Document:

exv10w10

 

EXHIBIT 10.10

OFFICE/SHOWROOM/WAREHOUSE LEASE

BASIC DEFINITIONS AND LEASE PROVISIONS

(Office/Showroom/Warehouse — Net Lease)

A. The following list sets out certain defined terms and certain financial and other information
pertaining to the Lease:

     1. “Date of Lease”: June 22, 1999

     2. “Landlord”: 1135 Arbor Drive Investors LLC

Landlord’s address: c/o Allegis Realty Investors, LLC

                                     12001 North Central Expressway #650

                                     Dallas, TX 75243-3735

Contact: Asset Management

Telephone: 972/458-3300

Facsimile: 972/490-9440

     3. “Tenant”: ULTA3 Cosmetics & Salon, Inc.

Tenant’s address: 1135 Arbor Drive, Romeoville, Illinois 60446

Contact: Matt Strall

Telephone: 630/226-0020

Facsimile: 630/226-8367

     4. Tenant’s trade name: N/A

     5. “Premises”: Landlord’s property and building improvements located in the Village of
Romeoville, Will County, Illinois which property is described or shown on Exhibit “A”,
attached to the Lease. The building improvements will contain approximately 291,335 (170,117
square feet of area in the “Existing Space” as depicted on Exhibit “A” and 121,218 rentable
square feet of area in the “New Space” also as depicted on Exhibit “A”) square feet in
rentable area (measured by calculating lengths and widths to the exterior of outside walls and to
the center of interior walls, without deduction for any columns or projections necessary to the
building), having an address of 1135 Arbor Drive and being described or shown on Exhibit
“B”, attached to the Lease. With regard to Exhibit “B”, the parties agree that the
exhibit is attached solely for the purpose of locating the Premises and that no representation,
warranty, or covenant is to be implied by any other information shown on the exhibit. Should a
party desire to measure the square footage of the building improvements, it must do so prior to the
Commencement Date. If such measurement reflects a different number, then, subject to the other
party’s verification of the number, the parties agree to make adjustments based on such

 

 

measurement. In the event of a dispute regarding the method of calculation, the parties agree
that the standards for measurement set by the Building Owners and Managers Association (“BOMA”)
shall govern and control. If no measurement is made prior to the Commencement Date, then the
parties to the Lease will be deemed to have accepted the number contained herein as the square
footage of rentable area of the Premises throughout the Lease Term, subject to adjustment only for
any subsequent additions or deletions of space. As of the Date of Lease, Tenant is presently
leasing the Existing Space from Landlord pursuant to a Net Lease Agreement dated July 12, 1995
between Tenant and Landlord’s predecessor in interest, Opus North Corporation (the “Existing
Lease”). Notwithstanding the fact that the Existing Space shall be subject to the terms and
conditions of the Lease, the Existing Space shall be subject to the terms and conditions of the
Existing Lease until the Commencement Date.

     6. “Commencement Date”: October 1, 1999, provided that if the First Phase Work (as defined in
Exhibit “E” below) is not substantially completed on or before October 1, 1999 due to
delays caused by Landlord, the Commencement Date shall be the date when the First Phase Work is
substantially completed.

     7. “Expiration Date”: April 30, 2010, provided that if the Commencement Date is later than
October 1, 1999, the Expiration Date shall be the day prior to the day which is ten (10) years and
seven (7) months after the Commencement Date.

     8. “Lease Term”: Commencing on the Commencement Date and continuing for 127 months after the
Commencement Date.

     9. “Base Rental”: The amounts set forth in the Schedule below (“Carry-Over Rent”) plus
Construction Rent (as defined in Exhibit “E” below):

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Lease Period	 	Carry-Over Rent	 	Monthly Carry-
	From	 	To	 	(Annual)	 	Over Rent
	10/1/99
	 	 	9/30/00	 	 	$	680,000	 	 	$	56,666.67	 
	10/1/00
	 	 	9/30/01	 	 	$	680,000	 	 	$	56,666.67	 
	10/1/01
	 	 	9/30/02	 	 	$	680,000	 	 	$	56,666.67	 
	10/1/02
	 	 	9/30/03	 	 	$	740,208	 	 	$	61,684.00	 
	10/1/03
	 	 	9/30/04	 	 	$	765,000	 	 	$	63,750.00	 
	10/1/04
	 	 	9/30/05	 	 	$	765,000	 	 	$	63,750.00	 
	10/1/05
	 	 	9/30/06	 	 	$	783,063	 	 	$	65,255.25	 
	10/1/06
	 	 	9/30/07	 	 	$	790,500	 	 	$	65,875.00	 
	10/1/07
	 	 	9/30/08	 	 	$	790,500	 	 	$	65,875.00	 
	10/1/08
	 	 	9/30/09	 	 	$	808,563	 	 	$	67,380.25	 
	10/1/09
	 	 	4/30/10	 	 	$476,000 (for a partial year)	 	$	68,000.00	 

     10. “Security Deposit”: See Section 4.2 of the Lease.

     11. “Permitted Use”: Office, showroom, packaging and warehouse uses only and related
purposes. Tenant acknowledges that the above specification of a “Permitted Use” means

2

 

only that Landlord has no objection to the specified use and does not include any
representation or warranty by Landlord that such specified use complies with applicable laws and/or
requires special governmental permits.

     12. “Rent” or “rental”: All amounts due from Tenant to Landlord under the provisions of this
Lease, except Default Interest (as defined in Section 4.5 of the Lease), are deemed to be
“rent” or “rental”.

     13. “Brokers”: Nicolson Porter & List Inc.

B. If any conflict exists between any Basic Lease Information and the Lease, then the Lease shall
control.

3

 

     IN WITNESS WHEREOF, Landlord and Tenant have entered into and executed this Lease on the Date
of the Lease written above.

	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:
	 
	 	 	 	 	 	 	 	 
	1135 ARBOR DRIVE INVESTORS LLC a Delaware
limited liability company	 	 	 	ULTA3 COSMETICS & SALON, INC.
	 
	 	 	 	 	 	 	 	 
	     By:

	 	ALLEGIS REALTY INVESTORS LLC, A
	 	 	 	By:
	 	/s/ Greg Smolarek
	 

	 	 	 	 	 	 	 	 
	 	 	Massachusetts limited liability

company, Its Manager	 	 	 	Printed Name: Greg Smolarek

Its: Sr VP Systems and Logistics
	 
	 	 	 	 	 	 	 	 
	     By:

	 	/s/ Joseph E. Gaukler	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Joseph E. Gaukler	 	 	 	 	 	 
	 

	 	Its: Senior Vice President	 	 	 	 	 	 

4

 

LEASE AGREEMENT

(Office/Showroom/Warehouse — Net Lease)

     This LEASE AGREEMENT (the “Lease”) is entered into as of the Date of the Lease, between AETNA
LIFE INSURANCE COMPANY (“Landlord”) and ULTA3 COSMETICS & SALON, INC. (“Tenant”).

ARTICLE 1

BASIC DEFINITIONS AND LEASE PROVISIONS

     1.1 The definitions and basic provisions set forth in the Basic Definitions and Lease
Provisions executed by Landlord and Tenant, and attached hereto, are incorporated herein by
reference for all purposes.

ARTICLE 2

LEASE GRANT

     2.1 Subject to the terms and conditions of this Lease, Landlord leases to Tenant, and Tenant
leases from Landlord, the Premises for the Lease Term.

ARTICLE 3

DELIVERY OF THE PREMISES; LEASE TERM

     3.1 The Lease Term shall be for the period of time specified in the Basic Definitions and
Lease Provisions, beginning on the Commencement Date, as such date may be adjusted herein, and
expiring on the Expiration Date. This Lease shall not be affected by any failure to deliver
possession of the New Space to Tenant on the Commencement Date and Tenant shall have no claim for
damages against Landlord as a result thereof, all of which claims are hereby waived and released by
Tenant.

     3.2 If Tenant takes possession of the New Space prior to the Commencement Date for any reason,
then such possession shall be subject to all the terms and conditions of this Lease and Tenant
shall pay Base Rental and other rent to Landlord on a per diem basis for each day of occupancy
prior to the Commencement Date (using the estimated rate payable for Construction Rent for the
first month of the Lease Term). Tenant shall not, however, be obligated to pay Base Rental and
other rent to Landlord prior to the Commencement Date if such early occupancy is only for the
purpose of fixturing the New Space.

     3.3 By taking possession of the Premises, it shall be conclusive evidence that Tenant has
inspected the Premises (and has sufficient knowledge and expertise to make such inspection or has
caused the Premises to be inspected on its behalf by one or more persons with such knowledge and
expertise), that Tenant has accepted the Premises as being in good and satisfactory condition,
suitable for the purposes herein intended and that the same comply fully with Landlord’s covenants
and obligations under this Lease with respect to the construction of the Work (as defined in
Exhibit “E” below), except for any punchlist items agreed to in writing by Landlord and
Tenant and the performance of the Second Phase Work (as defined in Exhibit “E” below).
Tenant acknowledges and agrees that Landlord has made no representation or warranty, express or
implied, as to the habitability, suitability, quality, condition or fitness of

 

 

the Premises, and Tenant waives, to the extent permitted by applicable law, any defects in the
Premises and any claims arising therefrom, save and except those arising from any construction or
repair obligations of Landlord expressly provided for in this Lease.

     3.4 Following delivery of the Second Phase Work to Tenant, Landlord shall prepare a
Commencement Date Letter in the form attached hereto as Exhibit “F” setting forth the
Commencement Date, Expiration Date, Base Rental (and specifically delineating Construction Rent)
and confirming Tenant’s acceptance of the Premises and the Second Phase Work and that Landlord has
performed all of its obligations with respect to delivery of the Premises, except as to any
punchlist items previously specified in writing and related to the Second Phase Work. Tenant shall
execute and deliver the Commencement Date Letter to Landlord within ten (10) days after delivery by
Landlord.

ARTICLE 4

RENT

     4.1 Tenant promises and agrees to pay Landlord at Landlord’s address set forth in this Lease,
or such other address as Landlord may provide to Tenant, the Base Rental and all other rent charged
under this Lease without deduction or set off, for each month of the entire Lease Term. Monthly
installments of Base Rental, as may be adjusted in accordance with the provisions of the Lease,
shall be due and payable, in advance, without notice or demand on or before the first day of each
calendar month during the Lease Term. The Base Rental for any fractional month at the beginning or
end of the Lease Term shall be prorated.

     4.2 The Security Deposit in the estimated amount of $288,113 (3 months’ worth of Base Rental
[estimated including Construction Rent attributable to the Second Phase Work]) shall be paid to
Landlord contemporaneously with the execution of this Lease. If the actual amount of 3 months’
worth of Base Rental (as finally determined after the final computation of Construction Rent)
varies from $288,113, the parties shall make an adjusting payment between them if the Security
Deposit is cash, or the Tenant shall provide Landlord with a substitute Letter of Credit (as
defined below) in the proper amount and upon receipt of such substitute Letter of Credit, Landlord
shall return to Tenant the Letter of Credit it then holds. Landlord shall hold the Security
Deposit without liability for interest and as security for the performance by Tenant of Tenant’s
covenants and obligations under this Lease, it being expressly understood that such deposit shall
not be considered an advance payment of rental or a measure of Landlord’s damages in case of
default by Tenant. Upon the occurrence of any Event of Default by Tenant, Landlord may, from time
to time, without prejudice to any other remedy, use the Security Deposit to the extent necessary to
make good any arrearage of rent and any other damage, injury, expense or liability caused to
Landlord by such Event of Default. Following any such application of the Security Deposit, Tenant
shall pay to Landlord on demand the amount so applied in order to restore the Security Deposit to
its original amount. If Tenant is not then in default of this Lease, any remaining balance of the
Security Deposit shall be returned by Landlord to Tenant upon termination of this Lease. If
Landlord transfers its interest in the Premises during the Lease Term, Landlord may assign the
Security Deposit to the transferee and thereafter shall have no further liability for the return of
the Security Deposit.

2

 

     At Tenant’s election, the Security Deposit may be in the form of cash or an unconditional and
irrevocable letter of credit (the “Letter of Credit”), which Letter of Credit shall (a) be in the
amount as described above, (b) be in form and substance satisfactory to Landlord, (c) name Landlord
as its beneficiary, (d) expressly allow Landlord to draw upon it at any time or from time to time
by delivering to the issuer written notice that either an Event of Default then exists or Landlord
has not been timely provided a substitute Letter of Credit as described in the next grammatical
sentence, and (e) be drawn on an FDIC-insured financial institution satisfactory to Landlord. If
Landlord is not provided with a substitute Letter of Credit complying with all of the requirements
hereof at least ten (10) days before the stated expiration date of the existing Letter of Credit,
then Landlord shall have the right to draw under such Letter of Credit then held by Landlord and
hold such funds as a Security Deposit in accordance with the terms of this Section 4.2.

     Upon receipt of a paid invoice from Tenant evidencing Tenant’s payment to the issuing bank of
the fee for the Letter of Credit, Landlord shall reimburse Tenant annually for such fee in an
amount not to exceed 2% of the amount of the Letter of Credit on an annual basis and Tenant shall
be responsible for any fee above such 2% amount. Landlord may, at its sole and absolute
discretion, authorize Tenant to reduce the amount of the Letter of Credit beginning October 1, 2004
through the expiration of the Lease Term to an amount equal to two months’ worth of Base Rental
payable as of October 1, 2004.

     4.3 All amounts due from Tenant to Landlord under this Lease (including Base Rental) is herein
collectively referred to as “rent.” Tenant hereby acknowledges that late payment to Landlord of
rent due hereunder will cause Landlord to incur costs and inconvenience not contemplated by this
Lease, the exact amount of which will be extremely difficult to ascertain. If any rent due from
Tenant is not received by Landlord or Landlord’s designated agent within ten (10) days after its
due date, then Tenant shall pay to Landlord as a late charge ten percent (10%) of such overdue
amount, plus any reasonable attorney’s fees incurred by Landlord by reason of Tenant’s failure to
pay rent when due hereunder. The parties hereby agree that such late charges represent a fair and
reasonable estimate of the cost that Landlord will incur by reason of Tenant’s late payment.
Landlord’s acceptance of such late charges shall not constitute a waiver of Tenant’s default with
respect to such overdue amount or estop Landlord from exercising any of the other rights and
remedies granted hereunder.

     4.4 All payments required of Tenant under this Lease shall bear interest, beginning on the day
after the due date until paid at the lesser of eighteen percent (18%) per annum or the maximum
lawful rate (“Default Interest”). In no event, however, shall the charges permitted under this
paragraph or elsewhere in this Lease, to the extent the same are considered to be interest under
applicable law, exceed the maximum lawful rate of interest.

     4.5 No payment by Tenant or receipt by Landlord of a lesser amount than the rent due under
this Lease shall be deemed to be other than on account of the earliest rent due hereunder, nor
shall any endorsement or statement on any check or any letter accompanying any check or payment as
rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord’s right to recover the balance of such rent or to pursue any other remedy
provided in this Lease or at law or in equity.

3

 

ARTICLE 5

SERVICES

     5.1 Tenant shall contract with providers of water, gas, electricity, sewer and telephone
utility services (collectively, “Utilities”) to the Premises. Tenant shall pay for the Utilities
used in operating all facilities serving the Premises, including, without limitation, the cost of
separate meters, connections and security deposits.

     5.2 Landlord shall not be liable for any loss, injury or damage to property caused by or
resulting from any variation, interruption, or failure of Utilities due to any cause whatsoever, or
from failure to make any repairs or perform any maintenance. No temporary interruption or failure
of such services incident to the making of repairs, alterations, improvements, or due to accident,
strike, or conditions or other events shall be deemed an eviction of Tenant or relieve Tenant from
any of its obligations hereunder. In no event shall Landlord be liable to Tenant for any damage to
the Premises or for any loss, damage or injury to any property therein or thereon occasioned by
bursting, rupture, leakage or overflow of any plumbing or other pipes (including, without
limitation, water, steam, and/or refrigerant lines), sprinklers, tanks, drains, drinking fountains
or washstands, or other similar cause in, above, upon or about the Premises.

ARTICLE 6

USE

     6.1 Tenant shall use the Premises only for the Permitted Use. Tenant will not occupy or use
the Premises, or permit any portion of the Premises to be occupied or used, for any business or
purpose other than the Permitted Use or for any use or purpose which is unlawful or deemed to be
disreputable in any manner, or dangerous to life, limb or property, or extrahazardous on account of
fire, nor permit anything to be done which will in any way invalidate any insurance coverage on the
Premises. Tenant will conduct its business and control its agents, employees and invitees in such a
manner as not to create any nuisance. Tenant will not commit waste and will maintain the Premises
in a clean, healthful and safe condition and will comply in all material respects with all laws,
ordinances, orders, rules and regulations (state, federal, municipal, insurance and other agencies
or bodies having any jurisdiction thereof) with reference to the use, condition or occupancy of the
Premises, including, without limitation, all environmental, health and safety laws and the
Americans with Disabilities Act. Tenant will secure at its own expense all permits and licenses
required for the transaction of business from the Premises in accordance with the Permitted Use.
Tenant will not display or sell merchandise outside the exterior walls and doorways of the enclosed
building improvements located on the Premises and may not use such outside areas for storage.
Tenant will not use any apparatus which might make undue vibrations in the building improvements
located on the Premises.

     6.2 Tenant will, and will cause all its employees, agents, contractors and invitees to, comply
fully with all rules and regulations of the Premises adopted by Landlord from time to time. A copy
of the rules and regulations for the Premises, existing on the Date of this Lease, are attached
hereto as Exhibit “D”. Landlord shall at all times have the right to change such rules and
regulations or to promulgate other rules and regulations in such reasonable manner as may be deemed
advisable for the safety, care, or cleanliness of the Premises, and for the preservation of

4

 

good order therein, all of which rules and regulations, changes and amendments will be
forwarded to Tenant in writing and shall be carried out and observed by Tenant.

ARTICLE 7

SIGNAGE

     7.1 Tenant shall have the right to install signs upon the exterior of the Premises only when
first approved in writing by Landlord in Landlord’s sole discretion and subject also to any
applicable governmental laws, ordinances, regulations and other requirements. Should Landlord agree
in writing to consent to signage, Tenant agrees to maintain same in good condition and repair at
all times. Tenant shall remove all of its signs no later than the Expiration Date. In the event
Tenant fails to remove all its signs by the Expiration Date, Landlord shall be authorized to remove
the signs on Tenant’s behalf and Tenant shall reimburse the cost of such removal to Landlord, at
Tenant’s sole expense, and Tenant hereby agrees to indemnify and hold Landlord harmless from and
against any and all costs, expenses, claims and other liabilities of any type arising out of such
sign removal. Tenant shall repair all damage to the Premises or other improvements caused by the
installation or removal of Tenant’s signs. The provisions of this Article 7 shall survive
the expiration or termination of this Lease.

     7.2 Tenant may erect signs on the exterior or interior of the Premises or on the landscaped
area adjacent thereto, and may erect satellite dishes or other communications equipment on the roof
of the Building, provided that such signs, satellite dishes or other communications equipment (a)
do not cause any structural damage or other damage to the Building; (b) do not violate applicable
governmental laws, ordinances, rules or regulations; (c) do not violate any existing restrictions
affecting the Premises; and (d) are compatible with the architecture of the Premises and the
landscaped area adjacent thereto. Tenant shall repair any damage to the Premises caused by any
installation or removal performed pursuant to the terms of this Section 7.2.

ARTICLE 8

ABSOLUTE TRIPLE NET

     Notwithstanding anything to the contrary, it is the intent and purpose of this Lease that it
shall be an absolute triple net lease and that, in addition to payment of Base Rental, Tenant shall
be responsible for payment of all operating expenses incurred with respect to the Premises,
including, but not limited to those for taxes (as described in Article 23 below),
insurance, repairs and maintenance and upkeep.

ARTICLE 9

ALTERATIONS

     9.1 Any leasehold improvements to the Premises contemplated to be made prior to the
Commencement Date shall be performed in accordance with the provisions of Exhibit “E”.

     9.2 Other than (i) any leasehold improvements to be made under Section 9.1 above, or
(ii) any interior alteration, addition or improvement which does not impact the heating, air
conditioning, ventilation, electrical, plumbing, utility or mechanical systems of any improvements
located in the Premises nor impact the structural components of the Premises,

5

 

including but not limited to the foundation, bearing walls, structural steel, footings and
roofs and the cost of which, in any instance, does not exceed $10,000, Tenant shall not make, or
allow to be made, any alterations, additions or improvements to the Premises without the prior
written approval of Landlord. All alterations, additions or improvements installed on the Premises
by either party, including, without limitation, fixtures, but excluding readily movable trade
fixtures and equipment, shall become the property of Landlord at the expiration of the Lease Term,
unless Landlord requests their removal in accordance with Article 20 below.

     9.3 Prior to commencing any construction work on the Premises, Tenant must furnish to Landlord
adequate plans and specifications for the written approval of Landlord. Once approved, Tenant shall
not modify the plans and specifications without, again, obtaining the written approval of Landlord.
Landlord’s approval of the plans and specifications shall not be deemed to be a representation by
Landlord that such plans and specifications comply with applicable insurance requirements, building
codes, ordinances, laws or regulations.

     9.4 All construction work shall be performed only by Landlord or by contractors and
subcontractors approved in writing by Landlord. If Landlord does not perform the construction work,
then Tenant shall cause all of its contractors and subcontractors to procure and maintain insurance
coverage against such risks and in such amounts as Landlord may reasonably require and with such
companies as Landlord may reasonably approve. Landlord may also require Tenant to furnish a payment
and performance bond, reasonably satisfactory to Landlord in an amount covering the cost of the
construction work. Tenant agrees to indemnify Landlord and hold Landlord harmless against any loss,
liability or damage resulting from any such construction work performed by Tenant or on Tenant’s
behalf.

     9.5 All construction work by, or on behalf of, Tenant must be performed in a good and
workmanlike manner in accordance with the approved plans and specifications, lien-free, and in
compliance with all governmental laws and requirements. Tenant shall only utilize new materials in
the construction work.

     9.6 Other than as to the Work, Tenant shall not permit any mechanic’s liens to be filed
against the Premises for any work performed, materials furnished, or obligation incurred by or at
the request of Tenant. If such a lien is filed, then Tenant shall, within ten (10) days after
Landlord has delivered notice of the filing to Tenant, either pay the amount of the lien or
diligently contest such lien, in which event, Tenant shall deliver to Landlord a bond or other
security reasonably satisfactory to Landlord. If Tenant fails to timely take either such action,
then Landlord may, at its election, pay the lien claim without inquiry as to the validity thereof,
and any amounts so paid, plus Landlord’s expenses and an administrative fee equal to fifteen
percent (15%) of the amount paid, shall be paid by Tenant to Landlord as additional rental within
ten (10) days after Landlord has delivered to Tenant an invoice therefor. No work which Landlord
permits Tenant to perform in the Premises shall be deemed to be for the immediate use or benefit of
Landlord so that no mechanics or other lien shall be allowed against the estate of Landlord by
reason of its consent to such work.

6

 

ARTICLE 10

REPAIRS

     10.1 Except as otherwise provided in this Article 10, Tenant, at its sole cost and
expense, throughout the Lease Term, shall take good care of, and keep in good order, condition and
repair (including, without limitation, interior repainting and refurnishing, as needed) all parts
of the Premises, and shall make and perform all routine maintenance thereof and all necessary
repairs thereto. When used in this Article, “repairs” shall include all necessary replacements,
alterations, additions and betterments, interior and exterior, structural and non-structural,
ordinary and extraordinary, foreseen and unforeseen, of every nature, kind and description,
including, without limitation, any repairs, replacements, alterations, additions and betterments
required by any governmental law, ordinance or regulation now or hereafter enacted relating to the
Premises. Such repairs and replacements will be made in a good and workmanlike manner with
materials of equal or better quality to the original work, and under the supervision and with the
approval of Landlord. Tenant shall enter into a service contract with a contractor approved by
Landlord, providing for the service and regular maintenance (with service calls no less frequent
than once each calendar quarter and otherwise meeting the specifications set forth in Exhibit
“M”) of the heating, venting and air conditioning system throughout the Lease Term.

     10.2 If Tenant shall fail to maintain or repair the Premises, and such failure continue for a
period of ten (10) days after written notice from Landlord, then Landlord shall have the right, but
not the obligation, to cause such repairs to be made and the costs therefor plus an administrative
fee equal to fifteen percent (15 %) of the costs shall be payable by Tenant to Landlord as
additional rental on the date of the next installment of Base Rental due under the Lease.
Notwithstanding the foregoing to the contrary, if an emergency exists, Landlord shall have the
right, but not the obligation, to make such repairs without prior notice to Tenant if reasonable
under the circumstances. Again, Tenant shall pay to Landlord the cost thereof and administrative
fee as additional rental due on the date of the next installment of Base Rental.

