Exhibit
10.7(a)


 


FIRST AMENDMENT TO LEASE


 


THIS
FIRST AMENDMENT TO LEASE (“First Amendment”) is made as of           November 12            ,
2004, by and between TRANSWESTERN GREAT LAKES, L.P., a Delaware limited
partnership (“Landlord”), as successor in interest to Great Lakes REIT, Inc.,
and AKSYS, LTD., a Delaware corporation (“Tenant”).


 


WHEREAS,
Landlord and Tenant are parties (by succession or assignment) to a written
lease dated July 15, 1996 (the “Lease”) for the lease of the entire
commercial building consisting of approximately 41,500 rentable square feet,
and located at Two Marriott Drive, Lincolnshire, Illinois  60069; and


 


WHEREAS,
Landlord and Tenant now desire to amend the Lease and extend the term of the
Lease, all on the terms and conditions hereinafter set forth.


 


NOW,
THEREFORE, in consideration of the mutual covenants and conditions hereinafter contained, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant hereby agree as follows:


 


1.                                       Lease
Term.  The term of the Lease shall be
extended from the current expiration date of August 31, 2006, until December 31,
2011 (the “Extension Term”).


 


2.                                       Annual
Rent.  Effective as of June 1,
2005, Tenant shall pay the following amounts as Annual Rent and Monthly
Installment of Rent for the Premises for the remainder of the term of the Lease
(including the Extension Term):


 


	
  Period

  	
   

  	
  Annual Rent/ RSF

  	
   

  	
  Annual Rent

  	
   

  	
  Monthly Installment of Rent

  	
   

  
	
  6/1/05 – 12/31/05

  	
   

  	
  $

  	
  8.50

  	
   

  	
  $

  	
  352,750.00

  	
   

  	
  $

  	
  29,395.83

  	
   

  
	
  1/1/06 – 12/31/06

  	
   

  	
  $

  	
  8.80

  	
   

  	
  $

  	
  365,200.00

  	
   

  	
  $

  	
  30,433.33

  	
   

  
	
  1/1/07 – 12/31/07

  	
   

  	
  $

  	
  9.10

  	
   

  	
  $

  	
  377,650.00

  	
   

  	
  $

  	
  31,470.83

  	
   

  
	
  1/1/08 – 12/31/08

  	
   

  	
  $

  	
  10.50

  	
   

  	
  $

  	
  435,750.00

  	
   

  	
  $

  	
  36,312.50

  	
   

  
	
  1/1/09 – 12/31/09

  	
   

  	
  $

  	
  11.25

  	
   

  	
  $

  	
  466,875.00

  	
   

  	
  $

  	
  38,906.25

  	
   

  
	
  1/1/10 – 12/31/10

  	
   

  	
  $

  	
  12.50

  	
   

  	
  $

  	
  518,750.00

  	
   

  	
  $

  	
  43,229.17

  	
   

  
	
  1/1/11 – 12/31/11

  	
   

  	
  $

  	
  13.25

  	
   

  	
  $

  	
  549,875.00

  	
   

  	
  $

  	
  45,822.92

  	
   

  



 


3.                                       Rent
Adjustment.  In addition to Annual
Rent, for the remainder of the term of the Lease, including the Extension Term,
Tenant shall continue to pay to Landlord Direct Expenses and Taxes for each
Lease Year, as set forth in the Lease.


