Document:

ex10_7.htm

Exhibit 10.7

 PATRICK INDUSTRIES, INC.

 NOTICE OF ____ TIME BASED RESTRICTED SHARE AWARD AND PERFORMANCE CONTINGENT RESTRICTED SHARE AWARD

Name of Employee (“Employee”): ______________

 

You have been granted a Time Based Restricted Share Award and a Performance Contingent Restricted Share Award (collectively the “____ Award”) as follows:

	 	
I. 

	
Time Based Restricted Share Award (“Time-Based Shares”)

 

Time-Based Share Grant Date: ____________

 

Time Based Shares Granted: ____ shares of Common Stock (“Shares”), without par value of Patrick Industries, Inc., an Indiana corporation (the “Company”)

Time-Based Shares Vesting Schedule: The Restrictions (as defined in Article 2 of the Agreement) relating to the Time-Based Shares shall lapse on the third anniversary of the Time-Based Share Grant Date, provided that Employee remains in the continuous employment of the Company or a subsidiary at all times through the vesting date.

	 	
II. 

	
Performance Contingent Restricted Share Award (“Performance Shares”)

 

Performance Share Grant Date: ________

 

Performance Shares Granted:  _______ Shares

 

Performance Shares Vesting Schedule: The Restrictions (as defined in Article 2 of the Agreement) relating to the Performance Shares shall lapse upon receipt of final audited results for the period ended December 31, 20XX the “Performance Period Ending Date”), provided that (1) Employee remains in the continuous employment of the Company or a subsidiary at all times from January 1, 2012 (the “Performance Period Begin Date”) through the Performance Period Ending Date and (2) the actual number of Performance Shares that shall vest will range from 0% to 100%, with the actual amount to be determined based on the Company’s achievement of the EBITDA Performance for the period January 1, 201X to December 31, 201X established in the 201X Long-Term Incentive - Executive Compensation Statement set out in Attachment A hereto.  For these purposes, EBIDTA Performance shall be based on the Company’s cumulative earnings before interest, taxes, depreciation and amortization (“EBITDA”), as defined in the Company’s credit agreement over the three year period ending December 31, 201X.

 

The Employee and the Company hereby agree that these awards are granted under and governed by the terms and conditions of the 201X Time Based Restricted Share Award and Performance Contingent Restricted Share Award (the “Agreement”), which is attached hereto and made an integral part hereof, and the Patrick Industries, Inc. Omnibus Incentive Plan (the “Plan”).  The Company and Employee each agree to be bound by all of the terms and conditions set forth in the Plan and in the Agreement.

Patrick Industries, Inc.                                                                Employee

 

By:_______________________                                            _______________________

Its:_______________________

  

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PATRICK INDUSTRIES, INC.

2012 TIME BASED RESTRICTED SHARE AWARD AND PERFORMANCE CONTINGENT RESTRICTED SHARE AWARD 

In consideration of the premises, mutual covenants and agreements herein, the Company and the Employee hereby agree as follows:

ARTICLE 1

AWARD

Section 1.1  Award of Restricted Shares.  Subject to all of the terms and conditions set forth in this 2012 Time Based Restricted Share Award and Performance Contingent Restricted Share Award (the “Agreement”), the Company hereby grants to Employee pursuant to the Employee’s Notice of 201X Time Based Restricted Share Award and Performance Contingent Restricted Share Award (the “Notice”) (i) the Time Based Shares and (ii) the Performance Shares.  The Time Based Shares and the Performance Shares are hereinafter referred to collectively as the “Restricted Shares.”

Section 1.2 Conditions to Award of Restricted Shares.  The award of all Restricted Shares to Employee is conditioned upon Employee, concurrently with the execution of this Agreement, delivering to the Company:  (1) if requested by the Company, a duly signed stock power, endorsed in blank, relating to the Restricted Shares as required under Section 2.7 hereof, (2) a duly signed Section 83(b) Election, but only if the Employee, in his or her sole discretion, intends to make such election, and (3) such other documents or agreements as the Company may request.