     10.3 Except as expressly provided elsewhere in this Lease, Landlord shall not be required to
furnish any services or to make any repairs or alterations in, on or about the Premises or any
improvements hereafter erected on the Premises. Tenant hereby assumes the full and sole
responsibility for the condition, operation, repair, replacement, maintenance and management of the
Premises and all improvements thereon, and Tenant hereby waives any rights created by any law now
or hereafter in force to make repairs to the Premises or improvements thereon at Landlord’s
expense.

     10.4 Tenant, in executing this Lease, acknowledges that the parties have specifically
negotiated and Tenant has specifically agreed to perform the repair obligations under this Lease.
Without limiting the foregoing, Tenant acknowledges that the Base Rental has been determined, in
part, upon Tenant’s agreement to maintain and make all the repairs to the Premises required during
the Lease Term. Tenant acknowledges that the benefit of the repairs performed by Tenant may inure
to the benefit of Landlord after the expiration of the Lease Term and that Tenant, as a
sophisticated commercial tenant, understands the full undertaking of such obligations.

     10.5 Notwithstanding the foregoing, for a period of one (1) year from the date of substantial
completion of (i) the First Phase Work and (ii) the Second Phase Work, as the case

7

 

may be, Landlord guarantees the First Phase Work and Second Phase Work against, and Landlord
shall, at its sole cost and expense, repair or replace any defective item occasioned during said
one-year period by, (a) defective workmanship and/or materials, and (b) failure of such components
of the Work to comply substantially with the Plans and Specifications (as defined in Exhibit
“E”). Except as expressly provided herein, performance of such applicable one-year guaranty
shall be Landlord’s sole and exclusive obligation with respect to defective workmanship and/or
materials or such other failures as aforesaid, and Tenant’s rights to enforce such applicable
one-year guaranty shall be Tenant’s sole and exclusive remedy against other Landlord with respect
to such defective workmanship and/or materials or such failures, in limitation of any contract,
warranty or other rights, whether express or implied, that Tenant may otherwise have under
applicable law. From and after the expiration of such applicable one-year guaranty, Landlord agrees
to cooperate with Tenant in the enforcement by Tenant, at Tenant’s sole cost and expense, of any
express warranties or guaranties of workmanship or materials given by contractors, subcontractors
or materialmen that guarantee or warrant against defective workmanship or materials for a period of
time in excess of such applicable one-year period and to cooperate with Tenant in the enforcement
by Tenant, at Tenant’s sole cost and expense, of any service contracts that provide service, repair
or maintenance to any item incorporated in the New Space for a period of time in excess of such
applicable one-year period. Further, Landlord shall assign to Tenant all warranties in connection
with the Work which are given by manufacturers, contractors, subcontractors and sub-subcontractors.
Such warranties shall be consistent with those then generally available from other high quality,
reputable commercial contractors in the greater Chicago, Illinois vicinity.

     Anything in this Lease to the contrary notwithstanding, and in addition to the one-year
warranty set forth above, Landlord, to the full extent of applicable Illinois law, guarantees the
Work against any latent defects in workmanship or materials in the construction thereof (which
shall include, without limitation, latent defects in the structural elements or the facade of the
New Space); provided, however, that the parties acknowledge and agree that with respect to any such
latent defects, the provisions of 735 ILCS 5/13-214, as the same may be amended, modified and
interpreted from time to time, shall govern and control the foregoing warranty. Anything in this
Lease to the contrary notwithstanding, Tenant has not waived, and does not hereby waive, any rights
it may have under common law with respect to any latent defects with respect to the construction of
the Work.

     Anything in this Section 10.5 or elsewhere in this Lease to the contrary
notwithstanding, in the event that at any time during the Lease Term Tenant incurs reasonable costs
and expenses for the repair or replacement of the roof of the Existing Space or of the roof of the
New Space, respectively, which costs and expenses, in each case (a) are not paid or reimbursed
under the roof manufacturer’s warranty (Tenant being obligated to use all commercially reasonable
efforts to obtain such payment or reimbursement), (b) are not caused by fire or other casualty, and
(c) are not caused by any act or neglect of Tenant, or any of its employees, agents, invitees,
contractors, subcontractors or sub-subcontractors (other than Landlord and Landlord’s contractors,
subcontractors or sub-subcontractors), then Landlord shall reimburse Tenant for such costs and
expenses in accordance with this grammatical paragraph. In the event that such costs and expenses
are incurred prior to January 31, 2001 (with respect to the roof of the Existing Space), or prior
to September 30, 2004 (with respect to the roof of the New Space), then Landlord shall reimburse
Tenant for all of such costs and expenses. In the event that such costs and expenses are

8

 

incurred after January 31, 2001 (with respect to the roof of the Existing Space), or after
September 30, 2004 (with respect to the roof of the New Space), in both instances, including,
without limitation, any Renewal Terms (as defined in Exhibit “J” below), then Landlord
shall reimburse Tenant for such costs and expenses, to the extent (if at all) that the same exceed
the difference between (y) Fifty Thousand and 00/100ths Dollars ($50,000.00), which $50,000.00
deductible amount shall apply separately with respect to each of the Existing Space roof and the
New Space roof, and (z) any such costs or expenses theretofore incurred by Tenant and not
previously reimbursed by Landlord hereunder. Landlord’s reimbursement hereunder shall be made
within thirty (30) days after Tenant’s presentation to Landlord of reasonable documentation
evidencing the costs and expenses incurred by Tenant and the satisfaction of the other conditions
set forth above.

     10.6 (a) Anything in this Lease to the contrary notwithstanding, if, during the last eighteen
(18) months of the then-current Lease Term, Tenant is required to make any repair or replacement
pursuant to Section 10.1 hereof, which repair or replacement under generally accepted
accounting principles is not fully chargeable to a current account in the year in which the
expenditure is incurred and, therefore, must be capitalized, the cost of such repair or replacement
shall be shared between Landlord and Tenant as provided in this Section 10.6. Any such
repair or replacement is hereinafter referred to as an “Eligible Repair or Replacement” and that
portion of the cost of such Eligible Repair or Replacement in excess of $5,000.00 is hereinafter
referred to as the “Eligible Cost”. Tenant shall pay, in the first instance, the entire cost of an
Eligible Repair or Replacement, and Landlord shall reimburse Tenant, in accordance with this
Section 10.6, for that portion of the Eligible Cost which equals the difference between (i)
the amount of the Eligible Cost, and (ii) the product of (A) the Eligible Cost, and (B) a fraction,
the numerator of which is the number of months from the commencement of the subject Eligible Repair
or Replacement through the end of the then current term, and the denominator of which is the useful
life, expressed in months, of the subject Eligible Repair or Replacement assigned to it for federal
income tax purposes (pursuant to Section 168 of the Internal Revenue Code of 1986, as amended, and
the rules and regulations from time to time promulgated thereunder). Such amount to be reimbursed
by Landlord, as calculated in accordance with the preceding sentence, is hereinafter referred to as
the “Tenant Reimbursement.” In the event Tenant thereafter exercises its option with respect to a
Renewal Term, then the amount of the Tenant Reimbursement shall be recalculated to reflect the
number of months from the commencement of the subject Eligible Repair or Replacement through the
end of the applicable Renewal Term (“Recalculated Reimbursement”). In the event that, because of
Tenant’s exercise of its option for a Renewal Term, Tenant shall have been reimbursed hereunder for
amounts in excess of the Recalculated Reimbursement, then Tenant shall pay the entire amount of
such excess to Landlord within sixty (60) days after Tenant’s exercise with respect to such Renewal
Term.

     (b) In the event that at any time during the last six (6) months of the then-current Lease
Term, Tenant intends to undertake an Eligible Repair or Replacement, Tenant shall give written
notice thereof to Landlord, which notice shall include a summary of the nature and cost of such
Eligible Repair or Replacement. Landlord shall be required to consider such repair or replacement
in good faith and, within twenty (20) days after such notice (or such lesser time as stated in such
notice, in the event of an emergency), either approve or disapprove the expenditure or propose a
reasonable alternative thereto. In the event that Landlord fails to respond to Tenant

9

 

with an approval, disapproval or an alternative proposal within such twenty (20) day (or
shorter) period, such Eligible Repair or Replacement shall be deemed disapproved. In the event that
within such twenty (20) day (or shorter) period, Landlord either disapproves or proposes an
alternative to the proposed repair or replacement and Tenant determines that such disapproval or
alternative proposal is not reasonable, Tenant may undertake the proposed repair or replacement at
its sole expense, without waiving its right to contest the reasonableness of Landlord’s position
hereunder.

     (c) For purposes of this Section 10.6, Landlord’s “reasonableness” in disapproving or
proposing an alternative to a proposed repair or replacement shall be determined in light of a
reasonably prudent owner of similar commercial real estate in the same general vicinity of the
Premises.

ARTICLE 11

ASSIGNMENT AND SUBLETTING

     11.1 Restriction on Transfer. Tenant shall not sublet the Premises, or any portion thereof,
nor assign, mortgage, pledge, transfer or otherwise encumber or dispose of this Lease, or any
interest therein, or in any manner assign, mortgage, pledge, transfer or otherwise encumber or
dispose of its interest or estate in the Premises, or any portion thereof, without obtaining
Landlord’s prior written consent in each and every instance, which consent shall not be
unreasonably withheld or delayed, provided the following conditions are complied with:

     (a) Any assignment of this Lease shall transfer to the assignee all of Tenant’s right, title
and interest in this Lease and all of Tenant’s estate or interest in the Premises.

     (b) At the time of any assignment or subletting, and at the time when Tenant requests
Landlord’s written consent thereto, this Lease must be in full force and effect, without any Event
of Default.

     (c) In the case of an assignment, any such assignee shall assume, by written, recordable
instrument, in form and content reasonably satisfactory to Landlord, the due performance of all of
Tenant’s obligations under this Lease, including any accrued obligations at the time of the
effective date of the assignment, and such assumption agreement shall state that the same is made
by the assignee for the express benefit of Landlord as a third party beneficiary thereof. A copy of
the assignment and assumption agreement, both in form and content reasonably satisfactory to
Landlord, fully executed and acknowledged by assignee, together with a certified copy of a properly
executed corporate resolution (if the assignee be a corporation) authorizing the execution and
delivery of such assumption agreement, shall be sent to Landlord ten (10) days prior to the
effective date of such assignment.

     (d) In the case of a subletting, a copy of any sublease fully executed and acknowledged by
Tenant and the sublessee shall be mailed to Landlord ten (10) days prior to the effective date of
such subletting, which sublease shall be in form and content reasonably acceptable to Landlord.

     (e) Such assignment or subletting shall be subject to all the provisions, terms, covenants and
conditions of this Lease and Tenant-assignor (and the guarantor or guarantors of

10

 

this Lease, if any) and the assignee or assignees shall continue to be and remain liable under
this Lease, as it may be amended from time to time without notice to any assignor of Tenant’s
interest or to any guarantor.

     (f) Each sublease permitted under this Section 11.1 shall contain provisions to the
effect that (i) such sublease is only for actual use and occupancy by the sublessee; (ii) such
sublease is subject and subordinate to all of the terms, covenants and conditions of this Lease and
to all of the rights of Landlord thereunder; and (iii) in the event this Lease shall terminate
before the expiration of such sublease, the sublessee thereunder will, at Landlord’s option, attorn
to Landlord and waive any rights the sublessee may have to terminate the sublease or to surrender
possession thereunder, as a result of the termination of this Lease. A sublease need not be for all
of the Premises.

     (g) Tenant agrees to pay on behalf of Landlord any and all costs of Landlord, including
reasonable attorneys’ fees paid or payable to outside counsel, occasioned by such assignment or
subletting; provided, however, that such attorneys’ fees shall not exceed $5,000.00 in each
instance.

     Anything in this Section 11.1 or Section 11.3 hereof to the contrary
notwithstanding, Tenant may sublet or assign its interest in this Lease, without Landlord’s
consent, if such subletting or assignment is to an affiliate of Tenant and if such subletting or
assignment does not release Tenant (or guarantor, if any) from any of its obligations under this
Lease. An “affiliate” for purposes of this Section 11.1 and Section 11.3 hereof
shall mean (i) a wholly-owned subsidiary of Tenant, (ii) Tenant’s parent, (iii) an entity
succeeding to all or a substantial part of the business of Tenant, (iv) an entity resulting from a
merger or consolidation with Tenant, or (v) an entity which directly or indirectly, through one or
more intermediaries, controls or is controlled by, or is under common control with, Tenant. The
term “control” (including, without limitation, the terms “controlling”, “controlled by” and “under
common control with” shall mean the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of an entity, whether through the ownership of voting
securities, by contract or otherwise).

     11.2 Restriction From Further Assignment. Notwithstanding anything contained in this Lease to
the contrary and notwithstanding any consent by Landlord to any sublease of the Premises, or any
portion thereof, or to any assignment of this Lease or of Tenant’s interest or estate in the
Premises, no sublessee shall assign its sublease nor further sublease the Premises, or any portion
thereof, and no assignee shall further assign its interest in this Lease or its interest or estate
in the Premises, or any portion thereof, nor sublease the Premises, or any portion thereof, without
Landlord’s prior written consent in each and every instance which consent shall not be unreasonably
withheld or unduly delayed. No such assignment or subleasing shall relieve Tenant from any of
Tenant’s obligations in this Lease contained.

     11.3 Landlord’s Termination Rights. Should Tenant desire to assign this Lease, or its interest
or estate in the Premises, or sublet the Premises, or any portion thereof, it shall give written
notice of its intention to do so to Landlord sixty (60) days or more before the effective date of
such proposed assignment or subletting and, unless such assignment or subletting is to an affiliate
of Tenant in accordance with Section 11.1 hereof, Landlord may, at any time within

11

 

thirty (30) days after the receipt of such notice from Tenant, cancel this Lease by giving
Tenant written notice of its intention to do so, in which event such cancellation shall become
effective upon the date specified by Landlord, but not less than thirty (30) nor more than ninety
(90) days after its receipt by Tenant, with the same force and effect as if said cancellation date
were the Expiration Date, or the expiration date of any extension or renewal thereof. In the event
of any such termination by Landlord, Tenant shall not be obligated to pay Landlord’s costs pursuant
to Section 11.1(g) hereof. Landlord may enter into a direct lease with the proposed
sublessee of assignee or with any other persons as Landlord may desire without obligation or
liability to Tenant, its assignees, sublessees or their respective successors, assigns, agents or
brokers.

     11.4 Tenant’s Failure to Comply. Tenant’s failure to comply with all of the foregoing
provisions and conditions of this Article 11 shall (whether or not Landlord’s consent is
required under this Article), at Landlord’s option, render any purported assignment or subletting
null and void and of no force and effect.

     11.5 Sharing of Excess Rent. If Landlord consents to Tenant assigning its interest under this
Lease or subletting all or any portion of the Premises, Tenant shall pay to Landlord (in addition
to rent and all other amounts payable by Tenant under this Lease) 50% of the rents and other
considerations payable by such assignee or subtenant in excess of the rent otherwise payable by
Tenant from time to time under this Lease, and net of Tenant’s direct out-of-pocket expenses in
connection with such assignment or subletting. For the purposes of this computation, the additional
amount payable by Tenant shall be determined by application of the rental rate per square foot for
the Premises or any portion thereof sublet. Said additional amount shall be paid to Landlord
immediately upon receipt by Tenant of such rent or other considerations from the assignee or
subtenant.

ARTICLE 12

INSURANCE; WAIVERS; SUBROGATION; INDEMNITY

     12.1 Tenant shall at its expense procure and maintain throughout the Lease Term the following
insurance policies: (i) commercial general liability insurance in amounts of not less than
$5,000,000 per occurrence, combined single limit, or such other amounts as Landlord may from time
to time reasonably require, insuring Tenant, Landlord and Landlord’s agents against all liability
for injury to or death of a person or persons or damage to property arising from the use and
occupancy of the Premises, (ii) contractual liability insurance coverage sufficient to cover
Tenant’s indemnity obligations hereunder, (iii) casualty insurance, including “all risks” and fire
and extended coverage insurance covering loss by fire, and other hazards, including, but not
limited to, windstorm, hail, explosion, vandalism, riot and civil commotion, damage from vehicles,
smoke, water, and flood, if the Premises are in a designated flood or flood insurance area, and
earthquake, if the Premises are in an earthquake prone area, and such other similar or dissimilar
hazards customarily insured against in the vicinity of the Premises and covering the full
replacement cost of the Premises and Tenant’s leasehold improvements, personal property and other
property (including the property of others), located in or on the Premises, (iv) workman’s
compensation insurance, containing a waiver of subrogation endorsement reasonably acceptable to
Landlord, (v) comprehensive automobile liability insurance, insuring Tenant, Landlord and
Landlord’s agents, (vi) business interruption insurance, and (vii) such other insurance and in such
amounts as Landlord may reasonably require from time to time. The term

12

 

“full replacement cost”, as used above, shall mean the cost of replacing the improvements
without deduction for depreciation or wear and tear, and it shall include a reasonable sum for
architectural, engineering, legal, administrative and supervisory fees connected with any
restoration. In the event there is a sprinkler system and/or a boiler or pressure pipes on the
Premises, then Tenant shall also procure sprinkler leakage insurance and/or boiler and pressure
vessel insurance at Tenant’s expense. Tenant’s insurance shall provide primary coverage to Landlord
when any policy issued to Landlord provides duplicate or similar coverage, and in such
circumstance, Landlord’s policy will be excess over Tenant’s policy. Tenant shall furnish
certificates of insurance and such other evidence satisfactory to Landlord of the maintenance of
all insurance coverages required hereunder prior to the Commencement Date, and Tenant shall obtain
a written obligation on the part of each insurance company to notify Landlord at least thirty (30)
days before cancellation or a material change of any such insurance. All such insurance policies
shall name Landlord as additional insured or loss payee, as applicable, and otherwise shall be in
form, and issued by companies, reasonably satisfactory to Landlord and with deductibles reasonably
satisfactory to Landlord. Tenant’s failure to maintain any insurance hereunder shall constitute an
Event of Default without any written notice required of Landlord and, in such event, Landlord shall
have the right, but not the obligation, to purchase any insurance that has lapsed. Should Landlord
elect to purchase insurance on behalf of Tenant, then Tenant shall reimburse to Landlord the cost
of such insurance and an administrative fee of fifteen percent (15%) of the amount of the premium
within ten (10) days of the date of the notice from Landlord seeking the reimbursement. The policy
limits of any insurance required to be carried by Tenant shall not limit the liability of Tenant
under this Lease.

     12.2 Landlord shall not be liable to Tenant or those claiming by, through, or under Tenant for
any injury to or death of any person or persons or the damage to or theft, destruction, loss, or
loss of use of any property or inconvenience (a “Loss”) caused by casualty, theft, fire, third
parties, or any other matter (including Losses arising through repair or alteration of any part of
the Premises, or failure to make repairs, or from any other cause), except the negligence or
misconduct of Landlord or its employees and agents. Notwithstanding the foregoing to the contrary,
Landlord and Tenant waive any claim each might have against the other for any damage to or theft,
destruction, loss, or loss of use of any property, to the extent the same is covered under any
insurance policy that covers the Premises, Landlord’s or Tenant’s fixtures, personal property,
leasehold improvements, or business, or, in the case of Tenant’s waiver, is required to be insured
against under the terms of this Lease, and, to the extent allowed by law, regardless that the
negligence or fault of the other party caused such loss. This waiver shall not apply to the portion
of any damage which is not reimbursed by the damaged party’s insurance by reason of the deductible
in such party’s insurance coverage, or apply to any coinsurance penalty which Landlord or Tenant
might sustain. Each party shall cause its insurance carrier to endorse all applicable policies
waiving the carrier’s rights of recovery under subrogation or otherwise against the other party.

     12.3 Subject to the waiver provisions of Section 12.2 above, Tenant shall defend,
indemnify, and hold harmless Landlord and its employees and agents from and against all claims,
demands, liabilities, causes of action, suits, judgments, and expenses (including attorneys’ fees)
for any Loss arising from an occurrence on the Premises or caused by or resulting from the
condition of the Premises, or from the acts or omissions of Tenant or Tenant’s

13

 

employees, agents, contractors or invitees, or from Tenant’s failure to perform any of its
obligations under this Lease.

     12.4 Tenant shall not use, and shall not permit any subtenant, licensee, concessionaire,
employee, agent or invitee (hereinafter collectively “Tenant’s Representatives”) to use, any
portion of the Premises for the placement, storage, manufacture, disposal or handling of any
hazardous materials (hereinafter defined) unless Tenant complies with all applicable environmental
laws (federal, state or local), including, but not limited to those for obtaining proper permits.
In the event Tenant or Tenant’s Representatives desire to use or place hazardous materials on the
Premises it shall notify Landlord in writing thirty (30) days prior to such proposed use or
placement, and provide the names of the hazardous materials, procedures to insure compliance with
the applicable environmental law and such other information as Landlord may reasonably request.

     In the event Tenant or Tenant’s Representatives places, releases or discovers any hazardous
materials on the Premises in violation of applicable environmental laws, Tenant shall immediately
notify Landlord of such fact in writing within twenty-four (24) hours of the placement, release or
discovery. Tenant shall not attempt any removal, abatement or remediation of those hazardous
materials on the Premises in violation of applicable environmental laws, without obtaining the
additional written consent of Landlord, which consent may be specifically conditioned on Landlord’s
right to approve the scope, timing and techniques of any such work and the appointment of all
contractors, engineers, inspectors and consultants in connection with any such work. Tenant shall
be responsible for the cost of any removal, abatement and remediation work of any hazardous
materials placed, stored, manufactured, disposed of or handled by Tenant or Tenant’s
Representatives on the Premises and for the cost of any removal, abatement or remediation of any
hazardous materials which might be disturbed or released as a result of any remodeling or
construction in the Premises by Tenant or Tenant’s Representatives. Such costs shall include,
without limitation, the cost of any supervision by Landlord, its employees or agents, in connection
with such work. Tenant shall comply with all environmental laws in connection with any such
removal.

     Tenant shall indemnify Landlord, its shareholders, directors, officers, employees and agents
and hold them harmless, from and against any loss, damage (including, without limitation, a loss in
value of the Premises or damages due to restrictions on marketing contaminated space), cost,
liability or expense (including reasonable attorneys’ fees and expenses and court costs) arising
out of the placement, storage, use, manufacture, disposal, handling, removal, abatement or
remediation of any hazardous materials by Tenant or Tenant’s Representatives on the Premises, or
any removal, abatement or remediation of any hazardous materials required hereunder to be performed
or paid for by Tenant, with respect to any portion of the Premises, or arising out of any breach by
Tenant of its obligations under this paragraph.

     The term “hazardous materials” as used herein shall mean (i) any “hazardous waste” as defined
by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), as amended
from time to time, and regulations promulgated thereunder; (ii) any “hazardous substance” as
defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. Section 9601, et seq.), as amended from time to time, and regulations promulgated
thereunder; (iii) asbestos or polychlorinated biphenyls;

14

 

(iv) any substance the presence of which on the Premises is prohibited or regulated by any
federal, state or local law, regulation, code or rule; and (v) any other substance which requires
special handling or notification of any federal, state or local governmental entity in its
collection, storage, treatment, or disposal.

     12.5 The indemnification provisions contained in this Article 12 shall survive the
termination of this Lease.

ARTICLE 13

FIRE AND CASUALTY

     13.1 Tenant covenants and agrees that in case of damage to or destruction of the Premises by
fire or otherwise, Tenant at its sole cost and expense, shall promptly restore, repair, replace and
rebuild the same (“Restoration”) as nearly as possible to the condition that the same were in
immediately prior to such damage or destruction with such changes or alterations as may be
reasonably acceptable to Tenant or required by law, except that Tenant shall not be obligated to
rebuild any of the Flammable Storage Room, Mezzanine or Elevator (all as defined in Exhibit
“E” attached hereto and collectively referred to herein as “Tenant’s Construction Items”).
Tenant shall forthwith give Landlord written notice of such damage or destruction upon the
occurrence thereof and specify in such notice, in reasonable detail, the extent thereof. The
Restoration shall be carried on and completed in accordance with the provisions and conditions of
this Lease. All insurance proceeds shall be held by Landlord and Tenant as co-trustee. If the
insurance monies in the hands of Landlord and Tenant as co-trustees shall be deemed to be
insufficient by Landlord to pay the entire costs of the Restoration, Tenant, at its election, shall
either pay any deficiency to Landlord promptly upon demand or provide other reasonable security to
the Landlord for the deficiency and pay Landlord the portions of the deficiency from time to time
as expended by Landlord and invoiced to Tenant.

