Looking for an agreement? Search from over 1 million agreements now.

Build To Suit Lease Agreement

This is an actual contract by Petco Animal Supplies.
Browse the agreement preview below and buy the entire agreement for $35

Sectors: Retail
Governing Law: California , View California State Laws
Effective Date: February 20, 1998
Search This Document
BUILD TO SUIT LEASE AGREEMENT


BETWEEN


INDUSTRIAL DEVELOPMENTS INTERNATIONAL, INC.


AS LANDLORD


AND


PETCO ANIMAL SUPPLIES, INC.


AS TENANT


DATED FEBRUARY 20, 1998


LEASE INDEX


Section Subject


1 Basic Lease Provisions
2 Demised Premises
3 Term
4 Minimum Rent
5 Tenant's Right to Cease Operations
6 Additional Rent
7 Use of Demised Premises
8 Insurance
9 Utilities
10 Taxes and Other Impositions
11 Maintenance and Repairs
12 Tenants' Personal Property; Indemnity
13 Tenant's Fixtures
14 Signs
15 [INTENTIONALLY OMITTED]
16 Governmental Regulations
17 Environmental Matters
18 Plans and Specifications for Construction of Demised Premises
19 Tenant Alterations and Additions
20 Services by Landlord
21 Fire and Other Casualty
22 Condemnation
23 Tenant's Default


Page 1


24 Landlord's Right of Entry
25 Mortgagee's Rights
26 Estoppel Certificate
27 Landlord Liability
28 Notices and Payments
29 Brokers
30 Assignment and Subleasing
31 Termination or Expiration
32 Late Payments
33 Protective Covenants
34 Dispute Resolution Procedure
35 Waiver of Landlord's Lien
36 Quiet Enjoyment
37 Miscellaneous


Exhibit "A" Legal Description
Exhibit "A-1" Site Plan
Exhibit "B" Permitted Encumbrances
Exhibit "C" Expansion Land
Exhibit "C-1" Alternate Expansion Land
Exhibit "D" Prevailing Market Rate
Exhibit "E" Allowance Work
Exhibit "F" Environmental Reports
Exhibit "G" Base Building Plans and Specifications
Exhibit "G-1" Additional Plans and Specifications
Exhibit "G-2" Tenant's Work
Exhibit "H" Subordination, Non-Disturbance and Attornment Agreement
Exhibit "I" Protective Covenants
Exhibit "J" Landlord's Agreement


BUILD TO SUIT LEASE AGREEMENT


THIS LEASE AGREEMENT (this "Lease") is made this 20th day of February, 1998 ("Lease Date"), by and between INDUSTRIAL DEVELOPMENTS INTERNATIONAL, INC., a Delaware corporation ("Landlord"), and PETCO ANIMAL SUPPLIES, INC., a _______________________ corporation ("Tenant") (the words "Landlord" and "Tenant" to include their respective legal representatives, successors and permitted assigns where the context requires or permits).


W I T N E S S E T H:


1. Basic Lease Provisions. The following constitute the "Basic Lease Provisions" of this Lease:


Page 2


(a) Demised Premises: As described in Section 2 of this Lease. The term "Base Building", as used in this Lease, shall mean the Building (as hereinafter defined) constructed by Landlord in accordance with this Lease prior to construction of Expansion Improvements (as defined in Section 3.1), if any.


(b) Building Square Footage: Approximately 258,000 square feet (subject to adjustment pursuant to Section 18(j) of this Lease), as such amount may be increased by the square footage of the Expansion Improvements, if any.


(c) Annual Minimum Rent (subject to adjustment pursuant to Section 18(j) of this Lease):


Lease Year one (1) $745,620.00


Lease Year two (2) $758,520.00


Lease Years three (3) through five (5) $771,420.00


Lease Years six (6) and seven (7) $879,780.00


The Annual Minimum Rent for the Base Building is sometimes referred to in this Lease as the "Base Building Annual Minimum Rent".


