EXHIBIT 10.9.1
SIXTH AMENDMENT TO LEASE
THIS SIXTH AMENDMENT TO LEASE (this "Amendment") entered into in Chicago,
Illinois, effective as of the 1st day of May, 2006, by and between GOLUB LSP
INVESTORS, LP, a Delaware limited partnership ("Lessor"), and PLAYBOY
ENTERPRISES, INC., a Delaware corporation ("Lessee").
WITNESSETH:
A. LaSalle National Bank, not personally, but solely as Trustee under a
Trust Agreement dated December 21, 1987, and known as Trust No. 112912
("Original Lessor"), and Lessee have heretofore entered into that certain Office
Lease dated as of April 7, 1988 (the "Original Lease"), whereby Original Lessor
leased to Lessee certain premises in the office portion of 680 North Lake Shore
Drive, Chicago, Illinois.
B. Original Lessor has heretofore assigned its interest under the
Original Lease to American National Bank and Trust Company of Chicago, not
personally, but solely as Trustee under Trust Agreement dated May 2, 1989, and
known as Trust No. 108237-06 ("Successor Lessor").
C. Successor Lessor and Lessee have heretofore entered into that
certain Amendment to Lease dated as of October 26, 1989 (the "First Amendment"),
that certain Second Amendment to Lease dated as of June 1, 1992 (the "Second
Amendment"), that certain Third Amendment to Lease ("Third Amendment") dated as
of August 30, 1993, that certain Fourth Amendment to Lease ("Fourth Amendment")
dated as of August 6, 1996, and that certain Fifth Amendment to Lease dated as
of March 19, 1998 ("Fifth Amendment"). The Original Lease, the First Amendment,
the Second Amendment, Third Amendment, Fourth Amendment and Fifth Amendment are
collectively referred to herein as the "Lease".
D. Successor Lessor and Lessee have heretofore entered into that
certain Storage Lease dated May 25, 1999 (the "Storage Lease") for storage space
in the basement of the Building, which Storage Lease is not affected hereby.
E. Successor Lessor has heretofore assigned its interest under the
Lease and Storage Lease to Lessor.
F. Lessor and Lessee now desire to amend the Lease to surrender a
portion of the Premises, extend the term of the Lease and amend certain other
provisions contained in the Lease, all upon the terms and provisions hereinafter
set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and legal
Sufficiency of which are hereby acknowledged, Lessor and Lessee hereby agree as
follows:
1. Definitions. Each capitalized term used in this Amendment shall have
the same meaning as is ascribed to such capitalized term in the Lease, unless
otherwise provided for herein.
2. Partial Termination. Effective from and after May 1, 2006 (the
"Surrender Date"), Lessee hereby remises, releases, quitclaims and surrenders to
Lessor, its successors and assigns, forever, all rights of Lessee in and to the
Second Additional Premises (as defined in the Fifth Amendment, which consists of
approximately 32,140 rentable square feet on the 14th floor of the Building),
however acquired, including all of the estate and rights of Lessee in and to the
Lease as to the Second Additional Premises, to have and to hold the same unto
Lessor, its successors and assigns, forever, from and after the Surrender Date.
Additionally, effective as of the Surrender Date, the Additional Premises (which
is storage space known as Room B-101 in the basement of the Building (as more
fully described in the First Amendment)) shall be released and surrendered under
the Lease and shall be added to the storage space leased pursuant to the Storage
Lease. Accordingly, from and after the Surrender Date, the Premises shall
contain only 95,523 rentable square feet. Lessor and Lessee acknowledge and
agree that the Lease shall remain in full force and effect as to such Premises
and the Storage Lease shall remain in full force and effect as to the storage
space covered by the Storage Lease, as amended. The Storage Lease will be
extended by a separate amendment to be co-terminus with the Term of the Lease,
as extended by this Amendment, and shall be amended to include the Additional
Premises surrendered hereunder effective as of the Surrender Date.
The reduction in Base Rent and Rent Adjustment, as well as recognition of
the Sublease (as hereinafter defined), are each effective as of the Surrender
Date, as more fully provided below. Lessee has made payments of Base Rent and
Rent Adjustment in excess of the amounts due under this Amendment after the
Surrender Date and has collected sums under the Sublease after the Surrender
Date. Additionally, Lessee has made payments of Taxes for the Second Additional
Premises on a "year-of-payment" basis as provided in the Fifth Amendment. Lessor
and Lessee shall calculate the refund due Lessee for such overpayments of Base
Rent and Rent Adjustment, less amounts collected under the Sublease by Lessee,
and Lessor shall pay Lessee any such sum within thirty (30) days following such
determination. Without limiting the generality of the effect of the foregoing
reconciliation, Lessor acknowledges that Lessee has previously paid $60,505.09
representing the allocable portion of the first installment 2005 tax bill with
respect to the Second Additional Premises. When the second installment 2005 bill
is received (expected in August or September 2006), the total taxes allocable to
the Second Additional Premises will be determined, and Lessee is responsible for
4/12 thereof (i.e., through April 30). If 4/12 of such total taxes allocable to
the Second Additional Premises is more than $60,505.09, Lessee shall pay Lessor
the difference, or if 4/12 of such total taxes allocable to the Second
Additional Premises is less than $60.505,09, Lessor shall pay Lessee the
difference. Except for such determination, Lessee will not owe any further taxes
with respect to the Second Additional Space, and Lessor specifically will not be
entitled to claim in 2007 that Lessee owes taxes for the space attributable to
2006.
3. Return of Second Additional Premises. Lessor and Lessee agree that
the Lease is to be cancelled and terminated and the Term thereof brought to an
end as of the Surrender Date with respect to the Second Additional Premises with
the same force and effect as if the Term of the Lease were in and by the
provisions thereof fixed to expire on the Surrender Date with respect to the
Second Additional Premises. Without limiting the generality of the foregoing,
Lessee agrees to quit and surrender to Lessor, on or before the Surrender Date,
the Second Additional Premises in broom clean condition and otherwise in
accordance with the provisions of Section 9 of the Lease and that Lessor shall
have the right to re-enter upon the Second
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Additional Premises as of the Surrender Date, as fully as it would or could have
done if that were the date provided for the expiration of the Term of the Lease.
