Exhibit 10.7
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Lease
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Between
Focal Communications Corporation
(Tenant)
and
Teachers Insurance and Annuity
Association of America
(Landlord)
Lease
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Table of Contents
Page
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1. LEASE AGREEMENT...............................................................1
2. RENT..........................................................................2
A. Types of Rent............................................................2
(1) Base Rent...........................................................2
(2) Operating Cost Share Rent...........................................2
(3) Tax Share Rent......................................................2
(4) Additional Rent.....................................................2
(5) Rent................................................................2
B. Payment of Operating Cost Share Rent and Tax Share Rent..................2
(1) Payment of Estimated Operating Cost Share Rent and Tax Share
Rent................................................................2
(2) Correction of Operating Cost Share Rent.............................3
(3) Correction of Tax Share Rent........................................3
C. Definitions..............................................................3
(1) Taxes...............................................................3
(3) Fiscal Year.........................................................6
D. Computation of Base Rent and Rent Adjustments............................6
(1) Prorations..........................................................6
(2) Default Interest....................................................6
(3) Intentionally deleted...............................................6
(4) Books and Records...................................................6
(5) Miscellaneous.......................................................7
3. PREPARATION AND CONDITION OF PREMISES; POSSESSION AND SURRENDER OF
PREMISES......................................................................7
A. Condition of Premises....................................................7
B. Tenant's Possession......................................................7
C. Maintenance..............................................................7
D. Ownership of Improvements................................................7
E. Removal at Termination...................................................8
4. PROJECT SERVICES..............................................................8
A. Heating and Air Conditioning.............................................8
B. Elevators................................................................8
C. Electricity..............................................................8
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E. Janitorial Service................................................ 9
F. Telephone Service................................................. 9
G. Natural Gas....................................................... 9
H. Interruption of Services.......................................... 9
5. ALTERATIONS AND REPAIRS................................................. 10
A. Landlord's Consent and Conditions................................. 10
B. Electronic Systems................................................ 11
C. Damage to Systems................................................. 11
D. No Liens.......................................................... 11
6. USES OF PREMISES.................................................. 11
7. GOVERNMENTAL REQUIREMENTS AND BUILDING RULES............................ 13
8. WAIVER OF CLAIMS; INDEMNIFICATION; INSURANCE............................ 14
A. Waiver of Claims.................................................. 14
B. Indemnification................................................... 14
C. Insurance Coverage................................................ 14
D. Insurance Certificates............................................ 14
9. FIRE AND OTHER CASUALTY................................................. 15
A. Termination....................................................... 15
B. Restoration....................................................... 15
10. EMINENT DOMAIN.......................................................... 15
11. RIGHTS RESERVED TO LANDLORD............................................. 15
A. Name.............................................................. 15
B. Signs............................................................. 16
C. Window Treatments................................................. 16
D. Service Contracts................................................. 16
E. Keys.............................................................. 16
F. Access............................................................ 16
G. Preparation for Reoccupancy....................................... 16
H. Heavy Articles.................................................... 16
I. Show Premises..................................................... 16
J. Restrict Access................................................... 16
K. Intentionally deleted............................................. 16
L. Use of Lockbox.................................................... 16
M. Repairs and Alterations........................................... 17
N. Landlord's Agents................................................. 17
O. Building Services................................................. 17
P. Other Actions..................................................... 17
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12. TENANT'S DEFAULT...................................................... 17
A. Rent Default..................................................... 17
B. Assignment/Sublease or Hazardous Substances Default.............. 17
C. Other Performance Default........................................ 17
D. Credit Default................................................... 18
13. LANDLORD REMEDIES..................................................... 18
A. Termination of Lease or Possession............................... 18
B. Lease Termination Damages........................................ 18
C. Possession Termination Damages................................... 18
D. Landlord's Remedies Cumulative................................... 19
E. WAIVER OF TRIAL BY JURY.......................................... 19
F. Litigation Costs................................................. 19
14. SURRENDER............................................................. 19
15. HOLDOVER.............................................................. 19
16. SUBORDINATION TO GROUND LEASES AND MORTGAGES.......................... 20
A. Subordination.................................................... 20
B. Termination of Ground Lease or Foreclosure of Mortgage........... 20
C. Security Deposit................................................. 20
D. Notice and Right to Cure......................................... 20
E. Definitions...................................................... 20
17. ASSIGNMENT AND SUBLEASE............................................... 21
A. Consent Required................................................. 21
C. Chance of Management or Ownership................................ 22
D. Excess Payments.................................................. 22
18. CONVEYANCE BY LANDLORD................................................ 22
19. ESTOPPEL CERTIFICATE.................................................. 22
20. SECURITY DEPOSIT...................................................... 22
21. FORCE MAJEURE......................................................... 23
22. Intentionally deleted................................................. 23
23. NOTICES............................................................... 23
A. Landlord......................................................... 24
B. Tenant........................................................... 24
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24. QUIET POSSESSION...................................................... 24
25. REAL ESTATE BROKER.................................................... 24
26. MISCELLANEOUS......................................................... 24
A. Successors and Assigns........................................... 24
B. Date Payments Are Due............................................ 24
C. Meaning of "Landlord", "ReEntry, "including" and "Affiliate"..... 25
D. Time of the Essence.............................................. 25
E. No Option........................................................ 25
F. Severability..................................................... 25
G. Governing Law.................................................... 25
H. Lease Modification............................................... 25
I. No Oral Modification............................................. 25
J. Landlord's Right to Cure......................................... 25
K. Cautions......................................................... 25
M. Landlord's Enforcement of Remedies............................... 25
N. Entire Agreement................................................. 26
O. Landlord's Title................................................. 26
P. Light and Air Rights............................................. 26
Q. Consents......................................................... 26
R. Singular and Plural.............................................. 26
S. No Recording by Tenant........................................... 26
T. Exclusivity...................................................... 26
U. No Construction Against Drafting Party........................... 26
V. Survival......................................................... 26
W. Rent Not Based on Income......................................... 26
X. Building Manager and Service Providers........................... 26
Y. Interest on Late Payments........................................ 27
27. UNRELATED BUSINESS INCOME............................................. 27
28. HAZARDOUS SUBSTANCES.................................................. 27
29. EXCULPATION........................................................... 27
30. BASE RENT............................................................. 27
32. TENANT'S IMPROVEMENTS PRIOR TO THE COMMENCEMENT DATE................... 30
APPENDIX A - PLAN OF THE PREMISES
APPENDIX A-1 - LOCATION OF GENERATOR
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APPENDIX B - CLEANING SCHEDULE
APPENDIX C - RULES AND REGULATIONS
APPENDIX D - [Intentionally Deleted]
APPENDIX E - MORTGAGES CURRENTLY AFFECTING THE PROJECT
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LEASE
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THIS LEASE (the "Lease") is made as of December 31, 1996 between Teachers
Insurance and Annuity Association of America, a New York corporation (the
"Landlord") and the Tenant as named in the Schedule below. The term "Project"
means the building (the "Building") known as "200 North LaSalle Street" and the
land (the "Land") located at the ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇. "Premises" means that part of the Project leased to Tenant
described in the Schedule and outlined on Appendix A.
The following schedule (the "Schedule") is an integral part of this Lease.
Terms defined in this Schedule shall have the same meaning throughout the Lease.
SCHEDULE
1. TENANT: Focal Communications Corporation.
2. PREMISES: A portion of the lower level.
3. RENTABLE SQUARE FEET OF THE PREMISES: Approximately 10,236 square feet.
4. TENANT'S PROPORTIONATE SHARE: 1.6438% (based upon a total of 622,667
rentable square feet in the Building).
5. SECURITY DEPOSIT: A Letter of Credit with a face amount of $115,000.
6. TENANT'S IMPROVEMENTS: See Section 32.
7. TENANT'S ADDRESS FOR NOTICES BEFORE POSSESSION DATE: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
8. TENANT'S REAL ESTATE BROKER FOR THIS LEASE: The ▇▇▇▇▇▇▇▇▇ Company.
9. COMMENCEMENT DATE: See Section 32.
10. TERMINATION DATE/TERM: January 31, 2006; Ten (10) years after the
Commencement Date.
11. BASE RENT: See Section 30.
12. RENT ABATEMENT: Two (2) months of Base Rent.
13. BASE OPERATING COSTS: Operating Costs for the year 1997.
14. BASE TAXES: Taxes for the year 1997.
15. GUARANTOR: None.
1. LEASE AGREEMENT. On the terms stated in this Lease, Landlord leases
the Premises to Tenant, and Tenant leases the Premises from Landlord, for the
Term beginning on the Commencement Date and ending on the Termination Date
unless extended or sooner terminated pursuant to this Lease.
2. RENT.
A. Types of Rent. Tenant shall pay the following Rent in the form of
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a check to Landlord's building manager at the office of the Building, or in such
other manner as Landlord may notify Tenant:
(1) Base Rent in monthly installments in advance on or before the
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first day of this Lease and the first day of each month of the Term
thereafter in the amount set forth in Section 30.
(2) Operating Cost Share Rent in an amount equal to the Tenant's
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Proportionate Share of the excess (the "Excess Operating Costs") of
Operating Costs for the applicable fiscal year of the Lease over Base
Operating Costs, paid monthly in advance in an estimated amount.
Definitions of Operating Costs and Tenant's Proportionate Share, and the
method for billing and payment of Operating Cost Share Rent are set forth
in Sections 2B, 2C and 2D.
(3) Tax Share Rent in an amount equal to the Tenant's
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Proportionate Share of the excess (the "Excess Taxes") of Taxes for the
applicable fiscal year of this Lease over the Base Taxes, paid monthly in
advance in an estimated amount. Definitions of Taxes and the method for
billing and payment of Tax Share Rent are set forth in Sections 2B, 2C and
2D.
(4) Additional Rent in the amount of all costs, expenses,
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liabilities, and amounts which Tenant is required to pay under this Lease,
excluding Base Rent, Operating Cost Share Rent, and Tax Share Rent, but
including any interest for late payment of any item of Rent.
(5) Rent as used in this Lease means Base Rent, Operating Cost
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Share Rent, Tax Share Rent and Additional Rent. Tenant's agreement to pay
Rent is an independent covenant, with no right of setoff, deduction or
counterclaim of any kind.
B. Payment of Operating Cost Share Rent and Tax Share Rent.
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(1) Payment of Estimated Operating Cost Share Rent and Tax Share
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Rent. Landlord shall estimate the Operating Costs and Taxes of the Project
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each fiscal year, generally after the beginning of the year. Landlord may
revise these estimates whenever it obtains more accurate information, such
as the final real estate tax assessment or tax rate for the Project.
Within ten (10) days after notice from Landlord setting forth (a)
an estimate of Operating Costs for a particular fiscal year, (b) the Base
Operating Costs, and (c) the resulting estimate of Excess Operating Costs
for such fiscal year, Tenant shall pay Landlord an amount equal to one-
twelfth (1/12th) of Tenant's Proportionate Share of
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such estimated Excess Operating Costs for such fiscal year, multiplied by
the number of months that have elapsed in the applicable fiscal year to the
date of such payment including the current month, minus payments previously
made by Tenant for the months elapsed. Thereafter on the first day of each
month, Tenant shall pay monthly until a new estimate of Operating Costs is
applicable, one-twelfth (1/12th) of Tenant's Proportionate Share of the
estimated Excess Operating Costs.
Within ten (10) days after notice from Landlord setting forth (a)
an estimate of Taxes for a particular fiscal year, (b) the Base Taxes, and
(c) the resulting estimate of Excess Taxes, Tenant shall pay Landlord an
amount equal to one-twelfth (1/12th) of Tenant's Proportionate Share of
such estimated Excess Taxes, multiplied by the number of months that have
elapsed in the applicable fiscal year to the date of such payment,
including the current month, minus payments previously made by Tenant for
the months elapsed. Thereafter on the first day of each month, Tenant shall
pay monthly until a new estimate of Taxes is applicable, one-twelfth
(l/12th) of Tenant's Proportionate Share of the estimated Excess Taxes.
