FIRST AMENDMENT TO LEASE EXHIBIT 10.48
THIS FIRST AMENDMENT TO LEASE (the First Amendment ) is
made, entered into, and effective as of the 1st day of November,
1995, by and between MERRILLVILLE PARTNERS LIMITED PARTNERSHIP,
an Illinois limited partnership ( Landlord ), as sole beneficiary
of Lake County Trust Company, as Trustee under Trust Agreement
dated June 30, 1987 and known as Trust No. 3737, and SPORTMART,
INC., a Delaware corporation ( Tenant ).
RECITALS:
A. By that certain Lease with an effective date of
September 1, 1987 (the Lease ), by and between Landlord and
Tenant, Landlord leased to Tenant certain premises consisting of
approximately 41,000 square feet of retail space (the Store , or
the Leased Premises ) in the shopping center commonly known as
Sportmart Plaza (the Shopping Center ) located at ▇▇▇▇ ▇▇▇▇
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B. Tenant desires to expand the Leased Premises by
approximately 9,000 square feet (the Additional Premises ), and
to perform other building and facade improvements for its own
benefit.
C. Landlord and Tenant are mutually desirous of amending
the Lease in order to, among other things: (i) reflect Landlord's
approval of Tenant's expansion of the Leased Premises, on the
terms and conditions set forth herein; (ii) modify the Original
Term of the Lease and to grant Tenant certain options to extend
the term of the Lease; (iii) modify the Basic Rent and
percentage rental payable under the Lease; and (iv) grant Tenant
a right of first refusal to purchase the Shopping Center, on the
terms and conditions set forth herein.
D. Initially capitalized terms not otherwise defined
herein shall have the meanings attributed to them in the Lease.
NOW, THEREFORE, in consideration of the foregoing Recitals,
the mutual covenants hereinafter set forth, and for other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by each party hereto, Landlord and Tenant
hereby agree as follows:
AGREEMENT
1. Additional Premises. Landlord hereby leases to Tenant
and Tenant hereby takes from Landlord, on the terms and
conditions set forth herein, the Additional Premises consisting
of approximately 9,000 square feet. The Additional Premises are
in the approximate location shown on the site plan (the Site
Plan ) attached hereto and made a part hereof as Exhibit A. A
list of Tenant's plans and specifications for the construction of
the Additional Premises, and the building and facade work to be
performed by Tenant, is attached hereto and made a part hereof as
Exhibit B. In accordance with Section 4.7 of the Lease, Landlord
hereby approves of Tenant's plans and specifications for the
construction of the Additional Premises, as well as Tenant's
plans and specifications for the building and facade work to be
performed by Tenant, all at Tenant's sole cost and expense.
2. Definition of Leased Premises. Notwithstanding
anything to the contrary contained in Section 1.1 of the Lease,
and except as is expressly set forth otherwise in this First
Amendment, from and after the Commencement Date (as hereinafter
defined), the term Leased Premises , as used in the Lease,
shall include and mean for all purposes (including, without
limitation, for purposes of determining Tenant's pro-rata share
of the Shopping Center s common area charges, real estate taxes,
and insurance) both the Leased Premises and the Additional
Premises leased herein.
3. Lease Term, Commencement Date and Rent Commencement
Date. Section 2.1 of the Lease is hereby deleted in its entirety
and replaced with the following new Section 2.1:
2.1 Notwithstanding anything in this Lease contained
to the contrary, the term of this Lease shall commence
on November 1, 1995 (the Commencement Date ), and
Tenant's obligation to commence paying Basic Rent (as
hereinafter defined) shall commence on September 1,
1996 (the Rent Commencement Date ). References to
"Term" of this Lease shall include the original term
(the Original Term ) of this Lease and any extension
of such Original Term. The Original Term of this Lease
shall begin on the Commencement Date and, unless
earlier terminated, shall expire on the Initial
Termination Date (as hereinafter defined). The
Initial Termination Date shall be the January 31st
next following the fifteenth (15th) anniversary of the
Commencement Date. For purposes of this Lease, the
term Lease Year shall have the following meaning: (a)
the first Lease Year shall extend from the Commencement
Date to the second (2nd) January 31st following the
Commencement Date (i.e., the first Lease Year shall be
the period from the Commencement Date through January
31, 1997); and (b) subsequent Lease Years shall
commence on February 1st and end on the following
January 31st.
4. Options to Extend. The following new Section 2.3 is
hereby incorporated into and made a part of the Lease:
2.3 The Tenant shall have the option to extend the
Original Term of this Lease for two (2) separate,
consecutive additional periods of five (5) years each
(each an "Option Period"), on all of the same terms and
conditions set forth in this Lease other than Basic
Rent. Each such option must be exercised, if at all,
by notifying the Landlord in writing, not less than six
(6) months prior to the expiration of the Original
Term, or of the then current Option Period, as the case
may be. Should Tenant neglect to exercise any of its
options by the applicable date specified above,
Tenant's right to exercise shall not expire until
thirty (30) days after notice from Landlord of Tenant's
failure to exercise the option. Basic Rent payable
during each Option Period is specified in Section 3.1.
