<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 5, 1999
REGISTRATION NO. 333-87019
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SILICON ENTERTAINMENT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7999 77-0389433
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
210 HACIENDA AVENUE
CAMPBELL, CALIFORNIA 95008
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DAVID S. MORSE
CHAIRMAN, CEO & PRESIDENT
210 HACIENDA AVENUE
CAMPBELL, CALIFORNIA 95008
(408) 364-6710
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)
COPIES TO:
<TABLE>
<S> <C>
JAMES M. KOSHLAND, ESQ. NORA L. GIBSON, ESQ.
NICOLE D. ALSTON, ESQ. RICHARD R. PLUMRIDGE, ESQ.
LYNN E. FULLERTON, ESQ. JOHN E. HAYES, ESQ.
GRAY CARY WARE & FREIDENRICH LLP BROBECK, PHLEGER & HARRISON LLP
400 HAMILTON AVENUE SPEAR STREET TOWER, ONE MARKET
PALO ALTO, CALIFORNIA, 94301-1825 SAN FRANCISCO, CALIFORNIA 94105
(650) 833-2000 (415) 442-0900
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act") check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
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TITLE OF EACH CLASS AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
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Common stock, $0.001 par value 5,175,000 $10.00 $51,750,000 $14,387
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</TABLE>
(1) Includes 675,000 shares which the underwriters have the option to purchase
to cover over-allotments, if any.
(2) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(a) under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
EXPLANATORY NOTE
The purpose of this Amendment No. 3 is solely to file certain exhibits to
the Registration Statement as set forth below in Item 16(a) of Part II.
<PAGE> 3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the common stock being registered. All amounts shown are estimates except for
the registration fee, the NASD filing fee and the Nasdaq National Market fee.
<TABLE>
<S> <C>
Registration fee............................................ $ 14,387
NASD filing fee............................................. 5,675
Nasdaq National Market fee..................................
Blue sky qualification fees and expenses....................
Printing and engraving expenses............................. 200,000
Legal fees and expenses..................................... 300,000
Accounting fees and expenses................................ 200,000
Transfer agent and registrar fees...........................
Miscellaneous...............................................
----------
Total............................................. $1,000,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware Law permits indemnification of officers,
directors and other corporate agents under certain circumstances and subject to
certain limitations. The Registrant's Certificate of Incorporation and By-laws
provide that the Registrant shall indemnify its directors, officers, employees
and agents to the full extent permitted by the Delaware Law, including
circumstances in which indemnification is otherwise discretionary under Delaware
law. In addition, the Registrant has entered into separate indemnification
agreements with its directors and executive officers which require the
Registrant, among other things, to indemnify them against certain liabilities
which may arise by reason of their status or service (other than liabilities
arising from acts or omissions not in good faith or willful misconduct).
These indemnification provisions and the indemnification agreements entered
into between the Registrant and its executive officers and directors may be
sufficiently broad to permit indemnification of the Registrant's executive
officers and directors for liabilities (including reimbursement of expenses
incurred) arising under the Securities Act.
The Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the Underwriters of the Registrant and
its officers and directors for certain liabilities arising under the Securities
Act, or otherwise.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since January 1, 1996, we sold and issued the following unregistered
securities:
1. From inception through August 1, 1999, we granted stock options to
purchase an aggregate of 2,588,141 shares of our common stock at an average
weighted exercise price of approximately $1.90 per share to employees,
consultants, directors and other service providers pursuant to our 1996
Stock Option Plan, 1997 Nonstatutory Stock Option Plan, and 1998 Executive
Stock Option Plan.
2. From inception through August 1, 1999, we issued and sold an
aggregate of 1,078,368 shares of our common stock to employees,
consultants, directors and other service providers for aggregate
consideration of approximately $2,050,085 pursuant to exercise of options
granted under our 1996 Stock Option Plan, 1997 Nonstatutory Stock Option
Plan, and 1998 Executive Stock Option Plan. Of the $2,050,085
consideration, $382,000 was received in the form of promissory notes and
$1,558 was received in the form of prior services rendered.
II-1
<PAGE> 4
3. From January 5, 1996 through May 16, 1996, in connection with the
issuance of promissory notes, we issued warrants to certain of our existing
private investors to purchase an aggregate of 106,667 shares of our common
stock at an exercise price of $1.50 per share.
4. On February 7, 1996, we sold 1,633,334 shares of Series A Preferred
Stock for $0.60 per share to a private investor for an aggregate purchase
price of $980,000.10.
5. On October 15, 1996, in connection with an equipment lease line, we
issued a warrant to Phoenix Leasing Incorporated to purchase 26,667 shares
of our Series B Preferred Stock at an exercise price of $1.50 per share.
6. From May 16, 1996 through May 12, 1997, we issued and sold an
aggregate of 2,769,016 shares of Series B Preferred Stock for $1.50 per
share to a group of private investors for an approximate aggregate purchase
price of $4,153,524.
7. From March 27, 1997 through November 19, 1997, we issued warrants
to certain of our existing private investors to purchase an aggregate of
232,584 shares of our Series C Preferred Stock at an exercise price of
$6.00 per share.
8. On August 14, 1997, in connection with a strategic partnership and
license transaction, we issued a warrant to one of our strategic partners
to purchase 50,000 shares of our Series C Preferred Stock at an exercise
price of $6.00 per share.
9. On August 18, 1997, in connection with a strategic partnership and
licensing agreement, we issued an option to one of our strategic partners
to purchase 20,000 shares of our common stock at $0.15 per share.
10. From December 1997 through July 1999, we issued and sold an
aggregate of 3,485,449 shares of Series C Preferred Stock for $6.00 per
share to a group of private investors for an aggregate purchase price of
$20,912,676. SG Cowen Securities Corporation acted as a broker in this
transaction.
11. On April 23, 1998, in connection with a strategic partnership
transaction, we issued a warrant to John Force to purchase 7,500 shares of
our Series C Preferred Stock at an exercise price of $6.00 per share.
12. On May 17, 1998, in connection with a strategic partnership
transaction, we issued a warrant to Simon Investors to purchase 25,000
shares of our Series C Preferred Stock at an exercise price of $6.00 per
share.
13. On July 1, 1998, in connection with a strategic partnership
transaction, we issued a warrant to Action Performance Companies to
purchase 20,000 shares of our Series C Preferred Stock at an exercise price
of $6.00 per share.
14. On July 1, 1998, in connection with an equipment lease line, we
issued a warrant to Phoenix Growth Capital Corporation to purchase 13,334
shares of our Series C Preferred Stock at an exercise price of $6.00 per
share.
15. From February 2, 1999 through June 18, 1999, we granted 2,413
shares of our common stock to our employees pursuant to our 1999 Employee
Stock Bonus Plan. Of these shares, 1,525 shares have been exercised.
16. From January 22, 1999 through July 1, 1999, we issued warrants to
certain of our existing private investors to purchase an aggregate of
131,000 shares of our common stock at an exercise price of $6.00 per share.
17. On June 17, 1999, we issued a warrant to LINC to purchase 3,224
shares of our Series C Preferred Stock in connection with a capital
equipment lease agreement.
II-2
<PAGE> 5
18. On July 1, 1999, we issued a warrant to Pentech Financial
Services, Inc. to purchase 20,000 shares of our Series C Preferred Stock at
$6.00 per share in connection with a capital equipment lease agreement.
19. On June 30, 1999, we issued a secured subordinated convertible
note to each of Galladio Holding B.V., Wagenaarkwartier's-Gravenhage B.V.
and Van der Lee Partnership in the principal amount of $2,260,000,
$2,260,000 and $1,130,000, respectively. All of these notes are convertible
into shares of our common stock.
20. From June 16, 1999 to September 9, 1999, we issued promissory
notes in an aggregate amount of $8,803,166 to various investors, $5,780,000
of which is convertible into shares of our common stock.
21. On February 2, 1999, we issued an option to purchase 100,000
shares of our common stock at $1.00 per share to one of our strategic
partners in connection with a strategic partnership and license agreement.
22. On April 23, 1998, August 11, 1998 and June 17, 1999, we issued
1,817, 3,421 and 4,420 shares, respectively, of our common stock at $0.50,
$1.00 and $6.00 per share, respectively, to Michael DiLorenzo in connection
with consultant stock purchase agreements.
23. On June 17, 1999, we issued 4,000 and 1,000 shares of our common
stock at $6.00 per share to Nagle & Ferri, L.L.C. and Michael Nichols,
respectively, in connection with a consultant stock purchase agreement.
24. On February 2, 1999 and April 7, 1999, we issued an aggregate of
3,393 shares of our common stock at $1.00 per share to Madeline Canepa in
connection with a consultant common stock purchase agreement.
There were no underwriters employed in connection with any of the
transactions set forth in Item 15.
The issuances described in Items 15.3 through 15.14 and 15.16 through 15.23
were deemed to be exempt from registration under the Securities Act in reliance
on Section 4(2) of the Securities Act as transactions by an issuer not involving
a public offering. In addition, the issuances described in Item 15.1, 15.2 and
15.15 were deemed exempt from registration under the Securities Act in reliance
on Rule 701 promulgated thereunder as transactions pursuant to compensatory
benefit plans and contracts relating to compensation. The recipients of
securities in each such transaction represented their intention to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof and appropriate legends were affixed to the share
certificates and other instruments issued in such transactions. All recipients
either received adequate information about the Registrant or had access, through
employment or other relationships, to such information.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
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<S> <C>
1.1 Form of Underwriting Agreement.
3.1 Restated Certificate of Incorporation of the Registrant and
Certificate of Amendment of Restated Certificate of
Incorporation to be in effect after the offering.
3.2 Bylaws of the Registrant to be in effect after the offering.
** 4.1 Third Amended and Restated Rights Agreement, dated as of
December 31, 1998, as amended to date.
4.2 Specimen Common Stock Certificate.
5.1 Opinion of Gray Cary Ware & Freidenrich LLP.
10.1 Form of Indemnification Agreement for directors and
executive officers.
</TABLE>
II-3
<PAGE> 6
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
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<S> <C>
**10.2 1996 Stock Option Plan and forms of Incentive Stock Option
Agreement and Nonstatutory Stock Option Agreement
thereunder.
**10.3 1997 Nonstatutory Stock Option Plan and form of Nonstatutory
Stock Option Agreement thereunder.
**10.4 1998 Executive Stock Option Plan and forms of Incentive
Stock Option Agreement and Nonstatutory Stock Option
Agreement thereunder.
**10.5 Stock Bonus Plan and form of Stock Bonus Agreement
thereunder.
10.6 1999 Employee Stock Purchase Plan.
10.7+ License Agreement by and between National Association for
Stock Car Auto Racing, Inc. and the Registrant, dated August
18, 1997, as amended.
10.8+ The Registrant and Action Performance Companies, Inc.
Terms -- Strategic Partnership, dated April 20, 1998.
10.9+ Letter Agreement with Simon Investors, LLC, dated May 17,
1998.
10.10+ Industrial Complex Lease (California) between MP Hacienda,
Inc. and the Registrant, dated as of April 30, 1998.
10.11+ Dallas Galleria Lease between Dallas Galleria Limited as
"Landlord" and the Registrant, as "Tenant" d/b/a/ Nascar
Silicon Motor Speedway, dated as of May 22, 1998, as
amended.
10.12+ Lease by and between Mall of America Company, a Minnesota
General Partnership, and the Registrant, dated as of August
12, 1997.
10.13+ Irvine Retail Properties Company Retail Space Lease, dated
as of April 22, 1998.
10.14+ The Palisades Center Shopping Center Lease, dated as of July
27, 1998.
10.15+ Lease, the Registrant, Tenant, "NASCAR Silicon Motor
Speedway," Trade Name, Woodfield Mall, dated as of December
18, 1997.
10.16+ Lease, the Registrant, Tenant, NASCAR Silicon Motor Speedway
and/or Silicon Motor Speedway, Trade Name, Concord Mills,
dated as of June 30, 1999.
10.17+ Lease, the Registrant, Tenant, NASCAR Silicon Motor Speedway
and/or Silicon Motor Speedway, Trade Name, Katy Mills, dated
as of March 17, 1999.
10.18+ Universal Studios CityWalk Hollywood Lease between Universal
Studios CityWalk Hollywood, a division of Universal Studios,
Inc. as Landlord and the Registrant, executed as of July 20,
1999.
10.19+ Standard Shopping Center Lease, dated as of August 12, 1999
(Walden Galleria, Buffalo, New York).
10.20+ Standard Shopping Center Lease, dated as of August 12, 1999
(Crossgates Mall, Albany, New York).
10.21+ Retail Lease Agreement between Peabody Place Centre, L.P., a
Tennessee limited partnership and the Registrant dated as of
May 24, 1999.
10.22+ Standard Shopping Center letter, dated as of August 18, 1999
(Carousel Center, Syracuse, New York).
10.23+ Lease, the Registrant, Tenant, NASCAR Silicon Motor Speedway
and/or Silicon Motor Speedway, Trade Name, Opry Mills, dated
as of August 23, 1999.
10.24+ Agreement of Lease between Mall of Georgia, L.L.C. and the
Registrant, dated as of September 23, 1999.
**10.25 Service Agreement by and among the Registrant, Dale
Earnhardt, Inc. and Richard Childress Racing, dated as of
April 30, 1997.
**10.26 Jeff Gordon Personal Services and Endorsement Agreement by
and among the Registrant, Jeff Gordon, Inc. and Jeff Gordon,
dated as of January 1, 1998.
**10.27 Licensing Agreement by and between the Registrant and Dale
Jarrett, dated as of March 24, 1997.
**10.28 Licensing Agreement by and between the Registrant and Rusty
Wallace Inc., dated as of March 1, 1997.
</TABLE>
II-4
<PAGE> 7
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<S> <C>
**10.29 License Agreement (Auto Design) by and between the
Registrant and Robert Yates Racing, Inc., dated as of
February 28, 1997.
10.30 Note Purchase Agreement by and among the Registrant,
Galladio Holding, Wagenaarkwartier and E.M.H. van der Lee,
dated as of June 30, 1999.
10.31 Note Purchase Agreement by and among the Registrant and
Galladio Holding, van der Lee Partnership, E.M.H. van der
Lee E.W. van der Lee and Manschot Opportunity Fund, dated as
of September 9, 1999.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Public
Accountants.
23.2 Consent of Gray Cary Ware & Freidenrich LLP (included in
Exhibit 5.1).
**24.1 Power of Attorney.
</TABLE>
- -------------------------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment has been requested for portions of this exhibit. The
confidential portions have been filed separately with the Securities and
Exchange Commission.
(b) FINANCIAL STATEMENT SCHEDULES.
No schedules have been filed because the information required to be set
forth therein is not applicable or is shown in the financial statements or notes
thereto.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referenced in Item 14 of
this Registration Statement or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer, employee or agent of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer, employee or agent in connection with the securities being
registered hereunder, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective; and
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-5
<PAGE> 8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-1 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Campbell, County of Santa Clara, State of California, on the 5th day of
November, 1999.
SILICON ENTERTAINMENT, INC.
By: /s/ ROSS C. MULHOLLAND
------------------------------------
Ross C. Mulholland
Vice President Finance, Chief
Financial Officer
and Principal Accounting Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ DAVID S. MORSE* Chairman of the Board, Chief November 5, 1999
- --------------------------------------------- Executive Officer and President
David S. Morse
/s/ ROSS C. MULHOLLAND Vice President Finance, Chief November 5, 1999
- --------------------------------------------- Financial Officer and Principal
Ross C. Mulholland Accounting Officer
/s/ WILLIAM HART* Director November 5, 1999
- ---------------------------------------------
William Hart
/s/ ROBERT H. MANSCHOT* Director November 5, 1999
- ---------------------------------------------
Robert H. Manschot
/s/ CHRISTOPHER S. BESING* Director November 5, 1999
- ---------------------------------------------
Christopher S. Besing
/s/ ROBERT V. CHEADLE* Director November 5, 1999
- ---------------------------------------------
Robert V. Cheadle
*By: /s/ ROSS C. MULHOLLAND
- ---------------------------------------------
Ross C. Mulholland
Attorney-in-Fact
</TABLE>
II-6
<PAGE> 9
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<S> <C>
1.1 Form of Underwriting Agreement.
3.1 Restated Certificate of Incorporation of the Registrant and
Certificate of Amendment of Restated Certificate of
Incorporation to be in effect after the offering.
3.2 Bylaws of the Registrant to be in effect after the offering.
** 4.1 Third Amended and Restated Rights Agreement, dated as of
December 31, 1998, as amended to date.
4.2 Specimen Common Stock Certificate.
5.1 Opinion of Gray Cary Ware & Freidenrich LLP.
10.1 Form of Indemnification Agreement for directors and
executive officers.
**10.3 1997 Nonstatutory Stock Option Plan and form of Nonstatutory
Stock Option Agreement thereunder.
**10.4 1998 Executive Stock Option Plan and forms of Incentive
Stock Option Agreement and Nonstatutory Stock Option
Agreement thereunder.
**10.5 Stock Bonus Plan and form of Stock Bonus Agreement
thereunder.
10.6 1999 Employee Stock Purchase Plan and form of subscription
agreement thereunder.
10.7+ License Agreement by and between National Association for
Stock Car Auto Racing, Inc. and the Registrant, dated August
18, 1997, as amended.
10.8+ The Registrant and Action Performance Companies, Inc.
Terms -- Strategic Partnership, dated April 20, 1998.
10.9+ Letter Agreement with Simon Investors, LLC, dated May 17,
1998.
10.10+ Industrial Complex Lease (California) between MP Hacienda,
Inc. and the Registrant, dated as of April 30, 1998.
10.11+ Dallas Galleria Lease between Dallas Galleria Limited as
"Landlord" and the Registrant, as "Tenant" d/b/a/ Nascar
Silicon Motor Speedway, dated as of May 22, 1998, as
amended.
10.12+ Lease by and between Mall of America Company, a Minnesota
General Partnership, and the Registrant, dated as of August
12, 1997.
10.13+ Irvine Retail Properties Company Retail Space Lease, dated
as of April 22, 1998.
10.14+ The Palisades Center Shopping Center Lease, dated as of July
27, 1998.
10.15+ Lease, the Registrant, Tenant, "NASCAR Silicon Motor
Speedway," Trade Name, Woodfield Mall, dated as of December
18, 1997.
10.16+ Lease, the Registrant, Tenant, NASCAR Silicon Motor Speedway
and/or Silicon Motor Speedway, Trade Name, Concord Mills,
dated as of June 30, 1999.
10.17+ Lease, the Registrant, Tenant, NASCAR Silicon Motor Speedway
and/or Silicon Motor Speedway, Trade Name, Katy Mills, dated
as of March 17, 1999.
10.18+ Universal Studios CityWalk Hollywood Lease between Universal
Studios CityWalk Hollywood, a division of Universal Studios,
Inc. as Landlord and the Registrant, executed as of July 20,
1999.
10.19+ Standard Shopping Center Lease, dated as of August 12, 1999
(Walden Galleria, Buffalo, New York).
10.20+ Standard Shopping Center Lease, dated as of August 12, 1999
(Crossgates Mall, Albany, New York).
10.21+ Retail Lease Agreement between Peabody Place Centre, L.P., a
Tennessee limited partnership and the Registrant dated as of
May 24, 1999.
10.22+ Standard Shopping Center letter, dated as of August 18, 1999
(Carousel Center, Syracuse, New York).
10.23+ Lease, the Registrant, Tenant, NASCAR Silicon Motor Speedway
and/or Silicon Motor Speedway, Trade Name, Opry Mills, dated
as of August 23, 1999.
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<S> <C>
10.24+ Agreement of Lease between Mall of Georgia, L.L.C. and the
Registrant, dated as of September 23, 1999.
**10.25 Service Agreement by and among the Registrant, Dale
Earnhardt, Inc. and Richard Childress Racing, dated as of
April 30, 1997.
**10.26 Jeff Gordon Personal Services and Endorsement Agreement by
and among the Registrant, Jeff Gordon, Inc. and Jeff Gordon,
dated as of January 1, 1998.
**10.27 Licensing Agreement by and between the Registrant and Dale
Jarrett, dated as of March 24, 1997.
**10.28 Licensing Agreement by and between the Registrant and Rusty
Wallace Inc., dated as of March 1, 1997.
**10.29 License Agreement (Auto Design) by and between the
Registrant and Robert Yates Racing, Inc., dated as of
February 28, 1997.
10.30 Note Purchase Agreement by and among the Registrant,
Galladio Holding, Wagenaarkwartier and E.M.H. van der Lee,
dated as of June 30, 1999.
10.31 Note Purchase Agreement by and among the Registrant and
Galladio Holding, van der Lee Partnership, E.M.H. van der
Lee E.W. van der Lee and Manschot Opportunity Fund, dated as
of September 9, 1999.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Public
Accountants.
23.2 Consent of Gray Cary Ware & Freidenrich LLP (included in
Exhibit 5.1).
**24.1 Power of Attorney.
</TABLE>
- -------------------------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment has been requested for portions of this exhibit. The
confidential portions have been filed separately with the Securities and
Exchange Commission.
<PAGE> 1
Exhibit 1.1
[Number of Shares]
SILICON ENTERTAINMENT, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
November __, 1999
SG COWEN SECURITIES CORPORATION
CIBCWorld Markets Corp.
J.C. Bradford & Co.
E*OFFERING Corp.
c/o SG Cowen Securities Corporation
Financial Square
New York, New York 10005
Dear Sirs:
1. INTRODUCTORY. Silicon Entertainment, Inc., a Delaware corporation (the
"Company"), proposes to sell, pursuant to the terms of this Agreement, to the
several underwriters named in Schedule A hereto (the "Underwriters," or, each,
an "Underwriter"), an aggregate of _____ shares of common stock, $0.001 par
value (the "Common Stock") of the Company (the "Company"). The aggregate of ____
shares so proposed to be sold is hereinafter referred to as the "Firm Stock".
The Company also proposes to sell to the Underwriters, upon the terms and
conditions set forth in Section 3 hereof, up to an additional ______ shares of
Common Stock (the "Optional Stock"). The Firm Stock and the Optional Stock are
hereinafter collectively referred to as the "Stock." SG Cowen Securities
Corporation ("SG Cowen") and CIBC World Markets Corp, J.C. Bradford & Co. and
E*OFFERING Corp. are acting as representatives of the several Underwriters and
in such capacity are hereinafter referred to as the "Representatives."
2. (I) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, the several Underwriters that:
a. A registration statement on Form S-1 (File No. 333-87019) (the
"Initial Registration Statement") in respect of the Stock has been filed with
the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in the
form heretofore delivered to you, and, excluding exhibits thereto, to you for
each of the other Underwriters, have been declared effective by the Commission
in such form; other than a registration statement, if any, increasing the size
of the offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Securities Act"), and
the rules and regulations (the "Rules and Regulations") of the Commission
thereunder, which became effective upon filing, no other document with respect
to the Initial Registration Statement has heretofore been filed with the
Commission; and no stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective
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amendment thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or, to the
Company's knowledge, is threatened by the Commission (any preliminary prospectus
included in the Initial Registration Statement or filed with the Commission
pursuant to Rule 424(a) of the Rules and Regulations, is hereinafter called a
"Preliminary Prospectus"); the various parts of the Initial Registration
Statement and the Rule 462(b) Registration Statement, if any, including all
exhibits thereto and including (i) the information contained in the form of
final prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act and deemed by virtue of Rule 430A under the Securities Act to be
part of the Initial Registration Statement at the time it was declared
effective, each as amended at the time such part of the Initial Registration
Statement became effective or such part of the Rule 462(b) Registration
Statement, if any, became or hereafter becomes effective, are hereinafter
collectively called the "Registration Statements"; and such final prospectus, in
the form first filed pursuant to Rule 424(b) under the Securities Act, is
hereinafter called the "Prospectus". No document has been or will be prepared or
distributed in reliance on Rule 434 under the Securities Act. No order
preventing or suspending the use of any Preliminary Prospectus has been issued
by the Commission.
b. The Registration Statement conforms (and the Rule 462(b) Registration
Statement, if any, the Prospectus and any amendments or supplements to either of
the Registration Statements or the Prospectus, when they become effective or are
filed with the Commission, as the case may be, will conform) in all material
respects to the requirements of the Securities Act and the Rules and Regulations
and do not and will not, as of the applicable effective date (as to the
Registration Statements and any amendment thereto) and as of the applicable
filing date (as to the Prospectus and any amendment or supplement thereto)
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that the foregoing representations and
warranties shall not apply to information contained in or omitted from the
Registration Statements or the Prospectus or any such amendment or supplement
thereto in reliance upon, and in conformity with, written information furnished
to the Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein.
c. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification, and it has
the power and authority necessary to own or hold its properties and to conduct
the business in which it is engaged, except where the failure to so qualify or
have such power or authority would not have, singularly or in the aggregate, a
material adverse effect on the condition (financial or otherwise), results of
operations, business or prospects of the Company (a "Material Adverse Effect").
The Company does not have any Subsidiaries (as defined in Section 14 herein) and
does not own or control, directly or indirectly, any other corporations,
associations or other entities.
d. This Agreement has been duly authorized, executed and delivered by the
Company.
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e. The Stock to be issued and sold by the Company to the Underwriters
hereunder has been duly and validly authorized and, when issued and delivered
against payment therefor as provided herein, will be duly and validly issued,
fully paid and nonassessable and free of any preemptive or similar rights and
will conform in all material respects to the description thereof contained in
the Prospectus.
f. The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and conform in all material respects to the description thereof contained in the
Prospectus.
g. The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company is a
party or by which the Company is bound or to which any of the property or assets
of the Company or any of its subsidiaries is subject, except for such conflicts,
breaches, violations and defaults that would not, individually or in the
aggregate, result in a Material Adverse Effect, nor will such actions result in
any violation of the provisions of the charter or by-laws of the Company or any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its properties or assets.
h. Except for the registration of the Stock under the Securities Act and
such consents, approvals, authorizations, registrations or qualifications as may
be required under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Stock by the Underwriters,
no consent, approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the execution,
delivery and performance of this Agreement by the Company and the consummation
of the transactions contemplated hereby.
i. PricewaterhouseCoopers LLP, who have expressed their opinions on the
audited financial statements and related schedules included in the Registration
Statements and the Prospectus are independent public accountants as required by
the Securities Act and the Rules and Regulations.
j. The financial statements, together with the related notes and
schedules, included in the Prospectus and in each Registration Statement fairly
present the financial position and the results of operations and changes in
financial position of the Company at the respective dates or for the respective
periods therein specified. Such statements and related notes and schedules have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis except as may be set forth in the Prospectus.
k. The Company has not sustained, since the date of the latest audited
financial statements included in the Prospectus, any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
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contemplated in the Prospectus; and, since such date, there has not been any
change in the capital stock or long-term debt of the Company or any material
adverse change, or to the Company's knowledge, any development involving a
prospective material adverse change, in or affecting the business, general
affairs, management, financial position, stockholders' equity or results of
operations of the Company otherwise than as set forth or contemplated in the
Prospectus.
l. Except as set forth in the Prospectus, there is no legal or
governmental proceeding pending to which the Company is a party or of which any
property or assets of the Company is the subject which, if determined adversely
to the Company, might have a Material Adverse Effect or would prevent or
adversely affect the ability of the Company to perform its obligations under
this Agreement; and to the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.
m. The Company (i) is not in violation of its charter or by-laws, (ii) is
not in default in any respect, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default, in the due performance
or observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which it is a party or by which it is bound or to which any of its
property or assets is subject or (iii) is in violation in any respect of any
law, ordinance, governmental rule, regulation or court decree to which it or its
property or assets may be subject, except any violations or defaults which,
singularly or in the aggregate, would not have a Material Adverse Effect.
n. The Company possesses all licenses, certificates, authorizations and
permits issued by, and have made all declarations and filings with, the
appropriate state, federal or foreign regulatory agencies or bodies which are
necessary or desirable for the ownership of its properties or the conduct of its
businesses as described in the Prospectus except where any failures to possess
or make the same, singularly or in the aggregate, would not have a Material
Adverse Effect, and the Company has not received notification of any revocation
or modification of any such license, authorization or permit and has no reason
to believe that any such license, certificate, authorization or permit will not
be renewed.
o. The Company will not, after giving effect to the offering of the Stock
and the application of the proceeds thereof as described in the Prospectus,
become an "investment company" within the meaning of the Investment Company Act
of 1940, as amended, and the rules and regulations of the Commission thereunder.
p. Neither the Company nor any of its officers, directors or affiliates
has taken or will take, directly or indirectly, any action designed or intended
to stabilize or manipulate the price of any security of the Company, or which
caused or resulted in, or which might in the future reasonably be expected to
cause or result in, stabilization or manipulation of the price of any security
of the Company.
q. The Company owns or possesses the right to use all patents,
trademarks, trademark registrations, service marks, service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
described in the Prospectus as being owned by it for the
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<PAGE> 5
conduct of its business, and the Company is not aware of any claim to the
contrary or any challenge by any other person to the rights of the Company with
respect to the foregoing. The Company's business as now conducted and as
proposed to be conducted (in each case, as described in the Prospectus) does not
and will not infringe or conflict with any patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses or other intellectual property
or franchise right of any person. Except as described in the Prospectus, no
claim has been made against the Company alleging the infringement by the Company
of any patent, trademark, service mark, trade name, copyright, trade secret,
license in or other intellectual property right or franchise right of any
person.
r. The Company has good and marketable title in fee simple to, or has
valid rights to lease or otherwise use, all items of real or personal property
which is material to the business of the Company, in each case free and clear of
all liens, encumbrances, claims and defects that may result in a Material
Adverse Effect.
s. No labor disturbance by the employees of the Company exists or, to the
Company's knowledge, is imminent which might be expected to have a Material
Adverse Effect. The Company is not aware that any key employee or significant
group of employees of the Company plans to terminate employment with the
Company.
t. No "prohibited transaction" (as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"), or Section 4975 of the
Internal Revenue Code of 1986, as amended from time to time (the "Code")), or
"accumulated funding deficiency" (as defined in Section 302 of ERISA) or any of
the events set forth in Section 4043(b) of ERISA (other than events with respect
to which the 30-day notice requirement under Section 4043 of ERISA has been
waived) has occurred with respect to any employee benefit plan which could have
a Material Adverse Effect; each employee benefit plan is in compliance in all
material respects with applicable law, including ERISA and the Code; the Company
has not incurred and does not expect to incur liability under Title IV of ERISA
with respect to the termination of, or withdrawal from, any "pension plan"; and
each "pension plan" (as defined in ERISA) for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which could cause the loss of such qualification.
u. There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission, or other release of any kind of toxic
or other wastes or other hazardous substances by, due to, or caused by the
Company (or, to the Company's knowledge, any other entity for whose acts or
omissions the Company is or may be liable) upon any of the property now or
previously owned or leased by the Company, or upon any other property, in
violation of any statute or any ordinance, rule, regulation, order, judgment,
decree or permit or which would, under any statute or any ordinance, rule
(including rule of common law), regulation, order, judgment, decree or permit,
give rise to any liability, except for any violation or liability which would
not have, singularly or in the aggregate with all such violations and
liabilities, a Material Adverse Effect; there has been no disposal, discharge,
emission or other release of any kind onto
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<PAGE> 6
such property or into the environment surrounding such property of any toxic or
other wastes or other hazardous substances with respect to which the Company has
knowledge, except for any such disposal, discharge, emission, or other release
of any kind which would not have, singularly or in the aggregate with all such
discharges and other releases, a Material Adverse Effect.
v. The Company (i) has filed all necessary federal, state and foreign
income and franchise tax returns, (ii) has paid all federal state, local and
foreign taxes due and payable for which it is liable, and (iii) does not have
any tax deficiency or claims outstanding or assessed or, to the Company's
knowledge, proposed against it which could reasonably be expected to have a
Material Adverse Effect.
w. The Company carries, or is covered by, insurance in such amounts and
covering such risks as is adequate for the conduct of its business and the value
of its properties and as is customary for companies engaged in similar
businesses in similar industries.
x. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
y. The minute books of the Company have been made available to the
Underwriters and counsel for the Underwriters, and such books (i) contain a
complete summary of all meetings and actions of the directors and stockholders
of the Company since the time of its incorporation through the date of the
latest meeting and action, and (ii) accurately, in all material respects,
reflect all transactions referred to in such minutes.
z. There is no franchise, lease, contract, agreement or document required
by the Securities Act or by the Rules and Regulations to be described in the
Prospectus or to be filed as an exhibit to the Registration Statements which is
not described or filed therein as required; and all descriptions of any such
franchises, leases, contracts, agreements or documents contained in the
Registration Statements are accurate and complete descriptions of such documents
in all material respects.
aa. No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders, customers or
suppliers of the Company on the other hand, which is required to be described in
the Prospectus and which is not so described.
bb. No person or entity has the right to require registration of shares of
Common Stock or other securities of the Company because of the filing or
effectiveness of the Registration Statements or otherwise, except for persons
and entities who have expressly waived such right or who have been given proper
notice and have failed to exercise such right within the time or times required
under the terms and conditions of such right.
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cc. The Company does not own any "margin securities" as that term is
defined in Regulations G and U of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), and none of the proceeds of the sale of
the Stock will be used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might cause any of the Securities to be
considered a "purpose credit" within the meanings of Regulation G, T, U or X of
the Federal Reserve Board.
dd. The Company is not a party to any contract, agreement or understanding
with any person that would give rise to a valid claim against the Company or the
Underwriters for a brokerage commission, finder's fee or like payment in
connection with the offering and sale of the Stock.
ee. No forward-looking statement (within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act) contained in the Prospectus
has been made or reaffirmed without a reasonable basis or has been disclosed
other than in good faith.
ff. The Company has reviewed its operations and that of any third parties
with which the Company has a material relationship to evaluate the extent to
which the business or operations of the Company will be affected by the Year
2000 Problem. As a result of such review, the Company has no reason to believe,
and does not believe that the Year 2000 Problem will have a Material Adverse
Effect. The "Year 2000 Problem" as used herein means any significant risk that
computer hardware or software used in the receipt, transmission, processing,
manipulation, storage, retrieval, retransmission or other utilization of data or
in the operation of mechanical or electrical systems of any kind will not, in
the case of dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring prior to
January 1, 2000.
gg. The Stock has been approved for listing subject to notice of issuance
on the NASDAQ Stock Market's National Market.
3. PURCHASE SALE AND DELIVERY OF OFFERED SECURITIES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Company that number of shares of Firm Stock (rounded up or down, as
determined by SG Cowen in its discretion, in order to avoid fractions) obtained
by multiplying _____ shares of Firm Stock by a fraction, the numerator of which
is the number of shares of Firm Stock set forth opposite the name of such
Underwriter in Schedule A hereto and the denominator of which is the total
number of shares of Firm Stock.
The purchase price per share to be paid by the Underwriters to the Company
for the Stock will be $_____ per share (the "Purchase Price").
The Company will deliver the Firm Stock to the Representatives for the
respective accounts of the several Underwriters (in the form of definitive
certificates, issued in such names
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<PAGE> 8
and in such denominations as the Representatives may direct by notice in writing
to the Company given at or prior to 12:00 Noon, New York time, on the second
full business day preceding the First Closing Date (as defined below)) against
payment of the aggregate Purchase Price therefor by wire transfer to an account
at a bank reasonably acceptable to SG Cowen, payable to the order of the
Company, all at the offices of Gray Cary Ware & Freidenrich LLP, 400 Hamilton
Avenue, Palo Alto, California 94301. Time shall be of the essence, and delivery
at the time and place specified pursuant to this Agreement is a further
condition of the obligations of each Underwriter hereunder. The time and date of
the delivery and closing shall be at 10:00 A.M., New York time, on , 1999, in
accordance with Rule 15c6-1 of the Exchange Act. The time and date of such
payment and delivery are herein referred to as the "First Closing Date." The
First Closing Date and the location of delivery of, and the form of payment for,
the Firm Stock may be varied by agreement between the Company and SG Cowen.
The Company shall make the certificates for the Stock available to the
Representatives for examination on behalf of the Underwriters in New York, New
York at least twenty-four hours prior to the First Closing Date.
For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Stock as contemplated by the Prospectus, the
Underwriters may purchase all or less than all of the Optional Stock. The price
per share to be paid for the Optional Stock shall be the Purchase Price. The
Company agrees to sell to the Underwriters the number of shares of Optional
Stock specified in the written notice by SG Cowen described below and the
Underwriters agree, severally and not jointly, to purchase such shares of
Optional Stock. Such shares of Optional Stock shall be purchased from the
Company for the account of each Underwriter in the same proportion as the number
of shares of Firm Stock set forth opposite such Underwriter's name bears to the
total number of shares of Firm Stock (subject to adjustment by SG Cowen to
eliminate fractions). The option granted hereby may be exercised as to all or
any part of the Optional Stock at any time, and from time to time, not more than
thirty (30) days subsequent to the date of this Agreement. No Optional Stock
shall be sold and delivered unless the Firm Stock previously has been, or
simultaneously is, sold and delivered. The right to purchase the Optional Stock
or any portion thereof may be surrendered and terminated at any time upon notice
by SG Cowen to the Company.
The option granted hereby may be exercised by written notice given to the
Company by SG Cowen setting forth the number of shares of the Optional Stock to
be purchased by the Underwriters and the date and time for delivery of and
payment for the Optional Stock. Each date and time for delivery of and payment
for the Optional Stock (which may be the First Closing Date, but not earlier) is
herein called the "Option Closing Date" and shall in no event be earlier than
two (2) business days nor later than five (5) business days after written notice
is given. (The Option Closing Date and the First Closing Date are herein called
the "Closing Dates.")
The Company will deliver the Optional Stock to the Underwriters (in the
form of definitive certificates, issued in such names and in such denominations
as the Representatives may direct by notice in writing to the Company given at
or prior to 12:00 Noon, New York time,
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<PAGE> 9
on the second full business day preceding the Option Closing Date) against
payment of the aggregate Purchase Price therefor in federal (same day) funds by
certified or official bank check or checks or wire transfer to an account at a
bank reasonably acceptable to SG Cowen payable to the order of the Company all
at the offices of Gray Cary Ware & Freidenrich LLP, 400 Hamilton Avenue, Palo
Alto, California 94301. Time shall be of the essence, and delivery at the time
and place specified pursuant to this Agreement is a further condition of the
obligations of each Underwriter hereunder. The Company shall make the
certificates for the Optional Stock available to the Representatives for
examination on behalf of the Underwriters in New York, New York not later than
10:00 A.M., New York Time, on the business day preceding the Option Closing
Date. The Option Closing Date and the location of delivery of, and the form of
payment for, the Optional Stock may be varied by agreement between the Company
and SG Cowen.
The several Underwriters propose to offer the Stock for sale upon the terms
and conditions set forth in the Prospectus.
4. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees with the several
Underwriters that:
a. The Company will prepare the Rule 462(b) Registration Statement, if
necessary, in a form reasonably satisfactory to the Representatives and file
such Rule 462(b) Registration Statement with the Commission on the date hereof;
prepare the Prospectus in a form reasonably satisfactory to the Representatives
and file such Prospectus pursuant to Rule 424(b) under the Securities Act not
later than the second business day following the execution and delivery of this
Agreement; make no further amendment or any supplement to the Registration
Statements or to the Prospectus to which the Representatives shall reasonably
object by written notice to the Company after a reasonable period to review;
advise the Representatives, promptly after it receives notice thereof, of the
time when any amendment to either Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended Prospectus
has been filed and to furnish the Representatives with copies thereof; advise
the Representatives, promptly after it receives notice thereof, of the issuance
by the Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Stock for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the Registration
Statements or the Prospectus or for additional information; and, in the event of
the issuance of any stop order or of any order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus or suspending any such
qualification, use promptly its best efforts to obtain its withdrawal.
b. If at any time prior to the expiration of nine months after the
effective date of the Initial Registration Statement when a prospectus relating
to the Stock is required to be delivered any event occurs as a result of which
the Prospectus as then amended or supplemented would include any untrue
statement of a material fact, or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus,
the Company will promptly notify the Representatives thereof and upon their
request will prepare an amended or
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supplemented Prospectus which will correct such statement or omission or effect
such compliance. The Company will furnish without charge to each Underwriter and
to any dealer in securities as many copies as the Representatives may from time
to time reasonably request of such amended or supplemented Prospectus; and in
case any Underwriter is required to deliver a prospectus relating to the Stock
nine months or more after the effective date of the Initial Registration
Statement, the Company upon the request of the Representatives and at the
expense of such Underwriter will prepare promptly an amended or supplemented
Prospectus as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the Securities Act.
c. The Company will furnish promptly to each of the Representatives and
to counsel for the Underwriters a signed copy of each of the Registration
Statements as originally filed with the Commission, and each amendment thereto
filed with the Commission, including all consents and exhibits filed therewith.
d. The Company will deliver promptly to the Representatives in New York
City such number of the following documents as the Representatives shall
reasonably request: (i) conformed copies of the Registration Statements as
originally filed with the Commission and each amendment thereto (in each case
excluding exhibits), (ii) each Preliminary Prospectus, (iii) the Prospectus (not
later than 10:00 A.M., New York time, of the business day following the
execution and delivery of this Agreement) and any amended or supplemented
Prospectus (not later than 10:00 A.M., New York City time, on the business day
following the date of such amendment or supplement).
e. The Company will make generally available to its stockholders as soon
as practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Securities Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Securities Act
and the Rules and Regulations (including, at the option of the Company, Rule
158).
f. The Company will promptly take from time to time such actions as the
Representatives may reasonably request to qualify the Stock for offering and
sale under the securities or Blue Sky laws of such jurisdictions as the
Representatives may designate and to continue such qualifications in effect for
so long as required for the distribution of the Stock; provided that the Company
and its subsidiaries shall not be obligated to qualify as foreign corporations
in any jurisdiction in which they are not so qualified or to file a general
consent to service of process in any jurisdiction;
g. During the period of three years from the date hereof, the Company
will deliver to the Representatives and, upon request, to each of the other
Underwriters, (i) as soon as they are available, copies of all reports or other
communications furnished to shareholders and (ii) as soon as they are available,
copies of any reports and financial statements furnished or filed with the
Commission pursuant to the Exchange Act or any national securities exchange or
automatic quotation system on which the Stock is listed or quoted.
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h. The Company will not directly or indirectly offer, sell, assign,
transfer, pledge, contract to sell, or otherwise dispose of any shares of Common
Stock or securities convertible into or exercisable or exchangeable for Common
Stock for a period of 180 days from the date of the Prospectus without the prior
written consent of SG Cowen other than the Company's sale of the Stock hereunder
and the issuance of shares pursuant to employee benefit plans, qualified stock
option plans or other employee compensation plans existing on the date hereof or
pursuant to currently outstanding options, warrants or rights; the Company will
cause each officer, director and shareholder listed in Schedule B to furnish to
the Representatives, prior to the First Closing Date, a letter, substantially in
the form of Exhibit I hereto, pursuant to which each such person shall agree not
to directly or indirectly offer, sell, assign, transfer, pledge, contract to
sell, or otherwise dispose of any shares of Common Stock or securities
convertible into or exercisable or exchangeable for Common Stock for a period of
180 days from the date of the Prospectus, without the prior written consent of
SG Cowen.
i. The Company will supply the Representatives with copies of all
correspondence to and from, and all documents issued to and by, the Commission
in connection with the registration of the Stock under the Securities Act.
j. Prior to each of the Closing Dates the Company will furnish to the
Representatives, as soon as they have been prepared, copies of any unaudited
interim consolidated financial statements of the Company for any periods
subsequent to the periods covered by the financial statements appearing in the
Registration Statement and the Prospectus.
k. Prior to each of the Closing Dates, the Company will not issue any
press release or other communication directly or indirectly or hold any press
conference with respect to the Company, its condition, financial or otherwise,
or earnings, business affairs or business prospects (except for routine oral
marketing communications in the ordinary course of business and consistent with
the past practices of the Company and of which the Representatives are
notified), without the prior consent of the Representatives, unless in the
judgment of the Company and its counsel, and after notification to the
Representatives, such press release or communication is required by law.
l. In connection with the offering of the Stock, until SG Cowen shall
have notified the Company of the completion of the resale of the Stock, the
Company will not, and will cause its affiliated purchasers (as defined in
Regulation M under the Exchange Act) not to, either alone or with one or more
other persons, bid for or purchase, for any account in which it or any of its
affiliated purchasers has a beneficial interest, any Stock, or attempt to induce
any person to purchase any Stock; and not to, and to cause its affiliated
purchasers not to, make bids or purchase for the purpose of creating actual, or
apparent, active trading in or of raising the price of the Stock.
m. The Company will not take any action prior to the Option Closing Date
which would require the Prospectus to be amended or supplemented pursuant to
Section 4(b);
n. The Company will apply the net proceeds from the sale of the Stock as
set forth in the Prospectus under the heading "Use of Proceeds."
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<PAGE> 12
5. PAYMENT OF EXPENSES. The Company agrees with the Underwriter to pay (a) the
costs incident to the authorization, issuance, sale, preparation and delivery of
the Stock and any taxes payable in that connection; (b) the costs incident to
the Registration of the Stock under the Securities Act; (c) the costs incident
to the preparation, printing and distribution of the Registration Statement,
Preliminary Prospectus, Prospectus, any amendments and exhibits thereto, the
costs of printing, reproducing and distributing the "Agreement Among
Underwriters" between the Representatives and the Underwriters, the Master
Selected Dealers' Agreement, the Underwriters' Questionnaire and this Agreement
by mail, telex or other means of communications; (d) the fees and expenses
(including related fees and expenses of counsel for the Underwriters) incurred
in connection with filings made with the National Association of Securities
Dealers; (e) any applicable listing or other fees; (f) the fees and expenses of
qualifying the Stock under the securities laws of the several jurisdictions as
provided in Section 4(f) and of preparing, printing and distributing Blue Sky
Memoranda and Legal Investment Surveys (including related fees and expenses of
counsel to the Underwriters in an amount not to exceed $10,000); (g) all fees
and expenses of the registrar and transfer agent of the Stock; and (h) all other
costs and expenses incident to the performance of the obligations of the Company
under this Agreement (including, without limitation, the fees and expenses of
the Company's counsel and the Company's independent accountants); provided that,
except as otherwise provided in this Section 5 and in Section 9, the
Underwriters shall pay their own costs and expenses, including the fees and
expenses of their counsel, any transfer taxes on the Stock which they may sell
and the expenses of advertising any offering of the Stock made by the
Underwriters.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective obligations of the
several Underwriters hereunder are subject to the accuracy, when made and on
each of the Closing Dates, of the representations and warranties of the Company
contained herein, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of their obligations hereunder, and to each of the following additional
terms and conditions:
a. No stop order suspending the effectiveness of either the Registration
Statements shall have been issued and no proceedings for that purpose shall have
been initiated or threatened by the Commission, and any request for additional
information on the part of the Commission (to be included in the Registration
Statements or the Prospectus or otherwise) shall have been complied with to the
reasonable satisfaction of the Representatives. The Rule 462(b) Registration
Statement, if any, and the Prospectus shall have been timely filed with the
Commission in accordance with Section 4(a).
b. None of the Underwriters shall have discovered and disclosed to the
Company on or prior to the Closing Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of a fact which, in the opinion of counsel for the Underwriters, is material or
omits to state any fact which, in the opinion of such counsel, is material and
is required to be stated therein or is necessary to make the statements therein
not misleading.
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<PAGE> 13
c. All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of this Agreement, the Stock, the
Registration Statement and the Prospectus and all other legal matters relating
to this Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Underwriters, and the
Company shall have furnished to such counsel all documents and information that
they may reasonably request to enable them to pass upon such matters.
d. Gray Cary Ware & Freidenrich LLP shall have furnished to the
Representatives such counsel's written opinion, as counsel to the Company,
addressed to the Underwriters and dated the Closing Date, in form and substance
reasonably satisfactory to the Representatives, to the effect that:
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business as described in the Registration
Statements requires such qualification, and it has the power and authority
necessary to own or hold its properties and to conduct the business in which it
is engaged, except where the failure to so qualify or have such power or
authority would not have a Material Adverse Effect.
(ii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the Company,
including the Stock being delivered on the Closing Date, have been duly and
validly authorized and issued, are fully paid (assuming receipt of payment for
the Stock by the Underwriters as provided herein) and non-assessable and conform
to the description thereof contained in the Prospectus.
(iii) There are no preemptive or other rights to subscribe for or to
purchase, nor any restriction upon the voting or transfer of, any shares of the
Stock pursuant to the Company's charter or by-laws or any agreement or other
instrument known to such counsel.
(iv) This Agreement has been duly authorized, executed and delivered
by the Company.
(v) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not conflict with
or result in a material breach or violation of any agreement, stock plan or
stock option plan filed as an exhibit to the Registration Statement, nor will
such actions result in any violation of the Charter or by-laws of the Company or
any statute or any order, rule or regulation of any court or governmental agency
or body or court having jurisdiction over the Company or any of its properties
or assets.
(vi) Except for the registration of the Stock under the Securities
Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable state
securities laws in connection with the purchase and distribution of the Stock by
the Underwriters, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is required for
the
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<PAGE> 14
execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby.
(vii) The statements in the Prospectus under the headings
"Business--Licensing Agreements", "Management--Stock Option Plans", "Description
of Capital Stock" and "Shares Eligible for Future Sale" and in Item 14 and Item
15 of the Registration Statement, to the extent that they constitute summaries
of matters of law or regulation or legal conclusions, have been reviewed by such
counsel and fairly summarize the matters described therein in all material
respects.
(viii) The description in the Registration Statement and Prospectus of
statutes, legal or governmental proceedings and contracts and other documents
are accurate in all material respects; and to such counsel's knowledge, there
are no statutes, legal or governmental proceedings, contracts or other documents
of a character required to be described in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration Statement which are
not described or filed as required.
(ix) To such counsel's knowledge, the Company (i) is not in
violation of its charter or by-laws, (ii) is not in default, and no event has
occurred, which, with notice or lapse of time or both, would constitute a
default, in the due performance or observance of any term, covenant or condition
contained in any agreement or stock plan or stock option plan filed as an
exhibit to the Registration Statement or (iii) is not in violation of any law,
ordinance, governmental rule, regulation or court decree to which it or its
property or assets may be subject or has failed to obtain any license, permit,
certificate, franchise or other governmental authorization or permit necessary
to the ownership of its property or to the conduct of its business except, in
the case of clauses (ii) and (iii), for those defaults, violations or failures
which, in the aggregate, would not have a Material Adverse Effect.
(x) To such counsel's knowledge and other than as set forth in the
Prospectus, there are no legal or governmental proceedings pending to which the
Company is a party or of which any property or asset of the Company is the
subject which, in the aggregate, if determined adversely to the Company, might
have a Material Adverse Effect or would prevent or adversely affect the ability
of the Company to perform its obligations under this Agreement; and, to such
counsel's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(xi) The Registration Statement was declared effective under the
Securities Act as of the date and time specified in such opinion, the Rule
462(b) Registration Statement, if any, was filed with the Commission on the date
specified therein, the Prospectus was filed with the Commission pursuant to the
subparagraph of Rule 424(b) of the Rules and Regulations specified in such
opinion on the date specified therein and no stop order suspending the
effectiveness of the Registration Statement has been issued and, to the
knowledge of such counsel, no proceeding for that purpose is pending or
threatened by the Commission.
(xii) The Registration Statements, as of the respective effective
dates and the Prospectus, as of its date, and any further amendments or
supplements thereto, as of their
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<PAGE> 15
respective dates, made by the Company prior to the Closing Date (other than the
financial statements and other financial data contained therein, as to which
such counsel need express no opinion) complied as to form in all material
respects with the requirements of the Securities Act and the Rules and
Regulations (other than the financial statements and related schedules therein,
as to which such counsel need express no opinion), when they were filed with the
Commission.
(xiii) To such counsel's knowledge, no person or entity has the right
to require registration of shares of Common Stock or other securities of the
Company because of the filing or effectiveness of the Registration Statements or
otherwise, except for persons and entities who have expressly waived such right
or who have been given proper notice and have failed to exercise such right
within the time or times required under the terms and conditions of such right.
(xiv) The Company is not an "investment company" within the meaning
of the Investment Company Act and the rules and regulations of the Commission
thereunder.
Such counsel shall also have furnished to the Representatives a written
statement, addressed to the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Representatives, to the effect that (x) such
counsel has acted as counsel to the Company in connection with the preparation
of the Registration Statements and that (y) based on such counsel's examination
of the Registration Statements and such counsel's "conferences with certain
officers and employees of and with auditors for and counsel to the Company",
such counsel has no reason to believe that the Registration Statements, as of
the respective effective dates, contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading, or that the
Prospectus contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading; it being understood that such counsel need express no
opinion as to the financial statements or other financial data contained in the
Registration Statement or the Prospectus.
The foregoing opinion and statement may be qualified by a statement to the
effect that such counsel has not independently verified the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus and takes no responsibility therefor except to the
extent set forth in the opinion described in clauses (vii) and (viii) above.
e. The Representatives shall have received from Brobeck, Phleger &
Harrison LLP counsel for the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to such matters as the Underwriters may reasonably
require, and the Company shall have furnished to such counsel such documents as
they request for enabling them to pass upon such matters.
f. At the time of the execution of this Agreement, the Representatives
shall have received from PricewaterhouseCoopers LLP a letter, addressed to the
Underwriters and dated such date, in form and substance satisfactory to the
Representatives (i) confirming that they are independent certified public
accountants with respect to the Company and its subsidiaries within the meaning
of the Securities Act and the Rules and Regulations and (ii) stating the
conclusions
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<PAGE> 16
and findings of such firm with respect to the financial statements and certain
financial information contained or incorporated by reference in the Prospectus.
g. On the Closing Date, the Representatives shall have received a letter
(the "bring-down letter") from PricewaterhouseCoopers LLP addressed to the
Underwriters and dated the Closing Date confirming, as of the date of the
bring-down letter (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information is given
in the Prospectus as of a date not more than three business days prior to the
date of the bring-down letter), the conclusions and findings of such firm with
respect to the financial information and other matters covered by its letter
delivered to the Representatives concurrently with the execution of this
Agreement pursuant to Section 6(g).
h. The Company shall have furnished to the Representatives a certificate,
dated the Closing Date, of its Chairman of the Board, its President or a Vice
President and its chief financial officer stating that (i) such officers have
carefully examined the Registration Statements and the Prospectus and, in their
opinion, the Registration Statements as of their respective effective dates and
the Prospectus, as of each such effective date, did not include any untrue
statement of a material fact and did not omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
(ii) since the effective date of the Initial Registration Statement no event has
occurred which should have been set forth in a supplement or amendment to the
Registration Statements or the Prospectus, (iii) to their knowledge after
reasonable investigation, as of the Closing Date, the representations and
warranties of the Company in this Agreement are true and correct and the Company
has complied in all material respects with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date, and (iv) subsequent to the date of the most recent financial
statements included in the Prospectus, there has been no material adverse change
in the financial position or results of operation of the Company, or any change,
or any development including a prospective change, in or affecting the condition
(financial or otherwise), results of operations, business or prospects of the
Company and its subsidiaries taken as a whole, except as set forth in the
Prospectus.
i. (i) The Company has not sustained since the date of the latest
audited financial statements included in the Prospectus any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Prospectus,
(ii) since such date there shall not have been any change in the capital stock
or long-term debt of the Company or any change, or any development involving a
prospective change, in or affecting the business, general affairs, management,
financial position, stockholders' equity or results of operations of the
Company, otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in any such case described in clause (i) or (ii), is, in the
judgment of the Representatives, so material and adverse as to make it
impracticable or inadvisable to proceed with the sale or delivery of the Stock
on the terms and in the manner contemplated in the Prospectus.
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<PAGE> 17
j. No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental agency or
body which would, as of the Closing Date, prevent the issuance or sale of the
Stock; and no injunction, restraining order or order of any other nature by any
federal or state court of competent jurisdiction shall have been issued as of
the Closing Date which would prevent the issuance or sale of the Stock.
k. Subsequent to the execution and delivery of this Agreement there shall
not have occurred any of the following: (i) trading in securities generally on
the New York Stock Exchange or the American Stock Exchange or in the
over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment of
the Representatives, impracticable or inadvisable to proceed with the sale or
delivery of the Stock on the terms and in the manner contemplated in the
Prospectus.
l. The Nasdaq National Market System shall have approved the Stock for
inclusion, subject only to official notice of issuance and evidence of
satisfactory distribution.
m. SG Cowen shall have received the written agreements, substantially in
the form of Exhibit I hereto, of the officers, directors and shareholders of the
Company listed in Schedule B to this Agreement.
n. All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
7. INDEMNIFICATION AND CONTRIBUTION.
a. The Company shall indemnify and hold harmless each Underwriter, its
officers, employees, representatives and agents and each person, if any, who
controls any Underwriter within the meaning of the Securities Act (collectively
the "Underwriter Indemnified Parties" and each an "Underwriter Indemnified
Party") against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which that Underwriter Indemnified Party may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Prospectus, either of the Registration Statements or the Prospectus
or in any amendment or supplement thereto, (ii) the omission or alleged omission
to state in any Preliminary Prospectus, either of the Registration Statements or
the Prospectus or in any amendment or supplement thereto a material fact
required to be stated therein or necessary to make the statements therein not
misleading or (iii) any act or failure to
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<PAGE> 18
act, or any alleged act or failure to act, by any Underwriter in connection
with, or relating in any manner to the Stock or the offering contemplated
hereby, and which is included as part of or referred to in any loss, claim,
damage, liability or action arising out of or based upon matters covered by
clause (i) or (ii) above, (provided that the Company shall not be liable in the
case of any matter covered by this clause (iii) to the extent that it is
determined in a final judgement by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted from any such act or failure
to act undertaken or omitted to be taken by such Underwriter through its gross
negligence or wilful misconduct) and shall reimburse each Underwriter
Indemnified Party promptly upon demand for any legal or other expenses
reasonably incurred by that Underwriter Indemnified Party in connection with
investigating or preparing to defend or defending against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon (i) an untrue
statement or alleged untrue statement in or omission or alleged omission from
the Preliminary Prospectus, either of the Registration Statements or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for use therein,
which information the parties hereto agree is limited to the Underwriter's
Information (as defined in Section 16), and, provided further, however, that
with respect to any Preliminary Prospectus, the foregoing indemnity agreement
shall not inure to the benefit of any Underwriter from whom the person asserting
any loss, claim, damage, liability or action purchased Stock, or any person
controlling such Underwriter, if copies of the Prospectus were timely delivered
to the Underwriter pursuant to Section 4(a) and (d) and a copy of the Prospectus
(as then amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered, at or
prior to the written confirmation of the sale of the Stock to such person, and
if the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage, liability or action. This indemnity
agreement is not exclusive and will be in addition to any liability which the
Company might otherwise have and shall not limit any rights or remedies which
may otherwise be available at law or in equity to each Underwriter Indemnified
Party.
b. Each Underwriter, severally and not jointly, shall indemnify and hold
harmless the Company, its officers, employees, representatives and agents, each
of its directors and each person, if any, who controls the Company within the
meaning of the Securities Act (collectively the "Company Indemnified Parties"
and each a "Company Indemnified Party") against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company Indemnified Parties may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of or is based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Prospectus, either of the
Registration Statements or the Prospectus or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the
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<PAGE> 19
Company through the Representatives by or on behalf of that Underwriter
specifically for use therein, and shall reimburse the Company Indemnified
Parties for any legal or other expenses reasonably incurred by such parties in
connection with investigating or preparing to defend or defending against or
appearing as third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided that the
parties hereto hereby agree that such written information provided by the
Underwriters consists solely of the Underwriter's Information. This indemnity
agreement is not exclusive and will be in addition to any liability which the
Underwriters might otherwise have and shall not limit any rights or remedies
which may otherwise be available at law or in equity to the Company Indemnified
Parties.
c. Promptly after receipt by an indemnified party under this Section 7 of
notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 7, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have under this Section 7 except to the extent it has been materially
prejudiced by such failure; and, provided, further, that the failure to notify
the indemnifying party shall not relieve it from any liability which it may have
to an indemnified party otherwise than under this Section 7. If any such claim
or action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
employment thereof has been specifically authorized by the indemnifying party in
writing, (ii) such indemnified party shall have been advised by such counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party and in the
reasonable judgment of such counsel it is advisable for such indemnified party
to employ separate counsel or (iii) the indemnifying party has failed to assume
the defense of such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all such indemnified
parties, which firm shall be designated in writing by SG Cowen, if the
indemnified parties under this Section 7 consist of any Underwriter Indemnified
Party, or by the Company, if the indemnified
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<PAGE> 20
parties under this Section 7 consist of any Company Indemnified Parties. Each
indemnified party, as a condition of the indemnity agreements contained in
Sections 7(a) and 7(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. Subject to the
provisions of Section 7(e) below, no indemnifying party shall be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment.
d. If at any time an indemnified party shall have requested that an
indemnifying party reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by this Section 7 effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the request for reimbursement, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
e. If the indemnification provided for in this Section 7 is unavailable
or insufficient to hold harmless an indemnified party under Section 7(a) or
7(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other from the offering of the Stock or if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Underwriters on
the other with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other with respect to such
offering shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Stock purchased under this Agreement (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters with respect to the Stock purchased
under this Agreement, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the Underwriters on the
other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission; provided that the parties hereto agree that the written information
furnished to the Company through the Representatives by or on behalf of the
Underwriters for use in any Preliminary Prospectus, either of the Registration
Statements or the Prospectus consists solely of the Underwriter's Information.
The Company and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this
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<PAGE> 21
Section 7(e) were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 7(e) shall be deemed to include, for purposes
of this Section 7(e), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7(e), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Stock underwritten by it and distributed to the public
was offered to the public less the amount of any damages which such Underwriter
has otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
f. The Underwriters' obligations to contribute as provided in this
Section 7(f) are several in proportion to their respective underwriting
obligations and not joint.
8. TERMINATION. The obligations of the Underwriters hereunder may be
terminated by SG Cowen, in its absolute discretion by notice given to and
received by the Company prior to delivery of and payment for the Firm Stock if,
prior to that time, any of the events described in Sections 6(i) or 6(k) have
occurred or if the Underwriters shall decline to purchase the Stock for any
reason permitted under this Agreement.
9. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If (a) this Agreement shall have
been terminated pursuant to Section 8 or 10, (b) the Company shall fail to
tender the Stock for delivery to the Underwriters for any reason permitted under
this Agreement, or (c) the Underwriters shall decline to purchase the Stock for
any reason permitted under this Agreement the Company shall reimburse the
Underwriters for the fees and expenses of their counsel and for such other
out-of-pocket expenses as shall have been reasonably incurred by them in
connection with this Agreement and the proposed purchase of the Stock, and upon
demand the Company shall pay the full amount thereof to the SG Cowen. If this
Agreement is terminated pursuant to Section 10 by reason of the default of one
or more Underwriters, the Company shall not be obligated to reimburse any
Underwriter on account of those expenses.
10. SUBSTITUTION OF UNDERWRITERS
a. If any Underwriter or Underwriters shall default in its or their
obligations to purchase shares of Stock hereunder and the aggregate number of
shares which such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed ten percent (10%) of the total number of shares
underwritten, the other Underwriters shall be obligated severally, in proportion
to their respective commitments hereunder, to purchase the shares which such
defaulting Underwriter or Underwriters agreed but failed to purchase. If any
Underwriter or Underwriters shall so default and the aggregate number of shares
with respect to which such default or defaults occur is more than ten percent
(10%) of the total number of shares underwritten and
21
<PAGE> 22
arrangements satisfactory to the Representatives and the Company for the
purchase of such shares by other persons are not made within forty-eight (48)
hours after such default, this Agreement shall terminate.
b. If the remaining Underwriters or substituted Underwriters are required
hereby or agree to take up all or part of the shares of Stock of a defaulting
Underwriter or Underwriters as provided in this Section 10, (i) the Company
shall have the right to postpone the Closing Dates for a period of not more than
five (5) full business days in order that the Company may effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company agrees
promptly to file any amendments to the Registration Statement or supplements to
the Prospectus which may thereby be made necessary, and (ii) the respective
numbers of shares to be purchased by the remaining Underwriters or substituted
Underwriters shall be taken as the basis of their underwriting obligation for
all purposes of this Agreement. Nothing herein contained shall relieve any
defaulting Underwriter of its liability to the Company or the other Underwriters
for damages occasioned by its default hereunder. Any termination of this
Agreement pursuant to this Section 10 shall be without liability on the part of
any non-defaulting Underwriter or the Company, except expenses to be paid or
reimbursed pursuant to Sections 5 and 9 and except the provisions of Section 7
shall not terminate and shall remain in effect.
11. SUCCESSORS; PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the several Underwriters, the
Company and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person other than the
persons mentioned in the preceding sentence any legal or equitable right, remedy
or claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person; except that the representations, warranties,
covenants, agreements and indemnities of the Company contained in this Agreement
shall also be for the benefit of the Underwriter Indemnified Parties, and the
indemnities of the several Underwriters shall also be for the benefit of the
Company Indemnified Parties.
12. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC. The respective
indemnities, covenants, agreements, representations, warranties and other
statements of the Company and the several Underwriters, as set forth in this
Agreement or made by them respectively, pursuant to this Agreement, shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter, the Company or any person controlling any of them and shall
survive delivery of and payment for the Stock.
13. NOTICES. All statements, requests, notices and agreements hereunder shall
be in writing, and:
a. if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to SG Securities Corporation Attention: Jorge Pedreira
(Fax: 212-269-1690); any such statements, requests, notices or agreements shall
take effect at the time of receipt thereof;
22
<PAGE> 23
b. if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to Silicon Entertainment, Inc. Attention: David S. Morse
(Fax: 408-364-6724); any such statements, requests, notices or agreements shall
take effect at the time of receipt thereof.
14. DEFINITION OF CERTAIN TERMS. For purposes of this Agreement, (a) "business
day" means any day on which the New York Stock Exchange, Inc. is open for
trading and (b) "subsidiary" has the meaning set forth in Rule 405 of the Rules
and Regulations.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. UNDERWRITERS' INFORMATION. The parties hereto acknowledge and agree that,
for all purposes of this Agreement, the Underwriters' Information consists
solely of the following information in the Prospectus: (i) the last paragraph on
the front cover page concerning the terms of the offering by the Underwriters;
and (ii) the statements concerning the Underwriters contained in the fourth,
ninth and tenth paragraphs under the heading "Underwriting."
17. AUTHORITY OF THE REPRESENTATIVES. In connection with this Agreement, you
will act for and on behalf of the several Underwriters, and any action taken
under this Agreement by the Representatives, will be binding on all the
Underwriters.
18. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
19. GENERAL. This Agreement constitutes the entire agreement of the parties to
this Agreement and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings and negotiations with respect to the subject
matter hereof. In this Agreement, the masculine, feminine and neuter genders and
the singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company and the Representatives.
20. COUNTERPARTS. This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
23
<PAGE> 24
If the foregoing is in accordance with your understanding of the agreement
between the Company and the several Underwriters, kindly indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
SILICON ENTERTAINMENT, INC.
By:
-------------------------------------
Name:
Title:
Accepted as of
the date first above written:
SG COWEN SECURITIES CORPORATION
CIBC WORLD MARKETS CORP.
J.C. BRADFORD & CO.
E*OFFERING CORP.
Acting on their own behalf
and as Representatives of
several Underwriters referred
to in the foregoing Agreement.
By: SG COWEN SECURITIES CORPORATION
By:
-------------------------------------
Name:
Title:
24
<PAGE> 25
SCHEDULE A
<TABLE>
<CAPTION>
Number of Number of
Firm Shares Optional Shares
Name to be Purchased to be Purchased
- ---- --------------- ---------------
<S> <C> <C>
SG Cowen Securities Corporation
---------- ----------
CIBC World Markets Corp.
---------- ----------
J.C. Bradford & Co.
---------- ----------
E*OFFERING Corp.
---------- ----------
Total
========== ==========
</TABLE>
25
<PAGE> 26
SCHEDULE B
[list of shareholders subject to Section 4(h)]
26
<PAGE> 27
EXHIBIT I
LOCK-UP AGREEMENT
----------, ----
SG Cowen Securities Corporation
CIBC World Markets Corp.
J.C. Bradford & Co.
E*OFFERING Corp.
As representatives of the
several Underwriters
c/o SG Cowen Securities Corporation
Financial Square
New York, New York 10005
Re: Silicon Entertainment, Inc.
Dear Sirs:
In order to induce SG Cowen Securities Corporation ("SG Cowen"), CIBC World
Markets Corp., J.C. Bradford & Co. and E*OFFERING Corp. (together with SG Cowen,
the "Representatives"), to enter in to a certain underwriting agreement with
Silicon Entertainment, Inc. (the "Company"), with respect to the public offering
of shares of the Company's Common Stock ("Common Stock"), the undersigned hereby
agrees that for a period of 180 days following the date of the final prospectus
filed by the Company with the Securities and Exchange Commission in connection
with such public offering, the undersigned will not, without the prior written
consent of SG Cowen, directly or indirectly, offer, sell, assign, transfer,
pledge, contract to sell, or otherwise dispose of, any shares of Common Stock
(including, without limitation, Common Stock which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations promulgated under the Securities Act of 1933, as the same may be
amended or supplemented from time to time (such shares, the "Beneficially Owned
Shares")) or securities convertible into or exercisable or exchangeable in
Common Stock.
Anything contained herein to the contrary notwithstanding, any person to
whom shares of Common Stock or Beneficially Owned Shares are transferred from
the undersigned shall be bound by the terms of this Agreement.
In addition, the undersigned hereby waives, from the date hereof until the
expiration of 180-day period following the date of the Company's final
Prospectus, any and all rights, if any, to request or demand registration
pursuant to the Securities Act of any shares of Common Stock that are registered
in the name of the undersigned or that are Beneficially Owned Shares. In order
to enable the aforesaid covenants to be enforced, the undersigned hereby
consents to the
27
<PAGE> 28
placing of legends and/or stop-transfer orders with the transfer agent of the
Common Stock with respect to any shares of Common Stock or Beneficially Owned
Shares.
Dated:
----------------------
By:
-----------------------------------
Name:
Title:
28
<PAGE> 1
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
SILICON ENTERTAINMENT, INC. DELAWARE
(Pursuant to Sections 242 and 245 of the General Corporation Law of the State of
Delaware)
Silicon Entertainment, Inc. Delaware, a corporation organized and
existing under the General Corporation Law of the State of Delaware on August
11, 1999, (the "Corporation") certifies as follows:
1. The Corporation's Restated Certificate of Incorporation was duly
adopted by the Board of Directors and sole stockholder by written consent in
accordance with Sections 242 and 245 of the General Corporation Law.
2. The Corporation's Certificate of Incorporation is restated to read in
full as follows:
FIRST: The name of the Corporation is Silicon Entertainment, Inc.
Delaware.
SECOND: The address of the registered office of the Corporation in
the State of Delaware is Incorporating Services, Ltd., 15
East North Street, in the City of Dover, County of Kent.
The name of the registered agent at that address is
Incorporating Services, Ltd.
THIRD: The purpose of the Corporation is to engage in any lawful
act or activity for which a corporation may be organized
under the General Corporation Law of Delaware.
FOURTH:
A. The Corporation is authorized to issue a total of
108,387,799 shares of stock in two classes designated
respectively "Preferred Stock" and "Common Stock". The
total number of shares of all series of Preferred Stock
that the Corporation shall have the authority to issue is
8,387,799 and the total number of shares of Common Stock
that the Corporation shall have the authority to issue is
100,000,000. All of the authorized shares shall have a par
value of $0.001.
The shares of Preferred Stock may be divided into such
number of series as the Board of Directors may determine.
The Board of Directors is authorized to determine and
alter the rights, preferences, privileges and restrictions
granted to and imposed upon the Preferred Stock or any
series thereof with respect to any wholly unissued series
of Preferred Stock, and to fix the number of shares of any
such series of Preferred Stock. The Board of Directors,
within the limits and restrictions stated in any
<PAGE> 2
resolution or resolutions of the Board of Directors
originally fixing the number of shares constituting any
series, may increase or decrease (but not below the number
of shares of such series then outstanding) the number of
shares of any series subsequent to the issue of shares of
that series.
FIFTH: The following provisions are inserted for the management
of the business and the conduct of the affairs of the
Corporation, and for further definition, limitation and
regulation of the powers of the Corporation and of its
directors and stockholders:
A. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of
Directors. In addition to the powers and authority
expressly conferred upon them by statute or by this
Certificate of Incorporation or the Bylaws of the
Corporation, the directors are hereby empowered to
exercise all such powers and do all such acts and things
as may be exercised or done by the Corporation.
B. The directors of the Corporation need not be elected by
written ballot unless the Bylaws so provide.
C. On and after the closing date of the first sale of the
Corporation's Common Stock pursuant to a firmly
underwritten registered public offering (the "IPO"), any
action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly
called annual or special meeting of stockholders of the
Corporation and may not be effected by any consent in
writing by such stockholders. Prior to such sale, unless
otherwise provided by law, any action which may otherwise
be taken at any meeting of the stockholders may be taken
without a meeting and without prior notice, if a written
consent describing such actions is signed by the holders
of outstanding shares having not less than the minimum
number of votes which would be necessary to authorize or
take such action at a meeting at which all shares entitled
to vote thereon were present and voted.
D. Special meetings of stockholders of the Corporation may be
called only by the Board of Directors, the Chairman of the
Board of Directors or the President and Chief Executive
Officer.
<PAGE> 3
SIXTH:
A. The number of directors shall initially be set at five (5)
and, thereafter, shall be fixed from time to time
exclusively by the Board of Directors pursuant to a
resolution adopted by a majority of the total number of
authorized directors (whether or not there exist any
vacancies in previously authorized directorships at the
time any such resolution is presented to the Board for
adoption). All directors shall hold office until the
expiration of the term for which elected, and until their
respective successors are elected, except in the case of
the death, resignation, or removal of any director.
B. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, newly created
directorships resulting from any increase in the
authorized number of directors or any vacancies in the
Board of Directors resulting from death, resignation or
other cause (other than removal from office by a vote of
the stockholders) may be filled only by a majority vote of
the directors then in office, though less than a quorum,
and directors so chosen shall hold office for a term
expiring at the next annual meeting of stockholders at
which the term of office of the class to which they have
been elected expires, and until their respective
successors are elected, except in the case of the death,
resignation, or removal of any director. No decrease in
the number of directors constituting the Board of
Directors shall shorten the term of any incumbent
director.
C. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, any directors, or the
entire Board of Directors, may be removed from office at
any time, but only for cause and only by the affirmative
vote of the holders of at least a majority of the voting
power of all of the then outstanding shares of capital
stock of the Corporation entitled to vote generally in the
election of directors, voting together as a single class.
SEVENTH: The Board of Directors is expressly empowered to adopt,
amend or repeal Bylaws of the Corporation. Any adoption,
amendment or repeal of Bylaws of the Corporation by the
Board of Directors shall require the approval of a
majority of the total number of authorized directors
(whether or not there exist any vacancies in previously
authorized directorships at the time any resolution
providing for adoption, amendment or repeal is presented
to the Board). The stockholders shall also have power to
adopt, amend or repeal the Bylaws of the Corporation. Any
adoption, amendment or repeal of Bylaws of the Corporation
by the stockholders shall require, in addition to any vote
of the holders of any class or series of stock of the
Corporation required by law or by this Certificate of
Incorporation, the affirmative vote of the holders of at
least sixty-six and two-thirds percent (66-2/3%) of the
voting power of all of the then outstanding shares of the
capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as
a single class.
<PAGE> 4
EIGHTH: A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except
for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involved
intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit.
If the Delaware General Corporation Law is hereafter
amended to authorize the further elimination or limitation
of the liability of a director, then the liability of a
director of the Corporation shall be eliminated or limited
to the fullest extent permitted by the Delaware General
Corporation Law, as so amended.
Any repeal or modification of the foregoing provisions of
this Article EIGHTH by the stockholders of the Corporation
shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such
repeal or modification.
NINTH: The Corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation
in the manner prescribed by the laws of the State of
Delaware and all rights conferred upon stockholders are
granted subject to this reservation; provided, however,
that, notwithstanding any other provision of this
Certificate of Incorporation or any provision of law which
might otherwise permit a lesser vote or no vote, but in
addition to any vote of the holders of any class or series
of the stock of this Corporation required by law or by
this Certificate of Incorporation, the affirmative vote of
the holders of at least 66-2/3% of the voting power of all
of the then outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be
required to amend or repeal this Article NINTH, Article
FIFTH, Article SIXTH, Article SEVENTH or Article EIGHTH.
<PAGE> 5
IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated
Certificate to be signed by a duly authorized officer on this ___, day of
________________, 1999.
SILICON ENTERTAINMENT, INC. DELAWARE
By:
----------------------------------
David S. Morse, Chief Executive
Officer and President
<PAGE> 6
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
SILICON ENTERTAINMENT, INC.
Silicon Entertainment, Inc., a Delaware corporation (the "Corporation"),
hereby certifies:
1. That the Corporation's Board of Directors has duly adopted the
following resolutions:
RESOLVED, that the first paragraph of Article FOURTH of the Restated
Certificate of Incorporation is hereby amended to read in full as
follows:
FOURTH: The Corporation is authorized to issue a total of
100,500,000 shares of stock in two classes designated
respectively "Preferred Stock" and "Common Stock." The total
number of shares of all series of Preferred Stock that the
Corporation shall have the authority to issue is 500,000 and the
total number of shares of Common Stock that the Corporation
shall have the authority to issue is 100,000,000. All of the
authorized shares shall have a par value of $0.001.
2. That the proposed amendment has been duly adopted by the
Corporation's Board of Directors and sole stockholder in accordance with the
provisions of Sections 242 and 228 of the General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment of Restated Certificate of Incorporation to be signed by a duly
authorized officer on this _____ day of ________________, 1999.
SILICON ENTERTAINMENT, INC.
By:
--------------------------------
David S. Morse, Chief Executive
Officer and President
<PAGE> 1
Exhibit 3.2
BYLAWS
OF
SILICON ENTERTAINMENT, INC.
A DELAWARE CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I Offices......................................................................1
Section 1.1 Registered Office......................................................1
Section 1.2 Other Offices..........................................................1
ARTICLE II Stockholders' Meetings.......................................................1
Section 2.1 Place of Meetings......................................................1
Section 2.2 Annual Meetings........................................................1
Section 2.3 Special Meetings.......................................................1
Section 2.4 Notice of Meetings.....................................................2
Section 2.5 Quorum, Conduct and Voting.............................................2
Section 2.6 Voting Rights..........................................................3
Section 2.7 Voting Procedures and Inspectors of Elections..........................4
Section 2.8 List of Stockholders...................................................5
Section 2.9 Stockholder Proposals at Annual Meetings...............................5
Section 2.10 Nominations of Persons for Election to the Board of Directors..........6
Section 2.11 Action Without Meeting.................................................7
ARTICLE III Directors....................................................................7
Section 3.1 Powers.................................................................7
Section 3.2 Number of Directors....................................................7
Section 3.3 Election and Term of Office............................................8
Section 3.4 Vacancies..............................................................8
Section 3.5 Resignations and Removals..............................................8
Section 3.6 Meetings...............................................................9
Section 3.7 Quorum and Voting.....................................................10
Section 3.8 Action Without Meeting................................................10
Section 3.9 Fees and Compensation.................................................10
Section 3.10 Committees............................................................10
ARTICLE IV Officers....................................................................12
Section 4.1 Officers Designated...................................................12
Section 4.2 Tenure and Duties of Officers.........................................12
ARTICLE V Execution of Corporate Instruments and Voting of Securities Owned by the
Corporation.................................................................13
Section 5.1 Execution of Corporate Instruments....................................13
Section 5.2 Voting of Securities Owned by Corporation.............................14
ARTICLE VI Shares of Stock.............................................................14
Section 6.1 Form and Execution of Certificates....................................14
Section 6.2 Lost Certificates.....................................................14
Section 6.3 Transfers.............................................................15
Section 6.4 Fixing Record Dates...................................................15
Section 6.5 Registered Stockholders...............................................16
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VII Other Securities of the Corporation.........................................16
ARTICLE VIII Corporate Seal..............................................................16
ARTICLE IX Indemnification of Officers, Directors, Employees and Agents................17
Section 9.1 Right to Indemnification..............................................17
Section 9.2 Authority to Advance Expenses.........................................17
Section 9.3 Right of Claimant to Bring Suit.......................................18
Section 9.4 Provisions Nonexclusive...............................................18
Section 9.5 Authority to Insure...................................................18
Section 9.6 Indemnification Contracts.............................................18
Section 9.7 Survival of Rights....................................................18
Section 9.8 Settlement of Claims..................................................18
Section 9.8 Effect of Amendment...................................................19
Section 9.10 Subrogation...........................................................19
Section 9.11 No Duplication of Payments............................................19
ARTICLE X Notices.....................................................................19
ARTICLE XI Amendments..................................................................20
</TABLE>
ii
<PAGE> 4
BYLAWS
OF
SILICON ENTERTAINMENT, INC.
ARTICLE I
OFFICES
SECTION 1.1 REGISTERED OFFICE.
The registered office of the corporation in the State of Delaware shall
be in the City of Dover, County of Kent.
SECTION 1.2 OTHER OFFICES.
The corporation shall also have and maintain an office or principal
place of business at 210 Hacienda Avenue, Campbell, California 95008, and may
also have offices at such other places, both within and without the State of
Delaware as the Board of Directors may from time to time determine or the
business of the corporation may require.
ARTICLE II
STOCKHOLDERS' MEETINGS
SECTION 2.1 PLACE OF MEETINGS.
Meetings of the stockholders of the corporation shall be held at such
place, either within or without the State of Delaware, as may be designated from
time to time by the Board of Directors or the Chairman of the Board, or, if not
so designated, then at the office of the corporation required to be maintained
pursuant to section 1.2 of Article I hereof.
SECTION 2.2 ANNUAL MEETINGS.
The annual meetings of the stockholders of the corporation for the
purpose of election of directors, and for such other business as may lawfully
come before it, shall be held on such date and at such time as may be designated
from time to time by the Board of Directors or the Chairman of the Board.
SECTION 2.3 SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes
prescribed in the notice of the meeting, may be called only (i) by the Board of
Directors pursuant to a resolution adopted by a majority of the total number of
authorized directors (whether or not there exists any vacancies in previously
authorized directorships at the time any such resolution is presented to
1
<PAGE> 5
the Board of Directors for adoption) or (ii) by the holders of not less than 20%
of all shares entitled to cast votes at the meeting, voting together as a single
class and shall be held at such place, on such date, and at such time as they
shall fix. Business transacted at special meetings shall be confined to the
purpose or purposes stated in the notice.
SECTION 2.4 NOTICE OF MEETINGS.
(a) Except as otherwise provided by law or the Certificate of
Incorporation, written notice of each meeting of stockholders, specifying the
place, date and hour and purpose or purposes of the meeting, shall be given not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to each stockholder entitled to vote thereat, directed to his address as it
appears upon the books of the corporation; except that where the matter to be
acted on is a merger or consolidation of the corporation or a sale, lease or
exchange of all or substantially all of its assets, such notice shall be given
not less than twenty nor more than sixty days prior to such meeting.
(b) If at any meeting action is proposed to be taken which, if taken,
would entitle Stockholders fulfilling the requirements of Section 262(d) of the
Delaware General Corporation Law to an appraisal of the fair value of their
shares, the notice of such meeting shall contain a statement of that purpose and
to that effect and shall be accompanied by a copy of that statutory section.
(c) When a meeting is adjourned to another time or place, notice need
not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken unless the
adjournment is for more than thirty days, or unless after the adjournment a new
record date is fixed for the adjourned meeting, in which event a notice of the
adjourned meeting shall be given to each stockholder of record entitled to vote
at the meeting.
(d) Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, either before or after such meeting, and to the extent
permitted by law, will be waived by any stockholder by his attendance thereat,
in person or by proxy. Any stockholder so waiving notice of such meeting shall
be bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given.
(e) Unless and until voted, every proxy shall be revocable at the
pleasure of the person who executed it or of his legal representatives or
assigns, except in those cases where an irrevocable proxy permitted by statute
has been given.
SECTION 2.5 QUORUM, CONDUCT AND VOTING.
(a) At all meetings of stockholders, except where otherwise provided by
law, the Certificate of Incorporation, or these Bylaws, the presence, in person
or by proxy duly authorized, of the holders of a majority of the outstanding
shares of stock entitled to vote shall constitute a quorum for the transaction
of business. Shares, the voting of which at said meeting have been enjoined, or
which for any reason cannot be lawfully voted at such meeting, shall not be
counted to determine a quorum at said meeting. In the absence of a quorum, any
meeting of stockholders may be adjourned, from time to time, by vote of the
holders of a majority of the
2
<PAGE> 6
shares represented thereat, but no other business shall be transacted at such
meeting. At such adjourned meeting at which a quorum is present or represented
any business may be transacted which might have been transacted at the original
meeting. The stockholders present at a duly called or convened meeting, at which
a quorum is present, may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
(b) Meetings of the stockholders shall be presided over by one of the
following officers in the order of seniority and if present and acting: (i) the
Chairman of the Board, (ii) the Vice-Chairman of the Board, (iii) the President,
(iv) the Vice-President, or (v) if none of the foregoing is present and acting,
by a chairman to be chosen by the stockholders.
The Chairman of the meeting shall call the meeting to order, establish
the agenda, and conduct the business of the meeting in accordance therewith or,
at the Chairman's discretion, it may be conducted otherwise in accordance with
the wishes of the stockholders in attendance. The date and time of the opening
and closing of the polls for each matter upon which the stockholders will vote
at the meeting shall be announced at the meeting.
The Chairman shall also conduct the meeting in an orderly manner, rule
on the precedence of, and procedure on, motions and other procedural matters,
and exercise discretion with respect to such procedural matters with fairness
and good faith toward all those entitled to take part. The Chairman may impose
reasonable limits on the amount of time taken up at the meeting on discussion in
general or on remarks by any one stockholder. Should any person in attendance
become unruly or obstruct the meeting proceedings, the Chairman shall have the
power to have such person removed from participation. Notwithstanding anything
in the Bylaws to the contrary, no business shall be conducted at a meeting
except in accordance with the procedures set forth in this Section 2.5(b). The
Chairman of a meeting shall, if the facts warrant, determine and declare to the
meeting that any proposed item of business was not brought before the meeting in
accordance with the provisions of this Section 2.5(b), and if he should so
determine, he shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.
(c) Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, all action taken by the holders of a majority of
the voting power represented at any meeting at which a quorum is present shall
be valid and binding upon the corporation.
(d) In the election of directors, a plurality of the votes cast shall
elect. No stockholder shall be entitled to exercise the right of cumulative
voting for the election of directors.
SECTION 2.6 VOTING RIGHTS.
(a) Except as otherwise provided by law, only persons in whose names
shares entitled to vote stand on the stock records of the corporation on the
record date for determining the stockholders entitled to vote at said meeting
shall be entitled to vote at such meeting. Shares standing in the names of two
or more persons shall be voted or represented in accordance with the
determination of the majority of such persons, or, if only one of such persons
is present in
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person or represented by proxy, such person shall have the right to vote such
shares and such shares shall be deemed to be represented for the purpose of
determining a quorum.
(b) Every person entitled to vote or execute consents shall have the
right to do so either in person or by an agent or agents authorized by a written
proxy executed by such person or his duly authorized agent, which proxy shall be
filed with the Secretary of the corporation at or before the meeting at which it
is to be used. Said proxy so appointed need not be a stockholder. No proxy shall
be voted on after three years from its date unless the proxy provides for a
longer period.
(c) Without limiting the manner in which a stockholder may authorize
another person or persons to act for him as proxy pursuant to subsection (b) of
this section, the following shall constitute a valid means by which a
stockholder may grant such authority:
(1) A stockholder may execute a writing authorizing another person
or persons to act for him as proxy. Execution may be accomplished by the
stockholder or his authorized officer, director, employee or agent signing such
writing or causing his or her signature to be affixed to such writing by any
reasonable means including, but not limited to, by facsimile signature.
(2) A stockholder may authorize another person or persons to act
for him as proxy by transmitting or authorizing the transmission of a telegram,
cablegram, or other means of electronic transmission to the person who will be
the holder of the proxy or to a proxy solicitation firm, proxy support service
organization or like agent duly authorized by the person who will be the holder
of the proxy to receive such transmission, provided that any such telegram,
cablegram or other means of electronic transmission must either set forth or be
submitted with information from which it can be determined that the telegram,
cablegram or other electronic transmission was authorized by the stockholder.
Such authorization can be established by the signature of the stockholder on the
proxy, either in writing or by a signature stamp or facsimile signature, or by a
number or symbol from which the identity of the stockholder can be determined,
or by any other procedure deemed appropriate by the inspectors or other persons
making the determination as to due authorization.
If it is determined that such telegrams, cablegrams or other electronic
transmissions are valid, the inspectors or, if there are no inspectors, such
other persons making that determination shall specify the information upon which
they relied.
(d) Any copy, facsimile telecommunication or other reliable reproduction
of the writing or transmission created pursuant to subsection (c) of this
section may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or
transmission could be used, provided that such copy, facsimile telecommunication
or other reproduction shall be a complete reproduction of the entire original
writing or transmission.
SECTION 2.7 VOTING PROCEDURES AND INSPECTORS OF ELECTIONS.
(a) The corporation shall, in advance of any meeting of stockholders,
appoint one or more inspectors to act at the meeting and make a written report
thereof. The corporation may designate one or more persons as alternate
inspectors to replace any inspector who fails to act. If
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no inspector or alternate is able to act at a meeting of stockholders, the
person presiding at the meeting shall appoint one or more inspectors to act at
the meeting. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his ability.
(b) The inspectors shall (i) ascertain the number of shares outstanding
and the voting power of each, (ii) determine the shares represented at a meeting
and the validity of proxies and ballots, (iii) count all votes and ballots, (iv)
determine and retain for a reasonable period a record of the disposition of any
challenges made to any determination by the inspectors, and (v) certify their
determination of the number of shares represented at the meeting, and their
count of all votes and ballots. The inspectors may appoint or retain other
persons or entities to assist the inspectors in the performance of the duties of
the inspectors.
(c) The date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote at a meeting shall be
announced at the meeting. No ballot, proxies or votes, nor any revocations
thereof or changes thereto, shall be accepted by the inspectors after the
closing of the polls unless the Court of Chancery upon application by a
stockholder shall determine otherwise.
(d) In determining the validity and counting of proxies and ballots, the
inspectors shall be limited to an examination of the proxies, any envelopes
submitted with those proxies, any information provided in accordance with
Section 212(c)(2) of the Delaware General Corporation Law, ballots and the
regular books and records of the corporation, except that the inspectors may
consider other reliable information for the limited purpose of reconciling
proxies and ballots submitted by or on behalf of banks, brokers, their nominees
or similar persons which represent more votes than the holder of a proxy is
authorized by the record owner to cast or more votes than the stockholder holds
of record. If the inspectors consider other reliable information for the limited
purpose permitted herein, the inspectors at the time they make their
certification pursuant to subsection (b)(v) of this section shall specify the
precise information considered by them including the person or persons from whom
they obtained the information, when the information was obtained, the means by
which the information was obtained and the basis for the inspectors' belief that
such information is accurate and reliable.
SECTION 2.8 LIST OF STOCKHOLDERS.
The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at said meeting, arranged in
alphabetical order, showing the address of and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days prior to the meeting,
either at a place within the city where the meeting is to be held and which
place shall be specified in the notice of the meeting, or, if not specified, at
the place where said meeting is to be held, and the list shall be produced and
kept at the time and place of meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
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SECTION 2.9 STOCKHOLDER PROPOSALS AT ANNUAL MEETINGS.
At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be properly
brought before an annual meeting, business must be specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, otherwise properly brought before the meeting by or at the direction
of the Board of Directors or otherwise properly brought before the meeting by a
stockholder. In addition to any other applicable requirements, for business to
be properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
corporation. To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the corporation, not less
than 120 calendar days in advance of the date that the corporation's proxy
statement was released to stockholders in connection with the previous year's
annual meeting of stockholders, except that if no annual meeting was held in the
previous year or the date of the annual meeting has been changed by more than 30
calendar days from the date contemplated at the time of the previous year's
proxy statement, notice by the stockholder to be timely must be received not
later than the close of business on the 10th calendar day following the day on
which public announcement of the date of such meeting is first made. A
stockholder's notice to the Secretary shall set forth, as to each matter the
stockholder proposes to bring before the annual meeting, (a) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (b) the name and record
address of the stockholder proposing such business, (c) the class and number of
shares of the corporation which are beneficially owned by the stockholder, and
(d) any material interest of the stockholder in such business. For purposes of
this Section 2.10, "public announcement" shall mean disclosure in a press
release reported by the Dow Jones News Service, Associated Press or comparable
national news service or in a document publicly filed by the Company with the
Securities and Exchange Commission (the "SEC") pursuant to Section 13, 14 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
SECTION 2.10 NOMINATIONS OF PERSONS FOR ELECTION TO THE BOARD OF DIRECTORS.
In addition to any other applicable requirements, only persons who are
nominated in accordance with the following procedures shall be eligible for
election as directors. Nominations of persons for election to the Board of
Directors of the corporation may be made at a meeting of stockholders by or at
the direction of the Board of Directors, by any nominating committee or person
appointed by the Board of Directors or by any stockholder of the corporation
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in this Section 2.10. Such nominations, other
than those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the corporation. To be
timely, a stockholder nomination for a director to be elected at an annual
meeting shall be received at the corporation's principal executive offices not
less than 120 calendar days in advance of the date that the corporation's proxy
statement was released to stockholders in connection with the previous year's
annual meeting of stockholders, except that if no annual meeting was held in the
previous year or the date of the annual meeting has been advanced by more than
30 calendar days from the date contemplated at the time of the previous year's
proxy statement, notice by the stockholders to be timely must be received not
later than the close of business on the 10th calendar day following the day on
which the public
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announcement of the date of such meeting is first made. Each such notice shall
set forth (a) the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated, (b) a representation
that the stockholder is a holder of record of stock of the corporation entitled
to vote for the election of Directors on the date of such notice and intends to
appear in person or by proxy at the meeting to nominate the person or persons
specified in the notice, (c) a description of all arrangements or understandings
between the stockholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or nominations are to
be made by the stockholder, (d) such other information regarding each nominee
proposed by such stockholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission, had the nominee been nominated, or intended to be nominated, by the
Board of Directors, and (e) the consent of each nominee to serve as a director
of the corporation if so elected. For purposes of this Section 2.10, "public
announcement" shall mean disclosure in a press release reported by the Dow Jones
News Service, Associated Press or comparable national news service or in a
document publicly filed by the Company with the SEC pursuant to Section 13, 14
or 15(d) of the Exchange Act. Notwithstanding the foregoing provisions of this
Section 2.10, a stockholder shall also comply with all applicable requirements
of the Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 2.10. The corporation may require any proposed
nominee to furnish such other information as may reasonably be required by the
corporation to determine the eligibility of such proposed nominee to serve as a
director of the corporation. No person shall be eligible for election as a
director of the corporation unless nominated in accordance with the procedures
set forth herein.
In the event that a person is validly designated as a nominee in
accordance with this Section 2.10 and shall thereafter become unable or
unwilling to stand for election to the Board of Directors, the Board of
Directors or the stockholder who proposed such nominee, as the case may be, may
designate a substitute nominee upon delivery, not fewer than five days prior to
the date of the meeting for the election of such nominee, of a written notice to
the Secretary setting forth such information regarding such substitute nominee
as would have been required to be delivered to the Secretary pursuant to this
Section 2.10 had such substitute nominee been initially proposed as a nominee.
Such notice shall include a signed consent to serve as a director of the
corporation, if elected, of each such substitute nominee.
The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
SECTION 2.11 ACTION WITHOUT MEETING.
Unless otherwise provided in the Certificate of Incorporation, any
action required by statute to be taken at any annual or special meeting of
stockholders of the corporation, or any action which may be taken at any annual
or special meeting of such stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing, setting
forth the action so taken, are signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a
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meeting at which all shares entitled to vote thereon were present and voted. To
be effective, a written consent must be delivered to the corporation by delivery
to its registered office in Delaware, its principal place of business, or an
officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to a
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. Every written consent shall bear the date of
signature of each stockholder who signs the consent and no written consent shall
be effective to take the corporate action referred to therein unless, within
sixty days of the earliest dated consent delivered in the manner required by
this section 2.11 to the corporation, written consents signed by a sufficient
number of holders to take action are delivered to the corporation in accordance
with this section 2.11. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
SECTION 3.1 POWERS.
The powers of the corporation shall be exercised, its business conducted
and its property controlled by or under the direction of the Board of Directors.
SECTION 3.2 NUMBER OF DIRECTORS.
The number of directors shall initially be five (5) and, hereafter, may
be fixed from time to time exclusively by the Board of Directors pursuant to a
resolution adopted by a majority of the entire Board of Directors; provided,
however, that the number of directors shall not be reduced so as to shorten the
term of any director at the time in office.
SECTION 3.3 ELECTION AND TERM OF OFFICE.
Elected directors shall hold office until the next annual meeting and
until their successors shall be duly elected and qualified. A director need not
be a stockholder of the corporation, a citizen of the United States, or a
resident of the State of Delaware. If, for any cause, the Board of Directors
shall not have been elected at an annual meeting, they may be elected as soon
thereafter as convenient at a special meeting of the stockholders called for
that purpose in the manner provided in these Bylaws.
SECTION 3.4 VACANCIES.
Vacancies and newly created directorships resulting from any increase in
the authorized number of directors may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole remaining director,
and each director so elected shall hold office for the unexpired portion of the
term of the director whose place shall be vacant, and until his successor shall
have been duly elected and qualified. A vacancy in the Board of Directors shall
be deemed to exist under this section 3.4 in the case of the death, removal or
resignation of any director, or if the stockholders fail at any meeting of
stockholders at which directors are to be elected
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(including any meeting referred to in section 3.5 below) to elect the number of
directors then constituting the whole Board.
SECTION 3.5 RESIGNATIONS AND REMOVALS.
(a) Any director may resign at any time by delivering his written
resignation to the Secretary, such resignation to specify whether it will be
effective at a particular time, upon receipt by the Secretary or at the pleasure
of the Board of Directors. If no such specification is made it shall be deemed
effective at the pleasure of the Board of Directors. When one or more directors
shall resign from the Board, effective at a future date, a majority of the
directors then in office, including those who have so resigned, shall have power
to fill such vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations shall become effective, and each director so chosen
shall hold office for the unexpired portion of the term of the director whose
place shall be vacated and until his successor shall have been duly elected and
qualified.
(b) Subject to the rights of the holder of any series of Preferred Stock
then outstanding, any directors, or the entire Board of Directors, may be
removed from office at any time, but only for cause and only by the affirmative
vote of the holders of at least a majority of the voting power of all of the
outstanding shares of capital stock entitled to vote generally in the election
of directors, voting together as a single class.
(c) The Board of Directors may declare vacant the office of any director
who has been declared of unsound mind by an order of court or convicted of a
felony.
SECTION 3.6 MEETINGS.
(a) The annual meeting of the Board of Directors shall be held
immediately after the annual stockholders' meeting and at the place where such
meeting is held or at the place announced by the Chairman at such meeting. No
notice of an annual meeting of the Board of Directors shall be necessary and
such meeting shall be held for the purpose of electing officers and transacting
such other business as may lawfully come before it.
(b) Except as hereinafter otherwise provided, regular meetings of the
Board of Directors shall be held in the office of the corporation required to be
maintained pursuant to section 1.2 of Article I hereof. Regular meetings of the
Board of Directors may also be held at any place within or without the State of
Delaware which has been designated by resolutions of the Board of Directors or
the written consent of all directors.
(c) Special meetings of the Board of Directors may be held at any time
and place within or without the State of Delaware whenever called by the
Chairman of the Board or, if there is no Chairman of the Board, by the
President, or by any of the directors.
(d) Written notice of the time and place of all regular and special
meetings of the Board of Directors shall be delivered personally to each
director or sent by telegram or facsimile transmission at least 48 hours before
the start of the meeting, or sent by first class mail at least 120 hours before
the start of the meeting. Notice of any meeting may be waived in writing at any
time before or after the meeting and will be waived by any director by
attendance thereat.
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(e) The Chairman of the Board, if any and if present and acting, the
Vice Chairman of the Board, if any and if present and acting, shall preside at
all meetings of the Board of Directors. Otherwise, the President, if any and
present and acting, or any director chosen by the Board, shall preside.
SECTION 3.7 QUORUM AND VOTING.
(a) A quorum of the Board of Directors shall consist of a majority of
the exact number of directors fixed from time to time in accordance with section
3.2 of Article III of these Bylaws. If a vacancy or vacancies prevents such a
majority, a majority of the directors then in office shall constitute a quorum,
provided such majority shall constitute at least either one-third of the
authorized number of directors or two directors, whichever is larger. If the
number of Directors is one, then one director shall constitute a quorum. At any
meeting whether a quorum be present or otherwise, a majority of the directors
present may adjourn from time to time until the time fixed for the next regular
meeting of the Board of Directors, without notice other than by announcement at
the meeting.
(b) At each meeting of the Board at which a quorum is present all
questions and business shall be determined by a vote of a majority of the
directors present, unless a different vote be required by law, the Certificate
of Incorporation, or these Bylaws.
(c) Any member of the Board of Directors, or of any committee thereof,
may participate in a meeting by means of conference telephone or similar
communication equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting by such means shall
constitute presence in person at such meeting.
(d) The transactions of any meeting of the Board of Directors, or any
committee thereof, however called or noticed, or wherever held, shall be as
valid as though had at a meeting duly held after regular call and notice, if a
quorum be present and if, either before or after the meeting, each of the
directors not present shall sign a written waiver of notice, or a consent to
holding such meeting, or an approval of the minutes thereof. All such waivers,
consents or approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.
SECTION 3.8 ACTION WITHOUT MEETING.
Unless otherwise restricted by the Certificate of Incorporation or these
Bylaws, any action required or permitted to be taken at any meeting of the Board
of Directors or of any committee thereof may be taken without a meeting, if all
members of the Board or of such committee, as the case may be, consent thereto
in writing, and such writing or writings are filed with the minutes of
proceedings of the Board or committee.
SECTION 3.9 FEES AND COMPENSATION.
Directors and members of committees may receive such compensation, if
any, for their services, and such reimbursement for expenses, as may be fixed or
determined by resolution of the Board of Directors.
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SECTION 3.10 COMMITTEES.
(a) EXECUTIVE COMMITTEE. The Board of Directors may, by resolution
passed by a majority of the whole Board, appoint an Executive Committee of not
less than one member, each of whom shall be a director. The Executive Committee,
to the extent permitted by law, shall have and may exercise when the Board of
Directors is not in session all powers of the Board in the management of the
business and affairs of the corporation, including, without limitation, the
power and authority to declare a dividend or to authorize the issuance of stock,
except such committee shall not have the power or authority to amend the
Certificate of Incorporation, to adopt an agreement or merger or consolidation,
to recommend to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, to recommend to the
stockholders of the corporation a dissolution of the corporation or a revocation
of a dissolution, or to amend these Bylaws.
(b) OTHER COMMITTEES. The Board of Directors may, by resolution passed
by a majority of the whole Board, from time to time appoint such other
committees as may be permitted by law. Such other committees appointed by the
Board of Directors shall have such powers and perform such duties as may be
prescribed by the resolution or resolutions creating such committee, but in no
event shall any such committee have the powers denied to the Executive Committee
in these Bylaws.
(c) TERM. The members of all committees of the Board of Directors shall
serve a term coexistent with that of the Board of Directors which shall have
appointed such committee. The Board, subject to the provisions of subsections
(a) or (b) of this section 3.10, may at any time increase or decrease the number
of members of a committee or terminate the existence of a committee; provided,
that no committee shall consist of less than one member. The membership of a
committee member shall terminate on the date of his death or voluntary
resignation, but the Board may at any time for any reason remove any individual
committee member and the Board may fill any committee vacancy created by death,
resignation, removal or increase in the number of members of the committee. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee, and, in addition, in the absence or disqualification of any
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
(d) MEETINGS. Unless the Board of Directors shall otherwise provide,
regular meetings of the Executive Committee or any other committee appointed
pursuant to this section 3.10 shall be held at such times and places as are
determined by the Board of Directors, or by any such committee, and when notice
thereof has been given to each member of such committee, no further notice of
such regular meetings need be given thereafter; special meetings of any such
committee may be held at the principal office of the corporation required to be
maintained pursuant to section 1.2 of Article I hereof; or at any place which
has been designated from time to time by resolution of such committee or by
written consent of all members thereof, and may be called by any director who is
a member of such committee, upon written notice to the members of such committee
of the time and place of such special meeting given in the
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manner provided for the giving of written notice to members of the Board of
Directors of the time and place of special meetings of the Board of Directors.
Notice of any special meeting of any committee may be waived in writing at any
time after the meeting and will be waived by any director by attendance thereat.
A majority of the authorized number of members of any such committee shall
constitute a quorum for the transaction of business, and the act of a majority
of those present at any meeting at which a quorum is present shall be the act of
such committee.
ARTICLE IV
OFFICERS
SECTION 4.1 OFFICERS DESIGNATED.
The officers of the corporation shall be a President and a Secretary.
The Board of Directors may appoint a Chairman of the Board, whom shall serve as
the Chief Executive Officer of the corporation. The Board of Directors or the
President may also appoint a Treasurer, one or more Vice-Presidents, assistant
secretaries, assistant treasurers, and such other officers and agents with such
powers and duties as it shall deem necessary. The order of the seniority of the
Vice-Presidents shall be in the order of their nomination, unless otherwise
determined by the Board of Directors. The Board of Directors may assign such
additional titles to one or more of the officers as they shall deem appropriate.
Any one person may hold any number of offices of the corporation at any one time
unless specifically prohibited therefrom by law. The salaries and other
compensation of the officers of the corporation shall be fixed by or in the
manner designated by the Board of Directors.
SECTION 4.2 TENURE AND DUTIES OF OFFICERS.
(a) GENERAL. All officers shall be appointed by the Board of Directors
in accordance with these bylaws. All officers hold office at the pleasure of the
Board of Directors until their successors shall have been duly elected and
qualified, unless sooner removed. Any officer elected or appointed by the Board
of Directors may be removed at any time by the Board of Directors. If the office
of any officer becomes vacant for any reason, the vacancy may be filled by the
Board of Directors. Nothing in these Bylaws shall be construed as creating any
kind of contractual right to employment with the corporation.
(b) DUTIES OF THE CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of
the Board of Directors shall be the chief executive officer of the corporation
and, when present, shall preside at all meetings of the stockholders and the
Board of Directors. The Chairman of the Board of Directors shall perform such
other duties and have such other powers as the Board of Directors shall
designate from time to time.
(c) DUTIES OF PRESIDENT. The President shall be the chief executive
officer of the corporation in the absence of the Chairman of the Board and shall
preside at all meetings of the stockholders and at all meetings of the Board of
Directors, unless the Chairman of the Board of Directors has been appointed and
is present. The President shall perform such other duties and have such other
powers as the Board of Directors shall designate from time to time.
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(d) DUTIES OF VICE-PRESIDENTS. The Vice-Presidents, in the order of
their seniority, may assume and perform the duties of the President in the
absence or disability of the President or whenever the office of the President
is vacant. The Vice-President shall perform such other duties and have such
other powers as the Board of Directors or the President shall designate from
time to time.
(e) DUTIES OF SECRETARY. The Secretary shall attend all meetings of the
stockholders and of the Board of Directors and any committee thereof, and shall
record all acts and proceedings thereof in the minute book of the corporation.
The Secretary shall give notice, in conformity with these Bylaws, of all
meetings of the stockholders, and of all meetings of the Board of Directors and
any Committee thereof requiring notice. The Secretary shall perform such other
duties and have such other powers as the Board of Directors shall designate from
time to time. The President may direct any Assistant Secretary to assume and
perform the duties of the Secretary in the absence or disability of the
Secretary, and each Assistant Secretary shall perform such other duties and have
such other powers as the Board of Directors or the President shall designate
from time to time.
(f) DUTIES OF TREASURER. The Treasurer (if there be such an officer
appointed) shall keep or cause to be kept the books of account of the
corporation in a thorough and proper manner, and shall render statements of the
financial affairs of the corporation in such form and as often as required by
the Board of Directors or the President. The Treasurer, subject to the order of
the Board of Directors, shall have the custody of all funds and securities of
the corporation. The Treasurer shall perform all other duties commonly incident
to his office and shall perform such other duties and have such other powers as
the Board of Directors or the President shall designate from time to time. The
President may direct any Assistant Treasurer or to assume and perform the duties
of the Treasurer in the absence or disability of the Treasurer, and each
Assistant Treasurer shall perform such other duties and have such other powers
as the Board of Directors or the President shall designate from time to time.
ARTICLE V
EXECUTION OF CORPORATE INSTRUMENTS AND
VOTING OF SECURITIES OWNED BY THE CORPORATION
SECTION 5.1 EXECUTION OF CORPORATE INSTRUMENTS.
(a) The Board of Directors may, in its discretion, determine the method
and designate the signatory officer or officers, or other person or persons, to
execute any corporate instrument or document, or to sign the corporate name
without limitation, except where otherwise provided by law, and such execution
or signature shall be binding upon the corporation.
(b) Unless otherwise specifically determined by the Board of Directors
or otherwise required by law, formal contracts of the corporation, promissory
notes, deeds of trust, mortgages and other evidences of indebtedness of the
corporation, and other corporate instruments or documents requiring the
corporate seal, and certificates of shares of stock owned by the corporation,
shall be executed, signed or endorsed by the Chairman of the Board (if there be
such an officer appointed) or by the President; such documents may also be
executed by any
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<PAGE> 17
Vice-President and by the Secretary or Treasurer or any Assistant Secretary or
Assistant Treasurer. All other instruments and documents requiring the corporate
signature, but not requiring the corporate seal, may be executed as aforesaid or
in such other manner as may be directed by the Board of Directors.
(c) All checks and drafts drawn on banks or other depositories on funds
to the credit of the corporation, or in special accounts of the corporation,
shall be signed by such person or persons as the Board of Directors shall
authorize so to do.
SECTION 5.2 VOTING OF SECURITIES OWNED BY CORPORATION.
All stock and other securities of other corporations owned or held by
the corporation for itself, or for other parties in any capacity, shall be
voted, and all proxies with respect thereto shall be executed, by the person
authorized so to do by resolution of the Board of Directors or, in the absence
of such authorization, by the Chairman of the Board (if there be such an officer
appointed), or by the President, or by any Vice-President.
ARTICLE VI
SHARES OF STOCK
SECTION 6.1 FORM AND EXECUTION OF CERTIFICATES.
Certificates for the shares of stock of the corporation shall be in such
form as is consistent with the Certificate of Incorporation and applicable law.
Every holder of stock in the corporation shall be entitled to have a certificate
signed by, or in the name of the corporation by, the Chairman of the Board (if
there be such an officer appointed), or by the President or any Vice-President
and by the Treasurer or Assistant Treasurer or the Secretary or Assistant
Secretary, certifying the number of shares owned by him in the corporation. Any
or all of the signatures on the certificate may be a facsimile. In case any
officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate is issued, it may
be issued with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue. If the corporation shall be authorized to issue
more than one class of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights shall be set forth
in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided in Section 202 of the Delaware General
Corporation Law, in lieu of the foregoing requirements, there may be set forth
on the face or back of the certificate which the corporation shall issue to
represent such class or series of stock, a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
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<PAGE> 18
SECTION 6.2 LOST CERTIFICATES.
The Board of Directors may direct a new certificate or certificates to
be issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate of stock to be
lost or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to indemnify the
corporation in such manner as it shall require and/or to give the corporation a
surety bond in such form and amount as it may direct as indemnity against any
claim that may be made against the corporation with respect to the certificate
alleged to have been lost or destroyed.
SECTION 6.3 TRANSFERS.
Transfers of record of shares of stock of the corporation shall be made
only upon its books by the holders thereof, in person or by attorney duly
authorized, and upon the surrender of a certificate or certificates for a like
number of shares, properly endorsed.
SECTION 6.4 FIXING RECORD DATES.
(a) In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall not be more
than sixty (60) nor less than ten (10) days before the date of such meeting. If
no record date is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the date on which the meeting is held. A determination of
stockholders of record entitled notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting,
(b) In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten (10) days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required by the Delaware General Corporation Law, shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the corporation by delivery to its registered office in
Delaware, its principal place of business, or an officer or agent of the
corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If
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<PAGE> 19
no record date has been fixed by the Board of Directors and prior action by the
Board of Directors is required by law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
(c) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining stockholders
for any such purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
SECTION 6.5 REGISTERED STOCKHOLDERS.
The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends, and
to vote as such owner, and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
ARTICLE VII
OTHER SECURITIES OF THE CORPORATION
All bonds, debentures and other corporate securities of the corporation,
other than stock certificates, may be signed by the Chairman of the Board (if
there be such an officer appointed), or the President or any Vice-President or
such other person as may be authorized by the Board of Directors and the
corporate seal impressed thereon or a facsimile of such seal imprinted thereon
and attested by the signature of the Secretary or an Assistant Secretary, or the
Treasurer or an Assistant Treasurer; provided, however, that where any such
bond, debenture or other corporate security shall be authenticated by the manual
signature of a trustee under an indenture pursuant to which such bond, debenture
or other corporate security shall be issued, the signature of the persons
signing and attesting the corporate seal on such bond, debenture or other
corporate security may be the imprinted facsimile of the signatures of such
persons. Interest coupons appertaining to any such bond, debenture or other
corporate security, authenticated by a trustee as aforesaid, shall be signed by
the Treasurer or an Assistant Treasurer of the corporation, or such other person
as may be authorized by the Board of Directors, or bear imprinted thereon the
facsimile signature of such person. In case any officer who shall have signed or
attested any bond, debenture or other corporate security, or whose facsimile
signature shall appear thereon or before the bond, debenture or other corporate
security so signed or attested shall have been delivered, such bond, debenture
or other corporate security nevertheless may be adopted by the corporation and
issued and delivered as though the person who signed the same or whose facsimile
signature shall have been used thereon had not ceased to be such officer of the
corporation.
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<PAGE> 20
ARTICLE VIII
CORPORATE SEAL
The corporate seal shall consist of a die bearing the name of the
corporation and the state and date of its incorporation. Said seal may be used
by causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
ARTICLE IX
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
SECTION 9.1 RIGHT TO INDEMNIFICATION.
Each person who was or is a party or is threatened to be made a party to
or is involved (as a party, witness, or otherwise), in any threatened, pending,
or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (hereinafter a "Proceeding"), by reason of the
fact that he, or a person of whom he is the legal representative, is or was a
director, officer, employee, or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee, or agent of
another corporation or of a partnership, joint venture, trust, or other
enterprise, including service with respect to employee benefit plans, whether
the basis of the Proceeding is alleged action in an official capacity as a
director, officer, employee, or agent or in any other capacity while serving as
a director, officer, employee, or agent (hereafter an "Agent"), shall be
indemnified and held harmless by the corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended or interpreted (but, in the case of any such amendment or
interpretation, only to the extent that such amendment or interpretation permits
the corporation to provide broader indemnification rights than were permitted
prior thereto) against all expenses, liability, and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties, and amounts paid or to
be paid in settlement, and any interest, assessments, or other charges imposed
thereon, and any federal, state, local, or foreign taxes imposed on any Agent as
a result of the actual or deemed receipt of any payments under this Article IX)
reasonably incurred or suffered by such person in connection with investigating,
defending, being a witness in, or participating in (including on appeal), or
preparing for any of the foregoing in, any Proceeding (hereinafter "Expenses");
provided, however, that except as to actions to enforce indemnification rights
pursuant to section 9.3 of this Article IX, the corporation shall indemnify any
Agent seeking indemnification in connection with a Proceeding (or part thereof)
initiated by such person only if the Proceeding (or part thereof) was authorized
by the Board of Directors of the corporation. The right to indemnification
conferred in this Article shall be a contract right.
SECTION 9.2 AUTHORITY TO ADVANCE EXPENSES.
Expenses incurred by an officer or director (acting in his capacity as
such) in defending a Proceeding shall be paid by the corporation in advance of
the final disposition of such Proceeding, provided, however, that if required by
the Delaware General Corporation Law, as amended, such Expenses shall be
advanced only upon delivery to the corporation of an undertaking by or on behalf
of such director or officer to repay such amount if it shall ultimately
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<PAGE> 21
be determined that he is not entitled to be indemnified by the corporation as
authorized in this Article IX or otherwise. Expenses incurred by other Agents of
the corporation (or by the directors or officers not acting in their capacity as
such, including service with respect to employee benefit plans) may be advanced
upon such terms and conditions as the Board of Directors deems appropriate. Any
obligation to reimburse the corporation for Expense advances shall be unsecured
and no interest shall be charged thereon.
SECTION 9.3 RIGHT OF CLAIMANT TO BRING SUIT.
If a claim under section 9.1 or 9.2 of this Article is not paid in full
by the corporation within 60 days after a written claim has been received by the
corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense
(including attorneys' fees) of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending a Proceeding in advance of its final disposition where the
required undertaking has been tendered to the corporation) that the claimant has
not met the standards of conduct that make it permissible under the Delaware
General Corporation Law for the corporation to indemnify the claimant for the
amount claimed. The burden of proving such a defense shall be on the
corporation. Neither the failure of the corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper under the circumstances because he has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by the corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant had not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that claimant has not met the applicable standard of conduct.
SECTION 9.4 PROVISIONS NONEXCLUSIVE.
The rights conferred on any person by this Article IX shall not be
exclusive of any other rights that such person may have or hereafter acquire
under any statute, provision of the Certificate of Incorporation, agreement,
vote of stockholders or disinterested directors, or otherwise, both as to action
in an official capacity and as to action in another capacity while holding such
office. To the extent that any provision of the Certificate of Incorporation,
agreement, or vote of the stockholders or disinterested directors is
inconsistent with these Bylaws, the provision, agreement, or vote shall take
precedence.
SECTION 9.5 AUTHORITY TO INSURE.
The corporation may purchase and maintain insurance to protect itself
and any Agent against any Expense, whether or not the corporation would have the
power to indemnify the Agent against such Expense under applicable law or the
provisions of this Article.
SECTION 9.6 INDEMNIFICATION CONTRACTS.
The Board of Directors is authorized to enter into a contract with any
director, officer, employee or agent of the corporation, or any person serving
at the request of the corporation as a
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director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprises, including employee benefit plans, providing
for indemnification rights equivalent to or, if the Board of Directors so
determines, greater than, those providing for in this Articles IX.
SECTION 9.7 SURVIVAL OF RIGHTS.
The rights provided by this Article IX shall continue as to a person who
has ceased to be an Agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
SECTION 9.8 SETTLEMENT OF CLAIMS.
The corporation shall not be liable to indemnify any Agent under this
Article IX (a) for any amounts paid in settlement of any action or claim
effected without the corporation's written consent, which consent shall not be
unreasonably withheld; or (b) for any judicial award if the corporation was not
given a reasonable and timely opportunity, at its expense, to participate in the
defense of such action.
SECTION 9.9 EFFECT OF AMENDMENT.
Any amendment, repeal, or modification of this Article IX shall not
adversely affect any right or protection of any Agent existing at the time of
such amendment, repeal, or modification.
SECTION 9.10 SUBROGATION.
In the event of payment under this Article IX, the corporation shall be
subrogated to the extent of such payment to all of the rights of recovery of the
Agent, who shall execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such documents
necessary to enable the corporation effectively to bring suit to enforce such
rights.
SECTION 9.11 NO DUPLICATION OF PAYMENTS.
The corporation shall not be liable under this Article IX to make any
payment in connection with any claim made against the Agent to the extent the
Agent has otherwise actually received payment (under any insurance policy,
agreement, vote, or otherwise) of the amounts otherwise indemnifiable hereunder.
ARTICLE X
NOTICES
Whenever, under any provisions of these Bylaws, notice is required to be
given to any stockholder, the same shall be given in writing, timely and duly
deposited in the United States mail, postage prepaid, and addressed to his last
known post office address as shown by the stock record of the corporation or its
transfer agent. Any notice required to be given to any director may be given by
the method hereinabove stated, or by telegram or other means of electronic
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<PAGE> 23
transmission, except that such notice other than one which is delivered
personally, shall be sent to such address or (in the case of facsimile
telecommunication) facsimile telephone number as such director shall have filed
in writing with the Secretary of the corporation, or, in the absence of such
filing, to the last known post office address of such director. If no address of
a stockholder or director be known, such notice may be sent to the office of the
corporation required to be maintained pursuant to section 1.2 of Article I
hereof. An affidavit of mailing, executed by a duly authorized and competent
employee of the corporation or its transfer agent appointed with respect to the
class of stock affected, specifying the name and address or the names and
addresses of the stockholder or stockholders, director or directors, to whom any
such notice or notices was or were given, and the time and method of giving the
same, shall be conclusive evidence of the statements therein contained. All
notices given by mail, as above provided, shall be deemed to have been given as
at the time of mailing and all notices given by telegram or other means of
electronic transmission shall be deemed to have been given as at the sending
time recorded by the telegraph company or other electronic transmission
equipment operator transmitting the same. It shall not be necessary that the
same method of giving be employed in respect of all directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.
The period or limitation of time within which any stockholder may exercise any
option or right, or enjoy any privilege or benefit, or be required to act, or
within which any director may exercise any power or right, or enjoy any
privilege, pursuant to any notice sent him in the manner above provided, shall
not be affected or extended in any manner by the failure of such a stockholder
or such director to receive such notice. Whenever any notice is required to be
given under the provisions of the statutes or of the Certificate of
Incorporation, or of these Bylaws, a waiver thereof in writing signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. Whenever notice is required
to be given, under any provision of law or of the Certificate of Incorporation
or Bylaws of the corporation, to any person with whom communication is unlawful,
the giving of such notice to such person shall not be required and there shall
be no duty to apply to any governmental authority or agency for a license or
permit to give such notice to such person. Any action or meeting which shall be
taken or held without notice to any such person with whom communication is
unlawful shall have the same force and effect as if such notice had been duly
given. In the event that the action taken by the corporation is such as to
require the filing of a certificate under any provision of the Delaware General
Corporation Law, the certificate shall state, if such is the fact and if notice
is required, that notice was given to all persons entitled to receive notice
except such persons with whom communication is unlawful.
ARTICLE XI
AMENDMENTS
The Board of Directors is expressly empowered to adopt, amend or repeal
Bylaws of the corporation. Any adoption, amendment or repeal of Bylaws of the
corporation by the Board of Directors shall require the approval of a majority
of the total number of authorized directors (whether or not there exist any
vacancies in previously authorized directorships at the time any resolution
providing for adoption, amendment or repeal is presented to the Board).
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<PAGE> 24
The stockholders shall also have power to adopt, amend or repeal the
Bylaws of the corporation. Any adoption, amendment or repeal of Bylaws of the
corporation by the stockholders shall require, in addition to any vote of the
holders of any class or series of stock of the corporation required by law or by
the Certificate of Incorporation, the affirmative vote of the holders of at
least 66 2/3% of the voting power of all of the then outstanding shares of the
capital stock of the corporation entitled to vote generally in the election of
directors.
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<PAGE> 25
CERTIFICATE OF SECRETARY
The undersigned, Secretary of Silicon Entertainment, Inc., a Delaware
corporation, hereby certifies that the foregoing is a full, true and correct
copy of the Bylaws of said corporation, with all amendments to date of this
Certificate.
WITNESS the signature of the undersigned this ____th day of August,
1999.
/s/ JAMES M. KOSHLAND
-----------------------------------
James M. Koshland, Secretary
<PAGE> 1
EXHIBIT 4.2
COMMON STOCK COMMON STOCK
[SEAL] SILICON [SEAL]
ENTERTAINMENT
INCORPORATED UNDER THE LAWS
OF THE STATE OF DELAWARE
THIS CERTIFICATE IS TRANSFERABLE SEE REVERSE FOR
IN BOSTON, MA OR NEW YORK, NY CERTAIN DEFINITIONS
CUSIP 82705M 10 7
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, $.001 PAR VALUE PER
SHARE, OF
SILICON ENTERTAINMENT, INC.
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid until countersigned by the Transfer
Agent and registered by the Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
/s/ James M. Koshland [SEAL] /s/ David S. Morse
- --------------------------- ---------------------------
Secretary Chairman of the Board,
President and Chief
Executive Officer
COUNTERSIGNED AND REGISTERED:
TRANSFER AGENT AND REGISTRAR
/s/
- ------------------------------------
<PAGE> 2
SILICON ENTERTAINMENT, INC.
A statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights as established, from time to time, by the Certificate
of Incorporation of the Corporation and by any certificate of determination,
the number of shares constituting each class and series, and the designations
thereof, may be obtained by the holder hereof upon request and without charge
from the Secretary of the Corporation at the principal office of the
Corporation.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- ...................Custodian...............
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act........................................
in common (State)
COM PROP -- as community property UNIF TRF MIN ACT -- .............Custodian (until age.........)
(Cust)
....................under Uniform Transfers
(Minor)
to Minors Act..............................
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED,___________________________hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
- --------------------------------------
_______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
_______________________________________________________________________________
_______________________________________________________________________________
________________________________________________________________________ Shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
______________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation
with full power of substitution in the premises.
Dated________________________
X_______________________________________________
X_______________________________________________
THE SIGNATURE(S) TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE
NOTICE: FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER.
Signature(s) Guaranteed
By___________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS
WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.
<PAGE> 1
Exhibit 5.1
[GRAY CARY WARE & FREIDENRICH LLP LETTERHEAD]
November 5, 1999
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Silicon Entertainment, Inc.
Registration Statement on Form S-1
Ladies and Gentlemen:
As counsel to Silicon Entertainment, Inc. (the "Company"), we are rendering
this opinion in connection with a proposed sale of those certain shares of the
Company's newly-issued Common Stock as set forth in the Registration Statement
on Form S-1 to which this opinion is being filed as Exhibit 5.1 (the "Shares").
We have examined all instruments, documents and records which we deemed relevant
and necessary for the basis of our opinion hereinafter expressed. In such
examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity to
the originals of all documents submitted to us as copies.
We express no opinion with respect to (i) the availability of equitable
remedies, including specific performance, or (ii) the effect of bankruptcy,
insolvency, reorganization, moratorium or equitable principles relating to or
limiting creditors' rights generally.
Based on such examination, we are of the opinion that the Shares identified
in the above-referenced Registration Statement will be, upon effectiveness of
the Registration Statement and receipt by the Company of payment therefor,
validly authorized, legally issued, fully paid, and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
above-referenced Registration Statement and to the use of our name wherever it
appears in said Registration Statement, including the Prospectus constituting a
part thereof, as originally filed or as subsequently amended.
Respectfully submitted,
/s/ Gray Cary Ware & Freidenrich LLP
---------------------------------------
GRAY CARY WARE & FREIDENRICH LLP
<PAGE> 1
EXHIBIT 10.1
INDEMNITY AGREEMENT
This Indemnity Agreement, dated as of __________, 1999, is made by and
between Silicon Entertainment, Inc. Delaware, a Delaware corporation (the
"Company"), and (the "Indemnitee").
RECITALS
A. The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors, officers or agents of corporations
unless they are protected by comprehensive liability insurance or
indemnification, due to increased exposure to litigation costs and risks
resulting from their service to such corporations, and due to the fact that the
exposure frequently bears no reasonable relationship to the compensation of such
directors, officers and other agents.
B. The statutes and judicial decisions regarding the duties of directors
and officers are often difficult to apply, ambiguous, or conflicting, and
therefore fail to provide such directors, officers and agents with adequate,
reliable knowledge of legal risks to which they are exposed or information
regarding the proper course of action to take.
C. Plaintiffs often seek damages in such large amounts and the costs of
litigation may be so enormous (whether or not the case is meritorious), that the
defense and/or settlement of such litigation is often beyond the personal
resources of directors, officers and other agents.
D. The Company believes that it is unfair for its directors, officers
and agents and the directors, officers and agents of its subsidiaries to assume
the risk of huge judgments and other expenses which may occur in cases in which
the director, officer or agent received no personal profit and in cases where
the director, officer or agent was not culpable.
E. The Company recognizes that the issues in controversy in litigation
against a director, officer or agent of a corporation such as the Company or its
subsidiaries are often related to the knowledge, motives and intent of such
director, officer or agent, that he is usually the only witness with knowledge
of the essential facts and exculpating circumstances regarding such matters, and
that the long period of time which usually elapses before the trial or other
disposition of such litigation often extends beyond the time that the director,
officer or agent can reasonably recall such matters; and may extend beyond the
normal time for retirement for such director, officer or agent with the result
that he, after retirement or in the event of his death, his spouse, heirs,
executors or administrators, may be faced with limited ability and undue
hardship in maintaining an adequate defense, which may discourage such a
director, officer or agent from serving in that position.
F. Based upon their experience as business managers, the Board of
Directors of the Company (the "Board") has concluded that, to retain and attract
talented and experienced individuals to serve as directors, officers and agents
of the Company and its subsidiaries and to encourage such individuals to take
the business risks necessary for the success of the Company and its
subsidiaries, it is necessary for the Company to contractually indemnify its
directors,
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<PAGE> 2
officers and agents and the directors, officers and agents of its subsidiaries,
and to assume for itself maximum liability for expenses and damages in
connection with claims against such directors, officers and agents in connection
with their service to the Company and its subsidiaries, and has further
concluded that the failure to provide such contractual indemnification could
result in great harm to the Company and its subsidiaries and the Company's
stockholders.
G. Section 145 of the General Corporation Law of Delaware, under which
the Company is organized ("Section 145"), empowers the Company to indemnify its
directors, officers, employees and agents by agreement and to indemnify persons
who serve, at the request of the Company, as the directors, officers, employees
or agents of other corporations or enterprises, and expressly provides that the
indemnification provided by Section 145 is not exclusive.
H. The Company desires and has requested the Indemnitee to serve or
continue to serve as a director, officer or agent of the Company and/or one or
more subsidiaries of the Company free from undue concern for claims for damages
arising out of or related to such services to the Company and/or one or more
subsidiaries of the Company.
I. Indemnitee is willing to serve, or to continue to serve, the Company
and/or one or more subsidiaries of the Company, provided that he is furnished
the indemnity provided for herein.
AGREEMENT
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions.
(a) Agent. For the purposes of this Agreement, "agent" of the
Company means any person who is or was a director, officer, employee or other
agent of the Company or a subsidiary of the Company; or is or was serving at the
request of, for the convenience of, or to represent the interests of the Company
or a subsidiary of the Company as a director, officer, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise; or was a director, officer, employee or agent of a foreign or
domestic corporation which was a predecessor corporation of the Company or a
subsidiary of the Company, or was a director, officer, employee or agent of
another enterprise at the request of, for the convenience of, or to represent
the interests of such predecessor corporation.
(b) Expenses. For purposes of this Agreement, "expenses" include all
out of pocket expenses costs of any type or nature whatsoever (including,
without limitation, all attorneys' fees and related disbursements), actually and
reasonably incurred by the Indemnitee in connection with either the
investigation, defense or appeal of a proceeding or establishing or enforcing a
right to indemnification under this Agreement or Section 145 or otherwise;
provided,
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however, that "expenses" shall not include any judgments, fines, ERISA excise
taxes or penalties, or amounts paid in settlement of a proceeding.
(c) Proceeding. For the purposes of this Agreement, "proceeding"
means any threatened, pending, or completed action, suit or other proceeding,
whether civil, criminal, administrative, or investigative.
(d) Subsidiary. For purposes of this Agreement, "subsidiary" means
any corporation of which more than 50% of the outstanding voting securities is
owned directly or indirectly by the Company, by the Company and one or more
other subsidiaries, or by one or more other subsidiaries.
2. Agreement to Serve. The Indemnitee agrees to serve and/or continue to
serve as agent of the Company, at its will (or under separate agreement, if such
agreement exists), in the capacity Indemnitee currently serves as an agent of
the Company, so long as he is duly appointed or elected and qualified in
accordance with the applicable provisions of the Bylaws of the Company or any
subsidiary of the Company or until such time as he tenders his resignation in
writing; provided, however, that nothing contained in this Agreement is intended
to create any right to continued employment by Indemnitee.
3. Liability Insurance.
(a) Maintenance of D&O Insurance. The Company hereby covenants and
agrees that, so long as the Indemnitee shall continue to serve as an agent of
the Company and thereafter so long as the Indemnitee shall be subject to any
possible proceeding by reason of the fact that the Indemnitee was an agent of
the Company, the Company, subject to Section 3(c), shall promptly obtain and
maintain in full force and effect directors' and officers' liability insurance
("D&O Insurance") in reasonable amounts from established and reputable insurers.
(b) Rights and Benefits. In all policies of D&O Insurance, the
Indemnitee shall be named as an insured in such a manner as to provide the
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's directors, if the Indemnitee is a director; or of the
Company's officers, if the Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, if the Indemnitee is not a director
or officer but is a key employee.
(c) Limitation on Required Maintenance of D&O Insurance.
Notwithstanding the foregoing, the Company shall have no obligation to obtain or
maintain D&O Insurance if the Company determines in good faith that such
insurance is not reasonably available, the premium costs for such insurance are
disproportionate to the amount of coverage provided, the coverage provided by
such insurance is limited by exclusions so as to provide an insufficient
benefit, or the Indemnitee is covered by similar insurance maintained by a
subsidiary of the Company.
4. Mandatory Indemnification. Subject to Section 9 below, the Company
shall indemnify the Indemnitee as follows:
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(a) Successful Defense. To the extent the Indemnitee has been
successful on the merits or otherwise in defense of any proceeding (including,
without limitation, an action by or in the right of the Company) to which the
Indemnitee was a party by reason of the fact that he is or was an Agent of the
Company at any time, against all expenses of any type whatsoever actually and
reasonably incurred by him in connection with the investigation, defense or
appeal of such proceeding.
(b) Third Party Actions. If the Indemnitee is a person who was or is
a party or is threatened to be made a party to any proceeding (other than an
action by or in the right of the Company) by reason of the fact that he is or
was an agent of the Company, or by reason of anything done or not done by him in
any such capacity, the Company shall indemnify the Indemnitee against any and
all expenses and liabilities of any type whatsoever (including, but not limited
to, judgments, fines, ERISA excise taxes and penalties, and amounts paid in
settlement) actually and reasonably incurred by him in connection with the
investigation, defense, settlement or appeal of such proceeding, provided the
Indemnitee acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Company and its stockholders, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
(c) Derivative Actions. If the Indemnitee is a person who was or is
a party or is threatened to be made a party to any proceeding by or in the right
of the Company by reason of the fact that he is or was an agent of the Company,
or by reason of anything done or not done by him in any such capacity, the
Company shall indemnify the Indemnitee against all expenses actually and
reasonably incurred by him in connection with the investigation, defense,
settlement, or appeal of such proceeding, provided the Indemnitee acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company and its stockholders; except that no indemnification
under this subsection 4(c) shall be made in respect to any claim, issue or
matter as to which such person shall have been finally adjudged to be liable to
the Company by a court of competent jurisdiction unless and only to the extent
that the court in which such proceeding was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such amounts which the court shall deem proper.
(d) Actions where Indemnitee is Deceased. If the Indemnitee is a
person who was or is a party or is threatened to be made a party to any
proceeding by reason of the fact that he is or was an agent of the Company, or
by reason of anything done or not done by him in any such capacity, and if prior
to, during the pendency of after completion of such proceeding Indemnitee
becomes deceased, the Company shall indemnify the Indemnitee's heirs, executors
and administrators against any and all expenses and liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes
and penalties, and amounts paid in settlement) actually and reasonably incurred
to the extent Indemnitee would have been entitled to indemnification pursuant to
Sections 4(a), 4(b), or 4(c) above were Indemnitee still alive.
(e) Notwithstanding the foregoing, the Company shall not be
obligated to indemnify the Indemnitee for expenses or liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes
and penalties, and amounts paid in settlement)
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for which payment is actually made to Indemnitee under a valid and collectible
insurance policy of D&O Insurance, or under a valid and enforceable indemnity
clause, by-law or agreement.
5. Partial Indemnification. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any expenses or liabilities of any type whatsoever (including, but
not limited to, judgments, fines, ERISA excise taxes and penalties, and amounts
paid in settlement) incurred by him in the investigation, defense, settlement or
appeal of a proceeding, but not entitled, however, to indemnification for all of
the total amount hereof, the Company shall nevertheless indemnify the Indemnitee
for such total amount except as to the portion hereof to which the Indemnitee is
not entitled.
6. Mandatory Advancement of Expenses. Subject to Section 8(a) below, the
Company shall advance all expenses incurred by the Indemnitee in connection with
the investigation, defense, settlement or appeal of any proceeding to which the
Indemnitee is a party or is threatened to be made a party by reason of the fact
that the Indemnitee is or was an agent of the Company. Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the extent that, it
shall be determined ultimately that the Indemnitee is not entitled to be
indemnified by the Company as authorized hereby. The advances to be made
hereunder shall be paid by the Company to the Indemnitee within twenty (20) days
following delivery of a written request therefor by the Indemnitee to the
Company.
7. Notice and Other Indemnification Procedures.
(a) Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the Indemnitee
shall, if the Indemnitee believes that indemnification with respect thereto may
be sought from the Company under this Agreement, notify the Company of the
commencement or threat of commencement thereof.
(b) If, at the time of the receipt of a notice of the commencement
of a proceeding pursuant to Section 7(a) hereof, the Company has D&O Insurance
in effect, the Company shall give prompt notice of the commencement of such
proceeding to the insurers in accordance with the procedures set forth in the
respective policies. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of the Indemnitee, all
amounts payable as a result of such proceeding in accordance with the terms of
such policies.
(c) In the event the Company shall be obligated to pay the expenses
of any proceeding against the Indemnitee, the Company, if appropriate, shall be
entitled to assume the defense of such proceeding, with counsel approved by the
Indemnitee, upon the delivery to the Indemnitee of written notice of its
election so to do. After delivery of such notice, approval of such counsel by
the Indemnitee and the retention of such counsel by the Company, the Company
will not be liable to the Indemnitee under this Agreement for any fees of
counsel subsequently incurred by the Indemnitee with respect to the same
proceeding, provided that (i) the Indemnitee shall have the right to employ his
counsel in any such proceeding at the Indemnitee's expense; and (ii) if (A) the
employment of counsel by the Indemnitee has been previously authorized by the
Company, (B) the Indemnitee shall have reasonably concluded that there may be a
conflict of
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interest between the Company and the Indemnitee in the conduct of any such
defense; or (C) the Company shall not, in fact, have employed counsel to assume
the defense of such proceeding, the fees and expenses of Indemnitee's counsel
shall be at the expense of the Company.
8. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) Claims Initiated by Indemnitee. To indemnify or advance expenses
to the Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by the Indemnitee and not by way of defense, unless (i) such
indemnification is expressly required to be made by law, (ii) the proceeding was
authorized by the Board, (iii) such indemnification is provided by the Company,
in its sole discretion, pursuant to the powers vested in the Company under the
General Corporation Law of Delaware or (iv) the proceeding is brought to
establish or enforce a right to indemnification under this Agreement or any
other statute or law or otherwise as required under Section 145.
(b) Lack of Good Faith. To indemnify the Indemnitee for any expenses
incurred by the Indemnitee with respect to any proceeding instituted by the
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or
(c) Unauthorized Settlements. To indemnify the Indemnitee under this
Agreement for any amounts paid in settlement of a proceeding unless the Company
consents to such settlement, which consent shall not be unreasonably withheld.
9. Non-exclusivity. The provisions for indemnification and advancement
of expenses set forth in this Agreement shall not be deemed exclusive of any
other rights which the Indemnitee may have under any provision of law, the
Company's Certificate of Incorporation or Bylaws, the vote of the Company's
stockholders or disinterested directors, other agreements, or otherwise, both as
to action in his official capacity and to action in another capacity while
occupying his position as an agent of the Company, and the Indemnitee's rights
hereunder shall continue after the Indemnitee has ceased acting as an agent of
the Company and shall inure to the benefit of the heirs, executors and
administrators of the Indemnitee.
10. Enforcement. Any right to indemnification or advances granted by
this Agreement to Indemnitee shall be enforceable by or on behalf of Indemnitee
in any court of competent jurisdiction if (i) the claim for indemnification or
advances is denied, in whole or in part, or (ii) no disposition of such claim is
made within ninety (90) days of request therefor. Indemnitee, in such
enforcement action, if successful in whole or in part, shall be entitled to be
paid also the expense of prosecuting his claim. It shall be a defense to any
action for which a claim for indemnification is made under this Agreement (other
than an action brought to enforce a claim for expenses pursuant to Section 6
hereof, provided that the required undertaking has been tendered to the Company)
that Indemnitee is not entitled to indemnification because of the limitations
set forth in Sections 4 and 8 hereof. Neither the failure of the Corporation
(including its Board of Directors or its stockholders) to have made a
determination prior to the
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commencement of such enforcement action that indemnification of Indemnitee is
proper in the circumstances, nor an actual determination by the Company
(including its Board of Directors or its stockholders) that such indemnification
is improper, shall be a defense to the action or create a presumption that
Indemnitee is not entitled to indemnification under this Agreement or otherwise.
11. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
12. Survival of Rights.
(a) All agreements and obligations of the Company contained herein
shall continue during the period Indemnitee is an agent of the Company and shall
continue thereafter so long as Indemnitee shall be subject to any possible claim
or threatened, pending or completed action, suit or proceeding, whether civil,
criminal, arbitrational, administrative or investigative, by reason of the fact
that Indemnitee was serving in the capacity referred to herein.
(b) The Company shall require any successor to the Company (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, expressly to assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform if no such succession had taken
place.
13. Interpretation of Agreement. It is understood that the parties
hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification to the Indemnitee to the fullest extent permitted by law
including those circumstances in which indemnification would otherwise be
discretionary.
14. Severability. If any provision or provisions of this Agreement shall
be held to be invalid, illegal or unenforceable for any reason whatsoever, (i)
the validity, legality and enforceability of the remaining provisions of the
Agreement (including without limitation, all portions of any paragraphs of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby, and (ii) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable and to give
effect to Section 13 hereof.
15. Modification and Waiver. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
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16. Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee or (ii) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the mailing date. Addresses for notice to either party are as shown on the
signature page of this Agreement, or as subsequently modified by written notice.
17. Governing Law. This Agreement shall be governed exclusively by and
construed according to the laws of the State of Delaware as applied to contracts
between Delaware residents entered into and to be performed entirely within
Delaware.
18. Consent to Jurisdiction. The Company and the Indemnitee each hereby
consent to the jurisdiction of the courts of the State of Delaware with respect
to any action or proceeding which arises out of or relates to this Agreement.
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The parties hereto have entered into this Indemnity Agreement effective
as of the date first above written.
THE COMPANY:
SILICON ENTERTAINMENT, INC. DELAWARE
By
------------------------------------
Its
------------------------------------
Address:
INDEMNITEE:
---------------------------------------
[NAME]
Address:
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EXHIBIT 10.6
SILICON ENTERTAINMENT, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1 ESTABLISHMENT. This 1999 Employee Stock Purchase Plan (the
"PLAN") is hereby established effective as of the effective date of the initial
registration by the Company of its Stock under Section 12 of the Securities
Exchange Act of 1934, as amended (the "EFFECTIVE DATE").
1.2 PURPOSE. The purpose of the Plan is to advance the interests
of Company and its shareholders by providing an incentive to attract, retain and
reward Eligible Employees of the Participating Company Group and by motivating
such persons to contribute to the growth and profitability of the Participating
Company Group. The Plan provides such Eligible Employees with an opportunity to
acquire a proprietary interest in the Company through the purchase of Stock. The
Company intends that the Plan qualify as an "employee stock purchase plan" under
Section 423 of the Code.
1.3 TERM OF PLAN. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued.
2. DEFINITIONS AND CONSTRUCTION.
2.1 DEFINITIONS. Any term not expressly defined in the Plan but
defined for purposes of Section 423 of the Code shall have the same definition
herein. Whenever used herein, the following terms shall have their respective
meanings set forth below:
(a) "BOARD" means the Board of Directors of the Company.
If one or more Committees have been appointed by the Board to administer the
Plan, "Board" also means such Committee(s).
(b) "CODE" means the Internal Revenue Code of 1986, as
amended, and any applicable regulations promulgated thereunder.
(c) "COMMITTEE" means a committee of the Board duly
appointed to administer the Plan and having such powers as shall be specified by
the Board. Unless the powers of the Committee have been specifically limited,
the Committee shall have all of the powers of the Board granted herein,
including, without limitation, the power to amend or terminate the Plan at any
time, subject to the terms of the Plan and any applicable limitations imposed by
law.
(d) "COMPANY" means Silicon Entertainment, Inc., a
California corporation, or any successor corporation thereto.
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(e) "COMPENSATION" means, with respect to any Offering
Period, base wages or salary, commissions, overtime, bonuses, annual awards,
other incentive payments, shift premiums, and all other compensation paid in
cash during such Offering Period before deduction for any contributions to any
plan maintained by a Participating Company and described in Section 401(k) or
Section 125 of the Code. Compensation shall not include reimbursements of
expenses, allowances, long-term disability, workers' compensation or any amount
deemed received without the actual transfer of cash or any amounts directly or
indirectly paid pursuant to the Plan or any other stock purchase or stock option
plan, or any other compensation not included above.
(f) "ELIGIBLE EMPLOYEE" means an Employee who meets the
requirements set forth in Section 5 for eligibility to participate in the Plan.
(g) "EMPLOYEE" means a person treated as an employee of
a Participating Company for purposes of Section 423 of the Code. A Participant
shall be deemed to have ceased to be an Employee either upon an actual
termination of employment or upon the corporation employing the Participant
ceasing to be a Participating Company. For purposes of the Plan, an individual
shall not be deemed to have ceased to be an Employee while such individual is on
any military leave, sick leave, or other bona fide leave of absence approved by
the Company of ninety (90) days or less. In the event an individual's leave of
absence exceeds ninety (90) days, the individual shall be deemed to have ceased
to be an Employee on the ninety-first (91st) day of such leave unless the
individual's right to reemployment with the Participating Company Group is
guaranteed either by statute or by contract. The Company shall determine in good
faith and in the exercise of its discretion whether an individual has become or
has ceased to be an Employee and the effective date of such individual's
employment or termination of employment, as the case may be. For purposes of an
individual's participation in or other rights, if any, under the Plan as of the
time of the Company's determination, all such determinations by the Company
shall be final, binding and conclusive, notwithstanding that the Company or any
governmental agency subsequently makes a contrary determination.
(h) "FAIR MARKET VALUE" means, as of any date, if there
is then a public market for the Stock, the closing price of a share of Stock (or
the mean of the closing bid and asked prices if the Stock is so quoted instead)
as quoted on the Nasdaq National Market, The Nasdaq SmallCap Market or such
other national or regional securities exchange or market system constituting the
primary market for the Stock, as reported in The Wall Street Journal or such
other source as the Company deems reliable. If the relevant date does not fall
on a day on which the Stock has traded on such securities exchange or market
system, the date on which the Fair Market Value shall be established shall be
the last day on which the Stock was so traded prior to the relevant date, or
such other appropriate day as shall be determined by the Board, in its
discretion. If, as of any date, there is then no public market for the Stock,
the Fair Market Value on any relevant date shall be as determined by the Board.
Notwithstanding the foregoing, the Fair Market Value per share of Stock on the
Effective Date shall be deemed to be the public offering price set forth in the
final prospectus filed with the Securities and Exchange Commission in connection
with the initial public offering of the Stock.
(i) "OFFERING" means an offering of Stock as provided in
Section 6.
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(j) "OFFERING DATE" means, for any Offering, the first
day of the Offering Period with respect to such Offering.
(k) "OFFERING PERIOD" means a period established in
accordance with Section 6.1.
(l) "PARENT CORPORATION" means any present or future
"parent corporation" of the Company, as defined in Section 424(e) of the Code.
(m) "PARTICIPANT" means an Eligible Employee who has
become a participant in an Offering Period in accordance with Section 7 and
remains a participant in accordance with the Plan.
(n) "PARTICIPATING COMPANY" means the Company or any
Parent Corporation or Subsidiary Corporation designated by the Board as a
corporation the Employees of which may, if Eligible Employees, participate in
the Plan. The Board shall have the sole and absolute discretion to determine
from time to time which Parent Corporations or Subsidiary Corporations shall be
Participating Companies.
(o) "PARTICIPATING COMPANY GROUP" means, at any point in
time, the Company and all other corporations collectively which are then
Participating Companies.
(p) "PURCHASE DATE" means the last day of an Offering
Period (or Purchase Period, if so determined by the Board).
(q) "PURCHASE PERIOD" means a period, if any,
established in accordance with Section ERROR! REFERENCE SOURCE NOT FOUND..
(r) "PURCHASE PRICE" means the price at which a share of
Stock may be purchased under the Plan, as determined in accordance with Section
9.
(s) "PURCHASE RIGHT" means an option granted to a
Participant pursuant to the Plan to purchase such shares of Stock as provided in
Section 8, which the Participant may or may not exercise during the Offering
Period in which such option is outstanding. Such option arises from the right of
a Participant to withdraw any accumulated payroll deductions of the Participant
not previously applied to the purchase of Stock under the Plan and to terminate
participation in the Plan at any time during an Offering Period.
(t) "STOCK" means the common stock of the Company, as
adjusted from time to time in accordance with Section 4.2.
(u) "SUBSCRIPTION AGREEMENT" means a written agreement
in such form as specified by the Company, stating an Employee's election to
participate in the Plan and authorizing payroll deductions under the Plan from
the Employee's Compensation.
(v) "SUBSCRIPTION DATE" means the last business day
prior to an Offering Date or such other date as the Company shall establish.
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(w) "SUBSIDIARY CORPORATION" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.
2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term "or" is not intended to be exclusive, unless the context clearly
requires otherwise.
3. ADMINISTRATION.
3.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered
by the Board. All questions of interpretation of the Plan, of any form of
agreement or other document employed by the Company in the administration of the
Plan, or of any Purchase Right shall be determined by the Board and shall be
final and binding upon all persons having an interest in the Plan or the
Purchase Right. Subject to the provisions of the Plan, the Board shall determine
all of the relevant terms and conditions of Purchase Rights granted pursuant to
the Plan; provided, however, that all Participants granted Purchase Rights
pursuant to the Plan shall have the same rights and privileges within the
meaning of Section 423(b)(5) of the Code. All expenses incurred in connection
with the administration of the Plan shall be paid by the Company.
3.2 AUTHORITY OF OFFICERS. Any officer of the Company shall have
the authority to act on behalf of the Company with respect to any matter, right,
obligation, determination or election that is the responsibility of or that is
allocated to the Company herein, provided that the officer has apparent
authority with respect to such matter, right, obligation, determination or
election.
3.3 POLICIES AND PROCEDURES ESTABLISHED BY THE COMPANY. The
Company may, from time to time, consistent with the Plan and the requirements of
Section 423 of the Code, establish, change or terminate such rules, guidelines,
policies, procedures, limitations, or adjustments as deemed advisable by the
Company, in its sole discretion, for the proper administration of the Plan,
including, without limitation, (a) a minimum payroll deduction amount required
for participation in an Offering, (b) a limitation on the frequency or number of
changes permitted in the rate of payroll deduction during an Offering, (c) an
exchange ratio applicable to amounts withheld in a currency other than United
States dollars, (d) a payroll deduction greater than or less than the amount
designated by a Participant in order to adjust for the Company's delay or
mistake in processing a Subscription Agreement or in otherwise effecting a
Participant's election under the Plan or as advisable to comply with the
requirements of Section 423 of the Code, and (e) determination of the date and
manner by which the Fair Market Value of a share of Stock is determined for
purposes of administration of the Plan.
4. SHARES SUBJECT TO PLAN.
4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be Five Hundred Thousand (500,000),
cumulatively increased on February 1, 2001 and each February 1 thereafter until
and including February 1, 2010 by an
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amount equal to the lesser of (a) One Hundred Thousand (100,000) shares or (b) a
lesser amount of shares determined by the Board, and shall consist of authorized
but unissued or reacquired shares of Stock, or any combination thereof. If an
outstanding Purchase Right for any reason expires or is terminated or canceled,
the shares of Stock allocable to the unexercised portion of such Purchase Right
shall again be available for issuance under the Plan.
4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event
of any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of the
Company, or in the event of any merger (including a merger effected for the
purpose of changing the Company's domicile), sale of assets or other
reorganization in which the Company is a party, appropriate adjustments shall be
made in the number and class of shares subject to the Plan, the purchase limit
set forth in Section 8.1 and each Purchase Right and in the Purchase Price. If a
majority of the shares which are of the same class as the shares that are
subject to outstanding Purchase Rights are exchanged for, converted into, or
otherwise become (whether or not pursuant to an Ownership Change Event) shares
of another corporation (the "NEW SHARES"), the Board may unilaterally amend the
outstanding Purchase Rights to provide that such Purchase Rights are exercisable
for New Shares. In the event of any such amendment, the number of shares subject
to, and the Purchase Price of, the outstanding Purchase Rights shall be adjusted
in a fair and equitable manner, as determined by the Board, in its sole
discretion. Notwithstanding the foregoing, any fractional share resulting from
an adjustment pursuant to this Section 4.2 shall be rounded down to the nearest
whole number, and in no event may the Purchase Price be decreased to an amount
less than the par value, if any, of the stock subject to the Purchase Right. The
adjustments determined by the Board pursuant to this Section 4.2 shall be final,
binding and conclusive.
5. ELIGIBILITY.
5.1 EMPLOYEES ELIGIBLE TO PARTICIPATE. Each Employee of a
Participating Company is eligible to participate in the Plan and shall be deemed
an Eligible Employee, except the following:
(a) Any Employee who is customarily employed by the
Participating Company Group for less than twenty (20) hours per week; or
(b) Any Employee who is customarily employed by the
Participating Company Group for not more than five (5) months in any calendar
year.
5.2 EXCLUSION OF CERTAIN SHAREHOLDERS. Notwithstanding any
provision of the Plan to the contrary, no Employee shall be granted a Purchase
Right under the Plan if, immediately after such grant, such Employee would own
or hold options to purchase stock of the Company or of any Parent Corporation or
Subsidiary Corporation possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of such corporation, as
determined in accordance with Section 423(b)(3) of the Code. For purposes of
this Section 5.2, the attribution rules of Section 424(d) of the Code shall
apply in determining the stock ownership of such Employee.
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<PAGE> 6
6. OFFERINGS.
6.1 OFFERING PERIODS. The Plan shall be implemented by
sequential Offerings (an "OFFERING PERIOD"). The first Offering Period shall
commence on the Effective Date and end on August 31, 2000 (the "INITIAL OFFERING
PERIOD"). Subsequent Offerings shall commence on the first day of March and
September of each year and end on the last day of August and February,
respectively, occurring thereafter, and will have a duration of approximately
six (6) months.
6.2 PURCHASE PERIODS. If the Board so determines, in its
discretion, each Offering Period may consist of two (2) or more consecutive
Purchase Periods having such duration as the Board shall specify, and the last
day of each such Purchase Period shall be a Purchase Date.
6.3 DISCRETION TO VARY DURATION. Notwithstanding the foregoing,
the Board may establish a different duration for one or more Offering Periods or
Purchase Periods or different commencing or ending dates for such periods;
provided, however, that no Offering Period may have a duration exceeding
twenty-seven (27) months. If the first or last day of an Offering Period or a
Purchase Period is not a day on which the national securities exchanges or
Nasdaq Stock Market are open for trading, the Company shall specify the trading
day that will be deemed the first or last day, as the case may be, of the
period.
7. PARTICIPATION IN THE PLAN.
7.1 INITIAL PARTICIPATION. An Eligible Employee may become a
Participant in an Offering Period by delivering a properly completed
Subscription Agreement to the Company not later than the close of business for
such office on the Subscription Date established by the Company for the
applicable Offering Date. An Eligible Employee who does not deliver a properly
completed Subscription Agreement to the Company's designated office on or before
the Subscription Date shall not participate in that Offering Period or any
subsequent Offering Period unless such Eligible Employee subsequently delivers a
properly completed Subscription Agreement to the appropriate office of the
Company on or before the Subscription Date for such subsequent Offering Period.
An Employee who becomes an Eligible Employee after the Offering Date of an
Offering Period (other than the Initial Offering Period) shall not be eligible
to participate in such Offering Period but may participate in any subsequent
Offering Period provided such Employee is still an Eligible Employee as of the
Offering Date of such subsequent Offering Period.
7.2 CONTINUED PARTICIPATION. A Participant shall automatically
participate in the next Offering Period commencing immediately after the final
Purchase Date of each Offering Period in which the Participant participates
provided that such Participant remains an Eligible Employee on the Offering Date
of the new Offering Period and has not either (a) withdrawn from the Plan, or
(b) terminated employment as provided in Section 13. A Participant who may
automatically participate in a subsequent Offering Period, as provided in this
Section, is not required to deliver any additional Subscription Agreement for
the subsequent Offering Period in order to continue participation in the Plan.
However, a Participant may deliver a new
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<PAGE> 7
Subscription Agreement for a subsequent Offering Period in accordance with the
procedures set forth in Section 7.1 if the Participant desires to change any of
the elections contained in the Participant's then effective Subscription
Agreement.
8. RIGHT TO PURCHASE SHARES.
8.1 GRANT OF PURCHASE RIGHT. Except as set forth below, on the
Offering Date of each Offering Period, each Participant in such Offering Period
shall be granted automatically, on the Offering Date, a Purchase Right
consisting of an option to purchase, on each Purchase Date within such Offering
Period, that number of whole shares of Stock determined by dividing the
aggregate payroll deductions collected from the Participant by the applicable
Purchase Price on such Purchase Date; provided, that no Participant may purchase
more than one thousand (1,000) shares of Stock on any Purchase Date.
8.2 CALENDAR YEAR PURCHASE LIMITATION. Notwithstanding any
provision of the Plan to the contrary, no Participant shall be granted a
Purchase Right which permits his or her right to purchase shares of Stock under
the Plan to accrue at a rate which, when aggregated with such Participant's
rights to purchase shares under all other employee stock purchase plans of a
Participating Company intended to meet the requirements of Section 423 of the
Code, exceeds Twenty-Five Thousand Dollars ($25,000) in Fair Market Value (or
such other limit, if any, as may be imposed by the Code) for each calendar year
in which such Purchase Right is outstanding at any time. For purposes of the
preceding sentence, the Fair Market Value of shares purchased during a given
Offering Period shall be determined as of the Offering Date for such Offering
Period. The limitation described in this Section shall be applied in conformance
with applicable regulations under Section 423(b)(8) of the Code.
9. PURCHASE PRICE.
The Purchase Price at which each share of Stock may be acquired
in an Offering Period upon the exercise of all or any portion of a Purchase
Right shall be established by the Board; provided, however, that the Purchase
Price shall not be less than eighty-five percent (85%) of the lesser of (a) the
Fair Market Value of a share of Stock on the Offering Date of the Offering
Period or (b) the Fair Market Value of a share of Stock on the Purchase Date.
Unless otherwise provided by the Board prior to the commencement of an Offering
Period, the Purchase Price for that Offering Period shall be eighty-five percent
(85%) of the lesser of (a) the Fair Market Value of a share of Stock on the
Offering Date of the Offering Period, or (b) the Fair Market Value of a share of
Stock on the Purchase Date.
10. ACCUMULATION OF PURCHASE PRICE THROUGH PAYROLL DEDUCTION.
Shares of Stock acquired pursuant to the exercise of all or any
portion of a Purchase Right may be paid for only by means of payroll deductions
from the Participant's Compensation accumulated during the Offering Period for
which such Purchase Right was granted, subject to the following:
10.1 AMOUNT OF PAYROLL DEDUCTIONS. Except as otherwise provided
herein, the amount to be deducted under the Plan from a Participant's
Compensation on each payday during
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<PAGE> 8
an Offering Period (after the Offering Date) shall be determined by the
Participant's Subscription Agreement. The Subscription Agreement shall set forth
the percentage of the Participant's Compensation to be deducted on each payday
during an Offering Period (after the Offering Date) in whole percentages of not
less than one percent (1%) (except as a result of an election pursuant to
Section 10.3 to stop payroll deductions made effective following the first
payday during an Offering after the Offering Date) or more than ten percent
(10%). Notwithstanding the foregoing, the Board may change the limits on payroll
deductions effective as of any future Offering Date.
10.2 COMMENCEMENT OF PAYROLL DEDUCTIONS. Payroll deductions
shall commence on the first payday following the Offering Date and shall
continue to the end of the Offering Period unless sooner altered or terminated
as provided herein.
10.3 ELECTION TO CHANGE OR STOP PAYROLL DEDUCTIONS. During an
Offering Period, a Participant may elect to increase or decrease the rate of or
to stop deductions from his or her Compensation by delivering to the Company an
amended Subscription Agreement authorizing such change on or before the "Change
Notice Date." The "CHANGE NOTICE DATE" shall be a date prior to the beginning of
the first pay period for which such election is to be effective as established
by the Company from time to time and announced to the Participants. A
Participant who elects to decrease the rate of his or her payroll deductions to
zero percent (0%) shall nevertheless remain a Participant in the current
Offering Period unless such Participant withdraws from the Plan as provided in
Section 12.1.
10.4 ADMINISTRATIVE SUSPENSION OF PAYROLL DEDUCTIONS. The
Company may, in its sole discretion, suspend a Participant's payroll deductions
under the Plan as the Company deems advisable to avoid accumulating payroll
deductions in excess of the amount that could reasonably be anticipated to
purchase the maximum number of shares of Stock permitted during a calendar year
under the limit set forth in Section 8.2. Payroll deductions shall be resumed at
the rate specified in the Participant's then effective Subscription Agreement at
the beginning of the next Offering Period the Purchase Date of which falls in
the following calendar year.
10.5 PARTICIPANT ACCOUNTS. Individual bookkeeping accounts shall
be maintained for each Participant. All payroll deductions from a Participant's
Compensation shall be credited to such Participant's Plan account and shall be
deposited with the general funds of the Company. All payroll deductions received
or held by the Company may be used by the Company for any corporate purpose.
10.6 NO INTEREST PAID. Interest shall not be paid on sums
deducted from a Participant's Compensation pursuant to the Plan.
10.7 VOLUNTARY WITHDRAWAL FROM PLAN ACCOUNT. A Participant may
withdraw all or any portion of the payroll deductions credited to his or her
Plan account and not previously applied toward the purchase of Stock by
delivering to the Company a written notice on a form provided by the Company for
such purpose. A Participant who withdraws the entire remaining balance credited
to his or her Plan account shall be deemed to have withdrawn from the Plan in
accordance with Section 12.1. Amounts withdrawn shall be returned to the
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<PAGE> 9
Participant as soon as practicable after the withdrawal and may not be applied
to the purchase of shares in any Offering under the Plan. The Company may from
time to time establish or change limitations on the frequency of withdrawals
permitted under this Section, establish a minimum dollar amount that must be
retained in the Participant's Plan account, or terminate the withdrawal right
provided by this Section.
11. PURCHASE OF SHARES.
11.1 EXERCISE OF PURCHASE RIGHT. On each Purchase Date, each
Participant who has not withdrawn from the Plan and whose participation in the
Offering has not terminated before such Purchase Date shall automatically
acquire pursuant to the exercise of the Participant's Purchase Right the number
of whole shares of Stock determined by dividing (a) the total amount of the
Participant's payroll deductions accumulated in the Participant's Plan account
during the Offering Period and not previously applied toward the purchase of
Stock by (b) the Purchase Price. No shares of Stock shall be purchased on a
Purchase Date on behalf of a Participant whose participation in the Offering or
the Plan has terminated before such Purchase Date.
11.2 PRO RATA ALLOCATION OF SHARES. In the event that the number
of shares of Stock which might be purchased by all Participants in the Plan on a
Purchase Date exceeds the number of shares of Stock available in the Plan as
provided in Section 4.1, the Company shall make a pro rata allocation of the
remaining shares in as uniform a manner as shall be practicable and as the
Company shall determine to be equitable. Any fractional share resulting from
such pro rata allocation to any Participant shall be disregarded.
11.3 DELIVERY OF CERTIFICATES. As soon as practicable after each
Purchase Date, the Company shall arrange the delivery to each Participant, as
appropriate, of a certificate representing the shares acquired by the
Participant on such Purchase Date; provided that the Company may deliver such
shares to a broker that holds such shares in street name for the benefit of the
Participant. Shares to be delivered to a Participant under the Plan shall be
registered in the name of the Participant, or, if requested by the Participant,
in the name of the Participant and his or her spouse, or, if applicable, in the
names of the heirs of the Participant.
11.4 RETURN OF CASH BALANCE. Any cash balance remaining in a
Participant's Plan account following any Purchase Date shall be refunded to the
Participant as soon as practicable after such Purchase Date. However, if the
cash to be returned to a Participant pursuant to the preceding sentence is an
amount less than the amount that would have been necessary to purchase an
additional whole share of Stock on such Purchase Date, the Company may retain
such amount in the Participant's Plan account to be applied toward the purchase
of shares of Stock in the subsequent Offering Period (or Purchase Period, if
applicable).
11.5 TAX WITHHOLDING. At the time a Participant's Purchase Right
is exercised, in whole or in part, or at the time a Participant disposes of some
or all of the shares of Stock he or she acquires under the Plan, the Participant
shall make adequate provision for the foreign, federal, state and local tax
withholding obligations of the Participating Company Group, if any, which arise
upon exercise of the Purchase Right or upon such disposition of shares,
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<PAGE> 10
respectively. The Participating Company Group may, but shall not be obligated
to, withhold from the Participant's compensation the amount necessary to meet
such withholding obligations.
11.6 EXPIRATION OF PURCHASE RIGHT. Any portion of a
Participant's Purchase Right remaining unexercised after the end of the Offering
Period to which the Purchase Right relates shall expire immediately upon the end
of the Offering Period.
11.7 REPORTS TO PARTICIPANTS. Each Participant who has exercised
all or part of his or her Purchase Right shall receive, as soon as practicable
after the Purchase Date, a report of such Participant's Plan account setting
forth the total payroll deductions accumulated prior to such exercise, the
number of shares of Stock purchased, the Purchase Price for such shares, the
date of purchase and the cash balance, if any, remaining immediately after such
purchase that is to be refunded or retained in the Participant's Plan account
pursuant to Section 11.4. The report required by this Section may be delivered
in such form and by such means, including by electronic transmission, as the
Company may determine.
12. WITHDRAWAL FROM OFFERING OR PLAN.
12.1 VOLUNTARY WITHDRAWAL FROM THE PLAN. A Participant may
withdraw from the Plan by signing and delivering to the Company a written notice
of withdrawal on a form provided by the Company for such purpose. Such
withdrawal may be elected at any time prior to the end of an Offering Period. A
Participant who voluntarily withdraws from the Plan is prohibited from resuming
participation in the Plan in the same Offering from which he or she withdrew,
but may participate in any subsequent Offering by again satisfying the
requirements of Sections 5 and 7.1. The Company may impose a requirement that
the notice of withdrawal from the Plan be on file with the Company for a
reasonable period prior to the effectiveness of the Participant's withdrawal.
12.2 RETURN OF PAYROLL DEDUCTIONS. Upon a Participant's
voluntary withdrawal from the Plan pursuant to Section 12.1, the Participant's
accumulated payroll deductions which have not been applied toward the purchase
of shares of Stock shall be refunded to the Participant as soon as practicable
after the withdrawal, without the payment of any interest, and the Participant's
interest in the Plan shall terminate. Such accumulated payroll deductions to be
refunded in accordance with this Section may not be applied to any other
Offering under the Plan.
13. TERMINATION OF EMPLOYMENT OR ELIGIBILITY.
Upon a Participant's ceasing, prior to a Purchase Date, to be an
Employee of the Participating Company Group for any reason, including
retirement, disability or death, or the failure of a Participant to remain an
Eligible Employee, the Participant's participation in the Plan shall terminate
immediately. In such event, the payroll deductions credited to the Participant's
Plan account since the last Purchase Date shall, as soon as practicable, be
returned to the Participant or, in the case of the Participant's death, to the
Participant's legal representative, and all of the Participant's rights under
the Plan shall terminate. Interest shall not be paid on sums returned pursuant
to this Section 13. A Participant whose participation has been so terminated
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<PAGE> 11
may again become eligible to participate in the Plan by again satisfying the
requirements of Sections 5 and 7.1.
14. CHANGE IN CONTROL.
14.1 DEFINITIONS.
(a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have
occurred if any of the following occurs with respect to the Company: (i) the
direct or indirect sale or exchange in a single or series of related
transactions by the shareholders of the Company of more than fifty percent (50%)
of the voting stock of the Company; (ii) a merger or consolidation in which the
Company is a party; (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or (iv) a liquidation or
dissolution of the Company.
(b) A "CHANGE IN CONTROL" shall mean an Ownership Change
Event or a series of related Ownership Change Events (collectively, the
"TRANSACTION") wherein the shareholders of the Company immediately before the
Transaction do not retain immediately after the Transaction, in substantially
the same proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the "TRANSFEREE
CORPORATION(s)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to determine whether
multiple sales or exchanges of the voting stock of the Company or multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.
14.2 EFFECT OF CHANGE IN CONTROL ON PURCHASE RIGHTS. In the
event of a Change in Control, the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case may be (the
"ACQUIRING CORPORATION"), may assume the Company's rights and obligations under
the Plan. If the Acquiring Corporation elects not to assume the Company's rights
and obligations under outstanding Purchase Rights, the Purchase Date of the then
current Offering Period shall be accelerated to a date before the date of the
Change in Control specified by the Board, but the number of shares of Stock
subject to outstanding Purchase Rights shall not be adjusted. All Purchase
Rights which are neither assumed by the Acquiring Corporation in connection with
the Change in Control nor exercised as of the date of the Change in Control
shall terminate and cease to be outstanding effective as of the date of the
Change in Control.
15. NONTRANSFERABILITY OF PURCHASE RIGHTS.
A Purchase Right may not be transferred in any manner otherwise
than by will or the laws of descent and distribution and shall be exercisable
during the lifetime of the Participant only by the Participant.
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16. COMPLIANCE WITH SECURITIES LAW.
The issuance of shares under the Plan shall be subject to
compliance with all applicable requirements of federal, state and foreign law
with respect to such securities. A Purchase Right may not be exercised if the
issuance of shares upon such exercise would constitute a violation of any
applicable federal, state or foreign securities laws or other law or regulations
or the requirements of any securities exchange or market system upon which the
Stock may then be listed. In addition, no Purchase Right may be exercised unless
(a) a registration statement under the Securities Act of 1933, as amended, shall
at the time of exercise of the Purchase Right be in effect with respect to the
shares issuable upon exercise of the Purchase Right, or (b) in the opinion of
legal counsel to the Company, the shares issuable upon exercise of the Purchase
Right may be issued in accordance with the terms of an applicable exemption from
the registration requirements of said Act. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company's legal counsel to be necessary to the lawful issuance and
sale of any shares under the Plan shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the exercise of a
Purchase Right, the Company may require the Participant to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation, and to make any representation or warranty
with respect thereto as may be requested by the Company.
17. RIGHTS AS A SHAREHOLDER AND EMPLOYEE.
A Participant shall have no rights as a shareholder by virtue of
the Participant's participation in the Plan until the date of the issuance of a
certificate for the shares purchased pursuant to the exercise of the
Participant's Purchase Right (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company). No
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date such certificate is issued, except as
provided in Section 4.2. Nothing herein shall confer upon a Participant any
right to continue in the employ of the Participating Company Group or interfere
in any way with any right of the Participating Company Group to terminate the
Participant's employment at any time.
18. LEGENDS.
The Company may at any time place legends or other identifying
symbols referencing any applicable federal, state or foreign securities law
restrictions or any provision convenient in the administration of the Plan on
some or all of the certificates representing shares of Stock issued under the
Plan. The Participant shall, at the request of the Company, promptly present to
the Company any and all certificates representing shares acquired pursuant to a
Purchase Right in the possession of the Participant in order to carry out the
provisions of this Section. Unless otherwise specified by the Company, legends
placed on such certificates may include but shall not be limited to the
following:
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"THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE
CORPORATION TO THE REGISTERED HOLDER UPON THE PURCHASE OF SHARES UNDER AN
EMPLOYEE STOCK PURCHASE PLAN AS DEFINED IN SECTION 423 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED. THE TRANSFER AGENT FOR THE SHARES EVIDENCED HEREBY
SHALL NOTIFY THE CORPORATION IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE
REGISTERED HOLDER HEREOF. THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED
UNDER THE PLAN IN THE REGISTERED HOLDER'S NAME (AND NOT IN THE NAME OF ANY
NOMINEE)."
19. NOTIFICATION OF SALE OF SHARES.
The Company may require the Participant to give the Company
prompt notice of any disposition of shares acquired by exercise of a Purchase
Right within two (2) years from the date of granting such Purchase Right or one
(1) year from the date of exercise of such Purchase Right. The Company may
require that until such time as a Participant disposes of shares acquired upon
exercise of a Purchase Right, the Participant shall hold all such shares in the
Participant's name (or, if elected by the Participant, in the name of the
Participant and his or her spouse but not in the name of any nominee) until the
lapse of the time periods with respect to such Purchase Right referred to in the
preceding sentence. The Company may direct that the certificates evidencing
shares acquired by exercise of a Purchase Right refer to such requirement to
give prompt notice of disposition.
20. NOTICES.
All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
21. INDEMNIFICATION.
In addition to such other rights of indemnification as they may
have as members of the Board or officers or employees of the Participating
Company Group, members of the Board and any officers or employees of the
Participating Company Group to whom authority to act for the Board or the
Company is delegated shall be indemnified by the Company against all reasonable
expenses, including attorneys' fees, actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, or in connection
with any appeal therein, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with the Plan, or
any right granted hereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company) or paid by them in satisfaction of a judgment in any
such action, suit or proceeding, except in relation to matters as to which it
shall be adjudged in such action, suit or proceeding that such person is liable
for gross negligence, bad faith or intentional misconduct in duties; provided,
however, that within sixty (60) days after the institution of such action, suit
or
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proceeding, such person shall offer to the Company, in writing, the opportunity
at its own expense to handle and defend the same.
22. AMENDMENT OR TERMINATION OF THE PLAN.
The Board may at any time amend or terminate the Plan, except
that (a) such termination shall not affect Purchase Rights previously granted
under the Plan, provided that the Board mayterminate the Plan (and any Offering
thereunder) on any Purchase Date if the Board determines that such termination
is in the best interests of the Company and its shareholders except as permitted
under the Plan, and (b) no amendment may adversely affect a Purchase Right
previously granted under the Plan (except to the extent permitted by the Plan or
as may be necessary to qualify the Plan as an employee stock purchase plan
pursuant to Section 423 of the Code or to obtain qualification or registration
of the shares of Stock under applicable federal, state or foreign securities
laws). In addition, an amendment to the Plan must be approved by the
shareholders of the Company within twelve (12) months of the adoption of such
amendment if such amendment would authorize the sale of more shares than are
authorized for issuance under the Plan or would change the definition of the
corporations that may be designated by the Board as Participating Companies.
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SILICON ENTERTAINMENT, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
NAME (Please print):
------------------------------------------------------------
(Last) (First) (Middle)
ADDRESS:
------------------------------------------------------------------------
MY SOCIAL SECURITY NUMBER:
------------------------------------------------------
(TM) Original Application for the Offering Period beginning _________, 199__.
(TM) Change in Payroll Deduction rate effective with the pay period ending
__________, 199__.
I hereby elect to participate in the 1999 Employee Stock Purchase Plan
(the "PLAN") of Silicon Entertainment, Inc. (the "COMPANY") and subscribe to
purchase shares of the Company's Stock in accordance with this Subscription
Agreement and the Plan.
I hereby authorize payroll deductions in the amount of ________ percent
(in whole percentages not less than 1% or more than 10%) of my "COMPENSATION" on
each payday throughout the "OFFERING PERIOD" in accordance with the Plan. I
understand that these payroll deductions will be accumulated for the purchase of
shares of Stock at the applicable purchase price determined in accordance with
the Plan. I understand that, except as otherwise provided by the Plan, I will
automatically purchase shares on each Purchase Date under the Plan unless I
withdraw from the Plan by giving written notice on a form provided by the
Company or unless my employment terminates.
I understand that I will automatically participate in each subsequent
Offering that commences immediately after the last day of an Offering in which I
am participating until I withdraw from the Plan by giving written notice on a
form provided by the Company or my employment terminates.
Shares I purchase under the Plan should be issued in the name(s) set
forth below. (Shares may be issued in the participant's name alone or together
with the participant's spouse as community property or in joint tenancy.)
NAME(S):
---------------------------------------------------------------
(TM) In my name alone (TM) Community Property (TM) Joint Tenancy
I agree to make adequate provision for the federal, state, local and
foreign tax withholding obligations, if any, which may arise upon my purchase of
shares under the Plan and/or my disposition of such shares. The Company may, but
will not be obligated to, withhold from my compensation the amount necessary to
meet such withholding obligations.
I agree that while I hold shares acquired under the Plan, unless
otherwise permitted by the Company, I will hold such shares in the name(s)
entered above (and not in the name of any nominee). This restriction only
applies to the name(s) in which shares are held and does not affect my ability
to dispose of Plan shares.
THE TAX TREATMENT OF A DISPOSITION OF PLAN SHARES (INCLUDING A GIFT)
DEPENDS ON WHEN THE DISPOSITION OCCURS. I AGREE THAT I WILL NOTIFY THE CHIEF
FINANCIAL OFFICER OF THE COMPANY IN WRITING WITHIN 30 DAYS AFTER ANY DISPOSITION
OF PLAN SHARES THAT OCCURS WITHIN 2 YEARS AFTER THE OFFERING DATE OR 1 YEAR
AFTER THE PURCHASE DATE (A "DISQUALIFYING DISPOSITION"). I FURTHER AGREE THAT IF
I DO NOT RESPOND WITHIN 30 DAYS TO A COMPANY SURVEY DELIVERED TO ME REQUESTING
INFORMATION ABOUT A POSSIBLE DISQUALIFYING DISPOSITION, THE COMPANY MAY (1)
TREAT MY NONRESPONSE AS MY NOTICE TO THE COMPANY THAT A DISQUALIFYING
DISPOSITION OCCURRED, AND (2) REPORT THE ORDINARY INCOME I MUST RECOGNIZE AS A
RESULT OF THE DISQUALIFYING DISPOSITION TO THE INTERNAL REVENUE SERVICE.
I am familiar with the provisions of the Plan and agree to participate
in the Plan subject to all of its provisions. I understand that the Board of
Directors of the Company reserves the right to terminate the Plan or to amend
the Plan and my right to purchase stock under the Plan to the extent provided by
the Plan. I understand that the effectiveness of this Subscription Agreement is
dependent upon my eligibility to participate in the Plan.
Date: Signature:
------------------------------ --------------------------
<PAGE> 16
SILICON ENTERTAINMENT, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
NAME (Please print):
------------------------------------------------------------
(Last) (First) (Middle)
I hereby elect to withdraw from the Offering under Silicon
Entertainment, Inc. 1999 Employee Stock Purchase Plan (the "PLAN") which began
on _________________________, 19____ and in which I am currently participating
(the "CURRENT OFFERING").
ELECT EITHER A OR B BELOW:
(TM) A. I elect to terminate immediately my participation in the Current
Offering and in the Plan.
I request that the Company cease all further payroll deductions
from my Compensation under the Plan (provided that I have given
sufficient notice prior to the next payday). I request that all
payroll deductions credited to my account under the Plan (if any)
not previously used to purchase shares under the Plan shall not
be used to purchase shares on the Purchase Date of the Current
Offering. Instead, I request that all such amounts be paid to me
as soon as practicable. I understand that this election
immediately terminates my interest in the Current Offering and in
the Plan.
(TM) B. I elect to terminate my participation in the Current Offering and
in the Plan following my purchase of shares on Purchase Date of
the Current Offering.
I request that the Company cease all further payroll deductions
from my Compensation under the Plan (provided that I have given
sufficient notice prior to the next payday). I request that all
payroll deductions credited to my account under the Plan (if any)
not previously used to purchase shares under the Plan shall be
used to purchase shares on the Purchase Date of the Current
Offering to the extent permitted by the Plan. I understand that
this election will terminate my interest in the Current Offering
and in the Plan immediately following such purchase. I request
that any cash balance remaining in my account under the Plan
after my purchase of shares be paid to me as soon as practicable.
I understand that by making this election I am terminating my interest
in the Plan and that no further payroll deductions will be made (provided that I
have given sufficient notice prior to the next payday) unless I elect in
accordance with the Plan to become a participant in another Offering under the
Plan by filing a new Subscription Agreement with the Company.
Date: Signature:
------------------------------ --------------------------
<PAGE> 1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED ON A REQUEST FOR
CONFIDENTIAL TREATMENT. THE CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.7
LICENSE AGREEMENT
BY AND BETWEEN
NATIONAL ASSOCIATION FOR STOCK CAR AUTO RACING, INC.
AND
LBE TECHNOLOGIES, INC.
THIS LICENSE AGREEMENT (this "Agreement") is made and entered into this
18th day of August, 1997 (the "Effective Date") by and between the NATIONAL
ASSOCIATION FOR STOCK CAR AUTO RACING, INC., a Florida corporation with a
principal business address of P.O. Box 2875, Daytona Beach, Florida 32120-2875
("Licensor") and LBE TECHNOLOGIES, INC., a California corporation with a
principal business address of 10401 Bubb Road, Cupertino, California 95014
("Licensee").
RECITALS
WHEREAS, Licensor, by the expenditure of time, skill, effort and money,
has developed and owns a distinctive system for establishing, operating and
sanctioning stock car and stock truck racing in North America and is engaged in,
among other things, the promotion of racing events and development and
merchandising of various products relating to stock car and stock truck racing,
and is the owner of certain trademarks and service marks and the goodwill
related thereto; and
WHEREAS, Licensee, by the expenditure of time, skill, effort and money,
has developed and owns a distinctive system for photonic, electronic,
electromechanical and hydraulic simulated representation real world vehicle
operation, including stock car racing and for simultaneous competitive display
of multiple vehicles in apparent real-time and for the engagement of viewers and
spectators, and is the owner of certain trademarks, technical know-how, and
trade secrets.
WHEREAS, Licensee desires to acquire a license from Licensor to obtain the
right to use certain trademarks, service marks and trade dress owned by Licensor
(i) for implementation of the NASCAR marks into the visual display of the NASCAR
stock car and NASCAR stock truck simulators (as defined below), and (ii) in the
development, design, operation, promotion and advertising of retail outlets that
offer to the general public simulator games and concessions predominately
consisting of interactive stock car and stock truck simulation entertainment
(including the Simulators) and which retail outlets have a theme associated and
identified with NASCAR stock car and stock truck racing, and other related
NASCAR themes, and Licensor desires to grant Licensee such license upon the
terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, for and in consideration of the terms and conditions set
forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
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1. DEFINITIONS
The following terms shall have the following meanings in this Agreement:
(a) "Advertising" means all forms of advertising, including but not
limited to print advertisements and promotional literature, television and radio
commercials, and advertisements on or through on-line services, the World Wide
Web and other portions of the Internet.
(b) "Affiliate" means, with respect to any Person, any other natural
person or Entity that directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with such
Person. The term "control" (including, with correlative meaning, the terms
"controlling," "controlled by" and "under common control with" means the
possession, directly or indirectly, of the power to direct or cause direction of
the management and policies of a Person, whether through the ownership of voting
securities, by Contract or otherwise; provided, however, that in no event shall
Licensor be deemed an Affiliate of Licensee. For purposes of the definition of
Affiliate, the term "Contract" shall mean any agreement, lease, license,
evidence of debt, mortgage, deed of trust, note, bond, indenture, security
agreement, commitment, instrument, understanding, or other contract, obligation
or arrangement of any kind.
(c) "Entertainment Store" or collectively "Entertainment Stores" shall
mean a self contained retail outlet that offers entertainment to the general
public predominately consisting of indoor simulated stock car and stock truck
race driving experiences using the Simulators and indoor grandstand spectator
seating, but also including a refreshment area and a retail merchandise area,
with a predominant theme associated and identified with NASCAR stock car and
stock truck racing, and other NASCAR racing theme(s) promoted and approved by
NASCAR during the term of this Agreement.
(d) "Entity" or collectively "Entities" shall mean corporations, limited
liability companies, partnerships, joint ventures or other forms of legal
entity.
(e) "Gross Revenue" shall mean all monies and things of value received or
earned or accrued by the Licensee or relating to or associated with the
Entertainment Store, less applicable sales and use taxes, as a result of or in
connection with a revenue-producing activity of any kind on or in connection
with the goods and services licensed under this Agreement. In computing Gross
Revenue, the gross amount set forth in any contract or agreement giving rise to
the right of payment shall be included, and any applicable commissions, fees or
expenses paid to or deducted by sales agents, consultants and other parties
shall not be deducted therefrom. However, Licensee may approach Licensor from
time to time, when unique circumstances warrant the Licensee's use of a third
party sales agent in securing, a sponsorship for the Entertainment Stores and/or
the Remote Sites, at which time the Licensor shall reasonably consider deducting
the sales commission from Gross Revenue computation. Provided however, that the
sales commission rate is based upon a reasonable industry standard and that the
sales agent has been pre-approved by the Licensor, such approval shall not be
unreasonably withheld.
(f) "NASCAR Marks" shall mean only those trademarks, service marks, logos,
emblems or indicia of origin owned exclusively by NASCAR as are listed and
described on
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Exhibit A attached hereto, which NASCAR Marks may be supplemented from time to
time by NASCAR in NASCAR's sole discretion.
(g) "NASCAR Trade Dress" refers to the overall image and impression of the
NASCAR and its sanctioned events and shall be given the meaning ascribed to it
under the cases applying Section 43(a) of the Lanham Act and the cases applying
and interpreting that statute.
(h) "Person" shall mean any natural person or Entity.
(i) "Royalties" shall mean the aggregate of all royalties described in
this Agreement, including, but not limited to royalties described in Section 4
of this Agreement.
(j) "Simulators" shall mean interactive, two-passenger, stock car or stock
truck simulation equipment developed and owned by Licensee, including hardware,
software, firmware and other components, with working gas, clutch and brake
pedals, rearview mirrors and racing tires, which will be mounted on "motion
platforms" capable of moving the Simulator in four degrees of freedom, and which
will incorporate NASCAR stock car and/or stock truck racing theme(s) and which
are developed and owned by the Licensee and which incorporate the NASCAR Marks
and any other elements unique to NASCAR as licensed in this Agreement. Licensor
recognizes that the Licensee has agreements with and will from time to time
establish agreements with stock car drivers, team owners and tracks which are
not subject to the terms herein. In addition, Licensor acknowledges that
Licensee may develop simulations that do not pertain to stock car and stock
truck racing; these simulators shall not be subject to the term herein.
(k) "Site" shall mean the individual location of an Entertainment Store as
approved by Licensor in accordance with Section 9(a) hereof.
(l) "Site Trade Dress" refers to the overall image and impression of the
Entertainment Stores and the Remote Sites and shall be given the meaning
ascribed to it under the cases applying Section 43(a) of the Lanham Act, and the
cases applying and interpreting that statute.
2. GRANT OF LICENSE
(a) Grant of License. Subject to the terms and conditions set forth
herein, Licensor hereby grants to Licensee, during the term of this Agreement,
the non-exclusive, limited right and license to use the NASCAR Marks and NASCAR
Trade Dress solely in connection with: (i) the development, design, creation,
implementation and display of software in the Simulators at locations approved
by NASCAR as provided in this Agreement; (ii) the design, development, building,
construction of the Entertainment Stores and the Remote Sites (as defined in
Section 2(c) hereof) within the territory consisting of the entire world (the
"Territory") and the ownership and operation thereof (the "Business"); and (iii)
"Promotional Activities" relating to the Entertainment Stores and Remote Sites,
all such Promotional Activities are subject to the prior approval of Licensor.
As used herein, the term "Promotional Activities" shall mean all forms of
advertising, marketing, promotional and sponsorship activities relating to or
associated with the Entertainment Stores or Remote Sites.
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(b) Non-Exclusivity. Licensee acknowledges, understands and confirms that
the license granted to Licensee by Licensor during the term of this Agreement
and subject to the terms and conditions of this Agreement are nonexclusive and
Licensor retains the right, at its sole option and discretion, to operate, or
grant to any other Person the right to operate, Entertainment Stores (or any
other related concept) at any location within or outside the Territory, however,
Licensor shall not be entitled to use any of the Licensee's Intellectual
Property [as defined in Section 12(b) of this Agreement] in any other
Entertainment Store not associated with the Licensee. Upon termination or
expiration (without renewal of this Agreement), Licensee shall have no further
rights hereunder, other than the rights held prior to the Grant of License.
(c) Remote Sites. In connection with the license granted to Licensee by
Licensor pursuant to this Agreement, Licensee shall have the right, at its sole
expense, to transport one or more Simulators to locations other than the
premises of the Entertainment Stores temporarily operated by Licensee
(individually a "Remote Site" or collectively the "Remote Sites") for the
purpose of making the Simulators available for use by the general public at
sporting or other entertainment and promotional events; provided that the
locations and times of operation for each Remote Site has been previously
approved in writing by Licensor; and further provided that, in connection with
each Remote Site, Licensee complies with all of the terms and conditions of this
Agreement applicable to the Entertainment Stores insofar as such terms and
conditions could apply to the Simulators or the Remote Site. Notwithstanding the
foregoing, in connection with the Remote Sites, except with respect to the fee
charged by Licensee with respect to the use and operation of the Simulators by
customers, Licensee shall not be permitted to sell at or around a Remote Site
located at or in close proximity to any NASCAR-sanctioned race track facility,
any merchandise or other products or services bearing, containing or displaying
the NASCAR Marks, without Licensor's prior approval. Licensee shall be permitted
to sell approved merchandise at locations other than NASCAR-sanctioned race
track facilities, provided that Licensee has obtained any and all necessary
permits, permissions, licenses, etc. necessary for this type of activity.
(d) Limitations on License Granted to Licensee. In connection with the
license granted to Licensee by Licensor hereunder, Licensee understands and
agrees that:
(1) Theme. Licensee shall use the NASCAR Marks and NASCAR Trade
Dress only in connection with a NASCAR stock car or NASCAR stock truck racing
theme.
(2) Premiums, Bundling and Sweepstakes. Licensee agrees it is not
entitled to, and shall not, except as approved in advance by Licensor in
accordance with the procedures of this subparagraph 2(d)(2) of this Section 2,
use any of the NASCAR Marks or NASCAR Trade Dress (1) in connection with the
manufacture, sale or distribution of goods or services as premiums or for
promotional, publicity, fund-raising, giveaways, bundling, or disposal purposes
or (2) in connection with any sweepstakes, lottery, game of chance or any
similar promotional or sales program. Licensee may submit from time to time
proposals for the activities described in this subparagraph 2(d)(1) and (2).
Each proposal shall be in writing and describe the proposal in reasonable
detail. NASCAR, in its sole discretion, shall approve or disapprove each
proposal within fifteen (15) business days after actual receipt of such
proposal. Failure of NASCAR to reply to a proposal within this time will be
deemed a disapproval of the proposal. Furthermore, Licensee shall not use any of
the NASCAR Marks or NASCAR Trade Dress in connection with
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<PAGE> 5
any sweepstakes, lottery, game of chance or any similar promotional or sales
program unless such program is consistent with applicable law.
(3) Other Trade Names, Trademarks and Service Marks. Except to the
extent permitted by applicable law, Licensee understands and agrees that it is
not entitled to, and shall not, use the names, pictures, identities, trade
names, trademarks or service marks of any racetrack promoting and presenting
NASCAR-sanctioned events, Persons involved in sponsoring or advertising in
connection with such events, NASCAR-licensed officials, drivers, car and truck
owners and crew members, or the cars or trucks involved in such events (the
"Third Party Marks") either by themselves or in conjunction with the NASCAR
Marks, unless Licensee has obtained the rights beforehand to use such Third
Party Marks from the owners(s) of such marks by written agreement. Unless
approved in advance by NASCAR, Licensee shall not use the NASCAR Marks in such
close physical proximity or in such close connection or combination with its own
marks or the marks of any third party that a reasonable consumer of the services
would be likely to get the impression that the NASCAR Marks do not indicate a
separate source of goods or services from other marks.
(4) Sublicensing. Licensee understands and agrees that this
Agreement does not in any manner whatsoever grant to Licensee any right to
sublicense. Licensee may request Licensor's approval, such approval in
Licensor's sole discretion, for sublicensing the rights and license granted to
it under this Agreement to any Person. Each of such request by Licensee shall be
in writing and describe the proposal in reasonable detail. NASCAR, in its sole
discretion, shall approve or disapprove of each proposal within fifteen (15)
business days after actual receipt of such proposal. Failure of NASCAR to reply
to a proposal within this time will be deemed a disapproval of the proposal. The
parties agree that no such sublicensing agreements approved by Licensor and
between Licensee and any other Person may without NASCAR's express written
permission include rights which allow the Person to use the NASCAR Marks or
NASCAR Trade Dress in marketing anything other than the activities licensed in
this Agreement or to hold himself or itself out to the public as an "official"
(or "home" or other words of similar import) provider of NASCAR goods or
services or to be otherwise endorsed by NASCAR.
(5) Warranty Within Territory. NASCAR expressly does not warrant or
represent that the rights under the license granted hereunder are enforceable or
noninfringing upon the rights of others outside of the United States, Canada and
Australia, even though the Territory provided in this Agreement extends beyond
the United States, Canada and Australia. Licensee agrees that use of the Marks
outside of these countries shall be at the sole risk of the Licensee, and that
Licensee agrees to indemnify and hold NASCAR and its Affiliates, and the
shareholders, employees, directors, officers and agents of each of them harmless
against all cost and expense incurred, including settlements, judgments and
reasonable attorneys' fees in the defense of any claim that arises solely as a
result of the use by one of the Licensee (and not by NASCAR or any other NASCAR
licensee) of the NASCAR Marks outside of the United States, Canada and
Australia. From time to time Licensee may present a list of prospective
territories outside of the United States, Canada and Australia in which the
Licensee is considering establishing additional Entertainment Store locations,
at which time the Licensor will notify the Licensee of any known rights-related
issues that might encumber such expansion.
(e) "NASCAR Silicon Motor Speedway" Mark and Logo. The word mark NASCAR
SILICON MOTOR SPEEDWAY is included in the NASCAR Marks licensed to Licensee in
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<PAGE> 6
Section 2(a) above. In addition, Licensee may develop logos containing this mark
and versions of the mark in stylized lettering (collectively, the "Speedway
Logos") which, subject to the prior written approval by NASCAR of the appearance
and use of such Speedway Logos, shall also be included in the NASCAR Marks
licensed under this Agreement. NASCAR shall, at its own discretion and expense
pursue U.S. trademark registrations for the word mark NASCAR SILICON MOTOR
SPEEDWAY and the Speedway Logos, and such foreign registrations as are mutually
agreed upon between the parties. NASCAR shall, both during and after the Term of
this Agreement, own all right, title and interest in the word mark NASCAR
SILICON MOTOR SPEEDWAY and the Speedway Logos, which may be used by Licensee
only during the term of this Agreement and only in accordance with the terms of
this Agreement, except that Licensee shall be permitted both during and after
the term of this Agreement to use the word mark SILICON and the word mark
SILICON MOTOR SPEEDWAY (without the word NASCAR) and logos containing these
marks and stylized letter versions of these marks, provided that such logos and
stylized letter versions are not confusingly similar to any of the Speedway
logos. Notwithstanding the foregoing, Licensee shall be permitted to use the
fonts contained in the stylized letter version of the words "SILICON MOTOR
SPEEDWAY" found in the NASCAR Marks and Speedway logos and attached to this
Agreement, provided that these uses are not confusingly similar to any of the
Speedway logos and provided that these fonts shall not be used by the Licensee
or featured in any logo for an Entertainment Store following the termination of
this Agreement. Licensor agrees not to use the NASCAR SILICON MOTOR SPEEDWAY
word mark or any of the Speedway Logos following the termination of this
Agreement without the prior consent of the Licensee. Licensor also agrees not to
alter the Speedway logos without the prior consent of the Licensee; however,
Licensor shall be permitted to alter the word-mark NASCAR and its design as part
of the Speedway logos at any time and at the Licensor's sole discretion.
3. TERM OF LICENSE
(a) Term. The Term of this Agreement shall be for a period of four (4)
consecutive years commencing on the Effective Date and ending on August 12, 2001
(the "Term"). The Term may be earlier terminated by Licensor and Licensee as
provided in this Agreement.
(b) Renewal. The term of this Agreement may only be renewed upon the
mutual written agreement of Licensor and Licensee.
4. ROYALTIES
(a) Guaranteed Minimum Royalty.
(1) Schedule. In consideration of the license granted to Licensee
hereunder, Licensee shall pay to Licensor a nonrefundable advance against
royalties owed under this Agreement (the "Guaranteed Minimum Royalty") as
follows:
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<TABLE>
<CAPTION>
Quarterly Guaranteed Annual Guaranteed
Minimum Royalty Minimum Royalty
Calendar Year Payment by Licensee Payment by Licensee
------------- -------------------- -------------------
<S> <C> <C>
1998 $ 50,000 $200,000
1999 $125,000 $500,000
2000 $200,000 $800,000
2001 (through Aug. 18) $278,970 $650,000
</TABLE>
(2) Payment Terms. Guarantees shall be calculated on a [***]
basis and payable in conjunction with the [***] royalty payment schedule, as
specified in this Section 4(b)(4). The Guaranteed Minimum Royalty for each
calendar year shall be credited against the Revenue Royalty only for that same
calendar year. Under no circumstances shall any payments of the Guaranteed
[***] Minimum Royalty be refundable, including upon termination or
expiration of this Agreement by either party for any reason.
(3) Guarantee Waiver. In the event that Licensee pays Licensor [***]
in royalties by end of the [***] , Guarantee Minimum Royalties for years three
and four shall be waived.
(b) Revenue Royalty. In consideration of the license granted hereunder,
Licensee shall pay to Licensor a percentage of the categories of Gross Revenue
defined in this Section 4(b) (collectively referred to as the "Revenue Royalty")
as follows:
(1) Entertainment Store Revenue Royalty. Licensee shall pay to
Licensor the following royalties associated with each Entertainment Store:
(i) Simulator Revenue Royalty. Licensee shall pay to Licensor
a revenue royalty in an amount equal to [***] of each Entertainment Store's
Simulator Revenue for each calendar [***] (the "Simulator Revenue Royalty"). The
term "Simulator Revenue" means Gross Revenue derived directly from allowing use
of the Simulators located in such Entertainment Store, whether by cash, check,
credit card, debit card, or any other means of payment and any revenue derived
from the sale of NASCAR Silicon Motor Speedway Driver Licenses. The value of
gift certificates relating to Simulators and the amounts paid therefor shall be
included in Simulator Revenue upon the issuance of such gift certificates.
(ii) Merchandise/Food and Beverage Revenue Royalty. Licensee
shall pay to Licensor a royalty in an amount equal to [***] of each
Entertainment Store's Merchandise/Food and Beverage Revenue for each calendar
[***] (the "Merchandise/Food and Beverage Revenue Royalty"). The term
"Merchandise/Food and Beverage Revenue" means Gross Revenue derived from sales
by Licensee of merchandise and food and beverages at such Entertainment Store,
whether by cash, check, credit card, debit card or other means of payment. The
value of gift certificates relating to merchandise and/or food and beverage
sales and the amounts paid therefor shall be included in Merchandise/Food and
Beverage Revenue upon the issuance of such gift certificates.
(iii) Sponsor Revenue Royalty. Licensee shall pay to Licensor
a royalty in an amount equal to [***] of each Entertainment Store's Sponsor
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<PAGE> 8
Revenue for each calendar year (the "Sponsor Revenue Royalty"). The term
"Sponsor Revenue" means Gross Revenue derived from sponsors, promoters, and
advertisers in connection with the development and operation of the
Entertainment Stores or one or more parts thereof or activities therein.
(2) Remote Site Revenue Royalty. Licensee shall pay to Licensor the
following royalties associated with each Remote Site:
(i) Remote Simulator Revenue Royalty. Licensee shall pay to
Licensor a royalty in an amount equal to [***] of each Remote Site's Remote
Simulator Revenue for each calendar [***] (the "Remote Simulator Revenue
Royalty"). The term "Remote Simulator Revenue" means Gross Revenue derived from
allowing use of the Simulators located in each Remote Site, whether by cash,
check, credit card, debit card or other means of payment. The value of gift
certificates relating to the Simulators of the Remote Sites and the amounts paid
therefor shall be included in Remote Simulator Revenue upon the issuance of such
gift certificates.
(ii) Remote Sponsor Revenue Royalty. Licensee shall pay to
Licensor a royalty in an amount equal to [***] of each Remote Site's Remote
Sponsor Revenue for each calendar [***] (the "Remote Sponsor Revenue Royalty").
The term "Remote Sponsor Revenue" means Gross Revenue derived from sponsors,
promoters, and advertisers in connection with the development and operation of
the Remote Sites or activities therein.
(3) Miscellaneous Revenue Royalty. In the event that the
Entertainment Stores produce revenue related to a stock car or stock truck theme
other than the revenue derived in the aforementioned categories, Licensee and
Licensor shall [***]. The term "Miscellaneous Revenue" means any Gross
Revenue not included in Simulator Revenue, Merchandise/Food and Beverage
Revenue, Sponsor Revenue, Remote Simulator Revenue, and Remote Sponsor Revenue
as defined above.
(4) Payment of the Revenue Royalty. The Revenue Royalty hereunder
shall be accounted for and paid [***] during the term of this Agreement, shall
be nonrefundable, and shall be fully earned when paid. Such [***] payments of
the Revenue Royalty will be based on the Simulator Revenue, Merchandise/Food and
Beverage Revenue, Sponsor Revenue, Remote Simulator Revenue, Remote Sponsor
Revenue, and Miscellaneous Revenue for the preceding calendar quarter, with a
credit for any Guaranteed Minimum Royalty payment made to Licensor for that
calendar year. Payment of the Revenue Royalty shall be due and payable by
Licensee to Licensor on or before the [***] day of the first calendar month
following each calendar [***] .
(5) Interest on Late Payments. All payments which are not timely
paid to Licensor by Licensee in accordance with this Section 4, will bear
interest after their due date at a rate of [***] per month or the highest
contract rate of interest permitted by law, whichever is less. Licensee and
Licensor each acknowledge that this Section 4(b)(5) does not constitute
Licensor's agreement to accept any payments after they are due or its commitment
to extend credit to, or otherwise finance Licensee's operation of, any
Entertainment Store or Remote Site.
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<PAGE> 9
(6) Quarterly and Annual Revenue Royalty Reports. On or before the
thirtieth (30th) day of the first calendar month following each calendar quarter
during the term of this Agreement, Licensee shall deliver to Licensor a complete
and accurate written statement setting forth the amount of Licensee's Simulator
Revenue, Merchandise/Food and Beverage Revenue, Sponsor Revenue, Remote
Simulator Revenue, Remote Sponsor Revenue, and Miscellaneous Revenue for the
preceding calendar quarter, including a complete and accurate copy of the state
and local sales tax return (if any is required) at such time that the tax
returns are actually due to the state and local governments. On or before March
1 of each calendar year during the term of this Agreement, Licensee shall
deliver to Licensor a complete and accurate written statement setting forth the
amount of the Simulator Revenue, Merchandise/Food and Beverage Revenue, Sponsor
Revenue, Remote Simulator Revenue, Remote Sponsor Revenue, and Miscellaneous
Revenue for the calendar year. Each of the quarterly reports and the annual
reports referenced herein shall be signed and verified by one of Licensee's
principal executive officers. Licensee shall also deliver to Licensor any other
sales data which may be reasonably requested from time to time by Licensor in
the form, manner and frequency requested.
(7) Underpayment or Overpayment of the Revenue Royalty. On or before
March 1st of each calendar year during the term of this Agreement, Licensee
shall calculate the Simulator Revenue, Merchandise/Food and Beverage Revenue,
Sponsor Revenue, Remote Simulator Revenue, Remote Sponsor Revenue, and
Miscellaneous Revenue for the preceding calendar year and shall deliver directly
to Licensor funds in an amount equal to the total Revenue Royalty payment owed
for the preceding calendar year less (i) all [***] Revenue Royalty payments made
by Licensee to Licensor with respect to the preceding calendar year and (ii) the
Guaranteed Minimum Royalty paid by Licensee to Licensor with respect to the
preceding calendar year ("Reconciliation Amount"); provided, however, that no
interest shall be due on the Reconciliation Amount if timely paid [including,
but not limited to, the interest set forth in Section 4(b)(5)]. If Licensee
overpaid the Revenue Royalty owed for the preceding calendar year, such
overpayment may be applied to offset against subsequent Revenue Royalty payments
owed by Licensee pursuant to this Section 4(b)(7).
(8) No Credits Against the Guaranteed Minimum Royalty. No payment of
the Revenue Royalty for any calendar year in excess of payments of the
Guaranteed Minimum Royalty shall be credited against the Guaranteed Minimum
Royalty due to Licensor for any other calendar year.
(9) Payment of Revenue Royalty Upon expiration of the Agreement.
Upon expiration of the term of this Agreement, Licensee shall as soon as
practicable calculate the Simulator Revenue, Merchandise/Food and Beverage
Revenue, Sponsor Revenue, Remote Simulator Revenue, Remote Sponsor Revenue, and
Miscellaneous Revenue for the partial calendar year ending on the date of such
expiration and shall deliver to Licensor an amount equal to Revenue Royalty owed
for such partial calendar year less all [***] Revenue Royalty payments
previously made by Licensee to Licensor with respect to such partial calendar
year; provided, however, that in the event that Licensee overpaid the Revenue
Royalty owed for such partial calendar year, such overpayment shall be promptly
refunded to Licensee by Licensor.
(10) Records and Audits. Licensee's books and records which relate
to the calculation and determination of the Revenue Royalty shall be made
available at Licensee's office for inspection, examination, copying, or audit by
a certified public accountant or other
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<PAGE> 10
authorized representative selected by Licensor at its sole discretion during,
normal business hours upon ten (10) business days prior written notice to
Licensee by Licensor, provided that the Licensor shall not be entitled to no
more than to two (2) individual audits each year. Such examination, copying or
audit shall be at Licensor's sole expense unless it is disclosed that the
Simulator Revenue, Merchandise/Food and Beverage Revenue, Sponsor Revenue,
Remote Simulator Revenue, Remote Sponsor Revenue, and Miscellaneous Revenue
reported by Licensee for the period being audited by Licensor is understated to
the extent of [***] or more, in which case all costs and expenses related to
such audit shall be borne by Licensee. Licensee shall immediately pay Licensor
on demand any deficiency in the Revenue Royalty, together with: (i) interest at
the lower of the maximum rate permitted by law or [***] per annum, accruing from
the date on which they are paid in full, (ii) a late fee of [***] of the amount
of fees so understated, and (iii) if applicable, all costs and expenses of
Licensor related to such audit.
5. DEVELOPMENT FEE
(a) Development Fee. Simultaneously with the execution and delivery of
this Agreement, Licensee shall pay, by cashier's check, money order or by wire
transfer, to NASCAR an amount equal to [***] (the "Development Fee"), which
Development Fee shall be nonrefundable and fully earned by Licensor when paid by
Licensee.
(b) Credit Applied Against Royalty Payments. Upon execution of this
Agreement and the payment to Licensor of the Development Fee by Licensee,
Licensor agrees to provide Licensee with an aggregate credit in the amount of
[***] (the "Credit") which shall be applied against the payments of Royalties
otherwise due to Licensor hereunder as such Royalties become due and payable
until such time as the Credit has been applied in full to payment of such
Royalties by Licensee after which time Licensee shall be required to pay all
further Royalties to Licensor as they become due as provided hereunder.
6. DEVELOPMENT OF THE INITIAL PLAN OF BUSINESS
(a) Initial Plan. On or before the Effective Date of the Agreement,
Licensee agrees to submit, in the form of a written proposal to Licensor,
Licensee's plans and specifications (the "Initial Plan") regarding the
development, design, building, construction and operation of the Entertainment
Stores (the "Business"). Such Initial Plan shall be prepared by Licensee at its
own expense and shall include, without limitation, detailed and specific plans
regarding the management, marketing, advertising, design, attractions, building,
construction, proposed locations of the Entertainment Stores, Site Trade Dress,
and systems development for the Business as well as future plans for expansion
of the Business. Licensor agrees to approve or disapprove the Initial Plan
within thirty (30) days after the delivery of the Initial Plan to Licensor from
License, such approval shall not be unreasonably withheld.
(b) Licensee's Continuing Obligation to Provide Status Reporting to
Licensor. Licensee agrees that at least once every three (3) months commencing
on the last day of the third (3rd) month following the date on which the Initial
Plan is approved by Licensor, and on the last day of the month each and every
three (3) months thereafter during the term of this Agreement, Licensee shall
have a continuing obligation to deliver to Licensor a written status report
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providing a general overview of progress made by Licensee in meeting the
objectives and plans set forth and described in the Initial Plan. Any proposed
material modifications by Licensee to the Initial Plan or any material
alterations to any previously approved Initial Plan are subject to the approval
of Licensor.
7. ENTERTAINMENT STORES' DESIGN AND TRADE DRESS
(a) Entertainment Stores' Design. Licensee shall be responsible for
developing the Business, including, without limitation the requirements for
building and constructing each Entertainment Store, the Simulators and the
dimensions, design, image, interior, layout, and Site Trade Dress of each
Entertainment Store; all of which shall be in substantial compliance with the
Initial Plan.
(b) Site Trade Dress. The Site Trade Dress of each Entertainment Store
that is opened to the general public must substantially comply with the Initial
Plan, as such Initial Plan may be amended from time to time with Licensor's
approval.
8. DEVELOPMENT SCHEDULE
(a) Total Number of Entertainment Stores. Licensee shall develop a total
of at least eleven (11) Entertainment Stores within the Territory during the
term of this Agreement pursuant to the terms of this Agreement in accordance
with the following development schedule (the "Development Schedule"):
(i) Licensee shall have opened to the general public at least
[***] Entertainment Store on or before December 31, 1997;
(ii) Licensee shall have opened to the general public at least
[***] additional Entertainment Stores on or before December 31, 1998,
resulting in a cumulative minimum number of at least [***] Entertainment
Stores opened to the general public and in operation by December 31, 1998;
(iii) Licensee shall have opened to the general public at
least [***] additional Entertainment Stores on or before August 31, 1999,
resulting in a cumulative minimum number of at least [***] Entertainment Stores
opened to the general public and in operation by August 31, 1999; and
(iv) Licensee shall have opened to the general public at least
[***] additional Entertainment Stores on or before August 31, 2000, resulting
in a cumulative minimum number of at least eleven (11) Entertainment Stores
opened to the general public and in operation by August 31, 2000.
Licensee understands and acknowledges that the development and
establishment by Licensee of any Remote Units shall not be counted towards nor
shall it satisfy any of Licensee's obligations to fully comply with the
development schedule contained in this Section 8.
(b) Additional Entertainment Stores. During the term of this Agreement,
and subject to the other provisions of this Agreement, including, but not
limited to, Licensor's consent to the
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Site of each of the Entertainment Stores as set forth in Section 9(a) below,
Licensee is free to develop more than the minimum number of Entertainment Stores
specified in the Development Schedule.
(c) Failure to Comply with Development Schedule. Strict compliance with
the Development Schedule specified in this Section 8(a) is of the essence in
this Agreement. Licensee's failure to fulfill its specified development
obligations with respect to the Development Schedule specified in Section 8(a)
shall constitute a default under Section 20 hereof. However, if the Licensee is
working in good faith to rectify any Development Schedule deficiencies, Licensor
shall consider waiving a portion or all of this stipulation using its reasonable
discretion.
(d) Force Majeure. Notwithstanding the foregoing, if Licensee is unable to
comply with the Development Schedule as set forth in this Section 8 solely due
to an event of "Force Majeure," the Development Schedule shall be extended by
Licensor for a reasonable period of time not to exceed nine (9) months, as
determined by Licensor in its reasonable discretion; provided that, Licensee
continues at all times during the term of this Agreement to use its best efforts
to fully comply with and timely satisfy the Development Schedule and perform all
of its obligations in accordance with this Agreement. For purposes of this
Agreement, "Force Majeure" shall mean an event caused by fire, strike, flood,
embargo, Acts of God, or other similar causes beyond Licensee's control.
