EXHIBIT 10.1
AGREEMENT OF PURCHASE AND SALE
1851 Arthur Avenue, Elk Grove Village (“1851”)
3001 Malmo Drive, Arlington Heights (“3001”)
ARTICLE 1: PROPERTY/PURCHASE PRICE
          1.1 Certain Basic Terms.

     
Purchaser and Notice Address:
  With a copy to:
PROLOGIS, a Maryland real estate investment trust
  MAYER, BROWN, ROWE & MAW LLP
Attn: William Moody
  Attn: Milos Markovic, Esq.
4545 Airport Way
  71 South Wacker Drive
Denver, Colorado 80239
  Chicago, Illinois 60606
Telephone: 303/567-5753
  Telephone: 312/701-7202
Facsimile: 303/567-5602
  Facsimile: 312/706-8505
 
   
 
  and to
 
   
 
  PROLOGIS
 
  Attn: David Riefe
 
  100 Division Street, Suite 101
 
  Bensenville, Illinois 60106
 
  Telephone: 630/350-5429
 
  Facsimile: 630/350-5929
 
   
(b) Seller and Notice Address:
  With a copy to:
John B. Sanfilippo and Son, Inc.
  John B. Sanfilippo and Sons, Inc.
Attn: Jeffrey Sanfilippo
  Attn: Jasper B. Sanfilippo
2299 Busse Road
  2299 Busse Road
Elk Grove, Illinois 60007
  Elk Grove, Illinois 60007
Telephone: 847/871-6553
  Telephone: 847/871-6576
Facsimile: 847/593-9608
  Facsimile: 847/593-9608
 
   
 
  and to
 
  Stahl Cowen Crowley LLC
 
  Attn: Lauane C. Addis
 
  55 W. Monroe St., Suite 500
 
  Chicago, IL 60603
 
  Telephone: 312/641-0060
 
  Facsimile: 312/641-6959
 
   
(c) Title Company:
  (d) Escrow Agent:
Fidelity National Title Insurance Company
  Fidelity National Title Insurance Company
Attn: Shirley Fox
  Attn:                                        
8110 E. Union Avenue, #400
                                                              
Denver, Colorado 80237
  Chicago, IL 60602
Telephone: 720/200-1245
  Telephone: 312/                                        
Facsimile: 720/489-7593
  Facsimile: 312/                                        

      (e) Date of this Agreement: The latest date of execution by the Seller or
the Purchaser, as indicated on the signature page.

 

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(f) Purchase Price:
  $3,650,000 for 1851
$4,150,000 for 3001
 
   
(g) Earnest Money:
  The “Initial Earnest Money” of $100,000, including interest thereon, plus the
“Additional Earnest Money” of $150,000, including interest thereon.
 
   
(h) Due Diligence Period:
  The period ending 45 days after the Date of this Agreement, unless sooner
waived by Purchaser.
 
   
(i) Closing Date:
  As designated by the Purchaser upon not less than 10 days’ prior notice, but
no later than 15 days’ after the Due Diligence Period.
 
   
(j) Broker:
  Grubb and Ellis and NAI Hiffman

          1.2 Property. Subject to the terms and conditions of this Agreement of
Purchase and Sale (the “Agreement”), Seller agrees to sell to Purchaser, and
Purchaser agrees to purchase from Seller, the following property (collectively,
the “Property”):
          (a) The “Real Property,” being the land described in Exhibit A
attached hereto, together with (i) all improvements located thereon
(“Improvements”), (ii) all and singular the rights, benefits, privileges,
easements, tenements, hereditaments, and appurtenances thereon or in anywise
appertaining to such real property, and (iii) without warranty, all right,
title, and interest of Seller in and to all strips and gores and any land lying
in the bed of any street, road or alley, open or proposed, adjoining such real
property.
          (b) The “Tangible Personal Property,” being all equipment, machinery,
furniture, furnishings, supplies and other tangible personal property owned by
Seller, and Seller’s interest in any such property leased by Seller, now or
hereafter located in and used in connection with the operation, ownership or
management of the Real Property, but specifically excluding any personal
property used by Seller or any tenant in the operation of any business on the
Property, including, without limitation, equipment used for food processing or
related businesses.
          (c) The “Intangible Personal Property,” being all intangible personal
property related to the Real Property and the Improvements, including, without
limitation: the plans and specifications and other architectural and engineering
drawings for the Improvements; warranties; contract rights related to the
construction, operation, ownership or management of the Real Property (but only
to the extent Seller’s obligations thereunder are expressly assumed by Purchaser
pursuant to this Agreement); governmental permits, approvals and licenses (to
the extent assignable); and all records relating to the Property.
          1.3 Earnest Money. Within 5 business days after receipt of a fully
executed copy of this Agreement, Purchaser shall deposit the Initial Earnest
Money with the Escrow Agent. Within 5 business days after the expiration or
waiver by Purchaser of the Due Diligence Period, Purchaser shall deposit the
Additional Earnest Money with the Escrow Agent. The Earnest Money shall be
applied to the Purchase Price at Closing. If this Agreement terminates pursuant
to any express right of Purchaser to terminate this Agreement, the Earnest Money
shall be refunded to Purchaser immediately upon request, and all further rights
and obligations of the parties under this Agreement shall terminate except those
that by their terms survive any termination of this Agreement. The Earnest Money
shall be held and disbursed by the Escrow Agent pursuant to Article 9 of this
Agreement.
          1.4 Independent Contract Consideration. At the same time as the
deposit of the Earnest Money to the Escrow Agent, Purchaser shall deliver to
Seller in cash the sum of One Hundred and No/100 Dollars ($100.00) (the
“Independent Contract Consideration”), which amount has been bargained for and
agreed to as consideration for Purchaser’s exclusive option to purchase the
Property and the Due Diligence Period provided herein, and for Seller’s
execution and delivery of this Agreement. The Independent Contract Consideration
is in addition to and independent of all other consideration provided in this
Agreement, and is nonrefundable in all events.

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ARTICLE 2: INSPECTION
          2.1 Seller’s Delivery of Specified Documents. Seller has provided to
Purchaser prior to the Date of this Agreement the following items, to the extent
such items were in Seller’s possession or control (the “Property Information”):
          (a) Operating Expense Detail. Operating expense detail of the Property
for the 36 months preceding this Agreement (“Operating Statements”);
          (b) Tax Statements. Copies or a summary of ad valorem tax statements
relating to the Property for the current year or other current tax period (if
available) and for the 24 months preceding this Agreement;
          (c) Service Contracts. Copies of all management, service, supply,
equipment rental, and other contracts, if any, related to the operation of the
Property (“Service Contracts”);
          (d) Maintenance Records. All available maintenance work orders for the
12 months preceding this Agreement;
          (e) List of Capital Improvements. A list of all capital improvements
known to the Seller and performed on the Property within the 24 months preceding
this Agreement;
          (f) Reports. Any other reports, studies, documents or information
(including, without limitation, environmental and soils reports) in Seller’s
possession or control related to the Property;
          (g) Plans: Governmental Approvals. All construction plans and
specifications in Seller’s possession relating to the original development of
the Property and any major capital repairs or tenant improvements, temporary and
final certificates of occupancy (tenant and Seller) and all other governmental
permits and approvals applicable to the Property;
          (h) Existing Title and Survey Documents. Copy of Seller’s existing
title insurance policy and any existing ALTA “as-built” survey of the Property;
          (i) Notices of Violations. Notices, if any, (i) of violations of any
governmental law or regulation or any covenants or restrictions encumbering the
Property or any physical defect in the Improvements, or (ii) from any insurance
company or underwriter of any defect that would adversely affect the
insurability of the Property or cause an increase in insurance premiums; and
          (j) Litigation. Notices, if any, of any action or proceeding pending
or, to Seller’s knowledge, threatened against Seller or relating to the
Property, including, without limitation, any condemnation proceedings, which
challenges or impairs Seller’s ability to execute or perform its obligations
under this Agreement.
          Seller shall have an ongoing obligation during the pendency of this
Agreement to provide Purchaser with any document described above and coming into
Seller’s possession or produced by Seller after the Date of this Agreement.
          2.2 Due Diligence.
          (a) Due Diligence Termination. Purchaser shall have through the last
day of the Due Diligence Period in which to examine, inspect, and investigate
the Property and, in Purchaser’s sole and absolute judgment and discretion, to
determine whether the Property is acceptable to Purchaser and to obtain all
necessary internal approvals. If Purchaser, by written notice to Seller, waives
its right to-terminate this Agreement pursuant to this Paragraph prior to the
last day of the Due Diligence Period, then the Due Diligence Period shall be
deemed to have ended on the date such notice is received by Seller.
Notwithstanding anything to the contrary in this Agreement, Purchaser may
terminate this Agreement by giving notice of termination to Seller (the “Due
Diligence Termination Notice”) on or before the last day of the Due Diligence
Period. If Purchaser does not give the Due Diligence

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Termination Notice, this Agreement shall continue in full force and effect and
said right to terminate shall be deemed waived by Purchaser. If this Agreement
terminates pursuant to this Paragraph 2.2, the Earnest Money shall be refunded
to Purchaser immediately upon request, and all further rights and obligations of
the parties under this Agreement shall terminate.
          (b) Access to Property/Indemnification. Purchaser shall have
reasonable access to the Property for the purpose of conducting surveys,
architectural, engineering, geotechnical and environmental inspections and tests
(including intrusive inspection and sampling), and any other inspections,
studies, or tests reasonably required by Purchaser. Purchaser shall keep the
Property free and clear of any liens and will protect, indemnify, defend and
hold Seller, and its officers, directors, shareholders, employees, agents,
successors and assigns (collectively, the “Indemnified Parties”) harmless from
and against any claim for liabilities, losses, costs, expenses (including
reasonable attorneys’ fees), damages or injuries suffered or incurred by any of
the Indemnified Parties arising out of, resulting from, relating to or connected
with: (a) any Due Diligence performed at the Property by Purchaser or its
agents, employees, consultants, representatives or contractors pursuant to this
Section 2.2; and/or (b) the negligence or willful misconduct of, or other acts
or omissions of Purchaser or its agents, employees, consultants, representatives
or contractors at the Property. If any inspection or test disturbs the Property,
Purchaser will restore the Property to the same condition as existed prior to
any such inspection or test. Purchaser and its agents, employees, and
representatives shall have a continuing right of reasonable access to the
Property during the pendency of this Agreement for the purpose of conducting
inspections, studies, or tests of the Property and Purchaser shall have the
right to conduct a “walk-through” of the Property prior to the Closing upon
appropriate notice to tenants as permitted under the Leases. In the course of
its investigations, Purchaser may make inquiries to third parties, including,
without limitation, tenants, lenders, contractors, property managers, parties to
Service Contracts and municipal, local and other government officials and
representatives, and Seller consents to such inquiries. The obligations of the
Purchaser under this paragraph shall survive the termination of the Agreement.
          (c) Confidentiality. Purchaser hereby agrees to make commercially
reasonable efforts to keep confidential any Property Information which may be
delivered or disclosed to it which is not otherwise available to the general
public. Purchaser shall also take commercially reasonable steps to ensure that
every employee, agent or representative of Purchaser to whom such confidential
Property Information is divulged observes the undertakings in this Agreement.
The Property Information shall remain the sole property of Seller and upon
termination of this Agreement for any reason, Purchaser shall return to Seller
any and all documents and records containing any or all of the Property
Information, including all copies thereof, within four (4) business days after
such termination.
          (d) Disclosure by Seller. Seller shall be entitled to make all
disclosures regarding the transaction contemplated under this Agreement as
required under the regulations of the Securities and Exchange Commission,
including all necessary information required to complete and file Form 8-K, and
under any other applicable law, rule, regulation or ordinance. Seller shall
provide a copy of all such disclosures to Purchaser simultaneously with the
filing or issuance of same.
          (e) Leases. At Closing, Seller and Purchaser shall execute a lease for
both 1851 and 3001 (collectively, the “Leases”) in the form attached hereto as
Exhibit B.
          2.3 Service Contracts. During the Due Diligence Period Seller will
disclose to Purchaser which Service Contracts Purchaser will assume and which
Service Contracts will be terminated by Seller at Closing or at the termination
of the Leases. On the date that Seller delivers possession of the Property to
Purchaser under the terms of the Leases, Purchaser will assume the obligations
arising from and after said date under those Service Contracts that are not in
default as of the Closing Date and which Seller and Purchaser have agreed will
not be terminated. At or prior to the date that Seller will deliver possession
of the Property to Purchaser under the terns of the Leases, Seller shall
terminate all Service Contracts that are not so assumed. Seller shall terminate
at Closing, and Purchaser shall not assume, any property management agreement
affecting the Property.
ARTICLE 3: TITLE AND SURVEY REVIEW
          3.1 Delivery of Title Commitment and Survey. Seller shall cause to be
prepared an effective commitment for title insurance with an effective date on
or after the Date of this Agreement (the “Title Commitment”) issued by the Title
Company, in the amount of the Purchase Price with Purchaser as the proposed

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insured, and accompanied by true, complete, and legible copies of all documents
referred to in the Title Commitment, except documents relating to liens of an
ascertainable amount voluntarily created by, under or through Seller, which
liens Seller shall cause to be released at the Closing. Purchaser shall cause to
be prepared a current ALTA-ACSM Land Title Survey of the Property (the “Survey”)
including a certification addressed to Purchaser.
          3.2 Title Review and Cure. During the Due Diligence Period, Purchaser
shall review title to the Property as disclosed by the Title Commitment and the
Survey. Seller will cooperate with Purchaser in curing any objections Purchaser
may have to title to the Property. Seller shall have no obligation to cure title
objections except liens of an ascertainable amount created by, under or through
Seller, which liens Seller shall cause to be released, removed from the Title
Commitment or insured over by endorsement to the title policy to be issued in
accordance with the Title Commitment (the form and substance of such endorsement
must be reasonably acceptable to Purchaser) by the Title Company at the Closing;
provided however, that Seller may establish a title indemnity with Title Company
for the purpose of contesting any such lien, so long as Title Company provides
complete title insurance to Purchaser over such lien. Seller further agrees to
remove any exceptions or encumbrances to title that are created by, under or
through Seller after the date of this Agreement without Purchaser’s consent.
Purchaser may terminate this Agreement and receive a refund of the Earnest Money
if the Title Company revises the Title Commitment after the expiration of the
Due Diligence Period to add or modify exceptions, or to add or modify the
conditions to obtaining any endorsement requested by Purchaser during the Due
Diligence Period, if such additions or modifications are not acceptable to
Purchaser and are not removed by the Closing Date. The term “Permitted
Exceptions” shall mean: the specific exceptions (exceptions that are not part of
the promulgated title insurance form) in the Title Commitment that the Title
Company has not agreed to insure over or remove from the Title Commitment as of
the end of the Due Diligence Period and that Seller is not required to remove as
provided above; items shown on the Survey, which have not been removed as of the
end of the Due Diligence Period; real estate taxes not yet due and payable; and
tenants in possession as tenants only under the Leases without any option to
purchase or acquire an interest in the Property.
          3.3 Delivery of Title Policy at Closing. As a condition to Purchaser’s
obligation to close, the Escrow Agent shall deliver to Purchaser at Closing an
ALTA Form B (or other form required by state law) Owner’s Policy of Title
Insurance (the “Title Policy”), with extended coverage (i.e., with ALTA General
Exceptions 1 through 5 deleted, or with corresponding deletions if the Property
is located in a non-ALTA state), issued by the Title Company as of the date and
time of the recording of the Deed, in the amount of the Purchase Price,
containing the Purchaser’s Endorsements, insuring Purchaser as owner of good,
marketable and indefeasible fee simple title to the Property, and subject only
to the Permitted Exceptions, “Purchaser’s Endorsements” shall mean, to the
extent such endorsements are available under the laws of the state in which the
Property is located: (a) owner’s comprehensive; (b) access; (c) survey (accuracy
of survey); (d) location (survey legal matches title legal); (e) separate tax
lot; (f) legal lot; (g) zoning 3.1, with parking; and (h) such other
endorsements as Purchaser may require based on its review of the Title
Commitment and Survey, Seller shall execute at Closing an affidavit in such form
as the Title Company shall reasonably require for the issuance of the Title
Policy. The Title Policy may be delivered after the Closing if at the Closing
the Title Company issues a currently effective, duly-executed “marked-up” Title
Commitment and irrevocably commits in writing to issue the Title Policy in the
form of the “marked-up” Title Commitment promptly after the Closing Dale.
          3.4 Purchaser shall pay the cost of the Survey and the Purchaser’s
Endorsements and Seller shall pay the cost of the premium for the Title Policy,
including the premium for extended coverage.
ARTICLE 4: OPERATIONS AND RISK OF LOSS
          4.1 Ongoing Operations. During the pendency of this Agreement:
          (a) Performance under Service Contracts. Seller shall (i) carry on its
business and activities relating to the Property substantially in the same
manner as it did before the Date of this Agreement, and (ii) perform its
obligations under the Service Contracts and other agreements that may affect the
Property. Each party agrees to indemnify and hold the other harmless from any
default or breach by the other under the Service Contracts assumed by Purchaser.

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          (b) New Contracts. Seller will not enter into any contract that will
be an obligation affecting the Property subsequent to the Closing without the
prior written consent of Purchaser, not to be unreasonably withheld or delayed.
          (c) Listings and Other Offers. Seller will not list the Property with
any broker or otherwise solicit or make or accept any offers to sell the
Property, engage in any discussions or negotiations with any third party with
respect to the sale or other disposition of the Property, or enter into any
contracts or agreements (whether binding or not) regarding any disposition of
the Property.
          (d) Leasing Arrangements. Seller will not enter into any lease or
other occupancy agreement without Purchaser’s prior written consent in each
instance.
          (e) Removal and Replacement of Tangible Personal Property. Seller will
be entitled to remove equipment and tenant fixtures, including any
cooler/freezer improvements and associated equipment. Seller will not otherwise
remove any Tangible Personal Property except as may be required for necessary
repair or replacement, and replacement shall be of equal quality and quantity as
existed as of the time of its removal.
          (f) Notices. Seller shall promptly furnish to Purchaser copies of any
written notices hereafter received by Seller of (i) any suit, judgment or other
proceeding filed, entered or threatened with respect to the Property or Seller’s
use or ownership thereof, (ii) any actual or contemplated changes in zoning of
the Property or any other legal requirement which would adversely affect the
use, ownership, maintenance or leasing of the Property, and (iii) any default by
any other party or notice or claim of default by Seller made by any other party
under any of the Leases or Service Contracts.
          (g) Acts or Omissions. Seller will not take or consent to take or omit
to take any action which would render untrue or incorrect any of the warranties
and representations made by Seller herein or which would otherwise threaten or
impair Seller’s ability to perform as contemplated by this Agreement and Seller
will use its best efforts to cause each condition precedent to Closing set forth
in Section 5.2 below to be satisfied.
          (h) Miscellaneous. Seller shall not convey any portion of the Property
or rights therein, nor enter into any conveyance, security document, easement or
other agreement or amendment to agreement granting to any rights with respect to
the Property or any part thereof, or any interest whatsoever therein, or any
option thereto, and any such conveyance or other agreement entered into in
violation of this provision shall be null and void and of no force or effect.
          4.2 Damage. Risk of loss up to and including the Closing Date shall be
borne by Seller. In the event of any material damage to or destruction of the
Property or any portion thereof, Purchaser may, at its option, by notice to
Seller given within 10 days after Seller notifies Purchaser of such damage or
destruction (and if necessary the Closing Date shall be extended to give
Purchaser the full 10-day period to make such election): (i) terminate this
Agreement and the Earnest Money shall be immediately returned to Purchaser, or
(ii) proceed under this Agreement, receive any insurance proceeds (including any
rent loss insurance applicable to any period on and after the Closing Date) due
Seller as a result of such damage or destruction and assume responsibility for
such repair, and Purchaser shall receive a credit at Closing for any deductible,
uninsured or coinsured amount under said insurance policies. If Purchaser elects
(ii) above, Purchaser may extend the Closing Date for up to an additional 10 day
period in which to obtain insurance settlement agreements with Seller’s
insurers, and Seller will cooperate with Purchaser in obtaining the insurance
proceeds and such agreements from Seller’s insurers. If the Property is not
materially damaged, then Purchaser shall not have the right to terminate this
Agreement, but Seller shall, at its cost, repair the damage before the Closing
in a manner reasonably satisfactory to Purchaser or if repairs cannot be
completed before the Closing, credit Purchaser at Closing for the reasonable
cost to complete the repair. “Material damage” and “Materially damaged” means
damage (x) reasonably exceeding five (5%) percent (on a per property or
cumulative basis) of the Purchase Price to repair, or (y) which, in Purchaser’s
reasonable estimation, will take longer than 90 days to repair.
          4.3 Condemnation. In the event any proceedings in eminent domain are
contemplated, threatened or instituted by any body having the power of eminent
domain with respect to the Property or any portion thereof, Purchaser may, at
its option, by notice to Seller given within 10 business days after Seller
notifies Purchaser of such proceedings (and if necessary the Closing Date shall
be extended to give Purchaser the full 10 business day period to

