<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to
Commission file number: 0-17919
SURGICAL LASER TECHNOLOGIES, INC.
--------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 31-1093148
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
147 Keystone Drive
Montgomeryville, PA 18936
--------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(215) 619-3600
--------------------------------------------------
(Registrant's telephone number, including area code)
200 Cresson Boulevard, P.O. Box 880
Oaks, PA 19456
--------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days
Yes X No
---
On August 12, 1996, the registrant had outstanding 9,866,607 shares of
Common Stock, $.01 par value.
Page 1 of 135 Pages
Exhibit Index is on Page 14
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SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION:
ITEM 1. Financial Statements:
a. Condensed Consolidated Balance Sheets,
June 30, 1996 (unaudited) and December 31, 1995 3
b. Condensed Consolidated Statements of Operations
(unaudited) for the quarters ended June 30, 1996
and July 2, 1995 4
c. Condensed Consolidated Statements of Operations
(unaudited) for the six months ended June 30, 1996
and July 2, 1995 5
d. Condensed Consolidated Statements of Cash Flows
(unaudited) for the six months ended June 30, 1996
and July 2, 1995 6
e. Notes to Condensed Consolidated Financial
Statements (unaudited) 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION:
ITEM 1. Legal Proceedings 12
ITEM 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
EXHIBITS 14
Page 2 of 135 Pages
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
Jun. 30, Dec. 31,
1996 1995
---- ----
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 7,756 $ 4,903
(including restricted amounts of $100)
Short-term investments 0 3,244
Accounts receivable, net of allowance for doubtful
accounts of $118 2,605 3,225
Inventories 3,455 3,866
Other 272 194
------- -------
Total current assets 14,088 15,432
Property and equipment, net 7,841 8,250
Other assets 1,261 1,139
------- -------
Total Assets $23,190 $24,821
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 217 $ 212
Accounts payable 706 467
Accrued liabilities 2,159 2,163
------- -------
Total current liabilities 3,082 2,842
------- -------
Long-term debt 6,165 6,289
Stockholders' equity:
Common stock, $.01 par value, 30,000 shares authorized,
9,855 shares and 9,854 shares issued and outstanding 99 99
Additional paid-in capital 32,601 32,588
Accumulated deficit (18,757) (16,997)
------- -------
Total stockholders' equity 13,943 15,690
------- -------
Total Liabilities and Stockholders' Equity $23,190 $24,821
======= =======
The accompanying notes are an integral part of these statements.
Page 3 of 135 Pages
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SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
For the Quarter Ended:
----------------------
Jun, 30, Jul. 2,
1996 1995
-------- --------
Net sales $2,784 $3,806
Cost of sales 929 1,642
-------- --------
Gross profit 1,855 2,164
-------- --------
Operating expenses: 2,321 2,671
Selling, general and adminitrative 374 668
Product development 0 390
-------- --------
Non-recurring charges (credits) 2,695 3,729
-------- --------
Operating income (loss) (840) (1,565)
Interest expense 140 151
Interest income (85) (33)
Other income (15) 0
Equity in (earnings) loss of joint venture 61 1
-------- --------
Income (loss) before income taxes (941) (1,684)
Provision for income taxes - -
-------- --------
Net income (loss) ($941) ($1,684)
======== ========
Net income (loss) per share ($0.10) ($0.17)
======== ========
Shares used in calculating net income (loss) per share 9,855 9,850
======== ========
The accompanying notes are an integral part of these statements.
Page 4 of 135 Pages
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SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
For the Six Months Ended:
-------------------------
Jun, 30, Jul. 2,
1996 1995
-------- --------
Net sales $5,549 $7,973
Cost of sales 1,979 3,306
-------- --------
Gross profit 3,570 4,667
-------- --------
Operating expenses: 4,339 5,636
Selling, general and administrative 810 1,351
Product development 0 390
-------- --------
Non-recurring charges (credits) 5,149 7,377
-------- --------
Operating income (loss) (1,579) (2,710)
Interest expense 284 312
Interest income (191) (71)
Other income (15) 0
Equity in (earnings) loss of joint venture 104 (6)
-------- --------
Income (loss) before income taxes (1,761) (2,945)
Provision for income taxes 0 0
-------- --------
Net income (loss) ($1,761) ($2,945)
======== ========
Net income (loss) per share ($0.18) ($0.30)
======== ========
Shares used in calculating net income (loss) per share 9,854 9,848
======== ========
The accompanying notes are an integral part of these statements.
Page 5 of 135 Pages
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SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
For the Six Months Ended:
-------------------------
Jun. 30, Jul. 2,
1996 1995
-------- --------
Cash Flows From Operating Activities:
Net income (loss) ($1,761) ($2,945)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Equity in (earnings) loss of joint venture 104 (6)
Depreciation and Amortization 466 921
Imputed interest (9) (10)
Non-recurring charges (credits) 0 390
Decrease (increase) in assets:
Accounts receivable 621 816
Inventories 431 (609)
Other current assets (79) (173)
Other assets 6 1
Increase (decrease) in liabilities:
Accounts payable 241 341
Accrued liabilities 4 (107)
-------- --------
Net cash provided by (used in) operating activities 24 (1,381)
-------- --------
Cash Flows From Investing Activities:
Sale (purchase) short term investments 3,244 --
Investment in joint venture (200) (150)
Sale (purchase property and equipment (66) (255)
Patent costs (44) (119)
-------- --------
Net cash provided by (used in) investing activities 2,934 (524)
-------- --------
Cash Flows From Financing Activities:
Payments on long-term debt (105) (222)
-------- --------
Net cash used in financing activities (105) (222)
Net increase (decrease) in cash and cash equivalents 2,853 (2,127)
Cash and Cash Equivalents, Beginning of Period 4,903 4,143
-------- --------
Cash and Cash Equivalents, End of Period $7,756 $2,016
======== ========
The accompanying notes are an integral part of these statements.
Page 6 of 135 Pages
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SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Summary Financial Information and Results of Operations:
In the opinion of Surgical Laser Technologies, Inc. and Subsidiaries (the
"Company" ), the accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles and with the regulations of the Securities and Exchange Commission
and contain all adjustments (consisting of only normal recurring adjustments)
necessary to present fairly the financial position as of June 30, 1996, the
results of operations for the quarters and six months ended June 30, 1996 and
July 2, 1995 and cash flows for the six months ended June 30, 1996 and July 2,
1995.
Interim Financial Information:
While the Company believes that the disclosures presented are adequate to
prevent misleading information, it is suggested that the unaudited condensed
consolidated financial statements be read in conjunction with the audited
consolidated financial statements and notes included in the Company's Form 10-K
report for the fiscal year ended December 31, 1995, as filed with the Securities
and Exchange Commission. Interim results for the quarter and six months ended
June 30, 1996 are not necessarily indicative of the results to be expected for
the full year.
2. Supplemental Cash Flow Information:
Income taxes paid for the six months ended June 30, 1996 were $15,200, primarily
representing federal alternative minimum taxes. There were no income taxes paid
for the six months ended July 2, 1995. Interest paid for the six months ended
June 30, 1996 and July 2, 1995 was $283,000 and $312,000, respectively.
The following noncash investing and financing activities took place:
During the first half of 1995, the Company issued additional notes of $342,000
in connection with the financing of certain patent litigation. These notes, like
others issued later in the year, were completely repaid following the settlement
in December 1995 of the patent litigation with Sharplan Lasers, Inc. and its
parent, Laser Industries Ltd. For the six months ended June 30, 1996 and July 2,
1995, $13,000 and $49,000 respectively, of the 8% convertible subordinated notes
were converted at the request of the noteholders into common stock at a
conversion price of $4.50 per share.
Page 7 of 135 Pages
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3. Net Loss Per Share:
Net loss per share has been computed using the weighted average number of common
shares outstanding during each period. Common share equivalents have not been
considered as they are anti-dilutive.
4. Bank Borrowings:
At June 30, 1996, the Company had a $2.75 million line of credit agreement with
a bank, which included a $750,000 sub-line for letters of credit. Under its
sub-line, the Company issued a letter of credit in the amount of $576,000 in
favor of the Montgomery County Industrial Development Corporation (MCIDC) under
the terms of the Mortgage and Security Agreement, and one other minor trade
letter of credit. There were no other borrowings under the line at June 30,
1996. Borrowings on the line are secured by the Company's accounts receivable
and inventories and bear interest at the bank's prime rate plus 1/2%. The
Company's line of credit agreement prohibits the declaration or payment of any
dividends or distributions on any capital stock at any time there are
outstanding obligations to the bank without the prior written consent of the
bank. The line is subject to the Company maintaining certain financial
covenants, as defined. The Company expects that its bank will renew its line of
credit facility, including the sub-line for letters of credit at August 30,
1996.
5. Income Taxes:
No income tax provision was made for the first six months of 1996 or 1995 due to
the losses incurred.
6. Segment and Geographic Data:
The Company is engaged in one business segment: the design, development,
manufacture and marketing of laser products for medical applications. The
Company's customers are primarily hospitals and medical centers. Foreign sales
represented 24% of sales in the first six months of 1996, as compared to 22% in
the same period in 1995. Sales to the Company's joint venture (see Note 7) were
2% and 10% of net sales in the first six months of 1996 and 1995, respectively.
Page 8 of 135 Pages
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7. Investment in MEDIQ PRN/SLT:
The Company is a 50% owner of MEDIQ PRN/SLT, a joint venture formed in the third
quarter of 1993 to provide rentals of lasers and related equipment to hospitals
and other health care providers. The investment in MEDIQ PRN/SLT is accounted
for using the equity method and is included in other assets. Sales to MEDIQ
PRN/SLT are recorded at an arm's-length price. Under the equity method, 50% of
the gross profit from the sales to the joint venture is deferred and amortized
to income as the related asset is used by the joint venture. The Company's sales
to the joint venture were $137,000 and $801,000 for the six months ended June
30, 1996 and July 2, 1995, respectively. Accounts receivable from sales to MEDIQ
PRN/SLT at June 30, 1996 were $27,000.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Net sales for the quarter ended June 30, 1996 of $2,784,000 increased
$19,000 over the first quarter of 1996. Compared to the second quarter of 1995,
net sales decreased $1,022,000 or 27%. For the six months ended June 30, 1996,
net sales were $5,549,000 compared to $7,973,000 in the first six months of
1995, a decrease of $2,424,000, or 30%. Net sales of Nd:YAG laser systems were
flat with the first quarter of 1996 and decreased 21% and 36% from the second
quarter and first six months of 1995, respectively. Net sales of delivery
systems increased slightly over the first quarter of 1996 and declined by 28% in
the second quarter and 29% in the first six months, from the comparable periods
in 1995.
The market for capital purchases by hospitals continued to be weak in the
first half of 1996, as expected. In addition, delivery system sales volumes
were negatively affected by the lower capital sales as well as by drug and
electrosurgical alternatives in the urologic market. The Company believes that
its recently introduced urologic probe, called the VaporMax(tm), and a new
delivery system line of products, called SLT Select(tm), for use on other
manufacturers' laser systems, have both contributed to stemming the erosion that
the Company had been experiencing in its disposable line of products due to the
negative market factors.
Principally due to the lower volumes of sales, gross profits for the
quarter ended June 30,1996 of $1,855,000 decreased $309,000 or 14% from the
second quarter of 1995, while gross profits for the first six months of 1996 of
$3,570,000 decreased $1,097,000, or 24% from the first six months of 1995. As a
percentage of net sales, gross profit increased to 64% for the first six months
of 1996 from 59% in the comparable period of 1995, due primarily to cost
reduction measures taken in the second half of 1995 to reduce manufacturing
overhead.
Page 9 of 135 Pages
<PAGE>
Due to the lower level of sales which were being experienced during 1995
and which were expected to continue into 1996, the Company took actions at the
end of the second quarter of 1995 to bring its expenditure levels more in line
with sales levels being experienced. The actions included a significant
reduction in the Company's workforce enacted in July 1995. In addition, as part
of its cost reduction plan, the Company has sublet its office and
research/training facility. The sublease is part of an overall plan to
consolidate the Company's operations into one office/research and manufacturing
facility in Montgomeryville, Pa, the net effect of which will reduce cash
outlays for facilities by an amount in excess of $700,000 per year. In July
1996, the Company relocated its administrative/sales and marketing operations
into its new facility and relocated its research operations into its existing
manufacturing and warehouse facility. The consolidation plan is expected to be
completed by January 1997, at which time the relocation of the research and
manufacturing operations to the new facility is expected to be accomplished.
Operating expenses were $2,695,000 for the second quarter of 1996 compared
to $3,729,000 in the second quarter of 1995. The second quarter of 1995
operating expenses included a non-recurring charge of $390,000 for severance and
related costs associated with a workforce reduction. For the first six months of
1996, operating expenses were $5,149,000 compared to $7,377,000 for the first
six months of 1995, which included the same non-recurring charge of $390,000.
Product development expenses of $374,000 in the second quarter of 1996 and
$810,000 in the first six months of 1996 decreased by $294,000 or 44%, and
$541,000 or 40%, respectively, from the comparable periods in 1995. The
decrease was due mainly to lower consulting costs resulting from the expiration
in June 1995 of the one-year consulting arrangement with the principals of
Advanced Laser Systems Technology as well as to lower personnel related charges.
Excluding the above-mentioned non-recurring charge in 1995, selling,
general and administrative expenses were $2,321,000 in the second quarter of
1996, a decrease of $350,000 or 13% from the comparable prior year period. In
the first six months of 1996, selling, general and administrative expenses were
$4,339,000 compared to $5,636,000 in the first six months of 1995, a decrease of
$1,297,000. The above-mentioned cost reductions taken at the end of the second
quarter of 1995 accounted for the majority of the reduced spending levels in
both comparable periods. In addition, the first six month period of 1995
included a charge of $200,000 incurred in connection with a proposed business
combination transaction for which there are no corresponding expenses in the
comparable 1996 period.
Net interest expense was $55,000 in the second quarter of 1996 and $93,000
in the first six months of 1996, a decrease of $63,000 and $148,000,
respectively, from the comparable periods in 1995. The reduction was primarily
attributable to higher interest income earned in the 1996 period due to the
substantially higher cash position.
Page 10 of 135 Pages
<PAGE>
Liquidity and Capital Resources
The Company had cash, cash equivalents and short-term investments of
$7,756,000 at June 30, 1996, of which $100,000 was restricted. In addition, the
Company currently has a $2.75 million credit facility with its bank. The
facility includes a sub-line for letters of credit of $750,000. Other than for
the letter of credit issued in the amount of $576,000 in favor of the Montgomery
County Industrial Development Corporation ("MCIDC") as a condition of the
Mortgage and Security Agreement with MCIDC, and one other minor trade letter of
credit, there were no borrowings outstanding under the line of credit.
Borrowings under the line are secured by the Company's accounts receivable and
inventories . The line is subject to the Company maintaining certain financial
covenants, as defined. The expiration of the line of credit has been extended to
August 30, 1996, at which time the line is expected to be renewed.
Net cash provided from operating activities was $24,000 for the first six
months of 1996 compared to cash used in operating activities of $1,381,000 in
the comparable period in 1995. The comparable increase in cash provided by
operating activities was due mainly to the reduction in the net loss incurred
coupled with a reduction in inventories.
Net cash provided by investing activities was $2,934,000 in the first six
months of 1996 compared to cash used in investing activities of $524,000 in the
first six months of 1995. The increase was due principally to the maturity of
certain short-term investments in the first quarter of 1996, amounting to
$3,244,000.
Net cash used in financing activities was $105,000 and $222,000 in the
first six months of 1996 and 1995, respectively.
Management anticipates capital expenditures of approximately $300,000 in
1996 of which $66,000 was spent in the first six months. The capital
expenditures are primarily for manufacturing and research and development needs,
sales demonstration lasers and leasehold improvements. The Company is
contractually committed to spend approximately $75,000 of the balance of its
estimated capital expenditures on leasehold improvements in its new facility.
The Company is not contractually committed to spend the balance of its estimated
capital expenditures. Management believes that its current cash position and
cash provided by operations will be sufficient for these expenditures.
Management believes that inflation has not had a material effect on
operations.
Page 11 of 135 Pages
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
For information regarding certain pending lawsuits, reference is made to the
Company's Form 10-K, Item 3, for the fiscal year ended December 31, 1995, and to
the Company's Form 10-Q for the quarter ended March 31,1996, as filed with the
Securities and Exchange Commission, which are incorporated herein by reference.
Trimedyne. On July 3, 1996, the United States District Court for the Central
District of California granted the Company's Motion for Partial Summary Judgment
that its products do not infringe U.S. Patent No. 5,380,317, held by Trimedyne,
Inc. and Royice Everett M.D. The Court had previously ruled that the Company's
products did not infringe the 4,646,737 and 4,773,413 hot metal tip patents held
by Trimedyne. On July 11, 1996 the Court entered a final judgment in favor of
the Company, ruling that none of its products infringed Trimedyne's patents and
dismissing Trimedyne's Complaint. Trimedyne filed a motion for the Court to
reconsider its judgment. On August 7, 1996, the Court denied Trimedyne's motion.
It is not known whether Trimedyne will appeal.
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits: Exhibit 10.48 - Sublease Agreement dated March 21,
1996 by Registrant, SLT Properties, Inc. and
Suburban Cable TV Co. Inc.
Exhibit 10.49 - Letter agreement dated June 14,
1996 by Registrant, SLT Properties, Inc. and
Suburban Cable TV Co. Inc.
Exhibit 10.50 - Subordination, Non-Disturbance and
Attornment Agreement dated April 30, 1996 and
delivered May 13, 1996 by Registrant, SLT
Properties, Inc., Suburban Cable TV Co.Inc., and
American United Life Insurance Company.
Exhibit 10.51 - Lease Agreement dated May 29, 1996
by Nappen & Associates and Registrant
Exhibit 11 - Computation of Earnings Per Share
Exhibit 27 - Financial Data Disclosure
b. Reports on Form 8-K: none
Page 12 of 135 Pages
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SURGICAL LASER TECHNOLOGIES, INC.
Date: August 14, 1996 By /s/ Michael R. Stewart
-------------------------
Michael R. Stewart
Vice President, Finance and
Chief Financial Officer
Signing on behalf of the registrant
and as principal financial officer
Page 13 of 135 Pages
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EXHIBIT INDEX
Exhibit Number Description of Exhibit Page
- -------------- ---------------------- ----
10.48 Sublease Agreement dated March 21, 1996
by Registrant, SLT Properties, Inc.
and Suburban Cable TV Co. Inc. 15
10.49 Letter agreement dated June 14, 1996 by Registrant,
SLT Properties, Inc and Suburban Cable TV Co. Inc. 84
10.50 Subordination, Non-Disturbance and Attornment
Agreement dated April 30, 1996 and delivered
May 13, 1996 by Registrant, SLT Properties, Inc.,
Suburban Cable TV Co. Inc., and
American United Life Insurance Company. 89
10.51 Lease Agreement dated May 29, 1996
by Nappen & Associates and Registrant. 97
11 Computation of Earnings Per Share 134
27 Financial Data Disclosure 135
Page 14 of 135 Pages
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EXHIBIT 10.48
1
Page 15 of 135 Pages
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SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT (this "Sublease") dated March 21, 1996 is by and
between SURGICAL LASER TECHNOLOGIES, INC., a Delaware corporation
("Sublandlord") and SUBURBAN CABLE TV CO. INC., a Pennsylvania corporation
("Subtenant").
ARTICLE I.
BASIC SUBLEASE TERMS
Whenever used in this Sublease without further qualification, the following
terms shall have the respective meanings given to those terms in this Article I.
1.1. Building. 200 Cresson Boulevard
Oaks, Upper Providence Township
Montgomery County, PA
1.2. Premises. The parcel or tract of land located at
200 Cresson Blvd described in Exhibit "A" together
with the building situated thereon and the parking
areas adjacent to the building.
1.3. Subleased Area. 57,000 rentable square feet.
1.4. Total Building Area. 57,000 rentable square feet
1.5. Subtenant's Pro-Rata Share. 100%
1.6. Sublease Term. Three (3) years.
1.7. Commencement Date. June 15, 1996
1.8. Expiration Date. June 14, 1999
1.9. Base Rent. $663,480.00 per year
1.10. Monthly Installment of Base Rent. $55,290.00 per
month
2
Page 16 of 135 Pages
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1.11. Address of Sublandlord.
422 Business Center
Montgomery Avenue
Oaks, PA 19456
Attention: James R. Appleby, Jr., President
1.12. Address of Subtenant.
200 Cresson Boulevard
P.O. Box 989
Oaks, Pa l9456-0989
Attention: H. F. Lenfest, President
Copy of notices to be sent to:
Samuel W. Morris, Jr., Esquire
Vice President - General Counsel
Suburban Cable TV Co. Inc.
P.O. Box 989
200 Cresson Boulevard
Oaks, PA l9456-0989
1.13. Sublandlord's Share of Operating Expenses. An
amount equal to the aggregate Operating Expenses
during 1996 Base Year.
1.14. Sublandlord's Share of Real Estate Taxes. An
amount equal to the aggregate Real Estate Taxes
during 1996 Base Year (i.e. fiscal year 1995-1996
for School District taxes and calendar year 1996
for County and Township taxes).
1.15. Use. General office.
1.16. Initial Period. The period of fourteen (14) days
after the date of this Sublease set forth above.
1.17. Mortgagees. Collectively, the holder of a
mortgage or other financing instrument affecting
the Premises from time to time including American
United Life Insurance Company ("AULIC"),
Pennsylvania Industrial Development Authority
3
Page 17 of 135 Pages
<PAGE>
("PIDA"), and Montgomery County Industrial
Development Corporation ("MCIDC").
ARTICLE II.
PREMISES
2.1. Sublease of Premises. Sublandlord hereby leases to Subtenant and
Subtenant leases from Sublandlord, for the term and upon the conditions and
covenants set forth in this Sublease, the Premises identified in Section 1.2 of
this Sublease, which Sublandlord represents consists of the approximate amount
of rentable square feet specified in Section 1.3. The Premises are depicted in
the space plans attached as Exhibit "A" but the depiction of possible uses or
locations on Exhibit "A" shall not be construed to be a warranty or
representation by Sublandlord that any such uses or locations presently exist or
will continue to exist. Subtenant's share of the total amount of square feet of
the Building is agreed to be equal to the Subtenant's Pro-rata Share specified
in Section 1.5.
2.2. Parking. Subtenant, its employees and customers shall have the right
to park in the parking areas adjacent to the Building. Subtenant shall have the
right to designate parking spaces as reserved and to place signs so indicating
subject to applicable laws and ordinances and restrictions of record.
2.3. Option to Purchase Premises. SLT Properties, Inc. ("Fee Owner") joins
with Sublandlord in this Sublease to grant to Subtenant an option to purchase
the Premises upon the terms and conditions set forth in this Section 2.3 (the
"Purchase Option") and the Agreement of Sale described in Section 3.3(b) below
(the "Agreement of Sale").
(a) Notice; Closing Date.. Subtenant must exercise the Purchase
Option, if at all, by notice to Sublandlord and Fee Owner not later than January
1, 1999 accompanied by the Agreement of Sale signed by Subtenant. The notice
shall state a closing date (the "Closing Date") under the Purchase Option not
later than the Expiration Date of the Term (not including the Extension Period).
Notwithstanding the foregoing, the Purchase Option shall automatically terminate
on the day before the commencement of any condemnation proceedings against the
Premises.
4
Page 18 of 135 Pages
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(b) Option Purchase Price. The purchase price for the Premises shall
be the sum of FOUR MILLION SEVEN HUNDRED FIFTY THOUSAND ($4,750,000.00) DOLLARS
payable by Subtenant to Fee Owner on the Closing Date in accordance with the
terms and conditions of the Agreement of Sale.
(c) Termination. Subtenant cannot exercise the Purchase Option if an
event of default under this Sublease has occurred at the time of its election
and is continuing uncured. This Purchase Option will terminate automatically
with any termination or expiration of the Sublease.
(d) Non-Transferrable. This Purchase Option is personal to Subtenant
and is not transferrable to any other person or entity except as may be
otherwise provided in the Agreement of Sale.
ARTICLE III.
TERM
3.1. Term. The Term of this Sublease shall be the term specified in
Section 1.6, commencing on the Commencement Date and ending, without the
necessity for notice from either party to the other, at midnight on the
Expiration Date unless sooner terminated pursuant to any provision of this
Sublease.
3.2. Early Possession.
(a) Early Possession. Sublandlord agrees to permit Subtenant to gain
access to, and take possession of, the basement and the second floor of the
Premises at any time on or after May 1, 1996. All obligations of Subtenant under
this Sublease (other than the payment of Monthly Installments) shall commence as
of May 1, 1996 or, if earlier, the date Subtenant, its contractors or employees
enter upon the Premises for purposes of preparation of the Premises for
Subtenant's occupancy except that Subtenant shall not have any obligation to pay
for utilities or other monetary obligations under the Sublease prior to May 1,
1996. Based upon the amount of space within the Premises occupied by Subtenant
and Sublandlord, Subtenant shall reimburse Sublandlord for Subtenant's
proportionate share of the expenses described in Sections 4.6(b), (c) (other
than the cost of Tenant's telecommunications services which Tenant shall pay)
and (e) for the period May 1, 1996 until the Commencement Date. Without
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limiting Subtenant's other obligations, Subtenant shall deliver to Sublandlord
prior to entry upon the Premises certificates of insurance and waivers of
mechanics liens on behalf of Subtenant and any contractors entering upon the
Premises at the request of Subtenant. Subtenant has requested, and Sublandlord
has agreed, to permit Subtenant to commence renovation, wiring and space
planning of the basement and of the second floor corporate offices prior to May
1, 1996, but after expiration of the Initial Period.
(b) No Advancement. Neither early possession nor early access shall
advance the Expiration Date of this Sublease.
3.3. Contingencies.
(a) Inspection. Subtenant shall have the right, at Subtenant's sole
cost and expense, to have the Premises, including but not limited to the
structural components, roof, electrical, plumbing and HVAC systems and
components, inspected by the engineer or other inspection company of Subtenant's
selection. If the written report of such inspections discloses structural
defects or that any of the building systems are not in good working order, then
Subtenant shall have the right to terminate this Sublease upon notice to
Sublandlord prior to the expiration of the Initial Period accompanied by the
written inspection reports, unless Sublandlord agrees to, and does, cure such
deficiencies prior to the Commencement Date.
(b) Agreement of Sale. During the Initial Period, Fee Owner, Subtenant
and Sublandlord shall negotiate in good faith the terms and conditions of the
Agreement of Sale to be initialled by the parties for identification purposes
and incorporated (subject to any confidentiality provisions contained therein)
into this Sublease as Exhibit "B". If the parties fail to reach agreement on the
form of Agreement of Sale within the Initial Period, either Sublandlord or
Subtenant may terminate this Sublease upon five (5) days notice to the other.
(c) Consent; Non-Disturbance. During the Initial Period, Sublandlord
shall seek such consents of the Mortgagees as may be required for Sublandlord to
enter into this Sublease and to request from the Mortgagees non-disturbance
agreements substantially in the form of Exhibit "C" attached hereto and
incorporated herein (the "Non-Disturbance Agreements"). If
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Sublandlord fails to obtain the consents of the Mortgagees to this Sublease,
Sublandlord may terminate this Sublease by notice to Subtenant not later than
the expiration of the Initial Period. If Sublandlord fails to deliver
Non-Disturbance Agreements from all Mortgagees to Subtenant prior to the
expiration of the Initial Period, Subtenant shall have the right to terminate
this Sublease upon notice to Sublandlord within three days after the expiration
of the Initial Period. Failure of Subtenant to notify Sublandlord of its
election to terminate the Sublease on account of the failure to deliver
Non-Disturbance Agreements shall be deemed a waiver of such requirement.