 


4.                                       Improvements.  Landlord has no obligation to improve, alter
or remodel the Premises; provided
however, that Landlord shall provide up to but not in excess of $290,500 (an
amount equal to $7.00 per rentable square foot in the Premises) (“Tenant
Allowance”) for Tenant’s use for the purpose of redecorating, altering,
furnishing and/or remodeling the Premises, provided however, in no event shall
the cost of furnishing the Premises exceed $124,500.00 (an amount equal to
$3.00 per rentable square foot in the Premises).  No work may be performed prior to Landlord’s
written approval of such work and/or the detailed plans of such work, if
necessary and available.  All contractors
must be approved by Landlord in advance, which approval shall not be
unreasonably withheld, and shall be licensed, bonded and/or insured to Landlord’s
reasonable satisfaction.  The cost of
performing such work shall include any and all architectural fees, fees for
building permits and approvals, and Landlord’s construction management fee of
three percent (3%) of the cost of the work. 
Landlord shall provide Construction Management Services to Tenant for
its improvements.  If the cost of such
work exceeds the amount of the Tenant Allowance, Tenant shall be directly
responsible for said excess amount or shall pay to Landlord said excess amount
within fifteen (15) days of Tenant’s receipt of Landlord’s statement of such
excess costs.  If the actual cost of the


 


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work
is less than the Tenant Allowance, Tenant shall not be entitled to receive any
payment or credit for such difference. 
Such work must be completed by, and any request for reimbursement from
the Tenant Allowance must be made to Landlord no later than, December 31,
2005.  Unless otherwise provided herein,
any installations shall remain the property of Landlord.


 


5.                                       Electricity.  All electricity used by Tenant in the
Premises shall be paid for by Tenant by a separate charge or charges billed by
the utility company providing electrical service and payable by Tenant directly
to such utilities company.  Landlord
shall have the right at any time and from time-to-time during the Lease Term to
contract for electricity service from such providers of such services as
Landlord shall elect (each being an “Electric Service Provider”).  Tenant shall cooperate with Landlord, and the
applicable Electric Service Provider, at all times and, as reasonably
necessary, shall allow Landlord and such Electric Service Provider reasonable
access to the Building’s electric lines, feeders, risers, wiring, and any other
machinery within the Premises.  Tenant’s
use of electrical services furnished by Landlord shall not exceed in voltage,
rated capacity, or overall load that which is standard for the Building.


 


6.                                       Security
Deposit / Letter of Credit.


 


A.           Landlord
and Tenant hereby acknowledge that Tenant has previously deposited with
Landlord an irrevocable letter of credit (“Letter of Credit”) running in favor
of Landlord, in the current face amount of $600,000.00, as provided in Section 5
of the Lease.  No later than June 1,
2005, Tenant shall either: (i) cause the issuer of the Letter of Credit to
deliver to Landlord a valid and binding amendment to the Letter of Credit
pursuant to which the face amount of the Letter of Credit shall be increased to
$750,000.00; or (ii) provide to Landlord a new letter of credit in the amount
of $750,000.00 in a form and from a bank reasonably acceptable to Landlord.


 


B.             Paragraphs
(i) and (ii) of Section 5 of the Lease are hereby deleted.  Notwithstanding the terms of this Paragraph 6
or Section 5 of the Lease, if Tenant has not, as of the applicable date
set forth below or prior, defaulted in the performance of any of its obligations
under the Lease beyond any applicable notice or cure period, then the Letter of
Credit may be reduced as follows:


 


(i) at any time after January 1, 2006, Tenant may reduce
the face amount of the Letter of Credit to $600,000.00;


 


(ii) at any time after January 1, 2007, Tenant may reduce
the face amount of the Letter of Credit to $500,000.00;


 


(iii) at any time after January 1, 2008, Tenant may reduce
the face amount of the Letter of Credit to $400,000.00; and


 


(iv)
at any time after January 1, 2009, and each January 1 thereafter,
Tenant may reduce the face amount of the Letter of Credit by not more than
$250,000.00 per year, provided that Tenant first demonstrates to Landlord that
Tenant’s income from continuing operations for the immediately preceding fiscal
year is greater than $2,000,000.00 (as evidenced by Tenant’s audited financial
statements); provided however, in no event shall the face amount of the Letter
of Credit be less than $150,000.00 at any time during the term of the Lease.


