Exhibit 10.17
SECOND AMENDMENT TO LEASE
THIS SECOND AMENDMENT TO LEASE (the "Amendment") is executed as of the 23rd
day of June, 2005, to be effective as of the Effective Date (as hereafter
defined) by and between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New
Jersey corporation ("Landlord"), and INNOTRAC CORPORATION, a Georgia corporation
("Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant have heretofore entered into that certain
lease dated as of September 17, 2002, as amended pursuant to that certain First
Amendment to Lease dated April 4, 2003 (collectively, the "Lease"), pursuant to
which Tenant is leasing approximately 204,307 square feet of rentable area (the
"Existing Premises") in the building located at 1180 W. Remington Boulevard in
Romeoville, Illinois (the "Building"). Capitalized terms that are not otherwise
defined in this Amendment shall have the meanings ascribed to them in the Lease;
WHEREAS, Tenant desires to lease from Landlord and Landlord desires to
lease to Tenant an additional 51,254 feet of gross rentable area adjacent to the
Existing Premises;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Additional Premises. As of June 1, 2005 (the "Effective Date"), Landlord
hereby leases to Tenant, and Tenant hereby leases from Landlord, the 51,254
square feet of gross rentable area in the cross hatched area in the south east
corner of the Building depicted as the "Innotrac Corporation Released Space" on
Exhibit A attached hereto and made a part hereof (the "Additional Premises") for
the Term. For all periods from and after the Effective Date, Exhibit A to the
Lease shall be superseded by Exhibit A attached hereto and made a part hereof.
From and after the Effective Date the Premises shall consist of both the
Existing Premises and the Additional Premises, constituting 255,561 feet of
rentable area in the aggregate. From and after the Effective Date, all
references to the Premises in the Lease shall be deemed to refer to the Existing
Premises and the Additional Premises.
2. Base Rent and Tenant's Proportionate Share.
(a) For all periods from and after the Effective Date, Section 1.09 of the
Lease shall be superseded by Exhibit B attached hereto and made a part hereof.
(b) As of the Effective Date Tenant's Proportionate Share under the Lease
shall be 56.68% (rather than 45.30%).
(c) Notwithstanding anything to the contrary contained in the Lease or this
Amendment, Tenant shall not be obligated to pay Base Rent with respect to the
20,577 square feet of the Additional Premises until the completion of the Tenant
Improvements (as such term is defined in the Work Letter).
3. Possession of the Additional Premises. Possession of the Additional
Premises shall be tendered to Tenant by Landlord on the Effective Date in their
"as-is" condition, subject to Landlord's obligations set forth in the Work
Letter Agreement attached hereto as Exhibit C. Tenants talking possession of any
portion of the Additional Premises shall be conclusive evidence when the Tenant
took possession (unless otherwise expressly provided in the Work Letter
Agreement attached hereto in Exhibit C). Other than as set forth in Exhibit C,
no promise of Landlord to alter, remodel or improve the Existing Premises or the
Additional Premises, and no representation respecting the condition of the
Existing Premises or the Additional Premises has been made by Landlord to
Tenant.
4. Real Estate Broker. Other than with respect to NAI Hiffman (the
"Landlord's Broker") and CBRE (the "Tenant's Broker"), insofar as each party
knows, no other broker negotiated this Amendment or is entitled to any
commissions in connection herewith. Each party agrees to indemnify, defend and
hold the other and its employees, agents and their officers and partners
harmless from and against any claims resulting from a breach of the foregoing
representation. Landlord agrees to pay a commission to Landlord's Broker which
will in turn pay Tenant's Broker in connection with this Amendment pursuant to a
separate agreement.
5. Full Force and Effect, Inconsistency. Except as set forth in this
Amendment, the terms, covenants, conditions and agreements of the Lease shall
remain unmodified and otherwise in full force and effect. In the event of any
inconsistency between the terms of the Lease and the terms of this Amendment,
the terms of this Amendment shall control.
6. Miscellaneous.
(a) The preambles to this Amendment are incorporated into the body of this
Amendment as if restated herein.
(b) Interpretation of this Amendment shall be governed by the laws of the
State of Illinois.
(c) The mutual obligations of the parties as provided herein are the sole
consideration for this Amendment and no representations, promises or
inducements have been made by the parties other than as appear in this
Amendment. This Amendment may not be amended except in writing signed by
both parties.
