Document:

Exhibit 10.18

SECOND
AMENDMENT TO LEASE

THIS SECOND AMENDMENT TO LEASE (“Second Amendment”) is made as of the
     day of October,
2002, by and among DAVIS CHURCH OFFICE
DEVELOPMENT, L.L.C., a Delaware limited liability company (“Landlord”), and HOUGHTON MIFFLIN COMPANY, a Massachusetts corporation (“Tenant”).

W I T N E S
S E T H :

A.            Landlord and Tenant
entered into a certain lease dated August 4, 2000, (the “Original Lease”) as amended by that certain
First Amendment to Lease dated July 25, 2002 (the “First Amendment” and collectively with the Original Lease, the
“Lease”), whereby Landlord leased
to Tenant certain premises initially consisting of 139,056 Rentable Square Feet
(the “Premises”) in the building
located at 909 Davis Street, Evanston, Illinois (the “Building”).

B.            The actual physical
configuration and Rentable Square Feet of the Premises have changed from that
stated in the Original Lease.

C.            Landlord and Tenant
desire to amend the Lease as set forth herein but not otherwise to reflect the
aforesaid change in the physical configuration and Rentable Square Feet of the
Premises and to establish the Commencement Date under the Lease.

NOW, THEREFORE, for good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, Landlord and Tenant hereby agree as follows:

1.   
Definitions; Incorporation of Recitals. Each
capitalized term used in this Second Amendment shall have the same meaning as
is ascribed to such capitalized term in the Lease, unless otherwise provided for
herein. The foregoing recitals are incorporated into this Second Amendment as
if fully set forth herein.

2.   
The Premises: Rentable Square Feet. Retroactive to the
Commencement Date, Articles 1.B and 3.C(i) and 3.C(ii) of the Original Lease
are hereby amended by (i) deleting the words “139,056 Rentable Square Feet”
where they appear therein and substituting therefor the words “140,751 Rentable
Square Feet”, (ii) deleting the words “137,295 Rentable Square Feet” where they
appear therein and substituting therefor the words “138,817 Rentable Square
Feet”, and (iii) deleting the words “1,761 Rentable Square Feet” where they
appear therein and substituting therefor the words “1,934 Rentable Square
Feet”. Retroactive to the Commencement Date, Exhibit A to this Second Amendment
is hereby substituted for Exhibit A to the Original Lease in its entirety.

3.   
Tenant’s Proportionate Share. Retroactive to the
Commencement Date, the last sentence of Article 1.D of the Original Lease is
hereby deleted in its entirety and the following is substituted therefor:
“Tenant’s Proportionate Share shall initially be Seventy-One and 10/100 percent
(71.10%).”

4.   
Commencement Date.  The Commencement Date as
defined and used in the Lease as amended hereby is agreed to be April 1, 2002.

 

 

5.   
Real Estate Broker. Landlord and Tenant each represents that, except for Mesirow Stein Real
Estate, Inc. (“Broker”) and McCall & Almy, it has not dealt with any real
estate broker, salesperson or finder in connection with this Second Amendment
and no such person initiated or participated in the negotiation of this Second
Amendment or is entitled to any fee or commission in connection herewith.
Landlord and Tenant each hereby agrees to indemnify and hold the other party,
its agents and employees harmless from and against any and all damages,
liabilities, claims, actions, costs and expenses (including attorneys’ fees)
arising from either (i) any claims or demands of any broker, other than Broker,
salesperson or finder retained by the indemnifying party for any fee or
commission alleged to be due such broker, salesperson or finder in connection
with this Second Amendment or (ii) a claim of, or right to, any lien under the
Statutes of the State of Illinois relating to real estate broker liens with
respect to any such broker, salesperson or finder retained by the indemnifying
party. Landlord agrees to pay any fee or commission that may be due to Broker
in connection with this Second Amendment.

6.   
Binding Effect; Conflict.
The Lease, as amended hereby, shall continue in full force and effect, subject
to the terms and provisions thereof and hereof. In the event of any conflict
between the terms of the Lease and the terms of this Second Amendment, the
terms of this Second Amendment shall control. This Second Amendment shall be
binding upon and inure to the benefit of Landlord, Tenant and their respective
successors and permitted assigns.

IN WITNESS WHEREOF, this Second Amendment is
executed as of the day and year aforesaid.

 

	
  TENANT:

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HOUGHTON MIFFLIN COMPANY, a
  Massachusetts corporation

  	
  DAVIS CHURCH OFFICE DEVELOPMENT,
  L.L.C., a Delaware limited liability company  

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Mesirow Stein Development Services, Inc., 

  
	
  By:

  	
  /s/ Paul D. Weaver

  	
   

  	
   an Illinois
  corporation, Its Member  

  
	
  Its:

  	
  General Counsel

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  Michael Szkatulski

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Michael Szkatulski

  
	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
  Managing Director

  
							

 

 

2EXHIBIT 10.19

 

OFFICE LEASE

 

BY AND BETWEEN

 

DAVIS CHURCH OFFICE DEVELOPMENT, L.L.C.

AS LANDLORD,

 

AND

 

HOUGHTON MIFFLIN COMPANY,

AS TENANT

 

EVANSTON, ILLINOIS

 

 

TABLE OF CONTENTS

 

ARTICLE

	
  1.

  	
  BASIC
  LEASE PROVISIONS

  
	
   

  	
  A.

  	
  Premises
  Location

  
	
   

  	
  B.

  	
  Rentable Square
  Feet of the Premises

  
	
   

  	
  C.

  	
  Rentable
  Square Feet of the Building

  
	
   

  	
  D.

  	
  Tenant’s Proportionate Share

  
	
   

  	
  E.

  	
  Term

  
	
   

  	
  F.

  	
  Commencement
  Date

  
	
   

  	
  G.

  	
  Expiration
  Date

  
	
   

  	
  H.

  	
  Projected Final
  Delivery Date

  
	
   

  	
  I.

  	
  Base Rent

  
	
   

  	
  J.

  	
  Broker(s)

  
	
   

  	
  K.

  	
  Retail Area

  
	
  2.

  	
  LEASE OF PREMISES

  
	
  3.

  	
  DESCRIPTION OF THE PROJECT,
  BUILDING, PREMISES AND COMMON AREAS

  
	
   

  	
  A.

  	
  The Project

  
	
   

  	
  B.

  	
  The Building

  
	
   

  	
  C.

  	
  The Premises;
  Rentable Square Feet

  
	
   

  	
  D.

  	
  The Common
  Areas

  
	
  4.

  	
  TERM AND
  POSSESSION

  
	
   

  	
  A.

  	
  Commencement and
  Expiration

  
	
   

  	
  B.

  	
  Construction of
  Landlord’s Work

  
	
   

  	
  C.

  	
  “As Is”; Landlord
  Warranty

  
	
   

  	
  D.

  	
  Early Occupancy

  
	
  5.

  	
  RENT

  
	
   

  	
  A.

  	
  Definitions

  
	
   

  	
  B.

  	
  Components
  of Rent

  
	
   

  	
  C.

  	
  Payment of
  Rent

  
	
   

  	
  D.

  	
  Audit Rights

  
	
   

  	
  E.

  	
  Reimbursement of
  Excess Expenses

  
	
   

  	
  F.

  	
  Tax Contests

  
	
  6.

  	
  USE

  	
   

  
	
  7.

  	
  CONDITION
  OF PREMISES

  
	
  8.

  	
  BUILDING
  SERVICES

  
	
   

  	
  A.

  	
  Basic
  Services

  
	
   

  	
  B.

  	
  Electricity

  
	
   

  	
  C.

  	
  Telephones

  
	
   

  	
  D.

  	
  Additional
  Service; Supplemental Air Conditioning Units

  
	
   

  	
  E.

  	
  Failure or
  Delay in Furnishing Services

  

 

i

 

	
   

  	
  F.

  	
  Holidays

  
	
   

  	
  G.

  	
  Operating
  Standards

  
	
  9.

  	
  RULES AND REGULATIONS

  
	
  10.

  	
  CERTAIN RIGHTS
  RESERVED TO LANDLORD

  
	
  11.

  	
  MAINTENANCE
  AND REPAIRS

  
	
   

  	
  A.

  	
  Tenant’s
  Obligations

  
	
   

  	
  B.

  	
  Landlord’s
  Obligations

  
	
  12.

  	
  ALTERATIONS

  
	
   

  	
  A.

  	
  Requirements

  
	
   

  	
  B.

  	
  Liens

  
	
   

  	
  C.

  	
  Reasonable
  Consent

  
	
   

  	
  D.

  	
  Non-Structural
  Alterations

  
	
   

  	
  E.

  	
  Alterations to Storage
  Area

  
	
  13.

  	
  INSURANCE

  
	
   

  	
  A.

  	
  Tenant’s
  Insurance

  
	
   

  	
  B.

  	
  Landlord’s
  Insurance

  
	
   

  	
  C.

  	
  Risk of Loss

  
	
   

  	
  D.

  	
  General
  Waiver

  
	
  14.

  	
  TENANT’S RESPONSIBILITIES

  
	
   

  	
  A.

  	
  Waiver of
  Claims

  
	
   

  	
  B.

  	
  Indemnity

  
	
   

  	
  C.

  	
  Indemnity
  by Landlord

  
	
   

  	
  D.

  	
  Landlord’s
  Negligence

  
	
  15.

  	
  DAMAGE OR DESTRUCTION
  BY CASUALTY

  
	
   

  	
  A.

  	
  Termination of Lease, Repair
  by Landlord

  
	
   

  	
  B.

  	
  Repair by
  Tenant

  
	
   

  	
  C.

  	
  Abatement
  of Rent

  
	
   

  	
  D.

  	
  Untenantability

  
	
   

  	
  E.

  	
  Core and Shell

  
	
  16.

  	
  EMINENT DOMAIN

  
	
   

  	
  A.

  	
  Substantial
  Taking

  
	
   

  	
  B.

  	
  Taking of Part

  
	
   

  	
  C.

  	
  Compensation

  
	
  17.

  	
  ASSIGNMENT AND SUBLETTING

  
	
   

  	
  A.

  	
  Prohibitions

  
	
   

  	
  B.

  	
  Continuing
  Liability

  
	
   

  	
  C.

  	
  Notice
  of Proposed Assignment of Subletting

  
	
   

  	
  D.

  	
  Grounds for
  Withholding Consent

  
	
   

  	
  E.

  	
  Excess
  Rent Payment

  
	
   

  	
  F.

  	
  Lease
  Assumption; Subtenant Attornment

  

 

ii

 

	
   

  	
  H.

  	
  Corporation,
  Partnership and Limited Liability Company Transfers

  
	
   

  	
  I.

  	
  Permitted
  Transfers

  
	
  18.

  	
  SURRENDER

  
	
  19.

  	
  DEFAULTS
  AND REMEDIES

  
	
   

  	
  A

  	
  Evidence
  of Default

  
	
   

  	
  B.

  	
  Right of Re-Entry

  
	
   

  	
  C.

  	
  Termination of
  Right to Possession

  
	
   

  	
  D.

  	
  Termination
  of Lease

  
	
   

  	
  E.

  	
  Other
  Remedies

  
	
   

  	
  F.

  	
  Bankruptcy

  
	
   

  	
  G.

  	
  Waiver
  of Trial by Jury

  
	
   

  	
  H.

  	
  Venue

  
	
   

  	
  I.

  	
  Landlord
  Default

  
	
  20.

  	
  HOLDING OVER

  
	
  21.

  	
  CERTAIN REGULATORY MATTERS

  
	
   

  	
  A.

  	
  Hazardous
  Substances

  
	
   

  	
  B.

  	
  Landlord Responsibility

  
	
   

  	
  C.

  	
  Americans With Disabilities
  Act

  
	
   

  	
  D.

  	
  Environmental
  Laws

  
	
  22.

  	
  ESTOPPEL
  CERTIFICATE

  
	
  23.

  	
  SUBORDINATION

  
	
   

  	
  A.

  	
  Subordination
  of Lease

  
	
   

  	
  B.

  	
  Rights
  of Successors

  
	
   

  	
  C.

  	
  Subordination of Mortgage

  
	
  24.

  	
  QUIET ENJOYMENT

  
	
  25.

  	
  BROKER

  
	
  26.

  	
  NOTICES

  
	
  27.

  	
  BASE BUILDING;
  TENANT IMPROVEMENTS

  
	
   

  	
  A.

  	
  Landlord’s Work

  
	
   

  	
  B.

  	
  Substantially Complete

  
	
   

  	
  C.

  	
  Holdover
  Costs

  
	
   

  	
  D.

  	
  Milestone
  Dates

  
	
  28.

  	
  MISCELLANEOUS

  
	
   

  	
  A.

  	
  Successors
  and Assigns

  
	
   

  	
  B.

  	
  Entire Agreement

  
	
   

  	
  C.

  	
  Time of
  Essence

  
	
   

  	
  D.

  	
  Execution
  and Delivery

  
	
   

  	
  E.

  	
  Severability

  
	
   

  	
  F.

  	
  Governing Law

  
	
   

  	
  G.

  	
  Attorneys’
  Fees

  

 

iii

 

	
   

  	
  H.

  	
  Tenant; Joint and Several
  Liability

  
	
   

  	
  I.

  	
  Force Majeure

  
	
   

  	
  J.

  	
  Captions

  
	
   

  	
  K.

  	
  No Waiver

  
	
   

  	
  L.

  	
  Landlord

  
	
   

  	
  M.

  	
  Landlord Access to
  Premises

  
	
   

  	
  N.

  	
  Limitation of Liability

  
	
  29.

  	
  CERTAIN RIGHTS TO
  LEASE VACANT SPACE

  
	
   

  	
  A.

  	
  Exercise

  
	
   

  	
  B.

  	
  Vacant Space Exercise
  Notice

  
	
   

  	
  C.

  	
  Conditions
  to Exercise

  
	
   

  	
  D.

  	
  Terms of Lease

  
	
   

  	
  E.

  	
  Amendment

  
	
  30.

  	
  RIGHT OF
  FIRST OFFER

  
	
   

  	
  A.

  	
  Notice

  
	
   

  	
  B.

  	
  Exercise

  
	
   

  	
  C.

  	
  Entire Space

  
	
   

  	
  D.

  	
  Conditions
  to Exercise

  
	
   

  	
  E.

  	
  Terms of Lease

  
	
   

  	
  F.

  	
  Possession

  
	
   

  	
  G.

  	
  Other Rights

  
	
   

  	
  H.

  	
  First
  Offer Period

  
	
  31.

  	
  EXPANSION
  OPTIONS

  
	
   

  	
  A.

  	
  Exercise
  Dates

  
	
   

  	
  B.

  	
  Designation of
  Expansion Space

  
	
   

  	
  C.

  	
  Conditions to Exercise

  
	
   

  	
  D.

  	
  Addition of Expansion
  Space

  
	
   

  	
  E.

  	
  Amendment

  
	
   

  	
  F.

  	
  Possession

  
	
  32.

  	
  RENEWAL OPTIONS

  
	
   

  	
  A.

  	
  Exercise

  
	
   

  	
  B.

  	
  Conditions
  to Exercise

  
	
   

  	
  C.

  	
  Base Rent

  
	
   

  	
  D.

  	
  Amendment

  
	
   

  	
  E.

  	
  No
  Further Extensions

  
	
  33.

  	
  MARKET
  RENTAL RATE

  
	
   

  	
  A.

  	
  Definition

  
	
   

  	
  B.

  	
  Arbitration

  
	
  34.

  	
  PARKING

  
	
   

  	
  A.

  	
  At-Grade
  Spaces

  

 

iv

 

	
   

  	
  B.

  	
  Building Parking Garage

  
	
   

  	
  C.

  	
  Offsite
  Parking

  
	
   

  	
  D.

  	
  Expansion

  
	
  35.

  	
  SIGNAGE

  
	
   

  	
  A.

  	
  Tenant’s
  Signage

  
	
   

  	
  B.

  	
  Other
  Exterior Signage

  
	
  36.

  	
  RETAIL AREA

  

 

EXHIBITS:

 

	
  EXHIBIT A

  	
  -

  	
  PREMISES
  FLOOR PLANS

  
	
  EXHIBIT B

  	
  -

  	
  SQUARE FOOTAGE CALCULATIONS

  
	
  EXHIBIT C

  	
  -

  	
  BUILDING
  FLOOR PLANS

  
	
  EXHIBIT D

  	
  -

  	
  LEGAL
  DESCRIPTION

  
	
  EXHIBIT E

  	
  -

  	
  PRO
  FORMA RENTAL RATES

  
	
  EXHIBIT F

  	
  -

  	
  CLEANING
  SPECIFICATIONS

  
	
  EXHIBIT G

  	
  -

  	
  OPERATING
  STANDARDS

  
	
  EXHIBIT H

  	
  -

  	
  RULES
  AND REGULATIONS

  
	
  EXHIBIT I

  	
  -

  	
  FF&E CATEGORIES

  
	
  EXHIBIT J

  	
  -

  	
  PLAN
  DEVELOPMENT DRAWINGS AND SHELL AND CORE DESCRIPTION

  
	
  EXHIBIT K

  	
  -

  	
  WORKLETTER
  AGREEMENT

  
	
  EXHIBIT L

  	
  -

  	
  COMPLETION
  GUARANTY

  
	
  EXHIBIT M

  	
  -

  	
  PARKING LEASE

  
	
  EXHIBIT N

  	
  -

  	
  RETAIL SIGNAGE GUIDELINES

  

 

v

OFFICE LEASE

 

THIS OFFICE
LEASE (“LEASE”) is made as of the        
day of August, 2000 (“LEASE DATE”), between DAVIS CHURCH OFFICE DEVELOPMENT,
L.L.C., a Delaware limited liability company (“LANDLORD”), and HOUGHTON MIFFLIN
COMPANY, a Massachusetts corporation (“TENANT”).

 

1. BASIC LEASE PROVISIONS. The basic terms of this
Lease are known as the “BASIC LEASE PROVISIONS”, which are set forth below:

 

A. PREMISES
LOCATION: The portions of Floors 1 and 3 of the
Building and all of floors 4, 5 and 6 of the Building, which are depicted on the
floor plans for the Premises attached to this Lease as EXHIBIT A (“OFFICE
PREMISES”), subject to increase pursuant to any expansion rights of Tenant set
forth in this Lease, and the portion of the basement of the Building which is
depicted on Exhibit A attached to this Lease (“STORAGE AREA:).

 

B. RENTABLE
SQUARE FEET OF THE PREMISES: Initially the Premises
shall contain 139,056 Rentable Square Feet, consisting of 137,295 Rentable
Square Feet in the Office Premises and 1,761 Rentable Square Feet in the Storage
Area, calculated in accordance with the Building Owners and Management
Association International Methods of Measurements - ANSI/BOMAZ65.1 1996
(“BOMA”), as modified with respect to the Building and Premises to reflect
re-apportioned Building Common Areas in accordance with the methodology
utilized in EXHIBIT B attached to this Lease, which contains a summary, on a
floor by floor basis of the Rentable Square Feet of the Building and the
Rentable Square Feet of the Premises. The Rentable Square Feet of the Office
Premises shall be subject to increase in accordance with any expansion rights
granted Tenant in this Lease. Tenant acknowledges that Landlord’s architect has
provided its auto-cad electronic files (“AUTO-CAD FILES”) to Tenant’s architect
confirming the Rentable Square Feet of the Building and Premises shown on
EXHIBIT B, and that Tenant’s architect and Tenant have confirmed the accuracy
of, and approved EXHIBIT B.

 

C. RENTABLE
SQUARE FEET OF THE BUILDING: 195,245 Rentable Square
Feet, measured in accordance with BOMA, as modified with respect to the
Building and Premises to reflect re-apportioned Building Common Areas in
accordance with the methodology utilized in EXHIBIT B attached to this Lease,
subject to adjustment in accordance with Section 3. A copy of the current floor
plans for all floors of the Building are attached to this Lease as EXHIBIT C
and a summary of the number of Rentable Square Feet for each floor of the
Building is contained in EXHIBIT B.

 

D. TENANT’S
PROPORTIONATE SHARE: The percentage obtained from time
to time by dividing (i) the Rentable Square Feet of the Office Premises by (ii)
an

 

 

amount equal
to the Rentable Square Feet of the Building (excluding the Retail Area),
subject to adjustment as hereinafter provided. Tenant’s Proportionate Share
shall initially be Seventy and 32/100 percent (70.32%). 

 

E. TERM: Fifteen
(15) Years, beginning with the Commencement Date and ending with the Expiration
Date (provided, however, that if the Commencement Date is a date other than the
first day of a calendar month, the Term shall commence on the Commencement Date
but shall end on the date which is fifteen (15) years following the first day
of the calendar month immediately succeeding the Commencement Date), subject to
any extension rights provided in this Lease.

 

F.
COMMENCEMENT DATE: April 1, 2002, subject to
adjustment as hereinafter provided in Section 4.E, and subject to Tenant’s
early access rights under the Workletter Agreement (as defined in Section 27)
and in Section 4.D. 

 

G. EXPIRATION
DATE: The date which is fifteen (15) years following
the Commencement Date (or if the Commencement Date is a date other than the
first day of any calendar month, the date which is fifteen (15) years following
the first day of the calendar month immediately succeeding the Commencement
Date), subject to adjustment as hereinafter provided. 

 

H. PROJECTED
FINAL DELIVERY DATE: April 12, 2002.

 

I. BASE RENT:
As provided in Section 5.

 

J. BROKER(S):
Montero Partners Ltd.

 

K. RETAIL AREA:
That portion of the first floor of the office building within which the
Premises is located to be utilized for retail uses, located on the ground floor
thereof, and consisting of twelve thousand four hundred ninety eight (12,498)
Rentable Square Feet, subject to adjustment as hereinafter provided. 

 

2. LEASE OF PREMISES. Landlord, in consideration of the
rents and covenants hereinafter set forth, does hereby demise, let and lease to
Tenant, and Tenant does hereby hire, take and lease from Landlord, on the terms
and conditions hereinafter set forth, the Premises described in Section 3.C, to
have and to hold the same, with all appurtenances, unto the Tenant for the Term
herein specified.

 

3. DESCRIPTION OF THE PROJECT, BUILDING, PREMISES
AND COMMON AREAS.

 

A. THE PROJECT.
The term “PROJECT” means that certain office building project and appurtenant
improvements (excluding the Retail Area) to be situated on certain land (the
“LAND”) in the City of Evanston, Illinois, located between Church and Davis 

 

2

 

Streets, which
land is legally described in EXHIBIT D attached to this Lease. Landlord’s
obligations with respect to the construction of the Project are set forth in
and governed by Section 27. 

 

B. THE
BUILDING. The term “BUILDING” means the six story
office building to be located at the Project (excluding, however, the Retail
Area). Any reference in this Lease to the term Building shall include such
office building (other than the Retail Area), the land on which it is located
and the Common Areas (as hereinafter defined in Section 3.D), unless the
context requires otherwise. 

 

C. THE
PREMISES; RENTABLE SQUARE FEET.

 

(i) The term “PREMISES” means initially, the “Office Premises”
consisting of the portions of the Building located on floors 1, 3, 4, 5 and 6,
containing 137,295 Rentable Square Feet as depicted on EXHIBIT A attached to
this Lease and the “Storage Area” consisting of the portion of the basement of
the Building containing 1,761 Rentable Square Feet, depicted on Exhibit A
attached to this Lease. The configuration of the Premises shall be subject to
further adjustment pursuant to the expansion rights set forth in this Lease.

 

(ii) Upon completion of the Design Documents (as defined in Section
27.A) Landlord’s architect shall forward to Tenant and Tenant’s architect the
Design Documents, and if the Rentable Square Feet of the Office Premises,
Storage Area or Building differs from that set forth in Sections 1.B and 1.C as
a result of changes in design of the Building or revised floor plans for the
Building, Landlord’s architect shall forward to Tenant and Tenant’s architect a
revised table showing the rentable square footage of each floor within the
Building, the total rentable square footage of the Building, and the total rentable
square footage of each of the Office Premises and Storage Area, all calculated
in accordance with BOMA, as modified with respect to the Building and Premises
to reflect re-apportioned Building Common Areas in accordance with the
methodology utilized in EXHIBIT B, together with Landlord’s architect’s
Auto-Cad Files for the same, for Tenant and Tenant’s architect’s verification
and approval (such approval not to be unreasonably withheld). As used herein,
the term “RENTABLE SQUARE FEET OF THE OFFICE PREMISES” shall mean 137,295
Rentable Square Feet and the term “RENTABLE SQUARE FEET OF THE STORAGE AREA”
shall mean 1,761 Rentable Square Feet, or if there are changes necessitated by
the Design Documents, that number of rentable square feet in the Office Premises
and/or Storage Area as determined by Landlord’s architect and set forth in the
table delivered to Tenant and Tenant’s architect pursuant to the immediately
preceding sentence and approved by Tenant and Tenant’s architect, calculated in
accordance with the methodology utilized in EXHIBIT B, all subject to
adjustments for expansion rights provided in this Lease, and subject to
adjustments as hereinafter provided. In addition, as used herein, the “RENTABLE
SQUARE FEET OF THE BUILDING” shall mean 195,245 Rentable Square Feet, or if
there are changes necessitated by the Design 

 

3

 

Documents,
that number of rentable square feet in the Building as determined by Landlord’s
architect and set forth in the table provided to and approved by Tenant and
Tenant’s architect pursuant to this Section 3.C (ii), as calculated in
accordance with the methodology used in EXHIBIT B and subject to adjustment as
hereinafter provided. At the request of Tenant’s architect, Landlord’s
architect shall provide to Tenant’s architect copies of shop drawings and such
other documentation as Tenant’s architect may reasonably require. If the
Rentable Square Feet of the Office Premises and/or Storage Area and the
Rentable Square Feet of the Building as shown in the Design Documents differs
from that set forth in Sections 1.B and 1.C, then upon verification of the
revised Rentable Square Feet of the Building and the Rentable Square Feet of
the Office Premises and/or Storage Area by Tenant’s architect and approval of
the revisions by Tenant (such approval not to be unreasonably withheld),
Landlord and Tenant shall enter into an amendment to this Lease, designating
such square footage as well as the revised Tenant’s Proportionate Share (although
no changes to Tenant’s Proportionate Share shall be required as a resulting of
changes to the Rentable Square Feet of the Storage Area). 

 

(iii) If after determination of the Rentable Square Feet of the
Building and the Rentable Square Feet of the Office Premises and Storage Area
pursuant to Section 3.C(ii), additional changes are made to the Design
Documents, or any other changes are made to the configuration of the Premises
and/or Building, Landlord’s architect shall provide Tenant and Tenant’s architect
with revised calculations of the Rentable Square Feet of the Building and the
Rentable Square Feet of the Office Premises and/or Storage Area, along with its
Auto-Cad Files evidencing the revisions, for Tenant’s architect’s verification
and for Tenant’s approval (not to be unreasonably withheld), and shall also
provide Tenant’s architect with copies of shop drawings and other changes
during construction that relate to such area variances, to enable Tenant’s
architect to perform the verifications. Upon Substantial Completion (as defined
in Section 27), at the request of Landlord or Tenant, Landlord and Tenant shall
enter into an amendment to the Lease confirming the Rentable Square Feet of the
Building, and the Rentable Square Feet of the Office Premises and/or Storage
Area and Tenant’s Proportionate Share, as approved by Tenant based on the final
configuration of the Building and Premises (if changes have been made after
completion of the Design Documents).

 

(iv) If Tenant or Tenant’s architect, after review of the Auto-Cad
Files and other documents provided by Landlord’s architect, disputes whether
Landlord’s architect has properly determined the Rentable Square Feet of the
Building and the Rentable Square Feet of the Premises in accordance with the
standards of EXHIBIT B, Tenant shall notify Landlord of the dispute, within
five (5) business days following receipt of the applicable determination or
redetermination. If Landlord and Tenant are unable to resolve the dispute
within fifteen (15) days after Tenant’s architect’s receipt of the Auto-Cad
Files, then the parties shall select a third licensed, reputable architect,
with at least ten (10) years experience in office building design in the

 

4

 

Chicago area,
who will review the determination of each party’s architect and make a
determination of the disputed square footage, based on the criteria set forth
in this Section 3 and in EXHIBIT B. If Landlord and Tenant cannot agree upon
the third architect within five (5) days following Tenant’s architect’s receipt
of the applicable Auto-Cad Files, then Landlord and Tenant may petition the
presiding judge of the Circuit Court in Cook County, Illinois, who shall
appoint the third architect based upon the criteria set forth above. The third
architect’s determination shall be binding upon the parties.

 

D. THE COMMON
AREAS. The term “COMMON AREAS” means the “BUILDING
COMMON AREAS” and “PROJECT COMMON AREAS”. The term “BUILDING COMMON AREAS”
means the areas of the interior of the Building which are designated by
Landlord for use in common by or provide services to the tenants and other
occupants of the Building, and their respective employees, agents, customers,
invitees and others, as delineated on EXHIBITS B AND C attached hereto. The
term “PROJECT COMMON AREAS” means the areas of the Project other than the
interior of the Building which are designated by Landlord for use in common by
or to provide services to the tenants and other occupants of the Building and
their respective employees, agents, customers, invitees and others, and
includes, without limitation, private sidewalks, driveways and other areas
located outside the Building designated by Landlord as part of the Project
Common Areas. Landlord reserves the right to modify, alter and otherwise change
the Common Areas from time to time, subject to the terms of Section 27 (i.e.,
regarding Tenant’s right to consent to material Scope Changes as therein
defined) and provided that no such changes shall increase or decrease the
Rentable Square Feet of the Building or Premises or Tenant’s Proportionate
Share, without Tenant’s prior approval.

 

4.             TERM AND
POSSESSION.

 

A.
COMMENCEMENT AND EXPIRATION. The term of this Lease
(sometimes referred to herein as the “TERM”) shall be the period of time
specified in Section 1. Except as hereinafter provided, the Term shall commence
on the Commencement Date (as adjusted pursuant to Section 4.E) and shall expire
without notice to Tenant on the Expiration Date, as the same may be extended by
renewal options provided herein. If Landlord’s Work (as defined in Section 27)
has not been Substantially Completed on or before the Projected Final Delivery
Date set forth in Section 1, then, except as provided in Sections 27.C. and
27.D., Landlord shall not be liable or responsible for any claims, damages or
liabilities in connection therewith or by reason thereof. Upon the
determination of the actual Commencement Date and Expiration Date of the Term
in accordance with this Section 4., at either Landlord’s or Tenant’s request,
Landlord and Tenant shall promptly execute and deliver a commencement
certificate confirming the Commencement Date and the Expiration Date.

 

B.
CONSTRUCTION OF LANDLORD’S WORK. Landlord will perform
or cause to be performed Landlord’s Work, which work shall be performed in
accordance with the terms of Section 27. When applicable, at Landlord’s or
Tenant’s request, Landlord and

 

5

 

Tenant shall
enter into a written agreement containing Tenant’s acknowledgment that the
“Substantial Completion” requirements set forth in Section 27 have been meet.

 

C. “AS IS”;
LANDLORD WARRANTY. Except for Landlord’s obligation to
perform Landlord’s Work as set forth in Section 27, the warranties hereinafter
set forth, any punchlist items determined pursuant to the procedures of the
Workletter Agreement and subject to Section 7, Tenant shall accept the Premises
and Building, except as set forth in this Section 4.C, “as is”, and Tenant
acknowledges that Landlord has made no representations or warranties as to the
condition of the Premises or the Building, express or implied, and that
Landlord shall not be required to make any improvements to the Premises or the
Building to ready the same for Tenant’s occupancy, except as expressly set
forth this Lease. Except for Landlord’s performance of Landlord’s Work, all
work desired by Tenant of the Premises to ready the same for Tenant’s initial
occupancy shall be performed by Tenant in accordance with the terms and conditions
of Section 12. The acceptance, by Tenant of the Building “as is”, shall not,
however, relieve Landlord from any of Landlord’s repair or maintenance
obligations with respect to the Building under this Lease. Landlord shall,
however, procure from its contractors and subcontractors, and make Tenant an
intended third party beneficiary of, all warranties received by Landlord from
the contractor, subcontractors, and suppliers performing the Tenant
Improvements (as defined in Section 27) (collectively, the “CONTRACTOR
WARRANTIES”) required by the Construction Documents (as defined in the
Workletter Agreement) and, in addition, Landlord shall upon Substantial
Completion, provide Tenant with a one (1) year warranty with respect to the
construction of the Landlord’s Work from Landlord which shall be identical in
form and substance to the warranty received by Landlord from its general
contractor with respect to Landlord’s Work (“LANDLORD WARRANTY”). In addition,
Landlord shall, at Tenant’s request, upon expiration of the Landlord Warranty,
assign to Tenant all unexpired Contractor Warranties and shall diligently
enforce all Contractor Warranties which have not been assigned to Tenant.