     13.2 All insurance monies recovered by Landlord or Tenant shall be held by Landlord and Tenant
as co-trustees on account of such damage or destruction and shall be applied to the payment of the
costs of the Restoration and shall be paid out from time to time as the restoration progresses, in
accordance with requirements reasonably imposed by Landlord or any mortgagee of record. Tenant
shall furnish Landlord at the time of any such payment with lien releases and evidence reasonably
satisfactory to Landlord that there are no unpaid bills in respect to any work, labor, services or
materials performed, furnished or supplied in connection with such Restoration.

     13.3 No destruction of or damage to the Premises, or any portion thereof, by fire, casualty or
otherwise shall permit Tenant to surrender this Lease or shall relieve Tenant from its liability to
pay to Landlord the Base Rental and additional rent payable under this Lease or from any of its
other obligations under this Lease, and Tenant waives any rights now or hereafter conferred upon
Tenant by present or future law or otherwise to quit or surrender this Lease or the Premises, or
any portion thereof, to Landlord or to any suspension, diminution, abatement or reduction of rent
on account of any such damage or destruction.

     13.4 In the event the damage or destruction occurs during the last nine (9) months of the
Lease Term, then, notwithstanding the provisions of Sections 13.1 and 13.2 above,
Tenant

15

 

shall not be obligated to complete such Restoration so long as Tenant assigns to Landlord all
insurance proceeds necessary (including the amount of any deductibles and any other amounts
necessary) for Landlord to complete such Restoration, except that Tenant may retain any proceeds
attributable to the Tenant’s Construction Items.

ARTICLE 14

CONDEMNATION

     14.1 If all of the Premises should be taken for any public or quasi-public use under any
governmental law, ordinance or regulation or by right of eminent domain or by private purchase in
lieu thereof, this Lease shall terminate and the rent shall be abated during the unexpired portion
of the Lease Term, effective on the date physical possession is taken by the condemning authority,
and Tenant shall have no claim against Landlord for the value of any unexpired Lease Term.

     14.2 In the event a portion but not all of the Premises shall be taken for any public or
quasi-public use under any governmental law, ordinance or regulation, or by right of eminent
domain, by private sale in lieu thereof and the partial taking or condemnation shall render the
Premises unsuitable for continued operation, then Landlord shall have the option, in its sole
discretion, of terminating this Lease or, at Landlord’s sole risk and expense, restoring and
reconstructing the Premises to the extent necessary to make the same reasonably tenantable. Should
Landlord not elect to terminate this Lease, then Landlord shall restore the Premises and this Lease
shall continue in full force and effect with the rent payable during the unexpired portion of this
Lease being adjusted to such an extent as may be fair and reasonable under the circumstances, and
Tenant shall have no claim against Landlord for the value of any interrupted portion of this Lease.

     14.3 Landlord shall be entitled to receive all of the compensation awarded upon a condemnation
(or the proceeds of a private sale in lieu thereof) of all or any part of the Premises, including
any award for the value of any unexpired Lease Term, and Tenant hereby assigns to Landlord and
expressly waives all claim to any such compensation, except that Tenant shall be entitled to any
proceeds attributable to the Tenant’s Construction Items. However, Tenant reserves for itself any
separate award made for relocation cost or loss of any of Tenant’s trade fixtures, provided no such
award shall diminish the amount that would otherwise be awarded to Landlord.

ARTICLE 15

SUBORDINATION, ATTORNMENT, ESTOPPEL

     15.1 This Lease shall be subordinate to any deed of trust, mortgage, or other security
instrument (a “Mortgage”), or any ground lease, master lease, or primary lease (a “Primary Lease”),
that now or hereafter covers all or any part of the Premises (the mortgagee under any Mortgage or
the lessor under any Primary Lease is referred to herein as “Landlord’s Mortgagee”), including any
modifications, renewals or extensions of such Mortgage or Primary Lease. Notwithstanding the
foregoing, Tenant agrees that any such Landlord’s Mortgagee shall have the right at any time to
subordinate such Mortgage or Primary Lease to this Lease on such terms and subject to such
conditions as Landlord’s Mortgagee may reasonably deem appropriate

16

 

in its discretion. Tenant agrees upon demand to execute such further instruments subordinating
this Lease or attorning to the Landlord’s Mortgagee as Landlord may reasonably request. In the
event that Tenant should fail to execute any subordination or other agreement required by this
Section, promptly as requested, Tenant hereby irrevocably constitutes Landlord as its attorney in
fact to execute such instrument in Tenant’s name, place and stead, it being agreed that such power
is one coupled with an interest.

     15.2 Tenant shall attorn to any party succeeding to Landlord’s interest in the Premises,
whether by purchase, foreclosure, deed in lieu of foreclosure, power of sale, termination of lease,
or otherwise, upon such party’s request, and shall execute such agreements confirming such
attornment as such party may reasonably request.

     15.3 Tenant shall not seek to enforce any remedy it may have for any default on the part of
the Landlord without first giving written notice by certified mail, return receipt requested,
specifying the default in reasonable detail, to any Landlord’s Mortgagee whose address has been
given to Tenant, and affording such Landlord’s Mortgagee a reasonable opportunity to perform
Landlord’s obligations hereunder.

     15.4 Tenant agrees that, within ten (10) days of written request by Landlord, it will execute
and deliver to such persons as Landlord shall request a statement in recordable form certifying
that this Lease is unmodified and in full force and effect (or if there have been modifications,
that the same is in full force and effect as so modified), stating the dates to which rent and
other charges payable under this Lease have been paid, stating that Landlord is not in default
hereunder (or if Tenant alleges a default stating the nature of such alleged default) and further
stating such other matters as Landlord shall reasonably require.

ARTICLE 16

EVENTS OF DEFAULT

     16.1 The following shall be deemed to be Events of Default by Tenant under this Lease:

     (a) Tenant shall fail to pay any installment of Base Rental or any other rent or monetary sum
when due under the provisions of this Lease, but in the case of the first two (2) such failures in
any twelve (12) consecutive months, an Event of Default shall not be deemed to have occurred until
this failure continues for five (5) days after written notice from Landlord.

     (b) Tenant shall fail to comply with any term, provision or covenant of this Lease, other than
the payment of a monetary sum, and such failure shall not be cured within ten (10) days after
written notice thereof to Tenant; provided that, if any such default cannot reasonably be remedied
by Tenant within ten (10) days after such written notice, then Tenant shall have such additional
time that shall be reasonably necessary to remedy such default (but in no event longer than ninety
(90) days) so long as during such time Tenant is continuously and diligently pursuing the remedy
necessary to cure such default.

     (c) Tenant or any guarantor of Tenant’s obligations under this Lease shall become insolvent,
or shall make a transfer in fraud of creditors, or shall make an assignment for the benefit of
creditors.

17

 

     (d) Tenant or any guarantor of Tenant’s obligations under this Lease shall file a petition
under any state or federal bankruptcy or other insolvency statutes or Tenant or any guarantor of
Tenant’s obligations under this Lease shall be adjudged bankrupt or insolvent in proceeding filed
against Tenant or guarantor thereunder and such adjudication shall not be vacated or set aside
within ninety (90) days.

     (e) A receiver or trustee shall be appointed for all or substantially all of the assets of
Tenant or any guarantor of the obligations of Tenant under this Lease and such receivership shall
not be terminated or stayed within forty-five (45) days.

     (f) Tenant shall desert or vacate any substantial portion of the Premises; provided that,
Tenant vacating the Premises shall not constitute an Event of Default if, prior to vacating the
Premises, Tenant has made arrangements reasonably satisfactory to Landlord to (i) insure that
Tenant’s insurance for the Premises will not be voided or canceled with respect to the Premises as
a result of such vacancy, (ii) insure that the Premises are secured and not subject to vandalism,
and (iii) insure that the Premises will be properly maintained after such vacation. During such
vacation, Tenant shall inspect the Premises at least once each month and report monthly in writing
to Landlord on the condition of the Premises.

ARTICLE 17

REMEDIES

     17.1 Upon the occurrence of an Event of Default, Landlord shall have the option to pursue any
one or more of the following remedies without any notice or demand whatsoever, except if required
by applicable law:

     (a) Terminate this Lease in which event Tenant shall immediately surrender the Premises to
Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any other remedy which
it may have for possession or damages, enter upon and take possession and expel or remove Tenant
and any other person who may be occupying said Premises or any part thereof without being liable
for prosecution or any claim for damages therefor, and Tenant agrees to pay to Landlord, as
hereinafter set forth in Section 17.2, on demand the amount of all loss and damage which
Landlord may suffer by reason of such termination, whether through inability to relet the Premises
on satisfactory terms or otherwise.

     (b) Terminate Tenant’s right to possession of the Premises, but not this Lease, in which event
Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails to do so, Landlord
may, without prejudice to any other remedy which it may have for possession or damages, enter upon
and take possession of the Premises and expel or remove Tenant and any other person who may be
occupying the Premises or any part thereof without being liable for prosecution or any claim for
damages therefor and Tenant agrees to pay to Landlord, as hereinafter set forth in Section
17.2, on demand the amount of all loss and damage which Landlord may suffer by reason of such
termination, whether through inability to relet the Premises on satisfactory terms or otherwise.

     (c) Enter upon the Premises, without terminating this Lease or Tenant’s right to possession
and without being liable for prosecution or any claim for damages therefor, and do

18

 

whatever Tenant is obligated to do under the provisions of this Lease, and Tenant agrees to
reimburse Landlord on demand for any expenses which Landlord may incur in thus effecting compliance
with Tenant’s obligations under this Lease, plus an administrative fee equal to fifteen percent
(15%) of any expenses incurred by Landlord, and Tenant further agrees that Landlord shall not be
liable for any damages resulting to the Tenant for such action.

     (d) Not to re-enter the Premises or terminate this Lease, but to allow Tenant to remain in
possession of the Premises, and bring suit against Tenant to collect the monthly rents and other
charges provided in this Lease as they accrue. Landlord shall have a right to allow such
deficiencies of monthly rents and other charges provided in this Lease to accumulate and to bring
an action on several or all of the accrued deficiencies at one time. Any such suit shall not
prejudice in any way the right of Landlord to bring a similar action for any subsequent deficiency
or deficiencies.

     Tenant agrees that any re-entry into the Premises under the provisions of subsection (a) or
(b) of this Section shall not be deemed a termination of this Lease or an acceptance of the
surrender thereof, unless Landlord shall have notified Tenant in writing that it has so elected to
terminate this Lease. Tenant also agrees that any notice pursuant to an action for forcible
detainer or eviction shall not be deemed to be a termination of this Lease unless Landlord shall
have also notified Tenant in writing that it has so elected to terminate this Lease. Any election
of the remedy provided in subsection (b) of this Section shall not preclude the subsequent election
by Landlord of the remedy under subsection (a) of this Section.

     Should Landlord elect to re-enter the Premises under the provisions of subsection (a) or (b),
Landlord shall make commercially reasonable efforts to relet the Premises. Nothing herein, however,
shall prohibit Landlord from using its business judgment in respect to the releasing of the
Premises. In this regard, Landlord shall not be required to relet the Premises for a rental rate
less than the fair market rental rate for the Premises.

     17.2 Should Landlord at any time terminate this Lease or Tenant’s right to possession for an
Event of Default, Landlord shall recover from Tenant, and Tenant shall be liable and pay to
Landlord, as damages a sum equal to the following:

     (i) the unpaid monthly rents and other charges provided in this Lease and which accrued
prior to the date of termination;

     (ii) an amount equal to the following:

     (A) Until Landlord is able, through reasonable efforts, to relet the Premises
under terms satisfactory to Landlord, in its sole discretion, Tenant shall pay to
Landlord on or before the first day of each calendar month, the monthly rentals and
other charges provided in this Lease. If and after the Premises have been relet by
Landlord, Tenant shall pay to Landlord on the twentieth (20th) day of each calendar
month the difference between the monthly rentals and other charges provided in this
Lease for such calendar month and that actually collected by Landlord for such
month. If it is necessary for Landlord to bring suit in order to collect any
deficiency, Landlord shall have a right to allow such deficiencies to

19

 

accumulate and to bring an action on several or all of the accrued deficiencies
at one time. Any such suit shall not prejudice in any way the right of Landlord to
bring a similar action for any subsequent deficiency or deficiencies. Any amount
collected by Landlord from subsequent tenants for any calendar month in excess of
the monthly rentals and other charges provided in this Lease, shall be credited to
Tenant, first, in reduction of Tenant’s liability for any calendar month for which
the amount collected by Landlord will be less than the monthly rentals and other
charges provided in this Lease and, then, against Tenant’s liability for any other
damages of Landlord hereunder, and Tenant shall have no right to any excess other
than the above-described credits; and

     (B) When Landlord desires, Landlord may demand a final settlement, in which
event, Landlord shall have a right to, and Tenant hereby agrees to pay, the
difference between (1) the total monthly rents and other charges provided in this
Lease for the remainder of the Lease Term, and (2) the fair rental value of the
Premises for such period (determined as of the time of the final settlement) such
difference discounted to present value using the prime rate published in The
Wall Street Journal for the region in which the Premises is located on the date
of the final settlement; and

     (iii) all other damages which Landlord may demonstrate it incurred, including, without
limitation, any and all costs of retaking the Premises, costs of maintaining and preserving
the Premises after such retaking, and costs of reletting the Premises, such as costs to
repair or remodel the Premises and to pay leasing commissions.

     If Landlord elects to exercise the remedy prescribed in Section 17.2(ii)(A) above,
this election shall not prejudice Landlord’s right at any time thereafter to cancel said election
in favor of the remedy prescribed in Section 17.2(ii)(B) above.

     As used in this Article 17, the phrase “the monthly rentals and other charges provided
in this Lease” shall mean the monthly amount of Base Rental plus one twelfth (1/12th) the annual
amount of Operating Expenses. If Landlord demands a final settlement, then Landlord shall have the
right to estimate Operating Expenses for the remainder of the Lease Tenn.

     Any past due monthly rents and other charges provided in this Lease shall bear interest at the
Default Interest Rate.

     17.3 Intentionally omitted.

     17.4 Should Landlord re-enter and take possession of the Premises, Landlord may, to the extent
permitted by law, with respect to any and all furniture, fixtures, equipment and other personal
property located on the Premises, exercise one or more of the following rights: (i) sell the
personal property pursuant to any lien retained by Landlord; (ii) remove the personal property from
the Premises (without the necessity of obtaining a distress warrant, writ of sequestration or other
legal process) and place same in storage and, in such event, Tenant shall be liable to Landlord for
costs incurred by Landlord in connection with such removal and storage and shall indemnify and hold
Landlord harmless from all loss, damage, cost, expense and

20

 

liability in connection with such removal and storage; or (iii) dispose of any of the personal
property. Should Landlord elect to dispose of any of the personal property, whether or not such
personal property was first placed in storage, Landlord shall give Tenant written notice at
Tenant’s last known address advising Tenant that Landlord will dispose of the personal property
unless Tenant retrieves same within five (5) days from the date of the notice and pays to Landlord
any costs incurred for storage and/or removal. Landlord shall also have the right to relinquish
possession of all or any portion of such personal property to any person claiming to be entitled to
possession thereof who presents to Landlord a copy of any instrument represented to Landlord by
such person to grant such person the right to take possession of such personal property, without
the necessity on the part of Landlord to inquire into the authenticity of the copy of the
instrument or of Tenant’s or Tenant’s predecessor’s signature thereon and without the necessity of
Landlord’s making any nature of investigation or inquiry as to the validity of the factual or legal
basis upon which such person purports to act; and Tenant agrees to indemnify and hold Landlord
harmless from all cost, expense, loss, damage and liability incident to Landlord’s relinquishment
of possession of all or any portion of such furniture, fixtures, equipment of other personal
property to the person. The rights of Landlord herein stated shall be in addition to any and all
other rights which Landlord has or may hereafter have a law or in equity, and Tenant stipulates and
agrees that the rights herein granted Landlord are commercially reasonable. Tenant knowingly and
irrevocably waives any claims it may have against Landlord arising from Landlord’s removal and
storage of Tenant’s personal property in accordance with the provisions of this paragraph.

     17.5 No re-entry or taking possession of the Premises by Landlord shall be construed as an
election on its part to terminate this Lease, unless a written notice of such intention shall be
given to Tenant. Notwithstanding any such re-entry or taking possession of the Premises, Landlord
may at any time thereafter elect to terminate this Lease by reason of the Event of Default. Pursuit
of any of the remedies set forth in this Article 17 shall not preclude pursuit of any of
the other remedies in this Article 17 or any others provided in this Lease or any other
remedies provided by law or in equity. The specific remedies to which Landlord may resort under
this Lease are cumulative and are not intended to be exclusive of any other remedies to which
Landlord may be lawfully entitled in case of an Event of Default under this Lease. In addition to
any other remedies provided in this Lease, Landlord shall be entitled to seek injunctive relief to
restrain any violation or threatened violation of the covenants, conditions or provisions of this
lease or to compel specific performance. The pursuit of any remedy provided in this Lease shall not
constitute a forfeiture or waiver of any rent due to Landlord under this Lease or of any damages
accruing to Landlord by reason of the violation of any of the terms, provisions and covenants
contained in this Lease. Landlord’s acceptance of rent following an Event of Default hereunder
shall not be construed as Landlord’s waiver of such Event of Default unless such waiver is
expressly stated in writing signed by Landlord. No waiver by Landlord of any violation or breach of
the terms, provisions, and covenants of this Lease shall be deemed or construed to constitute a
waiver of any other violation or breach of any of the terms, provisions, and covenants of this
Lease. No consent by Landlord to any act of Tenant under this Lease shall be deemed to waive or
render unnecessary consent to any subsequent or similar act. Forbearance by Landlord to enforce one
or more of the remedies herein provided upon an Event of Default shall not be deemed or construed
to constitute a waiver of any other violation or Event of Default.

21

 

     17.6 Landlord and Tenant hereby irrevocably waive, to the extent permitted by law, any right
to trial by jury in any lawsuit, action, proceeding, or counterclaim brought by either party hereto
against the other on any matter arising out of or connected with this Lease, the acts or omissions
of Landlord or Tenant in connection with this Lease, or Tenant’s occupancy and use of the Premises.

     17.7 Tenant shall not for any reason withhold or reduce Tenant’s required payments of rent and
other charges provided in this Lease, it being agreed that the obligations of Landlord under this
Lease are independent of Tenant’s obligations except as may be otherwise expressly provided. The
immediately preceding sentence shall not be deemed to deny Tenant the pursuit of all rights granted
it under this Lease or at law; however, at the direction of Landlord, Tenant’s claims in this
regard shall be litigated in proceedings different from any litigation involving rent claims or
other claims by Landlord against Tenant (i.e., each party may proceed to a separate judgment
without consideration, counterclaim or offset as to the claims asserted by the other party);
provided that, Tenant may override such direction of Landlord and litigate rent claims in the same
proceedings as claims made by Landlord against Tenant so long as Tenant timely escrows all rent
payments it believes it is not obligated to make to Landlord under this Lease with the subject
court during the pendency of such proceeding.

     17.8 In the event of any default described in Section 16.1(d) of this Lease, any
assumption and assignment must conform with the requirements of the Bankruptcy Code which provides,
in part, that the Landlord must be provided with adequate assurance of the following: (i) that the
proposed assignee has sources to pay monthly rents and any other charges due under this Lease; (ii)
that the financial condition and operating performance of any proposed assignee and its guarantors,
if any, shall be similar to the financial condition and operating performance of Tenant and its
guarantors, if any, as of the date of execution of this Lease; and (iii) that any assumption or
assignment is subject to all of the provisions of this Lease (including, but not limited to,
restrictions as to use) and will not breach any such provision contained in any other lease,
financing agreement or other agreement relating to the Premises.

     (a) In order to provide Landlord with the assurance contemplated by the Bankruptcy Code,
Tenant must fulfill the following obligations, in addition to any other reasonable obligations that
Landlord may require, before any assumption of this Lease is effective: (i) all defaults under
subsection (a) of Section 16.1 of this Lease must be cured within ten (10) days after the
date of assumption; (ii) all other defaults under Section 16.1 of this Lease other than
under subsection (d) of Section 16.1 must be cured within ten (10) days after the date of
assumption; (iii) all actual monetary losses incurred by Landlord (including, but not limited to,
reasonable attorneys’ fees) must be paid to Landlord within ten (10) days after the date of
assumption; and (iv) Landlord must receive within ten (10) days after the date of assumption an
additional Security Deposit in the amount of six (6) months Base Rental (using the Base Rental in
effect for the first full month immediately following the assumption) and an advance prepayment of
Base Rental in the amount of three (3) months Base Rental (using the Base Rental in effect for the
first full month immediately following the assumption), both sums to be held by Landlord in
accordance with the other provisions of this Lease, including, without limitation, Section
4.2, and deemed to be rent under this Lease for the purposes of the Bankruptcy Code as amended
and from time to time in effect.

22

 

     (b) In the event this Lease is assumed in accordance with the requirements of the Bankruptcy
Code and this Lease, and is subsequently assigned, then, in addition to any other reasonable
obligations that Landlord may require and in order to provide Landlord with the assurances
contemplated by the Bankruptcy Code, Landlord shall be provided with the following: (i) a financial
statement of the proposed assignee prepared in accordance with generally accepted accounting
principles consistently applied, though on a cash basis, which reveals a net worth in an amount
sufficient, in Landlord’s reasonable judgment, to assure the future performance by the proposed
assignee of Tenant’s obligations under this Lease; or (ii) a written guaranty by one or more
guarantors with financial ability sufficient to assure the future performance of Tenant’s
obligations under this lease, such guaranty to be in form and content satisfactory to Landlord and
to cover the performance of all of Tenant’s obligations under this Lease.

     17.9 The liability of Tenant to Landlord for any default by Tenant under the terms of this
Lease shall be limited to Landlord’s actual direct, but not consequential nor punitive damages
therefor, except that any claims by Landlord against Tenant under Article 12 above
or Article 20 below shall not be subject to such limitation and in such instances,
Landlord may pursue consequential and/or punitive damages against Tenant.

ARTICLE 18

LANDLORD’S DEFAULT

     18.1 Landlord shall be in default under this Lease if Landlord has not begun and pursued with
reasonable diligence the cure of any failure of Landlord to meet its obligations under this Lease
within thirty (30) days of the receipt by Landlord of written notice from Tenant of the alleged
failure to perform. Tenant hereby waives any right to terminate or rescind this Lease as a result
of Landlord’s default as to any covenant or agreement contained in this Lease or as a result of the
breach of any promise or inducement hereof, whether in this Lease or elsewhere and Tenant hereby
agrees that Tenant’s sole remedies for default hereunder and for breach of any promise or
inducement shall be limited to a suit for damages and/or injunctive relief. In addition, Tenant
hereby covenants that, prior to the exercise of any such remedies, it will give the mortgagees
holding mortgages on the project notice and a reasonable time to cure any default by Landlord.

     18.2 The liability of Landlord to Tenant for any default by Landlord under the terms of this
Lease shall be limited to Tenant’s actual direct, but not consequential nor punitive, damages
therefor. Tenant agrees to look solely to the estate and interest of Landlord in the Premises for
the collection of any judgment or other judicial process requiring the payment of money by Landlord
in the event of a default or breach by Landlord with respect to this Lease, and no other assets of
Landlord shall be subject to levy of execution or other procedures for the satisfaction of Tenant’s
rights. This section shall not be deemed to limit or deny any remedies which Tenant may have in the
event of default by Landlord hereunder which do not involve the personal liability of Landlord.

23

 

ARTICLE 19

LANDLORD’S CONTRACTUAL LIEN

     19.1 Landlord shall have, at all times, a valid security interest in and upon the present and
future receivables of Tenant and all goods, wares, equipment, fixtures, furniture, improvements and
other personal property of Tenant presently or which may hereafter be situated on the Premises, and
all proceeds therefrom, and such property shall not be removed therefrom without the consent of
Landlord until all arrearage in rent as well as any and all other sums of money then due to
Landlord hereunder shall first have been paid and discharged and all the covenants, agreements and
conditions hereof have been fully complied with and performed by Tenant. This contractual lien is
in addition to any and all other liens and rights of Landlord to bring a suit for distraint of
Tenant’s personal property or otherwise and is given to secure payment of all rent and other sums
of money becoming due under the Lease from Tenant and to secure payment of any damages or loss
which Landlord may suffer by reason of the breach by Tenant of any covenant, agreement or condition
contained herein and shall survive any termination of this Lease by reason of a default of Tenant.
Upon the occurrence of any Event of Default by Tenant, Landlord may, in addition to any other
remedies provided herein, enter upon the Premises and take possession of any and all goods, wares,
equipment, fixtures, furniture, improvements and other personal property of Tenant situated on the
Premises, without liability for trespass or conversion, store same (on or off the Premises or
Project) and sell the same at public or private sale, with or without having such property at the
sale, after giving Tenant reasonable notice of the time and place of any public sale or of the time
after which any private sale is to be made, at which sale the Landlord or its assigns may purchase
unless otherwise prohibited by law. Without intending to exclude any other manner of giving Tenant
reasonable notice, the requirement of reasonable notice shall be met if such notice is given in the
manner prescribed in this Lease at least five (5) days before the time of sale unless otherwise
required by law. The proceeds from any such disposition, less any and all expenses connected with
the taking of possession, holding and selling of the property (including reasonable attorneys’ fees
and other expenses), shall be applied as a credit against the indebtedness secured by the security
interest granted in this section. Any surplus shall be paid to Tenant or as otherwise required by
law; and the Tenant shall pay any deficiencies forthwith. Upon request by Landlord, Tenant agrees
to execute and deliver to Landlord within ten (10) days of such request a financing statement in
form sufficient to perfect the security interest of Landlord in the aforementioned property and
proceeds thereof under the provisions of the Uniform Commercial Code in force in the State of
Illinois. Landlord may also file a copy of this Lease to perfect its interest in the personal
property of Tenant described above.

