-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I1x8qgWRftWOPreMLwQe7gEGJey4DjdnYBfOuWRTgQCgXIh8DkGgECZ5KxxFQr9L PiYr9Y6Eo93yT6soxqWtOQ== 0000943440-01-500132.txt : 20010615 0000943440-01-500132.hdr.sgml : 20010615 ACCESSION NUMBER: 0000943440-01-500132 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20010614 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010614 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PETMED EXPRESS INC CENTRAL INDEX KEY: 0001040130 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MISCELLANEOUS NONDURABLE GOODS [5190] IRS NUMBER: 650680967 STATE OF INCORPORATION: FL FISCAL YEAR END: 0330 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-28827 FILM NUMBER: 1660806 BUSINESS ADDRESS: STREET 1: 1441 SW 29 AVENUE CITY: POMPANO BEACH STATE: FL ZIP: 33069 BUSINESS PHONE: 9549794788 MAIL ADDRESS: STREET 1: 1441 SW 29 AVENUE CITY: POMPANO BEACH STATE: FL ZIP: 33069 8-K 1 jun1401-8k.txt ============================================================================= UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): June 14, 2001 Commission file number 000-28827 PETMED EXPRESS, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) FLORIDA 65-0680967 - --------------------------------- ------------------- (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 1441 S.W. 29th Avenue, Pompano Beach, Florida 33069 - --------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (954) 979-5995 Not Applicable ------------------------------------------------------------- (Former name or former address, if changed since last report) 1 Item 2. Acquisition or Disposition of Assets On May 31, 2001, the Company sold their facilities (50,000 square foot corporate office building), which includes the principal executive offices and warehouse, to an unrelated third party. The Company received proceeds of $2,150,000, of which approximately $1,600,000 was used to pay off the mortgage. The Company then entered into a five-year term leaseback agreement for 20,000 of the 50,000 square foot Pompano Beach office building. The lease term runs through May 2006. The financial results of the transaction will be reported in the first quarter of fiscal year 2002. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. 99.1 Agreement of Sale of Corporate Office Building 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PETMED EXPRESS,, Inc. Date: June 14, 2001 By: /s/ Bruce S. Rosenbloom --------------------------- Bruce S. Rosenbloom, Chief Executive Officer 3 EX-99 2 saleag-6018k.txt AGREEMENT OF SALE AND PURCHASE AGREEMENT OF SALE AND PURCHASE ------------------------------ THIS AGREEMENT OF SALE AND PURCHASE ("Agreement") is by and between RMS PROPERTIES, L.L.C., an Illinois Limited Liability Company doing business in Florida as RMS PROPERTIES OF ILLINOIS, L.L.C., having an address at 331B West Golf Road, Schaumburg, Illinois 60195 or nominee (the "Buyer") and PETMED EXPRESS, INC., a Florida Corporation, having an address at 1441 SW 29th Street, Pompano Beach, Florida ("Seller"). This Agreement is to be effective as of the date that the last of Buyer and Seller have executed this Agreement (the "Effective Date"). In consideration of the covenants and provisions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Agreement of Sale and Purchase. Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, subject to the terms and conditions of this Agreement, Seller's fee simple interest in that certain property comprised of one (1) office/warehouse building consisting of approximately 49,920 rentable square feet on approximately 4.37 acres more or less, whose tax folio numbers are 4942-04-08-0010, located at 1441 SW 29th Street, Pompano Beach, Florida, as more fully described by the legal description attached hereto as Exhibit "A", together with all right, title and interest of Seller in and to any land lying in the bed of any highway, street, road or avenue, opened or proposed, in front of or abutting or adjoining such tracks or pieces of land and any easements and appurtenances pertaining thereto (the "Real Property") and all the buildings and other improvements situated thereon, including all fixtures, and HVAC systems and equipment attached or appurtenant to, located in or on, or used in connection with the Real Property (the "Personal Property"). (The Real Property and the Personal Property are jointly called the "Property".) 2. Purchase Price. The purchase price for the sale of Seller's fee simple interest in the Property is $2,150,000.00 (the "Purchase Price") payable as follows: (a) $200,000.00 (the "Deposit") by check payable to the trust account of the real estate firm of NAI-Rauch, Weaver, Norfleet, Kurtz & Co. ("Escrow Agent"), which shall be delivered to Escrow Agent within two (2) business days following the Effective Date. The Deposit shall be held in an interest bearing, federally insured money market account by Escrow Agent in accordance with the provisions specified in this Agreement pending consummation of this transaction. Any interest earned on the Deposit shall be paid to Buyer unless Seller shall be entitled to the Deposit by reason of a default by Buyer, in which case such interest shall be paid to Seller. Seller's Federal Tax I.D. Number is 65- 0680967; Buyer's Federal Tax I.D. Number is 36-4203617. (b) The balance of the Purchase Price, subject to prorations and adjustments as herein provided, shall be paid to Seller at Closing (as defined below) by wire transfer of immediately available federal funds. 1 Exhibit 99.1 3. Closing. Closing shall be held on the date (the "Closing Date") which is fifteen (15) calendar days after expiration of the Due Diligence Period (as defined below) (or on the next business day thereafter if such date is not a business day), at the office of Seller's counsel ("Closing"). It is agreed that the time of Closing and the obligation of Seller to deliver the special warranty deed and other closing documents at Closing upon Buyer's full payment of the Purchase Price in cleared funds are of the essence of this Agreement. 4. Condition of Title. (a) Title to Seller's fee simple interest in the Property shall be good and marketable, (i) free and clear of all liens (except for the lien of real estate taxes and assessments for the current year not yet due and payable, restrictions, easements, conditions, assessments, agreements, encumbrances, claims or liens by contractors, subcontractors, mechanics and materialmen, leases, financing statements or other personal property liens or encumbrances and other title objections, other than such title exceptions as may be approved by Buyer within the Due Diligence Period. Within ten (10) days after the Effective Date, Seller shall obtain and deliver at its expense a title insurance commitment in the amount of the Purchase Price, issued by Lawyer's Title Insurance Company committing to issue a fee simple owner' title insurance policy with an effective date not earlier than the Effective Date, and including copies of all Schedule B-1 and B-2 documents. All standard exceptions and the "gap" shall be deleted at the time of Closing, and there shall be no exception for possible mechanics liens or possible taxes and assessments for prior years against Seller or the Property. Seller shall deliver to Buyer within three (3) days of the Effective Date, a prior survey of the Property, if in Seller's possession. Buyer, at Buyer's election and expense may obtain either an update and recertification of Seller's existing survey, or a new survey of the Property prepared by a Florida registered land surveyor ("survey"). In the event the Survey shows any encroachments, non-contiguity, overlaps, strips, gores, easements, rights-of-way, hiatus, or any other type of encumbrance or matter not authorized by the provisions of this Agreement, they shall be considered as title defects and may be objected to by Buyer during the Due Diligence Period. (b) Buyer shall have until the expiration of the Due Diligence Period to give written notice to Seller of any objections that Buyer may have to any exceptions to title as disclosed in the Commitment (including any endorsements thereto) and survey or otherwise as to any unrecorded matters. Any title exceptions not timely objected to by Buyer shall be deemed permitted exceptions (the "Permitted Exceptions"). (c) In the event Buyer timely delivers its title objections to Seller, Seller will cooperate with Buyer and shall use reasonable efforts to cure by Closing Buyer's title objections; provided, however, that (i) Seller shall not be required to cure any matters which cannot be cured within fifteen (15) days after Seller's receipt of Buyer's title objection letter; (ii) Seller shall not be required to incur in the aggregate in excess of Twenty Thousand Dollars ($20,000.00) to cure all title objections; (iii) Seller shall not be obligated to institute any legal action to cure any such title objections and provided, further, that Seller shall not be required to cure any such title objections which are not considered title defects under the Title Standards adopted by the authority of the Florida Bar. Seller, however, agrees that Seller shall pay and discharge all liens at Closing which can be satisfied by payment of a liquidated sum. 2 Exhibit 99.1 (d) At Closing, Seller shall transfer its fee simple interest in the Property to Buyer by Special Warranty Deed ("Deed") in recordable form attached hereto and made a part hereof as "Exhibit B", subject only to the Permitted Exceptions, and the following matters which shall also be deemed to be Permitted Exceptions: the lien of all ad valorem real estate taxes and assessments not yet due and payable as of the date of Closing; and local, state and federal laws, ordinances or governmental regulations, including but not limited to building and zoning laws, ordinances and regulations. (e) If title to the Property cannot be conveyed to Buyer at Closing in accordance with the requirements of this Agreement for a reason other than the existence of any lien on the Property for an amount not in excess of the Purchase Price, then Buyer shall have the option of either (i) of taking such title as Seller has without abatement of the Purchase Price, or (ii) of terminating Buyer's obligations under this Agreement, having the Deposit (with any accrued interest) returned to it, whereupon this Agreement shall be cancelled and neither party shall have any further rights or obligations hereunder except to the extent that any right, obligation or liability set forth herein expressly survives termination of this Agreement. 