Notwithstanding the foregoing, however, Lessor and Lessee acknowledge that
a portion of the Second Additional Premises consisting of approximately 12,066
rentable square feet (the "Subleased Premises") has been previously subleased by
Lessee to Sublessee pursuant to February 9, 2004 (the "Sublease"). Lessor and
Sublessee are simultaneously entering into a recognition and attornment
agreement pursuant to which Lessor will recognize the Sublessee as a direct
lessee of Lessor effective as of the Surrender Date and, accordingly, Lessee's
surrender obligations hereunder with respect to the Subleased Premises shall be
subject to said Sublease as recognized by Lessor. In the event of any default by
Sublessee with respect to the Subleased Premises from and after the Surrender
Date, Lessee shall not have liability with respect thereto. Additionally, the
remaining portion of the Second Additional Premises, consisting of approximately
20,074 rentable square feet ("Temporary Space"), shall be subject to Lessee's
continued occupancy as provided under Section 14 below.
4. Extension of Term. The Term of the Lease is hereby extended to
August 31, 2022 ("Extended Expiration Date"), unless sooner terminated or
extended in accordance with the terms of the Lease, as amended hereby.
5. Base Rent. Effective as of May 1, 2006, Base Rent due under the
Lease shall be the amounts set forth in the following schedule and shall be paid
in accordance with the provisions of the Lease:
ANNUAL MONTHLY
PERIOD BASE RENT* BASE RENT*
- ---------------- ------------- -----------
5/1/06 - 8/31/07 $ 955,230.00 $ 79,602.50
9/1/07 - 8/31/08 $1,313,441.28 $109,453.44
9/1/08 - 8/31/09 $1,361,202.72 $113,433.56
9/1/09 - 8/31/10 $1,408,964.28 $117,413.69
9/1/10 - 8/31/11 $1,456,725.72 $121,393.81
9/1/11 - 8/31/12 $1,504,487.28 $125,373.94
9/1/12 - 8/31/13 $1,552,248.72 $129,354.06
9/1/13 - 8/31/14 $1,600,010.28 $133,334.19
9/1/14 - 8/31/15 $1,647,771.72 $137,314.31
9/1/15 - 8/31/16 $1,695,533.28 $141,294.44
9/1/16 - 8/31/17 $1,743,294.72 $145,274.56
9/1/17 - 8/31/18 $1,791,056.28 $149,254.69
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ANNUAL MONTHLY
PERIOD BASE RENT* BASE RENT*
- ---------------- ------------- -----------
9/1/18 - 8/31/19 $1,838,817.72 $153,234.81
9/1/19 - 8/31/20 $1,886,579.28 $157,214.94
9/1/20 - 8/31/21 $1,934,340.72 $161,195.06
9/1/21 - 8/31/22 $1,982,102.28 $165,175.19
*Before abatement
Notwithstanding anything contained in this Lease to the contrary, so long
as Lessee is not in default under this Lease, as amended, Lessee shall be
entitled to an abatement of 50% of Base Rent for the seventy-two (72) month
period commencing on September 1, 2007, and ending August 31, 2013 (the "Rent
Abatement Period"). The total amount of Base Rent abated during the Rent
Abatement Period is herein collectively referred to as the "Abated Rent". If
Lessee is in default at any time during the Term and fails to cure such default
within the applicable cure period under the Lease, if any, the Rent Abatement
Period shall be deemed ended as of the date of such Default and expiration of
any applicable cure periods, if any. Termination of the Rent Abatement Period in
the event of a Default shall not limit or affect any of Lessor's other rights,
pursuant to this Lease or at law or in equity.
6. Rent Adjustment. From the date hereof through August 31, 2007,
Lessee shall continue to pay Lessor Rent Adjustment for the Premises in
accordance with Section 2 of the Lease. Effective as of September 1, 2007,
Lessee shall pay to Lessor Rent Adjustment for the Premises in accordance with
Section 2 of the Lease, except, however, the definition of Expenses and Taxes
set forth in Sections 2.A(iv) and 2.A(v), respectively, of the Lease are hereby
replaced with the definition of "Expenses" and "Taxes" set forth in Section 4(b)
of the Fifth Amendment, it being the intent that the definition of Expenses and
Taxes shall be applicable to the entire Premises effective as of September 1,
2007. Additionally, Lessor and Lessee acknowledge and agree that effective as of
the Surrender Date Rent Adjustment payments shall be appropriately adjusted to
reflect the partial termination under Section 2 above.
7. Condition of Premises. Lessee accepts the Premises in their "as is",
"where is" physical condition, and Lessee acknowledges that no promise of Lessor
to alter, remodel, improve, repair or decorate the Premises or any part thereof
or any portion of the Building has been made, except, however Lessor shall
provide to Lessee Lessor's Contribution as provided in Exhibit A attached hereto
(the "Workletter") and Lessor acknowledges that Lessee will be constructing
certain improvements in the Premises in accordance with said Workletter.
8. Expansion Option. All expansion options granted to Lessee under the
Lease, including, without limitation, any and all expansion options, rights of
first refusal or rights of first offer, are hereby deleted in their entirety and
the following, along with Lessee's rights granted under Section 9 and Section 10
below, are substituted in their place and stead:
(a) Lessor hereby grants to Lessee one (1) option to expand the
Premises (the "Expansion Option") by between 17,500 rentable square feet
and 19,250 rentable square
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feet (the "Expansion Premises"), effective as of the Expansion Premises
Commencement Date (as hereinafter defined) and expiring on the Extended
Expiration Date, unless sooner terminated or extended in accordance with
the terms of the Lease, as amended hereby, under the following terms and
conditions. The Expansion Premises shall be located on any of the 8th
through the 14th floors of the Building.
(b) Lessee may, by written notice (the "Expansion Inquiry Notice")
given to Lessor no sooner than October 1, 2009, and no later than November
15, 2009, request Lessee's terms and conditions for a lease of the
Expansion Premises. If Lessee timely delivers the Expansion Inquiry Notice
to Lessor, Lessor shall, no later than November 30, 2009, notify Lessee
("Lessor's Notice") of the precise location and area of the Expansion
Premises, the commencement date of the Lease with respect to the Expansion
Premises and the Base Rent for the Expansion Premises. The rentable square
footage of the Expansion Premises shall be determined by Lessor within the
range identified above. The commencement date of the Lease with respect to
the Expansion Premises shall no sooner than January 1, 2011, and no later
than March 31, 2011. Base Rent for the Expansion Premises shall be equal
to the Fair Market Base Rental (as hereinafter defined and determined),
including the Fair Market Base Rental Escalation Rate (as hereinafter
defined and determined), for the Expansion Premises for the applicable
term of the Lease for the Expansion Premises. After receipt of Lessor's
Notice, if Lessee disagrees with Lessor's determination of the Fair Market
Base Rental or Fair Market Base Rental Escalation Rate, Lessor and Lessee
shall negotiate in good faith to agree upon a Fair Market Base Rental and
Fair Market Base Rental Escalation Rate.