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make such election): (i) if said proceedings will result in a taking of more
than five (5%) percent of any building located on the Property, terminate this
Agreement and the Earnest Money shall be immediately returned to Purchaser, or
(ii) proceed under this Agreement, in which event Seller shall, at the Closing,
assign to Purchaser its entire right, title and interest in and to any
condemnation award, and Purchaser shall have the sole right during the pendency
of this Agreement to negotiate and otherwise deal with the condemning authority
in respect of such matter.
ARTICLE 5: CLOSING
          5.1 Closing. The consummation of the transaction contemplated herein
(“Closing”) shall be done through the mail, with both parties delivering to the
Escrow Agent all closing deliveries on or before the Closing Date. Closing shall
occur through an escrow with the Escrow Agent. Funds shall be deposited into and
held by Escrow Agent in a closing escrow account with a bank satisfactory to
Purchaser and Seller. Upon satisfaction or completion of all closing conditions
and deliveries, the parties shall direct the Escrow Agent to immediately record
and deliver the closing documents to the appropriate parties and make
disbursements according to the closing statements executed by Seller and
Purchaser. The Escrow Agent shall agree in writing with Purchaser that (1)
recordation of the Deed constitutes its representation that it is holding the
closing documents, closing funds and closing statements and is prepared and
irrevocably committed to disburse the closing funds in accordance with the
closing statement and (2) release of funds to the Seller shall irrevocably
commit it to issue the Title Policy in accordance with this Agreement.
          5.2 Conditions to the Parties’ Obligations to Close. In addition to
all other conditions set forth herein, the obligation of Seller, on the one
hand, and Purchaser, on the other hand, to consummate the transactions
contemplated hereunder shall be contingent upon the following:
          (a) The other party’s representations and warranties contained herein
shall be true and correct as of the Date of this Agreement and the Closing Date.
For purposes of this clause (a), if a representation is made to knowledge, but
the factual matter that is the subject of the representation is false
notwithstanding any lack of knowledge or notice to the party making the
representation, such event shall constitute a failure of this condition only,
and not a default by Seller;
          (b) As of the Closing Date, the other party shall have performed its
obligations hereunder and all deliveries to be made at Closing have been
tendered;
          (c) There shall exist no pending or threatened actions, suits,
arbitrations, claims, attachments, proceedings, assignments for the benefit of
creditors, insolvency, bankruptcy, reorganization or other proceedings, pending
or threatened against the other party that would materially and adversely affect
the operation or value of the Property or the other party’s ability to perform
its obligations under this Agreement;
          (d) For Purchaser’s benefit, there shall have been no material adverse
change to the Property, the operation thereof or income therefrom from and after
the expiration of the Due Diligence Period; and
          (e) There shall exist no pending or threatened action, suit or
proceeding with respect to the other party before or by any court or
administrative agency which seeks to restrain or prohibit, or to obtain damages
or a discovery order with respect to, this Agreement or the consummation of the
transactions contemplated hereby.
          (f) The obligation of both parties to close this transaction is
contingent upon the closing of the sale by Arthur/Busse Limited Partnership to
Purchaser of the real estate commonly know as 2299 Busse Road, Elk Grove
Village, Illinois, pursuant to an Agreement of Purchase and Sale by and between
said parties of even date herewith (the “Busse Closing”), occurring on the
Closing Date. If the Busse Closing does not occur on the Closing Date by reason
of a default by Purchaser, such default shall be a-default by Purchaser under
this Agreement-and Seller shall have all rights and remedies as provided in this
Agreement. If the Busse Closing does not occur on the Closing Date by reason of
a default by the seller thereof, such default shall be deemed to be a default by
Seller under this Agreement and Purchaser shall have all rights and remedies as
provided in this Agreement.

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          So long as a party is not in default hereunder, if any condition to
such party’s obligation to proceed with the Closing hereunder has not been
satisfied as of the Closing Date, such party may, in its sole discretion,
(i) terminate this Agreement by delivering written notice to the other party on
or before the Closing Date, (ii) elect to extend the Closing until such
condition is satisfied, and (iii) elect to consummate the transaction,
notwithstanding the non-satisfaction of such condition, in which event such
party shall be deemed to have waived any such condition. In the event such party
elects to close, notwithstanding the non-satisfaction of such condition, there
shall be no liability on the part of any other party hereto for breaches of
representations and warranties of which the party electing to close had actual
knowledge at the Closing. Notwithstanding the foregoing, the failure of a
condition due to the breach of a party shall not relieve such breaching party
from any liability it would otherwise have hereunder.
          5.3 Seller’s Deliveries in Escrow. At least 1 business day prior to
the Closing Date, Seller shall deliver in escrow to the Escrow Agent the
following:
          (a) Deed. A special warranty deed (warranting title against any party
claiming by, through or under Seller) in form provided for under the law of the
state where the Property is located, or otherwise in conformity with the custom
in such jurisdiction and mutually satisfactory to the parties, executed and
acknowledged by Seller, conveying to Purchaser good, indefeasible and marketable
fee simple title to the Real Property, subject only to the Permitted Exceptions
(the “Deed”);
          (b) Bill of Sale and Assignment of Contracts. A Bill of Sale and
Assignment of Contracts in the form of Exhibit C attached hereto (the
“Assignment”), executed and acknowledged by Seller, vesting in Purchaser good
title to the property described therein free of any claims, except for the
Permitted Exceptions to the extent applicable;
          (c) Leases. Original, signed counterparts of the Leases;
          (d) State Law Disclosures. Such disclosures and reports as are
required by applicable state and local law in connection with the conveyance of
real property;
          (e) FIRPTA. A Foreign Investment in Real Property Tax Act affidavit
executed by Seller. If Seller fails to provide the necessary affidavit and/or
documentation of exemption on the Closing Date, Purchaser may proceed with
withholding provisions as provided by law;
          (f) CCRs. If the Property is subject to a declaration of covenants,
conditions and restrictions or similar instrument (“CCRs”) governing or
affecting the use, operation, maintenance, management or improvement of the
Property, (i) estoppel certificates, in form and substance satisfactory to
Purchaser, from the declarant, association, committee, agent and/or other person
or entity having governing or approval rights under the CCRs, and (ii) a
recordable assignment, in form and substance satisfactory to Purchaser,
assigning any and all developer, declarant or other related rights or interests
of Seller (or any affiliate of Seller) in or under the CCRs;
          (g) Authority. Evidence of the existence, organization and authority
of Seller and of the authority of the persons executing documents on behalf of
Seller reasonably satisfactory to the Escrow Agent and the Title Company; and
          (h) Additional Documents. Any additional documents that Purchaser, the
Escrow Agent or the Title Company may reasonably require for the proper
consummation of the transaction contemplated by this Agreement.
          5.4 Purchaser’s Deliveries in Escrow. Except as specified below, at
least 1 business day prior to the Closing Date, Purchaser shall deliver in
escrow to the Escrow Agent the following:
          (a) Purchase Price. On the Closing Date, the Purchase Price, less the
Earnest Money that is applied to the Purchase Price, plus or minus applicable
prorations, deposited by Purchaser with the Escrow Agent in immediate, same-day
federal funds wired for credit into the Escrow Agent’s escrow account;
          (b) Bill of Sale and Assignment of Contracts. The Assignment, executed
by Purchaser;

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          (c) Leases. Original, signed counterparts of the Leases;
          (d) State Law Disclosures. Such disclosures and reports as are
required by applicable state and local law in connection with the conveyance of
real property; and
          (e) Additional Documents. Any additional documents that Seller, the
Escrow Agent or the Title Company may reasonably require for the proper
consummation of the transaction contemplated by this Agreement.
          5.5 Closing Statements. At least 1 business day prior to the Closing
Date, Seller and Purchaser shall deposit with the Escrow Agent executed closing
statements consistent with this Agreement in the form required by the Escrow
Agent. If Seller and Purchaser cannot agree on the closing statement to be
deposited as aforesaid because of a dispute over the prorations and adjustments
set forth therein, the Closing nevertheless shall occur, and the amount in
dispute shall be withheld from the Purchase Price and placed in an escrow with
the Title Company, to be paid out upon the joint direction of the parties or
pursuant to court order upon resolution or other final determination of the
dispute.
          5.6 Title Policy. The Escrow Agent shall deliver to Purchaser the
Title Policy in accordance with the provisions of Paragraph 3.3.
          5.7 Possession. Seller shall deliver possession of the Property to
Purchaser at the Closing subject only to the Permitted Exceptions.
          5.8 Delivery of Books and Records. Immediately after the Closing,
Seller shall deliver to the offices of Purchaser’s property manager: copies or
originals of all contracts, receipts for deposits, unpaid bills and other papers
or documents which pertain to the Property; all booklets, keys and other items,
if any, used in the operation of the Property; and, if in Seller’s possession or
control, the original “as-built” plans and specifications and all other
available plans and specifications. Seller shall cooperate with Purchaser after
Closing to transfer to Purchaser any such information stored electronically.
ARTICLE 6: PRORATIONS
          6.1 Prorations. As the tenant under the Lease will continue to pay all
real estate taxes, utilities and expenses relating to the Property after
Closing, there shall be no proration of real estate taxes, utilities or other
expenses relating to the Property at Closing.
          6.2 Service Contracts. Seller or Purchaser, as the case may be, shall
receive a credit for regular charges under Service Contracts assumed by
Purchaser pursuant to this Agreement paid and applicable to Purchaser’s period
of ownership or payable and applicable to Seller’s period of ownership,
respectively.
          6.3 Sales, Transfer, and Documentary Taxes. Seller shall pay all
sales, gross receipts, compensating, stamp, excise, documentary, transfer, deed
or similar taxes and fees imposed in connection with this transaction under
applicable state or local law.
          6.4 Utility Deposits. Seller shall receive a credit for the amount of
deposits, if any, with utility companies that are transferable and that are
assigned to Purchaser at the Closing.
          6.5 Sales Commissions. Seller and Purchaser represent and warrant each
to the other that they have not dealt with any real estate broker, sales person
or finder in connection with this transaction other than Broker. If this
transaction is closed, Seller shall pay Broker in accordance with their separate
agreement. Broker is an independent contractor and is not authorized to make any
agreement or representation on behalf of either party. Except as expressly set
forth above, in the event of any claim for broker’s or finder’s fees or
commissions in connection with the negotiation, execution or consummation of
this Agreement or the transactions contemplated hereby, each party shall
indemnify and hold harmless the other party from and against any such claim
based upon any statement, representation or agreement of such party.

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ARTICLE 7: REPRESENTATIONS AND WARRANTIES
          7.1 Seller’s Representations and Warranties. As a material inducement
to Purchaser to execute this Agreement and consummate this transaction, Seller
represents and warrants to Purchaser that:
          (a) Organization and Authority. Seller has been duly organized, is
validly existing, and is in good standing as a Delaware corporation. Seller is
in good standing and is qualified to do business in the state where the Real
Property is located. Seller has the full right and authority and has obtained
any and all consents required to enter into this Agreement and to consummate or
cause to be consummated the transactions contemplated hereby. This Agreement has
been, and all of the documents to be delivered by Seller at the Closing will be,
authorized and properly executed and constitutes, or will constitute, as
appropriate, the valid and binding obligation of Seller, enforceable in
accordance with their terms.
          (b) Conflicts and Pending Actions or Proceedings. To Seller’s
knowledge, there is no agreement to which Seller is a party or is binding on
Seller which is in conflict with this Agreement. To Seller’s knowledge, there is
no action or proceeding pending or threatened against Seller or relating to the
Property, including, without limitation, any condemnation proceedings, which
challenges or impairs Seller’s ability to execute or perform its obligations
under this Agreement.
          (c) Contractors and Suppliers. All contractors, subcontractors,
suppliers, architects, engineers, and others who have performed services or
labor or have supplied materials in connection with Seller’s acquisition,
development, ownership, or management of the Property have been paid in full and
all liens arising therefrom (or claims which with the passage of time or the
giving of notice, or both, could mature into liens) have been or will be
satisfied and released or insured over by the Title Company.
          (d) Service Contracts. The list of Service Contracts to be delivered
to and assumed by Purchaser pursuant to this Agreement will be true, correct,
and complete as of the date of its delivery. Neither Seller nor, to Seller’s
knowledge, any other party is in default under any Service Contract.
          (e) Operating Expenses. The operating expense detail to be delivered
to Purchaser pursuant to this Agreement will show all items of expense
(operating and capital) incurred in connection with Seller’s ownership,
operation, and management of the Property for the periods indicated and will be
true, correct, and complete in all material respects.
          (f) Violations or Defects. Seller has received no written notice,
regarding conditions which have not been heretofore corrected: that the Property
or the use thereof violates any governmental law or regulation (including,
without limitation, environmental) or any covenants or restrictions encumbering
the Property; of any physical defect in the Improvements; or from any insurance
company or underwriter of any defect that would adversely affect the
insurability of the Property or cause an increase in insurance premiums and
Seller has not done or caused anything to be done that would cause such
violation or defect.
          (g) Withholding Obligation. Seller’s sale of the Property is not
subject to any federal, state or local withholding obligation of Purchaser under
the tax laws applicable to Seller or the Property.
          (h) Outside Agreements. Other than as delivered with the Property
Information or as disclosed in the Permitted Exceptions, to Seller’s knowledge,
there is no other agreement, understanding or restriction with or for the
benefit of any person or entity, private, public or quasi-public, that will be
binding upon Purchaser after Closing and which may prevent or limit in any way
the current use or Purchaser’s intended use of the Property or for any uses
allowed by current zoning regulations.
          (i) No Leases. The Property is not subject to any lease or other
occupancy agreement or any related commission or similar agreement which will
not be terminated as of the date of closing.
As used herein, the phrase “Seller’s knowledge” (as well as any similar phrases)
when used to qualify a representation and warranty shall mean the actual
knowledge of Seller, without investigation.

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          7.2 Purchaser’s Representations and Warranties. As a material
inducement to Seller to execute this Agreement and consummate this transaction,
Purchaser represents and warrants to Seller that:
          (a) Organization and Authority. Purchaser has been duly organized and
is validly existing as a real estate investment trust, in good standing in the
Maryland, and will be qualified to do business in the state in which the Real
Property is located on the Closing Date. Subject only to obtaining certain
internal approvals on or before the expiration of the Due Diligence Period,
Purchaser has the full right and authority and has obtained any and all consents
required to enter into this Agreement and to consummate or cause to be
consummated the transactions contemplated hereby. This Agreement has been, and
all of the documents to be delivered by Purchaser at the Closing will be,
authorized and properly executed and constitutes, or will constitute, as
appropriate, the valid and binding obligation of Purchaser, enforceable in
accordance with their terms.
          (b) Conflicts and Pending Action. There is no agreement to which
Purchaser is a party or to Purchaser’s knowledge binding on Purchaser which is
in conflict with this Agreement. There is no action or proceeding pending or, to
Purchaser’s knowledge, threatened against Purchaser which challenges or impairs
Purchaser’s ability to execute or perform its obligations under this Agreement.
          7.3 Survival of Representations and Warranties. The representations
and warranties set forth in this Article 7 are made as of the Date of this
Agreement and are remade as of the Closing Date and shall not be deemed to be
merged into or waived by the instruments of Closing, but shall survive the
Closing for a period of one (1) year. Each of the representations, warranties
and covenants set forth in this Section 7 are expressly limited to the actual
knowledge of the Seller, without investigation, regardless of any language to
the contrary elsewhere in this Agreement. Each party agrees to defend and
indemnify the other against any claim, liability, damage or expense asserted
against or suffered by such other party arising out of the breach or inaccuracy
of any such representation or warranty. Subject to said limitation, each party
agrees to defend and indemnify the other against any claim, liability, damage or
expense asserted against or suffered by such other party arising out of the
breach or inaccuracy of any such representation or warranty. Seller and
Purchaser shall have the right to bring an action thereon only if Seller or
Purchaser, as the case may be, has given the other party written notice of the
circumstances giving rise to the alleged breach within such one (1) year period.
          7.4 “AS IS”. PURCHASER ACKNOWLEDGES AND AGREES THAT THE PURCHASE OF
THE PROPERTY BY PURCHASER IS ON AN “AS-IS” “WHERE-IS” BASIS. EXCEPT FOR ANY
REPRESENTATION OR WARRANTY EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY
DOCUMENT EXECUTED PURSUANT TO OR IN CONNECTION WITH THIS AGREEMENT, SELLER HAS
NOT MADE, AND SHALL UNDER NO CIRCUMSTANCES BE DEEMED TO HAVE MADE, AND SELLER
HEREBY DISCLAIMS, AND PURCHASER HAS NOT RELIED UPON, ANY REPRESENTATION OR
WARRANTY, EITHER EXPRESS OR IMPLIED, TO PURCHASER, OR ANY PERSON REPRESENTING
PURCHASER, OR ANY PERSON OR ENTITY UPON WHICH PURCHASER RELIES IN PURCHASING THE
PROPERTY, AS TO ANY MATTER WHATSOEVER CONCERNING THE PROPERTY INCLUDING, WITHOUT
LIMITATION, THE CONDITION OF THE PROPERTY AND EACH PART THEREOF, SOIL CONDITIONS
OR ANY ENVIRONMENTAL CONDITION WITH RESPECT TO THE PROPERTY (INCLUDING, WITHOUT
LIMITATION, THE PRESENCE OR RELEASE OF ANY POLLUTANT, CONTAMINANT OR HAZARDOUS
SUBSTANCE IN, ON OR UNDER THE PROPERTY), THE ADEQUACY, MERCHANTABILITY,
SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, THE STATE OF REPAIR OF THE
PROPERTY OR ANY PART THEREOF. EXCEPT FOR (I) DAMAGE CLAIMS ARISING FROM EXPRESS
BREACHES OF THE AFOREMENTIONED WARRANTIES AND/OR (II) ANY RIGHTS OF CONTRIBUTION
AND/OR CLAIMS FOR INDEMNITY AGAINST SELLER THAT PURCHASER MAY HAVE UNDER
APPLICABLE LAWS WITH RESPECT TO THIRD PARTY CLAIMS, PURCHASER SHALL NOT HAVE A
CLAIM AGAINST SELLER FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING,
WITHOUT LIMITATION, BUSINESS INTERRUPTION OR STRICT OR- ABSOLUTE LIABILITY IN
TORT, OCCASIONED BY OR ARISING IN CONNECTION WITH THE CONDITION OR ANY ALLEGED
CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, LIABILITY ARISING OUT
OF ANY ENVIRONMENTAL CONDITION WITH RESPECT TO THE PROPERTY (INCLUDING, WITHOUT
LIMITATION, THE PRESENCE OF ANY POLLUTANT, CONTAMINANT OR HAZARDOUS SUBSTANCE
IN, ON OR UNDER THE PROPERTY). SELLER SHALL NOT BE OBLIGATED TO CONDUCT

