BUILD TO SUIT
LEASE AGREEMENT
BETWEEN
INDUSTRIAL DEVELOPMENTS INTERNATIONAL, INC.
AS LANDLORD
AND
PETCO ANIMAL SUPPLIES, INC.
AS TENANT
DATED FEBRUARY 20, 1998
LEASE INDEX
Section Subject
1 Basic Lease Provisions
2 Demised Premises
3 Term
4 Minimum Rent
5 Tenant's Right to Cease Operations
6 Additional Rent
7 Use of Demised Premises
8 Insurance
9 Utilities
10 Taxes and Other Impositions
11 Maintenance and Repairs
12 Tenants' Personal Property; Indemnity
13 Tenant's Fixtures
14 Signs
15 [INTENTIONALLY OMITTED]
16 Governmental Regulations
17 Environmental Matters
18 Plans and Specifications for Construction of Demised Premises
19 Tenant Alterations and Additions
20 Services by Landlord
21 Fire and Other Casualty
22 Condemnation
23 Tenant's Default
Page 1
24 Landlord's Right of Entry
25 Mortgagee's Rights
26 Estoppel Certificate
27 Landlord Liability
28 Notices and Payments
29 Brokers
30 Assignment and Subleasing
31 Termination or Expiration
32 Late Payments
33 Protective Covenants
34 Dispute Resolution Procedure
35 Waiver of Landlord's Lien
36 Quiet Enjoyment
37 Miscellaneous
Exhibit "A" Legal Description
Exhibit "A-1" Site Plan
Exhibit "B" Permitted Encumbrances
Exhibit "C" Expansion Land
Exhibit "C-1" Alternate Expansion Land
Exhibit "D" Prevailing Market Rate
Exhibit "E" Allowance Work
Exhibit "F" Environmental Reports
Exhibit "G" Base Building Plans and Specifications
Exhibit "G-1" Additional Plans and Specifications
Exhibit "G-2" Tenant's Work
Exhibit "H" Subordination, Non-Disturbance and Attornment Agreement
Exhibit "I" Protective Covenants
Exhibit "J" Landlord's Agreement
BUILD TO SUIT
LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Lease") is made this 20th day of February,
1998 ("Lease Date"), by and between INDUSTRIAL DEVELOPMENTS INTERNATIONAL, INC.,
a Delaware corporation ("Landlord"), and PETCO ANIMAL SUPPLIES, INC., a
_______________________ corporation ("Tenant") (the words "Landlord" and
"Tenant" to include their respective legal representatives, successors and
permitted assigns where the context requires or permits).
W I T N E S S E T H:
1. Basic Lease Provisions. The following constitute the "Basic
Lease Provisions" of this Lease:
Page 2
(a) Demised Premises: As described in Section 2 of this Lease. The term
"Base Building", as used in this Lease, shall mean the Building (as
hereinafter defined) constructed by Landlord in accordance with this Lease
prior to construction of Expansion Improvements (as defined in Section 3.1),
if any.
(b) Building Square Footage: Approximately 258,000 square feet (subject
to adjustment pursuant to Section 18(j) of this Lease), as such amount may be
increased by the square footage of the Expansion Improvements, if any.
(c) Annual Minimum Rent (subject to adjustment pursuant to Section 18(j)
of this Lease):
Lease Year one (1) $745,620.00
Lease Year two (2) $758,520.00
Lease Years three (3) through five (5) $771,420.00
Lease Years six (6) and seven (7) $879,780.00
The Annual Minimum Rent for the Base Building is sometimes referred to in this
Lease as the "Base Building Annual Minimum Rent".
(d) Monthly Minimum Rent Installments (subject to adjustment pursuant to
Section 18(j) of this Lease):
Lease Year one (1) $62,135.00
Lease Year two (2) $63,210.00
Lease Years three (3) through five (5) $64,285.00
Lease Years six (6) and seven (7) $73,315.00
(e) Lease Commencement Date: The date of Substantial Completion (as defined
in Section 3 of this Lease) or April 7, 1998, whichever is later.
(f) Minimum Rent Commencement Date: The Lease Commencement Date
(g) Term: Seven (7) years following the Lease Commencement Date (subject to
adjustment in accordance with Section 3 of this Lease).
Page 3
(h) [INTENTIONALLY OMITTED]
(i) Permitted Use: Storage, warehousing and
distribution of pet supplies, pet food and pet-related goods of all kinds and
general office use ancillary thereto (collectively, the "Primary Use") and (2)
subject to the limitations hereinafter specified in Section 7(a) of this Lease
and in this subsection (i), storage, warehousing and distribution permissible
under applicable laws and regulations of governmental authorities having
jurisdiction over the Demised Premises (collectively, "Governmental
Requirements") and under the Protective Covenants (as defined in Section 33),
and general office use ancillary thereto; the Permitted Use (a) shall never
include any use prohibited by Section 17 of this Lease, (b) shall never extend
to or allow the use of radioactive or biohazardous materials at the Demised
Premises, (c) shall never include any heavy manufacturing, the manufacture or
production of chemicals or petroleum (or distillates thereof) or any other use
wherein a Hazardous Substance (as defined in Section 17) constitutes the
principal or primary product of the business to be conducted at the Demised
Premises and (d) must not result in a material increase in the wear and tear
on the Demised Premises, as compared to the Primary Use; and with respect to
any Permitted Use other than the Primary Use, such Permitted Use must not, in
the reasonable judgment of Landlord, result in a material increase in the risk
of Contamination (as defined in Section 17) at the Demised Premises, as
compared to the Primary Use. The Primary Use may be altered only in accordance
with Section 7(a) of this Lease.
(j) Addresses for notice:
Landlord: Industrial Developments International, Inc.
Monarch Tower
0000 Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Operating Officer
Tenant: PETCO ANIMAL SUPPLIES, INC.
0000 Xxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attn: Property Manager
AND:
PETCO ANIMAL SUPPLIES, INC.
0000 Xxxx Xxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Property Manager
Page 4
(k) Address for rental payments:
Industrial Developments International, Inc.
X.X. Xxx 000000
Xxxxxxx, Xxxxxxx 00000
(l) Broker(s): Xxx & Associates
0000 Xxxxxx Xxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
2. Demised Premises. For and in consideration of the rent
hereinafter reserved and the mutual covenants hereinafter contained, Landlord
does hereby lease and demise unto Tenant, and Tenant does hereby lease and
accept from Landlord, that certain parcel of real property (the "Land")
containing approximately 13.23 acres, which Land is situated in DuPage County,
City of Joliet, Illinois, within Rock Run Business Park (the "Project") and is
more particularly described in Exhibit "A" attached hereto and by this
reference made a part hereof, together with and including all buildings,
structures, driveways, parking lots, walkways, landscaping and other
appurtenances thereto and all other improvements constructed or placed on the
Land in accordance with this Lease, at any time during the Term, including
specifically, but without limitation, a building (the "Building") containing
approximately 258,000 square feet of office and warehouse space, which is
located on the Land as shown on Exhibit "A-1" attached hereto (collectively,
the "Demised Premises"). This Lease and the rights of Landlord andTenant under
this Lease are subject to the matters set forth on Exhibit "B" attached hereto
(herein referred to as "Permitted Encumbrances").
3. Term.
(a) To have and to hold the Demised Premises for a
term ("Term") which will commence on the Lease Date and shall expire seven (7)
years after the Lease Commencement Date; provided, however, that if the Lease
Commencement Date is a day other than the first day of a calendar month, the
first Lease Year (as hereinafter defined) will also include the period between
the Lease Commencement Date and the end of the calendar month in which the
Lease Commencement Date occurs and, thereafter, each Lease Year shall commence
on the anniversary of the first calendar day of the first full calendar month
after the Lease Commencement Date. The Term of this Lease shall end on the
final day thereof without the requirement of notice from either party to the
other. The term "Lease Year", as used in this Lease, shall mean the 12-month
period commencing on the Lease Commencement Date, and each 12-month period
thereafter during the Term. If this Lease terminates in
Page 5
accordance with its terms on a day other than the last day of the final Lease
Year, Minimum Rent (as defined in Section 4) and Additional Rent (as defined
in Section 5) for the Lease Year in which such termination occurs shall be
prorated as of the date of such termination.
3.1 Option to Expand and Extend. Landlord hereby grants to
Tenant a continuing right and option to expand the Demised Premises and to
extend the Term, upon and subject to the following terms and conditions:
(a) At any time prior to the end of the third (3rd)
Lease Year, Tenant shall have the right and option ("Expansion Option") to
expand the Demised Premises by causing Landlord to construct the Expansion
Improvements (as that term is herein defined) in accordance with all the
provisions of this Section 3.1; provided that Tenant shall have the right to
extend the term ("Expansion Option Term") of the Expansion Option in the
manner provided in Section 3.2; provided further, however, that the right of
Tenant to exercise the Expansion Option shall be subject to the conditions
precedent set forth in Section 3.4. Tenant shall exercise the Expansion Option
by giving written notice ("Expansion Notice") to Landlord prior to expiration
of the Expansion Option Term. If Tenant fails to give the Expansion Notice
timely, the Expansion Option granted Tenant in this Section 3.1 shall lapse
unexercised and shall be of no further force or effect; provided, however,
that if Tenant fails to exercise the Expansion Option prior to the end of the
Expansion Option Term, the right of Tenant to exercise the Expansion Option
shall not finally lapse and terminate until the tenth (10th) business day
following the receipt of a written notice from Landlord (which may not be
given prior to the expiration of the Expansion Option Term) advising Tenant
that the Expansion Option Term has expired and Landlord did not receive the
Expansion Notice. The term "Expansion Improvements", as such term is used in
this Section 3.1, shall mean an expansion of the Building containing a maximum
of approximately 250,000 square feet (subject to limitations of applicable
zoning and other laws) and an absolute minimum of 100,000 square feet of
additional space, together with additional parking area as may be required by
applicable law or the Final Expansion Plans (as defined in Section 3.1(d) of
this Lease), whichever is greater; provided that such Expansion Improvements
shall otherwise be, in all respects, subject to then applicable laws. If
Tenant timely exercises the Expansion Option, and the Expansion Improvements
will exceed 100,000 square feet, the Demised Premises must expand to include
the 13.38 acres of land ("Expansion Land") more particularly described on
Exhibit "C" attached to this Lease and made a part hereof by this reference.
If Tenant exercises the Expansion Option, and elects to cause Landlord to
construct the minimum of 100,000 square feet of additional space, only that
portion of the Expansion Land containing 4.73 acres
Page 6
and described on Exhibit C-1 attached to this Lease and made a part hereof by
this reference ("Alternate Expansion Land") shall become part of the Demised
Premises and the remaining acreage of the Expansion Land will no longer be
available to become part of the Demised Premises and will no longer be subject
to this Lease in any respect. Accordingly, the Expansion Land (or only the
Alternate Expansion Land, if applicable) shall become part of the Demised
Premises as of the Expansion Completion Date (as defined in Section 3.1(e),
below) and thereafter be subject to all of the terms and provisions of this
Lease. Landlord and Tenant stipulate and agree that the term "Expansion Land
Value", as used in this Section 3.1, shall mean a sum of money calculated by
multiplying the square footage of the Expansion Land (or so much thereof as
becomes part of the Demised Premises), as calculated to the nearest ten
thousandth of a foot, times the Expansion Land Cost Per Foot (as hereinafter
defined). The term "Expansion Land Cost Per Foot" shall mean the sum of $2.00.
So long as the Expansion Option remains in effect and unexercised by Tenant,
Landlord agrees that Landlord will not utilize or permit to be utilized the
Expansion Land for any purpose without the prior written consent of Tenant, to
be given or withheld by Tenant in its sole discretion.
(b) The Expansion Notice shall include proposed
specifications and a proposed site plan, prepared at the expense of Tenant,
(i) describing the Expansion Improvements as contemplated by Tenant, (ii)
showing the location and configuration of the Expansion Improvements,
including, without limitation, the manner in which the Expansion Improvements
will be connected to the Building (collectively "Expansion Requirements") and
(iii) specifying an amount of money which Tenant authorizes Landlord to expend
to prepare the Preliminary Expansion Plans (the "Preliminary Plan Expenses").
The Expansion Notice must also include the financial information described in
Section 3.4.
(c) Within forty-five (45) days after receipt of the
Expansion Notice, Landlord will, at the expense of Tenant, cause to be
prepared preliminary construction drawings and preliminary construction
specifications, including an estimated construction cost breakdown and a
construction schedule (collectively "Preliminary Expansion Plans") for the
Expansion Improvements. The Preliminary Plan Expenses actually and reasonably
incurred by Landlord in obtaining the Preliminary Expansion Plans shall either
(i) if Tenant withdraws its exercise of the Expansion Option in accordance
with subsection (c) below, be reimbursed to Landlord by Tenant within thirty
(30) calendar days after receipt from Landlord of a written request for
payment, supported by invoices or other reasonable documentation which
evidence the costs or (ii) be included in the Expansion Costs (as hereinafter
defined). Landlord agrees that the Preliminary Expansion Plans will be
prepared on the basis of the Expansion Requirements and such additional
requirements and comments as may be provided by Tenant to Landlord in
Page 7
writing; provided, however, that Landlord shall have no duty or obligation to
incur any expense in obtaining the Preliminary Expansion Plans in excess of
the Preliminary Plan Expenses (as such sum may be increased in the discretion
of Tenant). Tenant will, in good faith, cooperate with Landlord in the
preparation of the Preliminary Expansion Plans and shall provide Landlord with
such additional information as Landlord may reasonably request in order to
prepare the Preliminary Expansion Plans in a manner which will be consistent
with the intended use by Tenant of the Expansion Improvements. The Preliminary
Expansion Plans shall be prepared with a level of detail sufficient to allow
computation of the Expansion Costs for the purpose of calculating the
Expansion Rent (as hereinafter defined). Landlord and Tenant agree that the
exterior appearance and general quality of the Expansion Improvements shall be
consistent with the exterior appearance and general quality of the Building;
in addition, the Expansion Improvements must (i) have bay size and clear
height the same as the Base Building, (ii) have no greater proportion of
office space than the Base Building, (iii) have the same level and quality of
sprinkler and fire safety systems as the Base Building, (iv) have no
improvements in the warehouse area other than improvements consistent with the
Base Building or mandated by Governmental Requirements and (v) provide for
truck docks such that the ratio of the number of truck docks to the total
square footage of the Expansion Improvements will not exceed the same ratio
for the Base Building. Not later than forty-five (45) calendar days after
receipt of the Expansion Notice, Landlord shall submit to Tenant the proposed
Preliminary Expansion Plans together with an estimated cost statement
associated therewith. With respect to the cost of the general construction
contract, Landlord shall include, as part of the estimated cost statement, not
less than three (3) competitive bids; the general contractors from whom bids
are solicited shall be subject to the approval of Tenant, such approval not to
be unreasonably withheld or delayed. Tenant shall have thirty (30) calendar
days from receipt of the proposed Preliminary Expansion Plans and estimated
cost statement to notify Landlord of approval or disapproval by Tenant. Any
such notice of disapproval shall set forth in detail and with specificity the
aspects of the Preliminary Expansion Plans which are not acceptable to Tenant.
Landlord shall make those changes in the Preliminary Expansion Plans which are
reasonably requested by Tenant and, within ten (10) business days after
receipt of the written notice from Tenant, submit the revised portion of the
Preliminary Expansion Plans to Tenant; as part of such revisions, Landlord
shall also revise, to the extent necessary as a result of the changes
requested by Tenant, and submit to Tenant the construction schedule and cost
estimate for the Expansion Improvements. Tenant shall have the right to
approve or disapprove any such resubmission for a period of ten (10) business
days after receipt; if no written notice of approval or disapproval is given
by Tenant, the resubmission shall conclusively be deemed to have been
disapproved. Tenant
Page 8
shall have no obligation to accept the cost estimate of Landlord and Landlord
shall have no obligation to change its cost estimate except as a result of
manifest error; as set forth below, the estimated costs shall become the
"Expansion Costs" only on the basis of mutual approval of Landlord and Tenant.
Landlord shall (A) use its best efforts to obtain final, unappealable approval
of the Preliminary Expansion Plans and the Final Expansion Plans (as
hereinafter defined) by all governmental authorities having jurisdiction, and
by the Association to the extent required by the Protective Covenants and
otherwise satisfy all Governmental Requirements (as defined in Section 16)
applicable to the construction of the Expansion Improvements and development
of the Expansion Land, in accordance with the Final Expansion Plans, (B)
timely file all applications required to obtain such approvals and respond
timely to requests by the applicable authority for additional information and
otherwise diligently pursue such approvals, (C) keep Tenant generally apprised
of the status of the efforts by Landlord to obtain the approvals and (D) allow
Tenant to participate, at its own expense, in the efforts to obtain the
approvals. If a required approval is denied, Landlord shall diligently pursue
any available appeal process. If Tenant does not approve the cost estimates or
construction schedule submitted by Landlord to Tenant, or if Landlord is
unable to provide Tenant with assurance (which shall be described or set forth
in a written notice from Landlord) acceptable to Tenant that the Expansion
Improvements contemplated by the Preliminary Expansion Plans and the Final
Expansion Plans can be constructed in accordance with requirements of the
Association and all applicable Governmental Requirements, Tenant may, as its
exclusive remedy, by written notice to Landlord, withdraw its election to
exercise the Expansion Option. Upon such withdrawal, the Expansion Option
shall automatically be reinstated just as though the prior exercise of the
Expansion Option had not occurred. If Tenant approves in writing the
Preliminary Expansion Plans, cost estimate and construction schedule for the
Expansion Improvements, as submitted and resubmitted by Landlord in accordance
with this subsection (c), the cost estimate and construction schedule which
are so approved in writing by Tenant are hereinafter referred to as the
"Expansion Costs" and the "Expansion Construction Schedule", respectively. At
such time, if ever, that Tenant approves in writing the Preliminary Expansion
Plans, the Expansion Costs, and the Expansion Construction Schedule, Landlord
shall, if Landlord is not then the owner of the Expansion Land, proceed to
acquire title to the Expansion Land or the Alternate Expansion Land, as may be
required, in the manner described in Section 3.1(j). Tenant acknowledges that
the estimated cost of the Expansion Improvements to be submitted by Landlord
to Tenant (and which will become the Expansion Costs only when approved by
Tenant in accordance with this subsection (c)) will be the sum of (1) the
Expansion Land Value, plus (2) all costs and expenses of any nature, whether
generally characterized as "hard" or "soft" costs, which Landlord estimates
will be
Page 9
incurred by Landlord and payable to a third party in connection with the
design and construction ("Construction Costs") of the Expansion Improvements
plus (3) interest on all Construction Costs, accruing from each particular
date the cost or expense is estimated to be paid, at a rate equal to the Prime
Rate (as defined in Section 32) plus one percent (1%), and plus (4) a
construction management fee payable to Landlord (which shall be in addition to
any fees payable to the general contractor) which will not exceed ten percent
(10%) of the Construction Costs. Landlord and Tenant agree that the Expansion
Costs shall constitute the basis for the calculation of Expansion Rent and
shall be subject to adjustment only for Change Orders (as defined in Section
18(a)) approved by Tenant. Landlord and Tenant shall each act in good faith in
their efforts to develop Preliminary Expansion Plans, Expansion Costs and an
Expansion Construction Schedule which are mutually acceptable.
