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EXHIBIT
10.26
CERTAIN INFORMATION IN THIS EXHIBIT
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
INDUSTRIAL LEASE
AGREEMENT
THIS LEASE AGREEMENT (the
“Lease”) is made as of the “Lease Date” (as
defined in Section 37 herein) by and between INDUSTRIAL
DEVELOPMENTS INTERNATIONAL, INC., a Delaware corporation
(“Landlord”), and 8650 Commerce Drive, LLC, a
Mississippi limited liability company (“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 provisions of
this Lease:
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Demised Premises Address: |
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8650
Commerce Drive, Suite 100 |
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Southaven, Mississippi 38671 |
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| (b) |
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Demised Premises Square Footage: approximately 592,956 sq.
ft. |
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| (c) |
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Building Square Footage: approximately 740,844 sq.
ft. |
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| (d) |
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Annual Base Rent: |
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Lease Year 1: |
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(Lease Year 1 consists of 12 months plus
any Fractional Month)
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(months 1
– [*] ) |
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($ [*] ) |
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Months
[*] – 12) |
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$ [*] (plus the prorated amount
for any Fractional Month per Section 1(i) hereof, if
applicable)
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Based on a rental rate of $ [*]
per square foot per annum, [*] .
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Lease Years
2-5: |
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$ [*] |
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Based on a rental rate of $ [*]
per square foot per annum.
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Lease Years
6-10: |
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$ [*] |
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Based on a rental rate of $ [*]
per square foot per annum.
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Monthly Base Rent Installments: |
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Lease Year 1 (months 1- [*]
):
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$ [*]
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Lease Year 1 (months [*]
-12):
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$ [*] (plus the prorated amount
for any Fractional Month per Section 1(i) hereof, if
applicable)
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Lease Years 2-5 (months 13 –
60):
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$ [*]
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Lease Years 6-10 (months 61 –
120):
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$ [*]
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| (f) |
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Lease Commencement Date: The date on which Substantial
Completion (as defined in Section 17(f) hereof) of the Demised
Premises has occurred, which is contemplated to be October 1,
2007 (and Tenant shall not be required to accept a Lease
Commencement Date prior to October 1, 2007). |
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| (g) |
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Base Rent Commencement Date: The ninety-third (93rd) day
after the Lease Commencement Date. |
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| (h) |
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Expiration Date: The last day of the one-hundred twentieth
(120th) full calendar month following Lease Commencement
Date. |
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| (i) |
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Primary Term: Ten (10) Lease Years from the Lease
Commencement Date plus, in the event the Base Rent Commencement
Date does not occur on the first (1st) day of a calendar
month, a number of days equal to the period from and including the
Base Rent Commencement Date to and including the last day of the
calendar month in which the Base Rent Commencement Date occurs (if
applicable, the “Fractional Month”). |
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CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED
PORTIONS. |
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Tenant’s Operating Expense Percentage:
80.04%. |
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Security Deposit: $ [*] . |
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Permitted Use: (a) Distribution, warehousing, assembly,
systems integration and storage of automatic identification
products and telephony and computer telephony integration products,
security and conferencing products, software, and any other durable
goods, training purposes, and administrative uses reasonably
incidental thereto (collectively, the “Primary Use”),
and (b) subject to the limitations hereinafter specified, for
distribution, warehousing and storage of other products to the
extent permissible under applicable Governmental Requirements (as
hereinafter defined), the Rules and Regulations (as hereinafter
defined) and the protective covenants and other title matters
affecting the Building listed on Exhibit A-3 hereto (the
“Permitted Exceptions”); provided however, that
Tenant’s use of the Demised Premises (i) shall never
include the distribution, warehousing and storage of products or
any use of the Demised Premises prohibited by any provision
contained in this Lease (including, without limitation,
Section 16 hereof), (ii) shall never extend to or allow
the use, distribution, warehousing or storage of radioactive
materials at the Demised Premises, or any use wherein a Hazardous
Substance (as hereinabove defined) constitutes the principal or
primary product of the business to be conducted at the Demised
Premises, and (iii) for distribution, warehousing and storage
of any products other than those contemplated by the Primary Use,
must not result in a material risk of environmental contamination
at the Demised Premises. Tenant shall give written notice to
Landlord in the event Tenant changes the use from the Primary
Use. |
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| (m) |
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Address for notice: |
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Landlord: |
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Industrial Developments International, Inc. |
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c/o IDI,
Inc. |
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3424
Peachtree Road, N.E., Suite 1500 |
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Atlanta,
Georgia 30326 |
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Attn:
Manager - Lease Administration |
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Tenant: |
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8650
Commerce Drive, LLC |
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6 Logue
Court |
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Greenville, SC 29615 |
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Attn:
General Counsel |
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Address for rental payments: |
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Industrial Developments International, Inc. |
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c/o IDI Services Group, LLC
P. O. Box 281464
Atlanta, Georgia 30384-1464
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Broker(s): |
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Commercial Advisors, LLC |
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3175
Lenox Park Blvd., Suite 100 |
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Memphis,
Tennessee 38115 |
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Attn: Mr.
