Exhibit 10.3

 

RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:

 

WELLS FARGO BANK, N.A.
Commercial Mortgage Servicing
1320 Willow Pass Road, Suite 210
Concord, CA 94520

 

Loan No.: 70-0200685

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(Space Above For Recorder’s Use)

 

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

This SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (“Agreement”) is
made as of December 14, 2004, by and between AMERICAN BANK NOTE HOLOGRAPHICS,
INC., a Delaware corporation (“Subtenant”), and LASALLE BANK NATIONAL
ASSOCIATION, FORMERLY KNOWN AS LASALLE NATIONAL BANK, AS TRUSTEE FOR MORGAN
STANLEY CAPITAL I INC., COMMERCIAL MORTGAGE SECURITIES INC., COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATES, SERIES 1999-WF1 (“Lender”), with reference to the
following facts and intentions of the parties:

R E C I T A L S

A.                                   More Applied Four (DE) LLC, a Delaware
limited liability company (“Owner”) is the owner of the land and improvements
commonly known as 2 Applegate Drive, Robbinsville, New Jersey, and more
specifically described in Exhibit A attached hereto (“Property”) and the owner
of the Landlord’s interest in the lease identified in Recital B below.

 

B.                                     APW North America, Inc., a Delaware
corporation (“APW”), and Owner, as successor in interest to Power (DE) QRS
14-34, Inc., a Delaware corporation, are parties to that certain Deed of Lease
Agreement dated as of May 30, 2000, as amended by that certain First Amendment
to Deed of Lease dated July 31, 2000, as amended by that certain Second
Amendment to Deed of Lease dated October 31, 2001, and as amended by that
certain Third Amendment to Deed of Lease dated December 14, 2004 (as amended,
the “Master Lease”), pursuant to which Owner leases the Property, among other
locations, to APW.

 

C.                                     Subtenant and APW are parties to that
certain Sublease dated as of December 14, 2004 pursuant to which APW subleases
the Property to Subtenant.

 

D.                                    Owner is indebted to Lender under a
promissory note in the original principal amount of $11,070,524, which note is
secured by, among other things, a mortgage encumbering the Property, dated
October 31, 2001 and recorded on November 7, 2001 with the Office of the County
Clerk of Mercer County, New Jersey in Mortgage Book 6391, at Page 47. Owner

 

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is also obligated to Lender pursuant to a guaranty relating to a $6,429,477 loan
made by Lender’s predecessor in interest to an affiliate of Owner, which
guaranty is secured by a second mortgage encumbering the Property, dated October
31, 2001 and recorded on November 7, 2001 with the Office of the County Clerk of
Mercer County, New Jersey in Mortgage Book 6391, at Page 118. The aforementioned
mortgages are individually and collectively referred to herein as the “Mortgage”

 

E.                                      Pursuant to that certain Subordination,
Non-Disturbance, Attornment, Renewal and Option to Purchase Agreement dated as
of December 14, 2004 between Owner and Subtenant (the “Sublease SNDA”), the
parties thereto have agreed, among other things, that if the Master Lease is
terminated prior to the expiration or termination of the Sublease, the Sublease
will become a direct lease between Owner and Subtenant. The Sublease, as
modified by the Sublease SNDA is referred to herein as the “Lease”.

 

F.                                      As a condition to the Lease, Subtenant
has requested that Lender make certain agreements with Subtenant, as set forth
below, and Lender is willing to make such agreements with Subtenant if Subtenant
furnishes certain assurances to, and makes certain agreements with, Lender, as
set forth below.

 

THEREFORE, the parties agree as follows:

 

1.          SUBORDINATION.

 

1.1.     Prior Lien. The Mortgage, and any modifications, renewals or extensions
thereof, shall unconditionally be and at all times remain a lien or charge on
the Property prior and superior to the Lease.

 

1.2.     Entire Agreement. This Agreement shall be the whole agreement and only
agreement with regard to the subordination of the Lease to the lien or charge of
the Mortgage, and shall supersede and cancel, but only insofar as would affect
the priority between the Mortgage and the Lease, any prior agreements as to such
subordination, including, without limitation, those provisions, if any,
contained in the Lease which provide for the subordination of the Lease to a
deed or deeds of trust, a mortgage or mortgages, a deed or deeds to secure debt
or a trust indenture or trust indentures.

 

1.3.     Disbursements. Lender, in making disbursements pursuant to the Note,
the Mortgage or any loan agreements with respect to the Property, is under no
obligation or duty to, nor has Lender represented that it will, see to the
application of such proceeds by the person or persons to whom Lender disburses
such proceeds, and any application or use of such proceeds for purposes other
than those provided for in such agreement or agreements shall not defeat this
Agreement to subordinate in whole or in part.

 

1.4.     Subordination. Subtenant intentionally and unconditionally waives,
relinquishes and subordinates all of Subtenant’s right, title and interest in
and to the Property, to the lien of the Mortgage.

 

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2.         NON-DISTURBANCE AND ATTORNMENT.