3.4. Delivery of Possession. Subtenant shall be deemed to have taken
possession of the Premises when the earliest of any of the following occur: (a)
June 15, 1996; or (b) Subtenant commences to occupy or otherwise make use of the
Premises (other than preparation described in Section 3.2(b) above). Subtenant
agrees that, upon the request of Sublandlord, Subtenant will execute a document
certifying the date on which Subtenant took possession of the Premises and the
applicable Commencement Date and Expiration Date of this Sublease.
3.5. Option to Extend Term. Subtenant may extend the Term of this Sublease
provided Subtenant exercises its rights to extend strictly in accordance with
this Section.
(a) Notice. Subtenant may extend the Term of this Sublease only by
delivery of notice to Sublandlord not later than January 1, 1999. If Subtenant
elects to exercise the Purchase Option under Section 2.3, Subtenant may not
elect to extend the Term under this Section 3.5; provided, however, that if the
conditions precedent to Closing under the Agreement of Sale are not met through
no fault of Subtenant, then upon termination of the Agreement of Sale,
Subtenant shall have a period of fifteen (15) days to elect to extend the Term
as set forth in this Section 3.5.
(b) Extension of Term. Subtenant may extend the Term one time only for
an additional two (2) year period (the "Extension Period") subject to all of the
conditions of this Sublease but with the rent adjustment applicable to the
Extension Period described in Article IV below.
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(c) No Event of Default. Subtenant cannot elect to extend the Term of
this Sublease if an event of default has occurred at the time of its election
and is continuing uncured.
3.6. Holding Over. If Subtenant remains in possession of the Premises or
any part thereof after the expiration of the Term (except under a written
extension agreement with Sublandlord), such occupancy shall be a tenancy from
month to month at a monthly rental equal to 150% of the Monthly Installment
payable under this Sublease for the month immediately preceding the Expiration
Date. The foregoing provisions of this Section shall neither be construed to
give the Subtenant any right to remain in possession of the Premises or any part
thereof after the expiration of the Term nor to waive any of the Sublandlord's
rights under this Sublease to collect any damages to which it may be entitled,
whether direct or consequential.
ARTICLE IV.
RENT; ADDITIONAL RENT
4.1. Base Rent. Subtenant shall pay, without demand and without deduction
or setoff, to Sublandlord as annual Base Rent the sum set forth in Section 1.9,
payable in advance, in equal Monthly Installments in the amount set forth in
Section 1.10 on the first day of each calendar month during the Term subject to
adjustment as set forth in this Sublease.
(a) Proration. Base Rent for any period during the Term which is less
than one calendar month shall be a pro rata portion of the Monthly Installment
based upon the actual number of days the Sublease is in effect during said
calendar month.
(b) Payment Terms. All rents shall be payable in lawful money of the
United States of America without notice or demand and without any deduction,
offset or abatement, and shall be payable to Sublandlord at the address for
payments stated in Section 1.11 or to such other persons or at such other
places as Sublandlord may designate in writing. The payment of Base Rent under
this Sublease shall be an independent covenant.
4.2. CPI Adjustment. If Subtenant has exercised its option to extend the
Term of the Sublease as set forth in Section 3.5, the Base Rent (and
corresponding Monthly Installments) during the Extension Period, shall be
increased as follows:
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(a) First Year. Commencing June 15, 1999, the Base Rent and
(corresponding Monthly Installments) shall be increased by a percentage equal to
the aggregate increase in the CPI Index from the CPI Index last published prior
to the Commencement Date through the CPI Index last published prior to June 15,
1999.
(b) Second Year. Commencing June l5, 2000, the Base Rent and
(corresponding Monthly Installments) shall be increased by a percentage equal to
the aggregate increase in the CPI Index from the CPI Index last published prior
to June 15, 2000 through the CPI Index last published prior to June 15, 2000.
(c) CPI Index. The term "CPI Index" means the Consumer Price Index
last published prior to the applicable reference date by the Bureau of Labor
Statistics of the United States Department of Labor, U.S. City Average, All
Items and Major Group Figures for Urban Wage Earners and Clerical Workers
(1982-84). If a substantial change is made in the manner of computing the CPI
Index, then the index will be adjusted to the figure that would have been used
had the manner of computing the index in effect at the date of this Lease had
not been altered. If the index (or a successor or substitute index) is not
available, a reliable governmental or other nonpartisan publication selected by
Sublandlord evaluating the information used in determining the index will be
used.
4.3. Additional Rent. Both Subtenant and Sublandlord expressly understand
and agree that all other sums, excepting Base Rent, which may from time to time
become due under this Sublease shall be deemed Additional Rent. Additional Rent
shall include, but not be limited to, late charges, interest, Subtenant's
Pro-Rata Share of Shared Expenses (as defined in Section 4.5), attorneys' fees,
security deposits and any cash bonds or escrows which may by circumstance be
required to be posted hereunder. Both Subtenant and Sublandlord expressly
understand and agree that all monies paid by Subtenant under this Sublease
shall, at the option of Sublandlord, be first credited to Additional Rent (and
allocated among different items of Additional Rent as Sublandlord may
determine), and only then to Base Rent. All payments of Additional Rent shall be
in lawful money of the United States of America, shall be paid without any
deduction, offset or abatement, and shall be payable to Sublandlord at the
address for payments stated in Section 1.11 or to such other persons or at such
other places as Sublandlord may
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designate in writing. The obligation to make payments of
Additional Rent hereunder shall be an independent covenant.
4.4. Acceptance of Rental Payments. No acceptance by Sublandlord of a
lesser sum than the Base Rent and/or Additional Rent then due shall be deemed to
be other than on account of the earliest amount of such rental due (unless
Sublandlord elects otherwise), nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction or compromise and settlement, and Sublandlord may accept
such check or payment without prejudice to Sublandlord's right to recover the
balance of such payments due or to pursue any other remedy as provided in this
Sublease.
4.5. Subtenant's Pro-Rata Share of Shared Expenses. Commencing on the first
day of the first January following the Commencement Date, and continuing
thereafter during the term of this Sublease, Subtenant shall pay to Sublandlord
monthly in advance on the first day of each month, without notice or demand and
without any deduction, offset or abatement, in lawful money of the United States
of America, 1/12th of the amount of the Subtenant's Pro-Rata Share of Shared
Expenses as estimated by Sublandlord to be incurred for the calendar year in
which the monthly payments are to be made. If the Expiration Date is not
December 31, the monthly payments owing hereunder during the last partial
calendar year of the Sublease shall be appropriately adjusted. The term "Shared
Expenses" shall mean the amount by which Operating Expenses (as defined in
Section 4.5(a) below) and Real Estate Taxes (as defined in Section 4.5(b)
below) incurred in any period exceed the amounts of Sublandlord's obligations
for the same as set forth, respectively, in Section 1.13 and Section 1.14. The
term "Building" as used in this Section 4.5 shall include the parking areas
adjacent to the Building, the parcel of land on which the Building is situated,
and improvements or facilities servicing the Building or utilized in common by
the Building and other buildings upon or adjacent to the real property on which
the Building stands.
(a) Operating Expenses. Sublandlord agrees to expend as its share of
Operating Expenses paid for and sustained by the Sublandlord during any calendar
year an amount not greater than that specified in Section 1.13. Said sum shall
constitute the maximum payable by Sublandlord as its contribution toward
Operating Expenses. The term "Operating Expense" means the total amounts paid or
payable, whether by the Sublandlord or otherwise on
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behalf of the Sublandlord, in connection with maintenance of the elevator and
HVAC servicing the Building, pest control, insurance pursuant to Section 8.2
below, and window cleaning.
(b) Real Estate Taxes. Sublandlord agrees to expend as its share of
Real Estate Taxes paid for and sustained by the Sublandlord during any calendar
year an amount not greater than that specified in Section 1.14. Sublandlord
represents and warrants that the amount of Real Estate Taxes for the l996 Base
Year is $75,065.65. Said sum shall constitute the maximum payable by Sublandlord
as its contribution toward Real Estate Taxes. Real Estate Taxes shall include
general and special taxes, assessments, duties and levies, charged and levied
upon or assessed against the Building and/or any improvement situated on the
real property on which the Building stands, any leasehold improvement, fixtures,
installations, additions and equipment used in the maintenance or operation of
the Building, whether owned by Sublandlord or Subtenant, not paid directly by
the Subtenant. Further, if at any time during the Term of this Sublease, the
method of taxation of real estate prevailing as of the date of this Sublease
shall be or has been altered so as to cause the whole or any part of the taxes
now or hereafter levied, assessed or imposed on real estate to be levied,
assessed or imposed upon Sublandlord, wholly or partially, as a capital levy or
otherwise, or on, or measured by the rents received from the Building, then such
new or altered taxes attributable to the Premises shall be deemed to be included
within the term "Real Estate Taxes" for purposes of this paragraph.
(c) Estimates. In each calendar year after the year in which the
Commencement Date occurs, Sublandlord shall send to Subtenant a statement (the
"Sublandlord's Statement") which shall set forth the actual amount of Shared
Expenses and Subtenant's Pro-Rata Share thereof for the preceding calendar year
or portion thereof and the estimated amount of Shared Expenses and Subtenant's
Pro-Rata Share thereof for the calendar year in which the Sublandlord's
Statement is given. Sublandlord's failure to render a Sublandlord's Statement
with respect to any period shall not eliminate or reduce Subtenant's obligation
to pay Shared Expenses and shall not prejudice Sublandlord's right to render a
Sublandlord's Statement with respect to any subsequent period. The obligations
of Subtenant under the provisions of this Section with respect to any increase
in rent shall survive the expiration or any sooner termination of the Term of
the Sublease. Within
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fifteen (15) days next following the notification by Sublandlord of the contents
of its Sublandlord's Statement, Subtenant shall pay to Sublandlord the entire
amount of Subtenant's Pro-Rata Share of actual Shared Expenses for the prior
period covered by the Sublandlord's Statement less the amount of Shared Expenses
actually paid by Subtenant for said period, plus Subtenant shall also then pay
to Sublandlord such amount as is necessary to assure that, through the calendar
month in which the Sublandlord's Statement is given, the Subtenant has paid to
Sublandlord the full amount of estimated Shared Expenses for the calendar year
in which Sublandlord's Statement is given as if the Sublandlord's Statement were
given on January 1 of said calendar year. For each month following for the
remainder of said calendar year, Subtenant shall pay the monthly estimated
Shared Expenses set forth in the Sublandlord's Statement. In the event that the
estimated payments made by the Subtenant in the calendar year preceding the date
on which the Subtenant is given notice of the Sublandlord's Statement exceed the
Subtenant's Pro-Rata Share of actual Shared Expenses for such calendar year,
then should the Subtenant not be otherwise in default hereunder, the amount of
such excess shall be applied by the Sublandlord to the next succeeding
installments of monthly estimated payments of Shared Expenses.
(d) Statements. All reasonable determinations by Sublandlord pursuant
to this Section shall be presumed to be correct. Until Subtenant is advised of
the adjustment in its obligation to pay Shared Expenses, if any, pursuant to the
provisions of this Section, Subtenant's monthly rental shall continue to be paid
at the then current rent (including all prior adjustments thereto pursuant to
this Sublease). Upon written notice to Sublandlord of not less than fifteen (15)
business days, Subtenant shall have the right to review the documentation relied
upon by Sublandlord relating to the computation of Shared Expenses, which review
shall occur at Sublandlord's address for notices specified in Section 1.11. All
Shared Expenses shall be computed on the actual basis. In computing Shared
Expenses, no cost or expense may be accounted more than once, any expenses which
are paid by the proceeds of insurance shall be excluded, and any expenses which
are separately metered or billed directly to and separately paid by Subtenant
shall be excluded. Subtenant shall have the right to cause an audit to be made
of Sublandlord's computation of Shared Expenses, at the location of the
Sublandlord, at Subtenant's sole expense, not more frequently
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than once per calendar year. Subtenant shall not be entitled to withhold or
deduct any portion of Base Rent or Additional Rent during the pendency of any
such audit. Any errors disclosed by such audit shall be promptly corrected,
provided that Sublandlord shall have the right to cause another independent
audit to be made of such computations, at Sublandlord's expense, and in the
event of a disagreement between the auditors, the two auditors shall appoint a
third auditor whose determination shall be final if it is between the
deeterminations of the first two auditors; otherwise, the determination of the
auditor who is closest to the third audit shall control.
4.6. Other Subtenant Expenses.
(a) Personal Property Taxes. Subtenant shall pay prior to delinquency
all taxes assessed against and levied upon leasehold improvements, fixtures,
furnishings, equipment and all other personal property of Subtenant contained in
the Premises or elsewhere. If such taxes are assessed to Sublandlord's property,
Subtenant shall pay Sublandlord the taxes attributable to Subtenant within ten
(10) days after receipt of a written notice from Sublandlord setting forth the
taxes applicable to Subtenant's property, and if Subtenant fails to do so,
Sublandlord may make such payment and the amount so paid, together with interest
thereon from the date paid, shall be deemed to be Additional Rent and shall be
due and payable to Sublandlord on the next succeeding date on which a Monthly
Installment is due. Subtenant shall promptly deliver to Sublandlord, upon
Sublandlord's written request, receipts for payments of all taxes, charges,
rates, dues, assessments and licenses in respect of all improvements, equipment
and facilities of the Subtenant on or in the Premises which were due and payable
within a period up to one year prior to Sublandlord's making such request.
(b) Utility Charges and Services. Subtenant shall separately arrange
and pay for the furnishing of and use of all gas, electric, water, sewer and
telecommunications services supplied to the Building during the Term and
Sublandlord shall have no liability in connection therewith. If billed to
Sublandlord, rather than Subtenant, Subtenant agrees to pay to Sublandlord, as
Additional Rent, promptly upon demand therefor by Sublandlord, the amount
determined to be due to the providers of
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such services to the Building (including lighting of the parking
area).
(c) Janitorial; Trash Removal; Landscaping. Subtenant shall separately
arrange and pay for janitorial service, cleaning supplies and trash removal for
the Premises and ordinary maintenance of the landscaping, sidewalks and parking
areas adjacent to the Building (such as grass cutting and snow removal).
(d) Security. Subtenant shall separately arrange and pay for any
security, guards or other protection services desired by Subtenant.
(e) Use and Occupancy Tax. Subtenant shall pay to Sublandlord,
promptly as and when due, all Use & Occupancy Tax imposed upon or allocated to
the Premises whether charged to Sublandlord or Subtenant.
ARTICLE V.
USE; COMPLIANCE WITH LAWS AND REGULATIONS
5.1. Use. The Premises shall be used and occupied only for the use
specified in Section 1.15 provided that the foregoing shall not be construed as
a representation or guarantee by the Sublandlord that such business may
lawfully be conducted on the Premises.
5.2. Compliance With Law. In the event it is determined by the applicable
governmental unit that the Premises violates any building code, regulation or
ordinance, then it shall be the obligation of the Sublandlord, after written
notice from Subtenant which includes a copy of the governmental unit's
determination, to promptly, at Sublandlord's sole cost and expense, rectify any
such violation. In the event Subtenant does not give to Sublandlord written
notice of any such violation within forty-five (45) days from the date on which
Subtenant takes possession of the Premises, it shall be presumed that such
violation, whether the same is patent or latent, did not exist and the
correction of the same shall be the obligation and expense of the Subtenant at
the direction of the Sublandlord unless Subtenant can establish that such
violation in fact existed prior to the Commencement Date; provided, however,
that nothing in this Section shall be construed to require or permit
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the Subtenant to make any structural changes to the Building not caused by
Subtenant's improvements or the nature of Subtenant's occupancy of the Premises.
5.3. Hazardous Materials.
(a) Subtenant covenants not to introduce any hazardous or toxic
materials onto the Building, the Premises, or the grounds surrounding the
Building, without i) first obtaining Sublandlord's written consent and ii)
complying with all applicable federal, state and local laws or ordinances
pertaining to the transportation, storage, use or disposal of such materials,
including but not limited to obtaining proper permits.
(b) If Subtenant's transportation, storage, use or disposal of
hazardous or toxic materials on the Building, the Premises, or the grounds
surrounding the Building results in i) contamination of the soil or the surface
or ground water or ii) loss or damage to person(s) or property, then Subtenant
agrees to respond in accordance with the requirements of this Section and
applicable laws.
(c) Subtenant agrees i) to notify Sublandlord immediately of any
contamination, claim of contamination, loss or damage, ii) after consultation
and approval by Sublandlord, to clean up and iii) to indemnify, defend and hold
Sublandlord harmless from and against any claims, suits, causes of action, costs
and fees, including attorney's fees, arising from or connected with any such
contamination, claim of contamination, loss or damage unless Subtenant can
establish that the contamination preceded the Commencement Date. The provisions
of this Section shall survive the termination of this Sublease.
5.4. Waste and Nuisance. Subtenant shall not commit, suffer or permit any
waste, damage, disfiguration or injury to the Premises, the common areas in the
Building, or the fixtures and equipment located therein or thereon. Subtenant
shall not permit or suffer any overloading of the floors, roof or other
structural components thereof, and shall not place therein any heavy business
machinery, safes, computers, data processing machines, or other items heavier
than customarily used for general office purposes without first obtaining the
written consent of Sublandlord. Subtenant shall not use or permit to be used any
part of the Building for any dangerous, noxious or
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offensive trade or business, and shall not cause or permit any nuisance, noise,
action, or disturbance of other occupants, in, at or on the Premises.
5.5. Condition of Premises. Subject to Sublandlord's completion of its
obligations under Section 7.1(a), Subtenant hereby accepts the Premises in their
condition existing as of the date of the commencement hereof, subject to all
applicable zoning, municipal, county and state laws, ordinances and regulations
governing and regulating the use of the Premises, and accepts this Sublease
subject thereto and to all matters disclosed thereby and by any exhibits
attached hereto. In addition, Subtenant shall, at Subtenant's expense, comply
promptly with all applicable laws, statutes, ordinances, rules, regulations,
orders, restrictions of record, and requirements in effect during the Term or
any part of the Term hereof regulating the use by Subtenant of the Premises.
5.6. Insurance Cancellation. No use shall be made or permitted to be made
of the Premises other than as offices, nor acts done which will cause the
cancellation of any insurance policy covering the Premises or the Building, and
if Subtenant's use of the Premises for any purpose other than as offices causes
an increase in said insurance rates, Subtenant shall pay any such increase as
Additional Rent, which, together with interest on any amount paid therefor by
Sublandlord, shall be payable by Subtenant on the next succeeding date on which
a Base Rental payment is due.
ARTICLE VI.
BUILDING SERVICES
6.1. Basic Services. Subject to any law, rule or governmental order or
regulation, and further subject to any circumstance beyond the control of the
Sublandlord, Sublandlord shall furnish the following services:
(a) Elevator and HVAC maintenance;
(b) Pest control; and
(c) Window cleaning.
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6.2. Limitations on Subtenant Use. Except with respect to any unfinished
space in the Building, Subtenant shall not connect with any electric current
except through existing electrical outlets in the Premises, or to any water
pipes, any apparatus or device for the purposes of using electric current or
water. With the prior written consent of Sublandlord, which consent shall not be
unreasonably withheld, Subtenant may maintain and operate data processing
equipment on the Premises, but all additional costs in connection therewith
(including, but not limited to, additional support flooring, insulation,
electrical outlets and temperature maintenance facilities) shall be borne solely
by Subtenant and the utility services utilized by or for such equipment shall be
borne solely by Subtenant.
6.3. Interruption of Services. Interruption or curtailment of any service
maintained in the Building, if caused by strikes, mechanical difficulties, or
for any other reason beyond Sublandlord's control, shall not entitle Subtenant
to any claim against Sublandlord or to any abatement in rent, nor shall the same
constitute constructive or partial eviction. Unless due to the gross negligence
of Sublandlord, Sublandlord shall not be liable to Subtenant for any injury or
damage resulting from defects in the plumbing, heating, or electrical systems in
the Building or for any damage resulting from water seepage into the Building or
for any damage resulting from wind storm, hurricane or rain storm.
ARTICLE VII.
MAINTENANCE, REPAIRS AND ALTERATIONS
7.1. Sublandlord's Obligations.
(a) As of Commencement Date. The Premises are being leased in an
"As-Is" condition; however, prior to delivery of possession of the Premises to
Subtenant, the carpets will be shampooed and cleaned and, where necessary, the
walls will be patched, spackled and painted. Sublandlord shall be responsible
for all maintenance and repairs with respect to the first floor of the Building
prior to the time exclusive possession thereof is given to Subtenant, unless the
need for such maintenance or repairs is caused by Subtenant or Subtenant's
agents, employees, representatives, customers or invitees. Existing cabinetry,
equipment and all other items related to the prior use of such space will be
removed from the basement; the existing tile floor
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will be patched and cleaned; and all of the basement walls will be patched,
sealed and painted. The 10,000 square feet of unimproved space on the second
floor of the Premises is being taken in an As-IS condition. Subtenant agrees
that, except as set forth in this subsection (a), there is no promise,
representation, or undertaking by or binding upon Sublandlord with respect to
any construction, alteration, remodeling or redecorating in or to the Premises.
(b) During the Term. Except for damage caused by any negligent or
intentional act or omission of Subtenant, Subtenant's agents, employees,
representatives, customers or invitees (in the event of which damage, Subtenant
shall repair the damage, at its sole expense), Sublandlord shall keep in good
order, condition and repair the structural portions of the Building (i.e. roof,
bearing walls and foundation), provided that Sublandlord shall have no
obligation to perform any act which is the obligation of Subtenant. Subtenant
expressly waives the benefits of any statute now or hereafter in effect which
would otherwise afford Subtenant the right to make repairs at Sublandlord's
expense or to terminate this Sublease because of Sublandlord's failure to keep
the Premises in good order, condition and repair. Other than as specifically
provided in this Section, Sublandlord shall not be obligated to make any repairs
or improvements of any kind, in, upon, about, or to the Premises or the
Building.
7.2. Subtenant's Obligations. Subtenant, at Subtenant's expense, shall keep
in good order, condition and repair the Premises and every part thereof
including, without limiting the generality of the foregoing, all plumbing,
electrical and lighting facilities and equipment within the Premises, fixtures,
interior walls and interior surfaces of exterior walls, ceilings, windows,
doors, plate glass and skylights located within the Premises. All repairs made
by the Subtenant shall be at least of the same quality, design and class as that
of the original work. All damage or injury to the Building or to the Premises,
fixtures, appurtenances and/or equipment caused by the Subtenant moving property
in or out of the Building or the Premises or by Subtenant's installation or
removal of furniture, fixtures, or other property, or from any other cause of
any kind or nature whatsoever due to carelessness, omission, neglect, improper
conduct, or other cause of the Subtenant, its agents, employees, invitees,
contractors or subcontractors shall be repaired,
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restored, or replaced promptly by the Subtenant at its sole cost and expense to
the satisfaction of the Sublandlord. In the event that the Subtenant fails to
keep the Premises in good order, condition and repair while this Sublease
remains in effect, then thirty days after written demand (which written demand
shall not be required in the case of an emergency), Sublandlord may enter the
Premises to repair the Premises to good order and condition and make such
repairs without liability to Subtenant for any loss or damage that may accrue to
Subtenant's property or business by reason thereof, and upon completion thereof
Subtenant shall pay to Sublandlord upon demand and as Additional Rent the cost
of restoring the Premises to such good order and condition, together with
interest thereon from the date paid.
7.3. Surrender. On the last day of the Term hereof or on any sooner
termination or date on which Subtenant ceases to possess the Premises, Subtenant
shall surrender the Premises to Sublandlord in good and clean condition,
ordinary wear and tear excepted. Prior to such surrender Subtenant shall repair
any damage to the Premises occasioned by its removal of trade fixtures,
furnishings and equipment, which repair shall include the patching and filling
of holes and repair of structural damage. Subtenant agrees to indemnify
Sublandlord and hold Sublandlord harmless from and against any liability
(including reasonable attorneys' fees) of Sublandlord to third parties resulting
from Subtenant's failure to timely comply with the provisions of this Section.
7.4. Alterations and Additions. Subtenant shall not, without Sublandlord's
prior written consent, which consent shall not be unreasonably withheld or
delayed, make any alterations, improvements or additions: (referred to
collectively herein as "Alterations") in, on or about the Premises. Sublandlord
may require that Subtenant remove any or all of said Alterations at the
expiration of the Term or such other time at which Subtenant ceases to possess
the Premises, and restore the Premises to their prior condition; provided that
Sublandlord notifies Subtenant of such requirement not later than the time
Sublandlord consents to such Alterations. Should Subtenant make any Alterations
without the prior approval of the Sublandlord, Sublandlord may require that
Subtenant immediately remove any or all of such items and/or Sublandlord may
declare a default by Subtenant under this Sublease. Notwithstanding anything in
this Section 7.4 to the contrary, Subtenant shall have the right to complete the
unfinished space
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in the Building to Building standard as office space without Sublandlord's
consent. Except in connection with normal interior decorating of the Premises,
Subtenant shall not place any holes in any part of the Premises, and in no event
shall Subtenant place any exterior or interior signs or interior drapes, blinds,
or similar items visible from the outside of the Premises without the prior
written approval of Sublandlord which approval shall not be unreasonably
withheld or delayed.
7.5. Sublandlord's Consent. Any Alterations in, on or about the Premises
that Subtenant shall desire to make shall be presented to Sublandlord in written
form with proposed detailed plans. If Sublandlord shall give its consent, the
consent shall be deemed conditioned upon Subtenant acquiring a permit to do the
work from appropriate governmental agencies, the furnishing of a copy thereof to
Sublandlord prior to the commencement of the work and the compliance by
Subtenant with all conditions of said permit and with all specifications in the
plans in a prompt and expeditious manner. Subtenant shall not permit any of the
work to be performed by persons not currently licensed under any applicable
licensing laws or regulations pertaining to the types of work to be performed.
Sublandlord shall not be deemed unreasonable in the exercise of its discretion
for withholding approval of any Alterations which involve or might affect any
structural or exterior element of the Building or any facility serving any area
of the Premises outside of the Building, or which will require unusual expense
to re-adapt the Premises to normal office use on the termination or expiration
of the Sublease, unless in the latter case Subtenant either desires to or is
required to make repairs or Alterations in accordance with this Sublease,
Sublandlord may require Subtenant, at Subtenant's sole cost and expense, to
obtain and provide to Sublandlord a lien and completion bond (or such other
applicable bond or other security as reasonably determined by Sublandlord) in an
amount equal to one and one-half (1-1/2) times the estimated cost of such
improvements, to insure Sublandlord against liability including but not limited
to liability for mechanic's and materialmen's liens and to insure completion of
the work.
7.6. Removal of Liens. Subtenant shall pay, when due, all claims for labor
or materials furnished or alleged to have been furnished to or for Subtenant at
or for use in the Premises, which claims are or may be secured by any mechanic's
or materialmen's lien against the Premises or the Building.