 

D. EARLY
OCCUPANCY. In addition to Tenant’s rights of early
access for installation of FF&E (as hereinafter defined in Section 18)
under Section 15 of the Workletter Agreement, the parties anticipate that prior
to the Commencement Date, Landlord shall Substantially Complete certain floors
within the Premises (each such Substantially Completed floor, “EARLY OCCUPANCY
SPACE”) in accordance with the construction delivery schedule (“DELIVERY
SCHEDULE”) attached to the Workletter Agreement as Schedule 2 and that certain
of the Floors will be Substantially Completed after the Commencement Date, all
as more particularly shown on the Delivery Schedule. If the Early Occupancy
Space may be occupied by Tenant and utilized by Tenant for the purposes
permitted under this Lease without violating any applicable legal requirements,
Tenant may elect to occupy the Early Occupancy Space as of the date the Early
Occupancy Space is Substantially Complete. Tenant’s occupancy of the Early
Occupancy Space prior to the Commencement Date pursuant to this Section 4.D
shall be upon and subject to all of the terms and provisions of this Lease,
except for the obligation to pay Base Rent (hereinafter defined), Taxes
(hereinafter defined) and Excess Expenses (hereinafter defined) for the Early
Occupancy Space, provided, however, that Tenant shall reimburse Landlord for all
Expenses incurred by Landlord attributable to the

 

6

 

Early
Occupancy Space for the period prior to the Commencement Date, within thirty
(30) days following Landlord’s written request, accompanied by invoices
evidencing the amounts incurred, and provided further, however, that occupancy
of any Early Occupancy Space prior to the Commencement Date shall not otherwise
affect the determination of the Commencement Date or the Expiration Date.

 

E. ADJUSTMENTS.
If Landlord fails to Substantially Complete Landlord’s Work for any of the
floors within the Premises and to deliver possession thereof to Tenant on or
before the projected delivery date (“PROJECTED DELIVERY DATE”) for the
applicable floor set forth in the Delivery Schedule, for any reason other than
Tenant Delay (as defined in Section 27), in addition to Tenant’s rights under
Sections 27.C and 27.D, if applicable, the Commencement Date shall be extended
by the number of days (rounded up or down to the nearest full day) which is
equal to (i) the sum, calculated on a floor by floor basis, of the number of
days of delay for each floor, multiplied by a fraction which has as its
numerator the number of Rentable Square Feet of the floor and its denominator
the number of Rentable Square Feet of the Premises, less (ii) the sum,
calculated on a floor by basis, of the number of days Landlord Substantially
Completes and delivers to Tenant any floor prior to its Projected Delivery
Date, multiplied by a fraction which has as its numerator the number of
Rentable Square Feet of the floor, and its denominator the number of Rentable
Square Feet of the Premises. In no event shall the Commencement Date occur
prior to April 1, 2002, regardless of the date of delivery of the Premises, or
applicable portions thereof.

 

5.             RENT.

 

A. DEFINITIONS.
For purposes of this Lease, the following terms shall have the following
meanings:

 

(i) “EXPENSES” shall mean any and all direct expenses, costs and
disbursements (other than Taxes) incurred by Landlord in connection with the
Project and the ownership management, maintenance, operation, replacement
and/or repair of the Project, including the Building, the Premises and the
Common Areas. Expenses shall also include, without limitation, all expenses
allocated to the Building and Project under any declaration of covenants or
other recorded instrument to which the Building and Project are from time to
time subject and all insurance procured by Landlord with respect to the
Building, Tenant Improvements and Project. Expenses shall not include: 

 

(1) costs or other items included within the meaning of the term
“TAXES” (as hereinafter defined) or any type of taxes specifically excluded
from the definition of “TAXES” hereunder; 

 

(2) any cost or expense to the extent to which Landlord is paid or
reimbursed (other than as a payment for Expenses), including but not
necessarily limited to, (1) work or service performed for any tenant (including
Tenant) at such tenant’s cost, (2) the cost of any item for which Landlord is

 

7

 

paid or
reimbursed by insurance, warranties, service contracts, condemnation proceeds,
insurance reimbursements or otherwise, (3) increased insurance assessed
specifically to any tenant of the Building, (4) charges (including applicable
taxes) for electricity, water and other utilities for which Landlord is
entitled to reimbursement from any tenant, and (5) the cost of any HVAC,
janitorial or other services provided to tenants on an extra-cost basis after
regular business hours;

 

(3) the cost of installing, operating and maintaining any special
service, such as an observatory, broadcasting facilities, luncheon club,
athletic or recreation club;

 

(4) the cost of correcting defects in the design, construction or
equipment of the Building, or any latent defect in any of the foregoing
discovered throughout the Term of this Lease or of any other work which
Landlord is obligated to perform pursuant to this Lease (unless such defect is
attributable to any act or omission of Tenant or the result of normal wear and
tear or usage); 

 

(5) salaries and bonuses of officers, executives of Landlord and
administrative employees above the grade of property manager or building
supervisor, and if a property manager or building supervisor or any personnel
below such grades are shared with other buildings or has other duties not
related to the Building, only the allocable portion of such person or persons
salary shall be included in Expenses;

 

(6) the cost of any work or service performed on an extra-cost basis
for any tenant of the Building (including Tenant) or any costs in connection
with services or benefits which are provided to or for the benefit of other
tenants but not offered to Tenant;

 

(7) the cost of any work or service performed for any facility other
than the Building and/or Project;

 

(8) the cost, including increased real estate taxes and other operating
expenses, related to any additions (as opposed to renovations) to the Building
after the original construction;

 

(9) interest on debt or principal amortization payments or any other
payments on any mortgage or any payments under any ground lease;

 

(10) any fees, costs, and commissions incurred in procuring or
attempting to procure other tenants including, but not necessarily limited to

 

8

 

brokerage
commissions, finders fees, attorneys’ fees and expenses, entertainment costs
and travel expenses;

 

(11) any cost included in Expenses representing an amount paid to a
person, firm, corporation or other entity related to Landlord which is in
excess of the amount which would have been paid on an arms length basis in the
absence of such relationship;

 

(12) any costs of painting or decorating of any interior parts of the
Building occupied or occupiable by tenants;

 

(13) any cost or expense which is applicable to or incurred for the
Building Parking Garage (as defined in Section 34) or any costs of personnel
used to park cars, collect money or provide special security, and garage
management fees;

 

(14) Landlord’s general overhead, provided that Expenses shall include
the costs of operating the leasing/management office of the Building (provided
that there shall not be more than one (1) such office);

 

(15) the cost of initial cleaning of, and rubbish removal from, the
Building to be performed prior to final completion of the Base Building Work or
to the completion of any tenant’s space, including Tenant’s;

 

(16) with exception of those items specifically referred to as an inclusion
or hereinafter described, the cost of any repairs, alterations, additions,
improvements, changes, replacements, compliance expenses or other items which
under generally accepted accounting principles are properly classified as
capital expenses;

 

(17) lease payments for rental equipment which would constitute a major
capital expenditure if the equipment were purchased (unless such capital
expenditure is otherwise specifically included within Expenses);

 

(18) the cost of acquiring sculptures, paintings and other objects of
art;

 

(19) the cost of advertising or promotion for the Building;

 

(20) depreciation of the Building or any part thereof;

 

(21) replacement or contingency reserves;

 

(22) expenses for renovating tenant space;

 

9

 

(23) accounting and bookkeeping services, except to the extent included
in the management fee for the Project;

 

(24) legal or other professional fees related to leasing, financing,
tenant disputes or other services not related to the normal maintenance,
cleaning, repair or protection of the Building;

 

(25) any compensation paid to personnel in retail concessions operated
by Landlord;

 

(26) charitable contributions;

 

(27) any offsite traffic mitigation requirements including traffic
lights;

 

(28) Any charge for Landlord’s income taxes, corporate excise taxes,
excess profit taxes or franchise taxes; and

 

(29) management fees in excess of market rate management fees
customarily charged by third party managers for buildings comparable to the
Building. Management fees charged pursuant to any arrangement approved by
Tenant under Section 8.H, shall be deemed to be “market rate”.

 

Notwithstanding
anything contained in the above definition of Expenses to the contrary:

 

The cost of
any capital improvements, repairs, alterations, additions, changes,
replacements, or compliance expenses (collectively, “CAPITAL IMPROVEMENTS”) to
the Building made after construction of the Building which are intended in good
faith to reduce Expenses (and are made pursuant to sound management practices)
or which are required under any governmental laws, rules, regulations, orders
or ordinances which were not applicable to the Building as of the date the City
approved the final plans for the construction of the Building, or which are
intended to enhance the safety of the Building or its occupants, shall be
included in Expenses in the year of installation and subsequent calendar years
as hereinafter provided. In any calendar year, the portion includable in
Expenses shall be the annual amortization of the cost, using as the
amortization period the useful life of the applicable Capital Improvements,
together with interest at the rate of ten percent (10%) per annum on the
unamortized cost of the applicable Capital Improvements, or if Landlord has
financed the Capital Improvements, at the rate charged to Landlord (without
mark-up). In the case of loss or damage to the Building due to fire or other
casualty, the costs of repairing, restoring or replacing any portion of the Building
which constitute Capital Improvements shall be included in Expenses, but only
to the extent of deductible or other uncollectible amounts under insurance
policies.

 

10

 

(ii) “EXCESS EXPENSES” shall mean for any full or partial calendar year
during the Term that the Building is not fully leased and occupied by tenants
paying rent, the Expenses for such calendar year, multiplied by a fraction
which has as its numerator the number of Rentable Square Feet of the Building
which have not been leased to Tenant under this Lease and are not being leased
to any other party, where such party is in possession and paying rent,
including any space which has previously been leased to a third party tenant,
where the lease has been terminated prior to its stated expiration, as a result
of a default by the tenant thereunder (but excluding any space leased to any
third party which has terminated on its stated expiration), with the applicable
number of Rentable Square Feet to be determined in accordance with the
methodology utilized in EXHIBIT B (such space being referred to herein as the
“UNLEASED SPACE”) (provided that the Rentable Square Feet of the Unleased Space
shall be calculated on a weighted average basis if any such space which was
Unleased Space at the beginning of the calendar year for which Excess Expenses
are being calculated becomes leased and the tenant thereof is in possession and
commences paying rent during such calendar year or if previously leased space becomes
Unleased Space as a result of the termination of a lease prior to its stated
expiration arising from the tenant’s default) and as its denominator the
Rentable Square Feet of the Building. Excess Expenses shall no longer accrue or
be calculated, and Tenant’s obligations with respect to payment thereof under
Section 5.B(ii) shall terminate, from and after the date all of the Unleased
Space has been initially leased and is occupied by tenants paying rent unless
any such lease has terminated prior to the expiration of its stated term as a
result of the tenant’s default, in which case the space which was the subject
of the terminated lease will revert back to, and become Unleased Space but only
through the expiration of the stated term of the initial lease.

 

(iii) “LEASE YEAR” shall mean the following designated periods: if the
Commencement Date is the first day of a calendar month, the period of twelve
(12) consecutive months commencing on the Commencement Date; if the
Commencement Date is not the first day of a calendar month, the period
commencing with the Commencement Date and ending on the last day of the twelfth
(12th) full calendar month of the Term; and, in either case, each consecutive
twelve (12) month period (or portion thereof) falling within the Term.

 

(iv) “RENT” shall mean Base Rent, Additional Rent (as hereinafter
defined), and any other sums or charges due from Tenant under this Lease.

 

(v) “TAXES” shall mean all taxes, assessments and fees levied upon the
Building and/or Land or the property of Landlord located therein, by any
governmental entity based upon the ownership, leasing, renting or operation of
the Building, including all costs and expenses of protesting any taxes,
assessments or fees other than costs Tenant is obligated to pay directly
pursuant to Section 5.G. Taxes shall not include any net income, capital stock,
succession, transfer, franchise, gift,

 

11

 

estate or
inheritance taxes of Landlord; provided, however, if at any time during the
Term, a tax or excise on rental income or any other tax is levied or assessed
by any governmental entity, which tax or excise is enacted in lieu of or as a
substitute for, in whole or proportionately in part, real estate taxes or other
ad valorem taxes, the tax (to the extent it is in lieu of or a substitute for
real estate taxes) shall constitute and be included in Taxes. For the purpose
of determining Taxes for any given year, the amount to be included for the
applicable year shall be Taxes which are assessed or become a lien during the
applicable year (and not Taxes which are due for payment or paid during the
applicable year). Tenant shall have the right to contest Taxes to the extent
hereinafter provided in Section 5.F.

 

B. COMPONENTS
OF RENT. Tenant agrees to pay the following amounts to
Landlord at the office of the Building or at such other place as Landlord
designates:

 

(i) Annual base rent for the Premises (“BASE RENT”) in an amount equal
to (a) the product of the number of Rentable Square Feet of the Office Premises
multiplied by $16.02 (subject to escalation in accordance with the last
sentence of this Section 5.B(i)) plus (b) the applicable annual Storage Area
Base Rent (as hereinafter defined), to be paid in equal monthly installments (subject
to adjustment for any expansion options provided hereunder and as hereinafter
provided ), in advance on or before the first day of each month of the Term,
without notice, offset or demand (prorated for any partial calendar month
occurring during the Term). The annual “Storage Area Base Rent” shall be an
amount per annum equal to: (1) the product of $16.00 and the number of Rentable
Square Feet of the Storage Area during the period from the Commencement Date
until the expiration of the fifth (5th) Lease Year, (2) the product of $16.50
and the number of Rentable Square Feet of the Storage Area during the period
commencing with the sixth (6th) Lease Year and ending on the expiration of the
tenth (10th) Lease Year and (3) the product of $17.00 and the number of
Rentable Square Feet of the Storage Area during the period commencing with the
eleventh (11th) Lease Year and ending on the Expiration Date. On each
anniversary of the Commencement Date (except as otherwise provided in Section
32.C), the Base Rent for the Office Premises shall automatically be increased
to an amount equal to the product of (c) the Base Rent for the Office Premises
for the immediately preceding Lease Year and (d) 1.03.

 

(ii) Additional Rent (“ADDITIONAL RENT”) with respect to the Premises
(other than the Storage Area) in an amount equal to (a) Tenant’s Proportionate
Share of Expenses for any calendar year, (b) Tenant’s Proportionate Share of
Taxes for any calendar year and (c) the Excess Expenses for any calendar year.
On or prior to the Commencement Date, or as soon as is reasonably practicable
thereafter, with respect to the first calendar year, or portion thereof, of the
Term, and thereafter, on or prior to November 1 of each calendar year during
the Term, or as soon as reasonably practicable thereafter, for each calendar
year of the Term following

 

12

 

the first
calendar year, Landlord shall estimate and notify Tenant of the amount of
Additional Rent due for the following calendar year, and Tenant shall pay
Landlord one-twelfth of such estimate on the first day of each month during the
following calendar year. Such estimate may be revised by Landlord whenever it
obtains information relevant to making the estimate more accurate, including,
with respect to Excess Expenses, when Landlord enters into any leases for the
Unleased Space. On or before April 1 of each calendar year during the Term (or
as soon thereafter as is reasonably practicable), Landlord shall deliver to
Tenant a report setting forth the actual Expenses and Taxes for the preceding
calendar year, a statement of the amount of Additional Rent that Tenant has
paid and that was payable for such calendar year, and, if applicable, the
amount of the credit that Tenant is entitled to as a result of Excess Expenses
previously paid, as determined pursuant to Section 5.E., which credit shall be
calculated on a Lease Year (not a calendar year) basis. Tenant acknowledges
that actual Taxes for a calendar year may not be determined until after actual
Expenses for such calendar year are determined. Accordingly, Tenant
acknowledges that Landlord may report the actual Expenses and actual Taxes for
a calendar year separately. Within thirty (30) days after receipt of the report
or reports, whether or not exception is taken thereto, Tenant shall pay to
Landlord the amount of Additional Rent due for the applicable calendar year
minus any payments of Additional Rent made by Tenant for the applicable year,
it being acknowledged by Tenant that if Landlord separately reports actual
Expenses and actual Taxes for a calendar year, Landlord may reasonably allocate
Additional Rent paid by Tenant for the applicable calendar year between
Expenses and Taxes for the applicable calendar year. If Tenant’s estimated payments
of Additional Rent exceed the amount due Landlord for the applicable calendar
year, Landlord shall apply the excess as a credit against Tenant’s other rental
obligations under this Lease or promptly refund the excess to Tenant if the
Term has already expired (except that Landlord may first offset the excess
against any claim for rental or other damages resulting from any default of
Tenant hereunder), in either case without interest to Tenant.

 

C. PAYMENT OF
RENT. As used in this Lease, the term Rent shall mean
the Base Rent, Additional Rent, and any Excess Expenses payable by Tenant to
Landlord pursuant to Sections 5.A. and 5.B. The following provisions shall
govern the payment of Rent: (i) if this Lease commences or ends on a day other
than the first day or last day of a calendar month, respectively, the Rent for
the month in which this Lease so begins or ends shall be prorated accordingly,
and if this Lease commences or ends on a day other than the first day or last
day of a calender year, respectively, the Additional Rent for the year in which
the Lease so begins or ends shall be prorated accordingly based on the number
of days in such calendar year falling within the Term (and the monthly
installments shall be adjusted accordingly); and (ii) all Rent shall be paid to
Landlord without offset or deduction (except as expressly provided herein), and
the covenant to pay Rent shall be independent of every other covenant in this
Lease; (iii) any sum due from Tenant to Landlord or due from Landlord to Tenant
(as the case may be) which is not paid within five (5) days after Tenant’s
receipt of written notice that the same is due shall bear interest from the
date due until the earlier of

 

13

 

(a) the date
which is thirty (30) days following Tenant’s receipt of written notice or (b)
the date paid, at the annual rate of two percentage (2%) points above the rate
then most recently announced by Bank One in Chicago, Illinois as its prime or
corporate base lending rate (“PRIME RATE”), from time to time in effect,
provided further that if the payment is not made on or before the thirtieth
(30th) day following Tenant’s receipt of written notice that the same is due,
from and after the thirtieth (30th) day until the date the delinquent amount is
paid, the sum shall bear interest at the annual percentage rate of three
percentage points (3%) above the Prime Rate from time to time in effect, but in
either case, in no event shall the delinquent amount bear interest at a rate that
is higher than the maximum rate permitted by law (the “DEFAULT RATE”); and, in
addition, Tenant shall pay Landlord a late charge for any Rent payment which is
paid more than five (5) days after Tenant’s receipt of written notice that the
same is due equal to three percent (3%) of the payment (provided, however, that
the late charge shall only be assessed one time for each delinquent payment
under this Lease); (v) if this Lease terminates prior to the determination of
any Additional Rent, Tenant’s agreement to pay any Additional Rent not yet
determined and Landlord’s obligation to refund any Additional Rent collected in
excess of the amounts due from Tenant shall survive the termination of this
Lease (provided that if Tenant is then in default, Landlord may offset the
amounts necessary to cure the default or to otherwise satisfy Landlord’s
damages on account thereof against Landlord’s obligation to refund sums to
Tenant for over-payment of Additional Rent); (vi) Landlord may at any time with
no less than twelve (12) months prior notice to Tenant change the fiscal year
of the Building; (vii) each amount owed to Landlord under this Lease for which
the date of payment is not expressly fixed shall be due on the later of (a) ten
(10) business days after delivery of an invoice therefor and (b) the due date
listed on the statement to Tenant showing the amount is due; and (viii) if
Landlord fails to give Tenant an estimate of Additional Rent prior to the
beginning of any calendar year, Tenant shall continue to pay Additional Rent at
the rate for the previous calendar year until Landlord delivers the estimate,
at which time Tenant shall pay retroactively the increased amount (or deduct
from subsequent payments of Additional Rent any decreased amount) with respect
to all previous months of such calendar year.

 

D. AUDIT
RIGHTS. Tenant shall have the right, at its expense
(except as expressly set forth below), to have its “REPRESENTATIVES”
(hereinafter defined) audit Landlord’s accounting records relative to Expenses
and Taxes during normal business hours at any time within three (3) years
following the furnishing to Tenant of the annual statement(s) of Expenses or
Taxes (as the case may be). Unless Tenant shall take written exception to any
item of Taxes or Expenses, specifying in detail the reasons for the exception
as to a particular item within three (3) years after Tenant’s receipt of
Landlord’s annual statement covering Expenses or Taxes (as the case may be),
Landlord’s statement of Expenses or Taxes, as applicable, shall be considered
as final and accepted by Tenant. For purposes of this Lease, the term
“REPRESENTATIVES” shall mean either a nationally recognized independent
certified public accounting firm licensed to do business in the State of
Illinois, or another accounting firm reasonably acceptable to Landlord, or any
other real estate professionals (with one or more certified public
accountant(s) on staff ) experienced in management of first-class office
buildings and reasonably acceptable to Landlord. If any audit determines that

 

14

 

Landlord’s
annual statement of Expenses or Taxes overstated Tenant’s Additional Rent
attributable to Expenses or Taxes from the actual amount so required hereunder
for any calendar year by an amount in excess of three percent (3%), Landlord
shall be responsible for the prompt payment of reasonable audit fees incurred
by Tenant under this Section 5.D.; otherwise, Tenant shall be responsible for
the costs of the audit and, in addition, Tenant shall pay Landlord, within five
(5) business days after Landlord’s demand therefor, an amount equal to all of
Landlord’s reasonable costs and expenses incurred relative to the audit
performed by Tenant. Landlord shall maintain its books and records in Chicago,
Illinois (or such other location in the Chicago metropolitan area as Landlord
may designate), showing Taxes and Expenses, which books and records shall be
maintained for a period of not less than three (3) years following the date
Landlord delivers to Tenant its annual statement(s) of Taxes and Expenses for
the applicable year. The books and records shall be available for review by
Tenant and/or Tenant’s Representatives at all reasonable times within the
foregoing three (3) year period, upon Tenant’s reasonable prior request
therefor to Landlord.

 

E.
REIMBURSEMENT OF EXCESS EXPENSES. If during any Lease
Year after the Commencement Date, Landlord actually receives triple net income
(after all rent abatement and other concessions are taken into account) from
leases of the space which constituted Unleased Space as of the Commencement
Date, in excess of the pro forma triple net income for the applicable year
(which amount shall be adjusted pro rata for the first Lease Year, if the
Commencement Date is other than the first day of a calendar month) set forth in
EXHIBIT E attached to this Lease (the “EXCESS”), Landlord shall on an annual
basis, in connection with the delivery of the report described in Section
5.b(ii), if and to the extent the Excess is actually received, credit to Tenant
against any Rent then or thereafter due under the Lease from Tenant, an amount
equal to the Excess, until such time as the amount credited to Tenant equals
the Excess Expenses previously paid by Tenant to Landlord pursuant to Section
5.B.

 

F. TAX
CONTESTS. Landlord shall, when Landlord deems it
necessary or appropriate, contest the assessed valuation of the Building, and
Taxes (and the cost thereof shall be included as part of Taxes). In addition,
if Landlord is not contesting and if Tenant requests that Landlord seek a
reduction in the assessed valuation of the Building or contest any Taxes,
Landlord, at Tenant’s expense, shall in good faith and with all due diligence
seek the reduction or contest the Tax, provided that the contest shall not
result in delinquent payment of any Taxes. If Landlord contests Taxes at
Tenant’s request, Tenant shall indemnify, defend and hold Landlord harmless
from and against any and all costs, expenses and the liabilities arising as a
result of the contest. If Landlord does not institute any proceedings within
thirty (30) days following Tenant’s request, then Tenant may bring or carry on
the proceeding in its own name, or Landlord’s name, at Tenant’s sole expense
and Landlord shall, reasonably cooperate with Tenant in connection with the
proceeding to ensure that Taxes for the Building are as low as reasonably
possible.

 

6. USE. Tenant agrees that it shall occupy and use the Office
Premises only as business offices and/or other ancillary uses permitted by law
and consistent with first class

 

15

 

office
buildings in the Chicago area’s north suburban office market, and the Storage
Area only for storage ancillary to Tenant’s use of the Office Premises and for
no other purposes. Tenant shall, at its own cost and expense, comply with all
federal, state and municipal laws, ordinances, rules and regulations issued by
any governmental authority and all covenants, conditions and restrictions of
record which relate to the condition, use or occupancy of the Premises,
including without limitation, those described in Section 6(d) of the proposed
Redevelopment Agreement (“REDEVELOPMENT AGREEMENT”) to be entered into by and
between the City of Evanston (“CITY”) and Landlord, in substantially the form
of the draft thereof previously delivered by Landlord to Tenant.

 

7. CONDITION OF PREMISES. Tenant’s possession of the
Premises for the conduct of business shall be conclusive evidence that the
Premises were then in good order and satisfactory condition, subject to
punchlist items as determined pursuant to the Workletter, latent defects in
Landlord’s Work within the Premises identified by Tenant in writing to Landlord
within one (1) year following the Commencement Date and the Landlord Warranty.
No agreement of Landlord to alter, remodel, decorate, clean or improve the
Premises or the Building (or to provide Tenant with any credit or allowance for
the same), and no representation regarding the condition of the Premises or the
Building, have been made by or on behalf of Landlord or relied upon by Tenant,
except as expressly set forth herein.

 

8. BUILDING SERVICES.

 

A. BASIC
SERVICES. During the Term, Landlord shall furnish the
following services: (i) heating, ventilating and air conditioning to provide a
temperature condition required, in Landlord’s reasonable judgment, for
comfortable occupancy of the Office Premises under normal business operations,
consistent with seasonal air comfort at other first class office buildings in
the Chicago area’s north suburban office market and consistent with the HVAC
specifications described in the Building Outline Specifications (as defined in
Section 27), Monday through Friday from 7:00 A.M. to 6:00 P.M. and Saturday
from 7:00 A.M. to 1:00 P.M.), with Sundays and Holidays (as hereafter defined)
excepted; (ii) hot and cold water for use in all lavatories from the regular
supply of the Building; (iii) janitor service in the Office Premises and common
areas of the Building, as set forth in the Cleaning Specifications attached as
EXHIBIT F to this Lease, weekends and Holidays excepted, including periodic
outside window washing of the perimeter windows in the Office Premises not less
than twice per year; (iv) passenger elevator service for the Office Premises in
common with Landlord and other tenants of the Building, 24 hours a day, 7 days
a week; and (v) freight elevator service daily, weekends and Holidays excepted,
upon request of Tenant and subject to scheduling and reasonable charges by Landlord
(based upon Landlord’s actual cost of providing the freight elevator service).

 

B. ELECTRICITY.
The Premises shall be separately metered for electrical use for lighting and
business machines (however, power for building systems shall not be separately
metered). Electricity shall be distributed to the Premises by the electric
utility company serving the Building (which shall be Commonwealth Edison,
provided that Landlord may elect not to utilize Commonwealth Edison, so long as
Landlord obtains

 

16

 

competitive
bids from other electric utility providers, and selects the lowest responsible
bidder, after consultation with Tenant). Tenant at its cost shall make all
necessary arrangements with the electric utility company providing service to
the Building for metering and paying for electric current furnished to the
Premises. All electricity used during the performance of janitor service, or
the making of any alterations or repairs in the Premises, or the operation of
any special air conditioning systems serving the Premises shall be paid for by
Tenant.

 

C. TELEPHONES.
Tenant shall arrange for telephone service directly with one or more of the
public telephone companies servicing the Building and shall be solely responsible
for paying for telephone service. Landlord shall permit Tenant to connect to
Landlord’s telephone cables on such reasonable terms and conditions as Landlord
may prescribe (and Landlord shall install in the Building at no cost to Tenant
the copper risers and fiber optic connection described in the Base Building
Work). In no event does Landlord make any representation or warranty with
respect to telephone service in the Building and Landlord shall have no
liability with respect thereto. Further, any access by Tenant or its
representatives to any of the telephone closets, risers or other telephone
cables at the Building, shall be coordinated with Landlord and shall be subject
to Landlord’s reasonable regulations relating thereto. Tenant shall be entitled
to Tenant’s Proportionate Share of riser space available at the Building, at no
additional charge to Tenant.

 

D. ADDITIONAL
SERVICE; SUPPLEMENTAL AIR CONDITIONING UNITS. If
Tenant requests Landlord to provide services for the Office Premises in addition
to those stated above (including services at times other than those stated
above), Landlord shall, unless the services are commercially unobtainable,
provide Tenant with the services, and Tenant shall pay all related costs and
charges incurred by Landlord in providing the service (including any capital
expenditures incurred by Landlord in connection with providing the service),
within thirty (30) days following Landlord’s written request for reimbursement;
provided that if the service is also being provided to other tenants of the
Building as well, Tenant shall pay Landlord as a charge therefor, Landlord’s
reasonable rates then established at the Building for the furnishing of the
services. If Tenant fails to make any payment for additional services, Landlord
may, after five (5) days’ written notice to Tenant, in addition to all other
remedies available to Landlord, discontinue any additional services. No
discontinuance of any additional service shall result in any liability of
Landlord to Tenant or be considered as an eviction or a disturbance of Tenant’s
use of the Premises. Without limitation of the foregoing, if Tenant desires
ventilation, air conditioning or heat during times or on days for which
Landlord is not required to provide those services pursuant to Section 8.A.,
Landlord shall provide the service to Tenant provided that (a) Tenant notifies
Landlord before 2:00 P.M. on any business day on which Tenant desires
ventilation, air conditioning or heat after hours on such business day, or
before 2:00 P.M. on the business day immediately preceding any Holiday or
weekend day for which Tenant desires the additional service, and (b) Tenant
shall pay Landlord, Landlord’s then after-hours HVAC charges in connection with
the after-hours service. Landlord’s charges for after-hours HVAC shall be based
upon all actual direct and indirect costs to Landlord in providing the service
(but shall not reflect any “mark-up” by

 

17

 

Landlord).
Landlord, on or before the beginning of each calendar year of the Term, shall
provide Tenant with a schedule of its anticipated after hour HVAC charges,
which shall not be adjusted during the calendar year for which it applies,
unless Landlord’s out-of-pocket costs of providing HVAC services increases. In
addition, if Landlord reasonably determines that Tenant’s concentration of
personnel or equipment at the Premises is not consistent with ordinary and
customary office usage and adversely affects the temperature or humidity in the
Premises or the Building, Landlord may install (or require Tenant to install)
supplementary air conditioning units in the Premises, and Tenant shall pay all
of the costs of installation, operation and maintenance thereof (other than
supplemental air conditioning installed as part of Landlord’s Work, the cost of
which shall be allocated pursuant to Section 27 and the Workletter Agreement).

 

E. FAILURE OR
DELAY IN FURNISHING SERVICES. Tenant agrees that
Landlord shall not be liable for damages for failure or delay in furnishing any
service stated above, nor shall any such failure or delay be considered to be
an eviction or disturbance of Tenant’s use of the Premises, or (except as
hereinafter provided) relieve Tenant from its obligation to pay any Rent when
due or from any other obligations of Tenant under this Lease. Notwithstanding
the foregoing, if any of the services described in Sections 8.A.(i), (ii)
(limited to water supplied to base building washrooms) or (iv) or Section 8.B.
above are interrupted for any reason, resulting in a material impairment to
Tenant’s ability to conduct a substantial portion of Tenant’s customary
business operations at the Premises, and Tenant is unable to conduct a
substantial portion of its customary operations from the Premises as a result
thereof for a period of three (3) consecutive business days, then, as Tenant’s
sole recourse therefor, Base Rent, and Additional Rent shall abate as of the
date of the interruption and thereafter until the service is restored so that
the material impairment is cured or until Tenant is able to occupy the Premises
for the conduct of a substantial portion of its customary business operations
therefrom (whichever first occurs). Tenant shall not, however, have any right
to abate Base Rent or Additional Rent if the service is restored within three
(3) business days following the date of the interruption. Landlord shall use
commercially reasonable efforts to minimize any failure, delay, interruption or
diminution in furnishing any service described above. Nothing contained herein
shall be deemed to diminish any rental abatement rights of Tenant arising out
of a casualty to the extent provided for in Section 15.