 

     2.1.   Non-Disturbance. Notwithstanding anything to the contrary contained
in the Lease, so long as there shall exist no breach, default or event of
default (beyond any period given to Subtenant in the Lease to cure such default)
on the part of Subtenant under the Lease at the time of any judicial or non
-judicial foreclosure of the Mortgage or deed in lieu thereof or at any time
Lender (or its designee or successors) otherwise acquires title to the Property,
Lender agrees that the leasehold interest of Subtenant under the Lease shall not
be terminated or otherwise disturbed by reason of such foreclosure, deed in lieu
thereof or other acquisition of the Property (and Subtenant shall not be named
as a defendant in any such foreclosure action), but rather the Lease shall
continue in full force and effect and Lender shall recognize and accept
Subtenant as Subtenant under the Lease subject to the provisions of the Lease
including, without limitation, all of the terms of the Sublease SNDA which amend
the Sublease.

 

     2.2.   Attornment. Notwithstanding anything to the contrary contained in
the Lease, should title to the Property and Owner’s interest in the Lease be
transferred to Lender or any other person or entity (“New Owner”) by, or in lieu
of judicial or non-judicial foreclosure of the Mortgage (collectively, a
“Transfer”), Subtenant agrees, for the benefit of New Owner and effective
immediately and automatically upon the occurrence of any such Transfer, that:
(a) Subtenant shall pay to New Owner all rental payments required to be made by
Subtenant pursuant to the terms of the Lease for the remainder of the Lease
term; (b) Subtenant shall be bound to New Owner in accordance with all of the
provisions of the Lease for the remainder of the Lease term; (c) Subtenant
hereby attorns to New Owner as its landlord, such attornment to be effective and
self-operative without the execution of any further instrument; (d) New Owner
shall not be liable for any default of any prior landlord under the Lease,
including, without limitation, Owner, except where such default is continuing at
the time New Owner acquires title to the leased premises and New Owner fails to
cure same after receiving notice thereof; (e) New Owner shall not be subject to
any offsets or defenses which Subtenant may have against any prior landlord
under the Lease, including, without limitation, Owner, except where such offsets
or defenses arise out of a default of the prior landlord which is continuing at
the time New Owner acquires title to the leased premises and New Owner fails to
cure same after receiving notice thereof; and (f) New Owner shall not be liable
for any obligations of landlord arising under the Lease following any subsequent
transfer of the title to the leased premises by New Owner.

 

                     2.3.   [Intentionally Deleted]

 

     2.4.   Option to Purchase; Right of First Offer. The provisions of Section
15 of the Sublease, Section 8 and Section 13 of the Sublease SNDA, and any other
provision of the Lease notwithstanding (collectively, the “Option and ROFO
Rights”), Subtenant acknowledges and agrees as follows:

 

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(i)            Without limiting the generality of any provision of this
Agreement, the Option and ROFO Rights are subject to the provisions of the
Mortgage and each of the other documents, instruments and agreements executed in
connection with the above-described indebtedness of Owner and Owner’s affiliate
to Lender (collectively, the “Debt”);

(ii)           Subtenant shall not have the right to exercise any of the Option
and ROFO Rights as a result of the appointment of a receiver, the foreclosure of
the Mortgage, or the Transfer of the Property in lieu of judicial or
non-judicial foreclosure of the Mortgage; and

(iii)          Subtenant shall not have the right to exercise any option to
purchase the Property included in the Option and ROFO Rights unless and until
the Debt has been indefeasibly paid in full or unless the Debt will be paid in
full contemporaneously with the closing of the acquisition of Property in
connection with Subtenant’s exercise of such option to purchase.

 

3.             [Intentionally Deleted]

4.             [Intentionally Deleted]

5.             MISCELLANEOUS.

5.1.     Heirs, Successors and Assigns. The covenants herein shall be binding
upon, and
inure to the benefit of, the heirs, successors and assigns of the parties
hereto. Whenever necessary or appropriate to give logical meaning to a provision
of this Agreement, the term “Owner” shall be deemed to mean the then current
owner of the Property and the landlord’s interest in the Lease.

5.2.     Addresses; Request for Notice. All notices and other communications
that are required or permitted to be given to a party under this Agreement shall
be in writing and shall be sent to such party, either by personal delivery, by
overnight delivery service, by certified first class mail, return receipt
requested, or by facsimile transmission, to the address or facsimile number
below. All such notices and communications shall be effective upon receipt of
such delivery or facsimile transmission.

 

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The addresses and facsimile numbers of the parties shall be:

Subtenant:

 

Lender:

American Bank Note Holographics, Inc.
399 Executive Boulevard
Elmsford, NY 10103
Attention: Kenneth Traub, President and CEO

 

LaSalle Bank National Association, formerly known as LaSalle National Bank, as
Trustee for Morgan Stanley Capital I Inc., Commercial Mortgage Securities Inc.,
Commercial Mortgage Pass-Through Certificates, Series 1999-WF 1

 

 

 

 

 

c/o Wells Fargo Bank, N.A.

 

 

Commercial Mortgage Servicing 1320 Willow Pass Road, Suite 210 Concord, CA 94520

 

provided, however, any party shall have the right to change its address for
notice hereunder by the giving of written notice thereof to the other party in
the manner set forth in this Agreement.