(2) Correction of Operating Cost Share Rent. As soon as
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reasonably possible after the end of each fiscal year, Landlord shall
deliver to Tenant a report for such year (the "Operating Cost Report")
setting forth (a) the actual Operating Costs incurred, (b) the Base
Operating Costs, (c) the amount of Operating Cost Share Rent due from
Tenant, and (d) the amount of Operating Cost Share Rent paid by Tenant.
Within twenty (20) days after such delivery, Tenant shall pay to Landlord
the amount due minus the amount paid. If the amount paid exceeds the amount
due, Landlord shall apply the excess to Tenant's next month's payment of
Operating Cost Share Rent, refunding any overage directly to Tenant.
(3) Correction of Tax Share Rent. As soon as reasonably possible
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after the end of each fiscal year, Landlord shall deliver to Tenant a
report for such fiscal year (the "Tax Report") setting forth (a) the actual
Taxes, (b) the Base Taxes, (c) the amount of Tax Share Rent due from
Tenant, and (d) the amount of Tax Share Rent paid by Tenant. Within twenty
(20) days after such delivery, Tenant shall pay to Landlord the amount due
from Tenant minus the amount paid by Tenant. If the amount paid exceeds the
amount due, Landlord shall apply any the excess as a credit against
Tenant's next month's payment of Tax Share Rent, refunding any overage to
Tenant.
C. Definitions.
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(1) Taxes. "Taxes" means any and all taxes, assessments and
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charges of any kind, general or special, ordinary or extraordinary, levied
by any governmental entity, which Landlord shall pay or become obligated to
pay in connection with the ownership, leasing, renting, management, control
or operation of the Project or of the personal property, fixtures,
machinery, equipment, systems and apparatus used in connection therewith.
Taxes shall include real estate taxes, personal property taxes, sewer
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rents, water rents, special or general assessments, transit taxes, ad
valorem taxes, and any tax levied on the rents hereunder or the interest of
Landlord under this Lease (the "Rent Tax"). Taxes shall also include all
legal fees and other costs and expenses paid by Landlord in seeking a
refund or reduction of any Taxes, whether or not the Landlord is ultimately
successful.
For any year, the amount to be included in Taxes (a) from taxes
or assessments payable in installments, shall be the amount of the
installments (with any interest) due and payable during such year, and (b)
from all other Taxes, shall at Landlord's election be the amount accrued,
assessed, or otherwise imposed for such year or the amount due and payable
in such year. Any refund or other adjustment to any Taxes by the taxing
authority, shall apply during the year in which the adjustment is made.
Taxes shall not include any net income (except Rent Tax),
capital, stock, succession, transfer, franchise, gift, estate or
inheritance tax, except to the extent that such tax shall be imposed in
lieu of any portion of Taxes.
(2) Operating Costs. "Operating Costs" means (except as provided
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herein) 100% of the actual expenses, costs and disbursements of any kind
other than Taxes, paid or incurred by Landlord in connection with the
ownership, leasing, management, maintenance, operation and repair of any
part of the Project and of the personal property, fixtures, machinery,
equipment, systems and apparatus used in connection therewith, including
the cost of providing those services required to be furnished by Landlord
under this Lease. Operating Costs shall not include (a) costs of
alterations of tenant premises; (b) costs of capital improvements, except
those intended to reduce Operating Costs, and those made to keep the
Project in compliance with governmental requirements applicable from time
to time, amortized by Landlord in accordance with sound accounting and
management principles; (c) interest and principal payments on mortgages or
any other debt costs, or rental payments on any ground lease of the Project
("Ground Lease"); (d) real estate brokers' leasing commissions; (e) any
cost or expenditure for which Landlord is reimbursed by insurance proceeds
or otherwise, except by Operating Cost Share Rent; (f) the cost of any
service furnished to any office tenant of the Project which Landlord does
not make available to Tenant; (g) depreciation or amortization of any
improvements, except as specifically set forth in this Lease; (h) costs of
repairs, alterations or replacements caused by the exercise of the rights
of imminent domain to the extent Landlord receives net condemnation
proceeds therefor; (i) costs of electricity for individual tenant spaces,
(j) costs of any special services rendered or costs reimbursed to other
tenants which are not generally reimbursed or rendered to either retail or
office tenants in the Building; (k) costs and expenses incurred in
connection with leasing space in the Building, such as legal fees for the
preparation of leases, tenant allowances, space planner fees and
advertising and promotional expenses (1) court costs and legal fees
incurred with regard to enforcing the obligations of tenants under other
leases; (m) any expenses for services or items for
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which Tenant directly reimburses Landlord (other than as a component of
Operating Expenses) or pays to third parties at Landlord's request; (n)
costs and expenses incurred as a result of a violation by Landlord of the
terms and conditions of any lease in the Building or of any law, statute or
ordinance, or any debt agreement or ground lease; (o) costs and expenses of
relocation of any tenants in the Building; (p) costs, fines or penalties
incurred due to violation by Landlord of any governmental rule or law
except as incurred by Landlord in challenging any law; (q) overhead and
profit paid to subsidiaries of Landlord or entitles under common control
with Landlord for services on or to the Building, but only to the extent
that the cost of such services exceeds normal rates being paid for such
services by owners of other first class office buildings in the Chicago
metropolitan area; (r) wages, salaries or fringe benefits related to any
employee above the rank of Building manager; (s) amounts of any political
and charitable contributions paid by Landlord; (t) compensation paid to
clerks or attendants in commercial concessions operated by Landlord, if
any, except that Operating Expenses shall include such compensation if
landlord deducts from the computation of Operating Expenses any profits
derived by Landlord from such concession; (u) rentals or other related
expenses incurred by Landlord in leasing Building systems and major
Building components; and (v) costs of acquiring sculptures, paintings or
other objects of art for the Building.
If the Project is not fully leased during any portion of any
fiscal year, Landlord may adjust (an "Equitable Adjustment") Operating
Costs to equal what would have been incurred by Landlord had the Project
been fully leased. For example, assume (i) the Building has ten floors;
(ii) the Tenant occupies one floor and Tenant's Proportionate Share is ten
percent (10%); (iii) the other nine floors are vacant; (iv) the cost of
providing a particular service for Tenant's floor is $1,000. If Tenant paid
Tenant's Proportionate Share of that cost, Tenant would pay $100. Instead,
Landlord shall estimate the cost of such service for the Building if it
were one hundred percent (100%) leased. Landlord would take into account
any economies of scale; for example, the cost for the entire Building might
be $9,000. The Landlord's estimate ($9,000) minus the actual cost incurred
by the Landlord ($1000) equals the Equitable Adjustment ($8000). The
Equitable Adjustment is added to the actual cost and Tenant pays Tenant's
Proportionate Share of the total; in this example, Tenant would pay $9,000
times 10% or $900. This Equitable Adjustment shall apply only to Operating
Costs which are variable and therefore increase as leasing of the Project
increases. Landlord may incorporate the Equitable Adjustment in its
estimates of Operating Costs.
If Landlord does not furnish any particular service whose cost
would have constituted an Operating Cost to a tenant who has undertaken to
perform such service itself, Operating Costs shall be increased by the
amount which Landlord would have incurred if it had furnished the service
to such tenant.
"Lease Year" means each consecutive twelve-month period beginning
with the Commencement Date, except that if the Commencement Date is not the
first day of
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a calendar month, then the first Lease Year shall be the period from the
Commencement Date through the final day of the twelve months after the
first day of the following month, and each subsequent Lease Year shall be
the twelve months following the prior Lease Year.
(3) Fiscal Year. "Fiscal Year" means the calendar year, except
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that the first fiscal year and the last fiscal year of the Term may be a
partial calendar year.
D. Computation of Base Rent and Rent Adjustments.
(1) Prorations. If this Lease begins on a day other than the
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first day of a month, the Base Rent, Operating Cost Share Rent and Tax
Share Rent shall be prorated for such partial month. If this Lease begins
on a day other than the first day, or ends on a day other than the last
day, of the fiscal year, Operating Cost Share Rent and Tax Share Rent shall
be prorated for the applicable fiscal year.
(2) Default Interest. Any sum due from Tenant to Landlord not
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paid when due shall bear interest from the date due until paid at the
annual rate equal to the greater of: (i) twelve percent (12%), or (ii) five
percent (5%) plus the "Corporate Base Rate" at the time of such nonpayment.
"Corporate Base Rate" means the rate of interest most recently announced by
the First National Bank of Chicago, or its successor (the "First") as its
corporate base rate. If the First ceases to use the term corporate base
rate, then the Corporate Base Rate shall be the rate used by the First as a
base rate of interest for commercial loans, however this rate is designated
by the First. A certificate by an officer of the First stating the
corporate base rate (or such designated rate) in effect shall be conclusive
evidence thereof.
(3) Intentionally deleted.
(4) Books and Records. Landlord shall maintain books and records
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reflecting the Operating Costs and Taxes in accordance with sound
accounting and management practices. Tenant, and its agents and
representatives, may inspect Landlord's records at Landlord's office upon
one day's prior notice during normal business hours during the thirty (30)
days following delivery of either the Operating Cost Report or the Tax
Report. Tenant and any agent or representative must agree, in their
contract for such services, that the results of any such inspection shall
be kept entirely confidential and shall specifically not be made available
to any other tenant of the Building. Unless Tenant sends to Landlord any
written exception to either such report within said thirty (30) day period,
such report shall be deemed final and accepted by Tenant. Tenant shall pay
the amount shown on both reports in the manner prescribed in this Lease,
whether or not Tenant takes any such written exception, without any
prejudice to such exception. If Tenant makes a timely exception, Landlord
shall cause its independent certified public accountant to issue a final
and conclusive resolution of Tenant's exception. Tenant shall
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pay the cost of such certification unless Landlord's original determination
of annual Operating Costs or Taxes was in error by more than five percent
(5%).
(5) Miscellaneous. So long as Tenant is in default of any
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obligation under this Lease, Tenant shall not be entitled to any refund of
any amount from Landlord. If this Lease is terminated for any reason prior
to the annual determination of Operating Cost Share Rent or Tax Share Rent,
either party shall pay the full amount due to the other within fifteen (15)
days after Landlords notice to Tenant of the amount when it is determined.
Landlord may commingle any payments made with respect to Operating Cost
Share Rent or Tax Share Rent, without payment of interest.
3. PREPARATION AND CONDITION OF PREMISES; POSSESSION AND SURRENDER OF
PREMISES.
A. Condition of Premises. Except to the extent of the Tenant
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Improvements item on the Schedule, Landlord is leasing the Premises to Tenant
"As Is," without any representations or warranties, including any express or
implied warranties of merchantability, fitness or habitability, and without any
obligation to alter, remodel, improve, repair, decorate or clean any part of the
Premises.
B. Tenant's Possession. Tenant's taking possession of any portion
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of the Premises shall be conclusive evidence that such portion was in good
order, repair and condition. If Landlord authorizes Tenant to take possession of
any part of the Premises prior to the Commencement Date for purposes of doing
business, all terms of this Lease shall apply to such pre-Term possession,
including Base Rent at the rate set forth for the First Lease Year in Section 2A
prorated for any partial month.
C. Maintenance. Throughout the Term, Tenant shall maintain the
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Premises in their condition as of the Completion Date, loss or damage caused by
the elements, ordinary wear, and fire and other casualty excepted, and at the
termination of this Lease, or Tenant's right to possession, Tenant shall return
the Premises to Landlord in broom-clean condition. To the extent Tenant fails to
perform either obligation, Landlord may, but need not, restore the Premises to
such condition and Tenant shall pay the cost thereof.
D. Ownership of Improvements. All Work as defined in Section 5, 1
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partitions, hardware, and all fixtures except Trade Fixtures (defined below),
constructed in the Premises by either Landlord or Tenant, shall become
Landlord's property upon installation without compensation to Tenant, unless
Landlord consents otherwise in writing, or requires Tenant to remove any such
item at the termination of the Lease or of Tenant's right to possession. "Trade
Fixtures" shall include all major equipment and material used to provide
telephone service and operate a telephone company, including the Generator and
Equipment (defined in Section 6).