(c) Lessee may elect by written notice (the "Expansion Notice")
given to Lessor at any time, but no later than January 1, 2010, time being
of the essence, to (i) not exercise the Expansion Option, (ii) exercise
the Expansion Option and accept the terms set forth in Lessor's Notice (or
as otherwise agreed during negotiations as provided above), or (iii)
exercise the Expansion Option but submit the determination of Fair Market
Base Rental and/or Fair Market Base Rental Escalation Rate for the
Expansion Premises to arbitration as provided in Section 13 below.
Lessee's election shall be irrevocable once made. If Lessee fails to
timely exercise the Expansion Option, Lessee's rights hereunder with
respect to the Expansion Option shall terminate and Lessor shall have no
further obligation hereunder with respect thereto.
(d) If Lessee timely exercises the Expansion Option, then Lessor
shall deliver possession of the Expansion Premises to Lessee on or before
the commencement date stated in Lessor's Notice, provided, however, that
in no event shall Lessor be liable to Lessee if Lessor is unable to
deliver possession of the Expansion Premises on or before the designated
commencement date for causes outside of Lessor's reasonable control,
including the hold over of any existing occupant, provided, however, that
in any event, Lessor shall use all commercially reasonable efforts to
obtain possession, including an eviction action, if reasonably necessary.
Effective as of the date of such delivery to Lessee (the "Expansion
Premises Commencement Date"), the Expansion Premises shall be included in
the Premises and shall be subject to all of the terms, conditions and
provisions of the Lease, as amended, except as follows:
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(i) The rentable area of the Premises shall be increased by
the rentable square feet of the Expansion Premises and Lessee's
Proportionate Share shall be increased accordingly;
(ii) Base Rent for the Expansion Premises shall be as set
forth in Lessor's Notice or as otherwise determined hereunder; and
(iii) Lessee shall take possession of the Expansion Premises
in an "as is" condition.
(e) Lessee's right to exercise the Expansion Option is contingent
upon Lessee not being in Default under the Lease, as amended hereby,
either on the date that Lessee exercises such Expansion Option or, unless
waived in writing by Lessor for purposes of the Expansion Option, on the
date that otherwise would have been the commencement date of the lease
term for the Expansion Premises. If Lessee is not in Default under the
Lease, as amended hereby, on the date Lessee exercises such Expansion
Option but is so in Default on the date that otherwise would have been the
commencement date of the lease term for the Expansion Premises and Lessor
does not waive in writing such Default for purposes of the Expansion
Option, then, notwithstanding Lessee's timely exercise of the Expansion
Option, Lessee shall have no right to lease such Expansion Premises as a
result of Lessee's exercise of such Expansion Option.
(f) If Lessee exercises the Expansion Option, Lessor and Lessee
shall execute and deliver an amendment to the Lease reflecting the lease
by Lessor to Lessee of the Expansion Premises on the terms provided above,
which amendment shall be executed and delivered promptly after Lessee and
Lessor agree on the Fair Market Base Rental and Fair Market Base Rental
Escalation Rate.
(g) The Expansion Option shall automatically terminate and become
null and void and of no force or effect upon the earlier to occur of (i)
the expiration or termination of the Lease, as amended, (ii) the
termination of Lessee's right to possession of the Premises, or (iii) the
failure of Lessee to timely or properly exercise such Expansion Option.
The Expansion Option is personal to Lessee (and to any parent, subsidiary
or affiliate of Lessee to which the Lease is assigned pursuant to the
terms and conditions of the Lease) and shall not be assignable by Lessee
separately from the Lease.
(h) The Expansion Option shall not be deemed altered or affected
by Lessee's lease of any First Opportunity Space under Section 9 below or
any First Offer Space under Section 10 below unless, as a result of
Lessee's exercise of such rights, insufficient space remains on the 8th
through 14th floors of the Building.
9. Opportunity Notice.
(a) In the month of January 2008, and in each January falling
within the Term hereof (not including, however, the final two Januarys
falling within the Term hereof (i.e., not including January 2021 and
January 2022, and January of 2026 and January 2027 in the event the First
Option to Extend is exercised and January 2031 and January 2032 if the
Second Option to Extend is exercised)), Lessor shall notify Lessee in
writing
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(the "Opportunity Notice") of any contiguous space on any of floors 8
through 14 of the Building containing 10,000 rentable square feet or more
that is then available for lease (i.e., not under lease, subject to
renewal or expansion options in any lease or then under current
negotiations) (each such space identified by Lessor in the Opportunity
Notice being herein referred to as a "First Opportunity Space"). If,
within fifteen (15) business days after the delivery of such Opportunity
Notice, Lessee shall give Lessor written notice ("Interest Notice") that
Lessee elects to negotiate a lease of one or more of the First Opportunity
Spaces identified in the Opportunity Notice, Lessor shall not offer the
applicable First Opportunity Space for rent to a third party for at least
fifteen (15) business days after receipt of the Interest Notice. Lessor
and Lessee agree to negotiate in good faith and that in negotiating the
terms of the lease of such First Opportunity Space identified in the
Interest Notice, Base Rent shall be at the Fair Market Base Rental,
including the Fair Market Base Rental Escalation Rate for the applicable
First Opportunity Space. Lessee may only lease an entire, but not less
than the entire, First Opportunity Space identified in the Opportunity
Notice. If Lessee does not timely deliver an Interest Notice or if, within
fifteen (15) business days following Lessor's receipt of an Interest
Notice, the parties shall fail to agree on the terms of a lease therefor,
Lessor may lease such space to a third party on such terms and conditions
as Lessor may desire; provided, however, that if such space is not leased
by the time the next Opportunity Notice is required hereunder, such space
shall then again be listed on the Opportunity Notice.