ARTICLE 20

SURRENDER OF PREMISES; HOLDING OVER

     20.1 No act by Landlord shall be deemed an acceptance of a surrender of the Premises, and no
agreement to accept a surrender of the Premises shall be valid unless the same is made in writing
and signed by Landlord. At the expiration or termination of this Lease, Tenant shall deliver to
Landlord the Premises “broom-clean” and with all improvements located thereon in good repair and
condition, reasonable wear and tear and condemnation and fire or other casualty damage not caused
by Tenant excepted, and shall deliver to Landlord all keys to the Premises. Provided that Tenant
has performed all of its obligations hereunder, Tenant may remove all

24

 

unattached trade fixtures, furniture, and personal property placed in the Premises by Tenant
(but Tenant shall not remove any such item which was paid for, in whole or in part, by Landlord).
Additionally, Tenant shall remove such alterations, additions, improvements, trade fixtures,
equipment, wiring, and furniture as Landlord may request, including without limitation, the
Tenant’s Construction Items and the office area to be constructed as part of the Work in the
Existing Space. Tenant shall repair all damage caused by such removal. All items not so removed
shall be deemed to have been abandoned by Tenant and may be appropriated, sold, stored, destroyed,
or otherwise disposed of by Landlord at any time, thereafter, without notice to Tenant and without
any obligation to account for such items. If Landlord incurs any cost in the storage or removal of
any such items, Tenant shall pay to Landlord on demand any and all such charges. The provisions of
this paragraph shall survive the expiration or termination of this Lease.

     20.2 If Tenant, or any party under Tenant claiming rights to this Lease, fails to vacate the
Premises at the end of the Lease Term, then such possession shall be an unlawful detainer (Landlord
reserving the right to seek an eviction or removal), no tenancy shall be created, and Tenant shall
pay each day during any holdover period a daily Base Rental equal to the greater of (a) one
thirtieth (1/30th) of two hundred percent (200%) of the monthly Base Rental payable during the last
month of the Lease Term, or (b) the prevailing rental rate for similar space in the Premises, plus,
Tenant shall pay any additional rental due under the other provisions of this Lease during any such
holdover period. In addition to payment of rent, Tenant shall pay to Landlord all other damages to
which Landlord may be entitled as a result of Tenant’s holding over.

ARTICLE 21

RIGHT OF ACCESS

     21.1 Landlord or Landlord’s representatives shall have the right to enter into and upon the
Premises at any and all reasonable times upon prior reasonable notice to Tenant except in the event
of an emergency (i) to inspect, clean or make repairs or alterations or additions to the Premises
as Landlord may deem necessary (but without any obligation to do so, except as expressly provided
elsewhere in this Lease), or (ii) to show the Premises to prospective tenants, purchasers or
lenders; and Tenant shall not be entitled to any abatement or reduction of rent by reason thereof,
nor shall any such entry be deemed to be an actual or constructive eviction, provided that in
exercising its rights under this Article 21, to the extent commercially reasonable under
the circumstances, Landlord shall minimize interference with Tenant’s operations from the Premises.

ARTICLE 22

MISCELLANEOUS

     22.1 Attorneys’ Fees. In case it should be necessary or proper for one party to bring an
action under this Lease against the other, then the party which does not prevail agrees in each and
any such case to pay to the party which prevails its reasonable attorneys’ fees.

     22.2 Personal Property Taxes. Tenant shall be liable for all taxes levied or assessed against
personal property, furniture, or fixtures placed by Tenant in the Premises. If any taxes for

25

 

which Tenant is liable are levied or assessed against Landlord or Landlord’s property and
Landlord elects to pay the same, or if the assessed value of Landlord’s property is increased by
inclusion of such personal property, furniture or fixtures and Landlord elects to pay the taxes
based on such increase, then Tenant shall pay to Landlord, upon demand, that part of such taxes for
which Tenant is primarily liable hereunder.

     22.3 Name. Tenant shall not, without the written consent of Landlord, use the name of the
Premises for any purpose other than as the address of the business to be conducted by Tenant in the
Premises. In no event shall Tenant acquire any rights in or to such name and Landlord reserves the
right from time to time and at any time to change the name of the Premises.

     22.4 Financial Statements. Prior to the execution of this Lease, Tenant has delivered
financial statements to Landlord, prepared by a certified public accountant and certified to be
true and correct in all material aspects. Tenant further agrees to deliver to Landlord its most
current financial statements at the time, from time to time, within ten (10) days of Landlord’s
written request, but in no event shall Tenant be obligated to deliver such financial statements to
Landlord more often than once every twelve (12) calendar months except when an Event of Default
exists. Each such financial statement certified to be true and correct in all material aspects by
an authorized person on behalf of Tenant.

     22.5 Brokerage. Landlord and Tenant each warrant to the other that it has not dealt with any
broker or agent in connection with the negotiation or execution of this Lease, other than the
person(s) listed in the Basic Definitions and Lease Provisions of this Lease (the “Broker(s)”).
Except for any Broker(s) who shall be compensated in accordance with the provisions of a separate
agreement, Landlord and Tenant each agree to indemnify the other against all costs, expenses,
attorneys’ fees, and other liability for commissions or other compensation claimed by any other
broker or agent claiming the same by, through, or under the indemnifying party.

     22.6 Quiet Enjoyment. Provided Tenant has performed all of the terms and conditions of this
Lease to be performed by Tenant, Tenant shall peaceably and quietly hold and enjoy the Premises for
the Term, without hindrance from Landlord or any party claiming by, through, or under Landlord,
subject to the terms and conditions of this Lease.

     22.7 Force Majeure. Whenever a period of time is herein prescribed for action to be taken by
either party hereto, such party shall not be liable or responsible for, and there shall be excluded
from the computation for any such period of time, delays due to strikes, riots, acts of God,
shortages of labor or materials, war, governmental laws, regulations, or restrictions, or any other
causes of any kind whatsoever which are beyond the control of such party. The foregoing shall not
excuse, however, the timely payment of rent by Tenant under the provisions of this Lease.

     22.8 Notices. All notices and other communications given by one party to the other under the
provisions of this Lease shall be in writing, addressed to the party at the address provided in the
Basic Definitions and Lease Provisions, and shall be by one of the following: (i) mailed by first
class, United States Mail, postage prepaid, certified, with return receipt requested, (ii) hand
delivered by courier to the intended address, or (iii) sent by prepaid telegram, cable, facsimile
transmission, or telex followed by a confirmatory letter. Notice sent by certified mail

26

 

shall be effective three (3) days after being deposited in the United States Mail; all other
notices shall be effective upon delivery to the address of the addressee. The parties hereto may
change their addresses by giving notice thereof to the other in conformity with this provision.

     22.9 Joint and Several Liability. If there is more than one Tenant, then the obligations
hereunder imposed upon Tenant shall be joint and several. If there is a guarantor of Tenant’s
obligations hereunder, then the obligations hereunder imposed upon Tenant shall be the joint and
several obligations of Tenant and such guarantor, and Landlord need not first proceed against
Tenant before proceeding against such guarantor nor shall any such guarantor be released from its
guaranty for any reason whatsoever.

     22.10 Severability. If any clause or provision of this Lease is illegal, invalid, or
unenforceable under present or future laws, then the remainder of this Lease shall not be affected
thereby and in lieu of such clause or provision, there shall be added as a part of this Lease a
clause of provision as similar in terms to such illegal, invalid, or unenforceable clause or
provision as may be possible and be legal, valid, and enforceable.

     22.11 Amendments; Construction and Binding Effect. This Lease may not be amended except by
instrument in writing signed by Landlord and Tenant. No provision of this Lease shall be deemed to
have been waived by Landlord unless such waiver is in writing signed by Landlord, and no custom or
practice which may evolve between the parties in the administration of the terms thereof shall
waive or diminish the right of Landlord to insist upon the performance by Tenant in strict
accordance with the terms hereof. The terms and conditions contained in this Lease shall inure to
the benefit of and be binding upon the parties hereto, and upon their respective successors in
interest and legal representatives, except as otherwise herein expressly provided. This Lease is
for the sole benefit of Landlord and Tenant, and, other than Landlord’s Mortgagee or a successor
thereto, no third party shall be deemed a beneficiary hereof.

     22.12 Captions. The captions contained in this Lease are for convenience of reference only,
and do not limit or enlarge the terms and conditions of this Lease.

     22.13 Intentionally Omitted.

     22.14 Time of Essence. Except as otherwise expressly provided in this Lease, time is of the
essence.

     22.15 Governing Law; Venue. The laws of the state in which the Premises is located shall
govern the interpretation, validity, performance and enforcement of this Lease. Venue for any
action under this Lease shall be the county in which rentals are due.

     22.16 Authority. If Tenant is a corporation or partnership, the person executing this Lease on
behalf of Tenant hereby represents and warrants that (i) he is duly authorized and empowered to
execute this Lease on behalf of Tenant, (ii) Tenant has full right and authority to enter into this
Lease, and (iii) upon full execution, this Lease constitutes a valid and binding obligation of
Tenant.

     22.17 Approval. Any approval of Landlord required under the provisions of this Lease must be
in writing or it shall not be deemed to be effective and, if not in writing, then in the

27

 

making of proof thereof, Landlord shall be presumed not to have given its approval. Unless
specified to the contrary herein, Landlord’s consent to any action of Tenant described herein shall
not be unreasonably withheld.

     22.18 No Merger. There shall be no merger of the leasehold estate hereby created with the fee
estate in the Premises or any part thereof if the same person acquires or holds, directly or
indirectly, this Lease or any interest in this Lease and the fee estate in the Premises or any
interest in such fee estate.

     22.19 No Partnership. Nothing in this Lease shall be deemed or construed by the parties
hereto, nor by any third party, as creating the relationship of principal and agent or of
partnership or of joint venture between the parties hereto, it being understood and agreed that
neither the method of computation of rent, nor any other provision contained herein, nor any acts
of the parties hereto, shall be deemed to create any relationship between the parties hereto other
than the relationship of landlord and tenant.

     22.20 No Offer. The submission of this Lease by Landlord to Tenant for examination shall not
be construed as an offer to lease or a reservation of an option to lease. Further, it is the
intention of the parties that Landlord shall not be bound and Tenant shall not have any rights
under this Lease unless and until Landlord executes a copy of this Lease and delivers it to Tenant.

     22.21 Exhibits. All exhibits and attachments attached hereto are incorporated herein by this
reference. [Check all boxes which apply. Boxes not checked are of exhibits that do not apply.]

	 	 	 
	          Exhibit A — Legal Description

	 	þ
	          Exhibit B — Outline of Premises

	 	þ
	          Exhibit C — Operating Expense
Reimbursement

	 	o
	          Exhibit D — Premises Rules and Regulations

	 	þ
	          Exhibit E — Work Letter

	 	þ
	          Exhibit F — Commencement Date Letter

	 	þ
	          Exhibit G — Financing Statement

	 	o
	          Exhibit H — Parking

	 	o
	          Exhibit I — Signage

	 	o
	          Exhibit J — Renewal Option

	 	þ
	          Exhibit K — Right of First Refusal

	 	o
	          Exhibit L — Guaranty of Lease

	 	o
	          Exhibit M — HVAC Maintenance
Specifications

	 	þ

     22.22 Entire Agreement. This Lease, including all exhibits attached hereto, constitutes the
entire agreement between Landlord and Tenant regarding the subject matter hereof and supersedes all
oral statements and prior writings relating thereto. Except for those set forth in this Lease, no
representations, warranties, or agreements have been made by Landlord, Landlord’s agent or Tenant,
anyone of the foregoing to the other with respect to this Lease or the obligations to Landlord or
Tenant in connection therewith.

28

 

ARTICLE 23

PAYMENT OF TAXES

     23.1 Payment of Impositions. Tenant covenants and agrees to pay during the Lease Term before
any fine, penalty, interest or cost may be added thereto for the nonpayment thereof, all real
estate taxes, special assessments, water rates and charges, sewer rates and charges, including any
sum or sums payable for present or future sewer or water capacity, charges for public utilities,
street lighting, excise levies, licenses, permits, inspection fees, other governmental charges, and
all other charges or burdens of whatsoever kind and nature (including costs, fees, and expenses of
complying with all encumbrances affecting the Premises) incurred in the use, occupancy, ownership,
operation, leasing or possession of the Premises, without particularizing by any known name or by
whatever name hereafter called, and whether any of the foregoing be general or special, ordinary or
extraordinary, foreseen or unforeseen (all of which are sometimes herein referred to as
“Impositions”), which at any time during the Lease Term may have been or may be assessed, levied,
confirmed, imposed upon, or become a lien on the Premises, or any portion thereof, or any
appurtenance thereto, rents or income therefrom, and such easements or rights as may now or
hereafter be appurtenant or appertain to the use of the Premises. Tenant shall pay all special (or
similar) assessments for public improvements or benefits which, during the Lease Term shall be
laid, assessed, levied or imposed upon or become payable or become a lien upon the Premises, or any
portion thereof; provided, however, that if by law any special assessment is payable (without
default) or, at the option of Landlord, may be paid (without default) in installments (whether or
not interest shall accrue on the unpaid balance of such special assessment), Tenant may pay the
same, together with any interest accrued on the unpaid balance of such special assessment in
installments as the same respectively become payable and before any fine, penalty, interest or cost
may be added thereto for the nonpayment of any such installment and the interest thereon. Landlord
shall pay all installments of special assessments (including interest accrued on the unpaid
balance) which are payable prior to the Commencement Date (with respect to the New Space only;
Tenant acknowledging that it is already so obligated with respect to the Existing Space under the
Existing Lease) and after the termination date of the Lease Term (with respect to the entire
Premises). Tenant shall pay all Impositions whether heretofore or hereafter levied or assessed upon
the Demised Premises, or any portion thereof, which are due and payable during the Lease Term.
Landlord shall pay all Impositions which are payable prior to the Commencement Date (with respect
to the New Space only; Tenant acknowledging that it is already so obligated with respect to the
Existing Space under the Existing Lease) and after the expiration date of the Lease Term (with
respect to the entire Premises). Notwithstanding any other provision of this Section 23.1
to the contrary, in no event shall Tenant be obligated to pay Impositions with respect to the last
calendar year of the Lease Term, unless such Impositions comes due during the Lease Term, it being
hereby acknowledged and agreed by Landlord and Tenant that Tenant is obligated to pay Impositions
coming due during the first year of the Lease Term hereof, even though such Impositions relate to
the year prior to the Commencement Date. However, Impositions payable during the first and last
calendar years of the term of this Lease shall not be prorated. The terms of this Section
23.1 do not alter the terms of the Existing Lease as to the Existing Space.

     23.2 Tenant’s Right to Contest Impositions. Tenant shall have the right at its own expense to
contest the amount or validity, in whole or in part, of any Imposition by appropriate proceedings
diligently conducted in good faith, but only after payment of such Imposition, unless

29

 

such payment, or a payment thereof under protest, would operate as a bar to such contest or
interfere materially with the prosecution thereof. In this latter event, notwithstanding the
provisions of Section 23.1 hereof, Tenant may postpone or defer payment of such Imposition
if (a) neither the Premises nor any portion thereof would, by reason of such postponement or
deferment, be in danger of being forfeited or lost, and (b) Tenant shall have deposited with
Landlord cash or other security reasonably acceptable to Landlord in the amount of the Imposition
so contested and unpaid, together with all interest and penalties which may accrue in Landlord’s
reasonable judgment in connection therewith, and all charges that may or might be assessed against
or become a charge on the Premises, or any portion thereof, during the pendency of such
proceedings. If, during the continuance of such proceedings, Landlord shall, from time to time,
reasonably deem the amount deposited, as aforesaid, insufficient, Tenant shall, within five (5)
business days’ prior written notice from Landlord, make additional deposits of such additional sums
of money or such other security as Landlord may reasonably request in such written notice. Upon
failure of Tenant to make such additional deposits, the amount theretofore deposited may be applied
by Landlord to the payment, removal and discharge of such Imposition, and the interest, fines and
penalties in connection therewith, and any costs, fees (including reasonable attorneys’ fees) and
other liability (including costs incurred by Landlord) accruing in any such proceedings. Upon the
termination of any such proceedings, Tenant shall pay the amount of such Imposition or part
thereof, if any, as finally determined in such proceedings, the payment of which may have been
deferred during the prosecution of such proceedings, together with any costs, fees, including
reasonable attorneys’ fees, interest, penalties, fines and other liability in connection therewith,
and upon such payment Landlord shall return all amounts or other security deposited with it with
respect to the contest of such Imposition, as aforesaid, or, at the written direction of Tenant,
Landlord shall make such payment out of the funds on deposit with Landlord and the balance, if any,
shall be returned to Tenant. Tenant shall be entitled to the refund of any Imposition, penalty,
fine and interest thereon received by Landlord which have been paid by Tenant or which have been
paid by Landlord but for which Landlord has been previously reimbursed in full by Tenant. Landlord
shall not be required to join in any proceedings referred to in this Section 23.2 unless
the provisions of any law, rule or regulation at the time in effect shall require that such
proceedings be brought by or in the name of Landlord, in which event Landlord shall join in such
proceedings or permit the same to be brought in Landlord’s name upon compliance with such
conditions as Landlord may reasonably require. Landlord shall not ultimately be subject to any
liability for the payment of any fees, including reasonable attorneys’ fees, costs and expenses in
connection with such proceedings. Tenant agrees to pay all such fees (including reasonable
attorneys’ fees), costs and expenses or, on demand, to make reimbursement to Landlord for such
payment. During the time when any certificate of deposit is on deposit with Landlord, and prior to
the time when the same is returned to Tenant or applied against the payment, removal or discharge
of Impositions, as above provided, Tenant shall be entitled to receive all interest paid thereon,
if any. Cash deposits shall not bear interest.

     Landlord shall use its commercially reasonable efforts either (a) to cause all real estate tax
bills and all real estate tax assessment notices to be sent directly to Tenant, or (b) to provide
copies of all such bills and notices to Tenant in reasonably sufficient time for Tenant to contest
the same if it so chooses.

30

 

     23.3 Levies and Other Taxes. If, at any time during the Lease Term, any method of taxation
shall be such that there shall be levied, assessed or imposed on Landlord, or on the Basic Rental
or other rent, or on the Premises or on the value of the Premises, or any portion thereof, a
capital levy, sales or use tax, gross receipts tax or other tax on the rents received therefrom, or
a franchise tax, or an assessment, levy or charge measured by or based in whole or in part upon
such rents or value, Tenant covenants to pay and discharge the same, it being the intention of the
parties hereto that the rent to be paid hereunder shall be paid to Landlord absolutely net without
deduction or charge of any nature whatsoever foreseeable or unforeseeable, ordinary or
extraordinary, or of any nature, kind or description, except as in this Lease otherwise expressly
provided. Nothing in this Lease contained shall require Tenant to pay any municipal, state or
federal net income or excess profits taxes assessed against Landlord, or any municipal, state or
federal capital levy, estate, succession, inheritance or transfer taxes of Landlord, or corporation
franchise taxes imposed upon any owner of the fee of the Premises.

     23.4 Evidence of Payment. Tenant covenants to furnish Landlord, within thirty (30) days after
the date upon which any Imposition or other tax, assessment, levy or charge is payable by Tenant,
official receipts of the appropriate taxing authority, or other appropriate proof satisfactory to
Landlord, evidencing the payment of the same. The certificate, advice or bill of the appropriate
official designated by law to make or issue the same or to receive payment of any Imposition or
other tax, assessment, levy or charge may be relied upon by Landlord as sufficient evidence that
such Imposition or other tax, assessment, levy or charge is due and unpaid at the time of the
making or issuance of such certificate, advice or bill.

     23.5 Escrow for Taxes and Assessments. At Landlord’s written demand after any monetary Event
of Default and for as long as such Event of Default is uncured, Tenant shall pay to Landlord the
known or estimated yearly Impositions payable with respect to the Premises in monthly payments
equal to one-twelfth of the known or estimated yearly Impositions next payable with respect to the
Premises. From time to time Landlord may re-estimate the amount of the Impositions, and in such
event Landlord shall notify Tenant, in writing, of such re-estimate and fix future monthly
installments for the remaining period prior to the next tax and assessment due date in an amount
sufficient to pay the re-estimated amount over the balance of such period after giving credit for
payments made by Tenant on the previous estimate. If the total monthly payments made by Tenant
pursuant to this Section 23.5 shall exceed the amount of payments necessary for said
Impositions, such excess shall be credited on subsequent monthly payments of the same nature; but
if the total of such monthly payments so made under this Section shall be insufficient to pay such
Impositions when due, then Tenant shall pay to Landlord such amount as may be necessary to make up
the deficiency. Payment by Tenant of Impositions under this Section shall be considered as
performance of such obligation under the provisions of Section 23.1 hereof.

     23.6 Landlord’s Right to Contest Impositions. In addition to the right of Tenant under
Section 23.2 to contest the amount or validity of Impositions, Landlord shall also have the
right, but not the obligation, to contest the amount or validity, in whole or in part, of any
Impositions not contested by Tenant, by appropriate proceedings conducted in the name of Landlord
or in the name of Landlord and Tenant. If Landlord elects to contest the amount or validity, in
whole or in part, of any Impositions, such contests by Landlord shall be at Landlord’s expense;
provided, however, that if the amounts payable by Tenant for Impositions are reduced

31

 

(or if a proposed increase in such amounts is avoided or reduced) by reason of Landlord’s
contest of Impositions, Tenant shall reimburse Landlord for costs incurred by Landlord in
contesting Impositions, but such reimbursements shall not be in excess of the amount saved by
Tenant by reason of Landlord’s actions in contesting such Impositions.

ARTICLE 24

TERMINATION OF EXISTING LEASE

     Notwithstanding anything contained in the Existing Lease to the contrary, upon the
Commencement Date, Landlord and Tenant hereby agree to terminate the Existing Lease (except
Section 20.6 therein) and mutually release each other from all claims, liabilities,
obligations and responsibilities arising thereunder, which termination and release shall be
effective from and after the Commencement Date of this Lease; provided, however, that Tenant’s
obligations to pay all Basic Rent, Additional Rent and any other rent (as defined in the Existing
Lease and due and payable or accruing under the Existing Lease) up to and including the
Commencement Date shall survive the termination of the Existing Lease and shall become present
liabilities and obligations under this Lease. Nothing set forth in this Lease shall act as a
termination of, or limit in any way, Tenant’s rights under Section 20.6 of the Existing
Lease.

ARTICLE 25

RIGHT OF NOTICE OF SALE

     In the event that, at any time during Lease Term, Landlord intends to sell the Premises,
contemporaneously with Landlord’s public announcement of such intended sale, Landlord shall notify
Tenant, in writing, of such intention.

32

 

     EXECUTED to be effective on the day and date first written above.

	 	 	 	 	 
	 	LANDLORD:

1135 ARBOR DRIVE INVESTORS LLC, a 

Delaware limited liability company
 	 

	 	 	 	 	 
	 	By:  	ALLEGIS REALTY INVESTORS LLC, a
 	 
	 	 	Massachusetts limited liability company Its
Manager 	 

	 	 	 	 	 
	 	By:  	                        /s/ Joseph E. Gaukler
 	 
	 	 	Joseph E. Gaukler 	 
	 	Its: 	      Senior Vice President 	 
	 

	 	 	 	 	 
	 	TENANT:

ULTA3 COSMETICS & SALON, INC.

 	 
	 	By:  	/s/ Greg Smolarek
 	 
	 	Printed Name: Greg Smolarek  	 
	 	Its: Sr VP Systems and Logistics 	 
	 

 

 

EXHIBIT “A”

LEGAL DESCRIPTION

Lot 2 in Windham Lakes resubdivision number 10, part of the north half of Section 29, Township 37
North, Range 10 East of the Third Principal Meridian in Will County, Illinois, per Document Number
R95-057606.

 

 

OUTLINE OF PREMISES

 

 

EXHIBIT “D”

RULES AND REGULATIONS

     This Exhibit is attached to and made a part of the Lease by and between Aetna Life Insurance
Company (“Landlord”) and ULTA3 Cosmetics & Salon, Inc. (“Tenant”).