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Subtenant shall give Sublandlord not less than ten (10) days' notice prior to
the commencement of any work in, on or about the Premises, and Sublandlord shall
have the right to post notices of non-responsibility in, on or about the
Premises as provided by law. Subtenant shall have no power or authority to do
any act or make any contract which may create or be the basis for any lien upon
the interest of the Sublandlord, the Premises or the Building, or any portion
thereof. If any mechanics' or other lien or any notice of intention to file a
lien shall be filed or delivered with respect to the Premises or the Building,
based upon any act of the Subtenant or of anyone claiming through the Subtenant,
or based upon work performed or materials supplied allegedly for the Subtenant,
Subtenant shall cause the same to be canceled and discharged of record within
fifteen (15) days after the filing or delivery thereof or shall obtain a bond in
an amount sufficient to fully protect Sublandlord. If Subtenant has not so
canceled the lien or obtained a bond to protect Sublandlord within fifteen (15)
days as required herein, Sublandlord may pay such amount, and the amount so paid
together with interest thereon from the date of payment and all legal costs and
charges, including attorneys' fees, incurred by Sublandlord in connection with
said payment and cancellation of the lien or notice of intent shall be
Additional Rent and shall be payable on the next succeeding date on which a Base
Rental Installment is due. Sublandlord may, at its option and without waiving
any of its rights set forth in the immediately preceding sentence, permit
Subtenant to contest the validity of any such lien or claim, provided that in
such circumstances the Subtenant shall at its expense defend itself and
Sublandlord against the same and shall pay and satisfy any such adverse judgment
that may be rendered thereon before the enforcement thereof against the
Sublandlord, the Premises or the Building, provided further that Sublandlord may
at any time require the Subtenant to deposit with the court exercising
jurisdiction over such claim, such amount as may be necessary under applicable
statutes to cause the release and discharge of the lien, and if Subtenant shall
not immediately make such payment upon the request of Sublandlord, Sublandlord
may make said payment and the amount so paid, together with interest thereon
from the date of payment and all legal costs and charges, including attorneys'
fees, incurred by Sublandlord in connection with said payment shall be deemed
Additional Rent and shall be payable on the next succeeding date on which a Base
Rental installment is due. In addition, Sublandlord may require Subtenant to pay
Sublandlord's attorneys' fees and costs in
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participating in such action if Sublandlord shall decide it is in its best
interest to do so. Nothing herein contained shall be construed as a consent on
the part of Sublandlord to subject the interest and estate of Sublandlord to
liability under any lien law of the Commonwealth of Pennsylvania, for any reason
or purpose whatsoever, it being expressly understood that Sublandlord's interest
and estate shall not be subject to such liability and that no person shall have
any right to assert any such lien.
7.7. Incorporation into Premises. Unless Sublandlord requires their removal
at the time Sublandlord consents to any Alterations, all Alterations which may
be made on the Premises shall, at the expiration of the term or such other time
at which Subtenant ceases to possess the Premises, become the property of
Sublandlord and remain upon and be surrendered with the Premises.
Notwithstanding the provisions of this Section, Subtenant's machinery and
equipment, other than that which is affixed to the Premises so that it cannot be
removed without material damage to the Premises, shall remain the property of
Subtenant and may be removed by Subtenant subject to the requirements of this
Article and provided further that Subtenant is not in default under this
Sublease at the time Subtenant ceases to possess the Premises.
7.8. Public Areas. Subtenant agrees to repair at its cost all
deteriorations or damages to the Building or parking areas occasioned by its
negligence or intentional misconduct or that of its officers, agents,
representatives, customers, employees or invitees.
ARTICLE VIII.
INSURANCE AND INDEMNITY
8.1. Liability Insurance. Subtenant shall, at Subtenant's expense, obtain
and keep in force during the term of this Sublease a policy of bodily injury and
property damage insurance, insuring Sublandlord and Subtenant against any
liability arising out of the ownership, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be in an amount
not less than $1,000,000 in primary insurance coverage and $2,000,000 in excess
coverage. The limits of said insurance shall not, however, limit the liability
of Subtenant
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hereunder. Subtenant shall also obtain and keep in force during the term of this
Sublease, at Subtenant's expense, "all risk" or "special coverage form"
insurance upon the property of every description and kind owned by the Subtenant
and located in the Building or for which Subtenant is legally liable or
installed by or on behalf of the Subtenant, including without limitation,
furniture, fittings, installations, alterations, additions, partitions, fixtures
and anything in the nature of leasehold improvements in an amount not less than
80% of the full replacement cost thereof. Sublandlord shall be named as an
additional insured on such policies. If Subtenant shall fail to procure and
maintain the insurance required hereunder, Sublandlord may but shall not be
required to procure and maintain the same, and any amount so paid by Sublandlord
for such insurance shall be Additional Rent which, together with interest
thereon from the date paid, shall be due and payable by Subtenant on the next
succeeding date on which a Base Rental installment is due. If in the opinion of
Sublandlord the amount of liability insurance required hereunder is not
adequate, then not more frequently than once during each option, extension or
renewal term of this Sublease, if any, Subtenant shall increase said insurance
coverage as required by Sublandlord; provided, however, that in no event shall
the amount of the liability insurance increase by more than fifty percent of the
amount of the insurance during the preceding term of this Sublease. However, the
failure of Sublandlord to require any additional insurance coverage shall not be
deemed to relieve Subtenant from any obligations under this Sublease.
8.2. Property Insurance. Sublandlord shall obtain and keep in force during
the term of this Sublease fire and extended coverage on the Building (including
Building standard leasehold improvements) in amounts and coverages not less than
those set forth on the certificate of insurance attached hereto as Exhibit "D"
and incorporated herein. Sublandlord may also, but shall not be required to,
procure any other insurance policies respecting the Premises or Building which
Sublandlord deems necessary or any Mortgagee requires. Sublandlord shall deliver
to Subtenant certificates evidencing renewal of the coverages described in
Exhibit "D" within thirty (30) days after the renewal date.
8.3. Insurance Policies. Insurance required by Subtenant and Sublandlord
hereunder shall be in companies rated A+, AAA or better in "Best's Insurance
Guide". Subtenant shall deliver to
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Sublandlord prior to taking possession of the Premises copies of policies of
such insurance or certificates evidencing the existence and amounts of such
insurance with loss payable clauses reasonably satisfactory to Sublandlord. No
such policy shall be cancelable or subject to reduction of coverage or other
modification except after ten (10) days' prior written notice to Sublandlord.
Subtenant shall, within ten (10) days prior to the expiration of such policies,
furnish Sublandlord with renewals thereof, or Sublandlord may order such
insurance and charge the cost thereof to Subtenant, which amount, together with
interest thereon, shall be Additional Rent and shall be payable by Subtenant on
the next succeeding date on which a Monthly Installment is due. Subtenant shall
not do or permit to be done anything which shall invalidate the insurance
policies referred to in this Article.
8.4. Waiver of Subrogation. As long as their respective insurers so permit,
Subtenant and Sublandlord each waives any and all rights of recovery against the
other, or against the officers, employees, agents and representatives of the
other for loss or damage to such waiving party or its property or the property
of others under its control, where such loss or damage is insured against under
any insurance policy in force at the time of such loss or damage. Subtenant and
Sublandlord shall, upon obtaining the policies of insurance required hereunder,
give notice to the insurance carriers that the foregoing mutual waiver of
subrogation is contained in this Sublease and obtain policies of insurance, if
obtainable, which shall include a waiver by the insurer of all right of
subrogation against Sublandlord or Subtenant in connection with any loss or
damage thereby insured against.
8.5. Hold Harmless. Subtenant shall indemnify, defend and hold Sublandlord
harmless from any and all claims, liabilities, damages and costs, including
attorneys' fees, incurred by Sublandlord which arise from Subtenant's use of the
Premises or the Building or from the conduct of its business or from any
activity, work or things which may be permitted or suffered by Subtenant in, on
or about the Premises or the Building, and shall further indemnify, defend and
hold Sublandlord harmless from and against any and all claims, liabilities,
damages and costs, including attorneys' fees, incurred by Sublandlord which
arise from any breach or default in the performance of any obligation on
Subtenant's part to be performed under any provision of this
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Sublease or which arise from any negligence of Subtenant or any of its agents,
representatives, customers, employees or invitees.
8.6. Exemption of Sublandlord from Liability. Subtenant hereby agrees that
Sublandlord shall not be liable for injury to Subtenant's business or any loss
of income therefrom, or for damage to the goods, wares, merchandise or other
property of Subtenant, Subtenant's employees, representatives, agents, invitees,
customers or any other person in, on or about the Premises or Building, nor
shall Sublandlord be liable for injury to the person of Subtenant, Subtenant's
employees, representatives, agents, customers, or invitees, whether any such
damage or injury is caused by or results from fire, steam, electricity, gas,
water or rain, or from the breakage, leakage, obstruction or other defects of
pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, or from any other cause, and whether such damage or injury results
from conditions arising upon the Premises or any other cause, and whether such
damage or injury results from conditions arising upon the Premises or Building,
or from other sources or places, and regardless of whether the cause of such
injury or the means of repairing the same is inaccessible to Sublandlord or
Subtenant, unless such injury, loss of income or damage is caused by the
Sublandlord's gross negligence or intentional acts. Subtenant hereby assumes all
risk of damage to property or injury to persons in, on or about the Premises or
the Building from any cause and Subtenant hereby waives all claims in respect
thereof against Sublandlord, excepting where such damage arises out of the gross
negligence or intentional acts of Sublandlord.
ARTICLE IX.
CASUALTY; CONDEMNATION
9.1. Option to Terminate Sublease. If the Premises or any part thereof
shall be damaged or destroyed by fire or other casualty, the Sublandlord may, at
its option and subject to other applicable provisions of this Article, elect to
terminate this Sublease by giving notice to the Subtenant within ninety (90)
days after Sublandlord receives actual notice of the fire or other casualty, and
thereupon the term of this Sublease shall expire by lapse of time upon the tenth
day after such notice is given. Instead of exercising said option, Sublandlord
may elect to repair or restore the Premises to the same condition as existed
before such damage or destruction. Upon electing to
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repair or restore, Sublandlord shall proceed with reasonable dispatch to perform
the necessary work, and the Base Rent to be paid until such work is completed
shall be abated in proportion of the Premises being unusable, but Sublandlord
shall not be liable to Subtenant for any delay which arises by reason of labor
strikes, adjustments of insurance or any other cause beyond Sublandlord's
control, and in no event shall Sublandlord be liable for any loss of profits or
income. Notwithstanding the foregoing, there shall be no abatement,
apportionment or reduction in the rental obligations of Subtenant if the damage
or destruction is caused by the Subtenant or Subtenant's agents,
representatives, employees, customers or invitees except to the extent
Sublandlord is entitled to receive proceeds of insurance for such rental loss.
9.2. Obligation to Repair or Restore. If and only if all of the following
circumstances exist with respect to damage or destruction to the Premises,
Sublandlord may not elect to terminate the Sublease as provided in this Article
but rather must elect to repair or restore the Premises:
(a) There is no fault or neglect on the part of the Subtenant,
Subtenant's agents, representatives, employees, customers or invitees which
contributed to the damage or destruction;
(b) The damage or destruction to the Premises can be restored within
the period of time fully covered by Sublandlord's business interruption or
rental loss insurance (if any);
(c) The Sublandlord is fully insured for the casualty which causes the
damage or destruction and the insurance proceeds have been made available
therefor by the holder or holders of any mortgages or deeds of trust covering
the Premises;
(d) The date of the damage or destruction is greater than one year
prior to the Expiration Date of this Sublease or any renewal, modification or
extension thereof; and
(e) Less than ten percent (10%) of the rentable square feet of the
Building are so damaged or destroyed, as determined by Sublandlord, regardless
of the percentage of rentable square feet of the Premises which may be damaged
or destroyed.
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9.3 Fault of Subtenant. Sublandlord may exercise its option to repair or
restore as described in this Article even if such damage or destruction is due
to the fault or neglect of Subtenant, Subtenant's agents, representatives,
employees, customers or invitees, but in such event Sublandlord's election to
repair or restore shall be without prejudice to any other rights and remedies of
Sublandlord under this Sublease, and there shall be no apportionment or
abatement of any rent of any kind and Sublandlord shall not be liable for any
other loss to Subtenant of any nature whatsoever unless and only to the extent
such loss is covered by proceeds of insurance Sublandlord is entitled to receive
on account of the loss.
9.4 Obligations of Subtenant. Except as provided in this Article, none of
Subtenant's obligations under this Sublease shall be affected by any damage or
destruction of the Premises by any cause whatsoever. Subtenant hereby expressly
waives any and all rights it might otherwise have under any law, regulation or
statute which would act to modify the provisions of the immediately preceding
sentence.
9.5 Termination by Subtenant. In the event that the Premises shall be
damaged or destroyed by fire or other casualty not caused by the Subtenant or
Subtenant's agents, representatives, employees, customers or invitees such that
the reasonable time required for restoration exceeds six (6) months, then either
party may terminate this Sublease by giving notice to the other within thirty
(30) days after the date of the fire or other casualty or, if later, the date
Subtenant is notified that the reasonable time required for restoration exceeds
six (6) months from the date of the fire or other casualty, and upon such
termination the rental obligations of the Subtenant shall be duly apportioned as
of the date of such fire or other casualty.
9.6 Condemnation. If the Premises are taken under any public or private
power of eminent domain, or sold by Sublandlord under the threat of the exercise
of said power (all of which is herein referred to as "condemnation"), or if a
substantial portion of the parking area located on the Premises is so condemned,
or if a substantial portion of the Building is so condemned, such that it shall
no longer be reasonably economical or practical because of such condemnation for
Subtenant to continue its business in the Premises or it shall no longer be
economical or practical to restore the Premises to its present
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value or utility, this Sublease shall terminate as of the date on which the
condemning authority takes title or possession whichever occurs first. If this
Sublease is not terminated as a result of a partial condemnation, the Sublease
shall remain in full force and effect as to the portion of the Premises not so
taken, and Subtenant's rental obligations shall be reduced proportionately to
reflect the number of rentable square feet remaining in the Premises, or if a
portion of the parking area located on the Premises is condemned, Subtenant's
rental obligations shall be equitably reduced, and such rental reduction, if
any, shall take effect as of the date on which the condemning authority takes
title or possession, whichever first occurs. If repairs or restorations to that
portion of the Premises not so taken are deemed necessary by Sublandlord to
render such portion reasonably suitable for the purposes for which it was
leased, Sublandlord shall perform such work at its own cost and expense but in
no event shall Sublandlord be required to expend any amount greater than the
amount received by Sublandlord as compensation for the portion of the Premises
taken by the condemnor. Subtenant shall have the right to terminate this Lease
if the portion of the Premises not so taken is not restored to a condition
reasonably suitable for the purpose for which it was leased. All awards for the
taking of any part of the Premises or any payment made under the threat of the
exercise of power of eminent domain shall be the property of Sublandlord,
whether made as compensation for diminution of value of the leasehold or for the
taking of the fee or as severance damages. No award for any partial or entire
taking shall be apportioned, and Subtenant hereby assigns to Sublandlord any
award which may be made in such taking or condemnation, together with any and
all rights of Subtenant now or hereafter arising in or to the same or any part
thereof, except that any award or other compensation made for any taking is
subject to the rights of the first mortgagee up to the amount of its lien and of
any junior mortgagee, as may be permitted by the first mortgagee, up to the full
amount of such junior lien; provided, however, that Subtenant shall be entitled
to any award for loss of or damage to Subtenant's trade fixtures and removable
personal property and/or for the interruption of or damage to Subtenant's
business including relocation expenses.
ARTICLE X.
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ASSIGNMENT; SUBLETTING
10.1. Sublandlord's Consent Required. Subtenant shall not voluntarily or by
operation of law assign, transfer, mortgage, further sublet or otherwise
transfer or encumber all or any part of Subtenant's interest in this Sublease or
in the Premises without Sublandlord's prior written consent. Any attempted
assignment, transfer, mortgage, encumbrance or further subletting without such
consent shall be void and shall constitute a breach of the Sublease. Any
transfer of Subtenant's interest in this Sublease or in the Premises from
Subtenant by merger, consolidation or liquidation, or by any subsequent change
in the ownership of fifty percent (50%) or more of the capital stock of
Subtenant shall be deemed a prohibited assignment within the meaning of this
Section. As a condition of obtaining Sublandlord's consent, Subtenant shall
submit to Sublandlord together with its request for consent the name of the
proposed assignee or subsubtenant, the terms and provisions of the proposed
transaction, and such information as to the nature of the proposed assignee's or
subsubtenant's business and its financial responsibility and standing as
Sublandlord may reasonably require, together with the effective date of the
proposed transfer which shall be at least sixty (60) days after the date of
submission of such information to Sublandlord. Sublandlord's failure to consent
to any proposed transfer under this Section shall not be deemed unreasonably
withheld if (a) the occupancy resulting from such transfer will not be
consistent with the general character of the Building or violates any agreement
binding upon Fee Owner, Sublandlord or the Building; or (b) the proposed
occupant pursuant to the transfer does not have the financial strength and
stability to perform its rental obligations; or (c) any Mortgagee objects to the
transfer.
10.2. No Release of Subtenant. Regardless of Sublandlord's consent, no
subletting or assignment or other transfer described in this Article shall
release Subtenant of Subtenant's obligation or alter the primary liability of
Subtenant to pay the rent and to perform all other obligations to be performed
by Subtenant hereunder. Consent to one assignment, subletting or other transfer
shall not be deemed consent to any subsequent act. In the event of default by
any assignee of Subtenant or any successor of Subtenant in the performance of
any of the terms hereof, Sublandlord may proceed directly against Subtenant
without the necessity of exhausting remedies against said
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assignee or successor. Notwithstanding anything in this Sublease to the
contrary, Sublandlord shall have no obligation to grant consent to any transfer
as defined in this Article if Subtenant is in default under this Sublease at the
time the request for consent is made or at any time thereafter and which has not
been cured as of the effective date of the transfer. In the event that Subtenant
proposes to assign this Sublease or to sublet all of the Premises for the
remaining term of this Sublease, Sublandlord shall have the right, exercisable
by notice in writing after receipt of the request by Subtenant, to terminate
this Sublease upon execution of an agreement between Sublandlord and the
proposed assignee or subtenant, provided that Sublandlord shall not have any
such termination right if (i) Subtenant withdraws such request within ten (10)
days of being notified by Sublandlord that it has elected to exercise said
termination right, or (ii) the proposed assignee or subtenant is a parent,
subsidiary or affiliate of Subtenant or the proposed assignee or Subtenant
acquires substantially all of the assets of Subtenant.
10.3. Attorneys' Fees and Administrative Fees. In the event Subtenant shall
request the consent of Sublandlord to any assignment, subletting or transfer or
if Subtenant shall request the consent of Sublandlord for any other act which
Subtenant proposes to do under any other provision of this Sublease, then
Subtenant shall pay Sublandlord's reasonable attorneys' fees incurred in
connection with the consideration or evaluation of such request provided that
such request is granted. In addition thereto, in the event that Sublandlord
shall consent to a sublease, assignment or transfer, Subtenant shall pay
Sublandlord administrative fees of Two Hundred Dollars ($200) incurred in
connection with giving such consent.
10.4. Right to Collect Rent. The acceptance of rent by Sublandlord from any
person other than Subtenant shall not be deemed to be a waiver by Sublandlord of
any provision of this Sublease. If the Premises are sublet or occupied by anyone
other than Subtenant and Subtenant is in default hereunder, or this Sublease is
assigned by Subtenant, then, in any such event, Sublandlord may collect rent
from the assignee, subtenant or occupant and apply the net amount collected to
the rent reserved in this Sublease, but no such collection shall be deemed a
waiver of the covenant in this Sublease against assignment and subletting or the
acceptance of such assignee, subtenant or
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occupant as tenant, or a release of Subtenant from further performance of the
covenants contained in this Sublease.
ARTICLE XI.
DEFAULT; REMEDIES
11.1. Defaults. The occurrence of any one or more of the following events
shall constitute a default and breach of this Sublease by Subtenant:
(a) The vacating or abandonment of the Premises by Subtenant; or
(b) The failure by Subtenant to pay any Monthly Installment of Base
Rent, any Additional Rent or any other payment required to be made by Subtenant
hereunder, as and when due, where such failure shall continue for a period of
ten (10) days after notice to Subtenant but no notice shall be required if
notice of non-payment has been given within the twelve-month period preceding
the default; or
(c) The failure by Subtenant to observe or perform any of the
covenants, conditions or provisions of this Sublease to be observed or performed
by Subtenant, other than described in paragraph (b) above, where such failure
shall continue for a period of twenty (20) days after written notice thereof
from Sublandlord to Subtenant; provided, however, that if the nature of
Subtenant's default as determined by Sublandlord is such that more than twenty
(20) days are reasonably required for its cure, then Subtenant shall not be
deemed to be in default if Subtenant commences such cure as soon as possible
within said twenty (20) day period and thereafter diligently prosecutes such
cure to completion, and in any case completes said cure within sixty (60) days
after the aforesaid written notice; or
(d) i) The insolvency of the Subtenant or the execution by the
Subtenant of an assignment for the benefit of creditors, or the convening by
Subtenant of a meeting of its creditors, or any class thereof, for the purposes
of effecting a moratorium upon or extension or composition of its debts; or the
failure of the Subtenant to generally pay its debts as they mature; or ii) the
filing by or against Subtenant for reorganization or arrangement under any law
relating to bankruptcy (unless in the case of a petition filed against
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Subtenant, the same is dismissed within sixty (60) days); or iii) the
appointment of a trustee or receiver to take possession of substantially all of
Subtenant's assets located at the Premises or of Subtenant's interest in this
Sublease, where possession is not restored to Subtenant within thirty (30) days;
or iv) the attachment, execution or other judicial seizure of substantially all
of Subtenant's assets located at the Premises or of Subtenant's interest in this
Sublease, where such seizure is not discharged within thirty (30) days.
11.2. Remedies on Default.
(a) In the event of any such default or breach by Subtenant,
Sublandlord shall have the right at any time thereafter, with or without notice
or demand and without limiting Sublandlord in the exercise of any right or
remedy which Sublandlord may otherwise have by reason of such default or breach,
to terminate this Sublease at its option or to re-enter and at its option to
attempt to re-let without terminating this Sublease and remove all persons and
property from the Premises, and to the extent permitted by applicable law, using
any force as may reasonably be necessary to accomplish said purposes, all
without service of notice or resort to legal process and without being deemed
guilty of trespass or forcible entry or becoming liable for any loss or damage
which may be occasioned thereby.
(b) If Subtenant shall fail to remove any effects which it is entitled
to remove from the Premises upon the termination of this Sublease, or any
extension or renewal hereof, or upon a re-entry by Sublandlord for any cause
whatsoever, or upon Subtenant's ceasing to possess the Premises for any reason,
the Sublandlord, at its option, may remove the same and store or dispose of the
said effects without liability for loss or damage thereto, and Subtenant agrees
to pay to Sublandlord on demand any and all reasonable expenses incurred in such
removal, including Court costs, attorneys' fees, storage and insurance charges
on such effects for any length of time the same shall be in Sublandlord's
possession; or the Sublandlord, at its option, without notice, may sell such
effects, or any of them, at private or public sale and without legal process,
for such price or consideration as the Sublandlord may obtain, and apply the
proceeds of such sale upon any amounts due under this Sublease from the
Subtenant to the Sublandlord, and upon the expenses incidental to the removing,
cleaning the Premises, selling said
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effects, and any other expense, rendering the surplus, if any, to the Subtenant;
provided, however, in the event the proceeds of such sale or sales are
insufficient to reimburse the Sublandlord, Subtenant shall pay such deficiency
upon demand. Subtenant acknowledges and agrees that any such disposition of
Subtenant's property in the above-described manner by the Sublandlord shall be
deemed to be commercially reasonable and that no bailment shall be created by
Sublandlord's exercise of any of its rights under this subsection (b).
(c) Should Sublandlord elect to re-enter, as herein provided, or
should it take possession pursuant to legal proceedings, or pursuant to any
notice provided for by law, it may make such alterations, additions,
improvements and repairs as may be necessary in order to re-let the Premises,
and may but need not re-let the Premises or any part thereof for such term or
terms (which may be for a term extending beyond the Term of this Sublease) and
at such rental or rentals and upon such other terms and conditions as
Sublandlord may determine to be advisable; upon each such re-letting all rentals
received by the Sublandlord shall be applied first to the payment of any costs
and expenses of such re-letting, including brokerage fees and attorneys' fees
and the cost of such alterations, additions, improvements and repairs; second,
to the payment of Additional Rent due hereunder; third, to Base Rent due and
unpaid hereunder, and the residue, if any, shall be held by Sublandlord and
applied in payment of future rent as the same may become due and payable
hereunder provided that Subtenant shall have no right to claim any interest in
all or any portion of said residue; and if the rent and other charges paid or to
be paid to Sublandlord by any new tenant pursuant to any re-letting exceed the
monetary obligations of Subtenant, Subtenant shall have no right to claim any
interest in all or any portion of said excess. If such rental received from such
re-letting during any month be less than that to be paid during the month by
Subtenant hereunder, Subtenant shall pay any such deficiency to Sublandlord, and
such deficiency shall be calculated and paid monthly on the date on which the
rent would have been payable hereunder if possession had not been retaken.
Sublandlord shall in no event be liable in any way whatsoever for failure to
re-let the Premises for any reason (other than failure to make reasonable
efforts to re-let) or in the event the Premises are re-let, for failure to
collect the rent thereof under such re-letting. No such re-entry or taking
possession of the Premises by Sublandlord, nor any acts pursuant thereto, shall
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be construed as an election on its part to terminate this Sublease unless a
written notice of such termination be given to Subtenant by Sublandlord. No
notice from Sublandlord under this Sublease or under any applicable forcible
entry and detainer or eviction statute or similar law shall constitute an
election by Sublandlord to terminate this Sublease unless such notice
specifically so states. Notwithstanding any such re-letting without termination,
Sublandlord may at any time thereafter elect to terminate this Sublease for such
previous breach.
(d) Should Sublandlord at any time terminate this Sublease for any
default or breach, in addition to any other remedies it may have, it may recover
from Subtenant all damages it may incur by reason of such default or breach,
including the cost of recovering the Premises, reasonable attorneys' fees, and
including the worth at the time of such termination of the excess, if any, of
the amount of rent and such other charges as are required to be paid by
Subtenant under the terms of this Sublease for the remainder of the Term over
the then reasonable rental value of the Premises for the remainder of the Term,
all of which amounts shall be immediately due and payable from Subtenant to
Sublandlord; provided, however, that if the then reasonable rental value of the
Premises exceeds the value of the rent and other charges required to be paid by
Subtenant under this Sublease as aforesaid, Subtenant shall have no right to
claim any interest in all or any portion of such excess. In determining the rent
which would be payable by Subtenant hereunder, subsequent to default, the annual
rent for each year of the unexpired Term shall be equal to the average annual
Base Rent and Additional Rent paid or payable by Subtenant from the Commencement
Date of this Sublease to the time of default, or during the preceding three (3)
full calendar years, whichever is shorter; and
(e) Each of the remedies set forth hereinabove in this Section shall
not be exclusive, but rather shall be considered cumulative with any other legal
or equitable remedy now or hereafter available to Sublandlord under the laws or
judicial decisions of the Commonwealth of Pennsylvania. To the extent such
waiver is permitted by law, the parties waive trial by jury in any action or
proceeding brought in connection with this Sublease. Suit or suits for the
recovery of the amount of damages set forth hereinabove may be brought by
Sublandlord, from time to time, at Sublandlord's election, and nothing herein
shall
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be deemed to require Sublandlord to await the date whereon this Sublease or the
Term hereof would have expired had there been no event of default. Nothing
contained in this Sublease shall limit or prejudice the right of Sublandlord to
prove and obtain as liquidated damages in any bankruptcy, insolvency,
receivership, reorganization or dissolution proceeding, an amount equal to the
maximum allowed by any statute or rule of law governing such proceeding and in
effect at the time when such damages are to be proved, whether or not such
amount be greater, equal to or less than the amounts recoverable, either as
damages or rent, referred to in any of the preceding provisions of this Section.
