EXHIBIT 10.2.4

 

AMENDED AND RESTATED OFFICE/WAREHOUSE LEASE 

FOURTH EXTENSION AGREEMENT

 

(1260 Red Fox Road, Arden Hills, Minnesota)

 

This Amended and Restated Office/Warehouse Lease Fourth Extension Agreement
(“Fourth Amendment”) is made March 10, 2017 (“Effective Date”), by Arden
Partners I, L.L.P., a Minnesota limited liability partnership (“Lessor”) and
IntriCon, Inc., a Minnesota corporation (“Lessee”).

 

RECITALS

 

A.       Lessor and Lessee are parties to that certain Amended and Restated
Office/Warehouse Lease dated November 1, 1996 (the “Original Lease”), as amended
by Amended and Restated Office/Warehouse Lease Extension Agreement dated October
1, 2001 (“First Amendment”), Amended and Restated Office/Warehouse Lease Second
Extension Agreement dated October 20, 2011 (“Second Amendment”), and Amended and
Restated Office/Warehouse Lease Third Extension Agreement dated September 17,
2013 (“Third Amendment”) (collectively, the “Amended Lease”), for the lease of
1260 Red Fox Road, Arden Hills, Minnesota (the “Premises”). 

 

B.       The term of the Amended Lease expired on October 31, 2016. 

 

C.       Lessor and Lessee are executing this Fourth Amendment in order to
extend the term of the Amended Lease and amend certain other terms of the
Amended Lease.

 

D.       The Amended Lease, as amended by this Fourth Amendment, is referred to
herein as the “Lease.”

 

NOW, THEREFORE, in consideration of the foregoing Recitals and their mutual
agreements and covenants contained herein, Lessor and Lessee agree as follows: 

 

1.        Recitals Incorporated. The Recitals above are incorporated herein by
reference. Capitalized terms used in this Fourth Amendment shall have the same
definitions as used in the Amended Lease unless the context indicates
otherwise. 

 

2.        Extension of Lease Term. The term of the Amended Lease is extended
from November 1, 2016, to January 31, 2022 (the “New Term”). 

 

3.        Base Rent During New Term. Subject to Paragraph 4 below, the Base Rent
payable during the New Term shall be as follows: 

 

 

 

  

November 1, 2016,   through February 28, 2017: $31,792.50 per month;     March
1, 2017, through   May 31, 2017: $0.00 per month;*     June 1, 2017, through  
October 31, 2017: $31,792.50 per month;     November 1, 2017, through   October
31, 2018: $32,587.31 per month;     November 1, 2018, through   October 31, 2019
$33,402.00 per month;     November 1, 2019, through   October 31, 2020
$34,237.05 per month;     November 1, 2020, through   October 31, 2021
$35,092.97 per month; and     November 1, 2021, through   January 31, 2022
$35,970.30 per month.

  

*If Lessee defaults under the Lease and Lessor either terminates the Lease or
Lessee’s right to possession of the Premises, the amount of Base Rent that would
have been payable for March 1, 2017, through May 31, 2017 ($95,377.50), but for
such abatement, shall be immediately due and payable in full.

 

4.        Application of Holdover Rent. As noted in the Recitals, the term of
the Amended Lease expired October 31, 2016. Upon such expiration, Lessee
remained in possession of the Premises without the written consent of Lessor.
Accordingly, Lessee has been holding over under Paragraph 30 of the Original
Lease. On or about December 6, 2016, Lessee paid Lessor Base Rent and Additional
Rent at the holdover rate for November and December, 2016, in the total amount
of $160,930.00 (the “November/December Holdover Rent”). By letter dated February
3, 2017, which included a check payable to Lessor, Lessee paid an additional
$49,457.50 to Lessor (the “February Payment”). As of the date of this Fourth
Amendment, Lessor has not cashed the check for the February Payment. Subject to
Lessor’s successful negotiation of the February Payment check, Lessor and Lessee
agree to allocate Lessee’s payment of the November/December Holdover Rent and
the February Payment, totaling $210,387.50, as follows:

  

(a)Base Rent of $31,792.50 for November, 2016-- paid

(b)Base Rent of $31,792.50 for December, 2016-- paid

(c)Base Rent of $31,792.50 for January, 2017-- paid

(d)Base Rent of $31,792.50 for February, 2017-- paid

(e)Additional Rent of $9,225.00 for November, 2016-- paid

(f)Additional Rent of $9,225.00 for December, 2016-- paid

(g)Additional Rent of $9,225.00 for January, 2017-- paid

 

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(h)Additional Rent of $9,225.00 for February, 2017-- paid

(i)Additional Rent of $9,225.00 for March, 2017-- paid

(j)Additional Rent of $9,225.00 for April, 2017-- pre-paid

(k)Additional Rent of $9,225.00 for May, 2017-- pre-paid

(l)Additional Rent of $9,225.00 for June, 2017-- pre-paid

(m)Additional Rent of $9,417.50 for July, 2017-- pre-paid       Total paid and
pre-paid-- $210,387.50

  

5.        Deferred Maintenance/Allowance. Lessee intends to perform certain
“Deferred Maintenance” (described in Paragraph 6 below) to the Premises. Lessee
shall obtain Lessor’s prior written consent to the plans and methods for
performing the Deferred Maintenance (such consent not to be unreasonably
withheld, delayed or conditioned) and shall comply with the other terms of
Paragraph 8 of the Original Lease in connection with the Deferred Maintenance.
Lessor shall provide Lessee an allowance in the amount of the lesser of (i)
$120,000.00, or (ii) the actual cost of performing, constructing or installing
the items comprising the Deferred Maintenance (as applicable, the “Allowance”).
The Allowance shall only be used for construction costs and for soft costs
including permit fees, architectural fees, engineering fees and other related
soft costs for the Deferred Maintenance, but no more than 10% of the Allowance
shall be used for soft costs. The Allowance shall only be used for the Deferred
Maintenance. No portion of the Allowance shall be used for Lessee’s furniture,
equipment, or trade fixtures, or other improvements to the Premises. Except for
the Allowance, Lessee shall be responsible for payment of all hard and soft
costs of the Deferred Maintenance. Lessor shall advance the necessary funds from
the Allowance to Lessee in one lump sum after the Deferred Maintenance has been
fully completed, inspected and approved by or on behalf of Lessor, and Lessor
has received a “Request for Payment” in the form of Exhibit A attached hereto
together with the items described in Paragraph 4 of the Request for Payment.
Within fifteen (15) days after receipt of a Request for Payment and the items
described in paragraph 4 therein, and Lessor’s inspection and approval of the
Deferred Maintenance described in the Request for Payment, Lessor will fund the
amount requested, but in no event more than the amount of the Allowance. The
Allowance shall in no event exceed the actual costs of the Deferred Maintenance.
If Lessor has paid the Allowance to Lessee and this Lease subsequently
terminates as the result of a default by Lessee prior to the end of the New
Term, then Lessee shall repay the unamortized portion of the Allowance to
Lessor, upon demand, such amount to be amortized over the New Term at an
interest rate of eight percent (8%) per annum. Any portion of the Allowance that
has not been requested by Lessee in connection with the Deferred Maintenance by
December 31, 2017, shall be forfeited and shall remain the sole property of
Lessor.

  

6.        Deferred Maintenance. As used in this Fourth Amendment, the term
“Deferred Maintenance” shall mean any repairs and/or improvements to the
interior or exterior of the Premises, including, without limitation, bathrooms,
access areas, coffee and food station areas, and other capital items located
within or outside of the Building.