(d) After approval by Tenant of the Preliminary
Expansion Plans, the Expansion Construction Schedule and the Expansion Costs,
Landlord shall promptly and diligently proceed with preparation of final plans
and specifications for the Expansion Improvements. Within thirty (30) calendar
days after the occurrence of such approval by Tenant, Landlord shall prepare
(with the cost of such preparation being part of the Expansion Costs) and
submit to Tenant a set of proposed plans and specifications, based upon the
Preliminary Expansion Plans, covering all work to be performed by Landlord in
constructing the Expansion Improvements. Tenant shall have ten (10) business
days after receipt thereof to review the proposed plans and specifications and
give to Landlord a written notice of approval or disapproval; provided that
each day after the tenth (10th) business day that the notice is given by
Tenant shall constitute a day of Permitted Delay. Tenant acknowledges that the
Expansion Improvements will likely be constructed on a "fast track" basis and
that Landlord shall have the right and option to submit various parts of the
proposed plans and specifications from time to time during said 30-day period
and the time period for approval of any part of the proposed plans and
specifications shall commence upon receipt of each submission. If Tenant gives
written notice of disapproval of any of the proposed plans and specifications,
such notice of disapproval shall set forth in detail and with specificity the
aspects of the proposed plans and specifications which are not acceptable to
Tenant. Landlord shall make those changes which are reasonably requested by
Tenant and promptly submit the revised portion of the proposed plans and
specifications to Tenant. Landlord must, in any event, make such changes as
may be necessary to achieve conformance with the Preliminary Expansion Plans.
Tenant shall have no right to request any changes which would materially alter
the exterior appearance or basic nature of the Building or the Expansion
Improvements, as contemplated by the Preliminary Expansion Plans. If Tenant
fails to approve any portion of the proposed plans and
Page 10
specifications so resubmitted to Tenant within seven (7) business days after
receipt of such resubmission, each day after the seventh (7th) business day
that the approval is given by Tenant shallconstitute a day of Permitted Delay.
Tenant may not disapprove the revisions of the proposed plans and
specifications unless Landlord has unreasonably failed to incorporate comments
of Tenant. Tenant shall, in its review of the proposed plans and
specifications, act reasonably and in good faith. The final plans and
specifications for the Expansion Improvements, as so approved by Tenant, are
hereinafter referred to as the "Final Expansion Plans." After approval by
Tenant of the Final Expansion Plans, Landlord shall proceed with construction
of the Expansion Improvements with reasonable diligence (and with the same
quality materials and workmanship that the Building was constructed), and
otherwise in accordance with this Lease, Governmental Requirements and the
Permitted Encumbrances, free of all liens arising in any manner out of such
construction. The Expansion Improvements will be constructed in accordance with
the Expansion Construction Schedule, subject to extension for Permitted Delay.
There shall be no material variation from the Final Expansion Plans and no
change in the Expansion Costs, except pursuant to Change Orders approved by
Tenant in the same manner as Change Orders for the Plans and Specifications
(and at the sole cost and expense of Tenant). In connection with construction
of the Expansion Improvements, Landlord and its contractors shall undertake all
such steps as may be reasonable and practicable to prevent interference of such
construction with the use and enjoyment by Tenant of the Demised Premises. If,
after determination of the Expansion Costs, the imposition or enactment of any
Governmental Requirement necessitates a change in either the Preliminary
Expansion Plans or the Final Expansion Plans which will increase the Expansion
Costs, Landlord shall pay such increase (without increasing the Expansion
Costs, the Minimum Rent or the Additional Rent) unless the required change is
necessary because of the particular use of the Demised Premises by Tenant; if
the required change is necessary because of the particular use of the Demised
Premises by Tenant, the increase in cost shall be included in the Expansion
Costs, in accordance with this subsection (d), and shall be payable by Landlord
in the same manner as all other Expansion Costs. Without limiting any of the
foregoing provisions of this subsection (d), the provisions of Sections 18(f)
and (h) shall, in the manner set forth therein, apply to the Expansion
Improvements.
(e) Upon the Expansion Completion Date (as that term is herein
defined), the Expansion Improvements and the Expansion Land (or the Phase I
Expansion Land, if applicable) shall become part of the Demised Premises and the
Expansion Improvements shall automatically be governed by all the terms and
provisions of this Lease, and shall be deemed to be included in the definition
of "Demised Premises" for all purposes, except that, commencing on the Expansion
Completion Date,
Page 11
Tenant shall pay, in addition to the Base Building Annual Minimum Rent and as
part of the Minimum Rent, the Expansion Rent (as that term is hereinafter
defined). The Expansion Rent shall commence to accrue on the date (the
"Expansion Completion Date") on which the Expansion Improvements are
Substantially Completed (as defined in Section 18(i). Within ten (10)
calendar days after the Expansion Completion Date, the architect who prepared
the Final Expansion Plans shall execute and deliver to Landlord and Tenant a
written certification of the square footage contained in the Expansion
Improvements, such computation of square footage to be made on a "drip-line"
basis. The square footage so certified by such architect shall (subject to
the right of Tenant to dispute the measurement, as hereinafter provided)
conclusively determine the square footage of the Expansion Improvements for
all purposes under this Lease and such square footage shall become part of
the Building Square Footage. In the event Tenant shall dispute the
determination by such architect of the square footage of the Expansion
Improvements, the parties shall utilize the Dispute Resolution Procedure (as
defined in Section 34), with qualified architects serving as "Officials".
(f) If the Expansion Option is timely exercised by Tenant and
not thereafter withdrawn in accordance with subsection 3.1(c), above, prior to
written agreement by Landlord and Tenant regarding the Preliminary Expansion
Plans, the Expansion Construction Schedule and the Expansion Costs, then,
provided that the Expansion Improvements are Substantially Completed in
accordance with the terms of this Lease, the Term shall, if necessary,
automatically be extended for a period of time so that this Lease will expire
not less than five (5) years after the first day of the first full calendar
month following the Expansion Completion Date. The period of time between the
Expansion Completion Date and the end of such extended period is herein
sometimes referred to as the "Extension Term". If the Expansion Completion Date
occurs not later than the end of the second Lease Year, there will be no
Extension Term. The Extension Term shall be governed by all the terms and
provisions of this Lease, with the exception that, for the period between the
end of the initial Primary Term, i.e., the end of the seventh (7th) Lease Year,
and the end of the Extension Term, the Base Building Annual Minimum Rent (which
is in addition to the Expansion Rent) shall (to the extent necessary, depending
upon the expiration date of the Extension Term) escalate on the first day of the
eighth (8th) Lease Year by an amount equal to five and thirty-four one
hundredths percent (5.34%) of the Base Building Annual Minimum Rent in effect
during the sixth (6th) and seventh (7th) Lease Years and, if required because of
the duration of the Extension Term, again on the first day of the ninth (9th)
Lease Year and on the first day of each subsequent Lease Year during the
Extension Term, by an amount equal to two and sixty-seven one-hundredths percent
(2.67%) of the Base Building Annual Minimum Rent in effect during the
immediately preceding Lease Year.
Page 12
(g) The term "Expansion Rent", as used in this Section 3.1,
shall be an amount calculated by multiplying the Expansion Costs times eleven
percent (11%). The Expansion Rent is an annual amount of Minimum Rent payable in
equal, monthly installments on the first day of each calendar month in the same
manner as Base Building Monthly Minimum Rent Installments.
(h) Landlord and Tenant agree to enter into an amendment to
this Lease to document the expansion of the Demised Premises, the Expansion
Completion Date, the extension of the Term pursuant to this Section 3.1 and the
Expansion Rent.
(i) Landlord acknowledges and agrees that Tenant shall have no
obligation of any kind to pay any fee or commission to any real estate broker or
agent in connection with expansion of the Demised Premises in accordance with
the Expansion Option.
(j) Tenant acknowledges that Landlord may, at any time prior
to incorporation of the Expansion Land (or, if applicable, the Alternate
Expansion Land) into the Demised Premises pursuant to this Section 3.1, sell and
convey to a third party the interest of Landlord in and to the Land and the
Demised Premises (subject to this Lease), and retain title to the Expansion
Land. In such event, Landlord shall, simultaneously with such sale of the Land
and the Demised Premises, grant and deliver to the purchaser or transferee an
exclusive, irrevocable option to acquire the Expansion Land at a purchase price
equal to the Expansion Land Value and otherwise upon such terms as will enable
the Landlord from time to time to carry out its obligations under this Lease
with respect to the Expansion Land ("Expansion Land Option"). After a sale and
conveyance of the Demised Premises to a third party, Industrial Development
International, Inc. ("IDI") shall not, except as hereinafter provided, sell,
transfer or convey the Expansion Land to any person or entity other than the
owner of the Demised Premises; IDI shall have the right to transfer or convey
the Expansion Land to any entity which owns or controls IDI, which is owned or
controlled by IDI or which is under common control with IDI (any such entity
being hereafter called an "IDI Affiliate"), and subsequently from one IDI
Affiliate to another. The Expansion Land Option shall run with the title to the
Land and shall not be assignable to any person other than the holder of the
Landlord interest under this Lease. The Expansion Land Option shall remain in
effect so long as the Expansion Option remains in effect. If, at the time Tenant
gives the Expansion Notice, the Expansion Land Option is then in effect,
Landlord shall, after written agreement by Landlord and Tenant regarding the
Preliminary Expansion Plans, the Expansion Construction Schedule and the
Expansion Costs, give such notices and take such action as may be necessary to
acquire,
Page 13
pursuant to the Expansion Land Option, either the Expansion Land or the
Alternate Expansion Land, as may be required; Landlord shall exercise its
best efforts to carry out such acquisition in a manner which will enable
Landlord to achieve Substantial Completion of the Expansion Improvements in
accordance with the Expansion Construction Schedule.
3.2 Extension of Expansion Option Term. So long as no Event of Default
(as defined in Section 23) has occurred and is then continuing, Tenant shall
have the right to extend the Expansion Option Term through and including the
last day of the fourth (4th) Lease Year by giving written notice to Landlord not
later than the last day of the third (3rd) Lease Year and by paying to Landlord,
with such written notice, a non-refundable fee in the amount of $51,500.00
(which shall be fully earned by Landlord when received and shall not constitute
a credit against either Minimum Rent or Addtional Rent). If Tenant timely and
properly exericses its right to extend the Expansion Option Term for the fourth
(4th) Lease Year, and so long as no Event of Default has occurred and is then
continuing, Tenant shall have the right to extend the Expansion Option Term
through and including the last day of the fifth (5th) Lease Year by giving
written notice to Landlord not later than the last day of the fourth (4th) Lease
Year and by paying to Landlord, with such written notice, a non-refundable fee
in the amount of $51,500.00 (which shall be fully-earned by Landlord when
received and shall not constitute a credit against either Minimum Rent or
Addtional Rent). Tenant shall have not be entitled to exercise its right under
this Section 3.2 to extend the Expansion Option Term whenever an Event of
Default has occurred and is continuing.
3.4 Conditions Precedent. Notwithstanding anything to the contrary in
Section 3.1, Tenant shall not have the right to exercise the Expansion Option
if, at the time Tenant desires to exercise such right, either (i) an Event of
Default has occurred and is continuing or (ii) the stockholder equity of Tenant
is less than $150,000,000.00 (U.S.) ("Minimum Net Worth"). At such time as
Tenant may give the Expansion Notice, Tenant must provide simultaneously such
audited financial statements or other finacial information as may be reasonably
required by Landlord to establish to the reasonable satisfaction of Landlord
that, as of the date on which the Expansion Notice is received by Landlord, the
stockholder equity of Tenant equals or exceeds the Minimum Net Worth. If Tenant
fails to provide the financial information required by this Section 3.4 or if
such financial information fails to establish to the reasonable satisfaction of
Landlord that the stockholder equity of Tenant then equals or exceeds the
Minimum Net Worth, the exercise by Tenant shall be void and of no force or
effect.
3.5. Renewal Option.
Page 14
(a) Provided that no Event of Default has ccurred and is then
continuing, Tenant shall have the right and option to extend the Primary Term
(as it may have been extended for the Extension Term in accordance with Section
3.1) of this Lease for three (3) successive additional periods of five (5) years
each (the "First Renewal Term", the "Second Renewal Term" and the "Third Renewal
Term", respectively). The option for the First Renewal Term may be exercised by
Tenant by written notice given to Landlord not less than six (6) months prior to
the end of the Primary Term. The option for the Second Renewal Term may be
exercised by Tenant by written notice given to Landlord not less than six (6)
months prior to the end of the First Renewal Term; provided, however, that
unless Tenant timely exercises its option to extend the Primary Term for the
First Renewal Term, Tenant will have no right to exercise its option for the
Second Renewal Term or the Third Renewal Term. The option for the Third Renewal
Term may be exercised by Tenant by written notice given to Landlord not less
than six (6) months prior to the end of the Second Renewal Term; provided,
however, that unless Tenant timely exercises its option to extend the First
Renewal Term for the Second Renewal Term, Tenant wil have no right to exercise
its option for the Third Renewal Term. Subject to the terms of subsection (b) of
this Section 4, all of the terms and provisions of this Lease (excluding any
allowances provided by Landlord and excluding any construction obligation of
Landlord whatsoever, whether relating to the Base Building or the Expansion
Improvements) shall govern and be applicable to the First Renewal Term, the
Second Renewal Term and the Third Renewal Term in accordance with and subject to
all the provisions of this subsection (a). The First Renewal Term, the Second
Renewal Term and the Third Renewal Term are hereinafter sometimes referred to
collectively as the "Renewal Terms".
(b) Tenant shall pay to Landlord as Minimum Rent during the
First Renewal Term (herein, the "First Renewal Minimum Rent") in lawful money of
the United States commencing at the commencement of the First Renewal Term, a
per annum amount equal to the greater of (i) ninety-five percent (95%) of the
product obtained by multiplying the Building Square Footage (including the
Expansion Improvements, if applicable) times an amount equal to the Prevailing
Market Rate calculated in the manner set forth in Exhibit "D" attached to this
Lease and made a part hereof by this reference or (ii) the Minimum Rent for the
Demised Premises in effect as of the expiration of the Primary Term, payable in
equal monthly installments of one twelfth 1/12th of said sum, in advance,
without demand and, except as expressly provided to the contrary in this Lease,
without abatement, reduction, set-off or deduction, on the first day of each
calendar month during the First Renewal Term. If Tenant timely and properly
exercises its right to the extend the Term for the Second Renewal Term, Tenant
shall pay to Landlord as Minimum Rent during the Second Renewal Term (herein,
the "Second Renewal Minimum Rent") in lawful money of the United States
commencing
Page 15
at the commencement of the Second Renewal Term, a per annum amount equal to
the greater of (i) ninety-five percent (95%) of the product obtained by
multiplying the Building Square Footage (including the Expansion
Improvements, if applicable) times an amount equal to the Prevailing Market
Rate or (ii) the Minimum Rent for the Demised Premises in effect as of the
expiration of the First Renewal Term, payable in equal monthly installments
of one twelfth 1/12th of said sum, in advance, without demand and, except as
expressly provided to the contrary in this Lease, without abatement,
reduction, set-off or deduction, on the first day of each calendar month
during the Second Renewal Term. If Tenant timely and properly exercises its
right to the extend the Term for the Third Renewal Term, Tenant shall pay to
Landlord as Minimum Rent during the Third Renewal Term (herein, the "Third
Renewal Minimum Rent") in lawful money of the United States commencing at the
commencement of the Third Renewal Term, a per annum amount equal to the
greater of (i) ninety-five percent (95%) of the product obtained by
multiplying the Building Square Footage (including the Expansion
Improvements, if applicable) times an amount equal to the Prevailing Market
Rate or (ii) the Minimum Rent for the Demised Premises in effect as of the
expiration of the Second Renewal Term, payable in equal monthly installments
of one twelfth 1/12th of said sum, in advance, without demand and, except as
expressly provided to the contrary in this Lease, without abatement,
reduction, set-off or deduction, on the first day of each calendar month
during the Third Renewal Term.
(c) If Tenant timely exercises its right to the First Renewal Term and
makes the first payment of Base Rent due after commencement of the First Renewal
Term, Landlord will, at any time during the First Renewal Term, provide an
allowance of $45,000.00 ("Refurbishment Allowance"), which will be applied as an
automatic credit against the first installment of Base Rent due after the
commencement of the First Renewal Term. Landlord will have no obligation to
perform any work of any nature in connection with the Refurbishment Allowance.
4. Minimum Rent. Tenant shall pay to Landlord at the address
set forth in Section 1(k) as base rent for the Demised Premises, commencing on
the Minimum Rent Commencement Date and continuing throughout the Term in lawful
money of the United States the annual amount set forth in Section 1(c) payable
in equal monthly installments as set forth in Section 1(d) (the "Minimum Rent"),
payable in advance, without demand and, except as expressly provided to the
contrary in this Lease, without abatement, reduction, set-off or deduction, on
the first day of each calendar month during the Term. If the Minimum Rent
Commencement Date shall fall on a day other than the first day of a calendar
month, the Minimum Rent shall be apportioned pro rata on a per diem basis for
the period between such Minimum Rent Commencement Date and the first day of the
following calendar month and such apportioned
Page 16
sum shall be paid on the Minimum Rent Commencement Date.
4.1 Allowance. Landlord is providing to Tenant an allowance in
the amount of $369,000.00 ("Maximum Construction Allowance") for the
installation of general office space and a shipping/receiving office at the
Demised Premises, generally as described on Exhibit E ("Allowance Work"), which
Allowance Work is part of the Landlord's Work (as defined in Section 18(b)). If
Tenant does not utilize the full Maximum Construction Allowance, the unused
portion ("Allowance Savings") may be applied by Tenant either to pay the cost of
Change Orders (as defined in Section 18(a)) requested by Tenant which increase
the cost of the Landlord's Work or as a credit against Base Rent which would
otherwise accrue in accordance with this Lease; provided, however, that the
Allowance Savings may never exceed $25,000.00. At any time after the occurrence
of Substantial Completion, Landlord and Tenant shall, within thirty (30) days
after receipt by Tenant of a written request from Landlord, execute and deliver
an amended and restated version of this Lease which will delete this Section 4.1
in its entirety and delete any other references in this Lease to this Section
4.1; such restated version of this Lease will not otherwise alter or modify any
provision of this Lease.
5. Tenant's Right to Cease Operations. Notwithstanding any provision to
the contrary in this Lease, nothing herein shall be construed as an obligation
for Tenant to open or operate its business in the Demised Premises. Subject to
all the provisions of this Lease, Tenant shall determine in all instances its
methods and times of operation at the Demised Premises. Tenant shall have the
right to remove Tenant's personal property and cease operations at the Demised
Premises at any time and at Tenant's sole discretion. However, the right to
cease the operation of its business shall not affect Tenant's obligation to pay
all amounts due under this Lease and to perform all covenants and obligations
under this Lease. Landlord acknowledges that Tenant has notified Landlord that
Tenant would not enter into this Lease unless and until the rights contained in
this Section 5 were included and made a part of this Lease.
6. Additional Rent. Any amounts required to be paid by Tenant under
this Lease (in addition to Minimum Rent) hereunder and any charges or expenses
incurred by Landlord on behalf of Tenant under the terms of this Lease,
including, without limitation, any expenses incurred for taxes, insurance,
maintenance, repairs, replacements and utilities which are the obligation of
Tenant hereunder, shall be considered additional rent (herein, "Additional
Rent") payable in the same manner and upon the same terms and conditions as
Minimum Rent reserved hereunder except as expressly set forth herein to the
contrary. Any failure on the part of Tenant to pay such Additional Rent when due
shall entitle Landlord to the remedies available to it for non-payment of
Minimum
Page 17
Rent, including, without limitation, late charges and interest thereon at the
Interest Rate (as herein defined) pursuant to Section 32 hereof. Tenant's
obligations for payment of Additional Rent shall begin to accrue on the
Minimum Rent Commencement Date.