5. Representations and Warranties. Seller, to induce Buyer to enter into this Agreement and to complete the sale and purchase of the Property hereunder, represents, warrants and covenants to Buyer as follows: (a) Except to the extent identified on "Schedule One" attached hereto and made part hereof to Seller's knowledge, without investigation, Seller has received no notice from, any governmental authority requiring any work, repairs, construction, alterations or installations on or in connection with the Property, or asserting any violation of any federal, state, county or municipal laws, ordinances, codes, orders, regulations or requirements affecting any portion of the Property, including, without limitation, the Americans with Disabilities Act, Florida Americans with Disabilities Accessibility Implementation Act and any applicable environmental laws or regulations. To the best of Seller's knowledge, there is no action, suit or proceeding pending or, to the knowledge of Seller, threatened against or affecting Seller or the Property or any portion thereof or relating to or arising out of the ownership of the Property, in any court or before or by any federal, state, county or municipal department, commission, board, bureau or agency or other governmental instrumentality. (b) To Seller's knowledge, without investigation, no assessments or charges for any public improvements have been made against the Property which remain unpaid, no improvements to the Property or any roads or facilities abutting the Property have been made for which a lien, assessment or charge can be filed or made, and Seller has no knowledge of any plans for improvements by any governmental or quasi- governmental authority which might result in a special assessment against the Property. Provided Closing is completed hereunder and there is no breach of the warranties contained in this subparagraph, Buyer will be responsible for payment of any certified special assessments for any public improvement made after the Effective Date. (c) Seller has received no notice from any insurance company which has issued a policy with respect to the Property or by any board of fire underwriters (or other body exercising similar functions) claiming 3 Exhibit 99.1 any defects or deficiencies or requesting the performance of any repairs, alterations or other work, and Seller will promptly notify Buyer of and comply with any such notice or requirement at Seller's cost or, in the alternative, terminate the contract without further liability on Seller's part if such notice is received prior to Closing. (d) There are no management, employment, service, equipment, supply, maintenance, water, sewer, or other utility or concession agreements or agreements with municipalities with respect to or affecting the Property which will burden the Property or obligate Buyer after Closing in any manner whatsoever, except for the contracts and agreements as listed on Exhibit "C" attached hereto and made a part hereof ("Service Agreements"). During the Due Diligence Period Buyer may determine which of the Service Agreements listed on Exhibit "C" Buyer desires to have assigned to Buyer at Closing. Seller agrees to cooperate with Buyer in determining as to any such Service Agreements whether they are assignable, and on what terms the Service Agreements may be terminated. If Buyer proceeds beyond the Due Diligence Period, then Buyer shall notify Seller which of the assignable Service Agreements (the "Assigned Agreements") Buyer desires to have assigned at Closing, and which of the terminable Service Agreements Buyer desires for Seller to terminate as of Closing. At closing, the parties shall execute an Assignment of Contracts in the form attached hereto as Exhibit "D". (e) There are no proceedings pending or to Seller's knowledge threatened by or against Seller in bankruptcy, insolvency or reorganization in any state or federal court. (f) There are no existing leases, whether oral or written, agreements of sale, options, tenancies, licenses or any other claims to possession affecting the Property except as identified on Exhibit "E". (g) If, after Seller's execution hereof, any event occurs or condition exists which renders any of the representations contained herein untrue or misleading in any material respect, Seller shall promptly notify Buyer in writing. (h) Neither the execution and delivery of this Agreement, nor compliance with the terms and conditions of this Agreement by Seller, nor the consummation of the sale constitutes or will constitute a violation or breach of the Seller's articles of incorporation or bylaws or of any agreement or other instrument to which Seller is a party, to which Seller is subject or by which Seller is bound. (i) The execution and delivery of this Agreement have been approved by the Seller and no further corporate action is required on the part of Seller to consummate the transaction contemplated hereby. The corporate officers of Seller executing this Agreement on behalf of Seller have all requisite authority to execute this Agreement; and this Agreement, as executed, is valid, legal and binding upon Seller. These representations and warranties shall be true and correct from the Effective Date through and including the Closing, and shall survive Closing for a period of twelve (12) months and thereafter shall be deemed null and void and of no further effect. 4 Exhibit 99.1 6. Conditions of Buyer's Obligations. The obligation of Buyer under this Agreement to purchase the Property from Seller is subject to the satisfaction at Closing of each of the following conditions (any one of which may be waived in whole or in part by Buyer at or prior to Closing): (a) All of the representations, covenants and warranties by Seller set forth in this Agreement shall be true and correct at and as of Closing in all material respects as though such representations, covenants and warranties were made at and as of Closing, and Seller shall have performed, observed and complied with all covenants, agreements and conditions required by this Agreement to be performed on its part prior to and as of Closing. (b) Buyer shall have a period of time to conduct due diligence investigations commencing from the Effective Date of this Agreement, and running through the date which is thirty (30) days thereafter (the "Due Diligence Period"). Buyer shall have the right to make physical inspections of the Property, site assessments, environmental assessments and any and all other studies, assessments or investigations which Buyer deems necessary, all at Buyer's expense, and to examine at such place or places as is agreeable to the parties any operating files maintained by Seller or its property manager in connection with the leasing, maintenance and/or management of the Property. Buyer agrees that any on-site inspections shall be conducted upon reasonable prior notice to Seller. Buyer agrees to indemnify and hold Seller harmless against any claim for liabilities, damages, actions, costs, expenses including reasonable attorneys' fees and costs and damages or injuries arising out of or resulting from the inspection of the Property made by Buyer or is agents. This indemnity obligation of Buyer shall survive Closing or any termination of this Agreement. If Buyer, in its sole and absolute discretion, determines that it does not desire to acquire the Property, with or without reason, and notifies Seller by 5:00 p.m. on or before the last day of the Due Diligence Period of its election to terminate this Agreement, the Initial Deposit and all accrued interest shall be returned to Buyer, this Agreement thereupon shall become void and there shall be no further obligation or liability on either of the parties hereto. In the event, on the last day of the Due Diligence Period, Buyer has not terminated this Agreement by giving timely written notice to Seller as above provided, Buyer shall be obligated to purchase the Property in accordance with this Agreement. (c) The Seller shall convey to Buyer good and marketable title to Seller's fee simple interest in the Property, subject only to the Permitted Exceptions. (d) Seller shall not have entered into any new leases or any modifications or renewals of any of the leases after the Due Diligence Period, the terms of which have not been approved in writing by Buyer, which approval may be withheld in Buyer's reasonable discretion. (e) Buyer shall have reviewed and accepted the conditions stated in the estoppel certificates of all tenants in form reasonably satisfactory to Buyer. (f) The parties shall have entered into a Seller leaseback under terms and conditions acceptable to the parties. 5 Exhibit 99.1 Unless all the foregoing conditions contained in this Paragraph 6 are satisfied within the time period specified, or if no time period is specified, prior to or at Closing, Buyer, at its election, shall on or before the Closing Date, either (i) terminate this Agreement and have the Deposit refunded together with accrued interest or (ii) waive in writing the satisfaction of any such conditions, in which event this Agreement shall be read as if such conditions no longer existed. 7. Delivery of Documents. (a) Within five (5) business days of the Effective Date, Seller shall deliver to Buyer: (i) Copies of all service contracts and other agreements referenced in Exhibit "B" with respect to the Property; (ii) copies of recent real estate and personal property tax bills pertaining to the Property. (iii) copies of all leases pertaining to the Property; (iv) copies of any existing title insurance policies for the Property; (v) copies of any surveys; and (vi) copies of all plans and specifications within Seller's possession or control; (vii) copies of all environmental audits, engineering studies, appraisals or other studies or investigations pertaining to the Property within Seller's possession or control; (b) At Closing, Seller shall deliver to Buyer duly executed originals of the following with respect to the Property: (i) The Deed. (ii) An absolute bill of sale for the Personal Property with special warranties. (iii) A Nonforeign Person Certification, as required under Section 1445 of the Internal Revenue Code. (iv) An assignment and assumption in form and substance mutually satisfactory to Seller and Buyer, duly executed by Seller, assigning to Buyer all of Seller's right, title and interest in and to (A) any and all leases; (B) any and all guaranties and warranties, if any, pertaining to the Property; and (C) any permits, licenses, plans, authorizations and approvals relating to ownership, operation or occupancy of the Property, and to the extent assignable, an assignment and assumption of such agreements from Exhibit "B" as approved by Buyer. 6 Exhibit 99.1 (v) Originals of the following instruments (or copies if originals are unavailable): (A) all assigned contracts and agreements pursuant to Exhibit "B" attached hereto; (B) all leases; (C) each bill of current real estate taxes, sewer charges and assessments, water charges and other utilities, together with proof of payment thereof (to the extent same have been paid); and (D) all assigned guaranties and warranties. (vi) All keys and combinations to locks at the Property, all plans, specifications, as-built drawings, surveys, site plans, equipment manuals, technical data and other documentation relating to the building systems, equipment and any other personal property forming part of the Property or any portion thereof in the possession of Seller or any property manager(s). (vii) A Seller no lien, gap and possession affidavit in favor of Buyer and Buyer's title insurer in the form reasonably required by such title insurance company. (viii) Such other documents as reasonably may be required to consummate this transaction in accordance with this Agreement. 8. Possession. Possession of the Property shall be given to Buyer at Closing, subject only to those leases stated on Exhibit C. 9. Apportionments, Credits and Prorations. (a) Seller shall be responsible for all real estate taxes, personal property taxes, utility charges and other expenses of operation of the Real Property through the day prior to closing. Current year taxes shall be prorated through closing based on the last ascertainable tax bill and shall be reprorated when determined by the parties. (b) All documentary stamp taxes and surtaxes imposed on or in connection with the recording of the Deed shall be paid by Seller. Buyer shall pay for the expense of recording the Deed. 7 Exhibit 99.1 (c) Seller shall pay the premium for the owner's title insurance policy only specified herein. Buyer shall pay for all endorsements and for the title premium for any mortgagee title policy. (d) Rents shall be prorated through the day prior to closing and unapplied security deposits shall be credited to Buyer at closing. (e) Buyer and Seller shall each pay its own legal fees and costs with respect to this transaction. (f) All other costs and expenses incident to this transaction and the Closing thereof shall be paid by the party incurring same. 10. Condemnation. Seller covenants and warrants that Seller has not heretofore received any notice of any condemnation proceeding or other proceeding in the nature of eminent domain in connection with the Property. If prior to Closing any such proceeding is commenced or any change is made, or proposed to be made, to the current means of ingress and egress to the Property or to the roads or driveways adjoining the Property, or to change such ingress or egress or to change the grade thereof, Seller agrees promptly to notify Buyer thereof. Either Seller or Buyer then shall have the right, at their option, to terminate this Agreement by giving written notice to the other within five (5) days after receipt of such notice. If Buyer or Seller does not so terminate this Agreement, Buyer shall proceed to Closing hereunder as if no such proceeding had commenced and will pay Seller the full Purchase Price in accordance with this Agreement; Seller shall assign to Buyer all of its right, title and interest in and to any compensation for such condemnation, Seller shall not negotiate or settle any claims for compensation prior to Closing, and Buyer shall have the sole right (in the name of Buyer or Seller or both) to negotiate for, to agree to and to contest all offers and awards. 