  

7.        Parking Lot Improvements. Lessor, at Lessor’s sole discretion, may
cause improvements to be made to the driveways and parking areas of the
Premises, including but not

 

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limited to, replacing all or a portion of the curbing on the Premises and
performing a mill and overlay on all of the paved surfaces of the Premises (the
“Curbing/Parking Improvements”). Lessor may cause the Curbing/Parking
Improvements to be performed at any time during the New Term. Lessor and Lessee,
in good faith, shall cooperate with each other in connection with scheduling the
construction of the Curbing/Parking Improvements. The cost of constructing the
Curbing/Parking Improvements shall be allocated between Lessor and Lessee as
follows: 

 

(a)If the Curbing/Parking Improvements are commenced in calendar year 2017, and
substantially completed by October 31, 2017, the cost of the Curbing/Parking
Improvements shall be allocated between Lessor and Lessee as follows: (i) Lessee
shall pay the lesser of (a) twenty-five percent (25%) of the actual aggregate
costs of the Curbing/Parking Improvements or $50,000 (as applicable, “Lessee’s
Portion”), and (ii) Lessor shall pay the balance of the Curbing/Parking
Improvements.

  

(b)If the Curbing/Parking Improvements are commenced after October 31, 2017, and
substantially completed by October 31, 2018, the cost of the Curbing/Parking
Improvements shall be allocated between Lessor and Lessee as follows: (i) Lessee
shall pay the lesser of (a) twenty percent (20%) of the actual aggregate costs
of the Curbing/Parking Improvements or $40,000 (as applicable, “Lessee’s
Portion”), and (ii) Lessor shall pay the balance of the Curbing/Parking
Improvements.

  

(c)If the Curbing/Parking Improvements are commenced after October 31, 2018, and
substantially completed by October 31, 2019, the cost of the Curbing/Parking
Improvements shall be allocated between Lessor and Lessee as follows: (i) Lessee
shall pay the lesser of (a) fifteen percent (15%) of the actual aggregate costs
of the Curbing/Parking Improvements or $30,000 (as applicable, “Lessee’s
Portion”), and (ii) Lessor shall pay the balance of the Curbing/Parking
Improvements.

  

(d)If the Curbing/Parking Improvements are commenced after October 31, 2019, and
substantially completed by October 31, 2020, the cost of the Curbing/Parking
Improvements shall be allocated between Lessor and Lessee as follows: (i) Lessee
shall pay the lesser of (a) ten percent (10%) of the actual aggregate costs of
the Curbing/Parking Improvements or $20,000 (as applicable, “Lessee’s Portion”),
and (ii) Lessor shall pay the balance of the Curbing/Parking Improvements.

  

(e)If the Curbing/Parking Improvements are commenced after October 31, 2020, and
substantially completed by October 31, 2021, the cost of the Curbing/Parking
Improvements shall be allocated between Lessor and Lessee as follows: (i) Lessee
shall pay the lesser of (a) five percent (5%) of the actual aggregate costs of
the Curbing/Parking Improvements or $10,000 (as applicable, “Lessee’s Portion”),
and (ii) Lessor shall pay the balance of the Curbing/Parking Improvements.

  

In each case under paragraphs (a)-(e) above, Lessee’s Portion shall be amortized
over the remainder of the New Term with interest at the rate of eight percent
(8%) per annum, and shall be paid by Lessee to Lessor in monthly installments as
part of the Operating Expenses under the Lease beginning with the calendar month
immediately

 

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following the calendar month in which the Curbing/Parking Improvements are
substantially completed.

 

8.     Additional Amendments to the Amended Lease. The Amended Lease is also
amended as follows:

  

(a)In the second paragraph of Section 12 of the Original Lease, the time period
“ninety (90) days” is deleted in its entirety and replaced with “twelve (12)
months.”

  

(b)Section 15.a. of the Original Lease is deleted in its entirety and replaced
by the following: “Lessor, at all times during the term of this Lease, shall
obtain and maintain a policy or policies of insurance issued by an insurance
company licensed to do business in the State of Minnesota insuring the Building
against loss or damage by fire, explosion or other insurance hazards for the
full replacement value with Lessor named as loss payee. The cost of the
premium(s) for such policy(ies) shall be an Operating Expense under Section 3.b.
of the Original Lease.”

