SIXTH AMENDMENT TO INDUSTRIAL REAL ESTATE LEASE
This Sixth Amendment to Industrial Real Estate Lease is entered into as
of this 23 day of February, 1998, by and between American Real Estate
Holdings, L.P. ("Landlord") and The Sportman's Guide, Inc. ("Tenant").
RECITALS
A. Landlord and Tenant entered into that certain Industrial Real Estate
Lease dated April 22, 1993, covering a portion of the building (the
"Project") located at 000 Xxxxxxx Xxxxxx, Xxxxx Xx. Xxxx, Xxxxxxxxx, as
amended by that certain Amendment to Industrial Real Estate Lease dated
September 8, 1993, as further amended by that certain Second Amendment to
Industrial Real Estate Lease dated September 22, 1993, as further amended by
that certain Third Amendment to Industrial Real Estate Lease dated February
16, 1994, as further amended by that certain Fourth Amendment to Industrial
Real Estate Lease dated April 7, 1994, and as further amended by that certain
Fifth Amendment to Industrial Real Estate Lease dated November 2, 1994
(collectively, the "Lease").
B. The Lease Term expires March 31, 1999.
C. Tenant currently occupies 317,159 square feet of the Project as
identified on attached Exhibit A (the "Property") and the Project contains
422,727 square feet.
D. Tenant's Pro Rata Share of Common Area Expenses equals 76.67%.
E. Landlord and Tenant desire to further amend the terms of the Lease
pursuant to the terms and conditions stated herein.
F. All capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Lease.
AGREEMENT
NOW, THEREFORE, for One Dollar and No/100 ($1.00) and other good
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. EXTENSION OF LEASE TERM. The Lease Term is hereby extended from
April 1, 1999 to March 31, 2004 (the "Extended Term") upon the same terms and
conditions as set forth in the Lease, except that Base Rent for the Property
during the Extended Term shall be increased to Two Dollars and 75/100 ($2.75)
per square foot annually.
2. EXTENSION OPTIONS. Tenant shall have the option to extend the Lease
Term with respect to all (but not less than all) of the Property for three
(3) additional terms of five (5) years each (referred to herein as "First,
Second, and Third Extension Options" or individually as an
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"Extension Option."), commencing on the date immediately following the
expiration date of the preceding Lease Term.
A. CONDITIONS. Tenant's right to exercise an Extension Option is
subject to the following terms and conditions:
i. Tenant must deliver to Landlord written notice (the "Extension
Notice") of its election to exercise each Extension Option not
less than three hundred and sixty (360) days prior to the
expiration of the preceding Lease Term;
ii. Tenant must not be in default under the Lease either on the
date Tenant exercises an Extension Option or on the
commencement date of an Extension Option, unless waived in
writing by Landlord; and
iii. With respect to the Second and Third Extension Options, Tenant
must have exercised the First and Second Extension Option,
respectively, pursuant to the terms set forth herein.
B. FIRST EXTENSION OPTION. If Tenant exercises the First Extension
Option, then all terms and conditions of this Lease shall be applicable
to such First Extension Option, except that the Base Rent for the First
Extension Option shall be increased by the increase in the CPI-U, as
hereinafter defined, from the date of the commencement of the Extended
Term to the date of the expiration of said Extended Term. The CPI-U
shall be defined as the Consumer Price Index seasonally adjusted U.S.
City Average for all Items for all Urban Consumers published in the
"Monthly Labor Review" of the Bureau of Labor and Statistics of the
United States Department of Labor (the "CPI-U"). When the percentage
increase in the CPI-U has been determined for such period, the Base Rent
for the Extension Term shall be multiplied by that figure and the
product shall be added to the Base Rent payable during the Extended
Term. That sum will constitute the Base Rent payable for the First
Extension Option. In no event, however, shall the Base Rent be less than
the Base Rent paid during the preceding Lease Term or greater than Three
Dollars and 19/100 ($3.19) per square foot annually. Landlord shall
notify Tenant in writing of the increase in the Base Rent within a
reasonable time after the applicable CPI-U figures become publicly
available (the "Rental Notice"). The Rental Notice may be delivered to
Tenant after the commencement of the First Extension Option and Tenant
shall continue to pay Base Rent in the amount payable during the
Extended Term until the first day of the month following Tenant's
receipt of such Rental Notice. Within ten (10) days following receipt of
the Rental Notice, Tenant shall pay Landlord the accrued rental
adjustment for the months elapsed between the commencement of the First
Extension Term and the first day of the month following receipt of the
Rental Notice.