Wyatt Aiken |
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Guarantor: |
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ScanSource, Inc. |
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6 Logue
Court |
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Greenville, SC 29615 |
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Attn:
General Counsel |
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 hire, lease and
accept, from Landlord all upon the terms and conditions hereinafter
set forth the following premises, referred to as the “Demised
Premises”, as outlined on Exhibit A-1 attached hereto
and incorporated herein: approximately 592,956 square feet of
space, having an address as set forth in Section 1(a), located
within Building F (the “Building”), which contains a
total of approximately 740,844 square feet and is located on
certain land containing approximately 34.89 acres (more
particularly described on Exhibit A-2 attached hereto, the
“Land”) within Stateline Business Park (the
“Project”), located in DeSoto County, Mississippi. The
parties acknowledge that the number of square feet recited above
has been conclusively determined and is not subject to contest by
either party, subject to the provisions of Section 13 of
Exhibit C to this Lease.
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CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED
PORTIONS. |
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3. Term . To have and
to hold the Demised Premises for a preliminary term (the
“Preliminary Term”) commencing on the Lease Date and
ending on the day immediately preceding the Lease Commencement Date
as set forth in Section 1(f), and a primary term (the
“Primary Term”) commencing on the Lease Commencement
Date and terminating on the Expiration Date as set forth in
Section 1(h), as the Lease Commencement Date and the
Expiration Date may be revised pursuant to Section 17 (the
Preliminary Term, the Primary Term, and any and all extensions
thereof, herein referred to as the “Term”). 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; provided,
however, that if the Base Rent Commencement Date is a day
other than the first day of a calendar month, the first Lease Year
shall include the resulting Fractional Month and shall extend
through the end of the twelfth (12th) full calendar month
following the Lease Commencement Date.
4. Base Rent . Tenant
shall pay to Landlord at the address set forth in
Section 1(n), as base rent for the Demised Premises,
commencing on the Base Rent Commencement Date and continuing
throughout the Term in lawful money of the United States, the
annual amount set forth in Section 1(d) payable in equal
monthly installments as set forth in Section 1(e) (the
“Base Rent”), payable in advance, without demand and
without abatement, reduction, set-off or deduction, on the first
day of each calendar month during the Term. If the Base Rent
Commencement Date shall fall on a day other than the first day of a
calendar month, the Base Rent shall be apportioned pro rata on a
per diem basis for the resulting Fractional Month (which pro rata
payment shall be due and payable on the Base Rent Commencement
Date). No payment by Tenant or receipt by Landlord of rent
hereunder shall be deemed to be other than on account of the amount
due, and no endorsement or statement on any check or any letter
accompanying any check or payment of rent shall be deemed an accord
and satisfaction, and Landlord may accept such check as payment
without prejudice to Landlord’s right to recover the balance
of such installment or payment of rent or pursue any other remedies
available to Landlord.
5. Security Deposit .
On the date which is six (6) months prior to the expiration of
the Term (after giving effect to any extensions of the Term that
have been exercised at the time), Tenant shall pay to Landlord
within ten (10) days after Landlord’s request the sum
set forth in Section 1(k) (the “Security Deposit”)
as security for the full and faithful performance by Tenant of each
and every term, covenant and condition of this Lease (including,
without limitation, those which have accrued prior to such date).
The Security Deposit may be commingled with Landlord’s other
funds or held by Landlord in a separate interest bearing account,
with interest paid to Landlord, as Landlord may elect. In the event
that Tenant is in default under this Lease, Landlord may retain the
Security Deposit for the payment of any sum due Landlord or which
Landlord may expend or be required to expend by reason of
Tenant’s default or failure to perform; provided ,
however , that any such retention by Landlord shall not be
or be deemed to be an election of remedies by Landlord or viewed as
liquidated damages, it being expressly understood and agreed that
Landlord shall have the right to pursue any and all other remedies
available to it under the terms of this Lease or otherwise. In the
event all or any portion of the Security Deposit is so retained by
Landlord, Tenant shall, within five (5) days of demand
therefor from Landlord, replenish the Security Deposit to the full
amount set forth in Section 1(k). In the event that Tenant
shall comply with all of the terms, covenants and conditions of
this Lease, the Security Deposit shall be returned to Tenant within
thirty (30) days after the later of (a) the Expiration
Date or (b) the date that Tenant delivers possession of the
Demised Premises to Landlord. In the event of a sale of the
Building, Landlord shall transfer the Security Deposit to the
purchaser, and upon acceptance by such purchaser, Landlord shall be
released from all liability for the return of the Security Deposit.
Tenant shall not assign or encumber the money deposited as
security, and neither Landlord nor its successors or assigns shall
be bound by any such assignment or encumbrance.
6. Operating Expenses and
Additional Rent .
(a) Tenant agrees to pay as
Additional Rent (as defined in Section 6(b) below) its
proportionate share of Operating Expenses (as hereinafter defined).