Section 1.3  Voting and Other Rights.  Upon Employee’s timely compliance with each of the conditions set forth in Section 1.2 hereof, Employee shall have all of the rights and status as a shareholder of the Company in respect of all of the Restricted Shares, including the right to vote such shares and to receive dividends or other distributions thereon.  Any cash dividends paid on any Restricted Shares shall be paid to the Employee.  In the event any non-cash dividends or other distributions, whether in property, or stock of another company, are paid on any Restricted Shares, such non-cash dividends or other distributions payable to the Employee shall be retained by the Company and not delivered to the Employee unless and until such time as the Restrictions on the Restricted Shares with respect to which such non-cash dividends or other distributions have been paid shall have lapsed and such shares shall have become Vested Shares (as defined in Section 2.2 hereof).  Such non-cash dividends or distributions with respect to all of the Restricted Shares shall be retained by the Company in the event the Restricted Shares on which such non-cash dividends or other distributions were paid are forfeited to the Company under Section 2.1(b) hereof.

Section 1.4  Subject to Plan.  This Agreement is subject to all of the terms and conditions of the Patrick Industries, Inc. Omnibus Incentive Plan (the “Plan”), as the same may be further 

 

  

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amended from time to time.  Any capitalized terms not otherwise defined in this Agreement shall have the meaning set forth in the Plan.

 

ARTICLE 2

RESTRICTIONS

Section 2.1  Restrictions. The Restricted Shares are being awarded to Employee subject to the following transfer and forfeiture restrictions (collectively, the “Restrictions”).

(a)  Transfer.  Prior to the date that the Restricted Shares become Vested Shares, Employee may not directly or indirectly, by operation of law or otherwise, voluntarily or involuntarily, anticipate, alienate, attach, sell, assign, pledge, encumber, charge or otherwise transfer all or any part of the Restricted Shares without the written consent of the Company, which consent may be withheld by the Company in its sole discretion.

(b)  Forfeiture.  Upon termination of Employee’s employment with the Company or any Subsidiary, all Restricted Shares which are not Vested Shares (or have not become Vested Shares under Section 2.3 hereof) at the effective time of such termination, shall immediately thereafter be returned to or canceled by the Company in the case of Restricted Shares, and shall be deemed to have been forfeited by Employee to the Company, unless such designation is made otherwise by the Board of Directors of the Company, at their sole discretion.  Upon any forfeiture of Restricted Shares under this Section 2.1, the Company will not be obligated to pay Employee any consideration whatsoever for the forfeited Restricted Shares.

Section 2.2  Lapse of Restrictions.  Subject to the other terms of this Agreement, the Restrictions shall lapse with respect to the Restricted Shares awarded hereunder only at the time or times and as to that number of Restricted Shares determined in accordance with the relevant Vesting Schedules set forth in the Notice.  To the extent the Restrictions shall have lapsed with respect to Restricted Shares subject to this Award, those shares (the “Vested Shares”) will thereafter be free of the terms and conditions of this Agreement.

Section 2.3  Acceleration of Vesting.

(a)  Time Based Shares.  Notwithstanding the vesting schedule set forth in the Notice, the Restrictions shall lapse with respect to any Time Based  Shares that have not otherwise vested as of the termination of the Employee’s employment with the Company or any Subsidiary if such termination is by reason of a termination by the Company without Cause, or a termination by reason of the Employee’s death or Disability (as those terms are defined below), and such shares shall not be subject to forfeiture under Section 2.1(b).

(b)  Performance Shares.  Notwithstanding the vesting requirements set out in the Notice relating to the Performance Shares, if the Employee’s employment with the Company or any Subsidiary is terminated prior to the Performance Period Ending Date by reason of a termination by the Company without Cause, or a termination by reason of the Employee’s death 

 

  

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or Disability (as those terms are defined below), Employee will be deemed to have satisfied the requirement that Employee remain in the continuous employment of the Company or a subsidiary through the Performance Period Ending Date, but such Performance Shares shall continue to be subject to the performance criteria set out in the Notice.  In the event of a termination of employment described in the preceding sentence, the actual number of Performance Shares that shall vest shall be determined based on the level of the Company’s achievement of the specified performance for the performance period ending with the Performance Period Ending Date as set out in Attachment A to the Notice.

