EXHIBIT 10.5
INDUSTRIAL BUILDING LEASE
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TERM OF LEASE
Beginning Ending
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11/10/99 11/10/2009
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MONTHLY RENT DATE OF LEASE LOCATION OF PREMISES
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▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
$17,403.65 11/10/99 [See description of Leased Premises
on Exhibit A attached hereto
and made a part hereof]
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PURPOSE
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General office and warehouse use.
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LESSEE LESSOR
NAME CTI Industries Corporation NAME Pepper Road, Inc.
ADDRESS ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ADDRESS 401 ▇. ▇▇▇▇▇▇▇ St., Ste. 1302
CITY ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ CITY ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
In consideration of the mutual covenants and agreements herein stated, Lessor
hereby leases to Lessee and Lessee hereby leases from Lessor solely for the
above purpose the premises designated above (the "Premises"), together with the
appurtenances thereto, for the above Term.
LEASE COVENANTS AND AGREEMENTS
1. RENT. Lessee shall pay Lessor or Lessor's agent as rent for the Premises
the sum stated above, monthly in advance, until termination of this Lease,
at Lessor's address stated above or such other address as Lessor may
designate in writing.
2. UTILITY CHARGES. Lessee will pay, in addition to the specified rent above,
all water, telephone, gas, electric light and power bills taxed, levied or
charged on the Premises, for and during the term of this Lease. In case
said bills for water, rent, gas, electric light and power shall not be
paid by Lessee when due, Lessor shall have the right to pay the same, and
any amounts so paid, together with any sums paid by Lessor to keep the
Premises in a clean and healthy condition, are declared to be additional
rent and shall be payable by Lessee with the next installment of rent due
thereafter.
3. PAYMENT BY LESSEE. In addition to the rent to be paid by Lessee for the
Premises, Lessee shall pay as additional rent for the Premises, all real
estate taxes, special assessment taxes, sewer charges, water rates and all
other impositions, ordinary and extraordinary, of every kind and nature
whatsoever, which are billed to the Premises or for any improvements made
or placed on the Premises by Lessee, which Lessor shall become obligated
to pay during the term of this Lease ("Impositions").
4. INTEREST ON LATE PAYMENTS. Each and every installment of rent, and each
and every payment of other charges under this Lease which shall not be
paid within ten (10) days of the date due, shall bear interest at the
lower of either the highest rate permitted by law or twenty percent (20%)
per annum from the date when the same is payable under the terms of this
Lease until the same shall be paid.
5. RULES AND REGULATIONS. Lessee shall observe and comply with all reasonable
rules and regulations as may be required by Lessor for the necessary,
proper and orderly care of the Premises.
6. ASSIGNMENT; SUBLETTING. Lessee shall not assign this Lease or permit by
any act or default the transfer of any of Lessee's interest under this
Lease by operation of law, nor shall Lessee offer the Premises or any part
thereof for lease or sublease, or permit the use thereof for any purpose
other than as above mentioned, without in each case the written consent of
Lessor. Lessor hereby acknowledges that Lessee is current leasing portions
of the Premises and approves of the continuation of the following lease on
its existing terms: Industrial Building Lease dated September 28, 1998,
with Kroy, L.L.C. d/b/a Mac's Snow Removal, expiring on May 22, 2000.
Lessor also acknowledges that Lessee is currently negotiating an office
lease with Tri-County Physicians and Lessor confirms that it will approve
of any lease or sublease entered into between Lessee and Tri-County
regarding office space on the Premises.
7. INSURANCE. Lessee shall procure and maintain policies of insurance at its
own cost and expense throughout the term of this Lease insuring:
7.1 Lessor and Lessee from all claims, demands or actions for injury
to or death of any person, in an amount of not less than $1,000,000 for
injury to or death of more than one person in any one occurrence in an
amount of not less than $1,000,000 and for damage to property in an amount
of not less than $2,400,000 made by, or on behalf of, any person or
persons, firm or corporation arising from, related to or connected with
the Premises or any act or omission of Lessee together with an umbrella
policy of $15,000,000. Said insurance shall comprehend full coverage of
the indemnity set forth in Paragraph 10 hereof;
7.2 Lessor and Lessee with the same limits of coverage as provided
in subsection 7.1 for loss or damage by boiler or internal explosion or
breakdown of boilers, if applicable;
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7.3 Lessee from all worker's compensation claims;
7.4 Lessor and Lessee against breakage of all plate glass utilized
in the Building located on the Premises caused by Lessee; and
7.5 Such other insurance, and in such amounts as may from time to
time be reasonably required by Lessor and which is customary for buildings
and operations that are similar to the Premises and Lessee's operations
thereon.