11.3. Sublandlord's Default. Sublandlord shall not be in default unless
Sublandlord fails to perform obligations required of Sublandlord within thirty
(30) days after written notice by Subtenant to Sublandlord and to the holder of
any first mortgage or deed of trust covering the Premises, specifying the manner
in which Sublandlord has failed to perform such obligation; provided however,
that if the nature of Sublandlord's obligation is such that more than thirty
(30) days are required for performance as determined by Sublandlord, then
Sublandlord shall not be in default if Sublandlord commences performance within
such thirty day period and thereafter diligently prosecutes the same to
completion; provided further that Sublandlord's obligation to perform any act
under this Sublease shall be excused for any period of time during which
Sublandlord is prevented from performing because of any circumstance beyond
Sublandlord's control. Subtenant's remedies upon Sublandlord's default are
further limited as elsewhere provided in this Sublease.
11.4. Late Charge. Subtenant hereby acknowledges that late payment by
Subtenant to Sublandlord of rent and other sums due hereunder will cause
Sublandlord to incur costs not contemplated by this Sublease, the exact amount
of which will be extremely difficult to ascertain. Such costs include, but are
not limited to, processing and accounting charges and late charges which may be
imposed on Sublandlord by the terms of any mortgage or trust deed covering the
Premises. Accordingly, if any Monthly Installment of Base Rent, any Additional
Rent or any other sum due from Subtenant shall not be received by Sublandlord or
Sublandlord's designee within ten (10) days after such amount is due, then
Subtenant shall immediately pay to Sublandlord a late charge equal to five
percent (5%) of such overdue amount.
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The parties hereby agree that such late charge represents a fair and reasonable
estimate of the cost Sublandlord will incur by reason of late payment by
Subtenant and is in addition to interest due under applicable provisions of this
Sublease. Acceptance of such late charge by Sublandlord shall in no event
constitute a waiver of Subtenant's default with respect to such overdue amount,
or prevent Sublandlord from exercising any of the other rights and remedies
granted hereunder.
11.5. Interest on Past Due Obligations; Certified Funds. Except as may
expressly be provided in this Sublease to the contrary, any amount due to
Sublandlord not paid when due shall bear interest at the rate of two percent
(2%) per annum greater than the prime rate of Corestates Bank, N.A. as the same
may fluctuate from and after the date on which the payment was first due through
the date on which the payment is paid in full, provided, however, that the
payment of such interest shall in no event exceed the highest rate allowed under
applicable law. Payment of such interest shall not excuse or cure any default by
Subtenant under this Sublease. In the event that either Subtenant is more than
ten (10) days late in making any payment due under the Sublease, or any payment
from Subtenant to Sublandlord does not clear the bank or is returned for
insufficient funds, and either such condition occurs on two or more occasions
during the preceding twelve-month period, or each occurs once during the
preceding twelve-month period, Sublandlord shall have the right at any time
thereafter to require that all succeeding monthly installments of Base Rent and
all succeeding payments of Additional Rent be paid to the Sublandlord in
certified funds drawn on a bank located in the metropolitan area in which the
Premises are located. Said right may be exercised by Sublandlord by giving
notice of such requirements to Subtenant, but the giving of such notice and the
exercise of this right by Sublandlord shall not be construed to be a waiver of
any default by Subtenant or any other right which Sublandlord may exercise under
this Sublease.
11.6. Cumulative Remedies. No remedy or election by Sublandlord hereunder
shall be deemed exclusive, but shall wherever possible be cumulative with all
other remedies at law or in equity to which Sublandlord may be entitled.
11.7. Attorneys' Fees; Court Costs. If Sublandlord utilizes the services of
an attorney to enforce any of its rights
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under this Sublease following a default or breach, whether or not it results in
the bringing of an action, Subtenant shall immediately pay to Sublandlord upon
demand therefor the amount of such reasonable attorneys' fees and court costs.
ARTICLE XII.
QUIET ENJOYMENT; MORTGAGEE'S RIGHTS
12.1. Quiet Possession. Subject to other provisions of this Article, upon
Subtenant's paying the sums due hereunder and observing and performing all of
the covenants, conditions and provisions on Subtenant's part to be observed and
performed under this Sublease, Subtenant shall have quiet possession of the
Premises for the entire Term hereof subject to all of the provisions of this
Sublease.
12.2 Subordination. This Sublease and the rights of Subtenant hereunder
shall be and are hereby made subject and subordinate to the provisions of any
mortgage or deed of trust affecting the Premises, and to each advance made or
hereafter to be made under the same, and to all renewals, modifications,
consolidations and extensions thereof and all substitutions therefor. This
Section shall be self-operative and no further instrument of subordination shall
be required provided, however, that Subtenant receives from the mortgagee
requesting subordination a Non-Disturbance Agreement substantially in the form
of Exhibit "C". However, in confirmation of the provisions of this Section,
Subtenant shall execute and deliver promptly any certification or instrument
that Sublandlord or any mortgagee may request, and failing to do so within ten
(10) days after written demand, Subtenant does hereby make, constitute and
irrevocably appoint Sublandlord as Subtenant's attorney-in-fact in Subtenant's
name, place and stead, to do so, and/or Sublandlord may declare this Sublease to
be in default. If any mortgagee or ground lessor shall elect to have this
Sublease prior to the lien of its mortgage, deed of trust or ground lease, and
shall give written notice thereof to Subtenant, this Sublease shall be deemed
prior to such mortgage, deed of trust or ground lease, whether this Sublease is
dated prior or subsequent to the date of said mortgage, deed of trust or ground
lease or the date of recording thereof. Subtenant shall and does hereby agree to
attorn to any mortgagee or successor in title and to recognize such mortgagee or
successor as its Sublandlord in the event any such person or entity succeeds to
the interest of Sublandlord.
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Notwithstanding any other provision of this Sublease, in the event that any
mortgagee or its respective successor in title shall succeed to the interest or
Sublandlord hereunder, the liability of such mortgagee or successor shall exist
only so long as it is the owner of the Building, or any interest therein, or is
the tenant under said ground lease.
12.3 Mortgagee's Consent to Amendments. No assignment of this Sublease and
no agreement to make or accept any surrender, termination or cancellation of
this Sublease and no agreement to modify so as to reduce the rent, change the
term, or otherwise materially change the rights of Sublandlord under this
Sublease, or to relieve Subtenant of any obligation or liability under this
Sublease, shall be enforceable against Sublandlord unless consented to by
Sublandlord's mortgagees of record.
12.4 Mortgagee's Right to Cure. No act or failure to act on the part of
Sublandlord which would entitle Subtenant under the terms of this Sublease, or
by law, to be relieved of Subtenant's obligations hereunder or to terminate this
Sublease, shall result in a release or termination of such obligations or
termination of this Sublease unless (a) Subtenant shall have first given written
notice of Sublandlord's act of failure to act to Sublandlord's mortgagees of
record, if any, specifying the act or failure to act on the part of Sublandlord
which could or would give basis to Subtenant's rights; and (b) such mortgagees,
after receipt of such notice, have failed or refused to correct or cure the
condition complained of within a reasonable time thereafter, provided that
nothing contained in this Section shall be deemed to impose any obligation on
any such mortgagees to correct or cure any condition. As used herein, a
"reasonable time" includes a reasonable time to obtain title to the mortgaged
premises if the mortgagee elects to do so and a reasonable time to correct or
cure the condition if such condition is determined to exist, but in no event
less than 120 days from the date of the mortgagees' receipt of the above
described notice.
ARTICLE XIII.
GENERAL PROVISIONS
13.1. Notices. Any notices under this Sublease shall be in writing and
shall be deemed to have been given (a) when personally delivered; (b) on the
next day after it is received by a reliable overnight commercial courier
(charges prepaid); or (c)
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on the third day after it is deposited in any depository regularly maintained by
the United States postal service, postage prepaid, certified or registered mail,
return receipt requested; or (d) on the day transmitted by telecopy or other
means of electronic transmission, if confirmed promptly by any of the methods
specified in clauses (a), (b) or (c) of this sentence and addressed to
Sublandlord at its address for notices set forth in Section 1.11 and to
Subtenant at the Premises in accordance with Section 1.12. Either Sublandlord or
Subtenant may change its addresses or addresses for purposes of this Section by
giving ten (10) days' prior notice according to this Section.
13.2. Estoppel Certificate
(a) Subtenant shall at any time upon not less than ten (10) days'
prior written notice from Sublandlord, execute, acknowledge and deliver to
Sublandlord a statement in writing: i) certifying that this Sublease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification, identifying the instruments of modification and certifying
that this Sublease, as so modified, is in full force and effect), and the date
to which the Base Rent, Additional Rent and other charges are paid in advance,
if any, and ii) acknowledging that there are not, to Subtenant's knowledge, any
uncured defaults on the part of Sublandlord hereunder, or specifying such
defaults, if any, which are claimed. Any such statement may be conclusively
relied upon by any prospective purchaser, encumbrancer or other transferee of
the Premises.
(b) Subtenant's failure to deliver such statement within such time
shall be conclusive upon Subtenant: i) that this Sublease is in full force and
effect, without modification except as may be represented by Sublandlord, ii)
that there are no uncured defaults in Sublandlord's performance, and iii) that
no rent has been paid more than thirty (30) days in advance.
(c) If Sublandlord desires to finance or refinance the Premises or the
Building, or any part thereof, Subtenant hereby agrees to deliver to Sublandlord
and/or to any lender designated by Sublandlord such financial records of
Subtenant as may be reasonably required by such lender. Such statements may
include but not be limited to the past three (3) years' financial statements of
Subtenant. All such financial statements shall be
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received by Sublandlord in confidence and shall be used only for the purposes
herein set forth.
13.3. Sublandlord's Interest and Liability. The term "Sublandlord" as used
herein shall mean only the owner or owners at the time in question of the fee
title or a tenant's interest in a ground lease of the real property on which the
improvements comprising the Building are situated. In the event of any transfer
of such title or interest, Sublandlord herein named (and in case of any
subsequent transfers the then grantor), shall be relieved from and after the
date of such transfer of all liability as respects Sublandlord's obligations
thereafter to be performed, provided that any funds in the hands of Sublandlord
or the then grantor at the time of such transfer in which Subtenant has an
interest shall be delivered to the grantee and the grantee acknowledges in
writing receipt of such funds and agrees to be bound as Sublandlord under this
Sublease. The obligations contained in this Sublease to be performed by
Sublandlord shall, except as aforesaid, be binding on Sublandlord's successors
and assigns only during their respective periods of ownership. Anything to the
contrary elsewhere in this Sublease notwithstanding, Subtenant shall look solely
to the estate and property of the Sublandlord in the Building for the
satisfaction of the Subtenant's remedies for the collection of a judgment (or
other judicial process) requiring the payment of money by the Sublandlord in the
event of any default or breach by the Sublandlord with respect to any of the
terms, covenants and conditions of the Sublease to be observed and/or performed
by the Sublandlord, and no other property or assets of the Sublandlord shall be
subject to levy, execution or other enforcement procedure for the satisfaction
of the Subtenant's remedies.
13.4. Severability. The invalidity of any provision of this Sublease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
13.5. Time of The Essence. Time is of the essence in the performance by
Subtenant of its obligations hereunder.
13.6. Captions. Any captions contained in this Sublease are not a part
hereof, are for convenience only, and are not to be given any substantive
meaning in construing this Sublease.
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13.7. Entire Agreement. This Sublease contains the entire agreement and
understanding among the parties hereto. There are no oral understandings, terms,
or conditions, and neither party has relied upon any representations, express or
implied, not contained in this Sublease. All prior understandings, terms, or
conditions are deemed merged in this Sublease. No modification of this Sublease
shall be binding unless such modification shall be in writing and signed by the
parties hereto. Subtenant acknowledges that it has not been induced to enter
into this Sublease by any promises or representations not expressly set forth in
this Sublease, and if any such representations were made prior to the execution
of this Sublease, Subtenant acknowledges that it has not relied on the same, and
that Sublandlord shall have no liability with respect to any such
representations.
13.8. Waivers. No failure by either party to insist upon the strict
performance of any agreement, term, covenant or condition hereof or to exercise
any right or remedy consequent upon a breach thereof, and no acceptance of full
or partial rent or the continuance of any such breach, shall constitute a waiver
of any such breach of such agreement, term, covenant or condition or a
relinquishment of the right to exercise such right or remedy. No agreement,
term, covenant or condition hereof to be performed or complied with by either
party, and no breach thereof, shall be waived, altered or modified except by a
written instrument executed by the other party. No waiver of any breach shall
affect or alter this Sublease, but each and every agreement, term, covenant or
condition hereof shall continue in full force and effect with respect to any
other then existing or subsequent breach thereof. Notwithstanding any
termination of this Sublease, the same shall continue in force and effect as to
any provisions of the Sublease, including remedies, which require or permit
observance or performance of Sublandlord or Subtenant subsequent to termination.
13.9. Recording. After the Commencement Date of this Sublease, Subtenant
may record a memorandum of this Sublease provided that Subtenant deposits with
Duane, Morris & Heckscher, as escrow agent, a duly executed and acknowledged
Release of Memorandum of Sublease to be recorded upon the expiration or earlier
termination of this Sublease.
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13.10. Determinations. Whenever in this Sublease the Sublandlord is to make
any determination or decision, the Sublandlord shall make its determination or
decision in the exercise of its reasonable discretion and judgment; however, any
such determination or decision shall not bind the Sublandlord if it has not been
confirmed in writing. Whenever in this Sublease consent or approval of
Sublandlord or Subtenant is required or requested, such consent or approval
shall not be unreasonably withheld; provided, however, that Sublandlord shall
not be in default of this provision if Sublandlord must obtain the consent or
approval of a Mortgagee before giving its consent under this Sublease and such
Mortgagee refuses to give its consent or approval.
13.11. Covenants and Conditions. Each provision of this Sublease
performable by Subtenant shall be deemed both a covenant and a condition.
13.12. Binding Effect; Choice of Law. Subject to any provisions hereof
restricting assignment, subletting or transfer by Subtenant and other provisions
of this Sublease limiting the liability of Sublandlord, this Sublease shall bind
the parties, their personal representatives, heirs, successors and assigns. This
Sublease shall be governed by the laws of the Commonwealth of Pennsylvania.
13.13. Sublandlord's Access. Sublandlord and Sublandlord's agents,
representatives and designees shall have the right after notice (except in the
case of an emergency) during normal business hours to enter the Premises as
reasonably necessary or desirable, if required or permitted by the terms of this
Sublease to Sublandlord for the purpose of inspecting the same, showing the same
to prospective purchasers, tenants, lenders or other transferees, making such
alterations, repairs, improvements or additions to the Premises or to the
Building as Sublandlord may deem necessary or desirable, or for any other
reasonable purpose as Sublandlord may determine. Sublandlord may at any time
during the last six (6) months of the term of this Sublease place in, on or
about the Premises any "For Sale", or "For Sublease" or similar signs, all
without rebate of rent or liability to Subtenant.
13.14. Merger. The voluntary or other surrender of this Sublease by
Subtenant, or a mutual cancellation thereof, shall
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not work a merger, and shall, at the option of the Sublandlord, terminate all or
any existing subtenancies or may, at the option of Sublandlord, operate as an
assignment to Sublandlord of any or all of such subtenancies.
13.15. Authorization. If Subtenant is a corporation, each individual
executing this Sublease represents and warrants that he is duly authorized to
execute this Sublease on behalf of the corporation in accordance with a duly
adopted resolution of the Board of Directors of said corporation or in
accordance with the Bylaws of said corporation, and that this Sublease is
binding upon said corporation in accordance with its terms.
13.16. Signs. Subtenant shall not install, paint, display, inscribe, place
or affix, or otherwise attach, any sign (except reserved parking signs),
fixture, advertisement, notice, lettering or direction on any part of the
outside of the Building or in the interior or other portion of the Building
without obtaining the prior written consent of the Sublandlord which consent
shall not be unreasonably withheld. Subtenant shall have the right to affix to
the Building or on a sign near the Building the name "Suburban Cable", provided
that Subtenant obtains all necessary zoning and other governmental permits at
Subtenant's expense and provided, further, that the sign does not violate any
restrictions of record pertaining to the Premises. All signs must be removed
from the Premises upon the expiration or earlier termination of this Sublease
and all damage to the Premises arising from the placement or removal of signs by
or on behalf of Subtenant must be repaired.
13.17. Brokers. Sublandlord acknowledges that it was represented by
Jackson-Cross Company (the "Listing Broker") in connection with this transaction
and is solely responsible for payment of any commission due the Listing Broker
on account of this Sublease, a renewal of this Sublease or the sale of the
Premises to Subtenant pursuant to the Purchase Option under the terms of the
Exclusive Subleasing Agent Agreement dated March 12, 1996 between Sublandlord
and the Listing Broker. Subtenant acknowledges that it was represented by
Cushman Wakefield of Pennsylvania (the "Co-Operating Broker") in connection with
this transaction. It is the responsibility of the Listing Broker (and not
Sublandlord or Subtenant) to pay to the Co-Operating Broker one-half of any
commission paid to Listing Broker if, as and when received in connection with
the transactions contemplated by this
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Sublease by separate agreement between the Co-Operating Broker and the Listing
Broker. Subtenant and Sublandlord agree to indemnify the other party from claims
for commission from any other brokers arising out of the execution of this
Sublease as a result of the acts of the indemnifying party.
13.18. Relationship of Parties. Nothing contained in this Sublease shall be
construed to create the relationship of principal and agent, partnership, joint
venture or any other relationship between the parties hereto other than the
relationship of Sublandlord and Subtenant.
13.19. Review of Counsel. Both Sublandlord and Subtenant have been
represented by separate counsel in connection with this transaction. This
Sublease is the product of negotiation on the part of both Sublandlord and
Subtenant and, in the event of any ambiguity, no presumption shall be made as to
its interpretation in favor of either party.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, and intending to be legally bound hereby, Sublandlord
and Subtenant have executed this Sublease as of the date of the Sublease first
written above.
SUBURBAN CABLE TV CO. INC. SURGICAL LASER TECHNOLOGIES, INC.
By: /s/ Harry F. Brooks By: /s/ Michael R. Stewart
---------------------- ----------------------------
Title: Vice President Title: Vice President, Finance
------------------- -------------------------
Date: 3/11/96 Date: 3/14/96
-------------------- --------------------------
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CONSENT TO SUBLEASE
The undersigned, SLT Properties, Inc., hereby consents to the provisions of
the Sublease between Surgical Laser Technologies, Inc. as sublandlord
("Sublandlord") and Suburban Cable TV Co. Inc. as subtenant with respect to
property located at 200 Cresson Boulevard, Upper Providence Township, Montgomery
County, Pennsylvania. The undersigned hereby agrees to be bound by such Sublease
in the same manner and to the same extent as Sublandlord is bound, including,
without limitation, the provisions of Sections 2.3 and 12.1 (regardless of
whether Sublandlord is in default under, or the expiration or termination of the
lease between the undersigned as landlord and Sublandlord as tenant).
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
undersigned has executed this Consent as of the day of March, l996.
SLT PROPERTIES, INC.
By: /s/ Michael R. Stewart
----------------------------
Title: Vice President
-------------------------
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<PAGE>
Exhibit A
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<PAGE>
ATTACHED TO AND FORMING A PART OF REPORT OF TITLE
NO. D017114CN
================================================================================
DESCRIPTION and RECITAL
ALL THAT CERTAIN tract of land, Situate in the Township of Upper Providence,
County of Montgomery, Commonwealth of Pennsylvania, described according to an
ALTA Land Survey Plan prepared for Surgical Laser Technologies, Inc., by Yerkes
Associates, 101 Garden Drive, Box 100, Bryn Mawr, PA. 1901 dated May 30, 1991
and revised 7/22/91 as follows to wit:
BEGINNING at a point in the Title Line of Mill Road, said point being located
North 06 degrees 37 minutes 54 seconds West 509.00 feet from the intersection of
said Title Line with the centerline of Cresson Boulevard (50 feet wide); thence
extending along said Title Line of Mill Road, North 06 degrees 37 minutes 54
seconds West 394.00 feet to a point in line of lands of Burl L. and Geraldine
Collins; thence extending along said lands, the following two (2) courses and
distances: (1) North 73 degrees 16 minutes 45 seconds East 216.79 feet to a
point (2) North 06 degrees 37 minutes 55 seconds West 135.95 feet to a point in
the Southeasterly Title Line of Egypt Road, S.R. 46062-2; thence extending along
said Title Line, North 80 degrees 10 minutes 00 seconds East 68.97 feet to a
point in the centerline of Cresson Boulevard; thence extending along said
centerline, the following three (3) dimensions: (1) South 39 degrees 00 minutes
00 seconds East 146.56 feet to a point of curvature (2) extending along the arc
of a circle curving to the right, having a radious of 225.00 feet, the arc
distance of 131.55 feet to a point of tangency (3) crossing a 25 feet wide storm
easement South 05 degrees 30 minutes 00 seconds East 323.16 feet to a point in
line of Lot #3; thence extending along said Lot, South 83 degrees 22 minutes 06
seconds West 389.29 feet to the point and place of beginning.
CONTAINING 4.147 acres of land more or less.
BEING Lot 2 as shown on the above mentioned plan.
TOGETHER with the free and uninterrupted rights, in common with others, of (1)
access, ingress and egress over Cresson Boulevard to Egypt and Mill Roads, (2)
drainage, sewer and utility lines
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and their replacements and (3) parking and access over common areas pursuant to
a "Declaration of Cross Easements, Restrictions, Access and Parking Rights"
dated 8/25/1990 and recorded in Deed Book 4958 page 156 and as shown on an ALTA
Title Survey for Surgical Laser Technologies, Inc. by Yerkes
Associates, Inc. dated 5/30/1991.
ATTACHED TO AND FORMING A PART OF REPORT OF TITLE
NO. D017114CN
================================================================================
BEING ASSESSMENT PARCEL NUMBER 61-00-01208-14-4.
BEING the same premises which Oaks Associates, Pennsylvania Limited Partnership
by Deed dated September 14, 1991 and recorded in Montgomery County, in Deed Book
4958 page 199 conveyed unto Montgomery County Industrial Development
Corporation, in fee..
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<PAGE>
Exhibit B
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<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement") dated _______, ____ is by and
between SLT PROPERTIES, INC. (the "Seller") and SUBURBAN CABLE TV CO. INC. (the
"Buyer").
BACKGROUND
A. Buyer is the sublessee of certain Premises (hereafter defined) under a
sublease dated March 21, 1996 (the "Sublease") between Buyer, as Subtenant, and
Surgical Laser Technologies, Inc., as Sublandlord ("Sublandlord").
B. Sublandlord is the lessee of the Premises under a certain lease (the
"Lease") dated September 12, 1991 with Seller.
C. Seller holds equitable title to the Premises under a certain installment
sale agreement with Montgomery County Industrial Development Corporation
("MCIDC"). The Premises is subject to certain notes, mortgages and other
documents more fully described in Exhibit "A" attached hereto and incorporated
herein (collectively, the "Existing Mortgage Documents").
D. Buyer has exercised the Purchase Option described in Section 2.3 of the
Sublease and has executed and delivered to Seller this Agreement of Sale, the
form of which has been incorporated into the Sublease as Exhibit "B" thereto.
TERMS AND CONDITIONS
1. Premises. The Premises consists of all that certain parcel of land
identified as 200 Cresson Blvd., Oaks, Upper Providence Township, Montgomery
County, Pennsylvania together with all buildings thereon and all easements
appurtenant thereto.
2. Purchase Price. The total purchase price for the Premises (the "Purchase
Price") shall be FOUR MILLION SEVEN HUNDRED FIFTY THOUSAND ($4,750,000.00)
DOLLARS which shall be paid by Buyer to Seller by either (A) wire transfer of
immediately available funds on the Closing Date if the condition described in
Paragraph 4(a) is satisfied as of the Closing Date; or (B) if
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<PAGE>
the condition described in Paragraph 4(b) is satisfied as of the Closing
Date, then as follows:
(a) Existing Mortgages. By Buyer's assumption of the Existing Mortgage
Documents (as modified, as of the Closing Date, pursuant to Paragraph 4(b) of
this Agreement) and acceptance of the Premises under and subject to:
i) First Mortgage. The outstanding principal balance as of the
Closing Date of the first mortgage loan (the "First Mortgage Loan") made by
American United Life Insurance Company ("AULIC") in the original principal
amount of THREE MILLION FOUR HUNDRED THOUSAND ($3,400,000.00) DOLLARS secured by
a first mortgage lien against the Premises; and
ii) Second Mortgage. The outstanding principal balance as of the
Closing Date of the second mortgage loan (the "Second Mortgage Loan") made by
Pennsylvania Industrial Development Authority ("PIDA") in the original principal
amount of TWO MILLION ($2,000,000.00) DOLLARS secured by a second mortgage lien
against the Premises; and
(b) Balance. The balance of the Purchase Price shall be paid to Seller
on the Closing Date by electronic transfer of immediately available funds to
account designated by Seller.
3. Closing. Closing (the "Closing") under this Agreement shall take place
at the offices of the title company insuring Buyer's title to the Premises, or
at such other location as the Buyer and Seller shall mutually agree upon, on a
date specified by Buyer by notice to Seller on or before the expiration of
thirty (30) days after the satisfaction of the conditions precedent to Closing
described in Paragraph 4 below, but not later than 164 days after the date of
exercise of the Purchase Option or, if later, June 14, 1999 (the "Closing
Date").
4. Conditions to Closing. Closing of the Purchase Option under this
Agreement is conditioned upon satisfaction of either Paragraph 4(a) or
Paragraph 4(b). If neither the terms of Paragraph 4(a) nor the terms of
Paragraph 4(b) are satisfied as of the Closing Date, either Buyer or Seller may
terminate this Agreement upon notice to the other:
(a) Discharge of Existing Mortgages. The Existing Mortgagees accept,
in consideration of the discharge of the
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<PAGE>
Existing Mortgages and all liability of Seller and Sublandlord under the
Existing Mortgage Documents, an amount to be mutually agreed upon by the
parties; or
(b) Assumption of Existing Mortgages. The Existing Mortgagees consent
to the transfer of the Premises to Buyer under and subject to the Existing
Mortgages under the following terms and conditions:
i) The Lease between Seller and Sublandlord and the Sublease
between Sublandlord and Buyer will both be terminated as of the Closing Date.
ii) Both Seller and Sublandlord will be released from all
personal liability under the Existing Mortgage Documents from and after the
Closing Date.
iii) The blended interest rate of the Existing Mortgages as of
the Closing Date shall not exceed a) the then-current market rate of interest
(including points) and payment terms for similar loans with similarly situated
parties ("Market Terms") or, if lower, b) the interest rate (including points)
and payment terms then obtainable by Buyer and evidenced by the written
commitment of a commercial bank or other institutional lender to Buyer setting
forth the terms of such loan ("Buyer Terms") or, if it does, the annual interest
rate payable by Buyer under the First Mortgage Loan shall have been
"bought-down" or otherwise subsidized by Seller to a rate which, when blended
with the annual rate on the Second Mortgage Loan, is equivalent to Market Terms
or, if applicable, Buyer Terms. Seller's contribution to any "buy-down" or
subsidy arrangement is limited to an amount to be mutually agreed upon by the
parties, to be paid out of the balance of the Purchase Price otherwise payable
to Seller under Paragraph 2(b).