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E. Removal at Termination. Tenant shall remove its trade fixtures
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furniture, moveable equipment and other personal property from the Premises upon
the termination of this Lease or Tenant's right of possession. If Tenant does
not, then Tenant shall be conclusively presumed to have, at Landlord's election
(i) conveyed such property to Landlord without compensation or (ii) abandoned
such property, and Landlord may dispose of any part thereof in any manner
without liability to Tenant or any other person. Landlord shall have no duty to
be a bailee of any such personal property. If Landlord elects abandonment,
Tenant shall pay to Landlord, upon demand, any expenses) incurred for
disposition.
4. PROJECT SERVICES.
Landlord shall furnish the following services (except as provided
below):
A. Heating and Air Conditioning. During the normal business hours
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of 8:00 a.m. to 6:00 p.m., Monday through Friday, and 8:00 a.m. to 1:00 p.m. on
Saturday, Landlord shall furnish heating and air conditioning to provide a
comfortable temperature, in Landlord's judgment, for normal business operations,
except to the extent Tenant installs equipment which adversely affects the
temperature maintained by the air conditioning system. Tenant may install
supplementary air conditioning units in the Premises, and Tenant shall pay the
cost of installation, operation and maintenance thereof. Landlord reserves the
right to install additional or supplementary air conditioning systems at
Tenant's sole cost and expense if Tenant's use of the Premises or use of
electrical equipment adversely affects any other tenant in the Building, and to
charge Tenant for any additional expenses in connection with the Building's
water cooling system (including costs of expanding the existing system) if
Tenant's use of cooling water exceeds a 75 ton capacity.
Landlord shall furnish heating and air conditioning after business
hours if Tenant provides Landlord at least twenty-four (24) hours' notice, and
pays Landlord all then current charges for such additional heating or air
conditioning.
B. Elevators. Landlord shall provide passenger elevator service
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during normal business hours to Tenant in common with Landlord and all other
tenants. Landlord shall provide limited passenger service at other times, except
in case of an emergency. Landlord shall provide freight elevator service at
reasonable hours at Tenant's request, subject to scheduling by the Landlord and
payment for the service by Tenant.
C. Electricity. Landlord shall pay for the electricity required for
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the operation of the heating and air conditioning systems in the Premises during
the hours specified in Section 4A above, and shall include such payment in
Operating Costs. All other electricity used in the Premises shall be supplied by
the electricity company through a separate meter and paid for by Tenant. Tenant
shall pay for the installation of any sub-meter required on any floor of its
Premises. Any decrease or discontinuance of electric service shall not affect
the parties' rights and obligations under this Lease. Tenant shall not use
electricity at a rate which causes the use by all tenants to exceed the capacity
of the Building or the risers or wiring to the Premises.
-8-
Landlord shall at Tenant's expense maintain the light fixtures and install
lamps, bulbs, ballasts and starters in the Premises.
Tenant shall pay for all electricity required for janitorial service,
for alterations and repairs to the Premises, to run its Equipment (as defined
herein) and for the operation of any supplementary air conditioning or
ventilating system required for its equipment (including the Generator (as
defined herein) and the Equipment).
D. Water. Landlord shall furnish (i) tap water for dishwasher and
-----
computer room purposes, (ii) cold water for drinking and toilet purposes, and
(iii) cold and hot water for lavatory purposes. Tenant shall pay Landlord for
water furnished for any other purpose as Additional Rent at rates fixed by
Landlord. Tenant shall not permit water to be wasted.
E. Janitorial Service. Landlord shall furnish janitorial service as
------------------
set forth in Appendix B. Tenant may obtain supplementary janitorial service only
at its sole cost and responsibility, with employees or contractors satisfactory
to Landlord, and subject to Landlord's prior written consent, which may be
withheld in Landlord's discretion.
F. Telephone Service. Tenant shall arrange for telephone service in
-----------------
the Premises and shall pay all of costs and charges associated therewith.
G. Natural Gas. Tenant shall arrange for natural gas service for the
-----------
Premises for the purpose of running its Generator and shall pay all of the costs
and charges associated therewith.
H. Interruption of Services. No interruption of services caused by
------------------------
repairs, replacements, or alterations to the service system, or by any other
cause beyond the reasonable control of Landlord, shall be deemed an eviction or
disturbance of Tenant's possession of any part of the Premises, or render
Landlord liable to Tenant for damages, or otherwise affect the rights and
obligations of Landlord and Tenant under this Lease. However, the rent otherwise
payable under this Lease shall ▇▇▇▇▇ in the manner described in the last
sentence of this paragraph if all of the following conditions are met: (i) if
Landlord ceases to furnish any service in the Building as a result of a
condition which affects only the Building (i.e. which does not affect office
buildings in general in the vicinity of the Building); and (ii) if Tenant
notifies Landlord in writing within one (1) business days after such cessation;
and (iii) if such cessation is not caused by Force Majeure (as defined in
Section 21 of this Lease); and (iv) if such cessation has not arisen as a result
of an act or omission of Tenant; and (v) as a result of such cessation, the
Premises (or a material portion thereof) is rendered untenantable (meaning that
Tenant is unable to use such space in the normal course of its business) and
Tenant in fact so ceases to use such space in the manner used prior to such
cessation. As Tenant's sole and exclusive remedy for such cessation, on the
sixth day after all of the foregoing conditions have been met, the rent payable
hereunder shall be equitably abated based upon the percentage of the space in
the Premises so rendered untenantable and not being so used by Tenant, and such
abatement shall continue until the date the Premises become tenantable again.
-9-
5. ALTERATIONS AND REPAIRS.
A. Landlord's Consent and Conditions. Tenant shall not make any
---------------------------------
improvements or alterations to the Premises which (i) impact the base structural
components or the heating, air conditioning, ventilation, electrical, plumbing
or mechanical systems (collectively, the "Systems") of the Building (although
Tenant may bolt its Equipment and furniture to the floor of the Premises
provided such bolting does not impact the foregoing) or (ii) impact any other
tenant's premises (collectively, the "Systems/Structure Work"), without
submitting plans and specifications therefor to Landlord, and obtaining
Landlord's prior written consent thereto (which consent Landlord may withhold in
its sole discretion). Tenant shall not make any improvements or alterations in
or additions, changes or installations to the Premises which are not deemed
Systems/Structure Work pursuant to this Section 5A, without submitting plans and
specifications therefor to Landlord, and obtaining Landlord's prior written
consent thereto (which consent shall not be unreasonably withheld), if (a) the
cost thereof, excluding installation of telephone switching equipment, is in
excess of $8,000.00, or (b) such improvements, alterations, additions, changes
or installations are visible from outside the Premises (collectively, the "Non-
Systems Work"). Tenant shall be allowed to make any improvements or alterations
in or additions, changes or installations to the Premises which are not deemed
Systems/Structure Work or Non-Systems Work pursuant to this Section 5A without
Landlord's consent (collectively, the "Non-Consent Work."). For purposes of this
Lease, Systems/Structure Work, Non-Systems Work and Non-Consent Work are
sometimes collectively referred to herein as the "Work". Landlord hereby agrees
to inform Tenant of its approval or disapproval of any such Systems/Structure
Work or NonSystems Work within fifteen (15) days after receipt of a complete set
of plans and specifications therefor. Tenant shall pay Landlord's out of pocket
expenses for review of the plans and all other items submitted by Tenant. At
Tenant's option, the Work shall be performed by Landlord's employees or
contractors. All Work shall become the property of Landlord upon its
installation, except for Tenant's Trade Fixtures and for items which Landlord
requires Tenant to remove at Tenant's cost at the termination of the Lease. The
following requirements shall apply to all Work:
(1) Prior to commencement, Tenant shall furnish to Landlord
building permits, certificates of insurance satisfactory to Landlord, and,
if Landlord's contractors are to perform any Work, at Landlord's request,
security for payment of all costs.
(2) Tenant shall perform all Work so as to maintain peace and
harmony among other contractors serving the Project and shall avoid
interference with other work to be performed or services to be rendered in
the Project.
(3) The Work shall be performed in a good and workmanlike manner,
meeting the standard for construction and quality of materials in the
Building, and shall comply with all insurance requirements and all
applicable laws, ordinances and regulations.
-10-
(4) Tenant shall permit Landlord to supervise all Work. Landlord
may charge a supervisory fee not to exceed the lesser of fifteen percent
(15) or $5,000.00, if Tenant's employees or contractors perform the Work.
(5) Upon completion, Tenant shall furnish Landlord with
contractor's affidavits and full and final statutory waivers of liens, as-
built plans and specifications, and receipted bills covering all labor and
materials.
B. Electronic Systems. If Tenant notifies Landlord that Tenant
------------------
requires additional electrical or cable capacity for telegraph, telephone,
burglar alarm, computer, or signal service Landlord shall direct how the
installation shall be done. Tenant shall make no installation of any kind (other
than as may be required from time to time in the normal course of Tenant's
business and provided the same does not adversely affect any other tenant or
Landlord's operation of the Building) except in accordance with Landlord's
direction. At Landlord's election, Landlord may make the installation itself.
Tenant shall pay for the entire cost of both the installation and the service.
C. Damage to Systems. If any part of the mechanical, electrical or
-----------------
other systems in the Premises shall be damaged, Tenant shall promptly notify
Landlord, and Landlord shall repair such damage. Landlord may also at any
reasonable time make any repairs or alterations which Landlord deems necessary
for the safety or protection of the Project, or which Landlord is required to
make by any court or other governmental authority. Tenant shall at its expense
make all other repairs necessary to keep the Premises, and Tenant's fixtures and
personal property, in good order, condition and repair; to the extent Tenant
fails to do so, Landlord may make such repairs itself. The cost of any repairs
made by Landlord on account of Tenant's default, or on account of the mis-use or
neglect by Tenant or its invitees, contractors or agents anywhere in the
Project, shall become Additional Rent payable on demand by Tenant.
D. No Liens. Tenant has no authority to cause or permit any lien or
--------
encumbrance of any kind to affect Landlord's interest in the Project; any such
lien or encumbrance shall attach to Tenant's interest only. If any mechanic's
lien shall be filed or claim of lien made for work or materials furnished to
Tenant, then Tenant shall at its expense within ten (10) days thereafter either
discharge or contest the lien or claim. If Tenant contests the lien or claim,
then Tenant shall (i) within such ten (10) day period, provide Landlord adequate
security for the lien or claim, (ii) contest the lien or claim in good faith by
appropriate proceedings that operate to stay its enforcement, and (iii) pay
promptly any final adverse judgment entered in any such proceeding. If Tenant
does not comply with these requirements, Landlord may discharge the lien or
claim, and the amount paid, as well as attorney's fees and other expenses
incurred by Landlord, shall become Additional Rent payable on demand by Tenant.
6. USES OF PREMISES. Tenant shall use the Premises only for (i)
executive and general administrative offices; and (ii) operating a telephone
switching center (the "Switching Center") through which Tenant will provide
telephone services to clients within an approximate
-11-
600-mile radius of the Building. As part of the Switching Center, Tenant may, at
Tenant's sole cost and expense, install, operate and maintain in the Premises an
auxiliary power generator run on natural gas (the "Generator"), and a variety of
telecommunications equipment (the "Equipment"). The placement and manner of
installation of the Generator and Equipment shall be mutually agreed upon by
Tenant and Landlord, provided, however, that the Generator shall be located in
the place shown on Appendix A-1. Tenant shall provide evidence satisfactory to
the Landlord that the Generator and Equipment will comply with the Chicago
Zoning Code and Building Ordinance and any other applicable governmental
requirements, and that neither the Generator nor the Equipment will increase the
costs of Landlord's insurance on the Project or Tenant shall pay such increases
immediately upon demand by Landlord. Tenant shall comply with Section 5 hereof
in installing the Generator and Equipment. Tenant shall be fully responsible for
any injury to person or property arising out of the installation, presence or
operation of the Generator and Equipment. Tenant shall not allow any use of the
Premises which would cause the value or utility of any part of the Premises to
diminish or would interfere with any other Tenant or with the operation of the
Project by Landlord. Tenant shall not permit any nuisance or waste upon the
Premises, or allow any offensive noise or odor in or around the Premises. Tenant
shall not place vending or dispensing machines of any kind in the Premises.