“Operating Expenses” shall be defined as all reasonable
expenses for operation, repair, replacement and maintenance as
necessary to keep the Building and the common areas, driveways, and
parking areas associated therewith (collectively, the
“Building Common Area”) fully operational and in good
order, condition and repair, including but not limited to,
utilities for the Building Common Area, expenses associated with
the driveways and parking areas (including sealing and restriping,
and trash, snow and ice removal) , roof, security systems,
fire detection and prevention systems, lighting facilities,
landscaped areas, walkways, painting and caulking, directional
signage, curbs, drainage strips, sewer lines, all charges assessed
against or attributed to the Building pursuant to any applicable
easements, covenants, restrictions, agreements, declaration of
protective covenants or development standards, property management
fees, all real property taxes and special assessments imposed upon
the Building, the Building Common Area and the land on which the
Building and the Building Common Area are constructed, all costs of
insurance paid by Landlord with respect to the Building and the
Building Common Area (including, without limitation, commercially
reasonable deductibles), and costs of improvements to the Building
and the Building Common Area required by any law, ordinance or
regulation applicable to the Building and the Building Common Area
generally (and not because of the particular use of the Building or
the Building Common Area by a particular tenant), which cost shall
be amortized on a straight line basis over the useful life of such
improvement, as reasonably determined by Landlord in accordance
with generally accepted accounting
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principles. Operating Expenses shall not
include expenses for the costs of any maintenance and repair
required to be performed by Landlord at its own expense under
Section (10)(b). Further, Operating Expenses shall not include
(i) the costs for capital improvements unless such costs are
incurred for the purpose of causing a material decrease in the
Operating Expenses of the Building or the Building Common Area or
are incurred with respect to improvements made to comply with laws,
ordinances or regulations as described above (ii) leasing and
brokerage commissions and fees and marketing expenses;
(iii) costs of building out or otherwise improving any space
to be occupied by a tenant; (iv) legal or court costs (or
other professional or advisory costs) associated with leasing any
space or addressing disputes with any present, former or potential
tenant or purchaser of the property on which the Building is
located (the “Property”); (v) fines or penalties
imposed on Landlord, the Property or the Building; (vi) costs
of special services rendered to particular tenants of the Building
rather than to all tenant thereof; (vii) capital expenditures
and depreciation of the Building or any other improvements to the
Property (except to the extent expressly permitted in this
Section 6); (viii) interest and amortization of loans;
(ix) ground rent; (x) compensation paid to officers or
executives of Landlord higher than the level of Building manager;
(xi) franchise, transfer, gains, inheritance, estate and
income taxes imposed upon Landlord; (xii) costs and expenses
otherwise includable in Operating Expenses, to the extent that
Landlord is specifically and separately reimbursed from other
sources for such costs and expenses through insurance or
condemnation proceeds, direct payment by a tenant of the Building
or otherwise; (xiii) that portion of the salaries of
Landlord’s employees which does not relate to services
performed in and for the Building; (xiv) any damages paid or
incurred as a result of any tortious conduct by Landlord or any of
its agents or employees, or any breach of any lease of space by
Landlord or any of its agents or employees, and any
attorneys’ fees actually incurred, disbursements, or other
costs paid or incurred in the defense and settlement of claims
therefor; (xv) costs relating to liability for a complete or
partial withdrawal from any “multi-employer” plans
within the meaning of Section 4001(a)(3) of the Employee
Retirement Income Security Act of 1974, as amended by the
Multi-Employer Retirement Income Security Act of 1980; and
(xvi) the cost of repairs or construction necessitated by
violations of applicable Governmental Requirements in effect as of
the Lease Commencement Date, including without limitation,
Environmental Laws (as hereinafter defined), including fines,
penalties, and interest thereon. The proportionate share of
Operating Expenses to be paid by Tenant shall be a percentage of
the Operating Expenses based upon the proportion that the square
footage of the Demised Premises bears to the total square footage
of the Building (such figure referred to as “Tenant’s
Operating Expense Percentage” and set forth in
Section 1(j)); provided that, as to management fees, Tenant
shall pay Landlord the management fees directly attributable to the
Rent (as hereinafter defined) payable hereunder with respect to the
Demised Premises, and not Tenant’s Operating Expense
Percentage of the management fees payable on the entire Building.