11. Default by Buyer. If Buyer in default of its obligations hereunder, fails to complete Closing, the Deposit and all accrued interest shall be paid to Seller. Such payment of the Deposit and all accrued interest to Seller shall be deemed to be liquidated damages for Buyer's default and the receipt of same shall be Seller's exclusive and sole remedy, and Seller hereby waives any right to recover the balance of the Purchase Price, or any part thereof, and the right to pursue any other remedy permitted at law or in equity against Buyer. Buyer and Seller acknowledge and agree that actual damages are difficult or impossible to ascertain and the Deposit is a fair and reasonable estimation of the damages of Seller. 12. Default by Seller. Except to the extent expressly provided for otherwise in this agreement, if Seller, without the right to do so and in default of its obligations hereunder, fails to complete Closing, the Buyer may (1) terminate this agreement in which case the Deposit and all accrued interest shall be returned to Buyer and the parties shall be relieved of any further liability hereunder or (2) Buyer may sue for specific performance. 13. Risk of Loss. Seller shall bear the risk of all loss or damage to the Property from all causes other than loss or damage caused directly or indirectly by Buyer, or its members, inspectors, contractors, subcontractors, agents or other representatives until Closing. Seller 8 Exhibit 99.1 represents that it has, and will maintain pending Closing, a policy of fire and extended coverage insurance in at least the full amount of the replacement cost of all buildings and improvements located on the Property. If at any time prior to Closing any portion of the Property is destroyed or damaged as a result of fire or any other casualty whatsoever, Seller shall promptly give written notice thereof to Buyer and either party shall have the right (i) to terminate this Agreement within five (5) business days after receipt of the notice by written notice to the other, whereupon Escrow Agent shall return the Deposit (with any accrued interest) to Buyer, and thereafter this Agreement shall be void and neither party shall have any further rights or obligations hereunder. 14. Brokerage. Buyer represents and warrants to Seller and Seller represents and warrants to Buyer that each dealt with no broker, agent, finder or other intermediary in connection with this sale and purchase other than NAI-Rauch Weaver Norfleet Kurtz & Co. ("RWNK") as agent of the Seller. Seller is responsible for payment of the commission due to RWNK in the amount of Eighty Thousand Dollars ($80,000.00) only if and when Closing takes place, out of the proceeds thereof. Seller agrees to indemnify, defend and hold Buyer harmless (including costs and reasonable attorneys' fees at trial and all appellate levels) from and against the claims of any and all brokers and other intermediaries claiming a commission in connection with this sale or the Leases. Buyer agrees to indemnify, defend and hold Seller harmless (including costs and reasonable attorneys' fees at trial and all appellate levels) from and against the claims of any and all brokers, agents, finders and other intermediaries arising from any breach by Buyer of Buyer's representation and warranty in this paragraph. The representations and covenants of this paragraphs shall survive the Closing or termination of this Agreement. 15. Operation of the Property Prior to Closing. Prior to closing, (a) The Property shall be operated, managed and maintained in a reasonable, professional and prudent manner, and kept in its present condition, reasonable wear and tear excepted. (b) Seller shall comply with all of the obligations of landlord under the Leases and all other agreements and contractual arrangements affecting the Property by which Seller is bound. (c) Seller promptly shall notify Buyer of Seller's receipt of any notice from any party alleging that Seller is in default of its obligations under any of the Leases or any permit or agreement affecting the Property, or any portion or portions thereof. (d) No contract for or on behalf of or affecting the Property shall be negotiated or entered into after the date hereof which cannot be terminated by Seller prior to Closing without charge, cost, penalty or premium. 9 Exhibit 99.1 (e) After expiration of the Due Diligence Period, Seller shall not enter into any new leases for any portion of the Property without Buyer's consent, which shall not be unreasonably withheld, conditioned or delayed. Buyer shall be notified as to any modification as to existing leases or the execution of any new lease prior to expiration of the Due Diligence Period by Seller and shall receive copies of the proposed or entered into agreements or understandings if in writing, or, if not then a synopsis of the understanding of the parties for review.. 16. Notice. All notices, requests and other communications under this Agreement shall be in writing and shall be delivered (i) in person, (ii) by registered or certified mail, return receipt requested, (iii) by facsimile transmission, to be effectively delivered upon transmission, or (iv) by recognized overnight delivery service providing positive tracking of items (for example, Federal Express), addressed as follows or at such other address of which Seller or Buyer shall have given notice as herein provided: If intended for Seller: PetMed Express, Inc. 1441 SW 29th Avenue Pompano Beach, FL 33069 Attn: John Vermaaten Fax No.: (954) 971-0544 Tel. No.: (954) 979-5995 with a copy to: Stearns, Weaver, et al. 200 East Broward Boulevard 19th Floor Ft. Lauderdale, FL 33301 Fax No.: (954) 462-9567 Tel. No.: (954) 462-9540 and to Escrow Agent: NAI-Rauch, Weaver, Norfleet, Kurtz & Co. 5300 North Federal Highway Ft. Lauderdale, FL 33308 Fax No.: (954) 771-4537 Tel. No.: (954) 771-4400 If intended for Buyer: RMS Properties, Inc. 331 B West Golf Road Schaumburg, IL 60195 Attn: Mr. Roshan Shoffet, Pres. Fax No.: (847) 310-0906 Tel. No.: (847) 310-0900 10 Exhibit 99.1 With a copy to: Dowd, Dowd & Mertes, Ltd. 701 Lee Street, Suite 790 Des Plaines, IL 60016 Attn: Drake D. Mertes, Esq. Fax No.: (847) 390-7643 Tel. No.: (847) 827-2181 and to Escrow Agent: NAI-Rauch, Weaver, Norfleet, Kurtz & Co. 5300 North Federal Highway Ft. Lauderdale, FL 33308 Fax No.: (954) 771-4537 Tel. No.: (954) 771-4400 All such notices, requests and other communications shall be deemed to have been sufficiently given for all purposes hereof only upon receipt by the party to whom such notice is sent. Notices by the parties may be given on their behalf by their respective attorneys. 17. Indemnity. Provided that Closing has taken place hereunder, Seller shall indemnify and hold harmless Buyer from and against, and to reimburse Buyer with respect to any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses (including attorney's fees and court costs) asserted against or incurred by Buyer by reason of or arising out of (a) a breach of any representation or warranty of Seller as set forth in this Agreement, (b) the failure of Seller to perform any obligation required by this Agreement to be performed by it, and (c) subject to limitations imposed in this Agreement relating to the physical condition of the Property, the ownership, maintenance and operation of the Property prior to Closing. Buyer shall indemnify and hold harmless Seller from and against, and to reimburse Seller with respect to any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses (including attorneys' fees and court costs) asserted against or incurred by Seller by reason of or arising out of (a) a breach of any representation or warranty of Buyer as set forth in this agreement, (b) the failure of Buyer to perform any obligation required by this Agreement to be performed by it, and (c) the ownership, maintenance and operation of the Property subsequent to Closing. This provision shall survive Closing. 18. AS-IS. As of 4:00 p.m. on the last day of the Due Diligence Period, if Buyer has not given written notice to terminate this Agreement, Buyer shall be deemed to have waived its right to terminate this Agreement as provided in this Section, to have agreed that the Deposit shall not be refundable except as otherwise expressly provided herein, and to have represented and warranted to Seller that except for Seller's express representations and warranties set forth in Section 5 of this Agreement: (a) Buyer has had the full opportunity to make such investigation of the condition of the Property as Buyer has deemed necessary; (b) Buyer is relying solely upon its own investigations in making the decision to purchase the Property; and (C) BUYER WILL ACCEPT THE PROPERTY IN ITS "AS IS" CONDITION, WITHOUT ANY OBLIGATION OF SELLER TO MAKE ANY REPAIRS OR RENOVATIONS TO THE PROPERTY, AND WITH NO REPRESENTATIONS OR WARRANTIES, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED 11 Exhibit 99.1 HEREIN. EXCEPT FOR SELLER'S EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 5 OF THIS AGREEMENT, TO THE MAXIMUM EXTENT PERMITTED BY LAW, SELLER HAS NOT, DOES NOT AND WILL NOT MAKE ANY REPRESENTATIONS OR WARRANTIES, OF ANY KIND, ORAL OR WRITTEN, EXPRESS OR IMPLIED, CONCERNING THE PROPERTY INCLUDING, WITHOUT LIMITATION (I) THE VALUE, TITLE, CONDITION, MERCHANTABILITY, HABITABILITY, PROFITABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE, OF THE PROPERTY, (II) THE CONDITION OR QUALITY OF THE CONSTRUCTION OR MATERIALS INCORPORATED INTO THE PROPERTY, OR (III) THE MANNER OF REPAIR, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY AND SELLER HAS NOT, DOES NOT AND WILL NOT MAKE ANY REPRESENTATIONS OR WARRANTIES WITH REGARD TO COMPLIANCE WITH ANY ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE LAWS, RULE, REGULATIONS ORDERS OR REQUIREMENTS INCLUDING, BUT NOT LIMITED TO, THOSE PERTAINING TO THE HANDLING, GENERATING, TREATING, STORING OR DISPOSING OF ANY HAZARDOUS WASTE OR SUBSTANCE. 19. Miscellaneous. (a) This Agreement shall be void and of no force or effect if not executed by Seller and delivered to Buyer or Buyer's attorney within five (5) days after execution by Buyer and delivery to Seller. (b) The captions in this Agreement are inserted for convenience of reference only and in no way define, describe or limit the scope or intent of this Agreement or any of the provisions hereof. If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall nonetheless remain in full force and effect. (c) Time is of the essence with respect to all matters contained herein. (d) Unless otherwise specified, in computing any period of time described in this Agreement, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included unless such last day is a Saturday, Sunday or legal holiday under the laws of the State of Florida in which event the period shall run until the end of the next day which is neither a Saturday, Sunday or legal holiday. The final day of any such period shall be deemed to end at 5:00 P.M., EST. (e) Buyer or Buyer's nominee shall have the right to assign this Agreement without Seller's consent to a deferred trustee for the sole purpose of consummating a 1031 exchange, provided said exchange shall not (i) delay the closing; (ii) cause Seller to incur any additional fees or costs; or (iii) affect Seller's rights or obligations under this Agreement. Buyer shall also have the right to designate a partnership, limited liability company or other legal entity to be the grantee hereunder and to assign to designee all of Buyer's rights to this Agreement, provided; however, in no event shall the obligation of RMS Properties, LLC hereunder be diminished or released thereby.. 