9. CONDITIONS PRECEDENT TO THE DEVELOPMENT OF THE ENTERTAINMENT STORES
Prior to developing, acquiring, constructing, designing and building each
Entertainment Store, Licensee shall have satisfied all of the following
conditions (each of which shall be in form and substance reasonably satisfactory
to Licensor). Licensor recognizes that some of these conditions may be unable to
be met by the Licensee until after the development process has already begun;
Licensee shall notify the Licensor when this occurs:
(a) Site. Licensee shall have received the prior approval of Licensor as
to the suitability and selection of the Site on which the Entertainment Store
shall be located and Licensee shall have obtained all rights necessary in order
to operate the Entertainment Store in the manner provided for in this Agreement
by either holding fee simple title to the Site, Letter of Intent with the
Leasor, or by entering into a lease for the Site (provided that the term of such
lease shall not be less than the term of this Agreement):
(b) Licenses and Permits. Licensee shall have obtained all licenses,
permits and other governmental authorizations and approvals necessary or
required for the development, construction and building of the Entertainment
Store or to conduct the businesses currently contemplated by Licensee (including
without limitation all necessary licenses and permits relating to zoning,
building, utility, sign, health, sanitation, business and other permits and
licenses required to build, acquire and construct the Entertainment Store):
(c) Compliance with Laws. Licensee shall have complied with all applicable
federal, state, local, municipal and county laws, rules and regulations
necessary or required for the development, construction, acquisition and
building of the Entertainment Store:
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(d) Insurance. Licensee has furnished Licensor with complete and accurate
copies of all certificates of insurance and copies of insurance policies
pertaining to the Entertainment Store, as required by this Agreement in
accordance with Section 18:
(e) Design. Licensee shall have received the prior approval of Licensor as
to the design (including the Site Trade Dress) of the Entertainment Store.
Provided, however, if the design is consistent with the Initial Plan previously
approved by the Licensor, no such additional approval shall be necessary:
(f) Related Items. Licensee shall have provided to Licensor all other
related items which Licensor may reasonably request or require in connection
with the development, construction, acquiring and building, of the Entertainment
Store.
Licensee acknowledges that Licensor's consent to a proposed Site for an
Entertainment Store and any information communicated to Licensee regarding the
proposed Site does not constitute a representation or warranty of any kind,
express or implied, as to the suitability of the proposed Site for an
Entertainment Store or for any other purpose. Licensor's consent to such Site
indicates only that Licensor believes that the particular Site meets the general
criteria of Site acceptability which Licensor has established as of the time of
its consent to the Site. Application of criteria that have appeared effective
with respect to other locations of Entertainment Stores may not accurately
reflect the potential for all locations of the Entertainment Stores, and, after
Licensor's consent to the Site, demographic and/or other factors included in or
excluded from Licensor's Site criteria could change, thereby altering the Site's
potential. The uncertainty and instability of such criteria are beyond
Licensor's control, and Licensee agrees that Licensor will not be responsible
for the failure of the Site to which Licensor has consented to meet Licensee's
expectations as to potential revenue or operational criteria.
10. CONDITIONS PRECEDENT TO THE OPENING OF EACH ENTERTAINMENT STORE
Prior to the opening to the general public of each Entertainment Store,
Licensee shall have satisfied all of the following conditions (each of which
shall be in form and substance satisfactory, to the Licensor):
(a) Compliance with Initial Plan. The Entertainment Store has been
designed and constructed in substantial compliance with the Initial Plan, and as
such Initial Plan may be modified from time to time with the approval of
Licensor.
(b) Inspection. Licensor has inspected and/or approved the Entertainment
Store. As an alternative to Licensor's physical inspection of the Entertainment
Store, Licensor may request that Licensee provide Licensor with such videotapes
and/or photographs of the Entertainment Store as Licensor deems necessary to
provide Licensor's approval as to the Entertainment Store.
(c) Licenses and Permits. Licensee shall have obtained all licenses,
permits and other governmental authorizations and approvals necessary or
required for the ownership, use and operation of the Entertainment Store and to
conduct the related businesses currently contemplated by Licensee (including
without limitation all necessary licenses and permits
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relating to zoning, building, utility, sign, health, sanitation, business and
other permits and licenses required to own and operate the Entertainment Store):
(d) Compliance with Laws. Licensee shall have complied with all applicable
federal, state, local, municipal and county laws, rules and regulations
necessary or required for the ownership, operation and use of the Entertainment
Store:
(e) Insurance. Licensee has furnished to Licensor with complete and
accurate copies of all certificates of insurance and copies of insurance
policies pertain to the Entertainment Store, as required by this Agreement in
accordance with Section 18:
(f) Simulators. Licensee shall have at least four (4) Simulators on
display at each Entertainment Store and offered for use to prospective customers
of the Entertainment Store.
(g) Related Items. Licensee has provided Licensor with all other related
items which Licensor may reasonably request or require in connection with the
opening to the general public of the Entertainment Store. Licensor shall not
unreasonably uphold the opening of the Entertainment Store locations.
11. DESIGN AND OPERATION STANDARDS OF THE ENTERTAiNMENT STORES
(a) General Provisions. In order to maintain uniform standards of
operation for the Entertainment Stores to be developed by Licensee under the
terms of this Agreement and to protect the goodwill of Licensor in the NASCAR
Marks and NASCAR Trade Dress, Licensee covenants and agrees to operate the
Entertainment Store at all times as a high quality retail outlet consisting of
interactive stock car and stock truck racing simulation entertainment as
described herein, offering high quality products and services to the general
public, and Licensee further covenants and agrees at all times during the Term
to fully comply with the following standards and operating procedures:
(i) Licensee shall maintain accurate, orderly books and
records, including, without limitation sales, inventory, and expense
information.
(ii) Licensee shall maintain an amount of capital that is
necessary or desirable for the efficient and profitable operation of the
Entertainment Stores, including sufficient working capital.
(iii) Licensee shall (1) maintain its trade accounts in
current status and seek to resolve any disputes with trade suppliers promptly,
(2) timely pay all creditors of Licensee and the Entertainment Stores in full,
(3) satisfy all debts and liabilities of Licensee and the Entertainment Stores
as they become due and (4) timely pay all taxes incurred in connection with the
operation of the Business or the assets related thereto, unless Licensee is, in
good faith and by appropriate proceedings, contesting such amount.
(iv) Licensee shall operate the Entertainment Stores in
compliance with all applicable federal, state, local, county and municipal laws,
rules and regulations relating thereto.
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(v) Upon five (5) days advance written request by Licensor,
Licensee shall provide Licensor or its employees, representatives and agents
access to any of the Entertainment Stores in order to conduct physical
inspections of such Entertainment Store and interview Licensee's managers and
employees at any reasonable time to determine whether such Entertainment Store
is being operated in accordance with the terms of this Agreement and to ensure
protection of the NASCAR Marks, NASCAR Trade Dress and the Site Trade Dress, and
the goodwill associated therewith. In addition, Licensor and/or its designated
representatives or agents shall have the right at any time during such
Entertainment Store's regular business hours to observe, photograph and
videotape the operations of such Entertainment Store for such consecutive or
intermittent periods as it deems necessary and inspect and copy any books,
records and documents relating to Licensee's operation of such Entertainment
Store. Licensee agrees to fully cooperate with Licensor in connection with any
such inspection, observations, photographing, videotaping, copying, and
interviews, all such costs shall be at Licensor's expense.
(vi) Licensee shall maintain each of the Entertainment Stores'
interior and exterior and the surrounding area within Licensee's control in a
high degree of cleanliness, orderliness and sanitation and comply with the
requirements of all federal, state, municipal and county laws, rules and
regulations relating thereto.
(vii) Licensee shall maintain all licenses, permits and other
governmental authorizations and approvals necessary or required for the
ownership, use and operation of the Entertainment Stores, and Licensee shall
maintain all minimum levels of insurance as required by this Agreement in
accordance with Section 18.
(viii) Licensee shall maintain at least four (4) Simulators on
display at each Entertainment Store and offered for use to prospective customers
of the Entertainment Store.
(ix) During the Term of this Agreement, in connection with
those Entertainment Stores that predominately contain the NASCAR stock car and
NASCAR stock truck racing theme(s), Licensee shall use the name "NASCAR Silicon
Motor Speedway" in identifying itself and in connection with all related signage
thereof, provided however, in connection with any Entertainment Store which
predominately contains racing themes other than the stock car and stock truck
racing theme, Licensee may, at its option, in the alternative, use the name
"Silicon Motor Speedway" in identifying itself.
(b) Retail Merchandising Sales Space. Licensee covenants and agrees that
any retail merchandising sales areas within an Entertainment Store shall not
have in excess of 700 square feet of Retail Merchandising Sales Space and/or not
exceed more than fifteen (15) percent of the total Entertainment Store space or
whichever is less, unless a larger space is expressly approved by Licensor in
writing. As used herein, the term "Retail Merchandising Sales Space" means the
actual square footage of any and all space in the Entertainment Store in which
any of the following take place: (i) merchandise sales occur, (ii) merchandise
is displayed, (iii) merchandise is stored, or (iv) merchandise is otherwise
sold. Licensee from time to time may request from the Licensor that the Retail
Merchandising Sales Space be expanded, Licensor will evaluate each request on a
case-by-case basis and issue any approval or disapproval. In the event that the
Licensee's Retail Merchandising Sales Space in any way violates any of the
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Licensor's current Agreements with any of the Licensor's other licensees or
sponsors, the Licensee shall use its best efforts to work with the Licensor to
resolve any of these issues. In addition, the Licensee shall not be permitted to
operate any "free-standing" merchandise kiosks within sixteen (16) miles of any
NASCAR Thunder retail store developed or opened prior to or subsequent to the
date of this Agreement. Licensee understands and agrees that in no event shall
any such "free-standing" merchandise kiosks be any larger than 300 square feet.
Licensee further understands and agrees that it shall be required to cease
operation and close to the general public any such "free-standing" merchandise
kiosk within five (5) months following written notice by Licensor.
(c) Advertising/Promotion and Right of Approval. All advertising and
Promotional Activities shall conform to the standards and requirements that
Licensor prescribes from time to time and must be approved in advance by
Licensor, and, in connection therewith, Licensee covenants and agrees as
follows:
(i) Licensee shall be required to conduct all advertising or
promotion generally in accordance with the general marketing and design aspects
set forth in the Initial Plan. Any actual advertising or promotion by Licensee
shall be conducted in a dignified and professional manner generally consistent
with the Initial Plan. Not in limitation of the foregoing, Licensee shall
continuously maintain white pages and yellow pages telephone directory listings
in the telephone book(s) which cover the local telephone calling area in which
each of the Entertainment Stores are located.
(ii) Licensor shall have the right of prior approval of all
uses of the NASCAR Marks on or in conjunction with the Entertainment Stores and
in materials used for Promotional Activities. Licensee agrees to submit in a
timely manner to Licensor, free of cost, for its prior approval as to quality,
style and content, all uses of the NASCAR Marks on or in conjunction with the
Entertainment Stores and all advertising and promotional materials used for
Promotional Activities. Comments or approval with respect to any materials for
which Licensee must seek Licensor's approval hereunder will be provided by
Licensor to Licensee within [***] business days from the date of Licensor's
receipt of such materials. Licensor shall provide Licensee with a copy of any
existing advertising guidelines developed from time to time by Licensor.
(iii) Licensee agrees that [***] or more of its Promotional
Activities for advertising with respect to the activity licensed by this
Agreement shall be directed to the interactive Simulators contained within the
Entertainment Stores licensed hereunder by Licensor.
(d) Maintenance and Changes to the Entertainment Stores. In connection
with the operation of the Entertainment Stores, Licensee covenants and agrees
that:
(i) It shall at all times maintain the Entertainment Stores,
their respective furnishings, fixtures and equipment (including without
limitation, the Simulators) in good condition and in repair and shall be solely
responsible for all maintenance, repair, and replacement where necessary to
maintain such furnishings, fixtures and equipment in the Entertainment Stores in
good operating condition, and it shall be solely responsible for all liabilities
arising from the operation of the Entertainment Stores.
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(ii) It shall obtain the approval of Licensor prior to making
any changes to the Site Trade Dress as applied at the Entertainment Stores if
such changes result in any of the Entertainment Stores being materially
different from any other Entertainment Stores developed pursuant to this
Agreement or from the Entertainment Stores design approved pursuant to Section 7
hereof. To the extent any change is made to the Site Trade Dress as applied at
any of the Entertainment Stores Licensor shall have reasonable access to such
Entertainment Store while the work is in progress to verify that such
alterations or modifications of the Site Trade Dress as applied at such
Entertainment Store complies with this Section 11.
(e) Approved Products, Merchandise, Merchandise Sales, and Food Sales. In
connection with the sale of approved products, merchandise and food sales at or
around the Entertainment Stores, in connection with any activity approved in
advance by Licensor in accordance with the terms and conditions contained in
Section 2(d), Licensee covenants and agrees as follows:
(i) Unless otherwise approved by Licensor, Licensee agrees to
purchase from Licensor's approved and authorized licensees all articles,
products and merchandise that bear, contain or display any of the NASCAR Marks,
provided that this merchandise is comparable to any other vendor merchandise
that the Licensee is considering and within [***] of the other vendor's pricing.
However, if the Licensor's licensees do not offer merchandise that is comparable
to other vendor's merchandise and not within [***] of the other vendor's prices,
the Licensor will consider licensing the Licensee's other vendors on a temporary
basis to produce NASCAR SILICON MOTOR SPEEDWAY exclusive merchandise, provided
that each vendor would enter into a separate License Agreement with Licensor,
such approval and licensing of other vendors shall not be unreasonably withheld.
(ii) Except as provided herein, Licensee agrees that [***] of
the merchandise bearing or containing the NASCAR Marks sold by Licensee at the
Entertainment Stores shall be manufactured pursuant to license agreements with
Licensor's approved and authorized licensees unless Licensor expressly approves
the sale of other items bearing, displaying or containing, the NASCAR Marks at
the Entertainment Stores.
(iii) "Official Label" means an "Officially Licensed Product"
tag or label in the form prescribed by Licensor which shall be affixed to each
Licensed Product, its Packaging or Advertising by the Licensee.
(iv) Licensee agrees not to sell any food or beverage items at
the Entertainment Stores other than items listed and described on the menu
attached on Exhibit B. Food items shall be limited to snack food types (i.e.,
pre-packaged chips, pretzels, soft-drinks, etc.) and be self service (meaning no
waiters and/or waitresses). In addition, prior to offering any food item for
sale, Licensee shall seek written approval for all such food items for each
Entertainment Store, except for items previously approved by Licensor and
appearing on Exhibit B. Licensee may request, from time to time, that Licensor
approve additional food items for sale at the Entertainment Stores, such
approval subject to Licensor's sole discretion.
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(f) Exclusive Sponsors and Exclusive Licensee.
(i) Licensee acknowledges and agrees that Licensor has entered
into and may in the future enter into exclusive relationships with sponsors and
licensees (to the exclusion of Licensee) with respect to, among other things,
merchandise, programming, racing events, racing services, advertising and
promotion, official sponsorships and other designations, and products and
services that display or promote the NASCAR Marks (collectively, "Exclusive
Sponsors and Licensees"). A current listing of all Exclusive Sponsors and
Licensees is attached hereto as Exhibit C. Licensor agrees to provide Licensee
updates and changes to such listing periodically during the term of this
Agreement. Licensee agrees to honor the commitments that Licensor has made to
Exclusive Sponsors and Licensees. Licensee agrees that prior to negotiating with
any sponsor or company that manufactures or produces a product or provides a
service in a category in which one of Licensor's Exclusive Sponsors and
Licensees engages, Licensee shall first negotiate with Licensor's Exclusive
Sponsors and Licensees for any and all Promotional Activities for the
Entertainment Stores. If Licensee desires to enter into a relationship with a
sponsor that is not one of Licensor's Exclusive Sponsors and Licensees for
Promotional Activities that will take place within the Entertainment Stores,
Licensee must obtain Licensor's approval, which approval shall not be
unreasonably withheld.
(ii) If, however, Licensee desires to enter into a
relationship with a sponsor that is not one of Licensor's Exclusive Sponsors and
Licensees for Promotional Activities outside of the Entertainment Stores,
Licensee must obtain Licensor's approval, which may not be unreasonably
withheld. Notwithstanding the foregoing, Licensee may however, have [***]
sponsors per Entertainment Store location in competing categories with
Licensor's Exclusive Sponsors and Licensees per year. If Licensee enters into an
agreement with one of Licensor's Exclusive Sponsors and Licensees but is
thereafter notified by Licensor that such sponsor or entity is no longer one of
Licensor's Exclusive Sponsors and Licensees, Licensee may continue to use such
sponsor or entity only during the term of Licensee's agreement with such entity.
From and after the expiration of the term of such agreement or its earlier
termination, whichever shall occur first. Except as provided herein, Licensee
agrees to use its best efforts to enter into an agreement with one of Licensor's
then current Exclusive Sponsors and Licensees unless otherwise approved by
Licensor, which approval shall not be unreasonably withheld. All sponsor or
vendor agreements entered into by Licensee shall have a term of no more than
five (5) years with no automatic renewals.
12. OWNERSHIP AND PROTECTION OF NASCAR MARKS AND TRADE OR RELATED PROPRIETARY
RIGHTS
(a) Licensor's Rights. Licensee acknowledges and agrees that NASCAR
exclusively owns and will continue to exclusively own during and after the Term
of this Agreement the NASCAR Marks and any registrations therefor and all
goodwill associated with them, as well as any trademarks, trade names, logos and
service marks adopted and used or approved for use by NASCAR and all goodwill
associated with them, and the NASCAR Trade Dress and all goodwill associated
with them, along with NASCAR's unique characteristics, NASCAR Rulebook, and
"look and feel" (all collectively referred to herein as the "NASCAR Indicia").
Licensor acknowledges that the Licensee owns the Site Trade Dress, however,
Licensee agrees that all NASCAR Trade Dress items and NASCAR Indicia contained
within the Site Trade Dress are owned by the Licensor. Licensee further
acknowledges that NASCAR owns and will
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continue to own during and after the Term of this Agreement all common law and
statutory copyrights in its rules, procedures, publications and all other
original works of authorship fixed in a tangible means of expression
(hereinafter "NASCAR Copyrighted Works"), and that NASCAR owns and will continue
to own during and after the Term of this Agreement trade secret rights in its
customer lists, membership lists, and other information meeting the definition
of a Licensor Trade Secret in Section 15 of this Agreement. The NASCAR Marks,
NASCAR Indicia, NASCAR Copyrighted Works, and Licensor Trade Secrets are
hereinafter referred to collectively as the "NASCAR Intellectual Property."
Licensee acknowledges that nothing contained in this Agreement shall provide
Licensee with any right, title or interest to the NASCAR Intellectual Property
other than the right to use the NASCAR Marks and NASCAR Trade Dress pursuant to
the licenses granted under this Agreement. Licensee further acknowledges and
agrees that nothing contained in this Agreement shall, in any manner whatsoever,
preclude, restrict or prohibit Licensor from selling, distributing,
manufacturing or providing, or authorizing others to do so, any products,
merchandise or services containing, displaying or bearing the NASCAR Marks or
the NASCAR Trade Dress, or any trade or service marks other than the NASCAR
Marks, within or outside the Territory through distribution channels other than
the Entertainment Stores.
(b) Licensee's Intellectual Property. Except for NASCAR's right, title and
interest in the Marks, NASCAR Indicia, NASCAR Copyrighted Works, and NASCAR
Trade Secrets, it is expressly agreed that Licensee is the sole owner of all
right, title and interest, including all copyrights, patents, trademarks, trade
names, trade secrets, algorithms, audio visual rights and moral rights and other
intellectual property rights, in the Entertainment Stores and pertaining to the
Simulators created by Licensee and its personnel and any collateral materials
such as customer lists, source code, object code, algorithms, audio visual
displays, technical specifications, user manuals, documentation, fonts (such as
that used in the "Silicon" portion of the NASCAR Silicon Motor Speedway logo as
found in Exhibit A) and quick reference guides underlying the Entertainment
Stores and Simulators created, designed, authored or conceived by Licensee or
its personnel (hereinafter referred to collectively as "Licensee's Intellectual
Property").
(c) Acknowledgment of Validity of the Marks. Licensee acknowledges the
validity of each of the NASCAR Marks and the state and federal registrations
NASCAR owns, obtains or acquires for the NASCAR Marks. Licensees shall not, at
any time, file any trademark application with the United States Patent and
Trademark Office, or any application with any other governmental entity in any
country claiming rights in the NASCAR Marks, NASCAR Indicia, NASCAR Copyrighted
Works, or Licensor Trade Secrets. Except as expressly authorized in advance by
NASCAR, Licensee shall not use any of the NASCAR Marks or any similar mark as,
or as part of, a trademark, service mark, trade name, fictitious name, company
or corporate name anywhere in the world other than "NASCAR Silicon Motor
Speedway" as provided in this Agreement. Any trademark or service mark
registration obtained or applied for that contains the Marks or any similar mark
shall be transferred to NASCAR without compensation beyond the mutual promises
in this Agreement.
(d) Challenge or Objection. Licensee shall not oppose or seek to cancel or
challenge in any forum, including, but not limited to, the United States Patent
and Trademark Office, any application or registration of NASCAR. Licensee shall
not object to, or file any action or lawsuit
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because of, any use by NASCAR of the NASCAR Intellectual Property for any goods
or services, whether such use is by NASCAR directly or through different
licenses or authorized users, except that Licensees may bring a breach of
contract claim for breach of any exclusive rights they are granted under this
Agreement.
(e) Good Will. Licensee acknowledges that: (1) the NASCAR Marks are unique
and original and NASCAR holds the right to the commercial exploitation of the
NASCAR Marks; (2) NASCAR has acquired valuable goodwill in the Marks and the
NASCAR Trade Dress; and (3) all goodwill derived from Licensee's use of any
NASCAR Marks, NASCAR Trade Dress and Site Trade Dress will inure to the benefit
of NASCAR.
(f) Infringement by Third Parties. Licensee shall not, during the Term or
anytime thereafter, dispute or contest, nor cause or assist or aid others in
disputing or contesting, NASCAR's exclusive right to the NASCAR Intellectual
Property. Licensee shall fully cooperate with and assist NASCAR (at NASCAR's
cost and expense) in preventing or prosecuting any infringement of NASCAR
Intellectual Property which NASCAR in its sole discretion decides to pursue, and
Licensee shall not share in any recovery in any such action. Licensee shall give
prompt written notice to Licensor of any improper use of the NASCAR Marks or
NASCAR Trade Dress, any other trademark or service mark or trade dress used by
any third party except Licensor's authorized licensees which is confusingly
similar to the NASCAR Marks or NASCAR Trade Dress which comes to Licensee's
attention or any event or advertisement which it believes may constitute an
infringement upon NASCAR Marks or other NASCAR Intellectual Property or any
challenge to Licensor's ownership or Licensee's use of the NASCAR Marks or
NASCAR Intellectual Property, which comes to Licensee's attention.
(g) Quality Standards. Licensee acknowledges that if any aspect of the
goods and services promoted and marketed by it hereunder were of inferior
quality in design or workmanship, the goodwill which NASCAR has established and
now possesses in the NASCAR Marks and NASCAR Trade Dress would be impaired.
Licensee agrees to maintain the quality of goods and services offered in
connection with the NASCAR Marks, NASCAR Trade Dress, Site Trade Dress at a high
level.
(h) Copyright. Licensee shall not attempt to obtain or assert copyright or
trademark rights on behalf of Licensee in any artwork, logo or design which
contains the NASCAR Marks or the NASCAR Trade Dress. If any such works are
created, Licensee shall include copyright notices on behalf of NASCAR in such
works, and assign to NASCAR any copyrights obtained or asserted by Licensee.
(i) Injunctive Relief. Licensee acknowledges that its breach of the
intellectual property provisions of this Agreement will result in immediate and
irreparable harm to Licensor and that money damages alone would be inadequate to
compensate Licensor. Therefore, in the event of such breach, Licensor may, in
addition to other remedies, immediately obtain and enforce injunctive relief
prohibiting the breach or threatened breach or compelling specific performance.
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13. NON-ASSIGNABILITY AND TRANSFERABILITY OF AGREEMENT OR OWNERSHIP INTEREST
OF LICENSEE
(a) Transfer by Licensor. This Agreement is fully assignable by Licensor
to any Affiliate of Licensor and inures to the benefit of such assignee or any
other legal successor to the interest of Licensor and if such assignee or other
legal successor agrees to assume the rights and obligations of Licensor under
this Agreement, Licensor shall be released from all obligations and liabilities
hereunder. Licensee agrees to execute any documents and other forms that
Licensor may reasonably request in connection with any such transfer or
assignment by Licensor.
(b) Transfer by Licensee. Licensee understands and acknowledges that the
rights and duties created by this Agreement are personal to Licensee and that
Licensor has granted the licenses hereunder to Licensee in reliance upon its
perceptions of Licensee's individual character, skill, aptitude, attitude,
business ability and financial capacity. Accordingly, Licensee agrees as
follows:
(i) Restrictions on Transfer of Licenses. Licensee shall not
sell, assign, convey, give away, pledge, encumber, mortgage, or otherwise
transfer all or any portion of any right and/or interest in this Agreement, the
NASCAR Marks, or the NASCAR Trade Dress, any license granted hereunder, or any
interest herein or related thereto (collectively, the "Proprietary Interests")
without the prior written consent of Licensor, which may be withheld by Licensor
for any reason whatsoever.
(ii) Permitted Transfers. If Licensor shall consent to a
transfer under subparagraph (i) of this Section 13 above, Licensee shall
nonetheless remain primarily and fully obligated to Licensor under this
Agreement. In addition, the transferee shall be bound by the terms of this
Agreement (including, but not limited to Licensor's right to terminate this
Agreement) as if such transferee had originally signed this Agreement as
Licensee, and the transferee shall sign all documents, instruments and
agreements that Licensor requires in order to bind transferee to the terms and
conditions of this Agreement.
(iii) Exception to Restrictions on Transfers. The restrictions
in Section 13(b)(i) above shall not apply to an Initial Public Offering or any
Secondary Offering by Licensee (as such terms are defined in the Warrant
attached hereto as Exhibit D to this Agreement), provided that such Initial
Public Offering or any Secondary Offering by Licensee is in accordance with the
terms of this Agreement and the Warrant. Licensor's consent to a transfer of
this Agreement or any interest in Licensee does not constitute a representation
as to the fairness of the terms of any contract between Licensee and the
transferee, does not provide any guarantee of the prospects of success of the
transferee nor does such consent provide any waiver of any claims Licensor may
have against Licensee or as to Licensor's right to demand the transferee's exact
compliance with any of the terms and conditions of this Agreement.
14. NON-DISCLOSURE
(a) Non-Disclosure of Licensor Trade Secrets. For purposes of this Agreement,
the term "Licensor Trade Secrets" means any information of Licensor and/or its
Affiliates which (i) derives its economic value, actual or potential, from not
being generally known to other persons who can obtain economic value from its
disclosure or use, (ii) is the subject of efforts
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that are reasonable under the circumstances to maintain its secrecy or
confidentiality, or (iii) is identified by Licensor in writing as confidential.
Licensor Trade Secrets shall include, without limitation, financial documents
and information, marketing, plans and strategies and other items not related to
the Business but excluding Licensee Trade Secrets and Licensee Confidential
Information (the above information hereinafter referred to as the "Licensor
Proprietary Information"). Licensee acknowledges and agrees that all of the
Licensor Proprietary Information is economically valuable, that such value is
derived from such Licensor Proprietary Information containing Licensor Trade
Secrets not generally known to others, and that reasonable efforts have been
taken by Licensor to maintain the secrecy and confidentiality of the Licensor
Proprietary Information and Licensor Trade Secrets, and that Licensee has
entered into this Agreement in order to use such Licensor Proprietary
Information to the economic benefit of Licensee. To the extent that any Licensor
Trade Secrets are disclosed to Licensee pursuant to this Agreement, Licensee
shall not, during and after the term of this Agreement for so long as any such
information shall remain trade secrets, use or permit the duplication or
disclosure of any such Licensor Trade Secrets, unless such use, duplication or
disclosure is specifically authorized by Licensor in advance in writing.
(b) Non-Disclosure of Licensee Trade Secrets. For purposes of this
Agreement, the term "Licensee Trade Secrets" means any information of Licensee
and/or its Affiliates which (i) derives its economic value, actual or potential,
from not being generally known to other persons who can obtain economic value
from its disclosure or use, (ii) is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy or confidentiality, or (iii) is
identified by Licensee in writing as confidential. Licensee Trade Secrets shall
include, without limitation, financial documents and information, marketing
plans and strategies of Licensee and other items whether or not related to the
Business (the above information hereinafter referred to as "Licensee Proprietary
Information"). Licensor acknowledges and agrees that all of the Licensee
Proprietary Information is economically valuable, that such value is derived
from such Licensee Proprietary Information containing Licensee Trade Secrets not
generally known to others, and that reasonable efforts have been taken by
Licensee to maintain the secrecy and confidentiality of the Licensee Proprietary
Information and Licensee Trade Secrets. To the extent that any Licensee Trade
Secrets are disclosed to Licensor pursuant to this Agreement or otherwise,
Licensor will not, during and after the term of this Agreement for so long as
any such information shall remain trade secrets, use or permit the duplication
or disclosure of any such Licensee Trade Secrets, unless such use, duplication
or disclosure is specifically authorized by Licensee in advance in writing.
(c) Non-Disclosure of Licensor Confidential Information. For purposes of
this Agreement, the term "Licensor Confidential Information" shall mean any data
or information of Licensor which is not related to the Business, other than
Licensor Trade Secrets, that is competitively sensitive, that is not disclosed
to the public by Licensor or that is not generally known by the public,
including without limitation any of the Licensor Proprietary Information, and
other items or compilations of such information, whether in printed or magnetic
form, relating to Licensor and/or its business or that is identified by Licensor
in writing as confidential. Licensor Confidential Information shall also mean
any information received by Licensee from Licensor or any agent or Affiliate of
Licensor or any other third party providing such information in confidence to
Licensee. To the extent that any Licensor Confidential Information is disclosed
to Licensee, Licensee shall not, during the term of this Agreement and for five
(5) years after
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<PAGE> 23
termination or expiration of this Agreement, use or permit the duplication or
disclosure of any such Licensor Confidential Information, unless such use,
duplication or disclosure is specifically authorized by Licensor in advance.
(d) Non-Disclosure of Licensee Confidential Information. For purposes of
this Agreement, the term "Licensee Confidential Information" shall mean any data
or information, other than Licensee Trade Secrets, that is competitively
sensitive, that is not disclosed to the public by Licensee or that is not
generally known to the public, including without limitation items or
compilations of such information, whether in printed or magnetic form, used in
or related to the Business, or that is identified by Licensee in writing, as
confidential. Licensee Confidential Information also shall mean any information
received by Licensor or Licensee from any agent or Affiliate of Licensee or any
other third party providing such information in confidence to such party. To the
extent that any Licensee Confidential Information is disclosed to Licensor,
Licensor shall not, during the term of this Agreement and for five (5) years
after termination or expiration of this Agreement, use or permit the duplication
or disclosure of any such Licensee Confidential Information, unless such use,
duplication or disclosure is specifically authorized by Licensee in advance in
writing.
(e) Exception. Licensee and Licensor shall not be obligated to maintain in
confidence under Sections 14(a) through 14(d) above:
(i) information which is, or subsequently may become within
the knowledge of the public generally through no fault of the receiving party;
(ii) information which the receiving party can show was
previously known to it as a matter of record at the time of receipt;
(iii) information which may subsequently be obtained lawfully
from a third party who has lawfully obtained the information through no fault of
Licensee or Licensor; and
(iv) information which may subsequently be developed as a
matter of record, independently of disclosure, by the Licensee.
(f) Ownership. All Licensor Trade Secrets and Licensor Confidential
Information furnished or disclosed by Licensor to Licensee directly or
indirectly hereunder are and shall remain the property of Licensor. Any
reproductions, notes, summaries or similar documents relating to the Licensor
Trade Secrets and Licensor Confidential Information and any files, memoranda or
reports relating thereto shall become and remain the property of Licensor
immediately upon their creation. Upon termination of this Agreement or upon the
prior demand of Licensor, Licensee shall immediately return all such materials
together with all copies thereof to Licensor. It is also understood that all
Licensee Trade Secrets and Licensee Confidential Information furnished or
disclosed by Licensee to Licensor directly or indirectly hereunder are and shall
remain the property of Licensee. Any reproductions, notes, summaries or similar
documents relating to the Licensee Trade Secrets and Licensee Confidential
Information and any files, memoranda or reports relating thereto shall become
and remain the property of Licensee immediately upon their creation. Upon
termination of this Agreement or upon the prior demand
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of Licensee, Licensor shall immediately return all such materials together with
all copies thereof to Licensee.
15. LICENSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Licensee makes to and for the benefit of Licensor the following
representations, warranties and covenants:
(a) Authority. Licensee has the requisite authority to execute, deliver
and perform its obligations under this Agreement, Licensee has obtained all
required corporate approval including board of directors or other consents,
Licensee is duly organized or formed and validly existing, in good standing,
under the laws of the state of its incorporation or formation, and Licensee's
entering into this Agreement does not in any manner whatsoever violate or
conflict with any other agreement previously entered into by Licensee, an
Affiliate of Licensee, any Owner or any Affiliate of any Owner. Furthermore,
Licensee represents and warrants that it is the sole and exclusive owner of all
intellectual property rights in the Simulators, including but not limited to all
patents, copyrights, trade secrets and other proprietary rights in the software,
hardware, firmware and other components of the Simulators.
(b) Exclusivity Regarding Simulators. Except as expressly provided in
Section 16(h) hereof, Licensee covenants and agrees that the Simulators shall be
available for use by the general public or otherwise solely at the Sites of the
Entertainment Stores [each Site subject to the prior approval of Licensor in
accordance with Section 9(a) hereof] and in connection therewith. Except as
provided herein, Licensee further covenants and agrees not to sell, convey,
transfer or assign, nor grant a license to use, any of the stock car or stock
truck themed Simulators nor any of the hardware, software, firmware or other
components of these Simulators to any Person without the prior approval of
Licensor, which approval shall not be unreasonably withheld, however, Licensee
shall be permitted to sell Simulators or any components of the Simulators to any
Licensor wholly-owned subsidiaries or Licensor joint venture partners of the
Licensee. Notwithstanding the foregoing, if at any time during the Term of this
Agreement Licensee is willing to sell one or more Simulators solely to Licensor,
Licensee agrees to sell [***] individual Simulators to Licensor at a purchase
price equal to Licensee's actual cost of labor, equipment and materials for each
such Simulator.
(c) Ownership. Exhibit E to this Agreement completely and accurately
describes all of Licensee's current owners together with their respective
ownership and voting interests in Licensee (such owners, together with any
successors thereto or other owners of ownership or voting interest in Licensee,
the "Owners" or, singly, an "Owner"). Each of the Owners are set forth on
Exhibit E.
(d) Warrant. Licensee has duly executed and delivered to Licensor the
Warrant in the form attached hereto as Exhibit D (the "Warrant).
(e) Conflicts. Licensee acknowledges that upon execution of the Agreement,
that the Licensor has previously engaged in various marketing and promotional
activities which are designed to promote and enhance the sport of stock car and
stock truck racing and the goodwill of the NASCAR Marks. Licensee further
acknowledges that Licensor's marketing, and promotional activities involve
relationships with numerous companies, organizations and
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individuals who serve as sponsors, owners, advertisers and business partners
(hereinafter referred to as "Other NASCAR Licensees"). Licensee agrees that in
the event Licensor determines that Licensee's activities taken pursuant to this
Agreement come into conflict with the interests or rights of other NASCAR
Licensees, Licensee shall in good faith cooperate with Licensor in order to
resolve the conflict and, in the event the conflict cannot be resolved, shall
take the action requested by NASCAR as long as it is legal and commercially
practical to do so. Licensee acknowledges that NASCAR has previously granted a
license to third parties who will operate an online multiplayer service (which
has been referred to publicly as the NASCAR Racing Online Series) which will
allow multiple players to compete online in the same race, and may to some
extent directly or indirectly compete with Licensee for the same users (although
targeted at home users rather than users in retail outlet locations).
(f) Control of NASCAR Marks and NASCAR Trade Dress. It understands that it
is an essential condition of this Agreement to protect the high reputation
enjoyed by Licensor and the NASCAR Marks, and that Licensor retains the sole and
exclusive right and authority to control the nature and quality of each and
every use of the NASCAR Marks and NASCAR Trade Dress by Licensee, and Licensee
shall comply with and abide by any and all requirements or restrictions on the
use of the NASCAR Marks and NASCAR Trade Dress under the terms of this
Agreement. Licensee agrees that the NASCAR Marks and NASCAR Trade Dress shall be
used solely in connection with the Entertainment Stores and that Licensor shall
retain the sole and exclusive right and authority to control the nature,
quality, and character of the goods and services with which the NASCAR Marks and
NASCAR Trade Dress are utilized, provided, however, that Licensee shall not be
obligated to replicate the numbers, sponsors, or colors of the cars of actual
NASCAR competitors. Licensee agrees that it shall not use the term "SpeedPark"
in any manner to identify the Entertainment Stores or in conjunction with the
NASCAR trials. In the event that it becomes advisable at any time, in Licensor's
sole discretion, to modify or discontinue the use of any one or more of the
NASCAR Marks or to use one or more additional or substitute marks, Licensee
agrees at its expense to promptly comply with the instructions of Licensor in
that regard as soon as commercially practicable but, in any event, no later than
four (4) years from receipt of notice of such instructions from Licensor.
(g) Additional Covenant by Licensee. Licensee covenants and agrees to use
its best efforts to provide and grant to Licensor the licensing right to use
Simulators within the theme park commonly known as "DAYTONA USA" located on the
property of the Daytona International Speedway, provided that financially
reasonable terms are reached with Licensor. In addition, proposed Entertainment
Stores within the Volusia County, Florida limits shall be approved or
disapproved based on the Licensor's sole discretion.
(h) Licensee's Requirement to Disclose to Licensor all Owners and
Directors of Licensee. Licensee covenants and agrees to provide Licensor, within
five (5) business days following any request by Licensor from time to time
during the Term of this Agreement, a complete and accurate written list and
description, as of the date of such request by Licensor, of: (x) all of the
owners of Licensee, together with their respective ownership and voting interest
in Licensee; and (y) the Members of the Board of Directors of Licensee, and the
total authorized number of Board of Directors of Licensee.
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16. LICENSOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Licensor hereby makes to and for the benefit of Licensee the following
representations, warranties and covenants:
(a) Authority. It has the authority to execute, deliver and perform its
obligations under this Agreement, Licensor has obtained all required board of
directors or other consents, and it is duly organized or formed and validly
existing in good standing under the laws of the state of its incorporation or
formation.
(b) Representations. It has the exclusive ownership right, title, and
interest to all of the existing registrations and pending applications for
registration of the NASCAR Marks as listed from time to time on Exhibit A
hereto, and within the United States, to the knowledge of Licensor, the NASCAR
Marks do not infringe the rights of any third party, and that Licensor is
authorized to grant to Licensee the license to use such NASCAR Marks on the
terms and conditions in this Agreement.
(c) Covenant. Licensor shall use commercially reasonable efforts to assist
Licensee in creating the most NASCAR authentic experience possible. NASCAR's
Competition, Administration, Marketing, Licensing, and Public Relations
departments shall work with Licensee to develop an official and realistic NASCAR
atmosphere in the Entertainment Stores. In addition, Licensor shall provide
Licensee with reasonable assistance and direction in the Licensee's efforts to
obtain sponsorship.
17. INDEMNIFICATION
(a) Licensee agrees to indemnify, defend and hold harmless Licensor, its
shareholders, directors, officers, employees, affiliates, professionals and
agents, from any and all loss, costs, expenses (including reasonable attorneys'
fees) claims, damages and liabilities related to or associated with Licensee or
arising out of Licensee's ownership or operation of the Entertainment Stores,
including, but not limited to (i) claims related to personal or property
injuries occurring in the Entertainment Stores or any surrounding area within
Licensee's control, (ii) any unauthorized use of or infringement of any
trademark, service mark, trade dress, copyright patent, process, method or
device by Licensee, (iii) alleged defects or deficiencies in any of the
Entertainment Stores or the use thereof, or any false advertising, fraud or
misrepresentation by Licensee, (iv) the unauthorized use of the NASCAR Marks or
NASCAR Trade Dress or any breach by Licensee of this Agreement (v) libel or
slander against, or invasion of the right of privacy, publicity or property of,
or violation or misappropriation of any other right of any third party, (vi) the
breach of any covenants, representations, and/or warranties of Licensee
contained in this Agreement and/or (vii) the breach of agreements or alleged
agreements made or entered into by Licensee to effectuate the terms of this
Agreement. Licensor shall give Licensee notice of the making of any claim or the
institution of any action hereunder and Licensor may at its sole discretion
participate in any action.
(b) Licensee agrees to notify Licensor immediately of any apparent
infringement or challenge to Licensee's use of any NASCAR Marks, or of any claim
by any person of any rights in any NASCAR Marks, and Licensee agrees not to
communicate with any person other than Licensor, or its respective attorneys and
Licensee's attorneys, in connection with any such
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infringement, challenge, or claim, unless legally required to do so. Licensor
has sole discretion to take such action as Licensor deems appropriate and the
right to control exclusively any litigation, U.S. Patent and Trademark Office
proceeding, or any other proceeding arising out of such infringement, challenge,
or claim or otherwise relating to any NASCAR Marks, the Speedway Logos or
related wordmarks. Licensee agrees to render such assistance and do such acts
and things as, in the opinion of Licensor's attorneys, may be reasonably
necessary or advisable to protect and maintain Licensor's interest in any
litigation, Patent and Trademark Office or other proceeding, or otherwise to
protect and maintain Licensor's interest in the wordmark NASCAR SILICON MOTOR
SPEEDWAY and the Speedway Logos. Licensee shall not institute any suit or take
any action on account of any infringements or imitations without first obtaining
the consent of Licensor to do so. Licensee understands and agrees that it is not
entitled to share in any proceeds received by Licensor (by settlement or
otherwise) in connection with any formal or informal action brought by Licensor
hereunder.
(c) Licensor agrees to indemnify and defend Licensee against and to
reimburse Licensee for all damages for which Licensee is held liable in any
claim or proceeding referred to in Section 17(b) hereof in the United States,
Canada and Australia, provided that Licensee's use of the NASCAR Marks was
authorized by Licensor pursuant to and in compliance with this Agreement and for
all costs reasonably incurred by Licensee in the defense of any such claim
brought against Licensee or in any such proceeding, in which Licensee is named
as a party, provided that Licensee has timely notified Licensor of such claim or
proceeding, having given Licensor sole control of the defense (including the
selection of attorneys to represent Licensee) and settlement of any such claim
or proceeding, and have otherwise complied with this Agreement. If it becomes
legally necessary for Licensee to modify or discontinue the use of any NASCAR
Marks and/or use one or more additional or substitute trademarks or service
marks, Licensee agrees to comply with Licensor's directions within a reasonable
time after receiving notice thereof. Licensor shall not be obligated in any
manner whatsoever to reimburse Licensee for any loss of revenue, lost profits,
start-up or other such expenses, or any direct or consequential damages
attributable to any modified or discontinued NASCAR Marks or for any
expenditures Licensee makes to promote a modified or substitute trademark or
service mark.
18. INSURANCE
(a) Insurance Coverage. Licensee shall secure and maintain insurance
coverage for itself and its concessionaires, including general liability and
products liability coverage, with insurance carriers acceptable to Licensor and
in accordance with Licensor's current insurance requirements, as set forth from
time to time by Licensor. Licensee shall provide evidence of such insurance
before obtaining possession of a Site or at such other time that Licensor
specifies. The coverage shall comply with the requirements of any lease for
financing for a Site and include coverage for risk, in such amounts and subject
to such policy limits and deductible amounts as Licensor shall determine from
time to time. In any event (i) the amount of coverage provided for each Site
under any comprehensive general liability insurance shall not be less than
[***]; (ii) property and casualty insurance shall be for the full replacement
value of the Entertainment Store and its contents; (iii) Licensee shall carry
business interruption insurance which shall provide benefits over a period of
not less than [***] and (iv) no insurance shall have greater than a [***]
deductible unless approved in writing in advance by Licensor. Licensee also
shall carry such workers'
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compensation insurance for itself and its concessionaires as may be required by
applicable law. In addition, Licensor may require as a condition to approval of
any food and beverage supplier to the Entertainment Stores that such supplier
includes Licensor and Licensee as additional insureds on such supplier's product
liability insurance.
(b) Conditions of Coverage. Licensee agrees to name Licensor as an
additional insured on all insurance policies required by this Section 18 to the
extent of its interest and provide Licensor certificates of insurance evidencing
such coverage. All policies shall provide Licensor with at least thirty (30)
days' prior written notice of cancellation or termination of coverage. Licensor
reserves the right to specify reasonable changes in the types and amounts of
insurance coverage required by this Section 18. Should Licensee fail or refuse
to procure the required insurance coverage from an insurance carrier acceptable
to Licensor, or to maintain such coverage throughout the Term of this Agreement,
Licensor may, but not shall be obligated to, procure such coverage for Licensee,
in which event Licensee agrees to pay the required premiums and/or to fully
reimburse Licensor for them.
19. TERMINATION BY LICENSEE WITH CAUSE
During the term of this Agreement, Licensee in the exercise of its best
business judgment, may determine that it is necessary or advisable to close an
Entertainment Store or to otherwise cease operating such Entertainment Store
pursuant to the terms of this Agreement. If, and only if, Licensee reasonably
determines that with respect to an Entertainment Store it is unprofitable and
the expenses of an Entertainment Store exceed the Gross Revenue from such
Entertainment Store during any full calendar year in the operation of such
Entertainment Store; provided, however, that Licensee shall timely pay all
creditors and satisfy all of its debts and liabilities relating to such
Entertainment Store prior to closing of such Entertainment Store to the general
public. In connection therewith, in the event that Licensee discontinues the
operation of an Entertainment Store or causes the operation of an Entertainment
Store to be discontinued in accordance with this Section 20, Licensee shall
provide Licensor sixty (60) days written notice prior to discontinuing the
operation of an Entertainment Store and Licensee shall fully comply with Section
21 hereof.
This Agreement (i) shall be automatically terminated (without any further
action required by Licensee) upon the expiration of the Term and (ii) may be
terminated, subject to any applicable cure period, in Licensee's sole
discretion, upon the occurrence of any Default (as defined below).
(a) Events of Default; Termination. Licensee may elect, without prejudice
to any other rights or remedies which it may have hereunder, at law or in
equity, immediately to terminate this Agreement upon occurrence of any of the
following (a "Default"), which shall constitute an event of default under this
Agreement.
(i) Misrepresentation and Misconduct. Licensor has knowingly
made any material misrepresentation or omission in connection with its ownership
of the license granted hereby or in connection with entering into this
Agreement; or if Licensor engages in any dishonest conduct or act of moral
turpitude that materially adversely affects the goodwill associated with the
license granted hereunder or the NASCAR Marks.
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20. TERMINATION BY LICENSOR
This Agreement (i) shall be automatically terminated (without any further
action required by Licensor) upon the expiration of the Term and (ii) may be
terminated, subject to any applicable cure period, in Licensor's sole
discretion, upon the occurrence of any Default (as defined below).
(a) Events of Default; Termination. Licensor may elect, without prejudice
to any other rights or remedies which it may have hereunder, at law or in
equity, immediately to terminate this Agreement upon occurrence of any of the
following (a "Default"), which shall constitute an event of default under this
Agreement:
(i) Sums Due. Licensee's failure to pay any sum which is due
and payable within thirty (30) days after written notice from Licensor that such
amount is due pursuant to this Agreement;
(ii) Misrepresentation and Misconduct. Licensee has knowingly
made any material misrepresentation or omission in connection with its securing
of the license granted hereby or in connection with entering into this
Agreement; or if Licensee engages in any dishonest conduct or act of moral
turpitude that materially adversely affects the goodwill associated with the
NASCAR Marks and/or the NASCAR Trade Dress;
(iii) Violations of Laws and Regulations. Licensee violates
any laws, rules and regulations (including without limitation, health, safety or
sanitation law, ordinance or regulation) and does not cure the noncompliance or
violation within ten (10) days or such longer grace period as the authorities
allow) of discovering such noncompliance or violation;
(iv) Transfer or Assignment. Licensee makes an unauthorized
transfer or assignment of this Agreement or the Entertainment Store(s);
(v) Understatement of Gross Revenue. Licensee intentionally
understates any of the Entertainment Stores' Gross Revenue;
(vi) Payment of Taxes. Licensee fails to pay within thirty
(30) days when due any federal or state income, service, sales or other taxes
due on the Licensee's operations, unless it is in good faith contesting its
liability for such taxes, has effectively stayed the enforcement of liability
for such taxes and has established adequate reserves for such taxes;
(vii) Abandonment. Licensee's abandonment of any Entertainment
Store(s) by failure to have any Entertainment Store(s) open to the general
public and operating for five (5) or more consecutive days, or an aggregate of
ten (10) days within any calendar quarter (other than in connection with the
permanent cessation of operating an Entertainment Store pursuant to Section 20
hereof) unless such failure to operate is due to scheduled remodeling repairs,
technology upgrades or renovation approved by Licensor, or due to fire, flood,
earthquake or other similar Acts of God beyond Licensee's control;
(viii) Creditor's Remedies, etc. Licensee or any Entertainment
Store is seized, taken over or foreclosed on by a government official in the
exercise of his duties, or by a
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creditor, lien holder or lessor, or any legal action against Licensee by a
creditor resulting in attachment, garnishment or sequestration of Licensee's
interest in any Entertainment Store, and possession is not regained by Licensee
within thirty (30) days or the attachment, garnishment or sequestration is not
discharged within thirty (30) days; or a levy of execution has been made upon
Licensee or upon any property used in the business and it is not discharged
within thirty (30) days of such levy; or the making of an assignment for the
benefit of creditors or the filing of a voluntary or involuntary petition by or
against Licensee or any Entertainment Store under any Section or chapter of the
United States Bankruptcy Code, as amended, or under any similar law or statute
of the United States or any state thereof; or the appointment of a receiver for
all or substantially all of the assets of any Entertainment Store;
(ix) Litigation. Licensee shall contest the enforceability of
this Agreement, or ownership by Licensor of the NASCAR Marks and/or the NASCAR
Trade Dress;
(x) Closing of Multiple Entertainment Stores. An aggregate of
five (5) or more Entertainment Stores are closed to the general public, in
accordance with Section 19 during the Term of this Agreement;
(xi) Licensor's Failure to Approve Initial Plan. Licensor
disapproves or fails to approve Licensee's Initial Plan within thirty (30) days
after the delivery of the Initial Plan by Licensee to Licensor in accordance
with Section 6(a) hereof;
(xii) Breach of Representations, Warranties and Covenants.
Licensee breaches any representation, warranty or covenant contained in this
Agreement;
(xiii) Change in Majority Ownership or Majority Control of
Licensee. Except upon the completion of an Initial Public Offering, the original
owners of Licensee, such original owners' being all of those Owners of Licensee
as of December 15, 1997 (collectively, the "Original Owners"), fail to maintain
at all times during the Term of this Agreement, for any reason whatsoever, at
least fifty-one percent (51%) or more of the outstanding total and ownership
interest in Licensee;
(xiv) Certain Changes in Connection with Board of Directors of
Licensee. More than two (2) of the six (6) original Members of the Board of
Directors of Licensee, such original Members of the Board of Directors of
Licensee being those Members of the Board of Directors of Licensee as of the
Effective Date of this Agreement, as are listed and described on Exhibit E (the
"Original Directors"), do not remain or serve, for any reason whatsoever, as
Members of the Board of Directors of Licensee, unless otherwise approved in
writing by Licensor; or the authorized number of Board of Directors of Licensee
at any time during the Term of this Agreement exceeds seven (7), unless
otherwise approved in writing by Licensor;
(xv) Breach of any Term. Licensee fails to comply with or
violates any of the terms or conditions of this Agreement and such failure or
violation is not cured within twenty (20) days of the date of notice that such
failure or violation occurred; provided, however, such failure or violation can
be corrected or cured but cannot be corrected and cured (to the satisfaction of
Licensor) within such twenty (20) days, Licensee shall be provided with an
additional reasonable amount of time to correct and cure such failure or such
violation; provided
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<PAGE> 31
that Licensee at all times uses its best efforts to correct and cure such
failure or violation; and further provided that, in no event shall such time
period to correct or cure such failure or violation by Licensee extend beyond
sixty (60) days following the date of notice that such failure or violation
occurred; and
Notwithstanding the provisions described in this Section 20, if any,
applicable law or regulation of a governmental authority having jurisdiction
over this Agreement, Licensor and/or Licensee limit-, Licensor's rights of
termination or requires different or longer notice periods than those set forth
herein, the affected portions of this Section 20 shall be deemed amended solely
to conform to such laws and regulations.
(b) Successive Breaches. In addition to and not in limitation of any of
Licensor's remedies for any event of Default set forth in Section 20, if, after
a breach by Licensee of a provision of this Agreement, for which License has
been given notice and an opportunity to cure (if any) as provided herein,
Licensee breaches the same provision twice within any one hundred eighty (180)
day period, Licensor may also immediately terminate this Agreement upon any such
subsequent breach of the same provision within such one hundred eighty day (180)
period, provided that Licensee has been given notice of such subsequent breach
and, if the provision breached provides for an opportunity to cure, Licensee has
also been provided with an additional ten (10) day period during which to cure
such subsequent breach.
(c) Effective Date of Termination. Termination of this Agreement shall be
effective immediately upon Licensor's giving to Licensee written notice of
termination in accordance with the notification provisions set forth in Section
22.
(d) Choice of Remedies. Upon the occurrence of an event of Default under
this Agreement, Licensor may in its sole discretion independently exercise or
not exercise any or all rights which it may have under this Agreement or any
other agreements by and between Licensee and Licensor, and the exercise of
Licensor's rights under this Agreement shall not exclude any other remedies
which Licensor may have at law or in equity. All such remedies of Licensor are
cumulative.
21. EFFECT OF TERMINATION OR EXPIRATION
Upon termination or expiration of this Agreement with respect to any of
the Entertainment Stores, or the closing of an Entertainment Store pursuant to
Section 20:
(a) De-identification. Licensee covenants and agrees that it shall:
(i) after [***] days following the date of termination, not
directly or indirectly at any time or in any manner identify itself or any
business as one of Licensor's licensees, use any NASCAR Mark, any colorable
imitation thereof or other indicia of NASCAR in any manner or for any purpose or
utilize for any purpose any trade-name, trade or service mark or other
commercial symbol that indicates or suggests a connection or association with
Licensor;
(ii) cease all use of and remove, destroy and/or deliver to
Licensor all signs, signs/faces, advertising and promotion materials, forms and
other materials containing any
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<PAGE> 32
NASCAR Mark or otherwise identifying or relating to NASCAR, to the satisfaction
of Licensor within [***] days following the date of termination;
(iii) during the period prior to the discontinuance of use of
the NASCAR Marks at the Entertainment Stores, remain obligated to pay Royalties
with respect to the Gross Revenue of the Entertainment Stores and otherwise
comply with the terms of this Agreement;
(iv) within [***] days following such termination, turn over
to Licensor all copies of all records, files, instructions, correspondence,
agreements, and any and all other materials relating to the NASCAR Marks, in
Licensee's possession, and all copies thereof (all of which are hereby
acknowledged to be Licensor's sole property);
(v) within [***] days and at its own expense make such
alterations to the Entertainment Stores or otherwise to distinguish the
Entertainment Stores clearly from their former appearance and remove any
tradename, trade or service mark or other commercial symbol that indicates or
suggests a connection or association with Licensor so as to prevent confusion
therewith by the public; and
(vi) subject to the terms and conditions in this Agreement,
Licensee shall within [***] days remove from the software of all Simulators all
uses of the NASCAR Marks, NASCAR Trade Dress, NASCAR Indicia, NASCAR Copyrighted
Works, and Licensor Trade Secrets.
(vii) furnish Licensor, within [***] days after the effective
date of expiration or termination of this Agreement, with evidence satisfactory
to Licensor of Licensee's compliance with the foregoing obligations.
(b) Licensee further covenants and agrees that within [***] days following
such termination or expiration of this Agreement, it shall pay all creditors of
the Entertainment Stores in full and discharge and fully satisfy all debts and
liabilities relating to or associated with the Entertainment Stores.
(c) All of Licensee's obligations that expressly or by their nature
survive the expiration or termination of this Agreement under this Agreement
will continue in full force and effect subsequent to and notwithstanding its
expiration or termination and until they are satisfied in full or by their
nature expire.
22. NOTICES
Unless otherwise specified herein, all notices, requests, demands,
payments, consents and other communications hereunder shall be transmitted in
writing, and shall be deemed to have been duly given when hand delivered, upon
delivery when sent by express mail, courier, overnight mail or other overnight
or next day delivery service, or three (3) days after the date mailed when sent
by registered or certified United States mail, postage prepaid, return receipt
requested, or when deposited with a public telegraph company for immediate
transmittal, charges prepaid, or by telecopier, with a confirmation copy sent by
U.S. mail, postage prepaid, addressed as follows:
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<PAGE> 33
<TABLE>
<S> <C>
Licensor: NASCAR
P.O. Box 2875
Daytona Beach, FL 32120-2875
Attention: Tom Bledsoe
with a copy to (which shall not constitute notice):
NASCAR
13801 Reese Boulevard West
Huntersville, NC 28078
Attention: Contract Administrator
with a copy to (which shall not constitute notice):
Alston & Bird LLP
1201 W. Peachtree Street
Atlanta, GA 30309-3424
Attention: Martin J. Elison, Esq.
Licensee: LBE Technologies, Inc
10401 Bubb Road
Cupertino, CA 95014
Attention: Chris Morse
with a copy to (which shall not constitute notice):
Gray Cary Ware & Freidenrich LLP
400 Hamilton Road
Palo Alto, CA 94301
Attention: James Koshland, Esq.
</TABLE>
23. MISCELLANEOUS
(a) Further Acts. The parties agree to execute such other documents and
perform such further acts as may be necessary or desirable to carry out the
purposes of this Agreement.
(b) Entire Agreement. This Agreement and the exhibits hereto, which are
incorporated herein by this reference, represent the entire understanding
between the parties with respect to the subject matter contained herein and
supersedes all other negotiations, agreements, representations and covenants,
oral or written, and any other agreement executed by Licensor or its affiliates
and Licensee in connection herewith. The parties intend this Agreement to be the
entire integration of all of their agreements of any nature on the subject
matter hereof. This Agreement may not be modified except by a written instrument
signed by the parties.
(c) Waiver. Failure by the parties to enforce any of their respective
rights under this Agreement shall not be construed as waiver of such rights. Any
waiver, including waiver of default, in any one instance shall not constitute a
continuing waiver or a waiver in any other
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<PAGE> 34
instance. Any acceptance of money or other performance by one party from another
party shall not constitute a waiver of any default except as to the payment of
the particular payment or performance so received.
(d) Effectiveness. The submission of this Agreement does not constitute an
offer to license and this Agreement shall become effective only upon execution
thereof by Licensee and Licensor.
(e) Governing Law. THIS AGREEMENT IS A CONTRACT MADE UNDER AND SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA.
(f) Severability. In the event that any term or provision in this
Agreement is held to be invalid, void, illegal or unenforceable in any respect,
the Agreement shall not fail, but shall be deemed amended to delete the void or
unenforceable term or provision, and the remainder of this Agreement shall be
enforced in accordance with its terms and shall not in any way be affected or
impaired thereby. In the event that any term or provision of this Agreement is
held to be unreasonable, the same shall not fail, but shall be deemed amended
only to the extent necessary to render it reasonable, and the parties agree to
be bound by the same as thus amended.
(g) Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(h) Disclaimer of Warranties. Licensee hereby acknowledges and agrees that
Licensor has made no promises, representations, guarantees or warranties, of any
nature, that the Entertainment Stores will be successful or profitable. Licensee
further represents to Licensor that Licensee has independently reviewed and
evaluated the business to be conducted by Licensee hereunder, and the decision
to enter into this Agreement was made by Licensee solely in reliance upon such
independent evaluation.
(i) Relationship of the Parties. The relationship between the parties
hereto is solely that of licensee and licensor, and nothing herein shall be
deemed or construed to create any franchise, joint venture, partnership or any
relationship other than that of licensee and licensor. In all dealings with
third parties, including, without limitation, employers, suppliers and
customers, Licensee shall disclose in an appropriate manner acceptable to
Licensor, that Licensee is an independent entity licensed by Licensor. Nothing
in this Agreement is intended by the parties hereto to create a fiduciary
relationship between them, nor to constitute one party an agent, legal
representative, subsidiary, franchise, joint venture, partner, employee or
servant of another party for any purpose whatsoever. It is understood and agreed
that Licensee is an independent contractor and is in no way authorized to make
any contract, warranty or representation or to create any obligation on behalf
of Licensor.
(j) Jurisdiction. ANY DISPUTE ARISING OUT OF OR RELATED TO THE AGREEMENT,
WHICH CANNOT BE RESOLVED BY NEGOTIATION, SHALL BE SETTLED BY BINDING ARBITRATION
IN ACCORDANCE WITH THE AMERICAN ARBITRATION ASSOCIATION COMMERCIAL ARBITRATION
RULES AND PROCEDURES AS AMENDED BY THIS AGREEMENT. THE COST OF ARBITRATION,
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<PAGE> 35
INCLUDING THE FEES AND EXPENSES OF THE ARBITRATOR, SHALL BE SHARED EQUALLY BY
THE PARTIES UNLESS THE ARBITRATION AWARD PROVIDES OTHERWISE. EACH PARTY SHALL
BEAR THE COST OF PREPARING AND PRESENTING ITS CASE. THE PARTIES AGREE THAT THIS
PROVISION AND THE ARBITRATOR'S AUTHORITY TO GRANT RELIEF SHALL BE SUBJECT THE
UNITED STATES ARBITRATION ACT, 9 U.S.C. 1-16 ET SEQ. (AUSAA@), THE PROVISIONS OF
THIS AGREEMENT, AND THE ABA-AAA CODE OF ETHICS FOR ARBITRATORS IN COMMERCIAL
DISPUTES. THE PARTIES AGREE THAT THE ARBITRATOR SHALL HAVE NO POWER OR AUTHORITY
TO MAKE AWARDS OR ISSUE ORDERS OF ANY KIND EXCEPT AS EXPRESSLY PERMITTED BY THIS
AGREEMENT, AND IN NO EVENT SHALL THE ARBITRATOR HAVE THE AUTHORITY TO MAKE ANY
AWARD THAT PROVIDES FOR PUNITIVE OR EXEMPLARY DAMAGES. THE ARBITRATOR'S DECISION
SHALL FOLLOW THE PLAIN MEANING OF THE RELEVANT DOCUMENTS, AND SHALL BE FINAL AND
BINDING. THE AWARD MAY BE CONFIRMED AND ENFORCED IN ANY COURT OF COMPETENT
JURISDICTION. ALL POST-AWARD PROCEEDINGS SHALL BE GOVERNED BY THE USAA. THIS
PROVISION SHALL NOT BE CONSTRUED SO AS TO PROHIBIT EITHER PARTY FROM SEEKING
PRELIMINARY OR PERMANENT INJUNCTIVE RELIEF IN ANY COURT OF COMPETENT
JURISDICTION.
(k) Headings. Titles and captions of sections, subsections and clauses in
this Agreement are for convenience only, and neither limit nor amplify the
provisions of this Agreement.
(l) Survival of Representations, Warranties and Covenants. The several
representations and warranties of Licensee contained in this Agreement and each
of the covenants of Licensee contained in Section 4, Section 12, Section 14,
Section 15, Section 16, Section 18(b) and Section 21 hereof, and the
indemnification obligations of Licensee contained herein, shall all survive the
expiration or termination of this Agreement indefinitely.
The representations and warranties of Licensor contained in this
Agreement, and each of the covenants of Licensor contained in Section 14 and
Section 16 hereof, shall all survive the expiration or termination of this
Agreement indefinitely.
(m) Approvals and Similar Actions. Where the approval, acceptance,
consent, authorization, or similar action of Licensor is required under this
Agreement, such approval, acceptance, consent, authorization, or similar action
must be in writing, and the same may be given, denied or withheld by Licensor in
its sole discretion, except where otherwise indicated.
(n) Equitable Relief. In the event of a breach or threatened breach by
either Licensor or Licensee of the terms hereof, the non-breaching party shall
be entitled to injunctive and other equitable relief.
(o) Warranty Disclaimer. EXCEPT AS PROVIDED HEREIN, EACH OF THE PARTIES
AGREES THAT NONE OF THE PARTIES HERETO MAKES ANY WARRANTIES, EITHER EXPRESS OR
IMPLIED, WITH RESPECT TO ANY OF THE SIGNS, FIXTURES, FURNISHINGS, DECOR,
APPROVED EQUIPMENT, OTHER EQUIPMENT, PRODUCTS, SUPPLIES, INVENTORY AND MATERIALS
THAT MAY BE
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USED IN CONNECTION WITH ANY ENTERTAINMENT STORE. FURTHERMORE, NONE OF THE
PARTIES MAKES ANY WARRANTY OF MERCHANTABILITY FOR A PARTICULAR PURPOSE.
(p) Marketing Fund Contribution. In addition to any amounts payable by
Licensee under this Agreement, Licensee shall pay to Licensor an amount equal to
[***] in each year of the term, beginning in 1998, of this Agreement in
consideration for Licensee's participation in Licensor's Buyer's Guide and other
promotional projects determined by Licensor. The fee payable by Licensee under
this SECTION 23(p) shall be subject to an [***] increase of up to [***] during
the term of this Agreement in Licensor's sole discretion and without notice to
Licensee. Licensee hereby agrees to participate in Licensor's Buyer's Guide,
which participation includes, but is not limited to, providing Licensor with all
necessary materials for the Buyer's Guide.
[Signatures Appear on the Following Page]
36
***Confidential treatment requested.
<PAGE> 37
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Agreement Date first above written.
LICENSOR:
NATIONAL ASSOCIATION FOR
STOCK CAR AUTO RACING, INC.
By: /s/
---------------------------------------------
Title: VP Licensing
------------------------------------------
LICENSEE:
LBE TECHNOLOGIES, INC.
By: /s/ DAMON DANIELSON
---------------------------------------------
Title: President & CEO
------------------------------------------
Attest: CHRIS MORSE
-----------------------------------------
Title: VP Business Development
------------------------------------------
37
<PAGE> 38
EXHIBIT A
GENERAL DESCRIPTION OF NASCAR MARKS
1. The general mark NASCAR & DESIGN as reflected in U.S. Reg. No.
1,850,527, and any modifications or replacements thereof.
2. The mark NASCAR SILICON MOTOR SPEEDWAY & Design [picture to be
included].
H-1
<PAGE> 39
[GRAPHICS]
H-2
<PAGE> 40
AMENDMENT #1 TO THE LICENSE AGREEMENT
BY AND BETWEEN LBE TECHNOLOGIES, INC.
AND NATIONAL ASSOCIATION FOR STOCK CARE AUTO RACING, INC.
This Amendment (the "Amendment") shall amend the License Agreement (the
"Agreement") by an between LBE TECHNOLOGIES, INC. ("License") and National
Association for Stock Car Auto Racing, Inc. ("Licensor").
RECITALS
WHEREAS, Licensee and Licensor have entered into the Agreement, the
effective date of which was August 18, 1997.
WHEREAS, Licensee and Licensor wish to amend the Agreement as set forth in
this Amendment.
WHEREAS, Defined terms not defined herein will have the same meanings as
ascribed to such terms in this Agreement.
THEREFORE, for adequate consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
AMENDMENT
The License Agreement is hereby modified by the following:
1. Both parties acknowledge and agree that Licensee has changed its
corporate name to SILICON ENTERTAINMENT, INC. a, California Corporation with a
principal business address of 210 Hacienda Avenue, Campbell, California 95008.
All rights and obligations held by LBE Technologies, Inc. under the Agreement
and Amendment hereto shall now be held by Silicon Entertainment, Inc.
2. DEFINITIONS.
"Category" means operator assisted location-based interactive
stockcar or stock-truck entertainment experiences that consist of no less than
five (5) linked simulator units, with each on a motion-based platform and each
allowing a maximum of two (2) people to participate in each individual simulator
unit; each location shall be permanent in nature, in an out of home retail
environment, such as a mall, and shall be no less than 3,000 square feet in size
with a minimum of three (3) permanent perimeter walls and a fixed ceiling.
3. Paragraph 2(b) is amended, in its entirety as follows:
"Exclusivity. Licensee acknowledges, understands and confirms that the
license granted to Licensee by Licensor during the term of this Agreement
and subject to the terms and conditions of this Agreement are EXCLUSIVE in
the category only for a period commencing the date of this Amendment and
ending on
H-3
<PAGE> 41
December 31, 2002. The license does not include coin-operated video
games or arcade games, including, but not limited to networked arcade
units; individual "free-standing" simulator units; simulators that permit
more than two users to participate at one time and that are not user
controlled, such as the "Thompson" simulators. In the event Licensor
elects to exercise its option to render this Agreement NON-EXCLUSIVE in
the category as provided for in Section 5(a) herein; Licensor shall retain
the right, at its sole discretion, to operate or grant to any other person
the right to operate Entertainment Stores (or any other related concept)
at any location within or outside the Territory, provided however,
Licensor shall not be entitled to use any of Licensee's Intellectual
Property (as defined in Section 12(b) of the Agreement) in any other
Entertainment Store associated with the Licensor. Upon termination or
expiration (without renewal of this Agreement), Licensee shall have no
further rights hereunder, other than the rights held prior to the Grant of
License."
4. Paragraph 2(d)(5) shall be amended, in its entirety, as follow:
"Warranty Within Territory". Licensor imposes upon Licensee no limitation
on the territorial scope of the License, which is worldwide in scope, but
Licensor expressly does not warrant or represent that the rights under the
license granted hereunder are enforceable or non-infringing upon the rights of
others outside of the United States and Canada. Licensee agrees that use of the
Marks outside of these countries shall be at the sole risk of the Licensee, and
that Licensee agrees to indemnify and hold Licensor and its affiliates,
shareholders, employees, directors, officers and agents of each of them harmless
against all cost and expense incurred, including settlements, judgments and
reasonable attorney's fees in the defense of any claim that arises solely as a
result of the use by of Licensee of the Marks outside of the United States and
Canada. At Licensee's expense, Licensee may present a list of prospective
territories outside of the United States and Canada in which the Licensee is
considering establishing additional Entertainment Store locations, at which time
the Licensor will research and notify the Licensee of any known rights-related
issues that might encumber such expansion; provided that Licensee may offset
such costs and expenses against future royalties earned from such countries. For
example; if Licensee notifies Licensor that it would like to go to Country X,
Licensor will research any and all third-parties rights, which might encumber
such expansion and Licensor shall take any steps it deems necessary, at its sole
discretion with respect to clearing such rights, and all costs associated with
such research and steps taken to clear the NASCAR Marks ("Costs") shall be paid
for by Licensee; provided further that Licensee may offset future royalties or
Guaranteed Minimum Royalties earned in Country X against such Costs."
5. Paragraph (3) "TERMS OF LICENSE" shall be amended, in its entirety, as
follows:
"(a) Term. The Term of this Agreement shall commence on the Effective Date
of the Agreement and end on December 31, 2005; with the period beginning
with the Effective Date of the Amendment and commencing until December 31,
2002 being EXCLUSIVE. At the end of the Exclusivity Period NASCAR shall
have the option, in its sole discretion, to extend the exclusivity period.
If Licensor
H-4
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elects to not extend the exclusivity period, the remaining term January 1,
2003 through December 31, 2005 shall be NON-EXCLUSIVE."
6. Paragraph 4(a)(1) "Guaranteed Minimum Royalty" shall be amended, in its
entirety, as follows:
"(1) Schedule. In consideration of the license granted to Licensee,
hereunder, Licensee shall pay to Licensor a non-refundable advance against
royalties owed under this Agreement (the "Guaranteed Minimum Royalty") as
follows:
<TABLE>
<CAPTION>
Quarterly Guaranteed Annual Guaranteed
Minimum Royalty Minimum Royalty
Calendar Year Payment by Licensee Payment by Licensee
------------- -------------------- -------------------
<S> <C> <C>
1998 $50,000 $200,000
1999 $125,000 $500,000
2000 $200,000 $800,000
2001 $243,750 $975,000
2002 $292,500 $1,170,000
2003 $336,250 $1,345,000
2004 $375,000 $1,500,000
2005 $412,500 $1,650,000
</TABLE>
7. Paragraph 8(a)(iii) shall be amended, in its entirety, as follows:
"(iii) Licensee shall have opened to the general public at least
[***] additional Entertainment Stores on or before September 30, 1999, resulting
in a cumulative minimum number of at least [***] Entertainment Stores opened to
the general public and in operation by September 30, 1999; and . . .
8. EXCLUSIVITY FEE
(a) Licensee shall pay Licensor an Exclusivity Fee of [***] which
shall be fully earned and non-refundable upon receipt by Licensor upon the
signing of this Amendment #1 and shall not be credited against royalties or
Annual Guaranteed Minimum payments owed to the Licensor by the Licensee.
(b) Licensor shall have the rights provided in the Nonstatutory
Stock Option, included as Exhibit A. These rights include but are not limited to
the purchase of [***] shares of Licensee's stock at [***] per share.
9. SPECIAL STIPULATIONS
(a) Licensee acknowledges, understands and confirms that the license
granted to Licensee by Licensor during the term of this Agreement and Addendum
thereto shall become non-exclusive on July 1, 2000, in the event Licensee fails
to execute a public offering of stock on or before June 30, 2000.
H-5
***Confidential treatment requested.
<PAGE> 43
(b) The Las Vegas location of the NASCAR Cafe shall be permitted to
operate a simulator experience similar to that of Licensee and this operation
shall be excluded from the exclusivity provision in Paragraph 3(a) of this
Amendment. Notwithstanding the foregoing, NASCAR will utilize commercially
reasonable efforts to ensure that the simulator experience located at the NASCAR
Cafe in Las Vegas does not directly convey an "official" or perceived
endorsement by NASCAR. NASCAR shall determine what constitutes an "official" or
perceived endorsement at its reasonable discretion.
10. All other provisions of the Agreement shall remain in full force and
effect, it being understood that, in the event of a conflict the terms of this
Amendment and the Agreement, the terms of this Amendment will take precedence.
IN WITNESS WHEREOF, the parties have executed the Amendment to be
effective the date of last signature below.
<TABLE>
<S> <C>
LICENSEE: LICENSOR:
SILICON ENTERTAINMENT, INC. NATIONAL ASSOCIATION FOR STOCK CAR
AUTO RACING, INC.
By: /s/ CHRIS MORSE By: /s/
--------------------------------- ---------------------------------
Print Name: Print Name:
------------------------- -------------------------
Title: VP Title:
------------------------------ ------------------------------
Date: 7-7-99 Date:
------------------------------- -------------------------------
</TABLE>
H-6
<PAGE> 44
AMENDMENT #2 TO THE LICENSE AGREEMENT
BY AND BETWEEN LBE TECHNOLOGIES, INC.
AND NATIONAL ASSOCIATION FOR STOCK CAR AUTO RACING, INC.
This Amendment (the "Amendment") shall amend the License Agreement (as
amended), (the "Agreement") by and between LBE TECHNOLOGIES, INC. ("Licensee")
and National Association for Stock Car Auto Racing, Inc. ("Licensor").
RECITALS
WHEREAS, Licensee and Licensor have entered into the Agreement, the
effective date of which was August 18, 1997 and which was subsequently amended.
WHEREAS, Licensee and Licensor wish to amend the Agreement as set forth in
this Amendment.
WHEREAS, Defined terms not defined herein will have the same meanings as
ascribed to such terms in the Agreement (as amended).
THEREFORE, for adequate consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
AMENDMENT
The Licensee Agreement is hereby modified by the following:
1. Section 20(a)(xiv) of the Agreement, as amended, is hereby deleted in
its entirety and the following language is substituted therefore:
Section 20(a)(xiv) Certain Changes In Connection With Board of Directors of
Licensee
More than two (2) of the (5) Members of the Board of Directors of Licensee,
such members of the Board of Directors of Licensee being those Members of the
Board of Directors of Licensee as of the Effective Date of this Amendment, and
as are listed and described on Exhibit E, do not remain or serve, for any reason
whatsoever, as Members of the Board of Directors of Licensee, unless otherwise
approved in writing by Licensor; or the authorized number of Board of Directors
of Licensee at any time during the Term of this Agreement exceeds seven (7),
unless otherwise approved in writing by Licensor.
2. Section 8 of the Agreement (as amended is hereby deleted in its
entirety and the following is substituted therefore
8. DEVELOPMENT SCHEDULE
(a) Total Number of Entertainment Stores. Licensee shall develop
a total of at least eleven (11) Entertainment Stores within the Territory
during the Term of this
<PAGE> 45
Agreement pursuant to the terms of this Agreement in accordance with the
following development schedule (the "Development Schedule")
(i) Licensee shall have opened to the general public at least [***]
Entertainment Store on or before December 31, 1997;
(ii) Licensee shall have opened to the general public at least [***]
additional Entertainment stores on or before December 31, 1998
resulting in a cumulative minimum number of at least [***]
Entertainment Stores opened to the general public and in
operation by December 31, 1998;
(iii) Licensee shall have opened to the general public at least [***]
additional Entertainment stores on or before January 31, 2000
resulting in a cumulative minimum number of at least nine (9)
Entertainment Stores opened to the general public and in
operation by January 31, 2000;
(iv) Licensee shall have opened to the general public at least [***]
additional Entertainment stores on or before August 31, 2000
resulting in a cumulative minimum number of at least thirteen
(13) Entertainment Stores opened to the general public and in
operation by August 31, 2000;
3. Exhibit E, the section titled Board of Directors is hereby deleted and
the following substituted therefore:
Board of Directors
David S. Morse - President, Chief Executive Officer and Chairman of the Board
William Hart - Director
Robert Manschot - Director
Chris Besing - Director
Robert Cheadle - Director
10. All other provisions of the Agreement, as amended, shall remain in full
force and effect, it being understood that, in the event of a conflict the
terms of this Amendment and the Agreement, the terms of this Amendment will
take precedence.
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THE AMENDMENT TO BE
EFFECTIVE THE DATE OF LAST SIGNATURE BELOW.
*** Confidential treatment requested.
<PAGE> 46
LICENSEE: SILICON LICENSOR: National Association for
ENTERTAINMENT, Inc. Stock Car Auto Racing, Inc.
By: /s/ CHRISTOPHER O. MORSE By: /s/
------------------------------ ------------------------------
Print Name: Christopher O. Morse Print Name:
---------------------- ----------------------
Title: V.P. Title:
--------------------------- ---------------------------
Date: 9-7-99 Date:
---------------------------- ----------------------------
<PAGE> 1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED ON A REQUEST
FOR CONFIDENTIAL TREATMENT
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
EXHIBIT 10.8
LBE TECHNOLOGIES, INC. & ACTION PERFORMANCE COMPANIES, INC.
TERMS - STRATEGIC RELATIONSHIP
TERM: Five years from of date of signing of this term sheet
MERCHANDISE: LBE Technologies, Inc. (LBET) will put an "Action Pit Stop"
merchandise concept in all NASCAR Silicon Motor Speedway
(NSMS) entertainment centers. Design to be consistent with
NSMS style and approved by both parties.
LBET to Provide:
- Own and operate all merchandise operations.
- Purchase *** NASCAR related merchandise from Action
Performance Companies, Inc. (Action) except for the
merchandise of NSMS official drivers not covered by Action.
- First right of refusal on NSMS merchandise. Action
will provide a *** turnaround on all quotas. The
choice of vendor will be based on price, quality,
availability and will be made at the determination of LBET.
- "Action Pit Shop" identification and signage in each
merchandise location. Design to be consistent with NSMS
style and approved by both parties.
Action to Provide
- *** access to the top Action product lines including
merchandise and die-cast.
- *** pricing.
- Dedicated account rep to work with LBET to ensure we have
newest and best products on a timely basis.
- Input on merchandise area design in all locations.
- Exclusive items for NSMS (e.g. NSMS Dale Earnhardt
T-shirt, hat...)
- NSMS store specific die-cast.
- "Action Pit Stop" signage for all sites. Design to be
consistent with NSMS style and approved by both parties.
CLUB PROMOTION: Agreement to cross promote the NSMS Drivers Club and the
Action Performance RCCA Club.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 2
TRAVELING SHOW: Action will have first right of refusal on any annual
sponsorship of the touring version of NSMS tht includes
NASCAR track-sde events. Action to have first right of
refusal to operate all mobile units if not operated by LBET.
WARRANT: LBET will provide Action Performance with a Warrant to
purchase 50,000 shares of common stock at $3.00 per share.
Action will use reasonable best efforts to assist LBET with
driver appearances and relationships within the racing
community.
TERMS AGREED TO AND SIGNED BY:
/s/
- ------------------------------------- Date: 4/20/98
LBE Technologies, Inc. _____________________
Authorized Representative
/s/
- ------------------------------------- Date: April 17-98
Action Performance, Inc. _____________________
Authorized Representative
<PAGE> 1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED ON A REQUEST
FOR CONFIDENTIAL TREATMENT
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
EXHIBIT 10.9
VIA FACSIMILE
Mr. Stephen Simon
Simon Investors, LLC
National City Center
115 West Washington Street
Indianapolis, Indiana 46204
Dear Steve,
We welcome Simon Investors, LLC ("Simon Investors") as an investor in LBE
Technologies, Inc. (the "Company") and as part of our strategic team.
We understand that Simon Investors will use *** to assist the Company in
obtaining real estate locations for a minimum of *** NASCAR Silicon Motor
Speedways. Such *** consist of putting the Company into contact with the
appropriate parties at Simon DeBartolo Group, Inc. ("SDG") during the next three
year period. We understand that Simon Investors will disclose its relationship
with the Company to SDG and that entering into this letter agreement does not
bind SDG to its terms. We acknowledge and agree that Simon Investors cannot make
any binding commitments or guarantees or assurances that the Company will be
able to obtain leases in properties owned by SDG or its affiliates. The decision
on whether to enter into such leases will be based on the merits of the proposed
transaction and each lease shall in all events be an arms length transaction
between the Company and SDG or its affiliates.
In consideration for the services to be rendered pursuant to the above
paragraph, the Company hereby agrees to issue to Simon a five-year warrant to
purchase 50,000 shares of Series C Preferred Stock at an exercise price of $3.00
per share. The form of such warrant is attached for your reference.
*** CONFIDENTIAL TREATMENT REQUESTED.
<PAGE> 2
Please acknowledge your understanding of these terms by signing and dating a
copy of this letter and returning it to me via facsimile (408.777.8086).
Sincerely,
LBE TECHNOLOGIES, INC.
By: /s/ DAVID S. MORSE
------------------------------------------
David S. Morse, Chairman of the Board
Attachment
AGREED TO AND ACCEPTED:
SIMON INVESTORS, LLC
BY: MELVIN SIMON & ASSOCIATES, INC.
By: /s/
------------------------------------------
Stephen Simon, President
Date: May 17, 1998
----------------------------------------
-2-
<PAGE> 1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED ON A REQUEST FOR CONFIDENTIAL
TREATMENT
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
EXHIBIT 10.10
INDUSTRIAL COMPLEX LEASE
(California)
Industrial Complex: Hacienda Business Park
Landlord: MP Hacienda, Inc.
Tenant: LBE Technologies, Inc.
Reference Date: April 30, 1998
INDEX TO LEASE
<TABLE>
<CAPTION>
TITLE PAGE
<S> <C> <C>
ARTICLE 1. DEFINITIONS AND CERTAIN BASIC PROVISIONS........................... 1
ARTICLE 2. GRANTING CLAUSE.................................................... 2
ARTICLE 3. DELIVERY OF DEMISED PREMISES....................................... 2
ARTICLE 4. RENT............................................................... 2
ARTICLE 5. FINANCIAL REPORTS.................................................. 4
ARTICLE 6. TENANT'S RESPONSIBILITY FOR TAXES, OTHER
REAL ESTATE CHARGES AND INSURANCE EXPENSES......................... 4
ARTICLE 7. COMMON AREA........................................................ 5
ARTICLE 8. INTENTIONALLY DELETED.............................................. 7
ARTICLE 9. USE AND CARE OF DEMISED PREMISES................................... 7
ARTICLE 10. MAINTENANCE AND REPAIR OF DEMISED PREMISES......................... 7
ARTICLE 11. ALTERATIONS........................................................ 8
ARTICLE 12. LANDLORD'S RIGHT OF ACCESS......................................... 9
ARTICLE 13. SIGNS; STORE FRONTS................................................ 9
ARTICLE 14. UTILITIES.......................................................... 10
ARTICLE 15. INSURANCE COVERAGES................................................ 10
ARTICLE 16. WAIVER OF LIABILITY; MUTUAL WAIVER OF SUBROGATION.................. 11
ARTICLE 17. DAMAGES BY CASUALTY................................................ 12
ARTICLE 18. EMINENT DOMAIN..................................................... 13
ARTICLE 19. ASSIGNMENT AND SUBLETTING.......................................... 13
ARTICLE 20. SUBORDINATION; ATTORNMENT; ESTOPPELS............................... 15
ARTICLE 21. TENANT'S INDEMNIFICATION........................................... 16
ARTICLE 22. DEFAULT BY TENANT AND REMEDIES..................................... 17
ARTICLE 23. INTENTIONALLY DELETED.............................................. 19
ARTICLE 24. HOLDING OVER....................................................... 20
</TABLE>
i
<PAGE> 2
<TABLE>
<S> <C> <C>
ARTICLE 25. NOTICES............................................................ 20
ARTICLE 26. COMMISSIONS........................................................ 20
ARTICLE 27. REGULATIONS........................................................ 20
ARTICLE 28. HAZARDOUS MATERIALS................................................ 21
ARTICLE 29. MISCELLANEOUS...................................................... 23
EXHIBIT "A" DEMISED PREMISES
EXHIBIT "B" CONSTRUCTION: TENANT ACCEPTANCE OF SPACE "AS IS"
EXHIBIT "C" TENANT CONSTRUCTION RULES AND REGULATIONS
EXHIBIT "D" OPTION TO EXTEND
</TABLE>
ii
<PAGE> 3
INDUSTRIAL COMPLEX LEASE
(California)
ARTICLE 1.
DEFINITIONS AND CERTAIN BASIC PROVISIONS
1.1 The following list sets out certain defined terms and certain
financial and other information pertaining to this lease:
(a) "Landlord": MP Hacienda, Inc., a Delaware corporation, whose
taxpayer identification number is 94-3226571.
(b) Landlord's address: c/o GE Capital Investment Advisors, Inc.,
444 Market Street, Suite 2100, San Francisco, California 94111, Attention:
Asset Management and Legal Department.
(c) "Tenant": LBE Technologies, Inc., a California corporation,
whose taxpayer identification number is 77-038943.
(d) Tenant's address:
Prior to Commencement Date: 10401 Bubb Road
Cupertino, CA 95104
Upon Commencement Date: 210 East Hacienda Avenue
Campbell, CA 95008
(e) Tenant's trade names: LBE Technologies and NASCAR Silicon Motor
Speedway
(f) Tenant's Guarantor: N/A
(g) "Agent": South Bay Development Company, whose address is 511
Division Street, Campbell, California 95008, Attention: James D. Mair.
(h) "Industrial Complex": Landlord's property in the City of
Campbell, Santa Clara County, California, which property is commonly known as:
200-254 E. Hacienda Avenue and 1315-1357 Dell Avenue, Hacienda Business Park,
Campbell, California.
(i) "Demised Premises": that certain area in the Industrial Complex
located at 210 East Hacienda Avenue, Campbell, CA 95008, California and being
described or shown cross-hatched on the floor plan(s) attached hereto as
EXHIBIT "A" which Landlord and Tenant acknowledge and agree to contain 40,000
square feet of rentable area.
(j) "Commencement Date": the later of June 1, 1998, or that date
following vacation of the Demised Premises by any existing tenant therein.
(k) "Lease term": commencing on the Commencement Date and continuing
for five (5) years and no months after the Commencement Date; provided that if
the Commencement Date is a date other than the first day of a calendar month,
the lease term shall be extended by the number of days remaining in the calendar
month in which the Commencement Date occurs. Provided further, Tenant shall have
the right to extend the Lease term in accordance with and subject to the terms
of the Option to Extend attached hereto as EXHIBIT "D".
(l) Minimum guaranteed rental: [***], subject to increases in
accordance with Section 4.1 below.
(m) Prepaid rental: [***], being an estimate of the initial
minimum guaranteed rental, for the first month of the lease term, such prepaid
rental being due and payable upon execution of this lease.
(n) "Security Deposit": [***], such Security Deposit being due
and payable upon execution of this lease; provided, however, that the amount of
the Security Deposit may be increased pursuant to Section 4.7 below. The
Security Deposit shall be held and/or applied by Landlord pursuant to the terms
of Section 22.7 below.
(o) Permitted use: Office use, marketing, warehousing, research and
development and product integration in connection with a NASCAR driving
simulator machine business and any other legally permitted use related to such
business, and for no other purpose whatsoever. Any use not
*** Confidential treatment requested.
1
<PAGE> 4
permitted pursuant to the foregoing sentence shall be subject to Landlord's
prior written consent, not to be unreasonably withheld.
(p) Tenant's maximum insurance deductible: [***].
(q) "Tenant's Broker": Colliers Parrish International, Inc.
(r) "Tenant's Proportionate Share": [***].
(s) "Letter of Credit Amount": [***], such Letter of Credit Amount
subject to the terms and conditions of Section 4.7 below.
ARTICLE 2.
GRANTING CLAUSE
2.1 Landlord leases the Demised Premises to Tenant and Tenant leases the
Demised Premises from Landlord, upon all of the terms and conditions set forth
in this lease.
ARTICLE 3.
DELIVERY OF DEMISED PREMISES
3.1 Except to the extent modified by Landlord's express assumption of
construction obligations, if any, in EXHIBIT "B" attached to this lease, the
Demised Premises are being leased "AS IS," with Tenant accepting all defects,
if any; and Landlord makes no warranty of any kind, express or implied, with
respect to the Demised Premises (without limitation, Landlord makes no warranty
as to the habitability, fitness or suitability of the Demised Premises for a
particular purpose nor as to the absence of any toxic or otherwise hazardous
substances). This Section 3.1 is subject to any contrary requirements under
applicable law; however, in this regard Tenant acknowledges that it has been
given the opportunity to inspect the Demised Premises and to have qualified
experts inspect the Demised Premises prior to the execution of this lease.
3.2 If any present tenant or occupant of the Demised Premises holds over
and Landlord cannot acquire possession of the Demised Premises and/or Landlord
cannot complete and improvements to the Demised Premises required to be made by
Landlord as provided in this lease prior to the Commencement Date, this lease
shall not be void or voidable and Landlord shall not be deemed to be in default
under this lease or otherwise liable to Tenant for any claims, damages or
liabilities in connection therewith or by reason thereof; and in such event
Tenant agrees to accept possession of the Demised Premises at such time as
Landlord is able to tender the same. If Landlord utilizes the provisions of
this Section, Landlord will waive the payment of rent and other charges
covering any period prior to tender of possession of the Demised Premises to
Tenant. Notwithstanding the foregoing, if possession of the Demised Premises is
not delivered to Tenant by October 1, 1998, Tenant shall have the right to
terminate this lease upon written notice to Landlord delivered at any time
prior to the date upon which Landlord is able to deliver possession of the
Premises to Tenant.
ARTICLE 4.
RENT
4.1 The minimum guaranteed rental shall be subject to periodic increases
based upon the following schedule and which increases shall become effective
automatically and without further notice as of the first day of the specified
lease month:
<TABLE>
<CAPTION>
Lease Months Monthly Rental
------------ -------------
<S> <C>
Month 13 - 24 [***]
Month 25 - 36 [***]
Month 37 - 48 [***]
Month 49 - 60 [***]
</TABLE>
4.2 Rental shall accrue from the Commencement Date, and shall be payable
to Landlord at Agent's address specified in Section 1.1(g) above or at such
other address as Landlord shall so notify Tenant from time to time.
4.3 Tenant shall pay to Landlord minimum guaranteed rental in monthly
installments in the amounts specified in Section 1.1(l) and Section 4.1 of this
lease. The first such monthly installment shall be due and payable on or before
the Commencement Date, and subsequent installments shall be due
*** Confidential treatment requested.
2
<PAGE> 5
and payable on or before the first day of each succeeding calendar month during
the lease term; provided that if the Commencement Date is a date other than the
first day of a calendar month, there shall be due and payable on or before such
date as minimum guaranteed rental for the balance of such calendar month a sum
equal to that proportion of the rent specified for the first full calendar
month as herein provided, which the number of days from the Commencement Date
to the end of the calendar month during which the Commencement Date shall fall
bears to the total number of days in such month. Tenant agrees to pay to
Landlord, if assessed by the jurisdiction in which the Industrial Complex is
located, any sales, excise or other tax imposed, assessed or levied in
connection with Tenant's payment of rents.
4.4 It is understood that the minimum guaranteed rental is payable on or
before the first day of each calendar month (in accordance with Section 4.2
above), without offset or deduction of any nature. In the event any rental is
not received within ten (10) days after its due date for any reason whatsoever,
or if any rental payment is by check which is returned for insufficient funds,
then in addition to the past due amount Tenant shall pay to Landlord one of the
following (the choice to be at the sole option of Landlord unless one of the
choices is improper under applicable law, in which event the other alternative
will automatically be deemed to have been selected): (a) a late charge in an
amount equal to [***] of the rental then due, in order to compensate Landlord
for its administrative and other overhead expenses; or (b) interest on the
rental then due at the [***], such interest to accrue continuously on any unpaid
balance due to Landlord by Tenant during the period commencing with the rental
due date and terminating with the date on which Tenant makes full payment of all
amounts owing to Landlord at the time of said payment. Any such late charge or
interest payment shall be payable as additional rental under this lease, shall
not be considered a waiver by Landlord of any default by Tenant hereunder, and
shall be payable immediately on demand.
4.5 If Tenant fails in two (2) consecutive months to make rental payments
within ten (10) days after it is due, Landlord, in order to reduce its
administrative costs, may require, by giving written notice to Tenant (and in
addition to any late charge or interest accruing pursuant to Section 4.4 above,
as well as any other rights and remedies accruing pursuant to Article 22 or
Article 23 below or any other provision of this lease or at law), that minimum
guaranteed rentals are to be paid quarterly in advance instead of monthly, and
that all future rental payments are to be made on or before the due date by
cash, cashier's check, or money order and that the delivery of Tenant's
personal or corporate check will no longer constitute a payment of rental as
provided in this lease. Any acceptance of a monthly rental payment or of a
personal or corporate check thereafter by Landlord shall not be construed as a
subsequent waiver of said rights.
4.6 Tenant shall pay when due any and all sales taxes levied, imposed or
assessed by the United States of America, the State of California, or any
political subdivision thereof or other taxing authority upon the minimum
guaranteed rental, additional rent and all other sums payable hereunder.
4.7 (a) Within three (3) business days of the execution of this lease by
Tenant, Tenant shall cause a standby, irrevocable letter of credit to be issued
for the benefit of Landlord by a financial institution acceptable to Landlord in
its sole discretion, in form and substance acceptable to Landlord in its sole
discretion, in the amount of [***] (the "Letter of Credit"). The term of
the Letter of Credit shall not expire until at least ninety (90) days after the
expiration of the lease term (as the same may be extended by Tenant). If the
foregoing requirement necessitates the annual renewal of the Letter of Credit,
such Letter of Credit shall, inter alia, provide that the Letter of Credit shall
be deemed to extend automatically for successive one (1) year periods following
the initial expiration date thereof unless Landlord is provided at least thirty
(30) days prior notice of such scheduled expiration. Notwithstanding the
foregoing, in the event that Tenant has at no time been in default of its
obligations under this lease during the first one hundred and eighty days (180)
of the lease term following the Commencement Date, the amount of the Letter of
Credit shall be reduced to [***] (the "First Reduction"). Provided further,
at any time following the First Reduction, so long as Tenant has at no time been
in default of its obligations under this lease, then upon Tenant's satisfaction
of "Tenant's Financial Requirements" (as defined below), the Letter of Credit
shall be extinguished. For purposes of this Section 4.7, Tenant shall be deemed
to have satisfied Tenant's Financial Requirements at such time as Landlord
determines in its reasonable discretion that Tenant is sufficiently profitable
to meet its financial obligations under this lease as they become due. Tenant
shall provide Landlord with such information concerning Tenant's financial
status as Landlord may request to determine if Tenant's Financial Requirements
have been satisfied. Landlord's rights to draw down on the Letter of Credit
shall be governed by Section 4.7(b) below.
(b) Tenant's failure to timely provide the Letter of Credit as herein
required shall be deemed a default hereunder entitling Landlord to terminate
this lease without notice or opportunity to cure. In the event of any default
by Tenant under this lease (beyond any applicable notice and cure periods)
during such period as the Letter of Credit is required by the terms of this
Section 4.7, or in the event of the noticed expiration of the Letter of Credit
during such time period (without immediate replacement thereof
*** Confidential treatment requested.
3
<PAGE> 6
to Landlord's sole satisfaction), Landlord shall be entitled to exercise any and
all rights and remedies to which it is entitled hereunder or under applicable
law, including without limitation the right to draw down the Letter of Credit.
4.8 Provided Tenant has at no time been in default of its obligations
under this lease, Tenant may upon thirty (30) days prior written notice to
Landlord, replace all or a portion of the amount of the Letter of Credit then
required under Section 4.7 above with an equivalent increase in the amount of
the Security Deposit. Any such replacement must be in good funds received by
Landlord in advance of the reduction and shall be documented to Landlord's
satisfaction (including any necessary amendments to the Letter of Credit or
amendments to this Lease). Any such increase in the Security Deposit shall be
governed by the terms of Section 22.7 of this lease. In the event that (i)
Tenant shall have replaced all or a portion of the Letter of Credit with an
increase in the Security Deposit pursuant to this Section 4.8 and (ii) Tenant
would have been entitled to a reduction in the Letter of Credit under Section
4.7 above had such replacement not occurred, then Landlord shall refund to
Tenant such amount as would have been subject to reduction had it still been in
the form of the Letter of Credit.
ARTICLE 5.
FINANCIAL REPORTS
5.1 Tenant shall, when requested by Landlord from time to time, furnish a
true and accurate audited statement of its financial condition prepared in
conformity with recognized accounting principles and in a form reasonably
satisfactory to Landlord.
ARTICLE 6.
TENANT'S RESPONSIBILITY FOR TAXES, OTHER
REAL ESTATE CHARGES AND INSURANCE EXPENSES
6.1 Tenant shall be liable for all taxes levied against personal property
and trade fixtures placed by Tenant in the Demised Premises which taxes shall
be paid when due and before any delinquency. If any such taxes are levied
against Landlord or Landlord's property and if Landlord elects to pay the same
or if the assessed value of Landlord's property is increased by inclusion of
personal property and trade fixtures placed by Tenant in the Demised Premises
and Landlord elects to pay the taxes based on such increase, Tenant shall pay
to Landlord upon demand that part of such taxes for which Tenant is primarily
liable hereunder.
6.2 Tenant shall also be liable for Tenant's Proportionate Share (as
specified in Section 1.1(r) above) of all "real estate charges" (as defined
below) and "insurance expenses" (as defined below) related to the Industrial
Complex or Landlord's ownership of the Industrial Complex. Tenant's obligations
under this Section 6.2 shall be prorated during any partial year (i.e., the
first year and the last year of the lease term). Tenant's Proportionate Share
shall be adjusted as reasonably determined by Landlord in the event that the
total rentable area of the buildings in the Industrial Complex shall change
after the date hereof. "Real estate charges" shall include ad valorem taxes,
general and special assessments, parking surcharges, any tax or charge for
governmental services (such as street maintenance or fire protection) which are
attributable to the transfer or transaction directly or indirectly represented
by this Lease, by any sublease or assignment hereunder or by other Leases in
the Industrial Complex or by any document to which Tenant is a party creating
or transferring (or reflecting the creation or transfer of) any interest or an
estate in the Demised Premises and any tax or charge which replaces or is in
addition to any of such above-described "real estate charges"; real estate
charges shall also include any fees, expenses or costs (including attorneys'
fees, expert fees and the like) incurred by Landlord in protesting or
contesting any assessments levied or the tax rate. "Real estate charges" shall
not be deemed to include sales tax payable by Tenant pursuant to Section 4.6
above and any franchise, estate, inheritance or general income tax. "Insurance
expenses" shall include all premiums and other expenses incurred by Landlord
for liability insurance and fire and extended coverage property insurance (plus
whatever endorsements or special coverages which Landlord, in Landlord's sole
discretion, may consider appropriate) business interruption, and rent loss,
earthquake and any other insurance policy which may be carried by Landlord
insuring the Demised Premises, the Common Area, the Industrial Complex, or any
improvements thereon.
6.3 At Landlord's sole option, Landlord and Tenant shall attempt to
obtain separate assessments for Tenant's obligations pursuant to Section 6.1
and, with respect to Section 6.2, for such of the "real estate charges" as are
readily susceptible of separate assessment. To the extent of a separate
assessment, Tenant agrees to pay such assessment before it becomes delinquent
and to keep the Demised Premises free from any lien or attachment; moreover, as
to all periods of time during the lease term,this covenant of Tenant shall
survive the termination of the lease. With regard to the calendar year during
which the lease term expires, Landlord at its option either may bill Tenant
when the charges become payable or may charge Tenant an estimate of Tenant's
pro rata share of whichever
4
<PAGE> 7
charges have been paid directly by Tenant (based upon information available for
the current year plus, if current year information is not adequate in itself,
information relating to the immediately preceding year).
6.4 At such time as Landlord has reason to believe that at some time
within the immediately succeeding twelve (12) month period Tenant will owe
Landlord any amounts pursuant to one or more of the preceding sections of this
Article 6, Landlord may direct that Tenant prepay monthly a pro rata portion of
the prospective future payment (i.e., the prospective future payment divided by
the number of months before the prospective future payment will be due). Tenant
agrees that any such prepayment directed by Landlord shall be due and payable
monthly on the same day that minimum guaranteed rental is due.
6.5 In the event that any payment due from Tenant to Landlord is not
received within ten (10) days after its due date for any reason whatsoever, or
if any such payment is by check which is returned for insufficient funds, then
in addition to the amount then due, Tenant shall pay to Landlord interest on the
amount then due at the maximum contractual rate which could legally be charged
in the event of a loan of such amount to Tenant (but in no event to exceed
1-1/2% per month), such interest to accrue continuously on any unpaid balance
until paid.
ARTICLE 7.
COMMON AREA
7.1 The term "Common Area" is defined for all purposes of this lease as
that part of the Industrial Complex intended for the common use of all tenants,
including among other facilities (as such may be applicable to the Industrial
Complex), parking areas, private streets and alleys, landscaping, curbs,
leading areas, sidewalks, recreation/picnic areas, malls and promenades
(enclosed or otherwise), lighting facilities, drinking fountains, meeting
rooms, public toilets, and the like, but excluding (i) space in buildings (now
or hereafter existing) designated for rental for commercial purposes, as the
same may exist from time to time; (ii) streets and alleys maintained by a
public authority; (iii) areas within the Industrial Complex which may from time
to time not be owned by Landlord (unless subject to a cross-access agreement
benefiting the area which includes the Demised Premises); and (iv) areas leased
to a single-purpose user where access is restricted. In addition, although the
roof(s) of the building(s) in the Industrial Complex are not literally part of
the Common Area, they will be deemed to be so included for purposes of (i)
Landlord's ability to prescribe rules and regulations regarding same, and (ii)
their inclusion for purposes of common area maintenance reimbursements.
Landlord reserves the right to change from time to time the dimensions and
location of the Common Area, as well as the dimensions, identities, locations
and types of any buildings, signs or other improvements in the Industrial
Complex. For example, and without limiting the generality of the immediately
preceding sentence, Landlord may from time to time substitute for any parking
area other areas reasonably accessible to the tenants of the Industrial
Complex, which areas may be elevated, surface or underground.
7.2 Tenant, and its employees and customers, and when duly authorized
pursuant to the provisions of this lease, its subtenants, licensees and
concessionaires, shall have the nonexclusive right to use the Common Area
(excluding roofs of buildings in the Industrial Complex) as constituted from
time to time, such use to be in common with Landlord, other tenants in the
Industrial Complex and other persons permitted by Landlord to use the same, and
subject to rights of governmental authorities, easements, other restrictions of
record, and such reasonable rules and regulations governing use as Landlord may
from time to time prescribe. For example, and without limiting the generality
of Landlord's ability to establish rules and regulations governing all aspects
of the Common Area, Tenant agrees as follows:
(a) Landlord may from time to time designate specific areas within
the Industrial Complex or in reasonable proximity thereto in which automobiles
owned by Tenant, its employees, subtenants, licensees, and concessionaires
shall be parked; and in this regard, Tenant shall furnish to Landlord upon
request a complete list of license numbers of all automobiles operated by
Tenant, its employees, its subtenants, its licensees or its concessionaires, or
their employees; and Tenant agrees that if any automobile or other vehicle
owned by Tenant or any of its employees, its subtenants, its licensees or its
concessionaires, or their employees, shall at any time be parked in any part of
the Industrial Complex other than the specific areas designated for employee
parking, Tenant shall pay to Landlord as additional rent upon demand an amount
equal to the daily rate or charge for such parking as established by Landlord
from time to time for each day, or part thereof, that such automobile or other
vehicle is so parked.
(b) Tenant shall not solicit business within the Common Area nor
take any action which would interfere with the rights of other persons to use
the Common Area.
*** Confidential treatment requested.
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<PAGE> 8
(c) Landlord may temporarily close any part of the Common Area for
such periods of time as may be necessary to make repairs or alterations or to
prevent the public from obtaining prescriptive rights.
(d) With regard to the roof(s) of the building(s) in the Industrial
Complex, use of the roof(s) is reserved to Landlord, or with regard to any
tenant demonstrating to Landlord's satisfaction a need to use same, to such
tenant after receiving prior written consent from Landlord.
7.3 Landlord shall be responsible for the operation, management and
maintenance of the Common Area, the manner of maintenance and the expenditures
therefor to be in the sole discretion of Landlord, but to be generally in
keeping with similar industrial centers within the same geographical area as the
Industrial Complex. Landlord shall be the sole determinant of the type and
amount of security services to be provided, if any. Landlord shall not be liable
to Tenant, and Tenant hereby waives any claim against Landlord for (i) any
unauthorized or criminal entry of third parties into the Demised Premises or
Industrial Complex, (ii) any damage to persons or property, or (iii) any loss of
property in and about the Demised Premises or Industrial Complex from any
unauthorized or criminal acts of third parties, regardless of any action,
inaction, failure, breakdown or insufficiency of security.
7.4 In addition to the rentals and other charges prescribed in this
lease, Tenant shall pay to Landlord Tenant's Proportionate Share of the cost of
operation and maintenance of the Common Area which may be incurred by Landlord
in its discretion, including, among other costs, those for lighting, painting,
cleaning, policing, inspecting, repairing, replacing, and, if there is an
enclosed mall or promenade in the Industrial Complex, heating and cooling;
Tenant's Proportionate Share of capital expenditures and expenses incurred by
Landlord to increase the operating efficiency of the Industrial Complex or to
cause the Common Area to comply with applicable Regulations (as such term is
defined in Section 27.1), it being agreed that the cost of such capital
expenditures and installation shall be amortized over the reasonable life of
the capital expenditure, with the reasonable life and amortization schedule
being determined in accordance with generally accepted accounting principles
consistently applied; a reasonable portion of whatever management fee Landlord
pays to the property manager for the Industrial Complex; a reasonable allowance
for Landlord's overhead costs and the cost of any insurance for which Landlord
is not reimbursed pursuant to Section 6.2, but specifically excluding all
expenses paid or reimbursed pursuant to Article 6. In addition, although the
roof(s)of the building(s) in the Industrial Complex are not literally part of
the Common Area, Landlord and Tenant agree that roof, maintenance, repair and
replacement shall be included as a common area maintenance item to the extent
not specifically allocated to Tenant under this lease nor to another tenant
pursuant to its lease. With regard to capital expenditures other than the
capital expenditures contemplated by the first sentence of this Section, (i)
the original investment in capital improvements, i.e., upon the initial
construction of the Industrial Complex, shall not be included, and (ii)
improvements and replacements, to the extent capitalized on Landlord's records,
shall be included only to the extent of a reasonable depreciation or
amortization (including interest accruals commensurate with Landlord's interest
costs). If this lease should commence on a date other than the first day of a
calendar year or terminate on a date other than the last day of a calendar
year, Tenant's reimbursement obligations under this Section 7.4 shall be
prorated based upon Landlord's expenses for the entire calendar year. Tenant
shall make such payment to Landlord on demand, at intervals not more frequent
than monthly. Landlord may, at its option, make monthly or other periodic
charges based upon the estimated annual cost of operation and maintenance of
the Common Area, payable in advance but subject to adjustment after the end of
the year on the basis of the actual cost for such year. Landlord has the right
to establish as a reserve, such commercially reasonable amounts as Landlord
deems reasonable for the maintenance, repair and restoration of the roof and
parking of the Industrial Complex. In the event that any payment due from
Tenant to Landlord is not received within ten (10) days after its due date for
any reason whatsoever, or if any such payment is by check which is returned for
insufficient funds, then, in addition to the amount then due, Tenant shall pay
to Landlord interest on the amount then due at the maximum contractual rate
which could legally be charged in the event of a loan of such amount to Tenant
(but in no event to exceed 1-1/2% per month), such interest to accrue
continuously on any unpaid balance until paid. Any delay or failure of Landlord
in delivering any estimate or statement described in this Section 7.4 or in
computing or billing Tenant's Proportionate Share of the foregoing costs shall
not constitute a waiver of Landlord's right to require an increase in rent as
provided herein or in any way impair the continuing obligations of Tenant under
this Section. Notwithstanding anything to the contrary contained herein, the
following costs shall be excluded from Tenant's pro rata share of Landlord's
common area costs: (a) repairs or replacements to the roof, walls, floor slab
and foundation for which Landlord is reimbursed by insurance proceeds, and (b)
all items for which Tenant or any other party directly compensates Landlord
such that no duplication of payment shall occur. Tenant at its expense shall
have the right at any reasonable time within twelve (12) months after the end
of any calendar year during the lease term, upon prior written notice to
Landlord, to audit Landlord's books and records relating to this Lease with
respect to the costs of operation and maintenance of the Common Area paid by
Tenant for such calendar year. Any such audit shall be conducted by a certified
public accountant who shall be paid on an hourly, as opposed to contingent
fees, basis.
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ARTICLE 8.
INTENTIONALLY DELETED
ARTICLE 9.
USE AND CARE OF DEMISED PREMISES
9.1 The Demised Premises shall be used and occupied by Tenant solely for
the permitted use specified in Section 1.1(o) above and for no other purpose.
Tenant, at its sole cost and expense, shall obtain and keep in effect during
the term, all permits, licenses and other authorizations necessary to permit
Tenant to use and occupy the Demised Premises for the permitted use. Without
limiting the generality of the foregoing, Tenant shall not use or store any
gasoline or flammable or so called "Red Label" materials in or about the
Demised Premises. All equipment used within the Demised Premises shall be
subject to approval by Landlord's insurance carriers and shall be Underwriters
Laboratory or Factory Mutual approved for the uses intended, evidence of which
shall be furnished to Landlord upon request. Tenant shall not operate any
machinery or equipment in the Demised Premises which, in Landlord's sole
discretion, shall cause any excessive noise, vibration, damage or disturbance
to the other tenants in the Industrial Complex.
9.2 Tenant shall take good care of the Demised Premises and keep the same
free from waste at all times. Tenant shall not overload the floors in the
Demised Premises, nor deface or injure the Demised Premises. Tenant shall keep
the Demised Premises and all sidewalks, service-ways and loading areas adjacent
to the Demised Premises neat, clean and free from dirt, rubbish, ice or snow at
all times. Tenant shall store all trash and garbage within the Demised Premises
or in a trash dumpster or similar container approved by Landlord as to type,
location and screening; and Tenant shall arrange for the regular pick-up of
such trash and garbage at Tenant's expense (unless Landlord finds its necessary
to furnish such a service, in which event Tenant shall be changed an equitable
portion of the total of the charges to all tenants using the service).
Receiving and delivery of goods and merchandise and removal of garbage and
trash shall be made only in the manner and areas prescribed by Landlord. Tenant
shall not operate an incinerator or burn trash or garbage within the Industrial
Complex.
ARTICLE 10.
MAINTENANCE AND REPAIR OF DEMISED PREMISES
10.1 Landlord shall keep the foundation, the exterior walls, foundation,
floor slabs, and structural walls (except plate glass; windows, doors and other
exterior openings; window and door frames, molding, closure devices, locks and
hardware; special store fronts; lighting, heating, air conditioning, plumbing
and other electrical, mechanical and electromotive installation, equipment and
fixtures; signs, placards, decorations or other advertising media of any type;
and interior painting or other treatment of exterior walls) and roof (subject
to the second sentence in Section 7.4 above) of the Demised Premises in good
repair. Landlord, however, shall not be required to make any repairs occasioned
by the act or negligence of Tenant, its agents, contractors, employees,
subtenants, invitees, customers, licensees and concessionaires (including, but
not limited to, roof leaks resulting from Tenant's installation of air
conditioning equipment or any other roof penetration or placement); and the
provisions of the previous sentence are expressly recognized to be subject to
the provisions of Article 17 and Article 18 of this lease. In the event that
the Demised Premises should become in need of repairs required to be made by
Landlord hereunder, Tenant shall give immediate written notice thereof to
Landlord and Landlord shall have a reasonable time after receipt by Landlord of
such written notice in which to make such repairs. Landlord shall not be liable
to Tenant for any interruption of Tenant's business or inconvenience caused due
to any work performed in the Demised Premises or in the Industrial Complex
pursuant to Landlord's rights and obligations under the Lease, so long as the
work is performed without gross negligence or willful misconduct.
10.2 Tenant shall keep the Demised Premises in good, clean and habitable
condition and shall at its sole cost and expense keep the Demised Premises free
of insects, rodents, vermin and other pests and make all needed repairs and
replacements, including replacement of cracked or broken glass, except for
repairs and replacements required to be made by Landlord under the provisions of
Section 10.1, Article 17 and Article 18. Without limiting the coverage of the
previous sentence, it is understood that Tenant's responsibilities therein
include the repair and replacement in accordance with all applicable Regulations
(as defined in Section 27.1 below) of all lighting, heating, air conditioning,
plumbing and other electrical, mechanical and electromotive installation,
equipment and fixtures and also include all utility repairs in ducts, conduits,
pipes and wiring, and any sewer stoppage located in, under and above the Demised
Premises, regardless of when or how the defect or other cause for repair or
replacement occurred or became apparent; provided, however, that as to the
maintenance and repair of the HVAC equipment in the Demised Premises, Landlord
shall have the option of contracting directly with an HVAC servicing company for
all such work and charging Tenant for all costs thereof. If any repairs required
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to be made by Tenant hereunder are not made within ten (10) days after written
notice delivered to Tenant by Landlord, Landlord may at its option make such
repairs without liability to Tenant for any loss or damage which may result to
its stock or business by reason of such repairs and Tenant shall pay to Landlord
upon demand, as additional rental hereunder, the cost of such repairs plus
interest at the maximum contractual rate which could legally be charged in the
event of a loan of such payment to Tenant (but in no event to exceed 1-1/2% per
month), such interest to accrue continuously from the date of payment by
Landlord until repayment by Tenant. At the expiration of this lease, Tenant
shall surrender the Demised Premises in good condition, excepting reasonable
wear and tear and losses required to be restored by Landlord in Section 10.1,
Article 17 and Article 18 of this lease.
10.3 Tenant waives the right to make repairs at Landlord's expense under
Sections 1941 and 1942 of the California Civil Code and all other laws now or
hereafter in effect.
ARTICLE 11.
ALTERATIONS
11.1 Tenant shall not make any alterations, additions or improvements to
the Demised Premises (collectively, the "Alterations") without the prior written
consent of Landlord, except for the installation of unattached, movable trade
fixtures which may be installed without drilling, cutting or otherwise defacing
the Demised Premises. Tenant shall furnish complete plans and specifications to
Landlord at the time it requests Landlord's consent to any Alterations if the
desired Alterations (i) will affect the Industrial Complex's mechanical,
electrical, plumbing or life safety systems or services, or (ii) will affect any
structural component of the Demised Premises or the Industrial Complex, or (iii)
will require the filing of plans and specifications with any governmental or
quasi-governmental agency or authority, or (iv) will cost in excess of [***].
Subsequent to obtaining Landlord's consent and prior to commencement of the
Alterations, Tenant shall deliver to Landlord any building permit required by
applicable law and a copy of the executed construction contract(s). Tenant shall
reimburse Landlord within ten (10) days after the rendition of a bill for all of
Landlord's actual out-of-pocket costs incurred in connection with any
Alterations, including, without limitation, all management, engineering, outside
consulting, and construction fees incurred by or on behalf of Landlord for the
review and approval of Tenant's plans and specifications and for the monitoring
of construction of the Alterations. If Landlord consents to the making of any
Alterations, such Alterations shall be made by Tenant at Tenant's sole cost and
expense by a contractor approved in writing by Landlord. Tenant shall give
Landlord not less than ten (10) days advance written notice of the commencement
of Tenant's Alterations to enable Landlord to post and record notices of
nonresponsibility. Tenant shall require its contractor to maintain insurance in
such amounts and in such form as Landlord may require. Any construction,
alteration, maintenance, repair, replacement, installation, removal or
decoration undertaken by Tenant in connection with the Demised Premises shall be
completed in accordance with plans and specifications which must be approved by
Landlord, shall be carried out in a good, workmanlike and prompt manner and in
accordance with the provisions of EXHIBIT "C" attached hereto, shall comply with
all applicable Regulations of the authorities having jurisdiction thereof, and
shall be subject to supervision by landlord or its employees, agents or
contractors. Without limiting the generality of the immediately preceding
sentence, any installation or replacement of Tenant's heating or air
conditioning equipment must be effected strictly in accordance with Landlord's
instructions, the Clean Air Act and all other applicable Regulations. Without
Landlord's prior written consent, Tenant shall not use any portion of the Common
Areas either within or without the Industrial Complex in connection with the
making of any Alterations. If the Alterations which Tenant causes to be
constructed result in Landlord being required to make any alterations and/or
improvements to other portions of the Industrial Complex in order to comply with
any applicable Regulations, then Tenant shall reimburse Landlord upon demand for
all costs and expenses incurred by Landlord in making such alterations and/or
improvements. Any Alterations made by Tenant shall become the property of
Landlord upon installation and shall remain on and be surrendered with the
Demised Premises upon the expiration or sooner termination of this lease, except
Tenant shall upon demand by Landlord, at Tenant's sole cost and expense,
forthwith and with all due diligence remove all or any portion of any
Alterations made by Tenant which are designated by Landlord to be removed and
repair and restore the Demised Premises in a good and workmanlike manner to
their original condition, reasonable wear and tear excepted.
11.2 All construction work done by Tenant within the Demised Premises
shall be performed in a good and workmanlike manner with new materials of
first-class quality, lien-free and in compliance with all governmental
requirements and Regulations, and in such manner as to cause a minimum of
interference with other construction in progress and with the transaction of
business in the Industrial Complex. Tenant agrees to indemnify Landlord and
hold Landlord harmless against any loss, liability or damage resulting from
such work, and Tenant shall, if requested by Landlord, furnish a bond or other
security satisfactory to Landlord against any such loss, liability or damage.
*** Confidential treatment requested.
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11.3 In the event Tenant uses a general contractor to perform
construction work within the Demised Premises, Tenant shall, prior to the
commencement of such work, require said general contractor to execute and
deliver to Landlord a waiver and release of any and all claims against Landlord
and liens against the Industrial Complex to which such contractor might at any
time be entitled. The delivery of the waiver and release of lien within the
time period set forth above shall be a condition precedent to Tenant's ability
to enter on and begin its construction work at the Demised Premises and, if
applicable, to any reimbursement from Landlord for its construction work.
11.4 Nothing contained in this lease shall be construed as
constituting the consent or request of Landlord, express or implied, to or for
the performance by any contractor, laborer, materialman or vendor of any labor
or services or for the furnishing of any materials for any construction,
alteration, addition, repair or demolition of or to the Demised Premises or
any part thereof. All materialmen, contractors, artisans, mechanics, laborers
and any other persons now or hereafter furnishing any labor, services,
materials, supplies or equipment to Tenant with respect to any portion of the
Demised Premises are hereby charged with notice that they must look exclusively
to Tenant to obtain payment for same. Tenant and any subtenants shall have no
power to do any act or make any contract which may create or be the foundation
of any lien, mortgage or other encumbrance upon the reversionary or other
estate of Landlord, or any interest of Landlord in the Demised Premises. NOTICE
IS HEREBY GIVEN THAT LANDLORD IS NOT AND SHALL NOT BE LIABLE FOR ANY LABOR,
SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE
HOLDING THE DEMISED PREMISES OR ANY PART THEREOF, AND THAT NO MECHANICS' OR
OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR
AFFECT THE INTEREST OF LANDLORD IN AND TO THE DEMISED PREMISES.
11.5 In the event that Landlord elects to remodel all or any portion
of the Industrial Complex, Tenant will cooperate with such remodeling,
including Tenant's tolerating temporary inconveniences (and even the temporary
removal of Tenant's signs in order to facilitate such remodeling, as it may
relate to the exterior of the Demised Premises).
ARTICLE 12.
LANDLORD'S RIGHT OF ACCESS
12.1 Landlord and Landlord's agents and representatives shall have
the right to enter the Demised Premises at any time in case of an emergency,
and at all reasonable times for any purpose permitted pursuant to the terms of
this lease, including, but not limited to, examining the Demised Premises;
making such repairs or alterations therein as may be necessary or appropriate
in Landlord's sole judgment for the safety and preservation thereof; erecting,
installing, maintaining, repairing or replacing wires, cables, conduits, vents,
ducts, risers, pipes, HVAC equipment or plumbing equipment running in, to or
through the Demised Premises; showing the Demised Premises to prospective
purchasers or mortgagees and during the last year of this lease, prospective
tenants; and posting notices of nonresponsibility.
12.1 If requested in writing by Landlord, Tenant shall give Landlord
a key for all of the doors of the Demised Premises, excluding Tenant's vaults,
safes and files. Landlord shall have the right to use any and all means to open
the doors to the Demised Premises in an emergency in order to obtain entry
thereto without liability to Tenant therefor. Any entry to the Demised Premises
by Landlord by any of the foregoing means, or otherwise, shall not be construed
or deemed to be a forcible or unlaw entry into or a detainer of the Demised
Premises, or an eviction, partial eviction or constructive eviction of Tenant
from the Demised Premises or any portion thereof, and shall not relieve Tenant
of its obligations hereunder.
ARTICLE 13.
SIGNS; STORE FRONTS
13.1 Tenant shall not place or permit to be placed any signs upon (i)
the roof of the Demised Premises, or (ii) the Common Areas or any exterior area
of the Industrial Complex without Landlord's prior written approval which
approval shall not be unreasonably withheld or delayed provided any proposed
sign is placed only in those locations as may be designated by Landlord, and
complies with the sign criteria promulgated by landlord from time to time. Upon
request of Landlord, Tenant shall immediately remove any sign, advertising
material or lettering which Tenant has placed or permitted to be placed upon the
exterior or interior surface of any door or window or at any point inside the
Demised Premises, on the exterior of the Industrial Complex if required in
connection with any cleaning, maintenance or repairs to the Industrial Complex
or which, in Landlord's reasonable opinion, is of such a nature as to not be in
keeping with the standards of the Industrial Complex and if Tenant fails to do
so, Landlord may without liability remove the same at Tenant's expense. Tenant
shall comply with such regulations as may from time to time be promulgated by
Landlord governing signs, advertising material or lettering of all tenants in
the Industrial Complex.
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ARTICLE 14.
UTILITIES
14.1 Tenant shall obtain all water, electricity, sewerage, gas, telephone
and other utilities directly from the public utility company furnishing same.
Any meters required in connection therewith shall be installed at Tenant's sole
cost. Tenant shall pay all utility deposits and fees, and all monthly service
charges for water, electricity, sewage, gas, telephone and any other utility
services furnished to the Demised Premises during the term of this lease. In the
event any such utilities are not separately metered on the Commencement Date,
then until such time as such services are separately metered, Tenant shall pay
Landlord Tenant's equitable share of the cost of such services, as determined by
Landlord. If for any reason the use of any utility is measured on a meter(s)
indicating the usage of Tenant and other tenants of the Industrial Complex,
Tenant and such other tenants shall allocate the cost of such utility amongst
themselves and shall each be responsible for the payment of its allocable share.
Landlord shall furnish and install all piping, feeders, risers and other
connections necessary to bring utilities to the perimeter walls of the Demised
Premises. Anything to the contrary notwithstanding, Tenant shall remain
obligated for the payment of Tenant's pro rata share of any heating costs and/or
other utilities or services furnished to the Common Areas pursuant to Section
7.4.
14.2 Tenant shall have the right to use the existing heating, air
conditioning and ventilation equipment in the Demised Premises, if any. All
such equipment shall be maintained, repaired and replaced, as necessary, by
Tenant at its sole expense and shall be surrendered by Tenant to Landlord at
the end of the term of this lease together with the Demised Premises. Landlord
makes no representation or warranty as to the condition or capacity of such
equipment. Landlord shall have no obligation whatsoever to provide the Demised
Premises with any additional heat, air conditioning, ventilation or hot water.
14.3 Landlord shall not be liable for any interruption whatsoever, nor
shall Tenant be entitled to an abatement or reduction of rent on account
thereof, in utility services not furnished by Landlord, nor for interruptions
in utility services furnished by Landlord which are due to fire, accident,
strike, acts of God or other causes beyond the control of Landlord or which are
necessary or useful in connection with making any alterations, repairs or
improvements.
14.4 Tenant shall not install any equipment which exceeds or overloads the
capacity of the utility facilities serving the Demised Premises.
ARTICLE 15.
INSURANCE COVERAGES
15.1 Landlord shall procure and maintain throughout the term of this lease
a policy or policies of insurance, at its sole cost and expense (but subject to
Article 6 above), causing the Industrial Complex to be insured under standard
fire and extended coverage insurance (excluding hurricane and storm insurance
unless readily obtainable at commercially reasonable rates) and liability
insurance (plus whatever endorsements or special coverages Landlord, in its
sole discretion, may consider appropriate), to the extent necessary to comply
with Landlord's obligations pursuant to other provisions of this lease. All
payments for losses thereunder shall be made solely to Landlord. If the annual
premiums charged to Landlord shall exceed the standard rates because Tenant's
operations, the contents of the Demised Premises, or improvements made to the
Demised Premises beyond standard improvements result in extra-hazardous
exposure, Tenant shall pay the excess amount of the premium upon demand
therefor by Landlord.
15.2 Tenant shall procure and maintain throughout the term of this Lease,
at its sole cost and expense, all of the following insurance coverages:
(i) Commercial General Liability Insurance providing coverage for
bodily injury (including death), property damage and products liability
insurance (where such exposure exists). This policy shall contain a broad
form contractual liability endorsement under which the insurer agrees to
insure Tenant's obligations under Section 16.2 and Article 21 hereof. Such
insurance shall have a combined single limit of not less than [***] per
occurrence, or such greater amount as Landlord may from time to time
require. If Tenant uses vehicles, owned and non-owned, in any way to carry
out business on or about the Industrial Complex, Tenant shall also maintain
Motor Vehicle Liability Insurance; such insurance shall have a combined
single limit of not less than [***] for bodily injury and property damage.
(ii) Fire and extended coverage insurance covering Tenant's personal
property, fixtures, improvements, wall coverings, floor coverings, window
coverings, signs, alterations, furniture, furnishings, equipment,
lighting, ceilings, heating, ventilation and air conditioning
*** Confidential treatment requested.
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equipment and interior plumbing against loss or damage by fire, flood,
windstorms, hail, earthquakes, explosion, riot, damage from aircraft and
vehicles, smoke damage, vandalism and malicious mischief and such other
risks as are from time to time covered under "extended coverage"
endorsements and special extended coverage endorsements commonly known as
"all risks" endorsements, containing the waiver of subrogation required in
Section 16.3 of this lease and in an amount equal to the greater of the
full replacement value or the amount required by the holder of any
mortgage from time to time placed upon the Industrial Complex or a portion
of the Industrial Complex containing the Demised Premises, with business
interruption insurance covering the Demised Premises. Replacement value is
understood to mean the cost to replace without deduction for depreciation.
(iii) State Worker's Compensation Insurance in the statutorily
mandated limits.
(iv) Employer's Liability Insurance with limits of not less than
[***] for bodily injury per accident and each disease, per employee, and a
total combined limit for bodily injury in amounts not less than [***] per
accident and [***] per each disease, or such greater amount as Landlord may
from time to time require.
(v) Plate Glass Insurance.
It is expressly understood and agreed that the foregoing minimum limits of
insurance coverage shall not limit the liability of Tenant for its acts or
omissions as provided in this lease. All of the foregoing insurance policies
(with the exception of Worker's Compensation Insurance to the extent not
available under applicable law) shall name Landlord, GE Capital Investment
Advisors, Inc., the Agent identified in Section 1.1(g), any mortgagee, the
managing agent for the Industrial Complex, and such other parties as Landlord
shall from time to time designate, as additional insureds as their respective
interests may appear, through an ISO Additional Insured Endorsement CG20261185
or equivalent, and shall provide that any loss shall be payable to Landlord and
such other additional insured parties as their respective interests may appear.
All insurance required hereunder shall be placed with companies which are rated
A:VII or better by Best's Insurance Guide (or such other comparable publication
if Best's is no longer published) and which are licensed to do business in the
State of California. All such policies shall be written as primary policies with
deductibles not to exceed the amount specified in Section 1.1(p) above;
provided, however, that the deductible for the Plate Glass Insurance shall not
exceed [***]. Any other policies, including Landlord's policy, will serve as
excess coverage. Tenant shall deliver duplicate original copies of all such
policies and all endorsements thereto (or certificates evidencing that the
required insurance coverages and endorsements, including waiver of subrogation,
are in full force and effect) to Landlord, prior to the Commencement Date, or,
in the case of renewals thereto, fifteen (15) days prior to the expiration of
the prior insurance policy, together with evidence that (1) such policies are
fully paid for, and (2) no cancellation, material change or non-renewal thereof
shall be effective except upon thirty (30) days' prior written notice by
registered mail from the insurer to Landlord, as well as to Landlord's managing
agent (at the address for the payment of rent set forth in Section 4.2 above).
Whenever, in Landlord's reasonable judgment, good business practice or change in
conditions indicate a need for additional or different types of insurance,
Tenant shall, within fifteen (15) days of receipt of Landlord's request
therefor, obtain the insurance at its own expense. If Tenant should fail to
comply with the foregoing requirements relating to insurance, Landlord may
obtain such insurance and Tenant shall pay to Landlord on demand as additional
rental hereunder the premium cost thereof [***] from the date of payment by
Landlord until repaid by Tenant.
15.3 In addition to the foregoing, Tenant shall obtain certificates of
insurance evidencing Commercial General Liability Insurance, including
Completed Operations, Motor Vehicle Liability Insurance, Worker's Compensation
Insurance and Employer's Liability Insurance in the amounts required above from
any contractor or subcontractor engaged by Tenant for repairs or maintenance
during the lease term.
ARTICLE 16.
WAIVER OF LIABILITY; MUTUAL WAIVER OF SUBROGATION
16.1 Landlord and Landlord's agents and employees shall not be liable to
Tenant, nor to Tenant's employees, agents, contractors, subcontractors,
invitees, subtenants or licensees, nor to any other person whomsoever, for any
injury to person or damage to property caused by the Demised Premises or other
portions of the Industrial Complex becoming out of repair or by defect or
failure of any structural element of the Demised Premises or of any equipment,
pipes or wiring, or broken glass, or by the backing up of drains, or by gas,
water, steam, electricity, or oil leaking, escaping or flowing into the Demised
Premises (except where due to Landlord's willful failure to make repairs
required to be made by Landlord hereunder, after the expiration of a reasonable
time after written notice to Landlord of the need for such repairs), nor shall
Landlord be liable to Tenant, nor to Tenant's employees, agents, contractors,
subcontractors, invitees, subtenants or licensees, nor to any other person
whomsoever, for
*** Confidential treatment requested.
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any loss or damage that may be occasioned by or through the acts or omissions
of other tenants of the Industrial Complex or of any other persons whomsoever,
excepting only duly authorized employees and agents of Landlord. Landlord shall
not be held responsible in any way on account of any construction, repair or
reconstruction (including widening) of any private or public roadways, walkways
or utility lines.
16.2 Landlord shall not be liable to Tenant or to Tenant's employees,
agents, contractors, subcontractors, invitees, subtenants or licensees, or to
any other person whomsoever, for any injury to person or damage to property on
or about the Demised Premises or the Common Area caused by the negligence or
misconduct of Tenant, its employees, agents, contractors, subcontractors,
invitees, subtenants or licensees, or of any other person entering the
Industrial Complex under express or implied invitation of Tenant (with the
exception of invitees in the Common Area), or arising out of the use of the
Demised Premises by Tenant and the conduct of its business therein, or arising
out of any breach or default by Tenant in the performance of its obligations
under this lease; and Tenant hereby agrees to indemnify, defend and hold
Landlord harmless from any loss, expense or claims arising out of such damage or
injury. Furthermore, Tenant agrees to indemnify, defend and hold Landlord
harmless from and against any and all liability, claims, demands, causes of
action of any kind and nature arising or growing out of or in any way connected
with Tenant's use, occupancy, management or control of the Demised Premises and
Tenant's operations or activities in the Industrial Complex. Upon notice from
Landlord, Tenant shall defend any such claim, demand, cause of action or suit
referenced hereinabove at Tenant's expense by counsel satisfactory to Landlord
in its sole discretion.
16.3 Landlord and Tenant each hereby release the other from any and all
liability or responsibility to the other, or to any other party claiming through
or under them by way of subrogation or otherwise, for any loss or damage to
property caused by a casualty which is insurable under standard fire and
extended coverage insurance; provided, however, that this mutual waiver shall be
applicable only with respect to a loss or damage occurring during the time when
property insurance policies, which are readily available in the marketplace,
contain a clause or permit an endorsement to the effect that any such release
shall not adversely affect or impair the policy or the right of the insured
party to receive proceeds under the policy; provided, further, that this release
shall not be applicable to the portion of any damage which is not reimbursed by
the damaged party's insurer because of the "deductible" in the damaged party's
insurance coverage. The release specified in this Section 16.3 is cumulative
with any releases or exculpations which may be contained in other provisions of
this lease. Landlord and Tenant agree that all policies of insurance obtained by
them pursuant to the terms of this lease shall contain provisions or
endorsements thereto waiving the insurer's rights of subrogation with respect to
claims against the other, and, unless the policies permit waiver of subrogation
without notice to the insurer, each shall immediately notify its insurance
companies of the existence of the waiver and indemnity provisions set forth in
this lease.
ARTICLE 17.
DAMAGES BY CASUALTY
17.1 Tenant shall give immediate written notice to Landlord of any
damage caused to the Demised Premises by fire or other casualty.
17.2 In the event that the Demised Premises shall be damaged or
destroyed by fire or other casualty insurable under standard fire and extended
coverage insurance and Landlord does not elect to terminate this lease as
hereinafter provided, Landlord shall proceed with reasonable diligence and at
its sole cost and expense to rebuild and repair the Demised Premises. In the
event (a) the building in which the Demised Premises are located is destroyed
or substantially damaged by a casualty not covered by Landlord's insurance, or
(b) such building is destroyed or rendered untenantable to an extent in excess
of fifty percent (50%) of the first floor area by a casualty covered by
Landlord's insurance, or (c) the holder of a mortgage, deed of trust or other
lien on such building at the time of the casualty elects, pursuant to such
mortgage, deed of trust or other lien, to require the use of all or part of
Landlord's insurance proceeds in satisfaction of all or part of the
indebtedness secured by the mortgage, deed of trust or other lien, or (d) the
Demised Premises shall be damaged to the extent of fifty percent (50%) or more
of the cost of replacement, then Landlord may elect either to terminate this
lease or to proceed to rebuild and repair the Demised Premises. Landlord shall
give written notice to Tenant of such election within sixty (60) days after the
occurrence of such casualty and, if it elects to rebuild and repair, shall
proceed to do so with reasonable diligence and at its sole cost and expense.
17.3 Landlord's obligation to rebuild and repair under this Article 17
shall in any event be limited to restoring one of the following (as may be
applicable): (a) if this lease does not include an attached exhibit describing
Landlord's initial construction responsibility ("Landlord's Work"), restoring
the Demised Premises to substantially the condition in which the same existed
prior to such casualty, exclusive of any alterations, additions, improvements,
fixtures and equipment installed by Tenant; or (b) restoring Landlord's Work,
as described in the applicable exhibit attached to this lease (if such an
exhibit is attached), to substantially the same condition in which the same
existed prior to the casualty.
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Tenant agrees that promptly after completion of such work by Landlord, Tenant
will proceed with reasonable diligence and at Tenant's sole cost and expense to
restore, repair and replace all alterations, additions, improvements, fixtures,
signs and equipment installed by Tenant, and, if an exhibit describing Tenant's
Work is attached hereto, all items of Tenant's Work as described in such
exhibit.
17.4 Tenant agrees that during any period of reconstruction or repair of
the Demised Premises, it will continue the operation of its business within the
Demised Premises to the extent practicable. During the period from the
occurrence of the casualty until Landlord's repairs are completed, the minimum
guaranteed rental shall be reduced to such extent as may be fair and reasonable
under the circumstances; however, there shall be no abatement of the charges
provided for herein.
17.5 Tenant hereby waives the provisions of California Civil Code Sections
1932(2) and 1933(4) and the provisions of any successor or other law of like
import.
ARTICLE 18.
EMINENT DOMAIN
18.1 If more than thirty percent (30%) of the floor area of the Demised
Premises should be taken for any public or quasi-public use under any
governmental law, ordinance or regulation or by right of eminent domain or by
private purchase in lieu thereof, this lease shall terminate and the rent shall
be abated during the unexpired portion of this lease, effective on the date
physical possession is taken by the condemning authority.
18.2 If less than thirty percent (30%) of the floor area of the Demised
Premises should be taken as aforesaid, this lease shall not terminate; however,
the minimum guaranteed rental payable hereunder during the unexpired portion of
this lease shall be reduced in proportion to the area taken, effective on the
date physical possession is taken by the condemning authority. Following such
partial taking, Landlord shall make all necessary repairs or alterations to the
remaining premises or, if an exhibit describing Landlord's Work is attached to
this lease, all necessary repairs within the scope of Landlord's Work as
described in such exhibit, as the case may be, required to make the remaining
portions of the Demised Premises an architectural whole, but in no event shall
Landlord be required to expend an amount greater than the award actually
received by Landlord in connection with such taking.
18.3 If any part of the Common Area should be taken as aforesaid, this
lease shall not terminate, nor shall the rent payable hereunder be reduced,
except that either Landlord or Tenant may terminate this lease if the area of
the Common Area remaining following such taking plus any additional parking
area provided by Landlord in reasonable proximity to the industrial Complex
shall be less than seventy percent (70%) of the area of the Common Area
immediately prior to the taking. Any election to terminate this lease in
accordance with this provision shall be evidenced by written notice of
termination delivered to the other party within thirty (30) days after the date
physical possession is taken by the condemning authority.
18.4 All compensation awarded for any taking (or the proceeds of private
sale in lieu thereof) of the Demised Premises or Common Area shall be the
property of Landlord, and Tenant hereby assigns its interest in any such award
to Landlord; provided, however, Landlord shall have no interest in any award
made to Tenant for Tenant's moving and relocation expenses or for the loss of
Tenant's fixtures and other tangible personal property if a separate award for
such items is made to Tenant as long as such separate award does not reduce the
amount of the award that would otherwise be awarded to Landlord.
18.5 The rights contained in this Article 18 shall be Tenant's sole and
exclusive remedy in the event of a taking or condemnation. Each party waives
the provisions of Sections 1265.130 and 1265.150 of the California Code of
Civil Procedure and the provisions of any successor or other law of like import.
18.6 Notwithstanding anything to the contrary, Landlord may terminate this
lease with no further liability to Tenant if (i) fifty percent (50%) or more of
the gross leasable area of the Industrial Complex is taken or (ii) if following
any taking, Landlord's mortgagee elects to require Landlord to apply all or a
portion of such award to the outstanding indebtedness.
ARTICLE 19.
ASSIGNMENT AND SUBLETTING
19.1 Tenant shall not assign or in any manner transfer this lease or any
estate or interest therein, or sublet the Demised Premises or any part thereof,
or grant any license, concession or other right of occupancy of any portion of
the Demised Premises without the prior written consent of Landlord. Landlord
agrees that it will not withhold consent in a wholly unreasonable and
arbitrary manner (as
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further explained in Section 29.4 of this lease); however, in determining
whether or not to grant its consent, Landlord shall be entitled to take into
consideration factors such as Landlord's desired tenant mix, the reputation and
net worth of the proposed transferee, and the then current market conditions
(including market rentals). In addition, Landlord shall also be entitled to
charge Tenant a reasonable fee for processing Tenant's request. Consent by
Landlord to one or more assignments or sublettings shall not operate as a
waiver of Landlord's rights as to any subsequent assignments and sublettings.
In all events, Landlord can refuse to consent to an assignment or sublease if
there shall exist any uncured default of Tenant or a matter which will become a
default with the passage of time. Notwithstanding the foregoing, Tenant shall
have the right upon written notice to Landlord to assign this lease or sublet
the Demised Premises or any part thereof without Landlord's consent (and
without triggering any right of Landlord to terminate this lease or recapture
any part of the Demised Premises) to an Affiliate (as hereinafter defined) or
to any corporation, partnership or entity which survives the consolidation or
merger of Tenant or which acquires all of Tenant's stock or all or
substantially all of Tenant's assets; provided, however, that (i) all of the
obligations of Tenant hereunder shall be expressly assumed in writing by the
transferee, (ii) notwithstanding such assumption, Tenant shall remain primarily
liable for all of its obligations under this lease, and (iii) in the case of a
merger, consolidation, sale or conveyance, such transferee has a net worth equal
to or greater than the net worth of Tenant immediately prior to any such
merger, consolidation, sale or conveyance. "Affiliate" is any entity which
controls, is controlled by or is under common control (at least 51% ownership
interest) with Tenant.
19.2 If Tenant is a corporation, partnership or other entity and if at
any time during the term of this lease the person or persons who own a majority
of either the outstanding voting rights or the outstanding ownership interests
of Tenant at the time of the execution of this lease cease to own a majority of
such voting rights or ownership interests (except as a result of transfers by
devise or descent), the loss of a majority of such voting rights or ownership
interests shall be deemed an assignment of this lease by Tenant and, therefore,
subject in all respects to the provisions of Section 19.1 above. The previous
sentence shall not apply, however, if (i) at the time of the execution of this
lease Tenant is a corporation and the outstanding voting shares of capital
stock of Tenant are listed on a recognized security exchange or
over-the-counter market, or (ii) if such transfer of control of Tenant is as a
result of a public offering of the capital stock of Tenant on a recognized
security exchange or over-the-counter market.
19.3 Notwithstanding anything to the contrary contained herein, and
without prejudice to Landlord's right to require a written assumption from each
assignee, any person or entity to whom this lease is assigned including,
without limitation, assignees pursuant to the provisions of the Bankruptcy Code,
11 U.S.C. Paragraph 101, et seq. (the "Bankruptcy Code"), shall automatically
be deemed, by acceptance of such assignment or sublease or by taking actual or
constructive possession of the Demised Premises, to have assumed all
obligations of Tenant arising under this lease effective as of the earlier of
the date of such assignment or sublease or the date on which the assignee or
sublessee obtains possession of the Demised Premises. In the event this lease
is assigned to any person or entity pursuant to the provisions of the
Bankruptcy Code, any and all monies or other consideration payable or otherwise
to be delivered in connection with such assignment shall be paid or delivered
to Landlord and shall remain the exclusive property of Landlord and not
constitute the property of Tenant or Tenant's estate within the meaning of the
Bankruptcy Code. All such money or other consideration not paid or delivered to
Landlord shall be held in trust for the benefit of Landlord and shall be
promptly paid or delivered to Landlord.
19.4 Notwithstanding any assignment or subletting, Tenant and any
guarantor of Tenant's obligations under this lease shall at all times remain
fully responsible and liable for the payment of the rent herein specified and
for compliance with all of its other obligations under this lease (even if
future assignments and sublettings occur subsequent to the assignment or
subletting by Tenant, and regardless of whether or not Tenant's approval has
been obtained for such future assignments and sublettings). Moreover, in the
event that the rental due and payable by a sublessee (or a combination of the
rental payable under such sublease plus any bonus or other consideration
therefor or incident thereto) exceeds the rental payable under this lease, or if
with respect to a permitted assignment, permitted license or other transfer by
Tenant permitted by Landlord, [***]. Finally, in the event of an assignment or
subletting, it is understood and agreed that all rentals paid to Tenant by an
assignee or sublessee shall be received by Tenant in trust for Landlord, to be
forwarded immediately to Landlord without offset or reduction of any kind; and
upon election by Landlord such rentals shall be paid directly to Landlord as
specified in Section 4.2 of this lease (to be applied as a credit and offset to
Tenant's rental obligation).
19.5 Tenant shall not mortgage, pledge or otherwise encumber its interest
in this lease or in the Demised Premises.
*** Confidential treatment requested.
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19.6 In the event of the transfer any assignment by Landlord of its
interest in this lease and in the building containing the Demised Premises to a
person expressly assuming Landlord's obligations under this lease, Landlord
shall thereby be released from any further obligations hereunder, and Tenant
agrees to look solely to such successor in interest of the Landlord for
performance of such obligations. Any security given by Tenant to secure
performance of Tenant's obligations hereunder may be assigned and transferred
by Landlord to such successor in interest and Landlord shall thereby be
discharged of any further obligation relating thereto.
19.7 Notwithstanding anything to the contrary contained herein,
Landlord shall have the option, in its sole discretion, in the event of any
proposed subletting or assignment, to terminate this lease, or in the case of a
proposed subletting of less than the entire Demised Premises for substantially
all of the remaining term of this lease, to recapture the portion of the Demised
Premises to be sublet, as of the date the subletting or assignment is to be
effective. The option shall be exercised by Landlord giving Tenant written
notice as required above. If this lease shall be terminated with respect to the
entire Demised Premises, the term shall end on the date stated in Tenant's
notice ("Landlord's Recapture Notice") within twenty (20) days following
Landlord's receipt of Tenant's written notice as the effective date of the
sublease or assignment as if that date had been originally fixed in this lease
for the expiration of the term. If Landlord recaptures only a portion of the
Demised Premises, the minimum guaranteed rental during the unexpired term shall
abate, proportionately, based on the minimum guaranteed rental due as of the
date immediately prior to such recapture. Notwithstanding the foregoing, if,
within seven (7) days of Tenant's receipt of Landlord's Recapture Notice, Tenant
sends Landlord a notice informing Landlord that Tenant withdraws its request to
assign or sublet this lease, then Landlord shall not exercise its termination or
recapture election (as the case may be) stated in Landlord's Recapture Notice.
Provided, further, notwithstanding the foregoing, Landlord's right of recapture
pursuant to this Section 19.7 shall not apply in the event of an assignment or
sublet by Tenant to any entity owned by or under common control with Landlord
(i.e., at lease 51% of ownership interest).
19.8 Tenant hereby waives any suretyship defenses it may now or
hereafter have to an action brought by Landlord including those contained in
Sections 2787 through 2856, inclusive, 2899 and 3433 of the California Civil
Code, as now or hereafter amended, or similar laws of like import.
ARTICLE 20.
SUBORDINATION; ATTORNMENT; ESTOPPELS
20.1 Tenant accepts this lease subject and subordinate to any
mortgage, deed of trust or other lien presently existing or hereafter placed
upon the Industrial Complex or any portion of the Industrial Complex which
includes the Demised Premises, and to any renewals, modifications and
extensions thereof and this subordination shall be self operative and no
further instrument of subordination is needed. Tenant agrees that any mortgagee
shall have the right at any time to subordinate its mortgage, deed of trust or
other lien to this lease; provided, however, notwithstanding that this lease
may be (or is made to be) superior to a mortgage, deed of trust or other lien,
the mortgagee shall not be liable for prepaid rentals, security deposits and
claims accruing during or with respect to Landlord's ownership, any amendment
or modification made to this lease without its prior written consent or any
offsets or claims against Landlord; further provided that the provisions of
a mortgage, deed of trust or other lien relative to the right of the mortgagee
with respect to proceeds arising from an eminent domain taking (including a
voluntary conveyance by Landlord) and provisions relative to proceeds arising
from insurance payable by reason of damage to or destruction of the Demised
Premises shall be prior and superior to any contrary provisions contained in
this instrument with respect to the payment or usage thereof. Landlord is
hereby irrevocably vested with full power and authority to subordinate this
lease to any mortgage, deed of trust or other lien hereafter placed upon the
Demised Premises or the Industrial Complex as a whole, and Tenant agrees upon
demand to execute such further instruments subordinating this lease as Landlord
may request. If the holder of any mortgage, indenture or deed of trust or
similar instrument (each a "Mortgagee") succeeds to Landlord's interest in the
Demised Premises, Tenant shall, upon request of any such Mortgagee,
automatically become the tenant of and attorn to and recognize such Mortgagee
as the landlord under this lease and will pay to it all rents and other amounts
payable by Tenant under this lease, in accordance with the applicable terms of
this lease. Notwithstanding that the foregoing provisions of this Section are
self-operative, upon request of Landlord or any Mortgagee, Tenant shall execute
and deliver to Landlord and to such Mortgagee a subordination and attornment
agreement in recordable form confirming the foregoing and otherwise in form and
substance acceptable to Landlord and such Mortgagee.
20.2 Tenant may not exercise any remedies for default by Landlord
hereunder unless and until Landlord and the holder(s) of any indebtedness
secured by mortgage, deed of trust or other lien on the Demised Premises shall
have received written notice of such default and a reasonable time (not less
than 90 days) shall thereafter have elapsed without the default having been
cured.
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20.3 Tenant agrees that it will from time to time upon request by Landlord
execute and deliver to Landlord a written statement addressed to Landlord (and
to a party[ies] designated by Landlord), which statement shall identify Tenant
and this lease, shall certify that this lease is unmodified and in full force
and effect (or if there have been modifications, that the same is in full force
and effect as so modified), shall confirm that Landlord is not in default as to
any obligations of Landlord under this lease (or if Landlord is in default,
specifying any default), shall confirm Tenant's agreements contained above in
this Article 20, and shall contain such other information or confirmations as
Landlord may reasonably require. Landlord is hereby irrevocably appointed and
authorized as the agent and attorney-in-fact of Tenant to execute and deliver
any such written statement on Tenant's behalf if Tenant fails to do so within
seven (7) days after the delivery of a written request from Landlord to Tenant.
ARTICLE 21.
TENANT'S INDEMNIFICATION
21.1 Tenant shall indemnify, defend and hold harmless Landlord, Landlord's
asset manager, Landlord's subasset manager, Landlord's partners, any subsidiary
or affiliate of Landlord and the officers, directors, shareholders, partners,
employees, managers, independent contractors, attorneys and agents of any of
the foregoing (collectively, the "Indemnitees") from and against any and all
claims, demands, causes of action, judgments, costs and expenses, and all
losses and damages (including consequential and punitive damages) arising from
Tenant's use of the Demised Premises or from the conduct of its business or
from any activity, work, or other acts or things done, permitted or suffered by
Tenant in or about the Demised Premises, and shall further indemnify, defend
and hold harmless the Indemnitees from and against any and all claims arising
from any breach or default in the performance of any obligation on Tenant's
part to be performed under the terms of this lease, or arising from any act,
omission or negligence or willful or criminal misconduct of Tenant, or any
officer, agent, employee, independent contractor, guest, or invitee thereof,
and from all costs, attorneys' fees and disbursements, and liabilities incurred
in the defense of any such claim or any action or proceeding which may be
brought against, out of or in any way related to this lease. Upon notice from
Landlord, Tenant shall defend any such claim, demand, cause of action or suit
at Tenant's expense by counsel satisfactory to Landlord in its sole discretion.
As a material part of the consideration to landlord for this Lease, Tenant
hereby assumes all risk of damage to property or injury to persons in, upon or
about the Demised Premises from any cause, and Tenant hereby waives all claims
with respect thereto against landlord. Tenant shall give immediate notice to
Landlord in case of casualty or accidents in the Demised Premises. The
provisions of this Article 21 shall survive the expiration or sooner
termination of this lease.
21.2 All personal property of Tenant, including goods, wares, merchandise,
inventory, trade fixtures and other personal property of Tenant, shall be
stored at the sole risk of Tenant. Landlord or its agents shall not be liable
for any loss or damage to persons or property resulting from fire, explosion,
falling plaster, steam, gas, electricity, water or rain which may leak from any
part of the Industrial Complex or from the pipes, appliances or plumbing works
therein or from the roof, street or subsurface or from any other places
resulting from dampness or any other cause whatsoever, or from the act or
negligence of any other tenant or any officer, agent, employee, contractor or
guest of any such tenant, except personal injury caused by or due to the gross
negligence or willful misconduct of Landlord. Landlord or its agents shall not
be liable for interference with the electrical service, ventilation, or for any
latent defect in the Demised Premises.
21.3 The parties hereto acknowledge that all or a part of the Demised
Premises may be used for the storage and shipment of goods not owned by Tenant,
and Landlord is not willing to enter into this lease unless Tenant indemnifies
the indemnitees to Landlord's satisfaction from any liability on the part of
the Indemnitees to the owner(s) of such goods for damage to the same arising
out of any acts or omissions of the Indemnitees. As a material inducement to
Landlord to enter into this lease, Tenant agrees to defend, indemnify and hold
the indemnitees harmless from and against any and all losses, claims,
liabilities, obligations and damages imposed upon or incurred or asserted
against the indemnitees by reason of damage to goods of persons storing such
goods with Tenant, notwithstanding the fact that such losses, claims,
liabilities, obligations or damages may have been caused by the acts or
omissions of Landlord. Tenant agrees that at all times during which it shall
store goods not owned by it in the Demised Premises, it shall insure the
indemnity described under this Section 21.3 in a manner reasonably satisfactory
to landlord. Landlord shall not be deemed a bailee, consignee, or warehouseman
(or responsible for the standard of care incidental thereto) with respect to
any goods stored or shipped to or from the Demised Premises for consignment or
bailment and Tenant shall insert a clause to that effect in all warehouse
receipts or consignment agreements for the storage or shipment of goods to or
from the Demised Premises.
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ARTICLE 22.
DEFAULT BY TENANT AND REMEDIES
22.1 The following events shall be deemed to be events of default by
Tenant under this lease:
(a) Tenant shall fail to pay any installment of rental or any other
obligation under this lease involving the payment of money on the date such
payment shall become due and payable.
(b) Tenant shall fail to comply with any provision of this lease,
other than as described in subsection (a) above, and either shall not cure such
failure within fifteen (15) days after written notice thereof to Tenant, or
shall cure that particular failure but shall again fail to comply with the same
provision of this lease within three (3) months after Landlord's written notice;
provided, however, that any such notice shall be in lieu of, and not in
addition to, any notice required under Section 1161 et seq. of the California
Code of Civil Procedure.
(c) Tenant or any guarantor of Tenant's obligations under this lease
shall become insolvent, or shall make a transfer in fraud of creditors, or
shall make an assignment for the benefit of creditors.
(d) Tenant or any guarantor of Tenant's obligations under this lease
shall file a petition under any section or chapter of the federal Bankruptcy
Code, as amended, or under any similar law or statute of the United States or
any state thereof; or Tenant or any guarantor of Tenant's obligations under
this lease shall be adjudged bankrupt or insolvent in proceedings filed against
Tenant or any guarantor of Tenant's obligations under this lease thereunder.
(e) A receiver or Trustee shall be appointed for the Demised
Premises or for all or substantially all of the assets of Tenant or any
guarantor of Tenant's obligations under this lease.
(f) Tenant shall desert or vacate or shall commence to desert or
vacate the Demised Premises or any substantial portion of the Demised Premises
or at any time prior to the last month of the lease term shall remove or
attempt to remove, without the prior written consent of Landlord, all or a
substantial amount of Tenant's goods, wares, equipment, fixtures, furniture, or
other personal property.
(g) Tenant shall do or permit to be done anything which creates a
lien upon the Demised Premises or upon all or any part of the Industrial
Complex.
(h) Any transfer of a substantial portion of the assets of Tenant,
or any incurrence of a material obligation by Tenant, unless such transfer or
obligation is undertaken or incurred in the ordinary course of Tenant's
business or in good faith for equivalent consideration, or with Landlord's
consent.
(i) The default of any guarantors of Tenant's obligations hereunder
under any guaranty of this Lease, or the attempted repudiation or revocation of
any such guaranty.
22.2 Upon the occurrence of any such event of default, Landlord shall have
the option to pursue any one or more of the following remedies to the extent
permitted by law:
(a) Without any further notice or demand whatsoever, Tenant shall be
obligated to reimburse Landlord for the damages suffered by Landlord as a
result of the event of default, plus interest on such amount at the maximum
contractual rate which could legally be charged in the event of a loan of such
amount to Tenant (but in no event to exceed 1-1/2% per month); and Landlord may
pursue a monetary recovery from Tenant.
(b) Without any further notice or demand whatsoever, Landlord may
take any one or more of the actions permissible at law to insure performance by
Tenant of Tenant's covenants and obligations under this lease. In this regard,
and without limiting the generality of the immediately preceding sentence, it
is agreed that if Tenant fails to open for business as required in this lease
or, having opened for business, deserts or vacates the Demised Premises,
Landlord may enter upon and take possession of such premises in order to
protect them from deterioration and continue to demand from Tenant the monthly
rentals and other charges provided in this lease, without any obligation to
relet; however, if Landlord does, at its sole discretion, elect to relet the
Demised Premises, such action by Landlord shall not be deemed an acceptance of
Tenant's surrender of the Demised Premises unless Landlord expressly notifies
Tenant of such acceptance in writing pursuant to this subsection (b), Tenant
hereby acknowledging that Landlord shall otherwise be reletting as Tenant's
agent and Tenant furthermore hereby agreeing to pay to Landlord on demand any
deficiency that may arise between the monthly rentals and other charges
provided in this lease and that actually collected by Landlord. In the event
that Landlord shall elect to relet, then rentals received by Landlord from such
reletting shall be applied: first, to the payment of any indebtedness (other
than rent) due hereunder from Tenant to
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Landlord; second, to the payment of any cost of such reletting (including
brokerage commissions); third, to the payment of the cost of any alterations and
repairs to the Demised Premises; fourth, to the payment of rent due and unpaid
hereunder, and the residue, if any, shall be held by Landlord and applied in
payment of future rent as the same may become due and payable hereunder. Should
reletting, during any month to which such rent is applied, result in the actual
payment of rentals at less than the rent payable during the month by Tenant
hereunder, then Tenant shall pay such deficiency to Landlord immediately upon
demand therefor by Landlord. Such deficiency shall be calculated and paid
monthly. Tenant shall also pay to Landlord as soon as ascertained, any costs and
expenses incurred by Landlord in such reletting or in making such alterations
and repairs not covered by the rentals received from such reletting. Finally, it
is agreed that in the event of any default described in subsection (g) of
Section 22.1 of this lease, Landlord may pay or bond around such lien, whether
or not consented by Tenant; and in such event Tenant agrees to reimburse
Landlord on demand for all costs and expenses incurred in connection with any
such action, with Tenant further agreeing that Landlord shall in no event be
liable for any damages or claims resulting from such action. No action or
inaction by Landlord including, without limitation, the re-entry or taking of
possession of the Demised Premises by Landlord pursuant to this Section 22.2(b)
shall be construed as an election to terminate this lease or as interference
with Tenant's rights of possession, assignment or subletting unless a written
notice of such election shall be given to Tenant or unless the termination
thereof be decreed by a court of competent jurisdiction. Notwithstanding any
reletting without termination by Landlord, Landlord may, at any time after such
reletting, elect to terminate this lease for any such default.
(c) Landlord may terminate this lease by written notice to Tenant,
in which event Tenant shall immediately surrender the Demised Premises to
Landlord. In the event that Landlord shall elect to so terminate this lease,
then Landlord may recover from Tenant:
(i) The worth at the time of award of any unpaid rent which had
been earned at the time of such termination; plus
(ii) The worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss Tenant proves
reasonably could have been avoided; plus
(iii) The worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that Tenant proves reasonably
could be avoided; plus
(iv) Any other amount necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform its
obligations under this lease or which in the ordinary course would be
likely to result therefrom, plus
(v) At Landlord's election, such other amounts in addition to
or in lieu of the foregoing as may be permitted from time to time by
applicable California law.
As used in subparagraphs (i) and (ii) above, the "worth at the time of
award" is computed by allowing interest at the maximum rate permitted
by law. AS used in subparagraph (iii) above, the "worth at the time of
award" is computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco at the time of award plus
[***].
Forbearance by Landlord to enforce one or more of the remedies herein provided
upon an event of default shall not be deemed or construed to constitute a
waiver of such default. Tenant hereby waives for Tenant and for all those
claiming under Tenant all right now or hereafter existing to redeem by order
or judgment of any court or by any legal process or writ, Tenant's right of
occupancy of the Demised Premises after any termination of this lease.
(d) In addition to all other rights and remedies provided Landlord
in this lease and by law, Landlord shall have the remedy described in
California Civil Code Section 1951.4 (Landlord may continue the lease in effect
after Tenant's breach and abandonment and recover rent as it becomes due if
Tenant has the right to sublet or assign the lease, subject to reasonable
limitations).
22.3 It is expressly agreed that in determining "the unpaid rent" as that
term is used throughout subsections 22.2(c)(i) and 22.2(c)(ii) above, there
shall be added to the minimum guaranteed rental (as specified in Sections
1.1(l) and 4.1 of this lease) a sum equal to the charges for maintenance of the
Common Area (as specified in Section 7.4 of this lease), and the payments for
taxes, charges and insurance (as specified in Article 6 of this lease).
*** Confidential treatment requested.
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22.4 It is further agreed that, in addition to payments required
pursuant to subsections 22.2(b) and 22.2(c) above, Tenant shall compensate
Landlord for all expenses incurred by Landlord in repossession (including,
among other expenses, any increase in insurance premiums caused by the vacancy
of the Demised Premises), all expenses incurred by Landlord in reletting
(including, among other expenses, repairs, remodeling, replacements,
advertisements and brokerage fees), all concessions granted to a new tenant
upon reletting (including, among other concessions, renewal options), all
losses incurred by Landlord as a direct or indirect result of Tenant's default
(including, among other losses, any adverse reaction by Landlord's mortgagee or
by other tenants or potential tenants of the Industrial Complex) and a
reasonable allowance for Landlord's administrative efforts, salaries and
overhead attributable directly or indirectly to Tenant's default and Landlord's
pursuing the rights and remedies provided herein and under applicable law.
22.5 Landlord may restrain or enjoin any breach or threatened breach
of any covenant, duty or obligation of Tenant herein contained without the
necessity of proving the inadequacy of any legal remedy or irreparable harm.
The remedies of Landlord hereunder shall be deemed cumulative and not exclusive
of each other.
22.6 If on account of any breach or default by Tenant in its
obligations hereunder, Landlord shall employ an attorney to present, enforce or
defend any of Landlord's rights or remedies hereunder. Tenant agrees to pay any
reasonable attorneys' fees incurred by Landlord in such connection.
22.7 Tenant acknowledges its obligation to deposit with Landlord the
sum stated in Section 1.1(n) above, to be held by Landlord without interest as
security for the performance by Tenant of Tenant's covenants and obligations
under this Lease. Tenant agrees that such deposit may be commingled with
Landlord's other funds and that such security deposit is not an advance payment
of rental or a measure of Landlord's damages in case of default by Tenant. Upon
the occurrence of any event of default by Tenant, Landlord may, from time to
time, without prejudice to any other remedy provided herein or provided by law,
use such funds to the extent necessary to make good any arrears of rentals and
any other damage, injury, expense or liability caused to Landlord by such event
of default, and Tenant shall pay to Landlord on demand the amount so applied in
order to restore the security deposit to its original amount. If Tenant is not
then in default hereunder, any remaining balance of such security deposit shall
be returned by Landlord to Tenant upon termination of this lease (subject to the
provisions of Section 19.5 above).
22.8 (a) In the event of any default described in subsection (d) of
Section 22.1 of this lease, any assumption and assignment must conform with the
requirements of the Bankruptcy Code and, in order to provide Landlord with the
assurances contemplated by the Bankruptcy Code, Tenant must fulfill the
following obligations, in addition to any other reasonable obligations that
Landlord may require, before any assumption of this lease is effective: (i) all
defaults under subsection (a) of Section 22.1 of this lease must be cured
within ten (10) days after the date of assumption; (ii) all other defaults
under Section 22.1 of this lease other than under subsection (d) of Section
22.1 must be cured within fifteen (15) days after the date of assumption; (iii)
all actual monetary losses incurred by Landlord (including, but not limited to,
reasonable attorneys' fees) must be paid to Landlord within ten (10) days after
the date of assumption; and (iv) Landlord must receive within ten (10) days
after the date of assumption a security deposit in the amount of six (6) months
minimum guaranteed rent (using the minimum guaranteed rent in effect for the
first full month immediately following the assumption) and an advance
prepayment of minimum guaranteed rent in the amount of three (3) months minimum
guaranteed rent (using the minimum guaranteed rent in effect for the first full
month immediately following the assumption), both sums to be held by Landlord
in accordance with Section 22.7 above and deemed to be rent under this lease
for the purposes of the Bankruptcy Code as amended and from time to time in
effect.
(b) In the event this lease is assumed in accordance with the
requirements of the Bankruptcy Code and this lease, and is subsequently
assigned, then, in addition to any other reasonable obligations that Landlord
may require and in order to provide Landlord with the assurances contemplated
by the Bankruptcy Code, Landlord shall be provided with (i) a financial
statement of the proposed assignee prepared in accordance with generally
accepted accounting principles consistently applied, though on a cash basis,
which reveals a net worth in an amount sufficient, in Landlord's reasonable
judgment, to assure the future performance by the proposed assignee of Tenant's
obligations under this lease; or (ii) a written guaranty by one or more
guarantors with financial ability sufficient to assure the future performance
of Tenant's obligations under this lease, such guaranty to be in form and
content satisfactory to Landlord and to cover the performance of all of
Tenant's obligations under this lease.
ARTICLE 23.
INTENTIONALLY DELETED
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ARTICLE 24.
HOLDING OVER
24.1 In the event Tenant remains in possession of the Demised Premises
after the expiration of this lease and without the execution of a new lease or
an amendment hereto, it shall be deemed to be occupying said premises as a
tenant from month to month at a rental equal to the rental herein provided [***]
of such amount and otherwise subject to all the conditions, provisions and
obligations of this lease insofar as the same are applicable to a month-to-month
tenancy. Neither any provision hereof nor acceptance by Landlord of rent after
such expiration or earlier termination shall be deemed a consent to a holdover
hereunder or result in a renewal of this lease or an extension of the term.
Notwithstanding any provision to the contrary contained herein, (i) Landlord
expressly reserves the right to require Tenant to surrender possession of the
Demised Premises upon the expiration of the term of this lease or upon the
earlier termination hereof, the right to reenter the Demised Premises, and the
right to assert any remedy at law or in equity to evict Tenant and collect
damages in connection with any such holding over, and (ii) Tenant shall
indemnify, defend and hold Landlord harmless from and against any and all
claims, demands, actions, losses, damages, obligations, costs and expenses,
including, without limitation, attorneys' fees incurred or suffered by Landlord
by reason of Tenant's failure to surrender the Demised Premises on the
expiration or earlier termination of this Lease in accordance with the
provisions of this lease.
ARTICLE 25.
NOTICES
25.1 Wherever any notice is required or permitted hereunder, such notice
shall be in writing. Any notice or document required or permitted to be
delivered hereunder shall be deemed to be delivered when actually received by
the designated addressee or, if earlier and regardless of whether actually
received or not, when deposited in the United States mail, postage prepaid,
certified mail, return receipt requested, addressed to the parties hereto at
the respective addresses set out in Section 1.1 above (or at Landlord's option,
to Tenant at the Demised Premises), or at such other addresses as they have
theretofore specified by written notice.
25.2 If and when included within the term "Landlord" as used in this
instrument there are more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of such a notice
specifying some individual at some specific address for the receipt of notices
and payments to Landlord; if and when included within the term "Tenant" as used
in this instrument there are more than one person, firm or corporation, all
shall jointly arrange among themselves for their joint execution of such a
notice specifying some individual at some specific address for the receipt of
notices and payments to Tenant. All parties included within the terms
"Landlord" and "Tenant," respectively, shall be bound by notice and payments
given in accordance with the provisions of this Article to the same effect as
if each had received such notice or payment. In addition, Tenant agrees that
actions by Landlord and notices to Tenant hereunder may be taken or given by
Agent, Landlord's attorney, or any other property manager or agent.
25.3 A copy of any notice or document required or permitted to be
delivered hereunder to Landlord shall simultaneously be delivered to Agent.
ARTICLE 26.
COMMISSIONS
26.1 Tenant and Landlord warrant that they have had no dealings with any
broker or agent in connection with this lease, other than Agent and Tenant's
Broker. Landlord and Tenant covenant to pay, hold harmless and indemnify each
other from and against any and all cost, expense or liability for any
compensation, commissions or charges claimed by any other broker or agent
utilized by the indemnitor with respect to this lease or the negotiation hereof.
ARTICLE 27.
REGULATIONS
27.1 Landlord and Tenant acknowledge that there are now in effect and may
hereafter be enacted or go into effect federal, state, county and municipal
laws, orders, rules, directives and regulations relating to or affecting the
Demised Premises or the Industrial Complex, concerning the impact on the
environment of construction, land use, maintenance and operation of structures,
toxic or otherwise hazardous substances, and the conduct of business,
including, without limitation, the Americans With Disabilities Act of 1990 and
the Clean Air Act and regulations issued thereunder (all of the foregoing, as
amended from time to time, being herein called the "Regulations"). Tenant will
not
*** Confidential treatment requested.
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cause or permit to be caused, any act or practice, by negligence, omission or
otherwise, that would adversely affect the environment or do anything or permit
anything to be done that would violate any of said Regulations. Moreover,
Tenant shall have no claim against Landlord by reason of any changes Landlord
may make in the Industrial Complex or the Demised Premises pursuant to said
Regulations or any charges imposed upon Tenant, Tenant's customers or other
invitees pursuant to same.
27.2 If, by reason of any Regulations, the payment to, or collection
by, Landlord of any rental or other charge (collectively referred to
hereinafter as "Lease Payments") payable by Tenant to Landlord pursuant to the
provisions of this lease is in excess of the amount (the "Maximum Charge")
permitted by the Regulations, then Tenant, during the period (the "Freeze
Period") when the Regulations shall be in force and effect shall not be
required to pay, nor shall Landlord be permitted to collect, any sum in excess
of the Maximum Charge. Upon the earlier of (i) the expiration of the Freeze
Period, or (ii) the issuance of a final order or judgment of a court of
competent jurisdiction declaring the Regulations to be invalid or not
applicable to the provisions of this lease, Tenant, to the extent not then
proscribed by law, and commencing with the first day of the month immediately
following, shall pay to Landlord as additional rental, in equal monthly
installments during the balance of the term of this lease, a sum equal to the
cumulative difference between the Maximum Charges and the Lease Payments during
the Freeze Period. If any provisions of this Section, or the application
thereof, shall to any extent be declared to be invalid and unenforceable, the
same shall not be deemed to affect any of the other provisions of this Section
or of this lease, all of which shall be deemed valid and enforceable to the
fullest extent permitted by law.
27.3 Tenant acknowledges that it will be wholly responsible for any
accommodations or alterations which need to be made to the Demised Premises to
accommodate disabled employees and customers of Tenant, including without
limitation, the requirements under the Americans With Disabilities Act of 1990
and any equivalent California law. Any alterations made to the Demised Premises
in order to comply with either statute must be made solely at Tenant's expense
and in compliance with all terms and requirements of this lease. Landlord
agrees to make reasonable efforts to ensure that the Common Area is in
compliance with the applicable disability access laws as of the date hereof. If
a complaint is received by Landlord from either a private or government source
regarding disability access to the Common Area of the Industrial Complex,
Landlord reserves the right to mediate, contest, comply with or otherwise
respond to such complaint as Landlord deems to be reasonably prudent under the
circumstances. If Landlord decides to make alterations to the Common Area of
the Industrial Complex in response to any such complaints or in response to
legal requirements Landlord considers to be applicable to the Common Area of
the Industrial Complex, the cost of such alterations shall be included in the
Common Area maintenance charge under this lease. Landlord and Tenant agree that
so long as the governmental entity or entities charged with enforcing such
statutes have not expressly required Landlord to take specific action to
effectuate compliance with such statutes, Landlord shall be conclusively deemed
to be in compliance with such statutes. Tenant agrees to provide Landlord with
written notice should Tenant become aware of a violation of such statutes with
respect to the Common Area. In the event Landlord is required to take action to
effectuate compliance with such statutes, Landlord shall have a reasonable
period of time to make the improvements and alterations necessary to effectuate
such compliance, which period of time shall be extended by any time necessary
to cause any necessary improvements and alterations to be made.
ARTICLE 28.
HAZARDOUS MATERIALS
28.1 During the term of this lease, Tenant shall comply with all
Environmental Laws and Environmental Permits (each defined in Section 28.7
hereof) applicable to the operation or use of the Demised Premises, will cause
all other persons occupying or using the Demised Premises to comply with all
such Environmental Laws and Environmental Permits, will immediately pay or cause
to be paid all costs and expenses incurred by reason of such compliance, and
will obtain and renew all Environmental Permits required for the operation or
use of the Demised Premises.
28.2 Tenant shall not generate, use, treat, store, handle, release or
dispose of, or permit the generation, use, treatment, storage, handling,
release or disposal of Hazardous Materials (as defined in Section 28.7 hereof)
on the Demised Premises, or the Industrial Complex, or transport of permit the
transportation of Hazardous Materials to or from the Demised Premises or the
Industrial Complex except for limited quantities used or stored at the Demised
Premises and required in connection with the routine operation and maintenance
of the Demised Premises, and then only upon the written consent of Landlord and
in compliance with all applicable Environmental Laws and Environmental Permits.
28.3 At any time and from time to time during the term of this lease,
Landlord may perform at Tenant's sole cost and expense, an environmental site
assessment report concerning the Demised Premises, prepared by an environmental
consulting firm chosen by Landlord, indicating the presence or absence of
Hazardous Materials caused or permitted by Tenant and the potential cost of any
compliance,
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removal or remedial action in connection with any such Hazardous Materials on
the Demised Premises. Tenant shall grant and hereby grants to Landlord and its
agents access to the Demised Premises and specifically grants Landlord an
irrevocable non-exclusive license to undertake such an assessment; and the cost
of such assessment shall be immediately due and payable on demand.
28.4 Tenant will immediately advise Landlord in writing of any of the
following: (1) any pending or threatened Environmental Claim (as defined in
Section 28.7 hereof) against Tenant relating to the Demised Premises or the
Industrial Complex; (2) any condition or occurrence on the Demised Premises or
the industrial Complex that (a) results in noncompliance by Tenant with any
applicable Environmental Law, or (b) could reasonably be anticipated to form
the basis of an Environmental Claim against Tenant or Landlord or the Demised
Premises; (3) any condition or occurrence on the Demised Premises or any
property adjoining the Demised Premises that could reasonably be anticipated to
cause the Demised Premises to be subject to any restrictions on the ownership,
occupancy, use or transferability of the Demised Premises under any
Environmental Law; and (4) the actual or anticipated taking of any removal or
remedial action by Tenant in response to the actual or alleged presence of any
Hazardous Material on the Demised Premises or the Industrial Complex. All such
notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and Tenant's
response thereto. In addition, Tenant will provide Landlord with copies of all
communications regarding the Demised Premises with any government or
governmental agency relating to Environmental Laws, all such communications
with any person relating to Environmental Claims, and such detailed reports of
any such Environmental Claim as may reasonably be requested by Landlord.
28.5 Tenant will not change or permit to be changed the present use of the
Demised Premises unless Tenant shall have notified Landlord thereof in writing
and Landlord shall have determined, in its sole and absolute discretion, that
such change will not result in the presence of Hazardous Materials on the
Demised Premises except for those described in Section 28.2 above.
28.6 (a) Tenant agrees to defend, indemnify and hold harmless the
Indemnitees (as defined in Section 21.1) from and against all obligations
(including removal and remedial actions), losses, claims, suits, judgments,
liabilities, penalties, damages (including consequential and punitive damages),
costs and expenses (including attorneys' and consultants' fees and expenses) of
any kind or nature whatsoever that may at any time be incurred by, imposed on
or asserted against such Indemnitees directly or indirectly based on, or
arising or resulting from (a) the actual or alleged presence of Hazardous
Materials on the Industrial Complex which is caused or permitted by Tenant and
(b) any Environmental Claim relating in any way to Tenant's operation or use of
the Demised Premises (the "Hazardous Materials Indemnified Matters"). The
provisions of this Article 28 shall survive the expiration or sooner
termination of this lease.
(b) To the extent that the undertaking in the preceding paragraph
may be unenforceable because it is violative of any law or public policy,
Tenant will contribute the maximum portion that it is permitted to pay and
satisfy under applicable law to the payment and satisfaction of all Hazardous
Materials Indemnified Matters incurred by the Indemnitees.
(c) All sums paid and costs incurred by Landlord with respect to any
Hazardous Materials Indemnified Matter shall bear interest at the lessor of (i)
[***], or (ii) [***], from the date so paid or incurred until reimbursed by
Tenant, and all such sums and costs shall be immediately due and payable on
demand.
28.7 (a) "Hazardous Materials" means (i) petroleum or petroleum
products, natural or synthetic gas, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, and radon gas; (ii) any
substances defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants" or "pollutants," or words of similar import, under any
applicable Environmental Law; and (iii) any other substance exposure to which
is regulated by any governmental authority; (b) "Environmental Law" means any
federal, state or local statute, law, rule, regulation, ordinance, code, policy
or rule of common law now or hereafter in effect and in each case as amended,
and any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment, relating to the
environment, health, safety or Hazardous Materials, including without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, 42 U.S.C. Section 9601 et seq.; the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.; the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801 et seq.; the Clean Water
Act, 33 U.S.C. Section 1251 et seq.; the Toxic Substances Control Act, 15
U.S.C. Section 2601 et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq.;
the Safe Drinking Water Act, 42 U.S.C. Section 3001 et seq.; the Atomic Energy
Act, 42 U.S.C. Section 2011 et seq.; the Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. Section 136 et seq.; and the Occupational Safety and
Health Act, 29 U.S.C. Section 651 et seq.; (c) "Environmental Claims" means any
and all administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of non-compliance or violation.
*** Confidential treatment requested.
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investigations, proceedings, content orders or consent agreements relating in
any way to any Environmental Law or any Environmental Permit, including without
limitation (i) any and all Environmental Claims by governmental or regulatory
authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law and (ii) any and
all Environmental Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment; and (d) "Environmental Permits" means all
permits, approvals, identification numbers, licenses and other authorizations
required under any applicable Environmental Law.
ARTICLE 29.
MISCELLANEOUS
29.1 Nothing in this lease shall be deemed or construed by the parties
hereto, nor by any third party, as creating the relationship of principal and
agent or of partnership or of joint venture between the parties hereto, it being
understood and agreed that neither the method of computation of rent, nor any
other provision contained herein, nor any acts of the parties hereto, shall be
deemed to create any relationship between the parties hereto other than the
relationship of landlord and tenant.
29.2 Tenant shall not for any reason withhold or reduce Tenant's required
payments of rentals and other charges provided in this lease, it being agreed
that the obligations of Landlord under this lease are independent of Tenant's
obligations except as may be otherwise expressly provided. The immediately
preceding sentence shall not be deemed to deny Tenant the ability of pursuing
all rights granted it under this lease or at law; however, at the direction of
Landlord, Tenant's claims in this regard shall be litigated in proceedings
different from any litigation involving rental claims or other claims by
Landlord against Tenant (i.e., each party may proceed to a separate judgment
without consideration, counterclaim or offset as to the claims asserted by the
other party).
29.3 The liability of Landlord, any agent of Landlord, or any of their
respective officers, directors, shareholders, or employees to Tenant for or in
respect of any default by Landlord under the terms of this lease or in respect
of any other claim or cause of action shall be limited to the interest of
Landlord in the Industrial Complex, and Tenant agrees to look solely to
Landlord's interest in the Industrial Complex for the recovery and satisfaction
of any judgment against Landlord, any agent of Landlord, or any of their
respective officers, directors, shareholders, and employees.
29.4 In all circumstances under this lease where the prior consent of one
party (the "consenting party"), whether it be Landlord or Tenant is required
before the other party (the "requesting party") is authorized to take any
particular type of action, such consent shall not be withheld in a wholly
unreasonable and arbitrary manner; however, the requesting party agrees that its
exclusive remedy if it believes that consent has been withheld improperly
(including, but not limited to, consent required from Landlord pursuant to
Section 19.1) shall be to institute litigation either for a declaratory judgment
or for a mandatory injunction requiring that such consent be given (with the
requesting party hereby waiving any claim for damages, attorneys' fees or any
other remedy unless the consenting party refuses to comply with a court order or
judgement requiring it to grant its consent).
29.5 Whenever a period of time is herein prescribed for action to be taken
by Landlord, Landlord shall not be liable or responsible for, and there shall be
excluded from the computation of any such period of time, any delays due to
strikes, riots, acts of God, shortages of labor or materials, war, governmental
laws, regulations or restrictions or any other causes of any kind whatsoever
which are beyond the reasonable control of Landlord.
29.6 If any provision of this lease should be held to be invalid or
unreasonable, the validity and enforceability of the remaining provisions of
this lease shall not be affected thereby.
29.7 If this lease is in fact a sublease, Tenant accepts this lease
subject to all of the terms and conditions of the underlying lease under which
Landlord holds the Industrial Complex as lessee. Tenant covenants that it will
do no act or thing which would constitute a violation by Landlord of its
obligation under such underlying lease; provided, however, that Tenant's
agreement in this regard is premised on Landlord's assurances to the effect that
the terms of this lease do not violate such underlying lease.
29.8 The laws of the State of California shall govern the interpretation,
validity, performance and enforcement of this lease. Venue for any action under
this lease shall be the county in which rentals are due pursuant to Section 4.2
and Section 1.1 of this lease.
29.9 The captions used herein are for convenience only and do not limit or
amplify the provisions hereof.
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29.10 Whenever herein the singular number is used, the same shall
include the plural, and words of any gender shall include each other gender.
29.11 All covenants and obligations contained within this lease shall
bind and inure to the benefit of Landlord, its successors and assigns, and
shall be binding upon Tenant, its permitted successors and assigns.
29.12 This lease contains the entire agreement between the parties,
and no rights are created in favor of either party other than as specified or
expressly contemplated in this lease. No brochure, rendering, information or
correspondence shall be deemed to be a part of this agreement unless
specifically incorporated herein by reference. In addition, no agreement shall
be effective to change, modify or terminate this lease in whole or in part
unless such is in writing and duly signed by the party against whom enforcement
of such change, modification or termination is sought.
29.13 LANDLORD AND TENANT HEREBY ACKNOWLEDGE THAT THEY ARE NOT RELYING
UPON ANY BROCHURE, RENDERING, INFORMATION, REPRESENTATION OR PROMISE OF THE
OTHER, OR OF THE AGENT, EXCEPT AS MAY BE EXPRESSLY SET FORTH IN THIS LEASE.
29.14 No waiver of any of the terms, covenants, provisions,
conditions, rules and regulations imposed by this lease, and no waiver of any
legal or equitable relief or remedy, shall be implied by the failure of
Landlord to assert any rights, declare any forfeiture, or for any other reason.
No waiver of any of the terms, provisions, covenants, conditions, rules and
regulations shall be valid unless it shall be in writing signed by Landlord. No
waiver by Landlord or forgiveness of performance by Landlord for one or more
tenants shall constitute a waiver or forgiveness of performance in respect to
Tenant. Landlord's consent to or approval of any act by Tenant requiring
Landlord's consent or approval under this lease shall not be deemed to render
unnecessary the obtaining of Landlord's consent to or approval of any
subsequent act of Tenant. No act or thing done by Landlord or Landlord's agents
during the term of this lease shall be deemed an acceptance of a surrender of
the Demised Premises, unless in writing signed by Landlord. The delivery of the
keys to any employee or agent of Landlord shall not operate as a termination of
this lease or a surrender of the Demised Premises. The acceptance of any rent
by Landlord following a breach of this lease by Tenant shall not constitute a
waiver by Landlord of such breach or any other breach unless such waiver is
expressly stated in a writing signed by Landlord.
29.15 Tenant shall deliver and surrender to Landlord possession of the
Demised Premises (including all of Tenant's permanent work upon and to the
Demised Premises, all replacements and all fixtures permanently attached to the
Demised Premises) immediately upon the expiration of the term or the
termination of this lease in as good condition and repair as the same were on
the delivery date (loss by any insured casualty and ordinary wear and tear only
excepted) and deliver the keys at the office of Landlord or Landlord's agent;
provided, however, that upon Landlord's request made at least thirty (30) days
prior to the end of the term, or the date Tenant is otherwise required to
vacate the Demised Premises, Tenant shall remove all fixtures and equipment
affixed to the Demised Premises by Tenant, and repair and restore the Demised
Premises to their condition on the delivery date (loss by any insured casualty
and ordinary wear and tear only excepted), at Tenant's sole expense. The
removal shall be performed prior to the earlier of the end of the term or the
date Tenant is required to vacate the Demised Premises.
29.16 Tenant shall not record this lease. Without the prior written
consent of Landlord, Tenant shall not record any memorandum of this lease,
short form or other reference to this lease.
29.17 The submission of this lease for examination does not constitute
a reservation of or option for the Demised Premises or any other space in the
Industrial Complex, and shall not vest any right in Tenant. This lease shall
become effective as a lease only upon its execution and delivery by the parties.
29.18 LANDLORD AND TENANT HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LEASE OR ANY
DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF
CONDUCT. COURSE OF DEALINGS, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
EITHER PARTY ARISING OUT OF OR RELATED IN ANY MANNER WITH THE DEMISED PREMISES
(INCLUDING WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS LEASE OR
ANY CLAIMS OR DEFENSES ASSERTING THAT THIS LEASE WAS FRAUDULENTLY INDUCED OR IS
OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS A MATERIAL INDUCEMENT FOR LANDLORD
TO ENTER INTO AND ACCEPT THIS LEASE.
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29.19 This lease consists of twenty-nine Articles and Exhibits "A"
through "D". With the exception of Article 7, in the event any provision of an
exhibit shall be inconsistent with a provision in the body of the lease, the
provision as set forth in the exhibit shall be deemed to control.
EXECUTED as of the latest date accompanying a signature by Landlord or
Tenant below.
LANDLORD: MP HACIENDA, INC.,
a Delaware corporation
By: GE CAPITAL INVESTMENT ADVISORS, INC.,
Its agent
By: /s/ DANIEL S. MELLEN
-----------------------------------
Name: Daniel S. Mellen
Title: VP
Date of Signature: 5/5/98
TENANT: LBE TECHNOLOGIES, INC.,
a California corporation
By: /s/ DAVID S. MOESE
----------------------------------------
Name: David S. Moese
Title: Chairman of the Board
By: /s/ [ILLEGIBLE]
----------------------------------------
Name: [illegible]
Title: VP & CTO
Date of Signature: 5/1/98
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EXHIBIT "A"
DEMISED PREMISES
BUILDING C
FIRST FLOOR PLAN
BUILDING C
SECOND FLOOR PLAN
210 HACIENDA AVENUE
<PAGE> 29
EXHIBIT "B"
CONSTRUCTION: TENANT ACCEPTANCE OF SPACE "AS IS"
ARTICLE I. GENERAL
Tenant hereby accepts the Demised Premises "as is" and "ready for occupancy"
and Landlord shall have no obligation to make or pay for any improvements,
renovations or alterations in or to the Demised Premises to prepare or make
ready the Demised Premises for Tenant's occupancy as of the Commencement Date.
Provided, however, Landlord shall deliver the Demised Premises to Tenant in
broom clean condition with the building systems, including plumbing,
electrical, lighting and elevator (but excluding the HVAC system), serving the
Demised Premises in good working order. Tenant acknowledges that the existing
HVAC system serving the Demised Premises is not in good working order and that
costs incurred by Tenant to repair the existing HVAC system may be reimbursed
to Tenant as a "Reimbursable Improvement" (as defined in this Exhibit "B").
Prior to any modification of the existing premises, Tenant shall adhere to the
following as well as the provisions contained in Article 11 of the lease:
ARTICLE II. TENANT IMPROVEMENTS
A. Tenant Improvement Allowance: Tenant shall be entitled to a tenant
improvement allowance (the "Tenant Improvement Allowance") in the
maximum amount of [***] for the costs relating to the initial
design and construction of Tenant's improvements which are (i)
permanently affixed to the Demised Premises and (ii) are
"Reimbursable Improvements", as defined in Paragraph E. below (the
"Tenant Improvements"). In no event shall Landlord be obligated to
make disbursements for Tenant Improvements in a total amount
which exceeds the Tenant Improvement Allowance. No portion of the
Tenant Improvement Allowance may be utilized for material or supplies
not located on the Demised Premises for Tenant's fixturization,
signage or installation of furniture or equipment.
B. Disbursement of Tenant Improvement Allowance: Landlord shall reimburse
Tenant for costs and expenses actually incurred by Tenant for work
actually performed, construction in place and/or materials delivered
to the Demised Premises in connection with the design and construction
of Tenant improvements on a [***] except as provided below. The final
disbursement of the Tenant Improvement Allowance, which amount shall
not be less than [***] of the entire Tenant Improvement Allowance,
shall be payable thirty (30) days after Tenant opens for business in
the Demised Premises and Landlord has received (i) a written request
from Tenant for reimbursement, (ii) invoices of Tenant's contractor,
subcontractors or suppliers, as applicable, with evidence of final
payment thereof, (iii) unconditional lien waivers and mechanic's lien
releases executed by Tenant's contractor, subcontractors or suppliers,
as applicable (all such waivers and releases to be in the forms
prescribed by California Civil Code Section 3262), and (iv) all other
information and documentation reasonably requested by Landlord
(including, without limitation, a certificate of occupancy for the
Demised Premises). Landlord may withhold the amount of any and all
retentions provided for in the original contracts or subcontracts
until expiration of the applicable lien periods or Landlord's receipt
of unconditional lien waivers and mechanic's lien releases executed by
Tenant's contractor, subcontractors or suppliers, as applicable.
C. Notwithstanding anything to the contrary set forth above, Landlord,
at Landlord's sole option, may elect to contract directly for the
performance of some or all of the Tenant Improvements and pay the
contractor(s) directly, up to the Tenant Improvement Allowance set
forth above; any amounts in excess thereof shall be paid directly by
Tenant upon receipt of invoices for such work; Landlord shall have
the further option of requiring Tenant to pay such excess sums in
advance based upon Landlord's reasonable estimation thereof.
D. Under no circumstances shall Landlord be required to fund any portion
of the Tenant Improvement Allowance when Tenant is in default under
this lease. Tenant acknowledges that in the event Tenant is in
default of any of its obligations set forth in the Lease at any time
during the Lease Term which default is not cured within the
applicable cure period, in addition to any other rights or remedies
Landlord may have as a result of any such default, the entire amount
of the Tenant Improvement Allowance funded by Landlord shall become
immediately due and payable by Tenant to Landlord.
*** Confidential treatment requested.
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<PAGE> 30
E. In the event that Tenant shall have failed to qualify under
Paragraph B above for reimbursement of any portion of the Tenant
Improvement Allowance by that date which is one hundred eighty
(180) days after the date of execution of this lease, such amount
shall no longer be available for the payment of expenses in
connection with the Tenant Improvements and Landlord's obligation
for funding of such amounts shall be terminated.
F. As stated in Paragraph A, above, Landlord shall only be required
to reimburse Tenant for Tenant Improvements which are also
"Reimbursable Improvements". For purposes of this Exhibit "B",
"Reimbursable Improvements" shall only consist of Improvements
which (i) repair or replace the existing HVAC system serving the
Demised Premises; (ii) are necessary to bring the Demised
Premises into compliance with Regulations (including the
Americans with Disabilities Act of 1990); (iii) involve carpeting
and/or painting the Demised Premises using building standard
materials; and (iv) other improvements approved in advance (in
Landlord's sole discretion) and in writing by Landlord as being
Reimbursable Improvements under this Exhibit "B".
ARTICLE III. PRE-CONSTRUCTION OBLIGATIONS
A. Plans, diagrams, schedules and other data relating to work to be
performed by Tenant must be furnished by Tenant to Landlord
complete, sufficient to obtain a building permit, and ready for
Landlord's consideration and final approval within thirty (30)
days after execution of this lease (or at such other time as may
be specified by this exhibit). Without limiting the generality of
the immediately preceding sentence, Tenant's submissions must
include a floor plan, a reflected ceiling plan, a plumbing plan,
elevations of walls and a fixture plan. All drawings shall be at
scale of either 1/8" or 1/4". Tenant shall reimburse Landlord for
any loss or extra cost which may result to Landlord by reason of
failure on the part of Tenant to submit any such plans, diagrams,
schedules, specifications and/or other data within said period of
time.
B. Tenant shall secure Landlord's written approval of all designs,
plans, specifications, materials, contractors and contracts for
work to be performed by Tenant before beginning the work
(including following whatever "work letter" instructions, if any,
which Landlord may deliver to Tenant in connection with the
work), and shall secure all necessary licenses and permits to be
used in performing the work. Tenant's finished work shall be
subject to Landlord's approval and acceptance.
C. The insurance requirements under Article 15 of this lease and
indemnity requirements under Article 21 of this lease shall apply
during the construction contemplated in this exhibit, and Tenant
shall provide evidence of appropriate insurance coverage prior to
beginning any of Tenant's work. Tenant shall provide Landlord
with evidence of insurance covering both Tenant and Tenant's
contractor against damage to their personal property, as well as
against third-party liability and workers' compensation claims
arising out of all construction and associated activities. All
policies of insurance shall be subject to Landlord's prior
approval and shall be endorsed showing Landlord as an additional
named insured (or if permitted by Landlord, may provide a waiver
of subrogation against Landlord).
ARTICLE IV. DESCRIPTION OF TENANT'S WORK
A. Signs: Tenant shall pay for all signs and the installation
thereof, including the electrical hook-up, subject to the
provisions of Section 13.1 of this lease.
B. Utilities: All meters or other measuring devices in connection
with utility services shall be provided by Tenant. All service
deposits shall be made by Tenant at Tenant's expense.
C. All work undertaken by Tenant shall be at Tenant's expense
(except as specifically provided above with respect to the Tenant
Improvement Allowance) and shall not damage the building or any
part thereof. Any roof penetration shall be performed by
Landlord's roofer or, at Landlord's option, by a bonded roofer
approved in advance by Landlord. The work shall be begun only
after Landlord has given consent, which consent shall in part be
conditioned upon Tenant's plans, to include materials acceptable
to Landlord, in order to prevent injury to the roof and to spread
the weight of the equipment being installed. Tenant shall also be
responsible for obtaining and paying for professional inspections
of any structural work (including, without limitation, any roof
work or concrete work).
2
<PAGE> 31
D. All work performed by or at the behest of Tenant shall be in
compliance with all applicable Regulations.
3
<PAGE> 32
EXHIBIT "C"
TENANT CONSTRUCTION RULES AND REGULATIONS
1. All demolition, removals and other categories of work that may
inconvenience other tenants or disturb building operations must be
scheduled and performed before or after normal working hours, and the
property manager for the Industrial Complex (the "Property Manager") shall
be provided with at least twenty-four (24) hours notice prior to
proceeding with such work.
2. All structural and floor loading requirements shall be subject to the prior
approval of the Industrial Complex's structural engineer. Approval shall
be obtained by Tenant and any fees shall be at Tenant's sole expense.
3. All mechanical (HVAC, plumbing and sprinkler) and electrical requirements
shall be subject to the prior approval of Landlord's mechanical engineers.
When necessary, Property Manager will require engineering and shop
drawings, which drawings must be approved by Property Manager before the
work is started. Drawings shall be prepared by Tenant and all approvals
shall be obtained by Tenant.
4. If the shutdown of risers and mains for electrical, HVAC, sprinkler
and/or plumbing work is required, such work shall be supervised by a
representative of Landlord at Tenant's sole expense at a time approved in
advance by Property Manager.
5. Tenant's general contractor is responsible to do all of the following:
(a) Properly supervise construction at the Demised Premises at all times.
(b) Police the work at all times, continually keeping the affected
space(s) safe and orderly.
(c) Maintain the cleanliness and protection of all affected areas.
(d) Avoid and prevent the disturbance of other tenants.
6. If Tenant's general contractor is negligent in any of its responsibilities,
Tenant shall be charged for the corrective work done by Landlord's
personnel.
7. No electrical cords are to be stretched across any walkways or public
areas in any manner that would cause any safety hazard.
8. Radios may not be played if the sound can be heard in the Common Area or
in other tenant suites.
9. Electrical rooms may not be used to store any materials, fixtures, etc.
10. All sprinkler shutdowns, draining or filling shall be scheduled and
coordinated with the Landlord's chief engineer or his delegate.
11. Bracing, soldering or welding shall be scheduled in advance with Property
Manager.
12. Dust shall be kept at a minimum to avoid smoke detector activation.
13. If requested by Tenant, Property Manager shall provide space in the
parking lot at a location to be determined by Landlord for a trash and
debris bin during construction of the tenant improvements.
14. Damage to any pre-installed fixtures (e.g., water fountains, sinks,
lights, commodes, signage, etc.) shall be repaired at Tenant's sole
expense.
15. Tenant's general contractor shall coordinate the keying schedule, Tenant's
key requirements and cylinder installation with Landlord's designated
locksmith.
16. Where appropriate, Tenant shall submit to Property Manager a final
"as-built" set of drawings showing all items of work in full detail.
"As-builts" shall be sepias or vellums.
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<PAGE> 33
17. Throughout the construction period and upon conclusion of the
work, Tenant's general contractor shall cause the work areas and
all other affected areas to be clean and free of debris.
2
<PAGE> 34
EXHIBIT "D"
RENEWAL OPTION
Tenant shall have the right to renew the term of this Lease for one (1)
five (5) year term upon prior written notice ("Tenant's Election Notice") to
Landlord given not sooner than fifteen (15) months nor later than four (4)
months prior to the expiration of the initial term of this Lease; provided that
at the time Tenant gives such notice to Landlord and for the remainder of the
initial term of this Lease (i) this Lease has not been assigned and Tenant
continues to occupy at least eighty percent (80%) of the rentable area of the
Demised Premises, and (ii) Tenant is not in default hereunder. The parties shall
document such renewal by executing an amendment to this Lease. During the
renewal term, the provisions of this Lease, as it may be amended in writing
prior to the date of the commencement of such renewal term, shall continue in
effect except that (a) Tenant shall occupy the Demised Premises in its then "AS
IS" condition, (b) there shall be no abatement of rent, nor shall there be
credit or allowances given to Tenant for improvements to the Demised Premises,
(c) there shall be no further option to extend the Lease Term, and (d) the
minimum guaranteed rental will be an amount equal to whatever monthly rental
(plus whatever periodic adjustments) Landlord is then quoting to prospective
tenants for new leases of comparable space in the Industrial Complex for a
comparable term (as confirmed by written statement to Tenant by a representative
of Landlord), or if no comparable space exists in the Industrial Complex, then
one hundred percent (100%) of the projected prevailing market rate of rent for
comparable space with comparable finish-out in comparable space within the City
of Campbell, California, as of the expiration of the initial Lease Term of this
Lease (as confirmed by written statement to Tenant by a written representative
of Landlord). Notwithstanding the above provisions to the contrary, in no event
will the adjusted monthly minimum guaranteed rental for the option period be
lower than the monthly minimum guaranteed rental for the immediately preceding
period. It is understood and agreed that Tenant's submittal of Tenant's Election
Notice shall bind Tenant to a five (5) year extension of this Lease.
*** Confidential treatment requested.
1
<PAGE> 1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED
BASED ON A REQUEST FOR CONFIDENTIAL TREATMENT
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
EXHIBIT 10.11
DALLAS GALLERIA LEASE
BETWEEN
DALLAS GALLERIA LIMITED, AS "LANDLORD"
AND
LBE TECHNOLOGIES, INC., AS "TENANT"
d/b/a NASCAR SILICON MOTOR SPEEDWAY
TENANT'S ADDRESS:
LBE Technologies, Inc.
10401 Bubb Road
Cupertino, CA 95014
GUARANTOR'S ADDRESS:
N/A
LANDLORD'S ADDRESS:
Dallas Galleria Limited
c/o Hines Interests Limited Partnership
2800 Post Oak Boulevard
Houston, TX 77056-6110
ATTENTION: Senior Vice-President - Retail Development Group
With a copy to:
Dallas Galleria Limited
c/o Hines Interests Limited Partnership
13355 Noel Road, Suite 250
Dallas, Texas 75240-6603
ATTENTION: Retail Property Management
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<PAGE> 2
INDEX TO DALLAS GALLERIA LEASE
<TABLE>
<S> <C> <C>
ARTICLE I - PREMISES.......................................................... 1
Section 1.1 Demised Premises............................................. 1
ARTICLE II -- TERM OF LEASE................................................... 3
Section 2.1 Term......................................................... 3
Section 2.2 Commencement of Term......................................... 3
Section 2.3 Occupancy Date............................................... 4
ARTICLE III - RENT............................................................ 4
Section 3.1 Minimum Rent................................................. 4
Section 3.2 Percentage Rent.............................................. 4
Section 3.3 Quarterly Payments........................................... 5
Section 3.4 Quarterly Payment Dates...................................... 5
Section 3.5 Lease Year................................................... 6
Section 3.6 Adjustment for Actual Percentage Rent........................ 6
Section 3.7 Gross Sales.................................................. 7
Section 3.8 Monthly and Annual Statements................................ 9
Section 3.9 Audits by Landlord........................................... 9
Section 3.10 Place and Manner of Payment.................................. 10
Section 3.11 Landlord/Tenant Relationship................................. 10
ARTICLE IV -- CONSTRUCTION WORK............................................... 11
Section 4.1 Landlord's Construction...................................... 11
Section 4.2 Tenant's Construction........................................ 11
Section 4.3 Timely Performance by Tenant................................. 12
Section 4.4 Barricade Graphics........................................... 12
ARTICLE V - USE OF PREMISES................................................... 13
Section 5.1 Use of Premises.............................................. 13
Section 5.2 Covenants of Tenant Regarding Use............................ 13
Section 5.3 Tenant Signs................................................. 17
Section 5.4 Assignment or Subletting..................................... 18
Section 5.5 Cost of Assignment or Subletting............................. 20
ARTICLE VI -- PARKING FACILITIES.............................................. 20
Section 6.1 Parking Facilities........................................... 20
Section 6.2 Maintenance of Parking Facilities............................ 21
Section 6.3 Parking Designation.......................................... 21
Section 6.4 Tenant Compliance with Parking Rules......................... 22
Section 6.5 Employee Parking............................................. 22
Section 6.6 Temporary Closing............................................ 22
Section 6.7 Nonexclusivity of Parking.................................... 23
Section 6.8 Floor Space Definition....................................... 23
ARTICLE VII - COMMON AREAS ................................................... 23
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
Section 7.1 Common Areas Definition...................................... 23
Section 7.2 Maintenance of Common Areas.................................. 24
ARTICLE VIII -- CHARGES FOR AND MAINTENANCE OF COMMON AREAS................... 25
Section 8.1 Shopping Center Operating Expense............................ 25
Section 8.2 Mall HVAC Charge............................................. 27
Section 8.3 Tenant's Share of Parking Expense............................ 28
Section 8.4 Tenant's Share of Shopping Center Operating Expenses......... 30
Section 8.5 Payment of Operating Expense................................. 31
Section 8.6 Tenant's Audit Right......................................... 31
ARTICLE IX -- UTILITIES ...................................................... 32
Section 9.1 Tenant Payment for Utilities................................. 32
Section 9.2 Central System............................................... 33
ARTICLE X - MAINTENANCE OF SHOPPING CENTER AND DEMISED PREMISES............... 33
Section 10.1 Landlord's Obligations....................................... 33
Section 10.2 Tenant's Obligations......................................... 34
Section 10.3 No Change to Demised Premises................................ 35
Section 10.4 Fixtures..................................................... 35
Section 10.5 Surrender of Demised Premises................................ 36
ARTICLE XI -- TAXES........................................................... 36
Section 11.1 Payment Before Delinquency................................... 36
Section 11.2 Separate Assessments......................................... 37
Section 11.3 Tenant Renders Tenant Improvements........................... 37
Section 11.4 Parking Taxes................................................ 38
Section 11.5 Other Taxes.................................................. 38
Section 11.6 Monthly Payments and Year End Adjustments.................... 38
Section 11.7 Pro Rata Adjustment for Partial Years........................ 39
ARTICLE XII - INDEMNITY AND LIABILITY INSURANCE............................... 39
Section 12.1 Tenant's Indemnity and Release Agreement..................... 39
Section 12.2 Tenant's Liability Insurance................................. 41
Section 12.3 Tenant's Waiver and Release of Claims for Tenant's Property.. 41
Section 12.4 Release of Landlord Liability for Acts of Adjoining Tenants.. 42
Section 12.5 Worker's Compensation Insurance.............................. 43
ARTICLE XIII -- CASUALTY INSURANCE............................................ 43
Section 13.1 Landlord's Insurance......................................... 43
Section 13.2 Tenant Insurance............................................. 43
Section 13.3 Waiver of Subrogation........................................ 44
Section 13.4 Payment of Premiums.......................................... 44
ARTICLE XIV -- DAMAGE CLAUSE.................................................. 45
Section 14.1 Partial Damage............................................... 45
Section 14.2 Substantial Damage........................................... 45
Section 14.3 Termination for Damage....................................... 46
</TABLE>
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<TABLE>
<S> <C> <C>
Section 14.4 Abatement of Rent When Damage Interferes..................... 46
Section 14.5 Effect of Termination for Damage............................. 47
Section 14.6 Definitions of "Partial Damage" and "Substantial Damage"..... 47
Section 14.7 Other Damage................................................. 47
ARTICLE XV -- EMINENT DOMAIN.................................................. 48
Section 15.1 Effect of a Taking........................................... 48
Section 15.2 Right to Receive Awards...................................... 48
Section 15.3 Abatement of Rent............................................ 49
Section 15.4 Taking of Other Portions..................................... 49
ARTICLE XVI - MISCELLANEOUS COVENANTS OF TENANT............................... 49
Section 16.1 Landlord's Right to Inspect.................................. 49
Section 16.2 Access to Show Premises...................................... 50
Section 16.3 Promotional Programs......................................... 50
Section 16.4 Cooperative Promotional Opportunities........................ 51
Section 16.5 Grand Re-Opening Promotion................................... 51
Section 16.6 Tenant Certificates.......................................... 51
Section 16.7 Curing Landlord Defaults..................................... 52
Section 16.8 Obligations of a Mortgagee................................... 53
Section 16.9 Discharge of Mechanic's and Materialman's Liens.............. 53
Section 16.10 Recording Prohibited......................................... 54
Section 16.11 Force Majeure................................................ 54
Section 16.12 Holding Over................................................. 55
Section 16.13 Interest on Amount Past Due.................................. 55
Section 16.14 No Termination............................................... 56
Section 16.15 Ratings of Insurance Companies............................... 56
Section 16.16 Tenant Records............................................... 56
Section 16.17 Landlord Not Liable for Interest............................. 57
Section 16.18 Reimbursement for Legal Expenses............................. 57
ARTICLE XVII -- LANDLORD'S COVENANT OF QUIET ENJOYMENT AND LIMITATIONS OF
LIABILITY.................................................... 57
Section 17.1 Peaceful Enjoyment........................................... 57
Section 17.2 No Personal Liability of Landlord............................ 58
Section 17.3 Landlord and Tenant Not Liable for Special Damages........... 58
Section 17.4 Independent Obligations/Curing Landlord Defaults............. 58
ARTICLE XVIII -- LANDLORD'S REMEDIES.......................................... 59
Section 18.1 Events of Default............................................ 59
Section 18.2 Landlord Remedies............................................ 60
Section 18.3 Percentage Rent After Entry by Landlord...................... 62
Section 18.4 Lease Guaranty............................................... 62
Section 18.5 No Waiver.................................................... 62
Section 18.6 Security Interest............................................ 62
ARTICLE XIX - NOTICE.......................................................... 62
Section 19.1 Address and Manner of Giving Notice.......................... 62
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE XX - MISCELLANEOUS PROVISIONS REGARDING LEASE......................... 63
Section 20.1 Governing Law................................................ 63
Section 20.2 Representation by Corporate Tenant........................... 64
Section 20.3 No Accord and Satisfaction................................... 64
Section 20.4 Headings and Index........................................... 64
Section 20.5 Partial Invalidity........................................... 64
Section 20.6 Successors and Assigns....................................... 64
Section 20.7 When Lease Becomes Binding................................... 65
Section 20.8 Other Leases and Tenants..................................... 65
Section 20.9 Attorneys' Fees.............................................. 66
Section 20.10 Third Party Contracts........................................ 66
Section 20.11 No Broker.................................................... 66
Section 20.12 Security Deposit............................................. 66
Section 20.13 Time of the Essence.......................................... 67
ARTICLE XXI - LEASE SUPERIOR OR SUBORDINATE TO MORTGAGES...................... 67
Section 21.1 Lease Superior or Subordinate................................ 67
Section 21.2 Attornment by Tenant......................................... 67
ARTICLE XXII - ADDITIONAL TERMS............................................... 68
Section 22.1 "Galleria" Servicemark....................................... 68
Section 22.2 Construction Allowance....................................... 68
Section 22.3 Repayment of Construction Allowance.......................... 69
Section 22.4 Satellite Dish............................................... 70
</TABLE>
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<PAGE> 6
DALLAS GALLERIA
CROSS REFERENCES 10 CERTAIN DEFINED TERMS
<TABLE>
<CAPTION>
SECTION IN WHICH
TERM DEFINITION APPEARS
- ---- ------------------
<S> <C>
Additional Rent .................................................. 3.10
Common Areas ..................................................... 7.1
Commencement Date ................................................ 2.2
Complex .......................................................... 1.1
Demised Premise .................................................. 1.1
Development ...................................................... 1.1
Floor Space ...................................................... 6.8
Force Majeure .................................................... 16.11
Full Replacement Cost ............................................ 13.1
Gross Sales ...................................................... 3.7
Landlord's Mortgagee ............................................. 21.1
Lease Year ....................................................... 3.5
Major Retail Store ............................................... 1.1
Majority Shareholder ............................................. 5.4
Mall Building .................................................... 1.1
Mall HVAC Charge ................................................. 8.2
Merchant's Association ........................................... 16.3
Minimum Rent ..................................................... 3.1
Parking Facility Taxes ........................................... 11.2
Partial Damage ................................................... 14.6
Percentage Rent .................................................. 3.2
Promotion Charge ................................................. 16.3
Quarterly Payment Date ........................................... 3.4
Security Deposit ................................................. 20.13
Shopping Center .................................................. 1.1
Shopping Center Operating Expense ................................ 8.1
Shopping Center Site ............................................. 1.1
Substantial Damage ............................................... 14.6
Tenant Improvements .............................................. 11.3
Voting Stock ..................................................... 5.4
</TABLE>
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<PAGE> 7
DALLAS GALLERIA
LIST OF EXHIBITS
EXHIBIT A Plan of Demised Premises
EXHIBIT A-1 Location of Demised Premises
in Mall Building Floor Plan
EXHIBIT A-2 Description of Shopping Center Site
EXHIBIT A-3 Description of Complex Site
EXHIBIT A-4 Complex Site Plan
EXHIBIT B Description of Landlord's Work
EXHIBIT C Description of Tenant's Work
EXHIBIT C-1 Design Criteria for Tenant's Mechanical and Electrical Work
EXHIBIT C-1(a) Vertical Penetrations
EXHIBIT C-1(b) Suspension Criteria
EXHIBIT C-2 Design Criteria for Tenant's Architectural Standards and
Tenant's Signage Criteria
EXHIBIT D Central Heating and Cooling Rate Schedule
EXHIBIT E Landlord's Electrical Work
EXHIBIT F UCC-1 Financing Statement(s)
EXHIBIT S Satellite Agreement
vii
<PAGE> 8
THIS INDENTURE OF LEASE (the "Lease") executed as of the 22nd day of
May, 1998 by and between DALLAS GALLERIA LIMITED, a Texas limited partnership
(hereinafter referred to as "Landlord"), and LBE TECHNOLOGIES, INC., a
corporation duly organized and existing according to the laws of the State of
California (hereinafter referred to as "Tenant"), doing business as Nascar
Silicon Motor Speedway.