Section 2.4  Termination of Vesting.  In the event the Employee’s employment with the Company (or any other employment, consulting, advisory or service relationship or arrangement with the Company or any Subsidiary (as defined below)) is terminated for any reason, after taking into account the provisions of Section 2.3 hereof, (1) no further vesting (pro rata or otherwise) of any Restricted Shares shall occur after the occurrence of such event.

Section 2.5  Withholding Taxes.

(a)  The award of the Restricted Shares to the Employee, and the lapse of Restrictions on the Restricted Shares, shall be conditioned on any applicable federal, state or local withholding taxes having been paid by Employee at the appropriate time pursuant to a direct payment of cash or other readily available funds to the Company.

(b)  If the Employee shall have elected to file a Section 83(b) Election with respect to the award of Restricted Shares hereunder, the award of the Restricted Shares shall be conditioned on the Employee providing the Company with a direct payment of cash or other immediately available funds in an amount equal to the statutory minimum withholding taxes required to by withheld by the Company not later than 30 days after the date of the award.

(c)  Unless the Employee shall have elected to file a Section 83(b) Election pursuant to Section 2.5(b), above, Employee shall have the right to satisfy all or any portion of his or her obligations under Section 2.5(a) by having the Company withhold from the Restricted Shares with respect to which the Restrictions will lapse, that number of shares of Common Stock having an aggregate Fair Market Value, determined as of the date of the taxable event with respect to such shares, equal to the federal, state or local taxes required to be withheld by the Company with respect to such taxable event; provided however, that the Fair Market Value of any shares of Common Stock withheld under this Section 2.5(c) may not exceed the statutory minimum withholding amount required by law.

Section 2.6  Issuance of Shares; Restrictive Legend.  Stock certificates in respect of the Restricted Shares may be issued by the Company subject to Employee’s fulfillment of the conditions set forth in Section 1.2 hereof.  Any such certificates shall be registered in Employee’s name and shall be inscribed with a legend evidencing the Restrictions, and such additional legends as may be required to comply with the Securities Act of 1933, as amended, and other applicable federal or state securities laws.  Alternatively, the Company may issue Restricted Shares hereunder in uncertificated form.

 

  

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Section 2.7 Custody.  All certificates representing the Restricted Shares (other than Vested Shares) shall be deposited, together with stock powers executed by Employee, in proper form for transfer, with the Company or the Company’s transfer agent.  If requested, the Company shall provide Employee with a copy of any certificate representing the Restricted Shares, or such other evidence thereof as may be determined by the Company, which shall contain the legends described in Section 2.6.  The Company is hereby authorized to cause the transfer into its name of the Restricted Shares (and any non-cash distributions or other property described in Section 1.3 hereof) which are forfeited to the Company pursuant to Section 2.1(b) hereof.  At the request of Employee, certificates representing Vested Shares shall, subject to any applicable securities law restrictions, be delivered by the Company to Employee or Employee’s personal representative.  Certificates representing shares that have become Vested Shares in accordance with Section 2.2, 2.3 or 3.1 shall be issued without the legend evidencing the Restrictions, but may contain such legends as may be required to comply with the Securities Act of 1933, as amended, or any other applicable federal or state securities laws.

ARTICLE 3

CHANGE IN CONTROL; ADJUSTMENTS

Section 3.1  Consequences of a Change in Control.  In the event of a Change in Control of the Company, any Time Based  Shares then held by Employee shall become Vested Shares, notwithstanding the Vesting Schedule prescribed under Section 2.2 hereof, as of the effective date of such Change in Control.  In addition, in the event of a Change in Control of the Company, (a) the Performance Shares shall become Vested Shares as of the effective date of such Change in Control based on the assumption that the targeted amount of EBITDA Performance set out in Attachment A to the Notice shall have been achieved and based on the fair market value of the Company’s shares as reasonably determined by the Board of Directors.