Notwithstanding the foregoing, provided Tenant constructs a cinder
block or suitable housing for its Generator to act as a noise buffer and
Landlord approves such housing, Tenant may test its Generator one time per week
for up to sixty minutes between the following hours only: 12:00 a.m. to 6:00
a.m. Friday; 6:00 p.m. Friday to 6:00 a.m. Saturday; and 6:00 p.m Saturday to
6:00 a.m. Sunday. Tenant shall bear all costs expenses and liabilities
(including the cost of Landlord's reasonable attorney's fees) for the violation
of any federal, state or local laws or ordinances associated with the operation
of the Generator.
Tenant shall not permit or cause any party (including Tenant) to bring
any Hazardous Substance upon the Premises or to possess, use, store, handle,
generate, treat, dispose of, or release any Hazardous Substance on or about the
Premises; provided, however, that Tenant may, under the following conditions,
store and use de minimis quantities of Hazardous Substances that are normally
used in the ordinary course of running an administrative office business and
small quantities of Absolyte IIP batteries necessary to run Tenant's Equipment:
(i) Tenant's storage and use of such Hazardous Substances does not violate any
federal, state or local laws, ordinances or regulations; (ii) Tenant transports
all such Hazardous Substances in and out of the Building and the Premises via
the loading dock and the freight elevator, and by no other route whatsoever;
(iii) if the presence of such Hazardous Substances in the Building causes
Landlord to pay increased insurance premiums, Tenant bears the total cost of
such increased insurance premiums; (iv) all such Hazardous Substances are
properly stored, used and disposed of by Tenant; and (v) no disposal of
Hazardous Substances by or on behalf of Tenant occurs on or at the Project.
Tenant, at its sole cost and expense, shall operate its business in the Premises
in strict compliance with all Environmental Requirements and shall remediate in
a manner satisfactory to Landlord any Hazardous Substances released on or from
the Project by Tenant, its agents, employees, contractors, subtenants, or
invitees. Tenant shall complete and certify to disclosure statements as
requested by Landlord from time to time relating
-12-
to Tenant's transportation, storage, use, generation, manufacture, disposal, or
release of Hazardous Substances on the Premises. The term "Environmental
Requirements" means all applicable present and future statutes, regulations,
ordinances, rules, codes, judgments, orders or other similar enactments of any
governmental authority or agency regulating or relating to health, safety, or
environmental conditions on, under, or about the Premises or the environment,
including without limitation, the following: the Comprehensive Environmental
Response, Compensation and Liability Act; the Resource Conservation and Recovery
Act; and all state and local counterparts thereto, and any regulations or
policies promulgated or issued thereunder. As defined in Environmental
Requirements, Tenant is and shall be deemed to be the "operator" of Tenant's
"facility" and the "owner" of all Hazardous Materials brought on the Premises by
Tenant, its agents, employees, contractors or invitees, and the wastes, by-
products, or residues generated, resulting, or produced therefrom.
Tenant shall indemnify, defend, and hold Landlord harmless from and
against any and all losses (including, without limitation, diminution in value
of the Premises or the Project and loss of rental income from the Project),
claims, demands, actions, suits, damages (including, without limitation,
punitive damages), expenses (including, without limitation, remediation,
removal, repair, corrective action, or cleanup expenses), and costs (including,
without limitation, actual attorneys' fees, consultant fees or expert fees)
which are brought or recoverable against, or suffered or incurred by, Landlord
as a result of any release of Hazardous Materials for which Tenant is obligated
to remediate as provided above or any other breach of the requirements under
this Section 6 by Tenant, its agents, employees, contractors, subtenants,
assignees or invitees, regardless of whether Tenant had knowledge of such
noncompliance. The obligations of Tenant under this Section 6 shall survive any
termination of this Lease.
At the expiration or earlier termination of the Lease, Tenant, at its
sole cost and expense, shall: (i) remove and dispose off-site any Hazardous
Substances and any drums, containers, receptacles, structures, or tanks storing
or containing Hazardous Substances (or which have stored or contained Hazardous
Substances) and the contents thereof; and (ii) restore the Premises to its
original condition. Such activities shall be performed in compliance with all
Environmental Requirements and to the satisfaction of Landlord. Landlord's
satisfaction with such activities or the condition of the Premises does not
waive, or release Tenant from, any obligations hereunder.
7. GOVERNMENTAL REQUIREMENTS AND BUILDING RULES. Tenant shall comply
with all governmental laws or regulations applying to its use of the Premises.
Tenant shall also comply with all rules established for the Project from time to
time by Landlord. The present rules are contained in Appendix C. Failure by
another tenant to comply with the rules or failure by Landlord to enforce them
shall not relieve Tenant of its obligation to comply with the rules or make
Landlord responsible to Tenant in any way.
-13-
8. WAIVER OF CLAIMS; INDEMNIFICATION; INSURANCE.
A. Waiver of Claims. To the extent permitted by law, Tenant waives
----------------
any claims it may have against the Landlord or its officers, directors, agents,
contractors or employees for business interruption, damage to property, or any
other loss sustained by Tenant as the result of any accident or occurrence in
the Project or of any part of the Building becoming in disrepair.
B. Indemnification. Tenant shall indemnify, defend and hold
---------------
harmless Landlord and its directors, officers, employees, agents and contractors
against any claims by any third party for injury to any person or damage to or
loss of any property occurring in the Project and arising from the use of the
Premises or from any other act or omission of Tenant or any of Tenant's
employees, agents, invitees or contractors.
C. Insurance Coverage. Tenant shall maintain insurance customary
------------------
for an office tenant, with such terms, coverages and insurers, as Landlord shall
reasonably require from time to time. Initially, such insurance shall include:
(1) Comprehensive General Liability Insurance, with (a)
Contractual Liability including the indemnification provisions contained in
this Lease, (b) a severability of interest endorsement, (c) limits of not
less than One Million Dollars ($1,000,000) combined single limit per
occurrence for bodily injury, sickness or death, and property damage, and
umbrella coverage of not less than Five Million Dollars ($5,000,000), and
(d) Landlord and Landlord's building manager named as additional insureds.
(2) Insurance against "All Risks" of physical loss covering the
replacement cost of all of Tenant's fixtures and personal property.
Tenant's property insurance shall include a waiver of subrogation.
Tenant's insurance shall be primary and not contributory.
Landlord shall carry insurance policies in amounts and on terms and
conditions which are normally carried by reasonably prudent owners similar in
size and composition to Landlord of properties similar to the Project.
The insurance policies obtained by Landlord and Tenant shall include a
waiver of subrogation by the insurers and all rights based upon an assignment
from its insured, against Landlord or Tenant, their officers, directors,
employees, managers, agents, invitees and contractors, in connection with any
loss or damage thereby insured against.
D. Insurance Certificates. Tenant shall deliver to Landlord
----------------------
certificates evidencing all required insurance no later than five (5) days prior
to the Commencement Date
-14-
and each renewal date. Each certificate will provide for the thirty (30) days
prior written notice of cancellation to Landlord and Tenant.
9. FIRE AND OTHER CASUALTY.
A. Termination. If a fire or other casualty causes substantial
-----------
damage to the Building or the Premises, Landlord shall engage a registered
architect to certify within one (1) month of the casualty to both Landlord and
Tenant, the amount of time needed to restore the Building and the Premises to
tenantability, using standard working methods. If the time needed exceeds
eighteen (18) months from the date of the architects certification, or two (2)
months from the beginning of the restoration if the restoration would begin
during the last eighteen (18) months of the Lease, then in the case of the
Premises, either Landlord or Tenant may terminate this lease, and in the case of
the Building, Landlord may terminate this Lease, by notice to the other party
within ten (10) days after the notifying party's receipt of the architects
certificate. The termination shall be effective thirty (30) days from the date
of the notice and Rent shall be paid by Tenant to that date, within an abatement
for any portion of the space which has been untenantable after the casualty.
B. Restoration. If a casualty causes damage to the Building or the
-----------
Premises but this Lease is not terminated for any reason, then subject to the
rights of any mortgagees or ground lessors, Landlord shall obtain the applicable
insurance proceeds and diligently restore the Building and the Premises subject
to current governmental requirements. Tenant shall replace its damaged personal
property and fixtures. Rent shall be abated on a per diem basis during the
restoration for any portion of the Premises which is untenantable, except to the
extent that Tenant's negligence caused the casualty and Landlord's rent loss
insurance would not provide coverage if the Rent were abated.
10. EMINENT DOMAIN. If a part of the Project is taken by eminent domain
or deed in lieu thereof which is so substantial that the Premises cannot
reasonably be used by Tenant for the operation of its business, then either
party may terminate this Lease effective as of the date of the taking. If any
substantial portion of the Project is taken without affecting the Premises, then
Landlord may terminate this Lease as of the date of such taking. Rent shall
▇▇▇▇▇ from the date of the taking in proportion to any part of the Premises
taken. The entire award for a taking of any kind shall be paid Landlord, and
Tenant shall have no right to share in the award. All obligations accrued to the
date of the taking shall be performed by each party.
11. RIGHTS RESERVED TO LANDLORD.
Landlord may exercise at any time and of the following rights
respecting the operation of the Project without liability to the Tenant of any
kind:
A. Name. To change the name or street address of the Building or
----
the suite numbers of the Premises.
-15-
B. Signs. To install and maintain any signs on the exterior and in
-----
the interior of the Building, and to approve at its discretion prior to
installation any of the Tenants signs in the Premises visible from the common
areas or the exterior of the Building.
C. Window Treatments. To approve, at its discretion, prior to
-----------------
installation any shades, blinds, ventilators or window treatments of any kind,
as well as any lighting within the Premises that may be visible from the
exterior of the Building.
D. Service Contracts. To enter into service contracts with all
-----------------
providers furnishing ice and drinking water, towels, toilet supplies, shoe
shines, sign painting, beverage or food services, or other services to the
Premises, provided that the rates charged are reasonably competitive for office
buildings in the Chicago area.
E. Keys. To retain and use passkeys to enter the Premises or any
----
door within the Premises, provided Landlord shall only exercise this right in
the event of an emergency or upon 24 hours notice to Tenant and while
accompanied by a representative of Tenant. Tenant shall not alter or add any
lock or bolt.
F. Access. To have access to inspect the Premises, and to perform
------
its obligations, or make repairs, alterations, additions or improvements, as
permitted by this Lease, provided Landlord shall only exercise this right in the
event of an emergency or upon 24 hours notice to Tenant and while accompanied by
a representative of Tenant.
G. Preparation for Reoccupancy. To decorate, remodel, repair, alter
---------------------------
or otherwise prepare the Premises for reoccupancy at any time after Tenant
abandons the Premises, without relieving Tenant of any obligation to pay Rent.
H. Heavy Articles. To approve the weight, size, placement and time
--------------
and manner of movement within the Building of any safe or other heavy article of
Tenant's property. Tenant shall move its property entirely at its own risk.
I. Show Premises. To show the Premises to prospective purchasers or
-------------
brokers at any reasonable time, and to prospective tenants during the final year
of the Term, provided that Landlord gives prior notice to Tenant and does not
materially interfere with Tenant's use of the Premises.
J. Restrict Access. To restrict access to the Project during such
---------------
hours as Landlord shall determine, so long as Landlord shall admit Tenant at all
times, subject to appropriate regulation by Landlord.
K. Intentionally deleted.
---------------------
L. Use of Lockbox. To designate a lockbox collection agent for
--------------
collections of amounts due Landlord. In that case, the date of payment of Rent
or other sums shall be the
-16-
date of the agent's receipt of such payment or the date of actual collection if
payment is made in the form of a negotiable instrument thereafter dishonored
upon presentment. However, if Tenant is in default under this Lease, Landlord
may reject any payment for all purposes as of the date of receipt or actual
collection by mailing to Tenant within 21 days after such receipt or collection
a check equal to the amount sent by Tenant.