 

F. HOLIDAYS.
For purposes of this Section 8, “HOLIDAYS” means New Year’s Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, Christmas Day and any other day
customarily designated as a holiday by landlords operating first-class office
buildings in the Chicago area’s north suburban office market.

 

G. OPERATING
STANDARDS. During the Term, Landlord shall operate the
Building in accordance with the standards set forth in EXHIBIT G attached to
this Lease.

 

H. PROPERTY
MANAGEMENT. Prior to entering into any management
agreement for the Building, or any renewal thereof, Landlord shall notify Tenant
of the proposed business terms

 

18

 

 

thereof, and
shall demonstrate that they reflect market terms. Tenant shall have the right
to approve the terms, which approval shall not be unreasonably withheld, conditioned
or delayed and shall be given or withheld within forty (40) days following
Landlord’s request, by written notice to Landlord, which response, if it is a
disapproval shall specify the reasons for disapproval and the terms, based upon
bona fide written proposals from reputable third party managers providing for a
similar scope of services, received by Tenant and delivered to Landlord, which
are acceptable to Tenant. If Tenant has not responded to Landlord’s request for
approval, within forty (40) days following such request, Landlord shall give
Tenant a second notice requesting such approval, and if Tenant fails to respond
within five (5) days following the second notice, Tenant’s consent shall be
deemed given.

 

I. OPERATING
BUDGET. On or prior to ninety (90) days before the
beginning of each full calendar year of the Term, Landlord shall submit to
Tenant a proposed operating budget for the Project, detailing the anticipated
Taxes and Expenses for the following calendar year, including without limitation,
anticipated capital expenditures. The proposed operating budget shall be
subject to Tenant’s approval, not to be unreasonably withheld, conditioned or
delayed. Tenant shall notify Landlord in writing of its approval or disapproval
of the operating budget (with any disapproval specifying in detail Tenant’s
objections to particular line items therein) within thirty (30) days following
Landlord’s request for approval. If Tenant fails to respond within the thirty
(30) day period, Landlord shall give Tenant a second notice requesting approval
and if Tenant fails to respond within five (5) days following the second
notice, the proposed operating budget shall be deemed approved. Landlord shall
use reasonable efforts to operate the Building in accordance with the approved
operating budget; provided, however, that Landlord and Tenant acknowledge that
the operating budget is only an estimate of anticipated expenditures, and
nothing contained herein shall be deemed (i) to limit Tenant’s obligation to
pay Expenses, Excess Expenses or other items of Additional Rent under Section
5, whether or not actual Expenses, Excess Expenses or other Additional Rent
exceed those in the operating budget or (ii) to preclude Landlord from
incurring expenditures in excess of or in addition to those set forth in the
operating budget, to the extent required in connection with the performance of
Landlord’s obligations under this Lease or deemed necessary or desirable by
Landlord in connection with the prudent operation of the Project. If the
parties are unable to agree upon an operating budget, until an operating budget
is approved, Landlord shall use reasonable efforts, to the extent possible, to
operate the Project in accordance with the most recently approved operating
budget, subject to the terms and conditions set forth above and subject to
increase for increases in costs for items outside of Landlord’s control and
which Landlord has knowledge of (i.e., taxes, insurance costs, utilities and
other similar costs).

 

9. RULES AND REGULATIONS. Tenant shall observe and comply, and
shall cause its subtenants, assignees, invitees, employees, contractors and
agents to observe and comply, with the Rules and Regulations listed on EXHIBIT
H attached to this Lease, with such reasonable modifications and additions
thereto as Landlord may make from time to time. Landlord shall not be liable
for failure of any person to obey the Rules and Regulations. Landlord shall not
be obligated to enforce the Rules and Regulations against any person, and the
failure of Landlord to enforce any of the Rules and Regulations shall not
constitute a waiver thereof or relieve Tenant from compliance with the Rules
and Regulations, provided, however, that Landlord shall not discriminate

 

19

 

against Tenant
in the enforcement of the Rules and Regulations which are applicable to all
tenants generally.

 

10. CERTAIN RIGHTS RESERVED TO LANDLORD.
Landlord reserves the following rights, each of which Landlord may exercise
without notice to Tenant (except as expressly indicated below) and without
liability to Tenant, and the exercise of any of Landlord’s reserved rights
shall not be deemed to constitute an eviction or disturbance of Tenant’s use or
possession of the Premises and shall not give rise to any claim for set-off or
abatement of rent or any other claim: (a) if mandated by the post office or
other governmental body, to change the street address of the Building; (b) to
install, affix and maintain any and all signs on the exterior or interior of
the Building or elsewhere at the Project (subject, however, to the approval
rights of Tenant set forth in Section 35 and the other limitations contained
therein); (c) to make repairs, decorations, alterations, additions or
improvements, whether structural or otherwise, in and about the Building or the
Common Areas, provided that any repairs, decorations, alterations, additions or
improvements to be performed within the Premises which will interfere with
Tenant’s ability to operate its business therein, shall, except in the case of
an emergency, be performed by Landlord after ordinary business hours, except
that Tenant agrees to pay Landlord for overtime and similar expenses incurred
if the work is done other than during ordinary business hours at Tenant’s
request (and Landlord is not otherwise obligated to perform the work after
ordinary business hours), and in connection with the foregoing purposes to
enter upon the Premises, temporarily close doors, corridors and other areas of
the Building and interrupt or temporarily suspend services or use of Common
Areas (provided that, in the absence of an emergency, Landlord shall (1) give
at least forty-eight (48) hours’ notice to Tenant prior to entry upon the
Premises under this Section 10(c), except for entry for routine repairs,
maintenance and/or cleaning, and (2) use all reasonable efforts not to
materially interfere with Tenant’s business operations at the Premises during
the course of any actions taken within the Premises under this Section 10(c));
(d) to retain at all times, and to use in appropriate instances, keys to all
doors within and into the Premises; (e) to grant to any person or to reserve
unto itself the exclusive right to conduct any business or render any service
in the Building; (f) to show or inspect the Premises at reasonable times during
normal business hours (provided that Landlord shall only have the right to show
the Premises to prospective tenants during the last twelve (12) months of the
Term and while any Default (as defined in Section 19) under this Lease is
continuing) and, while any Default is continuing, to prepare the Premises for
reoccupancy; (g) to install, use and maintain in and through the Premises
pipes, conduits, wires and ducts serving the Building, provided that Tenant
shall have the right to approve the location of any such installation not
otherwise provided as part of the Base Building (which approval shall not be
unreasonably withheld); (h) to take any other action which Landlord deems
reasonable in connection with the operation, maintenance, marketing or
preservation of the Building or the Project; and (i) to approve the weight,
size and location of safes or other heavy equipment or articles, which articles
may be moved in, about or out of the Building or Premises only at times and in
a manner as Landlord shall reasonably direct, at Tenant’s sole risk and
responsibility.

 

20

 

11.           MAINTENANCE
AND REPAIRS.

 

A. TENANT’S
OBLIGATIONS. Tenant, at its expense, shall maintain
and keep the Premises (other than elevator lobby areas), including all tenant
improvements therein, in good order and repair, and in accordance with all
applicable laws, ordinances and other legal requirements, at all times during
the Term, including correcting all defects in the design of the Tenant
Improvements. Subject to the terms of Section 15, Tenant shall promptly and
adequately repair all damages to the Premises and replace or repair all damaged
or broken glass in the interior of the Premises, fixtures or appurtenances. Any
repairs or maintenance shall be completed with materials of similar quality to
the original materials. All repairs, maintenance and other work (i) affecting
structural or other Base Building components of the Building, (ii) affecting
Building systems, or (iii) otherwise involving the use of paint or other
materials which could result in odors penetrating other tenant premises or
Common Areas at the Building, shall, in each instance, be completed under the
supervision of Landlord, if Landlord so elects, and shall otherwise be
performed in accordance with the same terms and requirements as set forth in
Section 12. If Tenant fails to perform any of its obligations set forth in this
Section 11.A, Landlord may, in its sole discretion and upon thirty (30) days
prior notice to Tenant (except in the case of emergencies, when no notice shall
be required), without limitation of any other rights or remedies available to
Landlord, perform the same, and Tenant shall pay to Landlord the actual direct
and indirect costs incurred by Landlord in performing Tenant’s obligations,
within thirty (30) days following Landlord’s written demand (accompanied by
invoices evidencing the amount incurred). Tenant shall have no responsibility
to maintain or repair any items which Landlord is specifically obligated to
maintain or repair pursuant to Section 11.B.

 

B. LANDLORD’S
OBLIGATIONS. Subject to the provisions of Section 15,
Landlord shall maintain and make necessary repairs to the foundations, roof,
exterior walls, and structural elements of the Building, the electrical,
plumbing, heating, ventilation and air-conditioning systems of the Building,
the public corridors, washrooms and lobbies of the Building and the restrooms
and elevator lobbies on each floor of the Building which are within the
Premises, except that Landlord shall not be responsible for: (i) the
maintenance or repair of any floor or wall coverings in the Premises or any of
the systems which are located within the Premises and are supplemental or
special to the Building’s standard systems; (ii) the cost of performing any
maintenance or repairs whether to the Premises or to the Building, caused by
the negligence of Tenant, its employees, agents, servants, licensees,
subtenants, contractors or invitees, shall be paid by Tenant, except to the
extent of insurance proceeds, if any, actually collected by Landlord with
regard to the damage necessitating the repairs; and (iii) correcting and/or
repairing any defects in the Tenant Improvements resulting from any defects in
the design thereof. Landlord shall have no responsibility to maintain or repair
any items which Tenant is specifically obligated to repair pursuant to Section
11.A.

 

21

 

12.           ALTERATIONS.

 

A.
REQUIREMENTS. Except as provided in Section 12.D.,
Tenant shall not make any replacement, alteration, improvement or addition to
or removal from the Premises (collectively an “ALTERATION”) without the prior
written consent of Landlord (not to be unreasonably withheld, as hereinafter
provided). Subject to the terms of Section 12.D., if Tenant proposes to make
any alteration requiring Landlord’s consent, Tenant shall, prior to commencing
the alteration, submit to Landlord for Landlord’s prior written approval
detailed plans and specifications. In addition, following approval of the
detailed plans and specifications for any alteration by Landlord, and prior to
commencing the alteration, Tenant shall also submit to Landlord, for Landlord’s
approval: (i) the names, addresses and, if required by any Mortgagee or Ground
Lessor (as those terms are defined in Section 23), copies of contracts for all
contractors; (ii) all necessary permits evidencing compliance with all
applicable governmental rules, regulations and requirements; (iii) certificates
of insurance (including builders risk) in form and amounts required by
Landlord, naming Landlord, its managing agent and any other parties reasonably
designated by Landlord as additional insureds; (iv) payment and performance
bonds from sureties and in form and amount satisfactory to Landlord, in its
discretion, with respect to any alteration, the cost of which Landlord
determines, in its reasonable discretion, will exceed Five Hundred Thousand and
No/100 Dollars ($500,000.00), showing Landlord as dual obligee; and (v) all
other documents and information as Landlord may reasonably request in
connection with the proposed alteration. If Tenant requests that Landlord
perform any construction management or supervisory services relative to any
alterations (other than in connection with the Tenant Improvements, for which
Landlord will not charge a fee) and if Landlord agrees to perform the services,
then Tenant agrees to pay Landlord market rate charges for the services, to be agreed
upon by Landlord and Tenant. In addition, Tenant shall reimburse Landlord
within thirty (30) days following Landlord’s written request, for any
out-of-pocket costs incurred by Landlord for review of architectural and
engineering plans and specifications; provided that prior to incurring any
charges for review of plans and specifications, Landlord shall notify Tenant of
its intention to engage an architect and/or engineer to review the same and the
anticipated cost of the review. Neither approval of the plans and
specifications nor supervision of the alteration by Landlord shall constitute a
representation or warranty by Landlord as to the accuracy, adequacy,
sufficiency or propriety of the plans and specifications or the quality of
workmanship or the compliance of the alteration with applicable law. Tenant
shall pay the entire cost of the alteration. Each alteration shall be performed
in a good and workmanlike manner, in accordance with the plans and
specifications approved by Landlord, and shall meet or exceed the standards for
construction and quality of materials established by Landlord for the Building.
In addition, each alteration shall be performed in compliance with all
applicable governmental and insurance company laws, regulations and requirements,
as well as such reasonable construction rules and regulations for the Building
as may be promulgated by Landlord from time to time (including, without
limitation, any rules governing usage of and charges for elevator service).
Each alteration shall be performed in harmony with Landlord’s employees,
contractors and other tenants and in a manner so as not to interfere with any
other tenant’s occupancy and, at Landlord’s option, Landlord shall have

 

22

 

the right, to
monitor the progress of all alterations. In connection with each alteration,
Tenant shall utilize union labor, unless otherwise consented to by Landlord.
Each alteration, whether temporary or permanent in character, made by Landlord
or Tenant in or upon the Premises (excepting only FF&E) shall become
Landlord’s property and shall remain upon the Premises at the expiration or
termination of this Lease without compensation to Tenant; provided, however,
that Landlord shall have the right to require Tenant to remove any alteration
at Tenant’s sole cost and expense, provided at the time of approval of the
alteration by Landlord, Landlord has notified Tenant that Landlord will require
removal and the alteration does not constitute a standard office installation
(e.g., vaults, safes, internal stairwells, raised floors, and other similar
items).

 

B. LIENS. Upon
completion of any alteration, Tenant shall promptly furnish Landlord with sworn
owner’s and contractors’ statements and full and final waivers of lien covering
all labor and materials included in the alteration. Tenant shall not permit any
mechanics’ lien to be filed against the Building, or any part thereof, arising
out of any alteration performed, or alleged to have been performed, by or on
behalf of Tenant. Landlord and Tenant shall notify each other promptly
following receipt by the applicable party of notice of any lien filed. If any
mechanics’ lien is filed, Tenant shall within thirty (30) days thereafter have
the lien released of record or deliver to Landlord a bond or title insurance in
form, amount, and issued by a surety or title company satisfactory to Landlord,
in its sole discretion, indemnifying Landlord against all costs and liabilities
resulting from the lien and the foreclosure or attempted foreclosure thereof.
If Tenant fails to have the lien released or to deliver a satisfactory bond or
title insurance to Landlord in accordance with the preceding sentence,
Landlord, without investigating the validity of the lien, may (without limiting
any other rights or remedies available to Landlord), upon five (5) business
days’ prior notice to Tenant, pay or discharge the same, and Tenant shall
reimburse Landlord within thirty (30) days following Landlord’s demand for the
amount so paid by Landlord, including Landlord’s reasonable expenses and
reasonable attorneys’ fees. If Tenant delivers the bond or title insurance to
Landlord with respect to the lien, Tenant shall thereafter have the right and
duty to diligently contest the lien; provided that Tenant shall, in any event,
have the lien released of record prior to final enforcement thereof.

 

C. REASONABLE
CONSENT. Landlord agrees not to unreasonably withhold
or delay its consent to any alterations; provided, however, that Landlord shall
not be deemed to have acted unreasonably if it withholds its consent because,
in Landlord’s reasonable opinion, the work: would adversely affect Building
systems, the structure of the Building or the safety of its occupants; would
increase Landlord’s cost of repairs, insurance or furnishing services or
otherwise adversely affect Landlord’s ability to efficiently operate the
Building or furnish services to Tenant or other tenants; involves toxic or
hazardous materials in any unlawful manner; or requires entry into another
tenant’s premises or use of public areas (other than use of public areas for
movement of materials to the Premises). The foregoing reasons, however, shall
not be exclusive of the reasons for which Landlord may withhold consent,
whether or not any other reasons are similar or dissimilar to the foregoing. In
addition, if Tenant requests Landlord’s approval of any plans and
specifications for

 

23

 

alterations or
of any of the other items described in Section 12.A, Landlord shall have
fifteen (15) days following receipt of Tenant’s request for approval of each of
such items to notify Tenant of Landlord’s approval or disapproval. If Landlord
fails to respond to Tenant within the fifteen (15) day period, Tenant shall
deliver a second notice to Landlord, stating in bold type on the first page
thereof “URGENT - DELAY NOTICE,” which notice shall specify the matter or item
for which Tenant is seeking approval and shall state that if Landlord fails to
respond within three (3) business days following receipt of the notice, such
matter or item will be deemed approved by Landlord. If Landlord fails to
respond to the second notice within three (3) business days following receipt,
the matters for which approval has been sought shall be deemed approved.

 

D.
NON-STRUCTURAL ALTERATIONS. Notwithstanding the
foregoing provisions of this Section 12, Tenant may perform certain interior
decorating or other non-structural alterations to the Premises, such as
carpeting, painting (so long as the odors from the same do not materially or
unreasonably interfere with any other tenant’s operations), hanging artwork or
wall coverings, cabling, installing furniture systems, installing cubicle
systems or other similar interior decorating improvements or non-structural
alterations, without obtaining Landlord’s consent therefor (but subject to
satisfaction of all of the other requirements of this Section 12), but only if
(i) the items do not affect the Building structure or systems, the public areas
of the Building or any other tenant space, (ii) such items are not visible from
outside of the Premises, (iii) the hard costs of construction for the proposed
alterations does not exceed the sum of $500,000.00 with respect to any proposed
alteration project, taken as a whole, and (iv) Tenant gives prior written
notice to Landlord of the items, including a description of the contemplated
work and the types of materials being used. Approval of plans and
specifications shall not be required for the foregoing interior decorating or
non-structural items, where plans and specifications are not reasonably
appropriate for the work to be performed.

 

E. ALTERATIONS
TO STORAGE AREA. Notwithstanding anything to the
contrary in Sections 12.A through 12.D of this Lease, Tenant shall not have the
right to make any alterations to the Storage Area, except for the installation
of racking and shelving (which may be installed by Tenant without Landlord’s
prior consent but otherwise subject to Tenant’s compliance with all of the
other terms and conditions of this Section 12 applicable to alterations).

 

13. INSURANCE. In consideration of the leasing of the Premises
at the rent stated herein, Landlord and Tenant agree to provide insurance and
allocate the risks of loss as follows:

 

A.            TENANT’S INSURANCE. Throughout the Term:

 

(i) Tenant, at its sole cost and expense but for the mutual benefit of
Landlord and Tenant (when used in this Section 13.A(i) the term “LANDLORD”
shall include Landlord, its constituent members and the partners, directors,
officers, agents,

 

24

 

servants and
employees of each of them), agrees to purchase and keep in force and effect
during the term hereof, insurance under policies issued by insurers of
recognized responsibility licensed to do business in the State of Illinois with
a Best’s rating of A-/VIII or better on all alterations, additions, and
improvements located at the Premises (other than the Tenant Improvements), and
on all personal property and FF&E located in the Premises, protecting
Landlord and Tenant (including Tenant’s partners, directors, officers, agents,
servants and employees) from damage or other loss caused by fire or other
casualty, including but not limited to vandalism and malicious mischief, perils
covered by extended coverage, theft, sprinkler leakage, water damage (however
caused), explosion malfunction or failure of heating and cooling or other
apparatus, and other similar risks in amounts not less than the full insurable
replacement value of the applicable property. Tenant’s property insurance shall
provide that it is specific and non-contributory and shall contain a
replacement cost endorsement. Tenant’s insurance shall also contain a clause
pursuant to which the insurance carriers waive all rights of subrogation
against the Landlord with respect to losses payable under the policies.
Landlord shall have no right or interest in insurance proceeds under this
Section 13.A. which relate to Tenant’s trade fixtures and personalty (including
FF&E, unless paid for by Landlord pursuant to the Workletter Agreement) and
which do not relate to the Tenant Improvements and shall not be an additional
insured with respect to the insurance covering Tenant’s trade fixtures,
personalty or FF&E (other than any items paid for by Landlord pursuant to
the Workletter Agreement).

 

(ii) Tenant also agrees to maintain commercial general liability
insurance with the broad form commercial liability endorsement, including
contractual liability insurance covering Tenant’s indemnity obligations
hereunder, covering Tenant (including Tenant’s partners, directors, officers,
agents, servants and employees) as the insured party, and naming Landlord, each
Mortgagee, and each Ground Lessor, against claims for bodily injury and death
and property damage occurring in or about the Premises, with limits of at least
Two Million Dollars ($2,000,000.00) per occurrence.

 

(iii) Tenant also agrees to maintain Workers’ Compensation and
Employers’ Liability insurance in such amounts as is required under applicable
law, together with such other insurance or coverages as Landlord reasonably
requests, consistent with insurance requirements of tenants at other comparable
first-class office buildings in the Chicago area’s north suburban office market.

 

Tenant shall,
prior to commencement of the Term and thereafter at least thirty (30) days
prior to any renewal or replacement of such policies, furnish to Landlord
certificates, in form and substance satisfactory to Landlord, issued by the
insurers and binding upon the insurers, evidencing all of the coverages
required under this Section 13, which certificates shall state (and the
underlying policies shall provide) that the insurance coverage may not be
changed or canceled without at least thirty (30) days prior written notice to
Landlord and Tenant. Any certificate shall also confirm to the satisfaction of
the insured parties that the

 

25

 

policies are
primary insurance. If Tenant shall fail to procure the insurance required
pursuant to this Section 13, Landlord may at its option, after giving Tenant no
less than ten (10) business days prior written notice of its election to do so
and without limiting any other rights or remedies available to Landlord, procure
the same for the account of Tenant and the cost thereof shall be paid to
Landlord as additional rent upon receipt by Tenant of bills therefor. All such
policies maintained by Tenant pursuant to this Section 13.A shall contain
commercially reasonable deductibles.

 

B. LANDLORD’S INSURANCE.
Landlord agrees to purchase and keep in force and effect replacement cost “all
risk” property insurance on the core and shell of the Building(as described in
Section 15.E. below) and on the Tenant Improvements, containing, a clause
pursuant to which the insurance carrier waives all rights of subrogation
against Tenant with respect to losses payable under the policy. Landlord shall
also purchase and keep in full force and effect (without limitation of other
coverages deemed prudent by Landlord) (i) commercial general liability
insurance (including contractual liability insurance covering Landlord’s
indemnity obligations hereunder) with liability limits no less than the amounts
specified in Section 13.A(ii), and (ii) Workers’ Compensation and Employers’
liability insurance, in commercially reasonable amounts or as otherwise
required by applicable law. All such policies shall contain commercially
reasonable deductibles.

 

C. RISK OF LOSS. By
this Section 13, Landlord and Tenant intend that the risk of loss or damage as
described above be borne by responsible insurance carriers to the extent above
provided, and Landlord and Tenant hereby agree to look solely to, and to seek
recovery only from, their respective insurance carriers in the event of a loss
of a type described above to the extent that such coverage is agreed to be
provided hereunder. For this purpose, any applicable deductible amount shall be
treated as though it were recoverable under the insurance policies described
above. Landlord and Tenant agree that applicable portions of all monies
collected from their respective insurance shall be used toward the full
compliance with the obligations of Landlord and Tenant under this Lease in
connection with damage resulting from fire or other casualty.

 

D. GENERAL WAIVER.
In addition to and without limiting or being limited by any other releases or
waivers of claims in this Lease, but rather in confirmation and furtherance
thereof, to the extent not prohibited by law, Landlord and Tenant each releases
and waives any and all claims for, and rights to recover, damages against and
from the other, and the other’s respective agents, members, partners,
shareholders, officers and employees (collectively, the “RELEASED PARTIES”), for
loss, damage or destruction to any of its property (including the Premises, the
Building and their contents), the elements of which are insured against or
which would have been insured against had the party suffering the loss, damage
or destruction maintained the property or physical damage insurance policies
required under this Section 13. In no event shall this clause be deemed,
construed or asserted (i) to affect or limit any claims or rights against any
Released Parties other than the right to recover damages for loss, damage or
destruction to property, or (ii) to benefit any third party other than the
Released Parties.

 

26

 

14.           TENANT’S
RESPONSIBILITIES.

 

A. WAIVER OF
CLAIMS. To the extent permitted by law, Tenant
releases Landlord, its constituent members and their respective officers,
directors, employees agents, successors and assigns (herein the “LANDLORD
PARTIES”) from, and waives all claims for, damage to person or property
sustained by Tenant or any occupant of the Building or Premises resulting
directly or indirectly from any existing or future condition, defect, matter or
thing in and about the Building or the Premises or any part of either or any
equipment or appurtenance therein, or resulting from any accident in or about
the Building, or resulting directly or indirectly from any act of neglect of
any tenant or occupant of the Building or of any other person, including
Landlord’s agents and servants, except where resulting from the willful misconduct
or negligence of any of the Landlord Parties. If any damage, whether to the
Premises or to the Building or any part thereof, or whether to Landlord or to
other tenants in the Building, results from any act or neglect of Tenant, its
employees, agents, invitees or customers, Tenant shall be liable therefor and
Landlord may, at Landlord’s option and without limiting any other rights or
remedies available to Landlord, repair such damage and Tenant shall, as payment
of additional Rent hereunder, reimburse Landlord within ten (10) business days
of demand for the total costs of such repairs, in excess of amounts, if any,
paid to Landlord under insurance covering the damage. Tenant shall not be
liable for any damage caused by its acts or neglect if Landlord has recovered
the full amount of the damage from proceeds of insurance policies and, the
insurance company has waived its right of subrogation against Tenant.

 

B. INDEMNITY.
To the extent permitted by law, Tenant agrees to indemnify, defend and hold the
Landlord Parties harmless from and against any and all actions, claims,
demands, costs and expenses, including reasonable attorneys’ fees and expense
for the defense thereof, arising from Tenant’s occupancy of the Premises, from
the undertaking of any Tenant alterations or repairs to the Premises, from the
conduct of Tenant’s business on the Premises, or from any breach or default on
the part of Tenant in the performance of any covenant or agreement on the part
of Tenant to be performed, pursuant to the terms of this Lease, or from any
willful or negligent act or omission of Tenant, its agents, servants, employees
or invitees, in or about the Premises, but only to the extent of Landlord’s
liability, if any, in excess of amounts, if any, paid to Landlord under insurance
covering the claims or liabilities and excluding any claims resulting solely
from the willful misconduct or negligent acts of any of the Landlord Parties.
In case of any action or proceeding brought against the Landlord Parties by
reason of any claim being indemnified by Tenant hereunder, upon notice from
Landlord, Tenant shall defend such action or proceeding by counsel reasonably
satisfactory to Landlord.

 

C. INDEMNITY
BY LANDLORD. In addition to and without limiting or
being limited by any other indemnity in this Lease, but rather in confirmation
and furtherance thereof, to the extent not prohibited by law, Landlord agrees
to indemnify, defend by counsel reasonably acceptable to Tenant and hold
Tenant, its constituent shareholders, and

 

27

 

their
respective officers, directors, members, partners, agents, employees,
successors and assigns (collectively, the “TENANT PARTIES”) harmless of, from
and against any and all losses, damages, liabilities, claims, liens, costs and
expenses, including court costs and reasonable attorneys’ fees and expenses,
imposed on them in connection with injury to or death of third parties, other
than the Tenant Parties, occurring in connection with Landlord’s performance of
Landlord’s Work, or otherwise occurring within the Common Areas of the
Building, or with respect to damage to or theft, loss or loss of the use of
property of third parties, other than Tenant Parties, occurring within the
Common Areas of the Building, but only to the extent that the foregoing losses,
damages, liabilities, claims, liens, costs and expenses arise from or are
caused directly or indirectly by any negligent act or omission or wilful
misconduct of Landlord, or any of its employees, agents, officers, directors,
members or partners. Such third parties shall not be deemed third party
beneficiaries to this Lease.

 

D. LANDLORD’S
NEGLIGENCE. Subject to the provisions of Section 13.B.
and Section 13.C., to the extent permitted by law, no agreement of Tenant in
this Lease shall be deemed to exempt Landlord from liability or damages for
injury to persons or damage to property caused by or resulting from the
negligence of Landlord, its agents, servants or employees, in the operation or
maintenance of the Premises or Building.

 

15.           DAMAGE OR DESTRUCTION BY CASUALTY.

 

A.            TERMINATION
OF LEASE, REPAIR BY LANDLORD.

 

(i) If the Premises or the Building shall be damaged by fire or other
casualty, then Landlord, so long as Landlord’s Mortgagee(s) or Ground
Lessor(s), if any, are obligated or agree to make insurance proceeds available
for restoration or, if the Mortgagee(s) or Ground Lessor(s) are not obligated
to make insurance proceeds available for restoration or do not agree to do so,
and Landlord elects to fund any shortfall, shall proceed with reasonable
promptness to repair and restore the core and shell of the Building (including
any elements thereof within the Premises) and the Tenant Improvements (but not
any alterations or FF&E) so as to render the Premises tenantable, subject
to the terms and conditions hereinafter set forth and subject to zoning laws
and building codes then in effect. Landlord shall, with reasonable promptness
after the occurrence of the damage, (a) engage an architect to estimate the
length of time that will be required to substantially complete the repair and
restoration of the core and shell of the Building or the core and shell of the
Premises and the Tenant Improvements, as the case may be, necessitated by such
damage and Landlord shall use reasonable efforts to ensure that the architect
provides the estimate as soon as reasonably possible, and (b) obtain a
determination from the Mortgagee(s) or Ground Lessor(s), if any, as to whether
insurance proceeds will be made available for restoration and, in each case,
Landlord shall notify Tenant (“CASUALTY NOTICE”) of the determination as to
length of time for repair, and if there are Mortgagee(s) or Ground Lessor(s)
whether the Mortgagee(s) or Ground Lessor(s) will make proceeds available for
restoration and/or whether Landlord will fund any shortfall(s) from its own
funds

 

28

 

or other
sources (and if Landlord elects to fund any shortfall, Landlord shall provide
Tenant with reasonable evidence of the availability of funds to cover the
shortfall). If there are Mortgagee(s) or Ground Lessor(s), and the Mortgagee(s)
or Ground Lessor(s) are unwilling to make proceeds of insurance available for
restoration (and Landlord does not elect to cover any shortfall) this Lease
shall terminate effective as of the date of the Casualty Notice to Tenant, if
Tenant is not in occupancy, or on the date which is sixty (60) days following
the Casualty Notice, if Tenant remains in occupancy of any portion of the
Premises. If the Mortgagee(s) or Ground Lessor(s) agree to or are obligated to
make proceeds available for restoration or Landlord elects to fund any
shortfall, Tenant shall remain obligated under this Lease, this Lease shall not
terminate as a result of the casualty and shall remain in full force and
effect, and Tenant hereby waives any right to terminate as a result of a
casualty, except as hereinafter specifically provided. Notwithstanding the
foregoing, if the estimate of the amount of time required to substantially
complete the repair and restoration will exceed two hundred seventy (270) days
from the date the damage occurred, then Tenant shall have the right to
terminate this Lease effective as of the date of notice of the election by
giving written notice to Landlord of termination within twenty (20) days after
Landlord gives Tenant the Casualty Notice. Unless this Lease is terminated as
provided in the preceding sentence, Landlord shall proceed with reasonable
promptness to repair and restore the core and shell of the Building (including
any elements thereof within the Premises) and the Tenant Improvements (other
than FF&E) to an equal or better condition as existed prior to the damage
and so as to render the Premises tenantable, subject to reasonable delays for insurance
adjustments and delays caused by matters beyond Landlord’s reasonable control,
and also subject to zoning laws and building codes then in effect. Landlord
shall have no liability to Tenant, and Tenant shall not be entitled to
terminate this Lease (except as hereinafter provided) if the repairs and
restoration are not in fact completed within the time period estimated by
Landlord’s architect, as aforesaid, or within said two hundred seventy (270)
days. However, if the repairs and restoration are not completed by a date
(“OUTSIDE DATE”) which is thirty (30) days after the expiration of the time
period estimated by Landlord’s architect as aforesaid (which Outside Date shall
be extended by the number of days of delay caused by Tenant or Force Majeure, except
that in no event shall the Outside Date be extended by more than ninety (90)
days as a result of delays caused by Force Majeure) then Tenant may terminate
this Lease, effective as of the date of notice of such election, by giving
written notice to Landlord within the thirty (30) day period after said Outside
Date (as the same may be extended), but prior to substantial completion of
repair or restoration.

