Document:

exv10w11xay

 

EXHIBIT 10.11(a)

FIRST AMENDMENT TO LEASE

     THIS FIRST AMENDMENT TO LEASE (this “Amendment”) is made as of the 24th day of August, 2004,
between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation (“Landlord”) and ULTA
SALON, COSMETICS AND FRAGRANCE, INC., a Delaware corporation (“Tenant”).

     WHEREAS, Landlord and Tenant entered into that certain lease dated as of September 11, 2002
(the “Lease”) pursuant to which Tenant leases from Landlord approximately 12,532 square feet of
space (the “Existing Premises”) in the building commonly known as The Offices at Windham Lakes and
located at 1275 Windham Parkway, Romeoville, Illinois, 60446; and

     WHEREAS, any initially capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to such terms in the Lease.

     WHEREAS, the parties hereto now desire to amend the Lease to extend the Term, modify the Rent
payable under the Lease, add additional space to the Premises and amend the Lease in certain other
respects.

     NOW THEREFORE, in consideration of the mutual covenants and conditions contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Lease is hereby amended as follows:

     1. Extension of Existing Premises Term. The Term of the Lease with respect to the
Existing Premises, currently set to expire on January 31, 2005, is hereby extended to the last day
of the Term of the Lease with respect to the Additional Premises (defined below).

     2. The Additional Premises.

          (a) Lease of the Additional Premises. Subject to the terms of the Lease and this
Amendment, Landlord agrees to lease to Tenant, and Tenant agrees to lease from Landlord, an
additional 11,047 square feet of rentable area in the Building, located adjacent to the Existing
Premises (such space is hereinafter collectively referred to as the “Additional Premises”), all as
more particularly described on Exhibit A, attached hereto and made a part hereof. The Term
of the Lease with respect to the Additional Premises shall be five (5) years, shall commence on the
Substantial Completion Date (as such term is defined in the Workletter; such date being hereinafter
referred to as the “Additional Premises Commencement Date”) and expire on the last day of the
calendar month in which the fifth (5th) anniversary of the Additional Premises Commencement Date
occurs. Each twelve (12) consecutive month period is hereinafter referred to as an “Additional
Premises Lease Year”; provided however that if the Additional Premises Commencement Date is other
than the first day of any calendar month, the first Additional Premises Lease Year shall consist of
the partial month in which the Additional Premises Commencement Date occurs and the twelve (12)
consecutive month period that follows.

          (b) Termination of Amendment. In the event that Landlord cannot deliver the Additional
Premises to Tenant on or before April 1, 2005, Tenant may elect to terminate the Lease with respect
to the Additional Premises upon written notice to Landlord delivered by April 30, 2005, upon which
termination landlord shall have no further liability to Tenant hereunder or

 

 

under the Lease with respect to the Additional Premises, but the Lease shall continue in full
force and effect, without regard to the Amendment, with respect to the Existing Premises, as if
this Amendment had never been entered into between Landlord and Tenant.

          (c) Improvement of the Additional Premises. Landlord shall improve the Additional
Premises in accordance with the Workletter, attached hereto as Exhibit B.

          (d) Definition of Premises; Lease Binding. From and after the Additional Premises
Commencement Date (i) the Premises shall consist of both the Existing Premises and the Additional
Premises constituting 23,579 rentable square feet in the aggregate, (ii) all references in the
Lease to “Premises” shall be deemed to refer to both the Existing Premises and the Additional
Premises, (iii) the Additional Premises shall be deemed to be a part of the Premises and shall be
governed by all the terms of the Lease.

     3. Base Rent.

          (a) Existing Premises Base Rent. Base Rent for the Existing Premises shall continue to
be paid in the same manner, time and place as provided in the Lease, in the following amounts:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Annual Base Rent	 	 	 	 
	Period from/to	 	Per Square Foot	 	Annual Base Rent	 	Monthly Base Rent
	February 1, 2005- last
	 	$	11.50	 	 	$	144,118.00	 	 	$	12,009.83	 
	day of Additional

Premises Lease Year 1
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Additional Premises
	 	$	12.00	 	 	$	150,384.00	 	 	$	12,532.00	 
	Lease Year 2
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Additional Premises
	 	$	12.50	 	 	$	156,650.00	 	 	$	13,054.17	 
	Lease Year 3
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Additional Premises
	 	$	13.00	 	 	$	162,916.00	 	 	$	13,576.33	 
	Lease Year 4
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Additional Premises
	 	$	13.50	 	 	$	169,182.00	 	 	$	14,098.50	 
	Lease Year 5
	 	 	 	 	 	 	 	 	 	 	 	 

          (b) Additional Premises Base Rent. Tenant shall commence the payment of Rent for the
Additional Premises on the Additional Premises Commencement Date. Tenant shall pay Base Rent for
the Additional Premises in the same manner, time and place as set forth in the Lease with respect
to the Existing Premises. The amount of Base Rent payable by Tenant for the Additional Premises is
as follows:

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	 	 	Annual Base Rent	 	 	 	 
	Period from/to	 	Per Square Foot	 	Annual Base Rent	 	Monthly Base Rent
	Additional Premises
	 	$	12.50	 	 	$	138,087.50	 	 	$	11,507.29	 
	Lease Year 1
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Additional Premises
	 	$	13.00	 	 	$	143,611.00	 	 	$	11,967.58	 
	Lease Year 2
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Additional Premises
	 	$	13.50	 	 	$	149,134.50	 	 	$	12,427.88	 
	Lease Year 3
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Additional Premises
	 	$	14.00	 	 	$	154,658.00	 	 	$	12,888.17	 
	Lease Year 4
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Additional Premises
	 	$	14.50	 	 	$	160,181.50	 	 	$	13,348.46	 
	Lease Year 5
	 	 	 	 	 	 	 	 	 	 	 	 

          (c) Abatement of Rent on Additional Premises. If Tenant has taken possession of the
Additional Premises for the purpose of carrying on its business therein and if Tenant is not in
default under any of terms, provisions and conditions of the Lease (as described in Section
16 of the Lease) on the date such installment is due, the first monthly installment of Base
Rent and Additional Rent due shall be abated in full and shall not be payable by Tenant.

     4. Tenant’s Proportionate Share. From and after the Additional Premises Commencement
Date, Tenant’s Proportionate Share shall be 49.65%.

     5. Parking. From and after the Additional Premises Commencement Date, Tenant, its
agents, employees and invitees shall be entitled to utilize up to 118 parking spaces in the Parking
Areas in accordance with Section 25 of the Lease.

     6. Termination Right. Subject to the terms of this Section 6, Tenant shall
have the option (the “Termination Option”) to terminate the Lease effective as of the last day of
the third Additional Premises Lease Year (the “Termination Date”), if Tenant is not in default
under any of its obligations under this Lease at the time it exercises such option or on the
Termination Date. To exercise the Termination Option, Tenant must:

          (a) give to Landlord written notice of such election prior to the last day of the second
Additional Premises Lease Year; and

          (b) pay to Landlord a termination fee, in an amount equal to $250,000 (the “Termination Fee”),
fifty percent of which is to be paid at the time of such notice, and fifty percent of which is to
be paid on or before the Termination Date.

Exercise of the Termination Option shall be irrevocable but shall not excuse Tenant from paying
Rent accruing through the Termination Date. If Tenant fails to exercise the Termination Option

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prior to the last day of the second Additional Premises Lease Year, or fails to pay any portion of
the Termination fee when required, Tenant shall be deemed to have waived all of its rights under
the Termination Option and, thereafter, the Termination Option shall be null and void and of no
further effect.

     7. Miscellaneous.

          (a) The preambles to this Amendment are incorporated into the body of this Amendment as if
restated herein.

          (b) Interpretation of this Amendment shall be governed by the laws of the State of Illinois.

          (c) The mutual obligations of the parties as provided herein are the sole consideration for
this Amendment and no representations, promises or inducements have been made by the parties other
than as appear in this Amendment. This Amendment may not be amended except in writing signed by
both parties.

          (d) Except as modified herein, the Lease is hereby ratified and confirmed and the terms,
covenants, conditions and agreements contained therein remain in full force and effect.

          (e) This Amendment shall not be binding until executed and delivered by both parties.

          (f) Tenant represents and warrants to Landlord that neither it nor its officers or agents nor
anyone acting on its behalf has dealt with any real estate broker other than GVA Williams in the
negotiation or making of this Amendment, and Tenant agrees to indemnify and hold harmless Landlord
from any and all claims, liability, costs and expenses (including reasonable attorneys’ fees)
incurred as a result of any inaccuracy in the foregoing representation and warranty. Landlord
represents and warrants to Tenant that neither it nor its officers or agents nor anyone acting on
its behalf has dealt with any real estate broker in the negotiation or making of this Amendment
other than GVA Williams and Landlord agrees to indemnify and hold harmless Tenant from any and all
claims, liability, costs and expenses (including reasonable attorneys’ fees) incurred as a result
of any inaccuracy in the foregoing representation and warranty. Landlord will pay GVA Williams a
commission in connection with this Amendment in accordance with a separate agreement between
Landlord and GVA Williams.

NO FURTHER TEXT ON THIS PAGE

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     IN WITNESS WHEREOF, the parties have executed this Amendment on the date first written above.

	 	 	 	 	 	 	 
	 	 	LANDLORD
	 
	 	 	 	 	 	 
	 	 	THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey corporation
	 
	 	 	 	 	 	 
	 	 	By:	 	PDC Properties, Inc., its agent
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Rex Davis
	 

	 	 	 	 	 	 
	 

	 	 	 	Its:
	 	Portfolio Manager

	 	 	 	 	 
	 	 	TENANT:
	 
	 	 	 	 
	 	 	ULTA SALON, COSMETICS & FRAGRANCE, INC.,
a Delaware corporation
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Charles Weber
	 

	 	 	 	 
	 

	 	Its:
	 	Charles R. Weber, CFO
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ George Frye
	 

	 	 	 	 
	 

	 	Its:
	 	George L. Frye, Senior Vice President

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EXHIBIT A

Additional Premises

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EXHIBIT B

Workletter

All of the terms and conditions of the Amendment are incorporated herein by reference and, except
as may be expressly set forth to the contrary in this Work Letter or the Amendment, shall apply as
fully to this Work Letter as to the Amendment. The capitalized terms used but not defined in this
Work Letter shall have the meanings ascribed to them in the Amendment.

     1. Construction of Tenant Improvements. Except as provided below to the contrary,
Landlord, at Landlord’s sole cost and expense, shall provide the construction material, hardware
and equipment and the labor to construct the Tenant Improvements. “Tenant Improvements” means (i)
the materials, hardware and equipment to be affixed to or incorporated into the Additional Premises
pursuant to the Plans (as defined below and as the same may be modified pursuant to Section 4 of
this Work Letter), and the labor to construct and install such items, (ii) the other building
standard items described in the Plans, as the same may be modified pursuant to Section 4 of this
Work Letter, and (iii) the installation of roof mounted heating and cooling units for reasonable
temperature control in the Additional Premises. Landlord shall proceed diligently to cause the
Tenant Improvements to be substantially completed substantially in accordance with the Plans and
the terms and conditions of the Amendment. The cost to construct the Tenant Improvements, including
but not limited to all costs relating to material, hardware, equipment, labor, applicable
governmental fees and permit cost, taxes, architectural fees, engineering fees, design fees, but
expressly excluding any the cost of Tenant’s furniture, trade fixtures or equipment or other
personal property of Tenant that Tenant is permitted or required to remove from the Additional
Premises upon the expiration or earlier termination of the Lease, is hereinafter referred to as the
“Permitted Costs.” Permitted Costs shall also include a construction management fee of 15% per cent
of all other Permitted Costs payable to Landlord.

     2. Contractors. If Tenant elects to engage an interior designer for the Additional
Premises (the “Interior Designer”), Tenant shall have the right to do so, subject to Landlord’s
reasonable approval, and Tenant shall contract directly with the Interior Designer for the
provision of services. All other architects, engineers, contractors, subcontractors, suppliers,
manufacturers or materialmen performing services or supplying materials in connection with the
design and/or construction of the Tenant Improvements (the “Contractors”) shall be selected by
Landlord, and shall enter into contracts directly with Landlord for the provision of services and
materials.

     3. The Plans. Landlord and Tenant have approved the preliminary description of the
Tenant Improvements attached to this Work Letter as Schedule 1 and made a part hereof.
Landlord will cause to be prepared, and Landlord and Tenant shall act in good faith and cooperate
with each other to finalize and approve as soon as reasonably possible, the plans, drawings and
specifications for the Tenant Improvements based on the description in Schedule 1. If
Landlord and Tenant have not approved the final plans, drawings and specifications for the Tenant
Improvements within thirty (30) days after the execution and delivery of the Lease by Landlord and
Tenant, at the request of either party, any disagreements regarding such final plans, drawings and
specifications shall be submitted to and resolved by arbitration in accordance with under the
Expedited Procedures of the Commercial Arbitration Rules of the American

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Arbitration Association then in force except as provided below. Any such arbitration
proceedings shall be conducted through the American Arbitration Association in Chicago, Illinois
and the cost of such arbitration proceedings shall be split evenly between Landlord and Tenant,
provided that each party shall be solely responsible for its own costs and expenses incurred in
connection with any arbitration proceedings. The final plans, drawings and specifications for the
Tenant Improvements approved by Landlord and Tenant prior to the commencement of construction are
collectively referred to as the “Plans”.

     4. Changes to the Plans.

          (a) Tenant Changes to the Plans.

          (i) Tenant may propose one or more changes to the Plans to Landlord at any time before the
Substantial Completion Date (as defined below), and, as promptly as reasonably practicable after
the receipt and approval thereof by Landlord (which approval may be withheld in Landlord’s
reasonable discretion), Landlord shall provide Tenant with a written estimate of the delay (if any)
in the Substantial Completion Date (which delay shall be a Tenant Delay [as defined below]) and the
additional cost (if any) to complete the Tenant Improvements which will result from such change
(whether hard costs or soft costs), which costs shall include, without limitation: (A) the actual
cost of all materials, supplies, equipment and labor used or supplied in making the proposed
change, including general conditions and any contractor’s fees; (B) any architect and engineer
fees; and (C) a construction management fee payable to Landlord equal to fifteen percent (15%) of
such additional costs (collectively, “Change Order Costs”). If Tenant fails to approve the estimate
of Change Order Costs within five (5) business days after delivery of same, Tenant shall be deemed
to have abandoned its request for such change, and the Tenant Improvements shall be constructed
substantially in accordance with the then existing Plans. If Tenant approves the estimate of Change
Order Costs within said 5-day period by signing and returning a copy of Landlord’s estimate,
Landlord shall cause the Tenant Improvements to be constructed substantially in accordance with the
Plans as so revised. Unless requested in writing by Tenant to the contrary, Landlord shall continue
with construction of the Tenant Improvements according to the then existing Plans during the
pendency of any proposed change in the Plans until such change is approved by Landlord and Tenant
as provided above. Any delay resulting from a halt in construction requested in writing by Tenant
shall constitute a Tenant Delay.

          (ii) If Tenant approves Landlord’s estimate of the time and Change Order Costs of a proposed
change to the Plans: (A) Tenant shall be liable for the actual Change Order Costs, whether or not
such actual cost exceeds Landlord’s estimate, and (B) Landlord shall not be liable for any delay in
the Substantial Completion Date resulting from the requested change, whether or not the delay
exceeds Landlord’s estimate, and any such delay shall be a Tenant Delay. Upon Tenant’s request,
Landlord shall provide Tenant with reasonable evidence of the actual Change Order Costs and the
basis for any delay in the Substantial Completion Date resulting from such change.

          (iii) lf Tenant requests a change to the Plans pursuant to this Section 4(a), and
Tenant does not ultimately approve the resulting revised Plans or estimate, Tenant shall promptly
reimburse Landlord, as Rent, for any reasonable costs and expenses resulting from such requested
changes incurred by Landlord.

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          (b) Landlord Changes to the Plans. Landlord may make changes to the Plans without
Tenant’s consent, provided that such changes (i) are necessary to address field conditions, (ii)
will not create any additional monetary obligation for Tenant under the Lease, (iii) are in
material conformity with the Plans (as they may have been previously revised by permissible Tenant
and/or Landlord changes thereto), and (iv) will not result in the use of materials or equipment
which are of a materially lesser quality than those specified in the Plans. Landlord will notify
Tenant of any changes made pursuant to this Section 4(b).

     5. Payment of Costs. Tenant shall deposit with Landlord the amount of any Change Order
Costs within ten (10) days after Tenant’s approval of the estimate of such Change Order Costs in
accordance with Section 4(a) of this Work Letter. Thereafter, in the event that at any time
the actual Change Order Costs exceed the estimated Change Order Costs, Tenant shall deposit with
Landlord the amount of such excess within ten (10) days after written demand therefor by Landlord.
Upon Tenant’s request, Landlord shall provide Tenant with reasonable evidence of the actual Change
Order Costs.