(d) Monthly Minimum Rent Installments (subject to adjustment pursuant to Section 18(j) of this Lease):


Lease Year one (1) $62,135.00


Lease Year two (2) $63,210.00


Lease Years three (3) through five (5) $64,285.00


Lease Years six (6) and seven (7) $73,315.00


(e) Lease Commencement Date: The date of Substantial Completion (as defined in Section 3 of this Lease) or April 7, 1998, whichever is later.


(f) Minimum Rent Commencement Date: The Lease Commencement Date


(g) Term: Seven (7) years following the Lease Commencement Date (subject to adjustment in accordance with Section 3 of this Lease).


Page 3


(h) [INTENTIONALLY OMITTED]


(i) Permitted Use: Storage, warehousing and distribution of pet supplies, pet food and pet-related goods of all kinds and general office use ancillary thereto (collectively, the "Primary Use") and (2) subject to the limitations hereinafter specified in Section 7(a) of this Lease and in this subsection (i), storage, warehousing and distribution permissible under applicable laws and regulations of governmental authorities having jurisdiction over the Demised Premises (collectively, "Governmental Requirements") and under the Protective Covenants (as defined in Section 33), and general office use ancillary thereto; the Permitted Use (a) shall never include any use prohibited by Section 17 of this Lease, (b) shall never extend to or allow the use of radioactive or biohazardous materials at the Demised Premises, (c) shall never include any heavy manufacturing, the manufacture or production of chemicals or petroleum (or distillates thereof) or any other use wherein a Hazardous Substance (as defined in Section 17) constitutes the principal or primary product of the business to be conducted at the Demised Premises and (d) must not result in a material increase in the wear and tear on the Demised Premises, as compared to the Primary Use; and with respect to any Permitted Use other than the Primary Use, such Permitted Use must not, in the reasonable judgment of Landlord, result in a material increase in the risk of Contamination (as defined in Section 17) at the Demised Premises, as compared to the Primary Use. The Primary Use may be altered only in accordance with Section 7(a) of this Lease.


(j) Addresses for notice:


Landlord: Industrial Developments International, Inc. Monarch Tower 3424 Peachtree Road, Suite 1500 Atlanta, Georgia 30326 Attention: Chief Operating Officer


Tenant: PETCO ANIMAL SUPPLIES, INC. 9125 Rehco Road San Diego, California 92121-2270 Attn: Property Manager


AND:


PETCO ANIMAL SUPPLIES, INC.
3801 Rock Creek Boulevard
Joliet, Illinois 60431
Attn: Property Manager


Page 4


(k) Address for rental payments:


Industrial Developments International, Inc. P.O. Box 930190 Atlanta, Georgia 31193


(l) Broker(s): Lee & Associates 3535 Inland Empire Boulevard Ontario, California 91764


2. Demised Premises. For and in consideration of the rent hereinafter reserved and the mutual covenants hereinafter contained, Landlord does hereby lease and demise unto Tenant, and Tenant does hereby lease and accept from Landlord, that certain parcel of real property (the "Land") containing approximately 13.23 acres, which Land is situated in DuPage County, City of Joliet, Illinois, within Rock Run Business Park (the "Project") and is more particularly described in Exhibit "A" attached hereto and by this reference made a part hereof, together with and including all buildings, structures, driveways, parking lots, walkways, landscaping and other appurtenances thereto and all other improvements constructed or placed on the Land in accordance with this Lease, at any time during the Term, including specifically, but without limitation, a building (the "Building") containing approximately 258,000 square feet of office and warehouse space, which is located on the Land as shown on Exhibit "A-1" attached hereto (collectively, the "Demised Premises"). This Lease and the rights of Landlord andTenant under this Lease are subject to the matters set forth on Exhibit "B" attached hereto (herein referred to as "Permitted Encumbrances").