 

(ii)           Notwithstanding
anything to the contrary herein set forth:

 

(a) Landlord shall have no duty pursuant to this Section 15 to repair
or restore any portion of Tenant’s alterations or any other improvements or
additions made by or on behalf of Tenant in the Premises following installation
of the Tenant Improvements, including any FF&E; and

 

29

 

(b) Landlord shall not be obligated (but may, at its option, so elect)
to repair or restore the Premises or Building if the damage is due to any
casualty which Landlord is not required to insure against pursuant to this
Lease, or is otherwise uninsurable (provided that if Landlord elects not to so
repair or restore the Premises as a result of any matter described in this
clause (b), Landlord shall promptly notify Tenant of Landlord’s election, and,
Tenant shall thereafter have the right to terminate this Lease effective upon
written notice thereof to Landlord given not later than ten (10) business days
after Tenant’s receipt of notice of Landlord’s election).

 

B. REPAIR BY
TENANT. If this Lease is not terminated pursuant to
this Section 15, Tenant shall, in accordance with Section 12, proceed with
reasonable promptness to repair and restore all of Tenant’s alterations, all
FF&E and all other alterations, additions and improvements in the Premises
other than the Tenant Improvements, and other than any repairs or restoration
required to be made by Landlord pursuant to Section 15.A. above, to as near the
condition which existed prior to the fire or other casualty as is reasonably
possible. If Landlord allows Tenant to perform work concurrent with Landlord’s
work, then Tenant shall fully cooperate with Landlord in coordinating any work
being performed by Tenant under this Section 15.B with work being performed by
Landlord under Section 15.A. above.

 

C. ABATEMENT
OF RENT. If any fire or casualty damage renders the
Premises untenantable and if this Lease shall not be terminated pursuant to the
foregoing provisions of this Section 15 by reason of the damage, then Rent
shall abate during the period beginning with the date of the damage and ending
with the date which is the later of (i) when Landlord substantially completes
its repair or restoration required hereunder and possession of the Premises is
delivered to Tenant or (ii) the earlier of the date which is sixty (60) days following
the date Landlord allows Tenant access to the Premises pursuant to Section 15.B
to restore alterations and install FF&E in conjunction with Landlord’s
restoration work or the date Tenant occupies the restored portion of the
Premises for purposes of conducting business therein. The abatement shall be in
an amount bearing the same ratio to the total amount of Rent for the period as
the portion of the Rentable Square Feet of the Premises which is untenantable
and not used by Tenant from time to time bears to the Rentable Square Feet of
the entire Premises. In the event of termination of this Lease pursuant to this
Section 15, Rent shall be apportioned on a per diem basis and be paid to the
date of the termination.

 

D.
UNTENANTABILITY. As used in this Lease, the term
“UNTENANTABLE” means (i)with respect to the Premises, material impairment to
Tenant’s ability to conduct a substantial portion of its customary business
operations therefrom due to damage to the Premises, and (ii) with respect to
any other portion of the Building, material impairment to continued occupancy
for its intended use due to damage to the applicable portion of the Building.
Notwithstanding anything contained to the contrary in this Section 15, neither
the Premises nor any portion of the Premises shall be deemed untenantable if
Landlord is not

 

30

 

required to
repair or restore same (or if Landlord is required to repair or restore same,
then following the time Landlord has substantially completed the repair and
restoration work required to be performed by Landlord under this Section 15),
or if Tenant continues to actually occupy the subject portion of the Premises.

 

E. CORE AND
SHELL. The term “CORE AND SHELL” shall mean and refer
to the Base Building, including any elements thereof located within the
Premises, and specifically excludes the Tenant Improvements, FF&E or any
work related to tenant improvements constructed by or for Tenant or other
tenants or installed within the Premises or within any other tenant’s premises
(except to the extent included as part of the Base Building hereunder).

 

16.           EMINENT DOMAIN.

 

A. SUBSTANTIAL
TAKING. If the entire Building, or a substantial part
thereof, shall be taken or condemned by any competent authority for any public
or quasi-public use or purpose or if any part of the Premises is so taken or
condemned and Tenant elects by written notice to Landlord within thirty (30)
days following the taking to terminate this Lease, the Term shall end upon and not
before the earlier of the date when the possession of the part so taken shall
be required for the use or purpose or the effective date of the taking. If any
condemnation proceeding shall be instituted in which it is sought to take or
damage any part of the Building, the taking or damaging of which would, in
Landlord’s opinion, prevent the economical operation of the Building, or if the
grade of any street or alley adjacent to the Land or the Building is changed or
any such street or alley is closed by any competent authority, and the taking,
damage, change of grade or closing makes it necessary or desirable to remodel
the Building to conform to the taking, damage, change of grade or closing,
Landlord shall have the right to terminate this Lease upon written notice to
Tenant given not less than ninety (90) days prior to the date of termination
designated in the notice. In either of the events above referred to, Rent shall
be apportioned on a per diem basis and be payable to the date of the
termination.

 

B. TAKING OF
PART. If a part of the Building or the Premises is
taken or condemned by any competent authority and this Lease is not terminated
as provided in Section 16.A., the Lease shall be amended to reduce (if
applicable) the monthly Base Rent, or to reduce or increase, as the case may
be, the Tenant’s Proportionate Share to reflect the Rentable Square Feet of the
Premises or Building, as the case may be, remaining after the taking or
condemnation. Landlord, upon receipt and to the extent of the award in condemnation
(or proceeds of sale), shall make necessary repairs and restorations to the
Premises (including Tenant Improvements, but excluding any FF&E, Tenant’s
alterations, or any other improvements made by or on behalf of Tenant) and to
the Building to the extent necessary to constitute the portion of the Building
not so taken or condemned as a complete architectural and economically
efficient unit.

 

31

 

C.
COMPENSATION. Landlord shall be entitled to receive
the entire award (or sale proceeds) from any taking, condemnation or sale
without any payment to Tenant, and Tenant hereby assigns to Landlord all of
Tenant’s interest, if any, in the award; provided, however, Tenant shall have
the right separately to pursue against the condemning authority a separate
award in respect of the loss, if any, to any of Tenant’s FF&E, alterations
paid for by Tenant without any credit or allowance from Landlord, and with
respect to Tenant’s moving expenses, so long as there is no diminution of
Landlord’s award as a result, and subject to the rights of any Ground Lessor or
Mortgagee of Landlord with respect thereto.

 

17.           ASSIGNMENT
AND SUBLETTING.

 

A.
PROHIBITIONS. Except as provided in Section 17.D. and
17.I. below, Tenant shall not, either prior or subsequent to the commencement
of the Term, (i) assign, transfer, mortgage, pledge, hypothecate or encumber or
subject to or permit to exist upon or be subjected to any lien or charge, this
Lease or any interest under it, (ii) allow to exist or occur any transfer of or
lien upon this Lease or Tenant’s interest herein by operation of law, (iii)
sublet the Premises or any part thereof, or (iv) permit the use or occupancy of
the Premises or any part thereof for any purpose not provided for under Section
6 of this Lease or by anyone other than Tenant and Tenant’s employees (which
shall be deemed to include Tenant’s operating division known commonly as
McDougal Littell, any other operating division of Tenant or any operating
division of any entity wholly owned by Tenant), without the prior consent of
Landlord in each instance, not to be unreasonably withheld, conditioned or
delayed (subject to the terms and conditions hereafter set forth), with respect
to any matters described in Section 17.A.(i) and (iii), and which may be
withheld in Landlord’s sole discretion, with respect to the matters described
in Section 17.A(ii) and (iv). In no event shall this Lease be assigned or
assignable by voluntary or involuntary bankruptcy proceedings or otherwise,
except as provided by law, and in no event shall this Lease or any rights or
privileges hereunder be an asset of Tenant under any bankruptcy, insolvency or
reorganization proceedings, except as provided by law. Any of the foregoing
performed or attempted in violation of the provisions of this Section shall be
null and void.

 

B. CONTINUING
LIABILITY. No assignment, subletting, use, occupancy,
transfer or encumbrance by Tenant shall operate to relieve Tenant from any
covenant, liability or obligation hereunder except to the extent, if any,
expressly provided for in any written consent of Landlord to the foregoing
given pursuant to the terms of Section 17.G, and no consent to any of the
foregoing, shall be deemed to be a consent to or relieve Tenant from obtaining
Landlord’s consent to any subsequent assignment, subletting, use, occupancy,
transfer or encumbrance. Tenant shall pay all of Landlord’s reasonable costs,
charges and expenses, including, without limitation, reasonable attorneys’ fees
and expenses, incurred in connection with any assignment, subletting, use,
occupancy, transfer or encumbrance made or requested by Tenant.

 

C. NOTICE OF
PROPOSED ASSIGNMENT OF SUBLETTING. Subject to the
terms of Section 17.I. below if Tenant desires to assign this Lease or to
sublease all or any

 

32

 

portion of the
Premises, Tenant shall, by notice in writing, advise Landlord of its intention
from, on and after a stated date (which shall not be less than ten (10) business
days nor more than six (6) months after the date of the giving of Tenant’s
notice to Landlord; provided, however, that in connection with an assignment or
subletting arising out of a merger, consolidation, dissolution, reorganization
or other similar corporate transaction, the six (6) month period shall be
automatically extended, so long as Tenant is diligently negotiating the terms
of the transaction) to assign this Lease or sublet all or any part of the
Premises for the balance or any part of the Term and, Landlord shall within ten
(10) business days after its receipt of Tenant’s notice, consent or refuse to
consent to the proposed assignment or sublease (which consent shall not be
unreasonably withheld, as described in Section 17.D. below). Tenant’s notice
shall include the name and address of the proposed assignee or subtenant, a
true and complete copy of the proposed assignment or sublease and sufficient
information, as Landlord deems reasonably necessary, to permit Landlord to
determine (i) the financial responsibility of any prospective assignee or
subtenant; (ii) the character and the nature of the business of the proposed
assignee or subtenant, and (iii) whether Landlord has the right under this
Lease to withhold consent to the proposed assignment or sublease. If Landlord
fails to respond to Tenant’s request for approval within the ten (10) business
day period, Landlord shall be deemed to have consented to the proposed
assignment or subletting.

 

D. GROUNDS FOR
WITHHOLDING CONSENT. Landlord will not unreasonably
withhold or delay its consent to Tenant’s proposed assignment of this Lease or
subletting of the space covered by Tenant’s notice to a “REPUTABLE TENANT”, as
hereinafter defined. Without limiting the grounds on which it may be reasonable
for Landlord to withhold its consent, Landlord shall not be deemed to have
unreasonably withheld its consent to a proposed assignment of this Lease or to
a proposed sublease of part or all of the Premises if its consent is withheld
because: (i) Tenant is then in default hereunder (provided that if the default
is cured within applicable cure periods, Tenant shall again have the right to
propose the assignment or subletting to Landlord for its consent hereunder);
(ii) the proposed assignee or sublessee is a governmental or quasi-governmental
agency, foreign or domestic, and its status as a governmental or quasi-
governmental agency will in any way effect the obligations of Tenant (or such
assignee or sublessee) to pay or reimburse Landlord for Taxes; (iii) the proposed
assignee or sublessee is a tenant in the Building (and Landlord has space
available or coming available within the Building sufficient to accommodate the
proposed subtenant within three (3) months of the commencement date of the
proposed sublease) or a party with whom Landlord is negotiating a lease of
space in the Building with (provided that if Landlord withholds consent because
Landlord is negotiating with the assignee or sublessee, Landlord shall provide
Tenant with written evidence of the terms upon which Landlord and the assignee
or sublessee are negotiating a lease of space in the Building); (iv) the
assignment or sublease would violate any of the terms of this Lease; or (v) the
proposed use would be inconsistent with the nature of the Building. As used
herein, the term “REPUTABLE TENANT” shall mean, with respect to any proposed
assignee or subtenant, an assignee or subtenant that in Landlord’s reasonable
judgment, satisfies all of the following criteria: (i) the financial condition
of the transferee (a) in the case of an assignment is in Landlord’s judgment
(1) sufficient to enable the assignee to perform its obligations under this
Lease and (2) is either equal to or greater

 

33

 

than Tenant’s
and each entity remaining liable on the Lease as of the date of the assignment
or if the assignee’s financial condition is not equal to or greater than
Tenant’s (and each entity remaining liable on the Lease) as of the date of the
assignment, then the assignee’s financial condition must be sufficient in
Landlord’s reasonable judgment, to preclude any increase in the interest rate
applicable to any debt secured by the Project, or to preclude any adverse
impact on Landlord’s ability to finance or refinance the Project at rates and
on terms equivalent to those that would be available if Tenant had remained the
tenant under the Lease, or (b) in the case of a subletting, is sufficient to
enable the transferee to perform its obligations under the proposed sublease;
(ii) the transferee has not in the five (5) year period immediately preceding
the assignment or subletting been the subject of any state or federal
bankruptcy, insolvency or other similar proceeding, and has not within the five
(5) year period made an assignment for the benefit of creditors, admitted its
inability to pay its debts when due, or taken any other similar actions; and
(iii) the transferee has a use which is consistent with the use permitted under
this Lease and with the first class nature of the Building. Notwithstanding
anything to the contrary herein, so long as Landlord has approximately
comparable space in the Building available for lease or coming available for
lease in the Building within three (3) months of the proposed commencement date
of any sublease, Tenant shall not have the right to offer to sublease or to
enter into a sublease for all or any portion of the Premises (except for a
sublease permitted pursuant to Section 17.I), which offer or sublease is for a
net effective rental which is less than the net effective rental that Landlord
is then quoting for space in the Building, and Landlord shall have no
obligation to approve any such sublease which has a net effective rental rate
which is less than the net effective rental rate which Landlord is quoting for
space in the Building.

 

E. EXCESS RENT
PAYMENT. If Tenant (as Tenant or debtor-in-possession)
shall assign this Lease or sublet the Premises, or any part thereof, at a
rental or for other monetary or non-monetary consideration in excess of the
Rent or pro rata portion thereof due and payable by Tenant under this Lease,
then Tenant shall pay to Landlord as additional Rent one-half (1/2) of the
excess rent or other consideration, immediately upon receipt under any such
assignment or, in the case of a sublease, (i) on the later of the first day of
each month during the term of any sublease, or the day of receipt from such
subtenant, one-half (1/2) of the excess of all rent and other consideration
paid by the subtenant for such month over the Rent then payable to Landlord
pursuant to the provisions of this Lease for said month (or if only a portion
of the Premises is being sublet, one-half (1/2) of the excess of all rent and
other consideration due from the subtenant for the month over the portion of
the Rent then payable to Landlord pursuant to the provisions of this Lease for
said month which is allocable on a rentable area basis to the space sublet),
and (ii) immediately upon the receipt thereof, one-half (1/2) of any other
consideration realized by Tenant from the subletting. Landlord shall not be
responsible for any deficiency if Tenant shall assign this Lease or sublet the
Premises or any part thereof at a rental less than that provided for herein.
Whenever reference is made to the “EXCESS” of rent or other consideration, such
excess shall be reduced by charging (until Tenant has recouped such amount in
full) against the rent or other consideration paid by the assignee or
subtenant, reasonable brokerage commissions, leasehold improvements costs and
other tenant concessions which Tenant has paid or given in

 

34

 

connection
with assigning the Lease or subleasing the applicable portion of the Premises,
as well as the then unamortized portion of any amount paid directly by Tenant
for Tenant Improvements pursuant to the Workletter Agreement, which amount
shall be deemed amortized, on a straight line basis over the Term, without
interest.

 

F. LEASE
ASSUMPTION; SUBTENANT ATTORNMENT. If Tenant shall assign
this Lease, then, as a condition to the effectiveness of the assignment, the
assignee shall expressly assume all of the obligations of Tenant under this
Lease in a written instrument mutually acceptable to Landlord and the assignee,
with an unexecuted copy thereof being delivered to Landlord not later than ten
(10) days prior to the effective date of the assignment and an executed copy of
the assignment being delivered to Landlord not later than fifteen (15) days
after the effective date of the assignment. If Tenant shall sublease any part
of the Premises, then as a condition to the effectiveness of the sublease,
Tenant shall obtain and furnish to Landlord, not later than ten (10) days prior
to the effective date of the sublease and in form reasonably satisfactory to
Landlord and the subtenant, an unexecuted copy of the proposed written
agreement of the subtenant to the effect that the subtenant will attorn to
Landlord, at Landlord’s option and written request (at Landlord’s sole
election), if this Lease terminates before the expiration of the sublease, with
an executed copy of the written agreement being delivered to Landlord not later
than fifteen (15) days after the effective date of the sublease. Tenant shall,
not later than fifteen (15) days after the effective date of any the assignment
or sublease, deliver to Landlord a certified copy of the instrument of
assignment or sublease.

 

G. RELEASE. In connection with any proposed assignment of this Lease,
if Tenant desires to be released from its obligations under this Lease, Tenant
shall request a release at the time of requesting Landlord’s consent to the
assignment, and Landlord shall not withhold its consent to a release of
Tenant’s obligations under this Lease accruing from and after the assignment, provided
(i) the proposed transferee is “investment grade” as hereinafter described or
if the proposed assignee is not considered “investment grade” because it does
not have issued and outstanding publicly traded securities and is privately
held, Landlord shall have determined, in its good faith discretion, that the
financial condition of the assignee is sufficient to enable commercial lenders
who provide long term debt secured by leased properties, using commercial
underwriting standards, to provide financing on a long term basis for the
Project in an amount equal to or greater than the amounts which could be
obtained if the assignee had a credit rating equivalent to that of an
“investment grade” assignee, and upon terms at least as favorable to Landlord
as the terms that would be available if the assignee were considered
“investment grade”, (ii) each of the Mortgagee’s and Ground Lessor’s, if any,
consent in writing to the release, and (iii) Landlord otherwise is obligated
to, and has granted its consent to, the assignment pursuant to this Section 17.
For purposes of this Section 17.G, a proposed transferee shall be considered
“investment grade” if the transferee (A) has, at the time of the proposed
transfer, and at all times throughout the Compliance Period (as hereinafter
defined) had, issued and outstanding publicly traded securities (“SECURITIES”)
listed on a “national securities exchange”, as defined in the Securities
Exchange Act of 1934, and (B) at the time of the proposed transfer, the
Securities have, and at all times throughout the Compliance Period the
Securities had, a credit rating from Standard & Poors, Dun &
Bradstreet, Moody’s Investor Services or Duff & Phelps of at least BBB-. As
used

 

35

 

herein, the
term “Compliance Period” shall mean the period from the date of the filing of
the most recent annual report for the proposed transferee with the Securities
and Exchange Commission (“SEC”) until and through and including the date of the
proposed transfer; provided that if the most recent annual report has been
filed within six (6) months of the date of the proposed transfer, the
Compliance Period shall be deemed to be the period from the date of the filing
of the annual report for the proposed transferee which preceded the most recent
annual report filed, until and through and including the date of the proposed
transfer. Tenant shall not, however, be released as a result of a transfer to a
Tenant Affiliate, regardless of whether the Tenant Affiliate is “investment
grade” unless the Tenant Affiliate is an entity resulting from the merger,
reorganization or consolidation of another entity with Tenant or is an entity
which acquires all or substantially all of the assets of Tenant and all of the
requirements of this Section 17.G for a release have been met.

 

H. CORPORATION,
PARTNERSHIP AND LIMITED LIABILITY COMPANY TRANSFERS. If Tenant is a
corporation, any transaction or series of transactions (including without
limitation any dissolution, merger, consolidation or other reorganization of
Tenant, or any issuance, sale, gift, transfer or redemption of any capital
stock of Tenant, whether voluntary, involuntary or by operation of law, or any
combination of any of the foregoing transactions) resulting in the transfer of
control of Tenant, other than by reason of death, shall be deemed to be a
voluntary assignment of this Lease by Tenant subject to the provisions of this
Section 17. If Tenant is a partnership or limited liability company, any
transaction or series of transactions (including without limitation any
withdrawal or admittance of a partner or member or any change in any partner’s
or member’s interest in Tenant, whether voluntary, involuntary or by operation
of law, or any combination of any of the foregoing transactions) resulting in
the transfer of control of Tenant, other than by reason of death, shall be
deemed to be a voluntary assignment of this Lease by Tenant subject to the
provisions of this Section 17. The term “CONTROL” as used in this Lease means
the power to directly or indirectly direct or cause the direction of the
management or policies of Tenant, whether through the ownership of voting
securities or beneficial interest or otherwise. Notwithstanding any of the
foregoing, the provisions of this Section 17.H. shall not apply to any entity
the outstanding voting stock of which is listed at the time of a transaction
referred to herein on a “NATIONAL SECURITIES EXCHANGE”, as defined in the
Securities Exchange Act of 1934.

 

I. PERMITTED
TRANSFERS. Notwithstanding any of the foregoing,
Landlord’s consent under Sections 17.C. and 17.D. shall not be required for an
assignment or sublet to a Tenant Affiliate, and Landlord shall not collect any
excess rent under Section 17.E. as a result of an assignment or sublet to a
Tenant Affiliate, as long as (i) Tenant gives reasonable prior notice to
Landlord of the assignment or sublet (provided that in the case of an
assignment or subletting to a Tenant Affiliate arising out of a merger,
consolidation, dissolution or reorganization of Tenant, or any other similar
corporate transaction, prior notice shall not be required, so long as Tenant
notifies Landlord of the transaction promptly following the consummation of the
transaction or when corporate policy permits, if earlier); and (ii) if an
assignment, the assignee assumes the obligations of Tenant under this Lease. As
used herein, the term “TENANT AFFILIATE” shall mean any entity (i) which
acquires all or substantially all of the assets of or ownership interests in the
original Tenant under this Lease

 

36

 

for a purpose
other than to circumvent the provisions of this Article 17; (ii) which results
from a merger or consolidation with the original Tenant under this Lease; or
(iii) which is controlled by, controls, or is under common control with, the
Tenant under this Lease. For purposes of the foregoing, the term “CONTROL”
shall have the meaning described in Section 17.H. Except as provided in this
Section 17.I. all terms of this Section 17 shall apply with respect to an
assignment or sublet to a Tenant Affiliate (including, without limitation, the
terms of Section 17.B. regarding the continued liability of the “TENANT” making
the assignment or sublease, as well as the continued liability of each prior
“TENANT” and of and any guarantor(s) of this Lease, except as provided in
Section 17.G relating to releases).

 

18. SURRENDER. Upon termination of the Term or Tenant’s right to
possession of the Premises, Tenant shall return the Premises to Landlord in
good order and condition, ordinary wear and damage by fire or other casualty
excepted. If, in connection with the approval of plans for any alterations,
Landlord notifies Tenant in accordance with Section 12 that Landlord requires
Tenant to remove any of such alterations, then at Landlord’s request, Tenant
shall remove the applicable alterations, and the removal shall be done in a
good and workmanlike manner, and upon the removal Tenant shall restore the
Premises to its condition prior to the installation of such alterations (as the
case may be), in each case on or before the expiration of the Term or Tenant’s
right to possession. Tenant shall not, however, be obligated to remove the
Tenant Improvements (as defined in the Workletter Agreement) or any associated
telephone, data and power wiring and cabling at the expiration or earlier
termination of the Term. If Tenant does not remove the applicable alterations
on or before the expiration of the Term or termination of Tenant’s right to
possession, then Landlord, without limiting any other rights or remedies
available to Landlord, may remove the same and restore the Premises, and Tenant
shall pay the reasonable cost of the removal and restoration to Landlord within
thirty (30) days following Landlord’s written demand. Notwithstanding the
foregoing, it is understood and agreed that Tenant shall remove its FF&E
(other than any associated telephone, data and power wiring and cabling
installed in connection with the Tenant Improvements) from the Premises prior
to termination of the Term or Tenant’s right to possession of the Premises. As
used herein, the term “FF&E” shall mean all of Tenant’s furniture,
equipment, trade fixtures, and all other items of non-affixed personal property
and associated telephone, data and power wiring and cabling from time to time
within the Premises, including without limitation, the categories of items
listed in EXHIBIT I attached to this Lease. On or about the Commencement Date,
Landlord and Tenant shall prepare and agree upon an updated list of the
FF&E within the Premises, which shall be insured by Tenant under this Lease
and shall be removed by Tenant upon the expiration of the Term or Tenant’s
right of possession. If Tenant does not remove the FF&E (other than cabling
and wiring as described above), Tenant shall be conclusively presumed to have
conveyed the same to Landlord without further payment or credit by Landlord to
Tenant, or at Landlord’s sole option and without limiting any other rights or
remedies available to Landlord, the items shall be deemed abandoned, in which
event Landlord may cause the items to be removed and disposed of at Tenant’s
expense, which shall be Landlord’s reasonable cost of removal (less any net
proceeds received by Landlord from the sale thereof), without notice to Tenant
and without obligation to compensate Tenant.

 

37

 

19. DEFAULTS AND REMEDIES.

 

A. EVIDENCE OF
DEFAULT. The occurrence or existence of any one or
more of the following shall constitute a “DEFAULT” by Tenant under this Lease:
(i) Tenant fails to pay any installment or other payment of Rent when due
(provided that Tenant shall have five (5) days after written notice of the
failure to cure the default on the first two (and only two) occasions thereof
occurring in any twelve (12) consecutive month period during the Term);
(ii)Tenant fails to observe or perform any of the other covenants, conditions
or provisions of this Lease and fails to cure the default within thirty (30)
days after written notice thereof to Tenant (provided that the thirty (30) day
period shall be extended for the time reasonably required to complete the cure,
not exceeding, in any event, an additional ninety (90) day period, if the
failure cannot reasonably be cured within the thirty (30) day period and Tenant
commences to cure such failure within the thirty (30) day period and thereafter
diligently and continuously proceeds to cure the failure and provided further
that if the default is not reasonably susceptible of being cured within the
ninety (90) day period, and Tenant is diligently proceeding with the cure, the
ninety (90) day period shall be extended while Tenant is diligently curing, so
long as the default does not cause a default under any Mortgage or Ground Lease
(each, as hereinafter defined in Section 23.A), create any risk to life, health
or safety at the Project or otherwise cause Landlord to be in default under any
lease or other agreement to which Landlord is a party or bound); (iii) the interest
of Tenant in this Lease is levied upon under execution or other legal process;
(iv) a petition is filed by or against Tenant to declare Tenant bankrupt or
seeking a plan or reorganization or arrangement under any Chapter of the United
States Bankruptcy Code (or any similar law for the relief of debtors), or any
amendment, replacement, or substitution therefor, or to delay payment of,
reduce or modify Tenant’s debts, which in the case of an involuntary action, is
not discharged within ninety (90) days after filing of the petition; (vi)
Tenant is declared insolvent by law or any assignment of Tenant’s property is
made for the benefit of creditors; (vi) a receiver is appointed for Tenant or
Tenant’s property, which appointment is not discharged within sixty (60) days
after the appointment; (vii) any action taken by or against Tenant to
reorganize or modify Tenant’s capital structure, which in the case of an
involuntary action, is not discharged within sixty (60) days after the action;
or (ix) upon the dissolution of Tenant.

 

B. RIGHT OF
RE-ENTRY. Upon the occurrence of a Default, Landlord
may elect to terminate this Lease or, without terminating this Lease, terminate
Tenant’s right to possession of the Premises. Upon any termination pursuant to
the preceding sentence, Tenant shall immediately surrender and vacate the
Premises and deliver possession thereof to Landlord in the condition required
for surrender set forth in this Lease. Tenant grants to Landlord the right to
enter and repossess the Premises and to expel Tenant and any others who may be
occupying the Premises and to remove any and all property therefrom, without
being deemed in any manner guilty of trespass and without relinquishing
Landlord’s rights to Rent or any other right given to Landlord hereunder or by
operation of law.

 

C. TERMINATION
OF RIGHT TO POSSESSION. If Landlord terminates
Tenant’s right to possession of the Premises without terminating this Lease,
Landlord may relet the Premises or any part thereof. If Landlord terminates
Tenant’s right to possession, but not the Lease, Landlord shall use reasonable
efforts to mitigate Tenant’s damages as required

 

38

 

by applicable
law and to relet the Premises on such terms as Landlord shall reasonably deem
appropriate (and Landlord hereby reaffirms its obligations under applicable law
to mitigate damages); provided, however, Landlord may first lease Landlord’s
other available space and shall not be required to accept any tenant offered by
Tenant or to observe any instructions given by Tenant about such reletting.
Tenant shall reimburse Landlord for the costs and expenses of reletting the
Premises including, but not limited to, all brokerage, advertising, legal,
alteration, redecorating, repairs and other expenses incurred to secure a new
tenant for the Premises. In addition, if the consideration collected by
Landlord upon any such reletting, after payment of the expenses of reletting
the Premises which have not been reimbursed by Tenant, is insufficient to pay
monthly the full amount of the Rent, Tenant shall pay to Landlord the amount of
each monthly deficiency as it becomes due. If the consideration actually
received by Landlord is greater than the amount necessary to pay the full
amount of the monthly Rent, the full amount of such excess shall be retained by
Landlord and shall in no event be payable to Tenant.

 

D. TERMINATION
OF LEASE. If Landlord terminates this Lease, Landlord
may recover from Tenant and Tenant shall pay to Landlord, on demand, as and for
liquidated and final damages, an accelerated lump sum amount equal to the
amount by which Landlord’s estimate of the aggregate amount of Rent owing from
the date of the termination through the stated expiration date of the Term
hereof plus Landlord’s estimate of the aggregate expenses of reletting the
Premises, exceeds Landlord’s estimate of the fair rental value of the Premises
for the same period (after deducting from the fair rental value the time needed
to relet the Premises and the amount of concessions which would normally be
given to a new tenant) both discounted to present value at the rate of six and
one-half percent (6.5%) per annum.

 

E. OTHER
REMEDIES. Upon the occurrence of a Default, and
without limiting any other rights or remedies available to Landlord, Landlord
may, but shall not be obligated to, perform any obligation of Tenant under this
Lease, and, if Landlord so elects, all costs and expenses paid by Landlord in
performing the obligation, together with interest at the Default Rate, shall be
reimbursed by Tenant to Landlord on demand. Any and all remedies set forth in
this Lease: (i) shall be in addition to any and all other remedies Landlord may
have at law or in equity; (ii) shall be cumulative; and (iii) may be pursued
successively or concurrently as Landlord may elect. The exercise of any remedy
by Landlord shall not be deemed an election of remedies or preclude Landlord
from exercising any other remedies in the future.

 

F. BANKRUPTCY.
If Tenant becomes bankrupt, the bankruptcy trustee shall not have the right to
assume or assign this Lease unless the trustee complies with all requirements
of the United States Bankruptcy Code, and Landlord expressly reserves all of
its rights, claims and remedies thereunder.

 

G. WAIVER OF
TRIAL BY JURY. To the fullest extent permitted by law,
Landlord and Tenant waive trial by jury in the event of any action, proceeding
or

 

39

 

counterclaim
brought by either Landlord or Tenant against the other in connection with this
Lease.

 

H. VENUE. If either
Landlord or Tenant desires to bring an action against the other in connection
with this Lease, such action shall be brought in the federal courts located in
Chicago, Illinois, or state courts located in Cook County, Illinois. Landlord
and Tenant consent to the jurisdiction of such courts and waive any right to
have such action transferred from such courts on the grounds of improper venue
or inconvenient forum.

 

I. LANDLORD
DEFAULT. Landlord shall be in default under this Lease
if Landlord fails to perform any obligation required of Landlord under the
terms of this Lease and fails to cure the default within thirty (30) days after
written notice thereof by Tenant to Landlord specifying the nature of
Landlord’s failure to perform; provided that the thirty (30) day period shall
be extended for the time reasonably required to complete the cure, not
exceeding an additional ninety (90) day period, if the failure cannot
reasonably be cured within the thirty (30) day period and if Landlord commences
performance within the thirty (30) day period and thereafter diligently and
continuously proceeds to cure the failure and provided further that if the
default is not reasonably susceptible of being cured within the ninety (90) day
period, and Landlord is diligently proceeding with the cure, the ninety (90)
day period shall be extended while Landlord is diligently curing, so long as
the failure does not create any risk to life, health or safety at the Project.
If Landlord fails to cure any such default within the time period specified
above, and such default materially interferes with Tenant’s ability to use and
occupy the Premises, Tenant may elect, by ten (10) days’ prior written notice
to Landlord, as its sole remedy, to cure the default, and the reasonable costs
of Tenant incurred in curing the default, shall be reimbursed by Landlord to
Tenant within ten (10) days following Tenant’s written demand therefor,
accompanied by appropriate invoices. Notwithstanding the foregoing, this
Section shall not apply to Landlord’s obligations under Section 27, and
Tenant’s sole rights and remedies with respect to any failure of Landlord to
perform under Landlord’s obligations under Section 27 shall be exclusively
governed by Section 27.

