EXHIBIT 10.17
THIRD AMENDMENT TO LEASE
THIS THIRD AMENDMENT TO LEASE ("Third Amendment") is made as of January
22, 2002, by and between AMERICAN OSTEOPATHIC ASSOCIATION, an Illinois
not-for-profit corporation ("Landlord") and BROADVIEW MEDIA, INC., formerly
known as NORTHWEST TELEPRODUCTIONS/CHICAGO, INC., a Minnesota corporations
("Tenant").
RECITALS:
A. Landlord and Tenant executed that certain Lease dated January
31, 1994, as amended by that certain First Amendment to Lease dated July, 1996,
and that certain Second Amendment to Lease dated April 2, 1998 (the "Lease") for
7, 510 square feet of space (the "Current Premises") located on the third floor
of that certain office building situated in Chicago, Illinois, and commonly
known as 000 Xxxx Xxxxxxx Xxxxxx (the "Building").
B. Landlord and Tenant wish to amend the Lease to delete the
third floor from the lease, substitute the twelfth floor and extend the Term.
NOW, THERFORE, in consideration of the mutual promises contained herein
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant agree
to amend the lease as follows.
1. INCORPORATION OF RECITAL. The foregoing Recitals and all
exhibits to this Third Amendment, by this reference, are incorporated herein as
if the same had been set forth in this Third Amendment.
2. SECOND SUBSTITUTE PREMISES. Landlord and Tenant have agreed
that in place of the Current Premises Tenant will lease the 7,510 rentable
square feet on the twelfth floor (the "Second Substitute Premises") as shown on
Exhibit A attached hereto. Landlord will deliver possession of the Second
Substitute Premises to Tenant in order for Tenant to perform improvements in the
Second Substitute Premises. During the period commencing with the delivery of
the Second Substitute Premises and ending on the Second Substitute Premises
Commencement Date, the term "Premises" shall mean the Current Premises and the
Second Substitute Premises unless the context requires otherwise (for example,
Tenant will be required to insure its operations in both spaces but will be
required to pay Rent during this period on the equivalent of only one space.) As
of the earlier of the date Tenant opens for business in the Second Substitute
Premises or June 1, 2002 (the "Second Substitute Premises Commencement Date),
Tenants rights and obligations with respect to the third floor will cease in the
same manner as if that date had been originally fixed in the Lease for the
expiration of the Term with respect to the third floor. (Thus, Tenant shall only
be required to pay Rent on both the Current Premises and the Second Substitute
Premises if Tenant holds over in the Current Premises beyond the Second
Substitute Premises Commencement Date). Tenant agrees to vacate the third floor
and deliver possession thereof to Landlord by the Second Substitute Premises
Commencement Date. In addition, Tenant shall remove the items listed on Exhibit
F and the audio room windows and doors from the Current Premises by the Second
Substitute Premises Commencement Date, such removal to be in compliance with
Tenant's obligations under article 16. Tenant shall pay to Landlord all Rent and
other charges as specified in the Lease as amended hereby through the Second
Substitute Premises Commencement Date, for the third floor in accordance with
the terms of the Lease as if that date had been originally fixed in the Lease
for the expiration of the Term with respect to the third floor. Therefore, as of
the Second Substitute Premises Commencement Date, and with respect to periods
thereafter, the term "Premises" shall mean the Second Substitute Premises unless
the context requires otherwise. Notwithstanding the above, Landlord
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acknowledges that the items listed on Exhibit F and the audio room windows and
doors are the property of Tenant and may be reinstalled in the Second Substitute
Premises, and, if Tenant does so, such items may be removed by Tenant at the
expiration of the Extension Term (as hereinafter defined), subject to Tenant's
obligations under Article 16.