Section 3.2  Change in Control.  For purposes of this Agreement, a “Change In Control” shall be deemed to have occurred if:

(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”)), other than the Company or an employee benefit plan sponsored by the Company, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing twenty percent (20%), or more (or if a person is permitted to own a higher percentage under the Company’s Rights Agreement, dated March 31, 2006, as the same may be amended from time to time, such higher percentage as to such person and their affiliates and associates) of the combined voting power of the Company’s then outstanding securities ordinarily having the right to vote at elections of directors (excluding an acquisition of such securities directly from the Company),

(ii) during any period of two consecutive years individuals who at the beginning of the two-year period were members of the Board cease for any reason to constitute at least a majority of the Board (individuals with such two years of service being the “Continuing Directors”),

  

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(iii) there shall be consummated (A) any consolidation, merger or reorganization of the Company in which the capital stock of the Company is not converted into or exchanged for cash, securities or other property, other than a consolidation, merger, or reorganization of the Company in which the holders of capital stock of all classes of the Company (including Common Stock) immediately prior to the transaction have, directly or indirectly, an ownership interest in securities representing a majority of the combined voting power of the outstanding voting securities of the surviving entity immediately after the transaction, or (B) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, other than any such transaction with entities in which the holders of the Company’s then outstanding capital stock of all classes, directly or indirectly, have an ownership interest in securities representing a majority of the combined voting power of the outstanding voting securities of such entities immediately after the transaction,

(iv) a change occurs of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A, promulgated under the Exchange Act or any successor disclosure item, or

(v) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company;

provided, however, that any occurrence described in (i) through (iv) approved by the affirmative vote of a majority of the Continuing Directors, shall not constitute a Change in Control to the extent so provided by the affirmative vote of a majority of those Continuing Directors.

Section 3.4  Binding Nature of Adjustments.  Adjustments under Section 15 of the Plan will be made by the Compensation Committee, whose determination as to what adjustments, if any, will be made, will be final, binding and conclusive.  No fractional shares will be issued pursuant to the Award on account of any such adjustments.  Subject to Section 1.3, the terms “Restricted Shares” and “Vested Shares” shall include any shares,  securities, or other property that Employee receives or becomes entitled to receive as a result of Employee’s ownership of the original Restricted Shares, and any such shares, securities or other property shall be subject to the same Restrictions and other terms and conditions that apply with respect to, and shall vest or be forfeited at the same time as, the Restricted Shares with respect to which such shares, securities or other property are issued.

ARTICLE 4

DEFINITIONS

Section 4.1  Definitions.  For purposes of this Award, the following terms shall have the following meanings:

“Cause” shall have the meaning  set out in any separate employment agreement between the Employee and the Company and, in the absence of an employment 

 

  

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agreement, “Cause” shall mean Employee’s:  (a) commission of an act of dishonesty, fraud, theft, or embezzlement; (b) sabotage or intentional failure to act on the direction of an officer of the Company or the Board of Directors of the Company or of any affiliate; (c) engagement, directly or indirectly, in a business or occupation (as a proprietor, partner, officer, shareholder, or employee, or otherwise) in competition with the Company or any of its affiliates; (d) indictment or conviction for a felony violation of a criminal law, other than motor vehicle offenses; (e) the use or possession of illegal drugs; or (f) failure to achieve and/or perform, to the Company’s satisfaction, Employee’s duties and responsibilities on behalf of the Company (other than due to Disability).

“Disability” shall have the meaning ascribed to such term in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended, or any successor provision.

“Section 83(b) Election” shall mean an election made pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to be taxed with respect to the Restricted Shares at the time of grant rather than upon the lapse of the Restrictions.

“Subsidiary” or “Subsidiaries” shall mean any corporation or other entity of which outstanding shares or ownership interests representing 50% or more of the combined voting power of such corporation or other entity entitled to elect the management thereof, or such lesser percentages may be approved by the Compensation Committee, are owned, directly or indirectly, by the Company.