     6. Punchlist Items. Before Tenant takes occupancy of the Additional Premises, but no
later than five (5) business days after the Substantial Completion Date, Landlord, Landlord’s
architect, Tenant and at Tenant’s election, Tenant’s consulting architect or other construction
consultants shall conduct an inspection of the Additional Premises and shall work in good faith to
jointly prepare a punchlist for the Tenant Improvements. Any items not on such punchlist shall be
deemed accepted by Tenant. Landlord shall complete all punchlist items as soon as reasonably
practicable after such punchlist items are finally determined.

     7. Representatives of Landlord and Tenant. Landlord designates John Pagliari as its
representative for all purposes of this Work Letter. Tenant designates George Frye as its
representative for all purposes of this Work Letter. Wherever this Work Letter requires any notice
to be given to or by a party, or any determination or action to be made or taken by a party, the
representative(s) of each party shall act for and on behalf of such party, and the other party
shall be entitled to rely thereon. Either party may designate one or more additional or substitute
representatives for all or a specified portion of the provisions of this Work Letter, subject to
notice to the other party of the identity of such additional or substitute representative(s).

     8. Delay in the Additional Premises Commencement Date.

          (a) The Substantial Completion Date. The “Substantial Completion Date” shall mean (i)
the later to occur of (A) the date on which Landlord receives the approval from the City of
Romeoville authorizing occupancy of the Additional Premises by Tenant, which approval may take the
form of a conditional or temporary certificate of occupancy so long as Tenant may occupy the
Additional Premises, and (B) the date on which Landlord’s architect issues a certificate to
Landlord and Tenant stating that the Tenant Improvements have been substantially completed
substantially in accordance with the Plans, or (ii) if the substantial completion of the Tenant
improvements has been delayed as a result of one or more Tenant Delays (as defined below), the date
on which Landlord would have substantially completed the Tenant Improvements but for such Tenant
Delays, as so certified by the Landlord’s architect.

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          (b) Tenant Delays. “Tenant Delay” shall mean any interruption or delay at any time in the
progress of the Tenant Improvements which is the result of: (a) Tenant changes to the Plans,
including, in addition to delays resulting from the actual execution of such changes to the Plans,
any delay occurring because the change to the Plans requested by Tenant expressly requires the
design or construction of the Additional Premises to be halted or delayed pending resolution of any
request by Tenant for a change to the Plans, whether or not the requested change is ultimately
approved by Landlord and/or Tenant; (b) the performance or non-performance of any work at the
Additional Premises by Tenant or any person, firm or corporation employed by Tenant; or (c) any
other act or omission of Tenant (for example, but not by way of limitation, failure to timely
respond to requests for information or approval of construction related matters submitted by
Landlord).

          (c) Force Majeure Delays. “Force Majeure Delay” shall mean any interruption or delay at any
time in the progress of the Tenant Improvements which is not a Tenant Delay and is the result of
any Events of Force Majeure. Any delay shall be deemed to be a Force Majeure Delay notwithstanding
that Landlord or its agent or Contractor with respect to which the time period for the Force
Majeure Delay is being claimed is concurrently delayed by events within its control.

          (d) Notice of Tenant Delays and Force Majeure Delays. Landlord agrees that it shall exercise
reasonable efforts to provide Tenant with written notice of any Tenant Delay or Force Majeure Delay
(and the expected length of the applicable delay) as soon as reasonably practicable following the
date Landlord has been notified of any such delay; provided, however, that Landlord’s failure to
furnish such notice shall in no event be deemed to a waiver by Landlord of the Tenant Delay or
Force Majeure Delay or otherwise affect the operation of this Section 8 Landlord shall be deemed to
have notified Tenant of a Tenant Delay or a Force Majeure Delay f the applicable delay is noted in
the written job meeting minutes, if any, prepared by Landlord or any Contractor and furnished to
Tenant.

     9. Governmental Approvals. Landlord shall use reasonable efforts to obtain all
governmental licenses, permits and approvals necessary for the construction of the Tenant
Improvements and to achieve Substantial Completion of the Tenant Improvements in a timely manner.
If Landlord is unable to obtain any permit, license or approval from any governmental authority
necessary for the construction of the Tenant Improvements, Landlord may elect to terminate the
Lease with respect to the Additional Premises upon written notice to Tenant delivered within thirty
(30) days after the date hereof, upon which termination Landlord shall have no further liability to
Tenant hereunder or under the Lease with respect to the Additional Premises, but the Lease shall
continue in full force and effect, without regard to the Amendment, with respect to the Existing
Premises.

     10. Access by Tenant Prior to Commencement Date. Landlord will permit Tenant and
Tenant’s agents, suppliers, contractors and workmen to enter the Additional Premises prior to the
completion of the Tenant Improvements to enable Tenant to do such other things as may be required
by Tenant to make the Additional Premises ready for Tenant’s occupancy, provided that Tenant shall
fully perform and comply with each of the following covenants, conditions and requirements:

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          (a) Tenant and Tenant’s agents, contractors, workmen, mechanics, suppliers and invitees, shall
work in harmony and not interfere with Landlord and Landlord’s agents in performing the Tenant
Improvements or work for other tenants and occupants of the Building, and if at any time such entry
shall in the judgment of Landlord cause or threaten to cause disharmony or interference, Landlord
shall have the right to withdraw such permission upon twelve (12) hours written notice.

          (b) Tenant agrees that any such entry into the Additional Premises shall be deemed to be under
all of the terms, covenants, conditions, and provisions of the Lease except the covenant to pay
Rent, and further agrees that in connection therewith Landlord shall not be liable in any way for
any injury, loss or damage which may occur to any of Tenant’s work or installations made in the
Additional Premises or to property placed therein prior to the Additional Premises Commencement
Date (except to the extent caused by the gross negligence or willful misconduct of Landlord), the
same being at Tenant’s sole risk. In addition, Tenant shall require all entities performing work on
behalf of Tenant to provide protection for existing improvements to an extent that is satisfactory
to Landlord and shall allow Landlord access to the Additional Premises, for inspection purposes, at
all times during the period when Tenant is undertaking construction activities therein. In the
event any entity performing work on behalf of Tenant causes any damage to the Tenant Improvements
or the property of Landlord or others, Tenant shall cause such damage to be repaired at Tenant’s
expense, and if Tenant fails to cause such damage to be repaired immediately upon Landlord’s demand
therefor, Landlord may in addition to any other rights or remedies available to Landlord under the
Lease or at law or equity cause such damage to be repaired, in which event Tenant shall immediately
upon Landlord’s demand pay to Landlord the cost of such repairs as Rent.

          (c) All contractors and subcontractors shall use only those entrances designated by Landlord
for ingress and egress of personnel, and the delivery and removal of equipment and material through
or across any common areas of the Building or parking areas on the Property shall only be permitted
with the written approval of Landlord and during hours determined by Landlord. Landlord shall have
the right to order Tenant or any contractor or subcontractor that violates the above requirements
to cease work and remove it, its equipment, and its employees from the Building or the Property.

          (d) During the performance of Tenant’s work and Tenant’s fixturing, Landlord may provide trash
removal service from a location designated by Landlord. Tenant shall be responsible for breaking
down boxes and placing trash in Landlord’s containers at such designated location. Tenant shall
accumulate its trash in containers supplied by Tenant and Tenant shall not permit trash to
accumulate within the Additional Premises or in the corridors or public areas adjacent to the
Additional Premises. Tenant shall cause each entity employed by it to perform work on the
Additional Premises to abide by the provisions of this Work Letter as to the storage of trash and
shall require each such entity to perform its work in a way that dust and dirt is contained
entirely within the Additional Premises and not within any other portion of the Building or the
Property and shall cause Tenant’s contractors to leave the Additional Premises broom clean at the
end of each day. Should Landlord deem it necessary to remove Tenant’s trash because of
accumulation, an additional charge to Tenant will be on a time and material basis.

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          (e) Tenant agrees that all services and work performed on the Additional Premises by, on
behalf of, or for the account of Tenant, including installation of materials and personal property
delivered to the Additional Premises shall be done in a first-class workmanlike manner using only
good grades of material, shall be performed in accordance with Laws, and shall be performed only by
persons covered by a collective bargaining agreement with the appropriate trade union.

          (f) Tenant agrees to protect, indemnify, defend and hold harmless the Landlord Parties from
and against any and all losses, damages, liabilities, claims, liens, costs and expenses, including
reasonable attorneys’ fees, of whatever nature, including those to the person and property of
Tenant, its employees, agents, invitees, licensees and others arising out of or in connection with
the activities of Tenant or Tenant’s contractors or subcontractors in or about the Additional
Premises and the Property, and the cost of any repairs to the Additional Premises and the Property
necessitated by activities of Tenant or Tenant’s contractors or subcontractors.

          (g) Tenant shall secure, pay for, and maintain during the continuance of its work within the
Additional Premises, policies of insurance with such coverages and such amounts as Landlord may
reasonably require, which policies shall be endorsed to include Landlord and its contractors and
their respective employees and agents and any Mortgagee as additional insured parties, and which
shall provide thirty (30) days prior written notice of any alteration or termination of coverage.
Tenant shall not permit Tenant’s contractors to commence any work until all required insurance has
been obtained by Tenant and certificates evidencing such coverage have been delivered to and
approved by Landlord in writing.

     11. Warranties. Landlord shall assign to Tenant and Tenant shall have the benefit of
any guaranties and warranties Landlord receives from contractors with respect to the Tenant
Improvements.

     12. Termination of Work Letter; Survival of Terms. Landlord and Tenant acknowledge and
agree that the provisions of this Work Letter are intended and designed to govern certain rights
and obligations of the parties relating to the construction of the Tenant Improvements and other
matters prior to the Additional Premises Commencement Date. Accordingly, except as hereinafter set
forth in this Section 12, from and alter the Additional Premises Commencement Date, the
terms and provisions of this Work Letter shall become null and void and of no further force or
effect. Notwithstanding anything to the contrary in this Section 12, however, the following
provisions shall not terminate and shall continue in full force and effect after the Additional
Premises Commencement Date, and shall survive the Additional Premises Commencement Date:
Sections 1 and 6 (both of which shall terminate at such time as all punchlist items have
been completed and all claims in connection therewith have been satisfied in full); Sections
10(b), 10(e), 10(f), 12 and 13 (which shall remain in effect for the duration of the Term); and
Section 14 (which shall terminate at such time as the parties have executed the
Confirmatory Memorandum).

     13. Application of Work Letter. This Work Letter shall not be applicable to any space
added to the Premises other than the Additional Premises or in the event of a renewal or extension
of the Term of the Lease or the exercise of any expansion option granted to Tenant pursuant to the
Lease.

12

 

     14. Confirmatory Memorandum. At the request of either party, at such time as the
Substantial Completion Date has been finally determined, the parties shall jointly execute a
written memorandum in the form attached to this Work Letter as Schedule 2, and such
memorandum shall be attached to and become a part of the Lease.

13

 

SCHEDULE 1

The Plans

     Space Plan Prepared by Interwork Architects dated .June 28,2004, last revised August 6, 2004,
attached hereto as Schedule 1-A, and modified as follows:

     Landlord and Tenant acknowledge that the 8 x 8 workstations shown on the Plans are not built
in partitions, and Landlord is not obligated to supply workstations.

     All materials shall be building standard finishes, comparable to the finishes used in the
Existing Premises, including without limitation the installation of inset glass in all perimeter
offices.

 

 

SCHEDULE 1-A

Space Plan

 

 

SCHEDULE 2

Form of Confirmatory Memorandum

     THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA (“Landlord”) and      
             
            
           (“Tenant”)
hereby execute and deliver this Confirmatory memorandum pursuant to Section 13 of the Work
Letter attached as Exhibit B to that certain Amendment between Landlord and Tenant dated
             
             
              
2004.

     1. This Confirmatory Memorandum is for the convenience and reference of the parties. The
provisions of the Amendment and the Work Letter shall be valid and given their full force and
effect with respect to the terms contained in this Confirmatory Memorandum, notwithstanding the
failure or refusal of either party to execute this document.

     2. Landlord and Tenant further agree and acknowledge as follows:

      
    (a) the Substantial Completion Date occurred on  
              
             
           ,
2004; and

        
  (b) the Additional Premises Commencement Date occurred on  
               
               
        , 2004.

     Executed and
delivered as of           
             
                ,
2004.

	 	 	 	 	 	 	 
	 	 	LANDLORD:
	 
	 	 	 	 	 	 
	 	 	THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey corporation
	 
	 	 	 	 	 	 
	 	 	By:	 	PDC Properties, Inc., its agent
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 
	 

	 	 	 	 	 	 

	 	 	 	 	 
	 	 	TENANT:
	 
	 	 	 	 
	 	 	ULTA SALON, COSMETICS & FRAGRANCE, INC.,
a Delaware corporation
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Its:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Its:exv10w12

 

EXHIBIT 10.12

WINDHAM INDUSTRIAL CENTER III

ROMEOVILLE, ILLINOIS

LEASE

BETWEEN

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,

a New Jersey corporation,

Landlord

AND

ULTA SALON, COSMETICS & FRAGRANCE, INC.,

a Delaware corporation

Tenant

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 SECTION
	 	 	 	PAGE
	1.

	 	FUNDAMENTAL LEASE TERMS
	 	 	1	 
	2.

	 	AGREEMENT TO LEASE
	 	 	1	 
	3.

	 	RENT
	 	 	2	 
	4.

	 	BASE RENT
	 	 	2	 
	5.

	 	ADDITIONAL RENT
	 	 	2	 
	6.

	 	SERVICES
	 	 	6	 
	7.

	 	SECURITY DEPOSIT
	 	 	7	 
	8.

	 	USE
	 	 	7	 
	9.

	 	CONDITION OF PREMISES
	 	 	8	 
	10.

	 	EARLY POSSESSION
	 	 	8	 
	11.

	 	ASSIGNMENT AND SUBLETTING
	 	 	8	 
	12.

	 	REPAIRS AND ALTERATIONS
	 	 	11	 
	13.

	 	CERTAIN RIGHTS RESERVED BY LANDLORD
	 	 	12	 
	14.

	 	COVENANT AGAINST LIENS
	 	 	14	 
	15.

	 	WAIVERS AND INDEMNITIES
	 	 	14	 
	16.

	 	DEFAULTS AND LANDLORD’S REMEDIES
	 	 	16	 
	17.

	 	SURRENDER OF POSSESSION
	 	 	19	 
	18.

	 	INSURANCE
	 	 	20	 
	19.

	 	FIRE OR CASUALTY
	 	 	21	 
	20.

	 	CONDEMNATION
	 	 	22	 
	21.

	 	NOTICES
	 	 	22	 
	22.

	 	ADDITIONAL COVENANTS OF TENANT
	 	 	23	 
	23.

	 	ESTOPPEL CERTIFICATES; MORTGAGE ISSUES
	 	 	26	 
	24.

	 	MISCELLANEOUS
	 	 	27	 
	25.

	 	PARKING
	 	 	29	 
	26.

	 	ERISA
	 	 	30	 
	27.

	 	ATTORNEYS’ FEES
	 	 	30	 
	28.

	 	AMERICANS WITH DISABILITIES ACT
	 	 	30	 

i

 

EXHIBITS

	 	 	Exhibit A—  Plan of the Premises
	 
	 	 	Exhibit B—  Legal Description of the Land
	 
	 	 	Exhibit C—  Form of Tenant Estoppel Letter

ii

 

WINDHAM INDUSTRIAL CENTER III

LEASE

     THIS LEASE (“Lease”) is entered into as of the 31st day of October, 2006, by and between THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation, whose address is Two Prudential
Plaza, 180 North Stetson Street, Suite 3275, Chicago, Illinois 60601 (together with its successors
and assigns, “Landlord”) and ULTA SALON, COSMETICS & FRAGRANCE, INC., a Delaware corporation
(together with its permitted successors and assigns, “Tenant”).

     1. FUNDAMENTAL LEASE TERMS. Certain fundamental lease terms (the “Fundamental Lease Terms”) are
set forth below in this Section 1:

	 	 	 	 	 	 	 	 	 
	 

	 	 	1.1	 	 	Building and Address:
	 	Windham Industrial Center III
	 

	 	 	 	 	 	 	 	1198 Arbor Drive
	 

	 	 	 	 	 	 	 	Romeoville, Illinois 60446
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.2	 	 	Tenant:
	 	ULTA SALON, COSMETICS & FRAGRANCE,
	 

	 	 	 	 	 	 	 	INC., a Delaware corporation
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.3	 	 	Tenant’s Current Address:
	 	1135 Arbor Drive
	 

	 	 	 	 	 	 	 	Romeoville, Illinois 60446
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.4	 	 	Landlord:
	 	The Prudential Insurance Company of
America, a New Jersey corporation
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.5	 	 	Landlord’s Address:
	 	Two Prudential Plaza
	 

	 	 	 	 	 	 	 	180 North Stetson Street, Suite 3275
	 

	 	 	 	 	 	 	 	Chicago, Illinois 60601
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.6	 	 	Premises:
	 	Approximately 2,500 square feet of
office space and 55,048 square feet
of warehouse space located in the
Building, as shown on the plan
attached hereto and made a part
hereof as Exhibit A.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.7	 	 	Term:
	 	February 1, 2007- April 10, 2010
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.8	 	 	Commencement Date:
	 	February 1, 2007
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.9	 	 	Base Rent:
	 	$225,437.20/year, $18,703.10/month
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.10	 	 	Security Deposit:
	 	$0 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	1.11	 	 	Broker:
	 	NAI Hiffman

     2. AGREEMENT TO LEASE. Landlord hereby leases to Tenant, and Tenant hereby accepts and leases
from Landlord the Premises in the Building located on the real estate legally described on
Exhibit B attached hereto and made a part hereof (the “Land”) for the Term. The Land, the
Building and all other improvements now or hereafter located on the Land are collectively referred
to herein as the “Property.”