 


C.                                     The use, application or retention of the
Letter of Credit, or any portion thereof, by Landlord shall not prevent
Landlord from exercising any other right or remedy provided by the Lease or by
law (it being intended


 


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that Landlord shall not first be required to
proceed against the collateral) and shall not operate as a limitation on any
recovery to which Landlord may otherwise be entitled.


 


D.                                    In
the event of a transfer of Landlord’s interest in the Building, Landlord shall
have the right to (i) transfer the Letter of Credit to the transferee, or (ii)
to require Tenant to cause the  issuer of
the Letter of Credit to deliver a valid and binding amendment changing the
beneficiary of the Letter of Credit to the transferee, and thereupon the
Landlord shall, without any further agreement between the parties, be released
by Tenant from all liability therefor, and it is agreed that the provisions
hereof shall apply to every transfer or assignment of the Letter of Credit to a
new Landlord.  Tenant shall pay upon
Landlord’s demand, as additional rent, any and all costs or fees charged in
connection with the Letter of Credit that arise due to: (i) Landlord’s sale or
transfer of all or a portion of the Building; or (ii) the addition, deletion,
or modification of any beneficiaries under the Letter of Credit.


 


7.                                       Option
To Renew.


 


A.                                   Tenant
shall have and is hereby granted one (1) option to renew the Lease with respect
to all (but not less than all) of the Premises for five (5) years (the “Renewal
Term”) by notice in writing received by Landlord no later than December 31,
2010, time being of the essence for the giving of such notice.  All of the
covenants, conditions and provisions of the Lease shall be applicable to the
Renewal Term, except that the Annual and Monthly Base Rent shall be adjusted to
the current “Market Rental Rate” for the Premises as of the date the Renewal
Term is to commence with appropriate increases each year thereafter.  Landlord shall advise Tenant of the new monthly
rental rate for a Renewal Term within fifteen (15) days after a request
therefore from Tenant; provided however that Tenant’s failure to timely make
such request shall not extend the date upon which Tenant must give notice of
its exercise of the option to renew.  In
no event shall the Annual and Monthly Base Rent be subject to determination or
modification by any person, entity, court or authority other than as expressly
set forth herein.  Tenant shall have
thirty (30) days from the receipt of Landlord’s notice to either accept or
dispute Landlord’s determination of the Market Rental Rate.  In the event that Tenant disputes Landlord’s
determination, Tenant shall so notify Landlord and advise Landlord of Tenant’s
determination of the Market Rental Rate for the Renewal Term.  If, after engaging in good faith
negotiations, Landlord and Tenant cannot agree upon the Market Rental Rate
within thirty (30) days after Landlord’s receipt of Tenant’s notice of
objection to Landlord’s determination of the Market Rental Rate, the “Dispute
Resolution Mechanism” described in subparagraph D below shall apply.


 


B.                                     Tenant’s
exercise of the foregoing option to renew is subject to the conditions that (i)
the Lease is in full force and effect, (ii) there is no uncured default by
Tenant the time of notification of its exercise of the renewal option or any
time prior to commencement of the Renewal Term, and (iii) that both at the time
of notification and commencement there has been no material adverse change in
the financial condition of the Tenant since the date of the Lease, as
reasonably determined by Landlord.


 


C.                                     For
purposes of this Lease, “Market Rental Rate” shall mean the rental, as of the
date for which such Market Rental Rate is being calculated, per annum per
rentable square foot, for lease renewals for comparable space of comparable
size in buildings comparable to the Building in the applicable office
submarket, taking into account prevailing market conditions, including the
concessions customary for a lease renewal of the size and term contained
herein, including but not limited to free rent, tenant improvement allowance
(or cash equivalent or rental abatement in lieu of tenant improvement
allowance), and any other inducements which are customary for such a transaction.