Notwithstanding the foregoing, Landlord shall, in Landlord’s
reasonable discretion, have the right to adjust Tenant’s
proportionate share of individual components of Operating Expenses
if Tenant’s Operating Expense Percentage thereof would not
equitably allocate to Tenant its share of such component of
Operating Expenses in light of Tenant’s particular use of,
manner of use of and/or level of tenant improvements in the Demised
Premises. Prior to or promptly after the beginning of each calendar
year during the Term, Landlord shall estimate the total amount of
Operating Expenses to be paid by Tenant during each such calendar
year and Tenant shall pay to Landlord one-twelfth (1/12) of
such sum on the first day of each calendar month during each such
calendar year, or part thereof, during the Term. Within a
reasonable time after the end of each calendar year, Landlord shall
submit to Tenant a statement of the actual amount of Operating
Expenses for such calendar year (Landlord hereby agreeing to submit
such statement within one hundred twenty (120) days of the
expiration of the calendar year with respect to which such
statement applies), and the actual amount owed by Tenant, and
within thirty (30) days after receipt of such statement,
Tenant shall pay any deficiency between the actual amount owed and
the estimates paid during such calendar year, or in the event of
overpayment, Landlord shall credit the amount of such overpayment
toward the next installment of Operating Expenses owed by Tenant or
remit such overpayment to Tenant if the Term has expired or has
been terminated and no Event of Default exists hereunder (or, if an
Event of Default exists, apply such amount to Tenant’s
outstanding obligations hereunder), along with such statement. The
obligations in the immediately preceding sentence shall survive the
expiration or any earlier termination of this Lease. If the Lease
Commencement Date shall fall on other than the first day of the
calendar year, and/or if the Expiration Date shall fall on other
than the last day of the calendar year, Tenant’s
proportionate share of the Operating Expenses for such calendar
year shall be apportioned prorata.
(b) Any amounts required to
be paid by Tenant hereunder (in addition to Base Rent) and any
charges or expenses incurred by Landlord on behalf of Tenant under
the terms of this Lease shall be considered “Additional
Rent” payable in the same manner and upon the same terms and
conditions as the Base Rent reserved hereunder except as set forth
herein to the contrary (all such Base Rent and Additional Rent
sometimes being referred to collectively herein as
“Rent”). Any failure on the part of Tenant to pay such
Additional Rent when and as the same shall become due shall entitle
Landlord to the remedies available to it for non-payment of Base
Rent. Tenant’s obligations for payment of Additional Rent
shall begin to accrue on the Lease Commencement Date regardless of
the Base Rent Commencement Date.
(c) If applicable in the
jurisdiction where the Demised Premises are located, Tenant shall
pay and be liable for all rental, sales, use and inventory taxes or
other similar taxes, if any, on the amounts payable by Tenant
hereunder levied or imposed by any city, state, county or other
governmental body having authority, such payments to be in addition
to all other payments required to be paid to Landlord by Tenant
under the terms of this Lease. Such payment shall be made by Tenant
directly to such governmental body if billed to Tenant, or if
billed to Landlord, such payment shall be paid concurrently with
the payment of the Base Rent, Additional Rent, or such other charge
upon which the tax is based, all as set forth herein.
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(d) In addition to the
provisions of this Section 6, Special Stipulations 5 and 6 on
Exhibit C hereto shall be applicable to the determination of
Operating Expenses hereunder.
7. Use of Demised
Premises .
(a) The Demised Premises
shall be used for the Permitted Use set forth in Section 1(l)
and for no other purpose.
(b) Tenant will permit no
liens to attach or exist against the Demised Premises, and shall
not commit any waste.
(c) The Demised Premises
shall not be used for any illegal purposes, and Tenant shall not
allow, suffer, or permit any vibration, noise, odor, light or other
effect to occur within or around the Demised Premises that could
constitute a nuisance or trespass for Landlord or any occupant of
the Building or an adjoining building, its customers, agents, or
invitees. Upon notice by Landlord to Tenant that any of the
aforesaid prohibited uses are occurring, Tenant agrees to promptly
remove or control the same.
(d) Tenant shall not in any
way violate any law, ordinance or restrictive covenant affecting
the Demised Premises, and shall not in any manner use the Demised
Premises so as to cause cancellation of, prevent the use of, or
increase the rate of, the fire and extended coverage insurance
policy required hereunder. Landlord makes no (and does hereby
expressly disclaim any) covenant, representation or warranty as to
the Permitted Use being allowed by or being in compliance with any
applicable laws, rules, ordinances or restrictive covenants now or
hereafter affecting the Demised Premises, and any zoning letters,
copies of zoning ordinances or other information from any
governmental agency or other third party provided to Tenant by
Landlord or any of Landlord’s agents or employees shall be
for informational purposes only, Tenant hereby expressly
acknowledging and agreeing that Tenant shall conduct and rely
solely on its own due diligence and investigation with respect to
the compliance of the Permitted Use with all such applicable laws,
rules, ordinances and restrictive covenants and not on any such
information provided by Landlord or any of its agents or employees.
Notwithstanding the foregoing, Industrial Developments
International, Inc. (“IDI”), the initial
“Landlord” hereunder, hereby represents that, to
IDI’s actual knowledge (i) which for purposes of this
clause (i) is based solely on that letter from the Office of
Planning and Development of the City of Southaven, Mississippi to
Mr. Robert Fischer of IDI dated July 21, 2006, a copy of
which is attached hereto as Exhibit H , the land on which
the Building lies is currently zoned “Planned Business Park
(PBP)” under the City of Southaven, Mississippi zoning
ordinance; and (ii) there are no protective or restrictive
covenants that encumber the Property other than as may be included
in the Permitted Exceptions.