(b) Lessee's right to lease any First Opportunity Space hereunder
is contingent upon Lessee not being in Default under the Lease, as amended
hereby, either on the date that Lessee delivers the Interest Notice or,
unless waived in writing by Lessor for purposes of the lease of the First
Opportunity Space hereunder, on the date that otherwise would have been
the commencement date of the lease term for the appropriate First
Opportunity Space. If Lessee is not in Default under the Lease, as amended
hereby, on the date Lessee delivers the Interest Notice but is so in
Default on the date that otherwise would have been the commencement date
of the lease term for the First Opportunity Space and Lessor does not
waive in writing such Default for purposes of the lease any First
Opportunity Space hereunder, then, notwithstanding Lessee's timely
delivery of the Interest Notice, Lessee shall have no right to lease such
First Opportunity Space.
(c) If Lessee leases any First Opportunity Space hereunder, Lessor
and Lessee shall execute and deliver an amendment to the Lease reflecting
the lease by Lessor to Lessee of the applicable First Opportunity Space on
the terms provided above, which amendment shall be executed and delivered
promptly after Lessor and Lessee agree upon the terms for the applicable
First Opportunity Space.
(d) Lessee's rights hereunder shall automatically terminate and
become null and void and of no force or effect upon the earlier to occur
of (i) the expiration or termination of the Lease, as amended, (ii) the
termination of Lessee's right to possession of the Premises or (iii) the
failure by Lessee to timely or properly exercise such right (solely as to
the space specified in the Opportunity Notice, but not as to any other
space in the Building and only until the space otherwise becomes
available, whether upon
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termination in the case of a lease of such space or inclusion in the next
due Opportunity Notice). Lessee's rights hereunder are personal to Lessee
(and to any parent, subsidiary or affiliate of Lessee to which the Lease
is assigned pursuant to the terms and conditions of the Lease) and shall
not be assignable by Lessee separately from the Lease.
10. Right of First Offer. Lessee shall have the right of first offer (the
"Right of First Offer") as hereinafter described to lease any space on the
fourteenth (14th) floor of the Building ("First Offer Space") which Lessor
proposes to lease for a term commencing during the First Offer Period and which
has not been previously included in the Premises. For purposes of this Section
10, the term "First Offer Period" shall mean the period commencing on the date
hereof and continuing thereafter during the Term of this Lease and any
extensions and renewals; provided, however, that the First Offer Period shall
not include the last two (2) years of the Term or the last two (2) years of any
extension or renewal term thereafter. The lease of any First Offer Space shall
be for a term beginning on the First Offer Space Commencement Date (as hereafter
defined) for such First Offer Space and ending contemporaneously with the
expiration of the Term and any renewals or extensions, unless sooner terminated
as provided in the Lease, as amended. The Right of First Offer hereunder,
however, shall not be applicable to the first lease of each portion of the First
Offer Space entered into by Lessor after the date hereof (i.e., the first lease
of the First Offer Space after surrender of the Second Additional Premises by
Lessee under Section 3 above). Further, the Right of First Offer is subject to
Lessor's right to renew or extend the lease of or enter into a new lease with
any lessee occupying any portion of any First Offer Space even if not pursuant
to an option contained in its lease. The Right of First Offer is also subject to
any rights or options to lease granted to third parties prior to the date of
this Lease and the rights of third parties who are parties to leases dated after
the date of this Lease whose leased premises were offered to Lessee pursuant to
this Section, but waived or deemed waived by Lessee pursuant to this Section.
The Right of First Offer is exercisable at the following times and upon the
following conditions:
(a) Upon Lessor receiving a written counter proposal/offer,
generating a revised proposal or developing a space plan for any portion
of the First Offer Space during the First Offer Period, Lessor shall
provide written notice thereof to Lessee ("Lessor's Notice") and shall
include in Lessor's Notice an offer to Lessee to lease such First Offer
Space at the Fair Market Base Rental, including the Fair Market Base
Rental Escalation Rate, and shall also include in Lessor's Notice the date
of commencement of the term of the lease of such First Offer Space (the
"Effective Date"). Lessee shall have a period of ten (10) business days
after the date of delivery of Lessor's Notice to notify Lessor ("Lessee's
Notice") whether Lessee elects to exercise the right granted hereby to
lease such First Offer Space. Lessee may only elect to lease the entire
First Offer Space described in Lessor's Notice, and if Lessor is offering
space in addition to the First Offer Space, Lessee may only elect to lease
the entire space being offered by Lessor. If Lessee fails to give Lessee's
Notice to Lessor within the required ten (10) business day period. Lessee
shall be deemed to have failed to exercise its right to lease such First
Offer Space.
(b) If Lessee fails to exercise its right to lease any First Offer
Space, Lessor shall have the right to lease all or any portion of such
First Offer Space to any prospective tenant or others on such terms and
provisions as may be acceptable to Lessor and such prospective tenant for
a twelve (12) month period following the date of Lessor's Notice
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and Lessee shall have no further Right of First Offer to lease such First
Offer Space during said twelve (12) month period.
(c) If Lessee timely exercises the Right of First Offer, then
Lessor shall deliver possession of the applicable First Offer Space to
Lessee on or before the commencement date stated in Lessor's Notice,
provided, however, that in no event shall Lessor be liable to Lessee if
Lessor is unable to deliver possession of the Applicable First Offer Space
on or before the designated commencement date for causes outside of
Lessor's reasonable control, including the hold over of any existing
occupant, provided, however, that in any event, Lessor shall use all
commercially reasonable efforts to obtain possession, including an
eviction action, if reasonably necessary. Effective as of the date of such
delivery to Lessee (each applicable date being herein referred to as a
"First Offer Space Commencement Date"), the applicable First Offer Space
shall be included in the Premises and shall be subject to all of the
terms, conditions and provisions of the Lease, as amended, except as
follows:
(i) The rentable area of the Premises shall be increased by
the rentable square feet of the applicable First Offer Space and
Lessee's Proportionate Share shall be increased accordingly;
(ii) Base Rent for the applicable First Offer Space shall be
as set forth in Lessor's Notice, subject to Lessee's right to
negotiate and, if elected, arbitrate same pursuant to Section 13(b)
below, or as otherwise determined hereunder; and
(iii) Lessee shall take possession of the applicable First
Offer Space in an "as is" condition.