WITNESSETH:
ARTICLE I -- PREMISES
SECTION 1.1 DEMISED PREMISES.
The Landlord hereby demises and leases to the Tenant, and the
Tenant hereby leases from the Landlord, upon and subject to the terms and
provisions of this Lease (which term is used herein shall include all Exhibits
attached hereto or referred to herein), the commercial space (sometimes
hereinafter referred to as the "Demised Premises") depicted on Exhibit A hereto
annexed and made a part hereof. Said Demised Premises contain approximately six
thousand six hundred fifty-one (6,651) square feet of floor area (measuring
from (i) the center of the two side demising walls and (ii) the front lease line
of the Demised Premises, through the rear wall), commonly known as suite 3800 on
level 3 as shown on Exhibit A-1 attached hereto of the multi-level structure
(the "Mall Building"), which Landlord has constructed on a parcel of land (the
"Shopping Center Site") located in Dallas, Dallas County, Texas. The metes and
bounds description of the Shopping Center Site is set forth on Exhibit A-2
annexed hereto and made a part hereof. In the event, within sixty (60) days
after commencement of the term of this Lease, either party hereto finds that the
actual floor area of the Demised Premises differs by ten (10) square feet or
more from the floor area set forth hereinabove and such difference is confirmed
by Landlord's independent architect (which confirmation shall be binding upon
Landlord and Tenant absent bad faith or manifest error on the part of Landlord's
architect), Landlord and Tenant shall execute an amendment to this Lease setting
forth the actual floor area, and proportionately changing Tenant's monetary
obligations, including Minimum Rent, based upon the ratio of the actual floor
area of the Demised Premises to the floor area set forth hereinabove. The term
"Mall Building" shall not include any Major Retail Store (as hereinafter
defined) or other structures
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<PAGE> 9
attached thereto. The term "Shopping Center" as used herein shall mean the
Shopping Center Site and the improvements constructed thereon (including without
limitation the Mall Building). The term "Major Retail Store" as used herein
shall be deemed to mean any retail tenant of the Shopping Center occupying at
least 75,000 square feet of floor space. The Shopping Center Site is part of a
larger tract of land (the "Complex Site") upon which other improvements have
been constructed, or are contemplated, in addition to the Shopping Center. The
Complex Site is more particularly described in Exhibit A-3 and is shown on
Exhibit A-4 (the Complex Site Plan), both of which are hereto annexed and made a
part hereof. The Complex Site and the improvements now or hereafter erected
thereon are herein referred to as the "Complex".
The purpose of attaching Exhibit A-1 hereto is to show the
approximate location of the Demised Premises within the Mall Building and
certain other improvements constituting part of the Shopping Center, but
Landlord hereby reserves the unrestricted right at any time to relocate, modify
and add to the parking areas, common areas and other facilities provided for the
Shopping Center and specifically hereby reserves the unrestricted right at any
time to reduce or expand the Mall Building and the Shopping Center (and the
Shopping Center Site) to exclude or include land and improvements. With respect
to expansion of the Complex, the same shall be accomplished by execution and
recordation by Landlord of an annexation supplement, in the office of the County
Clerk of Dallas County, Texas at which time "Complex" and "Complex Site", as
used herein shall include the land and improvements (then or thereafter erected
thereon) annexed pursuant to said instrument. Landlord agrees not to place any
kiosks within an area in front of the Demised Premises, determined as if
extending the side demising walls fifteen feet (15') in front of the Demised
Premises. Landlord reserves the right to place a kiosk in any other location.
Tenant shall receive by virtue of this Lease only the rights and
privileges herein specifically granted and/or leased unto Tenant, and Landlord
specifically excepts and reserves unto itself, without limiting the generality
of the foregoing, (i) the exclusive use of the roof (including, without
limitation, the installation of antennae, signs, displays, equipment and/or
other objects, as well as the right to construct additional stories if Landlord
so elects), exterior walls (other than store fronts) and the area above and
below the Demised Premises and (ii) the
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right to place or to permit to be placed in the Demised Premises (above or
inside ceilings, below floors or next to columns), in such manner as to reduce
to a minimum any interference with Tenant's use of the Demised Premises, utility
lines, pipes, and the like, to serve the Common Area or premises other than the
Demised Premises, and to replace, maintain and repair, in such a manner as to
minimize to the extent possible any interference with Tenant's use of the
Demised Premises, such utility lines, pipes and the like, in, over and upon the
Demised Premises as may have been installed therein.
ARTICLE 11 -- TERM OF LEASE
SECTION 2.1 TERM.
TO HAVE AND TO HOLD the Demised Premises unto Tenant, subject to
matters of record affecting the Shopping Center Site and the terms, provisions
and conditions of this Lease for the term of sixty (60) calendar months (plus
the partial month, if any) immediately following the commencement of the term
hereof.
SECTION 2.2 COMMENCEMENT OF TERM.
The term hereof shall commence on that date (the "Commencement
Date") which is the earlier to occur of: (a) one hundred twenty (120) days from
the first day on which the Demised Premises are ready for occupancy (in
accordance with the provisions of Section 2.3 hereof) by Tenant or (b) the
opening by Tenant of its business in the Demised Premises; and the term hereof
shall end on the last day of the sixtieth (60th) full calendar month (exclusive
of any partial month) after such Commencement Date. From and after the execution
of this Lease until the Commencement Date, all the terms and conditions of this
Lease shall be applicable to Landlord and Tenant (and any entry into the Demised
Premises by Tenant shall be subject to the terms hereof), except Tenant's
obligations to (i) pay Minimum Rent and Additional Rent and (ii) conduct
business from the Demised Premises.
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SECTION 2.3 OCCUPANCY DATE.
The Demised Premises shall be deemed to be ready for occupancy
by the Tenant on the date Landlord sends to Tenant a notice that the Demised
Premises are ready for occupancy by Tenant (subject to Tenant completing
Tenant's work described in Section 4.2 hereof).
ARTICLE III -- RENT
SECTION 3.1 MINIMUM RENT.
Tenant covenants and agrees to pay to Landlord, in the manner
and at the place specified in Section 3.10 hereof, minimum rent ("Minimum Rent")
for the Demised Premises at the rate of (a) [***] per calendar month during
calendar months [***] through [***] following the Commencement Date of this
Lease, plus proportionately for any partial calendar month at the commencement
of the term; and (b) [***] per calendar month commencing with the [***] calendar
month following the Commencement Date and continuing through the remainder of
the term of this Lease, and proportionately at such rate for any partial month,
which Minimum Rent shall be paid monthly in advance, without prior notice or
demand, on the first day of each and every calendar month during the term
hereof. The term "Minimum Rent", wherever such term is used herein, shall be
deemed to mean the Minimum Rent above specified, less any abatements or
reductions of said Minimum Rent which may result during the applicable period by
reason of the application of Sections 8.2, 14.4 or 15.3 hereof, and it is hereby
expressly agreed that said Sections 8.2, 14.4 and 15.3 of this Lease set forth
the only instances in which Tenant shall have any right to reduce or abate
rentals due hereunder. In no event shall Tenant have any right to apply any
offset or counterclaim to Minimum Rent, Percentage Rent or any Additional Rent
due hereunder.
SECTION 3.2 PERCENTAGE RENT.
In addition to Minimum Rent, and as part of the total rent to be
paid by Tenant to Landlord, Tenant covenants and agrees to pay to Landlord, as
percentage rent ("Percentage
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Rent") for each "Lease Year" (as that term is defined in Section 3.5 hereof) of
the term hereof, a sum equal to the amount, if any, by which [***] of gross
sales (as defined in Section 3.7 hereof) are in excess of [***] during such
Lease Year.
Computation of the amount of Percentage Rent specified herein
shall be made separately with regard to each Lease Year of the term hereof, it
being understood and agreed that the calculation of the gross sales of any Lease
Year and the Percentage Rent due thereon shall have no bearing on, or connection
with, the gross sales of any other Lease Year of the term hereof. Tenant shall
pay the final Lease Year's Percentage Rent remaining to be paid, if any, thirty
(30) days prior to the end of the term of this Lease based upon gross sales to
date with an estimate of gross sales for the final month. Tenant's obligation to
pay Percentage Rent for the final Lease Year of the term hereof shall survive
the expiration or termination of this Lease.
SECTION 3.3 QUARTERLY PAYMENTS.
Tenant shall pay estimated Percentage Rent quarterly with
respect to each Lease Year on or before each "Quarterly Payment Date" (as that
term is defined in Section 3.4 hereof). The estimated amount to be paid on any
Quarterly Payment Date shall be a sum equal to the amount, if any, by which
[***] of gross sales for the three calendar months (and the partial month, if
any, other than the partial month in the same calendar month as the Quarterly
Payment Date) immediately preceding said Quarterly Payment Date shall exceed the
Minimum Rent to be paid by Tenant with respect to such quarter-annual period.
The partial month, if any, immediately following the Commencement Date shall be
considered a part of the quarter-annual period preceding the first Quarterly
Payment Date.
SECTION 3.4 QUARTERLY PAYMENT DATES.
The term "Quarterly Payment Date" is hereby defined to mean the
twentieth (20th) day of the fourth (4th), seventh (7th) and tenth (10th) full
calendar months during each Lease Year of the term of this Lease. For example,
(i) if the term of this Lease commenced on January 1, the quarterly payments of
Percentage Rent would be due on the 20th day of each
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April, July and October or (ii) if the term of this Lease commenced on August
15, the quarterly payments of Percentage Rent would be due on the 20th day of
each December, March and June. In each example, an adjustment for actual gross
sales during the Lease Year would be made in accordance with Section 3.6.
SECTION 3.5 LEASE YEAR.
The term "Lease Year" is hereby defined to mean each twelve (12)
full calendar month period during the term hereof commencing on the first day of
the first calendar month immediately following the Commencement Date and on each
anniversary thereof; provided, however, that the first Lease Year shall begin on
the Commencement Date and will end on the last day of the twelfth (12th) full
calendar month thereafter.
SECTION 3.6 ADJUSTMENT FOR ACTUAL PERCENTAGE RENT.
Within forty-five (45) days after the end of each Lease Year of
the term of this Lease, Tenant shall deliver to Landlord (i) a month-by-month
statement of gross sales for the preceding Lease Year as described in Section
3.8, (ii) a sum of money equal to the amount of unpaid Percentage Rent due with
respect to such preceding Lease Year, and (iii) if the amount of Percentage Rent
paid on Quarterly Payment Dates for the preceding Lease Year exceeds the amount
of Percentage Rent due for such Lease Year, a statement detailing the amount of
Percentage Rent due and the amount of excess payments made by Tenant.
Upon receipt of the statements required by this Section 3.6 or
Section 3.8, after any review of the computations contained therein, Landlord
shall (i) bill Tenant for any deficiency or (ii) refund to Tenant the amount, if
any, which has been paid by Tenant to Landlord as Percentage Rent in excess of
the Percentage Rent due under the provisions of Section 3.2. If Landlord's
computation of Percentage Rent reflects that the entire Percentage Rent has not
been paid, Tenant shall pay any remaining Percentage Rent due and payable,
together with interest thereon from the date or dates due until paid at the rate
provided in Section 16.13 hereof, as reflected by the bill or statement
submitted to Tenant by Landlord, within twenty (20) days after receipt of such
statement.
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SECTION 3.7 GROSS SALES.
The term "gross sales" wherever used herein is hereby defined to
mean the dollar aggregate of:
(a) The sales prices of all goods, wares and merchandise sold, and
the charges for all services performed, by the Tenant to the
extent originating solely in, at, on or from the Demised
Premises, whether made for cash, on credit, or otherwise,
without reserve or deduction for inability or failure to
collect, including but not limited to such sales and services
(i) where the orders therefor originate at, or are accepted by
the Tenant in, the Demised Premises whether delivery or
performance thereof is made from or at any place other than the
Demised Premises; (ii) pursuant to mail, telegraph, telephone or
other similar orders received or filled at or from the Demised
Premises; (iii) by means of mechanical and other vending devices
in the Demised Premises; (iv) as a result of transactions
originating upon the Demised Premises; and/or (v) which the
Tenant in the normal and customary course of its operations
would credit or attribute to its business upon the Demised
Premises, or any part or parts thereof; and
(b) All moneys or other things of value received by the Tenant from
its operations at, in or from the Demised Premises which are
neither included in nor excluded from gross sales by the other
provisions of this definition.
The term "gross sales" shall not include: (a) the exchange of
merchandise between stores of Tenant where such exchanges are made solely for
the convenient operation of Tenant's business and not for the purpose of
consummating a sale which has theretofore been made at, in, on or from the
Demised Premises and/or for the purpose of depriving Landlord of the benefit of
a sale which otherwise would have been made at, in, on or from the Demised
Premises; or (b) returns to shippers or manufacturers; or (c) sales of fixtures
after use thereof in the conduct of the Tenant's business in the Demised
Premises; or (d) the sales price of all merchandise returned and accepted for
full credit or the amount of the cash refund or allowance made thereon, or (e)
sums and credits received in settlement of claims for loss or damage to
merchandise or other personal property or fixtures of Tenant; or (f) the
consideration received in connection with a sale of inventory which occurs other
than in the ordinary course of Tenant's business, including, but not limited to,
a sale in bulk or to a jobber, liquidator or assignee; or (g) sales taxes,
so-called luxury taxes, excise taxes, gross receipt taxes and other taxes not or
hereafter imposed upon the sale or value of merchandise or services, whether
added separately to the selling price of the merchandise or services and
collected from customers or included in the retail selling price; or (h)
receipts from public telephones and vending machines; or (i) any fees, costs or
charges deducted by third party credit card issuers (including, but not limited
to, MasterCard and Visa)
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whether based on a percentage or flat rate, not to exceed [***] of Tenant's
gross sales in any given Lease Year; or (j) finance, interest, service or
carrying charges or other charges, however denominated, paid by customers for
extension of credit on sales and where not included in the merchandise sales
price; or (k) sales of fixtures, trade fixtures, or personal property that are
not merchandise held for sale at retail; or (l) sales by Tenant to its employees
at a discounted price not to exceed [***] of Tenant's gross sales in any one
Lease Year; or (m) revenue received from mailing, alterations, delivery or other
services performed on a non-profit basis for the benefit of customers; or (n)
Tenant's accounts receivable, not to exceed [***] of gross sales per Lease Year,
which have been determined to be uncollectible for federal income tax purposes
during the applicable lease year, provided, however, that if such accounts are
actually collected in a later lease year, the amount shall he included in gross
sales for such later lease year; or (o) rents, subrents or other consideration
received in connection with an assignment, sublease, license, concession or
other transfer of any portion of the store (however, gross sales of any such
transferee shall be included), including license fees otherwise payable by
Tenant in connection with a third party license agreement; or (p) amounts
received for merchandise transferred to any other place of business of Tenant
(or its subtenants, concessionaires and/or licensees) or to any business
organization affiliated with Tenant wherever located, provided such merchandise
is not used to fill a sale made in the store; or (q) discounts given for
promotional coupons that are redeemed from time to time; or (r) gift
certificates until such time as the certificates are redeemed; or (s) amounts
received in connection with promotional activities not located in the Shopping
Center; or (t) amounts received by Tenant in connection with its Construction
Allowance pursuant to Section 22.2 of the Lease; and there shall be deducted
from gross sales: (i) cash or credit refunds made upon transactions included
within gross sales, not exceeding the selling price of merchandise returned by
the purchaser and accepted by the Tenant, and (ii) the amount of any city,
county, state or federal sales, luxury or excise tax on such sales which is both
(a) added to the selling price or absorbed therein and (b) paid to the taxing
authority by the Tenant.
The term "gross sales" shall also include such gross sales made
by any sublessee, concessionaire, licensee or otherwise at, in, on or from the
Demised Premises; and such gross
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sales made by sublessees, concessionaires, licensees or otherwise shall be
included in the reports submitted by Tenant as herein provided.
SECTION 3.8 MONTHLY AND ANNUAL STATEMENTS.
Tenant agrees to deliver to Landlord, within twenty (20) days
after the end of each month during the term hereof, a complete statement signed
by an agent of the Tenant showing gross sales for the preceding month.
Within forty-five (45) days after the end of each Lease Year,
Tenant shall deliver to Landlord a statement of the gross sales of the Tenant
made at, in, on and/or from the Demised Premises for such Lease Year, certified
by a duly authorized officer of Tenant.
If Tenant shall fail to furnish to Landlord the annual certified
statement required by this Section 3.8 within forty-five (45) days after the end
of each Lease Year or the monthly statement required by this Section 3.8 on the
due date thereof, Landlord shall give Tenant notice thereof. If Tenant fails to
supply said statements within twenty (20) days of such notice, then in addition
to the remedies available to Landlord for default by Tenant hereunder, and
regardless whether the same constitutes a default by Tenant hereunder, Landlord
shall have the right to perform (or cause to be performed by an independent
auditing firm) an audit of Tenant's books and records to ascertain the
information required to be contained in the statement to be provided by Tenant.
Such audit shall be conducted at the sole cost and expense of Tenant; and Tenant
shall pay to Landlord within ten (1O) days of demand therefor the cost of such
audit as Additional Rent.
SECTION 3.9 AUDITS BY LANDLORD.
Landlord shall have the right, upon not less than twenty (20)
days prior written notice to Tenant, at any time within thirty-six (36) months
after the close of each Lease Year of the term hereof, to audit all of the books
of account, documents, records, returns, papers and files of the Tenant relating
to gross sales for such Lease Year, and the Tenant, on written request of the
Landlord, shall make all such matters available for such examination at either
the principal office of the Tenant or the Demised Premises. If the Landlord
shall have such an audit made for any Lease Year and the gross sales shown by
the Tenant's statement for such Lease Year should
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be found to be understated, Tenant shall pay any rent deficiency revealed
thereby, plus interest on the amount past due from the date or dates due until
paid at the rate provided in Section 16.13 of this Lease within [***] days of
demand therefor. In addition, if gross sales shall be found to be understated by
[***] or more, then Tenant shall pay to Landlord the cost of such audit. If such
audit establishes an overpayment of Percentage Rent by Tenant, then Landlord
shall refund to Tenant the amount of such overpayment. Such examination and
audits shall be made, if at all, by an independent auditor designated by the
Landlord from time to time. Such auditor shall be compensated at usual and
customary rates and shall not be compensated on a contingency basis.
It is understood and agreed that in the case of an audit
pursuant to Section 3.8 or pursuant to this Section 3.9, any payments or
adjustments in Percentage Rent to be made shall be accomplished on the basis of
the audit results absent manifest error.
SECTION 3.10 PLACE AND MANNER OF PAYMENT.
Tenant shall make, without the necessity of prior demand
therefor, all payments due from Tenant to Landlord pursuant to the provisions of
this Lease, whether under this Article III, or otherwise, at Landlord's office
in Dallas, Texas (the address of which is set forth on the cover page of this
Lease), or such other place as Landlord shall from time to time designate in
writing. All sums due and payable by Tenant except for Minimum Rent and
Percentage Rent shall be collectively referred to herein as "Additional Rent".
All statements deliverable by Tenant to Landlord under this Lease shall be
delivered to the place where rent is then payable, or at such other place or
places as Landlord may from time to time direct by written notice to Tenant
pursuant to Article XIX hereof.
SECTION 3.11 LANDLORD/TENANT RELATIONSHIP.
It is further understood and agreed that the Landlord and the
Tenant shall in no event be construed or held to be partners, joint venturers or
associates of the other in the conduct of each party's business, nor shall
Landlord be liable for any debts incurred by the Tenant in the conduct of
Tenant's business; but it is understood and agreed that the relationship is and
at all times shall remain that of landlord and tenant.
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ARTICLE IV -- CONSTRUCTION WORK
SECTION 4.1 LANDLORD'S CONSTRUCTION.
Landlord has constructed the following improvements:
(a) the exterior of the Mall Building and a minimum of 300,000
square feet of total Floor Space (as defined in Section 6.8 of
this Lease) in the Mall Building, and
(b) parking facilities for the Shopping Center as described in
Article VI hereof.
That portion of the Demised Premises identified as "Landlord's
Work" has been constructed substantially in accordance with the Outline
Specifications contained in Exhibit B annexed hereto.
SECTION 4.2 TENANT'S CONSTRUCTION.
Landlord and Tenant hereby acknowledge and agree that Tenant is
leasing previously built and occupied premises. Tenant has been in occupancy of
and made a complete inspection of the Demised Premises, has found them to be
suitable for their intended purposes and agrees that it will take the Demised
Premises in an "AS-IS" condition on the date hereof without any representations
or warranties, expressed or implied, of any kind whatsoever, including, without
limitation, fitness for a particular purpose or tenantability, and without
recourse to Landlord.
Promptly after the Demised Premises are ready for Tenant's
occupancy (as defined in Section 2.3), Tenant shall perform at its own cost and
expense all the Tenant's work set forth in Exhibit C hereto annexed and made a
part hereof, shall equip the Demised Premises with trade fixtures and all
personal property necessary or proper for the operation of Tenant's business,
and shall, subject to the provisions of this Lease, open for business as soon
thereafter as possible (but, in any event, shall complete such work and open for
business by the Commencement Date). All such activities of the Tenant shall not
interfere with (i) any construction work of Landlord, (ii) the management and
operation of the Shopping Center, or (iii) the use of the Mall Building by other
tenants or occupants. Tenant hereby specifically agrees that any construction or
remodeling of the Demised Premises shall comply with the applicable portions of
Landlord's design and construction criteria set forth in Exhibits C, C-1, and
C-2 attached hereto and shall be subject to Landlord's prior written approval.
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Notwithstanding anything to the contrary contained in this Lease
and the Exhibits attached hereto, in the event of a conflict between the
provisions of this Lease and/or the Exhibits and Tenant's plans and
specifications approved by Landlord ("Tenant's Approved Plans") for Tenant's
Work within the Demised Premises, Tenant's Approved Plans shall control.
SECTION 4.3 TIMELY PERFORMANCE BY TENANT.
Tenant recognizes that it is imperative that the Demised
Premises be fully fixtured and open for business on the Commencement Date.
Tenant agrees to furnish to Landlord (i) the name of Tenant's architect and/or
store designer for approval no later than five (5) days after the execution of
this Lease, and (ii) complete plans and specifications for approval for the work
to be performed by Tenant in accordance with the provisions of Exhibit C,
attached hereto and made a part hereof, within twenty (20) days after the
execution of this Lease. If Tenant shall not timely perform its obligations
pursuant to (i) or (ii) above, Landlord, in addition to all other remedies
available to it, shall have the right to terminate this Lease after giving
Tenant twenty (20) days' written notice and opportunity to perform such
obligations. Furthermore, if Tenant shall fail timely to perform its obligations
under Section 4.2 and the Demised Premises shall not open for business by the
Commencement Date, Tenant agrees to pay to Landlord, as liquidated damages
therefor and not as a penalty, for each calendar day commencing on the date set
forth in Section 2.2 to the date Tenant shall open for business to the public,
the greater of the following:
(i) [***] of the monthly installment of Minimum Rent (as specified
in Section 3.1), or
(ii) [***]
The foregoing provision with respect to liquidated damages shall
not alter Tenant's obligation to open the Demised Premises for business by the
Commencement Date.
SECTION 4.4 BARRICADE GRAPHICS.
Upon the construction of Tenant's barricade, Landlord shall
place or cause to be placed on the construction barricade or storefront of the
Demised Premises a sign identifying Tenant and Tenant's expected store opening
date, and including Tenant's logo wherever possible. In consideration of such
work undertaken by Landlord on Tenant's behalf, Tenant shall pay to
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Landlord with Tenant's initial payment of Minimum Rent, a one-time "Graphics
Fee" of [***].
ARTICLE V -- USE OF PREMISES
SECTION 5.1 USE OF PREMISES.
It is understood, and Tenant so agrees, that at all times during
the term of this Lease the Demised Premises shall be continuously used and
occupied by Tenant (i) primarily for the purpose of conducting a simulated
automobile racing entertainment center using interactive computer simulators
operated by the use of coins, tokens or otherwise, provided, however, at no time
shall Tenant devote less than seventy percent (70%) of the floor area of the
Demised Premises for such use, (ii) secondarily for the sale of auto racing and
other racing related entertainment merchandise, provided, however, Tenant may
not devote more than thirty percent (30%) of the floor area of the Demised
Premises for such secondary use and (iii) incidentally for the sale of snack
foods, non-alcoholic hot and cold beverages, provided, however, Tenant may not
devote more than one hundred (100) square feet of floor space for such
incidental use. The Demised Premises shall be used for no other purpose or
purposes whatsoever. The Demised Premises shall at all times be and appear to be
a Nascar Silicon Motor Speedway or Silicon Motor Speedway entertainment center.
SECTION 5.2 COVENANTS OF TENANT REGARDING USE.
Tenant further agrees that:
(a) Tenant shall always conduct its operations in and from the
Demised Premises under its present assumed or trade name or the
name "Silicon Motor Speedway", unless Landlord shall otherwise
consent in writing, and in such a manner as to maximize Tenant's
gross sales from the Demised Premises. Tenant shall carry at all
times in the Demised Premises merchandise of sufficient quantity
as shall be necessary to maximize gross sales;
(b) No auction, fire, distress, liquidation or bankruptcy sales
(whether real or fictitious) may be conducted within the Demised
Premises without the previous written consent of the Landlord;
(c) Tenant shall not use the malls, sidewalks, or other parts of the
Shopping Center outside of the Demised Premises (or outside the
Tenant's storefront if the storefront is set back from the outer
perimeter of the Demised Premises) for the sale or display of
any merchandise or signs or for any other business purposes or
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for outdoor public meetings or entertainment without the
previous written consent of the Landlord;
(d) Tenant shall keep the display windows of the Demised Premises
electrically lighted from the opening of the Mall Building for
business each day until the Mall Building is closed to the
public each day, or if Landlord shall set different hours, then
during such shorter or longer hours as Landlord shall so set by
notice to Tenant; provided however, that Tenant shall keep such
windows lighted during such shorter period as Landlord shall
designate in keeping with energy conservation methods or such
time periods as may be designated by applicable governmental or
utility regulation. If Tenant shall breach the provisions of
this subsection (d), Landlord may elect in lieu of exercising
any other remedies available to Landlord, to receive from Tenant
liquidated damages for each calendar day in which a breach under
this subsection shall occur commencing after the second (2nd)
breach in any consecutive twelve (12) month period, equal to the
sum of [***]. Landlord and Tenant agree that the failure to keep
the display windows of the Demised Premises electrically lighted
during the hours specified herein will cause great harm to the
Shopping Center, that it is difficult to specify exactly the
amount of damages resulting therefrom and that the liquidated
damages provided for above is a reasonable amount. If Landlord
elects to demand liquidated damages for any breach of this
Section 5.2, subsection (d), the liquidated damages shall
commence to accrue on the first day of the breach (not the first
day following the expiration of the grace period for cure, if
any). Tenant shall pay such liquidated damages to Landlord
within five (5) days of demand therefor and failure timely to
pay such sums to Landlord shall constitute a breach of this
Lease without further notice;
(e) Tenant shall receive and deliver goods and merchandise only in
the manner, at such times, and in such areas, as may be
designated by Landlord, and in this connection Tenant
specifically agrees (i) not to use any loading areas designated
exclusively for use by other tenants of the Shopping Center or
the Complex, (ii) to use Tenant's best efforts to complete or
cause to be completed, all deliveries, loading, unloading and
services to the Demised Premises prior to 10 a.m. each day,
(iii) to abide by such further reasonable regulations as
Landlord shall implement to regulate the activities of tenants
of the Shopping Center with respect to deliveries to and
servicing of the premises occupied by such tenants, (iv) to
reimburse Landlord for any costs of repairs to any part of the
Shopping Center necessitated by Tenant's receipt or delivery of
goods and merchandise, and (v) not to operate or cause to be
operated any "elephant trains" or similar transportation
devices;
(f) Tenant shall not use, or permit to be used, any sound
broadcasting or amplifying device which can be heard outside of
the Demised Premises without the prior written consent of
Landlord;
(g) Tenant shall not sell counterfeit merchandise or alcoholic
beverages, or display or sell indecent, sexually explicit or
pornographic literature, printed material, video products or
merchandise in or from the Demised Premises;
(h) Tenant shall not use or permit the use of any portion of the
Demised Premises for any unlawful purpose, or use or permit the
use of any portion of said Demised Premises as living quarters,
sleeping apartments or lodging rooms;
(i) Tenant shall not use the Demised Premises for any shooting
gallery, flea circus, funeral establishment, automobile showroom
or lot, secondhand store (other than antiques), bowling alley,
video game (other than racing simulators) or vending machine
parlor, pool or billiard establishment, or similar business or
activity.
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Notwithstanding anything to the contrary contained in this
subparagraph (i), Tenant shall be permitted to display one (1)
full size NASCAR stock car in the Demised Premises;
(j) Tenant shall not use, operate or maintain the Demised Premises
in such manner that any of the rates for any insurance carried
by Landlord, or any other owner or occupant of premises in the
Shopping Center, shall thereby be increased, unless Tenant shall
pay to Landlord, or the affected other owner or occupant of
premises in the Shopping Center, an amount equal to any such
increase in rates on demand as each premium which shall include
such increase shall become due and payable;
(k) Tenant shall not (i) perform any act or carry on any practice
which may injure the Demised Premises, any other part of the
Shopping Center, or the reputation and good will of Landlord and
the Shopping Center, (ii) cause any strong, unusual or offensive
odors or vapors or (iii) emit noises or sounds which have an
adverse effect on the operation of the Shopping Center or
interfere with any other tenant's quiet enjoyment of its
premises due to intermittence, beat, frequency, shrillness or
loudness (including, but without limitation, the use of
loudspeakers) and Tenant shall immediately act to reduce such
noises or sounds upon Landlord's request, or (iv) create a
nuisance or a menace to any other tenant or tenants or other
persons in the Shopping Center. Notwithstanding anything to the
contrary contained in this paragraph, Tenant shall be permitted
to install a video wall, mounted video screen or video panel
provided such installation is more than ten feet (10') from the
lease line;
(l) Recognizing that it is in the interests of both the Tenant and
the Landlord to have regulated hours of business for all of the
Shopping Center, Tenant agrees that commencing with the date
Tenant opens for business in the Demised Premises and continuing
throughout the remainder of the term of this Lease, Tenant shall
keep the front door(s) to the Demised Premises physically open
and shall operate the business conducted within the Demised
Premises at such hours and on such days and evenings of the week
(including Sundays) as may be determined from time to time by
Landlord, excepting only Christmas Day and Thanksgiving Day.
Tenant shall also have the right to remain open for business
until 2:00 a.m. If Tenant shall breach the provisions of this
subsection (1), Landlord may elect, in lieu of exercising any
other remedies available to Landlord, to receive from Tenant
liquidated damages for each calendar day in which a breach under
this subsection (1) shall occur commencing after the second
(2nd) breach in any consecutive twelve (12) month period, equal
to the greater of the following:
(i) [***] of the monthly installment of Minimum Rent (as
specified in Section 3.1), or
(ii) [***].
Landlord and Tenant agree that the failure to keep the Demised
Premises open in accordance with this subsection will cause
great harm to the Shopping Center, that it is difficult to
specify exactly the amount of damages resulting therefrom and
that the liquidated damages provided for above is a reasonable
amount. If Landlord elects to demand liquidated damages for any
breach of this subsection (1), the liquidated damages shall
commence to accrue on the first day of the breach (not the first
day following the expiration of the grace period for cure, if
any). Tenant shall pay such liquidated damages to Landlord
within five (5) days of demand therefor and failure timely to
pay such sums to Landlord shall constitute a breach of this
Lease without further notice.
*** Confidential treatment requested.
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Notwithstanding anything contained in this subsection (1) to the
contrary, Tenant may close its business for two (2) days during
any consecutive twelve (12) month period for the sole purpose of
taking inventory in the Demised Premise;
(m) Tenant shall not use any portion of the Demised Premises for
storage or other services except as customary for its operations
in the Demised Premises in accordance with the uses of the
Demised Premises permitted in Section 5.1 of this Lease;
(n) Unless otherwise agreed to in writing by Landlord, Tenant shall
not display or sell merchandise or allow carts, signs, devices
or other objects to be stored or to remain outside the defined
exterior walls and permanent doorways or store front of the
Demised Premises, even on a temporary basis, and Tenant shall
not solicit in any manner in any of the automobile parking and
common areas of the Shopping Center or other parts of the
Complex;
(o) Tenant shall comply with all rules and regulations prescribed by
Landlord for the removal of trash from the Demised Premises,
including (i) the collection and removal of trash, refuse and
garbage from the Demised Premises in a manner approved by
Landlord and (ii) storage of such trash in a collecting area
approved or designated by Landlord. Tenant shall not permit
trash, rubbish, cartons, merchandise or other goods intended for
use in the Demised Premises to accumulate in the service
corridors, hallways, truck docks or other areas outside of the
Demised Premises; and Tenant shall be responsible for insuring
that any service corridor immediately adjacent to the Demised
Premises is kept clear of all items at all times. Landlord shall
have the right to remove and dispose of items in the service
corridor, and Tenant shall reimburse Landlord upon demand for
the cost of such removal and disposal, in the amount equal to
the greater of Landlord's actual cost or One Hundred Dollars
($100.00). Landlord shall not be responsible or liable to Tenant
for such removal of any property of Tenant;
(p) Tenant shall keep the Demised Premises free of pests and vermin
by periodic pest control treatment, which shall be undertaken by
Tenant in a manner approved by Landlord;
(q) The parties hereto acknowledge that the realization of the
benefits of a percentage rent lease is dependent upon Tenant's
maximizing its gross sales, and that self-competition is
inconsistent with the generation of maximum gross sales and with
Tenant's general contribution to the promotion of customer
traffic and commerce within the Shopping Center. The parties
further acknowledge that the annual Minimum Rent was negotiated
together with and giving consideration to the Percentage Rent
rate and base sales amount, and that self-competition by Tenant
will deprive Landlord of a bargained-for consideration.
Accordingly, Tenant covenants and agrees that during the term of
this Lease, in the event either Tenant or any person, firm or
corporation, directly or indirectly controlling, controlled by,
or under common control with, Tenant (and also, if Tenant is a
corporation, if any officer or director thereof, or any
shareholder owning more than ten percent (10%) of the
outstanding stock thereof, or any parent, subsidiary or related
or affiliated corporation) either directly or indirectly, or by
means of any license or sublease, engages in any business
similar to or in competition with that for which the Demised
Premises are let, within a radius of seven (7) miles of the
boundary of the Shopping Center Site without Landlord's prior
written consent, then Landlord shall include all gross sales
generated by Tenant's other store or stores within seven (7)
miles of the Shopping Center in calculating the Percentage Rent
due under this Lease. This covenant is not intended to restrict
the sale of Tenant's merchandise, but shall only apply to the
operation of a Nascar Silicon Motor Speedway entertainment
center within the aforementioned area. This covenant will be
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inapplicable to (i) any business of Tenant extant as of the date
hereof, provided the size, trade name, nature and character of
such business remains the same and is continuously operated at
the same location and (ii) remote site promotional activities
which do not exceed sixty (60) days in any Lease Year;
(r) Tenant shall maintain positive air pressure in the Demised
Premises so as to prevent the drawing of heated or chilled air
from the Common Areas of the Mall Building.
SECTION 5.3 TENANT SIGNS.
To insure the operation of a first-class Shopping Center
Landlord reserves the right of approval with respect to all signage located in
the Demised Premises. Tenant specifically covenants and agrees that (except for
signs and lighting permitted in accordance with the provisions of Exhibit C-2
attached hereto and made a part hereof and Tenant's plans, as approved by
Landlord) Tenant shall not:
(a) paint, decorate or make any changes to the store front of the
Demised Premises; or
(b) install any exterior lighting or awnings, or any exterior signs,
advertising matter, decoration or painting in or upon the
Demised Premises; or
(c) install any drapes, blinds, shades or other coverings on
exterior windows or doors of the Demised Premises; or
(d) affix any window or door lettering, sign decoration or
advertising matter to any window or door glass of the Demised
Premises; or
(e) erect or install any signs, window or door lettering placards,
decoration, or advertising media of any type which can be viewed
from the exterior of the Demised Premises, or erect or install
any of the foregoing which are suspended from the ceiling of the
Demised Premises except for (i) signs placed on the interior
walls of the Demised Premises which signs are located more than
five (5) feet from the lease line of the Demised Premises which
abuts the Common Area of the Shopping Center, and (ii) signs
located within five (5) feet of such lease line, provided such
signs are professionally prepared and limited in number;
without the prior written consent of Landlord first had and obtained. Tenant
shall install and maintain a sign on the exterior of the Demised Premises in
accordance with Exhibit C-2 attached hereto, at Tenant's expense. Tenant shall
keep all signs installed in or for the Demised Premises in good condition and in
proper operating order at all times.
If Tenant without the prior written consent of Landlord erects
or installs a sign with any dimension greater than two (2) feet within the
Demised Premises, and such sign is visible from the exterior of the Demised
Premises, and Landlord notifies Tenant (or, the manager of Tenant's store in the
Demised Premises) to remove such sign or signs, then, if Tenant does not remove
such sign or signs within twenty-four (24) hours after such notice to Tenant,
Landlord
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may elect, in lieu of exercising any other remedies available to Landlord, to
receive from Tenant liquidated damages for each calendar day in which a breach
under this Section shall occur equal to Two Hundred Fifty Dollars and No/100
($250.00). Landlord and Tenant agree that signs with any dimension greater than
two (2) feet in the Demised Premises and visible from the exterior thereof will
cause great harm to the Shopping Center, that it is difficult to specify exactly
the amount of damages resulting therefrom and that the liquidated damages
provided for above is a reasonable amount. If Landlord elects to demand
liquidated damages for any breach of limitation on the size of any sign, as
contained in this Section 5.3, the liquidated damages shall commence to accrue
on the first day of the breach (not the first day following the expiration of
the grace period for cure, if any). Tenant shall pay such liquidated damages to
Landlord within five (5) days of demand therefor and failure timely to pay such
sums to Landlord shall constitute a breach of this Lease without further notice.
SECTION 5.4 ASSIGNMENT OR SUBLETTING.
Notwithstanding any other provisions of this Lease to the
contrary, Tenant covenants and agrees that it will not assign this Lease or
sublet (which term without limitation, shall include the granting of
concessions, licenses, and the like) the whole or any part of the Demised
Premises or mortgage, pledge, or encumber this Lease or any estate or interest
therein without in each instance having first received the express prior written
consent of Landlord, and only if an event of default by Tenant shall not have
occurred and be continuing. Landlord shall respond to any request by Tenant for
permission to sublease or assign within thirty (30) days after receipt of
written request. In any case where Landlord shall consent to such assignment or
subletting, the Tenant named herein shall remain fully liable for the
obligations of the Tenant hereunder, including, without limitation, the
obligation to pay the rent and all other amounts provided under this Lease.
Further, in the event Tenant sublets the whole or a part of the Demised Premises
for an amount in excess of the Minimum Rent (or proportionate Minimum Rent
applicable to the space covered by any sublease) payable by Tenant hereunder,
Tenant shall pay [***] of such excess amount to Landlord as Additional
Rent. The provisions of this Section 5.4 prohibiting the right of Tenant to
assign this Lease or sublet the Demised Premises without Landlord's prior
consent shall not, however, be applicable to an assignment of this Lease by the
Tenant to a subsidiary, affiliate or controlling corporation of Tenant, provided
(and it shall be a condition of the validity of such assignment) that such
subsidiary, affiliate or controlling
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corporation agrees in writing directly with Landlord to assume and be bound by
all the obligations of the Tenant hereunder, including without limitation (i)
the obligation to pay the rent and other amounts provided for under this Lease,
(ii) the use restrictions contained in Section 5.1, and (iii) the covenant
against further assignment of this Lease without Landlord's prior written
consent; but such assignment shall not relieve the Tenant named herein of any of
its obligations hereunder, and Tenant shall remain fully and primarily liable
therefor. In no event shall the granting of such written consent by Landlord
ever be construed as a waiver by Landlord of the requirement that each
subsequent assignment, if any, shall also require the prior written consent of
Landlord; and each subsequent assignor, if any, shall likewise remain fully
liable for the obligations of the Tenant hereunder. For the purposes of this
Section 5.4, the term "affiliate" of Tenant shall mean and refer to any entity
controlling, controlled by or under common control with Tenant or Tenant's
parent, as the case may be. "Control" as used herein shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of such controlled entity; and the ownership, or
possession of the right to vote, in the ordinary direction of its affairs, of at
least fifty percent (50%) of the voting interest in any entity.
The acceptance by Landlord of the payment of any sums from any
party other than the Tenant (whether or not such party is an occupant of the
Demised Premises) shall not be deemed to constitute consent by Landlord to any
assignment or transfer of this Lease, nor shall such acceptance be deemed to be
a waiver of Landlord's rights under this Section 5.4.
If Tenant is a corporation and if at any time during the lease
term the person or persons who then own or control a majority of its voting
shares ("majority shareholder") cease for any reason, including but not limited
to merger, consolidation or other reorganization involving another corporation,
to own or control a majority of such shares (except as the result of transfers
by gift, bequest or inheritance to or for the benefit of members of the
immediate family of the majority shareholder), Tenant shall so notify Landlord
and Landlord may terminate this Lease by notice to Tenant given within ninety
(90) days thereafter. For the purposes of this provision, stock ownership shall
be determined in accordance with the principles set forth in Section 544 of the
Internal Revenue Code of 1954, as the same existed on August 16, 1954, and the
term "voting stock" shall refer to shares of stock regularly entitled to vote
for the election of directors of the corporation. Failure by Tenant to notify
Landlord of such a change of ownership of the majority of voting shares shall
constitute an act of default hereunder.
Tenant may sell shares of its stock to the public as part of a
public offering registered with the Securities and Exchange Commission and/or
once registered by and through a nationally or regionally recognized securities
exchange. Tenant also may transfer or issue shares
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of its capital stock in connection with any private placement of equity
securities, and so long as such shares are transferred or issued in compliance
with all federal and state securities laws the prior consent of Landlord to such
transfer or issuance shall not be required.
SECTION 5.5 COST OF ASSIGNMENT OR SUBLETTING.
In the event Landlord gives its consent to an assignment of this
Lease or a subletting of the Demised Premises, Tenant shall pay all reasonable
costs and expenses in connection with such assignment or subletting, including,
without limitation, any attorneys' fees of Landlord for work requested by Tenant
in connection with the assignment or subletting (such fees not to exceed [***]
and any cost of renovating, altering or decorating the Demised Premises for a
new occupant and any leasing brokerage fees payable.
ARTICLE VI -- PARKING FACILITIES
SECTION 6.1 PARKING FACILITIES.
Landlord agrees that no structures shall be erected on the
Shopping Center Site unless at the time of completion thereof and the opening of
such structure for business to the public, surface, subsurface and/or
multi-level (or any combination thereof) parking facilities for use by tenants,
employees and patrons of such structures shall be available and shall meet the
following requirements:
(a) 5 parking spaces per 1080 square feet of Floor Space (as defined
in Section 6.8 hereof) devoted to retail and commercial uses
(other than as provided in (b) and (c) below);
(b) 3.5 parking spaces per 1000 square feet (i) of Floor Space
devoted to office space (including Floor Space in all office
buildings within the Shopping Center) and (ii) of Floor Space in
banks, trust companies, savings and loan institutions, stock
brokerage firms, barber shops and beauty salons in the Complex,
including the Mall Building and other office-type users in the
Mall Building;
(c) one (1) parking space for each bedroom in a hotel, apartment,
condominium or other residential unit;
or such greater or lesser requirements as are set forth in applicable ordinances
(or permitted variances therefrom) of the City of Dallas, Texas.
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Notwithstanding anything contained to the contrary in this
Section 6.1, it is understood and agreed that to the extent permitted by
applicable governmental authorities, additional parking facilities shall not be
required for restaurants, clubs, cinemas and other establishments (a) whose
primary business is after 5:00 P.M. or (b) whose primary business is on the
weekend or (c) whose customers, visitors, patients, clients, invitees,
licensees, subtenants or concessionaires are largely tenants or customers,
visitors, patients, clients, invitees, licensees, subtenants or concessionaires
of other Complex facilities for which parking is otherwise required or provided
pursuant to this Section 6.1.
SECTION 6.2 MAINTENANCE OF PARKING FACILITIES.
In addition to parking spaces, the parking facilities shall
include such additional space as is customarily included in parking areas and
garages, such as entrances, exits, and aisles and walkways. Landlord agrees that
all of said parking facilities, including proper lighting thereof, shall be
maintained by Landlord in reasonably good repair and clean condition throughout
the term of this Lease.
SECTION 6.3 PARKING DESIGNATION.
Landlord agrees that Tenant may during the term hereof, with
others, have the nonexclusive right (subject to the same limitations as are
applicable to others) to use the parking facilities designated from time to time
by Landlord within the Complex (and in addition thereto, any parking areas
outside the Complex provided and designated by Landlord for Shopping Center
tenants) for the accommodation and parking of such automobiles of the Tenant,
its officers, agents and employees, and its customers while in the Shopping
Center; but it is understood and agreed that Landlord shall have the right to
designate from time to time, and to change from time to time, the portions of
the Shopping Center parking facilities (and such other parking facilities) that
shall be used as parking areas, approaches, exits, entrances, roadways, and the
like.
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SECTION 6.4 TENANT COMPLIANCE WITH PARKING RULES.
Tenant agrees that it and all persons claiming by, through and
under it, shall at all times abide by all rules and regulations promulgated by
Landlord with respect to the parking facilities and other common areas of the
Shopping Center or the Complex. Without limitation, Landlord may establish
permit parking or such other devices Landlord deems appropriate to control use
of the parking facilities and may allow and/or institute and operate valet
parking. Landlord shall have the right to restrict parking for particular users
during certain hours of the day, in such manner as Landlord deems advisable for
the benefit of the Shopping Center or the Complex.
Nothing in this Lease shall be deemed to prohibit the
establishment and enforcement by Landlord of a system of charging for the use of
parking spaces provided by Landlord for retail tenants of the Complex, and for
such tenants' employees and/or customers.
SECTION 6.5 EMPLOYEE PARKING.
Landlord may prescribe certain sections within the parking
facilities in the Complex, or on the other land outside the Complex within a
reasonable distance, for use as parking space for the employees, contractors,
licensees and concessionaires of Tenant to use. Tenant shall be fully
responsible to cause all of its employees, contractors, licensees and
concessionaires to park their cars only in those areas as Landlord may from time
to time designate. To this end, Tenant shall furnish the Landlord, upon
Landlord's request at reasonable intervals, the license numbers of automobiles
of all such parties; and Tenant shall pay to Landlord, on demand, an amount
equal to [***] per incident for every time an employee, contractor, licensee or
concessionaire of Tenant parks in areas not designated as employee parking. Any
areas so designated for such parking, whether within or without the Shopping
Center Site, shall be deemed parking facilities for all purposes.
SECTION 6.6 TEMPORARY CLOSING.
Landlord may from time to time temporarily close any portion of
the parking facilities provided for the Shopping Center to make repairs or
changes, to prevent the acquisition of public rights in such areas, or to
discourage non-customer parking or use thereof.
*** Confidential treatment requested.
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SECTION 6.7 NONEXCLUSIVITY OF PARKING.
Subject to the other provisions of this Article VI, all parking
spaces provided for use by Tenant shall be used by Tenant on a nonexclusive and
co-mingled basis with (i) Landlord and (ii) other tenants or occupants and
customers and patrons of the Shopping Center, and (iii) other tenants and
occupants and their customers and patrons of the Complex; provided, however,
that Landlord shall at all times have the right to designate and control parking
facilities in such manner as Landlord deems advisable and for the benefit of the
Shopping Center or the entire Complex.
SECTION 6.8 FLOOR SPACE DEFINITION.
The term "Floor Space" as used in this Lease means "gross
leasable area" which is defined as the actual number of square feet of floor
space, determined by the linear dimensions in feet, from the center of party or
interior walls (or the outside of the exterior building perimeter walls, as
applicable) to the center of party or interior walls (or the outside of the
exterior building perimeter walls, as applicable), but excluding (i) the second
level of any multi-level storage area created by fixture installation to
increase usability for stock keeping purposes, as contrasted to structural
building installation, (ii) service corridors, truckways, walkways, loading
docks and common areas, (iii) escalators and elevators available for use by more
than one occupant of the Shopping Center and (iv) physically separated areas
used exclusively to house mechanical, building service or maintenance equipment.
With respect to office space (other than space in retail stores used for office
purposes), "Floor Space" shall mean seventy percent (70%) of the total floor
area.
ARTICLE VII -- COMMON AREAS
SECTION 7.1 COMMON AREAS DEFINITION.
"Common Areas", as used herein with respect to the Shopping
Center (as the same may be altered or expanded pursuant to Section 1.1), means
the improvements and portions of the Shopping Center which have been designated
and provided for common use by or for the benefit of more than one occupant of
the Shopping Center and/or Complex, including without
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limitation (if and to the extent facilities therefor are provided at the time in
question), the land and facilities (within or without the Complex, as provided
in Article VI hereof) utilized for or as parking areas for the Shopping Center;
access and perimeter roads, entrances and exits to and from the Shopping Center
and Complex and to and from the public highways and streets abutting the
Complex; truck passageways, loading courts, loading platforms, truck docks and
truck maneuvering areas; service corridors and stairways and/or loading
facilities; landscaped areas; open malls (except retail areas therein where
permitted under this Lease); on-site and off-site signs identifying or
advertising the Shopping Center and the Complex; exterior walks, sidewalks and
arcades; skylights, stairs, stairway, elevators, escalators, ramps and any other
pedestrian direction and control measures; interior corridors, arcades and
balconies; directory signs and equipment; underground storm and sanitary sewers,
utility lines and the like to the junction box serving one occupant exclusively,
and any of the foregoing which serves the Common Areas; sprinkler systems, fire
protection and security alarm systems; lockers and locker rooms, wash rooms,
comfort rooms, drinking fountains, toilets and auditoriums; maintenance
buildings or areas; custodial facilities; office for the marketing director to
carry out the services described in Section 16.3; and other public facilities;
and bus stations, taxi stands and the like, if any.
It is understood that some of the facilities to fulfill
Landlord's obligations under Article VI may be located outside the Shopping
Center Site but within the Complex. In addition, to the extent that and so long
as (but only so long as) parking spaces outside the Complex are used to provide
parking to fulfill Landlord's parking obligations under Article VI of this
Lease, and so long as said parking spaces outside the Complex have been
designated for such purpose by Landlord, the tract of land on which such parking
spaces are provided and designated and all improvements thereon shall be
considered Common Areas.
SECTION 7.2 MAINTENANCE OF COMMON AREAS.
Landlord agrees that the Common Areas shall be maintained by
Landlord in reasonably good repair and condition throughout the term of this
Lease.
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ARTICLE VIII -- CHARGES FOR AND MAINTENANCE OF COMMON AREAS
SECTION 8.1 SHOPPING CENTER OPERATING EXPENSE.
All costs and expenses ("Shopping Center Operating Expense") of
every kind and nature paid or incurred by Landlord (including reasonable
reserves) in operating, managing, accounting in connection with, equipping,
controlling, lighting, repairing, replacing, enhancing and maintaining all
Common Areas (including, but without limitation, all costs and expenses incident
to maintaining, replacing due to use, wear and tear, and repairing as reasonably
required to maintain the Common Areas in the same condition as existed when
originally completed) and the "Mall HVAC Charge" (as defined in Section 8.2
hereof) shall be prorated and Tenant shall share therein in the manner provided
in Sections 8.3 and 8.4 of this Lease. Shopping Center Operating Expense shall
likewise include (but shall not be limited to) water, sewer and utility charges;
premiums for liability, property, worker's compensation, employers' liability
and other casualty and/or risk insurance provided by Landlord in connection with
the Shopping Center (including all such insurance with respect to parking
facilities and for the entire Mall Building); contractor fees, contractor costs
and personnel compensation; management expenses of the Shopping Center,
including costs of a management office, wages and salaries of management and
support personnel situated in the Complex; Landlord's accounting costs;
unemployment taxes, social security taxes and personal property taxes; fees for
permits and licenses; scheduling and compensation of security personnel, traffic
directors and/or parking attendants (if and to the extent provided by Landlord);
equipment, operation and repairs of loudspeakers and any equipment supplying
music or intercom capability to the Common Areas; all costs and expenses of
planting, replanting and replacing flowers and landscaping; repair and rental
costs for, and reasonable depreciation of, equipment used in the operation and
maintenance of the Common Areas; skylight and vault glass cleaning and
replacement; costs and expenses of lighting, heating, ventilating, repairing,
replacing and maintaining the Common Areas and their facilities; costs and
expenses of cleaning and removal of rubbish, dirt and debris; Shopping Center
Parking Facility expense as defined in Section 8.3; and administrative costs
equal to [***] of the total costs of Shopping Center Operating Expense; but
there shall be excluded (a)
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the depreciation of the original cost of constructing said Common Areas, (b)
costs incurred in connection with or directly related to the original
construction (as distinguished from maintenance and repair) of the Shopping
Center, (c) principal and/or interest payments on any financing for the Shopping
Center or the regional retail development or any portion thereof or rental under
any ground lease or other underlying lease, (d) the cost of any repairs,
alterations, additions or replacements to the structure of the Shopping Center
which would be classified (under generally accepted accounting principles) as
capital expenditures, to the extent they upgrade or improve the Shopping Center,
as opposed to replacement of existing items, (e) the costs of correcting defects
in or inadequacies of the initial design or construction of the Shopping Center,
or repair and/or replacement of any of the original materials or equipment
required as a result of such defects or inadequacies, (f) reserves for
anticipated future expenses, (g) legal and other fees, leasing commissions,
advertising expenses and other costs incurred in connection with development or
leasing of the Shopping Center, or in connection with negotiations or disputes
with tenants, occupants or prospective tenants or occupants, or legal fees
incurred in connection with this Lease, (h) repairs or other work occasioned by
casualty or the exercise of the right of eminent domain; (i) expenses incurred
in build out, renovation or other improvement or decoration, painting or
redecoration or any leasable area, (j) any items for which Landlord is
reimbursed by insurance or otherwise compensated, including direct reimbursement
by any tenant or occupant of the Shopping Center, (k) costs incurred due to the
violation by Landlord or any tenant or occupant of any term or condition of any
lease or rental arrangement covering space in the Shopping Center, (l) expenses
in connection with services or other benefits of a type which are not provided
Tenant but which are provided to another tenant or occupant of the Shopping
Center, (m) any interest or penalties incurred as a result of Landlord's failure
to pay any bill as the same shall become due, (n) salaries and bonuses of
officers and executives of Landlord and compensation paid to clerks, attendants
or other persons in commercial concessions operated by Landlord, (o) advertising
and promotional expenditures or customer services, (p) costs, fines, or fees
incurred by Landlord due to violations of any federal, state or local law,
statute or ordinance, or any rule, regulation, judgment or decree of any
governmental
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rule or authority, (q) any governmental charges, impositions, penalties or any
other costs incurred by Landlord to cleanup, remove, abate or neutralize any
Hazardous Materials (as defined in Section 5.2(u) hereof) present at the
Shopping Center, unless the cleanup, removal, abatement or neutralization of any
Hazardous Materials is required as a result of Tenant, or Tenant's contractors,
licensees, agents, servants, or employees bringing or releasing any Hazardous
Materials in the Shopping Center, in which event Tenant shall be responsible for
the cleanup, removal, abatement or neutralization of same, (r) the cost of any
work or services performed for any facility other than the Shopping Center, (s)
any costs representing an amount paid to a person, firm, corporation or other
entity related to Landlord which is in excess of the amount which would have
been paid in the absence of such relationship and (t) any other costs and
expenses that are not ordinarily treated as operating or maintenance expenses
under generally accepted accounting principles.
SECTION 8.2 MALL HVAC CHARGE.
The term "Mall HVAC Charge" is hereby defined to mean the Mall
Building's pro rata share (as determined by Landlord) of the total cost of
providing, operating and maintaining heating and air cooling to the Common Areas
in accordance with the system specifications set forth in Exhibit C-1 attached
hereto and made a part hereof.
If, as a result of an interruption of the services provided by
Landlord, due to a reason that is within the control of Landlord, and that is
described in this Section 8.2, the Demised Premises becomes untenantable and
Tenant cannot operate its business from within the Demised Premises for a period
of two (2) days after such interruption of its business, then Tenant's payment
of Minimum Rent and all Additional Rent (but not Percentage Rent) shall abate
commencing with the first day of such interruption and continuing until the date
such services are restored to a condition such that the Demised Premises are
tenantable. Tenant shall provide Landlord with written notice of any such
interference within two (2) days after such interference occurs.
Landlord agrees to provide to Tenant, within sixty (60) days
after written notice ("Tenant's Audit Notice") from Tenant to Landlord, an audit
(the "Audit") of Shopping Center
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Operating Expense prepared and certified to by an independent accounting firm
selected by Landlord. Tenant's Audit Notice shall be given, if at all, only
within one hundred twenty (120) days after Tenant receives the annual
reconciliation of Shopping Center Operating Expense pursuant to the provisions
of Article VIII, Section 8.4. In the event Landlord does not provide the Audit
to Tenant within sixty (60) days after Tenant's Audit Notice, and provided that
Tenant is not then in default of the terms and conditions of this Lease, then
Tenant shall have the right once within twelve (12) months after the end of the
calendar year for which Tenant has given Tenant's Audit Notice to cause an audit
of the books of account, documents and records of Landlord relating to Shopping
Center Operating Expense for such calendar year to be made by an independent
certified public accountant selected by Tenant, and Landlord, upon fifteen (15)
days prior written notice from Tenant shall make such material available for
examination at Landlord's offices. If Tenant's audit reasonably shows that
Tenant has been overcharged by more than three percent (3%) during the calendar
year subject to the audit, then Landlord shall pay the cost of Tenant's audit of
Landlord's records. If the annual Shopping Center Operating Expense previously
submitted by Landlord to Tenant shall be determined to be incorrect as a result
of such audit, then Landlord shall refund to Tenant any excess payment of
Shopping Center Operating Expense made by Tenant to Landlord.
SECTION 8.3 TENANT'S SHARE OF PARKING EXPENSE.
Tenant's pro rata share of the parking facilities costs included
in the Shopping Center Operating Expense shall be computed for each calendar
year as follows:
(a) The whole of such parking facilities costs and expenses shall be
multiplied by the following fraction:
(i) the numerator of such fraction shall be determined by
multiplying each 1,000 square feet of Floor Space within
the Mall Building (including any fraction of 1,000 feet)
by 4.6 (or such greater or lesser number of parking
spaces per 1,000 square feet of Floor Space of the Mall
Building (exclusive of the athletic club) as are
required by law, provided such greater or lesser amount
of parking is constructed and included in Common Areas);
and
(ii) the denominator of the fraction shall be determined by
multiplying each 1,000 square feet of Floor Space within
the office and retail portions of the Complex,
(including any fraction of 1,000 square feet), exclusive
of areas devoted to hotel use, by the applicable parking
requirement factor for retail
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<PAGE> 36
and office-type space set forth in Section 6.1 (a) or
(b), (or such greater or lesser amount of parking
applicable to such improvements as required by law
provided such greater or lesser amount of parking is
constructed and included in Common Areas) and adding to
such sum the number of bedroom units in hotel,
apartment, condominium or other residential units within
the Complex (or such greater or lesser number of parking
spaces applicable to such improvements as are required
by law provided such greater or lesser amount of parking
is constructed and included in Common Areas).
(b) The product obtained above, the "Retail Portion of Parking
Facility Costs", shall be multiplied by the following fraction:
(i) the numerator of such fraction shall be the total square
footage within the Demised Premises set forth in Section
1.1 of this Lease; and
(ii) the denominator of such fraction shall be the Floor Area
of the Mall Building. This denominator shall be computed
as of the first day of each calendar year during the
term of this Lease.
To illustrate the foregoing, assuming the following:
(i) Floor Area of the Mall Building is 450,000 square feet.
(ii) The Demised Premises consists of 2,000 square feet.
(iii) Complex square footage totals equal: 450,000 for the
Mall Building (exclusive of the athletic club); 900,000
square feet of Office Space; 500,000 square feet of
Major Retail Stores; 26,000 square feet of athletic club
space that is considered retail for parking space
requirements, and 450 hotel bedroom units.
(iv) Total Complex Parking Facility Costs of $800,000.
then the Tenant's share of Complex Parking Facility Costs would
be computed as follows:
(a) the numerator of the first fraction would be 2,070; determined
by multiplying 450 (the number of 1,000 square foot increments
within the Floor Area of the Mall Building) by 4.6;
(b) the denominator of the applicable fraction would be determined
by adding:
(i) the product of 2,070, the number of 1,000 square foot
increments of Floor Area of the Mall Building multiplied
by 4.6 (the number of parking spaces per 1,000 square
feet of retail space),
(ii) the product of 3,150, the number of 1,000 square foot
increments of Commercial Office Space in the Complex
multiplied by 3.5 (the number of parking spaces per
1,000 square feet for Office use),
(iii) the product of 2,300, the number of 1,000 square foot
increments of Major Retail Stores multiplied by 4.6 (the
number of parking spaces per 1,000 square feet of retail
space),
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<PAGE> 37
(iv) the product Of 120, the number of 1,000 square foot
increments of the athletic club space in the Complex
multiplied by 4.6 (the number of parking spaces per
1,000 square feet of retail space), and
(v) 450 (the number of hotel bedroom units)
(c) This fraction 2,070/8,090 is multiplied by $800,000 (Complex
Parking Facility Costs) and would result in $204,697 which is
the amount applicable to the Mall Building.
(d) This cost of $204,697 applicable to the Mall Building is then
multiplied by the fraction of which the numerator is 2,000 (the
square footage of the Demised Premises) and the denominator of
which is 450,000 (the Floor Area of the Mall Building) which
results in the Tenant's share of Complex Parking Facility Costs
being $909.76.
In further illustration, the mathematical calculation is
summarized as follows:
<TABLE>
<S> <C> <C>
1. Each 1,000 SF of All parking Retail portion of
Mall Floor Area X 4.6 X expenses = parking facility costs
---------------------
(Each 1,000 SF Retail
Floor Area X 4.6 + each
1,000 SF of office X 3.5 +
number of hotel bedroom units)
SF in DP
2. Retail portion of X -------- = Tenant's share of
re parking facility costs Mall Floor Area parking facility costs
</TABLE>
SECTION 8.4 TENANT'S SHARE OF SHOPPING CENTER OPERATING EXPENSES.
Tenant's pro rata share of all Shopping Center Operating Expense
(including all of the Mall HVAC Charge) exclusive of (i) Tenant's pro rata share
of the parking facilities costs which are computed in accordance with the
provisions of Section 8.3 and (ii) those costs which are allocated by Landlord
to other portions of the Shopping Center, shall be computed for each calendar
year by multiplying the whole of such costs and expenses by the following
fraction:
(a) the numerator of such fraction shall be the total square footage
within the Demised Premises set forth on the first page of this
Lease; and
(b) the denominator of such fraction shall be the total square
footage of Floor Space of the Mall Building, except there shall
be excluded from such denominator (i) any store premises or
storage areas which have no direct access to the enclosed
portions of the Mall Building and (ii) any area of the Mall
Building devoted to hotel use.
The denominator specified in this Section 8.4 shall be computed
as of the first day of each calendar year during the term of
this Lease.
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SECTION 8.5 PAYMENT OF OPERATING EXPENSE.
Tenant's pro rata share of the Shopping Center Operating Expense
and Mall HVAC Charge shall be paid as Additional Rental and Tenant agrees to pay
such Additional Rent in advance in monthly installments on the first (1st) day
of each calendar month, based upon Landlord's estimates of the Shopping Center
Operating Expense and Mall HVAC Charge as set forth in annual statements during
the term of this Lease (or such other periodic intervals as shall be determined
by Landlord). Within one hundred twenty (120) days after the end of each
calendar year during the term hereof, Landlord shall furnish to Tenant a
statement in reasonable detail setting forth the computation of actual Shopping
Center Operating Expense and Mall HVAC Charge (as allocated by Landlord for
purposes of Sections 8.3 and 8.4 of this Lease) for such calendar year, and
thereupon there shall be within thirty (30) days thereafter an adjustment
between Landlord and Tenant, with payment to, or repayment by, Landlord, as the
case may require, to the end that Landlord shall receive the entire amount of
Tenant's pro rata share of said Shopping Center Operating Expense and Mall HVAC
Charge for such calendar year, and no more.
SECTION 8.6 TENANT'S AUDIT RIGHT.
Landlord agrees to provide to Tenant, within sixty (60) days
after written notice ("Tenant's Audit Notice") from Tenant to Landlord, an audit
(the "Audit") of Shopping Center Operating Expense prepared and certified to by
an independent accounting firm selected by Landlord. Tenant's Audit Notice shall
be given, if at all, only within one hundred twenty (120) days after Tenant
receives the annual reconciliation of Shopping Center Operating Expense pursuant
to the provisions of Article VIII, Section 8.4. In the event Landlord does not
provide the Audit to Tenant within sixty (60) days after Tenant's Audit Notice,
and provided that Tenant is not then in default of the terms and conditions of
this Lease, then Tenant shall have the right once within twelve (12) months
after the end of the calendar year for which Tenant has given Tenant's Audit
Notice to cause an audit of the books of account, documents and records of
Landlord relating to Shopping Center Operating Expense for such calendar year to
be made by an independent certified public accountant selected by Tenant, and
Landlord, upon fifteen (15) days
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prior written notice from Tenant shall make such material available for
examination at Landlord's offices. If Tenant's audit reasonably shows that
Tenant has been overcharged by more than three percent (3%) during the calendar
year subject to the audit, then Landlord shall pay the cost of Tenant's audit of
Landlord's records. If the annual Shopping Center Operating Expense previously
submitted by Landlord to Tenant shall be determined to be incorrect as a result
of such audit, then Landlord shall refund to Tenant any excess payment of
Shopping Center Operating Expense made by Tenant to Landlord.
ARTICLE IX -- UTILITIES
SECTION 9.1 TENANT PAYMENT FOR UTILITIES.
Tenant shall pay for all its requirements for utilities,
including, but not limited to, gas, steam, water, telephone, electricity, "tap
fees" or connection costs charged by the City of Dallas or any utility supplier,
sewer charges, and the like, and shall also pay for heating, ventilating and air
conditioning the Demised Premises in the manner provided herein, and in no event
shall Landlord ever be liable to any suppliers of any such utilities for
services contracted for and/or used by Tenant in connection with the Demised
Premises. In the event that Landlord shall elect to supply any of such utilities
(apart from those for which provision is made in Section 9.2 hereof, Tenant
agrees to purchase the same from Landlord at the same rate which Tenant would be
charged by a utility company furnishing the same to the Demised Premises. Tenant
shall pay for such utilities furnished by Landlord, in advance, on the first day
of each calendar month, in the monthly amount estimated by Landlord prior to the
beginning of each calendar year. Within a reasonable time following the end of
each year, Landlord shall provide Tenant with a statement showing the cost of
such utility, Tenant's actual use, any adjustment from the amount paid by Tenant
over the previous calendar year and the amount due from Tenant to Landlord or
from Landlord to Tenant. In the event any such utilities are not separately
metered to the Demised Premises, Tenant's actual use shall be determined in good
faith by Landlord's engineers which determination shall be binding except upon a
showing of bad faith.
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SECTION 9.2 CENTRAL SYSTEM.
As set forth in Exhibits B and D hereto annexed and made a part
hereof, Landlord is furnishing a central system to provide chilled water to the
Demised Premises as set forth in Exhibit D for air conditioning, and chilled
water to the Mall Building for air conditioning the Mall Building (other than
the hotel areas of the Mall Building). Tenant agrees to pay for such service
Tenant's pro rata share of the Mall HVAC Charge in accordance with Article VIII
of this Lease as well as Tenant's ventilating and air conditioning charge as set
forth on said Exhibit D attached hereto.
ARTICLE X -- MAINTENANCE OF SHOPPING CENTER AND DEMISED PREMISES
SECTION 10.1 LANDLORD'S OBLIGATIONS.
Landlord agrees to keep in reasonably good order, condition and
repair, the roof, foundation and structural portions of the Mall Building and
the Demised Premises, except:
(a) for repairs thereto necessitated by damage caused by any act or
negligence of Tenant, its employees, agents, licensees or
contractors, or
(b) any structural changes necessary in whole or in part as a result
of
(i) any alterations made by Tenant, or
(ii) any use made of the Demised Premises by the Tenant which
is different from or more hazardous than the use thereof
permitted by Section 5.1 hereof, or
(c) glass and glass windows and the so-called store front of the
Demised Premises and other premises leased to tenants of the
Shopping Center.
Tenant does hereby grant Landlord and its agents access in and
upon the Demised Premises, as necessary for the purpose of fulfilling its repair
and maintenance obligations provided that Landlord shall give Tenant's store
manager twenty-four (24) hours' prior notice to such entry, except in the event
of an emergency, in which event no such notice shall be required. Landlord will
use good faith efforts to prevent material adverse interference with Tenant's
business in the Demised Premises caused by Landlord fulfilling its repair and
maintenance obligations pursuant to this Section 10.1.
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Landlord shall not be responsible to make any other improvements
or repairs of any kind upon the Demised Premises, but this paragraph is not
intended to refer to damage by fire or other insured risk to the Demised
Premises which is covered by the insurance policies provided for in Article XIII
hereof
SECTION 10.2 TENANT'S OBLIGATIONS.
Except with respect to Landlord's obligations as set forth in
Section 10.1 hereof, Tenant agrees that from and after the date that possession
of the Demised Premises is delivered to Tenant, and until the end of the term
hereof, it will keep neat and clean and maintain in good order, condition and
repair the Demised Premises and every part thereof, including, without
limitation, the store front and the exterior and interior portions of all doors,
windows, plate glass and showcases surrounding the Demised Premises, all
plumbing and sewage facilities within the Demised Premises (including all such
facilities outside of the Demised Premises, but exclusively serving the Demised
Premises, and assuring the free flow of Tenant's sanitary sewer line to the main
line serving the Demised Premises), fixtures and interior walls, floors,
ceilings, signs (including exterior signs where permitted), and all wiring,
electrical systems, sprinkler systems within the Demised Premises, interior
building appliances and similar equipment. In the event of an emergency caused
by damage or malfunction of a system, or component thereof, within the Demised
Premises, resulting in possible damage to another tenant's demised premises, or
the Shopping Center, or affecting Landlord's systems, then Landlord may repair
such damage or malfunction without notice to Tenant, and Tenant shall reimburse
Landlord the costs thereof within ten (10) days after Landlord invoices Tenant
for the costs of such repairs. Tenant shall keep the Demised Premises in a
first-class, tenantable, and attractive condition throughout the term of this
Lease. There is excepted from this paragraph, however, damage to the portions of
the Demised Premises originally constructed by Landlord caused by those hazards
which are covered by the policies of fire insurance and extended coverage
endorsements carried by Landlord and described in Article XIII hereof Tenant
further agrees that the Demised Premises shall be kept in a clean, sanitary and
safe condition in accordance with the laws of the State of Texas and ordinances
of the City of Dallas, and in accordance with all directions, rules and
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<PAGE> 42
regulations of the Health Officer, Fire Marshall, Building Inspector, and other
proper officers of the governmental agencies having jurisdiction thereover and
Tenant shall comply with all other federal, state and local laws, orders, rules
and regulations applicable to the Demised Premises and their use and occupancy.
SECTION 10.3 NO CHANGE TO DEMISED PREMISES.
Tenant shall not make any alterations, improvements and/or
additions to the Demised Premises (except as initially required by the terms of
Exhibit Q hereto annexed or as required pursuant to Section 14.2 hereof) without
first obtaining, in each instance, the prior written consent of Landlord. Any
such alterations, improvements and/or additions permitted by Landlord (as well
as those not requiring Landlord's permission) shall be (a) made in accordance
with all applicable laws, (b) completed in a good and first-class workmanlike
manner, (c) Promptly paid for by Tenant, and (d) in compliance with Landlord's
design and construction criteria set forth in Exhibits C, C-L, and C-2 hereto.
Notwithstanding anything contained in this Section 10.3 to the
contrary, Tenant may construct up to Twenty-Five Thousand and No/100 Dollars
($25,000.00) per Lease Year, noncumulative, of interior non-structural
alterations provided that for any interior, non-structural alterations provided
Tenant gives Landlord at least two (2) days prior written notice together with
copies of plans for the intended work if plans are required by applicable local
code, otherwise, with copies of so-called "sample boards". Such alterations
shall be constructed in conformance with Landlord's design and construction
criteria set forth in Exhibits C, C-1, and C2 hereto.
SECTION 10.4 FIXTURES.
Any and all alterations, additions, improvements and fixtures
which may be made or installed by either Landlord or Tenant upon the Demised
Premises and which in any manner are attached to the floors, walls or ceilings
(including, without limitation, any linoleum or other floor or wall covering of
similar character which may be cemented or otherwise adhesively afffixed to the
floor, or any fixtures, lights or shelving bolted or otherwise affixed to the
floor, walls or ceiling) shall remain upon the Demised Premises, and at the
termination of this Lease.
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<PAGE> 43
shall be surrendered with the Demised Premises as a part thereof without
disturbance, molestation or injury. Tenant's simulators, removable display
cases, personal property and furniture which are installed in the Demised
Premises prior to or during the term hereof at the cost of the Tenant (except
such as may replace any of the same originally installed by or at the cost of
Landlord), personal property and simulators may be removed by Tenant from the
Demised Premises prior to the termination of this Lease, if, but only if, Tenant
is not then in default hereunder. Any and all such property which is not removed
after ten (10) days notice to Tenant following the expiration or termination of
this Lease shall be deemed abandoned by Tenant and shall thereby become the
property of Landlord. Tenant covenants and agrees at its own cost and expense to
promptly repair any and all damage to the Demised Premises resulting from or
caused by any removal, and it is specifically agreed that Tenant's covenant to
repair shall survive the expiration of the term of this Lease.
SECTION 10.5 SURRENDER OF DEMISED PREMISES.
Upon any surrender of the Demised Premises, the Tenant shall
re-deliver the Demised Premises to the Landlord in good order, condition and
state of repair, ordinary wear and tear and casualty damage excepted and
excepting such items of repair as may be the Landlord's obligation hereunder.
ARTICLE XI -- TAXES
SECTION 11.1 PAYMENT BEFORE DELINQUENCY.
Landlord shall pay, or cause to be paid, before the same become
delinquent, all general and special taxes, including assessments for local
improvements and other governmental charges which may be lawfully charged,
assessed, or imposed upon the Shopping Center Site (exclusive of the component
sites therein occupied by Major Retail Stores), any parcel of land within or
without the Complex together with all improvements thereon provided or available
for parking for the Shopping Center; provided, however, that if authorities
having jurisdiction assess real estate taxes, assessments, or other charges on
all or any portion of the foregoing which Landlord deems excessive, Landlord may
defer compliance therewith to the extent permitted by
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the laws of the State of Texas, so long as the validity or amount thereof is
contested by Landlord in good faith and so long as Tenant's occupancy of the
Demised Premises is not disturbed.
Should the State of Texas or any political subdivision thereof
or any governmental authority having jurisdiction thereover, impose a tax and/or
assessment (other than an income or franchise tax) upon or against the rentals
payable by tenants of the Mall Building to Landlord, either by way of
substitution for the taxes and assessments levied or assessed at the
commencement of the term of this Lease, or in addition thereto, such tax and/or
assessment shall be deemed to constitute a tax and/or assessment upon the Mall
Building for purposes of Article XI and this Section 11.1.
SECTION 11.2 SEPARATE ASSESSMENTS.
Landlord agrees, to the extent feasible, to cause THE taxing
authorities to levy taxes and assessments separately on the Mall Building and
the land on which the same is located. Landlord agrees, to the extent feasible,
to cause the taxing authorities to levy taxes and assessments separately on all
parking facilities of the Complex and the land on which the same are located
(including driveways, entrances, exits, landscaped areas and parking, if any),
the taxes assessed upon such land and parking facilities, being hereinafter
collectively referred to as "Parking Facility Taxes".
In the event of any such taxes are not assessed separately,
Landlord shall make an allocation of the total assessed value between the
components of the Shopping Center and such allocation shall be the basis upon
which Tenant pays its taxes under this Lease.
SECTION 11.3 TENANT RENDERS TENANT IMPROVEMENTS.
Each calendar year Tenant shall render all of the Tenant
Improvements with local taxing authorities and pay taxes assessed thereon prior
to delinquency. The term "Tenant Improvements" is hereby defined to mean all
portions of the Demised Premises not originally constructed and provided by
Landlord pursuant to Exhibit B attached hereto and made a part hereof. Taxes
upon Tenant Improvements shall also include all general and special taxes,
including ad valorem taxes, assessments for local improvements and other
governmental charges which are lawfully charged, assessed or imposed upon all
fixtures and equipment of every type
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and all personal property in said Demised Premises, together with all permit and
license fees which may be lawfully imposed upon the business of Tenant conducted
within the Demised Premises.
Not later than ten (10) days prior to the date on which taxes
assessed upon the Tenant Improvements would become delinquent, Tenant shall
deliver to Landlord copies of paid tax receipts or other proof satisfactory to
Landlord evidencing the payment of all taxes upon the Tenant Improvements.
SECTION 11.4 PARKING TAXES.
Tenant shall pay its pro rata share of all Parking Facility
Taxes for each calendar year during the lease term in the manner specified in
Section 11.6 of this Lease. Tenant's pro rata share of Parking Facility Taxes
shall be computed by multiplying the whole of such Parking Facility Taxes by the
fraction set forth in Section 8.3 of this Lease.
SECTION 11.5 OTHER TAXES.
Tenant shall pay its pro rata share of all taxes and assessments
upon the Mall Building and the land upon which the same is located for each
calendar year during the lease term in the manner specified in Section 11.6 of
this Lease. Tenant's pro rata share of such taxes shall be computed by
multiplying the whole of such taxes by the fraction set forth in Section 8.4 of
this Lease.
SECTION 11.6 MONTHLY PAYMENTS AND YEAR END ADJUSTMENTS.
Tenant's pro rata share of (i) the total of all taxes due from
Tenant with respect to any calendar year of the lease term under the provisions
of Sections 11.4 and 11.5 of this Lease, plus (ii) Landlord's cost of
rendering and contesting all such taxes shall be paid as Additional Rent, and
Tenant agrees to pay such Additional Rent in advance in monthly installments,
based upon Landlord's estimates of the taxes as set forth in statements or bills
therefor submitted by Landlord to Tenant, on or about the first day of each and
every calendar year during the term of this Lease (or such other periodic
intervals as shall be determined by Landlord). Within one hundred twenty (120)
days after the end of each calendar year during the term hereof, Landlord
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shall furnish to Tenant a statement in reasonable detail setting forth the
computation of actual taxes billed to Landlord for such calendar year, and there
shall be within thirty (30) days thereafter an adjustment between Landlord and
Tenant, with payment to, or repayment by, Landlord, as the case may require, to
the extent that Landlord shall receive the entire amount of Tenant's pro rata
share of said taxes for such calendar year, and no more.
Where the applicable tax bills are not available prior to the
end of the term of this Lease, then an adjustment for the year for which tax
statements are not available shall be made, tentatively, on the basis of the
Landlord's estimates of taxes, and a final adjustment shall be made between
Landlord and Tenant promptly after Landlord shall have received the tax bill for
such period, it being specifically agreed that Landlord's and Tenant's
obligations under this Section 11.6 shall survive the expiration of the term of
this Lease.
SECTION 11.7 PRO RATA ADJUSTMENT FOR PARTIAL YEARS.
For the calendar years in which this Lease commences and
terminates, Tenant's liability for its proportionate share of any taxes and
assessments for such partial calendar years shall be subject to pro rata
adjustment for the portion of the total year that the term of this Lease is in
effect.
ARTICLE XII -- INDEMNITY AND LIABILITY INSURANCE
SECTION 12.1 TENANT'S INDEMNITY AND RELEASE AGREEMENT.
Tenant shall indemnify, defend, and hold harmless and hereby
releases Landlord and its agents, contractors, lenders, employees, partners and
its partners' officers, directors, agents and employees (singularly, an
"Indemnified Party" and collectively, the "Indemnified Parties") from and
against all suits, demands, liabilities, claims, causes of action, costs, fines,
losses, damages, and expenses (the "Claims") (i) arising from or caused in any
way by any act, omission, or negligence of Tenant or its officers, agents,
employees, servants, contractors, or licensees (the "Tenant Responsible
Parties"), (ii) arising out of any accident within, or damage to the property of
any person (including, without limitation, the Tenant Responsible Parties)
located within the Demised Premises, or injury to, or death of, any person, in
OR upon the Demised Premises, (iii) arising out of any violation of any
applicable law from and after the date that
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possession of the Demised Premises is delivered to Tenant and until the end of
the Term or (iv) arising out of any accident, injury or damage occurring outside
of the Demised Premises but within the Shopping Center, where such accident,
damage or injury results or is claimed to have resulted from all act or omission
on the part of one or more of the Tenant Responsible Parties. THE INDEMNITY AND
RELEASE SET FORTH IN CLAUSES (ii), (iii) AND (iv) ABOVE SHALL APPLY REGARDLESS
OF CAUSATION, INCLUDING, WITHOUT LIMITATION, AN INDEMNIFIED PARTY'S ACTS,
OMISSIONS OR NEGLIGENCE (WHETHER SUCH NEGLIGENCE IS SOLE, JOINT, COMPARATIVE,
CONTRIBUTORY, OR CONCURRENT), OR BASED ON ANY THEORY OF PREMISES LIABILITY
(WHETHER FOUNDED IN WHOLE OR IN PART ON NEGLIGENCE OR STRICT LIABILITY), OR ANY
THEORY OF STRICT LIABILITY, INCLUDING, WITHOUT LIMITATION, ANY THEORIES OF
PRODUCTS LIABILITY. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN,
THERE IS EXPRESSLY EXCLUDED FROM THE ABOVE INDEMNITY, OBLIGATIONS AND RELEASE OF
TENANT, ANY CLAIMS RESULTING FROM THE INTENTIONAL TORTS OR GROSS NEGLIGENCE OF
AN INDEMNIFIED PARTY. The foregoing indemnities shall include attorney's fees,
court costs, investigation costs and all other costs and expenses incurred by a
party from the first notice that any Claim or demand has been made or may be
made, and shall not be limited in any way by any limitation on the amount or
type of damages, compensation or benefits payable under applicable worker's
compensation acts, disability benefit acts or other employee benefit acts. The
provisions of this Section 12.1 shall survive the termination or expiration of
this Lease with respect to any Claim occurring before such termination or
expiration and with respect to any Claim arising after such termination or
expiration if same relates back to an event or set of circumstances which
occurred before such termination or expiration.
Notwithstanding anything contained herein to the contrary, from
and after the date of execution of this Lease Landlord agrees to indemnify and
save harmless the Tenant from and against all claims for bodily injury or
property damage, or proceedings brought thereon, and the defense thereof, on the
part of Landlord or Landlord's employees or third parties of whatever nature
arising from (i) any act, omission or negligence of Landlord or Landlord's
employees arising wholly within and from or out of the use of any portion of the
Common Areas by Landlord or Landlord's employees, (ii) any violation of
applicable law from and after the date that possession of the Demised Premises
is delivered to Tenant and until the end of the term.
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SECTION 12.2 TENANT'S LIABILITY INSURANCE.
Tenant agrees to maintain in full force during the Term a policy
or policies of commercial general liability insurance under which Landlord, and
such other persons as are in privity of estate with Landlord as may be set out
in notice from Landlord to Tenant from time to time ("Landlord's Designees"),
are named as additional insureds and Tenant is named primary insured, with
contractual liability endorsements covering the agreements of Tenant to
indemnify the Indemnified Parties from and against all cost, expense and/or
liability as contractually undertaken by Tenant under the terms of this Lease
(whether in this Article XII or otherwise). Each such policy shall provide that
it is primary over any insurance carried by Landlord and/or Landlord's Designees
and that it cannot be canceled, amended or modified with respect to the Landlord
or Landlord's Designees without fifteen (15) days' prior written notice to
Landlord and Landlord's Designees, and a duplicate original or certificate
thereof evidencing such coverage shall be delivered to Landlord no less than the
date Tenant commences occupancy of the Demised Premises. The minimum limits of
liability of such insurance shall be not less than [***] combined single limit
for bodily injury (including death) and/or property damage in any one
occurrence, or such higher limits as Landlord may from time to time request,
provided such higher limits are then customarily required of tenants IN
first-class shopping centers.
In the event Tenant fails to obtain and maintain the insurance
required of Tenant hereunder, upon three (3) days notice and the failure of
Tenant to cure within said three (3) day period, Landlord shall have the right,
but not the obligation, after written notice to Tenant, to purchase said
insurance coverage on Tenant's behalf and the cost thereof shall be denied
Additional Rent and paid to Landlord by Tenant within ten (10) days after demand
therefor by Landlord.
Tenant shall submit any proposed substitution of insurance
policies or modification of insurance policies to Landlord for Landlord's
written approval not less than thirty (30) days prior to the date on which
Tenant desires to substitute or modify insurance policies provided for under the
terms of this Lease.
SECTION 12.3 TENANT'S WAIVER AND RELEASE OF CLAIMS FOR TENANT'S
PROPERTY.
Tenant hereby agrees to use and occupy the Demised Premises, and
to use such other portions of the Shopping Center as it is herein given the
right to use, at its own risk and Tenant hereby waives, and releases the
Indemnified Parties from, all Claims, responsibilities or liabilities for any
loss of or damage, regardless of cause, to fixtures, inventory or other
property
*** Confidential treatment requested.
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of Tenant, Tenant's employees or those claiming by, through or under Tenant
(including, without limitation for any loss or damage to its or their property
from the bursting, stopping or leaking of water, gas, sprinkler, sewer drainage
or steam pipes, regardless of cause). THE WAIVER AND RELEASE SET FORTH ABOVE
SHALL APPLY REGARDLESS OF CAUSATION, INCLUDING, WITHOUT LIMITATION, AN
INDEMNIFIED PARTY'S ACTS, OMISSIONS OR NEGLIGENCE (WHETHER SUCH NEGLIGENCE IS
SOLE, JOINT, COMPARATIVE, CONTRIBUTORY, OR CONCURRENT), OR BASED ON ANY THEORY
OF PREMISES LIABILITY (WHETHER FOUNDED IN WHOLE OR IN PART ON NEGLIGENCE OR
STRICT LIABILITY), OR ANY THEORY OF STRICT LIABILITY, INCLUDING, WITHOUT
LIMITATION, ANY THEORIES OF PRODUCTS LIABILITY. NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED HEREIN, THERE IS EXPRESSLY EXCLUDED FROM THE ABOVE WAIVER AND
RELEASE OF TENANT, ANY CLAIMS RESULTING FROM THE INTENTIONAL TORTS OR GROSS
NEGLIGENCE OF AN INDEMNIFIED PARTY. The provisions of this Section 12.3 shall
apply during the whole of the Term and, in view of the permission given to
Tenant to install fixtures prior to the commencement of the Term, shall also
apply at all times prior to the Commencement Date.
SECTION 12.4 RELEASE OF LANDLORD LIABILITY FOR ACTS OF ADJOINING
TENANTS.
Tenant hereby waives, and releases the Indemnified Parties from,
any claims, losses or damages to Tenant, Tenant's employees, or to those
claiming by, through or under Tenant, that may be occasioned by or through the
acts or omissions, negligent or otherwise, of persons occupying adjoining
premises or any part of the premises adjacent to or connecting with the Demised
Premises or any part of the Mall Building, or otherwise. THE WAIVER AND RELEASE
SET FORTH ABOVE SHALL APPLY REGARDLESS OF CAUSATION, INCLUDING, WITHOUT
LIMITATION, AN INDEMNIFIED PARTY'S ACTS, OMISSIONS OR NEGLIGENCE (WHETHER SUCH
NEGLIGENCE IS SOLE, JOINT, COMPARATIVE, CONTRIBUTORY, OR CONCURRENT), OR BASED
ON ANY THEORY OF PREMISES LIABILITY (WHETHER FOUNDED IN WHOLE OR IN PART ON
NEGLIGENCE OR STRICT LIABILITY), OR ANY THEORY OF STRICT LIABILITY, INCLUDING,
WITHOUT LIMITATION, ANY THEORIES OF PRODUCTS LIABILITY. NOTWITHSTANDING ANYTHING
TO THE CONTRARY CONTAINED HEREIN, THERE IS EXPRESSLY EXCLUDED FROM THE ABOVE
WAIVER AND RELEASE OF TENANT,
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ANY CLAIMS RESULTING FROM THE INTENTIONAL TORTS OR GROSS NEGLIGENCE OF AN
INDEMNIFIED PARTY.
SECTION 12.5 WORKER'S COMPENSATION INSURANCE.
Throughout the Term, Tenant shall maintain in full force and
effect a policy or policies of worker's compensation insurance covering Tenant's
employees in the maximum amount required by law, issued by and binding upon a
responsible insurance company qualified to do business in the State of Texas.
ARTICLE XIII -- CASUALTY INSURANCE
SECTION 13.1 LANDLORD'S INSURANCE.
Landlord shall keep the Mall Building of which the Demised
Premises are a part insured against loss or damage by fire and against loss or
damage by other risks now or hereafter embraced by all-risk insurance in amounts
not less than [***] of the "full replacement cost" thereof as determined from
time to time by Landlord. The term "full replacement cost" as used herein shall
mean the cost of replacing the Mall Building, exclusive of the cost of
excavations, foundations and footings below the lowest basement floor, and
exclusive of Tenant Improvements which it is not Landlord's responsibility to
rebuild.
SECTION 13.2 TENANT INSURANCE.
Tenant shall keep all Tenant Improvements (as defined in Section
11.3 hereof), including, without limitation, its fixtures, merchandise and
equipment insured against loss or damage by fire and against loss or damage by
other risks now or hereafter embraced by all-risk insurance and including
sprinkler leakage and water damage coverage, and Tenant shall maintain in
connection with such insurance "replacement cost" and "agreed amount"
endorsements. Such insurance shall designate Tenant and Landlord as loss payees
as their interests may appear. At least [***] days prior to the projected
Commencement Date of this Lease, and at least [***] days prior to the
expiration of any such policy, Tenant shall deliver to Landlord a duplicate
original, or certificate thereof, evidencing the insurance required of Tenant
under this Section 13.2. In addition to the foregoing obligation, Tenant agrees
to carry business interruption
*** Confidential treatment requested.
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insurance in such an amount as is necessary to protect the Tenant from any
interruption of its business operation for a period of at least one (1) year.
SECTION 13.3 WAIVER OF SUBROGATION.
Anything in this Lease to the contrary notwithstanding, Landlord
and Tenant each waive all rights of recovery, claim, action or cause of action
against the other, its agents, partners (both general and limited), officers,
directors, shareholders or employees, for any loss or damage that may occur to
the Demised Premises, or any improvements thereto, to the Shopping Center or to
any personal property of such party therein, by reason of fire, the elements, or
any other cause which is required to be insured against under the terms of the
all-risk insurance policies required to be obtained pursuant to this Lease,
regardless of cause or origin, including sole or contributory negligence of the
other party hereto, its agents, contractors, partners, officers, directors,
shareholders or employees; and each party covenants that no insurer shall hold
any right of subrogation against such other parties. Tenant shall advise
insurers of the foregoing and such waiver shall be a part of each policy
maintained by Tenant which applies to the Demised Premises, any part of the
Shopping Center or Tenant's use and occupancy of any part thereof, provided that
this waiver shall be null and void if such waiver is unavailable from
responsible insurance companies doing business in the State of Texas.
SECTION 13.4 PAYMENT OF PREMIUMS.
Tenant covenants and agrees that it will not do or permit
anything to be done in or upon the Demised Premises or bring in anything or keep
anything therein, which shall increase the rate of insurance on the Demised
Premises or the building of which the Demised Premises are a part above the
standard rate on said Demised Premises being used as permitted under Section 5.1
of this Lease; provided, however, that this Section 13.4 is subject to the right
of the Tenant to pay increased premiums in accordance with Section 5.20) above.
The right of Tenant to pay such increased premiums shall not be deemed to permit
Tenant to use, occupy or maintain the Demised Premises other than as expressly
permitted under Section 5.1.
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ARTICLE XIV -- DAMAGE CLAUSE
SECTION 14.1 PARTIAL DAMAGE.
In the event that during the term hereof the Demised Premises shall
be partially damaged (as distinguished from "substantially damaged", as such
terms are defined in Section 14.6 hereof) by fire or other casualty, the risk of
which is covered by Landlord's insurance, Landlord shall with all reasonable
dispatch repair such damage and restore the Demised Premises (excluding Tenant
Improvements), or so much thereof as was originally constructed by Landlord, to
substantially their condition at the time of such damage, but Landlord shall not
be responsible for any delay which may result from force majeure (as defined in
Section 16.1 1). Thereafter Tenant shall with all reasonable dispatch repair any
damage to the Tenant Improvements and restore the Tenant Improvements to
substantially their condition existing at the time of such damage, and promptly
reopen for business.
SECTION 14.2 SUBSTANTIAL DAMAGE.
In the event that during the term hereof the Demised Premises
shall be substantially damaged or destroyed by fire or other casualty, the risk
of which is covered by Landlord's insurance, this Lease shall, except as
hereinafter provided, remain in full force and effect and Landlord shall, with
all reasonable dispatch, repair or rebuild the Demised Premises (excluding
Tenant Improvements), or so much thereof as was originally constructed by
Landlord, to substantially their condition at the time of such damage or
destruction (subject, however, to zoning laws and building codes then in
existence), but Landlord shall not be responsible for any delay which may result
from force majeure (as hereinafter defined in Section 16.11). Thereafter, Tenant
shall with all reasonable dispatch repair any damage to the Tenant Improvements
and restore the Tenant Improvements to substantially their condition existing at
the time of such damage, and promptly reopen for business. In case of
substantial damage or destruction, as a result of a risk which is not covered by
Landlord's insurance, Landlord shall likewise be obligated to rebuild the
Demised Premises, all as aforesaid, unless within one hundred twenty (120) days
after the occurrence of such event, Landlord gives written notice to Tenant of
its election to terminate this Lease.
Notwithstanding the foregoing, in the event the Demised Premises
are substantially damaged or destroyed by fire or other casualty and Landlord
has failed to restore
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the Demised Premises (excluding Tenant Improvements) in accordance with
Landlord's obligations set forth herein within twelve (12) months following such
substantial damage or destruction or if Landlord fails to commence such
restoration within six (6) months after such substantial damage or destruction,
then Tenant shall be permitted to terminate this Lease upon sixty (60) days
prior written notice to Landlord.
SECTION 14.3 TERMINATION FOR DAMAGE.
Notwithstanding the foregoing provisions of this Article XIV, if
the Demised Premises shall be substantially damaged or destroyed by fire,
windstorm or otherwise within the last three (3) years of the term of this
Lease, Landlord shall have the right to terminate this Lease by giving written
notice of Landlord's intention to terminate to Tenant not later than ninety (90)
days after Landlord first receives written notice from Tenant of such damage or
destruction. Further, in the event that such substantial damage to the Demised
Premises occurs within the last two (2) years of the term of this Lease, Tenant
may terminate this Lease, provided it gives notice to Landlord within sixty (60)
days after such substantial damage or destruction and Landlord has not
theretofore commenced repairs and rebuilding. In the event this Lease is
terminated in accordance with this Section 14.3, Tenant shall, within thirty
(30) days thereafter pay to Landlord the amount of insurance proceeds payable to
Tenant under the insurance policies held by Tenant pursuant to Section 13.2
above less any such proceeds specifically allocable to Tenant's merchandise.
SECTION 14.4 ABATEMENT OF RENT WHEN DAMAGE INTERFERES.
In the event the provisions of Section 14.1 or Section 14.2
hereof shall be applicable, Minimum Rent and Additional Rent (but not Percentage
Rent or utilities) shall be abated or reduced proportionately during any period
in which, by reason of any such damage or destruction, there is substantial
interference with the operation of the business of Tenant in the Demised
Premises having regard to the extent to which Tenant may be required to
discontinue its business in the Demised Premises, and such abatement or
reduction shall continue for the period commending with distinction or damage
and ending upon THE date such interference is terminated.
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SECTION 14.5 EFFECT OF TERMINATION FOR DAMAGE.
In the event of termination of this Lease pursuant to this
Article XIV, this Lease and the term hereof shall cease and come to an end as of
the date of such damage or destruction as though such date were the date
originally fixed for the expiration of the term of this Lease.
SECTION 14.6 DEFINITIONS OF "PARTIAL DAMAGE" AND "SUBSTANTIAL DAMAGE".
The terms "substantially damaged" and "substantial damage", as
used in this Article XIV, shall have reference to damage of such a character as
cannot reasonably be expected to be repaired, or the Demised Premises restored,
within one hundred twenty (120) days from the time that such repair or
restoration work would be commenced. The terms "partially damaged" and "partial
damage", as used in this Article XIV, shall have reference to damage of such a
character which can reasonably be expected to be repaired, or the Demised
Premises restored, within one hundred twenty (120) days from the time such
repair or restoration work would be commenced.
For purposes of this Section 14.6, the estimated time for repair
or restoration shall be determined, in good faith, by Landlord's architect,
without assumption of any delays caused by force majeure (as hereinafter
defined), but with due regard to the specialized nature of Tenant's improvements
and fixturing requirements.
SECTION 14.7 OTHER DAMAGE.
Notwithstanding any provision contained in this Article XIV to
the contrary, in no event shall any fire or other casualty give Tenant the right
to require or demand that Landlord repair or restore any part of the Mall
Building (other than the Demised Premises, to the extent required elsewhere in
this Article XIV), the Shopping Center, or the Complex. Notwithstanding the
foregoing, in the event more than sixty percent (60%) of the Mall Building is
damaged or destroyed by fire or other casualty and Landlord has not restored
such portion of the Mall Building to an architectural whole and substantially
similar condition within eighteen (18) months thereafter, Tenant shall have the
right to terminate this Lease upon sixty (60) days prior written notice to
Landlord.
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ARTICLE XV -- EMINENT DOMAIN
SECTION 15.1 EFFECT OF A TAKING.
If the Demised Premises, or such portion thereof as to render
the balance (when reconstructed) unsuitable for the use set forth in Section 5.1
hereof, shall be taken by condemnation or right of eminent domain or conveyed by
Landlord in lieu of condemnation, either party, upon written notice to the
other, shall be entitled to terminate this Lease, provided that such notice is
given within sixty (60) days after Tenant has been deprived of possession.
Should any part of the Demised Premises be so taken or condemned, and should
this Lease not be terminated in accordance with the foregoing provision, the
Landlord covenants and agrees promptly after such taking or condemnation, and
the determination of Landlord's award therefor, to expend so much as may be
necessary of the net amount which may be awarded to it in such condemnation
proceedings in restoring the Demised Premises to an architectural unit as nearly
like their condition prior to such taking as shall be practicable. Should the
net amount so awarded to Landlord be insufficient to cover the cost of restoring
the Demised Premises, as estimated by Landlord's architect, Landlord may, but
shall not be obligated to supply the amount of such insufficiency and restore
said Demised Premises as above provided, with all reasonable diligence, or
Landlord may terminate this Lease. Where the Tenant has not already exercised
any right of termination accorded to it under the foregoing portion of this
Section 15.1, Landlord shall notify, Tenant of Landlord's election not later
than ninety (90) days after the final determination of the amount of the award.
SECTION 15.2 RIGHT TO RECEIVE AWARDS.
Out of any award for any taking of the Demised Premises, in
condemnation proceedings, or by right of eminent domain, Landlord shall be
entitled to receive and retain the amounts awarded for such Demised Premises and
for Landlord's business loss. Tenant shall be entitled to receive and retain
only the amounts, if any, which may be specifically awarded to it in any such
condemnation proceedings because of the taking of its trade furniture or
fixtures and the unamortized portion of its leasehold improvements based upon
straight LINE amortization over the
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term of the Lease (to the extent, but only to the extent, that funds therefor
were not initially furnished by Landlord).
SECTION 15.3 ABATEMENT OF RENT.
In the event of any such taking of the Demised Premises, Minimum
Rent and all other charges to be borne by Tenant under the provisions of this
Lease (but not Percentage Rent) shall be abated in a fair and just proportion
according to the nature and extent of the damage sustained during any period in
which, by reason of any such taking, there is substantial interference with the
operation of the business of Tenant in the Demised Premises, having regard to
the extent to which Tenant may be required to discontinue its business in the
Demised Premises, and such abatement or reduction shall continue for the period
such interference continues.
SECTION 15.4 TAKING OF OTHER PORTIONS.
Notwithstanding any provision contained in this Article XV to
the contrary, in no event shall any taking by condemnation or right of eminent
domain or conveyances by Landlord in lieu of condemnation give Tenant the right
to require or demand that Landlord repair or restore any part of the Mall
Building, the Shopping Center or the Complex other than the Demised Premises.
ARTICLE XVI -- MISCELLANEOUS COVENANTS OF TENANT
SECTION 16.1 LANDLORD'S RIGHT TO INSPECT.
Upon twenty-four (24) hours prior notice to Tenant, which notice
may be delivered orally to the store manager at the Demised Premises, Landlord
and Landlord's agents, contractors and employees shall have the right to enter
upon the Demised Premises at all reasonable hours (and at any time and without
prior notice in the event of emergency) for the purpose of inspecting or of
making any repairs to the same required of Landlord pursuant to Section 10.1
hereinabove, or the building of which they are a part, or for any other entry
upon the Demised Premises, by Landlord permitted under the terms of this Lease.
No entry by Landlord permitted under the terms of this Lease shall be deemed a
breach by Landlord of Tenant's right to
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quiet enjoyment of the Demised Premises, as set forth in Section 17.1
hereinafter. If repairs are required to be made by Tenant pursuant to the terms
hereof, Landlord may demand that Tenant make the same forthwith, and if Tenant
refuses or neglects to commence such repairs and complete the same with
reasonable dispatch, after such demand, Landlord may (but shall not be required
to do so) make or cause such repairs to be made and shall not be responsible to
Tenant for any loss or damage that may accrue to its stock or business by reason
thereof. If Landlord makes or causes such repairs to be made, Tenant agrees that
it will forthwith, on demand, pay to Landlord the cost thereof, plus an amount
equal to [***] thereof, as compensation for Landlord's administrative expenses,
all of which shall be deemed Additional Rent hereunder.
SECTION 16.2 ACCESS TO SHOW PREMISES.
For a period commencing one hundred fifty (150) days prior to
the expiration of the term of this Lease, Landlord may have reasonable access to
the Demised Premises for the purpose of exhibiting the same to prospective
tenants.
SECTION 16.3 PROMOTIONAL PROGRAMS.
Landlord has established an advertising and promotion service
for the general benefit of the Shopping Center and its tenants. In connection
with such service Landlord shall have the exclusive right to hire a Marketing
Director, and staff, to plan and administer such service. A committee composed
of Landlord, a representative of each Major Retail Store and representatives of
at least four (4) tenants of the Mall Building, selected by Landlord will be
formed to discuss the advertising and promotional activities.
Tenant agrees to make the following contribution (the "Promotion
Charge") into a fund (the "Promotion Fund") to be used for the advertising and
promotional service as hereinafter described:
Tenant shall pay to Landlord as Additional Rent, in equal
monthly installments, on or before the first day of each month
of the term hereof, an amount equal to [***] per year (subject
to adjustment as provided herein) per square foot of Floor Space
in the Demised Premises.
*** Confidential treatment requested.
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Promotion Fund payments for any partial calendar year shall be
pro-rated based upon the number of days the Lease is in effect during such year.
Landlord agrees to contribute annually to the Promotion Fund an
amount equal to [***] of the amount paid to the Promotion Fund during such
calendar year by tenants of the Shopping Center.
The Promotion Fund shall be used by Landlord for professional
advertising and sales promotions which, in Landlord's judgment, will benefit the
tenants of the Shopping Center. In addition, the Promotion Fund shall reimburse
Landlord for all salaries and expenses of the Marketing Director and the
marketing staff, including, but not limited to, office rent, utilities,
supplies, telephone, accounting charges, and expenses for other equipment used
by the Marketing Director and marketing staff.
Notwithstanding anything contained herein to the contrary,
Landlord shall have the right, effective as of the first day of January of any
year, to terminate the promotional and advertising service, in which event
Tenant shall have no obligation to pay any Promotion Charge accruing after any
such termination date, and Landlord shall no longer be obligated to make the
contributions specified in this Section 16.3.
In addition, Tenant agrees that any and all advertising
undertaken by Tenant in the Dallas-Ft. Worth metropolitan area shall include a
reference to Tenant's location in the Shopping Center.
SECTION 16.4 COOPERATIVE PROMOTIONAL OPPORTUNITIES.
Intentionally deleted.
SECTION 16.5 GRAND RE-OPENING PROMOTION.
Intentionally deleted.
SECTION 16.6 TENANT CERTIFICATES.
Recognizing that Landlord may find it necessary to establish to
third parties, such as accountants, banks, mortgagees or the like, the then
current status of performance hereunder, Tenant, on the written request of the
Landlord made from time to time, will promptly furnish a
*** Confidential treatment requested.
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written affidavit on the status of this Lease, consisting of statements, if
true, (i) that this Lease is in full force and effect, (ii) the date through
which rentals have been paid, (iii) the Commencement Date and date of expiration
of the Lease, (iv) the nature of any amendments or modifications to this Lease,
(v) that no default, or state of facts, which with the passage of time or notice
would constitute a default, exists on the part of either party hereto, (vi) the
dates on which Percentage Rent payments are due under the terms of this Lease
(see Article III), and (vii) such other matters as may reasonably be requested.
Without limiting the foregoing, Tenant specifically agrees, upon
the Commencement Date or upon receipt of a written request from Landlord after
the Commencement Date, to execute a short form written declaration, stating the
Commencement Date and expiration date of the Lease, and acknowledging
satisfaction of the construction requirements and other matters reasonably
requested by Landlord, save and except for such matters as Tenant may wish to
set forth specifically in said statement. Such declaration shall not be recorded
without written approval of both parties and only at the sole cost of the party
requesting recordation.
SECTION 16.7 CURING LANDLORD DEFAULTS.
After receiving written notice from the holder of a deed of
trust that such deed of trust which includes as a part of its mortgaged premises
the Demised Premises, Tenant shall, so long as such deed of trust is
outstanding, give to such holder the same notice and opportunity to correct any
default on the part of the Landlord as is required to be given to Landlord in
Section 17.4 hereafter, and shall be given in the manner specified in notice
from such holder to Tenant, but such notice may be given by Tenant to Landlord
and such holder concurrently.
Tenant shall not be liable for failure to give such notice to
such holder, but if Tenant fails to notify such holder of a default hereunder,
the time within which such holder shall leave the right to cure such default
shall not commence to run until such holder shall have been notified of such
default on the part of Landlord by Tenant.
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SECTION 16.8 OBLIGATIONS OF A MORTGAGEE.
With reference to any assignment of this Lease, and/or the rents
payable hereunder, whether as security or absolute, in connection with financing
on all or part of the Shopping Center which includes the Demised Premises,
Tenant agrees that the holder of any mortgage, deed of trust, or instrument (any
of the foregoing being called herein a "Mortgage") so assigning the Landlord's
interest in the Lease and/or the rents therefrom in connection with such
financing (a "Landlord's Mortgagee") shall never be treated as a mortgagee in
possession, or be liable for any obligations of the Landlord, even if such
Landlord's Mortgagee shall have commenced collecting rents hereunder, until such
time as such Landlord's Mortgagee shall have obtained actual legal title to or
actual physical possession of the Demised Premises. Further, no Landlord's
Mortgagee or any other person or entity acquiring title to the Demised Premises
through foreclosure or transfer by or in lieu of enforcement of the liens of a
Mortgagee shall ever be responsible or liable to Tenant for (i) damages or
offset for any default by any predecessor Landlord; (ii) any credit against
Tenant's obligations under this Lease for rents prepaid to any predecessor
landlord more than one month in advance; (iii) any termination or assignment of
this Lease except strictly in accordance with the terms of this Lease, or other
change to this Lease made without the prior written consent or written joinder
of the Landlord's Mortgagee; or (iv) any unperformed construction obligation or
other default by any predecessor Landlord, except to cure curable, non-monetary
defaults of a continuing nature within a reasonable time following acquiring
title to the Demised Premises.
SECTION 16.9 DISCHARGE OF MECHANIC'S AND MATERIALMAN'S LIENS.
Tenant agrees within thirty (30) days after notice of filing to
discharge of record by (i) payment, (ii) filing of the necessary bond, (iii)
order of a court of competent jurisdiction, or (V) other means acceptable to
Landlord, any mechanic's, materialman's or other lien against the Demised
Premises and/or Landlord's or Tenant's interest therein (or any portion of the
Shopping Center when such lien arises out of work performed or claimed to have
been performed in or on the Demised Premises), which liens may arise out of any
payment due for, or purported to be due for, any labor, services, materials,
supplies or equipment alleged to have been furnished to or for the Tenant in,
upon or about the Demised Premises. In the event Tenant contests any such
mechanic's or materialman's liens, Tenant shall, at Landlord's request, (i)
deposit with Landlord an amount equal to the claims made by such lien, together
with interest thereon as it may from
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time to time become due, as security for the payment and discharge thereof prior
to execution or (ii) deliver to Landlord a bond of a recognized surety
authorized to write surety bonds in Texas assuring the payment and removal of
such lien, together with any interest or penalty thereon, and naming Landlord as
a co-obligee. Any judgment or other process issued in such a contest shall be
paid and discharged before execution thereof. If Tenant fails to keep this
covenant, in addition to all other remedies available to Landlord under this
Lease, Landlord may, at its option, purchase a surety bond at twice the amount,
of the lien, securing such lien, and Tenant agrees to pay to Landlord, as
Additional Rent, one and one-half times the cost thereof, to compensate Landlord
for its expenses, attorney's fees and damages.
SECTION 16.10 RECORDING PROHIBITED.
Tenant agrees not to record this Lease or any other document
which sets forth the rental or other charges payable by Tenant under this Lease.
SECTION 16.11 FORCE MAJEURE.
In the event that either party hereto shall be delayed or
hindered in or prevented from doing or performing any act or thing required
hereunder (other than, with respect to Tenant the payment of Minimum Rent,
Percentage Rent, Additional Rent or any other charge set forth herein) by reason
of strikes, lock-outs, breakdown, accident, casualties, acts of God, labor
troubles, inability to procure materials, failure of supply, inability by the
exercise of reasonable diligence to obtain supplies, parts or employees,
necessary services, failure of power, governmental laws, orders or regulations,
riots, insurrection, war or other causes beyond the reasonable control of either
party, or for any cause due to any act or neglect of the other party or its
servants, agents, employees, licensees, or any person claiming by, through or
under the other party (referred to in this Lease as "force majeure"), then
Landlord or Tenant, as the case may be, shall not be liable or responsible for
any such delays and the doing or performing of such act or thing shall be
excused for the period of the delay and the period for the performance of any
such act shall be extended for a period equivalent to the period of such delay.
The inability to pay money shall in no event constitute force majeure. For
purposes of this Section 16.1 1, force majeure, with respect to Tenant, shall
not be deemed to cover any failure by Tenant to open for
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business by the date set forth in Section 2.2 if such failure is a result of
Tenant's failure to order equipment, fixtures, supplies or merchandise
sufficiently far in advance so as to be able to open for business in the Demised
Premises as required by Section 2.2.
SECTION 16.12 HOLDING OVER.
In the event Tenant remains in possession of the Demised
Premises after the expiration of the tenancy created hereunder, and without the
execution of a new lease, Tenant shall be deemed to be occupying the Demised
Premises as a tenant from month-to-month, at [***] times the Minimum Rent (with
Percentage Rent being calculated during such hold-over period as if only Minimum
Rent were payable), and subject to all the other conditions, provisions and
obligations of this Lease in so far as the same are applicable to a
month-to-month tenancy. In no event shall any such holding over and payment of
rent be constituted as otherwise extending the term of this Lease.
SECTION 16.13 INTEREST ON AMOUNT PAST DUE.
If Tenant shall fail to promptly make any payment of the rentals
reserved hereunder, or of Percentage Rent, or of Additional Rent, or to pay any
other sum which Tenant has agreed to pay to Landlord in accordance with the
terms of this Lease when such sums shall be due and payable, Tenant shall pay,
in addition to such sums, interest on any amount so unpaid more than ten (10)
days from the due date at the prime rate charged from time to time by Chase
Manhattan Bank NA, New York, New York, plus [***] per annum plus an
administrative fee of [***]; provided, however, the maximum amount payable
hereunder shall not exceed the maximum lawful rate. Tenant shall pay to Landlord
the sum of [***] for each check paid by Tenant to Landlord and returned unpaid
due to insufficient funds, or for any other reason. Further, in the event checks
tendered to Landlord by Tenant for any payments due hereunder are returned
unpaid due to insufficient funds two (2) times in any consecutive twelve (12)
month period, Landlord shall have the right to demand all future payments be
made by certified check or money order.
*** Confidential treatment requested.
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SECTION 16.14 No TERMINATION.
Except as specifically set forth in this Lease, Tenant shall
have no right to surrender or terminate this Lease and Tenant shall not be
relieved of its liability and obligation to pay Minimum Rent, Percentage Rent,
Additional Rent and all other charges payable under this Lease or any of its
obligations under this Lease, and Tenant waives any rights now or hereafter
conferred upon it by statute or otherwise to terminate or surrender this Lease
or the Demised Premises or any part thereof, or to any offset, retention,
suspension, diminution, abatement or reduction of rent or other charges payable
under this Lease.
SECTION 16.15 RATINGS OF INSURANCE COMPANIES.
All policies of insurance provided in this Lease to be
maintained by Tenant shall be written by insurance companies qualified to do
business in the State of Texas acceptable to Landlord, with general
policyholders rating not less than A and a financial rating of VIII (or better)
as rated in the most current available "Best's Insurance Reports".
SECTION 16.16 TENANT RECORDS.
For the purpose of ascertaining the amount payable as Percentage
Rent, Tenant agrees to prepare and keep available, for a period of not less than
thirty-six (36) months following each of the dates upon which Tenant delivers to
Landlord each of the written statements required in Section 3.8 of this Lease,
adequate records for the period reported upon by such statement which shall show
inventories and receipts of merchandise at the Demised premises, and daily
receipts from all sales and other transactions on or from the Demised Premises
by Tenant and any other persons conducting any business upon or from the Demised
Premises. Tenant shall record at the time of sale, in the presence of the
customer, all receipts from sales or other transactions whether for cash or
credit in a cash register or in cash registers or electronic or computer systems
having a cumulative total. Tenant further agrees to keep available for at least
three (3) years following the end of each Lease Year the gross income, sales and
occupation tax returns with respect to said Lease Year and all pertinent
original sales records. Pertinent original sales records shall includes: (a)
cash register tapes, if available, including tapes from temporary registers; (b)
serially numbered sales slips; (c) the originals of all
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mail orders at and to the Demised Premises; (d) the original records of all
telephone orders at and to the Demised Premises; (e) settlement report sheets of
transactions with subtenants, concessionaires and licensees; (f) the original
records showing that merchandise returned by customers was purchased at the
Demised Premises by. such customers; (g) memorandum receipts or other records of
merchandise taken out on approval; (h) such other sales records, if any, which
would normally be examined by an independent auditor pursuant to accepted
auditing standards in performing an audit of Tenant's sales; and (i) the records
specified in (a) to (h) above of subtenants, assignees, concessionaires, or
licensees.
SECTION 16.17 LANDLORD NOT LIABLE FOR INTEREST.
Tenant agrees that Landlord shall not be liable or accountable
to Tenant for interest on any sum of money deposited by Tenant under the terms
of this Lease, including, without limitation, amounts paid to Landlord by Tenant
pursuant to Sections 3.3, 8.5 and 11.6 of this Lease.
SECTION 16.18 REIMBURSEMENT FOR LEGAL EXPENSES.
If Tenant shall request anything of Landlord which shall require
preparation of, or review of, documents by Landlord's counsel, and if Landlord
accedes to such request, Tenant shall reimburse Landlord on demand any
reasonable legal and administrative fees and expenses incurred by Landlord
incident thereto, not to exceed [***] per
request.
ARTICLE XVII -- LANDLORD'S COVENANT OF QUIET ENJOYMENT
AND LIMITATIONS OF LIABILITY
SECTION 17.1 PEACEFUL ENJOYMENT.
Tenant, on payment of the rent and observing, keeping and
performing all of the terms and provisions of this Lease on its part to be
observed, kept and performed, shall lawfully, peaceably and quietly have, hold,
occupy and enjoy the Demised Premises during the term hereof without ejection by
any persons lawfully claiming under Landlord; but it is understood and agreed
that this covenant and any and all other covenants of Landlord contained in this
Lease
*** Confidential treatment requested.
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shall be binding upon Landlord and its successors only with respect to breaches
occurring during its and their respective ownership of the Landlord's interest
hereunder.
SECTION 17.2 No PERSONAL LIABILITY OF LANDLORD.
Tenant specifically agrees to look solely to Landlord's interest
in the Mall Building for the recovery of any judgment against Landlord and that
in no event shall Landlord, or any partner of Landlord, ever be personally
liable for any such judgment.
SECTION 17.3 LANDLORD AND TENANT NOT LIABLE FOR SPECIAL DAMAGES.
In no event shall Landlord or the interest of Landlord in the
Mall Building ever be liable to Tenant, or subject to execution by Tenant, for
any indirect, special or consequential damages, whether under the provisions of
this Article XVII or otherwise under this Lease. Furthermore, in no event shall
Tenant ever be liable to Landlord for any indirect, special or consequential
damages.
SECTION 17.4 INDEPENDENT OBLIGATIONS/CURING LANDLORD DEFAULTS.
The obligation of Tenant to pay all rent and other sums
hereunder provided to be paid by Tenant and the obligation of Tenant to perform
Tenant's other covenants and duties hereunder constitute independent,
unconditional obligations to be performed at all times provided for hereunder,
except to the extent an abatement thereof or reduction therein is expressly
provided for in this Lease. Tenant waives all rights which Tenant might have to
claim any nature of lien against or withhold, deduct from or offset against any
rent or other sums provided to be paid Landlord by Tenant, as well as any right
to assert, either as a claim or as a defense, that Landlord is bound to perform
or is liable for the non-performance of any implied covenant or implied duty of
Landlord not expressly herein set forth. To the maximum extent it may lawfully
do so, Tenant waives its rights, if any, under the Texas Deceptive Trade
Practices Act with respect to this Lease and its rights thereunder. Landlord
shall in no event be in default in the performance of any of its obligations
hereunder unless and until Landlord shall have failed to commence performance of
such obligations within thirty (30) days. and if performance of such obligation
is not reasonably capable of being performed within such thirty (30) day period,
then
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Landlord is obligated to commence performance of such obligations within said
thirty (30) day period and diligently prosecute the performance of such
obligations to completion, as soon as reasonably possible thereafter.
ARTICLE XVIII -- LANDLORD'S REMEDIES
SECTION 18.1 EVENTS OF DEFAULT.
The following shall constitute events of default under the terms
of this Lease:
(i) if Tenant shall neglect or fail to perform or observe any of the
covenants, terms, provisions or conditions contained in this
Lease on its part to be performed or observed within twenty (20)
days after written notice thereof from Landlord, subject to
force majeure as defined in Section 16.11, provided, however,
failure to cure such non-monetary default shall not constitute
an event of default hereunder if such default is, by its nature,
incapable of being cured within such twenty (20) days, and
Tenant promptly commences and diligently pursues to completion
the curing of such default, except for (A) payment of Minimum
Rent, Percentage Rent, Additional Rent or any other monetary
charges due hereunder, or any other monetary obligations at any
time owing from Tenant to Landlord, for which subparagraph (ii)
below shall apply, or (B) the circumstances described in
subsections (iii) through (x) of this Section 18.1, in which
event such subsections shall apply), or
(ii) if Tenant shall neglect or fail to pay Minimum Rent, Percentage
Rent or any other monetary obligations at any time owing from
Tenant to Landlord within ten (10) days after written notice
thereof from Landlord, or
(iii) if Tenant fails to operate its business from the Demised
Premises for (A) ten (10) consecutive days, or (B) fifteen (15)
days (whether or not consecutive) during any twelve (12) month
period (unless due to a fire or casualty to the Demised
Premises, in which event the provisions of Article XIV of the
Lease shall apply) or if Tenant abandons the Demised Premises,
or
(iv) if the 1easehold estate created by this Lease shall be taken on
execution or by other process of law, or
(v) if Tenant shall be judicially declared bankrupt or insolvent
according to law, or
(vi) if any assignment shall be made of the property of Tenant for
the benefit of creditors, or
(vii) if a receiver, guardian, conservator, trustee in involuntary
bankruptcy or other similar officer shall be appointed to take
charge of all or any substantial part of Tenant's property by a
court of competent jurisdiction, or
(viii) if a petition shall be filed for the reorganization of Tenant
under any, provisions of the Federal Bankruptcy Code now or
hereafter enacted and such petition is not dismissed within
ninety (90) days after the date of filing, or
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(ix) if Tenant shall file a petition for such reorganization, or for
arrangements under any provisions of the Federal Bankruptcy Code
now or hereafter enacted and providing a plan for a debtor to
settle, satisfy or extend the time for the payment of debts.
Nothing contained in this Section 18.1 shall be deemed to waive,
limit, reduce or otherwise alter the rights afforded to Landlord pursuant to
Subtitle C of the Bankruptcy Amendments and Federal Judgeship Act of 1984.
Notwithstanding Section 5.4, if this Lease is assigned pursuant to the
provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq., the person or
entity to whom it is assigned shall be deemed without further act or deed to
have assumed all of the obligations arising hereunder on and after the date of
such assignment. Any such assignee shall upon demand execute and deliver to
Landlord an instrument confirming such assumption. If this Lease is so assigned,
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 Landlord's exclusive property and shall not constitute property of
Tenant or of Tenant's estate 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 or delivered to Landlord. Any
attempted or purported assignment, subletting or conveyance not in conformance
herewith shall be void and of no force or effect.
Notwithstanding anything to the contrary contained in (ii) above
or in any other provision of this Lease, if the same or similar Event of Default
of this Lease identified in (ii) above occurs twice during any twelve (12) month
period, Landlord shall not thereafter in the twelve (12) month period subsequent
to the second (2nd) such breach be obligated to give Tenant written notice
thereof and a period of time in which to correct any such Event of Default, it
being understood under such circumstances that the occurrence of such further
breach shall constitute, without the necessity of any notice or grace period, an
Event of Default hereunder.
SECTION 18.2 LANDLORD REMEDIES.
Upon the occurrence of any event of default, Landlord lawfully
may, immediately, or at any time thereafter, upon written notice, (i) terminate
this Lease or (ii) enter into and upon said Demised Premises or any part thereof
Without terminating this Lease, and expel the Tenant and those claiming through
or under it and remove its or their effects (forcibly,
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if necessary) without being deemed guilty of any manner of trespass, and without
prejudice to any remedies which might otherwise be used for arrears of rent or
preceding breach of covenant.
Tenant covenants and agrees, notwithstanding any entry or
re-entry by Landlord, whether by summary proceedings, termination or otherwise,
to pay and be liable for on the days originally fixed herein for the payment
thereof, amounts equal, to the several installments of rent and other charges
reserved as they would, under the terms of this Lease, become due if this Lease
had not been terminated or if Landlord had not entered or re-entered, as
aforesaid, and whether the Demised Premises be relet or remain vacant in whole
or in part or for a period less than the remainder of the term, or for the whole
thereof. If Landlord attempts to relet the Demised Premises, the nature and
suitability of the proposed tenant and the terms of any new lease shall be in
the sole and absolute discretion of Landlord. Notwithstanding anything to the
contrary contained in the preceding sentence, Landlord agrees to use reasonable
efforts to relet the Demised Premises, however, Landlord shall not be obligated
to give preference to the Demised Premises over other space in the Shopping
Center. In the event the Demised Premises be relet by Landlord, Tenant shall be
entitled to a credit in the net amount of rent received by Landlord ill
reletting the Demised Premises after deduction of all reasonable costs incurred
by Landlord (i) in reletting the Demised Premises (including, without
limitation, remodeling costs, brokerage fees, attorneys' fees and the like) and
(ii) in collecting the rent in connection therewith.
As an alternative, at the election of Landlord, Tenant will upon
termination or upon entry or re-entry by Landlord without termination of this
Lease, pay to Landlord, as damages, such a sum as at the time of such
termination or re-entry by Landlord represents that amount of the [***]. In
connection with Landlord's rights on default as set forth in this Section 18.2,
Tenant grants to Landlord the right to undertake any and all credit checks on
Tenant deemed necessary by Landlord in collection with the collection by
Landlord of damages due Landlord as a result of a default by Tenant.
*** Confidential treatment requested.
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SECTION 18.3 PERCENTAGE RENT AFTER ENTRY BY LANDLORD.
For the purposes of this Article XVIII, it shall be deemed that
the Percentage Rent for any period after any event of default and entry by
Landlord would have been at a monthly rate equal to the average monthly
Percentage Rent which Tenant was obligated to pay to Landlord under this Lease
from the commencement hereof to the date of such default.
SECTION 18.4 LEASE GUARANTY.
If this Lease shall be guaranteed on behalf of the Tenant, if
there is a default by the Guarantor under the Guaranty, such default shall
constitute an event of default by Tenant under this Lease without further notice
to Tenant.
SECTION 18.5 NO WAIVER.
Failure on the part of Landlord to complain of any action or
non-action on the part of Tenant, no matter how long the same may continue,
shall never be deemed to be a waiver by Landlord of any of its rights hereunder.
Further, it is covenanted and agreed that no waiver at any time of any of the
provisions hereof by Landlord shall be construed as a waiver of any of the other
provisions hereof and that waiver at any time of any of the provisions hereof
shall not be construed as a waiver at any subsequent time of the same
provisions. The consent or approval by Landlord to or of any action by Tenant
requiring Landlord's consent or approval shall not be deemed to waive or render
unnecessary Landlord's consent or approval to or of any subsequent similar act
by Tenant.
SECTION 18.6 SECURITY INTEREST.
Intentionally deleted.
ARTICLE XIX -- NOTICE
SECTION 19.1 ADDRESS AND MANNER OF GIVING NOTICE.
Any notice, communication, request, reply or advice (herein
severally and collectively, for convenience, called "notice") in this Lease
provided or permitted to be given, made or accepted by either party to the other
must be in writing, and may, unless otherwise in
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this Lease expressly provided, be given or be served by depositing the same in
the United States mail, postpaid and certified and addressed to the party to be
notified, with return receipt requested, by telecopy, telegram with written
confirmation of delivery, or by delivering the same in person to such party.
Notice deposited in the mail in the manner hereinabove described shall be
effective, unless otherwise stated in this Lease, on the earlier of (i) actual
delivery or (ii) the third (3rd) day (exclusive of Saturdays, Sundays, and
postal holidays) after it is so deposited. Notice given in any manner other than
by deposit in the mail provided for herein shall be effective only if and when
received by the party to be notified. Rejection or other refusal to accept, or
the inability to deliver because of changed address of which no notice was given
pursuant to this Section 19.1 shall be deemed to be receipt of the notice sent.
For purposes of notice, the addresses of the parties shall, until changed as
herein provided, be as set forth on the cover page of this Lease. In addition
Landlord shall use its good faith efforts to send copies of default notices to
Gray Cary Ware & Freidenrich LLP, 400 Hamilton Avenue, Palo Alto, California
94301; Attn: Daniel K. Seubert; provided, however, failure to send such notice
shall not render Landlord's notice ineffective. However, the parties hereto and
their respective heirs, successors, legal representatives and assigns shall have
the right from time to time and at any time to change their respective addresses
and each shall have the right to specify as its address any other address within
the continental United States, by at least fifteen (15) days' written notice to
the other party; provided, however, except as set forth in Section 16.7 hereof,
if at any one time more than one person or party owns an interest in the Demised
Premises, nevertheless such persons or parties may not designate more than one
place and address to receive notice, pursuant to the terms hereof
ARTICLE XX -- MISCELLANEOUS PROVISIONS REGARDING LEASE
SECTION 20.1 GOVERNING LAW.
This Lease shall be governed by the laws of the State of Texas.
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SECTION 20.2 REPRESENTATION BY CORPORATE TENANT.
In the event Tenant hereunder shall be a corporation, the
parties executing this Lease on behalf of Tenant hereby covenant and warrant
that Tenant is a duly qualified corporation authorized to do business in the
State of Texas, and Tenant covenants and warrants that all franchise and
corporate taxes have been paid to date and that all future forms, reports, fees
and other documents necessary to comply with applicable laws will be filed when
due.
SECTION 20.3 No ACCORD AND SATISFACTION.
No payment by Tenant, or acceptance by Landlord of a lesser
amount than shall be due from Tenant to Landlord, shall be treated otherwise
than as a payment on account. The acceptance by Landlord of a check for a lesser
amount with an endorsement or statement thereon, or upon any letter accompanying
such check, that such lesser amount is payment in full, shall be given no
effect, and Landlord may accept such check without prejudice to any other rights
or remedies which Landlord may have against Tenant.
SECTION 20.4 HEADINGS AND INDEX.
The paragraph headings and the index to this Lease are for
convenience and reference only, and the words contained therein shall in no way
be held to explain, modify, amplify or aid in the interpretation, construction
or meaning of the provisions of this Lease.
SECTION 20.5 PARTIAL INVALIDITY.
If any term or provision of this Lease, or the application
thereof to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such term or
provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and be enforced to the fullest extent
permitted by law.
SECTION 20.6 SUCCESSORS AND ASSIGNS.
Except as herein otherwise expressly provided, the terms hereof
shall be binding upon and shall inure to the benefit of the heirs, executor,
administrators, successors and assigns, respectively, of the Landlord and the
Tenant. Each term and EACH provision of this Lease to be
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performed by the Tenant shall be construed to be both a covenant and a
condition. The above reference to successors and assigns of Tenant is not
intended to constitute a consent to assignment by Tenant, but has reference only
to permitted assignments in accordance with Section 5.4 hereof.
SECTION 20.7 WHEN LEASE BECOMES BINDING.
The submission of this document for examination and negotiation
does not constitute an offer to lease, or a reservation of, or option for, the
Demised Premises, and this document shall become effective and binding only upon
the execution and delivery hereof by both Landlord and Tenant. All negotiations,
considerations, representations, inducements, oral agreements and understandings
between Landlord and Tenant are merged and incorporated herein and this Lease
may be amended, modified or altered only by written agreement signed by both
Landlord and Tenant. This Lease constitutes the only agreement between the
parties hereto, and there are no other representations or warranties between the
parties. No employee or agent of Landlord shall have the right or authority to
amend, modify or alter any of the provisions of this Lease.
SECTION 20.8 OTHER LEASES AND TENANTS.
Landlord reserves the absolute right to effect such other
tenancies in the Shopping Center or the Complex as Landlord, in the exercise of
its sole business judgment, shall determine to best promote the interest of the
Shopping Center or the Complex. Notwithstanding anything in this Lease to the
contrary, Tenant does not rely on the fact, nor does Landlord represent, that
any specific tenant or number of tenants shall during the term of this Lease
occupy any space or any particular space in the Shopping Center or any other
premises within the Shopping Center Site or the Complex; nor does Landlord
represent or warrant that any particular space will be used for any particular
purpose during the term of this Lease.
In the event Landlord in the exercise of its sole discretion
shall effect other tenancies in the Shopping Center or the Complex, Tenant shall
not be deemed to be a beneficiary of any agreement between Landlord and such
other tenants. Tenant shall have no right whatsoever, either express or implied,
under any such agreements between Landlord and such
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other tenants or under any of the terms or provisions of such agreements; and
Tenant shall have no right to enforce any such agreements, terms or provisions
on behalf of itself or any other party including Landlord.
SECTION 20.9 ATTORNEYS' FEES.
If, on account of a default or breach by Landlord or Tenant in
Landlord's or Tenant's obligation under the terms of this Lease after notice and
opportunity to cure as required under Sections 17.4 and 18.1 hereof, it shall be
necessary for Landlord or Tenant to employ an attorney to enforce or defend any
of Landlord's or Tenant's rights or remedies hereunder, then, in such event, any
reasonable amounts incurred by Landlord or Tenant as attorneys' fees shall be
paid by the party in default.
SECTION 20.10 THIRD PARTY CONTRACTS.
In the event Landlord shall enter into any contract with third
parties in any way connected to the Complex, including specifically without
limiting the generality of the foregoing, the provision of security services,
Tenant shall not be deemed to be a beneficiary of any such contract. Tenant
shall have no right whatsoever, either express or implied, under any such
contract or under any of the terms or provisions of such contract; and Tenant
shall have no right to enforce any such contract, term or provision on behalf of
itself or any other party including Landlord.
SECTION 20.11 NO BROKER.
Tenant and Landlord warrant and represent that no broker was
involved on its behalf in negotiating or consummating this Lease, and Tenant and
Landlord agree to indemnify and hold harmless the other from and against any and
all claims for brokerage commissions arising out of the breach of this
representation.
SECTION 20.12 SECURITY DEPOSIT.
Intentionally deleted.
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SECTION 20.13 TIME OF THE ESSENCE.
Time is of the essence in the performance of each party's
obligations under this Lease and all performance due dates, time schedules, and
conditions precedent to exercising a right shall be strictly adhered to without
delay except where otherwise expressly provided.
ARTICLE XXI -- LEASE SUPERIOR OR SUBORDINATE TO MORTGAGES
SECTION 21.1 LEASE SUPERIOR OR SUBORDINATE.
Tenant agrees with Landlord and with any holder of any first
mortgage and/or beneficiary of any first mortgage and/or deed of trust now or
hereafter having a lien on the Shopping Center or any portion thereof including
the Demised Premises ("Landlord's Mortgagee") that any such Landlord's Mortgagee
shall have the right at any time to elect, by a notice in writing given to
Tenant, to make this Lease superior to such mortgage and/or deed of trust and,
upon the giving of such notice to Tenant, this Lease shall be deemed prior and
superior to such mortgage and/or deed of trust in respect of which said notice
was given; or any such Landlord's Mortgagee may, by like notice, make this Lease
subordinate to such mortgage and/or deed of trust. In the event of either such
election, and upon notification by Landlord's Mortgagee to Tenant to that
effect, the rights and interests of Tenant under this Lease shall be deemed to
be subordinate to, or to have priority over, as the case may be, the lien of
said first mortgage or first deed of trust, whether this Lease is dated prior to
or subsequent to the date of said mortgage or deed of trust subject to the
provisions of Section 17.1, provided that Tenant's use and quiet enjoyment of
the Demised Premises are not disturbed thereby and this Lease continues in full
force and effect for so long as Tenant is not in default hereunder. Tenant shall
execute and deliver whatever instruments may be required for such purposes, if
any, and in the event Tenant fails so to do within ten (10) days after demand in
writing, Tenant does hereby make, constitute and irrevocably appoint Landlord as
its attorney in fact and in its name, place and stead so to do.
SECTION 21.2 ATTORNMENT BY TENANT.
In the event any proceedings are brought for foreclosure, or in
the event of the exercise of the power of sale, under any mortgage or deed of
trust made by Landlord covering the
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Demised Premises or in the event of conveyance in lieu of foreclosure, or in the
event of termination of any ground lease of premises of which the Demised
Premises forms a part; further, provided Tenant is not in default hereunder
beyond any applicable notice and cure period, Tenant's quiet possession as set
forth in Section 17.1 shall not be disturbed, Tenant shall attorn to the
purchaser (including Landlord's Mortgagee) upon any such foreclosure, sale or
conveyance in lieu of foreclosure or to any fee owner in the event of
termination of such ground lease and recognize such purchaser or fee owner as
Tenant's landlord under this Lease.
ARTICLE XXII -- ADDITIONAL TERMS
SECTION 22.1 "GALLERIA" SERVICEMARK.
The Tenant shall not use the term "Galleria" as a part of any
trade name, corporate name, or other business name, as a part of any trademark
or serviceman, or for any other purpose. However, the Tenant may indicate in a
truthful descriptive statement, during the term of this Lease, the fact that the
Tenant's shop is located in the Galleria. The Tenant shall not use, register, or
apply for the registration of any name or mark which incorporates the term
"Galleria" or any other word having a similar sound or appearance. If the
Tenant, in violation of this Section, uses the term "Galleria" in any way other
than in a truthful descriptive statement regarding the location of Tenant's shop
in the Galleria, any such use of the term "Galleria" shall inure to the benefit
of the Landlord.
The Tenant recognizes the value of the "Galleria" mark to the
Landlord, and the Tenant acknowledges that the "Galleria" mark and its
associated goodwill belong exclusively to the Landlord. The Tenant acknowledges
the validity of the "Galleria" mark. The Tenant shall not at any time represent
or claim that the Tenant has any ownership interest in the "Galleria" mark, and
the Tenant shall not do or cause to be done, or assist others in doing or
causing to be done, any act or thing contesting or in any way impairing the
Landlord's rights to the "Galleria" mark.
SECTION 22.2 CONSTRUCTION ALLOWANCE.
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Provided Tenant is not in default under the terms of this lease,
Landlord shall provide Tenant with a Construction Allowance equal to [***] to
construct Tenant's Work (as described in Exhibit C attached hereto) in the
Demised Premises, but such Construction Allowance paid by Landlord to Tenant
shall in no event exceed [***] per square foot of floor area within the Demised
Premises. The Construction Allowance shall be paid as follows:
(a) Fifty percent (50%) within thirty (30) days after Tenant has
opened for business within the Demised Premises and;
(i) Tenant furnishes a certificate signed by an officer
certifying that all of Tenant's Work has been completed
in accordance with the plans approved by Landlord for
Tenant's Work and has been paid for in full;
(ii) Tenant's submission of evidence that any and all liens
therefor that have been or may be filed have been
satisfied of record or waived; and
(iii) Tenant provides evidence reasonably satisfactory to
Landlord that the actual cost to construct Tenant's Work
in the Demised Premises exceeded [***] per square foot
of floor area within the Demised Premises. Landlord
agrees that a certified statement from Tenant's general
contractor that the cost of Tenant's Work exceeded [***]
per square foot of floor area within the Demised
Premises shall be deemed to satisfy the requirements of
this subc1ause (iii).
(b) Twenty-five percent (25%) within nine (9) months after Tenant
has opened for business within the Demised Premises and;
(c) Twenty-five percent (25%) within eighteen (18) months after
Tenant has opened for business within the Demised Premises.
SECTION 22.3. REPAYMENT OF CONSTRUCTION ALLOWANCE.
Reference is herein made to Section 22.2 hereinabove. Tenant and
Landlord hereby agree that should Tenant default in its obligations under this
Lease subsequent to the Commencement Date but prior to the expiration date
hereof, and should the Lease, or Tenant's right of possession thereunder, be
terminated as a result of such uncured default in accordance with the terms of
this Lease, then Tenant shall repay to Landlord, in addition to all other rights
and remedies of Landlord, within thirty (30) days after any such termination the
unamortized portion (the "Construction Allowance Balance") of the Construction
Allowance, amortized on a straight-line basis over the term of the Lease.
*** Confidential treatment requested.
69
<PAGE> 77
SECTION 22.4 SATELLITE DISH.
Tenant shall have the right to enter into a license agreement with
Landlord for the installation of a satellite dish substantially in the same
form as is attached hereto as Exhibit "S".
This Lease is hereby executed and delivered in multiple original
counterparts, each of which shall have the force and effect of an original,
effective as of the date and year first above written on the first page of this
Lease.
<TABLE>
<S> <C>
"LANDLORD" DALLAS GALLERIA LIMITED,
A Texas Limited Partnership
By: HDG, Limited
A Texas Limited Partnership
General Partner
By: Hines Consolidated Investments, Inc.
A Delaware Corporation
General Partner
By: [ILLEGIBLE]
--------------------------------
[ILLEGIBLE]
--------------------------------
Vice President
"TENANT" LBE TECHNOLOGIES, INC.
D/B/A NASCAR SILICON MOTOR SPEEDWAY
By: JANET L. WOODS
--------------------------------
Janet L. Woods
--------------------------------
(Name Printed) (Title)
</TABLE>
70
<PAGE> 78
EXHIBIT A
DALLAS GALLERIA "NASCAR SILICON MOTOR SPEEDWAY"
<PAGE> 79
EXHIBIT A-1
GALLERIA
<PAGE> 80
EXHIBIT A-2
DALLAS GALLERIA
SHOPPING CENTER SITE
BEING a tract of land situated in the Joe Badgley Survey, Abstract No. 76, the
Mary Brown Survey, Abstract No. 159, and the Elisha Fike Survey, Abstract No.
478, City Block Nos. 7001 and 7002, City of Dallas, Dallas County, Texas and
being more particularly described by metes and bounds as follows:
COMMENCING at a cross-cut in concrete paving at the intersection of the South
line of Alpha Road (a 64' R.O.W.) and the West line of Noel Road (a 55' R.O.W.);
thence North 89 deg. 55 min. 37 sec. West a distance of 272.33 feet along said
South line of Alpha Road to the POINT OF BEGINNING;
THENCE South 00 deg. 00 min. 16 sec. West a distance of 2138.50 feet to a point
for corner; said point being in the North line of L.B.J. Freeway (I.H. 635);
THENCE the following bearings and distances along the said North line of L.B.J.
Freeway (I.H. 635); North 53 deg. 26 min. 12 sec. West a distance of 332.26 feet
to a monument for an angle point; thence North 66 deg. 02 min. 45 sec. West a
distance of 205.07 feet to a monument for a corner on the Northeast line of
Dallas Power & Light Co., a 100 foot R.O.W.;
THENCE North 17 deg. 03 min. 45 sec. West a distance of 570.77 feet along the
said Northeast line of Dallas Power & Light Co. R.O.W. to an iron rod for a
corner on the East line of Dallas Parkway (a 100' R.O.W.);
THENCE North 06 deg. 16 min. 12 sec. East a distance of 42.30 feet along the
said East line of Dallas Parkway to a point for corner;
THENCE South 89 deg. 59 min. 44 sec. East a distance of 200.03 feet to a point
for comer;
THENCE North 00 deg. 00 min. 16 sec. East a distance of 20.83 feet to a point
for corner;
THENCE North 44 deg. 59 min. 44 sec. East a distance of 111.96 feet to a point
for corner;
THENCE South 89 deg. 59 min. 44 sec. East a distance of 51.00 feet to a point
for corner;
THENCE North 00 deg. 00 min. 16 sec. East a distance of 282.67 feet to a point
for corner;
THENCE North 89 deg. 59 min. 44 sec. West a distance of 51.00 feet to a point
for corner;
THENCE North 44 deg. 59 min. 44 sec. West a distance of 111.96 feet to a point
for corner;
THENCE North 00 deg. 00 min. 16 sec. East a distance of 20.83 feet to a point
for corner;
THENCE North 89 deg. 59 min. 44 sec. West a distance of 260.39 feet to a point
for corner; said point being in the East line of Dallas Parkway;
THENCE North 17 deg. 01 min. 20 sec. West a distance of 519.01 feet along the
said East line of Dallas Parkway to an iron rod for the beginning of a curve to
the right having a central angle of 14 deg. 56 min. 17 sec. and a radius of
1095.92 feet;
A-2 (1)
<PAGE> 81
THENCE along said curve to the right and along said East line of Dallas Parkway
a distance of 285.73 feet to a cross cut in concrete paving on the said South
line of Alpha Road;
THENCE South 89 deg. 55 min. 37 sec. East a distance of 551.83 feet to a point
for corner;
THENCE South 00 deg. 00 min. 16 sec. West a distance of 166.71 feet to a point
for corner;
THENCE South 44 deg. 59 min. 44 sec. East a distance of 387.76 feet to a point
for corner;
THENCE North 45 deg. 00 min. 16 sec. East a distance of 20.00 feet to a point
for corner;
THENCE North 00 deg. 00 min. 16 sec. East a distance of 426.41 feet to a point
for corner, said point being in the South line of Alpha Road;
THENCE South 89 deg. 55 min. 37 sec. East a distance of 40.00 feet along said
South line of Alpha Road to the POINT OF BEGINNING and containing 24.563 acres
of land.
PLUS
A tract of land situated in the Joe Badgley Survey, Abstract No. 76, City Block
No. 7002, City of Dallas, Dallas County, Texas and being part of the HGD
Addition as recorded in Volume 81141, Page 2666 of the Deed Records of Dallas
County, Texas and being more particularly described as follows:
COMMENCING at a cross cut in concrete paving at the intersection of the South
line of Alpha Road (a 64' R.O.W.) and the West line of Noel Road (a 55' R.O.W.);
thence South 00 deg. 02 min. 30 sec. East a distance of 765.75 feet to the POINT
OF BEGINNING;
THENCE South 00 deg. 02 min. 30 sec. East a distance of 411.50 feet to a point
for corner;
THENCE North 89 deg. 59 min. 44 sec. West a distance of 273.28 feet to a point
for corner;
THENCE North 00 deg. 00 min. 16 sec. East a distance of 411.50 feet to a point
for corner;
THENCE South 89 deg. 59 min. 44 sec. East a distance of 272.95 feet to the POINT
OF BEGINNING and containing 112,385 square feet or 2.5800 acres of land.
A-2 (2)
<PAGE> 82
EXHIBIT A-3
DALLAS GALLERIA
COMPLEX SITE
BEING a tract of land situated in the Joe Badgley Survey, Abstract No. 76, the
Mary Brown Survey, Abstract No. 159, and the Elisha Fike Survey, Abstract No.
478, City Block Nos. 7001 and 7002, City of Dallas, Dallas County, Texas and
being more particularly described by metes and bounds as follows:
COMMENCING at a cross cut in concrete paving at the intersection of the South
line of Alpha Road (a 64' R.O.W.) and the West line of Noel Road (a 55' R.O.W.);
thence North 89 deg. 55 min. 37 sec. West a distance of 272.33 feet along said
South line of Alpha Road to the POINT OF BEGINNING;
THENCE south 00 deg. 00 min. 16 sec. West a distance of 1171.5 8 feet to a
point for corner;
THENCE South 89 deg. 59 min. 44 sec. East a distance of 273.27 feet to a point
for corner, said point being in the West line of Noel Road;
THENCE South 00 deg. 02 min. 30 sec. East a distance of 87.31 feet along the
said West line of Noel Road to an iron pipe for angle point;
THENCE South 00 deg. 03 min. 41 sec. West a distance of 112.77 feet along the
said West line of Noel Road to a point for corner;
THENCE North 89 deg. 59 min. 44 sec. West a distance of 145.90 feet to a point
for corner;
THENCE South 00 deg. 00 min. 16 sec. West a distance of 483.33 feet to a point
for corner;
THENCE North 89 deg. 59 min. 44 sec. West a distance of 127.33 feet to a point
for corner;
THENCE South 00 deg. 00 min. 16 sec. West a distance of 283.50 feet to a point
for corner; said point being in the North line of L.B.J. Freeway (I.H. 635);
THENCE the following bearings and distances along the said North line of L.B.J.
Freeway (I.H. 635); North 53 deg. 26 min. 12 sec. West a distance of 332.26 feet
to a monument for an angle point; thence North 66 deg. 02 min. 45 sec. West a
distance of 205.07 feet to a monument for a corner on the Northeast line of
Dallas Power & Light Co., a 100-foot R.O.W.;
THENCE North 17 deg. 03 min. 45 sec. West a distance of 570.77 feet along the
said Northeast line of Dallas Power & Light Co. R.O.W. to an iron rod for a
corner on the East line of Dallas Parkway (a 100' R.O.W.);
THENCE North 06 deg. 16 min. 12 sec. East a distance of 51.67 feet along the
said East line of Dallas Parkway to an iron rod for corner;
THENCE North 89 deg. 49 min. 46 sec. West a distance of 3.66 feet along the said
East line of Dallas Parkway to an iron rod for corner;
THENCE North 05 deg. 32 min. 1 1 sec. East a distance of 64.04 feet along the
said East line of Dallas Parkway to an iron rod for the beginning of a curve to
the left having a central angle of 22 deg. 36 min. 00 sec. and a radius of
766.20 feet;
A-3 (1)
<PAGE> 83
THENCE along said curve to the left and along said East line of Dallas Parkway a
distance of 302.22 feet to the end of said curve, an iron rod for point;
THENCE North 17 deg. 0 1 min. 20 sec. West a distance of 646.25 feet along the
said East line of Dallas Parkway to AN iron rod for the beginning of a curve to
the right having a central angle of 14 deg. 56 min. 17 sec. and a radius of
1095.92 feet;
THENCE along said curve to the right and along said East line of Dallas Parkway
a distance of 285.73 feet to a cross cut in concrete paving on the said South
line of Alpha Road;
THENCE South 89 deg. 55 min. 37 sec. East a distance of 551.83 feet along the
said South line of Alpha Road to a point for corner;
THENCE South 00 deg. 00 min. 16 sec. West a distance of 166.71 feet to a point
for corner;
THENCE South 44 deg. 59 min. 44 sec. East a distance of 387.76 feet to a point
for corner;
THENCE North 45 deg. 00 min. 16 sec. East a distance of 20.00 feet to a point
for corner;
THENCE North 00 deg. 00 min. 16 sec. East a distance of 426.41 feet to a point
for corner; said point being in the South line of Alpha Road;
THENCE South 89 deg. 55 min. 37 sec. East a distance of 40.00 feet along said
South line of Alpha Road to the POINT OF BEGINNING and containing 30.554 acres
of land.
PLUS
A tract of land situated in the Joe Badgley Survey, Abstract No. 76, City Block
No. 7002, City of Dallas, Dallas County, Texas and also being part of the HGD
Addition as recorded in Volume 81141, Page 2666 of the Deed Records of Dallas
County, Texas and being more particularly described as follows:
COMMENCING at a cross cut in pavement at the intersection of the South line of
Alpha Road (a 64' R.O.W.) and the West line of Noel Road (a 55' R.O.W.), said
cross cut also being the Northeast corner of said HGD Addition; thence South 00
deg. 02 min. 30 sec. East a distance of 571.50 feet along said West line of Noel
Road to the POINT OF BEGINNING.
THENCE continuing along said West line of Noel Road South 00 deg. 02 min. 30
sec. East a distance of 194.25 feet to a point for corner;
THENCE North 89 deg. 59 min. 44 sec. West a distance of 272.95, feet to a point
for corner;
THENCE North 00 deg. 00 min. 16 sec. East a distance of 644.50 feet to a point
for corner;
THENCE South 89 deg. 59 min. 44 sec. East a distance of 127.42 feet to a point
for corner;
THENCE South 00 deg. 00 min. 16 sec. West a distance of 450.25 feet to a point
for corner;
THENCE South 89 deg. 59 min. 44 sec. East a distance of 145.37 feet to the POINT
OF BEGINNING and containing 110,376 square feet or 2,5339 acres of land.
A-3 (2)
<PAGE> 84
PLUS
A tract of land situated in the Joe Badgley Survey, Abstract No. 76, City Block
No. 7001, City of Dallas, Dallas County, Texas and being part of the HGD
Addition as recorded in Volume 81141, Page 2666 of the Deed Records of Dallas
County, Texas and being More particularly described as follows:
BEGINNING at an "X" cut in concrete pavement at the Southeast corner of said HGD
Addition, said point also being the intersection of the North right-of-way line
of L.B.J. Freeway (I.H. 635) and the West right-of-way line of Noel Road (a
variable width R.O.W.);
THENCE North 65 deg. 05 min. 00 sec. West a distance of 240.27 feet along the
North line of L.B.J. Freeway (I.H. 635) to an iron rod for. corner;
THENCE continuing along said North line of LBJ Freeway North 53 deg. 26 min. 12
sec. West a distance of 67.74 feet to an iron rod for corner;
THENCE North 00 deg. 00 min. 16 sec. East a distance of 283.50 feet to and iron
rod for corner; for corner;
THENCE South 89 deg. 59 min. 44 sec. East a distance of 127.33 feet to an iron
rod for corner;
THENCE North 00 deg. 00 min. 16 sec. East a distance of 483.33 feet; to an iron
rod for corner; THENCE South 89 deg. 59 min. 44 sec. East a distance of 145.90
feet to an "X" cut in concrete pavement, said point being in the West line of
Noel Road;
THENCE along said West line of Noel Road South 00 deg. 03 min. 41 sec. West a
distance of 908.40 feet to the POINT OF BEGINNING and containing 168,613 square
feet or 3.871 0 acres of land.
PLUS
A tract of land situated in the Joe Badgley Survey, Abstract No. 76, City Block
No. 7002, City of Dallas, Dallas County, Texas and being part of the HGD
Addition as recorded in Volume 81141, Page 2666 of the Deed Records of Dallas
County, Texas and being more particularly described as follows:
COMMENCING at a cross cut in concrete paving at the intersection of the South
line of Alpha Road (a 64' R.O.W.) and the West line of Noel Road (a 55' R.O.W.);
thence South 00 deg. 02 min. 30 sec. East a distance of 765.75 feet to the POINT
OF BEGINNING;
THENCE South 00 deg. 02 min. 30 sec. East a distance of 411.50 feet to a point
for corner;
THENCE North 89 deg. 59 Min. 44 sec. West a distance of 273.28 feet to a point
for corner;
THENCE North 00 deg. 00 min. 16 sec. East a distance of 411.50 feet to a point
for corner;
THENCE South 89 deg. 59 min. 44 sec. East a distance of 272.95 feet to the POINT
OF BEGINNING and containing 112,385 square feet or 2.5800 acres of land.
A-3 (3)
<PAGE> 85
EXHIBIT A-4
[COMPLEX SITE PLAN]
A-3 (4)
<PAGE> 86
License, provided Licensee has paid to Licensor all of its obligations payable
under this License and further provided that Licensee has given Licensor written
notice of Licensee's forwarding address.
9. COMPLIANCE WITH ALL APPLICABLE LAWS.
Throughout the term, Licensee shall obtain and maintain, at its sole
cost and expense, all approvals, permits or licenses required by any
governmental authority which are necessary for Licensee's permitted use of the
Premises and occupancy of the Premises; further, Licensee shall, at its sole
cost and expense, at all times during the term hereof comply with all applicable
laws, ordinances, rules, regulations and requirements of any governmental
authority having jurisdiction over Licensee's business operations at, use and/or
occupancy of the Premises.
10. LICENSEE'S RELEASE, WAIVER AND INDEMNITY.
Notwithstanding anything to the contrary contained in this License, at
all times from and after the date that possession of the Premises is delivered
to Licensee and continuing throughout the term, Licensee shall indemnify,
defend, and hold harmless Licensor and its agents, employees, and partners and
the partners' officers, directors, agents, and employees (the "Indemnified
Parties") from and against and hereby releases and waives all suits, demands,
liabilities, claims, causes of action, costs, losses, damages and expenses
("Claims") (i) arising from or caused in any way by any act, omission, or
negligence of Licensee or its officers, agents, employees, servants,
contractors, or licensees or (ii) arising out of any accident within, or damage
to the property of any person (including, without limitation, Licensee and its
officers, agents, employees, servants, contractors, or licensees) located within
tile Premises, or injury to or death of any person in or upon the Premises, or
Licensee's use of the Premises, whether caused in whole or in part by the acts,
omissions, negligence or strict liability of an Indemnified Party, and (iii)
arising out of any violation of any applicable law. THE RELEASE, WAIVER
INDEMNITY SET FORTH IN CLAUSE (II) ABOVE SHALL APPLY REGARDLESS OF CAUSATION,
INCLUDING, WITHOUT LIMITATION, THE ACTS, OMISSIONS OR NEGLIGENCE OF AN
INDEMNIFIED PARTY, (WHETHER SUCH NEGLIGENCE IS SOLE, JOINT, COMPARATIVE,
CONTRIBUTORY, OR CONCURRENT), OR BASED ON ANY THEORY OF STRICT LIABILITY,
INCLUDING, WITHOUT LIMITATION, PRODUCTS LIABILITY OR PREMISES LIABILITY,-
(WHETHER FOUNDED IN WHOLE OR IN PART ON NEGLIGENCE OR STRICT LIABILITY) BUT
EXCLUDING LICENSOR'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. The foregoing
indemnities shall include attorneys' fees, court costs, investigation costs, and
all other costs and expenses incurred by an Indemnified Party from tile first
notice that any Claim or demand has been made or may be made, and shall not be
limited in any way by any limitation on the amount or type of damages,
compensation, or benefits payable under
3
<PAGE> 87
applicable worker's compensation acts, disability benefit acts, or other
employee benefit acts. The provisions of this paragraph shall survive the
expiration or termination of this License with respect to any Claim occurring
before such expiration or termination.
11. INSURANCE.
Licensee agrees to maintain in full force during the term of this
License a policy or policies of comprehensive general liability insurance in the
amount of at least [***] combined single limit for bodily injury (including
death) and/or property damage in any one occurrence. All insurance policies
required hereunder shall name Licensor as an additional insured, contain
contractual liability endorsements covering the agreement of Licensee to
indemnify the Indemnified Parties pursuant to the terms and provisions of this
License, shall be primary to any insurance carried by Licensor or an Indemnified
Party, and shall contain a waiver of subrogation provision covering the
releases, waivers and indemnities of Licensee referred to in the following
sentence. Licensee hereby further agrees that its insurance company shall have
no right of subrogation against Licensor and/or the Indemnified Parties on
account of any Claims for which Licensee has released or waived or indemnified
the Indemnified Parties for under this License. Licensee shall furnish Licensor
with a certificate of such insurance coverage prior to the commencement of this
License.
Licensee hereby agrees to use and occupy the Premises at Licensee's own
risk and that the Indemnified Parties shall not be liable for and Licensee
hereby releases and waives all Claims against the Indemnified Parties for any
loss of or damage to Licensee's property (including inventory) caused in any
manner whatsoever, including, without limitation, any loss or damage caused by
the negligence of an Indemnified Party, whether or not such negligence is sole,
joint, comparative, contributory or concurrent. Licensee shall insure its
property (including inventory) against damage or loss by any cause, including
theft.
12. NO PERSONAL LIABILITY OF AN INDEMNIFIED PARTY.
Licensee specifically agrees to look solely to an Indemnified Party's
interest in the Shopping Center for the recovery of any judgment from an
Indemnified Party, and that in no event shall an Indemnified Party ever be
personally liable for any such judgment.
13. NO INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES.
In no event shall an Indemnified Party or the interest of an Indemnified
Party ever be liable to Licensee or subject to execution by Licensee for any
indirect, special or consequential damages under the provisions of this License
or otherwise.
*** Confidential treatment requested.
4
<PAGE> 88
GALLERIA
Dallas, Texas
EXHIBIT B
DESCRIPTION OF LANDLORD'S WORK
The following work ("Landlord's Work") shall be, or has been, done for or by the
Landlord except as otherwise specified:
A. STRUCTURE
1. Frame: A structural frame of concrete and/or masonry
construction, or any combination of these, with a mall designed
to carry a live load of 100 pounds per square foot in accordance
with applicable building codes and a floor and roof designed to
carry an air handling unit of 1500 lbs. per tenant (any loads
exceeding 1500 lbs. must be reviewed by Landlord's structural
engineer); provided, however, roof top units are not permitted.
2. Roof, Deck of structure above.
3. Exterior Walls: Exterior walls shall be of non-combustible
construction and of finish as designed by Landlord.
4. Partitions Separating Leased Premises: The partition shall be
centered upon the lease line between demised premises and shall
be constructed of steel studs with one layer of 5/8" gypboard
taped and floated on either side of the steel stud. The walls
will extend from the floor to the underside of the deck above
and will be constructed in a manner which will provide a 1 hour
U.L. fire rating as per Dallas City Code (the "Code").
5. Floors: Floors shall be of metal-trowel finished topping over
structural pre-cast concrete or poured-in-place concrete.
B. COMMON AREAS AND SERVICES
1. Malls: The public areas of the Mall Building shall be lighted,
surfaced, heated and cooled.
2. Vertical Transportation: Landlord shall provide any vertical
transportation necessary in Landlord's judgment by means of
stairs, escalators, or elevators as are appropriate in
Landlord's judgment.
3. Service Corridors: Service corridors, as Landlord shall
determine, shall be provided.
C. UTILITIES
1. Electrical Service: The Landlord shall provide electrical
service (feeders) as follows:
a. Wire and conduit from T. U. Electric Co. function box in
meter room terminating into wireway mounted on the
interior side of rear wall of
B (1)
<PAGE> 89
Demised Premises. Tenant's electrical installation
begins at this point, as shown on Exhibit E.
b. Service Description: 460 volts/ 3 Phase/ 5 wire.
C. Service Size and Capacity: Size and capacity of
electrical service shall be provided in accordance with
Tenant's requirements up to the maximum capacities
listed below. Any additional service capacity required
shall be at Tenant's expense and installed by Landlord:
<TABLE>
<CAPTION>
Floor Area Capacity Capacity
---------- -------- --------
<S> <C> <C>
(sq. ft.) (amperes) (amp, cont. duty)
up to 7,000 60 48
over 7,000 to 12,000 100 80
over 12,000 to 25,000 200 160
</TABLE>
d. Landlord's and Tenant's electrical construction criteria
are shown on Exhibit E attached hereto.
2. Water and Sanitary Sewer Service:
Water, sewer, and plumbing vent piping are available within the
structure of which the Demised Premises are a part, at chases located at
points within the Galleria such that the distance of connecting from the
rear wall of the Demised Premises is a maximum of 60 feet in a
horizontal direction. This piping is available for Tenant's use and the
Tenant may make connection from the Demised Premises to these lines at
the Tenant's expense only after receiving the Landlord's written
approval.
3. Heating, Ventilating and Air Conditioning:
The Tenant shall contract with a Landlord-approved mechanical engineer
to design the Tenant's HVAC system at Tenant's expense. Upon receiving
the design of the Tenant's HVAC system from Tenant, the Landlord shall
review and either approve in writing or return to Tenant for
modifications so as to conform to Landlord's design criteria set forth
in Exhibit C-1. Upon approval by Landlord, Landlord will authorize
Tenant to have constructed at Tenant's cost a heating, ventilating and
air conditioning system within the Tenant's Demised Premises by a
Landlord-approved contractor. Electrical connection for such system to
be provided by Tenant. Landlord shall provide a central heating and
cooling plant from which hot and chilled water lines shall be run to a
point at least within sixty (60) feet from the Demised Premises
according to the specifications set forth in Exhibit C-1. Landlord may
require Tenant to install chilled water and/or hot water metering
devices on such lines. These meters will be required for food service
operations and restaurants. For all other tenants Landlord will have
option either to require a meter or to calculate Tenant's HVAC usage in
accordance with the provisions of Exhibit D hereof.
4. Gas: Gas service shall not be allowed except by special prior written
approval of the Landlord. In the event Landlord permits Tenant to
install gas service in and to the Demised Premises, installation of pipe
lines, meters, valves, etc., shall be by the Tenant's contractor at the
Tenant's expense. If Landlord permits Tenant to use gas service, Tenant
shall have a gas leak detector installed at Tenant's expense. Such gas
leak detector shall have a loud audible alarm, connected to the Mall
Building's intercom system and capable of being heard in the Common Area
of the mall. This detector shall be located and installed in accordance
with the manufacturer's specifications.
B (2)
<PAGE> 90
D. FIRE PROTECTION
The Landlord will provide fire protection at the mall public areas.
Prior to Tenant's Work the Landlord will install a fire sprinkler grid
distribution system inside the Tenant's Demised Premises at Tenant's
cost. This sprinkler grid distribution system will have the capacity to
provide a maximum sprinkler coverage of one head per 100 square feet.
The Tenant shall install in the Demised Premises at Tenant's cost, and
with a contractor and materials, all of which are subject to Landlord's
prior approval, a working finished fire protection system (including
fire hose cabinets, additional sprinkler heads, and relocation of
sprinkler heads, if required) which shall be compatible with Landlord's
system and shall be in accordance with applicable codes.
E. GENERAL
Landlord shall have the right to run roof drainage lines, utility lines,
pipes, vertical chases, conduits, duct work and/or component parts of
all mechanical and electrical systems, where necessary, through attic
space, alongside columns or other parts of the Demised Premises, to
repair, alter, replace or remove the same, and to require Tenant to
install and maintain proper access panels thereto.
1. Utility Services - Water and Electricity:
Landlord agrees to cause the necessary mains, conduits and other
facilities to be available to supply domestic cold water and
electricity in accordance with and subject to Section C of
Exhibit B and Exhibit E. Tenant shall pay for all water and
electricity used in the Demised Premises and for meters, meter
installation costs, and for all water connections. If Landlord
shall elect to supply any one or more or all of said services,
Tenant shall purchase the use of such services as are tendered
by Landlord and shall pay the rates (including any established
minimum charges) established by Landlord at Landlord's option.
If such services are furnished, the rate charged for such
services shall not be more than those which would be charged to
Tenant by the public utility furnishing such services in the
area if separately metered to Tenant. The charges for such
services as are so furnished shall be additional rent due on the
first day of the calendar month following rendition of a bill
therefor. Landlord may discontinue furnishing such services if
the same are not so paid for, upon not less than fifteen (15)
days written notice, and no such discontinuation shall be deemed
an eviction or render Landlord liable to Tenant for damages or
relieve Tenant from performance of its obligations hereunder. If
Landlord shall elect to furnish one or more of such services,
from time to time, Landlord shall not be liable to Tenant IN
damages or otherwise if any one or more of said services is
interrupted or terminated because of necessary repairs,
installation, improvements or any cause beyond the control of
Landlord. Landlord may cease to furnish any one or more of said
services without responsibility to Tenant except to connect the
service facilities with such other sources of supply as may be
available for the services so discontinued. If the Landlord
permits a Tenant not to install a water meter for the Tenant's
use, the Tenant shall pay a monthly minimum charge equal to the
City utility company's standard monthly rate as changed from
time to time. If Tenant wants cooled drinking water, then
Tenant, at its own cost and expense and with its own equipment,
shall install a water cooler to meet Tenant's requirements in
accordance with Exhibit C and the Design Criteria set forth in
Exhibit C-1.
2. Public Toilets and Washroom Facilities:
The Landlord shall provide public toilet and washroom facilities
necessary in Landlord's judgment.
B (3)
<PAGE> 91
F. REVISION COSTS
The design for some portions of Landlord's Work, as specified in this
and other exhibits to the Lease may be derived from Tenant's
Construction Drawings as submitted to and approved by the Landlord, in
accordance with Section IV of Exhibit C-2 - Tenant Submission
Requirements. If any revisions to Tenant's Construction Drawings are
required after they are submitted to the Landlord by Tenant and approved
by Landlord, Tenant must bear all costs that may result from possible
resulting revisions in any portion of Landlord's Work that is dependent
upon Tenant's design, including the cost of revising the drawings.
Revision costs, as referred to above, will be based upon actual costs to
the Landlord, plus a 15% coordination fee. In the event the Tenant makes
any revisions after Landlord's construction work actually begins, Tenant
will be responsible for any additional construction costs incurred,
including the cost of revising the drawings, plus the 15% coordination
fee.
G. WORK EXECUTED BY LANDLORD FOR ACCOUNT OF TENANT:
If Tenant's Demised Premises are adjacent to, and can have access to, a
rear service corridor, Landlord will provide and install, at Tenant's
expense, a metal rear exit service door, as per City Code
specifications, complete with frame and door closure, standard
commercial hardware. The frame and door shall bear Underwriters' "B"
label and the hardware shall be Sargent or Russwin. Tenant shall be
furnished lock cylinder for his keying and installation. The cost for
this service door is $1,250.00. Should a double rear service door be
required, the cost will be additional.
B (4)
<PAGE> 92
GALLERIA
DALLAS, TEXAS
EXHIBIT C
DESCRIPTION OF TENANT'S WORK
All work (the "Tenant's Work") required to complete and place the Demised
Premises in finished condition for opening for business (except what is
identified as Landlord's Work in Exhibit B) is to be done by Tenant, at Tenant's
expense, and in accordance with Exhibits C, C-1 series, C-2 and E. Whenever the
term "Landlord's written approval" appears in these Exhibits to the Lease, then
the written approval of Landlord's property manager shall be deemed to be
written approval of the Landlord. Tenant's Work includes, but is not limited to,
the following:
A. Store Fronts and Show Windows: The storefront and mall walls and all
show window work, show windows, show window backs, floors and ceilings,
and show window lighting installations.
B. Ceilings: All finished ceilings and coves, the height of which shall not
exceed twelve feet on a] I levels without written permission of the
Landlord or Landlord's architect.
C. Interior Walls: All interior walls (including partitions and curtain
walls other than partitions separating leased premises) shall be framed
with metal studs covered with at least 5/8" gypsum board. The Tenant
shall not construct any concrete block walls.
D. Interior Painting: All interior painting and decorating including
taping, floating, and speckling of all partitions where required, except
Landlord's taping and floating of the dry-wall demising walls.
E. Mezzanines/Safes Etc: The Tenant shall not construct mezzanines within
the Demised Premises or install safes or other excessively heavy objects
such as freezers, etc., without the written approval of the Landlord's
structural engineer. Any mezzanines shall be floor supported.
F. Attics: No combustible material shall be installed or stored above the
ceiling.
G. Floors: Tenant is permitted no depressions from the established floor
level. Floor coverings shall be limited to a maximum dead weight of 10
pounds per square foot.
H. Furniture, Fixtures and Signs: All furnishings, trade fixtures, signs
and related parts, shall be new or like-new and of first quality,
including installation. Location and design of all signs shall be
subject to prior written consent of Landlord as provided in Exhibit C-2.
I. Changes and Alterations: Landlord reserves the right to require changes
in Tenant's Work when necessary by reason of Code requirements or
directives of governmental authorities having jurisdiction over the
Demised Premises or deviations from construction criteria stated in this
Lease. Any such changes will be at Tenant's expense.
J. Charges for Tenant's Consultants: Charges for Tenant's consultants shall
be paid by Tenant.
K. Attachments to the Structure: The method and manner of attaching the
various mechanical and plumbing, etc., chases, ducts, piping, etc.,
shall be approved in writing by the Landlord's structural engineer. The
criteria are shown ON Exhibits C-1 (KI) and C-1 (K2).
C (1)
<PAGE> 93
L. Floor Penetrations and Water Proofing: The floor shall not be penetrated
without prior written approval of the Landlord. All penetrations of the
floor shall be sleeved, fireproofed and caulked water tight as specified
by the Landlord's Architect as per Lease Exhibit C-1 (a). Restaurants
have special criteria. Other tenants (such as pet stores and photo
processing stores) having above typical liquids in the Demised Premises
may also have special criteria.
M. Wall Openings: Wall penetrations, if required by Tenant's Work, must
have prior written approval of Landlord or Landlord's architect. Any
approved penetration of exterior walls shall be constructed by
Landlord's contractor, at Tenant's expense.
N. Support of Equipment: HVAC, electrical, mechanical equipment, etc. shall
be ceiling hung as approved in writing by the Landlord's structural
engineer as shown on Exhibits C-1 (K-1) and C-1 (K2).
O. Water Heater/Water Treatment: Domestic water heater, where required,
shall be electric, automatic and less than 100 gallon capacity. Location
of any water treatment equipment must have prior written approval of
Landlord.
P. Plumbing: Tenant shall be responsible for all plumbing installation,
including the cost of installation of lines from the Demised Premises to
existing chases. Cutting and patching and drilling shall not be done
without prior written approval of the Landlord and the Landlord's
structural engineer. The criteria are shown on Exhibits C-1 (a), C-1
(P1) and C-1 (P2).
Q. Electrical work: Tenant shall furnish and install all rough and finished
electric work from the service termination pull box at the rear of the
Demised Premises. Tenant shall be responsible for providing electrical
conduits, wiring and boxes in the concrete floor topping prior to
placing of concrete floor by Landlord. Tenant shall furnish all
electrical fixtures, including lighting fixtures, exit lights, emergency
lighting system, lamps and equipment and installation thereof. Tenant
shall furnish and install all systems, where required, for telephone
conduit to the space from the telephone/meter room; inter-communication,
music, antenna, material handling or conveyor, burglar alarm, vault
wiring, fire alarm and communication, time switches, contractors and all
necessary disconnect switches for all motors required by Tenant. The
criteria are shown on Exhibits C-1 (U2), C-1 (Y) and E.
R. Gas: Gas service shall not be available except by exception, and only
with the prior written approval of Landlord. See Exhibit B, Section C.4
concerning additional requirements in connection with any such gas
service.
S. Heating, Ventilating and Air Conditioning: The Tenant, at Tenant's cost,
shall contract with a Landlord-approved mechanical engineer to design
the Tenant's HVAC system. Such systems shall be subject to Landlord's
prior written approval. Tenant, at Tenant's cost, shall construct with a
Landlord-approved contractor Tenant's HVAC system in accordance with the
criteria set forth in Exhibits C and the C-1 series. All such HVAC
equipment shall become Landlord's property upon termination of this
Lease. Tenant shall connect at Tenant's cost its HVAC system to the hot
and chilled water lines brought by Landlord to within sixty (60) feet of
Tenant's Demised Premises. Restaurants (and other tenants with special
make up air and exhaust fans) shall electrically interlock the HVAC and
exhaust systems.
T. Fire Protection:
1. The Tenant, at Tenant's cost, shall install in the Demised
Premises a finished fire protection system which shall be
connected to Landlord's grid distribution system in accordance
with the State fire codes and applicable City Building Codes.
All sprinkler heads shall be Viking type (micromatic), or other
brand approved by
C (2)
<PAGE> 94
Landlord. The Tenant shall use a Landlord-approved sprinkler
contractor, who shall abide by any rules related to working in
the Mall Building established by the Landlord from time to time.
The Tenant shall have the fire protection system for the Demised
Premises designed by Landlord's approved sprinkler contractor at
Tenant's cost in accordance with the Tenant's Construction
Drawings, (which must include the reflected ceiling plan), which
are subject to Landlord's prior written approval.
2. In addition to City Code requirements for fire extinguishing
systems in kitchen hoods for restaurants or other food facility
operations, Tenant must install a dry type extinguishing system
in the ductwork above kitchen hoods.
3. Specifications shall be subject to approval by Landlord. Tenant
must also keep and maintain in the Demised Premises a hand held
fire extinguisher of a type approved by Landlord. Tenant shall
maintain minimum clearances between Tenant's improvements within
the Demised Premises and the sprinkler heads within the Demised
Premises as required by governing agencies. Failure to promptly
respond after receiving a notice of violation shall result in
the Landlord's taking whatever remedial action is required by
the governing agencies, at Tenant's expense.
U. Tenant's Mechanical, Plumbing, Electrical, Fire Protection, Fire
Detection and Fire Communication Design:
Tenant's mechanical, plumbing, electrical, fire protection, fire
detection, and fire communication systems must be technically compatible
with Landlord's systems to ensure the proper functioning of the entire
system. The criteria are shown on Exhibit C-1 series. Therefore,
Landlord may contract with a consulting engineering firm (Landlord's
Engineer) to review the design of the systems. The cost of reviewing the
Tenant's systems shall be borne by Tenant. After Landlord receives the
billing from Landlord's Engineer for the review of Tenant's systems,
Landlord shall rebill Tenant for the cost of the design review. Tenant
shall pay Landlord within thirty (30) days of receipt of said billing.
V. Special Charge to Maintain Restaurant or Above Standard Ventilation and
Grease Traps:
1. Exhaust and Makeup Air Systems:
The Tenant is responsible for maintaining any exhaust and makeup
air systems for a restaurant or food service area or other above
normal ventilation systems. If Tenant does not clean such
systems within thirty (30) days after Landlord's request to
Tenant to clean such systems, then Landlord may perform such
cleaning, and Tenant shall pay the cost of such cleaning within
thirty (30) days after Landlord invoices Tenant the cost
thereof.
If Tenant requests Landlord to maintain Tenant's ventilation
systems, and Landlord agrees to do so, then Landlord shall
commence maintaining such systems only after Landlord and Tenant
enter into a mutually satisfactory maintenance contract.
2. Grease Traps:
The Tenant is responsible for the cost to maintain any grease
traps serving the Demised Premises. In addition, the Tenant
agrees to reimburse the Landlord for the prorated share of the
cost of cleaning and maintaining the main sanitary sewer outside
the Demised Premises.
W. Temporary Services During Construction:
1. Electricity: Tenant shall obtain temporary power from the local
utility company during construction.
C (3)
<PAGE> 95
HVAC: Should Tenant's HVAC system be operable prior to Tenant's
opening for business, Tenant may request the equipment be turned
on. Should Landlord agree, Tenant shall pay for the use of the
chilled and heated water at the rate specified in Exhibit D from
the date of the requested turn-on, and Tenant shall cause its
contractor to clean the HVAC system prior to Tenant opening for
business.
X. Fire Detection and Fire Communication: The Tenant shall at Tenant's cost
install in the Demised Premises a finished fire detection and fire
communication system which shall be connected to the Landlord's system
in accordance with applicable codes, and Landlord's criteria contained
in Exhibits C-1 (U1), C-1 (U2), C-1 (Y) and E.
y Building Control System: The Tenant at Tenant's expense shall furnish
necessary interface devices and wiring between the Tenant air handling
units and fans in accordance with Exhibits C-1 (S1), C-1 (S2) and C-1
(Y) to allow the remote control of such units from the Landlord's
Building Control System to ensure the proper operation of the central
plant and to comply with certain Code life safety requirements.
Z. General Provisions: All work done by Tenant shall be subject to
Landlord's prior review and written approval and governed in all
respects by, and be subject to, the following:
1. Within a reasonable time after the execution of the Lease, the
Landlord shall send to Tenant's architect a "Construction
Information Packet." Within fifteen (15) days after execution of
this Lease Tenant shall submit to Landlord Preliminary Design
Drawings (as more fully described in Section IV C of Exhibit
C-2) for storefront design, elevation or rendering, and
reflected ceiling plan (with electrical load requirements in
watts), and location of rear door, if required by Code
(specifying single or double), and the location of Tenant's
sign. Within thirty (30) days after execution of this Lease
Tenant shall submit to Landlord Preliminary MEP Drawings (as
more fully described in Section IV D of Exhibit C-2).
2. If Landlord disapproves the Preliminary Drawings (whether Design
or MEP) and requests revisions, Tenant shall revise said
Preliminary Drawings and shall resubmit for Landlord's approval
revised Preliminary Drawings incorporating Landlord's
requirements within ten (10) days after receipt of Landlord's
comments, and the foregoing procedure with respect to approval
and resubmission shall be followed until complete agreement of
Landlord has been given to Tenant's Preliminary Drawings. After
the Tenant's Preliminary Drawings have been approved by the
Landlord, the Tenant will prepare Construction Drawings (as more
fully described in Section IV E of Exhibit C-2) which shall be
subject to written approval by Landlord prior to the Tenant's
commencing Tenant's Work in the Demised Premises.
3. Tenant's Work shall be coordinated with the work being done by
the Landlord and/or other tenants of Landlord to such a degree
that such work will not interfere with or delay the completion
of work by Landlord and/or other tenants of Landlord. The
performance of Tenant's Work shall cause no interference
whatsoever with the completion of Landlord's Work in the Demised
Premises or in the remainder of the Galleria.
4. At any time during the Lease term if construction or repairs are
needed, or for initial construction of Tenant's Work, Landlord
shall provide Tenant a list of Landlord approved contractors
(general and sub-contractors). If Tenant wishes to use nonlisted
contractors or sub-contractors Tenant shall submit to Landlord
such names at least 30 days prior to the start of Tenant's Work.
Tenant agrees not to commence Tenant's Work until Tenant has
secured Landlord's written approval of all such contractors and
sub-contractors to be used in performing Tenant's Work. In any
C (4)
<PAGE> 96
event Tenant shall use Landlord's contractors for all work
related to fire alarm control and building management systems.
Tenant's contractors and sub-contractors shall not commence
construction of Tenant's Work without a set of Construction
Drawings (as defined in Exhibit C-2, Section IV, Paragraph E
hereof) signed as approved by Landlord and located on the
construction site.
5. During construction and upon completion Landlord may inspect
Tenant's Work for conformance to Landlord's specifications set
forth in this Lease. Landlord shall notify Tenant of any
discrepancies in the construction of Tenant's Work and Tenant
shall immediately correct such discrepancies. Tenant may not
operate its HVAC system or open for business until Landlord has
approved in writing Tenant's Work. Prior to Tenant's
commencement of operating its business from the Demised
Premises, Tenant shall cause its contractor to submit to
Landlord "HVAC system proof of performance tests" to verify that
the HVAC system meets design criteria in these Exhibits. Failure
of Landlord to notify Tenant that Tenant's Work is not in
compliance with (i) Landlord's criteria contained in these
Exhibits, or (ii) City Code, whether or not Landlord has
inspected Tenant's Work, shall not constitute a waiver by
Landlord to so notify Tenant at a subsequent time. Failure of
Tenant to correct its work so as to conform with Exhibits C, C-1
series or E within thirty (30) days of notice of discrepancies
shall give Landlord the right to terminate this Lease.
6. Tenant shall cause Tenant's contractor to furnish electricity,
water and toilet facilities required during the construction and
fixturing of Tenant's Demised Premises, and to arrange with the
general contractor for any needed vertical transportation.
7. During initial construction, texturing, and stocking of the
Demised Premises, Landlord will provide a trash removal service
from the truck docks. It shall be Tenant's responsibility to
break down its boxes and each day place its trash in the
containers provided at a designated collection point. Trash
accumulation will not be permitted overnight in the Demised
Premises, malls or service corridors. For this service, a single
charge of $.40 per square foot of floor area in the Demised
Premises, or $500.00, whichever is greater, will be due upon
opening the Demised Premises for business. Tenant shall be
charged for this service whether used or not. Tenant is
cautioned against having trash accumulate within its area or in
the corridor, mall, or arcade adjacent to its Demised Premises.
Should this situation develop and Landlord be forced to remove
Tenant's or Tenant's contractor's trash, the charge for this
service will be 1.5 times Landlord's cost.
8. Tenant is aware of the fact that Landlord will require a high
grade, first class operation to be conducted by Tenant in the
Demised Premises. To this end, Tenant shall do the interior
fixturing and exterior displays in a manner consistent with such
an operation. Tenant agrees to install in the Demised Premises
only such trade fixtures, lighting fixtures, carpeting, wall
treatment, interior decor and the like as shall first have been
approved in writing by Landlord. Only such improvements and
texturing as shall have been approved by Landlord shall ever be
installed in the Demised Premises.
9. Tenant's Work shall be performed in a first-class workman-like
manner and shall be in good and useable condition at the date of
completion thereof. Tenant shall require any party performing
any such work to guarantee the same to be free from any and all
defects in workmanship and materials for one (1) year from the
date of completion thereof. Tenant shall also require any such
party to be responsible for the replacement or repair without
additional charge of any and all work done or furnished by or
through such party which shall become defective within one (1)
year after substantial completion of the work. The correction of
such work shall include, without additional charge, all expenses
and damages in connection with such
C (5)
<PAGE> 97
removal, replacement, or repair of any part of the work which
may be damaged or disturbed thereby. All warranties or
guarantees as to materials or workmanship on or with respect to
Tenant's Work shall be contained in the contract or subcontract
with shall be so written that such guarantees or warranties
shall inure to the benefit of both Landlord and Tenant, as their
respective interests appear, and can be directly enforced by
either. Tenant covenants and agrees to give Landlord any
assignment or other assurances necessary to effect the same.
10. Landlord shall have the right (but shall not be obligated) at
Tenant's expense to perform by Landlord's own contractor or
subcontractor, on behalf of and for the account of Tenant, any
Tenant's Work which Landlord determines should be so performed.
Generally, such work shall be work which affects any structural
components of, or the general utility systems for, the building
in which the Demised Premises are located.
11. Compliance with Laws: All Tenant's Work shall conform to all
applicable statutes, ordinances, regulations, codes and the
requirements of Landlord's insurance underwriter. Tenant shall
obtain and convey to Landlord all approvals with respect to
electrical, gas, water, heating and cooling, and telephone
work all as may be required by the utility company supplying
the service.
12. Approvals: No approval by Landlord shall be deemed valid unless
the same shall be in writing signed by Landlord or Landlord's
architect.
13. Insurance: Prior to commencement of Tenant's Work and until
completion thereof, or Commencement Date of the Lease, whichever
is the last to occur, Tenant shall effect and maintain, and
provide certificates to the Landlord for insurance policies set
forth in Articles XII and XIII of the Lease. Tenant shall effect
and maintain, and provide certificates to the Landlord, for
Builder's Risk Insurance covering Landlord, Landlord's general
contractor, Tenant and Tenant's contractors, as their interests
may appear, against loss or damage by fire, vandalism and
malicious mischief, and such other risks as are customarily
covered by a so-called "extended coverage endorsement" upon all
Tenant's Work in place and all materials stored at the site of
Tenant's Work and all materials, equipment, supplies and
temporary structures of all kinds incident to Tenant's Work and
builder's machinery, tools and equipment; all while forming a
part, or contained in, such improvements or temporary structures
while on the Demised Premises or within 100 feet thereof, or
when adjacent thereto while on malls, drives, sidewalks,
streets, or alleys, all to the full insurable value thereof at
all times. In addition, Tenant agrees to require all contractors
and subcontractors engaged in the performance of Tenant's Work
to effect and maintain and deliver to Tenant (and Tenant shall
provide copies to the Landlord) copies of certificates naming
Dallas Galleria Limited and Hines Interests Limited Partnership
as Additional Insureds which certificates shall evidence the
existence of, prior to the commencement of Tenant's Work and
until completion thereof, the following insurance coverages:
a) Worker's Compensation Insurance in accordance with the
laws of the State of Texas, including Employer's
Liability Insurance, to the limit of [***];
b) Commercial General Liability Insurance, with limits of
not less than [***] per occurrence combined single
limit bodily injury and property damage.
c) Automobile Insurance, including owned, non-owned and
hired automobiles, with limits of not less than
[***] per occurrence combined single limit bodily
injury and property damage.
*** Confidential treatment requested.
C (6)
<PAGE> 98
14. Tenant will abide by and cause its contractor, subcontractors,
agents and employees to abide by rules and regulations published
by Landlord, including those pertaining to parking, toilet
facilities, safety conduct, delivery of materials and supplies,
trash storage, collection and removal, and cooperation with
Landlord's General Contractor.
15. Tenant shall cause its General Contractor to provide Landlord
with releases of liens in a form satisfactory to Landlord for
all work done by Tenant's Contractor, subcontractors, and
material suppliers within or about the Demised Premises prior to
Tenant opening for business in the Demised Premises.
C (7)
<PAGE> 99
Symbols Legend for Dallas Galleria
Series of Exhibits
<PAGE> 100
GALLERIA
VERTICAL PENETRATIONS
EXHIBIT C-1(A)
<PAGE> 101
GALLERIA MALL
EXHIBIT C-1 (K2)
<PAGE> 102
GALLERIA MALL
EXHIBIT C-1 (K-1)
<PAGE> 103
GALLERIA MALL
EXHIBIT C-1 P-1
<PAGE> 104
GALLERIA MALL
EXHIBIT C-1 (P2)
<PAGE> 105
GALLERIA MALL
EXHIBIT C-1 S-1
<PAGE> 106
GALLERIA MALL
EXHIBIT C-1 S-2
<PAGE> 107
Parts used for tenant leases.
<TABLE>
<CAPTION>
Item Part No. Description
- ---- -------- -----------
<S> <C> <C>
1 540-160 Unit Vent Controller (LGP)
540-168 Pneumatic Output Module (LGP)
2 265-1002 3-way pneumatic switch, 120V (LGP)
3 VP658 ANSI 250 N.C. 9-13# Powertop (valve sized for GPM requirements) (LGP)
4 540-122 Room Sensor (LGP)
5 540-244 Discharge Air Sensor (LGP)
6 251-0002 Pressure Electric Switch (used as run status) (LGP)
7 D1-83/AD-3R1 Duct Smoke Detector (Furnished by fire alarm contractor)
8 24VAC 3PDT Start/Stop Relay (Cube Type) (Mall coordinated for tenant)
9 Disconnect Motor starter w/120VAC control transformer, HOA, pilot
light 2 N.O. Aux. contacts
(Normally provided by electrical subcontractor)
10 SPDT 24VDC AHU shutdown relay (Furnished by fire alarm contractor)
11 VP658 ANSI 250 N.O. 3-6# Powertop valve, sized for GPM requirements) (LGP)
12 R-Controller Outside Air Constant Volume Boxes (Sized for each suite) (LGP)
</TABLE>
Note: Size control valves at 5 PSI drop at design GPM.
All valves to be ANSI Class 250
EXHIBIT C-1 S-2A
<PAGE> 108
GALLERIA MALL
EXHIBIT C-1 S-3
<PAGE> 109
GALLERIA MALL
EXHIBIT C-1 U-1
<PAGE> 110
GALLERIA MALL
EXHIBIT C-1 U-2
<PAGE> 111
GALLERIA MALL
EXHIBIT C-1 Y
<PAGE> 112
GALLERIA
DALLAS, TEXAS
EXHIBIT C-1
DESIGN CRITERIA FOR TENANT'S
MECHANICAL AND ELECTRICAL WORK
Mechanical and Electrical Design, whether work be performed by Tenant or
Landlord shall conform to the following:
A. HEATING, VENTILATING AND COOLING
1. Design Conditions - Heating of Demised Premises
a) Inside dry bulb temperature (Minimum) 70 deg F
b) Outside dry bulb temperature (Maximum) 22 deg F
2. Design Conditions - Cooling of Demised Premises
a) Inside dry bulb temperature - Maximum 76 deg F
b) Inside relative humidity - Maximum 55%
c) Outside dry bulb temperature - Minimum 100 deg F
d) Outside wet bulb temperature - Minimum 75 deg F
e) If Tenant requires special temperature or humidity
conditions different from those specified above, Tenant
shall notify Landlord before the Lease is signed and
shall note these special design requirements on the
mechanical plan submitted to the Landlord for its
consulting engineer's use in reviewing the design of the
system. Any additional costs required by these special
design conditions shall be borne by Tenant.
3. Design Conditions - Ventilating of Demised Premises
a) Total air circulated based on internal sensible heat
load at peak requirements, but not less than Code
requirements.
b) Recirculated air equal to 100% of air circulated, less
design outside air quantity.
c) Exhaust systems based on Code and space use special
requirements. Only mechanical exhaust permitted. Exhaust
to be routed to exhaust risers. All exhaust discharges
must be a minimum distance of 20 feet from all fresh air
intakes. Restaurants may require separate make up and
exhaust systems to be designed and installed.
d) Toilet exhaust shall be tied to base building system.
C-1(1)
<PAGE> 113
4. Central Plant Data
a) Peak load temperature of chilled water supply: 44 deg F.
Use 42 deg F for design factor.
b) Cooling service available during mall hours.
c) Minimum working pressure of all equipment - 300 PSIG,
chilled and heating hot water side.
d) Maximum allowable pressure drop through Tenant equipment
(booster pumping not permitted for chilled water and
heating hot water) - 30 feet of water.
e) Temperature of chilled water from Tenant's equipment -
greater than 60 deg F. Chill water coils must be
selected to provide a 18 deg F chill water differential
between supply and return at design and actual operating
conditions. Additional criteria are contained in
Exhibits C-1 series and E.
f) Peak heating hot water from Central Plant - 160 deg F
from Tenant's equipment - 120 deg F. Heating hot water
from central plant available only during those project
hours of occupancy where the outside conditions require
heating to maintain inside design conditions.
g) Design - specify chilled water coil for an 18 degrees F.
minimum rise in water temperature between supply and
return.
5. Diffusers, Registers, Grilles: Shall be of adjustable type for
volume and direction, Titus or equal quality.
6. Air Handling Unit: Ceiling hung horizontal or vertical type,
multi or single zone, with squirrel cage fans, belt driven,
separate heating source and cooling coils (500 FPM max.),
throw-away filters, outside air and return air dampers and
adequate vibration isolating devices. No roof mounted
air-handling units will be permitted. Only Carrier 39 NX,
LaSalle or York IAQ units will be permitted. Chill water coils
must be selected to provide a 18 deg F chill water differential
between supply and return at design and actual operating
conditions.
7. Tenant Equipment Loads: Tenant air conditioning equipment shall
be ceiling hung unless otherwise approved in writing by
Landlord's structural engineer. The equipment shall impose a
total floor load no greater than 1500 lbs. If greater than 1500
lbs. Landlord's structural engineer must review and approve. The
review shall be at Tenant's cost.
8. Location of Equipment: All Tenant components shall be located
within Tenant's Demised Premises, and so installed and located
as to provide for ease of removal or maintenance.
9. Electric Motors: Motors shall be designed for fan duty,
continuous operation, and shall leave NEMA rating and service
factor of 1.15 minimum. All motors shall have copper windings
and class "A" or "B" insulation. Motors shall be manufactured by
Westinghouse, Louis-Allis, Reliance, Siemans-Allis,
Century/Gould, or General Electric.
C-1(2)
<PAGE> 114
10. Heating:
a) Space Heating: The Demised Premises shall be heated by
finned hot water heating coils in the air handling
system.
b) Water Heating: Each Tenant requiring hot water for
domestic use shall heat water electrically.
11. Piping: Shall be in accordance with ASTM and ASA standards.
Piping and equipment shall be 300# rated for hot and chilled
water lines. Di-electric fittings required wherever dissimilar
metals are joined to reduce electrolysis failures.
12. Insulation: Outside air ductwork shall be externally insulated
with one inch thick one-half pound density fiberglass duct
liner. All supply air ductwork, including round duct and
flexible duct shall be externally insulated with a minimum one
and one-half inch thick 0.6 pound density fiberglass flexible
blanket with foil vapor barrier.
Chilled and heating hot water piping shall be insulated with one
and one-half inch (1-1/2") glass fiber pipe insulation as
manufactured by Johns-Manville "Micro-Lok 650", Armstrong
"Accotherm" or approved equal, with AP non-combustible vapor
barrier jacket. During the term of the Lease, Tenant shall be
responsible to maintain the HVAC ductwork.
13. Temperature Control - Automatic Temperature Control: Shall
conform to and operate in conjunction with the central plant and
life safety systems. Chilled and heating hot water control
valves shall be straight pattern type with equal percentage flow
characteristics, maximum 2% leakage rate, and rated for the
system pressure. The control valves shall be capable of tight
shut-off at the system differential pressure conditions. The
control valves shall automatically close when the air handling
unit fan is off. See Exhibit C-1 series.
14. Ceiling Access Panels: Tenant shall provide for access panels
for Landlord's accessibility to common facilities and MEP
equipment.
15. Tenant shall furnish Landlord the following information for
approval and acceptance in writing before ordering any work
done.
a) Complete information covering any special ventilation
system requirements.
b) Complete lighting plan layout showing location and
wattage of all lighting fixtures together with a
detailed interior layout plan showing merchandising
fixtures and lighting thereof to enable the Landlord to
review and approve same for coordination with space
conditioning and common facilities.
c) Complete plans showing all halls, partitions and
encroachments with spaces designated as sales, live
storage, offices, fitting rooms, alteration rooms,
toilets, docks, rest rooms, etc., complete with maximum
people occupancy.
d) Complete Mechanical, Electrical, Plumbing, Fire
Protection and Life Safety Drawings and Specifications.
See Exhibit C-2 Section IV for criteria.
16. Ductwork: Ductwork shall be constructed and installed in
accordance with SMACNA Manual, Current Edition.
C-1(3)
<PAGE> 115
B. ELECTRIC WIRING:
1. Electric Service:
a) 265/460 Volt, 5 wire, 3 phase, 60 cycle, A.C.
b) Electric meter to be provided by T. U. Electric Company
and to be located within meter rooms or service areas.
c) Tenant's connected load shall not exceed 7.0 watts per
square foot of floor area within the Demised Premises.
Any additional wattage required by Tenant must be
approved by Landlord, and any additional costs resulting
from this additional load will be at Tenant's expense.
Tenant shall pay for the electrical capacity in excess
of that provided by Landlord in Exhibit B, Paragraph
C1(c).
2. Tenant's Electrical Construction:
a) Material- General: All electrical materials shall be
new, shall be National Electrical Code standard unless
better grade is mentioned herein, and shall bear the
Underwriter's Laboratories label.
b) Codes and Ordinances: All work shall be performed in
full accordance with the latest National Electrical Code
and any or all State and local codes or ordinances
having jurisdiction over same.
c) Power Distribution Panelboards: Shall be arranged for
265/460 volt, 3 phase, 4 wire, wye service. General
Electric Type QMR and CCB or approved equal as
manufactured by: Square D or Westinghouse. Busbars shall
be either 55" conductivity aluminum or 98% conductivity
cooper. Aluminum bus plating shall be Alston-70 or
approved equal. Type CCB panelboards shall be provided
with molded case bolted-in circuit breakers. Type QNR
panelboards shall be provided with Type QMR quickmake,
quick-break, fusible switches and Bussman Type LPS-RK
fuses.
d) Lighting Panelboards: Shall be GE Type NLAB 120/ 208
volt, 4 wire, 3 phase: GE Type NAB 265/460 volt, 4 wire,
3 phase or approved equal as manufactured by
Westinghouse or Square D. Busbars shall be either 55%
conductivity aluminum or 98% conductivity copper.
Aluminum bus plating shall be Alston-70 or approved
equal. Panelboards shall be provided with molded case
bolted-in circuit breakers. All breakers shall be
quick-make, quickbreak type. Twenty percent additional
space breaker capacity shall be provided. Lighting
branch circuit breakers shall be 20 amp loaded not to
exceed 1600 watts at 120 volts. Two and three pole
breakers shall be common trip. Handle ties are not
acceptable.
e) Bussing: Shall be arranged by Tenant so that odd
numbered breakers are on the left side and even numbered
breakers are on the right side. Circuits 1, 2, 3, 4, 5,
6, etc., shall be on Phase A, B, or C respectively. With
this sequence maintained, the inside of the cabinet door
shall have a typewritten directory in frame under clear
plastic.
f) Contractors: Contractors for control of show window
lighting and signs shall be ASCO Bulletin, 920 Series,
enclosed, electrically operated and mechanically held,
with fuse adapter for control line fuse.
C-1(4)
<PAGE> 116
g) Time Switches/Time Clocks: Time switches for control of
Show window lighting shall be synchronous motor type
with by-pass and omitting devices as manufactured by
Sangamo, Tork or Landlord approved equal. Time clock
shall be Sangamo, Tork or Landlord approved equal.
h) Conduit: Rigid conduit shall be hot dipped galvanized or
sheradized. Electric metallic tubing shall be hot dipped
galvanized or electrogalvanized. Only rigid conduit
shall be used in concrete or below grade.
i) Outlet Boxes: Outlet boxes and covers therefor, in
general, shall be galvanized or sheradized one piece
knockout type. For outlet boxes in damp or exposed
locations, Tenant shall confirm with Landlord the type
of box required. Lighting fixtures are outlets shall be
provided with 3/8" fixture studs and plaster rings.
Outlet boxes for wiring devices, i.e., switches,
receptacles, etc. shall be 4" square minimum, fitted
with device cover to suit. Outlet boxes shall be
fastened by means of screws or shall be supported by
means of approved hangers.
j) Wire and Cable: Wire and cable shall be insulated copper
wire. It shall be properly coded with white neutral,
according to N.E.C. Code. All copper conductors except
#12 branch circuits, shall be standard code type "THW",
71-12,N" or "THWN" insulated wire. Branch circuit
conductors (#12) shall be type "TW", "THW", "THNN",
"THWN" insulated wire. Tenant shall use no wire smaller
than No. 12 "AWG" for lighting and/or power.
k) Toggle Switches: 120/277 volt switches shall be minimum
15 amp. rating Slater No. 2770 Series toggle or approved
equal.
1) Duplex Receptacles: 120 volt standard duplex receptacles
shall be minimum 15 amp. Slater 62645 or approved equal.
m) Electrical Grounding: Electrical safety grounding for
transformers and other devices must be connected to
common ground cable located in the Mall common meter
rooms. No grounding to water piping shall be permitted.
n) Floor Outlets: Floor outlets shall be round, adjustable
and water tight as follows, or equal: Russell and Stoll
No. 2503 with No. 3070 cover and Hubbell No. 562 duplex
receptacles for outlets in slab or grade. Outlets in
floor slabs above grade shall be similar except with No.
2503 HD boxes.
o) Weatherproof Receptacles: Shall be Slater 3780 single
with gasket and threaded metal cover and plate or
approved equal.
p) Telephone System: All telephones with services thereto
shall be provided by Tenant. All telephone charges shall
be paid by Tenant directly to the telephone utility
company furnishing the service. All interior facilities
within the Demised Premises required by the telephone
company to provide service shall be furnished by Tenant.
Tenant must cause conduit to be run from the telephone
equipment rooms or panel boxes within the structure to
the Demised Premises, and this must be done in
accordance with the telephone company's requirements.
q) Disconnect Switches: Shall be type HD (Heavy Duty) NEMA
type, manufactured by General Electric or Landlord
approved equal, in enclosure suitable for the
application.
C-1 (5)
<PAGE> 117
r) Motor Starters: Manual motor starters with overload
protection may be used for fractional horsepower motors.
Single phase starters shall be Allen Bradley Bul. 709SP
or Landlord approved equal. Three phase starters shall
be General Electric with overload relay for each phase,
Cutler Hammer, or Square D equivalent. See Exhibits C-1
(S1), C-1 (S2) and C-1 (Y).
s) Installation of Conduit: All conduit shall be concealed
where possible.
t) Lighting Fixtures: Lighting fixtures shall bear
Underwriter's label and be of a type approved by City
Inspection authorities. Recessed fixtures installed in
furred spaces shall be connected by means of flexible
conduit and "AF" wire run to a branch circuit outlet
box which is independent of the fixture.
u) Nameplates: Equipment following shall be identified with
engraved bakelite nameplates.
1) Distribution panels
2) Lighting panels
3) Motor starters
4) Push button stations
v) Motors: Motors shall be designed to latest NEMA
standards. Motors rated 3/4 horsepower and larger shall
be 3 phase, 460 volts. Motors rated less than 3/4
horsepower shall be single phase, 120 volts.
w) Light and Convenience Outlet Above Ceiling: Tenant shall
provide a light and convenience outlet near all
mechanical equipment above fixed suspended ceilings.
Switch to light shall be located near access panel to
ceiling space and shall have continuous lighted pilot
for ease of location. Where "lift-out" ceiling
suspension systems are used, the light and convenience
outlet above the ceiling is not required.
x) Transformers: Dry type transformers shall be equal to
G.E. type Q.L. Transformers must be multi-tap so that
they may be adjusted as needed to deliver 117 volts AC
plus or minus 5%.
3. Approval of Design:
Complete plans and specifications covering the electric work,
adequate for permit and construction purposes, shall be
furnished by the Tenant for approval by Landlord before Tenant's
Work is commenced.
C. TENANT'S PLUMBING AND GASFITTING:
1. Plumbing and Drainage: Water closets, urinals, lavatories,
janitor sinks and drinking fountains shall be Landlord approved
Standard manufacture.
2. Fixtures: Fixtures shall be American Standard, Crane, Kohler:
medium quality or better.
3. Insulation: All domestic hot water piping shall be insulated the
same as chilled water piping except insulation thickness shall
be one-half inch thickness.
4. Valve Tags: All valves and controls to be tagged and a schedule
of valves turned over to Landlord.
5. Gas: Gas shall not be provided except by special prior written
approval of Landlord. Tenant shall provide and pay for this
service through the local gas
C-1 (6)
<PAGE> 118
company facilities. See Exhibit B, Section C.A concerning
additional requirements with respect to gas service.
6. Approval of Designs: Complete Construction Drawings covering the
plumbing work, adequate for permit and construction, shall be
furnished by the Tenant for approval by Landlord before Tenant's
Work is commenced. See Exhibit C-2.
D. Fire Detection and Fire Communication:
1. Installation Responsibility: The Tenant shall install in the
Demised Premises a finished fire detection and fire
communication system which shall be connected to the Landlord's
system.
2. Approval of Designs: Complete Construction Drawings covering the
fire detection and fire communication systems adequate for
permit and construction, shall be furnished by the Tenant for
approval by Landlord before Tenant's Work is commenced. See
Exhibits C-1 (U1), C-1 (U2), C-1 (Y) and E.
E. Building Control System: The Tenant at Tenant's expense shall furnish
necessary interface devices between the tenant air handling units and
fans to allow remote control of such units from the Landlord's building
control system to ensure the proper operation of the central plant and
to comply with certain life safety code requirements. See Exhibits C-1
(SI), C-1 (S2), and C-1 (Y).
F. FLOOR PENETRATIONS, ATTACHMENTS & WATERPROOFING: All penetrations of the
structure or attachments to it shall require prior written approval by
the Landlord, and shall be sleeved and sealed as per Landlord's
Architect's specifications as shown on Exhibit C-1 (a). In rest rooms,
food preparation and dispensing areas or other areas where water on the
floor is likely, Tenant shall provide a membrane waterproofing
acceptable to the Landlord. All floor drains, cleanouts, etc. shall be
provided with flashing flanges with flashing extending out 12" minimum
in all directions from the device. Any floor penetrations shall be
properly waterproofed with the membrane system properly interconnected
to provide a watertight seal.
C-1 (7)
<PAGE> 119
GALLERIA
Dallas, Texas
EXHIBIT C-2
DESIGN CRITERIA FOR TENANT'S
ARCHITECTURAL STANDARDS AND TENANT'S SIGNS
Note: This Exhibit shall govern the design and installation of Tenant's
architectural finishes and Tenant's signs in the Demised Premises.
1. TENANTS ARCHITECTURAL STANDARDS
A. Store fronts of the Demised Premises shall have as much open or
glass areas as possible. Solid or opaque portions of said
Premises shall not exceed thirty (30) linear feet in any one
continuous block. All materials employed in the construction of
store fronts shall be non-combustible as defined by applicable
building codes. A distance of seven and one-half inches (7 1/2")
along the store front at each end of the store front shall be
reserved for a gray colored divider panel which Landlord shall
install at Tenant's expense. These panels provide separation
between store fronts and assure a harmonious design relationship
throughout the Mall. If the store front is recessed, the panels
shall remain at the lease line of the Mall. Within fifteen (15)
days after the execution of this Lease Tenant shall submit to
Landlord for Landlord's approval the proposed design of Tenant's
store front and the materials to be utilized.
B. Tenant ceilings shall be non-combustible concealed spline
acoustic tile suspended by adequate non-combustible suspension
systems to conform to final requirement of governing
authorities. The space above the ceiling line, which is not
occupied or allotted to Landlord's Work (structural members,
duct work, piping, etc.) may be used for the installation of
suspended ceiling, recessed lighting fixtures and duct work. All
materials above the ceiling line shall be non-combustible.
Exposed grid support systems for ceilings are not acceptable.
C. Finishing of partitions enclosing the Demised Premises must be
of noncombustible materials with a gypsum board finish or
equivalent.
D. Tenant may use only flooring approved by Landlord. No vinyl
asbestos tile will be approved.
E. All swinging entrance doors must be recessed in such a manner
that the door, when open, will not project beyond the line of
the Demised Premises.
F. Rolling or sliding metal type security grilles are not
permitted.
G. Incandescent lighting or fluorescent lighting with a grid
beneath it only in public sales areas. Plastic lenses are not
permitted.
C-2 (1)
<PAGE> 120
II. TENANTS' SIGNS
A. Mirror Sign Band
Intentionally deleted.
B. STORE FRONT IDENTIFICATION
Tenants are encouraged to have storefront identification. The
material shall be paint or applied materials.
1) Tenant's lettering on doors or show windows may not be
illuminated. Symbols, crests or coats of arms must not
exceed 1/4" in depth and must be approved. A single line
of letters, and/or symbol, crest or coats of arms may be
applied or painted to a panel above the door entrance,
but below the bulkhead, must not exceed 1/4" in depth
and shall not exceed the width of the door entrance.
C. Tenant shall not employ paper signs to be applied to the
interior or exterior faces of the storefront.
D. Tenant shall not employ any illuminated, moving action or
audible signs.
E. All interior signs visible from outside the Demised Premises
must be Landlord approved.
F. All signs and identification drawings will be submitted and
shall require Landlord's approval.
G. The storefronts shall remain illuminated while the Mall remains
open to the public. This requires that storefront windows are
tied into time switches coordinated with the hours the Mall
remains open to the public.
III. GENERAL STORE DESIGN CRITERIA
The following includes a list of base building materials, store and
storefront criteria and signing criteria. Essentially there are three
design control elements within which Tenant's designers must operate.
These are: materials control; facade control (including the area between
the lease line and the closure/base building control line); and signage
control. These controls are explained in the drawings included in this
Exhibit C-2.
A. Base Building Materials
1) Mirrored Bulkhead: Bronze Mirror - 1/4" PPG No. 9
Bronze.
2) Divider panel: 15" wide aluminum channel painted a gray
color.
3) Floor Covering: Tile pavers or carpet.
a) The Tenant shall use the mall floor covering at
the entrance to the Tenant's Demised Premises
from the lease line to the closure line.
B. Storefront
C-2 (2)
<PAGE> 121
Solid or opaque portions of the storefront shall not exceed a
continuous 30'0" or 50% of the storefront if less than 30'0".
1) Glass - mullion-less clear plate or tempered where
required by Code. Minimum 1/2 inch thickness on
storefront tempered glass.
2) Solid color plastic laminates.
3) Paint to back of glass.
4) Wood, smooth finished with high gloss lacquer, paint or
clear lacquer.
5) Natural metals - chrome, copper, etc., or gray painted
PPG UC51649 aluminum.
6) Polished marble.
7) Clear glass and bronze mirror to match mirror sign band.
8) Mall tile pavers on Ice Rink Level and Level 1.
All other materials must be behind the closure line.
C. Partitions
1) Finishing of Partitions enclosing the Demised Premises
must be of non-combustible materials with a gypsum board
finish or equal.
D. Ceilings
1) Tenant ceilings shall be non-combustible concealed
spline acoustical tile. All other ceilings must be
approved in writing by the Landlord. Lay-in acoustical
ceilings will not be approved.
E. Doors
1) Center pivoted glass doors: 3'0" single, or 6'0" double
leaf, 8'0" high clear tempered glass. Top and bottom
stiles shall be clear anodized, stainless steel, or
chrome.
2) Sliding Glass Doors: Clear frameless tempered glass.
3) Butt Hinged Doors: Width - not greater than 3'0" per
leaf and not less then 2'8" height; - no greater than
8'0". Constructed in accordance with Landlord approved
design, material finish and color.
4) General:
a) Design: The following are subject to the
Landlord's approval:
1) Size
2) Material
3) Finish
4) Color
5) Panel Design
6) Lites and Sidelites
7) Hardware
C-2 (3)
<PAGE> 122
8) Frame
9) Graphics
10) Threshold
b) Suggested Materials:
1) Tempered Glass - Clear.
2) Wood - Natural finish - painted (subject
to Landlord's approval).
3) Plastic laminates in solid colors only
(subject to Landlord's approval).
4) Metal - polished, plated or painted
(subject to Landlord's approval).
c) Location: Only center pivoted tempered glass
doors which swing into shops of occupancies less
than fifty people (as calculated by the Dallas
City Code) will be permitted at the lease line.