M. Repairs and Alterations. To make repairs or alterations to the
-----------------------
Project and in doing so transport any required material through the Premises, to
close entrances, doors, corridors, elevators and other facilities in the
Project, to open any ceiling in the Premises, or to temporarily suspend services
or use of common areas in the Building. Landlord may perform any such repairs or
alterations during ordinary business hours, except that Tenant may require any
Work in the Premises to be done after business hours if Tenant pays Landlord for
overtime and any other expenses incurred. Landlord may do or permit any work on
any nearby building, land, street, alley or way.
N. Landlord's Agents. If Tenant is in default under this Lease,
-----------------
possession of Tenant's funds or negotiation of Tenant's negotiable instrument by
any of Landlords agents shall not waive any breach by Tenant or any remedies of
Landlord under this Lease.
O. Building Services. To install use and maintain through the
-----------------
Premises, pipes, conduits, wires and ducts serving the Building, provided that
such installation, use and maintenance does not unreasonably interfere with
Tenant's use of the Premises.
P. Other Actions. To take any other action which Landlord deems
-------------
reasonable in connection with the operation, maintenance or preservation of the
Building.
12. TENANT'S DEFAULT
Any of the following shall constitute a default by Tenant:
A. Rent Default. Tenant fails to pay any Rent when due, and in the
------------
case of the second such failure in any 12 consecutive months, this failure
continues for five days after written notice from Landlord;
B. Assignment/Sublease or Hazardous Substances Default. Tenant
---------------------------------------------------
defaults in its obligations under Section 17 Assignment and Sublease or Section
28 Hazardous Substances;
C. Other Performance Default. Tenant fails to perform any other
-------------------------
obligation to Landlord under this Lease, and, in the case of only the first such
failure in any twelve consecutive months, this failure continues for seven days
after written notice from Landlord, except that if Tenant begins to cure its
failure within the seven day period but cannot reasonably complete its cure
within such period, then the seven-day period shall be extended to ninety days,
or such lesser period as is reasonably necessary to complete the cure;
-17-
D. Credit Default. One of the following credit defaults occurs:
--------------
(1) Tenant commences any proceeding under any law relating to
bankruptcy, insolvency, reorganization or relief of debts, or seeks
appointment of a receiver, trustee, custodian or other similar official for
the Tenant or for any substantial part of its property, or any such
proceeding is commenced against Tenant and either remains undismissed for a
period of thirty days or results in the entry of an order for relief
against Tenant which is not fully stayed within seven days after entry;
(2) Tenant becomes insolvent or bankrupt, does not generally pay
its debts as they become due, or admits in writing its inability to pay its
debts, or makes a general assignment for the benefit of creditors;
(3) Any third party obtains a levy or attachment under process of
law against Tenant 'a leasehold interest, unless same is cured by Tenant
within seven days after notice of said levy or attachment, except that if
Tenant begins to cure the levy or attachment within the seven day period
but cannot reasonably complete its cure within such period, then the seven-
day period shall be extended to fortyfive, or such lesser period as is
reasonably necessary to complete the cure.
13. LANDLORD REMEDIES.
A. Termination of Lease or Possession. If Tenant defaults, Landlord
----------------------------------
may elect by notice to Tenant either to terminate this Lease or to terminate
Tenant's possession of the Premises without terminating this Lease. In either
case, Tenant shall immediately vacate the Premises and deliver possession to
Landlord, and Landlord may repossess the Premises and may remove any of Tenant's
signs and any of its other property, without relinquishing its right to receive
Rent or any other right against Tenant.
B. Lease Termination Damages. If Landlord terminates the Lease,
-------------------------
Tenant shall pay to Landlord all Rent due on or before the date of termination,
plus Landlord's reasonable estimate of the aggregate Rent that would have been
payable from the date of termination through the Termination Date, reduced by
the rental value of the Premises calculated as of the date of termination for
the same period, taking into account reletting expenses and market concessions,
both discounted to present value at the rate of five (5) percent per annum. If
Landlord shall relet any part of the Premises for any part of such period before
such present value amount shall have been paid by Tenant or finally determined
by a court, then the amount of Rent payable pursuant to such reletting shall be
deemed to be the reasonable rental value for that portion of the Premises relet
during the period of the reletting. Landlord shall have a reasonable duty to
mitigate its damages under this Lease.
C. Possession Termination Damages. If Landlord terminates Tenant's
------------------------------
right to possession without terminating the Lease and Landlord takes possession
of the Premises itself, Landlord may relet any part of the Premises for such
Rent, for such time, and upon such terms
-18-
as Landlord in its sole discretion shall determine, without any obligation to do
so prior to renting other vacant areas in the Building. Any proceeds from
reletting the Premises shall first be applied to the expenses of reletting,
including redecoration, repair, alteration, advertising, brokerage, legal, and
other reasonably necessary expenses. If the reletting proceeds after payment of
expenses are insufficient to pay the full amount of Rent under this Lease,
Tenant shall pay such deficiency to Landlord monthly upon demand as it becomes
due. Any excess proceeds shall be retained by Landlord.
D. Landlord's Remedies Cumulative. All of Landlord's remedies under
------------------------------
this Lease shall be in addition to all other remedies Landlord may have at law
or in equity. Waiver by Landlord of any breach of an obligation by Tenant shall
be effective only if it is in writing, and shall not be deemed a waiver of any
other breach, or any subsequent breach of the same obligation. Landlord's
acceptance of payment by Tenant shall not constitute a waiver of any breach by
Tenant, and if the acceptance occurs after Landlord's notice to Tenant, or
termination of the Lease or of Tenant's right to possession, the acceptance
shall not affect such notice or termination. Acceptance of payment by Landlord
after commencement of a legal proceeding or final judgment shall not affect such
proceeding or judgment.
E. WAIVER OF TRIAL BY JURY. EACH PARTY WAIVES TRIAL BY JURY IN THE
-----------------------
EVENT OF ANY LEGAL PROCEEDING BROUGHT BY THE OTHER IN CONNECTION WITH THIS
LEASE. EACH PARTY SHALL BRING ANY ACTION AGAINST THE OTHER IN CONNECTION WITH
THIS LEASE IN A FEDERAL OR STATE COURTS LOCATED IN CHICAGO, ILLINOIS, CONSENTS
TO THE JURISDICTION OF SUCH COURTS, AND WAIVES ANY RIGHT TO HAVE ANY PROCEEDING
TRANSFERRED FROM SUCH COURTS ON THE GROUND OF IMPROPER VENUE OR INCONVENIENT
FORUM.
F. Litigation Costs. Tenant shall pay Landlord's attorneys' fees
----------------
and other costs in enforcing this Lease, whether or not suit is filed.
14. SURRENDER. Upon termination of this Lease or Tenant's right to
possession, Tenant shall return the Premises to Landlord in good order and
condition, ordinary wear and casualty damage excepted. If Landlord requires
Tenant to remove any alterations, then Tenant shall remove the alterations in a
good and workmanlike manner and restore the Premises to its condition prior to
their installation.
15. HOLDOVER. If Tenant retains possession of any part of the Premises
after the Term, Tenant shall become a month-to-month tenant upon all of the
terms of this Lease as might be applicable to such month-to-month tenancy,
except that Tenant shall pay Base Rent at 150' of the rate in effect immediately
prior to such holdover, computed on a monthly basis for each full or partial
month Tenant remains in possession. If Tenant holds over for more than one
month, Tenant shall also pay Landlord all of Landlord's direct and consequential
damages, and in addition, if Landlord so elects by notice to Tenant, such
holdover shall constitute a renewal of this Lease for one year at the then
current market rate as determined by Landlord but in no
-19-
event less than the Rent payable immediately prior to such holdover. No
acceptance of Rent or other payments by Landlord under these holdover provisions
shall operate as a waiver of Landlord's right to regain possession or any other
of Landlord's remedies.
16. SUBORDINATION TO GROUND LEASES AND MORTGAGES.
A. Subordination. This Lease shall be subordinate to any present or
-------------
future ground lease or mortgage respecting the Project, and any amendments to
such ground lease or mortgage, at the election of the ground lessor or mortgagee
as the case may be, effected by notice to Tenant in the manner provided in this
Lease. The subordination shall be effective upon such notice, but at the request
of Landlord or ground lessor or mortgagee, Tenant shall within ten (10) days of
the request, execute and deliver to the requesting party any reasonable
documents provided to evidence the subordination.
B. Termination of Ground Lease or Foreclosure of Mortgage. If any
------------------------------------------------------
ground lease is terminated or mortgage foreclosed or deed in lieu of foreclosure
given and the ground lessor, mortgagee, or purchaser at a foreclosure sale shall
thereby become the owner of the Project, Tenant shall attorn to such ground
lessor or mortgagee or purchaser without any deduction or setoff by Tenant, and
this Lease shall continue in effect as a direct lease between Tenant and such
ground lessor, mortgagee or purchaser. The ground lessor or mortgagee or
purchaser shall be liable as Landlord only during the time such ground lessor or
mortgagee or purchaser is the owner of the Project. At the request of Landlord,
ground lessor or mortgagee, Tenant shall execute and deliver within ten (10)
days of the request any document furnished by the requesting party to evidence
Tenant's agreement to attorn. In connection with Tenant's attornment, Landlord
shall use its best efforts to provide Tenant with a non-disturbance agreement.
C. Security Deposit. Any ground lessor or mortgagee shall be
----------------
responsible for the return of any security deposit by Tenant only to the extent
the security deposit is received by such ground lessor or mortgagee.
D. Notice and Right to Cure. The Project is subject to any ground
------------------------
lease and mortgage identified with name and address of ground lessor or
mortgagee in any Appendix to this Lease. Tenant agrees to send by registered or
certified mail to any ground lessor or mortgagee identified either in such
Appendix or in any later notice from Landlord to Tenant a copy of any notice of
default sent by Tenant to Landlord. If Landlord fails to cure such default
within the required time period under this Lease, but ground lessor or mortgagee
begins to cure within ten (10) days after such period and proceeds diligently to
complete such cure, then ground lessor or mortgagee shall have such additional
time as is necessary to complete such cure, including any time necessary to
obtain possession if possession is necessary to cure, and Tenant shall not begin
to enforce its remedies so long as the cure is being diligently pursued.
E. Definitions. As used in this Section 16, "mortgage" shall
-----------
include "trust deed" and "mortgagee" shall include "trustee", "mortgagee" shall
include the mortgagee of any
-20-
ground lessee, and "ground lessor", "mortgagee", and "purchaser at a foreclosure
sale" shall include, in each case, all of its successors and assigns, however
remote.
17. ASSIGNMENT AND SUBLEASE.
A. Consent Required. Tenant shall not, without the prior consent of
----------------
al Landlord in each case, (i) make or allow any assignment or transfer, by
operation of law . or otherwise, of any part of Tenant's interest in this Lease,
(ii) grant or allow any lien or encumbrance, by operation of law or otherwise,
upon any part of Tenant's interest in this Lease, (iii) sublet any part of the
Premises, or (iv) permit anyone other than Tenant and its employees to occupy
any part of the Premises. Landlord may withhold its consent to the assignment or
sublease if Tenant is in default under this Lease or if the financial
responsibility, nature of business, and character of the proposed assignee or
subtenant are not all reasonably satisfactory to Landlord. Landlord will not
otherwise unreasonably withhold its consent on any other basis to such an
assignment or subletting. No consent granted by Landlord shall relieve Tenant of
any of its obligations under this Lease, nor shall it be deemed to be a consent
to any subsequent assignment or transfer, lien or encumbrance, sublease or
occupancy. Tenant shall pay all of Landlord's attorneys' fees and other expenses
incurred in connection with any consent requested by Tenant or in reviewing any
proposed assignment or subletting. Any assignment or transfer, grant of lien or
encumbrance, or sublease or occupancy without Landlord's prior written consent
shall be void. Notwithstanding the foregoing, provided Tenant is not in default
under this Lease, upon 30 days prior written notice to Landlord, Tenant may,
without Landlord's prior written consent, assign this Lease to an entity into
which Tenant is merged or consolidated or to an entity to which substantially
all of Tenant's assets are transferred, provided (x) such merger, consolidation
or transfer of assets is for a good business purpose and not principally for the
purpose of transferring Tenant's leasehold estate, and (y) the assignee,
transferee or successor entity has a net worth at least equal to the net worth
of Tenant on the date of this Lease or immediately prior to such merger,
consolidation or transfer, on which ever date Tenant's net worth is greater.