 

20. HOLDING OVER. If Tenant retains possession of the Premises
after the expiration or termination of the Term or Tenant’s right to possession
of the Premises, Tenant shall pay (i) Base Rent during the first thirty (30)
days of the holdover at one hundred fifty percent (150%) of the Base Rent in
effect immediately preceding such holdover, and thereafter pay Base Rent during
the holdover in an amount equal to two hundred percent (200%) of the Base Rent
in effect immediately preceding such holdover, plus (ii) Additional Rent and
all other amounts otherwise payable under the Lease (including, without
limitation, Excess Expenses) computed on a per diem basis for each day that
Tenant remains in possession and Tenant shall perform all of its other
obligations under the Lease. Tenant shall also pay, indemnify and defend
Landlord from and against all claims and damages, consequential as well as
direct, sustained by reason of Tenant’s holding over, provided, however, that
so long as Tenant pays the holdover rent described herein above, and the
holdover terminates and Tenant vacates the Premises in the condition required
by the Lease on or before the date which is the earlier of sixty (60) days
following the expiration of the Term or the

 

40

 

termination of Tenant’s right of possession,
Tenant shall have no liability to Landlord for consequential damages;
otherwise, Tenant shall be so liable. The provisions of this Section do not
waive Landlord’s right of re-entry or right to regain possession by actions at
law or in equity or any other rights hereunder, and any receipt of payment by
Landlord shall not be deemed a consent by Landlord to Tenant’s remaining in
possession or be construed as creating or renewing any Lease or right of
tenancy between Landlord and Tenant.

 

21. CERTAIN REGULATORY MATTERS.

 

A. HAZARDOUS
SUBSTANCES. Except for Landlord’s obligations
expressly described in Section 21.B., Tenant shall comply , at its sole
expense, with all laws relating to the protection of public health, safety and
welfare and with all environmental laws (hereinafter defined) in the use,
occupancy and operation of the Premises. Tenant agrees that no Hazardous
Substances (as hereinafter defined) shall be used, located, stored or processed
on the Premises or be brought into the Building by Tenant, except for minor
quantities of cleaning materials and other items not inconsistent with office
use and, in any event, in compliance with all applicable laws. Tenant further
agrees that no Hazardous Substances will be released or discharged from the
Premises (including, but not limited to, ground water contamination). The term
“HAZARDOUS SUBSTANCES” shall mean and include all hazardous and toxic
substances, waste or materials, any pollutant or contaminant, including,
without limitation PCB’s, asbestos and raw materials that include hazardous
constituents or any other similar substances or materials that are now or
hereafter included under or regulated by any environmental laws or that would
pose a health, safety or environmental hazard. If Tenant is notified of any
investigation or violation of any environmental law arising from Tenant’s
activities at the Premises, Tenant shall immediately deliver to Landlord a copy
of such notice. In such event or if Landlord reasonably believes that a
violation of environmental law exists, Landlord may, upon notice to Tenant,
conduct such tests and studies relating to compliance by Tenant with
environmental laws or the alleged presence of Hazardous Substances upon the Premises
as Landlord reasonably deems necessary or desirable, and to the extent the
tests and studies indicate non-compliance by Tenant with environmental laws or
the presence of Hazardous Substances upon the Premises based upon Tenant’s
activities, then Tenant shall pay the cost of the tests and studies. Landlord’s
inspection and testing rights are for Landlord’s own protection only, and
Landlord has not, and shall not be deemed to have, assumed any responsibility
to Tenant or any other party for compliance with environmental laws, as a
result of the exercise or non-exercise of Landlord’s rights. Tenant shall
indemnify, defend, protect and hold harmless Landlord, its constituent members,
and their respective officers, directors, members, partners, agents, employees,
successors and assigns, from and against any and all loss, claim, expense,
liability and costs (including attorneys’ fees) arising out of or in any way
related to the presence of any Hazardous Substance introduced to the Premises
during the Term by Tenant, its agents, employees, contractors, subcontractors,
subtenants or invitees.

 

B. LANDLORD
RESPONSIBILITY. As to any Hazardous Substances (as now
defined) existing in the Premises or the Building or the Land on the
Commencement Date in violation of applicable environmental laws, Landlord shall
remove or otherwise

 

41

 

remediate the
Hazardous Substances to the extent required by law (as now existing), at
Landlord’s sole cost and expense. Tenant shall cooperate with Landlord in
allowing proper access to the Premises to perform the foregoing removal or
remediation activities, and shall use reasonable efforts not to take any action
which may worsen any environmental condition once discovered. Landlord shall
restore any damage caused to the Premises as a result of access by Landlord
under this Section 21.B., to the extent the damage was not caused by Tenant’s
negligence or willful misconduct or Tenant’s breach of its obligations
hereunder. In any entry into the Premises under this Section 21.B., Landlord
shall use commercially reasonable efforts to minimize interference with
Tenant’s business operations at the Premises. In addition, Landlord shall, at
Tenant’s request, either enforce the City’s obligations under the Redevelopment
Agreement with respect to Hazardous Substances or assign its rights with
respect to Hazardous Substances under the Redevelopment Agreement to Tenant.

 

C. AMERICANS
WITH DISABILITIES ACT. Landlord and Tenant acknowledge
that the Americans With Disabilities Act of 1990 (42 U.S.C. Section 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
herein as the “ADA”), establish requirements for business operations,
accessibility and barrier removal, and that such requirements may or may not
apply to the Premises and the Building depending on, among other things: (1)
whether Tenant’s business is deemed a “PUBLIC ACCOMMODATION” or “COMMERCIAL
FACILITY”, (2) whether such requirements are “READILY ACHIEVABLE”, and (3)
whether a given alteration affects a primary function area or triggers “PATH OF
TRAVEL” requirements. The parties hereby agree that: (a) Landlord shall be
responsible for ADA Title III compliance in the Common Areas of the Building,
except as provided below, and Landlord shall perform all work required for such
compliance, (b) Tenant shall be responsible for ADA Title III compliance in the
Premises, including paying the costs in connection with the Tenant Improvements
and any other leasehold improvements or other work to be performed in the
Premises under or in connection with this Lease, subject, however, to
Landlord’s obligations under the Workletter Agreement to perform certain
construction and to fund certain costs, and (c) Landlord may perform, or
require that Tenant perform, and Tenant shall be responsible for the cost of,
ADA Title III “PATH OF TRAVEL” requirements triggered by any improvements or
alterations in the Premises made by Tenant after the Commencement Date. Tenant
shall be solely responsible for requirements under Title I of the ADA relating
to Tenant’s employees.

 

D.
ENVIRONMENTAL LAWS. As used in this Lease, the term
“ENVIRONMENTAL LAWS” means any applicable state, local, or federal statute,
law, code, rule, regulation, ordinance, order, standard, permit, license or
requirement (including consent decrees, judicial decisions and administrative
orders) together with all related amendments, implementing, preservation,
conservation or regulation of the environment, and regulations and
reauthorizations pertaining to the protection, preservation, conservation or
regulation of the environment, including but not limited to: the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.Section 9601
et seq.; the Resource Conservation and Recovery Act, 42 U.S.C.Section 6901 et
seq.; the Toxic Substances Control Act, 15 U.S.C.Section 2601

 

42

 

et seq.; the Clean
Air Act, 42 U.S.C.Section 7401 et seq.; and the Clean Water Act, 33
U.S.C.Section 1251 et seq.

 

22. ESTOPPEL CERTIFICATE. Tenant agrees that, from
time to time within thirty (30) days’ following actual receipt by Tenant of a
written request by Landlord, Tenant shall execute and deliver to Landlord a
written certificate certifying, to the extent factually accurate: (i) that this
Lease is unmodified and in full force and effect (or if there have been
modifications, a description of the modifications and that this Lease as
modified is in full force and effect); (ii) the dates to which Rent has been
paid; (iii) that Tenant is in possession of the Premises, if that is the case;
(iv) that Landlord is not in default under this Lease, or, if Tenant believes Landlord
is in default, the nature thereof in detail; (v) that Tenant has no off-sets or
defenses to the performance of its obligations under this Lease (or if Tenant
believes there are any off-sets or defenses, a full and complete explanation
thereof); (vi) that the Premises have been completed in accordance with the
terms and provisions hereof, that Tenant has accepted the Premises and the
condition thereof and of all improvements thereto and has no claims against
Landlord or any other party with respect thereto (or if Tenant believes that
such matters are not accurate, a full and complete explanation thereof); and
(vii) such additional matters as may be reasonably requested by Landlord, it
being agreed that the certificate may be relied upon by any prospective
purchaser, investor, mortgagee, or other person having or acquiring a direct or
indirect interest in the Building. If Tenant fails to execute and deliver any
certificate within thirty (30) days after receipt of Landlord’s request, then
Tenant’s failure shall be deemed a “DEFAULT” hereunder, without any further
notice or cure periods being required under this Lease.

 

23. SUBORDINATION.

 

A.
SUBORDINATION OF LEASE. Landlord may have heretofore
or may hereafter encumber with a mortgage or trust deed the Building, the
Project, and/or the Land, or any part thereof or any interest therein, may sell
and lease back the Land or any part thereof, and may encumber the leasehold
estate under any sale and leaseback arrangement with a mortgage or trust deed.
Any such mortgage or trust deed is herein called a “MORTGAGE” and the holder of
any such mortgage or the beneficiary under any such trust deed is herein called
a “MORTGAGEE.” Any such lease of the land underlying the Building or Project
(or any part thereof) is herein called a “GROUND LEASE” and the lessor under
any such lease is herein called a “GROUND LESSOR.” This Lease and the rights of
Tenant hereunder shall be and are hereby expressly made subject to and
subordinate at all times to any Mortgage and to any Ground Lease now or
hereafter existing, and to all amendments, modifications, renewals, extensions,
consolidations and replacements thereof, and to all advances made or hereafter
to be made upon the security thereof, subject to the non-disturbance rights
hereinafter set forth. Notwithstanding the foregoing, Landlord shall provide
Tenant with a non-disturbance agreement from any Mortgagee or Ground Lessor
existing as of the date of execution of this Lease and any future Mortgagee or
Ground Lessor, which agreement shall be on the Mortgagee’s or Ground Lessor’s
customary form with changes thereto as reasonably requested by Tenant, and may
include the provisions set forth below in this Section 23. Tenant agrees to
execute and deliver to Landlord any further instruments consenting to or
confirming the

 

43

 

subordination
of this Lease to any Mortgage and to any Ground Lease and containing any other
reasonable provisions which may be requested in writing by Landlord within
thirty (30) days after Tenant’s receipt of Landlord’s written request; provided
that any such instrument shall also include recognition and non-disturbance
provisions to the effect that the Mortgagee or Ground Lessor, as the case may
be, will not disturb Tenant’s continued occupancy of the Premises under this
Lease so long as Tenant is not in Default hereunder, which recognition and
non-disturbance provisions may contain such other terms and conditions as are
contained in the Mortgagee’s or Ground Lessor’s customary form of
subordination, non-disturbance and attornment agreement, with changes thereto
as reasonably requested by Tenant, and including customary notice and cure
rights in favor of the Mortgagee or Ground Lessor.

 

B. RIGHTS OF
SUCCESSORS. If any Mortgage is foreclosed, or
Landlord’s interest under this Lease is conveyed or transferred in lieu of
foreclosure, or if any Ground Lease is terminated:

 

(i) no person or entity which as the result of any of the foregoing has
succeeded to the interest of Landlord in this Lease (any such person or entity
being hereafter called a “SUCCESSOR”) shall be liable for any default by
Landlord or any other matter which occurred prior to the date such Successor
succeeded to Landlord’s interest in this Lease, nor shall any Successor be
bound by or subject to any offsets or defenses which Tenant may have against
Landlord or any other predecessor in interest to such Successor (provided
further, however, that nothing herein shall be deemed to limit a Successor’s
obligations under this Lease which are required to be performed from and after
the date the Successor succeeds to Landlord’s interest hereunder).

 

(ii) upon request of any Successor, Tenant will attorn to the
Successor, as Landlord under this Lease, subject to the provisions of this
Section 23, and will execute and deliver such instruments as may be necessary
or appropriate to evidence the attornment within twenty (20) days after receipt
of a written request to do so.

 

(iii) no Successor shall be bound to recognize any prepayment by more
than thirty (30) days of Base Rent, Additional Rent or Excess Expenses from the
date when otherwise due hereunder.

 

iv) no Successor shall be bound to recognize any amendment or
modification of this Lease made without the written consent of the Mortgagee or
Ground Lessor (as the case may be).

 

C.
SUBORDINATION OF MORTGAGE. Notwithstanding anything to
the contrary contained herein, any Mortgagee may subordinate, in whole or in
part, its Mortgage to this Lease by sending Tenant notice in writing
subordinating all or any part of its Mortgage to this Lease, and Tenant agrees
to execute and deliver to the Mortgagee such further instruments consenting to
or confirming the subordination of all or any portion of its

 

44

 

Mortgage
to this Lease and containing any other provisions which may be requested in
writing by the Mortgagee within thirty (30) days after Tenant’s receipt of a
written request.

 

24.
QUIET ENJOYMENT. As long as no Default exists,
Tenant shall peacefully and quietly have and enjoy the Premises for the Term,
free from interference by Landlord, subject, however, to the provisions of this
Lease. In addition, if Tenant’s quiet enjoyment of the Premises is interfered
with by any party other than Landlord, and the existence of such parties rights
would give rise to a claim in favor of Landlord under its title insurance
policy for the Project, Landlord shall, at Tenant’s request, diligently enforce
its rights under the title policy, and Tenant shall reimburse Landlord for the
reasonable out of pocket costs incurred by Landlord in connection with
enforcement of its rights under the title policy (to the extent not reimbursed
by the title company) within thirty (30) days following Landlord’s request for
reimbursement, accompanied by invoices evidencing the costs incurred. The loss
or reduction of Tenant’s light, air or view will not be deemed a disturbance of
Tenant’s occupancy of the Premises nor will it affect Tenant’s obligations
under this Lease or create any liability of Landlord to Tenant.

 

25.
BROKER. Tenant represents to Landlord that Tenant has dealt
only with the broker(s) set forth in Section 1 hereof (the “BROKER”) and McCall
and Almy in connection with this Lease and that, insofar as Tenant knows, no
other broker negotiated this Lease or is entitled to any commission in
connection herewith. Tenant agrees to indemnify, defend and hold Landlord and
Landlord’s constituent members and agents harmless from and against any claims
for a fee or commission made by any broker, other than the Broker, claiming to
have acted by or on behalf of Tenant in connection with this Lease. Landlord
represents to Tenant that Landlord has dealt only with Broker and McCall and
Almy in connection with this Lease and that, insofar as Landlord knows, no
other broker negotiated this Lease or is entitled to any commission in
connection herewith. Landlord agrees to indemnify, defend and hold Tenant and
Tenant’s constituent partners and agents harmless from and against any claims
for a fee or commission made by any broker, other than the Broker and McCall
and Almy, claiming to have acted by or on behalf of Landlord in connection with
this Lease. Landlord agrees to pay the Broker a commission in accordance with a
separate agreement between Landlord and the Broker; however, Landlord shall not
be responsible for the payment of any commission to McCall and Almy.

 

26.
NOTICES. All notices and demands to be given by one party
to the other party under this Lease shall be given in writing, mailed, sent by
recognized overnight courier or hand delivered to Landlord or Tenant, as the
case may be, at the following address:

 

	
  If
  to Landlord

  	
   

  	
  Davis
  Church Office Development,

  
	
   

  	
   

  	
  L.L.C.

  
	
   

  	
   

  	
  c/o
  Mesirow Stein Real Estate

  
	
   

  	
   

  	
  350
  North Clark Street

  
	
   

  	
   

  	
  Chicago,
  Illinois  60601

  
	
   

  	
   

  	
  Attn.:  Mike Szkatulski

  

 

45

 

	
  With
  a copy to:

  	
   

  	
  Mesirow
  Stein Real Estate

  
	
   

  	
   

  	
  350
  North Clark Street

  
	
   

  	
   

  	
  Chicago,
  Illinois  60601

  
	
   

  	
   

  	
  Attn:  Denny Block

  
	
  And
  a copy to

  	
   

  	
  Piper
  Marbury Rudnick & Wolfe

  
	
   

  	
   

  	
  203
  North LaSalle

  
	
   

  	
   

  	
  Chicago,
  Illinois  60601

  
	
   

  	
   

  	
  Attn.:  Robert H. Goldman, Esq.

  
	
  If
  to Tenant:

  	
   

  	
  Houghton
  Mifflin Company

  
	
   

  	
   

  	
  222
  Berkeley Street

  
	
   

  	
   

  	
  Boston,
  Massachusetts  02116-3764

  
	
   

  	
   

  	
  Attn.:   Director of Corporate

  
	
   

  	
   

  	
  Services

  
	
  With
  a copy to:

  	
   

  	
  Houghton
  Mifflin Company

  
	
   

  	
   

  	
  222
  Berkeley Street

  
	
   

  	
   

  	
  Boston,
  Massachusetts  02116-3764

  
	
   

  	
   

  	
  Attn.:  General Counsel

  
	
  And
  a copy to:

  	
   

  	
  McCall
  & Almy, Inc.

  
	
   

  	
   

  	
  One
  Post Office Square

  
	
   

  	
   

  	
  Boston,
  Massachusetts  02109

  
	
   

  	
   

  	
  Attn:  David Richardson

  
	
   

  	
   

  	
   

  
	
  And
  a copy to:

  	
   

  	
  Mark
  Bartelstein & Associates

  
	
   

  	
   

  	
  222
  West Ontario

  
	
   

  	
   

  	
  Suite
  600

  
	
   

  	
   

  	
  Chicago,
  Illinois 60610

  
	
   

  	
   

  	
  Attn:  Rick Smith, Esq.

  

 

or
at such other address as either party may hereafter designate. Notices shall be
delivered by hand or by United States certified or registered mail, postage
prepaid, return receipt requested, or by a nationally recognized overnight air
courier service. Notices shall be considered to have been given upon actual
receipt or upon delivery (if delivered by hand) or upon refusal to accept
delivery.

 

27.           BASE BUILDING; TENANT IMPROVEMENTS.

 

A. LANDLORD’S
WORK.

 

(i) Landlord, at Landlord’s sole cost and
expense, agrees to construct, or cause to be constructed, the core and shell of
the Building (“BASE BUILDING” or “BASE BUILDING WORK”) substantially in
accordance with the plan development drawings and core and shell description
(“PLAN DEVELOPMENT DRAWINGS

 

46

 

AND
DESCRIPTION”) attached to this Lease as EXHIBIT J, as such Plan Development
Drawings and Description have been or are hereafter developed into the Design
Documents, and as modified from time to time, all subject to the limitations on
Scope Changes described hereinbelow. For purposes of this Section, “DESIGN
DOCUMENTS” shall mean the Plan Development Drawings and Description as further
developed into final plans and specifications. In addition to Landlord’s
obligations to provide Tenant with copies of all construction drawings and
plans and specifications, as hereinafter described, Landlord shall notify
Tenant of any material changes to the Design Documents which are not within the
scope of the Plan Development Drawings and Description (collectively, “SCOPE
CHANGES”). No material Scope Changes affecting Tenant rights hereunder in any
material respect shall be made unless Landlord obtains Tenant’s consent thereto
(which consent shall not be unreasonably withheld, conditioned or delayed, and
which consent shall be given or withheld within five (5) business days
following such request by Landlord; provided that if Tenant fails to respond
within the five (5) business day period, Landlord shall give Tenant an
additional notice requesting Tenant’s consent, and if Tenant fails to respond
within two (2) business days following the second request, Tenant’s consent
shall be deemed given). In addition, Landlord shall provide Tenant with copies
of any construction drawings and plans and specifications, including the Design
Documents and progress and construction administration documents, for the Base
Building Work, as they are developed; provided further, that following
completion of the construction drawings for the Base Building Work, any changes
made thereafter shall be highlighted on the copies delivered to Tenant. In
addition, Tenant may from time to time request changes in the Design Documents,
which changes shall be subject to Landlord’s approval, not to be unreasonably
withheld or delayed, so long as the changes do not delay Substantial Completion
of Landlord’s Work, Tenant pays all increased costs of Landlord’s Work
resulting from the changes, and the changes do not otherwise adversely affect
the costs of operating, insuring or maintaining the Building or affect the
ability of Landlord to lease the balance of the Building not leased to Tenant
or reduce the Rentable Square Feet of the Building.

 

(ii) Landlord also agrees to construct, or
cause to be constructed the Tenant Improvements, all as more particularly
described and defined in, and subject to all of the terms and conditions of the
Workletter Agreement (“WORKLETTER AGREEMENT”) attached to this Lease as EXHIBIT
K and to wire Tenant’s workstations installed as part of the FF&E with
telephone, data and electrical wiring (“WORKSTATION WIRING”). The Base
Building, Tenant Improvements and Workstation Wiring are collectively referred
to in this Lease as “LANDLORD’S WORK”.

 

B. SUBSTANTIALLY COMPLETE. Landlord
agrees to use all reasonable efforts to Substantially Complete Landlord’s Work
and to deliver possession of each floor of the Premises to Tenant, on or before
the Projected Delivery Date for the applicable floor set for the Delivery
Schedule, with each such date subject to extension for delays actually caused
by Force Majeure (hereinafter defined) and Tenant Delays (hereinafter defined),
and subject

 

47

 

to Tenant’s termination rights under
Section 27.D. Failure of Landlord’s Work to be Substantially Completed and/or
of Landlord to deliver possession any floor on or before the Projected Delivery
Date for such floor shall be subject to terms of Section 4.E. and the terms and
conditions hereinafter provided.

 

(i) “FORCE MAJEURE” means any of the
following which causes delays, to the extent that such delays are outside of
Landlord’s reasonable control to avoid: war, insurrection; strikes; lockouts;
labor trouble; riots; theft; vandalism; floods; fires; casualties; acts of God;
accidents; acts of the public enemy; epidemic; quarantine; freight embargos;
lack of transportation; governmental or municipal restrictions, laws,
moratoria, regulations or priorities; unexpected or unanticipated soil or
environmental conditions; unexpected weather conditions; inability to obtain
materials, electricity, gas or other fuel or water or utilities; defective supplies,
equipment or material used or to be used in construction of the Building;
non-delivery or late delivery of supplies, equipment or materials to be used in
construction of the Building; any act or failure to act of any governmental
agency or authority or of any other public or quasi-public authority,
including, without limitation, any delay in the issuance of or the non-issuance
of any governmental permits, licenses, consents or other approvals necessary
for Landlord to commence and complete construction of the Building and
Landlord’s Work in accordance with this Lease; where the delay is not the
result of Landlord’s actions or failure to act; utility company requirements,
actions or failure to act; and any other delays beyond Landlord’s reasonable control.
If a Force Majeure delay occurs Landlord and Tenant shall promptly meet and
discuss ways of alleviating the delay.

 

(ii) “TENANT DELAY” means any of the
following, to the extent they actually cause delays in Substantial Completion
of Landlord’s Work: (a) delay caused by any default by Tenant or its agents in
Tenant’s obligations under this Lease, (b) delays caused by Tenant’s access to
the Premises (including access by Tenant’s agents, contractors, architects,
space planners, brokers, or consultants) prior to the Commencement Date which
unreasonably interferes with Substantial Completion, (c) delays resulting from
Tenant’s failure to install any FF&E in sufficient time to enable Landlord
to perform the Workstation Wiring prior to the applicable Projected Delivery
Date (unless Landlord has failed to provide Tenant with sufficient access to
the applicable portion of the Premises to do so), (c) any event, condition or
circumstance defined as a Tenant Delay in the Workletter Agreement, or (d) any
other delay of any kind or nature caused by Tenant (including its agents,
contractors, architects, space planners, brokers or consultants). For purpose
of the foregoing, the term “CAUSED BY” shall mean that the particular delay
(i.e., whether in meeting “SUBSTANTIAL COMPLETION” requirements or the
Construction Commencement Date or Outside Completion Date as hereinafter
defined in Section 27.D) would not otherwise have occurred in the absence of
such specified act or failure to act by Tenant (or its agents, contractors,
architects, space planners, brokers or consultants). Landlord shall give Tenant
notice of any claim of Tenant Delay within the earlier of

 

48

 

(A)
three (3) business days following receipt by Landlord of actual knowledge of
the matters giving rise to such claim or (B) ten (10) business days following
receipt by Landlord’s general contractor of actual knowledge of the matters
giving rise to such claim, and, if Landlord fails to so give such timely notice,
then Landlord may not claim “TENANT DELAY” with respect to any period of delay
occurring prior to Landlord’s delivery of such notice to Tenant. If Tenant
disputes Landlord’s determination as to whether a Tenant Delay has occurred or
the length thereof, Tenant shall notify Landlord in writing (“TENANT DELAY
DISPUTE NOTICE”) within three (3) business days following receipt of Landlord’s
notice of Tenant Delays whereupon the dispute shall be resolved in accordance
with Section 27.E. If Tenant fails to give a timely Tenant Delay Dispute
Notice, Tenant shall be deemed to have waived any right to contest the claim of
Tenant Delay asserted by Landlord.

 

(iii) “SUBSTANTIAL COMPLETION” or
“SUBSTANTIALLY COMPLETE” or “SUBSTANTIALLY COMPLETED” shall mean that Landlord’s
Work (or the portion thereof applicable to any floor within the Premises) has
been substantially completed except for such minor, insubstantial details of
construction, decoration or mechanical adjustments as would not materially
interfere with the use of the Building as an office building or Tenant’s
occupancy of the Premises, or applicable floor thereof, as the context
requires, for office purposes. If Substantial Completion of Landlord’s Work as
a whole, or for any floor or floors, is delayed in whole or in part by any
Tenant Delay, then Substantial Completion shall be deemed to have occurred as
of such date as the Landlord’s Work, as a whole, or for such floor or floors,
as the context requires, would have been so completed but for such Tenant Delay.
Substantial Completion shall be conclusively evidenced by a certificate of
Landlord’s architect.

 

C. HOLDOVER COSTS. If
Landlord’s Work is not “SUBSTANTIALLY COMPLETE” (as defined above) on or before
May 1, 2002, subject to extensions for delays in Substantial Completion caused
by Tenant Delay (as used herein, the “HOLDOVER DATE”), then Tenant shall have
the following recourse (except for the remedy described in Section 27.D. below
and the extension of the Commencement Date pursuant to Section 4.E) as Tenant’s
sole and exclusive remedies hereunder, and subject to the terms and conditions
hereinafter set forth.

 

(i) Subject to the terms hereinafter set
forth, Tenant shall be entitled to payment from Landlord of an amount equal to
its actual Holdover Costs (as hereinafter defined) incurred from and after the
Holdover Date and through the Holdover Costs Period (as hereinafter defined).

 

(ii) The term “HOLDOVER COSTS” means any
(A) rental costs (including base rent and additional rent, such as Tenant’s
share of taxes and expenses) for holdover under Tenant’s Existing Leases
(hereinafter defined) in excess of the rental costs due or which would have
otherwise been due hereunder (without taking into account any rent abatement)
accruing from and after the later of (1) the Holdover Date, or (2) the date of
early cancellation elected by Tenant under the applicable Existing Leases,
through the Commencement Date, plus (B) any rental costs

 

49

 

(including
base rent and additional rent) for temporary space leased by Tenant (not to
exceed 120,000 rentable square feet in the aggregate) in excess of the base
rent and additional rent due or which would otherwise have been due hereunder
for rentable square footage within the Office Premises equal to the lesser of
120,000 rentable square feet or the rentable square footage of the temporary
space (without taking into account any rent abatement from the Holdover Date
until the Commencement Date) and continuing through the Commencement Date (the
“HOLDOVER COSTS PERIOD”), all subject to Section 27.D below plus (C) reasonable
storage costs incurred by Tenant during the Holdover Costs Period as a result
of the delay in Substantial Completion. Tenant will use good faith efforts to
prevent or minimize Holdover Costs, including, without limitation, consultation
and cooperation with Landlord in its negotiations with Tenant’s existing
landlords. Tenant shall also notify Landlord of its exercise of cancellation
rights under the Existing Leases, concurrently with or prior to the exercise of
such rights. In addition, as and when floors are Substantially Completed,
Tenant shall utilize best efforts to move out of the space covered by any
Existing Leases and interim leases, so as to minimize Holdover Costs.

 

(iii) If Substantial Completion is delayed
beyond the Projected Final Delivery Date as a result of Tenant Delay or Force
Majeure (i.e., meaning such delay beyond the Projected Final Delivery Date
would not have occurred in the absence of such Tenant Delay or Force Majeure),
then notwithstanding anything to the contrary above, Landlord shall have no
obligation to pay Holdover Costs attributable to the period from the Holdover
Date until the date which is the number of days after the Holdover Date equal
to the number of days of Tenant Delay plus the number of days of Force Majeure
delay.

 

(iv) Tenant represents that it has
delivered to Landlord a true and correct copy of its present leases (the
“EXISTING LEASES”) relative to space at 1560 Sherman Avenue and 1603 Orrington
Street in the City of Evanston, Illinois. Tenant hereby agrees that it shall
not amend or otherwise modify the Existing Leases following the date hereof in
any manner which increases the Holdover Costs, and to the extent any of such Existing
Leases are so modified or amended, Landlord shall have no obligation to pay any
additional Holdover Costs resulting therefrom.

 

(v) Landlord shall have the right along
with Tenant to jointly negotiate with each of the existing landlords under the
Existing Leases, so as to reduce the amount and extent of Holdover Costs
hereunder, and Tenant agrees to cooperate with Landlord in all reasonable
respects (but at no out-of-pocket cost to Tenant) relative to any such
negotiations to enable Landlord and Tenant to minimize the Holdover Costs.

 

(vi) Notwithstanding anything contained
herein to the contrary, if Tenant terminates this Lease pursuant to Section
27.D below, Tenant shall have no right to any Holdover Costs under this Section
27.C accruing on and after the date Tenant terminates this Lease.

 

50

 

D.
MILESTONE DATES. If Landlord fails to commence
construction of the Building on or before February 1, 2001 (which for purposes
hereof shall mean the commencement of work on footings, foundations and/or
caissons for the Building) (“CONSTRUCTION COMMENCEMENT DATE”), for any reason
other than Tenant Delay, Landlord shall notify Tenant of such event (herein, a
“FAILED MILESTONE NOTICE”), promptly after Landlord becomes aware of the same,
whereupon Tenant shall have the right to terminate the Lease by written notice
to Landlord, given at any time on or before the earlier to occur of thirty (30)
days following the date of Tenant’s receipt of the Failed Milestone Notice or
the commencement of construction, whereupon this Lease shall terminate and the
parties shall have no further rights or obligations hereunder. In addition,
without limitation of any rights or obligations described in this Section 27.D,
if the Substantial Completion of Landlord’s Work has not occurred on or before
January 2, 2003 (“OUTSIDE COMPLETION DATE”), for any reason other than as a
result of Tenant Delay, and if this Lease is then in full force and effect,
then, Tenant shall have the right by written notice to Landlord given at any
time after the Outside Completion Date and prior to the Substantial Completion
of Landlord’s Work to terminate this Lease as of the date of such notice,
whereupon neither party shall have any further rights or obligations hereunder.
Without limitation of the foregoing terms of this Section 27.D., it is
understood and agreed that, if Tenant exercises its termination rights under
this Section 27.D., Tenant shall not be entitled to any Holdover Costs
described in Section 27.C. above accruing from and after the date of
termination, and that if the termination is a result of Landlord’s failure to
commence construction by the Construction Commencement Date, no Holdover Costs
shall accrue and the terms of said Section 27.C. shall thereafter be deemed
null and void.

 

E.
TENANT DELAY DISPUTES. If Tenant gives a Tenant Delay Dispute
Notice in accordance with Section 27.B(ii), promptly following Landlord’s
receipt of the Tenant Delay Dispute Notice, representatives of Landlord and
Tenant shall meet and attempt in good faith to negotiate a resolution of the
dispute. If within fifteen (15) days following Landlord’s receipt of the Tenant
Delay Dispute Notice, representatives of Landlord and Tenant are unable to
resolve the dispute, then within fifteen (15) days following the end of such
negotiation period, the chief executive officer of Landlord and either the
chief executive officer of Tenant or the president of McDougal Littell shall
meet and attempt to resolve the dispute. If such parties are unable to resolve
the dispute within three (3) days following their initial meeting, either
Landlord or Tenant may elect, by written notice to the other, to submit the
dispute to binding arbitration, to be conducted at the offices of the American
Arbitration Association in Chicago, Illinois, pursuant to the construction
arbitration rules and procedures of the American Arbitration Association.