7. Use of Demised Premises.
(a) The Demised Premises shall be used for the Permitted Use
set forth in Section 1(i) and for no other purpose, except as hereinafter
provided to the contrary. If Tenant or any permitted assignee or subtenant
desires to use the Demised Premises for a Permitted Use other than the Primary
Use, Tenant shall submit to Landlord a written request setting forth in detail
the nature of the additional or altered Permitted Use proposed by Tenant or a
permitted or proposed assignee or subtenant. Landlord agrees that Landlord may
not unreasonably withhold, delay or condition its consent to the proposed
additional or altered Permitted Use, subject to the condition that the proposed
additional or altered Permitted Use must comply with the requirements and
conditions of Section 1(i) of this Lease. Landlord shall, within ten (10)
business days after receipt of the written notice from Tenant regarding a
proposed alteration of the Primary Use, give written notice to Tenant approving
or disapproving the proposal. A notice of approval may contain reasonable
conditions, based on the nature of the proposed use. If the written notice from
Landlord disapproves the proposed use, the reasons for such determination shall
be set forth in reasonable detail.
(b) Tenant will permit no liens to attach or exist against the
Demised Premises, if such liens are held by persons claiming through or under
Tenant. If any such lien is filed against the Demised Premises, Tenant shall
cause such lien to be discharged of record by payment or bonding within thirty
(30) calendar days after Tenant receives written notice from Landlord of the
existence of the lien. A written notice given by Landlord pursuant to this
subsection (b) may also constitute the written notice required by Section
23(a)(ii) so long as the notice expressly references both Sections of this
Lease. Tenant shall not commit any waste.
(c) The Demised Premises shall not be used for any illegal
purposes, and Tenant shall not cause any vibration, noise, odor, light or other
effect to occur within or around the Demised Premises that constitutes a
nuisance or trespass. Upon notice by Landlord to Tenant that any of the
aforesaid prohibited uses are occurring, Tenant agrees to promptly remove or
control the same.
(d) Tenant shall not in any way violate any law, ordinance or
any restrictive covenant affecting the Demised Premises as shown by and included
in the Permitted Encumbrances, including
Page 18
specifically, but without limitation, the Protective Covenants (as defined in
Section 33), and shall not in any manner use the Demised Premises so as to
cause cancellation of, or impair coverage under the fire and extended
coverage insurance policy required pursuant to Section 8.
8. Insurance.
(a) Tenant covenants and agrees that from and after the date
of delivery of the Demised Premises from Landlord to Tenant, Tenant will carry
and maintain, at its sole cost and expense, the following types of insurance, in
the amounts specified and in the form hereinafter provided for:
(i) Liability insurance in the commercial
general liability form covering the Demised Premises and Tenant's use thereof
against claims for personal injury or death, property damage and product
liability occurring upon, in or about the Demised Premises, such insurance to be
written on an occurrence basis (not a claims made basis), with combined single
limit primary coverage of not less than One Million Dollars ($1,000,000.00) and
umbrella coverage of not less than an additional Four Million Dollars
($4,000,000.00), for each policy year. The insurance coverage required under
this Section 8(a)(i) shall, in addition, extend to any liability of Tenant
arising out of the indemnities by Tenant in Section 11 and, if necessary, the
policy shall contain a contractual endorsement to that effect.
(ii) (A) insurance on the "All-Risk" or
equivalent form on a replacement cost basis against loss or damage to the
Building and all other improvements now or hereafter located on the Land
(including, without in any manner limiting the generality of the foregoing,
flood insurance if the Demised Premises are located in a flood hazard area),
exclusive of footings and foundation, having a deductible not greater than
Twenty-Five Thousand Dollars ($25,000.00); and in an amount sufficient to
prevent Landlord or Tenant from becoming a co-insurer of any loss, but in any
event in amounts not less than 100% of the actual replacement value of the
Building and such other improvements; provided, however, that whenever the
stockholder equity of Tenant equals or exceeds $100,000,000.00, as evidenced by
financial statements prepared and certified by independent public accountants
and delivered to Landlord, Tenant shall have the right to increase the
deductible to $250,000.00. Notwithstanding anything in this Section 8, Tenant
shall not be required to include, in any of the "All-Risk" insurance covering
the Building or any component thereof, any coverage against loss or damage
resulting from earthquake, unless such coverage is available without incremental
premium cost to Tenant or Landlord elects, at its option, to pay such
incremental cost.
Page 19
(B) insurance on the "All-Risk" or
equivalent form against abatement or loss of rental by reason of the occurrences
covered by the insurance described in clause (A) above and by reason of any
utility service interruptions in an amount equal to Minimum Rent and all
Additional Rent for at least twelve (12) months following the occurrence of such
casualty;
(C) boiler and machinery insurance
covering losses to or from any steam boilers, pressure vessels or similar
apparatus requiring inspection under applicable state or municipal laws or
regulations which are located at the Demised Premises or on any other building
systems for which such coverage is available, in amounts determined by Tenant to
be appropriate or for such higher amounts as may at any time be reasonably
required by Landlord and having a deductible of not more than Twenty-Five
Thousand Dollars ($25,000.00)(provided, however, that whenever the stockholder
equity of Tenant equals or exceeds $100,000,000.00, as evidenced by financial
statements prepared and certified by independent public accountants and
delivered to Landlord, Tenant shall have the right to increase the deductible to
$250,000.00); coverage shall be on a broad form comprehensive basis, including
loss of income with a limit of coverage which is reasonably acceptable to
Landlord; and
(D) workmen's compensation and
employer's liability insurance to the extent required by the laws of the state
of Illinois.
(b) All policies of the insurance provided for in Section 8(a)
shall be issued in form acceptable to Landlord by insurance companies with a
rating of not less than "A," and financial size of not less than Class XII, in
the most current available "Best's Insurance Reports", and licensed to do
business in the state in which the Building is located. Tenant shall have the
right to increase the deductible amounts under the policies of insurance
required by Sections 8(a)(ii)(A) and (C) above, subject to the approval of
Landlord, such approval not to be unreasonably withheld; provided, however, that
Landlord shall be entitled to withhold such approval unless Tenant is able to
demonstrate that the requested increase in any such deductible is commercially
reasonable for improvements comparable to the Building. Each and every such
policy:
(i) shall name Landlord as well as Landlord's
Mortgagee, as defined in Section 24, and any other party reasonably designated
by Landlord, as an additional insured. In addition, the coverage described in
Section 8(a)(ii) shall also name Landlord as "loss payee";
(ii) shall be delivered to Landlord prior to
Page 20
delivery of possession of the Demised Premises to Tenant and thereafter within
thirty (30) days prior to the expiration of each such policy, and, as often as
any such policy shall expire or terminate. Renewal or additional policies shall
be procured and maintained by Tenant in like manner and to like extent;
(iii) shall contain a provision that the insurer
waives any right of subrogation against Landlord on account of any loss or
damage occasioned to Landlord, its property, the Demised Premises or its
contents arising from any risk covered by all risks fire and extended coverage
insurance of the type and amount required to be carried hereunder, provided that
such waiver does not invalidate such policies or prohibit recovery thereunder;
(iv) shall contain a provision that the insurer
will give to Landlord and such other parties in interest at least ten (10) days
notice in writing in advance of any material change, cancellation, termination
or lapse, or the effective date of any reduction in the amounts of insurance;
and
(v) shall be written as a primary policy which
does not contribute to and is not in excess of coverage which Landlord may
carry.
(c) Tenant shall, from and after the Lease Commencement Date,
carry and maintain, at its sole cost and expense, insurance on the "all-risk" or
equivalent form against loss or damage to the personal property of Tenant within
the Building including, without limitation, stored inventory, with companies,
amounts and terms of coverage reasonably deemed prudent by Tenant. Landlord
shall have no interest in or claim of any nature to the proceeds of any such
insurance. Any such policy of insurance covering personal property of Tenant
shall contain a provision that the insurer waives any right of subrogation
against Landlord. At the request of Landlord, Tenant shall provide Landlord with
a certificate of such insurance, issued by the carrier or its agent, setting
forth the terms of coverage. Tenant waives any claim against Landlord for damage
to the personal property of Tenant arising from negligence of Landlord only to
the extent such damage is covered by the insurance which Tenant is required to
maintain pursuant to this subsection (c).
(d) Any insurance provided for in Section 8(a) may be
maintained by means of a policy or policies of blanket insurance, covering
additional items or locations or insureds; provided, however, that:
(i) Landlord and any other parties in interest
from time to time designated by Landlord to Tenant shall be named
Page 21
as an additional insured thereunder as its interest may appear;
(ii) the coverage afforded Landlord and any such
other parties in interest will not be reduced or diminished by reason of the use
of such blanket policy of insurance;
(iii) any such policy or policies shall specify
therein the amount of the total insurance allocated to the Tenant's improvements
and property; and
(iv) the requirements set forth in this Section 8
are otherwise satisfied.
(e) In the event that Tenant shall fail to carry and maintain
the insurance coverages set forth in this Section 8, Landlord may upon ten (10)
days written notice to Tenant (unless such coverages will lapse, in which event
no such notice shall be necessary) procure such policies of insurance and Tenant
shall promptly reimburse Landlord therefor; provided that no Event of Default
may occur until Landlord has given the written notice required by Section
23(a)(iv). A single written notice from Landlord may constitute the written
notice required by this subsection (e) and by Section 23(a)(iv) so long as the
notice expressly references both Sections.
(f) Each party may, at any time, but not more than one (1)
time in any three (3) year period, require a review of the insurance coverage
and limits of liability set forth in Section 8 to determine whether the coverage
and the limits are reasonable and adequate in the then existing circumstances.
The review shall be undertaken on a date and at a time set forth in a party's
notice requesting a review and shall be conducted at the Demised Premises. If
the parties are, after a review, unable to agree on either the coverage or the
limits, then the parties shall employ the Dispute Resolution Procedure (as
defined in Section 34) with insurance advisors having at least ten (10) years
experience in insurance for commercial and industrial properties serving as
Officials. In rendering the decision the Officials shall consider the
requirements of Section 8, the cost of the insurance to be obtained, inflation,
changes in condition, and the insurance then being carried by similar
light-industrial use developments in the area of the Project.
9. Utilities. Commencing on the Lease Commencement Date and
continuing through the remainder of the Term, Tenant shall be responsible for
maintaining the portion of the utility lines located between the Land
boundary line and the Building and shall promptly pay as billed to Tenant all
rents and charges for water and sewer services and all costs and charges for
gas, steam, electricity, fuel, light, power, telephone, heat and any other
utility or service used or consumed in
Page 22
or servicing the Demised Premises and all other costs and expenses involved
in the care, management and use thereof to the extent charged by the
applicable utility companies. Landlord will cause separate meters to be
installed (to the extent not installed as of the Lease Date) at the Demised
Premises to measure usage by Tenant of water, electricity and natural gas. If
Tenant fails to pay any utility bills or charges, Landlord may, at its option
and upon reasonable notice to Tenant, pay the same and in such event, the
amount of such payment, together with interest thereon at the Interest Rate
as defined in Section 32 from the date of such payment by Landlord, will be
added to Tenant's next due payment, as Additional Rent.
10. Taxes and Other Impositions.
(a) Commencing on the Lease Commencement Date and continuing
through the remainder of the Term, Tenant shall be solely obligated to pay in
full all Real Estate Taxes and Other Impositions (as hereinafter defined) for
the Demised Premises, including the Building and the Land, which accrue during
the Term. Tenant acknowledges and agrees that Real Estate Taxes and other
Impositions are payable by Tenant on an accrual basis and, accordingly, Tenant
shall be liable for all Real Estate Taxes and Other Impositions which accrue
from and after the Lease Commencement Date and thereafter throughout the Term,
without regard for the date or dates on which installments of Real Estate Taxes
and Other Impositions may, in fact, be due. With respect to any Real Estate
Taxes or Impositions, Tenant shall have the right to file with or against the
authority imposing such tax or imposition a protest or challenge of the validity
of any such sum provided that (i) Tenant shall timely file and diligently pursue
to protest or challenge and keep Landlord apprised in writing of the status
thereof, and (ii) neither Landlord nor the Demised Premises will be subject to
levy or other legal action of any kind resulting from non-payment so long as
Tenant is pursuing the protest or challenge.
(b) The term "Real Estate Taxes and Other Impositions", as
used in this Lease shall mean all ad valorem taxes, water and sanitary taxes,
assessments, liens, licenses and permit fees or any other taxes imposed,
assessed or levied against the Land and the Demised Premises, and all other
charges, impositions or burdens of whatever kind and nature, whether or not
particularized by name, and whether general or special, ordinary or
extraordinary, foreseen or unforeseen, which at any time during the Term may be
created, assessed, confirmed, adjudged, imposed or charged upon or with respect
to the Demised Premises, the Land, or any improvements made thereto, or on any
part of the foregoing or any appurtenances thereto, or directly upon this Lease
or the rent payable hereunder or amounts payable by any subtenants or other
occupants of the Demised Premises, or upon this transaction or any documents to
which Tenant is a party or successor-in-interest, or against
Page 23
Landlord because of Landlord's estate or interest herein, by any governmental
authority, or under any law, including among others, all rental, sales, use,
inventory or other similar taxes and any special tax bills and general,
special or other assessments and liens or charges made on local or general
improvements or any governmental or public power or authority whatsoever.
(c) Notwithstanding the foregoing, if any Real Estate Taxes or
Other imposition shall be created, levied, assessed, adjudged, imposed, charged
or become a lien with respect to a period of time which commences before the
Lease Commencement Date or ends after the expiration date of the Term (other
than an expiration date of the Term by reason of breach of any of the terms
hereof by Tenant), then Tenant shall only be required to pay that portion which
accrues during the Term. If Tenant is permitted to pay (by the assessing and
collecting authorities) and elects to pay any imposition in installments, Tenant
shall nevertheless pay any and all installments thereof which are due prior to
the expiration of the Term or sooner termination of the Term. Nothing contained
in this Lease shall require Tenant to pay any income or excess profits or taxes
assessed against Landlord, or any corporation, capital stock, franchise,estate,
single business, inheritance, succession or transfer taxes imposed upon
Landlord. Landlord agrees to deliver to Tenant copies of all notices of Real
Estate Other Taxes and impositions which Landlord receives.
(d) Tenant agrees to pay all Real Estate Taxes and Other
Impositions directly to the appropriate authority prior to the delinquency
thereof. Tenant acknowledges that ad valorem real property taxes for the Demised
Premises are payable in arrears. Accordingly, the property taxes (or a portion
thereof) which will accrue during the final Lease Year will not be payable until
a date after the end of the Term. During the final Lease Year of the Term,
Tenant shall, after receipt of prior written notice from Landlord making
specific reference to this Section 10(d), pay to Landlord, in addition to
making the payments which are due to the taxing authority during the Term, an
amount equal to 1/12th of the Real Estate Taxes and Other Impositions which will
accrue during such final Lease Year, but will not be due and payable until a
date after the end of the Term. Landlord shall estimate the amount of such
monthly installments, based on the most recent information officially available
from the relevant taxing authorities and shall give written notice to Tenant of
the amount of the required payment. Tenant acknowledges and agrees that the
installments payable pursuant to this Section 10(d) are in addition to the
Minimum Rent and Additional Rent otherwise required by this Lease. At such time
as the actual tax xxxx or bills (to the extent that the tax year or years
covered by such xxxx or bills are within the final Lease Year) become available
for the final Lease Year, Landlord shall send to Tenant copies of such bills. To
the extent, if any, that the amounts paid
Page 24
to Landlord may be insufficient to pay such xxxx or bills, Tenant shall pay
any deficiency to Landlord within thirty (30) calendar days after receipt of
a copy of the tax xxxx from Landlord, establishing the amount of the
deficiency. After payment in full of the actual tax xxxx or bills for the tax
year or years covered by the final Lease Year, the amount, if any, by which
the estimated payments by Tenant exceed the actual taxes shall be refunded to
Tenant within thirty (30) calendar days after the date Landlord receives the
applicable tax xxxx. The provisions of this Section 10(d) shall survive
expiration of this Lease.
(e) Tenant shall furnish Landlord, within thirty (30) days
after receipt of a written request from Landlord, evidence of the payment of all
Real Estate Taxes and Other Impositions during the twelve (12) months preceding
recipt of the notice.
11. Maintenance and Repairs.
(a) From and after the Lease Commencement Date and throughout the Term,
Tenant shall, at its own cost and expense, but subject to all of the obligations
of Landlord under Sections 11(b), 18(f) and 18(h) of this Lease, maintain the
Demised Premises, exterior and interior (but excluding maintenance and repair
which is the obligation of the Landlord under subsection (b) of this Section 11
and under Sections 18(f)), in good condition and repair, including, without
limitation, repair, maintenance and replacement (except as hereinafter provided
to the contrary with respect to certain replacement obligations of Landlord) of
the exterior walls (maintenance only, and not replacement, which is the
responsibility of Landlord under subsection (b) of this Section 11), the floor
(including both maintenance and replacement except as expressly provided to the
contrary in subsection (b) of this Section 11), floor coverings, non-load
bearing walls and columns of the Building and the interior of the Building,
including but not limited to the electrical systems, heating, air conditioning
and ventilation systems, plate glass, windows and doors, sprinkler and plumbing
systems (but only to the extent such systems serve only the Demised Premises).
Tenant shall maintain in full force and effect a service contract for the
heating, ventilation and air conditioning systems. Tenant's obligations to
repair and maintain the Demised Premises shall also include, without limitation,
repair, maintenance and replacement of all plumbing and sewage facilities within
and about the Demised Premises (including, specifically, but without limitation,
the portion of water and sewer lines between the boundary of the Land and
Building), fixtures, interior walls, floors, ceilings, windows, doors,
storefronts, plate glass, skylights, all electrical facilities and equipment
including, without limitation, lighting fixtures, lamps, fans and any exhaust
equipment and systems, electrical motors, and all other appliances and equipment
of every kind and nature located
Page 25
in, upon or about the Demised Premises including, without limitation,
exterior lighting and fencing, and any sidewalks, parking areas and access
ways (including, without limitation, curbs and striping) upon the Demised
Premises and the landscaping and grounds surrounding the Building. All glass,
both interior and exterior, is at the sole risk of Tenant; and any broken
glass shall be promptly replaced at Tenant's expense by glass of like kind,
size and quality. Unless the same is caused solely by the negligence or
willful misconduct of Landlord or its agents, employees or contractors,
Landlord shall not be liable to Tenant or to any other person for any damage
occasioned by failure in any utility system or by the bursting or leaking of
any vessel or pipe in or about the Demised Premises, or for any damage
occasioned by water coming into the Demised Premises or arising from the acts
or neglects of occupants of adjacent property or the public.