B. Procedure. Tenant shall notify Landlord of any proposed
---------
assignment or sublease at least sixty (60) days prior to its proposed effective
date. The notice shall include the name and address of the proposed assignee or
subtenant, its corporate affiliates in the case of a corporation and its
partners in a case of a partnership, an execution copy of the proposed
assignment or sublease, and sufficient information to permit Landlord to
determine the financial responsibility and character of the proposed assignee or
subtenant. As a condition to any effective assignment of this Lease, the
assignee shall execute and deliver in form satisfactory to Landlord at least
fifteen (15) days prior to the effective date of the assignment, an assumption
of all of the obligations of Tenant under this Lease. As a condition to any
effective sublease, subtenant shall execute and deliver in form satisfactory to
Landlord at least fifteen (15) days prior to the effective date of the sublease,
an agreement to comply with all of Tenant's obligations under this Lease, and at
Landlord's option, an agreement (except for the economic obligations which
subtenant will undertake directly to Tenant) to attorn to Landlord under the
terms of the sublease in the event this Lease terminates before the sublease
expires.
-21-
C. Chance of Management or Ownership. Any transfer of the direct or
---------------------------------
indirect power to affect the management or policies of Tenant or direct or
indirect change in 50% or more of the ownership interest in Tenant shall
constitute an assignment of this Lease.
D. Excess Payments. If Tenant shall assign this Lease or sublet any
---------------
part of the Premises for consideration in excess of the pro-rata portion of Rent
applicable to the space subject to the assignment or sublet, then Tenant shall
pay to Landlord as Additional Rent 50% of any such excess immediately upon
receipt.
18. CONVEYANCE BY LANDLORD. If Landlord shall at any time transfer its
interest in the Project or this Lease, Landlord shall be released of any
obligations occurring after such transfer, except the obligation to return to
Tenant any security deposit not delivered to its transferee, and Tenant shall
look solely to Landlord's successors for performance of such obligations. This
Lease shall not be affected by any such transfer.
19. ESTOPPEL CERTIFICATE. Each party shall, within ten (10) days of
receiving a request from the other party, execute, acknowledge in recordable
form, and deliver to the other party or its designee a certificate stating,
subject to a specific statement of any applicable exceptions, that the Lease as
amended to date is in full force and effect, that the Tenant is paying Rent and
other charges on a current basis, and that to the best of the knowledge of the
certifying party, the other party has committed no uncured defaults and has no
offsets or claims. The certifying party may also be required to state the date
of commencement of payment of Rent, the Commencement Date, the Termination Date,
the Base Rent, the current Operating Cost Share Rent and Tax Share Rent
estimates, the status of any improvements required to be completed by Landlord,
and such other matters as may be reasonably requested. Failure to deliver such
statement within the time required shall be conclusive evidence against the non-
certifying party that this Lease, with any amendments identified by the
requesting party, is in full force and effect, that there are no uncured
defaults by the requesting party, that not more than one months Rent has been
paid in advance, and that the non-certifying party has no claims or offsets
against the requesting party.
20. SECURITY DEPOSIT.
A. Tenant shall deposit with Landlord security for the performance
of all of its obligation in the amount set forth initially in the Schedule and
in the form set forth below. If Tenant defaults under this Lease, Landlord may
use any part of the Security Deposit to make any defaulted payment, to pay for
Landlord's cure of any defaulted obligation, or to compensate Landlord for any
loss or damage resulting from any default. To the extent any portion of the
Security Deposit is used, Tenant shall within five (5) days after demand from
Landlord either (i) reinstate the Letter of Credit (defined below) to its full
amount, or (ii) restore the Security Deposit to its full amount, as the case may
be. If Tenant shall perform all of its obligations under this Lease and return
the Premises to Landlord at the end of the Term, Landlord shall return either
all of the remaining Security Deposit or the Letter of Credit to Tenant. The
-22-
Security Deposit shall not serve as an advance payment of Rent or a measure of
Landlord's damages for any default under this Lease.
B. (1) The Security Deposit shall be initially in the form of an
unconditional and irrevocable letter of credit (the "Letter of Credit"), which
Letter of Credit shall (a) initially be in the amount as described in the
Schedule above, (b) be in substantially the form attached hereto as Appendix F,
(c) name Landlord as its beneficiary, (d) expressly allow Landlord to draw upon
it at any time or from time to time by delivering to the issuer written notice
that Landlord has the right to draw thereunder, (e) be drawn on an FDIC-insured
financial institution satisfactory to Landlord, and (f) be redeemable in the
State of New York. If Landlord is not provided with a substitute Letter of
Credit complying with all of the requirements hereof at least ten (10) days
before the stated expiration date hereof, then Landlord shall have the right to
draw under such Letter of Credit then held by Landlord and hold such funds as a
Security Deposit in accordance with the terms of this Section 20. The Letter of
Credit shall be delivered by Tenant to Landlord on or prior to the date of this
Lease. The Letter of Credit shall be delivered by Tenant to Landlord on or
prior to the date of this Lease.
(2) The Letter of Credit shall remain in full force and effect
until January 31, 2000, at which time (a) if Tenant has a net worth (as
calculated according to "GAAP") of more than $100,000,000.00, no further
Security Deposit shall be required and Landlord shall return the Letter of
Credit to Tenant; and (b) if Tenant has a net worth (as calculated
according to "GAAP") of less than $100,000,000.00, Tenant shall depositing
with Landlord a cash Security Deposit equal to two (2) months of the then
current Base Rent, Operating Cost Share Rent and Tax Share Rent and
Landlord shall then return the Letter of Credit to Tenant.
C. If Landlord transfers its interest in the Project or this Lease,
Landlord may transfer the Security Deposit, if held as cash, or Tenant will
cause the issuance of a new Letter of Credit for the benefit of the transferee.
Upon such transfer or return of the old Letter of Credit, Landlord shall have no
further obligation to return the Letter of Credit to Tenant, and Tenant's right
to the return of such Letter of Credit shall apply solely against Landlord's
transferee.
21. FORCE MAJEURE. Landlord shall not be in default under this Lease to
the extent Landlord is unable to perform any of its obligations on account of
any strike or labor problem, energy shortage, governmental pre-emption or
prescription, national emergency, or any other cause of any kind beyond the
reasonable control of Landlord ("Force Majeure").
22. Intentionally deleted.
23. NOTICES. All notices, consents, approvals and similar communications
to be given by one party to the other under this Lease, shall be given in
writing, mailed or personally delivered as follows:
-23-
A. Landlord. To Landlord as follows:
--------
Teachers Insurance and Annuity Teachers Insurance and Annuity
Association of America Association of America
c/o Office of the Building ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Attn: Vice President
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other person at such other address as Landlord may designate by
notice to Tenant.
B. Tenant. To Tenant at the address stated in the Schedule until Tenant
------
takes possession of the Premises, and thereafter at the Premises or such other
address as Tenant may designate by notice to Landlord.
Mailed notices shall be sent by United States certified or registered
mail, or by a reputable national overnight courier service, postage prepaid.
Mailed notices shall be deemed to have been given on the earlier of actual
delivery or three (3) business days after posting in the United States mail in
the case of registered or certified mail, and one business day in the case of
overnight courier.
24. QUIET POSSESSION. So long as Tenant shall perform all of its
obligations under this Lease, Tenant shall enjoy peaceful and quiet possession
of the Premises against any party claiming through the Landlord.
25. REAL ESTATE BROKER. Tenant represents to Landlord that Tenant has not
dealt with any real estate broker with respect to this Lease except for ▇▇▇▇▇▇-
▇▇▇▇▇▇▇ Management Corporation and any broker listed in the Schedule, and no
other broker is in any way entitled to any broker's fee or other payment in
connection with this Lease. Tenant shall indemnify and defend Landlord against
any claims by any other broker or third party with which Tenant has dealt for
any payment of any kind in connection with this Lease.
26. MISCELLANEOUS.
A. Successors and Assigns. Subject to the limits on Tenant's
----------------------
assignment contained in Section 14, the provisions of this Lease shall be
binding upon and inure to the benefit of all successors and assigns of Landlord
and Tenant.
B. Date Payments Are Due. Except for payments to be made by Tenant
---------------------
under this Lease which are due upon demand, Tenant shall pay to Landlord any
amount for which Landlord renders a statement of account within ten days of
Tenant's receipt of Landlord's statement.
-24-
C. Meaning of "Landlord", "Re-Entry, "including" and "Affiliate".
-------------------------------------------------------------
The term "Landlord" means only the owner of the Project and the lessor's
interest in this Lease from time to time. The words "re-entry" and "re-enter"
are not restricted to their technical legal meaning. The words "including" and
similar words shall mean "without limitation." The word "affiliate" shall mean a
person or entity controlling, controlled by or under common control with the
applicable entity. "Control" shall mean the power directly or indirectly, by
contract or otherwise, to direct the management and policies of the applicable
entity.
D. Time of the Essence. Time is of the essence of each provision of
-------------------
this Lease.
E. No Option. This document shall not be effective for any purpose
---------
until it has been executed and delivered by both parties; execution and delivery
by one party shall not create any option or other right in the other party.
F. Severability. The unenforceability of any provision of this
------------
Lease shall not affect any other provision.
G. Governing Law. This Lease shall be governed in all respects by
-------------
the laws of Illinois, without regard to the principles of conflicts of laws.
H. Lease Modification. Tenant agrees to modify this Lease in any
------------------
way requested by a mortgagee which does not cause increased expense to Tenant or
otherwise materially adversely affect Tenant's interests under this Lease.
I. No Oral Modification. No modification of this Lease shall be
--------------------
effective unless it is a written modification signed by both parties.
J. Landlord's Right to Cure. If Landlord breaches any of its
------------------------
obligations under this Lease, Tenant shall notify Landlord and shall take no
action respecting such breach so long as Landlord immediately begins to cure the
breach and diligently pursues such cure to its completion. Landlord may cure any
default by Tenant; any expenses incurred shall become Additional Rent due from
Tenant on demand by Landlord.
K. Cautions. The captions used in this Lease shall have no effect
--------
on the construction of this Lease.
L. Authority. Landlord and Tenant each represents to the other that
---------
it has full power and authority to execute and perform this Lease.
M. Landlord's Enforcement of Remedies. Landlord may enforce any of
----------------------------------
its remedies under this Lease either in its own name or through an agent.
-25-
N. Entire Agreement. This Lease, together with all Appendices,
----------------
constitutes the entire agreement between the parties. No representations or
agreements of any kind have been made by either party which are not contained in
this Lease.
O. Landlord's Title. Landlord's title shall always be paramount to
----------------
the interest of the Tenant, and nothing in this Lease shall empower Tenant to do
anything which might in any way impair Landlord's title.
P. Light and Air Rights. Landlord does not grant in this Lease any
--------------------
rights to light and air in connection with Project. Landlord reserves to itself,
the Land, the Building below the improved floor of each floor of the Premises,
the Building above the ceiling of each floor of the Premises, the exterior of
the Premises and the areas on the same floor outside the Premises, along with
the areas within the Premises required for the installation and repair of
utility lines and other items required to serve other tenants of the Building.
Q. Consents. Neither party shall unreasonably withhold or delay any
--------
consent or approval required under this Lease, except as specifically permitted
in this Lease.
R. Singular and Plural. Wherever appropriate in this Lease, a
-------------------
singular term shall be construed to mean the plural where necessary, and a
plural term the singular. For example, if at any time two parties shall
constitute Landlord or Tenant, then the relevant term shall refer to both
parties together.