 

28.
MISCELLANEOUS.

 

A.
SUCCESSORS AND ASSIGNS. Subject to Section 17 of this Lease, each
provision of this Lease shall extend to, bind and inure to the benefit of
Landlord and Tenant and their respective legal representatives, successors and
assigns, and all references herein to Landlord and Tenant shall be deemed to
include all such parties. Notwithstanding the foregoing, if Landlord assigns
this Lease (other than an assignment for security purposes) at any time prior
to Substantial Completion, Landlord shall cause to be delivered to Tenant

 

51

 

a
completion guaranty executed by Mesirow Stein Development Services, Inc. in the
form of EXHIBIT L to this Lease.

 

B.
ENTIRE AGREEMENT. This Lease, and the riders and exhibits,
if any, attached hereto which are hereby made a part of this Lease, represent
the complete agreement between Landlord and Tenant, and Landlord has made no
representations or warranties except as expressly set forth in this Lease. No
modification or amendment of or waiver under this Lease shall be binding upon
Landlord or Tenant unless in writing signed by Landlord and Tenant.

 

C.
TIME OF ESSENCE. Time is of the essence of this Lease and
each and all of its provisions.

 

D.
EXECUTION AND DELIVERY. Submission of this instrument for
examination by Tenant does not constitute a reservation of space or an option
for Lease, and it is not effective until execution and delivery by both
Landlord and Tenant.

 

E.
SEVERABILITY. The invalidity or unenforceability of any provision of this
Lease shall not affect or impair any other provisions.

 

F.
GOVERNING LAW. This Lease shall be governed by and
construed in accordance with the laws of the State of Illinois.

 

G.
ATTORNEYS’ FEES. Tenant shall pay to Landlord all costs
and expenses, including reasonable attorneys’ fees, incurred by Landlord in
enforcing this Lease or incurred by Landlord as a result of any litigation in
which Tenant causes Landlord, without Landlord’s fault, to become involved.
Landlord shall pay to Tenant all costs and expenses, including reasonable
attorneys’ fees, incurred by Tenant in enforcing this Lease or incurred by
Tenant as a result of any litigation in which Landlord causes Tenant, without
Tenant’s fault, to become involved.

 

H. TENANT; JOINT AND
SEVERAL LIABILITY. The word “TENANT” whenever used herein shall be construed to
mean Tenant or any one or more of them 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 other organizations,
partnerships or other entities, or individuals, shall in all cases be assumed
as though in each case fully expressed. In all cases where there is more than
one Tenant, the liability of each shall be joint and several and any one person
or entity comprising Tenant may give any notice or approval required or permitted
to be given by Tenant under this Lease and such notice or approval shall be
deemed binding upon all persons or entities comprising Tenant and may be relied
upon by Landlord as if such notice or approval had been given by all persons or
entities comprising Tenant.

 

I.
FORCE MAJEURE. Without limiting or being limited by any
of the provisions of this Lease, but subject to the terms of Section 27 hereof,
if Landlord fails to perform timely any of the terms, covenants or conditions
of this Lease on Landlord’s part

 

52

 

to
be performed, and such failure is due in whole or in part to Force Majeure,
then Landlord shall not be deemed in default under this Lease as a result of
such failure. Following the occurrence of any event of Force Majeure, at
Tenant’s request, Landlord and Tenant shall meet to determine methods for
alleviating the Force Majeure event. The foregoing shall not, however, affect
any rental abatement rights expressly provided for in the Lease. The terms of
this Section 28.I. shall not apply with respect to the obligations of Landlord
described in Section 27 hereof, and in lieu thereof, the express provisions
dealing with “FORCE MAJEURE” delays as described in Section 27 shall apply
relative to Landlord’s obligations thereunder, as and to the extent expressly
set forth in Section 27.

 

J. CAPTIONS. The
headings and titles in this Lease are for convenience only and shall have no
effect upon the construction or interpretation of this Lease. References to
“SECTION” or “SECTIONS” in this Lease shall be deemed to refer to the
applicable Section or Sections of this Lease.

 

K. NO
WAIVER. No receipt of money by Landlord from Tenant after termination
of this Lease or after the service of any notice or after the commencing of any
suit or after final judgment for possession of the Premises shall renew,
reinstate, continue or extend the Term or affect any such notice or suit. No
waiver of any default of Tenant shall be implied from any omission by Landlord
to take any action on account of such default if such default persists or is
repeated, and no express waiver shall affect any default other than the default
specified in the express waiver and then only for the time and to the extent
therein stated.

 

L. LANDLORD. The term
“LANDLORD” as used in this Lease means only the owner of Landlord’s interest in
the Premises from time to time. Upon any assignment, conveyance or sale, once
or successively, of Landlord’s interest in the Premises or any assignment of
this Lease by Landlord, the Landlord making the assignment conveyance or sale
shall be and hereby is entirely freed and relieved of all covenants and
obligations of Landlord hereunder accruing after the assignment, conveyance or
sale, and Tenant agrees to look solely to the assignee, grantee or purchaser,
with respect thereto. The holder of a Mortgage on the Building shall not be
deemed to be an assignee, grantee or purchaser under this Section 28.L unless
and until the foreclosure of the Mortgage or the conveyance or transfer of
Landlord’s interest under this Lease in lieu of foreclosure, and then subject
to the provisions of Section 23. This Lease shall not be affected by any
assignment, conveyance or sale, and Tenant agrees to attorn to the assignee,
grantee or purchaser.

 

M.
LANDLORD ACCESS TO PREMISES. Landlord or Landlord’s agents shall
have the right to enter upon the Premises, to inspect the Premises, to perform
janitorial and other services and to make such repairs, alterations,
improvements or additions to the Premises or the Building as Landlord may deem
necessary or desirable, without such action constituting an eviction of Tenant
in whole or in part or giving rise to an abatement of Rent, by reason of loss
or interruption of business of Tenant, or otherwise, provided that in
connection with any such entry, to the extent Landlord’s activities would
materially interfere with Tenant’s ability to operate its business in the
Premises, except in an emergency, Landlord shall perform such activities after
normal business hours. Landlord shall also have the right

 

53

 

at
any time without the same constituting an actual or constructive eviction and
without incurring any liability to Tenant therefor, to change the arrangement
and/or location of entrances or passageways, doors and doorways, and corridors,
elevators, stairs, toilets or public parts of the Building, and to close
entrances, doors, corridors, elevators or other facilities, provided that such
action shall not interfere with Tenant’s access to the Premises or the Building
in a permanent and material adverse manner. In any entry into the Premises
under this Section 28.M. (other than in the case of an emergency or to perform
services required of Landlord hereunder), Landlord shall give Tenant reasonable
prior notice of entry, shall allow a representative of Tenant to accompany
Landlord, and shall use reasonable efforts to minimize interference with
Tenant’s operations therefrom.

 

N.
LIMITATION OF LIABILITY. Any liability of Landlord under this
Lease shall be limited solely to its interest in the Building, and in no event
shall any personal liability be asserted against Landlord in connection with
this Lease nor shall any recourse be had to any other property or assets of
Landlord. Assets of a Landlord which is a partnership or limited liability
company do not include the assets of the partners or members of such Landlord,
and any negative capital account of a partner or member in a partnership or
limited liability company which is a Landlord, and any obligation of a partner
or member to contribute capital to the partnership or limited liability company
which is Landlord, shall not be deemed to be assets of the partnership or
limited liability company which is the Landlord. No directors, officers,
employees, managers, members, or shareholders of any corporation or limited
liability company which is Landlord shall have any personal liability arising
from or in connection with this Lease.

 

O.
CITY DOCUMENTS. Landlord shall promptly following receipt
of any notice from the City under the Redevelopment Agreement or City Parking
Lease (as defined in Section 34), forward a copy of same to Tenant.

 

29.
CERTAIN RIGHTS TO LEASE VACANT SPACE.
From and after the Lease Date until the date which is the earlier to occur of
the date the Building (other than the Retail Area) has been fully leased or the
date which is eighteen (18) months following the Commencement Date (the
“LEASE-UP PERIOD”), Landlord shall, on a monthly basis and additionally upon
Tenant’s request from time to time during the Lease-up Period, provide Tenant
with written reports (each, a “VACANT SPACE REPORT”), identifying those
portions of the Building (other than the Retail Area) for which Landlord has
not yet entered into a lease or into a letter of intent to lease or for which
Landlord has not sent out a proposal to lease (which Landlord is then
negotiating), with any party (including Tenant) or for which Landlord has
previously entered into a lease with a party other than Tenant, which lease has
terminated (such portions, as they may be modified from time to time as a
result of leasing activity in the Building, are referred to as the “VACANT
SPACE”). From time to time during the Lease-up Period, Tenant may elect to
lease all or a portion of the Vacant Space, the exact area, configuration, and
location of which shall be designated by Tenant, and finalized by Landlord as
provided in Section 29.E, within the parameters set forth below, upon and
subject to all of the terms and conditions set forth in this Section 29.

 

A. EXERCISE. Tenant’s
right to lease the Vacant Space identified in a Vacant Space Report shall be
exercisable by written notice (“VACANT SPACE EXERCISE

 

54

 

NOTICE”)
from Tenant to Landlord given at any time after receipt of the Vacant Space
Report and prior to Tenant’s receipt of written notice from Landlord that
Landlord has sent out a proposal to a potential tenant for a lease for all or a
portion of the Vacant Space, whereupon Tenant’s right to lease such space shall
terminate while Landlord is negotiating with the potential tenant (provided,
however, that if a letter of intent, term sheet or lease has not been entered
into with the prospective tenant within three (3) months following delivery of
the proposal to the prospective tenant, the applicable space shall be
considered Vacant Space again and shall be included in the next Vacant Space
Report). The Vacant Space Exercise Notice shall indicate the Rentable Square
Feet desired by Tenant to comprise the Vacant Space to be leased, and the
general configuration and location thereof, all within the parameters described
in Section 29.B. below.

 

B.
VACANT SPACE EXERCISE NOTICE. Each Vacant Space Exercise Notice
above shall designate the portion of the Vacant Space to be leased by Tenant,
subject to the following conditions:

 

(i) the area of the Vacant Space to be
leased by Tenant shall be the Rentable Square Feet amount designated by Tenant
(subject to adjustment by Landlord as provided in Section 29.B (iii)), shall
not be more than the Rentable Square Footage of the Vacant Space described in
the most recent Vacant Space Report and shall not be less than 5,000 Rentable
Square Feet; and

 

(ii) the Vacant Space to be leased by
Tenant pursuant to such Vacant Space Exercise Notice shall be on such floor or
floors within the Building as designated by Tenant; provided that such Vacant
Space shall be, if at all possible, contiguous to the other space then included
as part of the Premises hereunder; and

 

(iii) the balance of any floor which
contains Vacant Space and which is not being entirely leased by Tenant
hereunder pursuant to such Vacant Space Exercise Notice shall, in Landlord’s
judgment, have a size and configuration reasonably required for leasing to
third parties (including access to restrooms, Common Areas and elevator
lobbies) and shall comply (or without the necessity of extraordinary expense
can be made to comply) with applicable legal requirements (or Landlord may adjust
the size and configuration of the Vacant Space to be leased by Tenant to the
extent necessary to satisfy the foregoing criteria).

 

C.
CONDITIONS TO EXERCISE. Tenant may only exercise its rights under
this Section 29 and an exercise thereof shall only be effective, if at the time
of Tenant’s exercise of said right this Lease is in full force and effect and
Tenant is not in Default under this Lease.

 

D.
TERMS OF LEASE. If Tenant has validly exercised its
option to lease all or a portion of the Vacant Space, then the applicable
Vacant Space shall be included as part of the Premises for all purposes hereof,
subject to all of the terms, conditions and provisions of this Lease. Without
limitation of the foregoing:

 

55

 

(i) Base Rent per Rentable Square Foot for
the applicable Vacant Space shall be at the same respective rates from time to
time as Base Rent for the initial Office Premises or Storage Area, as
applicable;

 

(ii) the Rentable Square Feet of the Office
Premises and/or Storage Area, shall be increased by the Rentable Square Feet of
the applicable Vacant Space and Tenant’s Proportionate Share shall be
accordingly adjusted if the Vacant Space is not basement space;

 

(iii) the term of the demise covering the
applicable Vacant Space shall commence on the later to occur of the
Commencement Date or the earlier of the date which is one hundred fifty (150)
days following the date of Landlord’s receipt of the Vacant Space Exercise
Notice or the date of substantial completion of the Vacant Space Improvements
(as defined in Section 29.D(iv)) and shall expire simultaneously with the
expiration or earlier termination of the Term of this Lease, including any
extension or renewal thereof; and

 

(iv) if the Vacant Space Exercise Notice is
given by Tenant before October 1, 2001 and is accompanied by a detailed space
plan for the applicable Vacant Space, the tenant improvements for the
applicable Vacant Space shall be completed by Landlord as part of Landlord’s
Work pursuant to Section 27 and the Workletter Agreement and the Delivery
Schedule shall be adjusted to reflect the addition of such space. If the Vacant
Space Exercise Notice is given by Tenant on or after October 1, 2001, any
tenant improvements for the Vacant Space (“VACANT SPACE IMPROVEMENTS”) shall be
completed by Tenant at Tenant’s cost (except as hereinafter provided) pursuant
to the requirements of Section 12 (although the Vacant Space Improvements shall
be considered Tenant Improvements for purposes of removal pursuant to Section
18), and Landlord shall make a contribution towards the cost of the Vacant
Space Improvements in the amount of Thirty Two and 50/100 Dollars ($32.50) per
Rentable Square Foot of the applicable Vacant Space (“VACANT SPACE ALLOWANCE”)
to be disbursed as hereinafter provided. The Vacant Space Allowance shall be
utilized by Tenant to pay for items covered under Section 13.1 of the
Workletter Agreement with respect to the Vacant Space Improvements; provided
that no more than $.50 per Rentable Square Foot may be utilized to pay
architectural and engineering fees and the Vacant Space Allowance may not be
utilized for FF&E or Workstation Wiring. Notwithstanding the foregoing, if
the applicable Vacant Space has previously been built out and occupied by
another tenant whose lease has terminated or is storage space within the
basement of the Building, Landlord shall not be obligated to fund any Vacant
Space Allowance or construct any tenant improvements therein.

 

(v) Landlord shall disburse the Vacant Space
Allowance to Tenant (or to the contractor(s) performing the Vacant Space
Improvements as, Landlord may elect), in progress payments, with each payment
to be made within thirty (30) days following Tenant’s written request for
payment (to be given no more than monthly), provided all of the following
conditions have been satisfied:

 

56

 

(a)
prior to any disbursement of the Vacant Space Allowance, Tenant shall have
provided Landlord, the Mortgagee(s), the Ground Lessor(s) and the title
insurance company disbursing the Vacant Space Allowance and/or insuring the
Building (“TITLE COMPANY”), if any, with such customary assurances and
undertakings that Tenant will, and has the ability to, pay the amounts by which
the costs of the Vacant Space Improvements will exceed the Vacant Space
Allowance, as reasonably determined by Landlord (“VACANT SPACE EXCESS COSTS”),
as they may reasonably require, and shall further execute such documents and
instruments, including indemnities as the Mortgagee(s), Ground Lessor(s)
and Title Company may require in connection therewith, including assurances of
lien-free completion. The costs of the Vacant Space Improvements shall be
funded from the Vacant Space Allowance, and from Tenant’s funds, on a pari
passu basis;

 

(b)
each progress payment shall be for work performed during the preceding month
less a retainage of ten percent (10%) of each progress payment (“RETAINAGE”)
and each request for a progress payment shall be accompanied by a certificate
from Tenant certifying the costs incurred and/or paid in the preceding month,
the names of each contractor and subcontractor to whom payment is due and the
amount thereof, and shall also be accompanied by copies of conditional waivers
and releases of lien upon progress payment, in form satisfactory to Landlord,
from all contractors, subcontractors and material suppliers covering all work
and materials (provided that as long as the general contractor’s lien waiver
has been obtained, Tenant may submit subcontractor lien waivers within thirty
(30) days after the progress payment, subject to Landlord’s receipt of title
endorsements satisfactory to Landlord, and the approval of any Mortgagee or any
Ground Lessor) as well as a certificate from the architect supervising the
Vacant Space Improvements, in form satisfactory to Landlord, certifying the
status of the work to date, and that the work is being completed in accordance
with the plans and specifications therefor approved by Landlord in accordance with
Section 12, in accordance with all applicable legal requirements, and in
accordance with all other requirements of Section 12. In addition, Tenant shall
fund its proportionate share of each progress payment prior to or concurrently
with the disbursement of the applicable portion of the Vacant Space Allowance;

 

(c)
with respect to the final disbursement of the Vacant Space Allowance (including
Retainage), Landlord shall have received certifications from the architect
supervising the Vacant Space Improvements, that the Vacant Space Improvements
have been completed in accordance with the plans and specifications therefor
approved by Landlord pursuant to Section 12, and in accordance with all
applicable legal requirements, and that all other requirements of Section 12
applicable to the Vacant Space Improvements have been met;

 

57

 

(d) with respect to the final disbursement
of the Vacant Space Allowance (including Retainage), Landlord shall have
received contractors’ affidavits and suppliers’ affidavits (for suppliers with
lien rights) and waivers of lien satisfactory to Landlord evidencing that the
Vacant Space Improvements have been completed and that all costs of the Vacant
Space Improvements have been paid in full (or will be paid in full out of the
final disbursement of the Vacant Space Allowance) and evidence satisfactory to
Landlord, the Mortgagee(s), Ground Lessor(s), and Title Company that Tenant has
paid or concurrently with the disbursement is paying all costs of the Vacant
Space Improvements in excess of the Vacant Space Allowance; and

 

(e) Tenant shall not be in default under
any of the terms and provisions of this Lease at the time of any disbursement
of the Vacant Space Allowance.

 

(vi) Disbursement of any portion of the
Vacant Space Allowance shall not be deemed a waiver of Tenant’s obligation to
comply with any of the terms of Section 12. Tenant shall be solely responsible
for the completeness of the contractor’s affidavits and waivers of lien and approval
of any work done, and Landlord shall have no responsibility therefor.

 

E.
AMENDMENT. If Tenant has validly exercised its right to lease any Vacant
Space, within thirty (30) days after request by either party hereto Landlord
and Tenant shall enter into a written amendment to this Lease confirming the
terms, conditions and provisions applicable to the Vacant Space being leased by
Tenant as determined in accordance herewith, which shall include a final floor
plan or floor plans to be prepared by or on behalf of Landlord showing the
exact area, location and configuration of the Vacant Space determined in
accordance with this Section 29, which Vacant Space shall contain that number
of Rentable Square Feet designated by Tenant in accordance with this Section
29, subject to Landlord’s right to adjust the size and configuration of the
Vacant Space pursuant to Section 29.B(iii).

 

30.
RIGHT OF FIRST OFFER. Subject to the provisions
hereinafter set forth, Landlord hereby grants to Tenant the right to lease, on
the terms and conditions hereinafter set forth, each portion of the space in
the Building (the “FIRST OFFER SPACE”) which is not otherwise being leased by
Tenant hereunder and (i) has not yet been leased at the time the First Offer
Period (hereinafter defined) commences or (ii) becomes available for lease as a
result of the termination of the lease of an existing tenant therein during the
First Offer Period.

 

A. NOTICE. If
Landlord becomes aware that any portion of the First Offer Space has or will
become available for lease as a result of the expiration or termination of any
lease thereof during the First Offer Period or if, as of the commencement of
the First Offer Period, any portion of the First Offer Space has not yet been
leased to Tenant or any other party, Landlord shall prior to leasing any
portion of the First Offer Space for a term commencing during the First Offer
Period, give Tenant written notice of the location and

 

58

 

number
of Rentable Square Feet of the First Offer Space, the anticipated date as
determined by Landlord, which the First Offer Space will become available (the
“FIRST OFFER SPACE COMMENCEMENT DATE”) and Landlord’s determination of the
Market Rental Rate (as defined in Section 33) for such portion of the First
Offer Space and, if applicable, the amount of any market tenant improvement
allowance, to the extent provided for in Section 30.E.(iv). The First Offer
Space Commencement Date shall not be less than sixty (60) days after the date
such notice is given by Landlord. In no event shall the First Offer Space
Commencement Date be earlier than the date which is eighteen (18) months
following the Commencement Date.

 

B. EXERCISE. Tenant’s
right to lease the First Offer Space described in any First Offer Notice shall
be exercisable by written notice from Tenant to Landlord of Tenant’s election
to lease the applicable First Offer Space (a “FIRST OFFER EXERCISE NOTICE”)
given not later than ten (10) business days after Landlord’s notice is given,
time being of the essence. If such right is not so exercised, Tenant’s right of
first offer shall thereupon terminate as to such portion of the First Offer
Space, and Landlord may thereafter lease and grant options to lease such
portion of the First Offer Space without notice to Tenant and free of any right
in Tenant under this Section 30, provided that Landlord shall have leased or
granted an option to lease such First Offer Space within the period ending six
(6) months following the date of the First Offer Notice regarding such First
Offer Space plus, if Landlord is negotiating with a particular potential tenant
at the time such period expires, such additional period (not to exceed an
additional four (4) months) during which Landlord diligently continues to
negotiate with such potential tenant (and Landlord shall, at Tenant’s request,
provide Tenant with signed written evidence of the ongoing negotiation);
otherwise, Landlord shall not enter into a lease or grant an option in any such
portion of the First Offer Space without again giving the notice referred to
above. In addition, if Landlord enters into a lease or grants any options with
respect to any such First Offer Space, then, at the end of such lease
(including any renewals thereof, whether or not pursuant to renewal options
granted therein) and the expiration of all such other options, Tenant shall
again have first offer rights with respect to such space under this Section 30,
to the extent Landlord again proposes to lease or grant options to lease any
portion thereof for a term commencing during the First Offer Period.

 

C.
ENTIRE SPACE. Tenant may not elect to lease less than the entire area of the
First Offer Space described in a First Offer Notice; provided, however, that if
the First Offer Space consists of a full floor or full floors, Tenant may elect
to lease less than all of the space on one of the full floors (which election
shall be made by delivery of a floor plan for the partial floor at the time of
delivery of the First Exercise Notice) so long as Landlord is not then
negotiating in good faith a lease or letter of intent for the full floor (and
Landlord shall, at Tenant’s request, provide Tenant with signed written
evidence of the negotiation), and the balance of the floor not being leased by
Tenant is of a size and configuration which in Landlord’s judgment, is
reasonably required for leasing to third parties (including access to
restrooms, Common Areas and elevator lobbies) and shall comply (or without the
necessity of extraordinary expense can be made to comply) with applicable legal
requirements (or Landlord may adjust the size and configuration of the First
Offer Space for the partial floor to the extent necessary to satisfy the
foregoing requirements).

 

59

 

D.
CONDITIONS TO EXERCISE. Tenant may only exercise its right to
lease the First Offer Space described in a First Offer Notice, and any exercise
thereof shall only be effective, if at the time of Tenant’s exercise of said
right and on the pertinent First Offer Space Commencement Date, this Lease is
in full force and effect and Tenant is not in Default under this Lease.

 

E.
TERMS OF LEASE. If Tenant has validly exercised its right
to lease a portion of the First Offer Space, then effective as of the First
Offer Space Commencement Date such portion of the First Offer Space shall be
included in the Premises, subject to all of the terms, conditions and
provisions of this Lease, except that:

 

(i) Base Rent per Rentable Square Foot for
such portion of the First Offer Space shall be equal to the Market Rental Rate
for such First Offer Space. If Tenant disagrees with Landlord’s determination
of the Market Rental Rate set forth in the First Offer Notice, the Market
Rental Rate shall be determined by arbitration in accordance with the
procedures set forth in Section 33, provided Tenant has given Landlord timely
notice of its disagreement in accordance with Section 33;

 

(ii) the Rentable Square Feet of the Office
Premises and/or Storage Area, as applicable, shall be increased by the Rentable
Square Feet of such portion of the First Offer Space and Tenant’s Proportionate
Share, if applicable, shall be adjusted to reflect the added square footage;

 

(iii) the term of the demise covering such
portion of the First Offer Space shall commence on the later of the date of
delivery of the First Offer Space to Tenant or the First Offer Space
Commencement Date and shall expire simultaneously with the expiration of the
Term of this Lease, including any extension or renewal thereof;

 

(iv) the First Offer Space shall be rented
in its “AS IS” condition as of the First Offer Space Commencement Date
(inasmuch as tenant construction periods and/or tenant improvement work and
allowances, if any, will be reflected in the Market Rental Rate determined
pursuant to Section 33 below) unless the First Offer Space has never been
improved for use by another tenant and is not storage space within the basement
of the Building, in which event Landlord shall provide Tenant with a market
tenant improvement allowance (which shall also be determined pursuant to the
procedures for determination of the Market Rental Rate set forth in Section 33)
and shall be disbursed in accordance with the procedures for disbursement of
the Vacant Space Allowance set forth in Section 29.D.(v); and

 

(v) if Tenant has validly exercised its
right to lease a portion of the First Offer Space, on or before the First Offer
Space Commencement Date Landlord and Tenant shall enter into a written
amendment to this Lease confirming the terms, conditions and provisions
applicable to such portion of the First Offer Space as determined in accordance
herewith.

 

60

 

F.
POSSESSION. If Tenant has validly exercised its right to lease a portion
of the First Offer Space, Landlord shall use commercially reasonable efforts to
deliver possession of such First Offer Space to Tenant on the applicable First
Offer Space Commencement Date, but in the event Landlord should be unable for
any reason to do so, then, Landlord shall not be subject to any liability for
failure to deliver possession. Such failure to deliver possession shall not
affect either the validity of this Lease or the obligations of either Landlord
or Tenant hereunder or be construed to extend the expiration of the Term of
this Lease either as to such portion of the First Offer Space or the balance of
the Premises; provided, however, that under such circumstances, rent shall not
commence as to such portion of the First Offer Space until Landlord is able to
deliver possession. In addition, if notwithstanding Landlord’s commercially
reasonable efforts, Landlord is unable to deliver possession of the applicable
First Offer Space to Tenant on or before the date which is one hundred twenty
(120) days following the applicable First Offer Space Commencement Date, then
Tenant, as its sole remedy, may elect to rescind the First Exercise Notice and
its lease of the applicable First Offer Space, by written notice to Landlord
given at any time prior to delivery of possession of the applicable First Offer
Space.

 

G.
OTHER RIGHTS. Tenant’s rights to lease the First Offer Space are also
subject to any expansion options with respect to the First Offer Space or
portions thereof granted in any lease of First Offer Space entered into by
Landlord and a third party following notice to Tenant in accordance with this
Section and Tenant’s failure to lease such space pursuant to this Section, and
to Landlord’s right to extend or renew the lease of any tenant occupying any
portion of the First Offer Space even if not pursuant to an option contained in
its lease; provided that any first offer rights or rights of first refusal
granted to a third party tenant shall be subordinate to Tenant’s rights
hereunder.

 

H.
FIRST OFFER PERIOD. As used herein, the term “FIRST OFFER
PERIOD” shall mean the period commencing on the expiration of the Lease-up
Period and continuing through the balance of the Term of this Lease, provided,
however, that the First Offer Period shall not include the last one (1) year of
the Term or any renewal thereof pursuant to Section 32, unless Tenant has
exercised an option granted to Tenant, if any, in this Lease to extend the Term
hereof for the applicable renewal period described in Section 32.

 

31.
EXPANSION OPTIONS. Subject to the provisions
hereinafter set forth, Landlord hereby grants to Tenant three (3) separate
options to lease (collectively, the “OPTIONS” and individually, in the order of
potential exercise, the “FIRST OPTION”, the “SECOND OPTION” and the “THIRD
OPTION”), on the terms and conditions hereinafter set forth, certain space to
be designated by Landlord in connection with each Option (the “EXPANSION
SPACE”) which consists in the aggregate of all portions of the Building (other
than the Retail Area) which have not been leased to Tenant as of the Lease Date
(the “TOTAL EXPANSION SPACE”). The exact area, configuration and location of
the applicable Expansion Space for each Option shall be designated by Landlord
within the parameters set forth below.

 

A.
EXERCISE DATES. Each of the Options to lease Expansion
Space shall be exercisable by written notice (each, an “EXPANSION OPTION
EXERCISE NOTICE”) from Tenant to Landlord of Tenant’s election to exercise the
applicable Option given not later than

 

61

 

the
applicable latest exercise date designated below for such Option, time being of
the essence, and the applicable Expansion Space shall be delivered to Tenant on
the applicable date set forth below (each such date being referred to as an
“EXPANSION SPACE COMMENCEMENT DATE”):

 

	
  EXPANSION

  OPTION

  	
   

  	
  LATEST

  EXERCISE DATE

  	
   

  	
  EXPANSION
  SPACE

  COMMENCEMENT DATE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First Option

  	
   

  	
  End of the
  24th full calendar month of the Term

  	
   

  	
  Beginning of
  37th month of the Term

  
	
  Second
  Option

  	
   

  	
  End of 57th
  full calendar month of the Term

  	
   

  	
  Beginning of
  73rd month of the term

  
	
  Third Option

  	
   

  	
  End of 93rd
  full calendar month of the Term Lease Year

  	
   

  	
  Beginning of
  109th month of the term

  

 

If
any Option is not exercised on or before the applicable latest exercise date
described above for such Option, Landlord shall give Tenant written notice that
Tenant has failed to exercise the Option, and if within two (2) business days
following Tenant’s receipt of the notice, Tenant fails to deliver to Landlord
an Expansion Option Exercise Notice, the applicable Option shall terminate and
Tenant shall not thereafter have any right to lease any portion of the Total
Expansion Space pursuant to such Option (provided that any remaining Options
which may thereafter be exercised shall continue in full force and effect). As
to any such Option, Tenant may not elect to lease less than the entire area of
the Expansion Space designated by Landlord for such Option (unless otherwise
consented to by Landlord, in Landlord’s sole discretion), in accordance with
the parameters described in Section 31.B. below.

 

B.
DESIGNATION OF EXPANSION SPACE. Upon the exercise of the First
Option, Landlord shall be obligated, upon the applicable Expansion Space
Commencement Date, to deliver Expansion Space to Tenant which contains Rentable
Square Footage approximately equal to 11,041 Rentable Square Feet, upon the
exercise of the Second Option, Landlord shall be obligated, upon the applicable
Expansion Space Commencement Date, to deliver Expansion Space of approximately
22,460 Rentable Square Feet, and upon the exercise of the Third Option,
Landlord shall be obligated, upon the applicable Expansion Space Commencement
Date, to deliver Expansion Space of approximately 22,688 Rentable Square Feet,
in each case except as hereinafter provided. The exact location and
configuration of the Expansion Space to be delivered in connection with each
Option shall be designated by Landlord by written notice (each, an “EXPANSION
SPACE DESIGNATION NOTICE”) to Tenant, given within sixty (60) days of
Landlord’s receipt of the applicable Expansion Option Exercise Notice,
identifying the location of the applicable Expansion Space, the Rentable Square
Footage thereof, the configuration thereof, and the applicable Expansion Space
Commencement Date. Landlord shall, to the extent reasonably possible, provide
Expansion Space which is contiguous. Notwithstanding the foregoing, if Tenant
exercises any rights to lease additional space pursuant to Sections 29 or 30
prior to the delivery of any Expansion Space, the square footage of the
Expansion Space shall be reduced by the square footage of the space leased by
Tenant pursuant to Sections 29 and 30, and if the square footage of the

 

62

 

Premises
leased by Tenant pursuant to Sections 29 and 30, exceeds the square footage of
the applicable Expansion Space to be delivered, such excess square footage
shall reduce the amount of square footage that Landlord is obligated to deliver
in connection with the next Option or, if applicable, Options.

 

C. CONDITIONS TO
EXERCISE. Tenant may only exercise each Option, and an exercise thereof
shall only be effective, if at the time of Tenant’s exercise of said option and
on the applicable Expansion Space Commencement Date, this Lease is in full
force and effect, Tenant is not in Default under this Lease.