5. Basic Rent and Percentage Rent. Effective as of the
Rent Commencement Date, the first grammatical paragraph of
Section 3.1(a) of the Lease shall be deleted in its entirety and
replaced with the following new paragraphs:
3.1(a) During the Term of this Lease from and after
the Rent Commencement Date, the annual Basic Rent shall
be as specified according to the schedule set forth
below, payable in monthly installments in the amount of
one-twelfth (1/12) of the annual Basic Rent. Basic
Rent shall be prorated for any partial calendar months
and years. Each monthly installment of rental shall be
payable in advance on or before the first (1st) day of
each calendar month during the Term. If the Rent
Commencement Date is other than the first day of a
calendar month, the first month's Basic Rent shall be
prorated accordingly and paid with the Basic Rent for
the first full month. All rent and other payments to
be made by Tenant to Landlord shall be sent to the
place to which notices are required to be sent, unless
otherwise directed by the Landlord in writing. For
purposes of computing Tenant's obligations based upon
leasable floor area, the term leasable floor area or
Leasable Floor Area shall mean all areas available,
or held for the exclusive use and occupancy of
occupants or future occupants of the Shopping Center,
measured from the interior surface of exterior walls
(and from extensions thereof in the case of openings)
and from the center of interior demising partitions.
Non-retail mezzanines and basements, if any, shall not
be included within the definition of Leasable Floor
Area.
The annual Basic Rent is as follows:
(1) Rent Commencement Date through the end of the
fifth (5th) Lease Year (Lease Years One (1)
through Five (5)): Seven and 25/100 Dollars
($7.25) per square foot of Leasable Floor
Area of the Leased Premises ($362,500.00
based on 50,000 square feet).
(2) Lease Years Six (6) through Ten (10): the
lesser of (i) Seven and 97/100 Dollars
($7.97) per square foot of Leasable Floor
Area of the Leased Premises ($398,500.00
based on 50,000 square feet), or (ii) the
annual Basic Rent payable during the
preceding sixty (60) month period, multiplied
by the CPI Increase (as defined below) for
the immediately preceding sixty (60) month
period.
(3) Lease Years Eleven (11) through Fifteen (15):
the lesser of (i) Eight and 77/100 Dollars
($8.77) per square foot of Leasable Floor
Area of the Leased Premises ($438,500.00
based on 50,000 square feet), or (ii) the
annual Basic Rent payable during the
preceding sixty (60) month period, multiplied
by the CPI Increase for the immediately
preceding sixty (60) month period.
(4) Lease Years Sixteen (16) through Twenty (20)
(the first Option Period): the lesser of (i)
Nine and 65/100 Dollars ($9.65) per square
foot of Leasable Floor Area of the Leased
Premises ($482,500.00 based on 50,000 square
feet), or (ii) the annual Basic Rent payable
during the preceding sixty (60) month period,
multiplied by the CPI Increase for the
immediately preceding sixty (60) month
period.
(5) Lease Years Twenty-One (21) through Twenty-
Five (25) (the second Option Period): the
lesser of (i) Ten and 61/100 Dollars ($10.61)
per square foot of Leasable Floor Area of the
square feet), or (ii) the annual Basic Rent
payable during the preceding sixty (60) month
period, multiplied by the CPI Increase for
the immediately preceding sixty (60) month
period.
In addition to such Basic Rent, from and after the Rent
Commencement Date Tenant agrees to pay to Landlord as
percentage rental ( Percentage Rent ) during the entire
Term of this Lease a sum of money equal to one and one-
half percent (1.5%) of Tenant s Gross Sales made from
the Leased Premises as shall exceed Ten Million and
No/100 Dollars ($10,000,000.00) per Lease Year. In
addition to the foregoing, with respect to the one year
period from the Rent Commencement Date through August
31, 1997 only, Tenant shall also pay to Landlord a sum
of money equal to two percent (2%) of Tenant s Gross
Sales made from the Leased Premises during said year as
shall exceed Six Million and No/100 Dollars
($6,000,000.00) but be less than Seven Million and
No/100 Dollars ($7,000,000.00).