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ANY INQUIRY OR INVESTIGATION REGARDING THE CONDITION OF THE PROPERTY IN
CONNECTION WITH THIS AGREEMENT.
ARTICLE 8: DEFAULT AND REMEDIES
          8.1 Seller’s Default. If this transaction fails to close as a result
of Seller’s default, Purchaser shall, as its sole and exclusive remedy at law or
in equity, select either to: (i) terminate this Agreement, receive a refund of
the Earnest Money and Seller shall reimburse Purchaser for out-of-pocket costs
actually incurred by Purchaser in connection with the transaction contemplated
by this Agreement, provided however, that Seller’s liability for such costs
shall not exceed Fifty Thousand ($50,000) Dollars, or (ii) pursue the remedy of
specific performance, provided, however, that in the event that Seller has
conveyed the Property so as to make specific performance unavailable to
Purchaser, Purchaser shall in that instance be entitled to pursue any and all
remedies available for breach of contract at law and in equity.
          8.2 Purchaser’s Default. If this transaction fails to close due to the
default of Purchaser, then Seller’s sole remedy in such event shall be to
terminate this Agreement and to retain the Earnest Money as liquidated damages,
Seller waiving all other rights or remedies in the event of such default by
Purchaser. The parties acknowledge that Seller’s actual damages in the event of
a default by Purchaser under this Agreement will be difficult to ascertain, and
that such liquidated damages represent the parties’ best estimate of such
damages.
          8.3 Notice of Default. Except for a party’s failure to close on the
Closing Date, neither party shall have the right to declare a default by the
other party and terminate this Agreement because of a failure by such other
party to perform under the terms of this Agreement unless the other party shall
fail to cure such failure to perform within three business days after its
receipt of written notice of such failure to perform.
          8.4 Other Expenses. If this Agreement is terminated due to the default
of a party, then the defaulting party shall pay any fees due to the Escrow Agent
for holding the Earnest Money and any fees due to the Title Company for
cancellation of the Title Commitment.
ARTICLE 9: EARNEST MONEY PROVISIONS
          9.1 Investment and Use of Funds. The Escrow Agent shall invest the
Earnest Money in government insured interest-bearing accounts satisfactory to
Purchaser at an institution having assets of not less than $125,000,000, shall
not commingle the Earnest Money with any funds of the Escrow Agent or others,
and shall promptly provide Purchaser and Seller with confirmation of the
investments made. If the Closing under this Agreement occurs, the Escrow Agent
shall deliver the Earnest Money to, or upon the joint instructions of, Seller
and Purchaser on the Closing Date. Provided such supplemental escrow
instructions are not in conflict with this Agreement as it may be amended in
writing from time to time, Seller and Purchaser agree to execute such
supplemental escrow instructions as may be appropriate to enable Escrow Agent to
comply with the terms of this Agreement.
          9.2 Termination. Upon a termination of this Agreement other, either
party to this Agreement (the “ Terminating Party ”) may give written notice to
the Escrow Agent and the other party (the “ Non-Terminating Party ”) of such
termination and the reason for such termination. Such request shall also
constitute a request for the release of the Earnest Money to the Terminating
Party. The Non-Terminating Party shall then have five business days in which to
object in writing to the release of the Earnest Money to the Terminating Party.
If the Non-Terminating Party provides such an objection, then the Escrow Agent
shall retain the Earnest Money until it receives written instructions executed
by both Seller and Purchaser as to the disposition and disbursement of the
Earnest Money, or until ordered by final court order, decree or judgment, which
is not subject to appeal, to deliver the Earnest Money to a particular party, in
which event the Earnest Money shall be delivered in accordance with such notice,
instruction, order, decree-or judgment.
          9.3 Interpleader. Seller and Purchaser mutually agree that in the
event of any controversy regarding the Earnest Money, unless mutual written
instructions are received by the Escrow Agent directing the Earnest Money’s
disposition, the Escrow Agent shall not take any action, but instead shall await
the disposition of any

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proceeding relating to the Earnest Money or, at the Escrow Agent’s option, the
Escrow Agent may interplead all parties and deposit the Earnest Money with a
court of competent jurisdiction in which event the Escrow Agent may recover all
of its court costs and reasonable attorneys’ fees. Seller or Purchaser,
whichever loses in any such interpleader action, shall be solely obligated to
pay such costs and fees of the Escrow Agent, as well as the reasonable
attorneys’ fees of the prevailing party in accordance with the other provisions
of this Agreement.
          9.4 Liability of Escrow Agent. The parties acknowledge that the Escrow
Agent is acting solely as a stakeholder at their request and for their
convenience, that the Escrow Agent shall not be deemed to be the agent of either
of the parties, and that the Escrow Agent shall not be liable to either of the
parties for any action or omission on its part taken or made in good faith, and
not in disregard of this Agreement, but shall be liable for its negligent acts
and for any loss, cost or expense incurred by Seller or Purchaser resulting from
the Escrow Agent’s mistake of law respecting the Escrow Agent’s scope or nature
of its duties. Seller and Purchaser shall jointly and severally indemnify and
hold the Escrow Agent harmless from and against all costs, claims and expenses,
including reasonable attorneys’ fees, incurred in connection with the
performance of the Escrow Agent’s duties hereunder, except with respect to
actions or omissions taken or made by the Escrow Agent in bad faith, in
disregard of this Agreement or involving negligence on the part of the Escrow
Agent.
          9.5 Escrow Fee. Except as expressly provided herein to the contrary,
the escrow fee, if any, charged by the Escrow Agent for holding the Earnest
Money or conducting the Closing shall be shared equally by Seller and Purchaser,
except that if this Agreement is terminated by Purchaser pursuant to Paragraph
9.2, the escrow fee shall be borne by Purchaser.
ARTICLE 10: MISCELLANEOUS
          10.1 Parties Bound. Neither party may assign this Agreement without
the prior written consent of the other, and any such prohibited assignment shall
be void; provided, however, Purchaser may assign this Agreement without Seller’s
consent to an Affiliate and either party may assign this Agreement without the
other’s consent to effect an Exchange pursuant to Paragraph 10.17. Subject to
the foregoing, this Agreement shall be binding upon and inure to the benefit of
the respective legal representatives, successors, assigns, heirs, and devisees
of the parties. For the purposes of this paragraph, the term “Affiliate” means
(a) an entity that directly or indirectly controls, is controlled by or is under
common control with the Purchaser or (b) an entity at least a majority of whose
economic interest is owned by Purchaser; and the term “control” means the power
to direct the management of such entity through voting rights, ownership or
contractual obligations.
          10.2 Headings. The article and paragraph headings of this Agreement
are for convenience only and in no way limit or enlarge the scope or meaning of
the language hereof.
          10.3 Invalidity and Waiver. If any portion of this Agreement is held
invalid or inoperative, then so far as is reasonable and possible the remainder
of this Agreement shall be deemed valid and operative, and, to the greatest
extent legally possible, effect shall be given to the intent manifested by the
portion held invalid or inoperative. The failure by either party to enforce
against the other any term or provision of this Agreement shall not be deemed to
be a waiver of such party’s right to enforce against the other party the same or
any other such term or provision in the future.
          10.4 Governing Law. This Agreement shall, in all respects, be
governed, construed, applied, and enforced in accordance with the law of the
state in which the Real Property is located.
          10.5 Survival. The provisions of this Agreement that contemplate
performance after the Closing and the obligations of the parties not fully
performed at the Closing shall survive the Closing and shall not be deemed to be
merged into or waived by the instruments of Closing.
          10.6 No Third Party Beneficiary. This Agreement is not intended to
give or confer any benefits, rights, privileges, claims, actions, or remedies to
any person or entity as a third party beneficiary, decree, or otherwise.

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          10.7 Entirety and Amendments. This Agreement embodies the entire
agreement between the parties and supersedes all prior agreements and
understandings relating to the Property. This Agreement may be amended or
supplemented only by an instrument in writing executed by the party against whom
enforcement is sought.
          10.8 Time. Time is of the essence in the performance of this
Agreement.
          10.9 Confidentiality. Seller shall make no public announcement or
disclosure of any information related to this Agreement to outside brokers or
third parties, before or after the Closing, without the prior written specific
consent of Purchaser; provided, however, that Seller may make disclosure of this
Agreement to its lenders, creditors, officers, employees and agents as necessary
to perform its obligations hereunder.
          10.10 Attorneys’ Fees. Should either party employ attorneys to enforce
any of the provisions hereof, the party against whom any final judgment is
entered agrees to pay the prevailing party all reasonable costs, charges, and
expenses, including attorneys’ fees, expended or incurred in connection
therewith.
          10.11 Notices. All notices required or permitted hereunder shall be in
writing and shall be served on the parties at the addresses set forth in
Paragraph 1.1. Any such notices shall be either (a) sent by overnight delivery
using a nationally recognized overnight courier, in which case notice shall be
deemed delivered one business day after deposit with such courier, (b) sent by
telefax, in which case notice shall be deemed delivered upon transmission of
such notice, or (c) sent by personal delivery, in which case notice shall be
deemed delivered upon receipt. A party’s address may be changed by written
notice to the other party; provided, however, that no notice of a change of
address shall be effective until actual receipt of such notice. Copies of
notices are for informational purposes only, and a failure to give or receive
copies of any notice shall not be deemed a failure to give notice. Notices given
by counsel to the Purchaser shall be deemed given by Purchaser and notices given
by counsel to the Seller shall be deemed given by Seller.
          10. 12 Construction. The parties acknowledge that the parties and
their counsel have reviewed and revised this Agreement and agree that the normal
rule of construction, to the effect that any ambiguities are to be resolved
against the drafting party, shall not be employed in the interpretation of this
Agreement or any exhibits or amendments hereto.
          10.13 Calculation of Time Periods. Unless otherwise specified, in
computing any period of time described herein, the day of the act or event after
which the designated period of time begins to run is not to be included and the
last day of the period so computed is to be included at, unless such last day is
a Saturday, Sunday or legal holiday for national banks in the location where the
Property is located, in which event the period shall run until the end of the
next day which is neither a Saturday, Sunday, or legal holiday. The last day of
any period of time described herein shall be deemed to end at 6:00 p.m. Denver,
Colorado time.
          10.14 Information and Audit Cooperation. At Purchaser’s request, at
any time before or after the Closing, Seller shall, at Purchaser’s sole expense,
provide to Purchaser’s designated independent auditor access to the books and
records of the Property, and all related information regarding the period for
which Purchaser is required to have the Property audited under the regulations
of the Securities and Exchange Commission, and Seller shall provide to such
auditor a representation letter regarding the books and records of the Property,
in substantially the form of Exhibit F attached hereto, in connection with the
normal course of auditing the Property in accordance with generally accepted
auditing standards. The Purchaser agrees to indemnify and hold harmless the
Seller from any claim, damage, loss, or liability to which Seller is at any time
subjected by any person who is not a party to this Agreement as a result of
Seller’s compliance with this paragraph.
          10.15 Procedure for Indemnity. The following provisions govern actions
for indemnity under this Agreement, Promptly after receipt by an indemnitee of
notice of any claim, such indemnitee will, if a claim in respect thereof is to
be made against the indemnitor, deliver to the indemnitor written notice thereof
and the indemnitor shall have the right to participate in and, if the indemnitor
agrees in writing that it will be responsible for any costs, expenses,
judgments, damages, and losses incurred by the indemnitee with respect to such
claim, to assume the defense thereof, with counsel mutually satisfactory to the
parties; provided, however, that an indemnitee shall have the right to retain
its own counsel, with the fees and expenses to be paid by the indemnitor, if the
indemnitee reasonably believes that representation of such indemnitee by the
counsel retained by the indemnitor

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would be inappropriate due to actual or potential differing interests between
such indemnitee and any other party represented by such counsel in such
proceeding. The failure of indemnitee to deliver written notice to the
indemnitor within a reasonable time after indemnitee receives notice of any such
claim shall relieve such indemnitor of any liability to the indemnitee under
this indemnity only if and to the extent that such failure is prejudicial to its
ability to defend such action, and the omission so to deliver written notice to
the indemnitor will not relieve it of any liability that it may have to any
indemnitee other than under this indemnity. If an indemnitee settles a claim
without the prior written consent of the indemnitor, then the indemnitor shall
be released from liability with respect to such claim unless the indemnitor has
unreasonably withheld such consent.
          10.16 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, and all
of such counterparts shall constitute one Agreement. Execution copies of this
Agreement may be delivered by facsimile, and the parties hereto agree to accept
and be bound by facsimile signatures hereto. The signature of any party on a
facsimile document, for purposes hereof, is to be considered as an original
signature, and the document transmitted is to be considered to have the same
binding effect as an original signature on an original document. At the request
of either party, any facsimile document is to be re-executed in original form by
the party who executed the original facsimile document. Neither party may raise
the use of a facsimile machine or the fact that any signature was transmitted
through the use of a facsimile machine as a defense to the enforcement of this
Agreement.
          10.17 Section 1031 Exchange. Each party may consummate the purchase
and sale of the Property as part of a so-called like kind exchange (the
“Exchange”) pursuant to Section 1031 of the Internal Revenue Code of 1986, as
amended (the “Code”), provided that: (i) the Closing shall not be delayed or
affected by reason of the Exchange nor shall the consummation or accomplishment
of the Exchange be a condition precedent or condition subsequent to the
exchanging party’s obligations under this Agreement; (ii) the exchanging party
shall effect the Exchange through an assignment of this Agreement, or its rights
under this Agreement, to a qualified intermediary; (iii) the non-exchanging
party shall not be required to take an assignment of the purchase agreement for
the relinquished property or be required to acquire or hold title to any real
property for purposes of consummating the Exchange; and (iv) the exchanging
party shall pay any additional costs that would not otherwise have been incurred
by either party had the exchanging party not consummated its purchase through
the Exchange. The non-exchanging party shall not by this agreement or
acquiescence to the Exchange (1) have its rights under this Agreement affected
or diminished in any manner or (2) be responsible for compliance with or be
deemed to have warranted to the exchanging party that the Exchange in fact
complies with Section 1031 of the Code.
          10.18 Limitation of Liability. In accordance with the Declaration of
Trust of Purchaser, notice is hereby given that all persons dealing with
Purchaser shall look to the assets of Purchaser for the enforcement of any claim
against Purchaser, as neither the trustees, officers, employees nor shareholders
of Purchaser assume any personal liability for obligations entered into by or on
behalf of Purchaser.
          10.19 Further Assurances. In addition to the acts and deeds recited
herein and contemplated to be performed, executed and/or delivered by either
party at Closing, each party agrees to perform, execute and deliver, but without
any obligation to incur any additional liability or expense, on or after the
Closing any further deliveries and assurances as may be reasonably necessary to
consummate the transactions contemplated hereby or to further perfect the
conveyance, transfer and assignment of the Property to Purchaser.
[REMAINDER OF PAGE INTENTIONALLY BLANK]

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SIGNATURE PAGE TO
AGREEMENT OF PURCHASE AND SALE
BY AND BETWEEN
JOHN B. SANFILIPPO & SON, INC.
AND
PROLOGIS
          IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year written below.

                  JOHN B. SANFILIPPO & SON, INC.,
a Delaware corporation    
 
           
 
  By:
Name:   /s/  Jasper B. Sanfilippo
 
Jasper B. Sanfilippo    
 
           
 
  Title:   CEO    
 
           
Dated: May 11, 2006
           

“Seller”               

                  PROLOGIS,
a Maryland real estate investment trust    
 
           
 
  By:
Name:   /s/  John Bezzant
 
John Bezzant    
 
           
 
  Title:   First Vice President    
 
           
 
      Asset Services    
Dated: 5/9, 2006
           

“Purchaser”               
Escrow Agent has executed this Agreement in order to confirm that the Escrow
Agent has received and shall hold the Earnest Money and the interest earned
thereon, in escrow, and shall disburse the Earnest Money, and the interest
earned thereon, pursuant to the provisions of Article 9.

                  FIDELITY NATIONAL TITLE INSURANCE COMPANY    
 
           
 
  By:        
 
  Name:  
 
   
 
           
 
  Title:        
 
           
Dated:                    , 2006
           

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AGREEMENT OF PURCHASE AND SALE
EXHIBITS

     
A -
  Legal Description of Real Property  
B -
  Leases  
C -
  Bill of Sale and Assignment of Contracts

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EXHIBIT A
LEGAL DESCRIPTION OF REAL PROPERTY

 

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1851 Arthur & Malmo
CHICAGO TITLE INSURANCE COMPANY
COMMITMENT FOR TITLE INSURANCE
SCHEDULE A (CONTINUED)
ORDER NO. : 1401  008336448  D1

5.   THE LAND REFERRED TO IN THIS COMMITMENT IS DESCRIBED AS FOLLOWS:

PARCEL 1:
LOT 2 IN SANFILIPPO RESUBDIVISION, BEING A RESUBDIVISION IN THE SOUTH 1/2 OF THE
SOUTHWEST 1/4 OF SECTION 35, TOWNSHIP 41 NORTH, RANGE 11 EAST OF THE THIRD
PRINCIPAL MERIDIAN, IN COOK COUNTY, ILLINOIS.
PARCEL 2:
LOT 211 IN CENTEX INDUSTRIAL PARK UNIT 108 BEING A SUBDIVISION IN SECTION 35,
TOWNSHIP 41 NORTH, RANGE 11 EAST OF THE THIRD PRINCIPAL MERIDIAN, IN COOK
COUNTY, ILLINOIS.
PARCEL 3:
THE NORTH 400 FEET OF THE WEST 50 FEET OF THAT PART OF THE SOUTHWEST 1/4 OF
SECTION 35, TOWNSHIP 41 NORTH, RANGE 11 EAST OF THE THIRD PRINCIPAL MERIDIAN,
BOUNDED AND DESCRIBED AS FOLLOWS:
COMMENCING AT THE NORTHWEST CORNER OF LOT 208 IN CENTEX INDUSTRIAL PARK 105,
BEING A SUBDIVISION IN SAID SECTION 35, THENCE SOUTH ALONG THE WEST LINE OF SAID
LOT 208 AND THE WEST LINE OF LOT “A” IN SAID CENTEX INDUSTRIAL PARK UNIT 105,
425 FEET TO THE SOUTHWEST CORNER OF SAID LOT “A”, THENCE WEST ALONG THE SOUTH
LINE OF SAID LOT “A” EXTENDED WEST, A DISTANCE OF 465.12 FEET; THENCE NORTH 425
FEET TO A POINT ON THE SOUTH LINE OF ARTHUR AVENUE 463 FEET WEST OF THE PLACE OF
BEGINNING; THENCE EAST ALONG SAID SOUTH LINE OF ARTHUR AVENUE 463 FEET TO THE
PLACE OF BEGINNING, IN COOK COUNTY, ILLINOIS.
PARCEL 4:
THE SOUTH 25 FEET OF THAT PART OF THE SOUTH 1/2 OF THE SOUTHWEST 1/4 OF SECTION
35, TOWNSHIP 41 NORTH, RANGE 11, EAST OF THE THIRD PRINCIPAL MERIDIAN, DESCRIBED
AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF LOT 194 IN CENTEX INDUSTRIAL PARK UNIT 17,
BEING A SUBDIVISION IN SAID SECTION 35, THENCE EAST ALONG THE SOUTH LINE OF
ARTHUR AVENUE, 217.55 FEET TO THE WEST LINE OF EAST 60 ACRES OF THE SOUTH 1/2 OF
THE SOUTHWEST 1/4 OF SECTION 35; THENCE SOUTH ALONG SAID WEST LINE OF EAST 60
ACRES, 425.00 FEET TO THE SOUTH LINE OF LOT “A” IN THE CENTEX INDUSTRIAL PARK
UNIT 17 PRODUCED EAST; THENCE WEST ALONG SAID EXTENDED SOUTH LINE OF LOT “A”,
215.65 FEET TO THE SOUTHEAST CORNER OF LOT 194 AFORESAID; THENCE NORTH ALONG THE
EAST LINE OF LOT 194, 425.00 FEET TO THE PLACE OF BEGINNING, IN COOK COUNTY,
ILLINOIS.
PARCEL 5:
LOT “A” IN CENTEX INDUSTRIAL PARK UNIT 108, BEING A SUBDIVISION IN SECTION 35,
TOWNSHIP 41 NORTH, RANGE 11 EAST OF THE THIRD PRINCIPAL MERIDIAN, IN COOK
COUNTY, ILLINOIS.
PARCEL 6:
THE NORTH 100 FEET OF LOT 2 AND LOT 3 IN THE ELMHURST-ALGONQUIN INDUSTRIAL PARK
UNIT NO. 1, BEING A RESUBDIVISION OF PART OF LOT 3 IN LINNEMAN’S DIVISION OF
SECTION 23, TOWNSHIP 41 NORTH RANGE 11 EAST OF THE THIRD PRINCIPAL MERIDIAN, IN
COOK COUNTY, ILLINOIS.

PAGE A2

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EXHIBIT B
LEASES
Attached Hereto

 

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[Net Lease]
LEASE AGREEMENT
     THIS LEASE AGREEMENT is made this ___day of___,___, between ProLogis
(“Landlord”), and the Tenant named below.

         
Tenant:
    John B. Sanfilippo & Sons, Inc.  
 
       
Tenant’s Representative,
    ___  
Address, and Telephone:
    ___  
 
    ___  
 
    ___, ___ ___  
 
    ___  
 
       
Premises:
    The land containing approximately ___ square feet commonly known as Elk
Grove Distribution Center #23,1851 Arthur Avenue, Elk Grove Village, Illinois
60007 and the improvements located thereon including an approximately 83,192
square feet building (the “Building”).  
 
       
Building:
    Elk Grove Distribution Center #23
1851 Arthur Avenue
Elk Grove Village, Illinois 60007  
 
       
Lease Term:
    Beginning on the Commencement Date and ending August 31st, 2008.  
 
       
Commencement Date:
    Upon the date of closing of Landlord’s purchase of the Premises.  
 