All others will be at or behind the base
building control line.
d) Prohibited Doors: Rolling or sliding metal
security type grilles are prohibited.
F. Divider Panel
The Tenant's storefront(s) shall be separated by a 15" wide
aluminum divider panel painted gray installed by Landlord at
Tenant's expense. Each tenant will pay for half of the cost of
the panel on either side of Tenant's premises.
TV. TENANT SUBMISSION REQUIREMENTS
A. In any deviation between criteria drawings and the working
drawings of the Landlord's shopping center architect, the latter
will have precedence. Landlord shall have the right to review
and approve all Tenant improvements.
B. After receiving an executed lease and the Construction
Information Packet and prior to starting construction, Tenant
shall provide Preliminary Drawings, then complete Construction
Drawings for the construction of the Demised Premises for
Landlord's written approval. All submissions must include six
(6) sets of prints, plus one (1) set of reproducibles.
C. Preliminary Design Drawings to be submitted within fifteen (15)
days after the execution of the Lease, and shall contain the
following:
1) Floor Plan - scale 1/4" = 1'0",
2) Storefront elevation - 1/2" = 1'0"
3) Reflected ceiling plan - 1/4" = 1'0" (Include ceiling
materials, height and light fixtures)
4) Electrical requirements with voltage and wattage.
5) Rear service door location and size (if Tenant adjoins a
service corridor-single or double). The rear door's
secondary use is that of an exit and the
C-2 (4)
<PAGE> 123
door must swing towards the service corridor. Door can
be on surface of corridor as long as door does not
project into the corridor more than 1/2 the width of the
corridor.
6) Preliminary design and location of the Tenant's sign -
Scale 1/2" = 1'0".
D. Preliminary MEP Drawing to be submitted within thirty (30) days
after the execution of the Lease and shall contain the
following:
1) Any requirements for plumbing with dimensioned
locations.
2) Any requirements for combustion venting, exhaust
venting, outside air, grease traps, etc.
3) Samples of proposed storefront materials, colors and
finishes.
4) All revisions to previous submissions for written
approval by Landlord.
5) Interior layouts and elevations.
6) Drawings must indicate weight of heavy equipment such as
safes, refrigeration equipment, cases, etc., as well as
masonry facing materials.
7) Electrical drawings, complete, to include riser diagram,
fixture schedule, total connected load and load
analysis.
8) Plumbing drawing, complete, to include fixture schedule,
waste riser diagram and specifications.
9) HVAC drawings and specifications including total design
load calculations.
10) Fire protection drawings and specifications.
11) Fire detection and fire communication drawings and
specifications.
E. Construction Drawings
Construction Drawings should be developed after the Landlord has
approved Tenant's Preliminary Design and MEP Drawings. Tenant
shall submit Construction Drawings for Landlord's approval
within fifteen (15) days after Landlord approves Tenant's
Preliminary Design and MEP Drawings.
1) Contents
a) Drawings: Complete for construction with job name, date,
Tenant's name, architect's name, sheet number, title or
drawing description and the designation "Galleria".
1) Plot Plan
2) Plan(s) - 1/4" = 1'0"
3) Reflected ceiling plan(s) - 1/4" = 1'0"
4) Interior elevations - 1/4' = 1'0"
5) Details of partitions, millwork, etc.
6) Store front elevation - 1/2" = 1'0"
7) Store front details - 3" = l'0"
8) Finish schedules
C-2 (5)
<PAGE> 124
9) Electrical
10) Plumbing
11) Sign detail
12) HVAC
13) Fire protection
14) Fire detection and fire communication
b) Specifications
2) All under-floor services and openings through floor must be
indicated and dimensioned on drawings recognizing and avoiding
structural beams, tee stems, and any other obstructions which
may be base building construction or the construction of a
Tenant space on another level.
C-2 (6)
<PAGE> 125
GALLERIA
STOREFRONT CRITERIA
EXHIBIT C-2
<PAGE> 126
GALLERIA
STOREFRONT CRITERIA
EXHIBIT C-2
<PAGE> 127
GALLERIA
STOREFRONT
TENANT/LANDLORD CONSTRUCTION
EXHIBIT C-2
<PAGE> 128
GALLERIA
STOREFRONT EXAMPLES
EXHIBIT C-2
<PAGE> 129
GALLERIA
STOREFRONT EXAMPLES
EXHIBIT C-2
<PAGE> 130
GALLERIA
STOREFRONT EXAMPLES
EXHIBIT C-2
<PAGE> 131
GALLERIA
STOREFRONT EXAMPLES
EXHIBIT C-2
<PAGE> 132
GALLERIA
STOREFRONT DETAILS
EXHIBIT C-2
<PAGE> 133
GALLERIA
STOREFRONT THRESHOLD DETAILS
EXHIBIT C-2
<PAGE> 134
GALLERIA
STOREFRONT THRESHOLD DETAILS
EXHIBIT C-2
<PAGE> 135
GALLERIA
DIAGRAM OF VERTICAL CLEARANCES
EXHIBIT C-2
<PAGE> 136
GALLERIA
SIGNAGE CRITERIA
EXHIBIT C-2
<PAGE> 137
GALLERIA
SIGNAGE CRITERIA
EXHIBIT C-2
<PAGE> 138
GALLERIA
SIGNAGE CRITERIA
EXHIBIT C-2
<PAGE> 139
EXHIBIT D
CENTRAL HEATING AND COOLING RATE SCHEDULE
FOR DEMISED PREMISES
Landlord agrees to construct, operate and maintain a central heating and
cooling plant "Central Plant", and a common heating and cooling service
distribution system, to heat, ventilate and cool the Demised Premises.
Tenant shall install at Tenant's expense, an individual tenant HVAC
system sufficient for tenant occupancy with toilet exhaust and outside air
make-up systems as may be required.
Additionally, Landlord reserves the right to require such extra-ordinary
exhaust and outside air systems, constructed at Tenant's expense, to be
constructed as an integral portion of "Common" exhaust and outside air systems
- -- the purpose of which is to group similar systems within areas to provide the
tenants with such cost and space benefits as may accrue to common systems.
Tenant shall pay for such service, as additional rent for each calendar
year during the term hereof, A "Heating and Cooling Service Charge" equal to the
Base Unit Charge (hereinafter defined) for such year multiplied by Tenant's
consumption for such year. The Heating and Cooling Service Charge shall be
payable in monthly installments on the first day of each month during the term.
Said monthly installments shall be based on Landlord's estimate of the Base Unit
Charge for such year multiplied by Tenant's consumption for the period of
consumption covered by such installment, as set forth in statements or billings
therefor submitted to Tenant by Landlord.
"Tenant's Consumption" as used herein, means HVAC energy consumption in
ton-hours with respect to the period in question, as determined by either of the
following two methods as selected by Landlord at its sole option: (i) by use of
flow and temperature valves metered automatically and continuously on Tenant's
chill water line serving the Demised Premises; or, (ii) as estimated by an
independent engineering company (the "Consultant") selected by Landlord, using
accepted engineering principles. If Landlord elects to use a Consultant to
estimate Tenant's Consumption, then Tenant agrees to make the Demised Premises
available to the Consultant from time to time during Tenant's normal business
hours to permit the Consultant to make an HVAC survey of the Demised Premises.
Tenant further agrees to supply Landlord within fifteen (15) days after written
request therefor, additional information, as Consultant reasonably deems
necessary to estimate Tenant's Consumption, including Tenant's days and hours of
operation and specifications of heat producing equipment. The Consultant's
estimate of Tenant's Consumption shall be binding upon Landlord and Tenant.
Estimates of the Base Unit Charge with respect to each calendar year
during the term hereof shall be provided by Landlord to Tenant as more fully set
forth in Section B of this Exhibit. Following the conclusion of each calendar
year, adjustments shall be made between Landlord and Tenant, with respect to the
Heating and Cooling Service Charge for such year, as set forth in Section B
below, on the basis of the actual Base Unit Charge for such year.
A. BASE UNIT CHARGE
The Base Unit Charge is estimated to be $.2749 per ton-hour of
consumption. For this charge Tenant shall be provided with:
1. Hot and chilled water to the design criteria detailed in Exhibit
C-1
2. "Maintenance Services", which shall consist of the following:
D(1)
<PAGE> 140
a. Landlord agrees to maintain the Tenant's Cooling,
Heating and Ventilating equipment in Tenant's space, as
defined below, in good working order as follows:
1. Air Handling Units
a. Periodically lubricate motor and fan
shaft bearings.
b. Replace defective motors, sheaves,
bearings, V-belts and shafts as these
items become defective through normal
wear and tear.
c. Replace the air filters and furnish new
materials as needed.
2. Temperature Controls
a. Adjust, inspect and repair temperature
control equipment, including
thermostats, automatic control valves,
and automatic damper motors.
b. Furnish and install new control devices
if such equipment cannot be adjusted or
repaired.
3. Ventilating Fans
a. Periodically lubricate motor and fan
shaft bearings.
b. Replace defective motors, sheaves,
bearings, V-belts and shafts as these
items become defective through normal
wear and tear.
4. Electric Motor Starters, Contractors and Relays
b. Where Tenant's design criteria requires special duty or
grease filters, Tenant shall furnish, maintain, clean
and/or replace as needed any special duty or grease
filters at the expense of Tenant. If in Landlord's
opinion, grease filters are not maintained and cleaned
adequately by Tenant, then Landlord shall have the right
to perform needed maintenance and cleaning at the
expense of Tenant.
c. Tenant shall be responsible to maintain the ductwork in
the Demised Premises at Tenant's expense.
d. Definition of "Maintain" shall be construed to mean
furnishing of parts, materials, labor supervision, and
tools to accomplish the preventative measures and to
effect the repairs set out above, but not to include
damage caused by Tenant in which the Tenant shall
reimburse Landlord for the cost of repairing such
damage.
3. The "Base Unit Charge" has three components as follows:
a. "Basic Costs" equal to $.1331 per ton-hour. Basic Costs
cover operating expenses of the Central Plant as
hereinafter defined in greater detail.
b. "Maintenance Services Expenses" (hereinafter defined)
equal to $.0105 per ton-hour.
c. Amortization of capital costs equal to (and hereby
conclusively deemed to be) $.1313 per ton-hour. This
component is for amortization of the retail
D(2)
<PAGE> 141
mall's proportionate share of the capital costs of
building the Central Plant. Also included in this
component is a 2%/year reserve for replacement of
capital equipment and a 10%/year administrative fee.
B. BASE UNIT CHARGE ADJUSTMENT
The Base Unit Charge adjustment shall be calculated in accordance with
the following:
1. Tenant's Base Unit Charge includes two components which may
escalate. These two components are Basic Costs amounting to
$.1331 per ton-hour and Maintenance Services Expenses amounting
to $.0105 per ton-hour. These amounts are estimates of Basic
Costs and Maintenance Services Expenses as if the Central Plant
and Tenant's Cooling, Heating and Ventilating equipment were in
operation in 1981.
2. Prior to Tenant's occupancy of the Demised Premises, Landlord
will provide an updated estimate of Basic Costs and Maintenance
Services Expenses for the year in which occupancy occurs. If
this estimate exceeds $.1331 per ton-hour for Basic Costs or
$.0105 per ton-hour for Maintenance Services Expenses, then
Tenant's Base Unit Charge shall be adjusted upward by the amount
of this excess.
3. Prior to the commencement of each calendar year of Tenant's
occupancy, Landlord shall provide to Tenant an estimate of the
Base Unit Charge (based on estimates of Basic Costs and
Maintenance Services Expenses) for said calendar year.
4. Within 90 days or as soon thereafter as possible following the
conclusion of each calendar year of the lease term, Landlord
shall furnish to Tenant a statement of the actual Heating and
Cooling Service Charge for such calendar year (based on the
actual Base Unit Charge, for said calendar year.) Such statement
may be audited at request of Tenant at Tenant's expense. A lump
sum payment will be made from Landlord to Tenant or from Tenant
to Landlord, as appropriate, promptly after the delivery of such
statement equal to the difference in actual Basic Costs and
Maintenance Services Expenses and estimated Basic Costs and
Maintenance Services Expenses multiplied by Tenant's actual
metered consumption for the just completed year. The effect of
this reconciliation payment is that Tenant will pay or receive
annually over the lease term its share of the charges adjusted
from the original estimate of $.1331 per ton/hour for Basic
Costs and $.0105 per ton-hour for Maintenance Service Expenses.
Notwithstanding the adjusting procedure described above, in no
event shall charges for Basic Costs be less than $.1331 per
ton-hour and charges for Maintenance Services Expenses be less
than $.0105 per ton-hour.
5. An example of the adjustment described in Section B.4 is as
follows:
Assume the time is early 1982. Tenant's estimated Base Unit
Charge for 1981 is $.2749 per ton-hour, which includes $.1331
per ton-hour for Basic Costs and $.0105 per ton-hour for
Maintenance Services Expenses. Tenant's metered consumption for
1981 is 15,459 ton-hours. Landlord provides a statement to
Tenant within the first 90 days of 1982 stating that the actual
Base Unit Charge if $.2801 per ton-hour. The reconciliation
payment would be a payment from Tenant to Landlord of $80.39
calculated as follows: ($.2801/ton-hour - $.2749/ton-hour) x
15,459 ton-hours = $80.39
6. If it should become necessary to convert the units of energy,
production in BTU's shall be converted to ton-hours by dividing
by 12,000 BTU's per ton-hour.
D(3)
<PAGE> 142
C. BASIC COSTS DEFINED
"Basic Costs", as said term is used herein, shall be a dollar amount per
ton-hour, determined by dividing the total operating expenses for the
Central Plant by the total cooling ton-hours produced by the Central
Plant, computed as of the last day of each calendar year during the
term.
Operating expenses of the Central Plant shall be computed on the accrual
basis and shall include all expenditures by Landlord to maintain and
operate facilities of the Central Plant in operation from the beginning
of the lease term and such additional facilities in subsequent years as
may be determined by Landlord to be necessary. Replacement of capital
equipment is provided for in the 2%/year reserve referred to in Section
A.3.c of this Exhibit and is not a Basic Cost. All operating expenses
shall be determined in accordance with generally accepted accounting
principles which shall be consistently applied. The term "operating
expenses" as used herein shall mean all expenses, costs and
disbursements (but not replacement of capital investment items nor
specific costs especially billed to and paid by specific tenants) of
every kind and nature which Landlord shall pay or become obligated to
pay because of or in connection with the ownership and operation of the
Central Plant, including but not limited to, the following:
1. Wages, salaries and all related expenses and benefits, of all
employees engaged in operation and maintenance of the Central
Plant. All taxes, insurance and benefits relating to employees
providing these services shall be included.
2. Cost of all supplies and materials and equipment rented or used
in operation and maintenance of the Central Plant.
3. Cost of all utilities for the Central Plant including the cost
of water and power, heating, lighting, air conditioning and
ventilating for the Central Plant.
4. Management costs and the cost of all maintenance and service
agreements for the Central Plant and the equipment therein
including, but not limited to alarm service and security
service.
5. Cost of all insurance relating to the Central Plant, including,
but not limited to the cost of fire, rental abatement, casualty
and liability insurance applicable to the Central Plant and
Landlord's personal property used in connection therewith.
6. All taxes and assessments and governmental charges whether
federal, state, county or municipal, and whether they be by
taxing districts or authorities presently taxing the Central
Plant or by others subsequently created or otherwise, and any
other taxes and assessments attributable to the Central Plant or
its operation.
7. Cost of repairs and general maintenance of the Central Plant
(excluding repairs and general maintenance paid by proceeds of
insurance or by Tenant or other third parties, and alterations
attributable solely to tenants of the building other than
Tenant).
8. Amortization of the cost of installation of capital investment
items which are primarily for the purpose of reducing operating
costs or which may be required by governmental authority. All
such costs shall be amortized over the reasonable life of the
capital investment items by including in Basic Costs annually
the applicable amortization schedule being determined in
accordance with generally accepted accounting principles and in
no event to extend beyond the reasonable life of the Mall
Building.
9. Landlord's central accounting costs applicable to the Central
Plant.
D(4)
<PAGE> 143
10. Any allocation of expenditures for service or operation of the
Complex attributable to the Central Plant, determined in
accordance with generally accepted accounting principles.
As used herein, the term "Complex" shall mean the Central Plant
and other parts of a larger development bounded by Dallas
Parkway, Alpha Road, Noel Road, and LBJ Freeway which from time
to time are subject to reciprocal easement arrangements for
common use of certain areas as an integrated mixed-use Complex.
D. MAINTENANCE SERVICES EXPENSES DEFINED
"Maintenance Services Expenses", as said term is used herein, shall be a
dollar amount per ton-hour, determined by dividing all operating
expenses associated with performance of the Maintenance Services defined
in Section A-2 of this Exhibit by the total cooling ton-hours consumed
by the Mall tenants and the Mall common area computed as of the last day
of each calendar year during the term of this lease.
All operating expenses associated with the performance of the
Maintenance Services defined in Section A-2 shall be determined in
accordance with generally accepted accounting principles which shall be
consistently applied. The term "operating expenses" as used herein shall
mean expenses, costs and disbursement (but not replacement of capital
investment items nor specific costs especially billed to and paid by
specific tenants) of every kind and nature which Landlord shall pay or
become obligated to pay because of or in connection with the performance
of Maintenance Services, including but not limited to, the following:
1. Wages, salaries and all related expenses and benefits, of all
employees engaged in performing Maintenance Services. All taxes,
insurance and benefits relating to employees providing these
services shall be included.
2. Cost of all supplies and materials and equipment rented or used
in performing Maintenance Services.
3. Management costs and the cost of all maintenance and service
agreements engaged in the performance of Maintenance Services
and the equipment therein.
4. Cost of repairs and general maintenance as called for under the
definition of Maintenance Services.
E. HOURS OF OPERATION
The normal operating hours during which Landlord agrees to operate the
Central Plant to heat, ventilate, and cool the Demised Premises to the
design criteria detailed in Exhibit C-1 are as follows:
Monday-Saturday 7:00 a.m. - 12:00 midnight
Sunday 11:00 a.m. - 12:00 midnight
Tenant shall have the right to request the Central Plant to heat,
ventilate and cool the Demised Premises from 12:00 midnight until 2:00
a.m. each day for an hourly charge equal to Thirty-Five and No/100
Dollars ($35.00).
D(5)
<PAGE> 144
[LANDLORD/TENANT ELECTRICAL WORK DIAGRAM]
EXHIBIT E
<PAGE> 145
EXHIBIT F
FINANCING STATEMENT
(Real Property Records)
Intentionally deleted.
E(1)
<PAGE> 146
EXHIBIT S
SATELLITE DISH AGREEMENT
LICENSE AGREEMENT
This License Agreement (this "License") is entered into and
effective this __________ day of _______________, 1998, (the "Effective
Date") by and between Dallas Galleria Limited, a Texas limited partnership
(hereinafter referred to as "Licensor") acting through Hines Interests Limited
Partnership, its agent, and LBE TECHNOLOGIES, INC., a corporation duly organized
and existing according to the laws of the State of California (hereinafter
referred to as "Licensee").
WHEREAS Licensor is the owner of an enclosed shopping mall known
as the Dallas Galleria (the "Mall") located in the City of Dallas, Dallas
County, Texas on the land described in Exhibit "A" attached hereto: and
WHEREAS Licensee desires to install a satellite dish on the roof
of the Mall with the wiring thereto and Licensor agrees to permit Licensee to
install a satellite dish on the roof of the Mall with the wiring thereto under
the terms and conditions contained herein.
NOW THEREFORE, for and in consideration of ten dollars ($10.00)
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Licensor and Licensee hereby agree as follows:
1. By this License, Licensor hereby grants to Licensee the right to install
and maintain at Licensee's sole cost and expense one satellite dish not
to exceed seventy-two inches (72 inches) in diameter (the "Satellite
Dish") at a location approved in writing by Licensor on the roof of the
Mall building, subject to the terms and conditions contained herein.
2. The term of this License shall be month-to-month. Either Licensor or
Licensee shall have the right to terminate this License, with or without
cause, upon thirty (30) days prior written notice to the other party.
3. Throughout the term of this License, Licensee shall pay to Licensor
monthly in advance, without prior notice or demand, a License Fee of One
Hundred Twenty-Five and No/100 Dollars ($125.00) per month and
proportionately for any partial first or last month.
4. Installation of the wiring to the Satellite Dish will be on the roof of
the Mall building in an area approved by Licensor. Licensee and its
contractor shall make no roof penetrations, but the wiring shall be run
at the inside of the parapet wall to a location near the Satellite Dish
in a manner approved by Licensor. From the parapet wall to the Satellite
Dish any fastening to the roof shall be done by Licensor's roofing
contractor at Licensee's expense.
5. Licensee shall install and maintain the wiring to the Satellite Dish at
Licensee's expense, and at the expiration or termination of the term of
this License, Licensee shall remove all wiring from the Demised Premises
to the
A(a) (1 of 3)
<PAGE> 147
Satellite Dish, all at the Licensee's sole cost and expense. If Licensee
fails to remove such wiring within thirty (30) days after the expiration
or termination of this License, then Licensor shall have the right to
remove such wiring at Licensee's expense, plus an administrative fee
equal to fifteen percent (15%) of the costs of removal.
6. Prior to the installation of the Satellite Dish, Licensee shall obtain,
at Licensee's sole cost and expense, all legal and regulatory permits
and licenses, whether Federal, State or Local, necessary for the
construction, maintenance and use of the Satellite Dish.
7. Licensee agrees to install and operate the Satellite Dish in a manner
which does not cause interference with existing satellite installations,
or the transmissions therefrom or the receipt of transmissions thereto.
Licensee shall be responsible to verify prior to installation that its
Satellite Dish does not interfere with other satellite dishes installed
on the roof of the Mall building.
8. Licensor shall have no liability for interference caused by
transmissions to or from other satellite dishes affecting receipt of
transmissions by Licensee.
9. Licensee shall hold Licensor harmless and indemnify Licensor from any
and all claims or proceedings brought thereon, and the defense thereof,
on the part of Licensee, Licensee's agents or employees or third parties
of whatever nature (i) arising from any act, omission or negligence of
Licensee or Licensee's contractors, agents, servants or employees, or
(ii) arising from any accident, injury or damage whatsoever caused to
any person, or any damage to the party of any person, including that of
Licensee or Licensee's agents or employees, occurring during term hereof
or from the installation or maintenance of the wiring, whether due
solely or in part to negligence of Licensor, its officers, employees or
agents. Notwithstanding anything to the contrary contained herein, there
is expressly excluded from the above indemnity, any claims resulting
from the intentional torts or gross negligence of Licensor, its
officers, employees or agents. This indemnity and hold harmless
agreement shall include indemnity against all costs, expenses and
liabilities incurred in or in connection with any such claim or
proceeding brought thereon, and in the defense thereof. Throughout the
term of this License, Licensee shall continuously maintain general
liability insurance under which Licensor and Licensee are named as
insureds with contractual liability endorsements covering the indemnity
contained herein and with limits of at lease one million and no/100
dollars ($1,000,000.00) combined single limit coverage for personal
injury and property damage in any one occurrence. Each such policy shall
provide that it is primary over any insurance carried by Licensor.
10. If during the term of the License, Licensor installs a common satellite
system for the Mall (and which may include other buildings), then this
License shall terminate upon thirty (30) days written notice from
Licensor to Licensee, after which Licensee may, at its option, connect
with such common satellite dish at its cost and receive transmissions
through such common satellite system at the rates then charged by
Licensor under the rules and regulations established by Licensor.
A(a) (2 of 3)
<PAGE> 148
This License is hereby executed and delivered in multiple
counterparts, each of which shall have the force and effect of an original,
effective as of the date first written hereinabove.
DALLAS GALLERIA LIMITED
By: Hines Interests Limited Partnership
Authorized Agent
By:
-------------------------------------
LICENSOR
LBE TECHNOLOGIES, INC.
d/b/a Nascar Silicon Motor Speedway
By:
-------------------------------------
-------------------------------------
Name Printed Title
LICENSEE
A(a) (3 of 3)
<PAGE> 149
VIA AIRBORNE EXPRESS
August 11, 1998
Ms. Janet Woods
Silicon Entertainment, Inc.
10401 Bubb Rd.
Cupertino, CA 95014
(408) 777-8082
RE: First Amendment of Lease
Hines Tenant: Silicon Entertainment, Inc.
d/b/a Nascar Silicon Motor Speedway
Landlord: Dallas Galleria Limited
Location: Dallas Galleria
Dear Ms. Woods:
Enclosed please find one (1) fully executed original(s) of the
above referenced document(s) for your files.
If you have any further questions, please let me know.
Sincerely,
/s/ PAULA KYZAR/kae
---------------------------------
Paula Kyzar
Legal Assistant to Marcela Chennisi
Retail Development Group
/kae
cc: Jennifer Brown
Lou Ann Kelley
Safe Deposit
Invoice File
<PAGE> 150
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (The "License"), is entered into this 20th day of
July, 1998, by and between SILICON ENTERTAINMENT, INC., a corporation duly
organized and existing according to the laws of the State of California (the
"Licensor") and DALLAS GALLERIA LIMITED, a Texas limited partnership (the
"Licensee") d/b/a Nascar Silicon Motor Speedway.
WITNESSETH:
IN CONSIDERATION of the payments provided for herein, and the covenants
and conditions hereinafter set forth, Licensor and Licensee hereby covenant and
agree as follows:
1. PREMISES AND TERM.
Licensor hereby grants to Licensee the revocable license and right to
operate a temporary exhibit in the Common Area on level 3 of the Shopping
Center (as defined below) shown as "Exhibit Area" on Exhibit "A" attached hereto
(the "Premises"), within the Dallas Galleria Shopping Center (the "Shopping
Center") located in Dallas, Dallas County, Texas, commencing on September 1,
1998 and continuing on a month-to-month basis (the "term"), subject to
Licensor's right to terminate on thirty (30) days prior written notice as
contained hereinbelow.
2. CONDITION OF PREMISES.
Licensee hereby acknowledges and agrees that Licensee has inspected the
Premises and found them to be suitable for Licensee's permitted use as set forth
in Section 3, and Licensee further agrees that Licensee is accepting the
Premises in an "AS-IS" condition without any representations or warranties
(expressed or implied) of any kind whatsoever, including, without limitation,
fitness for a particular purpose, tenantability or habitability, and without
recourse to Licensor.
3. USE.
Licensee shall operate its business in the Premises solely for the
display of a platform based full-size NASCAR racing vehicle and sign as shown on
Exhibit "S" attached hereto (collectively, the "Installation"). Licensee hereby
agrees that the Premises shall be used for no other purpose or purposes
whatsoever.
4. LICENSE FEE AND ADDITIONAL LICENSE FEE.
Intentionally deleted.
1
<PAGE> 151
5. HVAC AND UTILITIES.
In the event Licensee requires the use of electricity, water, sewer or
gas (the "Utilities") for the Premises, Licensee shall cause the Utilities to be
metered in the name of Licensee and shall pay the Utility bills for the Premises
directly to the company providing any such Utilities. In the event that Licensor
elects to provide any of the Utilities to the Premises, Licensee shall reimburse
Licensor for the cost of providing any such Utilities, which reimbursement shall
be due within five (5) days after Licensee's receipt of demand, invoice or
statement therefor from Licensor.
6. MAINTENANCE AND REPAIR OF PREMISES.
Licensee shall, at its sole costs and expense, keep and maintain the
Premises and the Installation in "like new" condition as determined by
Landlord's sole judgment. Licensor hereby reserves and retains the right to
enter the Premises at any time to fulfill its repair and maintenance obligations
to the common areas and other premises. Licensor shall use reasonable efforts to
minimize interference with Licensee's permitted business operations in the
Premises.
7. ALTERATIONS, IMPROVEMENTS AND ADDITIONS.
Other than the Installation described on Exhibit "S" attached hereto,
Licensee shall not make any alterations, improvements or additions (including,
without limitation, the installation of any fixtures) to the Premises without,
in each instance, first obtaining the prior written consent of Licensor.
Licensee hereby agrees that any alterations, improvements or additions
(including, without limitation, the installation of any fixtures) to the
Premises shall be (i) completed in a good and workman like manner, (ii)
performed and completed by a contractor approved by Landlord so as not to create
a lien against the Premises, the building of which the Premises are a part, or
the Shopping Center, (iii) performed and completed pursuant to Licensor's then
current rules, regulations, specifications and design criteria (including,
without limitation, the submission of plans and specifications), (iv) the
property of Licensor upon the completion thereof, (v) performed and completed in
such a manner as not to interfere with or cause a nuisance to Licensor's
operation of the Shopping Center, the use of the common areas of the Shopping
Center or the other occupants of the Shopping Center, (vi) performed and
completed in compliance with all applicable laws, ordinances, rules and
regulations of any governmental authority leaving jurisdiction thereover and
(vii) performed after Shopping Center business hours unless otherwise approved
in writing by Licensor.
8. SECURITY DEPOSIT.
Licensee shall deposit with Licensor, upon Licensee's execution of this
License, a deposit of [***] as security for Licensee's performance hereunder.
Licensor shall return to Licensee such security deposit within thirty (30) days
after the expiration or termination of this
*** Confidential treatment requested.
2
<PAGE> 152
14. EXTENSION OF TERM, LICENSOR'S RIGHT TO TERMINATE AND SURRENDER OF PREMISES.
Licensor hereby reserves and retains, during the term of this License, the
right to terminate this License, with or without cause, upon thirty (30) days
prior written notice to Licensee, provided, however, that Licensor may not
revoke the license granted hereunder with respect to the sign described on
Exhibit "S" except upon a default by Licensee or the early termination or
expiration of the term of Licensee's lease of retail space within the Shopping
Center.
Licensee hereby agrees upon the expiration or termination of this License
to (i) vacate the Premises and re-deliver the Premises to Licensor in good
order, condition and repair (ordinary wear and tear excepted), (ii) leave all
improvements which are in place at the time Licensor delivers possession of the
Premises to Licensee, and (iii) leave all alterations, improvements, additions
and fixtures which may be made or installed by either Licensor or Licensee upon
the Premises and which in any manner are attached to the Premises (including,
without limitation, being cemented, glued, nailed, bolted or otherwise affixed
to the floor, walls, storefront, or ceiling of the Premises).
15. HOLDOVER.
In the event of any unauthorized holding over, Licensee shall indemnify and
hold harmless Licensor against any and all claims for damages by any other
licensee or tenant to whom Licensor may have leased the Premises for any date
commencing after the termination date of this License, unless licensee is
granted the right, in writing and signed by the Licensor, to hold over beyond
the termination date.
16. EVENTS OF DEFAULT AND REMEDIES OF LICENSOR.
In the event that Licensee fails to comply with, perform or fulfill any of
the terms, conditions or obligations herein which are to be complied with, or
performed or fulfilled by Licensee ("Event of Default"), Licensor lawfully may,
immediately or at any time thereafter, without further demand or notice, elect
either to (i) receive as liquidated damages, in addition to all rentals and
other charges provided for in this License, the sum of One Hundred Dollars
($100.00) per day that Licensee fails to cure any such Event of Default, or (ii)
terminate this License upon five (5) days notice to Licensee, or (iii) pursue
any other remedies available to Licensor at law or in equity. The failure of
Licensor to complain of any action or non-action on the part of Licensee, no
matter how long the same may continue, shall never be deemed to be a waiver by
Licensor of its rights under this License. Further, it is covenanted and agreed
that no waiver at any time of any of the other provisions of this License by
Licensor shall be construed as either a waiver of any of the other provisions of
this License or a waiver of at any subsequent time of the same provisions. If on
account of a default or breach by Licensee of any term,
5
<PAGE> 153
provision, condition or obligation under this License, it shall be necessary for
Licensor to employ an attorney to enforce or defend any of Licensor's rights or
remedies hereunder or to evict Licensee, then Licensee shall pay to Licensor any
reasonable amounts incurred by Licensor as attorney's fees.
17. RELOCATION.
In the event the Licensor requires the use of the Premises for any
special event, Licensor shall have the right, upon ten (10) days notice to
Licensee, to temporarily relocate the Premises to another location on level 3 of
the Shopping Center. Such relocation shall be at Licensee's sole cost and
expense. Licensor shall have the right to relocate the sign to another location
on level 3 of the Shopping Center at any time during the term of this License
which relocation shall be at Licensee's sole cost and expense.
18. ADDITIONAL COVENANTS OF LICENSEE.
Licensee shall at all times keep and maintain the Premises and
Installation in a safe and clean manner.
Licensee shall not permit any rubbish or refuse emanating from the
Premises to accumulate in the common areas of the Shopping Center and shall be
responsible for a neat and clean appearance of the Premises.
Unless otherwise specifically permitted herein, Licensee shall not
permit consumption of food or beverages as a part of the conduct of business in
the Premises.
Licensee shall provide Licensor with both a local emergency telephone
number and address and permanent forwarding address. All notices in connection
with this License shall be given by Certified U.S. Mail, return receipt
requested or, in the case of notices from Licensor, personally delivered to the
Premises with written confirmation of receipt.
Licensee shall be responsible at all times for the security of the
Premises.
Licensee shall at all times abide by the rules and regulations
established by Licensor (and/or the Shopping Center Manager) from time to time,
with respect to the common areas, parking facilities, employee parking and
Shopping Center.
Except as shown on Exhibit "S", Licensee shall not, without Licensor's
prior written approval, erect or install any signs, window or door lettering
placards, or advertising media of any type which can be viewed from the exterior
of the Premises, or erect or install any of the foregoing which are suspended
from the ceiling of the Premises.
Licensee shall not use any neon, flashing or rotating lights or signs at
the Premises.
Licensee shall not conduct solicitation of any kind from the Premises
without the Licensor's prior written approval.
6
<PAGE> 154
Licensee shall not interrupt or disturb customers or patrons in the
Common Area.
18. MISCELLANEOUS PROVISIONS.
This License shall be governed exclusively by the provisions hereof and
by the laws of the State of Texas, as the same may exist from time to time,
without regard to any theory or principal of the conflict of laws, and venue
shall be in Harris County, Texas.
If any term or provision of this License or the application thereof to
any person or circumstance shall to any extent be invalid or unenforceable, the
remainder of this License (including the application of such term or provision
to persons or circumstances other than those as to which it is held invalid or
unenforceable) shall not be affected thereby, and each term and provision of
this License shall be valid and be enforced to the fullest extent permitted by
law.
The submission of this document for examination and negotiation does not
constitute an offer to lease, a reservation of, or an option for the Premises,
and this document shall become effective and binding only upon the execution and
delivery hereof by both Licensor and Licensee. All negotiations, considerations,
representations, inducements, oral agreements and understandings between
Licensor and Licensee are merged and incorporated herein and this License may be
amended, modified or altered only by written agreement signed by both Licensor
and Licensee. This License constitutes the only agreement between the parties
hereto, and there are no other representations or warranties between the
parties. No employee or agent of Licensor shall have the right or authority to
amend, modify or alter any of the provisions of this License.
7
<PAGE> 155
IN WITNESS WHEREOF, Licensor and Licensee have caused this License to be
executed as of the date set forth above.
LICENSEE: SILICON ENTERTAINMENT, INC.
d/b/a Nascar Silicon Motor Speedway
By: /s/ JANET WOODS
----------------------------------------
Janet Woods - Vice President Real Estate
Licensee's Permanent Address:
LBE Technologies, Inc.
10401 Bubb Road
Cupertino, CA 95014
LICENSOR: DALLAS GALLERIA LIMITED,
A Texas Limited Partnership
By: HDG, Limited
A Texas Limited Partnership
General Partner
By: Hines Consolidated Investments, Inc.
A Delaware Corporation
General Partner
By: /s/ DON B. MCCRORY
-------------------------------------
Don B. McCrory
Vice President
8
<PAGE> 156
GALLERIA
SITE LAYOUT - LEVEL 3
EXHIBIT A
<PAGE> 157
SHOW CAR
PLAN VIEW
DALLAS GALLERIA
<PAGE> 158
SHOW CAR
SIDE ELEVATION
DALLAS GALLERIA
<PAGE> 1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED ON A REQUEST FOR CONFIDENTIAL
TREATMENT
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
EXHIBIT 10.12
LEASE
BY AND BETWEEN
MALL OF AMERICA COMPANY,
a Minnesota General Partnership
AND
LBE TECHNOLOGIES, INC.
<PAGE> 2
MALL OF AMERICA
LEASE
THIS LEASE made this 12th day of August, 1997 by and between MALL OF
AMERICA COMPANY, a Minnesota General Partnership, ("Landlord"), and LBE
TECHNOLOGIES, INC., ("Tenant"):
WITNESSETH THAT, inconsideration of the rents, covenants and agreements
hereafter set forth, such parties enter into the following agreement:
ARTICLE I
EXHIBITS
The exhibits listed below and attached to this Lease are incorporated
herein by this reference:
EXHIBIT "A" Legal description of real estate to be developed by the
Landlord as a mixed use project, consisting of a retail
mall and entertainment center ("Retail Space") and a
hotel ("Hotel Space"), as well as a parking deck
("Parking Space") (hereinafter called "Total tract").
The Total Tract with existing and future improvements
being hereinafter called the "Center".
EXHIBIT "B" Plot Plan of that area of the Retail Space upon which is
located the space herein leased to Tenant. This Exhibit
is provided for informational purposes only, and shall
not be deemed to be a warranty, representation or
agreement by Landlord that the Center or buildings
and/or any stores will be exactly as indicated on the
Exhibit or that the other tenants which may be drawn on
said Exhibit will be occupants in the Center. Landlord
reserves unto itself the unlimited right to modify the
configuration of Total Tract at any time for the purpose
of incorporating additional department stores and other
buildings within the Center.
EXHIBIT "C" Description of Tenant's Work.
EXHIBIT "D" Rules and Regulations applicable to Tenant.
EXHIBIT "E" Sign Criteria applicable to Tenant.
EXHIBIT "F" INTENTIONALLY DELETED.
Notwithstanding Exhibits A or B or anything else in this Lease contained,
Landlord reserves the right to change or modify and add to or subtract from the
size and dimensions of the Center or any part thereof, the number, location and
dimensions of buildings and stores, the size and configuration of the parking
areas, entrances exits and parking aisle alignments, dimensions of hallways,
malls and corridors, the number of floors in any building, the location, size
and number of tenants' spaces and kiosks which may be erected in or fronting on
any mall or otherwise, the identity, type and location of other stores and
tenants, and the size, shape, location and arrangement of Common areas
(hereinafter defined), and to design and decorate any portion of the Center as
it desires, but the general character of the Center, the approximate location
of the Premises (as hereinafter defined) in relation to the major department
stores shall not be substantially changed. LANDLORD SHALL NOT MODIFY THE COMMON
AREAS IN ANY MANNER THAT WOULD HAVE A MATERIAL ADVERSE EFFECT ON PEDESTRIAN AND
VEHICULAR TRAFFIC WITHIN THE CENTER OR THAT WOULD REDUCE THE NUMBER OF PARKING
SPACES SERVING THE CENTER BELOW APPLICABLE CODE REQUIREMENTS. FURTHER, EXCEPT
AS SHOWN ON EXHIBIT "B" AND EXCEPT AS IN EXISTENCE ON THE DATE OF THIS LEASE,
LANDLORD SHALL NOT LEASE OR OTHERWISE PERMIT TENANTS OR CONCESSIONAIRES TO
OCCUPY THAT PORTION OF THE COMMON AREAS FRONTING ON THE PREMISES CROSS-HATCHED
ON PAGE 2 OF EXHIBIT "B". THE FOREGOING SHALL NOT, HOWEVER, LIMIT LANDLORD'S
RIGHT TO MAKE NECESSARY REPAIRS, TO TAKE SUCH ACTIONS AS ARE REQUIRED IN AN
EMERGENCY SITUATION OR FOR SECURITY PURPOSES, OR TO COMPLY WITH GOVERNMENTAL
REQUIREMENTS.
ARTICLE II
LEASED PREMISES AND TERM
Section 2.1. Leased Premises.
Landlord hereby leases to Tenant and Tenant hereby rents from Landlord
the space (in the Center) designated as Space S-352 outlined in red on Exhibit
"B" (hereinafter called "the Premises"), irregularly shaped, but measured to
the center line of all party or common walls, to the exterior faces of all
other walls and to the building line where there is no wall, containing
approximately 5,899 square feet. When the Premises are completed, Landlord
shall deliver to Tenant a certificate stating Landlord's determination of the
actual number of square feet in the Premises (hereinafter called the "Store
Floor Area"), and the parties agree that, unless Tenant reasonably disputes the
same within sixty (60) days after the receipt of Landlord's certificate,
Landlord's determination shall be final, binding and conclusive. In the event
of a dispute as to the tore Floor Area in the Premises, Landlord and Tenant
agree to mutually field measure the Premises. If, after such field measurement
of the Premises, the parties still dispute the Store Floor Area, then the
parties shall employ the services of a reputable, independent, third-party
architect or engineer to measure the Premises and, absent manifest error, such
architect's or engineer's determination of the Store Floor Area shall be final,
binding and conclusive. The fee for such architect or engineer shall be shared
equally by the parties.
Section 2.2. Roof and Walls.
Landlord shall have the exclusive right to use all or any part of the
exterior of the roof, side and rear walls of the Premises for any purpose,
including but not limited to erecting signs or other structures on or over all
or any part of the same, erecting scaffolds and other aids to the construction
and installation of the same, and installing, maintaining, using, repairing and
replacing pipes, ducts, conduits and wires leading through, to or from the
Premises and serving other parts of the Center in locations which do not
materially interfere with Tenant's use of the Premises. Tenant shall have no
right whatsoever in the exterior of exterior walls or the roof of the Premises.
Section 2.3. Lease Term.
The term of this Lease (hereinafter called "Lease Term") shall commence
upon the earlier of (a) the day following the last day allowed herein to Tenant
for completion of Tenant's Work (hereinafter defined) hereinafter called
"Required Completion Date" or (b) the day on which Tenant opens for business,
the applicable date being hereinafter called "Commencement Date." The term of
this Lease shall end on the last day of the fifth (5th) Lease Year (hereinafter
defined) after the Commencement Date unless sooner terminated as herein
provided.
SUBJECT TO SECTION 3.2 HEREOF, TENANT IS REQUIRED TO OPEN FOR BUSINESS TO
THE PUBLIC IN THE PREMISES ON OR BEFORE NOVEMBER 30,1997.
Section 2.4. Lease Year Defined.
"Lease Year," as used herein, means a period of twelve (12) consecutive
months during the Lease Term commencing on February 1 of any calendar year, the
first Lease Year commencing on the first day of the first February occurring on
or after the Commencement Date. "Partial Lease Year" means that portion of the
Lease Term prior to the first Lease Year.
Section 2.5. Relocation of Premises. INTENTIONALLY DELETED.
ARTICLE III
TENANT'S WORK
Section 3.1. Tenant's Work.
Tenant agrees to accept delivery of the Premises in its present "AS IS,
WHERE IS" condition except that Tenant is to completely remodel the Premises
[***] (subject to Section 24.20 below) not later than the Required Completion
Date (hereinafter defined) in accordance with plans and specifications submitted
by Tenant and approved by Landlord (hereinafter referred to as "Tenant's Plans")
which plans shall become a part hereof by this reference as Exhibit "C-2".
Further alterations to the Premises, if any, shall be performed by Tenant
(hereinafter called "Tenant's Work") including but not limited to all work
designated as Tenant's Work in Exhibit "C", and Tenant shall do and perform at
its expense all of Tenant's Work diligently and promptly and in accordance with
the following provisions.
Section 3.2. Tenant's Obligations Before Commencement Date.
The parties acknowledge that Landlord has delivered to Tenant a drawing of
the Premises and a copy of the Tenant Handbook prepared by Landlord's architect
(hereinafter referred to as "Tenant Handbook"). Within forty-five (45) days
after the date of this Lease, Tenant will submit to Landlord one (1)
reproducible set (sepia) and 4 copies of Tenant's Plans and specifications,
prepared by a registered architect or engineer, of all Tenant's Work to be done
within the Premises, prepared in conformity with Exhibit "C" and the Tenant
Handbook. Within fifteen (15) days after receipt of Tenant's Plans, Landlord
shall notify Tenant of any failures of Tenant's Plans to conform to Exhibit "C,"
the Tenant Handbook or otherwise to meet with Landlord's reasonable approval.
Tenant shall within fifteen (15) days after receipt of any such notice cause
Tenant's Plans to be revised to the extent necessary to obtain Landlord's
reasonable approval and resubmitted for Landlord's approval. When Landlord has
approved the original or revised Tenant's Plans, Landlord shall initial and
return one (1) set of approved Tenant's Plans to Tenant and the same shall
become a part hereof by this reference as Exhibit "C-2." Approval of plans and
specifications by Landlord shall not constitute the assumption of any
responsibility by Landlord for their accuracy or sufficiency, or compliance with
applicable codes and Tenant shall be solely responsible for such plans and
specifications. Landlord shall not unreasonably withhold or delay approval of
Tenant's Plans. If Landlord objects to Tenant's Plans, Landlord shall specify in
writing the basis for such objections and the changes Landlord requires to be
made to Tenant's Plans. Tenant shall not commence any of Tenant's Work until
Landlord has approved Exhibit "C-2," unless prior Landlord approval has been
obtained in writing.
Tenant shall commence Tenant's Work following the approval by Landlord of
the Tenant's Plans at a time reasonably acceptable to both parties and Tenant
shall complete the same in strict accordance with Exhibits "C" and "C-2,"
install all store and trade fixtures, equipment, stock in trade, merchandise and
inventory, and open for business therein not later than November 30, 1997, which
day shall be the Required Completion Date. Tenant hereby releases Landlord and
its contractors from any claim whatsoever for damages against Landlord or its
contractors
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for any delay in the date on which the Premises shall be ready for delivery
to Tenant or for any delay in commencing or completing any work Landlord is to
perform or is authorized by Tenant to perform under Exhibit "C".
Landlord hereby grants Tenant the right to enter upon the Premises and to
have access through the Center for the purpose of completing the Tenant's
Plans, conducting review and analysis of Tenant's build-out and fixturing
requirements, and completion of the Tenant's Work.
Notwithstanding any provision of this Lease to the contrary, the Required
Completion Date and the Commencement Date shall not be deemed to have occurred
if the Tenant's Work is not completed and the Premises are not suitable for the
opening of business to the extent that any of the following occurs (collectively
referred to as "Unavoidable Delays"): (a) Landlord has unreasonably delayed
approving the Tenant's Plans within the time periods specified herein; (b)
Landlord has failed to provide Tenant and Tenant's architect, contractors and
subcontractors with reasonable access to the Premises to permit the completion
of the Tenant's Work; (c) the occurrence of a fire or other casualty; (d) delays
in obtaining approvals from any governmental entity or authority whose
permission or approval is required as a condition to the lawful construction of
the Tenant's Work or the use or occupancy of the Premises for the use of the
Premises contemplated by Tenant, provided Tenant promptly applied for such
permits and approvals and diligently pursues the same for approval; (e) any
default or breach of Landlord that causes a delay in completion of the Tenant's
Work; or (e) the occurrence of any event described in Section 24.5 of this Lease
or other event not within the reasonable control of Tenant or its contractor or
subcontractors. To the extent an Unavoidable Delay occurs and is continuing,
Tenant's obligation to complete the Tenant's Work and the Required Completion
Date shall be extended by a like number of days.
Section 3.3. Failure of Tenant to Perform.
Because of the difficulty or impossibility of determining Landlord's damages
resulting from Tenant's failure to open for business fully fixtured, stocked and
staffed on the Commencement Date, including, but not limited to, damages from
loss of Percentage Rent (hereinafter defined) from Tenant and other tenants,
diminished saleability, leasability, mortgageability or economic value of the
Center, if Tenant fails to diligently complete Tenant's Work, or to open for
business fully fixtured, stocked and staffed on or before the Commencement Date
Landlord may, if such failure is not cured within twenty (20) days after notice
to Tenant, collect rent from the Commencement Date in an amount equal to the
Minimum Annual Rent (hereinafter defined) and other additional rent and other
amounts payable by Tenant hereunder, and, in addition thereto, an amount equal
to [***] of 1/365ths of the Minimum Annual Rent for each day that Tenant has
failed to open for business on and after the Commencement Date, which later
amount shall be in lieu of Percentage Rent that might have earned had Tenant
opened in timely fashion. In addition, Landlord may, upon ninety (90) days prior
written notice to Tenant and Tenant's subsequent failure to open for business in
the Premises within such ninety (90) day period, terminate this Lease. All
remedies in this Lease or at law provided shall be cumulative and not exclusive
and shall survive the expiration of the Lease Term or the earlier termination of
this Lease.
Section 3.4. Condition of Premises.
Tenant's taken possession of the Premises shall be conclusive evidence of
Tenant's acceptance thereof in good order and satisfactory condition. Tenant
agrees that no representations respecting the condition of the Premises or the
existence or non-existence of Hazardous Materials (hereinafter defined) in, on
or about the Premises, no warranties or guarantees, expressed or implied, with
respect to workmanship or any defects in material, and no promise to decorate,
alter, repair or improve the Premises either before or after the execution
hereof, have been made by Landlord or its agents to Tenant unless the same are
contained herein.
ARTICLE IV
RENT
Section 4.1. Minimum and Percentage Rent.
Tenant covenants and agrees to pay to Landlord, without notice or demand,
at Landlord's address for notice (Landlord's and Tenant's notice addresses
being the addresses specified in Section 24.7 hereof), as rent for the Premises:
(i) A "Minimum Annual Rent" of [***] per square foot of Store Floor Area,
or [***] per annum (based upon the approximated Store Floor Area set
forth in Section 2.1 hereof), payable in equal monthly installments,
in advance upon the first day of each and every month of the Lease
Term commencing upon the Commencement Date (such monthly installment
being hereinafter called "Minimum Monthly Rent"); and
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(ii) [***] of Gross Sales (hereinafter defined) during each Lease Year or
Partial Lease Year to the extent such Gross Sales exceed $[***] (the
"Simulator Breakpoint") (pro rated accordingly for a Partial Lease
Year) for such period for all Gross Sales generated by Tenant's
Simulators and [***] of Gross Sales during each Lease Year or Partial
Lease Year to the extent such Gross Sales exceed [***] (the
"Merchandise Breakpoint") (pro rated accordingly for a Partial Lease
Year) for such period for all Gross Sales generated by the sale of
merchandise (hereinafter called "Percentage Rent").
When Store Floor Area is determined in accordance with Section 2.1, the
Minimum Annual Rent and Minimum Monthly Rent shall be deemed automatically
increased or decreased based upon the Store Floor Area as thus determined, and
any overpayments or underpayments of Minimum Monthly Rent to Landlord shall be
adjusted accordingly.
Section 4.2. Miscellaneous Rent Provisions.
Any rent or other amounts to be paid by Tenant which are not paid when due
and which remain unpaid for seven (7) days after Tenant's receipt of written
notice specifying such failure shall bear interest as of the first day of the
month on which any sum is due and owing at a rate equal to [***]
over the prime rate announced by Citibank, N.A. If the Commencement Date is
other than the first day of a month, Tenant shall pay on the Commencement Date
a prorated partial Minimum Monthly Rent for the period prior to the first day
of the next calendar month, and thereafter Minimum Monthly Rent payments shall
be made not later than the first day of each calendar month. For the purposes
of this Lease, a "Major Tenant" is herein defined as a single tenant occupying
at least 40,000 contiguous square feet of floor area.
Section 4.3. Percentage Rent.
Tenant shall (i) not later than the twenty-first (21st) day after the
close of each calendar month, deliver to Landlord a written statement certified
by an officer of Tenant to the best knowledge of such officer, showing Gross
Sales made in such calendar month; and (ii) not later than 30 days after the
end of each Lease Year or Partial Lease Year, deliver to Landlord a statement
of Gross Sales for such Lease Year or Partial Lease Year the correctness of
which is certified to by an independent certified public accountant. If Tenant
fails to prepare and deliver any statement of Gross Sales required hereunder,
within the time or times specified above, then Landlord shall have the right,
in addition to the other rights and remedies set forth in this Lease, (a) to
collect from Tenant a sum which shall be [***] per calendar day for each day
that Gross Sales reports are not so submitted, and (b) to estimate Tenant's
Gross Sales for any non-reported period (which estimate shall be based upon
prior Lease Years' Gross Sales, if available, and reasonable extrapolations
which may be derived therefrom) and bill Tenant's Percentage Rent accordingly.
Landlord reserves the right, at Landlord's option, to adjust Percentage Rent
billings when actual Gross Sales reports are received.
On or before the twenty-first (21st) day of each May, August, November and
February, Tenant shall pay Landlord [***] of Gross Sales of Tenant generated by
Tenant's Simulators during the three (3) months (or less in a Partial Lease
Year) ending on the last day of the month preceding such payment date to the
extent such Gross Sales exceed [***] (pro rated accordingly for a period of less
than three [3] months) for such period and [***] of Gross Sales of Tenant
generated by the sale of merchandise during the three (3) months (or less in a
Partial Lease Year) ending on the last day of the month preceding such payment
date to the extent such Gross Sales exceed [***] (pro rated accordingly for a
period of less than three [3] months) for such period. Within thirty (30) days
after the later of (i) the due date for Tenant's annual report of Gross Sales,
or (ii) the date of Landlord's receipt of such annual report, if Tenant has paid
Landlord for such Lease Year or Partial Lease Year Percentage Rent greater than
Tenant is obligated to pay for such period, Landlord shall refund such excess,
and if Tenant has paid less than the Percentage Rent required to be paid for
such period, Tenant shall pay Landlord such difference.
The parties acknowledge that Gross Sales may fluctuate substantially
during different months of any annual period, and the parties agree that
Percentage Rent payable for a Partial Lease Year shall be determined in a
manner that approximates the monthly Percentage Rent that would be payable if
the Percentage Rent were determined on an annual basis. Accordingly, for
purposes of prorating Percentage Rent for a Partial Lease Year pursuant to
Section 4.1 and this Section 4.3, the Percentage Rent shall be determined as
follows:
The Simulator Breakpoint and the Merchandise Breakpoint, as the case may
be shall be prorated by multiplying such breakpoints by a fraction, the
numerator of which is the number of days in the Partial Lease Year and the
denominator of which is 365 days (such fraction herein called the "Partial
Lease Year Fraction"). As initially determined, the Percentage Rent shall be
[***] of Gross Sales during the Partial Lease Year to the extent
Gross Sales exceed the Simulator Breakpoint and shall be [***] of
Gross Sales during the Partial Lease Year to the extent Gross Sales exceed the
Merchandise Breakpoint, respectively, calculated in accordance with the
immediately preceding sentence. The Percentage Rent as determined in accordance
with this paragraph is referred to as the "Estimated Partial Lease Year
Percentage Rent" and shall be payable as provided in Section 4.3 of this Lease,
subject to adjustment as provided in the immediately following paragraph.
The Percentage Rent for a Partial Lease Year thereafter shall be adjusted
based on the actual Gross Sales for the annual period starting on the
Commencement Date and ending on the 365th day after the Commencement Date. The
Percentage Rent attributable to Gross Sales during such annual period shall be
computed based on the Simulator Breakpoint and Merchandise Breakpoint (each
computed without proration) in accordance with Section 4.1 (ii) above. The
Percentage Rent for the Partial Lease Year then shall be recalculated by
multiplying the Percentage Rent (as determined in accordance with the
immediately preceding sentence) by the Partial Lease Year Fraction. Any
underpayments of Percentage Rent by Tenant promptly shall be paid by Tenant and
overpayments of Percentage Rent shall be credited to the
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next installment or installments of Percentage Rent then coming due. The
foregoing shall not affect the provisions of this Lease relating to the
computation of Percentage Rent for the first or any subsequent full Lease Year.
Tenant will preserve for at least three (3) years at Tenant's notice
address (or at the Premises, at Tenant's discretion) all original books and
records disclosing information pertaining to Gross Sales, including, but not
limited to, cash register tapes, sales slips, sales checks, gross income and
sales tax returns, bank deposit records, sales journals and other supporting
data. Landlord and its agents shall have the right during business hours,
following not less than fifteen (15) days prior written notice, to examine and
audit such books and records preserved by Tenant, Tenant reserving the right to
be present during any such examination or audit. If such examination or audit
discloses a liability for Percentage Rent [***] or more in excess of the
Percentage Rent paid by Tenant for any period or if Tenant's Gross Sales cannot
be verified due to the insufficiency or inadequacy of Tenant's records, Tenant
shall promptly reimburse Landlord for Landlord's actual out-of pocket costs (not
to exceed customary and reasonable amounts) for said audit. Tenant shall, in any
event, pay to Landlord the amount of any deficiency in rents which is disclosed
by such audit. Landlord shall not disclose any information relating to any
examination performed by or for Landlord to other parties, except to Landlord's
lenders, accountants, attorneys and other employees (who shall be allowed access
to such information on a "need to know basis" and who in any event likewise
shall be obligated not to disclose such information to other parties) or to any
governmental agency or in accordance with any legal proceeding pursuant to a
duly issued subpoena.
Section 4.4. Gross Sales Defined.
As used herein, Gross Sales means the sale prices of all goods, wares
and merchandise sold and the charges for all services performed by Tenant or any
other person or entity in, at, or from the Premises for cash, credit or
otherwise, without reserve or deduction for uncollected amounts except as
hereinafter specifically provided, including but not limited to sales and
services (i) where the orders originate in, at or from the Premises, regardless
from whence delivery or performance is made, (ii) pursuant to mail, telephone,
telegraph or otherwise received or filled at the Premises, (iii) resulting form
transactions originating in, at or from the Premises, and deposits not refunded
to customers. Excluded from Gross Sales shall be: (i) exchanges of merchandise
between Tenant's stores made only for the convenient operation of Tenant's
business and not to consummate a sale made in, at or from the Premises, (ii)
returns to manufacturers, (iii) refunds to customers (but only to the extent
included in Gross Sales), (iv) sales of fixtures, machinery and equipment after
use in Tenant's business in the Premises, (v) sales of merchandise or services
at a discount to Tenant's employees, not to exceed [***] of annual Gross Sales,
(vi) amounts that are determined by Tenant to be uncollectible from customers,
including checks returned for lack of sufficient funds and credit card
chargebacks, not to exceed [***] of annual Gross Sales, provided such amounts
were originally included in Gross Sales when made and provided, further, any
subsequent collection or recover thereof shall be included in Gross Sales in the
Lease Year of collection or recovery, (vii) discounts given for promotional
coupons that are redeemed from time to time, not to exceed [***] of annual Gross
Sales, (viii) gift certificates until such time as the gift certificates are
redeemed, (ix) fees charged by credit card companies for transactions
originating in, at or from the Premises not to exceed [***] of annual Gross
Sales, and (x) sales, excise or similar tax imposed by governmental authority
and collected from customers and paid out by Tenant. No other taxes shall be
deducted from Gross Sales.
Section 4.5 Real Estate Taxes.
A. Definition. Landlord shall pay or cause to be paid all Real Estate Taxes
(as hereinafter defined) assessed or imposed upon the Center and the Total Tract
which become due or payable during the Lease Term. As used in this Section 4.5
the term Real Estate Taxes shall mean and include all real estate taxes, public
and governmental charges and assessments, including all extraordinary or special
assessments applicable to the Center, or assessments against any of Landlord's
personal property now or hereafter located in the Center, all reasonable costs,
expenses and attorneys' fees incurred by Landlord in contesting or negotiating
with public authorities (Landlord having the sole authority to conduct such a
contest or enter into such negotiations) as to any of the same and all sewer and
other taxes and charges, but shall not include taxes on Tenant's business in the
Premises, machinery, equipment, inventory or other personal property or assets
of Tenant, Tenant agreeing to pay, before delinquency, all taxes upon or
attributable to such excluded items without apportionment. With respect to any
special assessments made by governmental authorities for street improvement,
traffic mitigation or similar physical improvements, Landlord may, at its
option, pay any such special assessments in one lump sum when due or, if
permitted by law, Landlord may elect to pay such special assessments in
installments. In the event Landlord shall pay any special assessment in full
when due, Tenant shall nevertheless reimburse Landlord for its share thereof
based upon the installment payments including principal and interest which
Landlord would have been obligated to pay had Landlord elected to pay the
special installment in the maximum number of installments permitted. Tenant's
installment payments for such special assessment shall be due and payable on the
same dates that they would have been payable to the taxing authority had
Landlord elected to pay the special assessment in installments.
B. Tenant's Share. Tenant shall pay to Landlord, as Additional Rent, its
proportionate share of all Real Estate Taxes upon the Center and the Total Tract
which become due or payable during the Lease Term, such proportionate share to
be prorated for periods at the beginning and end of the Lease Term which do not
constitute full calendar months or years. Landlord shall endeavor to have the
Retail Space and Hotel Space separately assessed. If this cannot be accomplished
then Landlord, in its sole discretion, shall allocate Real Estate Taxes among
the Retail Space and Hotel Space based on its determination of the assessed
value of each such Space. This determination shall control except in case of
manifest error. Real Estate Taxes allocated by Landlord to the Retail Space are
referred to herein as "Retail Space Real Estate Taxes". Tenant's proportionate
share of any such Retail Space Real Estate Taxes shall be that portion of such
Retail Space Real Estate Taxes
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which bears the same ratio to the total Retail Space Real Estate Taxes as the
Store Floor Area bears to the Rentable Floor Area rented or occupied in the
Retail Space (hereinafter called "Retail Rentable Floor Area") as of the
Commencement Date or the first day of the calendar year in which such taxes are
due or payable. The floor area of (i) a Major Tenant, (ii) any tenant in a free
standing Premises who is obligated to pay real estate taxes specifically upon
specific improvements or specific parcel of land, and (iii) Common Areas, as
hereinafter defined, shall not be included in the Retail Rentable Floor Area,
and any contributions to Real Estate Taxes received by Landlord from such
tenants shall be deducted from Retail Space Real Estate Taxes prior to the
calculation of Tenant's proportionate share.
C. Payment by Tenant. Tenant's proportionate share of Retail Space
Real Estate Taxes shall be paid in monthly installments commencing with the
Commencement Date, in amounts initially estimated by Landlord, one (1) such
installment being due on the first day of each full or partial month of each
full or partial calendar year during the Lease Term. Such monthly installments
shall increase or decrease upon notice from Landlord given after the actual or
anticipated amounts of Real Estate Taxes due or payable in a particular calendar
year are determined PROVIDED SUCH ADJUSTMENTS SHALL BE MADE NOT MORE THAN ONCE
ANNUALLY. Following the close of each full or partial calendar year during the
Lease Term, the actual amount of Retail Space Real Estate Taxes due or payable
shall be computed by Landlord and any excess paid by Tenant during such calendar
year over the actual amount Tenant is obligated to pay hereunder shall be
credited to Tenant, and within thirty (30) days after written notice from
Landlord any deficiency owed shall be paid in full by Tenant. Tenant
acknowledges and stipulates that Landlord has made no agreement of any kind as
to the total dollar amount of such real estate taxes or Tenant's dollar share
thereof. LANDLORD DOES, HOWEVER, REPRESENT THAT IT IS CURRENTLY ESCROWING REAL
ESTATE TAXES FOR CALENDAR YEAR 1997 AT A RATE OF $17.75 PER SQUARE FOOT OF STORE
FLOOR AREA. THE FOREGOING SHALL NOT BE DEEMED, CONSTRUED OR INTERPRETED AS AN
AGREEMENT OF ANY KIND THAT TENANT'S ACTUAL SHARE OF REAL ESTATE TAXES FOR
CALENDAR YEAR 1997 WILL BE $17.75 PER SQUARE FOOT OF STORE FLOOR AREA.
D. Other Taxes. Tenant's proportionate share of any governmental
tax or charge (other than income tax) levied, assessed, or imposed on account
of the payment by Tenant or receipt by Landlord, or based in whole or in part
upon, the rents in this Lease reserved or upon the Center or the value thereof
shall be paid by Tenant.
E. Larger parcel. If the land under the Center is a part of a
larger parcel of land for assessment purposes (the "Larger Parcel"), the taxes
and assessments allocable to the land in the Center for the purpose of
determining Real Estate Taxes under this Section shall be deemed a fractional
portion of the taxes and assessments levied against the Larger Parcel, the
numerator of which is the acreage in the Center and the denominator of which is
the acreage in the Larger Parcel.
Section 4.6. SPRINKLER SYSTEM.
Landlord has installed and will maintain a sprinkler system in the
Premises and Tenant shall pay to Landlord as additional rent twenty-five
cents (25c) per square foot of Store Floor Area per Lease Year, prorated for
Partial Lease Years, in equal monthly installments in advance on the first day
of each full calendar month during the Lease Term.
Section 4.7. ADDITIONAL RENT.
All amounts required or provided to be paid by Tenant under this Lease
other than Minimum Annual Rent and Percentage Rent shall be deemed additional
rent and Minimum Annual Rent, Percentage Rent and additional rent shall in all
events be deemed rent.
Section 4.8. LANDLORD'S EXPENSES.
TO THE EXTENT THAT LANDLORD HAS THE RIGHT UNDER THIS LEASE AND TO THE
EXTENT THAT Landlord pays any monies or incurs any expense to correct a
breach of this Lease by Tenant or to do anything in this Lease required to be
done by Tenant, or incurs any expense (including, but not limited to, attorneys'
fees and court costs), as a result of Tenant's failure to perform any of
Tenant's obligations under this Lease, all REASONABLE amounts so paid or
incurred shall, on notice to Tenant, be considered additional rent payable in
full by Tenant with the first Minimum Monthly Rent installment thereafter
becoming due and payable, and may be collected as by law provided in the case
of rent. NOTHING HEREIN SHALL BE DEEMED TO AUTHORIZE LANDLORD TO TAKE ANY SUCH
ACTIONS EXCEPT AS OTHERWISE SPECIFIED HEREIN.
ARTICLE V
PARKING AND COMMON AREAS AND FACILITIES
Section 5.1. COMMON AREAS.
All parking areas, access roads and facilities furnished, made available
or maintained by landlord in or near the Center, including employee parking
areas, truck ways, driveways, loading docks and areas, delivery areas,
multi-story parking facilities, package pickup stations, elevators, escalators,
pedestrian sidewalks, malls, including the Enclosed Mall (as indicated for
identification purposes on Exhibit "B"), courts and ramps, landscaped areas,
retaining walls, stairways, bus stops, first-aid and comfort stations, lighting
facilities, COMMON AREA PLUMBING AND sanitary systems, utility lines, COMMON
AREA HVAC SYSTEMS AND EQUIPMENT, water filtration and treatment facilities and
other areas and improvements provided by Landlord for the general use in common
of tenants and their customers and department stores in the Center (all herein
called "Common Areas") shall at all times be subject to the exclusive control
and management of Landlord, and Landlord shall have the right, from time to
time, to establish, modify and enforce reasonable rules and regulations with
respect to all Common Areas. Tenant agrees to comply with all rules and
regulations set forth in Exhibit "D" attached hereto and all reasonable
amendments thereto. ANY MODIFICATIONS TO THE RULES AND REGULATIONS THAT ARE
ADOPTED BY LANDLORD SHALL BE NON-DISCRIMINATORY WITH RESPECT TO ALL TENANTS OF
THE CENTER AND SHALL BECOME EFFECTIVE ONLY AFTER NOT LESS THAN THIRTY (30) DAYS
PRIOR WRITTEN NOTICE TO TENANT. IN THE EVENT OF ANY INCONSISTENCY BETWEEN ANY
SUCH RULES AND REGULATIONS AND THE PROVISIONS OF THIS LEASE (INCLUDING ANY
INCONSISTENCY BETWEEN RIGHTS GRANTED UNDER THIS LEASE AND RESTRICTIONS CREATED
UNDER THE RULES AND REGULATIONS), THE TERMS OF THIS LEASE SHALL PREVAIL.
Landlord shall have the right from time to time IN ITS REASONABLE
DISCRETION to: change or modify and add to or subtract from the sizes,
locations, shapes and arrangements of parking areas, entrances, exits, parking
aisle alignments and
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other Common Areas; restrict parking by Tenant's employees to designated areas,
construct surface, sub-surface or elevated parking areas and facilities;
establish and from time to time change the level or grade of parking surfaces;
enforce parking charges (by meters or otherwise); add to or subtract from the
buildings in the Center; and do and perform such other costs in and to said
Common Areas as Landlord in its reasonable discretion deems advisable for the
use thereof by tenants and their customers.
Section 5.2. Use of Common Areas.
Tenant and its business invitees, employees and customers shall have
the nonexclusive right, in common with Landlord and all others to whom Landlord
has granted or may hereafter grant rights, to use the Common Areas subject to
such reasonable regulations as Landlord may from time to time impose and the
rights of Landlord set forth above. Tenant shall use its best efforts to ensure
that all concessionaires, employees and agents of Tenant shall use the areas
designated by Landlord for employee parking. After the first such violation of
Landlord's employee parking regulations in a Lease Year, Tenant shall pay
Landlord, upon demand, $10.00 for each day thereafter during such Lease Year on
which a car of Tenant, a concessionaire, employee or agent of Tenant is parked
outside any area designated by Landlord for employee parking. Tenant authorizes
Landlord to cause any such car to be towed from the Center and Tenant shall
reimburse Landlord for the cost thereof upon demand. Tenant shall abide by all
rules and regulations adopted by Landlord in accordance with Section 5.1 and
cause its concessionaires, officers, employees, agents, customers and invitees
to abide thereby. Landlord may at any time close temporarily any Common Areas
to make repairs or changes, prevent the acquisition of public rights therein,
discourage noncustomer parking, or for other reasonable purposes. Tenant shall
furnish Landlord license numbers and descriptions of cars used by Tenant and its
concessionaires, officers and employees. Tenant shall not interfere with
Landlord's or other tenants' rights to use any part of the Common Areas.
ARTICLE VI
COST AND MAINTENANCE OF COMMON AREAS
Section 6.1. Expense of Operating and Maintaining the Common Facilities.
Landlord will operate, manage, maintain and repair or cause to be
operated, managed, maintained or repaired, the Common Areas of the Center to
the extent the same is not done by any Major Tenant so as to maintain the
Center in good condition and repair. "Landlord's Common Area Costs" shall mean
all costs of operating and maintaining the Common Areas in a manner deemed by
landlord appropriate for the best interests of tenants and other occupants in
the Center. Included among the costs and expenses which constitute Landlord's
Common Area Costs, but not limited thereto, shall be, at the option of Landlord,
all costs and expenses of protecting, operating, managing the Center (including
attorney's fees and other professional fees), repairing, repaving, lighting,
cleaning, painting, striping, insuring (including but not limited to fire and
extended coverage insurance on Common Areas, insurance protecting landlord
against liability for personal injury, death and property damage and workers'
compensation insurance), removing of snow, ice and debris, police protection,
security and security patrol, fire protection, regulating traffic, inspecting,
repairing and maintaining of machinery and equipment used in the operation of
the Common Areas, including heating, ventilating and air conditioning machinery
and equipment, depreciation of machinery and equipment used in the operation or
maintenance of the Center, providing heating, ventilating and air conditioning
for the interior Common Areas initially determined and thereafter adjusted in
the manner described in Section 7.2 herein, cost and expense of inspecting,
maintaining, repairing and replacing storm and sanitary drainage systems,
sprinkler and other fire protection systems, electrical, gas, water, telephone
and irrigation systems, cost and expense of maintaining, repairing and
replacing the Enclosed Mall and the exterior of the buildings in the Center
(except as otherwise specifically provided to the contrary in the following
paragraph), including, but not limited to floors, roofs, skylights, escalators,
elevators, walls, stairs and signs, cost and expense of installing, maintaining
and repairing burglar or fire alarm systems on the Retail Space, if installed,
cost and expense of installing, maintaining and repairing burglar or fire alarm
systems on the Retail Space, if installed, cost and expense of landscaping and
shrubbery, expenses of utilities, and administrative and overhead costs equal
to [***] of all of the foregoing and all other of Landlord's
Common Area Costs, exclusive of real estate taxes and insurance.
Notwithstanding any other provision herein to the contrary, Tenant
shall not be responsible for payment of any of the following as a Common Area
Costs, whether or not otherwise included in the definition of "Landlord's
Common Area Costs":
1. Interest, loan fees, ground lease rental and other carrying costs
related to any mortgage or indebtedness secured by the Center.
2. Premiums or deductibles to the extent any other tenant in the Center
causes Landlord's insurance premiums relating to the Premises to
increase or obligates Landlord to purchase additional insurance, or any
damage resulting from the negligent or willful acts or omissions or
breach of any other tenant of the Center.
3. New buildings or other improvements constructed on or within the Center.
4. Expenses that under generally accepted accounting principles are
treated as capital expenditures to the extent they improve the Common
Areas to beyond their original condition or utility (other than those
capital expenditures reasonably required for maintenance, repair and
replacement of existing capital items which costs Landlord shall
amortize over a period of years as reasonably determined by Landlord and
which amortized amount may be included in Landlord's Common Area Costs).
5. Leasing fees, commissions or other brokerage commissions of any kind,
or advertising or promotional expenditures (including costs incurred in
leasing or procuring new tenants with allowances, concessions, or
inducements provided by Landlord, such as the cost of leasehold
improvements), attorney's fee, or other comparable expenses incurred in
connection with attracting any prospective tenant to the Center or with
respect to disputes or litigation with such tenants.
*** Confidential treatment requested.
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6. Costs incurred due to a violation by Landlord or any tenant (other
than Tenant) of the Center of the terms of this Lease or any other
lease or condition, covenant or restriction affecting the Center, or
any laws, rules, regulations or ordinances applicable to the Center.
7. Costs of repairs, replacements or other work occasioned by fire,
windstorm, earthquake or other casualty, or the exercise by
governmental authorities of the right of eminent domain.
8. Costs and expenses reimbursed by Tenant or any other third party,
except for reimbursements of Common Area Costs.
9. The cost of repair necessitated by the negligence, willful misconduct
or breach of any written agreement by Landlord or Landlord's agents
or any other tenant of the Center.
10. Cost of repairs, replacements, alterations or improvements necessary
to make the Center comply with applicable past, present of future
laws, except to the extent compliance with such laws is required as
the result of Tenant's particular use of the Premises or alterations
or additions made or requested to be made by Tenant.
11. The cost incurred in performing work or furnishing services for
individual tenants in the Center to the extent such work or services
are in excess of the work and services required to be provided to
Tenant under the Lease, and costs incurred for the benefit of
particular tenants and not generally beneficial to the tenants of the
Center.
12. Expenses for repair or replacement paid by proceeds of insurance,
condemnation awards, warranties or guarantees, or reimbursed by
tenants of the Center.
13. Costs and expenses incurred in connection with the investigation,
remediation, or clean up of Hazardous Materials existing on or under
the Center prior to the Commencement Date, or Hazardous Materials
thereafter introduced thereon or thereunder, except to the extent
such investigation, remediation or clean up is required as the result
of the acts of Tenant and Tenant's agents, contractors or employees.
14. Costs of salaries, wages and other employment benefits, except to the
extent such costs are fairly allocable to the Center and not to other
shopping centers or projects.
15. Amounts that are payable or reimbursable by Landlord to Tenant with
respect to any tenant improvement allowance or contribution provided
by Landlord to Tenant in connection with Tenant's construction of
leasehold improvements at the Premises.
16. Costs and expenses (including maintenance, repair, replacement,
insurance or taxes) that are for the sole benefit of the Hotel Space
or for other buildings not comprising part of the Retail Space.
Section 6.2. Tenant to Bear Pro Rata Share of Expenses.
Tenant will pay Landlord, in addition to all other amounts in this Lease
provided, such portion of Landlord's Common Area Costs for each calendar year
during the Lease Term which bears the same ratio to the total of Landlord's
Common Area Costs as the Store Floor Area at the Commencement of such calendar
year bears to all Rentable Floor Area rented or occupied by tenants in the
Retail Space. The floor area of (i) a Major Tenant, (ii) any tenant in a
freestanding Premises who is obligated to maintain specific areas or a specific
parcel of land, and (iii) Common Areas shall not be included in Rentable Floor
Area, and subject to Section 6.1 above any contributions to Landlord's Common
Area Costs received by Landlord from such tenants shall be deducted from
Landlord's Common Area Costs received by Landlord from such tenants shall be
deducted from Landlord's Common Area Costs prior to the calculation of Tenant's
proportionate share.
Tenant's share of Landlord's Common Area Costs shall be paid in monthly
installments in amounts estimated from time to time by Landlord (provided any
such adjustment shall not be made more than once annually), one (1) such
installment being due on the first day of each month of each calendar year.
After the end of each calendar year the total Landlord's Common Area Costs for
such year (and at the end of the Lease Term, the total Landlord's Common
Area Costs for the period since the end of the immediately next preceding
calendar year) shall be determined by Landlord and Tenant's share paid for such
period shall immediately, upon such determination, be adjusted by credit of any
excess or payment of any deficiency.
Tenant may audit Landlord's Common Area Costs for such year in order to
verify the accuracy thereof, provided that: (a) Tenant specifically designates
the year Tenant intends to audit, which shall be a year during t he Lease Term
that is also within three (3) years of the date of the audit; (b) such audit is
conducted only during regular business hours at the office where Landlord
maintains expense records of Landlord's Common Area Costs; (c) Tenant gives
Landlord fifteen (15) days prior written notice of Tenant's request to audit
and Tenant shall deliver to Landlord a copy of the results of such audit within
ten (10) days of its receipt by Tenant; (d) such audit must be conducted by
Tenant's employees or an independent nationally recognized accounting firm that
is not being compensated on a contingency fee basis; (e) no audit shall be
conducted if Tenant has previously conducted an audit for the same time period;
(f) such audit shall be at Tenant's sole cost and expense; and (g) any
financial or other information provided by Landlord or obtained by Tenant as a
result of such audit shall only be pursuant to duly executed confidentiality
agreements between Landlord, Tenant and Tenant's agents and employees to whom
disclosure is made. Tenant acknowledges that the Landlord considers its
financial and other operating information to be confidential and will not
disclose such information to any third party without Landlord's prior written
consent except to prospective buyers or lenders, Tenant's accountants and
attorneys, or in the case of compliance with a subpoena or other legal process
provided Tenant gives Landlord at least ten (10) days prior written notice of
Tenant's receipt of such subpoena or legal process and Tenant's intent to
disclose pursuant thereto. If the audit discloses that Tenant
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has underpaid, Tenant shall promptly reimburse Landlord any amount owed. If the
audit accurately discloses that Tenant has overpaid, Landlord shall promptly
refund such excess.
ARTICLE VII
UTILITIES AND SERVICES
Section 7.1. Utilities
Tenant shall not install any equipment which can exceed the capacity of
any utility facilities serving the Center and if any equipment installed by
Tenant requires additional utility facilities, the same shall be installed at
Tenant's expense in compliance with all code requirements and plans and
specifications which must be approved in writing by Landlord (such approval not
to be unreasonably withheld). Tenant shall be solely responsible for and
promptly pay all charges for use or consumption of sewer, gas, electricity,
water and all other utility services delivered to the Premises. Landlord may
make electrical service available to the Premises as provided in Exhibit "C,"
and so long as Landlord continues to provide such electrical service Tenant
agrees to purchase the same from Landlord and pay Landlord for the electrical
service (based upon Landlord's determination from time to time of Tenant's
consumption of electricity), as additional rent, on the first day of each month
in advance (and prorated for partial months), commencing on the Commencement
Date at the same cost as would be charged to Tenant from time to time by the
utility company which otherwise would furnish such services to the Premises if
it provided such services and metered the same directly to the Premises, but in
no event at a cost which is less than the cost Landlord must pay in providing
such electrical service. Landlord may supply water and other utilities to the
Premises, and so long as Landlord continues to provide water or such other
utilities Tenant shall pay Landlord for same at the same cost as would be
charged to Tenant by the utility company which otherwise would furnish such
service to the Premises if it provided such service and metered the same
directly to the Premises, but in no event at a cost which is less than the cost
Landlord must pay in providing such service, and in no event less than the
minimum monthly charge which would have been charged by the utility company in
providing such service.
Landlord may make additional services, including but not limited to, pest
control, trash compactor/trash removal, cleaning, and security, available to
the Premises and, in such event, Tenant shall utilize such services, at
Tenant's expense.
Tenant shall operate its heating and air conditioning so that the
temperature in the Premises will be approximately the same as that in the
adjoining mall, and set Tenant's thermostat at the same temperature as that
thermostat in the mall which is nearest the Premises. Tenant shall be
responsible for the installation, maintenance, repair and replacement of air
conditioning, heating and ventilation systems within and specifically for the
Premises, including all components such as air handling units, air distribution
systems, motors, controls, grilles, thermostats, filters and other components.
Tenant shall operate ventilation so that the relative air pressure in the
Premises will be the same as or less than that in the adjoining mall as
reasonably required by the Landlord.
In the event Tenant requires the use of telecommunication services,
including, but not limited to, credit card verification and/or other data
transmission, then Tenant shall contract for such services with one of the
service providers available at the Center.
In addition to any rental abatement to which Tenant otherwise is entitled,
if Tenant is prevented from using the Premises or any portion thereof for five
(5) consecutive days or ten (10) days in any twelve (12) consecutive month
period (the "Eligibility Period") as a result of Landlord's failure to provide
utilities or services to the Premises, then Tenant's rent shall be abated after
the expiration of the eligibility period for such time that Tenant continues to
be so prevented from using the Premises or portion thereof, 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. However, in the
event that Tenant is prevented from so conducting its business in any portion
of the Premises for a period 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, 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 the total rentable area of the
Premises, shall be payable by Tenant from the date such business operations
commence. Notwithstanding anything herein in this paragraph which may be to the
contrary, Tenant shall not be permitted to abate rent as hereinabove otherwise
provided if the failure to provide any such utilities or services to the
Premises is as a result of Tenant's failure to pay for the same or due to the
negligence or willful misconduct of Tenant, its employees, agents or
contractors.
Section 7.2. Air Conditioning of Premises.
Landlord will provide and maintain a central plant and a system of chilled
media to the Premises installed at a point determined by Landlord for the
effective cooling of the Premises. Tenant agrees to purchase the chilled media
services from Landlord and pay Landlord annually therefor as additional rent,
in equal monthly installments, in advance on the first day of each month the
current Adjusted HVAC Plant Charge (which shall consist of Minimum Charge of
$2.00 per square foot of Store Floor Area per year, increased in the manner
hereinafter provided).
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The Adjusted HVAC Plant Charge shall be recalculated from time to time on
dates selected by the Landlord (but no more often than annually, each time the
Landlord's utility costs are changed and/or each time field verification
indicates that Tenant's use of the system has changed.)
The current Adjusted HVAC Plant Charge shall be calculated by multiplying
the Minimum Charge by a series of adjusting multipliers as follows:
Adjusted HVAC Plant Charge = Minimum Charge x M1 x M2 x M3 x M4
(a) M1 = Capacity Multiplier
The capacity multiplier shall be the greater of 1 or the multiplier
arrived at by applying the following formula:
M1 = 1 + [0.6[BTUH/33 - 1]
The factor "BTUH" shall mean BTUH/per Sq. Ft. of Store Floor Area and
shall be the calculated peak design total heat gain as determined in accordance
with ASHRAE procedures. Tenant's outdoor air or exhaust that is derived via the
Landlord's system, and total heat gain from the roof, lights, fan motors and
other items, shall be included in calculating the BTUH/per Sq. Ft. factor of
this section for purposes of determining the capacity multiplier. The peak
total heat gain shall be calculated using the same sun time hour as is used by
Landlord in determining the peak building heat gain. (Typically 1600 hours).
(b) M2 = Hours Multiplier
The hours multiplier shall be the greater of 1 or the multiplier
arrived at by applying the following formula:
M2 = 1 = [Extra Hours/Regular Hours]
The term "Extra Hours" shall mean Tenant's hours use of system during
times other than the originally established regular weekly hours of the Center.
The term "Regular Hours" shall mean originally established regular weekly hours
of the Center.
(c) M3 = Utility Cost Multiplier
The utility cost multiplier shall be the multiplier arrived at by
applying the following formula:
M3 = 1 + [0.5[Current Cost/Original Cost - 1]]
The term "Current Cost" shall mean "Utility Cost" based on rates in
effect on the selected date. The term "Original Cost" shall mean Utility Cost
based on rates in effect on March 31, 1994. The term "Utility Cost" shall mean
the cost to Landlord of the utilities necessary for furnishing chilled media to
the Premises, including all charges made to Landlord by the public utilities
furnishing the same and based on the original consumption and demands estimated
for the Central HVAC System and building.
(d) M4 = Maintenance Cost Multiplier
The Maintenance Cost Multiplier shall be the greater of 1 or the
multiplier arrived at by applying the following formula:
M4 = 1 + [0.1 [Current CPI/Original CPI - 1]]
The term "Current CPI" shall mean the "Consumer Price Index" on the
selected date. The term "Original CPI" shall mean the "Consumer Price Index" for
February 1, 1996. The term "Consumer Price index" as used in this Section 7.2
and in Section 14.1 herein shall mean the Consumer Price Index All Items for All
Urban Consumers (CPI-U, 1982-4=100)" published by the Bureau of Labor Statistics
of the U.S. Department of Labor. If the publication of the Consumer Price Index
of the U.S. Bureau of Labor Statistics is discontinued, comparable statistics on
the purchasing power of the consumer dollar published by a responsible financial
periodical selected by Landlord shall be used for making such computations.
Section 7.3. Enforcement and Termination.
In the event of any material default by Tenant (as defined in Section 18.1
below), Landlord reserves the right, in addition to all other rights and
remedies available to Landlord, to cut off and discontinue, without notice or
liability to Tenant, any utilities or services provided in accordance with the
provisions of this Article VII. Except as otherwise provided herein to the
contrary, Landlord shall not be liable to Tenant in damages or otherwise if any
utilities or services, whether or not furnished by Landlord hereunder, are
interrupted or terminated because of repairs, installation or improvements, or
any cause beyond Landlord's reasonable control, nor shall any such termination
relieve Tenant of any of its obligations under this Lease. Tenant shall operate
the Premises in such a way as shall not unreasonably waste fuel, energy, and
natural resources. If Landlord provides any utilities or services under Section
7.1 or 7.2 of this Lease to tenants, Landlord may, upon written direction,
require Tenant to obtain such services from a third party provider without
liability for the same. No discontinuance of any utilities or services shall
constitute a constructive eviction.
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ARTICLE VIII
CONDUCT OF BUSINESS BY TENANT
Section 8.1. Use of Premises.
The Premises shall be occupied and used by Tenant for the purpose of
conducting therein the business of an auto racing entertainment center and other
related retail uses. The entertainment facility may include a combination of
driving simulators, but shall not include coin operated machines as typically
found in conventional video arcade game room type operations. Tenant shall be
permitted to use the Premises for the display and retail sale of auto racing and
other auto racing themed or related entertainment merchandise. Tenant shall be
permitted to sell some concessions from the Premises as mutually agreed to from
time to time by Landlord and Tenant. Tenant shall not use or permit or suffer
the use of the Premises for any other business or purpose. Tenant is hereby
specifically prohibited from selling, offering for sale, giving away or
displaying Mall of America merchandise or any other merchandise or items that
bear the Mall of America name, trademark, service mark or logo thereon without
Landlord's prior written consent thereto which consent may be given or withheld
by Landlord in Landlord's sole and absolute discretion and Landlord's failure to
give such consent shall not be deemed unreasonable.
Section 8.2. Prompt Occupancy and Use.
Tenant will occupy the Premises upon the Commencement Date and thereafter
continuously operate and conduct in one hundred percent (100%) of the Premises
during each hour of the entire Lease Term when Tenant is required under this
Lease to be open for business the business permitted under Section 8.1 hereof,
with a full staff and full stock of merchandise, using only such minor portions
of the Premises for storage and office purposes as are reasonably required. The
parties agree that: Landlord has relied upon Tenant's occupancy and operation in
accordance with the foregoing provisions; because of the difficulty or
impossibility of determining Landlord's damages which would result from Tenant's
violation of such provisions, including but not limited to damages from loss of
Percentage Rent from Tenant and other tenants, and diminished saleability,
mortgageability and economic value, Landlord shall be entitled to liquidated
damages if it elects to pursue such remedy; therefore for any day that Tenant
does not fully comply with the provisions of this Section 8.2 the Minimum Annual
Rent, prorated on a daily basis, shall be increased by ten percent (10%), such
increased sum representing the damages which the parties agree Landlord will
suffer by Tenant's noncompliance. In addition to all other remedies, Landlord
shall have the right to obtain specific performance by Tenant upon Tenant's
failure to comply with the provisions of this Section 8.2.
Notwithstanding the foregoing, Tenant may temporarily cease operating its
business in the Premises for reasonable periods in which: (i) Tenant is
carrying on remodeling activities, provided Tenant gives Landlord's Center
manager at least ten (10) days prior notice of the anticipated dates Tenant
will be closed and provided such remodeling activities have Landlord's prior
approval; (ii) Tenant is closed for the taking of inventory not to exceed three
(3) non-consecutive days in any period of twelve (12) consecutive months
provided Tenant has given Landlord's Center manager notification of the
anticipated date Tenant intends to close for inventory purposes at least five
(5) days in advance; (iii) Tenant is unable or reasonably unwilling to operate
as a result of casualty or natural disaster, condemnation, interruption of
utilities or services, extremely inclement weather, civil unrest, operation of
the business would expose Tenant's employees, agents or invitees to an
unreasonable risk of physical injury or property damage, or other force majeure
events of the type of described in Section 24.5 hereof.
Section 8.3. Conduct of Business.
Such business shall be conducted (a) under the name NASCAR(R) SILICON
MOTOR SPEEDWAY or SILICON MOTOR SPEEDWAY unless another name is previously
approved in writing by the Landlord which approval shall not be unreasonably
withheld provided: (i) Tenant gives Landlord at least thirty (30) days prior
written notice of such new trade name; (ii) Tenant provides Landlord with sign
plans for Landlord's review and approval prior to the fabrication and
installation thereof; and (iii) such new trends name is not the same as or
confusingly similar to the trade name of any other tenant or occupant in the
Center; and (b) in such manner as shall promote the transaction of a maximum
volume of business in and at the Premises. Tenant's store shall be and remain
open from 10:00 A.M. until 9:00 P.M. each day of the week except Sunday, on
Sunday from 12:00 P.M. until 6:00 P.M. Tenant shall have the right (but not be
obligated to) operate during such other hours as any other tenant in the Retail
Store remains open for business.
Section 8.4. Operation by Tenant.
Tenant covenants and agrees that it will: not place or maintain any
merchandise, vending machines or other articles in any vestibule or entry of the
Premises or outside the Premises; store garbage, trash, rubbish and other
refuse in rat-proof and insect-proof containers inside the Premises, and
remove the same frequently and regularly and, if directed by Landlord, by such
means and methods and at such times and intervals as are designated by
Landlord, all at Tenant's expense; not permit any sound system audible, or
reasonably objectionable advertising medium visible, outside the Premises; keep
all mechanical equipment free of vibration and noise that has an adverse
effect on the operation of the Center or interferes with any other tenant's
quiet enjoyment of its premises, and in good working order and condition; not
commit or permit waste or a nuisance upon the Premises; not permit or cause
odors to emanate or be dispelled from the Premises; not solicit business in the
Common Areas nor distribute advertising matter to, in or upon any Common Areas;
not permit the loading or unloading or the parking or standing of delivery
vehicles outside any area designated therefor, nor permit any use of vehicles
which will interfere with the use of any Common Areas; comply with all laws,
recommendations, ordinances, rules and regulations of governmental, public,
private and other authorities and agencies, including those with authority over
insurance rates, with respect to Tenant's particular use or occupancy of the
Premises, and including but not limited to the Williams-Steiger Occupational
Safety and Health Act but excluding any structural portions of the Premises
maintained by Landlord except as arises out of Tenant's particular use of the
Premises and except for Tenant's compliance with the Americans With
Disabilities Act ("ADA") within the Premises; light the show windows of the
Premises and all signs each night of the year for not less than one (1) hour
after the Premises is permitted to be closed; not permit any noxious, toxic or
corrosive fuel or gas, dust, dirt or fly ash on the Premises; not place a load
on any floor in the Center which exceeds the floor load per square foot which
such floor was designed to carry. Landlord acknowledges that Tenant will place
and operate within the Premises racing automobile
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simulators that, among other things will create sound emissions and visual
effects incidental to Tenant's activities from the Premises. Landlord hereby
approves of the installation of the simulators and related equipment and
systems, as shown on Tenant's Plans as approved by Landlord. The foregoing
shall not, however, relieve Tenant of compliance with applicable code
requirements or other provisions of this Section 8.4.
Section 8.5. Storage.
Tenant shall store in the Premises only merchandise which Tenant intends
to sell at, in or from the Premises, within a reasonable time after receipt
thereof.
Section 8.6. Painting, Decorating, Displays, Alterations.
Tenant will not paint (other than touch-up paint from time to time),
decorate or change the architectural treatment of any part of the exterior of
the Premises nor any part of the interior of the Premises visible from the
exterior nor make any structural alterations, additions or changes in the
Premises without Landlord's written approval thereto, which approval shall not
be unreasonably withheld or delayed, and will promptly remove any paint,
decoration, alteration, addition or changes applied or installed without
Landlord's approval and restore the Premises to an acceptable condition or take
such other action with respect thereto as Landlord directs. Notwithstanding the
foregoing, Tenant shall be permitted to make interior, non-storefront,
non-structural, non-mechanical and non-utility alterations and improvements to
the Premises without Landlord's prior consent thereto so long as the cost of
such work does not exceed Ten Thousand and no/100 Dollars ($10,000.00) in any
period of twelve (12) consecutive months.
Tenant will install and maintain at all times, subject to the other
provisions of this Section 8.6, merchandise displays in any show windows on the
Premises; the arrangement, style, color and general appearance thereof and of
displays in the interior of the Premises which are visible from the exterior,
including, but not limited to, window displays, advertising matter, signs,
merchandise and store fixtures, shall be maintained in keeping with the
character and standards of the Center.
Section 8.7. Other Operations.
If during the Lease Term Tenant directly operates or manages in any other
store or business operated for a purpose of business in direct competition with
all or part of the business permitted under Section 8.1 hereof within a radius
of ten (10) miles of the Center, it will injure Landlord's ability and right to
receive Percentage Rent (such ability and right being a major consideration for
this Lease and the construction of the Center). Accordingly, if Tenant
operates, manages or has such interest in any such store or business within
such radius, 100% of all sales made from any such other store or business shall
be included in the computation of Gross Sales for the purpose of determining
Percentage Rent under this Lease as though said Gross Sales had actually been
made at, in or from the Premises. Landlord shall have all rights of inspection
of books and records with respect to such stores or businesses as it has with
respect to the Premises; and Tenant shall furnish to Landlord such reports with
respect to Gross Sales from such other store or business as it is herein
required to furnish with respect to the Premises.
Section 8.8. Emissions and Hazardous Materials.
Tenant shall not, without the prior written consent of Landlord, cause or
permit, any Hazardous Material (hereinafter defined) to be brought or remain
upon, kept, used, discharged, leaked, or emitted in or about, or treated at the
Premises or the Center. As used in this Lease, "Hazardous Material(s)" shall
mean any hazardous, toxic or radioactive substance, material, matter or waste
which is or becomes regulated by any federal, state or local law, ordinance,
order, rule, regulation, code or any other governmental restriction or
requirement, and shall include asbestos, petroleum products and the terms
"hazardous Substance: and Hazardous Waste" as defined in the Comprehensive
Environmental Response. Compensation and Liability Act ("CERCLA"), as amended,
42 U.S.C. Section 9601 et seq., and the Resource Conservation and Recovery Act
("RCRA"), as amended, 42 U.S.C. Section 6901 et seq. To obtain Landlord's
consent, Tenant shall prepare an "Environmental Audit" for Landlord's review.
Such Environmental Audit shall list: (1) the name(s) of each Hazardous Material
and a Material Safety Data Sheet (MSDS) as required by the Occupational Safety
and Health Act (but only if an MSDS is required for the use or storage of such
Hazardous Materials); (2) the volume proposed to be used, stored and/or treated
at the Premises (monthly); (3) the purpose of such Hazardous Material; (4) the
proposed on-premises storage location(s); (5) the name(s) of the proposed
off-premises disposal entity; and (6) an emergency preparedness plan in the
event of a release. Additionally, the Environmental Audit shall include copies
of all required federal, state, and local permits (if required) concerning or
related to the proposed use, storage, or treatment by Tenant, its employees,
agents or contractors of any Hazardous Material(s) at the Premises. Tenant
shall submit a new Environmental Audit whenever it proposes to use, store, or
treat a new Hazardous Material at the Premises or when the volume of existing
Hazardous Materials to be used, stored, or treated at the Premises expands by
ten percent (10%) during any thirty (30) day period. If Landlord in its
reasonable judgment finds the Environmental Audit acceptable, then Landlord
shall deliver to Tenant Landlord's written consent. Notwithstanding such
consent, Landlord may revoke its consent upon: (1) Tenant's failure to remain in
full compliance with applicable environmental permits and/or any other
requirements under any federal, state, or local law, ordinance, order, rule,
regulation, code or any other governmental restriction or requirement
(including but not limited to the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), as amended, 42 U.S.C. Section 9601
et seq., and the Resource Conservation and Recovery Act ("RCRA"), as amended,
42 U.S.C. Section 6901 et seq.) related to environmental safety, human health,
or employee safety; (2) the Tenant's use of Hazardous Materials poses a human
health risk to other Tenants: or (3) the Tenant expands its use, storage, or
treatment of any Hazardous Material(s) in a manner inconsistent with the safe
operation of a shopping center. Should Landlord consent in writing to Tenant
bringing, using storing or treating any Hazardous Material(s) in or upon the
Premises or the Center, Tenant shall strictly obey and adhere to any and all
federal, state or local laws, ordinances, orders, rules, regulations, codes or
any other governmental restrictions of ("CERCLA"), as amended, 42 U.S.C. Section
9601 et seq., and the Resource Conservation and Recovery Act ("RCRA"), as
amended, 42 U.S.C. Section 6901 et seq.) which in any way regulate, govern or
impact Tenant's possession, use, storage, treatment or disposal of said
Hazardous Material(s). In addition, Tenant represents and warrants to Landlord
that (1) Tenant shall apply
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for and remain in compliance with any and all federal, state or local permits
in regard to Hazardous Materials used or stored by Tenant: (2) Tenant shall
report to any and all applicable governmental authorities any release by
Tenant, its employees, agents or contractors of reportable quantities of any
Hazardous Material(s) as required by any and all federal, state or local laws,
ordinances, orders, rules, regulations, codes or any other governmental
restrictions or requirements; (3) Tenant, within five (5) days of receipt,
shall send to Landlord a copy of any notice, order, inspection report, or other
document issued by any governmental authority relevant to the Tenant's
compliance status with environmental or health and safety laws; and, (4) Tenant
shall remove from the Premises all Hazardous Materials brought, placed or
installed on the Premises by Tenant, its employees, agents or contractors at
the termination of this Lease.
In addition to, and in no way limiting, Tenant's duties and obligations as
set forth in Section 11.6 of this Lease, should Tenant breach any of its duties
and obligations as set forth in this Section 8.8 of this Lease, or if the
release of any Hazardous Material(s) brought, placed or installed on the
Premises by Tenant, its employees, agents or contractors results in
contamination of the Premises, the Center, any land other than the Center, the
atmosphere, or any water or waterway (including groundwater), or if
contamination of the Premises or of the Center by any Hazardous Material(s)
otherwise occurs for which Tenant is otherwise legally liable to Landlord for
damages resulting therefrom, Tenant shall indemnify, save harmless and, at
Landlord's option and with attorneys approved in writing by Landlord, defend
Landlord, and its contractors, agents, employees, partners, officers, directors
and mortgagees, if any, from any and all claims, demands, damages, expenses,
fees, costs, fines, penalties, suits, proceedings, actions, causes of action,
and losses as a result of such contamination. This includes, without
limitation, costs and expenses, incurred in connection with any investigation
of site conditions or any cleanup, remedial, removal or restoration work
required by any federal, state or local governmental agency or political
subdivision because of the presence of Hazardous Material(s) on or about the
Premises or the Center, or because of the presence of Hazardous Material(s)
anywhere else which came or otherwise emanated from Tenant or the Premises.
Without limiting the foregoing, if the presence of any Hazardous Material(s) on
or about the Premises or the Center caused or permitted by Tenant results in
any contamination of the Premises or the Center, Tenant shall, at its sole
expense, promptly take all actions and expense as are necessary to return the
Premises and/or the Center to the condition existing prior to the introduction
of any such Hazardous Material(s) to the Premises or the Center; provided,
however, the Landlord's approval of such actions shall first be obtained in
writing.
Notwithstanding any provision hereof to the contrary, Landlord hereby
consents to Tenant's use of hydraulic oil in connection with the operation of
the simulators and cleaning and office products customarily used in retail or
office premises so long as such materials are used, handled, stored and
disposed of in accordance with applicable laws. Landlord hereby acknowledges
that such materials are approved and satisfy the Environmental Audit
requirements otherwise applicable to such materials.
Section 8.9. Sales and Dignified Use.
No public or private auction or any fire, "going out of business,"
bankruptcy or similar sales or auctions shall be conducted in or from the
Premises and the Premises shall not be used except in a dignified and ethical
manner consistent with the general high standards of merchandising in the
Center and not in a disreputable or immoral manner or in violation of national,
state or local laws.
ARTICLE IX
MAINTENANCE OF LEASED PREMISES
Section 9.1. Maintenance by Landlord
Landlord shall keep or cause to be kept the foundations, roof and
structural portions of the walls of the Premises in good order, repair and
condition except for damage thereto due to the acts or omissions of Tenant, its
agents, employees or invitees. Landlord shall commence required repairs as soon
as reasonably practicable after receiving written notice from Tenant thereof or
upon Landlord's obtaining actual knowledge that repair is warranted. This
Section 9.1 shall not apply in case of damage or destruction by fire or other
casualty or condemnation or eminent domain, in which events the obligations of
Landlord shall be controlled by Article XVI and XVII. Except as provided in
this Section 9.1 Landlord shall not be obligated to make repairs, replacements
or improvements of any kind upon the Premises, or to any equipment,
merchandise, stock in trade, facilities or fixtures therein, all of which shall
be Tenant's responsibility, but Tenant shall give Landlord prompt written
notice of any accident, casualty, damage or other similar occurrence in or to
the Premises or the Common Areas of which Tenant has knowledge.
Section 9.3. Maintenance by Tenant.
Tenant shall at all times keep the Premises (including all entrances and
vestibules) and all partitions, window and window frames and mouldings, glass,
store fronts, doors, door openers, fixtures, equipment and appurtenances
thereof (including lighting, heating, electrical, plumbing, ventilating and air
conditioning fixtures and systems and other mechanical equipment and
appurtenances located within the Premises or exclusively servicing the
Premises) and all parts of the Premises, and parts of Tenant's Work not on the
Premises, not required herein to be maintained by Landlord, in good order,
condition and repair and clean, orderly, sanitary and safe, damage by casualty
and ordinary wear and tear excepted. Tenant shall be responsible for compliance
with applicable laws relating to Tenant's particular use of the Premises and
the completion of Tenant's Work, including the Williams-Steiger
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Occupational and Safety Health Acts and the Americans With Disabilities Act
("ADA"); provided, however, that Landlord shall be responsible for completing,
at Landlord's sole cost and expense, any structural changes to the Premises
arising from any failure of the structural components of the Premises to comply
with applicable laws unless such failure arises out of or is as a result of
Tenant's particular use of the Premises or compliance with ADA requirements. If
replacement of equipment, fixtures and appurtenances required to be maintained
by Tenant is necessary, Tenant shall replace the same with new or completely
reconditioned equipment, fixtures and appurtenances, and repair all damages
done in or by such replacement. If Tenant fails to perform its obligations
hereunder, and if such failure continues for thirty (30) days after written
notice to Tenant, Landlord may, but shall not be obligated to, perform Tenant's
obligations or perform work resulting from Tenant's acts, actions or omissions
and add the cost of the same to the next installment of Minimum Monthly Rent
due hereunder to be repaid in full.
Section 9.3. Surrender of Premises
At the expiration or earlier termination of the Lease Term, Tenant shall
surrender the Premises in the same condition as they were required to be in on
the Required Completion Date, reasonable wear and tear alterations and
improvements approved by Landlord and damage by casualty excepted, and deliver
all keys for, and all combinations on locks, safes and vaults in, the Premises
to Landlord at Landlord's notice address as specified in Section 24.7 or, at
Landlord's option, to the office of the Center's general manager.
ARTICLE X
SIGNS, AWNINGS, CANOPIES, FIXTURES, ALTERATIONS
Section 10.1. Fixtures.
All fixtures installed by Tenant shall be new or reconditioned and in good
repair.
Section 10.2. Removal and Restoration by Tenant.
All alterations, changes and additions and all improvements, including
leasehold improvements, made by Tenant, or made by Landlord on Tenant's behalf,
whether part of Tenant's Work or not and whether or not paid for wholly or in
part by Landlord, shall remain Tenant's property for the Lease Term. Any
alterations, changes, additions and improvements shall immediately upon the
termination of this Lease become Landlord's property, be considered part of the
Premises, and not be removed at or prior to the end of the Lease Term without
Landlord's written consent. If Tenant fails to remove any shelving, decorations,
equipment, trade fixtures or personal property from the Premises prior to the
end of the Lease Term, they shall become Landlord's property and Tenant shall
repair or pay for the repair of any damage done to the Premises resulting from
removing same but not for painting or redecorating the Premises.
Upon expiration of the Lease Term or prior termination of this Lease,
Tenant shall have the right to remove any simulators or fixtures, whether or
not attached to the Premises, (but not permanently affixed leasehold
improvements) provided Tenant repairs any damage resulting from such removal.
Section 10.3. Tenant's Liens.
A. Tenant shall not suffer any mechanics' or materialmen's lien to be
filed against the Premises or the Center by reason of work, labor, services or
materials performed or furnished to Tenant or anyone holding any part of the
Premises under Tenant. If any such lien shall at any time be filed as
aforesaid, Tenant may contest the same in good faith, but, notwithstanding such
contest, Tenant shall, within 15 days after the filing thereof, cause such lien
to be released of record by payment, bond, order of a court of competent
jurisdiction, or otherwise in a manner satisfactory to Landlord and its
mortgagee. In the event of Tenant's failure to release of record any such lien
within the aforesaid period, Landlord, any affiliate of Landlord or any party
who delivered a guaranty with respect to any financing of the Center or the
Premises may remove said lien by paying the full amount thereof or by bonding
or in any other manner Landlord, any affiliate of Landlord or any party who
delivered a guaranty with respect to any financing of the Center or the
Premises deems appropriate, without investigating the validity thereof, and
irrespective of the fact that Tenant may contest the propriety or the amount
thereof, and Tenant, upon demand, shall pay Landlord the amount so paid out by
Landlord in connection with the discharge of said lien, together with interest
thereon at the rate set forth in Section 4.2 herein and reasonable expenses
incurred in connection therewith, including reasonable attorneys' fees, which
amounts are due and payable in full to Landlord as additional rent on the first
day of the next following month. Nothing contained in this Lease shall be
construed as a consent on the part of Landlord to subject Landlord's estate in
the Premises to any lien or liability under the lien laws of the State of
Minnesota. Tenant's obligation to observe and perform any of the provisions of
this Section 10.3 shall survive the expiration of the Lease Term or the earlier
termination of this Lease.
B. Tenant shall not create or suffer to be created a security interest or
other lien against any permanently affixed leasehold improvements, additions or
other construction made by Tenant in or to the Premises or against any
equipment or fixtures installed by Tenant (other than Tenant's personal
property, trade fixtures, equipment, furniture, inventory and simulators), and
should any security interest be created in breach of the foregoing, Landlord,
any affiliate of Landlord or any party who delivered a guaranty with respect to
any financing of the Center or the Premises shall be entitled to discharge the
same by exercising the rights and remedies afforded it under paragraph A of
this Section.
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Section 10.4. Signs, Awnings and Canopies
Tenant will not place or permit on any exterior door or window or any wall
of the Premises or otherwise, any sign, awning, canopy, advertising matter,
decoration, lettering or other thing of any kind which does not comply with the
Sign Criteria set forth in Exhibit "E" attached hereto.
ARTICLE XI
INSURANCE
Section 11.1. By Landlord.
Landlord shall carry public liability insurance on those portions of the
Common Areas included in the Total Tract providing coverage of not less than
[***] against liability for bodily injury including death and personal
injury for any one (1) occurrence and [***] property damage insurance,
or combined single limit insurance in the amount of [***].
Landlord shall also carry insurance for fire, extended coverage,
vandalism, malicious mischief and other endorsements deemed advisable by
Landlord, insuring all improvements on the Total Tract, including the Premises
and all leasehold improvements thereon and appurtenances thereto (excluding
Tenant's merchandise, trade fixtures, furnishings, equipment, personal property
and excluding plate glass) for the full insurable value thereof, with such
deductibles as Landlord deems advisable, such insurance coverage to include
improvements provided by Tenant as set forth in Exhibit "C" and "C-2" as
Tenant's Work (excluding wall covering, floor covering, carpeting and drapes)
and Landlord's Work as defined in Exhibit "C"; Tenant agrees to pay Landlord,
as additional rent, 25 cents per year for each square foot of Store Floor Area
payable in equal installments on the first day of every calendar month during
the Lease Term, as Tenant's share of the cost of the premiums for such
insurance described above in this sentence. At the end of the first Partial
Lease Year and each Lease Year thereafter, the amount thus to be paid by Tenant
shall be adjusted upward or downward (but shall never be less than the above
amount) in direct ratio to the increase or decrease in the cost of the premiums
paid by Landlord for such insurance coverage.
Section 11.2. By Tenant.
Tenant agrees to carry public liability insurance on the Premises during
the Lease Term, covering the Tenant and naming the Landlord, Simon DeBartolo
Group, Inc. and M.S. Management Associates, Inc., as additional named insured,
with terms and companies satisfactory to Landlord, for limits of not less than
[***] for bodily injury, including death, and personal injury for any one (1)
occurrence, [***] property damage insurance or a combined single limit of [***].
Tenant's insurance will include contractual liability coverage recognizing this
Lease, products and completed operations liability and providing that Landlord
and Tenant shall be given a minimum of thirty (30) days written notice by the
insurance company prior to cancellation or termination of such insurance. Tenant
also agrees to carry insurance against fire and such other risks as are from
time to time required by Landlord, including, but not limited to, a standard
"All Risk" policy of property insurance protecting against all risk of physical
loss or damage, including without limitation, sprinkler leakage coverage and
plate glass insurance covering all plate glass in the Premises (including store
fronts), in amounts not less than the actual replacement cost, covering all of
Tenant's merchandise, trade fixtures, furnishing, wall covering, floor covering,
carpeting, drapes, equipment and all items of personal property of Tenant
located on or within the Premises. Tenant shall provide Landlord with
certificates or, at Landlord's request, copies of the policies, evidencing that
such insurance is in full force and effect and stating the terms thereof. The
minimum limits of the comprehensive general liability policy of insurance shall
in no way limit or diminish Tenant's liability under Section 11.6 hereof and
shall be subject to increase at any time, and from time to time. Within ten (10)
days after demand therefor by Landlord, Tenant shall furnish Landlord with
evidence that it has complied with such demand.
Section 11.3. Mutual Waiver of Subrogation Rights.
Landlord and Tenant and all parties claiming under them mutually release
and discharge each other from all claims and liabilities arising from or caused
by any casualty or hazard covered or required hereunder to be covered in whole
or in part by insurance on the Premises or in connection with property on or
activities conducted on the Premises, and waive any right of subrogation which
might otherwise exist in or accrue to any person on account thereof and
evidence such waiver by endorsement to the required insurance policies,
provided that such release shall not operate in any case where the effect is to
invalidate or increase the cost of such insurance coverage (provided, that in
the case of increased cost, the other party shall have the right, within thirty
(30) days following written notice, to pay such increased cost, thereby keeping
such release and waiver in full force and effect).
Section 11.4. Waiver.
Except to the extent resulting from the Landlord's breach of this Lease or
the negligence or misconduct of Landlord or its agents or employees, Landlord,
its agents and employees, shall not be liable for, and Tenant waives all claims
for, damage, including but not limited to consequential damages, to person,
property or otherwise, sustained by Tenant or any person claiming through
Tenant resulting from any accident or occurrence in or upon any part of the
Center including, but not limited to, claims for damage resulting from: (a) any
equipment or appurtenances becoming out of repair; (b) Landlord's failure to
keep any part of the Center in repair unless Landlord shall have had prior
actual knowledge of the need for such repair and subsequently failed to make
such repair within a reasonable period of time thereafter; (c) injury done or
caused by wind, water, or other natural element; (d) any defect in or failure
of plumbing, heating or air conditioning equipment, electric wiring or
installation thereof, gas, water, and steam pipes, stairs, porches, railings or
walks; (e) broken glass; (f) the backing up of any sewer pipe or downspout; (g)
the bursting, leaking or running of any tank, tub, washstand, water closet,
waste pipe, drain or any other pipe or tank in, upon or about the Premises; (h)
the escape of steam or hot water; (i) water, snow or ice upon the Premises; (j)
the falling of any fixture, plaster or stucco; (k) damage to or loss by theft
or otherwise of property of Tenant or others; (l) acts or omissions of persons
in the Premises, other tenants in the Center, occupants of nearby properties,
or any other persons; and (m) any act or omission of owners of adjacent or
contiguous property.
*** Confidential treatment requested.
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All property of Tenant kept in the Premises shall be so kept at Tenant's risk
only and Tenant shall save Landlord harmless from claims arising out of damage
to the same, including subrogation claims by Tenant's insurance carrier.
Section 11.5. Insurance - Tenant's Operation.
Tenant will not do or knowingly suffer to be done anything which will
contravene Landlord's insurance policies or prevent Landlord from procuring
such policies, amounts and companies selected by Landlord. If anything done,
omitted to be done or suffered to be done by Tenant in, upon or about the
Premises shall cause the rates of any insurance effected or carried by Landlord
on the Premises or other property to be increased beyond the regular rate from
time to time applicable to the Premises for use for the purpose permitted under
this Lease, or such other property for the use or uses made thereof, Tenant
will pay the amount of such increase promptly upon Landlord's demand and
Landlord shall have the right to correct any such condition at Tenant's
expense. In the event that this Lease so permits and Tenant engages in the
preparation of food or packaged foods or engages in the use, sale or storage of
inflammable or combustible material, Tenant shall install chemical
extinguishing devices (such as ansul) approved by Underwriters Laboratories and
Factory Mutual and the installation thereof must be approved by the appropriate
local authority. Tenant shall keep such devices under service as required by
such organizations. If gas is used in the Premises, Tenant shall install gas
cut-off devices (manual and automatic).
Section 11.6. Indemnification.
Tenant shall save harmless, indemnify, and at Landlord's option, defend
Landlord, its agents and employees, and mortgagee, if any, from and against any
and all liability, liens, claims, demands, damages, expenses, fees (including
attorneys' fees), costs, fines, penalties, suits, proceedings, actions and
causes of action of any and every kind and nature arising or growing out of or
in any way connected with Tenant's use of the Premises or Tenant's operations,
conduct or activities in the Center.
Landlord shall indemnify, defend, protect and hold harmless Tenant and its
agents and employees from any loss, damage, expense, suit, proceeding, penalty,
liability or claim arising from the breach of this Lease by Landlord or the
negligence or misconduct of Landlord or its agents or employees.
ARTICLE XII
OFFSET STATEMENT, ATTORNMENT, SUBORDINATION
Section 12.1. Offset Statement.
Within ten (10) days after receipt of written request by either party, the
other party shall deliver, executed in recordable form a declaration to any
person designated by Landlord (a) ratifying this Lease; (b) stating the
commencement and termination dates; and (c) certifying (i) that this Lease is in
full force and effect and has not been assigned, modified, supplemented or
amended (except by such writings as shall be stated), (ii) that all conditions
under this Lease to be performed by the other party have been satisfied (stating
exceptions, if any), (iii) that no defenses or offsets against the enforcement
of this Lease by the other party (or stating those claimed): (iv) as to advance
rent, if any, paid by Tenant, (v) the date to which rent has been paid, (vi) as
to the amount of security deposited with Landlord, and such other information as
the requesting party reasonably requires. Persons receiving such statements
shall be entitled to rely upon them.
Section 12.2. Attornment.
Tenant shall, in the event of a sale or assignment of Landlord's interest
in the Premises or the building in which the Premises is located or this Lease
or the Total Tract, or if the Premises or such building comes into the hands of
a mortgagee, ground lessor or any other person whether because of a mortgage
foreclosure, exercise of a power of sale under a mortgage, termination of the
ground lease, or otherwise, attorn to the purchaser or such mortgagee or other
person and recognize the same as Landlord hereunder, provided such purchaser,
mortgagee or other person recognizes Tenant's possession of the Premises and
rights under this Lease. Tenant shall execute, at Landlord's request, any
reasonable attornment agreement required by any mortgagee, ground lessor or
other such person to be executed, containing such provisions as such mortgagee,
ground lessor or other person requires, provided that such mortgagee, purchaser
or other person, if requested by Tenant, executes a non-disturbance agreement in
favor of Tenant.
Section 12.3. Subordination.
A. Mortgage. This Lease shall be secondary, junior and inferior at all
times to the lien of any mortgage and to the lien of any deed of trust or other
method of financing or refinancing (hereinafter collectively referred to as
"mortgage") now or hereafter existing against all or a part of the Total Tract,
and to all renewals, modifications, replacements, consolidations and extensions
thereof, and Tenant shall execute and deliver all reasonable documents
requested by any mortgagee or security holder to effect such subordination,
provided the mortgagee or security holder agrees in writing that if Landlord
defaults under the mortgage, said mortgagee or security holder shall not
disturb Tenant's possession of the Premises and rights under this Lease while
Tenant is not in default hereunder. Landlord represents that as of the date of
this lease, there is no mortgagee with an interest superior to Tenant's
interest in the Premises.
B. Construction, Operation and Reciprocal Easement Agreements. This Lease
is subject and subordinate to one (1) or more construction, operation,
reciprocal easement or similar agreements (hereinafter referred to as
"Operating Agreements") entered into or hereafter to be entered into between
Landlord and other owners or lessees of real estate (including but not limited
to owners and operators of department stores) within or near the Center (which
Operating Agreements have been or will be recorded in the official records of
the County wherein the Center is located) and to any and all easements and
easement agreements which may be or have been entered into with or granted to
any persons heretofore or
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hereafter, whether such persons are located within or upon the Center or not ??
Tenant shall execute such instruments as Landlord requests to evidence such
subordination.
Section 12.4. Failure to Execute Instruments.
Tenant's failure to execute instruments or certificates provided for in
this Article XII within fifteen (15) days after Tenant's receipt from Landlord
of a written request shall be a default under this Lease.
ARTICLE XIII
ASSIGNMENT, SUBLETTING AND CONCESSIONS
Section 13.1. Consent Required.
Tenant shall not sell, assign, mortgage, pledge or in any manner transfer
this Lease or any interest therein, nor sublet all or any part of the Premises,
nor license concessions nor lease departments therein, without Landlord's prior
written consent in each instance, which shall not be unreasonably withheld or
delayed provided Tenant and its proposed assignee, sublessee or other
transferee comply with and otherwise satisfy the terms and conditions of
subparagraphs #1 through #6 below. Consent by Landlord to any assignment or
subletting shall not waive the necessity for consent to any subsequent
assignment or subletting. This prohibition shall include a prohibition against
any subletting or assignment by operation of law other than as provided in
section 13.3 below. If this Lease is assigned or the Premises or any part sublet
or occupied by anybody other than Tenant, Landlord may collect rent from the
assignee, subtenant or occupant and apply the same to the rent herein reserved,
but no such assignment, subletting, occupancy or collection of rent shall be
deemed a waiver of any restrictive covenant contained in this Section 13.1 or
the acceptance of the assignee, subtenant or occupant as tenant, or a release
of Tenant from the performance by Tenant of any covenants on the part of Tenant
herein contained. Any assignment (a) as to which Landlord has consented; or (b)
which is required by reason of a final nonappealable order of a court of
competent jurisdiction; or (c) which is made by reason of and in accordance
with the provisions of any law or statute, including, without limitation, the
laws governing bankruptcy, insolvency or receivership shall be subject to all
terms and conditions of this Lease, and shall not be effective or deemed valid
unless, at the time of such assignment:
1. Each assignee or sublessee shall agree, in a written agreement
satisfactory to Landlord, to assume and abide by all of the terms and
provisions of this Lease, including those which govern the permitted
uses of the Premises described in Article VIII herein; and
2. Each assignee or sublessee has submitted a current financial
statement, audited by a certified public accountant, showing a net
worth of not less than Tenant's net worth existing as of the
Commencement Date or the date immediately prior to the date of such
transfer, whichever is greater; and
3. Each assignee or sublessee has submitted, in writing, evidence
satisfactory to Landlord of substantial retailing experience in
shopping centers of comparable size to the Center and in the sale of
merchandise and services permitted under Article VIII of this Lease;
and
4.
5. The use of the Premises by each assignee or sublessee shall not
violate, or create any potential violation of applicable laws, codes
or ordinances, nor violate any other agreements affecting the
Premises, Landlord or other tenants in the Center.
6. Tenant shall pay Landlord an Assignment Fee as reimbursement for
administrative and legal expenses incurred by Landlord in connection
with any assignment or subletting. The Assignment Fee initially will
be One Thousand and 00/100 Dollars ($1,000.00) and shall increase by
One Hundred and 00/100 Dollars ($100.00) at the end of each full Lease
Year of the Lease Term.
In the event of any assignment or subletting as provided above, there
shall be paid to Landlord, in addition to the Minimum Annual Rent and other
charges due Landlord pursuant to this Lease, such additional consideration as
shall be attributable to the right of use and occupancy of the Premises,
whenever the same is receivable by Tenant, together with, as additional rent,
the excess, if any, of the rent and other charges payable by the assignee or
sublessee over the Minimum Annual Rent and other charges payable under the Lease
to Landlord by Tenant pursuant to this Lease, after first deducting the
reasonable and documented out-of-pocket costs and expenses actually incurred by
Tenant to procure such assignment or subletting including, without limitation,
legal fees and costs, brokerage commissions, and inducements and concessions to
the subtenant or assignee related to such subletting or assignment. Such
additional rent shall be paid to Landlord concurrently with the payments of
Minimum Annual Rent required under this Lease, and Tenant shall remain
primarily liable for such payments. Notwithstanding any assignment or
subletting, Tenant shall remain fully liable on this Lease and for the
performance of all terms, covenants and provisions of this Lease.
Anything contained in the foregoing provisions of this Section to the
contrary notwithstanding, neither Tenant nor any other person having an
interest in the possession, use, occupancy or utilization of the Premises shall
enter into any lease, sublease, license, concession or other agreement for use,
occupancy or utilization of space in the Premises which provides for
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<PAGE> 18
rental or other payment for such use, occupancy or utilization based, in whole
or part, on the net income or profits derived by any person from the Premises
leased, used, occupied, or utilized (other than an amount based on a fixed
percentage or percentages of receipts or sales), and any such purported lease,
sublease, license, concession or other agreement shall be absolutely void and
ineffective as a conveyance of any right or interest in the possession, use,
occupancy or utilization of any part of the Premises.
Section 13.2. Change in Ownership. INTENTIONALLY DELETED.
Section 13.3. Permitted Transfers.
Anything in this Lease to the contrary notwithstanding, Tenant shall have
the right to assign this Lease or sublet the Premises without Landlord's consent
to: (i) any parent, affiliate or operating subsidiary of Tenant; or (ii) to a
corporation with which Tenant may merge, consolidate or sell substantially all
of its assets. Tenant agrees that it shall notify Landlord in advance of its
intention to transfer this Lease pursuant to this Section 13.3. Further, the
transferee shall remain subject to all of the terms, covenants, conditions and
provisions of this Lease on Tenant's part to be performed hereunder including,
but not limited to, the permitted use of the Premises. Notwithstanding any
assignment or subletting made pursuant to this Section 13.3, Tenant shall remain
fully liable on this Lease and for the performance of all of the terms,
covenants, conditions and provisions of this Lease on Tenant's part to be
performed hereunder.
ARTICLE XIV
MARKETING FUND AND ADVERTISING
Section 14.1. Provisions Relating to Marketing Fund.
Landlord may, at its option, create and maintain a marketing fund
(hereinafter referred to as the "Fund"), the primary purpose of which is to
provide sums necessary for professional marketing services which benefit the
tenants in the Center. In the event Landlord does create and maintain the Fund,
Tenant agrees to contribute to such Fund, beginning upon the later to occur of
(a) the Commencement Date, or (b) the date the Fund is created, [***] per square
foot of Store Floor Area, during each calendar year of the Lease Term
(hereinafter referred to as "Fixed Contribution") payable in equal monthly
installments , in advance, on the first day of each and every month (pro rated
for partial months). Landlord shall contribute an amount equal to [***] of the
monies collected from all tenants in the Center during each calendar year, which
sum may be paid in whole or in part by Landlord, at its option, by providing the
services of a Marketing Director or other person or persons under Landlord's
exclusive control to help organize and implement marketing programs using assets
from the Fund. Any overpayment or underpayment of such amount by Landlord shall
be adjusted annually. The Fixed Contribution shall be adjusted annually
commencing with the creation of the Fund based upon the increase or decrease of
the Consumer Price Index (as defined in Section 7.2 above) during the preceding
twelve (12) month period but shall never be less than the above-stated amount.
In addition to its other obligations contained herein, Tenant agrees that it
shall participate and cooperate in all special sales and promotions sponsored by
the Fund. The failure of any other tenant or any department store to contribute
to the Fund shall not affect Tenant's obligations hereunder.
Section 14.2. Advertising.
Tenant shall furnish to Landlord an annual statement at the end of each
Lease Year showing the amounts spent by Tenant on white space advertising or
other advertising media. Each such annual statement shall be made a part of the
Gross Sales annual report required to be furnished by Tenant under Section 4.3.
If Tenant's annual statement shows that Tenant has expended for such
advertising, during the preceding Lease Year, less than [***] of its Gross Sales
for said period, Tenant shall within thirty (30) days after the required
delivery date of its annual statement contribute to the Marketing Fund referred
to in Section 14.1 above the difference between the amount actually expended for
such advertising and [***] of such Gross Sales. Contributions or other payments
payable by Tenant to the said Marketing Fund shall not be deemed an amount
expended for advertising within the meaning of this Section 14.2. All
expenditures made by Tenant for advertising in connection with Tenant's other
stores, if any, within a fifteen (15) mile radius from the nearest perimeter
boundary of the whole Center, may be included by Tenant to comply with this
Section 14.2, provided such advertising in all instances includes the Premises
and encompasses or is distributed to the geographical trade area in which the
whole Center is located.
Section 14.3. Media Fund.
Landlord may, at its option, create and maintain a Media Fund, the
exclusive purpose of which shall be to pay all costs and expenses associated
with the purchase of electronic, print or outdoor advertising for the promotion
of the Center. In the event Landlord does create and maintain the Media Fund,
Tenant agrees to contribute to such Fund, beginning upon the later to occur of
(a) the Commencement Date or (b) the date the Media Fund is created, a sum equal
to [***] per square foot of Store Floor Area during each calendar year of the
Lease Term (hereinafter referred to as "Media Fund Charge"), payable in equal
monthly installments, in advance, on the first day of each and every month (pro
rated for partial months).
The Media Fund Charge shall be adjusted annually by a percentage equal to
the percentage increase or decrease in the electronic, print and outdoor
advertising rates of the media used for advertising and promotions in the
preceding calendar year in the media market in which the Center is located,
provided, however that said charge shall not be less than as originally set
forth herein. Within ninety (90) days following the close of each calendar
year, Landlord shall furnish Tenant a statement for the preceding calendar year
showing the amounts expended by Landlord for media advertising. Tenant hereby
authorizes Landlord to use Tenant's trade name and a brief description of
Tenant's business in connection with any media advertising purchased pursuant
to this Section.
Notwithstanding anything herein in this Section 14.3 which may be to the
contrary, Tenant shall have the right to negotiate with Landlord's Center
marketing representative with respect to performing certain promotional
activities as may be mutually agreed upon by the parties with Tenant's cost for
such promotional activities credited, in whole or in part, to Tenant's Media
Fund Charge Obligation under this Section 14.3. The foregoing shall not,
however, require Landlord and/or Landlord's Center marketing representative to
agree to Tenant's proposed promotional activity and/or to any credit to Tenant's
Media Fund Charge obligation payable hereunder unless otherwise specified to the
contrary in a separate written agreement between Landlord and Tenant.
*** Confidential treatment requested.
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Section 14.4. Merchants' Association.
Landlord may, at its option, create and maintain a Merchants' Association
(the "Association") in lieu of the Fund and the Media Fund. In that event,
Tenant agrees to contribute to the Association, beginning upon the later to
occur of (a) the Commencement Date or (b) the date the Association is created,
the sum of the amounts Tenant would be obligated to contribute to the Fund and
the Media Fund under Sections 14.1 and 14.3 had Landlord create and maintained
the Fund and the Media Fund. Such amount shall be payable by Tenant to the
Association in equal monthly installments, in advance, on the first day of each
and every month (prorated for partial months). Landlord shall contribute to the
Association during each calendar year an amount equal to the amount Landlord
would otherwise be required to contribute to the Fund in accordance with
Section 14.1 above. Any overpayment or underpayment of such amount by Landlord
shall be adjusted annually.
ARTICLE XV
SECURITY DEPOSIT
Section 15.1. Amount of Deposit. INTENTIONALLY DELETED.
ARTICLE XVI
DAMAGE AND DESTRUCTION
If the Premises are hereafter damaged or destroyed or rendered partially
untenantable for their accustomed use by fire or other casualty insured under
the coverage which Landlord is obligated to carry pursuant to Section 11.1
hereof, Landlord shall promptly repair the same to substantially the condition
which they were in immediately prior to the happening of such casualty
(excluding stock in trade, fixtures, furniture, furnishings, carpeting, floor
covering, wall covering, drapes, ceiling and equipment). From the date of any
casualty (whether or not insured or required to be insured) until the Premises
are so repaired and restored, the Minimum Monthly Rent payments and all other
rent payments payable hereunder, except Real Estate Taxes, shall abate in such
proportion as the part of said Premises thus destroyed or rendered untenantable
bears to the total Premises; provided, however, that Landlord shall not be
obligated to repair and restore if such casualty is not covered by the insurance
which Landlord is obligated to carry pursuant to Section 11.1 hereof or is
caused directly by the negligence of Tenant, its agents or employees and
provided, further, that Landlord shall not be obligated to expend for any repair
or restoration an amount in excess of the insurance proceeds recovered by
Landlord therefor (other than applicable deductibles), and provided, further,
that if the Premises be damaged, destroyed or rendered untenantable for their
accustomed uses by fire or other casualty to the extent of more than fifty
percent (50%) of the cost to replace the Premises during the last three (3)
years of the Lease Term, then Landlord or Tenant shall have the right to
terminate this Lease effective as of the date of such casualty by giving to the
other party, within thirty (30) days after the happening of such casualty,
written notice of such termination. If such notice be given, this Lease shall
terminate and Landlord shall promptly repay to Tenant any rent theretofore paid
in advance which was not earned at the date of such casualty. Any time that
Landlord repairs or restores the Premises after damage or destruction, then
Tenant shall promptly repair or replace its stock in trade, fixtures,
furnishings, furniture, carpeting, wall covering, floor covering, drapes,
ceiling and equipment to the same condition as they were in immediately prior to
the casualty, and if Tenant has closed its business, Tenant shall promptly
reopen for business upon the completion of such repairs.
Notwithstanding anything to the contrary set forth herein, in the event
all or any portion of the Center shall be damaged or destroyed by fire or other
cause (notwithstanding that the Premises may be unaffected thereby), to the
extent the cost of restoration thereof would exceed fifteen percent (15%) of
the amount it would have cost to replace the Center in its entirety at the time
such damage or destruction occurred, then Landlord may terminate this Lease by
giving Tenant thirty (30) days prior notice of Landlord's election to do so,
which notice shall be given, if at all, within sixty (60) days following the
date of such occurrence. In the event of the termination of this Lease as
aforesaid, this Lease shall cease thirty (30) days after such notice is given,
and the rent and other charges hereunder shall be adjusted as of that date.
If the Premises are damaged and the reasonably estimated time to repair
the damage will exceed one hundred eighty (180) days, then either party shall
have the right to terminate this Lease by delivering written notice tot he
other party within thirty (30) days after the estimated time for rebuilding is
determined.
ARTICLE XVII
EMINENT DOMAIN
Section 17.1. Condemnation.
If ten percent (10%) or more of the Store Floor Area or fifteen percent
(15%) or more of the Center shall be acquired or condemned by right of eminent
domain for any public or quasi public use or purpose, or if an Operating
Agreement is terminated as a result of such an acquisition or condemnation,
then Landlord at its election may terminate this Lease by giving notice to
Tenant of its election, and in such event rentals shall be apportioned and
adjusted as of the date of termination. If the lease shall not be terminated as
aforesaid, then shall continue in full force and effect, and Landlord shall
within a reasonable time after possession is physically taken (subject to
delays due to shortage of labor, materials or equipment, labor difficulties,
breakdown of equipment, government restriction fires, other casualties or other
causes beyond the reasonable control of Landlord) repair or rebuild what
remains of the Premises for Tenant's occupancy; and a just proportion of the
Minimum Annual Rent shall be abated, according to the nature and extent of the
injury to the Premises until such repairs and rebuilding are completed, and
thereafter for the balance of the Lease Term.
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Section 17.2. Damages.
Landlord reserves, and Tenant assigns to Landlord, all rights to damages
on account of any taking or condemnation or any act of any public or quasi
public authority for which damages are payable. Tenant shall execute such
instruments of assignments as Landlord requires, join with Landlord in any
action for the recovery of damages, if requested by Landlord, and turn over to
Landlord any damages recovered in any proceeding. If Tenant fails to execute
instruments required by Landlord, or undertake such other steps as requested,
Landlord shall be deemed the duly authorized irrevocable agent and
attorney-in-fact of Tenant to execute such instruments and undertake such steps
on behalf of Tenant. However, Landlord does not reserve any damages payable for
trade fixtures installed by Tenant at its own cost which are not part of the
realty nor for any other damages Tenant may be entitled to recover by law as a
result of such taking or condemnation provided Tenant's claim therefor is made
against the condemning authority and not against the Landlord or Landlord's
mortgagee, if any, and provided, further, Tenant's damage award does not reduce
or diminish any damage award payable to Landlord or Landlord's mortgagee.
ARTICLE XVIII
DEFAULT BY TENANT
Section 18.1. Rights to Re-Enter.
The following shall be considered for all purposes to be defaults under
and breaches of this Lease: (a) any failure of Tenant to pay any rent or other
amount within ten (10) days after receipt of written notice from Landlord that
such amount is past due hereunder; (b) any failure by Tenant to perform or
observe any other of the terms, provisions, conditions and covenants of this
Lease and the continuance of such failure for more than thirty (30) days after
written notice of such failure provided, however, if such failure cannot
reasonably be cured within such thirty (30) day period, Tenant shall be allowed
such longer period as reasonably may be required so long as Tenant promptly
commences and diligently completes such cure; (c) a determination by Landlord
that Tenant has submitted any false report required to be furnished hereunder;
(d) anything done by Tenant upon or in connection with the Premises or the
construction of any part thereof which interferes in any way with, or results
in a work stoppage in connection with, construction of any part of the Center
or any other tenant's space and the failure of such interruption to be cured
within five (5) days after written notice to Tenant and Tenant shall
immediately, upon oral or written direction from Landlord or Landlord's
authorized representative, take such action as Landlord shall specify in order
to promptly prevent, avoid or terminate such interference or work stoppage in
connection with construction of any part of the Center or any other tenant's
space; (e) the bankruptcy or insolvency of Tenant or the filing by or against
Tenant of a petition in bankruptcy or for reorganization or arrangement or for
the appointment of a receiver or trustee of all or a portion of Tenant's
property, or Tenant's assignment for the benefit of creditors; (f) if Tenant
abandons or vacates or does not do business in the Premises when required to do
so under this Lease and Tenant subsequently fails to reopen for business in the
Premises within five (5) days after Tenant's receipt of Landlord's written
demand therefor; or (g) this Lease or Tenant's interest herein or in the
Premises or any improvements thereon or any property of Tenant are executed upon
or attached; or (h) the Premises come into the hands of any person other than
expressly permitted under this lease (i) repetition or continuation of any
failure to pay rent or other sums due hereunder where such failure shall
continue or be repeated for two consecutive months or a total of four months in
any period of twelve consecutive months. In any such event, Landlord, in
addition to all other rights or remedies it may have, shall have the right
thereupon or at any time thereafter to terminate this Lease by giving notice to
Tenant stating the date upon which such termination shall be effective, and
shall have the right, either before or after any such termination, to re-enter
and take possession of the Premises, remove all persons and property from the
Premises, store such property at Tenant's expense, and sell such property if
necessary to satisfy any deficiency in payments by Tenant as required hereunder.
Section 18.2. Right to Relet.
If Landlord re-enters the Premises as above provided, or if it takes
possession pursuant to legal proceedings or otherwise, it may either terminate
this Lease or it may, from time to time, without terminating this Lease, make
such alterations and repairs as it deems advisable to relet the Premises, and
relet the Premises or any part thereof for such term or terms (which may extend
beyond the Lease Term) and at such rentals and upon such other terms and
conditions as Landlord in its sole discretion deems advisable; upon each such
reletting all rentals received by Landlord therefrom shall be applied, first, to
any indebtedness other than rent due hereunder from Tenant to Landlord; second,
to pay any costs and expenses of reletting, including without limitation,
brokers and attorneys' fees and costs of advertising, alterations and repairs;
third, to rent due hereunder, and the residue, if any, shall be held by
Landlord and applied in payment of future rent as it becomes due hereunder.
Landlord shall use reasonable efforts to mitigate any damages resulting from
Tenant's default including reasonable efforts to relet the Premises upon
commercially reasonable terms in accordance with then currently market
conditions. Landlord shall not, however, be required to give the Premises
preference over other space in the Center in attempting to re-let the same.
If rentals received from such reletting during any month are less than
that to be paid during that month by Tenant hereunder, Tenant shall immediately
pay any such deficiency to Landlord. No re-entry or taking possession of the
Premises by Landlord shall be construed as an election to terminate this Lease
unless a written notice of such termination is given by Landlord.
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ARTICLE XXI
ACCESS BY LANDLORD
Section 21.1. Right of Entry.
Landlord, its agents and employees shall have the right to enter the
Premises from time to time following not less than forty-eight (48) hours prior
notice, oral or written, to Tenant or Tenant's store manager (except in an
emergency, no notice shall be required) at reasonable times to examine the
same, show them to prospective purchasers and other persons, and make such
repairs, alterations, improvements or additions as Landlord deems necessary.
Rent shall not abate while any such repairs, alterations, improvements, or
additions are being made. During the last six (6) months of the Lease Term,
Landlord may exhibit the Premises to prospective tenants. In addition, during
any apparent emergency, Landlord or its agents may enter the Premises forcibly
without liability therefor and without in any manner affecting Tenant's
obligations under this Lease.
ARTICLE XXII
HOLDING OVER. SUCCESSORS
Section 22.1. Holding Over.
If Tenant holds over or occupies the Premises beyond the Lease Term (it
being agreed there shall be no such holding over or occupancy without Landlord's
written consent), Tenant shall pay Landlord for each day of such holding over a
sum equal to [***] of the Minimum Monthly Rent prorated for the number of days
of such holding over, plus a prorata portion of all other amounts which Tenant
would have been required to pay hereunder had this Lease been in effect. If
Tenant holds over with or without Landlord's written consent Tenant shall occupy
the Premises on a tenancy at sufferance but all other terms and provisions of
this Lease shall be applicable to such period.
Section 22.2. Successors.
All rights and liabilities herein given to or imposed upon the respective
parties hereto shall bind and inure to the several respective heirs,
successors, administrators, executors and assigns of the parties and if Tenant
is more than one (1) person, they shall be bound jointly and severally by this
Lease except that no rights shall inure to the benefit of any assignee or
subtenant of Tenant unless the assignment or sublease was approved by Landlord
in writing as provided in Section 13.1 hereof. Landlord, at any time and from
time to time, may make an assignment of its interest in this Lease and, in the
event of such assignment, Landlord and its successors and assigns (other than
the assignee of Landlord's interest in this Lease) shall be released from any
and all liability thereafter accruing hereunder.
ARTICLE XXIII
QUIET ENJOYMENT
Section 23.1. Landlord's Covenant.
So long as Tenant is not in default under this Lease, Tenant shall
peaceably and quietly hold and enjoy the Premises for the Lease Term without
interruption by Landlord or any person or persons claiming by, through or under
Landlord, subject, nevertheless, to the terms and conditions of this Lease.
ARTICLE XXIV
MISCELLANEOUS
Section 24.1. Waiver.
No waiver by Landlord or Tenant of any breach of any term, covenant or
condition hereof shall be deemed a waiver of the same or any subsequent breach
of the same or any other term, covenant or condition. The acceptance of rent by
Landlord shall not be deemed a waiver of any earlier breach by Tenant of any
term, covenant or condition hereof, regardless of Landlord's knowledge of such
breach when such rent is accepted. No covenant, term or condition of this Lease
shall be deemed waived by Landlord or Tenant unless waived in writing.
Section 24.2. Accord and Satisfaction.
Landlord is entitled to accept, receive and cash or deposit any payment
made by Tenant for any reason or purpose or in any amount whatsoever, and apply
the same at Landlord's option to any obligation of Tenant and the same shall
not constitute payment of any amount owed except that to which Landlord has
applied the same. No endorsement or statement on any check or letter of Tenant
shall be deemed an accord and satisfaction or otherwise recognized for any
purpose whatsoever. The acceptance of any such check or payment shall be
without prejudice to Landlord's right to recover any and all amounts owed by
Tenant hereunder and Landlord's right to pursue any other available remedy.
Section 24.3. Entire Agreement.
There are no representations, covenants, warranties, promises, agreements,
conditions or undertakings, oral or written, between Landlord and Tenant other
than herein set forth. Except as herein otherwise provided, no subsequent
alteration,
*** Confidential treatment requested.
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amendment, change or additions to this Lease shall be binding upon Landlord
or Tenant unless in writing, signed by them and approved by Landlord's
mortgagee.
Section 24.4. No Partnership.
Landlord does not, by virtue of this Lease or the performance of the
parties under this Lease, become a partner, employee, principal, master, agent
or joint venturer of or with Tenant.
Section 24.5. Force Majeure.
If either party hereto shall be delayed or hindered in or prevented from
the performance of any act required hereunder by reason of strikes, lockouts,
labor troubles, inability to procure material, failure of power, restrictive
governmental laws or regulations, riots, insurrection, war or other reason of a
like nature not the fault of the party delayed in performing work or doing acts
required under this Lease, the period for the performance of any such act shall
be extended for a period equivalent to the period of such delay.
Notwithstanding the foregoing, the provisions of this Section 24.5 shall at no
time after the Commencement Date operate to excuse Tenant from any obligations
for payment of Minimum Annual Rent, Percentage Rent, additional rent or any
other payments required by the terms of this Lease when the same are due, and
all such amounts shall be paid when due.
Section 24.6. Submission of Lease.
Submission of this Lease to Tenant does not constitute an offer to lease;
this Lease shall become effective upon execution and delivery thereof by
Landlord and Tenant. The effective date of this Lease shall be the date filled
in on Page 1 hereof by Landlord, which shall be the date of execution by the
last of the parties to execute the Lease.
Section 24.7. Notices.
All notices from Tenant to Landlord required or permitted by any provision
of this agreement shall be directed to Landlord as follows:
MALL OF AMERICA COMPANY
c/o M.S. Management Associates Inc.
National City Center
115 W. Washington Street
Indianapolis, IN 46204
Prior to the Commencement Date such notices shall only be effective if
given to Landlord at the address shown above and to Landlord at the address
shown below:
MALL OF AMERICA COMPANY
c/o M.S. Management Associates Inc.
Construction Department
National City Center
115 W. Washington Street
Indianapolis, IN 46204
All notices from Landlord to Tenant required or permitted hereunder shall
be sent to the Premises and also directed as follows, namely:
<TABLE>
<S> <C> <C>
LBE Technologies, Inc. with a copy of Gray, Cary, Ware & Freidenrich
10401 Bubb Road default notices to: 400 Hamilton Avenue
Cupertino, California 95014 Palo Alto, California 94301
Attn.: James Koshland
</TABLE>
All notices to be given hereunder by either party shall be written and
sent by registered or certified mail, return receipt requested, postage
pre-paid or by an express mail delivery service, addressed to the party
intended to be notified at the address set forth above. Either party may, at
any time, or from time to time, notify the other in writing of a substitute
address for that above set forth, and thereafter notices shall be directed to
such substitute address. Notice given as aforesaid shall be sufficient service
thereof and shall be deemed given as of the date received, as evidenced by the
return receipt of the registered or certified mail or the express mail delivery
receipt, as the case may be. A duplicate copy of all notices from Tenant shall
be sent to any mortgagee whose address has been furnished to Tenant as provided
for in Section 19.2.
Section 24.8. Captions and Section Numbers.
This Lease shall be construed without reference to titles of Article and
Sections, which are inserted only for convenience of reference.
Section 24.9. Number and Gender.
The use herein of a singular term shall include the plural and use of the
masculine, feminine or neuter genders shall include all others.
Section 24.10. Objection to Statements. INTENTIONALLY DELETED.
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Section 24.11 Representation, Corporate Tenant.
If Tenant is or will be a corporation, the persons executing this Lease
on behalf of Tenant hereby covenant and warrant that Tenant is a duly qualified
corporation authorized to do business in the State of Minnesota, that all
franchise and corporate taxes have been paid to date and all future forms,
reports, fees and other documents necessary to comply with applicable laws will
be filed when due, and the person signing this Lease on behalf of the
corporation is an officer of Tenant, and is duly authorized to sign and execute
this Lease.
Section 24.12. Joint and Several Liability.
If Tenant is a partnership or other business organization the members of
which are subject to personal liability, the liability of each such member
shall be deemed to be joint and several.
Section 24.13. Limitation of Liability.
Anything to the contrary herein contained, notwithstanding, there shall
be absolutely no personal liability on persons, firms or entities who
constitute Landlord with respect to any of the terms, covenants, conditions and
provisions of this Lease, and Tenant shall, subject to the rights of any first
mortgagee, look solely to the interest of Landlord, its successors and assigns,
in Landlord's Tract for the satisfaction of each and every remedy of Tenant in
the event of default by Landlord hereunder: such exculpation of personal
liability is absolute and without any exception whatsoever.
Section 24.14. Broker's Commission.
Each party represents and warrants that it has caused or incurred no
claims for brokerage commissions or finder's fees in connection with the
execution of this Lease, and each party shall indemnify and hold the other
harmless against and from all liabilities arising from any such claims caused
or incurred by it (including without limitation, the cost of attorneys' fees in
connection therewith).
Section 24.15. Partial Invalidity.
If any provision of this Lease or the application thereof to any person
or circumstance shall to any extent be invalid or unenforceable, the remainder
of this Lease, or the application of such provision to persons or circumstances
other than those as to which it is invalid or unenforceable, shall not be
affected thereby and each provision of this Lease shall be valid and
enforceable to the fullest extent permitted by law.
Section 24.16. Recording.
The parties agree not to place this Lease of record but each party
shall, at the request of the other, execute and acknowledge so that the same
may be recorded a Short Form Lease or Memorandum of Lease, indicating the Lease
Term, but omitting rent and other terms and an Agreement specifying the date
of commencement and termination of the Lease Term; provided, however, that the
failure to record said Short Form Lease, Memorandum of Lease or Agreement shall
not affect or impair the validity and effectiveness of this Lease. The party
requesting recording shall pay all costs, taxes, fees and other expenses in
connection with or prerequisite to recording.
Section 24.17. Applicable Law.
This Lease shall be construed under the laws of the State of Minnesota.
Section 24.18. Mortgagee's Approval. INTENTIONALLY DELETED.
Section 24.19. Reservation of Air Rights.
There has been no representation or warranty by the Landlord and Tenant
acknowledges that there is no inducement or reliance to lease the Premises on
the basis that the existing access to light, air and views from the Premises
would continue unabated. Tenant acknowledges and understands that it shall have
no rights to the airspace above the Retail Space and those rights shall be the
sole property of Landlord.
Section 24.20. Landlord's Contribution Toward Tenant's Work.
When Tenant has completed all of Tenant's Work in strict accordance with
Exhibit "C" and "C-2" by the Required Completion Date, and furnishes evidence
satisfactory to Landlord of such completion including the total cost thereof as
certified by Tenant's architect in a form acceptable to Landlord, and that all
of Tenant's Work has been paid for in full and no liens have attached or may
attach as the result thereof, and no default in, breach of, or failure to
perform this Lease exists and Tenant has paid or reimbursed Landlord all
amounts owed to Landlord pursuant to Sections 3.4 and 4.1 hereof or otherwise
and has opened its store for business and accepted the Premises in writing in a
form prescribed by Landlord or its mortgagee, and executed and delivered to
Landlord the certificate provided for in Section 2.1 hereof and has executed
such other instruments and documents as are required by Landlord's mortgagee to
be executed, Landlord shall pay to Tenant as Landlord's contribution toward
Tenant's Work the sum of $35.00 per square foot of Store Floor Area, determined
as provided for in Section 2.1 hereof and nor more, provided if Tenant fails to
open for business on the required Commencement Date as set out in Section 2.3
of this Lease herein, then Landlord shall have the right, in addition to its
other rights and remedies as provided herein, to reduce Landlord's Contribution
Toward Tenant's Work (as defined herein) by one-half (1/2) of the total amount
of Landlord's contribution. Provided Tenant satisfies the terms, conditions and
provisions of this Section 24.20 by the tenth (10th) day of a month, Landlord's
Contribution shall be paid to Tenant by the fifteenth (15th) day of the
following month.
Section 24.21. Unrelated Business Taxable Income.
A. If at any time and from time to time during the term of this Lease
Landlord receives a written opinion from its counsel or counsel to an exempt
partner of Landlord or of the managing partner of Landlord (an "Exempt
Partner") that any provision of this Lease, including without limitation the
provisions relating to the payment of rent and additional rent, or the absence
of any provision might give rise to unrelated business taxable income within
the meaning of section 512 of the Internal Revenue Code of 1986, as amended, or
the regulations issued thereunder, or may jeopardize the ability of an Exempt
Partner to obtain or retain its tax-exempt status, then this Lease may be
unilaterally amended by Landlord
25
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in such manner as shall meet the requirements reasonably specified by such
counsel and Tenant agrees that it will execute all documents or instruments
reasonable necessary to effect such amendment or amendments, provided that no
such amendment shall result on an estimated basis in Tenant having to pay in
the aggregate more money on account of its occupancy of the Premises than it
would be required to pay under the terms of this Lease, or having to receive
fewer services or services of a lesser quality than it is presently entitled to
receive under this Lease.
B. Any services which Landlord is required to furnish pursuant to the
provisions of this Lease may, at Landlord's option, be furnished from time to
time, in whole or in part, by employees of Landlord or the managing agent of
the Project or its employees or by one or more third persons hired by Landlord
or the managing agent of the Project. Tenant agrees that upon Landlord's
written request it will enter into direct agreements with the managing agent of
the Project or other parties designated by Landlord for the furnishing of any
such services required to be furnished by Landlord hereunder, in form and
content approved by Landlord, provided however that no such contract shall
result on an estimated basis in Tenant having to pay in the aggregate more
money on account of its occupancy of the Premises under the terms of this
Lease, or having to receive fewer services or services of a lesser quality than
it is presently entitled to receive under this Lease.
Section 24.22. Option to Renew.
Landlord hereby grants to Tenant the option to renew this Lease for one
(1) additional term of five (5) years, which shall commence upon the expiration
of the original term. Such option, with respect to the Renewal Term, shall only
be exercised by Tenant mailing to Landlord (ATTN: Executive Vice President --
Leasing), at Landlord's Notice Address, by United States mail, postage prepaid,
certified or registered, return receipt requested, with a copy to the attention
of Managing Attorney -- Legal Leasing, notice of the exercise of such option,
not later than one hundred eighty (180) days prior to the expiration of the
original term. No exercise of any option herein granted shall be effective if
any default under or breach of this Lease (a) exists either at the time of
exercise or on the expiration of the term during which it was exercised.
In the event such option is effectively exercised with respect to the
Renewal Term, all terms and conditions of this Lease shall be applicable to
such Renewal Term except that:
(i) The Minimum Annual Rent due and payable by Tenant to Landlord for each
Lease Year of the Renewal Term shall be [***] per square foot of Store Floor
Area, or [***] per annum (based on the approximated Store Floor Area set forth
in Section 2.1 hereof), payable in equal monthly installments, in advance upon
the first day of each and every month during the renewal term; and
(ii) Tenant shall have no further renewal options after the expiration or
sooner termination of the option hereinabove set forth.
Notwithstanding anything to the contrary in this Lease contained, the term
"Lease Term" whenever used in this Lease, shall be defined to include the
original term and all renewals and extensions thereof.
IN WITNESS WHEREOF, Landlord and Tenant have signed and sealed this Lease
as of the day and year first above written.
(LANDLORD)
MALL OF AMERICA COMPANY, a Minnesota General Partnership
By: MOAC LIMITED PARTNERSHIP, a Minnesota Limited
Partnership, its General Partner
By: MALL OF AMERICA ASSOCIATES, a Minnesota General
Partnership, its General Partner
By: SI-MINN DEVELOPERS LIMITED PARTNERSHIP, an
Indiana Limited Partnership, its General
Partner
By: SI-MINN, INC., an Indiana Corporation,
its General Partner
By: /s/ HERBERT SIMON
----------------------------------------------
Herbert Simon, President
(TENANT)
If Corporation LBE TECHNOLOGIES, INC.
By: /s/ JANET SET CAVAGE
----------------------------------------------
Janet Set Cavage
WITNESS: /s/ PAUL A. PORT
-----------------------------------------
Paul A. Port
*** Confidential treatment requested.
26
<PAGE> 25
LEGAL DESCRIPTION
MALL OF AMERICA
Lots 1 through 5, Block 1, Mall of America - 3rd Addition according to the plat
thereof on file as of record as Document No. 2211073 in the office of the
Registrar of Titles for Hennepin County, Minnesota.
That part of Lot 1, Block 1, Mall of America 4th Addition except that part
embraced within that part of the Northwest Quarter of the Southeast Quarter of
Section 1, Township 27, Range 24 described as follows: Beginning at the
Northeast corner of said Northwest Quarter of the Southeast Quarter of said
Section 1, thence West along the North line of said Northwest Quarter, 660 feet;
thence South 330 feet, thence East and parallel with the North line of said
Northwest Quarter of Southeast Quarter 660 feet to the East line of Northwest
Quarter of Southeast Quarter of said Section 1, thence North to the point of
beginning, according to the plat thereof on file or of record in the office of
the Registrar of Titles in and for said County.
That part of Lot 1, Block 1, Mall of America 4th Addition embraced within that
part of the Northwest Quarter of the Southeast Quarter of Section 1, Township
27, Range 24 described as follows: Beginning at the Northeast comer of said
Northwest Quarter of the Southeast Quarter of said Section 1, thence West along
the North line of said Northwest Quarter, 660 feet; thence South 330 feet,
thence East and parallel with the North line of said Northwest Quarter of
Southeast Quarter 660 feet to the East line of Northwest Quarter of Southeast
Quarter of said Section 1, thence North to the point of beginning, according to
the plat thereof on file or of record in the office of the Registrar of Titles
in and for said County.
EXHIBIT "A"
Page 1
<PAGE> 26
EXHIBIT "B"
Level 3
Page 1
<PAGE> 27
Restricted Area per
Article I cross-hatched.
EXHIBIT "B"
Page 2
<PAGE> 28
DESCRIPTION OF TENANT'S WORK
TENANT'S WORK - Tile following work required to complete and place the premises
in finished condition ready to open for business is to be performed by the
Tenant at the Tenant's own expense and shall be in addition to any work
described in the Tenant Handbook and Tenant Contractor's Handbook. In the event
there is any conflict between the provisions of this Exhibit "C" and the Tenant
Handbook or the Tenant Contractor's Handbook, the provisions of the Tenant
Handbook and Tenant Contractor's Handbook shall control. Tenant's Work includes,
but is not limited to, the following:
A. GENERAL PROVISIONS
All work done by Tenant shall be governed in all respects by, and be
subject to, the following:
1. Landlord shall have the right to require Tenant to furnish payment
and performance bonds or other security in form satisfactory to
Landlord for the prompt and faithful performance of Tenant's Work,
assuring completion of Tenant's Work and conditioned that Landlord
will be held harmless from payment of any claim either by way of
damages or liens on account of bills for labor or material in
connection with Tenant's Work. Tenant's Work shall at all times be
conducted consistent with the Project Labor Agreement for the Center
and in such manner so that Tenant shall not be in violation of
Section 18.1 of the Lease.
2. It is understood and agreed between Landlord and Tenant that costs
incurred by Landlord, if any, as a result of Tenant's failure or
delay in providing the information as required in this Exhibit and
in the Lease to which this Exhibit is attached, shall be the sole
responsibility of Tenant and he will pay such costs, if any,
promptly upon Landlord's demand.
3. All Tenant's Work shall conform to applicable statutes, ordinances,
regulations and codes and the requirements of Factory Mutual and all
rating bureaus and the Tenant Handbook which contains the basic
architectural, electrical and mechanical information necessary for
the preparation of Tenant's Plans, and which by this reference is
incorporated into and made a part of this Lease. Tenant shall obtain
and convey to Landlord all approvals with respect to electrical,
water, sewer, heating, cooling and telephone work, all as may be
required by any agency or utility company.
4. No approval by Landlord shall be deemed valid unless in writing and
signed by Landlord.
5. Prior to commencement of Tenant's Work and until completion thereof,
or commencement of the Lease Term, whichever is the last to occur,
Tenant shall effect and maintain Builder's Risk Insurance covering
Landlord, Tenant, Tenant's contractors and Tenant's subcontractors,
as their interest may appear, against loss or damage by fire,
vandalism and malicious mischief and such other risks as are
customarily covered by a standard "All Risk" policy of insurance
protecting against all risk of physical loss or damage to all
Tenant's Work in place and all materials stored at the site of
Tenant's Work, and all materials, equipment, supplies and temporary
structures of all kinds incidental to Tenant's Work, and equipment,
all while forming a part of or contained in such improvements or
temporary structures, or while on the premises or within the Total
Tract, all to the actual replacement cost thereof at all times on a
completed value basis. In addition, Tenant agrees to indemnify and
hold Landlord harmless against any and all claims for injury to
persons or damage to property by reason of the use of the premises
for the performance of Tenant's Work, and claims, fines, and
penalties arising out of any failure of Tenant or its agents,
contractors and employees to comply with any law, ordinance, code
requirement, regulations or other requirement applicable to Tenant's
Work and Tenant agrees to require all contractors and subcontractors
engaged in the performance of Tenant's Work to effect and maintain
and deliver to Tenant and Landlord, certificates evidencing the
existence of, and covering Landlord, City of Bloomington, Minnesota,
Port Authority of the City of Bloomington, Simon DeBartolo Group,
Inc., M.S. Management Associates. Inc., Tenant and Tenant's
contractors, prior to commencement of Tenant's Work and until
completion thereof, the following insurance coverages:
a. Workmen's Compensation and Occupational Disease Insurance in
accordance with the laws of the State in which the property is
located, including Employer's Insurance to the limit of
[***].
b. Comprehensive or Commercial General Liability insurance
affording limits of not less than [***] per occurrence for
bodily injury, personal injury and death, and for not less
than [***] per occurrence for property damage, or not less
than [***] per occurrence, Combined Single Limit. Such
insurance shall include protection arising from contractual
liability completed operations, independent contractors, as
well as for the hazards of underground. collapse and
explosion.
C. Comprehensive Automobile Insurance, including "non-owned"
automobiles, against bodily injury including death resulting
therefrom, in the limits of [***] for any one occurrence and
[***] property damage or a combined single limit of [***].
d. Owners and contractors protective liability coverage for an
amount not less than [***].
*** Confidential treatment requested.
EXHIBIT "C"
Page I
<PAGE> 29
6. Tenant agrees that the contract of every contractor, subcontractor,
mechanic, journeyman, laborer, material supplier or other person or
entity performing labor upon, or furnishing materials or equipment
to, the Premises in connection with Tenant's Work shall contain the
following provision:
"Contractor acknowledges that this provision is required under
Tenant's lease of the premises to be improved under this Contract
(Lease Premises) from Mall of America Company (Lease). In
consideration of Tenant's engagement of Contractor to perform the
work hereunder, and as an inducement to Tenant to enter into this
Contract with Contractor. Contractor acknowledges, covenants and
agrees that any mechanic's lien which it may hereafter file, claim,
hold or assert with respect to the work hereunder (i) shall attach
only to Tenant's interest in the Lease Premises under the Lease and
(ii) shall be subject, subordinate and inferior to the lien of any
mortgage(s) now or hereafter held upon and against the Mall of
America by any lender(s) now or hereafter providing funds for the
financing for the Mall of America, notwithstanding that any such
mortgage(s) may be recorded after the commencement of the work
hereunder and that Contractor's mechanic's lien otherwise might be
entitled to priority over any such mortgage(s). For such purposes,
Contractor also shall execute, acknowledge and deliver a separate
subordination agreement upon request by Tenant, Mall of America
Company, or any such lender(s), prior to making any application or
request for payment hereunder and as a condition precedent to
Contractor's right to receive any payment hereunder. Contractor
likewise shall cause the liens and lien rights of all
subcontractors, sub-subcontractors, materialmen, suppliers,
laborers and all other persons furnishing work, labor, materials,
equipment and services on or in connection with the Lease Premises
to be limited to the Tenant's interest in the Lease Premises under
the Lease and to be subordinated to such mortgage(s), and Contractor
shall obtain and deliver to Tenant a similar subordination agreement
duly executed and acknowledged by each such subcontractor,
sub-subcontractor, materialman, supplier, laborer and other person
prior to making any application or request for payment hereunder and
as a condition precedent to Contractor's right to receive any
payment hereunder. Contractor shall indemnify, defend and hold
harmless Tenant, Mall of America Company, and such lender(s) from
and against any and all loss, costs, damage, expense (including,
without limitation, reasonable attorney fees), liability, suits,
actions and judgments arising or resulting from Contractor's failure
to cause all such mechanic's and materialmen's liens to be limited
to Tenant's interest in the Lease Premises under the Lease and to be
subordinated to said mortgage(s) as herein provided, in addition to
all other indemnities contained herein with respect to such liens."
Tenant shall indemnify, defend and hold harmless Landlord and such
lender(s) from and against any and all loss, costs, damage, expense
(including, without limitation, reasonable attorney fees),
liability, suits, action and judgments arising or resulting from
Tenant's failure to cause all such mechanic's and materialmen's
liens to be limited to Tenant's interest in the Premises under this
Lease and to be subordinated to said mortgage(s) as herein provided,
in addition to all other indemnities contained herein with respect
to such liens.
From the commencement of Tenant's Work through the date Tenant
obtains its certificate of occupancy, Tenant shall submit and
Landlord shall receive lien waivers no later than the fifth (5th)
day of each month for all work, material, services or machinery
furnished by Tenant's general contractor, subcontractors,
materialmen or suppliers in connection with Tenant's Work during the
preceding month. The failure of Tenant to submit such lien waivers
in accordance with this provision shall constitute a default under
Section 18.1 of this Lease.
B. FLOOR SLAB
No penetrations shall be allowed for electrical outlets in floor slabs.
All tenants with restroom facilities or food preparation areas shall
install a floor slab waterproofing membrane in the Premises. All floor
penetrations must be sleeved and waterproofed.
C. SECURITY SCREEN OR MALL FRONTAGE
1. Mall frontages shall be designed and constructed in accordance with
the requirements outlined in the Tenant Handbook. Security for "open
fronts" shall be by means of anodized aluminum roll up grilles or
anodized aluminum sliding and/or sliding glass doors. No mall
frontage shall be constructed without the written approval of
Landlord.
2. All materials employed in the construction of mall frontage shall be
as approved by Landlord and as defined by applicable building codes.
3. Mall Frontage Colors - It is the desire of the Landlord to give
Tenant the greatest practicable freedom in the choice of mall
frontage colors; but:
a. Colors must harmonize with the color scheme of the Center
itself.
b. Colors must harmonize with the color scheme of the surrounding
stores. To assist Tenant, a general color range will be
developed, with a sufficiently large selection to permit a
reasonable latitude for individual expression.
EXHIBIT "C"
Page 2
<PAGE> 30
4. All sliding entrance doors must be recessed in such manner that the
door, when open, will not project beyond the lease line.
5. Tenants with exterior glazing must install show window or display.
D. CEILING
1. All ceilings and coves shall not exceed 12'0" above the finished
floor.
2. Tenant's ceilings shall be suspended by adequate suspension systems
to conform to final requirements of governing authorities and
Landlord.
3. The space above the ceiling line, which is not occupied or allotted
to Landlord's Work (structural members, duct work, piping, etc.) may
be used for the installation of suspended ceiling, recessed
lighting fixtures and duct work. Under no circumstances will
Tenant's Work be hung or suspended from non-structural construction.
Any Tenant Work involving the hanging or suspension of construction
shall be accomplished only by methods, in locations and by use of
assemblies approved by Landlord.
4. Tenant shall provide ceiling access panels in the ceiling of the
Premises as required by Landlord to service Landlord equipment.
E. WALLS
All interior walls and curtain walls within the premises, including all
interior lath and plastering and gypsum board thereon, and including lath
and plastering, and/or dry wall on Landlord's exposed masonry or stud
party wall partitions. Dividing wall between premises shall meet Code
requirements and be continuous from floor to the underside of the roof or
floor deck. Tenant shall provide and install bracing and/or studs and/or
blocking as necessary to support wall mounted fixtures. Cracks, joints and
openings in walls to be filled with appropriate fire resistant materials.
Return air openings shall be provided in the dividing walls between
premises as required for proper air movement. Tenant shall install
insulation on the exterior walls of the Premises.
F. DOORS
Doors and vestibules to Service Courts and Corridors - where required, a
vestibule and a door 3'0" in width, with hardware, shall be provided and
installed by Tenant at Tenant's expense, between the Premises and the
service courts or between the Premises and a public corridor or mall
leading to the service courts.
G. INTERIOR PAINTING
All interior painting and decoration.
H. FLOOR COVERINGS
All floor coverings and floor finishes including recesses for special
floor finishes. It is Tenant's responsibility to join neatly to the mall
finish.
Floor Tile and Base - Tenant will install floor tile and base in
accordance with the materials and applications specified in the Tenant
Handbook along the storefront of the Premises, the width of which shall be
determined by Landlord.
I. SHOW WINDOW BACKGROUNDS
All show window backgrounds, show windows, show window floors and
ceilings, and show window lighting installations. All show windows shall
be adequately ventilated.
J. FURNITURE, FIXTURES AND SIGNS
All furnishings, trade fixtures, signs, and related parts, including
installation. Location and design of all signs subject to prior written
consent of Landlord.
K. PLUMBING
All plumbing and plumbing fixtures as required by applicable codes except
utility service to the area, including a properly sized water meter if the
same is required by Landlord, in which latter event Tenant shall make any
required utility deposits.
L. HOT WATER HEATER
Domestic electric hot water heater, where required, including final
connections.
EXHIBIT "C"
Page 3
<PAGE> 31
M. TOILET ROOM FIXTURES
Furnishing and installation of wiring, lighting fixtures, mechanical
toilet exhaust systems, towel cabinets, soap dishes, hand dryers,
deodorizers, mirrors and other similar items in toilet rooms within the
premises or as additionally required by code.
N. HEATING, VENTILATING AND AIR CONDITIONING
1. Complete HVAC Systems shall be designed, furnished and installed
within the premises by the Tenant. The HVAC systems, calculations,
designs and installations shall be as recommended in ASHRAE
Publications and the Landlord's Tenant Finish Mechanical Criteria.
Tenant's systems and ventilation shall meet all codes and ASHRAE
standards. Tenant shall furnish Landlord with complete load
calculations including information as to Tenant's lighting load in
watts and Tenant's estimated store population (employees and
customers).
2. Tenant's cooling system shall be adequate for cooling the premises
to 75 degrees F DB and 50% RH based on the latest ASHRAE guide
outdoor design dry bulb and design wet bulb temperatures for the
area as tabulated in the 2-1/2% columns, with a rise of not more
than 3 degrees F DB during peak periods.
3. Tenant's heating method shall be adequate for heating the premises
to 55 degrees F DB during times other than regular business hours
based on the latest ASHRAE guide outdoor design temperature for the
area as tabulated in the 99% column. The Tenant's heating method
shall be independent of the central cooling system. The Tenant's
lighting system shall be used to heat the sales area during regular
business hours in the heating season. The Tenant's lighting system
may be used to maintain the required sales area minimum temperature
level during other then regular business hours in the heating
season.
4. Tenant's exhaust systems shall provide the required exhaust air
capacities and shall be independent of the central cooling system.
The Tenant's exhaust systems shall be inoperative during other than
regular business hours. Replacement air for the Tenant's exhaust
will be provided through the Tenant's air supply system up to the
design air supply quantity. Any additional replacement air required
will be drawn from the mall. Independent air make-up air systems
shall not be installed by the Tenant.
5. Tenant's HVAC systems shall be complete with air distribution
systems, ventilating systems, control systems, insulation and all
other components required to make a complete system. Tenant's
systems shall be specifically designed to coordinate with variable
air volume cooling temperature control. Tenant's HVAC system
components shall be installed in locations as designated by the
Landlord.
6. Tenant shall provide and install fire dampers, in accordance with
all codes, in the right hand side (as viewed when facing the rear of
the Premises) demising partition of its Premises if its Premises
adjoin another tenant space. Tenant shall also provide and install
fire dampers where the Tenant's ductwork passes through service
corridor walls or other fire separations. Tenant's installation
shall include complete access and access panels to all valves,
dampers and similar service devices (including the Landlord's)
required for testing, balancing and servicing. Tenant shall utilize
only fire damper products as specified by the Tenant Handbook.
7. Tenant shall connect to Landlord's central cooling system and shall
use Landlord's Design Criteria in designing systems and controls.
Alterations to the Landlord's central system required due to
Tenant's design shall be done by Landlord at Tenant's sole expense.
8. If directed to do so by Landlord, Tenant shall paint and/or screen
from ground level view by parapet walls or other appropriate
screening, all of Tenant's outdoor equipment. Any such painting or
screening must be done at Tenant's sole expense and approved in
advance by Landlord.
O. MECHANICAL EQUIPMENT
All mechanical equipment including dumb-waiters, elevators, escalators,
freight elevators, conveyors, and their shafts and doors, located within
the premises, including electrical work for these items. Locations, size
and design of roof vents, HVAC equipment, units, hoods and caps shall be
approved by Landlord. Landlord reserves the right of disapproval of any
equipment to be placed on the roof. Tenant shall install equipment at
locations where structural reinforcements are provided. All changes in
structural design caused by Tenant's equipment shall be made by Landlord
and paid for by Tenant.
Any roof cuts or openings required to be made pursuant to Tenant's Plans
shall be performed by a contractor designated by Landlord at Tenant's
expense. In addition, all strips, base furnishings and other work
necessary to complete permanent weather proofing of Landlord's roof as a
result of roof cuts or openings required by Tenant shall be performed by a
contractor designated by Landlord at Tenant's expense.
EXHIBIT "C"
Page 4
<PAGE> 32
P. ELECTRICAL
All interior distribution panels, lighting panels, power panels, conduits,
outlet boxes, switches, outlets and wires within the premises. Tenant
shall provide electric conduit and boxes in the ceiling and walls,
including all electrical service panels, pull boxes and equipment.
2. All electrical fixtures, including lighting fixtures and equipment,
and installation thereof. Lighting systems (except security and
emergency lighting) must be controlled by lighting contractors. The
lighting contractors will be inter-locked with the Landlord's Energy
Management System for automatic control during other than regular
business hours.
3. All systems, where required for intercommunication, music antenna,
material handling or conveyor, burglar alarm, vault wiring, fire
protection alarm, time clock and demand control.
4. All conduit for necessary telephone wires in the premises.
5. Feeder conductors from Landlord's facilities to the Premises,
including the connections to Tenant's equipment.
6. Final connection to the Landlord's switch gear shall be done by a
contractor designated by Landlord at Tenant's expense. Tenant's
contractor will be responsible for the feeder conductors and
connections to tenant's equipment and for supplying proper fuses to
Landlord's designated contractor at the time of final connection.
Q. TEMPORARY SERVICES
Any temporary services required by Tenant during its construction period,
including heat, water or electrical service shall be secured by the
Tenant, at Tenant's sole cost and expense.
R. SUBSEQUENT REPAIRS AND ALTERATIONS
Landlord reserves the right to require changes in Tenant's Work when
necessary by reason of code requirements.
S. SIGNS
In order to assure orderly and aesthetically coordinated signing, plans
for all Tenant's signs must conform to Exhibit "E" hereto attached and the
applicable Mall criteria and before installation must be approved by
Landlord. No permission is granted, expressed or implied to permit Tenant
to erect an exterior sign of any type.
T. DOORS AND EXITING REQUIREMENTS
1. Tenant will be responsible for adherence to exiting codes.
2. Tenant will maintain a clear exiting path through the stockroom to
Tenant's rear door for those premises that contain a rear door.
U. CONSTRUCTION ACTIVITIES
1. During premises interior construction, Tenant shall use rear opening
to premises for moving in/out of materials, for those premises that
contain a rear door.
2. If any roof cuts or penetrations are required by Tenant, all curbs,
supports, blocking, temporary flashing, counterflashing or other
work necessary for installation shall be provided and installed by
Tenant at its expense. Tenant shall promptly notify, Landlord, in
advance, of the need for such cuts or penetrations and shall utilize
Landlord's designated roofing contractor for this work. Tenant's
contractor shall be responsible for contracting with Landlord's
roofing contractor to perform this work.
3. During construction, Tenant's use of the service elevators shall be
at Tenant's expense.
4. Landlord shall be responsible for the installation of the temporary
store front or barricade shielding the interior of the Premises from
the Mall, at Tenant's expense.
5. Tenant acknowledges that its construction activities in the Premises
and the Center are subject to a certain Project Labor Agreement for
Construction of the Mall of America executed on or about the 19th
day of November, 1985, by and among Triple Five Corporation, ???
Construction Services, Inc., and The Minneapolis Building and
Construction Trades Council. Such Project Labor Agreement is fully
incorporated herein by reference. As a material consideration of
Landlord entering into and executing this Lease with Tenant. Tenant
agrees to abide by the terms, conditions and provisions of the
Project Labor Agreement as such Project Labor Agreement effects
Tenant's construction activities
EXHIBIT "C"
Page 5
<PAGE> 33
in the Premises and the Center. Tenant's failure to abide by the same may be
deemed a default of this Lease if such failure results, either directly or
indirectly, in a work stoppage or interference or the threat of the same in the
construction activities in the Center or any other tenant's space. Landlord or
Landlord's authorized representative may take such action as Landlord or its
authorized representative deems necessary in order to immediately enforce the
terms of the Project Labor Agreement and in order to prevent, avoid or terminate
any interference or work stoppage (or the threat thereof) in connection with the
construction of any part of the Center or any other tenant's space. Such action
may include, but shall not be limited to, the issuance of a cease and desist
directive to Tenant. Tenant shall reimburse Landlord or any other tenant in the
Center for any losses, fees, expenses or damages suffered or incurred by
Landlord or such other tenant in the Center as a result of Tenant's failure to
comply with the Project Labor Agreement.
EXHIBIT "C"
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RULES AND REGULATIONS
1. Tenant shall advise and cause its vendors to deliver all merchandise
before noon on Mondays through Fridays, not at other times.
2. All deliveries are to be made to designated service or receiving areas and
Tenant shall request delivery trucks to approach their service or
receiving areas by designated service routes and drives.
3. Tractor trailers which must be unhooked or parked must use steel plates
under dolly wheels to prevent damage to the asphalt paving surface. In
addition, wheel blocking must be available for use. Tractor trailers are
to be removed from the loading areas after unloading. No parking or
storing of such trailers will be permitted in the Center.
4. Except for small parcel packages, no deliveries will be permitted through
the malls unless Tenant does not have a rear service door. In such event,
prior arrangements must be made with the Resident Mall Supervisor for
delivery. Merchandise being received shall immediately, be moved into
Tenant's Premises and not be left in the service or receiving areas.
5. Tenant is responsible for storage and removal of its trash, refuse and
garbage. Tenant shall not dispose of the following items in drains, sinks
or commodes: plastic products (plastic bags, straws, boxes); sanitary
napkins; tea bags; cooking fats; cooking oils; any meat scraps or cutting
residue; petroleum products (gasoline, naptha, kerosene, lubricating
oils); paint products (thinner, brushes); or any other item which the same
are not designed to receive. All Store Floor Area of Tenant, including
vestibules, entrances and returns, doors, fixtures, windows and plate
glass, shall be maintained in a safe, neat and clean condition.
6. Other than as permitted under the provisions of Section 10.4 or Exhibit
"E," Tenant shall not permit or suffer any advertising medium to be placed
on mall walls, on Tenant's mall or exterior windows, on standards in the
mall, on the sidewalks or on the parking lot areas or light poles. No
permission, expressed or implied, is granted to exhibit or display any
banner, pennant, sign, and trade or seasonal decoration of any size, style
or material within the Center, outside the Premises.
7. Tenant shall not permit or suffer the use of any advertising medium which
can be heard or experienced outside of the Premises, including, without
limiting the generality of the foregoing, flashing lights, searchlights,
loud speakers, phonographs, radios or television. No radio, television, or
other communication antenna equipment or device is to be mounted,
attached, or secured to any part of the roof, exterior surface. or
anywhere outside the Premises, unless Landlord has previously given its
written consent. Notwithstanding the foregoing but provided the same have
been approved by Landlord on Tenant's Plans, Tenant shall be allowed to
place a full size race car within the Premises in the area immediately
fronting on Tenant's entrance to the Premises. Landlord acknowledges that
the race car may be fitted with operating lights, including flashing
lights, a "fogging" device to simulate exhaust emissions and race car
sound effects. However, Tenant's operation of such race car shall remain
subject to the terms and conditions of the Lease (including, but not
limited to, Section 8.4 thereof) and shall not cause an adverse effect on
the Center or activities conducted in or from the Common Areas or
interfere with any other tenant's quiet enjoyment of its premises.
8. Tenant shall not permit or suffer merchandise of any kind at any time to
be placed, exhibited or displayed outside its Premises, nor shall Tenant
use the exterior sidewalks or exterior walkways of its Premises to
display, store or place any merchandise. No sale of merchandise by tent
sale, truck load sale or the like, shall be permitted on the parking lot
or other common areas.
9. Tenant shall not permit or suffer any portion of the Premises to be used
for lodging purposes, nor conduct or permit any unusual firing, explosion
or other damaging or dangerous hazard within the Premises or the Common
Area.
10. Tenant shall not permit or suffer any portion of the Premises to be used
for any warehouse operation, or any assembling, manufacturing, distilling,
refining, smelting, industrial, agricultural, drilling or mining
operation, adult bookstore or cinema, peepshow, entertainment or sale of
products of an obscene or pornographic nature or predominately sexual
nature.
11. Tenant shall not, in or on any part of the Common Area:
(a) Vend, peddle or solicit orders for sale or distribution of any
merchandise, device, service, periodical, book, pamphlet or other
matter whatsoever.
(b) Exhibit any sign, placard, banner, notice or other written material,
except for activities as approved in writing by Landlord.
(c) Distribute any circular, booklet, handbill, placard or other
material, except for activities as approved in writing by Landlord.
(d) Solicit membership in any organization, group or association or
contribution for any purpose.
(e) Create a nuisance.
EXHIBIT "D"
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<PAGE> 35
(f) Use any Common Areas (including the Enclosed Mall) for any purpose
when none of the other retail establishments within the Center is
open for business or employment, except for activities as approved
in writing by Landlord.
(g) Throw, discard, or deposit any paper, glass or extraneous matter of
any kind except in designated receptacles, or create litter or
hazards of any kind.
(h) Deface, damage or demolish any sign, light standard or fixture,
landscaping materials or other improvement within the Center, or the
property of customers, business invitees or employees situated
within the Center.
EXHIBIT "D"
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<PAGE> 36
SIGN CRITERIA
Tenant will not erect any signs except in conformity with the following policy:
(a) Wording on storefront signs shall be limited to store or trade name only.
Each party's customary signature or logo, hallmark insignia or other trade
identification will be respected.
(b) Signs of the flashing, blinking, rotating, moving, or animated types or
audible type signs are not permitted except for portions of East Broadway.
(c) The size of all Tenant's signs shall be limited. The scale and concept of
the enclosed mall requires the use of signs which are not larger than
necessary to be legible from within the mall. Thus, except for department
store signs, Tenant's signs shall be located within the limits of its
storefront and shall not project more than 6 inches beyond the storefront
and shall conform to the following proportionate height criteria:
(1) 30' storefront: 18" capitals 12" body
(2) 30' to 60' storefront: 24" capital 18" body
(3) 60' and over storefront: 30" capital 24" body
In addition to complying with the above criteria, signs in the enclosed
malls shall be limited in length to 70% of Tenant's frontage on the mall,
and shall in no case exceed a length of 30 feet.
(d) Secondary blade signs may be installed at right angles to the mall
storefront(s) provided they are adjacent to the Tenant's premises and
otherwise conform to the provisions of the Tenant Handbook Criteria.
(e) Signs on the building's exterior are strictly prohibited.
(f) Public safety decals or artwork on glass in minimum sizes to comply with
applicable Code, subject to the approval of Landlord, may be used, as
required by building codes or other governmental regulations.
(g) Paper signs, stickers, banners or flags are prohibited.
(h) No exposed raceways, ballast boxes or electrical transformers will be
permitted except as required by Code.
(i) Sign company names or stamps shall be concealed (Code permitting).
(j) Except as otherwise approved in writing by Landlord and by a Major Tenant
with respect to stores within one hundred fifty feet (150') of the
entrance of such Major Tenant's Building, only one (1) primary sign and
one (1) secondary blade sign for a Tenant's location will be permitted
within the Enclosed Mall areas; provided, however, that if a Tenant has
(a) more than sixty feet (60') of storefront and (b) more than one (1)
entrance, such Tenant will be permitted one (1) primary sign and one (1)
secondary blade sign for each of its entrances. Corner Tenants may have
one (1) primary sign and one (1) secondary blade sign on each side of the
corner Tenant's location fronting the Mall.
(k) Signs and identifying marks shall be placed entirely within the boundaries
of Tenant's Premises except blade signs as specified in paragraph (d)
above with no part higher than 13 feet above the finished floor line, or
lower than 8 feet to the finished floor line.
(1) Sign letters may be back-lighted with lamps or tubes entirely concealed
within the depth of the letter or may be opaque or translucent plastic
face with no visible openings. Maximum brightness allowed for interior
(enclosed mall) signs will be 100 foot lamberts taken at the letter face
and must comply with all building and electrical codes.
(m) Exposed sign illumination or illuminated sign cabinets or modules are not
permitted.
(n) Tenant shall not install any roof top signs.
(o) Tenant shall not install any pylon signs.
(p) All signs shall be subject to the Landlord's written approval before
fabrication.
(q) Three (3) complete sets of sign drawings must be submitted to the Landlord
for written approval before fabrication. Tenant's sign drawings must
include the following:
1. Elevation view of storefront showing sign (drawn to accurate scale)
with dimensions of height of letters and length of sign.
2. Color sample of sign panel.
3. Color sample of sign letters.
EXHIBIT "E"
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4. Cross section view through sign letter and sign panel showing location of
sign relative to the storefront line and showing the dimensioned
projection of the face of the letter from the storefront face.
The Landlord shall not be responsible for the cost of refabrication of signs
fabricated, ordered or construed, that do not conform to the Tenant Handbook
Signage Criteria.
EXHIBIT "E"
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<PAGE> 1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED ON
A REQUEST FOR CONFIDENTIAL TREATMENT
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
EXHIBIT 10.13
IRVINE RETAIL PROPERTIES COMPANY
RETAIL SPACE LEASE
LBE TECHNOLOGIES, INC., a California corporation,
dba "NASCAR Silicon Motor Speedway"
TENANT
IRVINE SPECTRUM CENTER
<PAGE> 2
RETAIL SPACE LEASE
THIS LEASE ("Lease") is entered into as of the date set forth in Section
1.1 by and between Landlord and Tenant.
ARTICLE 1
BASIC LEASE PROVISIONS
<TABLE>
<S> <C> <C> <C>
1.1 Date of April 22, 1998
Lease:
1.2 Landlord: IRVINE RETAIL PROPERTIES COMPANY,
a division of The Irvine Company,
a Delaware corporation
1.3 Tenant: LBE TECHNOLOGIES, INC., a California corporation
1.4 Tenant's NASCAR Silicon Motor Speedway (Article 11)
Trade
Name:
1.5 Shopping Irvine Spectrum Center; located in the City of Irvine, County (Article 2)
Center: of Orange, State of California.
Premises: Address: 71 Fortune Drive, Space 31, Irvine Spectrum (Article 3)
Center, Phase II, Irvine, CA 92618, the approximate location
of which is shown on Exhibit B.
1.7 Floor Area: Approximately five thousand two hundred eighteen (5,218) (Article 3)
square feet.
1.8 Term: eighty four (84) months. (Article 4)
1.9 Opening N/A (Article 4)
Date:
OR
1.10 Time to [***] days following Substantial Completion of the (Article 4)
Complete Premises and delivery of possession of the Premises to
Tenant's Tenant; provided, however, in the event that Tenant is
Work: delayed in submitting plans, or receiving from the City of
Irvine its use permit as a result of Landlord's failure
to comply with the terms of this Lease, then the Time To
Complete Tenant's Work shall be extended one (1) day for
each day of delay caused by Landlord's failure to comply with
the terms of this Lease.
1.11 Delayed If Tenant fails to open for business within the Premises within (Article 6)
Opening [***] days following the Commencement Date as set forth
Rental: forth in Section 4.1, Tenant shall pay to Landlord, as
Additional Rental, and in addition to Minimum Annual Rental,
the sum of [***] per month for each month Tenant is not open for
business. Tenant shall pay such amount to Landlord as of the
thirty-first (31st) day that Tenant is not open for business.
1.12 Minimum (Article 7)
Annual
Rental:
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<CAPTION>
Dollars Per Square Foot Months Following
Per Annum Dollars Per Annum Dollars Per Month Commencement Date
<S> <C> <C> <C>
[***] [***] [***] 1-24
[***] [***] [***] 25-60
[***] [***] [***] 61-84
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<TABLE>
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3 Percentage [***] on automobile racing simulators; (Article 7)
Rate: [***] on sale of all merchandise and other items.
1.14 Use of The Premises shall be used for the primary (Article 11)
Premises: purpose of conducting a simulated interactive
automobile entertainment center, including,
the operation of automobile racing simulators
(operated by the use of coins, tokens or
otherwise), and the incidental retail sale
of high quality auto racing and entertainment
accessories. In addition, Tenant shall have the
right to sell, on an incidental basis (from not
more than five percent (5%) of the Floor Area of
the Premises) non-alcoholic beverages and the
snack items shown on the menu attached hereto
as Exhibit I.
The Premises shall be used solely for the use
stated above and for no other use or purpose.
1.15 Initial [***] per square foot of Floor Area within the (Article 15)
Promotional Premises (one time charge).
Assessment:
1.16 Promotional [***] per square foot of Floor Area within (Article 15)
Charge: the Premises per annum.
1.17 Insurance [***]. (Article 16)
Limits:
1.18 Architectural [***] (one time charge). (Exhibit C)
Review Fee:
1.19 Security [***] (Article 22)
Deposit:
1.20 Guarantor(s): None. (Exhibit E)
1.21 Broker(s): Corti-Gilchrist Partnership, Inc. (Article 27)
1.22 Addresses for Notices and Payments: (Article 24)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
LANDLORD TENANT
Notices To: Notices To:
Irvine Retail Properties Company LBE Technologies, Inc.
8001 Irvine Center Drive, Suite 1130 71 Fortune Drive, Suites 29 and 31
Irvine, California 92618 Irvine Spectrum Center, Phase II
Irvine, California 92618
with copy to: In the event of default:
Irvine Retail Properties Company Gray Cary Ware & Freidenrich
550 Newport Center Drive 400 Hamilton Avenue
P.O. Box 6370 Palo Alto, California 94301
Newport Beach, California 92660 Attention: James Koshland
Attn: General Counsel
Landlord's Address for Payment and Reports: with copy to:
Irvine Retail Properties Company LBE Technologies, Inc.
c/o Hollis & Associates 10401 Bubb Road
Department #65044-280 Cupertino, California 95014
El Monte, California 91735 Attn: Ms. Janet Setcavage Woods
Tenant's Address for Statements and Billings:
LBE Technologies, Inc.
10401 Bubb Road
Cupertino, California 95014
Attn: Ms. Janet Setcavage Woods
</TABLE>
<TABLE>
<CAPTION>
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1.23 Electrical [***] per square foot of Floor Area of the (Article 10)
Facility Premises per annum.
Contribution
Rate:
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4 Electrical Meter [***] (one-time charge).
Reimbursement: (Article 10)
1.25 VAC Equipment [***] per square foot of the (Article H)
Contribution Rate: Floor Area of the Premises per annum.
This Article I is intended to supplement and/or summarize the provisions set
forth in the balance of this Lease. If there is any conflict between any
provisions contained in this Article I and the balance of this Lease, the
balance of this Lease shall control.
ARTICLE 2
EXHIBITS
The following Exhibits are attached to this Lease and, by this
reference, made a part of this Lease:
EXHIBIT A - Site plan of a retail shopping center and/or commercial
development constructed or to be constructed on real property located in the
city, county and state specified in Article I ("Shopping Center"). For all
purposes of this Lease (i) the term "Irvine Center" shall mean the area bounded
by Fortune Drive, the Santa Ana (1-5) Freeway, and the San Diego (1-405)
Freeway, and (ii) the term "Shopping Center" shall mean only the "Entertainment
Center" portion (as designated on Exhibit A) of Irvine Center. Landlord, at any
time, may change the shape, size, location, number and extent of the
improvements shown on Exhibit A and eliminate, add or relocate any improvements
to any portion of the Shopping Center including, without limitation, buildings,
parking areas (including parking structures), roadways, curb cuts, temporary or
permanent kiosks, displays or stands, and may add land to and/or withdraw land
from the Shopping Center. Tenant acknowledges that (i) Landlord intends to
develop the remainder of Irvine Center (excluding the Shopping Center) as a
regional retail shopping center (the "Adjacent Center") which will be contiguous
with the Shopping Center, and which will enjoy mutual reciprocal access and
parking rights with the Shopping Center, and (ii) Landlord, at any time may
cause one or more separate legal parcels to be created on the land constituting
the Shopping Center and the Adjacent Center. The notations and designations
found on Exhibit A are intended only for the convenience of Landlord and are not
intended to define, limit or otherwise alter the intent or scope of this Lease
or of any other lease to which Landlord may be a party, nor as a representation
or warranty as to current occupancy or future occupancy of any particular tenant
in the Shopping Center.
EXHIBIT B - Premises.
EXHIBIT C - Construction Provisions.
EXHIBIT D - Tenant's Statement of Gross Sales.
EXHIBIT E - Intentionally Omitted.
EXHIBIT F - Tenant's Certificate
EXHIBIT G - Tenant's Estoppel
EXHIBIT H - Tenant Ventilating and Air-Conditioning Exhibit
EXHIBIT I - Menu
ADDENDUM TO LEASE - The terms and conditions set forth in the Addendum
to Lease attached hereto are, by this reference, made a part of this Lease.
Where, and to the extent that, any provision contained in the Addendum to Lease
is contrary to or inconsistent with any provision contained in the printed
portion of this Lease, the provision contained in the Addendum to Lease shall
control.
ARTICLE 3
PREMISES
3.1 PREMISES. Landlord leases to Tenant and Tenant leases from
Landlord, for the "Term" (as defined in Article 4) and upon the covenants and
conditions set forth in this Lease, the premises described in Section 1.6
("Premises").
3.2 RESERVATION. Landlord reserves the right to use the exterior
walls, floor, roof and plenum in, above and below the Premises for the
installation, maintenance, use and replacement of pipes, ducts, utility lines
and systems, structural elements serving the Shopping Center and for such other
purposes as Landlord deems necessary. In exercising its rights reserved herein,
Landlord shall not materially and unreasonably interfere with the operation of
Tenant's business on the Premises.
3.3 FLOOR AREA. The term "Floor Area", as used in this Lease, shall
mean all areas designated by Landlord for the exclusive use of a tenant measured
from the exterior surface of exterior walls (and extensions,
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in the case of openings) and from the center of interior demising walls, and
shall include, but not be limited to, restrooms, mezzanines, patios, Warehouse
or storage areas, clerical or office areas and employee areas. The Premises
contain approximately the number of square feet of Floor Area specified in
Section 1.7. Landlord shall have the right during the Term to remeasure the
Floor Area of the Premises for accuracy. If an error is found, Landlord shall so
certify to Tenant and this Lease shall be amended so as to reflect the actual
Floor Area and corresponding "Minimum Annual Rental" (as defined in Section 7.2)
and "Additional Rental" (as defined in Section 7.4) based on such actual Floor
Area.
3.4 RELOCATION. Landlord shall have the right, at any time and from
time to time upon ninety (90) days' prior written notice to Tenant, to relocate
Tenant to other premises ("New Premises") within the Shopping Center; subject,
however, to the following terms and conditions: (a) The New Premises shall have
approximately the same Floor Area as is contained in the Premises, (b) the New
Premises shall be leased to Tenant on the same terms and conditions as provided
in this Lease, except that there shall be a proportionate adjustment of Minimum
Annual Rental and Additional Rental based upon the Floor Area in the New
Premises, (c) Landlord shall pay to Tenant, within thirty (30) days following
the date Tenant initially opens for business in the New Premises, those expenses
reasonably incurred by Tenant in connection with the relocation of Tenant's
personal property; provided. however, Tenant has first provided Landlord with an
itemized list of these expenses (accompanied with copies of invoices and proofs
of payment of same), and (d) Landlord shall pay all costs of the leasehold
improvements to be constructed at the New Premises and such leasehold
improvements shall be substantially similar to the leasehold improvements in the
Premises. In its notice to Tenant, Landlord shall set forth a timetable for
completion of the leasehold improvements in the New Premises. If the New
Premises is unacceptable to Tenant for any reason, Tenant shall have the right
as its sole remedy hereunder, upon written notice to Landlord to be given within
thirty (30) days after Landlord's notice of relocation to Tenant, to terminate
this Lease on thirty (30) days' written notice to Landlord. Landlord shall pay
to Tenant, within sixty (60) days after said notice is given and upon vacation
of the Premises by Tenant, the unamortized book value of Tenant's leasehold
improvements, excluding items removable by Tenant at the expiration of the Term
pursuant to Section 27.24 (to the extent said leasehold improvements were paid
for by Tenant, as evidenced by invoices and proofs of payment of same),
depreciated on a straight-line basis over the Term, and Tenant shall provide
Landlord with a bill of sale for said leasehold improvements.
ARTICLE 4
TERM
4.1 TERM. This Lease shall be effective from and after the date
specified in Section 1. I ("Date of Lease"). The term of this Lease ("Term")
shall commence on that date (the "Commencement Date") which is the earliest of:
(a) the date Tenant initially opens for business to the public in the Premises,
(b) the date set forth in Section 1.9 as the "Opening Date", or (c) the date
immediately following the expiration of the period set forth in Section 1.10 as
the "Time to Complete Tenant's Work". The Term shall continue, unless sooner
terminated in accordance with the provisions of this Lease, for the number of
months specified in Section 1.8 from the first day of the month following the
Commencement Date.
ARTICLE 5
POSSESSION
5.1 SUBSTANTIAL COMPLETION. The term "Substantial Completion of the
Premises", as used in this Lease, shall mean the date Landlord notifies Tenant
in writing that "Landlord's Work" (as specified in Exhibit C) is substantially
complete to the point that Tenant's contractor may commence the construction of
"Tenant's Work" (as specified in Exhibit C.
5.2 DELIVERY OF POSSESSION. Tenant shall accept possession of the
Premises from Landlord upon Substantial Completion of the Premises. Tenant shall
deliver each of the following to Landlord prior to Substantial Completion of the
Premises: (a) "Security Deposit", "Architectural Review Fee", "Initial
Promotional Assessment", the first monthly installment of the "Promotional
Charge", the first monthly installment of Tenant's estimated share of "Common
Area Expenses" and the first monthly installment of "Minimum Annual Rental" (as
each is defined in this Lease); (b) executed copies of policies of insurance or
certificates thereof (as required under Article 16); (c) copies of governmental
permits and authorizations (as required under this Lease); (d) "Final Plans" (as
defined in Exhibit C) and (e) a copy of Tenant's building permit. Tenant shall
pay to Landlord, upon its execution of this Lease, the sums specified in
subparagraph (a) above. Landlord shall not be obligated to deliver possession of
the Premises to Tenant until such items are delivered, but the date of
Substantial Completion of the Premises shall not be affected by Tenant's failure
to deliver any of such items.
ARTICLE 6
CONSTRUCTION AND DELAYED OPENING
6.1 CONSTRUCTION. Tenant shall commence construction of Tenant's
Work upon Substantial Completion of the Premises and delivery of possession of
the Premises to Tenant, and shall diligently prosecute same to completion.
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<PAGE> 6
6.2 DELAYED OPENING RENTAL. If Tenant fails to open for business to
the public in the Premises on or before the Commencement Date, Tenant shall pay
to Landlord, as Additional Rental, and in addition to Minimum Annual Rental
specified in Section 7.2, the amount set forth in Section 1.11, in arrears, on
the last day of the month for each month or partial month Tenant is not open for
business in the Premises following the Commencement Date ("Delayed Opening
Rental"). Delayed Opening Rental for any partial month shall be prorated on the
basis of thirty (30) days.
6.3 CERTIFICATES. Within ten (10) days after Tenant initially opens
for business to the public in the Premises, Tenant shall (a) execute and deliver
to Landlord a certificate substantially in accordance with the criteria set
forth in Section 21.3 of this Lease ("Tenant's Certificate"), and (b) deliver to
Landlord the certificate of occupancy for the Premises issued by the appropriate
governmental agency.
ARTICLE 7
RENTAL
7.1 MINIMUM ANNUAL RENTAL. Tenant shall pay the sum specified in
Section 1. 12 ("Minimum Annual Rental") in the monthly installments specified,
in advance, on or before the first (1st) day of each month, without prior demand
and without offset or deduction, commencing on the Commencement Date. Should the
Commencement Date be a day other than the first (1st) day of a calendar month,
then the monthly installment of Minimum Annual Rental for the first partial
month shall be equal to one-thirtieth (1/30th) of the monthly installment of
Minimum Annual Rental for each day from the Commencement Date to the end of the
partial month.
7.2 ADJUSTMENT TO MINIMUM ANNUAL RENTAL. The Minimum Annual Rental
payable under Section 1.12 and this Article 7 shall be adjusted on each
anniversary date of the Commencement Date of this Lease ("Adjustment Date") to
reflect any increases in the cost of living in accordance with the "Index" (as
defined in Section 27.21 of this Lease), using as the base month ("Base Month")
the month ninety (90) days prior to the Commencement Date, and using as the
comparison month ("Comparison Month") the month ninety (90) days prior to the
Adjustment Date.
7.3 PERCENTAGE RENTAL.
(a) During the Term, Tenant shall pay to Landlord, as
provided below, the dollar amount by which the percent specified in Section
1.13 ("Percentage Rate") of Tenant's "Gross Sales" (as defined in subparagraph
(b) below) exceeds the Minimum Annual Rental paid by Tenant to Landlord during
each calendar year, or at Landlord's option, its fiscal year, of the Term
("Percentage Rental"). On or before the tenth (10th) day of each month during
the Term following the Commencement Date, Tenant shall pay to Landlord the
amount by which the Percentage Rate of Gross Sales during the preceding month
exceeds the installment of Minimum Annual Rental paid by Tenant for that month.
For the purpose of computing Percentage Rental, Gross Sales made during the
first partial month, if any, following the Commencement Date shall be added to
the Gross Sales made during tile first full calendar month (provided the first
partial month is within the same calendar (or fiscal) year as the first full
month) and Tenant shall pay to Landlord the amount by which the Percentage Rate
of Gross Sales during this entire period exceeds the monthly installments of
Minimum Annual Rental which were paid by Tenant during this period. Tenant shall
furnish to Landlord a certified statement of Gross Sales within ten (10) days
after the close of each calendar month and a certified annual statement,
including a monthly breakdown of Gross Sales, on or before the twentieth (20th)
day after the end of each year. Statements shall be in the form and certified in
the manner shown in Exhibit D attached to this Lease, which form Landlord may
revise from time to time. Statements shall include the Gross Sales of all
subtenants, licensees and concessionaires of Tenant. Following receipt by
Landlord of Tenant's certified annual statement, Landlord shall determine the
Gross Sales of Tenant for the preceding year and the amounts paid to Landlord as
Minimum Annual Rental and Percentage Rental and shall make an adjustment as
follows: If Tenant paid to Landlord an amount greater than the Percentage Rental
required to be paid for said year, Tenant shall be entitled to a credit against
Tenant's next payment(s) of Percentage Rental for the amount of the overpayment.
If Tenant paid an amount less than the Percentage Rental required to be paid,
the difference shall be paid to Landlord with the submission of said certified
annual statement. Percentage Rental shall be computed separately with respect to
each year. For the purpose of computing Percentage Rental, Tenant's Gross Sales
for any period during which Tenant does not continuously and uninterruptedly
conduct its business, as required by Article 11, shall be deemed to be Tenant's
Gross Sales for the corresponding period during the last year in which Tenant
operated continuously and uninterruptedly.
(b) The term "Gross Sales", as used in this Lease, shall
mean the gross selling price of all merchandise or services sold or rented in or
from the Premises by Tenant, its subtenants, licensees and concessionaires,
whether for cash or on credit and whether made by store personnel or by machine
as well as any business interruption or loss of income insurance proceeds
attributable to lost sales revenue receive by Tenant with respect to the
Premises, excluding therefrom the following: (i) The selling price of all
merchandise returned by customers and accepted for full credit; (ii) interest or
other charges paid by customers for extension of credit; (iii) receipts from
vending machines used solely by Tenant's employees; (iv) sales taxes, excise
taxes or gross receipts taxes imposed by governmental entities upon the sale of
merchandise or services, but only if collected from customers separately from
tile selling price and paid directly to the respective governmental entities;
and (v) proceeds from the sale of fixtures, equipment or property which are not
stock in trade. The exclusions listed in this subparagraph (b) shall be referred
to as "Exclusions from Gross Sales". All sales originating at the Premises shall
be deemed made and completed from the Premises even though bookkeeping or
payment of the account is
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transferred to another location for collection or filling of the sale or service
order and actual delivery of the merchandise is made from a location other than
the Premises. Each installment sale, credit sale or layaway sale shall be
treated as a sale for the full cash price at the time of such sale or deposit.
7.4 ADDITIONAL RENTAL. Tenant shall pay, as "Additional Rental",
all sums required to be paid by Tenant to Landlord pursuant to this Lease in
addition to Minimum Annual Rental and Percentage Rental (including, without
limitation, interest, late charges, Service Charges, reimbursement for
attorneys' fees and expenses and auditing costs). Landlord shall have the same
rights and remedies for the nonpayment of Additional Rental as it has with
respect to the nonpayment of Minimum Annual Rental. It is the intention of
Landlord and Tenant that the Minimum Annual Rental, Percentage Rental and
Additional Rental to be paid hereunder shall be paid to Landlord absolutely net
without deduction of any amount of any nature whatsoever, except as otherwise
expressly provided in this Lease.
7.5 PLACE OF PAYMENT. Tenant shall pay Minimum Annual Rental,
Percentage Rental and Additional Rental to Landlord at Landlord's Address for
Payments and Reports specified in Section 1.22, or to such other address and/or
person as Landlord may from time to time designate in writing to Tenant.
7.6 LATE PAYMENTS. If Tenant fails to pay when the same is due any
Minimum Annual Rental, Percentage Rental or Additional Rental, the unpaid
amounts shall bear interest at the maximum lawful rate from the date due to and
including the date of payment. In addition, Tenant acknowledges that the late
payment of any installment of Minimum Annual Rental, Percentage Rental or
Additional Rental will cause Landlord to incur certain costs and expenses, the
exact amount of which are extremely difficult or impractical to fix. These costs
and expenses may include, without limitation, administrative and collection
costs and processing and accounting expenses. Therefore, if any installment of
Minimum Annual Rental, Percentage Rental or Additional Rental is not received by
Landlord from Tenant within five (5) days after such installment is due, Tenant
shall immediately pay to Landlord a late charge equal to [***] for any
installment of Minimum Annual Rental due, and [***] for any installment of
Percentage Rental or Additional Rental due. Landlord and Tenant agree that this
late charge represents a reasonable estimate of the costs and expenses Landlord
will incur and is fair compensation to Landlord for its loss suffered by reason
of late payment by Tenant. Upon accrual, all such late charges shall be deemed
Additional Rental.
ARTICLE 8
TENANT FINANCIAL DATA
8.1 RECORDATION OF SALES. At the time of a sale or other
transaction, Tenant shall record the sale or other transaction either in a cash
register or computer with sealed continuous tape or by using any other method of
recording sequentially numbered purchases and keeping a cumulative total.
8.2 BOOKS AND RECORDS. For a period of three (3) years following the
submittal of its certified annual statement for each calendar or fiscal year,
Tenant shall keep and maintain full and accurate books of account and records
relative to transactions from the Premises in accordance with generally accepted
accounting principles consistently applied. The books of account and records
kept and maintained by Tenant for audit purposes shall include all records,
receipts, journals, ledgers and documents reasonably necessary to enable
Landlord or its auditors to perform a complete and accurate audit of Tenant's
Gross Sales and Exclusions from Gross Sales in accordance with generally
accepted accounting principles.
8.3 AUDITS. Landlord, at any time within three (3) years after
receipt of any certified annual statement and upon not less than fifteen (15)
days' prior written notice to Tenant, may cause an audit to be made of Tenant's
Gross Sales and Exclusions from Gross Sales and all of Tenant's records and
books necessary to audit such items. Tenant shall make all such books and
records available for the audit at the Premises or at Tenant's offices in the
state in which the Premises are situated. If the audit discloses an underpayment
of Percentage Rental, Tenant shall immediately pay to Landlord the amount of the
underpayment, with interest at the "Interest Rate", as defined in Section 27.18,
from the date the payment should have been made through and including the date
of payment. If the audit discloses an underreporting of Gross Sales in excess of
two percent (2%) of the reported Gross Sales, whether or not additional
Percentage Rental is due, then Tenant shall also immediately pay to Landlord all
reasonable costs and expenses incurred in the audit and in collecting the
underpayment, including auditing costs and attorneys' fees. If the audit
discloses an overpayment of Percentage Rental, Tenant shall be entitled to a
credit in the amount of the overpayment against the next payment(s) of
Percentage Rental due.
8.4 FINANCIAL STATEMENTS. Within fifteen (15) days after Landlord's
written request, Tenant shall furnish Landlord with financial statements
including, but not limited to, balance sheets, profit and loss statements,
income statements and statements of changes in financial condition reflecting
Tenant's current financial condition, certified by Tenant or its financial
officer. If Tenant is a publicly-traded corporation, delivery of Tenant's last
published financial information shall be satisfactory for purposes of this
Section 8.4. Any information obtained from Tenant's financial statements shall
be confidential and shall not be disclosed other than to carry out the purposes
of this Lease; provided, however, Landlord shall incur no liability for the
inadvertent disclosure of any such information. Landlord may divulge the
contents of any financial statements in connection with any financing
arrangement or sale of Landlord's interest in the Premises or Shopping Center or
in connection with any administrative or judicial proceedings.
*** Confidential treatment requested.
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ARTICLE 9
TAXES
9.1 REAL PROPERTY TAXES.
(a) As used in this Lease, the term "Taxes" shall include
any form of tax or assessment, license fee, license tax, tax or excise on
rental, or any other levy, charge, expense or imposition imposed by any Federal,
state, county or city authority having jurisdiction, or any political
subdivision thereof, or any school, agricultural, lighting, drainage or other
improvement or special assessment district (individually and collectively,
"Governmental Agencies") on any interest of Landlord or Tenant (including any
legal or equitable interest of Landlord or its mortgagee, if any) in the
Premises, the remainder of the Shopping Center or the underlying realty
including, but not limited to: (i) Any impositions (whether or not such
impositions constitute tax receipts to Governmental Agencies) in substitution,
partially or totally, of any impositions now or previously included within the
definition of real property taxes including, without limitation, those imposed
or required by Governmental Agencies to increase tax increments to Governmental
Agencies and for services such as fire protection, street, sidewalk and road
maintenance, refuse removal or other governmental services formerly provided
without charge to property owners or occupants; (ii) any impositions allocable
to or measured by the area of the Premises, the sales generated from the
Premises or any rental payable under this Lease; and (iii) any impositions upon
this Lease transaction or any document to which Tenant is a party creating or
transferring an interest or an estate in the Premises. The term "Taxes" shall
not include Landlord's general income taxes, inheritance, estate or gift taxes.
(b) From and after the Commencement Date, Tenant shall pay
to Landlord, as Additional Rental, a share of the Taxes pursuant to subparagraph
(c) below. Taxes for any partial year shall be prorated. Landlord, at its
option, may collect Tenant's payment of its share of Taxes after the actual
amount of Taxes are ascertained or in advance, monthly or quarterly, based upon
estimated Taxes. If Landlord elects to collect Tenant's share of Taxes based
upon estimates, Tenant shall pay to Landlord from and after the Commencement
Date, and thereafter on the first (1st) day of each month or quarter during the
Term (as determined by Landlord), an amount estimated by Landlord to be the
monthly or quarterly Taxes payable by Tenant. Landlord may periodically adjust
the estimated amount. If Landlord collects Taxes based upon estimated amounts,
then following the end of each calendar year or, at Landlord's option, its
fiscal year, Landlord shall furnish Tenant with a statement covering the year
just expired showing the total Taxes payable by Tenant for that year and the
payments made by Tenant with respect to that year, as set forth above. If the
actual Taxes payable for that year exceed Tenant's payments for that year,
Tenant shall pay to Landlord the deficiency within ten (10) days after its
receipt of the statement. If Tenant's payments exceed the actual Taxes payable
for that year, Tenant shall be entitled to offset the excess against the next
payment(s) of Taxes that become due to Landlord.
(c) If the Premises and underlying realty are part of a
larger parcel for assessment purposes or are within a multi-level building
("larger parcel"), Tenant's share of the Taxes shall be determined by
multiplying all of the Taxes on the larger parcel, excluding Taxes on the
"Common Area" (as defined in Section 13.1), by a fraction, the numerator of
which shall be the Floor Area of the Premises and the denominator of which shall
be the Floor Area in the larger parcel which is occupied as of the commencement
of the applicable calendar or fiscal year, exclusive of the Common Facilities.
9.2 OTHER PROPERTY TAXES. Tenant shall pay, prior to delinquency,
all taxes, assessments, license fees and public charges levied, assessed or
imposed upon its business operation, trade fixtures, leasehold improvements,
merchandise and other personal property in, on or upon the Premises. If any such
items of property are assessed with property of Landlord, then the assessment
shall be equitably divided between Landlord and Tenant. Landlord shall
reasonably determine the basis of prorating and dividing any of these
assessments. No taxes, assessments, fees or charges referred to in this Section
9.2 shall be considered Taxes under the provisions of Section 9.1.
9.3 CONTESTING TAXES. If Landlord contests any Taxes levied or
assessed during the Term, Tenant shall pay to Landlord that portion of all costs
incurred by Landlord in connection with such contest, pursuant to the formula
set forth in Section 9.1(c) for the allocation of Taxes. If Landlord receives
a refund pursuant to its contest of any Taxes, then, provided Tenant has paid
its share of the total Taxes and its share of the costs incurred by Landlord in
connection with such contest as required by this Article 9, Landlord shall
reimburse Tenant that portion of the total refund prorated in the same manner as
set forth in Section 9.1(c).