For purposes of periodic Basic Rent increases under
this Section 3.1, the "CPI Increase" is calculated by
solving the following equation for CPII:
CPII = (((CPI divided by CPI ) - 1) x 5) + 1
end start
where: CPII = CPI Increase
CPI(end) = the CPI (defined below) for the
month of October immediately
preceding the effective date of the
applicable increase
CPI(start) = the CPI for the month of
October immediately preceding
the sixty (60) month period
preceding the effective date
of the applicable increase
Notwithstanding the foregoing, if the CPI(start) is
greater than the CPI(end) (i.e., the CPI has gone down
over the 60 month period preceding the rent adjustment
date in question), the CPI Increase shall be deemed to
be 1.00.
"CPI" shall mean the Consumer Price Index--United
States All Items for All Urban Consumers
(1982-1984=100) published by the Bureau of Labor
Statistics of the Department of Labor. If the manner
in which such Consumer Price Index as determined by the
Bureau of Labor Statistics shall be substantially
revised, an adjustment shall be made in such revised
index, which would produce results equivalent, as
nearly as possible, to those which would have been
obtained if the Consumer Price Index had not been so
revised. If the Consumer Price Index shall become
unavailable to the public, Landlord will substitute
therefor a comparable index based upon changes in the
cost of living or purchasing power of the consumer
dollar published by any other governmental agency, a
major bank or other financial institution, a university
or a recognized financial publication.
By way of example only of a calculation of the CPI
Increase and a rent adjustment under this Section
3.1(a), if the Commencement Date is November 1, 1995,
the CPI Increase for purposes of calculating the new
Minimum Rent payable beginning February 1, 2001 under
Section 3.1(a)(2) would be calculated by dividing the
October, 2000 CPI by the October, 1995 CPI. Assume
that the October 1995 CPI (CPI(start)) is 200 and the
October 2000 CPI (CPI(end)) is 220. The CPI Increase
would be 1.50 (((220 divided 200) - 1) x 5) + 1).
Since $10.875 per square foot (1.50 x $7.25) is more
than $7.97 per square foot, the annual Basic Rent
beginning February 1, 2001 would be $7.97 per square
foot. If, however, the October 2000 CPI were 201,
the CPI Increase would be 1.025 ((((201 divided 200)
-1) x 5) +1). Since $7.43125 per square foot (1.025 x
$7.25) is less than $7.97 per square foot, the
annual Basic Rent beginning February 1, 2001 would be
$7.43125 per square foot.
6. Notices. Article X of the Lease is hereby deleted in
its entirety and replaced with the following new Article X:
"ARTICLE X
Notices
Any notice to be given or served in connection with
this Lease shall be in writing and shall be served by
certified or registered mail, postage prepaid, or by
reputable overnight (or second business day) air
courier service which provides written evidence of
delivery, in either case addressed as specified below,
or to such other address as requested by either party
in writing. Service shall be deemed effective three
(3) days after deposit in the U.S. mail in accordance
herewith or on the next business day (or second
business day, if applicable) following delivery to such
air courier service in accordance herewith. Either
party by written notice to the other may designate two
additional parties to receive copies of notices sent to
it. Such designees may be changed by written notice.
If to Tenant: Sportmart, Inc.
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Attention: Legal Department
With copies of all notices to Tenant to
be sent to:
Sportmart, Inc.
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Attention: Senior Vice President,
Corporate Development
If to Landlord: Merrillville Partners Limited Partnership
c/o SM Property Management Co., Inc.
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Attention: Legal Department
With copies of all notices to Landlord to be
sent to:
Merrillville Partners Limited Partnership
c/o SM Property Management Co., Inc.
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Attention: Senior Vice President, Corporate
Development
and to Landlord's lender at its address
currently on file with Landlord and Tenant.
7. Right of First Refusal to Purchase the Shopping Center.
The following new Article XIII is hereby incorporated into and
made a part of the Lease:
ARTICLE XIII
Tenant Right of First Refusal
13.1 If during the Term of this Lease, Landlord
receives an offer to purchase the Leased Premises, the
legal parcel upon which the Leased Premises are located
or the Shopping Center (collectively referred to herein
as the "subject property") on terms and conditions
(collectively "terms") acceptable to it ("Third Party
Offer"), Landlord shall by written notice to Tenant
(which notice shall be accompanied by a copy of the
Third Party Offer and other relevant data) offer to
sell the subject property to Tenant on the terms
specified in the Third Party Offer. If within sixty
(60) days thereafter Tenant does not notify Landlord
that Tenant accepts Landlord's offer, Landlord, within
the ensuing six (6) month period shall be free to sell
the subject property to the party named in the Third
Party Offer on the terms specified in the Third Party
Offer; provided, however, that a failure by Tenant to
exercise such right of first refusal shall not relieve
Landlord of its obligations under this Article in
respect of subsequent Third Party Offers. If Tenant
elects to purchase the subject property on the terms
stated in the Third Party Offer, the Third Party Offer
shall constitute a binding agreement of purchase and
sale between Landlord and Tenant and govern their
subsequent performance, provided however, time of
performance shall be suitably extended to take into
account time elapsed between presentation to Tenant of
Landlord's offer and Tenant's acceptance. The term
"other relevant data" as used in this Section means
copies of all (a) information and materials previously
furnished by or on behalf of Landlord to Third Party
Offerer, (b) inspections and surveys made by or on
behalf of Third Party Offerer in respect of the subject
property and (c) other information as reasonably
requested by Tenant so as to ascertain subject property
value.