(e) In the event insurance
premiums pertaining to the Demised Premises, the Building, or the
Building Common Area, whether paid by Landlord or Tenant, are
increased over the least hazardous rate available for ordinary
office, warehouse, assembly, integration and distribution purposes
due to the nature of the use of the Demised Premises by Tenant,
Tenant shall pay such additional amount as Additional
Rent.
8. Insurance
.
(a) Tenant covenants and
agrees that from and after the Lease Commencement Date or any
earlier date upon which Tenant enters or occupies the Demised
Premises or any portion thereof, Tenant will carry and maintain, at
its sole cost and expense, the following types of insurance, in the
amounts specified and in the form hereinafter provided
for:
(i) Commercial General
Liability insurance (including Contractual Liability coverage)
covering the Demised Premises and Tenant’s use thereof
against claims for bodily injury or death, property damage and
product liability occurring upon, in or about the Demised Premises,
such insurance to be written on an occurrence basis (not a claims
made basis), to be in combined single limits amounts not less than
$3,000,000.00 per occurrence and to have general aggregate limits
of not less than $5,000,000.00.
(ii) Insurance covering
(A) all of the items included in the leasehold improvements
constructed in the Demised Premises by or at the expense of
Landlord (collectively, the “Improvements”), including
but not limited to demising walls and the heating, ventilating and
air conditioning system and (B) Tenant’s trade fixtures,
merchandise and personal property from time to time in, on or upon
the Demised Premises, in an amount not less than one hundred
percent (100%) of their full replacement value from time to
time during the Term (with such replacement value reasonably
determined by Landlord by notice to Tenant from time to time during
the term), providing protection against perils included within the
standard form of “Special Form” fire and casualty
insurance policy, together with insurance against sprinkler damage,
vandalism, malicious mischief, flood and earthquake,
regardless of the flood or earthquake zone. If during the
lease term, Tenant is unable to procure earthquake coverage on its
merchandise through Tenant’s risk management portfolio,
Landlord agrees to allow Tenant to carry earthquake coverage on
such merchandise of not less than sixty percent
(60%) of the full replacement value
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thereof. Any policy proceeds from
such insurance relating to the Improvements shall be used solely
for the repair, construction and restoration or replacement of the
Improvements damaged or destroyed unless this Lease shall cease and
terminate under the provisions of Section 20.
(b) All policies of the
insurance provided for in Section 8(a) shall be issued in form
reasonably acceptable to Landlord by insurance companies with a
rating of not less than “A,” and financial size of not
less than Class VII, in the most current available
“Best’s Insurance Reports”, and licensed to do
business in the state in which the Building is located. Each and
every such policy:
(i) shall name Landlord,
Lender (as defined in Section 24), and any other party
reasonably designated by Landlord, as an additional insured. In
addition, the coverage described in Section 8(a)(ii)(A)
relating to the Improvements shall also name Landlord as
“loss payee”;
(ii) shall be delivered to
Landlord through a certificate of insurance evidencing the required
lines of coverage, insurance limits and coverage endorsements set
forth in this Lease, and otherwise in a form acceptable to
Landlord, prior to the Lease Commencement Date and thereafter
within ten (10) days prior to the expiration of each such
policy, and, as often as any such policy shall expire or terminate.
Renewal or additional policies shall be procured and maintained by
Tenant in like manner and to like extent;
(iii) shall contain a
provision that the insurer will give to Landlord and such other
parties in interest at least thirty (30) days notice in
writing in advance of any cancellation, termination or lapse
(provided that no such notice shall be required by virtue of the
expiration of such policy in accordance with the terms of the
certificate delivered to Landlord as provided herein), or the
effective date of any reduction in the amounts of insurance
(provided that such policy need only provide ten (10) days
notice in writing in advance of any cancellation as a result of
failure to pay the premium therefor); and
(iv) shall be written as a
primary policy which does not contribute to and is not in excess of
coverage which Landlord may carry.
(c) In the event that Tenant
shall fail to carry and maintain the insurance coverages set forth
in this Section 8, Landlord may upon thirty (30) days
notice to Tenant (unless such coverages will lapse in which event
no such notice shall be necessary) procure such policies of
insurance and Tenant shall promptly reimburse Landlord
therefor.
(d) Landlord and Tenant
hereby waive any rights each may have against the other on account
of any loss or damage occasioned to Landlord or Tenant, as the case
may be, their respective property, the Demised Premises, its
contents or to the other portions of the Building, arising from any
risk covered by the Special Form fire and extended coverage
insurance required to be carried hereunder. The parties hereto
shall cause their respective insurance companies insuring the
property of either Landlord or Tenant against any such loss, to
waive any right of subrogation that such insurers may have against
Landlord or Tenant, as the case may be.