ARTICLE 5

MISCELLANEOUS

Section 5.1  Administration.  This Award shall be administered by the Compensation Committee or its delegate as provided in Section 2 of the Plan.

Section 5.2  No Guarantee of Employment or Service; Compensation.  Nothing in this Agreement shall be construed as an employment, consulting or similar contract for services between the Company or any Subsidiary and the Employee.  Any benefit derived under this Agreement shall not be considered compensation for purposes of calculating any severance, resignation, bonus, pension, retirement or similar payments or benefits.

Section 5.3  The Company’s Rights.  The existence of the Award shall not affect in any way the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or other securities with preference ahead of or convertible into, or otherwise affecting the Shares or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of the Company’s assets or business, or any other act or proceeding, whether of a similar character or otherwise.

  

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Section 5.4  Employee.  Whenever the word “Employee” is used in any provision of this Agreement, under circumstances where the provision should logically be construed to apply to the estate, personal representative or beneficiary to whom this Award may be transferred by will or by the laws of descent and distribution, the word “Employee” shall be deemed to include such person.

Section 5.5  Nontransferability of Award.   This Award is not transferable by the Employee otherwise than by will or the laws of descent and distribution.

Section 5.6  Entire Agreement; Modification.  This Agreement contains the entire agreement between the parties with respect to the subject matter contained herein, and may not be modified, except as provided in a written document signed by each of the parties hereto.  Any oral or written agreements, representations, warranties, written inducements, or other communications made prior to the execution of this Agreement shall be void and ineffective for all purposes.

Section 5.7 Severability.  In the event that any term or provision of this Agreement shall be finally determined to be superseded, invalid, illegal or otherwise unenforceable pursuant to applicable law by a governmental authority having jurisdiction and venue, that determination shall not impair or otherwise affect the validity, legality or enforceability, to the maximum extent permissible by law, (a) by or before that authority of the remaining terms and provisions of this Agreement, which shall be enforced as if the unenforceable term or provision were deleted, or (b) by or before any other authority of any of the terms and provisions of this Agreement.

Section 5.8  Governing Law.  This Agreement shall be governed and construed in accordance with the laws of the State of Indiana (regardless of the law that might otherwise govern under applicable Indiana principles of conflict of laws).

 

 

8ex10_43.htm

 Exhibit 10.43

SUBLEASE AGREEMENT

THIS SUBLEASE AGREEMENT is entered into effective as of December 28, 2011 (the “Effective Date”), by and between NORTECH SYSTEMS INCORPORATED, a Minnesota professional corporation (“Sublessor”) and WINLAND ELECTRONICS, INC., a Minnesota corporation (“Sublessee”).

RECITALS

A.           Sublessor is the tenant under that certain Lease Agreement dated January 1, 2011 (the “Main Lease”) with Sublessee.

B.           Sublessor and Sublessee are parties to that certain Sublease Agreement dated January 1, 2011, as amended on May 1, 2011 (the “Original Sublease”).

B.           Pursuant to the Main Lease, Sublessee has leased to Sublessor the Leased Premises (as defined in the Main Lease) its office and manufacturing facility (the “Building”) and improvements (collectively, the “Improvements”) located at 1950 Excel Drive, Mankato Minnesota, 5600, which Building and Improvements are hereinafter referred to as the “Main Lease Premises.”  The Building is a 58,000 square foot building consisting of 32,500 square feet of manufacturing space, 10,000 square feet of warehouse space and 15,500 square feet of office space.

C.           The parties mutually desire for Sublessee to sublease from Sublessor approximately 1,924 square feet of the Main Leased Premises as has been designated by Sublessor and Sublessee (the “Sublease Premises”) pursuant to the Original Sublease.

D.           Terms not otherwise defined herein shall have the meaning given them in the Main Lease.

PROVISIONS

In consideration of the mutual promises set forth in this Sublease Agreement and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.           Recitals.  The Recitals set forth above are incorporated into and made a substantive part of this Sublease Agreement.