 

 

     3. RENT. Tenant shall pay Rent (as defined below) to:

PDC PR 132803 Windham Industrial Ctr III

23237 Network Place

Chicago, Illinois 60673-1232

or to such other person or at such other place as Landlord may designate, without offsets or
deductions of any kind whatsoever, at the times and in the manner hereinafter set forth. As used
herein “Rent” shall mean Base Rent (as defined below), Additional Rent (as defined below) and all
other amounts to be paid by Tenant to Landlord under this Lease. Tenant’s covenant to pay Rent
shall be independent of every other covenant in this Lease.

     4. BASE RENT. The Base Rent payable for each Lease Year (as defined below) set forth in
Section 1.9 shall be paid in twelve (12) equal monthly installments, paid in advance not
later than the first (1st) day of each month. If the Commencement Date is other than the first
(1st) day of a month, then the installment of Base Rent for such initial month shall be prorated on
a per diem basis for such fractional period. Base Rent for the first full calendar month for which
Base Rent shall be due shall be paid on or before the Commencement Date. As used herein, “Lease
Year” shall mean each consecutive twelve (12) month period beginning with the Commencement Date,
except that if the Commencement Date is other than the first (1st) day of a calendar month, then
the first (1st) Lease Year shall be the period from the Commencement Date through the date twelve
(12) months after the last day of the calendar month in which the Commencement Date occurs, and
each subsequent Lease Year shall be the period of twelve (12) months following the last day of the
prior Lease Year.

     5. ADDITIONAL RENT. In addition to paying the Base Rent specified in Section 4 hereof,
Tenant shall pay as “Additional Rent” the amounts determined as set forth below in this Section
5.

     5.1 Definitions. As used in this Lease, the following terms shall have
the following meanings:

     (a) “Calendar Year” shall mean the twelve (12) month period January
through December of any year (or portion thereof) falling within the Term.

     (b) “Tenant’s Proportionate Share” shall be 35.27%, a percentage
determined by dividing 57,548 square feet, the rentable area contained in the
Premises, by 163,172 square feet, the rentable area contained in the Building. The
parties acknowledge and agree that a variety of methods and standards exist for
measuring the rentable area of a building or a portion thereof, and that
individuals, including experts in this area, may reach different conclusions on the
rentable area of a building or a portion thereof, even though such parties have
based their conclusions on the same measurement methods or standards. Accordingly,
in order to eliminate any ambiguity or uncertainty the parties hereby agree that the
rentable areas of the Premises and the Building and such figures, and Tenant’s
Proportionate Share shall not be contested by either party. Tenant’s Proportionate
Share shall only be revised upon an actual change in the physical dimensions of the
Premises or upon an actual reconfiguration, addition or modification to the rentable
area of space leased or available for lease at the Building during the Term, each of
which as Landlord may reasonably redetermine from time to time. If the Building or
any development of which it is a part, shall contain non-office uses, Landlord shall
have the right to determine in accordance with sound accounting and management
principles, Tenant’s Proportionate Share of Taxes and Tenant’s Proportionate Share
of Operating Expenses for only the office portion of the Building or of such
development, in

2

 

which event, Tenant’s Proportionate Share shall be based on the
ratio of the rentable area of the Premises to the rentable area of such office
portion. Similarly, if the Building shall contain tenants who do not participate in
all or certain categories of Taxes or Operating Expenses on a prorata basis,
Landlord may exclude the amount of Taxes or Operating Expenses, or such categories
of the same, as the case may be, attributable to such tenants, and exclude the
rentable area of their premises, in computing Tenant’s Proportionate Share. If the
Building shall be part of or shall include a complex, development or group of
buildings or structures collectively owned or managed by Landlord or its affiliates
or collectively managed by Landlord’s managing agent, Landlord may allocate Taxes
and Operating Expenses within such complex, development or group, and between such
buildings and structures and the parcels on which they are located, in accordance
with sound accounting and management principles. In the alternative, Landlord shall
have the right to determine, in accordance with sound accounting and management
principles, Tenant’s Proportionate Share of Taxes and Tenant’s Proportionate Share
of Operating Expenses based upon the totals of each of the same for all such
buildings and structures, the land constituting parcels on which the same are
located, and all related facilities, including common areas and easements,
corridors, lobbies, side-walks, elevators, loading areas, parking facilities and
driveways and other appurtenances and public areas, in which event Tenant’s
Proportionate Share shall be based on the ratio of the rentable area of the Premises
to the rentable area of all such buildings.

     (c) “Taxes” shall mean all real estate and personal property taxes
and assessments and similar governmental charges, special or otherwise, direct or
indirect, ordinary or extraordinary (including, without limitation, real estate
taxes, general and special assessments, transit taxes, water and sewer rents, taxes
based upon the receipt of rent including gross receipts or sales taxes applicable to
the receipt of rent or service or value added taxes, ad valorem taxes for Landlord’s
personal property, and taxes levied or assessed by special taxing districts now or
hereafter created) levied or assessed for any Calendar Year (without regard to any
different fiscal year used by such government or municipal authority) upon or with
respect to the Property or Landlord’s personal property
used in connection with the Property that Landlord shall actually pay because
of or in connection with the ownership, leasing and operation of the Property.
Should any political subdivision or governmental authority having jurisdiction over
the Property, impose a tax, assessment, charge or fee which Landlord shall be
required to pay, either by way of substitution for such real estate taxes and ad
valorem personal property taxes, or in addition to such real estate taxes and ad
valorem personal property taxes, or impose an income or franchise tax or a tax on
rents which may be in addition to or in substitution for a tax levied against the
Property and/or Landlord’s personal property used in connection with the Property,
such taxes, assessments, fees or charges shall be deemed to constitute Taxes
hereunder. “Taxes” shall also include all reasonable fees and costs incurred by
Landlord in connection with protesting, reducing or limiting the increase in any
Taxes, regardless of whether any reduction or limitation is obtained. “Taxes” shall
not include inheritance, income, transfer or franchise taxes paid by Landlord to the
extent applicable to Landlord’s general or net income (as opposed to rents, receipts
or income attributable to operations at the Property), other than as described
above, and shall not include any taxes to be paid by Tenant under the terms of this
Lease. In determining the amount of Taxes for any Calendar Year, the amount of
special assessments to be included shall be limited to the amount of the installment
(plus any interest payable thereon) of such special assessment which would have been
required to have been paid during such year if Landlord had elected to have such
special assessment paid over the maximum period of time permitted by law. Except as
provided in the immediately preceding sentence, all

3

 

references to Taxes “for” a
particular year shall be deemed to refer to Taxes levied, assessed or otherwise
imposed for such year without regard to when such Taxes are payable.

     (d) “Operating Expenses” shall mean for any Calendar Year those costs
or expenses of every kind and nature paid or incurred by or on behalf of Landlord
for owning, managing, operating, maintaining, repairing and restoring the Property
and Landlord’s personal property used in connection with the Property including,
without limitation: (i) dues and other amounts payable to the Windham Lakes Business
Center Owner’s Association (the “Association”), as the Property is located in the
Windham Lakes Business Center (the “Park) and payments under any other easement,
operating agreement, declaration, restrictive covenant, or instrument pertaining to
the sharing of costs in any planned development; (ii) utilities for the Property,
including but not limited to electricity, power, gas, steam, oil or other fuel,
water, sewer, lighting, heating, air conditioning and ventilating, to the extent not
separately metered; (iii) the cost of fire monitoring, security and security device
systems for the Building, if any; (iv) the cost of maintaining and repairing the
Building and other improvements in the Property, and all systems, equipment and
components thereof, including but not limited to: (A) sewer, water, mechanical,
electrical, sprinkler and other utility systems and equipment, (B) heating,
ventilating, and air conditioning systems and equipment, (C) the roof and structural
components of the Building, (D) parking lots, driveways and sidewalks, (E) exterior
lighting systems and equipment; (F) window cleaning, (G) trash removal, (H) cleaning
of walks, parking facilities and building walls, (I) removal of ice and snow, (J)
replacement of wall and floor coverings, ceiling tiles and fixtures in lobbies,
corridors, restrooms and other common or public areas or facilities, (K) maintenance
and replacement of shrubs, trees, grass, sod and other landscaped items, (L)
irrigation systems, (M) drainage facilities, (N) fences, curbs, and walkways, (O)
re-paving and re- striping parking facilities, and (P) painting of Building
exteriors; (v) insurance (including but not limited to, fire, extended coverage, all
risk, rent loss, liability, worker’s compensation, and any other insurance carried
by Landlord and applicable to the
Property and not carried by tenants under any provision of their lease); (vi)
deductibles paid by Landlord under the insurance policies described above; (vii)
uninsured losses; (viii) management agreements (including the cost of any management
fee actually paid thereunder and the fair rental value of any office space provided
thereunder, up to customary and reasonable amounts); (ix) supplies, tools, equipment
and materials used in the operation, repair and maintenance of the Property; (x) the
cost of wages, salaries and benefits of all persons at the level of property manager
and below, engaged in the operation, management, maintenance and repair of the
Property; (xi) accounting, legal, inspection, consulting, concierge and other
services; (xii) permits, licenses and certificates necessary to operate, manage and
lease the Property; (xiii) any rental (or installment purchase or financing
agreements) with respect to equipment used in the operation, repair or maintenance
of the Property; and (xiv) any other expense or charge which would be considered as
an expense of owning, managing, operating, maintaining, repairing or restoring the
Property or Landlord’s personal property used in connection therewith.
Notwithstanding anything herein to the contrary, Operating Expenses shall not
include: costs or other items included within the meaning of the term “Taxes”; costs
of tenant alterations to tenant space; marketing costs; costs of capital
improvements to the Property, except for the cost of resurfacing the Parking Areas
(as hereinafter defined), driveways and sidewalks on the Property and except as
provided below; depreciation charges; interest and principal payments on mortgages;
real estate brokerage and leasing commissions; and any other expenditures for which
Landlord has been reimbursed (other

4

 

than pursuant to rent escalation or tax and
operating expense reimbursement provisions in leases). Notwithstanding the
foregoing, the cost of any capital improvements to the Property made after the date
of this Lease that are primarily intended to reduce Operating Expenses or that are
required under any laws, statutes, codes, ordinances, or governmental rules,
regulations or requirements, or judicial or administrative rules, orders or decrees
(collectively, “Laws”) that were not applicable to the Property at the time it was
constructed, amortized over such reasonable periods as Landlord shall determine,
together with interest on the unamortized cost of any such improvements (at the
prevailing construction loan rate available to Landlord on the date the cost of such
improvements was incurred) shall be included in Operating Expenses. The cost of any
capital improvements made in connection with resurfacing the Parking Areas,
driveways and sidewalks in their entirety on the Property shall also be amortized,
with interest, as provided in the immediately preceding sentence, and included in
Operating Expenses. In the event the Property is not fully occupied during any
Calendar Year, the variable Operating Expenses for that year may be adjusted by
Landlord to reflect the Operating Expenses as though the Property were fully
occupied; provided, however, that in no event shall the payments made by all tenants
of the Property to Landlord for Operating Expenses exceed the actual Operating
Expenses paid or incurred by Landlord in any Calendar Year. Notwithstanding
anything to the contrary contained in this Section 5.1(e), Operating
Expenses may include, at Landlord’s sole, but reasonable discretion, both (i) snow
removal costs, and/or (ii) maintenance, repair and/or replacement costs of the
parking areas for both the Property and the building directly west of and
immediately adjacent to the Property (the “Adjacent Property”); provided, however,
in no event shall Tenant’s Proportionate Share of the aggregate cost for (i) snow
removal for the Property and the Adjacent Property; or (ii) maintenance, repair
and/or replacement costs of the parking areas for both the Property and the Adjacent
Property exceed Tenant’s Proportionate Share of snow removal costs for the Property
or Tenant’s Proportionate Share of maintenance, repair and/or replacement costs of
the Parking Areas for the Property.

     5.2 Tax Amount. Tenant shall pay to Landlord as Rent, in addition to the
Base Rent and the Operating Expense Amount (as defined below), an amount (the “Tax Amount”)
equal to Tenant’s Proportionate Share multiplied by the amount of Taxes for each Calendar
Year. Tenant shall pay to Landlord the Tax Amount with respect to each Calendar Year in
monthly installments, at the same time and place as Base Rent is to be paid, in an amount
estimated from time to time by Landlord by a written notice to Tenant (the “Estimated Tax
Payments”). Landlord shall deliver to Tenant as soon as practical after the close of each
Calendar Year (including the Calendar Year in which this Lease terminates) a statement
showing the amount of the Taxes for such Calendar Year and the Tax Amount. Tenant hereby
acknowledges that Landlord will not be able to deliver such statement until Landlord
receives the real estate tax bills for each Calendar Year, which bills are currently
received six (6) to nine (9) months after the end of each Calendar Year. If the Estimated
Tax Payments paid by Tenant during any Calendar Year are less than the Tax Amount for such
Calendar Year, Tenant shall pay any deficiency to Landlord as shown by such statement within
fifteen (15) days after receipt of such statement. If the Estimated Tax Payments paid by
Tenant during any Calendar Year exceed the Tax Amount due from Tenant for such Calendar
Year, such excess shall be credited against payments of Rent next due hereunder. If no such
payments are next due, such excess shall be refunded by Landlord. Landlord’s failure to
deliver an annual statement of the Taxes for any Calendar Year shall not constitute a waiver
or release of, or relieve Tenant from, its obligations under this Subsection. If Taxes for
any period during the Term or any extension thereof, shall be increased after payment
thereof by Landlord, for any reason including without limitation error or

5

 

reassessment by
applicable governmental or municipal authorities, Tenant shall pay Landlord upon demand
Tenant’s Proportionate Share of such increased Taxes. Tenant shall pay increased Taxes
whether Taxes are increased as a result of increases in the assessment or valuation of the
Property (whether based on a sale, change in ownership or refinancing of the Property or
otherwise), increases in the tax rates, reduction or elimination of any rollbacks or other
deductions available under current law, scheduled reductions of any tax abatement, as a
result of the elimination, invalidity or withdrawal of any tax abatement, or for any other
cause whatsoever. Notwithstanding the foregoing, Tenant shall pay prior to delinquency all
taxes, charges or other governmental impositions assessed against or levied upon Tenant’s
fixtures, furnishings, equipment and personal property located in the Premises, and any
Alterations. Whenever possible, Tenant shall cause all such items to be assessed and billed
separately from the property of Landlord. In the event any such items shall be assessed and
billed with the property of Landlord, Tenant shall pay Landlord its share of such taxes,
charges or other governmental impositions within thirty (30) days after Landlord delivers a
statement and a copy of the assessment or other documentation, showing the amount of such
impositions applicable to Tenant’s property. Tenant shall pay any rent tax or sales tax,
service tax, transfer tax or value added tax, or any other applicable tax on the Rent or
services herein or otherwise respecting this Lease.

     5.3 Operating Expense Amount. Tenant shall pay to Landlord as Rent, in
addition to the Base Rent and the Tax Amount, an amount (the “Operating Expense Amount”)
equal to Tenant’s Proportionate Share multiplied by the amount of Operating Expenses for
each Calendar Year. Tenant shall pay to Landlord the Operating Expense Amount with respect
to each Calendar Year in monthly installments, at the same time and place as Base Rent is to
be paid, in an amount estimated from time to time by Landlord by a written notice to Tenant
(the “Estimated Operating Expense Payments”). Landlord shall deliver to Tenant as soon as
practical after the close of each Calendar Year (including the Calendar Year in which this
Lease terminates) a statement showing the amount of the Operating
Expenses for such Calendar Year and the Operating Expense Amount. If the Estimated
Operating Expense Payments paid by Tenant during any Calendar Year are less than the
Operating Expense Amount for such Calendar Year, Tenant shall pay any deficiency to Landlord
as shown by such statement within fifteen (15) days after receipt of such statement. If the
Estimated Operating Expense Payments paid by Tenant during any Calendar Year exceed the
Operating Expense Amount due from Tenant for such Calendar Year, such excess shall be
credited against payments of Rent next due hereunder. If no such payments are next due,
such excess shall be refunded by Landlord. Landlord’s failure to deliver an annual
statement of the Operating Expenses for any Calendar Year shall not constitute a waiver or
release of, or relieve Tenant from, its obligations under this Subsection.