 

D.
ADDITION OF EXPANSION SPACE. If Tenant has validly exercised any
Option, then effective as of the applicable Expansion Space Commencement Date,
the designated Expansion Space shall be included in the Office Premises,
subject to all of the terms, conditions and provisions of this Lease, except
that:

 

(i) With respect to the First Option only,
Base Rent per Rentable Square Feet for the First Expansion Space shall be at
the same rates as Base Rent for the initial Office Premises;

 

(ii) With respect to the Expansion Space
leased pursuant to each of the Second Option and Third Option, Base Rent shall
be an amount equal to the Market Rental Rate as of the applicable Expansion
Space Commencement Date, as determined by Landlord (which determination shall
be included within the Expansion Space Designation Notice); provided that if
Tenant disagrees with Landlord’s determination, the Market Rental Rate shall be
determined by arbitration pursuant to Section 33, provided Tenant has given a
timely notice of disagreement pursuant to Section 33;

 

(iii) Tenant’s obligation to pay Rent with
respect to any Expansion Space shall not commence until the date which is sixty
(60) days following delivery of the Expansion Space to Tenant;

 

(iv) The Rentable Square Feet of the Office
Premises shall be increased by the Rentable Square Feet of the applicable
Expansion Space and Tenant’s Proportionate Share shall be accordingly adjusted;

 

(v) The term of the demise covering the
applicable Expansion Space shall commence on the applicable Expansion Space
Commencement Date and shall expire simultaneously with the expiration or
earlier termination of the Term of this Lease, including any extension or
renewal thereof; and

 

(vi) The applicable Expansion Space shall
be rented in its “AS IS” condition as of the Expansion Space Commencement Date;
provided that if the Expansion Space (or any portion thereof) has not previously
been improved for another tenant’s use, Tenant shall be entitled to a tenant
improvement allowance equal to Thirty Dollars and No/100 ($30.00) multiplied by
the number of Rentable Square

 

63

 

Feet
in the applicable Expansion Space (the “EXPANSION SPACE ALLOWANCE”). Any work
performed by Tenant at the pertinent Expansion Space in order to ready the same
for occupancy shall be performed in accordance with Section 12 hereof. The
Expansion Space Allowance shall be disbursed by Landlord in accordance with,
and subject to satisfaction of all of the conditions for disbursement of the
Vacant Space Allowance, all as more particularly set forth in Section 29.D.(v).

 

E. AMENDMENT.
If Tenant has validly exercised an Option to lease any applicable Expansion
Space, within thirty (30) days after request by either party given at any time
following the delivery of the Expansion Space Designation Notice, Landlord and
Tenant shall enter into a written amendment to this Lease confirming the terms,
conditions and provisions applicable to the Expansion Space as determined in
accordance herewith.

 

F. POSSESSION.
If Tenant has validly exercised any Option, Landlord shall use commercially
reasonable efforts to deliver possession of the applicable Expansion Space on
the applicable Expansion Space Commencement Date, provided that if Landlord
should be unable to deliver possession of the applicable Expansion Space on the
applicable Expansion Space Commencement Date for any reason which is not within
Landlord’s reasonable control, then Landlord shall not be subject to any
liability for failure to deliver possession. Such failure to deliver possession
shall not affect either the validity of this Lease or the obligations of either
Landlord or Tenant hereunder, or be construed to extend the expiration of the
Term of this Lease either as to the Expansion Space or the balance of the
Premises. In addition, if notwithstanding Landlord’s commercially reasonable
efforts, Landlord is unable to deliver possession of the applicable Expansion
Space to Tenant on or before the date which is one hundred twenty (120) days
following the applicable Expansion Space Commencement Date, Tenant may, as its
sole remedy, elect to rescind the exercise of the Expansion Option and its
lease of the applicable Expansion Space by written notice to Landlord given at
any time prior to deliver of possession of the applicable Expansion Space.

 

32.
RENEWAL OPTIONS. Subject to the provisions
hereinafter set forth, Landlord hereby grants to Tenant three (3) successive
options to extend the Term of this Lease (collectively the “RENEWAL OPTIONS”,
and individually in the order of potential exercise, the “FIRST RENEWAL
OPTION”, “SECOND RENEWAL OPTION”, and “THIRD RENEWAL OPTION”) for all or a
portion of the Premises (provided that in no event shall Tenant be entitled to
exercise any Renewal Option if the Premises would be less than 120,000 Rentable
Square Feet) on the same terms, conditions and provisions as contained in this
Lease, except as otherwise provided herein, for three (3) successive periods of
five (5) years per Renewal Option (collectively, the “RENEWAL PERIODS” and
individually a “RENEWAL PERIOD”), with the first Renewal Period to commence on
the first day of the sixteenth (16th) Lease Year and end on the last day of the
twentieth (20th) Lease Year; the second Renewal Period to commence on the first
day of the twenty-first (21st) Lease Year and end on the last day of the
twenty-fifth (25th) Lease Year and the third Renewal Period to commence on the
first day of the twenty-sixth (26th) Lease Year and to end on the last day of
the thirtieth (30th) Lease Year.

 

A. EXERCISE. Each
Renewal Option shall be exercisable by written notice from Tenant to Landlord
of Tenant’s election to extend the Term given not later than the date which is
twelve (12) months prior to the commencement date for the applicable

 

64

 

Renewal
Period, time being of the essence, which notice shall also designate the
portions of the Premises which will be subject to the Lease during the Renewal
Period (which in no event shall be less than 120,000 Rentable Square Feet). If
Tenant’s notice does not designate the portions of the Premises to be subject
to the Renewal Period, Tenant shall be deemed to have elected to extend as to
the entire Premises. If the First Renewal Option is not timely exercised,
Landlord shall notify Tenant in writing of the failure, and if within two (2)
business days following receipt of Landlord’s notice, Tenant fails to deliver
written notice of exercise of such Renewal Option, all of the Renewal Options
shall expire. If the First Renewal Option is timely exercised but the Second
Renewal Option is not timely exercised, Landlord shall notify Tenant in writing
of the failure, and if within two (2) business days following receipt of
Landlord’s notice, Tenant fails to deliver written notice of exercise of such
Renewal Option, the Second Renewal Option and Third Renewal Option shall
expire. If the Third Renewal Option is not timely exercised, Landlord shall
notify Tenant in writing of the failure, and if within two (2) business days
following receipt of Landlord’s notice, Tenant fails to deliver written notice
of exercise of such Renewal Option, the Third Renewal Option shall expire.

 

B.
CONDITIONS TO EXERCISE. Tenant may only exercise a Renewal
Option, and an exercise thereof shall only be effective, if at the time of
Tenant’s exercise of the Renewal Option and on the commencement date of the applicable
Renewal Period, this Lease is in full force and effect and Tenant is not in
Default under this Lease.

 

C. BASE
RENT. Base Rent per Rentable Square Foot of the Premises payable
during each Renewal Period with respect to all space included in the Premises
as of the commencement of the applicable Renewal Period shall be equal to
ninety percent (90%) of the Market Rental Rate for the Premises during such
Renewal Period (which the parties acknowledge may be less than or more than the
Base Rent payable during any one year period prior to the commencement of the
applicable Renewal Period). Landlord shall give Tenant written notice of the
proposed Market Rental Rate for the applicable Renewal Period within thirty
(30) days following written request by Tenant made not earlier than fifteen
(15) months prior to the commencement of the applicable Renewal Period. If
Tenant disagrees with Landlord’s determination of the Market Rental Rate for
any Renewal Period, the determination of the Market Rental Rate for the Renewal
Period shall be subject to arbitration pursuant to the procedures set forth in
Section 33, provided Tenant has given a timely notice of disagreement pursuant
to Section 33. The Base Rent for the first year of each Renewal Period shall
not be subject to the adjustment described in the last sentence of Section
5.B(i). 

 

D.
AMENDMENT. If Tenant has validly exercised any Renewal Option, within
thirty --------- (30) days after request by either party hereto, Landlord and
Tenant shall enter into a written amendment to this Lease confirming the terms,
conditions and provisions applicable to the applicable Renewal Period as
determined in accordance herewith, with such revisions to the rental provisions
of this Lease as may be necessary to conform such provisions to the Market
Rental Rate and reflecting any reduction in the size of the Premises..

 

E.
NO FURTHER EXTENSIONS. Tenant shall not have any option to
extend the Term of this Lease beyond the expiration of the Third Renewal
Period.

 

65

 

33.
MARKET RENTAL RATE.

 

A. DEFINITION. As used
herein, the term “MARKET RENTAL RATE” per Rentable Square Foot of the Premises
shall mean (i) the annual rate of net rent reasonably determined by Landlord to
be the prevailing market net rental rate for comparable tenants for leases of
comparable space in comparable Class A office buildings in the Chicago area’s
north suburban office market (taking into consideration the duration of the
term for which such space is being leased, location and/or floor level within
the applicable building, when the applicable rate first becomes effective and
other comparable factors; and reflecting (i.e., reduced, if applicable, to
reflect any prevailing concessions which are not being provided to Tenant in
kind) prevailing concessions, such as, but not limited to, rental concessions,
tenant improvement work, design, construction and moving allowances, and time
for construction of tenant improvements; and assuming that leasing commissions
will be paid) for terms commencing on or about the time for which Market Rental
Rate is being determined hereunder, plus (ii) additional components of the
Market Rental Rate, which may include periodic adjustments and increases to
adjust for inflation. Comparable arms length lease transactions at the Building
and/or any other relevant information or factors which a qualified MAI
appraiser would utilize in determining the prevailing market net rental rate
applicable to space in the Building may be used by Landlord as factors for the
determination of the Market Rental Rate and Landlord, at Tenant’s request,
shall provide Tenant with copies of the applicable portions of the leases with
respect to space in the Building and other information being utilized by
Landlord in connection with the determination.

 

B. ARBITRATION.

 

(i) If Tenant disagrees with Landlord’s
determination of the Market Rental Rate (and/or, if applicable, the amount of
any market tenant improvement allowance under Section 30.E.(iv)) with respect
to any First Offer Space under Section 30, any Expansion Space pursuant to
Section 31, or any renewal of the Term under Section 32 (which, in each
instance, Tenant must do, if at all, in writing setting forth Tenant’s
determination of the proposed Market Rental Rate (and/or, if applicable, the
amount of any market tenant improvement allowance under Section 30.E.(iv))
within thirty (30) days after notice of Landlord’s determination) and if the
parties cannot agree on the Market Rental Rate (and/or, if applicable, the
amount of any market tenant improvement allowance under Section 30.E.(iv))
within thirty (30) days after Tenant’s notice, then such dispute shall be
determined by binding arbitration as hereinafter provided.

 

(ii) Within ten (10) days following the
expiration of the thirty (30) day period following Tenant’s notice, Landlord
and Tenant will each select (and notify the other party of the identity of) an
arbitrator who shall be disinterested and shall either be a person who is a
licensed real estate broker that is experienced in office leasing in the
Chicago area’s north suburban office market or that has been actively engaged
in the development or leasing of first-class office buildings in the Chicago
area’s north suburban office market, in each case for a period not less than
seven (7) years

 

66

 

immediately
preceding his or her appointment. If either party fails to notify the other
party of the appointment of its arbitrator within the time specified, then the
arbitrator appointed by the party who does so notify the other party shall be
the sole arbitrator to determine the Market Rental Rate (and/or, if applicable,
the amount of any market tenant improvement allowance under Section 30.E.(iv))
for the applicable Renewal Period and such arbitrator’s determination shall be
binding upon the parties.

 

(iii) If two (2) arbitrators are chosen
pursuant to Section 33.B(ii), the arbitrators so chosen shall meet within ten
(10) business days after the second arbitrator is appointed in an attempt to
set the Market Rental Rate (and/or, if applicable, the amount of any market
tenant improvement allowance under Section 30.E.(iv)) for the applicable
Renewal Period. If the two (2) arbitrators agree, their determination of the Market
Rental Rate (and/or, if applicable, the amount of any market tenant improvement
allowance under Section 30.E.(iv)) shall be binding upon the parties.

 

(iv) If the two (2) arbitrators so
appointed fail to agree as to the Market Rental Rate (and/or, if applicable,
the amount of any market tenant improvement allowance under Section 30.E.(iv)),
the two (2) arbitrators shall notify the parties in writing of their respective
determinations of the Market Rental Rate (and/or, if applicable, the amount of
any market tenant improvement allowance under Section 30.E.(iv)) and shall
thereafter appoint a third arbitrator, using the criteria described above, and
the third arbitrator shall notify the parties of its determination of the
Market Rental Rate (and/or, if applicable, the amount of any market tenant
improvement allowance under Section 30.E.(iv)) within thirty (30) days
following the third arbitrator’s appointment. If the two (2) arbitrators are
not able to so agree upon a third arbitrator, the third arbitrator shall be
appointed by the American Arbitration Association, using the criteria described
above.

 

(v) If a third arbitrator is appointed,
upon the third arbitrator’s determination of the Market Rental Rate (and/or, if
applicable, the amount of any market tenant improvement allowance under Section
30.E.(iv)), such determination shall be averaged with the Market Rental Rate
(and/or, if applicable, the amount of any market tenant improvement allowance
under Section 30.E.(iv)) of the arbitrator whose Market Rental Rate was closest
in amount to the third arbitrator’s determination, and the average of such
determinations shall constitute the Market Rental Rate (and/or, if applicable,
the amount of any market tenant improvement allowance under Section 30.E.(iv))
and shall be binding upon the parties. Each party shall pay one-half (1/2) of
the costs of the arbitration, provided that each party shall be required to pay
directly the costs of the arbitrator that it appointed. If no determination is
made prior to the date for commencement of payment of rent for which Market
Rental Rate must be determined, then the determination of Landlord’s arbitrator
shall be used until the arbitration is completed. Upon the final determination
Landlord shall promptly refund any overpayments to Tenant.

 

67

 

34.
PARKING. During the Term, Landlord shall provide to Tenant
parking, as follows:

 

A.
AT-GRADE SPACES. Tenant shall be entitled to utilize all
on-grade parking spaces, if any, constructed by Landlord upon the Land as part
of the Project, at no cost to Tenant (other than costs reimbursable as part of
Expenses).

 

B.
BUILDING PARKING GARAGE. In connection with the construction of
the Building, Landlord shall construct a below grade parking garage on the Land
(the “BUILDING PARKING GARAGE”) and Tenant shall initially have the right to
utilize the number of permits for parking in the Building Parking Garage which
is equal to Tenant’s Proportionate Share multiplied by the total number of spaces
within the Building Parking Garage (i.e., with each parking permit related to
the right to park one automobile) (the “BUILDING ALLOCATED PARKING”). On or
before sixty (60) days prior to the Commencement Date, Tenant shall notify
Landlord in writing as to how many parking permits (which in no event shall
exceed the Building Allocated Parking) Tenant shall utilize as of the
Commencement Date. If Tenant fails to notify Landlord in a timely manner,
Landlord shall send Tenant a notice requesting that Tenant notify Landlord as
to how many parking permits Tenant desires, and if within five (5) business
days thereafter Tenant fails to respond, Tenant shall be deemed to have elected
to utilize all of the Building Allocated Parking. If Tenant does not elect to
utilize all of the Building Allocated Parking, Landlord shall have the right to
issue parking permits to other tenants for the unutilized Building Allocated
Parking, provided that any parking arrangements for the unutilized Building
Allocated Parking shall provide that they are terminable upon no more than
sixty (60) days prior notice from Landlord. At Tenant’s election, upon sixty
(60) days prior notice to Landlord, Landlord shall make available to Tenant any
spaces not being utilized by Tenant out of the Building Allocated Parking prior
to Tenant’s notice. In addition, if Tenant has elected to utilize all of the
Building Allocated Parking, at Tenant’s request, Tenant shall also be placed on
the Building Parking Garage’s waiting list, and shall be notified when additional
spaces become available; provided that all spaces made available to Tenant
above the Building Allocated Parking shall be subject to a right in favor of
Landlord to terminate Tenant’s use thereof upon sixty (60) days prior notice to
Tenant. Also, from time to time following the Commencement Date, Tenant may
elect to terminate its use of some or all of the parking permits, upon no less
than sixty (60) days prior written notice to Landlord, whereupon Tenant’s
rights to utilize the applicable parking permits shall terminate and Landlord
shall have the right to issue parking permits to other tenants, subject to a
right in favor of Landlord to terminate the use upon sixty (60) days prior
notice to the holder of the permit to the extent such spaces are unutilized
spaces from the Building Allocated Parking. If Tenant has terminated its use of
parking permits within the Building Allocated Parking, at Tenant’s election,
upon sixty (60) days prior notice to Landlord, Tenant may elect to utilize such
spaces, up to the Building Allocated Parking, and Landlord shall terminate any
existing arrangements with third parties for use of the spaces. Tenant shall
pay to Landlord a parking charge, monthly in advance, equal to the then
applicable parking charge calculated on a per space, per month basis, that
Landlord is obligated to pay the City under the City Parking Lease, as the
parking charges may be adjusted from time to time under the City Parking Lease,
multiplied by the number of parking permits Tenant has elected to utilize,
which shall be due and payable concurrently with each payment

 

68

 

of
Base Rent, and the use of parking spaces within the Building Parking Garage
shall be further subject to the terms and conditions, including reasonable
parking rules and regulations, promulgated by Landlord, applicable from time to
time to parking in the Building Parking Garage. The parking rules and
regulations (and any revisions thereto) shall be subject to Tenant’s prior written
approval, not to be unreasonably withheld, conditioned or delayed and to be
given within five (5) business days following Landlord’s request; provided that
if Tenant fails to respond within the five (5) business day period, Landlord
shall give Tenant a second notice, and Tenant’s consent shall be deemed given,
if the second notice is not responded to within three (3) business days of
Landlord’s second written request for approval. Landlord shall not implement
any changes to the parking rules and regulations, without at least sixty (60)
days prior written notice to Tenant. In that connection, Tenant may be required
to periodically execute standard parking agreements that are being utilized in
the Building Parking Garage. Tenant shall pay parking charges for all parking
permits provided for hereunder, whether or not Tenant does, in fact, utilize
the parking permits and spaces, subject to the termination rights set forth
above.

 

C.
OFFSITE PARKING. Pursuant to the terms of the
Redevelopment Agreement, upon acquisition of the Land by Landlord, the City and
Landlord shall enter into a Parking Lease (“CITY PARKING LEASE”) substantially
in the form attached to this Lease as EXHIBIT M, obligating the City to provide
Landlord with certain parking spaces at the proposed Maple Street Garage at the
northwest corner of Clark and Maple Street (the “MAPLE STREET PARKING
STRUCTURE”) and at the City’s existing Sherman Avenue parking structure
(“SHERMAN AVENUE PARKING STRUCTURE”) (the Maple Street Parking Structure and
Sherman Avenue Parking Structure are collectively the “CITY PARKING
STRUCTURES”) as designated by Landlord in accordance with the City Parking
Lease; provided, however, until completion of the Maple Street Parking
Structure, alternative parking for the parking spaces designated by Landlord to
be located in the Maple Street Parking Structure shall be provided at the
Sherman Avenue Parking Structure and during any redevelopment of the Sherman
Avenue Parking Structure, to the extent there are not sufficient remaining
spaces available from the City in the Sherman Avenue Parking Structure to
accommodate the parking spaces designated by Landlord to be located in the
Sherman Avenue Parking Structure, then the City shall put all such designated
parking spaces in the Maple Avenue Parking Structure. The Parking Lease
provides that the City shall be paid a quarterly rental payment at the market
rate for the parking spaces provided. Any parking space provided pursuant to
the Parking Lease shall be non-segregated and non-exclusive. Landlord shall
initially allocate for use by Tenant’s employees from the spaces leased
pursuant to the City Parking Lease in the City Parking Structures, the number
of spaces which is equal to (i) the Rentable Square Feet of the Office Premises
as of the Completion Date, multiplied by 1.5, (ii) reduced by the number of
spaces provided by Landlord to Tenant pursuant to Sections 34.A and B above
(such sum being referred to as the “ADDITIONAL REQUIRED PARKING”). The
Additional Required Parking shall be allocated by Landlord between the Sherman
Avenue Parking Structure and the Maple Street Parking Structure pro rata based
upon the allocation of Landlord’s spaces under the City Parking Lease (as such
allocation may change from time to time based upon the construction and
reconstruction of the City Parking Structures) among the City Parking
Structures (i.e., if fifty percent of the spaces given Landlord under the City
Parking Lease are in the Maple Street Parking Structure and fifty percent are
in the Sherman Avenue Parking Structure, fifty

 

69

 

percent
of the Additional Required Parking will be allocated to each such structure).
Landlord shall offer to lease directly to Tenant’s employees the Additional
Required Parking for a monthly rate equal to the rate then being charged by the
City under the City Parking Lease for the spaces (prorated to reflect a per
month, per space rental amount) with the parking payment to be made directly by
Tenant’s employees to Landlord. Tenant shall require that all of Tenant’s
employees utilizing parking outside of the Building enter into parking
agreements with Landlord to the extent Landlord has spaces available out of the
Additional Required Parking. If Tenant’s employees have not entered into
parking leases covering all of the Additional Required Parking on or before the
Commencement Date, Landlord may enter into parking leases with others for the
portion of the Additional Required Parking not leased to Tenant’s employees so
long as those parking leases are terminable upon sixty (60) days prior notice
to the user of the space, and if Tenant’s employees thereafter choose to
utilize the spaces (not to exceed the Additional Required Parking), Landlord
shall exercise its termination rights and make the spaces available to Tenant’s
employees. In addition, if Tenant’s employees are utilizing all of the
Additional Required Parking, Landlord, at Tenant’s request from time to time,
shall put Tenant’s employees on the waiting list for any spaces in excess of
the Additional Required Parking, as they become available; provided that the
right of Tenant’s employees to utilize the excess spaces shall be terminable
upon sixty (60) days prior notice from Landlord. In addition, from and after
the Commencement Date if Tenant’s employees have not elected to utilize or have
terminated the use of some or all of the Additional Required Parking, and such
spaces are subsequently leased to other parties, if Tenant’s employees
thereafter desire to use all or a portion of the unutilized Additional Required
Parking, at Tenant’s request, Landlord shall exercise its termination rights
under the parking leases for the appropriate number of spaces requested by
Tenant (not to exceed the Additional Required Parking) and shall make the
spaces available for Tenant’s employees upon such termination. In connection
with their use of the Additional Required Parking, Tenant’s employees shall
comply with the terms of the City Parking Lease and any rules and regulations
promulgated by the City or the operators of the City Parking Structures. To the
extent Landlord has approval rights over the parking rules and regulations,
Landlord shall not exercise such rights without Tenant’s consent, not to be
unreasonably withheld, conditioned or delayed. If Landlord defaults in the
performance of its obligations under the City Parking Lease, and as a result of
Landlord’s default, Tenant’s employees are precluded from utilizing any
Additional Required Parking they have leased, the default by Landlord under the
City Parking Lease shall also constitute a default by Landlord under this
Lease.

 

D.
EXPANSION. If Tenant elects to expand the Premises pursuant to Sections
29, 30 or 31, in connection with each such expansion, Tenant shall have the
right to utilize, the number of parking spaces within either the Building
Parking Garage or the City Parking Structures, wherever available, equal to (i)
the total parking spaces leased by Landlord pursuant to the City Parking Lease,
plus (ii) the total number of spaces within the Building Parking Garage,
multiplied by (iii) a fraction which has as its numerator the Rentable Square
Feet of the expansion area and as its denominator the Rentable Square Feet of
the Building (“EXPANSION PARKING ALLOCATION”). Tenant shall concurrently with
the exercise of the expansion rights, notify Landlord as to the number of
parking spaces Tenant would like to utilize (not to exceed the Expansion
Parking Allocation) and Landlord shall provide such spaces, if they are not
being leased by other tenants or licensees, or if they are being leased,

 

70

 

Landlord
shall exercise its sixty (60) day termination rights with respect to the spaces
Tenant desires to use and thereafter provide the spaces to Tenant, up to the
Expansion Parking Allocation, upon the terms and conditions set forth in
Sections 34.B or 34.C, as applicable, (and Landlord shall also notify Tenant as
to the allocation of the spaces among the Building Parking Garage and City Parking
Structures, promptly following receipt of Tenant’s notice requesting the
spaces).

 

35.
SIGNAGE.

 

A.
TENANT’S SIGNAGE. As part of the Tenant Improvements,
Landlord shall install for Tenant, and Tenant shall maintain during the Term
hereof, at Tenant’s expense, (a) subject to obtaining all applicable
governmental approvals, exterior Building signage (“EXTERIOR SIGNAGE”)
identifying the Building as Tenant’s headquarters; (b) identification signage
for Tenant located in the first floor lobby of the Building (the “LOBBY
SIGNAGE”), and (c) identification signage for Tenant located in the common
corridors of any floors of the Building in which Tenant is leasing the full
floor as part of the Premises hereunder (“ENTRY SIGNAGE”). The foregoing
Exterior Signage, Lobby Signage and Entry Signage shall be located at areas
mutually acceptable to Landlord and Tenant and identified in the plans and
specifications for the Tenant Improvements provided for in the Workletter
Agreement. The signage rights of Tenant set forth in this Section 35 are
personal to the original named Tenant hereunder and to any permitted Tenant
Affiliate assignee under Section 17 hereof, and no other party shall have the
right to exercise such signage rights under this Section 35 without the express
written consent of Landlord (at Landlord’s sole discretion).

 

B.
OTHER EXTERIOR SIGNAGE. Landlord shall not install or grant any
tenant (other than tenants of the Retail Area) signage identifying the tenant
of the Building on the exterior of the Building or on the Land, except that
Landlord may grant any tenant other than Tenant which leases a full floor in
the Building with a minimum of 20,000 rentable square feet, the right to
install exterior signage of moderate size (but smaller than Tenant’s Exterior
Signage) at grade level. The size, configuration and location of all exterior
signage for tenants of the Building (other than tenants of the Retail Area)
shall be subject to Tenant’s approval, not to be unreasonably withheld,
delayed, or conditioned (and to be deemed given if Tenant fails to approve or
disapprove in writing, within ten (10) days following Landlord’s request for
approval). In addition, the retail tenants of the ground floor of the Building
shall have the right to place exterior signage on the exterior of the Building,
provided that all such exterior signage shall be smaller than Tenant’s Exterior
Signage and shall be consistent with the retail signage guidelines attached to
this Lease as EXHIBIT N.

 

36.
RETAIL AREA. Landlord shall use commercially reasonable
efforts to enforce the use and leasing restrictions set forth in the recorded
documents entered into or to be entered into between Landlord and the owner of
the Retail Area or otherwise applicable to the Retail Area relating to the operation
of the Building and Retail Area (the “Restrictions”). In addition, Landlord
shall not approve any “Type 2” restaurant use in the Retail Area over which
Landlord has approval rights under the Restrictions, without the prior written
consent of Tenant, not to be unreasonably withheld, conditioned or delayed.

 

71

 

IN
WITNESS WHEREOF, the parties hereto have executed this Lease in manner
sufficient to bind them as of the day and year first above written.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  DAVIS
  CHURCH OFFICE DEVELOPMENT, L.L.C., a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  MESIROW
  STEIN

  
	
   

  	
   

  	
  DEVELOPMENT
  SERVICES, INC.,

  an Illinois corporation, its Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  HOUGHTON
  MIFFLIN COMPANY, a

  Massachusetts corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
									

 

72

 

EXHIBIT A

 

PREMISES
FLOOR PLANS

 

A-1

 

EXHIBIT B

 

SQUARE
FOOTAGE CALCULATIONS

 

B-1

 

EXHIBIT C

 

BUILDING
FLOOR PLANS

 

C-1

 

EXHIBIT D

 

LEGAL
DESCRIPTION

 

D-1

 

EXHIBIT E

 

PRO
FORMA RENTAL RATES

 

E-1

 

EXHIBIT F

 

CLEANING
SPECIFICATIONS

 

F-1

 

EXHIBIT G

 

OPERATING
STANDARDS

 

G-1

 

EXHIBIT H

 

RULES
AND REGULATIONS

 

1.             No sign, lettering, picture
(excluding artwork within the Premises), notice or advertisement shall be
placed on any outside window or in a position to be visible from outside the
Premises (except as otherwise permitted in Section 35 of the Lease) and if
visible from the outside or public corridors within the Building shall be
installed in such manner and be of such character and style as Landlord shall
approve in writing.

 

2.             No article which is explosive or
inherently dangerous is allowed in the Building.

 

3.             Tenant shall not represent itself
as being associated with any company or corporation by which the Building is
owned.

 

4.             Sidewalks, entrances, passages,
courts, corridors, halls, elevators and stairways in and about the Premises
shall not be obstructed. 

 

5.             No animals (except for dogs in the
company of a blind person), pets, bicycles or other vehicles shall be brought
or permitted to be in the Building or the Premises.

 

6.             Room-to-room canvasses to solicit
business from other tenants of the Building are not permitted; Tenant shall not
advertise the business, profession or activities of Tenant conducted in the
Building in any manner which violates any code of ethics by any recognized
association or organization pertaining to such business, profession or
activities.

 

7.             Tenant shall not waste electricity,
water or air-conditioning and shall cooperate reasonably with Landlord to
assure the most effective and efficient operation of the Building’s heating and
air-conditioning systems. 

 

8.             No locks or similar devices shall
be attached to any door except by Landlord and Landlord shall have the right to
retain a key to all such locks. Tenant may not install any locks without
Landlord’s prior written approval. 

 

9.             Tenant assumes full responsibility
of protecting the Premises from theft, robbery and pilferage; the Indemnitees
shall not be liable for damage thereto or theft or misappropriation thereof.
Except during Tenant’s normal business hours, Tenant shall keep all doors to
the Premises locked and other means of entry to the Premises closed and
secured. All corridor doors shall remain closed at all times. If Tenant desires
telegraphic, telephones, burglar alarms or other electronic or mechanical
devices, then Landlord will, upon request, direct where and how connections and
all wiring for such services shall be installed and no boring, cutting or
installing of wires or cables is permitted without Landlord’s approval.

 

H-1

 

10.           Except with the prior approval of
Landlord, all cleaning, repairing, janitorial, decorating, painting or other
services and work in and about the Premises shall be done only by authorized
Building personnel. 

 

11.           The weight, size and location of
safes, furniture, equipment, machines and other large or bulky articles shall
be subject to Landlord’s reasonable approval and shall be brought to the
Building and into and out of the Premises at such times and in such manner as
the Landlord shall direct and at Tenant’s sole risk and cost. Prior to Tenant’s
removal of any of such articles from the Building, Tenant shall obtain written
authorization from Landlord (which Landlord shall not unreasonably withhold or
delay) and shall present such authorization to a designated employee of
Landlord.

 

12.           Tenant shall not overload the safe
capacity of the electrical wiring of the Building and the Premises or exceed
the capacity of the feeders to the Building or risers.

 

13.           To the extent permitted by law,
Tenant shall not cause or permit picketing or other activity which would
interfere with the business of Landlord or any other tenant or occupant of the
Building, or distribution of written materials involving its employees in or
about the Building, except in those locations and subject to time and other
limitations as to which Landlord may give prior written consent.

 

14.           Tenant shall not cook, otherwise
prepare or sell any food or beverages in or from the Premises or use the
Premises for housing accommodations or lodging or sleeping purposes except that
Tenant may install and maintain vending machines, coffee/beverage stations and
food cooking and preparation equipment and eating facilities for the benefit of
its employees or guests, provided the same are maintained in compliance with
applicable laws and regulations and do not disturb other tenants in the
Building with odor, refuse or pests.

 

15.           Tenant shall not permit the use of
any apparatus for sound production or transmission in such manner that the
sound so transmitted or produced shall be audible or vibrations therefrom shall
be detectable beyond the Premises; nor permit objectionable odors or vapors to
emanate from the Premises 

 

16.           No floor covering shall be affixed to
any floor in the Premises by means of glue or other adhesive without Landlord’s
prior written consent (which consent shall be deemed given as to any such
matters included as part of the plans and specifications for Tenant’s Work or
for subsequent alterations which are otherwise approved by Landlord).

 

17.           Tenant shall only use the freight
elevator for mail carts, dollies and other similar devices for delivering
material between floors that Tenant may occupy.

 

18.           No smoking, eating, drinking or
loitering is permitted in the common areas of the Building except in designated
areas.