       
Initial Monthly Base Rent:
  $22,531.17  
 
       
Security Deposit:
  $ 0.0  
 
       
Broker:
    N/A  
 
       
Addenda:
    1. One Renewal Option  

Exhibits:
     1. Granting Clause. In consideration of the obligation of Tenant to pay
rent as herein provided and in consideration of the other terms, covenants, and
conditions hereof, Landlord leases to Tenant, and Tenant takes from Landlord,
the Premises, to have and to hold for the Lease Term, subject to the terms,
covenants and conditions of this Lease.
     2. Acceptance of Premises. Tenant is in possession of the Premises and has
accepted the condition thereof. Tenant accepts the Premises in its condition,
subject to all applicable laws, ordinances, regulations, covenants and
restrictions. Landlord has made no representation or warranty as to the
suitability of the Premises for the conduct of Tenant’s business, and Tenant
waives any implied warranty that the Premises are suitable for Tenant’s intended
purposes. In no event shall Landlord have any obligation for any defects in the
Premises or any limitation on its use.
     3. Use. The Premises shall be used only for any use currently being made of
the Premises as of the date of this Lease and for no other purpose without
Landlord’s prior written consent, which shall not be unreasonably withheld.
Tenant will use the Premises in a careful, safe and proper manner and will not
commit waste, overload the floor or structure of the Premises or subject the
Premises to use that would damage the Premises. Tenant shall not permit any
objectionable or unpleasant odors, smoke, dust, gas, noise, or vibrations to
emanate from the Premises, or take any other action that would constitute a
public nuisance under Illinois law or would disturb, unreasonably interfere
with, or endanger Landlord or the surrounding owners or occupants. So long as
Tenant continues any use being made of the Premises as of the date of this
Lease, Tenant shall, at its expense, make any alterations or modifications,
within or without the Premises, which are required by any ordinances,
regulations, codes, statutes or laws now or hereafter applicable to the Premises
in connection with said uses. Landlord shall have no obligation to make any
changes to the Premises in connection with such uses by Tenant. Tenant will not
use or permit the Premises to be used for any purpose or in any manner that
would void Tenant’s or Landlord’s insurance, increase the insurance risk, or
cause the disallowance of any sprinkler credits. If any such increase in the
cost of any insurance on the Premises is caused-by-Tenant’s use or-occupation of
the-Premises, or because-Tenant-vacates the Premises, then Tenant shall pay the
amount of such increase to Landlord.
     4. Base Rent. Tenant shall pay Base Rent in the amount set forth above. The
first month’s Base Rent and the Security Deposit, shall be due and payable on
the date hereof, and Tenant promises to pay to Landlord in advance, without
demand, deduction or set-off, monthly installments of Base Rent on or before the
first day of each calendar month succeeding the Commencement Date. Payments of
Base Rent for any fractional calendar month shall be prorated. All payments
required to be made by Tenant to Landlord hereunder (or to such other party as
Landlord may from time to time specify in writing) shall be made by Electronic
Fund Transfer (“EFT”) of immediately available federal funds before 11:00 a.m.,
Eastern Time, at such place, within the continental United States, as Landlord
may from time to time designate to Tenant in writing. The obligation of Tenant
to pay Base

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Rent and other sums to Landlord and the obligations of Landlord under this Lease
are independent obligations. Tenant shall have no right at any time to abate,
reduce, or set-off any rent due hereunder except as may be expressly provided in
this Lease. If Tenant is delinquent in any monthly installment of Base Rent for
more than 5 days, Tenant shall pay to Landlord on demand a late charge equal to
four (4%) percent of such delinquent sum. The provision for such late charge
shall be in addition to all of Landlord’s other rights and remedies hereunder or
at law and shall not be construed as a penalty.
     5 Net Lease. It is the purpose and intent of Landlord and Tenant that the
Base Rent shall be absolutely net to Landlord, so that this Lease shall yield
net to Landlord monthly Base Rent and that all costs, expenses and obligations
of every kind and nature whatsoever relating to the Premises which may arise or
become due during the Term shall be paid by Tenant directly or reimbursed to
Landlord upon receipt of Landlord’s statement thereof.
     6. Security Deposit. Intentionally Omitted.
     7. Utilities. Tenant shall pay for all water, gas, electricity, heat,
light, power, telephone, sewer, sprinkler services, refuse and trash collection,
and other utilities and services serving the Premises, all maintenance charges
for utilities, and any storm sewer charges or other similar charges for
utilities imposed by any governmental entity or utility provider, together with
any taxes, penalties, surcharges or the like pertaining to Tenant’s use of the
Premises. No interruption or failure of utilities shall result in the
termination of this Lease or the abatement of rent, other than if said
interruption or failure is caused by Landlord’s gross negligence or intentional
acts.
     8. Impositions. Tenant shall pay to Landlord as additional rent an amount
equal to all general real estate taxes and special assessments, if any, levied
against the Premises, or any part thereof, which accrue during the Lease Term,
including such taxes which accrue during the Lease Term but are due and payable
after the expiration of the Lease Term; provided, however, that Landlord shall
pay all such tax bills prior to the due date thereof, subject to receiving
reimbursement from Tenant as provided herein. During the Lease Term, Tenant
shall pay to Landlord monthly deposits in an amount equal to one twelfth
(1/12th) of the prior years real estate tax bills. Said real estate tax payments
shall be reconciled upon receipt of the second installment real estate tax bills
for each year of the Lease Term. If the monthly deposits made by Tenant are less
than the actual tax bills for any year of the Lease Term, then Tenant shall pay
such deficiency within fourteen (14) days after written demand from Landlord,
including any deficiencies for 2006 taxes whether or not such taxes accrued
before or after the Commencement Date. If the monthly deposits made by Tenant
are greater than the actual tax bills for any year of the Lease Term, then
Tenant shall be entitled to a credit against the next monthly deposit due
hereunder, or, if for tax bills received after the end of the Lease Term,
Landlord shall pay such excess amount to Tenant within fourteen (14) days after
written demand from Tenant.
     In addition, Tenant shall pay the general real estate tax bills levied
against the Premises, or any part thereof, for the second installment of 2005
and the first installment of 2006 when said tax bills become due,
notwithstanding that said taxes will have accrued for periods prior to the
commencement of the Lease Term.
     In addition, Tenant shall not less than five (5) days prior to the due date
pay as additional rent any and all special taxes and assessments, water rates
and all other impositions, ordinary and extraordinary, of every kind and nature
whatsoever, which accrue or may be levied, assessed or imposed upon the
Premises, or any part thereof, or any ad valorem taxes for any personal property
used in connection therewith, which Landlord shall be required to pay, accruing
or becoming due and payable during the term of this Lease (such real estate
taxes and water bills are hereafter referred to as the “Impositions”). Tenant
shall provide Landlord evidence of payment of the Impositions within three
(3) days of Landlord’s request therefor.
     If at any time during the term of this Lease the method of taxation
prevailing at the commencement of the term hereof shall be altered so that any
new tax, assessment, levy, imposition or charge, or any part thereof, shall be
measured by or be based in whole or in part upon the Lease or Premises, or the
Base Rent, additional rent or other income therefrom and shall be imposed upon
the Landlord, then all such taxes, assessments, levies, impositions or charges,
or the part thereof, to the extent that they are so measured or based, shall be
deemed to be included within the term Impositions for the purposes hereof, to
the extent that such Impositions would be payable if the Premises were the only
property of Landlord subject to such Impositions, and Tenant shall pay and
discharge the same as herein provided in respect of the payment of Impositions.
There shall be excluded from Impositions all federal or state income taxes,
federal or state excess profit taxes, franchise, capital stock and federal or
state estate or inheritance taxes of Landlord.
     In addition to the taxes described above, Tenant shall be responsible for
and shall pay prior to delinquency any and all taxes, whether or not customary
or now within the contemplation of the parties hereto (i) levied against, upon,
measured by or reasonably attributable to Tenant’s equipment, furniture,
fixtures and other personal property located in the Premises or any leasehold
improvements made in or to the Premises by or for Tenant, regardless of whether
title to such improvements shall be in Landlord or Tenant, or levied upon,
measured by or reasonably attributable to cost or value of any of the foregoing;
(ii) levied upon or with respect to the possession, leasing, operation,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises or any portion thereof; or (iii) levied upon this transaction or any
document to which Tenant is a party creating or transferring any interest or an
estate in the Premises. Upon demand by Landlord, Tenant shall furnish Landlord
satisfactory evidence of payment thereof.
     9. Insurance. Landlord shall maintain all risk property insurance covering
the full replacement cost of the Building. Landlord may, but is not obligated
to, maintain such other insurance and additional coverages as it may deem
necessary, including, but not limited to, commercial liability insurance and
rent loss insurance. Tenant shall reimburse Landlord for the cost of all such
insurance within ten (10) days of receipt of Landlord’s statement thereof. The
Building may be included in a blanket policy (in which case the cost of such
insurance allocable to the

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Building will be determined by Landlord based upon the insurer’s cost
calculations). Tenant shall also reimburse Landlord for any increased premiums
or additional insurance, which Landlord reasonably deems necessary as a result
of Tenant’s use of the Premises.
     Tenant, at its expense, shall maintain during the Lease Term such insurance
as reflected in the certificates of insurance provided by Tenant to Landlord on
the date of this Lease. The commercial liability insurance shall name Landlord
as an additional insured. Tenant shall deliver updated certificates for such
insurance to Landlord upon each renewal of said insurance.
     The all risk property insurance 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. Neither party nor its officers,
directors, employees, managers, agents, invitees or contractors shall be liable
to the other for loss or damage caused by any risk coverable by all risk
property insurance, and each party waives any claims against the other party,
and its officers, directors, employees, managers, agents, invitees and
contractors for such loss or damage. The failure of a party to insure its
property shall not void this waiver. Landlord and its agents, employees and
contractors shall not be liable for, and Tenant hereby waives all claims against
such parties for, business interruption and losses occasioned thereby sustained
by Tenant or any person claiming through Tenant resulting from any accident or
occurrence in or upon the Premises from any cause whatsoever, including without
limitation, damage caused in whole or in part, directly or indirectly, by the
negligence of Landlord or its agents, employees or contractors.
     10. Landlord’s Repairs. Intentionally Omitted.
     11. Tenant’s Repairs. Subject to Paragraphs 9 and 15, Tenant, at its
expense, shall maintain the entire interior and exterior of the Building and
shall repair, replace and maintain in good condition all portions of the
Premises interior, exterior, and all parking areas, improvements and systems
including, without limitation, dock and loading areas, truck doors, plumbing,
water and sewer lines, fire sprinklers and fire protection systems, entries,
doors, ceilings, windows, interior walls, and heating, ventilation and air
conditioning systems. Such repair and replacements include capital expenditures
and repairs whose benefit may extend beyond the Term. Heating, ventilation and
air conditioning systems and other mechanical and building systems serving the
Premises shall be maintained at Tenant’s expense pursuant to maintenance service
contracts entered into by Tenant or, at Landlord’s election, by Landlord. The
scope of services and contractors under such maintenance contracts shall be
reasonably approved by Landlord. If Tenant fails to perform any repair or
replacement for which it is responsible, Landlord may perform such work and be
reimbursed by Tenant within 10 days after demand therefor. Subject to Paragraphs
9 and 15, Tenant shall bear the full cost of any repair or replacement to any
part of the Building.
     12. Tenant-Made Alterations and Trade Fixtures. Any alterations, additions,
or improvements made by or on behalf of Tenant to the Premises after the date of
this Lease (“Tenant-Made Alterations”) shall be subject to Landlord’s prior
written consent. Tenant shall cause, at its expense, all Tenant-Made Alterations
to comply with insurance requirements and with Legal Requirements and shall
construct at its expense any alteration or modification required by Legal
Requirements as a result of any Tenant-Made Alterations. All Tenant-Made
Alterations shall be constructed in a good and workmanlike manner by contractors
reasonably acceptable to Landlord and only good grades of materials shall be
used. All plans and specifications for any Tenant-Made Alterations shall be
submitted to Landlord for its approval. Landlord may monitor construction of the
Tenant-Made Alterations. Tenant shall reimburse Landlord for its costs in
reviewing plans and specifications and in monitoring construction. Landlord’s
right to review plans and specifications and to monitor construction shall be
solely for its own benefit, and Landlord shall have no duty to see that such
plans and specifications or construction comply with applicable laws, codes,
rules and regulations. Tenant shall provide Landlord with the identities and
mailing addresses of all persons performing work or supplying materials, prior
to beginning such construction, and Landlord may post on and about the Premises
notices of non-responsibility pursuant to applicable law. Tenant shall furnish
security or make other arrangements satisfactory to Landlord to assure payment
for the completion of all work free and clear of liens and shall provide
certificates of insurance for worker’s compensation and other coverage in
amounts and from an insurance company satisfactory to Landlord protecting
Landlord against liability for personal injury or property damage during
construction. Upon completion of any Tenant-Made Alterations, Tenant shall
deliver to Landlord sworn statements setting forth the names of all contractors
and subcontractors who did work on the Tenant-Made Alterations and final lien
waivers from all such contractors and subcontractors. Upon surrender of the
Premises, all Tenant-Made Alterations and any leasehold improvements constructed
by Landlord or Tenant after the date of this Lease shall remain on the Premises
as Landlord’s property, except to the extent Landlord requires removal at
Tenant’s expense of any such items or Landlord and Tenant have otherwise agreed
in writing in connection with Landlord’s consent to any Tenant-Made Alterations.
Tenant shall repair any damage caused by such removal. Upon surrender of the
Premises, any improvements to the Premises made by Tenant prior to the date of
this Lease shall remain on the Premises as Landlord’s property.
     Tenant, at its own cost and expense and without Landlord’s prior approval,
may erect such shelves, bins, machinery and trade fixtures (collectively “Trade
Fixtures”) in the ordinary course of its business provided that such items do
not after the basic character of the Premises, do not overload or damage the
Premises, and may be removed without injury to the Premises, and the
construction, erection, and installation thereof complies with all Legal
Requirements and with Landlord’s requirements set forth above. Upon surrender of
the Premises, Tenant shall remove its Trade Fixtures and shall repair any damage
caused by such removal.
     13. Signs. Tenant shall not make any changes to the exterior of the
Premises, install any exterior lights, decorations, balloons, flags, pennants,
banners, or painting, or erect or install any signs, windows or door lettering,
placards, decorations, or advertising media of any type which can be viewed from
the exterior of the Premises, without Landlord’s prior written consent. Upon
surrender or vacation of the Premises, Tenant shall have removed all signs,
other than monument signs, which shall remain in place, and repair, paint,
and/or replace the

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building facia surface to which its signs are attached. Tenant shall obtain all
applicable governmental permits and approvals for sign and exterior treatments.
All signs, decorations, advertising media, blinds, draperies and other window
treatment or bars or other security installations visible from outside the
Premises, other than such items in place as of the date of this Lease, shall be
subject to Landlord’s approval and conform in all respects to Landlord’s
requirements.
     14. Parking. Intentionally Omitted.
     15. Restoration. If at any time during the Lease Term the Premises are
damaged by a fire or other casualty, Landlord shall notify Tenant within 60 days
after such damage as to the amount of time Landlord reasonably estimates it will
take to restore the Premises. If the restoration time is estimated to exceed
6 months, either Landlord or Tenant may elect to terminate this Lease upon
notice to the other party given no later than 30 days after Landlord’s notice.
If neither party elects to terminate this Lease or if Landlord estimates that
restoration will take 6 months or less, then, subject to receipt of sufficient
insurance proceeds, Landlord shall promptly restore the Premises excluding the
improvements installed by Tenant or by Landlord and paid by Tenant, subject to
delays arising from the collection of insurance proceeds or from Force Majeure
events. Tenant at Tenant’s expense shall promptly perform, subject to delays
arising from the collection of insurance proceeds, or from Force Majeure events,
all repairs or restoration not required to be done by Landlord and shall
promptly re-enter the Premises and commence doing business in accordance with
this Lease. Notwithstanding the foregoing, either party may terminate this Lease
if the Premises are damaged during the last year of the Lease Term and Landlord
reasonably estimates that it will take more than one month to repair such
damage. Base Rent shall be abated for the period of repair and restoration in
the proportion which the area of the Premises, if any, which is not usable by
Tenant bears to the total area of the Premises. Such abatement shall be the sole
remedy of Tenant, and except as provided herein, Tenant waives any right to
terminate the Lease by reason of damage or casualty loss.
     16. Condemnation. If any part of the Premises should be taken for any
public or quasi-public use under governmental law, ordinance, or regulation, or
by right of eminent domain, or by private purchase in lieu thereof (a “Talking”
or “Taken”), and the Taking would prevent or materially interfere with Tenant’s
use of the Premises or in Landlord’s judgment would materially interfere with or
impair its ownership or operation of the Premises, then upon written notice by
Landlord this Lease shall terminate and Base Rent shall be apportioned as of
said date. If part of the Premises shall be Taken, and this Lease is not
terminated as provided above, the Base Rent payable hereunder during the
unexpired Lease Term shall be reduced to such extent as may be fair and
reasonable under the circumstances. In the event of any such Taking, Landlord
shall be entitled to receive the entire price or award from any such Taking
without any payment to Tenant, and Tenant hereby assigns to Landlord Tenant’s
interest, if any, in such award. Tenant shall have the right, to the extent that
same shall not diminish Landlord’s award, to make a separate claim against the
condemning authority (but not Landlord) for such compensation as may be
separately awarded or recoverable by Tenant for moving expenses and damage to
Tenant’s Trade Fixtures, if a separate award for such items is made to Tenant.
     17. Assignment and Subletting. Without Landlord’s prior written consent,
Tenant shall not assign this Lease or sublease the Premises or any part thereof
or mortgage, pledge, or hypothecate its leasehold interest or grant any
concession or license within the Premises and any attempt to do any of the
foregoing shall be void and of no effect. For purposes of this paragraph, a
transfer of the ownership interests controlling Tenant shall be deemed an
assignment of this Lease unless such ownership interests are publicly traded.
Notwithstanding the above, Tenant may assign or sublet the Premises, or any part
thereof, to any entity controlling Tenant, controlled by Tenant or under common
control with Tenant (a “Tenant Affiliate”), without the prior written consent of
Landlord. Tenant shall reimburse Landlord for all of Landlord’s reasonable
out-of-pocket expenses in connection with any assignment or sublease. Upon
Landlord’s receipt of Tenant’s written notice of a desire to assign or sublet
the Premises, or any part thereof (other than to a Tenant Affiliate), Landlord
may, by giving written notice to Tenant within 30 days after receipt of Tenant’s
notice, terminate this Lease with respect to the space described in Tenant’s
notice, as of the date specified in Tenant’s notice for the commencement of the
proposed assignment or sublease.
          Notwithstanding any assignment or subletting, Tenant and any guarantor
or surety of Tenant’s obligations under this Lease shall at all times remain
fully responsible and liable for the payment of the rent and for compliance with
all of Tenant’s other obligations under this Lease (regardless of whether
Landlord’s approval has been obtained for any such assignments or sublettings).
In the event that the rent due and payable by a sublessee or assignee (or a
combination of the rental payable under such sublease or assignment plus any
bonus or other consideration therefor or incident thereto) exceeds the rental
payable under this Lease, then Tenant shall he bound and obligated to pay
Landlord as additional rent hereunder all such excess rental and other excess
consideration within 10 days following receipt thereof by Tenant.
          If this Lease be assigned or if the Premises be subleased (whether in
whole or in part) or in the event of the mortgage, pledge, or hypothecation of
Tenant’s leasehold interest or grant of any concession or license within the
Premises or if the Premises be occupied in whole or in part by anyone other than
Tenant, then upon a default by Tenant hereunder Landlord may collect rent from
the assignee, sublessee, mortgagee, pledgee, party to whom the leasehold
interest was hypothecated, concessionee or licensee or other occupant and,
except to the extent set forth in the preceding paragraph, apply the amount
collected to the next rent payable hereunder; and all such rentals collected by
Tenant shall be held in trust for Landlord and immediately forwarded to
Landlord. No such transaction or collection of rent or application thereof by
Landlord, however, shall be deemed a waiver of these provisions or a release of
Tenant from the further performance by Tenant of its covenants, duties, or
obligations hereunder.
     18. Indemnification. Except for the negligence of Landlord, its agents,
employees or contractors, and to the extent permitted by law, Tenant agrees to
indemnify, defend and hold harmless Landlord, and Landlord’s agents, employees
and contractors, from and against any and all losses, liabilities, damages,
costs and expenses (including attorneys’ fees) resulting from claims by third
parties for injuries to any person and damage to or theft or

