Exhibit 10.16
SECOND AMENDMENT TO LEASE AGREEMENT
THIS SECOND AMENDMENT TO LEASE AGREEMENT is entered into as of the 5th day
of March, 2003, by and between ProLogis-Macquarie Kentucky I LLC, a Delaware
limited liability company ("Landlord"), and Innotrac Corporation ("Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant have entered into a Lease dated as of the 23rd
day of April, 2002, and as amended by that certain First Amendment To Lease
Agreement dated October 15, 2002 (such Lease, as heretofore and hereafter
modified, being herein referred to as the "Lease") pursuant to which Landlord
leased to Tenant approximately 330,000 square feet located at 1226 Aviation
Blvd. Hebron, KY 41048 (the "Original Premises"); and
WHEREAS, Landlord and Tenant desire to expand the Premises by 66,000 square
feet in addition to modifying certain other terms and conditions as set forth
below.
NOW THEREFORE, in consideration of Ten Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Landlord and Tenant agree as follows:
1. Effective on March 1, 2003 (the "Second Expansion Premises Commencement
Date"), the Premises shall hereby be expanded to include those certain premises
consisting of approximately 66,000 rentable square feet (the "Second Expansion
Premises"), commonly known as 1242 Aviation Blvd., Hebron, Kentucky, and as more
fully described on the attached Exhibit A. The Premises as described in the
Lease shall be revised to include the Second Expansion Premises and shall
further be revised to reflect a total square footage of approximately 396,000
square feet.
2. The Lease Term for the Second Expansion Premises shall commence on the
Second Expansion Premises Commencement Date and shall continue through the end
of the original lease term July 31, 2007.
3. The total monthly Base Rent for the Premises and the Second Expansion
Premises, during the Lease Term as defined herein, shall be due and payable to
Landlord in accordance with Paragraph 4 of the Lease equal to the following
amount for the respective period set forth below:
Period Amount
------ -----------------
March 1, 2003 through December 31, 2003 $84,837 per month
January 1, 2004 through July 31, 2007 $92,675 per month
4. Effective on the Second Expansion Premises Commencement Date, Tenant's
Proportionate Share of the Building and Project shall be revised to reflect the
amount for the respective periods set forth below:
Tenant's Proportionate Tenant's Proportionate
Period Share of Building Share of Project
------ ---------------------- ----------------------
March 1, 2003 through December 31, 2003 91.7% 91.7
January 1, 2004 through July 31, 2007 100% 100%
5. Effective on March 1, 2003, the Initial Estimated Monthly Operating
Expense Payments shall be as follows:
Monthly Charge
--------------
Common Area Charges: $ 5,142.00
Taxes: 9,075.00
Insurance: 1,815.00
----------
Total $16,032.00
6. Tenant Improvements.
(a) Landlord agrees to furnish or perform at Landlord's sole cost and
expense those items of construction and those improvements (the "Tenant
Improvements") specified below:
1. Install additional warehouse lighting.
2. Install ventilation system in warehouse area.
3. Install additional dock equipment.
Any other items shall require prior approval from Landlord.
Landlord shall pay for the Tenant Improvements up to a maximum amount
of $75,000.00, and Tenant shall pay for the cost of the Tenant Improvements in
excess of such amount. If the cost of the Tenant Improvements is estimated to
exceed such amount, such estimated overage shall be paid by Tenant before
Landlord begins construction and a final adjusting payment based upon the actual
cost of the Tenant improvements shall be made when the Tenant Improvements are
complete.
(b) If Tenant shall desire any changes, Tenant shall so advise
Landlord in writing and Landlord shall determine whether such changes can be
made in a reasonable and feasible manner. Any and all costs of reviewing any
requested changes, and any and all costs of making any changes to the Tenant
Improvements which Tenant may
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request and which Landlord may agree to shall be at Tenant's sole cost and
expense and shall be paid to Landlord upon demand and before execution of the
change order.
(c) Landlord shall proceed with and complete the construction of the
Tenant Improvements within a commercially reasonable period of time.
(d) Except for incomplete punch list items, Tenant shall have and hold
the Premises as the same shall then be without any liability or obligation on
the part of Landlord for making any further alterations or improvements of any
kind in or about the Premises.
7. Effective on March 1, 2003, Addendum 1 of the Lease, captioned "Right Of
First Refusal", is intentionally deleted and no longer in force or effect.
8. Effective on March 1, 2003, Addendum 5 of the Lease, captioned
"Cancellation Option", shall be revised to reflect the following:
"Provided no Event of Default shall then exist and no condition shall
then exist which with the passage of time or giving of notice, or
both, would constitute an Event of Default, Tenant shall have the
right at any time on or before the first day of the 30th month of the
Lease Term to send Landlord written notice (the "Termination Notice")
that Tenant has elected to terminate this Lease effective on the last
day of the 36th month of the Lease Term with respect to the Premises
consisting of approximately 396,000 square feet.
If Tenant elects to terminate this Lease pursuant to the immediately
preceding sentence, the effectiveness of such termination shall be
conditioned upon Tenant paying to Landlord $2,217,622.00
contemporaneously with Tenant's deliver of the Termination Notice to
Landlord. Such amount is consideration for Tenant's option to
terminate and shall not be applied to rent or any other obligation of
Tenant. Landlord and Tenant shall be relieved of all obligations
accruing under this Lease after the effective date of such termination
but not any obligations accruing under the Lease prior to the
effective date of such termination."
9. With the exception of those terms and conditions specifically modified
and amended herein, the Lease shall remain in full force and effect in
accordance with all its terms and conditions. In the event of any conflict
between the terms and provisions of this Amendment and the terms and provisions
of the Lease, the terms and provisions of this Amendment shall supersede and
control.
10. All capitalized terms used but not defined herein which are defined in
the Lease shall have the same meaning herein as in the lease.
IN WITNESS WHEREOF, the parties hereto have signed this Second Amendment To
Lease Agreement as of the day and year first above written.
Landlord:
PROLOGIS-MACQUARIE KENTUCKY I LLC
Signed and acknowledged in the By: ProLogis Management Incorporated,
presence of: a Delaware corporation, Agent
By: By:
--------------------------------- ------------------------------------
Printed Name: Name: Douglas A. Kiersey, Jr.
----------------------- Title: Senior Vice President
By:
---------------------------------
Printed Name:
-----------------------
Signed and acknowledged in the Tenant:
presence of: INNOTRAC CORPORATION
By: /s/ Molly C. Jones By: /s/ David L. Gamsey
--------------------------------- ------------------------------------
Printed Name: Molly C. Jones Name: David L. Gamsey
Title: CFO
By: /s/ Shanin Crowther
---------------------------------
Printed Name: Shanin Crowther
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EXHIBIT A
SITE PLAN
Tenant: Innotrac Corporation.
(SITE PLAN)
AIRPARK INTERNATIONAL DISTRIBUTION CENTER
1230 AVIATION BOULEVARD
Boone County, Kentucky
BUILDING FIVE
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