ARTICLE 10
UTILITIES
10.1 TENANT'S PAYMENT OF UTILITY CHARGES. Tenant agrees to pay
directly to the appropriate utility company all charges for utility services
supplied to Tenant for which there is a separate meter and/or submeter to the
Premises. Tenant agrees to pay to Landlord its share of all charges for utility
services supplied to the Premises for which there is no separate meter or
submeter upon billing by Landlord of Tenant's share based on the reasonable
estimates of Landlord's consultant or engineer, or at Landlord's election Tenant
shall pay Landlord's cost for installing separate meters and shall thereafter
pay based upon such meters. If no such charges are established by Landlord, then
the costs of such utilities shall be included as part of Common Area Expenses.
Landlord shall have the right at any time and from time to time during the Term
to either continue to
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contract with the existing provider of any utility service for the Premises or
to contract with a different company to provide such service.
10.2 LANDLORD'S OPTION TO PROVIDE UTILITIES.
(a) Landlord shall have the option from time to time to
supply any and all utilities to the Premises. If Landlord shall elect to supply
any utilities to the Premises, Tenant will pay all charges, as Additional
Rental, for its requirements for such service tendered by Landlord. Tenant shall
pay Landlord, or Landlord's designated third party service provider, within (10)
days after delivery to Tenant of statements therefor at the applicable rates
determined by Landlord from time to time. Landlord agrees that such applicable
rates shall not exceed the "all-inclusive" rate which the Tenant would be
charged directly for the same service by the public utility company serving the
general area in which the Premises is located, but in no event shall the
applicable rate be less than Landlord's actual "all-inclusive" cost of providing
such service.
(b) Without limitation on the foregoing provisions of this
Section 10.2, Landlord may discontinue providing any utilities then being
provided by Landlord upon thirty (30) days' prior written notice to Tenant, in
which event Tenant shall obtain such utilities directly from the applicable
utility company, and be responsible for all of the costs therefor.
(c) If Landlord supplies any utilities to the Premises,
Landlord will require that Tenant at Tenant's expense maintain, repair and
replace any portion of the systems and equipment therefor exclusively serving
the Premises. Tenant acknowledges that the cost for maintenance and operation of
the systems and equipment required to deliver the utilities to the Premises (and
not maintained, repaired and replaced by Tenant pursuant to the immediately
preceding sentence) is a component of Common Area Expenses, as defined in
Section 13.5, and subject to reimbursement under Section 13.6.
(d) Tenant acknowledges that Landlord currently has elected
to supply electricity to the Premises. With respect to such utility service, in
each calendar or fiscal year, Tenant shall pay Landlord, as Additional Rental
(a) an annual amount in twelve (12) equal monthly installments together with
Minimum Annual Rental (the "Electrical Facility Contribution"), determined by
multiplying the amount set forth in Section 1.23 by the Floor Area of the
Premises, to reimburse Landlord for the cost of providing the electrical systems
necessary to supply electricity to the Premises, and (b) a one-time charge upon
execution of this Lease equal to the amount set forth in Section 1.24, as a
reimbursement to Landlord for the cost of the electrical meter servicing the
Premises ("Electrical Meter Reimbursement").
10.3 VENTILATING AND AIR-CONDITIONING. Exhibit "H" specifies the
obligations of Landlord and Tenant (other than those obligations set forth in
Article 13) regarding the ventilating and air-conditioning equipment and system
serving the Premises or the Shopping Center. Tenant covenants and agrees to pay
to Landlord, as Additional Rental and in the same manner as Minimum Annual
Rental is payable, all charges as the same may be adjusted from time to time,
and as more particularly set forth in said Exhibit H. Landlord, in its sole
discretion, shall have the right, from time to time, to alter the ventilating
and air conditioning systems and equipment serving the Shopping Center, or any
part thereof, and Tenant agrees to execute and deliver to Landlord such
documentation as may be required to effect such alteration.
10.4 NO LIABILITY OF LANDLORD. Landlord shall not be liable in
damages for any failure or interruption of any utility or service. No failure or
interruption of any utility or service shall entitle Tenant to terminate this
Lease or to discontinue making payment of Minimum Annual Rental, Percentage
Rental or Additional Rental. If Tenant fails to pay when due any charges
referred to in this Article 10, Landlord may pay the charge and Tenant shall
reimburse Landlord, as Additional Rental, for any amounts so paid by Landlord
within ten (10) days after demand therefor.
ARTICLE 11
TENANT'S CONDUCT OF BUSINESS
11.1 PERMITTED TRADE NAME AND USE. Tenant shall use the Premises
solely under the trade name specified in Section 1.4 and shall not use the
Premises under a different trade name without Landlord's prior written consent,
which consent shall not be unreasonably withheld. Tenant shall use the Premises
solely for the use specified in Section 1.14. Tenant acknowledges that Tenant's
agreement to use the Premises solely for the use specified in Section 1.14 is a
material inducement to Landlord to enter into this Lease, and that Tenant shall
not be permitted to change the use of the Premises without the prior written
consent of Landlord, which consent Landlord may grant or withhold in its sole
and absolute discretion. Tenant agrees that the foregoing provision is
reasonable in light of Landlord's legitimate interest in determining the mix of
uses which will be present in the Shopping Center.
11.2 COVENANT TO OPEN AND OPERATE. Tenant covenants to open for
business to the public in the Premises fully fixturized and stocked with
merchandise and inventory, on or before the Commencement Date. From and after
the Commencement Date, but subject to temporary closures necessitated by
casualty, condemnation or permitted remodeling, Tenant shall operate
continuously and uninterruptedly in the entire Premises the business which it is
permitted to operate under the provisions of this Lease and, at all times, shall
keep and maintain within
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the Premises an adequate stock of merchandise and trade fixtures to service and
supply the usual and ordinary requirements of its customers.
11.3 HOURS OF BUSINESS. From and after the Commencement Date, Tenant
shall keep the entire Premises continuously open for business during the days
and hours established by Landlord from time to time for the Shopping Center
generally, including, but not limited to, all holidays except Thanksgiving Day,
Christmas Day, New Year's Day and Easter Day. Subject to Article 17 and Section
27.25, Tenant shall pay to Landlord a Two Hundred Fifty Dollar ($250.00) per day
penalty for each day that Tenant fails to continuously remain open for business
during the hours previously established by Landlord. Tenant shall have its
window displays, exterior signs and exterior advertising displays adequately
illuminated continuously during those hours and days that the Premises are
required to be open for business to the public.
11.4 HOURS FOR DELIVERIES. Tenant shall use its best efforts to
require all deliveries, (exclusive of United Parcel Service and U.S. Postal
Service), loading, unloading and services to the Premises to be completed
between 7:00 a.m. and 10:00 a.m. each day. All deliveries, loading, unloading
and services to the Premises shall be accomplished within the service areas of
the Shopping Center.
11.5 RULES AND REGULATIONS. Tenant shall keep the Premises in a neat
and clean condition, free from any objectionable noises, odors or nuisances,
shall operate its business without unreasonable noise or vibration emanating
from the Premises, and shall comply with all applicable health, safety and
police laws, ordinances and regulations of any governmental authority having
jurisdiction over the Premises or the Shopping Center. Tenant shall not sell
merchandise from vending machines or allow any coin or token operated vending
machine on the Premises, except those exclusively used by employees and pay
telephones provided for the convenience of its customers. Tenant shall deposit
trash and rubbish only within receptacles approved by Landlord Tenant shall
cause trash receptacles to be emptied at Tenant's cost and expense; provided,
however, at Landlord's option, Landlord may provide trash removal services, the
cost of which shall be paid for by Tenant either (a) as a Common Area Expense,
or (b) pursuant to an equitable proration of said costs by Landlord. Tenant
shall not display or sell merchandise or allow carts, signs or any other object
to be stored or to remain outside the Premises. Tenant shall not erect any
aerial or antenna on the roof, exterior walls or any other portion of the
Premises. Tenant shall not solicit or distribute materials in the Common Area.
Landlord, from time to time, may establish further reasonable and
non-discriminatory rules and regulations for the Shopping Center, and Tenant
shall abide by same, Tenant shall neither conduct on the Premises, nor advertise
with respect to the Premises, any liquidation, "going out of business",
distress, "lost our lease" or similar sale.
11.6 ADVERTISING MEDIA. Tenant shall not affix upon the Premises any
sign, advertising placard, name, insignia, trademark, descriptive material or
other like item unless approved by Landlord in writing, in advance, in
accordance with Exhibit C. No advertising medium shall be utilized by Tenant
which can be heard or seen outside the Premises including, without limitation,
flashing lights, searchlights, loudspeakers, phonographs, radios or televisions.
Tenant shall not display, paint or place any handbill, bumper sticker or other
advertising device on any vehicle parked in the Common Area. Tenant shall not
distribute any handbills or other advertising matter in the Shopping Center.
Notwithstanding the above, Tenant shall erect signs at its own expense in
accordance with (a) the sign criteria established by Landlord, (b) the Final
Plans, and (c) all applicable laws, ordinances and regulations, and shall
maintain these signs in good condition and repair during the Term.
11.7 RADIUS RESTRICTION. During the Term, neither Tenant nor any
entity owned by or controlled directly or indirectly by or under common control
with Tenant, nor any shareholder or partner holding more than fifty percent
(50%) of the shares or partnership interest, as the case may be, of Tenant shall
own, operate or have any financial interest in any business similar to the
business of Tenant, as set forth in Section 1. 14, if such other business is
opened after the Date of Lease specified in Section 1.1 and its front door or
storefront opening is located within three (3) miles of the front door or
storefront opening of the Premises. Without limiting Landlord's remedies if
Tenant violates this covenant, Landlord, for so long as Tenant is operating the
other business, may include the gross sales (as the term Gross Sales is defined
in this Lease) of the other business in the Gross Sales made from the Premises
for the purpose of computing Percentage Rental. Landlord or its authorized
representative, at all reasonable times during the Term and for a period of at
least three (3) years after expiration or earlier termination of this Lease,
shall have the right to inspect, audit, copy and make extracts of the books,
records and accounts pertaining to such other business, in the manner set forth
in Section 8.3, for the purpose of determining and verifying the additional
Percentage Rental due to Landlord pursuant to this Section 11.7.
11.8 SHOPPING CENTER NAME. Tenant shall use the name of the Shopping
Center in its advertising as the address reference for the Premises. Tenant
shall not use the name of the Shopping Center for any other purpose. Landlord
reserves the right, in its sole discretion, to change the name and logo of the
Shopping Center at any time.
ARTICLE 12
MAINTENANCE, REPAIRS AND ALTERATIONS
12.1 LANDLORD'S MAINTENANCE OBLIGATIONS. Landlord shall maintain in
good condition and repair the foundations, roofs and exterior surfaces of the
exterior walls of all buildings (exclusive of doors, door frames, door checks,
windows, window frames and, unless Landlord elects to include cleaning of the
storefronts and storefront awnings of tenants of the Shopping Center as part of
Common Area maintenance pursuant to Section
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13.2 below, storefronts and storefront awnings); provided, however, if any
repairs or replacements are necessitated by the negligence or willful acts of
Tenant or anyone claiming under Tenant or by reason of Tenant's failure to
observe or perform any conditions or agreements contained in this Lease, or
caused by alterations, additions or improvements made by Tenant or anyone
claiming under Tenant, the cost of same shall be the sole responsibility of
Tenant. It is acknowledged by Tenant that the cost of some of Landlord's
maintenance obligations referenced in the preceding sentence shall be prorated
and paid as Common Area Expenses. Notwithstanding anything to the contrary
contained in this Lease, Landlord shall not be liable for failure to make
repairs required to be made by Landlord under the provisions of this Lease
unless Tenant has previously notified Landlord in writing of the need for such
repairs and Landlord has failed to commence and complete the repairs within a
reasonable period of time following receipt of Tenant's written notification.
Tenant waives the provisions of Sections 1941 and 1942 of the Civil Code of the
State of California, or any superseding statute, and of any other law permitting
Tenant to make repairs at Landlord's expense.
12.2 LANDLORD'S RIGHT OF ENTRY. Landlord, its agents, contractors,
servants and employees may enter the Premises following reasonable notice to
Tenant and Landlord's good faith efforts to coordinate such entry with Tenant's
on-site management so as to minimize interference with Tenant's business
operations (except in a case of emergency): (a) to examine the Premises; (b) to
perform any obligation or exercise any right or remedy of Landlord under this
Lease; (c) to make repairs, alterations, improvements or additions to the
Premises or to other portions of the Shopping Center as Landlord deems necessary
or desirable; (d) to perform work necessary to comply with laws, ordinances,
rules or regulations of any public authority or of any insurance underwriter;
and (e) to perform work that Landlord deems necessary to prevent waste or
deterioration in connection with the Premises should Tenant fail to commence
such repairs or, after commencing same, fail to diligently pursue such repairs
to completion within three (3) days after written demand by Landlord. If
Landlord makes any repairs which Tenant is obligated to make pursuant to the
terms of this Lease, Tenant shall pay the cost of such repairs to Landlord, as
Additional Rental, promptly upon receipt of a bill from Landlord for same. In
exercising its right of entry herein provided, Landlord shall not materially and
unreasonably interfere with the operation of Tenant's business on the Premises.
12.3 TENANT'S MAINTENANCE OBLIGATIONS. Tenant, at its expense, shall
keep the Premises and all utility facilities and systems exclusively serving the
Premises ("Tenant Utility Facilities") in first-class order, condition and
repair and shall make replacements necessary to keep the Premises and Tenant
Utility Facilities in such condition. All replacements shall be of a quality
equal to or exceeding that of the original. At the option of Landlord, (i)
Tenant shall contract with a service company approved by Landlord for the
regular (but not less frequently than quarterly) maintenance, repair and/or
replacement (when necessary) of the heating, ventilating and air conditioning
equipment serving the Premises and shall provide Landlord with a copy of any
service contract within ten (10) days following its execution, or (ii) Landlord
may contract with a service company of its own choosing (or provide such service
itself) for the maintenance, repair and/or replacement of the heating,
ventilating and air conditioning equipment serving the Premises and collect a
reserve or bill Tenant for the cost of same, as Additional Rental. The sum so
billed to Tenant shall become immediately due to Landlord. In either event,
Landlord may elect to be responsible for the replacement, as necessary, of the
heating, ventilating and air conditioning equipment or any elements, components
or portions thereof, in which event Landlord shall have the right to establish
and collect from Tenant, as Additional Rental, a reasonable reserve to be
maintained by Landlord and used for the purpose of paying the cost of such
replacement. Such reserve may, at Landlord's option, either be collected as part
of Common Area Expenses or billed to Tenant separately.
12.4 ALTERATIONS. After initially opening the Premises for business,
without first obtaining the written approval of Landlord in accordance with the
provisions of Exhibit C, Tenant shall not make or cause to be made to the
Premises or the Tenant Utility Facilities any addition, renovation, alteration,
reconstruction or change (collectively, "Alterations") (i) costing in excess of
[***], (ii) involving structural changes or additions, (iii) affecting the
exterior storefront, mechanical systems, fire sprinkler systems, exterior walls,
floors, ceilings or roof of the Premises, (iv) erecting or increasing the size
of an existing mezzanine, or (v) requiring or resulting in any penetration of
the roof, demising walls or floor of the Premises. All Alterations shall be
constructed in accordance with the provisions of Exhibit C.
ARTICLE 13
COMMON AREA
13.1 DEFINITION OF COMMON AREA. The term "Common Area", as used in
this Lease, shall mean all areas within the exterior boundaries of the Shopping
Center and adjacent streets, now or later made available for the general use of
Landlord and other persons entitled to occupy Floor Area in the Shopping Center
(including all landscaping, parking areas, parking structures, if any, and other
improvements and facilities), accordingly, without limiting the generality of
the foregoing, Landlord may include in the Common Area those portions of the
Shopping Center presently or later sold or leased to purchasers or tenants, as
the case may be, until the commencement of construction of the building(s)
thereon, at which time there shall be withdrawn from the Common Area those areas
not provided by the owner or tenant for common use. At Landlord's election,
Common Area also may include similar areas located within the exterior
boundaries of the Adjacent Center and adjacent streets (whether or not the same
is located on land constituting a separate legal parcel) and any "Shared Parking
Areas" (as defined in Section 13.5) designated by Landlord.
*** Confidential treatment requested.
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13.2 MAINTENANCE AND USE OF COMMON AREA. Landlord shall maintain the
Shopping Center in a first-class condition similar to other shopping centers in
Orange County, California, however, the manner in which the Shopping Center
shall be managed shall be determined by Landlord in its sole discretion. If any
owner or tenant of any portion of the Shopping Center maintains its own Common
Area (Landlord shall have the right to allow any purchaser or tenant to so
maintain its own Common Area and to exclude such purchaser or tenant from
participation in the payment of Common Area Expenses, as provided for in
Sections 13.5 and 13.6), then Landlord shall not have responsibility for the
maintenance of that portion of the Common Area. The use and occupancy by Tenant
of the Premises shall include the non-exclusive use of the Common Area (except
those portions of the Common Area on which have been constructed or placed
permanent or temporary kiosks, displays, carts and stands and except areas used
in the maintenance or operation of the Shopping Center) in common with Landlord
and the other tenants of the Shopping Center and their customers and invitees,
subject to rules and regulations concerning the use of the Common Area
established by Landlord from time to time.
13.3 CONTROL OF AND CHANGES TO COMMON AREA. Landlord shall have the
sole and exclusive control of the Common Area, and the right to make changes to
the Common Area. Landlord's rights shall include, but not be limited to, the
right to (a) restrain the use of the Common Area by unauthorized persons; (b)
utilize from time to time any portion of the Common Area for promotional,
entertainment and related matters; (c) place permanent or temporary kiosks,
displays, carts and stands in the Common Area and to lease same to tenants; (d)
temporarily close any portion of the Common Area for repairs, improvements or
Alterations, to discourage noncustomer use, to prevent dedication or an easement
by prescription or for any other reason deemed sufficient in Landlord's
reasonable judgment; and (e) renovate, upgrade or change the shape and size of
the Common Area or add, eliminate or change the location of improvements to the
Common Area including, without limitation, buildings, parking areas, roadways
and curb cuts, and to construct buildings on the Common Area. Landlord may
determine the nature, size and extent of the Common Area and whether portions of
same shall be surface, underground or multiple-deck, as well as make changes to
the Common Area from time to time which, in its opinion, are deemed desirable
for the Shopping Center.
13.4 PARKING. Tenant and its employees shall park their vehicles only
in the parking areas from time to time designated for that purpose by Landlord.
Without limiting the generality of the foregoing, if Landlord implements any
program related to parking, parking facilities or transportation facilities
including, but not limited to, any program of parking validation, employee
shuttle transportation during peak traffic periods or other program to limit,
control, enhance, regulate or assist parking by customers of the Shopping
Center, Tenant agrees to participate in the program and to pay its proportionate
share of the costs of the program under reasonable and nondiscriminatory rules
and regulations from time to time established by Landlord. Tenant shall furnish
Landlord with a list of its and its employees' vehicle license numbers at any
time during the Term within ten (10) days after Landlord's written request.
Tenant authorizes Landlord to tow, at Tenant's expense, any vehicle belonging to
Tenant or Tenant's employees parked in violation of these provisions and/or to
attach violation stickers or notices to any such vehicle. Tenant agrees to
assume responsibility for compliance by its employees with these parking
provisions and to indemnify and defend Landlord and its agents from and against
all cost, expense and liability arising from Landlord's reasonable enforcement
efforts. Tenant acknowledges that Tenant's customers shall use, in addition to
the on-grade parking within the Shopping Center, the off-site parking areas of
certain of the office parcels adjacent to the Shopping Center as designated from
time to time by Landlord ("Shared Parking Areas"). Tenant agrees to pay its
reasonably allocated share of the cost of the maintenance and operation of the
Shared Parking Areas, billed by Landlord as part of Common Area expenses or as
separately billed by the owners of such office parcels.
13.5 COMMON AREA EXPENSES. The term "Common Area Expenses", as used
in this Lease, shall mean all costs and expenses incurred by Landlord in (a)
operating, managing, policing, insuring, repairing and maintaining the Common
Area and the onsite management and/or security offices, merchants' association
offices, postal services, parking structures, if any, nonprofit community
buildings and child care centers located in the Shopping Center from time to
time ("Common Facilities"), (b) maintaining, repairing and replacing the
exterior surface of exterior walls (and storefronts and storefront awnings if
Landlord has elected to include the cleaning of same as part of Common Area
maintenance) and maintaining, repairing and replacing roofs of the buildings
from time to time constituting the Shopping Center, and (c) operating, insuring
(including reasonable reserves for deductibles and any self-insured retention),
repairing, replacing and maintaining all utility facilities and systems
including, without limitation, sanitary sewer lines and systems, fire protection
lines and systems, security lines and systems and storm drainage lines and
systems not exclusively serving the premises of any tenant or store ("Common
Utility Facilities"), mall furniture and equipment, seasonal and holiday
decorations, Common Area lighting fixtures, Shopping Center sign monuments and
directional signage. Common Area Expenses shall include, without limitation, the
following: Expenses for maintenance, landscaping, repaving, resurfacing,
repairs, replacements, painting, lighting, cleaning, trash removal, security,
fire protection and similar items; nonrefundable contributions toward reserves
for replacements other than equipment; depreciation or rental on equipment;
charges, surcharges and other levies related to the requirements of any Federal,
state or local governmental agency; expenses related to the Common Utility
Facilities; Taxes on the improvements and land comprising the Common Area;
public liability and property damage insurance on the Common Area; standard "all
risks" fire and extended coverage insurance with, at Landlord's option, an
earthquake damage endorsement covering the Common Facilities; Tenant's
reasonably allocated share of the costs of the maintenance and operation of the
Shared Parking Areas; and a sum payable to Landlord for administration and
overhead in an amount equal to [***] of the Common Area Expenses for the
applicable year. Specifically excluded from the Common Area Expenses are "Food
Court Expenses", as more particularly described in Section 13.7, below.
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13.6 PRORATION OF COMMON AREA EXPENSES. Portions of the Shopping
Center are, or may be, owned or leased from time to time by various persons or
entities occupying freestanding facilities or other facilities containing a
substantial amount of Floor Area and contributing to the Common Area Expenses on
a basis other than that described herein (collectively, "Other Stores"). The
contributions, if any, received from the Other Stores towards the Common Area
Expenses shall be credited against the total Common Area Expenses and the
balance thereof shall be prorated in the following manner:
(a) From and after the Commencement Date, Tenant shall pay
to Landlord, on the first (1st) day of each calendar month, an amount estimated
by Landlord to be the monthly amount of Tenant's share of the Common Area
Expenses. The estimated monthly charge may be adjusted periodically by Landlord
on the basis of Landlord's reasonably anticipated costs.
(b) Following the end of each calendar year or, at
Landlord's option, its fiscal year, Landlord shall furnish to Tenant a statement
covering the calendar or fiscal year (as the case may be) just expired, showing
the actual Common Area Expenses for that year, the amount of Tenant's share of
the Common Area Expenses for, that year and the monthly payments made by Tenant
during that year for the Common Area Expenses. If Tenant's share of the Common
Area Expenses exceeds Tenant's prior payments, Tenant shall pay to Landlord the
deficiency within ten (10) days after receipt of such annual statement. If
Tenant's payments for the calendar year exceed Tenant's actual share of the
Common Area Expenses, and provided Tenant is not in arrears as to the payment
of any Minimum Annual Rental, Percentage Rental or Additional Rental, Tenant
may offset the excess against payments of Common Area Expenses next due
Landlord. An appropriate proration of Tenant's share of the Common Area Expenses
as of the Commencement Date and the expiration date of the Term shall be made.
(c) Tenant's share of the Common Area Expenses shall be
determined by multiplying the Common Area Expenses that remain after applying
the contributions, if any, paid by the Other Stores (less reserves, to the
extent available) by a fraction, the numerator of which is the number of square
feet of Floor Area in the Premises and the denominator of which is the number of
square feet of Floor Area in the Shopping Center and the Adjacent Center (if,
pursuant to Section 13.1 above, Landlord elects to include within the Common
Area those areas of the Adjacent Center provided for common use) occupied by
tenants as of the commencement of the applicable calendar year or fiscal year
(as the case may be) or, at Landlord's option, each calendar or fiscal quarter,
exclusive of the Floor Area occupied by the Other Stores and exclusive of the
Common Facilities.
(d) Notwithstanding anything contained in this Section 13.6
to the contrary, tenants in the Shopping Center (and, if applicable, the
Adjacent Center) that maintain, repair and replace the roofs located above their
premises shall not be included in the proration of the Common Area Expenses
relative to the roofs in the Shopping Center which are maintained by Landlord as
part of the Common Area, and the Floor Area of such premises shall be excluded
from the calculations made pursuant to Section 13.6(c) with respect to the
maintenance, repair and replacement of roofs.
13.7 FOOD COURT. Landlord has designated a portion of the Shopping
Center in which the Premises is located as a food court ("Food Court").
Notwithstanding any term or provision of the Lease, Landlord shall have the
right to change the shape, size, location, number and extent of the improvements
to the Food Court and eliminate, add or relocate any improvements to any portion
of the Food Court, including, without limitation, any seating areas, restrooms,
trash facilities, dishwashing facilities, temporary or permanent kiosks,
displays or stands.
"Food Court Expenses", as used in this Lease, shall mean all costs and
expenses incurred by Landlord in connection with the operation, management,
policing, repair, maintenance and replacement of the Food Court, including, but
not limited to, costs and expenses related to (i) the common seating areas
located in the Food Court (including, but not limited to cleaning of the Food
Court tables, chairs and floors and trash removal), (ii) all facilities
servicing the Food Court (including, but not limited to employee restrooms,
customer restrooms, trash facilities and dishwashing facilities, (iii) cleaning
of common greaseshafts and fans in the Food Court, and (iv) a reasonable
allowance to Landlord for Landlord's supervision of the operation, repair,
maintenance and replacement of the Food Court in an amount equal to fifteen
percent (15%) of the total of the Food Court Expenses for each year. The Food
Court Expenses shall be prorated among, and paid by, only those tenants located
within or near the Food Court and selling food or beverages ("Food Court
Tenants"). If Tenant is located within or near the Food Court and selling food,
Tenant's share of the Food Court Expenses shall be determined by multiplying the
Food Court Expenses by a fraction, the numerator of which is the number of
square feet of Floor Area in the Premises and the denominator of which is the
number of square feet of Floor Area of stores located within or near the Food
Court and selling food or beverages which are from time to time occupied and
open for business as of the commencement of each calendar or fiscal year (as
determined by Landlord).
Tenant shall be provided statements for, and annual adjustments shall be
made to, the Food Court Expenses in the same general manner provided for in the
Lease with respect to Common Area Expenses as set forth in Section 13.6 (a) and
(b) of this Lease. Notwithstanding the foregoing, Tenant's obligation to pay its
share of the Food Court Expenses shall in no way affect Tenant's obligations to
pay its share of Common Area Expenses pursuant to this Article 13.
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ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 LANDLORD'S CONSENT REQUIRED. Tenant shall not assign, sublet,
enter into franchise, license or concession agreements, change ownership or
voting control, or otherwise transfer (including any transfer by operation of
law) all or any part of this Lease, Tenant's interest in the Premises or
Tenant's business (collectively, "Assignment" or "Assign") without first
procuring the written consent of Landlord, which consent shall not be
unreasonably withheld, subject to the terms, covenants and conditions contained
in this Lease. Under no circumstances shall Tenant mortgage, encumber, pledge or
hypothecate this Lease or its interest in the Premises. If Tenant is a
corporation which, under the then current guidelines published by the
Commissioner of Corporations of the State of California, is not deemed a public
corporation or is an unincorporated association or partnership, the transfer,
assignment or hypothecation, whether in one (1) transaction or a series of
transactions, of any stock or interest in such corporation, association or
partnership in excess of an aggregate of forty-nine percent (49%) shall be
deemed an Assignment within the meaning and provisions of this Article 14.
14.2 PROCEDURES. Should Tenant desire to enter into an Assignment,
Tenant shall request, in writing, Landlord's consent to the proposed Assignment
at least sixty (60) days before the intended effective date of the proposed
Assignment, which request shall include the following: (a) full particulars of
the proposed Assignment including its nature, effective date, terms and
conditions, (b) a description of the identity, net worth and previous business
experience of the proposed transferee (c) a complete business plan prepared by
the proposed transferee; and (d) any further information relevant to the
proposed Assignment which Landlord shall reasonably request.
Within thirty (30) days after receipt of Tenant's request for consent to
the proposed Assignment together with all of the above-required information,
Landlord shall respond and shall have the right either to: (i) consent to the
proposed Assignment; or (ii) refuse to consent to the proposed Assignment.
14.3 STANDARD FOR CONSENT. Tenant agrees that Landlord may refuse its
consent to the proposed transfer on any reasonable grounds, and (by way of
example and without limitation) Tenant agrees that it shall be reasonable for
Landlord to withhold its consent if any of the following situations exist or may
exist: (a) the use to which the Premises will be put by the proposed transferee
is different than the use set forth in Section 1.14; (b) the proposed
transferee's financial condition is inadequate to support all of the financial
and other obligations of Tenant under this Lease; (c) the business reputation or
character of the proposed transferee is not reasonably acceptable to Landlord;
(d) the proposed transferee is not likely to conduct on the Premises a business
of a quality substantially equal to that conducted by Tenant; (e) the nature of
the proposed transferee's proposed or likely use of the Premises would impose an
increased burden on the Common Area, or involve any increased risk of the
presence, use, release or discharge of Hazardous Materials, as defined in
Section 27.29; (f) Landlord has not received assurances acceptable to Landlord
in its sole discretion that all past due amounts owing from Tenant to Landlord,
if any, will be paid and all other defaults on the part of Tenant, if any, will
be cured prior to the effective date of the proposed Assignment; (g) in
Landlord's reasonable business judgment the annual Percentage Rental Landlord
anticipates receiving from the proposed transferee is less than the average
annual Percentage Rental Landlord has received from Tenant during the two (2)
years immediately prior to the proposed Assignment; and (h) in Landlord's
reasonable business judgment the Assignment would breach any covenant of
Landlord respecting radius, location, use or exclusivity relating to the
Shopping Center, or, in Landlord's sole discretion, conflict with, be
incompatible with or have an adverse impact on the tenant mix of the Shopping
Center.
Any purported Assignment without Landlord's prior written consent shall
be void and of no force or effect and shall not confer any estate or benefit on
anyone. Further, any such purported Assignment shall constitute an event of
default by Tenant which shall not be susceptible to cure or rectification
pursuant to Section 19.4 hereof. A consent to one (1) Assignment by Landlord
shall not be deemed to be a consent to any subsequent Assignment to any other
party.
14.4 PERMITTED ASSIGNMENT. Provided Tenant is a publicly-traded
corporation, Tenant shall have the right without Landlord's consent, to enter
into an Assignment to any subsidiary corporation of Tenant, Tenant's parent
corporation or to any corporation succeeding to substantially all of the assets
Tenant as a result of a consolidation or merger, or to a corporation to which
all or substantially all of the assets of Tenant have been sold ("Permitted
Assignment"), provided that within fifteen (15) days after the effective date of
any such transfer the assignee or sublessee executes and delivers to Landlord an
instrument meeting the requirements of Section 14.6, and containing an express
assumption of all of Tenant's obligations under this Lease.
14.5 NO RELEASE. No Assignment, or Permitted Assignment, whether with
or without Landlord's consent, shall relieve Tenant or ?? Guarantor hereunder
from its covenants and obligations under this Lease.
14.6 FORM. Any Assignment shall be evidenced by an instrument in
form and content satisfactory to Landlord and executed by Tenant and the
transferee, assignee, sublessee, licensee or concessionaire, as the case may be.
14.7 RENTAL INCREASE. If Tenant assigns its interest in this Lease or
sublets the Premises, other than in the case of a Permitted Assignment, the
Minimum Annual Rental then payable by Tenant shall be increased, effective as of
the date of such Assignment, to the greater of (a) an amount equal to the total
of the Minimum
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Annual Rental plus Percentage Rental required to be paid by Tenant pursuant to
this Lease during the twelve (12) month period immediately preceding the request
for Landlord's consent to the Assignment, or (b) a sum equal to the [***], as
the same shall be agreed upon by Landlord and Tenant. In the event Landlord and
Tenant are unable to agree upon the then fair market rental value of the
Premises sixty (60) days prior to the effective date of the Assignment, [***].
14.8 REASONABLENESS OF RESTRICTIONS. Tenant acknowledges and agrees
that each of the rights of Landlord set forth in Section 14.3, above, in the
event of a request for Landlord's consent to an Assignment is a reasonable
restriction for purposes of California Civil Code, Section 1951.4.
14.9 NO LIABILITY. Landlord shall have no liability for damages to
Tenant or to any proposed transferee if it is adjudicated that Landlord's
consent has been unreasonably withheld and such unreasonable withholding of
consent constitutes a breach of this Lease or other duty to Tenant, the proposed
transferee or any other person on the part of Landlord. In such event, Tenant's
sole remedy shall be to have the proposed Assignment declared valid as if
Landlord's consent had been given.
ARTICLE 15
PROMOTIONAL SERVICES AND ADVERTISING
15.1 ASSOCIATION OR PROMOTIONAL SERVICE. Tenant shall either (a)
maintain membership in a merchants' association ("Association") or (b)
participate in a promotional service ("Service") to be provided by Landlord. If
Landlord has established an Association, Landlord may at any time discontinue
the Association and establish a Service. If Landlord has established a Service,
Landlord may at any time discontinue the Service and establish an Association.
15.2 SERVICE. The purpose of a Service shall be to promote the
Shopping Center for the benefit of all of the tenants therein. Landlord may
select a committee to render advice to Landlord in connection with advertising
or promotional activities. As compensation for directing the Service and for
payment of the salaries of a promotional director, secretary and other personnel
who, in Landlord's judgment, will effectively carry out the purposes of the
Service, Landlord shall receive a sum not greater than [***] of the assessments
collected and/or contributed by Landlord pursuant to the provisions of this
Article 15.
15.3 ASSOCIATION. In the event an Association is established, Tenant
shall become a member of the Association, maintain its membership in good
standing, abide by the Association bylaws and regulations, pay its share of any
other assessments which might be imposed by the Association and cooperate in the
activities of the Association throughout the Term. If there is any conflict
between the bylaws and/or regulations of the Association and the provisions of
this Lease, this Lease shall control. The provisions of this Section 15.3 shall
be deemed to be covenants for the benefit of Landlord and the Association and
may be enforced by each of them. Further, Landlord agrees to become a member of
the Association and to pay, on a noncumulative basis, an assessment equal to
[***] of all monies collected by the Association from its members (excluding
Landlord) each fiscal or calendar year (as the case may be).
15.4 PROMOTIONAL CHARGE AND INITIAL PROMOTIONAL ASSESSMENT. Upon
execution of this Lease, Tenant shall pay to Landlord, who shall receive same on
behalf of the Association or the Service, as the case may be, an "Initial
Promotional Assessment" in the amount specified in Section 1.15. Thereafter,
Tenant shall pay to Landlord, as Tenant's share of costs of operation of the
Association or Service, as the case may be, an annual charge ("Promotional
Charge"). The Promotional Charge payable by Tenant for the first full or partial
calendar or fiscal year (as determined by Landlord) of the Term shall be the sum
determined by multiplying the number of square feet of Floor Area in the
Premises by the sum specified in Section 1.16. The Promotional Charge payable
by Tenant for each full or partial calendar or fiscal year thereafter shall be
adjusted in accordance with the formula contained in the following paragraph.
On each anniversary of the Commencement Date ("Adjustment Date"), the
Promotional Charge shall be increased to reflect the greater of (i) any change
in the cost of living, in accordance with the Index, as set forth in
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Section 27.21 of this Lease, using as the Base Month the month ninety (90) days
prior to the Commencement Date, and using as the Comparison Month the month
ninety (90) days prior to the Adjustment Date, and (ii) [***] per square foot of
Floor Area in the Premises.
15.5 PAYMENT. Tenant's obligation to pay the Promotional Charge shall
commence upon the Commencement Date. The Promotional Charge shall be paid by
Tenant, as Additional Rental, (i) within ten (10) days of billing for same or,
at Landlord's option, (ii) monthly or quarterly. In addition, Tenant agrees to
pay, as Additional Rental, any and all charges incurred in the collection of the
Promotional Charge from Tenant, including attorneys' fees and costs of suit, if
any, which the Association or Landlord may incur, as the case may be, in
connection with the collection of same, plus interest at the maximum lawful rate
from and after the due date to and including the date of payment.
15.6 ADVERTISING. In addition to the Promotional Charge and Initial
Promotional Assessment, from and after the Commencement Date Tenant shall expend
each calendar year for advertising a sum not less than [***] of its Gross Sales
for the calendar year. Tenant shall designate the location of the Premises by,
reference to the Shopping Center by name in its advertising. The advertising
shall be in newspapers, tabloids, direct mailings or other media covering the
trade area served by the Shopping Center. Further, the advertising shall include
annual participation in at least one (1) tabloid for direct mailing sponsored by
the Association or Service. Tenant shall furnish to Landlord with its annual
report of Gross Sales, and at any time upon request by Landlord, a certified
statement showing the amounts expended for advertising. If Tenant fails to so
advertise, Tenant shall pay to Landlord, upon demand, the difference between (a)
the amount actually expended by Tenant for advertising during the preceding
calendar year, and (b) the amount which Tenant was required to expend for
advertising during the applicable calendar year, as required pursuant to this
Article 15.
ARTICLE 16
INSURANCE
16.1 TENANT'S INSURANCE. Tenant, at its sole cost and expense,
commencing on the earlier of the date of [***], or (ii) the date [***], and
continuing during the Term, shall procure, pay for and keep in full force and
effect the following types of insurance, in at least the amounts and in the
forms specified below:
(a) Comprehensive or commercial general liability insurance
with coverage limits of not less than the combined single limit for bodily
injury, personal injury, death and property damage liability per occurrence
specified in Section 1.17 or the limit carried by Tenant, whichever is greater,
insuring against any and all liability of the insureds with respect to the
Premises or arising out of the maintenance, use or occupancy of the Premises or
related to the exercise of any rights of Tenant pursuant to this Lease, subject
to increases in amount as Landlord may reasonably require from time to time. All
such liability insurance shall specifically insure the performance by Tenant of
the indemnity agreement as to liability for injury to or death of persons and
injury or damage to property set forth in Section 16.6. Further, all such
liability insurance shall include, but not be limited to, personal injury,
blanket contractual, cross-liability and severability of interest clauses,
products/completed operations, broad form property damage, independent
contractors, owned, nonowned and hired vehicles and, if alcoholic beverages are
served, sold, consumed or obtained in the Premises, liquor law liability.
(b) Worker's compensation coverage as required by law,
including employer's liability coverage, with a limit of not less than [***] and
waiver by Tenant's insurer of any right of subrogation against Landlord and
Landlord's property manager by reason of any payment pursuant to such coverage.
(c) Business interruption or loss of income insurance in
amounts sufficient to insure Tenant's business operations for a period of not
less than one (1) year.
(d) Plate glass insurance covering all plate glass on the
Premises at full replacement value. Tenant shall have the option either to
insure this risk or to self-insure.
(e) Insurance covering all of Tenant's Work, Tenant's
leasehold improvements, Alterations permitted under Article 12, trade fixtures,
merchandise and personal property from time to time in, on or about the Premises
in an amount not less than their full replacement value from time to time,
including replacement cost, endorsement, providing protection against any peril
included within the classification Fire and Extended Coverage, sprinkler damage,
vandalism, malicious mischief and such other additional perils as covered in an
"all risks" standard insurance policy. Any policy proceeds shall be used for the
repair or replacement of the property damaged or destroyed unless this Lease
shall cease and terminate under the provisions of Article 17.
(f) Any insurance policies designated necessary by Landlord
with regard to Tenant's, or Tenant's contractors', construction of Tenant's
Work, as well as with regard to the construction of Alterations including, but
not limited to, contingent liability and "all risks" builders' risk insurance,
in amounts acceptable to Landlord.
16.2 POLICY FORM. All policies of insurance required of Tenant herein
shall be issued by insurance companies with general policy holder's rating of
not less than A and a financial rating of not less than Class X as
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rated in the most current available "Best's Key Rating Guide", and which are
qualified to do business in the State of California. All such policies, except
for the Worker's Compensation coverage, name and shall be for the mutual and
joint benefit and protection of Landlord, Tenant and Landlord's agents and
mortgagee(s) or beneficiary(ies), as additional insureds. The policies
described in subparagraphs (c) and (e) of Section 16.1 shall also name Landlord
and Landlord's mortgagee(s) or beneficiary(ies) as loss payees. Executed copies
of the policies of insurance or certificates thereof shall be delivered to
Landlord prior to Tenant, its agents or employees entering the Premises for any
purpose. Thereafter, executed copies of renewal policies or certificates thereof
shall be delivered to Landlord within thirty (30) days prior to the expiration
of the term of each policy. All policies of insurance delivered to Landlord must
contain a provision that the company writing the policy will give to Landlord
thirty (30) days' prior written notice of any cancellation or lapse or the
effective date of any reduction in the amounts of insurance. All policies
required of Tenant herein shall be endorsed to read that such policies are
primary policies and any insurance carried by Landlord or Landlord's property
manager shall be noncontributing with such policies. No policy required to be
maintained by Tenant shall have a deductible greater than Twenty-Five Thousand
Dollars (S25,000.00) unless approved in writing by Landlord.
16.3 BLANKET POLICIES. Notwithstanding anything to the contrary
contained in this Article 16, Tenant's obligation to carry insurance may be
satisfied by coverage under a so-called blanket policy or policies of insurance;
provided, however, that the coverage afforded Landlord will not be reduced or
diminished and the requirements set forth in this Lease are otherwise satisfied
by such blanket policy or policies.
16.4 INCREASED PREMIUMS DUE TO USE OF PREMISES. Tenant shall not do
any act in or about the Premises which will tend to increase the insurance rates
upon the Premises or the Shopping Center of which the Premises are a part.
Tenant agrees to pay to Landlord, upon demand, the amount of any increase in
premium for insurance resulting from Tenant's use of the Premises, whether or
not Landlord shall have consented to the act on the part of Tenant. If Tenant
installs upon the Premises any electrical equipment which constitutes an
overload of the electrical lines servicing the Premises, Tenant, at its own
expense, shall make whatever changes are necessary to comply with the
requirements of the insurance underwriters and any appropriate governmental
authority.
16.5 REIMBURSEMENT OF INSURANCE PREMIUMS BY TENANT. Landlord, at all
times from and after Substantial Completion of the Premises, shall maintain in
effect during the Term a policy or policies of insurance covering the building
of which the Premises are a part (including boiler and machinery) in an amount
not less than [***] of the full replacement cost (exclusive of
the cost of excavations, foundations and footings) or the amount of insurance
Landlord's mortgagee(s) or beneficiary(ies) may require Landlord to maintain,
whichever is the greater, providing protection against any peril generally
included in the classification "Fire and Extended Coverage", loss of rental
income insurance and such other additional insurance as covered in an "all
risks" standard insurance policy, with earthquake coverage insurance if deemed
necessary by Landlord in Landlord's sole judgment or if required by Landlord's
mortgagee(s) or beneficiary(ies) or by any Federal, state, county, city or local
authority. Landlord's obligation to carry this insurance may be brought within
the coverage of any so-called blanket policy or policies of insurance carried
and maintained by Landlord. From and after the Commencement Date, Tenant agrees
to pay to Landlord, as Additional Rental, its share of the cost to Landlord of
this insurance, including reasonable reserves for deductibles and any
self-insured retention. The cost of such insurance for any partial year of the
Term shall be prorated. Payment shall be made in the same manner set forth for
payment of Taxes in Section 9.1 (b). Tenant's share of the premiums for this
insurance shall be a fractional portion of the premiums, the numerator of which
shall be the Floor Area of the Premises and the denominator of which shall be
the Floor Area of all areas which are covered by this insurance and are occupied
as of the commencement of the applicable calendar or fiscal year, exclusive of
the Common Facilities.
16.6 INDEMNITY. "Landlord" for the purposes of this Section 16.6
shall mean and include Landlord and Landlord's directors, officers,
shareholders, agents and employees. To the fullest extent permitted by law,
Tenant covenants with Landlord that Landlord shall not be liable for any damage
or liability of any kind or for any injury to or death of persons or damage to
property of Tenant or any other person occurring from and after Substantial
Completion of the Premises (or such earlier date if Tenant is given earlier
access to the Premises) from any cause whatsoever related to the use, occupancy
or enjoyment of the Premises by Tenant or any person thereon or holding under
Tenant including, but not limited to, damages resulting from any labor dispute.
Tenant shall pay for, defend (with an attorney approved by Landlord), indemnify,
and save Landlord harmless against and from any real or alleged damage or injury
and from all claims, judgments, liabilities, costs and expenses, including
attorneys' fees and costs, arising out of or connected with Tenant's use of the
Premises and its facilities, or any repairs, Alterations or improvements
(including original improvements and fixtures specified as Tenant's Work) which
Tenant may make or cause to be made upon the Premises, any breach of this Lease
by Tenant and any loss or interruption of business or loss of rental income
resulting from any of the foregoing; provided, however (and though Tenant shall
in all cases accept any tender of defense of any action or proceeding in which
Landlord is named or made a party and shall, notwithstanding any allegations of
negligence or misconduct on the part of Landlord, defend Landlord as provided
herein), Tenant shall not be liable for such damage or injury to the extent and
in the proportion that the same is ultimately determined to be attributable to
the negligence or misconduct of Landlord. This obligation to indemnify shall
include all of Landlord's attorneys' fees, litigation costs, investigation costs
and court costs and all other costs, expenses and liabilities incurred by
Landlord or its counsel from the first notice that any claim or demand is to be
made or may be made. Tenant's obligations under this Section 16.6 shall survive
the termination of this Lease.
*** Confidential treatment requested.
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16.7 WAIVER OF SUBROGATION. Except to the extent that insurance
required to be maintained by Tenant pursuant to this Article 16 covers loss to
Landlord, Landlord and Tenant each waive any rights each may have against the
other on account of any loss or damage occasioned to Landlord or Tenant, as the
case may be, their respective property, the Premises or its contents, or to
other portions of the Shopping Center arising from any liability, loss, damage
or injury caused by fire or other casualty for which property insurance is
carried or required to be carried pursuant to this Lease. The insurance policies
obtained by Landlord and Tenant pursuant to this Lease shall contain
endorsements waiving any right of subrogation which the insurer may otherwise
have against the noninsuring party. If Landlord has contracted with a third
party for the management of the Shopping Center, the waiver of subrogation by
Tenant herein shall also run in favor of such third party.
16.8 FAILURE BY TENANT TO MAINTAIN INSURANCE. If Tenant refuses or
neglects to secure and maintain insurance policies complying with the provisions
of this Article 16, Landlord may secure the appropriate insurance policies and
Tenant shall pay, upon demand, the cost of same to Landlord, as Additional
Rental.
16.9 SUFFICIENCY OF COVERAGE. Neither Landlord nor any of Landlord's
agents make any representation that the types of insurance and limits specified
to be carried by Tenant under this Lease are adequate to protect Tenant. If
Tenant believes that any such insurance coverage is insufficient, Tenant shall
provide, at its own expense, such additional insurance as Tenant deems adequate.
Nothing contained herein shall limit Tenant's liability under this Lease.
ARTICLE 17
DAMAGE
17.1 INSURED CASUALTY. In the case of damage by fire or other perils
covered by the insurance specified in Section 16.5, the following provisions
shall apply:
(a) Within a period of sixty (60) days after all applicable
permits have been obtained, Landlord shall commence such repair, reconstruction
and restoration of the Premises as Landlord, in its reasonable business
judgment, deems necessary, and shall diligently prosecute the same to
completion; provided, however, that Tenant, at its cost, shall repair and
restore all items of Tenant's Work and replace its stock in trade, trade
fixtures, furniture, furnishings and equipment. Tenant shall commence this work
promptly upon delivery of possession of the Premises to Tenant and shall
diligently prosecute same to completion.
(b) Notwithstanding the foregoing, if the Premises is
totally destroyed, or if the Shopping Center is destroyed to an extent of at
least fifty percent (50%) of the then full replacement cost thereof as of the
date of destruction, then (i) if the destruction occurs during the last two (2)
years of the Term, Landlord and Tenant shall each have the right to terminate
this Lease, and (ii) if the destruction occurs prior to the last two (2) years
of the Term, Landlord shall have the right to terminate this Lease. In each
case, the termination right shall be exercised by the terminating party giving
written notice to the other party within thirty (30) days after the date of
destruction. If Landlord terminates this Lease pursuant to (ii) above, then upon
Landlord's receipt of any insurance proceeds payable by reason of such
destruction, Landlord shall pay to Tenant from such proceeds an amount equal to
the unamortized book value of Tenant's leasehold improvements paid for by Tenant
and Tenant's fixtures and equipment which are not capable of removal from the
Premises, reduced by the amount of proceeds of any insurance carried or required
to be carried by Tenant on such items pursuant to Article 16.
17.2 UNINSURED CASUALTY. If the Premises or the Shopping Center are
damaged as a result of any casualty not covered by the insurance specified in
Section 16.5, Landlord, within ninety (90) days following the date of such
damage, shall commence repair, reconstruction or restoration of the Premises to
the extent provided herein and shall diligently prosecute the same to completion
or, if the damage to the Premises, or to the buildings in the Shopping Center
excluding the Premises, and excluding any freestanding buildings, is greater
than ten percent (10%) of the total replacement cost, Landlord may elect within
said ninety (90) days not to so repair, reconstruct or restore the damaged
property, in which event, at Landlord's option, this Lease shall cease and
terminate upon the expiration of such ninety (90) day period. In the event
Landlord elects to restore the Premises, Tenant shall have the same repair,
restoration and replacement obligations it has pursuant to Section 17.1 (a).
17.3 DISTRIBUTION OF PROCEEDS. In the event of the termination of
this Lease pursuant to this Article 17, all proceeds from the Fire and Extended
Coverage insurance carried pursuant to Article 16 and all insurance covering
Tenant's Work and Tenant's leasehold improvements, but excluding proceeds for
trade fixtures, merchandise, signs and other personal property, shall be
disbursed and paid to Landlord.
17.4 ABATEMENT. In the event of repair, reconstruction and
restoration, as provided in this Article 17, and, provided Tenant has maintained
the business interruption or loss of income insurance required pursuant to
Article 16, to the extent that the proceeds of such business interruption or
loss of income insurance may be exhausted during the period of repair,
reconstruction and restoration, Minimum Annual Rental payable hereunder shall be
thereafter abated proportionately with the degree to which Tenant's use of the
Premises is impaired during the remainder of the period of repair,
reconstruction and restoration; provided, however, the amount of Minimum Annual
Rental abated pursuant to this Section 17.4 shall in no event exceed the amount
of loss of rental income insurance proceeds actually received by Landlord.
Tenant shall continue the operation of its business on the Premises during any
such period to the extent reasonably practicable from the standpoint of prudent
business
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management, and the obligation of Tenant to pay Percentage Rental and Additional
Rental shall remain in full force and effect. Tenant shall not be entitled to
any compensation or damage from Landlord for loss of use of the whole or any
part of the Premises or the building of which the Premises are a part, Tenant's
personal property or any inconvenience or annoyance occasioned by such damage,
repair, reconstruction or restoration.
17.5 WAIVER OF TERMINATION. Tenant waives any statutory rights of
termination which may arise by reason of any partial or total destruction of the
Premises.
ARTICLE 18
EMINENT DOMAIN
18.1 TAKING. The term "Taking", as used in this Article 18, shall
mean an appropriation or taking under the power of eminent domain by any public
or quasi-public authority or a voluntary sale or conveyance in lieu of
condemnation but under threat of condemnation.
18.2 TOTAL TAKING. In the event of a Taking of the entire Premises,
this Lease shall terminate and expire as of the date possession is delivered to
the condemning authority and Landlord and Tenant shall each be released from any
liability accruing pursuant to this Lease after the date of such termination,
but Minimum Annual Rental, Percentage Rental and Additional Rental for the last
month of Tenant's occupancy shall be prorated and Landlord shall refund to
Tenant any Minimum Annual Rental and Additional Rental paid in advance.
18.3 PARTIAL TAKING. If there is a Taking of (a) more than
twenty-five percent (25%) of the Floor Area of the Premises or, (b) a portion of
the Premises and, regardless of the amount taken, the remainder of the Premises
is not one (1) undivided parcel of property, either Landlord or Tenant may
terminate this Lease, as of the date Tenant is required to vacate a portion of
the Premises, upon giving notice in writing of such election to the other party
within thirty (30) days after receipt by Tenant from Landlord of written notice
that a portion of the Premises has been so appropriated or taken.
18.4 AWARD. The entire award or compensation in any such condemnation
proceeding, whether for a total or partial Taking, or for diminution in the
value of the leasehold or for the fee, shall belong to and be the property of
Landlord; and, in any event, the holder of any mortgage or deed of trust
encumbering the Shopping Center shall have a first priority to the extent of the
unpaid balance of principal and interest on its loan. Without derogating the
rights of Landlord or said lender under the preceding sentence, Tenant shall be
entitled to recover from the condemning authority such compensation as may be
separately awarded by the condemning authority to Tenant or recoverable from the
condemning authority by Tenant in its own right for the taking of trade fixtures
and equipment owned by Tenant and for the expense of removing and relocating its
trade fixtures and equipment, but only in the event that the compensation
awarded to Tenant shall be in addition to and shall not diminish the
compensation awarded to Landlord as provided above.
18.5 CONTINUATION OF LEASE. In the event of a Taking, if Landlord and
Tenant elect not to terminate this Lease as provided above (or have no right to
so terminate), Landlord agrees, at Landlord's cost and expense as soon as
reasonably possible after the Taking, to restore the Premises (to the extent of
the condemnation proceeds) on the land remaining to a complete unit of like
quality and character as existed prior to the Taking and, thereafter, Minimum
Annual Rental shall be reduced on an equitable basis, taking into account the
relative value of the portion taken as compared to the portion remaining, and
Landlord shall be entitled to receive the total award or compensation in such
proceedings.
ARTICLE 19
DEFAULTS BY TENANT
19.1 EVENTS OF DEFAULT. Should Tenant at any time be in default with
respect to any payment of Minimum Annual Rental, Percentage Rental, Additional
Rental or any other charge payable by Tenant pursuant to this Lease for a period
of five (5) days after written notice from Landlord to Tenant (provided,
however, any notice shall be in lieu of, and not in addition to, any notice
required under Section 1161 of the Code of Civil Procedure of California or any
similar, superseding statute), or should Tenant be in default in the prompt and
full performance of any other of its promises, covenants or agreements herein
contained for more than a reasonable time (in no event to exceed ten (10) days)
after written notice thereof from Landlord to Tenant specifying the particulars
of the default (provided, however, any notice shall be in lieu of, and not in
addition to, any notice required under Section 1161 of the Code of Civil
Procedure of California or any similar, superseding statute), or should Tenant
vacate or abandon the Premises, or should Tenant make any general assignment for
the benefit of creditors, or should there be filed against Tenant a petition to
have Tenant adjudged a bankrupt or a petition for reorganization or arrangement
under any law relating to bankruptcy (unless, in the case of a petition filed
against Tenant, same is dismissed within sixty (60) days), or should Tenant
institute any proceedings under the Bankruptcy Code or any similar or successor
statute, code or act, or should an appointed trustee or receiver take possession
of substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease where possession is not restored to Tenant within thirty
(30) days, or should substantially all of Tenant's assets located at the
Premises or Tenant's interest in this Lease be attached or judicially seized
where the seizure is not discharged within thirty (30) days, then Landlord may
treat the occurrence of any one (1) or more of the foregoing events as a breach
of this Lease and, in addition to any or all other rights or remedies of
Landlord by law provided, Landlord shall have the right, at
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Landlord's option, without further notice or demand of any kind to Tenant or any
other person, (a) to declare the Term ended and to re-enter and take possession
of the Premises and remove all persons therefrom, or (b) without declaring this
Lease terminated and without terminating Tenant's right to possession, to
re-enter the Premises and occupy the whole or any part for and on account of
Tenant and to collect any unpaid rentals and other charges which have become
payable or which may thereafter become payable, or (c) even though it may have
re-entered the Premises as provided in subparagraph (b) above, to thereafter
elect to terminate this Lease and all of the rights of Tenant in or to the
Premises. In any case in which Landlord shall re-enter and occupy the whole or
any part of the Premises, by unlawful detainer proceedings or otherwise,
Landlord, at its option, may repair, alter, subdivide or change the character of
the Premises from time to time in such manner as Landlord deems best, may relet
the Premises or any part thereof and receive the rents therefor, and none of
such actions shall constitute a termination of this Lease, a release of Tenant
from any liability hereunder, or result in the release or exoneration of any
Guarantor. Landlord shall not be deemed to have terminated this Lease or the
liability of Tenant to pay any Minimum Annual Rental, Percentage Rental,
Additional Rental or other charges later accruing by any re-entry of the
Premises pursuant to Section 19.1 (b) above, or by any action in unlawful
detainer or otherwise to obtain possession of the Premises, unless Landlord
shall have notified Tenant in writing that it has so elected to terminate this
Lease.
19.2 TERMINATION OF LEASE. Should Landlord elect to terminate this
Lease pursuant to the provisions of Sections 19.1 (a) or (c) above, Landlord may
recover from Tenant, as damages, the following: (a) The worth at the time of
award of any unpaid rental which had been earned at the time of the termination,
plus (b) the worth at the time of award of the amount by which the unpaid rental
which would have been earned after termination until the time of award exceeds
the amount of rental loss Tenant proves could have been reasonably avoided, plus
(c) the worth at the time of award of the amount by which the unpaid rental for
the balance of the Term after the time of award exceeds the amount of rental
loss that Tenant proves could be reasonably avoided, plus (d) any other amounts
necessary to compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under this Lease or which, in the
ordinary course of things, would be likely to result therefrom including, but
not limited to, any costs or expenses incurred by Landlord in (i) retaking
possession of the Premises, including reasonable attorneys' fees therefor, (ii)
maintaining or preserving the Premises after any default, (iii) preparing the
Premises for reletting to a new tenant, including repairs or alterations to the
Premises, (iv) leasing commissions, or (v) any other costs necessary or
appropriate to relet the Premises, plus (e) at Landlord's election, any other
amounts in addition to or in lieu of the foregoing as may be permitted from time
to time by the laws of the State of California.
As used in subparagraphs (a) and (b) above, the "worth at the time of
award" is computed by allowing interest at the maximum lawful rate. As used in
subparagraph (c) above, the "worth at the time of award" is computed by
discounting such amount at the discount rate of the Federal Reserve Bank
situated nearest to the location of the Shopping Center at the time of award
plus [***].
19.3 DEFINITION OF RENTAL. For purposes of this Article 19 only, the
term "rental" shall be deemed to be Minimum Annual Rental, Percentage Rental,
Additional Rental and all other sums required to be paid by Tenant pursuant to
the terms of this Lease. All sums, other than Minimum Annual Rental, shall, for
the purpose of calculating any amount due under the provisions of Section
19.2(c) above, be computed on the basis of the average monthly amount accruing
during the immediately preceding sixty (60) month period, except that if it
becomes necessary to compute these sums before the sixty (60) month period has
occurred, then these sums shall be computed on the basis of the average monthly
amount accruing during the shorter period.
19.4 NONMONETARY DEFAULTS. Notwithstanding any other provision of
this Article 19, if the default complained of, other than a default for the
payment of monies, cannot be rectified or cured within the period requiring
rectification or curing, as specified in the written notice relating to the
default, then, as to a default susceptible to being cured, the default shall be
deemed to be rectified or cured if Tenant, within the notice period, shall have
commenced to rectify or cure the default and shall thereafter diligently and
continuously prosecute same to completion.
19.5 ASSIGNMENT OF RENTS AND PROFITS. In the event of default by
Tenant hereunder, Tenant hereby grants to and confers upon Landlord the right,
power and authority, at Landlord's sole option and without affecting any of
Landlord's other rights or remedies hereunder, to collect all rents and profits
received by Tenant as a result of the possession by Tenant of the Premises. Such
amounts shall include, but shall not be limited to, amounts due under sublease,
license or concession arrangements. Upon any such default, Landlord shall have
the right to collect such rents and profits, including those past due and
unpaid. The collection of such rents and profits shall not cure, waive or
satisfy any default or notice of default hereunder.
ARTICLE 20
DEFAULTS BY LANDLORD
20.1 LANDLORD'S LIABILITY. If Landlord fails to perform any of the
covenants, provisions or conditions contained in this Lease on its part to be
performed within thirty (30) days after written notice of default (or if more
than thirty (30) days shall be required because of the nature of the default, if
Landlord shall fail to diligently proceed to commence to cure the default after
written notice), then Landlord shall be liable to Tenant for all damages
sustained by Tenant as a direct result of Landlord's breach and Tenant shall not
be entitled to terminate this Lease as a result thereof. It is expressly
understood and agreed that any judgment against Landlord resulting
*** Confidential treatment requested.
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from any default or other claim under this Lease shall be satisfied only out of
the net rents, issues, profits and other income actually received from the
operation of the Shopping Center, and Tenant shall have no claim against
Landlord (as Landlord is defined in Section 16.6) or any of Landlord's personal
assets for satisfaction of any judgment with respect to this Lease.
20.2 CURE BY ASSIGNEE. If any part of the Premises is at any time
subject to a first mortgage or a first deed of trust, and this Lease or the
rentals due from Tenant hereunder are assigned by Landlord to a mortgagee,
trustee or beneficiary ("Assignee" for purposes of this Article 20 only) and
Tenant is given written notice of the assignment including the post office
address of Assignee, then Tenant shall also give written notice of any default
by Landlord to Assignee, specifying the default in reasonable detail and
affording Assignee a reasonable opportunity to make performance for and on
behalf of Landlord. If and when Assignee has made performance on behalf of
Landlord, the default shall be deemed cured.
ARTICLE 21
SUBORDINATION, ATTORNMENT AND TENANT'S CERTIFICATE
21.1 SUBORDINATION. Upon written request of Landlord, Landlord's
mortgagee, the beneficiary of a deed of trust of Landlord or a lessor of
Landlord, Tenant will subordinate its rights pursuant to this Lease in writing
(a) to the lien of any mortgage, deed of trust or the interest of any lease in
which Landlord is the lessee (or, at Landlord's option, cause the lien of said
mortgage, deed of trust or the interest of any lease in which Landlord is the
lessee to be subordinated to this Lease), (b) to the Agreements referred to in
Article 25, (c) upon any building hereafter placed upon the land of which the
Premises are a part, and (d) to all advances made or hereafter to be made upon
the security thereof.
21.2 ATTORNMENT. In the event any proceedings are brought for
foreclosure, or in the event of the exercise of the power of sale under any
mortgage or deed of trust made by Landlord encumbering the Premises, or should a
lease in which Landlord is the lessee be terminated, Tenant shall attorn to the
purchaser or lessor under such lease upon any foreclosure, sale or lease
termination and recognize the purchaser or lessor as Landlord under this Lease,
provided that the purchaser or lessor shall acquire and accept the Premises
subject to this Lease.
21.3 TENANT'S CERTIFICATE. Tenant agrees, upon not less than ten (10)
days prior notice by Landlord, to execute, acknowledge and deliver to Landlord,
a statement in writing in substantially the form of Exhibit "F" hereto or in
such other form as may be required by Landlord's mortgagee or beneficiary
("Tenant's Certificate"). It is intended that any Tenant's Certificate delivered
pursuant hereto may be relied upon by Landlord, any prospective tenant of the
Premises, any current or prospective mortgagee or beneficiary, or by any other
party who may reasonably rely on such statement. At Landlord's option, the
failure to deliver such Tenant's Certificate within such time shall be a default
under this Lease by Tenant, and it shall be conclusively presumed, and shall
constitute a representation and warranty by Tenant, that (i) this Lease is in
full force and effect without modification, and (ii) Landlord is not in breach
or default of any of its obligations under the Lease.
ARTICLE 22
SECURITY DEPOSIT
22.1 SECURITY DEPOSIT. Upon execution of this Lease, Tenant shall
deposit with Landlord the sum specified in Section 1.19 ("Security Deposit").
The Security Deposit shall be held by Landlord, without obligation or liability
for payment of interest thereon, as security for the faithful performance by
Tenant of all of the terms of this Lease to be observed and performed by Tenant.
Landlord shall not be required to keep the Security Deposit separate from its
general funds.
22.2 APPLICATION OF SECURITY DEPOSIT. Should Tenant be in default of
any provision of this Lease at any time during the Term hereof, Landlord may, at
its option and without prejudice to any other remedy which Landlord may have at
law or in equity, apply the Security Deposit or any portion thereof same toward
payment of Minimum Annual Rental, Percentage Rental, Additional Rental or to any
loss or damage sustained by Landlord due to the default on the part of Tenant.
Within five (5) days after written demand by Landlord, Tenant shall deposit cash
with Landlord in an amount sufficient to restore the Security Deposit to the
original sum deposited, and Tenant's failure to do so shall constitute a
material default under this Lease.
22.3 REFUND. Should Tenant perform all of its obligations under this
Lease, the Security Deposit or any balance thereof then remaining shall be
returned to Tenant within sixty (60) days of the expiration of the Term or the
earlier termination of this Lease. Tenant hereby expressly waives the benefit of
any statutory right to the return of any unused portion of the Security Deposit
earlier than sixty (60) days after the expiration of the Term or earlier
termination of this Lease.
22.4 SALE OF PREMISES. Landlord may deliver the Security Deposit to
the purchaser of Landlord's interest in the Premises and Landlord shall then be
discharged from any further liability with respect to the Security Deposit. This
Section 22.4 shall also apply to any subsequent transfer of Landlord's interest
in the Premises.
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ARTICLE 23
QUIET ENJOYMENT
Upon Tenant's payment of Minimum Annual Rental, Percentage Rental and
Additional Rental and its observation and performance of all of the covenants,
terms and conditions of this Lease to be observed and performed by Tenant,
Tenant shall peaceably and quietly hold and enjoy the Premises from and after
delivery thereof to Tenant; subject, however, to (a) the rights of the parties
as set forth in this Lease, (b) any mortgage or deed of trust to which this
Lease is subordinate, (c) any ground or underlying leases, agreements and
encumbrances to which this Lease is subordinate, (d) all matters of record, and
(e) disturbances, odors and similar inconveniences which are commonly associated
with shopping centers of the type and size of the Shopping Center and/or with
tenants located in such shopping centers.
ARTICLE 24
NOTICES
Every notice, demand or request (collectively "Notice") required
hereunder or by law to be given by either party to the other shall be in
writing. Every provision of this Lease which provides that either party shall
notify the other of any particular matter shall be governed by this Section.
Notices shall be given by personal service or by United States certified or
registered mail, postage prepaid, return receipt requested, or by telegram,
mailgram or same-day or overnight private courier, addressed to the party to be
served at the address indicated in Section 1.22 or such other address as the
party to be served may from time to time designate in a Notice to the other
party. Notice personally served shall be effective when delivered to the party
upon whom such Notice is served. If served by registered or certified mail,
Notice shall be conclusively deemed served on the date shown on the return
receipt, but if delivery is refused or the Notice is unclaimed, Notice shall
conclusively be deemed given forty eight (48) hours after mailing. If served by
telegram, mailgram or private courier, Notice to the addressee shall be
conclusively deemed given as confirmed by the telegraphic agency or private
courier service making delivery. Copies of any Notice shall be sent to the
addresses, if any, designated for service of copies of Notices in Section 1.22;
but the inadvertent failure to serve a copy of a Notice, either to the address
so designated or in the manner provided in this Section, shall not render
service of Notice invalid if the original Notice is served in accordance with
this Section. Notice given by facsimile or telecopy shall not be effective
unless receipt of such Notice is acknowledged by the recipient in writing, in
which case the effective date of such Notice shall be the date of such written
acknowledgement.
ARTICLE 25
TITLE OF LANDLORD
Landlord covenants that, as of the date of this Lease, there are no
liens upon its estate other than (a) covenants, conditions, restrictions,
easements, ground leases, mortgages or deeds of trust (collectively,
"Agreements"); (b) liens and encumbrances which do not prevent Tenant from using
the Premises as permitted by this Lease; (c) the effect of any zoning laws of
the city, county and state where the Shopping Center is situated, and (d)
general and special taxes not delinquent. Tenant agrees that (i) as to its
leasehold estate, it and all persons in possession or holding under it will
conform to and will not violate the terms of the Agreements or any matters of
record, and (ii) this Lease is subordinate to the Agreements and any amendments
or modifications thereto; provided, however, if the Agreements are not of record
as of the date of this Lease, then this Lease shall automatically become
subordinate to the Agreements upon recordation so long as the Agreements do not
prevent Tenant from using the Premises for the use set forth in Section 1.14.
Tenant further agrees to execute and return to Landlord, within ten (10) days of
written demand by Landlord, an agreement in recordable form subordinating this
Lease to the Agreements.
ARTICLE 26
SHOPPING CENTER REMODELING
At any time during the Term, Landlord may remodel or expand, in any
manner, the existing Shopping Center, which work may include the addition of
shops and/or the addition of new buildings to the Shopping Center (collectively,
"Remodeled Center"). If Landlord deems it necessary for construction personnel
to enter the Premises in order to construct the Remodeled Center, Landlord shall
give Tenant no less than fifteen (15) days' prior notice and Tenant shall allow
such entry. Landlord shall use reasonable efforts to complete the work affecting
the Premises in an efficient manner so as not to interfere unreasonably with
Tenant's business. Tenant shall not be entitled to any damages or to reduction
in Minimum Annual Rental, Percentage Rental or Additional Rental for any
interference or interruption of Tenant's business upon the Premises or for any
inconvenience caused by such construction work. Landlord shall have the right to
use a portion of the premises to accommodate any structures required for the
Remodeled Center. If, as a result of Landlord utilizing a portion of the
Premises for such purpose, there is a permanent increase or decrease in the
Floor Area of the Premises of one percent (1%) or more, there shall be a
proportionate adjustment of Minimum Annual Rental and all other charges based on
Floor Area. During the course of construction, Tenant shall continue to pay
Minimum Annual Rental, Percentage Rental and Additional Rental.
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ARTICLE 27
MISCELLANEOUS
27.1 WAIVER. Any waiver by either party of a breach by the other
party of a covenant of this Lease shall not be construed as a waiver of a
subsequent breach of the same covenant. The consent or approval by either party
to anything requiring such party's consent or approval shall not be deemed a
waiver of such party's right to withhold consent or approval of any subsequent
similar act. No breach of a covenant of this Lease shall be deemed to have been
waived by the other party unless the waiver is in writing and is signed by such
party.
27.2 RIGHTS CUMULATIVE. Except as provided herein to the contrary,
and subject to the specific limitations contained in Article 20, the respective
rights and remedies of the parties specified in this Lease shall be cumulative
and in addition to any rights and remedies not specified in this Lease.
27.3 ENTIRE AGREEMENT LIMITATION OF ACTIONS. It is understood that
there are no oral or written agreements or representations between the parties
hereto affecting this Lease and this Lease supersedes and cancels any and all
previous negotiations, arrangements, representations, brochures, agreements and
understandings, if any, between Landlord and Tenant. Confirming the
understandings and agreements described in this Section 27.3, Tenant agrees to
execute and deliver to Landlord Tenant's Estoppel in the form and within the
content of Exhibit G attached hereto ("Tenant's Estoppel") concurrently with
Tenant's execution and delivery of this Lease. Any claim, demand, cause of
action or defense of any kind by Tenant which is based on or arises in
connection with this Lease, the negotiations prior to its execution, or any
asserted statement, representation, arrangement, agreement or understanding
between Landlord and Tenant which is not expressly stated in this Lease shall be
barred unless Tenant commences an action thereon, or interposes in a legal
proceeding a defense based thereon, within six (6) months after the date of the
asserted inaction or omission, or the date of the occurrence of the event or
action to which the claim, demand, cause of action or defense relates, whichever
applies.
27.4 NO REPRESENTATION. Landlord reserves the absolute right to
effect such other tenancies in the Shopping Center as Landlord, in the exercise
of its sole business judgment, shall determine to best promote the interests of
the Shopping Center. Tenant does not rely on the fact, nor does Landlord
represent, that any specific tenant or number of tenants shall, during the Term
of this Lease, occupy any space in the Shopping Center.
27.5 AMENDMENTS IN WRITING. No provision of this Lease may be amended
except by an agreement in writing signed by Landlord and Tenant.
27.6 NO PRINCIPAL/AGENT RELATIONSHIP. Nothing contained in this Lease
shall be construed as creating the relationship of principal and agent or of
partnership or joint venture between Landlord and Tenant.
27.7 LAWS OF CALIFORNIA TO GOVERN. This Lease shall be governed by
and construed in accordance with the laws of the State of California without
giving effect to the choice of law provisions thereof.
27.8 SEVERABILITY. If any provision of this Lease or the application
of such provision to any person, entity or circumstance is found invalid or
unenforceable by a court of competent jurisdiction, such determination shall not
affect the other provisions of this Lease and all other provisions of this Lease
shall be deemed valid and enforceable.
27.9 SUCCESSORS. All rights and obligations of Landlord and Tenant
under this Lease shall extend to and bind the respective heirs, executors,
administrators and the permitted concessionaires, successors, subtenants and
assignees of the parties. If there is more than one (1) Tenant hereunder, each
shall be bound jointly and severally by the terms, covenants and agreements
contained in this Lease.
27.10 TIME OF THE ESSENCE. Except for the delivery of possession of
the Premises to Tenant, time is of the essence of all provisions of this Lease
of which time is an element.
27.11 WARRANTY OF AUTHORITY. If Tenant is a corporation or
partnership, each individual executing this Lease on behalf of the corporation
or partnership represents and warrants that he or she is duly authorized to
execute and deliver this Lease on behalf of the corporation or partnership and
that this Lease is binding upon the corporation or partnership. If Tenant is a
corporation, Tenant hereby covenants and warrants that (a) Tenant is a duly
qualified corporation and all steps have been taken prior to the date hereof to
qualify Tenant to do business in the State of California, and (b) all franchise
and corporate taxes have been paid to date.
27.12 MORTGAGE CHANGES. Tenant shall not unreasonably with its consent
to changes or amendments to this Lease requested by the holder of a mortgage or
deed of trust or such similar financing instrument encumbering Landlord's fee
interest in the Premises so long as such change does not materially alter the
economic terms of this Lease or materially diminish the rights, or materially
increase the obligations, of Tenant
27.13 WAIVER OF RIGHTS OF REDEMPTION. Tenant waives any and all rights
of redemption granted under any present and future laws in the event Landlord
obtains the right to possession of the Premises by reason of the violation by
Tenant of any of the covenants and conditions of this Lease or otherwise.
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<PAGE> 24
27.14 NO IMPLICATION OF EXCLUSIVE USE. Nothing contained in this Lease
shall be deemed to give Tenant an express or implied exclusive right to operate
any particular type of business in the Shopping Center.
27.15 BROKERS. Tenant represents and warrants that it has not had any
dealings with any realtors, brokers or agents in connection with the negotiation
of this Lease, except as may be specifically set forth in Section 1.21, and
agrees to pay any realtors, brokers or agents not referenced in Section 1.21 and
to hold Landlord harmless from the failure to pay any realtors, brokers or
agents and from any cost, expense or liability for any compensation, commission
or charges claimed by any other realtors, brokers or agents claiming by, through
or on behalf of Tenant with respect to this Lease and/or the negotiation hereof.
27.16 NO RECORDING. Tenant shall not record this Lease or any short
form memorandum of this Lease.
27.17 TRANSFER OF LANDLORD'S INTEREST. Should Landlord sell, exchange
or assign this Lease (other than a conditional assignment as security for a
loan), then Landlord, as transferor, shall be relieved of any and all
obligations on the part of Landlord accruing under this Lease from and after the
date of such transfer provided that Landlord's successor in interest shall
assume such obligations from and after such date. No holder of a mortgage or
deed of trust to which this Lease is subordinate shall be responsible in
connection with the Security Deposit unless the mortgagee or holder of such deed
of trust actually receives the Security Deposit.
27.18 INTEREST ON PAST DUE OBLIGATIONS. Except where another rate of
interest is specifically provided for in this Lease, any amount due from either
party to the other under this Lease which is not paid when due, shall bear
interest at the rate per annum ("Interest Rate") equal to the prime interest
rate charged by Wells Fargo Bank plus two (2) percentage points (but in no event
to exceed the maximum lawful rate) from the date ten (10) days after such amount
was originally due to and including the date of payment.
27.19 RIGHT TO SHOW PREMISES. During the last one hundred twenty (120)
days of the Term or earlier termination of this Lease, Landlord shall have the
right to go upon the Premises to show same to prospective tenants or purchasers
and to post appropriate signs, during normal business hours and upon reasonable
notice to Tenant.
27.20 LIENS. Tenant shall pay all costs for work performed by or on
account of it and shall keep the Premises and the Shopping Center free and clear
of mechanics' liens or any other liens. Tenant shall give Landlord immediate
notice of any lien filed against the Premises or the Shopping Center as a result
of any work of improvement performed by or on behalf of Tenant. Tenant shall
immediately cause any lien to be discharged or removed of record by either
paying the amount thereof or recording a statutory lien release bond in an
amount equal to one hundred fifty percent (150%) of the amount of said lien. If
Tenant fails to do so, Landlord shall have the right, but not the obligation, in
addition to all other rights and remedies available to Landlord under this
Lease, to either pay and discharge such lien, without regard to the validity
thereof, or procure and cause to be recorded a statutory lien release bond and
to (a) collect from Tenant as Additional Rental; or (b) deduct from any Tenant
Improvement Allowance or any other amount payable by Landlord to Tenant under
this Lease (i) all costs incurred by Landlord in paying and discharging such
lien, or in procuring such bond, and (ii) all expenses incurred by Landlord in
connection with such lien, including attorneys' fees and costs, recording fees
and administrative costs and expenses.
27.21 INDEX. Wherever in this Lease there is a reference to the
"Index", such reference shall refer to the following:
(a) The "Index", as used in this Lease, shall be deemed to
mean The United States Department of Labor, Bureau of Labor Statistics Consumer
Price Index for Urban Wage Earners and Clerical Workers, Los
Angeles-Anaheim-Riverside Average, Subgroup "All Items", (1982-1984 = 100). If
at any time there shall not exist the Index in the format recited herein,
Landlord shall substitute any official index published by the Bureau of Labor
Statistics or successor or similar governmental agency as may then be in
existence and shall, in Landlord's opinion, be most nearly equivalent thereto.
(b) The sum to be increased in accordance with the
provisions of the Index shall be increased using the following formula: such sum
shall be increased by a percentage equal to the percentage increase, if any, in
the Index published for the Comparison Month over the Index published for the
Base Month; provided, however, in no event shall said sum be less than that
which was due immediately preceding the date of adjustment.
27.22 FAILURE TO SUBSTANTIALLY COMPLETE PREMISES. Notwithstanding
anything to the contrary contained herein, (a) if for any reason whatsoever
Substantial Completion of the Premises has not occurred on or before the last
day of the twenty-fourth (24th) month following the Date of Lease, or (b) if
Landlord should at any time postpone or abandon the development or construction
of the Shopping Center or that portion of the Shopping Center in which the
Premises are located, then either party may elect to terminate this Lease by
giving thirty (30) days' notice of such election to the other party. If such
notice is given, this Lease and the rights and obligations of the parties
pursuant to this Lease shall cease and terminate without the need for the
execution of any further or other instrument but, if Landlord shall request,
Tenant shall execute an instrument in recordable form confirming the termination
of this Lease and of Tenant's release and surrender all right, title and
interest in and to the Premises under this Lease or otherwise. If this Lease is
terminated pursuant to this Section 27.22, neither party
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<PAGE> 25
shall have any further or additional rights, remedies, claims or liability
arising out of this Lease or the termination of this Lease.
27.23 INDEPENDENT CONTRACTORS. Whenever in this Lease it provides that
Landlord shall perform certain work or services, Landlord shall be entitled to
contract with an independent contractor to perform said work or services or may
provide the services itself.
27.24 TRADE FIXTURES, PERSONAL PROPERTY AND ALTERATIONS. Upon the
expiration or earlier termination of the Term, Tenant shall remove from the
Premises all of Tenant's trade fixtures, furniture, equipment, signs,
improvements, additions and Alterations to the extent such items are not
permanently affixed to the Premises, and immediately repair any damage
occasioned to the Premises by reason of such removal so as to leave the Premises
in a neat and clean condition. Tenant may encumber or finance its movable
fixtures and equipment installed in the Premises, and no such encumbrance or
financing shall be deemed an Assignment, provided such encumbrance or financing
creates a security interest in such movable fixtures and equipment, only, and
confers no interest in the Premises. All trade fixtures, signs and other
personal property installed in or attached to the Premises by Tenant must be new
when so installed or attached.
27.25 FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain labor or materials or
reasonable substitutes therefor, governmental restrictions, governmental
regulations, governmental controls, judicial orders, enemy or hostile
governmental action, civil commotion, fire or other casualty, and other causes
(except financial) beyond the reasonable control of the party obligated to
perform, shall excuse the performance by that party for a period equal to the
prevention, delay or stoppage, except the obligations imposed with regard to
Minimum Annual Rental, Percentage Rental and Additional Rental to be paid by
Tenant pursuant to this Lease; provided the party prevented, delayed or stopped
shall have given the other party written notice thereof within thirty (30) days
of such event causing the prevention, delay or stoppage. Notwithstanding
anything to the contrary contained in this Section 27.25, in the event any work
performed by Tenant or Tenant's contractor results in a strike, lockout and/or
labor dispute, the strike, lockout and/or labor dispute shall not excuse the
performance by Tenant of the provisions of this Lease.
27.26 TERMINATION AND HOLDING OVER. This Lease shall terminate without
further notice upon the expiration of the Term. Tenant shall have no right to
extend or renew this Lease upon the expiration of the Term. Upon the expiration
or earlier termination of the Term, Tenant shall peaceably and quietly surrender
the Premises broom-clean and in the same condition (including, at Landlord's
option, the demolition and removal of any improvements made by Tenant to the
Premises as part of Tenant's Work or otherwise) as the Premises were in upon
delivery of possession of same to Tenant by Landlord, reasonable wear and tear
and any damage to the Premises Which Tenant is not required to repair pursuant
to Article 17 excepted. Should Tenant hold over in the Premises beyond the
expiration or earlier termination of this Lease, the holding over shall not
constitute a renewal or extension of this Lease or give Tenant any rights under
this Lease. In such event, Landlord may, in its sole discretion, treat Tenant as
a tenant at will, subject to all of the terms and conditions in this Lease,
except that Minimum Annual Rental shall be an amount equal to the greater of (a)
[***] times the sum of Minimum Annual Rental and Percentage Rental which was
payable by Tenant for the twelve (12) month period immediately preceding the
expiration or earlier termination of this Lease, or (b) the then currently
scheduled [***]. In the event Tenant fails to surrender the Premises upon the
expiration or earlier termination of this Lease, Tenant shall indemnify and hold
Landlord harmless from all loss or liability which may accrue therefrom
including, without limitation, any claims made by any succeeding tenant founded
on or resulting from Tenant's failure to surrender. Acceptance by Landlord of
any Minimum Annual Rental, Percentage Rental or Additional Rental after the
expiration or earlier termination of this Lease shall not constitute a consent
to a holdover hereunder, constitute acceptance of Tenant as a tenant at will, or
result in a renewal of this Lease.
27.27 ATTORNEYS' FEES AND PROCESSING CHARGES. In the event that, at
any, time after the date of this Lease, either Landlord or Tenant shall
institute any action or proceeding against the other relating to the provisions
of this Lease or any default hereunder, the party not prevailing in such action
or proceeding shall reimburse the prevailing party for its actual attorneys'
fees, and all fees, costs and expenses incurred in connection with such action
or proceeding, including, without limitation, any post-judgment fees, costs or
expenses incurred on any appeal or in collection of any judgment.
If at the request of Tenant or in connection with any such transaction
initiated by Tenant, Landlord shall prepare, review or execute any amendment,
modification, consent to Assignment, approval, fixture subordination, waiver or
other agreement or instrument relating to this Lease or the Premises, or any
Extension Amendment or New Lease pursuant to Section 28.3 of this Lease if
Tenant has been granted an option to extend the Term, Tenant agrees to pay to
Landlord, as Additional Rental, (i) a reasonable processing charge in accordance
with the schedule of charges from time to time established by Landlord, and (ii)
Landlord's reasonable attorneys' fees and expenses incurred in connection with
the evaluation and documentation thereof. Landlord may, at its option, require
the payment of all or a portion of such charges and/or fees in advance.
27.28 SERVICE CHARGE. Tenant acknowledges that Tenant's failure to
submit any required document, certificate, report, statement of Gross Sales,
insurance policy or certificate as and when required in this Lease will cause
Landlord to incur additional costs of administration, and agrees that in the
event Tenant fails to submit any required document, certificate, report,
statement of Gross Sales, insurance policy or certificate as and when required
in this Lease, Tenant shall pay to Landlord, as Additional Rental, a "Service
Charge" in the amount
*** Confidential treatment requested.
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of [***] for each week or portion thereof that said failure continues. Tenant
agrees that such Service Charge shall not constitute damages, and that neither
Tenant's payment of such Service Charge nor Landlord's acceptance of such
payment shall result in a cure of any default under this Lease, or waiver of any
default under this Lease by Landlord.
27.29 HAZARDOUS MATERIALS. Tenant, at its sole cost and expense, shall
comply with all laws relating to the storage, use, handling and disposal of
hazardous, toxic or radioactive matter including, without limitation, those
materials identified in Section 25501(k) of the California Health and Safety
Code, as amended from time to time (collectively, "Hazardous Materials"). In the
event Tenant intends or does store, use, handle or dispose of any Hazardous
Materials, Tenant shall notify Landlord in writing at least ten (10) days prior
to their first appearance on the Premises and Tenant's failure to do so shall
constitute a default under the Lease. Such notification shall include
identification (type and common name) and quantities of all Hazardous Materials,
or any combination thereof, which are or intended to be stored, used, handled or
disposed of on, under or about the Premises. Landlord may, at any time or from
time to time, require Tenant to conduct monitoring or evaluation activities with
respect to Hazardous Materials on the Premises, at Landlord's sole discretion,
and at Tenant's sole cost and expense, performed by environmental specialists
approved in advance by Landlord. Such monitoring and/or evaluation activity may
include, without limitation, soil testing, air testing, production waste stream
analysis, and if necessary, in Landlord's sole discretion, groundwater testing.
In the event Tenant intends to store, use, handle or dispose of Hazardous
Materials, Tenant shall complete, execute and deliver to Landlord an
Environmental Questionnaire and Disclosure Statement, in Landlord's then current
form ("Environmental Questionnaire"), prior to the execution of this Lease or
ten (10) days prior to the first appearance of the Hazardous Materials on the
Premises. The completed Environmental Questionnaire shall be deemed incorporated
into this Lease for all purposes, and Landlord shall be entitled to rely fully
on the information contained therein. Tenant shall update and resubmit to
Landlord the Environmental Questionnaire periodically as required by Landlord
and immediately if material changes occur in the nature or content of Hazardous
Materials being stored, used, handled or disposed of on the Premises.
Tenant shall promptly notify Landlord of, and shall promptly provide
Landlord with, true, correct, complete and legible copies of, all of the
following environmental items relating to the Premises which may be filed or
prepared by or on behalf of, or delivered to or served upon, Tenant: reports
filed pursuant to any self-reporting requirements, reports filed pursuant to any
applicable laws or this Lease, all permit applications, permits, monitoring
reports, workplace exposure and community exposure warnings or notices. In
addition, Tenant shall promptly notify Landlord of, and shall promptly provide
Landlord with, true, correct, complete and legible copies of, all of the
following environmental items relating to the Premises which may be filed or
prepared by or on behalf of, or delivered to or served upon, Tenant: all orders,
reports, notices, listings and correspondence (even those which may be
considered confidential) of or concerning the release, or threatened release,
investigation of, compliance, clean up, remedial and corrective action, and
abatement of Hazardous Materials whether or not required by applicable laws,
including, but not limited to, reports and notices required by or given pursuant
to applicable laws, and all complaints, pleadings and other legal documents
filed against Tenant related to Tenant's use, handling, storage or disposal of
Hazardous Materials on the Premises. In the event of a release or threatened
release of any Hazardous Material on the Premises or to the environment from the
Premises, Tenant shall promptly notify Landlord and provide Landlord with copies
of all reports and correspondence with or from all governmental agencies,
authorities or any other persons relating to such release or threatened release.
"Landlord" as used in this Paragraph shall have the same meaning as in
Section 16.6. Tenant shall be solely responsible for, shall pay for, defend
(with an attorney approved by Landlord), indemnify and hold Landlord harmless
against and from all claims, judgments, liabilities, costs and expenses,
including attorneys' fees and costs, arising out of or connected with its
storage, use, handling or disposal of Hazardous Materials on the Premises. In
addition, except with respect to any Hazardous Materials installed in or placed
on the Premises by Landlord or any agent, employee or contractor of Landlord,
Tenant shall be solely responsible for, shall pay for, defend, indemnify and
hold Landlord, and the Premises harmless against and from all claims, judgments,
liabilities, liens, costs and expenses, including attorneys' fees and costs,
arising out of or connected with the removal, clean-up and/or restoration work
and materials necessary to return the Premises, and any other property of
whatever nature, to their condition existing prior to the appearance of the
Hazardous Materials on the Premises. Tenant's obligations under this Section
27.29 shall survive the termination of this Lease.
27.30 WAIVER OF TRIAL BY JURY. Landlord and Tenant desire and intend
that any disputes arising between them with respect to or in connection with
this Lease be subject to expeditious resolution in a court trial without a jury.
Therefore, Landlord and Tenant each hereby waive the right to trial by jury of
any cause of action, claim, counterclaim or cross-complaint in any action,
proceeding or other hearing brought by either Landlord against Tenant or Tenant
against Landlord on any matter whatsoever arising out of, or in any way
connected with, this Lease, the relationship of Landlord and Tenant, Tenant's
use or occupancy of the Premises or any claim of injury or damage, or the
enforcement of any remedy under any law, statute, or regulation emergency or
otherwise, now or hereafter in effect.
27.31 CITY OF IRVINE OCCUPANCY DISCLOSURE FORM. Pursuant to the City
of Irvine master plan approval conditions applicable to the Shopping Center,
Landlord is required to provide Tenant with a City of Irvine Occupancy
Disclosure form for the Shopping Center. Tenant acknowledges receipt of such
Occupancy Disclosure form.
*** Confidential treatment requested.
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<PAGE> 27
27.32 HAZARDOUS MATERIALS DISCLOSURE. Tenant acknowledges that the
28.3 acre parcel of land of which the Shopping Center is part has previously
been used for agricultural purposes; no other uses are known to have occurred
there. Landlord is unaware of any releases of hazardous substances on or beneath
the property -- with the following exceptions:
(a) Over the years, various agricultural chemicals have been
applied to the property. Residues of these materials may exist in the upper
layers of the soil. Landlord anticipates that any such residues will decompose
over time. The grading and development of the site also will reduce the
potential for exposure. The risks associated with this previous agricultural
chemical use on the property appear to be no greater than those that are
associated with other similarly used properties in the area.
(b) The El Toro Marine Corps Air Station, which is located
approximately 3/4 mile northeast of the property, has had several releases of
hazardous substances, many of which involved underground storage tanks.
Contaminated ground water emanating from the Air Station may have migrated
beneath portions of the property.
(c) Minor spillage has occurred from a small mobile diesel
tank that is stored in an agricultural equipment yard in the northeastern
portion of the property. Landlord plans to cleanup the minor soil contamination
prior to the development of that portion of the property.
Landlord has investigated each of these matters. None of them appear to
pose a significant risk to human health or the environment, or to interfere with
the proposed development, occupancy, or use of the property.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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53. Supplements Article 18;
The following supplements Article 18 and is incorporated as
Section 18.6:
"TENANT'S TERMINATION RIGHTS. (a) If Landlord does not commence
the repair and restoration work to the Premises, or any portion of the Common
Area which, if not restored, will materially adversely affect Tenant's use of
the Premises for the normal conduct of its business, as required pursuant to
this Article 18, by the date (the "Repair Commencement Date") which is six (6)
months following the date of the Taking, then Tenant shall have the right to
terminate this Lease by delivering written notice to Landlord, which notice
shall be given within sixty (60) days after the Repair Commencement Date but
prior to the commencement of restoration work by Landlord. Such notice by Tenant
shall set forth the effective date of termination, which date shall not be later
than that date occurring thirty (30) days after the Repair Commencement Date. If
Tenant timely and properly exercises its foregoing option to terminate this
Lease, Tenant shall vacate and deliver possession of the Premises to Landlord
in accordance with the provisions of this Lease applicable thereto, whereafter
neither party to this Lease shall have any further liability to the other
accruing thereafter under this Lease. The failure of Tenant to timely and
properly exercise the foregoing right to terminate this Lease shall result in
the subject right to terminate being null and void. (b) If Landlord does not
repair and restore the Premises, and that portion of the Common Area which, if
not restored, will materially adversely affect Tenant's use of the Premises for
the normal conduct of its business, as required pursuant to this Article 18,
within eighteen (18) months following the date of the Taking (which eighteen
(18) month period may be extended for up to six (6) months as a result of a
Force Majeure Event or Tenant delay) (the "Repair Construction Date"), then
Tenant shall have the right to terminate this Lease by delivering written notice
to Landlord, which notice shall be given within sixty (60) days after the Repair
Construction Date but prior to the substantial completion of the restoration
work by Landlord. Such notice by Tenant shall set forth the effective date of
termination, which date shall not be later than that date occurring thirty (30)
days after the Repair Construction Date. If Tenant timely and properly exercises
its foregoing option to terminate this Lease, Tenant shall vacate and deliver
possession of the Premises to Landlord in accordance with the provisions of this
Lease applicable thereto, whereafter neither party to this Lease shall have any
further liability to the other accruing thereafter under this Lease. The failure
of Tenant to timely and properly exercise the foregoing right to terminate this
Lease shall result in the subject right to terminate being null and void."
54. Supplements Section 19.1;
The first sentence of Section 19.1 is hereby deleted and
replaced with the following: "Should Tenant at any time be in default with
respect to any payment of Minimum Annual Rental, Percentage Rental, Additional
Rental or any other charge payable by Tenant pursuant to this Lease for a period
of ten (10) days after written notice from Landlord to Tenant (provided,
however, any notice shall be in lieu of, and not in addition to, any notice
required under Section 1161 of the Code of Civil Procedure of California or any
similar, superseding statute), or should Tenant be in default in the prompt and
full performance of any other of its promises, covenants or agreements herein
contained for more than a reasonable time (in no event to exceed thirty (30)
days) after written notice thereof from Landlord to Tenant specifying the
particulars of the default (provided, however, any notice shall be in lieu of,
and not in addition to, any notice required under Section 1161 of the Code of
Civil Procedure of California or any similar, superseding statute), or should
Tenant vacate or abandon the Premises, or should Tenant make any general
assignment for the benefit of creditors, or should there be filed against Tenant
a petition to have Tenant adjudged a bankrupt or a petition for reorganization
or arrangement under any law relating to bankruptcy (unless, in the case of a
petition filed against Tenant, same is dismissed within sixty (60) days), or
should Tenant institute any proceedings under the Bankruptcy Code or any similar
or successor statute, code or act, or should an appointed trustee or receiver
take possession of substantially all of Tenant's assets located at the Premises
or of Tenant's interest in this Lease where possession is not restored to Tenant
within thirty (30) days, or should substantially all of Tenant's assets located
at the Premises or Tenant's interest in this Lease be attached or judicially,
seized where the seizure is not discharged within thirty (30) days, then
Landlord may treat the occurrence of any one (1) or more of the foregoing events
as a breach of this Lease and, in addition to any or all other rights or
remedies of Landlord by law provided, Landlord shall have the right, at
Landlord's option, without further notice or demand of any kind to Tenant or any
other person, (a) to declare the Term ended and to re-enter and take possession
of the Premises and remove all persons therefrom, or (b) without declaring this
Lease terminated and without terminating Tenant's right to possession, to
re-enter the Premises and occupy the whole or any part for and on account of
Tenant and to collect any unpaid rentals and other charges which have become
payable or which may thereafter become payable, or (c) even though it may have
re-entered the Premises as provided in subparagraph (b) above, to thereafter
elect to terminate this Lease and all of the rights of Tenant in or to the
Premises."
55. Supplements Section 2 1. 1;
Section 21.1 is clarified to provide that in the event Landlord
requests Tenant to subordinate the Lease to any future liens of any mortgage,
deed of trust, or the interest of any lease in which Landlord is the lessee,
Landlord shall provide Tenant a subordination, and attornment agreement from
such lender under a deed of trust or mortgage or lessor under any ground lease
covering the Shopping Center, in a form reasonably acceptable to Landlord,
Tenant and such lender. Further, Landlord represents that as of the Date of
Lease there is no mortgage or underlying ground lease affecting the Premises or
the Shopping Center.
Addendum - 11
<PAGE> 29
56. Supplements Section 21.3:
The first sentence of Section 21.3 is hereby deleted and
replaced with the following: "Tenant agrees, upon not less than fifteen (15)
days prior notice by Landlord, to execute, acknowledge and deliver to Landlord,
a statement in writing in substantially the form of Exhibit F hereto or in such
other form as may reasonably be required by Landlord's mortgagee or beneficiary
("Tenant's Certificate")."
57. Supplements Section 22.2;
The second sentence of Section 22.2 is hereby deleted and
replaced with the following: "Within ten (10) days after written demand by
Landlord, Tenant shall deposit cash with Landlord in an amount sufficient to
restore the Security Deposit to the original sum deposited, and Tenant's failure
to do so shall constitute a material default under this Lease."
58. Supplements Section 21.3;
Section 21.3 is clarified to provide that Landlord agrees, upon
not less than twenty (20) days prior written notice by Tenant (but not more
frequently than once in any twelve (12) month period), during the Term of the
Lease, to execute, acknowledge and deliver to Tenant, a statement in writing in
a form reasonably acceptable to Landlord, stating, among other things (and to
the extent accurate), that the Lease is in full force and effect without
modification (or if modified so stating and identifying the modifications), the
date to which Minimum Annual Rental and other charges are paid, and Tenant is
not in breach or default of any of its obligations under the Lease (or, if in
breach, so stating) ("Landlord's Certificate").
59. Supplements Article 25;
Article 25 is clarified to provide that there are no Agreements
or liens and encumbrances to Landlord's actual knowledge which materially and
adversely affect Tenant's use of the Premises as permitted under the Lease.
60. Supplements Section 27.3;
The last sentence of Section 27.3 is hereby deleted.
61. Supplements Section 27.15;
Section 27.15 is clarified to provide that Landlord shall pay
the broker set forth in Section 1.2 1, pursuant to the terms of a separate
agreement. Controlling over any contrary provisions of Section 27.15, Tenant and
Landlord represent and warrant that they have not had any dealings with any
realtors, brokers or agents in connection with the negotiation of the Lease,
except as may be specifically set forth in Section 1.2 1, and each agrees to pay
any realtors, brokers or agents not referenced in Section 1.21 and to hold each
other harmless from the failure to pay any realtors, brokers or agents and from
any cost, expense or liability for any compensation, commission or charges
claimed by any other realtors, brokers or agents claiming by, through or on
behalf of Tenant or Landlord, as applicable, with respect to the Lease and/or
the negotiation hereof.
62. Supplements Section 27.20;
The third sentence of Section 27.20 is hereby deleted and
replaced with the following: "Tenant shall have the right to contest any lien
filed against the Shopping Center and/or the Premises as a result of any work of
improvement performed by or on behalf of Tenant; provided, however, Tenant shall
cause such lien to be discharged or removed of record by paying the amount
thereof or recording a statutory lien release bond in an amount equal to one
hundred fifty percent (150%) of the amount of said lien no later than fifteen
(15) days after the filing of such lien."
63. Supplements Section 27.23;
Section 27.23 is hereby deleted and replaced with the following:
"Whenever in this Lease it provides that Landlord shall perform certain work or
services, Landlord shall be entitled to contract with an independent contractor
to perform said work or services or may provide the services itself provided,
such costs do not exceed the rates charged for same by unaffiliated third
parties on a competitive basis in comparable shopping centers."
64. Supplements Section 27.24;
Controlling over any contrary provisions of Section 27.24, upon
the expiration or earlier termination of the Term, Tenant has the right, in its
sole discretion, to remove all of Tenant's trade fixtures, furniture, equipment
(including its simulators), signs, improvements, additions and Alterations
whether or not such items are permanently affixed to the Premises, provided,
that, and only so long as, Tenant repairs any and all damages to the Premises
resulting from such removal. Further, Landlord agrees that Tenant may use
reconditioned simulators in the Premises, provided the appearance of such
equipment shall be in like new condition.
Addendum - 12
<PAGE> 30
65. Supplements Section 27.26;
The third sentence of Section 27.26 shall be hereby deleted and
replaced with the following: "Upon the expiration or earlier termination of the
Term, Tenant shall peaceably and quietly surrender the Premises broom-clean and
in substantially the same condition as the Premises were in upon delivery of
possession of same to Tenant by Landlord, reasonable wear and tear and any
damage to the Premises which Tenant is not required to repair pursuant to
Article 17 excepted; provided, however, Tenant shall not be required to demolish
and remove any improvements made by Tenant to the Premises (so long as any and
all damage caused by Tenant from its election to remove same shall be repaired
by Tenant)."
66. Supplements Section 27.28:
Controlling over any contrary provisions of Section 27.28,
Landlord shall not impose a Service Charge unless the subject failure continues
for more than ten (10) days following written notice to Tenant of such failure;
provided, however if Tenant fails to report Gross Sales and Percentage Rental
under Section 7.3, or fails to maintain the insurance required under Article 16,
no prior notice shall be required. In addition, except with respect to Tenant's
failure to provide an insurance policy or certificate in accordance with this
Lease, Tenant shall not be required to pay a Service Charge until the second
(2nd) occasion in any consecutive twelve (12) month period during the Term and
each time during such twelve (12) month period thereafter that Tenant fails to
furnish any required document, report or statement as agreed in the Lease.
67. Supplements Sections 27.29;
Section 27.29 is clarified to provide that Tenant may, without
Landlord's prior consent, use ordinary cleaning materials, hydraulic oil and
similar substances customarily used in the typical course of Tenant's business;
provided same are used in compliance with all applicable laws and manufacturers
specifications. Controlling over any contrary provisions of Section 27.29,
Landlord shall only have the right to require Tenant to conduct monitoring or
evaluation activities with respect to Hazardous Materials on the Premises, not
more than one (1) time in any twelve (12) month period, or any time if Landlord,
in its reasonable discretion, determines that Tenant is not complying with all
laws with respect to its storage, use, handling or disposal of such Hazardous
Materials. The indemnification provisions set forth in the third (3rd) paragraph
of Section 27.29 are clarified to provide that in no event shall Tenant be
responsible for liabilities to the extent arising from Landlord's negligence
willful misconduct in connection with Landlord's Work. In addition, Landlord
represents, to its actual knowledge or (without duty of investigation), that, as
of the Date of the Lease, no Hazardous Materials are present in the Premises or
the Shopping Center in violation of applicable laws. In the event that any
Hazardous Materials are located in or discharged in the Premises or the Shopping
Center other than by Tenant or its agents, contractors or employees, and such
discharge is required to be remediated pursuant to applicable laws and has a
material and adverse affect upon Tenant's use of or operation of its business
from the Premises, then Landlord (and not Tenant) shall perform or cause to be
performed the necessary remediation of such Hazardous Materials on or affecting
the Premises or the Shopping Center at no cost to Tenant; provided, however,
that the costs of remediating any minor spills and/or discharges typically
encountered in the operation of a shopping center may be included in the Common
Area Expenses.
68. Supplements Article 27;
The following supplements Article 27 and is incorporated as
Section 27.33:
"27.33 JUDICIAL REFERENCE. Any dispute between Landlord and
Tenant which is to be resolved by a reference proceeding pursuant to the
provisions of this Lease (i.e., pursuant to Section 13.8 of the Addendum
(inspection rights) or Section 27.3 (payment under protest)) shall be resolved
by a proceeding in accordance with the provisions of California Code of Civil
Procedure Section 638 et seq., for a determination to be made which shall be
binding upon the parties as if tried before a court or jury. The parties agree
specifically as to the following:
1. Within five (5) business days after service of a demand
by a party hereto, the parties shall agree upon a single referee who shall then
try all issues, whether of fact or law, and then report a finding or judgment
thereon. If the parties are unable to agree upon a referee either party may seek
to have one appointed, pursuant to California Code of Civil Procedure Section
640, by the presiding judge of the Los Angeles County Superior Court.
2. The compensation of the referee shall be such charge as
is customarily charged by the referee for like services. The cost of such
proceedings shall initially be borne equally by the parties. However, the
prevailing party in such proceedings shall be entitled, in addition to all other
costs, to recover its contribution for the cost of the reference as an item of
damages and/or recoverable costs.
3. If a reporter is requested by either party, then a
reporter shall be present at all proceedings, and the fees of such reporter
shall be borne by the party requesting such reporter. Such fees shall be an item
of recoverable costs. Only a party shall be authorized to request a reporter.
Addendum - 13
<PAGE> 31
4. The referee shall apply all California Rules of Procedure and
Evidence and shall apply the substantive law of California in deciding the
issues to be heard. Notice of any motions before the referee shall be given,
and all matters shall be set at the convenience of the referee.
5. The referee's decision under California Code of Civil Procedure
Section 644, shall stand as the judgment of the court, subject to appellate
review as provided by the laws of the State of California.
6. The parties agree that they shall in good faith endeavor to cause
any such dispute to be decided within four (4) months. The date of hearing for
any proceeding shall be determined by agreement of the parties and the referee,
or if the parties cannot agree, then by the referee.
7. The referee shall have the power to award damages and all other
relief."
69. Supplements Exhibit C;
Controlling over any contrary provisions of Exhibit C, in no event
shall the store frontage and configuration of the Floor Area of the Premises
materially differ from that which is reflected on the Final Plans.
Addendum - 14
<PAGE> 32
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease on
the day and year first above written.
IRVINE RETAIL PROPERTIES COMPANY,
a division of The Irvine Company, a Delaware
corporation
By: /s/ FREDERICK D. EVANS
--------------------------------------------
Frederick D. Evans
President
Irvine Retail Properties Company
By: /s/ GARY A VACCARO
--------------------------------------------
Gary A. Vaccaro
Senior Vice President, Finance & Acquisitions
Investment Properties Group
LANDLORD
LBE TECHNOLOGIES, INC., a California
corporation, dba "NASCAR Silicon Motor
Speedway"
By: /s/ DAMON DANIELSON
--------------------------------------------
Name: Damon Danielson
------------------------------------------
Title: President & CEO
------------------------------------------
By: /s/ JANET WOODS
--------------------------------------------
Name: Janet Woods
------------------------------------------
Title: Vice President - Real Estate
------------------------------------------
TENANT
If Tenant is a corporation, the authorized officers must sign on behalf of the
corporation and indicate the capacity in which they are signing. This Lease
must be executed by the president or vice president and the secretary or
assistant secretary, unless the bylaws or a resolution of the board of
directors shall otherwise provide, in which event the bylaws or a certified
copy of the resolution, as the case may be, must be attached to this Lease.
Also, the appropriate corporate seal should be affixed hereto.
-27-
<PAGE> 33
EXHIBIT A
SITE PLAN
[IRVINE SPECTRUM CENTER PLAN]
<PAGE> 34
EXHIBIT B
PREMISES
[IRVINE SPECTRUM CENTER PREMISES]
<PAGE> 35
EXHIBIT C
CONSTRUCTION PROVISIONS
IRVINE SPECTRUM CENTER PHASE II
RETAIL SPACE
1. LANDLORD'S WORK
Except as herein provided, the Premises are leased to Tenant on an "as-is"
basis.
"Landlord's Work", as used in this Lease, shall mean the work specified in
items A through K, below. Landlord shall not be obligated to perform any
work or provide any facilities in relation to the Premises or the Shopping
Center except as specified in items A through K, below, as otherwise
specifically set forth in this Lease. Where two (2) types of materials or
structures are indicated, Landlord will have the option of using either.
A. Floor:
Landlord shall provide in the Premises an exposed, unsealed concrete
floor slab on the ground floor designed to support a live load of 100
pounds per square foot.
B. Storefront:
Landlord shall provide the opening(s) for Tenant's storefront.
C. Walls:
Landlord's shall provide for the Premises perimeter metal studs
without drywall from finish floor surface to a height of 15 feet.
Where roof structure or one-hour gyp sheeting does not exceed 15
feet, drywall will not be provided. Otherwise, drywall will be
provided from 15 feet to the underside of the structure above.
Landlord may provide unfinished masonry wall in lieu of metal studs
at Landlord's option, in which case no drywall will be provided.
D. Egress Door:
Landlord will provide a 3'-0" x 7'-0" egress door per building code
with appropriate hardware, but hinge only, to the service corridor or
exterior at a location to be determined by Landlord.
E. Clear Height:
Clear height for the Premised shall be as indicated on Landlord's
plans for the Premises.
F. Electrical:
Landlord will provide for 480/277 volt, 3-phase, 4-wire serviced from
a central distribution point, at which central distribution point,
Landlord shall provide an empty meter base, fusible service
disconnect switch (100 amp minimum), and Landlord shall provide an
empty conduit (2" trade size minimum) to the Premises. Tenant's
fusible service disconnect switch and empty conduit sizes shall be
based on a load density of 16 VA per square foot. If Tenant requires
a different size main electrical switch and/or empty conduit,
Landlord may provide same, if available, at Tenant's expense.
G. HVAC:
Landlord will provide roof mounted air conditioning units (all
electric heat pumps), with an average cooling capacity of 300 square
feet per ton condensate drainage connection completed and stubs
through the roof for thermostat and electrical hook-up by Tenant.
H. Plumbing:
Landlord shall provide 4" sewer (under slab) and 1" water (overhead)
stub-ins to rear of the Premises.
I. Gas:
Landlord shall provide gas service to the building in which the
Premises is located and a manifold for the distribution of gas
service to the Premises.
J. Telephone:
Landlord shall supply empty 1" conduit from the main telephone panel
to the Premises.
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<PAGE> 36
K. Automatic Fire Sprinklers:
Landlord shall provide a fire sprinkler main above the Premises and
general distribution as required to meet minimum N.F.P.A.
requirements for ordinary hazard occupancies.
II. TENANT'S WORK
"Tenant's Work", as used in this Lease, shall mean all work, other than
Landlords Work specified in Part I of this Exhibit C, which shall be
necessary to complete the Premises to a finished condition from which
business can be conducted. Tenant acknowledges receipt of a space outline
plan for the Premises and the Tenant Design and Construction Criteria for
The Entertainment Center at Irvine Spectrum ("Tenant Criteria"). All of
Tenant's Work shall be performed in accordance with the provisions of the
Final Working Drawings (as hereinafter described) for Tenant's Work.
Tenant shall perform or cause to be performed Tenant's Work at Tenant's
expense. Tenant's Work shall include, but not be limited to, the following:
A. Floors:
Tenant shall provide all floor coverings in the Premises.
Concentrated dead loads are not allowed without specific prior
written approval of Landlord. Penetrations through any walls or floor
must have prior written approval from Landlord. Penetrations may
require prior review and appropriate x-rays, the costs of which shall
be borne by Tenant.
B. Storefront:
Tenant shall construct the Storefront for the Premises ("Storefront")
in accordance with the Storefront Criteria set forth in the Tenant
Criteria.
C. Walls:
Tenant shall provide drywall on all perimeter walls from finish floor
to 15' above finish floor, or from finish floor to underside of roof
structure if less than 15' or if masonry wall is provided, and all
interior demising walls and partitions and wallcoverings in the
Premises.
D. Ceiling:
Tenant shall provide the ceiling in the Premises and any necessary
catwalks or access panels in accordance with the Tenant Criteria.
Penetrations through and/or attachments to roof structures must have
prior written approval from Landlord and comply with all of
Landlord's roof specifications and installation procedures.
E. Tenant shall provide all electrical work, equipment, fixtures and
services for the Premises. Tenant shall provide all temporary power
for Tenant's construction. Tenant shall arrange and pay for electric
meter from the Landlord.
F. HVAC:
Tenant shall distribute all HVAC within the Premises. All
distribution, including ductwork, electrical and piping, shall be
within the Premises below the roofline. All construction, and
engineering costs shall be at Tenant's expense. Any rooftop
penetrations and roof repairs required shall be made using Landlord's
designated subcontractor and complying with all of Landlord's roof
specifications.
G. Plumbing:
Tenant shall provide all plumbing for the Premises. Tenant shall make
all rooftop penetrations and roof repairs using Landlord's designated
subcontractor and complying with all of Landlord's roof
specifications.
H. Gas:
Tenant shall be responsible for distribution from the manifold of all
gas service within the Premises and application for service from the
applicable utility company.
I. Telephone:
Tenant shall provide all telephone equipment for the Premises and
connections to the main panelboard.
C-2
<PAGE> 37
J. Automatic Fire Sprinklers:
Tenant shall make any additions or changes in the sprinkler system
provided by Landlord necessary to meet the minimum criteria of
Landlord or governmental or insurance standards. Tenant shall use
Landlord's designated contractor for this work. Tenant shall be
responsible for fire alarm monitoring, including designated phone
line, monitoring equipment and monitoring company, as required by
code.
K. Signs:
Tenant shall provide signs in accordance with the sign criteria set
forth in the Tenant Criteria.
L. Service/Fire Exit Doors:
If required by applicable codes, Tenant shall provide additional
service doors and/or fire exit doors which shall conform with code
requirements.
M. Code-Related Items:
Tenant shall be responsible for complying with any code requirements
applicable to its type of business or its operation in the Premises.
III. DESIGN APPROVAL PROCEDURE
A. Preliminary Drawings:
1. Due to the special nature of the project, prior to preparing any
drawings, Tenant shall participate in a kickoff/coordination
meeting to discuss any special conditions that may affect the
design of the Premises and to review the Tenant Criteria.
2. Within thirty (30) days from the Date of Lease, Tenant shall
submit to Landlord's architect three (3) sets of blueline prints
and one (1) set of reproducible prints showing intended design
character and finishes of the Premises ("Preliminary Drawings").
3. Preliminary Drawings shall include the following:
a. Key plan showing location of shop within Shopping Center.
b. Preliminary floor plans (scale 1/4" = 1'-0") indicating
interior design concept.
c. Typical interior elevations (scale 1/4" = 1'-0").
d. Storefront elevation and section, including any graphics,
lighting and signage and indicating all materials and
finishes (scale 1/4" = 1'-0"). Elevations shall be rendered
in color. Elevations should include existing context (i.e.,
partial elevations of retail spaces) and should be drawn
full height to top of building. All exterior signage is
considered integral to the design and is required to be
submitted with preliminary elevations.
e. Preliminary finish schedule including all colors and
materials to be used.
4. Within fifteen (15) days after receipt of the Preliminary
Drawings, Landlord's architect will return to Tenant's
architect/designer one (1) set of prints of the Preliminary
Drawings with any required modifications or with approval. If
Tenant wishes to take exception to any required modifications,
Tenant may do so only by written notice received by Landlord
within ten (10) days from the date of receipt by Tenant's
architect/designer of the required modifications. Unless
exception is so taken, it will be deemed that all comments are
acceptable to and approved by Tenant.
5. If the Preliminary Drawings are returned to Tenant with required
modifications and Tenant does not take (or is deemed not to have
taken) exception to such modifications as provided above, the
Preliminary Drawings must be revised and resubmitted to Landlord
for approval within thirty (30) days of their receipt by Tenant's
architect/designer.
6. If Tenant properly takes exception to any required modifications
as provided above, Landlord will discuss the objections with
Tenant and will work with Tenant to achieve Final Working
Drawings (as described below) that are acceptable to Landlord. If
Tenant and Landlord are unable to agree on Preliminary Drawings,
Landlord may terminate this Lease.
C-3
<PAGE> 38
7. If the Preliminary Drawings are returned "Approved as Noted" and
Tenant does not take exception, Tenant's architect shall incorporate
Landlord's modifications into the Final Working Drawings.
C. Final Working Drawings:
1. Tenant must engage an architect licensed in the State of California
for the purpose of preparing the Final Working Drawings. Final Working
Drawings must adhere to the Preliminary Drawings as approved by
Landlord.
2. Final Working Drawings shall include, but not be limited to, the
following:
a. Key plan showing location of shop within Shopping Center.
b. Floor plans (scale 1/4" = 1'0") indicating storefront
construction materials, colors and finishes as well as sliding
door track location (if required), location of partitions and
type of construction, placement of merchandising fixtures and
toilet room locations indicating placement of plumbing and
fixtures.
c. Reflected ceiling plans (scale 1/4" = 1'0") indicating ceiling
materials, various heights, location of all light fixtures,
their manufacturer's name and catalog number, lamps to be used
and mounting (recessed, surface, etc.), location of sprinkler
heads and HVAC grilles.
d. Storefront elevation and section, including any graphics,
lighting and signage. Indicate all materials and finishes,
(scale 1/4" = 1'0").
e. Interior elevations, sections and details sufficient for
construction (scale 1/4" = 1'0").
f. Complete interior finish schedule.
g. Samples and color chips of the actual materials or charts firmly
attached to 8-1/2" x 11" illustration boards and clearly labeled.
h. Sign details (scale 1/2" = 1'0") indicating elevation and
section views, letter style and size, all colors and materials,
methods of illustration, color of illuminate and voltage
requirements.
i. Mechanical drawings, including electrical, HVAC, plumbing and
automatic fire sprinklers prepared by licensed engineers or
firms licensed to prepare such drawings.
j. Drawings must indicate connected electrical loads, weights of
heavy equipment, cases, etc.
k. Specification not on drawings should be submitted on 8-1/2" x
11" paper, four sets.
l. Landlord reserves the right to require mock ups of any
materials, finishes, colors, special signs or lighting.
3. The Final Working Drawings prepared by Tenant's architect must be
submitted in the form of two (2) sets of reproducible sepia prints
and three (3) sets of black or blue line prints to the Project
Architect for approval within fifteen (15) days from the earlier of
delivery to Tenant's architect/designer or Landlord's approval of the
Preliminary Drawings. Final Working Drawings with incomplete or
inadequate information or dimensional discrepancies will be rejected.
4. Within fifteen (15) days after receipt of the Final Working Drawings,
Landlord's architect will return to Tenant's architect/designer one
(1) set of prints of the Final Working Drawings with any required
modifications or with approval. If Tenant wishes to take exception to
any required modifications, Tenant may do so only by written notice
received by Landlord within ten (10) days from the date of receipt by
Tenant's architect/designer of the required modifications. Unless
exception is so taken, it will be deemed that all comments are
acceptable to and approved by Tenant.
5. If the Final Working Drawings are returned to Tenant with comments
and Tenant does not take exception to the comments as provided above,
the Final Working Drawings must be revised and resubmitted to
Landlord for approval within fifteen (15) days of their receipt by
Tenant's architect/designer.
6. If Tenant properly takes exception to any required modifications as
provided above, Landlord will discuss the objections with Tenant and
will work with Tenant to achieve Final Working
C-4
<PAGE> 39
Drawings that are acceptable to Landlord. If Tenant and Landlord
are unable to agree on Final Working Drawings, Landlord may
terminate this Lease.
7. Approved Final Working Drawings will be so stamped and returned
to Tenant's architect/designer who made the submittal.
C. Final Plans: The approved Final Working Drawings will be considered
the "Final Plans". Tenant agrees to provide to Landlord a complete
diskette containing the computer assisted drawings of the Final Plans.
All construction on the Premises must be in conformity to the Final
Plans. The improvements may be inspected by Landlord or its architect
who shall have the right to require all work which does not comply
with the Final Plans to be corrected by Tenant, or by Landlord at
Tenant's cost. Construction may not begin until Final Plans are at the
job site. No changes, modifications or alterations to the Final Plans
may be made without the written consent of Landlord.
D. Failure to Submit Plans: If Tenant fails to submit Preliminary
Drawings or Final Working Drawings or revisions thereto as and when
required, the period allowed for construction of the Premises as set
forth in Section 1.10 of this Lease as "Time to Complete Tenant's
Work" will be reduced by the total number of days equal to the number
of days the Preliminary Drawings or Final Working Drawings or the
revisions thereto were delivered after they were required to be
delivered. In addition, Landlord, at its option, may elect to
terminate this Lease.
E. Building Code Compliance and Nonresponsibility of Landlord: Landlord
will not check Tenant's drawings for building code compliance. All
Tenant drawings shall, however, be subject to the same engineering and
safety review as described below in Section IV.B.6 below respecting
Tenant's Work, and such review shall be subject to the same
limitations and other provisions set forth in said Section IV.B.6.
Approval of Final Working Drawings by Landlord is not a representation
that the drawings are in compliance with the requirements of
governmental authorities, and it shall be Tenant's responsibility to
meet and comply with all Federal, state and local code requirements.
Approval of Final Working drawings does not constitute assumption of
responsibility by Landlord for their accuracy, sufficiency or
efficiency and Tenant shall be totally responsible for such matters.
Tenant at all times shall maintain at the Premises the Final Plans as
approved by the Building Department, and all inspection cards with
respect to Tenant's Work.
F. Design Fees: All of Tenant's design fees (including, without
limitation, Tenant's architect and sign designer) must be paid by
Tenant.
IV. CONSTRUCTION OF PREMISES
A. Commencement of Construction: Tenant shall commence construction of
Tenant's Work in accordance with the provisions of this Lease and
shall carry such construction to completion with all due diligence.
B. General Requirements:
1. Tenant's contractor shall comply with all rules and regulations
and applicable fees as described in the Tenant's Criteria.
2. Tenant shall only engage contractors who are bondable, licenses
contractors, possessing good labor relations, capable of
performing quality workmanship and working in harmony with
Landlord and other contractors on the job. All work shall be
coordinated with other Shopping Center work.
3. Tenant shall perform or cause to be performed Tenant's Work in
all respects with applicable Federal, state, county and city
statutes, ordinances, regulations, laws and codes. All required
permits, approvals, licenses, authorizations and other permits in
connection with the construction and completion of the Premises
including, without limitation, building permits and conditional
use permits, shall be obtained and all fees (both one-time and
recurring) required in connection with the construction and
completion of the Premises including, without limitation, all
roads fees, building and conditional use permit fees, whether
similar or dissimilar, shall be paid for by Tenant.
4. Tenant shall apply and pay for all utility services including,
but not limited to, temporary utilities.
5. Tenant shall cause [illegible] contractor to provide warranties
for not less than one (1) year against defects in workmanship,
materials and equipment, commencing upon Landlord's acceptance of
Tenant's Work.
6. Tenant acknowledges that Tenant's Work shall be subject to (a)
the inspection and approval of Landlord for the purpose of
determining Tenant's compliance with the Final Working Drawings,
and (b) an engineering and safety review by Landlord for the
purpose of making
C-5
<PAGE> 40
an assessment regarding the potential safety impact of Tenant's Work
on other portions of the Shopping Center, which review may include,
without limitation, the examination of (i) any penetrations through
the roof or other structural elements of the Premises, (ii) the
transition points from the Common Areas to the Premises, and (iii) any
flooring, common walls or similar surfaces which may constitute a
potential for leakage into other portions of the Shopping Center. Any
such inspection, approval, or review shall not constitute an approval
of architectural or engineering design, a review to determine the
structural safety of Tenant's Work or Tenant's compliance with any
building codes or other legal requirements, or otherwise constitute
any assumption of liability or responsibility by Landlord or its
agents or contractors. Tenant hereby expressly acknowledges that no
such inspection, approval or review shall in any way limit the
obligations of Tenant or the rights of Landlord under this Lease, and,
without limitation on the foregoing, Tenant's obligations under that
provision in the Lease regarding Indemnity of this Lease shall apply
to any claims, etc. (as more fully indicated in such Indemnity
provision) arising or alleged to have arisen in connection with the
Premises, Tenant's Work or the safety or structural integrity thereof.
Tenant shall, at its sole cost and expense, perform any corrective
measures required by Landlord or its agents or contractors in
connection with any such inspection, approval or review.
7. Tenant shall be responsible for having a superintendent from its
general contractors' office on site during all Tenant's Work and
fixturing work. Tenant's general contractor's superintendent or other
responsible representative shall be on the jobsite to receive all
deliveries of materials, fixtures or merchandise. Landlord reserves
the right to turn away any delivery arriving at the jobsite if
Tenant's general contractor's superintendent or other responsible
representative is not present. Tenant shall stage its construction
equipment and materials only in the staging area designated for such
purpose by Landlord.
8. Tenant shall cause its general contractor and subcontractors during
the construction of Tenant's Work to maintain the Premises and the
jobsite in a clean condition and to provide daily removal, cleanup and
proper disposal of all trash, rubbish, refuse and construction debris
and spoils generated by Tenant's general contractor and subcontractors
in dumpsters and other appropriate facilities, and not by depositing
any such trash, refuse and construction debris and spoils within other
tenant spaces or the jobsite common areas. If Landlord incurs costs to
clean up the jobsite and/or adjacent tenant spaces due to the failure
of Tenant's general contractor and subcontractors to comply with the
foregoing requirements, Tenant agrees to promptly reimburse such costs
(or Tenant's proportionate share of such costs, which Landlord shall
determine as a flat per-square-foot rate based on the Floor Area of
the Premises) upon receipt of an invoice reasonably detailing such
costs.
9. Tenant and Tenant's general contractor and subcontractors shall be
responsible for the daily removal, cleanup and proper disposal of
their own rubbish, trash and construction debris, and for providing
adequate dumpster(s) for such purpose (to be located in only areas
designated by Landlord). Tenant shall contract with a disposal company
to provide daily removal of its rubbish, trash and construction
debris. If Landlord provides dumpsters for common use, or if Tenant's
contractors use Landlord's dumpsters for disposal of rubbish, trash
and/or construction debris, Tenant shall pay its proportionate share
of the cost of such trash service, including dumpster rental and
hauling fees and charges, which Landlord shall determine as a flat
per-square-foot rate based on the Floor Area of the Premises.
10. Tenant shall be responsible for any and all damage done by Tenant's
general contractor and/or subcontractors to any of Landlord's
buildings, other tenant premises, or the project common areas. Tenant
shall at all times cause its general contractor and subcontractors to
comply with the requirements of Landlord's general contractor and/or
onsite construction manager with respect to protection of Landlord's
construction work in the project which has been completed or is in
progress, including paths of access within the project for
construction materials, equipment and labor, and coordination of
sequencing of work. Tenant agrees to promptly reimburse Landlord for
all costs incurred by Landlord to repair (including repatching and
repainting) any and all damage done by Tenant's general contractor
and/or subcontractors to any of Landlord's buildings, other tenant
premises, or the project common areas upon receipt of an invoice
reasonably detailing such costs.
11. Tenant's general contractor shall provide its own temporary toilets
within the Premises or in an area designated by Landlord. Any
temporary toilets located by Tenant or Tenant's general contractor or
subcontractors other than in areas designated by Landlord may be
removed at Tenant's expense. Temporary toilets placed onsite by
Landlord's general contractor shall not be available for use by
Tenant's general contractor, subcontractors or other personnel.
12. Tenant shall provide and pay for its own temporary power and telephone
service from locations designated by Landlord. Landlord's general
contractor's jobsite telephones shall not be available for use by
Tenant's general contractor, subcontractors or other personnel. If
tenant or Tenant's general contractor or subcontractors use Landlord's
temporary power, Tenant agrees to pay Landlord and/or Landlord's
general contractor the actual or reasonable
C-6
<PAGE> 41
estimated cost of such power, plus a facilities charge equal
[***] of the actual or reasonably estimated cost of such
power usage.
13. Tenant and/or Tenant's general contractor shall be
responsible for providing all security deemed necessary by
Tenant to protect Tenant's Work, including furniture,
fixtures and inventory, during the conduct of Tenant's Work.
Neither Landlord nor Landlord's general contractor shall
provide or be responsible for any such security or
protection.
C. Landlord's Right to Perform Work: Landlord shall have the right, but
not the obligation, to perform on behalf of and for the account of
Tenant, subject to reimbursement of the cost thereof by Tenant, and
any all of Tenant's Work which Landlord determines, in its sole
discretion, should be performed immediately and on an emergency basis
for the best interest of the Shopping Center, including, without
limitation, work which pertains to structural components, mechanical,
sprinkler and general utility systems, fire alarm systems, roofing and
removal of unduly accumulated construction materials and debris.
D. As-Built Drawings. Tenant, at its expense, shall have prepared a
complete set of the Final Plans marked "As-Built Drawings" which fully
indicate Tenant's Work as constructed and deliver one (1) reproducible
set of such drawings to Landlord no later than thirty (30) days after
the completion of Tenant's Work.
V. ALTERATIONS
Tenant shall not perform any Alterations without the prior written approval
of Landlord. Approval shall be obtained by using the procedure set forth in
Part III above; provided, however, the initial date for delivery of the
Preliminary Drawings shall not be thirty (30) days from the date of this
Lease, but shall instead be thirty (30) days prior to the date Tenant
desires to commence the Alterations. The Preliminary Drawings and the Final
Working Drawings shall consist of the appropriate drawings in relation to
the intended Alterations.
VI. TENANT IMPROVEMENT ALLOWANCE
Provided (a) Tenant is not in default under this Lease, (b) the Premises
are lien-free and eighty-five (85) days have expired from the recordation
of the Notice of Completion described in Paragraph F below, and (c)
Landlord has approved, in advance, the scope of work and terms of any
negotiated contract for Tenant's Work or Tenant has accepted the [***] bid
(or any bid within [***]) from a minimum of [***] bids received from
contractors approved in advance by Landlord, the scope of work for which
has been approved by Landlord for a contract for construction of Tenant's
Work, then within thirty (30) business days after requirements A through J
below are satisfied, Landlord will reimburse to Tenant the lesser of (a)
the [***] paid by Tenant for Tenant's Work (specifically excluding floor
coverings, signs, fixtures, equipment, permit fees, engineering and
consulting fees and plan review fees), and (b) [***] ("Tenant Improvement
Allowance") which sum is calculated based on [***] per square foot of Floor
Area within the premises (it being understood that if the Floor Area is
increased or decreased the Tenant Improvement Allowance will be adjusted
accordingly). Notwithstanding anything herein to the contrary, in no event
shall the Tenant Improvement Allowance be used to pay for furniture,
fixtures or equipment in the Premises:
A. A building permit for the construction of Tenant's Work has been
issued by the City of Newport Beach and a copy of the building permit
has been delivered to Landlord;
B. Tenant has delivered to Landlord lien waivers and releases, in
statutory form, for all contractors, subcontractors and materialmen
who performed work or supplied materials in connection with the
completion of Tenant's Work;
C. All required inspections of Tenant's Work by governmental agencies
have taken place and the completed Tenant's Work has passed such
inspections;
D. Tenant has submitted to Landlord a copy of all building permits with
all sign-offs executed;
E. Tenant has submitted to Landlord a conformed copy of Tenant's
recorded Notice of Completion, prepared and recorded in accordance
with statutory requirements;
F. Tenant has submitted to Landlord a conformed copy of Tenant's
recorded Notice of Completion, prepared and recorded in accordance
with statutory requirements;
G. Tenant has delivered to Landlord a Certificate of Occupancy for the
Premises;
H. Tenant has submitted to Landlord invoices and proofs of payment for
Tenant's Work (specifically excluding signs, movable fixtures, permit
fees, engineering and consulting fees, and plan review fees) which
evidence expenditure by Tenant of at least [***];
*** Confidential treatment requested.
C-7
<PAGE> 42
I. Tenant has submitted to Landlord As-built Drawings for all of Tenant's
Work; and
J. Tenant has paid to Landlord all amounts owing to Landlord pursuant to
this Lease as of the date reimbursement is to be made, and Tenant is
not otherwise in default of any other term or condition or this Lease
as of such date, and no event has occurred which, given the passage of
time of the giving of notice or both, could be declared a default
under this Lease.
VII. LIENS
In the event that as a result of any work of improvement undertaken by Tenant,
any mechanics' lien or other lien is filed against the Premises, Tenant shall
immediately cause such lien to be removed of record by either paying the amount
of the lien or procuring and recording a statutory lien release bond in an
amount equal to [***] of the amount of said lien. If Tenant fails to remove such
lien and such failure continues for twenty (20) days after written demand by
Landlord to do so, Landlord shall have the right, but not the obligation, in
addition to all other rights and remedies available to landlord under this
Lease, to procure and cause to be recorded a statutory lien release bond and to
(a) collect from Tenant as Additional Rental, and/or (b) deduct from any Tenant
Improvement allowance payable to Tenant hereunder (i) all costs incurred in
procuring such bond, and (ii) the sum of [***] as reimbursement for all
recording and processing fees and administrative costs and expenses incurred by
Landlord in procuring and causing such bond to be recorded.
*** Confidential treatment requested.
<PAGE> 43
EXHIBIT D
TENANT'S STATEMENT OF GROSS SALES
SALES VOLUME REPORT-PERCENTAGE RENTAL / /
------------------------------
( ) Month Ended
( ) Quarter Ended
( ) Other
<TABLE>
<CAPTION>
ITEM SALES % RENTAL
---- ----- --- ------
<S> <C> <C> <C>
1. $
--------------- -------------- --------- ---------------
2. $
--------------- -------------- --------- ---------------
3. $
--------------- -------------- --------- ---------------
4. $
--------------- -------------- --------- ---------------
5. TOTAL (Add lines 1+2+3+4)
==============
6. Less Minimum Annual Rental paid for period covered ( )
=========
7. Total Percentage Rental payable and
enclosed (Line 5 less Line 6) $ )
=========
</TABLE>
TENANT:
--------------------------------
SIGNATURE:
--------------------------------
DATE:
--------------------------------
ACCOUNT NUMBER:
--------------------------------
Note: Signature constitutes certification that the information contained in
this statement is true, accurate and complete. If tenant is a corporation,
this statement must be signed by an authorized officer of Tenant. We
encourage you to send as much detailed information as practical to support
your calculations; however, in addition to documentation normally provided
IT IS ESSENTIAL THAT THIS FORM BE COMPLETED AND RETURNED to ensure that
all rental information is properly recorded to your account.
D-1
<PAGE> 44
EXHIBIT D
ANNUAL GROSS SALES VOLUME REPORT
ANNUAL GROSS SALES VOLUME REPORT FOR 19-
<TABLE>
<CAPTION>
Month Sales
- ----- -----
<S> <C> <C> <C>
JANUARY $ $ $
---------------- ---------------- ----------------
FEBRUARY $ $ $
---------------- ---------------- ----------------
MARCH $ $ $
---------------- ---------------- ----------------
APRIL $ $ $
---------------- ---------------- ----------------
MAY $ $ $
---------------- ---------------- ----------------
JUNE $ $ $
---------------- ---------------- ----------------
JULY $ $ $
---------------- ---------------- ----------------
AUGUST $ $ $
---------------- ---------------- ----------------
SEPTEMBER $ $ $
---------------- ---------------- ----------------
OCTOBER $ $ $
---------------- ---------------- ----------------
NOVEMBER $ $ $
---------------- ---------------- ----------------
DECEMBER $ $ $
---------------- ---------------- ----------------
GROSS SALES $ $ $
================ ================ ================
</TABLE>
TENANT: ----------------------------
SIGNATURE: ----------------------------
DATE: ----------------------------
ACCOUNT NUMBER: ----------------------------
NOTE: Signature constitutes certification that the information contained in this
statement is true, accurate and complete. If Tenant is a corporation, this
statement must be signed by an authorized officer of Tenant. We encourage
you to send as much detailed information as practical to support your
calculations; however, in addition to documentation normally provided IT
IS ESSENTIAL THAT THIS FORM BE COMPLETED AND RETURNED to ensure that all
rental information is properly recorded to your account. If the figures
you submit differ from the monthly reports previously submitted, please
include an explanation.
D-2
<PAGE> 1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED
ON A REQUEST FOR CONFIDENTIAL TREATMENT
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
EXHIBIT 10.14
THE PALISADES CENTER
SHOPPING CENTER LEASE
Name of Shopping Center: THE PALISADES CENTER
Location of Shopping Center: WEST NYACK, NEW YORK
Landlord: EKLECCO
Tenant: SILICON ENTERTAINMENT, INC.
a California corporation
d/b/a NASCAR SILICON MOTOR SPEEDWAY
Execution Date:
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1................................................................................ 2
Premises............................................................................ 2
1.01 Premises................................................................. 2
1.02 Center................................................................... 2
ARTICLE 2................................................................................ 2
Term of Lease....................................................................... 2
2.01 Commencement of Term..................................................... 2
2.02 Term of Lease............................................................ 3
2.03 Surrender of Premises.................................................... 3
ARTICLE 3................................................................................ 3
Rent................................................................................ 3
3.01 Rent..................................................................... 3
3.02 Rent Increases........................................................... 3
3.03 Percentage Rent.......................................................... 3
3.04 Gross Receipts Defined................................................... 4
3.05 Opening Assessment....................................................... 5
3.06 Tenant's Books and Records............................................... 6
3.07 Reports by Tenant........................................................ 6
3.08 Non-Waiver............................................................... 6
3.09 Landlord's Right to Examine and Audit Books and Records.................. 6
3.10 Delinquent Payments...................................................... 6
3.11 Additional Rent.......................................................... 7
3.12 Definition of Lease Year and Partial Lease Year.......................... 7
3.13 Place for Payments....................................................... 7
ARTICLE 4................................................................................ 7
Taxes............................................................................... 7
4.01 Real Property Taxes...................................................... 7
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
4.02 Tenant's Taxes............................................................. 8
ARTICLE 5................................................................................ 8
CONSTRUCTION AND FINANCING.......................................................... 8
5.01 Landlord's Work.......................................................... 8
5.02 Tenant's Work............................................................ 9
5.03 Payment.................................................................. 11
5.04 Financing................................................................ 11
ARTICLE 6................................................................................ 11
TRADE NAME AND CONDUCT OF BUSINESS BY TENANT........................................ 11
6.01 Use of Premises and Trade name........................................... 11
6.02 Tenant's Operating Covenant.............................................. 11
6.03 Other Business Practices................................................. 12
ARTICLE 7................................................................................ 13
COMMON AREAS AND OPERATING COSTS.................................................... 13
7.01 Definitions.............................................................. 13
7.02 Development of Common Areas.............................................. 13
7.03 Use of Common Areas...................................................... 13
7.04 Common Area Costs........................................................ 14
7.05 Extra Hours Common Area Costs............................................ 14
ARTICLE 8................................................................................ 14
ENERGY AND COSTS.................................................................... 14
8.01 Energy and Utility Charges............................................... 14
8.02 Miscellaneous Utility Provisions......................................... 14
ARTICLE 9................................................................................ 15
FIXTURES, ALTERATIONS, SIGNS........................................................ 15
9.01 Installation By Tenant................................................... 15
9.02 Removal and Restoration by Tenant........................................ 15
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
9.03 Signs, Awnings and Canopies.............................................. 15
9.04 Remodeling of the Premises............................................... 15
ARTICLE 10............................................................................... 16
REPAIRS AND MAINTENANCE............................................................. 16
10.01 Landlord's Obligation to Repair......................................... 16
10.02 Tenant's Obligation to Repair........................................... 16
10.03 Article Not Applicable to Fire or Condemnation.......................... 16
ARTICLE 11............................................................................... 17
INDEMNITY........................................................................... 17
11.01 Indemnity............................................................... 17
ARTICLE 12............................................................................... 17
INSURANCE........................................................................... 17
12.01 Liability Insurance..................................................... 17
12.02 Special Causes of Loss and Difference in Conditions Insurance........... 17
12.03 Insurance on Common Areas............................................... 18
12.04 Waiver of Subrogation................................................... 18
12.05 Policies................................................................ 18
ARTICLE 13............................................................................... 18
DAMAGE BY FIRE OR OTHER HAZARD...................................................... 18
13.01 Restoration of Premises................................................. 18
13.02 Restoration During Last Three Years of Term............................. 19
13.03 Tenant's Obligation Upon Restoration.................................... 19
ARTICLE 14............................................................................... 19
EMINENT DOMAIN...................................................................... 19
14.01 Eminent Domain.......................................................... 19
14.02 Landlord Entitled to Award.............................................. 19
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE 15............................................................................... 20
BANKRUPTCY AND DEFAULT PROVISIONS................................................... 20
15.01 Events of Default and Conditional Limitation............................ 20
15.02 Landlord's Remedies..................................................... 21
ARTICLE 16............................................................................... 22
MECHANICS' LIENS.................................................................... 22
16.01 Mechanic's Liens........................................................ 22
ARTICLE 17............................................................................... 22
ASSIGNMENTS, SUBLEASES AND OTHER TRANSFERS OF TENANT'S INTEREST..................... 22
17.01 Limitations on Tenant's Rights.......................................... 22
17.02 Effect of Landlord's Consent............................................ 24
ARTICLE 18............................................................................... 24
COMPLIANCE WITH GOVERNMENTAL ORDERS................................................. 24
18.01 Tenant to Comply........................................................ 24
18.02 Failure to Comply....................................................... 24
18.03 Hazardous Material...................................................... 25
18.04 Americans With Disabilities Act......................................... 25
ARTICLE 19............................................................................... 25
SUBORDINATION, MORTGAGE'S RIGHTS AND ASSIGNMENT OF RENTS............................ 25
19.01 Subordination........................................................... 25
19.02 Mortgagee's Rights...................................................... 25
19.03 Assignment of Rents..................................................... 26
ARTICLE 20............................................................................... 26
ENTRY TO PREMISES................................................................... 26
20.01 Entry to Premises by Landlord........................................... 26
ARTICLE 21............................................................................... 27
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C>
NOTICES AND CERTIFICATES............................................................ 27
21.01 Notices................................................................. 27
21.02 Estoppel Certificate of Landlord........................................ 27
21.03 Estoppel Certificate of Tenant.......................................... 27
ARTICLE 22............................................................................... 27
COVENANT OF QUIET ENJOYMENT......................................................... 27
22.01 Covenant of Quiet Enjoyment............................................. 27
ARTICLE 23............................................................................... 28
MISCELLANEOUS PROVISIONS............................................................ 28
23.01 Holdover................................................................ 28
23.02 Limitation on Landlord's Personal Liability............................. 28
23.03 Definition of Tenant's Allocable Share.................................. 29
23.04 Force Majeure........................................................... 29
23.05 Relocation of Tenant.................................................... 29
23.06 Changes and Additions................................................... 29
23.07 Attornment by Tenant.................................................... 29
23.08 Index................................................................... 30
23.09 Survival of Tenant's Obligations........................................ 30
23.10 Effect of Landlord's Notice to Terminate................................ 30
23.11 Effect of Captions...................................................... 30
23.12 Tenant Authorized to Do Business........................................ 30
23.13 Execution in Counterparts............................................... 30
23.14 Law Governing Effect; Gender............................................ 30
23.15 Memorandum or Notice of Lease........................................... 30
23.16 Complete Agreement...................................................... 30
23.17 Guaranty of Lease....................................................... 31
23.18 Arbitration............................................................. 31
23.19 Security Agreement...................................................... 31
</TABLE>
v
<PAGE> 7
<TABLE>
<S> <C>
23.20 Invalidity of Particular Provisions..................................... 31
23.21 Execution of Lease by Landlord.......................................... 31
23.22 Relationship of the Parties............................................. 31
23.23 Brokers................................................................. 31
23.24 Representations......................................................... 31
23.25 Abatement............................................................... 31
23.26 Other Provisions........................................................ 32
</TABLE>
vi
<PAGE> 8
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
DEFINED TERM SECTION
<S> <C>
Actual Percentage Rent.................................................. 3.07
ADA.....................................................................18.04
Additional Rent......................................................... 3.11
Affiliates............................................................3.04(c)
Audit....................................................................3.09
Books and Records........................................................3.06
Breakpoint............................................................3.03(a)
CAM......................................................................7.04
Center...................................................................1.01
Collateral..............................................................23.19
Common Areas.............................................................7.01
Condemnation Proceedings................................................14.01
Condemnation Proceedings Award..........................................14.01
CPI.....................................................................23.08
Default Rate.............................................................3.09
Difference in Conditions......................................12.02(a), 12.03
Energy Provider.......................................................8.01(b)
Event of Default.....................................................15.01(a)
Extra Hours Charge....................................................7.05(a)
Financing Modifications...............................................5.04(b)
First Lease Year.........................................................3.12
Governmental Orders.....................................................18.01
Gross Receipts........................................................3.04(a)
Hazardous Material......................................................18.03
Holder...............................................................19.01(b)
HVAC Units............................................................5.02(a)
Index...................................................................23.08
Insurance Matters.......................................................18.01
Insurance Policy........................................................12.01
Landlord................................................................23.02
Landlord's Tract.........................................................1.02
Landlord's Work..........................................................5.01
Lease Year...............................................................3.12
Monthly Percentage Rent..................................................3.03
Monthly Rent.......................................................3.01(a)(b)
Notice..................................................................21.01
Partial Lease Year.......................................................3.12
Percentage Pay........................................................3.03(a)
Percentage Rent.......................................................3.03(a)
Per Location Aggregate..................................................12.01
Permanent Improvements...............................................12.02(b)
Permanent Lender.....................................................19.01(b)
Pilot.................................................................4.01(a)
Premises.................................................................1.01
Punch List Items......................................................5.02(a)
Real Property Taxes...................................................4.01(a)
REA......................................................................1.02
Remodeling...............................................................9.04
Rent............................................................3.01(a)(b)(c)
Site Plan................................................................1.02
Special Causes of Loss..................................12.02(a)(b)(c), 12.03
Square Feet..........................................................23.03(b)
Standard Mall Hours......................................................6.02
</TABLE>
vii
<PAGE> 9
<TABLE>
<CAPTION>
DEFINED TERM SECTION
<S> <C>
Structural Shell.........................................................5.01
Subrogation Waiver......................................................12.04
Substantial Completion................................................5.02(c)
Tenant Area..........................................................23.03(b)
Tenant's Allocable Share of Real Property Taxes.......................4.01(a)
Tenant's Allocable Share................................................23.03
Tenant's Financial Institution.....................................3.13(b)(i)
Tenant's Insurance Policies.............................................12.05
Tenant's Operating Covenant Period.......................................6.02
Tenant's Personal Property...........................................12.02(b)
Tenant's Work............................................................5.02
Term.....................................................................2.02
Term Commencement Certificate............................................2.01
Term Commencement Date...................................................2.01
Termination Date.........................................................2.02
Then Full Replacement Cost...........................................12.02(a)
</TABLE>
viii
<PAGE> 10
The Palisades Center
SHOPPING CENTER LEASE
LEASE AGREEMENT made this 27th day of July, 1998, by and between the
following parties (the "Parties"):
LANDLORD: EklecCo
a partnership organized and existing under the laws of the State of New York
("Landlord") with its mailing address for Notices (as defined in Section 21.01)
and a principal office at:
FOUR CLINTON SQUARE
SYRACUSE, NEW YORK 13202-1078
ATTENTION: LEGAL DEPARTMENT
and
TENANT: SILICON ENTERTAINMENT, INC.
a corporation organized and existing under the laws of the State of California
("Tenant"), with its mailing address for Notices and a principal office and
place of business at:
10401 Bubb Road
Cupertino, California 95014
Attention: Janet Setcavage Woods
Tenant's Federal Tax Identification: 77-0389433.
THE HEADINGS SET FORTH IN THIS LEASE ARE FOR ORGANIZATIONAL PURPOSES ONLY AND
SHALL NOT AFFECT ANY LEGAL RIGHTS OR OBLIGATIONS.
1
<PAGE> 11
- -------------------------------------------------------------------------------
ARTICLE 1 PREMISES
- -------------------------------------------------------------------------------
1.01 PREMISES
(a) Landlord demises and leases to Tenant and Tenant rents from Landlord
those certain premises located in the Palisades Center (the "CENTER") in the
Town of Clarktown, County of Rockland, State of New York and shown on EXHIBIT
"A-1" attached and made a part of this Lease, consisting of approximately 5,700
square feet, (the "PREMISES"). The Premises shall not be deemed to include the
land lying under the Premises' location, or the exterior walls or roof of the
building in which said Premises are located, or any area beyond the lease line
of any interior demising wall. Landlord reserves the use of said land, walls and
roof of the building, together with the right to install, maintain, use, repair
and replace pipes, ducts, conduits, wires and structural elements leading
through the Premises in locations which will not adversely interfere with
Tenant's use of the Premises in a material way.
(b) Within sixty (60) days after Landlord's delivery of possession to
Tenant pursuant to the terms of this Lease, Tenant may, at its sole cost and
expense, have the size of the Premises verified by an independent architect of
Tenant's choice. For purposes of this verification, the square footage of the
Premises shall be measured from the midpoints of any interior walls shared in
common with another tenant, and from the outside face of any exterior walls of
the buildings. In the event that such verification reveals a discrepancy between
the measured size of the Premises and the size of the Premises set forth in
Section 1.01(a) of this Lease, and Landlord and Tenant are unable to agree upon
the square footage for purposes of this Lease, an independent architect
acceptable to Landlord and Tenant (the cost of which shall be divided equally
between Landlord and Tenant) shall measure the Premises in the manner set forth
above. In the event that Tenant's architect, Landlord or its architect, and the
independent architect are unable to agree upon the square footage of the
Premises for purposes of this Lease, the dispute shall be submitted to
arbitration pursuant to Section 23.18 hereof. In the event the square footage of
the Premises as determined in accordance with the methodology set forth in
Section 1.01(b) above varies from the square footage set forth in Section
1.01(a) above, Landlord and Tenant agree to execute a lease modification
agreement (effective retroactive to the Term Commencement Date) adjusting the
square footage of the Premises, and if necessary appropriately adjusting the
Rent, and those items of Additional Rent to the extent that such Additional Rent
was originally calculated on a pro rata square foot basis. Any necessary
payments or reimbursements shall be paid within thirty (30) days after the full
execution of the lease modification agreement.
1.02 CENTER
The Center includes (i) the parcel(s) of land and improvements referred to
as "LANDLORD'S TRACT" generally depicted on the plan (the "SITE PLAN") attached
and made a part of this Lease as EXHIBIT "A," whether owned in fee or ground
leased by Landlord and (ii) the parcel(s) of land and improvements, if any,
generally depicted on EXHIBIT "A" as "REA PARCEL" made available for use by any
reciprocal construction operating and easement agreement ("REA"). Landlord
reserves the right to add to or sever the lease, the ownership of or title to
any portion of the Center or to add to or reduce the size of any REA Parcel at
any time. No representation is made or implied that Landlord has title to the
Premises, the Landlord's Tract or REA Parcel at the time of execution of this
Lease. Landlord, in its sole and absolute discretion, reserves the right to
expand or remodel the Center and to change the configuration, size and
dimensions of the Center, including without limitation, the number, location
and dimensions of buildings, parking areas, driveways, entrances, exits and
landscaped areas, the number of floors in any of the buildings, the dimensions,
identity, and type of stores or tenancies, and, as provided in Section 7.02,
the "COMMON AREAS" (as defined in Section 7.01).
- -------------------------------------------------------------------------------
ARTICLE 2 TERM OF LEASE
- -------------------------------------------------------------------------------
2.01 COMMENCEMENT OF TERM
(a) Subject to Section 23.04 below and other delays solely caused by
Landlord, the term of this Lease shall commence on the earlier of the date
Tenant opens for business in all or any part of the Premises, or one hundred
twenty (120) days following the later of the date (i) Landlord delivers
possession of the Premises to Tenant in accordance with Section 5.01 below, or
(ii) Tenant receives any special permit(s) required for the permitted use set
forth in Section 6.01 below, provided Tenant uses diligent, good-faith efforts
to obtain such permit(s) on the earlier date possible (the "TERM COMMENCEMENT
DATE"). Tenant acknowledges the importance to Landlord and the tenants of the
Center of Tenant's opening for business to the public on the earliest Term
Commencement Date.
(b) Promptly after the Term Commencement Date, Landlord shall forward to
Tenant and Tenant shall execute a certificate in recordable form pursuant to
applicable state law (a "TERM COMMENCEMENT CERTIFICATE") annexed hereto and
made a part thereof in EXHIBIT "B", memorializing the Term Commencement Date.
(c) Landlord shall use commercially reasonable efforts to deliver
possession of the Premises to Tenant with Landlord's Work
2
<PAGE> 12
complete on or before August 1, 1998. If the Premises shall not be delivered to
Tenant with Landlord's Work complete on or before September 15, 1998 and Tenant
shall not have otherwise accepted possession of the Premises, then Tenant may at
any time thereafter terminate this Lease by three (3) days' Notice to Landlord
delivered prior to Landlord's delivery of the Premises with Landlord's Work
complete. If Landlord shall fail to complete Landlord's Work on or before August
1, 1998, Tenant may accept possession of the Premises and complete Landlord's
Work. Within twenty (20) days after Landlord's receipt of invoices for such work
performed by Tenant, Landlord shall reimburse for the actual out-of-pocket costs
incurred by Tenant to complete Landlord's Work.
2.02 TERM OF LEASE
The term of the Lease (the "TERM") shall expire on the last day of the
seventh (7th) Lease Year (as defined in Section 3.12 below) (the "TERMINATION
DATE"), unless earlier terminated pursuant to the provisions of this Lease.
If the Termination Date occurs during the period October 1 through the
last day of December, the Parties agree that the term shall be extended and the
Termination Date shall be the immediately succeeding January 31.
2.01 SURRENDER OF PREMISES
On the expiration or earlier termination of this Lease, Tenant agrees,
without necessity of any notices from Landlord (statutory or otherwise), to
surrender the Premises in accordance with Articles 9 and 13 below, in broom
clean condition and in good order and repair, subject only to reasonable wear
and tear.
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ARTICLE 3 RENT
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3.01 RENT
(a) Except as set forth in Section 23.25 below, Tenant agrees to pay
Landlord throughout the Term, without diminution, abatement, deduction or
set-off whatsoever and without prior Notice or demand, a rent ("RENT"), in the
annual amount of [***] payable in advance, in equal monthly installments of
[***] ("MONTHLY RENT") each upon the first day of each calendar month throughout
the Term.
(b) If the Term shall commence upon a day other than the first day of a
calender month or if the Term shall terminate upon a day other than the last day
of a calender month, then the Monthly Rent for such partial month shall be
prorated on a per diem basis.
(c) Rent shall include all Tenant occupancy costs assessed by Landlord,
EXCEPT: Percentage Rent pursuant to Section 3.03 below, Opening Assessment
pursuant to Section 3.05 below, Tenant's Allocable Share of Real Property Taxes
pursuant to Article 4 below, Energy and Utility charge pursuant to Article 8
below, and Additional Rent as that term is defined and applied throughout this
Lease.
(d) As a material inducement to Tenant to enter into this Lease for
Premises Landlord agrees to provide to Tenant an allowance in the amount of
[***] (the "ALLOWANCE") to be utilized by Tenant to defray a portion of the
costs of constructing, staffing and opening the Premises for business. [***] of
the Allowance will be paid by Landlord to Tenant in the form of an abatement of
the Rent beginning on the Term Commencement Date and continuing until Tenant has
received the full amount of the Allowance. The remaining [***] of the Allowance
shall be paid by Landlord to Tenant in cash upon the later of (i) the date
Tenant opens for business within the Premises, or (ii) Landlord's receipt of a
duly executed lien waiver from Tenant's General Contractor with an affidavit
stating all contractors have been paid in full. Tenant acknowledges and agrees
that notwithstanding Tenant's receipt of the payment of the Allowance beginning
with the Term Commencement Date, the Allowance shall be deemed by the Parties
hereto to be earned ratable over the term of this Lease. In the event that this
Lease is terminated by Landlord following an Event of Default, then in addition
to all remedies otherwise available to Landlord under this Lease upon such
termination, Tenant shall pay to Landlord an amount equal to the unamortized
portion of Allowance computed on a straight line basis over the term of this
Lease.
3.02 RENT INCREASES
Rent shall be increased by [***] annually on a compounding basis,
commencing January 1, 2000 and on each January 1 thereafter throughout the Term.
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(a) In addition to Rent, Tenant shall pay to Landlord throughout the Term
an amount ("PERCENTAGE RENT") which shall be equal to [***] ("RIDES PERCENTAGE
PAY") of Tenant's "GROSS RECEIPTS" (defined in Section 3.04 below) derived from
Tenant's simulator rides in excess of [***] (the "RIDES BREAKPOINT"), and [***]
("MERCHANDISE PERCENTAGE PAY") of Tenant's Gross Receipts from the sale of
merchandise in excess of [***] (the "MERCHANDISE BREAKPOINT"). The Breakpoints
shall be fixed throughout the Term.
(b) Percentage Rent, if any, shall be paid by Tenant to Landlord, in
quarter-annual installments computed on all Gross Receipts during each three
(3) month period of the term hereof (i.e., periods from January 1 through March
31; April 1 through June 30; July 1 through September 30; and October 1 through
December 31 (collectively, the "Quarter-Annual Periods")) in excess of
one-quarter (1/4) of both the Rides Breakpoint and the Merchandise Breakpoint,
respectively. Any Percentage Rent becoming due shall be payable on or before
the applicable January 15, April 15, July 15 and October 15 next following the
applicable quarter end of each Lease Year. In the event that the total of the
quarterly installments of Percentage Rent for any Lease Year does not equal the
annual Percentage Rent computed in accordance with the formula set forth in
Subsection 3.02(a), then, on or before February 15 following each such Lease
Year, Tenant shall pay to Landlord any deficiency, or Landlord shall refund any
overpayment to Tenant within fifteen (15) days after receipt of Tenant's Annual
Statement of Gross Receipts.
(c) Notwithstanding anything contained in this Section 3.03 to the
contrary, the Percentage Rent for any Lease Year having less than twelve (12)
full months shall be based on the Gross Receipts for the twelve (12) month
period immediately following the Commencement Date (as to the first Lease
Year) and for the twelve (12) month period immediately preceding the expiration
or earlier termination of the Lease (as to the final Lease Year). The
Percentage Rent due for such period shall be established by multiplying the
Percentage Rent which would have been due for such twelve (12) month period had
the Gross Receipts for such period been multiplied by the applicable percentage
in this Lease, by a fraction, the numerator of which is the number of days in
such partial Lease Year and the denominator of which is 365.
3.04 GROSS RECEIPTS DEFINED
(a) The term "GROSS RECEIPTS" as used in this Lease is defined to mean
receipts from sales of products or services by Tenant exclusively at, in, on,
or from the Premises (including any sales made via personal computer, "Home
Shopping" television sales, catalog, direct mail telephone or electric sales)
whether such sales be evidenced by check, contract rights, credit, charge
account, exchange or otherwise, and shall include, but not be limited to, the
amounts received from the sale or rental of goods, wares and merchandise, and
from fees and charges for the use by customers of Tenant's simulators and
racing entertainment center, and for services performed on or off the Premises
to the extent relating to sales made from the Premises, together with the
amount of all orders taken or received at the Premises, whether such orders are
filled from the Premises or elsewhere, and whether such sales are made by means
of merchandise or other vending devices in the Premises. Each charge or sale
upon installment or credit shall be treated as a sale for the full price in the
month during which such charge or sale shall be made, irrespective of the time
when Tenant shall receive payment (whether full or partial) therefore.
(b) Notwithstanding anything herein to the contrary the following shall
not be included in Gross Receipts:
(1) Sales of merchandise returned and claimed to be defective or
unsatisfactory, PROVIDED such sales have been included in Gross
Receipts and deducted from Gross Receipts shall be the sales
price of merchandise returned by customers for exchange, PROVIDED
that the sales price of merchandise delivered to the customer in
exchange is included in Gross Receipts.
(2) The amount of any sales tax, so-called luxury taxes, excise
taxes, gross receipt taxes and other taxes now or hereafter
imposed upon the sale or value of merchandise or services,
whether added separately to the selling price of merchandise or
services and collected from customers or included in the retail
selling price use, imposed by any federal, state, municipal or
governmental authority directly on sales and collected from
customers.
(3) No franchise or capital stock tax and no income or similar tax
based upon income or profits as such shall be deducted from Gross
Receipts in any event whatsoever.
(4) The sales price of merchandise returned and accepted for full
credit or the amount of the cash refund or allowance made
thereon.
(5) The sums and credits received in settlement of claims for loss or
damage to merchandise or other property is located at the
Premises.
(6) The consideration received in connection with a sale of inventory
which occurs other than in the ordinary course of Tenant's
business, including, but not limited to, a sale in bulk or to a
jobber, liquidator or assignee.
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(7) Receipts for public telephones and vending machines used
exclusively by Tenant's employees.
(8) Bankcard discounts (e.g., Visa, MasterCard, etc.), interest,
carrying charges, or other finance charges in respect of sales
made on credit.
(9) Sales of fixtures, trade fixtures, or personal property that are
not merchandise held for sale at retail.
(10) The amount of any discount in sales employees of Tenant, not to
exceed [***] of Gross Receipts in any Lease Year.
(11) The amount of any discount in sales made to senior citizens.
(12) Revenue received from mailing, alterations, delivery or other
services performed on a non-profit basis for the benefit of
customers.
(13) Tenant's accounts receivable, not to exceed [***] of Gross
Receipts in any Lease Year, which have been determined to be
uncollectible for federal income tax purposes during the
applicable Lease Year, provided however, that if such accounts
are actually collected in a later Lease Year, the amount shall
be included in Gross Receipts for such later Lease Year.
(14) Amounts received for merchandise transferred to any other place
of business of Tenant (or its subtenants, concessionaires and/or
licensees) or to any business organization affiliated with
Tenant wherever located, provided such merchandise is not used
to fill a sale made in, at, or from the Premises.
(15) The amount of any discounts given for promotional coupons that
are redeemed from time to time.
(16) Gift certificates until such time as the certificates are
redeemed.
(17) Amounts received in connection with remote site promotional
activities.
(18) Promotional fees earned by Tenant with respect to goods or
services offered for sale.
(19) Rents, subrents or other consideration received in connection
with an assignment, sublease, license, concession or other
transfer of any portion of the store (however, Gross Receipts of
any such transferee shall be included), including license fees
otherwise payable by Tenant in connection with a third party
license agreement.
(c) In the event any portion of the Premises shall be operated by one or
more of Tenant's departments or divisions, or if Tenant shall, in accordance
with all of the terms, covenants, and conditions of this Lease, assign this
Lease or enter into any sublease, license, concession or other use or occupancy
agreement with respect to all or any part of the Premises, then there shall be
included in the Gross Receipts for the purpose of determining the Percentage
Rent payable under this Lease all of the Gross Receipts generated by such
departments or divisions, subtenants, assignees, licensees, concessionaires and
all such other persons, individuals and/or entities (collectively referred to as
"AFFILIATES") generating such Gross Receipts. It being the intention of the
Parties that all Gross Receipts generated at or from the Premises shall be
included in Gross Receipts for the purpose of determining Percentage Rent as
defined herein. Tenant agrees that any assignment, sublease, license or
concession, use or occupancy agreement entered into by Tenant with any
Affiliates shall contain provisions setting forth the procedure for determining,
recording and reporting Gross Receipts by Affiliates which are subject to the
review and approval of Landlord. Such provisions shall contractually obligate
Affiliates to the same procedures set forth in this Lease for determining,
recording and reporting Gross Receipts.
3.05 OPENING ASSESSMENT
(a) Tenant shall pay an opening assessment to Landlord in the manner set
forth in Section 3.05(b) below. The opening assessment, at Landlord's sole
discretion, shall be used for the purpose of advertising and promoting the
Center in order to sustain and improve the market penetration and relations of
the Center and related administrative expenses. Landlord may utilize its
employees or independent agencies to formulate or implement such opening
programs.
(b) Upon the Term Commencement Date, Tenant shall pay to Landlord, an
amount equal to the sum of the "Tenant Area" of the Premises (defined in Section
23.03 below), multiplied by [***] ("TENANT'S OPENING ASSESSMENT"). Tenant's
Opening Assessment shall be paid within ten (10) days after demand.
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3.06 TENANT'S BOOKS AND RECORDS
Tenant agrees to prepare and keep on the Premises or at its principal
office for a period of not less than three (3) years following the end of each
Lease Year, accurate books of account, and electronic and hard document records
of daily Gross Receipts, including without limitation, all federal, state and
local tax returns, and copies of relevant contracts, insurance documentation,
checks, vouchers, inventory records, dated cash register tapes, sales slips and
such other documentation as would enable Landlord to make a full and complete
audit of Gross Receipts ("BOOKS AND RECORDS"). Landlord and Landlord's
authorized representatives shall have the right to examine Tenant's Books and
Records during regular business hours. Tenant agrees that all Gross Receipts
shall be registered at the time each sale or transaction is made in cash
registers or other devices or other electronic or technology based systems,
containing locked-in cumulation capacity, such systems to be consistent with
Tenant's normal business practices.
3.07 REPORTS BY TENANT
Within twenty (20) days after the end of each quarter as set forth in
Section 3.03(b) above, or a portion thereof, during the Term, Tenant shall
furnish to Landlord a written statement setting forth the amount of Gross
Receipts and an itemization of any deductions or exclusions taken from Gross
Receipts for such previous quarter. Tenant also agrees that it will furnish to
landlord within sixty (60) days after the end of each Lease Year or Partial
Lease Year, an annual statement, showing in reasonable detail the amount of
Gross Receipts and an itemization of any deductions or exclusions relating to
such Lease Year or Partial Lease Year and the amount of Percentage Rent due and
payable to Landlord ("ACTUAL PERCENTAGE RENT"). Each quarterly and annual
statement required by this Section 3.07 shall be certified by Tenant or one of
Tenant's executive officers and shall be subject to further certification as
provided in Section 3.08 below.
In the event Tenant fails to furnish Landlord with a quarterly or annual
statement within the required time period and in the manner set forth in this
Section 3.07, then the Gross Receipts for such quarter or year, shall, at
Landlord's option, be deemed to be equal to one hundred ten percent (110%) of
Tenant's highest previously reported monthly or annual Gross Receipts, and if
such failure continues for ten (10) days following Notice from Landlord, Tenant
shall pay to Landlord, as liquidated damages, the sum of [***] per month until
such statement is received. In addition, if Tenant is delinquent in furnishing
Landlord with quarterly statements of Gross Receipts for two (2) consecutive
months or is delinquent in furnishing Landlord the annual statement of Gross
Receipts, and such failure continues for ten (10) days following Notice from
Landlord, any subsequent "AUDIT" (defined in Section 3.09 below) the Landlord
conducts shall be at Tenant's expense.
3.08 NON-WAIVER
The acceptance by Landlord of payments of Percentage Rent and statements
of Gross Receipts shall be without prejudice to Landlord's right to examine
Tenants Books and Records in order to verify any amounts payable to Landlord,
subject to Section 3.09 below.
3.09 LANDLORD'S RIGHT TO EXAMINE AND AUDIT BOOKS AND RECORDS
Landlord may conduct, at its option, at any reasonable time upon seven (7)
days prior written notice to Tenant, a complete Audit of Tenant's Books and
Records, including the books and records of any subtenant, operator,
concessionaire or licensee or of any other store operated by Tenant (the
"AUDIT") for the period covered by any statement required to be furnished by
Tenant as set forth above. In the event the Audit discloses that Tenant has
intentionally or fraudulently understated Gross Receipts by [***] or more,
Tenant agrees to pay to Landlord the reasonable cost of such examination and
audit, plus a [***] administrative fee. In the event that such Audit discloses
that Tenant has intentionally or fraudulently understated Gross Receipts by
[***] or more, then, in addition to the foregoing, at Landlord's option, the
Term shall expire ten (10) days after Tenant's receipt of a termination Notice
from Landlord. Any additional Percentage Rent found to be due and owing to
Landlord as a result of any Audit shall immediately be due and payable to
Landlord and interest shall accrue on the unpaid portion thereof at a per annum
rate ("DEFAULT RATE") equal to the lesser of (i) the maximum interest rate
permitted by law, or (ii) the prime rate of interest from time to time charged
by Citibank, N.A. (or its successors) to its most credit worthy corporate
borrowers, plus [***].
3.10 DELINQUENT PAYMENTS
(a) If during the Term Tenant fails to pay the full amount of the Monthly
Rent, Percentage Rent or "ADDITIONAL RENT" (defined in Section 3.11 below)
within five (5) days when the same was due and payable, then interest equal to
the Default Rate, shall accrue on the unpaid portion from and after the date on
which any such sum shall be due and payable, and such interest, together with a
late charge of [***] for each past due payment to cover the extra expense
involved in handling such delinquency, shall be paid to Landlord at the time of
payment of the delinquent sum. Landlord shall have the right to apply any
payments made by Tenant first to any deficiency in the payment of the interest
and administrative charges due.
(b) Any payment to be made by Tenant under this Lease shall be deemed to
have been paid upon the date that it is received by Landlord.
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(c) The provision for a late charge and interest herein shall not be
deemed to grant Tenant any grace period or extension of time or prevent
Landlord from exercising any of its rights under this Lease.
(d) Tenant shall pay to Landlord an administrative fee of [***] for each
and every check submitted by Tenant which is dishonored. If Landlord receives
from Tenant two or more checks which have been dishonored, all payments from
Tenant thereafter required under this Lease, shall at Landlord's option, be
either certified, cashier's checks or wire transfers.
3.11 ADDITIONAL RENT
All rents, charges, costs, expenses, reimbursements, fees, interest and
other payments to be made by Tenant to Landlord under this Lease, other than
Rent and Percentage Rent, shall be deemed to be "ADDITIONAL RENT."
3.12 DEFINITION OF LEASE YEAR AND PARTIAL LEASE YEAR
The term "LEASE YEAR" is defined to mean a period of twelve (12)
consecutive calendar months commencing on the first day of January with the
"FIRST LEASE YEAR" commencing on the first January 1 of the Term following the
Term Commencement Date, unless the Term Commencement Date is a January 1, in
which case, the Term Commencement Date and the commencement date of the First
Lease Year shall be the same. Any portion of the Term which is less than a
Lease Year shall be deemed a "PARTIAL LEASE YEAR" and computations requiring
proration shall be made on a per diem basis using a 365 day year. Landlord
reserves the right to designate and change the beginning and ending day of the
Lease year, Notice of which shall be given to Tenant.
3.13 PLACE FOR PAYMENTS
(a) Tenant shall deliver to Landlord all payments of Monthly Rent,
Percentage Rent and Additional Rent at the office of Landlord shown at the
beginning of this Lease, or such other place as may be designated in writing by
Landlord. Nothing contained in this Section 3.13 shall relieve Tenant of the
obligation to pay by the dates due, any and all such payments payable by Tenant
under this Lease.
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ARTICLE 4 TAXES
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4.01 REAL PROPERTY TAXES
(a) Landlord shall pay to the appropriate taxing authority, on behalf of
Tenant, throughout the Term (beginning with the Term Commencement Date), all
real property taxes (which shall include real property tax assessments, sewer
assessments, parking and environmental surcharges, and any other governmental
charges and assessments, general and special, ordinary and extraordinary) which
may be levied or assessed against land or improvements located in the Center by
any lawful authority in effect on the Term Commencement Date of this Lease
(collectively "REAL PROPERTY TAXES"). For each Lease Year and Partial Lease
Year throughout the Term, Tenant shall reimburse and pay to Landlord an amount,
("TENANT'S ALLOCABLE SHARE OF REAL PROPERTY TAXES") equal to the product of
Real Property Taxes paid or payable by Landlord during such Lease Year or
Partial Lease Year, multiplied by Tenant's Allocable Share (defined in Section
23.03 below). The amount, charges or assessments required to be paid by
Landlord, or any tenant or occupant of the Center, pursuant to any Payment in
Lieu of Tax Agreement or any other agreement which Landlord makes, to such
taxing authorities, municipal agencies or other governmental bodies in lieu of
taxes, ("PILOT") entered into in connection with the Center shall be considered
for the purposes of this Lease to be included within the definition of Real
Property Taxes.
Tenant shall pay to Landlord, as Additional Rent, all sums due pursuant
to this Article 4, in monthly installments, in advance and without Notice, on
or before the first day of each month during the Term in an amount estimated by
Landlord, such that Landlord will have received the full amount of Tenant's
Allocable Share of Real Property Taxes in time for payment to the applicable
taxing authority when due. In the event Landlord chooses to escrow Real
Property Taxes, Landlord may, but shall not be obligated to, use the amount
required to be placed in an escrow account as a basis for its estimate of the
monthly installments due from Tenant hereunder. Landlord shall furnish Tenant
with a written statement of the actual amount of Tenant's Allocable Shares of
Real Property Taxes based upon the tax bills or assessment bills for each tax
fiscal year. If the total amount paid by Tenant under this Section 4.01(a) for
any tax fiscal year during the Term is less than the actual amount due from
Tenant for such year as shown on such statement, Tenant shall pay to Landlord
the deficiency within thirty (30) days after demand by Landlord therefor. If
the total amount paid by Tenant for any year exceeds the amount due from Tenant
for such year, Tenant shall be entitled to offset the excess against payments
next thereafter becoming due under this Section 4.01(a). For the tax fiscal
years in which this Lease commences Tenant shall pay to Landlord, as Additional
Rent and within thirty (30) days after receipt of a bill therefor, the amount
of Tenant's Allocable Share of all Real Property Taxes, computed as of the Term
Commencement Date for the balance of the then current tax fiscal year(s). With
respect to the tax fiscal year in which this Lease terminates, Tenant's
liability for Tenant's Allocable Share of Real Property Taxes for such year
shall be subject to a
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pro rata adjustment based on the appropriate number of days of said tax fiscal
years. A copy of a tax bill or assessment bill submitted by Landlord to Tenant
shall at all times be sufficient evidence of the amount of Real Property Taxes
to which such bill relates.
(b) If Tenant's Premises are separately assessed, then Tenant agrees to
pay to Landlord, as Additional Rent, the amount of the Real Property Taxes
separately assessed against the Premises, including the land lying thereunder,
plus Tenant's Allocable Share of Real Property Taxes assessed against the
Common Areas of the Center. Such amount shall be calculated on the basis of the
number of days (from the Term Commencement Date) remaining in each such current
tax fiscal year.
(c) Landlord may seek a reduction in the assessed valuation (for Real
Property Tax purposes) of all or any part of the Center by administrative or
legal proceeding. Tenant shall pay to Landlord, Tenant's Allocable Share of
Landlord's costs for said proceedings, PROVIDED Landlord has been successful in
obtaining a reduction in the assessed valuation of all or any part of the
Center, including attorneys' fees, appraisal fees and other similar and
necessary expenses, within thirty (30) days after Tenant's receipt of a
statement from Landlord therefor. Tenant's Allocable Share of such costs shall
be computed under Section 23.03(a) below. Landlord shall reimburse Tenant for
Tenant's Allocable Share of any refund of Real Property Taxes (after deducting
any unpaid portion of Tenant's Allocable Share of Landlord's costs for such
proceedings) resulting from any proceeding for which Tenant has paid Tenant's
Allocable Share of Real Property Taxes.
(d) Should any alteration or improvement performed by or for Tenant
during the Term cause an increase in assessment, Tenant shall pay to Landlord
the full cost of all Real Property Taxes resulting from such increase in
assessment. Any amount paid separately hereunder by Tenant to Landlord shall be
in addition to any amounts paid by Tenant pursuant to Section 4.01(b) above.
(e) Should any governmental taxing authority acting under any present or
future law, ordinance or regulation, levy, assess or impose a tax, excise,
surcharge or assessment upon or against the rents payable by Tenant to
Landlord, or upon or against the Common Areas, whether by way of substitution
for or in addition to any existing Real Property Tax or otherwise, Tenant shall
be responsible for and shall pay annually, Tenant's Allocable Share of such tax
in the manner provided in Section 4.01(a) above.
4.02 TENANT'S TAXES
Tenant shall, at all times, be responsible for and pay, before
delinquency, all municipal, county, state or federal taxes charged against
Tenant's income, sales, fixtures, furnishings, equipment, stock-on-trade or
other personal property of any kind owned, installed or used in or on the
Premises, and any tax now or hereafter charged against Tenant on any other
basis.
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ARTICLE 5 CONSTRUCTION AND FINANCING
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5.01 LANDLORD'S WORK
Prior to the Term Commencement Date, Landlord shall perform all items of
"LANDLORD'S WORK" defined below at Landlord's sole expense and in a good and
workmanlike manner, in compliance with all Governmental Orders (defined in
Section 18.01 below), and the TENANT INFORMATION PACKET separately provided to
Tenant. The Tenant Information Packet provides for procedures and mechanisms,
including, without limitation: (i) notice of turnover, (ii) design sequence,
(iii) dates and requirements, (iv) change orders, chargebacks, documentation
and Tenant cooperation. Landlord hereby warrants to Tenant that to Landlord's
actual knowledge the Premises do not contain any asbestos-containing materials
or other reportable amounts of hazardous or toxic materials.
Any item of work requested by Tenant or necessitated by Tenant's space
plans or business operation, or change orders for additional or untimely
requested work not included within LANDLORD'S WORK shall be performed by
Landlord at an additional cost to Tenant, plus ten percent (10%) for Landlord's
profit and twelve percent (12%) for Landlord's administration. Anything
contained in this Lease to the contrary notwithstanding, Tenant shall not be
obligated for the payment of the profit or administration charges for any
structural work performed by Landlord beyond Landlord's Work, or for any work
which this Lease requires be performed by Landlord's designated contractor, and
Tenant shall only be obligated for the payment of Landlord's actually incurred
costs. Tenant shall not incur any expense for Landlord's Work, except as
specifically set forth in this Lease. Except as explicitly set forth in this
Lease, Tenant shall be permitted to perform all non-structural work within the
Premises.
LANDLORD'S WORK: A building structural shell of structural steel and metal
floor decking ready for concrete, uninsulated precast exterior wall(s), and a
roof (a "STRUCTURAL SHELL"), more specifically defined as follows:
FRAME: Structural frame of steel, concrete or masonry construction, or any
combination thereof, in accordance with applicable national,
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state and local codes.
ROOF: A watertight roof that is designed by Landlord which will be in
accordance with applicable codes.
EXTERIOR WALL: Exterior walls which will be of non-combustible
construction as designed by Landlord.
FLOOR SYSTEM: Landlord shall install a composite light weight concrete
floor slab over metal decking to meet Landlord's design criteria and furnished
floor elevation to withstand a live load of one hundred (100) pounds per square
foot with an allowance for live load reduction in accordance with applicable
codes.
FIRE PROTECTION: Landlord shall furnish and install, in accordance with
all applicable codes, the appropriate fire rating for all structural beams and
columns within the Premises.
SERVICE CORRIDOR PARTITIONS AND WALLS, PARTITIONS, FINISHES AND DOORS:
Landlord shall design and construct wall partitions dividing Tenant's Premises
from adjacent service corridors providing sheetrock only on the corridor side
including fire wall finishes. Landlord and Tenant shall coordinate the
installation of the sheetrock for the demising walls, including sheetrock, such
that Tenant may install its electrical service and other items to be located
within the walls of the Premises prior to the sheetrock installation.
ELECTRICAL SERVICE: Landlord shall provide and install electrical conduit
from Landlord's electrical room located within the Center to Tenant's Premises.
Landlord shall make provisions for a 480/277 volt 3 phase, electrical service
providing Tenant with at least a 600 amp service to the Premises. Any
additional work that would require Tenant's electrical contractor to enter the
Center electrical room shall be performed only by an electrical contractor,
properly licensed and approved by Landlord, at Tenant's sole cost and expense.
PLUMBING: Landlord shall provide a four inch (4") sanitary waste line and
a one inch (1") water line capped within or adjacent to the Premises.
DEMOLITION: Landlord shall remove the glass window facing Dave & Busters
near the fire hose cabinet and close with dry wall; remove all interior
existing wall partitions; remove all perimeter door openings and close with dry
wall; remove roll up door at angled storefront; and remove two (2) glass
windows at angled storefront. Landlord shall not remove the HVAC system
components servicing the front of the Premises.
5.02 TENANT'S WORK
(a) Prior to the Term Commencement Date, Tenant shall at its sole cost and
expense (but subject to Landlord's payment of the Allowance) perform "TENANT'S
WORK" defined below in compliance with all Governmental Orders and in accordance
with the Tenant Information Packet. Any item of Tenant's Work which Tenant
requests Landlord to perform on Tenant's behalf and which Landlord agrees to
undertake shall be provided to Tenant at Landlord's cost, plus [***] for profit
and [***] for administration. Anything contained in this Lease to the contrary
notwithstanding, Tenant shall not be obligated for the payment of the profit or
administration charges for any structural work performed by Landlord beyond
Landlord's Work, or for any work which this Lease requires be performed by
Landlord's designated contractor, and Tenant shall only be obligated for the
payment of Landlord's actually incurred costs. Tenant shall not incur any
expense for Landlord's Work, except as specifically set forth in this Lease.
With respect to Tenant's Work as defined in Section 5.02, Tenant shall be
permitted to perform all non-structural work within the Premises without further
consent or approval from Landlord.
Tenant represents (i) its ability to perform Tenant's Work and (ii)
warrants that no delay in its performance shall cause, nor shall Landlord's
undertaking of any portion of Tenant's Work be deemed to cause, any delay or
postponement in the Term Commencement Date. Tenant shall not be obligated to
commence Tenant's Work until such time Landlord delivers the Premises to Tenant
and such Premises are in a phase of "SUBSTANTIAL COMPLETION" (defined in
Section 5.02(c) below) excluding minor items of a cosmetic nature which do not
in any material respect interfere with Tenant's completion or use of the
Premises ("PUNCH LIST ITEMS").
Tenant will be required to perform all work above and beyond the
Structural Shell necessary and appropriate for the Tenant's build-out and
Tenant's operation. Tenant shall undertake and complete any and all work
necessary to address all national, federal, state, and local laws, rules,
ordinances, regulations and code requirements for the Premises necessary for a
schedule consistent with the opening of the Center. Landlord will not be
reviewing Tenant's plans and specifications for the Premises. Tenant hereby
covenants that Tenant's plans and specifications for the Premises will comply
with all applicable New York State and local codes and regulations and the
Palisades Center Tenant Information Package. Landlord hereby waives any right
to review Tenant's aesthetic design. Tenant acknowledges that certain on-site
work at the Center is subject to a Project Labor Agreement (the "PLA") by and
between and among Landlord's Construction Project Manager, the Building and
Construction Trades Council of Rockland County, and signatory Local Unions.
Tenant agrees that all Tenant Work performed or to be performed which is
covered by the PLA shall be performed under and pursuant to the terms of the
PLA. In furtherance thereof, prior to undertaking or commissioning any of
Tenant's Work and within fifteen (15) days of the execution date of this Lease
(as stated on the cover page
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hereof) Tenant shall execute a signature page which will become part of the PLA
signifying Tenant's agreement to be bound by the terms of the PLA.
Tenant's Work includes the following:
WALLS, PARTITIONS, FINISHES AND DOORS: In addition, Tenant shall install
and finish all demising walls beyond the demising walls installed by Landlord,
including all insulation (if required), blocking, bracing doors, including
doors leading into the service corridors, exterior doors, (in precast or other)
frames and hardware, paint and finishes.
FIRE PROTECTION: Tenant shall maintain, in accordance with all applicable
codes, the appropriate fire rating for all structural beams and columns within
the Premises as installed by Landlord. If the Premises is 50,000 square feet or
greater, Tenant shall provide and install a fire alarm system subpanel
compatible with Landlord's fire alarm and building management systems which is
connected with the Center's main fire alarm system. If the Premises is less
than 50,000 square feet, Tenant shall, at its sole cost and expense, engage the
services of Landlord's fire alarm system contractor to provide and install,
where applicable, smoke detection devices which are compatible with, and shall
be connected to, the Center's main fire alarm system. Tenant shall modify, at
its sole cost and expense, the Landlord installed base sprinkler grid with
heads in accordance with applicable codes based on Tenant's plans for the
Premises. Tenant shall construct, from the bottom of the above metal floor
decking, along the entire length of Tenant's storefront, a smoke curtain with a
one hour fire rating which shall measure thirty-six inches (36") in height.
HEATING, VENTILATING AND AIR CONDITIONING: A complete HVAC system,
including a smoke control system, and connection to utility billing system as
required by the applicable Public Utility or Energy Provider, and any equipment
and/or controls necessary to interface and be compatible with the HVAC units.
Tenant shall be responsible, where applicable, for installing all condensate
piping to Tenant's HVAC system.
a) OUTSIDE AIR DUCT SYSTEM: Landlord, at Landlord's sole cost and
expense, shall provide a system to supply outside air to Tenant's HVAC
equipment where necessary, and as required by the design of the Center with due
regard to the nature of the mechanical equipment provided.
b) TOILET EXHAUST: A toilet exhaust duct system will be provided, where
necessary, in accordance with the design of the Center. Each effected tenant
shall be required to connect to the system and shall be prohibited from making
separate roof penetrations. Where practical, tenants shall extend all vent and
exhaust piping through the roof, with roof penetrations to be made by
Landlord's designated roofing contractor at Tenant's expense.
PLUMBING: A master sanitary vent will be provided, where necessary, in
accordance with the design of the Center. Each effected Tenant shall be
required to connect to the system and shall be prohibited from making separate
roof penetrations. Where practical, tenants shall extend all vent and exhaust
piping through the roof, with roof penetrations to be made by Landlord's
designated roofing contractor at Tenant's expense. Tenant is responsible to
extend plumbing lines and provide a complete and operational plumbing system
within Tenant's Premises.
ELECTRICAL SERVICE: Installation, repair, maintenance and replacement of
all conduit, wiring, panel boards, junction boxes, electric meters, and
metering systems transformers, fixtures and equipment necessary to complete
Tenant's electrical, telephone, security and public address or sound system.
When designing its interior storefront display windows, Tenant shall install
two hundred (200) watts of electrical illumination for each lineal foot of
display window or frontage to the mall, which shall be located within the area
that is three feet (3'-0") from the interior or, as applicable, exterior of the
storefront of Tenant's Premises.
WATER SERVICES AND SERVICE HOOK-UP: Tenant shall directly make application
for and pay the appropriate fee to the applicable municipal water department to
obtain water services and a water meter, and sewer hook-up.
ROOF WORK: In order to maintain the integrity of the roof warranty, no
penetration or other roof work will be permitted unless such work is performed
by Landlord's designated roofing contractor. All such roof work shall be at
Tenant's sole cost and expense.
(b) Tenant agrees to obtain and maintain, or cause Tenant's contractors,
at Tenant's or Tenant's contractors expense, for so long as Tenant's Work
continues, owners and contractors protective liability insurance, public
liability insurance, builder's risk property insurance covering Tenant's Work,
and Workers' Compensation insurance, protecting from and against any and all
liability for death of or injury to persons or damage to property caused in or
about the Premises, or by reason of the construction of Tenant's Work. Tenant
shall furnish to Landlord certificates evidencing said coverage prior to the
commencement of Tenant's Work and insurance policies, required by this Section
5.02, shall comply with the provisions of Article 12 set forth below.
(c) The term "SUBSTANTIAL COMPLETION" shall define a certain phase in the
progress of Landlord's Work when such scope of work is sufficiently complete to
allow Tenant to occupy its Premises and commence Tenant's Work, including but
not limited to all utilities being available to the Premises. Landlord and
Tenant shall conduct a walk-through of the Premises within ten (10) days of
Landlord's delivery of
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possession to Tenant to identify any and all punch list items as well as any
and all major defects and incomplete items which materially impair Tenant's use
of the Premises or the completion of Tenant's Work. The Premises shall not be
deemed to be in a state of Substantial Completion until all such major defects
and incomplete items have been repaired or completed. In the event Tenant fails
to participate in said walk-through within ten (10) days of the date of
Landlord's delivery Notice, then the Premises shall be deemed to be in a state
of Substantial Completion as of the date of Landlord's delivery Notice.
5.03 PAYMENT
Any payment due or to be made by Tenant for any items of Tenant's Work
which Tenant requests Landlord to perform and which Landlord agrees to
undertake as provided in Section 5.02 above, shall be paid for by Tenant, as
Additional Rent, within ten (10) days after receipt of a bill therefore.
5.04 FINANCING
(a) Intentionally deleted.
(b) If Landlord can obtain approval of this Lease from a mortgagee for
the purposes of financing or refinancing only upon the basis of reasonable
modifications of terms and provisions of this Lease (the "FINANCING
MODIFICATIONS"), Landlord shall have the right to terminate this Lease if
Tenant refuses to approve any reasonable such modifications within thirty (30)
days after Landlord's request. The Financing Modifications shall not relate to
those provisions pertaining to size or location of the Premises, length of the
term, or amount of Rent, Percentage Rent or Additional Rent, the Allowance or
the Permitted Use, nor shall such modifications increase Tenant's obligations,
decrease Tenant's rights, or increase Tenant's financial obligations under this
Lease. If such right to terminate is exercised by Landlord, this Lease shall
thereafter be null and void, and neither Party shall have any liability to the
other by reason of such cancellation.
(c) Within fifteen (15) days following request by Landlord in connection
with any financing or sale of the Center, which request shall not be made more
than once per Lease Year, Tenant shall provide to Landlord financial statements
(audited or non-audited) for Tenant's last fiscal year, including a balance
sheet, sales reports and statements of income.
ARTICLE 6 TRADE NAME AND CONDUCT OF BUSINESS BY TENANT
6.01 USE OF PREMISES AND TRADE NAME
Throughout the Term, Tenant shall operate the Premises solely under the
trade name "NASCAR Silicon Motor Speedway" or "Silicon Motor Speedway" or, with
Landlord's approval, not to be unreasonably withheld, any other legally
permitted trade name, and use the entire Premises solely for the purpose(s) of
conducting an interactive entertainment center featuring among other things
racing simulators and other related retail and entertainment uses; such uses
may include but shall not be limited to the installation and operation of
simulators and the sale of auto racing, including NASCAR Silicon Motor Speedway
merchandise, NASCAR driver merchandise and other entertainment merchandise
related to NASCAR; the sale of hot and cold beverage and snack foods, and for
no other purpose whatsoever. Tenant shall use its reasonable efforts not to
place any food vending machines or other food sales area at the store front of
the Premises. Anything contained in this Lease to the contrary notwithstanding,
throughout the Term Tenant shall limit the display of merchandise to no more
than forty percent (40%) of the square footage of the Premises. Landlord hereby
represents and warrants to Tenant that Tenant's use of the Premises as
contemplated in this paragraph does not violate any exclusivity clause or other
agreement between Landlord and any other party, including any other Tenant of
the Center, and Landlord shall indemnify, defend, protect, and hold harmless
Tenant from any loss, liability, cost, expense, judgment, action or claim of
any such party arising from the inaccuracy of such representation and warranty.
Anything contained in this Lease to the contrary notwithstanding, Landlord's
consent shall not be unreasonably withheld for any change or addition to
Tenant's permitted use requested in writing by Tenant. Tenant hereby agrees
that the criteria which Landlord may use in determining whether or not to grant
such consent shall include, but not be limited to, (i) the impact such change or
addition may have on the tenant mix of the Center, (ii) whether such change or
addition violates any use restriction applicable to the Center, or (iii) the
compatibility such change or addition may have with a first-class
super-regional shopping center.
Notwithstanding anything to the contrary in this Section 6.01 of this
Lease, Tenant shall be entitled to use the Premises from time to time for
conducting the uses set forth in Section 6.01 for the exclusive use of groups
of private parties ("Private Events"). Tenant may while such Private Events are
in progress, temporarily restrict access by the general public to Tenant's
simulator rides, provided that the Tenant shall otherwise remain open to the
general public for the sale of merchandise and the sale of simulator ride
tickets for redemption by the public after any Private Event is concluded.
Gross Receipts in connection with Private Events shall be included in Gross
Receipts for purposes of calculating Percentage Rent. In connection with
Private Events, Tenant may serve food and beverage (including alcoholic
beverages) for on-premises consumption only, provided that Tenant obtains or
causes to be obtained all governmental licenses, approvals and permits required
in connection
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therewith and in the case of offering of any alcoholic beverages for
consumption within the Premises, Dram Shop or liquor liability insurance
coverage. For the preparation and serving of food and alcoholic beverages at
Private Events, Tenant shall engage, and cause third parties to use,
restaurants and food establishments located within the Center ("Center
Caterer"), provided that up to ten percent (10%) of the total number of Private
Events held during a Lease Year may be catered by non-Center Caterers and
provided, further, that Tenant shall not be required to use or cause to be used
Center Caterers for Private Events within the Center unless at the time of the
related Private Event there are at least three restaurants or other food and
beverage vendors in the Center offering catering services from the Center at
prices equal to or less than the then menu prices of such restaurant or vendor
and two of three of such Center Caterers are full service sit down restaurants
(such as by way of example and not limitation Rainforest Cafe, California Pizza
Kitchen, Dave & Busters, TGI Fridays, California Cafe, Legal Sea Foods, or
Macaroni Grill) and one of the three is either a full service restaurant or a
limited service restaurant, food court operator or other food and beverage
operator (such as by way of example and not limitation Johnny Rockets or
Sbarros). In the event that Tenant shall be in default of the immediately
preceding sentence and a Private Event is conducted in whole or in part by
other than a Center Caterer, then, as liquidated damages and not as a penalty,
the retail value of food and beverage provided by such third party shall be
included in the amount of Gross Receipts used to compute Percentage Rent
payable under this Lease on merchandise sold from the Premises. Any Private
Events which are held at times when the requirements set forth in the provisos
above concerning Center Caterers are not met shall be excluded from the total
number of Private Events held during any Lease Year for purposes of calculating
the ten percent (10%) permissible number of Private Events catered by
non-Center Caterers as described above.
6.02 TENANT'S OPERATING COVENANT
Subject to Section 23.04 below, Tenant shall occupy and be open for
business in the entire Premises, during not less than the hours of 10:00 a.m.
to 10:00 p.m. ("STANDARD MALL HOURS"), and shall continuously operate its store
in the entire Premises throughout the Term ("TENANT'S OPERATING COVENANT
PERIOD"). Notwithstanding the foregoing, Tenant shall be permitted to be open
for business until the later of (i) 2:00 a.m. or (ii) as late as any other
tenant located on the fourth level of the Center is permitted to be open without
incurring any Extra Hours Charge as set forth in Section 7.05 below. Landlord
has the right to modify the Standard Mall Hours from time to time at its sole
and absolute
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discretion. Tenant shall operate in the Premises as of the Term Commencement
Date, during Standard Mall Hours as Landlord shall direct, with due diligence,
effort and efficiency so as to maximize Gross Receipts. At all times during the
Term, Tenant shall carry in the Premises a stock of merchandise of a size,
character and quality as shall be reasonably designed to produce the maximum
return to Landlord and Tenant. Tenant shall use for office, storage or other
non-selling purposes only such space as is reasonably required for the proper
operation of Tenant's retail business in the Premises. Tenant acknowledges and
agrees that the Center's success is dependent upon the continued operation of
Tenant's business as required by the terms of this Lease.
In the event Tenant ceases operation prior to the Termination Date,
(defined in Section 2.02 herein) Landlord shall have the right to obtain a
court order for specific performance of Tenant's Operating Covenant as set
forth in this Section 6.02. During any part of Tenant's Operating Covenant
Period that Tenant shall fail to operate the Premises as provided herein, in
addition to Landlord's right to seek specific performance of Tenant's Operating
Covenant Period, Tenant shall pay as liquidated damages, as a reasonable
estimate of damages suffered by Landlord due to the loss of Rent, Percentage
Rent and Additional Rent, and the damage to the character and quality of the
Center and other non-quantifiable adverse effects caused by Tenant's failure to
continually operate, a sum equal to [***] of the Rent for the remainder or
unexpired portion of Tenant's Operating Covenant Period. The payment of such
sums shall not relieve Tenant of any of its obligations under this Lease.
Anything contained in this lease to the contrary notwithstanding, Tenant shall
not be obligated to continuously operate from the Premises during period which
(i) Tenant is carrying on remodeling activities, provided prior Notice of such
activities has be delivered to Landlord, (ii) Tenant is closed for the taking
of inventory (not to exceed four (4) days per Lease Year), or (iii) Tenant's
use and occupancy of the Premises is prohibited by any law, ordinance, order or
other act of any judicial, governmental or quasi-governmental authority.
6.03 OTHER BUSINESS PRACTICES
(a) Tenant shall keep the Premises, all show windows and signs and any
loading area and all other areas designated for Tenants sole use, in good, safe,
neat and clean condition. Tenant shall keep the premises and any sidewalk or
service area contiguous to or part of the Premises free of debris, water,
rubbish, garbage, pests, rodents and vermin, and, upon two (2) days written
notice by Landlord to Tenant of Tenant's failure to do so, Landlord may remove
such debris, water, substances, rubbish, garbage, pests, rodents and vermin and
charge Tenant the actual cost of such removal plus twelve percent (12%) for
administration.
(b) Tenant shall keep its display windows dressed and electrically
illuminated (in accordance with Section 5.02 herein) during such periods of
time as may from time to time be required by Landlord of substantially all
other retail businesses located within the Center.
(c) Tenant shall load and unload its goods, foods, inventory,
ingredients, stock, merchandise, equipment and supplies and remove its rubbish
only by way of the loading area and service doors designated by Landlord for
Tenant's use.
(d) Tenant shall not commit nor knowingly and willfully permit any act or
practice which may tend to injure the building occupied by Tenant, nor permit
its equipment to be a nuisance to other tenants, nor keep goods, foods,
rubbish, inventory, merchandise on or obstruct the mall area or sidewalks or
other areas outside the Premises, not conduct or permit any fire, bankruptcy,
auction or going-out-of-business sale, nor erect or retain any sign, light,
lettering, inscription, symbol or mark which is not approved by Landlord, nor
install any antenna, fixture, or improvement outside of the Premises, nor sell
or display merchandise outside the Premises. Notwithstanding the foregoing,
Tenant shall be permitted to place professionally generated signs,
advertisements and decorations within the Premises consistent with Tenant's
other operations. Anything contained in this Lease to the contrary
notwithstanding, Tenant shall be permitted to install a video wall or mounted
video screen or panel within the Premises which can be visible to customer
from outside the Premises.
(e) In all of the Tenant's printed material referring to the location of
the Premises and in all of Tenant's local advertising (by newspaper, radio,
television or otherwise), Tenant shall include in any reference to Tenant's
place of business the name and where appropriate the symbol) of the Center.
(f) Tenant agrees to store in the Premises only such goods, food,
inventory and merchandise as is to be offered for sale at retail from the
Premises within a reasonable time after receipt; to store all trash and refuse
in adequate containers within the Premises and to maintain such containers in a
healthy, safe, neat, odor free and clean condition and in a location so as not
to be visible to members of the public shopping in the Center, and to attend to
the daily disposal thereof in the manner designated by Landlord; and to conform
to all rules and regulations which Landlord may make in the management and use
of the Center requiring such conformance by Tenant and Tenant's employees. If
the Premises are used for the sale of food, Tenant shall store all trash,
refuse and garbage in a garbage storeroom or compartment which Tenant shall
install and keep in good repair at its sole expense. Landlord may require that
the premises be periodically treated against pests, rodents or vermin, and in
such event, Tenant shall, at its sole cost and expense, enter into a contract
with a professional pest control service for the performance of such work,
which contract and service shall be subject to Landlord's prior approval.
(g) Costs associated with the collection and removal of rubbish in the
Common Areas are included in Rent in accordance with Section 7.04 herein. With
respect to the collection and removal of rubbish produced on the Premises and
in the course of the operation of Tenant's business, Tenant agrees to contract
with a third party rubbish removal contractor designated by the Landlord and
pay directly to such contractor,
*** Confidential treatment requested.
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when due, all charges at the rate established therefore from time to time.
Tenant may, however, contract with an entity other than that designated by
Landlord in the event that Landlord's designated contractor's rates are not
reasonable and competitive with alternative services available to Tenant.
Notwithstanding the foregoing, Tenant covenants to properly dispose of all
rubbish, trash and refuse produced on the Premises in accordance with applicable
Governmental Orders relating to the sorting or recycling of trash or refuse.
(h) Tenant shall comply with additional rules and regulations for the use
and occupancy of the Center as Landlord, from time to time, may impose or amend
in the best interests of the Center.
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ARTICLE 7 COMMON AREAS AND OPERATING COSTS
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7.01 DEFINITION
The term "COMMON AREAS" shall mean the interior and exterior areas and
facilities within and around the Center which are not leased to a tenant, or by
nature not leasable to a tenant for the purpose of the sale of merchandise or
the rendition of services to the general public. Common Areas shall include,
but shall not be limited to, all parking areas and facilities, roadways,
driveways, entrances and exits, truck service ways and tunnels, utilities,
water filtration and treatment facilities, retention ponds or basins located
within or outside the Center, retaining and exterior walls, sidewalks, open and
enclosed malls, outside courts, landscaped and planted areas, escalators,
stairways, elevators, service corridors, service areas, loading docks,
hallways, public restrooms, community rooms or areas, roofs, equipment, signs
and any special services provided by Landlord for the common or joint use and
benefit of all tenants in the Center, their employees, customers and invitees.
7.02 DEVELOPMENT OF COMMON AREAS
As Landlord deems appropriate, Landlord shall make available from time to
time such Common Areas, which may in part consist of areas made available by
means of REA or other agreements, for the common benefit to the tenants and
occupants of the Center. Subject to the provisions of any REA Agreement,
Landlord shall operate, manage, equip, heat, cool, ventilate, insure, repair
and maintain such Common Areas for their intended purposes in such a manner as
Landlord shall, in its sole and absolute discretion determine. Landlord shall
at all times and without being subject to liability, have the right to
determine, change or alter the nature, extent, size or location of the Common
Areas. Tenant shall not be entitled to any compensation or diminution or
abatement of rent on account of any Common Area change, nor shall any such
action be deemed an actual or a constructive eviction of Tenant.
7.03 USE OF COMMON AREAS
(a) Tenant and its officers, employees, agents, customers and invitees
shall have the non-exclusive right, in common with Landlord and all others to
whom Landlord has or may hereafter grant rights, to use the Common Areas as
designated by Landlord from time to time, subject to such regulations as
Landlord may from time to time impose.
(b) Landlord's regulations may include designation of the days and hours
of operation and use and designation of specific areas in which motor vehicles
owned or used by Tenant, its officers, employees, and agents must be parked.
Tenant shall, upon request, furnish to Landlord the license numbers and
descriptions of the motor vehicles operated by Tenant and its officers, agents
and employees. If Landlord designates such parking areas, and if any motor
vehicle of Tenant, or an officer, employee or agent of Tenant is parked in any
other portion of the Center, Tenant shall pay to Landlord, the sum of [***] for
each motor vehicle for each day such motor vehicle(s) is so parked. Tenant
hereby authorizes Landlord to tow or cause any such car to be towed to the then
designated parking area. Notwithstanding anything to the contrary herein, Tenant
shall be entitled to one (1) notification during the Term before Tenant shall be
obligated to pay Landlord the amount set forth in this Section 7.03(b) for said
violation. Tenant, upon receipt of Landlord's statement sent to the address
shown at the beginning of this Lease, agrees to pay Landlord, as Additional
Rent, all sums due pursuant to this Section 7.03, to reimburse Landlord for the
above amounts and the cost of towing such improperly parked vehicles. Tenant
agrees to abide by such regulations and to use its best efforts to cause its
officers, employees, agents, customers and invitees to conform thereto.
(c) Landlord may at any time (i) close temporarily the Common Areas or
any portion thereof; (ii) make repairs or changes to prevent the acquisition of
public rights therein; (iii) discourage non-customer parking; and (iv) may do
such other acts in and to the Common Areas as in its judgment may be desirable
to improve the convenience thereof. Tenant shall not at any time interfere with
the rights of Landlord and other tenants, its and their permitted officers,
employees, agents, customers, and invitees, to use any part of the parking
areas and other Common Areas. Landlord shall have the sole and exclusive right
to use the Common Areas for advertising purposes, promotions, exhibits, shows,
displays, kiosks and such other similar uses. Notwithstanding the foregoing,
Landlord shall not modify the Common Areas in any manner that would have a
material adverse affect on pedestrian and vehicular traffic or that would
materially limit the number of parking spaces reasonably required for the
business and retail activities conducted or that otherwise would adversely
affect access to the Premises or the Building in which the Premises are
*** Confidential treatment requested.
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located. Landlord hereby agrees that it shall not install or allow to be
installed any permanent or temporary kiosk or cart in the area marked "NO KIOSK
AREA" as shown on EXHIBIT "A-2" attached hereto (other than in the locations
specifically noted in the No Kiosk Area, provided that any kiosk permitted in
the specified locations shall not exceed an area of 150 square feet nor a
height of 8 feet).
(d) Anything contained in this Lease to the contrary notwithstanding and
subject to all applicable governmental codes, rules and regulations, Tenant
shall be permitted to place a genuine or replica NASCAR automobile in the
Common Area of the Center in the location shown on Exhibit A-1A adjacent to the
Premises, provided such automobile shall not obstruct the entrances of any
other tenants or occupants of the Shopping Center. In addition, Tenant may be
permitted to use the Common Area immediately adjacent to the Premises for the
purposes of queuing Tenant's customers. The queuing of such customers shall be
subject to the reasonable rules and regulations imposed by Landlord as provided
in this Lease.
7.04 COMMON AREA COSTS
Common Area Costs (as hereinafter defined) are included in Rent and shall
be fixed for the Term. "COMMON AREA COSTS" or "CAM" shall mean the total costs
and expenses incurred in operating, heating, ventilating, cooling, security,
insurance, sprinklering, compactor expenses, managing, food court maintenance
and maintaining the Common Areas, including but without limitation, such
maintenance, repair, replacement and remodeling as shall be required in
Landlord's sole and absolute judgment to preserve the utility thereof in the
same condition and status as existed at the time of completion of the original
construction and installation.
7.05 EXTRA HOURS COMMON AREA COSTS
(a) In the event Tenant is open for business in the Premises beyond
Standard Mall Hours or when less than fifty percent (50%) of the total leased
area of the Center is open for business, then for each such hour that Tenant is
open for business in the Premises, Tenant, shall pay to Landlord, as Additional
Rent, an hourly amount (the "EXTRA HOURS CHARGE") which shall be determined at
the time Tenant puts Landlord on Notice that Tenant will operate and be open
for business within the Premises beyond the Standard Mall Hours. The Extra
Hours Charge shall be due and payable to Landlord within ten (10) days after
the end of the month in which such Extra Hours Charges are incurred. To the
extent Tenant is open for business in the Premises beyond Standard Mall Hours
on a consistent basis, Rent due Landlord pursuant to Section 3.01 herein shall
increase at a reasonable amount to be determined at such time Tenant's
operations consistently exceed Standard Mall Hours.
(b) "EXTRA HOURS CHARGES" shall mean the total costs and expense
incurred by Landlord in operating the Center and Common Areas in excess of the
Standard Mall Hours as defined above. Such costs and expenses shall include,
but shall not be limited to the following: security, lighting including exterior
and interior parking lot lighting, maintenance and all energy and utility
charges relating to the Common Areas.
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ARTICLE 8 ENERGY AND COSTS
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8.01 ENERGY AND UTILITY CHARGES
(a) Prior to entering into possession of the Premises, Tenant shall
either directly or through Landlord, make application to the appropriate local
authority, municipality or other governmental agency or other Energy Provider
(as defined in Section 8.01(b) below) to obtain service for Tenant's electric,
water, and any other utility requirements. The Premises shall be separately
metered for electricity and water. Tenant shall be solely responsible for the
cost of obtaining such services and the cost of providing, installing,
maintaining, repairing and replacing any required meters. Tenant shall pay to
Landlord, within ten (10) days after receipt of a bill therefor, the cost of any
sewer rents or sanitary charges for service used upon or furnished to the
Premises at the rates in effect from time to time which would be applicable to
Tenant as a direct customer of the utility or municipality providing sewer and
sanitary services to the Center.
(b) From and after the date Tenant first enters into possession of the
Premises, Tenant shall be billed directly by and pay to the entity providing
electric and thermal energy to the Center (the "ENERGY PROVIDER").
8.02 MISCELLANEOUS UTILITY PROVISIONS
(a) Tenant shall not install within the Premises any equipment, fixtures
or appliances which exceed the capacity of the utility facilities within or
serving the Premises. If any such equipment, fixtures or appliances installed
by Tenant requires additional utility facilities, the same shall be installed
by Tenant at Tenant's sole cost and expense. Tenant agrees to use all
reasonable precautions to guard against the waste of energy.
(b) Tenant shall operate the heating, ventilating and cooling systems
serving the Premises such that the temperature in the
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Premises will be the same as that in the Common Areas, and Tenant shall set
Tenant's thermostat at the same temperature as exists in the Common Areas.
Tenant shall operate ventilation equipment such that the relative air pressure
in the Premises will be the same as or more than that in the Common Areas.
(c) Landlord shall not be liable for any damages resulting from or
arising out of any discontinuance by the Energy Provider for Tenant's
non-payment of energy or utility charges and the same shall not constitute a
termination of this Lease or an actual or constructive eviction of Tenant.
(d) Tenant agrees that Landlord shall not be responsible for any
interruption of business or damage to the Premises resulting from an
interruption of utility service caused by the Energy Provider, any utility
company or governmental regulatory agency.
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ARTICLE 9 FIXTURES, ALTERATIONS, SIGNS
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9.01 INSTALLATION BY TENANT
After the completion of Tenant's Work, Tenant shall not make or cause to be
made any alterations, additions or improvements or install or cause to be
installed any exterior sign, exterior lighting, plumbing fixtures, exterior
shades or awnings without first obtaining Landlord's written approval which
shall not be unreasonably withheld. Notwithstanding the foregoing, Tenant shall
be permitted to make interior, non-structural alterations, changes, and
modifications not exceeding [***] per Lease Year without Landlord's prior
consent, provided Tenant notifies Landlord in writing prior to the commencement
of such alterations, changes, and/or modifications. Tenant shall present to
Landlord plans and specifications of such work at the time approval is sought.
All permitted alterations, additions or improvements shall be done in a good and
workmanlike manner in compliance with all Governmental Orders and shall not
interfere with or interrupt the conduct of any tenants' normal business. All
fixtures installed by Tenant shall be new or completely reconditioned. Tenant
hereby warrants that such fixtures will be free from defects in material and
workmanship and designed, constructed and installed so as not to be hazardous to
the Center or any persons who may come on to the Premises.
9.02 REMOVAL AND RESTORATION BY TENANT
All alterations, additions, improvements or installations made by Tenant,
or made by Landlord on Tenant's behalf and at Tenant's expense, shall remain
the property of Tenant for the Term. Such alterations, additions, improvements,
trade fixtures and equipment shall not be removed from the Premises prior to
the end of the Term without Landlord's prior written consent, except in the
case of routine maintenance, refurbishment or replacement of defective or
broken items. Upon expiration of the Term, or upon Tenant's vacating the
Premises or upon eviction or surrender of the Premises prior to expiration of
the Term, any permanent leasehold improvements and fixtures or equipment
permanently attached to the real estate shall become the property of Landlord
if not removed by Tenant. With respect to any improvements and fixtures which
Tenant does remove, Tenant shall be obligated to repair any damage resulting
from such removal, and Tenant's possession of the Premises shall not be deemed
terminated until such repairs have been completed. Tenant shall surrender all
keys for the Premises to Landlord and shall inform Landlord of all combinations
on locks, safes and vaults, if any, in the Premises. Within five (5) days
following the expiration or earlier termination of this Lease, Tenant shall
remove furnishings, equipment, trade fixtures and personal property or else
Landlord shall have the option of retaining or removing such property at
Tenant's expense. Tenant shall repair or cause to be repaired any damage to the
Premises caused by such removal.
9.03 SIGNS, AWNINGS AND CANOPIES
Tenant will not place, maintain or suffer to be placed or maintained on or
in an exterior door, wall or window of the Premises any sign, awning or canopy,
decoration, lettering or advertising matter or other thing of any kind without
first obtaining Landlord's written approval, which approval shall not be
unreasonably withheld. Notwithstanding the foregoing, Landlord's consent shall
not be required for any professionally prepared signs or banners, or for the
installation of an awning or canopy at the store front of the Premises,
provided such awning or canopy complies with all applicable building codes and
further provided that such awning or canopy does not utilize any supports which
cannot be integrated into the store front of the Premises. Tenant further
agrees to maintain such sign, awning, canopy, decoration, lettering,
advertising matter or other thing as may be approved in good condition and
repair at all times.
