LEASE AGREEMENT
THIS
LEASE, made and
entered into this the
day of
, 2005,
------
----------
by and between POMEROY INVESTMENTS, LLC,
a Kentucky limited liability company,
with its principal place of business
located at 903 Squire Oaks Drive in Villa
Hills, Kentucky
41017 ("Landlord") and POMEROY SELECT INTEGRATION
SOLUTIONS,
INC., a Delaware corporation, with its principal
place of business located at
1020 Petersburg
Road, Hebron, Kentucky 41048 ("Tenant").
WITNESSETH:
WHEREAS, it
is the intent of Landlord to construct a new building
comprising approximately 69,364 square feet, which shall be
situated adjacent to
the buildings that Landlord currently leases to Tenant's parent
company, Pomeroy
IT Solutions, Inc., at
1020 Petersburg Road, Hebron, Kentucky ("Buildings A and
C") and 1050 Elijah Creek Road, Hebron Kentucky ("Building B")
respectively; and
WHEREAS, Landlord
desires to lease such building to Tenant, as more
particularly described
herein, and Tenant desires to lease such
building from
Landlord under the terms and conditions set forth in this
Lease.
NOW
THEREFORE,
the parties desire to enter into a Lease defining
their
respective rights, duties and liabilities relating to the
premises.
IN
CONSIDERATION
of the mutual covenants contained herein, the
parties
agree as follows:
1. PREMISES.
Landlord will be the owner of
69,364rentable square feet, which
is to be constructed and located at (STREET ADDRESS TO BE INSERTED UPON
COMPLETION OF
CONSTRUCTION)
in Hebron, Kentucky 41048.
The
leased space shall consist of office and warehouse space, together
with
fixtures and
other improvements thereon, consisting of approximately
69,364
rentable square feet
(hereinafter referred to as "Leased Premises" or "Building
D") and more particularly described on
Exhibit ,
attached hereto and made a
---
part hereof by
reference. Building D
shall be for the exclusive use of Tenant,
its agents,
representatives, employees and invitees for
office/retail/warehouse
and related
uses.
Landlord represents and warrants that it will be the owner in fee
simple of
Building D
and that there are no covenants, restrictions or
zoning or other
regulations which will prevent, or will be violated by, this Lease
or the use of
the Building D as contemplated herein during the term hereof.
2. TERM.
The term of this Lease shall be for a period of ten (10)
years,
beginning on
the date upon which Tenant takes occupancy of Building D
("Commencement Date"),
and terminating exactly ten (10) years thereafter
("Termination Date")
unless either terminated sooner as provided herein or
extended for additional renewal term(s) pursuant to terms provided
herein.
3. BASE
RENT. During the term of this Lease, Tenant shall
pay base rent as
follows for
Building D:
<TABLE>
<CAPTION>
(A) 20,000 SQUARE FEET
OF OFFICE SPACE
<S>
<C>
<C>
Year
1 20,000 sq. ft.
office space @ $5.00/sq. ft. $8,333.33/month
Year
2 *2% increase
. . . . . . . . . . .
. . .
$8,500.00/month
Year
3 *2% increase
. . . . . . . . . . .
. . .
$8,670.00/month
Year
4 *2% increase
. . . . . . . . . . .
. . .
$8,843.40/month
Year
5 *2% increase
. . . . . . . . . . .
. . .
$9,020.27/month
Year
6 *2% increase
. . . . . . . . . . .
. . . .
$9,200.68/month
Year
7 *2% increase
. . . . . . . . . . .
. . .
$9,384.69/month
Year
8 *2% increase
. . . . . . . . . . .
. . .
$9,572.83/month
Year
9 *2% increase
. . . . . . . . . . .
. . .
$9,763.83/month
Year
10 *2% increase
. . . . . . . . . . .
. . .
$9,959.11/month
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
(B) 29,364 SQUARE FEET
OF WAREHOUSE SPACE
<S>
<C>
<C>
Year
1 29,364 sq. ft.
warehouse space @ $3.00/sq. ft $7,341.00/month
Year
2 *2% increase
. . . . . . . . . . .