3. CONDITION OF SECOND SUBSTITUTE PREMISES. Tenant acknowledges
and agrees that the Second Substitute Premises are being leased in their "AS-IS"
condition without representation or warranty by Landlord or any other party, and
Landlord has no obligation to make any alterations, improvement or repairs to
the Premises or to provide Tenant with and allowance in connection therewith
Premises except that Landlord will make available an allowance of $25.00 per
square foot in the Second Substitute Premises to improve the Second Substitute
Premises (the "Allowance"). All work in the Second Substitute Premises shall be
done in accordance with the terms of the Lease with respect to the construction
of alterations, including the requirement of Landlord's prior approval of plans.
The Allowance shall be disbursed to Tenant's contractor upon receipt of final
lien waivers and other evidence of lien-free completion in accordance with
approval plans as Landlord shall reasonably determine. A portion of the
Allowance not to exceed $3.00 per square foot in the Second Substitute Premises
may be used to reimburse Tenant for moving costs and will be disbursed to Tenant
upon receipt of final paid bills. In addition, Tenant may request that Landlord
increase the Allowance up to an additional $6.00 per square foot in the Second
Substitute Premises. If Tenant so requests, the amount so advanced by Landlord
in excess of the Allowance (the "additional Improvement Allowance") shall be
recovered by Landlord by calculating the monthly amount necessary to amortize
the Additional Improvement Allowance over the balance of the Extension Term
commencing June 1, 2002 [i.e., ten (10) years] with interest at ten percent
(10%) per annum and such amount shall be added to and become part of the Base
Rent for the Second Substitute Premises. Promptly following the Commencement
Date, Tenant and Landlord will execute and deliver an amendment to the Lease
setting forth the adjusted Base Rent for the Premises.
4. EXTENSION OF TERM. The Term shall be extended from the current
Termination Date of April 30, 2002, until May 31, 2012 (the "Extension Term").
5. BASE RENT. Base Rent with respect to the Second Substitute
Premises for the Extension Term shall be payable by Tenant to Landlord in
monthly installments, in advance, for the time periods and in the amounts set
forth below:
Time Period Annual Base Rent Monthly Installment
----------- ---------------- -------------------
5/1/02-5/31/03 $187,750.00 $15,645.83
6/1/03-5/31/04 $193,382.50 $16,115.21
6/1/04-5/31/05 $199,183.97 $16,598.66
6/1/05-5/31/06 $205,159.48 $17,096.62
6/1/06-5/31/07 $211,314.26 $17,609.52
6/1/07-5/31/08 $217,653.68 $18,137.81
6/1/08-5/31/09 $224,183.29 $18,681.94
6/1/09-5/31/10 $230,908.78 $19,242.40
6/1/10-5/31/11 $237,836.04 $19,819.67
6/1/11-5/31/12 $244,971.12 $20,414.26
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The Base Rent may be increased to reflect Tenant's election to use the
Additional Improvement Allowance as provided in paragraph 3 above. In addition,
Tenant shall pay Rent Adjustments and Rent Adjustments Deposits pursuant to the
Lease.
6. PROPORTIONATE SHARE. Tenant's Proportionate Expense Share
shall remain 5.6627% and Tenant's Proportionate Tax Share shall remain 7.8993%,
subject to adjustment as provided in the Lease, except that from and after the
Second Substitute Premises Commencement Date, the Expense Stop shall be actual
2002 Operating Expenses (computed on a rentable square foot basis) and the Tax
Shop shall be actual 2002 taxes (computed on a non-exempt square foot basis)
7. SECURITY DEPOSIT. Concurrently with the execution of this
Third Amendment, Tenant shall deposit with Landlord the sum of $31,291.66 as the
Security Deposit. On June 1 of each year during the Term, Tenant shall deposit
with Landlord the amount needed to increase the Security Deposit to the product
of two (2) times the sum of (a) the monthly Installment of Base Rent plus for
the ensuing month (b) the estimated Expense Adjustment Amount for the ensuing
month, and (c) the estimated Tax Adjustment Amount for the ensuing month.
Article 25 if the Lease is hereby deleted in its entirety and replaced and
replaced with the following:
"ARTICLE 25 - SECURITY DEPOSIT
Tenant has deposited with Landlord the Security Deposit as
security for the prompt, full and faithful performance by Tenant of
each and every provision of this Lease and of all obligations of Tenant
hereunder.
A. USE. If Tenant fails to perform any of its obligations
hereunder, Landlord may use, apply or retain the whole or any part of
the Security Deposit for the payment of (i) and Rent or other sums of
money which Tenant may not have paid when due. (ii) any sum expended by
Landlord on Tenant's behalf in accordance with the provisions of the
Lease, ad/or (iii) any sum which Landlord may expend or be required to
expend by reason of Tenants default, including, without limitation, any
damage or deficiency in or from the reletting of the Premises as
provided in Article 22. The use, thereof, by Landlord shall not prevent
Landlord from exercising any other right or remedy provided by this
Lease or by law (it being intended that Landlord shall not first be
required to proceed against the Security Deposit) and shall not operate
as a limitation on any recovery to which Landlord may otherwise be
entitled. If any portion of the Security Deposit is used, applied or
retained by Landlord for the purposes set forth above, Tenant agrees,
within ten (10) days after the written demand therefore made by
Landlord, to deposit cash with the Landlord in an amount sufficient to
restore the Security Deposit to its original amount.
B. RETURN. If Tenant shall fully and faithfully comply
with all of the provisions of this Lease, the Security Deposit, or any
balance thereof, shall be returned to Tenant without interest after the
expiration of the Term or upon any later date after which Tenant has
vacated the Premises. In the absence of evidence satisfactory to
Landlord if any permitted assignment of the right to receive the
Security Deposit, or of the remaining balance thereof, Landlord may
return the same to the original Tenant, regardless of one or more of
the assignments of Tenants interest in this Lease or the Security
Deposit. In such event, upon the return of the Security Deposit, or the
remaining balance thereof to the original Tenant, Landlord shall be
completely relieved.
C. TRANSFER. Tenant acknowledges that Landlord has the
right to transfer or mortgage its interest in the Land and the Building
and in this Lease and Tenant agrees that in the event of any such
transfer or mortgage, Landlord shall have the right to transfer or
assign the
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Security Deposit to such transferee or mortgagee. Upon such transfer or
assignment, Landlord shall thereby be released by Tenant from all
liability or obligation for the return of such Security Deposit and
Tenant shall look solely to such transferee or mortgagee for the return
of the Security Deposit."
8. CHILLED WATER. Tenant has requested that Landlord supply
approximately fifteen (15) ton of chilled water to the supplement air
conditioning units which Tenant wishes to install to service the Second
Substitute Premises. A riser with a vertical chilled water line is available for
tap in on the twelfth floor. Connections to the chiller water rise shall be made
pursuant to plans approved by Landlord and by a contractor reasonably acceptable
to Landlord at Tenant's expense. Tenant agrees to pay monthly with the each
Monthly Installment of Base Rent a fee equal to Five Dollars ($5.00) per ton of
chilled water and Landlord will supply for Tenant's use approximately use
approximately fifteen (15) ton of chilled water. In addition, Tenant shall
comply with Landlord's rules and regulations with respect to the use of such
water chiller. Tenant acknowledges that Landlord shall not be liable if the
water chiller does not function as designed and that the provisions of Paragraph
6(D) of the Lease (Interruptions of Service) shall apply to the provision of
chilled water service.
9. RIDER 3. Rider 3 of the Lease is hereby deleted in its
entirety and replaced with Rider 3 attached hereto.
10. RIDER 7. Rider 7 attached hereto is hereby added to the Lease.
11. RIDER 8. Rider 7 attached hereto is hereby added to the Lease.
12. BROKERS. Landlord and Tenant each represent and warrant to the
other that it has not dealt with any brokers in connection with this Third
Amendment other than Xxxxxx X. Xxxxxxx, Inc. and The Xxxx Xxxxx Company, whose
commission shall be paid by Landlord. Landlord and Tenant each agrees to defend,
indemnify and hold the other harmless from and against any and all claims by any
other broker for fees, commissions or other compensation to the extent such
broker alleges to have been retained by the indemnifying party in connection
with the execution of this Third Amendment. The provisions of this Section 13
shall survive the expiration or termination of the Lease.
13. SEVERABILITY. If any provision of this Third Amendment or the
application thereof to any person or circumstance is or shall be deemed illegal,
invalid or unenforceable, the remaining provisions hereof shall remain in full
force and effect and this Third Amendment shall be interpreted as if such
illegal, invalid or unenforceable provision did not exist herein.
14. MISCELLANEOUS.
(a) Except to the extent stated or modified herein, all other term
and conditions of the Lease shall remain and continue in full force and effect
as originally written and shall apply to this Third Amendment as if set forth in
their entirety herein.
(b) Capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Lease.
(c) Time is of the essence of this Third Amendment and each
provision hereof.
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(d) This Third Amendment may be executed in counterparts, each of
which shall be deemed to be an original and all of which shall together
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to be executed by their duly authorized representatives, effective as of the
date hereinabove written.
LANDLORD: TENANT:
AMERICAN OSTEOPATHIC BROADVIEW MEDIA, INC., a
ASSOCIATION, an Illinois not-for-profit Minnesota corporation
corporation
By: ______________________ By: _______________________
Name:_____________________ Name:______________________
Title:____________________ Title:_____________________
Date:_____________, 2002 Date:_____________, 2002
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EXHIBIT A - SECOND SUBSTITUTE PREMISES
(FLOORPLAN)
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RIDER 3 - EXTENSION OPTION
Subject to the conditions set forth in paragraph 3 below, the Term of
this Lease may be extended, at the option of Tenant, for one addition of five
(5) (the "Renewal Term"). The Renewal Term shall be upon the same terms,
covenants and conditions contained in this Lease, excluding the provisions
modified hereby, and any reference in the Lease to the "Term" of the Lease shall
be deemed to include the Renewal Term and apply thereto, unless it is expressly
provided otherwise. Tenant shall have no extension option beyond the aforesaid
option. Any termination of this Lease during the Term of this Lease shall
terminate all rights under this Rider 3.
1. The Base Rent during the Renewal Term for any space then
constituting a portion of the Premises shall be at a rate
equal to the then prevailing market rate (including (i) market
concessions, if any, such as rent abatement, and (ii) Tenant;s
obligation to pay its Proportionate Share of Opening Expenses
and Taxes) for fuly credit worthy tenants for comparably
built-out space in the Building and other first class office
buildings in the vicinity of the Building as reasonably
determined by Landlord.
2. Such option to extend shall be exercised by Tenant delivering
an initial nonbonding written notice to Landlord not less than
twelve (12) full calendar months prior to the expiration of
the initial Term of this Lease. Thereafter, Landlord shall
calculate the prevailing market rate of the Premises, which
calculation shall reflect the market rate that would be
payable per annum for a term commencing on the first day of
the Renewal Term. Landlord shall deliver such calculation to
Tenant within thirty (30) days after Landlord receives
Tenant's initial non-binding written notice. Within five (5)
days after Landlord advises Tenant of its determination of the
prevailing market rate, Landlord and Tenant shall negotiate in
good faith to reach agreement on the prevailing market rate.
If Landlord and Tenant are unable to reach agreement on the
prevailing market rate within twenty-one (21) days after the
date negotiations commenced, then within seven (7) days
thereafter Landlord and Tenant shall each simultaneously
submit to the other in writing its good faith estimate of the
prevailing market rate, which estimate shall be a reduction to
writing of its final determination of the prevailing market
rate in the preceding negotiations and not a new position. If
the process of reducing the parties positions to writing does
not result in an agreement, the parties shall select, as an
arbitrator, a mutually acceptable independent MAI appraiser or
broker with experience in real estate activities, including at
least five (5) years experience in appraising or leasing
office space in the north Michigan Avenue area (a "Qualified
Appraiser"). If the parties cannot agree on a Qualified
Appraiser, then within ten (10) days thereafter the two
appointed Qualified Appraisers shall select a third Qualified
Appraiser and the third Qualified Appraiser shall be the
arbitrator and shall determine the prevailing market rate. If
one party shall fail to make such appointment within said
second seven (7) day period, then the Qualified Appraiser
chosen by the other party shall be the sole arbitrator. As
soon as practicable after his selection but in any case within
twenty-one (21) days, the arbitrator shall select one of the
two estimates of prevailing market rate submitted by Landlord
and Tenant, which shall be the one that is closer to the
prevailing market rate. The decision of the arbitrator as to
the prevailing market rate shall be submitted in writing to,
and be final and binding on, Landlord and Tenant. If the
arbitrator believes that expert advice would materially assist
him, he may retain one or more qualified persons, including
but not limited to, legal counsel, brokers, architects or
engineers, to provide such expert advice. The party whose
estimate is not chosen by the arbitrator shall pay the costs
of the arbitrator and any experts retained by the arbitrator.
Any fees of
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any counsel or expert engaged directly by Landlord or Tenant
shall, at option, give Landlord final binding written notice
of intent to exercise its option to extend no later than ten
(10) months prior to the expiration of the initial term.
3. Tenant's right to exercise its option to extend this Lease and
to extend this Lease pursuant to this Rider 3, is subject to
the following conditions: (i) that on the date that Tenant
delivers its initial non-binding written notice of its
election to exercise its option to extend, Tenant is not in
default under any of the term, covenants or conditions of the
Lease (after the expiration of any applicable notice and cure
periods) (ii) that on the date that Tenant delivers its final
binding written notice of its election to exercise its option
to extend, Tenant is not in default under any of the terms,
covenants, or conditions of the Lease without regard to any
notice or cure periods, and (iii) that on the date that
Tenant's extension option commences, Tenant is not in default
under any of the terms, covenants or conditions of the Lease,
after the expiration of any applicable notice or cure periods.
4. If Tenant fails to give its initial non-binding written notice
of intent or its final binding written notice of intent to
exercise its option to extend when due as provided herein,
Tenant will be deemed to have waived the option to extend
provided by this Rider 3 for all purposes.
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RIDER 7 - RIGHT OF FIRST REFUSAL
Tenant Shall have and is hereby granted of first refusal ion any
portion of the _________ rentable square feet currently vacant on the thirteenth
floor of the Building (collectively, the "ROFR Space"), which shall be exercised
in accordance with the procedures set forth below.
1. Each and every time after June1, 2002, Landlord proposes to
lease RPFR Space or any portion thereof to a third party,
Landlord shall give written notice thereof to Tenant (the
"Landlord's ROFR Notice") identifying that portion of the ROFR
Space that is to be leased (the "Subject's ROFR Space") along
with a copy of the proposed lease terms (except that Landlord
may eliminate references to the name and address of the
proposed tenant). Within ten (10) business days after receipt
of Landlord's ROFR Notice, Tenant shall deliver to Landlord
binding written notice of intent to lease the Subject ROFR
Space. If Tenant fails to deliver its binding notice within
such 10-day period, Tenant shall be deemed to have refused to
exercise its right of first refusal. After Tenant refuses of
is deemed to have refused to exercise its rights under this
Rider 7, Tenant shall have no further rights to the Subject
ROFR Space and such lease expires or is otherwise terminated
during the Term of the Lease, then Landlord shall not enter
into a new lease for the Subject ROFR Space without first
offering such space to Tenant pursuant to this provision.
If Tenant exercises its right of first refusal with respect to
the Subject ROFR Space within the time period allowed, such
space shall be added to the Premises for the lesser of the
term set forth in the Landlord's ROFR Notice or the remaining
Term of the Lease (including the Renewal Term, if any) on all
the terms, covenants and conditions specified in the
Landlord's ROFR Notice. Tenant's obligations to pay Base Rent
and Additional Rent with respect to such ROFR Space shall
begin on the date such ROFR Space is added to the Premises.