(d) Lessee's right to exercise the Right of First Offer is
contingent upon Lessee not being in Default under the Lease, as amended
hereby, either on the date that Lessee exercises such Right of First Offer
or, unless waived in writing by Lessor for purposes of the Right of First
Offer, on the date that otherwise would have been the commencement date of
the lease term for the applicable First Offer Space. If Lessee is not in
Default under the Lease, as amended hereby, on the date Lessee exercises
such Right of First Offer but is so in Default on the date that otherwise
would have been the commencement date of the lease term for the applicable
First Offer Space and Lessor does not waive in writing such Default for
purposes of the Right of First Offer, then, notwithstanding Lessee's
timely exercise of the Right of First Offer, Lessee shall have no right to
lease such applicable First Offer Space as a result of Lessee's exercise
of such Right of First Offer.
(e) If Lessee exercises the Right of First Offer, Lessor and
Lessee shall execute and deliver an amendment to the Lease reflecting the
lease by Lessor to Lessee of the applicable First Offer Space on the terms
provided above, which amendment shall be executed and delivered promptly
after Lessee delivers Lessee's Notice to Lessor.
(f) The Right of First Offer shall automatically terminate and
become null and void and of no force or effect upon the earlier to occur
of (i) the expiration or
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termination of the Lease, as amended, (ii) the termination of Lessee's
right to possession of the Premises or (iii) the failure of Lessee to
timely or properly exercise such Right of First Offer (solely as to the
space specified in Lessor's Notice, and not as to any other space in the
Building and only until the space otherwise comes available, whether upon
termination in the case of a lease of such space, or Lessor's decision to
remarket the space). The Right of First Offer is personal to Lessee (and
to any parent, subsidiary or affiliate of Lessee to which the Lease is
assigned pursuant to the terms and conditions of the Lease) and shall not
be assignable by Lessee separately from the Lease.
11. Extension Option. All extension rights set forth in the Lease are
hereby deleted in their entirety and the following is substituted in its place
and stead:
(a) Subject to the terms, conditions and limitations set forth in
this Section 11, Lessee is hereby granted the option to extend (the
"Option to Extend") the Term of the Lease for two (2) renewal terms of
five (5) years each commencing September 1, 2022 (the "First Extension
Term Commencement Date"), and expiring August 31, 2027 (the "First
Extension Term"), and commencing September 1, 2027 (the "Second Extension
Term Commencement Date"), and expiring August 31, 2032 (the "Second
Extension Term"), on the same terms and conditions as are contained in the
Lease, as amended hereby, except as follows:
(i) Lessor shall be under no obligation to make or pay for
any further improvements to the Premises;
(ii) Lessee shall have no further rights under this Section
11; and
(iii) Commencing as of the first day of the First Extension
Term or Second Extension Term, as the case may be, Base Rent and
Rent Adjustments for the first Lease Year of the First Extension
Term or Second Extension Term, as the case may be shall be equal to
ninety-two and one-half percent (92.5%) of the then current Fair
Market Base Rental plus Lessee's Proportionate Share of Taxes and
Expenses allocable to the Premises, increased by the Fair Market
Escalation Rate on each September 1 thereafter during the remainder
of the Extension Term.
(b) Notwithstanding anything to the contrary contained in this
Section 11, Lessee's right to exercise the Option to Extend shall be
contingent upon Lessee not being in Default under the Lease, as amended
hereby, either on the date that Lessee exercises the Option to Extend or,
unless waived in writing by Lessor for purposes of the Option to Extend,
on the First Extension Term Commencement Date or Second Extension Term
Commencement Date, as the case may be. If Lessee is not in Default under
the Lease, as amended hereby on the date that Lessee exercises the Option
to Extend but is so in Default on the First Extension Term Commencement
Date or Second Extension Term Commencement Date, as the case may be, and
Lessor does not waive in writing such Default for purposes of the Option
to Extend, then, notwithstanding Lessee's exercise of the Option to
Extend, the Option to Extend shall be deemed to be terminated and of no
force and effect and the Term of the Lease shall expire or be terminated
in accordance with terms of the Lease as if Lessee had not been granted
the Option to Extend pursuant
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to this Section 11.
(c) Lessee may, by notice given to Lessor not later than January
1, 2021, with respect to the First Extension Term and January 1, 2026,
with respect to the Second Extension Term request Lessor to provide Lessee
with Lessor's determination of the Fair Market Base Rental and Fair Market
Base Rental Escalation Rate in effect on the First Extension Term
Commencement Date or Second Extension Term Commencement Date, as the case
may be, and, in such case, Lessor shall provide Lessee with written notice
("Lessor's Extension Notice") of such determination within ten (10)
business days after receipt of Lessee's request. After receipt of Lessor's
determination of the Fair Market Base Rental and Fair Market Base Rental
Escalation Rate, if Lessee disagrees with same, Lessor and Lessee shall
negotiate in good faith to mutual agree upon the Fair Market Base Rental
and Fair Market Base Rental Escalation Rate.
(d) Lessee may elect by written notice ("Lessee's Extension Option
Exercise Notice") on or before March 1, 2021, with respect to the First
Extension Term and March 1, 2026, with respect to the Second Extension
Term, time being of the essence, to (i) not exercise the Option to Extend,
(ii) exercise the Option to Extend and accept the terms set forth in
Lessor's Extension Notice (or as otherwise agreed to during negotiations
as provide above) or (iii) exercise the Option to Extend but submit the
determination of Fair Market Base Rental and/or Fair Market Base Rental
Escalation Rate to arbitrations as provided in Section 13 below. Lessee's
election shall be irrevocable once made. If Lessee fails to timely
exercise the Option to Extend, then Lessee's rights hereunder with respect
to the Option to Extend shall terminate and be of no further force or
effect.
12. Contraction Options. All contraction and early termination rights
set forth in the Lease are hereby deleted in their entirety and the following is
substituted in its place instead:
(a) Provided that Lessee is not in Default hereunder, Lessee shall
have the options to exclude from the Premises (i) up to 20,000 rentable
square feet (the "First Contraction Option") effective as of August 31,
2012 (the "First Contraction Date") and (ii) up to 20,000 rentable square
feet (the "Second Contraction Option"; the First Contraction Option and
the Second Contraction Option are hereinafter each referred to as a
"Contraction Option") effective as of August 31, 2017 (the "Second
Contraction Date"; the First Contraction Date and the Second Contraction
Date are hereinafter each referred to as a "Contraction Date").