5.3.     Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute and be construed as one and the same instrument.

5.4.     Section Headings. Section headings in this Agreement are for
convenience only and are not to be construed as part of this Agreement or in any
way limiting or applying the provisions hereof.

5.5.     Attorneys’ Fees. If any legal action, suit or proceeding is commenced
between Subtenant and Lender regarding their respective rights and obligations
under this Agreement, the prevailing party shall be entitled to recover, in
addition to damages or other relief, costs and expenses, attorneys’ fees and
court costs (including, without limitation, expert witness fees). As used
herein, the term “prevailing party” shall mean the party which obtains the
principal relief it has sought, whether by compromise settlement or judgment. If
the party which commenced or instituted the action, suit or proceeding shall
dismiss or discontinue it without the concurrence of the other party, such other
party shall be deemed the prevailing party.

6.        INCORPORATION. Exhibit A, the Owner’s Consent is attached hereto and
incorporated herein by this reference.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

“LENDER”

 

LASALLE BANK NATIONAL ASSOCIATION, FORMERLY KNOWN AS LASALLE NATIONAL BANK, AS
TRUSTEE FOR MORGAN STANLEY CAPITAL I INC. COMMERCIAL MORTGAGE SECURITIES INC.,
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-WF1

 

By:

Wells Fargo Bank, National Association, as Master Servicer under the Pooling and
Servicing Agreement, dated February 1, 1999 by and between Morgan Stanley
Capital I Inc., Wells Fargo Bank, National Association, GMAC Commercial Mortgage
Corporation, LaSalle National Bank, ABN AMRO Bank N.V., and Norwest Bank
Minnesota, National Association

 

 

 

 

By:

/s/ Sarah J. Burns

 

 

 

Name:

Sarah J. Burns

 

 

 

Title:

Assistant Vice President

 

 

“SUBTENANT”

 

AMERICAN BANK NOTE HOLOGRAPHICS, INC.,
a Delaware corporation

 

 

By:

/s/ Kenneth H. Traub

 

 

 

 

 

Name:

Kenneth H. Traub

 

 

 

Its:

President and CEO

 

 

 

 

 

 

 

 

 

IT IS RECOMMENDED THAT, PRIOR TO THE EXECUTION OF THIS AGREEMENT, THE PARTIES
CONSULT WITH THEIR ATTORNEYS WITH RESPECT HERETO.

 

ALL SIGNATURES MUST BE ACKNOWLEDGED.

 

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OWNER’S CONSENT

The undersigned, which owns the Property and the landlord’s interest in the
Lease, hereby consents to the execution of the foregoing SUBORDINATION,
NON-DISTURBANCE AND ATTORNMENT AGREEMENT, and to implementation of the
agreements and transactions provided for therein.

“OWNER”

MORE APPLIED FOUR (DE) LLC,a Delaware
limited liability company

 

By:

Applied Four (DE) QRS 14-75, Inc., a
Delaware corporation, its managing
member

 

 

 

 

By:

/s/ Thomas E. Zacharias

 

 

 

Name:

Thomas E. Zacharias

 

 

 

Title:

Managing Director

 

 

 

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ACKNOWLEDGMENT

STATE OF NEW YORK

)

)

ss.

COUNTY OF WESTCHESTER

)

Then personally appeared the above-named Kenneth Traub, the President of ABNH, a
Delaware Corp., and acknowledged the foregoing instrument to be his/her free act
and deed and the free act and deed of such corporation, in said capacity, before
me, December 6, 2004

 

WITNESS my hand and official seal.

 

 

/s/ Nancy A. Borst

 

Nancy A. Borst
Notary Public State of NY
No. 01B05057933
Qualified in Westchester County

Notary Public in and for said State

 

 

 

My commission expires:

4/1/2006

ACKNOWLEDGMENT

STATE OF CALIFORNIA

)

)

ss.

COUNTY OF CONTRA COSTA

)

Then personally appeared the above-named Sarah J. Burns, the Asst VP of Wells
Fargo, a National Assoc., and acknowledged the foregoing instrument to be
his/her free act and deed and the free act and deed of such corporation, in said
capacity, before me,

 

WITNESS my hand and official seal.

 

 

/s/ Amanda Garrison

 

Amanda Garrison
Commission # 1408202
Notary Public California
Contra Costa County

Notary Public in and for said State

 

 

 

My commission expires:

3/3/07

 

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ACKNOWLEDGMENT

STATE OF NEW YORK

)

)

ss.

COUNTY OF NEW YORK

)

 

Then personally appeared the above-named Thomas Zacharias, the Managing Director
of , Applied Four (DE) QRS 14-75 Inc. a Delaware Corp and acknowledged the
foregoing instrument to be his/her free act and deed and the free act and deed
of such corporation, in said capacity, before me,

 

WITNESS my hand and official seal.

 

 

/s/ Heather Coleman

 

Heather Coleman
Notary Public State of NY
No. 01C06087715
Qualified in NY County

Notary Public in and for said State

 

 

 

My commission expires:

2/24/07

 

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