(e) Landlord agrees to keep
in force during the Term, at Landlord’s sole cost and expense
(subject to reimbursement therefor by Tenant’s payment of its
share of Operating Expenses) (i) a fire and other casualty
policy protecting against losses suffered to any portion of the
Building by fire and such other risks and hazards as are insurable
under present and future terms of “all-risk” insurance
policies (or its equivalent), such policy to be issued by an
insurance company with a rating of not less than “A”,
and financial size of not less than Class VII, in the most current
“Best’s Insurance Reports”, and authorized to do
business in the State of Mississippi (a “Satisfactory
Insurance Company”) in an amount not less than ninety-five
percent (95%) of the replacement value of the Building
(exclusive of footing and foundations), and shall be on such other
terms and conditions as insurance policies then generally being
carried by other owners of similar buildings in the greater
Memphis, Tennessee area carrying such insurance, and (ii) a
Commercial General Liability Insurance policy written by a
Satisfactory Insurance Company insuring Landlord against bodily
injury (including death) and property damage occasioned by an
occurrence in or about the Building for which Landlord would be
responsible pursuant to the terms hereof. The limits of liability
for such liability policy shall be not less than that required of
Tenant hereinabove. Landlord agrees to carry an “All
Risk” property deductible of not greater than two hundred
fifty thousand dollars ($250,000) and an Earthquake deductible of
not greater than five percent (5%) of the total insurable
value of the building, subject to a minimum deductible of two
hundred fifty thousand dollars ($250,000). These deductibles shall
be subject to the operating expenses identified in Section 6
of the lease. Notwithstanding the above, Tenant shall only be
subject to actual deductibles paid by the Landlord at the time of
loss.
9. Utilities . During
the Term, Tenant shall promptly pay as billed to Tenant all rents
and charges for water and sewer services and all costs and charges
for gas, steam, electricity, fuel, light, power, telephone, heat
and any other utility or service used or consumed in or servicing
the Demised Premises and all other costs and expenses involved in
the care, management and use thereof as charged by the applicable
utility companies. All such utilities shall be separately metered
and billed to Tenant, and Tenant shall establish an account with
the utility provider with respect to each such separately metered
utility. Tenant’s obligation for payment of all utilities
shall commence on the earlier of the Lease Commencement Date or the
date of Tenant’s actual occupancy of all or any portion of
the Demised Premises, including any period of occupancy prior to
the Lease Commencement Date, regardless of whether or not Tenant
conducts
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business operations during such period
of occupancy. If Tenant fails to pay any utility bills or charges,
Landlord may, at its option and upon reasonable notice to Tenant,
pay the same and in such event, the amount of such payment,
together with interest thereon at the Interest Rate as defined in
Section 32 from the date of such payment by Landlord, will be
added to Tenant’s next payment due as Additional
Rent.
10. Maintenance and
Repairs .
(a) Tenant shall, at its own
cost and expense, maintain in good condition and repair and replace
as necessary the interior of the Demised Premises, including but
not limited to the heating, air conditioning and ventilation
systems, glass, windows and doors, sprinkler, all plumbing and
sewage systems (excluding any pipes or lines located beneath the
floor slab which are used in common with other tenants of the
Building), fixtures, interior walls, floors (including floor
slabs), dock areas, dock ramps, ceilings, storefronts, plate glass,
skylights, all electrical facilities and equipment including,
without limitation, lighting fixtures, lamps, fans and any exhaust
equipment and systems, electrical motors, and all other appliances
and equipment (including, without limitation, dock levelers, dock
shelters, dock seals and dock lighting) of every kind and nature
located in, upon or about the Demised Premises, except as to such
maintenance, repair and replacement as is the obligation of
Landlord pursuant to Section 10(b). During the Term, Tenant
shall either (i) maintain qualified staff reasonably
acceptable to Landlord to perform maintenance of the heating,
ventilation and air conditioning systems, as reasonably evidenced
to Landlord from time to time upon Landlord’s request, or
(ii) maintain in full force and effect a service contract for
the maintenance of the heating, ventilation and air conditioning
systems with an entity reasonably acceptable to Landlord; provided,
however, that during the one year period following the Lease
Commencement Date, such service contract shall be maintained with
the contractor that installed the heating, ventilation and air
conditioning systems and shall provide for at least two preventive
maintenance service calls during such one year period. If Tenant is
required to or elects to maintain the service contracts in
accordance with part (ii) of the foregoing sentence, Tenant
shall deliver to Landlord (x) a copy of said service contract
prior to the Lease Commencement Date, and (y) thereafter, a
copy of a renewal or substitute service contract within thirty
(30) days prior to the expiration of the existing service
contract. Tenant’s obligation shall exclude any maintenance,
repair and replacement required because of the act, gross
negligence or willful misconduct of Landlord, its employees,
contractors or agents, which shall be the responsibility of
Landlord.