(b) Landlord acknowledges and agrees that, during the Warranty
Period (as defined in Section 18(h), below), Landlord shall be responsible for
performing, and shall promptly perform, all repairs and maintenance of the
Landlord's Work (as defined in Section 18(b)), other than repairs and
maintenance required because of improper operation, misuse or negligence of
Tenant (or its employees, agents or contractors) or third parties other than
Landlord (or its employees, agents or contractors). Tenant acknowledges that
Landlord is not required, at the end of the Warranty Period, to have maintained
the Demised Premises in a "like-new" condition and that the Demised Premises
will, during the Warranty Period, be subject to normal wear and tear from use by
Tenant and that Landlord has no duty or responsiblilty with respect to such wear
and tear. Notwithstanding the expiration of the Warranty Period, Landlord, at
its own cost and expense, shall continue to be responsible throughout the Term
for, and shall promptly perform as necessary, all maintenance, repair and
replacement of the floor slab (but not floor coverings, which are the exclusive
responsibility of Tenant unless the damage is caused by Landlord or its agents,
employees or contractors or by a failure of Landlord to perform its obligations
under this Lease) to the extent that the need for such maintenance, repair or
replacement arises solely out of a failure of the floor slab to conform to the
Plans and Specifications or latent defects in the materials or workmanship used
or provided by Landlord in the original installation of the floor slab. After
the end of the Warranty Period, Landlord shall, at its own cost and expense,
remain responsible throughout the Term for the repair, maintenance and
replacement of the roof (and all components of the roof), foundation and
structural frame (including load-bearing walls) of the Building. After the end
of the Warranty Period, Landlord shall transfer and assign to Tenant, without
recourse (except for a warranty that there have been no previous assignments or
pledges of such warranties), all warranties held by Landlord which cover any
portion or component of the Demised Premises which must be maintained by Tenant
pursuant to
Page 26
Section 11(a).
12. Tenant's Personal Property; Indemnity. All of Tenant's personal
property in the Demised Premises shall be and remain at Tenant's sole risk,
and Landlord shall not be liable for and Tenant hereby releases Landlord from
any and all liability for theft thereof or any damage thereto occasioned by
any acts or negligence of any third persons, or any act of God, except to the
extent caused by the acts or negligence of Landlord, its agents, employees
and contractors, or a failure of Landlord to perform its obligations under
this Lease. Tenant shall have the right at any time during the Term to remove
any and all personal property of Tenant from the Demised Premises. Each party
hereby agrees to indemnify, defend, protect and hold the other party harmless
from and against any and all losses, costs, liabilities, damages and
expenses, including, but not limited to, penalties, fines, reasonable
attorney's fees and costs actually incurred, but specifically excluding
consequential and indirect damages (collectively,"Claims"), to the extent
such Claims (i) are caused or result from the activities (including the
negligence or willful conduct) of the indemnifying party or its respective
agents, contractors or employees in or on the Demised Premises, Building or
Land, and (ii) are not insured (or required to be insured) by the indemnified
party pursuant to the provisions of this Lease; provided, however, that the
foregoing indemnity shall not extend to any Claims to the extent resulting
from the negligence or willful misconduct of the indemnified party. The
foregoing mutual indemnity is intended to be consistent with the waivers as
set forth in Section 8(e) of this Lease, pursuant to which (A) each party
has waived its respective rights against the other party to the extent any
losses, damages or other Claims are insured or required to be insured under
property damage policies by such party pursuant to the provisions of this
Lease, and (B) has agreed to cause such party's respective insurance carrier
to include a waiver of subrogation (to the extent obtainable) in their
respective property damage insurance policies. The foregoing indemnities, and
the waivers set forth in Section 8, are not intended to and shall not relieve
any insurance carrier of its obligations to provide insurance coverage
pursuant to insurance policies obtained pursuant to the provisions of this
Lease. The provisions of this Section 12 shall survive the expiration or
earlier termination of this Lease.
13. Tenant's Fixtures. Tenant shall have the right to install in the
Demised Premises trade fixtures required by Tenant or used by it in its
business, and if installed by Tenant, to remove any or all such trade fixtures
from time to time during the Term and upon termination of this Lease; provided,
however, that Tenant shall repair and restore any damage or injury to the
Demised Premises (to the condition in which the Demised Premises existed prior
to such installation) caused by the installation and/or removal of any such
trade fixtures.
Page 27
14. Signs. Tenant shall have the right to install interior and
exterior signs at the Demised Premises which comply with Governmental
Requirements and the Protective Covenants Any and all permitted signs shall
be installed, maintained and, upon expiration or termination of the Term,
removed by Tenant, at Tenant's sole expense.
15. [INTENTIONALLY OMITTED]
16. Governmental Regulations. From and after the Commencement Date,
Tenant shall, at Tenant's sole cost and expense, promptly comply (so long as
compliance is required (i) solely as a result of the specific use being made by
Tenant of the Demised Premises, as distinguished from a requirement applicable
to any warehouse-distribution building comparable to the Building irrespective
of the use thereof by any particular occupant, (ii) with respect to the Base
Building, solely as a result of construction of the Expansion Improvements or
(iii) with respect to the Base Building and, if applicable, the Expansion
Improvements, solely as a result of the installation or construction of any
"Tenant Change", as defined in Section 19) with all applicable Governmental
Requirements, and notices, orders, rules and regulations of the National Board
of Fire Underwriters, or any other body now or hereafter constituted exercising
similar functions, relating to all or any part of the Demised Premises. Without
limiting the generality of the foregoing, Tenant shall keep in force at all
times all licenses, consents and permits necessary for the lawful use of the
Demised Premises by Tenant. Tenant shall likewise observe and comply with the
requirements of all policies of public liability, fire and other policies of
insurance at any time in force with respect to the Demised Premises pursuant to
Section 8. Landlord shall, during the Primary Term, promptly comply at
Landlord's expense with Governmental Requirements which relate to all or any
part of the Demised Premises and which are applicable to any
warehouse-distribution building comparable to the Building irrespective of the
specific use thereof by any particular occupant. If Tenant exercises its right
under Section 3.5 to extend the Primary Term, Tenant will, from and after the
end of the Primary Term, be responsible for and shall perform, at the expense of
Tenant, the duties and obligations which were the responsibility of Landlord
during the Primary Term under the preceding sentence of this Section 16;
provided that Landlord shall, in all events, retain full and complete
responsibility under this Section 16 with respect to the components of the
Demised Premises which must be maintained by Landlord at its expense pursuant to
Section 11(b) after the end of the Warranty Period. Anything in this Section 16
to the contrary notwithstanding, Landlord shall, throughout the Term, be
responsible at its sole, cost and expense for compliance with Governmental
Requirements affecting the Demised Premises to the extent that the Demised
Premises did not comply with such Governmental Requirements at the time of
Page 28
Substantial Completion (hereinafter be referred to as "Landlord Exclusive
Compliance Obligations"). Each of Landlord and Tenant shall have the right to
challenge the applicability or validity of any Governmental Requirement which
gives rise to a duty or obligation under this Section 16, subject to the
conditions that the party instituting such action shall maintain the challenge
diligently and continuously and that the challenge will prevent the imposition
of any fine, penalty or other sanction on the other party or, with respect to
challenges pursued by the Landlord, the closure of any portion of the Demised
Premises; provided, however, that, with respect to any fine, penalty or sanction
which involves only payment of a sum of money, the challenging party shall have
the right to provide a bond or other security reasonably acceptable to the other
party in the event of actual imposition of the fine, penalty or sanction.
17. Environmental Matters.
(a) For purposes of this Lease:
(i) "Contamination" as used herein means the
uncontained or uncontrolled presence of or release of Hazardous Substances (as
hereinafter defined) into any environmental media from, upon, within, below,
into or on any portion of the Demised Premises, the Building, or the Project so
as to require remediation, cleanup or investigation under any applicable
Environmental Law (as hereinafter defined).
(ii) "Environmental Laws" as used herein means
all federal, state, and local laws, regulations, orders, permits, ordinances or
other requirements, concerning protection of human health, safety and the
environment, all as may be amended from time to time.
(iii) "Hazardous Substances" as used herein means
any hazardous or toxic substance, material, chemical, pollutant, contaminant or
waste as those terms are defined by any applicable Environmental Laws
(including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601 et seq. ("CERCLA") and the
Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq. ["RCRA"]) and any
solid wastes, polychlorinated biphenyls, urea formaldehyde, asbestos,
radioactive materials, radon, explosives, petroleum products and oil.
(iv) "Third Party Contamination" means
Contamination of the the Demised Premises which is caused by or arises out of
the acts or omissions of any person other than (i) Landlord or Tenant, (ii)
their respective employees, agents or contractors or (iii) subtenants or
assignees of the interest of Tenant under this Lease.
Page 29
(b) Landlord represents that, except as set forth in
environmental reports delivered by Landlord to Tenant (i) Landlord has not
treated, stored or disposed of any Hazardous Substances upon or within the
Demised Premises, (ii) to Landlord's actual knowledge, without inquiry or
investigation, no Hazardous Substances are present on or under the Land as of
the date of this Lease, except as may be set forth in the environmental reports
described on Exhibit "E" attached to this Lease, copies of which have been
delivered to Tenant prior to the Lease Date, (iii) all activities of Landlord in
constructing the Landlord's Work pursuant to Section 17 of this Lease will be
conducted in compliance with Environmental Laws, (iv) Landlord has received no
written notices of any violation of Environmental laws pertaining to the Land or
the Building, and (v) Landlord will not treat, store or dispose of any Hazardous
Substances upon or within the Demised Premises in connection with the
construction of the Landlord's Work, except such Hazardous Substances which are
routinely used in connection with such construction work or activities, but then
only in compliance with Environmental Laws.
(c) Tenant represents that all its activities on the Demised
Premises or the Project during the course of this Lease will be conducted in
compliance with Environmental Laws. Tenant represents that, with respect to its
activities affecting the Demised Premises, it is currently in compliance with
all applicable Environmental Laws and that there are no pending or threatened
notices of deficiency, notices of violation, orders, or judicial or
administrative actions involving alleged violations by Tenant of any
Environmental Laws which could affect the Demised Premises or the performance by
Tenant of its obligations under this Lease. Tenant, at Tenant's sole cost and
expense, shall be responsible for obtaining all permits or licenses or approvals
under Environmental Laws necessary for Tenant's operation of its business on the
Demised Premises and shall make all notifications and registrations required by
any applicable Environmental Laws. Tenant, at Tenant's sole cost and expense,
shall at all times comply with the terms and conditions of all such permits,
licenses, approvals, notifications and registrations and with any other
applicable Environmental Laws affecting in any way the Demised Premises. Tenant
represents and agrees that it will obtain all such permits, licenses or
approvals and make all such notifications and registrations required by any
applicable Environmental Laws necessary for Tenant's operation of its business
on the Demised Premises.
(d) Tenant shall not cause or knowingly permit any Hazardous
Substances to be brought upon, kept, stored or used in or about the Demised
Premises, the Building, or the Project without the prior written consent of
Landlord, which consent may be granted or withheld in the absolute discretion of
Landlord; provided, however, that the
Page 30
consent of Landlord shall not be required for the use at the Demised Premises
of (i) cleaning supplies, toner for photocopying machines and other similar
materials, in containers and quantities reasonably necessary for and
consistent with normal and ordinary use by Tenant, at the Demised Premises,
in the routine operation or maintenance of Tenant's office equipment or in
the routine janitorial service, cleaning and maintenance for the Demised
Premises and (ii) Hazardous Substances which are components of the products
associated with the Primary Use, e.g. (but not by way of limitation) pet
shampoos and flea treatments; provided that such products will be stored and
distributed in and from the Demised Premises only in bottles and other
containers which are filled at locations other than the Demised Premises.
(e) Tenant shall not cause or knowingly permit the release of
any Hazardous Substances by Tenant or its agents, contractors or employees into
any environmental media such as air, water or land, or into or on the Demised
Premises, the Building or the Project in any manner that violates any
Environmental Laws. If such release shall occur, Tenant shall (i) take all steps
reasonably necessary to contain and control such release and any associated
Contamination, (ii) clean up or otherwise remedy such release and any associated
Contamination to the extent required by, and take any and all other actions
required under, applicable Environmental Laws and (iii) notify and keep Landlord
reasonably informed of such release and response.
(f) Regardless of any consents granted by Landlord pursuant to
Section 17(d) allowing Hazardous Substances upon the Demised Premises, Tenant
shall under no circumstances whatsoever (i) cause or knowingly permit any
activity on the Demised Premises which would cause the Demised Premises to
become subject to regulation as a hazardous waste treatment, storage or disposal
facility under RCRA or the regulations promulgated thereunder; (ii) discharge
Hazardous Substances into the storm sewer system serving the Project; or (iii)
install any underground storage tank or underground piping on or under the
Demised Premises.
(g) Tenant shall and hereby does indemnify Landlord and hold
and defend Landlord harmless from and against any and all reasonable and actual
expense, loss, and liability suffered by Landlord (but excluding indirect or
consequential damages and excluding expenses, losses, and liabilities arising
from Landlord's own negligence or willful act), by reason of Tenant's storage,
generation, handling, treatment, transportation, disposal, or arrangement for
transportation or disposal, of any Hazardous Substances (whether accidental,
intentional, or negligent) or by reason of Tenant's breach of any of the
provisions of this Section 17. Such expenses, losses and liabilities shall
include, without limitation, (i) any and all reasonable expenses that Landlord
may incur to comply with any Environmental Laws as a result of
Page 31
Tenant's failure to comply therewith; (ii) any and all reasonable costs that
Landlord may actually incur in studying or remedying any Contamination at or
arising from the Demised Premises as a result of a failure by Tenant to
comply with this Section 17 or Environmental Laws; (iii) any and all costs
that Landlord may incur in studying, removing, disposing or otherwise
addressing any Hazardous Substances which are present at the Demised Premises
as a result of a failure by Tenant to comply with this Section 17 or
Environmental Laws; (iv) any and all fines, penalties or other sanctions
assessed upon Landlord by reason of Tenant's failure to comply with
Environmental Laws; and (v) any and all reasonable legal and professional
fees and costs incurred by Landlord in connection with the foregoing.
Notwithstanding the foregoing, Tenant shall have the right and obligation to
undertake and perform all such studying, remedying, removing, disposing or
otherwise addressing any Hazardous Substances which are the responsibility of
Tenant under this subsection (g), and Landlord shall not perform such acts
unless Tenant has failed or refused to perform such acts within thirty (30)
calendar days after receipt of written notice from Landlord; provided that if
the condition requiring action by Tenant cannot be corrected or remediated
within such thirty (30) day period, Landlord shall not be entitled to act so
long as Tenant commences the required action within said thirty (30) day
period and thereafter diligently pursues such action to completion within a
reasonable time. The indemnity contained herein shall survive the termination
or expiration of this Lease.
(h) Landlord shall have the right, but not the obligation, to
enter the Demised Premises at reasonable times throughout the Term, after prior
written notice to Tenant, to audit and inspect the Demised Premises for Tenant's
compliance with this Section 17.
(i) Landlord hereby agrees to indemnify Tenant and hold Tenant
harmless from and against any and all reasonable and actual expense, loss and
liability suffered by Tenant (but excluding indirect or consequential damages
and excluding expenses, losses, and liabilities arising from Tenant's own
negligence or willful act) as a result of Landlord's breach of Section 17(b), or
by reason of storage, generation, handling, treatment, transportation or
disposal or arrangement for transportation or disposal of any Hazardous
Substances upon or within the Demised Premises by Landlord, its agents,
employees or contractors. For purposes of such indemnity, Tenant's permissible
expenses shall include only (A) any and all reasonable expenses which Tenant may
actually incur to comply with any Environmental Laws, (B) any and all reasonable
expenses which Tenant may actually incur in studying or remedying any
Contamination, (C) any and all reasonable costs which Tenant may actually incur
in studying, removing, disposing at the Demised Premises or otherwise addressing
any Hazardous Substances at the Demised Premises, (D) any and all fines,
penalties or other sanctions
Page 32
assessed upon Tenant, and (E) any and all reasonable legal and reasonable
professional expenses which Tenant may actually incur in connection with the
foregoing. Notwithstanding the foregoing, Landlord shall have the right and
obligation to undertake and perform all such studying, remedying, removing,
disposing or otherwise addressing any Hazardous Substances which are the
responsibility of Landlord under this subsection (i), and Tenant shall not
perform such acts unless (x) Tenant is specifically required by Environmental
Laws to perform such acts, and (y) Landlord has failed or refused to perform
such acts within thirty (30) calendar daysafter receipt of written notice
from Tenant; provided that if the condition requiring action by Landlord
cannot be corrected or remediated within such thirty (30) day period, Tenant
shall not be entitled to act so long as Landlord commences the required
action within said thirty (30) day period and thereafter diligently pursues
such action to completion within a reasonable time. In addition to the
foregoing indemnity, if, as a result of Third Party Contamination, (1) Tenant
vacates the Demised Premises pursuant to subsection (j), below, and (2) a
federal, state or local governmental authority files suit against Landlord
and obtains a final judgment holding Landlord liable for the cost of
remediating the Third Party Contamination which caused Tenant to vacate,
Landlord shall and hereby does indemnify Tenant and hold and defend Tenant
harmless from and against (i) any and all reasonable out-of-pocket moving
expenses which Tenant actually incurred in relocating the business conducted
at the Demised Premises to another facility in the Chicago, Illinois
metropolitan area (but no consequential or indirect costs or damages of any
kind) and (ii) the unamortized value of the Tenant's Work, as calculated on a
straight-line basis over the Primary Term. After Substantial Completion,
Tenant shall, within thirty (30) calendar days after receipt of a written
request from Landlord, provide Landlord reasonable written evidence of the
original cost of the Tenant's Work (which may not include any cost for items
of movable personal property).The indemnities contained herein shall survive
the termination or expiration of this Lease.
(j) If Contamination not caused by Tenant is found to exist
in, on or under the Demised Premises and such Contamination actually prevents
(by virtue of the application or enforcement of applicable Environmental Laws by
a governmental authority or a demonstrable hazard to human health) Tenant from
occupying any material part of the Demised Premises for the conduct of Tenant's
normal business operations for a period of thirty (30) or more continuous
calendar days, then Tenant shall have the right to terminate this Lease by
giving written notice to Landlord; if such written notice is properly given,
this Lease shall terminate on the later to occur of the date on which Tenant
gives the written notice or actually vacates the Demised Premises. Unless the
Contamination is the result of facts or circumstances which constitute a breach
by Landlord of or material inaccuracy in the representations,
Page 33
warranties and covenants of Landlord contained in subsection (b) of this
Section 17 or is otherwise within the scope of Landlord's indemnities of
Tenant in Section 17(i), above, the foregoing right to terminate this Lease
shall be the sole and exclusive remedy of Tenant with respect to the
existence of such Contamination. If the Contamination results from a breach
or material inaccuracy of the representations, warranties and covenants by
Landlord in subsection (b) of this Section 17 or is otherwise within the
scope of Landlord's indemnities of Tenant in Section 17(i), above, nothing
contained in this subsection (j) is intended to limit or impair the right of
Tenant to demand performance by Landlord of its indemnity and other
obligations under subsection (i) of this Section 17.
18. Plans and Specifications for Construction of Demised Premises.
(a) Tenant hereby approves the plans and specifications for
the base Building described on Exhibit G attached hereto and incorporated herein
by this reference ("Base Building Plans and Specifications"). Within thirty (30)
days after the Lease Date, Landlord shall prepare, at Landlord's sole cost and
expense, and submit to Tenant a set of plans and specifications and/or
construction drawings for the office improvements in the Building (collectively,
the "Additional Plans and Specifications") based on the preliminary plans and
specifications and/or preliminary floor plans set forth on Exhibit G-1 attached
hereto and incorporated herein, covering certain work to be performed by
Landlord in completing the Building and constructing interior improvements for
the Demised Premises. Tenant shall have ten (10) business days to approve the
proposed Additional Plans and Specifications. A failure of any proposed plans or
specifications to conform to Exhibit G-1 shall be a proper basis for
disapproval. Any subsequent changes to the Additional Plans and Specifications
requested by Tenant shall be at Tenant's sole cost and expense and subject to
Landlord's written approval. Any change in the Additional Plans and
Specifications initiated by a party other than Tenant shall be undertaken at the
expense of a party other than Tenant. Tenant shall have no right or power to
request or require any changes in the Base Building Plans and Specifications.