     A. The following rules and regulations shall apply to the Premises:

          1. Sidewalks and other similar outside areas shall not be obstructed by Tenant or used by
Tenant for purposes other than ingress and egress to and from its Premises. No rubbish, litter,
trash, or material of any nature shall be placed, emptied, or thrown in those areas. At no time
shall Tenant permit Tenant’s employees to loiter in outside areas in or about the Premises.

          2. Plumbing, fixtures and appliances shall be used only for the purposes for which designed,
and no sweepings, rubbish, rags or other unsuitable material shall be thrown or deposited therein.
Damage resulting to any such fixtures or appliances from misuse by Tenant or its agents, employees
or invitees, shall be paid by Tenant.

          3. No signs, advertisements or notices shall be painted or affixed on or to any windows or
doors or exterior parts of the Premises without the prior written consent of Landlord.

          4. Intentionally omitted.

          5. Tenant assumes all risks of and shall be liable for all damage to articles moved and injury
to persons resulting from such activity. If any equipment, property and personnel are damaged or
injured as a result of acts in connection with this activity, then Tenant shall be solely liable
for any and all damage or loss resulting therefrom.

          6. Intentionally omitted.

          7. No birds or animals (except seeing-eye dogs) shall be brought into or kept in, on or about
the Premises. No portion of the Premises shall at any time be used or occupied as sleeping or
lodging quarters or for any immoral or illegal purposes or for any purpose which would tend to
injure the reputation of the Premises or impair the value of the Premises.

          8. Tenant shall not commit waste and shall keep the Premises neat and clean. All trash and
debris must be placed in receptacles provided therefor.

          9. Tenant shall not make or permit any improper, objectionable or unpleasant noises or odors
to emanate from the Premises to adjacent property or otherwise interfere in any way with other
persons on adjacent property, shall not solicit business or distribute, or cause to be distributed,
in any outside portion of the Premises any handbills, promotional materials or other advertising,
and shall not conduct or permit any other activities in the Premises that might constitute a
nuisance.

 

 

          10. No machinery of any kind (other than normal office/showroom/warehouse equipment) shall be
operated by Tenant on its Premises without Landlord’s prior written reasonable consent.

          11. Intentionally omitted.

          12. Landlord will not be responsible for lost or stolen personal property, money or jewelry
from the Premises regardless of whether such loss occurs when the area is locked against entry or
not.

          13. Intentionally omitted.

          14. Tenant will refer to Landlord for Landlord’s supervision, approval and control all
contractors, contractor representatives, and installation technicians rendering any service to
Tenant, before performance of any contractual service. Such supervisory action by Landlord shall
not render Landlord responsible for any work performed for Tenant. This provision shall apply to
all work performed in the Premises, including, without limitation, the installation of telephones,
computer wiring, cabling, electrical devices, attachments and installations of any nature. Tenant
shall be solely responsible for complying with all applicable laws, codes and ordinances pursuant
to which such work shall be performed.

          15. Landlord may from time to time (without any obligation to do so or liability for not doing
so) adopt appropriate systems and procedures for the security or safety of the Premises, its
occupants, entry and use, or its contents and Tenant, its employees, contractors, agents and
invitees shall comply therewith.

          16. At no time shall Tenant permit or shall Tenant’s agents, employees, contractors, guests,
or invitees smoke in any common area of the Premises, unless such common area has been declared a
designated smoking area.

          17. Tenant accepts any and all liability for damages and injuries to persons and property
resulting from the serving and sales of alcoholic beverages from the Premises. Nothing contained
herein shall be construed as the consent of Landlord to permit the serving or sale of alcoholic
beverages on the Premises.

     B. The Landlord reserves the right to rescind any of these rules and make such other and
further rules and regulations as in the judgment of Landlord shall from time to time be needed for
the safety, protection, care and cleanliness of the Premises, the operation thereof, the
preservation of good order therein, and the protection and comfort of its tenants, their agents,
employees and invitees, which rules when made and notice thereof given to Tenant shall be binding
upon it in like manner as if originally herein prescribed.

 

 

EXHIBIT “E”

WORK LETTER

     This Exhibit is attached to made a part of the Lease by and between Aetna Life Insurance
Company (“Landlord”) and ULTA3 Cosmetics & Salon, Inc. (“Tenant”).

     A. Definitions. Each term used in this Work Letter shall have the meaning hereinafter
set forth:

          1. “Architect” shall mean Kwasek Architects, Inc.

          2. “Construction Costs” shall mean all costs incurred in the construction of the Work
in accordance with the Plans and Specifications, as modified from time to time in accordance with
the provisions of this Work Letter. Such costs shall include all hard costs and soft costs to
complete the Work including, but not limited to, infrastructure costs, impact fees, site
preparation costs; architectural and engineering fees; legal fees; testing; labor and materials to
construct the Work and related infrastructure and improvements; permit fees, sales taxes and fees
payable to contractors; project landscaping, including related design fees and permits; water, gas
and electrical hookup fees and related miscellaneous costs; any builder’s risk insurance maintained
by Landlord prior to Tenant maintaining builder’s risk insurance; property tax assessed during
construction period (beginning upon acquisition and ending on substantial completion); reasonable
general and administrative and employer out-of-pocket expenses incurred in managing the
pre-construction and construction process; brokerage commissions; Landlord’s average cost of
coverage for liability insurance attributable to the New Space during the period ending on
substantial completion; services for verification of compliance with city ordinances and other
laws; and imputed interest at 9.00 percent per year on actual cost expenditures (imputed interest
accrues on actual cost as and when incurred up to substantial completion).

          3. “Contractor” shall mean Krusinski Construction Company.

          4. “Plans and Specifications” shall mean the final plans and specifications for the
construction of the Work, which Plans and Specifications are described on Exhibit “E”-1
attached hereto.

          5. “Tenant Delay” shall mean any delay in the construction of the First Phase Work
caused by Tenant for any reason whatsoever. In the event of a Tenant Delay, the Commencement Date
shall be accelerated one (1) day for every day of Tenant Delay.

          6. “Work” shall mean the construction of all leasehold improvements in the Premises in
accordance with the Plans and Specifications, which leasehold improvements shall consist of both
the “First Phase Work” (which is all of the Work except for the expansion of the office in the
Premises) and the “Second Phase Work” (which is only the expansion of the office in the Premises).

          7. “Construction Rent” means (i) for the first six (6) months of the Lease Term, 5.5%
of the Construction Costs for the First Phase Work, (ii) for the second six (6) months

 

 

of the first (1st) Lease Year of the Lease Term, 5.5% of the Construction Costs for both the
First Phase Work and the Second Phase Work, (iii) for the second (2nd) Lease Year, an amount equal
to 103% of 11% of the Construction Costs for all of the Work, and (iv) for every twelve (12) month
period of the Lease Term thereafter (except that with respect to the last seven (7) months of the
Lease Term, Construction Rent will be prorated accordingly), an amount equal to 103% of the
Construction Rent for the prior twelve (12) month period. Construction Rent for the first twelve
(12) month period shall be determined in accordance with Paragraph E below. Prior to the
date Landlord has determined actual Construction Rent in accordance with Paragraph E below,
Tenant shall pay Construction Rent based upon the estimates set forth in the Budget described
below.

          8. “Budget” Attached to this Exhibit as Exhibit “E”-2 is a proforma budget
(the “Budget”) of Construction Costs to perform the Work, showing the line item categories to be
included in Construction Costs, and a calculation of Construction Rent based upon the Budget.
Tenant acknowledges that the Budget is an estimate and that Construction Costs may vary from the
amounts set forth in the Budget.

     B. Construction of Work. Landlord shall cause the Work to be constructed substantially
in accordance with the Plans and Specifications. Tenant acknowledges that Landlord is presently
performing the First Phase Work and that Landlord shall construct the Second Phase Work pursuant to
a schedule which will enable the Landlord to substantially complete the Second Phase Work, subject
to unavoidable delays (as defined below), on or before April 1, 2000. Tenant shall cooperate at all
stages to promote the efficient and expeditious completion of the Work. Either the Landlord or the
Contractor, as appropriate, shall apply for a building permit, and the Contractor shall commence
construction of the subject phase of the Work immediately upon receipt of the permit and proceed
with all due diligence until substantial completion. Each phase of the Work shall be deemed to be
“substantially complete” upon (i) Landlord’s obtaining a certificate of occupancy or its equivalent
from the appropriate governmental authority and (ii) such phase of the Work is sufficiently
complete in accordance with the Plans and Specifications so that Tenant may occupy the Premises, or
the new office space, as the case may be, subject to any punchlist items.

          1. Unavoidable Delays. Tenant and Landlord acknowledge that there may be unavoidable
delays in the construction of the Work. The term “unavoidable delays” shall mean events beyond the
control of Landlord or the Contractor, including, without limitation, acts of God, war, civil
commotion, strikes, fire, flood, earthquake or other casualty, governmental regulation or
restriction and adverse weather conditions or continued possession by prior tenants or occupants.

          2. Changes. If Tenant requests a change, alteration or addition to the Plans and
Specifications, Tenant shall submit same in writing to Landlord and to the Architect. If Landlord
approves such change, Landlord shall obtain from the Contractor and provide Tenant with an estimate
of the cost of such change. Tenant shall notify Landlord within five (5) business days if Tenant
elects to proceed with the change, in which event, Landlord shall incorporate the change into the
Plans and Specifications (any approved change is referred to herein as a “Change Order”). The
incremental greater cost of implementing such Change Order shall not be included in the
Construction Costs but instead shall be paid directly by Tenant to Landlord within thirty

2

 

(30) days after Landlord invoices Tenant for the Change Order. If Landlord disapproves of such
change, it shall immediately notify Tenant in writing specifying the reasons for such disapproval
and the construction shall proceed in accordance with the Plans and Specifications. Any delay in
construction time (determined in accordance with the next sentence) caused by such changes (whether
approved or not) shall constitute a Tenant Delay. The Architect, in his sole discretion, shall
determine whether such change necessitates a delay in construction and the length of such delay.

          3. Governmental Regulations. Tenant shall be solely responsible for causing the design
and construction of the Work to conform to any and all requirements of applicable building,
plumbing, electrical and fire codes and the requirements of any authority having jurisdiction over
the Work, as such codes and requirements may from time to time be amended or supplemented.

          4. Entry by Tenant. During the course of construction of the First Phase Work, Tenant
may enter the New Space for purposes of inspecting the First Phase Work, installing trade fixtures,
erecting signs, stocking merchandise and such other work as may be necessary or desirable to
prepare to occupy and conduct its business from the New Space, provided that (i) Tenant assumes the
risk of injury to person and damage to its property, (ii) any entry shall be subject to the
provisions of the Lease, except that the Lease Term shall not commence and rent shall not be due,
and (iii) Tenant shall not unreasonably interfere with the construction of the Work on the
Premises. Tenant shall also provide evidence of insurance prior to any such entry. If such entry
shall interfere with the construction of the First Phase Work, then Tenant shall immediately leave
upon the request of Landlord.

     C. Delivery of the Premises. Subject to unavoidable delays, the First Phase Work is
estimated to be substantially completed for delivery of the Premises to Tenant by the Commencement
Date. If an unavoidable delay will prevent the substantial completion of the First Phase Work prior
to the scheduled Commencement Date, then Landlord will notify Tenant in writing. Upon substantial
completion of the First Phase Work, Landlord will notify Tenant in writing and afford Tenant an
opportunity to inspect the Premises prior to delivery. At the inspection, Landlord and Tenant will
prepare and agree upon a punchlist of any items that remain to be completed.

     If the First Phase Work is substantially completed to permit delivery of the Premises prior to
the Commencement Date, Landlord shall notify Tenant in writing and, should Tenant elects to take
occupancy early, then Tenant may inspect the Premises and prepare, with Landlord, a punchlist prior
to delivery.

     D. Limitation. This Exhibit shall not be deemed applicable to any additional space
added to the original Premises or, in the event of a renewal of the Lease Term, to the original
Premises, itself, during the renewal term, unless expressly so provided in the Lease or any
amendment thereto.

     E. Determination of Construction Rent. Base Rental shall be equal to the sum of
Carry-Over Rent (as defined in the Basic Definitions and Lease Provisions) plus Construction Rent.
Landlord shall calculate Construction Rent after Landlord has closed out the First Phase

3

 

Work and Second Phase Work and finally determined the applicable Construction Costs.
Thereafter, Tenant shall pay Landlord Construction Rent based on the actual Construction Costs.
Upon each such calculation, Landlord shall give notice to Tenant of the difference, if any, between
actual Construction Rent and estimated Construction Rent (including reasonable back-up
documentation evidencing the difference), and if actual Construction Rent is (i) higher than
estimated Construction Rent, including any overruns to the Budget, Tenant shall pay any shortfall
to Landlord within ten (10) days after demand, and (ii) less than estimated Construction Rent,
Landlord shall promptly credit such overage against Base Rental next due and owing.

     F. Other Construction Items. At the same time as performing the First Phase Work,
Landlord shall construct, at Tenant’s sole cost and expense and in addition to the Work, a
flammable storage room (the “Flammable Storage Room”) in the Premises, which Flammable Storage Room
is depicted on the Plans and Specifications. Tenant may, by providing written notice to Landlord on
or prior to February 1, 2000, elect to cause Landlord to construct, at Tenant’s sole cost and
expense, any or all of a mezzanine in the Premises which will tolerate a 150-pound floor load (the
“Mezzanine”) and an elevator to serve the Mezzanine (the “Elevator”). The Plans and Specifications
also depict the Mezzanine and the Elevator. With respect to any of the improvements described above
in this paragraph, Tenant shall reimburse Landlord from time to time for all of Landlord’s costs
and expenses is causing such improvement to be performed within thirty (30) days after receiving an
invoice from Landlord for the same. If Tenant fails to provide such written notice to Landlord on
or prior to February 1, 2000, Tenant shall be deemed to have waived its right to require Landlord
to construct the Mezzanine or the Elevator.

     G. Property Insurance On The Work. Tenant shall purchase and maintain in force all
risk property or builder’s risk insurance for the construction of the Work. Such insurance shall be
written in an amount at least equal to the initial “Contract Sum” of $3,600,000 as well as any
subsequent modifications of that sum, of which Tenant will be advised by Landlord. The insurance
shall apply on a replacement cost basis. If the insurance obtained is builder’s risk insurance,
coverage shall be written on a completed value form. The insurance shall name as insureds Landlord;
Contractor, Krusinski Construction Company, and all subcontractors and sub-subcontractors
performing any portion of the Work as additional insureds to the extent of their interests. The
insurance policy shall contain a provision that the insurance will not be canceled or allowed to
expire without at least thirty (30) days prior written notice being given to Landlord and
Contractor. The insurance shall cover the entire Work at the project site at 1135 Arbor Drive,
Romeoville, Illinois; portions of the Work located away from the site but intended for use at the
site; and also portions of the Work in transit. The policy shall include as insured property
scaffolding, false work, and temporary buildings located at the site. The policy shall cover the
cost of removing debris, including demolition as may be legally necessary by the operation of any
law, ordinance or regulation. This property insurance shall be written to cover all risks of
physical loss excepts those specifically excluded in the policy and shall insure at least the
perils of fire, lightning, explosion, wind storm or hail, smoke, aircraft or vehicles, riot or
civil commotion, theft, vandalism, malicious mischief, and collapse. The policy shall have a
deductible not to exceed $5,000. Pursuant to the terms of its construction contract with Landlord,
Contractor is responsible for payments of any deductible amount. Landlord and Tenant waive all
rights against each other and against the Contractor, subcontractor, sub-subcontractors for
recovery for damages caused by fire or other perils to the extent covered by the property insurance
purchased pursuant to the requirements of this paragraph. Prior to the commencement

4

 

of any Work, Tenant shall furnish a certificate of insurance evidencing compliance with the
aforementioned terms. At the request of either the Landlord or the Contractor, Tenant will furnish
a complete copy of the property insurance policy being provided hereunder.

5

 

EXHIBIT “El”

PLANS & SPECIFICATIONS

Original Facility Design & Construction by OPUS Architects & Engineers

     Plans Dated 8/30/95 Issued for Construction/Permit

Expansion of Facility Design by Julius Kwasek

     Site Plan Submitted for Permit dated 3/10/99

 

 

EXHIBIT E-2

CONSTRUCTION BUDGET

Updated: 5/17/99

Warehouse Office & Expansion to be paid for by Landlord

Flammables Room, Office Expansion Mezzanine & Elevator to be paid for by Tenant

	 	 	 	 	 	 	 	 	 
	Description	 	Cost	 	 	 	 	 
	Warehouse Expansion
	 	$	3,116,059	 	 	 	 	 
	HVAC
	 	 	83,500	 	 	 	 	 
	Fire Alarm Allowance
	 	 	30,000	 	 	 	 	 
	Contingency
	 	 	50,000	 	 	 	 	 
	Office Expansion
	 	 	363,130	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	Subtotal
	 	$	3,642,689	 	 	 	 	 
	Architect — Bases Building
	 	 	56,750	 	 	 	 	 
	Architect — Office Expansion
	 	 	21,000	 	 	 	 	 
	Civil Engineering (Includes Topology)
	 	 	11,198	 	 	 	 	 
	Soil Borings
	 	 	2,750	 	 	 	 	 
	Surveys (3)
	 	 	5,000	 	 	 	 	 
	Legal (Lease Related)
	 	 	15,000	 	 	 	 	 
	Construction Interest
	 	 	78,348	 	 	 	 	 
	Construction Supervision Visits
	 	 	8,000	 	 	 	 	 
	Commission
	 	 	220,000	 	 	 	 	 
	Development Fee Management Firm
	 	 	109,281	 	 	 	 	 
	Development Fee Landlord
	 	 	125,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	Subtotal
	 	$	652,327	 	 	 	 	 
	Total
	 	$	4,295,016	 	 	By Landlord
	Flammables Storage Room
	 	 	253,724	 	 	 	 	 
	Office Expansion Mezzanine & Elevator
	 	 	205,012	 	 	 	 	 
	Total
	 	$	458,736	 	 	By Tenant
	Grand Total
	 	$	4,753,752	 	 	 	 	 

 

 

EXHIBIT E-2

ULTA3 EXPANSION RENTAL STREAM CALCULATION

	 	 	 	 	 
	Updated:
	 	5/27/99 17:15	 	 
	 
	 	 	 	 
	Expansion:	 	Assumes 10 year 7 month lease term for 121,218 SF (including 6,612 SF additional office)
	 
	 	 	 	 
	Term:
	 	10/1/99-4/30/10	 	 
	 
	 	 	 	 
	Building Expansion w/ Soft Costs	 	$3,931,886
	 
	 	Costs Capped at 11% with 3% annual escalations	 	$432,507.42 1st year
	 
	 	 	 	 
	Office Expansion	 	 
	 
	 	Complete April 1, 2000	 	$363,130
	 
	 	Costs Capped at 11% with 3% annual escalations	 	$39,944.30 1st year

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Base Building Expansion	 	Office Expansion	 	Total Expansion
	 	 	 	 	 	 	121,218 SF	 	6,612 SF	 	Rent
	Lease Period	 	Annual Rent	 	Rent/SF	 	Annual Rent	 	Rent/SF	 	Annual Rent	 	Rent/SF
	From	 	To	 	(Payable Monthly)	 	Annualized	 	(Payable Monthly)	 	Annualized	 	(Payable Monthly)	 	Annualized
	10/1/99
	 	 	3/31/00	 	 	$	216,253.71	 	 	$	3.57	 	 	$	0.00	 	 	 	 	 	 	$	216,253.71	 	 	$	3.57	 
	4/1/00
	 	 	9/30/00	 	 	$	216,253.71	 	 	$	3.57	 	 	$	19,972.15	 	 	$	6.04	 	 	$	236,225.86	 	 	$	3.90	 
	10/1/00
	 	 	9/30/01	 	 	$	445,482.65	 	 	$	3.68	 	 	$	40,543.46	 	 	$	6.13	 	 	$	486,026.11	 	 	$	4.01	 
	10/1/01
	 	 	9/30/02	 	 	$	458,847.13	 	 	$	3.79	 	 	$	41,759.77	 	 	$	6.32	 	 	$	500,606.90	 	 	$	4.13	 
	10/1/02
	 	 	9/30/03	 	 	$	472,612.54	 	 	$	3.90	 	 	$	43,012.56	 	 	$	6.51	 	 	$	515,625.10	 	 	$	4.25	 
	10/1/03
	 	 	9/30/04	 	 	$	486,790.92	 	 	$	4.02	 	 	$	44,302.94	 	 	$	6.70	 	 	$	531,093.86	 	 	$	4.38	 
	10/1/04
	 	 	9/30/05	 	 	$	501,394.64	 	 	$	4.14	 	 	$	45,632.03	 	 	$	6.90	 	 	$	547,026.67	 	 	$	4.51	 
	10/1/05
	 	 	9/30/06	 	 	$	516,436.48	 	 	$	4.26	 	 	$	47,000.99	 	 	$	7.11	 	 	$	563,437.47	 	 	$	4.65	 
	10/1/06
	 	 	9/30/07	 	 	$	531,929.58	 	 	$	4.39	 	 	$	48,411.02	 	 	$	7.32	 	 	$	580,340.60	 	 	$	4.79	 
	10/1/07
	 	 	9/30/08	 	 	$	547,887.46	 	 	$	4.52	 	 	$	49,863.35	 	 	$	7.54	 	 	$	597,750.81	 	 	$	4.93	 
	10/1/08
	 	 	9/30/09	 	 	$	564,324.09	 	 	$	4.66	 	 	$	51,359.25	 	 	$	7.77	 	 	$	615,683.34	 	 	$	5.08	 
	10/1/09
	 	 	4/30/10	 	 	$	339,064.72	 	 	$	4.80	 	 	$	30,858.35	 	 	$	8.00	 	 	$	369,923.07	 	 	$	5.23	 

 

 

EXHIBIT E-2

ULTA3 COMBINED RENTAL STREAM CALCULATION

	 	 	 	 	 
	Updated:
	 	5/27/99 17:15	 	 
	 
	 	 	 	 
	Expansion:	 	Assumes 10 year 7 month lease term for 121,218 SF (including 6,612 SF additional office)
	 
	 	 	 	 
	Term:
	 	10/1/99-4/30/10	 	 
	Building Expansion w/ Soft Costs	 	$3,931,886
	 
	 	Costs Capped at 11% with 3% annual escalations	 	$432,507.42 1st year
	 
	 	 	 	 
	Office Expansion	 	 
	 
	 	Complete April 1, 2000	 	$363,130
	 
	 	Costs Capped at 11% with 3% annual escalations	 	$39,944.30 1st year

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Existing Building	 	Expansion	 	Total Combined Rent
	 	 	 	 	 	 	170,000 SF	 	121,218 SF	 	291,218 SF
	Lease Period	 	Annual Rent	 	Rent/SF	 	Annual Rent	 	Rent/SF	 	Annual Rent	 	Rent/SF
	From	 	To	 	(Payable Monthly)	 	Annualized	 	(Payable Monthly)	 	Annualized	 	(Payable Monthly)	 	Annualized
	10/1/99
	 	 	3/31/00	 	 	$	340,000.00	 	 	$	4.00	 	 	$	216,253.71	 	 	$	3.57	 	 	$	556,253.71	 	 	$	3.82	 
	4/1/00
	 	 	9/30/00	 	 	$	340,000.00	 	 	$	4.00	 	 	$	236,225.86	 	 	$	3.90	 	 	$	576,225.86	 	 	$	3.96	 
	10/1/00
	 	 	9/30/01	 	 	$	680,000.00	 	 	$	4.00	 	 	$	486,026.11	 	 	$	4.01	 	 	$	1,166,026.11	 	 	$	4.00	 
	10/1/01
	 	 	9/30/02	 	 	$	680,000.00	 	 	$	4.00	 	 	$	500,606.90	 	 	$	4.13	 	 	$	1,180,606.90	 	 	$	4.05	 
	10/1/02
	 	 	9/30/03	 	 	$	739,500.00	 	 	$	4.35	 	 	$	515,625.10	 	 	$	4.25	 	 	$	1,255,125.10	 	 	$	4.31	 
	10/1/03
	 	 	9/30/04	 	 	$	765,000.00	 	 	$	4.50	 	 	$	531,093.86	 	 	$	4.38	 	 	$	1,296,093.86	 	 	$	4.45	 
	10/1/04
	 	 	9/30/05	 	 	$	765,000.00	 	 	$	4.50	 	 	$	547,026.67	 	 	$	4.51	 	 	$	1,312,026.67	 	 	$	4.51	 
	10/1/05
	 	 	9/30/06	 	 	$	783,700.00	 	 	$	4.61	 	 	$	563,437.47	 	 	$	4.65	 	 	$	1,347,137.47	 	 	$	4.63	 
	10/1/06
	 	 	9/30/07	 	 	$	790,500.00	 	 	$	4.65	 	 	$	580,340.60	 	 	$	4.79	 	 	$	1,370,840.60	 	 	$	4.71	 
	10/1/07
	 	 	9/30/08	 	 	$	790,500.00	 	 	$	4.65	 	 	$	597,750.81	 	 	$	4.93	 	 	$	1,388,250.81	 	 	$	4.77	 
	10/1/08
	 	 	9/30/09	 	 	$	809,200.00	 	 	$	4.76	 	 	$	615,683.34	 	 	$	5.08	 	 	$	1,424,883.34	 	 	$	4.89	 
	10/1/09
	 	 	4/30/10	 	 	$	476,000.00	 	 	$	4.80	 	 	$	369,923.07	 	 	$	5.23	 	 	$	845,923.07	 	 	$	4.98	 

 

 

EXHIBIT “F”

COMMENCEMENT DATE LETTER

     This Exhibit is attached to and made a part of the Lease by and between Aetna Life Insurance
Company (“Landlord”) and ULTA3 Cosmetics & Salon, Inc. (“Tenant”).

