INDUSTRIAL BUILDING LEASE
This Industrial Building Lease is made the 30th day of September, 2008, between STURTEVANT VENICE, LLC, an Illinois limited liability company, JES STURTEVANT VENICE, LLC, an Illinois limited liability company, RES STURTEVANT VENICE, LLC, an Illinois limited liability company, MSP STURTEVANT VENICE, LLC, an Illinois limited liability company, as tenants in common (hereinafter referred to collectively as " Landlord" ), having Landlord' s principal office at c/o HSA Commercial Real Estate, 233 South Wacker Drive, Suite 350, Chicago, Illinois 60606, and BWAY CORPORATION, as successor by merger to Bway Manufacturing, Inc., a Delaware corporation, (hereinafter referred to as " Tenant" ).
WHEREAS, Tenant is in occupancy and possession of the Premises (as such term is defined below) pursuant to that certain Sublease dated December 5, 2003 between Tenant (as Sublessee) and Buske Lines, Inc., an Illinois corporation (as Sublessor), as amended by First Amendment dated June 28, 2005 (the " Sublease" ) and Landlord has acquired a fee simple interest and owns the Premises;
WHEREAS, the Sublease, and the Master Lease to which the Sublease is subject, have been terminated by written agreement of Tenant, the Sublessor and Master Lease Lessor effective immediately prior to the making of this Lease;
WHEREAS, the parties hereto desire that Tenant enter into a new lease directly with Landlord on the terms and conditions contained herein;
NOW, THEREFORE, Landlord does hereby demise and lease to the Tenant 100,000 square feet of space (as depicted on Exhibit " A" attached hereto and incorporated herein by reference) in the Building located at 10277 Venice Avenue, Sturtevant, Wisconsin, which Building consists of a total of 196,875 square feet of warehouse space (the leased space depicted on Exhibit " A" hereto being hereafter referred to as the " Premises," and the Building and accompanying land, driveways and parking areas being hereafter referred to as the " Project" ), upon the following Terms, Covenants and Conditions.
(a) Initial Term The initial term of this Lease shall commence as of October 2, 2008 (the " Commencement Date" ) and shall terminate February 28, 2014 (the " Initial Term" ). As used herein, " Term" shall mean the Initial Term, together with any Extended Term agreed to by the parties pursuant to subparagraph (b) below.
(b) Option to Extend Initial Term :
(i) Tenant shall have the right and option to extend the Initial Term subject to all the provisions contained in this Lease, except for Fixed Rent (which shall be calculated as set forth in Section l(b)(ii) below), for up to two (2) consecutive extensions (each, an " Extension Option" ) of five (5) years each (each, an " Extended Term" ), provided that Tenant is not in default
hereunder beyond the expiration of any notice and cure periods herein provided at the time of the exercise of the option and provided the cure is made timely. For each Extended Term, Tenant must elect to continue leasing all of the square footage of the Premises it is then leasing upon the expiration of the Initial Term, or if applicable, the immediately preceding Extended Term. Tenant shall exercise an Extension Option by delivering written notice to Landlord no later than 270 days prior to the expiration of the Initial Term, or if applicable, the immediately preceding Extended Term. Upon determination of Tenant' s new Fixed Rent for an Extended Term (as determined pursuant to Section 1 (b)(ii) below), the Extended Term shall commence without notice or further documentation upon the expiration of the Initial Term, or if applicable, the immediately preceding Extended Term, except that the parties hereto shall execute an amendment to the Lease evidencing the new Fixed Rent payment schedule for the Extended Term.