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C. SECOND AND THIRD EXTENSION OPTION. If Tenant exercises the Second or
Third Extension Option, then all of the terms and conditions of the
Lease shall be applicable to such Second or Third Extension Options,
except that the Base Rent for the Second and Third Extension Options
shall be equal to the greater of (i) the Fair Market Rental Rate, as
hereinafter defined, of the Property as of the commencement date of the
applicable Extension Option; or (ii) the Base Rent payable during the
preceding Lease Term. Tenant and Landlord shall have a period of thirty
(30) days following Landlord's receipt of the Extension Notice in which
to agree on the Fair Market Rental Rate of the Property. If Landlord and
Tenant agree on the Fair Market Rental Rate for the Property, then they
shall immediately execute an amendment to this Lease stating and
incorporating such agreed upon Fair Market Rental Rate as the Base Rent
for the applicable Extended Term. If Landlord and Tenant are unable to
agree upon the Fair Market Rental Rate within thirty (30) days following
Tenant's delivery of the Extension Notice, then the dispute shall
proceed to arbitration pursuant to the terms described herein.
i. ARBITRATION.
(a) Not later than ten (10) days after the expiration of such
thirty (30) day period, each party shall appoint an arbitrator
and notify the other party of such appointment by identifying
the appointee. Each party hereto agrees to select as its
respective appointee a licensed real estate appraiser, who is
an individual of substantial experience with respect to
industrial building ownership, management and marketing in the
Minneapolis/St. Xxxx metropolitan area, which person shall not
be regularly employed or have been retained during the last
two (2) years as a consultant by the party selecting such
person. Neither party may consult directly or indirectly with
any arbitrator regarding the Fair Market Rental Rate prior to
appointment, or after appointment, outside the presence of the
other party. The arbitration shall be conducted in Minneapolis,
Minnesota, under the provisions of the commercial arbitration
rules of the American Arbitration Association and the laws of
the State of Minnesota.
(b) Not later than ten (10) days after both arbitrators are
appointed, each party shall separately, but simultaneously,
submit in a sealed envelope to each arbitrator their separate
suggested Fair Market Rental Rate and shall provide a copy of
such submission to the other party. The two (2) selected
arbitrators, after reviewing such submissions, shall determine
whether Landlord's or Tenant's estimate of Fair Market Rental
Rate is closer to the actual Fair Market Rental Rate for the
Property. If both arbitrators agree that one of said declared
estimates is closer to the actual Fair Market
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Rental Rate, they shall declare the estimate to be the Fair
Market Rental Rate, and their decision shall be final and
binding upon the parties.
(c) If the two selected arbitrators are unable to agree on
the Fair Market Rental Rate within thirty (30) days after
receipt of Landlord's and Tenant's submitted estimates, then
the arbitrators shall inform the parties. Unless the parties
shall both otherwise then direct, said arbitrators shall
select a third arbitrator, no later than ten (10) days after
the expiration of said thirty (30) day period. If no
arbitrator is selected within such ten (10) day period, either
party may immediately petition a court with appropriate
jurisdiction to appoint such third arbitrator. The third
arbitrator shall have the qualifications and restrictions set
forth in herein, and shall conduct an arbitration pursuant to
the commercial arbitration rules of the American Arbitration
Association. The third arbitrator's decision shall be final
and binding as to which estimate (as between Landlord's and
Tenant's) of the Fair Market Rental Rate is closer to the
actual Fair Market Rental Rate. Such third arbitrator shall
make a decision not later than thirty (30) days after
appointment.
(d) Each party shall be responsible for the costs, charges
and/or fees of its respective appointee, and the parties shall
share equally in the costs, charges and/or fees of the third
arbitrator. The decision of the arbitrator(s) may be entered
in any court having jurisdiction thereof.