(d) This Amendment shall not be binding until executed and delivered by
both parties.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first above written.
LANDLORD:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA,
a New Jersey corporation
By: PDC Properties, Inc., its agent
By: /s/ Rex Davis
------------------------------------
Name: Rex Davis
Title: Asset Manager
TENANT:
INNOTRAC CORPORATION,
a Georgia corporation
By: /s/ Robert J. Toner, JR
------------------------------------
Name: Robert J. Toner, JR
Title: VP of Logistics
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Exhibit A
Premises
See Attached
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Exhibit B
Schedule of Base Rent Payments
Existing Premises
(204,307 square feet)
Lease Year Annual Base Rent. Total Annual Base Rent Monthly Installments
- ---------- --------------------- ---------------------- --------------------
10/1/04 through 9/30/05 $3.81 per square foot $778,409.67 $64,867.47
10/1/05 through 9/30/06 $3.92 per square foot $800,833.44 $66,740.29
10/1/06 through 9/30/07 $4.04 per square foot $825,400.28 $68,783.36
10/1/06 through 11/30/07 $4.16 per square foot $849,917.12 $70,826.43
Additional Premises
(51,254 square feet)
Lease Year Annual Base Rent. Total Annual Base Rent Monthly Installments
- ---------- --------------------- ---------------------- --------------------
Effective Date through 9/30/05 $3.33 per square foot $170,675.82 $14,222.99
10/1/05 through 9/30/06 $3.43 per square foot $175,801.22 $14,650.10
10/1/06 through 9/30/07 $3.53 per square foot $180,926.62 $15,077.22
10/1/06 through 11/30/07 $3.64 per square foot $186,564.56 $15,547.05
** Notwithstanding anything to the contrary contained in the Lease or this
Amendment, Tenant shall not be obligated to pay Base Rent with respect to
the 20,577 square feet of the Additional Premises until the completion of
the Tenant Improvements (as such term is defined in the Work Letter).
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Exhibit C
Work Letter
1. Landlord shall perform improvements to the Additional Premises in accordance
with the space plan attached hereto as Schedule 1 (the "Space Plans") and any
related construction drawings and related architectural and engineering
drawings reasonably prepared by Landlord's architect (such construction drawings
and related architectural and engineering drawings, together with the Space
Plans, the "Plans"). The improvements to be performed by Landlord in accordance
with the Plans shall be limited to the following: (i) Demolish existing office
area to reduce the office square footage to 4,295 rentable square feet and
restore the balance of the space to warehouse space, (ii) Install in break room
area standard Vinyl composite tile (VCT), (iii) Demolish and reinstall
multi-stalled mens and womens restrooms in accordance with applicable codes, and
(iv) Install restroom in the south west area of the warehouse in accordance
with applicable codes (collectively, the "Tenant Improvements"). No
(collectively, the ("Landlord Work"). It is agreed that construction of the
Landlord Work will be completed at Landlord's sole cost and expense (subject to
the terms of Paragraph 2 below) using Building standard methods, materials, and
finishes. Landlord shall enter into a direct contract for the Landlord Work
with a general contractor selected by Landlord. In addition, Landlord shall have
the right to select and/or approve of any subcontractors used in connection with
the Landlord Work.
2. If Tenant shall request any revisions to the Plans, Landlord shall have such
revisions prepared at Tenant's sole cost and expense and Tenant shall reimburse
Landlord for the actual out of pocket cost of preparing any such revisions to
the Plans, plus any applicable state sales or use tax thereon, upon demand.
Promptly upon completion of the revisions, Landlord shall notify Tenant in
writing of the increased cost in the Landlord Work, if any, resulting from such
revisions to the Plans. Tenant, within two (2) business days, shall notify
Landlord in writing whether it desires to proceed with such revisions. In the
absence of such written authorization, Landlord shall have the option to
continue the Landlord Work disregarding the requested revision. Tenant shall be
responsible for any delay in completion of the Premises resulting from any
revision to the Plans, and such delay shall constitute a Tenant Delay (as
defined below). If such revisions result in an increase in the cost of Landlord
Work, such increased costs, plus any applicable state sales or use tax thereon,
shall be payable by Tenant upon demand, and Landlord shall not commence work
with respect to such revision until Tenant's payment of such amount.