(b) The First Contraction Option may be exercised by written
notice given by Lessee to Lessor no later than February 28, 2011 ("First
Contraction Notice"), time being of the essence, which First Contraction
Notice shall include Lessee's designation of the portion of the Premises
as to which the First Contraction Option is being exercised (the "First
Contraction Space"). The Second Contraction Option may be exercised by
written notice given by Lessee to Lessor no later than February 28, 2016,
time being of the essence, which Second Contraction Notice shall include
Lessee's designation of the portion of the Premises as to which the Second
Contract Option is being exercised (the "Second Contraction Space"; the
First Contraction Space and the Second Contraction Space are hereinafter
each referred to as a "Contraction Space"). Each Contraction
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Space shall be one horizontally contiguous space no more than 20,000
rentable square feet and shall all be configured in a manner satisfying
all applicable city and fire codes, having reasonable access to the
elevator, lobby and other common areas on such floor as reasonably
determined by Lessee, subject, however, to the reasonable approval of
Lessor and Lessor's architect as to the marketability and commercial
reasonableness of the configuration, Lessor acknowledging, however, that a
proposed configuration which does not include any windows will nonetheless
still be marketable and commercially reasonable so long as a building
permit for office use can be issued for such space.
(c) If Lessee timely exercises a Contraction Option, Lessee shall
pay to Lessor a fee (the "Termination Fee"), determined as hereinafter
provided. The Termination Fee shall be paid no later thirty (30) days
prior to the applicable Contraction Date. The Termination Fee shall be
equal to (i) $86.67 per rentable square foot of the Contraction Space with
respect to the First Contraction Option and (ii) $55.16 per rentable
square foot of the Contraction Space for the Second Contraction Option,
plus, in both cases, two (2) times the monthly installment of Base Rent
and Rent Adjustment due and payable in connection with the applicable
Contraction Space for the month in which the applicable Contraction Date
occurs. In addition, Lessee shall pay the costs incurred to demise the
Construction Space and construct the required multi-tenant corridor or
other common area improvements on such floor as reasonably determined and
designed by Lessee, subject to the reasonable approval of Lessor and
Lessor's architect. Also in addition, if any portion of the Contraction
Space includes the stairway between the 15th and 16th floors of the
Premises, then Lessee shall reimburse Lessor for 50% of all reasonable
costs and expenses incurred by Lessor in demolishing said stairway and
restoring the floor slab between the 15th and 16th floors of the Building.
(d) If Lessee exercises the Contraction Option, the Lease, as
amended, shall terminate as to the applicable Contraction Space as though
it had expired by lapse of time, Lessee shall return the applicable
Contraction Space to Lessor on the applicable Contraction Date in
accordance with the requirements of the Lease, as amended, and effective
as of the applicable Contraction Date:
(i) Base Rent for the remaining balance of the Premises
shall be proportionately reduced; and
(ii) the rentable square feet of the Premises shall be
reduced by the rentable square feet of the applicable Contraction
Space and Lessee's Proportionate Share shall be reduced accordingly.
(e) If Lessee has validly exercised a Contraction Option, Lessor
and Lessee shall enter into a written amendment to this Lease confirming
the terms, conditions and provisions applicable to such contraction as
determined in accordance herewith.
13. Fair Market Base Rent.
(a) As used in this Amendment, "Fair Market Base Rental" shall be
deemed to mean the market base rental, net of all concessions, tax and
expense "stops" (or
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charges for taxes and expenses), construction or other allowances or
abatements, for comparable office space in comparable first-class office
buildings in the North Michigan Avenue market of Chicago, Illinois, for
lease terms equivalent to the term for the applicable premises, in effect
on the applicable commencement date; the "Fair Market Base Rental
Escalation Rate" shall be deemed to mean the annual escalation (whether in
the form of a percentage or fixed monetary amount, if any) being applied
to such Fair Market Base Rental for comparable office space in comparable
office buildings in the North Michigan Avenue market of Chicago, Illinois,
for lease terms equivalent to the term for the applicable premises, in
effect on the applicable commencement date; and the "North Michigan Avenue
market of Chicago, Illinois" shall be deemed to mean the area bounded by
Lake Shore Drive to the east, the Chicago River to the south, State Street
to the west and Oak Street to the north.
(b) With respect to the First Offer Space only, if Lessee
disagrees with Lessor's determination of the Fair Market Base Rental and
Fair Market Base Rental Escalation Rate (which Lessee must do, if at all,
in writing setting forth Lessee's determination of Fair Market Base Rental
and Fair Market Base Rental Escalation Rate within ten (10) business days
after receipt of notice of Lessor's determination) and if the parties
cannot agree on the Fair Market Base Rental and Fair Market Base Rental
Escalation Rate within ten (10) business day's thereafter, then such
dispute shall be determined by binding arbitration as hereinafter
provided. With respect to the Expansion Premises and Option to Extend, the
determination of Fair Market Base Rental and Fair Market Base Rental
Escalation Rate may be submitted to arbitration by Lessee as provided
under Section 8 or Section 11 above, respectively. Lessor and Lessee will
each select an arbitrator who shall be disinterested and shall be a broker
that has been actively engaged in the leasing of comparable office
buildings in the North Michigan Avenue market of Chicago, Illinois, for a
period of not less than five (5) years immediately preceding his or her
appointment. Lessor and Lessee shall each simultaneously submit to the
arbitrators a determination of proposed Fair Market Base Rental and Fair
Market Base Rental Escalation Rate. If no submittal is made, the parties
shall be deemed to have submitted their original determinations. The
arbitrators shall be directed as promptly as possible to select from the
two determinations submitted by Lessor and Lessee the one that is closer
to the Fair Market Base Rental and Fair Market Base Rental Escalation Rate
as determined by the arbitrators, and said selection shall thereafter be
deemed the Fair Market Base Rental and Fair Market Base Rental Escalation
Rate. If the two arbitrators so appointed fail to agree as to which of the
determinations submitted by Lessor and Lessee is closest to the actual
Fair Market Base Rental and Fair Market Base Rental Escalation Rate, the
two arbitrators shall appoint a third arbitrator, using the criteria
described above, to decide upon which of the two determinations submitted
is closest to the actual Fair Market Base Rental and Fair Market Base
Rental Escalation Rate. In the event the two arbitrators are not able to
so agree upon a third arbitrator, the third arbitrator shall be appointed
by the American Arbitration Association, using the criteria described
above. The cost of the foregoing arbitration process shall be borne by the
losing party. If no determination is made prior to the applicable
commencement date, then Lessor's determination shall be used until the
arbitration is completed. If Lessee's determination is later selected,
Lessor shall promptly refund any overpayments to Lessee
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14. Temporary Space. Lessor shall allow Lessee to continue to occupy the
Temporary Space from and after the date hereof until the earlier to occur of (a)
December 31, 2007, and (b) the date which is ten (10) business days after the
date on which the Lessee's Work (as defined in the Workletter) is substantially
completed. Lessor shall not be obligated to install any improvements in the
Temporary Space, and Lessee accepts the Temporary Space in its "as is"
condition. Lessee may install temporary improvements as needed to conduct
business in the Temporary Space, including the right to install cabling, but,
upon Lessor's request, Lessee shall remove such temporary improvements,
including cabling, upon termination of Lessee's occupancy of the Temporary
Space. Lessee's occupancy of the Temporary Space shall be upon the same terms
and conditions contained in the Lease, except that Lessee shall not have an
obligation to pay Base Rent or Rent Adjustment for the Temporary Space. Lessee
shall, however, be responsible for reimbursing Lessor for utilities, including
electricity, and janitorial and cleaning costs incurred by Lessor in connection
with the Temporary Space, such reimbursement to be made by Lessee to Lessor
within thirty (30) days after periodic invoice for same from Lessor. Lessee
shall vacate the Temporary Space within ten (10) business days after the date of
substantial completion of Lessee's Work, and failure to vacate the Temporary
Space within ten (10) business days after the date of substantial completion
shall constitute a Default under the Lease. Lessee shall repair any damage done
to the Temporary Space and shall leave the Temporary Space in broom clean
condition. Lessee shall be responsible for all costs associated with the move
into and out of the Temporary Space.
15. Cash Allowance. Within thirty (30) days after execution and delivery
of this Amendment by both Lessor and Lessee, Lessor shall pay to Lessee the sum
of $408,028.00. Additionally, on or before September 1, 2007, Lessor shall pay
Lessee the sum of $895,528.25. If Lessor fails to timely pay either of such
payments to Lessee, Lessee may offset the unpaid amounts against Base Rent and
Rent Adjustment payments next becoming due under the Lease, as amended, until
fully applied.
16. Deleted Provision. The last grammatical paragraph of Section 14 of
the Original Lease is hereby deleted in its entirety and shall be of no further
force or effect.
17. Brokers. Lessee represents to Lessor that Lessee has not dealt with
any real estate broker, salesperson or finder in connection with this
Amendment other than Golub & Company and U.S. Equities Realty (collectively, the
"Brokers"), and no other such person initiated or participated in the
negotiation of this Amendment or is entitled to any commission in connection
herewith. Lessee hereby agrees to indemnify, defend and hold Lessor, its
property manager and their respective employees harmless from and against any
and all liabilities, claims, demands, actions, damages, costs and expenses
(including attorneys' fees) arising from a claim for a fee or commission made by
any broker (other than the Brokers), claiming to have acted by or on behalf of
Lessee in connection with this Amendment. Lessor shall be responsible for paying
any commissions due the Brokers in connection with this Amendment pursuant to
separate agreements with the Brokers.
18. Submission. Submission of this Amendment by Lessor or Lessor's
agent, or their respective agents or representatives, to Lessee for examination
and/or execution shall not in any manner bind Lessor or Lessee and no
obligations on Lessor or Lessee shall arise under this Amendment unless and
until this Amendment is fully signed and delivered by Lessor and
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Lessee; provided, however, the execution and delivery by Lessee of this
Amendment to Lessor or Lessor's agent, or their respective agents or
representatives, shall constitute an irrevocable offer by Lessee on the terms
and conditions herein contained, which offer may not be revoked for fifteen (15)
days after such delivery.
19. Ratification; Conflict; Successors and Assigns. The Lease, as
amended by this Amendment, shall continue in full force and effect, subject to
the terms and provisions thereof and hereof, and is hereby ratified and
confirmed. In the event of any conflict between the terms of the Lease and the
terms of this Amendment, the terms of this Amendment shall control. This
Amendment shall be binding upon and inure to the benefit of Lessor and Lessor's
successors and assigns. This Amendment shall be binding upon and inure to the
benefit of Lessee and Lessee's successors, permitted assigns, heirs and personal
representatives.
20. Limitation of Liability. The liability of Lessor under the Lease, as
amended, is limited to its interest in the Building and Lessee agrees that no
judgment against Lessor may be satisfied against any property or assets of
Lessor other than the equity interest of Lessor in the Building.
IN WITNESS WHEREOF, this Amendment is executed as of the day and year
aforesaid.
LESSOR:
GOLUB LSP INVESTORS, LP, a Delaware
limited partnership
By: GP Golub LSP, Inc., a Delaware
corporation, its general partner
By: /s/ Lee Golub, EVP
-------------------------
Name: Lee Golub, EVP
Title: EVP
LESSEE:
PLAYBOY ENTERPRISES, INC., a Delaware
corporation
By: /s/ HOWARD SHAPIRO
-------------------------
Name: HOWARD SHAPIRO
Title: Ex VP
15
EXHIBIT A
WORKLETTER
The terms used herein shall have the meanings ascribed to them in that
certain Sixth Amendment to Lease dated May 1, 2006, by and between Golub LSP
Investors, LLC, a Delaware limited liability company ("Lessor") and Playboy
Enterprises, Inc., a Delaware corporation ("Lessee"), unless otherwise stated
herein.
I. Construction of the Premises. Lessor and Lessee agree that their
respective rights and obligations in reference to the construction of
improvements in the Premises shall be as follows:
A. Lessee's Plans and Specifications.
(1) For any work to be performed in the Premises for which a
building permit is required, Lessee, at Lessee's sole cost and expense,
except as provided herein, shall cause a licensed architect to prepare
complete, finished, detailed architectural, mechanical, structural and
electrical plans and specifications including all dimensions and
specifications for such work ("Lessee's Plans").
(2) Lessee's Plans shall also include all information as shall be
required by Lessor's engineers in connection with mechanical plans, which
information shall include, but not be limited to, the following:
(i) Any special floor loading conditions which may exceed
the structural weight limits of any floor;
(ii) Specifications of any heat emanating equipment to be
installed by Lessee which may require special air conditioning;
(iii) Electrical specifications of any equipment that requires
additional electrical power or outlets; and
(iv) Complete plans and specifications for demolition of the
existing stairway between the 14th and 15th floors of the Premises
and restoration of the floor between the 14th and 15th floors of the
Premises.