Landlord shall have the right to make substitutions for materials called for in
the Base Building Plans and Specifications without Tenant's written consent, so
long as any substituted materials have a quality equal to or higher than the
quality specified in the Base Building Plans and Specifications. Tenant shall
have the right to propose or request changes in the Additional Plans and
Specifications subject to Landlord's written approval which approval shall not
be unreasonably with held or delayed (herein referred to as a "Change Order");
provided that Tenant shall have no right to request any change which would
materially alter the scope of Landlord's Work, alter the exterior appearance of
the Building or result in
Page 34
a delay in the occurrence of Substantial Completion. The cost to Tenant for
Change Orders shall be Landlord's cost plus ten percent (10%) of such amount
as Landlord's overhead.
(b) Landlord shall, at its sole cost and expense perform the
work contemplated by the Additional Plans and Specifications, and in accordance
with the terms and conditions of this Lease ("Landlord's Work"). Landlord shall
make no changes to the Additional Plans and Specifications without Tenant's
written consent, with the exception of immaterial details which will not affect
Tenant's use and occupancy of the Building. Landlord shall have the Additional
Plans and Specifications sealed by the Architect, obtain all required building
permits, certificates and licenses and thereafter, in accordance with all
applicable law and insurance requirements, perform Landlord's Work in a diligent
and good and workmanlike manner, subject to Permitted Delay and Tenant Delay (as
those terms are defined below).
(c) Landlord shall use reasonable speed and diligence to
achieve Substantial Completion, at Landlord's sole cost and expense, on or
before April 7, 1998, provided that, except for certain liquidated damages
hereinafter described, Landlord shall not be liable to Tenant in any way for
achieving Substantial Completion after such target date. In the event Landlord
fails to achieve Substantial Completion by April 7, 1998, as extended by
Permitted Delay, then, in such event, this Lease shall remain in full force and
effect and Tenant shall be entitled to the following:
(i) If Substantial Completion is achieved after April 7, 1998, as such date may
be extended by Permitted Delay, but not later than April 14, 1998, as such date
may be extended by Permitted Delay, Landlord shall pay to Tenant liquidated
damages, for late delivery, in the amount of $1125.00 per day for each calendar
day after April 7, 1998, through and including April 14, 1998, as extended by
Permitted Delay, that Substantial Completion is not achieved, payable to Tenant
in the form of a credit against Base Rent; and
(ii) If Substantial Completion is achieved on or after April 15, 1998, as such
date may be extended by Permitted Delay, Landlord shall pay to Tenant liquidated
damages, for late delivery, in the amount of $5,000.00 per day for each calendar
day after April 14, 1998, to but not including the date that Substantial
Completion is actually achieved, as those dates may be extended by Permitted
Delay, payable to Tenant in the form of a credit against Base Rent.
(d) Landlord acknowledges that Tenant desires to obtain access
to the Demised Premises prior to the occurrence of Substantial Completion for
the purpose of performing the work described on Exhibit "G-2" (collectively, the
"Tenant's Work"). Landlord shall exercise
Page 35
a good faith effort to achieve, thirty (30) calendar days prior to
Substantial Completion, a level of completion of the Landlord's Work which
will allow the Tenant lawful access to the Demised Premises for the purpose
of performing Tenant's Work ("Partial Completion"). Landlord shall likewise
endeavor in good faith to give to Tenant reasonable prior notice of the
anticipated date of Partial Completion. Tenant shall have the right, upon the
occurrence of Partial Completion, to enter the Demised Premises in order to
perform the Tenant's Work. Prior to commencement of installation of Tenant's
Work, Tenant shall submit to Landlord reasonably detailed plans and
specifications for Tenant's Work, which shall be subject to the approval of
Landlord, not to be unreasonably withheld, delayed or conditioned. Landlord
shall have no liability for a failure to achieve Partial Completion by the
date specified in this subsection (d). In connection with entry by Tenant
after Partial Completion, (i) Tenant shall not interfere with Landlord's
completion of the Landlord's Work, provided that Landlord shall use
reasonable efforts to accommodate Tenant's Work, (ii) Tenant shall not begin
operation of its business or store any inventory or other personal propety in
the Demised Premises and (iii) Tenant shall enter the Demised Premises at its
sole risk, whether from personal injury, property damage, theft or otherwise.
(e) The Substantial Completion target date of April 7,
l998, shall be extended for one (1) day for each day that Substantial
Completion is delayed:
(i) solely as a result of the failure by Tenant
to timely approve or disapprove the Plans and Specifications, or as a result of
Change Orders or other changes requested by Tenant in the Additional Plans and
Specifications after the Tenant's approval thereof (collectively referred to
herein as "Tenant Delay"); or
(ii) due to strikes or other labor troubles not
specific to the Demised Premises, governmental moratoria, war or other national
emergency, non-availability of materials or supplies, delay in transportation,
accidents, floods, fire, damage or other casualties, weather or acts or
omissions of Tenant, all beyond the reasonable control of Landlord (collectively
referred to herein as "Permitted Delay"). The inability or refusal of Landlord
to make any monetary payment shall not constitute or result in an Permitted
Delay. Any extension of time for Permitted Delay will be allowed only if the
party claiming the extension gives written notice to the other party of the
facts or circumstances which gave rise to the claim within ten (10) business
days after the occurrence of the event or circumstance.
(f) On or prior to the date of Substantial Completion
of the Demised Premises, a representative of Landlord and a representative of
Tenant together shall inspect the Demised Premises and,
Page 36
within fifteen (15) days thereafter, generate a punchlist of defective or
uncompleted items relating to the completion of construction of the
improvements within the Demised Premises, which punchlist shall indicate the
estimation by the parties of the cost of each item. Landlord shall, within a
reasonable time after such punchlist is prepared and agreed upon by Landlord
and Tenant, complete such incomplete work and remedy such defective work as
are set forth on the punchlist.
(g) Upon the Lease Commencement Date, Tenant shall
execute and deliver to Landlord a letter confirming the Lease Commencement
Date and expiration date of this Lease.
(h) Landlord hereby warrants to Tenant that the
materials and equipment furnished by Landlord's contractors in the completion
of Landlord's Work will be of good quality and new, that during the one (1)
year period following the date of Substantial Completion of Landlord's Work
("Warranty Period"), such materials and equipment and the work of such
contractors shall be free from defects not inherent in the quality required
or permitted hereunder, and that such work will conform to the Plans and
Specifications (the foregoing referred to herein as "Landlord's Warranty").
This warranty shall exclude damages or defects to the extent caused by abuse
by Tenant, its employees, invitees, licensees, contractors and agents,
improper or insufficient maintenance, improper operation, or normal wear and
tear under normal usage.
(i) For purposes of this Lease, the term "Substantial
Completion" or any grammatical variation thereof shall mean sufficient
completion of construction of the Demised Premises in accordance with the Plans
(as defined in Section 18), so that Tenant can lawfully occupy the Demised
Premises, as evidenced by the delivery by Landlord to Tenant of a Certificate of
Occupancy or its equivalent (or Temporary Certificate of Occupancy or its
equivalent) for the Building issued by the appropriate governmental authority if
so required by applicable law. Tenant acknowledges that (i) because of weather
conditions at the time of Substantial Completion, the landscaping for the
Demised Premises will not be installed and a portion of the parking, dock and
trailer areas will not be paved, and (ii) the absence of landscaping and the
existence of the unpaved areas will not prevent the occurrence of Substantial
Completion. Landlord will cover the unpaved areas with gravel in a manner which
will permit use thereof by Tenant as of the time of Substantial Completion of
the Building. Landlord will cause the landscaping and paving to be completed in
accordance with the Plans and Specifications as soon as (1) weather permits and
(2) asphalt plants in the area reopen in the spring. In the event completion to
such extent is delayed because of Tenant Delay, as defined herein, then
Substantial Completion shall be deemed to mean the date when the Demised
Premises would have been completed to such extent but for such
Page 37
Tenant Delay, as determined by Xxxxxx Xxxxxx & Associates ("Architect").
In the event Tenant shall dispute the determination of such date by the
Architect, the parties shall utilize the Dispute Resolution Procedure as
defined in Section 34, with Qualified Architects serving as Officials. For
purposes of this Lease, the Architect shall be deemed a "Qualified Architect"
for Landlord. Tenant shall be entitled to designate its "Qualified Architect"
at any time by written notice to Landlord.
(j) Within thirty (30) calendar days after the Lease
Commencement Date, Tenant shall execute and deliver to Landlord a letter of
acceptance confirming that the Lease Commencement Date and Expiration Date
remain as set forth in Section 1, or if revised pursuant to the terms hereof,
setting forth such dates as so revised. Within thirty (30) calendar days after
Substantial Completion, Landlord shall deliver to Tenant a written
certification of an architect, duly licensed as such under the laws of the
State of Illinois, of the square footage contained in the Building, based on a
"drip-line" measurement from the outside of the exterior walls of the Building.
The square footage so certified by such architect shall determine the Building
Square Footage for all purposes under this Lease, including, without
limitation, calculation of Annual Minimum Rent, Monthly Minimum Rent
Installments and the amount of the Purchase Price. The Annual Minimum Rent and
Monthly Minimum Rent Installments shall be adjusted on the basis of the square
footage of the Building so certified by such architect, using the following
amount for calculation:
Lease Year one (1) $2.89 per square foot
Lease Year two (2) $2.94 per square foot
Lease Years three (3)
through five (5) $2.99 per square foot
Lease Years six (6)
and seven (7) $3.41 per square foot
Tenant shall have the right to accompany the Architect when the measurements are
being made. If Tenant is not reasonably satisfied with said measurements, Tenant
shall have the right to require a second set of measurements pursuant to the
Dispute Resolution Procedure (as defined in Section 34).
18.2 Landlord Warranties. In connection with the
performance by Landlord of its obligations under this Section 18, Landlord
hereby represents and warrants to Tenant as follows:
(a) Landlord is the owner of the Demised Premises,
Page 38
subject to the Permitted Encumbrances;
(b) The Building, including the Landlord's Work, will,
upon achieving Substantial Completion, comply with all applicable Governmental
Requirements;
(c) As of the Lease Date, the Primary Use is lawful under
all applicable Governmental Requirements and is permissible under the Protective
Covenants; and
(d) As of the Lease Date, no default has occurred and is
continuing under the Protective Covenants with respect to the Demised Premises
(and no event has occurred which, with the passage of time or the giving of
notice, or both, would become a default) and Landlord has received no notice
(and has no actual knowledge) of any violation by the Demised Premises of any
Governmental Requirements.
19. Tenant Alterations and Additions.
(a) Any alteration, improvement, or addition to the
Demised Premises performed by Tenant pursuant to this Section 19 is hereinafter
referred to as a "Tenant Change". Subject to compliance with the provisions of
this Section 19, Tenant shall, so long as Tenant maintains the Minimum Net
Worth, have the right to undertake Tenant Changes without the prior consent of
Landlord, but subject to compliance with all the provisions of this Section 19,
if, and only if, (i) the Tenant Change affects only the interior of the Demised
Premises, (ii) the Tenant Change does not affect the roof or any structural
element of the Demised Premises and (iii) the Tenant Change does not alter any
of the utility systems of the Building; provided, however, that, not less than
ten (10) calendar days prior to commencing the performance of any Tenant Change
which Tenant has determined does not require the prior consent of Landlord,
Tenant shall give Landlord prior written notice of the intended Tenant Change,
which notice must describe the nature of the work to be perfomed with
sufficient detail to enable Landlord to determine that the requirements of this
Section 19 have been satisfied. Tenant shall not make or permit to be made any
other Tenant Change without first obtaining on each occasion Landlord's prior
written consent (which consent Landlord agrees not unreasonably to withhold)
and Mortgagee's prior written consent (if such consent is required). With
respect to any such Tenant Change requiring Landlord's prior written consent,
Tenant shall furnish Landlord with a full set of plans and specifications for
any such Tenant Change prior to the commencement thereof together with an
original builder's risk policy of insurance in form and amount of coverage
reasonably acceptable to Landlord, showing Tenant as named insured, and
Landlord and Mortgagee (if applicable) as loss payees. If Landlord, at the time
of giving its approval to any Tenant Change, notifies Tenant that approval is
conditioned
Page 39
upon restoration, then upon written request of Landlord, Tenant shall, at its
sole cost and expense and upon the termination of this Lease, remove the same
and restore the Demised Premises to its condition prior to such Tenant Change,
ordinary wear and tear excepted. Any Tenant Change not requiring the consent of
Landlord and which is performed or undertaken by Tenant must, absent written
agreement by Landlord to the contrary, be fully removed from the Demised
Premises prior to the end of the Term and the Demised Premises must be restored
to its condition prior to such Tenant Change, ordinary wear and tear excepted.
The term "Tenant Change", as used in this Lease, does not include either the
Allowance Work or the Tenant's Work.
(b) All Tenant Changes shall be performed in accordance
with all legal requirements applicable thereto and in a good and workmanlike
manner with materials having a quality not lower than the quality of materials
used in the Building and, upon completion of any Tenant Change, Tenant shall
furnish to Landlord "as-built" drawings showing the location and type thereof.
No Tenant Change shall impair the structural strength of the Building or reduce
its value, Tenant shall take or cause to be taken all steps that are required
or permitted by law in order to avoid the imposition of any materialmen's or
mechanics' liens upon the Building or the Demised Premises, and Tenant shall
pay the full cost of any Tenant Change.If, but only if, the stockholder equity
of Tenant is less than the Minimum Net Worth, Landlord shall have the right to
require from Tenant, as a condition of granting its consent, reasonable
security, such as payment and performance bonds, to insure payment of the cost
of the requested Tenant Change. Subject to the obligation of Tenant to remove
Tenant Changes in the manner described above in this Section 19, Tenant Changes
shall immediately upon completion or installation thereof be and become part of
the Demised Premises and the property of Landlord without payment therefor by
Landlord and shall be surrendered to Landlord upon the expiration or earlier
termination of the Term. With respect to any Tenant Change, whether or not
requiring Landlord's prior consent, Landlord shall have no duty or obligation
to make any replacement or repair thereto, whether interior or exterior,
structural or non-structural, ordinary or extraordinary or as required to
comply with any law.
20. Services by Landlord. From and after the Lease Commencement
Date, Landlord shall be responsible for providing no services to the Demised
Premises whatsoever, except for the services for which Landlord is specifically
obligated pursuant to Section 11(b) and Sections 18(f) and (h).
21. Fire and Other Casualty.
(a) If the Building or other improvements on the Land
shall be damaged or destroyed by fire or other casualty, Tenant, at
Page 40
Tenant's sole cost and expense, shall promptly and diligently proceed to adjust
the loss with the insurance companies (subject to the approval of the Mortgagee
(if applicable) and of Landlord, not to be unreasonably withheld, delayed or
conditioned) and arrange for the disbursement of insurance proceeds, and
repair, rebuild or replace such Building and other improvements, so as to
restore the Demised Premises to the condition in which they were immediately
prior to such damage or destruction. The net proceeds of any insurance
recovered by reason of such damage or destruction in excess of the cost of
adjusting the insurance claim and collecting the insurance proceeds (such
excess being referred to herein as the "Net Insurance Proceeds") shall be held
by the Mortgagee (provided that such Mortgagee is a bank, savings association,
insurance company or other similar institutional lender; herein called
"Institutional Lender"), or, if no Institutional Lender then holds a mortgage
lien, or deed of trust on the Demised Premises, by any national or state
chartered bank which is reasonably acceptable to Landlord and Tenant; and the
Net Insurance Proceeds shall be released for the purpose of paying the fair and
reasonable cost of restoring such Building and other improvements. Such Net
Insurance Proceeds shall be released to Tenant, or to Tenant's contractors,
from time to time as the work progresses, pursuant to such requirements and
limitations as may be reasonably acceptable to Landlord and Mortgagee (if the
Mortgagee so requires), including, without limitation, lien waivers from each
of the contractors, subcontractors, materialmen and suppliers performing the
work. If the Net Insurance Proceeds (less any applicable deductible) are
insufficient to restore the Demised Premises, Tenant shall be obligated to pay
such deficiency and the amount of any such deductible. Notwithstanding the
foregoing, if the Net Insurance Proceeds are less than Twenty-Five Thousand
Dollars ($25,000.00)(which amount will automatically be increased to
$250,000.00 whenever the stockholder equity of Tenant equals or exceeds the
Minimum Net Worth), and if the Mortgagee agrees in writing, such Net Insurance
Proceeds may be held by Tenant and used by Tenant to pay the fair and
reasonable cost of restoring such Demised Premises and other improvements. If
the Net Insurance Proceeds exceed the full cost of the repair, rebuilding or
replacement of the damaged Building or other improvements, if the Mortgagee
does not retain such excess proceeds and apply the same on account of the debt
owed to it, then the amount of such excess Net Insurance Proceeds shall be paid
to Tenant upon the completion of such repair, rebuilding or replacement.
Landlord agrees not unreasonably to withhold or delay any approvals required to
be obtained by Tenant from Landlord pursuant to the provisions of this Section
21(a).
(b) Whenever Tenant shall be required to carry out any
work or repair and restoration pursuant to this Section 21, Tenant, prior to
the commencement of such work, shall deliver to Landlord for Landlord's prior
approval (which shall not be unreasonably withheld
Page 41
or delayed) a full set of the plans and specifications therefor, together with
a copy of all approvals and permits which shall be required from any
governmental authority having jurisdiction. After completion of any major
repair or restoration, Tenant shall, as soon as reasonably possible, obtain and
deliver to Landlord a Certificate of Substantial Completion from the inspecting
architect and a permanent Certificate of Occupancy (or amended Certificate of
Occupancy), if required by applicable laws, issued by the appropriate authority
with respect to the use of the Demised Premises, as thus repaired and restored.
Any such work or repair and restoration, in all cases, shall be carried out by
Tenant in a good and workmanlike manner with materials at least equal in
quality to the original materials used therefor prior to the damage or
destruction. If, after a default by Tenant, Landlord shall carry out any such
work or repair and restoration pursuant to the provisions of this Section 21,
then Landlord shall be entitled to withdraw monies held for application to the
costs of such work from time to time as such costs are incurred.
22. Condemnation.
(a) If all of the Demised Premises is taken or condemned
for a public or quasi-public use, this Lease shall terminate as of the earlier
of the date title to the condemned real estate vests in the condemnor and the
date on which Tenant is deprived of possession of all of the Demised Premises.
In such event, the Minimum Rent herein reserved and all Additional Rent and
other sums payable hereunder shall be apportioned and paid in full by Tenant to
Landlord to that date, all Minimum Rent, Additional Rent and other sums payable
hereunder prepaid for periods beyond that date shall forthwith be repaid by
Landlord to Tenant, and neither party shall thereafter have any liability
hereunder, except that any obligation or liability of either party, actual or
contingent, under this Lease which has accrued on or prior to such termination
date shall survive.
(b) In the event of a taking of "Substantially All of
the Demised Premises" (as herein defined), Tenant may, at its option, upon
thirty (30) days' written notice to Landlord, which shall be given no later
than sixty (60) days following the taking, have the right to terminate this
Lease. All Minimum Rent and other sums payable by Tenant hereunder shall be
apportioned and paid through and including the date of taking, and neither
Landlord nor Tenant shall have any rights in any compensation or damages
payable to the other in connection with such condemnation. For purposes of this
provision, "Substantially All of the Demised Premises" shall mean (i) so much
of the Demised Premises as, when taken, leaves the untaken portion unsuitable,
in the reasonable opinion of Tenant and Landlord, for the continued feasible
and economic operation of the Demised Premises by Tenant for the same purposes
as immediately prior to such taking or as contemplated herein,
Page 42
or (ii) so many of the parking spaces on the Land as reduces the parking ratio
below that which is required by the zoning ordinance applicable to the Project,
and Landlord's failure to provide substantially similar alternative parking
reasonably acceptable to Tenant within sixty (60) days after such taking, or
(iii) so much of the Demised Premises that access to the Demised Premises is
materially impeded, as reasonably determined by Landlord and Tenant.