Notwithstanding anything herein to the contrary, all revisions to the Plans
shall be subject to the reasonable approval of Landlord.
3. Delay in the Commencement Date.
(a) The "Substantial Completion Date" shall mean the earliest to occur of:
(i) the date on which Landlord's Work has been substantially completed
substantially in accordance with the Plans or (ii) if the substantial
completion of Landlord's Work has been delayed as a result of one or more Tenant
Delays (as defined below), the date on which Landlord would have substantially
completed Landlord's Work but for such Tenant Delays, as so certified by the
Landlord's architect.
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(b) "Tenant Delay" shall mean any interruption or delay at any time in the
progress of the Landlord Work which is the result of: (a) Tenant changes to the
Plans, including, in addition to delays resulting from the actual execution of
such changes to the Plans, any delay occurring because the change to the Plans
requested by Tenant expressly requires the design or construction of the
Premises to be halted or delayed pending resolution of any request by Tenant for
a change to the Plans, whether or not the requested change is ultimately
approved by Landlord and/or Tenant; (b) the performance or non-performance of
any work at the Premises by Tenant or any person, firm or corporation employed
by Tenant, including but not limited to any work conducted in accordance with
Section 4 below; or (c) any other act or omission of Tenant (for example, but
not by way of limitation, failure to timely respond to requests for information
or approval of construction related matters submitted by Landlord and failure to
act in good faith and to cooperate with Landlord in finalizing and approving the
Plans pursuant to Section 2 of this Work Letter).
(c) "Force Majeure Delay" shall mean any interruption or delay at any time
in the progress of Landlord's Work that is not a Tenant Delay and is the result
of any Force Majeure (as defined in the Lease). Any delay shall be deemed to be
a Force Majeure Delay notwithstanding that Landlord or its agent or Contractor
with respect to which the time period for the Force Majeure Delay is being
claimed is concurrently delayed by events within its control.
(d) Landlord agrees that it shall exercise reasonable efforts to provide
Tenant with written notice of any Tenant Delay or Force Majeure Delay (and the
expected length of the applicable delay) as soon as reasonably practicable
following the date Landlord has been notified of any such delay; provided,
however, that Landlord's failure to furnish such notice shall in no event be
deemed to a waiver by Landlord of the Tenant Delay or Force Majeure Delay or
otherwise affect the operation of this Section 3. Landlord shall be deemed to
have notified Tenant of a Tenant Delay or a Force Majeure Delay if the
applicable delay is noted in the written job meeting minutes, if any, prepared
by Landlord or any Contractor and furnished to Tenant.
4. Access by Tenant Prior to Commencement Date. Landlord will permit Tenant and
Tenant's agents, suppliers, contractors and workmen to enter the Additional
Premises prior to the completion of the Landlord's Work to enable Tenant to do
such other things as may be required by Tenant to make the Additional Premises
ready for Tenant's occupancy on or after the date of this Second Amendment,
provided that Tenant shall fully perform and comply with each of the following
covenants, conditions and requirements:
(a) Tenant and Tenant's agents, contractors, workmen, mechanics, suppliers
and invitees, shall work in harmony and not interfere with Landlord and
Landlord's agents in performing the Landlord Work or work for other tenants and
occupants of the Building, and if at any time such entry shall in the judgment
of Landlord cause or threaten to cause disharmony or interference, Landlord
shall have the right to withdraw such permission upon twelve (12) hours written
notice.
(b) Tenant agrees that any such entry into the Additional Premises prior to
the Commencement Date shall be deemed to be under all of the terms, covenants,
conditions, and
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provisions of the Lease (as amended by the Second Amendment) except the covenant
to pay Base Rent and Tenant's Proportionate Share of Operating Expenses relating
to the Additional Premises, and further agrees that in connection therewith
Landlord shall not be liable in any way for any injury, loss or damage which may
occur to any of Tenant's work or installations made in the Premises or to
property placed therein prior to the Commencement Date, the same being at
Tenant's sole risk. In addition, Tenant shall require all entities performing
work on behalf of Tenant to provide protection for existing improvements to an
extent that is satisfactory to Landlord and shall allow Landlord access to the
Additional Premises, for inspection purposes, at all times during the period
when Tenant is undertaking construction activities therein. In the event any
entity performing work on behalf of Tenant causes any damage to the Landlord
Work or the property of Landlord or others, Tenant shall cause such damage to be
repaired at Tenant's expense, and if Tenant fails to cause such damage to be
repaired immediately upon Landlord's demand therefor, Landlord may in addition
to any other rights or remedies available to Landlord under the Lease or at law
or equity cause such damage to be repaired, in which event Tenant shall
immediately upon Landlord's demand pay to Landlord the cost of such repairs as
rent.