     5.4 Survival. Without limiting any other obligations of Tenant which
shall survive the expiration of the Term or a termination of Tenant’s right of possession,
the obligations of Tenant to pay the Additional Rent provided for in this Section 5
shall survive the expiration of the Term or a termination of Tenant’s right of possession.

     6. SERVICES.

     6.1 Services Furnished by Landlord. As long as Tenant is not in default
under this Lease, Landlord shall furnish the following services:

     (a) Repairs and maintenance (and if necessary, replacements) of air
conditioning and heating units providing service to the Premises. Notwithstanding
anything contained herein to the contrary, if any repairs, maintenance or
replacements are

6

 

necessitated by the act or neglect of Tenant, its agents, servants
or employees, then the cost thereof shall be billed directly to Tenant, and Tenant
shall pay Landlord therefor within fifteen (15) days after receiving such bill.
Landlord shall not otherwise be responsible for the operation of air conditioning
and heating units serving the Premises or the costs thereof, the parties
acknowledging that the use and operation of such units shall be within the sole
control of Tenant. Landlord shall not be responsible for inadequate
air-conditioning or ventilation to the extent the same occurs because Tenant uses
any item of equipment consuming more than 500 watts at rated capacity without
providing adequate air-conditioning and ventilation therefor.

     (b) Domestic Water for drinking, lavatory and toilet purposes at
those points of supply provided for nonexclusive general use of other tenants at the
Property. In the event that Tenant uses or requires a materially greater amount of
water or refuse disposal service than the usual and ordinary office use of either of
such services, then Landlord may bill Tenant for the additional cost of such
increased use and for the cost of determining the amount of such increased use, and
Tenant shall pay Landlord for such costs as Rent within fifteen (15) days after
receiving such bill. If as of the Commencement Date, water service is not
separately metered for the Premises, Landlord reserves the right to install separate
meters for the Premises at Tenant’s cost.

     (c) Exterior window washing of all windows in the Premises, weather
permitting, at intervals to be reasonably determined by Landlord.

     (d) Refuse disposal service in common with other tenants.

     6.2 Utilities. Landlord shall arrange with the public utility companies
and/or municipality providing the Building with electricity and natural gas service for the
supply of such services to the Premises. Such services shall be separately metered to the
Premises, and Tenant shall pay for the cost of any meter required in connection therewith.
Tenant shall pay the public utility companies and/or municipality directly for any services
provided and separately metered to the Premises. Tenant shall bear the cost of maintaining
light fixtures and replacing bulbs, tubes, ballasts and similar items in the Premises.

     6.3 No Other Services. Landlord shall not be obligated to provide any
services other than those expressly set forth above in this Section. Landlord does not
warrant that any of the services described in this Section 6 will be free from
interruptions caused by repairs, improvements or alterations of equipment, or by war,
insurrection, civil commotion, acts of God or governmental action, strikes, lockouts,
picketing, whether legal or illegal, accidents, inability of Landlord to obtain fuel or
supplies, or any other cause or causes beyond Landlord’s reasonable control. None of such
interruptions shall be deemed an eviction (constructive or actual) or disturbance of
Tenant’s use and possession of the Premises or any part thereof, or render Landlord liable
to Tenant for damages or abatement of Rent, or relieve Tenant from performance of Tenant’s
obligations under this Lease. Landlord in no event shall be liable for damages by reason of
loss of profits, business interruption or other consequential damages.

     7. SECURITY DEPOSIT. [INTENTIONALLY DELETED]

     8. USE. Tenant shall use and occupy the Premises for general office, warehouse and distribution
purposes and for no other purpose, unless otherwise expressly agreed in writing by Landlord.
Notwithstanding the foregoing, Tenant shall not use or occupy the Premises, or permit the Premises
to be used or occupied contrary to or in violation of any Laws or any covenant, condition or
restriction of

7

 

record, or in any manner that would: (i) cause structural injury to the Premises or
the Building; (ii) invalidate any insurance policy affecting the Premises or the Building; (iii)
increase the amount of premiums for any insurance policy affecting the Premises or the Building;
(iv) affect any certificate of occupancy affecting the Premises or the Building; (v) or may be
dangerous to persons or property; (vi) create a nuisance, or disturb any other occupant of the
Building; or (vii) injure the reputation of the Property or of Landlord.

     9. CONDITION OF PREMISES. Landlord shall perform the following work in the Premises: (i) reduce
the office space existing in the Premises to 2,500 square feet, including general office area,
lunchroom and bathrooms, (ii) re-paint and re-carpet the remaining office space as required, using
Building standard materials, (iii) leave the existing vestibule in place at the northwest corner entrance to the Premises, (iv) at Tenant’s
election, either (a) relocate 400 amp electrical service to the Premises, or (b) provide controls
for lighting within the Premises and provide Tenant and credit against Base Rent in the amount of
$5,000, and (v) apply a “frost” coating to the existing windows that would otherwise permit the
inside of the Premise to be seen from the outside. Tenant’s taking possession of the Premises
shall be conclusive evidence as against Tenant that the Premises were in good, clean and sanitary
order, repair and condition satisfactory to Tenant and at such time free from defects. No promise
of Landlord to alter, remodel or improve the Premises or the Building and no representation
respecting the condition of the Premises or the Building has been made by Landlord to Tenant other
than as may be expressly set forth in this Lease.

     10. EARLY POSSESSION. Landlord acknowledges and agrees that Tenant may take possession of all or
any part of the Premises on prior to January 1, 2007 in order to undertake improvements to the
Premises at its sole cost and expense and in accordance with the provisions of this Lease
(including but not limited to Section 12). If Tenant does so take possession of all or any
part of the Premises prior to the Commencement Date, all of the covenants and conditions of this
Lease shall be binding upon the parties hereto the same as if the Commencement Date had been fixed
as of the date when Tenant took such possession, except that Tenant shall not be responsible for
the payment of Base Rent or Additional Rent for any period prior to the Commencement Date.
Notwithstanding the foregoing, Tenant shall be responsible for the payment of all costs and
expenses relating to utility services being provided to the Premises after Landlord has delivered
possession of all or any part of the Premises to Tenant.

     11. ASSIGNMENT AND SUBLETTING.

     11.1 Prohibitions. Tenant shall not, without the prior written consent of
Landlord, undertake any of the following (collectively, a “Transfer”): (a) assign, convey or
mortgage this Lease or any interest hereunder; (b) permit any assignment of, or lien upon
this Lease or Tenant’s interest herein by operation of law or otherwise; (c) sublet the
Premises or any part thereof; or (d) permit the use of the Premises by any parties other
than Tenant, its agents and employees. Any Transfer attempted to be made without complying
with this Section 11 shall at Landlord’s option be null, void and of no effect and
shall constitute a default under this Lease. Neither a Transfer to any party (including but
not limited to any affiliates or subsidiaries), nor Landlord’s consent to any other
Transfer, nor Landlord’s election to accept any assignee, sublessee or transferee as Tenant
hereunder shall release the original Tenant from any covenant or obligation under this
Lease. Landlord’s consent to any Transfer shall not constitute a waiver of Landlord’s right
to consent to any future Transfer.

     11.2 Notice to Landlord. Tenant shall give Landlord written notice of any
proposed Transfer (including, without limitation, a proposed Transfer to an affiliate or
subsidiary) at least forty-five (45) days prior to the effective date of such proposed
Transfer. Such written notice

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shall include: (a) the name and address of the proposed
assignee, sublessee or transferee (a “Transferee”), and whether the proposed Transferee is
an Affiliate (as defined below), (b) the proposed effective date (which shall not be less
than 45 nor more than 180 days after Tenant’s notice), (c) the portion of the Premises
subject to the proposed Transfer (the “Subject Space”), (d) except if Tenant makes a
Transfer to an Affiliate, the terms of the proposed Transfer and the consideration therefor,
(e) except if Tenant makes a Transfer to an Affiliate, a copy of all documentation pertaining to
the proposed Transfer, (f) except if Tenant makes a Transfer to an Affiliate, current
financial statements of the proposed Transferee certified by an officer, partner or owner
thereof, (g) except if Tenant makes a Transfer to an Affiliate, any other reasonable
information to enable Landlord to determine the financial responsibility, character, and
reputation of the proposed Transferee, nature of such Transferee’s business and proposed use
of the Subject Space, and (h) except if Tenant makes a Transfer to an Affiliate, such other
information as Landlord may reasonably require. The term “Affiliate” in this Lease shall
mean an entity that directly or indirectly, through one or more intermediaries, controls or
is controlled by or is under common control with Tenant. For purposes of this definition,
the term “control” shall mean possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of an entity, whether through the
ownership of voting securities, by contract or otherwise.

     11.3 Approval. Landlord will not unreasonably withhold or delay its
consent to any proposed Transfer of the Subject Space to the Transferee on the terms
specified in Tenant’s notice. The parties hereby agree that it shall be reasonable under
this Lease and under any applicable Laws for Landlord to withhold consent to any proposed
Transfer where one or more of the following applies (without limitation as to other
reasonable grounds for withholding consent): (i) the proposed Transferee is of a character
or reputation or engaged in a business which is not consistent with the quality of the
Property, or would be a significantly less prestigious occupant of the Property than Tenant,
(ii) the proposed Transferee intends to use the Subject Space for purposes which are not
permitted under this Lease, (iii) the proposed Subject Space is not regular in shape with
appropriate means of ingress and egress suitable for normal renting purposes, (iv) the
proposed Transferee is either a governmental authority (or agency or instrumentality
thereof) or a current tenant or occupant of the Property, (v) the proposed Transferee does
not have a reasonable financial condition in relation to the obligations to be assumed in
connection with the Transfer, (vi) an uncured event of default under this Lease shall exist
at the time Tenant requests consent to the proposed Transfer, or (vii) any such transfer
will cause a violation of ERISA (as defined below) or other applicable state statutes
regulating investments by or fiduciary obligations with respect to “governmental plans.”
Notwithstanding the foregoing, Tenant shall have the right to make a Transfer of this Lease
to an Affiliate without Landlord’s prior consent; provided that such Transfer shall
otherwise be subject to the terms and conditions of Section 11.2 and Section
11.4.

     11.4 Terms of Consent. If Landlord consents to a Transfer, or if Tenant
makes a Transfer to an Affiliate: (a) the terms and conditions of this Lease shall in no way
be deemed to have been waived or modified, (b) such consent (if required) shall not be
deemed consent to any further Transfer by either Tenant or a Transferee, (c) no Transferee
shall succeed to any rights provided in this Lease or any amendment hereto to extend the
Term of this Lease, expand the Premises, or lease additional space, any such rights being
deemed personal to the original Tenant and its Affiliates, (d) no Transfer relating to this
Lease or agreement entered into with respect thereto, whether with or without Landlord’s
consent, shall relieve Tenant from liability under this Lease, (e) except if Tenant makes a
Transfer to an Affiliate, Tenant shall deliver to Landlord promptly after execution, an
original executed copy of all documentation pertaining to the Transfer in form reasonably
acceptable to Landlord, and (f) except if Tenant makes a Transfer to

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an Affiliate, Tenant shall furnish upon Landlord’s request a complete statement, certified by an independent
certified public accountant, or Tenant’s chief financial officer, setting forth in detail
the computation of any profits Tenant has derived and shall derive from such Transfer.
Landlord or its authorized representatives shall
have the right at all reasonable times to audit the books, records and papers of Tenant
relating to any Transfer, and shall have the right to make copies thereof. If the profits
derived by Tenant from any Transfer shall be found understated, Tenant shall within thirty
(30) days after demand pay the deficiency, and if understated by more than 2%, Tenant shall
pay Landlord’s costs of such audit. Any sublease hereunder shall be subordinate and subject
to the provisions of this Lease, and if this Lease shall be terminated during the term of
any sublease, Landlord shall have the right to: (i) treat such sublease as canceled and
repossess the Subject Space by any lawful means, or (ii) require that such subtenant attorn
to and recognize Landlord as its landlord under any such sublease. In the event of default,
Landlord is hereby irrevocably authorized, as Tenant’s agent and attorney-in-fact, to direct
any Transferee to make all payments under or in connection with the Transfer directly to
Landlord (which Landlord shall apply towards Tenant’s obligations under this Lease) until
such default is cured.

     11.5 Sharing of Profits. Without limitation of any other provision
hereof, should Tenant propose to Transfer to any Transferee other than an Affiliate,
Landlord may condition its consent to the Transfer on the condition that fifty percent (50%)
of the profit derived by Tenant from the Transfer be paid by Tenant to Landlord as Rent.
For purposes of Subsections 11.4 and 11.5, “profits” shall mean the amount of any
and all consideration received by Tenant in connection with such Transfer, minus the amount
of Base Rent and Additional Rent to be paid by Tenant under this Lease for the portion of
the Term and the Subject Space, minus all reasonable, out-of-pocket costs actually incurred
by Tenant in connection with such Transfer (including leasing commissions, advertising
expenses, costs of alterations or improvements to the Premises approved by Landlord in
accordance with this Lease, and attorney’s fees).

     11.6 Transfer of Ownership Interests in Tenant. For purposes of this
Lease, the term “Transfer” shall also include any one of the following events if and only if
Tenant does not maintain substantially the same (or better) net worth and remain in
substantially the same (or better) financial condition upon and after such event: (a) the
direct or indirect sale or other transfer of an aggregate of 50% or more of the voting or
ownership interests of Tenant, (b) the sale, mortgage, hypothecation or pledge of an
aggregate of 50% or more of Tenant’s net assets, or (c) if Tenant is a partnership, the
withdrawal or change, voluntary, involuntary or by operation of law, of a majority of the
partners or the dissolution of the partnership. Notwithstanding anything to the contrary in
this Lease, any transfer of ownership interests in Tenant shall not be permitted hereunder,
shall at Landlord’s option be null, void and of no effect and shall constitute a default
under this Lease if such transfer would cause any of the representations and warranties made
by Tenant in Section 26.2 below to be inaccurate or incorrect at any time. Tenant
shall indemnify, defend and hold the Landlord Parties (as defined below) harmless from all
claims, causes of action, liabilities, losses, costs, damages, liens and expenses related to
any transfer of ownership interests in Tenant that may cause any of the representations and
warranties made by Tenant in Section 26.2 below to be inaccurate or incorrect at any
time. Notwithstanding anything in this Lease to the contrary, a transfer of the share or
other interests of Tenant or an Affiliate of Tenant whose outstanding voting stock is listed
on a national stock exchange regulated by the U.S. Securities and Exchange Commission shall
not be deemed to be a Transfer.

     11.7 Recapture. Notwithstanding anything to the contrary contained in this Article, Landlord shall have
the option, by giving written notice to Tenant within thirty (30) days after receipt of
Tenant’s notice of any proposed Transfer, to recapture the Subject Space. Such recapture
notice shall cancel and terminate this Lease with respect to the Subject Space as of the

10

 

date stated in Tenant’s notice as the effective date of the proposed Transfer (or at
Landlord’s option, shall cause the Transfer to be made to Landlord or its agent, in which
case the parties shall execute the Transfer documentation promptly thereafter). If this
Lease shall be cancelled with respect to less than the entire Premises, the Rent reserved
herein shall be prorated on the basis of the number of rentable square feet retained by
Tenant in proportion to the number of rentable square feet contained in the Premises (both
as reasonably determined by Landlord), this Lease as so amended shall continue thereafter in
full force and effect, and upon request of either party, the parties shall execute written
confirmation of the same.

     11.8 Landlord’s Costs. Tenant shall pay to Landlord as Rent hereunder,
all costs and expenses (including, without limitation, reasonable attorneys’ fees) paid or
incurred by Landlord in connection with any proposed assignment or subletting hereunder,
regardless of whether Landlord exercises its recapture option pursuant to Subsection
11.7 hereof or withholds or grants its consent to such assignment or subletting in
accordance with the terms and conditions of this Section 11.