     1. The Lease Term commenced on [October 1, 1999].

     2. The Lease Term will expire on [April 30, 2010], unless renewed or extended.

     3. Tenant acknowledges that the Work has been completed in accordance with the Plans and
Specifications and accepts such Work, subject to any punch list items being completed.

     4. Tenant, further, acknowledges that all obligations of Landlord to Tenant in connection with
the Work and all other conditions precedent to the commencement of the Lease Term have occurred and
that the Lease is in full force and effect.

     5. There are no existing defenses or offsets which, as of the date hereof, Tenant has against
the enforcement of the Lease by Landlord.

     6. Base Rental for the Lease Term is as follows:

[INSERT SCHEDULE BASED ON FINAL CONSTRUCTION RENT CALCULATIONS]

 

 

     EXECUTED on the day of , 2000.

	 	 	 	 	 
	 	 	LANDLORD:
	 
	 	 	 	 
	 	 	AETNA LIFE INSURANCE COMPANY
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 
	 

	 	Printed Name:	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 
	 
	 	 	 	 
	ATTEST:	 	TENANT:
	 
	 	 	 	 
	 	 	ULTA3 COSMETICS & SALON, INC.
	 
	 	 	 	 
	(Title)

	 	By:
	/s/ Greg Smolarek
	 

	 	 	 
	 	 	Printed Name: Greg Smolarek
	 	 	Title: SR VP Systems and Logistics

 

 

EXHIBIT “J”

RENEWAL OPTION

     This Exhibit is attached to and made a part of the Lease by and between Aetna Life Insurance
Company (“Landlord”) and ULTA3 Cosmetics & Salon, Inc. (“Tenant”).

     1. Tenant, but not any assignee or sublessee of Tenant, is hereby granted two (2) options of
five (5) years each to renew this Lease (each a “Renewal Term” and collectively, the “Renewal
Terms”). Provided Tenant is not in default at the time of exercise of the option or, again on
commencement of the Renewal Term at issue, Tenant may exercise each option upon written notice to
Landlord given no earlier than fifteen (15) months and no later than twelve (12) months before the
expiration of the then current term. If Tenant fails to exercise the option within the time frame
set forth in the preceding sentence, then Tenant shall be deemed to have elected not to exercise
the option and this renewal option and all other unexercised renewal options contained herein shall
be deemed to have terminated; time being of the essence in the exercise of such option. Each
Renewal Term will be on the same terms and conditions as those contained in the Lease except as
follows:

          (a) there shall be no further rights to renew after the exercise of the last of the renewal
option(s) granted in this Exhibit;

          (b) any tenant improvement allowances, rental concessions or the like granted by Landlord to
Tenant in the initial Lease Term shall not be applicable in such Renewal Term; and

          (c) the rental for such Renewal Term shall be the greater of (i) the fair market rental rate
(the “Fair Market Rent”) for the Premises based on the then-prevailing market rental rate for
properties of equivalent quality, size, utility and location, taking into account a lease for a
lease term of that of the Renewal Term and with a tenant of the credit standing of Tenant (as Fair
Market Rent shall be determined below in this Exhibit “J”), or (ii) the Base Rental in
effect at the expiration of the initial Lease Term or first Renewal Term, as the case may be.

     2. Landlord shall notify Tenant of its determination of the Fair Market Rent for the subject
Renewal Term, and Tenant shall advise Landlord of any objection within 10 days of receipt of
Landlord’s notice. Failure to respond within the 10-day period shall constitute Tenant’s acceptance
of such Fair Market Rent. If Tenant objects, Landlord and Tenant shall commence negotiations to
attempt to agree upon the Fair Market Rent within 30 days of Landlord’s receipt of Tenant’s notice.
If the parties cannot agree, each acting in good faith but without any obligation to agree, then
the Lease Term shall not be extended and shall terminate on its scheduled termination date and
Tenant shall have no further right hereunder or any remedy by reason of the parties’ failure to
agree unless Tenant or Landlord invokes the arbitration procedure provided below to determine the
Fair Market Rent.

     3. Arbitration to determine the Fair Market Rent shall be in accordance with the Real Estate
Valuation Arbitration Rules of the American Arbitration Association. Unless otherwise required by
state law, arbitration shall be conducted in the metropolitan area where the Premises is located by
a single arbitrator unaffiliated with either party. Either party may elect to

 

 

arbitrate by sending written notice to the other party and the Regional Office of the American
Arbitration Association within 5 days after the 30-day negotiating period provided in Paragraph
2, invoking the binding arbitration provisions of this Paragraph. Landlord and Tenant shall
each submit to the arbitrator their respective proposal of Fair Market Rent. The arbitrator must
choose between the Landlord’s proposal and the Tenant’s proposal and may not compromise between the
two or select some other amount. Notwithstanding any other provision herein, the Fair Market Rent
determined by the arbitrator shall not be less than, and the arbitrator shall have no authority to
determine a Fair Market Rent less than, the Base Rental in effect as of the scheduled expiration of
the initial Lease Term or First Renewal Term, as the case may be. The cost of the arbitration shall
be paid by Landlord if the Fair Market Rent is that proposed by Landlord and by Tenant if the Fair
Market Rent is that proposed by Tenant; and shall be borne equally otherwise. If the arbitrator has
not determined the Fair Market Rent as of the end of the Lease Term, or first Renewal Term, as the
case may be, Tenant shall pay 105 percent of the Base Rental in effect under the Lease as of the
end of the Lease Term or first Renewal Term, as the case may be, until the Fair Market Rent is
determined as provided herein. Upon such determination, Landlord and Tenant shall make the
appropriate adjustments to the payments between them.

     4. The parties consent to the jurisdiction of any appropriate court to enforce the arbitration
provisions of this Exhibit “J” and to enter judgment upon the decision of the arbitrator.

     5. If the Lease is extended for a Renewal Term, then Landlord shall prepare and Tenant shall
execute an amendment to the Lease confirming the extension of the Lease Term and the other
provisions applicable thereto.

     6. If Tenant exercises its right to extend the term of the Lease for a Renewal Term pursuant
to this Exhibit “J”, the term “Lease Term” as used in the Lease, shall be construed to
include, when practicable, the Extension Term.

 2

 

 

EXHIBIT “M”

HVAC MAINTENANCE SPECIFICATIONS

     Tenant shall enter into a service contract with a contractor reasonably approved by Landlord,
providing for the service and regular maintenance (with service calls no less frequent than once
each calendar quarter and otherwise meeting the specifications set for in this Exhibit “M”)
of the hot water heating, venting and air conditioning system throughout the Lease Term.
The service contract must include all services suggested by the equipment manufacturer in its
operations/maintenance manual and must become effective within thirty (30) days of the date Tenant
takes possession of the Premises. Tenant shall provide Landlord with an executed copy of the
aforementioned service contract within ten (10) days of execution.

     Maintenance Specifications to be contained in service contract:

     1. Service calls no less frequent than once per calender quarter.

     2. Detail of services to be performed and the frequency of each service (i.e., once per
calendar year, once per calendar quarter, etc.).exv10w11

 

EXHIBIT 10.11

THE OFFICES AT WINDHAM LAKES

ROMEOVILLE, ILLINOIS

LEASE

BETWEEN

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,

a New Jersey corporation,

Landlord

AND

ULTA SALON, COSMETICS & FRAGRANCE, INC.,

a Delaware corporation

Tenant

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 Section
	 	Page
	1.

	 	FUNDAMENTAL LEASE TERMS
	 	 	1	 
	 
	 	 	 	 	 	 
	2.

	 	AGREEMENT TO LEASE
	 	 	2	 
	 
	 	 	 	 	 	 
	3.

	 	RENT
	 	 	2	 
	 
	 	 	 	 	 	 
	4.

	 	BASE RENT
	 	 	2	 
	 
	 	 	 	 	 	 
	5.

	 	ADDITIONAL RENT
	 	 	3	 
	 
	 	 	 	 	 	 
	6.

	 	SERVICES.
	 	 	8	 
	 
	 	 	 	 	 	 
	7.

	 	SECURITY DEPOSIT
	 	 	9	 
	 
	 	 	 	 	 	 
	8.

	 	USE
	 	 	10	 
	 
	 	 	 	 	 	 
	9.

	 	CONDITION OF PREMISES
	 	 	10	 
	 
	 	 	 	 	 	 
	10.

	 	EARLY POSSESSION
	 	 	10	 
	 
	 	 	 	 	 	 
	11.

	 	ASSIGNMENT AND SUBLETTING
	 	 	10	 
	 
	 	 	 	 	 	 
	12.

	 	REPAIRS AND ALTERATIONS
	 	 	13	 
	 
	 	 	 	 	 	 
	13.

	 	CERTAIN RIGHTS RESERVED BY LANDLORD
	 	 	15	 
	 
	 	 	 	 	 	 
	14.

	 	COVENANT AGAINST LIENS
	 	 	17	 
	 
	 	 	 	 	 	 
	15.

	 	WAIVERS AND INDEMNITIES
	 	 	17	 
	 
	 	 	 	 	 	 
	16.

	 	DEFAULTS AND LANDLORD’S REMEDIES.
	 	 	19	 
	 
	 	 	 	 	 	 
	17.

	 	SURRENDER OF POSSESSION.
	 	 	23	 
	 
	 	 	 	 	 	 
	18.

	 	INSURANCE.
	 	 	25	 
	 
	 	 	 	 	 	 
	19.

	 	FIRE OR CASUALTY
	 	 	26	 
	 
	 	 	 	 	 	 
	20.

	 	CONDEMNATION
	 	 	27	 
	 
	 	 	 	 	 	 
	21.

	 	NOTICES.
	 	 	27	 
	 
	 	 	 	 	 	 
	22.

	 	ADDITIONAL COVENANTS OF TENANT
	 	 	28	 
	 
	 	 	 	 	 	 
	23.

	 	ESTOPPEL CERTIFICATES; MORTGAGE ISSUES.
	 	 	32	 

i

 

	 	 	 	 	 	 	 
	 	 	 Section
	 	Page
	24.

	 	MISCELLANEOUS.
	 	 	33	 
	 
	 	 	 	 	 	 
	25.

	 	PARKING
	 	 	36	 
	 
	 	 	 	 	 	 
	26.

	 	ERISA
	 	 	36	 
	 
	 	 	 	 	 	 
	27.

	 	ATTORNEYS’ FEES
	 	 	36	 
	 
	 	 	 	 	 	 
	28.

	 	AMERICANS WITH DISABILITIES ACT
	 	 	36	 

ii

 

EXHIBITS

Exhibit A — Plan of the Premises

Exhibit B — Legal Description of the Land

Exhibit C — Form of Tenant Estoppel Letter

 

 

THE OFFICES AT WINDHAM LAKES

LEASE

     THIS LEASE (“Lease”) is entered into as of the 11th day of September, 2002, by and between THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation, whose address is Two Prudential
Plaza, 180 North Stetson Street, Suite 3275, Chicago, Illinois 60601 (together with its successors
and assigns, “Landlord”) and ULTA SALON, COSMETICS & FRAGRANCE, INC., a Delaware corporation
(together with its permitted successors and assigns, “Tenant”).

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

	 	 	 	 	 
	1.1

	 	Building and Address:
	 	The Offices at Windham Lakes
	 

	 	 	 	1295 Windham Parkway
	 

	 	 	 	Romeoville, Illinois 60446
	 
	 	 	 	 
	1.2

	 	Tenant :
	 	ULTA SALON, COSMETICS & 
FRAGRANCE, INC., a Delaware
corporation
	 
	 	 	 	 
	1.3

	 	Tenant’s Current

Address :
	 	1135 Arbor Drive
 Romeoville, Illinois 60446
	 
	 	 	 	 
	1.4

	 	 Landlord:
	 	The Prudential Insurance Company of 
America, a New
Jersey corporation
	 
	 	 	 	 
	1.5

	 	Landlord’s Address:
	 	Two Prudential Plaza
	 

	 	 	 	180 North Stetson Street, Suite 3275
	 

	 	 	 	Chicago, Illinois 60601
	 
	 	 	 	 
	1.6

	 	Premises:
	 	(a) Approximately 12,532 square feet of office space
located in the Building, as shown on the plan attached
hereto and made a part hereof as Exhibit A.
	 
	 	 	 	 
	 

	 	 	 	(b) All trade fixtures, furniture, equipment and other
personal property located in such office space as of
the date of this Lease (the “Personal Property”).

 

 

	 	 	 	 	 
	1.7

	 	Term:
	 	Twenty five (25) calendar months commencing on the
Commencement Date, provided that if the Commencement
Date is not the first (1st) day of a calendar month,
the Term shall end twenty five (25) calendar months
after the last day of the calendar month in which the
Commencement Date occurs.
	 
	 	 	 	 
	1.8

	 	Commencement Date:
	 	January 1, 2003
	 
	 	 	 	 
	1.9

	 	Base Rent:	 	 

	 	 	 	 	 	 	 	 	 
	 	 	Annual	 	Monthly
	1st Lease Year
	 	$	131,586.00	 	 	$	10,965.50	 
	2nd Lease Year
	 	$	137,852.00	 	 	$	11,487.67	 
	3rd Lease Year
	 	$	137,852.00	 	 	$	11,487.67	 

	 	 	 	 	 
	1.10

	 	Security Deposit:
	 	 $10,965.50
	 
	 	 	 	 
	1.11

	 	Broker:
	 	 CB Richard Ellis and GVA Williams

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

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

PDC Properties, Inc.

23350 Network Place

Chicago, Illinois 60673-1227

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

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

2

 

Commencement Date is other than the first (1st) day of a
calendar month, then the first (1st) Lease Year shall be the period from the Commencement Date
through the date twelve (12) months after the last day of the calendar month in which the
Commencement Date occurs, and each subsequent Lease Year shall be the period of twelve (12) months
following the last day of the prior Lease Year.

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

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

	 	(a)	 	“Calendar Year” shall mean the twelve (12) month period January through
December of any year (or portion thereof) falling within the Term.
	 
	 	(b)	 	“Tenant’s Proportionate Share” shall be 26.39%, a percentage determined by
dividing 12,532 square feet, the rentable area contained in the Premises, by 47,487
square feet, the rentable area contained in the Building. The parties acknowledge and
agree that a variety of methods and standards exist for measuring the rentable area of
a building or a portion thereof, and that individuals, including experts in this area,
may reach different conclusions on the rentable area of a building or a portion
thereof, even though such parties have based their conclusions on the same measurement
methods or standards. Accordingly, in order to eliminate any ambiguity or uncertainty
the parties hereby agree that the rentable areas of the Premises and the Building and
such figures, and Tenant’s Proportionate Share shall not be contested by either party.
Tenant’s Proportionate Share shall only be revised upon an actual change in the
physical dimensions of the Premises or upon an actual reconfiguration, addition or
modification to the rentable area of space leased or available for lease at the
Building during the Term, each of which as Landlord may reasonably redetermine from
time to time. If the Building or any development of which it is a part, shall contain
non-office uses, Landlord shall have the right to determine in accordance with sound
accounting and management principles, Tenant’s Proportionate Share of Taxes and
Tenant’s Proportionate Share of Operating Expenses for only the office portion of the
Building or of such development, in which event, Tenant’s Proportionate Share shall be
based on the ratio of the rentable area of the
Premises to the rentable area of such office portion. Similarly, if the Building
shall contain tenants who do not participate in all or certain categories of Taxes
or Operating Expenses on a prorata basis, Landlord may exclude the amount of Taxes
or Operating Expenses, or such categories of the same, as the case may be,
attributable to such tenants, and exclude the rentable area of their premises, in
computing Tenant’s Proportionate Share. If the Building shall be part of or shall
include a complex, development or group of buildings or structures collectively

3

 

	 	 	 	owned or managed by Landlord or its affiliates or collectively managed by
Landlord’s managing agent, Landlord may allocate Taxes and Operating Expenses
within such complex, development or group, and between such buildings and
structures and the parcels on which they are located, in accordance with sound
accounting and management principles. In the alternative, Landlord shall have the
right to determine, in accordance with sound accounting and management principles,
Tenant’s Proportionate Share of Taxes and Tenant’s Proportionate Share of Operating
Expenses based upon the totals of each of the same for all such buildings and
structures, the land constituting parcels on which the same are located, and all
related facilities, including common areas and easements, corridors, lobbies,
side-walks, elevators, loading areas, parking facilities and driveways and other
appurtenances and public areas, in which event Tenant’s Proportionate Share shall
be based on the ratio of the rentable area of the Premises to the rentable area of
all such buildings.
	 
	 	(c)	 	“Taxes” shall mean all real estate and personal property taxes and
assessments and similar governmental charges, special or otherwise, direct or
indirect, ordinary or extraordinary (including, without limitation, real estate taxes,
general and special assessments, transit taxes, water and sewer rents, taxes based
upon the receipt of rent including gross receipts or sales taxes applicable to the
receipt of rent or service or value added taxes, ad valorem taxes for Landlord’s
personal property, and taxes levied or assessed by special taxing districts now or
hereafter created) levied or assessed for any Calendar Year (without regard to any
different fiscal year used by such government or municipal authority) upon or with
respect to the Property or Landlord’s personal property used in connection with the
Property that Landlord shall actually pay because of or in connection with the
ownership, leasing and operation of the Property. Should any political subdivision or
governmental authority having jurisdiction over the Property, impose a tax,
assessment, charge or fee which Landlord shall be required to pay, either by way of
substitution for such real estate taxes and ad valorem personal property taxes, or in
addition to such real estate taxes and ad valorem personal property taxes, or impose
an income or franchise tax or a tax on rents which may be in addition to or in
substitution for a tax levied against the Property and/or Landlord’s personal property
used in connection with the Property, such taxes, assessments, fees or charges shall
be deemed to constitute Taxes hereunder. “Taxes” shall also include all reasonable
fees and costs incurred by Landlord in connection with
protesting, reducing or limiting the increase in any Taxes, regardless of whether
any reduction or limitation is obtained. “Taxes” shall not include inheritance,
income, transfer or franchise taxes paid by Landlord to the extent applicable to
Landlord’s general or net income (as opposed to rents, receipts or income
attributable to operations at the Property), other than as described above, and
shall not include any taxes to be paid by Tenant under the terms of this Lease. In
determining the amount of Taxes for any Calendar Year, the amount of special
assessments to be included shall be

4

 

	 	 	 	limited to the amount of the installment (plus
any interest payable thereon) of such special assessment which would have been
required to have been paid during such year if Landlord had elected to have such
special assessment paid over the maximum period of time permitted by law. Except
as provided in the immediately preceding sentence, all references to Taxes “for” a
particular year shall be deemed to refer to Taxes levied, assessed or otherwise
imposed for such year without regard to when such Taxes are payable.
	 
	 	(d)	 	“Operating Expenses” shall mean for any Calendar Year those costs or expenses
of every kind and nature paid or incurred by or on behalf of Landlord for owning,
managing, operating, maintaining, repairing and restoring the Property and Landlord’s
personal property used in connection with the Property including, without limitation:
(i) dues and other amounts payable to the Windham Lakes Business Park Association, and
payments under any other easement, operating agreement, declaration, restrictive
covenant, or instrument pertaining to the sharing of costs in any planned development;
(ii) utilities for the Property, including but not limited to electricity, power, gas,
steam, oil or other fuel, water, sewer, lighting, heating, air conditioning and
ventilating, to the extent not separately metered, (iii) the cost of fire monitoring,
security and security device systems for the Building, if any; (iv) the cost of
maintaining and repairing the Building and other improvements in the Property, and all
systems, equipment and components thereof, including but not limited to: (A) sewer,
water, mechanical, electrical, sprinkler and other utility systems and equipment, (B)
heating, ventilating and air conditioning systems and equipment, (C) the roof and
structural components of the Building, (D) parking lots, driveways and sidewalks, (E)
exterior lighting systems and equipment; (F) window cleaning, (G) trash removal, (H)
cleaning of walks, parking facilities and building walls, (I) removal of ice and snow,
(J) replacement of wall and floor coverings, ceiling tiles and fixtures in lobbies,
corridors, restrooms and other common or public areas or facilities, (K) maintenance
and replacement of shrubs, trees, grass, sod and other landscaped items, (L)
irrigation systems, (M) drainage facilities, (N) fences, curbs, and walkways, (O)
re-paving and re-striping parking facilities, and (P) painting of Building exteriors;
(v) insurance (including but not limited to, fire, extended coverage, all risk, rent
loss, liability, worker’s compensation, and any other insurance carried by Landlord
and applicable to the Property and not carried by tenants under any provision
of their lease); (vi) deductibles paid by Landlord under the insurance policies
described above; (vii) uninsured losses; (viii) management agreements (including
the cost of any management fee actually paid thereunder and the fair rental value
of any office space provided thereunder, up to customary and reasonable amounts);
(ix) supplies, tools, equipment and materials used in the operation, repair and
maintenance of the Property; (x) the cost of wages, salaries and benefits of all
persons at the level of property manager and below, engaged in the operation,

5

 

	 	 	 	management, maintenance and repair of the Property; (xi) accounting, legal, inspection, consulting, concierge and other services; (xii) permits, licenses and
certificates necessary to operate, manage and lease the Property; (xiii) any rental
(or installment purchase or financing agreements) with respect to equipment used in
the operation, repair or maintenance of the Property; and (xiv) any other expense
or charge which would be considered as an expense of owning, managing, operating,
maintaining, repairing or restoring the Property or Landlord’s personal property
used in connection therewith. Notwithstanding anything herein to the contrary,
Operating Expenses shall not include: costs or other items included within the
meaning of the term “Taxes”; costs of tenant alterations to tenant space; marketing
costs; costs of capital improvements to the Property, except for the cost of
resurfacing the Parking Areas (as hereinafter defined), driveways and sidewalks on
the Property and except as provided below; depreciation charges; interest and
principal payments on mortgages; real estate brokerage and leasing commissions; and
any other expenditures for which Landlord has been reimbursed (other than pursuant
to rent escalation or tax and operating expense reimbursement provisions in
leases). Notwithstanding the foregoing, the cost of any capital improvements to
the Property made after the date of this Lease that are primarily intended to
reduce Operating Expenses or that are required under any laws, statutes, codes,
ordinances, or governmental rules, regulations or requirements, or judicial or
administrative rules, orders or decrees (collectively, “Laws”) that were not
applicable to the Property at the time it was constructed, amortized over such
reasonable periods as Landlord shall determine, together with interest on the
unamortized cost of any such improvements (at the prevailing construction loan rate
available to Landlord on the date the cost of such improvements was incurred) shall
be included in Operating Expenses. The cost of any capital improvements made in
connection with resurfacing the Parking Areas, driveways and sidewalks in their
entirety on the Property shall also be amortized; with interest, as provided in the
immediately preceding sentence, and included in Operating Expenses. In the event
the Property is not fully occupied during any Calendar Year, the variable Operating
Expenses for that year may be adjusted by Landlord to reflect the Operating
Expenses as though the Property were fully occupied; provided, however, that in no
event shall the payments made by all tenants of the Property to Landlord for
Operating Expenses exceed the actual Operating Expenses paid or incurred by
Landlord in any Calendar Year.