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misappropriation or loss of property occurring in or about the Premises. The
furnishing of insurance required hereunder shall not be deemed to limit Tenant’s
obligations under this Paragraph 18.
     19. Inspection and Access. Landlord and its agents, representatives, and
contractors may enter the Premises at any reasonable time to inspect the
Premises and to make such repairs as may be required or permitted pursuant to
this Lease and for any other business purpose. Landlord and Landlord’s
representatives may enter the Premises during business hours for the purpose of
showing the Premises to prospective purchasers and, during the last year of the
Lease Term, to prospective tenants. Landlord may erect a suitable sign on the
Premises stating the Premises are available to let or that the Project is
available for sale. Landlord may grant casements, make public dedications,
designate common areas and create restrictions on or about the Premises,
provided that no such easement, dedication, designation or restriction
materially interferes with Tenant’s use or occupancy of the Premises. At
Landlord’s request, Tenant shall execute such instruments as may be necessary
for such easements, dedications or restrictions.
     20. Quiet Enjoyment. If Tenant shall perform all of the covenants and
agreements herein required to be performed by Tenant, Tenant shall, subject to
the terms of this Lease, at all times during the Lease Term, have peaceful and
quiet enjoyment of the Premises against any person claiming by, through or under
Landlord.
     21. Surrender. Upon termination of the Lease Term or earlier termination of
Tenant’s right of possession, Tenant shall surrender the Premises to Landlord in
the same condition as received, broom clean, ordinary wear and tear and casualty
loss and condemnation covered by Paragraphs 15 and 16 excepted. Any Trade
Fixtures, Tenant-Made Alterations and property not so removed by Tenant as
permitted or required herein shall be deemed abandoned and may be stored,
removed, and disposed of by Landlord at Tenant’s expense, and Tenant waives all
claims against Landlord for any damages resulting from Landlord’s retention and
disposition of such property. All obligations of Tenant hereunder not fully
performed as of the termination of the Lease Term shall survive the termination
of the Lease Term, including without limitation, indemnity obligations, payment
obligations with respect to Impositions and obligations concerning the condition
and repair of the Premises.
     22. Holding Over. If Tenant retains possession of the Premises after the
termination of the Lease Term, unless otherwise agreed in writing, such
possession shall be subject to immediate termination by Landlord at any time,
and all of the other terms and provisions of this Lease (excluding any expansion
or renewal option or other similar right or option) shall be applicable during
such holdover period, except that Tenant shall pay Landlord from time to time,
upon demand, as Base Rent for the holdover period, an amount equal to double the
Base Rent in effect on the termination date, computed on a monthly basis for
each month or part thereof during such holding over, as full compensation for
any damages which may be incurred by Landlord as a result of such holding over.
All other payments shall continue under the terms of this Lease. No holding over
by Tenant, whether with or without consent of Landlord, shall operate to extend
this Lease except as otherwise expressly provided, and this Paragraph 22 shall
not be construed as consent for Tenant to retain possession of the Premises. For
purposes of this Paragraph 22, “possession of the Premises” shall continue
until, among other things, Tenant has delivered all keys to the Premises to
Landlord, Landlord has complete and total dominion and control over the
Premises, and Tenant has completely fulfilled all obligations required of it
upon termination of the Lease as set forth in this Lease, including, without
limitation, those concerning the condition and repair of the Premises.
     23. Events of Default. Each of the following events shall be an event of
default (“Event of Default”) by Tenant under this Lease:
     (i) Tenant shall fail to pay any installment of Base Rent or any other
payment required herein when due, and such failure shall continue for a period
of 5 days from the date such payment was due.
     (ii) Tenant or any guarantor or surety of Tenant’s obligations hereunder
shall (A) make a general assignment for the benefit of creditors; (B) commence
any case, proceeding or other action seeking to have an order for relief entered
on its behalf as a debtor or to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, liquidation, dissolution or
composition of it or its debts or seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or of any substantial part
of its property (collectively a “proceeding for relief’); (C) become the subject
of any proceeding for relief which is not dismissed within 60 days of its filing
or entry; or (D) die or suffer a legal disability (if Tenant, guarantor, or
surety is an individual) or be dissolved or otherwise fail to maintain its legal
existence (if Tenant, guarantor or surely is a corporation, partnership or other
entity).
     (iii) Any insurance required to be maintained by Tenant pursuant to this
Lease shall be cancelled or terminated or shall expire or shall be reduced or
materially changed, except, in each case, as permitted in this Lease.
     (iv) Tenant shall attempt or there shall occur any assignment, subleasing
or other transfer of Tenant’s’ interest in or with respect to this Lease except
as otherwise permitted in this Lease.
     (v) Tenant shall fail to discharge any lien placed upon the Premises in
violation of this Lease within 30 days after any such lien or encumbrance is
filed against the Premises.
     (vi) Tenant shall fail to comply with any provision of this Lease other
than those specifically referred to in this Paragraph 23, and except as
otherwise expressly provided herein, such default shall continue for more than
30 days after Landlord shall have given Tenant written notice of such default.
     24. Landlord’s Remedies. Upon each occurrence of an Event of Default and so
long as such Event of Default shall be continuing for more than five (5) days
after Landlord has given notice of said default to Tenant,

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Landlord may at any time thereafter at its election: terminate this Lease or
Tenant’s right of possession, (but Tenant shall remain liable as hereinafter
provided) and/or pursue any other remedies at law or in equity. Upon the
termination of this Lease or termination of Tenant’s right of possession, it
shall be lawful for Landlord, with such demand or notice as is required by this
Lease and Illinois Saw, to re-enter the Premises by forcible entry end detainer
proceedings or any other action or proceeding authorized by law and to remove
Tenant and all persons and property therefrom. If Landlord re-enters the
Premises, Landlord shall have the right to keep in place and use, or remove and
store, all of the furniture, fixtures and equipment at the Premises.
          If Landlord terminates this Lease, Landlord may recover from Tenant
the sum of: all Base Rent and all other amounts accrued hereunder to the date of
such termination; the cost of reletting the whole or any part of the Premises,
including without limitation brokerage fees and/or leasing commissions incurred
by Landlord, and costs of removing and storing Tenant’s or any other occupant’s
property, repairing, altering, remodeling, or otherwise putting the Premises
into condition acceptable to a new tenant or tenants, and all reasonable
expenses incurred by Landlord in pursuing its remedies, including reasonable
attorneys’ fees and court costs; and the excess of the then present value of the
Base Rent and other amounts payable by Tenant under this Lease as would
otherwise have been required to be paid by Tenant to Landlord during the period
following the termination of this Lease measured from the date of such
termination to the expiration date stated in this Lease, over the present value
of any net amounts which Tenant establishes Landlord can reasonably expect to
recover by reletting the Premises for such period, taking into consideration the
availability of acceptable tenants and other market conditions affecting
leasing. Such present values shall be calculated at a discount rate equal to the
90-day U.S. Treasury bill rate at the date of such termination.
          If Landlord terminates Tenant’s right of possession (but not this
Lease), Landlord shall use commercially reasonable efforts to relet the Premises
for the account of Tenant for such rent and upon such terms as shall be
satisfactory to Landlord without thereby releasing Tenant from any liability
hereunder and without demand or notice of any kind to Tenant. For the purpose of
such reletting Landlord is authorized to make any repairs, changes, alterations,
or additions in or to the Premises as Landlord deems reasonably necessary or
desirable. If the Premises are not relet, then Tenant shall pay to Landlord as
damages a sum equal to the amount of the rental reserved in this Lease for such
period or periods, plus the cost of recovering possession of the Premises
(including attorneys’ fees and costs of suit), the unpaid Base Rent and other
amounts accrued hereunder at the time of repossession, and the costs incurred in
any attempt by Landlord to relet the Premises. If the Premises are relet and a
sufficient sum shall not be realized from such retelling [after first deducting
therefrom, for retention by Landlord, the unpaid Base Rent and other amounts
accrued hereunder at the time of reletting, the cost of recovering possession
(including attorneys’ fees and costs of suit), all of the costs and expense of
repairs, changes, alterations, and additions, the expense of such reletting
(including without limitation brokerage fees and leasing commissions) and the
cost of collection of the rent accruing therefrom] to satisfy the rent provided
for in this Lease to be paid, then Tenant shall immediately satisfy and pay any
such deficiency. Any such payments due Landlord shall be made upon demand
therefor from time to time and Tenant agrees that Landlord may file suit to
recover any sums falling due from time to time. Notwithstanding any such
reletting without termination, Landlord may at any time thereafter elect in
writing to terminate this Lease for such previous breach.
          Exercise by Landlord of any one or more remedies hereunder granted or
otherwise available shall not be deemed to be an acceptance of surrender of the
Premises and/or a termination of this Lease by Landlord, whether by agreement or
by operation of law, it being understood that such surrender and/or termination
can be effected only by the written agreement of Landlord and Tenant. Any law,
usage, or custom to the contrary notwithstanding, Landlord shall have the right
at all times to enforce the provisions of this Lease in strict accordance with
the terms hereof; and the failure of Landlord at any time to enforce its rights
under this Lease strictly in accordance with same shall not be construed as
having created a custom in any way or manner contrary to the specific terms,
provisions, and covenants of this Lease or as having modified the some. Tenant
and Landlord further agree that forbearance or waiver by Landlord to enforce its
rights pursuant to this Lease or at law or in equity, shall not be a waiver of
Landlord’s right to enforce one or more of its rights in connection with any
subsequent default. A receipt by Landlord of rent or other payment with
knowledge of the breach of any covenant hereof shall not be deemed a waiver of
such breach, and no waiver by Landlord of any provision of this Lease shall be
deemed to have been made unless expressed in writing and signed by Landlord.
Tenant waives all right of redemption in case Tenant shall be dispossessed by a
judgment or by warrant of any court or judge. The terms “enter,” “re-enter,”
“entry” or “re-entry,” as used in this Lease, are not restricted to their
technical legal meanings. Any reletting of the Premises shall be on commercially
reasonable terms and conditions. Landlord shall not be liable, nor shall
Tenant’s obligations hereunder be diminished because of, Landlord’s failure to
relet the Premises or collect rent due in respect of such reletting.
     25. Tenant’s Remedies/Limitation of Liability. Landlord shall not be in
default hereunder unless Landlord fails to perform any of its obligations
hereunder within 30 days after written notice from Tenant specifying such
failure (unless such performance will, due 10 the nature of the obligation,
require a period of time in excess of 30 days, then after such period of time as
is reasonably necessary). All obligations of Landlord hereunder shall be
construed as covenants, not conditions; and, except as may be otherwise
expressly provided in this Lease, Tenant may not terminate this Lease for breach
of Landlord’s obligations hereunder. All obligations of Landlord under this
Lease will be binding upon Landlord only during the period of ils ownership of
the Premises and not thereafter. The term “Landlord” in this Lease shall mean
only the owner, for the time being of the Premises, and in the event of the
transfer by such owner of its interest in the Premises, such owner shall
thereupon be released and discharged from all obligations of Landlord thereafter
accruing, but such obligations shall be binding during the Lease Term upon each
new owner for the duration of such owner’s ownership. Any liability of Landlord
under this Lease shall be limited solely to its interest in the Project, and in
no event shall any personal liability be asserted against Landlord in connection
with this Lease nor shall any recourse be had to any other property or assets of
Landlord.
     26. Waiver of Jury Trial. TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL BY
JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN

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CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING OUT OF THIS
LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.
     27. Subordination. This Lease and Tenant’s interest and rights hereunder
are and shall be subject and subordinate at all times to the lien of any first
mortgage, now existing or hereafter created on or against the Project or the
Premises, and all amendments, restatements, renewals, modifications,
consolidations, refinancing, assignments and extensions thereof, without the
necessity of any further instrument or act on the part of Tenant, provided
however, that the holder of any such first mortgage shall not disturb the
tenancy of Tenant, provided that Tenant is not in default under this Lease.
Tenant agrees, at the election of the holder of any such mortgage, to attorn to
any such holder. Tenant agrees upon demand to execute, acknowledge and deliver
such instruments, confirming such subordination, provided such subordination
agreement shall contain an agreement of non-disturbance by the mortgagee with
respect to Tenant, provided that Tenant is not in default under this Lease, end
such instruments of attornment as shall be requested by any such holder and are
agreeable to Landlord and Tenant. Notwithstanding the foregoing, any such holder
may at any time subordinate its mortgage to this Lease, without Tenant’s
consent, by notice in writing to Tenant, and thereupon this Lease shall be
deemed prior to such mortgage without regard to their respective dates of
execution, delivery or recording and in that event such holder shall have the
same rights with respect to this Lease as though this Lease had been executed
prior to the execution, delivery and recording of such mortgage and had been
assigned to such holder. The term “mortgage” whenever used in this Lease shall
be deemed to include deeds of trust, security assignments and any other
encumbrances, and any reference to the “holder” of a mortgage shall be deemed to
include the beneficiary under a deed of trust.
     28. Mechanic’s Liens. Tenant has no express or implied authority to create
or place any lien or encumbrance of any kind upon, or in any manner to bind the
interest of Landlord or Tenant in, the Premises or to charge the rentals payable
hereunder for any claim in favor of any person dealing with Tenant, including
those who may furnish materials or perform labor for any construction or
repairs. Tenant covenants and agrees that it will pay or cause to be paid all
sums legally due and payable by it on account of any labor performed or
materials furnished in connection with any work performed on the Premises and
that it will save and hold Landlord harmless from all loss, cost or expense
based on or arising out of asserted claims or liens against the leasehold estate
or against the interest of Landlord in the Premises or under this Lease. Tenant
shall give Landlord immediate written notice of the placing of any lien or
encumbrance against the Premises and cause such lien or encumbrance to he
discharged within 60 days of the filing or recording thereof; provided, however.
Tenant may contest such liens or encumbrances as long as such contest prevents
foreclosure of the lien or encumbrance and Tenant causes such lien or
encumbrance to be bonded or insured over in a manner satisfactory to Landlord
within such 60 day period.
     29. Estoppel Certificates. Tenant agrees, from time to time, within 10 days
after request of Landlord, to execute and deliver to Landlord, or Landlord’s
designee, any estoppel certificate requested by Landlord, stating that this
Lease is in full farce and effect, the date to which rent has been paid, that
Landlord is not in default hereunder (or specifying in detail the nature of
Landlord’s default), the termination date of this Lease and such other matters
pertaining to this Lease as may be requested by Landlord. Tenant’s obligation to
furnish each estoppel certificate in a timely fashion is a material inducement
for Landlord’s execution of this Lease. No cure or grace period provided in this
Lease shall apply to Tenant’s obligations to timely deliver an estoppel
certificate. Tenant hereby irrevocably appoints Landlord as its attorney in fact
to execute on its behalf and in its name any such estoppel certificate if Tenant
fails to execute and deliver the estoppel certificate within 10 days after
Landlord’s written request thereof.
     30. Environmental Requirements. Except for Hazardous Material contained in
products used by Tenant in its manufacturing processes or in de minimis
quantities for ordinary cleaning and office purposes, Tenant shall not permit or
cause any party to bring any Hazardous Material upon the Premises or transport,
store, use, generate, manufacture or release any Hazardous Material in or about
the Premises without Landlord’s prior written consent. 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 Materials released on or from the Premises during the
Lease Term or otherwise released on or from the Premises 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 to Tenant’s transportation, storage, use, generation, manufacture or
release of Hazardous Materials 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 slate and local counterparts thereto, and any regulations or
policies promulgated or issued thereunder. The term “Hazardous Materials” means
and includes any substance, material, waste, pollutant, or contaminant listed or
defined as hazardous or toxic, under any Environmental Requirements, asbestos
and petroleum, including crude oil or any fraction thereof, natural gas liquids,
liquified natural gas, or synthetic gas usable for fuel (or mixtures of natural
gas and such synthetic gas). 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 and loss of rental income therefrom), 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
attorney’s fees, consultant fees or expert fees and including, without
limitation, removal or management of any asbestos brought into the property or
disturbed in breach of the requirements of this Paragraph 30, regardless of
whether such removal or management is required by law) which arc brought or
recoverable against,

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or suffered or incurred by Landlord as a result of any release of Hazardous
Materials for which Tenant is obligated to remediate us provided above or any
other breach of the requirements under this Paragraph 30 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
Paragraph 30 shall survive any termination of this Lease.
          Landlord shall have access to, and a right to perform inspections and
tests of, the Premises to determine Tenant’s compliance with Environmental
Requirements, its obligations under this Paragraph 30, or the environmental
condition of the Premises. Access shall be granted to Landlord upon Landlord’s
prior notice to Tenant and at such times so as to minimize, so far as may be
reasonable under the circumstances, any disturbance to Tenant’s operations. Such
inspections and tests shall be conducted at Landlord’s expense, unless such
inspections or tests reveal that Tenant has not complied with any Environmental
Requirement, in which case Tenant shall reimburse Landlord for the reasonable
cost of such inspection and tests. Landlord’s receipt of or satisfaction with
any environmental assessment in no way waives any rights that Landlord holds
against Tenant.
     31. Rules and Regulations. Tenant shall, at all times during the Lease Term
and any extension thereof, comply with all reasonable rules and regulations at
any time or from time to time established by Landlord covering use of the
Premises. The current rules and regulations are attached hereto. In the event of
any conflict between said rules and regulations and other provisions of this
Lease, the other terms and provisions of this Lease shall control.
     32. Security Service. Tenant acknowledges and agrees that Landlord is not
providing any security services with respect to the Premises and that Landlord
shall not be liable to Tenant for, and Tenant waives any claim against Landlord
with respect to, any loss by theft or any other damage suffered or incurred by
Tenant in connection with any unauthorized entry into the Premises or any other
breach of security with respect to the Premises.
     33. Force Majeure. Landlord shall not he held responsible for delays in the
performance of its obligations hereunder when caused by strikes, lockouts, labor
disputes, acts of God, inability to obtain labor or materials or reasonable
substitutes therefor, governmental restrictions, governmental regulations,
governmental controls, delay in issuance of permits, enemy or hostile
governmental action, civil commotion, fire or other casualty, and other causes
beyond the reasonable control of Landlord (“Force Majeure”).
     34. Entire Agreement. Tins Lease constitutes the complete agreement of
Landlord and Tenant with respect to the subject matter hereof. No
representations, inducements, promises or agreements, oral or written, have been
trade by Landlord or Tenant, or anyone acting on behalf of Landlord or Tenant,
which are not contained herein, and any prior agreements, promises,
negotiations, or representations are superseded by this Lease. This Lease may
not be amended except by an instrument in writing signed by both parties hereto.
     35. Severability. If any clause or provision of this Lease is illegal,
invalid or unenforceable under present or future laws, then and in that event,
it is the intention of the parties hereto that the remainder of this Lease shall
not be affected thereby. It is also the intention of the parties to this Lease
that in lieu of each clause or provision of this Lease that is illegal, invalid
or unenforceable, there be added, as a part of this Lease, a clause or provision
as similar in terms to such illegal, invalid or unenforceable clause or
provision as may be possible and be legal, valid and enforceable.
     36. Brokers. Tenant represents and warrants that it has dealt with no
broker, agent or other person in connection with this transaction and that no
broker, agent or other person brought about this transaction, other than the
broker, if any, set forth on the first page of this Lease, and Tenant agrees to
indemnify and hold Landlord harmless from and against any claims by any other
broker, agent or other person claiming a commission or other form of
compensation by virtue of having dealt with Tenant with regard to this leasing
transaction.
     37. Miscellaneous. (a) Any payments or charges due from Tenant to Landlord
hereunder shall be considered rent for all purposes of this Lease.
     (b) If and when included within the term “Tenant,” as used in this
instrument, there is more than one person, firm or corporation, each shall be
jointly and severally liable for the obligations of Tenant.
     (c) All notices required or permitted to be given under this Lease shall be
in writing and shall be sent by registered or certified mail, return receipt
requested, or by a reputable national overnight courier service, postage
prepaid, or by hand delivery addressed to the parties at their addresses below,
and with a copy sent to Landlord at 14100 East 35th Place, Aurora, Colorado
80011. Either party may by notice given aforesaid change its address for all
subsequent notices. Except where otherwise expressly provided to the contrary,
notice shall be deemed given upon delivery.
     (d) Except as otherwise expressly provided in this Lease or as otherwise
required by law, any consent or approval required of Landlord hereunder shall
not be unreasonably withheld by Landlord.
     (e) At Landlord’s request from lime to time Tenant shall furnish Landlord
with true and complete copies of its most recent annual and quarterly financial
statements prepared by Tenant or Tenant’s accountants and any other financial
information or summaries That Tenant typically provides to its lenders or
shareholders.
     (f) Neither this Lease nor a memorandum of lease shall be filed by or on
behalf of Tenant in any public record. Landlord may prepare and file, and upon
request by Landlord Tenant will execute, a memorandum of lease.