Buyer, Seller and Sublandlord shall cooperate with each other in
seeking the approval of the Existing Mortgagees to the assumption of the
Existing Mortgages on the conditions described in this paragraph.
5. Title. Title to the Premises at the Closing shall be good and marketable
and insurable as such at regular rates by a reputable title company subject to
easements and restrictions of record as of the date of the Sublease, if the
terms of Paragraph 4(b)
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apply, the Existing Mortgage Documents, and other matters affecting title which
do not impair or preclude the use of the Premises as described in the Sublease;
easements visible upon the ground; and other matters affecting title to which
Buyer has consented in writing, not to be unreasonably withheld.
6. Brokers. The provisions of Section 13.17 of the Sublease are
incorporated into this Agreement as if set forth in full.
7. Reliance; "As-Is" Sale. Buyer has not relied, and will not purchase the
Premises in reliance, upon any representation, warranty, statement, act or
omission of Seller, Sublandlord, Broker or any agent of Seller or Sublandlord
not set forth in this Agreement. Except for such representations and warranties,
if any, as Seller has expressly made in this Agreement, Buyer is purchasing the
Premises strictly on an "as-is" basis.
8. Loss by Fire or Other Casualty. If prior to the Closing, the Premises,
or any part thereof, shall be damaged by fire or other casualty not arising from
the acts or omissions of Buyer, its agents and employees, such that the cost of
repair does not exceed twenty (20%) percent of the Purchase Price, Seller and
Buyer shall consummate this transaction without any abatement of the Purchase
Price whatsoever and, at the Closing, all of the insurance proceeds payable as a
result of such damage shall belong (and, to the extent received by Seller, shall
be paid) to Buyer or if such proceeds have not then been received by Seller,
such proceeds and all of Seller's rights thereto shall be assigned by Seller to
Buyer. If the cost of repair is more than twenty (20%) percent of the Purchase
Price and the casualty did not arise as a result of the acts or omissions of
Buyer, its agents or employees, then Buyer shall have the option to cancel this
Agreement upon notice to Seller within twenty (20) days after the date of the
casualty. Failure of Buyer to cancel shall be deemed an election to proceed to
Closing as in the first sentence of this paragraph.
9. Condemnation or Eminent Domain. If after exercise of the Purchase Option
but prior to the Closing, a notice of condemnation or eminent domain shall be
issued with respect to the Premises, Seller shall notify the Buyer and, if the
taking does not materially affect the value or utility of the Premises, Buyer
shall consummate this transaction without any abatement of the Purchase Price
whatsoever and, at the Closing, the proceeds
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<PAGE>
of any award or payment in respect of any such taking shall belong (and to the
extent received by Seller, shall be paid) to Buyer or, if such proceeds have not
then been received by Seller, such proceeds, and all of Seller's rights thereto
shall be assigned by Seller to Buyer. If the taking materially affects the value
or utility of the Premises, Buyer shall have the right to cancel this Agreement
upon notice to Seller within twenty (20) days after notification of the taking.
Failure of Buyer to cancel shall be deemed an election to proceed to Closing as
in the first sentence of this paragraph.
10. Closing Documents. At the Closing:
(a) Seller's Documents. Seller will deliver, or cause to be delivered,
to Buyer:
i) If the condition described in Paragraph 4(a) is satisfied, a
special warranty deed for the Premises; or, if the condition described in
Paragraph 4(b) is satisfied, an assignment of Seller's equitable interest
under the installment sale agreement with MCIDC, in either case in form and
substance reasonably acceptable to Buyer;
ii) an affidavit, in accordance with the Foreign Investments in
Real Property Tax Act;
iii) termination of the Lease and the Sublease; and
iv) such other documents as may be required by the provisions of
this Agreement or as may be reasonably required to effectuate the transaction
contemplated by this Agreement.
(b) Buyer's Documents. Buyer will deliver, or cause to be delivered,
to Seller
i) The Purchase Price including, if the condition described in
Paragraph 4(b) is satisfied, an assumption agreement and other documentation
reasonably required by the Existing Mortgagees to effectuate the assumption of
the Existing Mortgages;
ii) Termination of the Sublease; and
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<PAGE>
iii) such other documents as may be required by the provisions of
this Agreement or as may be reasonably required to effectuate the transaction
contemplated by this Agreement.
11. Apportionments. County, Township and School district real estate taxes
assessed against the Premises shall be apportioned between Buyer and Seller on a
per diem basis, without discount or penalty and on the basis of the fiscal year
of the authority levying same.
12. Expenses.
(a) All realty transfer taxes imposed by any governmental authority
upon the conveyance of the Premises shall be divided equally between Seller and
Buyer.
(b) Buyer shall pay for all title insurance premiums and all recording
fees for the deed and other documents to be recorded at the Closing except for
documents required to be delivered by Seller to clear exceptions to title under
this Agreement.
13. Assignability. This Agreement and the rights and obligations hereunder
shall not be assignable by either party without the written consent of the other
except that Buyer may assign its rights under this Agreement to its parent or an
affiliate of its parent or a shareholder of its parent effective only at Closing
and only in compliance with the following conditions: (a) notice is given to
Seller and the Title Company of the identity of Buyer's prospective assignee not
less than ten (10) days prior to Closing; and (b) if Closing is to occur under
the terms of Paragraph 4(b) of this Agreement, AULIC and PIDA have approved the
assumption of the Existing Mortgages by Buyer's intended assignee. In the event
of any assignment by Buyer, Buyer and its assignee shall be jointly and
severally liable for any additional tax payable as a result of the transfer in
excess of the amount which would be payable based upon the Purchase Price set
forth in this Agreement.
14. Governing Law; Successors and Assigns. This Agreement shall be governed
by the laws of the Commonwealth of Pennsylvania. This Agreement shall bind and
inure to the benefit of the parties hereto and their respective successors and
assigns.
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<PAGE>
15. Time of Essence. All times, wherever specified herein, are of the
essence of this Agreement.
16. Headings. The headings preceding the text of the Sections and
Subsections of this Agreement are inserted solely for convenience of reference
and shall not constitute a part of this Agreement, nor shall they affect the
meaning, construction or effect of this Agreement.
17. Entire Agreement; Amendments. This Agreement sets forth the entire
agreement of the parties. This Agreement may not be changed orally but only by
an agreement in writing, duly executed by or on behalf of the party against whom
enforcement of any waiver, change, modification, consent or discharge is sought.
18. Recording. This Agreement shall not be recorded in the office for the
recording of deeds or in any other office or place of public record except with
the prior written consent of Seller.
19. Tender. Formal tender of an executed deed and purchase price is hereby
waived; but nothing herein shall be deemed a waiver, concurrently with Closing
hereunder, of the obligation of Seller to execute, acknowledge and deliver a
deed for the Premises or the concurrent obligation of Buyer to pay the balance
of the Purchase Price.
20. Notices. Any notices under this Agreement shall be in writing and shall
be given in accordance with the terms of the Sublease.
21. Recovery Fund. As required by the Pennsylvania Real Estate Licensing
and Registration Act, Seller and Buyer acknowledge notice of the following: (a)
the Pennsylvania legislature has established a real estate recovery fund whose
purpose is to compensate persons who obtain a judgment because of fraud,
misrepresentation or deceit of any agent. For further information call (717)
783-3658; (b) Agent's fee and the expiration date of a listing agreement, if
any, are negotiable; and (c) the broker is agent of the Seller, not the Buyer.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
have hereunto executed this Agreement as of the date first above written.
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<PAGE>
SUBURBAN CABLE TV CO. INC. SURGICAL LASER TECHNOLOGIES, INC.
By:_______________________ By:________________________
Title:____________________ By:________________________
Date:_____________________ Date:______________________
SLT PROPERTIES, INC.
By:___________________________
Title:________________________
Date: ________________________
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<PAGE>
EXHIBIT "A" TO SLT/SUBURBAN
AGREEMENT OF SALE
A. $3,400,000 First Mortgage Loan from AULIC (all dated August 16, 1991, and
delivered September 12, 1991, unless otherwise indicated)
1. $3,400,000 Mortgage Note executed by Borrower, Guarantor and MCIDC in
favor of First Lender
2. Mortgage executed by Borrower and MCIDC in favor of First Lender
3. Guaranty Agreement executed by Guarantor
4. Assignment of Rents and Leases executed by Borrower and MCIDC
5. Tenant Agreement dated September 12, 1991, among Borrower, Guarantor
and First Lender
6. UCC-1 Financing Statements executed by Borrower and MCIDC
7. Subordination Agreement among Borrower, Guarantor, MCIDC and First
Lender
B. $2,000,000 Second Mortgage Loan from PIDA (all dated November 20, 1991,
and delivered December 2, 1991, unless otherwise indicated)
1. Amended and Restated Installment Sale Agreement dated November 25,
1991, between MCIDC and Borrower
2. Amended and Restated Installment Memorandum of Installment Sale
Agreement
3. Loan Agreement between MCIDC and PIDA
4. $2,000,000 Note executed by MCIDC in favor of PIDA
5. Open-End Mortgage executed by MCIDC in favor of PIDA
6. Consent, Subordination and Assumption Agreement among Borrower, MCIDC
and PIDA
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<PAGE>
7. Assignment of Installment Sale Agreement executed by MCIDC in favor of
PIDA
8. Assignment of Lease dated December 2, 1991, executed by Borrower in
favor of PIDA
9. Guaranty and Surety Agreement dated December 2, 1991, executed by
Guarantor
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<PAGE>
Exhibit C
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<PAGE>
NON-DISTURBANCE, SUBORDINATION AND ATTORNMENT AGREEMENT
This Agreement is made this ___ day of March, 1996 by and among AMERICAN
UNITED LIFE INSURANCE COMPANY, an Indiana corporation ("Lender"), SLT
PROPERTIES, INC., a Delaware corporation ("Owner"), SURGICAL LASER TECHNOLOGIES,
INC., a Delaware corporation ("Sublandlord"), and SUBURBAN CABLE TV CO. INC., a
Pennsylvania corporation ("Subtenant").
BACKGROUND
A. Lender is the holder of a mortgage ("Mortgage") dated August, 16, 1991
and recorded in Montgomery County, Pennsylvania in Mortgage Book ____, page
____, granted by the Owner and by Montgomery County Industrial Development
Corporation to the Lender, in the original principal amount of $3,400,000, which
Mortgage creates a mortgage lien on premises commonly known as 200 Cresson
Boulevard, Oaks, Pennsylvania ("Premises").
B. Owner and Sublandlord entered into a Lease Agreement dated August 16,
1991 ("Lease"), pursuant to which Owner leased the Premises to Sublandlord.
C. Sublandlord and Subtenant have entered into a Sublease Agreement dated
March __, 1996 ("Sublease"), pursuant to which Sublandlord has agreed to
sublease the Premises to Subtenant. The Sublease provides that Subtenant has the
right to terminate the Sublease if Lender does not execute this Agreement.
D. By the execution this Agreement, the parties wish to provide for the
non-disturbance of Subtenant's possession of the Premises and the subordination
of the Subtenant's leasehold estate to the lien of the Mortgage.
NOW, THEREFORE, for good and valuable consideration and intending to be
legally bound, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
XIV. Subtenant hereby acknowledges and agrees that its leasehold estate
created under the terms of the Sublease and all of its rights thereunder will be
subject and subordinate to the rights
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<PAGE>
and lien of the Lender under the terms of the Mortgage and any modifications,
replacements, renewals or extensions thereof.
XV. So long as Subtenant is not in default in performing its obligations
under the terms of the Sublease, the Lender agrees, for itself and its
successors and assigns, that it will not disturb or interfere with the enjoyment
by Subtenant of Subtenant's leasehold estate in the Premises, including all
rights granted by the Sublease. However, in no event shall Lender, or any
subsequent purchaser or grantee (a) be liable for any act or omission or Owner
or Sublandlord; (b) be subject to any offset or deficiency which Subtenant may
have against Owner or Sublandlord; or (c) have any obligation with respect to
any security deposited under the Sublease unless such security has been
delivered to Lender.
XVI. If the Lender succeeds to the Owner's interest as landlord, either as
a result of mortgage foreclosure proceedings or as a result of any conveyance in
lieu of mortgage foreclosure, and Sublandlord ceases to be entitled to
possession under the Lease, then Subtenant agrees that it will attorn directly
to the Lender (or in the event of a foreclosure or sale of the Premises to any
purchaser or grantee) as if the Lender were the landlord named in the Sublease;
the Lender, in turn, will accept the Subtenant's attornment and will recognize
the leasehold interest of Subtenant under the terms of the Sublease, to the end
that Subtenant may continue to peaceably and quietly have, hold and enjoy the
Premises, provided that Subtenant has then complied and continues to comply with
the terms of the Sublease.
XVII. Subtenant acknowledges that it has notice that the Lease and the
Sublease and the rent and all sums due thereunder have been assigned to the
Lender as part of the security for the note secured by the Mortgage. If the
Lender notifies Subtenant of a default under the Mortgage or note, and demands
that Subtenant pay its rent and all other sums due under the Sublease to the
Lender, Subtenant agrees that it will honor such demand and pay its rent and all
other sums due under the Sublease directly to the Lender.
XVIII. Subtenant covenants and acknowledges that except to the extent
provided in the Sublease, it has no right or
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<PAGE>
option of any nature whatsoever, whether pursuant to the Sublease or otherwise,
to purchase the Premises or any portion thereof, or any interest in the
Premises. To the extent that Subtenant has any such right or option, the same is
hereby acknowledged to be subject to and subordinate to the Mortgage. Lender
shall have no obligation, nor incur any liability, with respect to any
warranties of any nature whatsoever, whether pursuant to the Sublease or
otherwise including, without limitation, any warranties respecting use,
compliance with zoning, habitability, fitness for purpose or possession.
XIX. Anything herein or in the Sublease to the contrary notwithstanding, if
the Lender shall acquire title to the Premises, the Lender shall have no
obligation, nor incur any liability, beyond the Lender's then interest, if any,
in the Premises for the payment and discharge of any obligations imposed upon
the Lender hereunder or under the Sublease, and the Lender is hereby released or
relieved of any other obligations hereunder and under the Sublease. Subtenant
agrees that with respect to any money judgment which may be obtained or secured
by Subtenant against the Lender, Subtenant shall look solely to the estate or
interest owned by the Lender in the Premises or any portion thereof, and
Subtenant will not collect or attempt to collect any such judgment out of any
other assets of the Lender.
XX. Subtenant will neither offer nor make prepayment of rent (for a period
in excess of one month) nor further change the terms, covenants, conditions and
agreements of the Sublease in any manner without the express consent in writing
of the Lender, which consent shall not be unreasonably withheld.
XXI. The foregoing provisions shall be self-operative and effective without
the execution of any further instrument of any party hereto. However, Subtenant
agrees to execute and deliver to the Lender or to any person to whom Subtenant
herein agrees to attorn, such other instruments as either shall reasonably
request, in order to effectuate the foregoing provisions.
XXII. No modification, amendment, waiver or release of any provision of
this Agreement shall be valid or binding unless
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in writing and duly executed by the party against whom the same is
sought to be asserted.
XXIII. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Provided, however,
that in the event of the assignment or transfer of the interest of the Lender,
all obligations and liabilities of the Lender under this Agreement shall
terminate and all such obligations and liabilities shall be the responsibility
of the party to whom the Lender's interest is assigned or transferred; and
provided further that the interest of Subtenant under this Agreement may not be
assigned or transferred without the written consent of the Lender.
XXIV. This Agreement shall be construed in accordance with the laws of the
Commonwealth of Pennsylvania.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
ATTEST OR WITNESS: AMERICAN UNITED LIFE INSURANCE
COMPANY
__________________________ By:____________________________
SLT PROPERTIES, INC.
__________________________ By:____________________________
SURGICAL LASER TECHNOLOGIES,
INC.
__________________________ By:____________________________
SUBURBAN CABLE TV CO. INC.
__________________________ By:____________________________
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<PAGE>
Exhibit D
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<PAGE>
ACCORD (R) CERTIFICATE OF INSURANCE DATE (MM/DD/YY) 3/11/96
PRODUCER:
- ------------------ THIS CERTIFICATE IS ISSUED AS A MATTER OF
THE GRAHAM COMPANY INFORMATION ONLY AND CONFERS NO RIGHTS
THE GRAHAM BUILDING UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE
ONE PENN SQUARE WEST DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE
PHILADELPHIA, PA. 19102 AFFORDED BY THE POLICIES BELOW.
INSURED: COMPANIES AFFORDING COVERAGE:
- ------------------ ---------------------------------------------
SURGICAL LASER TECHNOLOGIES, INC. COMPANY A: ST. PAUL FIRE & MARINE INSURANCE
200 CRESSON BOULEVARD COMPANY
P.O. BOX 880 COMPANY B:
OAKS, PA. 19456 COMPANY C:
COMPANY D:
COVERAGES:
- ------------------
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED
TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED, NOTWITHSTANDING ANY
REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO
WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY
THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND
CONDITIONS OF SUCH POLICIES, LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
<TABLE>
<CAPTION>
POLICY POLICY
DATE EXPIRATION
CO POLICY EFFECTIVE DATE
LTR TYPE OF INSURANCE NUMBER (MM/DD/YY) (MM/DD/YY) LIMITS
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A GENERAL LIABILITY:
X COMMERCIAL GENERAL LIABILITY TEO6400229 3/1/96 3/1/97 GENERAL AGGREGATE $2,000,000
X OCCUR PRODUCTS-COMP/OP AGG $0
PERSONAL & ADV INJURY $1,000,000
EACH OCCURRENCE $1,000,000
FIRE DAMAGE (Any one fire) $1,000,000
MED EXP (Any one person) $5,000
A AUTOMOTIVE LIABILITY:
X ANY AUTO TEO6400229 3/1/96 3/1/97 COMBINED SINGLE LIMIT $1,000,000
A EXCESS LIABILITY:
X UMBRELLA FORM TEO6400229 3/1/96 3/1/97 EACH OCCURRENCE $10,000,000
AGGREGATE $10,000,000
</TABLE>
Page 82 of 135 Pages
<PAGE>
<TABLE>
<CAPTION>
POLICY POLICY
DATE EXPIRATION
CO POLICY EFFECTIVE DATE
LTR TYPE OF INSURANCE NUMBER (MM/DD/YY) (MM/DD/YY) LIMITS
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A WORKERS COMPENSATION AND
EMPLOYER'S LIABILITY: WVA6400082 3/1/96 3/1/97 EACH ACCIDENT $100,000
DISEASE-POLICY LIMIT $500,000
DISEASE-EACH EMPLOYEE $100,000
OTHER:
A PROPERTY TEO06400326 3/1/96 3/1/97 BLANKET BUILDING & PERSONAL
PROPERTY - $ 15,268,000
BLANKET BUSINESS INCOME & EXTRA
EXPENSE - $ 5,000,000
</TABLE>
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS:
- --------------------------------------------------------------------------------
FOR DISCLOSURE TO SUBURBAN TELEVISION CABLE COMPANY INC.
CANCELLATION:
- ------------------
SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION
DATE THEREOF, THE ISSUING COMPANY WILL ENDEAVOR TO MAIL 30 DAYS WRITTEN NOTICE
TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO MAIL SUCH NOTICE
SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE COMPANY, ITS AGENTS
OR REPRESENTATIVES
AUTHORIZED REPRESENTATIVE
/S/ William A. Graham IV
Page 83 of 135 Pages
<PAGE>
EXHIBIT 10.49
1
Page 84 of 135 Pages
<PAGE>
[Letterhead of Suburban Cable]
June 14, 1996
Surgical Laser Technologies, Inc.
200 Cresson Boulevard
PO Box 880
Oaks, PA 19456-0880
Attention; James R. Appleby, Jr., President
Dear Mr. Appleby
This is to confirm the agreement between Surgical Laser Technologies, Inc.
("Sublandlord") and Suburban Cable TV Co. Inc. ("Subtenant") with respect to the
Sublease Agreement dated March 21, 1996 ("Sublease"). Capitalized terms used in
this letter without definition shall have the meanings set forth in the
Sublease. The parties agree that in the event of any inconsistency or conflict
between the provisions of this letter and the provisions of the Sublease, the
provisions of this letter shall control.
1. Notwithstanding that the Commencement Date is June 15, 1996, Sublandlord
shall not be obliged to vacate the first floor of the Premises before July 15,
1996, except as provided in Section 2 of this letter with respect to the
cafeteria and except that Sublandlord shall vacate the west wing of the first
floor by July 11, 1996 and the east wing of the first floor by July 19, 1996.
2. The parties agree that notwithstanding the provisions of Section 3.2(a) of
the Sublease, Subtenant shall be permitted to gain access to and take exclusive
possession of the basement and the second floor of the Premises at any time
before or after the date of this letter. Subtenant shall be permitted to gain
access to and take nonexclusive possession of the cafeteria located on the
first floor of the premises at any time before or after the date of this letter.
Subtenant shall not have any obligation to pay for utilities of other monetary
obligations under Section 3.2(a) of the Sublease prior to the date it occupies
any portion of the second floor of the Premises. Sublandlord shall continue to
be primarily responsible for utilities or other monetary obligations
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<PAGE>
under Section 3.2(a) until it has fully vacated the Premises on or before July
15, 1996. Subtenant shall pay the rent for July, 1996 by June 30, 1996.
3. Subtenant hereby waives its right to terminate the Sublease pursuant to
Section 3.3(a) of the Sublease. In consideration of Subtenant agreeing to waive
such right, Sublandlord agrees to pay Subtenant the sum of $55,300 to reimburse
Subtenant in part for the deficiencies (other than the Code violations described
below) described in the due diligence report of Bala Consulting Engineers, Inc.
dated April 2, 1996, prepared for Subtenant ("Bala Report"), a copy of which has
been delivered to Sublandlord. Such payment shall be made not later than July 2,
1996. In addition, Sublandlord agrees to pay for the cost of curing the code
violations set forth in the Bala Report, consisting of the cost of performing
the following work, such cost is expected to be in the range of $16,500, the
aggregate of the estimates set forth in said report.
(a) increase capacity of first and second floor toilet exhaust system (page 5);
(b) separate basement toilet exhaust system from equipment room's ventilation
(page 6);
(c) replace PVC sanitary piping in return air plenum with cast iron piping
(page 8);
(d) provide outdoor fire alarm bell (page 10); and
(e) install exit discharge lights on emergency circuits (pages 12 & 14).
Subtenant shall perform the work identified above which is required to comply
with the Code. Prior to performing such work, Subtenant shall supply Sublandlord
with evidence of the cost of compliance and obtain Sublandlord's consent, which
consent shall not be unreasonably withheld or delayed.
4. Subtenant waives its right to require non-disturbance agreements from the
Pennsylvania Industrial Development Authority (PIDA) and from Montgomery County
Industrial Development Corporation (MCIDC) pursuant to Section 3.3(c) of the
Sublease. To induce Subtenant to agree to such waiver, Sublandlord hereby
represents and warrants to Subtenant that its loan agreements with PIDA and
MCIDC do not require their consent to the Sublease and that Sublandlord will
take all action required to prevent a default from occurring under its loan
documents with PIDA and MCIDC including, without limitation, making any
mandatory prepayments of loan principal. Notwithstanding the foregoing,
Subtenant will support Sublandlord's efforts to obtain non-disturbance
agreements from PIDA and MCIDC, as contemplated in Section 3.3(c) of the
Sublease.
5. Subtenant shall have the right to install a pole near the northwest corner of
the Premises to connect with a pole on the other side of Mill Road. Subtenant
shall also have the right to run conduits from the pole under the parking lot to
the building. Subtenant shall repair any damage to the parking lot caused by the
installation of the conduits.
3
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<PAGE>
If this accurately reflects your understanding of the terms which have been
agreed to, please sign and return the enclosed copy of this letter and arrange
for your related company, SLT Properties, Inc., also to sign and return a copy
of this letter.
4
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<PAGE>
Sincerely yours,
Suburban Cable TV Co., Inc.
By: /s/ Harry F. Brooks
--------------------------------------
Harry F. Brooks, Executive Vice President
Agreed to and accepted:
Surgical Laser Technologies, Inc.
By: /s/ Michael R Stewart
--------------------------------------
Title: Vice President
Date: 6/14/96
The undersigned is executing this letter to agree to be bound in the same manner
and to the same extent as Sublandlord is bound.
SLT Properties, Inc.
By: /s/ Michael R Stewart
--------------------------------------
Title: Vice President
Date: 6/14/96
5
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<PAGE>
EXHIBIT 10.50
1
Page 89 of 135 Pages
<PAGE>
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS AGREEMENT, is made this 30th day of April, 1996, by and among AMERICAN
UNITED LIFE INSURANCE COMPANY, an Indiana corporation ("Lender"), SLT
PROPERTIES, INC., a Delaware corporation ("Landlord"), SURGICAL LASER
TECHNOLOGIES, INC., a Delaware corporation ("Sublandlord"), and SUBURBAN CABLE
TV CO., INC., a Pennsylvania corporation ("Subtenant").
BACKGROUND
A. Lender is the holder of a mortgage ("Mortgage") dated August, 16, 1991
and recorded in Montgomery County, Pennsylvania in Mortgage Book 6760, page 166,
granted by the Owner and by Montgomery County Industrial Development Corporation
to the Lender, in the original principal amount of $3,400,000, which Mortgage
creates a first mortgage lien on premises commonly known as 200 Cresson
Boulevard, Oaks, Pennsylvania ("Premises").
B. Owner and Sublandlord entered into a Lease Agreement dated August 16,
1991 ("Lease"), pursuant to which Owner leased the Premises to Sublandlord.
C. Sublandlord and Subtenant have entered into a Sublease Agreement dated
March 21, 1996 ("Sublease"), pursuant to which Sublandlord has agreed to
sublease the Premises to Subtenant. The sublease provides that Subtenant has the
right to terminate the Sublease if Lender does not execute this Agreement.
D. By the execution of this Agreement, the parties wish to provide for the
non-disturbance of Subtenant's possession of the Premises and the subordination
of the Subtenant's leasehold estate to the lien of the Mortgage.
NOW, THEREFORE, in consideration of the premises and of the sum of One
Dollar ($1.00) by each party in hand paid to the other, the receipt and
sufficiency of which is hereby acknowledged, it is hereby agreed as follows:
1. The Sublease, and all rights, options, liens or charges created thereby,
is hereby made and shall be subject and subordinate to the Mortgage and the
security interest created thereby insofar as it affects the Premises and to all
renewals, modifications, consolidations, replacements and extension thereof.