5.2 Tax Amount. Tenant shall pay to Landlord as Rent, in addition to the
Base Rent and the Operating Expense Amount (as defined below), an amount (the ‘Tax Amount”) equal
to Tenant’s Proportionate Share multiplied by the amount of Taxes for each Calendar Year. Tenant
shall pay to Landlord the Tax Amount with respect to each Calendar Year in monthly installments, at
the same time and place as Base Rent is to be paid, in an amount estimated from time to time by
Landlord by a written notice to Tenant (the ‘Estimated Tax Payments”). Landlord shall deliver to
Tenant as soon as practical

6

 

after the close of each Calendar Year (including the Calendar Year in
which this Lease terminates) a statement showing the amount of the Taxes for such Calendar Year and
the Tax Amount. Tenant hereby acknowledges that Landlord will not be able to deliver such
statement until Landlord receives the real estate tax bills for each Calendar Year, which bills are
currently received six (6) to nine (9) months after the end of each Calendar Year. If the
Estimated Tax Payments paid by Tenant during any Calendar Year are less than the Tax Amount for
such Calendar Year, Tenant shall pay any deficiency to Landlord as shown by such statement within
fifteen (15) days after receipt of such statement. If the Estimated Tax Payments paid by Tenant
during any Calendar Year exceed the Tax Amount due from Tenant for such Calendar Year, such excess
shall be credited against payments of Rent next due hereunder. If no such payments are next due,
such excess shall be refunded by Landlord. Landlord’s failure to deliver an annual statement of
the Taxes for any Calendar Year shall not constitute a waiver or release of, or relieve Tenant
from, its obligations under this Subsection. If Taxes for any period during the Term or any
extension thereof, shall be increased after payment thereof by Landlord, for any reason including
without limitation error or reassessment by applicable governmental or municipal authorities,
Tenant shall pay Landlord upon demand Tenant’s Proportionate Share of such increased Taxes. Tenant
shall pay increased Taxes whether Taxes are increased as a result of increases in the assessment or
valuation of the Property (whether based on a sale, change in ownership or refinancing of the
Property or otherwise), increases in the tax rates, reduction or elimination of any rollbacks or
other deductions available under current law, scheduled reductions of any tax abatement, as a
result of the elimination, invalidity or withdrawal of any tax abatement, or for any other cause
whatsoever. Notwithstanding the foregoing, Tenant shall pay prior to delinquency all taxes,
charges or other governmental impositions assessed against or levied upon Tenant’s fixtures,
furnishings, equipment and personal property located in the Premises, and any Alterations.
Whenever possible, Tenant shall cause all such items to be assessed and billed separately from the
property of Landlord. In the event any such items shall be assessed and billed with the property
of Landlord, Tenant shall pay Landlord its share of such taxes, charges or other governmental
impositions within thirty (30) days after Landlord delivers a statement and a copy of the
assessment or other documentation, showing the amount of such impositions applicable to Tenant’s
property. Tenant shall pay any rent tax or sales tax, service tax, transfer tax or value added
tax, or any other applicable tax on the Rent or services herein or otherwise respecting this Lease.

5.3 Operating Expense Amount. Tenant shall pay to Landlord as Rent, in
addition to the Base Rent and the Tax Amount, an amount (the “Operating Expense Amount”) equal to
Tenant’s Proportionate Share multiplied by the amount of Operating Expenses for each Calendar Year.
Tenant shall pay to Landlord the Operating Expense Amount with respect to each Calendar Year in
monthly installments, at the same time and place as Base Rent is to be paid, in an amount estimated
from time to time by Landlord by a written notice to Tenant (the ‘Estimated Operating Expense
Payments”). Landlord shall deliver to Tenant as soon as practical after the close of each Calendar
Year (including the Calendar Year in which this Lease terminates) a statement showing the amount of
the Operating Expenses for such Calendar Year and the Operating Expense Amount. If the Estimated
Operating Expense Payments paid by Tenant during any Calendar Year are less than the Operating
Expense Amount for such Calendar Year, Tenant shall pay any

7

 

 deficiency to Landlord as shown by such
statement within fifteen (15) days after receipt of such statement. If the Estimated Operating
Expense Payments paid by Tenant during any Calendar Year exceed the Operating Expense Amount due
from Tenant for such Calendar Year, such excess shall be credited against payments of Rent next due
hereunder. If no such payments are next due, such excess shall be refunded by Landlord.
Landlord’s failure to deliver an annual statement of the Operating Expenses for any Calendar Year
shall not constitute a waiver or release of, or relieve Tenant from, its obligations under this
Subsection.

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

6. SERVICES.

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

	 	(a)	 	Repairs and maintenance (and if necessary, replacements) of air conditioning
and heating units providing service to the Premises. Notwithstanding anything
contained herein to the contrary, if any repairs, maintenance or replacements are
necessitated by the act or neglect of Tenant, its agents, servants or employees, then
the cost thereof shall be billed directly to Tenant, and Tenant shall pay Landlord
therefor within fifteen (15) days after receiving such bill. Landlord shall not
otherwise be responsible for the operation of air conditioning and heating units
serving the Premises or the costs thereof, the parties acknowledging that the use and
operation of such units shall be within the sole control of Tenant. Landlord shall
not be responsible for inadequate air-conditioning or
ventilation to the extent the same occurs because Tenant uses any item of equipment
consuming more than 500 watts at rated capacity without providing adequate
air-conditioning and ventilation therefor.
	 
	 	(b)	 	Domestic Water for drinking, lavatory and toilet purposes at those points of
supply provided for nonexclusive general use of other tenants at the Property. In the
event that Tenant uses or requires a materially greater amount of water or refuse
disposal service than the usual and ordinary office use of either of such services,
then Landlord may bill Tenant for the additional cost of such increased use and for
the cost of determining the amount of such increased use, and Tenant shall pay
Landlord for such costs as Rent within fifteen (15) days after receiving such bill.
If as of the Commencement Date, water service is not separately metered for the
Premises, Landlord reserves the right to install separate meters for the Premises at
Tenant’s cost.

8

 

	 	(c)	 	Exterior window washing of all windows in the Premises, weather permitting,
at intervals to be reasonably determined by Landlord.
	 
	 	(d)	 	Refuse disposal service in common with other tenants.

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

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

7. SECURITY DEPOSIT. As additional security for the full and prompt performance by Tenant of
all its obligations hereunder, Tenant has upon execution of this Lease paid to Landlord the amount
set forth in Section 1.10 hereof (the “Security Deposit”), which amount may be applied by Landlord
for the purpose of curing any default by Tenant under this Lease. Landlord shall be permitted to
commingle the Security Deposit with Landlord’s general funds. Landlord shall not be required to
pay any interest on the Security Deposit. If any portion of the Security Deposit is applied to
cure a default by Tenant, Tenant shall, within five (5) days after written demand therefor, deposit
cash with Landlord in an amount sufficient to restore the Security Deposit to its original amount,
and Tenant’s failure to do so shall be a breach of this Lease. If Tenant has not defaulted
hereunder or if Landlord has not applied the full amount of the Security Deposit to said default,
then the Security Deposit, or any portion thereof not so applied by Landlord, shall be applied to
the Base Rent due for the month of January 2004. The Security Deposit is not an advance payment of
Rent or an account of Rent (except as set forth herein), or any part or settlement thereof, or a
measure of Landlord’s damages. The use or application of the Security Deposit or any portion
thereof shall not prevent Landlord from exercising any other right or remedy provided hereunder or
under any Laws and shall not be construed as liquidated damages. In the event Landlord transfers
all or any part of its interest in the Building or this Lease, Landlord shall have the right to
transfer the Security Deposit to the transferee. Upon such transfer, Landlord shall

9

 

thereby be
released by Tenant from all liability or obligation for the return of the Security Deposit.

8. USE. Tenant shall use and occupy the Premises for general office purposes and for no other
purpose, unless otherwise expressly agreed in writing by Landlord. Notwithstanding the foregoing,
Tenant shall not use or occupy the Premises, or permit the Premises to be used or occupied contrary
to or in violation of any Laws or any covenant, condition or restriction of record, or in any
manner that would: (i) cause structural injury to the Premises or the Building; (ii) invalidate
any insurance policy affecting the Premises or the Building; (iii) increase the amount of premiums
for any insurance policy affecting the Premises or the Building; (iv) affect any certificate of
occupancy affecting the Premises or the Building; (v) or may be dangerous to persons or property;
(vi) create a nuisance, or disturb any other occupant of the Building; or (vii) injure the
reputation of the Property or of Landlord.

9. CONDITION OF PREMISES. Tenant’s taking possession of the Premises shall be conclusive
evidence as against Tenant that the Premises were in good, clean and sanitary order, repair and
condition satisfactory to Tenant and at such time free from defects. No promise of Landlord to
alter, remodel or improve the Premises or the Building and no representation respecting the
condition of the Premises or the Building has been made by Landlord to Tenant other than as may be
expressly set forth in this Lease.

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

11. ASSIGNMENT AND SUBLETTING.

11.1 Prohibitions. Tenant shall not, without the prior written consent of
Landlord, undertake any of the following (collectively, a “Transfer”): (a) assign, convey or
mortgage this Lease or any interest hereunder; (b) permit any assignment of, or lien upon this
Lease or Tenant’s interest herein by operation of law or otherwise; (c) sublet the Premises or any
part thereof; or (d) permit the use of the Premises by any parties other than Tenant, its agents
and employees. Any Transfer attempted to be made without complying with this Section 11 shall at
Landlord’s option be null, void and of no effect and shall constitute a default under this Lease.
Neither a Transfer to any party (including

10

 

but not limited to any affiliates or subsidiaries), nor
Landlord’s consent to any other Transfer, nor Landlord’s election to accept any assignee, sublessee
or transferee as Tenant hereunder shall release the original Tenant from any covenant or obligation
under this Lease. Landlord’s consent to any Transfer shall not constitute a waiver of Landlord’s
right to consent to any future Transfer.

11.2 Notice to Landlord. Tenant shall give Landlord written notice of any
proposed Transfer (including, without limitation, a proposed Transfer to an affiliate or
subsidiary) at least forty-five (45) days prior to the effective date of such proposed Transfer.
Such written notice shall include: (a) the name and address of the proposed assignee, sublessee or
transferee (a “Transferee”), and whether the proposed Transferee is an Affiliate (as defined
below), (b) the proposed effective date (which shall not be less than 45 nor more than 180 days
after Tenant’s notice), (c) the portion of the Premises subject to the proposed Transfer (the
“Subject Space”), (d) except if Tenant makes a Transfer to an Affiliate, the terms of the proposed
Transfer and the consideration therefor, (e) except if Tenant makes a Transfer
to an Affiliate, a copy of all documentation pertaining to the proposed Transfer, (f) except
if Tenant makes a Transfer to an Affiliate, current financial statements of the proposed Transferee
certified by an officer, partner or owner thereof, (g) except if Tenant makes a Transfer to an
Affiliate, any other reasonable information to enable Landlord to determine the financial
responsibility, character, and reputation of the proposed Transferee, nature of such Transferee’s
business and proposed use of the Subject Space, and (h) except if Tenant makes a Transfer to an
Affiliate, such other information as Landlord may reasonably require. The term “Affiliate” in this
Lease shall mean an entity that directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with Tenant. For purposes of this
definition, the term “control” shall mean possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of an entity, whether through the
ownership of voting securities, by contract or otherwise.

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

11

 

 Notwithstanding the foregoing, Tenant shall have
the right to make a Transfer of this Lease to an Affiliate without Landlord’s prior consent;
provided that such Transfer shall otherwise be subject to the terms and conditions of Section 11.2
and Section 11.4.

11.4 Terms of Consent. If Landlord consents to a Transfer, or if Tenant
makes a Transfer to an Affiliate: (a) the terms and conditions of this Lease shall in no way be
deemed to have been waived or modified, (b) such consent (if required) shall not be deemed consent
to any further Transfer by either Tenant or a Transferee, (c) no Transferee shall succeed to any
rights provided in this Lease or any amendment hereto to extend the Term of this Lease, expand the
Premises, or lease additional space, any such rights being deemed personal to the original Tenant
and its Affiliates, (d) no Transfer relating to this Lease or agreement
entered into with respect thereto, whether with or without Landlord’s consent, shall relieve
Tenant from liability under this Lease, (e) except if Tenant makes a Transfer to an Affiliate,
Tenant shall deliver to Landlord promptly after execution, an original executed copy of all
documentation pertaining to the Transfer in form reasonably acceptable to Landlord, and (f) except
if Tenant makes a Transfer to an Affiliate, Tenant shall furnish upon Landlord’s request a complete
statement, certified by an independent certified public accountant, or Tenant’s chief financial
officer, setting forth in detail the computation of any profits Tenant has derived and shall derive
from such Transfer. Landlord or its authorized representatives shall have the right at all
reasonable times to audit the books, records and papers of Tenant relating to any Transfer, and
shall have the right to make copies thereof. If the profits derived by Tenant from any Transfer
shall be found understated, Tenant shall within thirty (30) days after demand pay the deficiency,
and if understated by more than 2%, Tenant shall pay Landlord’s costs of such audit. Any sublease
hereunder shall be subordinate and subject to the provisions of this Lease, and if this Lease shall
be terminated during the term of any sublease, Landlord shall have the right to: (i) treat such
sublease as canceled and repossess the Subject Space by any lawful means, or (ii) require that such
subtenant attorn to and recognize Landlord as its landlord under any such sublease. In the event
of default, Landlord is hereby irrevocably authorized, as Tenant’s agent and attorney-in-fact, to
direct any Transferee to make all payments under or in connection with the Transfer directly to
Landlord ( which Landlord shall apply towards Tenant’s obligations under this Lease) until such
default is cured.

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

12

 

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

11.7 Recapture. Notwithstanding anything to the contrary contained in this
Article, Landlord shall have the option, by giving written notice to Tenant within thirty (30) days
after receipt of Tenant’s notice of any proposed Transfer, to recapture the Subject Space. Such
recapture notice shall cancel and terminate this Lease with respect to the Subject Space as of the
date stated in Tenant’s notice as the effective date of the proposed Transfer (or at Landlord’s
option, shall cause the Transfer to be made to Landlord or its agent, in which case the parties
shall execute the Transfer documentation promptly thereafter). If this Lease shall be cancelled
with respect to less than the entire Premises, the Rent reserved herein shall be prorated on the
basis of the number of rentable square feet retained by Tenant in proportion to the number of
rentable square feet contained in the Premises (both as reasonably determined by Landlord), this
Lease as so amended shall continue thereafter in full force and effect, and upon request of either
party, the parties shall execute written confirmation of the same.

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

12. REPAIRS AND ALTERATIONS.

12.1 Tenant’s Repair Obligations. Tenant shall, at its own expense, keep and
maintain the Premises in good and sanitary condition, working order and repair during

13

 

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

12.2 Prohibition on Alterations. Tenant shall not, without the prior written
consent of Landlord, make any alterations, improvements, decorations or additions (collectively,
“Alterations”) to the Premises. Landlord may, in its sole discretion, withhold its consent to any
Alteration which: (i) affects the roof or structural components of the Building; (ii) affects any
heating, ventilating, air conditioning, utility or mechanical systems or equipment in the Building;
(iii) is visible from outside of the Premises; (iv) costs more than $10,000.00 to complete
(including all labor and material costs); or (iv) requires a building permit to perform. Except as
provided in the immediately preceding sentence, Landlord shall not unreasonably withhold its
consent to any Alterations. Landlord’s consent to any Alterations (including, without limitation,
Landlord’s approval of Tenant’s plans, specifications or working drawings therefor), shall impose
no responsibility or liability on Landlord with respect to the completeness, or design sufficiency
thereof or the compliance thereof with all applicable Laws.

12.3 Performance of Alterations. The work necessary to make any Alterations
shall be done by employees of or contractors employed by Landlord or, with Landlord’s prior written
consent, by contractors and subcontractors arranged for by Tenant and approved by Landlord. If
Alterations are, with Landlord’s consent, performed by contractors employed by Tenant, Tenant shall
deliver to Landlord, for its review and approval prior to commencing any
such Alterations, copies of all contracts and subcontracts related to

14

 

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

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

	 	(a)	 	To change the name or street address of the Building or the Property;
	 
	 	(b)	 	To install, affix and maintain any and all signs on the exterior of the
Building, and to prescribe the location and style of the identification sign

15

 

	 	 	 	(including ground mounted sign with panels, if any), logo and/or lettering for the
Premises occupied by the Tenant;
	 
	 	(c)	 	To designate and/or approve, prior to installation, all types of window
shades, blinds, drapes, awnings, window ventilators and other similar equipment, and
to control all internal lighting that may be visible from the exterior of the
Premises;
	 
	 	(d)	 	To show the Premises to prospective tenants at reasonable hours during the
last twelve (12) months of the Term and, if vacated during such year, to prepare the
Premises for re-occupancy, and to show the Premises to current and prospective
insurers, brokers, purchasers and lenders of the Building at reasonable hours upon
reasonable prior verbal notice at any time during the Term;
	 
	 	(e)	 	To retain at all times, and to use in appropriate instances, keys to all
doors within and into the Premises. No locks shall be changed without the prior
written consent of Landlord;
	 
	 	(f)	 	To decorate or maintain or to make repairs, alterations, additions or
improvements, whether structural or otherwise, in and about the Property or the
Building, or any part of any thereof, and for such purposes to enter upon the Premises
upon reasonable prior verbal notice (except in an emergency, in which case no notice
shall be necessary), and, during the continuance of any such work, to take into and
upon or through the Premises all materials required to make such decorations, repairs,
maintenance, alterations or improvements, to erect scaffolding and other structures as
may be reasonably required, to close roads, drives, doors, entryways, public space and
corridors in the Property or the Building on a temporary basis, and to interrupt or
suspend temporarily Building services and facilities, all without abatement of Rent or
affecting any of Tenant’s obligations hereunder, so long as the Premises are
reasonably accessible;
	 
	 	(g)	 	To have and retain a paramount title to the Premises free and clear of any
act of Tenant purporting to burden or encumber it;
	 
	 	(h)	 	To grant to anyone the exclusive right to conduct any business or render any
service in or to the Property, provided such exclusive right shall not operate to
exclude Tenant from the use expressly permitted herein;
	 
	 	(i)	 	To approve the location of fixtures, equipment and other articles of personal
property in and about the Premises and the Building so as not to exceed the legal live
load;
	 
	 	(j)	 	To prohibit the placing of vending or dispensing machines of any kind in or
about the Premises, except for vending or dispensing machines for the sole use of
Tenant and its employees;

16

 

	 	(k)	 	To issue rules and regulations, from time to time, governing the use of the
Parking Areas (as defined below); and
	 
	 	(l)	 	To limit or prevent access to the Property or otherwise take such action or
preventative measures deemed necessary by Landlord for the safety of tenants or other
occupants of the Property or the protection of the Property and other property located
thereon or therein, in case of fire, invasion, insurrection, riot, civil disorder,
public excitement or other dangerous condition, or threat thereof.

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

15. WAIVERS AND INDEMNITIES.

15.1 Waiver.

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

17

 

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

15.2 Indemnification.

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

18

 

	 	 	 	misappropriation
of property) and the reasonable costs relating thereto (including, without limitation,
attorneys’ fees) to the extent any such damage, injury or death is the result of the
negligence or willful misconduct of any of the Landlord Parties, but only to the
extent not covered by Tenant’s insurance and expressly excluding any consequential or
special damages.

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

15.4 No Implicit Waivers. No waiver of any condition expressed in this Lease
shall be implied by any neglect of Landlord to enforce any remedy on account of the violation of
such condition if such violation be continued or repeated subsequently, and no express waiver shall
affect any condition other than the one specified in such waiver and that one only for the time and
in the manner specifically stated. No receipt of moneys by Landlord from Tenant after the
termination in any way of the Term or of Tenant’s right of possession hereunder or after the giving
of any notice shall reinstate, continue or extend the Term or affect any notice given to Tenant
prior to the receipt of such moneys, it being agreed that after the service of notice of the
commencement of a suit or after final judgment for possession of the Premises, Landlord may receive
and collect any Rent due, and the payment of said Rent shall not waive or affect said notice, suit
or judgment.

16. DEFAULTS AND LANDLORD’S REMEDIES.

16.1 Defaults. It shall be a “default” or “event of default” under this
Lease if: (i) Tenant fails to pay, when due, Rent or any installment thereof or any other sum
required to be paid by Tenant under this Lease (including any required replenishment of the
Security Deposit), and such failure continues for more than five (5) days after written notice;
(ii) any guarantor or surety (“Guarantor”) of Tenant’s obligations under this Lease fails to pay,
when due, any sum required to be paid by such Guarantor under any guaranty or surety agreement
(‘Guaranty”) that Landlord may have required in connection with this Lease, and such failure
continues for more than five (5) days after written notice; (iii) Tenant or
any Guarantor fails to observe or perform any of the covenants, conditions or obligations not
relating to the payment of Rent or other sums that Tenant or such Guarantor is required to observe
or perform under this Lease or any Guaranty, respectively, and such failure continues for more than
thirty (30) days after notice thereof to Tenant (unless such failure shall give rise to an
emergency or hazardous condition requiring an immediate cure, in which case, no notice is necessary
and no cure period shall be allowed); provided, however, that Landlord shall not be entitled to
exercise its remedies on account of any default described in this clause (iii) if (a) such default
cannot reasonably be cured within thirty (30) days, (b) Tenant or any Guarantor commences to cure
such default within said thirty (30) day period and thereafter diligently and continuously proceeds
with such cure, and (c) Tenant or any Guarantor cures such default within a reasonable period of
time not to exceed sixty (60) days after

19

 

Landlord’s notice of such default; (iv) the interest of
Tenant in this Lease is levied on under execution or other legal process; (v) an Event of
Bankruptcy (as defined below) occurs; (vi) Tenant or any Guarantor dissolves or ceases to exist;
(vii) Tenant shall attempt to effect a Transfer in violation of Section 11 hereof; or (viii) any
material misrepresentation herein, or material misrepresentation or omission in any financial
statements or other materials provided by Tenant or any Guarantor in connection with negotiating or
entering this Lease or in connection with any Transfer. For purposes of this Lease, an “Event of
Bankruptcy” means the occurrence of any one or more of the following events or circumstances:

	 	(a)	 	If Tenant or any Guarantor shall file in any court a petition in bankruptcy
or insolvency or for reorganization within the meaning of the Federal Bankruptcy Code,
or for arrangement within the meaning of such Code (or for reorganization or
arrangement under any future bankruptcy or reform act for the same or similar relief),
or for the appointment of a receiver or trustee of all or a portion of the property of
Tenant or any Guarantor, or
	 
	 	(b)	 	If an involuntary petition in bankruptcy or insolvency or for reorganization
within the meaning of the Federal Bankruptcy Code shall be filed against Tenant or any
Guarantor, and such petition shall not be vacated or withdrawn within thirty (30) days
after the date of filing thereof, or
	 
	 	(c)	 	If Tenant or any Guarantor shall make an assignment for the benefit of
creditors, or
	 
	 	(d)	 	If Tenant or any Guarantor shall be adjudicated a bankrupt or shall admit in
writing an inability to pay its debts as they become due, or
	 
	 	(e)	 	If a receiver shall be appointed for the property of Tenant or any Guarantor
by order of a court of competent jurisdiction (except where such receiver shall be
appointed in an involuntary proceeding and be withdrawn within thirty (30) days from
the date of his appointment).

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

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

20

 

	 	 	 	and reducing said fair rental
value by, the Costs of Re-Letting [as defined below]), plus any other sum of money and
damages owed by Tenant to Landlord.
	 
	 	(b)	 	Landlord may terminate Tenant’s right of possession and may repossess the
Premises by forcible entry or detainer suit, by taking peaceful possession or
otherwise, without terminating this Lease. If Landlord terminates Tenant’s right of
possession without terminating this Lease, Landlord shall take reasonable measures to
the extent required by law, to relet the same for the account of Tenant, for such rent
and upon such terms as shall be reasonably satisfactory to Landlord. Reasonable
measures shall not obligate Landlord to show the Premises before showing other space
in the Building to a prospective tenant. For the purpose of such reletting, Landlord
is authorized to decorate, repair, remodel, alter or otherwise improve the Premises
and to relet the Premises at such rental rate (which may be higher than the rental
rate then applicable under this Lease), as Landlord reasonably determines to be
necessary to maximize the effective rent on reletting. If Landlord shall fail to
relet the Premises, Tenant shall pay to Landlord as damages the amount of the Rent
reserved in this Lease for the balance of the Term as due hereunder. If the Premises
are relet and a sufficient sum shall not be realized from such reletting after paying
all of the costs and expenses of all decoration, repairs, remodeling, alterations,
installations and additions and the expenses of such reletting (including all
allowances, abatements and other tenant concessions required under then-existing
market conditions) (collectively, the ‘Costs of Re-Letting”), to satisfy the Rent
provided for in this Lease, Tenant shall satisfy and pay the same upon demand therefor
from time to time. Tenant shall not be entitled to any rents received by Landlord in
excess of the Rent provided for in this Lease. Tenant agrees that Landlord may file
suit to recover any sums falling due under the terms of this paragraph (b) from time
to time and that no suit or recovery of any portion due Landlord hereunder shall be
any defense to any subsequent action brought for any amount not theretofore reduced to
judgment in favor of Landlord.
	 
	 	(c)	 	Landlord may perform the obligation which is the subject of such default for
the account and at the expense of Tenant. All costs incurred by Landlord in
performing such obligation, plus an administrative fee equal to fifteen percent (15%)
of such costs, plus all attorneys’ fees and expenses of Landlord incurred in enforcing
any of the obligations of Tenant under this Lease shall become Rent hereunder and
shall be due and payable by Tenant immediately on demand.
	 