 


D.                                    The Dispute Resolution
Mechanism shall be as follows:  no later
than fifteen (15) days after the end of the 30-day period described in
subparagraph A above, Landlord and Tenant shall jointly appoint as arbitrator a
commercial real estate broker licensed in Illinois with a minimum of ten (10)
years experience in the applicable market. 
If Landlord and Tenant cannot agree on an acceptable arbitrator,
Landlord and Tenant shall each choose, within an additional fifteen (15) days
thereafter, its own arbitrator who meets the qualifications described
above.  The arbitrators shall then
jointly select, within an additional ten (10) days, an arbitrator to serve as
the arbitrator hereunder.  If either
Landlord or Tenant fails to choose its own arbitrator within said fifteen (15)
day period, then the arbitrator chosen by the other shall resolve the
dispute.  Within ten (10) days after
appointment (whether mutually by


 


66





















 


the
parties, by default of one party to choose an arbitrator, or by selection by
the two arbitrators), Landlord and Tenant shall each submit to the
arbitrator(s) in writing its good faith estimate of the Market Rental Rate for
the Renewal Term.  Within ten (10) days
after receipt of the last of the determinations, the arbitrator(s) shall choose
either Landlord’s or Tenant’s determination of Market Rental Rate.  The cost of the arbitrator(s) shall be borne
by the party whose determination of the Market Rental Rate was not selected by
the arbitrator.


 


E.              Landlord
shall have no obligation to make improvements, decorations, repairs,
alterations or additions to the Premises as a condition to Tenant’s obligations
to pay Rent during the Renewal Term unless otherwise agreed to by the parties
at the time the amendment set forth below is executed.  In the event that Tenant exercises the
renewal option set forth herein, Tenant agrees to enter into an amendment to
the Lease incorporating the Renewal Term and the Annual and Monthly Base Rent
applicable thereto within thirty (30) days following the exercise of the
renewal option, but in no event shall a delay in the full execution of such
amendment nullify Tenant’s exercise of the option to renew.


 


8.                                       Superseded Provisions.  Section 29
and Exhibit B of the Lease are hereby deleted and shall be of no further force
or effect.


 


9.                                       Notices.  The Lease is hereby modified to provide that
the address for rent payments and notices to Landlord shall be addressed as
follows:


 


	
  Landlord:

  	
  Transwestern
  Commercial Services

  
	
   

  	
   

  	
  3000 Lakeside
  Drive, Suite 113S

  
	
   

  	
   

  	
  Bannockburn,
  Illinois 60015

  
	
   

  	
   

  	
  Attn: Property
  Manager

  
	
   

  	
   

  	
   

  
	
  with
  a copy to:

  	
   

  	
  Transwestern
  Investment Company

  
	
   

  	
   

  	
  150 North Wacker
  Drive, Suite 800

  
	
   

  	
   

  	
  Chicago,
  Illinois 60606

  
	
   

  	
   

  	
  Attn: Owner’s
  Representative

  
	
   

  	
   

  	
   

  
	
  and
  to:

  	
   

  	
  Drane, Freyer
  and Lapins

  
	
   

  	
   

  	
  150 North Wacker
  Drive, 8th Floor

  
	
   

  	
   

  	
  Chicago,
  Illinois 60606

  
	
   

  	
   

  	
  Attn: Wendy
  Freyer, Esq.

  
	
   

  	
   

  	
   

  
	
  Payments
  of Rent shall be made payable to the order of: Transwestern Two Marriott, at
  the following address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Transwestern
  Commercial Services

  
	
   

  	
   

  	
  3000 Lakeside
  Drive, Suite 113S

  
	
   

  	
   

  	
  Bannockburn,
  Illinois 60015

  
	
   

  	
   

  	
  Attn: Property
  Manager

  



 


or
such other name and address as Landlord shall, from time to time, designate.


 


10.                                 Broker’s
Commission.  Landlord and Tenant each
represent to the other that the only broker with whom either has dealt in
connection with this First Amendment are Transwestern Commercial Services as
Landlord’s agent and CB Richard Ellis, Inc. at Tenant’s agent.