(c) All contractors and subcontractors shall use only those entrances
designated by Landlord for ingress and egress of personnel, and the delivery and
removal of equipment and material through or across any common areas of the
Building or parking areas on the Project shall only be permitted with the
written approval of Landlord and during hours determined by Landlord. Landlord
shall have the right to order Tenant or any contractor or subcontractor that
violates the above requirements to cease work and remove it, its equipment, and
its employees from the Building or the Project.
(d) During the performance of Tenant's work and Tenant's fixturing,
Landlord may provide trash removal service from a location designated by
Landlord. Tenant shall be responsible for breaking down boxes and placing trash
in Landlord's containers at such designated location. Tenant shall accumulate
its trash in containers supplied by Tenant and Tenant shall not permit trash to
accumulate within the Premises or in the corridors or public areas adjacent to
the Premises. Tenant shall cause each entity employed by it to perform work on
the Additional Premises to abide by the provisions of this Work Letter as to the
storage of trash and shall require each such entity to perform its work in a way
that dust and dirt is contained entirely within the Additional Premises and not
within any other portion of the Building or the Project and shall cause Tenant's
contractors to leave the Additional Premises which are under construction as
broom clean at the end of each day. Should Landlord deem it necessary to remove
Tenant's trash because of accumulation, an additional charge to Tenant will be
on a time and material basis.
(e) Landlord and Tenant agree that all services and work performed on the
Additional Premises by, on behalf of, or for the account of Tenant, including
installation of materials and personal property delivered to the Additional
Premises shall be done in a first-class workmanlike manner using only good
grades of material, shall be performed in accordance with Legal Requirements,
and shall be performed only by persons covered by a collective bargaining
agreement with the appropriate trade union.
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(f) Tenant agrees to protect, indemnify, defend and hold harmless Landlord
and its employees, agents and contractors from and against any and all losses,
damages, liabilities, claims, liens, costs and expenses, including reasonable
attorneys' fees, of whatever nature, including those to the person and property
of Tenant, its employees, agents, invitees, licensees and others arising out of
or in connection with the activities of Tenant or Tenant's contractors or
subcontractors in or about the Additional Premises and the Existing Premises,
and the cost of any repairs to the Additional Premises and the Existing Premises
necessitated by activities of Tenant or Tenant's contractors or subcontractors.
(g) Tenant shall secure, pay for, and maintain during the continuance of
its work within the Additional Premises, policies of insurance with such
coverages and such amounts as Landlord may reasonably require, which policies
shall be endorsed to include Landlord and its contractors and their respective
employees and agents and any mortgagee of the Project as additional insured
parties, and which shall provide thirty (30) days prior written notice of any
alteration or termination of coverage. Tenant shall not permit Tenant's
contractors to commence any work until all required insurance has been obtained
by Tenant and certificates evidencing such coverage have been delivered to and
approved by Landlord in writing.
5. This Exhibit shall not be deemed applicable to any additional space added to
the Existing Premises or the Additional Premises at any time hereafter, whether
by any options or any additions to the Existing Premises or the Additional
Premise or in the event of a renewal or extension of the original Lease Term,
unless expressly so provided in the Lease or any amendment or supplement to the
Lease.
6. Landlord's and Tenant's representatives for coordination of construction and
approval of change orders will be as follows, provided that either party may
change its representative upon written notice to the other:
LANDLORD'S REPRESENTATIVE:
NAME Linda Armstrong
ADDRESS PDC Properties, Inc.
1099 Hawthorn
Itasca, Illinois 60143
PHONE (630)250-0255
TENANT'S REPRESENTATIVE:
NAME Robert J. Toner
ADDRESS 6655 Sugarloaf Parkway
Duluth, Georgia 30097
PHONE 678-584-4200
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Schedule 1
Space Plans
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(FLOOR PLAN)
PARTIAL FLOOR PLAN