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     (g) The normal rule of construction to the effect that any ambiguities are
to be resolved against the drafting party shall not be employed in the
interpretation of this Lease or any exhibits or amendments hereto.
     (h) The submission by Landlord to Tenant of this Lease shall have no
binding force or effect, shall not constitute an option for the leasing of the
Premises, nor confer any right or impose any obligations upon either party until
execution of this Lease by both parties.
     (i) Words of any gender used in this Lease shall be held and construed to
include any other gender, and words in the singular number shall be held to
include the plural, unless the context otherwise requires. The captions inserted
in this Lease are for convenience only and in no way define, limit or otherwise
describe the scope or intent of this Lease, or any provision hereof, or in any
way affect the interpretation of this Lease.
     (j) Any amount not paid by Tenant within thirty (30) days after its due
date in accordance with the terms of this Lease shall bear interest from such
due date until paid in full at the lesser of the highest rate permitted by
applicable law or 15 percent per year. It is expressly the intent of Landlord
and Tenant at all times to comply with applicable law governing the maximum rate
or amount of any interest payable on or in connection with this Lease. If
applicable law is ever judicially interpreted so as to render usurious any
interest called for under this Lease, or contracted for, charged, taken,
reserved, or received with respect to this Lease, then it is Landlord’s and
Tenant’s express intent that all excess amounts theretofore collected by
Landlord be credited on the applicable obligation (or, if the obligation has
been or would thereby be paid in full, refunded to Tenant), and the provisions
of this Lease immediately shall be deemed reformed and the amounts thereafter
collectible hereunder reduced, without the necessity of the execution of any new
document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder.
     (k) Construction and interpretation of this Lease shall be governed by the
laws of the state in which the Premises is located, excluding any principles of
conflicts of laws.
     (l) Time is of the essence as to the performance of Tenant’s obligations
under this Lease.
     (m) All exhibits and addenda attached hereto are hereby incorporated into
this Lease and made a part hereof. In the event of any conflict between such
exhibits or addenda and the terms of this Lease, such exhibits or addenda shall
control.
     (n) In the event either party hereto initiates litigation to enforce the
terms and provisions of this Lease, the non-prevailing party in such action
shall reimburse the prevailing party for its reasonable attorney’s fees, filing
fees, and court costs.
     38. Landlord’s Lien/Security Interest. Intentionally omitted.
     39. Limitation of Liability of Trustees, Shareholders, and Officers
ProLogis. Any obligation or liability whatsoever of ProLogis, a Maryland real
estate investment trust, which may arise at any time under this Lease or any
obligation or liability which may be incurred by it pursuant to any other
instrument, transaction, or undertaking contemplated hereby shall not be
personally binding upon, nor shall resort for the enforcement thereof be had to
the property of, its trustees, directors, shareholders, officers, employees or
agents, regardless of whether such obligation or liability is in thc nature of
contract, tort, or otherwise.
     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the
day and year first above written.

                      TENANT:       LANDLORD:    
 
                    John B. Sanfilippo & Sons, Inc.       PROLOGIS, a Maryland
real estate investment trust    
 
                    By:       By:    
 
     
 
   
Name:
      Name: Brian Marsh    
 
     
 
   
Title:
      Title: Senior Vice President    
 
     
 
   
 
                   
Address:
      Address:    
 
                   
 
          100 Division Street    
 
               
 
          Suite 101    
 
               
 
 
,
    Bensenville, IL 60106    

 
 
 
 
         

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Rules and Regulations

1.   The sidewalk, entries, and driveways of the Premises shall not be
obstructed by Tenant, or its agents, or used by them for any purpose other than
ingress and egress to and from the Premises.   2.   Tenant shall not install or
operate any steam or gas engine or boiler, or other mechanical apparatus in the
Premises, except as specifically approved in the Lease. The use of oil, gas or
inflammable liquids for heating, lighting or any other purpose is expressly
prohibited. Explosives or other articles deemed extra hazardous shall not be
brought into the Premises.   3.   Parking any type of recreational vehicles is
specifically prohibited on or about the Premises. Except for the overnight
parking of operative vehicles, no vehicle of any type shall be stored in the
parking areas at any time. In the event that a vehicle is disabled, it shall be
removed within 48 hours. There shall he no “For Sale” or other advertising signs
on or about any parked vehicle.   4.   Tenant shall maintain the Premises free
from rodents, insects and other pests.   5.   All moveable trash receptacles
provided by the trash disposal firm for the Premises must be kept in the trash
enclosure areas, if any, provided for that purpose.   6.   No auction, public or
private, will be permitted on the Premises.   7.   The Premises shall not be
used for lodging, sleeping or cooking or for any immoral or illegal purposes or
for any purpose other than that specified in the Lease. No gaming devices shall
be operated in the Premises.   8.   Tenant shall ascertain from Landlord the
maximum amount of electrical current which can safely be used in the Premises,
and shall not use more than such safe capacity. Landlord’s consent to the
installation of electric equipment shall not relieve Tenant from the obligation
not to use more electricity than such safe capacity.   9.   Tenant assumes full
responsibility for protecting the Premises from theft, robbery and pilferage.

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ADDENDUM 2
ONE RENEWAL OPTION
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED___, BETWEEN
ProLogis
and
John B. Sanfilippo & Sons, Inc.
     (a) Provided that as of the time of the giving of the Extension Notice and
the Commencement Date of the Extension Term, (x) Tenant is the Tenant originally
named herein, (y) Tenant actually occupies all of the Premises initially demised
under this Lease and any space added to the Premises, and (z) no Event of
Default exists or would exist but for the passage of time or the giving of
notice, or both; then Tenant shall have the right to extend the Lease Term for
an additional term of at least 3 months, but not more than 9 months (such
additional term is hereinafter called the “Extension Term”) commencing on the
day following the expiration of the Lease Term (hereinafter referred to as the
“Commencement Date of the Extension Term”). Tenant shall give Landlord notice
(hereinafter called the “Extension Notice”) of its election to extend the term
of the Lease Term at least 6 months, but not more than 12 months, prior to the
scheduled expiration date of the Lease Term.
     (b) The Base Rent payable by Tenant to Landlord during the Extension Term
shall be the Base Rent applicable to the last year of the initial Lease term.
The Base Rent shall not be reduced by reason of any costs or expenses saved by
Landlord by reason of Landlord’s not having to find a new tenant for such
premises (including, without limitation, brokerage commissions, costs of
improvements, rent concessions or lost rental income during any vacancy period).
     (c) The payment of Base Rent does not reduce the Tenant’s obligation to pay
or reimburse Landlord for reimbursable items as set forth in the Lease, and
Tenant shall reimburse and pay Landlord as set forth in the Lease with respect
to such items with respect to the Premises during the Extension Term without
regard to any cap on such expenses set forth in the Lease.
     (d) Except for the Base Rent as provided above, Tenant’s occupancy of the
Premises during the Extension Term shall be on the same terms and conditions as
are in effect immediately prior to the expiration of the initial Lease Term;
provided, however, Tenant shall have no further right to any allowances, credits
or abatements or any options to expand, contract, renew or extend the Lease.
     (e) If Tenant does not give the Extension Notice within the period set
forth in paragraph (a) above, Tenant’s right to extend the Lease Term shall
automatically terminate. Time is of the essence as to the giving of the
Extension Notice.
     (f) Landlord shall have no obligation to refurbish or otherwise improve the
Premises for the Extension Term. The Premises shall be tendered on the
Commencement Date of the Extension Term in “as-is” condition.
     (g) If the Lease is extended for the Extension Term, then Landlord shall
prepare and Tenant shall execute an amendment to the Lease confirming the
extension of the Lease Term and the other provisions applicable thereto (the
“Amendment”).
     (h) If Tenant exercises its right to extend the term of the Lease for the
Extension Term pursuant to this Addendum, the term “Lease Term” as used in the
Lease, shall be construed to include, when practicable, the Extension Term
except as provided in (d) above.

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[Net Lease]
LEASE AGREEMENT
     THIS LEASE AGREEMENT is made this___ day of___, ___, between ProLogis
(“Landlord”), and the Tenant named below.

         
Tenant:
    John B. Sanfilippo & Sons, Inc.  
 
       
Tenant’s Representative,
    ___  
Address, and Telephone:
    ___  
 
    ___  
 
    ___, ___ ___  
 
    ___    
Premises:
    The land containing approximately ___ square feet commonly known as
Arlington Heights Distribution Center # 1, 3001 Malmo Drive, Arlington Heights,
1L 60005 and the improvements located thereon including an approximately 94,013
square feet building (the “Building”).  
 
       
Building:
    Arlington Heights Distribution Center #1
3001 Malmo Drive
Arlington Heights, 1L 60005  
 
       
Lease Term:
    Beginning on the Commencement Date and ending December 31st, 2008.  
 
       
Commencement Date:
    Upon the date of closing of Landlord’s purchase of the Premises.  
 
       
Initial Monthly Base Rent:
  $25,461.85  
 
       
Security Deposit:
  $0.0  
 
       
Broker:
    N/A  
 
       
Addenda:
    1. One Renewal Option  

Exhibits:
     1. Granting Clause. In consideration of the obligation of Tenant to pay
rent as herein provided and in consideration of the other terms, covenants, and
conditions hereof, Landlord leases to Tenant, and Tenant takes from Landlord,
the Premises, to have and to hold for the Lease Term, subject to the terms,
covenants and conditions of this Lease.
     2. Acceptance of Premises. Tenant is in possession of the Premises and has
accepted the condition thereof. Tenant accepts the Premises in its condition,
subject to all applicable laws, ordinances, regulations, covenants and
restrictions. Landlord has made no representation or warranty as to the
suitability of the Premises for the conduct of Tenant’s business, and Tenant
waives any implied warranty that the Premises are suitable for Tenant’s intended
purposes. In no event shall Landlord have any obligation for any defects in the
Premises or any limitation on its use.
     3. Use. The Premises shall be used only for any use currently being made of
the Premises as of the date of this Lease and for no other purpose without
Landlord’s prior written consent, which shall not be unreasonably withheld.
Tenant will use the Premises in a careful, safe and proper manner and will not
commit waste, overload the floor or structure of the Premises or subject the
Premises to use that would damage the Premises. Tenant shall not permit any
objectionable or unpleasant odors, smoke, dust, gas, noise, or vibrations to
emanate from the Premises, or take any other action that would constitute a
public nuisance under Illinois law or would disturb, unreasonably interfere
with, or endanger Landlord or the surrounding owners or occupants. So long as
Tenant continues any use being made of the Premises as of the date of this
Lease, Tenant shall, at its expense, make any alterations or modifications,
within or without the Premises, which are required by any ordinances,
regulations, codes, statutes or laws now or hereafter applicable to the Premises
in connection with said uses. Landlord shall have no obligation to make any
changes to the Premises in connection with such uses by Tenant. Tenant will not
use or permit the Premises to be used for any purpose or in any manner that
would void Tenant’s or Landlord’s insurance, increase the insurance risk, or
cause the disallowance of any sprinkler credits. If any such increase in the
cost of any insurance on the Premises is caused by Tenant’s use or occupation of
the Premises, or because Tenant vacates the Premises, then Tenant shall pay the
amount of such increase to Landlord.
     4. Base Rent. Tenant shall pay Base Rent in the amount set forth above. The
first month’s Base Rent and the Security Deposit, shall be due and payable on
the date hereof, and Tenant promises to pay to Landlord in advance, without
demand, deduction or set-off, monthly installments of Base Rent on or before the
first day of each calendar month succeeding the Commencement Date. Payments of
Base Rent for any fractional calendar month shall be prorated. All payments
required to be made by Tenant to Landlord hereunder (or to such other party as
Landlord may from time to time specify in writing) shall be made by Electronic
Fund Transfer (“EFT”) of

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immediately available federal funds before 11:00 a.m., Eastern Time, at such
place, within the continental United States, as Landlord may from time to time
designate to Tenant in writing. The obligation of Tenant to pay Base Rent and
other sums to Landlord and the obligations of Landlord under this Lease are
independent obligations. Tenant shall have no right at any time to abate,
reduce, or set-off any rent due hereunder except as may be expressly provided in
this Lease. If Tenant is delinquent in any monthly installment of Base Rent for
more than 5 days, Tenant shall pay to Landlord on demand a late charge equal to
four (4%) percent of such delinquent sum. The provision for such late charge
shall be in addition to all of Landlord’s other rights and remedies hereunder or
at law and shall not be construed as a penalty.
     5. Net Lease. It is the purpose and intent of Landlord and Tenant that the
Base Rent shall be absolutely net to Landlord, so that this Lease shall yield
net to Landlord monthly Base Rent and that all costs, expenses and obligations
of every kind and nature whatsoever relating to the Premises which may arise or
become due during the Term shall be paid by Tenant directly or reimbursed to
Landlord upon receipt of Landlord’s statement thereof.
     6. Security Deposit. Intentionally Omitted.
     7. Utilities. Tenant shall pay for all water, gas, electricity, heat,
light, power, telephone, sewer, sprinkler services, refuse and trash collection,
and other utilities and services serving the Premises, all maintenance charges
for utilities, and any storm sewer charges or other similar charges for
utilities imposed by any governmental entity or utility provider, together with
any taxes, penalties, surcharges or the like pertaining to Tenant’s use of the
Premises. No interruption or failure of utilities shall result in the
termination of this Lease or the abatement of rent, other than if said
interruption or failure is caused by Landlord’s gross negligence or intentional
acts.
     8. Impositions. Tenant shall pay to Landlord as additional rent an amount
equal to all general real estate taxes and special assessments, if any, levied
against the Premises, or any part thereof, which accrue during the Lease Term,
including such taxes which accrue during the Lease Term but are due and payable
after the expiration of the Lease Term; provided, however, that Landlord shall
pay all such tax bills prior to the due date thereof, subject to receiving
reimbursement from Tenant as provided herein. During the Lease Term, Tenant
shall pay to Landlord monthly deposits in an amount equal to one twelfth
(1/12th) of the prior years real estate tax bills. Said real estate tax payments
shall be reconciled upon receipt of the second installment real estate tax bills
for each year of the Lease Term. If the monthly deposits made by Tenant are less
(than the actual tax bills for any year of the Lease Term, then Tenant shall pay
such deficiency within fourteen (14) days after written demand from Landlord,
including any deficiencies for 2006 taxes whether or not such taxes accrued
before or after the Commencement Date. If the monthly deposits made by Tenant
are greater than the actual tax bills for any year of the Lease Term, then
Tenant shall be entitled to a credit against the next monthly deposit due
hereunder, or, if for tax bills received after the end of the Lease Term,
Landlord shall pay such excess amount to Tenant within fourteen (14) days after
written demand from Tenant.
     In addition, Tenant shall pay the general real estate tax bills levied
against the Premises, or any part thereof, for the second installment of 2005
and the first installment of 2006 when said tax bills become due,
notwithstanding that said taxes will have accrued for periods prior to the
commencement of the Lease Term.
In addition, Tenant shall not less than five (5) days prior to the due date pay
as additional rent any and all special taxes and assessments, water rates and
all other impositions, ordinary and extraordinary, of every kind and nature
whatsoever, which accrue or may be levied, assessed or imposed upon the
Premises, or any part thereof, or any ad valorem taxes for any personal property
used in connection therewith, which Landlord shall be required to pay, accruing
or becoming due and payable during the term of this Lease (such real estate
taxes and water bills are hereafter referred to as the “Impositions”). Tenant
shall provide Landlord evidence of payment of the Impositions within three
(3) days of Landlord’s request therefor.
     If at any time during the term of this Lease the method of taxation
prevailing at the commencement of the term hereof shall be altered so that any
new tax, assessment, levy, imposition or charge, or any part thereof, shall be
measured by or be based in whole or in part upon the Lease or Premises, or the
Base Rent, additional rent or other income therefrom and shall be imposed upon
the Landlord, then all such taxes, assessments, levies, impositions or charges,
or the part thereof, to the extent that they are so measured or based, shall be
deemed to be included within the term Impositions for the purposes hereof, to
the extent that such Impositions would be payable if the Premises were the only
property of Landlord subject to such Impositions, and Tenant shall pay and
discharge the same as herein provided in respect of the payment of Impositions.
There shall be excluded from Impositions all federal or state income taxes,
federal or state excess profit taxes, franchise, capital stock and federal or
state estate or inheritance taxes of Landlord.
     In addition to the taxes described above, Tenant shall be responsible for
and shall pay prior to delinquency any and all taxes, whether or not customary
or now within the contemplation of the parties hereto (i) levied against, upon,
measured by or reasonably attributable to Tenant’s equipment, furniture,
fixtures and other personal property located in the Premises or any leasehold
improvements made in or to the Premises by or for Tenant, regardless of whether
title to such improvements shall be in Landlord or Tenant, or levied upon,
measured by or reasonably attributable to cost or value of any of the foregoing;
(ii) levied upon or with respect to the possession, leasing, operation,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises or any portion thereof; or (iii) levied upon this transaction or any
document to which Tenant is a party creating or transferring any interest or an
estate in the Premises. Upon demand by Landlord, Tenant shall furnish Landlord
satisfactory evidence of payment thereof.

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     9. Insurance. Landlord shall maintain all risk properly insurance covering
the full replacement cost of the Building. Landlord may, but is not obligated
la, maintain such other insurance and additional coverages as it may deem
necessary, including, but not limited to, commercial liability insurance and
rent loss insurance. Tenant shall reimburse Landlord for the cost of all such
insurance within ten (10) days of receipt of Landlord’s statement thereof. The
Building may be included in a blanket policy (in which case the cost of such
insurance allocable to the Building will be determined by Landlord based upon
the insurer’s cost calculations). Tenant shall also reimburse Landlord for any
increased premiums or additional insurance which Landlord reasonably deems
necessary as a result of Tenant’s use of the Premises.
          Tenant, at its expense, shall maintain during the Lease Term such
insurance as reflected in the certificates of insurance provided by Tenant to
Landlord on the date of this Lease. The commercial liability insurance shall
name Landlord as an additional insured. Tenant shall deliver updated
certificates for such insurance to Landlord upon each renewal of said insurance.
          The all risk property insurance 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. Neither party nor its officers,
directors, employees, managers, agents, invitees or contractors shall be liable
to the other for loss or damage caused by any risk coverable by all risk
property insurance, and each party waives any claims against the other party,
and its officers, directors, employees, managers, agents, invitees and
contractors for such loss or damage. The failure of a party to insure its
property shall not void this waiver. Landlord and its agents, employees and
contractors shall not be liable for, and Tenant hereby waives all claims against
such parties far, business interruption and losses occasioned thereby sustained
by Tenant or any person claiming through Tenant resulting from any accident or
occurrence in or upon the Premises from any cause whatsoever, including without
limitation, damage caused in whole or in part, directly or indirectly, by the
negligence of Landlord or its agents, employees or contractors.
     10. Landlord’s Repairs. Intentionally Omitted.
     11. Tenant’s Repairs. Subject to Paragraphs 9 and 15, Tenant, at its
expense, shall maintain the entire interior and exterior of the Building and
shall repair, replace and maintain in good condition all portions of the
Premises interior, exterior, and all parking areas, improvement and systems
including, without limitation, dock and loading areas, truck doors, plumbing,
water and sewer lines, fire sprinklers and fire protection systems, entries,
doors, ceilings, windows, interior walls, and heating, ventilation and air
conditioning systems. Such repair and replacements include capital expenditures
and repairs whose benefit may extend beyond the Term. Heating, ventilation and
air conditioning systems and other mechanical and building systems serving the
Premises shall be maintained at Tenant’s expense pursuant to maintenance service
contracts entered into by Tenant or, at Landlord’s election, by Landlord. The
scope of services and contractors under such maintenance contracts shall be
reasonably approved by Landlord. If Tenant fails to perform any repair or
replacement for which it is responsible, Landlord may perform such work and be
reimbursed by Tenant within 10 days after demand therefor. Subject to Paragraphs
9 and 15, Tenant shall bear the full cost of any repair or replacement to any
part of the Building.
     12. Tenant-Made Alterations and Trade Fixtures. Any alterations, additions,
or improvements made by or on behalf of Tenant to the Premises after the dale of
this Lease (“Tenant-Made Alterations”) shall be subject to Landlord’s prior
written consent. Tenant shall cause, at its expense, all Tenant-Made Alterations
to comply with insurance requirements and with Legal Requirements and shall
construct at its expense any alteration or modification required by Legal
Requirements as a result of any Tenant-Made Alterations. All Tenant-Made
Alterations shall be constructed in a good and workmanlike manner by contractors
reasonably acceptable to Landlord and only good grades of materials shall be
used. All plans and specifications for any Tenant-Made Alterations shall be
submitted to Landlord for its approval. Landlord may monitor construction of the
Tenant-Made Alterations. Tenant shall reimburse Landlord for its costs in
reviewing plans and specifications and in monitoring construction. Landlord’s
right to review plans and specifications and to monitor construction shall be
solely for its own benefit, and Landlord shall have no duty to see that such
plans and specifications or construction comply with applicable laws, codes,
rules and regulations. Tenant shall provide Landlord with the identities and
mailing addresses of all persons performing work or supplying materials, prior
to beginning such construction, and Landlord may post on and about the Premises
notices of non-responsibility pursuant to applicable law. Tenant shall furnish
security or make other arrangements satisfactory to Landlord to assure payment
for the completion of all work free and clear of liens and shall provide
certificates of insurance for worker’s compensation and other coverage in
amounts and from an insurance company satisfactory to Landlord protecting
Landlord against liability for personal injury or property damage during
construction. Upon completion of any Tenant-Made Alterations, Tenant shall
deliver to Landlord sworn statements setting forth the names of all contractors
and subcontractors who did work on the Tenant-Made Alterations and final lien
waivers from all such contractors and subcontractors. Upon surrender of the
Premises, all Tenant-Made Alterations and any leasehold improvements constructed
by Landlord or Tenant after the date of this Lease shall remain on the Premises
as Landlord’s property, except to the extent Landlord requires removal at
Tenant’s expense of any such items-or Landlord and Tenant have otherwise agreed
in writing in connection with Landlord’s consent to any Tenant-Made
Alterations,Tenant shall repair any damage caused by such removal. Upon
surrender of the Premises, any improvements to the Premises made by Tenant prior
to the dale of this Lease shall remain on the Premises as Landlord’s property.
     Tenant, at its own cost and expense and without Landlord’s prior approval,
may erect such shelves, bins, machinery and trade fixtures (collectively “Trade
Fixtures”) in the ordinary course of its business provided that such items do
not alter the basic character of the Premises, do not overload or damage the
Premises, and may be removed without injury to the Premises, and the
construction, erection, and installation thereof complies with all