. . . . .
$7,487.82/month
Year
3 *2% increase
. . . . . . . . . . .
. . . . .
$7,637.58/month
Year
4 *2% increase
. . . . . . . . . . .
. . . . .
$7,790.33/month
Year
5 *2% increase
. . . . . . . . . . .
. . . . .
$7,946.14/month
Year 6 *2% increase . . . . . . . . . . . . . . . .
$8,105.06/month
Year
7 *2% increase
. . . . . . . . . . .
. . . . .
$8,267.16/month
Year
8 *2% increase
. . . . . . . . . . .
. . . . .
$8,432.50/month
Year
9 *2% increase
. . . . . . . . . . .
. . . . .
$8,601.15/month
Year
10 *2% increase
. . . . . . . . . . .
. . . . .
$8,773.17/month
</TABLE>
(C) 20,000 SQUARE FEET
OF ADDITIONAL WAREHOUSE SPACE
Tenant shall be entitled to an additional 20,000 square feet of
warehouse space,
during which
time the base monthly
rental for such space shall be abated for a
period of two (2) years, beginning on the Commencement Date
and end exactly
twenty-four (24)
months thereafter as provided in the chart below.
Year 1 & 2
20,000 sq.
ft. warehouse space $ -0- /sq. ft.
$-0-/month
On the second
anniversary of the Commencement Date, Tenant shall have the
right
and option
to continue to occupy
the 20,000 square feet of warehouse space, or
such other
lesser amount of square footage as the parties
may mutually agree
upon, at a rate of $3.00 per square foot so long
as Tenant provides Landlord
with written
notice of Tenant's intent to lease some or
all of such space at
such rate at least 90 days prior to the
second anniversary of the Commencement
Date. Tenant
shall also notify Landlord as to the length
of time that Tenant
intends to
lease such additional warehouse space; which term shall be in
accordance with
the terms and conditions provided hereunder. In the event
Tenant exercises
its right and option hereunder, the base rent for this
additional 20,000
square feet of warehouse space shall be $3.00 per square foot
of the space that Tenant agrees to lease
from Landlord hereunder and said base
rent shall increase exactly 2% annually for so long as Tenant
leases such space.
(D) 7,300 SQUARE FEET
OF MEZZANINE SPACE
Tenant shall
also be entitled to
possession of approximately 7,300 square feet
of space located on the mezzanine level of Building D. In
consideration of
Tenant paying for the expenses associated with the construction of
the aforesaid
square footage for use as office space, which one-time costs are
estimated to be
$130,000.00 for
such construction of the mezzanine space, Landlord
shall not
charge Tenant
rent for the use of such space during
the initial ten (10) year
term of this Lease or any renewal term hereof. Tenant shall be solely
responsible for
any additional costs associated with the
improvements and/or
build-out construction
costs for finishing the space for use as offices or like
kind purposes.
<TABLE>
<CAPTION>
<S>
<C>
<C>
Year
1 7,300 sq. ft.
warehouse space @ $-0-/sq. ft. $-0-/month
Year
2 . . . .
. . . . . . . . . . . . . . . . . $-0-/month
Year
3 . . . .
. . . . . . . . . . . . . . . . . $-0-/month
Year
4 . . . .
. . . . . . . . . . . . . . . . . $-0-/month
Year
5 . . . .
. . . . . . . . . . . . . . . . . $-0-/month
Year
6 .
. . . . . . . . . . . . . . . . . . . . $-0-/month
Year
7 .
. . . . . . . . . . . . . . . . . . . . $-0-/month
Year
8 . . . . .
. . . . . . . . . . . . . . . $-0-/month
Year
9 . . . . .
. . . . . . . . . . . . . . . . $-0-/month
Year
10 .
. . . . . . . . . . . . . . . . . . . . $-0-/month
</TABLE>
2
<PAGE>
Based upon
the foregoing, the Tenant's base
monthly rental obligation to
Landlord for
the first year of the initial ten (10) year term shall be:
$15,574.33. Tenant's
base monthly rental
obligation shall increase annually in
accordance with
the schedules provided above.