12 Exhibit 99.1 (f) This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns. (g) This Agreement, including the exhibits attached hereto, contains the whole agreement as to the Property between Seller and Buyer and there are no other terms, obligations, covenants, representations, statements or conditions, oral or otherwise of any kind whatsoever concerning this sale and purchase. This Agreement shall not be altered, amended, changed or modified except in writing executed by the parties hereto. (h) This Agreement shall be construed in accordance with the laws of the State of Florida. (i) Both parties to this Agreement having participated fully and equally in the negotiation and preparation hereof, this Agreement shall not be more strictly construed, or any ambiguities within this Agreement resolved, against either party hereto. 20. Non-Disclosure. Neither party shall make public disclosure with respect to this transaction before the Closing except: (a) as may be required by law, including without limitation disclosure required under securities laws; and (b) to such lenders, attorneys, accountants, partners, directors, officers, employees and representatives of either party or of such party's advisors who need to know such information for the purpose of evaluating and consummating the transaction, including the financing of the transaction; and (c) to present or prospective sources of financing. 21. Establishment of Escrow. Buyer and Seller both hereby acknowledge and agree that Escrow Agent shall hold and deliver the Deposit in accordance with the terms and conditions of this Agreement. Escrow Agent shall be relieved from any responsibility or liability and held harmless by both Buyer and Seller in connection with the discharge of any of Escrow Agent's duties hereunder provided that Escrow Agent exercises ordinary and reasonable care in the discharge of said duties. In the event of any dispute between the Buyer and Seller as to the disbursement of the Deposit, Escrow Agent shall have the right to deliver the Deposit into the registry of a court of competent jurisdiction and, upon such delivery, Escrow Agent shall be discharged from any and all further obligations and liabilities hereunder. 22. Radon Gas Disclosure. Pursuant to Section 404.056(8), Florida Statutes (1988), the following notification regarding radon gas is hereby made, and all parties executing this Agreement acknowledge receipt of this notification: 13 Exhibit 99.1 "Radon Gas: Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your County Public Health Unit." 23. Counterparts. This Agreement may be executed in counterparts, each of which shall be considered an original, and when taken together shall constitute one document. IN WITNESS WHEREOF, intending to be legally bound, the parties have caused this Agreement to be duly executed on the dates specified below. Witnesses: BUYER: RMS PROPERTIES, L.L.C., doing business in Florida as RMS PROPERTIES OF ILLINOIS, L.L.C. /s/ [Illegible] - ----------------------------- By: RMS Properties, Inc., doing business in Florida as RMS Properties of Illinois, Inc., Manager /s/ Mary E. Kruse - ----------------------------- (As to Buyer) By:______/s/ Roshan Shoffet__________ Roshan Shoffet, President Date: March 27, 2001 Witnesses: SELLER: PETMED EXPRESS, INC. John S. Vermaaten - ----------------------- /S/ John S. Vermaaten By:_____/s/ Chris Lloyd____________ (As to Seller) Name Chris Lloyd Its CEO Date: March 27, 2001 14 Exhibit 99.1 EX-99 3 firstamd-6018k.txt FIRST AMENDMENT TO REAL ESTATE PURCHASE AGREEMENT FIRST AMENDMENT TO REAL ESTATE PURCHASE AGREEMENT ------------------------------------------------- THIS FIRST AMENDMENT TO AGREEMENT OF SALE AND PURCHASE ("First Amendment") is made and entered into this 27th day of April, 2001, between PETMED EXPRESS, INC., a Florida corporation ("Seller"), and RMS PROPERTIES, L.L.C., an Illinois limited liability company, doing business in Florida as RMS PROPERTIES OF ILLINOIS, L.L.C. ("Buyer"). W I T N E S S E T H: WHEREAS, Seller and Buyer entered into that certain Agreement of Sale and Purchase dated March 29, 2001 (the "Contract") for the sale by Seller to Buyer of the property described therein (the "Property") at the price and on the terms and conditions set forth in the Contract; WHEREAS, Seller and Buyer have agreed to amend and modify the Contract as more particularly set forth below; NOW, THEREFORE, in consideration of the recitals, the mutual covenants hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, it is hereby agreed by and between the parties as follows: 1. Recitals. The above recitals are true and correct and are incorporated herein by this reference. 2. Due Diligence Period. Section 6(b) of the Contract is hereby modified by deleting the first sentence thereof and replacing it with the following: "Buyer shall have a period of time to conduct due diligence investigations until 5:00 p.m. Eastern Standard Time on May 4, 2001 (the "Due Diligence Period")." 3. Counterparts, Facsimile. This First Amendment may be executed in any number of counterparts, all of which shall constitute the First Amendment. Facsimile copies of this First Amendment shall constitute originals. 4. Conflict. In the event of any conflict between the terms and provisions of this First Amendment and the terms and provisions of the Contract, the terms and provisions of this First Amendment shall control. To the extent that there shall be no such conflict, the Contract shall remain in full force and effect and the parties hereto hereby ratify same. (Executions Appear on Following Page) Exhibit 99.2 IN WITNESS WHEREOF, the parties have caused this First Amendment to be executed as of the day and year first written above. Signed, sealed and delivered BUYER: in the presence of: RMS PROPERTIES, L.L.C., doing business in Florida as RMS PROPERTIES OF ILLINOIS, L.L.C. /s/ Gilda Garza - ----------------------------- By: RMS Properties, Inc., doing Print: Gilda Garza business in Florida as RMS Properties of Illinois, Inc., Manager /s/ Mary E. Kruse - ----------------------------- Print: Mary E. Kruse By:________/s/ Ron Shoffet___________ Ron Shoffet, President Date of Execution by Buyer: 4/27/01 Signed, sealed and delivered SELLER: in the presence of: PETMED EXPRESS, INC. /s/ Menderes Akdag - ---------------------------- Print: Menderes Akdag By:______/s/ John Vermaaten__________ /s/ Marc Puleo Print: John Vermaaten - ---------------------------- Title: CFO Print: Marc Puleo Date of Execution by Seller: 4/27/01 -2- Exhibit 99.2 EX-99 4 secamd-6018k.txt SECOND AMENDMENT TO AGREEMENT OF SALE AND PURCHASE SECOND AMENDMENT TO AGREEMENT OF SALE AND PURCHASE -------------------------------------------------- THIS SECOND AMENDMENT TO AGREEMENT OF SALE AND PURCHASE ("Second Amendment") is made and entered into this 18th day of May, 2001, between PETMED EXPRESS, INC., a Florida corporation ("Seller"), and RMS PROPERTIES II, L.L.C., an Illinois limited liability company ("Buyer"). W I T N E S S E T H: WHEREAS, Seller and RMS Properties, L.L.C., an Illinois limited liability company, doing business in Florida as RMS Properties of Illinois, L.L.C., entered into that certain Agreement of Sale and Purchase dated March 29, 2001, as amended by First Amendment to Agreement of Sale and Purchase dated April 27, 2001 (collectively, the "Agreement"), as assigned to RMS Properties II, L.L.C., an Illinois limited liability company, by that certain assignment dated May 7, 2001 (the "Assignment") for the sale by Seller to Buyer of the property described therein (the "Property") at the price and on the terms and conditions set forth in the Contract; WHEREAS, Seller and Buyer have agreed to amend and modify the Contract as more particularly set forth below; NOW, THEREFORE, in consideration of the recitals, the mutual covenants hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, it is hereby agreed by and between the parties as follows: 1. Recitals. The above recitals are true and correct and are incorporated herein by this reference. 2. Closing Date. The first sentence of Section 3 of the Agreement ("Closing Date") is hereby deleted and replaced with the following: "3. Closing. Closing shall be held on May 31, 2001 (the "Closing Date"), at the office of Seller's counsel ("Closing")." 3. Counterparts, Facsimile. This Second Amendment may be executed in any number of counterparts, all of which shall constitute the Second Amendment. Facsimile copies of this Second Amendment shall constitute originals. 4. Conflict. In the event of any conflict between the terms and provisions of this Second Amendment and the terms and provisions of the Contract, the terms and provisions of this Second Amendment shall control. To the extent that there shall be no such conflict, the Contract shall remain in full force and effect and the parties hereto hereby ratify same. (Executions Appear on Following Page) Exhibit 99.3 IN WITNESS WHEREOF, the parties have caused this Second Amendment to be executed as of the day and year first written above. Signed, sealed and delivered BUYER: in the presence of: RMS PROPERTIES, L.L.C., doing business in Florida as RMS PROPERTIES OF ILLINOIS, L.L.C. /s/ Gilda Garza - ----------------------------- By: RMS Properties, Inc., doing Print: Gilda Garza business in Florida as RMS Properties of Illinois, Inc., Manager By:________/s/ Ron Shoffet___________ Ron Shoffet, President Date of Execution by Buyer: May 18, 2001 Signed, sealed and delivered SELLER: in the presence of: PETMED EXPRESS, INC. /s/ Robert Hiltsley - ---------------------------- Print: Robert Hiltsley By:______/s/ Menderes Akdag__________ /s/ Rory Winter Print: Menderes Akdag - ---------------------------- Title: CEO Print: Rory Winter Date of Execution by Seller: 05/22/01 -2- Exhibit 99.3 EX-99 5 lease-6018k.txt COMMERCIAL LEASE COMMERCIAL LEASE BY AND BETWEEN RMS PROPERTIES II, L.L.C., AN ILLINOIS LIMITED LIABILITY COMPANY, AS LANDLORD AND PETMED EXPRESS, INC., A FLORIDA CORPORATION, AS TENANT Exhibit 99.4 TABLE OF CONTENTS ----------------- PAGE ---- 1. Definitions................................................. 1 2. Use; Compliance; Signs...................................... 2 3. Rent; Taxes; Expenses, Security Deposit..................... 2 4. Gross Rent.................................................. 2 5. Condition of Premises; Maintenance; Repair; Alterations; and Hazardous Substances....................... 3 6. Insurance; Waiver of Subrogation; Indemnity................. 4 7. Tenant's Property........................................... 5 8. Construction; Liens......................................... 6 9. Casualty/Damage and Destruction............................. 6 10. Condemnation................................................ 6 11. Assignment; Subletting; Effect of Bankruptcy................ 7 12. Tenant's Default; Remedies; Re-Entry; Holding Over.......... 7 13. Quiet Enjoyment; Landlord's Default; Limitation of Landlord's Liability.......................... 8 14. Amendment; Waiver; Approval; Consent........................ 9 15. Notices..................................................... 9 16. Landlord's Reserved Rights; Access; Easements............... 10 17. Subordination; Estoppel Certificate......................... 10 18. Accord and Satisfaction..................................... 11 19. Severability................................................ 12 20. Time........................................................ 12 21. Successors and Assigns...................................... 12 22. Relationship of Parties..................................... 12 23. Captions and Section Numbers................................ 12 24. Schedules; Exhibits......................................... 12 ii Exhibit 99.4 25. Brokerage................................................... 12 26. Authority................................................... 13 27. Applicable Law.............................................. 13 28. Attorneys' Fees............................................. 13 29. Tender and Delivery of Lease................................ 