     12. REPAIRS AND ALTERATIONS.

     12.1 Tenant’s Repair Obligations. Tenant shall, at its own expense, keep
and maintain the Premises in good and sanitary condition, working order and repair during
the Term. Tenant shall promptly and adequately repair all damage to the Premises and
restore, replace or repair all damaged or broken glass, carpet, wall-covering, doors,
fixtures, equipment, improvements and appurtenances; provided, however, that Tenant shall
not be obligated to repair or replace the roof or any structural defects in the Premises, or
the heating and air conditioning systems servicing the Premises, except to the extent that
such repair or replacement are necessitated by the act or neglect of Tenant, its agents,
servants or employees. In the event that any such repairs, maintenance or replacements are
required, Tenant shall promptly arrange for the same either through Landlord for such
reasonable charges as Landlord may from time to time establish, or such contractors as
Landlord generally uses at the Property or such other contractors as Landlord shall first
approve in writing, and in a first class, workmanlike manner approved by Landlord in advance
in writing. If Tenant does not fulfill its obligations under this Subsection 12.1,
Landlord may, but need not, make such repairs and replacements, and Tenant shall pay
Landlord the cost thereof, plus an additional fifteen percent (15%) to cover Landlord’s
overhead and related expenses, immediately upon written demand therefor. Landlord may enter
the Premises at all reasonable times to make such repairs and replacements and any other
repairs, alterations, improvements and additions to the Premises or to the Building or to
any equipment or system located in the Building. Notwithstanding anything contained herein
to the contrary, if any damage to the Premises or the Property or to any equipment or system
thereon (including but not limited to the roof of the Building or any heating, air
conditioning and ventilation systems serving the Premises) or appurtenance thereto results
from any act, omission or neglect of Tenant or of Tenant’s contractors, agents or employees,
Landlord may but is not obligated to, at Landlord’s option, repair such damage, and Tenant
shall reimburse Landlord immediately upon written demand for the total cost of such repairs, plus
an additional fifteen percent (15%) to cover Landlord’s overhead and related expenses.

     12.2 Prohibition on Alterations. Tenant shall not, without the prior
written consent of Landlord, make any alterations, improvements, decorations or additions
(collectively, “Alterations”) to the Premises. Landlord may, in its sole discretion,
withhold its consent to any Alteration which: (i) affects the roof or structural components
of the Building; (ii) affects any heating, ventilating, air conditioning, utility or
mechanical systems or equipment in the Building; (iii) is visible from outside of the
Premises; (iv) costs more than $10,000.00 to complete

11

 

(including all labor and material costs); or (iv) requires a building permit to perform. Except as provided in the
immediately preceding sentence, Landlord shall not unreasonably withhold its consent to any
Alterations. Landlord’s consent to any Alterations (including, without limitation,
Landlord’s approval of Tenant’s plans, specifications or working drawings therefor), shall
impose no responsibility or liability on Landlord with respect to the completeness, or
design sufficiency thereof or the compliance thereof with all applicable Laws.

     12.3 Performance of Alterations. The work necessary to make any
Alterations shall be done at Tenant’s sole cost and expense, by employees of or contractors
employed by Landlord or, with Landlord’s prior written consent, by contractors and
subcontractors arranged for by Tenant and approved by Landlord. If Alterations are, with
Landlord’s consent, performed by contractors employed by Tenant, Tenant shall deliver to
Landlord, for its review and approval prior to commencing any such Alterations, copies of
all contracts and subcontracts related to such Alterations, and plans, working drawings and
specifications necessary to perform such work. Landlord’s review of Tenant’s plans,
specifications or working drawings shall impose no responsibility or liability on Landlord,
and shall not constitute a representation, warranty or guarantee by Landlord, with respect
to the completeness, design, sufficiency or compliance thereof with any Laws. In addition,
Alterations shall be performed subject to all conditions that Landlord may impose upon
Tenant and its contractors and subcontractors, including without limitation: furnishing
Landlord with bonds and other security for the payment of all costs to be incurred in
connection with such Alterations; insuring against liabilities which may arise out of such
Alterations, as determined by Landlord; obtaining necessary licenses and permits; contractor
and subcontractor lien waivers; affidavits listing all contractors, subcontractors and
suppliers; use of union labor (if Landlord uses union labor); affidavits from engineers
acceptable to Landlord stating that the Alterations will not adversely affect the systems
and equipment or the structure of the Building; and requirements as to the manner and times
in which such Alterations shall be done. All Alterations performed by Tenant or its
contractors shall be done in a first-class, workmanlike manner using only new and good
grades of materials and shall comply with all insurance requirements and all Laws. Tenant
shall permit Landlord to supervise all Alterations, and Landlord may charge a supervising
fee not to exceed: (a) ten percent (10%) of the total cost of the Alterations, including
without limitation, all labor and material costs, if Tenant’s employees or contractors
perform the Alterations, or (b) fifteen percent (15%) of the total cost of the Alterations,
including, without limitation, all labor and material costs, if Landlord’s employees or
contractors perform the Alterations. Tenant shall promptly pay to Landlord and/or to
Tenant’s contractors, as the case may be, when due, the cost of all work and of all
decorating required in connection with any Alterations, and all supervising fees, and if
payment is made directly to Tenant’s contractors, upon completion of the Alterations, Tenant
shall deliver to Landlord evidence of payment and full and final waivers of all liens for
labor, services or materials. Except to the extent caused by Landlord’s gross negligence or
willful misconduct, Tenant shall indemnify, defend and hold Landlord and its owners and
their respective officers, shareholders, directors, partners, agents and employees
(collectively, the “Landlord Parties”) harmless from all claims, causes of action,
liabilities, losses, costs, damages, liens and expenses related to any Alterations, whether
performed by or under the direction of Landlord, and whether performed in compliance with
this Section 12 or any other conditions imposed by Landlord.

     13. CERTAIN RIGHTS RESERVED BY LANDLORD. Except to the extent expressly limited herein,
Landlord reserves full rights to control the Property, including but not limited to the
following rights, exercisable without notice (except as expressly provided below in this
Section) and without liability to Tenant for damage or injury to property, person or
business, and without effecting an eviction, constructive or actual, or disturbance of
Tenant’s use or possession of the Premises or giving rise to any claim for set-off or
abatement of Rent:

12

 

     (a) To change the name or street address of the Building or the
Property;

     (b) To install, affix and maintain any and all signs on the exterior
of the Building, and to prescribe the location and style of the identification sign
(including ground mounted sign with panels, if any), logo and/or lettering for the
Premises occupied by the Tenant;

     (c) To designate and/or approve, prior to installation, all types of
window shades, blinds, drapes, awnings, window ventilators and other similar
equipment, which approval shall not be unreasonably withheld or delayed so long as
any such window covering does not violate any Laws or Association rules, and to
control all internal lighting that may be visible from the exterior of the Premises;

     (d) To show the Premises to prospective tenants at reasonable hours
during the last twelve (12) months of the Term and, if vacated during such year, to
prepare the Premises for re-occupancy, and to show the Premises to current and
prospective insurers, brokers, purchasers and lenders of the Building at reasonable
hours upon reasonable prior verbal notice at any time during the Term;

     (e) To retain at all times, and to use in appropriate instances, keys
to all doors within and into the Premises. Landlord agrees to use all commercially
reasonable efforts not to disturb or interfere with Tenant’s use of the Premise. No
locks shall be changed without the prior written consent of Landlord;

     (f) To decorate or maintain or to make repairs, alterations,
additions or improvements, whether structural or otherwise, in and about the
Property or the Building, or any part of any thereof, and for such purposes to enter
upon the Premises upon reasonable prior verbal notice (except in an emergency, in
which case no notice shall be necessary), and, during the continuance of any such
work, to take into and upon or through the Premises all materials required to make
such decorations, repairs, maintenance, alterations or improvements, to erect
scaffolding and other structures as may be reasonably required, to close roads,
drives, doors, entryways, public space and corridors in the Property or the Building
on a temporary basis, and to interrupt or suspend temporarily Building services and
facilities, all without abatement of Rent or affecting any of Tenant’s obligations
hereunder, so long as the Premises are reasonably accessible;

     (g) To have and retain a paramount title to the Premises free and
clear of any act of Tenant purporting to burden or encumber it;

     (h) To grant to anyone the exclusive right to conduct any business or
render any service in or to the Property, provided such exclusive right shall not
operate to exclude Tenant from the use expressly permitted herein;

     (i) To approve the location of fixtures, equipment and other articles
of personal property in and about the Premises and the Building so as not to exceed
the legal live load;

     (j) To prohibit the placing of vending or dispensing machines of any
kind in or about the Premises, except for vending or dispensing machines for the
sole use of Tenant and its employees;

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     (k) To issue rules and regulations, from time to time, governing the
use of the Parking Areas (as defined below); and

     (l) To limit or prevent access to the Property or otherwise take such
action or preventative measures deemed necessary by Landlord for the safety of
tenants or other occupants of the Property or the protection of the Property and
other property located thereon or therein, in case of fire, invasion, insurrection,
riot, civil disorder, public excitement or other dangerous condition, or threat
thereof.

     14. COVENANT AGAINST LIENS. Tenant covenants and agrees not to suffer or permit any lien of
mechanics or materialmen to be placed against the Property, the Building or the Premises in
connection with any work or Alterations on or respecting the Premises not performed by or at the
request of Landlord, and Tenant shall indemnify and hold Landlord harmless from and against any
claims, liabilities, judgments, or costs (including attorneys’ fees) arising out of the same or in
connection therewith. In the case of any such lien attaching, Tenant shall pay off and remove or
bond over any such lien to Landlord’s satisfaction within fifteen (15) days after the filing
thereof. If any such lien attaches, and Tenant falls to remove or bond over such lien within said
fifteen (15) day period, Landlord may, but shall not be obligated to, pay the amount necessary to
remove such lien without being responsible for making an investigation as to the validity or
accuracy thereof, and the amount so paid, together with all costs and expenses (including, without
limitation, reasonable attorneys’ fees) incurred by Landlord in connection therewith, shall be
deemed Rent hereunder, payable immediately upon demand. Tenant has no authority or power to cause
or permit any lien or encumbrance of any kind whatsoever, whether created by act of Tenant,
operation of Laws or otherwise, to attach to or be placed upon Landlord’s title or interest in the
Property, the Building or the Premises, and any such claim to a lien or encumbrance shall be null
and void, or at Landlord’s option shall attach only against Tenant’s interest in the Premises, and
shall in all respects be subordinate to Landlord’s title to the Property and Premises. Tenant
shall give Landlord notice at least twenty (20) days prior to the commencement of any work or
Alterations on the Premises (or such additional time as may be necessary under applicable Laws), to
afford Landlord the opportunity of posting and recording appropriate notices of non-responsibility.

     15. WAIVERS AND INDEMNITIES.

     15.1 Waiver.

     (a) Except to the extent Landlord expressly indemnifies Tenant in
accordance with Section 15.2 or otherwise expressly provides any other
rights, indemnities or remedies for the benefit of Tenant under this Lease, Tenant
waives all claims it may have against the Landlord Parties for any damage either to
person or property or loss of business due to the Property, the Premises or any part
of any thereof or any appurtenances thereto or improvements thereon not being in
good condition or becoming out of repair, or due to the happening of any accident in
or about the Property or the Premises or due to any act or neglect of Tenant or any
tenant or occupant of the Property, or of any other person, including the Landlord
Parties. This provision shall apply particularly (but not exclusively) to damage
caused by water, snow, frost, steam, sewage, gas, faucets and plumbing fixtures, and
shall apply without distinction as to the person whose act or neglect was
responsible for the damage and whether the damage was due to any of the causes
specifically enumerated above or to some other cause of an entirely different kind.
Tenant further agrees that all Tenant’s property upon the Premises or the Property
shall be there at the risk of Tenant only, and that Landlord shall not be liable for
any damage thereto or theft thereof.

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     (b) Except to the extent Tenant expressly indemnifies Landlord in
accordance with Section 15.2 or otherwise expressly provides any other
rights, indemnities or remedies for the benefit of Landlord under this Lease,
Landlord waives all claims it may have against Tenant for any damage either to
person or property or loss of business due to the Property, the Premises or any part
of any thereof or any appurtenances thereto or improvements thereon not being in
good condition or becoming out of repair, or due to the happening of any accident in
or about the Property or the Premises or due to any act or neglect of Landlord or
any tenant or occupant of the Property, or of any other person, including the
Landlord Parties.

     15.2 Indemnification.

     (a) Except to the extent caused by the negligence or willful
misconduct of any of the Landlord Parties, and subject to the waiver of subrogation
provided in accordance with Section 18.1 below, Tenant hereby agrees to
indemnify, defend and hold harmless the Landlord Parties from and against any claims
or liability for damage to person or property (or for loss or misappropriation of
property) occurring in or on the Property or the Premises, arising from any breach
or default on the part of Tenant under this Lease, or from any act or omission of
Tenant or any employee, agent, servant, invitee or contractor of Tenant, or from
Tenant’s operations or activities on or use of the Property or the Premises, and
from any cost relating thereto (including, without limitation, attorneys’ fees), but
only to the extent not covered by Landlord’s insurance and expressly excluding any
consequential or special damages.

     (b) Except to the extent caused by the negligence or willful
misconduct of any of Tenant or its officers, shareholders, directors, invitees,
agents or employees, and subject to the waiver of subrogation provided in accordance with Section
18.1 below, Landlord hereby agrees to indemnify, defend and hold harmless Tenant
and its officers, shareholders, directors, clients, servants, agents and employees
from and against any claims or liability for damage to person or property (or for
loss or misappropriation of property) and the reasonable costs relating thereto
(including, without limitation, attorneys’ fees) to the extent any such damage,
injury or death is the result of the negligence or willful misconduct of any of the
Landlord Parties, but only to the extent not covered by Tenant’s insurance and
expressly excluding any consequential or special damages.

     15.3 Waiver of Notice. Except for any notices expressly
provided for in this Lease, Tenant hereby expressly waives the service of any notice of
intention to terminate this Lease or to re-enter the Premises, and waives the service of any
demand for payment of Rent or for possession and waives the service of any other notice or
demand prescribed by any Laws.

     15.4 No Implicit Waivers. No waiver of any condition expressed in this
Lease shall be implied by any neglect of Landlord to enforce any remedy on account of the
violation of such condition if such violation be continued or repeated subsequently, and no
express waiver shall affect any condition other than the one specified in such waiver and
that one only for the time and in the manner specifically stated. No receipt of moneys by
Landlord from Tenant after the termination in any way of the Term or of Tenant’s right of
possession hereunder or after the giving of any notice shall reinstate, continue or extend
the Term or affect any notice given to Tenant prior to the receipt of such moneys, it being
agreed that after the service of notice of the commencement of a suit or after final
judgment for possession of the Premises, Landlord may

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receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or judgment.

     16. DEFAULTS AND LANDLORD’S REMEDIES.

     16.1 Defaults. It shall be a “default” or “event of default” under this
Lease if: (i) Tenant fails to pay, when due, Rent or any installment thereof or any other
sum required to be paid by Tenant under this Lease (including any required replenishment of
the Security Deposit), and such failure continues for more than five (5) days after written
notice; (ii) any guarantor or surety (“Guarantor”) of Tenant’s obligations under this Lease
fails to pay, when due, any sum required to be paid by such Guarantor under any guaranty or
surety agreement (“Guaranty”) that Landlord may have required in connection with this Lease,
and such failure continues for more than five (5) days after written notice; (iii) Tenant or
any Guarantor fails to observe or perform any of the covenants, conditions or obligations
not relating to the payment of Rent or other sums that Tenant or such Guarantor is required
to observe or perform under this Lease or any Guaranty, respectively, and such failure
continues for more than thirty (30) days after notice thereof to Tenant (unless such failure
shall give rise to an emergency or hazardous condition requiring an immediate cure, in which
case, no notice is necessary and no cure period shall be allowed); provided, however, that
Landlord shall not be entitled to exercise its remedies on account of any default described
in this clause (iii) if (a) such default cannot reasonably be cured within thirty (30) days,
(b) Tenant or any Guarantor
commences to cure such default within said thirty (30) day period and thereafter diligently
and continuously proceeds with such cure, and (c) Tenant or any Guarantor cures such default
within a reasonable period of time not to exceed sixty (60) days after Landlord’s notice of
such default; (iv) the interest of Tenant in this Lease is levied on under execution or
other legal process; (v) an Event of Bankruptcy (as defined below) occurs; (vi) Tenant or
any Guarantor dissolves or ceases to exist; (vii) Tenant shall attempt to effect a Transfer
in violation of Section 11 hereof; or (viii) any material misrepresentation herein,
or material misrepresentation or omission in any financial statements or other materials
provided by Tenant or any Guarantor in connection with negotiating or entering this Lease or
in connection with any Transfer. For purposes of this Lease, an “Event of Bankruptcy” means
the occurrence of any one or more of the following events or circumstances:

     (a) If Tenant or any Guarantor shall file in any court a petition in
bankruptcy or insolvency or for reorganization within the meaning of the Federal
Bankruptcy Code, or for arrangement within the meaning of such Code (or for
reorganization or arrangement under any future bankruptcy or reform act for the same
or similar relief), or for the appointment of a receiver or trustee of all or a
portion of the property of Tenant or any Guarantor, or

     (b) If an involuntary petition in bankruptcy or insolvency or for
reorganization within the meaning of the Federal Bankruptcy Code shall be filed
against Tenant or any Guarantor, and such petition shall not be vacated or withdrawn
within thirty (30) days after the date of filing thereof, or

     (c) If Tenant or any Guarantor shall make an assignment for the
benefit of creditors, or

     (d) If Tenant or any Guarantor shall be adjudicated a bankrupt or
shall admit in writing an inability to pay its debts as they become due, or

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     (e) If a receiver shall be appointed for the property of Tenant or
any Guarantor by order of a court of competent jurisdiction (except where such
receiver shall be appointed in an involuntary proceeding and be withdrawn within
thirty (30) days from the date of his appointment).