S. No Recording by Tenant. Tenant shall not record in any public
----------------------
records any memorandum or any portion of this Lease.
T. Exclusivity. Landlord does not grant to Tenant in this Lease any
-----------
exclusive right except the right to occupy its Premises.
U. No Construction Against Drafting Party. The rule of construction
--------------------------------------
that ambiguities are resolved against the drafting party shall not apply to this
Lease.
V. Survival. All obligations of Landlord and Tenant under this
--------
Lease shall survive the termination of this Lease.
W. Rent Not Based on Income. No rent or other payment in respect of
------------------------
the Premises shall be based in any way upon net income or profits from the
Premises. Tenant may not enter into or permit any sublease or license or other
agreement in connection with the Premises which provides for a rental or other
payment based on net income or profit.
X. Building Manager and Service Providers. Landlord may perform any
--------------------------------------
of its obligations under this Lease through its employees, the building manager
of the Project, or third parties hired by the Landlord or the building manager.
Upon the request of Landlord, Tenant shall enter into a contract approved by
Landlord as to form and content with the building
-26-
manager of the Project or third parties designated by Landlord for the
furnishing of such services, provided that no such contract shall require Tenant
to make more payments or accept fewer services than Tenant is entitled to under
this Lease.
Y. Interest on Late Payments. Interest shall be paid by Tenant to
-------------------------
Landlord on any late payments of Rent from the date due until paid at the rate
provided in Section 2D(3).
27. UNRELATED BUSINESS INCOME. If Landlord is advised by its counsel at
any time that any part of the payments by Tenant to Landlord under this Lease
may be characterized as unrelated business income under the United States
Internal Revenue Code and its regulations, then Tenant shall enter into any
amendment proposed by Landlord to avoid such income, so long as the amendment
does not require Tenant to make more payments or accept fewer services from
Landlord, than this Lease provides.
28. HAZARDOUS SUBSTANCES. Other than as provided for explicitly in
Section 6, Tenant shall not cause or permit any Hazardous Substances to be
brought upon, produced, stored, used, discharged or disposed of in or near the
Project unless Landlord has consented in writing to such storage or use in its
sole discretion. "Hazardous Substances" include those hazardous substances
described in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq., the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 et seq., any
other applicable federal, state or local law, and the regulations adopted under
these laws. If any lender or governmental agency shall require testing for
Hazardous Substances in the Premises, Tenant shall pay for such testing.
29. EXCULPATION. Landlord shall have no personal liability under this
Lease; its liability shall be limited to its interest in the Project, and shall
not extend to any other property or assets of the Landlord.
30. BASE RENT. Base Rent shall be in accordance with the following
Schedule:
Period Annual Base Rent Monthly Base Rent
------ ---------------- -----------------
(based on 10,236
square feet)
First Lease Year $12.55 per rentable square $10,705.15
foot
Second Lease Year $12.80 per rentable square $10,918.40
foot
Third Lease Year $13.05 per rentable square $11,131.65
foot
-27-
Fourth Lease Year $13.30 per rentable square $11,344.90
foot
Fifth Lease Year $13.55 per rentable square $11,558.15
foot
Sixth Lease Year $13.80 per rentable square $11,771.40
foot
Seventh Lease Year $14.05 per rentable square $11,984.65
foot
Eighth Lease Year $14.30 per rentable square $12,197.90
foot
Ninth Lease Year $14.55 per rentable square $12,411.15
foot
Tenth Lease Year $14.80 per rentable square $12,624.40
foot
31. EXTENSION. Subject to Sections 31B and 31C below, the Term of
this Lease may be extended, at the option of Tenant, for two (2) additional
periods of five (5) years each (the "Renewal Terms"). The Renewal Terms shall be
upon the same terms, covenants and conditions contained in this Lease, excluding
the provisions of Section 30 and this Section 31 of the Lease and except for the
amount of Base Rent payable during the Renewal Terms, and any reference in the
Lease to the "Term" of the Lease shall be deemed to include the Renewal Terms
and apply thereto, unless it is expressly provided otherwise. Tenant shall have
no extension options beyond the two aforesaid five year extension options. Any
termination of this Lease during the initial Term of this Lease shall terminate
all rights under this Section 31.
A. The initial Base Rent during the Renewal Terms shall be at a rate
equal to the greater of (i) the Base Rent existing on the date Tenant delivers
its initial non-binding notice, subject to escalation, and (ii) the then
prevailing Market Rate (defined hereinafter) for fully credit-worthy tenants for
comparable basement space in the Building and other comparable office buildings
in the vicinity of the Building as reasonably determined by Landlord. Tenant's
obligation to pay Operating Cost Share Rent and Tax Share Rent pursuant to
Section 2 of this Lease shall continue during the Renewal Terms.
B. For purposes of this Lease, "Market Rate", as defined above,
shall be determined as follows:
(i) On or before five (5) days after the time at which Tenant must
provide the Landlord with initial non-binding written notice under this
Lease of its intent to exercise
-28-
any of its rights to extend the Term of this Lease under this Section 31
or, on or before five (5) days after either Landlord or Tenant requests in
writing a determination of Market Rate, which determination is required for
purposes of enforcing any provision of this Lease, Landlord and Tenant
shall commence negotiations to agree upon the Market Rate (to be multiplied
by the rentable square feet in the Premises) applicable thereto. If the
Landlord and Tenant are unable to reach agreement on the Market Rate within
twenty-one (21) days after the date negotiations commenced, then the Market
Rate shall be determined in accordance with Section 31B(ii) below.
(ii) If the Landlord and Tenant are unable to reach agreement on the
Market Rate within said twenty-one (21) day period, then within seven (7)
days, the Landlord and Tenant shall each simultaneously submit to other in
a sealed envelope its good faith estimate of the Market Rate. If the higher
of such estimates is not more than one hundred five percent (105) of the
lower of such estimates then the Market Rate shall be the average of the
two estimates. Otherwise, within five (5) days either the Landlord or
Tenant may submit the question to arbitration in accordance with Section
31B(iii) below.
(iii) If the Landlord and Tenant are unable to agree upon the Market
Rate by exchange of estimates, then either may, by written notice of the
other within five (5) days after the exchange of good faith estimates
pursuant to Section 31B(ii) above, request to resolve the dispute by
arbitration. Within seven (7) days after the receipt of such request, the
parties shall select, as an arbitrator, a mutually acceptable independent
MAI appraiser with experience in real estate activities, including at least
five (5) years experience in appraising office space in the Chicago area (a
"Qualified Appraiser"). If the parties cannot agree on a Qualified
Appraiser, then within a second period of seven (7) days, each shall elect
a Qualified Appraiser and within ten (10) days thereafter the two appointed
Qualified Appraisers shall select a third Qualified Appraiser and the third
Qualified Appraiser shall be the arbitrator and shall determine the Market
Rate. If one party shall fail to make such appointment within said second
seven (7) day period, then the Qualified Appraiser chosen by the other
party shall be the sole arbitrator.
(iv) Once the arbitrator has been selected as provided in Section
31B(iii) above, then, as soon thereafter as practicable but in any case
within twenty-one (21) days, the arbitrator shall select one of the two
estimates of Market Rate submitted by the Landlord and Tenant, which shall
be the one that is closer to the fair market net rental value as determined
by the arbitrator. The value so selected shall be the Market Rate. The
decision of the arbitrator as to the Market Rate shall be submitted in
writing to, and be final and binding on, the Landlord and Tenant. If the
arbitrator believes that expert advice would materially assist him, he may
retain one or more qualified persons, including but not limited to, legal
counsel, brokers, architects or engineers, to provide such expert advice.
The party whose estimate is not chosen by the arbitrator shall pay the
costs of the arbitrator and of any experts retained by the arbitrator. Any
fees of any counsel or expert engaged directly by the Landlord or Tenant,
however, shall be borne by the party obtaining such counsel or expert.
-29-
C. Each option to extend shall be exercised by Tenant delivering an
initial non-binding written notice to Landlord not less than twelve (12) full
calendar months prior to the expiration of the initial Term of this Lease or
first Renewal Term, as applicable. Thereafter, the Market Rate for the
particular Renewal Term shall be calculated pursuant to Section 31B. Such
calculation shall reflect the Market Rate that would be payable per annum for a
term commencing on the first day of the Renewal Term with respect to which the
calculation is being made, provided that such calculation shall be final and
shall not be recalculated at the actual commencement of the Renewal Term (if
any). Tenant shall give Landlord final binding written notice of intent to
exercise its option to extend, if at all, no later than nine (9) months prior to
the expiration of the initial Term or first renewal term, as applicable.
D. Tenant's right to exercise its option to extend this Lease pursuant to
this Section 31, is subject to the following conditions: (i) that on the date
that Tenant delivers its final binding written notice of its election to
exercise its option to extend, Tenant is not in default under any of the terms,
covenants or conditions of this Lease, after the expiration of any applicable
notice and cure periods, and (ii) that Tenant shall not have assigned this Lease
or sublet the Premises at any time during the period commencing with the date
that Tenant delivers its final binding written notice to Landlord of its
exercise of such option to extend and ending on the commencement date of the
Renewal Term, or at any time prior to such period, if such assignment or
sublease extends into such period.
E. If Tenant fails to give its initial non-binding written notice of
intent or its final binding written notice of intent to exercise its option to
extend when due as provided in this Section 31, Tenant will be deemed to have
waived such option to extend.
32. TENANT'S IMPROVEMENTS PRIOR TO THE COMMENCEMENT DATE.
A. Tenant shall be obligated to improve the Premises, at its own
cost, in accordance with plans and specifications approved by Landlord, which
approval shall not be unreasonably withheld (such improvements are referred to
herein as the "Tenant's Improvements"). Tenant hereby agrees that such Tenant's
Improvements shall be completed on or before 120 days from the date Landlord
releases the Premises to Tenant (the "Completion Date"). The "Commencement Date"
of this Lease shall be the earlier of (i) the date Tenant begins operating its
business or (ii) on the Completion Date. Tenant hereby agrees that the plans and
specifications for the Tenant's Improvements shall comply with all applicable
statutes, ordinances, regulations, laws and codes. Landlord's approval of any of
such plans and specifications (or any modifications or changes thereto) shall
not impose upon Landlord or its agents or representatives any obligation with
respect to the design of the Tenant's Improvements or with respect to the
compliance of such Tenant's Improvements and/or the plans and specifications
therefor with applicable laws, codes, ordinances and regulations, it being
expressly understood that the obligation with respect to the design of the
Tenant's Improvements and its compliance with applicable laws, codes, ordinances
and regulations rests with the Tenant and the party responsible for preparing
such plans and specifications.
-30-
All such Tenant's Improvements shall comply with all insurance
requirements and with all applicable laws, ordinances and regulations. All
Tenant's Improvements shall be constructed in a good and workmanlike manner, and
only good grades of material shall be used. All Tenant's Improvements shall be
performed in such a fashion and by such means as necessary to maintain a
professional work environment in the areas surrounding the space to be improved.
Tenant shall only use labor that will work in peace and harmony with other
contractors and workers serving the Building in constructing Tenant's
Improvements. Tenant shall use reasonable efforts to avoid actions which may
unreasonably interfere with or delay the activities of other contractors serving
the Building and other tenants. Tenant shall permit Landlord to observe and
monitor all Tenant's Improvements.
Landlord's permitting Tenant and its agents and contractors to enter
the Premises prior to the Commencement Date to prepare the Premises for Tenant's
use and occupancy shall constitute a license only.
Landlord shall have the right to withdraw such license for any reason
upon twenty-four (24) hours' written notice to Tenant. Landlord shall not be
liable in any way for any injury, loss or damage which may occur to any of
Tenant's property or installations in the Premises prior to the Commencement
Date. Tenant shall protect defend, indemnify and save harmless Landlord from all
liabilities, costs, damages, fees and expenses arising out of the activities of
Tenant or its agents, contractors, suppliers or workmen in the Premises or the
Building.
-31-
IN WITNESS WHEREOF, the parties hereto have executed this Lease.