3. Term.


(a) To have and to hold the Demised Premises for a term ("Term") which will commence on the Lease Date and shall expire seven (7) years after the Lease Commencement Date; provided, however, that if the Lease Commencement Date is a day other than the first day of a calendar month, the first Lease Year (as hereinafter defined) will also include the period between the Lease Commencement Date and the end of the calendar month in which the Lease Commencement Date occurs and, thereafter, each Lease Year shall commence on the anniversary of the first calendar day of the first full calendar month after the Lease Commencement Date. The Term of this Lease shall end on the final day thereof without the requirement of notice from either party to the other. The term "Lease Year", as used in this Lease, shall mean the 12-month period commencing on the Lease Commencement Date, and each 12-month period thereafter during the Term. If this Lease terminates in


Page 5


accordance with its terms on a day other than the last day of the final Lease Year, Minimum Rent (as defined in Section 4) and Additional Rent (as defined in Section 5) for the Lease Year in which such termination occurs shall be prorated as of the date of such termination.


3.1 Option to Expand and Extend. Landlord hereby grants to Tenant a continuing right and option to expand the Demised Premises and to extend the Term, upon and subject to the following terms and conditions:


(a) At any time prior to the end of the third (3rd) Lease Year, Tenant shall have the right and option ("Expansion Option") to expand the Demised Premises by causing Landlord to construct the Expansion Improvements (as that term is herein defined) in accordance with all the provisions of this Section 3.1; provided that Tenant shall have the right to extend the term ("Expansion Option Term") of the Expansion Option in the manner provided in Section 3.2; provided further, however, that the right of Tenant to exercise the Expansion Option shall be subject to the conditions precedent set forth in Section 3.4. Tenant shall exercise the Expansion Option by giving written notice ("Expansion Notice") to Landlord prior to expiration of the Expansion Option Term. If Tenant fails to give the Expansion Notice timely, the Expansion Option granted Tenant in this Section 3.1 shall lapse unexercised and shall be of no further force or effect; provided, however, that if Tenant fails to exercise the Expansion Option prior to the end of the Expansion Option Term, the right of Tenant to exercise the Expansion Option shall not finally lapse and terminate until the tenth (10th) business day following the receipt of a written notice from Landlord (which may not be given prior to the expiration of the Expansion Option Term) advising Tenant that the Expansion Option Term has expired and Landlord did not receive the Expansion Notice. The term "Expansion Improvements", as such term is used in this Section 3.1, shall mean an expansion of the Building containing a maximum of approximately 250,000 square feet (subject to limitations of applicable zoning and other laws) and an absolute minimum of 100,000 square feet of additional space, together with additional parking area as may be required by applicable law or the Final Expansion Plans (as defined in Section 3.1(d) of this Lease), whichever is greater; provided that such Expansion Improvements shall otherwise be, in all respects, subject to then applicable laws. If Tenant timely exercises the Expansion Option, and the Expansion Improvements will exceed 100,000 square feet, the Demised Premises must expand to include the 13.38 acres of land ("Expansion Land") more particularly described on Exhibit "C" attached to this Lease and made a part hereof by this reference. If Tenant exercises the Expansion Option, and elects to cause Landlord to construct the minimum of 100,000 square feet of additional space, only that portion of the Expansion Land containing 4.73 acres


Page 6


and described on Exhibit C-1 attached to this Lease and made a part hereof by this reference ("Alternate Expansion Land") shall become part of the Demised Premises and the remaining acreage of the Expansion Land will no longer be available to become part of the Demised Premises and will no longer be subject to this Lease in any respect. Accordingly, the Expansion Land (or only the Alternate Expansion Land, if applicable) shall become part of the Demised Premises as of the Expansion Completion Date (as defined in Section 3.1(e), below) and thereafter be subject to all of the terms and provisions of this Lease. Landlord and Tenant stipulate and agree that the term "Expansion Land Value", as used in this Section 3.1, shall mean a sum of money calculated by multiplying the square footage of the Expansion Land (or so much thereof as becomes part of the Demised Premises), as calculated to the nearest ten thousandth of a foot, times the Expansion Land Cost Per Foot (as hereinafter defined). The term "Expansion Land Cost Per Foot" shall mean the sum of $2.00. So long as the Expansion Option remains in effect and unexercised by Tenant, Landlord agrees that Landlord will not utilize or permit to be utilized the Expansion Land for any purpose without the prior written consent of Tenant, to be given or withheld by Tenant in its sole discretion.