     16.2 Landlord’s Remedies. Upon a default under this Lease, Landlord at
its option may, without notice or demand of any kind to Tenant or any Guarantor or other
person, exercise any one or more of the following described remedies in addition to all
other rights and remedies provided at law or in equity:

     (a) Landlord may terminate this Lease and the Term created hereby, in
which event Landlord may forthwith repossess the Premises and be entitled to recover
forthwith as damages a sum of money equal to all Rent accrued and unpaid for the
period up to and including the date of termination, plus as final and liquidated
damages (and not as a penalty) Landlord’s reasonable estimate of the amount of Rent
that would be payable from the date of such termination through the balance of the
scheduled Term, less the fair rental value of the Premises for said period (taking
into consideration the time to relet the Premises, and taking into consideration and
reducing said fair rental value by, the Costs of Re-Letting [as defined below]),
plus any other sum of money and damages owed by Tenant to Landlord.

     (b) Landlord may terminate Tenant’s right of possession and may
repossess the Premises by forcible entry or detainer suit, by taking peaceful
possession or otherwise, without terminating this Lease. If Landlord terminates
Tenant’s right of possession without terminating this Lease, Landlord shall take
reasonable measures to the extent required by law, to relet the same for the account
of Tenant, for such rent and upon such terms as shall be reasonably satisfactory to
Landlord. Reasonable measures shall not obligate Landlord to show the Premises
before showing other space in the Building to a prospective tenant. For the purpose
of such reletting, Landlord is authorized to decorate, repair, remodel, alter or
otherwise improve the Premises and to relet the Premises at such rental rate (which
may be higher than the rental rate then applicable under this Lease), as Landlord
reasonably determines to be necessary to maximize the effective rent on reletting.
If Landlord shall fail to relet the Premises, Tenant shall pay to Landlord as
damages the amount of the Rent reserved in this Lease for the balance of the Term as
due hereunder. If the Premises are relet and a sufficient sum shall not be realized
from such reletting after paying all of the costs and expenses of all decoration,
repairs, remodeling, alterations, installations and additions and the expenses of
such reletting (including all allowances, abatements and other tenant concessions
required under then-existing market conditions) (collectively, the “Costs of
Re-Letting”), to satisfy the Rent provided for in this Lease, Tenant shall satisfy
and pay the same upon demand therefor from time to time. Tenant shall not be
entitled to any rents received by Landlord in excess of the Rent provided for in
this Lease. Tenant agrees that Landlord may file suit to recover any sums falling
due under the terms of this paragraph (b) from time to time and that no suit or
recovery of any portion due Landlord hereunder shall be any defense to any
subsequent action brought for any amount not theretofore reduced to judgment in
favor of Landlord.

     (c) Landlord may perform the obligation which is the subject of such
default for the account and at the expense of Tenant. All costs incurred by
Landlord in performing such obligation, plus an administrative fee equal to fifteen
percent (15%) of such costs, plus all attorneys’ fees and expenses of Landlord
incurred in enforcing any of

17

 

the obligations of Tenant under this Lease shall become
Rent hereunder and shall be due and payable by Tenant immediately on demand.

     (d) Landlord may additionally (i) seek any declaratory, injunctive or
other equitable relief, and specifically enforce this Lease, or restrain or enjoin a
violation or breach of any provision hereof, and (ii) sue Tenant or any Guarantor
for and collect any unpaid Rent which has accrued.

     16.3 Default Interest. If any payments of Rent remain unpaid for more
than five (5) days after the date when due, unless Tenant has not been in default of any
monetary obligation under this Lease within the previous twelve (12) month period, such
payments shall bear interest from the date when due until the date paid at a rate of
interest equal to the lesser of: (i) the maximum rate of interest permitted by applicable
Laws; or (ii) six percent (6%) in excess of the “prime rate” or “corporate base rate” of
interest rate announced or published from time to time by a major Chicago bank selected by
Landlord (the “Prime Rate”), but in no event at a rate which is more than the highest lawful
rate allowable in the state of Illinois. Landlord’s right to receive such interest shall
not, in any way, limit any of Landlord’s other remedies under this Lease or at law or
equity.

     16.4 Late Charge. If any payment or installment of Rent owed by Tenant under this Lease is not paid when
due, unless Tenant has not been in default of any monetary obligation under this Lease
within the previous twelve (12) month period, in addition to the amounts due under
Section 15.3 above, Tenant shall pay to Landlord to compensate it for its additional
for bookkeeping and administrative expenses resulting from such late payment an amount equal
to the greater of $100.00 or five percent (5%) of the amount of Rent overdue for each and
every thirty (30) day period or portion thereof that such Rent remains unpaid.

     16.5 Other Matters. No re-entry or repossession, repairs, changes,
alterations and additions, reletting, acceptance of keys from Tenant, or any other action or
omission by Landlord shall be construed as an election by Landlord to terminate this Lease
or Tenant’s right to possession, or accept a surrender of the Premises, nor shall the same
operate to release the Tenant in whole or in part from any of Tenant’s obligations
hereunder, unless express written notice of such intention is sent by Landlord or its agent
to Tenant. To the fullest extent permitted by Laws, all rent and other consideration paid
by any replacement tenants shall be applied: first, to the all reasonable costs and expenses
incurred by Landlord for any repairs, maintenance, changes, alterations and improvements to
the Premises, brokerage commissions, advertising costs, attorneys’ fees, any customary free
rent periods or credits, tenant improvement allowances, take-over lease obligations and
other customary, necessary or appropriate economic incentives required to enter leases with
replacement tenants, and costs of collecting rent from replacement tenants, second, to the
payment of any Rent theretofore accrued, and the residue, if any, shall be held by Landlord
and applied to the payment of other obligations of Tenant to Landlord as the same become due
(with any remaining residue to be retained by Landlord). Rent shall be paid without any
prior demand or notice therefor (except as expressly provided herein) and without any
deduction, set-off or counterclaim, or relief from any valuation or appraisement laws.
Landlord may apply payments received from Tenant to any obligations of Tenant then accrued,
without regard to such obligations as may be designated by Tenant. Landlord shall be under
no obligation to observe or perform any provision of this Lease on its part to be observed
or performed which accrues after the date of any default by Tenant hereunder not cured
within the times permitted hereunder. The times set forth herein for the curing of defaults
by Tenant are of the essence of this Lease. Tenant hereby irrevocably waives any right
otherwise available under any Laws to redeem or reinstate this Lease.

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     16.6 Landlord’s Default. If Landlord shall fail to perform any term or
provision under this Lease required to be performed by Landlord, Landlord shall not be
deemed to be in default hereunder nor subject to any claims for damages of any kind, unless
such failure shall have continued for a period of thirty (30) days after written notice
thereof by Tenant; provided, if the nature of Landlord’s failure is such that more than
thirty (30) days are reasonably required in order to cure, Landlord shall not be in default
if Landlord commences to cure such failure within such thirty (30) day period, and
thereafter reasonably seeks to cure such failure to completion. The aforementioned periods
of time permitted for Landlord to cure shall be extended for any period of time during which
Landlord is delayed in, or prevented from, curing due to fire or other casualty, strikes,
lock-outs or other labor troubles, shortages of equipment or materials, governmental
requirements, power shortages or outages, acts or omissions by Tenant or other Persons, and
other causes beyond Landlord’s reasonable control. If Landlord shall fail to cure within
the times permitted for cure herein, Landlord shall be subject to such remedies as may be
available to Tenant under applicable Laws (subject to the other provisions of this Lease);
provided, in recognition that Landlord must
receive timely payments of Rent and operate the Property, Tenant shall have no right of
self-help to perform repairs or any other obligation of Landlord, and shall have no right to
withhold, set-off, or abate Rent.

     17. SURRENDER OF POSSESSION.

     17.1 Condition of Premises. At the expiration or earlier termination of
this Lease by lapse of time or otherwise, or upon termination of Tenant’s right of
possession without terminating this Lease, Tenant shall surrender possession of the Premises
to Landlord and deliver all keys to the Premises to Landlord, and shall return the Premises
and all equipment and fixtures of Landlord to Landlord in as good condition as when Tenant
originally took possession, ordinary wear and tear, loss or damage by fire or other insured
casualty, and damage resulting from the act of Landlord or any other of its employees and
agents excepted, failing which Landlord may restore the Premises and such equipment and
fixtures to such condition and Tenant shall pay the cost thereof to Landlord as Rent
immediately upon demand. Except as provided below, all improvements, fixtures and other
items in or upon the Premises (including without limitation all Alterations, but expressly
excluding movable office furniture, trade fixtures, office equipment and other personal
property belonging to Tenant that they may be removed without permanent structural damage to
the Premises or the Building), whether temporary or permanent in character and whether made
by Landlord or Tenant, shall become Landlord’s property and shall remain upon the Premises
at the expiration or earlier termination of this Lease by lapse of time or otherwise or upon
a termination of Tenant’s right of possession, without compensation to Tenant.
Notwithstanding the foregoing, if within ten (10) days prior to the expiration or earlier
termination of this Lease or Tenant’s right of possession thereafter Landlord so directs by
notice, Tenant shall promptly remove such of the foregoing items as are designated in such
notice and restore the Premises to the condition prior to the installation of such items.
If Tenant does not remove such property upon the expiration or earlier termination of this
Lease, or upon the termination of Tenant’s right of possession, at Landlord’s election: (i)
Tenant shall be conclusively presumed to have conveyed the same to Landlord under this Lease
as a bill of sale without payment or credit by Landlord, or (ii) Tenant shall be
conclusively presumed to have forever abandoned such property, and without accepting title
thereto, Landlord may, at Tenant’s expense, remove, store, destroy, discard or otherwise
dispose of all or any part thereof without incurring liability to Tenant or to any other
person, and Tenant shall pay Landlord immediately upon demand the expenses incurred in
taking such actions. Unless prohibited by applicable Laws, Landlord shall have a lien
against such property for the costs incurred in removing and storing the same. Tenant’s
obligations under this Subsection 17.1 shall survive the expiration or earlier
termination of the Term or a termination of Tenant’s right of possession.

19

 

     17.2 Holding Over. If Tenant retains possession of the Premises or any
part thereof after the expiration or earlier termination of this Lease, whether by lapse of
time or otherwise, or after a termination of Tenant’s right of possession, then Landlord
may, at Landlord’s sole election at any time after the termination of this Lease or Tenant’s
right of possession, serve written notice on Tenant that such holding over constitutes
either: (i) the creation of a month-to-month tenancy upon each of the terms herein provided
as may be applicable to such month-to-month tenancy, except that Tenant shall pay to
Landlord Base Rent for each month or portion thereof in the amount set forth below,
plus all Additional Rent (including, without limitation, the Tax Amount, the Operating
Expense Amount, the Estimated Tax Payments and the Estimated Operating Expense Payments)
coming due during such period, or (ii) the creation of a tenancy at sufferance upon each of
the terms herein provided as may be applicable to such tenancy at sufferance, except that
Tenant shall pay to Landlord a per diem rent equal to the per diem Base Rent set forth
below, plus the per diem amount of all Additional Rent (including, without limitation, the
Tax Amount, the Operating Expense Amount, the Estimated Tax Payments and the Estimated
Operating Expense Payments). If no written notice is served by Landlord, then a tenancy at
sufferance with Rent as stated in (ii) above shall have been created. The provisions of
this Subsection shall not operate as a waiver by Landlord of any right of re-entry herein
provided. In addition to and not in limitation of all other remedies set out in this
Subsection, Tenant shall be liable for all damages (consequential as well as direct)
sustained by Landlord on account of Tenant’s holding over. Base Rent payable during any
holding over shall be as follows:

     (a) during the first thirty (30) days following the expiration or
earlier termination of this Lease or the termination of Tenant’s right of
possession, one hundred fifty percent (150%) of the Base Rent for the calendar month
immediately preceding the expiration or termination date of this Lease or the
termination of Tenant’s right of possession; and

     (b) from and after the thirty-first (31st) day following the
expiration or earlier termination of this Lease or the termination of Tenant’s right
of possession, two hundred percent (200%) of the Base Rent for the calendar month
immediately preceding the expiration or termination date of this Lease or the
termination of Tenant’s right of possession.

     18. INSURANCE.

     18.1 Waiver of Subrogation. Landlord and Tenant each hereby waive all
claims against the other for loss of or damage to the Property or Premises or to the
contents thereof, which loss or damage is covered by valid and collectible fire and extended
coverage insurance policies, to the extent that such loss or damage is recoverable under
said insurance policies. Inasmuch as this mutual waiver will preclude the assignment of any
such claim by subrogation (or otherwise) to an insurance company (or any other person),
Landlord and Tenant each agree to give each insurance company that has issued, or in the
future may issue, to it policies of fire and extended coverage insurance, written notice of
the terms of this mutual waiver, and to have said insurance policies properly endorsed, if
necessary, to prevent the invalidation of said insurance coverage by reason of said waiver.

     18.2 Tenant’s Insurance. Tenant shall carry insurance during the entire
Term insuring Tenant and Landlord and their respective agents and employees, and any other
parties designated by Landlord from time to time (including, without limitation, any
Mortgagee [as defined below]) as their interests may appear, with terms, coverages and in
companies satisfactory to Landlord, and with such increases in limits as Landlord may from
time to time request or as any Mortgagee may from time to time

20

 

request or as any Mortgagee may from time to time require, but initially Tenant
shall maintain the following coverages in the following amounts:

     (a) Comprehensive or Commercial General Liability insurance,
including Contractual Liability coverage of the indemnification provisions contained
in this Lease and host liquor liability insurance, with limits for bodily injury or
personal injury to or death of any person, or more than one (1) person, or for
damage to property in an amount of not less than $1,000,000 per
occurrence/$3,000,000 aggregate. The coverage amounts may be provided through an
umbrella or excess liability policy. The Comprehensive or Commercial General
Liability policy shall include Landlord, Landlord’s management agent and any
Mortgagee designated by Landlord from time to time as additional insureds on a
primary and non-contributory basis to any insurance carried by Landlord, Landlord’s
management agent and any Mortgagee.

     (b) Property damage insurance against “all risks” of physical loss
for the full insurable replacement value of the initial build-out of the Premises,
all Alterations, all Personal Property, and of all furniture, trade fixtures,
equipment, business records, merchandise and all other items of Tenant’s personal
property on the Premises.

     (c) Worker’s Compensation Insurance in amounts required by the State
of Illinois, including Voluntary Compensation, Broad Form All States Endorsement,
and employer’s liability insurance in an amount of not less than $500,000 per
occurrence.

     (d) Automobile Liability Insurance with limits for bodily injury or
personal injury to or death of any person, or more than one (1) person, or for
damage to property in an amount of not less than $1,000,000 combined single limit,
including Employer’s Owned, Non-Owned and Hired Car coverage.

     18.3 Evidence of Insurance. Tenant shall, prior to the commencement of
the Term, furnish to Landlord certificates of insurance evidencing the insurance coverage
required under this Section 18, and Tenant shall deliver renewals thereof to
Landlord not less than thirty (30) days prior to the end of the term of such coverage, which
certificates shall state that such insurance coverage may not be changed or canceled without
at least thirty (30) days’ prior written notice to Landlord and any Mortgagee identified by
Landlord from time to time. Said certificates evidencing liability insurance shall be in
the form of ACORD 25 and certificates evidencing property insurance in the form of ACORD 27.

     18.4 Landlord’s Insurance. Landlord may maintain during the Term the
following insurance with such coverages and deductibles as Landlord may determine from time
to time, the cost of which shall be included in “Operating Expenses”: comprehensive (or
commercial) general liability insurance; worker compensation insurance as required by
statute; employer’s liability insurance; fire and extended coverage or “all-risk” property
damage insurance; business interruption insurance with coverage of at least twelve (12)
months rent; and such other policies as Landlord shall deem appropriate or that may be
required by any Mortgagee.