(b) Landlord shall, at its
own cost and expense, maintain in good condition and repair the
foundation (beneath the floor slab), structural frame, external
walls (exclusive of painting and caulking of the Building, the cost
of which will be included in Operating Expenses) and roof of the
Building (but any patches to the roof membrane not covered by
warranty will be included in Operating Expenses). Landlord shall
also be responsible for any repairs to the floor slab (but not the
maintenance thereof) required because of latent defects in the
floor slab, defects resulting from inferior workmanship in the
construction of the floor slab, or defects resulting from a failure
to construct the floor slab in accordance with the applicable plans
and specifications therefor or the laws and regulations applicable
thereto. Landlord’s obligation shall exclude the cost of any
maintenance or repair required because of the gross negligence,
improper use or willful misconduct of Tenant or any of
Tenant’s subsidiaries or affiliates, or any of Tenant’s
or such subsidiaries’ or affiliates’ agents,
contractors, employees, licensees or invitees (collectively,
“Tenant’s Affiliates”), the cost of which shall
be the responsibility of Tenant. Landlord shall never have any
obligation to repair, maintain or replace, pursuant to this
subsection 10(b) or any other provision of this Lease, any
Tenant’s Change (as defined in Section 18 hereof). In
addition to the foregoing, Landlord will maintain the fire pump and
sprinklers and perform inspections and testing in accordance with
the guidelines outlined in NFPA No. 25 “Inspection of
Water Based Fire Suppression Systems.”
(c) Unless the same is caused
solely by the negligent action or inaction of Landlord, its
employees or agents, and is not covered by the insurance required
to be carried by Tenant pursuant to the terms of this Lease,
Landlord shall not be liable to Tenant or to any other person for
any damage occasioned by failure in any utility system or by the
bursting or leaking of any vessel or pipe in or about the Demised
Premises, or for any damage occasioned by water coming into the
Demised Premises or arising from the acts or neglects of occupants
of adjacent property or the public.
11. Tenant’s
Personal Property; Indemnity . All of Tenant’s personal
property in the Demised Premises shall be and remain at
Tenant’s sole risk. Landlord, its agents, employees and
contractors, shall not be liable for, and Tenant hereby releases
Landlord from, any and all liability for theft thereof or any
damage thereto occasioned by any act of God or by any acts,
omissions or negligence of any persons, except to the extent caused
by the negligence or willful misconduct of Landlord, its agents,
employees and contractors. Landlord, its agents, employees and
contractors, shall not be liable for any injury to the person or
property of Tenant or the employees, agents, contractors or
invitees of Tenant in or about the Demised Premises, Tenant
expressly agreeing to indemnify and save Landlord, its agents,
employees and contractors, harmless, in all such cases, except to
the extent caused by the negligence or willful misconduct of
Landlord, its agents, employees and contractors. Tenant further
agrees to indemnify and reimburse Landlord for any costs or
expenses, including, without limitation, attorneys’ fees,
that Landlord reasonably may actually incur in investigating,
handling or litigating any such claim against Landlord by a third
person, unless such claim arose from the negligence or willful
misconduct of Landlord, its agents, employees or contractors. The
provisions of this Section 11 shall survive the expiration or
earlier termination of this Lease with respect to any damage,
injury or death occurring before such expiration or
termination.
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12. Tenant’s
Fixtures . Tenant shall have the right to install in the
Demised Premises trade fixtures required by Tenant or used by it in
its business, and if installed by Tenant, to remove any or all such
trade fixtures from time to time during and upon termination or
expiration of this Lease; provided , however , that
Tenant shall repair and restore any damage or injury to the Demised
Premises (to the condition in which the Demised Premises existed
prior to such installation) caused by the installation and/or
removal of any such trade fixtures.
13. Signs . No sign,
advertisement or notice shall be inscribed, painted, affixed, or
displayed on the windows or exterior walls of the Demised Premises
or on any public area of the Building, except in such places,
numbers, sizes, colors and styles as are approved in advance in
writing by Landlord, and which conform to all applicable laws,
ordinances, or covenants affecting the Demised Premises. Any and
all signs installed or constructed by or on behalf of Tenant
pursuant hereto shall be installed, maintained and removed by
Tenant at Tenant’s sole cost and expense.
14. No Landlord’s
Lien . Notwithstanding any other provision hereof to the
contrary, other than with respect to liens arising by virtue of any
judgments obtained by Landlord against Tenant, Landlord hereby
waives any and all rights (whether contractual, common law,
statutory or otherwise) to any lien or right of distraint against
any personal property and trade fixtures of Tenant situated in and
upon the Demised Premises.