(b) The Expansion Notice shall include proposed specifications and a proposed site plan, prepared at the expense of Tenant, (i) describing the Expansion Improvements as contemplated by Tenant, (ii) showing the location and configuration of the Expansion Improvements, including, without limitation, the manner in which the Expansion Improvements will be connected to the Building (collectively "Expansion Requirements") and (iii) specifying an amount of money which Tenant authorizes Landlord to expend to prepare the Preliminary Expansion Plans (the "Preliminary Plan Expenses"). The Expansion Notice must also include the financial information described in Section 3.4.


(c) Within forty-five (45) days after receipt of the Expansion Notice, Landlord will, at the expense of Tenant, cause to be prepared preliminary construction drawings and preliminary construction specifications, including an estimated construction cost breakdown and a construction schedule (collectively "Preliminary Expansion Plans") for the Expansion Improvements. The Preliminary Plan Expenses actually and reasonably incurred by Landlord in obtaining the Preliminary Expansion Plans shall either (i) if Tenant withdraws its exercise of the Expansion Option in accordance with subsection (c) below, be reimbursed to Landlord by Tenant within thirty (30) calendar days after receipt from Landlord of a written request for payment, supported by invoices or other reasonable documentation which evidence the costs or (ii) be included in the Expansion Costs (as hereinafter defined). Landlord agrees that the Preliminary Expansion Plans will be prepared on the basis of the Expansion Requirements and such additional requirements and comments as may be provided by Tenant to Landlord in


Page 7


writing; provided, however, that Landlord shall have no duty or obligation to incur any expense in obtaining the Preliminary Expansion Plans in excess of the Preliminary Plan Expenses (as such sum may be increased in the discretion of Tenant). Tenant will, in good faith, cooperate with Landlord in the preparation of the Preliminary Expansion Plans and shall provide Landlord with such additional information as Landlord may reasonably request in order to prepare the Preliminary Expansion Plans in a manner which will be consistent with the intended use by Tenant of the Expansion Improvements. The Preliminary Expansion Plans shall be prepared with a level of detail sufficient to allow computation of the Expansion Costs for the purpose of calculating the Expansion Rent (as hereinafter defined). Landlord and Tenant agree that the exterior appearance and general quality of the Expansion Improvements shall be consistent with the exterior appearance and general quality of the Building; in addition, the Expansion Improvements must (i) have bay size and clear height the same as the Base Building, (ii) have no greater proportion of office space than the Base Building, (iii) have the same level and quality of sprinkler and fire safety systems as the Base Building, (iv) have no improvements in the warehouse area other than improvements consistent with the Base Building or mandated by Governmental Requirements and (v) provide for truck docks such that the ratio of the number of truck docks to the total square footage of the Expansion Improvements will not exceed the same ratio for the Base Building. Not later than forty-five (45) calendar days after receipt of the Expansion Notice, Landlord shall submit to Tenant the proposed Preliminary Expansion Plans together with an estimated cost statement associated therewith. With respect to the cost of the general construction contract, Landlord shall include, as part of the estimated cost statement, not less than three (3) competitive bids; the general contractors from whom bids are solicited shall be subject to the approval of Tenant, such approval not to be unreasonably withheld or delayed. Tenant shall have thirty (30) calendar days from receipt of the proposed Preliminary Expansion Plans and estimated cost statement to notify Landlord of approval or disapproval by Tenant. Any such notice of disapproval shall set forth in detail and with specificity the aspects of the Preliminary Expansion Plans which are not acceptable to Tenant. Landlord shall make those changes in the Preliminary Expansion Plans which are reasonably requested by Tenant and, within ten (10) business days after receipt of the written notice from Tenant, submit the revised portion of the Preliminary Expansion Plans to Tenant; as part of such revisions, Landlord shall also revise, to the extent necessary as a result of the changes requested by Tenant, and submit to Tenant the construction schedule and cost estimate for the Expansion Improvements. Tenant shall have the right to approve or disapprove any such resubmission for a period of ten (10) business days after receipt; if no written notice of approval or disapproval is given by Tenant, the resubmission shall conclusively be deemed to have been disapproved. Tenant