2.           Main Lease.  The terms and conditions of the Main Lease, as they apply to the Sublease Premises, are incorporated into this Sublease Agreement by reference, except for those terms specifically excluded in this Sublease Agreement.  Sublessee acknowledges and agrees:

a.           That Sublessee is granted no greater or additional rights and/or privileges under this Sublease Agreement than Sublessor was granted as tenant under the Main Lease.

b.           The obligations, conditions and covenants of the Sublessee as landlord under the Main Lease shall remain the obligations, conditions and covenants of Sublessee, and Sublessor shall not be required to perform the same in the event of a default by Sublessee.

Sublessor and Sublessee mutually agree not to do or suffer or permit anything to be done which would result in a default under the Main Lease or cause the Main Lease to be terminated or forfeited.

3.           Sublease Premises.  Sublessor hereby subleases the Sublease Premises to Sublessee, subject to and together with the terms and conditions of this Sublease Agreement, and the applicable terms and conditions of the Main Lease.

  

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4.           Term.  The term of this Sublease Agreement (the “Term”) shall be one (1) year commencing on the Effective Date.  Either Sublessor or Sublessee may terminate this Sublease Agreement prior to the Term by giving the other party not less than sixty (60) days’ prior written notice of such intention to terminate this Sublease Agreement.

5.           Base Rent.  Beginning on the Effective Date, Sublessee agrees to pay to Sublessor without demand, deduction or setoff, at $5.25 per square feet, or $841.75 per month.  Sublessee shall pay to Sublessor during the Term of this Sublease Agreement base monthly rent, on the fifth (5th) day of each and every month, without demand, deduction, or set-off, during the Term.  Each installment of base rent and any additional amounts due under this Sublease Agreement to be paid to Sublessor shall be paid by check, payable to the order of Sublessor (or such nominee as shall have been designated by Sublessor to receive such payment).  A pro rata portion of such monthly base rent shall be due for any partial calendar month during the Term, in proportion to the number of days of such calendar month falling within the Term.

6.           Condition of the Sublease Premises.  Sublessee agrees to accept the Sublease Premises in its as-is condition, provided that Sublessor shall use commercially reasonable efforts to enforce its rights under the Main Lease to ensure that the Sublease Premises is delivered in the condition required by the Main Lease.

7.           Insurance.  Sublessee shall maintain with respect to the Sublease Premises all insurance required to be maintained by Sublessor, as tenant, pursuant to the Main Lease.  The insurance policies maintained by Sublessee shall be subject to all provisions of the Main Lease to the extent applicable thereto.

8.           Indemnification; Waiver of Claims.  Sublessee agrees that it will indemnify and hold Sublessor and Sublessee (to the extent relating to the Sublease Premises) forever harmless as provided in the Main Lease, which indemnification and hold harmless shall also include any and all responsibility or liability which Sublessor may incur by virtue of this Sublease Agreement arising out of any failure of Sublessee in any respect to comply with and perform the requirements and provisions of the Main Lease as they relate to the Sublease Premises (except as expressly excepted in this Sublease Agreement) or this Sublease Agreement.

9.           Transfers.  Sublessee shall not assign or pledge this Sublease, further sublease all or any portion of the Sublease Premises, or otherwise transfer this Sublease or the Sublease Premises, without compliance with all requirements of the Main Lease.

10.           Alterations and Improvements.  Sublessee shall not make any alterations and improvements to the Sublease Premises without Sublessor’s prior written consent and full compliance with the terms and conditions of the Main Lease.

11.           Default.  If any one or more of the following events occurs, Sublessee shall be deemed to be in default under this Sublease Agreement:

a.           Sublessee fails to pay, when due, any installment of Rent, for which Sublessee is responsible under this Sublease Agreement.

b.           Sublessee fails to keep, observe or perform any of the other non-monetary terms, covenants and conditions herein to be kept, observed and performed by Sublessee under this Sublease Agreement; provided, however, that Sublessee shall have five (5) days less than any applicable cure period under the Main Lease within which to cure the default in question.