(ii) Fixed Rent for each Extended Term shall be at the then " Prevailing Market Rate," determined in the manner described as follows: Together with delivery of Tenant' s notice of its exercise of an Extension Option, Tenant also shall specify Tenant' s selection of a real estate appraiser who shall act on Tenant' s behalf in determining the Prevailing Market Rate as described herein. Within ten (10) days after Landlord' s receipt of Tenant' s selection of a real estate appraiser, Landlord, by written notice to Tenant, shall designate a real estate appraiser, who shall act on Landlord' s behalf in the determination of the prevailing market lease rate for comparable leases of space in Racine County, WI (herein referred to as the " Prevailing Market Rate" ). Within twenty (20) days of the selection of Landlord' s appraiser, the two (2) appraisers shall render a joint written determination of the Prevailing Market Rate, which determination shall take into consideration the following factors: (a) the creditworthiness of Tenant; (b) prevailing market incentives such as tenant fix-up allowances and rent concessions; (c) the cost of all improvements to the Premises made by or on behalf of Tenant, either made at Tenant' s sole cost and expense, or for which Tenant has reimbursed Landlord, or is obligated to reimburse Landlord; (d) the leasehold transaction being consummated with no liability to either Landlord or Tenant for any real estate broker' s or finder' s commission; (e) any differences between the Building and comparable buildings located in the Racine County, WI market area, including without limitation, age, location, height, ceiling height, number and location of truck loading bays, and type of building; (f) amenities offered; (g) the cost and provision of parking spaces, (h) size of the Premises; and (i) length of term. If the two (2) appraisers are unable to agree upon a joint written determination within said twenty (20) day period, each appraiser shall render its written determination of the Prevailing Market Rate and the two appraisers shall select a third appraiser within such twenty (20) day period. Within twenty (20) days after appointment of the third appraiser, the third appraiser shall render a written determination of the Prevailing Market Rate. If the third appraiser does not agree with either of the rates determined by the two prior appraisals, then the median of the three (3) determinations shall be final, conclusive and binding, and such median determination shall constitute the Prevailing Market Rate hereunder. All appraisers selected in accordance with this Section shall have at least ten (10) years' prior experience in the commercial/industrial leasing market of the market area and shall be members of the American Institute of Real Estate Appraisers or similar professional organization. If either Landlord or Tenant fails or refuses to select an appraiser, the other appraiser shall alone determine the Prevailing Market Rate. Landlord and Tenant agree that they shall be bound by the determination of the Prevailing Market Rate pursuant to this Section l(b)(ii). Landlord shall bear the fees and expenses of its appraiser; Tenant shall bear the fees and expenses of its appraiser; and
Landlord and Tenant shall share equally the fees and expenses of the third appraiser, if any. Notwithstanding any of the foregoing, however, in no event shall the Prevailing Market Rate as determined pursuant to this Section, be less than the Fixed Rent for the last month of the preceding term.
(iii) Additional Rent shall continue to be payable during any Extended Term pursuant to the provisions of Sections 2(b) and (c) below.
2. RENT - Tenant hereby covenants and agrees to pay to Landlord at its office or such other place as Landlord may from time to time designate, as rent, including Fixed Rent and Additional Rent, for the Premises during the Initial Term of this Lease, a rental as set forth below. Fixed Rent is payable monthly in advance on the first day of each and every month. Additional Rent is payable in the same manner as Fixed Rent. Installments of Fixed Rent and Additional Rent will be due and owing from Tenant commencing October 2, 2008.
(a) Fixed Rent . Fixed Rent shall be payable in equal monthly installments as set forth below:
PERIOD $/Sq. Ft/Yr. Monthly Installment October 2008 - February 2009 $ 4.208 $ 35,066.67 March 2009 - February 2010 $ 4.334 $ 36,116.67 March 2010 - February 2011 $ 4.464 $ 37,200.00 March 2011 - February 2012 $ 4.598 $ 38,316.67 March 2012 - February 2013 $ 4.736 $ 39,466.67 March 2013 - February 2014 $ 4.878 $ 40,650,00
(b) Additional Rent . As Additional Rent, the Tenant will pay its Proportionate Share, as defined below, of all real estate taxes attributable to the Project, its Proportionate Share of all costs of insuring the Building and its Proportionate Share of all common area maintenance charges (hereinafter referred to as " CAM Charges" ). CAM Charges include, but are not limited to, costs of grass cutting, landscape and parking lot maintenance, snow removal, exterior painting, utilities for common areas, utilities not separately metered, maintenance of those parts of the fire prevention equipment and sprinkler system that serve the Premises and other parts of the Building in common, management fees, and other operating expenses. As part of CAM charges, Tenant agrees to pay a management fee (" Management Fee" ) to Landlord equal to 1.5% of the monthly Fixed Rent due for each and every month of the Initial Term and Extended Term of this Lease. Landlord shall include the Management Fee with the other components of Additional Rent payable by Tenant as outlined below. CAM Charges shall not include the items listed on Exhibit " B" attached hereto and incorporated herein by reference. Tenant' s Proportionate Share is computed by dividing the square
feet of the Premises by the total square feet of warehouse and office space in the Building. Tenant' s Proportionate Share is computed to be 50.8%.