Lessee's Plans may consist of the plans to be submitted by Lessee to
the applicable governmental authority for building permits.
(3) Lessee's Plans are expressly subject to Lessor's prior written
approval, which shall not be unreasonably withheld, conditioned or
delayed, and in any event Lessor shall provide its approval or disapproval
within ten (10) business days after submission of proposed Lessee's Plans
by Lessee. Upon such approval, Lessee shall
A-l
cause Lessee's Plans, at Lessee's sole cost and expenses, to be filed with
the governmental agencies having jurisdiction thereof, in order to obtain
all governmental permits and authorizations which may be required in
connection with the work to be done. Lessee may not commence any of
Lessee's Work until Lessee's Plans are approved by Lessor.
(4) Without the prior written consent of Lessor, which consent
shall not be unreasonably withheld, conditioned or delayed, Lessee shall
make no material changes in Lessee's Plans after approval thereof by
Lessor.
II. Construction of Lessee's Work.
A. Lessee shall designate in Lessee's Plans all work and materials
necessary for construction of the Lessee improvements in the Premises, and
Lessee shall construct and install or cause to be constructed or installed in
the Premises all of the work designated in Lessee's Plans ("Lessee's Work").
Prior to solicitation of any bids for the construction of Lessee's Work, Lessor
shall approve, in writing, each of the contractors to be solicited by Lessee,
which approval shall not be unreasonably withheld or delayed.
B. Lessor shall contribute a maximum of up to $4,298,535.00 ("Lessor's
Contribution") toward the Cost of Lessee's Work. Lessee is solely responsible
for the Cost of Lessee's Work over $4,298,535.00. Lessee shall use a minimum of
$2,388,075 of Lessor's Contribution to pay for hard costs of Lessee's Work,
including labor and materials for installation of new improvements, demolition,
of existing improvements, disassembly and reassembly of furniture systems,
relocating furniture, cabling and other work, as well as soft costs such as
architectural and engineering fees and/or furniture for the Premises. Up to
$1,910,461.00 of Lessor's Contribution may be used as a credit against Base Rent
becoming due under the Lease, as amended hereby, provided, however, that any
such Base Rent credit shall not commence until September 1, 2007. Lessee agrees
to cause Lessee's Work to be completed by no later than June 30, 2008.
C. No supervisory fee shall be payable to Lessor in connection with
Lessee's Work, however, Lessee shall reimburse Lessor for all out-of-pocket
costs and expenses paid by Lessor to third parties in connection with Lessee's
Work, including any reasonable fees and expenses paid to architects or engineers
engaged by Lessor to review the plans and specifications for Lessee's Work.
D. Lessee's right to receive payment of Lessor's Contribution shall be
contingent upon (a) Lessee not being in default or breach under the Lease, as
amended, at the time Lessee so requests payment and (b) Lessee, at such time,
having completed the work for which Lessor's Contribution is being so requested
in accordance with the terms of this Workletter and having submitted to Lessor
contractor's affidavits and full and final waivers of lien and receipted bills
for labor and materials expended and used for such work. Lessee may submit a
request for payment two (2) times per month. Such request for payment shall
include satisfactory evidence of full payment to contractors and subcontractors,
including contractor affidavits and lien waivers covering the amounts requested
for payment. Lessor shall use reasonable efforts to pay such request for payment
from Lessee, provided that the foregoing conditions are satisfied, within thirty
(30) days after receipt by Lessee, and in any event Lessor shall pay any
properly
A-2
submitted request for payment within sixty (60) days after receipt of same. If
Lessor does not pay such request for payment within the required sixty (60) day
period, provided that all conditions are met and payment is not otherwise
disputed in good faith by Lessor, and Lessor does not cure such failure to pay
within one hundred eighty (180) days after initial submission of the request for
payment, Lessee may set off such unpaid portion of Lessor's Contribution
against the Base Rent and Additional Rent next becoming due under the Lease
until fully applied, without regard to the limitation on rental offset contained
in Section II.B.
E. In reviewing Lessee's Plans, Lessor may take into consideration
whether, in Lessor's reasonable judgment, Lessee's Work will be practicable and
consistent with existing physical conditions in the Building and the Office Area
and with the Building Plans and any other plans for the Building which have been
filed with the appropriate municipality or other governmental authorities having
jurisdiction thereof, or may impair Lessor's ability to perform any of Lessor's
obligations under the Lease or any other lease of space in the Building.
Lessee's Work shall not affect any portion of the Building other than the
Premises.
F. Lessee's Work shall be performed in strict conformity with Lessee's
Plans and shall be performed at Lessee's sole cost and expense, except for
Lessor's Contribution.
G. Prior to soliciting bids for construction of Lessee's Work, Lessee
shall submit to Lessor for Lessor's approval, the names and addresses of all
contractors to be solicited. Lessee's Work shall be done only by contractors or
mechanics approved by Lessor. Lessee shall not permit Lessee's contractors and
labor to interfere with Lessor or with any other lessee or its labor. Upon
completion of Lessee's Work, Lessee shall furnish, or shall cause to be
furnished to Lessor, contractor's affidavits, full and final waivers of lien,
final architect's certificates and receipted bills covering all labor and
materials expended and Lessee's Work shall comply with all insurance
requirements, all laws, ordinances, rules and regulations of all governmental
authorities, and all collective bargaining agreements applicable to the
Building, and shall be done in a good and workmanlike manner with the use of
high grades of materials.
III. Insurance and Indemnity.
A. Before commencing Lessee's Work, Lessee shall deliver to Lessor
certificates of insurance or copies of insurance policies from all contractors
performing labor or supplying materials for the construction of Lessee's Work,
insuring Lessor, its agents, representatives, successors and assigns against any
and all liability for bodily injury or property damage arising out of or
connected in any way with Lessee's Work.
B. To the extent permitted by law, Lessee hereby indemnifies and holds
harmless Lessor, its agents, representatives, successors and assigns, from and
against any and all losses, costs, claims and expenses of every kind and
description arising out or relating to Lessee's Work, except as such may be
required under insurance policies maintained pursuant to Paragraph III.A.
above.
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