13 30. Radon Gas................................................... 13 31. Option to Shorten Term...................................... 13 32. Rent Abatement.............................................. 13 iii Exhibit 99.4 COMMERCIAL LEASE ---------------- THIS LEASE ("Lease") dated May 31, 2001, is made between RMS PROPERTIES II, L.L.C., an Illinois limited liability company ("Landlord"), and PETMED EXPRESS, INC., a Florida corporation ("Tenant"). WITNESSETH: ----------- Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, the Premises described below for the Term (as hereafter defined) and subject to the terms, covenants and conditions hereinafter set forth: 1. DEFINITIONS. Unless the context otherwise specifies or requires, the following terms shall have the meanings herein specified: 1.1 Annual Rent: The annual rent payable monthly as set forth below: ANNUAL RENT MONTHLY PAYMENT ----------- --------------- 1st year $166,498.00 $13,874.83 2nd year $166,498.00 $13,874.83 3rd year $173,157.92 $14,429.83 4th year $180,084.23 $15,007.02 5th year $187,287.60 $15,607.30 1.2 Building: Collectively the building(s) and improvements now existing and hereafter constructed on the Land. 1.3 Commencement Date: May 31, 2001 1.4 Event of Default: Those events described in section 12.1 hereof. 1.5 Governmental Authority: Any federal, state, county, municipal or other governmental department, entity, authority, commission, board, bureau, court, agency or any instrumentality of any of same. 1.6 Governmental Requirement: Any law, enactment, statute, code, ordinance, rule regulation, judgment, decree, writ, injunction, franchise, permit, certificate, license, authorization, agreement or requirement of any Governmental Authority now existing or hereafter enacted, adopted, promulgated, entered, or issued applicable to the Premises. 1.7 Land: That certain real property located at 1441 S.W. 29th Street, Pompano Beach, Florida, as more particularly set forth in Exhibit "A" attached hereto, together with all appurtenances relating thereto. 1.8 Premises: That portion of the Building crosshatched on Exhibit "B" containing approximately 19,588 net rentable square feet. In addition, for a period not to exceed sixty (60) days after the Commencement Date, Tenant shall be entitled to occupy that portion of the Building crosshatched on Exhibit "C" containing approximately 882 square feet attached hereto and made a part hereof provided Tenant shall pay a monthly rent of $624.75 per month for such space. Monthly installments for any fractional calendar month shall be prorated. 1 Exhibit 99.4 1.9 Term: That time period between the Commencement Date and expiring five (5) years thereafter unless the Term is shortened by Tenant pursuant to the provisions of Section 31 hereof. 2. USE; COMPLIANCE; SIGNS. ----------------------- 2.1 Tenant shall not do, bring, keep or permit to be done in, on or about the Premises, nor bring, keep or permit to be brought therein, anything which is prohibited by, or will, in any way conflict with any Governmental Requirement. Tenant shall not do or permit anything to be done in, on or about the Premises for any improper, immoral, or unlawful purpose, nor shall Tenant cause, maintain or permit any nuisance in, or about the Premises. 2.2 All signs and symbols placed in or about doors, windows or elsewhere in or about the Premises, shall be subject to the prior written consent of the Landlord, provided that Tenants current signage inside and outside the Building are hereby approved by Landlord and Tenant shall be entitled to maintain and replace same so long as the size or location of such signage is not materially changed. 3. RENT; TAXES; EXPENSES; DEPOSIT. ------------------------------- 3.1 Tenant shall pay each monthly installment of Rent set forth above (plus all sales taxes from time to time imposed by any Governmental Authority in connection with rents paid by Tenant under this Lease), in advance on the first calendar day of each month during the Term. Monthly installments for any fractional calendar month, at the beginning or end of the Term, shall be prorated based on the number of days in such month which fall during the Term. Tenant shall pay all Rent, without demand, deduction or set off, to Landlord at the place specified for notice in Section 15 below. Tenant also shall pay a late charge ("Late Charge") of Fifty Dollars ($50.00) with each late payment of Rent as an administrative fee. The provisions herein for such a Late Charge shall not be construed to extend the date for payment of any sums required to be paid by Tenant hereunder or to relieve Tenant of its obligations to pay all such items at the time or times herein stipulated. Landlord acknowledges receipt from Tenant of the Rent for the month of June. Landlord also acknowledges receipt from Tenant of a security deposit in the amount of $42,500.00 (the "Deposit"). The Deposit shall be held as security for the payment of Rent and other sums of money payable by Tenant under this Lease, and for the faithful performance of all other terms, covenants and conditions of Tenant hereunder. Provided Tenant is not in default under the Lease at such time, at the expiration of the Second Lease Year of the Term $28,333.33 of the Deposit shall immediately be returned to Tenant. The remaining amount of the Deposit shall be repaid to Tenant at the expiration of the Term if there then shall be no Event of Default by Tenant and no act, occurrence or circumstance shall then exist which but for the giving of notice, if required by this Lease, or the passage of time, shall result in an Event of Default by Tenant. Upon any Event of Default by Tenant hereunder, all or part of the Deposit may, at Landlord's sole discretion, be applied on account of such default, and Tenant shall thereafter within fifteen (15) days replenish the applied portion of the Deposit then required to be held. 4. GROSS RENT AND UTILITIES. ------------------------- 4.1 Landlord acknowledges that except for Tenant's obligation to pay Rent as set forth above, Tenant's Share of the All Risk Premium (as defined in Section 6.2) and Tenant's Utilities (as defined 2 Exhibit 99.4 herein), Tenant shall not be required to pay Landlord and Landlord shall be solely responsible for all taxes, assessments, insurance, operating expenses and other costs and expenses relating to the Land, Building and/or Premises, except for Tenant's maintenance obligations expressly set forth in Section 5.5 below. Tenant shall pay for all Florida Power & Light charges for electricity allocable to the Premises based upon Tenant's actual consumption ("Tenant's Utilities"). 5. CONDITION OF PREMISES; MAINTENANCE; REPAIR; ALTERATIONS; AND HAZARDOUS SUBSTANCES AND CONDITION OF PREMISES AT END OF TERM: -------------------------------------------------------------- 5.1 Tenant hereby agrees and acknowledges that the Premises have been examined by it and that Tenant hereby accepts same in the "AS IS" condition in which it now exists without any representation or warranty, express or implied by law by Landlord or its agents. 5.2 Tenant shall not commit or suffer to be committed any waste in, on or about the Premises. Tenant shall not store any trash, merchandise, crates, pallets, vehicles, including, but not limited to inoperable vehicles, recreational vehicles or vehicles without valid inspection tags, boats, motors or other similar equipment or materials of any kind outside the Building. All trash shall be kept in metal containers which are subject to Landlord's approval, which approval shall not be unreasonably withheld. All trash shall be removed at reasonable intervals, at Tenant's sole cost and expense. 5.3 Except as otherwise expressly permitted under Section 5.7 of this Lease, Tenant shall not cut, drill into, disfigure, deface, or injure any part of the Premises, nor obstruct or permit any obstruction, alteration, addition, or installation in the Premises without the prior written consent of Landlord. All alterations, additions or installations, including but not limited to partitions, air conditioning ducts or equipment (except movable furniture and fixtures put in at the expense of Tenant and removable without defacing or injuring the Building or the Premises), shall become the property of Landlord at the expiration or any earlier termination of the Term. All work performed shall be done in a good and workmanlike manner and with materials of the quality and appearance comparable to those in the Building. At the expiration of the Lease Term, at Landlord's election, Tenant shall remove, at Tenant's expense, Tenant's improvements installed by Tenant after the date hereof. 5.4 Tenant shall, at its sole cost and expense, repair and replace all damage or injury to the Premises caused by Tenant or its agents, employees, invitees or licensees. 5.5 Tenant shall, at its sole cost and expense, keep and maintain all utilities, fixtures, mechanical, electrical and plumbing systems and equipment located within the Premises only. Landlord shall, at its sole cost and expense, maintain the roof, foundation, exterior walls, landscaping, parking areas, utility connections to the Premises and other areas and systems of the Building. During the Term, Tenant shall maintain an HVAC service contract for Tenant's HVAC system, provided that any repairs to Tenant's HVAC system not covered by such maintenance contract shall be paid for by Landlord. Tenant shall at its sole cost and expense provide the janitorial services for the interior of Tenant's Premises only. 5.6 Tenant shall neither cause nor permit: (i) the Premises to be used to manufacture, process, transport, store, handle, or dispose of, Hazardous Materials, except in compliance with all applicable 3 Exhibit 99.4 Governmental Requirements, nor (ii) a release of Hazardous Materials onto the Premises, or any other property as a result of any intentional or unintentional act or omission on the part of Tenant. Tenant shall defend, indemnify and hold harmless Landlord, and Landlord's employees, agents, officers and directors, from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs or expenses of any kind or nature, known or unknown contingent or otherwise (including, without limitation, attorneys' fees (including paralegals' and similar persons') at both the trial and appellate levels, consultant fees, investigation and laboratory fees, court costs and litigation expenses), arising out of, or in any way related to Tenant's default under this Section. 5.7 Notwithstanding anything contained in this Lease, Tenant shall have the right to make, without Landlord's consent, non- structural alterations to the Premises or changes to or improvements of the Premises which are not expected to cost in excess of Twenty Five Thousand Dollars ($25,000) in the aggregate or which do not constitute material design changes. Tenant's obligation to deliver the Premises to Landlord at the expiration of the term of this Lease as set forth in this Lease shall not include: (i) damage caused by Landlord or its servants or agents, (ii) damage that Landlord or its servants, Tenants or agents are required to repair, or (iii) obsolescence, damage from the elements, fire or other casualty. 6. INSURANCE; WAIVER OF SUBROGATION; INDEMNITY. 6.1 Tenant, at its sole cost and expense, shall throughout the Term procure and maintain: (a) Comprehensive public liability insurance with respect to the Premises and Tenant's activities therein and thereabout, insuring against liability for personal injury or death, property damage or other loss, with a contractual liability endorsement to cover the indemnity set forth in Section 6.4 below and with deductibles of no more than $1,000 and in amounts no less than: (i) $1,000,000.00 with respect to personal injury or death to any one person; (ii) $2,000,000.00 with respect to personal injury or death arising out of any one (1) occurrence; (iii) $100,000.00 with respect to property damage or other loss arising out of any one (1) occurrence; and (b) Worker's Compensation Insurance in at least the statutorily required amounts. 