Notwithstanding the foregoing, Subtenant agrees that Lender may at any time, at
its election, execute and record in the Office of the County Recorder of
Montgomery County, Pennsylvania, a notice of subordination reciting that the
Mortgage shall be superior to the Lease. From and after the recordation of such
notice of
2
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<PAGE>
subordination, the Mortgage shall be superior to the Lease and shall not be
extinguished by any foreclosure or sale thereunder.
2. Subtenant agrees that it will attorn to and recognize Lender upon breach
or default by Landlord under the Mortgage, any purchaser at a foreclosure or
other sale under the Mortgage, any transferee who acquires the Premises by deed
in lieu of foreclosure, and the successors and assigns of such purchasers, as
its landlord for the unexpired balance (and extensions, if exercised) of the
term of the Sublease, upon the same terms and conditions set forth in the
Sublease.
3. If it should become necessary to exercise remedies under the Mortgage or
if Lender shall otherwise take control of the Premises or succeed to the
interest of Landlord under the Lease, or Sublease, or if the Premises are sold
at a foreclosure or other sale under the Mortgage or under the Note secured by
the Mortgage, Lender, for itself and its successors and assigns, shall not
disturb or interfere with the enjoyment by Subtenant of Subtenant's leasehold
estate in the Premises, nor terminate the Sublease nor join Subtenant in summary
proceedings so long as Subtenant is not then currently in default under any of
the terms, covenants or conditions of the Sublease.
4. Subtenant shall have no right to appear in any foreclosure proceedings
brought under the Mortgage.
5. Subtenant agrees that it shall give Lender a copy of each notice of
default delivered to Landlord or Sublandlord with respect to any default under
the Sublease, which notice shall be delivered to Lender in hand or sent by
registered or certified mail to the address of Lender set forth in Section 7.
Subtenant further agrees that if Landlord or Sublandlord shall have failed to
cure such default within the time provided for in the Sublease (including any
applicable grace periods), then Lender shall have an additional 30 days within
which to cure such default, or, if such default cannot be cured within that
period, then such additional time as may be necessary to effect such a cure if
within such 30-day period Lender has commenced and is diligently pursuing the
remedies necessary to cure such default (including, but not limited to,
commencement of foreclosure proceedings, if necessary to effect such cure); and
Subtenant agrees that the Sublease shall not be terminated while such remedies
are being pursued. Lender shall in no event be obliged to cure any default.
6. If Lender shall succeed to the interest of Landlord under the Lease,
Lender shall not be:
(a) liable for any act or omission of any prior Landlord or Sublandlord;
(b) liable for the return of any security deposits (except
3
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<PAGE>
such as have been delivered to it);
(c) subject to any offsets or defenses which Subtenant might have against
any prior Landlord or Sublandlord;
(d) bound by an rent or additional rent which Subtenant might have paid for
more than the current month to any prior Landlord or Sublandlord;
(e) bound by any amendment or modification of the Sublease made without its
consent;
(f) bound by the consent of any prior Landlord or Sublandlord to any
assignment or sublease of Subtenant's interest in the Sublease made without also
obtaining Lender's prior written consent; or
(g) personally liable for any default under the Lease or Sublease or any
covenant on its part to be performed thereunder as landlord, it being
acknowledged that Subtenant's sole remedy in the event of such default shall be
to proceed against Lender's interest in the Premises.
7. Subtenant hereby acknowledges that the entire interest of Landlord in an
to the Lease has been assigned to Lender pursuant to the terms of the
Assignment. Subtenant further acknowledges and agrees:
(a) that the Sublease cannot be terminated by Landlord or Sublandlord
(either directly or by the exercise of any option which could lead to
termination) or modified in any of its terms, or consent be given to the release
of any party having liability thereon by Landlord or Sublandlord, without the
prior written consent of Lender, and without such consent, no rent may be
collected or accepted by Landlord or Sublandlord more than one month in advance;
(b) that it has notice that the Lease and the Sublease and the rent and all
sums due thereunder have been assigned to the Lender as part of the security for
the note secured by the Mortgage. If the Lender notifies Subtenant of a default
under the Mortgage or Note, and demands that Subtenant pay its rent and all
other sums due under the Sublease to the Lender, Subtenant agrees that it will
honor such demand and pay its rent and all other sums due under the Sublease
directly to the Lender;
(c) that any notices to be sent by Tenant to Lender shall be delivered in
hand or sent by overnight express service, registered or certified mail,
addressed to Lender at One American Square, Post Office Box 368, Indianapolis,
Indiana 46206-0368, Attention: Loan #63-20633.
4
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<PAGE>
(d) that the space occupied is acceptable in all respects;
(e) that all Subtenant space has been satisfactorily completed, except for
any work to be performed by Subtenant;
(f) that on or before June 15, 1996 the Subtenant intends to commence full
occupancy and open for business;
(g) that the Sublease is in full force and effect and the term will
commence on June 15, 1996;
(h) that the rent will commence to be payable on June 15, 1996, and all
rent to the date of this Agreement has been paid;
(i) that the rent has not been collected more than one (1) month in
advance;
(j) that there are no offsets or credits due the Subtenant;
(k) that the Subtenant has not been notified of any previous assignment of
Landlord's or Sublandlord's interest in the lease;
(l) that Subtenant will give Lender written notice of default by Landlord
and will give Lender a reasonable period of time to cure said default, including
time to complete a foreclosure of the mortgage loan anticipated herein, if
required to permit Lender to cure the default;
8. Subtenant, Sublandlord, and Landlord acknowledges that if Subtenant
exercises its rights to purchase the Premises for Four Million Seven Hundred
Fifty Thousand and No/100 Dollars ($4,750,000), pursuant to Section 2.3 of the
Sublease, that Lender is entitled to payment in full of its outstanding
indebtedness including a make whole prepayment premium.
9. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereby and their respective successors and assigns.
10. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania.
11. By execution hereof, Landlord and Sublandlord consents to the execution
hereby by Tenant and agrees that such execution is not and shall not be or cause
a default under the Lease.
5
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as a
sealed instrument as of the date and year first above written.
AMERICAN UNITED LIFE INSURANCE
COMPANY
Attest: /s/ Dorothy J. Bowman By: /s/Drew C. Boggs
--------------------- ----------------
Printed: Drew C. Boggs
Its: Vice President
SLT PROPERTIES, INC.
Attest: /s/ Davis Woodward By: /s/Michael R. Stewart
------------------ ---------------------
Printed: Michael R. Stewart
Its: Vice President
SURGICAL LASER TECHNOLOGIES,INC.
Attest: /s/ Davis Woodward By: /s/Michael R. Stewart
------------------ ---------------------
Printed: Michael R. Stewart
Its: Vice President
SUBURBAN CABLE TV CO. INC.
Attest: /s/ Delphine J. Charles By: /s/Harry F. Brooks
----------------------- ------------------
Printed: Harry F. Brooks
Its: Vice President
6
Page 94 of 135 Pages
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
On this ______ day of ______________ in the year of 199 , before me,
__________________, a Notary Public of said State, duly commissioned and sworn,
personally appeared _______________________________ _____, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person who
executed the within instrument as __________ and on behalf of AMERICAN UNITED
LIFE INSURANCE COMPANY, an Indiana corporation, the corporation therein, and
acknowledged to me that such corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/Michelle D. Brinkman
-----------------------
Notary Public
Michelle D. Brinkman
--------------------
Printed
My Commission Expires: January 25, 1998
STATE OF PENNA. )
) SS
COUNTY OF MONTGOMERY)
On this 3rd day of May in the year of 1996, before me, __________, a Notary
Public of said State, duly commissioned and sworn, personally appeared Michael
R. Stewart, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person who executed the within instrument as Vice President
of SLT Properties, Inc. and acknowledged to me that such Corporation executed
the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia A. Moriarity
-------------------------
Notary Public
Patricia A. Moriarity
---------------------
Printed
My Commission Expires: May 18, 1998
7
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<PAGE>
STATE OF PENNA. )
) SS
COUNTY OF MONTGOMERY)
On this 3rd day of May in the year of 1996, before me, __________, a Notary
Public of said State, duly commissioned and sworn, personally appeared Michael
R. Stewart, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person who executed the within instrument as Vice President
of Surgical Laser Technologies, Inc. and acknowledged to me that such
Corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia A. Moriarity
-------------------------
Notary Public
Patricia A. Moriarity
---------------------
Printed
My Commission Expires: May 18, 1998
STATE OF PENNA. )
) SS
COUNTY OF MONTGOMERY)
On this 7th day of May in the year of 1996, before me, Kimberly Ruth, a
Notary Public of said State, duly commissioned and sworn, personally appeared
Harry F. Brooks, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person who executed the within instrument as
Vice President and acknowledged to me that such Corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Kimberly Ruth
-----------------
Notary Public
Kimberly Ruth
-------------
Printed
My Commission Expires: August 11, 1997
8
Page 96 of 135 Pages
<PAGE>
EXHIBIT 10.51
1
Page 97 of 135 Pages
<PAGE>
LEASE AGREEMENT
THIS AGREEMENT OF LEASE, made as of the last date endorsed hereon
("Effective Date"), by and between NAPPEN & ASSOCIATES, a Pennsylvania limited
partnership, t/a 309 DEVELOPMENT COMPANY ("Lessor")
A N D
SURGICAL LASER TECHNOLOGIES, INC., a Delaware corporation ("Lessee").
Lessee and Lessor, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged and intending to be legally bound hereby, agree as follows:
1. Lease and Premises.
A. Lessor hereby demises and leases to Lessee and Lessee hereby hires
from Lessor that certain premises situate in Montgomery Township, Montgomery
County, Pennsylvania, known and numbered Lot No. 14, Bethlehem Pike Industrial
Center, known and numbered 147 Keystone Road, Montgomeryville, PA 18936,
together with the building ("Building") containing approximately 42,000 sq. ft.,
more or less, and improvements constructed thereon, such ground, Building and
improvements being hereinafter called the "Premises."
B. Lessee acknowledges that it has inspected the Premises and leases
the same in the condition existing on the date of execution hereof.
Notwithstanding anything set forth to the contrary, prior to the Lease
Commencement Date (as hereinafter defined), Lessor shall commence to install of
the improvements to the Premises shown on Exhibit "A" attached hereto and made
part hereof and shall substantially complete the office portion of such
improvements and a portion to be agreed upon by the parties, having not less
than 1,000 square feet, so as to permit Lessee's occupancy thereof, together
with the loading dock of the Premises, on or before July 6, 1996. The balance of
the improvements shown on Exhibit "A" shall be completed as soon as reasonably
possible thereafter, but in no case later than August 31, 1996. The improvements
shown on Exhibit "A" shall be constructed in accordance with Lessor's standard
specifications.
C. The Premises shall be occupied and used for office, warehouse and
light manufacturing, in accordance with applicable laws, ordinances and
regulations.
2
Page 98 of 135 Pages
<PAGE>
2. Term.
A. The term of this Lease shall be five (5) years, commencing July 7,
1996 ("Lease Commencement Date") and expiring at 11:59 p.m. on July 6, 2001,
unless extended, renewed or previously terminated, as hereinafter set forth.
B. If Lessee remains in possession of the Premises, including failure
to remove Alterations and Improvements (as hereinafter defined) after the
expiration of the term of this Lease, or any extension thereof, without the
written consent of Lessor, such holding over may, at Lessor's sole option,
create a tenancy from month to month with respect to the Premises on all of the
same terms and conditions as are in effect on the last day of the preceding
term, except that the monthly installment of Minimum Annual Rent shall be
increased to an amount equal to three times the monthly installment of Minimum
Annual Rent effective on the last day of the preceding term.
C. Notwithstanding anything set forth herein to the contrary, Lessee
shall have the option to cancel the term of this Lease, by notice to Lessor at
least one hundred fifty (150) days prior to the Cancellation Date, as defined
below ("Cancellation Notice") as of July 6, 1999 ("Cancellation Date"). Lessee
agrees to vacate the Premises, restore the Premises to the condition required
under the terms of this Lease, and pay Lessor a cancellation fee in the amount
of $125,000.00 ("Cancellation Fee"), on or before the Cancellation Date, in
which event, all rights and obligations of the parties accruing under the terms
and conditions of the Lease after the Cancellation Date shall be null and void,
and Minimum Annual Rent and Additional Rent shall be pro-rated as of the
Cancellation Date. In the event Lessee has not vacated the Premises, restored
the same and paid the Cancellation Fee, as aforesaid, on or before the
Cancellation Date, Lessee shall be treated as holding over under the terms and
conditions hereof. All rights and obligations of the parties accruing prior to
the later of the Cancellation Date or the end of the holdover period if Lessee
has held over, as aforesaid, shall remain in full force and effect.
D. Lessee is hereby granted a license to occupy that portion of the
Premises which is not otherwise occupied by Moore Products Company, the prior
tenant for the period commencing on the Effective Date and ending July 6, 1996,
at 11:59 p.m. ("License Period") for the purposes of erecting and constructing
the improvements to the premises described in Exhibit "B" attached hereto and
made part hereof (the "Tenant Improvements"). Lessee agrees that during the
License Period, Lessee, its employees, agents, contractors, subcontractors and
materialmen, shall not in any manner interfere with erection and construction by
Lessor, its employees, agents, contractors, subcontractors and materialmen of
the improvements designated in Exhibit "A" attached hereto and made part hereof.
During the License Period, all of the terms and
3
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<PAGE>
conditions of this Lease shall be in full force and effect, with the exception
of Article 3, infra., so that no Minimum Annual Rent will be payable during the
License Period and Article 4, infra., so that no Additional Rent will be payable
during the License Period.
3. Minimum Annual Rent.
The minimum annual rent ("Minimum Annual Rent") payable by Lessee to Lessor
shall be Two Hundred Twelve Thousand Five Hundred Twenty Dollars ($212,520.00)
per year, lawful money of the United States of America, payable in monthly
installments in advance during the said term of this Lease in sums of Seventeen
Thousand Seven Hundred Ten Dollars ($17,710.00) on the first day of each month,
rent to begin from the Lease Commencement Date, the first installment to be paid
at the time of signing this Lease. The first installment of Minimum Annual Rent
to be made during the occupancy of the Premises shall be adjusted to pro rate a
partial month of occupancy, if any, at the inception of this Lease at the rate
of Minimum Annual Rent in effect during the first Lease Year, i.e., the period
of twelve (12) calendar months following the Lease Commencement Date. If the
date of commencement of the term of this Lease shall be a day other than the
first day of the calendar month, then the term of this Lease shall be deemed
extended by the number of days between the Lease Commencement Date and the last
day of said month, so that the term of this Lease shall expire five (5) years
after such first day of the first calendar month following the Lease
Commencement Date, unless extended or previously terminated, as herein set
forth. Notwithstanding anything set forth herein to the contrary, until Lessor
shall have substantially completed the improvements set forth in Exhibit "A"
attached hereto and made part hereof, the monthly installments of Minimum Annual
Rent payable by Lessee to Lessor shall be reduced to a sum equal to Forty-Two
Cents ($0.42) multiplied by the leaseable square footage (exterior dimension) of
the Premises occupied by Lessee on July 7, 1996, and the first day of each
applicable month thereafter.
4. Additional Rent.
As Additional Rent ("Additional Rent") hereunder, Lessee shall pay
Lessor the following on or before the date such additional payment shall become
due, but not later than ten (10) days from rendition of a bill therefor (unless
otherwise set forth herein):
A. All real and tangible personal property taxes assessed or imposed
upon the Premises during the term of this Lease and any extension or renewal
term or applicable to the Premises during the term of this Lease. The amount due
hereunder on account of such taxes shall be apportioned for that part of the
first and last calendar years covered by the original, renewal or extension term
hereof as regards county and township real estate taxes and for that part of the
first and last July 1st fiscal years covered by the original, renewal or
extension term hereof regarding school
4
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<PAGE>
real estate taxes. At the time of execution of this Lease, Lessee shall pay
Lessor the pro rated portion of the township and county taxes on the Premises
for calendar year 1996. Lessor shall promptly forward to Lessee all bills
received by Lessor for such taxes and the amount of such taxes shall be paid by
Lessee to Lessor at least one (1) month before the expiration of the net payment
period for said taxes and before penalties are assessed. In the event Lessee
desires to take advantage of any early payment discount, said tax payment shall
be paid by Lessee to Lessor at least one (1) month before the expiration of any
discount period. A bill submitted by Lessor to Lessee shall be conclusive
evidence of the amount of taxes assessed or levied as well as the items taxed.
"Taxes" as utilized in this Lease shall mean all taxes, assessments
and charges of whatsoever nature levied upon or with respect to the Premises, or
any tangible personal property of Lessor or Lessee used in the maintenance and
operation thereof, or Lessor's ownership interest in either the Premises or such
personal property therein contained. "Taxes" shall include, without limitation,
all general real property taxes and general and special assessments, charges,
fees, or assessments for transit, housing, police, fire or other governmental
services or purported benefits inuring to the Premises, service payments in lieu
of taxes, and any tax, fee or excise on the act of entering into and/or
maintaining this Lease or any other lease of space on the Premises, or the use
or occupancy of the Premises or any part thereof, or on the rent payable under
any lease or in connection with the business of leasing the Premises, including,
but not limited to, business privilege taxes that have been, or are now, or
hereafter levied or assessed against Lessor by the United States of America, the
Commonwealth of Pennsylvania or any political subdivision, political
corporation, district or other political or public entity, whether quasi in
nature or otherwise, but not including any federal or state income tax levied
solely on Lessor's income generally.
Lessee at all times shall be responsible for and shall pay before
delinquency, all municipal, county, state or federal taxes assessed against any
leasehold interest or any tangible personal property of any kind, owned,
installed or used by Lessee.
Lessee, at its sole cost and expense, and after having given twenty
(20) days prior written notice to Lessor, may contest by appropriate legal
proceedings, promptly instituted and thereafter conducted in good faith with due
diligence, the amount or validity, in whole or in part of any Taxes; provided,
however, Lessee shall have at the time of giving notice to Lessor,
contemporaneously deposited with Lessor such financial security, by certified
funds or an irrevocable letter of credit, for payment of the contested Taxes,
said amount deposited with Lessor to equal one hundred twenty percent (120%) of
the total contested Taxes,
5
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<PAGE>
including interest and penalties, or other security as may reasonably be
required by Lessor.
B. All sums which may become due by reason of the failure of Lessee to
comply with any of the terms, covenants and conditions of this Lease to be kept
and observed by Lessee, and any and all damages and costs and expenses
(including without limitation thereto, reasonable attorney's fees) which Lessor
may suffer or incur by reason of any default of Lessee and any damages to the
Premises caused by any act or omission of Lessee together with interest to the
date of payment at a rate per annum equal to three hundred (300) basis points
above the prime interest rate (Prime + 3%) of CoreStates Bank, Philadelphia,
Pennsylvania, or its successor, in effect during the period said payment is due.
C. The premiums for insuring the Premises, including alterations,
additions and improvements other than Lessee's fixtures and equipment against
loss or damage by fire, all extended coverage, and rental value insurance
(covering twelve (12) months' rental on a fully gross basis) for the full, fair
and insurable value thereof, exclusive of foundations, excavations, and
pavement, and insuring Lessor against liability for bodily injury (including
death), personal injury and property damage in the amount of One Million Dollars
($1,000,000.00). The premiums shall be pro-rated for such portion of the term of
the Lease that is included within any period in which an insurance policy is in
effect.
D. Upon the written request of Lessor's mortgagee, Lessee will pay to
Lessor, together with each monthly installment of Minimum Annual Rent, an amount
equal to one-twelfth of the aggregate annual amount of (i) the taxes referred to
in subparagraph A hereof and (ii) the insurance premiums referred to in
subparagraph C hereof, all as estimated by Lessor; such amounts shall be held in
escrow by Lessor or transmitted to any Mortgagee requiring such payments and
applied on account of the taxes and insurance premiums as and when payments
therefor are due. Without limitation of the foregoing, Lessee shall also pay to
Lessor such additional amounts as Lessor's Mortgagee may request from time to
time to provide a sufficient fund, at least thirty (30) days prior to the due
date (or, in the case of any tax which may be paid in installments, the due date
of the next installment thereof) for payment of such taxes and premiums. Any
amounts held in escrow by Lessor pursuant to this paragraph may be deposited in
a non-interest bearing account. Lessor may apply such deposit against any
arrearages by Lessee in the payment of Minimum Annual Rent and/or Additional
Rent. In the event Lessor assigns his interest in this Lease, Lessor shall have
the right to pay the balance of such amounts then in its possession to the
assignee, and Lessor shall thereupon be completely released from any liability
with respect to such amounts.
E. In the event Lessee requests any consents or approvals of Lessor
and Lessor is obliged to expend counsel fees
6
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<PAGE>
and costs by reason thereof, Lessee will reimburse Lessor for the reasonable
counsel fees and costs incurred, as Additional Rent, within ten (10) days of
submission of bills therefor.
F. If Lessee does not pay any installment of Minimum Annual Rent or
any item of Additional Rent on the day when the same shall become due and
payable, and such failure shall continue for a period of ten (10) days, Lessee
shall pay Lessor as Additional Rent a service charge at the rate of One and
One-Half Percent (1- 1/2%) per month (or such lesser charge as may be the legal
maximum for a debtor of the same nature and character as Lessee in the
jurisdiction which the Premises is located) on the amount of such installment of
Minimum Annual Rent or item of Additional Rent or all of the same for each month
or a portion of a month that the same shall remain unpaid; provided, however,
that such charge shall in no event be less than Twenty-Five Dollars ($25.00) for
any month or a portion of a month that any installment of Minimum Annual Rent or
item of Additional Rent shall remain unpaid. Such charge shall be in the form of
Additional Rent for the purposes of defraying administrative expenses of Lessor
and is not intended as a penalty against Lessee. The provision of this paragraph
shall not preclude Lessor from exercising its options as set forth in any other
sections of this Lease, or as provided by law.
5. Utilities.
Lessee shall heat the Premises at its own expense and shall also pay
all charges of utility companies or public authorities for electricity, gas,
telephone, water, steam, sewer service or other services or utilities furnished
to the Premises. Under no circumstances shall Lessor be required to furnish or
be responsible for the furnishing of or the failure of any utility companies or
public authorities to furnish any utilities or any other service of any kind to
the Premises or any part thereof.
6. Repairs.
A. Except as otherwise set forth herein, Lessee shall be responsible
for all maintenance to the Premises and at Lessee's sole expense, shall make all
necessary or appropriate repairs, replacements, renewals, and additions,
interior and exterior, structural and non-structural, ordinary and
extraordinary, foreseen and unforeseen, required to keep and maintain the
Premises and all systems, equipment and apparatus appurtenant thereto or used in
connection therewith in good order and condition. Lessor shall be responsible
only for maintenance to the roof and structural portions of the Building, not
arising from the act or neglect of Lessee, its agents, servants, and business
visitors, in accordance with the provisions of subparagraph B hereof. Pertaining
to Lessee's responsibility to maintain the heating, air-conditioning and
sprinkler systems of the Premises, Lessee agrees that it shall, to the extent
generally available, at its cost and expense, enter
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into a service contract or contracts with responsible service companies
providing for at least two (2) semi-annual periodic inspections, and complete
maintenance including all necessary parts and labor, commencing upon the Lease
Commencement Date, which contract or contracts shall continue during the term of
this Lease and any renewal thereof and will be subject to the approval of
Lessor, which Lessor agrees not to unreasonably withhold. A copy of said service
contract shall be deposited with Lessor prior to the Lease Commencement Date and
said contract must provide for at least fifteen (15) days' notice to Lessor
prior to cancellation thereof. True and correct copies of all inspection reports
received from the service contractor shall be furnished to Lessor no later than
ten (10) days after receipt of same.
B. Upon receipt of written notice from Lessee, Lessor agrees to
proceed with due diligence to repair at its own cost and expense, any leaks in
the roof, or make any repairs to the structural portions of the Building,
provided such repairs are not necessitated by any act or neglect on the part of
Lessee, its agents, servants or business visitors. In no event, however, shall
Lessor be liable to Lessee for damages, including consequential damages, for any
loss or damage sustained by Lessee due to, or alleged to be due to, failure to
make such repairs in a timely or proper manner. In the event Lessor fails to
make said repairs within a reasonable time and in a proper manner, after notice
by Lessee, Lessee may proceed to effect said repairs and Lessor shall repay
Lessee the reasonable costs of said repairs, but Lessee may not set off the
amount of such costs against any rent due to Lessor pursuant to the terms of
this Lease. Provided, however, that within ten (10) days of receipt of any such
bill for repairs, Lessor may submit the questions of the reasonableness of said
bills and/or Lessor's responsibility to pay for same to arbitration before the
American Arbitration Association in Philadelphia, Pennsylvania, and in
accordance with the rules and regulations of the American Arbitration
Association in Philadelphia, Pennsylvania. The decision of the arbitrators shall
be final and binding upon the parties and shall be unappealable. The cost of
arbitration shall be borne equally by the parties. Each party shall bear its own
costs.
C. Any repairs, replacements, renewals and additions, and any labor
performed or materials furnished in, on or about the Premises shall be performed
and furnished by Lessee and/or Lessor, as the case may be, in strict compliance
with all applicable laws, regulations, ordinances and requirements of all duly
constituted municipal authorities or other governmental bodies having
jurisdiction over the Premises and the requirements of any board of underwriters
having jurisdiction thereof.
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7. Insurance.
A. Liability.
(i) Lessee shall provide and keep in force at its own cost and
expense Commercial General Liability Insurance, including Personal Injury,
Bodily Injury Including Death, and Property Damage covering premises liability,
independent contractors liability, and contractual liability, with minimum
limits of coverage of One Million Dollars ($1,000,000.00) per occurrence and Two
Million Dollars ($2,000,000.00) aggregate applicable to the Premises only.
(ii) Worker's Compensation Insurance in the full statutory
amount.
(iii) All policies carried hereunder, providing liability
coverage, will include Lessor as an additional named insured with respect to
ownership of the Premises.
B. Insurance policies required by this Lease shall:
(i) Be issued by insurance companies licensed to do business in
the State of Pennsylvania, with general policyholder's ratings of at least A and
a financial rating of at least XI in the most current Best's Insurance Reports
available on the date of issuance. If the Best's ratings are changed or
discontinued, the parties shall agree to an equivalent method of rating
insurance companies;
(ii) Provide that the insurance not be cancelled or materially
changed in scope or amount of coverage unless thirty (30) days advance notice is
given to the Lessor;
(iii) Be primary policies -- not contributing with, or in excess
of the coverage that the Lessor may carry;
(iv) Be permitted to be carried under a "blanket policy".
However, a specific minimum limit must be listed which is applicable to the
Premises and acceptable to the Lessor.
(v) Be maintained during the entire term and any extension or
renewal term of this Lease.
(vi) No "deductible" shall exceed the sum of One Thousand Dollars
($1,000.00).
C. By the Lease Commencement Date and prior to Lessee entering
possession of the Premises, and upon each renewal of its insurance policies,
Lessee shall provide certificates of insurance to Lessor by notice hereunder.
The certificates shall specify amounts, types of coverage, the waiver of
subrogation, specified in Article 16 hereof, and the insurance criteria listed
in this
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paragraph 7. The policies shall be renewed or replaced and maintained by Lessee.
If Lessee fails to give any required certificate within the time provided
herein, Lessor may obtain and pay for that insurance and receive reimbursement
from Lessee as Additional Rent, any other provision of this Lease
notwithstanding.