  

(c)Insert a new sentence at the end of Section 16 as follows: “Lessee shall give
to Lessor renewal certificates of insurance for the insurance that Lessee is
required to carry under this Lease at least ten (10) days before the expiration
of the particular insurance policy.”

 

(d)Section 16 of the Original Lease is amended by deleting the phrase
“$1,000,000 for injury/death to any one person” and replacing it with
“$3,000,000 for injury/death to any one person.”

 

(e)In the first sentence of Section 17.a. of the Original Lease, the following
phrase is to be added after “ten (10) days after the same shall be due,”:
“provided that Lessor shall provide a notice to Lessee and five (5) days
opportunity to cure one time within each twelve (12) month period if Lessee
fails to timely pay such rent due hereunder,”.

 

(f)In the second sentence of Section 17.b. of the Original Lease, the word
“subletting” is deleted and replaced with the word “reletting.”

 

(g)The following language is added at the end of Section 21 of the Original
Lease: “Notwithstanding anything contained herein to the contrary, Lessee may
assign this Lease or sublease the Premises, without Lessor’s prior written
consent, to any entity, that controls, is controlled by or is under common
control with, Lessee, or to any successor to Lessee by merger, consolidation or
reorganization, or to any purchaser of all or substantially all of the assets of
Lessee as a going concern (each, a “Lessee Affiliate”). No such assignment to,
or sublease with, a Lessee Affiliate shall release Lessee from its obligations
under this Lease.”

  

(h)Insert the words “that first accrue after the date of sale” at the end of the
first sentence in Section 23 of the Original Lease. The second sentence in the
first paragraph of Section 23 of the Original Lease is deleted in its entirety.

 

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(i)The word “Lessor” at the beginning of the second paragraph in Section 23 of
the Original Lease is deleted and replaced with the word “Lessee.”

  

9.        Brokers. Lessor is represented by David Stokes of Cushman & Wakefield
NorthMarq (“Lessor’s Broker”) and Lessee is represented by Mark Sims and Charlie
Merwin of Cushman & Wakefield NorthMarq (“Lessee’s Broker”). Lessor shall pay a
commission to Lessor’s Broker pursuant to a separate agreement. Lessor’s Broker
may share the commission with Lessee’s Broker.

 

10.      Addresses for Notice. The addresses for notices to Lessor and Lessee
under the Lease are as follows:

  

To Lessor: Arden Partners I, L.L.P.   c/o Shelly Wahlberg   822 159th Ave. NE  
Ham Lake, MN 55304     To Lessee: IntriCon Inc.   1260 Red Fox Road   Arden
Hills, MN 55112   Attention: CFO

 

11.      Representations.

 

  (a)      Upon the execution of this Fourth Amendment, Lessor’s successful
negotiation of the February Payment check and delivery to Lessor of the executed
Guaranty (described in Paragraph 13), Lessor agrees that all pre-existing
defaults by Lessee under the terms of the Lease that Lessor has actual knowledge
of shall be deemed to have been waived through the Effective Date.

  

  (b)      The parties executing this Fourth Amendment are authorized to do so
and no third party consent is required. 

 

  (c)      In connection with any prospective financing that may be obtained by
Lessee, Lessor agrees to reasonably cooperate with Lessee’s lender to execute
and deliver a landlord’s waiver or subordination that is reasonably acceptable
to Lessor.

 

12.      Ratification. All other terms of the Amended Lease that are not
inconsistent with the terms of this Fourth Amendment shall remain in full force
and effect. This Fourth Amendment may be signed in counterparts.

 

13.      Guaranty. As security for Lessee’s payment and performance obligations
under the Lease, and as a condition precedent to Lessor’s execution of this
Fourth Amendment, IntriCon Corporation, a Pennsylvania corporation, shall
execute the Guaranty in the form of Exhibit B attached hereto.