 


11.                                 Indemnification.  The following is hereby added at the end of Section 10
of the Lease:


 


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“Tenant shall not be liable to Landlord, and Landlord
waives all claims against Tenant, for any damage to any property in or about
the Premises or the Building by or from any cause whatsoever except to the
extent caused by or arising from the gross negligence or willful misconduct of
Tenant (or its agents, employees, or contractors).  Landlord shall protect, indemnify, and hold
Tenant harmless from and against any and all loss, claims, liability, or costs
(including court costs and reasonable attorneys fees) incurred by reason of (a)
any damage to any property of any third party, or any injury (including but not
limited to death) to any person occurring in, on or about the Premises or the
Building to the extent that such injury or damage shall be caused by or arise
from any actual or alleged act, neglect, fault or omission by or of Landlord,
its agents, servants, employees, or invitees to meet any standards imposed by
any duty with respect to the injury or damage; (b) Landlord’s failure to comply
with any and all governmental laws, ordinances, and regulations applicable to
the condition of the Building (other than those that are the responsibility of
Tenant); or (c) any breach or default on the part of Landlord in the
performance of any covenant or agreement on its part to be performed pursuant
to this Lease.


 


The provisions of this Section shall survive the
termination of this Lease with respect to any claims or liability accruing prior
to such termination.”


 


12.                                 Insurance.  Section 11.1 of the Lease is hereby
modified to provide that during the term of the Lease Landlord shall carry
property damage insurance for the Building at replacement cost.


 


13.                                 Services
and Utilities.  The following is
hereby added at the end of Section 13.1 of the Lease:


 


“Notwithstanding anything to the contrary
contained in this Section 13.1, if: (i) Landlord ceases to furnish any
service in the Building for a period in excess of five (5) consecutive Business
Days after Tenant notifies Landlord of such cessation (the “Interruption Notice”);
(ii) such cessation does not arise as a result of an act or omission of Tenant;
(iii) such cessation is not caused by a fire or other casualty (in which case Section 22
shall control); (iv) the restoration of such service is reasonably within the
control of Landlord; and (v) as a result of such cessation, the Premises or a
material portion thereof, is rendered untenantable and Tenant in fact ceases to
use the Premises, or material portion thereof, then Tenant, as its sole remedy,
shall be entitled to receive an abatement of Base Rent payable hereunder during
the period beginning on the sixth (6th) consecutive Business Day of such
cessation and ending on the day when the service in question has been
restored.  In the event the entire
Premises has not been rendered untenantable by the cessation in service, the
amount of abatement that Tenant is entitled to receive shall be prorated based
upon the percentage of the Premises so rendered untenantable and not used by
Tenant.”


 


14.                                 Remedies.  Sections 19.1.1, 19.1.4.1,
19.1.4.2, and 19.6 of the Lease are hereby modified to read as follows:


 


(a)                                  The
beginning of Section 19.1.1 of the Lease shall read as follows:  “Landlord may, at its election seek to
terminate this Lease or seek to terminate Tenant’s right...”


 


(b)                                 The
following is added to the end of Section 19.1.4.1:  “Landlord shall at all times make
commercially reasonable efforts to mitigate its damages hereunder.”


 


(c)                                  The
beginning of Section 19.1.4.2 of the Lease shall read as follows:   “Landlord shall use commercially
reasonable to relet the Premises or any part thereof for such rent and upon
such terms as Landlord, in its sole discretion, shall determine (including the
right to relet the premises for a greater or lesser term than that remaining
under this Lease, the right to relet the Premises as a part of a larger area,
and the right to change the character or use made of the Premises).  In connection with or in preparation for any
reletting, Landlord may, but shall not be required to, make repairs,
alterations and additions in or to the Premises and redecorate the same to the
extent Landlord deems necessary or desirable, and Tenant shall, upon demand,
pay the cost thereof, together with Landlord’s expenses of reletting,
including, without


 


68





















 


limitation, any commission
incurred by Landlord.  If Landlord
decides to relet the Premises or a duty to relet is imposed upon Landlord by law,
Landlord and Tenant agree that nevertheless Landlord shall at most be required
to use only the same efforts Landlord then uses to lease premises in the
Building generally....”