     19. FIRE OR CASUALTY. If the Premises or the Building (including machinery or equipment used in
the operation of the Building) shall be destroyed or damaged by fire or other casualty and if the
Premises or Building may be repaired and restored within two hundred seventy (270) days after such
casualty, then Landlord shall
repair and restore the same with reasonable promptness, but only to the extent insurance
proceeds are actually made available to Landlord for purposes of repair and restoration; provided,
however, that Landlord shall only be obligated to repair and restore any improvements made to

21

 

the Premises to the extent that: (i) Landlord paid for the initial construction of such improvements
(either directly or through an allowance granted to Tenant), and (ii) Landlord receives the
insurance proceeds related to such improvements under the insurance described in clause (b) of
Subsection 18.2 hereof. Tenant agrees to execute all documents and take all actions
necessary to make the insurance proceeds described in clause (ii) of the immediately preceding
sentence available to Landlord for the repair and restoration of the Premises. Notwithstanding
anything contained herein to the contrary, if the Premises or the Building are substantially
damaged or destroyed during the last twelve (12) months of the Term, either Landlord or Tenant
shall have the right to terminate this Lease as of the date of the fire or other casualty by giving
notice to the other within thirty (30) days after the date of the fire or casualty, in which event,
Rent shall be apportioned on a per diem basis and paid to the date of such fire or casualty.
Notwithstanding anything contained herein to the contrary, if in Landlord’s reasonable judgment
either: (1) such damage renders the Premises untenantable in whole or in part and cannot reasonably
be repaired and restored within two hundred seventy (270) days, or (2) sufficient insurance
proceeds are not or will not be made available to Landlord for repair or restoration, or (3) the
cost of the repairs or restoration would exceed twenty five percent (25%) of the replacement value
of the Building, or (4) the nature of such work would make termination of this Lease necessary or
convenient, then Landlord shall have the right to cancel and terminate this Lease as of the date of
such damage upon giving notice to Tenant at any time within ninety (90) days after such damage
shall have occurred. In the event any fire or casualty renders the Premises untenantable, in whole
or in part, and if this Lease shall not be terminated by reason of such damage, then Base Rent
shall abate during the period beginning with the date of such fire or other casualty and ending
with the date when Landlord has substantially completed all repairs to the Premises required to be
completed by Landlord, by an amount bearing the same ratio to the total amount of Base Rent for
such period as the untenantable portion of the Premises bears to the entire Premises. In any
event, Base Rent shall only abate to the extent Landlord actually recovers rent loss insurance
proceeds specifically allocated to the Base Rent due under this Lease. Landlord shall not
otherwise be liable for any inconvenience or annoyance to Tenant or its visitors, or injury to
Tenant’s business resulting in any way from any damage or the repair thereof relating to any fire
or other casualty. Tenant agrees that Landlord’s obligation to restore, and the abatement of Rent
provided herein, shall be Tenant’s sole recourse in the event of such damage, and waives any other
rights Tenant may have under any applicable Laws to terminate the Lease by reason of damage to the
Premises or Property. Tenant acknowledges that this Section 19 represents the entire
agreement between the parties respecting damage to the Premises or Property.

     20. CONDEMNATION. If the whole or any part of the Premises or the Building or any substantial
portion of the Parking Areas shall be taken or condemned by any competent authority for any public
use or purpose or if any adjacent property or street shall be condemned or improved in such a
manner as to require the use of any part of the Premises or of the Building or the Parking Areas,
or if Landlord shall grant a deed or other instrument in lieu of such taking by eminent domain or
condemnation, Landlord shall have the right (but not the obligation) to end the Term upon the date
when the possession of the part so taken shall be required for such use or purpose, and current
Rent shall be apportioned as of the date of such termination. Tenant shall have no right to any
apportionment of or share in any condemnation award or judgment for damages made for the taking of
any part of the Premises or the Property, but may seek its own award for loss of or damage to
Tenant’s business or its property resulting from such taking, provided that such an award to Tenant
does not in any way diminish the award payable to Landlord on account of such taking.

     21. NOTICES.

     21.1 Addresses. All notices to be given by one party to the other under
this Lease shall be in writing (except as expressly provided herein to the contrary) and
shall be sent by

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either: (i) United States certified mail, return receipt requested, postage
prepaid, (ii) national air courier service for overnight delivery, or (iii) hand delivery as
follows:

	 	 	 	 	 	 	 
	 

	 	(a)
	 	To Landlord:
	 	The Prudential Insurance Company of America
	 

	 	 	 	 	 	Two Prudential Plaza
	 

	 	 	 	 	 	180 North Stetson Street, Suite 3275
	 

	 	 	 	 	 	Chicago, Illinois 60601
	 

	 	 	 	 	 	Attention: Vice President-PRISA
	 
	 	 	 	 	 	 
	 

	 	 	 	With a copy to:
	 	PDC Properties, Inc.
	 

	 	 	 	 	 	One O’Hare Center
	 

	 	 	 	 	 	6250 N. River Road, Suite 4050
	 

	 	 	 	 	 	Rosemont, IL 60018
	 

	 	 	 	 	 	Attention: Susan Lehman

or to such other person or at such other address designated by notice
sent to Tenant, and during the Term with a copy to the address to
which Rent is then being paid under this Lease.

	 	 	 	 	 	 	 
	 

	 	(b)
	 	To Tenant:
	 	Ulta Salon, Cosmetics & Fragrance, Inc.
	 

	 	 	 	 	 	1135 Arbor Drive
	 

	 	 	 	 	 	Romeoville, Illinois 60446
	 

	 	 	 	 	 	Attention: Senior Vice President of Real
Estate

or to such other person or at such other address designated by notice
sent to Landlord, and during the Term with a copy to the Premises.

     21.2 Method. Mailed notices shall be deemed to have been given two (2)
business days after posting in the United States mails. Notices sent by overnight courier
shall be deemed to have been given one (1) business day after delivery to the overnight
courier, and notices which are hand delivered shall be deemed to have been given on the day
tendered for delivery.

     22. ADDITIONAL COVENANTS OF TENANT. Tenant hereby covenants and agrees to comply with, and to
cause its employees, agents, clients, customers, invitees and guests to comply with, the following
provisions:

     (a) Any sign, lettering, picture, notice, or advertisement installed
within the Premises or on the Property shall be installed at Tenant’s expense and in
compliance with all Laws. Without obtaining Landlord’s prior, written consent
(which consent may be
withheld in Landlord’s sole discretion) no sign, lettering, picture, notice or
advertisement may be placed on any portion of the Premises which is visible from
outside the Premises or on any portion of the Property.

     (b) Tenant shall not advertise the business, profession or activities
of Tenant in any manner which violates the letter or spirit of any code of ethics
adopted by any recognized association or organization pertaining thereto, or use the
name of the Building or the business park in which the Building is located for any
purpose other than for identifying Tenant’s business address, or use any picture or
likeness of the Building in any letterheads, envelopes, circulars, notices,
advertisements, containers or wrapping material, without Landlord’s prior consent in
writing.

23

 

     (c) Except with respect to satellite or other communication dishes or
antennas as may be permitted by applicable Laws and the Park Covenants (as defined
below) and as are installed: (i) in locations on the roof of the Building specified
by Landlord; (ii) subject to Landlord’s reasonable size restrictions, utility and
structural load requirements and screening criteria; (iii) with the use of
Landlord’s roofing contractor; and (iv) subject to other reasonable requirements
relating to any warranty, guaranty or service contract applicable to the roof of the
Building, Tenant shall not place any radio or television antenna on the roof of the
Building or on any other part of the Property other than inside the Premises, or
operate or permit to be operated any musical or sound producing instrument or device
inside or outside the Premises that may be heard outside the Premises. Tenant shall
not make noises, cause disturbances or vibrations or use or operate any electrical
or electronic devices or other devices that emit sound or other waves or
disturbances, or create odors, any of which may be offensive to other tenants and
occupants of the Building or that would interfere with the operation of any device
or equipment or radio or television broadcasting or reception from or within the
Building or elsewhere.

     (d) Tenant shall not obstruct sidewalks, roadways, Parking Areas or
entrances in and about the Property. Tenant shall not place objects against doors
or windows that would be unsightly from the exterior of the Building, and will
promptly remove same upon notice from Landlord. Tenant shall store and dispose of
refuse as directed by Landlord, including, without limitation, storing and disposing
of all refuse, in a neat and clean condition so as not to be visible to members of
the public and so as not to create any health or fire hazard.

     (e) Tenant shall not make any room-to-room canvass to solicit
business from other tenants in the Building and shall not exhibit, sell or offer to
sell, use, rent or exchange any item or service in or from the Premises.

     (f) Tenant shall not waste electricity or water and agrees to
cooperate fully with Landlord to assure the most effective operation of the
Building’s heating and air conditioning systems, and shall not adjust any controls
other than room thermostats installed for Tenant’s use or take any action which
could jeopardize the warranties covering the heating, ventilating or air
conditioning systems. Tenant shall comply with all programs instituted by Landlord
under applicable federal, state or local energy conservation standards or other
governmental requirements or directives (whether mandatory or voluntary).

     (g) Door keys for doors in the Premises will be furnished on the
Commencement Date by Landlord. Tenant shall not affix additional locks on doors and
shall purchase duplicate keys only from Landlord. At the end of the Term or earlier
termination of the Lease or upon a termination of Tenant’s right of possession,
Tenant shall return all keys to Landlord and will disclose to Landlord the
combination of any safes, cabinets or vaults left in the Premises in accordance with
the terms and conditions of this Lease.

     (h) Tenant assumes full responsibility for protecting the Premises
from theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed and secured. In addition, the parties
acknowledge that safety and security devices, services and programs provided by
Landlord, if any, while intended to deter crime and ensure safety, may not in given
instances prevent theft or other criminal

24

 

acts, or ensure safety of persons or
property. The risk that any safety or security device, service or program may not
be effective, or may malfunction, or be circumvented by a criminal, is assumed by
Tenant with respect to Tenant’s property and interests, and Tenant shall obtain
insurance coverage to the extent Tenant desires protection against such criminal
acts and other losses. Tenant agrees to cooperate in any reasonable safety or
security program developed by Landlord or required by applicable Laws.

     (i) Peddlers, solicitors and beggars shall be reported promptly to
Landlord.

     (j) Tenant shall not install or operate machinery or any mechanical
devices of a nature not directly related to Tenant’s permitted use of the Premises.

     (k) Tenant shall comply with all covenants, conditions and
restrictions of record encumbering or relating to the Property or any portion of
either thereof (including, without limitation, any declaration of covenants,
conditions, restrictions and easements encumbering the Park in which the Property is
located) (the “Park Covenants”), and with all rules and regulations issued from time
to time by Landlord or the Association.

     (l) Tenant will not in any manner deface or injure the Property or
any part of either thereof or overload the floors of the Premises.

     (m) Tenant will not use the Premises for lodging or sleeping purposes
or for any immoral or illegal purposes.

     (n) Tenant shall not at any time manufacture or sell, and shall not
at any time permit the manufacture or sale of any spirituous, fermented,
intoxicating or alcoholic liquors on the Premises or the Property. If Tenant
desires to permit the use of alcoholic beverages on the Premises, it may do so only
in connection with social events not generally open to the public conducted by
Tenant wholly within the Premises, provided that (i) such events shall be in the
ordinary course of Tenant’s business and shall not involve the sale of any food or
beverages, (ii) such events shall not violate any Laws, Park Covenants or other
provisions of this Lease, and shall in no event unreasonably disturb or bother other
tenants or occupants of the Building, and (iii) Tenant shall in all cases obtain, or
maintain in full force and effect full liquor liability insurance in the amount of
Tenant’s insurance as required under Section 18.2(a) and otherwise in
accordance with Section 18.1, Section 18.2 and Section 18.3.

     (o) In no event shall Tenant permit on the Property flammables or
explosives or any other article of an intrinsically dangerous nature. If by reason
of Tenant’s failure to comply with the provisions of this Subsection, any insurance
coverage is jeopardized or insurance premiums are increased, in addition to all
other rights and remedies available to Landlord upon a default by Tenant under this
Lease, Landlord shall have the right to require Tenant to make immediate payment of
the increased insurance premium, if any.

     (p) Tenant shall not introduce, use, handle, generate, treat,
transport, store or dispose of, or permit the introduction, use, handling,
generation, treatment, transportation, storage or disposal of any Hazardous
Materials (as defined below) in, on, under, to, from, around or about the Premises,
the Building or the Property, except for Hazardous Materials contained in products
which are reasonably and customarily used in general office uses, such as photocopy
machine solutions and cleaning solvents, as long as such Hazardous Materials are
only used in compliance with all Laws (without the need

25

 

for a special permit) and
all manufacturer’s and supplier’s instructions and recommendations, and in
quantities and for purposes which are reasonably and customarily used in general
office uses. Tenant shall indemnify, defend and hold harmless the Landlord Parties
from and against all fines, penalties, liens, suits, procedures, claims, demands,
liabilities, damages (including consequential damages), actions, causes of action,
costs and expenses of every kind and nature whatsoever (including, without
limitation, reasonable attorneys’, engineers’, experts’ and consultants’ fees and
costs of testing, monitoring, remediation, removal and cleanup), contingent or
otherwise, known or unknown, incurred or imposed, arising directly or indirectly out
of or in any way connected with Tenant’s breach of the covenants set forth in this
Subsection 22(p) or otherwise in connection with the introduction, use,
handling, generation, treatment, transportation, storage or disposal of any
Hazardous Materials. Tenant’s obligations under the immediately preceding sentence
shall survive the expiration or earlier termination of this Lease and a termination
of Tenant’s right of possession. For purposes hereof, “Hazardous Materials” shall
mean (i) substances defined as “hazardous substances”, “toxic substances” or
“hazardous wastes” in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C., Sec. 9061, et. seq.), the Hazardous
Materials Transportation Act (49 U.S.C., Sec. 1802), the Resource Conservation and
Recovery Act (42 U.S.C., Sec. 6901 et. seq.), the Toxic Substances Control Act of
1976, as amended (15 U.S.C., Sec. 2601, et. seq.) or in any other Laws now or
hereafter in effect governing similar matters, or in any regulations adopted or
publications promulgated pursuant thereto; (ii) asbestos and asbestos containing
materials; and (iii) petroleum and petroleum based products. Tenant shall promptly
notify Landlord of: (i) any enforcement, cleanup or other regulatory action taken or
threatened by any governmental or regulatory authority with respect to the presence
of any Hazardous Materials on the Premises or the migration thereof from or to other
property, (ii) any demands or claims made or threatened by any party against Tenant
or the Premises relating to any loss or injury resulting from any Hazardous
Materials, (iii) any release, discharge or nonroutine, improper or unlawful disposal
or transportation of any Hazardous Materials on or from the Premises, and (iv) any
matters where Tenant is required by Laws to give a notice to any governmental or
regulatory authority respecting any Hazardous Materials on the Premises.

     23. ESTOPPEL CERTIFICATES; MORTGAGE ISSUES.

     23.1 Estoppel Certificates. Tenant agrees that from time to time upon not
less than ten (10) business days prior request by Landlord or any Mortgagee, Tenant will
deliver to Landlord or such Mortgagee an estoppel certificate substantially in the form of
Exhibit C attached hereto and made a part hereof or in such other form as Landlord
or any Mortgagee may request. In the event Tenant fails or refuses to deliver any such
certificate within said 10-business day period, in addition to all other rights and remedies
available under this Lease, at law or in equity upon a default by Tenant under this Lease,
Tenant shall be deemed to have accepted, agreed to and certified to, each of the statements
set forth in any such certificate.

     23.2 Subordination and Attornment. Landlord may sell the Land and become
the tenant under a ground or underlying lease of the Land and this Lease and all rights of
Tenant hereunder will then be subject and subordinate to such underlying lease and any
extensions or modifications thereof. This Lease and all of Tenant’s rights hereunder shall
also be subject and subordinate to any mortgage or mortgages (and the liens thereof) now or
at any time hereafter in force against the Building, the Land and/or the underlying
leasehold estate, and to all advances made or hereafter to be made upon the security
thereof. For purposes of this Lease, “Mortgagee”

26

 

shall mean the mortgagee, from time to
time, under any mortgage granted by Landlord and now or hereafter encumbering the Property
or any portion thereof or interest therein. Tenant shall execute such further instruments
subordinating this Lease to any such mortgage or mortgages as Landlord from time to time may
request. Tenant covenants and agrees that, if by reason of any default on the part of
Landlord herein as tenant under said underlying lease, or as mortgagor under any mortgage to
which this Lease is subject and subordinate, said underlying lease is terminated or such
mortgage is foreclosed by summary proceedings, voluntary agreement or otherwise, Tenant, at
the election of the landlord under said underlying lease or the Mortgagee of such mortgage,
as the case may be, will attorn to and recognize such landlord or Mortgagee as the
“Landlord” under this Lease. Tenant further agrees to execute and deliver at any time upon
request of Landlord, any Mortgagee or any party which shall succeed to the interest of
Landlord as tenant under said underlying lease, any instrument to evidence such attornment.
However, in the event of attornment, no Mortgagee or any party which shall succeed to the
interest of Landlord as tenant under said underlying lease shall be: (i) liable for any act
or omission of Landlord, or subject to any offsets or defenses which Tenant might have
against Landlord (prior to such Mortgagee or other party becoming Landlord under such
attornment), (ii) liable for any security deposit or bound by any prepaid Rent not actually
received by such Mortgagee or other party, or (iii) bound by any future modification of this
Lease not consented to by such Mortgagee or other party. Tenant waives the provision of any
law now or hereafter in effect which may give to Tenant any right of election to terminate
this Lease or to surrender possession of the Premises in the event any proceeding is brought
by landlord under said underlying lease or the Mortgagee under any such mortgage to
terminate said underlying lease or foreclose such mortgage. At the election of any
Mortgagee (expressed in a document signed by such Mortgagee), such Mortgagee may make all or
some of Tenant’s rights and interests in this Lease superior to any mortgage held by such
Mortgagee and the lien thereof. Landlord will use commercially reasonable efforts to obtain
for Tenant, at Tenant’s sole cost and expense, a nondisturbance agreement from any Mortgagee
of the Property.