(e) The term Fair Market Rental Rate shall be defined as the
Base Rent of the Property which would be paid by a willing
tenant to a willing landlord, neither of whom is compelled to
rent, for a term of five (5) years, disregarding tenant
concessions. The term tenant concessions shall include,
without limitation, such inducements as free rent, free
parking, standard tenant improvement allowances or work
letter, and landlord's assumption of existing leases. The Fair
Market Rental Rate shall not reflect the value of any
improvements to the Property made by Tenant which Tenant has
the right to remove at the end of the Lease Term.
3. ASSIGNMENT OR SUBLEASE OF XXXX SPACE. Landlord currently leases
approximately ninety-six thousand five hundred twenty-two (96,522) square feet
within the Project to Xxxx Industries, Inc. ("Xxxx") as identified on attached
Exhibit A (the "Xxxx Space"). Landlord hereby agrees to approve any assignment
or sublease from Xxxx to Tenant of the Xxxx Space subject to the following terms
and conditions:
A. This Lease must be in full force and effect;
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B. Tenant shall not be in default under the Lease;
C. Base Rent payable to Landlord for that portion of the Xxxx Space
assigned or sublet to Tenant shall equal the Base Rent payable by Xxxx
pursuant to the Xxxx Lease; and
X. Xxxx shall not be released from any obligations or liabilities under
the Xxxx Lease, unless Tenant provides to Landlord additional security
that is acceptable to Landlord in its sole discretion.
4. EXPANSION SPACE. During the Lease Term, Tenant shall have a right of
first offer ("Right of First Offer") to lease the Xxxx Space subject to the
terms described herein.
A. CONDITIONS. At the time Landlord delivers to Tenant the First Offer
Leasing Notice (as defined herein):
i. The Lease must be in full force and effect;
ii. Tenant shall not be in default under the Lease upon the
exercise of the Right of First Offer or at the Commencement
Date for the Xxxx Space (as defined herein); and
iii. Tenant must simultaneously exercise the First Extension Option.
B. SPACE SUBJECT TO OFFER. Subject to the other terms of this Section,
after the Xxxx Space has or will "become available" for leasing by the
Landlord (as defined herein), Landlord shall not, during the Lease Term,
lease to another tenant the Xxxx Space without first offering Tenant the
right to lease the Xxxx Space pursuant to the terms and conditions
described herein.
C. AVAILABLE SPACE. The Xxxx Space shall be deemed to "become
available" on the earlier of (i) August 31, 2001; or (ii) when the Xxxx
Lease is otherwise terminated.
D. LANDLORD NOTICE. Landlord shall offer the Xxxx Space to Tenant in
writing (the "First Offer Leasing Notice"). Landlord shall have the
right to lease the Xxxx Space to another tenant if Tenant either rejects
such offer or fails to deliver to Landlord written notice of its
acceptance of such offer within fifteen (15) days from Landlord's
delivery of the First Offer Leasing Notice to Tenant, whichever occurs
first. The First Offer Leasing Notice shall contain the following
Information:
i. A description of the Xxxx Space (which description shall
include the square footage amount and location of such Xxxx
Space);
ii. The anticipated Commencement Date for the Xxxx Space.
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iii. The increase in Base Rent as calculated pursuant to the terms
of this Section; and
iv. The adjustment to Tenant's Pro Rata Share of Common Area
Expenses.
E. TENANT ACCEPTANCE. If Tenant timely delivers to Landlord, in
accordance with the conditions of this Section, written notice of
Tenant's exercise of the Right of First Offer for the Xxxx Space and
Landlord determines that Tenant has satisfied all of the conditions
provided in this Section, then the Xxxx Space shall be deemed added to
the Property and subject to the terms and conditions in the Lease, with
the exception of those Lease modifications set forth below.
F. TENANT'S REJECTION OR FAILURE TO MEET CONDITIONS. If Tenant
declines or fails to duly and timely exercise its Right of First Offer
or fails to meet all of the conditions provided in this Section,
Landlord shall thereafter be free to lease the Xxxx Space in portions or
in its entirety to any third-party tenant at any time without regard to
the restrictions in this Section and on whatever terms and conditions
Landlord may decide in its sole discretion.