4. PAYMENT OF
RENT. All monthly installments of rent herein stipulated are
due
in advance
on the first (1st) day
of each month during the term hereof, as set
forth in Section 3
hereof entitled "BASE RENT". All rents not received on
the
first (1st)
day of the month shall be deemed "past due" and all rents
not
received by
the Landlord by the fifteenth (15th)
day of each month shall bear
interest at
the rate of six percent (6%) per annum
from the due dates thereof
during the
term hereof.
For any partial month that Tenant occupies Building D,
Tenant's monthly base
rental obligation
shall be prorated as follows:
Tenant shall pay to
Landlord
base rent calculated on a daily basis assuming a 365 day
year, for each day
Tenant shall
occupy the Leased Premises during a partial month period.
All
rental payments must
be made payable to Landlord at the following address: 903
Squire Oaks
Drive, Villa Hills, Kentucky 41017 or at such other place as
Landlord may
direct so long as Landlord provides Tenant
with at least thirty
(30) days prior written notice of such change in address.
5. OCCUPANCY,
POSSESSION
AND ACCEPTANCE OF LEASED PREMISES.
(a)
Upon
Substantial
completion of Building
D, including construction
of the Tenant
Improvements to be constructed by Landlord on behalf of Tenant
as
set forth in Exhibit , a
representative of Landlord and representative of
---
Tenant together
shall inspect the
Leased Premises and generate a punch list of
defective or
incomplete
items relating to the completion of construction
of
Building D
and of the Tenant leasehold
improvements that Landlord was charged
with completing within the Leased Premises. Landlord shall, within a
reasonable
time after
such punch list is
prepared and agreed upon by Landlord and Tenant,
complete such incomplete work and remedy such defective work as are
set forth on
the punch list.
Subject to the warranty contained in Section 5(c) herein below,
all construction
work performed by
Landlord shall be deemed approved by Tenant
in all respects expect
for items of said work which are not completed or do not
conform to
the plans and specifications and which are
included on the punch
list.
(b)
Upon
the earlier of
twenty-nine (29) days of the acceptance of the
Leased Premises
by Tenant or the date Tenant
commences business at the Leased
Premises, Tenant
shall execute and
deliver to Landlord a letter confirming the
exact date
of the Lease Commencement Date, Base Rent Commencement Day and
Termination Date.
(c)
Landlord hereby warrants to Tenant that the materials and
equipment
furnished by
Landlord's
contractors
in the completion of Building D and
the
Tenant leasehold improvements that Landlord is responsible for
completing within
the Leased
Premises will be of good quality and new, that
during the one (1)
year period following
the Lease Commencement Date, such materials and equipment
and the work of such
contractors shall be free from defects not inherent in the
quality required or
permitted hereunder, and that such work will conform to the
plans and specifications. This warranty shall exclude
damages or defects caused
by abuse of Tenant,
its employees, invitees, licensees, contractors and agents,
improper or insufficient maintenance, improper operation or normal
wear and tear
under normal usage.
Landlord further
warrants that Building D will comply, at
all times, with all current governmental laws, codes, and
regulations, including
those relating
to the Americans with Disabilities Act
(ADA). If, during
the
term of this Lease, new governmental laws, codes, and regulations
are enacted or
existing governmental
laws, codes, and regulations are changed, altered or
amended in any way,
thereby rendering Building D non-compliant, Landlord shall,
at its own expense,
make appropriate changes or alterations to Building D so as
to ensure compliance with applicable governmental laws, codes, and
regulations.
6. USE. Building
D shall be used for general office use, the sale, service and
distribution of microcomputer products, including, but not limited
to, hardware,
software and
peripheral
devices, along with uses generally associated with
operating a
call center or remote helpdesk operation. Tenant shall not
3
<PAGE>
conduct, or
allow to be conducted, on or within Building D any
business or
permit any
act which in any way
constitutes a nuisance or is contrary to or in
violation of
the laws, statutes or ordinances of local state or federal
governments having
jurisdiction
and Tenant agrees to comply, at Tenant's
expense, with
all governmental regulations. Tenant shall permit no waste,
damage or injury to Building D.