(c) Estimates of Additional Rent . In order to provide for current payments of Additional Rent, Landlord shall give Tenant, upon execution of this Lease and from time to time during the Term hereof, written notice of its estimate of Additional Rent which will be due in the calendar year for which written notice of such estimate is given. Tenant shall pay to Landlord, as an Additional Rent deposit, in monthly installments commencing on the first day of the Term of this Lease, and/or the first day of the calendar month following that month in which Landlord notifies Tenant of the estimated Additional Rent, one-twelfth (1/12) of the Additional Rent due in any said calendar year as estimated by Landlord. If at any time it appears to Landlord that the Additional Rent due Landlord for any calendar year will vary from its estimate thereof by more than ten percent (10%), Landlord may, by written notice to Tenant, revise its estimate for such year. Subsequent Additional Rent deposits by Tenant for such year shall be based on the revised estimate. Tenant shall pay Landlord the Additional Rent deposit in the same manner as Fixed Rent.
After the end of the calendar year for which estimates of Additional Rent were made, actual Additional Rent due for such year shall be calculated. If the actual Additional Rent exceeds the deposits paid by Tenant based on Landlord' s estimates, Landlord shall bill Tenant for the excess amount and Tenant shall pay to Landlord said amount within ten (10) days of billing. If the actual Additional Rent is less than the deposits paid by Tenant based on Landlord' s estimate thereof, Tenant shall receive from Landlord a refund of the excess so paid by Tenant within ten (10) days of the completion of the accounting calculation. This covenant shall survive the expiration or termination of this Lease.
3. SECURITY DEPOSIT Tenant shall, within five (5) business days after the Commencement Date, deposit with Landlord $27,270.83 in readily available funds as security for the payment of rent and the compliance by Tenant with other terms of this Lease.
4. TAXES - Tenant shall pay, as Additional Rent, its Proportionate Share of all real estate taxes and assessments levied or imposed against the Premises during the Term of this Lease. For the purposes hereof, real estate taxes for any calendar year during the Term shall be real estate taxes which are payable in such year regardless of when such taxes are assessed or become a lien. If a special assessment payable in installments is levied against the Premises, real estate taxes for such calendar year shall include only the installment of such assessment arid any interest payable or paid during such year. Real estate taxes that are payable during the first and last calendar year in the Term shall be prorated between Landlord and Tenant.
5. RECORDING OF LEASE Recording of the Lease will be done by a Memorandum of Lease, to be executed by Landlord and Tenant and recorded on or prior to the Commencement Date.
6. UTILITIES - Tenant agrees to promptly pay all electric, gas, water and sewer services and other utilities used or consumed on the Premises. As further outlined in Section 26 hereof, Landlord shall arrange and pay for separately metering the electrical and gas service to the Premises. Also as further outlined in Section 26 hereof, Tenant shall arrange and pay for the installation of its own
telephone system to serve the Premises. To the extent any utilities at the Premises are not separately metered, Tenant shall pay, as Additional Rent, all charges reasonably allocable to Tenant, as determined by Landlord in Landlord' s sole discretion, by reason of Tenant' s use of the particular utility service. Tenant shall promptly pay all charges for electricity and telephone service directly to the applicable utility authority. If and when any other utility is separately metered, Tenant shall contract for under its own name and promptly pay all charges for such utility use by Tenant to the applicable utility authority.
7. REPAIRS, REPLACEMENT, MAINTENANCE, SECURITY, HOUSEKEEPING, SANITATION .
(a) Landlord shall, at its cost and expense, be responsible for regular maintenance and repair of the Building roof (including roof membrane and any skylights) and structural elements. The " structural elements" of the Building shall be defined as the foundations, footings, bearing and exterior walls. The unexposed electrical, plumbing and sewerage systems including those portions of the systems lying outside the Premises, gutters and downspouts on the Building, and the parking lot areas shall be maintained by Landlord and the expenses of same shall be included as part of CAM Charges. In addition, Landlord shall be responsible for replacement of the HVAC units which serve only the Premises (which expense shall also be included as part of CAM Charges). Landlord shall conduct, at Tenant' s expense as part of CAM Charges, regular maintenance of the HVAC units, Notwithstanding the foregoing, Tenant shall be responsible, at its sole cost, for any maintenance or repair caused by the negligence or willful act of Tenant or Tenant' s employees. Landlord shall be responsible for performing, but at Tenant' s expense as part of the CAM Charges, snow removal and common driveway and parking lot repair, unless damage to any common driveway or the parking lot is caused by Tenant, in which case Tenant shall be solely responsible.