 

H-2

 

19.           Landlord may require that all persons
who enter or leave the Building identify themselves to security guards, by
registration or otherwise. Landlord, however, shall have no responsibility or
liability for any theft, robbery or other crime in the Building.

 

20.           Tenant shall comply with all safety,
fire protection and evacuation procedures and regulations established by
Landlord or any governmental agency and shall cooperate and participate in all
reasonable security and safety programs affecting the Building.

 

21.           Tenant shall cooperate and
participate in all recycling programs established for the Building by Landlord
or any governmental agency.

 

H-3

 

EXHIBIT I

 

FF&E CATEGORIES

 

I-1

 

EXHIBIT J

 

PLAN
DEVELOPMENT DRAWINGS AND SHELL AND CORE DESCRIPTION

 

J-1

 

EXHIBIT K

 

WORKLETTER
AGREEMENT

 

THIS
WORKLETTER AGREEMENT (“AGREEMENT”) is made and entered into this
          day of
                ,
             ,
by and between DAVIS CHURCH OFFICE DEVELOPMENT, L.L.C., a Delaware limited
liability company (“LANDLORD”), and HOUGHTON MIFFLIN COMPANY, a Massachusetts
corporation (“TENANT”).

 

THE
PARTIES ENTER INTO this Agreement based upon the following facts, intentions
and understandings:

 

A.
Landlord and Tenant have entered into a Lease of even date herewith (the
“LEASE”), for certain Premises (as defined in the Lease) in the Building (as
defined in the Lease) to be constructed by Landlord in Evanston, Illinois as
more particularly described therein. The capitalized terms used in this
Agreement shall have the meanings set forth in the Lease, unless otherwise
defined herein or in the project team directory (“PROJECT DIRECTORY”) attached
hereto as Schedule 1 and incorporated herein by reference.

 

B.
Certain tenant improvement work is to be completed by Landlord within the
Premises upon the terms and conditions hereinafter set forth. NOW, THEREFORE,
for and in consideration of the agreement to lease the Premises and pay rent
and the mutual covenants contained herein, the parties agree as follows:

 

22.           TENANT IMPROVEMENTS. Landlord shall
perform, or cause to be performed, the tenant improvements (the “TENANT
IMPROVEMENTS”) as shown on the Construction Documents (as hereinafter defined)
approved by Landlord and Tenant, as provided in Paragraphs 5 and 6 below.
Landlord currently intends to utilize Power Construction as its general
contractor for the Tenant Improvements, but reserves the right to change the
general contractor, so long as Landlord notifies Tenant of the change, which
shall be subject to Tenant’s reasonable approval.

 

23.           TENANT’S ARCHITECT. Tenant’s
Architect is designated in the Project Directory (such architect, or such other
architect as may be selected by Tenant, and approved by Landlord in its
reasonable discretion, in substitution for such firm, is hereinafter referred
to as “TENANT’S ARCHITECT”).

 

24.           LANDLORD’S ARCHITECT AND CONSULTING
ENGINEERS. Landlord’s Architect is designated in the Project Directory (such
architect, or such other architect as may be selected by Landlord in
substitution for such firm, is hereinafter referred to as “LANDLORD’S
ARCHITECT”). Landlord’s Architect is also utilizing certain consulting
engineers for civil engineering and overseeing mechanical work, each of whom
are designated in the Project Directory (such engineers, or such other
engineers as may be selected by Landlord or Landlord’s Architect in
substitution for such firms, are hereinafter referred to as the “CONSULTING
ENGINEERS”).

 

K-1

 

25.           PRELIMINARY TENANT IMPROVEMENTS PLANS

 

Attached hereto as Schedule 2 are
preliminary plans for the Tenant Improvements to be constructed in the Premises
(“PRELIMINARY TENANT IMPROVEMENT PLANS”), which have been approved by Landlord
and Tenant for purposes of indicating the scope of work for the Tenant Improvements.

 

26.           ARCHITECTURAL CONSTRUCTION DOCUMENTS.

 

26.1 Tenant shall cause Tenant’s Architect
to prepare and deliver on or before December 1, 2000, at Tenant’s cost and
expense, to Landlord, Landlord’s Architect, the Consulting Engineers and the
Design Build Subcontractors (hereinafter defined in Paragraph 6.2), preliminary
construction drawings (“PRELIMINARY CONSTRUCTION DRAWINGS”) containing
sufficient information and detail to enable Landlord’s Architect, the
Consulting Engineers and the Design Build Subcontractors to begin preparation
of the engineering construction drawings for the Tenant Improvements, including
“backgrounds” for the Tenant Improvements for engineering use.

 

26.2 Tenant shall cause Tenant’s Architect
to prepare and deliver, at Tenant’s cost and expense, completed architectural
portions of the Construction Documents (the “ARCHITECTURAL CONSTRUCTION
DOCUMENTS”), to Landlord and Tenant on or before February 1, 2001. 

 

26.3 Within ten (10) business days
following receipt by Landlord of the architectural Construction Documents
referred to in Paragraph 5.1 above, Landlord shall indicate its acceptance or
rejection of the architectural Construction Documents in writing. Landlord
shall not unreasonably withhold its acceptance of the architectural Construction
Documents, as long as they are consistent with the scope of work outlined in
the Preliminary Tenant Improvements Plans and Specifications. If Landlord
rejects the architectural Construction Documents, Landlord shall advise Tenant
and Tenant’s Architect of the reasons for Landlord’s rejection.

 

26.4 If pursuant to Paragraph 5.3 above
Landlord rejects the architectural Construction Documents, Tenant shall submit
revised architectural Construction Documents to Landlord within twenty (20)
business days following receipt by Tenant of written advice of the rejection
and the reasons therefor. The submission of revised architectural Construction
Documents shall be accompanied by a point by point written response from Tenant
specifically responding to any disapprovals or other responses delivered by
Landlord to Tenant. 

 

26.5 If Tenant is required to submit
revised architectural Construction Documents pursuant to Paragraph 5.4 above,
Landlord shall indicate its acceptance or rejection of the revisions within
five (5) business days following receipt by Landlord of the revised
architectural Construction Documents. If Landlord rejects the revisions,
Landlord shall advise Tenant and Tenant’s Architect of the reasons for the
rejection. If the rejection is based on Tenant’s failure to remedy a reason or
reasons for rejection specified by Landlord pursuant to

 

K-2

 

Paragraph
5.3 above, the delay attributable to all further revisions of the architectural
Construction Documents required to correct such reasons for rejection shall
constitute Tenant Delay under Paragraph 12 below and accordingly shall not
result in a delay in the Commencement Date or the rental and other obligations
in the Lease.

 

26.6 The parties contemplate that the final
Construction Documents will be completed and approved by all parties by March
26, 2001.

 

27.           ENGINEERING CONSTRUCTION DOCUMENTS.

 

27.1 Landlord’s Architect, Consulting
Engineers, and/or the Design Build Subcontractors, as applicable, shall prepare
and deliver to Landlord and Tenant, at Tenant’s cost and expense (subject,
however, to Paragraph 13), the applicable engineering portions of the
Construction Documents, including, but not limited to, fire protection,
H.V.A.C., electrical, life safety, plumbing and, if applicable, structural
drawings and specifications (the “ENGINEERING CONSTRUCTION DOCUMENTS”, which
together with the architectural Construction Documents are collectively
referred to as the “CONSTRUCTION DOCUMENTS”).

 

27.2 Landlord and Tenant acknowledge that
certain portions of the Tenant Improvements shall be designed and constructed
by subcontractors of Landlord’s general contractor on a design-build basis
(“DESIGN-BUILD SUBCONTRACTORS”), that have been selected at the time Landlord
bids the Base Building Work, including the H.V.A.C., electrical, plumbing, and
life safety systems which are part of the Tenant Improvements. The Design Build
Subcontractors shall be selected based upon competitive pricing for the
building systems included in the Base Building Work and unit pricing for the
Tenant Improvements (which unit pricing shall be subject to Tenant’s approval,
not to be unreasonably withheld, conditioned or delayed). Upon receipt of the
Construction Drawings, Landlord’s general contractor shall price the
design-build portions of the Tenant Improvements with the Design Build
Subcontractors, based upon unit-pricing and unique items and shall obtain
Tenant’s approval of the costs for each of the Design Build Subcontractors,
which approval shall not be unreasonably withheld, conditioned or delayed. Any
rejection must specify in writing the reasons for rejection, and the changes to
the Construction Drawings or the costs needed to obtain Tenant’s approval. If
agreement on costs cannot be reached with the applicable Design Build
Subcontractor, Landlord shall cause Landlord’s general contractor to re-bid the
applicable portion of the work, and the lowest responsive bidder shall be
awarded the work. Any delays caused by rejection of costs of any Design Build
Subcontractor and/or any rebidding shall be deemed Tenant Delay under Paragraph
12 below.

 

27.3 Following selection of the Design
Build Subcontractors, Landlord shall cause Landlord’s Architect, the Consulting
Engineers and the Design Build Subcontractors, and Tenant shall cause Tenant’s
Architect, to coordinate the timely preparation of such engineering
Construction Documents with the preparation of the architectural Construction
Documents pursuant to Paragraph 5 above, allowing a minimum of two (2) months
following receipt of the Preliminary Construction Documents, for preparation of
the engineering Construction Documents, which shall be prepared concurrently
with the final preparation of the architectural Construction Documents. Within
ten (10) business days of receipt of the

 

K-3

 

engineering
Construction Documents, Tenant shall indicate its acceptance or rejection in
writing. If Tenant rejects any portion of the engineering Construction
Documents, Tenant shall advise Landlord in writing of the reasons for Tenant’s
rejection. Landlord’s Architect, the Consulting Engineers or the Design Build
Subcontractors, as the case may be, shall then, at Tenant’s cost and expense
unless such revisions are made necessary by reason of an error on the part of
Landlord’s Architect, the Consulting Engineers or the Design Build
Subcontractors revise the applicable portion of the engineering Construction
Documents within twenty (20) business days following receipt of Tenant’s
requested revisions. The revised engineering drawings shall be delivered to
Tenant, and the revisions shall be subject to Tenant’s approval or rejection,
which shall be given in writing within five (5) business days of receipt. The
final engineering Construction Documents approved by Tenant must also be
approved by Landlord.

 

28.           COST SCHEDULE. Landlord shall, in
consultation with its general contractor, within thirty(30) business days of
Tenant’s written approval of all of the Construction Documents, advise Tenant
of the cost to Tenant, or where necessitated by the uniqueness of the item the
cost estimate based on the best information then available to Landlord, for all
Tenant Improvements, together with the installation costs thereof, by means of
a schedule of costs and unit prices (“COST SCHEDULE”). Landlord shall require
its general contractor to competitively bid each of the major subcontracts for
the Tenant Improvements, either on a unit cost or total cost basis, including
the work being performed by the Design Build Subcontractors (as more
specifically provided in Paragraph 6.2) and shall reflect the bids and/or unit
costs in the Cost Schedule. Tenant shall have five (5) business days to accept
or reject the Cost Schedule in writing. If Tenant rejects the Cost Schedule,
Tenant shall advise Landlord in writing of the reasons for such rejection, and
shall work with Landlord, Landlord’s Architect, the Consulting Engineers, the
Design Build Subcontractors and Tenant’s Architect to revise Tenant’s
construction requirements so that the Cost Schedule may be approved by Tenant.
Tenant may not, however, disapprove or reject any portion of the Cost Schedule
which is consistent with the unit prices previously approved in connection with
the approval of any of the Design Build Subcontractors. Such revisions shall be
made within five (5) business days after Tenant’s written rejection of the Cost
Schedule. Any delays caused by a rejection of the Cost Schedule and the
necessary revisions shall constitute Tenant Delay under Paragraph 12 below.

 

29.           UNIQUE ITEMS. To the extent that the
Construction Documents call for specialty items, items requiring extensive lead
time or structural modifications, modifications to the Base Building Work
and/or items involving extensive amounts of labor or would otherwise cause the
build-out period for the Tenant Improvements for any floor of the Premises to
exceed one hundred eighty (180) days (collectively “UNIQUE ITEMS”), Landlord’s
general contractor, after such consultation with Tenant’s Architect as may be
necessary, shall deliver to Landlord and Tenant, upon completion and delivery
of the Construction Documents, a list of such Unique Items. Tenant shall have
the option to meet with Landlord’s general contractor and Tenant’s Architect
regarding substitutions for such Unique Items within five (5) business days
after receipt of Landlord’s general contractor’s list of Unique Items, and to
substitute items for Unique Items which would not be classified as Unique Items
by making such substitutions within five (5) business days after receipt of
such list. Expenses associated with making the substitutions shall be borne by
Tenant. Any delays in Substantial Completion of the Tenant Improvements
attributable to Unique Items retained as part of the Tenant Improvements shall
constitute Tenant Delay under Paragraph 12.

 

K-4

 

30.           CHANGE ORDERS.

 

30.1 TENANT INITIATED CHANGES. Subsequent
to Tenant’s approval of the Construction Documents, Tenant may, by written
direction to Landlord, initiate changes to the Construction Documents and
construction contemplated thereby. Tenant shall be responsible for all costs
and expenses attributable to any changes if the Costs of the Work (as defined in
Paragraph 13), taking into account the change, will exceed the TI Allowance (as
defined in Section 13). Notwithstanding anything contained herein to the
contrary, Landlord shall not be required to execute any requested changes to
the Construction Documents which (a) adversely affect mechanical, plumbing,
electric, heating, ventilating, air cooling or life safety systems of the
Building, (b) adversely affect any structural components of the Building or
require any penetration of the floor or ceiling not originally contemplated in
the Construction Documents, (c) would be visible from the outside of the
Building, (d) would adversely affect other tenants of the Building or (e) would
require Landlord to make changes or alterations to other portions of the Building
and/or to the Base Building Work.

 

Landlord, upon receipt of Tenant’s written
direction, shall cause Landlord’s Architect or the Consulting Engineers or
Design Build Subcontractors, as the case may be, to promptly prepare, at
Tenant’s cost and expense, a written change proposal, together with appropriate
construction drawings and specifications as required, if Landlord’s Architect
or the Consulting Engineers or Design Build Subcontractors, as the case may be,
initially prepared the portion of the Construction Documents which are to be
revised, otherwise, Tenant shall cause Tenant’s Architect to prepare, at
Tenant’s cost and expense, such construction drawings and specifications. Said
change proposal shall set forth the cost from Landlord’s general contractor of
said change including any costs for delay or out of sequence work and
preparation costs for drawings and related work (or if the cost cannot
reasonably be determined, the basis upon which such change proposal shall be
billed, for example, time and materials plus applicable mark-up) and the impact
of the change upon the scheduled date of Substantial Completion of the Tenant
Improvements or, if the exact impact upon the scheduled date of Substantial
Completion of the Tenant Improvements cannot reasonably be determined, the
estimated impact upon the scheduled date of Substantial Completion of the
Tenant Improvements. Tenant shall have three (3) business days from the receipt
of said change order to accept or reject it. Accepted change proposals shall become
change orders and be executed by Tenant upon receipt. No field work will
proceed without written approval of said change order by Tenant. The costs of
change orders shall be paid by Tenant within thirty (30) days of Tenant’s
acceptance of the change order if the Costs of the Work, taking into account
the change order, will exceed the TI Allowance. If Tenant fails to make such
payment to Landlord for change orders, Landlord shall not be obligated to
perform such change order and may proceed to complete the Tenant Improvements
pursuant to the approved Plans and Specifications.

 

All delays caused by Tenant initiated
change orders, including, without limitation, any stoppage of the work during
the change order review process, shall constitute Tenant Delay under Paragraph
12.

 

K-5

 

30.2 LANDLORD INITIATED CHANGES. Landlord
may make minor changes in the Tenant Improvements arising during the
construction process not requiring an adjustment to the Cost of the Work and
not inconsistent with the intent hereof. In addition, after prior notice to
Tenant (which notice need not be in writing), the Tenant Improvements shall be
changed (and the Construction Documents will be revised by Tenant) to reflect
changes required by any local government inspectors and the Cost of Work shall
be increased by the cost of such changes or decreased by any savings resulting
from such changes; provided, however, that if as a result of any such changes
required by local government inspectors arising from any changes in applicable
laws or interpretations thereof occurring after approval of the plans and
specifications for the Tenant Improvements, the Cost of Work shall materially
increase (i.e., by more than $25,000), then prior to implementing the change,
Tenant may request changes to the plans and specifications in order to reduce
the Cost of Work (and the time period for implementing Tenant’s changes shall
not constitute Tenant Delay, but shall be considered Force Majeure). Landlord
shall notify Tenant of such increase or decrease by delivering to Tenant a
change order, which shall be effective upon issuance by Landlord.

 

31.           CODE COMPLIANCE. Tenant shall be
responsible to deliver Preliminary Construction Drawings and architectural
Construction Documents in conformance with all applicable statutes, laws,
ordinances, orders, codes, rules, regulations and building and fire codes,
including, without limitation, the Americans With Disabilities Act and which do
not require the use of asbestos or asbestos-containing materials. Landlord’s,
Landlord’s Architect’s or the Consulting Engineers’ or Design Build
Subcontractors’ review of the architectural Construction Documents shall create
no responsibility or liability on the part of Landlord for such compliance or
their completeness or design sufficiency. Tenant shall be responsible for any
delays in obtaining necessary permits and occupancy certificates caused by
non-compliance of such Preliminary Construction Drawings and architectural
Construction Documents with such statutes, laws, ordinances, orders, codes,
rules and regulations, and such delays shall constitute Tenant Delay under
Paragraph 12 below and under the Lease.

 

32.           SUBSTANTIAL COMPLETION. Landlord’s
Architect shall schedule a joint inspection with Tenant, and, if desired by
Tenant, Tenant’s Architect, Landlord’s contractor and Landlord’s representative
of the Premises prior to occupancy by Tenant to determine if the Tenant
Improvements are Substantially Complete and to establish a complete list of
items which are unfinished or in need of corrective work (the “PUNCHLIST”). The
Punchlist shall be signed by both Landlord’s Architect and Tenant’s Architect.
Landlord’s Architect shall certify Substantial Completion. Landlord shall
proceed expeditiously to complete and/or correct any items listed on said
Punchlist, during normal business hours. Tenant shall, at Tenant’s expense,
cause Tenant’s Architect to review for accuracy and completeness “AS BUILT”
drawings of the Tenant Improvements prepared by Landlord’s contractor, make all
necessary corrections thereto and make all additions necessary to reflect
installations not shown thereon. Within thirty (30) days after Substantial
Completion of the Tenant Improvements, Tenant shall furnish one (1) complete
reproducible set of such drawings acceptable to Landlord.

 

33.           DELAYS IN WORK. If Landlord shall be
delayed in Substantially Completing the Tenant Improvements for any reason set
forth in the following subparagraphs 12.1 through 12.9 below (each, a “TENANT
DELAY”), then neither the Commencement Date of the Lease nor the payment of
Rent thereunder shall be affected or deferred on account of such Tenant Delay.
Landlord shall notify

 

K-6

 

Tenant
in writing within three (3) business days following Landlord’s actual knowledge
of the occurrence of the event constituting a Tenant Delay, that such event is
or will result in a Tenant Delay under this Workletter Agreement (provided that
if Landlord fails to give a timely notice, then Landlord may not claim “Tenant
Delay” with respect to any period of delay occurring prior to Landlord’s
delivery of such notice to Tenant). The following constitute Tenant Delay:

 

33.1 Tenant’s failure to furnish the
initial Preliminary Construction Drawings and architectural Construction
Documents or the information required for the preparation of the same or the
engineering Construction Documents as and when required hereby or other Tenant
delay under Paragraph 4, 5, 6 and 10 above;

 

33.2 Tenant’s failure to approve the Cost
Schedule within the time period required hereby or other Tenant delay under
Paragraph 7 above;

 

33.3 Tenant’s request for or use of Unique
Items; 

 

33.4 Tenant’s failure to pay for any
portions of the Tenant Improvements as and when payable by Tenant hereunder; 

 

33.5 Tenant’s changes in the work or the
Construction Documents (notwithstanding Landlord’s approval of any such
changes) or other Tenant delay under Paragraph 9 above;

 

33.6 Landlord’s determination that modifications
to the Base Building Work are necessary in order to accommodate the Tenant
Improvements;

 

33.7 the entry by Tenant or Tenant’s
contractors, suppliers, vendors or other agents in or about the Premises or
Building or other Tenant delay under Paragraph 15 below;

 

33.8 Landlord’s inability to commence the
Tenant Improvements on or before September 1, 2001 due to the failure to have
final Construction Documents and the Cost Schedule approved by both parties on
or before May 15, 2001 for any reason other than Landlord’s arbitrary
objections to, or disapproval of, such items or Landlords’ failure to respond
to Tenant’s submittals as and when required hereunder; or

 

33.9 any other act, omission or delay by
Tenant, its agents or contractors or persons employed by any of such persons
delaying Substantial Completion of the Tenant Improvements or otherwise
described as a “Tenant Delay” in this Workletter Agreement.

[OPEN:TENANT
WANTS BINDING ARBITRATION FOR DISPUTES REGARDING TENANT DELAYS]

 

34.           COST
OF THE WORK, TENANT IMPROVEMENT ALLOWANCE AND MOVING ALLOWANCE.

 

34.1 For purposes hereof, the “COST OF THE
WORK” shall mean and include the following costs attributable to the Tenant
Improvements: (a) the cost of all materials and labor; (b) general conditions
(including rubbish removal, hoisting, permits, temporary

 

K-7

 

facilities,
safety and protection, cleaning, tools, blueprints and reproduction, telephone,
temporary power, field supervision and the like); (c) premium cost of workers
compensation, public liability, casualty and other insurance charged by
contractors’; (d) contractors’ charges for overhead and fees; (e)
architectural, engineering and consulting fees incurred by Landlord and Tenant,
including fees payable to any Design Build Subcontractor; and (f) utility
costs. Costs of the Work shall not include any supervisory fee for loading dock
and elevator service. In addition, Landlord will serve as project manager for
the Tenant Improvements at no additional charge. Hoisting charges for Base
Tenant’s furniture, fixtures and equipment shall be invoiced to and paid
separately by Tenant, and not as part of Costs of the Work. 

 

34.2 Provided that Tenant is not in
Default, Landlord shall contribute in progress payments a maximum amount
(“TENANT IMPROVEMENT ALLOWANCE”) equal to (i) Thirty-Two Dollars and 50/100
Cents ($32.50) multiplied by (ii) the Rentable Square Feet of the Premises as
of the Lease Date, as Landlord’s share of the Cost of the Work (a portion of which,
not to exceed $2.50 per Rentable Square Foot (“A&E ALLOWANCE”) may be
utilized for fees of Landlord’s and Tenant’s Architects and engineers,
including the Design Build Subcontractors in connection with the Tenant
Improvements) and Tenant shall pay Landlord, as Additional Rent under the
Lease, any excess of the Cost of the Work over the amount of the Tenant
Improvement Allowance (“EXCESS COSTS”). Landlord shall not be obligated to
commence the work until either (i) Tenant has paid Landlord Landlords’ estimate
of such Excess Costs and all other costs and charges in connection with the
Tenant Improvements for which Tenant is responsible hereunder or (ii) if, and
only if, Landlord’s lender and the title company are amenable to progress
payments by Tenant of the Excess Costs (and do not require Landlord to deposit
such funds), Tenant shall have provided Landlord, Landlord’s lender and the
title company with reasonable assurances that the Excess Costs are or will be
available as construction proceeds. Landlord agrees to use such funds paid by
Tenant, along with the Tenant Improvement Allowance, to pay the Costs of the
Work in progress payments, as the work proceeds, and Tenant’s funds shall be
disbursed pari pasu with disbursements of the Tenant Improvement Allowance. If,
after the Construction Documents have been approved or work has commenced, the
Cost Schedule or Construction Documents are revised such that Tenant owes
Landlord additional amounts on account of the Cost of the Work, Landlord shall
not be obligated to proceed with the Tenant Improvements until Tenant has paid
Landlord any such deficit or, to the extent permitted above, provided Landlord,
Landlord’s lender and the title company with reasonable assurances that the
funds are or will be available as construction proceeds. Any such deficit owed
by Tenant shall be paid to Landlord within thirty (30) days after issuance of
the revised Cost Schedule. If the actual Cost of the Work is less than the
Tenant Improvement Allowance, Tenant shall not be entitled to receive a payment
or a credit for such difference. In addition, if Tenant has not deposited the
Excess Costs with Landlord, to the extent permitted above, Tenant shall fund
its proportionate share of each progress payment made by Landlord concurrently
with the disbursement of the applicable portion of the Tenant Improvement
Allowance, and if Tenant fails to do so, Landlord shall not be obligated to
disburse the Tenant Improvement Allowance; provided further, however, that if
the estimated costs of the Tenant Improvements do not exceed the product of
1.25 and the Tenant Improvements Allowance, and the title company and all
Mortgagees and Ground Lessors approve, Tenant may fund the Excess Costs
concurrently

 

K-8

 

with
the last construction draw made by Landlord to cover the costs of the Tenant
Improvements.

 

34.3 Notwithstanding any thing contained
herein to the contrary above, so long as Tenant is not in Default, upon
Tenant’s request, accompanied by invoices evidencing the amounts due, at any
time following final approval of the Construction Documents by Landlord and
Tenant, Landlord shall disburse out of the Tenant Improvement Allowance an
amount not to exceed the A&E Allowance, to Landlord’s and Tenant’s Architects
and engineers including the Design Build Subcontractors, to pay the costs
incurred in connection with the preparation of the Construction Drawings.
Tenant shall be responsible for paying all such costs in excess of the A&E
Allowance.

 

13.4 Upon substantial completion of the
Premises, Tenant’s acceptance and occupancy thereof, and provided Tenant is not
then in Default, Landlord shall pay to Tenant a moving allowance in an amount
equal to $1.00 per Rentable Square Foot of the Premises (with the square
footage of the Premises being determined as of the Lease Date) to reimburse
Tenant for costs incurred in connection with moving into the Premises.

 

35.           FAILURE TO MAKE PAYMENTS. In the
event Tenant fails to make any payment to Landlord as provided for in Paragraph
13 above, Landlord at its option may:

 

35.1 Stop all work.

 

35.2 Complete the Tenant Improvements,
pursuant to the approved Construction Documents, and continue to hold Tenant
liable for all costs due to Landlord. In such event all sums shall bear
interest as provided for late payments in the Lease.

 

These
rights shall be cumulative and in addition to all other rights at law and
equity of Landlord. Tenant’s failure to pay any sum due hereunder shall
constitute a default under the Lease.

 

36.           ACCESS BY TENANT PRIOR TO
COMMENCEMENT OF LEASE. [OPEN ISSUE REGARDING PERIOD OF FREE RENT AFTER
SUBSTANTIAL COMPLETIONS] Landlord, shall permit Tenant and Tenant’s agents to
enter the Premises no less than forty-five (45) days prior to the Commencement
Date in order that Tenant may make the Premises ready for Tenant’s use and
occupancy by installation of FF&E. Tenant shall notify Landlord in writing
prior to allowing any party to enter the Premises, and shall provide Landlord
with, and update as needed, a list of parties authorized by Tenant to so enter.
Such entry prior to the commencement of the term shall constitute a license
only and not a lease and such license shall be conditioned upon (a) Tenant
working in harmony and not interfering in any way with Landlord and Landlord’s
agents, contractors, workmen, mechanics and suppliers in doing Landlord’s Work
in the Building or with other tenants and occupants of the Building, (b) Tenant
furnishing Landlord with evidence of such insurance as Landlord may reasonably
require Tenant, Tenant’s suppliers, vendors and contractors to carry against
liabilities which may arise out of such entry (including, without limitation,
any insurance required to be maintained by Tenant under the Lease), (c)
Tenant’s assuming full responsibility for any damages it causes and (d) each
party entering being identified on the authorized entry list described above.
Landlord shall have the right to withdraw such license if Tenant interferes in
any way with the completion of Landlord’s Work, causes

 

K-9

 

any
damage, or otherwise violates any of the terms of this Paragraph 15. Tenant
agrees that Landlord shall not be liable in any way for any injury, loss or
damage which may occur to any of Tenant’s property placed, or installations
made, in the Premises prior to the commencement of the term of the Lease, the
same being at Tenant’s sole risk, and Tenant agrees to protect, defend,
indemnify and hold harmless Landlord, its employees, contractors, agents and
consultants from any and all liabilities, costs, damages, losses, suits,
proceedings, injuries, fees and expenses (including, without limitation,
attorneys’ fees) arising in any way out of or in any way connected with the
activities of Tenant or its agents, contractors, suppliers or workmen in or
about the Premises or the Building prior to the Commencement Date. Tenant shall
not interfere with or impair the mandated coordination with labor unions
provided for under the construction agreements for the Premises and the
Building. 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 law or otherwise, to be attached to or be placed upon Landlord’s title or interest
in the Premises, Building or underlying land and Tenant shall permit no
mechanics lien, materials lien or other lien to be filed against the Premises,
Building or underlying land. Tenant assumes full responsibility for any of its
employees, agents or contractors admitted to the Premises pursuant to this
paragraph, and does hereby indemnify Landlord as respects any claims which
arise against Landlord because of their presence, or by or through said
employees, agents or contractors. Without limitation of the other provisions of
the Lease and this Agreement, any delay in Substantial Completion of the Tenant
Improvements caused by entry hereunder prior to the commencement of the term
shall constitute Tenant Delay under the Lease and Tenant Delay under Paragraph
12 above. Any increase in construction costs caused by out-of-sequence work or
other disruption of the normal construction process to accommodate Tenant’s
access hereunder shall be a cost borne by Tenant.

 

37.           MISCELLANEOUS.

 

37.1 HEADINGS. The headings are for
convenience only. 

 

37.2 ELECTION OF LAW. This Agreement shall
be governed by the laws of the State of Illinois.

 

37.3 TIME IS OF THE ESSENCE. Time is of the
essence in this Agreement.

 

37.4 ENTIRE AGREEMENT. This Agreement sets
forth the entire Agreement of Tenant and Landlord regarding Tenant
Improvements. 

 

37.5 AMENDMENT. This Agreement may only be
amended in writing, duly executed by both Landlord and Tenant.

 

37.6 PAYMENTS. All payments to be made by
Tenant pursuant to this Agreement shall be deemed Rent.

 

37.7 DATES. Any date specified herein which
may fall on a Saturday, Sunday or holiday shall be deemed to be extended to the
next day which is not a Saturday, Sunday or holiday.

 

K-10

 

37.8 NO WARRANTIES. All implied warranties,
including, but not limited to, those of merchantability and fitness for a
particular purpose, are expressly negated and waived by Tenant. 

 

37.9 PREMISES ONLY. This Agreement shall
not be deemed applicable to any additional space added to the original Premises
at any time or from time to time, whether by any options under the Lease or
otherwise, or to any portion of the original Premises or any additions thereto
in the event of a renewal or extension of the original term of the Lease,
whether by any options under the Lease or otherwise, unless expressly so
provided in the Lease or any amendment or supplement thereto.

 

37.10 LANDLORD LIABILITY. The liability of
Landlord hereunder or under an amendment hereto or any instrument or document
executed in connection herewith shall be limited as provided in Section 28.N of
the Lease.

 

38.           DESIGNATED REPRESENTATIVES;
COOPERATION.

 

38.1 Landlord’s and Tenant’s
representatives with the authority to give and receive notices, other materials
and information relating to the Tenant Improvements, and approvals under this
Agreement are listed in the Project Directory, and may be changed by Landlord
or Tenant by giving written notice to the other party. 

 

38.2 Tenant and Landlord agree to make
their respective architects and engineers available to the other to answer
questions and provide clarifications and additional information as is
reasonable for the timely progress and completion of the Tenant Improvements.

 

K-11

 

IN
WITNESS WHEREOF, the parties have executed this Agreement as of the first day
aforewritten.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  DAVIS
  CHURCH OFFICE

  DEVELOPMENT, L.L.C., a Delaware

  limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  HOUGHTON
  MIFFLIN COMPANY, a

  Massachusetts corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
						

 

K-12

 

EXHIBIT L

 

COMPLETION
GUARANTY

 

L-1

 

EXHIBIT M

 

PARKING
LEASE

 

M-1

 

EXHIBIT N

 

RETAIL
SIGNAGE GUIDELINES

 

N-1

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