(c) If only part of the Demised Premises is taken or
condemned for a public or quasi-public use and this Lease does not terminate
pursuant to Section 22(b) above, Tenant shall restore, using all reasonable
speed and diligence, the Demised Premises to a condition and to a size as
nearly comparable as reasonably possible to the condition and size thereof
immediately prior to the taking and Landlord, to the extent of the award it
receives in excess of the costs of collecting the award and value of the Land
taken (herein, the "Net Condemnation Proceeds"), shall release the Net
Condemnation Proceeds to Tenant for that purpose and Tenant shall have the
right to participate in any proceeding relating to the awarding of restoration
damages. Tenant shall not be required to expend more than the Net Condemnation
Proceeds disbursed by Landlord in connection with such restoration. There shall
be an equitable abatement of the Minimum Rent and Additional Rent according to
the loss of use of the Demised Premises after the taking. Determination of such
value of the Demised Premises after a partial taking shall be mutually agreed
to by the parties within sixty (60) days from the date of the taking and if the
parties can not so agree, then such value shall be determined in accordance
with the Dispute Resolution Procedure (as defined in Section 34), with real
estate appraisers having at lease ten (10) years experience appraising
commercial real estate, including build-to-suit leases, serving as Officials.
Pending such determination, Tenant shall continue to pay the Minimum Rent and
Additional Rent as herein originally specified, and upon such determination, if
Tenant is entitled to a refund because of an overpayment of Minimum Rent or
Additional Rent, Landlord shall make the same promptly, or in lieu thereof
credit the amount thereof to future installments of Minimum Rent or Additional
Rent as they become due.
(d) Landlord shall be entitled to receive the entire
award in any proceeding with respect to any taking provided for in this Section
22, without deduction therefrom for any estate vested in Tenant by this Lease,
and Tenant shall receive no part of such award. Nothing herein contained shall
be deemed to prohibit Tenant from making a separate claim, against the
condemnor, to the extent permitted by law, for the value of the unamortized
tenant improvements (installed in accordance with Section 19 at Tenant's
expense), Tenant's moveable trade fixtures, machinery and moving expenses,
provided that, in any case, the making of such claim shall not and does not
adversely affect or diminish Landlord's award.
Page 43
23. Tenant's Default.
(a) The occurrence of any one or more of the following
events shall constitute an event of default (herein referred to as an "Event of
Default") of Tenant under this Lease:
(i) if Tenant fails to pay Minimum Rent or any
Additional Rent hereunder as and when such rent becomes due and such failure
shall continue for more than ten (10) days after receipt of written notice from
Landlord of such failure;
(ii) if Tenant permits to be done anything which
creates a lien upon the Demised Premises and fails either (A) to discharge or
bond such lien or (B) to post security with Landlord reasonably acceptable to
Landlord within thirty (30) calendar days after Landlord gives Tenant written
notice of such failure;
(iii) if Tenant violates the provisions of Section
30 of this Lease by making an unpermitted assignment or sublease;
(iv) if Tenant fails to maintain in force all
policies of insurance required by this Lease and such failure shall continue for
more than ten (10) calendar days after Landlord gives Tenant written notice of
such failure;
(v) if any petition is filed by or against
Tenant or any guarantor of this Lease under any present or future section or
chapter of the Bankruptcy Code, or under any similar law or statute of the
United States or any state thereof (which, in the case of an involuntary
proceeding, is not permanently discharged, dismissed, stayed, or vacated, as the
case may be, within sixty (60) days of commencement), or if any order for relief
shall be entered against Tenant or any guarantor of this Lease in any such
proceedings;
(vi) if Tenant or any guarantor of this Lease
becomes insolvent or makes a transfer in fraud of creditors or makes an
assignment for the benefit of creditors;
(vii) if a receiver, custodian, or trustee is
appointed for the Demised Premises or for all or substantially all of the assets
of Tenant or of any guarantor of this Lease, which appointment is not vacated
within sixty (60) days following the date of such appointment; or
(viii) if Tenant fails to perform or observe any
other term of this Lease and such failure shall continue for more
Page 44
than thirty (30) days after Landlord gives Tenant notice of such failure, or,
if such failure cannot be corrected within such thirty (30) day period, if
Tenant does not commence to correct such default within said thirty (30) day
period and thereafter diligently prosecute the correction of same to completion
within a reasonable time and in any event prior to the time a failure to
complete such correction could cause Landlord to be subject to prosecution for
violation of any law, rule, ordinance or regulation or causes, or could cause a
default under any mortgage or other Permitted Encumbrance.
(b) Upon the occurrence of any one or more of the
aforesaid Events of Default, or upon the occurrence of any other default or
defaults by Tenant under this Lease, Landlord may, at Landlord's option,
without any demand or notice whatsoever (except as expressly required in this
Section 23):
(i) Terminate this Lease by giving Tenant notice
of termination, in which event this Lease shall expire and terminate on the date
specified in such notice of termination with the same force and effect as though
the date so specified were the date herein originally fixed as the termination
date of the Term, and all rights of Tenant under this Lease and in and to the
Demised Premises shall expire and terminate and Tenant shall remain liable for
all obligations under this Lease arising up to the date of such termination, and
Tenant shall surrender the Demised Premises to Landlord on the date specified in
such notice, and if Tenant fails to so surrender Landlord shall have the right,
without notice, to enter upon and take possession of the Demised Premises and to
expel or remove Tenant and its effects without being liable for prosecution or
any claim for damages therefor; or
(ii) Terminate this Lease as provided in Section
23(b)(i) hereof and recover from Tenant all damages Landlord may incur by reason
of Tenant's default, including, without limitation, a sum which, at the date of
such termination, represents the value of the excess, if any, of (1) the Minimum
Rent, Additional Rent and all other sums which would have been payable hereunder
by Tenant for the period commencing with the day following the date of such
termination and ending with the expiration date had this Lease not been
terminated, over (2) the aggregate reasonable rental value of the Demised
Premises for the period commencing with the day following the date of such
termination and ending with the expiration date had this Lease not been
terminated, plus (3) the costs of recovering possession of the Demised Premises
and all other out-of-pocket expenses actually incurred by Landlord due to
Tenant's default, including, without limitation, reasonable attorney's fees,
plus (4) the unpaid Minimum Rent and Additional Rent earned as of the date of
termination plus any interest and late fees due hereunder, plus other sums of
money and damages owing on the date
Page 45
of termination by Tenant to Landlord under this Lease or in connection with the
Demised Premises, all of which excess sum shall be deemed immediately due and
payable; provided, however, that such payments shall not be deemed a penalty
but shall merely constitute payment of liquidated damages, it being understood
and acknowledged by Landlord and Tenant that actual damages to Landlord are
extremely difficult, if not impossible, to ascertain. The excess, if any, of
subparagraph (ii)(1) over subparagraph (ii)(2) herein shall be discounted to
present value at the "Treasury Yield" rate. "Treasury Yield" shall mean the
rate of return in percent per annum of Treasury Constant Maturities for the
length of time specified as published in document H.15(519) (presently
published by the Board of Governors of the U.S. Federal Reserve System titled
"Federal Reserve Statistical Release") for the calendar week immediately
preceding the calendar week in which the termination occurs. If the rate of
return of Treasury Constant Maturities for the calendar week in question is not
published on or before the business day preceding the date of the Treasury
Yield in question is to become effective, then the Treasury Yield shall be
based upon the rate of return of Treasury Constant Maturities for the length of
time specified for the most recent calendar week for which such publication has
occurred. If no rate of return for Treasury Constant Maturities is published
for the specific length of time specified, the Treasury Yield for such length
of time shall be the weighted average of the rates of return of Treasury
Constant Maturities most nearly corresponding to the length of the applicable
period specified. If the publishing of the rate of return of Treasury Constant
Maturities is ever discontinued, then the Treasury Yield shall be based upon
the index which is published by the Board of Governors of the U.S. Federal
Reserve System in replacement thereof or, if no such replacement index is
published, the index which, in Landlord's reasonable determination, most nearly
corresponds to the rate of return of Treasury Constant Maturities. In
determining the aggregate reasonable rental value pursuant to subparagraph
(ii)(2) above, the parties hereby agree that, at the time Landlord seeks to
enforce this remedy, all relevant factors should be considered, including, but
not limited to, (a) the length of time remaining in the Term, (b) the then
current market conditions in the general area in which the Building is located,
(c) the likelihood of reletting the Demised Premises for a period of time equal
to the remainder of the Term, (d) the net effective rental rates then being
obtained by landlords for similar type space of similar size in similar type
buildings in the general area in which the Building is located, (e) the vacancy
levels in the general area in which the Building is located, (f) current levels
of new construction that will be completed during the remainder of the Term and
how this construction will likely affect vacancy rates and rental rates and (g)
inflation; or
(iii) Without terminating this Lease, and with
Page 46
or without notice to Tenant, Landlord may in its own name but as agent for
Tenant enter into and upon and take possession of the Demised Premises or any
part thereof, and, at Landlord's option, remove persons and property therefrom
and such property, if any, may be removed and stored in a warehouse or
elsewhere at the cost of, and for the account of Tenant, all without being
deemed guilty of trespass or becoming liable for any loss or damage which may
be occasioned thereby, and Landlord may rent the Demised Premises or any
portion thereof as the agent of Tenant with or without advertisement, and by
private negotiations and for any term upon such terms and conditions as
Landlord may deem necessary or desirable in order to relet the Demised
Premises. Landlord shall in no way be responsible or liable for any failure to
rent the Demised Premises or any part thereof, or for any failure to collect
any rent due upon such reletting. Upon each such reletting, all rentals
received by Landlord from such reletting shall be applied: first, to the
payment of any indebtedness (other than any rent due hereunder) from Tenant to
Landlord; second, to the payment of any costs and expenses of such reletting,
including, without limitation, brokerage fees and attorney's fees and costs of
alterations and repairs; third, to the payment of rent and other charges then
due and unpaid hereunder; and the residue, if any, shall be held by Landlord to
the extent of and for application in payment of future rent, if any becomes
owing, as the same may become due and payable hereunder. In reletting the
Demised Premises as aforesaid, Landlord may grant rent concessions and Tenant
shall not be credited therefor. If such rentals received from such reletting
shall at any time or from time to time be less than sufficient to pay to
Landlord the entire sums then due from Tenant hereunder, Tenant shall pay any
such deficiency to Landlord. Such deficiency shall, at Landlord's option, be
calculated and paid monthly. Notwithstanding any such reletting without
termination, Landlord may at any time thereafter elect to terminate this Lease
for any such previous default provided same has not been cured; or
(iv) Without terminating this Lease, and with or
without notice to Tenant, Landlord may enter into and upon the Demised Premises
and without being liable for prosecution or any claim for damages therefor,
maintain the Demised Premises and repair or replace any damage thereto or do
anything or make any payment for which Tenant is responsible hereunder. Tenant
shall reimburse Landlord immediately upon demand for any expenses which Landlord
incurs in thus effecting Tenant's compliance under this Lease, and Landlord
shall not be liable to Tenant for any damages with respect thereto; or
(v) Allow the Demised Premises to remain
unoccupied and collect rent from Tenant as it comes due; provided that nothing
contained in this Lease will relieve Landlord of its obligation under the laws
of the state of Illinois to mitigate its damages arising from any Event of
Default; or
Page 47
(vi) Pursue such other remedies as are available
at law or in equity.
(c) If this Lease shall terminate as a result of or
while there exists a default hereunder, any funds of Tenant held by Landlord
may be applied by Landlord to any damages payable by Tenant (whether provided
for herein or by law) as a result of such termination or default.
(d) Neither the commencement of any action or
proceeding, nor the settlement thereof, nor entry of judgment thereon shall bar
Landlord from bringing subsequent actions or proceedings from time to time, nor
shall the failure to include in any action or proceeding any sum or sums then
due be a bar to the maintenance of any subsequent actions or proceedings for
the recovery of such sum or sums so omitted.
(e) If any statute or rule of law shall limit any of
Landlord's remedies as hereinabove set forth, Landlord shall nonetheless be
entitled to any and all other remedies hereinabove set forth.
(f) No agreement to accept a surrender of the Demised
Premises and no act or omission by Landlord or Landlord's agents during the
Term shall constitute an acceptance or surrender of the Demised Premises unless
made in writing and signed by Landlord. No re-entry or taking possession of the
Demised Premises by Landlord shall constitute an election by Landlord to
terminate this Lease unless a written notice of such intention is given to
Tenant.
(g) No provision of this Lease shall be deemed to have
been waived by either party unless such waiver is in writing and signed by the
party making such waiver. Landlord's acceptance of Minimum Rent or Additional
Rent following an Event of Default hereunder shall not be construed as a waiver
of such Event of Default. No custom or practice which may grow up between the
parties in connection with the terms of this Lease shall be construed to waive
or lessen either party's right to insist upon strict performance of the terms
of this Lease, without a written notice thereof the other party.
(h) The rights granted to Landlord in this Section 23
shall be cumulative of every other right or remedy provided in this Lease or
which Landlord may otherwise have at law or in equity or by statute, and the
exercise of one or more rights or remedies shall not prejudice or impair the
concurrent or subsequent exercise of other rights or remedies or constitute a
forfeiture or waiver of Minimum Rent, Additional Rent or damages accruing to
Landlord by reason of any Event of Default. If an Event of Default shall occur,
Tenant shall pay to
Page 48
Landlord, on demand, all reasonable expenses actually incurred by Landlord as a
result thereof, including reasonable attorneys' fees, court costs and expenses.
Other than in connection with a claim arising from the negligence, intentional
misconduct or other wrongful act of Landlord, its employees, agents or
representatives, if Landlord shall be made a party to any litigation commenced
against Tenant solely as a result of Landlord's ownership of the Demised
Premises or the relationship of Landlord and Tenant arising by virtue of this
Lease, Tenant shall pay all costs and reasonable attorneys' fees incurred by
Landlord in connection with such litigation.
23.1 Landlord Default. If Landlord fails to perform or
observe or otherwise breaches any term of this Lease and such failure shall
continue for more than thirty (30) days after Tenant gives Landlord written
notice of such failure, or, if such failure does not arise out of a failure by
Landlord to pay a sum of money and cannot reasonably be corrected within such
30-day period, if Landlord does not commence to correct such default within
such 30-day period and thereafter diligently prosecute the correction of same
to completion within a reasonable time, a "Landlord Event of Default" shall
exist under this Lease; provided that if a condition exists by virtue of a
failure of Landlord to perform an obligation of Landlord under this Lease which
interferes in a material manner with the use and occupancy by Tenant of the
Demised Premises and such interference continues for thirty (30) days after the
required written notice to Landlord, a Landlord Event of Default will exist
notwithstanding that Landlord may still be pursuing corrective efforts at the
end of such 30-day period. Upon the occurrence of a Landlord Event of Default,
Tenant may at Tenant's option, cure the Landlord Event of Default and the
actual cost of such cure shall be payable by Landlord to Tenant within thirty
(30) calendar days after written demand and shall bear interest at the Interest
Rate from the date paid by Tenant until repayment in full by Landlord occurs;
provided, however, that if a failure by Landlord to perform or observe any term
of this Lease gives rise to circumstances or conditions which constitute an
emergency threatening human health or safety or substantial damage to the
Demised Premises or Tenant's personal property, or materially impeding the
conduct of the business of Tenant at the Demised Premises, Tenant shall be
entitled to take immediate curative action (prior to the expiration of any
notice and cure period set forth above) to the extent necessary to eliminate
the emergency. If Landlord does not pay to Tenant the amount of such cost and
accrued interest, upon written demand, Tenant may set off such cost against
installments of Base Rent or other amounts due Landlord under this Lease. Such
cost must be reasonably incurred and must not exceed the scope of the Landlord
Event of Default in question; and if such costs are chargeable as a result of
labor or materials provided directly by Tenant, rather than by unrelated third
parties, the costs shall not exceed the amount which would have been charged by
a
Page 49
qualified third party unrelated to Tenant. The quality of all work performed
by Tenant must equal or exceed the quality of Landlord's Work. Such costs must
be reasonably documented and copies of such documentation must be delivered to
Landlord with the written demand for reimbursement. Tenant shall be permitted
to continue to set off against succeeding installments of Base Rent or other
amounts due Landlord under this Lease until the total amount of such cost
actually incurred by Tenant has been recovered by Tenant. Once Tenant has fully
set off all of such cost, Landlord shall no longer be deemed to be in default
under this Lease with respect to the Landlord Event of Default that was the
subject of the set off. Nothing contained in this Section 23.1 shall create or
imply the existence of any obligation by Tenant to cure any Landlord Event of
Default.
24. Landlord's Right of Entry. Tenant agrees to permit Landlord
and the authorized representatives of Landlord and of the Mortgagee to enter
upon the Demised Premises at all reasonable times for the purposes of
inspecting them and making any necessary repairs thereto and performing any
work therein that may be necessary by reason of Tenant's failure to make such
repairs or perform any such work required of Tenant under this Lease; provided
that, except in the case of an emergency, Landlord shall give the Tenant
reasonable prior written notice not less than two (2) days in advance of
Landlord's intended entry upon the Demised Premises. Nothing herein shall imply
any duty upon the part of Landlord to do any such work, and the performance
thereof by Landlord shall not constitute a waiver of Tenant's default in
failing to perform it. Landlord shall not be liable for inconvenience,
annoyance, disturbance or other damage to Tenant by reason of making such
repairs or the performance of such work in the Demised Premises or on account
of bringing materials, supplies and equipment into or through the Demised
Premises during the course thereof, and the obligations of Tenant under this
Lease shall not thereby be affected; provided, however, that Landlord shall use
reasonable efforts not to annoy, disturb or otherwise interfere with Tenant's
operations in the Demised Premises in making such repairs or performing such
work. Landlord also shall have the right to enter the Demised Premises at all
reasonable times, upon not less than 48 hours prior notice to Tenant (which may
be given by telephone), to exhibit the Demised Premises to any prospective
purchaser or mortgagee or, during the last six months of the Term, prospective
tenant.
25. Mortgagee's Rights.
(a) Landlord represents and warrants that no Mortgage
encumbers or will encumber the Demised Premises as of the Lease Commencement
Date. Subject to all the provisions of this Section 25, this Lease may be either
superior or subordinate to any "Mortgage". The term "Mortgage", as used in this
Lease, shall mean any and all mortgages,
Page 50
deeds to secure debt, deeds of trust, or other instruments creating a lien or
conveying a security title at any time and from time to time, granted by
Landlord and affecting or encumbering the title of Landlord to the Demised
Premises or this Lease. The term "Mortgagee" refers to the holder of the
Mortgage. Landlord shall have no right to grant to any Mortgagee in any
Mortgage any rights which, if exercised, would violate the obligations of
Landlord or the rights of Tenant under this Lease.