If Landlord fails to perform any of its repair obligations hereunder for a period of thirty (30) days after receipt of written notice from Tenant to Landlord specifying the needed repair and demanding Landlord' s repair thereof (unless the repair involves a condition dangerous to person or property, or which will become worse if no immediate action is taken to effect such repair, in which event such default shall be cured forthwith upon Tenant' s demand), Tenant may, at its option, cause such repair to be made and Tenant' s reasonable cost of performance shall be paid to Tenant by Landlord within thirty (30) days. The foregoing rights shall not be exclusive of any other right or remedy hereby to which Tenant may be entitled as a result of Landlord' s failure to make required repairs hereunder.
(b) Tenant shall maintain all other portions of the Premises in good repair and shall be responsible for all repairs and replacement of all other building systems which are located exclusive within or which exclusively service the Premises, including, docks and accessories, security system and fire prevention equipment, plumbing and electrical. Tenant will also be responsible for and shall conduct throughout the Term hereof: (a) housekeeping operations to keep the Premises free from dirt and debris, (b) insect and rodent control including trapping not only in the Premises, but also the dock area and building perimeter and (c) trash removal.
(c) Landlord will construct and provide to Tenant at Landlord' s sole cost and expense, within sixty (60) days after the date of this Lease, two (2) dumpster enclosures (the " Dumpster Enclosures" ) to contain and shelter Tenant' s two steel 7' x8' x6' dumpsters with plastic covers used for trash and routine waste dumpsters at the Premises (the " Garbage Dumpsters" ). The Dumpster Enclosures shall be for Tenant' s exclusive use during the Term, shall become Landlord' s property upon the expiration or early termination of the Lease, and will be located at a location or locations convenient to the Premises as designated by Tenant so long as such location does not hinder the rights of other tenants at the Building or violate local ordinances and subdivision/industrial park covenants and conditions relating to enclosing of dumpsters exterior to buildings (collectively, " Enclosure Requirements" ). The Dumpster Enclosures shall be built in accordance with the specifications set forth on Exhibit " D" attached hereto and made a part hereof. The aforesaid sixty day period may be extended as reasonably necessary for delivery of the Dumpster Enclosures, if Landlord has pursued the design and construction of the Dumpster Enclosures diligently, but due to delayed approval by the relevant owners' association, or other factors out of Landlord' s control, the Dumpster Enclosures cannot be completed within such sixty days. Tenant shall not be deemed to be in default under this Lease for failure to comply with Enclosure Requirements prior to delivery of the Dumpster Enclosures.
(d) In the event that either Tenant or Landlord receives a notice from the Renaissance Association or another organization or association managing the business park in which the Premises is located, indicating that any dumpsters used by Tenant at the Premises, other than the Garbage Dumpsters, are not in compliance with the business park rules or any covenants, conditions and restrictions recorded against the Project (together, the " Project Rules" ), and require screening, Tenant shall cause such dumpsters to be screened in accordance with the Project Rules. In the event that such notice is received, Landlord shall reimburse Tenant for the cost of compliance (not to exceed $10,000.00) with such Project Rules on the following terms and conditions: (i) Landlord approves of the design and plans for such screening; (ii) the screening is done in accordance with the Project Rules, the Lease and all applicable laws and regulations; (iii) Landlord receives written confirmation from the Renaissance Association or other organization or association requiring compliance with the Project Rules that the dumpsters have been screened in compliance with the Project Rules; and (iv) Landlord receives satisfactory evidence from Tenant of its out of pocket costs to enclose such dumpsters.
(a) Property .
(i) Landlord will keep in effect insurance protecting the Building against loss by fire, windstorm and other perils customarily provided under an extended coverage endorsement. Tenant shall pay its Proportionate Share of the cost of such insurance premiums as Additional Rent.
(ii) Tenant shall provide insurance covering Tenant' s inventory and personal property and Tenant' s leasehold improvements for their fall replacement value. Landlord shall not be obligated to provide insurance protection for Tenant' s personal property, inventory, or Tenant' s leasehold improvements.
6 (b) Indemnification - Liability Insurance .
(i) Landlord shall not be liable to Tenant for any loss or damage to Tenant or
to any other person or to the property of Tenant or of any other person except to the extent that such loss or damage shall be caused by the negligence, misconduct or intentionally tortious act of Landlord, or its agents, servants or employees, or by the failure of Landlord to perform its respective obligations hereunder.
(ii) Except as caused by the negligence, misconduct or intentionally tortious act of Landlord, or its agents, servants or employees, or by the failure of Landlord to perform its respective obligations hereunder, Tenant shall and does hereby agree to indemnify and save harmless Landlord, its successors or assigns, from all claims and demands of every kind, that may be brought against Landlord, its successors or assigns or any of them for or on account of any damage, loss or injury to persons or property in or about the Premises and its appurtenances, including damage to the Premises, (A) arising from or out of Tenant' s use or occupancy thereof, or (B) occasioned wholly or in part by any act or omission of Tenant, its agents, servants, contractors, employees or invitees, and from any and all costs and expenses, reasonable counsel fees and other charges which may be imposed upon Landlord, its successors and assigns, or which Landlord, its successors or assigns may incur in consequence thereof. The provisions of this subsection 8(b)(ii) shall survive for a period of one (1) year after the termination of this Lease. Notwithstanding the foregoing, Tenant' s indemnity obligations relating to Hazardous Materials shall be exclusively governed by Section 21(c) below.
(iii) Except as caused by the negligence, misconduct or intentionally tortious act of Tenant, or its agents, servants or employees, or by the failure of Tenant to perform its obligations hereunder. Landlord shall and does hereby agree to indemnify and save harmless Tenant, its successors or assigns, from all claims and demands of every kind, that may be brought against Tenant, its successors or assigns or any of them for or on account of any damage, loss or injury to persons or property in or about the Project (other than the Premises) and its appurtenances, (A) arising from or out of Landlord' s or any other tenant' s use or occupancy thereof or (B) occasioned wholly or in part by any act or omission of Landlord, its respective agents, servants, contractors, employees or invitees, and from any and all costs and expenses, reasonable counsel fees and other charges which may be imposed upon Tenant, its successors and assigns, or which Tenant, its successors or assigns may incur in consequence thereof. The provisions of this subsection 8(b)(iii) shall survive for a period of one (1) year after the termination of this Lease. Notwithstanding the foregoing, Landlord' s indemnity obligations relating to Hazardous Materials shall be exclusively governed by Section 21(c) below.
(iv) Tenant covenants and agrees that Tenant will, throughout the term of this Lease, carry and pay for comprehensive commercial general liability with contractual liability insurance coverage with a company reasonably satisfactory to Landlord, with a minimum limit of $3,000,000.00 combined single limit per occurrence, and will furnish Landlord with an original signed counterpart of the certificate evidencing such coverage. All insurance maintained by Tenant under this Lease shall name Landlord and Landlord' s designee as additional insureds, and shall also contain a provision stating that such policy or policies shall not be canceled or materially altered
except after 30 days' prior written notice to Landlord, and if applicable, Landlord' s designee. If at any time Tenant does not comply with the covenants made in this subsection, in addition to any other remedies to which Landlord may be entitled, Landlord may, at Landlord' s option, cause insurance as aforesaid to be issued, and Tenant agrees to pay the premium for such insurance within 10 days of Landlord' s written demand, together with 15% of such premium for reimbursement to Landlord for Landlord' s ancillary administrative expenses related thereto.
(c) Subrogation . Tenant and Landlord shall have included in all insurance policies relating to the Premises obtained by Tenant and Landlord hereunder, a waiver by the insurer of all right of subrogation against Landlord or Tenant in connection with any loss or damage thereby insured against. To the full extent permitted by law, Tenant and Landlord each waives all right of recovery against the other for, and agrees to release the other from liability for, loss or damage to the extent such loss or damage is covered by valid and collectible insurance in effect at the time of such loss or damage or would be covered by the insurance required to be maintained under this Lease by Tenant or Landlord, including any deductible thereunder. Such waiver also applies to each party' s directo