13.2 If the Third Party Offer provides for Landlord to
receive nonmonetary consideration from the offeror,
Tenant's right of first refusal shall be converted into
an option, to purchase the subject property free and
clear of all liens or encumbrances other than existing
leases (including this Lease) at 90% of its fair market
value (the "Option"), such Option to be exercised if at
within ten (10) business days following
determination of fair market value. If the parties
cannot agree on such fair market value within sixty
(60) days following provision to Tenant of the Third
Party Offer, fair market value shall be determined by
binding arbitration in accordance with the rules of the
American Arbitration Association. If purchase shall be
by exercise of the Option, closing shall occur within
sixty (60) days following its exercise at a time and
place as designated by Tenant; and the time and manner
of closing (including prorations), shall be in
accordance with local custom, provided however at
closing Landlord shall furnish Tenant with an ALTA
owners policy insuring marketable title to the subject
property as aforesaid in amount of the purchase price
(together with lender's policy if required by Tenant)
and further provided that if the parties are unable to
agree upon local custom, dispute shall be resolved by
binding arbitration in accordance with the rules of the
American Arbitration Association, and the time for
closing extended accordingly.
13.3 For purposes hereof a lease for a term of twenty
nine (29) years or more shall be deemed a sale."
8. Tenant's Right to Go Dark. The following new Article
XIV is hereby incorporated into and made a part of the Lease:
ARTICLE XIV
Tenant's Right to Go Dark
14.1 If , during the term of this Lease, Tenant
discontinues conducting business to the public in the
Leased Premises and vacates the Leased Premises ("goes
dark"), and the Leased Premises remain dark for a
period of four (4) months, Landlord may, at any time
after the expiration of such four (4) month period
while the Leased Premises remain dark, notify Tenant of
its intent to terminate this Lease, which termination
will be effective sixty (60) days after the receipt of
such notice; provided, however, that if Tenant notifies
Landlord within thirty (30) days after receipt of such
notice that all or a part of the Leased Premises will
be re-opened for business by Tenant as of a date
certain not more than ninety (90) days after the date
of Tenant's notice, Landlord's notice of termination
will be of no force and effect and this Lease shall
continue so long as Tenant does then timely reopen its
Leased Premises. Tenant is not deemed to have gone
dark if it closes the Leased Premises to the general
public (i) in order to prepare for sales or to take
stock of current inventory, provided that the same does
not result in Tenant's business being closed to the
public for more than ten (10) consecutive business
days, or for more than twenty (20) total business days,
in any consecutive twelve (12) month period; (ii) in
connection with the performance of any construction,
alteration, repair or restoration work on the Leased
Premises so long as the same is diligently pursued by
Tenant and does not result in Tenant's business being
closed to the public for more than two hundred forty
(240) days in any consecutive twelve (12) month period;
(iii) to accommodate a change in use of the Leased
Premises or pursuant to an assignment or subletting of
the Leased Premises, provided that the same does not
result in the Leased Premises being closed to the
public for more than one hundred fifty (150) days in
any consecutive twelve (12) month period; or (iv) while
a condition of force majeure prevents operation and for
a reasonable time thereafter."
9. Full Force. Except as hereby expressly or by necessary
implication modified or amended by this First Amendment, the
parties hereto acknowledge and agree that all of the terms and
provisions of the Lease shall be and remain in full force and
effect. In the event of any conflict or inconsistency between
the terms of the Lease and this First Amendment, the terms of
this First Amendment shall govern and control.
10. No Further Amendment. This First Amendment may not be
amended, waived or modified in any respect unless the same shall
be in writing and signed by both parties. This First Amendment
constitutes the entire agreement of the parties and supersedes
all prior agreements, arrangement and contracts, whether oral or
written, concerning the subject matter hereof.
11. Counterparts. This First Amendment may be executed in
multiple counterparts, each of which shall be deemed an original
and all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, Landlord and Tenant have executed this
First Amendment as of the date first above written.
LANDLORD:
MERRILLVILLE PARTNERS LIMITED
PARTNERSHIP, an Illinois limited partnership
By: Merrillville Corp., an Illinois Corporation,
its General Partner
By: /S/ ▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: VICE PRESIDENT
TENANT:
SPORTMART, INC.,
a Delaware corporation
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: PRESIDENT