G. CHANGES TO LEASE. If Tenant leases the Xxxx Space pursuant to the
terms of this Section, all the obligations, terms, and conditions under
the Lease shall also apply to the Xxxx Space, except that:
i. COMMENCEMENT DATE. The commencement date for the Xxxx Space
("the Commencement Date for the Xxxx Space") shall be the day
the Xxxx Space is delivered to the Tenant free of tenants or
other occupants, in its then "as is" condition;
ii. THE PROPERTY. As of the Commencement Date for the Xxxx Space,
the Xxxx Space shall be deemed part of the Property;
iii. PRO RATA SHARE. As of the Commencement Date for the Xxxx
Space, Tenant's Pro Rata Share of Common Area Expenses shall
be increased to one hundred percent (100%) of the Project; and
iv. RENT. As of the Commencement Date for the Xxxx Space, the
Base Rent shall be increased to an amount computed by
multiplying the square footage dollar amount that is then
payable with respect to the Property for the month in which
the Commencement Date for the Xxxx Space shall occur by the
number of rentable square feet contained in the Xxxx Space
taken by Tenant; provided, however, that the Xxxx Space shall
be subject to the same rental increases as the Property.
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H. CONFIRMING LEASE AMENDMENT. Within thirty (30) days after the
Commencement Date for the Xxxx Space, Landlord and Tenant shall confirm
the following in a written amendment to the Lease:
i. The Commencement Date for the Xxxx Space;
ii. The location and size of the Xxxx Space that was leased by
Tenant with an exhibit annexed showing that space crosshatched;
iii. The new Base Rent to be paid by Tenant, and
iv. The adjustment to the Tenant's Pro Rata Share of Common Area
Expenses.
I. INVALID AFTER ASSIGNMENT/SUBLEASE. This Right of First Offer is
personal to the Tenant and shall become null and void upon the
occurrence of an assignment of the Lease or a sublet of all or a part of
the Property.
5. BROKERAGE COMMISSIONS. Landlord hereby agrees to pay the following
brokerage commissions, subject to the terms and conditions contained herein:
A. COMMISSION TO CB COMMERCIAL REAL ESTATE GROUP, INC. Upon the
condition that no event of default exists under the Lease, Landlord
agrees to pay to CB Commercial Real Estate Group, Inc. ("CB Commercial")
a real estate commission in the amount of 2.5% of the Base Rent payable
during the Extended Term. Subject to the condition set forth herein,
such commission shall be payable on or before April 1, 1999. Except as
specifically provided herein, no commission shall be payable to CB
Commercial with respect to the Lease.
B. COMMISSION PAYABLE TO KEEWAYDIN GROUP: Landlord hereby agrees to pay
the following commission to the Keewaydin Group ("Keewaydin"):
i. EXTENDED TERM. Upon the condition that no event of default
exists at the time the payment is due or at the time the
Extension Term commences, Landlord agrees to pay Keewaydin a
commission in the amount of 2.5% of the Base Rent payable
during the Extended Term. Subject to the conditions set forth
herein, one-half (1/2) of such commission shall be payable on
or before April 1, 1998, and the balance shall be payable on
or before April 1, 1999.
ii. FIRST EXTENSION OPTION. Upon that condition that (i) Tenant
exercises the First Extension Option pursuant to the terms set
forth herein, without modification; (ii) no event of default
exists at the commencement of the First Extension Option; and
(iii) Keewaydin remains the sole and exclusive representative
of Tenant, then Landlord agrees to pay to Keewaydin a
commission in the amount of 1% of the Base Rent payable
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during the First Extension Option. Subject to the conditions
set forth herein, such commission shall be due and payable on
or before the commencement of the First Extension Option.
Except as specifically provided herein, no commission shall be payable
to Keewaydin with respect to this Lease.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year above written.
AMERICAN REAL ESTATE HOLDINGS, L.P. THE SPORTSMAN'S GUIDE, INC.
By: American Property Investors, Inc. By: /s/ Xxxxxxx X. Xxxxxxx
Its Sole General Partner --------------------------------
Its: EVP/COO
By: /s/ Xxxxxx Xxxxxx -------------------------------
-----------------------------------
Its: Vice-President
----------------------------------
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