(b) Unless this Lease is subordinated to a Mortgage
pursuant to subsection (c), below, this Lease shall be superior to such
Mortgage. If the Lease is superior, any person or entity acquiring title to the
Demised Premises by virtue of foreclosure of a Mortgage would automatically be
subject to this Lease, and bound by the obligations of the Landlord, arising
under this Lease from and after the date of foreclosure and for so long as such
person or entity holds title, without execution of any form of non-disturbance
agreement. Upon the request by any Mortgagee, Tenant shall execute and deliver
a written instrument, in a form reasonably to Tenant and acceptable for
recording in the real estate records of DuPage County, Illinois, recognizing
that this Lease is superior to the Mortgage held by the requesting Mortgagee
and that, upon foreclosure of or exercise of the power of sale contained in the
Mortgage, Tenant shall recognize and attorn to the purchaser at the foreclosure
sale as the Landlord under this Lease, subject to all the terms and provisions
of this Lease.
(c) If a Mortgagee desires for this Lease to be
subordinate to its Mortgage, Tenant agrees that it shall subordinate this Lease
by execution and delivery of the Subordination, Non-Disturbance and Attornment
Agreement attached to this Lease as Exhibit "H" and by this reference made a
part hereof in recordable form; provided, however, that, to be effective, such
Agreement must be fully executed by all parties thereto and properly recorded
in the real estate records of Will County, Illinois. This Lease will not be
subordinate to any Mortgage except in the manner provided in this subsection
(c). Tenant shall have no duty whatsoever to consider any amendment of Exhibit
H which would affect in any way the rights of Tenant under Section 23.1.
26. Estoppel Certificate. Landlord and Tenant agree, at any time,
and from time to time, within fifteen (15) days after written request from the
other, to execute, acknowledge and deliver to the requesting party and/or its
designee a statement in writing in recordable form certifying that: (i) this
Lease is unmodified and in full force and effect (or, if there have been
modifications, that the same is in full force and effect, as modified) and (ii)
the dates to which Minimum Rent, Additional Rent and other charges have been
paid, (iii) whether or not, to the best knowledge of the signer of such
certificate, there exists any failure by the requesting party to perform any
term,
Page 51
covenant or condition contained in this Lease, and, if so, specifying
each such failure of which the signer may have knowledge, (iv) (if such be the
case) the Tenant has unconditionally accepted the Demised Premises, (v) and as
to such additional matters as may be reasonably requested by Landlord, it being
intended that any such statement delivered pursuant hereto may be relied upon
by the requesting party (or its designee) and by any purchaser of title to the
Demised Premises or by any Mortgagee or any assignee thereof or any party to
any sale-leaseback of the Demised Premises, or the landlord under a ground
lease affecting the Demised Premises.
27. Landlord Liability. No owner of the Demised Premises, whether
or not named herein, shall have liability hereunder after it ceases to hold
title to the Demised Premises, except for obligations which may have
theretofore accrued. Neither Landlord nor any officer, director, shareholder,
partner or principal of Landlord, whether disclosed or undisclosed, shall be
under any personal liability with respect to any of the provisions of this
Lease, and if Landlord is in breach or default with respect to Landlord's
obligations or otherwise under this Lease, Tenant shall look solely to the
equity of Landlord in the Demised Premises and insurance and condemnation
proceeds arising from the Building and the Land which are actually received by
Landlord and not applied in accordance with this Lease for the satisfaction of
Tenant's remedies. It is expressly understood and agreed that Landlord's
liability under the terms, covenants, conditions, warranties and obligations of
this Lease shall in no event exceed the loss of Landlord's equity interest in
the Demised Premises (and such insurance and condemnation proceeds).
28. Notices and Payments. Any notice or payment required or
permitted to be given or served by either party to this Lease shall be deemed
given when made in writing and either (i) personally delivered, (ii) deposited
with the United States Postal Service, postage prepaid, to be mailed by
certified or registered mail, return receipt requested, or (iii) delivered by
overnight delivery service providing proof of delivery, properly addressed to
the address set forth in Section 1(j) (as the same may be changed by giving
written notice of the aforesaid in accordance with this Section 28); provided,
however, that the time period allowed for a response to any notice so given
shall not commence until the date of actual receipt of the notice. Refusal to
accept delivery or inability to deliver as a result of a change of address as
to which no notice was properly given shall be deemed receipt.
29. Brokers. Neither Landlord nor Tenant has engaged any brokers
who would be entitled to any commission or fee based on the execution of this
Lease, other than as set forth in Section 1(l) (the "Broker") who shall be paid
pursuant to separate agreement. Further, neither Landlord nor Tenant have had
any conversations or negotiations
Page 52
with any broker except the Broker concerning the leasing of the Demised
Premises to Tenant. Landlord and Tenant hereby indemnify each other against and
from any claims for any brokerage commissions (except those payable to the
Broker, all of which are payable pursuant to a separate agreement) and all
costs, expenses and liabilities in connection therewith, including, without
limitation, reasonable attorneys' fees and expenses, for any breach of the
foregoing. The foregoing indemnification shall survive the expiration or
termination of the Lease for any reason.
30. Assignment and Subleasing.
(a) Tenant may not assign, mortgage, pledge, encumber or otherwise
transfer this Lease, or any interest hereunder, or sublet the Demised Premises,
in whole or in part, without on each occasion first obtaining the prior express
written consent of Landlord, which consent shall not be unreasonably withheld
or conditioned. In making a determination to grant or withhold such consent,
Landlord shall be entitled to consider the creditworthiness of the proposed
assignee or sublessee, the nature of the use of the Demised Premises
contemplated by the proposed assignee or sublessee (to the extent such use
amends or alters the Permitted Use then in effect) and whether or not the
proposed use will materially increase wear and tear on the Demised Premises.
Landlord shall never be required to consent to any proposed use involving heavy
manufacturing or chemical processing. In addition, if the intended use by the
proposed assignee or sublessee involves in any way different amounts or types
of Hazardous Substances than the Hazardous Substances then being used or stored
by Tenant at the Demised Premises, in accordance with Section 17 of this Lease,
at the time of the proposed assignment or sublease, which different or
additional Hazardous Substances create, in the reasonable judgment of Landlord
a materially increased risk of Contamination at the Demised Premises, Landlord
shall be unconditionally entitled to withhold consent of the proposed
assignment or sublease in its absolute discretion. Permitted subtenants or
assignees shall become liable directly to Landlord for all obligations of
Tenant hereunder, without, however, relieving Tenant of any of its liability
hereunder; provided, however, that Landlord will allow Tenant to collect all
amounts payable by any permitted assignee or sublessee so long as no Event of
Default has occurred and is continuing. No such assignment, subletting,
occupancy or collection shall be deemed the acceptance of the assignee, tenant
or occupant, as Tenant, or a release of Tenant from the further performance by
Tenant of Tenant's obligations under this Lease.
(b) Notwithstanding subsections (a), (c), (d), (e) or (g) of this Section
30, provided that no Event of Default has occurred and is then continuing,
Tenant shall have the right, without the consent of Landlord but upon thirty
(30) days prior written notice to Landlord, (i) to
Page 53
sublet all or part of the Demised Premises to any entity which is controlled
by, under common control with, or which controls Tenant (any of such entities
being herein called a "Petco Affiliate"); or (ii) to assign this Lease (x) to a
Petco Affiliate or to (y) a successor corporation into which or with which
Tenant is merged or consolidated or which acquired substantially all of
Tenant's assets and property, provided that, with respect to an assignment
pursuant to (ii)(y), such successor corporation assumes substantially all of
the obligations and liabilities of Tenant and, after such merger, shall have
total assets and stockholder equity at least equal to the total assets and
stockholder equity of Tenant immediately prior to the merger, as determined by
generally accepted accounting principles. With respect to any assignment,
Tenant shall provide in its notice to Landlord such information as may be
reasonably required by Landlord to determine that the requirements of this
subsection (b) have been satisfied. The terms "controls", "controlled by" or
"under common control with", as used in this subsection (b), shall mean the
ownership of a direct or indirect majority interest.
(c) If Tenant should desire to assign this Lease or sublet the Demised
Premises (or any part thereof), Tenant shall give Landlord written notice no
later than thirty (30) days in advance of the proposed effective date of any
proposed assignment or sublease, specifying (i) the name and business of the
proposed assignee or sublessee, (ii) a detailed description of the intended use
of the Demised Premises by the proposed assignee or sublessee, with particular
detail regarding any Hazardous Substances which will be used in any manner at
the Demised Premises; (iii) the amount and location of the space within the
Demised Premises proposed to be so subleased, (iv) the proposed effective date
and duration of the assignment or subletting, and (v) the proposed rent or
consideration to be paid to Tenant by such assignee or sublessee. Tenant shall
promptly supply Landlord with available financial statements and other
information related to the decision being made by Landlord as Landlord may
reasonably request to evaluate the proposed assignment or sublease.
(d) Landlord shall have a period of fifteen (15) days following receipt of
such notice and other information requested by Landlord within which to notify
Tenant in writing that Landlord elects: (i) to permit Tenant to assign or
sublet such space; or (ii) to refuse to consent to Tenant's assignment or
subleasing of such space and to continue this Lease in full force and effect as
to the entire Demised Premises; any such refusal shall state with reasonable
specificity the reasons for the refusal. If Landlord should fail to notify
Tenant in writing of such election within the aforesaid fifteen (15) day
period, Landlord shall be deemed to have consented to such assignment or
sublease. Tenant agrees to reimburse Landlord for reasonable legal fees and any
other reasonable costs actually incurred by Landlord in connection with any
Page 54
requested assignment or subletting, not to exceed $1000 in the aggregate for
any one assignment or subletting. Tenant shall deliver to Landlord copies of
all documents executed in connection with any permitted assignment or
subletting, which documents shall be in form and substance reasonably
satisfactory to Landlord and which shall require such assignee to assume
performance of all terms of this Lease on Tenant's part to be performed. No
acceptance by Landlord of any rent or any other sum of money from any assignee,
sublessee or other category of transferee shall be deemed to constitute
Landlord's consent to any assignment, sublease, or transfer.
(e) Any attempted assignment or sublease by Tenant in violation of the
terms and provisions of this Section 30 shall be void and such act shall
constitute a material breach of this Lease. In no event shall any assignment,
subletting or transfer, whether or not with Landlord's consent, relieve Tenant
of its primary liability under this Lease for the entire Term, and Tenant shall
in no way be released from the full and complete performance of all the terms
hereof. If Landlord takes possession of the Demised Premises before the
expiration of the Term of this Lease, Landlord shall have the right, at its
option to take over any sublease of the Demised Premises or any portion thereof
and such subtenant shall attorn to Landlord, as its landlord, under all the
terms and obligations of such sublease occurring from and after such date, but
excluding previous acts, omissions, negligence or defaults of Tenant and any
repair or obligation in excess of available net insurance proceeds or
condemnation award.
(f) Landlord shall have the right to sell, transfer, assign, pledge, and
convey all or any part of the Demised Premises and any and all of Landlord's
rights under this Lease; provided, however, that Landlord shall not be entitled
to exercise such right, whether by operation or law or otherwise, prior to the
Lease Commencement Date without the prior written consent of Tenant. In the
event Landlord assigns or otherwise conveys its rights under this Lease,
Landlord shall be entirely freed and released from any obligations accruing
thereafter under this Lease (provided such obligations are assumed in writing
by the purchaser or transferee), and Tenant agrees to look solely to Landlord's
successor in interest for performance of such obligations.
(g) If Tenant transfers or assigns this Lease or sublets the Demised
Premises in whole or in part to any permitted assignee or sublessee, Landlord
shall be entitled to receive, as Additional Rent, fifty percent (50%) of any
"Rental Profit" (as hereinafter defined) received by Tenant. The term "Rental
Profit" shall mean the amount, calculated on a per square foot basis and not on
an aggregate or cumulative basis, by which (i) the total rental and other
consideration of any nature whatsoever and however characterized paid or
delivered to Tenant by an assignee of the interest of Tenant or sublessee of
all or any part of
Page 55
the Demised Premises, for the purpose of compensating Tenant directly or
indirectly for the assignment or sublease, exceeds (ii) the Monthly Minimum
Rent Installments paid by Tenant to Landlord pursuant to this Lease; provided,
however, that Landlord shall not be entitled to receive any Rental Profit until
Tenant has received an amount of Rental Profit equal to the sum of (x) the
actual, out-of-pocket cost of leasehold improvements installed by Tenant at its
expense specifically for and and as an inducement to the assignee or sublessee
(subject to the limitation hereinafter specified), plus (y) subject to the
limitation hereinafter specified, any other reasonable, documented expenses
actually paid by Tenant to a third party and "free rent" or similar concessions
granted by Tenant in connection with the assignment or subletting, including,
without limitation, reasonable attorneys' fees and expenses and brokerage
commissions (but expressly excluding any overhead or other internally charged
expenses of Tenant, or any amounts paid for tenant improvements, free rent or
other lease concessions given as an inducement to the assignee or sublessee
which materially exceed in the aggregate the tenant improvements, free rent or
other lease concessions given in aggregate on the basis of then prevailing
market conditions for a comparable sublease or assignment)(the sum of (x) and
(y) shall collectively constitute "Rental Expenses"). By way of example, if
Landlord grants the required written consent to a sublease by Tenant of 10,000
square feet of the Demised Premises and the total rental and other
consideration received by Tenant for the sublease equals a per annum rate of
$3.70 per square foot and the per annum rate per square foot for the Annual
Minimum Rent then payable by Tenant is $3.50 per square foot, the Rental Profit
would be 20(cent) per square foot and Landlord would be entitled to received
fifty percent (50%) of such Rental Profit concurrently with receipt of each
payment by the sublessee to Tenant; provided that Rental Profit would be
retained by Tenant until Tenant had fully recovered the amount of its Rental
Expenses. Landlord shall be entitled to receive payment of its share of Rental
Profit as and when payments are received by Tenant. Any dispute between
Landlord and Tenant regarding the calculation of Rental Expenses will be
resolved by the Dispute Resolution Procedure.
31. Termination or Expiration.
(a) No termination of this Lease prior to the normal
ending thereof, by lapse of time or otherwise, shall affect Landlord's right to
collect rent for the period prior to termination thereof.
(b) At the expiration or earlier termination of the
Term, Tenant shall surrender the Demised Premises and all improvements,
alterations and additions thereto, and keys therefor to Landlord, clean and
neat, and in the same condition as at the commencement of the
Page 56
Term, ordinary wear and tear only excepted.
(c) If Tenant remains in possession of the Demised
Premises after expiration of the Term, with or without Landlord's acquiescence
and without any express agreement of the parties, Tenant shall be a
tenant-at-sufference at the greater of (i) one hundred fifty percent (150%) of
the Minimum Rent in effect at the end of the Term or (ii) one hundred fifty
percent (150%) of the then current fair market rental value of the Demised
Premises. Tenant shall also continue to pay all other Additional Rent due
hereunder, and there shall be no renewal of this Lease by operation of law.
32. Late Payments. In the event any installment of rent,
inclusive of Base Rent, or Additional Rent or other sums due hereunder, if any,
is not paid (i) within ten (10) days after Tenant's receipt of written notice
of such failure to pay on the first two occasions during any twelve (12) month
period , or (ii) as and when due with respect to any subsequent late payments
in any twelve (12) month period, Tenant shall pay a late charge equal to three
percent (3%) of such past due amount. Any installment of Base Rent which is not
paid within sixty (60) calendar days after the date when such rent is due
shall, after such 60-day period, bear interest at the Interest Rate. The term
"Interest Rate", as used in this Lease, shall mean a per annum rate of interest
equal to five percent (5%) in excess of the Prime Rate (as herein defined) in
effect from time to time. The term "Prime Rate", as used in this Lease, shall
mean the prime rate of interest charged at the applicable time by Chase
Manhattan Bank, N.A. of New York. If Chase Manhattan Bank, N.A. ceases to
publish or announce the Prime Rate, Landlord shall designate a comparable
reference rate.
33. Protective Covenants. Tenant agrees to abide by the
Declaration of Covenants for the Project, attached hereto as Exhibit "I" as it
may be amended from time to time in accordance with the terms thereof (herein,
the "Protective Covenants"), which Protective Covenants shall run with the Land
and be binding on Tenant, its successors and permitted assigns. The non-profit
corporation which acts as the owners' association under the Protective
Covenants is referred to in this Lease as the "Association". Without limiting
the foregoing, Tenant shall pay, as Additional Rent, all assessments imposed
upon the Demised Premises pursuant to the Protective Covenants. Landlord agrees
that Landlord will not, at any time during the Term, in its capacity as an
owner of land subject to the Protective Covenants, execute or vote in favor of
any amendment of the Protective Covenants which would increase the assessments
or other amounts due by Tenant pursuant to this Section 33 or would materially
and adversely affect in any way the Primary Use, access to the Demised Premises
or the right of Tenant to use and enjoy the Demised Premises in accordance with
this Lease.
Page 57
34. Dispute Resolution Procedure.
(a) In the event that a dispute arises between Landlord and
Tenant under the Lease, and only if the Lease specifically provides that the
dispute resolution procedure outlined in this Section 34 (herein referred to as
the "Dispute Resolution Procedure") shall be utilized, the parties shall proceed
as follows:
(i) The party electing to proceed under the
procedures outlined herein (the "Electing Party") shall give written notice of
such election to the other party (the "Other Party"), and shall designate in
writing the Electing Party's selection of an individual with the qualifications
outlined in the section of the Lease giving rise to this remedy (the "Official")
who shall act on the Electing Party's behalf in determining the disputed fact.
(ii) Within twenty (20) days after the Other
Party's receipt of the Electing Party's selection of an Official, the Other
Party, by written notice to the Electing Party, shall designate an Official who
shall act on the Other Party's behalf in determining the disputed fact.
(iii) Within twenty (20) days of the selection of
the Other Party's Official, the two (2) Officials shall render a joint written
determination of the disputed fact. If the two (2) Officials are unable to agree
upon a joint written determination within such twenty (20) day period, each
Official shall render his or her own written determination and the two Officials
shall select a third Official within such twenty (20) day period. In the event
the two Officials are unable to select a third Official within such twenty (20)
day period, then either party may apply to a court of original jurisdiction in
DuPage County, Illinois for appointment by such court of such third Official.
(iv) Within twenty (20) days after the
appointment of the third Official, the third Official shall select one of the
determinations of the two (2) Officials originally selected, without
modification or qualification.
(v) If either Landlord or Tenant fails or
refuses to select an Official, the Official selected shall alone determine the
disputed fact. Landlord and Tenant agree that they shall be bound by the
determination of disputed fact pursuant to this subsection. Landlord shall bear
the fee and expenses of its Official, Tenant shall bear the fee and expenses of
its Official, and Landlord and Tenant shall share equally the fee and expense of
the third Official, if any.
Page 58
35. Waiver of Landlord's Lien. Landlord hereby waives and
releases any lien or claim of lien, statutory or otherwise, which Landlord
may be entitled to assert under the laws of the State of California upon or
against any personal property and trade fixtures of tenant situated in and
upon the Demised Premises. From time to time during the Term, Landlord shall,
within ten (10) business days after receipt of written request from Tenant,
execute and deliver the form of Landlord's Agreement attached to this Lease
as Exhibit "J" to any lender providing financing to Tenant for personal
property or trade fixtures or any equipment lessor leasing personal property
or trade fixtures to Tenant which will be located in the Demised Premises.
Landlord will not unreasonably withhold its approval of an alternative form
of Landlord's Agreement proposed by such lender or equipment lessor, provided
such alternative Landlord's Agreement contains provisions substantially the
same as Exhibit J.
36. Quiet Enjoyment. Landlord covenants with Tenant that,
during the periods that no Event of Default has occurred and is continuing,
Tenant shall have the right to quiet and peaceful use and enjoyment of the
Demised Premises, subject to the Permitted Encumbrances and all the
provisions of this Lease.