 

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Signature Page to Fourth Amendment

 

IN WITNESS WHEREOF, Lessor and Lessee have executed this Fourth Amendment the
day and year first above written.

  

  LESSOR:         Arden Partners I, L.L.P.         By:  /s/ Thomas Giguere    
Its: Managing Partner         LESSEE:         IntriCon, Inc.         By:  /s/
Scott Longval     Its: CFO

  

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EXHIBIT A

 

Request for Payment

 

REQUEST FOR PAYMENT 

 

__________________, 2017 

 

Reference is made to that Amended and Restated Office/Warehouse Lease dated
November 1, 1996, as amended (the “Amended Lease”) (the last amendment being
Amended and Restated Office/Warehouse Lease Fourth Extension Agreement dated
March ___, 2017 (the “Fourth Amendment”), between Arden Partners I, L.L.P.
(“Lessor”) and IntriCon, Inc. (“Lessee”) for the Premises at 1260 Red Fox Road,
Arden Hills, Minnesota. Unless otherwise indicated, all terms defined in the
Amended Lease have the same respective meaning when used herein.

  

1. Pursuant to Paragraph 5 of the Fourth Amendment, Lessee hereby requests that
Lessor make a payment on the Allowance in the amount of $___________.

 

2. The requested payment is for payment of the following Deferred Maintenance:
_____________________________________.

 

3. Lessee represents to Lessor as follows:

 

(a)  all the costs and expenses relating to this Request for Payment are
permitted under Paragraphs 5 and 6 of the Fourth Amendment; 

 

(b)  on the date of this Request for Payment, no event of default exists under
the Lease or no event exists that with the giving of notice or the passage of
time would constitute a default; and

 

(c)  Lessee has no knowledge that the work in connection with the applicable
Deferred Maintenance has not been performed in a good and workmanlike manner and
in accordance with the applicable plans and specifications therefor and all
applicable laws. 

 

4.       Attached are (a) a certificate from Lessee’s general contractor stating
that the applicable portion of the Deferred Maintenance relating to the payment
has been completed and installed in accordance with the plans and
specifications; and (b) a full release of lien for the Premises signed by
Lessee’s general contractor and by each subcontractor or supplier, as
applicable, being paid in connection with the payment requested by Lessee. 

          IntriCon, Inc.       By:           Its:  

 

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EXHIBIT B

 

IntriCon Corporation Guaranty 

 

(see attached)

 

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GUARANTY

 

GUARANTY made March 10, 2017, by IntriCon Corporation, a Pennsylvania
corporation (the “Guarantor”) in favor of Arden Partners I, L.L.P., a Minnesota
limited liability partnership (“Arden”).

 

WHEREAS, Guarantor owns all of the issued and outstanding shares of stock in
IntriCon, Inc., a Minnesota corporation (“Company”); and

 

WHEREAS, Arden, as Lessor, and Company, as Lessee, are parties to that certain
Amended and Restated Office/Warehouse Lease dated November 1, 1996 (the
“Original Lease”), as amended by Amended and Restated Office/Warehouse Lease
Extension Agreement dated October 1, 2001 (“First Amendment”), Amended and
Restated Office/Warehouse Lease Second Extension Agreement dated October 20,
2011 (“Second Amendment”), and Amended and Restated Office/Warehouse Lease Third
Extension Agreement dated September 17, 2013 (“Third Amendment”) (collectively,
the “Lease”), for the lease of 1260 Red Fox Road, Arden Hills, Minnesota (the
“Premises”); and

 

WHEREAS, Arden intends to enter into an Amended and Restated Office/Warehouse
Lease Fourth Extension Agreement (“Fourth Amendment”) with Company whereby the
term of the Lease will be extended and certain other terms of the Lease will be
amended; and

 

WHEREAS, Arden will not enter into the Fourth Amendment with Company unless
Guarantor executes this Guaranty; and

 

WHEREAS, to induce Arden to enter into the Fourth Amendment with Company,
Guarantor has agreed to guaranty Company’s obligations under the Lease, as
amended by the Fourth Amendment, according to the terms of this Guaranty; and

 

WHEREAS, the Lease, as amended by the Fourth Amendment, is referred to herein as
the “Amended Lease.”