Page 8


shall have no obligation to accept the cost estimate of Landlord and Landlord shall have no obligation to change its cost estimate except as a result of manifest error; as set forth below, the estimated costs shall become the "Expansion Costs" only on the basis of mutual approval of Landlord and Tenant. Landlord shall (A) use its best efforts to obtain final, unappealable approval of the Preliminary Expansion Plans and the Final Expansion Plans (as hereinafter defined) by all governmental authorities having jurisdiction, and by the Association to the extent required by the Protective Covenants and otherwise satisfy all Governmental Requirements (as defined in Section 16) applicable to the construction of the Expansion Improvements and development of the Expansion Land, in accordance with the Final Expansion Plans, (B) timely file all applications required to obtain such approvals and respond timely to requests by the applicable authority for additional information and otherwise diligently pursue such approvals, (C) keep Tenant generally apprised of the status of the efforts by Landlord to obtain the approvals and (D) allow Tenant to participate, at its own expense, in the efforts to obtain the approvals. If a required approval is denied, Landlord shall diligently pursue any available appeal process. If Tenant does not approve the cost estimates or construction schedule submitted by Landlord to Tenant, or if Landlord is unable to provide Tenant with assurance (which shall be described or set forth in a written notice from Landlord) acceptable to Tenant that the Expansion Improvements contemplated by the Preliminary Expansion Plans and the Final Expansion Plans can be constructed in accordance with requirements of the Association and all applicable Governmental Requirements, Tenant may, as its exclusive remedy, by written notice to Landlord, withdraw its election to exercise the Expansion Option. Upon such withdrawal, the Expansion Option shall automatically be reinstated just as though the prior exercise of the Expansion Option had not occurred. If Tenant approves in writing the Preliminary Expansion Plans, cost estimate and construction schedule for the Expansion Improvements, as submitted and resubmitted by Landlord in accordance with this subsection (c), the cost estimate and construction schedule which are so approved in writing by Tenant are hereinafter referred to as the "Expansion Costs" and the "Expansion Construction Schedule", respectively. At such time, if ever, that Tenant approves in writing the Preliminary Expansion Plans, the Expansion Costs, and the Expansion Construction Schedule, Landlord shall, if Landlord is not then the owner of the Expansion Land, proceed to acquire title to the Expansion Land or the Alternate Expansion Land, as may be required, in the manner described in Section 3.1(j). Tenant acknowledges that the estimated cost of the Expansion Improvements to be submitted by Landlord to Tenant (and which will become the Expansion Costs only when approved by Tenant in accordance with this subsection (c)) will be the sum of (1) the Expansion Land Value, plus (2) all costs and expenses of any nature, whether generally characterized as "hard" or "soft" costs, which Landlord estimates will be


Page 9


incurred by Landlord and payable to a third party in connection with the design and construction ("Construction Costs") of the Expansion Improvements plus (3) interest on all Construction Costs, accruing from each particular date the cost or expense is estimated to be paid, at a rate equal to the Prime Rate (as defined in Section 32) plus one percent (1%), and plus (4) a construction management fee payable to Landlord (which shall be in addition to any fees payable to the general contractor) which will not exceed ten percent (10%) of the Construction Costs. Landlord and Tenant agree that the Expansion Costs shall constitute the basis for the calculation of Expansion Rent and shall be subject to adjustment only for Change Orders (as defined in Section 18(a)) approved by Tenant. Landlord and Tenant shall each act in good faith in their efforts to develop Preliminary Expansion Plans, Expansion Costs and an Expansion Construction Schedule which are mutually acceptable.