LANDLORD:
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA, a New York corporation
By: /s/ S. ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------------
Print Name: S. ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Print Title: Assistant Secretary
----------------------------------
TENANT:
FOCAL COMMUNICATIONS CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------------
Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Print Title: Executive Vice President
----------------------------------
-32-
APPENDIX A
PLAN OF THE PREMISES
(Graphic)
APPENDIX A
APPENDIX A-1
LOCATION OF GENERATOR
(Graphic)
APPENDIX A-1
APPENDIX B
CLEANING SCHEDULE
Landlord shall furnish janitorial service as described below:
DAILY
-----
Sweep, dry mop (using treated mops), or vacuum all floor areas (moving
light furniture) of resilient wood or carpet, remove matter such as gum and tar
which has adhered to the floor.
Empty and damp wipe all ashtrays and waste baskets and remove all trash.
Dust all horizontal surfaces with treated dust cloth, including furniture,
files, equipment, blinds, and louvers that can be reached without a ladder.
Damp wipe all telephones, including dials and crevices.
Spot wash to remove smudges, marks and fingerprints from such areas as
walls, equipment, doors, partitions and light switches within reach.
Wash and disinfect water fountains and water coolers.
Damp mop all non-resilient floors such as concrete, terrazzo and ceramic
tile.
Empty all waste containers.
Dust and rub down elevator doors, walls, and metal work in elevator cabs.
TOILET ROOMS
------------
Clean mirrors, soap dispensers, shelves, wash basins, exposed plumbing,
dispenser and disposal container exteriors using detergent disinfectant and
water. Damp wipe all ledges, toilet stalls and doors, spot clean light
switchers, doors and walls.
Clean toilets and urinals with detergent disinfectant, beginning with seats
and working down. Pour one ounce of bowl cleaner into urinal after cleaning and
do not flush.
Furnish and refill all soap, toilet, sanitary napkin and towel dispensers.
Clean all baseboards.
APPENDIX B
Page 1 of 2
Damp mop floors using detergent disinfectant.
WEEKLY
------
Wash all directory board, display, entry door and side light glass, as
necessary.
Spot clean carpet stains.
Spot wash interior partition glass and door glass to remove all smudge
marks and finger marks from doors, partitions, woodwork, window ledges and
window mullions.
MONTHLY
-------
Sweep stairwells and landings.
Wash all uncarpeted areas.
High dust all horizontal and vertical surfaces not reached in nightly
cleaning, such as pipes, light fixtures, door frames, picture frames and other
wall hangings.
QUARTERLY
---------
Vacuum all ceilings and wall air supply and exhaust diffusers or grills.
Wash all stairwell landings and treads.
Clean exterior windows of the building, weather permitting.
Scrub, wax and buff all tile areas.
APPENDIX B
Page 2 of 2
APPENDIX C
RULES AND REGULATIONS
1. Tenant shall not place anything, or allow anything to be placed near
the glass of any window, door, partition or wall which may, in Landlord's
judgment, appear unsightly from outside of the Project.
2. The Project directory shall be available to Tenant solely to display
names and their location in the Project, which display shall be as directed by
Landlord.
3. The sidewalks, halls, passages, exits, entrances, elevators and
stairways shall not be obstructed by Tenant or used by Tenant for any purposes
other than for ingress to and egress from the Premises. Tenant shall lend its
full cooperation to keep such areas free from all obstruction and in a clean and
sightly condition and shall move all supplies, furniture and equipment as soon
as received directly to the Premises and move all such items and waste being
taken from the Premises (other than waste customarily removed by employees of
the Building) directly to the shipping platform at or about the time arranged
for removal therefrom. The halls, passages, exits, entrances, elevators,
stairways, balconies and roof are not for the use of the general public and
Landlord shall, in all cases, retain the right to control and prevent access
thereto by all persons whose presence in the judgment of Landlord, reasonably
exercised, shall be prejudicial to the safety, character, reputation and
interests of the Project. Neither Tenant nor any employee or invites of Tenant
shall go upon the roof of the Project.
4. The toilet rooms, urinals, wash bowls and other apparatuses shall not
be used for any purposes other than that for which they were constructed, and no
foreign substance of any kind whatsoever shall be thrown therein, and to the
extent caused by Tenant or its employees or invitees, the expense of any
breakage, stoppage or damage resulting from the violation of this rule shall be
borne by Tenant.
5. Tenant shall not cause any unnecessary janitorial labor or services by
reason of Tenant's carelessness or indifference in the preservation of good
order and cleanliness.
6. Tenant shall not install or operate any refrigerating, heating or air
conditioning apparatus, or carry on any mechanical business without the prior
written consent of Landlord; use the Premises for housing, lodging or sleeping
purposes; or permit preparation or warming of food in the Premises (warming of
coffee and individual meals with employees and guests excepted). Tenant shall
not occupy or use the Premises or permit the Premises to be occupied or used for
any purpose, act or thing which is in violation of any public law, ordinance or
governmental regulation or which may be dangerous to persons or property.
7. Tenant shall not bring upon, use or keep in the Premises or the
Project any kerosene, gasoline or inflammable or combustible fluid or material,
or any other articles deemed
APPENDIX C
PAGE 1 of 5
hazardous to persons or property, or use any method of heating or air
conditioning other than that supplied by Landlord.
8. Landlord shall have sole power to direct electricians as to where and
how telephone and other wires are to be introduced, except that Tenant may
control the location and type of wiring to the extent Tenant requires unique
wiring in connection with its operating a telephone company. No boring or
cutting for wires is to be allowed without the consent of Landlord. The location
of telephones, call boxes and other office equipment affixed to the Premises
shall be subject to the approval of Landlord.
9. No additional locks shall be placed upon any doors, windows or
transoms in or to the Premises. Tenant shall not change existing locks or the
mechanism thereof. Upon termination of the lease, Tenant shall deliver to
Landlord all keys and passes for offices, rooms, parking lot and toilet rooms
which shall have been furnished Tenant. In the event of the loss of keys so
furnished, Tenant shall pay Landlord therefor. Tenant shall not make, or cause
to be made, any such keys and shall order all such keys solely from Landlord and
shall pay Landlord for any keys in addition to the two sets of keys originally
furnished by Landlord for each lock.
10. Tenant shall not install linoleum, tile, carpet or other floor
covering so that the same shall be affixed to the floor of the Premises in any
manner except as approved by Landlord.
11. No furniture, packages, supplies, equipment or merchandise will be
received in the Project or carried up or down in the freight elevator, except
between such hours and in such freight elevator as shall be designated by
Landlord. Tenant shall not take or permit to be taken in or out of other
entrances of the Building, or take or permit on other elevators, any item
normally taken in or out through the trucking concourse or service doors or in
or on freight elevators.
12. Tenant shall cause all doors to the Premises to be closed and securely
locked and shall turn off all utilities, lights and machines before leaving the
Project at the end of the day.
13. Without the prior written consent of Landlord, Tenant shall not use
the name of the Project or any picture of the Project in connection with, or in
promoting or advertising the business of, Tenant, except Tenant may use the
address of the Project as the address of its business.
14. Tenant shall cooperate fully with Landlord to assure the most
effective operation of the Premises' or the Project's heating and air
conditioning, and shall refrain from attempting to adjust any controls, other
than room thermostats installed for Tenant's use. Tenant shall keep corridor
doors closed.
APPENDIX C
PAGE 2 of 5
15. Tenant assumes full responsibility for protecting the Premises from
theft, robbery and pilferage, which may arise from a cause other than Landlord's
negligence, which includes keeping doors locked and other means of entry to the
Premises closed and secured.
16. Peddlers, solicitors and beggars shall be reported to the office of
the Project or as Landlord otherwise requests.
17. Tenant shall not advertise the business, profession or activities of
Tenant conducted in the Project in any manner which violates the letter or
spirit of any code of ethics adopted by any recognized association or
organization pertaining to such business, profession or activities.
18. No bicycle or other vehicle and no animals or pets shall be allowed in
the Premises, halls, freight docks, or any other parts of the Building except
that blind persons may be accompanied by "seeing eye" dogs. Tenant shall not
make or permit any noise, vibration or odor to emanate from the Premises, or do
anything therein tending to create, or maintain, a nuisance, or do any act
tending to injure the reputation of the Building.
19. Tenant acknowledges that Building security problems may occur which
may require the employment of extreme security measures in the day-to-day
operation of the Project.
Accordingly:
(a) Landlord may, at any time, or from time to time, or for regularly
scheduled time periods, as deemed advisable by Landlord and/or its agents, in
their sole discretion, require that persons entering or leaving the Project or
the Property identify themselves to watchmen or other employees designated by
Landlord, by registration, identification or otherwise.
(b) Tenant agrees that it and its employees will cooperate fully with
Project employees in the implementation of any and all security procedures.
(c) Such security measures shall be the sole responsibility of
Landlord, and Tenant shall have no liability for any action taken by Landlord in
connection therewith.
20. Tenant shall not do or permit the manufacture, sale, purchase, use or
gift of any fermented, intoxicating or alcoholic beverages without obtaining
written consent of Landlord.
21. Tenant shall not disturb the quiet enjoyment of any other tenant.
22. Tenant shall not provide any janitorial services or cleaning without
Landlord's written consent and then only subject to supervision of Landlord and
at Tenant's sole
APPENDIX C
PAGE 3 of 5
responsibility and by janitor or cleaning contractor or employees at all times
satisfactory to Landlord.
23. Landlord may retain a pass key to the Premises and be allowed
admittance thereto at all times to enable its representatives to examine the
Premises from time to time and to exhibit the same and Landlord may place and
keep on the windows and doors of the Premises at any time signs advertising the
Premises for Rent.
24. No equipment, mechanical ventilators, awnings, special shades or other
forms of window covering shall be permitted either inside or outside the windows
of the Premises without the prior written consent of Landlord, and then only at
the expense and risk of Tenant, and they shall be of such shape, color,
material, quality, design and make as may be approved by Landlord.
25. Tenant shall not during the term of this Lease canvas or solicit other
tenants of the Building for any purpose.
26. Tenant shall not install or operate any phonograph, musical or sound
producing instrument or device, radio receiver or transmitter, TV receiver or
transmitter, or similar device in the Building, nor install or operate any
antenna, aerial, wires or other equipment inside or outside the Building, nor
operate any electrical device from which may emanate electrical waves which may
interfere with or impair radio or television broadcasting or reception from or
in the Building or elsewhere, without in each instance the prior written
approval of Landlord. The use thereof, if permitted, shall be subject to control
by Landlord to the end that others shall not be disturbed.
27. Tenant shall promptly remove all rubbish and waste from the Premises.
28. Tenant shall not exhibit, sell or offer for sale, Rent or exchange in
the Premises or at the Project any article, thing or service, except those
ordinarily embraced within the use of the Premises specified in Section 6 of
this Lease, without the prior written consent of Landlord.
29. Tenant shall list all furniture, equipment and similar articles Tenant
desires to remove from the Premises or the Building and deliver a copy of such
list to Landlord and procure a removal permit from the Office of the Building
authorizing Building employees to permit such articles to be removed.
30. Tenant shall not overload any floors in the Premises or any public
corridors or elevators in the Building.
APPENDIX C
PAGE 4 of 5
31. Tenant shall not do any painting in the Premises, or ▇▇▇▇, paint, cut
or drill into, drive nails or screws into, or in any way deface any part of the
Premises or the Building, outside or inside, without the prior written consent
of Landlord.
32. Whenever Landlord's consent, approval or satisfaction is required
under these Rules, then unless otherwise stated, any such consent, approval or
satisfaction must be obtained in advance, such consent or approval may be
granted or withheld in Landlord's sole discretion, and Landlord's satisfaction
shall be determined in its sole judgment.
33. Tenant and its employees shall cooperate in all fire drills conducted
by Landlord in the Building.
APPENDIX C
PAGE 5 of 5
APPENDIX D
[Intentionally Deleted]
APPENDIX D
Page 1 of 1
APPENDIX E
MORTGAGES CURRENTLY AFFECTING THE PROJECT
-----------------------------------------
None.
APPENDIX E
Page 1 of 1