If Sublessee is in default under any provision of this Sublease Agreement, Sublessor shall be entitled to exercise any and all of the rights and remedies provided to the Sublessee as landlord under the Main Lease, or otherwise available to lessors and/or sublessors under Minnesota law in the event of a default by a lessee and/or sublessee.

12.           Notices.  Sublessor shall immediately forward to the Sublessee copies of all billings, reports, written statements or notices received by Sublessor from Owner as landlord under the Main Lease to the extent related to the Sublease Premises.  Sublessee shall forward to Sublessor all reports and written statements required under the Main Lease in connection with the Sublease Premises or actions taken by Sublessee at least ten (10) days prior to the date such reports or written statements are due under the Main Lease.  Any notice which one party wishes or is required to give to the other party will be regarded as effective if in writing and delivered to such party in the manner provided under the Main Lease, addressed to the post-office address furnished by such party.

  

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13.           Relationship of the Parties.  Nothing contained in this Sublease Agreement shall be deemed or construed by the parties, or by a third party, to create the relationship of principal and agent or of partnership or joint venture or of any association whatsoever between Sublessor and Sublessee.  It is hereby expressly understood and agreed that neither the method of computation of Rent, or any other provisions contained in this Sublease Agreement, nor any act or acts of the parties hereto, shall be deemed to create any relationship between Sublessor and Sublessee other than the relationship of Sublessor and Sublessee.

14.           Invalidity.  If any one or more of the provisions of this Sublease Agreement are adjudicated to be void or invalid, then the remaining provisions of this Sublease Agreement shall remain in full force and effect insofar as such remaining provisions are capable of execution.  Each covenant and agreement on the part of one party is understood and agreed to constitute an essential part of the consideration for each covenant and agreement on the part of the other party.

15.           Conditions.  In the event that the Main Lease is terminated due to the sale of the Building by Sublessee, and Sublessor becomes a party to a new lease with the purchaser of the Building, this Sublease Agreement shall not terminate and the terms hereof shall not be impacted in any way.  In the event that this Sublease Agreement is terminated by either party, neither party to this Sublease Agreement shall have any liability or responsibility to the other, except:  (i) for such liability as shall have accrued prior to such termination; and (ii) to whatever extent Sublessor is liable to the Sublessee under the Main Lease in the event the Main Lease is cancelled or terminated because of Sublessee’s actions, Sublessee shall remain liable to Sublessor.

16.           Successors and Assigns.  This Sublease Agreement and all covenants and agreements contained herein shall be binding upon and inure to the benefit of the respective successors and assigns of the parties to this Sublease Agreement, subject to the restrictions imposed under this Sublease Agreement and the Main Lease relating to transfers.

17.           Non-Waiver.  A party’s failure to insist upon strict performance of any covenant of this Sublease Agreement or to exercise any option or right herein contained shall not be a waiver or relinquishment for the failure of such covenant, right or option, but the same shall remain in full force and effect.  Sublessor is specifically authorized to accept a partial payment of Rent or any other sum payable by Sublessee hereunder (no matter how such payment may be labeled or conditionally delivered) without such acceptance being deemed a waiver of the balance of the amount owed.

18.           General.  This Sublease Agreement shall be construed under the laws of the State of Minnesota.  Except as otherwise provided herein, no subsequent alteration, amendment, change or addition to this Sublease Agreement shall be binding upon the parties unless reduced to writing and signed by both parties.  This Sublease Agreement may be separately executed as counterparts which shall be then read together and enforced.

  

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IN WITNESS TO THIS SUBLEASE AGREEMENT, the parties have executed this Sublease Agreement effective as of the day and year first above-written.

 

	
SUBLESSOR:

	
NORTECH SYSTEMS INCORPORATED

	  	  
	  	  
	  	
/s/ Curt Steichen

	  	
Curt Steichen

	  	
Senior Vice President Commercial Business

	  	  
	  	  
	  	  
	
SUBLESSEE:

	
WINLAND ELECTRONCIS, INC.

	  	  
	  	  
	  	
/s/ Brian D. Lawrence

	  	
Brian D. Lawrence

	  	
Chief Financial Officer and Senior Vice President

 

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