6.2 Landlord, at its sole cost and expense, shall throughout the Term procure and maintain all risk hazard insurance (the "All Risk Coverage") with respect to the Premises in the amount not less than $1,000,000.00 or the full replacement value, whichever is greater with a deductible of not more than $10,000.00. Tenant shall pay Landlord 40% of the insurance premium paid by Landlord for the All Risk Coverage provided that Tenant shall not be responsible for any portion of such premium not applicable to the Tenant's term under this Lease and all such insurance premiums shall be reasonable and based upon customary insurance coverage for similar buildings in the area. Tenant shall be named as additional insured under Landlord's 4 Exhibit 99.4 insurance, and such insurance shall be primary and non-contributing with any insurance carried by Tenant. If, on account of the failure of Tenant to comply with Tenant's insurance requirements, Landlord is adjudged to be a coinsurer by its insurance carrier, then any loss or damage Landlord may sustain by reason thereof shall be borne by Tenant and shall be immediately paid by Tenant upon receipt of a bill thereof. Tenant's insurance policies shall contain endorsements requiring thirty (30) days notice to Landlord and Landlord's mortgagee, if any, prior to any cancellation or any reduction in amount of coverage. Tenant shall deliver to Landlord as a condition precedent to its taking occupancy of the Premises (but not to its obligation to pay Rent), a certificate or certificates evidencing such insurance acceptable to Landlord, and Tenant shall at least thirty (30) days prior to the expiration of such policies, deliver to Landlord certificates of insurance evidencing the renewal of such policies. 6.3 Tenant and Landlord release each other and waive any right of recovery against each other for loss or damage to their respective property, which occurs on or about the Premises (whether due to the negligence of either party, their agents, employees, licensees, invitees or otherwise), to the extent that such loss or damage is reimbursed by insurance proceeds. Tenant and Landlord agree that all policies of insurance obtained by either of them in connection with the Premises shall contain appropriate waiver of subrogation clauses. 6.4 Tenant shall indemnify Landlord, its officers, directors and employees (collectively for the purposes of this Section the "Landlord") and save them harmless from and against any and all claims actions, damages, liability and expense in connection with loss of life, personal injury and or damage to property arising from or out of the occupancy or use by Tenant of the Premises or any part thereof, or occasioned wholly or in part by any act or omission of Tenant, its agents, employees, licensees, invitees, third persons in or about the Premises. 7. TENANT'S PROPERTY. 7.1 Tenant shall have the right at any time during the term to repair, alter, move, remove, replace, or improve any of Tenant's furniture, fixtures, equipment and personal property of any nature owned by Tenant or located in the Premises, including, without limitation, art, paintings, sculptures, wall hangings, telephones, computer systems, cash registers, liquor control systems, ice makers and similar restaurant and office furniture fixtures and equipment and personal property of any nature, whether or not affixed to the Premises and whether or not included in Tenant's work (collectively, the "Tenant's Property"), provided Tenant promptly repairs and restores any damage to the Premises caused by Tenant's removal of same. Provided such items are not purchased with monies from Landlord, Tenant shall have the right to lease, pledge, encumber and grant security interests in any and all of Tenant's property and Landlord's lien on Tenant's Property shall be subordinate to any lien and security interest in favor of any institutional lender or any purchase money financing. Unless Tenant is in default under the Lease, nothing contained in this Section or the Lease shall prohibit or prevent Tenant from removing any improvements, furniture, fixtures or equipment installed in the Premises, including, without limitation, the Tenant's Work, at the termination of this Lease, provided only that Tenant promptly repair and restore any damage to the premises caused by Tenant's removal of the same, reasonable wear and tear, obsolescence and damage from the elements, fire or other casualty, 5 Exhibit 99.4 Landlord's repairs, Tenant's permitted improvements, any alterations made or damage caused by Landlord or its servants or agents, damage that Landlord is required to repair, excepted. 8. CONSTRUCTION LIENS. ------------------- 8.1 Tenant shall not suffer or permit the interest of Landlord in the Premises to be subject to any construction, mechanics' or materialmen's liens or other liens of any kind. 8.2 Neither Tenant nor anyone claiming by, through or under Tenant, including but not limited to contractors, subcontractors, materialmen, mechanics and laborers, shall have any right to file or place any kind of lien whatsoever upon the Premises or any improvement thereon, and any such liens are specifically prohibited. Tenant shall put all parties with whom Tenant may deal on notice that Tenant has no power to subject Landlord's interest to any claim or lien of any kind or character, and all such persons so dealing with Tenant must look solely to the credit of Tenant, and not to Landlord's interest or assets. 8.3 If at any time a lien or encumbrance is filed against the Premises as a result of Tenant's work, materials or obligations, Tenant shall cause same to be removed within thirty (30) days from the date it is filed. 9. CASUALTY/DAMAGE AND DESTRUCTION: -------------------------------- 9.1 Partial Damage. "Partial Damage" means damage or destruction to the Building to the extent that the cost of repair is less than fifty percent (50%) of the fair market value of the Building immediately prior to such damage or destruction. If at any time during the Term there is Partial Damage, Landlord may, at Landlord's option, either (i) repair such damage, in which event this Lease shall continue in full force and effect, or (ii) give written notice to Tenant within thirty (30) days after the date of the occurrence of such damage of Landlord's intention to terminate this Lease, which termination shall be effective as of the date of the occurrence of such damage. 9.2 Total Destruction. "Total Destruction" means damage or destruction to the Building to the extent that the cost of repair is fifty percent (50%) or more of the fair market value of the Building immediately prior to such damage or destruction. If at any time during the Term there is a Total Destruction, Landlord may, at Landlord's option, either (i) repair such damage within six (6) months of the date of such damage, in which event this Lease shall continue in full force and effect, or (ii) if Landlord does not elect to proceed under Section (i) above either Landlord or Tenant may terminate this Lease as of the date of such Total Destruction. 9.3 Abatement of Rent. If Landlord repairs or restores the Premises pursuant to the provisions of this Section, the Rent payable hereunder for the period during which such damage, repair or restoration continues shall be abated in proportion to the degree to which Tenant's use of the Premises is impaired. 10. CONDEMNATION. If all or any part of the Premises shall be taken under power of eminent domain or like power, or sold under imminent threat thereof to any public authority or private entity having such power, this Lease shall terminate as to the part of the Premises so taken or sold, effective as of the date possession is required to be delivered to such authority or entity. If a partial taking or sale of the Premises renders the Building commercially unviable to either Tenant or Landlord, either party may terminate this 6 Exhibit 99.4 Lease by notice to the other party within thirty (30) days after the terminating party receives written notice of the portion to be taken or sold, such termination to be effective sixty (60) days after notice thereof, or when the portion is taken or sold, whichever is sooner. All condemnation awards and similar payments shall be paid and belong to Landlord, except any amounts awarded or paid specifically for Tenant's trade fixtures and relocation costs. 11. ASSIGNMENT; SUBLETTING; EFFECT OF BANKRUPTCY. --------------------------------------------- 11.1 Tenant shall not, directly or indirectly, assign or sublet under this Lease or any part thereof, or any rights thereunder, nor permit all or any part of the Premises to be used or occupied by another, without first obtaining the written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. Any assignment or subletting made without such Landlord's consent, shall be voidable by Landlord. Any consent by Landlord, unless specifically stated therein, shall not relieve Tenant from its obligations under this Lease. To be effective, any assignment or sublease must be in writing and signed by the Landlord, Tenant and assignee/subtenant. The acceptance of Rent from any other person shall neither be deemed to be a waiver of any of the provisions of this Lease nor be deemed to be a consent to the assignment of this Lease or subletting of the Premises. If Landlord shall consent to any assignment or subletting, the assignee/subtenant shall assume all obligations of Tenant hereunder and neither Tenant nor any assignee/subtenant shall be relieved of any liability hereunder if there should be an Event of Default by assignee/subtenant in the performance of any of the terms, covenants and conditions hereof. 11.2 Tenant shall not assign, mortgage or encumber this Lease, nor sublet, nor suffer or permit the Premises or any part thereof to be used by others, except as set forth in Section 11.1 above; provided, however, that if this Lease is assigned to any person or entity pursuant to the provisions of the Bankruptcy Code, 11 U.S.C. Sec. 101 et seq. (the "Bankruptcy Code"), any and all monies or other considerations payable or otherwise to be delivered in connection with such assignment shall be paid or delivered to Landlord, shall be and remain the exclusive property of Landlord and shall not constitute property of Tenant or of the estate of Tenant within the meaning of the Bankruptcy Code. Any and all monies or other considerations constituting Landlord's property under the preceding sentence not paid or delivered to Landlord shall be held in trust for the benefit of Landlord and be promptly paid to or turned over to Landlord. 12. TENANT'S DEFAULT; REMEDIES; RE-ENTRY; HOLDING OVER: --------------------------------------------------- 12.1 The occurrence of any of the following shall constitute an "Event of Default" of this Lease by Tenant: (i) Tenant shall default in the payment of any monthly installment of Rent and such default shall continue for a period of five (5) days after written notice thereof to Tenant by Landlord; (ii) Tenant shall violate or fail to perform any of the other terms, covenants or conditions herein made by Tenant, and such violation or failure shall continue for a period of thirty (30) days after written notice thereof to Tenant by Landlord or, if such violation or failure shall reasonably require longer than thirty (30) days to cure, if Tenant shall fail to commence to cure same within thirty (30) days after the giving of such notice thereof and continuously prosecute the curing of the same to completion with due diligence but in any event such cure must be completed within sixty (60) days of the giving of such notice; (iii) Tenant shall make a general assignment for the benefit of its creditors or shall file or have filed involuntarily against Tenant, a petition for bankruptcy or other reorganization, liquidation, dissolution or similar relief; (iv) 7 Exhibit 99.4 a proceeding is filed against Tenant seeking any relief mentioned in (iii) above and said proceeding is not discharged within forty-five (45) days of the filing thereof; (v) a trustee, receiver or liquidator shall be appointed for Tenant on a substantial part of its property; or (vi) Tenant shall mortgage, assign or otherwise encumber its leasehold interest other than as specifically permitted under this Lease. 