15. Governmental
Regulations . Tenant shall promptly comply throughout the Term,
at Tenant’s sole cost and expense, with all present and
future laws, ordinances, orders, rules, regulations or requirements
of all federal, state and municipal governments and appropriate
departments, commissions, boards and officers thereof
(collectively, “Governmental Requirements”) relating to
(a) all or any part of the Demised Premises, and (b) the
use or manner of use of the Demised Premises and the Building
Common Area; provided, however, that Landlord shall be solely
responsible for making all changes necessitated by violations by
Landlord, it contractors or agents, of applicable Governmental
Requirements in effect as of the Lease Commencement Date. Tenant
shall also observe and comply with the requirements of all policies
of public liability, fire and other policies of insurance at any
time in force with respect to the Demised Premises. Notwithstanding
the foregoing, (A) if as a result of one or more Governmental
Requirements it is necessary, from time to time during the Term, to
perform an alteration or modification of the Demised Premises, the
Building, or the Building Common Area (a “Code
Modification”) which is made necessary as a result of the
specific use being made by Tenant of the Demised Premises (as
distinguished from an alteration or modification which would be
required to be made by the owner of a warehouse-office building
comparable to the Building irrespective of the use thereof by any
particular occupant) or a Tenant’s Change, then such Code
Modification shall be the sole and exclusive responsibility of
Tenant in all respects; any such Code Modification shall be
promptly performed by Tenant at its expense in accordance with the
applicable Governmental Requirement and with Section 18
hereof; and (B) if as a result of one or more Governmental
Requirements it is necessary from time to time during the Term to
perform a Code Modification which (i) would be characterized
as a capital expenditure under generally accepted accounting
principles and (ii) is not made necessary as a result of the
specific use being made by Tenant of the Demised Premises (as
distinguished from an alteration or modification which would be
required to be made by the owner of any warehouse-office building
comparable to the Building irrespective of the use thereof by any
particular occupant) or a Tenant’s Change, then
(a) Landlord shall have the obligation to perform the Code
Modification at its expense, (b) the cost of such Code
Modification shall be amortized on a straight-line basis over the
useful life of the item in question, as reasonably determined by
Landlord in accordance with generally accepted accounting
principles, and (c) Tenant shall be obligated to pay (as
Additional Rent, payable in the same manner and upon the same terms
and conditions as the Base Rent reserved hereunder) for
(i) Tenant’s proportionate share (based on
Tenant’s Operating Expense Percentage) of the portion of such
amortized costs attributable to the remainder of the Term,
including any extensions thereof, with respect to any Code
Modification respecting the Building Common Area, and (ii) the
entire portion of such amortized costs attributable to the
remainder of the Term, including any extensions thereof, with
respect to any Code Modification respecting the Demised Premises
(and Tenant shall expressly not be required to pay any portion of
the cost of a Code Modification respecting any leased or leasable
space in the Building other than the Demised Premises, unless
specifically required to do so under such Code Modification).
Tenant shall promptly send to Landlord a copy of any written notice
received by Tenant requiring a Code Modification.
16. Environmental
Matters .
(a) For purposes of this
Lease:
(i)
“Contamination” as used herein means the presence of or
release of Hazardous Substances (as hereinafter defined) into any
environmental media from, upon, within, below, into or on any
portion of the Demised Premises, the Building, the Building Common
Area or the Project so as to require remediation, cleanup or
investigation under any applicable Environmental Law (as
hereinafter defined).
(ii) “Environmental
Laws” as used herein means all federal, state, and local
laws, regulations, orders, permits, ordinances or other
requirements, which exist now or as may exist hereafter, concerning
protection of human health, safety and the environment, all as may
be amended
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from time to time including, without
limitation, the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. 9601 et seq. (“CERCLA”)
and the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et
seq. (“RCRA”).
(iii) “Hazardous
Substances” as used herein means any hazardous or toxic
substance, material, chemical, pollutant, contaminant or waste as
those terms are defined by any applicable Environmental Laws and
any solid wastes, polychlorinated biphenyls, urea formaldehyde,
asbestos, radioactive materials, radon, explosives, petroleum
products and oil.
(b) Landlord represents that,
except as revealed to Tenant in writing by Landlord, to
Landlord’s actual knowledge, Landlord has not treated, stored
or disposed of any Hazardous Substances upon or within the Demised
Premises, nor, to Landlord’s actual knowledge, has any
predecessor owner or occupant of the Demised Premises.
(c) Tenant covenants that all
its activities, and the activities of Tenant’s Affiliates (as
defined in Section 10(b)), on the Demised Premises, the
Building, or the Project during the Term will be conducted in
compliance with Environmental Laws. Tenant warrants that, to the
current actual knowledge of Shelby McCloud, Vice President of
Warehouse Operations for Tenant (without any individual liability
on her part), it is currently in compliance with all applicable
Environmental Laws and that there are no pending or threatened
notices of deficiency, notices of violation, orders, or judicial or
administrative actions involving alleged violations by Tenant of
any Environmental Laws. Tenant, at Tenant’s sole cost and
expense, shall be responsible for obtaining all permits or licenses
or approvals under Environmental Laws necessary for Tenant’s
operation of its business on the Demised Premises, shall make all
notifications and registrations required by any applicable
Environmental Laws, and shall use and store all substances used in
the operation of Tenant’s business at the Demised Premises in
accordance with the Materials Safety Data Sheets therefor. Tenant,
at Tenant’s sole cost and expense, shall at all times comply
with the terms and conditions of all such permits, licenses,
approvals, notifications and registrations and, to the extent
regulating the conduct of Tenant’s activities at the Demised
Premises, with any other applicable Environmental Laws. Tenant will
maintain all such permits, licenses or approvals and make all such
notifications and registrations required by any applicable
Environmental Laws necessary for Tenant’s operation of its
business on the Demised Premises.
(d) Tenant shall not cause or
permit any Hazardous Substances to be brought
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