 

NOW, THEREFORE, for valuable consideration, Guarantor hereby agrees as follows:

 

1.       Obligations and Duties. Guarantor absolutely, irrevocably and
unconditionally guaranties to Arden the full and punctual payment and
performance of all obligations and liabilities of Company under the Amended
Lease, and to reimburse Arden for its costs and expenses incurred in enforcing
the Amended Lease and/or this Guaranty, including but not limited to, attorneys’
fees and other legal expenses, all whether presently existing or hereafter
arising (the “Obligations”).

 

2.       Primary Obligation. This Guaranty is a primary obligation of Guarantor.
This Guaranty is intended to be enforceable against Guarantor directly as if
Guarantor was the Lessee under the Amended Lease. It is expressly understood
that this is a guaranty of payment and performance and not merely of
collectability. Guarantor shall, on demand, pay the amounts and/or perform the
obligations guaranteed by Guarantor under this Guaranty regardless of whether
Arden has instituted suit or exhausted its remedies against Company under the
Amended

 

 

 

 

Lease. No irregularity or enforceability of all or any part of the obligations
hereby guaranteed or of any security therefor shall affect, impair or be a
defense to this Guaranty. Guarantor waives and agrees not to assert or take
advantage of: (a) any right to require Arden to proceed against Company or any
other person or to pursue any other remedy before proceeding against Guarantor;
(b) any right or defense that may arise by reason of the incapacity, lack of
authority, death, dissolution or disability of Company or any other person; and
(c) any defense arising by reason of the absence, impairment, modification,
limitation, destruction, or cessation (in bankruptcy, by an election of
remedies, or otherwise) of the liability of Company, of the subrogation rights
of Guarantor or of the right of Guarantor to proceed against Company for
reimbursement. In addition, Guarantor waives and agrees not to assert or take
advantage of any right or defense based on the absence of any or all
presentments, demands (including demands for performance), notices, and protests
of each and every kind.

 

3.       Binding Effect. This Guaranty shall inure to the benefit of Arden, its
successors or assigns. Guarantor shall not assign or delegate any of its
responsibilities hereunder to any other party. This Guaranty is binding upon
Guarantor and any successors and/or assigns that may be permitted by Arden in
its sole discretion.

 

4.       Waiver. No delay on the part of Arden in exercising any rights
hereunder or failure to exercise the same shall operate as a waiver of such
rights. No notice to or demand on Guarantor shall be deemed to be a waiver of
any obligation of Guarantor or of the right of Arden to take other or further
action without notice or demand as provided herein. In any event, no
modification or waiver of the provisions hereof shall be effective unless in
writing and signed by Arden nor shall any waiver be applicable except in the
specific instance or matter for which given.

 

5.       Costs, Expenses and Attorneys’ Fees. Guarantor will pay, or reimburse
Arden for, all costs and expenses, including attorneys’ fees, incurred by Arden
in connection with the protection, defense or enforcement of this Guaranty.

 

6.       Severability. Wherever possible, each provision of this Guaranty shall
be interpreted in such a manner as to be effective and valid under applicable
law, but if any provision of this Guaranty shall be prohibited by or invalid
under such law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Guaranty.

 

7.       Governing Law. This Guaranty shall be governed by the laws of the state
of Minnesota.

  

Signature page follows

 

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Guarantor has executed this Guaranty this 10 day of March, 2017.

 

  GUARANTOR:         IntriCon Corporation         By /s/ Scott Longval     Its
CFO  

  

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