7. QUIET
ENJOYMENT.
The Landlord covenants that Tenant, upon paying the
Landlord the
rental stipulated
herein together with all other charges reserved
herein, and
performing
the covenants, promises and agreements herein,
shall
peaceably and quietly have, hold and enjoy Building D and all
rights, easements,
appurtenances and
privilege belonging or
appertaining thereto, during the full
term hereby
granted and any extensions or renewals thereof.
8. ASSIGNMENT
AND SUBLETTING. Landlord hereby acknowledges that Tenant may,
at
its option,
assign or sublease a portion of Building D to its any of its
subsidiaries or
its affiliates. Tenant shall not be required to obtain
Landlord's consent for such intra-company assignment or subletting
arrangements.
Tenant otherwise
covenants and agrees that neither this Lease nor the
term
hereby granted,
nor any part thereof, will be assigned,
mortgaged, pledged,
encumbered or
otherwise transferred, by operation of law or otherwise, and
that
neither Building
D, nor any part thereof, will be sublet or
advertised for
subletting or
occupied, by anyone other than Tenant and/or any of its
subsidiaries or
its affiliates, or for any purpose
other than as herein above
set forth, without the
prior written consent of Landlord, which shall not to be
unreasonably
withheld.
9. CONSTRUCTION
OF BUILDING D AND TENANT LEASEHOLD IMPROVEMENTS.
(a)
Landlord, at its sole cost, agrees to perform and complete the
work
on the construction of Building D according to the plans and
specifications
attached hereto
as Exhibit
by
, 2005, subject to
----
---------------------
events and
delays due to causes beyond its reasonable
control. Landlord,
on
behalf of Tenant, shall complete the Tenant
leasehold improvements outlined on
Exhibit according to the
plans and specifications attached hereto as Exhibit
----
,
at Tenant's cost and expense as set
forth in such Exhibit.
Tenant shall
----
pay for such Tenant leasehold improvements at within thirty (30) days of
accepting the
work performed and completed by
Landlord, but in no event shall
payment be
made to Landlord any
later than thirty (30) days after such time as
Tenant takes
occupancy of Building D. In the event that Tenant desires
any
change orders to such Tenant leasehold improvements as outlined on
Exhibit ,
----
Tenant shall
be responsible for any
costs incurred incident thereto. Upon the
completion of
Building D and the Tenant leasehold improvements,
the parties
shall amend
this Lease if the amount of rentable square
footage is less than
what is contemplated hereunder.
(b)
In
the event that Landlord is unable to substantially
complete
Building D
for occupancy by Tenant on or before
the date which is one hundred
eighty (180) days after the date set forth in Section 9(a) above
(as extended by
the number of days due to delay caused by Tenant and except as
provided herein),
Tenant may,
at its option and as its sole remedy, terminate this
Lease by
written notice
to Landlord given within thirty (30) days following the
expiration of
such one hundred eighty (180) day period (as extended) and
thereafter, neither
Landlord nor Tenant shall have any further obligation
hereunder.
(c)
Landlord will
use its reasonable, good faith effort to allow
Tenant, at
Tenant's sole risk and without liability to Landlord, to
accept
Building D twenty-nine
(29) days prior to the Lease Commencement Date set forth
herein for
the sole purpose of
furnishing and equipping Building D in order to
operate Tenant's
business. In the event Tenant is unable to complete the
furnishing and
equipping of Building D within such twenty-nine (29) day
period,
the Lease Commencement Date and Base Rent due incident
thereto shall begin at
the expiration
of such twenty-nine (29) day period. In the event Tenant
completes such
items prior to the expiration of such twenty-nine (29) day
period, the
Lease Commencement Date and Base Rent due incident
thereto shall
commence upon
Tenant's occupying Building D for business.