9.04 CONDITION OF THE PREMISES
Throughout the Term, Tenant shall maintain the Premises in a manner
consistent with a first class shopping center.
*** Confidential treatment requested.
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ARTICLE 10 REPAIRS AND MAINTENANCE
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10.01 LANDLORD'S OBLIGATION TO REPAIR
Subject to Article 13 below, Landlord agrees to repair and maintain, at
Landlord's sole cost and expense, in good order and serviceable condition, the
outside walls, roof, structure and foundation of the building containing the
Premises. Landlord shall not be required to commence any such repair until a
reasonable time after written Notice from Tenant that a repair is necessary,
except this covenant shall not include the following, which shall be Tenant's
sole responsibility:
(a) Repair of damage caused by the act or omission of Tenant, its
employees, agents, and contractors; and
(b) Repair of any loading areas not used in common with others; and
(c) Repairs which are the responsibility of Tenant in accordance with
Section 10.02 below.
10.02 TENANT'S OBLIGATION TO REPAIR
(a) Tenant agrees, at its sole cost and expense, to repair and maintain
the Premises in good order and condition, including, but not limited to, the
non-structural portions of the Premises, including Tenant's storefront, loading
areas, show windows, doors, windows, plate and window glass, ceilings, floor
coverings, and the plumbing, sprinkler, electric and sewage systems, facilities,
appliances, lighting fixtures and other systems and improvements located within
the Premises. Tenant shall, at its sole cost and expense, obtain any and all
permits and approvals necessary to effect such repairs and submit to Landlord a
copy of such permits or approvals prior to the commencement of any repair work.
In addition, Tenant shall be responsible, at its sole expense, for the repair
and maintenance of its HVAC equipment, in whatever form, including roof top
units or other supply mechanisms and unit(s) (if any) and any other equipment or
improvement located outside the Premises which is constructed or installed by
Tenant or at Tenant's request. Tenant shall obtain Landlord's prior consent
before making any repair or performing any maintenance which may adversely
affect any aspect of the Center's operation.
(b) During the entire Term, Tenant agrees to maintain, at Tenant's sole
cost, a maintenance contract with the Energy Provider, or, as applicable, an
independent HVAC contractor approved by Landlord covering at least the routine
items of maintenance for Tenant's HVAC systems are recommended by the
manufacturer of such systems, provided that the cost thereof at all times shall
be reasonable and competitive. Tenant agrees to provide Landlord with a copy of
such HVAC service contract within thirty (30) days following the Term
Commencement Date. Further, Tenant agrees during the entire Term to use the
sprinkler contractor(s) and fire alarm company(ies) designated by Landlord for
any repairs or maintenance required for Tenant's sprinkler system, or fire alarm
system, if applicable, provided that the cost thereof at all times shall be
competitive.
(c) If repairs are required to be made by Tenant pursuant to the terms of
this Lease, Landlord may demand (but shall not be required to do so) that
Tenant make the same forthwith, and if Tenant refuses or neglects to commence
such repairs and complete the same with reasonable dispatch after such demand,
and if Tenant's failure to commence such repairs continues for fifteen (15)
days after receipt of Notice from Landlord, Landlord may make or cause such
repairs to be made and shall not be responsible to Tenant for any loss or
damage that may accrue to its stock or business by reason thereof. If Landlord
makes or causes such repairs to be made, Tenant agrees that it will, on demand,
pay as Additional Rent to Landlord, the cost of the repairs, and an twelve
percent (12%) administration fee, and if Tenant defaults in such payment,
Landlord shall have the remedies provided in Article 15 below. Likewise, if
repairs are required under the terms hereof to be made by Landlord, and
Landlord fails or refuses after twenty (20) days Notice and demand by Tenant to
commence such repairs and thereafter diligently prosecute same to completion,
then Tenant shall have the right to make such required repairs. Landlord shall
reimburse Tenant for the cost of such repairs within twenty (20) days after
receipt by Landlord of evidence of payment therefor by Tenant; additionally,
Tenant shall have the right to offset such costs against the payment of Rent,
Percentage Rent or Additional Rent if Landlord shall fail to reimburse Tenant
for the cost of such repairs within thirty (30) days after receipt by Landlord
of evidence of payment therefor by Tenant.
(d) If Landlord determines Tenant's use of the Premises requires a grease
trap, Tenant agrees to install, maintain, repair and, as necessary, replace any
grease trap at Tenant's sole cost, and enter into a maintenance contract with
an independent service contractor approved by Landlord to inspect, clean and
repair such grease trap at such intervals as may be required by Tenant's use
but in no event less frequently than once a month.
10.03 ARTICLE NOT APPLICABLE TO FIRE OR CONDEMNATION
The provisions of this Article shall not apply to the repair of damage
caused by fire casualty, which matter is covered under Article 13, nor shall
these provisions apply to a taking under the power of Eminent Domain, which
matter is covered under Article 14 below.
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ARTICLE 11 INDEMNITY.
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11.01 INDEMNITY
Tenant shall indemnify, hold harmless and defend Landlord, Landlord's
managing agent, if any, and such other persons who are in privity of estate
with Landlord, or to whom Landlord is legally responsible, from and against any
and all claims, actions, suits, cross-claims, counterclaims, third party
actions, damages, liabilities and expenses in connection with loss of life,
personal injury, bodily injury or damage to property arising from or out of any
occurrence in, upon or at the Premises, from or out of the occupancy or use by
Tenant of the Premises or the Center or any part thereof, or occasioned wholly
or in part by any negligent act or omission of Tenant, its agents, contractors,
employees, lessees, invitees or concessionaires. In case Landlord, Landlord's
managing agent or such other persons who are in privity of estate with
Landlord, or to whom Landlord is legally responsible, shall be made a party to
any action or proceeding commenced by or against Tenant, then Tenant agrees to
protect and hold such parties harmless and to pay all costs, expenses and
reasonable attorneys' fees incurred or paid by such parties in connection with
such action or proceeding. Tenant shall pay to such parties all costs, expenses
and reasonable attorneys' fees that may be incurred or paid by Landlord in
enforcing the terms, conditions, covenants and agreements in this Lease.
Landlord shall indemnify, hold harmless and defend Tenant, Tenant's
managing agent, if any, and such other persons who are in privity of estate
with Tenant, or to whom Tenant is legally responsible, from and against any and
all claims, actions, suits, cross-claims, counterclaims, third party actions,
damages, liabilities and expenses in connection with loss of life, personal
injury, bodily injury or damage to property arising from or out of any
occurrence in, upon or at the Center, or occasioned wholly or in part by any
negligent act or omission of Landlord, its agents, contractors, employees,
lessees, invitees or concessionaires. In case Tenant, Tenant's managing agent
or such other persons who are in privity of estate with Tenant, or to whom
Tenant is legally responsible, shall be made a party to any action or
proceeding commenced by or against Landlord, then Landlord agrees to protect
and hold such parties harmless and to pay all costs, expenses and reasonable
attorneys' fees incurred or paid by such parties in connection with such action
or proceeding. Landlord shall pay to such parties all costs, expenses and
reasonable attorneys' fees that may be incurred or paid by Tenant in enforcing
the terms, conditions, covenants and agreements in this Lease.
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ARTICLE 12 INSURANCE
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12.01 LIABILITY INSURANCE
Throughout the Term, Tenant, at its sole cost and expense, for the mutual
benefit of Landlord and Tenant, shall maintain personal injury and property
damage liability insurance of not less than [***] in respect of personal injury,
bodily injury, death or property damage (combined single limit) against claims
for personal injury, bodily injury, death or property damage occurring on, in or
about the Premises, or arising from, in or about Tenant's use of the Common
Areas, or resulting from or arising out of products sold from the Premises or
Tenant's use of the Common Areas during the Term, (the "INSURANCE POLICY").
First, the Insurance Policy shall expressly contain a contractual endorsement to
provide coverage for Tenant's indemnification set forth in Section 11.01 of this
Lease, and shall contain a "PER LOCATION AGGREGATE" endorsement. The Insurance
Policy shall be endorsed (i) as primary and (ii) so as to waive rights of
subrogation against Landlord. Second, prior to the Term Commencement Date,
Tenant shall provide Landlord with a certificate containing evidence of such
coverage and of the coverage required in Sections 12.02(c) and (d) below, and
Tenant shall thereafter provide Landlord with appropriate evidence of said
coverage upon each anniversary date of the Insurance Policy. All such
certificates should be sent to Landlord at the address shown at the beginning of
this Lease, Attention: Legal Department. In the event that Tenant fails to
provide the certificate as set forth herein or fails to provide evidence of such
coverage at least thirty (30) days prior to the expiration date of each expiring
Insurance Policy, Landlord may obtain such insurance at Tenant's sole cost and
expense and upon demand of Landlord, Tenant shall reimburse Landlord for the
cost of procuring such insurance coverage together with [***] for
administration costs.
12.02 SPECIAL CAUSES OF LOSS AND DIFFERENCE IN CONDITIONS INSURANCE
(a) At all times during the Term, Landlord shall keep all "PERMANENT
IMPROVEMENTS," (defined in Section 12.02(b)) insured for the benefit of
Landlord against loss or damage by risks now or hereafter embraced by "SPECIAL
CAUSES OF LOSS" coverage and against such other risks as Landlord from time to
time reasonably may designate in amounts sufficient to prevent Landlord from
becoming a co-insurer under the terms of the applicable policies. In any event,
the amount applicable to "SPECIAL CAUSES OF LOSS" policies shall be not less
than [***] of the "THEN FULL REPLACEMENT COST" (being the cost of replacing the
Permanent Improvements exclusive of the costs of excavations and footings below
the lowest grade level). The Then Full Replacement Cost shall be determined from
time to time (but not more frequently than once in any twelve (12) calendar
months) by an appraiser, architect or other person or firm designated by
Landlord.
*** Confidential treatment requested.
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(b) Permanent Improvements for purposes of this Section 12.02 shall mean
the building in which the Premises is situated, the appurtenances thereto and
the equipment and other improvements constructed by Landlord and Tenant pursuant
to Section 5.01 and 5.02 of this Lease. Permanent Improvements shall EXCLUDE,
however, Tenant's merchandise, inventory, trade fixtures, furnishings,
equipment, wall covering, carpeting, drapes, and all personal property
(collectively "TENANT'S PERSONAL PROPERTY"). Tenant shall provide Landlord with
a certificate setting forth the cost of Tenant's Work no less than [***] days
following the Term Commencement Date.
Tenant shall, prior to commencing the build out of Tenant's Premises as
such scope of work is defined Section 5.02 herein, purchase Improvement and
Betterment insurance and provide Landlord with a copy of such insurance
certificate no less than [***] days prior to the commencement of work.
(c) At all times throughout the Term, Tenant shall keep all of Tenant's
Personal Property situated at or on the Premises, insured with "SPECIAL CAUSES
OF LOSS" coverage for not less than its full replacement cost, with any
deductible, but not to exceed [***].
(d) Tenant shall maintain, and shall cause all parties performing work on
or about the Premises or on behalf of Tenant to maintain, (i) statutory Workers'
Compensation coverage in the minimum amount required according to the laws of
the state in which the Center is located and (ii) Employer's Liability coverage
in limits of not less than [***].
12.03 INSURANCE ON COMMON AREAS.
At all times during the Term, Landlord shall keep the Common Areas insured
for personal injury, bodily injury and property damage liability, "SPECIAL
CAUSES OF LOSS" property coverage, Workers' Compensation, Employer's Liability
and any other casualty or risk insurance which Landlord or Landlord's insurance
carrier deems necessary or appropriate. Landlord may elect to self insure up to
the first [***] for personal injury, bodily injury, or under Workers'
Compensation.
12.04 WAIVER OF SUBROGATION
Each party releases and waives on behalf of itself and on behalf of the
insurers of such party's property, any and all claims and any rights of
subrogation of any such insurer against the other party, its employees and
agents for loss (other than loss or damage resulting from the willful act of
such other party, its employees and agents) sustained from any peril to
property required to be insured against herein, whether or not such insurance
is actually in force, or from any peril to property actually insured against,
though not required to be under this Lease. The policies of the respective
Parties shall contain an express waiver of subrogation to this effect (the
"SUBROGATION WAIVER").
12.05 POLICIES
All insurance provided pursuant to this Article 12 shall be effected under
valid and enforceable policies of insurers with a minimum Best rating of A-,
XII (or the equivalent in the event the Best rating system is discontinued),
and issued by insurers of recognized responsibility which are licensed to do
business in the State of New York. All of Tenant's policies of insurance
required by this Article 12 ("TENANT'S INSURANCE POLICIES") shall name
Landlord, Tenant, Landlord's managing agent and any mortgagee having an
interest in any part or all of the Center (the name and address of which Tenant
will have received written notice), as additional insureds, as their respective
interests may appear. Tenant agrees that Tenant's Insurance Policies shall also
be made payable, if required by Landlord, to a mortgagee or ground lessor, as
the interest of such mortgagee or ground lessor may appear. The loss, if any,
under any of Tenant's Insurance Policies provided for under this Article 12 may
be adjusted with the insurance company by Landlord. Each of Tenant's Insurance
Policies shall contain an agreement by the insurer that such policy shall not
be terminated, canceled or reduced in coverage without at least thirty (30)
days prior written Notice to Landlord and to any mortgagee or ground lessor to
whom a loss is payable. The minimum limits of coverage for all of Tenant's
Insurance Policies of insurance required by this Article 12 shall be increased
by Tenant if reasonably required by Landlord.
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ARTICLE 13 DAMAGE BY FIRE OR OTHER HAZARD
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13.01 RESTORATION OF PREMISES
(a) The Parties mutually agree that if the Premises are partially or
totally destroyed or damaged by fire or otherwise, then Landlord (subject to
being able to obtain all necessary permits and approvals) shall repair and
restore the Premises as soon as is reasonably practicable to substantially the
same condition in which the Premises existed before such damage; PROVIDED, that
if the insurance proceeds (other than the amount of any deductible, self
insured retention or co-insurance requirement) collected or collectible and
available to Landlord to pay the cost of such repairs and restorations by
Landlord as a consequence of such destruction or damage are less than the cost
of such repairs and restoration as
*** Confidential treatment requested.
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estimated by Landlord's architect, Landlord shall not be obligated to commence
or perform such repairs and restorations, and this Lease upon Notice by
Landlord to Tenant shall at the option of Landlord terminate, unless Tenant
undertakes (in form and upon terms satisfactory to Landlord) to pay the
difference between such estimated cost and such insurance proceeds. Within
forty-five (45) days following the date of damage or destruction, Landlord
shall notify Tenant of its intentions with respect to the repairs or
restoration of the Premises. If, however, the Premises are totally destroyed or
so damaged that Landlord cannot reasonably complete restoration or rebuilding
in four (4) months to substantially the same condition in which the Premises
were before such damage, then Landlord shall not be required to rebuild or
restore, and this Lease shall be terminable by either party serving written
Notice upon the other. In any event, if repairs have not been commenced within
sixty (60) days after the date on which Landlord receives the insurance
proceeds, this Lease may be terminated by Tenant serving Notice upon Landlord
following the expiration of such sixty (60) days by giving Landlord not less
than thirty (30) days advanced written Notice of such election, but in no event
may Tenant terminate this Lease after such repairs have been commenced by
Landlord.
(b) In the event the Premises are completely or partially destroyed or
so damaged by fire or other hazard that the Premises cannot be reasonably used
by Tenant or can only be partially used by Tenant and this Lease is not
terminated as provided in Section 13.01 (a) above, there shall be no abatement
of Rent for the first sixty (60) days following the date of damage or
destruction, it being understood and agreed that Tenant, at its discretion, and
sole cost and expense, shall procure insurance necessary to protect itself
against any interruption of its business during such sixty (60) day period. In
the event Tenant is prevented from using the Premises in excess of sixty (60)
days, then Rent and Additional Rent shall be abated, and there shall be a
proportionate reduction to the Breakpoint, from and after said sixtieth day
until the date Tenant is able to reopen for business within the Premises.
13.02 RESTORATION DURING LAST ONE AND ONE-HALF YEARS OF TERM
Notwithstanding anything to the contrary in Section 13.01, if within one
and one-half years prior to the expiration of the Term the Premises shall be
damaged or destroyed by fire or otherwise and the estimated cost of restoration
exceeds Fifty and 00/100 Dollars ($50.00) per square foot of each square foot
of the Tenant Area (as defined in Section 23.03(b)) of Tenant's Premises,
Landlord shall be under no obligation to repair and restore the Premises, and
at the election of Landlord by Notice to Tenant this Lease shall terminate
within one hundred twenty (120) days after such Notice.
13.03 TENANT'S OBLIGATION UPON RESTORATION
In the event of damage or destruction to the Premises, and unless this
Lease is terminated by Landlord or Tenant as provided in this Article 13,
Tenant shall, as soon as possible, repair, redecorate and re-fixture the
premises and restock the contents thereof in a manner and to at least a
condition equal to that existing prior to its destruction or casualty, and
reopen the entire Premises for business. All proceeds of insurance carried by
Tenant on Tenant's Personal Property shall be held in trust and used for such
purposes.
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ARTICLE 14 EMINENT DOMAIN
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14.01 EMINENT DOMAIN
If the Premises, or any portion of the Premises so as to render the
balance wholly unsuitable for the purpose of Tenant's occupancy, is taken by
condemnation or the right of eminent domain, or by agreement between Landlord
and those authorized to exercise such rights (collectively the "CONDEMNATION
PROCEEDINGS"), either Party upon written Notice to the other shall be entitled
to terminate this Lease, PROVIDED that such Notice is given not later than
thirty (30) days after Tenant has been deprived of possession or use by such
taking. Should any part of the Premises be so taken and should this Lease not
be terminated in accordance with the foregoing provisions, Landlord covenants
and agrees promptly after such taking to expend so much as may be necessary of
the net amount which may be awarded to and received by it in such condemnation
proceedings (the "CONDEMNATION PROCEEDINGS AWARD"), in restoring the Premises
to an architectural unit as nearly like its condition prior to such taking as
shall in the reasonable judgment of Landlord be practicable, with an
appropriate abatement to be made in Rent, and a corresponding reduction in
Breakpoint. Should the net amount so awarded to and received by Landlord be
insufficient to cover the cost of restoring the Premises as estimated by
Landlord's architect, Landlord may at its election, supply the amount of such
insufficiency and restore the Premises, as above provided, or terminate this
Lease. Where Tenant has not already exercised any right of termination accorded
to it under this Section 14.01, Landlord shall notify Tenant of Landlord's
election within ninety (90) days after the final determination of the amount of
the Condemnation Proceedings' award.
14.02 LANDLORD ENTITLED TO AWARD
Out of any award for any such taking of the Premises or any part thereof,
Landlord shall be entitled to receive and retain the amounts awarded for the
Premises out of any Condemnation Proceedings' Award, EXCEPT that Tenant shall
be entitled to receive and retain only those
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amounts which may be specifically awarded to it in any Condemnation Proceedings
because of the taking of its trade fixtures and its leasehold improvements
which have not become a part of the realty, and such business loss as Tenant
shall specifically and separately establish, but not otherwise. It is
understood in the event of the termination of this Lease as provided in this
Article 14, Tenant shall have no claim against the Landlord or the condemning
authority for the value of any unexpired Term of its Lease and no right or
claim to any part of the Condemnation Proceedings' Award. Tenant WAIVES each
such claim or right and assigns any such claim or right to any part or all of
the Condemnation Proceedings' Award to Landlord, EXCEPT as reserved in this
Section 14.02. Anything contained in this Lease to the contrary
notwithstanding, Tenant shall have the right to bring any claim during any
Condemnation Proceedings, provided such claim does not reduce the claim of
Landlord in said Condemnation Proceedings.
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ARTICLE 15 BANKRUPTCY AND DEFAULT PROVISIONS
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15.01 EVENTS OF DEFAULT AND CONDITIONAL LIMITATION
(a) If at any time prior to or during the Term any one or more of the
following events occurs, each such event shall constitute an "EVENT OF DEFAULT":
(i) Tenant makes an assignment for the benefit of its creditors;
(ii) Tenant becomes insolvent;
(iii) The leasehold estate created in Tenant by this Lease is
taken on execution or by other process of law;
(iv) Any petition is filed against Tenant in any court, whether
or not pursuant to any bankruptcy, reorganization, composition extension,
arrangement or insolvency proceedings, and Tenant is thereafter adjudicated
bankrupt, or such petition is approved by the Court; or the Court assumes
jurisdiction of the subject matter and such proceedings are not dismissed
within ninety (90) days after their institution; or any such petition is so
filed by Tenant;
(v) In any proceedings, a receiver or trustee is appointed for
Tenant's property and such receivership or trusteeship is not vacated or set
aside within ninety (90) days after the appointment of such receiver or trustee;
(vi) There is a transfer or an attempted transfer of this Lease
or of Tenant's interest in this Lease in violation of the restrictions set
forth below in Article 17 of this Lease;
(vii) Tenant ceases operation in or vacates or abandons the
Premises or otherwise fails to fully perform the obligations contained in
Section 6.02 of this Lease, and such failure continues for ten (10) days
following Notice from Landlord;
(viii) Tenant fails to comply with any local, state or federal
law, rule or regulation governing the use, handling and disposal of Hazardous
Materials or is otherwise in violation of the obligations contained in Section
18.03 of this Lease, and Tenant fails to commence a cure of such violation
within thirty (30) days following Notice from Landlord (or such shorter time
period if required by law);
(ix) Tenant fails to comply with the obligations contained in
Section 21.03 of this Lease, and such failure continues for fifteen (15) days
following Notice from Landlord;
(x) Tenant fails to pay all or any portion of any installment
of the Rent, Percentage Rent, or Additional Rent, when all or any portion of
such is due and payable, and such failure continues for ten (10) days after
receipt of written notice from Landlord to Tenant;
(xi) Tenant fails to pay all or any portion of any installment
of the Rent, Percentage Rent, or Additional Rent, when due and payable, and
such failure occurs on three (3) or more occasions in any Lease Year or Partial
Lease Year;
(xii) Tenant fails to perform or observe any other material
requirement of this Lease on the part of Tenant to be performed or observed and
such failure continues for thirty (30) days after receipt of written notice
from Landlord to Tenant; or
(xiii) Tenant fails to comply with the obligations contained in
Section 6.01 of this Lease, and such failure continues for ten (10) days after
receipt of written notice from Landlord to Tenant; or where any such event
shall occur on two or more occasions in any Lease Year or Partial Lease Year.
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(b) This Lease and the Term are expressly subject to the conditional
limitation that upon the happening of any one or more of the aforementioned
events of default, Landlord, in addition to the other rights and remedies it
may have, shall have the right, upon Notice to Tenant, to declare this Lease
terminated and the Term ended, in which event all of the right, title and
interest of Tenant hereunder shall wholly cease and expire upon receipt by
Tenant of a notice of termination. Tenant shall then quit and surrender the
Premises to Landlord in the manner and under the conditions as provided for
under this Lease, but Tenant shall remain liable as hereinafter provided.
15.01 LANDLORD'S REMEDIES
(a) If this Lease shall be terminated as provided in Section 15.01(b)
above, Landlord or Landlord's agents or employees may immediately or at any
time thereafter re-enter the Premises and remove Tenant, its agents, employees,
licensees, and any sub-tenants and other persons, firms or corporations, and
all or any of its or their property from the Premises, either by summary
dispossess proceedings or by any suitable action or proceedings at law or in
equity, without being liable to indictment or prosecution of damages therefor,
and repossess and enjoy the Premises, together with all alterations, additions
and improvements to the Premises. In the event of such re-entry and
repossession, Landlord may store Tenant's Personal Property in a public
warehouse or elsewhere at the cost of and for the account of Tenant.
(b) In case of any termination, re-entry or dispossession by summary
proceedings or otherwise, the rents and all other charges required to be paid
up to the time of such termination, re-entry or dispossession, shall be paid by
Tenant, and Tenant also shall pay to Landlord all reasonable expenses which
Landlord may then or thereafter incur for legal expenses, reasonable attorneys'
fees, brokerage commissions and all other costs paid or incurred by Landlord as
the result of such termination, re-entry or dispossession, for restoring the
Premises to good order and condition and for altering and otherwise preparing
the Premises for reletting. Landlord may, at any time and from time to time,
relet the Premises, in whole or in part, for any rental then obtainable either
in its own name or as agent of Tenant, for a term which, at Landlord's option,
may be for the remainder of the then current term of this Lease or for any
longer or shorter period.
(c) If this Lease is terminated by Landlord, Tenant nevertheless
covenants and agrees notwithstanding any entry or re-entry by Landlord, whether
by summary proceedings, termination, or otherwise, to pay and be liable for, on
the days originally fixed by this Lease for payment, the amounts equal to the
several installments of Rent, Percentage Rent and Additional Rent reserved, as
Tenant would under the terms of this Lease become due, if this Lease had not
been terminated, or if Landlord had not entered or re-entered as aforesaid, and
whether the Premises is relet or remains vacant in whole or in part or for a
period less than the remainder of the Term, and for the whole thereof. In the
event the Premises be relet by Landlord, Tenant shall be entitled to a credit
(but not in excess of the Rent, Percentage Rent and Additional Rent reserved
under the terms of this Lease) in the net amount of rent received by Landlord
in reletting the Premises, after deduction of all expenses and costs incurred
or paid as aforesaid in reletting the Premises and in collecting the rent in
connection with reletting. If Tenant fails to make such payments in accordance
with the first sentence of this subsection 15.02(c) for any two (2)
consecutive months following the termination of this Lease, Landlord shall at
any time thereafter, in lieu of collecting any monthly deficiencies, or any
further monthly deficiencies, -- at Landlord's option, be entitled to recover
from Tenant, in addition to any other relief, such a sum as at the time of such
termination represents the amount of the then present value of the total Rent,
Percentage Rent, and Additional Rent and other benefits which would have
accrued to Landlord under this Lease for the remainder of the Lease Term, as if
the Lease had been fully complied with by Tenant, less any monthly deficiencies
for such period previously paid to Landlord by Tenant. The present value
("Present Value Amount") shall be calculated by discounting all amounts due by
a discount rate equal to the greater of (i) the then current yield of the U.S.
Treasury debt securities with an original term equal to the same number of
calendar years then remaining in the original Term (without regard to earlier
termination) and a maturity date nearest to the original expiration date of the
term (without regard to the earlier termination) or (ii) six percent (6%).
Tenant shall be entitled to a credit against the Present Value Amount for Fixed
Annual Minimum Rent, Percentage Rent and Additional Rent subsequently received
by Landlord from a replacement tenant against amounts paid by Tenant to
Landlord after deducting [the allowance paid by Landlord to Tenant and] all
expenses and costs incurred or paid (including any allowances, construction
costs and administrative costs) by Landlord in reletting the Premises and in
collecting the rent in connection therewith, which right to a credit shall
terminate on the date this Lease would have expired pursuant to Section 2.02.
Suit or suits for the recovery of the deficiency or damages referred to in this
Subsection 15.02(c) or for any installment or installments of Rent, Percentage
Rent or Additional Rent under this Lease, or for a sum equal to any such
installment or installments, may be brought by Landlord all at once or from
time to time, at Landlord's election, and nothing in this Lease shall be deemed
to require Landlord to await the date whereon this Lease or the Term hereof
would have naturally expired had there been no such default by Tenant or no
such termination.
(d) For the purpose of this Section 15.02, it shall be deemed that the
Percentage Rent for any period after any default by Tenant and entry by
Landlord would have been at the monthly rate thereafter equal to the average
Percentage Rent which Tenant was obligated to pay to Landlord under this Lease
within the three (3) Lease Years (or lesser number of Lease Years since the
Term Commencement Date) immediately preceding the date of such entry.
(e) Tenant expressly WAIVES, so far as permitted by law, any and all
right of redemption or re-entry or repossession under present or future laws
arising after Landlord's recovery of possession, including any amendments
hereafter, or to restore the operation of this Lease.
(f) Landlord and Tenant, so far as permitted by law, WAIVE and will WAIVE
trial by jury in any action, proceeding or
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counterclaim brought by either of the Parties against the other on any matters
whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of the Premises,
or any claim or injury or damage.
(g) The terms "ENTER," "RE-ENTER," "ENTRY" or "RE-ENTRY" as used in this
Lease are not restricted to their technical legal meaning.
(h) In the event Landlord commences any proceedings for the recovery of
possession of the Premises or to recover for non-payment of Rent, Percentage
Rent or Additional Rent, Tenant shall not interpose any non-compulsory
counterclaim in any such proceeding. This may not, however, be construed as a
waiver of Tenant's rights to assert such claim in any separate action or
actions initiated by Tenant.
(i) No failure by Landlord to insist upon the strict performance of any
covenant, agreement, term or condition of this Lease or to exercise any right
or remedy consequent upon a breach thereof, and no acceptance of full or
partial Rent during the continuance of any such breach shall be deemed an
accord and satisfaction, thus Landlord may accept any check or payment without
prejudice to Landlord's rights to recover the balance due, nor shall Landlord's
acceptance of any check or payment constitute a waiver of any Tenant breach or
of any Tenant covenant, agreement, term and condition, and this Lease shall
continue in full force and effect with respect to any existing or subsequent
breach thereof.
(j) In the event of any breach or threatened breach by Tenant of any of
the covenants, agreements, terms or conditions contained in this Lease,
Landlord shall be entitled to enjoin such breach or threatened breach and shall
have the right to invoke any right or remedy allowed at law or in equity, by
statute or otherwise.
(k) Each right and remedy of Landlord provided for in this Lease shall be
cumulative and shall be in addition to every other right or remedy provided for
in this Lease or now or hereinafter existing at law or in equity, by statute
or otherwise.
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ARTICLE 16 MECHANICS' LIENS
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16.01 MECHANICS' LIENS
(a) If any mechanics' liens are filed against the Premises or any portion
of the Center based upon any act of Tenant or anyone claiming through Tenant,
Tenant shall hold Landlord harmless and defend from all damages, claims and
expenses arising therefrom, and Tenant, after Notice from Landlord (or any
person in privity of estate with Landlord), shall forthwith commence action as
will remove or satisfy such lien within thirty (30) days by bonding, deposit,
payment or otherwise. In the event Tenant does not remove or satisfy a lien
within said thirty (30) day period, Landlord shall have the right to do so by
posting a bond or undertaking, and Tenant agrees to reimburse Landlord for any
and all expenses incurred by Landlord in connection therewith, including
Tenant's providing a replacement bond or posting cash or securities
satisfactory to Landlord's bonding company to provide sufficient independent
security of the Landlord's bond, five (5) days after receipt by Tenant of
Landlord's invoice therefor. Expenses shall include, but are not limited to,
filing fees, legal fees and disbursements, bond premiums and bond rating
premium increases.
(b) Nothing in this Article 16 shall be deemed or construed as (i)
Landlord's consent to any person, firm or corporation for the performance of
any work or services or the supply of any materials to the Premises or any
improvement thereon, or (ii) giving Tenant or any other person, firm or
corporation any right to contract for or to perform or supply any work,
services or materials that would permit or give rise to a lien against the
Premises or any part thereof.
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ARTICLE 17 ASSIGNMENTS, SUBLEASES AND OTHER TRANSFERS OF TENANT'S INTEREST
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17.01 LIMITATIONS ON TENANT'S RIGHTS
(a) Neither this Lease, nor the interest of Tenant in this Lease, shall
be sold, assigned, transferred, mortgaged, pledged, hypothecated or otherwise
disposed of, whether by operation of law or otherwise, nor shall the Premises
or any part of the Premises be sublet or subject to any license or concession,
without the express, prior written consent of Landlord in each instance. For
the purpose of this Lease, the sale or transfer of stock constituting a
controlling interest in Tenant shall be considered an assignment, and likewise
shall require Landlord's prior written consent EXCEPT where Tenant is a
corporation having its shares traded on the New York, American, NASDAQ or
Over-The-Counter stock exchange or market. Tenant shall make available to
Landlord the stock record books of Tenant and shall produce the same on request
of Landlord. Similarly, if Tenant is a partnership, the interest of any partner
shall not be transferred without Landlord's prior written consent. For the
purposes of this Lease, the entering into of any management agreement or any
similar agreement which transfers control of the business operations of Tenant
in the Premises shall be treated as an assignment of this Lease and shall
require Landlord's prior written consent. Any attempted transfer, assignment,
subletting, license or concession agreement, hypothecation or other transfer
herein that is prohibited without Landlord's prior written consent shall be
void, and confer no rights upon any third party. Anything contained in this
Section 17.01(a) to the contrary notwithstanding, Tenant shall have the right
without Landlord's consent to assign this Lease or sublet the Premises, subject
to the terms of this Lease, in conjunction with the sale of substantially all
of the other assets and other store locations of Tenant to Tenant's parent,
Tenant's subsidiary, or a
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subsidiary of Tenant's parent, provided that at least seventy-five percent
(75%) of Tenant's other stores located in the United States are simultaneously
transferred to such entity. Tenant shall remain primarily liable under this
Lease following any assignment of the Lease or subletting of the Premises.
Subject to paragraph (f) hereinbelow, Landlord shall not unreasonably withhold
its consent to any assignment or subleasing and shall respond to any request by
Tenant for permission to sublease or assign with thirty (30) days after receipt
of written request. If Landlord objects to such assignment or sublease,
Landlord shall advise Tenant of the reasons for such objections. If Landlord
fails to respond to such request within said thirty (30) days, and such failure
continues for ten (10) days following Notice from Tenant, then such failure
shall be deemed approval of such sublease or assignment.
Notwithstanding the terms of the immediately preceding grammatical
paragraph provided Tenant is not in default beyond any applicable cure period,
named Tenant may, without the consent of Landlord, assign this Lease or sublet
the entire Premises to any corporation which owns all of the issued and
outstanding common stock of named Tenant, or to a wholly owned subsidiary
corporation of named Tenant, or to any corporation resulting from the
consolidation or merger of named Tenant, in or with any other business
organization or any person, firm or corporation acquiring all of the issued and
outstanding capital stock of named Tenant, or all or substantially all of the
assets and store locations of named Tenant; however, no such assignment shall
be deemed effective unless and until such assignee executes and delivers to
Landlord, at no cost to Landlord, a written agreement in form and substance
acceptable to Landlord whereby such assignee assumes for the benefit of
Landlord the performance and observance of all of the terms, conditions and
covenants contained in this Lease. The foregoing is subject to Tenant providing
Landlord with thirty (30) days' written notice in advance, including statements
of fact certified by an authorized officer of Tenant, certifying the facts upon
which Tenant is claiming the right to assign this Lease pursuant to this
grammatical paragraph. In addition, any private placement or public offering of
ownership interest in Tenant shall not require Landlord's prior consent,
provided that as a result of any private placement the day-to-day management of
Tenant remains unchanged.
(b) No permitted assignment made shall be effective until there are
delivered to Landlord (i) an agreement, in recordable form, executed by Tenant
and the proposed assignee, in which such assignee assumes due performance of all
the obligations of Tenant's part to be performed under this Lease to the end of
the Term and (ii) a written consent to such assignment by the holder of any fee
or leasehold mortgage affecting the Premises to which this Lease is then
subject; such consent shall have been obtained and delivered to Landlord if so
required by the terms of such mortgage or by a collateral document securing the
same obligations as are secured by such mortgage.
(c) Any assignment of this Lease or any sublease affecting the Premises
or any other permitted transfer under this Lease shall be subject and
subordinate to the full terms and conditions of this Lease. Regardless of
either the assumption by any assignee or sublease of due performance or the
Landlord's acceptance of Rent or other charges from such assignee or sublessee,
Tenant shall not be released by any assignment, license or sublease but shall
continue to be fully responsible for the due performance of Tenant's
obligations in the same manner and to the same extent as if no such assignment,
license or sublease had been made.
(d) In the event Tenant assigns or subleases all or any portion of the
Premises as set forth in this Article 17 and the amounts due to Tenant under
such assignment or sublease exceed the amounts reserved to be paid to Landlord
by Tenant under this Lease, then Tenant shall pay to Landlord [***] of the
amount by which such assignment or sublease rent exceeds Rent as set forth in
Section 3.01(a) above. In the event Tenant assigns or subleases only a portion
of the Premises, the assignment or sublease rent shall be calculated on a per
square foot basis and then compared to the then applicable per square foot Rent
reserved in Section 3.01(a) above to determine whether or not such assignment
or sublease rent exceeds Rent.
(e) Any transfer made in violation of the provisions of subsections (a),
(b) or (c) in this section 17.01 shall constitute an Event of Default under
Section 15.01 herein and give rise to Landlord's right to re-enter the Premises
in accordance with Section 15.02.
(f) Notwithstanding anything in this Section 17.01 to the contrary, if
Tenant desires to assign its interest under this Lease or to sublet all of the
Premises to a Permitted Party (as hereinafter defined), Tenant shall deliver to
Landlord written notice, requesting Landlord's consent to such transaction,
which consent request shall include (i) a fully executed letter of intent
containing the material terms of the proposed assignment or sublet transaction
(including proposed rent (including additional rent), square foot area, term
and use), (ii) current reasonable financial information with respect to the
proposed assignee or sublessee, including without limitation its most recent
financial report, (iii) a statement that the proposed assignment or sublease
relates to the entire Premises for the remaining term of this Lease, and (iv)
an express statement to the effect that the proposed assignee or sublessee is a
Permitted Party within the meaning of this paragraph and that Landlord has the
right to terminate this Lease in connection with the assignment or sublease
pursuant to this Section 17.01(f) or such assignment or sublease shall be
deemed consented to by Landlord. A notice that contains the information
described in clauses (i) through (iv) shall be deemed an offer ("Takeback
Offer") from Tenant to Landlord whereby Landlord may terminate this Lease. If
Tenant's notice does not expressly state the items described in clauses (i)
through (iv) including that the proposed assignee or sublessee is to a
Permitted Party, such notice shall constitute a request by Tenant for
Landlord's consent to sublease the Premises or assign this Lease subject to the
other terms of this Section 17.01; such notice shall not constitute a Takeback
Offer and Landlord shall not be entitled to terminate this Lease under this
Section 17.01(f). The Takeback Offer may be exercised by Landlord by written
notice ("Takeback Notice") to Tenant at any time within thirty (30) days after
such Takeback Offer has been given by Tenant to Landlord; and during such
thirty (30) day period Tenant shall not assign this Lease to such prospective
assignee or sublet the Premises to such prospective sublessee unless such
assignment is expressly conditioned upon and not effective until the expiration
of the 30-day period for Landlord to deliver the Takeback Notice. The term
"Permitted Party" shall mean a third party (i) who will operate the Premises
for a
*** Confidential treatment requested.
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lawful bona fide retail use consistent with uses at other first-class shopping
centers or for the use permitted under Section 6.01 of this Lease, and not in
violation of any use restriction in effect for the Shopping Center of which
Tenant has been advised within twenty (20) days after Landlord's receipt of
Tenant's Takeback Offer; (ii) who has a net worth equal to or greater than the
then net worth of Tenant; and (iii) who is a national or regional chain of
retail stores, or is then operating (directly or indirectly) at least five (5)
stores in the States of New York, New Jersey, Pennsylvania, Massachusetts and
Connecticut for the same or similar use, or has at least ten (10) years of
retail operating experience. Upon such termination, all obligations of Landlord
and Tenant (other than those that expressly are stated to survive termination)
shall cease to be of further force and effect.
If Landlord exercises its option to terminate this Lease pursuant to this
subsection in connection with an assignment or sublet of all of the Premises,
then, unless Tenant, within fifteen (15) days after receipt of the Takeback
Notice, withdraws Tenant's request for Landlord's consent to the proposed
assignment or sublet, this Lease shall end and expire on the effective date
designated by Landlord in its Takeback Notice (which date shall not be less
than sixty (60) days nor more than one hundred twenty (120) days after the date
of the Takeback Notice) as fully and completely as if such early termination
date were the original expiration date of the Term, and all Rent shall be
apportioned as of such date.
If (x) Landlord shall not elect to send a Takeback Notice within said
30-day period and (y) Tenant is not then in default under this Lease beyond any
applicable notice or cure periods, Tenant shall be entitled, without any consent
by Landlord, to assign this Lease or sublet all of the Premises on substantially
the terms for proposed rent (including additional rent), square foot area, term
and use and to the Permitted Party, described in Tenant's request for Landlord's
consent, provided that if Tenant shall then be in default under this Lease
beyond any applicable notice or cure period, then any such assignment or sublet
shall not be effective until such defaults are cured. Any assignment or sublet
to a Permitted Party shall be subject and subordinate to the terms, conditions
and covenants of this Lease (other than with respect to the use set forth in
Section 6.01), provided that if the assignee or sublessee will not operate any
racing simulator or other rides within the Premises, then notwithstanding
anything to the contrary in Section 3.02, Percentage Rent shall be an amount
equal to [***] of Gross Receipts in excess of $3,000,000.00. To the extent
necessary, Tenant and Landlord shall execute and deliver a Lease Modification
Agreement or other agreement reflecting the new use clause, if any.
17.02 EFFECT OF LANDLORD'S CONSENT
(a) Any consent by Landlord to a sale, assignment, sublease, mortgage,
pledge, license, concession, hypothecation or transfer of this Lease, shall
apply only to the specific transaction thereby authorized and shall not relieve
Tenant from the requirement of obtaining prior written consent of Landlord to
any further sale, assignment, sublease, mortgage, pledge, hypothecation, or
transfer of this Lease. When the consent of Landlord is required to any
proposed assignment or sublease of this Lease, or to the mortgaging, pledging,
licensing, concession or hypothecation of this Lease, Tenant shall submit in
writing with its request for any proposed sale, assignment, sublease, mortgage,
pledge, license concession, hypothecation or transfer of this Lease,
information reasonably sufficient to enable Landlord to make a decision with
respect thereto.
(b) With respect to any of the consents requested by Tenant, whether or
not the Landlord has consented thereto, Tenant shall pay to the Landlord all
reasonable attorney or other related fees, disbursements and all other expenses
incurred by Landlord in connection with Tenant's request.
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ARTICLE 18 COMPLIANCE WITH GOVERNMENTAL ORDERS
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18.01 TENANT TO COMPLY
Tenant, at its own expense, shall promptly execute and comply with all
statutes, ordinances, rules, orders, regulations and requirements of the
federal, state and local governments and of any and all other agencies,
departments and bureaus applicable to Tenant's particular use of the Premises
or to the business conducted by Tenant at the Premises, whether ordinary,
extraordinary, foreseen or unforeseen (collectively, "GOVERNMENTAL ORDERS"). In
addition, Tenant, at its own expense, shall comply promptly with and execute
all rules, orders, regulations and recommendations of the Board of Fire
Underwriters, Rating Board and Landlord and Tenant's insurance companies with
respect to the prevention of fires and the exposure of liability risks
(collectively, "INSURANCE MATTERS"). Tenant, at its own expense, shall furnish
and maintain in good order an adequate number and type of fire extinguishers on
the Premises at all times. Notwithstanding the foregoing, in no event shall
Tenant be responsible for any violation of Governmental Orders or Insurance
Matters arising directly out of Landlord's Work. Landlord hereby represents
that the Premises shall comply with all applicable Governmental Orders and
Insurance Matters on the date Landlord delivers possession of the Premises to
Tenant.
18.02 FAILURE TO COMPLY
In case Tenant fails or neglects to comply with any of the Governmental
Orders, Insurance Matters or the ADA (defined in Section 18.04 below) as
required of Tenant, then Landlord or its agent may enter the Premises and make
said repairs to comply with any and all of the Government Orders, Insurance
Matters or the ADA at the sole cost and expense of Tenant plus ten percent
(10%) profit and twelve percent (12%)
*** Confidential treatment requested.
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for administration costs, which shall be added to Tenant's next months
installment of Rent and be due and payable as such, or Landlord may deduct the
same from any balance remaining in Landlord's hands. This provision is in
addition to the right of Landlord to terminate this Lease under Article 15 by
reason of default on the part of Tenant.
18.03 HAZARDOUS MATERIAL
Tenant shall, at all times, comply with local, state and federal laws,
rules and regulations governing the use, handling and disposal by Tenant of
Hazardous Material in the Premises including, but not limited to Section 1004
of the Federal Resource Conservation and Recovery Act,
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42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903) and any additions,
amendments, or modifications thereof. As used herein, the term "HAZARDOUS
MATERIAL" shall mean any hazardous or toxic substance, material or waste which
is, or becomes, regulated by any local or state government authority in which
the Premises is located or by the United States Government. Landlord and its
agents shall have the right, but not the duty, to inspect the Premises at any
time to determine whether Tenant is complying with the terms of this Section. If
Tenant is not in compliance with this Section, Landlord shall have the right to
immediately enter upon the Premises and take whatever actions are reasonably
necessary to comply with the terms set forth in this Section, including, but not
limited to, the removal from the Premises of any Hazardous Material and the
restoration of the Premises to a clean, neat, attractive, healthy and sanitary
condition. Tenant shall pay all such costs incurred by Landlord ten (10) days
upon receipt of a bill therefor plus ten percent (10%) profit and twelve percent
(12%) for administration. The covenants in this Section 18.03 shall survive the
expiration or earlier termination of this Lease.
18.04 AMERICANS WITH DISABILITIES ACT
Tenant, at its own expense, shall at all times comply with and shall cause
the Premises to be in compliance with the requirements of the Americans With
Disabilities Act of 1990, and any additions, amendments or modifications thereto
and all related regulations (the "ADA"). Landlord, at Landlord's sole cost and
expense, shall be responsible for insuring that Landlord's Work and the Common
Areas are in compliance with the ADA.
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ARTICLE 19 SUBORDINATION, MORTGAGEE'S RIGHTS AND ASSIGNMENT OF RENTS
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19.01 SUBORDINATION
(a) The rights and interests of Tenant under this Lease shall be subject
and subordinate to any ground lease, mortgage trust deed or REA now or hereafter
placed upon any portion of the Center, and to any advances made under any ground
lease, mortgage, trust deed or REA, and to the interests therein, and to all
renewals, modifications, consolidations, replacements, extensions and
re-financings thereof. Tenant agrees that any ground lessor, mortgagee, REA
holder or trustee (collectively referred to as a "HOLDER") may elect to give the
rights and interest of Tenant under this Lease priority over the lien of its
ground lease, mortgage, REA or trust deed. In the event of such election, the
rights and interest of Tenant under this Lease automatically shall have priority
in whole or in part, over the lien of said ground lease, mortgage or trust deed,
and no additional consent or instrument shall be necessary or required. Upon
request by Tenant, Landlord shall use reasonable efforts to obtain from such
Holder a subordination, nondisturbance and attornment agreement containing such
terms, covenants and conditions which such Holder customarily and consistently
requires of tenants similarly situated to Tenant leasing comparable space in a
super-regional shopping center similar to the Center. Tenant agrees to execute
and deliver such subordination, nondisturbance and attornment agreement as well
as all other instruments which may be requested by a Holder for such purposes.
In the event Landlord shall elect to refinance the Center during the Term,
Tenant's subordination to such future lender shall be expressly conditioned upon
Tenant's receipt of a non-disturbance agreement reasonably acceptable to both
Tenant and such future lender.
(b) Notwithstanding anything to the contrary contained in this Section
19.01, in the event, and so long as a permanent lender ("PERMANENT LENDER") has
an interest in all or any part of the Center, the rights of Tenant under this
Lease shall be subject and subordinate only to any first mortgage and to any
subordinate mortgage approved by the Permanent Lender.
19.02 MORTGAGEE'S RIGHTS
(a) So long as any such ground lease, trust deed, REA or mortgage remains
a lien on any portion of the Center, Tenant agrees, simultaneously with the
giving of any Notice to Landlord which is required to be given by this Lease, to
give a duplicate copy thereof to the respective Holder, provided Landlord has
given Tenant Notice of the name and address of any such Holder. Landlord agrees
to notify Tenant of any Holder to whom such Notice must be sent. Further, Tenant
agrees that if Landlord defaults in its performance of any of the covenants
under the Lease and if such default entitles Tenant to terminate this Lease, the
Holder may cure said default within a reasonable period of time beyond any time
period required of Landlord, and, if necessary, be permitted entry upon the
Premises for the purpose of curing any such default. The giving of any such
Notice to Landlord shall not be properly given under the terms of this Lease and
shall be of no force and effect until a duplicate copy thereof is also given to
the Holder pursuant to this Section 19.02.
(b) Tenant hereby acknowledges that so long as any ground lease, mortgage,
REA or trust deed is a lien upon the Premises, Landlord cannot agree to reduce
the rents below that provided for in this Lease, provide for payments of Rent
prior to the time herein provided for, nor terminate this Lease prior to the end
of the Term, EXCEPT as otherwise provided in this Lease, without first obtaining
the written consent of the Holder. Tenant hereby acknowledges that without such
consent, any such modification or termination shall be void as against said
Holder.
(c) So long as a mortgage remains a lien on any portion of the Center,
neither Tenant nor any other person having an interest in the
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possession, use, occupancy or utilization of the Premises shall enter into any
lease, sublease, license, concession or other agreement for use, occupancy or
utilization of space in the Premises which provides for rental or other payment
for such use, occupancy or utilization based, in whole or in part, on the net
income or profits derived from any person from the Premises leased, used,
occupied or utilized (other than an amount based upon a fixed percentage or
percentages of Gross Receipts, as defined herein), and any purported lease,
sublease, license, concession or other agreement shall be absolutely void and
ineffective as a conveyance of any right or interest in the possession, use,
occupancy or utilization of any part of the Premises.
19.03 ASSIGNMENT OF RENTS
(a) With reference to any assignment by Landlord of Landlord's interest
in this Lease, or the rents payable under this Lease, conditional in nature or
otherwise, which assignment is made to the Holder of a mortgage or ground lease
on property which includes the Premises, Tenant agrees:
(i) That the execution of such assignment by Landlord, and the
acceptance thereof by the Holder of such mortgage shall never be treated as an
assumption by such Holder of any of the obligations of Landlord hereunder,
unless such Holder shall, by Notice sent to Tenant, specifically otherwise
elect; and
(ii) That except as stated above, such Holder shall be treated as
having assumed Landlord's obligations hereunder with respect only to those
obligations that arise following a foreclosure or deed in lieu of foreclosure,
or assumption of Landlord's position by a Holder only upon foreclosure of such
Holder of a mortgage and the taking of possession of the Premises, or, in the
case of a ground lessor, the assumption of Landlord's position hereunder by
such ground lessor. Tenant agrees that with respect to those obligations of
Landlord that arise prior to a foreclosure or deed in lieu thereof, or
assumption of Landlord's position by such Holder, Holder shall have no
liability, provided that nothing contained herein shall be deemed to relieve
such Holder from performance of non-monetary obligations of a continuing nature
arising under this Lease prior to the date of such assumption.
(b) Where a party acquires Landlord's interest in property (whether land
only, or land and buildings) which includes the Premises, and simultaneously
leases the same back, such acquisition shall not be treated as an assumption of
Landlord's position under this Lease, and this Lease shall thereafter be
subject and subordinate at all times to such lease.
- --------------------------------------------------------------------------------
ARTICLE 20 ENTRY TO PREMISES
- --------------------------------------------------------------------------------
20.01 ENTRY TO PREMISES BY LANDLORD
(a) Landlord shall have the right to enter the Premises at all reasonable
times acceptable to both Landlord and Tenant for the purposes of:
(i) Inspecting the Premises;
(ii) Making any repairs to the Premises and performing any work that
may be necessary or desirable;
(iii) Exhibiting the Premises for the purpose of sale, ground lease,
mortgage or other financing;
(iv) Exhibiting the Premises (within one year prior to the expiration
of the Term or at any time following delivery of Tenant's Notice
pursuant to Section 17.01 herein) to prospective tenants.
Except in the case of an emergency, Landlord shall be accompanied by
a representative of Tenant during any entry to the Premises unless Tenant
waives such requirement in advance of such entry. During any such entry,
Landlord shall not interfere with Tenant's access to the Premises.
(b) Nothing in this Lease shall imply any duty on the part of Landlord to
do work or perform obligations which, under any of the provisions of this
Lease, Tenant may be required to perform, and any such performance by Landlord
shall not constitute a constructive eviction, nor a waiver of Tenant's default.
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<PAGE> 38
- --------------------------------------------------------------------------------
ARTICLE 21 NOTICES AND CERTIFICATES
- --------------------------------------------------------------------------------
21.01 NOTICES
(a) Any notice, statement, certificate, request or demand required or
permitted to be given or delivered by or in this Lease (a "NOTICE") shall be in
writing, and sent either by a nationally recognized overnight courier service,
registered or certified mail, postage prepaid, return receipt requested, with
simultaneous first class mailing, and in either case addressed, as the case may
be, to Landlord and Tenant at the addresses shown at the beginning of this
Lease, or to such other addresses as Landlord or Tenant shall designate in the
manner provided in this Section 21.01. In the case of any default Notice sent
by Landlord to Tenant, Landlord shall send a copy to: Gray Cary Ware &
Freidenrich LLP, 400 Hamilton Avenue, Palo Alto, California 94301; Attn: Daniel
K. Seubert. Landlord's managing representative, as designated from time to
time, is authorized to give or deliver to Tenant any Notice under this Lease.
Any Notice, shall, in the case of registered or certified mailing, be deemed to
have been given on the date mailed in any post office or branch post office
regularly maintained by the United States Government, and in the case of
delivery by a nationally recognized overnight courier service, shall be deemed
to have been given upon the date of delivery to an authorized agent of such
courier service, EXCEPT in each case for Notice of change of address or
revocation of a prior Notice, which shall only be effective upon receipt.
(b) At any time or times when Tenant's interest is vested in more than
one person, firm or corporation, jointly, in common or in severalty, a Notice
given by Landlord to any one such person, firm or corporation shall be
conclusively deemed to have been given to all such persons, firms or
corporations. Any Notices by Tenant to Landlord pursuant to the provisions of
this Lease shall be void and ineffective unless signed by all persons, firms
and corporations unless all such persons, firms and corporations have
previously given Notice to Landlord, signed by each of them and designating and
authorizing one or more of them to give the Notice referred to, and such Notice
shall then be unrevoked by any Notice to Landlord.
21.02 ESTOPPEL CERTIFICATE OF LANDLORD
Within fifteen (15) days after request by Tenant, Landlord, from time to
time and without charge, shall deliver to Tenant or to a person, firm or
corporation specified by Tenant, a duly executed and acknowledged instrument
"LANDLORD'S ESTOPPEL CERTIFICATE" as set forth on EXHIBIT "C," annexed hereto,
and made a part hereof.
Such certification shall not estop Landlord from thereafter asserting any
existing default of which Landlord did not have actual knowledge on the date of
execution thereof.
21.03 ESTOPPEL CERTIFICATE OF TENANT
Within fifteen (15) days after request by Landlord or Holder, Tenant, from
time to time and without charge, shall deliver to Landlord or the requesting
party, or to a person, firm or corporation, specified by Landlord or Holder, a
duly executed and acknowledged "TENANT'S ESTOPPEL CERTIFICATE" as set forth on
EXHIBIT "D," annexed hereto, and made a part hereof.
Such certification shall not estop Tenant from thereafter asserting any
existing default of which Tenant did not have actual knowledge on the date of
execution thereof.
- --------------------------------------------------------------------------------
ARTICLE 22 COVENANT OF QUIET ENJOYMENT
- --------------------------------------------------------------------------------
22.01 COVENANT OF QUIET ENJOYMENT
(a) So long as no Event of Default is existing, Tenant shall lawfully,
peaceably and quietly have, hold and enjoy the Premises during the Term on and
after the Term Commencement Date, without hindrance or ejection by any persons
lawfully claiming under Landlord; but it is understood and agreed that this
covenant, and any and all other covenants of Landlord contained in this Lease
shall be binding upon Landlord and its successors only with respect to breaches
occurring during its and their respective ownership of Landlord's interest in
the Premises. If Landlord is unable to place Tenant in possession of the
Premises at the Term Commencement Date by reason of the possession of the
Premises by another tenant holding over under a lease, such inability by
Landlord shall not constitute a default under this Lease; but the Term
Commencement Date shall be postponed until such date as such holdover tenant
gives up possession of the Premises and the Term shall be deemed to commence on
such Term Commencement Date as postponed.
(b) With respect to any services to be furnished by Landlord to Tenant,
Landlord shall in no event be liable for failure to furnish
27
<PAGE> 39
the same when prevented from doing so by strike, lockout, breakdown, accident,
order or regulation of or by any governmental authority, or failure of supply,
or inability by the exercise of reasonable diligence to obtain supplies, parts
or employees necessary to furnish such services, or because of war or other
emergency, or for any cause beyond Landlord's control.
(c) Landlord shall be in default of this Lease if Landlord fails to
perform any obligation required to be performed by Landlord under this Lease and
if such failure is not cured within thirty (30) days after receipt of Notice
from Tenant specifying the nature of such failure. In the event of any such
default by Landlord, Tenant shall have the right to exercise all rights and
remedies available at law or in equity. Landlord shall reimburse Tenant for any
reasonable expenses incurred by Tenant in curing Landlord's failures within
twenty (20) days following receipt by Landlord of paid invoices from Tenant. In
the event Landlord fails to reimburse Tenant for such amounts within thirty
(30) days following receipt by Landlord of paid invoices from Tenant, then
Tenant shall have the right to offset such amounts against the next ensuing
installments of Rent, Percentage Rent and Additional Rent coming due under this
Lease until the entire amount has been recouped by Tenant.
- --------------------------------------------------------------------------------
ARTICLE 23 MISCELLANEOUS PROVISIONS
- --------------------------------------------------------------------------------
23.01 HOLDOVER
(a) It is expressly understood by Tenant that Tenant's right to
possession of the Premises under this Lease shall terminate at the expiration or
earlier termination of the Term, and should Tenant continue thereafter to
remain in possession, Landlord, should it so elect, shall be entitled to the
benefits of all provisions of law with respect to summary recovery of
possession from a holdover tenant. Tenant shall indemnify, save harmless and
defend Landlord from and against any claim, damage, expense, cost or loss which
Landlord may incur by reason of such holding over, including without
limitation, any claim of a succeeding tenant, or any loss by Landlord with
respect to a lost opportunity to re-let the Premises.
(b) Should Tenant continue to occupy the Premises after the expiration or
earlier termination of the Term with the consent of the Landlord, such tenancy
shall be from month-to-month, and such month-to-month tenancy shall be under
the same terms, covenants and conditions as set forth in this Lease, EXCEPT
that Tenant shall pay holdover rent ("Holdover Rent") equal to one and one-half
(1 1/2) times the Rent for the last Lease Year of the Term.
23.02 LIMITATION ON LANDLORD'S PERSONAL LIABILITY
(a) The term "LANDLORD" as used in this Section 23.02 and throughout this
Lease, shall be limited to mean and include only the owner or owners at the
time in question of Landlord's interest in this Lease. Further, in the event of
any transfer by Landlord of Landlord's interest in this Lease, then provided
such transferee assumes Landlord's obligations under this Lease, Landlord named
(and in case of any subsequent transfers or conveyances, the then assignor),
including each of its partners, trustees, beneficiaries, shareholders,
affiliates, co-tenants, or principals shall be automatically freed and
relieved, from and after the date of such transfer or conveyance, of all
liability for the performance of any covenants and agreements on the part of
Landlord except for the obligations which arise prior to such transaction.
(b) Tenant, its partners, trustees, beneficiaries, shareholders,
affiliates, alter egos, successors and assigns are limited solely to the
estate, interest and property of Landlord in the real property upon which the
Center is situated and improvements to the real property, for the satisfaction
of any of Tenant's remedies, or for the satisfaction of any liens, rights or
the collection of any damages, judgment or other judicial process with respect
to any of the terms and conditions of this Lease, or any other obligations
created by, under or related to this Lease.
(c) Tenant, shall not have any recourse to or against any other property
or assets of Landlord or its partners, trustees, beneficiaries, shareholders,
affiliates, alter egos, successors, assigns, co-tenants or principals, nor
shall Landlord or its agents, employees, partners, trustees, beneficiaries,
stockholders, affiliates, representatives, insurers, nor shall any of
Landlord's banking institutions or trusts be subject to levy, execution or
other prejudgment or judgment enforcement or attachment, for the satisfaction
of Tenant's remedies arising from or relating to this Lease.
(d) Landlord's partners, trustees, beneficiaries and affiliates,
shareholders, alter egos, successors, assigns, are not and shall not become
personally liable under this Lease, nor shall they be named in any action
arising from or relating to a breach or the enforcement of this Lease.
23.03 DEFINITION OF TENANT'S ALLOCABLE SHARE
(a) The term "TENANT'S ALLOCABLE SHARE" shall be a fraction, the
numerator of which is the number of square feet of the Premises as set forth in
Section 1.01, and the denominator of which is ninety five percent (95%) of the
total number of square feet of Total Tenant Area
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<PAGE> 40
EXHIBIT D
TENANT'S ESTOPPEL CERTIFICATE
[Date]
EklecCo
4 Clinton Square
Syracuse, NY 13202
RE: Lease Agreement (the "LEASE") executed this _____ day of ________,
19__, by and between EklecCo (the "LANDLORD") and SILICON
ENTERTAINMENT, Inc. (the "TENANT"), a California corporation
Gentlemen:
As Tenant under this Lease, the undersigned acknowledges with respect to
the Premises demised under the Lease (the "PREMISES"), the truth and accuracy
of the following statements pertaining to the Lease and the Premises except as
otherwise disclosed in an attachment hereto:
1. Tenant now occupies the Premises described in the Lease.
2. Tenant presently is open and conducting business with the public in
the Premises.
3. The Lease Rent in the amount of [amount] per month has commenced.
4. The Lease is in full force and effect and has not been modified,
amended or assigned and Tenant is not aware of any Landlord Notice of
Default or termination under the Lease.
5. The Lease represents the entire agreement between the Parties.
6. The Term of the Lease expires on [date].
7. To Tenant's actual knowledge, all conditions under the Lease to be
performed by Landlord have been satisfied.
8. On this date there are not existing defenses or offsets which Tenant
has against the enforcement of the Lease by Landlord.
9. Tenant has not paid any Rent in advance, nor has Tenant deposited any
security with Landlord.
10. The size of the Premises is approximately [size] square feet.
11. The Premises are being operated in accordance with all applicable
environmental laws, zoning ordinances and building codes.
12. Capitalized undefined terms used herein shall have the respective
meanings given such terms in the Lease.
By: _______________
Name: _____________
Title: ____________
Date: _____________
<PAGE> 41
(defined in Section 23.03(b)) of the Center.
(b) "TOTAL TENANT AREA" when used in this Lease as pertaining to the
Center shall mean the total floor area, described in square feet, of all Tenant
and REA Parcel space which is either designated by Landlord as available for
lease or in fact leased EXCLUDING the Common Areas, any outdoor selling areas
whether or not mechanically heated or air-conditioned, and any tenant or REA
parcels which are separately assessed and taxed. Whenever used in this Lease,
the term "SQUARE FEET" shall consist of the area of floor area located within
the buildings measured from the outside face of all exterior walls of the
buildings (or the mid-point of any interior walls). Square Feet shall not
include the surface area of any roof structures used for mechanical equipment.
23.04 FORCE MAJEURE
The period of time during which either Party is prevented or delayed in any
performance or the making of any improvements or repairs or fulfilling any
obligation under this Lease, other than the payment of Rent, Percentage Rent and
Additional Rent, due to unavoidable delays caused by fire, catastrophe, strikes
or labor trouble, civil commotion, Acts of God, the public enemy, governmental
prohibitions or regulations or inability to obtain materials by reason thereof,
or any other causes beyond such Party's reasonable control (excluding lack of
funds), shall be added to such Party's time for performance, and such party
shall have no liability by reason of such delay, except that as a condition to
Tenant's right to avail itself of force majeure, Tenant must give Landlord
written Notice of such claimed force majeure not later than three (3) business
days following the occurrence of such force majeure.
23.05 RELOCATION OF TENANT
Landlord shall have the right to relocate Tenant within the Center during
the last twelve (12) months of the Term upon one hundred twenty (120) days
Notice to Tenant, at Landlord's cost and expense, which relocation shall in no
way affect the obligation or duties of either party hereunder. Landlord shall be
obligated for all expenses associated with such relocation, including but not
limited to the construction of the new space to a condition and level of quality
of finishes at least equivalent to the condition and level of the Premises on
the date of Landlord's relocation notice and any actual out-of-pocket costs
incurred by Tenant for the printing of new stationary and business cards, and
the costs of moving Tenant's Personal Property. In the event Tenant shall fail
or refuse to accept the new location within twenty (20) days of such Notice,
Landlord at its option, may terminate this Lease upon forty-five (45) days
written Notice to Tenant, provided that if Landlord shall fail to give the
Notice of Landlord's election to terminate within forty-five (45) days after the
expiration of such twenty (20) days, then Landlord's termination right under
this Section 23.05 shall be waived and this Lease shall remain in full force and
effect through the Termination Date as defined in Section 2.02.
23.06 CHANGES AND ADDITIONS
Landlord reserves the right at any time, and from time to time, to make
alterations or additions to, and to build additional stories on, under, above
and adjoining the building in which the Premises are located. Landlord also
reserves the right at any time, and from time to time, to construct other
buildings and improvements in Landlord's Tract, to enlarge or otherwise modify
the Center, to make alterations or additions thereto, to build additional
stories on any building or buildings within the Landlord's Tract, to build
adjacent thereto, to construct decks or elevated parking facilities, to install,
maintain, use, repair and replace ducts, wires, pipes and conduits passing
through or under the Premises serving other parts (now existing or hereafter
added) of Center, and to sell or lease any part of Landlord's Tract. The purpose
of the attached site plan is to show the approximate location of the Premises
within the Center, and Landlord reserves the right at any time to relocate the
various buildings, parking areas and other Common Areas shown on said site plan;
PROVIDED, however, that there shall not be any unreasonable obstruction of
Tenant's right of access to the Premises or any unreasonable interference with
Tenant's use of the Premises for the purposes set forth above.
23.07 ATTORNMENT BY TENANT
If at any time during the Term Landlord shall be the holder of a leasehold
estate covering premises which include the Premises, and if such leasehold
estate shall be canceled or otherwise terminated prior to the expiration date of
the leasehold and prior to the expiration of the Term, or in the event of the
surrender thereof whether voluntary, involuntary or by operation of law, then
provided the lessor of such leasehold estate assumes all of Landlord's
obligations under this Lease, Tenant shall make full and complete attornment to
such lessor for the balance of the Term upon the same covenants and conditions
as are contained in this Lease, so as to establish direct privity between such
lessor and Tenant and with the same force and effect as though this Lease was
made directly from such lessor to Tenant. Tenant shall then make all rent
payments thereafter directly to such lessor. In the event any proceedings are
brought for the foreclosure of, or in the event of conveyance by deed in lieu of
foreclosure of, or in the event of the exercise of the power of sale under, any
mortgage or deed of trust made by Landlord covering the Premises, or in the
event Landlord sells, conveys or otherwise transfers its interest in the Center
or any portion thereof containing the Premises, Tenant shall attorn to and
hereby covenants and agrees to execute an instrument in writing reasonably
satisfactory to the new owner whereby Tenant attorns to such successor in
interest and recognizes such successor as the Landlord under this Lease.
23.08 INDEX
29
<PAGE> 42
Intentionally deleted.
23.09 Survival of Tenant's Obligations
Any sums due either party that by the terms herein would be payable, or
are incapable of calculation, until after the expiration or earlier termination
of this Lease shall survive and remain a continuing obligation until paid.
23.10 Effect of Landlord's Notice to Terminate
Any right on the part of Landlord to terminate this Lease shall, when
exercised, require no further act, to the end that at the expiration of the
applicable time period, if any, contained in the particular termination
provision, this Lease and the Term hereunder shall end and expire as fully and
completely as if such termination date was the date herein definitely fixed for
the end and expiration of this Lease and its Term, and upon such date Tenant
shall quit and surrender the Premises to Landlord.
23.11 Effect of Captions
The captions, bold-faced type, underlying, notational references, or
legends in this Lease are inserted only for convenient reference or
identification of the particular paragraphs and are in no way intended to
describe, interpret, define or limit the scope, extent or interest of this
Lease, or any paragraph or provision thereof.
23.12 Tenant Authorized to Do Business
Tenant represents, warrants and covenants upon the date of execution, and
throughout the Term, Tenant is authorized to do business and is in good
standing in Rockland County, State of New York. Tenant, if a partnership or
corporation, agrees to furnish to Landlord, upon request, evidence of authority
for entering into this Lease.
23.13 Execution in Counterparts
This Lease may be executed in one or more counterparts, any one or all of
which shall constitute but one agreement.
23.14 Law Governing Effect; Gender
This Lease, and any dispute concerning this Lease, shall be governed by
the laws of the State of New York and any dispute concerning the application or
any interpretation of any portion of the Lease or the conduct of the parties
shall be brought in the New York Supreme Court, Rockland County. Tenant
consents to service of process at the Premises in the event Tenant does not
maintain a separate business office within the state where the Premises is
located. This Lease shall be binding upon and inure to the benefit of the
parties hereto and their respective legal representatives, successors and
permitted assigns, except as expressly provided otherwise. Use of the neutral
gender shall be deemed to include the masculine and feminine.
23.15 Memorandum or Notice of Lease
Upon request by either party, Landlord and Tenant agree to execute a
Memorandum or Notice of Lease in recordable form pursuant to applicable state
law. Upon the expiration or earlier termination of this Lease, the party who
shall have recorded such Memorandum or Notice of Lease shall promptly execute
any necessary instrument and remove the Memorandum or Notice of Lease from the
public records, and upon failure to do so, the other Party is appointed
attorney-in-fact to execute any such instrument in the recording party's name,
place and stead.
23.16 Complete Agreement
This Lease contains and embraces the entire agreement between the parties
with respect to the matters contained in this Lease, and it or any part of it
may not be changed, altered, modified, limited, terminated, or extended orally
or by any agreement between the parties unless such agreement is in writing and
signed by the parties hereto, their legal representatives, successors or
assigns. Tenant acknowledges and agrees that neither Landlord nor any
representative of Landlord nor any broker has made any representation to or
agreement with Tenant relating to the Premises, this Lease or the Center which
is not contained in the express terms of this Lease. Tenant acknowledges and
agrees that Tenant's execution and delivery of this Lease is based upon
Tenant's independent investigation and analysis of the business potential and
expenses represented by this Lease, and Tenant expressly WAIVES any and all
claims or defenses by Tenant against the enforcement of this Lease which are
based upon allegations of representations, projections, estimates,
understandings or agreements by Landlord or Landlord's representative that are
not contained in the express terms of this Lease. With respect to this Lease,
Tenant hereby represent to Landlord that the transaction contemplated herein is
not in violation of the provisions of Tenant's documents of incorporation or
constitute a breach or violation of any provision
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<PAGE> 43
of any indenture, mortgage, lease, agreement, judgment, statute, rule or
regulation to which Tenant is a party or by which Tenant is subject or bound.
23.17 GUARANTY OF LEASE
Intentionally deleted.
23.18 ARBITRATION
Any controversy or claim arising from or relative to any matter in
connection with this Lease, with reference to which this Lease shall expressly
provide that this paragraph governs, shall be settled by arbitration in Rockland
County, New York, in accordance with the rules of the American Arbitration
Association or its successor organization, and judgment upon the award rendered
by the arbitrator or arbitrators may be entered in any court having jurisdiction
thereof.
23.19 SECURITY AGREEMENT
Intentionally deleted.
23.20 INVALIDITY OF PARTICULAR PROVISIONS
If any term or provision of this Lease or the application thereof to any
person or circumstance is, to any extent, invalid or unenforceable, the
remainder of this Lease, or the application of such term or provision to persons
or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Lease shall be valid and be enforced to the fullest extent permitted by
law.
23.21 EXECUTION OF LEASE BY LANDLORD
The submission of this document for examination and negotiation does not
constitute an offer to lease, or a reservation of, or option for, the Premises,
and this document shall be effective and binding only upon the execution and
delivery hereof by both the Landlord and Tenant.
23.22 RELATIONSHIP OF THE PARTIES
Nothing contained herein shall be deemed or construed by the parties hereto
nor by any third party as creating the relationship of principal and agent, or
of partnership or of joint venture between the parties, it being understood and
agreed that neither the method of computation of rent nor any other provision
contained in this Lease, nor any acts of the parties, shall be deemed to create
any relationship between the parties other than Landlord and Tenant.
23.23 BROKERS
Landlord and Tenant each represent and warrant to the other that neither of
them has employed any realtors or brokers in connection with the negotiation of
this Lease. Landlord and Tenant shall each indemnify, defend and hold harmless
the other form any cost, expense or claim for brokerage or other commission
arising from or out of any breach of the foregoing representation and warranty.
23.24 REPRESENTATIONS
Landlord warrants to Tenant that the Center is in good condition and
repair, free of material defects, and that the Center has been constructed in
accordance with applicable laws and requirements. Landlord warrants that Dave &
Busters, Inc. has signed a lease agreement for space within the Center.
23.25 ABATEMENT
In the event Tenant is prevented from using the Premises or any portion
thereof, for five (5) consecutive business days or ten (10) days in any twelve
(12) month period (the "Eligibility Period") as a result of the failure of
Landlord to maintain and repair the Center and the Premises in accordance with
its obligations as set forth in this Lease, and such failure interferes with
Tenant's operations and use of the Premises, or as a result of any failure to
provide services or access to the Premises, or because of the presence of
Hazardous Materials in or on the Center or the land on which the Center is
located resulting from the acts or omissions of any party other than Tenant
which pose a health risk to occupants of the
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<PAGE> 44
Premises, 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 a portion thereof, in the
proportion that the square footage of the portion of the Premises that Tenant
is prevented from using bears to the Tenant Area of the entire Premises.
However, in the event that Tenant is prevented from conducting its business in
any portion of the Premises under such circumstances for period of time in
excess of the Eligibility Period, and the remaining portion of the Premises is
not reasonably 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 square footage of such reoccupied portion of the Premises
bears to the Tenant Area of the Premises, shall be payable by Tenant from the
date such business operations commence.
23.26 OTHER PROVISIONS
There is attached hereto and incorporated herein an addendum containing
additional provisions to this Lease: NONE
23.27 SPECIAL USE PERMIT
Landlord represents that as of the date hereof, no "special" use permit
from local governmental authorities is required for Tenant's operation for the
permitted use in Section 6.01 within the Premises in accordance with this
Lease. The foregoing representation shall not extend to any building or similar
permits required for Tenant's Work or a certificate of use and occupancy for
the Premises or licenses to conduct business and the like.
23.28 PYLON OR MONUMENT SIGN
In the event Landlord erects in its sole discretion a pylon or monument
sign that references the "thEATery" and contains the names of other tenants or
occupants of premises located in the "thEATery" (other than cinemas), Tenant
shall be entitled to have its identification sign installed on such sign at
Tenant's expense. The location thereon and size of Tenant's identification size
shall be equivalent to the location and size of similarly sized tenants in the
"thEATery."
IN WITNESS WHEREOF, the parties hereto have executed this Lease on the
date first above written.
EKLECO
By: /s/ [Signature Illegible]
-------------------------------------
Title: Partner/Auth. Agent
----------------------------------
SILICON ENTERTAINMENT, INC.,
a California corporation
By: /s/ JANET WOODS
-------------------------------------
Title: VP Real Estate
----------------------------------
32
<PAGE> 45
(Acknowledgment of LANDLORD)
STATE OF NEW YORK )
ss:
COUNTY OF ONONDAGA )
On the 27th day of July, in the year 1998 before me, the undersigned, a
notary public in and for said state, personally appeared James A. Tuozzolo,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual or the person upon behalf of which
the individual acted, executed the instrument.
/s/ JENNIFER D. YOUNG
--------------------------------------
(Notary Public)
[SEAL]
(Acknowledgment of TENANT)
STATE OF CALIFORNIA )
ss:
COUNTY OF SANTA CLARA )
On the 24th day of July, in the year 1998 before me, the undersigned, a
notary public in and for said state, personally appeared Jaret Woods, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual(s) whose name(s) is (are) subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument, the
individual(s) or the person upon behalf of which the individual(s) acted,
executed the instrument.
/s/ CAROL BURKE
--------------------------------------
(Notary Public)
[SEAL]
33
<PAGE> 46
TABLE OF EXHIBITS
Exhibit A ............................................................ Site Plan
Exhibit A-1 ........................................................... Premises
Exhibit B ........................................ Term Commencement Certificate
Exhibit C ...................................... Landlord's Estoppel Certificate
Exhibit D ........................................ Tenant's Estoppel Certificate
34
<PAGE> 47
EXHIBIT A
Note: This is a schematic plan and is intended to show only the proposed layout
of the Center. All measures, dimensions and distances are not to scale.
The depiction hereon does not constitute a warranty or representation of
any kind.
<PAGE> 48
EXHIBIT A-1
PREMISES -- Space F401
NOTE: This diagram is an approximate lease plan of the Center. All measures,
dimensions, and distances are not to scale. The depiction hereon does not
constitute a warranty or representation of any kind.
<PAGE> 49
EXHIBIT-A-1-A
Permissible Area for Projection of Car and Sign Board
Note: This diagram is an approximate lease plan of the Center. All measures,
dimensions, and distances are not to scale. The depiction hereon does not
constitute a warranty or representation of any kind.
<PAGE> 50
EXHIBIT A-2
Kiosk Restricted Area
Permitted Kiosk Locations within Restricted Area
Note: This diagram is an approximate lease plan of the Center. All masues,
dimensions, and distances are not to scale. The depiction hereon does not
constitute a warranty or representation of any kind.
<PAGE> 51
EXHIBIT A-3
/// - Relocation Areas
Note: This diagram is an approximate lease plan of the Center. All measures,
dimensions, and distances are not to scale. The depiction hereon does not
constitute a warranty or representation of any kind.
<PAGE> 52
EXHIBIT B
TERM COMMENCEMENT CERTIFICATE
This Lease Agreement (the "Lease") executed this ________ day of
________, 19__, by and between EklecCo (the "Landlord") and SILICON
ENTERTAINMENT, Inc. (the "Tenant"), a California corporation.
WITNESSETH
WHEREAS, Landlord is the owner of a certain shopping center situated in
West Nyack, New York known as the Palisades Center (the "Center"); and
WHEREAS, by that certain Lease, Landlord leased a certain portion (the
"Premises") of the Center to Tenant; and
NOW THEREFORE, Landlord and Tenant hereby acknowledge with respect to the
Premises demised under the Lease, the truth and accuracy of the following:
1. Landlord turned over the Premises to Tenant, and Tenant accepted
delivery of the Premises on ________ day of 19__.
2. The Term Commencement Date (as such term is defined in the Lease) was,
_______ , 199_.
3. Capitalized undefined terms used herein shall have the respective
meanings given such terms in the Lease.
IN WITNESS WHEREOF, the undersigned executes this certificate as of this
_________ day of ___________ , 19__.
EKLECCO
By:
--------------------------------------
Title:
-----------------------------------
Date:
------------------------------------
SILICON ENTERTAINMENT, INC.,
a California corporation
By:
--------------------------------------
Title:
-----------------------------------
Date:
------------------------------------
<PAGE> 53
(Acknowledgment of LANDLORD)
STATE OF NEW YORK )
ss:
COUNTY OF ONONDAGA )
On the _________ day of ____________________, in the year 19__ before me,
the undersigned, a notary public in and for said state, personally
appeared ___________________________, personally known to me or proved to me
on the basis of satisfactory evidence to be the individual(s) whose name(s) is
(are) subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their capacity(ies), and that by
his/her/their signature(s) on the instrument, the individual(s) or the person
upon behalf of which the individual(s) acted, executed the instrument.
---------------------------------------
(Notary Public)
(Acknowledgment of TENANT)
STATE OF )
ss:
COUNTY OF )
On the _________ day of ___________________, in the year 19__ before me,
the undersigned, a notary public in and for said state, personally
appeared _______________________, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual(s) whose name(s) is (are)
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument, the individual(s) or the person upon behalf of
which the individual(s) acted, executed the instrument.
----------------------------------------
(Notary Public)
<PAGE> 54
EXHIBIT C
LANDLORD'S ESTOPPEL CERTIFICATE
[Date]
SILICON ENTERTAINMENT, Inc.
10401 Bubb Road
Cupertino, California 95014
RE: Lease Agreement (the "Lease") executed this ___ day of ___, 19__, by
and
between EklecCo ("Landlord") and SILICON ENTERTAINMENT, Inc. (the
"TENANT"), a California corporation
Landlord acknowledges with respect to the Premises demised under the Lease
(the "Premises"), the truth and accuracy of the following statements pertaining
to the Lease and Premises:
1. The commencement date of the Lease if [Date] and the expiration date
of the Term of the Lease is [Date].
2. The Lease is in full force and effect and has not been modified,
amended or extended, Landlord has neither received nor given notice of default
or termination under the Lease, nor is Landlord aware of any condition existing
that with notice and/or the passage of time or both would constitute a default
under the Lease.
3. Tenant currently is in sole possession of the Premises. All of the
construction required to have been performed by Landlord or Tenant prior to the
date hereof under the provisions of the Lease has been satisfactory completed
in all respects and, to the best knowledge of Landlord, all construction and
material used in connection therewith has been fully paid for by the respective
Parties responsible therefor, and Landlord has neither given nor received any
notice of any failure on the part of Landlord or Tenant to comply with the
provisions of the Lease in connection with any construction to have been
performed in or about the Premises.
4. The monthly Rent due under the Lease is [amount]. All Rent and
Additional Rent due through [Date] has been paid in full. No other rent or
additional rent has been paid in advance.
5. Capitalized undefined terms used herein shall have the respective
meanings given such terms in the Lease.
In witness whereof, the undersigned has executed this certificate as of
the date and year first above written.
By: EklecCo as Landlord
Name:
--------------------------
Title:
--------------------------
Date:
--------------------------
<PAGE> 1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED ON
A REQUEST FOR CONFIDENTIAL TREATMENT
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
EXHIBIT 10.15
LEASE
LBE TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
TENANT
"NASCAR SILICON MOTOR SPEEDWAY"
- -----------------------------------------------------------------------------
TRADE NAME
N/A
- -----------------------------------------------------------------------------
GUARANTOR
WOODFIELD MALL
A REGIONAL RETAIL DEVELOPMENT
VILLAGE OF SCHAUMBURG
COUNTY OF COOK
STATE OF ILLINOIS
PROVISIONS ADDED TO THIS LEASE APPEAR ON THE DATA SHEET
AND ON THE ATTACHED RIDER AND, EXCEPT IN INSTANCES
OF ADDITIONAL SENTENCES OR PARAGRAPHS BEING ADDED AT THE END
OF A SECTION OR PARAGRAPH, ARE INDICATED IN THE TEXT BY AN
UNDERSCORING OF THE LINE NUMBER IN THE RIGHT-HAND MARGIN
OF THE LINE BEING CHANGED. ADDITIONAL LANGUAGE IS INSERTED
EITHER IN PLACE OF DELETED LANGUAGE OR AFTER AN UNDERSCORED WORD,
EXCEPT AS OTHERWISE NOTED ABOVE.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
DATA SHEET..................................................................... D1
EXECUTION/ACKNOWLEDGMENT....................................................... E1
ADDENDUM....................................................................... A1
ARTICLE I. GRANT AND TERM
SECTION 1.01. LEASED PREMISES............................................. S1
SECTION 1.02. COMMENCEMENT AND ENDING DAY OF TERM......................... S1
SECTION 1.03. OPENING..................................................... S2
ARTICLE II. RENT
SECTION 2.01. MINIMUM RENT................................................ S2
SECTION 2.02. PERCENTAGE RENT............................................. S2
SECTION 2.03. GROSS SALES................................................. S2
SECTION 2.04. RENT ADJUSTMENT............................................. S3
SECTION 2.05. TENANT'S TAX OBLIGATION..................................... S3
SECTION 2.06. PAYMENTS.................................................... S4
ARTICLE III. RECORDS AND BOOKS OF ACCOUNT
SECTION 3.01. TENANT'S RECORDS............................................ S5
SECTION 3.02. REPORTS BY TENANT........................................... S5
ARTICLE IV. AUDIT
SECTION 4.01. RIGHT TO EXAMINE BOOKS...................................... S5
SECTION 4.02. AUDIT....................................................... S5
ARTICLE V. CONSTRUCTION OF LEASED PREMISES
SECTION 5.01. CONSTRUCTION OF LEASED PREMISES............................. S6
SECTION 5.02. AVAILABILITY AND POSSESSION OF PREMISES FOR TENANT'S WORK... S7
SECTION 5.03. LANDLORD'S AND TENANT'S OPTIONAL RIGHT OF CANCELLATION...... S7
SECTION 5.04. ULTIMATE COMMENCEMENT DATE.................................. S7
ARTICLE VI. ALTERATIONS, CHANGES AND ADDITIONS
SECTION 6.01. INSTALLATION BY TENANT...................................... S8
SECTION 6.02. REMOVAL BY TENANT........................................... S8
SECTION 6.03. CHANGES AND ADDITIONS....................................... S8
ARTICLE VII. CONDUCT OF BUSINESS BY TENANT
SECTION 7.01. USE OF PREMISES............................................. S8
SECTION 7.02. OPERATION OF BUSINESS....................................... S8
SECTION 7.03. RADIUS...................................................... S10
SECTION 7.04. STORAGE, OFFICE SPACE....................................... S10
SECTION 7.05. CARE OF PREMISES............................................ S10
ARTICLE VIII. COMMON AREAS
SECTION 8.01. OPERATION AND MAINTENANCE OF COMMON AREAS................... S10
SECTION 8.02. USE OF COMMON AREAS......................................... S10
SECTION 8.03. TENANT'S PRO RATA SHARE OF EXPENSES......................... S11
ARTICLE IX. SIGNS
SECTION 9.01. SIGNS....................................................... S12
ARTICLE X. MAINTENANCE
SECTION 10.01. LANDLORD'S OBLIGATIONS FOR MAINTENANCE..................... S12
SECTION 10.02. TENANT'S OBLIGATION FOR MAINTENANCE........................ S12
ARTICLE XI. INSURANCE AND INDEMNITY
SECTION 11.01. TENANT'S INSURANCE......................................... S14
SECTION 11.02. LANDLORD'S INSURANCE........................................S15
SECTION 11.03. COVENANTS TO HOLD HARMLESS..................................S15
ARTICLE XII. UTILITY CHARGES
SECTION 12.01. UTILITY CHARGES.............................................S16
ARTICLE XIII. ESTOPPEL STATEMENT, ATTORNMENT AND SUBORDINATION
SECTION 13.01. ESTOPPEL STATEMENT..........................................S17
SECTION 13.02. ATTORNMENT..................................................S18
SECTION 13.03. SUBORDINATION...............................................S18
SECTION 13.04. REMEDIES....................................................S18
ARTICLE XIV. ASSIGNMENT AND SUBLETTING
SECTION 14.01. NO ASSIGNMENT OR SUBLETTING.................................S18
ARTICLE XV. WASTE
SECTION 15.01. WASTE OR NUISANCE...........................................S19
</TABLE>
(i)
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE XVI. TRADE NAME, PROMOTIONAL CHARGE
SECTION 16.01. TRADE NAME................................................... S19
SECTION 16.02. SOLICITATION OF BUSINESS..................................... S19
SECTION 16.03. PROMOTIONAL CHARGE........................................... S19
ARTICLE XVII. DESTRUCTION OF LEASED PREMISES
SECTION 17.01. RECONSTRUCTION OF DAMAGED PREMISES........................... S20
SECTION 17.02. WAIVER OF SUBROGATION........................................ S21
ARTICLE XVIII. EMINENT DOMAIN
SECTION 18.01. TOTAL CONDEMNATION OF LEASED PREMISES........................ S21
SECTION 18.02. PARTIAL CONDEMNATION......................................... S21
SECTION 18.03. LANDLORD'S AND TENANT'S DAMAGES.............................. S22
ARTICLE XIX. DEFAULT
SECTION 19.01. RIGHT TO RE-ENTER............................................ S22
SECTION 19.02. RIGHT TO RELET............................................... S23
SECTION 19.03. EXPENSES..................................................... S23
SECTION 19.04. WAIVER OF COUNTERCLAIMS AND TRIAL BY JURY.................... S23
ARTICLE XX. BANKRUPTCY OR INSOLVENCY.......................................... S24
SECTION 20.01. TENANT'S INTEREST NOT TRANSFERABLE........................... S24
SECTION 20.02. TERMINATION.................................................. S24
SECTION 20.03. TENANT'S OBLIGATION TO AVOID CREDITORS' PROCEEDINGS.......... S24
SECTION 20.04. RIGHTS AND OBLIGATIONS UNDER THE BANKRUPTCY CODE............. S24
ARTICLE XXI. ACCESS BY LANDLORD
SECTION 21.01. RIGHT OF ENTRY............................................... S25
ARTICLE XXII. TENANT'S PROPERTY
SECTION 22.01. TAXES ON TENANT'S PROPERTY................................... S25
SECTION 22.02. LOSS AND DAMAGE.............................................. S25
SECTION 22.03. NOTICE BY TENANT............................................. S25
ARTICLE XXIII. HOLDING OVER
SECTION 23.01. HOLDINGS OVER................................................ S26
SECTION 23.02. SUCCESSORS................................................... S26
ARTICLE XXIV. RULES AND REGULATIONS
SECTION 24.01. RULES AND REGULATIONS........................................ S26
ARTICLE XXV. QUIET ENJOYMENT
SECTION 25.01. LANDLORD'S COVENANT.......................................... S26
SECTION 25.02. TENANT'S COVENANT............................................ S26
ARTICLE XXVI. SECURITY PROVISION
SECTION 26.01. SECURITY..................................................... S26
ARTICLE XXVII. MISCELLANEOUS
SECTION 27.01. WAIVER; ELECTION OF REMEDIES................................. S27
SECTION 27.02. ENTIRE AGREEMENT............................................. S27
SECTION 27.03. INTERPRETATION AND USE OF PRONOUNS........................... S27
SECTION 27.04. DELAYS....................................................... S28
SECTION 27.05. NOTICES...................................................... S28
SECTION 27.06. CAPTIONS AND SECTION NUMBERS................................. S28
SECTION 27.07. BROKER'S COMMISSION.......................................... S28
SECTION 27.08. RECORDING.................................................... S28
SECTION 27.09. FURNISHING OF FINANCIAL STATEMENTS........................... S28
SECTION 27.10. LANDLORD'S USE OF COMMON AREAS............................... S28
SECTION 27.11. TRANSFER OF LANDLORD'S INTEREST.............................. S28
SECTION 27.12. FLOOR AREA................................................... S29
SECTION 27.13. INTEREST ON PAST DUE OBLIGATIONS............................. S29
SECTION 27.14. LIABILITY OF LANDLORD........................................ S29
SECTION 27.15. ACCORD AND SATISFACTION...................................... S29
SECTION 27.16. EXECUTION OF LEASE; NO OPTION................................ S30
SECTION 27.17. GOVERNING LAW................................................ S30
SECTION 27.18. SPECIFIC PERFORMANCE OF LANDLORD'S RIGHTS.................... S30
SECTION 27.19. CERTAIN RULES OF CONSTRUCTION................................ S30
SECTION 27.20. INDEX........................................................ S30
SECTION 27.21. SURVIVAL; NONDISCLOSURE; FREE ACT............................ S30
EXHIBIT A SITE PLAN; LEASED PREMISES; LEGAL DESCRIPTION (if included)
EXHIBIT B CONSTRUCTION
EXHIBIT B-1 UTILITIES
EXHIBIT B-2 (additional construction information and procedures, if any)
EXHIBIT C CENTRAL-AIR/CONDENSER-WATER SYSTEM (if any)
OTHER EXHIBITS (if any)
RIDER
</TABLE>
(iii)
<PAGE> 4
WOODFIELD MALL
A REGIONAL RETAIL DEVELOPMENT
VILLAGE OF SCHAUMBURG, ILLINOIS
THIS LEASE made as of this 18 day of December, 1997, by and between
CHICAGO TITLE AND TRUST COMPANY, a corporation of Illinois, as Trustee under
Trust No. 46746, and not personally, (Landlord), and LBE TECHNOLOGIES, INC.,
the address of which is 10401 Bubb Road, Cuppertino, CA 90401, Attention: Ms.
Janet Setcavage Woods (Tenant). All of the provisions of the Lease, including
the Data Sheet, the standard provisions commencing with Article I and
continuing through Article XXVII of the Lease (hereinafter at times referred to
as the "text of the Lease" or the "Standard Form"), the Addendum, all exhibits,
and riders, if any, are incorporated in full in this preamble as if fully set
forth at this point.
DATA SHEET
The following references furnish data to be incorporated in the specified
Sections of the Lease and shall be construed to incorporate all of the terms of
the entire Section as stated in the said Lease:
(1) SECTION 1.01: LEASED PREMISES: Store Number 144, situated on the
lower level of Building "G," having an irregular shape and consisting of
approximately six thousand one hundred eleven (6,111) square feet.
(2) SECTION 1.02: COMMENCEMENT DATE OF TERM: The date one hundred fifty
(150) days after the date that the leased premises are available to Tenant free
and clear of the occupancy rights of the existing tenant with Landlord's Work
completed to the point where Tenant can commence and diligently pursue
completion of Tenant's Work.
LENGTH OF TERM: Five (5) lease years
(3) SECTION 2.01 AND SECTION 2.02: NAME AND ADDRESS FOR RENT PAYMENTS:
Payments from Tenant shall be made payable to WOODFIELD ASSOCIATES, and shall be
sent to:
Woodfield Associates
Department 55401
P.O. Box 67000
Detroit, Michigan 48267-0554
SECTION 27.05: NOTICE ADDRESS FOR LANDLORD:
Woodfield Associates
200 East Long Lake Road
P.O. Box 200
Bloomfield Hills, MI 48303-0200
(4) SECTION 2.01: MINIMUM RENT: [***] per annum, payable in equal
consecutive monthly installments of [***].
(5) SECTION 2.02(a): PERCENTAGE RENT: [***] (the "percentage rent factor")
of Gross Sales related to the use of auto racing simulators and the automobile
racing entertainment center made during each lease year of the term hereof in
excess of [***] ("Minimum Gross Sales") plus [***] (the "percentage rent
factor") of all other Gross Sales made during each lease year of the term hereof
in excess of [***] ("Minimum Gross Sales").
(6) SECTION 5.01(b): DESIGN OF LEASED PREMISES:
The store design to be used by Tenant in the preparation of Working
Drawings and Specifications for Tenant's Work in the leased premises shall be
substantially the same (taking into account differences due to space
configuration) as the store design reflected in the design for the NASCAR
Silicon Motor Speedway store for Mall of America (except there shall be no
projections beyond the lease line and storefront signage must comply with the
criteria set forth in Exhibit "B"), and Tenant's architect shall provide
certification to Landlord, with the submission of such Working
*** Confidential treatment requested.
D1
<PAGE> 5
Drawings and Specifications, that this store design requirement has been
satisfied. The Working Drawings and Specifications for Tenant's Work in the
leased premises shall be completed and submitted to Landlord no later than sixty
(60) days following full execution of this Lease. Such submission shall also
include the certification of Tenant's architect that the Working Drawings and
Specifications comply with the Space Layout Drawings provided by Landlord, all
criteria and specifications set forth in Exhibits B and B-1 and any further
construction exhibits attached to this Lease, and all applicable code
requirements. Landlord shall not withhold its approval of the store design
indicated in the Working Drawings and Specifications if Tenant and Tenant's
architect shall comply with the foregoing requirements.
(7) SECTION 5.01(c): TENANT REIMBURSEMENT TO LANDLORD: Not Applicable.
(8) SECTION 7.01: PERMITTED USE: The premises shall be occupied and used
by Tenant for the purpose of conducting a simulated automobile racing
entertainment center and other related retail uses. Such uses may include but
shall not be limited to the installation and operation of automobile racing
simulators (operated by the use of coins, tokens, or otherwise) and the sale of
auto racing and other entertainment merchandise. Incidental to the foregoing
uses, Tenant shall be permitted to sell a limited number of prepackaged snacks
and beverages (limited to the number and types of items of the attached list)
provided Tenant shall post signage at Tenant's entrance to the mall which states
that food and beverage items may not be consumed in the mall areas.
(9) SECTION 7.03: RADIUS: Ten (10) miles.
(10) SECTION 16.01: TRADE NAME: "NASCAR Silicon Motor Speedway" provided,
Tenant may operate under the trade name "Silicon Motor Speedway" if Tenant shall
no longer have the license to operate under the "NASCAR" name.
(11) SECTION 16.03: ORIGINAL ANNUAL PROMOTIONAL CHARGE: [***]. Original,
annual promotional charge to be paid in monthly installments of: [***].
(12) SECTION 26.01: SECURITY DEPOSIT: Not Applicable.
Additional Security: Not Applicable.
(13) GUARANTOR(S): Not Applicable.
Address(es): Not Applicable.
(14) RIDER: The Rider attached and made a part of this Lease is the
"Standard NASCAR Silicon Motor Speedway Rider" containing the pre-negotiated
revisions to the Standard Form and Exhibit B, which revisions are accepted by
Landlord and Tenant by their execution of this Lease.
SPECIAL PROVISIONS:
ADDENDUM SECTION 12.01: On page A1, lines 32, and 45, in place of the deleted
language, insert "twenty (20)".
ADDENDUM SECTION 16.03: On page A2, lines 32, 38 and 39, in place of the
deleted language, insert "two (2)".
On page A2, line 44, in place of the deleted language,
insert "be obligated to pay to Landlord the sum of [***] (per failure) as
Landlord's sole remedy."
On page A2, line 45, in place of the deleted language,
insert "twenty (20)".
SECTION 1.02: Landlord represents to Tenant that Landlord has lawful
possession of the leased premises free and clear of the occupancy rights of the
prior tenant.
*** Confidential treatment requested.
D2
<PAGE> 6
Tenant Termination Option. Provided Tenant shall not
be in default hereunder beyond any applicable grace or cure period set forth in
the Lease, then Tenant may terminate this Lease with an effective date of
termination to occur any time after expiration of the forty-second (42nd) full
calendar month after the commencement date of the lease term. In order for
Tenant's exercise of such option to be effective, Tenant must provide written
notice to Landlord (setting forth the effective date of lease termination) at
least one hundred eighty (180) days prior to the effective date of termination.
Provided Tenant shall not then be in default under any
of the terms, covenants, or conditions of said Lease beyond any applicable grace
or cure period set forth in this Lease, then one half (1/2) of Tenant's initial
monthly installments of minimum rent for the initial [***] months of the lease
term shall be abated. Landlord and Tenant agree that no portion of the minimum
rent paid by Tenant after the expiration of any period during which such rent
was abated shall be allocated by Landlord or Tenant to such abatement period,
nor is such rent intended by the parties to be allocable to any abatement
period. In the event that this Lease is terminated prior to expiration of the
stated lease term as a result of Tenant's default beyond any applicable grace or
cure period set forth in this Lease, or as a result of Tenant's exercise of its
termination option set forth in Section 1.02 of this Data Sheet, Tenant shall
immediately repay to Landlord an amount equal to the then unamortized potion of
the minimum rent abatement which amortization shall be on the straight-line
basis over the full stated lease term, plus interest on such unamortized portion
at a rate equal to [***] percentage points above the prime rate then charged by
a plurality of FDIC member banks headquartered in the State, which interest
shall accrue from the date of the minimum rent abatement through the date of
termination of the Lease.
Competing Business. For so long as (1) Tenant shall be
continuously operating its business in the leased premises with a principal
business which is the operation of automobile racing simulators and (2) Tenant
is not in default hereunder beyond any applicable notice or cure period set
forth in this Lease, Landlord agrees that if Landlord hereafter enters into
another lease agreement for a business whose principal business is the operation
of automobile racing simulators ("Competing Business"), then following thirty
(30) days' written notice from Tenant to Landlord thereof (and opportunity for
Landlord to remedy such situation during such thirty [30] day period) [***] of
each monthly payment of minimum rent required to be paid by Tenant to Landlord
hereunder shall be abated and Tenant shall have the right to terminate this
Lease upon prior written notice to Landlord with no repayment of the then
unamortized portion of the abatement amount and Tenant inducement referenced in
Sections 1.02 and 5.01(b) of this Data Sheet. The provisions of this paragraph
shall not apply to (a) the operation of a business which is owned in whole or in
part by, or operated by, Tenant or by any licensee, franchisee, assignee,
sublessee or affiliate of Tenant, or by any entity related in any other manner
to Tenant or to any licensee, franchisee, assignee, sublessee or affiliate of
Tenant or (b) the operation of a business resulting from an order or other
action of a bankruptcy court. Landlord's agreement under this subsection shall
become null and void and of no further force and effect immediately upon: (i)
the commencement of any action or proceeding against Landlord by any third party
or governmental agency challenging the enforceability of this subsection, or
asserting any claim under any Federal or state law or regulation; or (ii) a
finding or judgment of any Federal court or agency or state court or agency that
the provisions of this subsection are unenforceable, invalid or illegal. A
business shall not have, as its principal business, automobile racing simulators
unless at least [***] of such business' Gross Sales are derived directly from
the operation of automobile racing simulators.
The second paragraph of Section 1.02 of the Standard
Form shall not apply to this Lease.
SECTION 2.04 The provisions of Section 2.04 shall not apply to
Tenant.
ARTICLES III AND IV. Tenant shall maintain separate books, records and
source documents evidencing Gross Sales for each of Tenant's two uses: (i) sales
related to auto racing simulators and the automobile racing entertainment center
and (ii) all other sales.
SECTION 5.01(b): Provided that Tenant shall not be in default under this
Lease beyond any applicable grace or cure period set forth in this Lease, then,
Landlord shall pay to Tenant, as a Tenant inducement, the sum of [***]. Such
Tenant inducement shall be payable to Tenant in three (3) equal installments as
follows: one-third (1/3) within thirty (30) days following Tenant's completion
of one-third (1/3) of Tenant's leasehold improvements and issuance of Landlord's
Letter of Acceptance for such portion of the leasehold improvements, one-third
(1/3) within thirty (30) days following completion of two-thirds (2/3) of
Tenant's leasehold improvements, and issuance of Landlord's Letter of Acceptance
for such portion of the leasehold improvements, and the remainder within thirty
(30) days following completion of Tenant's Work, Tenant's opening for business
and issuance of Landlord's Letter of Acceptance for all of Tenant's Work. In the
event that this Lease is terminated prior to expiration of the stated lease term
as a result of Tenant's default beyond any applicable grace or cure period set
forth in this Lease, or as a result of Tenant's exercise of its termination
option set forth in Section 1.02 of the Data Sheet, Tenant shall immediately
repay to Landlord an amount equal to the then unamortized portion of the Tenant
inducement paid to Tenant, which amortization shall be on the straight-line
basis over the full stated lease term, plus interest on such unamortized portion
at a rate equal to three (3) percentage points above the prime rate then charged
by a plurality of FDIC member banks headquartered in the State, which interest
shall accrue from the date of payment of the Tenant inducement to Tenant through
the date of termination of the Lease. Upon Tenant's request, Landlord shall
promptly inspect Tenant's work and promptly issue
*** Confidential treatment requested.
D3
<PAGE> 7
Landlord's Letter of Acceptance provided Tenant shall have satisfied the
conditions for issuance of Landlord's Letter of Acceptance.
Landlord shall not have the option of terminating
this Lease pursuant to the provisions of the sentence commencing on page S6,
line 50 [***].
If Landlord shall fail to respond to Tenant's
submissions of plans and specifications within seven (7) business days following
receipt thereof, then the date set forth in Section 1.02 of page D1 of the Data
Sheet shall be extended one (1) day for each day beyond such seven (7) business
day period that Landlord fails to respond.
SECTIONS 5.01(b) AND 7.02: Tenant shall be permitted to place a full size race
car (with characteristics which are similar to the race car placed in Tenant's
Mall of America store) in the area of the leased premises abutting Tenant's
entranceway. Such car may have lights, flashing lights and sound effects,
provided sound shall not travel within other leased or licensed premises.
SECTION 7.02: Subject to Tenant's compliance with governmental
laws, ordinances and regulations, Tenant may open for business as early as 8:30
a.m. Mondays through Saturdays and 10:00 a.m. on Sundays and may remain open as
late as 2:00 a.m. on Mondays through Saturdays and 11:00 p.m. on Sundays. Tenant
shall not be obligated to pay any additional charges to Landlord for operating
before or after Shopping Center hours, provided if Landlord determines that
additional security personnel is needed in connection with Tenant's particular
business operations before or after Shopping Center hours, then Tenant shall be
obligated for the reasonable costs of such additional security personnel.
SECTION 7.03: If a competitor of Tenant opens an operation within
the ten (10) mile radius area whose principal business is the operation of
automobile racing simulators, then this Section 7.03 shall not apply to one
store operation with automobile racing simulators opened by Tenant within such
radius area after the opening of such competitor's operation.
This Section 7.03 shall not apply to Tenant's
operation of automobile racing simulators within the radius on a temporary basis
(not to exceed seven [7] days) provided same are not operated within shopping
centers.
ARTICLE XII: Notwithstanding these provisions to the contrary, to
the extent permitted by law and by the utility company providing electrical
service to the regional retail development, Tenant shall be permitted (at
Tenant's sole cost and expense) to obtain additional electrical current in a
manner substantially consistent with the plans prepared by the prior tenant for
the leased premises. Any work undertaken within the common areas in connection
therewith shall be undertaken under the supervision of Landlord.
SECTION 13.03: Upon Tenant's written request, Landlord agrees to
request from its mortgagee whose interest in the leased premises is, as of the
date of this Lease, superior to Tenant's interest therein, a non-disturbance
agreement on the mortgagee's standard form, which shall provide that in the
event Landlord defaults under such mortgage, Tenant's possession of the leased
premises shall not be disturbed so long as Tenant is not in breach or default of
this Lease. Tenant (and not Landlord) shall be liable and responsible for any
fee or expense charged by such mortgagee in attempting to secure, or in
providing, any such non-disturbance agreement. Further, the mortgagee's failure
or refusal to execute a non-disturbance agreement following Landlord's request
shall not be deemed to be a breach or default of this Lease by Landlord.
SECTION 16.01: Tenant hereby represents to Landlord that Tenant has
entered into a license agreement ("License Agreement") with the National
Association for Stock Car Auto Racing, Inc. ("NASCAR") dated as of August 18,
1997. Pursuant to the License Agreement, NASCAR has granted Tenant a license to
use the names "NASCAR Silicon Motor Speedway," as well as certain trademarks and
trade dress of NASCAR, in the conduct of Tenant's interactive stock car racing
simulation business subject to the terms and conditions set forth therein. The
effective term of the License Agreement commences on August 18, 1997 and ends on
August 12, 2001, unless terminated earlier in accordance with its terms. The
parties may mutually agree to extend the license term. Following termination of
the license, Tenant is permitted to use the word mark "Silicon Motor Speedway"
(without the word "NASCAR") but not "NASCAR Silicon Motor Speedway."
SECTION 16.03(a): The initial promotional charge shall not apply to
Tenant.
SECTION 19.01(a): The "Cross Default" provisions of this Section shall
not apply to this Lease.
EXHIBIT B. SECTION II.B: The $20.00 per lineal foot charge shall not apply to
Tenant.
EXHIBIT B. SECTION II.C: The $45.00 per lineal foot charge shall not apply to
Tenant.
*** Confidential treatment requested.
D4
<PAGE> 8
EXHIBIT B. SECTION III.D.2.a.: Neither the $45.00 per lineal foot charge nor
the $66.00 per lineal foot charge shall apply to Tenant.
EXHIBIT B. SECTION IV.C.2: Tenant may employ an "open" rather than a
"drop" ceiling design.
EXHIBIT B. SECTION V.B.3.: The fee for Coordination and Administrative
Services shall not apply to this Lease.
EXHIBIT B. SECTION VI.B.5.: The mid-term remodeling requirements of
Paragraph 5 of Section VI.B shall not apply to this Lease.
EXHIBIT B. SECTION VI.D.2: The electrical service charge in this Section
shall not apply.
EXHIBIT B. SECTION VI.D.3.: The trash removal charge in this Section
shall not apply to Tenant.
EXHIBIT B-1: Landlord represents that 277/480 volt
electrical service capacity is available to the leased premises.
[END OF TEXT OF DATA SHEET]
D5
<PAGE> 9
EXECUTION/ACKNOWLEDGMENT
In confirmation of their agreement to enter into this Lease (including the
Preamble, Data Sheet, Addendum, Standard Form, all exhibits and the Rider (if
any) attached hereto), and intended to be bound hereby, Landlord and Tenant
have signed and sealed this Lease as of the day and year first above written on
page D1 of this Lease.
In the Presence of: CHICAGO TITLE AND TRUST COMPANY,
a corporation of Illinois, as Trustee,
under Trust No. 46746, and not personally,
/s/ EVELYN F. MILLS By: /s/ [Signature Illegible]
- ---------------------------- ---------------------------------------
Its: Authorized Agent
- ---------------------------- LANDLORD
LBE TECHNOLOGIES, INC.
By: /s/ JANET SETCAVAGE WOODS
- ---------------------------- ---------------------------------------
Print Name: Janet Setcavage Woods
----------------------------
Its: Vice President
---------------------------------------
Print Title:
---------------------------
And:
- ---------------------------- ---------------------------------------
Print Name:
----------------------------
Its:
---------------------------------------
Print Title:
---------------------------
TENANT
Tenant's Federal Tax Identification Number:
-------------------------------------------
Tenant's corporate seal:
-------------------
It is expressly understood and agreed by and between the parties hereto,
anything herein to the contrary notwithstanding, that each and all of the
warranties, indemnities, representations, covenants, undertakings and
agreements herein made on the part of the Trustee while in form purporting to
be warranties, indemnities, representations, covenants, undertakings and
agreements of said Trustee are nevertheless each and every one of them, made
and intended not as personal warranties, indemnities, representations,
covenants, undertakings and agreements by the Trustee or for the purpose or
with the intention of binding said Trustee personally but are made and intended
for the purpose of binding only that portion of the trust property specifically
described herein, and this instrument is executed and delivered by said Trustee
not in its own right, but solely in the exercise of the powers conferred upon it
as such Trustee and that no personal liability or personal responsibility is
assumed by nor shall at any time be asserted or enforceable against the Chicago
Title and Trust Company or any of the beneficiaries under said Trust Agreement,
on account of this instrument or on account of any warranty, indemnity,
representation, covenant, undertaking or agreement of the said Trustee in this
instrument contained, either expressed or implied, all such personal liability,
if any, being expressly waived and released.
E1
<PAGE> 10
ACKNOWLEDGMENT OF LANDLORD
STATE OF MICHIGAN )
) ss.
COUNTY OF OAKLAND )
On this 18 day of December, 1997, before me personally appeared the above
named Agent of the Chicago Title and Trust Company, Trustee, personally known to
me to be the same person whose name is subscribed to the foregoing Lease as such
Agent, and acknowledged before me that he signed and delivered the said Lease as
his own free and voluntary act and as the free and voluntary act of said Company
for the uses and purposes therein set forth; and the said Agent then and there
acknowledged that said Agent, as custodian of the corporate seal of said
Company, caused the corporate seal of said Company to be affixed to said Lease
as said Agent's own free and voluntary act and as the free and voluntary act of
said Company for the uses and purposes therein set forth.
/s/ EVELYNE F. MILLS
----------------------------------------
Evelyne F. Mills
Notary Public - Oakland County, MI
My Commission expires: November 23, 1990
ACKNOWLEDGMENT OF LANDLORD
STATE OF )
) ss.
COUNTY OF )
On this ____ day of ___________, 19__, before me personally appeared ______
__________________________________________ and _________________________________
to me personally known, who, being by me duly sworn, did each for himself say
that he is, respectively, the _______________________________ and ______________
of _____________________________________ the corporation named in and which
executed the within instrument, and that the seal affixed to said instrument is
the corporate seal of said corporation, and that said instrument was signed and
sealed in behalf of said corporation by authority of its board of directors;
and said _____________________________ and ____________________________________
acknowledged before me said instrument to be the free act and deed of said
corporation.
_________________________________________
Notary Public, County,
My Commission expires:
E2
<PAGE> 11
ADDENDUM -- WOODFIELD MALL
All of the provisions set forth in this Addendum are in addition to, and
not in substitution for, the provisions of the Standard Form, except to the
extent specifically otherwise stated.
SECTION 1.01(a). LEASED PREMISES: The regional retail development is commonly
known as "Woodfield Mall," located in the Village of Schaumburg, Cook County,
Illinois.
SECTION 7.02. OPERATION OF BUSINESS: To the extent that Tenant shall accept
payment by credit card for goods or services offered from the leased premises,
Tenant shall be obligated to comply with the "point-of-purchase" display
requirements of its merchant agreement with the credit card company designated
in writing by Landlord from time to time. If Landlord has not designated a
particular credit card company, then the provisions of this paragraph shall not
apply. Likewise, if Tenant does not have a merchant agreement with the credit
card company designated by Landlord, the provisions of this paragraph shall not
apply.
SECTION 12.01. UTILITY CHARGES: In substitution for the text of paragraphs (a)
through (g) of Section 12.01, the following provisions shall apply:
Tenant shall be solely responsible for and shall promptly pay all
charges for water, gas, heat, electricity, sewer and any other utility used upon
or furnished to the leased premises. Tenant shall contract directly with and
shall be solely responsible to the public utility companies for the installation
of service and the payment of all charges for Tenant's usage of such utility
services. Landlord shall have the right, at its sole option, to supply
electricity to the leased premises in which event the minimum rent reserved
under the Lease will be increased for the period that Landlord so supplies such
electricity to include the increase in the fair and reasonable rental value of
the leased premises due to the supplying of such electricity in accordance with
the numbered paragraphs set forth below. If Landlord shall elect to supply any
of the foregoing other utilities used upon or furnished to the leased premises,
Tenant agrees to purchase and pay for same as additional rent, within ______
days of the presentation by Landlord to Tenant of bills therefor, at the rates
which would be applicable to Tenant as a direct customer of the public utility
company, as such rates are filed by the utility company serving the area with
the proper regulating authority and in effect from time to time covering such
services. Landlord shall also have the right to periodically estimate the
monthly amount required to be paid by Tenant to Landlord with respect to any or
all of such services provided by Landlord and such estimated monthly amount or
amounts shall be paid by Tenant on the first day of each calendar month, in
advance, at the place and in the manner specified for payments of minimum rent
hereunder. Landlord shall have the right to change such estimated amount or
amounts at any time and from time to time, by notice to Tenant. If the total of
the estimated monthly payments made by Tenant shall be less for any lease year
or calendar year than the actual amount due from Tenant pursuant to the
provisions of this Section, Tenant shall pay to Landlord the difference between
the amount paid by Tenant and the actual amount due within _____ days after
submission to Tenant of Landlord's statement and invoice therefor; and if the
total of the estimated payments made by Tenant for any such year shall exceed
the actual amount due from Tenant, the excess amount paid shall be credited
against the next payment due from Tenant to Landlord under this Section. The
obligation of Tenant to pay for such utilities shall commence as of the date on
which possession of the premises is delivered to Tenant, without regard to any
free rent period or formal commencement date of this Lease.
SEE ATTACHED DATA SHEET FOR INSERTS
Prior to the commencement of the term of this Lease,
(1) Landlord shall analyze Tenant's Working Drawings and Specifications
covering its construction of the leased premises and shall determine Tenant's
annual electric (kilowatt) requirements at the leased premises. Such
determination shall be based upon (i) Tenant's electric requirements for the
projected number of hours per year during which the leased premises will be open
for business (i.e., the number of hours established for the Shopping Center by
the Landlord), and during which Tenant's employees will be present at the leased
premises (for inventory, clean-up, meetings, etc.); and (ii) Tenant's electric
requirements during the remaining hours in the year. Based upon such
information, Landlord will calculate the annual amount which Tenant would be
charged by the local electric public utility company for furnishing such
electrical energy, and Tenant agrees that the minimum rent reserved under the
Lease will be increased by such amount.
-A1-
<PAGE> 12
(2) Landlord reserves the right to further increase the minimum rent
to reflect any increase in the annual amount which Tenant would be charged by
the local electric utility company or in the event of any change in the
construction of the leased premises or if Tenant operates its premises in excess
of the number of hours as projected above.
(3) At any time after the execution of the Lease, either Landlord or
Tenant may request an appraisal by an independent electrical engineer, mutually
acceptable to Landlord and Tenant, who is qualified to determine whether the
adjustment in the minimum rent as computed by Landlord is below or in excess of
the amount which Tenant would be charged by the local electric utility company
for furnishing such electrical energy. If Landlord and Tenant cannot agree
promptly upon an independent electrical engineer, then the matter shall be
submitted for arbitration before the American Arbitration Association.
(4) The appraisal or arbitration, as the case may be, shall be binding
on both parties and shall set forth the amount, if any, by which the adjustment
of the minimum rent reflecting the increased value of the leased premises
resulting from Landlord supplying electrical energy is below or in excess of the
annual amount which Tenant would be charged by the local electric utility
company for furnishing such electrical energy. The minimum rent shall thereupon
be adjusted by the amount of such deficiency or excess, such adjustment to
become effective as of the first day of the month following the month in which
demand for the appraisal was made.
(5) The cost of such appraisal or arbitration shall be shared equally
between Landlord and Tenant; provided, that if either party requests an
appraisal prior to one year after the effective date of the last preceding
appraisal or arbitration, the entire cost of such appraisal or arbitration shall
be paid for by the party requesting such appraisal. In each case, upon
completion of an appraisal and, if necessary, arbitration pursuant to this
agreement, the parties agree that the minimum rent shall reflect such adjustment
or adjustments.
SECTION 16.03. PROMOTIONAL CHARGE: (e) In any event, and notwithstanding the
formation of a promotion fund or Merchants' Association, Tenant agrees to
participate in at least ________ Shopping Center promotions in each lease year.
Tenant shall reimburse to Landlord all costs of including Tenant in each
promotion. Such promotions may consist of tabloids, circulars, catalogs, special
Shopping Center newspaper inserts or sections, direct mailings, electronic media
including radio and television, standard newspaper advertisements and/or any
other promotions sponsored by Landlord. The media type, format and content of
any such promotions, as well as the timing of any such promotions, shall be in
Landlord's sole discretion. If Landlord establishes more than ________ Shopping
Center promotions in each lease year, Tenant shall be permitted to determine in
which ________ promotions it shall participate. Tenant shall be required to
submit a proposed advertisement within thirty (30) days after Landlord's notice
of the type of promotion being sponsored and the requirements for individual
advertisements in connection with such promotion. In the event that Tenant fails
to submit a proposed advertisement in accordance with such advertising
requirements within the thirty (30) day period, Tenant ________. All amounts
payable by Tenant hereunder shall be payable within ________ days after written
notice by Landlord.
SEE ATTACHED DATA SHEET FOR INSERTS
SECTION 26.01. SECURITY: For purposes of this Section 26.01, references to
"Landlord" shall be deemed to be references to Woodfield Associates for payment,
retention and application of said security deposit.
SECTION 27.14. LIABILITY OF LANDLORD: The parties hereto agree that wherever in
this Lease the term "Woodfield Associates" or "beneficiary" of the Trust (or
trust) is used, it shall be deemed to mean Woodfield Associates, its successors
and assigns, or any other entity designated in writing by Landlord.
EXHIBIT B, ADDITIONAL CONSTRUCTION EXHIBIT (IF ANY): To the extent that any
construction exhibit beyond Exhibits B and B-1 shall be attached to the Lease,
and any such exhibit shall refer to electrical criteria, such electrical
criteria shall be field verified by Tenant prior to preparation of any plans for
Tenant's Work and prior to the undertaking of any work with respect to the
leased premises. Tenant shall be solely responsible for such verification.
[END OF TEXT OF ADDENDUM]
<PAGE> 13
STANDARD FORM
ARTICLE I. GRANT AND TERM
SECTION 1.01. LEASED PREMISES. (a) Landlord, in consideration of the rent
to be paid and the covenants to be performed by Tenant, does hereby demise and
lease unto Tenant, and Tenant hereby rents and hires from Landlord, those
certain premises in the regional retail development shown on Exhibit A, subject
to covenants, restrictions and easements of record, the terms and provisions of
certain reciprocal easement and/or operating agreements now or hereinafter
entered into by Landlord with the owners or lessees of the Department Store
Sites, and the terms and provisions of the underlying lease, if any. It is
agreed that the term "regional retail development" as used herein shall mean
and refer to the Department Store Sites and the Shopping Center, including the
buildings located or to be located thereon, all as shown on the site plan which
is set forth in Exhibit A attached hereto and made a part hereof, and that the
term "Shopping Center" shall, except as otherwise specifically provided herein,
mean and refer to the hatched and the shaded portions of such site plan which
portions from time to time open directly on the enclosed Mall and which may
vary at each level of the regional retail development, together with the
enclosed Mall (whether or not shaded or hatched). The approximate location of
the premises leased to Tenant hereunder is shown in Exhibit A. The legal
description of the regional retail development or of the Shopping Center is set
forth in Exhibit A or referenced in the Addendum attached hereto and made a
part hereof. The leased premises (herein referred to as the "leased premises"
or "premises") are described as set forth in the Data Sheet attached hereto. As
used in this Lease, the term "State" shall mean the state in which the Shopping
Center is located.
(b) The exterior walls and the roof of the leased premises and the area
beneath said premises are not demised hereunder, and the use thereof, together
with the right to locate, both vertically and horizontally, install, maintain,
use, repair and replace pipes, utility lines, ducts, conduits, flues,
refrigerant lines, drains, sprinkler mains and valves, access panels, wires and
structural elements leading through the leased premises serving other parts of
the regional retail development, is hereby reserved unto Landlord. Landlord
reserves an easement in, over and through the area occupied by the storefront
of the leased premises, and an easement above Tenant's finished ceiling to the
roof, or to the bottom of the floor deck above the leased premises, for general
access purposes and in connection with the exercise of Landlord's other rights
under this Lease.
SEE ATTACHED RIDER FOR INSERTS
(c) The attached site plan of the regional retail development, Exhibit A,
includes premises identified thereon as Department Store Sites, including the
buildings located or to be located thereon, which sites are collectively
hereinafter referred to as the "Department Store Sites" and/or "Department
Stores," unless otherwise specifically set forth. It is agreed that, whenever
the term "Shopping Center" is used herein, it shall be deemed to exclude the
Department Store Sites (even if such Sites shall be within the hatched and/or
shaded area shown on the site plan), except as otherwise specifically stated
herein. In addition, said site plan includes other portions of the Shopping
Center which Landlord may from time to time sell or lease for the purpose of
construction and/or use by one or more department stores (as defined in Section
27.12 hereof), which portion(s) may thereupon, at Landlord's option, be
referred to and treated as "Department Store Site(s)" and/or "Department
Stores" upon occupancy thereof by a department store, and which, at Landlord's
option, may be excluded from the Shopping Center. In the event Landlord elects
to enlarge the regional retail development, any additional area may be included
by Landlord in the definition of the Shopping Center for purposes of this Lease.
Landlord shall also have the general right from time to time to include within
and/or to exclude from the defined Shopping Center any existing or future
areas, and the floor area of the Shopping Center shall be accordingly adjusted.
SECTION 1.02. COMMENCEMENT AND ENDING DAY OF TERM. The term of this Lease
shall commence upon (a) the commencement date set forth in the Data Sheet, or
(b) the date on which Tenant opens its store in the leased premises for
business to the public, whichever of said dates is the first to occur, and
shall end on the final day of the last lease year of the term or other
specified date as set forth in the Data Sheet, unless sooner terminated as
hereinafter provided. For the purpose of this Lease, the first "lease year"
shall be a period commencing on the day the term of this Lease commences and
ending on January 31 next following; after the first lease year, the term
"lease year" shall mean a fiscal year of twelve (12) consecutive calendar
months commencing on February 1 of each calendar year, except that the final
lease year of the term shall be a period of less than twelve (12) consecutive
calendar months in the event that an expiration date other than January 31 is
set forth in the Data Sheet.
In the event Landlord elects to recapture space adjacent to the leased
premises, combine the leased premises with vacant space adjacent to the leased
premises, or cause an expansion or contraction of, or perform structural
changes or alterations to, the Shopping Center or the regional retail
development, and such expansion, contraction and/or structural changes or
alterations directly affect all or any portion of the leased premises, then
Landlord upon one hundred eighty (180) days' prior notice in writing to Tenant
may terminate this Lease. In the event of such termination, within thirty (30)
days following the date that Tenant shall have vacated the premises, Landlord
shall pay to the Tenant a sum equal to the then unamortized cost (without
interest) of Tenant's leasehold improvements, such amortization to be
calculated on the straight-line basis over the full term of the Lease, with
Landlord's obligation being limited to the balance of such cost remaining as of
the date that Tenant shall have so vacated. Tenant shall furnish to Landlord
such backup information as Landlord may reasonably require.
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<PAGE> 14
SECTION 1.03. OPENING. Tenant covenants and agrees to complete its
construction within the leased premises in accordance with the provisions of
this Lease and to open its store for business to the public not later than the
date established for commencement of the term of this Lease pursuant to Section
1.02 hereof.
ARTICLE II. RENT
SECTION 2.01. MINIMUM RENT. (a) The minimum rent during the term of this
Lease shall be the amount set forth in the Data Sheet attached hereto as
adjusted pursuant to Section 2.04 or other provisions of this Lease, which sum
shall be payable by Tenant in equal consecutive monthly installments in the sum
set forth in the Data Sheet attached hereto, on or before the first day of each
month, in advance, payable as set forth, and at the address set forth, in the
Data Sheet attached hereto under "Name and Address for Rent Payments," or such
other place as the Landlord may designate in writing, such payments to be
without any prior demand therefor and without any deductions or setoff
whatsoever.
(b) Should the term of this Lease commence on a day other than the
first day of a calendar month, then the rent for such month shall be prorated on
a daily based upon a thirty (30) day calendar month. Should any lease year
contain less than twelve (12) calendar months, said annual rent shall be
prorated.
SECTION 2.02. PERCENTAGE RENT. (a) In addition to the payment of the
minimum rent, as hereinbefore provided, Tenant shall pay to Landlord for each
lease year of the term hereof, as percentage rent, an amount equal to the
percentage rent factor (see Data Sheet) multiplied by all Gross Sales resulting
from business conducted in, on or from the leased premises during such lease
year in excess of the amount of Gross Sales set forth in the Data Sheet
(hereinafter referred to as "Minimum Gross Sales"). Subsequent to the date upon
which Tenant is initially obligated to open for business in the leased premises,
in addition to any and all other remedies afforded to Landlord under this Lease
by reason of default, "Minimum Gross Sales" shall be reduced by 1/360th for each
day or portion thereof that Tenant does not operate its business pursuant to
Section 7.02 hereof. If percentage rent hereunder shall be calculated on the
basis of a split percentage arrangement, as defined in subsection (b) below,
then the reduction required by the preceding sentence shall be applied to the
minimum rent which would otherwise be deductible in the calculation of
percentage rent with respect to all Gross Sales of Tenant (provided that such
reduction shall be made solely for the purpose of the percentage rent
calculation). The percentage rent shall be payable as set forth, and at the
address set forth, in the Data Sheet attached hereto under "Name and Address for
Rent Payments," or such other place as the Landlord may designate in writing,
such payments to be without any prior demand therefor and without any deductions
or setoff whatsoever.
(b) Such percentage rent shall be paid in quarter-annual
installments computed on all Gross Sales during each quarter-annual period of
the term hereof in excess of one quarter (1/4) of annual Minimum Gross Sales.
Such quarter-annual periods during each lease year shall be measured as follows:
February through April, May through July, August through October, and November
through January. Such quarter-annual installments shall be payable within thirty
(30) days after the expiration of each three (3) month period of each lease
year. In the event that the total of the quarter-annual installments of
percentage rent for any lease year does not equal the percentage rent computed
on the total amount of Gross Sales for such lease year, in accordance with the
formula set forth in the Data Sheet, then Tenant, at the time it submits the
annual statement of Gross Sales required under Section 3.02, shall pay Landlord
any deficiency, or Landlord shall credit any overpayment to the next installment
of percentage rent due from Tenant, as the case may be. In no event, however,
shall the aggregate of minimum rent and percentage rent to be paid by Tenant and
retained by Landlord for any lease year be less than the minimum rent specified
herein. If the commencement date of the lease term is other than February 1,
then the percentage rent covering the first lease year hereunder shall be paid
in the following manner: for the quarter-annual period during which the lease
term commences, the percentage rent shall be equal to the product of the
percentage rent factor and the amount of Gross Sales in excess of a prorated
fraction of annual Minimum Gross Sales (with such prorated fraction to be
calculated by taking the number of days remaining in such quarter-annual period
as of the date the leased premises are initially opened for business to the
general public, dividing by 360, and multiplying the resulting quotient by the
stated annual Minimum Gross Sales figure); for the balance of the first lease
year, the percentage rent shall be equal to the product of the percentage rent
factor and the amount of Gross Sales in excess of one-quarter (1/4) of annual
Minimum Gross Sales during each subsequent quarter-annual period. If the
expiration date of the lease term is other than January 31, then the percentage
rent covering the final lease year hereunder shall be calculated in a like
manner, with proration to occur in the quarter-annual period during which the
lease term expires. In the event that Tenant shall be obligated to pay
percentage rent calculated on different percentages for more than one category
of merchandise and/or services (a "split percentage" arrangement), then the
percentage rent payable by Tenant hereunder shall be calculated for each
quarter-annual period (and for any fractional period occurring at the beginning
or end of the term) based upon the stated percentages being applied to the
respective categories of Gross Sales for such period, with the minimum rent paid
by Tenant for any such period being deducted from the combined total in order to
arrive at the percentage rent owing by Tenant for such period. Such amounts
shall be payable within thirty (30) days after the expiration of the applicable
period.
SECTION 2.03. GROSS SALES. The term "Gross Sales" as used herein shall
be construed to include the entire amount of the actual sales price, whether for
cash or otherwise, of all sales of merchandise or services and all other
receipts whatsoever of all business conducted in or from the leased premises by
Tenant, or by all concessionaires (as defined in Section 3.02 hereof) or
otherwise, including, without limitation, mail, catalogue or telephone orders
received or filled at the leased premises, all deposits not refunded to
purchasers, and orders taken, although said orders may be filled elsewhere. A
"sale" shall be deemed to have been consummated for the purposes of this Lease,
and the entire amount of the sales price shall be included in Gross Sales, at
such time that (i) the transaction is initially reflected in the
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<PAGE> 15
books or records of Tenant or a concessionaire (if a concessionaire makes the
sale), or (ii) Tenant or such concessionaire receives all or any portion of the
sales price, or (iii) the applicable goods or services are delivered to the
customer, whichever first occurs, irrespective of whether payment is made in
installments, the sale is for cash or for credit, or otherwise, or all or any
portion of the sales price has actually been paid at the time of inclusion in
Gross Sales or at any other time. No deduction shall be allowed for direct or
indirect discounts, rebates, or other reductions on sales to employees or
others, unless generally offered to the public on a uniform basis. In addition,
no deduction shall be allowed for uncollected or uncollectible credit accounts,
or for trade-ins or other credits on sales to employees or others. The term
"Gross Sales" shall not include, however, any sums collected and paid out by
Tenant for any sales or excise tax imposed by and accounted for by Tenant to
any duly constituted governmental authority, nor shall it include the exchange
of merchandise between the stores of Tenant, if any, where such exchange of
goods or merchandise is made solely for the convenient operation of the business
of Tenant and not for the purpose of consummating a sale which has theretofore
been made in or from the leased premises and/or for the purpose of depriving
Landlord of the benefit of a sale which otherwise would be made in or from the
leased premises, nor shall the term include the amount of returns to shippers
or manufacturers, nor proceeds from the sale of trade fixtures. There shall be
deductible from Gross Sales the amount of any cash or credit refund made upon
any sale in or from the leased premises, previously included in "Gross Sales"
hereunder, not to exceed the sum so previously included, where the merchandise
sold is thereafter returned by the purchaser and accepted by Tenant. The term
"merchandise" as used in this Lease shall include food and beverages if Tenant
is permitted to sell such items in Section 7.01 hereof.
SEE ATTACHED RIDER FOR INSERTS
SECTION 2.04 RENT ADJUSTMENT. (a) Notwithstanding any provisions to the
contrary contained in this Lease, Tenant shall pay to Landlord as minimum rent
for the second lease year of the term of this Lease, and for each subsequent
lease year of said term, but subject to further increase pursuant to this
Section 2.04 and other provisions of this Lease, the greater of the amounts
calculated according to the formulas set forth in Paragraphs (i) and (ii) below.
(i) Minimum rent for the lease year in question shall be increased by the
net percentage of change between the Base Index and the Index published for the
first calendar month of such lease year (as such terms are defined below).
(ii) Minimum rent for the lease year in question shall be increased by the
amount of percentage rent payable for the immediately preceding lease year
pursuant to Section 2.02 hereof.
(b) For purposes of the foregoing calculations, the term "Base Index"
shall be the Index (as defined in Section 27.20), for the month during which
the term of this Lease commences (or, if the Index is not published for such
month, then the Index published for the month closest, but prior, to the lease
commencement date). Following any increase in minimum rent pursuant to
Paragraph (a) above, the "Base Index" for future calculations shall be redefined
as the Index published for the first calendar month of the lease year for which
the minimum rent has been increased pursuant to said Paragraph (a). The Index
for the first calendar month of any given lease year, if the Index is not
published for such month, shall be the Index published for the month closest,
but prior, to the first calendar month of such lease year. For the purposes of
this Section, the percentage rent payable by Tenant for any lease year
consisting of less than twelve (12) full calendar months shall be calculated by
dividing the percentage rent payable by Tenant for such lease year pursuant to
Section 2.02 hereof by the actual number of days in such lease year, and by
multiplying the resulting quotient by 360. Landlord shall notify Tenant of the
increased minimum rent for each lease year following the determination of same
by Landlord, and Tenant shall pay such increased minimum rent for the applicable
lease year in the manner set forth in Section 2.01 hereof. In the event that
the increase in minimum rent results from the calculation set forth above in
subsection (a)(ii), then the Minimum Gross Sales otherwise applicable for such
period shall be increased by a percentage equal to the percentage increase in
minimum rent made by reason of the percentage rent payable in the preceding
lease year. If percentage rent under this Lease shall be calculated on the
basis of a split percentage arrangement, as defined in Section 2.02(b) hereof,
then, in the even of an increase in minimum rent resulting from the calculation
set forth above in subsection (a)(i), only the minimum rent (not including such
increase) which would otherwise be deducted shall be deductible from the
percentage rent calculated with respect to all Gross Sales of Tenant. The
minimum rent for any period as stated in Section 2.01 hereof, if different than
that stated for the immediately preceding period, shall be adjusted by
multiplying such different minimum rent ("Changed Rent") by the cumulative
percentage increase in minimum rent pursuant to this Section from the
commencement of the term of this Lease through and including the first lease
year during which such Changed Rent would have become effective, with the
resulting product to be added to such Changed Rent to yield the effective
minimum rent for such period, subject to further adjustment as provided in this
Section or elsewhere in this Lease.
(c) Upon the opening of any department store within the regional retail
development during the term of this Lease (if such department store was not
open for business to the general public as of the commencement date of this
Lease), the minimum rent and Minimum Gross Sales then in effect shall be
immediately and automatically increased by fifteen percent (15%), subject to
further increases pursuant to this paragraph, this Section and other provisions
of this Lease.
SECTION 2.05. TENANT'S TAX OBLIGATION. Tenant shall pay to Landlord its
proportionate share of all taxes and assessments which may be levied or
assessed by any lawful authority during the term of this Lease, or with respect
to each fiscal tax year falling in whole or in part during the term of this
Lease, against the land, buildings and improvements comprising the Shopping
Center, and all other taxes which Landlord becomes obligated to pay with
respect to the regional retail development, irrespective of whether such taxes
are assessed against real or personal property. The portion of such taxes and
assessments allocated to the common areas of the Shopping Center, and the
portion of such taxes allocated to the "net-building area" (gross building
area less the sum of gross leasable floor area
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<PAGE> 16
and common areas) of the Shopping Center, shall be deducted from the total of
such taxes and assessments and charged to Tenant in accordance with the
provisions contained in Section 8.03 of this Lease. Tenant's proportionate share
of the remaining taxes and assessments (i.e., those not charged under Section
8.03) shall be equal to the product obtained by multiplying such taxes and
assessments by a fraction, the numerator of which shall be the number of square
feet of floor area in the leased premises and the denominator of which shall be
the total number of square feet of gross leased and occupied floor area in the
Shopping Center. In the event that any present or future enactment of the State
or any political subdivision thereof or any governmental authority having
jurisdiction thereover either: (a) imposes a direct or indirect tax and/or
assessment of any kind or nature upon, against or with respect to the rents
payable by tenants or occupants in the regional retail development to Landlord
derived from the regional retail development or with respect to the Landlord's
(or the individuals' or entities' which constitute the partners of the
partnership which is the Landlord, or which is the beneficiary of the Trust of
which Landlord is Trustee, as applicable) ownership of the land and buildings
comprising the regional retail development, either in addition to or by way of
substitution for all or any part of the taxes and assessments levied or assessed
against such land and such buildings, including, without limitation, any net
profits tax or any comparable tax imposed on any portion of Landlord's revenues
from the regional retail development; and/or (b) imposes a direct or indirect
tax or surcharge of any kind or nature, upon, against or with respect to the
parking areas or the number of parking spaces in the regional retail
development, then in either or both of such events, Tenant shall be obligated to
pay its proportionate share thereof as provided herein. For purposes of this
Section, the term "regional retail development" shall be deemed to include the
land upon which any parking facilities, temporary or permanent off-site utility
systems and any wooded area, lake, shoreline thereof or island park serving the
regional retail development are located with all improvements situated thereon.
To the extent that real estate taxes and assessments are the obligation of
Tenant pursuant to Section 8.03 hereof, the same shall not be includable in
Tenant's proportionate share pursuant to this section.
SEE ATTACHED RIDER FOR INSERTS
Tenant's proportionate share of all of the aforesaid taxes and
assessments levied or assessed for or during the term hereof, as determined by
Landlord, shall be paid in monthly installments on or before the first day of
each calendar month, in advance, in an amount estimated by Landlord; provided
that Landlord shall have the right to initially determine monthly estimates and
to revise the estimates from time to time, and shall have the right to apply
such monthly installments to tax bills according to the formula being utilized
by Landlord from time to time. Upon receipt of all tax bills and assessment
bills attributable to any calendar or fiscal year during the term hereof,
Landlord shall furnish Tenant with a written statement of the actual amount of
Tenant's proportionate share of the taxes and assessments for such year. In the
event no tax bill is available, Landlord will compute the amount of such tax. If
the total amount paid by Tenant under this Section for any calendar or fiscal
year during the term of this Lease shall be less than the actual amount due from
Tenant for such year, as shown on such statement, Tenant shall pay to Landlord
the difference between the amount paid by Tenant and the actual amount due, such
deficiency to be paid within ______ days after demand therefor by Landlord; and
if the total amount paid by Tenant hereunder for any such calendar or fiscal
year shall exceed such actual amount due from Tenant for such year, such excess
shall be credited against the next installment of taxes and assessments due from
Tenant to Landlord hereunder. All amounts due hereunder shall be payable to
Landlord at the place where the minimum rent is payable. In the event Landlord
contests any taxes levied or assessed during the term hereof upon, against or
with respect to the Shopping Center or any portion thereof or interest therein,
or in the event of Landlord's negotiation with respect to assessed valuation for
the Shopping Center, Tenant shall pay its proportionate share of Landlord's
costs, expenses and attorneys' fees in connection therewith calculated on the
same basis as set forth above in this Section. For the calendar or fiscal years
in which this Lease commences and terminates, the provisions of this Section
shall apply, and Tenant's liability for its proportionate share of any taxes and
assessments for such years shall be subject to a pro rata adjustment based on
the number of days of said calendar or fiscal years during which the term of
this Lease is in effect. A copy of a tax bill or assessment bill submitted by
Landlord to Tenant shall at all times be sufficient evidence of the amount of
taxes and/or assessments assessed or levied against the property to which such
bill relates. Prior to or at the commencement of the term of this Lease and from
time to time thereafter throughout the term hereof, Landlord shall notify Tenant
in writing of Landlord's estimate of Tenant's monthly installments due
hereunder.
SEE ATTACHED RIDER FOR INSERTS
SECTION 2.06. PAYMENTS. Rent shall be defined in this Lease as (i)
minimum rent, (ii) percentage rent and (iii) all other charges of whatever
nature required to be paid by Tenant under this Lease, including the Exhibits
hereto. The rent charges described in item (iii) of the preceding sentence
shall, unless otherwise specified, be due and payable _____ days after demand,
without any deductions or setoff whatsoever, in the manner and at the place
where minimum rent is payable and Tenant's failure to pay rent shall carry with
it the consequences set forth under Article XIX hereof. Landlord's rights and
remedies pursuant to this Section shall be in addition to any and all other
rights and remedies provided under this Lease or at law. Notwithstanding
anything to the contrary contained in this Lease, Landlord's demand for any and
all rent may be sent to Tenant by regular mail. Rent is specifically agreed by
Tenant to be a minimum reasonable use and occupancy charge for the leased
premises. In the event any sums required hereunder to be paid are not received
on or before the tenth (10th) day after the same are due, then, for each and
every such payment, Tenant shall immediately pay, as additional rent, a service
charge of ______ of the outstanding amount due, which service charge again shall
be imposed for each month that such amount shall remain unpaid. In the event of
Tenant's failure to pay the foregoing service charge, Landlord may deduct said
charge from the deposit set forth in Section 26.01 hereof. The provisions of
this Section shall not be construed to extend the date for payment of any sums
required to be paid by Tenant under this Lease or to relieve Tenant of its
obligation to pay all such sums at the time or times herein stipulated, and
neither the demand for, nor collection by Landlord of, late payment service
charges pursuant to this Section shall be construed as a cure of any default in
payment by Tenant. It is agreed that the said service charge is a fair and
reasonable charge under the circumstances and shall not be construed as interest
on a debt payment. In the event any charge imposed hereunder or under any other
section of this Lease is either stated to be or construed as interest, then no
such interest charge shall be calculated at a rate which is higher than the
maximum rate which is allowed under the usury laws of the State, which maximum
rate of interest shall be substituted for the rate in excess thereof, if any,
computed pursuant to this Lease.
SEE ATTACHED RIDER FOR INSERTS
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<PAGE> 17
ARTICLE III. RECORDS AND BOOKS OF ACCOUNT
SECTION 3.01. TENANT'S RECORDS. Tenant shall prepare and keep full,
complete and proper books and source documents, in accordance with generally
accepted accounting principles, of the Gross Sales, whether for cash, credit or
otherwise, of each separate department at any time operated in the leased
premises and of the operations of each subtenant, concessionaire, licensee
and/or assignee, and shall require and cause all such parties to prepare and
keep books, source documents, records and accounts sufficient to substantiate
those kept by Tenant. The books and source documents to be kept by Tenant shall
include, without limitation, true copies of all ________ tax returns and
reports, records of inventories and receipts of merchandise, daily receipts from
all sales and other pertinent original sales records and records of any other
transactions conducted in or from the leased premises by Tenant and any other
persons conducting business in or from the leased premises. Pertinent original
sales records shall include, without limitation: (i) cash register tapes,
including tapes from temporary registers, (ii) serially pre-numbered sales
slips, (iii) the original records of all mail and telephone orders at and to the
leased premises, (iv) settlement report sheets of transactions with subtenants,
concessionaires, licensee and assignees, (v) original records indicating that
merchandise returned by customers was purchased at the leased premises by such
customers, (vi) memorandum receipts or other records of merchandise taken out on
approval, (vii) detailed original records of any exclusions or deductions from
Gross Sales, (viii) sales tax records, and (ix) such other sales records, if
any, which would normally be examined by an independent accountant pursuant to
accepted auditing standard in performing an audit of Tenant's sales. Tenant
shall record at the time of each sale or other transaction, in the presence of
the customer, all receipts from such sale or other transaction, whether for
cash, credit or otherwise, in a cash register or cash register or cash registers
having a cumulative total which shall be sealed in a manner approved by Landlord
and which shall possess such other features as shall be required by Landlord. Al
of the foregoing books, source documents and records shall be retained for a
period of at least (4) years after the expiration of each lease.
SEE ATTACHED RIDER FOR INSERTS
SECTION 3.02. REPORTS BY TENANT. Tenant shall furnish to Landlord within
thirty (30) days after the expiration of each quarter-annual period of each
lease year a complete statement ("quarterly report"), certified by Tenant, of
the amount of Gross Sales, as defined in Article II, Section 2.03 of this Lease,
made in, on or from the leased premises during said period. Failure of Tenant to
timely submit quarterly reports as aforesaid shall entitle Landlord to estimate
Gross Sales based upon available data (with a reconciliation upon receipt of the
annual report), and Tenant shall be obligated to pay percentage rent, as set
forth in Section 2.02, on such estimated Gross Sales. Tenant also agrees that it
will furnish to Landlord within _____ days after the expiration of each full
lease year a complete statement, certified by an ________________________,
showing in all reasonable detail the amount of such Gross Sales made by Tenant
from the leased premies during the preceding lease year. Tenant shall in all
events furnish to Landlord within five (5) days after the end of each month of
the term of this Lease a written statement of Gross Sales covering the preceding
month, the statement to be in such form and style and contain such details and
breakdown as the Landlord may reasonably require. Tenant shall require and cause
all its concessionaires, if any, to furnish statements at the times and in the
form and content specified in this Section, relating to their operations within
the leased premises. All reports of Gross Sales submitted or caused to be
submitted by Tenant to Landlord shall be conclusive and binding upon Tenant
unless such reports are corrected within the two (2) years after the date of
issuance. The term "concessionaire" as used in this Lease shall mean and include
any and all concessionaires, licenses, franchises, department operators,
subtenants, permittees or others directly or indirectly operating or conducting
a business in or from the leased premises.
SEE ATTACHED RIDER FOR INSERTS
ARTICLE IV. AUDIT
SECTION 4.01. RIGHT TO EXAMINE BOOKS. Notwithstanding the acceptance by
Landlord of payments of percentage rent, Landlord shall have the right to all
rents and other charges actually due hereunder, and the right to examine, make
extracts from and copy, at the leased premises or (at the option of Landlord) at
the corporate headquarters office of Tenant in the United States, Tenant's and
all concessionaires' books, source documents, accounts, records and sales tax
reports filed with applicable government agencies in order to verify the amount
of Gross Sales in and from the leased premises. Tenant shall make all such
documents and records available at the leased premises (or at Tenant's corporate
headquarters, if elected by Landlord) upon ______ days' prior written from
Landlord.
SEE ATTACHED RIDER FOR INSERTS
SECTION 4.02. AUDIT. At this option, Landlord may at any time, upon
_________ days' prior written notice to Tenant, arrange for an auditor selected
by Landlord to conduct a complete audit (including a physical inventory) of the
entire records and operations of Tenant and/or any concessionaire concerning
business transacted upon or includable in Gross Sales from the leased premiss
during the period covered by any statement issued by Tenant or a concessionaire
as above set forth in Article III. Tenant shall make available to Landlord's
auditor at the leased premises (or at Tenant's corporate headquarters, if
elected by Landlord) within ______ days following Landlord's notice requiring
such audit, all of the books, source documents, accounts and records referred to
in Section 3.01 of this Lease and any other materials which such auditor deems
necessary or desirable for the purpose of making such audit. Tenant shall
promptly pay to Landlord the amount of any deficiency in percentage rent
payments disclosed by any such audit. If such audit shall disclose that Tenant's
statement of Gross Sales is ______ to the extent of ___________ or more,
Landlord may bill to Tenant the amount of any deficiency and the cost of such
audit, which shall be paid by Tenant within ______ days after Tenant's receipt
of Landlord's invoice; in the event Tenant fails to pay such discrepancy and
costs, Landlord shall have such rights and remedies as may be provided herein or
at law arising by virtue of Tenant's failure to pay rent.
<PAGE> 18
In addition to the foregoing, and in addition to all other remedies available
to Landlord, in the event Landlord or Landlord's auditor shall schedule a date
for an audit of Tenant's records in accordance with this Section, and Tenant
shall fail to be available or shall otherwise fail to comply with the
requirements for such audit, Tenant shall pay all costs and expenses associated
with the scheduled audit.
SEE ATTACHED RIDER FOR INSERTS
In addition to all other remedies available to Landlord, in the event that
any such audit shall disclose that Tenant's records and other documents as
referred to in Articles III and IV hereof and such other materials provided by
Tenant to Landlord's auditor are inadequate, in the opinion of Landlord's
auditor, to accurately disclose Tenant's Gross Sales, then Landlord shall be
entitled to collect as additional rent from Tenant an amount equal to fifteen
percent (15%) of the highest Effective Rent (minimum rent plus percentage rent)
payable by Tenant in any of the three (3) preceding lease years. Landlord's
exercise of the foregoing remedy shall in no way limit or otherwise affect
Landlord's ability to exercise other remedies available to it, nor shall
Tenant's obligations pursuant to the terms, covenants and conditions of this
Lease (including, without limitation, Tenant's obligation with respect to
reporting Gross Sales and payment of percentage rent) be in any manner reduced
or diminished by the exercise of such remedy. In the event that Tenant shall,
following the exercise of such remedy, provide to Landlord all records and
documentation as required to be provided pursuant to the terms of this Lease so
as to permit Landlord's auditor to accurately establish Tenant's Gross Sales
for the period in question, then Tenant shall be permitted a _______________
with respect to any amount of additional rent collected by Landlord from Tenant
pursuant to this paragraph. Neither the provisions of this Section 4.02 nor any
other provisions in this Lease shall restrict Landlord's rights to discovery in
any litigation or arbitration proceeding.
SEE ATTACHED RIDER FOR INSERTS
ARTICLE V. CONSTRUCTION OF LEASED PREMISES
SECTION 5.01. CONSTRUCTION OF LEASED PREMISES. (a) The leased premises
shall be constructed substantially as set forth in Exhibit B, which is attached
hereto and made a part hereof. Each of the parties hereto does hereby agree to
perform the obligations imposed upon such party in said Exhibit B at the times
and in the manner therein provided. All references in the text of the Lease to
Exhibit B shall include Exhibit B-1. Minor changes from any plans or
specifications covering Landlord's Work which may be, or which may have been,
necessary or appropriate during construction of the Shopping Center or leased
premises shall not affect or change this Lease or invalidate same. If this
Lease is executed after the opening of the regional retail development or if the
leased premises are in an expansion wing of the regional retail development
which opened prior to the date of this Lease, the parties hereto acknowledge
that the work to be performed by Landlord pursuant to Exhibit B has been fully
performed (except to the extent specifically otherwise set forth in Exhibit B).
(b) Tenant agrees, prior to the commencement of the term of this Lease, at
Tenant's sole cost and expense, to provide all work of whatsoever nature in
accordance with its obligations set forth in Exhibit B as "Tenant's Work."
Tenant agrees to furnish to Landlord the Working Drawings and Specifications
(and Demolition Drawings, as applicable) with respect to the leased premises
prepared in the manner and within the time periods required in Exhibit B. If
such Working Drawings and Specifications (and Demolition Drawings, as
applicable) are not furnished by Tenant to Landlord within the required time
periods in form to permit approval by Landlord, then Landlord may at its option
at any time while Tenant is in default of this provision, in addition to any and
all other remedies provided in this Lease, by notice to Tenant, declare this
Lease null and void and of no further force or effect, in which event this Lease
shall terminate, but Tenant shall remain liable for all obligations arising
during the original stated term as provided in this Lease. In addition, if
Landlord determines that Landlord and Tenant are unable to agree upon Working
Drawings and Specifications (and Demolition Drawings, as applicable), Landlord
shall have the option, upon notice to Tenant, to declare this Lease null and
void and of no further force or effect, in which event this Lease shall
terminate on the date specified in such notice, in the same manner as provided
in the preceding sentence. No deviation from the final set of plans and
specifications, once approved by the Landlord, shall be made by Tenant without
Landlord's prior written consent. Approval of the plans and specifications by
Landlord shall not constitute the assumption of any responsibility by Landlord
or Landlord's architect for their accuracy, efficacy or sufficiency, and Tenant
shall be solely responsible for such items. Unless Landlord otherwise directs in
writing, Tenant shall not open the lead premises for business until all
construction has been completed pursuant to the provisions of Exhibit B. Until
such time as Tenant's final Working Drawings and Specifications (and Demolition
Drawings, as applicable) have been approved in writing by Landlord, the right of
Tenant to enter upon the leased premises shall be solely for the purpose of
inspection, measurement and obtaining information necessary to prepare
architectural drawings and construct its premises. Tenant shall not be deemed to
have taken possession of the leased premises until, and Landlord shall be deemed
to have delivered and Tenant shall be deemed to have taken such possession when,
Tenant actually commences construction of its leasehold improvements following
Landlord's approval of Tenant's final Working Drawings and Specifications (and
Demolition Drawings, as applicable). Until Tenant is so deemed to have taken
possession, in the event of a default by Tenant under this Article V, Landlord,
upon notice to Tenant, shall have the right to declare this Lease null and void
and of no further force or effect and thereafter may demise and lease the
premises described in Section 1.01 free from any rights of Tenant. Tenant shall
not
S6
<PAGE> 19
open its store for business until Tenant's storefront sign is installed, the
store is fully fixtured, lighted, stocked with merchandise in place and
staffed, and Tenant is prepared to engage in the sale of goods and/or services
to the public pursuant to Article VII. Under no circumstances shall Tenant
remove the storefront barricade, unless Landlord shall specifically otherwise
direct in writing. Landlord shall remove the storefront barricade (or Tenant
shall remove the same if so directed in writing by Landlord) when Tenant is so
prepared to open for business as determined by Landlord, and Tenant shall pay
for all such costs and expenses directly (including transportation of the
barricade to storage in the regional retail development), if Tenant shall be
directed by Landlord to perform such removal. If all or any part of the leased
premises shall have been previously occupied, Tenant acknowledges that the
Tenant's Work described in Exhibit B has been initially performed by a tenant
previously occupying the leased premises and that Tenant accepts the leased
premises in an "as is" condition without representation by the Landlord or any
person, firm or corporation on behalf of Landlord as to the condition thereof.
Tenant shall submit Working Drawings and Specifications and Demolition Drawings
showing the work to be performed by Tenant to completely remodel and refurbish
the leased premises and, subject to Landlord's approval, will cause such work
to be performed prior to the commencement of the term of this Lease. All such
additional work and permitted alterations, repairs and improvements shall be in
accordance with the provisions of Exhibit B.
SEE ATTACHED RIDER FOR INSERTS
(c) Upon execution of this Lease, Tenant shall pay to Landlord, as a
reimbursement to Landlord for costs and expenses with respect to the leased
premises, the sum set forth in the Data Sheet as "Tenant Reimbursement to
Landlord." The payment of such sum by Tenant shall not in any manner reduce or
limit the obligation of Tenant for payment of other charges under this Lease,
including, without limitation, the charges set forth in the Exhibits attached
hereto.
SECTION 5.02. AVAILABILITY AND POSSESSION OF PREMISES FOR TENANT'S WORK.
(a) The leased premises shall be considered available to Tenant when Landlord
furnishes Tenant with a written notice to such effect (the "Notice of
Availability"). Upon receipt of such Notice of Availability, Tenant shall have
only limited access to the premises for purposes of inspection and measurement
verification. The Notice of Availability shall not constitute delivery of the
premises, and Landlord (or a current occupant of the premises) will retain
possession of the premises until delivery of possession is made to Tenant as
provided below. Landlord may furnish the Notice of Availability at any time
subsequent to Landlord's obtaining possession of the premises. If the leased
premises are presently occupied by another tenant, Landlord will not make the
premises available to Tenant until a date after Landlord regains possession of
the leased premises from the tenant presently occupying the same.
(b) Landlord covenants to deliver possession of the leased premises to
Tenant upon written approval by Landlord of Tenant's Working Drawings, but only
if said approval is subsequent to or simultaneous with a furnishing to Tenant of
a Notice of Availability. Upon receiving actual possession, Tenant shall have
access to the leased premises for all purposes set forth under this Lease.
(c) Upon delivery of possession, Tenant accepts the premises and
acknowledges that the premises are in the condition required by this Lease,
subject to all field conditions existing at the time of delivery of possession.
Failure of Landlord to deliver possession of the leased premises in the manner
and condition as provided for in this Lease will not give rise to any claim for
damages by Tenant against Landlord, or against Landlord's contractor, or permit
Tenant to rescind or terminate this Lease.
SEE ATTACHED RIDER FOR INSERTS
SECTION 5.03. LANDLORD'S AND TENANT'S OPTIONAL RIGHT OF CANCELLATION. If
for any reason the leased premises are not ready for Tenant's Work on the date
eighteen (18) months following the date of this Lease, then, for a period of
thirty (30) days thereafter, Tenant shall have the option, and for a period of
forty-five (45) days following such eighteen (18) month period, Landlord shall
have the option, of cancelling and terminating this Lease by not more than
sixty (60) days' written notice, one to the other, and, in the event that
either party shall exercise such option, this Lease shall terminate with
neither party being liable to the other in damages or otherwise, and any money
deposited pursuant to Section 26.01 hereof shall be returned to Tenant. In the
event that neither Tenant nor Landlord gives such written notice of
cancellation, then said options shall be null and void and of no further force
or effect, and this Lease shall be considered as continuing in full force and
effect. If as of the date of this Lease the leased premises are (i) in a
regional retail development, or in an expansion wing of a regional retail
development, which development or wing, as applicable, has not initially opened
for business to the public, or (ii) presently occupied by another entity, then
the foregoing eighteen (18) month period under this Section 5.03 (and the four
(4) year period set forth in Section 5.04) shall be modified to commence as of
(i) the currently projected date of such initial opening, or (ii) the currently
projected date of Landlord's repossession of the leased premises from such
present entity, as applicable.
SECTION 5.04. ULTIMATE COMMENCEMENT DATE. Notwithstanding anything to the
contrary contained herein, if for any reason whatsoever (including without
limitation, excusable delay) the term of this Lease shall not have commenced
prior to such date as shall be four (4) years from the date of this Lease
(subject to extension as set forth in Section 5.03), then this Lease shall be
automatically terminated without further act of either party hereto, and the
parties hereto shall be released from all obligations hereunder.
S7
<PAGE> 20
ARTICLE VI. ALTERATIONS, CHANGES AND ADDITIONS
SECTION 6.01. INSTALLATION BY TENANT. Tenant shall not make or cause to
be made any alterations, additions or improvements to the leased premises (for
example, but without limiting the generality of the foregoing, Tenant shall not
install or cause to be installed any signs, floor covering, interior or exterior
lighting, plumbing fixtures, shades, canopies or awnings, electronic detection
devices, antennas, mechanical, electrical or sprinkler systems, or make any
changes to the storefront) without the prior written approval of Landlord in
each instance. Tenant shall present to Landlord plans and specifications for
such work at the time approval is sought, in accordance with criteria and
procedures as provided in Exhibit B.
See Attached Rider For Inserts
SECTION 6.02. REMOVAL BY TENANT. All alterations, additions, trade
fixtures and improvements made by Tenant shall be deemed to have attached to the
leasehold and to have become the property of Landlord upon such attachment. Upon
expiration or earlier termination of the term of this Lease, Tenant shall not
remove any of such alterations, additions, trade fixtures or improvements.
Landlord may, however, designate by written notice to Tenant those trade
fixtures which shall be removed by Tenant at the expiration or earlier
termination of the Lease, and Tenant shall promptly remove the same and repair
any damage to the leased premises caused by such removal. Landlord shall have
the right to padlock or otherwise secure the leased premises upon the expiration
or earlier termination of the term of the Lease. Landlord shall also have the
right, at any time during the term of this Lease, and upon expiration or earlier
termination of the term of this Lease, to immediately enter the leased premises
in order to remove any items which shall be determined to be a violation of
existing health, safety, security or other similar codes or regulations
affecting or applicable to the leased premises or the regional retail
development. Landlord shall attempt to provide prior notification to Tenant of
such removal, subject to the then existing circumstances.
See Attached Rider For Inserts
SECTION 6.03. CHANGES AND ADDITIONS. Landlord, for itself and for the
underlying lessor, if any, hereby reserves the right at any time, and from time
to time, to make alterations to, and to build additional stories on the building
in which the leased premises are located, and to construct other buildings and
improvements in the regional retail development, including any modifications of
the common areas in connection therewith, to enlarge or reduce the Shopping
Center or the regional retail development, to add decks or elevated parking
facilities, and to sell or lease any part of the land comprising the regional
retail development, as shown on the site plan attached hereto as Exhibit A, for
the construction thereon of a building(s) to be occupied by a Department
Store(s) which may or may not be part of the regional retail development.
Landlord also reserves for itself and for the underlying lessor, if any, the
right at any time, and from time to time, to change, modify, or abolish any
temporary off-site utility or any storm sewer or retention pond system (if
applicable) serving the regional retail development. The purpose of Exhibit A is
to show the approximate location of the leased premises within the Shopping
Center and Landlord reserves for itself and for the underlying lessor, if any,
the right at any time to relocate, enlarge, or reconfigure the various
buildings, parking areas and other common areas on said site plan. Tenant hereby
consents to the exercise by Landlord of the rights set forth in this Section
6.03 and agrees that the exercise of such rights by Landlord or by the
underlying lessor, if any, shall not diminish Tenant's obligations under this
Lease.
See Attached Rider For Inserts
ARTICLE VII. CONDUCT OF BUSINESS BY TENANT
SECTION 7.01. USE OF PREMISES. Tenant shall continuously use and occupy
the entire leased premises during the term of this Lease, which use and
occupancy shall be solely for the purpose of conducting the business
specifically set forth in the Data Sheet and for no other purpose or purposes.
It is agreed that the use specified in the Data Sheet has been, and is, a
material inducement to Landlord in entering into this Lease with Tenant, and
that Landlord would not enter into this Lease without this inducement. If any
governmental license or permit shall be required for the proper and lawful
conduct of Tenant's business or other activity carried on in the leased premises
or if a failure to procure such a license or permit might or would in any way
affect Landlord or the Shopping Center, then Tenant, at Tenant's expense, shall
duly procure and thereafter maintain such license or permit and submit the same
for inspection by Landlord. Tenant, at Tenant's expense, shall, at all times,
comply with the requirements of each such license or permit.
SECTION 7.02. OPERATION OF BUSINESS. Tenant shall be open for business
and operate continuously, during all days and hours established by Landlord, in
all of the leased premises during the entire term of this Lease, and shall
conduct its business at all times in a first class and reputable manner,
maintaining at all times a full staff of employees and a full and complete stock
of merchandise. Failure by Tenant so to be open for business and to operate
shall entitle Landlord, in addition to other remedies provided in this Lease, to
mandatory injunctive relief, and shall give Landlord the right to erect a
storefront barricade in front of the leased premises at Tenant's expense, which
barricade shall not be removed except upon Landlord's prior written consent and
with Tenant paying the cost of such removal. The erection of such a barricade by
Landlord shall not be construed as a re-entry by Landlord into the leased
premises or as an acceptance by Landlord of any surrender of possession of the
leased premises by Tenant. In the event the maximum hours during which the
Shopping Center (or any separate part thereof) is legally permitted to be open
to the public are regulated by any lawful authority, then Landlord shall be the
sole judge of which days and hours shall be Shopping Center business days and
hours (and the days and hours applicable to any such separate part). Tenant
shall install and maintain at all times a display of merchandise in the display
windows, if any, of the leased premises and shall keep the same well lighted
during such hours as Landlord shall designate. Tenant, at Tenant's expense,
shall promptly comply with all present and future laws, ordinances, orders,
rules, regulations and requirements of all governmental authorities having
jurisdiction, affecting or applicable to the leased premises or the cleanliness,
safety, occupancy, and use of the same,
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whether or not any such law, ordinance, order, rule, regulation or requirement
is substantial, or foreseen or unforeseen, or ordinary or extraordinary, or
shall necessitate structural changes or improvements or interfere with the use
and enjoyment of the leased premises. Tenant shall not do or permit anything to
be done in or about the leased premises, or bring anything therein, which will
in any way conflict with any such law, ordinance, order, rule, regulation or
requirement affecting the occupancy or use of the leased premises or the
regional retail development which is or may hereafter be enacted or promulgated
by governmental authorities, or in any way obstruct or interfere with the rights
of others, nor shall Tenant use or allow the premises to be used for any
improper, immoral or objectionable purposes as determined by Landlord. Tenant
shall not cause or permit the use, generation, storage or disposal in or about
the leased premises or the regional retail development of any substances,
materials or wastes subject to regulation under any federal or state or local
laws from time to time in effect concerning hazardous, toxic or radioactive
materials unless Tenant shall have received Landlord's prior written consent,
which Landlord may withhold or at any time revoke in its sole discretion. Tenant
shall comply with all federal, state and local laws in effect from time to time
prohibiting discrimination or segregation by reason of race, color, creed, age,
religion, sex or national origin. No auction, liquidation, going out of
business, fire or bankruptcy sales may be conducted or advertised by sign or
otherwise in the leased premises. Tenant shall display and sell only
first-quality, current-season merchandise and Tenant's sales practices shall be
in accord with standards and practices generally acceptable in enclosed
first-class, full-retail-price regional shopping centers. Tenant shall be
obligated to permit returns of merchandise and shall allow cash refunds on such
returns, except in connection with special sales and close outs. Tenant shall
not offer any goods or services which Landlord determines, in its sole
discretion, to be inconsistent with the image of a first-class, family-oriented
regional retail development, nor shall Tenant display or sell any goods
containing portrayals which Landlord determines, in its sole discretion, to be
lewd, graphically violent or pornographic. Tenant agrees that it will conduct
its business in good faith, and will not do any act tending to injure the
reputation of the Shopping Center (or any part thereof) as determined by
Landlord. Tenant shall not sell or display any paraphernalia used in the
preparation or consumption of controlled substances. In the event Landlord has
approved Tenant's remaining open for business after normal Shopping Center hours
(and/or any hours applicable to that part of the Shopping Center containing the
leased premises), then such approval shall be conditioned upon Tenant's paying
for all additional costs incurred by Landlord as a result thereof. Tenant shall
not permit noise or odors in the leased premises which are objected to by
Landlord and, upon written notice from Landlord, Tenant shall immediately cease
and desist from causing such noises or odor, and failing of which Landlord may
deem the same a material breach of this Lease. Tenant shall not permit the
operation of any coin operated or vending machines or pay telephones on the
leased premises, other than in the areas reserved solely for the use of Tenant's
employees. Tenant shall not sell or display any merchandise within of
the storefront opening unless such sale or display shall be expressly
approved on the Store Design Drawings or otherwise approved by Landlord, in
writing, except that Tenant shall be permitted to display merchandise in the
display windows, if any. Tenant shall not use the areas adjacent to the leased
premises for business purposes. Tenant shall not store anything in service or
exit corridors. Tenant agrees that all receiving and delivery of goods and
merchandise, and all removal of merchandise, supplies, equipment, trash and
garbage, and all storage of trash and garbage, shall be made only by way of or
in the areas provided therefor by Landlord. Tenant shall not use or permit the
use of any portion of the leased premises as sleeping quarters, lodging rooms,
or for any unlawful purposes. Tenant shall not install any radio or television
or other similar device exterior to the leased premises and shall not erect any
aerial on the roof or exterior walls of any building within the regional retail
development. Landlord may direct the use of all pest extermination contractors
at the sole cost and expense of Tenant and at such intervals as Landlord may
require. Failure of Tenant to employ the pest extermination contractor
designated by Landlord shall entitle Landlord to employ such contractor with
respect to Tenant's premises and Tenant shall reimburse Landlord for the cost
thereof. Landlord shall have the option to provide pest extermination services
for the Shopping Center or the regional retail development or any part thereof,
in which event Tenant shall pay to Landlord Tenant's proportionate share of the
cost of such service, with such proportionate share to be calculated in the
manner provided in Section 8.03 of this Lease. In the event that Tenant is
permitted pursuant to this Lease to engage in the sale of food and beverages
from the leased premises, then Tenant shall: (i) offer such food and beverages
only pursuant to a menu approved by Landlord, which shall not be changed without
Landlord's prior written consent (which consent Landlord may grant or withhold
in its sole and absolute discretion), (ii) serve its customers in containers or
dishes and with utensils to be approved by Landlord, subject to change by
Landlord from time to time, (iii) be solely responsible for prompt disposal
within the premises of all trash, garbage and debris, and (iv) inspect and
maintain all grease traps, pans and hood ventilators in good order, condition
and repair, and shall contract for same if and as required by Landlord. The
covenants of Tenant regarding hazardous, toxic or radioactive materials, as set
forth in this Lease, shall survive the expiration or earlier termination of the
term of this Lease. Without limiting any of the foregoing provisions, Tenant
also shall be required to maintain, at all times, a minimum staff of two (2)
employees for operation of the leased premises, and Tenant shall not permit the
leased premises to be left unattended at any time.
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SECTION 7.03 RADIUS. During the term of this Lease, in the event Tenant,
its parent corporation or subsidiary corporation, or its franchisor or
franchisee, or its licensor or licensee, or any person, firm, corporation or
other entity who or which controls or is controlled by tenant, or by any person,
firm, corporation or other entity which directly or indirectly controls or is
controlled by Tenant, shall, directly or indirectly, either individually or as a
partner or stockholder or otherwise, own, operate or become financially
interested in any business similar to or in competition with the business of
Tenant described in Section 7.01 within a radius of ten (10) miles from the
leased premises, then the Gross Sales (as defined in this Lease) of any such
business or businesses within said radius shall be included in the Gross Sales
made from the leased premises and the percentage rent hereunder shall be
computed upon the aggregate of the Gross Sales made from the leased premises and
by any such other business or businesses then conducted within said radius and
Tenant shall report and maintain records of such sales in the manner provided in
Article III hereof. This Section 7.03 shall not apply to any such business or
businesses open and being operated by Tenant within said radius as of the date
of this Lease as long as such business or businesses shall continue to be
operated in the same location(s) existing as of said date. If Tenant fails to
make payments required pursuant to this Section 7.03, Landlord or Landlord's
authorized representative or agent shall have the right at all reasonable times
during the term hereof and for a period of at least four (4) years after the
expiration of the term of this Lease, to inspect, audit, copy and/or make
extracts of the books, source documents, records and accounts pertaining to such
other business or businesses conducted within said radius, in accordance with
the provisions of Article IV hereof, for the purpose of determining or verifying
the additional rents due to Landlord pursuant to this Section. Moreover, in the
event Tenant fails to supply to Landlord sales records with respect to any such
similar or competing business, Landlord shall have the right to estimate the
sales for such businesses based upon Tenant's Gross Sales in the leased
premises, and the additional percentage rent generated from the inclusion of
such estimated sales and Tenant's Gross Sales shall be deemed additional rent to
be paid by Tenant in accordance with the provisions of Section 2.02 and 2.06 of
this Lease.
SECTION 7.04. STORAGE, OFFICE SPACE. Tenant shall warehouse, store and/or
stock in the leased premises only such goods, wares and merchandise as Tenant
intends to offer for sale at retail at, in, from or upon the leased premises.
This shall not preclude occasional emergency transfers of merchandise from the
other stores of Tenant, if any, not located in the Shopping Center. Tenant
shall use for office, clerical or other non-selling purposes only such space in
the leased premises as is from time to time reasonably required for Tenant's
business in the leased premises.
SECTION 7.05. CARE OF PREMISES. Tenant, at Tenant's expense, shall at all
times keep the leased premises (including the service areas adjacent to the
premises, display windows and signs) orderly, neat, safe, clean and free from
rubbish and dirt, and vermin, and shall store all trash, garbage and other
solid waste within the leased premises. Tenant shall not burn any trash or
garbage at any time in or about the regional retail development. Landlord may
direct the use by Tenant at Tenant's expense of all solid waste disposal
contractors at such intervals as Landlord may require. If Landlord shall provide
or contract for any services or facilities for solid waste pickup or sewer
cleaning, then Tenant shall be obligated to use the same and shall pay a
proportionate share of the expense thereof within __ days after being billed
therefor. If Landlord does not provide such services, Tenant shall arrange for
the regular pickup of all solid waste at Tenant's expense.
SEE ATTACHED RIDER FOR INSERTS
ARTICLE VIII. COMMON AREAS
SECTION 8.01. OPERATION AND MAINTENANCE OF COMMON AREAS. Landlord agrees
to cause to be operated and maintained during the term of this Lease all
common areas within the Shopping Center. The manner in which such areas and
facilities shall be operated and maintained, and the expenditures therefor,
shall be at the sole discretion of Landlord and the use of such areas and
facilities shall be subject to such regulations as Landlord shall make from
time to time.
SEE ATTACHED RIDER FOR INSERTS
SECTION 8.02. USE OF COMMON AREAS. The term "common area," as used in this
Lease, shall mean (i) the following areas within the regional retail
development: parking areas and facilities as determined by Landlord
(collectively "parking facilities"), roadways, pedestrian sidewalks and
walkways, pedestrian plazas, pedestrian passage areas, driveways, public
transportation loading and unloading facilities, truckways, loading docks,
delivery areas, landscaped areas, community rooms, office facilities, the
enclosed Mall, berms, elevators and escalators and stairs and ramps and
vertical transportation facilities not contained within any leased premises,
public restrooms and comfort stations, service areas, service and fire and
exit corridors, passageways, retention ponds (if applicable), and other areas,
amenities, facilities and improvements provided by Landlord, (ii) those areas
within the regional retail development and areas adjacent to the regional
retail development which from time to time may be provided by the owners of
such areas for the convenience and use of Landlord, the tenants of the Shopping
Center, the owners and occupants of the Department Store Sites, and their
respective concessionaires, agents, employees, customers, invitees and all
other licensees and others entitled to the use thereof and (iii) any other
facilities or areas, whether within or outside the regional retail development,
as may be designated by Landlord from time to time. The use and occupancy by
Tenant of the leased premises shall include the use of the common areas in
common with Landlord and with all others for whose convenience and use the
common areas have been or may hereafter be provided by Landlord or by the
owners of common areas not within the Shopping Center, subject, however, to
rules and regulations for the use thereof as prescribed from time to time by
Landlord or the owner of such common area, including, without limitation, the
right of Landlord to determine the hours and mode of operation of the elevators,
escalators and vertical transportation facilities serving the Shopping Center,
and including the right of Landlord or such owner to impose parking charges,
whether by meter or otherwise, with respect to any parking facilities. In no
event, however, shall Tenant, its agents or employees, use the common areas for
the display or sale of merchandise. Without limiting the generality of the
foregoing, Landlord may include in common areas
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those portions of the Shopping Center presently or hereafter sold or leased to
Department Stores, until the building thereon has been opened for business, at
which time there shall be withdrawn from the common areas those areas not
provided by the owner thereof for common use. Tenant and its employees and
agents shall park their cars and other vehicles only in areas specifically
designated from time to time by Landlord for that purpose, and shall not in any
case park their vehicles in any private or non-public portions of the parking
facilities. Tenant covenants that it will enforce the parking by its employees
and agents in such designated areas and in only public areas. Automobile license
numbers of employees' and agents' vehicles shall be furnished by Tenant to
Landlord upon Landlord's request. In the event any vehicle is parked by Tenant
or by an employee or agent of Tenant in a private or non-public parking area or
in any portion of the parking facilities other than the area of such parking
facilities as shall be designated by Landlord, Tenant shall be obligated to pay
Landlord the sum of One Hundred Dollars ($100) per day for each such vehicle in
order to partially compensate Landlord for the loss of percentage rent arising
from the business lost to Tenant and to other tenants in the Shopping Center due
to the lack of available parking space in the said parking facilities, and
Landlord shall have the right to cause the vehicle to be towed to a location
designated by Landlord and Tenant shall be obligated to reimburse Landlord for
all towing charges. Similarly, Landlord shall have the right to cause any
vehicle to be towed if the parking charges, if any, or the per diem charge or
reimbursement due to Landlord hereunder, with respect to such vehicle have not
been paid; with any such vehicle to be towed to a location designated by
Landlord and with Tenant being obligated to pay all parking charges, fines and
towing charges imposed by Landlord with respect to such vehicles. Tenant further
agrees to hold harmless Landlord and defend Landlord, its agents and employees
against any and all claims of the employee, agent and/or owner of the vehicle
towed. Landlord shall have the further option of prohibiting Tenant and its
employees and agents from parking their cars or other vehicles in the parking
facilities, and the violation of such prohibition shall be subject to the same
provisions as set forth above. Landlord may at any time close temporarily any
common area to make repairs or changes, to prevent the acquisition of public
rights in such area, to discourage non-customer parking, to use areas for
attendant or valet parking, and may do such other acts in and to the common
areas as in its judgment may be desirable to improve the convenience thereof.
Tenant shall not provide, nor shall Tenant authorize any person or entity to
provide, valet or attendant parking for Tenant's customers or others; Landlord
shall have the exclusive right, but shall not be obligated, to provide valet or
attendant parking at the regional retail development.
SEE ATTACHED RIDER FOR INSERTS
SECTION 8.03. TENANT'S PRO RATA SHARE OF EXPENSES. (a) Tenant agrees to
pay to Landlord in the manner hereinafter provided, but not more often than once
each calendar month Tenant's proportionate share of: (1) all costs and expenses
of every kind and nature paid or incurred by Landlord in operating, equipping,
policing and protecting, lighting, heating, air conditioning, providing
sanitation and sewer and other services, providing a music and public address
system, insuring (including self-insurance and the payment of deductible amounts
under insurance policies), repairing, replacing and maintaining (i) common areas
and (ii) all buildings and roofs within the Shopping Center and (iii) all other
areas, facilities and buildings, including project offices, parking facilities,
vertical transportation facilities, retention ponds (if applicable), and any and
all facilities and improvements connecting the regional retail development to
off-site buildings or areas, which are used in connection with the maintenance
and/or operation of, and whether located within or outside of, the regional
retail development (hereinafter collectively referred to as "project areas");
such costs and expenses shall include, but shall not be limited to, the full
cost of: illumination and maintenance of regional retail development signs,
whether located on or off the regional retail development; holiday and seasonal
lighting, decorations and displays; refuse disposal, water, gas, sewage,
electricity and other utilities (without limitation), including any and all
usage, service, hook-up, connection, availability and/or standby fees or charges
pertaining to same, and including all costs associated with the provision,
maintenance and operation of any central telephone service for the regional
retail development; the operation, maintenance, repair and replacement of all or
any part of the parking facilities; snow removal; maintenance, operation, repair
and replacement of any and all roads (temporary or otherwise) servicing the
regional retail development including, without limitation, any landscaping or
other work related to such roads; maintenance and operation of any temporary or
permanent utility, including a sewage disposal system, within or without the
regional retail development, built, operated and/or maintained for the specific
purpose of servicing the regional retail development, together with hook up or
connection fees and service charges; compliance with laws, rules, regulations
and orders of governmental authorities; maintenance for wooded areas, retention
ponds, lakes and shoreline areas (if applicable); cleaning, lighting, striping
and landscaping; curbs, gutters, sidewalks, drainage and irrigation ditches,
conduits, pipes and canals located on or adjacent to the regional retail
development; premiums and all other costs with respect to liability, casualty,
and property insurance, and compliance with insurance requirements; personal
property taxes; licensing fees and taxes; audit fees and expenses; supplies; the
cost and expense of supplying music to the regional retail development; all
costs and expenses of enforcing the rules and regulations established by
Landlord for the Shopping Center and handling of claims or other matters arising
from the operation of the regional retail development; real estate taxes and
assessments and substitutions and replacements thereof levied or assessed by
municipal, county, state, federal or other taxing or assessing authority upon,
against or with respect to the common areas, the project areas and/or the land
thereunder and the land on which the Shopping Center buildings are located, and
all property (including any land upon which may be located any temporary or
permanent utility, including a sewage disposal system, within or without the
regional retail development built, operated and/or maintained for the purpose of
servicing the regional retail development) provided by Landlord which may at any
time comprise or serve the Shopping Center, whether located on or off the site
of the Shopping Center, irrespective of whether the same is taxed or assessed as
real or personal property; cost, lease payment or depreciation of any equipment,
improvements or facilities used in the operation or maintenance of the common
areas or project areas, including, without limitation, any imputed interest as
may be applicable to costs paid or incurred by Landlord the full amount of which
is not included under this Section 8.03 in the year so paid or incurred, and
including any interest or other expense associated with any loans obtained by
Landlord with respect to any cost or expense included or includable hereunder,
including any portion of the long-term debt on the Shopping Center which has
been incurred for such purposes; total compensation and benefits (including
premiums for workers' compensation or any
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other insurance or other retirement or employee benefits, and including all
costs incurred in providing such benefits) paid to or on behalf of employees
involved in the performance of the work specified in this Section 8.03 or
employees otherwise providing services to tenants or customers of the Shopping
Center; and (2) an amount equal to fifteen percent (15%) of the total of all of
the foregoing costs and expenses for the regional retail development. The
proportionate share to be paid by Tenant shall be that portion of the foregoing
costs and expenses which the number of square feet of floor area in the leased
premises bears to the total number of square feet of gross leased and occupied
floor area of all buildings in the Shopping Center abutting on the enclosed
Mall. The gross leased and occupied floor area in effect for the whole of any
lease year shall be the average of the gross leased and occupied floor area in
effect on the first day of each calendar month in such lease year.
SEE ATTACHED RIDER FOR INSERTS
(b) Tenant's proportionate share of such costs and expenses for each
lease year shall be paid in monthly installments on the first day of each
calendar month, in advance, in an amount estimated by Landlord from time to
time. Subsequent to the end of each calendar or fiscal lease year (at Landlord's
option), Landlord shall furnish Tenant with a statement of the actual amount of
Tenant's proportionate share of such cost and expenses for such period. If the
total amount paid by Tenant under this Section for any such year shall be less
than the actual amount due from Tenant for such year as shown on such statement,
Tenant shall pay to Landlord the difference between the amount paid by Tenant
and the actual amount due, such deficiency to be paid within __ days after the
furnishing of each such statement, and if the total amount paid by Tenant
hereunder for any such year shall exceed such actual amount due from Tenant for
such year, such excess shall be credited against the next installment due from
Tenant to Landlord under this Section. Landlord may estimate the annual budget
and charge the estimated share to the Tenant on a monthly basis subject to
revision by Landlord of the budget from time to time and final annual adjustment
based upon actual expenses. Neither the provisions of this Section, nor any of
the other requirements or restrictions imposed upon Tenant under this Lease,
shall excuse Tenant from its obligation to comply with laws and ordinances and
other governmental requirements as set forth in Section 7.02 hereof.
SEE ATTACHED RIDER FOR INSERTS
ARTICLE IX. SIGNS
SECTION 9.01. SIGNS. Tenant shall affix a sign to the exterior surface
of the storefront of the leased premises fronting on the enclosed Mall and shall
maintain said sign in good condition and repair during the entire term of this
Lease. Said sign shall conform to the criteria for signs contained in Exhibit B,
and the size, content, design and location thereof shall be subject to the prior
written approval of Landlord. Except as hereinabove mentioned, Tenant shall not
place or cause to be placed, erected or maintained on any exterior door, wall,
window or the roof of the leased premises, or on the glass of any window or door
of the leased premises, or on any sidewalk or other location outside the leased
premises, or within any display window space in the leased premises, or within
___ feet of the front of the storefront opening, whether or not there is a
display window space in the leased premises, or within any entrance to the
leased premises, or otherwise visible from the Mall, any sign (flashing, moving,
hanging, handwritten, or otherwise), decal, placard, decoration, flashing,
moving or hanging lights, lettering, or any other advertising matter of any kind
or description. Moreover, Tenant is prohibited from utilizing any displays which
are not part of the fixture plan approved in writing by Landlord for the leased
premises. If Tenant places or causes to be placed or maintained any of the
foregoing, the same may be removed by Landlord or Landlord's representative
without notice and without such removal constituting a breach of this Lease or
entitling Tenant to claim damages on account thereof. No symbol, design, name,
mark or insignia adopted by Landlord for the Shopping Center shall be used
without the prior written consent of Landlord. No illuminated sign located in
the interior of the leased premises and which is visible from the outside
thereof shall be permitted without the prior written approval of Landlord. All
signs located in the interior of the leased premises shall be in good taste and
professionally printed so as not to detract from the general appearance of the
leased premises and the Shopping Center.
SEE ATTACHED RIDER FOR INSERTS
ARTICLE X. MAINTENANCE
SECTION 10.01. LANDLORD'S OBLIGATIONS FOR MAINTENANCE. Landlord shall
keep and maintain the exterior surfaces of the exterior walls of the building in
which the leased premises are located (exclusive of doors, door frames, door
checks, other entrances, windows and window frames which are not part of common
areas, and storefronts) in good repair, except that Landlord shall not be called
upon to make any such repairs occasioned by the act or negligence of Tenant, its
agents, employees, invitees, licensees or contractors. Landlord shall not be
called upon to make any other improvements or repairs of any kind upon the
leased premises and appurtenances, except as may be required under Articles XVII
and XVIII hereof, and nothing contained in this Section 10.01 shall limit
Landlord's right to reimbursement from Tenant for maintenance, repair costs and
replacement costs conferred elsewhere in this Lease.
SEE ATTACHED RIDER FOR INSERTS
SECTION 10.02. TENANT'S OBLIGATIONS FOR MAINTENANCE. (a) Except as
provided in Section 10.01 of this Lease, Tenant, at Tenant's expense, shall keep
and maintain in first-class appearance, in a condition at least equal to that
which existed when Tenant initially opened the leased premises for business, and
in good order, condition and repair as determined by Landlord (including
replacement of parts and equipment, if necessary) the leased premises and every
part thereof and any and all appurtenances thereto wherever located, including,
but without limitation, the interior surfaces of the exterior walls, the
exterior and interior portion of all doors, door frames, door checks, other
entrances, windows, window frames, plate glass, storefronts, all plumbing and
sewage facilities within the leased premises, including free flow up to the main
sewer line, fixtures, ventilation, heating and air conditioning and electrical
systems (whether or not located in the leased premises), sprinkler systems,
walls, floors and ceilings, and all other
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repairs, replacements, renewals and restorations, interior and exterior,
ordinary and extraordinary, foreseen and unforeseen, and all other work
performed by or on behalf of Tenant pursuant to the exhibits attached hereto or
Articles V or VI hereof or otherwise in accordance with the provisions of this
Lease. Tenant shall remodel the leased premises as required in Exhibit B.
(b) Tenant shall keep and maintain the leased premises in a clean,
sanitary and safe condition in accordance with the laws of the State and in
accordance with all directions, rules and regulations of the health officer,
fire marshall, building inspector, or other proper officials of the
governmental agencies having jurisdiction, and Tenant shall comply with all
requirements of law, ordinances and otherwise, affecting the leased premises,
all at the sole cost and expense of Tenant. At the time of the expiration or
sooner termination of the tenancy created herein, Tenant shall surrender the
leased premises in good order, condition and repair.
SEE ATTACHED RIDER FOR INSERTS
(c) Tenant shall keep the leased premises and all other parts of the
regional retail development free from any and all liens arising out of any work
performed, materials furnished or obligations incurred by or for Tenant, and
agrees to bond against or discharge any such lien (including, without
limitation, any construction, mechanic's or materialman's lien) within _____
days after written request therefor by Landlord. Tenant shall give Landlord at
least fifteen (15) days' notice prior to commencing or causing to be commenced
any work on the leased premises (whether prior or subsequent to the
commencement of the lease term), so that Landlord shall have reasonable
opportunity to file and post notices of non-responsibility for Tenant's work.
In addition, prior to commencing or causing to be commenced any work on the
leased premises, Tenant shall file a Notice of Commencement (or other similar
instrument limiting lien rights related to Tenant's Work) as provided by
applicable statutory provisions and shall deliver a copy of such Notice of
Commencement (or similar instrument) to Landlord. Tenant shall reimburse
Landlord for any and all costs and expenses which may be incurred by Landlord
by reason of the filing of any such liens and/or the removal of same, such
reimbursement to be made within _____ days after written notice from Landlord
to Tenant setting forth the amount of such costs and expenses.
SEE ATTACHED RIDER FOR INSERTS
(d) Tenant, at its own expense, shall install and maintain fire
extinguishers, other fire protection devices as may be required from time to
time by any agency having jurisdiction thereof. Should Landlord's insurance
carrier require that Tenant's fire protection system be modified, Tenant shall
make such modification at its sole expense within thirty (30) days after notice
in writing by Landlord. Failure of Tenant to do so shall entitle Landlord to
enter the leased premises and make such modification at the expense of Tenant.
Tenant shall pay all charges billed by Landlord within _____ days after
invoice. Tenant shall also be liable for any additional insurance premiums
assessed to Landlord relating to the leased premises.
SEE ATTACHED RIDER FOR INSERTS
(e) (1) Tenant agrees to operate its heating and its ventilating and
air conditioning system(s) serving the leased premises during regular Shopping
Center business hours so as to maintain comfort conditions. Temperatures in the
leased premises shall be compatible with temperatures in the enclosed Mall.
Tenant's installation of its heating and ventilating and air conditioning
system shall be as set forth in Exhibit B, attached hereto and made a part
hereof. Tenant shall be fully obligated for its maintenance and repair. Tenant
shall not drain heat or ventilation or air conditioning from the enclosed Mall
into the leased premises and Tenant shall at all times maintain adequate
temperatures within the leased premises to prevent any such drainage; likewise,
Tenant shall not discharge air from the leased premises into the enclosed Mall
or other interior areas. Landlord shall not be obligated to Tenant for any
damages or cost or expense resulting, directly or indirectly, from any failure
or malfunction of any air conditioning supply system or condenser water system
serving the Shopping Center or any component parts of any such system.
(2) To the extent the leased premises shall be serviced by a
central air conditioning or condenser water system, Tenant's obligation for
connecting to, and all charges for, the central system, as well as Tenant's
installation, operation and maintenance of its heating and ventilating and
air conditioning portion of the system shall be as set forth in Exhibit B (and
any separate exhibit relating to such central system) attached hereto and made
a part hereof. Landlord shall not be obligated to Tenant for any damages or
cost or expense resulting, directly or indirectly, from any failure or
malfunction of the central air conditioning supply system (or central condenser
water system, as applicable) or any component parts thereof. Tenants approved
by Landlord for the installation of a separate heating, ventilating and air
conditioning system, serving the leased premises, shall construct the same in
accordance with Landlord's criteria. If Tenant shall install such a system,
Tenant shall be fully obligated for its maintenance and repair.
(f) Tenant expressly waives all rights to make repairs at the expense
of Landlord as provided for in any statute or law in effect during the term of
this Lease.
(g) In the event that Tenant fails, refuses or neglects to commence
and complete repairs promptly and adequately, to remove any lien, to pay any
cost or expense, to reimburse Landlord, or otherwise to perform any act or
fulfill any obligation required of Tenant pursuant to this Section 10.02,
Landlord may, but shall not be required to, make or complete any such repairs,
remove such lien (without inquiring into the validity thereof), pay such cost
or perform such act or the like without prior notice to, but at the sole cost
and expense of, Tenant, and Tenant shall reimburse Landlord for all costs and
expenses of Landlord thereby incurred within _____ days after receipt by Tenant
from Landlord of a statement setting forth the amount of such costs and
expenses. The failure by Tenant so to make repairs, to remove any lien, to pay
any such cost or expense, or to so reimburse Landlord (in the case of
reimbursement, within such ten-day period) shall constitute a default by Tenant
under this Lease and shall carry with it the same consequences
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as failure to pay any installment of rent. Landlord's rights and remedies
pursuant to this subsection (g) shall be in addition to any and all other
rights and remedies provided under this Lease or at law.
SEE ATTACHED RIDER FOR INSERTS
ARTICLE XI. INSURANCE AND INDEMNITY
SECTION 11.01. TENANT'S INSURANCE. (a) Tenant, at its sole cost and
expense, shall, at all times, commencing with the date upon which the leased
premises shall be made available for Tenant's Work, procure, pay for and keep
in full force and effect: (i) a commercial general liability policy (ISO form
or equivalent), including insurance against assumed or contractual liability
under this Lease with respect to the leased premises and the operations of
Tenant and any subtenants of Tenant in, on or about the leased premises in
which the limits with respect to personal liability and property damage shall
be not less than Two Million Dollars ($2,000,000) per occurrence; (ii) all risk
property insurance, including theft and, if applicable, boiler and machinery
coverage, written at replacement cost value in an adequate amount to avoid
coinsurance and a replacement cost endorsement insuring Tenant's merchandise,
trade fixtures, furnishings, equipment and all items of personal property of
Tenant and including property of Tenant's customers located on or in the leased
premises; (iii) workers' compensation coverage as required by law; (iv) with
respect to alterations, improvements and the like required or permitted to be
made by Tenant hereunder, contingent liability and builder's risk insurance, in
amounts satisfactory to Landlord; (v) product liability coverage, including,
without limitation (if this Lease covers leased premises in which food and/or
beverages are sold and/or consumed), liquor liability coverage (if applicable
to Tenant's business) and coverage for liability arising out of the consumption
of food and/or alcoholic beverages on or obtained at the leased premises, of
not less than Two Million Dollars ($2,000,000) per occurrence for personal
injury and death and property damage; (vi) the insurance required under Exhibit
B; and (vii) such insurance as may from time to time be required by city,
county, state or federal laws, codes, regulations or authorities, together with
such other insurance as is reasonably necessary or appropriate under the
circumstances. The minimum limits of coverage as set forth in this paragraph
may from time to time, at Landlord's option, be increased by not more than ten
percent (10%) per annum, on a cumulative basis, with such increase to occur not
more often than once during each lease year during the term hereof. The
deductibles under any of such insurance policies to be carried by Tenant shall
not exceed ___________.
SEE ATTACHED RIDER FOR INSERTS
(b) All policies of insurance required to be carried by Tenant pursuant
to this Section 11.01 shall be written by responsible insurance
companies authorized to do business in the State and acceptable to Landlord.
Any such insurance required of Tenant hereunder may be furnished by Tenant
under any blanket policy carried by it or under a separate policy therefor;
provided, however, that: (1) any such blanket policy carried with respect to
the insurance required under subparagraphs (i), (iv), (v), (vi) and (vii) of
Section 11.01(a) shall contain a "per location" endorsement assuring that any
aggregate limit under such blanket policy shall apply separately to the leased
premises and that the insurer thereunder shall provide written notice to
Landlord if the available portion of such aggregate is reduced to less than the
minimum amounts required under Section 11.01(a) by either payment of claims or
the establishment of reserves for claims (whereupon Tenant shall be obligated
to take immediate steps to increase the amount of its insurance coverage in
order to satisfy the minimum requirements set forth above), and (2) any such
blanket policy carried with respect to the property insurance required under
subparagraph (ii) of Section 11.01(a) shall contain an "agreed value"
endorsement with respect to all of the items of property identified in such
subparagraph. A copy of each paid-up policy evidencing such insurance
(appropriately authenticated by the insurer) or a certificate of the insurer,
certifying that such policy has been issued, providing the coverage required by
this Section and containing provisions specified herein, shall be delivered to
Landlord prior to the commencement of the term of this Lease and, upon
renewals, not less than thirty (30) days prior to the expiration of such
coverage. Landlord may, at any time, and from time to time, inspect and/or copy
any and all insurance policies required to be procured by Tenant hereunder.
(c) Each policy evidencing insurance required to be carried by Tenant
pursuant to this Section 11.01 shall provide coverage on an occurrence basis
(and not on a "claims-made" basis) and shall contain the following provisions
and/or clauses: (i) a cross-liability clause; (ii) a provision that such policy
and the coverage evidenced thereby shall be primary and non-contributing with
respect to any policies carried by Landlord, and that any coverage carried by
Landlord shall be excess insurance; (iii) a provision including Landlord, the
beneficial ownership entity of the Shopping Center (if any), the managing agent
of the Shopping Center and any other parties in interest designated by Landlord
or such beneficial ownership entity (if any), as additional insureds (except
with respect to workers' compensation insurance); (iv) a waiver by the insurer
of any right of subrogation against Landlord, the underlying lessor, if any,
and their respective agents, employees and representatives which arises or
might arise by reason of any payment under such policy or by reason of any act
or omission of Landlord, its agents, employees or representatives; (v) a
severability clause; (vi) a provision that the insurer will not cancel,
materially change or fail to renew the coverage provided by such policy without
first giving Landlord and the underlying lessor, if any, thirty (30) days'
prior written notice; and (vii) a provision (to the extent available) that no
act or omission of Landlord shall affect or limit the obligation of the insurer
to pay the amount of any loss sustained.
(d) In the event that Tenant fails to procure, maintain and/or pay for,
at the times and for the durations specified in this Section 11.01, any
insurance required by this Section, or fails to carry insurance required by law
or governmental regulation, Landlord may (but without obligation to do so) at
any time or from time to time, and without notice, procure such insurance and
pay the premiums therefor, in which event Tenant shall repay to Landlord all
sums so paid by Landlord together with interest thereon as provided elsewhere
herein and any costs or expenses incurred by Landlord in connection therewith,
within _______ days following Landlord's written demand to Tenant for such
payment.
SEE ATTACHED RIDER FOR INSERTS
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<PAGE> 27
(e) Tenant shall not carry any stock of goods or do anything in or
about the leased premises which will in any way tend to increase the insurance
rates on the Shopping Center, the regional retail development, the leased
premises and/or the building of which they are a part and/or the contents
thereof. If Tenant installs any electrical equipment that overloads the lines in
the leased premises, Tenant shall at its own expense make whatever changes are
necessary to comply with the requirements of the insurance underwriters and
governmental authorities having jurisdiction.
SECTION 11.02. LANDLORD'S INSURANCE. (a) Landlord agrees, during the term
hereof to provide, to the extent the name is available from Landlord's insurance
carrier, in amounts and coverages determined by Landlord, with or without
deductibles, insurance coverage against such risks as are from time to time
included in a standard extended coverage endorsement, insuring the improvements
to the leased premises provided by Tenant pursuant to this Lease (exclusive of
Tenant's merchandise, trade fixtures, furnishings, equipment, plate glass, signs
and personal property of Tenant). Landlord may also carry at its option special
extended coverage endorsements and other special insurance coverage (including,
without limitation, earthquake coverage). Tenant shall submit to Landlord an
itemized statement setting forth the cost of such improvements promptly after
completion thereof and Tenant shall provide to Landlord, within thirty (30) days
after the end of each lease year of the term hereof, a written ___________ of
the then current replacement value of the leasehold improvements to the leased
premises, which ________ shall be certified by an __________________. In the
event Tenant fails to provide such itemized statement or any such Landlord shall
have the right to estimate the value of said improvements, which estimate shall
be binding upon Tenant. Tenant agrees to pay Landlord for the total cost of so
insuring such improvements, including, without limitation, the payment of all
applicable deductible amounts, such payments (other than deductible amounts) to
be made in equal monthly installments on the first day of each calendar month,
in advance, in an amount estimated by Landlord; provided, however, that Landlord
may elect to bill Tenant for such costs on a basis less frequent than monthly.
Deductible amounts shall be paid by Tenant upon notice from Landlord. Subsequent
to the receipt by Landlord of an invoice for such insurance premium, Landlord
shall furnish Tenant with a written statement setting forth such cost. If the
total amount paid by Tenant under this Section for any calendar, lease or fiscal
year (at Landlord's option) shall be less than the actual amount due from Tenant
for such year as shown on such statement, Tenant shall pay to Landlord the
difference between the amount paid by Tenant and the actual amount due, such
deficiency to be paid within thirty (30) days after the furnishing of each such
statement, and if the total amount paid by Tenant hereunder for any such
calendar year shall exceed such actual amount due from Tenant for such calendar
year, such excess shall be credited against the next installment due from Tenant
to Landlord under this Section 11.02.
SEE ATTACHED RIDER FOR INSERTS
(b) Landlord agrees, during the term hereof, to carry rent interruption
insurance, which insurance may be carried in amounts equal to Tenant's total
minimum rent obligation for twelve (12) full months (or such other period as
Landlord may elect) under this Lease plus the total of the estimated costs to
Tenant of taxes, assessments, insurance premiums and common area maintenance
costs for such twelve (12) month period (or such other period as Landlord may
elect). Tenant agrees from time to time, to reimburse Landlord for the total
cost of such insurance, such reimbursement to be made within _________ days
after receipt of a written statement from Landlord setting forth such cost.
SEE ATTACHED RIDER FOR INSERTS
(c) Any insurance required of Landlord hereunder may be furnished by or
for Landlord under any blanket policy carried by or for Landlord or under a
separate policy therefor. The cost of the foregoing insurance under this Section
11.02 is a part of the cost of the property insurance which may be included in
the costs and expenses set forth in Section 8.03 hereof. To the extent that the
foregoing insurance costs shall be so included under Section 8.03 and Tenant
shall pay its proportionate share of costs and expenses pursuant to said Section
8.03, such insurance costs shall not be separately charged to Tenant under this
Section 11.02.
SECTION 11.03. COVENANT TO HOLD HARMLESS. Tenant covenants to indemnify
Landlord, the underlying lessor, if any, and their respective officers,
directors, stockholders, beneficiaries, partners, representatives, agents and
employees, and save them harmless (except for loss or damage resulting from the
negligence of Landlord and not required to be insured against by Tenant pursuant
to this Article XI) from and against any and all claims, actions, damages,
liability, cost and expense, including attorneys' fees, in connection with all
losses, including loss of life, personal injury and/or damage to property,
arising from or out of any occurrence in, upon or at the leased premises or the
occupancy or use by Tenant of the leased premises or any part thereof, or
arising from or out of Tenant's failure to comply with any provision of this
Lease or occasioned wholly or in part by any act or omission of Tenant, its
concessionaires, agents, contractors, suppliers, employees, servants, customers
or licensees. For the purpose of this Section 11.03, the leased premises shall
include the service areas adjoining the same and the loading platform area
allocated to the use of Tenant ______________________________. In case Landlord
or any other party so indemnified shall, without fault, be made a party to any
litigation commenced by or against Tenant, or if Landlord or any such party
shall, in its ____ discretion, determine that it must intervene in such
litigation to protect its interest hereunder, including, without limitation, the
incurring of costs, expenses, and attorney's fees in connection with relief of
Tenant ordered pursuant to the Bankruptcy Code (11 USC Section 101 et. seq.),
then Tenant shall protect and hold them harmless by attorneys satisfactory to
Landlord and shall pay all costs, expenses and reasonable attorneys' fees
incurred or paid by such party in connection with such litigation. Landlord
shall have the right to engage its own attorneys in connection with any of the
provisions of this Section 11.03 or any other provision of this Lease,
including, without limitation, any defence of Landlord or intervention by
Landlord, notwithstanding any contrary provision or court decisions of the
State. The foregoing provisions of this Section shall survive the expiration or
earlier termination of the term of this Lease.
SEE ATTACHED RIDER FOR INSERTS
<PAGE> 28
ARTICLE XII. UTILITY CHARGES
SECTION 12.01. UTILITY CHARGES. (a) Tenant shall be solely responsible
for and shall promptly pay all necessary fees, deposits and charges, including
use and/or connection fees, hook-up fees, standby fees, and/or penalties for
discontinued or interrupted service, and the like, for water, gas, heat,
electricity, centrally conditioned cold air supply, sewer and sanitation, solid
waste disposal and any other service or utility used in or upon or furnished to
the leased premises, irrespective of whether Landlord has paid for these
services in advance, or otherwise. Landlord, at its sole option, may elect to
furnish any or all of the above services on a "rent inclusion basis" without
separate charge therefor to Tenant, by metering or otherwise, such charge to be
included in the minimum rent payable hereunder, in which event the minimum rent
specified in Section 2.01 shall be increased to reflect the value of such
service(s) as provided in paragraph (h) below. Alternatively, Landlord, at its
sole option, may provide for any or all of such services on a separate-charge
basis, and in such event Tenant shall purchase such service(s) from Landlord,
and within _____ days after Landlord bills Tenant for any such service Tenant
shall pay Landlord such rates, charges and fees, upon terms and conditions as
Landlord may establish; provided that, if the rates, charges or fees for any
such service are regulated by a public agency, the rates, charges and/or fees
to Tenant shall be computed using the maximum rate schedules which would be
applicable if Tenant were at the time a direct customer of the applicable
public utility corporation. If the cost of any such service for any month has
not been made known to Landlord at the time of billing, Landlord shall have the
right to estimate the amount thereof, and to base its billing to Tenant upon
said estimated amount, and Landlord may adjust such billing when the actual
amount is made known to Landlord. Landlord shall also have the right to
periodically estimate the monthly amount required to be paid by Tenant to
Landlord with respect to any or all of such services provided by Landlord and
such estimated monthly amount or amounts shall be paid by Tenant on the first
day of each calendar month, in advance, at the place and in the manner
specified for payments of minimum rent hereunder. Landlord shall have the right
to change such estimated amount or amounts at any time and from time to time,
by notice to Tenant. If the total of the estimated monthly payments made by
Tenant for any lease year or calendar year shall be less than the actual amount
due from Tenant pursuant to the provisions of this Section, Tenant shall pay to
Landlord the difference between the amount paid by Tenant and the actual amount
due within _____ days after submission to Tenant of Landlord's statement and
invoice therefor; and if the total of the estimated payments made by Tenant for
any such year shall exceed the actual amount due from Tenant, the excess amount
paid shall be credited against the next payment due from Tenant to Landlord
under this Section. Landlord, at its sole option, may require Tenant to install
separate, appropriate meters for measuring Tenant's consumption of water,
electricity or the like, and may require Tenant to remove any or all such
meters upon Landlord's discontinuing the service in question to Tenant. The
failure by Tenant to pay when due any amount payable to Landlord under this
Section 12.01 shall carry with it the same consequences as failure to pay any
installment of rent when due. Notwithstanding the foregoing, if a separate
exhibit describing applicable rates for a utility service is attached to this
Lease, Tenant shall pay for such service pursuant to such exhibit.
SEE ATTACHED RIDER FOR INSERTS
(b) In the event Landlord furnishes electricity on a rent inclusion basis as
provided above, at such time as Tenant's lighting and electrical equipment has
been completely installed, Landlord may, at Landlord's sole option (and to the
extent permitted by applicable regulations), cause a survey of Tenant's usage
of electricity to be made by an independent electrical consultant selected by
Landlord. The consultant shall render a report to Landlord and Tenant showing
the estimated amount of electricity which Tenant will consume, the value
thereof, and the minimum rent reserved hereunder shall thereupon be increased
to reflect such value. Tenant shall promptly pay to Landlord the difference
between the minimum rent hereunder and the increased minimum rent as so
determined for all months of the term of this Lease which have therefore
elapsed, and each monthly installment of rent thereafter paid by Tenant shall
be based upon such increased rent. Subject to applicable utility regulations,
each party to this Lease shall thereafter have the right whenever such party
believes there has been a material increase or decrease in Tenant's regular
usage of electric current (that is, a change therein other than on a temporary
basis) to request, by notice to the other party, a redetermination of the fair
rent value of the electric service then furnished by Landlord. When any such
request occurs, the redetermination shall be made as promptly as possible by an
independent electrical consultant selected by Landlord, and, based upon its
report, the minimum rent theretofore required to be paid hereunder shall
thereafter be adjusted to reflect such new fair rent value. Any change or
adjustment in such report shall be binding on both Landlord and Tenant. It is
agreed that the cost of conducting the redetermination shall be borne solely by
the party requesting same. Tenant agrees, on request of Landlord, to execute
and deliver from time to time a supplement to this Lease, setting forth the new
minimum rent, as then determined as above provided. After the making of the
initial survey referred to above, Tenant shall not without prior written notice
to Landlord make any alterations in or additions to the electrical equipment
and/or appliances in the leased premises. Tenant shall promptly execute a
separate utility letter or utility agreement if requested by Landlord or by the
applicable utility company.
(c) Any furnishing by Landlord of electric current to the leased premises
shall be limited to the extent of the capacity of Landlord's existing feeders,
switches, risers, wiring installations and other electrical system serving the
leased premises (the "electric distribution system"). Tenant agrees that
Tenant's use of electrical current will at no time exceed the capacity of the
electric distribution system, and that Tenant will not make any alteration or
addition to the electric distribution system without Landlord's prior written
consent in each instance.
(d) In the event that, at any time during the term of this lease, Tenant
desires to connect or install any additional electric fixtures, equipment or
appliances to the electric distribution system and such fixtures, equipment or
appliances require additional electric current which, in combination with
Tenant's existing electrical requirements exceeds the capacity of the electric
distribution system, then, provided that Landlord shall have consented in
writing to such connections or installations, Landlord, upon the written
request of Tenant and at the sole cost and expense of Tenant, will
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<PAGE> 29
install any additional riser or risers (and all other equipment necessary and
proper in connection therewith) to supply Tenant's electric requirements, but
only if such riser or risers (and such other equipment) are necessary to supply
Tenant with the electric current required by it and will not cause permanent
damage or injury to the leased premises or the regional retail development of
which the leased premises form a part or cause or create a dangerous or
hazardous condition or entail excessive or unreasonable alterations, repairs,
expense or interference with or disturbance of other tenants or occupants of
the regional retail development. Notwithstanding any provisions contained in
this Section 12.01, Landlord shall not be obligated to provide any new utility
services or increased utility capacities to the leased premises to the extent
that the leased premises shall have been previously occupied by another tenant,
and, if the leased premises have not been previously occupied, Landlord shall
not be obligated to provide any utility services or utility capacities other
than as specifically set forth in Exhibit B. Tenant shall promptly advise
Landlord of any increase in Tenant's connected load to the electric
distribution system. Any additional utility services or any increase in utility
capacities beyond that in existence if the leased premises shall have been
previously occupied (or beyond the specifications set forth in Exhibit B if the
leased premises have not been previously occupied) shall be subject to the
prior written approval of Landlord, and such additional services or capacities
shall be provided at the sole cost and expense of Tenant.
(e) Tenant agrees further to provide and install, at Tenant's sole cost and
expense, all lamps, tubes, bulbs, starters, ballasts, transformers and the like
items used or required in the leased premises.
(f) At any time during the term hereof, Landlord may, upon the thirty (30)
days' prior written notice to Tenant, discontinue furnishing electric current
(or such other utility being furnished by Landlord) to the leased premises
without thereby affecting this lease in any manner or otherwise incurring any
liability to tenant, except that the minimum rent reserved herein shall be
reduced by the amount then being paid by Tenant on account of Landlord's service
of electricity (or such other utility) to the leased premises, determined as
provided above (as the same may have been adjusted from time to time pursuant to
other provisions of this Article), and Landlord shall no longer be obligated to
furnish electric current (or such other utility) to the leased premises. If
Landlord shall give Tenant notice of intentions to cease furnishing electric
current (or other utility) to the leased premises, Tenant may contract for and
receive such electric current (or such other utility) directly from the public
utility corporation then serving the Shopping Center, and if Tenant does so,
Landlord shall permit Tenant, at Tenant's sole cost, to use Landlord's risers,
wiring and electric installations (or other utility conduits, as applicable),
then serving the leased premises for such purposes to the extent that the same
are available, suitable and may be safely so used consistent with concurrent and
anticipated future use by Landlord and other tenants.
(g) If at any time after the date hereof, the electrical energy rates (or
other utility rates) as filed by the public utility corporation then serving the
Shopping Center shall be reduced or increased, or any tax shall be imposed
thereon (or subsequently increased or decreased), then the minimum rent
reserved herein shall be equitably adjusted as of the first day of the month
next following the effective date of such rate change to reflect the resulting
reduction or increase in the value of Landlord's service of providing Tenant
with electric current (or other utility service) on a rent inclusion basis, but
in no event, shall the minimum rent be reduced below the amount stated in
Article II hereof.
(h) Notwithstanding any other provisions of this Lease, the value of, or (as
applicable) the rate for, each utility furnished by Landlord, which utility
shall be subject to regulation by a public agency, shall be computed for the
purposes of this Lease in accordance with the maximum rate schedules which
would be applicable if Tenant were at the time a direct customer of the
applicable public utility company serving the Shopping Center (subject to any
separate rate schedules for utility services as may be included in the exhibits
to this Lease). The value of, or (as applicable) the rate for, any nonregulated
utility service provided by Landlord shall be computed at the prevailing rates
which would be paid by Tenant for direct comparable service from contractors in
the local area, except to the extent that specific rates are otherwise set
forth in this Lease. The public utility corporation referred to in this Section
12.01 shall be the utility company named in Exhibit C attached hereto (if any),
or the successor to such company or such other company designated by Landlord.