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Legal Requirements and with Landlord’s requirements set forth above. Upon
surrender of the Premises, Tenant shall remove its Trade Fixtures and shall
repair any damage caused by such removal.
     13. Signs. Tenant shall not make any changes to the exterior of the
Premises, install any exterior lights, decorations, balloons, flags, pennants,
banners, or painting, or erect or install any signs, windows or door lettering,
placards, decorations, or advertising media of any type which can be viewed from
the exterior of the Premises, without Landlord’s prior written consent. Upon
surrender or vacation of the Premises, Tenant shall have removed all signs,
other than monument signs, which shall remain in place, and repair, paint,
and/or replace the building facia surface to which its signs are attached.
Tenant shall obtain all applicable governmental permits and approvals for sign
and exterior treatments. All signs, decorations, advertising media, blinds,
draperies and other window treatment or bars or other security installations
visible from outside the Premises, other than such items in place as of the date
of this Lease, shall be subject to Landlord’s approval and conform in all
respects to Landlord’s requirements.
     14. Parking. INTENTIONALLY OMITTED.
     15. Restoration. If at any time during the Lease Term the Premises are
damaged by a fire or other casualty, Landlord shall notify Tenant within 60 days
after such damage as to the amount of time Landlord reasonably estimates it will
take to restore the Premises. If the restoration time is estimated to exceed
6 months, either Landlord or Tenant may elect to terminate this Lease upon
notice to the other party given no later than 30 days after Landlord’s notice.
If neither party elects to terminate this Lease or if Landlord estimates that
restoration will take 6 months or less, then, subject to receipt of sufficient
insurance proceeds, Landlord shall promptly restore the Premises excluding the
improvements installed by Tenant or by Landlord and paid by Tenant, subject to
delays arising from the collection of insurance proceeds or from Force Majeure
events. Tenant at Tenant’s expense shall promptly perform, subject to delays
arising from the collection of insurance proceeds, or from Force Majeure events,
all repairs or restoration not required to be done by Landlord and shall
promptly re-enter the Premises and commence doing business in accordance with
this Lease. Notwithstanding the foregoing, either party may terminate this Lease
if the Premises are damaged during the last year of the Lease Term and Landlord
reasonably estimates that it will take more than one month to repair such
damage. Base Rent shall be abated for the period of repair and restoration in
the proportion which the area of the Premises, if any, which is not usable by
Tenant bears to the total area of the Premises. Such abatement shall be the sole
remedy of Tenant, and except as provided herein, Tenant waives any right to
terminate the Lease by reason of damage or casualty loss.
     16. Condemnation. If any part of the Premises should be taken for any
public or quasi-public use under governmental law, ordinance, or regulation, or
by right of eminent domain, or by private purchase in lieu thereof (a “Taking”
or “Taken”), and the Taking would prevent or materially interfere with Tenant’s
use of the Premises or in Landlord’s judgment would materially interfere with or
impair its ownership or operation of the Premises, then upon written notice by
Landlord this Lease shall terminate and Base Rent shall be apportioned as of
said date. If part of the Premises shall be Taken, and this Lease is not
terminated as provided above, the Base Rent payable hereunder during the
unexpired Lease Term shall be reduced to such extent as may be fair and
reasonable under the circumstances. In the event of any such Taking, Landlord
shall be entitled to receive the entire price or award from any such Taking
without any payment to Tenant, and Tenant hereby assigns to Landlord Tenant’s
interest, if any, in such award. Tenant shall have the right, to the extent that
same shall not diminish Landlord’s award, to make a separate claim against the
condemning authority (but not Landlord) for such compensation as may be
separately awarded or recoverable by Tenant for moving expenses and damage to
Tenant’s Trade Fixtures, if a separate award for such items is made to Tenant.
     17. Assignment and Subletting. Without Landlord’s prior written consent,
Tenant shall not assign this Lease or sublease the Premises or any part thereof
or mortgage, pledge, or hypothecate its leasehold interest or grant any
concession or license within the Premises and any attempt to do any of the
foregoing shall be void and of no effect. For purposes of this paragraph, a
transfer of the ownership interests controlling Tenant shall be deemed an
assignment of this Lease unless such ownership interests are publicly traded.
Notwithstanding the above, Tenant may assign or sublet the Premises, or any pan
thereof, to any entity controlling Tenant, controlled by Tenant or under common
control with Tenant (a “Tenant Affiliate”), without the prior written consent of
Landlord. Tenant shall reimburse Landlord for all of Landlord’s reasonable
out-of-pocket expenses in connection with any assignment or sublease. Upon
Landlord’s receipt of Tenant’s written notice of a desire to assign or sublet
the Premises, or any part thereof (other than to a Tenant Affiliate), Landlord
may, by giving written notice to Tenant within 30 days after receipt of Tenant’s
notice, terminate this Lease with respect to the space described in Tenant’s
notice, as of the date specified in Tenant’s notice for the commencement of the
proposed assignment or sublease.
          Notwithstanding any assignment or subletting, Tenant and any guarantor
or surely of Tenant’s obligations under this Lease shall at all times remain
fully responsible and liable for the payment of the rent and for compliance with
all of Tenant’s other obligations under this Lease (regardless of whether
Landlord’s approval has been obtained for any such assignments or sublettings).
In the event that the rent due and payable by a sublessee or assignee (or a
combination of the rental payable under such sublease or assignment plus any
bonus or other consideration therefor or incident thereto) exceeds the rental
payable under this Lease, then Tenant shall be bound and obligated to pay
Landlord as additional rent hereunder all such excess rental and other excess
consideration within 10 days following receipt thereof by Tenant.
          If this Lease be assigned or if the Premises be subleased (whether in
whole or in part) or in the event of the mortgage, pledge, or hypothecation of
Tenant’s leasehold interest or grant of any concession or license within the
Premises or if the Premises be occupied in whole or in part by anyone other than
Tenant, then upon a default by Tenant hereunder Landlord may collect rent from
the assignee, sublessee, mortgagee, pledgee, party to whom the leasehold
interest was hypothecated, concessionee or licensee or other occupant and,
except to the extent

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set forth in the preceding paragraph, apply the amount collected to the next
rent payable hereunder; and all such rentals collected by Tenant shall be held
in trust for Landlord and immediately forwarded to Landlord. No such transaction
or collection of rent or application thereof by Landlord, however, shall be
deemed a waiver of these provisions or a release of Tenant from the further
performance by Tenant of its covenants, duties, or obligations hereunder.
18. Indemnification. Except for the negligence of Landlord, its agents,
employees or contractors, and to the extent permitted by law, Tenant agrees to
indemnify, defend and hold harmless Landlord, and Landlord’s agents, employees
and contractors, from and against any and all losses, liabilities, damages,
costs and expenses (including attorneys’ fees) resulting from claims by third
parties for injuries to any person and damage to or theft or misappropriation or
loss of property occurring in or about the Premises. The furnishing of insurance
required hereunder shall not be deemed to limit Tenant’s obligations under this
Paragraph 18.
19. Inspection and Access. Landlord and its agents, representatives, and
contractors may enter the Premises at any reasonable time to inspect the
Premises and to make such repairs as may be required or permitted pursuant to
this Lease and for any other business purpose. Landlord and Landlord’s
representatives may enter the Premises during business hours for the purpose of
showing the Premises to prospective purchasers and, during the last year of the
Lease Term, to prospective tenants. Landlord may erect a suitable sign on the
Premises stating the Premises are available to let or that the Project is
available for sale. Landlord may grant casements, make public dedications,
designate common areas and create restrictions on or about the Premises,
provided that no such easement, dedication, designation or restriction
interferes with Tenant’s use or occupancy of the Premises. At Landlord’s
request, Tenant shall execute such instruments as may be necessary for such
easements, dedications or restrictions.
     20. Quit Enjoyment. If Tenant shall perform all of the covenants and
agreements herein required to be performed by Tenant, Tenant shall, subject to
the terms of this Lease, at all times during the Lease Term, have peaceful and
quiet enjoyment of the Premises against any person claiming by, through or under
Landlord.
     21. Surrender. Upon termination of the Lease Term or earlier termination of
Tenant’s right of possession, Tenant shall surrender the Premises to Landlord in
the same condition as received, broom clean, ordinary wear and tear and casualty
loss and condemnation covered by Paragraphs 15 and 16 excepted. Any Trade
Fixtures, Tenant-Made Alterations and property not so removed by Tenant as
permitted or required herein shall be deemed abandoned and may be stored,
removed, and disposed of by Landlord at Tenant’s expense, and Tenant waives all
claims against Landlord for any damages resulting from Landlord’s retention and
disposition of such property. All obligations of Tenant hereunder not fully
performed as of the termination of the Lease Term shall survive the termination
of the Lease Term, including without limitation, indemnity obligations, payment
obligations with respect to Impositions and obligations concerning the condition
and repair of the Premises.
     22. Holding Over. If Tenant retains possession of the Premises after the
termination of the Lease Term, unless otherwise agreed in writing, such
possession shall be subject to immediate termination by Landlord at any time,
and all of the other terms and provisions of this Lease (excluding any expansion
or renewal option or other similar right or option) shall be applicable during
such holdover period, except that Tenant shall pay Landlord from time to time,
upon demand, as Base Rent for the holdover period, an amount equal to double the
Base Rent in effect on the termination date, computed on a monthly basis for
each month or part thereof during such holding over, as full compensation for
any damages which may be incurred by Landlord as a result of such holding over.
All other payments shall continue under the terms of this Lease. No holding over
by Tenant, whether with or without consent of Landlord, shall operate to extend
this Lease except as otherwise expressly provided, and this Paragraph 22 shall
not be construed as consent for Tenant to retain possession of the Premises. For
purposes of this Paragraph 22, “possession of the Premises” shall continue
until, among other things, Tenant has delivered all keys to the Premises to
Landlord, Landlord has complete and total dominion and control over the
Premises, and Tenant has completely fulfilled all obligations required of it
upon termination of the Lease as set forth in this Lease, including, without
limitation, those concerning the condition and repair of the Premises.
     23. Events of Default. Each of the following events shall be an event of
default (“Event of Default”) by Tenant under this Lease:
     (i) Tenant shall fail to pay any installment of Base Rent or any other
payment required herein when due, and such failure shall continue for a period
of 5 days from the date such payment was due.
     (ii) Tenant or any guarantor or surety of Tenant’s obligations hereunder
shall (A) make a general assignment for the benefit of creditors; (B) commence
any case, proceeding or other action seeking to have an order for relief entered
on its behalf as a debtor or to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, liquidation, dissolution or
composition of it or its debts or seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or of any substantial part
of its property (collectively a “proceeding for relief); (C) become the subject
of any proceeding for relief which is not dismissed within 60 days of its filing
or entry; or (D) die or suffer a legal disability (if Tenant, guarantor, or
surety is an individual) or be dissolved or otherwise fail to maintain its legal
existence (if Tenant, guarantor or surety is a corporation, partnership or other
entity).
     (iii) Any insurance required to be maintained by Tenant pursuant to this
Lease shall be cancelled or terminated or shall expire or shall be reduced or
materially changed, except, in each case, as permitted in this Lease.

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     (iv) Tenant shall attempt or there shall occur any assignment, subleasing
or other transfer of Tenant’s interest in or with respect to this Lease except
as otherwise permitted in this Lease.
     (v) Tenant shall fail to discharge any lien placed upon the Premises in
violation of this Lease within 30 days after any such lien or encumbrance is
filed against the Premises.
     (vi) Tenant shall fail to comply with any provision of this Lease other
than those specifically referred to in this Paragraph 23, and except as
otherwise expressly provided herein, such default shall continue for more than
30 days after Landlord shall have given Tenant written notice of such default.
     24. Landlord’s Remedies. Upon each occurrence of an Event of Default and so
long as such Event of Default shall be continuing for more than five (5) days
after Landlord has given notice of said default to Tenant, Landlord may at any
time thereafter at its election: terminate this Lease or Tenant’s right of
possession, (but Tenant shall remain liable as hereinafter provided) and/or
pursue any other remedies at law or in equity. Upon the termination of this
Lease or termination of Tenant’s right of possession, it shall be lawful for
Landlord, with such demand or notice as is required by this Lease and Illinois
law, to re-enter the Premises by forcible entry and detainer proceedings or any
other action or proceeding authorized by law and to remove Tenant and all
persons and property therefrom. If Landlord re-enters the Premises, Landlord
shall have the right to keep in place and use, or remove and store, all of the
furniture, fixtures and equipment at the Premises.
          If Landlord terminates this Lease, Landlord may recover from Tenant
the sum of: all Base Rent and all other amounts accrued hereunder to the date of
such termination; the cost of relating the whole or any part of the Premises,
including without limitation brokerage fees and/or leasing commissions incurred
by Landlord, and costs of removing and storing Tenant’s or any other occupant’s
property, repairing, altering, remodeling, or otherwise pulling the Premises
into condition acceptable to a new tenant or tenants, and all reasonable
expenses incurred by Landlord in pursuing its remedies, including reasonable
attorneys’ fees and court costs; and the excess of the then present value of the
Base Rent and other amounts payable by Tenant under this Lease as would
otherwise have been required to be paid by Tenant to Landlord during the period
following the termination of this Lease measured from the date of such
termination to the expiration date stated in this Lease, over the present value
of any net amounts which Tenant establishes Landlord can reasonably expect to
recover by reletting the Premises for such period, taking into consideration the
availability of acceptable tenants and other market conditions affecting
leasing. Such present values shall be calculated at a discount rate equal to the
90-day U.S. Treasury bill rate at the date of such termination.
          If Landlord terminates Tenant’s right of possession (but not this
Lease), Landlord shall use commercially reasonable efforts to relet the Premises
for the account of Tenant far such rent and upon such terms as shall be
satisfactory to Landlord without thereby releasing Tenant from any liability
hereunder and without demand or notice of any kind to Tenant. For the purpose of
such reletting Landlord is authorized to make any repairs, changes, alterations,
or additions in or to the Premises as Landlord deems reasonably necessary or
desirable. If the Premises are not relet, then Tenant shall pay to Landlord as
damages a sum equal to the amount of the rental reserved in this Lease for such
period or periods, plus the cost of recovering possession of the Premises
(including attorneys’ fees and costs of suit), the unpaid Base Rent and other
amounts accrued hereunder at the time of repossession, and the costs incurred in
any attempt by Landlord to relet the Premises. If the Premises are relet and a
sufficient sum shall not be realized from such reletting [after first deducting
therefrom, for retention by Landlord, the unpaid Base Rent and other amounts
accrued hereunder at the time of reletting, the cost of recovering possession
(including attorneys’ fees and costs of suit), all of the costs and expense of
repairs, changes, alterations, and additions, the expense of such reletting
(including without limitation brokerage fees and leasing commissions) and the
cost of collection of the rent accruing therefrom] to satisfy the rent provided
for in this Lease to be paid, then Tenant shall immediately satisfy and pay any
such deficiency. Any such payments due Landlord shall be made upon demand
therefor from lime to time and Tenant agrees that Landlord may file suit to
recover any sums falling due from time to time. Notwithstanding any such
reletting without termination, Landlord may at any time thereafter elect in
writing to terminate this Lease for such previous breach.
          Exercise by Landlord of any one or more remedies hereunder granted or
otherwise available shall-not be deemed to be an acceptance of surrender of the
Premises and/or a termination of this Lease by Landlord, whether by agreement or
by operation of law, it being understood that such surrender and/or termination
can be effected only by the written agreement of Landlord and Tenant. Any law,
usage, or custom to the contrary notwithstanding, Landlord shall have the right
at all times to enforce the provisions of this Lease in strict accordance with
the terms hereof; and the failure of Landlord at any time to enforce its rights
under (this Lease strictly in accordance with same shall not be construed as
having created a custom in any way or manner contrary to the specific terms,
provisions, and covenants of this Lease or as having modified the same. Tenant
and Landlord further agree that forbearance or waiver by Landlord to enforce its
rights pursuant to this Lease or at law or in equity, shall not be a waiver of
Landlord’s right to enforce one or more of its rights in connection with any
subsequent default. A receipt by Landlord of rent or other payment with
knowledge of the breach of any covenant hereof shall not be deemed a waiver of
such breach, and no waiver by Landlord of any provision of this Lease shall be
deemed to have been made unless expressed in writing and signed by Landlord.
Tenant waives all right of redemption in case Tenant shall be dispossessed by a
judgment or by warrant of any court or judge. The terms “enter,” “re-enter,”
“entry” or “re-entry,” as used in this Lease, are not restricted to their
technical legal meanings. Any reletting of the Premises shall be on commercially
reasonable terms and conditions. Landlord shall not be liable, nor shall
Tenant’s obligations hereunder be diminished because of, Landlord’s failure to
relet the Premises or collect rent due in respect of such reletting.
     25. Tenant’s Remedies/Limitation of Liability. Landlord shall not be in
default hereunder unless Landlord fails to perform any of its obligations
hereunder within 30 days after written notice from Tenant specifying