8. Destruction of Premises.
A. Total Destruction of Building. In the event the Building is totally
destroyed or so damaged by fire or other casualty covered by a policy or
policies of insurance maintained by Lessor that the same cannot be repaired and
restored within ninety (90) days from the happening of such injury, this Lease
shall absolutely cease and determine and the Minimum Annual Rent and Additional
Rent shall abate for the balance of the term. Nothing contained herein shall be
construed to affect Lessor's right to collect the proceeds of rental value
insurance on the Building.
B. Partial Destruction of Building. If the damage be only partial and
such that the Building can be restored to approximately its former condition
within ninety (90) days from the date of the casualty loss, Lessor shall restore
the same within ninety (90) days from the date of the casualty loss, reserving
the right to enter upon the Premises for that purpose. In such event, the rent
shall be apportioned and suspended during the term Lessor is in possession,
taking into account the portion of the demised Premises rendered untenantable
and the duration of the Lessor's possession. Nothing contained herein shall
affect or limit Lessor's right to collect the proceeds of any rental value
insurance on the Premises. If a dispute arises as to the amount of rent due
under this clause, Lessee agrees to pay the full amount claimed by Lessor, but
Lessee shall have the right to proceed by law to recover the excess payment, if
any.
C. Lessor shall make all such election to repair the Premises or
terminate this Lease by giving notice thereof to Lessee within thirty (30) days
from the day Lessor received notice that the demised Premises had been damaged
by fire or other casualty.
D. Lessor shall not be liable for any damage, compensation or claim by
reason of the necessity of repairing any portion of the Premises, the
interruption of the use of the Premises, any inconvenience or annoyance arising
as a result of such repairs or interruption or the termination of this Lease by
reason of damage or destruction of the Premises or any part thereof.
9. Condemnation.
A. Total Condemnation. In the event the entire Premises is taken or
condemned by any public or quasi-public authority exercising the right of
eminent domain, this Lease shall terminate as of the date the condemning
authority takes possession of the
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Premises, with the same force and effect as though such date were the date fixed
herein for expiration of the term. The entire amount of any award for such
taking shall belong to the Lessor, except for moving, business interruption
expenses, and damages to Lessee's personal property, if any, awarded directly to
Lessee and Lessee hereby waives any other right it may have to any portion of
such award.
B. Partial Condemnation. In the event that a portion of the Premises,
but not the entire Premises is taken or condemned for a public or quasi-public
use, the Minimum Annual Rent herein shall abate equitably in proportion to the
area of the building on the Premises condemned as of the date on which the
condemning authority shall take possession of the condemned property. Provided,
however, that if the condemnation was so extensive that the Premises is not
suitable for Lessee's use as set forth herein, the taking shall be considered a
total taking and subparagraph A above will apply. The entire amount of any award
for such taking shall belong to Lessor except for moving, business interruption
expenses and damages to Lessee's personal property, if any, awarded directly to
Lessee and Lessee hereby waives any other right it may have to any portion of
such award. If the parties are unable to agree as to whether any taking is so
substantial as to constitute a total taking for the purposes of this Lease, or
as to the amount of abatement of rent after a partial taking, the matter shall
be submitted to arbitration in Philadelphia, Pennsylvania, in accordance with
the rules of the American Arbitration Association then in force and the decision
of the arbitrators shall be final and binding on both parties.
C. If the condemning authority should take only the right to
possession for a fixed period of time or for the duration of an emergency or
other temporary condition, then, notwithstanding anything hereinabove provided,
this Lease shall continue in full force and effect without any abatement of rent
and the amounts payable by the condemning authority with respect to any period
of time prior to the expiration or sooner termination of this Lease (not
exceeding the Minimum Annual Rent and Additional Rent paid by Lessee to Lessor
during said period of time) shall be paid by Lessor to Lessee out of the amount
of any condemnation award received by Lessor.
10. Use and Compliance with Regulations.
A. Lessee hereby covenants and agrees that it will at no time use the
Premises for any other use or purpose than lawful purposes. Lessee further
agrees that it will at no time use the Premises in any manner which may be
deemed a violation of any municipal (including but not limited to township
authorities, regulatory agencies and water and sewer authorities), state or
federal law, rules, regulations or requirements. Lessee shall comply at its sole
cost and expense with any and all municipal, state and federal rules,
regulations, requirements or laws covering
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Lessee's occupancy and/or additional installations, which may be required.
Lessor represents and warrants that the applicable zoning ordinances permit
Lessee's intended use of the Premises as specified in Paragraph 1(C) hereof. The
applicable use and occupancy regulations of Montgomery Township, Montgomery
County, Pennsylvania, require a tenant to be in possession of its space and set
up for operation before making application for a certificate of occupancy ("CO")
and the necessary township inspection. Accordingly, Lessee shall take possession
of the Premises, set up its operation and promptly thereafter, make application
to Code Enforcement Officer of Montgomery Township for a CO for the Premises and
obtain any required CO. Lessee shall provide Lessor with a true and correct copy
of its CO promptly after issuance, by notice hereunder. In the event issuance of
a CO is withheld by reason of any condition of the Premises not related to
Lessee's specific use and occupancy, Lessor, at its sole cost and expense, shall
promptly use its best efforts to rectify this condition and otherwise will
cooperate with Lessee and render reasonable assistance to Lessee for issuance of
the CO. Lessee hereby agrees to protect, indemnify and save Lessor harmless from
and against any and all loss, damage, expense, cause of action, suits, demands,
judgments and claims of any nature whatsoever arising as a result of Lessee's
breach of the covenants contained in this paragraph, in addition to any other
indemnification provisions set forth in this Lease. Lessee shall deposit no
process wastes into the sanitary sewer system serving the Premises and agrees
that only sanitary waste shall be inserted into the sanitary sewer system. Seven
(7) EDU(s) of sanitary sewer capacity have been allocated to the Premises and
Lessee shall not exceed said allocation.
B. As used herein, "Hazardous Substance" means any substance which is
toxic, ignitable, reactive or corrosive and which is regulated by any local
government, the State of Pennsylvania or the United States Government. Hazardous
Substance includes any and all materials or substances which are defined as
'hazardous waste', 'extremely hazardous waste' or 'hazardous substance' pursuant
to state, federal or local governmental laws or regulations. "Hazardous
Substance" includes, but is not restricted to asbestos, polychlorinated
byphenals (PCBs) and petroleum. Lessee shall not cause or permit any Hazardous
Substance to be used, stored, generated or disposed of on or in the Premises by
Lessee, Lessee's agents, employees, contractors or invitees, except in
accordance with applicable laws and regulations. If Hazardous Substances are
used, stored, generated or disposed of on or in the Premises in violation of
applicable laws and regulations, or if the Premises become contaminated in any
manner for which Lessee is legally liable, Lessee shall indemnify, defend and
hold harmless the Lessor from any and all claims, damages, fines, judgments,
penalties, costs, liabilities or losses (including without limitation, a
decrease in value of the Premises or the Building or the Lot, damages because of
adverse impact on marketing of the Premises and any and all sums paid for
settlement of claims, attorneys', consultant and expert fees) arising during or
after the
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term hereof and arising as a result of such contamination by Lessee. This
indemnification includes, without limitation, any and all costs incurred because
of any investigation of the Lot or any clean-up, removal or restoration mandated
by a federal, state or local agency or political subdivision. In addition, if
Lessee causes or permits the presence of any Hazardous Substance on the Premises
and this results in contamination, Lessee shall promptly, at its sole expense,
take any and all necessary actions to return the Premises to the condition
existing before the presence of any such Hazardous Substance on the Premises,
provided, however, that Lessee shall first obtain Lessor's approval for any such
remedial action. Within ten (10) days after receipt, Lessor and Lessee shall
advise the other party in writing and provide the other party with copies of (as
applicable), any notices alleging violation of any law or regulation relating to
any Hazardous Substance upon any portion of the Premises, the Building or the
Lot; any claims made or threatened in writing regarding non-compliance with any
law or regulation involving the presence of any Hazardous Substance on any
portion of the Premises, the Building or the Lot; or any governmental or
regulatory actions or investigations instituted or threatened regarding
non-compliance with any law or regulation involving any Hazardous Substance upon
any portion of the Premises, the Building or the Lot. Hazardous Substances which
Lessee currently uses in its business, in accordance with OSHA's Hazardous
Communication Policy, are listed in Exhibit "C" attached hereto and made part
hereof.
C. Within ten (10) days after receipt, Lessor and Lessee shall advise
the other party in writing and provide the other with copies of (as applicable),
any notices alleging violation of the Americans with Disabilities Act of 1990
("ADA") relating to any portion of the Premises, the Building or the Lot; any
claims made or threatened in writing regarding non-compliance with the ADA and
relating to any portion of the Premises, the Building or the Lot; or any
governmental or regulatory actions or investigations instituted or threatened
regarding non-compliance with the ADA and relating to any portion of the
Premises, the Building or the Lot.
11. Indemnification.
A. The Lessee shall keep, save and hold harmless the Lessor from any
and all damages and liability for anything and everything whatsoever arising
from or out of the occupancy of the Premises and abutting common areas by or
under the Lessee, the Lessee's agents, servants, or business visitors, and from
any loss or damage arising from any fault or negligence by the Lessee or any
failure on the Lessee's part to comply with any of the covenants, terms and
conditions contained in this Lease.
B. Notwithstanding anything set forth herein to the contrary, in the
event Lessor is held liable to an employee of Lessee on account of work-related
injuries sustained by such employee on the Premises, Lessee shall be liable to
Lessor for
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damages, contribution and indemnity in any action at law or otherwise. This
subparagraph 11(B) shall constitute "a written contract" between Lessor and
Lessee pursuant to Section 303(b) of the Workmen's Compensation Act, 77 P.S.
Section 481(b).
12. Mechanic's Liens.
Lessee shall not permit any mechanic's, materialmen's or similar liens
to remain upon the Premises for labor or material furnished to Lessee or claimed
to have been furnished to Lessee in connection with work of any character
performed or claimed to have been performed on the Premises by, or at the
direction of, or with the consent of Lessee, whether such work was performed or
materials furnished before or after the commencement of the term of this Lease.
Lessee may, however, contest the validity of any such lien or claim, provided
Lessee shall give Lessor such reasonable security to insure payment and to
prevent any sale, foreclosure or forfeiture of the Premises by reason of such
non-payment as Lessor may require. Upon final determination of the validity of
any such lien or claim, Lessee shall immediately pay any judgment or decree
rendered against Lessee or Lessor with all proper costs and charges and shall
cause such lien to be released of record without cost to Lessor.
13. Subordination.
A. This Lease shall be subordinate in all respects to the lien of any
mortgage now or hereafter encumbering the Premises or any part thereof, with the
same force and effect as if such mortgage had been executed, acknowledged,
delivered and recorded prior to the execution of this Lease. The subordination
contained in this Article is and shall be effective without the necessity of any
further act or writing by either party hereto, but Lessee agrees that it will,
immediately upon Lessor's request, deliver such additional documents as any
mortgagee may require to confirm such subordination. Lessee, at the request of
any mortgagee or any one acquiring title to Lessor's estate or the Premises by
foreclosure, deed in lieu of foreclosure or otherwise, shall attorn to the then
owner and recognize such owner as Lessor for the balance of the term of this
Lease, subject to all of the terms and provisions hereof. Such mortgagee or
purchaser at said foreclosure sale shall not be:
(1) Liable for any act or omission of Lessor;
(2) Subject to any offsets or defenses which Lessee may have against
the Lessor;
(3) Bound by any rent or Minimum Annual Rent which the Lessee may have
paid to the Lessor for more than the current month; or
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(4) Bound by any amendment or modification of the Lease made, without
its consent.
B. At Lessee's request, by notice hereunder, Lessor shall use its best
efforts to obtain a Subordination, Non- Disturbance and Attornment Agreement
from Lessor's mortgagee. Any fee charged for this agreement by the mortgagee
shall be paid by Lessee as Additional Rent.
14. Estoppel Certificate.
Lessee agrees to execute and deliver to any mortgagee or purchaser of
the Premises immediately upon request, an "Estoppel Certificate" stating the
amount of rent due from Lessee hereunder, that this Lease remains in full force
and effect without modification, any reasonable representations requested by
said mortgagee or purchaser, and that Lessee has no setoffs against rent; or if
this Lease has been modified, or if Lessee has any setoffs against rent, the
exact nature of the modification and the precise amount of the setoffs.
15. Assignment and Subletting.
Lessee may assign this Lease in whole or in part and sublet all or a
portion of the herein demised Premises provided the business of the assignee or
sublessee shall be no more hazardous than that of Lessee's present business and
shall comply with the zoning and all other governmental regulations and
regulations of insurance underwriters, and provided further that Lessee shall
obtain prior written approval from Lessor which shall not be unreasonably
withheld; saving and excepting, that Lessor may specifically withhold consent if
the proposed assignee's or sublessee's projected use of the Premises involves
the use, storage, generation or disposal of Hazardous Substances, as defined in
subparagraph 10(B) of this Lease. However, Lessee shall not be relieved of any
liability or responsibility under the terms of this Lease by reason of such
assignment or subletting.
16. Waiver of Subrogation.
Lessor and Lessee hereby agree that all insurance policies which each
of them shall carry to insure the Premises and the contents therein against
casualty loss shall contain waivers of the right of subrogation against Lessor
and Lessee herein, their heirs, administrators, successors and assigns.
17. Security Deposit.
A. Lessee shall have deposited with Lessor upon execution hereof, the
sum of Seventeen Thousand Seven Hundred Ten Dollars ($17,710.00) as security for
Lessee's faithful performance of Lessee's obligations hereunder. Additionally,
from time to time, as necessary, Lessee shall deposit with Lessor amounts as
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determined by Lessor under paragraph 24(D), infra., to secure the removal of
Alterations and Improvements (as hereinafter defined) upon termination of the
Lease. If Lessee fails to pay rent or other charges due hereunder, or otherwise
defaults with respect to any provision of this Lease, Lessor may use, apply or
retain all or any portion of said security deposit for the payment of any rent
or other charge in default or for the payment of other sums to which Lessor may
become obligated by reason of Lessee's default, or to compensate Lessor for any
loss or damage which Lessor may suffer thereby. If Lessor so uses or applies all
or any portion of said deposit, Lessee shall within ten (10) days after written
demand thereof, deposit cash with Lessor in an amount sufficient to restore said
deposit to the full amount hereinabove stated and Lessee's failure to do so
shall be a material breach of this Lease. Lessor shall not be required to keep
said deposit separate from its general accounts. If Lessee performs all of
Lessee's obligations hereunder, said deposit, or so much thereof as had not
theretofore been applied by Lessor, shall be returned to Lessee without interest
(or at Lessor's option, to the last assignee, if any, of Lessee's interest
hereunder) at the expiration of the term hereof, and after Lessee has vacated
the Premises. No trust relationship is granted herein between Lessor and Lessee
with respect to said security deposit.
B. In lieu of a cash security deposit, Lessee may, at its election,
deposit with Lessor an irrevocable letter of credit, in non-documentary form, of
a bank or trust company acceptable to Lessor, in its sole discretion.
(i) The letter of credit shall be in the amount of the security
deposit and shall state that it is payable unconditionally to the Lessor or
order on demand upon presentation of a sight draft under the letter of credit
before the expiration date set forth in the letter of credit.
(ii) Without affecting the non-documentary status of the letter
of credit and without involving the issuer of the letter of credit in any
matters affecting this Lease, Lessor shall not present a draft under the letter
of credit for payment unless (y) there is a default by Lessee (whereupon the
funds paid on the letter of credit shall be applied by Lessor, as provided in
subparagraph 17(A) in respect to cash security); or (z) the letter expires
before the time set forth in the Lease for the return of the security deposit
and at least thirty (30) days before the expiration of the letter of credit, a
renewal letter of credit shall not have been delivered to Lessor. If Lessee
employs a letter of credit, it must keep renewing that letter of credit until
the time specified for the return of the security deposit unless a good check is
substituted therefor, without any need on the part of Lessor to give Lessee any
notice that it is in default of supplying that renewal, any provision of this
Lease as to notice of default to Lessee to the contrary, notwithstanding.
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(iii) The employment of the letter of credit is an accommodation
to Lessee and the object of subparagraph 17(B)(i) and (ii) is not to diminish
Lessor's rights to deal with the security deposit as would prevail if it were a
cash deposit.
(iv) Without limiting the foregoing suparagraphs 17(B)(i), (ii)
and (iii), the issuer of the letter of credit has no interest in, or concern
with, this Lease or the performance under it by either party. The issuer's sole
obligation is to honor a sight draft timely drawn and presented.
18. Inspection - Access.
Lessor may, at all reasonable times, by itself or its duly authorized
agents, go upon and inspect the Premises and every part thereof and/or at its
option to make repairs, alterations and additions to the Premises or the
building of which the Premises is a part. Provided, however, that Lessor agrees
that it will not enter upon the Premises for repairs except during business
hours, without the consent of Lessee, unless said repairs are of an emergency
nature. Provided further that such repairs, alterations and additions to the
Premises should not be undertaken so as to interfere with the business
operations of Lessee, and that Lessor's designees coming upon the Premises shall
preserve the trade secrets and confidential matters of Lessee's business
operations as confidential.
19. Right of Assignee.
All rights granted to Lessor hereunder may be exercised by any
assignee of Lessor's right, title and interest in this Lease in his, her or
their name, any statute, rule of court, custom or practice to the contrary
notwithstanding. In addition, upon such assignment, Lessor may pay over any
security deposit hereunder to said assignee and upon said payment, all
obligations of Lessor to Lessee pertaining to said security deposit shall
terminate. In addition, upon assignment of Lessor's interest herein to an
assignee, any obligations of Lessor hereunder arising on or after such
assignment, shall cease and terminate and said Assignee shall be responsible
therefor to Lessee. Notwithstanding, Lessor shall remain responsible to Lessee
for any obligations hereunder arising to prior to such assignment.
20. Intentionally deleted by the parties.
21. Signs.
Lessee may erect reasonable signs which will not damage or injure in
any way the roof or structural portions of the Premises, or any buildings on the
Premises and will not detract from the appearance of the Premises and
surrounding environments,
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having first obtained Lessor's permission, said permission to not be
unreasonably withheld. Lessee shall conform, at its sole cost and expense, with
all governmental rules and regulations, with respect to Lessee's sign, and will
save Lessor harmless from any mechanic's lien claim or claims for personal
injury or property damage arising from the erection, provision, installation or
maintenance and removal of said sign. At the termination of this Lease, Lessee
shall remove all signs and shall restore the Premises to its original good
condition, at Lessee's sole cost and expense.
22. Quiet Enjoyment.
Notwithstanding anything herein contained to the contrary, Lessee's
possession and quiet enjoyment of the Premises will not be interfered with by
Lessor or any person claiming by, through or under Lessor or by any predecessor
of Lessor so long as Lessee complies with the terms of this Lease and is not in
default hereunder.
23. Events of Default - Remedies.
A. The following events or any one or more of them shall be events of
default under this Lease:
(i) Lessee shall fail to pay any Minimum Annual Rent, Additional
Rent or other sums payable hereunder when the same are due and payable; or
(ii) Lessee shall fail to perform or comply with any of the other
terms, covenants, agreements or conditions hereof; or
(iii) Lessee shall make a general assignment for the benefit of
creditors or shall admit in writing its inability to pay its debts as they
become due, or shall file a petition in bankruptcy or shall be adjudged a
bankrupt or insolvent, or shall file a petition seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, or shall file an
answer admitting or not contesting the material allegations of a petition
against it in any such proceeding, or shall seek or consent to or acquiesce in
the appointment of any trustee, receiver or liquidator of Lessee or any material
part of its property; or
(iv) If within sixty (60) days after commencement of any
proceedings against Lessee seeking any reorganization, arrangement, composition,
readjustment, liquidation or dissolution or similar relief under any present or
future statute, law or regulation, such proceedings shall not have been
dismissed or, if, within sixty (60) days after the appointment without the
consent or acquiescence of Lessee of any trustee, receiver or liquidator of
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Lessee or any material part of its properties, such appointment shall not have
been vacated
(v) Lessee shall vacate the Premises in violation of Article 28
hereof.
B. In the event of any such event of default (regardless of the
pendency of any proceeding which has or might have the effect of preventing
Lessee from complying with the terms of this Lease) Lessor at any time
thereafter may exercise any one or more of the following remedies:
(i) Intentionally deleted by the parties.
(ii) Termination of Lease. Lessor may terminate this Lease
without any right by Lessee to reinstate its rights by payment of rent due or
other performance of the terms and conditions hereof. Upon such termination,
Lessee shall immediately surrender possession of the Premises to Lessor and
Lessor shall immediately become entitled to receive from Lessee damages equal to
the difference between the aggregate rentals reserved for the balance of the
term and the fair rental value of the Premises for that period, determined as of
the date of such termination; provided, however, that the amount of such damages
shall be discounted at the rate of Five Percent (5%) per annum for the period
from the date of payment by Lessee to Lessor to the date of expiration of the
term of this Lease.
(iii) Reletting. With or without terminating this Lease, as
Lessor may elect, Lessor may re-enter and repossess the Premises or any part
thereof, and lease them to any other person upon such terms as Lessor shall deem
reasonable for a term within or beyond the term of this Lease; provided,
however, that any such reletting prior to termination shall be for the account
of Lessee, and Lessee shall remain liable for:
(1) All Minimum Annual Rent, Additional Rent and other sums
which would be payable under this Lease by Lessee in the absence of such
expiration, termination or repossession, less
(2) The net proceeds, if any, of any reletting effective for
the account of Lessee after deducting from such proceeds without limitation, all
repossession costs, broker's commissions, attorneys' fees and expenses,
employees' expenses, reasonable alteration costs and expenses of preparation for
such reletting.
If the Premises are at the time of default sublet or leased
by Lessee to others, Lessor may, as Lessee's agent, collect rents due from any
subtenant or other tenant and apply such rents to the rent and other obligations
due hereunder without in any way affecting Lessee's obligations to Lessor
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hereunder. Such agency, being given for security, is hereby declared to be
irrevocable.
(iv) Acceleration of Rent. Lessor may declare Minimum Annual
Rent and all items of Additional Rent for the entire balance of the then current
term immediately due and payable, together with all other charges, payments,
costs and expenses payable by Lessee as though such amounts were payable in
advance on the date of the event of default occurred.
C. No expiration or termination of this Lease term pursuant to
subparagraph (B)(ii) above or by operation of law or otherwise (except as
expressly provided herein), and no repossession of the Premises or any part
thereof or exclusion of Lessee from the Premises pursuant to subparagraph B
above or otherwise shall relieve Lessee of its liabilities and obligations
hereunder, all of which shall survive such exclusion, expiration, termination or
repossession and Lessor may, at its option, sue for and collect rent and other
charges due hereunder at any time and from time to time as and when such charges
accrue.
D. Intentionally deleted by the parties.
E. The parties hereby waive trial by jury in any action or proceeding
hereunder.
F. Lessee hereby expressly waives any and all rights of redemption
granted by or under any present or future law in the event this Lease is
terminated or Lessee is evicted or dispossessed by reason of violation by Lessee
of any of the provisions of this Lease.
G. In the event of breach or threatened breach by Lessee of any
provision of this Lease, Lessor shall have the right of injunction as if other
remedies were not provided for herein.
H. No right or remedy herein conferred upon or reserved to Lessor is
intended to be exclusive of any other right or remedy herein or by law provided,
but each shall be cumulative and in addition to every other right or remedy
given herein or now or hereafter existing at law or in equity or by statute.
I. If Lessee shall default in the performance of any covenant required
to be performed by it under this Lease, Lessor may perform the same for the
account and at the expense of Lessee, after first giving notice to Lessee of its
intention to do so. If Lessor at any time is compelled to pay or elects to pay,
any sum of money or to do any act which will require the payment of any sum of
money by reason of the failure of Lessee to comply with any provisions hereof,
or if Lessor is compelled to incur any expense, including reasonable counsel
fees, in instituting, prosecuting or defending against any action or proceedings
instituted by reason of any default of Lessee hereunder, the amount of such
payments or
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expenses shall be paid by Lessee to Lessor as Additional Rent on the next day
following such payment or the incurring of such expenses upon which a regular
monthly rental is due, together with interest thereon at the rate set forth
herein.
J. No waiver by Lessor of any breach by Lessee of any of its
obligations, agreements or covenants hereunder shall be a waiver of any
subsequent breach or of any other obligation, agreement or covenant, nor shall
any forbearance by Lessor to seek a remedy for any breach by Lessee be a waiver
by Lessor of its rights and remedies with respect to such or any subsequent
breach.
K. Lessee expressly waives any right of defense which it may have
based on any purported merger of any cause of action, and neither the
commencement of any actions or proceeding nor the settlement thereof or the
entering of judgment therein shall bar Lessor from bringing subsequent action or
proceedings from time to time.
L. Intentionally deleted by the parties.
THE FOLLOWING PARAGRAPH 23(M) SETS FORTH A WARRANT OF AUTHORITY FOR
ANY PROTHONOTARY OR ATTORNEY OF COURT OF RECORD TO CONFESS JUDGMENT AGAINST THE
LESSEE. IN GRANTING THIS WARRANT OF ATTORNEY TO CONFESS JUDGMENT AGAINST THE
LESSEE, THE LESSEE, FOLLOWING CONSULTATION WITH (OR DECISION NOT TO CONSULT)
SEPARATE COUNSEL FOR THE LESSEE AND WITH KNOWLEDGE OF THE LEGAL EFFECT THEREOF,
HEREBY KNOWINGLY, INTENTIONALLY, VOLUNTARILY AND UNCONDITIONALLY WAIVES ANY AND
ALL RIGHTS THE LESSEE HAS OR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR
HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES OF
AMERICA, THE COMMONWEALTH OF PENNSYLVANIA OR ELSEWHERE. IT IS SPECIFICALLY
ACKNOWLEDGED BY THE LESSEE THAT THE LESSOR HAS RELIED ON THIS WARRANT OF
ATTORNEY IN EXECUTING THIS LEASE AND AS AN INDUCEMENT TO GRANT FINANCIAL
ACCOMMODATIONS HEREUNDER TO THE LESSEE.
M. Upon the expiration of the then current term of this Lease or the
earlier termination or surrender hereof as provided in this Lease, Lessee with
understanding of the RELINQUISHMENT OF CERTAIN RIGHTS, to which Lessee would
otherwise be entitled as a matter of law and due process, including the right to
notice and judicial hearing, agrees that it shall be lawful for any attorney to
appear as attorney for Lessee as well as for all persons claiming by, through or
under Lessee and to sign an Agreement for entering in any competent court an
amicable action in ejectment against Lessee and all persons claiming by, through
or under Lessee and therein CONFESS JUDGMENT FOR THE RECOVERY BY LESSOR OF
POSSESSION OF THE PREMISES, for which this Lease shall be its sufficient
warrant, whereupon if Lessor so desires, a writ of possession or other
appropriate writ under the Rules of Civil Procedure then in effect may issue
forthwith, without any prior writ or proceedings; provided, however, if for any
reason after such action shall have been commenced, the same shall be determined
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and the possession of the Premises remain in or be restored to Lessee, Lessor
shall have the right for the same default and upon any subsequent default or
defaults, or upon the termination of this Lease under any of the terms of this
Lease, to bring one or more further amicable action or actions as hereinbefore
set forth to recover possession of the Premises and confess judgment for the
recovery of possession of the Premises as hereinabove provided.