(d) After approval by Tenant of the Preliminary Expansion Plans, the Expansion Construction Schedule and the Expansion Costs, Landlord shall promptly and diligently proceed with preparation of final plans and specifications for the Expansion Improvements. Within thirty (30) calendar days after the occurrence of such approval by Tenant, Landlord shall prepare (with the cost of such preparation being part of the Expansion Costs) and submit to Tenant a set of proposed plans and specifications, based upon the Preliminary Expansion Plans, covering all work to be performed by Landlord in constructing the Expansion Improvements. Tenant shall have ten (10) business days after receipt thereof to review the proposed plans and specifications and give to Landlord a written notice of approval or disapproval; provided that each day after the tenth (10th) business day that the notice is given by Tenant shall constitute a day of Permitted Delay. Tenant acknowledges that the Expansion Improvements will likely be constructed on a "fast track" basis and that Landlord shall have the right and option to submit various parts of the proposed plans and specifications from time to time during said 30-day period and the time period for approval of any part of the proposed plans and specifications shall commence upon receipt of each submission. If Tenant gives written notice of disapproval of any of the proposed plans and specifications, such notice of disapproval shall set forth in detail and with specificity the aspects of the proposed plans and specifications which are not acceptable to Tenant. Landlord shall make those changes which are reasonably requested by Tenant and promptly submit the revised portion of the proposed plans and specifications to Tenant. Landlord must, in any event, make such changes as may be necessary to achieve conformance with the Preliminary Expansion Plans. Tenant shall have no right to request any changes which would materially alter the exterior appearance or basic nature of the Building or the Expansion Improvements, as contemplated by the Preliminary Expansion Plans. If Tenant fails to approve any portion of the proposed plans and


Page 10


specifications so resubmitted to Tenant within seven (7) business days after receipt of such resubmission, each day after the seventh (7th) business day that the approval is given by Tenant shallconstitute a day of Permitted Delay. Tenant may not disapprove the revisions of the proposed plans and specifications unless Landlord has unreasonably failed to incorporate comments of Tenant. Tenant shall, in its review of the proposed plans and specifications, act reasonably and in good faith. The final plans and specifications for the Expansion Improvements, as so approved by Tenant, are hereinafter referred to as the "Final Expansion Plans." After approval by Tenant of the Final Expansion Plans, Landlord shall proceed with construction of the Expansion Improvements with reasonable diligence (and with the same quality materials and workmanship that the Building was constructed), and otherwise in accordance with this Lease, Governmental Requirements and the Permitted Encumbrances, free of all liens arising in any manner out of such construction. The Expansion Improvements will be constructed in accordance with the Expansion Construction Schedule, subject to extension for Permitted Delay. There shall be no material variation from the Final Expansion Plans and no change in the Expansion Costs, except pursuant to Change Orders approved by Tenant in the same manner as Change Orders for the Plans and Specifications (and at the sole cost and expense of Tenant). In connection with construction of the Expansion Improvements, Landlord and its contractors shall undertake all such steps as may be reasonable and practicable to prevent interference of such construction with the use and enjoyment by Tenant of the Demised Premises. If, after determination of the Expansion Costs, the imposition or enactment of any Governmental Requirement necessitates a change in either the Preliminary Expansion Plans or the Final Expansion Plans which will increase the Expansion Costs, Landlord shall pay such increase (without increasing the Expansion Costs, the Minimum Rent or the Additional Rent) unless the required change is necessary because of the particular use of the Demised Premises by Tenant; if the required change is necessary because of the particular use of the Demised Premises by Tenant, the increase in cost shall be included in the Expansion Costs, in accordance with this subsection (d), and shall be payable by Landlord in the same manner as all other Expansion Costs. Without limiting any of the foregoing provisions of this subsection (d), the provisions of Sections 18(f) and (h) shall, in the manner set forth therein, apply to the Expansion Improvements.


(e) Upon the Expansion Completion Date (as that term is herein defined), the Expansion Improvements and the Expansion Land (or the Phase I Expansion Land, if applicable) shall become part of the Demised Premises and the Expansion Improvements shall automatically be governed by all the terms and provisions of this Lease, and shall be deemed to be included in the definition of "Demised Premises" for all purposes, except that, commencing on the Expansion Completion Date,


Page 11


Tenant shall pay, in addition to the Base Building Annual Minimum Rent and as part of the Minimum Rent, the Expansion Rent (as that term is hereinafter defined). The Expansi
-- End of Preview --
Home| About Us| FAQ| Subscription | Contact Us |