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such failure (unless such performance will, due to the nature of the obligation,
require a period of time in excess of 30 days, then after such period of time as
is reasonably necessary). All obligations of Landlord hereunder shall be
construed as covenants, not conditions; and, except as may be otherwise
expressly provided in this Lease, Tenant may not terminate this Lease for breach
of Landlord’s obligations hereunder. All obligations of Landlord under this
Lease will he binding upon Landlord only during the period of its ownership of
the Premises and not thereafter. The term “Landlord” in this Lease shall mean
only the owner, for the time being of the Premises, and in the event of the
transfer by such owner of its interest in the Premises, such owner shall
thereupon be released and discharged from all obligations of Landlord thereafter
accruing, but such obligations shall be binding during the Lease Term upon each
new owner for the duration of such owner’s ownership. Any liability of Landlord
under this Lease shall be limited solely to its interest in the Project, and in
no event shall any personal liability be asserted against Landlord in connection
with this Lease nor shall any recourse be had to any other property or assets of
Landlord.
     26. Waiver of Jury Trial. TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL BY
JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING OUT OF THIS
LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.
     27. Subordination. This Lease and Tenant’s interest and rights hereunder
are and shall be subject and subordinate at all times to the lien of any first
mortgage, now existing or hereafter created on or against the Project or the
Premises, and all amendments, restatements, renewals, modifications,
consolidations, refinancing, assignments and extensions thereof, without the
necessity of any further instrument or act on the part of Tenant, provided
however, that the holder of any such first mortgage shall not disturb the
tenancy of Tenant, provided that Tenant is not in default under this Lease.
Tenant agrees, at the election of the holder of any such mortgage, to attorn to
any such holder. Tenant agrees upon demand to execute, acknowledge and deliver
such instruments, confirming such subordination, provided such subordination
agreement shall contain an agreement of non-disturbance by the mortgagee with
respect to Tenant, provided that Tenant is not in default under this Lease, and
such instruments of attornment as shall be requested by any such holder and are
agreeable to Landlord and Tenant. Notwithstanding the foregoing, any such holder
may at any time subordinate its mortgage to this Lease, without Tenant’s
consent, by notice in writing to Tenant, and thereupon this Lease shall be
deemed prior to such mortgage without regard to their respective dates of
execution, delivery or recording and in that event such holder shall have the
same rights with respect to this Lease as though this Lease had been executed
prior to the execution, delivery and recording of such mortgage and had been
assigned to such holder. The term “mortgage” whenever used in this Lease shall
be deemed to include deeds of trust, security assignments and any other
encumbrances, and any reference to the “holder” of a mortgage shall be deemed to
include the beneficiary under a deed of trust.
     28. Mechanic’s Liens. Tenant has no express or implied authority to create
or place any lien or encumbrance of any kind upon, or in any manner to bind the
interest of Landlord or Tenant in, the Premises or to charge the rentals payable
hereunder for any claim in favor of any person dealing with Tenant, including
those who may furnish materials or perform labor for any construction or
repairs. Tenant covenants and agrees that it will pay or cause to be paid all
sums legally due and payable by it on account of any labor performed or
materials furnished in connection with any work performed on the Premises and
that it will save and hold Landlord harmless from all loss, cost or expense
based on or arising out of asserted claims or liens against the leasehold estate
or against the interest of Landlord in the Premises or under this Lease. Tenant
shall give Landlord immediate written notice of the placing of any lien or
encumbrance against the Premises and cause such lien or encumbrance to be
discharged within 60 days of the filing or recording thereof; provided, however,
Tenant may contest such liens or encumbrances as long as such contest prevents
foreclosure of the lien or encumbrance and Tenant causes such lien or
encumbrance to be bonded or insured over in a manner satisfactory to Landlord
within such 60 day period.
     29. Estoppel Certificates. Tenant agrees, from time to time, within 10 days
after request of Landlord, to execute and deliver to Landlord, or Landlord’s
designee, any estoppel certificate requested by Landlord, stating that this
Lease is in full force end effect, the date to which rent has been paid, that
Landlord is not in default hereunder (or specifying in detail the nature of
Landlord’s default), the termination date of this Lease and such other matters
pertaining to this Lease as may be requested by Landlord. Tenant’s obligation to
furnish each estoppel certificate in a timely fashion is a material inducement
for Landlord’s execution of this Lease. No cure or grace period provided in this
Lease shall apply to Tenant’s obligations to timely deliver an estoppel
certificate. Tenant hereby irrevocably appoints Landlord as its attorney in fact
to execute on its behalf and in its name any such estoppel certificate if Tenant
fails to execute and deliver the estoppel certificate within 10 days after
Landlord’s written request thereof.
     30. Environmental Requirements. Except for Hazardous Material contained in
products used by Tenant in its manufacturing processes or in de minimis
quantities for ordinary cleaning and office purposes, Tenant shall not permit or
cause any party to bring any Hazardous Material upon the Premises or transport,
store, use, generate, manufacture or release any Hazardous Material in or about
the Premises without Landlord’s prior written consent. 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 Materials released on or from the Premises during the
Lease Term or otherwise released on or from the Premises 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 to Tenant’s transportation, storage, use, generation, manufacture or
release of Hazardous Materials 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

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state and local counterparts thereto, and any regulations or policies
promulgated or issued thereunder. The term “Hazardous Materials” means and
includes any substance, material, waste, pollutant, or contaminant listed or
defined as hazardous or toxic, under any Environmental Requirements, asbestos
and petroleum, including crude oil or any fraction thereof, natural gas liquids,
liquified natural gas, or synthetic gas usable for fuel (or mixtures of natural
gas and such synthetic gas). 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 and loss of rental income therefrom), 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 and including, without
limitation, removal or management of any asbestos brought into the property or
disturbed in breach of the requirements of this Paragraph 30, regardless of
whether such removal or management is required by law) 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 Paragraph 30
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 Paragraph 30 shall survive any termination of
this Lease.
          Landlord shall have access to, and a right to perform inspections and
tests of, the Premises to determine Tenant’s compliance with Environmental
Requirements, its obligations under this Paragraph 30, or the environmental
condition of the Premises. Access shall be granted to Landlord upon Landlord’s
prior notice to Tenant and at such times so as to minimize, so far as may be
reasonable under the circumstances, any disturbance to Tenant’s operations. Such
inspections and tests shall be conducted at Landlord’s expense, unless such
inspections or tests reveal that Tenant has not complied with any Environmental
Requirement, in which case Tenant shall reimburse Landlord for the reasonable
cost of such inspection and tests. Landlord’s receipt of or satisfaction with
any environmental assessment in no way waives any rights that Landlord holds
against Tenant.
     31. Rules and Regulations. Tenant shall, at all times during the Lease Term
and any extension thereof, comply with all reasonable rules and regulations at
any time or from time to time established by Landlord covering use of the
Premises. The current rules and regulations are attached hereto, In the event of
any conflict between said rules and regulations and other provisions of this
Lease, the other terms and provisions of this Lease shall control.
     32. Security Service. Tenant acknowledges and agrees that Landlord is not
providing any security services with respect to the Premises and that Landlord
shall not be liable to Tenant for, and Tenant waives any claim against Landlord
with respect to, any loss by theft or any other damage suffered or incurred by
Tenant in connection with any unauthorized entry into the Premises or any other
breach of security with respect to the Premises.
     33. Force Majeure. Landlord shall not be held responsible for delays in the
performance of its obligations hereunder when caused by strikes, lockouts, labor
disputes, acts of God, inability to obtain labor or materials or reasonable
substitutes therefor, governmental restrictions, governmental regulations,
governmental controls, delay in issuance of permits, enemy or hostile
governmental action, civil commotion, fire or other casualty, and other causes
beyond the reasonable control of Landlord (“Force Mojeure”).
     34. Entire Agreement. This Lease constitutes the complete agreement of
Landlord and Tenant with respect to the subject matter hereof. No
representations, inducements, promises or agreements, oral or written, have been
made by Landlord or Tenant, or anyone acting on behalf of Landlord or Tenant,
which are not contained herein, and any prior agreements, promises,
negotiations, or representations are superseded by this Lease. This Lease may
not be amended except by an instrument in writing signed by both parties hereto.
     35. Severability. If any clause or provision of this Lease is illegal,
invalid or unenforceable under present or future laws, then and in that event,
it is the intention of the parties hereto that the remainder of this Lease shall
not be affected thereby. It is also the intention of the parties to this Lease
that in lieu of each clause or provision of this Lease that is illegal, invalid
or unenforceable, there be added, as a part of this Lease, a clause or provision
as similar in terms to such illegal, invalid or unenforceable clause or
provision as may be possible and be legal, valid and enforceable.
     36. Brokers. Tenant represents and warrants that it has dealt with no
broker, agent or other person in connection with this transaction and that no
broker, agent or other person brought about this transaction, other than the
broker, if any, set forth on the first page of this Lease, and Tenant agrees to
indemnify and hold Landlord harmless from and against any claims by any other
broker, agent or other person claiming a commission or other form of
compensation by virtue of having dealt with Tenant with regard to this leasing
transaction.
     37. Miscellaneous. (a) Any payments or charges due from Tenant to Landlord
hereunder shall be considered rent for all purposes of this
Lease.
     (b) If and when included within the term “Tenant,” as used in this
instrument, there is more than one person, firm or corporation, each shall be
jointly and severally liable for the obligations of Tenant.

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     (c) All notices required or permitted to be given under this Lease shall be
in writing and shall be sent by registered or certified mail, return receipt
requested, or by a reputable national overnight courier service, postage
prepaid, or by hand delivery addressed to the parties at their addresses below,
and with a copy sent to Landlord at 14100 East 35th Place, Aurora, Colorado
80011. Either party may by notice given aforesaid change its address for all
subsequent notices. Except where otherwise expressly provided to the contrary,
notice shall be deemed given upon delivery.
     (d) Except as otherwise expressly provided in this Lease or as otherwise
required by law, any consent or approval required of Landlord hereunder shall
not be unreasonably withheld by Landlord.
     (e) At Landlord’s request from time to lime Tenant shall furnish Landlord
with true and complete copies of its most recent annual and quarterly financial
statements prepared by Tenant or Tenant’s accountants and any other financial
information or summaries that Tenant typically provides to its lenders or
shareholders.
     (f) Neither this Lease nor a memorandum of lease shall be filed by or on
behalf of Tenant in any public record. Landlord may prepare and file, and upon
request by Landlord Tenant will execute, a memorandum of lease.
     (g) The normal rule of construction to the effect that any ambiguities are
to be resolved against the drafting party shall not be employed in the
interpretation of this Lease or any exhibits or amendments hereto.
     (h) The submission by Landlord to Tenant of this Lease shall have no
binding force or effect, shall not constitute an option for the leasing of the
Premises, nor confer any right or impose any obligations upon either party until
execution of this Lease by both parties.
     (i) Words of any gender used in this Lease shall be held and construed to
include any other gender, and words in the singular number shall be held to
include the plural, unless the context otherwise requires. The captions inserted
in this Lease are for convenience only and in no way define, limit or otherwise
describe the scope or intent of this Lease, or any provision hereof, or in any
way affect the interpretation of this Lease.
     (j) Any amount not paid by Tenant within thirty (30) days after its due
date in accordance with the terms of this Lease shall bear interest from such
due date until paid in full at the lesser of the highest rate permitted by
applicable law or 15 percent per year. It is expressly the intent of Landlord
and Tenant at all times to comply with applicable law governing the maximum rate
or amount of any interest payable on or in connection with this Lease. If
applicable law is ever judicially interpreted so as to render usurious any
interest called for under this Lease, or contracted for, charged, taken,
reserved, or received with respect to this Lease, then it is Landlord’s and
Tenant’s express intent that all excess amounts theretofore collected by
Landlord be credited on the applicable obligation (or, if the obligation has
been or would thereby be paid in full, refunded to Tenant), and the provisions
of this Lease immediately shall be deemed reformed and the amounts thereafter
collectible hereunder reduced, without the necessity of the execution of any new
document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder.
     (k) Construction and interpretation of this Lease shall be governed by the
laws of the state in which the Premises is located, excluding any principles of
conflicts of laws.
     (1) Time is of the essence as to the performance of Tenant’s obligations
under this Lease.
     (m) All exhibits and addenda attached hereto are hereby incorporated into
this Lease and made a part hereof. In the event of any conflict between such
exhibits or addenda and the terms of this Lease, such exhibits or addenda shall
control.
     (n) In the event either party hereto initiates litigation to enforce the
terms and provisions of this Lease, the non-prevailing party in such action
shall reimburse the prevailing party for its reasonable attorney’s fees, filing
fees, and court costs.
     38. Landlord’s Lien/Security Interest. Intentionally omitted.
     39. Limitation of Liability of Trustees, Shareholders, and Officers of
ProLogis. Any obligation or liability whatsoever of ProLogis, a Maryland real
estate investment trust, which may arise at any time under this Lease or any
obligation or liability which may be incurred by it pursuant to any other
instrument, transaction, or undertaking contemplated hereby shall not be
personally binding upon, nor shall resort for the enforcement thereof be had to
the property of, its trustees, directors, shareholders, officers, employees or
agents, regardless of whether such obligation or liability is in the nature of
contract, tort, or otherwise.
     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the
day and year first above written.

                      TENANT:       LANDLORD:    
 
                    John B. Sanfilippo & Sons, Inc.       PROLOGIS, a Maryland
real estate investment trust    
 
                   
By:
          By:        
 
 
 
         
 
   

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Name:
            Name:   Brian Marsh    
 
 
 
                 
Title:
            Title:   Senior Vice President    
 
 
 
                 
 
                     
Address:
            Address   :    
 
                                    100 Division Street                  
Suite 101       ,            Bensenville, IL 60106    

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Rules and Regulations

1.   The sidewalk, entries, and driveways of the Premises shall not be
obstructed by Tenant, or its agents, or used by them for any purpose other than
ingress and egress to and from the Premises.   2.   Tenant shall not install or
operate any steam or gas engine or boiler, or other mechanical apparatus in the
Premises, except as specifically approved in the Lease. The use of oil, gas or
inflammable liquids for heating, lighting or any other purpose is expressly
prohibited. Explosives or other articles deemed extra hazardous shall not be
brought into the Premises.   3.   Parking any type of recreational vehicles is
specifically prohibited on or about the Premises. Except for the overnight
parking of operative vehicles, no vehicle of any type shall be stored in the
parking areas at any time. In the event that a vehicle is disabled, it shall be
removed within 48 hours. There shall be no “For Sale” or other advertising signs
on or about any parked vehicle.   4.   Tenant shall maintain the Premises free
from rodents, insects and other pests.   5.   All moveable trash receptacles
provided by the trash disposal firm for the Premises must be kept in the trash
enclosure areas, if any, provided for that purpose.   6.   No auction, public or
private, will be permitted on the Premises.   7.   The Premises shall not be
used for lodging, sleeping or cooking or far any immoral or illegal purposes or
for any purpose other than that specified in the Lease. No gaming devices shall
be operated in the Premises.   8.   Tenant shall ascertain from Landlord the
maximum amount of electrical current which can safely be used in the Premises,
and shall not use more than such safe capacity. Landlord’s consent to the
installation of electric equipment shall not relieve Tenant from the obligation
not to use more electricity than such safe capacity.   9.   Tenant assumes full
responsibility for protecting the Premises from theft, robbery and pilferage.

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ADDENDUM 2
ONE RENEWAL OPTION
ATTACHED TO AND A PART OF THE LEASE AGREEMENT
DATED___, BETWEEN
ProLogis
and
John B. Sanfilippo &. Sons, Inc.
     (a) Provided that as of the time of the giving of the Extension Notice and
the Commencement Date of the Extension Term, (x) Tenant is the Tenant originally
named herein, (y) Tenant actually occupies all of the Premises initially demised
under this Lease and any space added to the Premises, and (z) no Event of
Default exists or would exist but for the passage of time or the giving of
notice, or both; then Tenant shall have the right to extend the Lease Term for
an additional term of at least 3 months, but not more than 9 months (such
additional term is hereinafter called the “Extension Term”) commencing on the
day following the expiration of the Lease Term (hereinafter referred to as the
“Commencement Date of the Extension Term”). Tenant shall give Landlord notice
(hereinafter called the “Extension Notice”) of its election to extend the term
of the Lease Term at least 6 months, but not more than 12 months, prior to the
scheduled expiration date of the Lease Term.
     (b) The Base Rent payable by Tenant to Landlord during the Extension Term
shall be the Base Rent applicable to the last year of the initial Lease term.
The Base Rent shall not be reduced by reason of any costs or expenses saved by
Landlord by reason of Landlord’s not having to find a new tenant for such
premises (including, without limitation, brokerage commissions, costs of
improvements, rent concessions or lost rental income during any vacancy period).
     (c) The payment of Base Rent does not reduce the Tenant’s obligation to pay
or reimburse Landlord for reimbursable items as set forth in the Lease, and
Tenant shall reimburse and pay Landlord as set forth in the Lease with respect
to such items with respect to the Premises during the Extension Term without
regard to any cap on such expenses set forth in the Lease.
     (d) Except for the Base Rent as provided above, Tenant’s occupancy of the
Premises during the Extension Term shall be on the same terms and conditions as
are in effect immediately prior to the expiration of the initial Lease Term;
provided, however, Tenant shall have no further right to any allowances, credits
or abatements or any options to expand, contract, renew or extend the Lease.
     (e) If Tenant does not give the Extension Notice within the period set
forth in paragraph (a) above, Tenant’s right to extend the Lease Term shall
automatically terminate. Time is of the essence as to the giving of the
Extension Notice.
     (f) Landlord shall have no obligation to refurbish or otherwise improve the
Premises for the Extension Term. The Premises shall be tendered on the
Commencement Date of the Extension Term in “as-is” condition.
     (g) If the Lease is extended for the Extension Term, then Landlord shall
prepare and Tenant shall execute an amendment to the Lease confirming the
extension of the Lease Term and the other provisions applicable thereto (the
“Amendment”).
     (h) If Tenant exercises its right to extend the term of the Lease for the
Extension Term pursuant to this Addendum, the term “Lease Term” as used in the
Lease, shall be constructed to include, when practicable, the Extension Term
except as provided in (d) above.

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EXHIBIT C
BILL OF SALE AND ASSIGNMENT OF CONTRACTS
     This instrument is executed and delivered as of the ___ day of ___,
200 ___ pursuant to that certain Agreement of Purchase and Sale (“Agreement”)
dated ___, 200_, by and between JOHN B. SANFILIPPO & SON, INC, a Delaware
corporation (“Seller”), and PROLOGIS a Maryland real estate investment trust
(“Purchaser”), covering the real property described in Exhibit A attached hereto
(“Real Property”).
     1. Sale of Personalty. For good and valuable consideration, Seller hereby
sells, transfers, sets over and conveys to Purchaser the following:
     (a) Tangible Personally. All of the furniture, fixtures, equipment,
interior appliances, machines, apparatus, supplies and personal property of
every nature and description and all replacements thereof now owned by Seller
(including any interest in such property that is leased by Seller) and located
in or on the property; and
     (b) Intangible Personalty. All the right, title and interest of Seller in
and to any and all of the intangible personal property related to the Real
Property, including, without limitation, all trade names and trademarks
associated with the Real Property including Seller’s interest in the name of the
Real Property, the plans and specifications and other architectural and
engineering drawings for the Real Property and improvements located on the Real
Property; warranties; contract rights related to the construction, operation,
ownership or management of the Real Property (but excluding Seller’s obligations
under contracts except those expressly assumed in this instrument); governmental
permits, approvals and licenses to the extent assignable; and telephone exchange
numbers (if assignable).
     2. Assignment of Contracts. For good and valuable consideration, Seller
hereby assigns, transfers, sets over and conveys to Purchaser, and Purchaser
hereby accepts the service contracts described in Exhibit B attached hereto (the
“Service Contracts”), and Purchaser hereby assumes the obligations of Seller
under such service contracts arising from and after the Closing Date.
     3. Warranty. Seller hereby represents and warrants to Purchaser that it is
the owner of the property described above, that such property is free and clear
of all liens, charges and encumbrances other than the Permitted Exceptions (as
defined in the Agreement), and Seller warrants and defends title to the
above-described property unto Purchaser, its successors and assigns, against any
person or entity claiming, or to claim, the same or any part thereof by, through
or under Seller, subject only to the Permitted Exceptions as defined in the
Agreement. Seller further warrants that there are no leases, occupancy
agreements, commission agreements, or other agreements whatsoever affecting the
Property.

 

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     4. Indemnification. Seller shall defend, indemnify and hold harmless
Purchaser from and against any liability, damages, causes of action, expenses,
and attorneys’ fees incurred by Purchaser by reason of the failure of Seller to
fulfill, perform, discharge, and observe its obligations with respect to the
Service Contracts arising on or before the Closing Date (as defined in the
Agreement). Purchaser shall defend, indemnify and hold harmless Seller from and
against any liability, damages, causes of action, expenses, and attorneys’ fees
incurred by Seller by reason of the failure of Purchaser to fulfill, perform,
discharge, and observe the obligations assumed by it under this instrument with
respect to the Service Contracts arising after the date hereof.
     5. Limitation of Liability. In accordance with the Declaration of Trust of
Purchaser, notice is hereby given that all persons dealing with Purchaser shall
look to the assets of Purchaser for the enforcement of any claim against
Purchaser, as none of the trustees, officers, employees or shareholders of
Purchaser assume any personal liability for obligations entered into by or on
behalf of Purchaser.
     IN WITNESS WHEREOF, the undersigned have caused this Bill of Sale and
Assignment of Contracts to be executed as of the date written above.

                  SELLER:    
 
                JOHN B. SANFILIPPO & SON, INC.,         a Delaware corporation  
 
 
           
 
  By:  
 
   
 
     
 
   
 
  Name:  
 
   
 
     
 
   
 
  Title:  
 
   
 
     
 
   
 
           
 
  PURCHASER:        
 
           
 
  PROLOGIS        
 
           
 
  By:  
 
   
 
     
 
   
 
  Name:  
 
   
 
     
 
   
 
  Title: