Exhibit 10.6
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
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:
(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).
(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
(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
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 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 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 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 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 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,
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.
(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, 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.
(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 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
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 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 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.
(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 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 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 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 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 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 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 Tenants 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 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.
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 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.
(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 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 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
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, 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 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 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, 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 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, 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 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
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 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, 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.
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 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 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 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
(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
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 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, 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, 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
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 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 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 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 tothe 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 cents 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 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.
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.
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.
(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.
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, 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 LAN
EXHIBIT C-1
ALTERNATE EXPANSION LAN
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 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
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 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 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.
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
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
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.
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.
LANDLORD:
By:
Its:
ACKNOWLEDGED AND AGREED:
TENANT
By:
Name:
Title:
SECURED PARTY:
By:
Its:
EXHIBIT A
Legal Description of the Premises