(i) Landlord shall not be liable to Tenant for any loss, damage or expense
which Tenant may sustain if the quality or character of utilities used upon or
furnished to the leased premises are no longer available or suitable for
Tenant's requirements, or if said utilities are interrupted as a result of
actions by the public utility companies or any other cause and no such change,
interruption, or cessation of service shall constitute an eviction of Tenant.
SEE ATTACHED RIDER FOR INSERTS
(j) Any obligation of Landlord to furnish light, heat, conditioned air, or
power or any utility service shall be conditioned upon the availability of
adequate energy sources. Landlord shall have the right to reduce heat,
lighting, air conditioning or other utility services within the regional retail
development, including without limitation, the leased premises and the common
areas, as required by any mandatory or voluntary fuel or energy saving
allocation, or any similar statute, regulation, order or program without such
action diminishing Tenant's obligations hereunder.
ARTICLE XIII. ESTOPPEL STATEMENT, ATTORNMENT AND SUBORDINATION
SECTION 13.01. ESTOPPEL STATEMENT. Tenant shall, without charge, at any
time and from time to time, within _____ days after receipt by Tenant of written
request therefor from Landlord or from any mortgagee under any mortgage or any
beneficiary under any deed of trust on the real property on which the building
containing the leased premises is located or of which the leased premises are a
part, deliver, in recordable form, a duly executed and acknowledged certificate
or statement to the party requesting said certificate or statement or to any
other person, firm
S17
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or corporation designated by Landlord certifying: (a) that this Lease is
unmodified and in full force and effect, or, if there has been any
modification, that the same is in full force and effect as modified, and
stating any such modification; (b) the date of commencement of the term of this
Lease; (c) that rent is paid currently without any off-set or defense thereto;
(d) the dates to which the rent and other charges payable hereunder by Tenant
have been paid, and the amount of rent and other charges, if any, paid in
advance; (e) whether or not there is then existing any claim of Landlord's
default hereunder and, if so, specifying the nature thereof; and (f) any other
matters relating to the status of such Lease as shall be requested by Landlord
or any such mortgagee or beneficiary from time to time; provided that, in fact,
such facts are accurate and ascertainable. Any such certificate or statement by
Tenant may, at the election of the requesting party, include Tenant's
undertaking not to pay rents or other charges for more than a specified period
in advance of the due dates therefor set forth herein.
SEE ATTACHED RIDER FOR INSERTS
SECTION 13.02. ATTORNMENT. In the event any proceedings are brought for
the foreclosure of, or in the event of the conveyance by deed in lieu of
foreclosure of, or in the event of exercise of the power of sale under, any
mortgage and/or deed of trust made by Landlord covering the leased premises, or
in the event Landlord sells, conveys or otherwise transfer its interest in the
Shopping Center or any portion thereof containing the leased premises, this
Lease shall remain in full force and effect and Tenant hereby attorns to, and
covenants and agrees to execute an instrument in writing reasonably
satisfactory to the new owner whereby Tenant attorns to such successor in
interest and recognizes such successor as the Landlord under this Lease.
Payment by or performance of this Lease by any person, firm or corporation
claiming an interest in this Lease or the leased premises by, through or under
Tenant without Landlord's consent in writing shall not constitute an attornment
or create any interest in this Lease or the leased premises.
SEE ATTACHED RIDER FOR INSERTS
SECTION 13.03. SUBORDINATION. Tenant agreed that this Lease shall, at the
request of Landlord, be subordinate to any underlying lease and to any mortgages
or deeds of trust that are now, or may hereafter be, place upon the leased
premises and to any and all advances to be made thereunder, and to the interest
thereon, and all renewals, replacements and extensions thereof, provided that
the lessor under any such underlying lease or the mortgagees or beneficiaries
named in said mortgages or trust deeds shall agree to recognize the interest of
Tenant under this Lease in the event of foreclosure, if Tenant is not then in
default. Tenant also agrees that any underlying lessor or mortgagee or
beneficiary may elect to have this Lease constitute a prior lien to its
underlying lease or mortgage or deed of trust, and in the event of such
election and upon notification by such underlying lessor or such mortgagee or
beneficiary to Tenant to that effect, this Lease shall be deemed prior in lien
to such underlying lease or mortgage or deed of trust, whether this Lease is
dated prior to or subsequent to the date of said underlying lease or mortgage
or deed of trust. Tenant agrees that upon the request of Landlord, or any
mortgagee or beneficiary, Tenant shall execute whatever instruments may be
required by Landlord or by any mortgagee or beneficiary to carry out the intent
of this Section.
SECTION 13.04. REMEDIES. Failure of Tenant to execute any statements or
instruments necessary or desirable to effectuate the foregoing provisions of
this Article, within ________ days after written request so to do by Landlord,
shall constitute a breach of this Lease. In the event of such failure, Tenant
hereby irrevocably appoints Landlord as attorney-in-fact for Tenant with full
power and authority to execute and deliver in the name of Tenant any such
statements or instruments, which appointment shall be in addition to any other
rights or remedies available to Landlord. In addition, for each day beyond the
referenced ________ day period that Tenant shall fail to execute said statements
or instruments, Tenant shall pay to Landlord ________________________ in order
to partially compensate Landlord for the administrative costs and other damages
arising from Tenant's failure. Such per diem amount shall be immediately due
and payable as additional rent under this Lease.
SEE ATTACHED RIDER FOR INSERTS
ARTICLE XIV. ASSIGNMENT AND SUBLETTING
SECTION 14.01. NO ASSIGNMENT OR SUBLETTING. Notwithstanding any provision
herein to the contrary or reference herein to concessionaires or subtenants or
otherwise, Tenant agrees not to assign or in any manner transfer this Lease or
any estate or interest therein, and not to lease or sublet the leased premises
or any part or parts thereof of any right or privilege appurtenant thereto, and
not to allow anyone to conduct business at, upon or from the leased premises
(whether as concessionaire, franchisee, licensee, permittee, subtenant,
department operator or otherwise), or to come in, by, through or under it, in
all cases either by voluntary or involuntary act of Tenant or by operation of
law or otherwise. Without limiting any of the other provisions contained in
this Section 14.01, the restrictions of this Section shall apply to any merger,
consolidation or other reorganization of Tenant or of Tenant or of Tenant's
Guarantor or of any corporate entity which directly or indirectly controls
Tenant, and any such merger, consolidation or other reorganization shall be
deemed to be an assignment of this Lease within the meaning of this Section
14.01. The sale, issuance or transfer of any voting capital stock of Tenant or
Tenant's Guarantor or any voting capital stock of any corporate entity which
directly or indirectly controls Tenant (if any one of such entities, Tenant or
Tenant's Guarantor or any such controlling corporate entity, is a corporation
the stock of which is not traded on the New York Stock Exchange or the American
Stock Exchange), or any interests in any noncorporate entity which directly or
indirectly controls Tenant or Tenant's Guarantor which results in a change in
the direct or indirect voting control (or a change in the identity of any
person, persons, entity or entities with the power to vote or control at least
fifty percent (50%) of the voting shares of any class of stock) of Tenant, or
Tenant's Guarantor, or any corporate or noncorporate entity which directly or
indirectly controls Tenant or Tenant's Guarantor shall be deemed to be an
assignment of this Lease within the meaning of this Section 14.01. If Tenant is
a partnership, trust or an unincorporated association, then the sale, issuance
or transfer of a controlling interest therein, or the transfer of a majority
interest in or a change in voting control of any partnership, trust,
unincorporated association, or corporation which directly or indirectly
controls Tenant, or the transfer of any
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portion of any general partnership or managing interest in Tenant or in any
such entity, or any change or conversion of Tenant or of any such entity to a
limited liability company, a limited liability partnership, or any other entity
which possesses the characteristics of limited liability, shall be deemed to be
a prohibited assignment of this Lease within the meaning of this Section 14.01.
Any such prohibited act by Tenant or Tenant's Guarantor (or any attempt at
same), either voluntarily or involuntarily or by operation of law or otherwise,
shall, at Landlord's option, terminate this Lease without relieving Tenant of
any of its obligations hereunder for the balance of the stated term, and any
such act shall be null and void. The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, or the termination thereof
by Landlord pursuant to any provision contained herein, shall not work a merger
and shall, at the option of Landlord, terminate all or any existing franchises,
concessions, licenses, permits, subleases, subtenancies, departmental operating
arrangements or the like, or may, at the option of Landlord, operate as an
assignment to Landlord of the same. Nothing contained elsewhere in this Lease
shall authorize Tenant to enter into any franchise, concession, license, permit,
subtenancy, departmental operating arrangement or the like, except pursuant to
the provisions of this Section. Landlord has entered into this Lease with
Tenant in order to obtain for the benefit of the entire regional retail
development the unique attraction of Tenant's trade name set forth in Section
16.01 and the unique merchandising mix and product line associated with
Tenant's business as described in Section 7.01, and Landlord has specifically
relied on the identity and special skill of the Tenant in its ability to
conduct the specific business identified in Section 7.01, and the foregoing
prohibition on assignment or subletting or the like is expressly agreed to by
Tenant as an inducement to Landlord to lease to Tenant. Tenant hereby
acknowledges that the foregoing provisions of this Section 14.01 constitute a
freely negotiated restraint on alienation.
Without limiting any of the foregoing provisions, neither Tenant nor any
other person having an interest in the possession, use, occupancy or utilization
of the leased premises shall enter into any lease, sublease, license, concession
or other agreement for use, occupancy or utilization of space in the leased
premises which provides for rent or other payment for such use, occupancy or
utilization based in whole or in part on the net income or profits derived by
any person from the property leased, used, occupied or utilized (other than an
amount based on a fixed percentage or percentages of receipts or sales), and any
such purported lease, sublease, license, concession or other agreement shall be
absolutely void and ineffective as a conveyance of any right or interest in the
possession, use, occupancy or utilization of any part of the leased premises.
SEE ATTACHED RIDER FOR INSERTS
ARTICLE XV. WASTE
SECTION 15.01. WASTE OR NUISANCE. Tenant shall not commit or suffer to
be committed any waste upon the leased premises and shall not place a load upon
any floor of the leased premises which exceeds the floor load per square foot
which such floor was designed to carry. Tenant shall not commit or suffer to be
committed any nuisance or other act or thing which may disturb the quiet
enjoyment of any other occupant or tenant of the regional retail development.
Tenant agrees that business machines and mechanical equipment used by Tenant
which cause vibration or noise that may be transmitted to the building or
buildings comprising the regional retail development or to the leased premises,
to such a degree as to be reasonably objectionable to Landlord or to any
occupant, shall be placed and maintained by Tenant at its expense in settings of
cork, rubber or spring-type vibration isolators sufficient to eliminate such
vibrations or noise. Tenant shall take such action as Landlord reasonably deems
necessary to prevent or terminate any such nuisance or waste arising out of
Tenant's business, including, without limitation, any nuisance created by
employees, agents, contractors, invitees or licensees of Tenant.
ARTICLE XVI. TRADE NAME, PROMOTIONAL CHARGE
SECTION 16.01. TRADE NAME. Tenant agrees (a) to operate its business in
the leased premises under the name specifically set forth in the attached Data
Sheet; (b) not to change the advertised name or character of the business
operated in the leased premises; and (c) to refer to the Shopping Center by the
name set forth in Section 1.01 for the regional retail development in
designating the location of the leased premises in all advertising and in all
other references to the location of the leased premises. Landlord shall have the
right to Tenant's trade name in any public relations, promotional or
advertising materials or information. By its execution of this Lease, Tenant
authorizes Landlord to Tenant's trade name in the foregoing manner.
SEE ATTACHED RIDER FOR INSERTS
SECTION 16.02. SOLICITATION OF BUSINESS. Tenant and Tenant's employees
and/or agents shall not solicit business in the parking areas or other common
areas, or any part of the regional retail development other than in the leased
premises, nor shall Tenant distribute any handbills or other advertising matter
in the parking area, other common areas, or any part of the regional development
other than in the leased premises. Tenant shall not give samples or approach
customers outside the leased premises for purposes of soliciting sales.
Moreover, and generally, Tenant shall not give away any promotional items which
could create a nuisance or require Landlord to incur additional common area
expenses.
SECTION 16.03. PROMOTIONAL CHARGE. (a) Landlord shall provide or cause
to be provided a program of advertising or promotional events which, in
Landlord's sole judgment, will serve to promote the regional retail development.
Landlord shall be compensated, out of promotional charges collected by Landlord
during each year for promotional services provided, in an amount equal to [***]
of the promotional charges so collected, on a non-cumulative basis. Landlord
shall not be obligated to expend more than is actually collected. Any
promotional
*** Confidential treatment requested.
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services and personnel so provided shall be under the exclusive control and
supervision of Landlord, who shall have the sole authority to employ and
discharge personnel and to establish a budget. Tenant agrees to pay to
Landlord, as Tenant's share of the cost of said advertising and promotional
program, an annual promotional charge which originally shall equal the amount
as shown in the Data Sheet for this Lease, which annual promotional charge
shall, at Landlord's option, be payable by Tenant in equal monthly installments
at the time and in the manner set forth for rent payments in this Lease.
However, such annual promotional charge payable by Tenant will be adjusted
commencing January 1st immediately succeeding the commencement date of the term
of this Lease and annually thereafter, by a percentage equal to the percentage
increase from the base period of the Index (as defined in Section 27.20) to the
respective January 1st or the closest month thereto that the Index is published
(but in no even shall Tenant pay less than the original promotional charge as
specified above). The term "base period" shall refer to the month of adjustment
in such annual promotional charge closest to and prior to the date of
commencement of the term of this Lease (i.e., the most recent month prior to
the commencement date during which such promotional charge has been adjusted),
or the date of the opening of the Shopping Center, whichever of such dates
shall be the later to occur. In addition to this cost of living adjustment, such
annual promotional charge may be increased from time to time by Landlord to the
extent required by increases in the costs of promotional, public relations or
advertising services provided pursuant to this Section (including, without
limitation, changes in costs arising from variations in the type, nature or
extent of such services). Tenant also agrees to pay to Landlord, within ____days
after demand therefor, an initial promotional charge in the amount set forth in
the Data Sheet in addition to the foregoing promotional charges. The various
promotional charges set forth in this Section 16.03 and in the Data Sheet shall
be increased as of the commencement date of the Lease to reflect the then
current charges per square foot for Shopping Center tenants.
SEE ATTACHED RIDER FOR INSERTS
(b) Landlord reserves the right at any time to cease providing
promotional services and to cause a Merchants' Association to be formed. Upon
the formation of the Association, Landlord will turn over to the Association
any funds in its possession, collected from tenants as promotional charges, not
spent or required to discharge indebtedness, and less Landlord's compensation
due under Section 16.03(a). Thereupon, Landlord shall be relieved of any and
all liability to Tenant in connection with such advertising and promotional
services. Upon formation of the Association, Tenant shall become a member
thereof and will maintain membership in good standing and will abide by the
regulations and cooperate in the activities of such Association throughout the
term of this Lease and any extensions or renewals thereof. The purpose of the
Merchants' Association shall be to encourage its members to deal fairly and
courteously with their customers, to follow ethical business practices, and to
assist the business of its members by sales promotions and centerwide
advertising. If Landlord shall elect to provide promotional services and
personnel to formulate and effect an advertising, promotional and public
relations program for the Shopping Center, Landlord shall be reimbursed by the
Merchants' Association for Landlord's cost of providing such promotional
services and personnel, in an amount equal to twenty-five percent (25%) of the
annual dues payable to the Merchants' Association. Any promotional services and
personnel so provided shall be under the exclusive control and supervision of
Landlord, who shall have the sole authority to employ and discharge such
personnel. The provisions of this Section 16.03 shall be deemed to be covenants
for the benefit of Landlord and said Association as and when formed, and may be
enforced by either of them as binding obligations of Tenant. Tenant's
obligation for payment of dues to the Association shall be the same sum per
month as Tenant was obligated to pay for promotional service prior to the
formation of the Association, subject, however, to annual adjustments approved
by the Board of Directors of the Association increasing said dues to the extent
required by increases in the costs of promotional, public relations and
advertising services (including, without limitation, changes in costs arising
from variations in the type, nature or extent of such services). In addition,
the cost of living adjustment referred to in Section 16.03(a) above with
respect to Tenant's monthly payment to Landlord for promotion services shall
also apply in the same manner to the Merchants' Association dues. In the event
that such a Merchants' Association shall be in operation as of the date of this
Lease, the parties hereby acknowledge the present application of this Section
16.03(b).
(c) Landlord reserves the right, at any time, to dissolve any Merchants'
Association which may exist and to provide, or cause to be provided, a program
of advertising and promotional events which, in Landlord's sole judgment, will
serve to promote the regional retail development. In the event any such program
is so established, it shall be governed by the provisions of Section 16.03(a)
hereof, and Tenant's obligations shall be as set forth therein.
(d) All recurring payments, charges, dues and assessments (other than the
initial assessment) payable under this Section 16.03 shall be due in monthly
installments on the first day of each month during the term of this Lease, and
all such items, and the initial assessment, shall be paid without deduction or
offset. Failure by Tenant to pay all amounts when due shall carry with it the
same consequences under Article XIX hereof as Tenant's failure to pay rent.
ARTICLE XVII. DESTRUCTION OF LEASED PREMISES
SECTION 17.01. RECONSTRUCTION OF DAMAGED PREMISES. In the event the leased
premises shall be partially or totally destroyed by fire or other casualty
insured under the insurance carried by Landlord pursuant to Section 11.02 of
this Lease so as to become partially or totally untenantable, then the damage
to the leased premises shall be promptly repaired (unless Landlord shall elect
not to rebuild as hereinafter provided), and the minimum rent and (to the
extent covered by the insurance carried by Landlord under Section 11.02(b))
other charges payable by Tenant to Landlord (to the extent that such charges
are based upon the square foot area of the leased premises) shall be abated in
proportion to the floor area of the leased premises rendered untenantable, and
the Minimum Gross Sales above which percentage rent is computed and payable
shall likewise be proportionately reduced. Payment of full rent and all other
charges so abated shall commence and Tenant shall be obligated to reopen for
business on the ________ day
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following the date that Landlord advises Tenant that the premises are
tenantable, unless Tenant opens at an earlier time in the damaged area or
remains open in such area following destruction or damage, in which event there
shall be no abatement or any such abatement shall terminate as of the date of
Tenant's earlier reopening. If Landlord shall elect to cause Tenant to make the
necessary repairs to the leased premises, as provided below, payment of full
rent and all other charges so abated shall commence and Tenant shall be
obligated to reopen for business on the ______ day following the date that
Landlord advises Tenant of Landlord's election for Tenant to perform such work.
Landlord shall be obligated to cause such repairs to be made unless Landlord,
at its sole option, elects to cause Tenant to make such repairs, in which event
Tenant shall promptly complete the same and Landlord will make available to
Tenant for the sole purpose of reconstruction of Tenant's improvements such
portion of any insurance proceeds received by Landlord from its insurance
carrier, under a policy carried pursuant to Section 11.02 of this Lease,
allocated to the leased premises by Landlord. In the event of any such
reconstruction by Tenant, an architect duly registered in the State shall be
selected by Landlord and direct the payment of such insurance proceeds. Such
insurance proceeds shall be payable to Tenant only upon receipt by Landlord of
certificates of said architect stating that the payments specified therein are
properly payable for the purpose of reimbursing Tenant for expenditures
actually made by Tenant in connection with such work. At the election of
Landlord or Landlord's mortgagee, direct payments may be made to material
suppliers and laborers upon written certification by said architect that such
payments are due and payable. Any such insurance proceeds in excess of Tenant's
actual expenditures in restoring the damage or destruction shall belong to
Landlord. In making repairs, restoration or reconstruction, Tenant, at its
expense, shall comply with all laws, ordinances, and governmental rules or
regulations, and shall perform all work or cause such work to be performed with
due diligence and in a first-class manner. All permits required in connection
with said repairs, restoration and reconstruction shall be obtained by Tenant
at Tenant's sole cost and expense. Any amount expended by Tenant in excess of
such insurance proceeds received by Landlord and made available to Tenant shall
be the sole obligation of Tenant. In the event of reconstruction or repair by
Landlord, any amount expended by Landlord in repairing the leased premises in
excess of the proceeds of insurance received by Landlord pursuant to Section
11.02 of this Lease allocated to the leased premises shall be repayable by
Tenant to Landlord within _____ days after receipt by Tenant from Landlord of a
statement setting forth the amount of such excess. The party required hereunder
to repair the damage to the leased premises shall reconstruct such leased
premises in accordance with the working drawings originally approved by
Landlord or with new drawings prepared by Tenant and acceptable to Landlord and
Tenant. In no event shall Landlord be required to repair or replace Tenant's
merchandise, trade fixtures, furnishings or equipment. If (i) more than
thirty-five percent (35%) of the floor area of the building in which the leased
premises are located or of the Shopping Center shall be damaged or destroyed by
fire or other casualty, or (ii) during the last three (3) years of the term
hereof more than twenty-five percent (25%) of the floor area of the leased
premises or of the building in which the leased premises are located or of the
Shopping Center shall be damaged or destroyed by fire or other casualty, or
(iii) all or any part of the Shopping Center or said building or the leased
premises are damaged or destroyed at any time by the occurrence of any risk not
insured under the insurance carried by Landlord pursuant to Sections 8.03 or
11.02(a), then Landlord, at its sole option, may terminate this Lease by giving
written notice to Tenant of Landlord's election so to terminate, such notice to
be given within ninety (90) days after the occurrence of such damage or
destruction. If Landlord repairs or rebuilds, or requires Tenant to repair or
rebuild the leased premises as herein provided, Tenant, at Tenant's sole cost,
shall repair or replace Tenant's merchandise, trade fixtures, furnishings and
equipment in a manner and to at least a condition equal to that prior to the
damage or destruction thereof.
SEE ATTACHED RIDER FOR INSERTS
SECTION 17.02. WAIVER OF SUBROGATION. Each party hereto does hereby
waive, remise, release and discharge the other party hereto and any officer,
director, shareholder, beneficiary, partner, agent, employee or representative
of such other party, of and from any liability whatsoever hereafter arising
from loss, damage or injury caused by fire or other casualty for which
insurance containing a waiver of subrogation is carried by the injured party at
the time of such loss, damage or injury to the extent of any recovery by the
injured party under such insurance.
SEE ATTACHED RIDER FOR INSERTS
ARTICLE XVIII. EMINENT DOMAIN
SECTION 18.01. TOTAL CONDEMNATION OF LEASED PREMISES. If the whole of
the leased premises shall be taken by any public authority under the power of
eminent domain or sold to public authority under threat or in lieu of such a
taking, then the term of this Lease shall cease as of the day possession shall
be taken by such public authority, and the rent shall be paid up to that day
with a proportionate refund by Landlord of such rent and other charges as may
have been paid in advance for a period subsequent to the date of the taking.
SECTION 18.02. PARTIAL CONDEMNATION. (a)(i) If less than the whole but
more than twenty percent (20%) of the leased premises or more than fifty
percent (50%) of the common areas shall be so taken under eminent domain, or
sold to public authority under threat or in lieu of such a taking, Tenant shall
have the right either to terminate this Lease and declare the same null and
void as of the day possession is taken by public authority, or, subject to
Landlord's right of termination as set forth in Section 18.02(b) of this
Article, to continue in the possession of the remainder of the leased premises,
upon notifying Landlord in writing within _____ days after such taking of
Tenant's intention. In the event Tenant elects to remain in possession, all of
the terms herein provided shall continue in effect, except that, as of the day
possession of such percentage of the leased premises is taken by public
authority, the minimum rent and other charges payable by Tenant to Landlord (to
the extent that such charges are based upon the square foot area of the leased
premises) shall be reduced in proportion to the floor area of the leased
premises taken and the Minimum Gross Sales above which percentage rent is
computed and payable shall likewise be proportionately reduced; thereafter,
Landlord shall, at its own cost and expense, make all necessary repairs or
alterations to the basic building, so as to
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constitute the remaining leased premises a complete architectural unit, and
Tenant, at Tenant's sole cost, shall similarly act with respect to Tenant's
improvements, trade fixtures, furnishings and equipment.
(ii) If twenty percent (20%) or less of the leased premises shall be so
taken, the lease term shall cease only on the part so taken, as of the day
possession shall be taken by such public authority, and Tenant shall pay rent
and other charges up to that day, with appropriate credit by Landlord (toward
the next installment of such rent for charges due from Tenant) of such rent or
charges as may have been paid in advance for a period subsequent to the date of
the taking; thereafter, the minimum rent and other charges payable to Landlord
(to the extent that such charges are based upon the square foot area of the
leased premises) shall be reduced in proportion to the amount of the leased
premises taken and the Minimum Gross Sales above which percentage rent is
computed and payable shall likewise be proportionately reduced. Landlord shall,
at its expense, make all necessary repairs and alterations to the basic
building, so as to constitute the remaining leased premises a complete
architectural unit, and Tenant, at Tenant's sole cost, shall similarly act with
respect to Tenant's improvements, trade fixtures, furnishings and equipment.
(b) If more than fifty percent (50%) of the building in which the leased
premises are located, or more than fifty percent (50%) of the leased premises,
or more than fifty percent (50%) of the Shopping Center or of the common areas,
shall be taken under power of eminent domain, or sold to public authority under
the threat or in lieu of such a taking, Landlord may, by written notice to
Tenant delivered on or before the tenth (10th) day following the date of
surrendering possession to the public authority, terminate this Lease as of the
day possession is taken by public authority. The rent and other charges shall
be paid up to the day possession is taken by public authority, with an
appropriate refund by Landlord of such rent as may have been paid in advance
for a period subsequent to that date.
SECTION 18.03. LANDLORD'S AND TENANT'S DAMAGES. All damages awarded for
such taking under the power of eminent domain or sale under threat or in lieu
of such taking, whether for the whole or a part of the leased premises, shall
belong to and be the property of Landlord, irrespective of whether such damages
shall be awarded as compensation for diminution in value to the leasehold or to
the fee of the leased premises, and Tenant shall have no claim against either
Landlord or the condemning authority with respect thereto; provided, however,
that Landlord shall not be entitled to any award specifically designated as
compensation for, depreciation to, and cost of removal of, Tenant's stock and
trade fixtures.
SEE ATTACHED RIDER FOR INSERTS
ARTICLE XIX. DEFAULT
SECTION 19.01. RIGHT TO RE-ENTER. (a) In the event of (1) any failure of
Tenant to pay any rent or other charges due hereunder due, or (2) if Tenant
shall fail to move into the premises and to commence the conduct of its business
date specified in Section 1.02 hereof, or fail to perform any obligation
hereunder prior to such commencement date, or fail to continuously operate its
business pursuant to Section 7.02 for the purpose specified in Section 7.01
hereof, or fail to operate under the name specified in Section 16.01 hereof, or
if Tenant shall abandon said premises, or permit this Lease to be taken under
any writ of execution, or if there shall be any default by Tenant (or by any
person or entity which, directly or indirectly, controls, is controlled by, or
is under common control with Tenant) under any other lease with Landlord (or
with any person or entity which is affiliated with Landlord or which, directly
or indirectly, controls, is controlled by, or is under common control with
Landlord, or which is managed by the managing agent utilized by Landlord for the
Shopping Center) which shall not be remedied within the applicable grace period,
if any, provided therefor under such other lease, or if there shall be any
default by Tenant or any entity affiliated with Tenant with respect to any
financing instrument or arrangement, if any, relating to any items used in, or
the operation of business upon, the leased premises, or (3) any failure to
perform any other of the terms, conditions or covenants of this Lease to be
observed or performed by Tenant for more than thirty (30) days after written
notice of such default shall have been mailed to Tenant; then Landlord, besides
other rights or remedies it may have, shall have the right to declare this lease
terminated and the term ended (in which event, this Lease and the term hereof
shall expire, cease and terminate with the same force and effect as though the
date set forth in any required notice were the date originally set forth herein
and fixed for the expiration of the term and Tenant shall vacate and surrender
the premises but shall remain liable for all obligations arising during the
balance of the original stated term as hereafter provided as if this Lease had
remained in full force and effect) and Landlord shall have the right to bring a
special proceeding to recover possession from Tenant holding over and/or
Landlord may, in any of such events, without notice, re-enter the leased
premises either by force or otherwise, and dispossess, by summary proceedings or
otherwise, Tenant and the legal representative of Tenant or other occupant of
the leased premises and remove their effects and hold the premises as if this
Lease had not been made, and Tenant hereby waives the service of notice of
intention to re-enter or to institute legal proceedings to that end.
SEE ATTACHED RIDER FOR INSERTS
(b) In addition to the remedies set forth herein for such failure by
Tenant, Landlord shall have the further remedy of erecting a barricade at the
storefront of the leased premises at such time as possession of the leased
premises is deemed vested in Landlord, which barricade may be erected, at
Tenant's expense, and without notice to Tenant or resort to legal process, and
without Landlord in any manner becoming liable for any loss or damage which may
be occasioned thereby. Notwithstanding the foregoing provisions of this
Section, in the event Tenant shall fail to perform or shall default in the
performance of term, covenant or condition of this lease on two (2) or more
separate occasions during any twelve-month period, then, even though such
failures or defaults may have been cured by Tenant, any further failure or
default by Tenant during shall be deemed a default without the ability for cure
by Tenant. During the continuance of any failure of performance of any default
by Tenant in the performance of any term, covenant or condition of this Lease,
Tenant shall not be entitled to exercise any rights or options, or to receive
any funds or proceeds being held under or pursuant to this Lease,
notwithstanding any contrary provisions contained herein. In the
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event of re-entry by Landlord, Landlord may remove all persons and property from
the leased premises and such property may be stored in a public warehouse or
elsewhere at the cost of, and for the account of Tenant, with notice resort to
legal process and without Landlord being deemed guilty of trespass, or becoming
liable for any loss or damage which may be occasioned thereby. In addition, and
to the extent permitted by law, in the event of re-entry by Landlord, Landlord
may, but shall not be required to, padlock or otherwise secure the entrances to
the leased premises without prior notice or resort to legal process and without
being deemed guilty of trespass or becoming liable for any loss or damage; all
costs and expenses incurred by Landlord in securing the entrances to the leased
premises shall be borne by Tenant and shall be payable to landlord on ____ days'
written notice; and any such padlocking or securing of the premises shall not
constitute or be deemed as an election on Landlord's part to terminate this
Lease unless a written notice of such intention shall be given to Tenant or
unless the termination of this Lease is decreed by a court of competent
jurisdiction. In the event Tenant shall not remove its property from the leased
premises within ten (10) days after Tenant has vacated the premises, then such
property shall be deemed abandoned by Tenant and Landlord may dispose of the
same without liability to Tenant. To the extent that this Lease specifically
provides for any abatement of rent otherwise payable by Tenant under this Lease,
or any payment by Landlord to Tenant, such abatement shall not be effective, nor
shall such payment be required to be made, if Tenant shall have failed to
observe or perform any of Tenant's obligations hereunder or if Tenant shall
otherwise be in default hereunder, and Tenant shall be obligated to immediately
repay to Landlord the amount of any rent previously abated or the amount of any
payment previously made by Landlord to Tenant hereunder, notwithstanding
anything contained in this Lease to the contrary.
See Attached Rider For Inserts
SECTION 19.02. RIGHT TO RELET. Should Landlord elect to re-enter, as
herein provided, or should it take possession pursuant to legal proceedings or
pursuant to any notice provided for by law, it may either terminate this Lease
or it may from time to time, without terminating this Lease, make such
alterations and repairs as may be necessary in order to relet the premises, and
relet said premises or any part thereof for such term or terms (which may be for
a term extending beyond the term of this Lease) and at such rent and upon such
other terms and conditions as Landlord in its sole discretion may deem
advisable. Upon each such reletting all rents and other sums received by
Landlord from such reletting shall be applied, first, to the payment of any
indebtedness other than rent due hereunder from Tenant to Landlord; second, to
the payment of any costs and expenses of such reletting, including reasonable
brokerage fees and attorneys' fees and the costs of any alterations and repairs;
third, to the payment of rent and other charges due and unpaid hereunder; and
the residue, if any, shall be held by Landlord and applied in payment of future
rent as the same may become due and payable hereunder. If such rents and other
sums received from such reletting during any month be less than that to be paid
during that month by Tenant hereunder, Tenant shall pay such deficiency to
Landlord; if such rents and the sums shall be more, Tenant shall have no right
to, and shall receive no credit for, the excess. Such deficiency shall be
calculated and paid monthly. No re-entry or taking possession of the leased
premises by Landlord shall be construed as an election on its part to terminate
this Lease unless a written notice of such intention is given to Tenant or
unless the termination thereof is decreed by a court of competent jurisdiction.
Notwithstanding any such reletting without termination, Landlord may at any time
elect to terminate this Lease for such previous breach. Should Landlord at any
time terminate this Lease for any breach, in addition to any other remedies it
may have, it may recover from Tenant all damages it may incur by reason of such
breach, including the cost of recovering the leased premises, reasonable
attorneys' fees, and including the worth at the time of such termination of the
excess, if any, of the amount of rent and charges equivalent to rent reserved in
this Lease for the remainder of the stated term over the then reasonable rental
value of the leased premises for the remainder of the stated term, all of which
amounts shall be immediately due and payable from Tenant to Landlord. In
determining the rent which would be payable under this Lease by Tenant
subsequent to default, the percentage rent for each year of the unexpired
portion of the term shall be equal to the average percentage rent payable by
Tenant from the commencement of the term to the time of default, or during the
preceding three (3) full lease years, whichever period is shorter. The failure
or refusal of Landlord to relet the premises shall not affect Tenant's
liability. The terms "entry" and "re-entry" are not limited to their technical
meanings. Nothing contained in this Lease shall be construed to limit or
prejudice the right of Landlord to prove for and obtain as damages by reason of
the termination of this Lease or re-entry of the leased premises for the default
of Tenant under this Lease an amount equal to the maximum allowed by any statute
or rule of law in effect at the time when, and governing the proceedings in
which, such damages are to be proved, whether or not such amount shall be
greater than any of the sums referred to in this Section 19.02.
See Attached Rider For Inserts
SECTION 19.03. EXPENSES. In case suit shall be brought for recovery of
possession of the leased premises, for the recovery of rent or any other amount
due under the provisions of this Lease, or because of the breach of any other
covenant herein contained on the part of Tenant to be kept and performed, and a
breach shall be established, Tenant shall pay to Landlord all expenses incurred
therefor, including reasonable attorneys' fees. In addition, in the event
Landlord shall incur expenses, including reasonable attorneys' fees, as a result
of Tenant's failure to perform or comply with any term, covenant or condition
set forth in this Lease, Tenant shall pay to Landlord all such expenses. Any
amounts payable by Tenant to Landlord pursuant to this Section 19.03 or Section
11.03 of this Lease may be included in any subsequent monthly rent bill to
Tenant, and the failure of Tenant to promptly pay same shall entitle Landlord to
all remedies for failure to pay rent as available under this Lease or at law or
in equity.
SECTION 19.04. WAIVER OF COUNTERCLAIMS AND TRIAL BY JURY. Landlord and
Tenant waive their right to trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto against the other (except
for personal injury or property damage) on any matters whatsoever arising out of
or in any way connected with this Lease, the relationship of Landlord and
Tenant, Tenant's use of or occupancy of said premises, and any
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emergency statutory or any other statutory remedy. Tenant shall not interpose
any counterclaim or counterclaims or claims for set-off, recoupment or
deduction of rent in a summary proceeding for nonpayment of rent or other
action or summary proceeding based on termination, holdover or other default in
which Landlord seeks repossession of the leased premises from Tenant.
SEE ATTACHED RIDER FOR INSERTS
ARTICLE XX. BANKRUPTCY OR INSOLVENCY
SECTION 20.01. TENANT'S INTEREST NOT TRANSFERABLE. Neither Tenant's
interest in this Lease, nor any estate hereby created in Tenant nor any
interest herein or therein, shall pass to any trustee, except as may
specifically be provided pursuant to the Bankruptcy Code (11 USC Section 101
et. seq.), or to any receiver or assignee for the benefit of creditors or
otherwise by operation of law.
SECTION 20.02. TERMINATION. In the event the interest or estate created in
Tenant hereby shall be taken in execution or by other process of law, or if
Tenant or Tenant's Guarantor, if any, or Tenant's executors, administrators, or
assigns, if any, shall be adjudicated insolvent or bankrupt pursuant to the
provisions of any state law or an order for the relief of such entity shall be
entered pursuant to the Bankruptcy Code, or if a receiver or trustee of the
property of Tenant or Tenant's Guarantor, if any, shall be appointed by reason
of the insolvency or inability of Tenant or Tenant's Guarantor, if any, to pay
its debts, or if any assignment shall be made of the property of Tenant or
Tenant's Guarantor, if any, for the benefit of creditors, then and in any such
events, this Lease and all rights of Tenant hereunder shall automatically cease
and terminate with the same force and effect as though the date of such event
were the date originally established herein and fixed for the expiration of the
term, and Tenant shall vacate and surrender the leased premises but shall
remain liable as herein provided. Notwithstanding the foregoing provisions of
this Section, in the event that such termination shall result solely from the
bankruptcy or insolvency of, or such other described event relating to,
Tenant's Guarantor, Landlord shall have the option to reinstate all of the
provisions of this Lease (including, without limitation, the obligation of
Tenant to continuously operate pursuant to Article VII hereof) upon written
notice to Tenant.
SECTION 20.03. TENANT'S OBLIGATION TO AVOID CREDITORS' PROCEEDINGS. Tenant
or Tenant's Guarantor, if any, shall not cause or give cause for the
appointment of a trustee or receiver of the assets of Tenant or Tenant's
Guarantor, if any, and shall not make any assignment for the benefit of
creditor, or become or be adjudicated insolvent. The allowance of any petition
under any insolvency law except under the Bankruptcy Code or the appointment of
a trustee or receiver of Tenant or Tenant's Guarantor, if any, or of the assets
of either of them, shall be conclusive evidence that Tenant caused, or gave
cause, therefor, unless such allowance of the petition, or the appointment of a
trustee or receiver, is vacated within thirty (30) days after such allowance or
appointment. Any act described in this Section 20.02 shall be deemed a material
breach of Tenant's obligations hereunder, and this Lease shall thereupon
automatically terminate in the same manner and with the same force and effect
as set forth in Section 20.02 hereof. Landlord does, in addition, reserve any
and all other remedies provided in this Lease or in law. Notwithstanding the
foregoing provisions of this Section, in the event that such termination shall
result solely from the bankruptcy or insolvency of, or such other described
event relating to, Tenant's Guarantor, Landlord shall have the option to
reinstate all of the provisions of this Lease (including, without limitation,
the obligation of Tenant to continuously operate pursuant to Article VII
hereof) upon written notice to Tenant.
SECTION 20.04. RIGHTS AND OBLIGATIONS UNDER THE BANKRUPTCY CODE. (a) Upon
the filing of a petition by or against Tenant under the Bankruptcy Code,
Tenant, as debtor as a debtor in possession, and any trustee who may be
appointed agree as follows: (i) to perform each and every obligation of Tenant
under this Lease including, but not limited to, the manner of "operation" as
provided in Section 7.02 of this Lease until such time as this Lease is either
rejected or assumed by order of the United States Bankruptcy Court; (ii) to pay
monthly in advance on the first day of each month, as reasonable compensation
for use and occupancy of the leased premises, an amount equal to all minimum
rent and other charges otherwise due pursuant to this Lease and to pay
percentage rent monthly at the percentage set forth in this Lease for the lease
year in which such month falls on all sales during such month in excess of one
twelfth (1/12th) of the Minimum Gross Sales for such lease year, with payment
of all such percentage rent to be made by the tenth (10th) day of the
succeeding month; (iii) to reject or assume this Lease within sixty (60) days
of the appointment of such trustee under Chapter 7 of the Bankruptcy Code or
within sixty (60) days (or such shorter term as Landlord, in its sole
discretion, may deem reasonably, so long as notice of such period is given) of
the filing of a petition under any other Chapter; provided that no extension of
either of the foregoing periods by or on behalf of Tenant shall be permitted;
(iv) to give Landlord at least forty-five (45) days' prior written notice of
any proceeding relating to any assumption of this Lease; (v) to give at least
thirty (30) days' prior written notice of any abandonment of the leased
premises, with any such abandonment to be deemed a rejection of this Lease and
an abandonment of any property not previously removed from the leased premises;
(vi) to do all other things of benefit to Landlord otherwise required under the
Bankruptcy Code; (vii) to be deemed to have rejected this Lease in the event of
the failure to comply with any of the above; and (viii) to have consented to
the entry of an order by an appropriate United States Bankruptcy Court
providing all of the above, waiving notice and hearing of the entry of same.
(b) No default of this Lease by Tenant, either prior to or subsequent to
the filing of such a petition, shall be deemed to have been waived unless
expressly done so in writing by Landlord.
(c) It is understood and agreed that this is a Lease of real property in
a shopping center and that, therefore, Section 365(b)(3) of the Bankruptcy Code
is applicable to any proposed assumption of this Lease in a bankruptcy case.
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(d) Included within and in addition to any other conditions or
obligations imposed upon Tenant or its successor in the event of assumption
and/or assignment are the following: the cure of any monetary defaults and the
reimbursement of pecuniary loss immediately upon entry of a court order
providing for assumption and/or assignment; (ii) the deposit of an additional
sum equal to three (3) months' rent to be held pursuant to the terms of Section
26.01 of this Lease (notwithstanding any alteration or modification of the
terms of said Section); (iii) the use of the leased premises as set forth in
Section 7.01 of this Lease and the quality, quantity and/or lines of
merchandise of any goods or services required to be offered for sale are
unchanged; (iv) the payment of any sums which may then be due or which may
thereafter become due pursuant to the provisions of Section 2.04 this Lease;
(v) the debtor, debtor in possession, trustee, or assignee of such entity
demonstrates in writing that it has sufficient background including, but not
limited to, substantial retailing experience in shopping centers of comparable
size and financial ability to operate a retail establishment out of the leased
premises in the manner contemplated in this Lease, and meets all other
reasonable criteria of Landlord as did Tenant upon execution of this Lease;
(vi) the prior written consent of any mortgagee to which this Lease has been
assigned as collateral security; and (vii) the premises, at all times, remains
a single store and no physical changes of any kind may be made to the premises
unless in compliance with the applicable provisions of this Lease.
(e) Any person or entity to which this Lease is assigned pursuant to
the provisions of the Bankruptcy Code shall be deemed without further act or
deed to have assumed all of the obligations arising under this Lease on and
after the date of such assignment. Any such assignee shall, upon demand,
execute and deliver to Landlord an instrument confirming such assumption.
ARTICLE XXI. ACCESS BY LANDLORD
SECTION 21.01. RIGHT OF ENTRY. Landlord or Landlord's agents shall have
the right to enter the leased premises at all reasonable times to examine the
same and to show them to prospective purchasers or mortgagees. Landlord or
Landlord's agents shall have the further right to enter the leased premises to
make such repairs, alterations, improvements or additions as Landlord may deem
necessary or desirable, irrespective of whether the work shall be for the
leased premises or for other premises or facilities, and Landlord shall be
allowed to take all material into and upon the leased premises that may be
required therefor without the same constituting an eviction of Tenant in whole
or in part, and the rent and other charges reserved shall in no wise abate
while said repairs, alterations, improvements, or additions are being made, by
reason of loss or interruption of business of Tenant, or otherwise. Landlord
may, at any time, exhibit the leased premises to prospective tenants. If an
excavation shall be made upon land adjacent to the leased premises, or shall be
authorized to be made, Tenant shall afford to the person causing or authorized
to cause such excavation, license to enter upon the leased premises for the
purpose of doing such work as said person shall deem necessary to preserve the
wall or the building of which leased premises form a part from injury or damage
and to support the same by proper foundations without any claim for damages or
indemnity against Landlord, or diminution or abatement of rent.
SEE ATTACHED RIDER FOR INSERTS
ARTICLE XXII. TENANT'S PROPERTY
SECTION 22.01. TAXES ON TENANT'S PROPERTY. Tenant shall be responsible
for, and shall pay, prior to delinquency, any and all taxes, assessments,
levies, fees and other governmental charges of every kind or nature (for all
purposes under this Lease, collectively called "taxes") levied or assessed by
municipal, county, state, federal or other taxing or assessing authority upon,
against or with respect to (i) the leased premises or any leasehold interest,
(ii) all furniture, fixtures, equipment and any personal property of any kind
owned by Tenant or any previous tenant and occupant, and placed, installed or
located in, within, upon or about the leased premises, (iii) all alterations,
additions or improvements of whatsoever kind or nature, if any, made to the
leased premises, by Tenant or any previous tenant or occupant, and (iv) rents
or other charges payable by Tenant to Landlord, irrespective of whether any of
the terms described in clauses (i) through (iv) above are assessed against real
or personal property, and irrespective of whether any of such items are
assessed to or against Landlord or Tenant. If at any time during the term of
this Lease any of such taxes are not levied and assessed separately and
directly to Tenant (for example, if the same are levied or assessed to
Landlord, or upon or against the building containing the leased premises and/or
the land underlying said building), Tenant shall pay to Landlord Tenant's share
thereof as determined by Landlord.
SECTION 22.02. LOSS AND DAMAGE. Landlord shall not be responsible or
liable to Tenant for any loss or damage that may be occasioned by or through
the acts or omissions of persons occupying adjoining premises or any part of
the premises adjacent to or connected with the premises hereby leased or any
part of the building of which the leased premises are a part, or any other area
in the regional retail development, or for any loss or damage resulting to
Tenant or its property from bursting, stoppage or leaking of water, gas, sewer
or steam pipes, or (without limiting the foregoing) for any damages or loss of
property within the leased premises from any cause whatsoever.
SEE ATTACHED RIDER FOR INSERTS
SECTION 22.03. NOTICE BY TENANT. Tenant shall give notice to Landlord
in case of any damage to or destruction of all or any part of, or accidents in,
the leased premises or of defects therein or in alterations, decorations,
additions or improvements, including, without limitation, any fixtures or
equipment.
SEE ATTACHED RIDER FOR INSERTS
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ARTICLE XXIII. HOLDING OVER
SECTION 23.01. HOLDING OVER. Any holding over after the expiration of
the term hereof with the consent of the Landlord, shall be construed to be a
tenancy from month to month at a monthly at a monthly minimum rent of not less
than ______ the annual minimum rent effective for the final lease year or
partial lease year preceding expiration of the term (subject to further
adjustment pursuant to the various provisions of this Lease, including, without
limitation, Section 2.04), together with an amount estimated by Landlord for the
monthly additional charges payables pursuant to this Lease, and shall otherwise
be on the same terms and conditions (including, without limitation, payment of
percentage rent) as herein specified so far as applicable, subject to any
changes in any of the foregoing terms or conditions as may be submitted by
Landlord to Tenant. Any holding over without Landlord's consent shall entitle
Landlord to re-enter the leased premises as provided in Section 19.01 of this
Lease.
SEE ATTACHED RIDER FOR INSERTS
SECTION 23.02. SUCCESSORS. All rights and liabilities herein given to,
or imposed upon, the respective parties hereto shall extend to and bind the
several respective heirs, executors, administrators, successors, and assigns of
the said parties; and if there shall be more than one person or entity
comprising Tenant, they shall all be bound jointly and severally by the terms,
covenants and agreements herein. No rights, however, shall inure to the benefit
of any assignee of Tenant.
ARTICLE XXIV. RULES AND REGULATIONS
SECTION 24.01. RULES AND REGULATIONS. Tenant agrees to comply with and
observe all rules and regulations established by Landlord from time to time,
provided the same shall apply uniformly to all tenants of the Shopping Center.
Tenant's failure to keep and observe said rules and regulation shall constitute
a breach of the terms of this Lease in the same manner as if the rules and
regulations were contained herein as covenants. In the case of any conflict
between said rules and regulations and this Lease, this Lease shall be
controlling.
ARTICLE XXV. QUIET ENJOYMENT
SECTION 25.01. LANDLORD'S COVENANT. Upon payment by Tenant of the rents
herein provided, and upon the observance and performance of all covenants, terms
and conditions on Tenant's part to be observed and performed, Tenant shall
peaceably and quietly hold and enjoy the leased premises for the term hereby
demised without hindrance or interruption by Landlord or any other person or
persons lawfully or equitably claiming by, through or under Landlord, subject,
nevertheless, to the terms and conditions of this Lease and any mortgage, deed
of trust underlying lease to which this Lease is subordinate.
SECTION 25.02. TENANT'S COVENANT. Tenant hereby acknowledges and agrees
that Landlord has specifically relied upon the identity, skill, product line,
and trade name of Tenant in entering into this Lease with Tenant. Tenant
recognizes that its use of the leased premises in accordance with the use clause
set forth in the Data Sheet and its compliance with the particular provisions of
Article VII hereof, regarding the conduct and continuous operation of Tenant's
business in the leased premises throughout the term of this Lease, forms a
material inducement to Landlord, Tenant specifically covenants that it will
strictly adhere to these provisions. Any ambiguities in Article VII or in the
use clause set forth in the Data Sheet shall be construed against Tenant. Tenant
further acknowledges and agrees that any indebtedness from Tenant to Landlord
existing as of the date of this Lease shall be deemed additional rent hereunder,
and Tenant's commitment and obligation to pay all such indebtedness as
additional rent under this Lease has formed an additional necessary
consideration to Landlord in entering into this Lease and in hereby granting
Tenant the right to use the leased premises as set forth herein.
SEE ATTACHED RIDER FOR INSERTS
ARTICLE XXVI. SECURITY PROVISION
SECTION 26.01. SECURITY. The amount set forth in the Data Sheet as a
security deposit is payable by Tenant, upon the execution of this Lease by
Tenant, in the manner and at the place where minimum rent is payable. Landlord
is to retain said amount as security for the faithful performance of all
covenants, conditions and agreements of this Lease. Such amount is occasionally
referred to here as the "Security". Landlord may, at its option, apply the
security to remedy defaults in the payment of any rent or other charge
hereunder, to repair damages to the leased premises caused by Tenant, or to
clean the leased premises upon the expiration or termination of this Lease; in
no event however, shall Landlord be obligated so to apply the security.
Landlord's right to bring a special proceeding to recover or otherwise to obtain
possession of the leased premises before or after Landlord's declaration of the
termination of this Lease for nonpayment of rent or for any other reason shall
not in any event be affected by reason of the fact that Landlord holds such
security. Such security, if not applied toward the payment of rent in arrears or
toward the payment of damages suffered by Landlord by reason of Tenant's breach
of the covenants, conditions and agreements of this Lease, is to be returned to
Tenant without interest, except as provided by law, when this Lease is
terminated according to its terms, but in no event is such security to be
returned until Tenant has vacated the leased premises and delivered possession
thereof to Landlord. In the event that Landlord repossesses itself of the leased
premises, whether by special proceeding or re-entry or otherwise, because of
Tenant's default or failure to carry out the covenants, conditions and
agreements of this Lease, Landlord may apply such security upon all damages
suffered to the date of said repossession
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and may retain the security to apply upon such damages as may be suffered or
shall accrue thereafter by reason of Tenant's default or breach. In the event
any bankruptcy, insolvency, reorganization or other creditor-debtor proceedings
shall be instituted by or against Tenant, or its successors or assigns, or any
guarantor of Tenant hereunder, such security shall be deemed to be applied first
to the payment of any rents and/or other charges due Landlord for all periods
prior to the institution of such proceedings, and the balance, if any, of such
security may be retained by Landlord in partial liquidation of Landlord's
damages. Landlord shall not be obligated to keep such security as a separate
fund but may commingle the security with its own funds. In the event Landlord
applies the security in whole or in part, Tenant shall, upon demand by Landlord,
deposit sufficient funds to maintain the security in the initial amount. Failure
of Tenant to deposit such additional security shall entitle Landlord to avail
itself of the remedies provided in this Lease for nonpayment of rent by Tenant.
The acceptance by Landlord of the security deposit submitted by Tenant shall not
render this Lease effective unless and until Landlord shall have executed and
actually delivered to Tenant a fully-executed copy of this Lease.
ARTICLE XXVII. MISCELLANEOUS
SECTION 27.01. WAIVER; ELECTION OF REMEDIES. The subsequent acceptance of
rent hereunder by Landlord shall not be deemed to be a waiver of any preceding
breach by Tenant of any term, covenant or condition of this Lease, other than
the failure of Tenant to pay the particular rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
rent. In particular, but without limitation, if Tenant assigns or transfers its
interest in this Lease contrary to the terms of this Lease, any acceptance by
Landlord of such assignee's or transferee's payment shall not be deemed to be a
waiver of the restrictions set forth in Section 14.01 hereof. In the event that
Tenant shall be at any time in default of both monetary and nonmonetary terms,
covenants or conditions of this Lease, any acceptance by Landlord of any
payment rendered by Tenant shall not have the effect of curing Tenant's
nonmonetary defaults and shall not have the effect of curing any monetary
default other than the particular amount owing for which such payment is
specifically accepted by Landlord. Following notice of termination or other
remedy exercised by Landlord with respect to any monetary default of Tenant,
such default shall not be deemed cured by the payment of rent owing by Tenant
for the current period only, and Landlord may apply such payments to current
rent only without any effect upon Tenant's existing indebtedness and continuing
monetary default, notwithstanding any contrary instructions by or on behalf of
Tenant, which instructions shall be null and void and of no effect. In addition,
after the service of notice or the commencement of a suit, or after final
judgment for the possession of the leased premises, Landlord may receive and
collect rent due from Tenant, and the payment of rent by Tenant shall not waive
or affect said notice or suit or judgment. One or more waivers of any covenant
or condition by landlord shall not be construed as a waiver of a subsequent
breach of the same covenant or condition, and the consent or approval by
Landlord to or of any act by Tenant requiring Landlord's consent or approval
shall not be deemed to render unnecessary Landlord's consent or approval to or
of any subsequent similar act by Tenant. The failure of Landlord to insist upon
a strict performance of any term, condition or covenant contained in this Lease
shall not be deemed a waiver of any rights or remedies that Landlord may have
and shall not be deemed a waiver of any subsequent breach or default in the
terms, conditions or covenants herein contained, and any such failure shall not
be construed as creating a custom of Landlord's accepting other than strict
performance or as modifying in any way the terms, covenants or conditions of
this Lease. No breach by Tenant of a covenant or condition of this lease shall
be deemed to have been waived by Landlord unless such waiver is in writing
signed by Landlord. No act or thing done by Landlord or Landlord's agents shall
be deemed an acceptance of surrender of the leased premises and no agreement to
accept such surrender shall be valid unless in writing signed by Landlord. In
addition to any and all other remedies available to Landlord, Landlord may
obtain an injunction to restrain any breach or threatened breach of any term,
covenant or condition of this Lease. The rights and remedies of Landlord under
this Lease or under any specific section, subsection or clause hereof shall be
cumulative and in addition to any and all other rights and remedies which
Landlord has or may have elsewhere under this Lease or at law or equity,
whether or not such section, subsection or clause expressly so states. Nothing
contained in this Lease shall be construed to confer upon any person or entity
other than Landlord or Tenant any rights, benefits or causes of action, except
to the extent specifically otherwise provided in this Lease and except to the
extent provided for the benefit of any mortgage, deed-of-trust beneficiary,
ground lessor or trustee for the Shopping Center.
SECTION 27.02. ENTIRE AGREEMENT. The Addendum, and all exhibits, and
riders, if any, attached hereto form a part of this Lease and shall be given
full force and effect, as fully as if set forth at length herein. This Lease
and said Addendum, exhibits, and riders, if any, so attached hereto and forming
a part hereof, set forth all the covenants, promises, agreements, conditions
and understandings between Landlord and Tenant concerning the leased premises,
and there are no covenants, promises, agreements, conditions or understandings,
either oral or written, between them other than as are herein set forth. Tenant
has not relied upon any representation of Landlord or its agents, other than
any items contained in this Lease, as an inducement to enter into this Lease. No
alteration, amendment, change or addition to this Lease shall be binding upon
Landlord or Tenant unless reduced to writing and signed by each party.
SECTION 27.03. INTERPRETATION AND USE OF PRONOUNS. Nothing contained
herein shall be deemed or construed by the parties hereto, nor by any third
party, as creating the relationship of principal and agent or of partnership or
of joint venture between the parties hereto, it being understood and agreed
that neither the method of computation of rent, nor any other provision
contained herein, nor any acts of the parties herein shall be deemed to create
any relationship between the parties hereto other than the relationship of
Landlord and Tenant. Whenever herein the singular number is used the same shall
include the plural, and the masculine gender shall include the feminine and
neuter genders.
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SECTION 27.04. DELAYS. In the event that either party hereto shall be
delayed in the performance of its initial construction or maintenance and/or
repair obligations by reason of strikes, lockouts, labor troubles, inability to
procure materials or shall at any time be so delayed by reason of failure of
power, restrictive governmental laws or reasons of a similar nature not the
fault of the party delayed performing work or doing acts required under the
terms of this Lease, then performance of such act shall be excused for the
period of the delay and the period for the performance of any such act shall be
extended for a period equivalent to the period of such delay. Nothing contained
in this Section shall excuse Tenant from the continuous operation of its
business in the leased premises in accordance with the provisions of Section
7.01 and 7.02 hereof. The provisions of this Section 2704 shall not operate to
delay the commencement of the term of this Lease or to excuse Tenant from
payment of minimum rent, percentage rent or any other payments required by the
is Lease or to excuse Tenant from payment of minimum rent, percentage rent or
any other payments required by the terms of this Lease; provided, however, that
the obligation of Tenant to open for business pursuant to Section 1.03 hereof
may be delayed pursuant to the provisions of this Section 27.04. Further,
Landlord's reduction of heat, light, air conditioning, or any other services
whatsoever to the Shopping Center because of any similar or dissimilar event
constituting a cause for excusable delay hereunder shall not relieve Tenant
from its obligations under Article VII of this Lease.
See Attached Rider For Inserts
SECTION 27.05. NOTICES. Unless specifically stated to the contrary in this
Lease, any notice, demand, request or other instrument which may be oris
required to be given by Tenant under this Lease or by law shall be sent by
United States certified mail, return receipt requested, postage prepaid, and
shall be deemed to have been give as of the third day following receipt of same
by Landlord; or, if required to be given by Landlord under this Lease or by law,
such notice, demand, request or other instrument may be sent by certified mail,
by regular mail, by overnight courier (using Federal Express, United Parcel
Service, or a similar reputable courier service), by personal delivery or by
other comparably reliable means, and shall be deemed to have been given upon the
date of and shall be addressed (a) if to Landlord, at the
address set forth for Landlord on Page D1 of this Lease or at such other address
as Landlord may designate by written notice, Attention Lease Administration,
together with copies thereof to such other parties designated by Landlord, and
(b) if to Tenant, at the leased premises the address set forth for Tenant on
Page D1 of this Lease, or such other address as Tenant shall designate by
written notice. All notices give from Landlord to Tenant, including without
limitation, notices of default and/or termination of Tenant's interest under
this Lease, may be given by Landlord's attorney acting as agent on behalf of
Landlord.
See Attached Rider For Inserts
SECTION 27.06. CAPTIONS AND SECTION NUMBERS. The captions, section
numbers, article numbers, and index appearing in this Lease are inserted only as
a matter of convenience and in no way define, limit, construe, or describe the
scope or intent of such sections or articles of this Lease, nor in any way
affect this Lease.
SECTION 27.07. BROKER'S COMMISSION. Each party represents and warrants to
the other party that the warrantor has dealt with no brokers and that there are
no claims for brokerage commissions or finder's fees, nor will there by any such
claim, arising from any act or omission of the warrantor in connection with this
Lease, and the warrantor agrees to indemnify the other party and hold it
harmless from all liabilities arising from any such claim, including, without
limitation, the cost of attorneys' fees in connection therewith. Such agreement
shall survive the termination of this Lease.
SECTION 27.08. RECORDING. Tenant shall not record this Lease or any
memorandum, affidavit or other notice of this Lease.
SECTION 27.10. LANDLORD'S USE OF COMMON AREAS. Landlord reserves the
right, from time to time, to utilize portions of the common areas for carnival
type shows, rides and entertainment, outdoor shows, displays, automobile and
other product shows, the leasing of permanent and temporary kiosks, or such
other uses which in Landlord's judgement tend to attract the public. Further,
Landlord reserves the right to utilize the lighting standards and other areas in
the parking facilities for advertising purposes. Any revenues derived by
Landlord from the use of the common areas, whether from usage fees or other
wise, shall not be applied as a deduction against any cost or expense required
to be paid by Tenant under this Lease.
See Attached Rider For Inserts
SECTION 27.11. TRANSFER OF LANDLORD'S INTEREST. In the event of any
transfer or transfers of Landlord's interest in the premises including a
so-called sale-leaseback, the transferor shall be automatically relieved of any
and all obligations on the part of Landlord accruing from and after the date of
such transfer, provided that (a) the interest of the transferor, as Landlord, in
any funds then in the hands of Landlord in which tenant has an interest shall be
turned over, subject to such interest, to the then transferee; and (b) notice of
such sale, transfer or lease shall be
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delivered to Tenant as required by law. Upon the termination of any such lease
in a sale-leaseback transaction prior to termination of this Lease, the former
lessee thereunder shall become and remain liable as Landlord hereunder until a
further transfer. No holder of a mortgage or deed of trust, or underlying lessor
on an underlying lease, to which this Lease is or may be subordinate, and no
lessor under a so-called sale-leaseback shall be responsible in connection with
the security deposited hereunder, unless such mortgagee, holder of such deed of
trust, underlying lessor or lessor shall have actually received the security
deposited hereunder.
SECTION 27.12. FLOOR AREA. (a) The term "floor area" as used in this Lease
means, with respect to any leasable area in the Shopping Center or in the
regional retail development, the aggregate number of square feet of floor space
of all floor levels therein, including any mezzanine space (to the extent
reflected as floor area in the applicable leases), measured from (i) the outside
faces of all perimeter walls thereof other than any party wall separating such
premises from other leasable premises, (ii) the center line of any such party
wall, (iii) the outside face of any interior wall, and (iv) the building and/or
leaseline adjacent to any entrance to such premises. In the event Landlord
determines that the square foot area of the leased premises is at variance with
the square foot area stated in this Lease, Landlord may, at its option, adjust
the floor area of the leased premises and make proportional adjustments in
minimum rent, percentage rent, and promotional/Merchants' Association charges,
and other charges to Tenant under this Lease.
(b) For the purpose of this Lease, in determining the gross leasable floor
area or the gross leased and occupied floor area of the Shopping Center, there
shall be excluded therefrom, at the sole option of Landlord, the leasable area
of 20,000 square feet or more occupied by a single entity (which, for purposes
of this Lease, shall be defined as a department store), the floor area of any
premiss leased for the operation of a post-office type or packaging or delivery
facility or other public/consumer-service or governmental facility, the floor
area of any space without direct customer access from the enclosed Mall, and the
total floor area utilized by Landlord for the operation of a skating rink or
other recreational area, child care center, community room, library, project
offices, and related rooms, common areas and project areas, which shall be
deemed amenities to the Shopping Center. The term "gross leased and occupied
floor area" shall include only such areas as are leased and occupied by tenants
subsequent to the dates of commencement of the terms of their respective leases.
Areas shall not be considered occupied to the extent that Landlord shall not be
receiving full proportionate share contributions for the same. No deduction or
exclusion from floor area shall be made by reason of columns, ducts, stairs,
elevators, escalators, shafts, or other interior construction or equipment.
SEE ATTACHED RIDER FOR INSERTS
SECTION 27.13. INTEREST ON PAST DUE OBLIGATIONS. Any amount due from
Tenant to Landlord hereunder which is not paid when due (including, without
limitation, amounts due as reimbursement to Landlord for costs incurred by
Landlord in performing obligations of Tenant hereunder upon Tenant's failure to
so perform) shall bear interest at the rate from the date due until paid, unless
otherwise specifically provided herein, but the payment of such interest shall
not excuse or cure any default by Tenant under this Lease.
SEE ATTACHED RIDER FOR INSERTS
SECTION 27.14. LIABILITY OF LANDLORD. If Landlord shall fail to perform
any covenant, term or condition of this Lease upon Landlord's part to be
performed, and if as a consequence of such default Tenant shall recover a money
judgment against Landlord, such judgment shall be satisfied only out of the
proceeds of sale received upon execution of such judgment and levied thereon
against the right, title and interest of Landlord in the Shopping Center and out
of net income from such property received by Landlord, or out of the
consideration received by Landlord from the sale or other disposition of all or
any part of Landlord's right, title and interest in the Shopping Center,
subject, nevertheless, to the rights of Landlord's mortgagee, and neither
Landlord, nor the individuals or entities which constitute the partners of the
partnership which is Landlord, nor the individuals or entities which constitute
the partners of the partnership which is the beneficiary of the Trust of which
Landlord is Trustee (if applicable), shall be liable for any deficiency. If
Landlord is identified in this Lease as a Trustee, Tenant hereby recognizes that
Landlord is executing this Lease as Trustee under an express trust, and it is
expressly understood and agreed by and between the parties hereto, anything
herein to the contrary notwithstanding, that each and all of the
representations, covenants, undertakings and agreements herein made on the part
of the Landlord while in form purporting (except as herein otherwise expressed)
to be the representations, covenants, undertakings, and agreements of the
Landlord are nevertheless each and every one of them, made and intended not as
personal representations, covenants, undertakings and agreements by the Landlord
or for the purpose of with the intention of binding said Landlord personally but
are made and intended for the purpose of binding only that portion of the trust
property specifically leased hereunder, and this Lease is executed and delivered
by said Landlord not in its own right, but solely in the exercise of the powers
conferred upon it as such Trustee; that no duty shall rest upon Landlord to
sequester the trust estate or the rents, issues and profits arising therefrom,
or the proceeds arising from any sale or other disposition thereof; and that no
personal liability or personal responsibility is assumed by nor shall at any
time be asserted or enforceable against Trustee, or any successor trustee or any
of the beneficiaries under said trust, on account of this Lease or on account of
any representation, covenant, undertaking or agreement of the said Landlord in
this Lease contained, either expressed or implied, all such personal liability,
if any, being expressly waived and released by the Tenant herein and by all
persons claiming by, through or under said Tenant.
SECTION 27.15. ACCORD AND SATISFACTION. Payment by Tenant or receipt by
Landlord of a lesser amount than the rent or other charges herein stipulated may
be, at Landlord's sole option, deemed to be on account of the earliest due
stipulated rent or other charges, or deemed to be on account of rent owing for
the current period only, notwithstanding any instructions by or on behalf of
Tenant to the contrary, which instructions shall be null and void, and no
endorsement or statement on any check or any letter accompanying any check
payment as rent or other charges shall be deemed an accord and satisfaction, and
Landlord shall accept such check or payment without prejudice to Landlord's
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<PAGE> 42
right to recover the balance of such rent or other charges or pursue any other
remedy in this Lease or in law or in equity against Tenant.
SECTION 27.16. EXECUTION OF LEASE; NO OPTION. The submission of this Lease
to Tenant shall be for examination purposes only, and does not and shall not
constitute a reservation of or option for Tenant to lease, or otherwise create
any interest of Tenant in the leased premises or any other premises situated in
the Shopping Center. Execution of this Lease by Tenant shall be irrevocable.
The return to Landlord of Tenant-executed copies of this Lease shall not be
binding upon Landlord, notwithstanding any reparation or anticipatory reliance
or expenditures by Tenant or any time interval, until Landlord has in fact
executed and actually delivered a fully-executed copy of this Lease to Tenant.
SEE ATTACHED RIDER FOR INSERTS
SECTION 27.17. GOVERNING LAW. This Lease shall be governed by and
construed in accordance with the laws of the State. If any provision of this
Lease or the application thereof to any person or circumstances shall, to any
extent, be invalid or unenforceable, the remainder of this Lease shall not be
affected thereby and each remaining provision of the Lease shall be valid and
enforceable to the full extent permitted by the law. Tenant appoints the
following persons at the following locations as agent to receive service of
process, writs, notices, summonses, or other legal documents in any suit,
action or proceeding which Landlord may commence against Tenant: any officer,
partner or other principal of Tenant, or any person in charge, at the Tenant's
address as set forth in Page D1 of this Lease. Where permitted by law or local
court rule, Tenant consents to service of such process by United State mail, in
the manner specified in the applicable law or court rule.
SECTION 27.18. SPECIFIC PERFORMANCE OF LANDLORD'S RIGHTS. Landlord shall
have the right to obtain specific performance of any and all of the covenants
or obligations of Tenant under this Lease, and nothing contained in this Lease
shall be construed as or shall have the effect of abridging such right.
SECTION 27.19. CERTAIN RULES OF CONSTRUCTION. Time is of the essence in
this Lease. Notwithstanding the fact that certain references elsewhere in this
Lease to acts required to be performed by Tenant hereunder omit to state that
such acts shall be performed at Tenant's sole cost and expense, unless the
context clearly implies to the contrary, each and every act to be performed or
obligations to be fulfilled by Tenant pursuant to this Lease shall be performed
or fulfilled at Tenant's sole cost an expense. Any breach or default by Tenant
of its obligations under this Lease shall be deemed material. Tenant shall be
fully responsible and liable for the observance and compliance by
concessionaires with all the terms and conditions of this Lease, which terms and
conditions shall be applicable to concessionaires as fully as if such
concessionaires were the Tenant hereunder; any failure by a concessionaire fully
to observe and comply with the terms and conditions of this Lease shall
constitute a default hereunder by Tenant. Nothing contained in the preceding
sentence shall constitute a consent by Landlord to any concession, subletting or
other arrangement prescribed by Section 14.01. All provisions of this Lease have
been freely negotiated by and between the parties.
SECTION 27.20. INDEX. The term "Index" as used in this Lease shall be the
"Consumer Price Index for All Urban Consumers (1982-84 = 100), U.S. City
Average, All Items," as published by the Bureau of Labor Statistics of the
United States Department of Labor. If the Index is not published by the Bureau
of Labor Statistics or another governmental agency at any time during the term
of this Lease, or if the Index is otherwise re-named, discontinued or
superseded, then the calculations based on the Index shall be made using the
most closely comparable statistics on the purchasing power of the consumer
dollar as published by a responsible financial authority and selected by
Landlord.
SECTION 27.21. SURVIVAL; NONDISCLOSURE; FREE ACT. The obligations of
Tenant for payment of rent and charges under this Lease shall survive the
expiration or earlier termination of the term of this Lease. Tenant covenants
that neither Tenant nor any attorney or other representative for Tenant shall
disclose the contents of this Lease to any other person or entity. Tenant shall
be fully responsible for the actions of its attorneys and representatives. By
its execution of this Lease, Tenant acknowledges and agrees that it has read
this Lease, understands the contents hereof, and is signing this Lease as its
own free act and deed, and as the free act and deed of the representatives
signing on Tenant's behalf, without any persuasion or coercion by any person or
entity, and with full advice of counsel.
SEE ATTACHED RIDER FOR INSERTS
- --------------------------------------------------------------------------------
[End of Standard Form; signature and acknowledgment pages for the Lease appear
after the Data Sheet on the pages immediately preceding the Addendum.]
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<PAGE> 43
[DIAGRAM]
SITE PLAN OF SHOPPING CENTER
SHOPPING CENTER SITE
This Exhibit is not a representation as to the identity, size, location or
opening date of any store, tenant, space user, occupant, or facility, or the
occupancy of any premises, building, or future premises or future building
within the regional retail development. Landlord reserves the right to not
construct, or to construct differently (in any manner, including, without
limitation, location, size, shape, height and/or design), any item shown on
this Exhibit, as well as the right, after any buildings, common areas or other
improvements have been constructed, to change, alter, modify, delete or add
buildings, common areas or other improvements to and from the Shopping Center
and/or the regional retail development (including, without limitation, any
future phases or additions -- there being no representation that any future
phase or addition will, in fact, be built). Landlord further reserves the right
to change the access points to the regional retail development, the parking
areas, and/or the common areas and to otherwise modify any items or matters
indicated on this Exhibit at any time and from time to time.
WOODFIELD
A MULTI-LEVEL RETAIL DEVELOPMENT
SCHAUMBURG, ILLINOIS
MAY '93
Exhibit A, page 1 of 5
<PAGE> 44
[SITE PLAN]
NASCAR SILICON
MOTOR SPEEDWAY
BLDG. G
LOWER LEVEL
WOODFIELD
Date: 11-20-97
Exhibit A, page 2 of 5
<PAGE> 45
[SITE PLAN]
LOWER LEVEL KEY PLAN
WOODFIELD
Date: 11-20-97
Exhibit A, page 3 of 5
<PAGE> 46
[SITE PLAN]
WOODFIELD
LOWER LEVEL LEASING PLAN
Exhibit A, page 4 of 5
<PAGE> 47
LEGAL DESCRIPTION OF SHOPPING CENTER
Parcel 1:
That part of Lot 2A in the Resubdivision of parts of Lots 2, 5, 6 and 7 in
Woodfield, and that part of Lot 2 in Woodfield, taken as a Tract, said
Woodfield being a Subdivision of part of the Northwest Quarter, Northeast
Quarter and Southeast Quarter of Section 13, Township 41 North, Range 10, East
of the Third Principal Meridian, bounded and described as follows:
Commencing at the most Northerly corner of Lot 2A aforesaid, thence South 43
degrees 40' 00" East, along the Northeasterly line of said Lot 2A, 308.33 feet;
thence South 46 degrees 20' 00" West, 30.00 feet; thence South 43 degrees 40'
00" East, 86.75 feet; thence North 46 degrees 20' 00" East, 192.42 feet; thence
South 43 degrees 40' 00" East, 1.42 feet; thence North 46 degrees 20' 00" East,
25.17 feet; thence North 43 degrees 40' 00" West, 6.75 feet; thence North 88
degrees 40' 00" West, 8.25 feet; thence North 43 degrees 40' 00" West, 2.33
feet; thence North 01 degrees 20' 00" East, 4.95 feet; thence North 01 degrees
20' 00" East, 2.33 feet; thence North 43 degrees 40' 00" West, 53.92 feet;
thence North 46 degrees 20' 00" East, 52.67 feet; thence North 43 degrees 40'
00" West, 272.00 feet; thence South 46 degrees 20' 00" West, 50.67 feet; thence
North 43 degrees 40' 00" West, 41.50 feet; thence South 46 degrees 20' 00" West,
20.25 feet; thence North 43 degrees 40' 00" West, 2.33 feet; thence North 88
degrees 40' 00" West, 7.78 feet; thence South 46 degrees 20' 00" West, 56.46
feet; thence North 88 degrees 40' 00" West, 6.36 feet; thence South 46 degrees
20' 00" West, 11.75 feet; thence South 01 degrees 20' 00" West, 11.55 feet;
thence South 46 degrees 20' 00" West, 30.08 feet; thence North 88 degrees 40'
00" West 11.55 feet; thence South 46 degrees 20' 00" West 11.75 feet; thence
South 01 degrees 20' 00" West, 6.36 feet; thence South 46 degrees 20' 00" West,
28.46 feet to the point of beginning, in Cook County, Illinois.
Also
Parcel 2:
Lot 10 and Lot 2 in Woodfield, a Subdivision of part of the Northwest Quarter
and the Northeast Quarter and the Southeast Quarter of Section 13, Township 41
North, Range 10, East of the Third Principal Meridian, in Cook County,
Illinois, except that part of Lot 2 lying Northerly of the following described
line:
Beginning at a point on the East line of said Lot 2, said point being 8.897
feet Southerly of (as measured along the East line of said Lot 2) the
Northeasterly corner of said Lot 2; thence Westerly along a straight line
having a bearing of South 88 degrees 17' 05" West a distance of 171.83 feet to
a point on the West line of said Lot 2, said point being 7.119 feet Southerly
of (as measured along the West line of said Lot 2) the Northwesterly corner of
said Lot 2, said area containing approximately 1,005 square feet, and except
Lot 2A in the Resubdivision of parts of Lots 2, 5, 6 and 7 in Woodfield, being
a Subdivision of part of the Northwest Quarter, Northeast Quarter and Southeast
Quarter of Section 13, Township 41 North, Range 10, East of the Third Principal
Meridian, (except that part bounded and described as follows: commencing at the
most Northerly corner of said Lot 2A; thence South 43 degrees 40' 00" East,
along the Northeasterly line of said Lot 2A, 334.00 feet to the point of
beginning, thence South 46 degrees 20' 00" West 30.00 feet; thence South 43
degrees 40' 00" East, 5.00 feet; thence North 46 degrees 20' 00" East, 30.00
feet; thence North 43 degrees 40' 00" West, 5.00 feet to the point of
beginning) in Cook County, Illinois, and in addition thereto Lot 5A in the
Resubdivision of parts of Lots 2, 5, 6 and 7 in Woodfield, being a Subdivision
of part of the Northwest Quarter, Northeast Quarter and Southeast Quarter of
Section 13, Township 41 North, Range 10 East of the Third Principal Meridian,
Cook County, Illinois, excepting therefrom the following:
That part of Lot 2A in the Resubdivision of parts of Lots 2, 5, 6 and 7 in
Woodfield, and that part of Lot 2 in Woodfield, taken as a Tract, said
Woodfield being a Subdivision of part of the Northwest Quarter, Northeast
Quarter and Southeast Quarter of Section 13, Township 41 North, Range 10, East
of the Third Principal Meridian, bounded and described as follows:
Commencing at the most Northerly corner of Lot 2A aforesaid, thence South 43
degrees 40' 00" East, along the Northeasterly line of said Lot 2A, 25.67 feet
to the point of beginning; thence South 43 degrees 40' 00" East along said
Northeasterly line of Lot 2A, 308.33 feet; thence South 46 degrees 20' 00"
West, 30.00 feet; thence South 43 degrees 40' 00" East, 86.75 feet; thence
North 46 degrees 20' 00" East, 192.42 feet; thence South 43 degrees 40' 00"
East, 1.42 feet; thence North 46 degrees 20' 00" East, 25.17 feet; thence North
43 degrees 40' 00" West, 6.75 feet; thence North 88 degrees 40' 00" West 8.25
feet; thence North 43 degrees 40' 00" West, 2.33 feet; thence North 01 degrees
20' 00" East, 4.95 feet; thence North 01 degrees 20' 00" East, 2.33 feet;
thence North 43 degrees 40' 00" West, 53.92 feet; thence North 46 degrees 20'
00" East, 52.67 feet; thence North 43 degrees 40' 00" West, 272.00 feet; thence
South 46 degrees 20' 00" West, 50.67 feet; thence North 43 degrees 40' 00"
West, 41.50 feet; thence South 46 degrees 20' 00" West, 20.25 feet; thence
North 43 degrees 40' 00" West, 2.33 feet; thence North 88 degrees 40' 00" West,
7.78 feet; thence South 46 degrees 20' 00" West, 56.46 feet; thence North 88
degrees 40' 00" West, 6.36 feet; thence South 46 degrees 20' 00" West, 11.75
feet; thence South 01 degrees 20' 00" West, 11.55 feet; thence South 46 degrees
20' 00" West, 30.08 feet; thence North 88 degrees 40' 00" West, 11.55 feet;
thence South 46 degrees 20' 00" West, 11.75 feet; thence South 01 degrees 20'
00" West, 6.36 feet; thence South 46 degrees 20' 00" West, 28.46 feet, to the
point of beginning, in Cook County, Illinois.
Exhibit A, page 5 of 5
<PAGE> 48
EXHIBIT B
CONSTRUCTION
This Exhibit B shall be deemed to include Exhibit B-1 and any additional
construction exhibits as may be attached to this Lease. Such additional exhibits
may have the effect of providing further specifications or criteria or may serve
to amplify or adjust certain of the provisions contained in this Exhibit B.
SECTION I. EXISTING IMPROVEMENTS.
The reuse by Tenant of existing improvements, if any, within the leased premises
shall be as dictated by practicality and Landlord's existing design criteria and
shall be subject to Landlord's written approval.
SECTION II. LANDLORD'S WORK
A. A complex of building shells and common area improvements of exterior
and interior design and materials as determined by Landlord
substantially as shown in Exhibit A.
B. If any partitions are required to separate the leased premises from
adjacent spaces, Landlord shall install metal stud framing only, after
Tenant has performed any demolition necessary to accommodate
installation of said framing. Such stud framing shall extend from the
floor slab of the leased premises to the underside of the floor or roof
structure. Tenant shall reimburse Landlord as Tenant's share of the cost
of such work. $20.00 per lineal foot of said stud framing. Tenant shall
install gypsum board on Tenant's side of stud framing to underside of
structure as required for a one-hour fire resistant separation.
C. In the event that the leased premises are located in a retail
development, or in an expansion wing of a retail development, which
development or expansion wing shall not yet have opened for business to
the public, and Tenant shall be able to complete its construction within
the leased premises prior to such opening, Landlord shall not provide a
temporary barricade at the storefront lease line, except to the extent
that Landlord shall determine that such barricade is necessary or
desirable. If the leased premises are not located in such a development
or in such an expansion wing, or if Tenant shall be unable to complete
the construction of the leased premises and to open for business at the
time that such development or expansion wing, as applicable, first opens
for business to the public, Landlord shall provide, for Tenant's use
during construction and demolition, a temporary barricade at the
storefront lease line. Tenant shall reimburse Landlord $45.00 per lineal
foot of storefront lease line for any such temporary barricade provided
by Landlord. Landlord shall remove the storefront barricade upon
completion of Tenant's Work and when Tenant is prepared to open for
business as determined by Landlord. Landlord shall have the option, by
written notice to Tenant, to require Tenant to remove the storefront
barricade and to store the same at a location specified by Landlord
within the regional retail development. In the event of such removal by
Tenant, Tenant shall be responsible for any damage caused to the
barricade by such removal and storage. In either case, Tenant shall
immediately repair any damage caused to the leased premises by the
removal of the barricade.
D. If the entire leased premises shall not have been previously occupied by
another tenant or occupant, the provision of utility connections by
Landlord shall be as set forth under Section II of Exhibit B-1. If the
entire leased premises shall have been previously occupied, and the
following utilities or utility stubs are not contained within the
premises, Landlord shall cause said utilities to be extended to within
the leased premises at a point which is closest to Landlord's pickup
point. Such utilities shall include: sanitary, domestic cold water,
plumbing vent (where applicable), fire protection, and air conditioning
supply duct stub (where applicable). Refer to Exhibit B-1 (and/or to
other construction exhibits, if any, attached to this Lease) for
additional information on certain utilities.
SECTION III. TENANT'S WORK
Tenant at its sole cost and expense shall perform all work required to complete
the leased premises to a finished condition ready for the conduct of business
therein. Tenant's Work shall conform to criteria, procedures, and schedules as
set forth in Sections IV, V, and VI respectively, of this Exhibit, and shall
include, but not be limited to, the following:
A. Field Conditions: Prior to the preparation of its working drawings and
the commencement of its construction, Tenant shall survey the site to
inspect, verify and coordinate all exiting conditions within the leased
premises. Such survey shall include the location of existing mall
utilities which are to remain, placement of wall stud framing defining
the leased premises, and identification of various improvements, made by
previous occupant(s), if any, which are to remain, be relocated or
removed and the determination of the extent of demolition or repair to
be performed by Tenant. Tenant shall advise Landlord immediately of any
discrepancies with respect to Landlord's Space Layout drawings.
The results of such survey shall be incorporated into Tenant's working
drawings and specifications. Tenant shall verify conditions pertaining
to the leased premises from time to time after commencement of
construction of its leased premises. Any adjustments to the work arising
from field conditions not apparent on drawings and other building
documents shall receive the prior written approval of Landlord.
Exhibit B, page 1 OF 11
<PAGE> 49
Immediately following the installation by Landlord of wall stud framing
defining the leased premises, Tenant shall verify the accuracy of said
installation and shall immediately advise Landlord of any discrepancies.
Failure to so notify Landlord shall be deemed as acceptance by Tenant of
said installation and layout.
Tenant shall coordinate its work with the work of others or with existing
conditions occurring above or below the leased premises and shall make
changes from time to time as required to accommodate such work or
conditions.
B. Working Drawings and Specifications: Working Drawings and Specifications
as set forth in Section V of this Exhibit.
C. Demolition
1. All demolition required to facilitate Tenant's construction shall be
performed by Tenant at Tenant's expense, and shall be as approved by
Landlord on Tenant's demolition plans, prior to commencing such work.
a. Floors: Tenant shall repair or replace any part of the existing
concrete slab which may have been removed by Landlord or Tenant
to allow for extension of underground utilities. Backfill and
compaction shall be provided by Tenant.
b. Interior Finishes: Tenant shall demolish any existing
improvements made by previous occupant(s) within the leased
premises which Tenant has indicated on the survey referred to in
Section III (A) above are not to remain. Such work shall include
but not be limited to: storefront and storefront enclosure,
abandoned party walls, interior partitions and finishes, floor
coverings, ceilings and miscellaneous improvements. Removal of
demolition debris shall be performed by Tenant. In no event
shall removal of debris take place through the malls during the
hours in which the Shopping Center is open for business.
c. Mechanical and Electrical Equipment: Tenant shall remove all
mechanical and electrical systems existing on the leased premises
which are no longer functional or designated to be reused. Such
work shall include but not be limited to: roof top and interior
HVAC equipment and supports, duct work, wire and conduits,
electrical distribution equipment, plumbing fixtures, sprinkler
lines, telephone equipment and any specialty equipment as may
exist in the leased premises.
2. Repairs:
Tenant shall make all repairs to the premises necessitated by the
removal of the improvements made by previous occupant(s). Such work
shall include but not be limited to: concrete slab, roof, structural
members, mechanical and electrical equipment, telephone equipment,
party walls and interior finishes.
D. Architectural and Finishing Work
1. Storefront work.
2. Partitions.
a. To the extent that new corridor-partitions are required,
Landlord will erect stud framing and one (1) layer of 5/8"
firecode gypsum wallboard on the corridor side of one-hour fire
resistant partitions separating the leased premises from
adjacent service/exit corridors. Such stud framing shall extend
from the floor slab of the leased premises to the underside of
the floor or roof structure. Tenant shall reimburse Landlord as
Tenant's share of the cost of such work $45.00 per lineal foot
of said stud framing, and gypsum wallboard. Tenant shall install
one (1) layer of 5/8" firecode gypsum wallboard on Tenant's side
of stud framing to underside of structure as required for a
one-hour fire resistant separation.
Note: Service/exit corridors where a two-hour fire resistant
partitions separating the leased premises from the adjacent
service/exit corridor is required, Landlord will erect stud
framing and two (2) layers of 5/8" firecode gypsum wallboard on
the corridor side of two-hour fire resistant partitions
separating the leased premises from adjacent service/exit
corridors. Tenant shall reimburse Landlord as Tenant's share of
the cost of such work $66.00 per lineal foot of said stud
framing and gypsum wallboard. Tenant shall install two (2)
layers of 5/8" firecode gypsum wallboard on Tenant's side of
stud framing to underside of structure as required for a
two-hour fire resistant separation.
3. All required interior partitioning, fire separations and doors,
service exit door, ceiling work, floor coverings, commercial grade
finish hardware, and painting and finishing work.
4. Covering and finishing of columns to achieve a one-hour fire
resistant rating.
5. Toilet facilities.
6. Sign(s) and sign panel backgrounds.
Exhibit B, page 2 of 11
<PAGE> 50
7. Floors:
a. In upper level Tenant spaces with a depressed structural
concrete floor, concrete topping to achieve a finished floor
elevation at the same elevation as the mall.
b. Repairs as may be required to accommodate extension of under-
ground utilities.
c. All slabs on grade. Tenant shall provide sand fill and/or
remove excess as required and compact same to 95% modified
proctor and install a vapor barrier (minimum .004 mill
visqueen) and a concrete minimum strength of 3,000 pounds with
6 x 6 No. 10 woven wire mesh (minimum thickness 4") in
accordance with Standard Project Details, finished as required
to receive floor finishes.
d. Finished floor elevation at all store entrances shall be at
the same elevation as adjacent areas. All carpet areas are to
be depressed.
E. Structural
1. Any alterations and/or additions and reinforcements to Landlord's
structure required to accommodate Tenant's Work, all of which must
be designed by a certified structural engineer at Tenant's expense.
Performance of such work is subject to prior written approval of
Landlord.
F. Mechanical
1. All plumbing, heating, ventilating, and air conditioning systems
within or directly related to Tenant's leased premises, proceeding
from the points of connection to utilities as listed in Exhibit B-1,
or modifications to existing mechanical systems, all in accordance
with Landlord's design criteria.
G. Electrical
1. All electrical and telephone systems within or directly related to
the leased premises proceeding from points of connection to
utilities as listed in Exhibit B-1 (or in other construction
exhibits, if any, attached to this Lease), or modifications to
existing systems, all in accordance with Landlord's design criteria.
H. Fire Protection
1. A complete, hydraulically calculated fire protection sprinkler
system, proceeding from the point of connection to Landlord's system
or modifications or removal of existing fire protection sprinkler
system and existing fire retardant materials in accordance with
Landlord's design criteria. All such work shall be performed, at
Tenant's sole cost and expense, by a qualified sprinkler contractor
acceptable to Landlord. Landlord's approval of the foregoing shall
not constitute the assumption of any responsibility by Landlord for
the accuracy or sufficiency thereof, and Tenant shall be solely
responsible therefor.
Tenant shall be responsible for the cost of the complete removal of
all existing fire-retardant materials and all demolition associated
with this removal. All work will be done in strict compliance with
all local, state, and federal codes and requirements. All demolition
and removal work will be performed by contractors under contract
with the Landlord.
See Attached Rider For Inserts
All of the work performed pursuant to this Section III shall, for the purpose of
the Lease to which this Exhibit is attached and made a part, be deemed to be
improvements made to the leased premises by Tenant.
SECTION IV. CRITERIA -- TENANT'S WORK.
The requirements, criteria and/or outline specifications as set forth herein
represent minimum standards for the preparation of working drawings,
construction and finish of the leased premises by Tenant:
A. Standard Project Details and Construction Information
1. Standard Project Details and Construction Information, issued by
Landlord, as they pertain to Tenant's Work, shall govern with
respect to such work. Such details shall be reviewed by Tenant and
incorporated as required in Tenant's Working Drawings and
Specifications for the leased premises.
B. Design Loads
1. Structural loading imposed by any of Tenant's Work on a temporary or
permanent basis shall not exceed the following allowable live loads:
a. Stores located on supported slabs (levels other than
on-grade): 75 lbs. per square foot.
b. Common areas, mall courts, and galleries: 75 lbs. per
square foot.
c. On-grade slabs: 125 lbs. per square foot.
d. Roof: 20 lbs. per square foot.
Exhibit B, page 3 of 11
<PAGE> 51
C. Architectural, Structural
1. Storefront work:
a. The configuration of the storefront line, as established by
Landlord, shall be considered the leaseline, beyond which no
element of the storefront may extend.
b. All storefront components, including head tracks for sliding
doors, grille roller supports, guides and supports for side
rolling grilles, etc., shall be structurally fastened and braced
to the building structure. All aluminum storefront components
which remain visible during business hours, such as sliding
doors and other glazing sections, rolling grilles or ornamental
metal shall have an anodized finish.
c. Electronic surveillance or other shoplifting detection devices
and security systems shall be incorporated and integrated within
Tenant's storefront. Free-standing "boxes" or "columns" or other
exposed equipment or decals shall be prohibited.
2. Ceilings:
Non-combustible ceilings on a concealed metal suspension system shall
be used throughout all Tenant's public areas. An exposed metal
suspension system may be permitted only if the system consists of
2' x 2' tee grid with regressed lay-in acoustical tile in horizontal
planes only; vertical or sloped use of exposed tees is prohibited.
Taped, painted and/or plaster sprayed gypsum board ceilings shall be
used in conjunction with all storefront soffits. The use of exposed
wood or other combustible material above ceilings or in any other
attic spaces is prohibited.
3. Walls:
5/8" Firecode (UL listed) gypsum board shall be used on all party
walls where a one-hour fire resistant separation is required. All
interior partitions shall have gypsum board finish on all sides. A
one-hour fire resistant rating is required for all steel columns.
4. Floors:
a. Carpeting and/or other quality floors, such as glazed or
unglazed tiles or hardwood flooring shall be used in Tenant's
public areas. The reuse of flooring materials not in compliance
with the foregoing is prohibited.
b. Toilet rooms and kitchens shall have waterproofed floors and
door thresholds.
5. Service Exit Door:
One hinged 3'-0" x 7'-0" x 1-3/4" prime coated, one-hour fire
labeled, hollow metal service exit door, frame, and commercial grade
hardware unless otherwise required by code. The service door shall be
installed in a vestibule, by Tenant at its expense, if required by
code.
6. Rubbish Storage:
a. Food and beverage service Tenants shall provide rubbish and
solid waste storage room(s) within leased premises.
b. Floor area to be waterproofed with membrane approved in writing
by Landlord.
7. General:
a. Landlord shall have the right to locate, both vertically and
horizontally, utility lines, air ducts, pipes, refrigerant lines,
drains, sprinkler mains and valves, and such other facilities,
including access panels for same, within the leased premises, as
deemed necessary by engineering design and/or code requirements.
Landlord's right to locate facilities within the leased premises
shall include the facilities required by other tenants. Landlord
shall also the right to locate mechanical and other equipment on
the roof over the leased premises.
b. Notwithstanding anything to the contrary contained in this Lease
or in any of the exhibits attached thereto, all flashing,
counter-flashing, roof penetrations, and roofing repairs shall
conform to the project roofing specifications. Roof repairs or
penetrations required by removal or relocation of existing
equipment or installation of new equipment (cutting of roof and
deck material and/or repair of same) shall be performed by
Landlord's roofing contractor at Tenant's expense.
Tenant shall enter into a direct contract with Landlord's
roofing contractor.
SEE ATTACHED RIDER FOR INSERTS
Exhibit B, page 4 of 11
<PAGE> 52
D. Mechanical
1. Plumbing:
a. Plumbing fixtures and accessories shall be of commercial quality
and shall be of water conserving type.
b. Tenant shall provide a water meter (calibrated in gallons) in an
easily accessible location (or, at Landlord's direction, Tenant
will install a remote reader device).
c. Floor drains shall be provided in toilet rooms and kitchens
and/or food service areas.
d. Tenant shall be obligated to pay to Landlord, at the time Tenant
obtains its construction permit, any capital facility connection
charge imposed by the governmental unit having jurisdiction,
together with all other costs and expenses incurred or to be
incurred by Landlord with respect to Tenant's construction of and
connection to water and wastewater facilities, and with respect
to particular plumbing fixtures, in accordance with all
applicable ordinances in effect from time to time.
Refer to Exhibit B-1 for additional criteria.
2. Heating, Ventilating and Air Conditioning:
a. If Tenant elects to utilize existing HVAC system, said system
shall be completely upgraded and repaired to like new condition
at Tenant's sole cost and expense.
b. If Tenant elects to install a new HVAC system or a supplement to
an existing system, said systems, shall be installed in complete
compliance with criteria presently established for the Shopping
Center.
Refer to Exhibit B-1 for additional criteria.
3. Fire Protection:
Hydraulically calculated fire protection sprinkler system, fire hose
cabinets, fire extinguishers and other equipment within the leased
premises in accordance with Landlord's insurance underwriters' Fire
Rating Inspection Bureau, and Code requirements. Since the entire fire
protection system for the project is required to be an inter-related,
centrally controlled installation, Tenant shall cause to be designed
and installed, by a qualified sprinkler contractor acceptable to
Landlord, said system within the leased premises in accordance with
Landlord's requirements and shall submit shop drawings, specifications
and hydraulic calculations for the sprinkler system to the Landlord's
Insurance Underwriters' Fire Rating Inspection Bureau for approval.
Landlord's approval of the foregoing shall not constitute the
assumption of any responsibility by Landlord for the accuracy of
sufficiency thereof, and Tenant shall be solely responsible therefor.
Said work shall be accomplished without interrupting fire service to
remainder of Shopping Center during occupied hours.
E. Electrical
1. Tenant, at its expense, shall furnish and install and/or modify the
existing to provide a complete electrical service proceeding from the
Landlord's point of connection as defined in Exhibit B-1 to a point
within the leased premises. This work shall include, but not be
limited to, furnishing and installing a fusible disconnect switch at
Landlord's/utility company's distribution equipment and conduit and
conductors of sufficient capacity for Tenant's requirements. All
conductors shall be insulated copper wire type THW or THWN.
2. All fluorescent or incandescent lighting fixtures in Tenant's public
areas, other than track type and decorative fixtures, shall be
recessed. Fluorescent fixtures shall have low brightness, parabolic
lenses or diffusers and be no larger than 2'0" x 2'0" in size. Bare
lamp fluorescent or incandescent fixtures may not be used except in
concealed areas and/or stock rooms. Connections to all devices in
Tenant's public areas shall be concealed.
3. Emergency lighting shall be provided by Tenant per code to illuminate
stock and/or sales areas and rear exitway during power outage, which
lighting shall be battery-operated, twin-head light pack(s) and/or
fluorescent fixtures. In public areas battery assembly for emergency
lights shall be concealed.
4. Circuits serving signs shall be controlled by a time switch.
5. Audio systems installed by Tenant shall be designed such that sound
shall be contained within the leased premises.
Refer to Exhibit B-1 for additional criteria.
See Attached Rider For Inserts
Exhibit B, page 5 of 11
<PAGE> 53
F. Tenant's Permanent Sign
1. General:
Tenant shall submit quadruplicate copies of its sign drawings and
specifications, including samples of materials and colors, for
Landlord's approval, prior to fabrication of Tenant's sign. Such
drawings shall show location of sign on storefront elevation drawing
and shall clearly indicate color, materials, attachment devices,
dimensions and construction details.
2. Criteria:
Only the storefront of the leased premises facing malls and/or
courts shall be identified by a sign. Tenant's sign shall be subject
to the following requirements and limitations:
a. The average height of sign letters or components shall not
exceed twelve inches (12").
b. No part of the sign letters shall hang free of the background.
c. Sign shall not project beyond the leaseline of the leased
premises more than two inches (2") if less than eight feet
(8') above finished floor line, or more than six inches (6")
if above eight feet (8').
d. Signs shall be limited to the store name only as set forth in
Section 16.01 of this Lease; reference to merchandise or
activity is prohibited.
e. Sign letters or components shall not have exposed neon or
other lamps. All light source shall be concealed by
translucent material. Surface brightness of translucent
material shall be consistent in all letters and components of
the sign. All edges and the backs shall be fully encased
in metal.
f. The storefront sign shall not employ the name of the Shopping
Center as part of Tenant's store identification.
g. The outer limits of sign letters, components or insignia shall
fall within a rectangle, the two short sides of which must be
at least twenty-four inches (24") from the side leaselines of
the leased premises, the top side of which must be at least
twelve inches (12") from the soffit of the mall fascia
element.
h. All electrical sign components must bear U.L. label. Such U.L.
label must be inconspicuously placed.
3. The following types of signs or sign components are prohibited:
a. Signs employing moving or flashing lights or any audible or
moving components.
b. Signs employing exposed raceways, ballast boxes or
transformers.
c. Signs exhibiting manufacturer's name, stamps or decals.
d. Signs employing painted and/or non-illuminated letters.
e. Signs employing luminous-vacuum formed plastic letters.
f. Signs of box or cabinet type, employing transparent,
translucent or luminous plastic background panels.
g. Shadow-box type signs.
h. Signs employing unedged or uncapped plastic letters with no
returns.
i. Any exposed fastenings whatsoever.
j. Cloth, paper, plastic or cardboard signs, stickers, decals, or
painted signs of any kind, hung around, on or behind
storefront glass or within storefront space.
k. Back-illuminated signs.
l. Free-standing signs.
4. The service door of the leased premises shall be identified with a
plastic sign, uniform to all Tenants, in accordance with Center
Management criteria.
SECTION V. PROCEDURE, SCHEDULES AND OBLIGATIONS FOR THE COMPLETION OF PLANS AND
SPECIFICATIONS BY TENANT.
All prints, drawing information and other material to be furnished by Tenant to
Landlord for approval as required in this Exhibit shall be addressed to Landlord
at 200 East Long Lake Road, P.O. Box 200, Bloomfield Hills, Michigan 48303-0200.
Approvals of such documents shall be deemed invalid unless given by Landlord in
writing. Any approval given by Landlord with respect to Tenant's Work or any
subsequent alterations by Tenant shall be effective only for a period of one
hundred twenty (120) days following Landlord's notice to Tenant for such
approval. If Tenant shall not have commenced construction with respect to such
work or alterations within such one hundred twenty (120) day period (or shall
not be diligently pursuing such work or alterations to completion), Tenant shall
be required to resubmit the applicable plans and specifications to Landlord for
re-approval prior to commencement or continuation of such work or alterations.
All notices, drawing information and other material furnished by Landlord to
Tenant under this Exhibit or pursuant to Sections 5.01 or 5.02 of the Lease may
be effectively submitted to Tenant by mailing the same to Tenant at the address
set forth on the Data Sheet on page 1 of the Lease or to Tenant's architect if
Tenant has provided Landlord with such an address, notwithstanding any contrary
or additional requirement contained in any other section of the Lease.
Exhibit B, page 6 of 11
<PAGE> 54
A. Space Layout Drawings
1. Following the execution of this Lease, Landlord shall furnish Tenant
with one (1) set of prints of Space Layout Drawings giving technical
and design information for the leased premises; provided that Landlord
shall not be responsible for the accuracy, efficacy or sufficiency of
said Space Layout Drawings and Tenant shall be solely responsible for
all technical and other examinations of the leased premises and shall
be exclusively responsible with respect to verification of actual
field conditions and actual field measurements and a full review of
all technical and engineering requirements with respect to the leased
premises and Tenant's construction thereon.
B. Working Drawings and Specifications
1. Within thirty (30) days from either of the following dates, whichever
shall be the later to occur (a) receipt by tenant of Space Layout
Drawings or (b) execution of this Lease by the parties hereto, Tenant
shall engage an Architect registered in the state in which the
Shopping Center is located for the purpose of preparing Working
Drawings and Specifications for the leased premises. Working Drawings
and Specifications shall be prepared in strict compliance with the
Construction Criteria and requirements as set forth in Section IV of
this Exhibit and shall adhere to the design as indicated in Section
5.01(b) of the Data Sheet of the Lease to which this exhibit is
attached.
2. All Working Drawings and Specifications prepared by Tenant's Architect
shall be submitted by Tenant, in the form of one (1) set of
reproducible prints (i.e., sepias) and one (1) set of prints, along
with a Letter of Certification by Tenant's Architect that such
drawings and specifications comply with Section 5.01(b) of the Data
Sheet and Landlord's Construction Criteria. Any required revisions to
such Working Drawings and Specifications shall be prepared and
resubmitted by Tenant to Landlord within ten (10) days of receipt of
notice from Landlord.
3. Tenant shall pay all fees of its Architect, and shall pay to Landlord
for Coordination and Administrative Services a fee based on the floor
area of the leased premises in accordance with the following schedule:
Floor Area of Lease Premises Applicable Amount in $
---------------------------- -----------------------
1 to 500 sq. ft. [***]
501 to 750 sq. ft. [***]
751 to 1,500 sq. ft. [***]
1,501 to 3,500 sq. ft. [***]
3,501 to 6,000 sq. ft. [***]
6,001 to 10,000 sq. ft. [***]
10,001 sq. ft. and over 3,300.00 + [***] sq. ft. in
excess of 10,000 sq. ft.
Tenant's payment of the foregoing fee shall be payment to Landlord in
connection with Landlord's review of the various plans and
specifications submitted by Tenant and in connection with Landlord's
facilitation and coordination of Tenant's actual construction in the
leased premises; however, Landlord shall not be in any way
responsible or liable with respect to the accuracy, sufficiency, or
feasibility of Tenant's plans, and Tenant shall be totally
responsible for same.
C. Completion Schedule:
1. The following information regarding Tenant's completion schedule
shall be completed by Tenant and delivered to Landlord upon Tenant's
execution of this Lease:
a. Working Drawings and Specifications submittal date after receipt
of fully-executed Lease
b. Submission of Working Drawings and Specifications to the local
building department for building permit concurrent with submittal
to Landlord (allow four (4) weeks for approval)
c. Construction start date
d. Merchandise date
e. Store opening date
f. Commencement date
Notification may be sent by Landlord to Tenant, at Landlord's option, for
completion of any of the preceding dates not listed on the Completion
Schedule submitted by Tenant. Any such notification shall be returned
completed to Landlord no later than twenty-one (21) days following Tenant's
receipt thereof.
See Attached Rider For Inserts
*** Confidential treatment requested.
Exhibit B, page 7 of 11
<PAGE> 55
SECTION VI. PROCEDURE, SCHEDULES AND OBLIGATIONS FOR THE CONSTRUCTION OF THE
LEASED PREMISES BY TENANT.
A. Commencement of Construction
1. Tenant shall commence demolition and/or construction of its leased
premises not later than fourteen (14) days from the date of approval
by Landlord's Architect of the Working Drawings and Specifications
referred to in Section V, C, 1 above, and shall carry such
construction to completion with all due diligence. The failure of
Tenant to comply with procedures and schedules set forth in this
Exhibit, or to commence or complete the construction of the leased
premises prior to the date of commencement of the term of the Lease to
which this Exhibit is attached and made a part shall have no effect
whatsoever upon the commencement of said term, which shall in any
event commence at the time provided for in Section 1.02 of said Lease.
B. General Requirements
1. Tenant shall submit to Landlord via Certified or Registered Mail, at
least five (5) days prior to the commencement of construction, the
following information:
a. The names and addresses of the General, Mechanical and Electrical
Contractors Tenant intends to engage in the construction of its
leased premises.
b. The date on which Tenant's construction work will commence,
together with the estimated date of completion of Tenant's
construction work and fixturing work, and date of Tenant's
projected opening for business in the leased premises.
c. Evidence of insurance as called for hereinbelow.
d. Itemized statement of estimated construction costs, including
architectural, engineering and contractor's fees.
e. Tenant's Contractors' Performance and/or Labor and Material
bonds, if so required by Landlord, or any other bond to be
furnished by Tenant as may be required by Landlord to insure the
faithful performance of the work in accordance with the Drawings
and Specifications approved by Landlord.
2. Tenant shall engage the services of such bondable, licensed
contractors who will work in harmony with Landlord's contractors and
the contractors employed by the other tenants so that there shall be
no labor disputes which would interfere with the operation,
construction and completion of the Shopping Center or with any work
being carried out therein.
3. Construction shall comply in all respects with applicable Federal,
State, County and/or city statutes, ordinances, regulations, laws and
codes. All required building and other permits in connection with the
construction and completion of the lased premises shall be obtained
and paid for by Tenant. Landlord's review of Tenant's Working Drawings
and Specifications shall be for the purpose of ascertaining compliance
with the requirements of this Lease and Landlord's requirements, and
shall in no event extend to any confirmation or authorization, express
or implied, that Tenant's Working Drawings and Specifications have
been prepared in accordance with the requirements of applicable laws,
codes, ordinances and regulations, including, without out limitation,
the Americans with Disabilities Act, and Tenant shall be solely
responsible with respect to all necessary compliance with such laws,
codes, ordinances and regulations.
Tenant shall provide temporary heat if required.
Tenant shall provide temporary electrical if required.
Tenant shall apply and pay for all utility services.
Tenant shall cause its Contractor to provide warranties for not less
than one year against defects in workmanship, materials and equipment.
4. Tenant's Work shall be subject to the inspection of Landlord, its
consultants, and its supervisory personnel.
5. Upon the expiration of one half (1/2) of the lease term, Tenant shall,
within thirty (30) days after direction from Landlord, submit Working
Drawings and Specifications as set forth in Section V of this Exhibit
showing the work to be performed by Tenant to completely remodel and
refurbish the leased premises. Tenant will cause such work to be
performed not later than ninety (90) days following the date of
Landlord's direction in accordance with Working Drawings and
Specifications approved by Landlord specifying the remodeling work to
be done by Tenant.
All such work shall be subject to and shall be carried out in
accordance with the provisions of this Lease, including, without
limitation, the provisions of Section 5.01(b) governing construction
of the leased premises and the remedies of Landlord in the event of
noncompliance by Tenant, including, but not limited to, termination of
this Lease as therein set forth. Without limiting the foregoing, in
the event that Tenant shall fail to perform such remodeling work, or
if Tenant shall fail to operate the leased premises as required in
Exhibit B, page 8 of 11
<PAGE> 56
the Lease or shall fail to surrender possession of the leased premises
to Landlord as required in the Lease or under law, Landlord shall have
the right to erect, at Tenant's expense, a storefront barricade in
front of the leased premises, which barricade shall not be removed
except upon Landlord's prior written consent and with Tenant paying
the cost of such removal.
C. Landlord's Right to Perform Work
1. Landlord shall have the right to perform, on behalf of and for the
account of Tenant, subject to reimbursement of the cost thereof by
Tenant, any and all of Tenant's Work which Landlord determines in its
sole discretion should be performed immediately and on an emergency
basis for the best interest of the project, including without
limitation, work which pertains to structural components, mechanical,
sprinkler and general utility systems, roofing and removal of unduly
accumulated construction material and debris.
D. Temporary Facilities During Construction
1. Tenant shall pay for all temporary utility facilities, and the removal
of debris, as necessary and required in connection with the demolition
and/or construction of the leased premises. Storage of Tenant's
Contractors' construction material, tools, equipment and debris shall
be confined to the leased premises and in areas which may be
designated for such purposes by Landlord. In no event shall any
material or debris be stored in the mall or in service or exit
corridors.
2. During construction, Landlord may provide temporary electrical service
in an area designated by Landlord. Tenant shall request, in writing,
permission to connect temporary lines to the power source for service
to its premises. The cost to Tenant for this service will be $450.00
per month or twenty-five cents (25 cents) per square foot of leased
area per month, whichever is greater. Payment is to be remitted to
Landlord by the first of each month after service is initiated. In the
event that the leased premises presently contain a metered electrical
service, Tenant shall utilize the existing service and reimburse
Landlord on the metered basis.
3. During initial construction, Tenant fixturing and merchandise
stocking, Landlord may require Tenant to utilize trash removal service
from designated truck courts. Tenant is responsible for breaking down
boxes and placing trash in containers in the designated truck court
areas.
The cost to Tenant for this service will be on a monthly basis and
payment is to be remitted by the first of each month after service is
initiated on the following basis:
<TABLE>
<CAPTION>
Floor Area of Leased Premises Monthly Charge in $
----------------------------- -------------------
<S> <C>
30,001 sq. ft. to 50,000 sq. ft. [***]
20,001 sq. ft. to 30,000 sq. ft. [***]
15,001 sq. ft. to 20,000 sq. ft. [***]
10,001 sq. ft. to 15,000 sq. ft. [***]
5,001 sq. ft. to 10,000 sq. ft. [***]
2,001 sq. ft. to 5,000 sq. ft. [***]
2,000 sq. ft. or less [***]
</TABLE>
At any time, as determined by Landlord, Landlord may discontinue trash
removal service and Tenant shall assume responsibility therefor. All
such work shall be performed by contractors approved by Landlord.
E. Construction Completion
1. A Letter of Certification by Tenant's Architect stating that the store
has been satisfactorily completed in compliance with the Landlord
Approved Working Drawings. Any deficiencies should be outlined and
sent to Tenant's contractor for correction within thirty (30) days.
F. Landlord's Letter of Acceptance
1. Upon the completion of Tenant's construction and fixturing work, and
upon written request to Landlord from Tenant, Landlord shall issue a
Landlord's Letter of Acceptance of said premises. The issuing of such
a Letter shall be contingent upon Tenant satisfying all of the
following conditions (which conditions shall, in any event, be
satisfied by Tenant as a obligation hereunder):
a. The satisfactory completion by Tenant of the work to be performed
by Tenant under Section III of this Exhibit including correction
of deficiencies and inconsistencies with approved Working
Drawings and Specifications.
b. Furnishing by Tenant to Landlord of all waivers of liens and
sworn statements from all persons performing labor and/or
supplying materials in connection with such work showing that all
of said persons have been compensated in full.
*** Confidential treatment requested.
Exhibit B, page 9 of 11
<PAGE> 57
c. Submittal by Tenant to Landlord of a detailed breakdown of
Tenant's final and total construction costs.
d. Submittal by Tenant to Landlord of warranties for not less than
one (1) year against defects in workmanship, materials and
equipment, if so required by Landlord.
e. Full payment by Tenant of all sums due Landlord for items of work
performed by Landlord on behalf of Tenant, as outlined in this
Exhibit.
f. The issuance of a Certificate of Occupancy by the Building and
Safety Department of the local unit of government.
2. Upon written request from Tenant, Landlord shall also inspect that
portion of Tenant's Work which shall have been completed up to the
date of such request, and upon satisfaction of all of the foregoing
conditions set forth in paragraph 1 above (other than issuance of a
Certificate of Occupancy) with respect to the portion of Tenant's
Work so completed, Landlord shall issue a Landlord's Letter of
Acceptance with respect to such completed work. No payments, if any,
required to be made by Landlord to Tenant shall be made unless and
until Tenant shall have obtained a current Letter of Acceptance with
respect to all of Tenant's Work completed as of the date of such
required payment.
G. Payments by Tenant
1. Tenant shall pay Landlord all sums due Landlord for items of work
performed or expenses incurred by Landlord on behalf of Tenant within
days after receipt by Tenant of a statement therefor from
Landlord. Such item of work and expenses incurred include, but are
not necessarily limited to, the following:
a. All items called for as Tenant's cost obligations in this
Exhibit.
b. In the event that the leased premises are located in a retail
development, or in an expansion wing of a retail development,
which development or expansion wing shall not yet have opened for
business to the public at the time of the commencement by Tenant
of its construction hereunder, Tenant shall be obligated to pay
to Landlord Tenant's pro rata share of costs and expenses
incurred by Landlord in arranging for a final cleaning of and
debris removal from the common areas and vacant premises in
preparation for the grand opening of the retail development or of
such expansion wing. Tenant's pro rata share shall be computed on
the basis that the square footage of the leased premises bears to
the square footage of gross leased and occupied area in the
Shopping Center (or in the expansion wing of the Shopping
Center, as applicable) as of the earlier of: the date of the
opening of the Shopping Center (or the expansion wing, as
applicable), or the date that Tenant is notified of its pro rata
share of such costs and expenses.
H. Insurance
1. Tenant shall secure, pay for and maintain, or cause its Contractor(s)
to secure, pay for and maintain during construction and fixturing
work within the leased premises, all of the insurance policies
required herein, in the amounts as set forth below, and such
insurance as may from time to time be required from city, county,
state or federal laws, codes, regulations or authorities, together
with such other insurance as is reasonably necessary or appropriate
under the circumstances. Tenant shall not permit its Contractor(s) to
commence any work until all required insurance has been obtained and
certificates of such insurance have been
Exhibit B, page 10 of 11
<PAGE> 58
delivered to Landlord.
2. Tenant's General Contractor's and Subcontractors' Required Minimum
Coverages and Limits of Liability.
a. Worker's Compensation, as required by state law, and including
Employer's Liability Insurance with a limit of not less than
[***], and any insurance required by any Employee Benefit Acts or
other statutes applicable where the work is to be performed as will
protect the Contractor and Subcontractors from any and all liability
under the aforementioned acts.
b. Commercial General Liability Insurance (including Contractor's
Protective Liability) in an amount not less than [***] for any
one occurrence whether involving personal injury liability (or death
resulting therefrom) or property damage liability or a combination
thereof with an aggregate limit of [***]. Such insurance shall
provide for explosion, collapse and underground coverage.
Such insurance shall insure Tenant's General Contractor against any
and all claims for personal injury, including death resulting
therefrom and damage to or destruction of property of any kind
whatsoever and to whomsoever belonging and arising from his operations
under the Contract and whether such operations are performed by
Tenant's General Contractor, Subcontractors, or any of their
Subcontractors, or by any one directly or indirectly employed by any
of them.
c. Comprehensive Automobile Liability Insurance, including the ownership,
maintenance, and operation of any automotive equipment, owned, hired,
and non-owned, in the following amounts:
(1) Bodily injury, per occurrence for personal
injury and/or death ........................... [***]
(2) Property Damage Liability ..................... [***]
Such insurance shall insure the General Contractor and/or Subcontractors
against any and all claims for personal injury, including death resulting
therefrom and damage to the property of others caused by accident and
arising from its operations under the Contract and whether such operations
are performed by the General Contractor, Subcontractors, or by anyone
directly or indirectly employed by any of them.
3. Tenant's Protective Liability Insurance.
Tenant shall provide Owner's Protective Liability Insurance as will insure
Tenant against any and all liability to third parties for damages because
of personal injury liability (or death resulting therefrom) and property
damage liability of others or a combination thereof which may arise from
work in connection with the leased premises, and any other liability for
damages which Tenant's General Contractor and/or Subcontractors are
required to insure against under any provisions herein. Said insurance
shall be provided in minimum amounts as follows:
a. Bodily injury, per occurrence for personal
injury and/or death ................................. [***]
b. Property Damage Liability ........................... [***]
4. Tenant's Builder's Risk Insurance -- Completed Value Builder's Risk
Material Damage Insurance.
Coverage:
Tenant shall provide an "All Physical Loss" Builder's Risk insurance policy
on the work to be performed for Tenant in the leased premises as it relates
to the building within which the leased premises is locate. The policy
shall include Tenant, its Contractors and Subcontractors, Landlord, and the
partners and agents of Landlord, as insureds as their interests may appear.
The amount of insurance to be provided shall be 100% of the replacement
cost.
5. All such insurance policies required under this Exhibit, except as noted
above, shall include Landlord, its Managing Agent, its Architect, its
General Contractor, and the partners and agents of Landlord, and the
partners of such partners, and any other parties in interest designated by
Landlord, as additional insureds; except Worker's Compensation Insurance,
which shall contain an endorsement waiving all rights of subrogation
against Landlord, its Managing Agent, its Architect, General Contractor,
partners and agents, and the partners of such partners, and any other
parties in interest designated by Landlord.
Certificates of Insurance shall provide that no reduction in the amounts or
limits of liability or cancellation of such insurance coverage shall be
undertaken without prior thirty (30) day written notice to Landlord.
The insurance required under this Exhibit shall be in addition to any and all
insurance required to be procured by Tenant pursuant to Section 11.01 of the
Lease to which this Exhibit is attached.
[END OF TEXT OF STANDARD CONSTRUCTION EXHIBIT]
*** Confidential treatment requested.
Exhibit B, page 11 of 11
<PAGE> 59
WOODFIELD
EXHIBIT B-1
UTILITIES
(Attached to and forming a part of Exhibit B;
Section references correspond to the Section numbers set forth in Exhibit B.)
SECTION II: LANDLORD'S WORK.
A. BUILDING UTILITIES AND SERVICES
1. Points of connection, for Tenant's use, to the following utilities in
location and sizes determined by Landlord.
a. Sanitary sewer stub.
b. Plumbing vent stub.
c. Domestic cold water stub.
d. Fire protection sprinkler system main.
e. Central gas utility company metering manifolds.
f. Central electric utility company distribution centers.
g. Central telephone company distribution boards.
h. Duct shafts containing fresh air, relief air and toilet exhaust
ducts to serve first level tenants stubbed in central locations
and terminating to the atmosphere.
SECTION IV: CRITERIA - TENANTS'S WORK.
The requirements, criteria, and/or outline specifications as set forth herein
represent minimum standards for the design, construction, and finish of the
mechanical and electrical systems installed by Tenant.
A. MECHANICAL
1. Plumbing:
a. Plumbing fixtures and accessories shall be of commercial quality
and shall be of a water-conserving type.
b. Water heaters shall be electric, except Food and Beverage Service
Tenants where gas units may be permitted if gas is available.
c. Floor drains shall be provided in toilet rooms, kitchens, and/or
food service areas.
d. Food and Beverage Service Tenants shall further provide:
(i) Cast-iron grease traps located within the leased premises.
(ii) Gas service and branch line extension from the gas meter
center to and within the leased premises.
e. Every space shall have at least one (1) toilet room. All spaces
3,000 square feet or larger must provide public accessible toilet
rooms (male and female). Said toilet rooms must comply with the
state of Illinois plumbing code.
3. Heating, Ventilating, and Air Conditioning:
a. Tenant shall install an all-electric heating and air-conditioning
system.
(i) Each Tenant shall provide its own individual system
(i.e., heating, ventilation and air-conditioning
equipment and controls, ducts, insulation, water
supply, venting and drainage, fresh air supply and
return, exhaust and make-up air, dehumidification and
humidification equipment, water saving equipment and
all structural, plumbing and electrical work related
thereto).
(ii) All equipment shall be contained within Tenant's
premises except rooftop air-cooled condensing units,
make-up air units, and hood exhausters. Such equipment
located on the roof shall only be located in areas
designated by the Landlord to specified heights, and in
accordance with Landlord's standard details for
roof-mounted equipment. All refrigerant piping shall be
installed in ceiling space and extended through roof
adjacent to the equipment. Suction lines shall be
insulated.
(iii) Tenant's air handling units shall be floor-supported in
Tenant's space independent of Landlord's structural
system.
b. Toilet rooms shall be exhausted per code. All roof mounted units
for second level Tenants shall be of aluminum construction.
Exhibit B-1, page 1 of 2
<PAGE> 60
c. Ductwork: Fabricated of galvanized sheet metal per American
Society of Heating, Refrigerating and Air-Conditioning Engineers'
standards, as outlined for "Low Pressure Ducts" in the latest
edition of their "Guide and Data Book".
d. There shall be a provision to bring in 100% fresh air for cooling
purposes anytime the outside temperature is below 60 degrees F.
Such provision shall be operated by automatic temperature
controls.
e. All first level outside air, relief air, exhaust air and other
ductwork requiring outdoor intake or venting except process
requirements shall be extended by Tenant to the common tenant
service shafts. All outside air, relief air and general exhaust
(Toilet Room, Storage Room, etc.) ductwork shall connect with
backdraft dampers to sheet metal housings provided at the base
of the common shafts.
f. All process exhausts, hood exhausts, equipment vents, and other
contaminated exhausts permitted by Landlord shall discharge
vertically to the atmosphere, and be located a minimum of 20
feet horizontally from any fresh air intakes, properly
dispersing odors or fumes away from same.
g. All supply and fresh-air ductwork shall be insulated, and all
ductwork on all levels shall be installed in concealed space
above ceilings. Space between ceiling and structure shall not be
used as a return air plenum.
h. All air supplied to Tenant's area by its equipment shall not
migrate to the public mall or adjacent spaces.
i. Standards of design and construction shall be in accordance with
latest ASHRAE and SMACNA Guides.
j. Tenant shall provide all process requirements, hood exhausts,
make-up air supply, equipment vents and other contaminated
exhausts. When permitted by Landlord they shall extend in
ductwork through the roof. This ductwork shall be located in
special shafts built by Tenant, at locations and of construction
designated by Landlord.
k. Ductwork which passes through service corridor and demising walls
shall have U.L. approved fire dampers located in ductwork at
wall. Provide approved access doors for such dampers.
l. Tenant roof equipment shall be located in areas designated by
Landlord to specified heights and in accordance with Landlord's
standard details for equipment on the roof.
(i) Should weight or location of equipment by Tenant require
supports, screens, cat walks or roof hatch and ladder, they
shall be provided by Tenant in accordance with standard
details. Landlord shall determine when and where the above
shall be required.
(ii) All above equipment shall be finish painted in accordance
with Landlord's paint schedule and specifications.
(iii) Tenant's roof equipment shall be clearly identified with
Tenant's name.
B. ELECTRICAL
1. Power available for the leased premises shall consist of the
following voltages:
a. For tenants located in buildings "D, E, F, G, J and K":
(i) Tenant spaces of 6,000 square feet and smaller will be
provided with 120/208 volt, 3 phase, 4 wire.
(ii) Tenant spaces in excess of 6,000 square feet will be
provided with 277/480 volt, 3 phase 4 wire.
b. For tenants located in buildings "L and N":
(i) All tenants will be provided with 277/480 volt, 3 phase, 4
wire.
2. Installation or modification of the existing system shall conform to
the following:
a. Power for Tenant's heating, ventilating and air conditioning
equipment (single and/or three phase), including electric duct
heaters, unit heaters, strip heaters, etc. will be taken from 480
volt, 3 phase, 3-wire rain tight distribution panelboards
located on the roof. Landlord will furnish and install a plug-in
fusible switch (min. 60 amp) at Tenant's expense. Tenant shall
furnish and install fuses, all wiring and conduit from rooftop
panelboards, transformers, starters, relays, switches,
connections, etc., required for Tenant's equipment.
b. Dry type transformer (if required) shall be used for all 120/208
volt requirements.
c. Panelboards shall be designed for 20% minimum spare ampacity
(based on connected load) and 20% spare breaker space.
d. All electrical wiring systems shall be in conduit. The use of
"Bx" or "Romex" is not permitted.
Exhibit B-1, page 2 of 2
<PAGE> 61
STANDARD NASCAR SILICON MOTOR SPEEDWAY RIDER
- --------------------------------------------------------------------------------
SECTION 1.01(b): At the end of the subsection, insert "Landlord shall grant
Tenant an easement to install and maintain utility facilities exclusively
serving the leased premises, within service areas and above Tenant's finished
ceiling, in work areas permitted by Landlord, provided such facilities are
permitted pursuant to the Working Drawings and Specifications approved by
Landlord."
SECTION 2.03: On page S3, line 8, after the word "sales", insert ", use,
luxury, gross receipts,".
At the end of the Section, insert "The term 'Gross Sales' shall not include: (i)
any sums and/or credits received in the settlement of claims for loss of or
damage to merchandise; (ii) a bulk sale of all or substantially all of Tenant's
assets not in the ordinary course of Tenant's business; (iii) bulk sales of
distressed merchandise to jobbers not in the ordinary course of Tenant's
business; (iv) receipts from any permitted pay telephones and vending machines
provided that no profit is intended or derived by Tenant; (v) interest, service
or sales carrying charges or other charges, other than credit card company fees,
however, denominated, paid by customers for extension of credit on sales,
provided the same are separately stated and not included in the merchandise
sales price and provided, further, that no profit is intended or derived by
Tenant; (vi) sales of gift certificates until redeemed provided if the
redemption does not occur within one (1) year of the sale then the sale of the
gift certificate shall be included at such time; (vii) the amount of the
discount on sales to employees at a discount provided the same shall not exceed
two percent (2%) of Gross Sales per annum; (viii) reimbursement by customers for
delivery, freight and/or postage charges rendered at no profit to Tenant solely
for the convenience of Tenant's customers; (ix) bad debts when written off of
the books of Tenant to the extent same shall not exceed one percent (1%) of
Gross Sales per annum, provided any recoveries on account of such bad debts
shall be included in Gross Sales when received by Tenant; (x) sales of used
fixtures and equipment not in the ordinary course of Tenant's business and not
to exceed one-half of one percent (0.5%) of Gross Sales per annum; (xi) the
amount of the discount due to redemption of promotional discount coupons; (xii)
credit card company fees paid to third party credit card companies (Visa,
Mastercard, etc.) not to exceed one percent (1%) of Gross Sales per annum; nor
(xiii) sums paid to, or other consideration received by, Tenant from third
parties under agreements which permit such third parties to advertise their
names, logos or products within all of Tenant's store locations."
SECTION 2.05: At the end of the first paragraph, insert "Notwithstanding
the foregoing, Tenant's obligation hereunder shall not include the payment of
any Federal or State income tax, estate tax, inheritance tax, or real estate
transfer tax of general applicability to be paid by Landlord, excepting that
Tenant shall be obligated for such tax to the extent such tax is assessed in
lieu of or in substitution for existing ad valorem taxes on real property which
are hereafter modified, abolished or repealed in whole or in part.
In the event Landlord elects to protest any real estate tax
or assessment and achieves relief on account thereof, Tenant shall be credited
to its proportionate share of such relief applicable to periods during the least
term after deducting all of the costs and expenses incurred in connection
therewith."
On page S4, line 34, in place of the deleted language,
insert "twenty (20)".
SECTION 2.06: On page S4, line 53, in place of the deleted language,
insert "twenty (20)".
On page S4, line 53, after the word "whatsoever," insert
"except for abatements expressly permitted by the terms of this Lease".
On page S4, line 60, in place of the deleted language,
insert [***].
SECTION 3.01: On page S5, line 8, in place of the deleted language,
insert "sales".
On page S5, line 11, after the word "limitation", insert
"(to the extent maintained or compiled by Tenant in the ordinary course of
Tenant's business);".
SECTION 3.02: On page S5, line 31, in place of the deleted language,
insert "sixty (60)".
*** Confidential treatment requested.
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<PAGE> 62
On page S5, line 32, in place of the deleted language,
insert "officer of Tenant,".
SECTION 4.01: On page S5, line 52, in place of the deleted language,
insert "ten (10)".
SECTION 4.02: On page S5, lines 54 and 59, in place of the deleted
language, insert "ten (10)".
On page S5, line 55, after the word "Landlord", insert
"which auditor shall be an independent certified public accountant and shall be
employing generally accepted auditing standards,".
On page S5, line 63, in place of the first deletion, insert
"understated".
On page S5, line 63, in place of the second deletion, insert
"three percent (3%)".
On page S5, line 64, in place of the deleted language,
insert "twenty (20)".
On page S6, line 9, after the word "audit,", insert
"Landlord shall use reasonable efforts to schedule an audit at a time and on a
date which is mutually convenient for Landlord and Tenant."
On page S6, line 13 after the word "auditor", insert "which
auditor shall be an independent certified public accountant and shall be
employing generally accepted auditing standards."
On page S6, line 22, in place of the deleted language,
insert "prompt refund".
At the end of the Section, insert "Landlord agrees to use
reasonable efforts to keep confidential any information acquired by Landlord
pursuant to its examination or audit rights under this Articles III and IV
except that Landlord shall be entitled to divulge such information to the
following: (i) Landlord's attorney, accountant or tax advisor; (ii) any
mortgagee or prospective mortgagee of all or any portion of Landlord's interest
in the regional retail development; (iii) any governmental authority having
competent jurisdiction and valid power or authority to compel such information;
(iv) any court, person, agency or organization as a result of any actual
litigation filed in connection with this Lease; (v) any prospective purchaser of
all or any portion of Landlord's interest in the regional retail development;
(vi) Landlord's managing agent or (vii) Landlord's partners, and the partners,
shareholders or other interest holders of such partners."
SECTION 5.01(b) On page S6, line 48, after the word "by", insert "ten (10)
days' prior written".
On page S6, line 49, after the word "Tenant", insert ", and
opportunity for Tenant to cure or reconcile with Landlord during such ten (10)
day period,".
On page S6, line 52, after the word "upon", insert ten (10)
days' prior written".
On page S6, line 52, after the word "Tenant", insert ", and
opportunity for Tenant to cure or reconcile with Landlord during such ten (10)
day period,".
On page S6, line 55, after the word "consent.", delete the
period and insert "except Tenant may make minor deviations provided same shall
not alter the design and specification criteria originally approved by
Landlord."
On page S6, line 67, after the word "upon", insert "ten
(10) days' prior written",
On page S6, line 67, after the word "Tenant", insert ", and
opportunity for Tenant to cure or reconcile with Landlord during such ten (10)
day period,".
On page S7, line 12, after the word "thereof.", delete the
period and insert "subject to defects or omissions in Landlord's Work which are
disclosed in writing by
-2-
<PAGE> 63
Tenant to Landlord within thirty (30) days following delivery of possession of
the leased premises to Tenant."
At the end of the subsection, insert "Upon Tenant's written
request, Landlord shall give Tenant a reasonably detailed explanation of any
reason Landlord may have for rejecting Tenant's plans and specifications."
SECTION 5.02(c): On page S7, line 39, after the word "possession.", delete
the period and insert "except for defects in Landlord's Work of which Tenant
notifies Landlord in writing within thirty (30) days from date of possession and
(if the leased premises have not previously been occupied) latent defects in
Landlord's Work of which Tenant notifies Landlord in writing within six (6)
months from the date of taking possession."
SECTION 6.01: At the end of the Section, insert "Notwithstanding the
foregoing, Tenant shall be permitted to make minor, nonstructural alterations to
the interior of the leased premises not to exceed Twenty-Five Thousand and
00/100ths Dollars ($25,000.00) during any twelve (12) month period, provided
that such alterations shall not change the original design of the leased
premises as originally approved by Landlord, and further provided, Tenant shall
not be permitted to make any alterations whatsoever to the storefront, signage
or configuration or size of the sales area without Landlord's prior written
approval. Tenant shall give Landlord fifteen (15) days' written notice prior to
undertaking any alterations which Tenant is permitted to make pursuant to this
paragraph."
SECTION 6.02: On page S8, line 14, after the word "improvements.", delete
the period and insert "provided Tenant may remove the following types of trade
fixtures upon expiration of the lease term if Tenant shall not be in default and
repairs any damage caused by installation or removal of same: Tenant's
automobile racing simulators (and support structures for such simulators), track
lighting fixtures, theatrical lighting fixtures, theatrical lighting truss,
theatrical lighting dimmers, television monitor mounts and monitors, satellite
dish, telecommunications/ISDN premises equipment, telephone system, neon logo
signage, cash/wrap registration desk, safe and fibre optic cabling. Furthermore,
Tenant may, from time to time during the lease term, remove automobile racing
simulators (and support structures for such simulators) from the leased premises
on a temporary basis provided the leased premises shall be operated
substantially as operated on the date of Tenant's initial opening in the
Shopping Center."
SECTION 6.03: At the end of the Section, insert "in exercising its rights
under this Section 6.03, Landlord shall use reasonable efforts to minimize
resulting interference with access to or visibility of the leased premises from
the enclosed mall area. If, while exercising its rights under this Section,
Landlord prevents Tenant from operating its business in the leased premises and
Tenant actually closes for three (3) or more consecutive days due to no fault of
Tenant, then commencing with expiration of such three (3) day period and
continuing until Landlord's activities have ceased to the point where Tenant is
able to reopen, minimum rent shall be abated as Tenant's sole remedy."
SECTION 7.02: On page S8, line 57, after the word "merchandise.", delete
the period and insert ", subject to the provisions of Section 27.04.
Notwithstanding anything to the contrary contained in this Section, Tenant shall
be permitted to close the leased premises for two (2) periods of one-half (1/2)
day each during each lease year for purposes of conducting inventory provided in
no event shall Tenant close for inventory on a weekend day, nor on a national
holiday nor during the period November 1 through January 1, and Tenant shall be
permitted to close its business to the extent Tenant's closing is necessary in
connection with a required or permitted remodeling or repair."
On page S8, line 58, after the word "and", insert ", Tenant
shall not be continuously operating its business in the leased premises for
three (3) consecutive business days or more,".
On page S9, line 2, after the word "improvements", insert
"excluding structural changes or improvements to the roof, foundation or support
structures of the Shopping Center buildings or to common area facilities, which
are Landlord's obligation to maintain under this Lease, provided Tenant shall be
obligated for the full cost of same if same are necessitated by Tenant's
particular manner of use of the leased premises or by the acts or negligence of
Tenant, its agents, employees or contractors)".
On page S9, line 11, after the word "discretion.", insert
"The foregoing restriction shall not extend to hazardous substances typically
found within first class enclosed regional Shopping Centers so long as (i) such
substances and any equipment which generates such substances are maintained only
in such quantities as are reasonably necessary for
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<PAGE> 64
Tenant's operations in the leased premises, (ii) such substances are used
strictly in accordance with the manufacturers' instructions therefor, (iii) such
substances are not disposed of in or about the Shopping Center in a manner which
would constitute a release or discharge thereof, (iv) all such substances and
any equipment which generates such substances are removed from the Shopping
Center by Tenant upon the expiration or earlier termination of this lease, and
(v) any use, storage, generation, disposal, release or discharge by Tenant of
hazardous materials in or about the Shopping Center as is permitted pursuant
hereto shall be carried out in compliance with all applicable federal, state and
local laws, ordinances, rules and regulations and the requirements of Landlord's
insurance carriers and mortgagees; Tenant's covenants set forth in this
paragraph shall survive expiration of the lease term or sooner termination of
the Lease."
On page S9, line 28, after the word "Lease.", insert
"Notwithstanding the foregoing, the normal sounds associated with Tenant's
business operations shall be permitted provided such sounds shall not travel
into any other leased or licensed premises."
On page S9, line 31, in place of the first deletion, insert
"three feet (3')".
On page S9, line 39, after the word "development.", insert
"Notwithstanding anything contained in this Lease to the contrary, Landlord
shall permit the installation of a communications antenna and satellite dish
('device') on the roof of the building containing the leased premises for use by
Tenant exclusively in connection with Tenant's business described in Section
7.01 provided (1) Tenant shall be continuously complying with all governmental
laws, ordinances and regulations regarding installation, operation, removal and
maintenance of such device; (2) if installation of the device is to penetrate
the roof, Tenant shall retain only Landlord's roofing contractor for purposes of
installation; (3) the size, visual screening, type and location of such device
shall be subject to Landlord's prior approval; (4) upon expiration of the lease
term Tenant shall, following direction from Landlord, remove such device and
repair all damage to the Shopping Center caused by installation or removal; (5)
Landlord's roofing contractor shall not be deemed to be Landlord's agent for
such purposes and Tenant shall indemnify and hold harmless Landlord and the
other parties identified in Section 11.03 of this Lease from any damages,
expenses, costs, reasonable attorneys' fees, etc. arising in connection with the
installation, removal and operation of such device, which indemnification shall
otherwise be pursuant to the provisions of Section 11.03; (6) Tenant shall give
Landlord at least thirty (30) days prior written notice of its intention to
install such device; and (7) any revenues paid to Tenant by other occupants of
the regional retail development in connection with the use of such device shall
be immediately payable and remitted to Landlord as additional rent. Landlord
shall have the right to relocate such device at Tenant's expense if such
relocation is necessary in order for Landlord to exercise its rights pursuant to
Sections of this Lease provided Landlord shall endeavor to provide Tenant with
at least three (3) days' advance notice of such relocation (except in the event
of an emergency in which event no notice shall be required)."
SECTION 7.05: On page S10, line 34, after the word "require.", insert "The
rates charged by such contractors shall be competitive with those charged by
other solid waste disposal contractors doing business in the vicinity of the
Shopping Center."
On page S10, line 36, in place of the deleted language,
insert "twenty (20)".
SECTION 8.01: On page S10, line 43, after the word "Center.", delete the
period and insert "generally in a first class manner."
On page S10, line 43, after the word "The", insert
"particular".
SECTION 8.02: On page S11, line 14, after the word "charges.", insert
"Landlord shall give one (1) hours' prior oral notice to the individual then
apparently in charge at the leased premises on the first occasion of a parking
violation during a twelve (12) month period prior to exercising its rights set
forth above."
On page S11, line 19, after the word "towed." delete the
period and insert "except to the extent of the negligence or wrongful acts of
Landlord, its agents or employees."
SECTION 8.03: At the end of the subsection, insert "The foregoing costs
and expenses shall not include: (i) Landlord's long term debt and permanent
mortgage payments to the extent such payments relate to payment of the cost of
the original construction of buildings
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<PAGE> 65
within the Shopping Center and/or regional retail development; (ii) the cost of
constructing new (not previously existing) buildings in the Shopping Center or
building additions to existing buildings; (iii) ground rent payments; (iv)
brokerage commissions or legal fees incurred in connection with the leasing of
space in the Shopping Center; (v) costs which are reimbursed to Landlord
through insurance proceeds, warranty or suit against third parties; (vi)
construction allowances or similar disbursements solely for the benefit of a
particular Shopping Center tenant; (vii) accounting or auditing fees in
connection with the examination or audit of individual tenant sales records;
(viii) legal fees of enforcing provisions in individual tenant leases, provided
legal fees incurred in connection with the common areas or enforcement of
Shopping Center rules and regulations shall be included; (ix) promotional
expenses; (x) costs of acquiring additional land for the Shopping Center; nor
(xi) charges payable by Tenant pursuant to other Sections of this Lease."
SECTION 8.03(b): On page S12, line 17, in place of the deleted language,
insert "twenty (20)".
SECTION 9.01: On page S12, line 34, in place of the deleted language,
insert "three (3)".
On page S12, line 39, after the word "premises.", delete
the period and insert ", provided Tenant shall be permitted to relocate readily
moveable displays within the leased premises to the extent the overall design
and appearance of the leased premises as originally approved by Landlord is not
altered."
At the end of the Section, insert "Landlord shall not
unreasonably withhold its approval of Tenant's interior professionally prepared
and printed signage provided same is consistent with that employed in Tenant's
other first class enclosed regional shopping center locations."
SECTION 10.01: On page S12, line 51, after the word "MAINTENANCE,", insert
"In addition to Landlord's obligations pursuant to Section 8.01,".
On page S12, line 52, after the word "the", insert "roof,
foundation, support structures and".
At end of the Section, insert "Except to the extent covered
or required to be covered by Tenant's insurance, Landlord shall either (at
Landlord's option) repair, or reimburse Tenant for the reasonable costs of
repairing, damage, to Tenant's leasehold improvements caused by the negligent
or wrongful acts of Landlord, its agents or employees."
SECTION 10.02(a): On page S12, line 68, after the word "premises", insert
"provided same shall be exclusively serving the leased premises)".
SECTION 10.02(b): On page S13, line 11, after the word "repair.", delete the
period and insert ", reasonable wear and tear and damage by fire or other
casualty excepted."
At the end of the subsection, insert "Tenant shall not be
obligated to undertake changes to the roof, foundation or support structures or
common area facilities of the Shopping Center necessitated by governmental
laws, ordinances or regulations, however Tenant shall be obligated for the cost
of same if the changes area required due to Tenant's particular manner of use
of the leased premises or the acts or negligence of Tenant, its agents,
employees or contractors."
SECTION 10.02(c): On page S13, line 16, in place of the deleted language,
insert "thirty (30)".
On page S13, line 24, in place of the deleted language,
insert "twenty (20)".
SECTION 10.02(d): On page S13, line 29, after the word "modified", insert
"and the failure to so modify such system shall result in an increase in
insurance rates at the Shopping Center,".
On page S13, line 31, in place of the deleted language,
insert "twenty (20)".
SECTION 10.02(g): On page S13, line 64, in place of the deleted language,
insert "twenty (20)".
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<PAGE> 66
On page S13, line 67, after the word "shall", insert
"(subject to Article XIX hereof)".
SECTION 11.01(a): On page S14, line 27, in place of the deleted language,
insert [***].
SECTION 11.01(d): On page S14, line 68, in place of the deleted language,
insert "twenty (20)".
SECTION 11.02(a): On page S15, lines 15 and 16, in place of the deleted
language, insert "statement".
On page S15, line 17, in place of the first deletion, insert
"officer of Tenant."
On page S15, line 17, in place of the second deletion,
insert "statement".
At the end of the subsection, "To the extent generally
available to landlords of super regional and regional shopping centers located
in the State, the insurance carried by Landlord pursuant to this subsection
11.02(a) shall contain a waiver by the insurer of any right of subrogation
against Tenant, its agents, employees or representatives."
SECTION 11.02(b): On page S15, line 37, in place of the deleted language,
insert "twenty (20)".
SECTION 11.03: On page S15, line 49, after the word "Landlord", insert
"it's agents or employees".
On page S15, line 50, after the word "including", insert
"reasonable".
On page S15, line 54, after the word "customers," insert
"(to the extent the act of the customer took place within the leased premises)".
On page S15, line 55, after the word "same", insert "(to the
extent used by Tenant)".
On page S15, line 55, after the word " area", insert
"exclusively".
On page S15, line 58, in place of the deleted language,
insert "reasonable".
On page S15, line 60, after the word "then", insert
"Landlord may do so upon at least five (5) days advance notice to Tenant and".
On page S15, line 61, after the word "and", insert ", Tenant
shall not have prevailed in such action,".
On page S15, line 65, after the word "State.", insert
"Tenant shall not be obligated to defend Landlord from any claims or actions
described in this Section to the extent in which Landlord shall have engaged its
own attorneys for such defense, provided Tenant shall remain obligated for
payment of Landlord's attorneys' fees as herein set forth."
At the end of the Section, insert "Landlord covenants to
indemnify Tenant, and save it harmless (except for loss or damage resulting from
the negligence of Tenant, its agents or employees) from and against any and all
claims, actions, damages, liability and expense, including attorneys' fees, in
connection with loss of life, personal injury and/or damage to property arising
from or out of any occurrence (other than any occurrence caused by Tenant, its
agents or employees or arising in connection with Tenant's business operations)
in the common ares of the Shopping Center."
SECTION 12.01(a): On page S16, lines 12 and 26, in place of the deleted
language, insert "twenty (20)".
SECTION 12.01(i): At the end of the subsection, insert "Notwithstanding the
foregoing, if utility service to the leased premises is interrupted due solely
to the acts or negligence of Landlord, its agents or employees (as determined by
a court of competent jurisdiction or by agreement between the parties) and such
interruption in service prevents Tenant from operating its business and Tenant
closes its business for more than three (3) consecutive business days, then
commencing with expiration of such three (3) business day period and continuing
until utility service is restored to the point where Tenant can reopen, minimum
rent shall be abated as Tenant's sole remedy. In the event of a conflict between
the provisions of this paragraph and the abatement provisions of Section 17.01,
the provisions of Section 17.01 shall control. Furthermore, if utilities are
interrupted to the point where Tenant can not operate, then Tenant shall receive
a rent abatement to the extent in which Landlord receives rental interruption
insurance covering Tenant's rent abatement."
*** Confidential treatment requested.
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<PAGE> 67
SECTION 13.01: On page S17, line 65, in place of the deleted language,
insert "twenty (20)".
On page S18, line 1, after the word "certifying", insert
"to the best of Tenant's knowledge:".
At the end of the Section, insert "Landlord shall supply to
Tenant a similar statement within thirty (30) days following Tenant's written
request."
SECTION 13.02: On page S18, line 18, after the word "Lease.", delete the
period and insert ", provided that such successor shall in turn thereafter
recognize Tenant's rights as the tenant hereunder."
SECTION 13.04: On page S18, lines 36 and 40, in place of the deleted
language, insert "twenty (20)".
On page S18, line 41, in place of the deleted language,
insert [***].
SECTION 14.01: At the end of the Section, insert "Notwithstanding the
provisions of this Section 14.01 to the contrary, Tenant may assign this Lease
(by merger, consolidation or otherwise) to another entity simultaneously
acquiring a controlling interest in Tenant's stock or all or substantially all
of Tenant's assets, including, without limitation, the entire chain of stores
conducted under the trade name herein set forth, provided that: (1) the
assignee shall simultaneously be acquiring control of the entire chain of stores
conducted under the trade name herein set forth, (2) Tenant shall not at the
time of such assignment be in default under any of the terms, covenants and
conditions of this Lease beyond any applicable grace or cure period set forth
on this Lease, (3) such assignee shall, as of the date immediately prior to the
effective date of the assignment, have a net worth (based on assets contained
within the United States) equal to or greater than the combined net worth of
Tenant and Tenant's Guarantor (if any) as of the date of Tenant's execution of
this Lease or as of the date immediately preceding the effective date of such
transfer, whichever of such net worth amounts shall be the greater, (4) such
assignee (and any person or entity acquiring a controlling interest in Tenant's
stock) shall agree in writing to perform all of the unperformed terms,
covenants and conditions of this Lease (whether accruing prior to, on, or after
the effective date of the assignment), (5) Tenant and Tenant's Guarantor (if
any) shall agree in writing to at all times remain primarily obligated for the
performance of the terms, covenants and conditions of this Lease, (6) the
assignee shall deposit with Landlord a sum equal to two (2) months' minimum
rent (at the then current rate) which Landlord may apply against any monetary
obligations of Tenant which are not satisfied as of the effective date of the
assignment (any portion of such sum which has not been so applied within
fourteen (14) months following the effective date of the assignment shall be
promptly returned to the assignee), (7) such assignee shall have, or shall have
hired, some management personnel experienced in business operations similar to
that described in Section 7.01, and (8) no later than thirty (30) days prior to
the effective date of the assignment, Tenant shall have supplied Landlord with
all back-up information reasonably required by Landlord to establish that all
of the foregoing conditions have been satisfied.
Notwithstanding the foregoing, the issuance or trading of
stock on a U.S. Government regulated and recognized exchange or on the NASDAQ
over the counter market shall not be deemed to result in a prohibited
assignment hereunder.
Further, notwithstanding the foregoing, an assignment of
this Lease to a parent corporation of Tenant, to a wholly owned subsidiary of
Tenant or to any entity which is under common ownership and control with
Tenant, shall be permitted provided (1) Tenant shall not at the time of such
assignment be in default under any of the terms, covenants and conditions of
this Lease, (2) such assignee shall agree in writing to perform all of the
unperformed terms, covenants and conditions of this Lease (whether accruing
prior to, on, or after the effective date of the assignment), and (3) Tenant
and Tenant's Guarantor (if any) shall agree in writing to at all times remain
primarily obligated for the performance of the terms, covenants and conditions
of this Lease. As used in this paragraph, the term 'control' shall mean the
ownership of and the power to vote more than fifty percent (50%) of the voting
stock of a corporation or more than fifty percent (50%) of the ownership
interests in any partnership or other business entity."
SECTION 16.01: On page S19, lines 52 and 54, in place of the deleted
language, insert "list (provided Landlord's listing does not suggest any
sponsorship, association or affiliation between Landlord and NASCAR)".
On page S19, line 54, after the word "manner.", insert "The
NASCAR name may be used by Landlord only to list Tenant's trade name as
follows: "NASCAR Silicon Motor Speedway."
*** Confidential treatment requested.
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<PAGE> 68
SECTION 16.03(a): On page S20, line 17, in place of the deleted language,
insert "twenty (20)".
SECTION 17.01: On page S20, line 67, after the word "reduced.", insert "For
purposes hereof, the leased premises shall be deemed to be 'untenantable' to the
extent same cannot be used generally for the use described in Section 7.01
hereof."
On page S20, line 68, in place of the deleted language,
insert "sixtieth (60th)".
On page S21, line 5, in place of the deleted language,
insert "one hundred thirtieth (130th)".
On page S21, line 11, after the word "Landlord.", insert "In
no event shall Tenant be obligated to undertake work other than: (i) previously
undertaken by Tenant pertaining the leased premises and (ii) any other work
encompassing Tenant's Work in Section 5.01(b) and the exhibits attached hereto."
On page S21, line 25, in place of the deleted language,
insert "twenty (20)".
At the end of the Section, insert "If more than twenty-five
percent (25%) of the floor area of the leased premises is destroyed by casualty
during the last two (2) years of the lease term, then Tenant may, during the
ensuing thirty (30) day period, terminate this Lease upon sixty (60) days prior
written notice to Landlord.
Tenant may open a temporary location within the radius area
referenced in Section 7.03 and the provisions of Section 7.03 shall not apply to
such location during any period that Tenant is unable to operate in the leased
premises due to casualty provided Tenant must close the temporary location by
the date Tenant is obligated to reopen within the leased premises."
SECTION 17.02: At the end of the Section, insert "The insurance carried by
Landlord pursuant to Section 11.02(a) shall contain a waiver of subrogation
clause for the benefit of Tenant, its agents and employees."
SECTION 18.02(a): On page S21, line 62, in place of the deleted language,
insert "thirty (30)".
SECTION 18.03: On page S22, line 29, after the word "fixtures.", delete the
period and insert "nor (subject to the rights of Landlord's mortgagee[s]) to any
award specifically designated as compensation to Tenant for relocation expenses
(to the extent the award for relocation expenses would not reduce the award
which would otherwise have been received by Landlord in the absence of any award
to Tenant for relocation expenses)."
SECTION 19.01(a): On page S22, line 34, in place of the deleted language,
insert "within ten (10) days after written notice that same are".
On page S22, line 35, in place of the deleted language,
insert "by the date ten (10) days following the".
On page S22, line 35, after the word "fail", insert
"(following ten [10] days' notice to Tenant and opportunity for Tenant to cure
during such ten [10] day period)".
On page S22, line 38, after the word "default", insert
"('Cross Default')".
On page S22, line 47, after the word "Tenant", insert
"(provided, however, such period shall be extended for an additional reasonable
period if the default is of such a nature that it cannot be cured within thirty
[30] days and Tenant has diligently commenced the curing of such default and is
diligently pursuing the same to completion);".
SECTION 19.01(b): On page S22, line 63, in place of the deleted language,
insert "the same".
On page S22, line 65, after the word "Tenant", insert "of
the same kind".
On page S22, line 65, in place of the deleted language,
insert "such twelve (12) month period".
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<PAGE> 69
On page S23, line 2, in place of the second deletion,
insert "and".
On page S23, line 8, in place of the deleted language,
insert "twenty (20)".
SECTION 19.02: At the end of the Section, insert "Landlord shall use
reasonable efforts to relet the leased premises following termination of this
Lease as a result of Tenant's default, provided Tenant acknowledges and agrees
that Landlord may refuse to relet if Landlord determines (in its sole
discretion) that the proposed use or quality of the prospective tenant's
operation is not then appropriate for the Shopping Center or if the proposed
rent is below market; in reletting, Landlord shall not be obligated to give
preference to reletting the leased premises over other vacant space."
SECTION 19.04: On page S24, line 1, after the word "any", insert
"noncompulsory".
SECTION 21.01: On page S25, line 24, after the word "times", insert "upon
prior oral notice to the individual apparently then in charge at the leased
premises,".
On page S25, line 25, after the word "time", insert "upon
prior oral notice to the individual then in charge at the leased premises,".
On page S25, line 30, after the word "time", insert "during
the last fifteen (15) months of the lease term (or at any time that Tenant
shall be in default hereunder)".
At the end of the Section, insert "In exercising its rights
under this Section, Landlord shall use reasonable efforts to minimize any
resulting interference with the operation of Tenant's business.
In the event Landlord shall enter the leased premises under
non-emergency situations in order to perform alterations, improvements,
additions or repairs to other portions of the Shopping Center (including the
leased premises), and the same are not necessitated by Tenant's act, neglect or
breach of this Lease, and as a result thereof Tenant cannot, in the exercise of
reasonable business judgment, operate its business and in fact closes the
entire premises to the public, and if such closing continues for a period of
three (3) business days or more, Landlord agrees that minimum rent shall be
abated as Tenant's sole remedy commencing with expiration of such three (3)
business day period and continuing until such time as the condition giving rise
to the Tenant closing has been corrected at which time Tenant shall resume the
payments."
SECTION 22.02: On page S25, line 59, after the word "whatsoever.", delete
the period and insert "except to the extent of damage to Tenant's tangible
personal property caused by Landlord's negligence (provided in no event shall
Landlord be liable for indirect or consequential damages including, without
limitation, lost profits and in no event shall Landlord be liable to the extent
the damage is covered by Tenant's insurance or is required to be covered by
the insurance which Tenant is obligated to maintain under this Lease [inclusive
of self insurance and deductibles which are Tenant's risk])."
SECTION 22.03: On page S25, line 61, in place of the deleted language,
insert "prompt".
SECTION 23.01: On page S26, line 4, in place of the deleted language,
insert "one-ninth (1/9)".
SECTION 25.02: On page S26, line 44, after the word "shall," insert "not."
On page S26, line 44, in place of the deleted language,
insert "or against Landlord, as a matter of law."
SECTION 27.04: On page S28, line 8, after the word "hereof.", delete the
period and insert ", provided Tenant shall be excluded from continuously
operating its business during those days and hours during which Tenant and
other tenants in the Shopping Center are simultaneously forced to close as a
result of a power failure, casualty or other occurrence beyond their control."
On page S28, line 9, after the word "Lease", insert "for a
period in excess of sixty (60) days".
SECTION 27.05: On page S28, line 22, in place of the deleted language,
insert "receipt (or refusal of receipt):".
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<PAGE> 70
On page S28, line 26, in place of the deleted language,
insert "and at".
At the end of the Section, insert "Notwithstanding anything
contained above. Landlord and Tenant may send notice with a reliable air courier
service, marked and prepaid for overnight delivery, and such notice shall be
deemed given one (1) day following deposit with such air courier."
SECTION 27.10: At the end of the Section, insert "in exercising its rights
under this Section, Landlord shall use reasonable efforts to minimize any
resulting interference with the operation of Tenant's business."
SECTION 27.12(b): On page S29, line 20, after the "20,000", insert
"contiguous".
On page S29, line 20, after the word "entity.", insert "as a
single integrated operation".
On page S29, line 29, after the word "same.", insert
"Landlord shall not permit any retail kiosks within an area bounded by the
storefront leaseline, a line parallel to the storefront leaseline and located
eight (8) feet therefrom and by two (2) lines perpendicular to the storefront
leaseline extended from each side demising wall of the leased premises into the
enclosed mall."
SECTION 27.13: On page S29, line 34, in place of the second deletion,
insert "of [***] above the prime rate then charged by a plurality of
FDIC member banks headquartered in the State".
SECTION 27.16: On page S30, line 7, after the word "irrevocable.", delete
the period and insert "for a period of twenty-one (21) days; thereafter Tenant
may revoke its execution prior to Landlord's execution upon prior written notice
to Landlord."
SECTION 27.21: On page S30, line 49, after the word "entity.", delete the
period and insert "provided Tenant may disclose the contents of this Lease (i)
to comply with any governmental orders, laws, rules or regulations applicable to
it or its principals, (ii) to professionals assisting Tenant to so comply, (iii)
to any potential investors in, lenders to or purchasers of Tenant's business;
provided however Tenant warrants to Landlord that all of the individuals who,
and entities which, are recipients of such information shall comply with the
confidentiality provisions of this Section, and (iv) to NASCAR and its
successors and assigns."
EXHIBIT B: On page 3, line 44, after the word "Landlord.", insert
"Notwithstanding anything contained to the contrary in this Lease or the
exhibits hereto, if within fifteen (15) days after Landlord gives Tenant
Landlord's Notice of Availability (as provided in Section 5.02) and prior to
Tenant's commencement of any construction in the leased premises, (x) Tenant
gives Landlord written notice of any asbestos containing materials (ACM) in the
leased premises which notice shall specify in detail the location, nature and
quantity of the ACM in the leased premises, and (y) the ACM shall have been
installed by Landlord, and (z) the applicable governmental authorities require
the removal or encapsulation of the ACM, then Landlord shall remove or
encapsulate such ACM and the commencement date set forth in the Data Sheet shall
be extended for the period from the date of Tenant's notice to Landlord of the
existence of ACM in the leased premises through completion of removal or
encapsulation. Tenant agrees not to bring or assert any claim whatsoever against
Landlord on account of the presence or condition of any ACM in the leased
premises. Landlord shall not be responsible for any ACM installed by Landlord
which is not identified by Tenant in Tenant's notice to Landlord and in no event
shall the existence of any ACM be deemed to be a defect (latent or otherwise) in
Landlord's Work, it being understood that, except as otherwise herein set forth,
Tenant accepts the leased premises in an "as is" condition without
representation by Landlord, or any person or entity on behalf of Landlord, as to
the condition thereof. Tenant shall disclose the existence of any ACM only to
Landlord, its agents and representatives and shall otherwise keep confidential
any information obtained regarding ACM in the leased premises.
Notwithstanding the foregoing, if Tenant gives timely notice pursuant to clause
(x) of the preceding paragraph and such notice describes ACM installed by a
prior tenant of the leased premises ("tenant-ACM"), and if the applicable
governmental authorities require the removal or encapsulation of the tenant-ACM,
and if the cost to remove or encapsulate the tenant-ACM is estimated by Tenant
(in good faith) to exceed Ten Thousand and 00/100ths Dollars ($10,000.00), then
in lieu of Tenant having to expend more than Ten Thousand and 00/100ths
($10,000.00) to remove or encapsulate the tenant-ACM, Tenant may elect to
terminate this Lease by written notice received by Landlord within thirty-five
(35) days after Landlord gives Tenant Landlord's Notice of Availability,
provided, however, that Landlord may vitiate such termination by Tenant by
agreeing to pay such costs over
*** Confidential treatment requested.
-10-
<PAGE> 71
$10,000.00 by notice sent to Tenant no later than ten (10) days following
Landlord's receipt of Tenant's notice of termination."
On page 4, line 56, after the word "premises.", insert "Landlord shall
use reasonable efforts to locate such facilities below the floor, above
Tenant's finished ceiling, and/or abutting dividing walls."
On page 5, line 61, after the word "shall," insert "substantially."
On page 5, line 62, after the word "premises.", insert "The normal
sounds associated with Tenant's business operations shall be permitted provided
such sounds shall not travel into any other leased or licensed premises."
On page 7, line 54, in place of the deleted language, insert
"forty-five (45)".
[End of text of the Rider; signature and acknowledgment pages appear at end of
Data Sheet on the pages immediately preceding the Addendum.]
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<PAGE> 72
EXHIBIT B
1. Packaged Chips
2. Packaged Candy
3. Soft Drinks
4. Popcorn
5. Pretzels
6. Cookies
7. Peanuts
8. Ice Cream - products
9. Hot Dogs
<PAGE> 1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED
BASED ON A REQUEST FOR CONFIDENTIAL TREATMENT
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
Exhibit 10.16
---
LEASE
SILICON ENTERTAINMENT, INC., a California corporation
________________________________________
Tenant
NASCAR SILICON MOTOR SPEEDWAY and/or SILICON MOTOR SPEEDWAY
_________________________________________
Trade Name
NONE
_________________________________________
Guarantor
Concord Mills
<PAGE> 2
TABLE OF CONTENTS
PAGE
ARTICLE I......................................................... 4
GRANT AND TERM............................................... 4
Section 1.1. Leased Premises............................ 4
Section 1.2. Term....................................... 6
Section 1.3. Opening.................................... 8
Section 1.4. Late Opening............................... 8
ARTICLE II........................................................ 8
RENT AND DEPOSIT............................................. 8
Section 2.1. Minimum Rent............................... 8
Section 2.2. Percentage Rent............................ 9
Section 2.3. Payments By Tenant......................... 12
Section 2.4. Security Deposit........................... 12
Section 2.5. Late Charge................................ 12
ARTICLE III....................................................... 13
PREPARATION OF LEASED PREMISES............................... 13
Section 3.1. Landlord's Work............................ 13
Section 3.2. Delivery of Possession..................... 13
Section 3.3. Tenant's Work.............................. 14
Section 3.4. Alterations by Tenant...................... 16
Section 3.5. Removal by Tenant.......................... 16
ARTICLE IV........................................................ 16
CONDUCT OF BUSINESS.......................................... 16
Section 4.1. Use and Trade Name......................... 16
Section 4.2. Operation of Business...................... 17
Section 4.3. Sign....................................... 18
Section 4.4. Tenant's Warranties........................ 19
Section 4.5. Storage and Office Space................... 19
Section 4.6. Care of Premises........................... 20
Section 4.7. Notice by Tenant........................... 20
Section 4.8. Radius..................................... 20
ARTICLE V......................................................... 20
COMMON AREA.................................................. 20
Section 5.1. Use of Common Area......................... 20
Section 5.2. Common Area Maintenance Expenses........... 21
ARTICLE VI........................................................ 24
REPAIRS AND MAINTENANCE...................................... 24
Section 6.1. Repairs and Maintenance by Landlord........ 24
Section 6.2. Repairs and Maintenance by Tenant.......... 24
ARTICLE VII....................................................... 25
TAXES........................................................ 25
Section 7.1. Tax Liability.............................. 25
Section 7.2. Method of Payment.......................... 26
ARTICLE VIII...................................................... 26
INSURANCE, INDEMNITY AND LIABILITY........................... 26
Section 8.1. Landlord's Insurance Obligations........... 26
Section 8.2. Tenant's Insurance Obligations............. 27
Section 8.3. Mutual Covenant............................ 28
i
<PAGE> 3
Section 8.4. Covenant to Hold Harmless............................28
Section 8.5. Loss and Damage .....................................29
ARTICLE IX..................................................................29
DESTRUCTION OF LEASED PREMISES.........................................29
Section 9.1. Continuance of Lease.................................29
Section 9.2. Reconstruction.......................................30
ARTICLE X...................................................................31
CONDEMNATION...........................................................31
Section 10.1. Eminent Domain......................................31
Section 10.2. Rent Apportionment..................................31
Section 10.3. Temporary Taking....................................31
ARTICLE XI..................................................................31
ASSIGNMENT, SUBLETTING AND ENCUMBERING LEASE...........................31
Section 11.1. No Assignment, Subletting or Encumbering of Lease...31
Section 11.2. Assignment or Sublet................................35
Section 11.3. Transfer of Landlord's Interest.....................35
ARTICLE XII.................................................................35
SUBORDINATION, ATTORNMENT, FINANCING AND ESTOPPEL CERTIFICATE..........35
Section 12.1. Subordination.......................................35
Section 12.2. Attornment..........................................36
Section 12.3. Financing...........................................36
Section 12.4. Estoppel Certificate................................36
Section 12.5. Remedies............................................36
ARTICLE XIII................................................................37
ADVERTISING AND PROMOTION..............................................37
Section 13.1. Promotion Fund......................................37
Section 13.2. Promotion Fund Contribution.........................37
Section 13.3. Advertisements [Intentionally Deleted]..............37
Section 13.4. Network.............................................37
ARTICLE XIV.................................................................38
DEFAULT AND REMEDIES...................................................38
Section 14.1. Elements of Default.................................38
Section 14.2. Landlord's Remedies.................................39
Section 14.3. Bankruptcy..........................................41
Section 14.4. Additional Remedies and Waivers.....................41
Section 14.5. Landlord's Cure of Default..........................41
Section 14.6. Security Interest...................................42
ARTICLE XV..................................................................42
RIGHT OF ACCESS........................................................42
ARTICLE XVI.................................................................43
DELAYS.................................................................43
ARTICLE XVII................................................................43
END OF TERM............................................................43
Section 17.1. Return of Leased Premises...........................43
Section 17.2. Holding Over........................................43
ARTICLE XVIII...............................................................44
COVENANT OF QUIET ENJOYMENT............................................44
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ARTICLE XIX................................................................44
UTILITIES..............................................................44
Section 19.1. Utilities............................................44
Section 19.2. Electricity..........................................44
Section 19.3. Trash and Garbage Removal............................44
Section 19.4. Water and Sewer......................................45
Section 19.5. Grease Interceptors..................................45
ARTICLE XX.................................................................45
MISCELLANEOUS..........................................................45
Section 20.1. Entire Agreement.....................................45
Section 20.2. Notices..............................................45
Section 20.3. Governing Law........................................45
Section 20.4. Successors...........................................46
Section 20.5. Liability of Landlord................................46
Section 20.6. Brokers..............................................46
Section 20.7. Transfer by Landlord.................................46
Section 20.8. No Partnership.......................................46
Section 20.9. Waiver of Counterclaims..............................46
Section 20.10. Waiver of Jury Trial.................................46
Section 20.11. Severability.........................................46
Section 20.12. No Waiver............................................46
Section 20.13. Consumer Price Index.................................47
Section 20.14. Interest.............................................47
Section 20.15. Excavation...........................................47
Section 20.16. Rules and Regulations................................47
Section 20.17. Financial Statements.................................47
Section 20.18. General Rules of Construction........................47
Section 20.19. Recording............................................48
Section 20.20. Effective Date.......................................48
Section 20.21. Headings.............................................48
Section 20.22. Managing Agent.......................................48
EXHIBITS:
Exhibit A Site Plan
Exhibit B Measurement of Leased Premises
Exhibit C Landlord's Work
Exhibit D Tenant's Work
Exhibit E Sign Criteria
Exhibit F Commencement and Expiration Date Declaration
Exhibit G Waiver of Sales Tax Confidentiality
Exhibit H Agreement of Subordination Non-Disturbance and Attornment
Exhibit H-1 Tenant Estoppel Certificate
Exhibit I Menu
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THIS LEASE dated as of this 30th day of June, 1999 (the "Lease") by and
between CONCORD MILLS LIMITED PARTNERSHIP, a Delaware limited partnership, the
address of which is c/o The Mills Corporation, 1300 Wilson Boulevard, Suite
400, Arlington, Virginia 22209 (hereinafter referred to as "Landlord") and
SILICON ENTERTAINMENT, INC., a California corporation, the address of which is
210 Hacienda Avenue, Campbell, California 95008 (hereinafter referred to as
"Tenant").
RECITAL
Landlord hereby leases to Tenant and Tenant hereby hires and takes from
Landlord, the Leased Premises, for the Term commencing on the Commencement
Date, subject to the terms, covenants, conditions and provisions of this Lease.
Landlord shall have the right, at any time prior to the Delivery of Possession
Date of the Leased Premises, by written notice to Tenant, to relocate the
Leased Premises in either direction (from side to side from the outside
boundary of the Leased Premises) by not more than forty (40) feet, and upon any
such relocation, the size and description of the Leased Premises shall be
appropriately modified to reflect any resulting proportional adjustment in the
Rent based upon the change in size of the Leased Premises. If the Commencement
Date is not the first day of a month, Minimum Rent for the month in which the
Commencement Date occurs shall be prorated to the end of the month and paid as
the second monthly installment of Minimum Rent on the first day of the next
month and, after the expiration of the number of years in the Term, the Term
shall expire on the last day of the same month in which the Commencement Date
of the Term occurred, it being the intention of the parties that the Term
expire on the last day of a month. Neither this Lease nor the obligations of
Tenant hereunder shall be affected by a postponement and Landlord shall not be
subject to any liability for failure to make possession of the Leased Premises
available on the Commencement Date. When the Commencement Date has been
determined, Landlord and Tenant shall execute, acknowledge and deliver a
written statement in recordable form specifying the Commencement and Expiration
Dates of the Term and, if there shall have been any changes in the floor area
of the Leased Premises, such statement shall reflect such change or changes.
Said statement upon execution and delivery shall be deemed to be a part of this
Lease.
<PAGE> 6
DATA SHEET
The following references furnish data to be incorporated in the specified
Sections of this Lease and shall be construed to incorporate all of the terms
of the entire Section as stated in this Lease;
(1) SECTION 1.1: DESCRIPTION OF LEASED PREMISES:
Store number: 202, consisting of approximately 7,865 square feet of floor
area as shown on Exhibits A and B attached hereto and made a part hereof.
(2) SECTION 1.2: TERM:
COMMENCEMENT DATE:
The earlier of (i) the later of (A) the Grand Opening, or (B) the date
following the expiration of a one hundred twenty (120) day fixturing
period ("Fixturing Period") following the Delivery of Possession Date
(as defined in Section 3.2), or (ii) the date the Leased Premises is
open for business to the public. It is estimated that the Delivery of
Possession Date will be May 16, 1999.
Original Term: Five (5) Years.
OPTION PERIOD: Five (5) years, provided Tenant's Gross Sales for the twelve
(12) month period ending two hundred ten (210) days prior to the Expiration
Date exceed [***] per square foot.
(3) SECTION 2.1: MINIMUM RENT:
Original Term:
From the Commencement Date and continuing through the expiration of the
Original Term, the sum of [***] annually ([***] psf), payable in equal
consecutive monthly installments of [***] each.
Option Period:
Beginning with the first (1st) year and continuing through the expiration
of the Option Period, the sum of [***] annually ([***] psf), payable in
equal consecutive monthly installments of [***] each.
(4) SECTION 2.2: PERCENTAGE RENT:
Percentage Factor: [***]
Sales Break Point for the Original Term:
From the Commencement Date through the expiration of the Original Term:
[***].
Sales Break Point for the Option Period:
Beginning with the first (1st) year and continuing through the expiration
of the Option Period: [***].
(5) SECTION 2.4: SECURITY DEPOSIT: [***]
(6) SECTION 4.1: PERMITTED USE:
Tenant shall use the Leased Premises for the use set forth below and
for no other purpose:
*** Confidential treatment requested.
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Conducting an interactive entertainment center featuring among other
things, racing simulators and other related retail and entertainment uses.
Such uses may include but shall not be limited to the installation and
operation of simulators and the sale of auto racing, including NASCAR
Silicon Motor Speedway merchandise, NASCAR driver merchandise and other
entertainment merchandise related to NASCAR; and for the sale of snack
food items only and hot and cold non-alcoholic beverages (selections to be
based on Landlord's approval) for on-the-premises consumption, provided
said snack food and beverage service shall not be operated or licensed by
a nationally-recognized fast-food chain. See menu referred to as Exhibit I
attached hereto and made a part hereof. Tenant shall have the right to
conduct group sales events ("Events") from the Leased Premises at which
time a portion of the Leased Premises may be closed to the general public.
During Events Tenant may retain an outside catering service (giving
preference to restaurant operators within the Retail Development) to
provide food and beverage service (including alcoholic beverage service if
Tenant or the caterer obtains all necessary permits) with food items that
are not reflected on Exhibit I.
TRADE NAME: NASCAR Silicon Motor Speedway and/or Silicon Motor Speedway
(7) SECTION 13.2: FUND CONTRIBUTION: [***] psf of floor area in the Leased
Premises
GRAND OPENING FEE (INITIAL CONTRIBUTION): [***] psf of floor area in the
Leased Premises
(8) GUARANTOR: N/A
ADDRESS:
(9) GRAND OPENING DATE: September 16, 1999
(10) TEMPORARY CHARGES: [***] psf of floor area in the Leased Premises
(11) CONSTRUCTION CHARGEBACKS: $ N/A
(12) CONSTRUCTION ALLOWANCE: [***]
*** Confidential treatment requested.
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ARTICLE I
GRANT AND TERM
SECTION 1.1. LEASED PREMISES. (a) Landlord, in consideration of the
Rent (as defined in Section 2.3) to be paid and the covenants to be performed by
the Tenant, does hereby lease and demise to Tenant, and Tenant hereby rents and
hires from Landlord for the Term herein set forth, the Leased Premises which are
described as set forth in the Data Sheet attached hereto, in the retail
development designated as Concord Mills or by such other name as Landlord may
from time to time hereafter designate (hereinafter "Retail Development"). The
term "State" as used herein shall mean the State or Commonwealth of North
Carolina. For all purposes in this Lease, a "Major Tenant" is any occupant of
20,000 square feet or more of floor area in the Retail Development and a "Major
Tenant Space" is any space in the Retail Development containing 20,000 square
feet or more. It is agreed that, wherever the term "Shopping Center" is used
herein, it shall mean the Retail Development excluding the Major Tenant Spaces,
except as otherwise specifically stated herein. Exhibit A sets forth the general
layout of the Retail Development. Landlord does not warrant or represent that
the Retail Development or the Leased Premises will be constructed exactly as
shown thereon or that it will be completed by a specific date, but Landlord does
warrant that the Leased Premises and the Retail Development will have the
general configuration shown on Exhibit A. Notwithstanding anything contained in
this Lease to the contrary, Landlord shall have the right, at any time and from
time to time, without notice to or consent of Tenant, and without in any manner
diminishing Tenant's obligations under this Lease, to make alterations or
additions to, and build additional stories on the building in which the Leased
Premises are located and to build adjoining the same, to construct other
buildings and improvements of any type in the Retail Development or the common
areas, or any part thereof, including the right to locate and/or erect thereon
permanent or temporary kiosks and structures, to enlarge the Retail Development,
and to make alterations therein or additions thereto (provided in no event will
any kiosk or other structure be located directly in front of the registration
desk within the Leased Premises other than the information booth which has been
previously disclosed to Tenant), to build additional stories on any building or
buildings within the Retail Development, and to build adjoining thereto, to
construct decks or elevated parking facilities and free standing buildings
within the parking lot areas of the Retail Development, and to change the size,
location, elevation and nature of any of the stores in the Retail Development or
the common areas or any part thereof. In exercising its options hereunder,
Landlord agrees to use reasonable efforts (in light of the then existing
circumstances) not to materially and unreasonably interfere with the visibility
of and access to the Leased Premises from the enclosed mall: it being understood
that any structure placed in the common areas shall not block Tenant's signage
located on the storefront signband. In the event Landlord elects to enlarge the
Retail Development, or any part thereof, any additional area may be included by
Landlord in the definition of the Retail Development for purposes of this Lease.
Landlord shall also have the general right from time to time to include within
and/or to exclude from the defined Shopping Center any existing or future areas
and the floor area of the Shopping Center shall be accordingly adjusted. The
premises leased to Tenant are herein referred to as the "Leased Premises". The
approximate location of the Leased Premises is cross-hatched on the lease plan
of the Retail Development attached hereto and made a part hereof as Exhibit A.
This Lease of the Leased Premises is subject to all applicable building
restrictions, planning and zoning ordinances, governmental rules and
regulations, existing underlying leases, and all other encumbrances, covenants,
restrictions, easements and agreements affecting the Retail Development and the
terms and provisions of certain master declaration, reciprocal easement and
operating agreements now or hereafter entered into by Landlord.
Landlord acknowledges that Tenant's customers shall be permitted to
queue in the common areas in front of the Leased Premises while waiting for
access to the Leased Premises ("Waiting Area"). The Waiting Area shall be in a
location designated by Landlord and reasonably approved by Tenant, provided said
Waiting Area permits Tenant's customers to queue in an orderly manner without
obstructing pedestrian traffic in the common areas and/or unreasonably
disturbing the operation of other tenants in the Retail Development.
In addition to the Leased Premises, Landlord shall grant Tenant a
license for a location in the common area of the Shopping Center which shall be
used by Tenant for the display of a full size stockcar, including sign tripods
("Display Area"). The location of the Display Area shall be selected
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by Landlord, but such location shall always be with in the area labeled on
Exhibit A-1 as "Display Area". In no event shall Tenant be obligated to pay
additional Rent for use of the Display Area; provided, however, that any
utility costs associated with the illuminated display shall be the sole
responsibility of Tenant. Tenant shall, at its sole cost and expense, construct
the illuminated display in accordance with approved plans and specifications,
which plans and specifications shall be submitted to Landlord for approval
pursuant to the submittal requirements and process outlined in the Tenant
Handbook. During the Term, Tenant shall repair and maintain the Display Area in
accordance with Section 6.2 of this Lease. In addition, Tenant shall be
required to carry insurance for the Display Area providing for the coverage set
forth in Section 8.2(a) of this Lease. Upon the Expiration Date (hereinafter
defined) or the earlier termination of this Lease, Tenant shall be responsible
for the complete removal of the display and shall make any necessary repairs
to the Display Area in accordance with Tenant's obligations set forth in
Section 17.1 of this Lease.
Subject to the provisions of Section 5.1, Tenant shall enjoy a
non-exclusive easement, right and privilege for Tenant and its customers,
employees and invitees and the customers, employees and invitees of any
assignee, sublessee, concessionaire or licensee of Tenant, to use the common
areas of the Shopping Center, with Landlord and the other tenants and occupants
of floor area within the Shopping Center and their respective customers,
employees and invitees. Furthermore, Landlord agrees that any additions,
alterations or modifications to the Shopping Center by Landlord shall not
adversely affect access to, or visibility of the Leased Premises and, except as
otherwise provided for herein, Tenant shall retain substantially the same
relative position with respect to Major Tenants of the Shopping Center as of
the Commencement Date.
(b) After the Commencement Date (as defined in Section 3.2), Landlord
reserves the right to relocate Tenant for the purpose of (i) the addition or
expansion of a Major Tenant or (ii) the redevelopment or expansion of the Retail
Development involving the addition of a minimum of 100,000 square feet of GLA.
Landlord shall provide Tenant with not less than sixty (60) days written notice
of such relocation (the "Relocation Period") during which Landlord shall offer
to Tenant such alternative location(s) (with approximately the same floor area,
configuration and at least fifty feet (50') of frontage) as may be available
within that area of the Retail Development labeled "Relocation Zone" on Exhibit
A-2. In the event the parties agree on a specific location, then this Lease
shall be amended by substituting the new location for the present location and
the square footage, Minimum Rent and Sales Break Point shall be proportionately
adjusted based upon the change in the size of the Leased Premises and Landlord
and Tenant shall agree upon a mutually acceptable timeframe for the completion
of work in the new premises and the relocation of the Tenant to the new
premises. Landlord shall, at Landlord's cost and expense, complete the leasehold
improvements to the new location in accordance with the working drawings
originally approved by Landlord with respect to Tenant's Work in the original
Leased Premises (including, without limitation finish work and the installation
of fixtures, simulators and other merchandise) and Tenant shall relocate to the
new location and, within sixty (60) days after delivery of the new location to
Tenant ("Relocation Fixturing Period"), open for business in the new location
("Relocation Date"). Since Tenant will need to move its equipment, including
simulators from one space to the other, Tenant shall be permitted to close for a
period not to exceed ten (10) days for the purpose of moving the equipment and
installing it in the new leased premises ("Relocation Closure"), and during such
Relocation Closure Tenant's Rent shall abate. In the event that Tenant is not
able to operate in either the original or the relocated Leased Premises during
the Relocation Fixturing Period because of the removal and installation of the
simulators and other equipment, Rent shall abate until Tenant reopens but in no
event after the expiration of the Relocation Fixturing Period. Notwithstanding
the foregoing, Tenant may elect to have Landlord construct the relocated space
under a new prototype design, but Tenant shall bear the additional costs
required as a result of the election of the new design. Landlord recognizes that
the installation of simulators is a specialized task for which Tenant's experts
will be required and Landlord shall reimburse Tenant for the reasonable internal
costs of using Tenant's personnel for the completion of such work.
In the event Landlord offers to Tenant at least one alternative location
with approximately the same floor area, configuration and at least fifty feet
(50') of frontage and Landlord and Tenant are unable to agree on an alternative
location, then within thirty (30) days after the expiration of the sixty (60)
day period set forth above Landlord shall either (A) terminate this lease by
providing Tenant ninety (90) days prior notice, which termination shall be
effective on the later of (i) ninety (90) days after notice from Landlord of
the termination or (ii) the date that Tenant actually vacates
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the Leased Premises ("Termination Date") or (B) withdraw the request for
relocation. In the event of such termination, Landlord shall pay to Tenant,
within thirty (30) days following the Termination Date, a sum equal to the then
unamortized cost of Tenant's leasehold improvements which have been paid for by
Tenant, such amortization to be on a straight line basis over the Original Term
less the value of all simulators equipment removed by Tenant for re-use plus all
reasonable costs associated with the moving and storage for up to three (3)
months of the simulators and other equipment in the Leased Premises, provided
Tenant shall furnish to Landlord such backup information as Landlord may
reasonably require. Tenant shall deliver possession of the Leased Premises to
Landlord on or before the Termination Date and/or the Relocation Date in "as is"
condition excepting the provisions of Sections 3.5 and 17.1. Tenant shall pay
all charges which are due and owing or which shall accrue up to such Termination
Date or Relocation Date (which charges shall be paid to Landlord within thirty
(30) days of such Termination Date or Relocation Date) and Tenant shall be
released from any and all further obligations pursuant to this Lease accruing
after such Termination Date or Relocation Date with respect to the vacated
Leased Premises, except as otherwise provided in Articles V and VII; however, in
the event of relocation, Tenant shall remain liable for all obligations accruing
under this Lease after the Relocation Date.
(c) The square footage of the Leased Premises (sometimes herein referred to
as the gross leasable floor area or GLA) shall be measured as defined in Exhibit
B. The actual square footage in the Leased Premises shall be determined by
Landlord's architect. If Tenant disagrees with the square footage so determined,
Tenant may advise Landlord in writing within ten (10) days that it contests the
same and retain an architect to remeasure the Leased Premises. If Landlord's
architect and Tenant's architect do not agree, then the two architects shall
retain a third architect whose decision shall be final and binding. The agreed
to square footage shall be binding upon both parties hereto, and such determined
square footage shall be used in all calculations based on square footage
throughout this Lease. If the floor area determined in accordance with the
preceding sentence varies from the square foot floor area originally set forth
in the Data Sheet, the Minimum Rent set forth in Section 2.1 hereof shall be
adjusted by multiplying the Minimum Rent by a fraction, the numerator of which
is the square foot floor area determined by Landlord's architect and the
denominator of which is the square foot floor area originally set forth in the
Data Sheet, and Tenant shall be obligated to pay such Minimum Rent, as adjusted,
from the Commencement Date, subject to further adjustments as provided in this
Lease but in no event shall Tenant be obligated to pay Minimum Rent on more than
one hundred ten (110) additional square feet of GLA. Each monthly installment
provided for in Section 2.1 shall be recomputed and shall be that dollar amount
which results from dividing the adjusted Minimum Rent by twelve (12). Any and
all references in this Lease to Minimum Rent (or the monthly installments
thereof) shall be deemed to be references to the Minimum Rent as computed by
application of this Section 1.1, subject, however, to the adjustments set forth
elsewhere in this Lease. For purposes of this Lease, in determining the gross
leasable floor area or the gross leased and occupied floor area of the Shopping
Center, there shall be excluded therefrom project areas and offices, common
areas and/or areas under Landlord's control (e.g., electrical/utility rooms,
etc.). The exterior walls, roof, storefront and the area beneath the Leased
Premises are not demised hereunder, and the use thereof, together with the right
to install, maintain, use, repair and replace pipes, ducts, conduits, wires,
people counters, tunnels, sewers and structural elements leading through the
Leased Premises in locations which will not materially interfere with Tenant's
use thereof and serving other parts of the Retail Development are hereby
reserved to Landlord. Landlord reserves an easement above Tenant's finished
ceiling or light line to the roof for general access purposes and in connection
with the exercise of Landlord's other rights under this Lease. Notwithstanding
anything contained in this Lease to the contrary, if as a result of Landlord's
exercise of the foregoing rights Tenant is prevented from operating its business
within the Leased Premises for three (3) or more consecutive days, Landlord
shall after written notice from Tenant to Landlord, abate Minimum Rent after
such three (3) days of disruption on a day-to-day basis until Tenant is able to
operate its business in the Leased Premises.
SECTION 1.2. TERM. The Term of this Lease shall be for a period commencing
on the Commencement Date, and expiring at 11:59 p.m. local time on the final day
of the month in which the Original Term or the Option Period, if exercised,
expires or other specified date as set forth in the Data Sheet, unless sooner
terminated in accordance with the provisions hereof (the "Expiration Date").
Unless otherwise specified in this Lease, the use of the word "Term" shall be
deemed to include both the Original Term and the Option Period, if exercised.
The term "full year" and "year" as used in this Lease shall mean consecutive
periods of twelve (12) months each following the
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Commencement Date. For all purposes of this Lease, the term "Lease Year"
shall have the following meaning: the first Lease Year shall be a period
beginning with the Commencement Date and ending on the 31st day of December next
following the Commencement Date, and after the first Lease Year, the term Lease
Year shall mean a fiscal period of twelve (12) consecutive calendar months
commencing on January 1 of each calendar year, except that the last Lease Year
shall terminate on the Expiration Date or sooner termination of this Lease.
Lease Years containing 365 days or more shall be referred to as "full Lease
Years." If the Leased Premises are not delivered to Tenant on or before the
expiration of twelve (12) months after the date of Landlord's execution of this
Lease then either party may cancel and terminate this Lease upon sixty (60) days
prior written notice to the other, in which event neither party shall have any
further obligation or liability to the other; provided, however, that if
Landlord has commenced construction of the Shopping Center, then Landlord shall
not be permitted to terminate in the foregoing manner. Following the
Commencement Date of this Lease, Landlord may submit to Tenant a Commencement
and Expiration Date Declaration in the form attached hereto as Exhibit F,
specifying the information called for in said form, and Tenant shall execute
such Declaration within thirty (30) days following submission for purposes of
certifying such information; provided, however, that the Declaration shall not
be rendered ineffective by Tenant's failure to execute same.
Provided Tenant is not in default (after expiration of any cure or grace
period provided herein) as of the date of exercise hereof. Tenant shall have the
option to extend the Term hereof (the "Option") for one (1) additional period of
five (5) years (the "Option Period"). The Option shall be exercised, if at all,
by written notice to Landlord ("Notice") at least one hundred eighty (180) days
prior to the expiration of the Original Term. All terms and conditions of this
Lease shall apply during the Option Period except the Minimum Rent and Sales
Break Points shall be as scheduled in Sections 2.1 and 2.2 hereof. In the event
that Tenant does not exercise the Option by the required date, then such Option
shall become null and void and be of no further force or effect. In addition, if
this Lease is transferred or assigned, in whole or in part, as permitted in
Section 11.1 hereof, or if the Leased Premises or any part thereof be sublet or
occupied by any person or entity other than Tenant, then such Option shall
become null and void and be of no further force or effect, unless the Lease has
been transferred with the prior written consent of Landlord or pursuant to a
transfer of substantially all of the assets of Tenant not requiring the approval
or consent of Landlord.
If Tenant's Gross Sales during the twelve (12) month period ending two
hundred ten (210) days prior to the Expiration Date do not exceed [***] per
square foot of floor area in the Leased Premises, then any Notice by Tenant of
the Option shall be null and void and Tenant's Notice shall have no force or
effect. Tenant shall furnish to Landlord, concurrently with its Notice, a
statement certified by an authorized representative or financial officer of
Tenant setting forth the amount of Tenant's Gross Sales for the said twelve (12)
month period.
Notwithstanding the foregoing, in the event Tenant does not achieve Gross
Sales (as hereinafter defined) of at least [***] per square foot during the
third year of the Term hereof, then Landlord and Tenant for a period of thirty
(30) days following the end of the third year, shall each have the option, upon
one hundred eighty (180) days prior written notice to the other party, of
terminating this Lease ("Termination Option") provided, however, that Tenant
shall not be entitled to terminate this Lease if Tenant is in default of this
Lease. In the event Tenant fails to submit a certified report of annual Gross
Sales within twenty (20) days after written notice of its failure to submit such
report within the time period required pursuant to Section 2.2 of this Lease,
then Landlord may use such information as Landlord shall have available to
permit Landlord to make a determination as to the amount of Gross Sales achieved
by Tenant during the period covered by Landlord's option to terminate, and such
information shall be the basis for Landlord exercising its Termination Option
and Tenant shall not be permitted to reinstate this Lease after termination for
any reason or cause whatsoever, including, but not limited to, the submittal by
Tenant of a subsequent sales report either certified or uncertified. In the
event that neither party exercises its Termination Option within the required
time period, then each such Termination Option shall, upon expiration of the
applicable period, become null and void and be of no further force or effect. In
the event either party exercises the foregoing Termination Option within the
required time period, this Lease shall terminate upon expiration of the one
hundred eighty (180) day period subject, however, to the payment by Tenant to
Landlord of all sums then due and owing or having accrued to Landlord. In the
event that Tenant exercises the Termination Option
*** Confidential treatment requested.
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provided for herein. Tenant shall pay to Landlord the unamortized portion of the
Construction Allowance (as hereinafter defined).
In the event that Tenant can prove that Tenant's Gross Sales are below
[***] per square foot as the result of an act or omission on the part of
Landlord, then Landlord shall not be permitted to exercise the Termination
Option provided in the immediately preceding paragraph.
SECTION 1.3. OPENING. Subject to delays as described in Article XVI.
Tenant covenants and agrees to complete its construction within the Leased
Premises in accordance with the provisions of this Lease, to satisfy the
requirements for issuance of a certificate of acceptance pursuant to Exhibit D
attached hereto and made a part hereof, and to open its store for business to
the public not later than the Commencement Date. Notwithstanding the foregoing,
Landlord hereby notifies Tenant that the anticipated date of the grand opening
of the Shopping Center (the "Grand Opening") is the date set forth on the Data
Sheet, Tenant shall be obligated to open its store for business to the public on
or before the later of (a) the expiration of the Fixturing Period or (B) the
Grand Opening. Tenant shall not be permitted to open for business to the public
prior to the Grand Opening without the prior written consent of Landlord which
consent shall be at Landlord's sole discretion.
SECTION 1.4. LATE OPENING. In the event Tenant shall fail to open its
store for business to the public upon the Commencement Date for reasons other
than Delays as described in Article XVI, or delays created by Landlord, then in
order to compensate Landlord for its loss, Tenant shall pay to Landlord as
additional rent (as defined in Section 2.3) over and above the Minimum Rent and
all other charges to be paid by Tenant to Landlord pursuant to this Lease, a sum
in an amount equal to [***] per day for the Commencement Date and each day after
the Commencement Date that Tenant shall have failed to open its store for
business. This remedy shall be in addition to any and all other remedies
provided for in this Lease in the event of such failure to open. Such additional
late opening rent shall be deemed to be in lieu of any Percentage Rent that
might have been earned during the period of Tenant's failure to open.
ARTICLE II
RENT AND DEPOSIT
SECTION 2.1. MINIMUM RENT. During the entire Term of this Lease, Tenant
shall pay annual minimum rental ("Minimum Rent") for the Leased Premises from
the Commencement Date of this Lease in the amount set forth in the Data Sheet
attached hereto, which sum shall be payable by Tenant in equal consecutive
monthly installments in the sum set forth in the Data Sheet attached hereto, on
or before the first day of each month, in advance. The Minimum Rent and each of
the monthly installments called for hereunder shall be payable to Landlord,
without demand, deduction, set-off or counter-claim, except as otherwise
provided herein or permitted by applicable law. The first installment of Minimum
Rent shall be paid by Tenant on or before the Commencement Date. If the
Commencement Date occurs on other than the first day of a month, the second
installment of Minimum Rent shall be prorated at a daily rate on the basis of a
thirty (30) day month.
On the Commencement Date, if either of the following conditions have not
been satisfied: (1) at least five (5) Major Tenants are open or ready to open
for business: or (2) the "Required Occupancy Level" (as hereinafter defined) has
been achieved, then Tenant's obligation for payment of Minimum Rent shall abate
and Tenant shall pay to Landlord, in lieu thereof, Interim Rent on the basis of
the lesser of (A) the scheduled Minimum Rent and (B) [***] of all of Tenant's
Gross Sales (as defined in Section 2.2 of this Lease) until both of the
conditions in (1) and (2) above have been initially satisfied; provided,
however, Tenant shall not be entitled to such abatement of Minimum Rent if
Tenant fails to open its store in the Leased Premises to the general public on
or before the Commencement Date of the Term hereof or if Tenant shall otherwise
be in default of this
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Lease. Said Interim Rent shall be paid to Landlord within ten (10) days
following the end of each calendar month, at which time Tenant shall also be
required to submit an unaudited statement of Tenant's Gross Sales for such
calendar month and for the Lease Year to date. All other terms and conditions
of this Lease shall be applicable during such period. For purposes of this
paragraph, the term 'Required Occupancy Level' shall mean occupants of at least
sixty-five percent (65%) of the gross leasable floor area of the Shopping
Center are open for business, or instead, at Landlord's sole option. 'Required
Occupancy Level' shall mean sixty five percent (65%) of the total number of
stores shown on the then existing lease plan for the Shopping Center, are
occupied and are open or ready to open for business.
In addition, Landlord hereby represents and warrants to Tenant that it has
a fully executed lease for a Bass Pro facility, Jillian's and a multi-plex
theater at the Retail Development ("Key Stores"). In the event that less than
two of the Key Stores have opened for business within six (6) months of the
Commencement Date then Tenant's obligation for payment of Minimum Rent shall
abate and Tenant shall pay to Landlord, in lieu thereof, Interim Rent on the
basis of the lesser of (A) [***] and (B) [***] (as defined in Section 2.2 of
this Lease) until at least two (2) of the Key Stores are initially open for
business; provided, however, Tenant shall not be entitled to such abatement of
Minimum Rent if Tenant fails to open its store in the Leased Premises to the
general public on or before the Commencement Date or if Tenant shall otherwise
be in default of this Lease. Said Interim Rent shall be paid to Landlord within
ten (10) days following the end of each calendar month, at which time Tenant
shall also be required to submit an unaudited statement of Tenant's Gross Sales
for such calendar month and for the Lease Year to date. All other terms and
conditions of this Lease shall be applicable during such period. In the event
that at least two (2) of the Key Stores have not initially opened for business
within eighteen (18) months after the Commencement Date, then at the end of such
eighteen (18) moth period. Tenant may elect to terminate this Lease by providing
Landlord within thirty (30) days of the end of such eighteen (18) month period,
written notice of its intention to so terminate the Lease ("Key Store
Termination Notice") or Tenant may elect to remain in the Leased Premises but
must commence paying the then applicable scheduled Minimum Rent as provided for
in the Data Sheet of this Lease. In the event that Tenant timely delivers the
Key Store Termination Notice, this Lease shall terminate one hundred and eighty
(180) days from the date of the Key Store Termination Notice or on such earlier
date as may be mutually agreed to between the parties and this Lease and all of
the unaccrued rights and obligations of the parties to it shall cease and
terminate, as fully and effectively as though the date agreed to were the
Expiration Date. In such event, Landlord and Tenant shall execute a Termination
Agreement setting forth the terms of such termination.
SECTION 2.2. PERCENTAGE RENT. (a) During and for each Lease Year, Tenant
shall pay annual percentage rent ("Percentage Rent") equal to the Percentage
Factor (see Data Sheet) multiplied by all "Gross Sales" resulting from business
conducted in, on or from the Leased Premises during such Lease Year in excess
of the applicable Sales Break Point set forth in the Data Sheet. In any Lease
Year where there is more than one applicable Sales Break Point, for purposes of
computing annual Percentage Rent the following calculation shall be used: each
Sales Break Point which was effective during any such Lease Year shall be
multiplied by a fraction, the numerator of which is the number of days in the
Lease Year that such Sales Break Point was effective and the denominator of
which is the actual number of days in such Lease Year (herein the "Adjusted
Break Point") and the sum of the Adjusted Break Points shall be the Sales Break
Point for such Lease Year. "Gross Sales" is defined to mean the total amount of
the actual sales price, whether for cash or otherwise, of all sales of
merchandise or services arising out of or payable on account of (and all other
receipts or amounts receivable whatsoever with respect to) all the business
conducted in, on, or from the Leased Premises by or on account of Tenant or any
sublessee, assignee or concessionaire of Tenant for cash or otherwise,
including all orders for merchandise taken from or filled at or from the Leased
Premises, including all deposits not refunded to customers. A "sale" shall be
deemed to have been consummated for purposes of this Lease, and the entire
amount of the sale price shall be included in Gross Sales, at such time as (i)
the transaction is initially reflected in the books or records of Tenant, or
any sublessee, assignee or concessionaire of Tenant, or (ii) Tenant or such
other entity receives all or any portion of the sales price, or (iii) the
applicable goods or services are delivered to the customer, whichever first
occurs. Tenant shall record at the time of each sale or transaction, in the
presence of the customer, all receipts from such sale or other
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transaction, whether for cash, credit or otherwise, in a cash register or cash
registers having a cumulative total, which shall be sealed in a manner approved
by Landlord and which shall possess such other features as shall be required by
Landlord. There shall be no deduction allowed for direct or indirect discounts,
rebates, or other reductions on sales, unless generally offered to the public on
a uniform basis. Tenant may deduct from Gross Sales discount sales to employees,
bad debts when written off the books of Tenant and charges paid to credit card
companies, as otherwise provided below. Tenant may also exclude from Gross Sales
any transfer of goods between Tenant's other stores and returns to shippers or
manufacturers. The term "Gross Sales" shall exclude, however, proceeds from any
sales tax, gross receipts tax or similar tax, by whatever name called which are
separately stated and in addition to the purchase price, bona fide transfers of
merchandise from the Leased Premises to any other stores or warehouses of
Tenant, refunds given to customers for merchandise purchased at the Leased
Premises and returned or exchanged, and sales of Tenant's fixtures and equipment
not in the ordinary course of Tenant's business. The term "merchandise" as used
in this Lease shall include food and beverages if Tenant is permitted to sell
such items pursuant to Section 4.1 hereof.
The term "Gross Sales" shall not include, however, the following: (i) the
sales price of all merchandise returned and accepted for full credit or the
amount of the cash refund or allowance made thereon; (ii) the sums and credits
received in settlement of claims for loss or damage to merchandise, (iii) the
consideration received in connection with a sale of inventory which occurs other
than in the ordinary course of Tenant's business, including, but not limited to,
a sale in bulk or to a jobber, liquidator or assignee; (iv) sales taxes,
so-called luxury taxes, excise taxes, gross receipt taxes, and other taxes now
or hereafter imposed upon the sale or value of merchandise or services, whether
added separately to the selling price of the merchandise or services and
collected from customers or included in the retail selling price; (v) receipts
from public telephones, vending machines, sales of money orders, and the
collection of public utility bills; (vi) bankcard discounts (e.g., Visa,
MasterCard, etc.), interest, carrying charges, or other finance charges in
respect of sales made on credit; (vii) sales of fixtures, trade fixtures, or
personal property that are not merchandise held for sale at retail; (viii) sales
to senior citizens at discount; (ix) revenue received from mailing, alterations,
delivery or other services performed on a non-profit basis for the benefit of
customers; (x) Tenant's accounts receivable, not to exceed five percent (5%) of
Gross Sales, which have been determined to be uncollectible for federal income
tax purposes during the applicable lease year, provided however, that if such
accounts are actually collected in a later lease year, the amount shall be
included in the Gross Sales for such later lease year; (xi) rents, subrents or
other consideration received in connection with a permitted assignment,
sublease, license, concession or other transfer of any portion of the store
(however, Gross Sales of any such transferee shall be included) and license fees
otherwise received by Tenant in connection with a third party license agreement;
(xii) amounts received for merchandise transferred to any other place of
business of Tenant (or its subtenants, concessionaires and/or licensees) or to
any business organization affiliated with Tenant wherever located, provided such
merchandise is not used to fill a sale made in the store; (xiii) discounts given
for promotional coupons that are redeemed from time to time (xiv) amounts
received in connection with remote site promotional activities; (xv) promotional
fees earned by Tenant with respect to goods or services offered for sale; and
(xvi) amount required to be paid by Tenant under any agreement related to
Tenant's use of the NASCAR name, not to exceed two percent (2%) of Gross Sales.
(b) Tenant shall keep at the Leased Premises or at Tenant's executive
offices within the continental United States a full and accurate set of books
and records adequately showing the amount of Gross Sales in each Lease Year. The
books and records to be kept by Tenant shall include, without limitation, (i)
cash register tapes, including tapes from temporary registers; (ii) serially
pre-numbered sales slips; (iii) detailed original records of any exclusions or
deductions from Gross Sales; (iv) sales tax records; and (v) such other records,
if any, which would normally be examined by an independent accountant pursuant
to accepted auditing standards in performing an audit of Tenant's sales. Such
books and records shall be kept in accordance with generally accepted accounting
principles and practices, may be saved in microfiche or an electronic storage
medium, and shall be retained by Tenant for a period of not less than two (2)
years following the end of the Lease Year to which they have reference. When and
as Landlord may reasonably require (but no more than once per Lease Year
following the first Lease Year (if the first year is a partial Lease Year)
unless required by the city, county or State), Tenant shall also furnish to
Landlord any and all
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statements, information, and copies of sales tax reports and returns which
separately show financial data for the Leased Premises, and inventory records
and other data evidencing Gross Sales. Within twenty (20) days following the end
of each calendar month of the Term hereof Tenant shall submit to Landlord an
unaudited statement of Gross Sales for such calendar month. Within twenty (20)
days following the end of the month in which Tenant's Gross Sales for the
Lease Year to date exceed the Sales Break Point, and each month thereafter,
Tenant shall pay to Landlord Percentage Rent and shall submit to Landlord a
statement certified by Tenant setting forth the Gross Sales for each such
period. Within forty-five (45) days after the close of each Lease Year, Tenant
shall furnish to Landlord a statement certified by an authorized representative
or financial officer of Tenant setting forth the amount of Gross Sales during
such Lease Year and showing the amount of Percentage Rent required to be paid by
Tenant for such Lease Year. The full amount of the Percentage Rent due shall be
paid to Landlord no later than sixty (60) days after the end of each Lease Year
and any excess Percentage Rent paid shall be credited against Tenant's next due
Rent payment, except for the final Lease Year of the Term for which any excess
shall be refunded to Tenant. Landlord and/or Landlord's auditor shall have the
right, at any time after thirty (30) business days notice but no more than once
per Lease Year after the first Lease Year (if the first Lease Year is a partial
Lease Year), to inspect and/or audit the records of Tenant relating to Gross
Sales. If the Gross Sales exceed those reported, Tenant shall immediately pay
any deficiency in Percentage Rent owing to Landlord. If Gross Sales vary from
those reported by three percent (3%) or more, Tenant shall pay Landlord's cost
of inspection and audit. If Gross Sales vary from those reported by (i) five
percent (5%) or more in any one (1) Lease Year, or (ii) three percent (3%) or
more for any two (2) Lease Years out of any five (5) Lease Years, then Landlord
shall have the right, at its sole option, to terminate this Lease, with Tenant
remaining liable for sums due and owing under this Lease for the balance of the
Term provided, however, that Landlord shall be permitted to terminate this Lease
if Landlord can prove that such misstatement was a deliberate act. Tenant agrees
that in the event Tenant shall fail to timely submit a Gross Sales statement as
required by this Section 2.2(b), Tenant shall pay on demand a late fee of Fifty
and 00/100ths Dollars ($50.00) per late statement, as additional rent.
(c) In the event that Tenant shall fail to operate its business in the
Leased Premises in the manner and on each day as required pursuant to Article
IV hereof, then, for the purpose of computing the Percentage Rent for such Lease
Year affected by Tenant's failure to operate, the Sales Break Point for such
Lease Year shall be adjusted by multiplying the Sales Break Point otherwise
applicable for such Lease Year by a fraction, the numerator of which shall be
the actual number of days in such short Lease Year or the actual number of days
in such Lease Year during which Tenant was open for business and operating in
accordance with Article IV, and the denominator of which shall be "360".
In the event that the first Lease Year is less than six (6) months in
length, then the Percentage Rent covering such Lease Year shall be paid on Gross
Sales in excess of the Sales Break Point computed on a pro rated basis for the
period beginning on the Commencement Date of the Term and ending on the
succeeding December 31st.
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SECTION 2.3. PAYMENTS BY TENANT. Throughout the Term of this Lease, Tenant
shall pay to Landlord, without demands, deductions, set-offs or counterclaims
(except as otherwise provided for herein or permitted by applicable law), the
Rent, which is hereby defined as the sum of the Minimum Rent, Percentage Rent
and all additional rent, when and as the same shall be due and payable
hereunder. Unless otherwise stated, all sums of money or charges of any kind or
nature, in addition to Minimum Rent and Percentage Rent, payable by Tenant to
Landlord pursuant to this Lease or the Exhibits attached hereto are defined as
"additional rent" and are due thirty (30) days after the rendering of an invoice
therefor, without any deductions, set-offs or counterclaims, and failure to pay
such sums of money or charges shall carry the same consequences as Tenant's
failure to pay Rent. All payments and charges required to be made by Tenant to
Landlord hereunder shall be payable in United States funds, at the address
indicated on page 1 of this Lease, unless otherwise specified by written notice
from Landlord to Tenant. No payment by Tenant or receipt by Landlord of a lesser
amount than the correct Rent shall be deemed to be other than a payment on
account and no endorsement or statement on any check or other communication
accompanying a check for payment of any amounts payable hereunder shall be
deemed an accord and satisfaction, and Landlord may accept such check in payment
without prejudice to Landlord's right to recover the balance of any sums owed by
Tenant hereunder or to pursue any other remedy available in this Lease, or under
law, against Tenant.
SECTION 2.4. SECURITY DEPOSIT. The amount set forth in the Data Sheet as a
security deposit is payable by Tenant to Landlord upon Tenant's execution of
this Lease, which sum shall be held by Landlord as security against any default
by Tenant in the performance of the covenants, conditions and agreements of this
Lease. The security deposit may, at Landlord's option, be applied by Landlord
against any default in any of the terms, provisions or conditions of this Lease.
Landlord shall not be obligated to keep such security deposit in a separate fund
but may commingle the security deposit with its own funds. A
mortgagee-in-possession of the Leased Premises, or any interest therein, through
public or private foreclosure or the acceptance of a deed in lieu thereof, shall
have no liability to Tenant for return of all or any portion of the security
deposit, unless, and then only to the extent that, such mortgagee has actually
received all or any portion of Tenant's security deposit. In the event Landlord
applies the security deposit in whole or in part against a default by Tenant,
Tenant shall, upon demand by Landlord, deposit sufficient funds to maintain the
security deposit in the initial amount. The failure of Tenant to maintain the
security deposit in the initial amount as stated shall constitute a failure to
pay Rent and shall carry with it the consequences set forth under Article XIV
hereof. Upon the expiration of the Term hereof, the security deposit, if not
applied toward the payment of Rent in arrears or toward the payment of damages
suffered by Landlord by reason of Tenant's breach of this Lease, is to be
returned to Tenant without interest, except as provided by law, but in no event
is such security deposit to be returned until Tenant has vacated the Leased
Premises, delivered possession thereof to Landlord, and fully satisfied Tenant's
obligations under this Lease. Notwithstanding the acceptance by Landlord of
Tenant's security deposit, this Lease shall not be deemed effective until the
Effective Date (as defined in Section 20.20).
SECTION 2.5. LATE CHARGE. In the event any Rent or sums required hereunder
to be paid are not received on or before the fifth (5th) calendar day after the
same are due, then, for each and every late payment, Tenant shall immediately
pay, as additional rent, a late charge equal to the greater of (a) [***], (b)
[***] per day for each day after the date due that such payment has not been
received by Landlord or (c) [***] per month of the total receivable balance of
Tenant outstanding. In the event of Tenant's failure to pay the foregoing late
charge, Landlord may deduct said charge from the Security Deposit set forth in
Section 2.4 hereof. The provisions herein for late charges shall not be
construed
*** Confidential treatment requested.
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to extend the date for payment of any sums required to be paid by Tenant
hereunder or to relieve Tenant of its obligation to pay all such sums at the
time or times herein stipulated. Notwithstanding the imposition of such late
charges pursuant to this Section 2.5, Tenant shall be in default under this
Lease if any or all payments required to be made by Tenant are not made on or
before the time due and as stipulated in Article XIV, and neither the demand
for, nor collection by, Landlord of such late charges shall be construed as a
cure of such default on the part of Tenant. It is agreed that the said late
charge is a fair and reasonable charge under the circumstances and shall not be
construed as interest on a debt payment. In the event any charge imposed
hereunder or under any other section of this Lease is either stated to be or
construed as interest, then no such interest charge shall be calculated at a
rate which is higher than the maximum rate which is allowed under the usury
laws of the State, which maximum rate of interest shall be substituted for the
rate in excess thereof, if any, computed pursuant to this Lease.
ARTICLE III
PREPARATION OF LEASED PREMISES
SECTION 3.1. LANDLORD'S WORK. Landlord shall construct the building
wherein the Leased Premises are to be located and perform the work described in
Exhibit C attached hereto and made a part hereof ("Landlord's Work") at
Landlord's cost and expense, except as otherwise provided in Exhibit C.
Landlord's work shall be completed in a good and workmanlike manner, free of
material defects and in compliance with applicable building codes, and zoning
and subdivision laws relating to general retail use. All work, in excess of the
work described in Exhibit C, done by Landlord at Tenant's written request shall
be paid for by Tenant within thirty (30) days after the presentation to Tenant
of a bill for such work. Any items of Landlord's Work which are not completed
as of delivery of possession shall be identified by Tenant on a punch list to
be submitted to Landlord within thirty (30) days after the date of possession
and Landlord shall thereafter complete the same. Any items of Landlord's Work
which are not timely identified on such a punch list shall be deemed completed,
other than latent defects as provided for in Section 6.1 hereof.
SECTION 3.2. DELIVERY OF POSSESSION. (a) Landlord, or Landlord's
supervising architect, shall give Tenant at least thirty (30) days' prior
written notice of the date on which Landlord's Work will be substantially
completed in accordance with Exhibit C and the Leased Premises will be
available for the performance of Tenant's Work (as defined in Section 3.3) to
the extent that Tenant shall be able to perform its work in the Leased Premises
without substantial interference resulting from the conduct of Landlord's Work
("Delivery of Possession Date"). Tenant covenants and agrees to take physical
possession of the Leased Premises on the Delivery of Possession Date provided
that Landlord's Work is "substantially complete." The term "substantially
complete" shall mean that Landlord can give Tenant beneficial occupancy of the
Leased Premises so that Tenant can begin the performance of Tenant's Work in
safety. Landlord and Tenant acknowledge that Landlord and Tenant will be
working simultaneously to complete the Leased Premises and that Landlord will
be continuing the completion of Landlord's Work during the thirty (30) day
period after the Delivery of Possession Date. Landlord and Tenant agree to
cooperate so as to avoid interference with each other so that Landlord's Work
and Tenant's Work may be completed in a timely manner. The Delivery of
Possession Date shall be subsequently confirmed by Landlord, or Landlord's
supervising architect, by written notice to Tenant. Failure of Landlord to
deliver possession of the Leased Premises within the time and in the condition
provided for in this Lease will not give rise to any claim for damages by
Tenant against Landlord or permit Tenant to rescind or terminate this Lease
except as may be provided in Section 1.2 hereof.