 


(d)                                 Section 19.6
of the Lease is hereby deleted, and the following is inserted in its
place:  “To secure the payment of all
rentals and other sums of money becoming due from Tenant under this Lease,
Landlord shall have and Tenant grants to Landlord a first lien upon the
leasehold interest of Tenant under this Lease, which lien may be enforced in
equity, but Landlord shall not under any circumstances have any security
interest in any of Tenant’s personal property.”


 


15.                                 Damage by Fire.  In Section 22.2
of the Lease, the words “sixty (60) days” are hereby replaced with “thirty
(30) days”.


 


16.                                 Sale
by Landlord.  The beginning of Section 24
of the Lease shall be modified to read as follows:  “In the event of sale or conveyance by
Landlord of the Building, and assumption of this Lease in writing by the
purchaser or transferee, the same shall operate to release Landlord...”


 


17.                                 Estoppel
Certificates.  In line 7 of Section 25
of the Lease, the word “reasonably” is hereby inserted before the word “requested”,
and by deletion of the remainder of the sentence after the word “purchaser” in
line 9 of Section 25.


 


18.         Surrender
of Premises.  The beginning of Section 26.1
of the Lease is hereby modified to read as follows:  “Both Landlord and Tenant will make
commercially reasonable efforts to schedule a joint inspection of the
Building at least 30 days before the last day of the Term...”


 


19.                                 Authority.  If a party to this First Amendment signs as a
corporation each of the persons executing this Lease on behalf of such parties
represents and warrants that such party has been and is qualified to do business
in the state in which the Building is located, and that the corporation has
full right and authority to enter into this First Amendment and that all
persons signing on behalf of the corporation were authorized to do so by
appropriate corporate action.  Such party
agrees to furnish promptly upon request a corporate resolution, proof of due
authorization by partners or other appropriate documentation evidencing the due
authorization of such party to enter into this First Amendment.


 


20.                                 Terms
of Lease.  Capitalized terms used but
not defined herein shall have the meanings ascribed thereto in the Lease.


 


21.                                 Incorporation
of the Lease.  Except as otherwise
amended hereby, the terms and covenants of the Lease remain in full force and
effect.


 


69





















 


IN WITNESS WHEREOF, Landlord and Tenant have executed
this First Amendment as of the day and year first above written.


 


	
  TENANT:

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
  AKSYS,
  LTD., a Delaware corporation

  	
  TRANSWESTERN GREAT LAKES, L.P.,
  a 

  Delaware limited partnership

  
	
   

  	
   

  
	
  By:

  	
  /s/ Lawrence D. Damron

  	
   

  	
  By:

  	
  Transwestern
  Great Lakes GP, L.L.C., a

  
	
  Name:

  	
   Lawrence D. Damron

  	
   

  	
   

  	
  Maryland limited liability company,

  
	
  Title:

  	
   Sr. VP and
  Chief Financial Officer

  	
   

  	
   

  	
  its general
  partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Transwestern Investment Company,

  
	
   

  	
   

  	
   

  	
  L.L.C.,
  its authorized agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Betsy J. Nelson

  
	
   

  	
   

  	
  Name:

  	
   Betsy J. Nelson

  
	
   

  	
   

  	
  Title:

  	
   Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WITNESS/ATTEST

  	
  WITNESS/ATTEST

  
	
  By:

  	
  /s/ Rose A. Upton

  	
   

  	
  By:

  	
  /s/ Jennifer Del Boccio

  
	
  Name:

  	
   Rose A. Upton

  	
   

  	
  Name:

  	
   Jennifer
  Del Boccio

  
	
  Title:

  	
   Exec. Office Coordinator

  	
   

  	
  Title:

  	
   Administrative
  Assistant

  
																			



 


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