8. FORM OF INSURANCE. The insurance set forth in Section 7 above shall be
placed with reputable companies and the form, substance and amount shall
be (even to the extent inconsistent with the foregoing if requested by a
mortgagee of Lessor) satisfactory to Lessor and any mortgagee of Lessor.
Such insurance shall not be subject to cancellation or material change,
except after at least thirty (30) days's prior written notice to Lessor
and any mortgagee of Lessor. The original insurance policies (or
certificates thereof satisfactory to Lessor) together with satisfactory
evidence of payment of the premiums thereon shall be deposited with Lessor
at the commencement date of this Lease and renewals thereof not less than
thirty (30) days prior to the end of the term of each such coverage.
9. WAIVER OF CERTAIN CLAIMS. Lessee waives all claims it may have against
Lessor, its beneficiaries, agents and employees for damage or injury to
persons or property sustained by Lessee or any persons claiming through
Lessee or by any occupant of the Premises, or by any other person,
resulting directly or indirectly from fire or other casualty, or any
existing or future condition, defect, matter or thing in or about the
Premises or any part thereof, or from any equipment or appurtenance
therein or thereon, or from any accident in or about the Premises or from
any occurrence, act, negligence or omission of any tenant, subtenant or
other occupant of the Premises or any part thereof or of any other person,
including Lessor, to the extent permitted by law. This Section 9 shall
include, but not be limited to, damage caused by water, snow, frost,
steam, excessive heat or cold, sewage, gas, odors, or noise, broken glass,
sprinklers, flooding of basement or caused by bursting or leakage of pipes
or plumbing fixtures, and shall apply equally whether any such damage
results from the act or neglect of Lessee or of other tenants, or
occupants of any part of the Premises or of any other person, including
Lessor to the extent permitted by law, or whether such damage be caused by
or result from any thing or circumstance above mentioned or referred to,
or to any other thing or circumstance whether of a like nature or of a
wholly different nature. All personal property belonging to Lessee or any
occupant of the Premises that is in or on any part of the Premises shall
be there at the risk of Lessee or of such other person only, and Lessor
shall not be liable for any damage thereto or for the theft or
misappropriation thereof.
10. INDEMNITY FOR ACCIDENTS. Lessee covenants and agrees that it will protect
and save and keep the Lessor forever harmless and indemnified against and
from any penalty or damages or charges imposed for any violation of any
laws or ordinances, whether occasioned
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by the neglect of Lessee or those holding under Lessee, and that Lessee
will at all times protect, indemnify and save and keep harmless Lessor
against and from any and all loss, cost, damage or expense, arising out of
or from any accident or other occurrence whatsoever on or about the
Premises, causing injury to any person or property whomsoever or
whatsoever and will protect, indemnify and save and keep harmless the
Lessor against and from any and all claims and against and from any and
all loss, cost, damage or expense arising out of any failure of Lessee in
any respect to comply with and perform all the requirements and provision
hereof.
11. HAZARDOUS MATERIALS. Lessor and Lessee agree as follows with respect to
the existence or use of "Hazardous Material" on the Premises or otherwise
in the Building located thereon:
11.1 Lessee, at its sole cost and expense, shall comply with all
laws, statutes, ordinances, rules and regulations of any governmental
authority having jurisdiction concerning environmental, health and safety
matters, including, but not limited to, any discharge into the air,
surface water, sewers, soil or groundwater of any hazardous material [as
defined in Section 11.3 below], whether within or outside the Building
located on the Premises.
11.2 It shall not be unreasonable for Lessor to withhold its consent
to any proposed assignment or sublease pursuant to Paragraph 6 if (i) the
proposed assignee's or sublessee's anticipated use of the Premises
involves the generation, storage, use, treatment or disposal of Hazardous
Material, or (ii) the proposed assignee or sublease is subject to an
enforcement order issued by any governmental authority in connection with
the use, disposal or storage of a Hazardous Material.
11.3 As used in this Lease, the term "Hazardous Materials" means any
hazardous or toxic substance, material or waste which is or becomes
regulated by any local government authority, the State of Illinois or the
United States Government. The term "Hazardous Material" includes, without
limitation, any material or substance which is (i) designated as a
"hazardous substance" pursuant to Section 1311 of the Federal Water
Pollution Control Act (33 U.S.C. Section 1317), (ii) defined as a
"hazardous waste" pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C.
Section 6903), or (iii) defined as a "hazardous substance" pursuant to
Section 101 of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C. Section 9601) and
asbestos.
11.4 Any increase in the premiums for necessary insurance on the
Premises which arises from Lessee's use and/or storage of these materials
shall be solely at Lessee's expense. Lessee shall procure and maintain at
its sole expense such additional insurance as may be necessary to comply
with any requirement of any Federal, State or local government agency with
jurisdiction.
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12. SUBORDINATION OR SUPERIORITY. The rights and interest of Lessee under this
Lease shall be subject and subordinate to any mortgage or first trust deed
that has been or hereafter may be placed upon the Premises or the Building
located thereon by Lessor and to any and all advances to be made
thereunder, and to the interest thereon, and all renewals, replacements
and extensions thereof. Lessee shall execute and deliver whatever
instruments may be reasonably required for such purposes within five (5)
days after demand in writing and in conjunction with any such request.
13. RIGHTS RESERVED TO LESSOR. Without limiting any other rights reserved or
available to Lessor under this Lease, at law or in equity, Lessor, on
behalf of itself, its beneficiaries, its agents and assigns reserves the
following rights to be exercised at Lessor's election:
13.1 To change the street address of the Premises;
13.2 To inspect the Premises during business hours after giving
reasonable notice and to make repairs, additions or alterations to the
Premises, at Lessor's or Lessee's expense as herein otherwise provided,
specifically including, but without limiting the generality of the
foregoing, to make repairs, additions or alterations within the Premises
to mechanical, electrical, and other facilities;
13.3 To show the Premises to prospective purchasers, mortgagees, or
other persons having a legitimate interest in viewing the same, and to
persons wishing to rent the Premises;
13.4 To place and maintain the usual "For Rent" or "For Sale" signs
in, on or about the Premises; and
13.5 During the last ninety (90) days of the Lease term, if during
or prior to that time Lessee vacates the Premises, to decorate, remodel,
repair, alter or otherwise prepare the Premises for new occupancy.
Lessor may enter upon the Premises during business hours for any and all
of said purposes and may exercise any and all of the foregoing rights
hereby reserved, without such entering being deemed an eviction or
disturbance of Lessee's use or possession of the Premises, and without
being liable in any manner to Lessee.
14. SURRENDER AND REMOVAL OF TENANT'S PROPERTY. Upon the termination of this
Lease, whether by forfeiture, lapse of time or otherwise, or upon the
termination of Lessee's right to possession of the Premises, Lessee will
at once surrender and deliver up the Premises, together with all
improvements thereon, to Lessor in the same condition and repair as of the
commencement date of this Lease, reasonable wear and tear excepted. All
alterations, additions, hardware, non-trade fixtures and all improvements,
temporary or permanent, in or upon the Premises placed there by Lessee
shall become Lessor's property
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and shall remain upon the Premises upon such termination of this Lease by
lapse of time or otherwise, without compensation or allowance or credit to
Lessee. If Lessor requests removal of said additions, hardware, non-trade
fixtures and improvements, Lessee, at Lessee's sole cost and expense,
shall remove the same and repair any damage to the Premises caused by such
removal, and, if Lessee does not make such removal at said termination of
this Lease, or within ten (10) days after such request, whichever is
later, Lessor may (i) remove and deliver the same to any other place of
business of Lessee or warehouse, and Lessee shall pay the cost of such
removal, repairs to the Premises, delivery and warehousing to Lessor on
demand, or (ii) treat such trade fixtures as having been conveyed to
Lessor with this Lease by a ▇▇▇▇ of Sale, without further payment, whether
by set-off, credit allowance or otherwise, by Lessor or Lessee.
15. NO WASTE OR MISUSE. Lessee shall restore the Premises to Lessor, with
glass of like kind and quality in the several doors and windows thereof,
entire and unbroken, as is now therein, and will not allow any waste of
water or misuse or neglect the water or light fixtures on the Premises,
and will pay all damages to the Premises caused by such waste or misuse.
16. TERMINATION; ABANDONMENT; RE-ENTRY; RELETTING. At the termination of this
Lease, by lapse of time or otherwise, Lessee agrees to yield up immediate
and peaceable possession to Lessor, and failing so to do, to pay as
liquidated damages, for the whole time such possession is withheld, the
sum of two and one-half times the per diem rent then or most recently due
under this Lease per day, and it shall be lawful for Lessor or its legal
representatives at any time thereafter, without notice, to re-enter the
Premises or any part thereof, either with or (to the extent permitted by
law) without process law, and to expel, remove and put out Lessee or any
person or persons occupying the same, using such force as may be necessary
so to do, and to repossess and enjoy the Premises again as before this
Lease, without prejudice to any remedies which might otherwise be used for
arrears of rent or preceding breach of covenants. In case the Premises
shall be abandoned, deserted, or vacated, and remain unoccupied five days
consecutively, Lessee hereby authorizes and requests the Lessor as
Lessee's agent to re-enter the Premises and remove all articles found
therein, place them in some regular warehouse or other suitable storage
place, at the sole cost and expense of Lessee, and proceed to re-rent the
Premises at the Lessor's option and discretion and apply all money so
received after paying the expenses of such removal toward the rent
accruing under this Lease. This request shall not in any way be construed
as requiring any compliance therewith on the part of Lessor, except as
required by Illinois statute. If Lessee shall fail to pay the rent at the
times, place and in the manner above provided, and the same shall remain
unpaid five days after the day whereon the same should be paid, Lessor by
reason thereof shall be authorized to declare the Lease Term ended, and
Lessee hereby expressly waives all right or rights to any notice or demand
under any Illinois statute relative to forcible entry or detainer or
landlord and tenant, and agrees that the Lessor, its agents or assigns may
begin suit for possession or rent without notice or demand.
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17. REMOVED PROPERTY. In the event of re-entry and removal of the articles
found on the Premises as hereinbefore provided, Lessee hereby authorizes
and requests Lessor to sell the same at public or private sale with or
without notice, and the proceeds thereof, after paying the expenses of
removal, storage and sale to apply towards the rent reserved herein,
sending the overplus, if any, to Lessee upon demand.
18. CONFESSION OF JUDGMENT. If default be made in the payment of rent, or any
installment thereof, as herein provided, Lessee hereby irrevocably
constitutes any attorney of any Court of Record in this State, attorney
for Lessee and in Lessee's name, from time to time, to enter the
appearance of Lessee, to waive the issuance of process and service
thereof, to waive trial by jury, and to confess judgment in favor of
Lessor against Lessee for the amount of rent which may be then due
hereunder, together with costs of suit and a reasonable sum for
plaintiff's attorneys fees in or about the entry of such judgment, and to
waive and release all errors and right of appeal from any such judgment,
and to consent to an immediate execution thereon.
19. OPTION TO TERMINATE. In the event that Lessor, its successors, attorneys
or assigns shall desire to regain the possession of the Premises herein
described and terminate this Lease for any reason, Lessor shall have the
option of so doing upon giving Lessee thirty (30) days notice of Lessor's
election to exercise such option.
20. RELATIONSHIP OF PARTIES. Nothing contained herein shall be deemed or
construed by the parties hereto, nor by any third party, as creating the
relationship of principal and agent, partnership or joint venture by the
parties hereto, it being understood and agreed that no provisions
contained in this Lease nor any acts of the parties hereto shall be deemed
to create any relationship other than the relationship of lessor and
lessee.
21. CORPORATE STANDING AND AUTHORITY. Lessee hereby represents and warrants to
Lessor that Lessee is duly incorporated and is in good standing under the
laws of said state or states as applicable, and is authorized to do
business in the State of Illinois and has due authority to execute this
Lease.
22. TIME OF ESSENCE. Time is of the essence of this Lease, and all provisions
herein relating thereto shall be strictly construed.
23. GOVERNING LAW. This Lease shall be construed and enforced in accordance
with the laws of the State of Illinois.
24. NO RENT DEDUCTION OR SET OFF. Lessee's covenant to pay rent is and shall
be independent of each and every other covenant of this Lease. Lessee
agrees that any claim by Lessee against Lessor shall not be deducted from
rent nor set off against any claim for rent in any action.
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25. RENT AFTER NOTICE OR SUIT. It is further agreed, by the Parties hereto,
that after the service of notice or the commencement of a suit or after
final judgment for possession of the Premises, Lessor may receive and
collect all rents due, and the payment of said rent shall not waive or
affect said notice, said suit, or said judgment.
26. PAYMENT OF COSTS. Lessee will pay and discharge all reasonable costs,
attorney's fees and expenses that shall be made and incurred by Lessor in
enforcing the covenants and agreements of this Lease.
27. RIGHTS CUMULATIVE/WAIVER. The rights and remedies of Lessor under this
Lease are cumulative. No failure by Lessor to exercise any of its rights
hereunder or to insist upon strict compliance with respect to any
obligation hereunder, and no custom or practice of the Parties at variance
with the terms hereof shall constitute a waiver by either Party to demand
exact compliance with the terms of this Lease. Waiver by either Party of
any particular default by the other Party shall not affect or impair such
Party's rights in respect to any subsequent default of the same or of a
different nature, nor shall any delay or omission of either Party to
exercise any rights arising from any default by the other Party affect or
impair such Party's rights as to such default or any subsequent default.
28. ENTIRE AGREEMENT. All understandings and agreements, oral or written,
heretofore made between the parties hereto are merged in this Lease, which
alone fully and completely recites the agreement between Lessor, its
agents and beneficiaries, and Lessee.
29. SEVERABILITY. Wherever possible each provision of this Lease shall be
interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Lease shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Lease.
30. AMENDMENTS MUST BE IN WRITING. None of the covenants, terms or conditions
of this Lease, to be kept and performed by either Party, shall in any
manner be altered, waived, modified, changed or abandoned, except by a
written instrument, duly signed, acknowledged and delivered by the party
against which such modification is being asserted.
31. PLURALS; SUCCESSORS. The words "Lessor" and "Lessee" wherever used in this
Lease shall be construed to mean Lessors or Lessees in all cases where
there is more than one Lessor or Lessee, and to apply to individuals, male
or female, or to firms or corporations, as the same may be described as
Lessor or Lessee herein, and the necessary grammatical changes shall be
assumed in each case as though fully expressed. All covenants, promises,
representations and agreements herein contained shall be binding upon,
apply and inure to the benefit of Lessor and Lessee and their respective
heirs, legal representatives, successors and assigns.
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This Lease has been executed by one or more corporations, and such
executions have been authorized by a duly adopted resolution of the Board of
Directors of such corporations.
This Lease consists of 9 pages numbered 1 through 9.
9
WITNESS the hands and seals of the Parties hereto, on the Date of the Lease
stated above.
LESSEE: CTI INDUSTRIES CORPORATION LESSOR: PEPPER ROAD, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------ -----------------------------------
Its: President Its: Vice-President
ASSIGNMENT BY LESSOR
On this ___________________, 19______, for value received, Lessor hereby
transfers, assigns and sets over to _______________________, all right, title
and interest in and to the above Lease and the rent thereby reserved, except
rent due and payable prior to _____________________, 19______.
__________________________________(SEAL)
__________________________________(SEAL)
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EXHIBIT A
DESCRIPTION OF LEASED PREMISES
All of the real property commonly known as ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, including all Buildings and parking facilities located
thereon, such property bearing the following legal description:
THAT PART OF THE SOUTH 1/2 OF SECTION 21, TOWNSHIP 43 NORTH, RANGE 9, EAST
OF THE THIRD PRINCIPAL MERIDIAN, DESCRIBED AS FOLLOWS: COMMENCING AT A
POINT IN THE EAST LINE OF THE WEST 1/2 OF THE SOUTHEAST 1/4 OF SAID
SECTION 21, 983.62 FEET NORTH OF THE SOUTHEAST CORNER THEREOF; THENCE WEST
PARALLEL WITH THE SOUTH LINE OF SAID SOUTHEAST 1/4, 699.98 FEET; THENCE
NORTHERLY 332.59 FEET TO A POINT 323.17 FEET NORTH AND 648.28 FEET WEST OF
THE POINT OF BEGINNING; THENCE EASTERLY PARALLEL TO THE SOUTH LINE OF SAID
SOUTHEAST 1/4, 648.28 FEET TO THE EAST LINE OF THE WEST 1/2 OF SAID
SOUTHEAST 1/4; THENCE SOUTH 323.17 FEET TO THE POINT OF BEGINNING,
(EXCEPTING THEREFROM THE EAST 33 FEET THEREOF) IN LAKE COUNTY, ILLINOIS.