37. Miscellaneous.
(a) The parties hereto hereby covenant and agree that Landlord
shall receive the Minimum Rent and Additional Rent and all other sums payable by
Tenant hereinabove provided as net income from the Demised Premises, without any
abatement, reduction, set-off, counterclaim, defense or deduction, except as
expressly provided to the contrary in this Lease.
(b) If any clause or provision of this Lease is determined to
be illegal, invalid or unenforceable under present or future laws effective
during the Term, then and in that event, it is the intention of the parties
hereto that the remainder of this Lease shall not be affected thereby, and that
in lieu of such illegal, invalid or unenforceable clause or provision there
shall be substituted a clause or provision as similar in terms to such illegal,
invalid or unenforceable clause or provision as may be possible and be legal,
valid and enforceable. If such invalidity is essential to the rights of either
or both parties, then the affected party shall have the right to terminate this
Lease on written notice to the other.
(c) All rights, powers, and privileges conferred hereunder
upon the parties hereto shall be cumulative, but not restrictive to those given
by law, except as may be expressly provided to the contrary in this Lease.
Page 59
(d) Time is of the essence of this agreement.
(e) No failure of Landlord or Tenant to exercise any power
given Landlord or Tenant hereunder or to insist upon strict compliance by
Landlord or Tenant with its obligations hereunder, and no custom or practice of
the parties at variance with the terms hereof shall constitute a waiver of
Landlord's or Tenant's rights to demand exact compliance with the terms hereof.
(f) This Lease contains the entire agreement of the parties
hereto and no representations, inducements, promises or agreements, oral or
otherwise, between the parties not embodied herein shall be of any force and
effect. The masculine (or neuter) pronoun, singular number shall include the
masculine, feminine and neuter gender and the singular and plural number.
(g) This contract shall create the relationship of Landlord
and Tenant between Landlord and Tenant; no estate shall pass out of Landlord;
Tenant has a usufruct, not subject to levy and sale, and not assignable by
Tenant except as expressly set forth herein.
(h) Landlord and Tenant agree to execute, upon request of the
other, a short form memorandum of this Lease in recordable form and the
requesting party shall pay the costs and charges for the recording of such short
form memorandum of lease. Under no circumstances shall Tenant have the right to
record this Lease (other than a short form memorandum of Lease, as approved by
Landlord), and should Tenant do so, Tenant shall be in default hereunder.
(i) The captions of this Lease are for convenience only and
are not a part of this Lease, and do not in any way define, limit, describe or
amplify the terms or provisions of this Lease or the scope or intent thereof.
(j) This Lease may be executed in multiple counterparts, each
of which shall constitute an original, but all of which taken together shall
constitute one and the same agreement.
(k) This Lease shall be interpreted under the laws of the
State in which the Demised Premises is located.
(l) The parties acknowledge that this Lease is the result of
negotiations between the parties, and in construing any ambiguity hereunder no
presumption shall be made in favor of either party. No inference shall be made
from any item which has been stricken from this Lease other than the deletion of
such item.
Page 60
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
under seals, the day and year first above written.
LANDLORD:
INDUSTRIAL DEVELOPMENTS INTERNATIONAL, INC.
By:
Name:
Title:
Attest:
Name:
Title:
(CORPORATE SEAL)
[signatures continue on following page]
TENANT:
PETCO ANIMAL SUPPLIES, INC.
By:
Name:
Title:
Attest:
Name:
Title:
(CORPORATE SEAL)
EXHIBIT A
Legal Description
The legal description of the Land will conform to the Site Plan and will be
determined by a ground run survey within sixty (60) calendar days after the
Lease Date. As of the Lease Date the Land is part of a larger unsubdivided
parcel. Landlord will have the right during the Term,
Page 61
at the expense of Landord to file a subdivision plat with the City of Joliet
to cause the Land to be separate, subdivided lot.
EXHIBIT A-1
Site Plan
EXHIBIT B
Permitted Encumbrances
1. Declaration of Protective Covenants for Rock Run Business Park,
dated June 16, 1995, recorded as Document No. R95-041407, Records of Will
County, Illinois, as modified by First Amendment dated March 14, 1996,
recorded as Document No. R96-023013, said Records.
2. Development Agreement dated July 17, 1990, recorded as Document No.
R90-56433, said Records.
3. Utility and drainage easements serving or crossing the Demised
Premises or required by Governmental Requirements for subdivision of the
Land; provided that no such easements may interfere with use of the Demised
Premises by Tenant in accordance with this Lease.
EXHIBIT C
EXPANSION LAND
EXHIBIT C-1
ALTERNATE EXPANSION LAND
EXHIBIT D
PREVAILING MARKET RATE
For purposes of this Lease, the phrase "Prevailing Market Rate" shall
mean the then prevailing market rate for base minimum rental calculated on a per
square foot per annum basis for leases containing comparable terms, covering
space comparable to the Demised Premises, with improvements of comparable age
and nature within buildings comparable to the Building located in the area
(hereinafter referred to as the "Market Area") designated as "Joliet, Illinois
Market Area".
The Prevailing Market Rate shall be determined by an appraisal
procedure as follows:
In the event that Tenant notifies Landlord that Tenant elects to extend
the Term for any one or more of the Renewal Terms in accordance with Section 3.5
of this Lease, Landlord and Tenant shall negotiate
Page 62
in good faith for a period of thirty (30) calendar days after the timely
giving of the written notice from Tenant required by Section 3.5 to reach
mutual agreement regarding the Prevailing Market Rate. Each of Landlord and
Tenant shall submit to the other during such thirty (30) day period at least
one written proposal for the Prevailing Market Rate. If Landlord and Tenant
are unable to reach agreement during the thirty (30) day period, each of
Landlord and Tenant shall, by written notice to the other within ten (10)
business days after expiration of the thirty (30) day period, select a real
estate appraiser. For a period of ten (10) business days after designation of
the second appraiser, the two appraisers so designated shall attempt to reach
mutual agreement regarding the Prevailing Market Rate. If the two appraisers
are unable to reach agreement, each of the two appraisers shall, not later
than the twentieth (20th) business day following the designation of the
second appraiser, render a separate written determination of the Prevailing
Market Rate. The two appraisers shall also select a third appraiser prior to
the end of the period when their separate appraisals must be rendered. Within
twenty (20) business days after the appointment of the third appraiser, the
third appraiser shall render a written determination of the Prevailing Market
Rate. From the three appraisals, the appraisal which is the farthest from the
median appraisal shall be disregarded and the average of the remaining two
appraisals shall conclusively constitute the Prevailing Market Rate. All
appraisers selected in accordance with this paragraph shall have at least ten
years experience in the commercial leasing market in the Market Area and
shall be members of the American Institute of Real Estate Appraisers or
similar professional organization. If either Landlord or Tenant fails or
refuses to select an appraiser, the other appraiser shall alone determine the
Prevailing Market Rate. Landlord and Tenant agree that they shall be bound by
the determination of Prevailing Market Rate pursuant to this paragraph.
Landlord shall bear the fee and expenses of its appraiser; Tenant shall bear
the fee and expense of its appraiser; and Landlord and Tenant shall share
equally the fee and expenses of the third appraiser, if any.
EXHIBIT E
ALLOWANCE WORK
The Allowance Work is described in Exhibit G-2.
EXHIBIT F
ENVIRONMENTAL REPORTS
1. Xxxxxx Consultants Phase I Environmental Property Assessment
Page 63
Report dated January 19, 1990.
2. Xxxxxx Consultants Phase I Environmental Property Assessment Report
dated October 17, 1989.
3. ERM Underground Storage Tank Removal Report dated April 13, 1995.
EXHIBIT G
BUILDING PLANS AND SPECIFICATIONS
Plans and Specifications by Xxxxxx Xxxxxx & Associates, dated May 19, 1997,
consisting of Sheets A-1 through A-6.
EXHIBIT G-1
ADDITIONAL PLANS AND SPECIFICATIONS
EXHIBIT G-2
TENANT'S WORK
EXHIBIT H
SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
(this "Agreement") is made as of the ____ day of ______________, 199__ between
_____________________, a _________________ (hereinafter called "Mortgagee"),
which has an office at _________________________ (Attn: _____________________)
and ______________________________________, a ____________ corporation
(hereinafter called "Tenant"), which has an office at _________________________.
W I T N E S S E T H:
WHEREAS, Tenant has entered into that certain Lease ("Lease")
dated ___________________, 199__ with INDUSTRIAL DEVELOPMENTS INTERNATIONAL,
INC. (hereinafter called "Landlord"), as Landlord, which Lease demises certain
premises (the "Premises") located on the real property described on Exhibit A
attached hereto and made a part hereof (the "Property");
WHEREAS, Mortgagee has agreed to make a loan to Landlord in
the face principal amount of $__________, to be secured by a
Page 64
Mortgage and Security Agreement (herein, together with all amendments,
modifications, extensions, renewals, consolidations and replacements thereof
now existing or hereafter entered into, collectively called the "Mortgage")
on the Property; and
WHEREAS, Mortgagee and Tenant have reached certain agreements
regarding the Lease and the Mortgage hereinafter set forth in this Agreement.
NOW, THEREFORE, in consideration of the sum of Ten Dollars
($10.00) in hand paid by Mortgagee to Tenant and other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, it is hereby
agreed as follows:
1. In accordance with and subject to all the provisions of
this Agreement, the Lease is and shall be subject and subordinate to the
Mortgage, to the full extent of any and all amounts from time to time secured
thereby and interest thereon.
2. Tenant, for itself and its successors and assigns,
agrees that it will attorn to and recognize any purchaser of the Property at a
foreclosure sale under the Mortgage or any transferee who acquires the Property
by deed in lieu of foreclosure or otherwise, and the successors and assigns of
such purchaser or transferee, as its landlord for the unexpired balance (and any
extensions or renewals, whether previously, at that time or thereafter exercised
by Tenant) of the term of the Lease, subject to and in accordance with the terms
and conditions set forth in the Lease.
3. Mortgagee, for itself and its successors and assigns, and
for any purchaser at a foreclosure sale under the Mortgage, any transferee who
acquires the Property by deed in lieu of foreclosure or otherwise, and the
successors and assigns of such purchaser or transferee (herein, Mortgagee and
each such other party is called a "New Landlord"), hereby covenants and agrees
with Tenant that in the event Mortgagee shall commence any proceedings to
foreclose the Mortgage for any reason whatsoever or in the event any other New
Landlord shall succeed to the interest of Landlord by foreclosure, deed in lieu
thereof or otherwise, that: (a) the Lease shall, in accordance with its terms,
remain in full force and effect as a direct indenture of lease between Mortgagee
or other New Landlord (as the case may be), and Tenant, with the same force and
effect as if originally entered into with Mortgagee, or such other New Landlord
(as the case may be); and (b) Tenant's possession of the Premises and Tenant's
rights and privileges under the Lease shall not be diminished, interfered with
or disturbed by such Mortgagee or such other New Landlord by such foreclosure
under the Mortgage or by any such attempt to foreclose or to succeed to the
interests of Landlord by foreclosure, deed in lieu thereof or
Page 65
otherwise; provided that the rights of possession of Tenant are subject to
all the terms of the Lease.
4. Without the prior written consent of Mortgagee, Landlord
will have no right or power to (a) enter into any agreement amending or
terminating the Lease or (b) cancel the term of, or surrender, the Lease, or (c)
waive or release Tenant from any obligation of Tenant under the Lease; provided
that regarding only any proposed amendment of the Lease which does not reduce
the amount of rental payable under the Lease by Tenant, relieve Tenant of any
obligation under the Lease, increase the responsibilities of Landlord or
otherwise impair or reduce the economic value of the Lease to Mortgagee,
Mortgagee agrees not unreasonably to withhold or delay its consent.
5. The Tenant hereby agrees to provide Mortgagee with a copy
of any written notice given by Tenant to Landlord of any default under the Lease
by the Landlord (such copy to Mortgagee to be given simultaneously with the
giving of the notice to Landlord) and to allow Mortgagee the same right and
opportunity to remedy or cure such default as may be available to Landlord under
the Lease prior to exercising any right or remedy of the Tenant under the Lease.
Notwithstanding the foregoing, Tenant agrees that Mortgagee shall have no
obligation to remedy or cure any such default.
6. In the event that Mortgagee or any other New Landlord
shall succeed to the interest of Landlord under the Lease, Tenant agrees that
Mortgagee or such other New Landlord shall not be: (i) except as provided to
the contrary in Section 23.1 of the Lease, subject to any credits, offsets,
defenses, claims or counterclaims which Tenant might have against any prior
landlord (including Landlord), (ii) bound by any rent or additional rent
which Tenant shall have paid more than one month in advance to any prior
landlord (including Landlord), or (iii) bound by any amendment or
modification to the Lease, or waiver of any provision of the Lease, which has
not been consented to in writing by Mortgagee.
7. Each notice, demand or other communication in connection
with this Agreement shall be in writing and shall be deemed to be given to and
served upon the addressee thereof on the earlier of (i) actual delivery to such
addressee at its address set out above or (ii) the third business day after the
deposit thereof in the United States mails, registered or certified mail, return
receipt requested, first-class postage prepaid, addressed to such addressee at
its address set out above. By notice complying with this section, any party may
from time to time designate a different address in the continental United States
as its address for the purpose of the receipt of notice hereunder.
Page 66
8. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto, and their respective successors and
assigns.
9. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of Illinois.
IN WITNESS WHEREOF, the parties hereto have executed, sealed
and delivered this Agreement as of the day and year first above written.
MORTGAGEE:
By:
Name:
Title:
TENANT:
_________________________________, a _______________
By:
Name:
Title:
Attest:
Name:
Title:
(Affix Corporate Seal)
[TO BE EXECUTED IN FORM ACCEPTABLE FOR RECORDING
UNDER THE LAWS OF THE STATE OF ILLINOIS]
EXHIBIT A
Legal Description
Page 67
EXHIBIT I
PROTECTIVE COVENANTS
EXHIBIT J.
LANDLORD'S AGREEMENT
THIS LANDLORD'S AGREEMENT (this "Agreement"), is executed and delivered
as of this _____ day of _____________________, 199__, by ("Landlord"), in favor
of ("Secured Party").
WITNESSETH:
WHEREAS, Secured Party and ("Borrower"), have entered, are entering,
and may from time to time hereafter enter into various agreements, instruments
and documents (collectively the "Loan Agreements") providing for certain
financial accommodations for the benefit of Borrower; and
WHEREAS, to secure payment and performance of all of Borrower's
obligations and liabilities under the Loan Agreements ("Borrower's
Liabilities"), Secured Party has required that Borrower grant to Secured Party a
security interest in certain machinery, equipment, inventory and other personal
property owned by Borrower and all proceeds of the foregoing (the "Collateral");
and
WHEREAS, all or some of the Collateral is now or from time to time
hereafter may be located at the premises known as (the "Premises")
[and legally described on Exhibit A hereto], which Premises are owned and
leased by Landlord to Borrower pursuant to that certain Lease Agreement dated
________________, 199__ (the "Lease"); and
WHEREAS, Borrower may require loans or advances pursuant to the Loan
Agreements, and Secured Party, as a condition precedent to making such
additional loans or advances, has required Landlord to execute and deliver this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which
Page 68
are hereby acknowledged, Landlord hereby covenants and agrees with Secured
Party as follows:
1. So long as Secured Party has an interest in the Collateral
under the Loan Agreements, and subject to all the provisions of this
Agreement, Landlord waives each and every right which Landlord now has or
hereafter may have, under the laws of the State of Illinois, or by virtue of
the Lease, or any renewals, extensions, amendments, modifications,
substitutions or replacements thereof (a "New Lease") or by virtue of
Borrower's occupation of the Premises, to claim or assert any lien, right,
claim or title to any or all of the Collateral, which now or hereafter may be
placed or located on the Premises.
2. Landlord agrees, subject to the provisions of Paragraph 6 of this
Agreement, that the Collateral (a) is and shall remain personal property and (b)
is not and shall not become or be deemed to be fixtures.
3. Subject to all the provisions of this Agreement, Landlord
recognizes and acknowledges that Secured Party's security interest in the
Collateral pursuant to the Loan Agreements is superior to any lien, right or
claim of title of any nature which Landlord now has or hereafter may have or
assert in or to the Collateral by statute, the Lease, any New Lease, any
other agreement or otherwise.
4. If Landlord gives to Tenant written notice of the occurrence of
an Event of Default (as that term is defined in the Lease) by Tenant under the
Lease, Landlord shall send to Secured Party a copy of such written notice
concurrently with the giving of the notice to Tenant. Landlord agrees that, with
respect to any Event of Default which arises as a result of a failure by Tenant
to pay a sum of money required by the Lease to be paid by Tenant, Landlord will
allow Secured Party to cure such monetary Event of Default by Tenant for the
same period of time that Tenant is entitled to cure such Event of Default.
Nothing contained in this Agreement will (i) extend or create any right to cure
any Event of Default except as expressly provided in the Lease and (ii) limit,
restrict, alter or modify the rights of Landlord under the Lease which are
available to Landlord as a result of the occurrence of an Event of Default by
Tenant.
5. In the event of default by Borrower in the payment or
performance of any of Borrower's Liabilities, Landlord, in accordance with
all the provisions of this Agreement (a) will not impede or interfere with
Secured Party in its efforts to assemble all of the Collateral located on the
Premises, (b) will not interfere with lawful efforts by Secured Party to
remove the Collateral from the Premises and (c) will not hinder Secured
Party's lawful actions in enforcing its security interest in the Collateral.
Page 69
6. Secured Party may, without affecting the validity of this
Agreement, extend, amend or in any way modify the terms of payment or
performance of any of Borrower's Liabilities, without the consent of Landlord
and without giving notice thereof to Landlord.
7. As a material part of the consideration to Landlord for
entering into this Agreement, Secured Party hereby agrees as follows:
(a) Landlord shall have no duty or obligation under this Agreement
to grant or facilitate access to the Premises by or for the benefit of Secured
Party, and nothing contained in this Agreement shall be deemed or construed to
grant to Secured Party any right of access to the Premises or the Collateral;
(b) Notwithstanding any provisions which may be contained in the
Loan Agreements, Secured Party shall not have any right to undertake or
attempt forcible entry to the Premises or to achieve entry in any manner
which causes any damage to the Premises; access by Secured Party to the
Premises shall be gained only by consent of the Borrower or pursuant to legal
process, but always without damage to the Premises;
(c) If any of the Collateral is affixed in any way to the Premises,
then, irrespective of the agreement of Landlord in this Agreement that
Collateral does not constitute fixtures, Secured Party shall have the same
obligations as Tenant under the Lease to restore any damage to the Premises
which may be caused by the removal of such affixed Collateral; and
(d) Any entry by Secured Party into the Premises pursuant to this
Agreement or the Loan Agreements shall be at the sole risk and expense of
Secured Party and Secured Party hereby releases Landlord from any loss, claim,
liability, damage, cost or expense of any nature whatsoever which Secured Party
may incur in connection with the exercise of its rights under this Agreement.
8. This Agreement shall inure to the benefit of the successors
and assigns of Secured Party and shall be binding upon the heirs, personal
representatives, successors and assigns of Landlord.
9. This Agreement shall continue in force until all of Borrower's
Liabilities are paid and satisfied in full and the Loan Agreements have been
terminated.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
as of the day and year specified at the beginning hereof.
Page 70
LANDLORD:
By:
Its:
ACKNOWLEDGED AND AGREED:
TENANT
By:
Name:
Title:
SECURED PARTY:
By:
Its:
EXHIBIT A
Legal Description of the Premises
Page 71