12.2 If an Event of Default by Tenant occurs, the Landlord shall have all rights and remedies that are available under Florida and federal law, including, but not limited to, the right to (i) consider the Lease terminated and take possession of the Premises for the Landlord's own purposes; (ii) take possession of the Premises for the Tenant's account and seek general damages; or (iii) accelerate and sue for the entire balance of the unpaid Rent for the remainder of the Lease Term which shall then be due and payable. All of the remedies of the Landlord herein enumerated shall be cumulative and none shall exclude any other rights or remedies allowed by law or in equity. 12.3 Upon the occurrence of an act or event which but for the passage of time would result in an Event of Default by Tenant after notice to Tenant and upon an Event of Default by Tenant, Landlord may, but shall not be obligated to, without waiving, or releasing Tenant from any obligation under this Lease, make such payment or perform such other act to the extent Landlord, in its sole discretion, may deem desirable, and in connection therewith, to pay expenses and employ counsel. All sums so paid by Landlord and all expenses in connection therewith, together with interest thereon at 14% from the date of payment, shall be deemed Rent hereunder and payable at the time of the next installment of Rent thereafter becoming due and Landlord shall have the same rights and remedies for the non-payment thereof, or of any other Additional Rent, as in the case of default in the payment of Rent. 12.4 If Tenant shall hold over after the expiration of the Term, at Landlord's option, Tenant may be deemed to be occupying the Premises as a tenant from month to month, which tenancy may be terminated by seven (7) days notice. During such tenancy, Tenant agrees to pay to Landlord, monthly in advance, Rent in an amount equal to one hundred fifty percent (150%) of the monthly installment of Rent which was payable on the last day of the Term, unless a different rate is agreed upon in writing, and to be bound by all of the terms, covenants and conditions herein specified. If Landlord relets the Premises (or any portion(s) thereof) to a new tenant and the term of such new lease commences during the period for which Tenant holds over, Landlord shall be entitled to recover from Tenant any and all costs, legal expenses, attorney's fees, damages, loss of profits or any other expenses incurred by Landlord as a result of Tenant's failure or inability to deliver possession of the Premises to Landlord when required under this Lease. 13. QUIET ENJOYMENT; LANDLORD'S DEFAULT; LIMITATION OF LANDLORD'S LIABILITY. -------------------------------------------------- 13.1 If and so long as Tenant pays all Rent and keeps and performs each and every term, covenant and condition herein contained on the part of Tenant to be kept and performed, Tenant shall quietly enjoy the Premises without hindrance by Landlord. 13.2 Landlord shall not be in default in the performance of any obligation required to be performed by Landlord under this Lease unless Landlord has failed to perform such obligations within thirty (30) days after the receipt of notice from Tenant specifying in detail Landlord's failure to perform; provided, however, that if the nature 8 Exhibit 99.4 of Landlord's obligation is such that more than thirty (30) days are required for its performance, then Landlord shall not be deemed in default if it shall commence such performance within such ten day period and thereafter diligently pursues the same to completion within sixty (60) days. Upon any such default by Landlord ("Default by Landlord"), Tenant may exercise any of its rights provided in law or at equity and shall have the right, but not the obligation, to cure any such Default by Landlord and to deduct the costs incurred by Tenant to cure such default, including reasonable legal fees and expenses, from the amounts next due and owing under the Lease. 13.3 Landlord acknowledges that Landlord is entering into this Lease based solely upon the credit of Tenant and not its principals, beneficiaries, shareholders, partners (general and limited, and the general and limited partners of such limited partners), officers, members or directors, past, present or future, for the payment of the rent, additional rent, or the payment of any other sums due under this Lease or the performance of any of Tenant's obligations under this Lease. Accordingly, Landlord's rights and remedies for any defaults of Tenant under this Lease are limited to pursuing Tenant and no member, shareholder, officer or director of Tenant, past, present or future, shall be liable to Landlord for any such defaults. Any judgment obtained by Landlord as a result of such defaults by Tenant may only be satisfied out of the assets of Tenant and Landlord may not satisfy any such judgment out of the assets of any shareholder, officer or director of Tenant, past, present or future. 13.4 The obligations of Landlord under this Lease do not constitute personal obligations of Landlord or the individual partners, shareholders, directors, and officers, and Tenant shall look solely to Landlord's then existing interest in the Building, and to no other assets of Landlord, for satisfaction of any liability in respect of this Lease, and will not seek recourse against the individual partners, shareholders, directors, officers, or any of their personal assets for such satisfaction. No other properties or assets of Landlord shall be subject to levy, execution, or other enforcement procedures for the satisfaction of any judgment (or other judicial process) or for the satisfaction of any other remedy of Tenant arising out of or in connection with this Lease, the relationship of landlord and tenant, or Tenant's use of the Premises. 14. AMENDMENT; WAIVER; APPROVAL; CONSENT. This Lease constitutes the entire agreement between the parties. This Lease shall not be amended or modified except in writing signed by both parties. Failure of Landlord to exercise any of its rights in one or more instances shall not be construed as a waiver of Landlord's right to strict performance of such rights or as to any subsequent breach of any such rights. Wherever this Lease requires either the Landlord's consent or approval, such consent or approval shall only be deemed given when in writing and, unless set forth expressly to the contrary, such consent or approval shall be in the sole discretion of Landlord. 15. NOTICES. All notices, communications and statements required or permitted under this Lease shall be in writing, delivered in person or sent by United States Registered or Certified Mail, return receipt requested, with postage prepaid, or Express Mail or Federal Express (or other similar courier service having a delivery system which provides for or makes available a signed receipt of delivery) or by facsimile transmission (provided an original copy is thereafter provided in the manner stated in this Section below) addressed to the parties as follows: 9 Exhibit 99.4 AS TO TENANT: WITH A COPY TO: PetMed Express, Inc. Stearns Weaver Miller Weissler 1441 S.W. 29th Avenue Alhadeff & Sitterson, P.A. Pompano Beach, Florida 33069 200 East Broward Blvd., #1900 Attn: John Vermaaten Ft. Lauderdale, Florida 33301 Fax (954)971-0544 Attn: Peter L. Desiderio, Esq. Fax (954)462-9567 AS TO LANDLORD: WITH A COPY TO: c/o RMS Properties, Inc. Dowd, Dowd & Mertes, Ltd. 331 B West Golf Road 701 Lee Street, Suite 790 Schaumburg, Illinois 60195 Des Plaines, Illinois 60016 Attn: Roshan Shoffet, Pres. Attn: Drake D. Mertes, Esq. Fax (847)310-0906 Fax (847)390-7643 Mail service shall be deemed effective upon the earlier of either seventy-two (72) hours after deposit in the U.S. mail in accordance herewith or upon receipt or refusal to accept receipt by a reputable courier service. Notices sent by facsimile transmission which are received by 4:00 p.m. (in the addressee's time zone) shall be deemed delivered as of the date of such transmission, provided that an original copy of such transmission is delivered to the addressee by a nationally utilized overnight courier service on the day following such transmission. Either party by written notice to the other may designate additional parties to receive copies of notices sent to it. Such designees may be changed by written notice. Either party may at any time, in the manner set forth for giving notice to the other, designate a different address to which notices, communication and statements to it shall be sent. 16. LANDLORD'S RESERVED RIGHTS; ACCESS; EASEMENTS: ---------------------------------------------- 16.1 Landlord shall have the right to (i) sell the Premises (or any portion(s) thereof) and assign this Lease, the Deposit and Prepaid Rent to the purchaser, and upon such assignment Landlord shall be released from all of its obligations under this Lease and Tenant agrees to attorn to such purchaser, or any other successor or assign of Landlord through foreclosure or deed in lieu of foreclosure or otherwise, and to recognize such person as successor Landlord under this Lease; and (ii) change the name or street address of the Premises. 16.2 Tenant shall permit Landlord to enter the Premises at all reasonable times for the purposes of inspecting, and repairing the Premises and of ascertaining compliance by Tenant with the provisions of this Lease. Landlord shall use reasonable efforts so as to minimize any inconvenience to or disruption of Tenant. Landlord may show the Premises to prospective purchasers, mortgagees, or tenants at any time. If representatives of Tenant shall not be present to open and permit entry into the Premises at anytime when such entry by Landlord is necessary due to an emergency, Landlord, or its employees or agents may enter by means of a master key, without liability of Landlord to Tenant and without such entry constituting an eviction of Tenant, and without incurring liability for trespass or causing a termination of this Lease. 17. SUBORDINATION; ESTOPPEL CERTIFICATE. ------------------------------------ 17.1 Subject to Tenant's receipt of the Non-Disturbance Agreement (as hereinafter defined), the rights of Tenant hereunder are and shall be, at the election of any mortgagee, subject and subordinate to the lien of any mortgage or mortgages, or the lien resulting from any other method of financing or refinancing, now or hereafter in force 10 Exhibit 99.4 against the Premises (or any portion(s) thereof), and to all advances made or hereafter to be made upon the security thereof ("Superior Instruments"). Tenant agrees upon request of Landlord, from time to time, to execute whatever documentation may be required to further effect the provisions of this Section. Notwithstanding the foregoing, Tenant shall not subordinate its leasehold interest to any Overlandlord (as hereinafter defined) unless prior to the commencement of the Lease term, Landlord at its sole cost and expense will provide Tenant with commercially reasonable non-disturbance agreements in favor of Tenant from all mortgagees, ground landlords and/or lien holders (collectively, "Overlandlords"). Landlord also agrees to provide Tenant with commercially reasonable non-disturbance agreement(s) in favor of Tenant from any future Overlandlords in consideration of, and as a condition precedent to, Tenant's agreement to be bound by any subordination, attornment or other similar provisions of the Lease. In no event shall any subordination or attornment expand beyond those set forth in this Lease the rights and remedies available to any such Overlandlord, the rights and remedies available to such party as against Tenant (including the imposition of additional or larger cure rights for such parties) or impose any additional burdens or requirements on Tenant. Neither Tenant nor any party claiming by, through or under Tenant shall be named or joined as a party defendant in any action or proceeding which may be instituted by any such Overlandlord against Landlord to foreclose or enforce any interest or lien held by such Overlandlord. 