     23.3 Notices to Mortgagees. Tenant agrees to give any Mortgagee, by
United States certified mail, return receipt requested, postage prepaid, a copy of any
notice of default served upon Landlord. Tenant further agrees that if Landlord shall have
failed to cure such default, then such Mortgagee shall have an additional thirty (30) days
within which to cure such default, and Tenant shall not pursue any remedies it may have for
such default and this Lease shall not be terminated, while such cure is being diligently
pursued during such period.

     23.4 Quiet Possession. Upon payment by Tenant of the Rent due hereunder,
and upon the observance and performance of all the covenants, terms and conditions on
Tenant’s part to be observed and performed under this Lease, Tenant shall peaceably and
quietly hold and enjoy the Premises for the Term, without hindrance or interruption by
Landlord or any other person or persons lawfully or equitably claiming by, through or under
Landlord, always subject, however, to the terms and conditions of this Lease.

     24. MISCELLANEOUS.

     24.1 Definition of Landlord. For purposes of this Lease, Landlord shall
mean Landlord named above, except that in the event of any sale or other transfer of the
Property or the Building, the seller or transferor (and the beneficiaries of any selling or
transferring land trust) shall be and hereby is and are entirely freed and relieved of all
agreements, covenants and obligations of the Landlord hereunder accruing from and after the
effective date of such transfer, and without further agreement between the parties and the
purchaser or transferee on any sale or transfer, such purchaser or transferee shall be
deemed and held to have assumed and agreed to

27

 

carry out any and all agreements, covenants
and obligations of the Landlord hereunder accruing from and after the effective date of such
sale or transfer.

     24.2 Real Estate Brokers. Tenant represents that Tenant has dealt with no
broker in connection with this Lease other than the Broker, and that insofar as Tenant
knows, no other broker or finder negotiated this Lease or is entitled to any fee or
commission in connection herewith. Tenant agrees to indemnify, defend and hold the Landlord
Parties free and harmless from and against all claims for broker’s commissions or finder’s
fees by any person claiming to have represented or procured, or to have been engaged by,
Tenant in connection with this transaction other than the Broker. Landlord represents that
Landlord has dealt with no broker in connection with this Lease other than the Broker and
that insofar as Landlord knows, no other broker or finder negotiated this Lease or is
entitled to any fee or commission in connection herewith. Landlord agrees to indemnify,
defend and hold Tenant free and harmless from and against all claims for broker’s
commissions or finder’s fees by any person claiming to have represented or to have been
engaged by Landlord in connection with this transaction.

     24.3 Cumulative Remedies. All rights and remedies of Landlord under this Lease shall be cumulative, and none shall
exclude any other rights and remedies allowed by law.

     24.4 Grammatical Interpretation. The word “Tenant” wherever used herein
shall be construed to mean Tenants in all cases where there is more than one Tenant, and the
necessary grammatical changes required to make the provisions hereof apply either to
corporations or individuals, men or women, shall in all cases be assumed as though in each
case fully expressed.

     24.5 Successors and Assigns. Each of the provisions of this Lease shall
extend to and shall, as the case may require, bind or inure to the benefit, not only of
Landlord and of Tenant, but also of their respective heirs, legal representatives,
successors and assigns, provided this clause shall not permit any Transfer contrary to the
provisions of Section 11 hereof.

     24.6 No Oral Modifications. All of the agreements, representations and
obligations of Landlord are contained herein, and no modification, waiver or amendment of
this Lease or of any of its conditions or provisions shall be binding upon Landlord unless
in writing signed by Landlord or by a duly authorized agent of Landlord empowered by a
written authorization signed by Landlord.

     24.7 Irrevocable Offer; No Option. In consideration of Landlord’s
administrative expense in considering this Lease, Tenant’s submission to Landlord of this
Lease, duly executed by Tenant, shall constitute Tenant’s irrevocable offer to continue for
twenty (20) days from and after receipt by Landlord or until Landlord shall deliver to
Tenant written notice of rejection of Tenant’s offer, whichever shall first occur. If
within said 20-day period Landlord shall neither return this Lease duly executed by Landlord
nor so advise Tenant of Landlord’s rejection of Tenant’s offer, then Tenant shall be free to
revoke its offer. Although Tenant’s execution of this Lease shall be deemed an irrevocable
offer by Tenant, the submission of this Lease by Landlord to Tenant for examination shall
not constitute a reservation of or option for the Premises. This Lease shall become
effective only upon execution thereof by both parties and delivery thereof to Tenant.

     24.8 No Air Rights. No rights to light or air over any property, whether
belonging to Landlord or any other person, are granted to Tenant by this Lease.

     24.9 [Intentionally omitted].

28

 

     24.10 Landlord’s Title. Landlord’s title to the Property is and always
shall be paramount to the title of Tenant. Nothing herein contained shall empower Tenant to
do any act which can, shall or may encumber the title of Landlord to the Property.

     24.11 Recording Prohibited. Neither this Lease, nor any memorandum,
affidavit or other writing with respect hereto, shall be recorded in any public record by
Tenant or by anyone acting through, under or on behalf of Tenant, and the recording thereof
in violation of this provision shall make this Lease null and void at Landlord’s election.

     24.12 Relationship of Parties. Nothing contained in this Lease shall be
deemed or construed by the parties hereto or by any third party, to create the relationship
of principal and agent, partnership, joint venture or any association between Landlord and
Tenant, it being expressly understood and agreed that neither the method of computation of
Rent nor any other provisions contained in this Lease nor any acts of the parties hereto
shall be deemed to create any relationship between Landlord and Tenant other than the
relationship of lessor and lessee.

     24.13 Limitation of Liability. Any claim against, or liability or
obligation of, Landlord under this Lease or relating to the Premises or the Property shall
be limited solely to and satisfied solely from the interest of Landlord in the Property, and
none of the Landlord Parties (other than Landlord) shall be individually or personally
liable for any claim arising out of this Lease or relating to the Premises or the Property.
A deficit capital account of any partner in Landlord shall not be deemed an asset or
property of Landlord.

     24.14 Excuse for Non-Performance. Except as expressly provided to the
contrary in this Lease, this Lease and Tenant’s obligation to pay Rent hereunder and to
perform all of Tenant’s covenants and agreements hereunder shall not be impaired or
affected, and Landlord shall not be in default hereunder, if Landlord is unable to fulfill
any of its obligations under this Lease because of any accident, governmental restriction,
inability to obtain fuel or materials, strike or lockout (whether legal or illegal), act of
God or other event, occurrence or circumstance beyond Landlord’s reasonable control (“Events
of Force Majeure”).

     24.15 Riders and Exhibits. All exhibits and riders attached to this Lease
are made a part hereof and are incorporated herein by reference.

     24.16 Authority. Tenant and all Persons signing for Tenant below hereby
represent that this Lease has been fully authorized and no further approvals are required
(and has any required certificates, licenses, permits and other such items).

     24.17 Captions and Severability. The captions of the Sections and
Subsections of this Lease are for convenience of reference only and shall not be considered
or referred to in resolving questions of interpretation. If any term or provision of this
Lease shall be found invalid, void, illegal, or unenforceable with respect
to any particular person or entity by a court of competent jurisdiction, it shall not
affect, impair or invalidate any other terms or provisions hereof, or its enforceability
with respect to any other person or entity, the parties hereto agreeing that they would have
entered into the remaining portion of this Lease notwithstanding the omission of the portion
or portions adjudged invalid, void, illegal, or unenforceable with respect to such person or
entity.

     25. PARKING. Tenant agrees not to utilize (and shall cause its agents, employees and invitees to
not utilize) more than forty (40) parking spaces in the parking areas located on the Land (the

29

 

“Parking Areas”). Tenant agrees to comply with, and to cause its agents, employees and invitees to
comply with, all rules and regulations which may from time to time be promulgated by Landlord with
respect to use of the Parking Areas. Tenant shall be responsible for supervising the use of the
Parking Areas by Tenant’s agents, employees and invitees in order to confirm compliance with the
terms set forth in this Section 25. If Tenant is in default of its covenants and
obligations set forth in this Section 25, Landlord shall have the right, but not the
obligation, in addition to all other rights and remedies under this Lease, to employ or engage one
or more individuals to supervise the use of the Parking Areas by Tenant’s agents, employees and
invitees in order to confirm compliance with the terms set forth in this Section 25, and
Tenant shall reimburse Landlord for all costs incurred in connection therewith within ten (10) days
after being billed therefor.

     26. ERISA. Tenant hereby represents and warrants that:

     26.1 Neither Tenant nor any of its “affiliates” (within the meaning of Part V(c) of
Prohibited Transaction Exemption 84-14, 49 Fed. Reg. 9494 (1984), as amended (“PTE 84-14”))
has, or during the immediately preceding year has exercised the authority to:

     (a) appoint or terminate Landlord as investment manager over assets
of any “employee benefit plan” (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”)) invested in, or
sponsored by, Landlord; or

     (b) negotiate the terms of a management agreement (including renewals
or modifications thereof) with Landlord on behalf of any such plan;

     26.2 Tenant is not “related” to Landlord (as determined under in Part V(h) of PTE 84-
14);

     26.3 Tenant has negotiated and determined the terms of this Lease at arm’s length, as
such terms would be negotiated and determined by the Tenant with unrelated parties; and

     26.4 Tenant is not an “employee benefit plan” as defined in Section 3(3) of ERISA, a
“plan” as defined in Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended, or
an entity deemed to hold “plan assets” within the meaning of 29 C.F.R. § 2510.3-101 of any
such employee benefit plan or plan.

     27. ATTORNEYS’ FEES. In the event of any litigation between the parties, the prevailing party shall be entitled
to obtain, as part of the judgment, all reasonable attorneys’ fees, costs and expenses incurred in
connection with such litigation, except as may be limited by applicable Laws.

     28. AMERICANS WITH DISABILITIES ACT. The parties acknowledge that Title III of the Americans With
Disabilities Act of 1990 (42 U.S.C. § 12101 et seq.) and regulations and guidelines promulgated
thereunder, as all of the same may be amended and supplemented from time to time (collectively
referred to here as the “ADA”) established requirements for accessibility and barrier removal, and
that such requirements may or may not apply to the Premises and Property depending on, among other
things: (a) whether Tenant’s business is deemed a “public accommodation” or “commercial facility”,
(b) whether such requirements are “readily achievable”, and (c) whether a given alteration affects
a “primary function area” or triggers “path of travel” requirements. The parties hereby agree
that: (x) Landlord shall be responsible for ADA Title III compliance on the common areas of the
Property and in the Building common areas and in the common area lobby restrooms, if any, (y)
Tenant shall be responsible for ADA Title III compliance in the Premises, and (z) Landlord may
perform, or require that Tenant perform, and Tenant shall be responsible for the cost of, ADA Title
III “path of travel”

30

 

requirements triggered by Alterations in the Premises. Tenant shall be solely
responsible for requirements under Title I of the ADA relating to Tenant’s employees.

[Signature Page to Follow]

31

 

     IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this Lease as of the date
first above written.

	 	 	 	 	 	 	 
	 	 	TENANT	 	 
	 
	 	 	 	 	 	 
	 	 	ULTA SALON, COSMETICS & FRAGRANCE, INC.,

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Alex J. Lelli, Jr.	 	 
	 

	 	Its:
	 	Senior Vice President	 	 
	 

	 	 	 	Growth & Development	 	 
	 
	 	 	 	 	 	 
	 	 	LANDLORD	 	 
	 
	 	 	 	 	 	 
	 	 	THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,

a New Jersey corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	PDC Properties, Inc., its agent	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	By: /s/ Rex Davis	 	 
	 

	 	 	 	Its: Asset Manager	 	 

32

 

Exhibit A

Plan of the Premises

Exhibit A, Page 1

 

 

Exhibit B

Legal Description of the Land

LOT 1 IN WINDHAM LAKES RESUBDIVISION NO. 22 BEING A SUBDIVISION OF PART OF THE WEST HALF OF SECTION
29, TOWNSHIP 37 NORTH, RANGE 10 EAST OF THE THIRD PRINCIPAL MERIDIAN, ACCORDING TO THE PLAT THEREOF
RECORDED APRIL 17, 2001 AS DOCUMENT NO. R2001-43185, IN WILL COUNTY ILLINOIS.

Exhibit B, Page 1

 

 

Exhibit C

Form of Tenant Estoppel Certificate

	 	 	 
	Lease Date:

	 	                                        , 200___
	Landlord:

	 	The Prudential Insurance Company of America
	Tenant:

	 	                                                            
	Premises:

	 	Unit No.                                        
	Rentable Area:

	 	                                        square feet

     The undersigned, being the Tenant under the above-described Lease hereby certifies to
                                         (“Lender” or “Purchaser”) and Landlord as follows:

     1. The Lease requires monthly base rent installments of $                     each, commencing on
                    , 20___. The Lease requires monthly installments of Tenant’s estimated share of
operating expenses of $                     and of Tenant’s estimated share of taxes of $                    .

     2. Tenant has not prepaid, and will not prepay, any rent for more than one (1) month, and
Tenant is paying rent under the Lease on a current basis with no offsets, credits, claims or
setoffs. Tenant has not been given any free rent, partial rent, rebates, rent abatements, or rent
concessions of any kind, which are unexpired, except as disclosed herein.

     3. A security deposit in the amount of $                     is being held by Landlord, which amount
is not subject to any setoff or reduction or to any increase for interest or other credit due to
Tenant. The Lease                      is or                      is not (check applicable provision) guaranteed by
a third party. If the Lease is guaranteed by a third party, the name of the guarantor is                     .

 

 

     4. The Lease is a valid lease and is in full force and effect. Attached hereto is a true and
complete copy of the Lease and all amendments thereto and other agreements relating to the Lease
and the rent payable thereunder, which documents represent the entire agreement between the
parties.

     5. There is no existing default by Landlord, or to Tenant’s knowledge, by Tenant under the
Lease, and no event has occurred which, with the giving of notice or the passage of time, or both,
would constitute an event of default by Landlord, or to Tenant’s knowledge, by Tenant, under the
Lease. To the best of Tenant’s knowledge, no claim, controversy or dispute exists between Tenant
and Landlord. As of the date hereof, Tenant is not asserting that the Lease is not fully
enforceable by Landlord in accordance with its terms.

     6. The Lease provides for a primary term of                      (                    ) months, commencing on
                    , 20___and ending on                     , 20___. The Lease contains an option for                     
(                    ) additional terms of                      (                    ) years each upon the terms and
conditions as set forth in the Lease. Tenant has not exercised any option or rights to renew,
extend, amend, modify, or change the term of the Lease, except as may be stated in the Lease.
Tenant does not have any preferential right to lease or purchase all or any part of the property of
which the Premises are a part (including any rights of first refusal or expansion options). The
only interest of Tenant in the Property is that of a tenant pursuant to the terms of the Lease.
Tenant hereby waives any option, right of first refusal or other right to purchase the Property or
any portion thereof or interest therein that is contained in the Lease or any other document or
agreement, if any.

Exhibit C, Page 1

 

 

     7. There are no actions, voluntary or involuntary, pending against Tenant under the bankruptcy
laws of the United States or any state thereof.

     8. Tenant is entitled to no rent concessions under the Lease other than the following: .

 

 

     9. All construction, build-out, improvements, or alterations work to be completed to date by
Landlord in the Premises under the Lease has been completed.

     10. Tenant has obtained or will obtain all necessary licenses and permits to carry on its
business at the Premises prior to opening for business.

     11. Tenant has received no notice of any claim, litigation or proceeding, pending or
threatened, against or relating to Tenant that would adversely affect Tenant’s ability to fulfill
its obligations under the Lease or with respect to the Premises. Tenant has received no notice of,
and has no knowledge of, any violations of any federal, state, county or municipal statutes, laws,
codes, ordinances, rules, regulations, orders, decrees or directives relating to the use or
condition of the Premises or Tenant’s operation thereon. Tenant has received no notice from any
governmental body or agency or from any person or entity with respect to any actual or threatened
taking of the Property or any portion thereof for any public or quasi-public purpose by the
exercise of condemnation or eminent domain.

     12. Tenant has accepted, is in sole possession of and is occupying the Premises. Except as
specified below, Tenant has not subleased all or any part of the Premises or assigned the Lease, or
otherwise transferred or hypothecated its interest in the Lease or the Premises.

     This certification is made knowing that Landlord, [Lender]/[Purchaser] is relying upon the
representations herein made.

	 	 	 	 	 	 	 	 
	 	 	TENANT	 	 	 
	 
	 	 	 	 	,	 	 
	 	 	 , 	,	 	 
	 	 	                     corporation	 	 	 
	 
	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 
	 

	 	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 	 
	 

	 	 	 	 	 	 	 

Exhibit C, Page 2

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