Any ROFR Space added to the Premises pursuant to this Rider 7
shall become a part of the Premises for all purposes of this
Lease, and any references in this Lease to the term "Premises"
shall be deemed to refer to and included such portion of the
ROFR Space, except as expressly provided otherwise in this
Lease.
2. Tenant's right to exercise its right of first refusal with
respect to the Subject ROFR Space pursuant to this Rider 7 is
subject to the following condition: that in the date that
Tenant delivers its binding written notice of its election to
exercise it right of first refusal, Tenant is not in default
under any of the terms, covenants or conditions for the Lease
without regard to notice or cure periods. Promptly after
Tenant's exercise of its right of first refusal pursuant to
this Rider 7, Landlord shall prepare an amendment to the Lease
to reflect changes in the size of the Premises, Base Rent,
Tenant's Proportionate Share and any other appropriate terms
and provision of the Lease, due to the addition of the Subject
ROFR Space. Tenant shall execute and return such an amendment
to the Lease within thirty (30) days after its submission to
Tenant. Landlord and Tenant shall negotiate in good faith
during the thirty (30) days after submission of the draft
amendment to Tenant to reach agreement on any issue raised
concerning the amendment.
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RIDER 8 - TERMINATION OPTION
Notwithstanding anything contained herein to the contrary but provided
that the Option Conditions (defined below) are satisfied, Tenant shall have the
option to terminate this Lease in its entirety (the "Termination Option"),
effective as of May 31, 2009 (the "Early Termination Date"), by delivering to
Landlord its binding written notice of intent to terminate this Lease (the
"Termination Notice") no less than twelve (12) months prior to the Early
Termination Date.
If Tenant delivers its Termination Notice in accordance with the terms and
conditions of this Rider 8, then, as of the Early Termination Date, this Lease
shall be null and void and of no further force and effect, except that Tenant
shall be and remain liable for the payment to Landlord of all Rent and other
sums and the performance of all obligation then due or accrued. In the event
that Tenant fail to vacate the Premises completely and surrender possession
thereof to Landlord in accordance with Artile16 of the Lease on or prior to the
Early Termination Date. Tenant shall be and remain liable for the performance
and keeping of all the covenants, agreements and obligations under the Lease to
be performed, paid and kept. Alternatively, at Landlord's option, any such
failure shall be treated as a holding over by Tenant, and Landlord shall be
entitled to all of its remedies therefore pursuant to Article 17 or 22 of this
Lease.
Tenant shall have the right to exercise the Termination Option only if
the following condition (the "Option Conditions") are fully satisfied:
1. Concurrent with the delivery of the Termination Notice, Tenant
shall pay to Landlord a fee equal to what the principal
balance remaining due in the Early Termination Date would have
been if the Expense Amount been loaned to Tenant on June 1,
2002 at an interest rate equal to ten percent (10%) per annum,
and had such loaned amount been repaid in monthly installments
of principal and interest in an amount that would completely
amortize such loaned amount on a straight line basis over ten
(10) years. The "Expense Amount" shall mean the sum of (i) the
Allowance, (ii) the Additional Improvement Allowance, (iii)
$57,727.20, and (iv) any brokerage commissions incurred by
Landlord in connection with the Third Amendment to Lease.
2. At the time Tenant delivers it Termination Notice there shall
be on uncured defaults by Tenant under the Lease (after the
expiration of any applicable notice and cure periods). If a
default shall occur at any time after delivery of the
Termination Notice and prior to the Early Termination Date,
such default shall be cured prior to the earlier to occur of
(i) the Early Termination Date and (ii) the end of any
applicable cure period for such default.
If, upon delivery of a Termination Notice, Tenant shall fail to fully
and completely comply with all of the Option Conditions prior to the Early
Termination Date, Landlord may declare any Termination Notice null and void, and
this Lease shall continue in full force and effects as if Tenant had not
exercised the Termination Option and Tenant shall forfeit all right and options
under this Rider 8.
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