17.2 Landlord and Tenant shall, each without charge at any time and from time to time, within ten (10) days after request by the other party, certify by written instrument, duly executed, acknowledged and delivered to any ground lessor, Mortgagee, assignee of any Mortgagee or purchaser, or any proposed Mortgagee, or proposed assignee or sub- tenant of Tenant or any other person, firm or corporation specified by Landlord or Tenant: (a) That this Lease is unmodified and in full force and effect (or, if there has been modification, that the same is in full force and effect as modified and stating the modifications); (b) Whether or not there are then existing any breaches or defaults by the other party under any of the terms of this Lease and specifying such breach or default or any setoffs or defenses against the enforcement of any of the agreements, terms, covenants or conditions of this Lease upon the part of the Landlord or Tenant, as the case may be, to be performed or complied with (and, if so, specifying the same and the steps being taken to remedy the same); and (c) The dates, if any, to which the rental(s) and other charges under this Lease have been paid in advance. 18. ACCORD AND SATISFACTION. No receipt and retention by Landlord of any payment tendered by Tenant in connection with this Lease shall give rise to or support or constitute an accord or satisfaction, or a compromise or other settlement, notwithstanding any accompanying statement, instruction or other assertion to the contrary (whether by notation on a check or in a transmittal letter or otherwise), unless Landlord expressly agrees to an accord and satisfaction, or a compromise or other settlement, in a separate writing duly executed by Landlord. Landlord may receive and retain, absolutely and for itself, any and all payments so tendered, notwithstanding any accompanying instructions by Tenant to the contrary. Landlord will be entitled to treat any such payments as being received on account of any item or items of Rent, interest, 11 Exhibit 99.4 expense or damage due in connection therewith, in such amounts and in such order as Landlord may determine in its sole discretion. 19. SEVERABILITY. The parties intend this Lease to be legally valid and enforceable in accordance with all of its terms, covenants and conditions to the fullest extent permitted by law. If any term, covenant or condition hereof shall be invalid or unenforceable, the parties agree that such term, covenant or condition shall be stricken from this Lease, the same as if it never had been contained herein. Such invalidity or unenforceability shall not extend to any other term, covenant or condition of this Lease, and the remaining terms, covenants or conditions hereof shall continue in effect to the fullest extent permitted by law, the same as if such stricken term, covenant and condition never had been contained herein. 20. TIME. Time is of the essence of this Lease and applies to all terms, covenants, and conditions contained herein. All "days" set forth in this Lease shall be deemed to be "calendar days" unless specifically stated to the contrary. 21. SUCCESSORS AND ASSIGNS. All terms, conditions to be observed and performed by Tenant hereunder shall be applicable to and binding upon each parties' respective heirs, administrators, executors, and permitted successors and assigns. 22. RELATIONSHIP OF PARTIES. Anything in this Lease to the contrary notwithstanding, it is agreed that Landlord shall in no event be deemed to be a partner or engaged in a joint venture with, or an associate of Tenant in the conduct of its business nor shall Landlord be liable for any debts incurred by Tenant in the conduct of its business. Nothing contained in this Lease shall be deemed or construed to confer upon Landlord any interest in the business of the Tenant. The relationship of the parties during the Term shall at all times be that of landlord and tenant. 23. CAPTIONS AND SECTION NUMBERS. The captions and section numbers are for convenience of reference only and in no way shall be used to construe or modify the provisions set forth in this Lease. It is understood and agreed that verbs and pronouns in the singular number are uniformly used throughout this Lease regardless of gender, number of the parties hereto. 24. SCHEDULES; EXHIBITS. All schedules, exhibits and typewritten riders, if any, attached or added hereto are made a part of this Lease by reference and the terms, covenants, and conditions thereof shall control over any inconsistent provisions in the Sections of this Lease. 25. BROKERAGE: Tenant represents that it has dealt with no broker, salesman, agent or other person in connection with this transaction and that no broker, salesman, agent or other person brought about this transaction. Tenant agrees to indemnify and hold Landlord harmless from and against any claims by any other broker, salesman, agent or other person claiming a commission or other form of compensation by virtue of having dealt with Tenant with regard to this leasing transaction. Landlord agrees to indemnify and hold Landlord harmless from and against any claims by any other broker, salesman, agent or other person claiming a commission or other form of compensation by virtue of having dealt with Landlord with regard to this leasing transaction. The provisions of this subsection shall survive the expiration or sooner termination of this Lease. 12 Exhibit 99.4 26. AUTHORITY. If Tenant signs as a corporation, partnership, or other entity, each of the persons executing this Lease, on behalf of Tenant, does hereby covenant and warrant that Tenant is duly authorized to transact business, is in good standing and existing, that Tenant is qualified to do business in the State of Florida, Tenant has full right and authority to enter into this Lease, and that the persons signing on behalf of Tenant were authorized to do so. If Landlord signs as a corporation, partnership, or other entity, each of the persons executing this Lease, on behalf of Landlord, does hereby covenant and warrant that Landlord is duly authorized to transact business, is in good standing and existing, that Landlord is qualified to do business in the State of Florida, Landlord has full right and authority to enter into this Lease, and that the persons signing on behalf of Landlord were authorized to do so. 27. APPLICABLE LAW. This Lease shall be construed according to the laws of the State of Florida. Should any provision of this Lease require judicial interpretation, it is agreed by the parties hereto that the court interpreting or construing the same shall not apply a presumption that any such provision shall be more strictly construed against the party who itself or through its agent prepared the same, as all parties have participated in the preparation of the provisions of this Lease and that all terms, covenants and conditions were negotiable. 28. ATTORNEYS' FEES: If either party defaults in the performance of any of the terms or provisions of this Lease and by reason thereof the other party employs the services of any attorney to enforce performance of the covenants, or to perform any service based upon defaults, then in any of said events the prevailing party shall be entitled to receive from the other party reasonable attorneys' fees and all expenses and costs incurred by the prevailing party pertaining thereto (including costs and fees relating to any appeal) and in enforcement of any remedy. 29. TENDER AND DELIVERY OF LEASE. Submission of this Lease does not constitute an offer, right of first refusal, reservation of or option for the Premises or any part thereof. This Lease becomes effective as a lease upon execution and delivery by both Landlord and Tenant. 30. RADON GAS. Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit. 31. OPTION TO SHORTEN TERM. At any time after the Commencement Date, Tenant may, by written notice delivered to Landlord at least one hundred twenty (120) days prior to the date Tenant elects to terminate this Lease (the "Tenant's Termination Date") elect to terminate this Lease as of the Tenant's Termination Date at no additional cost or expense to the Tenant, in which event the Term of this Lease shall expire on the Termination Date. At any time after March 1, 2003, Landlord may, by written notice delivered to Tenant, at least ninety (90) days prior to the date Landlord elects to terminate the Lease (the "Landlord's Termination Date") elect to terminate this Lease prior to the expiration of the Lease Term at no additional cost or expense to the Landlord, in which event the Term of the Lease shall expire on Landlord's Termination Date and Rent shall be payable only to such Landlord's Termination Date. Notwithstanding the foregoing, 13 Exhibit 99.4 in no event shall Landlord's Termination Date be effective prior to March 1, 2003. 32. RENT ABATEMENT: In the event that Tenant is prevented from using, and does not use, the Premises or the parking spaces required to be made available to Tenant under the Lease ("Tenant's Parking Spaces) or any portion thereof, for two (2) consecutive days or five (5) days in any twelve (12) month period (the "Eligibility Period") as a result of any damage, or destruction to the Premises, or any construction by Landlord or its contractors, subcontractors, employees or agents then Tenant's rent shall be abated or reduced, as the case may be, after expiration of the Eligibility Period for such time that Tenant continues to be so prevented from using the Premises or Tenant's Parking Spaces or a portion thereof for its business purposes, in the proportion that the rentable area of the portion of the Premises that Tenant is prevented from using bears to the total rentable area of the Premises, provided that if Tenant's access to or use of Tenant's Parking Spaces is impaired rent shall also be reduced, as reasonably determined by an architect selected by Tenant, in order to compensate Tenant for such temporary loss of parking. However, in the event that Tenant is prevented from conducting, and does not conduct, its business in any portion of the Premises for a period of time in excess of the Eligibility Period, and the remaining portion of the Premises is not sufficient to allow Tenant to effectively conduct its business therein, and if Tenant does not conduct its business from such remaining portion, then for such time after expiration of the Eligibility Period during which Tenant is so prevented from effectively conducting its business therein, the rent for the entire Premises shall be abated, provided, however, if Tenant reoccupies and conducts its business from any portion of the Premises during such period, the rent allocable to such reoccupied portion, based on the proportion that the rentable area of such reoccupied portion of the Premises bears to total rentable area of the Premises shall be payable by Tenant from the date such business operations commence. If Tenant's right to abatement occurs because of an eminent domain taking and/or because of damage or destruction to the Premises or Tenant's property, Tenant's abatement period shall continue until Tenant has been given sufficient time, and sufficient access to the Premises, to rebuild the portion of the Premises it is required to rebuild, to install its property, furniture, fixtures, and equipment and to move in. (Signatures Appear on Following Page) 14 IN WITNESS WHEREOF, the respective parties have signed, sealed and delivered this Lease on the date and year written below. WITNESSES: LANDLORD: RMS PROPERTIES II, L.L.C., an Illinois limited liability company, /S/ Michael Rauch - ------------------------- Print: Michael Rauch By: RMS PROPERTIES, INC., an Illinois corporation /S/ Mendo Akdag By: /S/ Ron Shoffet - ------------------------- ----------------------------- Print: Mendo Akdag Print: Ron Shoffet Title: President Dated: 5/31/2001 WITNESSES: TENANT: PETMED EXPRESS, INC., a Florida corporation /S/ Melissa Licata - ------------------------- Print: Melissa Licata /S/ Mendo Akdag By: /S/ Marc Puleo - ------------------------- ----------------------------- Print: Mendo Akdag Print: Marc Puleo Title: President Dated: 5/31/2001 -14- Exhibit 99.4 -----END PRIVACY-ENHANCED MESSAGE-----