In the event that
Landlord is unable to complete construction of the Tenant Leasehold
improvements
by
,
2005, as a result of change orders
requested by Tenant, the
------------
parties agree
to negotiate in good faith the Lease
Commencement Date and Base
Rent due incident thereto based on the nature and reason for such
delay.
4
<PAGE>
10. MAINTENANCE
& REPAIRS.
(a)
Tenant shall,
at its own cost and expense maintain in good
condition and
repair the interior of the Leased Premises, including
but not
limited to
the electrical systems, heating, air conditioning
and ventilation
systems, glass, windows and doors, sprinklers and plumbing systems.
Tenant shall
maintain in
full force and effect a service contract for the heating,
ventilation and air conditioning systems with an entity reasonably
acceptable to
Landlord. Tenant's
obligation to repair
and maintain the Leased Premises shall
included without limitation all plumbing and sewage facilities
within the Leased
Premises, fixtures,
interior walls, floors, ceilings, windows, doors,
plate
glass, skylights,
all electrical facilities including without limitation
lighting fixtures, lamps, fans and any exhaust equipment and
systems, electrical
motors and
all other appliances
and equipment of every kind and nature located
in, upon or about the
Leased Premises, except such maintenance and repair as is
the Obligation
of the Landlord pursuant to Section 5(c) and 19. Tenant's
obligation shall
exclude any maintenance and repair required because of the act
or negligence of Landlord, which shall be the responsibility of
Landlord.
(b)
Tenant shall,
at its own cost and expense, maintain in good
condition and
repair the exterior
walls, roof, foundation and structural frame
of the Leased Premises. Tenant's obligation shall exclude the cost of any
maintenance or
repair which is the
obligation of Landlord pursuant to Sections
5(c) and 19. Tenant's obligation shall exclude any maintenance and repair
required because
of the act or negligence of Landlord, which shall be
the
responsibility of
Landlord.
(c)
Tenant's obligations
shall include, but shall not be limited
to,
the obligation to repair or replace when necessary, any of the
items required to
be maintained
by Tenant at its sole cost and
expense. Such
replacement items
shall be of comparable quality as those that they are replacing.
If Tenant
fails to perform Tenant's obligations under this
Section 10, Landlord may, at
Landlord's option
and upon prior notice to Tenant (except in
the case of any
emergency), enter
upon the Leased Premises and put the same in good
order,
condition and
repair and make such replacements as may be
necessary, and the
cost thereof
shall become due and payable as additional rental
by Tenant to
Landlord upon demand,
but nothing contained in this sentence shall be deemed to
impose any
duty upon Landlord or affect in any manner
the obligations placed
upon Tenant
by this Paragraph 10. Any such entry by Landlord shall not
be
deemed to be an eviction of Tenant.
11. COMMON AREAS.
Tenant and its agents,
employees and invitees shall have the
nonexclusive right
to the use of the common areas of and
relating directly to
Building D
and access to and from the Leased Premises.
12. TENANT'S
ALTERATIONS.
Tenant shall be entitled to make such
alterations,
additions or
improvements
in and to the Leased
Premises which Tenant may deem
desirable or
necessary in its use and occupancy thereof. Such
alterations,
additions or
improvements shall not
be made without the prior written approval
of Landlord,
which shall not be
unreasonably withheld. Any such alterations,
additions or
improvements
shall be made in accordance with applicable
city,
county, state and federal laws and ordinances, and building and
zoning rules and
regulations and
all present and future
governmental regulations. Tenant shall
be liable for all damages or injuries, which may result to any person or
property by
reason of or resulting from any alterations, additions or
improvements made
by it to the Leased Premises and shall hold the
Landlord
harmless with respect thereto. All additions and improvements made
by the Tenant
shall become
a part of the Leased Premises and
shall, upon the termination or
expiration of
this Lease, belong to Landlord except as may be
otherwise set
forth in a letter
agreement or other written instrument executed by the parties
hereto and attached to this Lease as an amendment hereto and
thereby made a part
hereof.
13. SUBORDINATION
AND ATTORNMENT. Tenant agrees that this Lease