N. In any amicable action for ejectment, Lessor shall first cause to
be filed in such action an affidavit made by it or someone acting for it,
setting forth the facts necessary to authorize the entry of judgment and if a
true copy of this Lease (and such affidavit shall be sufficient evidence of the
truth of the copy) be filed in such action, it shall not be necessary to file
the original as warrant of attorney, any rule of court, custom or practice to
the contrary notwithstanding. Lessee hereby releases to Lessor and to any and
all attorneys who may appear for Lessee all errors in said proceedings and all
liability thereof.
O. If proceedings shall be commenced by Lessor to recover possession
under the Acts of Assembly and Rules of Civil Procedure, either at the end of
the term or earlier termination of this Lease, or for nonpayment of rent or any
other reason, Lessee specifically waives the right to the three (3) month notice
and to the fifteen (15) or thirty (30) days notice required by the Landlord and
Tenant Act of 1951, and agrees that five (5) days' notice shall be sufficient in
either or any such case.
P. Notwithstanding anything herein elsewhere contained to the
contrary, Lessor agrees that Lessor will not exercise any right or remedy
provided for in this Lease or allowed by law, because of any default of Lessee,
unless Lessor shall first have given written notice thereof to Lessee, and
Lessee, (i) within a period of ten (10) days thereafter shall have failed to pay
the sum or sums due if the default consists of the failure to pay money, or (ii)
if said default shall consist of anything other than the failure to pay the sum
or sums due hereunder, Lessee shall have failed within the period of thirty (30)
days after notice from Lessor to have cured said default, except that if such
default cannot be cured within said thirty (30) days, Lessee shall only be in
default if Lessee shall have failed to begin and actively and diligently in good
faith proceed with the correction of the default until it shall be fully
corrected not later than seventy-five (75) days after such notice; provided,
further, however, that no such notice from Lessor shall be required nor shall
Lessor be required to allow any part of the said notice periods if Lessee shall
have removed from or shall be in the course of removing from the Premises, or
Lessee shall have failed to provide the insurance required by this Lease or if a
Petition in Bankruptcy or for reorganization shall have been filed by or against
the Lessee resulting in an order for relief in bankruptcy, or for
reorganization, or if a receiver or trustee is appointed for Lessee and such
appointment and such receivership or trusteeship is not
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terminated within seventy-five (75) days, or if Lessee makes an assignment for
the benefit of creditors, or if Lessee is levied upon and is about to be sold
out upon the Premises by any sheriff, marshall or constable; provided, further,
however, that Lessor shall not be required to give any notice of monetary
default called for by this Article of the Lease more than two (2) times within
any twelve (12) month period.
24. Alterations and Additions.
A. The improvements set forth on Exhibit "A" attached hereto and made
part hereof are not intended to be covered by this Article 24. Lessee may, at
its own cost and expense, install additional improvements ("Alterations and
Improvements") upon the demised Premises, provided that such Alterations and
Improvements shall not adversely affect the roof and structural soundness of the
Premises or the building of which the Premises is a part in the case of
multi-tenant properties, or any Systems contained therein.
B. All such Alterations and Improvements shall be in accordance with
plans and specifications to be supplied by Lessee, which plans shall in all
instances first be subject to Lessor's prior written approval, which shall not
be unreasonably withheld. Lessee shall provide Lessor with evidence that each
contractor performing Alterations and Improvements on the Premises has adequate
workmen's compensation insurance and general liability insurance in the amount
of at least Two Million Dollars ($2,000,000.00) for bodily injury or death to
any person or persons and property damage, on an occurrence basis, together with
a certificate from the insurer who shall be reasonably satisfactory to Lessor,
to the effect that such insurance may not be cancelled or substantially modified
without at least thirty (30) days' prior written notice to Lessor. Lessor hereby
approves the alterations and improvements described in Exhibit "B" attached
hereto and made part hereof.
C. To the extent permitted by law, no Alterations or Improvements at
the Premises shall be done except after filing a waiver of the right to file any
lien therefor (commonly known as "mechanic's lien") in the local prothonotary's
office or elsewhere as provided by law, so as to constitute an effective waiver
by anyone having a right to file such a lien.
D. As to Alterations and Improvements installed with the prior written
consent of Lessor, Lessee may, or at Lessor's demand, shall remove all
Alterations and Improvements prior to the end of the term of this Lease and
Lessee shall at its own cost and expense, return the Premises to its condition
as of the Lease Commencement Date, ordinary wear and tear and damage by insured
casualty excepted. In the event, in violation of subparagraph B hereof, Lessee
installs Alterations and Improvements upon the Premises without Lessor's prior
written approval, Lessee shall remove all Alterations and Improvements prior to
the end of this
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Lease, at its own cost and expense, returning the Premises to its condition as
of the Lease Commencement Date. In the event Lessee shall fail to remove the
Alterations and Improvements and restore the Premises, as herein provided,
Lessor shall have the right to go upon the Premises and do so, and Lessee agrees
to pay the cost thereof as Additional Rent. Additionally, Lessor may decline to
accept surrender of the Premises by Lessee so long as such Alterations and
Improvements have not been removed and until removal of the same, Lessee shall
be deemed to have held over under the provisions of paragraph 2(B), supra. With
respect to those Alterations and Improvements which, with Lessor's consent, have
remained upon the Premises at the end of the term of this Lease, Lessee agrees
that title to the same shall vest in Lessor. Prior to commencing to install any
Alterations or Improvements, Lessee shall deposit with Lessor an additional
security deposit, to be held by Lessor in accordance with the provisions of
paragraph 17, supra., in an amount reasonably established by Lessor to cover the
cost of removal of said Alterations and Improvements upon termination of this
Lease.
E. If as a result of any Alterations and Improvements which may be
made to the Premises by the Lessee, either pursuant to this clause or without
authorization from the Lessor, any person and/or property shall be injured
and/or damaged, the liability therefor shall be the sole responsibility of
Lessee.
F. In making any Alterations and Improvements, Lessee shall comply
with any and all laws, statutes, ordinances, rules, regulations and requirements
of the municipal and other duly constituted governmental authorities and
insurance organizations.
25. Extensions and Renewals.
A. Extensions. It is hereby mutually agreed that in the event Lessee
has not given the "Preliminary Renewal Notice" as defined in subparagraph 25(B),
or has given the Preliminary Renewal Notice but has withdrawn the same, Lessee
may terminate this Lease at the end of this term and any renewal term or
extension term, by giving to Lessor written notice at least one hundred eighty
(180) days prior thereto, and Lessor may terminate this Lease at the end of this
term and any renewal or extension thereof by giving to Lessee written notice at
least one hundred fifty (150) days prior thereto; but in default of such notice
from either party, this Lease shall continue for an extension term of one (1)
year, commencing the day after the expiration of the current term, upon the
terms and conditions in force immediately prior to the expiration of the
then-current term, extension term or renewal term (except for the Minimum Annual
Rent, which shall be as computed in subparagraph 25(C)(iii)), and so on from
year to year, unless terminated by the giving of notice within the times and in
the manner aforesaid. In the event that Lessee or Lessor shall have given
notice, as stipulated in this Lease, to vacate the Premises at the end of the
present term or any renewal or extension thereof
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and Lessee shall fail or refuse to vacate same at the date designated by said
notice, then it is expressly agreed that Lessor shall have the option either:
(i) to disregard the notice so given as having no effect, in
which case all of the terms and conditions of this Lease as in effect at the end
of the current term, extension term or renewal term shall continue thereafter
with full force precisely as if such notice had not been given; or
(ii) Lessor may, at any time, within thirty (30) days after the
present term or any renewal or extension thereof, as aforesaid, give the said
Lessee ten (10) days' written notice of its intention to terminate the said
Lease; whereupon Lessee expressly agrees to vacate the Premises at the
expiration of the said period of ten (10) days specified in the aforesaid
notice. In the event Lessee has not vacated the Premises in accordance with said
notice, Lessee shall be treated as holding over in accordance with the terms of
paragraph 2(B) hereof.
All powers granted to Lessor by this Lease shall be exercised and all
obligations imposed upon Lessee by this Lease shall be performed by Lessee as
well during any extension or renewal of the original term of this Lease as
during the original term hereof.
Notwithstanding anything set forth in subparagraph 25(A) to the
contrary, if the term of this Lease is not previously terminated, the term of
this Lease shall end absolutely, without further notice, at 11:59 p.m. on the
day previous to the 29th anniversary of the Lease Commencement Date.
B. Option to Renew.
Provided Lessee is not then in default under any of the terms,
covenants and conditions of this Lease, and Lessee is not in default under the
terms of this Lease at the end of the original term, Lessee shall have the right
and privilege, at its election, to renew the term of this Lease for an
additional period of five (5) years commencing upon the day after the expiration
of the term hereof and terminating five (5) years thereafter without further
notice. Such five year period is hereinafter referred to as a "Renewal Term".
In order to exercise said option, Lessee must give Lessor written
notice of its election to renew ("Preliminary Renewal Notice") at least two
hundred ten (210) days prior to the expiration of the term hereof. Said renewal
shall be on the same terms and conditions as herein provided for the original
term except that the Minimum Annual Rent shall be calculated as set forth in the
following paragraph. In the event Lessee does not exercise its option to renew
within the time set forth, the provisions of subparagraph 25(A) shall apply.
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C. Computation of Minimum Annual Rent in the event of Renewal.
In the event of exercise of the option to renew this Lease by Lessee
in accordance with the terms of subparagraph A, commencing with the rental
payment due on the first day of the Renewal Term, the Minimum Annual Rent shall
be the greater of the Minimum Annual Rent set forth in this Lease for the last
Lease Year of the original term or the fair market rental. The fair market
rental shall be determined as follows:
(i) Within fifteen (15) days from receipt of the Preliminary Renewal
Notice, Lessor shall advise Lessee of the fair market rental of the Premises as
of the commencement of the Renewal Term, by notice hereunder, including examples
of rentals for comparable space in the Warminster area of Bucks County and the
Montgomeryville area of Montgomery County. In the event Lessee is dissatisfied
with the fair market rental as specified by Lessor, it may withdraw the
Preliminary Renewal Notice, by notice to Lessor, given at least one hundred
eighty-one (181) days prior to the end of the term.
(ii) The new Minimum Annual Rent, effective on or after the first day
of the Renewal Term and for the balance of said Renewal Term, shall be the
greater of the fair market rental set forth in Lessor's notice or the Minimum
Annual Rent as set forth in this Lease for the last year of the original term,
whichever is applicable, but not more than Two Hundred Forty-Five Thousand Seven
Hundred Dollars ($245,700.00) per year. This Minimum Annual Rent shall be
payable in equal monthly installments commencing on the first day of the Renewal
Term and on the first day of each month thereafter during the said Renewal Term.
(iii) For extensions of this Lease under subparagraph 25(A), the
Minimum Annual Rent during a one-year extension term shall be the greater of the
Minimum Annual Rent for the previous Lease Year or the fair market rental for
the Premises as of the commencement of the extension term, but not more than Two
Hundred Forty-Five Thousand Seven Hundred Dollars ($245,700.00) per year,
payable in monthly installments on the first day of each month during the
extension term.
26. Place of Payment of Rent and Notices.
All rent shall be payable without notice or demand and all notices
shall be given to Lessor by registered or certified mail, return-receipt
requested, at the following address or at such address as Lessor may designate
by notice to Lessee:
Nappen & Associates t/a 309 Development Company
P.O. Box 26752
Elkins Park, PA 19027
All notices required to be given by Lessor to Lessee shall be
sufficiently given if sent by registered or certified
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mail, return-receipt requested, to the Premises or to such other place as Lessee
may designate by notice to Lessor.
All notices or consents required by this Agreement shall be in
writing.
27. Condition of Premises at Termination.
At the expiration of the term hereof, Lessee shall surrender the
Premises to Lessor in good order and condition, broom clean, all Alterations and
Improvements designated for removal under the provisions of paragraph 24,
supra., having been removed, reasonable wear and tear and damage by insured
casualty alone excepted. Provided Lessee is not in default hereunder, all
furniture and trade fixtures installed at the expense of Lessee shall remain the
property of Lessee. Provided Lessee is not in default hereunder, Lessee shall
have the right to remove fixtures and/or equipment installed by Lessee in the
herein demised Premises during the term of this Lease and any renewal or
extension term. Lessee agrees to repair at its cost and expense any damage done
to the Premises by reason of the removal of such fixtures and/or equipment.
28. Vacation.
Lessee shall not vacate or desert the Premises during the term of this
Lease or permit the same to be empty and unoccupied without taking adequate
measures to secure the demised Premises, reasonably satisfactory to Lessor.
29. Net Lease.
The parties intend this to be a "fully net" Lease pursuant to which
the rent payable hereunder shall be an absolutely net return to Lessor for the
term of this Lease, undiminished by the taxes, or any of them or any part
thereof or any other carrying charges, maintenance charges (except for roof and
structural maintenance) or any other charges of any kind or nature whatsoever
except any mortgage now or hereafter placed upon the Premises and Lessor shall
not be required to perform any services or furnish any utilities of any kind or
nature whatsoever. Lessor may discontinue at any time, any and all facilities
furnished and services rendered by Lessor not expressly covenanted for herein or
required to be furnished or rendered by law; it being understood that they
constitute no part of the consideration for this Lease.
30. Miscellaneous.
A. Parties Bound. Subject to the provisions of this Lease regarding
consent by Lessor, this Lease shall be binding upon the parties hereto and shall
be binding upon and inure to the benefit of and be enforceable by their
respective successors and assigns.
B. Waiver of Custom. Lessor shall have the right at all times, any
law, usage or custom notwithstanding, to enforce
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strictly the provisions of this Lease, and the failure of Lessor at any time or
times, strictly to enforce any provision hereof, shall not be construed as
having created a custom or waiver in any way contrary to the specific provisions
of this Lease or as having in any way or manner modified this Lease.
C. Number and Gender. For the purposes of this Lease, the singular
shall include the plural and the plural shall include the singular and the
masculine shall include the feminine and the neuter, as the context may require.
The word "Lessor" as used herein shall mean the owner from time to time of the
fee or equitable title to the Premises and upon transfer of the fee or equitable
title, the person named herein as Lessor shall have no further liability or
obligation hereunder.
D. Captions. The captions contained herein are for the convenience of
the parties only. They do not in any way modify, amplify, alter or give full
notice of the provisions hereof.
E. Amendments. This Lease may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
F. Partial Invalidity. If any clause or provision of this Lease or the
application thereof to any person or in any circumstance shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such clause or provision to persons or in circumstances other than those as to
which it is valid or unenforceable, shall not be affected thereby, and each
clause and provision of this Lease shall be valid and enforceable to the fullest
extent permitted by law.
G. Governing Law. This Lease shall be governed by the laws of the
Commonwealth of Pennsylvania.
H. "For Sale" Sign. Lessor shall have the right to display a "For
Sale" sign at any time, and also, after notice from either party of intention to
determine this Lease, or any time within three (3) months prior to the
expiration of this Lease, a "For Rent" sign, or both "For Rent" and "For Sale"
signs; and all said signs shall be placed upon such part of the Premises as
Lessor may elect and may contain such matter as Lessor shall require.
Prospective purchasers or tenants, authorized by Lessor may inspect the Premises
at reasonable hours at any time on reasonable advanced notice to Lessee so as to
minimize the effect of same on Lessee's use and enjoyment of the Premises.
I. Entire Agreement. This Lease constitutes the entire agreement
between the parties hereto. Except as set forth herein, there are no promises,
representations or understandings between the parties of any kind or nature
whatsoever.
J. Effectiveness. The furnishing of the form of this Lease shall not
constitute an offer and this Lease shall become
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<PAGE>
effective upon and only upon its execution by and delivery to each party hereto.
K. Time of the Essence. All times set forth herein shall be of the
essence of this agreement.
L. Broker. Neither the Lessee nor the Lessor has taken any action or
knows of any circumstances which would make any party hereto liable for any
brokerage or finder's fees, except Lessor's obligation to Binswanger
Corporation, as set forth in a separate agreement between Lessor and Binswanger
Corporation. Each party agrees to indemnify the other, if contrary to the
representation or warranty herein set forth, any such party should become liable
for the payment of any such fee.
31. Bankruptcy or Insolvency.
Intentionally deleted by the parties since the subject will be covered
by existing laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
intending to be legally bound, as of the day and year last below written.
NAPPEN & ASSOCIATES, a
Pennsylvania limited partnership
t/a 309 DEVELOPMENT COMPANY
Dated: 5/29/96
By: /s/ Robert W. Nappen
--------------------------------
Robert W. Nappen, General Partner
SURGICAL LASER TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ Terry A. Fuller
--------------------------------
Dated: 5/29/96
Its: COO & EVP
--------------------------------
TIN NO.
-----------------------------
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EXHIBIT A
In accordance with Paragraphs 1B and 24A, Lessor shall make the following
alterations and improvements to the Premises. These alterations and improvements
need not be removed at the end of the lease. The attached plan, dated May 23,
1996 and entitled "SLT- REV," attached hereto as Schedule 1 (the "Plan")
comprises Lessor alterations and improvements and illustrates the locations of
the work:
1. Changes to the layout of the Premises as set forth in the Plan,
including without limitation:
a. hooking up a sink in the clean room and a floor sink by the loading
dock;
b. installing certain new partition walls and opening up certain
existing partition walls; and
c. installing certain lighting fixtures to light levels as indicated.
All light levels not indicated shall be suitable for general office
lighting.
2. Making the following improvements to the Premises generally:
a. Overhead lighting filter panels, where aged or damaged, shall be
replaced with new, matching panels.
b. All block wall areas abutting dropped ceiling areas shall be filled
and finished, so as to correct for particulates caused by seepage.
c. Air ducts and exhaust registers shall be made to be reasonably
clean.
3. The following finishes shall be made for areas other than the clean
room:
a. Existing ceiling tiles where aged or damaged shall be replaced with
new, matching tiles.
b. All walls shall be patched, sealed and painted with semi-gloss,
washable paint, color #953 I/A, Benjamin Moore Paints.
c. All areas marked on the Plan as tiled (e.g. cafeteria, mfg. area,
copy room) shall be tiled with Armstrong Imperial textured vinyl
composition (#51839, fortress white 12x12 1/8" gauge with Roppe 1/8"
vinyl cove base #578 pewter).
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d. All areas marked on the plan as carpeted (e.g. office areas, R&D
area) shall be carpeted with Stratton Ambition Tufted textured loop
pile carpet (#80530 Ashen grey) with Roppe 1/8" vinyl cove base #578
pewter.
4. Specifically for the clean room, the finishes shall be:
a. The ceiling in the clean room shall be weighted vinyl-covered
panels.
b. The walls in the clean room shall be patched and painted with
high-gloss washable paint, color #953 I/A, Benjamin Moore Paints.
c. The floor in the clean room shall be tiled with welded Armstrong
Medintech tandem sheet flooring (#91416 Almond gauge 0.080") and have
Roppe 1/8" vinyl cove base (#578 pewter.
5. The HVAC system to the clean room shall exceed class 100,000 and be
designed in consultation with Lessee. The HVAC system in general shall be
in first class condition.
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Exhibit A to the Lease Agreement dated May 29, 1996 between Nappen Associates
and Registrant includes a floor plan of the leased space in Montgomeryville. The
floor plan is entitled "Lot no. 14 - 42,000 Sq. Ft. Building, Bethlehem Pike
Industrial Center, Montgomeryville, Pa. 5-23-96 SLT Rev." Depicted on the floor
plan are, among other things, areas for executive offices, R&D, manufacturing,
machine shop, clean room, warehouse, quality assurance room.
32
Page 128 of 135 Pages
<PAGE>
EXHIBIT B
In accordance with Paragraph 24B, Lessee is permitted to make the following
alterations and improvements to the Premises. Such alterations and improvements
shall be removed, at Lessor's option, at the termination of the lease. The Plan
illustrates the locations of the work.
1. Lessee shall be responsible for electrical drops in the clean room,
manufacturing area, compressor room, the machine shop, the optics lab, etc.
The drops shall be multiple 110 volt 20 amp, and 208 volt 3 phase, and 208
volt 1 phase.
2. Lessee shall be responsible for installing a compressor(s) and
compressed air line to the manufacturing area.
3. Lessee shall be responsible for installing its office cubicles and file
cabinets.
4. Lessee shall be permitted to install racking in the warehouse area.
5. Lessee shall have vented ducts, one in the clean room (to be installed
by Lessor's HVAC contractor), and several in the machine shop and
manufacturing area.
6. Lessee shall be permitted to retain in place the following improvements
made by Moore Products: (a) air line drops to the compressor room; and (b)
2 ducts leading to and venting from the rear wall. Lessee shall be
responsible for removing these improvements at the end of the Lease unless
the Lessor permits otherwise or unless the succeeding lessee to the
Premises shall have need for the improvements.
33
Page 129 of 135 Pages
<PAGE>
EXHIBIT C
With reference to Paragraph 10B, Lessee currently uses the following substances
in its business operations.
o Accelerator 711
o Acetone
o Acetone Soluble Adhesive
o Acrylamide
o Aliphatic Amine Blend
o Amyl Acetate
o Bath Guard-Disinfectant Bathroom Cleaner
o Black Ink #7
o Blue Skies - Disinfectant Cleaner
o Bowl Cleaner
o Bright-Washroom Cleaner
o Braze 505
o Butane (Liquified)
o Cargille Optical Gel (Code 0608)
o Catalyst (Dow 4)
o Catalyst (Dow 176)
o Ceramabond 571 Powder
o Cerama-Bond 618
o Cerama-Dip 538 & Thinner
o Charge-Bowl Cleaner Detergent Thickened
o Creamy Lemon Wax Furniture Polish (SSS)
o Cyclohexane
o Cyclohexanone
o Deodorizer/Disinfectant Spray & Cleaner (SSS)
o Disinfectant Detergent (SSS)
o Double Steal
o Easy Strip (SSS)
o Code 210803
o Epo-Tek 353 ND Part A
o Epo-Tek 353 ND Part B
o Epoxy Resin
o Ethylene Glycol
o Fast Cure Additive (Dow 2-731)
34
Page 130 of 135 Pages
<PAGE>
o Fastbond 30-NF Green Contact Adhesive
o Fibermet Polishing Extender
o Floor Cleaner
o Floor Netralizer/Conditioner
o Fluoroglide CP Spray
o Flux (Liquid, Amber)
o Freon TF Cleansing Agent
o Freon 12 Techduster
o Formaldehyde
o Gentle Wash (SSS)
o Glass Cleaner (SSS)
o Glass Code 7070
o Graphi-Coat 623 Powder
o Hastilite Polishing Compound
o Heavy Duty Cleaner
o Heptane
o Hot Springs-Cleaner
o Hydrochloric Acid (37%)
o Invisible Shield
o Isocut Fluid
o Isopropyl Alcohol
o Isopropyl Myristate
o Lemon Twist-Liquid Concentrated Deodorant
o Liquid Defoamer (SSS)
o Locquic {R} Primer Grade N
o Locquic Gen Pur Primer T
o Loctite 411
o Loctite Black Max
o Loctite Prism
o Loctite Tak Pak
o Look-Glass Cleaner Concentrate
o Magic Glass Cleaning & Anti Fogging Fluid
o Manganese Dioxide
o Manganese Oxide
o MDX-4159 Fluid (Dow)
o Medical Adhesive Type A
o Medical Fluid (Dow 360)
35
Page 131 of 135 Pages
<PAGE>
o Medical Device Gap Filling
o Mercury
o Methanol
o Methylene Chloride
o Methy Ethyl Ketone
o Micromet Cerium Oxide Suspension (40-6355)
o Multi-Purpose Cleaner
o Neutral Floor Cleaner
o Nickel Oxide
o Paper Coating (Dow Sly-Off 294)
o Pearly-Clinging Heavy Duty Washroom Cleaner
o Plastic Wood Cellulose Fiber Filler - Natural
o Release Additive (Dow C4-2109)
o Removable Thread Locker 242 (Dow)
o Royalite ABS/PVC Alloy
o Silane (Dow Z-6020)
o Silastic {R} Medical Adhesive Type A
o Silicone Black Ink (Gem Type S)
o Silicone Red Ink (Gem Type S)
o Silicone Rubber CA (J-RTV)
o Silicone Rubber (RTV) 3112
o Silicone Rubber Base JRTV
o Silicone Rubber Sealant RTV 108
o Small Screw Threadlocker 222
o Soda-Lime Glass
o Solder
o Speedball - Power Cleaner
o Stainless Steel Brightener
o Superbond 412
o Superbond 417
o Tile and Grout Cleaner
o Trichloroethane (1,1,1)
o Trichloroethane (1,1,2)
o Ultra Jet
o Urinal Block
o Yttrium Oxide Patinal
o Vydax (Du-Pont)
36
Page 132 of 135 Pages
<PAGE>
o Walton-March Inc. (letter)
Revised 8/14/96
37
Page 133 of 135 Pages
<PAGE>
EXHIBIT 11
SURGICAL LASER TECHNOLOGIES, INC.
AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE (UNAUDITED)
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the Quarter Ended: For the Six months Ended:
---------------------- -------------------------
Jun. 30, Jul. 2, Jun. 30, Jul. 2,
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Primary Earnings (Loss) Per Share
Common Share:
Net income (loss) ($ 941) ($1,684) ($1,761) ($2,945)
------- ------- ------- -------
Weighted average number of shares
of common stock outstanding during
the period 9,855 9,850 9,854 9,848
Additional shares assuming excercise
of stock options and warrants
utilizing the treasury stock method -- -- -- --
------- ------- ------- -------
Weighted average Common Stock and
Common Stock equivalents outstanding 9,855 9,850 9,854 9,848
------- ------- ------- -------
Primary earnings (loss) per share ($ 0.10) ($ 0.17) ($ 0.18) ($ 0.30)
======= ======= ======= =======
Fully Diluted Earnings (Loss) Per
Common Share:
Net income (loss) ($ 941) ($1,684) ($1,761) ($2,945)
------- ------- ------- -------
Weighted average number of shares
of Common Stock outstanding during
the period 9,855 9,850 9,854 9,848
Additional shares assuming excercise
of stock options and warrants
utilizing the treasury stock method -- -- -- --
Additional shares assuming conversion of
convertible subordinated notes -- -- -- --
------- ------- ------- -------
Weighted average Common Stock and Common
Stock equivalents outstanding 9,855 9,850 9,854 9,848
------- ------- ------- -------
Fully diluted earnings (loss) per share ($ 0.10) ($ 0.17) ($ 0.18) ($ 0.30)
======= ======= ======= =======
Page 134 of 135 Pages
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 7,756
<SECURITIES> 0
<RECEIVABLES> 2,723
<ALLOWANCES> (118)
<INVENTORY> 3,455
<CURRENT-ASSETS> 14,088
<PP&E> 14,433
<DEPRECIATION> (6,592)
<TOTAL-ASSETS> 23,190
<CURRENT-LIABILITIES> 3,082
<BONDS> 0
0
0
<COMMON> 99
<OTHER-SE> 13,844
<TOTAL-LIABILITY-AND-EQUITY> 23,190
<SALES> 5,549
<TOTAL-REVENUES> 5,549
<CGS> 1,979
<TOTAL-COSTS> 1,979
<OTHER-EXPENSES> 5,149
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 284
<INCOME-PRETAX> (1,761)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,761)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,761)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