	 	(d)	 	Landlord may additionally (i) seek any declaratory, injunctive or other
equitable relief, and specifically enforce this Lease, or restrain or enjoin a
violation or breach of any provision hereof, and (ii) sue Tenant or any Guarantor for
and collect any unpaid Rent which has accrued.

21

 

16.3 Default Interest. If any payments of Rent remain unpaid for more than
five (5) days after the date when due, unless Tenant has not been in default of any monetary
obligation under this Lease within the previous twelve (12) month period, such payments shall bear
interest from the date when due until the date paid at a rate of interest equal to the lesser of:
(i) the maximum rate of interest permitted by applicable Laws; or (ii) six percent (6%) in excess
of the rate announced or published from time to time by Bank One, N.A. at its office in Chicago,
Illinois as its prime or equivalent base rate of interest adopted as a general benchmark from which
Bank One, N.A. determines the floating interest rates chargeable on various loans to borrowers from
time to time. Landlord’s right to receive such interest shall not, in any way, limit any of
Landlord’s other remedies under this Lease or at law or equity.

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

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

22

 

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

17. SURRENDER OF POSSESSION.

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

23

 

abandoned such property, and without accepting title thereto,
Landlord may, at Tenant’s expense, remove, store, destroy, discard or otherwise dispose of all or
any part thereof without incurring liability to Tenant or to any other person, and Tenant shall pay
Landlord immediately upon demand the expenses incurred in taking such actions. Unless prohibited
by applicable Laws, Landlord shall have a lien against such property for the costs incurred in
removing and storing the same. Tenant’s obligations under this Subsection 17.1 shall survive the
expiration or earlier termination of the Term or a termination of Tenant’s right of possession.

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

	 	(a)	 	during the first thirty (30) days following the expiration or earlier
termination of this Lease or the termination of Tenant’s right of possession, one
hundred fifty percent (150%) of the Base Rent for the calendar month immediately
preceding the expiration or termination date of this Lease or the termination of
Tenant’s right of possession; and
	 
	 	(b)	 	from and after the thirty-first (31st) day following the expiration or
earlier termination of this Lease or the termination of Tenant’s right of possession,
two hundred percent (200%) of the Base Rent for the calendar month immediately
preceding the expiration or termination date of this Lease or the termination of
Tenant’s right of possession.

24

 

18. INSURANCE.

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

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

	 	(a)	 	Comprehensive or Commercial General Liability insurance, including
Contractual Liability coverage of the indemnification provisions contained in this
Lease and host liquor liability insurance, with limits for bodily injury or personal
injury to or death of any person, or more than one (1) person, or for damage to
property in an amount of not less than $1,000,000 per occurrence/$3,000,000 aggregate.
The coverage amounts may be provided through an umbrella or excess liability policy.
The Comprehensive or Commercial General Liability policy shall include Landlord,
Landlord’s management agent and any Mortgagee designated by Landlord from time to time
as additional insureds on a primary and non-contributory basis to any insurance
carried by Landlord, Landlord’s management agent and any Mortgagee.
	 
	 	(b)	 	Property damage insurance against ‘all risks” of physical loss for the full
insurable replacement value of the initial build-out of the Premises, all Alterations,
all Personal Property, and of all furniture, trade fixtures, equipment, business
records, merchandise and all other items of Tenant’s personal property on the
Premises.
	 
	 	(c)	 	Worker’s Compensation Insurance in amounts required by the State of Illinois,
including Voluntary Compensation, Broad Form All States Endorsement, and employer’s
liability insurance in an amount of not less than $500,000 per occurrence.

25

 

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

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

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

19. FIRE OR CASUALTY. If the Premises or the Building (including machinery or equipment used
in the operation of the Building) shall be destroyed or damaged by fire or other casualty and if
the Premises or Building may be repaired and restored within two hundred seventy (270) days after
such casualty, then Landlord shall repair and restore the same with reasonable promptness, but only
to the extent insurance proceeds are actually made available to Landlord for purposes of repair and
restoration; provided, however, that Landlord shall only be obligated to repair and restore any
improvements made to the Premises to the extent that: (i) Landlord paid for the initial
construction of such improvements (either directly or through an allowance granted to Tenant), and
(ii) Landlord receives the insurance proceeds related to such improvements under the insurance
described in clause (b) of Subsection 18.2 hereof. Tenant agrees to execute all documents and take
all actions necessary to make the insurance proceeds described in clause (ii) of the immediately
preceding sentence available to Landlord for the repair and restoration of the Premises.
Notwithstanding anything contained herein to the contrary, if the Premises or the Building are
substantially damaged or destroyed during the last twelve (12) months of the Term, either Landlord
or Tenant shall have the right to terminate this Lease as of the date of the fire or other casualty
by giving notice to the other within thirty (30) days after the date of the fire or casualty, in
which event, Rent shall be apportioned on a per diem basis and paid to the date of such fire or
casualty. Notwithstanding anything contained herein to the contrary, if in Landlord’s reasonable
judgment either: (1) such damage renders the Premises untenantable in whole or in part and cannot
reasonably be repaired and restored within two hundred seventy (270) days, or (2) sufficient
insurance proceeds are not or will not be made available to Landlord for

26

 

repair or restoration, or
(3) the cost of the repairs or restoration would exceed twenty five percent (25%) of the
replacement value of the Building, or (4) the nature of such work would make termination of this
Lease necessary or convenient, then Landlord shall have the right to cancel and terminate this
Lease as of the date of such damage upon giving notice to Tenant at any time within ninety (90)
days after such damage shall have occurred. In the event any fire or casualty renders the Premises
untenantable, in whole or in part, and if this Lease shall not be terminated by reason of such
damage, then Base Rent shall abate during the period beginning with the date of such fire or other
casualty and ending with the date when Landlord has substantially completed all repairs to the
Premises required to be completed by Landlord, by an amount bearing the same ratio to the total
amount of Base Rent for such period as the untenantable portion of the Premises bears to the entire
Premises. In any event, Base Rent shall only abate to the extent Landlord actually recovers rent
toss insurance proceeds specifically allocated to the Base Rent due under this Lease. Landlord
shall not otherwise be liable for any inconvenience or annoyance to Tenant or its visitors, or
injury to Tenant’s business resulting in any way from any damage or the repair thereof relating to
any fire or other casualty. Tenant agrees that Landlord’s obligation to restore, and the abatement
of Rent provided herein, shall be Tenant’s sole
recourse in the event of such damage, and waives any other rights Tenant may have under any
applicable Laws to terminate the Lease by reason of damage to the Premises or Pro
perty. Tenant
acknowledges that this Section 19 represents the entire agreement between the parties respecting
damage to the Premises or Property.

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

21. NOTICES.

21.1 Addresses. All notices to be given by one party to the other under this
Lease shall be in writing (except as expressly provided herein to the contrary) and shall be sent
by either: (i) United States certified mail, return receipt requested, postage prepaid, (ii)
national air courier service for overnight delivery, or (iii) hand delivery as follows:

	 	 	 	 	 	 	 
	 

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

	 	 	 	 	 	Two Prudential Plaza
	 

	 	 	 	 	 	180 North Stetson Street, Suite 3275

27

 

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Chicago, Illinois 60601
	 

	 	 	 	 	 	Attention: Vice President-PRISA
	 
	 	 	 	 	 	 
	 

	 	 	 	With a copy to:
	 	PDC Properties, lnc.
	 

	 	 	 	 	 	222 Spring Lake Drive
	 

	 	 	 	 	 	Itasca, Illinois 601 43
	 

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

	 	 	 	To Tenant:
	 	Ulta Salon, Cosmetics & Fragrance, Inc.
	 

	 	 	 	 	 	1135 Arbor Drive

Romeoville, Illinois 60446
	 

	 	 	 	 	 	Attention: Senior Vice President of Real Estate
	 
	 	 	 	 	 	 
	 	 	 	 	or to such other person or at such other address designated by notice sent to
Landlord, and during the Term with a copy to the Premises.

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

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

	 	(a)	 	Any sign, lettering, picture, notice, or advertisement installed within the
Premises or on the Property shall be installed at Tenant’s expense and in compliance
with all Laws. Without obtaining Landlord’s prior, written consent (which consent may
be withheld in Landlord’s sole discretion) no sign, lettering, picture, notice or
advertisement may be placed on any portion of the Premises which is visible from
outside the Premises or on any portion of the Property.
	 
	 	(b)	 	Tenant shall not advertise the business, profession or activities of Tenant
in any manner which violates the letter or spirit of any code of ethics adopted by any
recognized association or organization pertaining thereto, or use the name of the
Building or the business park in which the Building is located for any purpose other
than for identifying Tenant’s business address, or use any picture or likeness of the
Building in any letterheads, envelopes, circulars, notices, advertisements, containers
or wrapping material, without Landlord’s prior consent in writing.

28

 

	 	(c)	 	Except with respect to satellite or other communication dishes or antennas as
may be permitted by applicable Laws and the Park Covenants (as defined below) and as
are installed: (i) in locations on the roof of the Building specified by Landlord;
(ii) subject to Landlord’s reasonable size restrictions, utility and structural load
requirements and screening criteria; (iii) with the use of Landlord’s roofing
contractor; and (iv) subject to other reasonable requirements relating to any
warranty, guaranty or service contract applicable to the roof of the Building, Tenant
shall not place any radio or television antenna on the roof of the Building or on any
other part of the Property other than inside the Premises, or operate or permit to be
operated any musical or sound producing instrument or device inside or
outside the Premises that may be heard outside the Premises. Tenant shall not make
noises, cause disturbances or vibrations or use or operate any electrical or
electronic devices or other devices that emit sound or other waves or disturbances,
or create odors, any of which may be offensive to other tenants and occupants of
the Building or that would interfere with the operation of any device or equipment
or radio or television broadcasting or reception from or within the Building or
elsewhere.
	 
	 	(d)	 	Tenant shall not obstruct sidewalks, roadways, Parking Areas or entrances in
and about the Property. Tenant shall not place objects against doors or windows that
would be unsightly from the exterior of the Building, and will promptly remove same
upon notice from Landlord. Tenant shall store and dispose of refuse as directed by
Landlord, including, without limitation, storing and disposing of all refuse, in a
neat and clean condition so as not to be visible to members of the public and so as
not to create any health or fire hazard.
	 
	 	(e)	 	Tenant shall not make any room-to-room canvass to solicit business from other
tenants in the Building and shall not exhibit, sell or offer to sell, use, rent or
exchange any item or service in or from the Premises.
	 
	 	(f)	 	Tenant shall not waste electricity or water and agrees to cooperate fully
with Landlord to assure the most effective operation of the Building’s heating and air
conditioning systems, and shall not adjust any controls other than room thermostats
installed for Tenant’s use or take any action which could jeopardize the warranties
covering the heating, ventilating or air conditioning systems. Tenant shall comply
with all programs instituted by Landlord under applicable federal, state or local
energy conservation standards or other governmental requirements or directives
(whether mandatory or voluntary).
	 
	 	(g)	 	Door keys for doors in the Premises will be furnished on the Commencement
Date by Landlord. Tenant shall not affix additional locks on doors and shall purchase
duplicate keys only from Landlord. At the end of the Term or earlier termination of
the Lease or upon a termination of Tenant’s right of possession, Tenant shall return
all keys to Landlord

29

 

	 	 	 	and will disclose to Landlord the combination of any safes,
cabinets or vaults left in the Premises in accordance with the terms and conditions of
this Lease.
	 
	 	(h)	 	Tenant assumes full responsibility for protecting the Premises from theft,
robbery and pilferage, which includes keeping doors locked and other means of entry to
the Premises closed and secured. In addition, the parties acknowledge that safety and
security devices, services and programs provided by Landlord, if any, while intended
to deter crime and ensure safety, may not in given instances prevent theft or other
criminal acts, or ensure safety of persons or property. The risk that any safety or
security
device, service or program may not be effective, or may malfunction, or be
circumvented by a criminal, is assumed by Tenant with respect to Tenant’s property
and interests, and Tenant shall obtain insurance coverage to the extent Tenant
desires protection against such criminal acts and other losses. Tenant agrees to
cooperate in any reasonable safety or security program developed by Landlord or
required by applicable Laws.
	 
	 	(i)	 	Peddlers, solicitors and beggars shall be reported promptly to Landlord.
	 
	 	(j)	 	Tenant shall not install or operate machinery or any mechanical devices of a
nature not directly related to Tenant’s permitted use of the Premises.
	 
	 	(k)	 	Tenant shall comply with all covenants, conditions and restrictions of record
encumbering or relating to the Property or any portion of either thereof (including,
without limitation, any declaration of covenants, conditions, restrictions and
easements encumbering the business park in which the Property is located) (the “Park
Covenants”), and with all rules and regulations issued from time to time by Landlord
or the Windham Lakes Business Park Association.
	 
	 	(l)	 	Tenant will not in any manner deface or injure the Property or any part of
either thereof or overload the floors of the Premises.
	 
	 	(m)	 	Tenant will not use the Premises for lodging or sleeping purposes or for any
immoral or illegal purposes.
	 
	 	(n)	 	Tenant shall not at any time manufacture or sell, and shall not at any time
permit the manufacture or sale of any spirituous, fermented, intoxicating or alcoholic
liquors on the Premises or the Property. If Tenant desires to permit the use of
alcoholic beverages on the Premises, it may do so only in connection with social
events not generally open to the public conducted by Tenant wholly within the
Premises, provided that (i) such events shall be in the ordinary course of Tenant’s
business and shall not involve the sale of any food or beverages, (ii) such events
shall not violate any Laws, Park Covenants or other provisions of this Lease, and
shall in no event unreasonably disturb or bother other tenants or occupants of the
Building,

30

 

	 	 	 	and (iii) Tenant shall in all cases obtain, or maintain in full force and
effect full liquor liability insurance in the amount of Tenant’s insurance as required
under Section 18.2(a) and otherwise in accordance with Section 18.1,
Section 18.2 and Section 18.3.
	 
	 	(o)	 	In no event shall Tenant permit on the Property flammables or explosives or
any other article of an intrinsically dangerous nature. If by reason of Tenant’s
failure to comply with the provisions of this Subsection, any insurance coverage is
jeopardized or insurance premiums are increased, in addition to all other rights and
remedies available to Landlord upon a default by Tenant under this Lease, Landlord
shall have the right to require Tenant to make immediate payment of the increased insurance premium, if
any.
	 
	 	(p)	 	Tenant shall not introduce, use, handle, generate, treat, transport, store or
dispose of, or permit the introduction, use, handling, generation, treatment,
transportation, storage or disposal of any Hazardous Materials (as defined below) in,
on, under, to, from, around or about the Premises, the Building or the Property,
except for Hazardous Materials contained in products which are reasonably and
customarily used in general office uses, such as photocopy machine solutions and
cleaning solvents, as long as such Hazardous Materials are only used in compliance
with all Laws (without the need for a special permit) and all manufacturer’s and
supplier’s instructions and recommendations, and in quantities and for purposes which
are reasonably and customarily used in general office uses. Tenant shall indemnify,
defend and hold harmless the Landlord Parties from and against all fines, penalties,
liens, suits, procedures, claims, demands, liabilities, damages (including
consequential damages), actions, causes of action, costs and expenses of every kind
and nature whatsoever (including, without limitation, reasonable attorneys’,
engineers’, experts’ and consultants’ fees and costs of testing, monitoring,
remediation, removal and cleanup), contingent or otherwise, known or unknown, incurred
or imposed, arising directly or indirectly out of or in any way connected with
Tenant’s breach of the covenants set forth in this Subsection 22(p) or otherwise in
connection with the introduction, use, handling, generation, treatment,
transportation, storage or disposal of any Hazardous Materials. Tenant’s obligations
under the immediately preceding sentence shall survive the expiration or earlier
termination of this Lease and a termination of Tenant’s right of possession. For
purposes hereof, “Hazardous Materials” shall mean (i) substances defined as ‘hazardous
substances”, “toxic substances” or “hazardous wastes” in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C.,
Sec. 9061, et. seq.), the Hazardous Materials Transportation Act (49 U.S.C., Sec.
1802), the Resource Conservation and Recovery Act (42 U.S.C., Sec. 6901 et. seq.), the
Toxic Substances Control Act of 1976, as amended (15 U.S.C., Sec. 2601, et. seq.) or
in any other Laws now or hereafter in effect governing similar

31

 

	 	 	 	matters, or in any
regulations adopted or publications promulgated pursuant thereto; (ii) asbestos and
asbestos containing materials; and (iii) petroleum and petroleum based products.
Tenant shall promptly notify Landlord of: (i) any enforcement, cleanup or other
regulatory action taken or threatened by any governmental or regulatory authority with
respect to the presence of any Hazardous Materials on the Premises or the migration
thereof from or to other property, (ii) any demands or claims made or threatened by
any party against Tenant or the Premises relating to any loss or injury resulting from
any Hazardous Materials, (iii) any release, discharge or nonroutine, improper or
unlawful disposal or transportation of any Hazardous Materials on or from the
Premises, and (iv) any matters
where Tenant is required by Laws to give a notice to any governmental or regulatory
authority respecting any Hazardous Materials on the Premises.

23. ESTOPPEL CERTIFICATES; MORTGAGE ISSUES.

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

23.2 Subordination and Attornment. Landlord may sell the Land and become the
tenant under a ground or underlying lease of the Land and this Lease and all rights of Tenant
hereunder will then be subject and subordinate to such underlying lease and any extensions or
modifications thereof. This Lease and all of Tenant’s rights hereunder shall also be subject and
subordinate to any mortgage or mortgages (and the liens thereof) now or at any time hereafter in
force against the Building, the Land and/or the underlying leasehold estate, and to all advances
made or hereafter to be made upon the security thereof. For purposes of this Lease, “Mortgagee”
shall mean the mortgagee, from time to time, under any mortgage granted by Landlord and now or
hereafter encumbering the Property or any portion thereof or interest therein. Tenant shall
execute such further instruments subordinating this Lease to any such mortgage or mortgages as
Landlord from time to time may request. Tenant covenants and agrees that, if by reason of any
default on the part of Landlord herein as tenant under said underlying lease, or as mortgagor under
any mortgage to which this Lease is subject and subordinate, said underlying lease is terminated or
such mortgage is foreclosed by summary proceedings, voluntary agreement or otherwise, Tenant, at
the election of the landlord under said underlying lease or the Mortgagee of such mortgage, as the
case may be, will attorn to and recognize such landlord or Mortgagee as the “Landlord” under this
Lease. Tenant further agrees to execute and deliver at any time upon request of Landlord, any
Mortgagee or any party which shall succeed to the interest of Landlord as tenant under said
underlying lease, any instrument to evidence such attornment. However, in the event

32

 

of attornment,
no Mortgagee or any party which shall succeed to the interest of Landlord as tenant under said
underlying lease shall be: (i) liable for any act or omission of Landlord, or subject to any
offsets or defenses which Tenant might have against Landlord (prior to such Mortgagee or other
party becoming Landlord under such attornment), (ii) liable for any security deposit or bound by
any prepaid Rent not actually received by such Mortgagee or other party, or (iii) bound by any
future modification of this Lease not consented to by such Mortgagee or other party. Tenant waives
the provision of any law now or hereafter in effect which may give to
Tenant any right of election to terminate this Lease or to surrender possession of the
Premises in the event any proceeding is brought by landlord under said underlying lease or the
Mortgagee under any such mortgage to terminate said underlying lease or foreclose such mortgage.
At the election of any Mortgagee (expressed in a document signed by such Mortgagee), such Mortgagee
may make all or some of Tenant’s rights and interests in this Lease superior to any mortgage held
by such Mortgagee and the lien thereof.

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

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

24. MISCELLANEOUS.

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

24.2 Real Estate Brokers. Tenant represents that Tenant has dealt with no
broker in connection with this Lease other than the Broker, and that insofar as Tenant knows, no
other broker or finder negotiated this Lease or is entitled to any fee or commission in connection
herewith. Tenant agrees to indemnify, defend and hold the Landlord Parties

33

 

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

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

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

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

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

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

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

34

 

24.9 [Intentionally omitted].

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

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

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

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

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

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

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

35

 

25. PARKING. Tenant agrees not to utilize (and shall cause its agents, employees and invitees
to not utilize) more than sixty three (63) parking spaces in the parking areas located on the Land
(the “Parking Areas”). Tenant agrees to comply with, and to cause its agents, employees and
invitees to comply with, all rules and regulations which may from time to time be promulgated by
Landlord with respect to use of the Parking Areas. Tenant shall be responsible for supervising the
use of the Parking Areas by Tenant’s agents, employees and invitees in order to confirm compliance
with the terms set forth in this Section 25. If Tenant is in default of its covenants and
obligations set forth in this Section 25, Landlord shall have the right, but not the obligation, in
addition to all other rights and remedies under this Lease, to employ or engage one or more
individuals to supervise the use of the Parking Areas by Tenant’s agents, employees and invitees in
order to confirm compliance with the terms set forth in this Section 25, and Tenant shall reimburse
Landlord for all costs incurred in connection therewith within ten (10) days after being billed
therefor.

26. ERISA. Tenant hereby represents and warrants that:

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

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

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

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

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

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

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

28. AMERICANS WITH DISABILITIES ACT. The parties acknowledge that Title Ill of the Americans
With Disabilities Act of 1990 (42 U.S.C. §12101 et seq.) and regulations and guidelines promulgated
thereunder, as all of the same may be amended and supplemented from time to time (collectively
referred to here as the “ADA”)

36

 

 established requirements for accessibility and barrier removal, and
that such requirements may or may not apply to the Premises and Property depending on, among other
things: (a) whether Tenant’s business is deemed a “public accommodation” or “commercial facility”,
(b) whether such requirements are “readily achievable”, and (c) whether a given alteration affects
a “primary function area” or triggers “path of travel” requirements. The parties hereby agree
that: (x) Landlord shall be responsible for ADA Title Ill compliance on the common areas of the
Property and in the Building common areas and in the common area lobby restrooms, if any, (y)
Tenant shall be responsible for ADA Title Ill compliance in the Premises, and (z) Landlord may
perform, or require that Tenant perform, and Tenant shall be responsible for the cost of, ADA Title
Ill “path of travel” requirements triggered by Alterations in the Premises. Tenant shall be solely
responsible for requirements under Title I of the ADA relating to Tenant’s employees.

[Signature Page to Follow]

37

 

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

	 	 	 	 	 
	 	 	TENANT
	 
	 	 	 	 
	 	 	ULTA SALON, COSMETICS & FRAGRANCE, INC.,

a Delaware corporation
	 
	 	 	 	 
	 	 	By: /s/ Charles R. Weber
	 	 	Name: Charles R. Weber
	 

	 	Its:
	 	Executive Vice President & COO/CFO
	 
	 	 	 	 
	 	 	By: /s/ Douglas W. Walrod
	 	 	Name: Douglas W. Walrod
	 	 	Its: Senior Vice President of Real Estate
	 
	 	 	 	 
	 	 	LANDLORD
	 
	 	 	 	 
	 	 	THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
	 	 	a New Jersey corporation
	 
	 	 	 	 
	 

	 	By:
	 	PDC Properties, Inc., its agent
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Rex Davis
	 

	 	Its:
	 	Portfolio Manager

38

 

Exhibit A

Plan of the Premises

Exhibit A, Page 1

 

 

Exhibit B

Legal Description of the Land

     LOT 1 IN WINDHAM LAKES RESUBDIVISION NO. 22, BEING A SUBDIVISION OF PART OF THE WEST HALF OF
SECTION 29, TOWNSHIP 37 NORTH, RANGE 10 EAST OF THE THIRD PRINCIPAL MERIDIAN, ACCORDING TO THE PLAT
THEREOF RECORDED ___, 2000, AS DOCUMENT NO. ___, IN WILL COUNTY,
ILLINOIS.

Exhibit B, Page 1

 

 

Exhibit C

Form of Tenant Estoppel Certificate

Lease Date:                                         , 200_

Landlord: The Prudential Insurance Company of America

Tenant:                                                             

Premises: Unit No.                                         

Rentable Area:                                                             square feet

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

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

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

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

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

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

     6. The Lease provides for a primary term of                      (___) months,
commencing on                     , 20___and ending on                     ,20___. The Lease
contains an option for                      (___) additional terms of
                     (___) years each upon the

Exhibit C, Page 1

 

 

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

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

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

 

 

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

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

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

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

Exhibit C, Page 2

 

 

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

	 	 	 	 	 
	 	 	TENANT
	 
	 	 	 	 
	 	 	                                                            ,
	 
	 	 	 	 
	 	 	                                        
	 
	 	 	 	 
	 	 	                                        corporation
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Its:	 	 
	 

	 	 	 	 

Exhibit C, Page 3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}]]