(b) Tenant may, provided Tenant shall not interfere with the conduct of
Landlord's Work, and subject to Landlord's reasonable rules and regulations,
enter the Leased Premises during normal working hours during the course of
Landlord's Work for the purpose of inspecting the Leased
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Premises and making measurements. At such time prior to the Delivery of
Possession Date that Landlord's Work has progressed sufficiently to permit
Tenant to perform its work without interfering with Landlord's Work, Landlord
may, but shall not be required to, notify Tenant of the same, and Tenant may
then enter the Leased Premises in order to begin to install its store fixtures
and perform such other work as may be required under the provisions of this
Lease in order to ready the store for opening. Throughout the period of Tenant's
Work, Tenant shall schedule its work so as not to interfere with any work being
performed by Landlord or by any other tenant in the Shopping Center.
SECTION 3.3. TENANT'S WORK. (a) Tenant agrees, prior to the commencement of
the Term of this Lease, at Tenant's sole cost and expense, to diligently perform
all work of whatever nature in accordance with Tenant's obligations set forth in
Exhibit D ("Tenant's Work") and all other related work necessary to prepare for
the opening to the public of Tenant's store in the Leased Premises in accordance
with the provisions of this Lease. Tenant agrees to furnish to Landlord the
Store Design Drawings and Working Drawings and Specifications with respect to
the Leased Premises prepared in the manner and within the time periods required
in Exhibit D. If such Store Design Drawings or Working Drawings and
Specifications are not furnished by Tenant to Landlord within the required time
period(s) in form to permit approval by Landlord, then the Fixturing Period (as
described in the Data Sheet) shall be reduced by one (1) day for each day of
delay by Tenant in submitting said Store Design Drawings or Working Drawings and
Specifications. Landlord shall respond to such Store Design Drawings or Working
Drawings and Specifications submitted by Tenant pursuant to this Lease within
seven (7) business days following Landlord's receipt from Tenant. In the event
of Landlord's failure to respond within such seven (7) business day period or
there are other delays created by Landlord, the Fixturing Period as described in
the Data Sheet shall be extended by one (1) day for each day of additional delay
by Landlord.
No material deviations from the final Store Design Drawings or Working
Drawings and Specifications, once approved by Landlord, shall be permitted
unless necessary to comply with applicable governmental requirements or unless
otherwise approved by Landlord. Landlord's approval of Tenant's Store Design
Drawings and Working Drawing and Specifications shall not constitute the
assumption of such items. Tenant's Work shall include the installation of
fixtures and equipment and the stocking of the Leased Premises with suitable
merchandise. Tenant covenants that all such fixtures and equipment visible to
customers shall be new (or like-new) and otherwise reasonably acceptable to
Landlord in appearance. In addition to conforming to the requirements specified
in Exhibit D, all work performed by Tenant shall comply with such rules and
regulations as Landlord and its representatives may make, provided that such
rules and regulations are uniformly applied to all similarly situated Shopping
Center tenants under construction. Unless Landlord otherwise directs in writing,
Tenant shall not open the Leased Premises for business until all construction
has been completed pursuant to the provisions of Exhibit D. It is further
understood and agreed that: (i) Landlord shall have no responsibility or
liability whatsoever for any loss of, or damage to, any fixtures, equipment,
merchandise, or other property belonging to Tenant, installed or left in the
Leased Premises except to the extent resulting from the negligence or
intentional acts of Landlord, its agents or employees; and (ii) Tenant's entry
upon and occupancy of the Leased Premises prior to the Commencement Date shall
be governed by and subject to all the provisions, covenants and conditions of
this Lease. Tenant shall obtain at its sole cost and immediately thereafter
furnish to Landlord all certificates and approvals with respect to work done and
installations made by Tenant that may be required for the issuance of a
certificate of occupancy for the Leased Premises, so that such certificate of
occupancy shall be issued and the Leased Premises shall be ready for the opening
of Tenant's business on the Commencement Date. Upon the issuance of the
certificate of occupancy, a copy thereof shall be immediately delivered to
Landlord. Promptly upon the completion of its work, Tenant, at Tenant's cost,
shall repair, clean and restore all portions of the Shopping Center affected by
Tenant's Work to their prior condition.
To the extent approved by the proper governing authorities, Tenant
shall have the right to install atop the roof of Landlord's building in which
the Leased Premises are located one (1) antenna and/or one (1) satellite dish
and the equipment necessary for Tenant's communications and data transmission
network system. The satellite dish shall not be larger than five (5) feet in
diameter. The antenna or satellite dish on such roof shall be at a location
designated by Landlord and reasonably approved by Tenant. Tenant shall submit to
Landlord for its approval plans for the installation of such antenna or
satellite dish and necessary equipment, such approval not to be unreasonably
withheld, delayed or conditioned. Tenant shall also provide Landlord with copies
of
*** Confidential treatment requested.
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all permits required by the proper governmental authorities regarding such
installation, which shall be obtained by Tenant at its sole cost and expense.
Landlord's contractor shall cut the roof and patch it (if necessary) at Tenant's
expense, and Tenant's contractor shall be subject to Landlord's prior approval,
which approval shall not be unreasonably withheld, delayed, or conditioned.
Tenant shall be responsible for the cost of repairing any damage to Landlord's
building arising from such installation, except to the extent caused by
Landlord's contractors. Upon prior written notice to Landlord (except in case
of an emergency), Tenant shall have access to the antenna or satellite dish and
related equipment for the purpose of maintaining, repairing, replacing and
operating the antenna or satellite dish. Any utility costs related to the
installation and operating of the antenna or satellite dish shall be the sole
responsibility of Tenant.
Provided Tenant is not in default hereof, Landlord hereby agrees to
contribute towards the cost of Tenant's Work a Construction Allowance of [***].
The aforesaid Construction Allowance shall be paid as follows: [***] after [***]
of Tenant's Work is completed; [***] upon [***]; and [***] upon [***]. In the
event that this Lease is terminated prior to the expiration of the Term hereof
as a result of a default on the part of Tenant, Tenant shall repay said
Construction Allowance to Landlord in cash upon termination; provided, however,
that Tenant's liability for said Construction Allowance shall be reduced at the
rate of one-sixtieth (1/60th) at the end of each full calendar month during the
Term hereof.
(b) The interest of Landlord in the Leased Premises and the Retail
Development shall not be subject to liens for improvements made by or on behalf
of Tenant. Nothing contained in this Lease shall be construed as a consent on
the part of Landlord to subject Landlord's estate in the Leased Premises or the
Retail Development to any lien or liability under applicable law. In the event
that any mechanic's, materialman's or other lien or any notices of claim,
including without limitation, stop notices (herein "lien") is filed against the
Leased Premises or Retail Development as a result of any work, labor, services
or materials performed or furnished, or alleged to have been performed or
furnished to or for Tenant (excluding work performed by or on behalf of
Landlord) or to or for anyone holding the Leased Premises through or under
Tenant, Tenant, at its expense, shall cause the lien to be discharged or fully
bonded to the satisfaction of Landlord within thirty (30) days after notice of
the filing thereof. If Tenant fails to discharge or bond against said
mechanic's, materialman's or other lien, Landlord may, in addition to any other
remedies Landlord may have, but without obligation to do so, bond against or pay
the lien without inquiring into the validity or merits of such lien and all sums
so advanced, including reasonable attorney fees incurred by Landlord in
defending against such lien, procuring the bond or in the discharge of such
lien, shall be paid by Tenant on demand as additional rent. It shall be Tenant's
continuing obligation to keep and maintain the Leased Premises and all other
parts of the Retail Development free from any and all liens arising out of any
work performed, materials furnished or obligations incurred by or for Tenant in
connection with the Leased Premises. In addition, Tenant shall replace any bonds
posted by Landlord pursuant hereto with a suitable bond of equivalent amount
within twenty (20) days after Landlord's demand therefor.
(c) During the Term of this Lease, Tenant agrees to repair, refurbish or
replace the interior portions of the Leased Premises that are visibly worn or
damaged so as to maintain the condition of the Shopping Center as a first class
super-regional discount specialty retail mall.
*** Confidential treatment requested.
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SECTION 3.4. ALTERATIONS BY TENANT. Tenant shall not make or cause to be
made any alterations, repairs, additions or improvements in or to the Leased
Premises (for example, but without limiting the generality of the foregoing,
Tenant shall not install or cause to be installed any exterior signs or
interior signs visible from the exterior except as permitted by Section 4.3
hereof, floor covering, interior or exterior lighting, plumbing fixtures,
shades, canopies or awnings or make any changes to the storefront, mechanical,
electrical or sprinkler systems) without the prior written consent thereto by
Landlord. Tenant shall submit to Landlord plans and specifications for such
work at the time consent is sought, in accordance with the criteria and
procedures as provided in Exhibit D. In the event Landlord grants such consent,
such alterations, repairs, additions or improvements shall be performed in good
and workmanlike manner and in accordance with all applicable legal and
insurance requirements and all drawings or specifications approved by Landlord,
and in accordance with the provisions of this Lease, including the provisions
of Section 3.3 governing construction of the Leased Premises. Any work
performed by Tenant shall be subject to Landlord's inspection and approval
after completion to determine whether the same complies with the requirements
of this Lease. Prior to the commencement of any such work by Tenant, Tenant
shall obtain the insurance required in Section 8.2.
Tenant may from time to time make non-structural alterations to the Leased
Premises without Landlord's prior written approval, the aggregate total cost of
which shall not exceed [***] in any Lease Year; provided, however, that Tenant
shall not be permitted to alter the exterior storefront sign or the exterior of
the storefront (other than for repairs) without the prior written consent of
Landlord, and provided further that any such non-structural alterations shall
not change the overall appearance of the Leased Premises as originally approved
by Landlord.
SECTION 3.5. REMOVAL BY TENANT. All repairs, alterations, decorations,
additions and improvements made by Tenant shall be deemed to be attached to the
leasehold and to have become the property of Landlord upon such attachment,
and, upon the Expiration Date or sooner termination of this Lease, Tenant shall
not remove any of such alterations, decorations, additions and improvements;
provided that trade fixtures, simulators, and other items noted as "To Be
Removed" on Tenant's Construction Documents and Specifications installed by
Tenant may be removed if all Rent due herein are paid in full and Tenant is not
otherwise in default hereunder; provided further, however, that Landlord may
designate by written notice to Tenant given at the time such improvements are
installed those alterations, decorations, additions and improvements which
shall be removed by Tenant at the Expiration Date or sooner termination of
this Lease and Tenant shall, at Tenant's cost, promptly remove the same and
repair any damage to the Leased Premises caused by such removal.
ARTICLE IV
CONDUCT OF BUSINESS
SECTION 4.1. USE AND TRADE NAME. Except as otherwise provided herein,
Tenant shall continuously use and occupy the Leased Premises during the Term
solely for the purpose of conducting the business specifically set forth in the
Data Sheet and for no other purpose or purposes. Throughout the Term hereof,
Tenant shall (a) operate its business in the Leased Premises under the Trade
Name specifically set forth in the Data Sheet and under no other so long as
such name shall not be held to be in violation of any applicable law, (b) not
change the advertised name or character of the business operated in the Leased
Premises, (c) refer to the Shopping Center by name in designating the location
of the Leased Premises in all newspaper and other advertising within the
Shopping Center market area and in all other references to the location of the
Leased Premises, and (d) during the period from the Delivery of Possession Date
through sixty (60) days following the Commencement Date, include in all
Tenant's newspaper advertising within the Shopping Center market area the
designation that Tenant is opening for business in the Shopping Center. If any
*** Confidential treatment requested.
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governmental license(s) or permit(s) shall be required for the proper and
lawful conduct of Tenant's business or other activity carried on in the Leased
Premises, or if a failure to procure such a license or permit might or would in
any way, adversely affect Landlord or the Shopping Center, then Tenant, at
Tenant's expense, shall duly procure and thereafter maintain such license(s) or
permit(s) and submit the same for inspection by Landlord. Tenant, at Tenant's
expense, shall at all times, comply with the requirements of such license(s) or
permit(s). Except as provided in Section I.3, Tenant shall open its store in
the Leased Premises for business to the public on the Commencement Date, and
shall thereafter diligently conduct its regular business operations in the
Leased Premises as required by the terms of this Lease. No symbol, design,
name, mark or insignia adopted by Tenant shall be used without the prior
written approval of Tenant.
During the Term of this Lease, and provided Tenant shall not be in default
hereof, Landlord agrees that Landlord will not lease space in the Retail
Development (other than with respect to spaces leased or to be leased to Major
Tenants and presently executed non-Major Tenant leases), to any tenant whose
primary use is the entertainment use of auto-racing simulators. In addition,
with respect to any non-Major Tenant lease, Landlord shall not be permitted to
modify any such lease, either through amendment or assignment, so as to permit
the occupant of the space leased thereby to have as its primary use the
entertainment use of auto-racing simulators.
Landlord hereby represents and warrants to Tenant that Tenant's use of the
Leased Premises as contemplated in the Data Sheet does not violate any
exclusivity clause or other agreement between Landlord and any other party,
including any other Tenant of the Shopping Center, and Landlord shall indemnify,
defend, protect and hold harmless Tenant from any loss, liability, cost,
expense, judgement, action, or claim of any such party arising from the
inaccuracy of such representation and warranty.
If the trade name of all or substantially all other stores operating under
the same trade name as set forth in this Section 4.1 shall be changed, then
Tenant, with prior written notice to Landlord, may likewise change its trade
name herein set forth to such other name as adopted for all or substantially
all such other stores in first class regional malls or super-regional malls.
Notwithstanding the foregoing, in no event shall Tenant's trade name duplicate
any other trade name in the Retail Development.
SECTION 4.2. OPERATION OF BUSINESS. Tenant shall open for business in the
Leased Premises and remain open during the entire Term and continuously operate
its business in the entire area of the Leased Premises during the entire Term.
Tenant shall conduct its business at all times in a high class and reputable
manner, maintaining at all times a full staff of employees and a complete stock
of merchandise. Tenant shall install and maintain at all times a display of
merchandise in the display windows (if any) of the Leased Premises and shall
keep the Leased Premises well lighted during all hours that the Shopping Center
is open to the public and during such other hours as may be reasonably
designated by Landlord but in no event more than one (1) hour after the close
of business. In no event shall Tenant conduct or advertise any auction, fire
sale, going out of business sale, or bankruptcy sale in or about the Leased
Premises without Landlord's prior written consent in each instance, which
consent may be withheld by Landlord in its sole and absolute discretion. Tenant
shall conduct its business in the Leased Premises in a lawful manner and in
good faith during all days and hours specified by Landlord from time to time as
the published operating hours for the Shopping Center. Tenant shall not use or
allow the Leased Premises to be used for any improper, immoral or objectionable
purposes, as determined by Landlord, and Tenant shall not do any act tending to
injure the reputation of the Shopping Center as determined by Landlord. Tenant
may (but shall not be required), from time to time, upon written notice to
Landlord, remain open for business beyond the normal operating hours of the
Shopping Center on a daily basis, but such hours of operation shall not extend
beyond the time permitted by applicable law or regulations, and in no event
beyond the time that is one hour after the release of the last movie from the
Theater or 1:00 a.m., whichever is later. In addition, in the event that there
is an exterior entrance serving only the Leased Premises, which provides ingress
and egress to the general public and such ingress and egress has been approved
by the local jurisdiction for non-emergency use, then Tenant shall be permitted
to remain open for business during the same days and hours that Jillian's or
its replacement is open for business. Tenant agrees to reimburse Landlord for
all reasonable costs directly relating to all additional hours of operation
beyond the normal operating hours of the Shopping Center, which
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costs include, without limitation, electricity for parking lot lighting and
salaries for security personnel.
Notwithstanding any provision hereof to the contrary, Tenant shall not be
obligated to continuously operate from the Leased Premises during periods in
which (i) Tenant is carrying on remodeling activities (but in no event for more
than thirty (30) days in any lease year and no more than twice in any five (5)
year period), (ii) Tenant is closed for the taking of inventory (but in no
event for more than two (2) days in any lease year), (iii) Tenant is unable or
reasonably unwilling to operate as a result of casualty or natural disaster,
condemnation, interruption of utilities or services, extremely inclement
weather, civil unrest, operation of the business would expose Tenant's
employees, agents or invitees to an unreasonably risk of physical injury or
property damage, or other force majeure events, (iv) Tenant's use and
occupancy of the Leased Premises is prohibited by any law, ordinance, order or
other act of any judicial governmental or quasi-governmental authority, (v)
there exists a substantial and material hardship to Tenant or its employees,
provided Tenant's failure to continuously occupy under this clause (v) for any
such occurrence shall be excused only for a period of forty-eight (48) hours,
(vi) Thanksgiving and Christmas, and (vii) during periods in which the Leased
Premises are temporarily closed in connection with group sales activities being
conducted and the Leased Premises are temporarily closed to the public (as
permitted pursuant to Section 4.1 of the Data Sheet).
Landlord hereby consents to Tenant's use of hydraulic oil in connection
with the operation of the simulators and cleaning and office products
customarily used in retail or office premises so long as such materials are
used, handled and disposed of in accordance with applicable laws, Landlord
hereby acknowledges that such materials are approved.
Landlord recognizes that Tenant's prototype incorporates an open
storefront design. Tenant shall be permitted to incorporate the open storefront
element into the design of the Leased Premises provided that Tenant, at
Tenant's expense shall construct Tenant Work in a manner that does not cause
the ambient noise level in adjacent tenant spaces and common areas to exceed 45
db(A). Similarly, Tenant installed equipment within the Leased Premises shall
be isolated in a manner that eliminates the transfer of any and all vibrations
to adjacent tenant spaces and common areas. Landlord shall be given the
opportunity to review and approve Tenant's intended construction methods to
isolate such noise and vibrations, which will be included in Tenant's Store
Design Drawings submission (as provided for in Exhibit D). Landlord's review
and approval of Tenant's Store Design Drawings shall not relieve Tenant of its
obligation to limit the ambient noise level and eliminate the transfer of
vibrations as required herein.
SECTION 4.3. SIGN. Tenant shall install and maintain one (1) sign affixed
to the front of the Leased Premises, subject to the prior written approval of
Landlord as to design and location and conforming to all applicable legal and
insurance requirements. Tenant's sign shall conform to the specifications and
requirements contained in Exhibit E attached hereto. Tenant shall keep its
approved storefront sign lighted during all hours that the Shopping Center is
open to the public and during such other hours as may be reasonably designed by
Landlord but in no event more than one (1) hour after the close of business.
Tenant shall pay for all costs in connection with such sign and shall be
responsible for the cost of proper installation and removal thereof and any
damage caused to the Leased Premises thereby. In the event Landlord deems it
necessary to remove such sign, then Landlord shall have the right to do so,
provided, however, that if the sign has received Landlord's prior written
approval and is consistent with the specifications and requirements of Exhibit
E, Landlord shall replace said sign as soon as practical. Except as mentioned
above, Tenant shall not place or cause to be placed, erected or maintained on
any exterior door, wall or window of the Lease Premises, or the glass of any
window or door of the Leased Premises, or on any sidewalk or within any display
window space in the Leased Premises, or within five (5) feet of the front of the
storefront lease line or opening, or within any entrance to the Leased Premises
any sign (flashing, moving, hanging, handwritten or otherwise), decal, placard,
flashing, moving or hanging lights, lettering or any other advertising matter
of any kind or description. No symbol, design, name, mark or insignia adopted
by Landlord for the Retail Development shall be used without the prior written
approval of Landlord. Any interior signs must be in good taste and prepared
professionally (not hand-lettered) so as not to detract from the appearance of
the Leased Premises or the Shopping Center. Any sign or display visible from
the exterior of the Leased Premises which does not meet the above criteria may
be removed at any time
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by Landlord without Landlord incurring any liability therefor, and without such
removal constituting a breach of this Lease or entitling Tenant to claim
damages on account thereof. Tenant shall be permitted to install a video wall
within the Leased Premises (but not within five (5) feet of the storefront
leaseline), which video wall may be visible from outside the Leased Premises.
Landlord and Tenant agree to use commercially reasonable good faith
efforts to cooperate in the development of a storefront design to permit the
incorporation of a stock car replica above the storefront so long as the
installation complies with applicable codes and is reasonably in keeping with
the design criteria for entertainment uses in the Retail Development.
SECTION 4.4. TENANT'S WARRANTIES. Tenant warrants, represents, covenants
and agrees that, in the operation of its business within the Leased Premises,
Tenant shall: (a) pay before delinquency any and all taxes, assessments and
public charges levied, assessed or imposed upon Tenant's business, or upon
Tenant's fixtures, furnishings or equipment in the Leased Premises, or upon any
leasehold interest or personal property of any kind, owned by or placed in or
about the Leased Premises by Tenant or by anyone claiming by, through or under
Tenant, including, without limitation, any transfer taxes, and pay when and as
due all license fees, permit fees and charges of a similar nature required for
the conduct by Tenant or any subtenant or concessionaire of any business or
undertaking authorized hereunder to be conducted in or from the Leased
Premises; (b) observe all reasonable requirements promulgated by Landlord at
any time and from time to time relating to delivery vehicles, the delivery of
merchandise, and the storage and removal of trash and garbage; (c) not use any
space outside the Leased Premises for sale, storage or any other undertaking
except as provided herein; (d) not use the plumbing facilities in the Leased
Premises for any purpose other than that for which they were constructed, nor
dispose of any foreign substances therein; (e) not use any advertising medium
or sound devices inside or adjacent to the Leased Premises which produce or
transmit sounds which are intended to be audible beyond the interior of the
Leased Premises it being expressly understood that Tenant shall be required to
soundproof the Leased Premises so as to minimize the impact of the noise
created by the Permitted Use on other tenants and patrons of the Retail
Development; (f) not permit any odor to emanate from the Leased Premises which
is objected to by Landlord or by any tenant or occupant of the Retail
Development (and, upon written notice from Landlord, Tenant shall immediately
cease and desist from causing such odor, and Landlord may deem the failure by
Tenant to do so, a material breach of this Lease); (g) keep the Leased Premises
and any platform, loading dock or service area used by Tenant in a neat, clean,
safe and sanitary condition; (h) promptly comply with all present and future
laws, ordinances, orders, rules, regulations and requirements of all
governmental authorities having jurisdiction, and observe and comply with all
covenants and restrictions of record and all notices from Landlord's mortgagee,
affecting or applicable to the Retail Development or affecting or applicable to
the Leased Premises or the cleanliness, safety, occupancy and use of the same,
whether or not any such law, ordinance, order, rule, regulation, covenant,
restriction, or other requirement is substantial, or foreseen or unforeseen, or
ordinary or extraordinary, or shall necessitate structural changes or
improvements (provided, however, that Tenant shall not be required to make any
structural changes or improvements required pursuant to this Section 4.4(h)
with respect to the structural portions of the Leased Premises originally
constructed by Landlord, unless such change shall be required by virtue of
Tenant's use of the Leased Premises), shall interfere with the use or enjoyment
of the Leased Premises, or shall be directed to or imposed upon Tenant or
Landlord, and Tenant shall hold Landlord harmless from any and all cost or
expense on account thereof (as used in this Lease, the term "legal requirements"
shall include the requirements set forth in this subparagraph); (i) not use the
parking areas or sidewalks, common areas or any space on or about the Retail
Development (outside the Leased Premises) for display, sale, handbilling,
advertising, solicitation, or any other similar undertaking; (j) maintain and
operate the heating, ventilating and air conditioning system and equipment
servicing the Leased Premises so as to adequately heat and cool the same and to
maintain at all times, whether or not Tenant is open for business, temperatures
in the Leased Premises which will not drain heat or ventilation or air
conditioning from the enclosed mall or other interior areas into the Leased
Premises and shall not discharge heat, ventilation or air conditioning from the
Leased Premises into the enclosed mall or other interior areas; and (k) be
authorized to do business in the State, evidence of which must be delivered to
Landlord on or before the earlier of (I) the Commencement Date or (II) the date
that Tenant opens for business in the Leased Premises.
SECTION 4.5. STORAGE AND OFFICE SPACE. Tenant shall store or stock in the
Leased Premises only such goods, wares and merchandise as Tenant intends to
offer for sale at, in, from, or upon the
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Leased Premises or as are required to repair and maintain the improvements and
simulators in the Leased Premises. This shall not preclude occasional emergency
transfers of merchandise to the other stores of Tenant, if any, not located in
the Shopping Center. Tenant shall use for office, clerical or other non-selling
purposes only such space in the Leased Premises as is from time to time
reasonably required for Tenant's business therein, and Tenant shall not perform
any office or clerical function in the Leased Premises for any store located
elsewhere.
SECTION 4.6. CARE OF PREMISES. Tenant shall keep the Leased Premises
(including the exterior and interior portions of all windows, doors and all
other glass and signs) orderly, neat, safe and clean and free from rubbish or
dirt at all times and shall store all trash and garbage only in the areas
reasonably designated by Landlord for such storage and accumulation. Tenant
shall not move any safe, heavy machinery, heavy equipment, or fixtures into or
out of the Leased Premises without Landlord's prior written consent, except
that, during hours when the Shopping Center is not open to the public, Tenant
shall be permitted to move equipment associated with its Permitted Use provided
that Tenant uses its best efforts to protect the common area improvements from
damage and agrees to assume responsibility for any damage resulting from the
same. Tenant agrees that it will not place a load on any floor exceeding the
floor load per square foot which such floor was designed to carry, and will not
install, operate or maintain in the Leased Premises any heavy equipment except
in such manner as to achieve a proper distribution of weight. Landlord and
Tenant shall cooperate in their efforts to insure that the Leased Premises are
designed to accommodate the Permitted Use.
SECTION 4.7. NOTICE BY TENANT. Tenant shall give immediate notice to
Landlord in case of fire or accidents in the Leased Premises, or in the
building of which the Leased Premises are a part of, or of defects therein or
in any fixtures or equipment.
SECTION 4.8. RADIUS. Tenant acknowledges that the Retail Development draws
it customers from a large geographic area, relying in part on regional and
international tourism, and that the success of the Retail Development and
income of the Landlord therefrom are dependent upon maximum customer traffic
within the Retail Development. In addition, Tenant acknowledges that Landlord
is relying on the generation of Percentage Rent from Tenant's Gross Sales at
the Leased Premises. During the Term, in the event Tenant, or any person, firm
or corporation who or which controls or is controlled by Tenant (an
"Affiliate") shall directly or indirectly, either individually or as a partner
or stockholder or otherwise, own, operate, or obtain a controlling interest
(i.e. own more than fifty percent (50%) of the shares or interest) in any
business similar to or in competition with the business of Tenant described in
Article IV ("competing business"), which business is conducted within the Area
(as said term is herein defined), then the Gross Sales (as said term is defined
in this Lease) of any such competing business within said Area shall be
included in Tenant's Gross Sales made from the Leased Premises and the
Percentage Rent hereunder shall be computed upon the aggregate of Tenant's
Gross Sales made from the Leased Premises and made from each such competing
business then conducted within said Area. Tenant shall be obligated to provide
Landlord with full and complete Gross Sales information and reports with
respect to any competing business within the Area in accordance with the
requirements of Article II of this Lease and Tenant shall be obligated to
include the applicable portion of the Gross Sales of such competing business
with the Gross Sales of the Leased Premises and to pay Percentage Rent thereon
in accordance with the terms of this Lease. The "Area" shall be defined as the
area falling within a radius of ten (10) miles measured from the outside
boundary of the Retail Development. This Section 4.8 shall not apply to any
competing business which is open and is being operated by Tenant within said
Area on the Effective Date.
ARTICLE V
COMMON AREA
SECTION 5.1. USE OF COMMON AREA. Landlord agrees to cause to be operated,
managed and maintained during the Term all of the common areas of the Shopping
Center. The term "common areas", as used in this Lease, shall mean the parking
areas, pedestrian sidewalks and bridges, truckways, loading docks, delivery
areas, park areas, pedestrian malls and courts, elevators and escalators, if
any, and stairs not contained in leased areas, public restrooms and comfort
stations, if
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any, service areas, fire, service and exit corridors, passageways, landscaped
areas, berms and all other areas or improvements which may be provided for the
convenience and use of the occupants and tenants of the Retail Development and
their respective agents, employees, customers, invitees, and the licensees and
invitees of Landlord. The use and occupancy by Tenant of the Leased Premises
shall include the non-exclusive use, in common with all others to whom Landlord
has or may hereafter grant rights to use the same (including, but not limited
to, the owners, tenants and occupants of the Shopping Center), of the common
areas and of such other facilities as may be designated by Landlord from time
to time; subject, however, to rules and regulations for the use thereof which
will be uniformly applicable to all Shopping Center tenants as prescribed from
time to time by Landlord. In particular, Tenant and its employees shall park
their cars only in the areas specifically designated from time to time by
Landlord for that purpose. Tenant covenants that it will enforce the parking by
its employees in such designated areas. Automobile license numbers of
employees' cars shall be furnished by Tenant to Landlord within five (5) days
after Landlord's request. In the event any vehicle is parked by an employee of
Tenant in a non-employee parking area, Landlord shall have the right to cause
the vehicle to be towed to a location designated by Landlord and Tenant shall
be obligated to reimburse Landlord for all towing charges. Landlord may at any
time close temporarily any common area to make repairs or changes, to prevent
the acquisition of public rights in such areas and to discourage non-customer
use, provided the same shall not materially adversely affect access to or
visibility of the Leased Premises. In addition, Landlord may modify, from time
to time, the traffic flow pattern and layout of parking spaces and the
entrances-exits to adjoining public streets or walkways, utilize portions of
the common areas for entertainment, displays and charitable activities and may
do such other acts in and to the common areas as in its judgment may be
desirable to improve the convenience or attraction thereof.
Landlord agrees to maintain all common areas of the Shopping Center in
good order, condition and repair and in a safe, clean, sightly and sanitary
condition in accordance with good and accepted shopping center practices. The
maintenance obligations of Landlord shall include, without limitation, the
re-striping of parking areas when required, repairing of common areas and
adequate lighting of all exterior common areas during all hours of darkness
during which Tenant shall be open for business and for one (1) hour thereafter.
SECTION 5.2. COMMON AREA MAINTENANCE EXPENSES. (a) Tenant agrees to pay to
Landlord each Lease Year, in the manner hereinafter provided, Tenant's
proportionate share of all costs and expenses (the "Common Area Maintenance
Expenses") of every kind and nature paid or incurred by Landlord, or for which
Landlord is obligated, during each Lease Year, for operating, equipping,
policing and protecting, heating, air conditioning, providing sanitation and
sewer and other services, lighting, insuring, repairing, replacing and
maintaining (i) the common areas, and (ii) all buildings and roofs within the
Retail Development, and (iii) all other areas, facilities and buildings used in
connection with the maintenance and/or operation of, and whether located within
or outside of, the Retail Development, including without limitation, all roads
and driveways serving the Retail Development which are maintained or repaired by
Landlord or at Landlord's expense. The Common Area Maintenance Expenses shall
include, but are not limited to, costs and expenses of: water, gas, sewage,
electricity, refuse disposal, air conditioning, heating and other utilities
(without limitation), including all usage, service, hook-up, connection,
availability and/or standby fees or charges pertaining to same, and the utility
costs; illumination and maintenance of signs, whether located on or off the
Retail Development property; salaries of all management, personnel; maintenance,
repair and replacement of directories, electronic or otherwise, cleaning,
lighting, snow removal and landscaping; security control and fire protection;
uniforms for maintenance, administrative and security personnel for the Retail
Development; management fees; maintenance for wooded areas, retention ponds,
wetlands, rivers and riverbank areas; premiums for insurance to the extent
maintained by Landlord, for liability, casualty and property damage, including,
without limitation, insurance against vandalism, plate glass breakage, fire and
extended coverage insurance and such other coverage as determined by Landlord,
and liability for defamation and claims of false arrest occurring in and about
such areas; personal property taxes; maintaining and replacing the equipment, if
any, supplying music to such areas; the reasonable depreciation of equipment
used in the operation and maintenance of such areas; total compensation and
benefits (including premiums for workers' compensation and other insurance) paid
to or on behalf of persons involved in the performance or
administration/technical support of the work specified in this Section 5.2;
repair, maintenance and
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cleaning of such areas; operation, repair, maintenance and reasonable
depreciation of all temporary and permanent utility systems for the Retail
Development, including, without limitation, heating, ventilating and air
conditioning systems (HVAC systems), gas system(s), plumbing system(s),
electrical equipment and irrigational pumping system(s); operation, repair,
maintenance and reasonable depreciation of emergency water and sprinkler main
system(s) and security alarm system(s); operation maintenance, repair and
replacement of mechanical equipment including any automatic door openers,
elevators, escalators, lighting fixtures (including replacement of poles, tubes
and bulbs) and all other items of equipment used in connection with such areas;
paper supplies in restrooms located in or about such areas, cleaning, lighting
striping and landscaping, curbs, gutters, sidewalks, drainage and irrigation
ditches, conduits, pipes and canals serving the Retail Development; and there
shall also be added to the foregoing costs and expenses an amount equal to [***]
of the total of all of the ongoing costs and expenses as Landlord's
administrative fee. As stated throughout this Lease, whenever Tenant is
obligated to pay its "proportionate share" of a cost, expense or Taxes (as
hereinafter defined) such share shall be based on gross leased and occupied
floor area in the Shopping Center, and Tenant's proportionate share shall be
that fraction, the numerator of which is the total square footage of floor area
in the Leased Premises, and the denominator of which is the total square footage
of gross leased and occupied floor area (including the Leased Premises) in the
Shopping Center. As used throughout this Lease, the "gross leased and occupied
floor area" in effect for the whole of any Lease Year shall be the average of
the gross leased and occupied floor area in effect on the first day of each
calendar month in such Lease Year.
Prior to the proration of such Common Area Maintenance Expenses to Tenant,
there shall be deducted from the total of such Common Area Maintenance Expenses
any amounts specifically contributed by the Major Tenants toward such Common
Area Maintenance Expenses. It is further agreed that in no event shall Tenant be
obligated for the capital costs of initially constructing the Retail Development
or the capital costs of subsequent expansion construction for the Retail
Development (i.e., adding new Major Tenants to the development or expanding the
Shopping Center or the common areas). Notwithstanding anything contained in this
Lease to the contrary, the following shall be excluded from Common Area
Maintenance Expenses in calculating Tenant's proportionate share: (i) the
capital costs of initially constructing the Retail Development or the capital
costs of subsequent expansion construction for the Retail Development; (ii)
executive salaries (employees senior to management personnel); (iii) leasing
commissions and the expense of preparing leases; (iv) debt service and
amortization under any mortgage encumbering the Shopping Center and charges and
fees incurred by Landlord in connection with the procurement and recording of
such mortgages or rental under any ground lease or other underlying lease; (v)
the costs of Landlord's Work in connection with preparing any tenant's space
(vi) any costs for which Landlord is reimbursed by insurance proceeds or
condemnation awards; (vii) costs for which Landlord is reimbursed by individual
tenants of the Shopping Center (viii) to the extent that any employee of
Landlord performs work or services other than for the Retail Development, the
portion of his salary allocable to work not performed in connection with the
Retail Development; (ix) the costs of correcting defects in or inadequacies of
the initial design or construction of the Shopping Center, or repair and/or
replacement of any of the original materials or equipment required as a result
of such defects or inadequacies; (x) any expense resulting from the negligence
of Landlord, its agents, servants or employees, or any expense incurred as a
direct result of Landlord's failure to use reasonable efforts to minimize
expenses to the extent possible without detracting from the standards of a first
class Shopping Center; (xi) the cost of any repair to remedy damage caused by or
resulting from the negligence of any other tenant(s) in the Shopping Center,
including their agents, servants or employees; (xii) repairs or other work
occasioned by casualty or the exercise of the right of eminent domain; (xiii)
expenses incurred in build out, renovation or other improvement or decoration,
painting or redecoration of any leasable area; (xiv) costs incurred due to the
violation by Landlord or any tenant or occupant of any term or condition of any
lease or rental arrangement covering space in the Shopping Center; (xv) any
interest or penalties incurred as a result of Landlord's failure to pay any bill
as the same shall become due; (xvi) any and all costs associated with the
operation of the business of the entity which constitutes Landlord, intending by
this exclusion to distinguish the costs of operation of the common areas
(excluded items shall specifically include but shall not be limited to formation
of the entity, internal accounting and legal matters, including, but not limited
to preparation of tax returns and financial statements and gathering of data
therefor, costs of defending any lawsuits, except as the actions of Tenant may
be an issue, costs of selling, syndication, financing mortgaging or
hypothecating any of Landlord's interest in the
*** Confidential treatment requested.
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Shopping Center, and costs of any disputes between Landlord and its employees);
(xvii) advertising and promotional expenditures or customer services, (xviii)
costs, fines, or fees incurred by Landlord due to violations of any federal,
state or local law, statute or ordinance, or any rules, regulations, judgment or
decree of any governmental rule or authority; (xix) the cost of any work or
services performed for any facility other than the Shopping Center. Replacements
of existing improvements, facilities, and equipment (including, by way of
example, parking lot repairs, structural repairs, replacement of HVAC or
mechanical equipment) otherwise chargeable as Common Area Maintenance Expenses
having a useful life of more than one year shall be amortized over the useful
life of the replacement, and only the reasonably amortized portion thereof shall
be included in Common Area Maintenance Expenses.
Tenant's proportionate share of Common Area Maintenance Expenses from the
Commencement Date through December 31, 2000 shall not exceed [***] per square
foot of floor area in the Leased Premises per Lease Year (proportionately
reduced for a partial Lease Year). From January 1, 2001 through December 31,
2001. Tenant's proportionate share of Common Area Maintenance Expenses shall not
exceed [***] per square foot of floor area in the Leased Premises per Lease Year
(proportionately reduced for a partial Lease Year). Beginning January 1, 2002
and continuing through the expiration of the Original Term and Option Period, if
any, Tenant's proportionate share of Common Area Maintenance Expenses shall not
be increased by more than [***] per Lease Year.
It is hereby agreed that at such times as there are tenants occupying less
than eighty-five percent (85%) of the gross leasable floor area of the Shopping
Center, Tenant's proportionate share of the foregoing Common Area Maintenance
Expenses shall be computed as if the Shopping Center were eight-five percent
(85%) leased and occupied.
(b) Tenant's proportionate share of such Common Area Maintenance Expenses
for each Lease Year shall be paid in advance, in equal monthly installments, in
the same manner and at the same time as the monthly installments of Minimum Rent
are payable hereunder without deduction, offset or diminution of any kind, based
on an amount estimated in advance from time to time by Landlord to be Tenant's
obligation under this Section 5.2. Notwithstanding the above, in the event
Landlord at any time determines that the amount of Common Area Maintenance
Expenses actually being paid or incurred by Landlord exceeds the estimate upon
which Tenant's proportionate share of Common Area Maintenance Expenses was
computed, then Tenant, following a request from Landlord, shall commence to pay
with the next monthly installment of Minimum Rent due an amount sufficient to
result in Tenant's paying its full proportionate share of Common Area
Maintenance Expenses as computed on the basis of Landlord's revised estimate of
Common Area Maintenance Expenses. Subsequent to the end of each Lease Year,
Landlord shall furnish Tenant with a statement of the actual amount of Tenant's
proportionate share of such Common Area Maintenance Expenses for such period
which statement shall be in reasonable detail, provided, however, Landlord shall
be permitted to describe areas of expenditure by category and shall not be
obligated to enumerate each specific expenditure. Upon Tenant's written request
therefore, but no more frequently than once per Lease Year, Landlord shall
provide Tenant written evidence substantiating up to three (3) particular items
included in Tenant's share of Common Area Maintenance Expenses. Landlord shall
make reasonable good faith efforts to answer or resolve Tenant's legitimate
questions about the Common Area Maintenance Expenses.
If the total amount paid by Tenant under this Section 5.2 for any Lease
Year shall be less than the actual amount due from Tenant for such Lease Year as
shown on such statement, Tenant shall pay Landlord the difference between the
amount paid by Tenant and the actual amount due, such deficiency to be paid
within thirty (30) days after the furnishing of each such statement, and if the
total amount paid by Tenant hereunder for any such Lease Year shall exceed the
actual amount due from Tenant for such Lease Year, such excess shall be credited
against the next installment due from Tenant to Landlord under this Section 5.2.
*** Confidential treatment requested.
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ARTICLE VI
REPAIRS AND MAINTENANCE
SECTION 6.1. REPAIRS AND MAINTENANCE BY LANDLORD. Landlord agrees to keep
in good order, condition and repair the roof (including keeping the roof
watertight), foundations, exterior (including exterior painting and finish), all
structural portions of the Leased Premises (and of the building in which the
Leased Premises are located) and all plumbing and utility lines not exclusively
serving the Leased Premises. Should any repairs, modifications or alterations be
required by reason of applicable law, the same shall be made by Landlord at
Landlord's cost and expense unless the need for such repairs, modifications or
alterations shall result from Tenant's failure to perform its obligations under
this Lease or from Tenant's use of the Leased Premises for other than general
merchandising purposes. In addition, for the first twelve (12) months only
following the Delivery of Possession Date, Landlord shall, upon written notice
from Tenant of the necessity therefor, correct any defects in Landlord's Work
within the Leased Premises. All costs and expenses incurred by Landlord under
this Section 6.1 shall be included in Common Area Maintenance Expenses, other
than costs and expenses for Landlord's correction of defects in Landlord's Work
or other amount that may be excluded as Common Area Maintenance Expenses
pursuant to a specific exclusion contained in Section 5.2 hereof.
SECTION 6.2. REPAIRS AND MAINTENANCE BY TENANT. (a) Except for the repairs
and maintenance that Landlord is specifically obligated to make or perform
pursuant to Section 6.1 above, throughout the entire Term of this Lease,
Tenant, at its expense, shall promptly make all repairs and replacements and
perform maintenance in and to the Leased Premises and all equipment and
fixtures therein or appurtenant thereto, that are necessary or desirable in
order to keep the Leased Premises in good order, condition and repair and in
safe, dry and tenantable condition. Without limiting the generality of the
foregoing, Tenant, at its expense, shall maintain and promptly make any and all
necessary repairs to or replacements of: (i) that portion of any pipes, lines,
ducts, wires or conduits that exclusively serve the Leased Premises; (ii) the
glass windows, plate glass doors, and all fixtures or appurtenances composed of
glass that are located in or about the Leased Premises; (ii) Tenant's signs;
(iv) the floors and floor coverings, doors and door frames, windows and window
frames, walls, storefront including security gates, grilles or enclosures,
locks and closing devices, partitions and ceilings in the Leased Premises; (v)
heating, ventilating, air conditioning, electrical and plumbing system(s)
equipment and fixtures (whether contained within or outside the Leased
Premises) which are installed by Tenant or which exclusively serve the Leased
Premises; and (vi) the Leased Premises or any part of the Shopping Center when
repairs thereto are necessitated by any act or omission (negligent or
otherwise) of Tenant or any of Tenant's agents, employees or invitees, or by
the failure of Tenant to perform any of its obligations under this Lease.
Notwithstanding the foregoing, Landlord shall be responsible for repairs and
maintenance necessitated by the negligence or intentional acts of Landlord, its
agents or employees. Notwithstanding any contrary provision of this Article VI,
Tenant, at its expense, shall make any and all repairs to the Leased Premises
as may be necessitated by any break-in, forcible entry or other trespass into
or upon the Leased Premises, regardless of whether or not such entry and damage
is caused by the negligence or fault of Tenant or occurs during or after
business hours. Tenant, at its expense, shall change all air conditioning
filters at lease five (5) times per year and shall have the air conditioning
system professionally inspected and generally serviced at lease twice per year.
(b) Tenant shall keep and maintain the Leased Premises in a clean,
sanitary and safe condition in accordance with the laws of the State and in
accordance with all directions, rules and regulations of the health officer,
building inspector, the National Fire Protection association and any other
officials of the governmental agencies having jurisdiction, at the sole cost and
expense of Tenant, and Tenant shall comply with all requirements of laws,
ordinances, rules, regulations and orders of any lawful authority having
jurisdiction affecting the Leased Premises or Tenant's use thereof. Tenant, at
its expense, shall install and maintain fire extinguishers and other fire
protection devices as may be required by reason of the conduct of Tenant's
business, from time to time by any agency having jurisdiction or the
underwriters insuring the building in which the Leased Premises are located. If
any bureau, department or official of the Federal or State government requires
or recommends the installation of any changes, modifications or alterations in
the sprinkler system or additional sprinkler heads or other equipment
(hereinafter in this subsection (b) collectively
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"changes") by reason of Tenant's business, or the location of partitions,
trade fixtures, or other contents of the Leased Premises, or for any other
reason, or if any such changes become necessary to prevent the imposition of a
penalty or charge against the full allowance for a sprinkler system in the fire
insurance rates set by any fire insurance company, Tenant, at Tenant's expense,
shall promptly make such changes as required.
(c) Tenant agrees that Tenant's use of electrical current will at no
time exceed the capacity of the electric distribution system and that Tenant
will not make any alteration or addition to Tenant's electrical system without
Landlord's prior written consent. If Tenant installs any electrical equipment
that overloads the electrical lines in the Leased Premises or the Retail
Development, Tenant shall, at Tenant's sole cost and expense, be required to
make whatever changes to such electrical equipment and in the electric wiring in
the Leased Premises (but only after obtaining Landlord's written approval) as
may be necessary in order to remedy such overloading and be in compliance with
all insurance and legal requirements. All changes required to be made hereby
shall result in the continued conformance with the provisions of Exhibit D and
this Lease.
(d) If Tenant refuses or neglects to properly maintain the Leased
Premises, or to commence or to complete repairs promptly and adequately, or if
Landlord finds it necessary to make any repairs or replacements otherwise
required to be made by Tenant, then Landlord may, after ten (10) days prior
written notice to Tenant (except in the event of an emergency in which event no
notice shall be required) with Tenant having the opportunity to cure or to
commence to cure during such ten (10) day period (in which event Landlord shall
not take action so long as Tenant is diligently pursuing such cure to
completion), in addition to all other remedies, but without obligation to do
so, enter the Leased Premises and proceed forthwith to have such maintenance,
repairs or replacements made and Tenant shall pay to Landlord, on demand, the
cost and expenses therefor plus a charge of fifteen percent (15%) of such costs
and expenses.
ARTICLE VII
TAXES
SECTION 7.1. TAX LIABILITY. Tenant agrees to pay to Landlord
Tenant's proportionate share of all taxes and assessments and service payments
in lieu of taxes of every nature and kind which may be levied or assessed by, or
payable to, any lawful authority during or with respect to each fiscal tax year
falling in whole or in part during the Term of this Lease against any or all or
any part of the land, buildings and improvements comprising the Retail
Development and any other taxes which Landlord becomes obligated to pay with
respect to the Retail Development, whether or not the same are assessed as real
or personal property or are payable in advance or in arrears (the "Taxes"). If
due to a future change in the method of taxation, any tax, excise or assessment
shall be levied or assessed against Landlord, directly or indirectly, in lieu
of, in substitution for or as a supplement to any present Taxes or future (real
estate or personal property) tax, in whole or in part, including any new tax,
excise or assessment upon rentals payable to Landlord by occupants of the Retail
Development or upon gross receipts or other income of Landlord derived by
Landlord from or upon the interest in the Retail Development of Landlord (or any
individuals or entities comprising Landlord), such tax, excise or assessment
shall constitute a tax respecting which Tenant is obligated to pay its
proportionate share to Landlord as provided herein. If any Taxes or assessed
valuation(s) are contested by Landlord, then Tenant's proportionate share of
Taxes shall also include Tenant's proportionate share of the cost and expense of
consultation services incurred in evaluating and contesting such Taxes or
assessed valuation(s).
The term "Taxes" shall also include any form of assessment, special
assessment, license fee, license tax, business license fee, business license
tax, commercial rental tax, levy, charge, tax or similar imposition, imposed by
any authority having the direct power to tax, including without limitation any
city, county, State or Federal government, or any school, agricultural,
lighting, drainage or other improvement or special assessment district or any
other agency or other public body, whether or not consented to or joined in by
Landlord and whether or not retroactive, payable by Landlord thereof as against
the land and improvements comprising, or any legal or equitable interest of the
Landlord in, the Retail Development. Notwithstanding anything to the contrary
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contained in this Section 7.1, Tenant shall not be obligated, pursuant to this
Section 7.2, to pay Landlord its proportionate share of any inheritance, estate,
succession, transfer, gift or franchise tax, levy assessment or surcharge that
may be imposed on Landlord or the individuals or entities which constitute the
partners of the partnership which is Landlord, unless the same is imposed by way
of substitution for all or any part of the "Taxes" otherwise required to be paid
in whole or in part by Tenant pursuant to this Lease; the foregoing shall not
exempt or exclude from the Taxes to be prorated among Shopping Center tenants
(including Tenant) levies, taxes, assessments or surcharges based on the rentals
or other revenues or gross income of Landlord derived from the Shopping Center
(as opposed to Landlord's net income) or other charges payable to Landlord by
Tenant or other tenants in or occupants of the Shopping Center.
SECTION 7.2. METHOD OF PAYMENT. Tenant's proportionate share of Taxes
shall be paid, in advance, in monthly installments on or before the first day
of each calendar month, in the same manner and at the same time as the monthly
installments of Minimum Rent are payable hereunder without deduction, offset or
diminution of any kind, based on an amount estimated by Landlord. Following
receipt of all bills for Taxes attributable to any calendar or fiscal year
during the Term hereof, Landlord shall furnish Tenant with a written statement
of the actual amount of Tenant's proportionate share of Taxes for such year. If
any bill for any such Taxes is not available, Landlord will estimate the amount
of such tax. If the total amount paid by Tenant hereunder for any calendar or
fiscal year during the Term of this Lease shall be less than the actual amount
due from Tenant for such year, as shown on such statement, Tenant shall pay to
Landlord the difference between the amount paid by Tenant and the actual amount
due, such deficiency to be paid within thirty (30) days after demand therefor
by Landlord; and if the total amount paid by Tenant hereunder for any such
calendar or fiscal year shall exceed such actual amount due from Tenant for
such year, such excess shall be credited against the next installment of Taxes
due from Tenant to Landlord hereunder. For the calendar or fiscal years in
which this Lease commences and terminates, Tenant's liability for its
proportionate share of any Taxes for such years shall be subject to a pro rata
adjustment based on the number of days of said calendar or fiscal years during
which the Term of this Lease is in effect. A copy of any such bill for Taxes
shall at all times be sufficient evidence of the amount of Taxes assessed or
levied against the property to which such bill relates. Prior to or at the
commencement of the Term of this Lease and from time to time thereafter
throughout the Term hereof, Landlord shall notify Tenant in writing of
Landlord's estimate of Tenant's monthly installments due hereunder. Tenant's
obligations under this Article VII shall survive the Expiration Date or sooner
termination of this Lease.
ARTICLE VIII
INSURANCE, INDEMNITY AND LIABILITY
SECTION 8.1. LANDLORD'S INSURANCE OBLIGATIONS. Landlord agrees to obtain
and maintain during the Term hereof, to the extent the same is available, fire
and extended coverage insurance, in amounts and coverages and with such special
endorsements as Landlord shall determine from time to time, insuring the
building in which the Leased Premises are located and the improvements to the
Leased Premises provided by Tenant pursuant to this Lease (exclusive of Tenant's
merchandise, trade fixtures, furnishings, equipment, plate glass, signs and
personal property of Tenant). Landlord shall also carry rental interruption
insurance in amounts at least equal to [***]. Landlord will maintain during the
Term of this Lease, commercial general liability insurance, insuring against any
and all claims for personal injury, bodily injury, death, or property damage,
accruing in, on or about the common areas and other portions of the Shopping
Center not leased to tenants, with limits of not less than [***] with respect to
bodily injury and death and [***] with respect to property damage. Further
Landlord shall maintain fire and extended coverage insurance insuring the
improvements located within the Shopping Center (except for Tenant's trade
fixtures, furnishings, operating equipment and personal property) for [***] of
the full replacement cost thereof. Tenant acknowledges that such coverage may be
provided pursuant to a blanket policy for centers managed by Managing Agent (as
defined in Section 20.22 hereof). Tenant shall reimburse Landlord for its
proportionate share of the insurance
*** Confidential treatment requested.
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costs incurred by Landlord under this Section 8.1 as part of Tenant's Common
Area Maintenance Expenses as provided in Section 5.2 hereof.
SECTION 8.2. TENANT'S INSURANCE OBLIGATIONS. (a) Provided Tenant is the
Tenant named on the Recital Page and a wholly-owned subsidiary of the Guarantor,
if any, and Tenant's and Guarantor's, if any, combined net worths are or
Tenant's net worth is at least equal to [***]. Tenant shall have the right to
self-insure for any loss or damage of the type covered by standard fire and
extended coverage insurance with respect to personal property located on or
within the Leased Premises including alterations and improvements made by Tenant
to the extent the same are not covered by Landlord's fire and extended coverage
insurance. Tenant and Guarantor shall at their sole expenses, without regard to
fault on the part of any person, make and perform any repairs or restorations
which are required as a result of a casualty which would be covered by insurance
of the type described in this Section 8.2(a). Tenant, at Tenant's sole cost and
expense, shall obtain and maintain in effect commencing with the Delivery of
Possession Date and continuing throughout the Term of this Lease, insurance
policies providing for the following coverage: (i) all risk property insurance
against fire, theft, vandalism, malicious mischief, sprinkler leakage and such
additional perils as now are or hereafter may be included in a standard extended
coverage endorsement from time to time in general use in the State, insuring
Tenant's merchandise, trade fixtures, furnishings, equipment and all items of
personal property of Tenant and of anyone claiming by, through or under Tenant
located on or in the Leased Premises, and the amount of such insurance will be
set forth in an "agreed value endorsement" to the policy of such insurance, not
less than [***] of the full replacement value thereof without deduction for
depreciation, and with a deductible amount of not more than [***], provided,
however, any and all proceeds of such insurance, so long as this Lease shall
remain in effect, shall be used only to repair or replace or pay for the items
so insured; (ii) a commercial general liability policy, including insurance
protecting against any and all claims for injury to persons or property
occurring in or about the Leased Premises and protecting against assumed or
contractual liability under this Lease with respect to the Leased Premises and
the operations of Tenant and any subtenant of Tenant in, on or about the Leased
Premises, with such policy to be in the minimum amount of [***] single limit
coverage; (iii) products liability insurance for merchandise offered for sale or
lease from the Leased Premises, including (if this Lease covers leased premises
in which food and/or beverages are sold and /or consumed) liquor liability
coverage (if applicable to Tenant's business) and coverage for liability arising
out of the consumption of food and/or alcoholic beverages on or obtained at the
Leased Premises, of not less than [***] per occurrence for personal injury and
death and property damage; (iv) workers' compensation coverage as required by
law; (v) with respect to alterations, improvements and the like required or
permitted to be made by Tenant hereunder, contingent liability and builders risk
insurance in amounts satisfactory to Landlord; and (vi) the insurance required
under Exhibit D.
(b) All insurance policies herein to be procured by Tenant shall: (i) be
issued by insurance companies reasonably satisfactory to Landlord and authorized
to do business in the State; (ii) be written as primary policy coverage and
non-contributing with respect to any coverage which Landlord may carry and that
any coverage carried by Landlord shall be excess insurance; (iii) insure and
name Landlord, Landlord's managing agent, any mortgagee of the Shopping Center
and any parties in interest designated by Landlord as additional insured, as
their respective interests may appear (except with respect to workers'
compensation insurance); and (iv) contain any express waiver of any right of
subrogation by the insurance company against Landlord, Landlord's managing agent
and their respective agents, employees and representatives which arises or might
arise by reason of any payment under such policy or by reason of any act or
omission of Landlord, its agents, employees or representatives. Neither the
issuance of any insurance policy required hereunder, nor the minimum limits
specified herein with respect to Tenant's insurance coverage, shall be deemed to
limit or restrict in any way Tenant's liability arising under or out of this
Lease. With respect to each and every one of the insurance policies herein
required to be procured by Tenant, on or before the Commencement Date and at
least thirty (30) days before any such insurance policy shall expire, Tenant
shall deliver to Landlord upon Landlord's written request a duplicate original
or certified copy of each such policy or a certificate of the insurer,
certifying that such policy has been issued, providing the coverage required by
this Section 8.2 and containing provisions specified herein, together with
evidence of payment of all applicable premiums. Any insurance required to be
carried hereunder may be carried under a blanket policy covering the Leased
Premises and other locations
*** Confidential treatment requested.
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of Tenant. Each and every insurance policy required to be carried hereunder by
or on behalf of Tenant shall provide (and any certificate evidencing the
existence of each such insurance policy shall certify) that, unless Landlord
shall first have been given thirty (30) days' prior written notice thereof, the
insurer will not cancel, materially change or fail to renew the coverage
provided by such insurance policy. The term "insurance policy" as used herein
shall be deemed to include any extensions or renewals of such insurance policy.
In the event that Tenant shall fail to promptly furnish any insurance coverage
hereunder required to be procured by Tenant, Landlord, at its sole option, shall
have the right after ten (10) days prior written notice to Tenant to obtain the
same and pay the premium therefor for a period not exceeding one (1) year in
each instance, and the premium so paid by Landlord shall be immediately due and
payable by Tenant to Landlord as additional rent.
(c) Tenant shall not do or permit to be done any act or thing upon the
Leased Premises that will invalidate or be in conflict with fire insurance
policies covering the building containing the Leased Premises or any part
thereof, including all common areas, or fixtures and property therein, or any
other insurance policies or coverage referred to above in this Article VIII; and
Tenant shall promptly comply with all rules, orders, regulations, or
requirements relating to such insurance policies, and shall not do, or permit
anything to be done, in or upon the Leased Premises, or bring or keep anything
therein, which shall increase the rate of fire insurance on the building in
which the Leased Premises are located or on any property, including all common
areas, located therein, or increase the rate or rates of any other insurance
referred to hereinabove. If any act or omission of Tenant, its agents, employees
or contractors shall result in any increase in the premium rates applicable to
any such insurance policies carried by Landlord, or other increased costs to
Landlord in connection therewith, then Tenant shall reimburse Landlord on demand
as additional rent for the amount of any such increased rates or costs. In
particular, if Tenant uses the "Leased Premises for the preparation of food,
Tenant shall reimburse Landlord on demand, for any part of the premium for
insurance coverage under Section 8.1 hereof required to be paid on account of
such use of the Leased Premises.
SECTION 8.3. MUTUAL COVENANT. Notwithstanding any provision of this Lease
to the contrary, Landlord and Tenant each hereby releases the other, its
officers, directors, employees, and agents from any and all liability or
responsibility for any loss, damage or injury caused by fire or other casualty
for which insurance containing a waiver of subrogation is carried by the injured
party at the time of such loss, damage or injury regardless of the extent of any
recovery by the injured party under such insurance. Both parties agree to carry
casualty insurance containing such waiver of subrogation.
Additionally, during any time when Tenant is self-insuring its insurance
obligations hereunder, Tenant hereby releases the Landlord, its officers,
directors, employees and agents from any and all liability or responsibility
for any loss, damage or injury caused by fire or other casualty, even if such
loss, damage or casualty is caused in whole or in part by Landlord or by any
party for whom Landlord may be responsible.
SECTION 8.4. COVENANT TO HOLD HARMLESS. Except with respect to the gross
negligence or wilful misconduct of Landlord, its agents or employees (unless
covered or required to be covered by Tenant's insurance). Tenant hereby
indemnifies and agrees to hold harmless Landlord, its officers, directors,
partners, employees and agents and any mortgagee or master lessor of the
Shopping Center, from and against any and all claims, actions, damages,
liabilities, costs and expenses, including attorneys' fees, that (i) arise from
or are in connection with the possession, use, occupancy, management, repair,
maintenance or control of the Leased Premises, or any portion thereof, or (ii)
arise from or are in connection with any negligent or wrongful act or omission
of Tenant or Tenant's agents, employees, contractors, licensees or invitees, or
(iii) result from any default, breach, violation or nonperformance of this Lease
or any provision hereof by Tenant, or (iv) result from injury to person or
property or loss of life sustained in the Leased Premises or outside of the
Leased Premises resulting from acts or omissions within the Leased Premises.
Tenant shall, at its own cost and expense, defend any and all actions, suits and
proceedings which may be brought against Landlord or any mortgagee or master
lessor of the Shopping Center with respect to the foregoing. Tenant shall pay,
satisfy and discharge any and all judgments, orders and decrees which may be
received against Landlord or any such mortgagee or master lessor in connection
with the foregoing. In the event Landlord or any other party so indemnified,
shall, without fault, be made a party to any litigation commenced by or against
Tenant, or if Landlord or any such party shall, in its sole
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discretion, intervene in such litigation to protect its interest hereunder, then
Tenant shall protect and hold them harmless and shall pay all costs, expenses
and attorneys' fees incurred or paid by such party(ies) in connection with such
litigation.
Landlord hereby indemnifies and agrees to save harmless Tenant, its
officers, directors, partners, employees and agents from and against any and all
claims, actions, damages, liabilities, costs and expenses including attorneys'
fees, in connection with loss of life, personal injury and/or damage to property
arising from or out of any occurrence in the common areas of the Shopping Center
unless caused by the negligence or default of Tenant, its agents, contractors,
employees, officers, directors, partners, subtenants or concessionaires.
SECTION 8.5. LOSS AND DAMAGE. All Tenant's property of every kind and
description which may at any time be in the Leased Premises shall be kept at
Tenant's sole risk, and Landlord shall not be liable except to the extent
resulting from the negligence or intentional acts of Landlord, its agents or
employees to Tenant, its agents, employees or customers, for any damage, loss,
compensation, accident, or claims whatsoever resulting to Tenant or its property
from the necessity of repairing any portion of the Shopping Center; any
interruption in the use of the Leased Premises; the use or operation (by
Landlord, Tenant, or any other person or persons whatsoever) of any elevators,
heating, cooling, electrical or plumbing equipment or apparatus; the termination
of this Lease by reason of the destruction of the Leased Premises; any fire,
robbery, theft, or any other casualty; any leakage in any part or portion of the
Leased Premises or the Shopping Center; any water, wind, rain or snow that may
leak into, or flow from part of the Leased Premises or the Shopping Center; any
acts or omissions of any occupant of any space adjacent to or adjoining all or
any part of the Leased Premises or any part of the building of which the Leased
Premises are a part; any explosion, casualty, utility failure or malfunction, or
falling plaster; the bursting, stoppage or leakage of any pipes, sewer pipes,
drains, conduits, appliance or plumbing works; or any other cause whatsoever.
ARTICLE IX
DESTRUCTION OF LEASED PREMISES
SECTION 9.1. CONTINUANCE OF LEASE. In the event of any damage to the
Leased Premises by fire or other casualty, this Lease shall not be terminated or
otherwise affected; except that, (a) if more than twenty-five percent (25%) of
the square footage of the Leased Premises shall be damaged by any such fire or
other casualty during the last three (3) years of the Term of this Lease (not
including any Option Periods) or during any renewal or extension of the Term
hereof and the cost of repair or restoration exceeds One Million and 00/100ths
Dollars ($1,000,000.00) as estimated by Landlord, or (b) if Landlord is unable
to rebuild any portion of the building in which the Leased Premises are located
or of the Shopping Center due to any inability (after Landlord uses commercially
reasonable efforts) to obtain any required governmental approval in connection
therewith, or (c) if more than thirty-five percent (35%) of the floor area of
the building in which the Leased Premises are located or of the Shopping Center
shall be damaged or destroyed by fire or other casualty, or (d) if twenty-five
percent (25%) or more of the building in which the Leased Premises are located
or if twenty-five percent (25%) or more of the Shopping Center or the Leased
Premises shall be damaged or destroyed at any time by the occurrence of any risk
not insured under the insurance required to be carried under Article VIII
hereof, then Landlord shall have the option to terminate this Lease within
seventy-five (75) days following the occurrence of such fire or other casualty
by giving written notice to Tenant during such period. In the event Landlord
exercises any of the foregoing options to terminate, this Lease shall
immediately terminate upon Landlord's written notice to Tenant and (i) the
entire proceeds of the insurance provided for in Section 8.1 hereof shall be
paid by the insurance company or companies directly to Landlord and shall belong
to, and be the sole property of Landlord, (ii) the portion of the proceeds of
the insurance provided for in Section 8.2 which is allocable to equipment,
fixtures and other items, which, by the terms of this Lease, rightfully belong
to Landlord upon the termination of this Lease by whatever cause, shall be paid
by the insurance company or companies directly to Landlord, and shall belong to,
and be the sole property of, Landlord, and (iii) Landlord and Tenant shall be
relieved from any and all further liability or obligation accruing under this
Lease from and after the date of such termination.
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Further, if Landlord cancels this Lease by virtue of the fact that it is
during the last three years of the Lease term, Tenant may nullify Landlord's
cancellation within thirty (30) days after receipt thereof by giving notice to
Landlord that Tenant elects to extend the term of the Lease pursuant to any
such right contained in this Lease, in which event the parties shall proceed to
restore in accordance with Section 9.2.
SECTION 9.2. RECONSTRUCTION. If the Leased Premises are damaged by fire or
other casualty and this Lease is not terminated in accordance with Section 9.1
hereof, then all fire and extended coverage insurance proceeds from policies
carried pursuant to Section 8.1 hereof, however recovered, shall be held in
escrow and made available for payment of the cost of repairing, replacing and
rebuilding the Leased Premises. Within seventy (75) days after the casualty
Landlord shall provide Tenant with a good faith estimate of the date on which
the reconstruction of the Leased Premises will be completed. The Minimum Rent
and other charges payable by Tenant to Landlord shall be abated in proportion to
the floor area of the Leased Premises rendered untenantable, and the Sales Break
Point shall likewise be proportionately reduced. Payment of Minimum Rent and all
other charges so abated shall commence and Tenant shall be obligated to reopen
for business ninety (90) days following the date that Landlord advises Tenant
that the Leased Premises are tenantable and Landlord has substantially completed
Landlord's Reconstruction Work, unless Tenant opens at an earlier time in the
damaged area or remains open in such area following destruction or damage, in
which event there shall be no abatement or any such abatement shall terminate as
of the date of Tenant's earlier reopening. Landlord shall be obligated to
commence Landlord's Reconstruction Work and shall diligently pursue the
completion of Landlord's Reconstruction Work and shall cause the same to be
completed as soon thereafter as possible under the attendant circumstances, but
in any event all such Landlord's Reconstruction Work shall be completed and the
Leased Premises reopened for business within one hundred eighty (180) days
following such fire or casualty. After Landlord has completed Landlord's
Reconstruction Work, Tenant shall commence Tenant's Reconstruction Work, at its
expense. Tenant shall comply with all laws, ordinances and governmental rules or
regulations, and shall perform all work or cause such work to be performed with
due diligence and in a first-class manner. All permits required in connection
with said repairs, restoration and reconstruction shall be obtained by Tenant at
Tenant's sole cost and expense. Any amount expended by Tenant in excess of any
insurance proceeds received by Tenant shall be the sole obligation of Tenant.
Landlord shall reconstruct such Leased Premises in accordance with the working
drawings originally approved by Landlord or with (at Landlord's sole election)
new drawings prepared by Tenant and acceptable to Landlord and Tenant
("Landlord's Reconstruction Work"). In no event shall Landlord be required to
repair or replace Tenant's merchandise, trade fixtures, furnishings or
equipment. If Landlord repairs or rebuilds, Tenant, at Tenant's sole cost, shall
repair or replace Tenant's merchandise, trade fixtures, furnishings and
equipment in a manner and to at least a condition equal to that prior to the
damage or destruction thereof ("Tenant's Reconstruction Work"). Except as may be
specifically set forth in this Article IX, Landlord shall not be liable or
obligated to Tenant to any extent whatsoever by reason of any fire or other
casualty damage to the Leased Premises, or any damages suffered by Tenant by
reason thereof, or the deprivation of Tenant's possession of all or any part of
the Leased Premises.
In the event Landlord has not commenced restoration or rebuilding of the
Leased Premises within ninety (90) days of the date of such fire or casualty
loss, or if the Leased Premises are not restored/rebuilt to its former
condition prior to such fire or casualty loss within one hundred eighty (180)
days of the date of such fire or casualty loss, Tenant will have the right, in
either case, to terminate this Lease by providing Landlord notice of such
election and Tenant will vacate and surrender the Leased Premises pursuant to
Section 17.1.
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ARTICLE X
CONDEMNATION
SECTION 10.1. EMINENT DOMAIN. If fifty percent (50%) or more of the
floor area of the Leased Premises shall be taken or condemned by any
governmental authority (including, for purposes of this Article X, any purchase
by such governmental authority in lieu of a taking), then either party may
elect to terminate this Lease by giving notice to the other party not more than
ninety (90) days after the date on which such title shall vest in the
authority. If the parking facilities are reduced below the minimum parking
requirements imposed by the applicable authorities, Landlord may elect to
terminate this Lease by giving Tenant notice within one hundred eighty (180)
days after such taking. In addition, if any Major Tenant shall terminate its
lease with Landlord, pursuant to a taking of its store, Landlord may terminate
this Lease by written notice to Tenant within ninety (90) days after notice to
Landlord that such Major Tenant is terminating its lease. In the case of any
taking or condemnation, whether or not the Term of this Lease shall cease and
terminate, the entire award shall be the property of Landlord; provided,
however, Tenant shall be entitled to any award as may be made for trade
fixtures and other equipment (not including any Tenant's Work required or
permitted under this Lease) which under the terms of this Lease would not have
become the property of Landlord; further provided, that any such award to
Tenant shall not be in diminution of any award otherwise to be made to Landlord
in the absence of such award to Tenant.
SECTION 10.2. RENT APPORTIONMENT. In the event of any taking or
condemnation, the then current Minimum Rent, Sales Break Point and the square
foot floor area in the Leased Premises as determined pursuant to Section 1.1
shall be apportioned as of the date when possession of the Leased Premises is
required to be delivered to the condemning authority or termination of this
Lease, as the case may be, and, if the Term of this Lease shall not have
ceased and have been terminated as of said date, Tenant shall be entitled to a
pro rata reduction in the Minimum Rent payable and Sales Break Point hereunder,
or, if Tenant has prepaid Minimum Rent, Tenant shall be entitled to a pro rata
credit for the Minimum Rent paid hereunder, based on the proportion which the
floor area taken from the Leased Premises bears to the entire floor area of the
Leased Premises immediately prior to such taking.
SECTION 10.3. TEMPORARY TAKING. Notwithstanding anything to the contrary
in this Article X, the requisitioning of the Leased Premises or any part hereof
by military or other public authority for purposes arising out of a temporary
emergency or other temporary situation or circumstances shall constitute a
taking of the Leased Premises by eminent domain when the use or occupancy by
the requisitioning authority is expressly provided to continue, or shall in
fact have continued, for a period of one hundred eighty (180) days or more, and
if this Lease is not thereafter terminated under the foregoing provisions of
this Article X, then for the duration of any period of use and occupancy of the
Leased Premises by the requisitioning authority, all the terms and provisions
of this Lease and obligations of Tenant hereunder shall remain in full force
and effect, except that the Minimum Rent and Sales Break Point shall be reduced
in the same proportion that the floor area of the Leased Premises so
requisitioned bears to the total floor area of the Leased Premises, and Landlord
shall be entitled to whatever compensation may be payable from the
requisitioning authority for the use and occupation of the Leased Premises
for the period involved.
ARTICLE XI
ASSIGNMENT, SUBLETTING AND ENCUMBERING LEASE
SECTION 11.1. NO ASSIGNMENT, SUBLETTING OR ENCUMBERING OF LEASE. (a)
Except as otherwise provided in this Article XI and notwithstanding any
references to assignees, subtenants, concessionaires or other similar entities
in this Lease, Tenant shall not (i) assign or otherwise transfer, or mortgage
or otherwise encumber, this Lease, in whole or in part, or any of its rights
hereunder, (ii) sublet the Leased Premises or any part thereof, or permit the
use of the Leased Premises or any part thereof by any persons other than
Tenant or its agents. Any such attempted or purported transfer, assignment,
mortgaging or encumbering of this Lease or any of Tenant's interest
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hereunder and any attempted or purported subletting or grant of a right to use
or occupy all or a portion of the Leased Premises in violation of the foregoing
sentence, whether voluntary or involuntary or by operation of law or otherwise,
shall be null and void and shall not confer any rights upon any purported
transferee, assignee, mortgagee, or occupant, and shall, at Landlord's option,
result in a "default" under this Lease. Nothing contained elsewhere in this
Lease shall authorize Tenant to enter into any franchise, concession, license,
permit, subtenancy, departmental operation arrangements or the like, except
pursuant to the provisions of this Article XI.
Notwithstanding anything to the contrary set forth in this Article XI,
the following shall govern with respect to certain types of transfers, it being
understood that Tenant shall have the right to assign, sublease or otherwise
transfer its rights under this Lease provided that the conditions and
requirements applicable to the particular assignment, sublease or other transfer
that are specified in subparagraphs (A), (B), (C), OR (D) below are satisfied:
(A) INTRA-ORGANIZATIONAL TRANSFER: Tenant shall have the right, without
Landlord's consent but with prior written notice to Landlord, to assign this
Lease or sublet the Leased Premises to its parent corporation or any of its
wholly-owned subsidiaries, or any affiliate or subsidiary of Tenant's parent
corporation provided that Tenant shall at all times remain primarily obligated
for the performance of the terms, covenants and conditions of this Lease.
(B) ASSIGNMENT AS PART OF A TRANSFER OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS
OF TENANT (Same Use): Landlord's consent shall not be unreasonably withheld or
delayed to an assignment of this Lease (by merger, consolidation or otherwise)
or a sublease for all or any portion of the Leased Premises to another entity
(the "Transferee") to which Tenant shall simultaneously be transferring all or
substantially all of its stock or all or substantially all of its assets,
provided that the following criteria are met: (1) Tenant shall not at the time
of such transfer be in default under any of the terms, covenants and conditions
of this Lease beyond any applicable grace period, (2) such Transferee shall
agree in writing to perform all of the unperformed terms, covenants and
conditions of this Lease, (3) Tenant shall at all times remain primarily
obligated for the performance of the terms, covenants and conditions of this
Lease and (4) the number of stores being transferred must consist of at least
three (3) stores.
(C) ASSIGNMENT AS PART OF A TRANSFER OF LESS THAN ALL OR SUBSTANTIALLY ALL OF
TENANT'S ASSETS (Same Use): Landlord shall not unreasonably withhold its consent
to an assignment, sublease or other transfer ("Transfer") of this Lease to an
entity to whom Tenant is transferring less than substantially all of Tenant's
assets ("Transferee") provided that the following requirements and conditions
shall be satisfied prior to any such Transfer: (i) at the time of such proposed
Transfer, Tenant is not in default of any of the terms, covenants or conditions
of this Lease and shall at such time be operating the Leased Premises pursuant
to Article IV of this Lease; (ii) the proposed Transferee shall agree in writing
to assume all of the terms, covenants and conditions to be performed by Tenant
hereunder, including, but not limited to, the obligation to continue to operate
the Leased Premises in accordance with Article IV of this Lease; (iii) effective
as of the date of such Transfer, the applicable Minimum Rent as provided for in
Section 2.1 shall be increased to [***]; (iv) at the time of such Transfer, the
proposed Transferee shall have a net worth equal to or greater than [***][in
1999 Dollars] as shown in current certified financial statements; and (v) the
proposed Transferee has proven expertise and experience in operating and
managing an entertainment use in a shopping center environment.
In addition to Landlord's right to deny Tenant's proposed Transfer on
the grounds that the items enumerated in (i) through (v) of Section 11.1(a)(C)
have not been met, within fifteen (15) days after Landlord's receipt of notice
from Tenant of its intention to complete the Transfer as provided for in this
Section 11.1(a)(C). Landlord may elect by notice (hereinafter called the "Same
Use Recapture Notice") in writing to Tenant to terminate this Lease and
recapture the Leased Premises, in which event this Lease shall automatically
terminate on the ninetieth (90th) day (hereinafter called the "Same Use
Recapture Date") following Tenant's receipt of the Recapture Notice with the
same
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force and effect as if said Same Use Recapture Date had been designated as the
expiration date of this Lease, and Landlord and Tenant shall upon such Same Use
Recapture Date be released from any and all liabilities thereafter accruing
hereunder, provided, however that Landlord shall be obligated to repay to Tenant
[***] on or before the Same Use Recapture Date. All Minimum Rent, Percentage
Rent and additional rent payable by Tenant hereunder shall be apportioned as of
the Same Use Recapture Date and Tenant shall promptly pay to Landlord any
amounts so determined to be due and owing by Tenant to Landlord, and conversely
Landlord shall promptly reimburse Tenant for any amounts prepaid by Tenant for
periods subsequent to the Same Use Recapture Date. Notwithstanding any Same Use
Recapture Notice given to Tenant by Landlord within the aforesaid fifteen (15)
day period, Tenant shall have the right within fifteen (15) days after its
receipt of the Same Use Recapture Notice to give Landlord notice (hereinafter
called the "Same Use Recision Notice") of its recision of its intention to
assign, transfer or sublease, and upon Landlord's receipt of the Same Use
Recision Notice the Same Use Recapture Notice previously given by Landlord shall
be deemed null and void; in such event. Tenant shall not assign this Lease or
sublet the Leased Premises as proposed in the notice of its intention to assign
or transfer the Lease or sublet the Leased Premises.
(D) ASSIGNMENT WITH PROPOSED CHANGE IN USE: Landlord's consent to an assignment,
transfer or sublease which results in a change in use shall not be unreasonably
withheld provided that the following criteria are met:
(i) the net worth of the assignee, transferee or sublessee shall be equal
to or greater than [***] [in 1999 Dollars] as shown in current certified
financial statements;
(ii) the proposed assignee, transferee or sublessee has proven experience
in the retail business to be conducted in the Leased Premises;
(iii) the proposed assignment, transfer or sublease applies to the entire
Leased Premises; and
(iv) the business to be conducted in the Leased Premises shall (A) not
violate an existing exclusive or restriction granted for the benefit of
another tenant in the Retail Development or (B) complement the
merchandising mix and program for the Retail Development being promoted at
the time of the proposed assignment (i, ii, iii and iv being collectively
referred to as the "Criteria").
In the event Tenant proposes to assign its interest in this Lease or
sublet the whole of the Leased Premises pursuant to the terms of this Section
11.1(a)(D), it shall, notwithstanding Section 11.1(c) to the contrary, first
give thirty (30) days prior written notice thereof (hereinafter called the
"Assignment/Subletting Notice") to Landlord together with all other information
required pursuant to Section 11.1(c) hereof. In the event the proposed assignee
is unacceptable to Landlord, because in Landlord's reasonable belief the
Criteria have not been met, Landlord shall be permitted during the thirty (30)
day period to reject the proposed assignment and Tenant shall remain liable
under the Lease.
In addition, within thirty (30) days after Landlord's receipt of an
Assignment/Subletting Notice and such required and/or requested information
from Tenant as provided in this Section 11.1(a)(D), Landlord may elect by
notice (hereinafter called the "Recapture Notice") in writing to Tenant to
terminate this Lease and recapture the Leased Premises, in which event this
Lease shall automatically terminate on the ninetieth (90th) day (hereinafter
called the "Recapture Date") following Tenant's receipt of the Recapture Notice
with the same force and effect as if said Recapture Date had been designated
as the expiration date of this Lease, and Landlord and Tenant shall upon such
Recapture Date be released from any and all liabilities thereafter accruing
hereunder, provided, however that Tenant shall be obligated to repay to
Landlord the unamortized portion of the Tenant Allowance as provided for in
Section 3.3 hereof on or before the Recapture Date. All Minimum Rent,
Percentage Rent and additional rent payable by Tenant hereunder shall be
apportioned as of the Recapture Date and Tenant shall promptly pay to Landlord
any amounts so determined to be due and owing by Tenant to Landlord, and
conversely Landlord shall promptly reimburse Tenant for any amounts prepaid by
Tenant for periods subsequent to the Recapture Date. Notwithstanding any
Recapture Notice given to Tenant by Landlord within the aforesaid thirty (30)
day period, Tenant shall have the right within fifteen (15) days after its
receipt of the Recapture Notice to give Landlord notice (hereinafter called the
"Recision Notice") of its recision of the
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Assignment/Subletting Notice, and upon Landlord's receipt of the Recision
Notice the Recapture Notice previously given by Landlord shall be deemed null
and void; in such event, Tenant shall not assign this Lease or sublet the
Leased Premises as proposed in its Assignment/Subletting Notice.
(b) Except as otherwise provided herein, if Tenant is a corporation, the
sale, issuance or transfer of any voting capital stock of Tenant or of any
corporate entity which directly or indirectly controls Tenant (unless the
Tenant is a corporation whose stock is publicly traded) which shall result in a
change in the voting control of Tenant or the corporate entity which controls
Tenant shall be deemed to be a prohibited assignment of this Lease within the
meaning of this Article XI. If Tenant is a partnership or an unincorporated
association, then the sale, issuance or transfer of a majority interest therein,
or the transfer of a majority interest in or a change in the voting control of
any partnership or unincorporated association or corporation which directly
or indirectly controls Tenant, or the transfer of any portion or all of any
general partnership or managing partnership interest, shall be deemed to be a
prohibited assignment of this Lease within the meaning of this Article XI.
Except as otherwise provided herein, the consent by Landlord to any assignment,
transfer, or subletting to any party shall not be construed as a waiver or
release of Tenant under the terms of any covenant or obligation under this
Lease or as a waiver or release of Tenant under the terms of any covenant or
obligation under this Lease or as a waiver or release of the non-assignability
covenants in their future application, nor shall the collection or acceptance
of Rent from any such assignee, transferee, subtenant or occupant constitute a
waiver or release of Tenant of any covenant or obligation contained in this
Lease.
(i) Notwithstanding anything herein contained to the contrary, a sale
or transfer of any voting capital stock of Tenant when caused by death (e.g.,
testamentary transfer) or for estate planning purposes (e.g. inter vivos trust)
will not be deemed a prohibited assignment of this Lease.
(ii) The provisions of this Section 11.1 (b) shall not be deemed to
prohibit transfer of limited partnership interests among existing limited or
general partners; however, if either general partner ceases to remain a general
partner of Tenant such occurrence shall be deemed a prohibited assignment of
this Lease under the meaning of this Article XI.
(iii) In addition, Tenant may, without violating the provisions of
this Article XI, and without consent of or notice to Landlord (i) sell or offer
for sale its capital stock to the public in accordance with the qualifications
or registration requirements of the state where Tenant is incorporated and the
Securities Act of 1933, as amended or (ii) issue or transfer shares of Tenant's
capital stock (whether or not such issuance or transfer results in a change in
the persons comprising majority shareholders of Tenant) as part of a so-called
"private placement".
(c) Without conferring any rights upon Tenant not otherwise provided in
this Article XI, should Tenant desire to enter into an assignment, sublease or
transfer of this Lease or Tenant's rights hereunder, Tenant shall request in
writing Landlord's consent to the assignment or, where consent is not required,
provide Landlord prior written notice of the same at least fifteen (15) days
before the proposed effective date of the assignment (or within such other
timeframe as may be provided for herein for a specific type of assignment),
providing the following: (i) the full particulars of the proposed assignment,
sublease or transfer of this Lease or Tenant's rights hereunder, including its
nature (i.e. whether it is an assignment, sublease or transfer) and effective
date, terms and conditions; (ii) a description of the identity, net worth and
previous business experience of the proposed transferee, including, without
limitation, copies of the proposed transferee's latest income, balance sheet
and changes in financial position statements (with accompanying notes and
disclosures of all material changes thereto) in audited form, if available, and
certified as accurate by the proposed transferee; and (iii) any further
information reasonably relevant to the proposed assignment and reasonably
available to Tenant which Landlord shall request after receipt of Tenant's
request for consent. Tenant shall, concurrently with any requests for
Landlord's consent, pay to Landlord a fee in the sum of [***] for Landlord's
review and processing of such request and Landlord shall not be obligated to
review such request prior to Landlord's receipt of such fee. All requests for
assignment, sublease or transfer shall be forwarded to Landlord at the address
provided above and to the on-site mall management office. To the extent
Landlord's consent is required, Landlord shall be required to respond within the
prescribed period (being a minimum of 15 days) and if Landlord's response is a
denial of the proposed transfer, Landlord shall give specific reasons for the
denial. If Landlord
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fails to respond within five (5) business days written notice from Tenant
(provided both to Landlord at the notice address and to the Mall Manager), which
notice must specify that Landlord has failed to respond to the initial request
and that failure to respond within five (5) days of the date of the second
notice will result in approval, then Landlord shall be deemed to have approved
the requested transfer.
(d) Except for a permitted assignment or subletting as specified in Section
11.1(a) and (b) and without conferring any rights upon Tenant not otherwise
provided in this Article XI, in the event of an assignment or transfer of
Tenant's interest in this Lease, or a sublease of all or a portion of the Leased
Premises, to a third party, any monthly rent or other payment accruing to Tenant
as the result of any such assignment, transfer, or sublease, including any lump
sum or periodic payment in any manner relating to such assignment, transfer or
sublease, which is in excess of the Rent then payable by Tenant under this Lease
less any amounts paid by Tenant in commissions, tenant improvements, unamortized
tenant improvements funded by Tenant and attorneys' fees shall be paid [***]
Landlord may require a certificate from Tenant specifying the full amount of any
such payment of whatsoever nature.
(e) Notwithstanding any assignment, subletting or transfer of this Lease or
Tenant's rights hereunder, Tenant shall remain fully liable on this Lease and
for the performance of all terms, covenants and provisions of this Lease;
provided, however, if the transferee, or assignee has a net worth equal to or in
excess of [***] [in 1999 Dollars] as shown in current certified financial
statements on the date of the transfer then Tenant shall be released from its
obligations with respect to the Lease from and after the date of the assignment
or transfer.
SECTION 11.2. ASSIGNMENT OR SUBLET. If this Lease is transferred or
assigned, in whole or in part in violation of the terms of this Lease, or if the
Leased Premises or any part thereof be sublet or occupied by any person or
entity other than Tenant in violation of the terms of this Lease, whether as a
result of any act or omission by Tenant, or operation of law, or otherwise, then
Landlord, whether before or after default by Tenant then Landlord may, in
addition to, and not in diminution of or substitution for, any other rights and
remedies under this Lease or pursuant to law to which Landlord may be entitled
as a result thereof, collect rent from the transferee, assignee, subtenant or
occupant and apply the net amount collected to the Rent herein reserved, but no
such transfer, assignment, subletting, occupancy or collection shall be deemed a
waiver of the covenants contained herein or the acceptance of the transferee,
assignee, subtenant, or occupant as Tenant, or a release of Tenant from the
further performance by Tenant of covenants on the part of Tenant set forth in
this Lease unless Tenant has been otherwise released, including without
limitation pursuant to Section 11.1(e).
SECTION 11.3. TRANSFER OF LANDLORD'S INTEREST. In the event of any transfer
of Landlord's interest in the Leased Premises, including a sale or lease, the
transferor shall be automatically relieved of any and all obligations on the
part of Landlord accruing from and after (but not before) the date of such
transfer, provided that (a) the interest of the transferor, as Landlord, in any
funds then in the hands of Landlord in which Tenant has an interest shall be
turned over, subject to such interest, to the then transferee; and (b) notice of
such sale, transfer or lease shall be delivered to Tenant as required by law.
ARTICLE XII
SUBORDINATION, ATTORNMENT, FINANCING AND ESTOPPEL CERTIFICATE
SECTION 12.1. SUBORDINATION. Tenant agrees that this Lease shall, at the
request of Landlord, be subordinate to any mortgages or deeds of trust that are
now, or may hereafter be, placed upon the Leased Premises and to any and all
advances to be made thereunder, and to the interest thereon, and all renewals,
replacements and extensions thereof, provided that the mortgagees or
beneficiaries named in said mortgages or deeds of trust shall agree to recognize
the interests of
*** Confidential treatment requested.
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Tenant under this Lease in the event of foreclosure, if Tenant is not then in
default. Tenant also agrees that any mortgagee or beneficiary may elect to have
this Lease constitute a prior lien to its mortgage or deed of trust, and in the
event of such election and upon notification by such mortgagee or beneficiary to
Tenant to that effect, this Lease shall be deemed prior in lien to such mortgage
or deed of trust, whether this Lease is dated prior to or subsequent to the date
of said mortgage or deed of trust. Tenant agrees that upon the request of
Landlord, or any mortgagee or beneficiary, Tenant shall execute whatever
reasonable instruments may be required to carry out the intent of this Section
12.1 and Section 12.2; provided that no such instrument may contain any matters
which increase any of Tenant's obligations under this Lease or decrease any of
Tenant's rights under this Lease and such instrument will grant a covenant of
non-disturbance to Tenant.
SECTION 12.2. ATTORNMENT. In the event any proceedings are brought for the
foreclosure of, or in the event of the conveyance by deed in lieu of foreclosure
of, or in the event of exercise of the power of sale under, any mortgage and/or
deed of trust made by Landlord covering the Leased Premises, or in
the event Landlord sells, conveys or otherwise transfers its interest in the
Shopping Center or any portion thereof containing the Leased Premises, this
Lease shall remain in full force and effect and Tenant hereby attorns to, and
covenants and agrees to execute an instrument in writing reasonably satisfactory
to the new owner whereby Tenant attorns to such successor in interest and
recognizes such successor as Landlord under this Lease. Payment by or
performance of this Lease by any person, firm or corporation claiming an
interest in this Lease or the Leased Premises by, through or under Tenant
without Landlord's consent in writing shall not constitute an attornment or
create any interest in this Lease or the Leased Premises.
SECTION 12.3. FINANCING. [INTENTIONALLY DELETED]
SECTION 12.4. ESTOPPEL CERTIFICATE. Tenant shall, without charge therefor,
at any time and from time to time, within thirty (30) days after request
therefor by Landlord, execute, acknowledge and deliver to Landlord a written
estoppel certificate, in reasonable form, certifying to Landlord, any mortgagee,
or any purchaser of the Shopping Center or any other person designated by
Landlord, as of the date of such estoppel certificate: (i) that Tenant is in
possession of the Leased Premises and has accepted the same; (ii) 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 setting
forth such modifications) (iii) whether or not there are then existing any
set-offs or defenses against the enforcement of any right or remedy of Landlord,
or any duty or obligation of Tenant, hereunder (and, if so, specifying the same
in detail); (iv) that Rent is paid currently without any offset or defense
thereto, (v) the dates, if any, to which any Rent has been paid in advance; (vi)
whether or not there is then existing any claim of Landlord's default under this
Lease and if so, specifying the same in detail; (vii) that Tenant has no
knowledge of any event having occurred that authorized the termination of this
Lease by Tenant (or if Tenant has such knowledge, specifying the same in
detail); and (viii) any other matters relating to the status of this Lease that
Landlord or its mortgagee may request be confirmed, provided that such facts are
accurate and ascertainable.
Landlord shall, within thirty (30) days after written request from Tenant,
no more often than once in any Lease Year and provided Tenant is not then in
default hereunder, deliver to Tenant or such persons as Tenant may designate, a
statement in writing certifying to the extent true that: (i) Tenant is in
possession of the Leased Premises; (ii) this Lease is in full force and effect
(as later modified, if such be the case); (iii) the Rent due hereunder is
current; and (iv) that to the best of Landlord's knowledge, information and
belief, Tenant is not in default hereunder.
SECTION 12.5. REMEDIES. Any failure by Tenant to execute any certificate,
statement or instrument in accordance with the foregoing provisions of this
Article XII or any financing statement in accordance with the provisions of
Section 14.2(a), within the time period provided or if no time period is
specified, then within thirty (30) days after written request, shall constitute
a "default" under this Lease.
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ARTICLE XIII
ADVERTISING AND PROMOTION
SECTION 13.1. PROMOTION FUND. Landlord shall establish an advertising and
promotion fund (the "Fund"). The object of the Fund shall be to advertise the
Retail Development in the local metropolitan statistical area and to provide a
program of events, all of which shall, in Landlord's judgment, serve to enhance
and promote the Retail Development and its occupants. Such program of events
may include the promotion of coach traffic to the Retail Development and the
development of a mall video network within the Retail Development offering a
program of information, entertainment and advertisements. The Fund shall be
administered by Landlord and the costs and expenses of such administration
shall be charged to the Fund. Landlord shall expend all amounts paid to the
Fund by the tenants in the Retail Development for the purposes herein set forth.
SECTION 13.2. PROMOTION FUND CONTRIBUTION. Tenant's annual contribution to the
Fund shall be the Fund Contribution (reduced proportionately for a partial Lease
Year) as defined in the Data Sheet. Upon the Grand Opening, Tenant shall also
pay Tenant's one-time initial contribution or Grand Opening Fee which is defined
in the Data Sheet. The Fund Contribution payable by Tenant for each Lease Year
shall be increased commencing with the second Lease Year of the Term of this
Lease, and each Lease Year thereafter, by a percentage equal to the percentage
increase from the [***] ("Index") to the "current period" of the Index of the
Lease Year for which the adjustment is being made; provided, however, if the
first Lease Year is less than six (6) months, the first adjustment to the Fund
Contribution shall be after the first full Lease Year. Except as herein
expressly provided, the term "base period" shall initially refer to the Index
published for the month of October immediately preceding the Commencement Date.
Following the initial increase in the Fund Contribution hereunder, the term
"base period" shall refer to the Index published for the month of October
immediately preceding the Lease Year for which the Fund Contribution was last
adjusted hereunder. The "current period" of the Index shall refer to the Index
published for the month of October immediately preceding the Lease Year for
which an adjustment is being made. In the event the Index shall not be published
for any of the above-described months, then the Index published for the month
closest, but prior, to the described month shall be used in its place. The
annual Fund Contribution shall be payable by Tenant to Landlord, or as Landlord
may direct, in twelve (12) equal monthly installments, commencing on the
Commencement Date, at the same time and in the same manner as the monthly
installments of Minimum Rent are payable.
Notwithstanding the foregoing, in lieu of Tenant's payment of the Grand
Opening Fee, during the period from the Delivery of Possession Date through and
including the Grand Opening date ("Advertising Period"), Tenant shall place
advertisements (including, without limitation, billboards; signs; newspapers,
radio, television ads; and direct mail) at a cost equal to the amount of the
Grand Opening Fee that Tenant would have otherwise been obligated to pay
("Eligible Advertising") which shall specifically identify the Leased Premises,
including the name and location of the Shopping Center. At or prior to the time
the Eligible Advertising is placed, Tenant shall submit to Landlord copies of
the actual Eligible Advertising or other written third-party evidence
reasonably satisfactory to Landlord evidencing the Eligible Advertising,
together with all receipts, canceled checks or other third-party evidence
reasonably satisfactory to Landlord establishing Tenant's payment for the
Eligible Advertising. In the event that the cost of the Eligible Advertising
does not meet or exceed the Grand Opening Fee by the end of the Advertising
Period, Tenant shall pay the balance to Landlord within thirty (30) days of
receipt of a bill from Landlord.
SECTION 13.3. ADVERTISEMENTS [INTENTIONALLY DELETED].
SECTION 13.4. NETWORK. Landlord may cause to be developed a mall video
network within the Retail Development (the "Network"). The object of the Network
shall be to provide a program of information, entertainment and advertisements,
which shall, in Landlord's judgment, serve to enhance or promote the Retail
Development and its occupants. The Network shall have the right to sell
available time and access on the Network for advertisements or other uses. The
Network shall be under the sole and exclusive direction of Landlord and shall be
administered by Landlord. The costs and expenses paid or incurred by Landlord
for administering, operating, equipping, staffing,
*** Confidential treatment requested.
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protecting, insuring, repairing, replacing and maintaining the Network shall be
charged to the Fund. Any production by Landlord of advertising messages for
Tenant and any air time on or access to the Network is subject to availability,
as determined solely by Landlord, and shall be at the then applicable rates and
fees set by Landlord. Landlord shall have the right to reject, remove or
discontinue showing any video taped advertising message of the business
conducted, or to be conducted, in the Leased Premises (herein "Tenant Video") or
advertising message on the Network the content of which is, in the opinion of
Landlord, unethical, misleading, in bad taste, or shall tend to injure the
reputation of the Retail Development or its occupants, or shall be deemed to be
detrimental to the Retail Development or is in violation of any applicable rule,
law or existing agreement with occupant(s) of the Retail Development. Tenant
acknowledges that Tenant shall be solely responsible for the content of its
Tenant Video and except with respect to the gross negligence of Landlord and the
Network, Tenant agrees to save harmless Landlord, its officers, directors,
partners, employees and agents from and against any and all claims, actions,
damages, liability, cost or expense, including attorneys' fees that arise from
or with respect to the content of such advertising message, including without
limitation any claims for infringement of the intellectual property rights of
others or actions for unfair competition. Landlord reserves the right at any
time to dissolve the Network and cease providing its promotional services as
well as Tenant Videos and in lieu thereof, to provide, or cause to be provided,
a program of advertising and promotional events which in Landlord's sole
judgment, will serve to promote the Retail Development and its occupants.
ARTICLE XIV
DEFAULT AND REMEDIES
SECTION 14.1. ELEMENTS OF DEFAULT. If any one or more of the following
events occur, said event or events shall hereby be classified as a "default" as
that term is used throughout this Lease: (a)(i) the failure of Tenant to take
possession of the Leased Premises at the Delivery of Possession Date, or (ii)
the failure of Tenant to open its doors for business within thirty (30) days
after the date specified in Section 1.3 hereof, or (iii) if Tenant vacates or
abandons the Leased Premises and permits the same to remain unoccupied and
unattended for three (3) days after written or telephone notice, or (iv) if
Tenant fails to maintain normal inventory levels and employee staff for the
conduct of its normal business activities in the Leased Premises for three (3)
days after written or telephone notice, or (v) the failure of Tenant to operate
its business in compliance with Section 4.2 for the purposes specified in
Section 4.1 and Tenant fails to cure the same within ten (10) days after written
notice, or (vi) in the event of the sale or removal of a substantial portion of
Tenant's property located in the Leased Premises in a manner which is outside
the ordinary course of Tenant's business; (b) the failure of Tenant to pay any
Rent or other charges required to be paid by Tenant when same shall become due
and payable hereunder and such failure continues for ten (10) days after written
notice; (c) the failure of Tenant to perform or observe any term or condition of
this Lease and such failure shall continue for thirty (30) days after written
notice; provided, however, such period shall be extended for an additional
reasonable period if Tenant has diligently commenced the curing of such default
within the thirty (30) days period and is diligently pursuing the same to
completion, but in no event shall either the thirty (30) days period or any
extension thereof apply to Tenant's covenant to operate pursuant to Article IV
of this Lease, unless the same is excused pursuant to Article IX or Article X of
this Lease; (d) if Tenant shall be given three (3) notices of the same default
under subparagraphs (b) or (c) within any period of eighteen (18) months,
notwithstanding any subsequent cure of the failure to perform or observe the
terms or conditions of this Lease as identified in such notices; (e) if any writ
of execution, levy, attachment or other legal process of law shall occur upon a
substantial and material part of Tenant's assets, merchandise, fixtures, or
Tenant's estate or interest in the Leased Premises; (f) Tenant shall be
liquidated or dissolved or shall begin proceedings toward such liquidation or
dissolution, or shall in any manner permit the divestiture of all, or any
substantial part of Tenant's assets.
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Section 14.2. Landlord's Remedies. In the event of any such default or
breach by Tenant, Landlord may at any time thereafter, with or without further
notice or demand and without limiting Landlord in the exercise of any right or
remedy which Landlord may have by reason of such default or breach:
(a) Perform, on behalf and at the expense of Tenant, any obligation
of Tenant under this Lease which Tenant has failed to perform and of which
Landlord shall have given at least three (3) days' notice (except in the case
of emergency, in which event no such notice shall be required), the cost of
which performance by Landlord, together with interest therein at the interest
rate (as specified in Section 20.14 hereof) from the date of such expenditure,
shall be deemed additional rent and shall be payable by Tenant to Landlord upon
demand.
(b) Without further notice, re-enter and repossess the Leased Premises,
by summary proceedings or otherwise, and remove Tenant and all other persons and
property from the Leased Premises, and store such property in a public warehouse
or elsewhere at the cost of and for the account of Tenant without resort to
legal process and without Landlord being deemed guilty of trespass or conversion
or becoming liable for any loss or damage occasioned thereby. In connection
herewith, Landlord shall have, in addition to any other remedies, any and all
self-help remedies, including but not limited to a forcible entry into the
Leased Premises or a "lock-out" accomplished by changing the locks on the Leased
Premises. No re-entry of the Leased Premises shall be construed as an election
by Landlord to accept Tenant's surrender of the Leased Premises or to terminate
this Lease unless a written notice of such intention is given by Landlord to
Tenant.
(c) Declare the entire balance of the Rent, and all other amounts to be
paid by Tenant hereunder for the remainder of the Term to be due and payable
immediately, and collect such balance in any manner not inconsistent with
applicable law. The amount of additional rent and Percentage Rent payable with
respect to each Lease Year remaining in the Term after such default (including
the Lease Year during which such default occurred) shall be conclusively
presumed to be equal to the average additional rent and Percentage Rent payable
with respect to each completed Lease Year preceding such default; provided,
however, that if such default occurs before the expiration of [***] Lease
Years, then the amount of additional rent and Percentage Rent payable with
respect to each Lease Year remaining in the Term after such default (including
the Lease Year or partial Lease Year during which such default occurred) shall
be conclusively presumed to be equal to [***] times the average monthly
additional rent and Percentage Rent payable prior to such default.
Notwithstanding anything to the contrary in this Lease, Landlord hereby
agrees to use reasonable efforts to mitigate damages; provided, however, that
Landlord, in attempting to lease the Leased Premises shall not be obligated to
give preference to the Leased Premises over any other available space in the
Shopping Center. In consideration of the preceding sentence, Tenant hereby
acknowledges that the Leased Premises are located within a super-regional
discount specialty retail shopping center and that the quality and record of
experience of a prospective tenant and the type of prospective tenant (compared
with the then current tenant mix in the Shopping Center) are principal
considerations which Landlord shall employ in determining whether to lease the
Leased Premises.
(d) Terminate this Lease by giving written notice of such termination
to Tenant, which termination shall be effective as of the date of such notice
or any later date therefor specified by Landlord in such notice (provided, that
without limiting the generality of the foregoing provisions, Landlord shall not
be deemed to have accepted any abandonment or surrender by Tenant of any or all
of the Leased Premises or Tenant's leasehold estate under this Lease unless
Landlord has so advised Tenant expressly and in writing, regardless of whether
Landlord has re-entered or relet any or all of the Leased Premises or exercised
any or all of Landlord's other rights under this Lease or applicable law).
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(e) In Landlord's own name or otherwise, relet any or all of the Leased
Premises with or without any additional premises, for any or all of the
remainder of the Term (or, if this Lease has then been terminated, for any or
all of the period which would, but for such termination, have constituted the
remainder of the Term) or for a period exceeding such remainder, on such terms
and subject to such conditions as are acceptable to Landlord (including, by way
of example rather than of limitation, the alteration of any or all of the
Leased Premises in any manner which, in Landlord's judgment, is necessary or
desirable in connection with such reletting, and the allowance of one or more
concessions or "free-rent" or reduced-rent periods), and collect and receive
the rents thereof. Tenant shall pay to Landlord, at the times and in the manner
specified by the provisions of this Lease (unless Landlord has elected to
accelerate Rent as provided above in subparagraph (d), in which event Tenant
shall be obligated to pay such accelerated amount as provided in such
subparagraph), (i) the installments of the Minimum Rent, additional rent and
Percentage Rent accruing during such remainder (or, if this Lease has then been
terminated, damages equalling the respective amounts of such installments
(determined as provided in subparagraph 14.2 (c) which would have accrued
during such remainder, had this Lease not been terminated)), plus (ii) the cost
to Landlord of any such reletting (including, by way of example rather of
limitation, any attorneys's fees, leasing or brokerage commissions, repair or
improvement expenses and the expense of any other actions taken in connection
with such reletting) less any monies received by Landlord with respect to such
remainder from such reletting of any or all of the Leased Premises.
(f) Recover from Tenant, an amount equal to (i) all items of accrued and
unpaid Rent, including, without limitation, the then unamortized amount of the
Construction Allowance; (ii) all reasonable expenses (including, by way of
example rather than of limitation, all repossession costs, management expenses,
operating expenses, legal expenses and attorney's fees) incurred by Landlord in
curing or seeking to cure any default or in exercising or seeking to exercise
any of Landlord's rights and remedies under the provisions of this Lease or at
law or in equity on account of any default, plus (iii) interest on all such
expenses, at the rate provided in Section 20.14, all of which expenses and
interest shall be payable by Tenant immediately on demand therefor by Landlord.
(g) Without terminating this Lease, maintain Tenant's right to
possession, in which case this Lease shall continue in effect whether or not
Tenant shall have vacated the Leased Premises. In such event, Landlord shall be
entitled to enforce all of Landlord's rights and remedies under this Lease,
including the right to recover Rent as it becomes due hereunder.
(h) Any damage or loss of Rent sustained by Landlord may be recovered by
Landlord, at Landlord's option, at the time of the reletting or termination, in
a single action or in separate actions, from time to time, as said loss of Rent
or damages shall accrue, or in a single proceeding deferred by Landlord or with
jurisdiction reserved by the court, until the expiration of the Term of this
Lease (in which event Tenant hereby agrees that, at Landlord's option, the
cause of action shall not be deemed to have accrued until the date of
expiration of said Term).
(i) Nothing contained herein shall prevent the enforcement of any claim
Landlord may have against Tenant for anticipatory breach of this Lease. In the
event of any anticipatory breach by Tenant of any of the covenants or provisions
hereof or in the event of Tenant's default, Landlord shall have the right of
injunction and the right to invoke any remedy allowed at law or in equity as if
re-entry, summary proceedings and other remedies were not provided for herein.
Mention in this Lease of any particular remedy shall not preclude Landlord from
any other remedy under this Lease or, at law or in equity. Tenant hereby
expressly waives for itself and all persons claiming by or through Tenant, any
and all rights to redeem, reinstate or restore, or obtain relief from forfeiture
of this Lease granted by or under any present or future law in the event of
Tenant being evicted or dispossessed for any cause, or in the event of Landlord
obtaining possession of the Leased Premises by reason of the violation by Tenant
of any of the covenants and conditions of this Lease.
(j) In case suit shall be brought for recovery of the Leased Premises,
for the recovery of Rent or any other amount due under the provisions of this
Lease, or because of the breach of any other covenant herein contained on the
part of Tenant to be kept and performed, and a breach shall be established,
Tenant shall pay to Landlord all costs and expenses incurred therefor,
including Landlord's attorney's reasonable fees and expenses.
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(k) Nothing herein contained shall limit or prejudice Landlord's right to
prove and obtain as damages, by reason of any default by Tenant, an amount
equal to the maximum allowed by statute or rule of law in effect at the time
when, and governing the proceedings in which, such damages are to be proved. No
expiration or termination of this Lease, abandonment, re-entry by Landlord or
vacancy, shall relieve Tenant of any of its liabilities and obligations under
this Lease (whether or not any or all of the Leased Premises are relet), and
Tenant shall remain liable to Landlord for all damages resulting from any
default by Tenant, including any damage resulting from the breach by Tenant of
any of its obligations to pay Minimum Rent, Percentage Rent, additional rent
and any other sums which Tenant is obligated to pay hereunder.
(l) The rights and remedies of Landlord under this Lease shall be deemed
to be cumulative, and no one of such rights or remedies shall be exclusive at
law or in equity of the other rights and remedies of Landlord on account of a
default by Tenant, and the exercise of any one such right or remedy by Landlord
shall not impair Landlord's standing, right or power to exercise any other
right or remedy.
Section 14.3. Bankruptcy. (a) Neither Tenant's interest in this Lease, nor
any estate hereby created in Tenant nor any interest herein or therein, shall
pass to any trustee or receiver or assignee for the benefit of creditors or
otherwise by operation of law, except as may specifically be provided pursuant
to the Bankruptcy Code (11 USC Section 101 et seq.), as the same may be amended
from time to time.
(b) It is understood and agreed that this Lease is a lease of real
property in a shopping center as such lease is described in Section 365 of the
Bankruptcy Code, as the same may be amended from time to time. Upon the filing
of a petition by or against Tenant under the Bankruptcy Code, Tenant, as debtor
and as debtor-in-possession, and any trustee who may be appointed with respect
to the assets of or estate in bankruptcy of Tenant, agree to pay monthly in
advance on the first day of each month, as reasonable compensation for the use
and occupancy of the Leased Premises, an amount equal to all Minimum Rent,
additional rent and other charges otherwise due pursuant to this Lease, and to
pay Percentage Rent monthly, at the percentage factor set forth in this Lease
for the Lease Year in which such month falls, on all of the Gross Sales during
such month in excess of one-twelfth (1/12th) of the Sales Break Point for such
Lease Year; payment of all such Percentage Rent to be made by the tenth (10th)
day of the succeeding month. Included within and in addition to any other
conditions or obligations imposed upon Tenant or its successor in the event of
the assumption and/or assignment of this Lease are the following: (i) the cure
of any monetary defaults and reimbursement of pecuniary loss within not more
than thirty (30) days of assumption and/or assignment; (ii) the deposit of an
additional sum equal to not less than three (3) months' Minimum Rent and
additional rent to be held pursuant to the terms of Section 2.4 of this Lease,
which sum shall be determined by Landlord, in its sole discretion, to be a
necessary deposit to secure the future performance under this Lease by Tenant or
its assignee; (iii) the use of the Leased Premises as set forth in Section 4.1
of this Lease and the quality, quantity and/or lines of merchandise, goods or
services required to be offered for sale are unchanged; and (iv) the prior
written consent of any mortgagee to which this Lease has been assigned as
collateral security.
Section 14.4. Additional Remedies and Waivers. Notwithstanding any other
provision contained in this Lease to the contrary, all rights and remedies of
Landlord set forth herein (including but not limited to Landlord's rights
respecting lockout, re-entry, self-help, repossession, security interests and
lien rights and foreclosure) shall be in addition to (and not in substitution
of) any and all other rights and remedies now or hereafter provided by law,
including but not limited to rights and remedies provided by the statutes,
rules, regulations, laws and judicial decisions of the State, and all such
rights and remedies shall be cumulative; and none of such rights and remedies
so provided by law shall be conditioned or limited by any conditions or
limitations on the remedies granted to Landlord under the terms of this Lease,
nor upon any notice and/or passage of time that may be required hereunder in
order for an event or condition to constitute a default or an event of default
as that term is defined in this Lease.
Section 14.5. Landlord's Cure of Default. If Tenant shall be in default
hereunder, Landlord shall have the option, but not the obligation, upon three
(3) days written notice to Tenant (except in the event of an emergency, in which
event no notice shall be required), to cure the act or failure constituting said
default for the account of and at the expense of Tenant. Landlord's cure or
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attempt to cure any act or failure constituting the default by Tenant shall not
result in a waiver or release of Tenant. Tenant agrees to pay the costs
incurred by Landlord pursuant to this Section 14.5 plus interest, in accordance
with Section 20.14 hereof, on all sums expended by Landlord pursuant to this
Section 14.5 from the date of such expenditure plus a charge of fifteen percent
(15%) of such costs, to Landlord upon demand, as additional rent.
SECTION 14.6. SECURITY INTEREST. Tenant may grant a security interest,
encumber or pledge its equipment, personal property, inventory and moveable
trade fixtures located on or about the Leased Premises, with respect to
financing which benefits this store location and Landlord shall agree to
subordinate its lien, if any, on such equipment to such financing. In no event,
however, shall Tenant be permitted to mortgage, hypothecate, encumber or pledge
the leasehold interest in the Leased Premises.
SECTION 14.7. TENANT'S REMEDIES. In the event Landlord shall fail to
perform any obligation specified in this Lease, which default materially and
adversely affects Tenant's operations, then Tenant may, after the continuance of
any such default for thirty (30) days after written notice thereof by Tenant to
Landlord (except in the event of an emergency when only reasonable notice
thereof by Tenant to Landlord (except in the event of an emergency when only
reasonable notice shall be required to be given to Landlord under the
circumstances), cure such default all on behalf of and at the expense of
Landlord and do all necessary work and make all necessary payments in connection
therewith and Landlord shall, on demand, pay Tenant forthwith, the amount so
paid by Tenant together with interest thereon at the rate specified in Section
20.14 hereof from the date of payment until re-payment.
ARTICLE XV
RIGHT OF ACCESS
Landlord may, at any reasonable time or times, upon prior notice to Tenant
(except in the event of an emergency, or if Tenant is in default under this
Lease, in which event no notice shall be required), before and after the
Commencement Date, enter upon the Leased Premises, any portion thereof and any
appurtenance thereto (with men and materials, if required) for the purpose of:
(a) inspecting the same; (b) making such repairs, replacements or alterations
which Landlord may be required to perform as herein provided or which it may
deem desirable for the Leased Premises; and (c) showing the Leased Premises to
prospective purchasers, lenders or lessees. Landlord hereby expressly reserves
the right, exercisable at any time and from time to time, to erect, use,
maintain and repair pipes, conduits, plumbing vents, ducts and wires in, to,
under and through the Leased Premises as and to the extent that Landlord may now
or hereafter deem to be necessary or appropriate for the proper operation and
maintenance of the Shopping Center. Any redecorating or repair necessitated by
reason of location of same within the Leased Premises shall be the
responsibility of Landlord. Landlord agrees to hold Tenant harmless from any
damage or injury to person or property to the extent resulting from Landlord
exercising its rights under this Article XV. Notwithstanding anything contained
in this Lease to the contrary, if such work prevents Tenant from operating its
business within the Leased Premises for three (3) or more consecutive days,
Landlord shall after written notice from Tenant to Landlord, abate Minimum Rent
after such three (3) days of disruption on a day-to-day basis until Tenant is
able to operate its business in the Leased Premises.
In the exercise of its rights under this Article XV, Landlord shall use
reasonable efforts to avoid material interference with the operation of Tenant's
business within the Leased Premises. Landlord agrees that except in the event of
an emergency, and provided Tenant shall make an employee of Tenant available to
accompany Landlord following Landlord's notice to Tenant of the necessity
therefor, Landlord shall not enter the Leased Premises during the Term of this
Lease without an employee of Tenant accompanying Landlord's representative.
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ARTICLE XVI
DELAYS
If Landlord or Tenant is delayed or prevented from performing any of their
respective obligations during the Term of this Lease because of strikes,
lockouts, labor troubles, inability to procure materials, failure of power,
governmental restrictions, a delay created by the other party, or reasons of a
like nature not the fault of the party delayed in performing such obligation
(collectively "Delays"), then the period of such delays shall be deemed added
to the time herein provided for the performance of any such obligation and the
defaulting party shall not be liable for losses or damages caused by such
delays; provided, however, that, subsequent to the Commencement Date, this
Article XVI shall not apply to the payment of any sums of money required to be
paid by Tenant hereunder or any obligation of Landlord or Tenant that can be
satisfied by the payment of money, and shall not excuse Tenant from its
obligation to continuously operate its business within the Leased Premises in
accordance with the provisions of Sections 4.1 and 4.2 hereof.
ARTICLE XVII
END OF TERM
SECTION 17.1. RETURN OF LEASED PREMISES. Upon the Expiration Date or
earlier termination of this Lease, Tenant shall quit and surrender to Landlord
the Leased Premises, broom-clean, in good order and condition, ordinary wear and
tear excepted, and shall surrender to Landlord all keys to or for the Leased
Premises and inform Landlord of all combinations of locks, safes and vaults, if
any, in the Leased Premises. Subject to the provisions of Section 3.5 hereof,
Tenant, at its expense, shall promptly remove all personal property of Tenant,
and repair all damage to the Leased Premises caused by such removal. Any
personal property of Tenant not removed within ten (10) days following the
Expiration Date or earlier termination of this Lease shall be deemed to have
been abandoned by Tenant and to have become the property of Landlord, and may be
retained or disposed of by Landlord, as Landlord shall desire. Tenant's
obligation to observe or perform the covenants set forth in this Section 17.1
shall survive the Expiration Date or earlier termination of this Lease.
SECTION 17.2. HOLDING OVER. If Tenant shall hold possession of the Leased
Premises after the Expiration Date or earlier termination of this Lease at
Landlord's option (a) Tenant shall be deemed to be occupying the Leased
Premises as a tenant from month-to-month, at one and one-half times the Minimum
Rent and other charges in effect during the last Lease Year immediately
preceding such holdover and otherwise subject to all of the terms and
conditions of this Lease, or (b) Landlord may exercise any other remedies it
has under this Lease or at law or in equity including an action for wrongfully
holding over.
Notwithstanding the foregoing, if Tenant is negotiating in good faith with
Landlord to renew or extend the Term of this Lease for the Leased Premises (or
a relocation within the Shopping Center), then Tenant may occupy the Leased
Premises on a month-to-month tenancy at one-twelfth (1/12th) of the annual
Minimum Rent for the last year of the Term of the Lease.
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<PAGE> 48
ARTICLE XVIII
COVENANT OF QUIET ENJOYMENT
Landlord covenants that if and so long as Tenant pays the Rent and all
other charges provided for herein, and performs all of its obligations provided
for herein, Tenant shall at all times during the Term hereof peaceably have,
hold and enjoy the Leased Premises, without any interruption or disturbance from
Landlord, or anyone lawfully or equitably claiming through or under Landlord,
subject to the terms hereof and any mortgage or deed of trust to which this
Lease shall be subordinate.
ARTICLE XIX
UTILITIES
SECTION 19.1. UTILITIES. Tenant agrees to connect to and use the utilities
(including electricity, water, gas, cooling and/or heating system, telephone and
any other utility) supplied to the Leased Premises in accordance with the
criteria set forth in the Exhibits attached to this Lease, Landlord's schedule
of mechanical and electrical design criteria, Landlord's rules and regulations,
and the rules and regulations of the utility companies supplying the service.
Tenant shall be solely responsible for and promptly pay all costs and charges,
including installation thereof where applicable, for all water, gas, cooling,
heat, electricity, sewer and other utilities provided or used in or at the
Leased Premises, commencing with the Delivery of Possession Date and continuing
throughout the Term of this Lease. If Landlord shall elect to supply any of the
utilities used upon or furnished to the Leased Premises, Tenant agrees to pay
as additional rent a per square foot charge based on Tenant's estimated usage,
as reflected on a monthly invoice to be provided by Landlord; provided,
however, in no event shall Tenant's total charges for utilities provided by
Landlord exceed what Tenant would be charged by the local utility company if it
were billed directly by such utility as a direct retail customer. Landlord
shall not be liable to Tenant for any loss, damage or expense which Tenant may
sustain if the utilities, or the quality or character of utilities used upon or
furnished to the Leased Premises are no longer available or suitable for
Tenant's requirements, or if the supply of any such utility ceases or is
interrupted as a result of any cause and no such change, interruption or
cessation of service shall constitute an eviction of Tenant. Any furnishing by
Landlord of light, cooling and/or heat or power shall be conditioned upon the
availability of adequate energy sources. Landlord shall have the right to
reduce heat, lighting and air conditioning within the Shopping Center,
including, without limitation, the Leased Premises and the common areas, as
required by any mandatory or voluntary fuel or energy saving allocation, or any
similar statute, regulation, order or program. Notwithstanding the foregoing,
in the event that any foregoing utility service is interrupted for three (3)
consecutive working days solely as a result of any of Landlord's or any of
Landlord's agents' wilful acts of misconduct or negligence, and Tenant is
unable to operate its business within the Leased Premises as a result thereof,
then Landlord shall, after written notice from Tenant to Landlord concerning
such interruption, abate Minimum Rent on a day-to-day basis if and until such
time as said utility services are restored.
SECTION 19.2. ELECTRICITY, TELEPHONE AND GAS. All telephone, electric and
gas (with gas being available only to food service tenants) utility required by
Tenant for the Leased Premises shall (if available) be obtained by Tenant in
accordance with Exhibit D and shall be installed by the appropriate company or
utility. All charges for such utility service (including the installation
thereof) shall be paid by Tenant directly to the company or utility providing
any such service, as and when they become due and payable.
SECTION 19.3. TRASH AND GARBAGE REMOVAL. Tenant shall be solely
responsible for trash and garbage removal from the Leased Premises including
the placing of all trash and garbage in containers provided by Landlord or
Landlord's contractor for such purpose. In the event Landlord elects to furnish
such service to the tenants in the Shopping Center, Tenant agrees to use only
the service provided by Landlord and to pay for such service (including both
the cost of leasing containers and the cost of removal) monthly, as additional
rent, in accordance with the uniform
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<PAGE> 49
schedule of charges to be established by Landlord. In no event shall Tenant be
obligated to pay Landlord more for such trash and garbage removal service than
the prevailing competitive rates of reputable independent trash removal
contractors for service similar to that provided by Landlord.
SECTION 19.4. WATER AND SEWER. The cost of water and sanitary sewer for
usage in the Shopping Center shall be included in Common Area Maintenance
Expenses, except for food service tenants which may be billed directly by
Landlord or by the supplier of water and sanitary service and any other tenants
which are billed directly by Landlord or such supplier. Landlord reserves the
right to install a water meter in the Leased Premises at any time or from time
to time to measure Tenant's consumption of water therein and bill Tenant
directly for the cost of such consumption. Tenant shall pay, as additional
rent, the amount of each bill within fifteen (15) days after such bill is
rendered.
SECTION 19.5. GREASE INTERCEPTORS. Landlord, in its commercially
reasonable judgment, will arrange for regular periodic service and cleaning of
all grease interceptors at Tenant's expense. Cost of service and cleaning of
grease interceptors will be allocated among grease interceptors serving food
court(s) and grease interceptors serving individual tenants in proportion to
grease trap size. Tenants served by individual grease traps will pay their pro
rata share of the cost for their grease trap. The share of grease trap service
and cleaning cost apportioned to food court grease traps will be paid by food
court tenants as part of the food court common facilities expenses.
ARTICLE XX
MISCELLANEOUS
SECTION 20.1. ENTIRE AGREEMENT. This Lease together with the Exhibits,
attached hereto and incorporated herein contains the entire agreement between
the parties hereto and there are no promises, agreements, conditions,
undertakings, or warranties, or representations, oral or written, express or
implied, between them other than as herein set forth. No change or modification
of this Lease or of any of the provisions hereof shall be valid or effective
unless the same is in writing and signed by the parties hereto. No alleged or
contended waiver of any of the provisions of this Lease shall be valid or
effective unless in writing signed by the party against whom it is sought to be
enforced.
SECTION 20.2. NOTICES. No notice or other communication given under this
Lease shall be effective unless the same is in writing and is delivered in
person or mailed by registered or certified mail, return receipt requested,
first class, postage prepaid, or delivered by Federal Express or a comparably
reliable national air courier service (i.e. on which delivers service in at
least 48 states) provided that any such courier service provides written
evidence of delivery. Any such notice or communication shall be addressed:
(a) If to Landlord, at 1300 Wilson Boulevard, Suite 400, Arlington,
Virginia 22209, Attention: General Counsel, or to such other address as
Landlord shall designate by giving notice thereof to Tenant, with a copy for
informational purposes only to the Mall Manager of the Retail Development.
(b) If to Tenant, at the address set forth for Tenant on page 1 of this
Lease or at the Leased Premises, or such other address as Tenant shall
designate by giving notice thereof to Landlord, with a courtesy copy but not
required, for effective notice to: Gray Cary Ware & Friedenrich, 400 Hamilton
Avenue, Palo Alto, CA 94301: Attn: Daniel K. Seubert.
The date of service of any notice or other communication given by mail shall be
three (3) days after the date on which such notice is deposited in the U.S.
mails. The date of service of any notice given by courier service (as described
above) shall be one (1) day after deposit with such courier service.
SECTION 20.3. GOVERNING LAW. It is the intent of the parties hereto that
all questions with respect to the construction of this Lease and the rights and
the liabilities of the parties hereto shall be determined in accordance with
the laws of the jurisdiction in which the Leased Premises is located
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<PAGE> 50
and that all disputes arising hereunder shall be heard and decided in the local
jurisdiction where the Leased Premises is located.
SECTION 20.4. SUCCESSORS. All rights and liabilities herein given to,
or imposed upon, the respective parties hereto shall extend to and bind the
several respective heirs, executors, administrators, successors, and assigns of
the said parties; and if there shall be more than one Tenant, or more than one
person or entity acting collectively as Tenant, they shall all be bound jointly
and severally by the terms, covenants and agreements herein. Any restriction on
or requirement imposed upon Tenant hereunder shall be deemed to extend to
Tenant's Guarantor, Tenant's sublessees, Tenant's assignees and Tenant's
invitees, and it shall be Tenant's obligation to cause the foregoing persons to
comply with such restrictions or requirements. No rights, however, shall inure
to the benefit of any assignee or other transferee of Tenant, and no rights or
benefits shall be conferred upon any such assignee or transferee by reason of
this Section 20.4, unless such rights or benefits shall be expressly otherwise
set forth in this Lease.
SECTION 20.5. LIABILITY OF LANDLORD. Neither Landlord, Landlord's
beneficiaries, any persons or entities comprising Landlord, nor any successor in
interest to Landlord (or to such persons or entities) shall have any personal
liability for any failure by Landlord to perform any term, covenant or condition
of this Lease. If Landlord shall fail to perform any covenant, term or condition
of this Lease upon Landlord's part to be performed, and if as a consequence of
such default Tenant shall recover a money judgment against Landlord, such
judgment shall be satisfied only out of the proceeds of sale received upon
execution of such judgment and levied thereon against the right, title and
interest of Landlord in the Shopping Center and out of rents or other income
from such property receivable by Landlord, or out of the consideration received
by Landlord from the sale or other disposition of all or any part of Landlord's
right, title and interest in the Shopping Center, subject, nevertheless, to the
rights of Landlord's mortgagee, and neither Landlord nor any of the co-partners
comprising the partnership which is Landlord herein shall be liable for any
deficiency. The foregoing limitation of liability shall be noted in any judgment
secured against Landlord and in the judgment index.
SECTION 20.6. BROKERS. Tenant warrants and represents that there was
no broker or agent instrumental in consummating this Lease. Tenant agrees to
indemnify and hold Landlord harmless against any claims for brokerage or other
commissions arising by reason of a breach by Tenant of this representation and
warranty.
SECTION 20.7. TRANSFER BY LANDLORD. Landlord hereunder shall have
the right to freely assign this Lease without notice to or the consent of
Tenant.
SECTION 20.8. NO PARTNERSHIP. Notwithstanding the fact that a portion
of the Rent reserved hereunder may be a percentage of Tenant's Gross Sales, and
notwithstanding anything else to the contrary, Landlord shall not be deemed to
be a partner of Tenant or a joint venturer with Tenant.
SECTION 20.9. WAIVER OF COUNTERCLAIMS. Tenant shall not impose any
counterclaim or counterclaims (other than compulsory counterclaims) in a
summary proceeding or other action based on termination or holdover, it being
the intent of the parties hereto that Tenant be strictly limited in such
instance to bringing a separate action in the court of appropriate
jurisdiction. The foregoing waiver is a material inducement to Landlord making,
executing and delivering this Lease and Tenant's waiver of its right to
counterclaim in any summary proceeding or other action based on termination or
holdover is done so knowingly, intelligently and voluntarily.
SECTION 20.10. WAIVER OF JURY TRIAL. [INTENTIONALLY DELETED].
SECTION 20.11. SEVERABILITY. If any provision of this Lease or the
application thereof to any person or circumstances shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each provision of
this Lease shall be valid and be enforced to the fullest extent permitted by
law.
SECTION 20.12. NO WAIVER. No failure by Landlord to insist upon the
strict performance of any term, covenant, agreement, provision, condition or
limitation of this Lease to be kept, observed
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<PAGE> 51
or performed by Tenant, and no failure by Landlord to exercise any right or
remedy available upon a breach of any such term, covenant, agreement, provision,
condition or limitation of this Lease, shall constitute a waiver of any such
breach or any such term, covenant, agreement, provision, condition or
limitation.
SECTION 20.13. CONSUMER PRICE INDEX. As used herein, "Consumer Price Index"
or "Index" shall mean the Consumer Price Index for All Urban Consumers (1982-84
= 100), U.S. City Average, All Items, published by the United States Department
of Labor, Bureau of Labor Statistics (or such comparable index as may be
utilized in substitution for or as the successor to the stated Index). If such
Index is not published by the Bureau of Labor Statistics or by another similar
governmental agency at any time during the Term of this Lease, then the most
closely comparable statistics on the purchasing power of the consumer dollar as
published by a responsible financial authority and selected by Landlord shall be
utilized in lieu of such Index.
SECTION 20.14. INTEREST. Any amount due from Tenant to Landlord herein
which is not paid when due shall bear interest at a rate per annum equal to the
Federal Reserve Bank discount rate as published in the Wall Street Journal on
the 25th day of the month preceding the date upon which the obligation is
incurred (or the next business day thereafter if the 25th is not a weekday) plus
[***] unless otherwise specifically provided herein, but the payment of such
interest shall not excuse or cure any default by Tenant under this Lease. In no
event shall any interest calculated hereunder be at a rate which is higher than
the maximum rate which is allowed under the usury laws of the State, which
maximum rate of interest shall be substituted for the rate in excess thereof, if
any, computed pursuant to this Section 20.14.
SECTION 20.15. EXCAVATION. If an excavation shall be made upon land
adjacent to the Leased Premises, or shall be authorized to be made, Tenant shall
afford to the person causing or authorized to cause such excavation, license to
enter upon the Leased Premises for the purpose of doing such work as said person
shall deem necessary to preserve the wall or the building of which the Leased
Premises form a part from injury or damage and to support the same by proper
foundation, without any claim for damages or indemnity from Landlord, or
diminution or abatement of Rent.
Notwithstanding anything contained in this Lease to the contrary, if such
excavation work prevents Tenant from operating its business within the Leased
Premises for three (3) or more consecutive days. Landlord shall after three (3)
days' written notice from Tenant to Landlord, abate Minimum Rent after such
three (3) days of disruption on a day-to-day basis until Tenant is able to
operate its business in the Leased Premises.
SECTION 20.16. RULES AND REGULATIONS. Tenant agrees to comply with and
observe all reasonable rules and regulations established by Landlord for the
Shopping Center from time to time. Tenant's failure to keep and observe such
rules and regulations shall constitute a default pursuant to the terms of this
Lease in the manner as if the same were contained herein as covenants, which
shall carry with it the same consequences under Article XIV hereof as Tenant's
failure to pay rent.
SECTION 20.17. FINANCIAL STATEMENTS. Upon Landlord's written request from
time to time, but not more than once per Lease Year, Tenant shall, within thirty
(30) days after Landlord's request therefor, furnish Landlord financial
statements outlining Tenant's then current financial condition and shall furnish
financial statements outlining the current financial condition of any Guarantor
of this Lease. Landlord shall maintain all financial information provided in a
confidential manner; provided, however, that Landlord may disclose such
financial statements to Landlord's mortgagees or prospective mortgagees or
purchasers.
SECTION 20.18. GENERAL RULES OF CONSTRUCTION. (a) This Lease may be
executed in several counterparts and the counterparts shall constitute one and
the same instrument. (b) Landlord may act under this Lease by its attorney or
agent. (c) Wherever a requirement is imposed on Tenant hereunder, Tenant shall
be required to perform such requirement at its sole cost and expense unless it
is specifically otherwise provided herein. (d)(i) Wherever appropriate herein,
the singular includes the plural and the plural includes the singular; (ii)
whenever the word "including" is used herein, it shall be deemed to mean
"including, but not limited to", and (iii) the words "re-enter" and "re-entry"
as used herein shall not be restricted to their technical legal meaning. (e)
Anything in this Lease to the contrary notwithstanding: (i) any provision hereof
which permits or requires a party to
47
<PAGE> 52
take any particular action shall be deemed to permit or require, as the case
may be, such party to cause such action to be taken; and (ii) any provision
hereof which requires any party not to take any particular action shall be
deemed to require such party to prevent such action to be taken by any person
or by operation of law, (f) Whenever costs or expenses are required to be
assessed to or paid by Tenant, such costs and expenses shall be reasonable.
SECTION 20.19. RECORDING. Neither this Lease nor any memorandum hereof may
be recorded without the express written consent of Landlord.
SECTION 20.20. EFFECTIVE DATE. For all purposes hereof, the "Effective
Date" of this Lease shall be the date upon which this Lease shall have been
executed by both parties and physically delivered by Landlord to Tenant or its
attorney. Prior to the Effective Date, neither this Lease nor anything
hereunder contained shall be legally binding on either Landlord or Tenant, and
the submission of this Lease by Landlord to Tenant prior to such Effective Date
for examination of consideration by Tenant or discussion between Landlord and
Tenant shall not constitute a reservation of or option for the Leased Premises
or create any legal obligation or liability whatsoever on Landlord.
SECTION 20.21. HEADINGS. The captions, section numbers, article numbers
and index appearing in this Lease are inserted only as a matter of convenience
and in no way define, limit, construe, or describe the scope of intent of such
sections or articles of this Lease nor in any way affect this Lease.
SECTION 20.22. MANAGING AGENT. Landlord has advised Tenant that it has
appointed MillsServices Corp., a Delaware corporation as managing agent of the
Retail Development (said managing agent and any successor or substitute managing
agent is hereinafter referred to as "Managing Agent"). Tenant shall, until
otherwise notified by Landlord, make all payments of Rent required to be made
pursuant to this Lease to the Managing Agent payable to Landlord and direct all
notices, inquires or other communications to the Managing Agent, 1300 Wilson
Boulevard, Suite 400, Arlington, Virginia 22209.
[Signatures Appear on the Following Page]
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<PAGE> 53
IN WITNESS WHEREOF, Landlord and Tenant have signed this Lease as of the
day and year first above written.
WITNESS: LANDLORD:
CONCORD MILLS LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Concord Mills, L.L.C., a Delaware
limited liability company
Its: General Partner
By: The Mills Limited Partnership, a
Delaware limited partnership
Its: Manager
By: The Mills Corporation, a Delaware
corporation
Its: General Partner
By: /s/ [Illegible] 6/30/99 By: /s/ Judith Berson
-------------------------- -----------------------------
Judith Berson
By: /s/ [Illegible] Executive Vice President
--------------------------
WITNESS/ATTEST: TENANT:
SILICON ENTERTAINMENT, INC., A
California corporation
By: By: /s/ Christopher Morse
-------------------------- -----------------------------
By: Name: Christopher Morse
-------------------------- -----------------------------
Its: Vice President
-----------------------------
By: By: /s/ David S. Morse
-------------------------- -----------------------------
By: Name: David S. Morse
-------------------------- -----------------------------
Its: Chairman/CEO
-----------------------------
Tenant's Corporate Seal:
49
<PAGE> 54
ACKNOWLEDGEMENT OF LANDLORD
COMMONWEALTH OF VIRGINIA )
) ss.
COUNTY OF ARLINGTON )
On this 30th day of June, 1999, before me personally appeared Judith
Berson, to me known to be the person who executed the foregoing Lease and
acknowledged before me that she was duly authorized and did execute same on
behalf of CONCORD MILLS LIMITED PARTNERSHIP, a Delaware limited partnership.
Terri D. Byers
------------------------------
Notary Public
My Commission expires: 2/28/02
[Notarial Seal]
ACKNOWLEDGEMENT OF CORPORATE TENANT
STATE OF CALIFORNIA )
) ss.
CITY/COUNTY OF SANTA CLARA )
On March 16, 1999, before me Laurie Shermer, a Notary Public in and for
said state aforesaid, personally appeared Chris Morse and David Morse, as Vice
President and Chairman and CEO of SILICON ENTERTAINMENT, INC., a California
corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
Laurie H. Shermer
---------------------------------
Notary Public, Santa Clara County,
My Commission expires: 9/19/2001
[Notarial Seal]
- ----------------------------------
LAURIE H. SHERMER
Commission #1155999
[SEAL] Notary Public - California
Santa Clara County
My Comm. Expires Sep 19, 2001
- ----------------------------------
<PAGE> 55
ADDENDUM ATTACHED TO AND MADE A PART OF LEASE DATED JUNE 30TH, 1999, BY AND
BETWEEN CONCORD MILLS LIMITED PARTNERSHIP, A DELAWARE LIMITED PARTNERSHIP, AS
"LANDLORD," AND SILICON ENTERTAINMENT, INC., A CALIFORNIA CORPORATION, AS
"TENANT."
- -------------------------------------------------------------------------------
The Lease is hereby modified and supplemented as set forth herein. Any
conflict between a term, condition or provision contained in this Addendum with
any term, condition or provision contained in the printed Lease shall be
resolved in favor of this Addendum.
Add as a new Section 7.3:
"SECTION 7.3. SALES TAX REBATE. Landlord has determined that financial
assistance from the City of Concord and/or the State of North Carolina in the
form of a sales tax rebate will better enable Landlord to develop the Shopping
Center in a manner beneficial to both Landlord and Tenant. Therefore, in order
to provide Landlord with the sales tax information from the State of North
Carolina comptroller or such other office as maintains sales tax information
("Comptroller") pertaining to Tenant's sales at the Leased Premises, Tenant
agrees to provide Landlord with certified copies of all sales tax returns filed
with the Comptroller for Tenant's retail operations at the Leased Premises
during the Term of this Lease. In addition thereto, Tenant shall provide
Landlord with a power of attorney letter addressed to, and in a form
satisfactory to, the Comptroller authorizing the Comptroller to release to
Landlord all sales tax information for Tenant's retail operations at the Leased
Premises during the Term of this Lease. Such letter shall be in the form
attached hereto and made a part hereof as Exhibit G, or such other or additional
forms as required from time to time by the Comptroller in order to release such
information to Landlord. Landlord agrees to maintain the confidentiality of any
proprietary information received by Landlord pursuant to this Section 7.3."
Section 12.1: At the end of Section 12.1, insert:
"In accordance with the provisions of this Section 12.1, Tenant agrees to
execute the Agreement of Subordination, Non-Disturbance and Attornment attached
hereto as Exhibit H or such other reasonable form of subordination agreement
within twenty (20) days of a request from Landlord's lender to do so and the
Tenant Estoppel Certificate attached hereto as Exhibit H-1 at the time Tenant
executes this Lease."
<PAGE> 56
IN WITNESS WHEREOF, Landlord and Tenant have signed and sealed this Addendum as
of the day and year first above written.
WITNESS: LANDLORD:
CONCORD MILLS LIMITED PARTNERSHIP, a
Delaware limited partnership
By: Concord Mills, L.L.C., a Delaware
limited liability company
Its: General Partner
By: The Mills Limited Partnership, a
Delaware limited partnership
Its: Manager
By: The Mills Corporation, a Delaware
corporation
Its: General Partner
By: /s/ [Illegible] 6/30/99 By: /s/ Judith Berson
-------------------------- ----------------------------
Judith Berson
By: /s/ [Illegible] Executive Vice President
--------------------------
WITNESS/ATTEST: TENANT:
SILICON ENTERTAINMENT, INC., a California
corporation
By: By: /s/ Christopher Morse
-------------------------- ----------------------------
By: Its: Vice President
-------------------------- ----------------------------
By: By: /s/ David S. Morse
-------------------------- ----------------------------
By: Its: Chairman/CEO
-------------------------- ----------------------------
Tenant's corporate seal:
---------
<PAGE> 57
ACKNOWLEDGEMENT OF LANDLORD
COMMONWEALTH OF VIRGINIA )
) ss.
COUNTY OF ARLINGTON )
On this 30th day of June, 1999, before me personally appeared Judith
Berson, to me known to be the person who executed the foregoing Addendum and
acknowledged before me that she was duly authorized and did execute same on
behalf of CONCORD MILLS LIMITED PARTNERSHIP, a Delaware limited partnership.
/s/ Terri D. Byers
---------------------------------------
Notary Public, Commonwealth of Virginia
My Commission expires: 2/28/02
ACKNOWLEDGEMENT OF TENANT
STATE OF CALIFORNIA )
) ss.
COUNTY OF SANTA CLARA )
On this 16th day of March, 1999, before me personally appeared Chris Morse
and David Morse, to me personally known, who, being by me duly sworn, did for
themselves say that they are the Vice President and Chairman of SILICON
ENTERTAINMENT, INC., a California corporation, the corporation named in and
which executed the within instrument, and that the seal affixed to said
instrument is the corporate seal of said corporation, and that said instrument
was signed and sealed in behalf of said corporation by authority of its board
of directors and acknowledged before me said instrument to be the free act and
deed of said corporation.
/s/ Laurie H. Shermer
----------------------------------
Notary Public
My Commission expires: 9/19/2001
- ----------------------------------------
LAURIE H. SHERMER
Commission # 1155999
[SEAL] Notary Public - California
Santa Clara County
My Comm. Expires Sep 19, 2001
- ----------------------------------------
<PAGE> 58
[MAP OF MALL SHOWING THE LEASED PREMISES]
LEASED PREMISES
(SPACE 202)
+/- 7,865 sf
- ------------------------------------------------------------------------------
PROJECT: CONCORD MILLS TENANT: SILICON ENTERTAINMENT, INC.
- ------------------------------------------------------------------------------
EXHIBIT: DATE:
- -------------------------------------------------------------------------------
REFERENCE: CONCORD MILLS LEASE PLAN
PLP 15-03 2/10/99 EXHIBIT A
- -------------------------------------------------------------------------------
PREPARED BY: CRAIG BENNETT ASSOC./ FILE: [ILLEGIBLE]
ARCHITECTS, PC
- -------------------------------------------------------------------------------
<PAGE> 59
[MAP OF MALL SHOWING THE RELOCATION ZONE]
- ------------------------------------------------------------------------------
PROJECT: CONCORD MILLS TENANT:
- ------------------------------------------------------------------------------
EXHIBIT: DATE:
- -------------------------------------------------------------------------------
REFERENCE: CONCORD MILLS LEASE PLAN
PLP 15-03 2/10/99 EXHIBIT A-2
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PREPARED BY: CRAIG BENNETT ASSOC./ FILE: [ILLEGIBLE]
ARCHITECTS, PC
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<PAGE> 60
[MAP OF MALL SHOWING THE DISPLAY AREA]
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PROJECT: CONCORD MILLS TENANT:
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EXHIBIT: DATE:
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REFERENCE: CONCORD MILLS LEASE PLAN
PLP 15-03 2/10/99
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PREPARED BY: CRAIG BENNETT ASSOC./ FILE: [ILLEGIBLE]
ARCHITECTS, PC
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<PAGE> 61
[MALL CORRIDOR FLOOR PLAN]
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CALCULATION OF GROSS LEASABLE AREA
EXHIBIT B
8/23/94
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<PAGE> 62
SPECIALTY TENANT LEASE EXHIBIT
EXHIBIT C
LANDLORD'S WORK - ROUGH SHELL
Preface
Work to be performed by Landlord in constructing the Leased Premises shall be
limited to those items expressly set forth below as Landlord's Work in this
Exhibit C ("Landlord's Work") and except as otherwise provided in Exhibit C or
Exhibit D, such work shall be performed at Landlord's sole cost and expense.
All Landlord's Work shall be performed by Landlord in a first class and
workmanlike manner using only new and first class materials in accordance with
all applicable laws, rules, regulations, codes and ordinances. All other items
of work, including the purchase and installation of all materials and equipment
necessary for Tenant's use of the Leased Premises shall be provided by Tenant
at Tenant's sole expense and shall include but shall not be limited to, those
items set forth in Exhibit D, Tenant's Work.
The building in which the Leased Premises are a part shall be designed by the
architect and engineer retained by the Landlord to design and oversee
construction of the Retail Development (herein sometimes referred to as "The
Project"). Construction shall meet the requirements for a fully sprinklered
building in accordance with the fire protection and building code program of
the local jurisdictional authority as well as the Development Agreement and
Master Declaration, if applicable.
Landlord shall provide Tenant with a Tenant Handbook (Tenant Design Criteria)
hereinafter referred to as "Tenant Handbook".
Except as otherwise provided below, Landlord shall initially construct the
following:
A. BUILDING SHELL WORK WITHIN AND AROUND THE LEASED PREMISES
1. Shell. Landlord shall construct the building shell (building
structure, insulated roof and exterior walls) in which the Leased
Premises are to be located. It is expressly agreed and understood
that the Leased Premises shall constitute a portion of a covered
mall building.
2. Exterior Appurtenances. Public entrance features, canopies and screen
walls at the exterior of the building structure shall be provided by
Landlord in locations and of a design and in materials deemed
appropriate by Landlord.
3. Outside Walls. If Lease Premises abuts an exterior wall, such wall
shall be unfinished on the interior.
4. Demising Partitions. Landlord shall install metal wall studs, 16" on
center, between all leased premises. Where rated walls are required
between Leased Premises and service/exit corridors Landlord shall
install 5/8" fire code gypsum board from the floor to the roof deck
on both Landlord and Tenant sides, along demising partitions
separating Tenant from service/exit corridors.
5. Demising Strip. Where Landlord desires, a vertical demising strip may
be located at the storefront line between stores. The center line
and/or back side of said strip may or may not precisely coincide with
the lease line defining the Leased Premises.
6. Exterior Service/Exit Door. Where Leased Premises abuts an outside
wall, Landlord shall install one (1) 3'0 X 7'0" x 1-3/4" (prime coated
only on inside face) hollow
Exhibit C, Rough Shell 5/1/98
Page 1
<PAGE> 63
metal door frame (with 1 1/2 pair butts and temporary lockset) as
required by code or Landlord's insurance carrier. The outside face of
door will be finished by Landlord to match adjacent construction and may
not be modified by Tenant. The location of such door (if any) will be
indicated on the Lease Outline Drawing. Tenant's store name and space
number will be applied adjacent to the door by Landlord per Landlord's
Architect's specifications in accordance with Exhibit D.
7. Interior Service/Exit Door. Where the Leased Premises abuts an interior
exit/service corridor, Landlord shall install one (1) 3'0" x 7'0" x
1-3/4" hollow metal door and frame (with 1 1/2 pair butts and temporary
lockset), as required by code or Landlord's insurance carrier. The
hollow metal door and frame will be finish painted on the corridor side
with a color selected by Landlord. Tenant's store name and space number
will be applied adjacent to the door by Landlord, per Landlord's
Architect's specifications in accordance with Exhibit D.
8. Floor Slab. Landlord shall furnish a 4" thick slab on-grade with smooth
trowelled concrete surface. The floor elevation may be 3/4" below
finished floor elevation in the mall areas adjacent to the Leased
Premises. The slab will be designed to support a load of not less than
125 pounds per square foot.
9. Storefronts and Sign Bands. The configuration of the storefront lease
line, as established by Landlord, shall be the line beyond which no
element of the storefront may extend and may not necessarily follow the
line of construction. The storefront furnished by Tenant shall include
one entry complete with security closure.
The width of the security closure will be as follows:
Storefront width up to 25' - 8' wide
Storefront width up to 26' - 35' - 10' wide
Storefront width 36' and up - 12' wide
B. FINISH WORK OUTSIDE THE LEASED PREMISES
1. Exterior Areas. Landlord shall provide parking areas, access roads,
delivery areas, drainage systems, walks, ramps, lighting, landscaping
and planting, striping, signage, and other facilities and improvements
as determined by Landlord in the exterior common area.
2. Interior Areas. Landlord shall provide enclosed air conditioned and
lighted malls, courts and entry-ways, lighted delivery areas, service
and exit corridors, ramps, public restrooms, meter and valve rooms and
all other areas, facilities, and buildings used in the maintenance and
operation of The Project as determined by Landlord.
C. BUILDING UTILITY SYSTEMS SERVING THE LEASED PREMISES
1. HVAC System. Landlord will provide either 1) a central condenser water
distribution system to provide cooling water for air conditioning
unit(s) provided by Tenant in the Leased Premises in accordance with the
Tenant Handbook referenced in Exhibit D. Landlord's portion of the
condenser water system shall terminate at valved and capped outlets
within the Leased Premises as indicated on the Lease Outline Drawing or
2) a roof-top package unit system providing at least 35 tons of air
conditioning. In this case Landlord to install roof opening and curb at
Tenant's expense for roof-top air conditioning equipment to be furnished
and installed by Tenant in accordance with Tenant Handbook from
Landlord's HVAC inventory.
2. Electrical System. Landlord shall bring primary electrical service to
the Retail Development. An empty secondary electrical distribution
conduit only shall be extended by Landlord from the electric room to a
point within the Leased Premises
Exhibit C, Rough Shell 5/1/98
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as indicated on the Lease Outline Drawing. Electrical service
furnished by Landlord shall consist of 277/480 volt phase four wire
service 400 amp service. Tenant to complete electrical system in
accordance with Exhibit D and the Tenant Handbook.
3. PLUMBING SYSTEM. If required by code, Landlord shall provide 3/4"
valved and capped domestic cold water line, a 1" condensate drain
line, if applicable, and a 4" sanitary sewer line at the rear of the
Leased Premises, as indicated on the Lease Outline Drawing. Tenant
shall connect to Landlord's plumbing system and extend service within
the Leased Premises according to Tenant's approved plans and in
accordance with requirements of Exhibit D and the Tenant Handbook.
4. SPRINKLER SYSTEM. Landlord shall install a wet sprinkler fire
protection system in the common areas and within the Leased Premises
including, but not limited to, risers, bulk mains, cross mains, branch
lines and upturned sprinkler heads at the bar joists. Within the
Leased Premises the sprinkler provided by Landlord shall have one (1)
head per 100 square feet. The quantity of heads provided by Landlord
will be the minimum required by code or other governing agencies. The
mains and cross mains will be designed to accept additional heads up
to a maximum coverage of one (1) head per 80 square feet of Leased
Premises. Additional or relocated heads shall be installed or
relocated by Landlord's designated sprinkler contractor as required by
Tenant's layout and as described in Exhibit D and the Tenant Handbook.
Tenant shall pay Landlord for the cost thereof in accordance with
Exhibit D.
5. TELEPHONE SYSTEM. Landlord shall extend empty raceway or J hooks from
a telephone junction board to a point within or adjacent to the Leased
Premises as indicated on the Lease Outline Drawing.
6. MECHANICAL SMOKE VENTING. Landlord's building has been designed to
provide smoke venting via mechanical fans, open ceilings and no
separation about 12'-0" between Tenant premises. Any Tenant required
by Code or the authority having jurisdiction to provide separate smoke
venting, or whose tenant space design interferes with normal
functioning of Landlord's smoke venting system, must install a
complete smoke venting system to meet code in accordance with Exhibit
D and the Tenant Handbook.
D. GENERAL PROVISIONS
1. Minor changes in any plans or specifications covering Landlord's Work
which may be necessary during design and construction of The Project
or affecting the Leased Premises shall not in any way invalidate the
terms of the Lease or this Exhibit C nor shall it require the Landlord
to provide any work not described herein. Notwithstanding the
foregoing, any changes which would materially impact Tenant's Store
Design and Working Drawings must be made at least sixty (60) days
prior to the Delivery of Possession date.
2. Landlord shall have the right to specify or change the location,
either before or after construction, of all utility lines, condenser
water lines, condensate drain lines, drains, sprinkler mains and
valves, and such other facilities within the Leased Premises as are
necessary by engineering design and/or Code requirements. These items
as described above shall be located so as not to materially interfere
with Tenant's use of the Leased Premises. Landlord shall have the
right to relocate and specify the location of mechanical and other
equipment on the roof over the Leased Premises. To the extent that
such utility lines, condenser water lines, condensate drain lines,
drains, sprinkler mains and valves and other facilities within the
Leased Premises are relocated, Landlord shall be responsible for
paying for any changes in either Tenant's plans or connecting Tenant
installed improvements to such relocated facilities.
Exhibit C, Rough Shell 5/1/98
Page 3
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4. Landlord shall have the right to perform, at Tenant's expense, any of
Tenant's Work which is not being timely or properly performed by
Tenant which Landlord determines in its sole discretion be performed:
(a) immediately and/or on an emergency basis for the best interest of
The Project, (b) to the extent required for Landlord's compliance with
all applicable building codes, or, (c) to the extent necessary to
obtain any Certificate of Occupancy required by the Landlord or any
other tenant in The Project. Except in the event of an emergency.
Landlord shall give Tenant forty-eight hours notice of its intention
to undertake such work and Landlord shall refrain from undertaking
such work if Tenant commences to cure during such 48-hour period.
5/1/98
Exhibit C, Rough Shell
Page 4
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SPECIALTY TENANT LEASE EXHIBIT
EXHIBIT D
TENANT'S WORK - ROUGH SHELL
PREFACE
This Exhibit "D" is intended to describe the obligation of the Tenant in the
design and construction of the Leased Premises. Landlord's Work will be limited
to the work described in Exhibit C. Any part of Tenant's Work which is
accomplished by Landlord for Tenant pursuant to the terms of this Exhibit D
will be accomplished by Landlord at Tenant's expense. The work of Tenant
described in Exhibit D is intended to complete the Leased Premises in accordance
with Tenant's drawings as approved in writing by Landlord to a finished
condition ready for the conduct of business therein. All finished installations
will be deemed incomplete until approved by Landlord. Tenant's Work shall
conform to the procedures, schedules and reimbursement requirements set forth in
Sections 2 and 3 of this Exhibit. Exhibit D shall govern over any
inconsistencies with Exhibit C.
Landlord and Tenant have a common interest in opening the Leased Premises on the
Grand Opening Date. To this end, Landlord will coordinate its work with Tenant's
work insofar as the schedule for such Grand Opening Date and prudent
construction practice allows and will assign one or more tenant coordinators to
function as liaison between tenants and Landlord. Further to this end, Tenant
and Tenant's contractors agree to abide by Landlord's Construction Rules and
Regulations which may be issued from time to time. In order to ensure that the
Tenant's store interior and signage design are orderly and aesthetically
coordinated with Landlord's building, and to ensure that Landlord's storefront
and signage requirements are understood by Tenant, its designers, engineers,
contractors, and other representatives, Landlord has drafted and Tenant shall
follow the architectural and signage criteria established in the Tenant Handbook
(Tenant Design Criteria) hereinafter referred to as "Tenant Handbook". In order
to ensure that the Tenant's HVAC, plumbing and electrical systems are compatible
and coordinated with the Landlord's building, and to ensure that the Landlord's
HVAC, plumbing and electrical requirements are understood by Tenant, its
designers, engineers, contractors, and other representatives, Landlord has
drafted and Tenant shall follow the mechanical and electrical criteria
established in the Tenant Handbook.
All Tenant construction shall be in accordance with the requirements of all
applicable codes, ordinances, rules and regulations of all authorities having
jurisdiction over the work including all requirements of the Landlord's
insurance carrier.
Construction shall conform to the requirements for a fully sprinklered building
in accordance with the fire protection and building code program of the local
jurisdictional authority as well as the Development Agreement and the Master
Declaration if applicable. Tenant shall secure all necessary permits including,
but not limited to, occupancy and health department permits from the
jurisdictional authorities in sufficient time to allow Tenant to open the Leased
Premises on the Grand Opening Date. Tenant shall furnish to Landlord upon
receipt, copies of all building permit applications, statements, amendments and
the like, and all permits, inspection reports, certificates, and other documents
as required by authorities having jurisdiction of The Project.
Tenant, at its sole cost and expense, shall perform all work other than work to
be performed by Landlord as set forth in Exhibit C, required to complete the
Leased Premises to a finished condition ready for the conduct of business
therein.
All of Tenant's work within the Leased Premises performed pursuant to this
Section 1 shall, for the purpose of this Lease to which this Exhibit is
attached, be deemed to be improvements made to the Leased Premises by Tenant at
Tenant's expense.
Exhibit D, Rough Shell 5/1/98
Page 1
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SECTION 1 - TENANT CONSTRUCTION WORK WITHIN THE PREMISES
A. GENERAL CRITERIA
The criteria and outline specifications set forth herein represent minimum
standards for the design, construction, and finish of the Leased Premises
by Tenant.
1. Jurisdictions and Codes. The Project is being developed in and under
the jurisdictions of the State, County and City in which The Project
is located. All design and construction work shall comply with all
applicable statutes, ordinances, regulations, laws and codes and the
requirements pertaining to service and utilities furnished by utility
companies, all applicable state, county, and local statutes and
ordinances, and OSHA regulations.
2. Permits and Approval. Prior to the commencement of construction, all
building and other permits shall be obtained and posted in a
prominent place within the Leased Premises. Landlord's written
approval shall be obtained by Tenant prior to the undertaking of any
construction work which deviates materially from Tenant's approved
Store Working Drawings and Specifications, or which modifies
whatsoever Landlord's building shell or utilities, or any work not
explicitly shown on said Store Working Drawings and Specifications.
Landlord's approval of the foregoing shall not constitute the
assumption of any responsibility by Landlord for the accuracy or
sufficiency thereof, and Tenant shall be solely responsible. To the
extent and material changes, changes which modify the building shell
or utility or new work are required. Landlord shall not unreasonably
withhold its approval of the same.
3. Floor Loads. The slab on-grade has been designed to carry a total
load (dead and live) of 125 pounds per square foot. Any loading
imposed by any of Tenant's Work, either on a temporary or permanent
basis, shall not exceed 125 lbs./SF ("Allowable Load").
4. Standard Project Details. Standard Project Details, as issued by
Landlord's Architect from time and time and as they pertain to
Tenant's Work, shall govern with respect to Tenant's Work. Such
details shall be incorporated into the Tenant's Store Working
Drawings and Specifications for the Leased Premises.
5. Materials. Only new, first-class materials shall be used in the
construction of the Leased Premises. Used, first-class materials for
interior architectural facades and fixtures may be used provided such
materials are noted on the Tenant's plans and approved by Landlord
through field inspection.
6. Field Conditions. From time to time, the Tenant is obligated to
verify conditions pertaining to the Leased Premises prior to and
after commencement of construction of its Leased Premises. Tenant
shall coordinate its work with the work of Landlord, other tenants,
and with existing conditions above, below and adjacent to the Leased
Premises. Tenant shall make changes as required to accommodate such
work or conditions.
7. Tenant Handbook. Landlord shall provide Tenant with a Tenant Handbook
("Tenant Handbook"), and Tenant shall comply with all design
criteria, procedures for drawings, specifications, and construction,
and other rules, regulations and provisions therein. To the extent,
if at all, that the Tenant Handbook may conflict with the provisions
of the Exhibit D, the provisions of the Tenant Handbook shall govern.
Exhibit D, Rough Shell 5/1/98
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B. ARCHITECTURAL FINISHES
1. Floors. Tenant finish floor covering materials must be selected and
adapted in thickness to correspond in elevation exactly with the
level of the finished mall floor, which may be approximately 3/4"
above the concrete floor of the Leased Premises at the Lease Line.
Quality floor materials, such as carpeting, glazed or unglazed tile,
wood parquet, or marble shall be used in the sales area of the
Leased Premises. All flooring finish materials are subject to
Landlord's approval.
2. Storefront. Tenant's storefront shall be designed and constructed
by Landlord as provided in Exhibit C and as described in the Tenant
Handbook.
3. Interior Partitions. All interior partitions by Tenant within the
Leased Premises shall be metal stud construction and shall have
5/8" gypsum board finish on all sides with taped and spackled
joints. Any combustible materials applied to partitions shall meet
all flamespread and smoke generation requirements of
jurisdictional authorities and receive a U.L. labeled fire retardant
coating if required by Code. Walls dividing the Leased Premises
from service and exit corridors, or other rated enclosures, shall
receive, on Tenant's side, sufficient layers of drywall to complete
the necessary rating. Landlord shall install service and exit
corridor drywall at Tenant's expense. Any Tenant penetrations of
rated partitions shall be specifically approved in writing by
Landlord and governing authorities as a portion of the permitting
process.
4. Demising Partitions. Demising partitions are not load bearing and
Tenant may not hang fixtures from them. Should Tenant require
structure and/or backing to accommodate the loading of Tenant's wall
hung fixtures, said request shall be in writing to Landlord for
approval. Additional structure and backing shall be furnished and
installed by Tenant at Tenant's expense. Tenant shall install
drywall, taped and spackled on demising partitions between tenants.
No drywall shall be placed on demising partitions above 12'-0"
without Landlord's specific approval. Above 12'-0" the Tenant may,
subject to Landlord's prior written approval, continue with wire
mesh for security purposes if so indicated on Tenant's construction
drawings. The Tenant, upon Landlord's approval, may also install
drywall to a higher level if openings of sufficient size are
provided to assure that the smoke venting system provided by the
Landlord functions as designed - see Tenant Handbook for specific
requirements.
5. Exterior Walls. Tenant shall install all finishes on the inside
face of exterior walls within Leased Premises.
6. Service and Exit Corridor Partitions. Any Tenant penetrations of
rated partitions, and relocations and/or additions to Landlord
furnished exit doors, shall be specifically approved in writing by
Landlord and governing authorities as a portion of the permitting
process. Any framing, cutting, patching of the corridor wall
surfaces including the building of vestibules to provide for the
nonimpingement of the door into the corridor traffic way, and other
work related construction shall be coordinated and consistent with
Landlord's work, including but not limited to the provision of
4'-0" high 1/4" masonite board and metal cornerguards. Walls
dividing the Leased Premises from service and exit corridors, or
other rated enclosures, shall receive, on Tenant's side, sufficient
layers of drywall to complete the necessary rating. All materials
used in corridor construction shall be fire rated. Any Tenant
penetrations of rated partitions shall be specifically approved in
writing by Landlord and governing authorities as a portion of the
permitting process.
7. Interior Service/Exit Corridor Doors. If Tenant desires additional
service access to Leased Premises other than what is provided by
Landlord in Exhibit C then Tenant
Exhibit D, Rough Shell 5/1/98
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shall provide and install a 3'-0" X 7'-0" X 1-3/4" 18 gauge interior hollow
metal door, labeled as required, with a hollow metal 16 gauge frame, and
all hardware, in accordance with governing Codes. Any framing, cutting, and
patching of the corridor wall surfaces including the building of vestibules
to provide for the non-impingement of the door into the corridor traffic
way, and other work related thereto shall be the responsibility of the
Tenant. Hollow metal door and frame are to be finish painted on the
corridor side with a color selected by Landlord. Tenant's store name will
be applied adjacent to the door by Landlord, at Tenant's expense, per
Landlord's Architect's specifications.
8. Door Relocation. The relocation of any exterior Tenant door shall be
performed by Landlord at Tenant's sole expense and must be coordinated with
the structure of Landlord's building.
9. Door Hardware. Tenant shall furnish and install all door locks and exit
devices on all interior service doors, exterior doors, exit corridor doors,
and storefront, using hardware recommended by Landlord in the Tenant
Handbook.
10. Ceiling. Exposed and open grid systems are encouraged. All work related to
ceiling and ceiling treatments, if any, shall be the responsibility of
Tenant. All ceilings and ceiling treatments shall be of non-combustible
material approved by Landlord and shall maintain the degree of openness
required to preserve the operation of the smoke venting system and
sprinkler system in The Project as established by jurisdictional authority
and/or as described in the Tenant Handbook. Tenant's ceiling and ceiling
treatment shall be limited to a ceiling height not less than the code
required minimum nor higher than the maximum heights indicated in the
Tenant Handbook. The structure of Landlord's Building has been designed to
accept a super-imposed loading of three (3) pounds per square foot for the
installation of Tenant's suspended ceiling and equipment. Access (such as
access panels) and other openings shall be provided by Tenant where
Landlord deems necessary.
Tenants providing ceilings with less than the required degree of openness
shall provide smoke venting at Tenant's sole expense, both as required by
jurisdictional authorities and as described in the Tenant Handbook. If
Tenant's interior partitions and ceiling configuration cause the
requirement of additional sprinkler heads, such additional heads shall be
installed by Landlord's designated contractor at Tenant's expense both as
required by jurisdictional authority and Landlord's insurance carrier.
11. Interior Finishes. All finished interior surfaces must be materials
approved by Landlord for appearance. All Tenant fixtures, furniture,
carpeting (including underlayment), upholstery materials, drapery and other
furnishing must comply with flammability of materials and smoke generation
requirements for furniture and furnishings of local jurisdictional
authorities. All wood shall be fire retardant in accordance with code
requirements. All wood in contact with the floor shall be termite
retardant.
12 Finish Hardware. Commercial grade finish hardware, labeled where required,
shall be used throughout. All doors shall have at least one and one-half
(1-1/2) pair butts, wall or floor stops, kick plates, lock sets and
push-pull plates as required. All exit doors shall have hardware as
required by Code.
13. Toilet Room. Tenant shall construct restroom facilities, fixtures, toilet
partitions, and building specialty items such as toilet room mirrors,
dispensers, paper holders and amenities to fully meet the ADA Guidelines
and local codes.
Exhibit D, Rough Shell 5/1/98
Page 4
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14. Mezzanines. Mezzanines will not be permitted (other than the
approximately 10' x 4' elevated stand which is part of Tenant's
prototype store design which must be supported from the floor).
15. Layout and Painting of Exposed Mechanical and Electrical Systems. All
Tenant installed ductwork, conduits, pipes and any other mechanical or
electrical equipment exposed to public view from outside the Leased
Premises, shall be laid out and installed in a neat and orderly
configuration. Tenant shall paint the above Tenant improvements with
either a black or a mutually agreed to color and finish if Tenant's
improvements can be seen from Mainstreet (i.e. those portions of the
common area made up of the pedestrian walkways outside of the Leased
Premises) above Tenant's storefront elevation or below the top of the
storefront but visible from Mainstreet.
C. STRUCTURAL
1. Modifications. Any alterations, additions, and/or reinforcements to
the structure of Landlord's building required to accommodate Tenant's
Work, must be designed by a registered structural engineer at Tenant's
expense. Tenant shall leave the structure of Landlord's building as
strong or stronger than original design and with finishes unimpaired.
Tenant's architect shall calculate or have calculated the structural
loads caused by Tenant's improvements and submit those calculations
for written approval by Landlord and Landlord's Architect prior to
Tenant's construction.
2. Loading. All loads individually hung from the structure in excess of
100 pounds shall be specifically approved by Landlord's structural
Engineer for location and method of support. All loads less than 100
pounds that are individually hung from the structure shall be hung in
accordance with the guidelines in the Tenant Handbook.
D. HEATING, VENTILATING AND AIR CONDITIONING
1. Connection to Condenser Water System (if applicable). Not applicable.
2. HVAC System. A complete air conditioning system to suit Tenant's
requirements shall be designed, furnished, installed and maintained by
Tenant in accordance with the requirements of the Tenant Handbook.
Tenant's portion of the HVAC system shall include an air conditioning
unit(s), ducts, insulation, fire dampers, outlets, grilles and
controls to maintain temperatures per Tenant Handbook. If roof-top
units are required, Landlord shall install roof-top curb at Tenant's
expense. All Tenant ductwork shall be internally insulated and Tenant
shall make all connections to Landlord installed systems in a manner
fully satisfactory to Landlord.
3. Toilet Exhaust System. Tenant installed toilet facilities within the
Leased Premises shall include a complete toilet exhaust system
according to Code and the requirements of the Tenant Handbook.
4. Outside Air Connection. Landlord, at Tenant's expense, will provide a
roof jack for Tenant's connection to provide outside air to Tenant's
HVAC system. Tenant shall provide outside air ventilation as required
by Code and the Tenant Handbook. No openings for fans, vents, louvers,
grilles, or other devices shall be installed in any demising
partition, exterior wall, or roof without Landlord's prior written
approval. All roof and/or wall penetrations required for Tenant's
plumbing, mechanical,
Exhibit D, Rough Shell 5/1/98
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electrical work and any other Landlord approved Tenant work shall be
made by Landlord's designated contractor at Tenant's expense.
5. Smoke Venting. If the authority having jurisdiction requires individual
smoke venting from the Leased Premises, Tenant, at Tenant's expense,
shall provide the complete required smoke system, discharging
vertically through a roof vent at sufficient velocity to carry the
discharge away from any intakes on the roof. Roof vents will be
installed by Landlord's designated contractor at Tenant's expense and
in accordance With the Tenant Handbook.
6. Refrigeration. Tenants may not connect refrigeration equipment to
Landlord's condenser water system. Landlord's condenser water system
will not operate during unoccupied hours. Refer to the Tenant Handbook
for requirements regarding Tenant's refrigeration equipment.
7. Exhaust/Negative Pressure. All exhaust and make up air systems shall be
by Tenant in accordance with Exhibit D and the Tenant Handbook. As
determined by Landlord, all tenants producing odors within their
premises shall be required to install full height partitions and
provide supplemental exhaust to the exterior of the building to keep
the premises at a negative pressure relative to Mainstreet and all
adjacent areas.
E. ELECTRICAL
1. System. Tenant shall design, furnish, install and maintain a complete
electrical distribution system, including but not limited to
conductors to electrical room connected to load side of meter socket,
transformer, distribution panels, circuits, conductors, fixtures and
devices, within the Leased Premises in accordance with the
requirements of the Tenant Handbook. No appurtenances, including but
not limited to light fixtures, antennas, signs, etc., will be affixed
to the exterior walls or roof of Landlord's Building without
Landlord's express written permission.
2. Electrical Construction.
a. Material - All electrical materials shall meet National Electrical
Code Standard, unless a better grade is required by local Code. All
materials shall be new and shall bear evidence of approval by
Underwriter's Laboratory (UL). All conductors shall be copper.
Aluminum conductors will not be allowed.
b. Lighting Fixtures - Recessed fixtures installed in furred spaces
shall be connected by means of flexible conduit and approved
fixture wire, connected to a branch circuit outlet box which is
independent of the fixture.
c. Fluorescent Fixtures - All fixtures shall be provided and
installed by Tenant with switch legs and local switches rated 20
amps at 277 volts. All fluorescent fixtures shall have internal
protection devices. Fluorescent ballasts shall be high power
factor type with individual non-resetting overload protection.
Ballast harmonics may not exceed that Total Harmonic Current
Distortion allowable by the electric utility. All lamps subject to
public view shall have warm white deluxe or better color
rendition. Cool white may be used only in storage areas not
exposed to public view.
d. Electric Meter - Where Landlord does not provide electricity from
a master meter and redistribute to Tenants, Tenant shall make
direct arrangements with the local electric utility company to
furnish and install electric meter to measure Tenant's use of
electricity.
Exhibit D, Rough Shell 5/1/98
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e. Panel Boards - Panel boards shall be furnished and installed by
Tenant, 120/208 volt panels and 277/480 volt panels shall both be
equipped with single or multiple pole bolted thermal magnetic
breakers.
f. Short Circuit Ratings - Tenant's electrical distribution system
shall be designed to withstand and safely interrupt an available
short circuit current indicated in the Tenant Handbook.
g. Transformer - All necessary transformers shall be furnished and
installed by Tenant. All ceiling hung transformers over 100
pounds shall be approved by Landlord's Structural Engineer for
location and method of support. All ceiling hung transformers
less than 100 pounds shall be hung in accordance with the
requirements in the Tenant Handbook.
h. Nameplates - The following equipment shall be identified with
engraved Bakelite nameplates: distribution panels, motor
starters, lighting panels and push-button stations.
F. PLUMBING
1. System. Tenant shall connect to Landlord's plumbing system as
described in Exhibit C and the Tenant Handbook. Tenant shall provide a
complete plumbing system within the Leased Premises, including but not
limited to, fixtures and toilet accessories as required by Code.
Tenant shall provide accessible clean outs in toilet areas. Plumbing
work must be installed according to all appropriate Codes and
requirements of the Tenant Handbook. Landlord's approval of Tenant's
plans is not a statement that the plans are in compliance with Code or
other local requirements. Tenant shall be required to provide vent
connections and a toilet room exhaust connection, if necessary,
through the roof as required by Code and the Tenant Handbook. All such
penetrations shall be by Landlord's designated contractor at Tenant's
sole expense.
2. Water Heaters. Electric water heaters shall be automatic and a maximum
capacity of 2 k.w. All units shall be UL approved and conform to the
requirements of the local Energy Code. Water heaters must have
temperature/pressure relief values with discharge piping according to
Code.
3. Water Meters. All restaurants, food court tenants, salons, pet stores
and any other high volume users of water (as determined by Landlord)
shall furnish and install water meters at Tenant's expense in
accordance with the Tenant Handbook.
4. Condensate Drains. Tenant shall extend and connect condensate drain
line(s) from Tenant's air conditioning unit(s) in accordance with the
Tenant Handbook.
5. Connection. If Tenant's restroom location, on Tenant's Store Working
Drawings does not coincide with Landlord's utility location, Tenant,
at Tenant's expense, shall move utility to coincide with Tenant's
Store Working Drawings with Landlord's prior approval. All cutting and
placing of concrete is by Tenant.
G. FIRE PROTECTION SYSTEM
All revisions to the fire protection system required by Tenant's layout
shall be performed by Landlord's designated sprinkler contractor at
Tenant's sole expense. Landlord's sprinkler contractor shall design system
revisions in accordance with Tenant's Store Working Drawings. Such designs
may involve additional heads, relocated heads, heads in refrigeration
boxes, toilet rooms, kitchen exhaust ducts, and/or at Tenant's request,
heads
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located to conform with Tenant's ceiling pattern and layout. All design and
construction shall be governed by Code and the requirements of Landlord's
insurance carrier.
Tenants are required by local code to provide fire extinguishers, at least
one to be installed within 25 feet of the Tenant's entry off Mainstreet.
H. TELEPHONE
Tenant shall arrange directly with the local Telephone Company for
telephone service. Tenant shall furnish, install and maintain telephone
wiring and equipment within the Leased Premises to suit Tenant's
requirements at Tenant's expense.
I. SIGNAGE
Guidelines. All signs shall be designed, constructed and located in
accordance with Landlord's sign Criteria, Exhibit E, the Tenant Handbook,
and as approved by Landlord.
J. FIXTURES AND FURNISHINGS
Tenant shall furnish and install in the Leased Premises all fixtures,
furnishings, equipment, shelving, trade fixtures, leasehold improvements,
interior decorations, graphics, signs, mirrors, cornices, covers and
decorative light fixtures, portable fire extinguishers as required by Code
and the Tenant Handbook, and other special effects, all as approved by
Landlord.
All Tenant improvements, other than mechanical equipment, ceilings, and
lighting fixtures, shall be floor-mounted unless written approval is
obtained from Landlord.
K. MISCELLANEOUS REQUIREMENTS
1. Tenant's Contractor. Work undertaken by Tenant at Tenant's expense (a)
shall not be awarded to Landlord's contractor without Landlord's
written consent, except that an approved list of contractors is
attached hereto as Exhibit D-1 and (b) may only be awarded to a
reputable and bondable contractor or contractors licensed to do
business in the State, County and City in which The Project is
located.
Tenant's contractor shall adhere to Landlord's policy of a drug and
alcohol free workplace.
2. Equipment Screening. Tenants requiring mechanical or electrical
equipment, antennas, and the like shall not have the same placed on
the roof or the exterior of the building without the prior express
written approval of Landlord. All such equipment, if allowed, shall be
screened from the view of the public from any point within the project
site. All screening materials, construction details, and construction
techniques shall be approved by Landlord in writing, prior to any such
work by Tenant.
3. Clean-Up. Tenant shall cause its contractors to maintain the Leased
Premises in a clean and orderly condition during construction. All
unusable shipping containers, packaging, and other debris shall be
broken down and contained within the Leased Premises until removed by
Tenant's contractor to containers provided by Landlord outside
Landlord's Building. Flammable waste must be confined to covered metal
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containers until removed by Tenant. All usable construction material,
equipment, fixtures, merchandise, etc. must always be contained within
the Leased Premises. Malls, courts, arcades, public corridors,
service/exit corridors and the exterior of Landlord's Building shall be
kept clean at all times. If Tenant fails to clean up, Tenant hereby
authorizes Landlord to clean up for Tenant at Tenant's expense.
4. Full Payment. Tenant shall satisfy Landlord that adequate arrangements
have been made to ensure that all Tenant's contractors shall be paid in
full for work ordered by Tenant. Tenant is advised to familiarize
itself with the mechanic's lien laws in the State in which The Project
is located and shall hold the Landlord harmless for any liens filed
against the property of the Landlord for the work of the Tenant.
5. Character of Employees. Tenant will not employ any unfit person or
anyone not skilled in the work he is performing, or any workman that is
incompatible with the balance of the work force or who will cause, or
whose presence will cause, labor disputes or work stoppages. In the
event any employee(s) of Tenant or Tenant's contractor(s) causes a
labor dispute or work stoppage, Tenant expressly agrees to have such
employee(s) immediately removed from the Project upon Landlord's
request, and that Tenant's failure to do so shall constitute an event
of Default under the Tenant's Lease of which this Exhibit is a part.
SECTION 2: PROCEDURE AND SCHEDULES FOR THE COMPLETION OF TENANT'S PLANS AND
SPECIFICATIONS
Unless otherwise notified by Landlord, all prints, specifications, and other
material to be furnished by Tenant as herein required shall be sent to: Tenant
Coordinator (Address to be furnished when available).
Tenant shall engage an architect ("Tenant's Architect") registered in the State
and licensed to do business in the County and the City in which The Project is
located to prepare the Working Drawings and Specifications to be submitted for
Landlord's approval. The fees for Tenant's Architect shall be paid by the
Tenant.
A. LEASE OUTLINE DRAWINGS
Following execution of the Lease of which this Exhibit is a part, Landlord
shall furnish Tenant with two (2) prints of the Lease Outline Drawings (LOD)
giving technical and design information relative to the Leased Premises
along with other drawings that may be helpful to Tenant in the design of its
store.
B. STORE DESIGN DRAWINGS
1. Within forty-five (45) days of whichever of the following shall be
the later to occur: (a) receipt of Lease Outline Drawings from Landlord
or (b) the execution
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of the Lease; the Tenant shall submit to Landlord one (1) set of sepia
reproducible prints and three (3) sets of blueline prints of Store Design
Drawings, showing the intended design, character, and finishes of the Leased
Premises. The Store Design Drawings shall comply with the design criteria of The
Project as described in this Exhibit D and in the Tenant Handbook and shall set
forth the requirements of Tenant within the Leased Premises. Said Drawings shall
include, but not be limited to the following:
a. Architectural design of the space, including an elevation of
Landlord's storefront showing Tenant's signage, floor plans,
elevations, sections, and renderings indicating material and
color selections and finishes, and layout including location of
fixtures both permanent and movable. Provide the weights of all
items to be suspended above from the structure in excess of 100
pounds each.
b. Mechanical System: Basic equipment to be used and its location,
duct distribution system, diffuser locations, and any louvers or
vents to be provided for Tenant by Landlord at Tenant's expense.
Provide projected mechanical loads on forms provided by Landlord
in the Tenant Handbook.
c. Electrical System: Reflected ceiling plans indicating type of
lighting fixtures, and floor plans showing outlets and other
electrical equipment contemplated with location of panel and
switchboard. Provide projected electrical loads on forms provided
by Landlord in the Tenant Handbook.
d. Plumbing System: Floor plans showing the location, layout, and
type of fixtures to be furnished, including riser diagrams.
e. Fire Protection System: Location of any specialty heads Tenant's
architect may require.
f. Tenant shall identify in writing all intended exceptions to the
design criteria contained in the Tenant Handbook and/or this
Exhibit D.
2. After receipt of Store Design drawings, Landlord shall, within seven
(7) business days, return to Tenant One (1) set of Store Design
Drawings with modifications and/or approval. If, upon receipt of
approved Store Design Drawings bearing Landlord's comments, Tenant
wishes to take exception thereto, Tenant may do so in writing within
seven (7) days from date of receipt of said drawings, by certified or
registered mail addressed to Landlord, at the above address, and the
notice address in the Lease. Unless such action is taken, it will be
deemed that all comments made by Landlord on Store Design Drawings are
acceptable to and adopted by Tenant.
3. If Store Design Drawings are returned to Tenant with comments, but not
bearing approval of Landlord, said Store Design Drawings shall
immediately be revised by Tenant and resubmitted to Landlord for
approval within seven (7) days of their receipt by Tenant.
C. STORE WORKING DRAWINGS AND SPECIFICATIONS
1. Store Working Drawings and Specifications shall be prepared in strict
compliance with the design criteria and requirements as set forth in
this Exhibit D and the Tenant Handbook and shall adhere to the Store
Design Drawings as approved by Landlord. Store Working Drawings to
minimum scales as called for below, and Specifications shall include,
but not be limited to, the following:
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a. Key plan showing location of the Leased Premises relative to the
entire mall.
b. Floor plan at a minimum scale of 1/4" = 1'0".
c. Overall sections at 1/4" = 1'0".
d. Reflected ceiling plan at a minimum scale of 1/4" = 1'0".
e. Plans, elevations, and section of storefront (if to be constructed by
Tenant) at 1/2" = 1'0", with finish materials board including
manufacturers, model numbers, color numbers, and all other identifying
information. Details of storefront at 1-1/2" = 1'0".
f. Interior elevations at 1/4" = 1'0".
g. Full sections of types of partitions used at 1/2" = 1'0".
h. Details of special conditions encountered at 1-1/2" = 1'0".
i. Door schedule with jamb details at 1-1/2" = 1'0".
j. Finish and color schedules with samples.
k. Plumbing, heating, ventilating, and cooling plans, at 1/4" = 1'0".
l. Mechanical details at 1-1/2" = 1'0".
m. Electrical plans 1/4" = 1'0".
n. Electrical details, fixture schedules, and one-line electrical riser
diagram.
o. Mechanical and electrical load tabulations on forms provided by
Landlord in the Tenant Handbook.
p. Structural load tabulations.
q. Specifications covering all of Tenant's Work, including, but not
limited to, architectural, electrical, plumbing, heating, ventilating,
and air conditioning.
r. Layout of fixture location, both permanent and movable.
s. Any and all other plans and specifications as may be required by the
local fire and building authorities or other governing bodies.
2. All Store Working Drawings and Specifications prepared by Tenant's
Architect shall be submitted by Tenant, in the form of one (1) set of
reproducible sepia prints, specifications and three (3) sets of blueline
prints to Landlord for approval within 21 days from receipt by Tenant of
Landlord's written approval of Store Design Drawings.
3. As soon as practicable after receipt of Store Working Drawings and
Specifications, Landlord shall return to Tenant one (1) set of prints of
Store Working Drawings and Specifications with its suggested modifications
and/or approval. If, upon receipt of approved Store Working Drawings and
Specifications bearing Landlord's comments, Tenant wishes to take exception
thereto, Tenant may do so in writing, by certified or registered mail
addressed to Landlord at the above address and at the notice address in the
Lease, within seven (7) days from the date of receipt of Store Working
Drawings and Specifications. Unless such action is taken, it will be deemed
that all comments made by Landlord on Store Working Drawings and
Specifications are acceptable to and adopted by Tenant.
4. If Store Working Drawings and Specifications are returned to Tenant with
comments, but not bearing approval of Landlord, said Store Working Drawings
and Specifications shall immediately be revised by Tenant and resubmitted
to Landlord for approval within seven (7) days of their receipt by Tenant.
5. "For Construction" Store Working Drawings and Specifications prepared by
Tenant's Architect shall be submitted by Tenant in the form of one (1) set
of mylar reproducible prints and specifications and three (3) sets of
blueline prints. "For Construction" shall be marked clearly on each copy in
red. Such drawings and specifications shall reflect correction of all
Landlord's comments to the Store Working Drawings and specifications
returned by Landlord.
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6. Store Working Drawings shall be submitted to the local Authorities
having jurisdiction for building permit after such drawings have been
approved by Landlord in the submittal process as outlined above.
7. Landlord and Landlord's architect shall, from time to time, be
entitled to monitor Tenant's Work and shall have the right to require
all work which does not comply with Tenant's approved Store Working
Drawings and Specifications to be corrected within thirty (30) days of
notification to Tenant.
SECTION 3: PROCEDURE AND SCHEDULES FOR THE CONSTRUCTION OF THE LEASED PREMISES
BY TENANT
A. COMMENCEMENT OF CONSTRUCTION
Tenant shall start construction of its Leased Premises not later than ten
(10) days from either of the following dates, whichever shall be the later to
occur: (1) The date of receipt by Tenant of written notice from Landlord that
Landlord has substantially completed the work to be performed by Landlord under
Exhibit C, and payment therefore as required by Exhibit C is due (other than
such work which cannot be performed by Landlord until Tenant makes the Leased
Premises ready for the performance thereof) and that the Leased Premises are
ready for Tenant's work; or (2) the date on which Landlord approves the
Tenant's Store Working Drawings and Specifications for the Leased Premises.
Tenant shall carry such construction to completion with all due diligence.
B. GENERAL REQUIREMENTS
1. Tenant shall submit to Landlord, via certified or registered mail, at
least five (5) days prior to the commencement of construction the
following information:
a. Copy of building and all other permits needed to perform Tenant's
Work within the Leased Premises.
b. The names and addresses of the general, mechanical, plumbing and
electrical contractors Tenant intends to engage in the
construction of the Leased Premises.
c. The actual commencement of construction date and the estimated
date of completion of construction work, fixturing work, and date
of projected opening.
d.
e. Itemized statement of estimated construction costs including
architectural, engineering, and contracting fees.
f. Evidence of insurance with a company or companies authorized to
transact business in which The Project is located as required
below.
g.
2. Tenant shall secure, pay for, maintain, and cause its contractors and
subcontractors to secure, pay for, and maintain, during the continuance of
construction and fixturing work within the Lease Premises, all of the insurance
policies required in the amounts as set forth herein, together with such
insurance as may from time to time be required
Exhibit D, Rough Shell 5/1/98
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by City, County, State or Federal laws, Codes, regulations or
authorities. Tenant's Work may not commence, nor many Tenant permit
its contractors and subcontractors to commence any work, until all
required insurance has been obtained and certificates of such
insurance have been delivered to Landlord. Insurance policies shall
name the Landlord and assignees, Landlord's Architect and General
Contractor for the project as additional insureds. Certificates of
insurance coverage shall provide that no change or cancellation of
such insurance coverage shall be undertaken without thirty (30) days
written notice to Landlord. Landlord shall have the right to require
Tenant, and Tenant shall have the duty, to stop work in the Leased
Premises immediately if any of the coverage required herein lapses
during the course of the work, in which event Tenant's Work may not be
resumed until the required insurance is obtained and satisfactory
evidence of same is provided to the Landlord.
a. Tenant's General Contractor's Required Minimum Coverages and
Limits of Liability.
(1) Worker's Compensation Insurance, as required by State law, and
Employer's Liability Insurance with a limit of not less than
[***] (or more if required by the law of the State) and any
insurance required by any Employee Benefit Act or similar
statute applicable where the work is to be performed as will
protect the contractor and subcontractors from any and all
liability under the aforementioned act(s) or similar statute.
(2) Comprehensive General Liability Insurance (including
Contractor's Protective Liability) in an amount not less than
$5,000,000 per occurrence whether involving personal injury
liability (or death resulting therefrom) or property damage
liability or a combination thereof (combined single limit
coverage) with a minimum aggregate limit of [***]. Such
insurance shall include explosion, collapse and underground
(X,C and U) coverage and contractual liability coverage for
personal injury, death and damage to the property of other
arising from construction at the Leased Premises, whether
performed by Tenant's contractors, subcontractors, or
sub-subcontractors, or by anyone directly or indirectly
employed by any of them.
(3) Comprehensive Automotive Liability Insurance, for the
ownership, maintenance, or operation of any automotive
equipment, whether owned, leased or otherwise held, including
employer's non-ownership and hired car liability endorsements,
in an amount not less than [***] per occurrence and [***]
aggregate, combined single limit bodily injury and property
damage liability.
Such insurance policies shall insure the Tenant's general
contractor and all subcontractors against any and all claims
for bodily injury, including death resulting therefrom and
damage to the property of others arising from its operations at
the Leased Premises or in connection with construction of the
Leased Premises, whether performed by the Tenant's general
contractor, subcontractors, or sub-subcontractors, or by anyone
directly or indirectly employed by any of them.
b. Tenant's Insurance Requirements
(1) Tenant shall obtain Owner's Protective Liability Insurance as
will insure Tenant against any and all liability for damage
from bodily
Exhibit D, Rough Shell 5/1/98
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injury, including death resulting therefrom, or property damage
or a combination thereof which may arise from work in connection
with the Leased Premises, and any other liability for damages
which Tenant's general contractor and/or subcontractors are
required to insure against under any provisions herein. Landlord
and Landlord's Architect and General Contractor shall be named as
additional insureds. Said insurance shall be provided in minimum
amounts of [***] aggregate, combined single limit bodily injury
and property damage liability.
(2) Tenant's Work Insurance: Tenant shall insure [***] of the value
of the work in the Leased Premises as it relates to the building
within which the Leased Premises is located, with an "all risk"
perils property insurance policy or a completed value "all risk"
perils Builder's Risk policy, naming the interest of the Landlord
and the Tenant's general contractor and all subcontractors, as
their respective interests may appear.
3. All contractors engaged by Tenant shall be licensed contractors in the
State in which The Project is located possessing good labor relations,
capable of performing quality workmanship and working in harmony with
Landlord's General Contractor and other contractors on the job. All
work shall be coordinated with the general project work.
4. Tenant's contractors and construction shall comply in all respects
with applicable federal, state and local statutes, ordinances,
regulations, laws and codes. All required building and other permits
in connection with the construction and completion of the Leased
Premises shall be obtained and paid for the Tenant.
5. Tenant shall complete all work within the Leased Premises as
expeditiously as possible, but in no event later than in time to open
for business on the Grand Opening Date. Should Tenant fail to complete
its work within this schedule, Landlord may, at Landlord's option,
install temporary storefront or barricade at the Leased Premises at
Tenant's expense. Temporary storefront and other work performed by
Landlord which was made necessary due to the Tenant's failure to
complete its work in time for the Grand Opening Date, shall be payable
to the Landlord.
6. Landlord shall have the right to perform, on behalf of and for the
account of Tenant any of Tenant's work which Landlord deems necessary
to be done on an emergency basis or which pertains to structural
components, the general utility systems for The Project, roof and
exterior wall penetrations, or the erection of temporary barricades
and temporary signs, during construction for the period following the
Opening of The Project for business. Landlord will provide such work
at Tenant's expense.
7. Tenant's Work shall be subject to the inspection and approval of
Landlord and Landlord's Architect as to compliance with Tenant's
approved plans and standards of merchantability, provided that
Landlord and Landlord's Architect shall use its commercially
reasonable efforts to insure that its work does not interfere with
Tenant's Work.
8. Tenant shall pay or reimburse Landlord for all costs incurred by
Landlord (including deposits) for all utility meters for the Leased
Premises.
9. Upon the completion of the Tenant's Work, all facilities shall be in
full use without defects.
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<PAGE> 80
10. All work performed by Tenant shall be performed so as to cause no
interference with other Tenants and the construction and operation of
The Project. Tenant will take all precautionary steps to protect its
facilities and the facilities of others affected by Tenant's Work and
properly police same. Construction equipment and materials are to be
located within the Leased Premises and truck traffic is to be routed
in and from the site, all as directed by Landlord and so as not burden
the construction and operation of The Project.
11. Upon and from the completion of Tenant's Work in the Leased Premises
and acceptance by Landlord's Architect, a minimum one-year warranty of
all work, materials, and equipment shall be provided to Landlord by
Tenant to the extent the same are received by Tenant from its
contractors and/or suppliers.
12. Landlord shall have the right to stop Tenant's Work whenever necessary
to obtain compliance with applicable building and safety codes or the
approved Store Working Drawings and Specifications.
13. Tenant and its contractors shall comply with the guidelines for Tenant
work procedures and temporary construction facilities set forth in the
Tenant Handbook, and Landlord's Construction Rules and Regulations
which may be issued from time to time.
14. Landlord shall have the right to order any Tenant or Tenant's
contractor who willfully violates any of the above requirements to
cease work, and to remove himself and his equipment and employees from
The Project.
C. TEMPORARY SERVICES AND FACILITIES DURING CONSTRUCTION
1. Utility costs or charges for any service to the Leased Premises shall
be the responsibility of Tenant from the date Tenant commences work
or is obligated to commence work, whichever is earlier.
2. If necessary, Tenant will provide temporary heat for the Leased
Premises during construction. No open burners are permitted and only
electricity may be used for temporary heat.
3. Temporary Electrical Services. If electrical service is not available
in the Leased Premises during construction, Landlord shall provide
electrical service in an area designated by the Landlord. Tenant shall
request, in writing, permission to connect temporary lines to the
power source for service to the Leased Premises. Tenant shall
reimburse Landlord for the Temporary Electric Service's.
4. Temporary Trash Removal. During initial construction, fixturing and
stocking, Landlord shall provide trash removal service from the
service areas. It shall be Tenant's responsibility to break boxes down
and place trash daily in the containers provided. Trash accumulation
will not be permitted overnight in the Leased Premises, mall or
service/exit corridors. Tenant shall not allow trash to accumulate
within the Leased Premises nor shall Tenant place any trash in the
service/exit corridor or mall areas adjacent to the Leased Premises.
Tenant shall reimburse Landlord for the Temporary Trash Removal.
The period shall start with the date the Tenant starts construction in
its premises and ends with the date the Tenant opens for business.
In addition, Tenant shall pay any costs incurred by Landlord in
removing trash from areas in and around the Leased Premises.
Landlord's decision as to which Tenant is
Exhibit D, Rough Shell 5/1/98
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responsible for trash left outside the Leased Premises will be
reasonable and equitable, and Landlord's decision will be final.
5. Plans Review/Tenant Coordination. Landlord or its architect and/or
engineer shall review Tenant's plans and specifications for
compliance with the provisions of this Exhibit D and the Tenant
Handbook. In addition, Landlord shall assign a Tenant Coordinator(s)
to work with Tenant and Tenant's Architect, Engineer and contractor
for the design and construction of the Leased Premises. Tenant shall
reimburse Landlord for such plan review and tenant coordination as
part of the Temporary Charges provided for in C.9.
6. Temporary Storefront. If Tenant is not open for business in the
Leased Premises and Landlord's Retail Development is open, or if, in
Landlord's sole judgment, Landlord determines that a temporary
storefront is necessary so as not to disrupt the construction,
opening or operation of any portion of The Project, then Landlord
shall install, at Tenant's expense, for Tenant's use during
construction a full height temporary barricade on the storefront lease
line. Tenant shall reimburse Landlord for the temporary storefront.
Upon completion of Tenant's construction and fixturing in the Leased
Premises, Tenant shall remove, disassemble and dispose of such
temporary storefront.
7. Coming Soon Sign. If during Tenant's initial construction, fixturing
and merchandise stocking, The Project is open (or shall open) for
business, Landlord will provide and install, following the earlier to
occur of (a) erection of the initial construction barricade, or (b)
completion of the storefront for the Leased Premises, a "coming soon"
sign on the front (barricade or storefront, as the case may be) of
the Leased Premises. Tenant shall reimburse Landlord for providing
such sign.
8. Suite Number and Tenant Trade Name. Landlord shall furnish and
install suite number and Tenant trade name sign adjacent to Tenant's
exterior and/or interior rear exit door(s) in accordance with
Landlord's standard. Landlord shall also install suite number on Mall
storefront. Tenant shall reimburse Landlord for this service.
9. The charges for Temporary Services and Facilities as described in
this subsection C shall be:
Landlord's Charge
-----------------
[***] psf
10. The charges identified in C.9 above shall be due and payable within
thirty (30) days after billing by Landlord. Landlord may decline at
Landlord's sole judgement to proceed with work at Tenant's expense
until Landlord's receipt of payment thereof.
D. COST PLUS ADMINISTRATION FEE WORK BY LANDLORD IN PREMISES AT TENANT EXPENSE
The following work in Tenant's premises shall only be accomplished by
Landlord in Landlord's building. The Tenant shall contract with the
Landlord to furnish the following work items if required by Tenant's
store design at Landlord's actual cost plus [***] for administration,
and the cost of any such item of work shall be payable to Landlord
in full within thirty (30) days after receipt of invoice therefore.
1. Openings in rated demising partitions and exterior wall,
provided such opening/penetrations have been approved in advance
by Landlord in writing.
*** Confidential treatment requested.
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2. Roof Openings. With Landlord's prior written permission, roof openings
for any purpose shall include supporting structures, curbs, roof
patching and flashing. Tenant shall be responsible for installation of
ducts, pipes, equipment and counter flashing. Landlord reserves the
right to refuse to permit the furnishing of any openings which exceed
the capability of the structural system or which in Landlord's opinion
would have an appearance detrimental to Landlord's Building.
3. Plumbing Service. With Landlord's written permission, additional
sanitary sewer or relocation of sanitary sewer.
4. Electric Service. With Landlord's written permission, additional
electric service or relocation of electrical service.
5. Storefront. With Landlord's prior written permission, changes to
Landlord furnished interior and exterior storefront including but not
limited to additional doors and relocation of doors.
6. Landlord's Labor (including overtime, demurrage and waiting time) and
equipment used in any work Landlord performs for Tenant.
7. Architectural and/or Engineering fees incurred Landlord as a result of
Tenant requesting any services in excess of the standard review
services described in Section
8. Building Department Expeditor Fees incurred by landlord in expediting
Tenant Building Permit, Controlled Inspection and other requirements
for temporary and permanent Certificates of Occupancy on the building
and the Tenant Premises.
9. Building Permits, Microfilming and Documentation Fees paid by Landlord
on behalf of the Tenant in expediting the approval of Building
Permits and other approvals of Agencies having jurisdiction.
E. CERTIFICATE OF ACCEPTANCE
Upon the completion of Tenant's construction and fixturing work within its
Leased Premises Tenant shall so notify Landlord in writing. Landlord, upon
receipt of such notice from Tenant, shall issue a Certificate of Acceptance
of said premises provided, however, that the issuing of such a Certificate
shall be contingent upon all of the following:
1. The satisfactory completion by Tenant of the work to be performed by
Tenant under this Exhibit D, in accordance with good workmanship and the
approved Construction Documents and Specifications therefor and receipt of a
certificate of occupancy from the local jurisdiction.
2. Receipt by Landlord from Landlord's Architect of a premises
acceptance letter. This letter can be issued only upon Tenant's correction of
the deficiencies noted by Landlord or Landlord's Architect upon any inspection
of Leased Premises.
3. Tenant shall have furnished Landlord with waivers of liens and sworn
statements, or satisfactory substitutes for same, in such form as may be
required by Landlord, and releases of notices of commencement (if any) from all
contractors, subcontractors and other persons performing labor and/or supplying
materials in connection with such work showing that all of said persons have
been compensated in full.
4. Submission by Tenant to Landlord of a detailed breakdown of Tenant's
final and total construction costs together with receipted invoices showing
payment thereof.
Exhibit D, Rough Shell 5/1/98
Page 17
<PAGE> 83
5.
Exhibit D, Rough Shell 5/1/98
Page 18
<PAGE> 84
SPECIALTY TENANT LEASE EXHIBIT
EXHIBIT E
SIGN CRITERIA
1. Tenant is required to identify the Leased Premises by a sign on the
storefront. The general criteria for the design of Tenant signage
("sign criteria") is set forth below. More specific sign criteria for
The Project as a whole and certain tenants in certain designated
locations such as in food courts and mall courts is set forth in the
Tenant Handbook, (Tenant Design Criteria) hereinafter referred to as
"Tenant Handbook".
2. Costs incurred in design, construction and installation, as well as
maintenance shall be the responsibility of Tenant. The Tenant must
obtain permits to erect and connect the sign from local community
officials before the sign is installed.
3. It is intended that the signage be developed in an imaginative and
varied manner so as to enhance the architectural treatment of the
facade in general and be harmonious with the overall architecture and
thematic consideration of the mall in particular. Although current
signage practices of the Tenant shall be considered, they will not
govern the signs to be installed.
4. Approval of signs shall be solely the right of the Landlord, and
Tenant must submit all candidates for signage to the Landlord for
approval in the form of working drawings before manufacturing or
further assembly begins. Submission shall be to Landlord, in the form
of shop drawings with all pertinent details necessary for construction
and installation included. Submission shall be a minimum of ninety
(90) days before proposed installation date, and Tenant is expected to
have sign manufactured and ready for installation within forty-five
(45) days of approval by Landlord or Landlord's agent before
installation, at project site. Landlord reserves the right to reject
signs not conforming to approved drawings regardless of stage of
completion or installation.
5. The Tenant's storefront sign shall occupy an area of the storefront
facade designated in the Tenant Handbook and/or the Lease Outline
Drawing, and/or by the Project Architect. The area shall total no more
than eight (8) square feet for up to a thirty foot (30') storefront;
and twelve (12) square feet for up to a forty foot (40') storefront;
sixteen (16) square feet for up to a fifty foot (50') storefront. The
design of the storefront is to be considered by Tenant in the
development of signage. In general, signs will be installed in the
designated sign area above the entry door. Variation of this criteria
shall be subject to Landlord's prior written approval, which shall be
solely at the discretion of Landlord. No sign shall be installed
closer than three feet (3'-0") from the end of the Tenant storefront
on both sides.
6. Signage shall be limited to the name of the store. Additional elements
will be considered as long as they enlarge, expand, or otherwise
clarify the name of the store.
7. Signs which are comprised of unaltered sans serif typefaces are, in
general, unacceptable, as will be signs or type faces which are
difficult to read.
8. The use of corporate identifications or logos will be considered, but
prior use or identification with a particular sign or logo will not
govern Landlord's approval for Tenant use. Tenant agrees that
Landlord's rejection of particular logo or sign shall not constitute a
violation of Lease by Landlord. In the case of conflict between the
sign criteria and other provisions of the Lease, Tenant agrees that
the sign criteria and Landlord's discretion shall prevail. Tenant
shall not hold Landlord liable for damage or injury as a result of the
sign criteria or the implementation of the sign criteria by agreement
of both parties.
Exhibit E, Sign Criteria 5/1/98
Page 1
<PAGE> 85
9. A variety of fabrication materials shall be considered, however
construction shall be guaranteed for a period of at least five (5) years
against peeling, cracking, crazing, blistering, or any other degradation of
surface or materials. Tenant shall obtain, from manufacturer of the sign, a
five (5) year warranty covering the condition of finished surfaces,
construction and operation of sign.
10. All electrical signs shall carry approval of Underwriters Laboratories
(U.L.) on all component parts and on the complete display. Maximum
brightness of lit signs shall be fifty foot (50') Lamberts measured one
foot (1') from the source of light. No blinking, moving or flashing lights
shall be allowed. Surface lighting may be reduced in order to accentuate
lit signage. There will be no special advantage in terms of visibility of
internally lit over externally lit signs.
11. No exposed raceways, ballast boxes or electrical transformers will be
permitted except as required to be exposed by local building codes.
12. Landlord shall not be responsible for signs improperly installed or
manufactured, and those signs not meeting code requirements shall, at
Tenant's expense, be removed and built to code specifications before
reinstallation. Signs meeting Landlord's sign criteria, but not meeting
local code requirements, shall be the responsibility of Tenant, and Tenant
agrees not to hold Landlord liable for costs due to conflict between these
sign criteria and code, should such conflict exist under present code or
due to future changes in code. Tenant must make required structural
modifications at Tenant's expense to Landlord's structure. Also, Landlord's
engineer to approve structural modifications.
13. Notwithstanding anything herein contained to the contrary, Tenant shall
have the right to replace any existing sign(s) of said Tenant as long as
such replacement meets the sign criteria listed within this document, the
Tenant Handbook, and is accompanied by Landlord's prior written approval
prior to installation.
14. No other signs of any type or purpose, permanent or temporary, shall be
permitted to be displayed upon the facade, windows or within the dimension
prescribed in Section 4.03 of the Lease, behind an unobstructed window
unless and until such sign has been submitted to Landlord and has received
Landlord's prior written approval. Landlord shall be the sole judge of what
constitutes an unobstructed window. Removal of signage of any type
installed without Landlord approval shall be mandatory before said sign
shall be considered by Landlord for installation.
15. Landlord shall not be required to approve signage for any reason other than
conformance with the sign criteria in this Exhibit E and the Tenant
Handbook. Scheduled opening dates and other time constraints shall not be
reason to approve signage which Landlord otherwise would consider
unsuitable for manufacture or installation. Tenant agrees not to hold
Landlord liable for any damage caused to Tenant due to signage or lack of
signage as a result of Landlord's insistence upon conformance with the sign
criteria or the Landlord's withholding of approval of submitted signage.
16. In the event that Tenant is unable to supply satisfactory signage design by
the fixturing period of Tenant's store, Landlord shall have the option of
providing such design. In such a case, Tenant agrees to pay prior to store
opening all expenses involved in the design, manufacture, and installation
of said signage plus 15% cost of administration, and Tenant agrees to waive
rights to reject said signage and agrees not to oppose installation of said
signage.
17. Signage indicated on drawings and mechanicals submitted for reasons other
than signage evaluation (as described in this Exhibit E and the Tenant
Handbook) shall not constitute a signage submittal. No approval of such
drawings and mechanicals shall constitute approval of signage.
Exhibit E, Sign Criteria 5/1/98
Page 2
<PAGE> 86
18. Food Court Tenants shall be permitted to install one menu board within
the Leased Premises subject to Landlord's prior design review and
written approval. Refer to the Tenant Handbook for type, size and
location allowed.
19. Procedure for Submittal and Approval of Sign Drawings:
a. Approval of store design drawings or working drawings and
specifications for Tenant's Leased Premises does not constitute
approval of any sign work. Approval of signs shall be solely the
right of Landlord, and Tenant must submit all candidates for
signage to the Landlord for approval in the form of sign designer's
working drawings and/or manufacturer's shop drawings before
manufacturing or assembly begins. Drawings by Tenant, its architect
or anyone not qualified to produce signage drawings are not
acceptable. At the same time as Tenant's initial submission of
store working drawings and specifications to Landlord, Tenant shall
submit one (1) set of reproducible prints and specifications and
three (3) sets of blueprints, along with samples of all material
and colors, for all its proposed sign work. The drawings shall
clearly show location of sign on storefront elevation drawing, size
and stroke dimensions, graphics, color, construction, and
attachment details. Full information regarding electrical load
requirements and brightness in footcandles shall also be included.
Landlord reserves the right to reject signs not conforming to
approved drawings regardless of state of completion or
installation.
b. As soon as practical after receipt of the sign drawings, Landlord
shall return to Tenant one (1) set of such sign drawings with the
suggested modifications and/or approval. If, upon receipt of
approved sign drawings bearing Landlord's comments, Tenant wishes
to take exception thereto, Tenant may do so in writing, by
certified or registered mail addressed to Landlord within seven (7)
days from the date of Tenant's receipt of such sign drawings.
Unless such action is taken, it will be deemed that all comments
made by Landlord on the sign drawings are acceptable to and
approved by Tenant.
C. If sign drawings and specifications are returned to Tenant with
comments, but not bearing approval of Landlord; said drawings and
specifications shall be revised immediately by Tenant and
resubmitted to Landlord for approval within seven (7) days of their
receipt by Tenant.
Exhibit E, Sign Criteria 5/1/98
Page 3
<PAGE> 87
EXHIBIT F
COMMENCEMENT AND EXPIRATION DATE DECLARATION
LANDLORD: ________________________________________________________
TENANT: ________________________________________________________
LEASE DATE: _________________________________________________________
STORE NUMBER: _________________________________________________________
Landlord and Tenant acknowledge and agree that the Commencement Date of
the above referenced Lease is _____________________ and the Expiration Date of
the Lease is ___________________________________________.
LANDLORD: TENANT:
By: _______________________________ By: _____________________________
Its: _______________________________ Its: _____________________________
Date: ______________________________ Date:_____________________________
<PAGE> 88
EXHIBIT G
WAIVER OF SALES TAX CONFIDENTIALITY
Date:
----------------------
I authorize the Comptroller of Public Accounts to release sales tax information
pertaining to the taxpayer indicated below to Concord Mills Limited
Partnership, c/o The Mills Corporation, 1300 Wilson Boulevard, Suite 400,
Arlington, Virginia 22209. I understand that this waiver applies only at our
retail store located in Concord Mills in Concord, North Carolina.
Please print or type the following information as shown below on your North
Carolina Sales and Use Tax Permit:
- --------------------------------------------------------------------------------
Name of Taxpayer Listed on North Carolina Sales Tax Permit
- --------------------------------------------------------------------------------
Name Under Which Taxpayer is Doing Business (d/b/a or Outlet Name)
- --------------------------------------------------------------------------------
Taxpayer Mailing Address
- --------------------------------------------------------------------------------
Physical Location of Business Permitted for Sales Tax in Concord, North Carolina
- --------------------------------------------------------------------------------
North Carolina Taxpayer ID Number Tax Outlet Number
(As Shown on North Carolina Sales Tax Permit)
-------------------------------------
Authorized Signature
-------------------------------------
Print Name of Authorized Signature
-------------------------------------
Position of Authorized Signature
-------------------------------------
Phone Number of Authorized Signature
<PAGE> 89
EXHIBIT H
AGREEMENT OF SUBORDINATION
NON-DISTURBANCE AND ATTORNMENT
THIS AGREEMENT is made this ______ day of ___________, 19__, by and among
CONCORD MILLS LIMITED PARTNERSHIP, a Delaware limited partnership having an
office c/o The Mills Corporation, 1300 Wilson Boulevard, Suite 400, Arlington,
VA 22209 ("Lessor"), SILICON ENTERTAINMENT, INC., a California corporation,
having an office at 210 Hacienda Avenue, Campbell, California 95008 ("Lessee")
and _____________ having offices at _________________ ("Agent"), as agent for,
and as co-lender with such other lenders (collectively, the "Lenders") under
the credit facility secured by the hereinafter described Deed of Trust, their
successors and assigns or affiliate.
W I T N E S S E T H:
WHEREAS, Lenders have provided financing for CONCORD MILLS shopping center
in Concord, North Carolina (the "Property");
WHEREAS, under a certain lease (the "Lease") Lessor did lease, let, and
demise a portion of the Property (such portion of the Property is hereinafter
called the "Premises") to Lessee;
WHEREAS, Lenders have or will become the owners of indebtedness secured
by, among other things, a deed of trust, granted by Lessor to ____________,
trustee, for the benefit of Agent, on behalf of the Lenders, as beneficiary
(the "Deed of Trust");
NOW, THEREFORE, in consideration of the covenants, terms, conditions and
agreements herein contained, and in consideration of other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged,
the parties hereto agree as follows:
NOW, THEREFORE, in consideration of the covenants, terms, conditions and
agreements herein contained, and in consideration of other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged,
the parties hereto agree as follows:
1. The Lease and all rights and liens created thereby shall be subject
and subordinate in all respects to the Deed of Trust and the lien created
thereby, to any advancements made thereunder, and to any increases, extensions,
modifications or renewals thereof.
2. So long as Lessee is not in default under the Lease beyond any
applicable grace or cure period, Agent, on behalf of the Lenders, hereby
covenants to Lessee that in the event Lenders obtain title to the Premises,
either by foreclosure or by deed in lieu of foreclosure, and thereafter obtains
the right of possession of the Premises, that the Lease will continue in full
force and effect, and Lenders shall recognize the Lease and Lessee's rights
thereunder, subject to the provisions of this Agreement.
3. Lessee agrees that from and after the date hereof in the event of any
act or omission by Lessor under the Lease which would give Lessee the right,
either immediately or after the lapse of a period of time, to terminate the
Lease, or to claim a partial or total eviction, Lessee will not exercise any
such right (a) until it has given written notice of such act or omission to
Agent by certified mail, return receipt requested, and (b) until and unless
Lenders fail to remedy such act or omission within thirty (30) days for any act
or omission which can be cured by the payment of money, or in the case of any
other act or omission, as long as necessary to remedy such act or omission,
provided (i) Lenders cause such remedy to be commenced within thirty days, and
(ii) Lenders cause completion of such remedy to be pursued with due diligence
following such giving of notice and following the time when Lenders shall have
become entitled under the Deed of Trust to remedy the same. It is specifically
agreed that Lessee shall not, as to Lenders, be entitled to require cure of any
such default which is personal to Lessor, and therefore not susceptible of cure
by Lenders, and that no such uncured default shall entitle Lessee to exercise
any rights under the Lease with respect to Lenders.
4. That in the event the interests of Lessor under the Lease shall be
transferred to Lenders or Agent or any nominee, designee, assignee of Lenders or
any purchaser at foreclosure sale (Lenders, Agent or such other party referred
to as a "Lender Party") by reason of foreclosure, deed in lieu of foreclosure,
or similar transaction, Lessee hereby covenants and agrees to make, for the
benefit and reliance of Lenders, full and complete attornment to the Lender
Party as substitute lessor upon the same terms, covenants and conditions as
provided in the Lease, except to the extent otherwise set forth herein.
5. The provisions of this Agreement are real property covenants running
with the Property, and shall be binding upon and inure to the benefit of the
respective parties hereto and their respective heirs, executors,
administrators, beneficiaries, successors and assigns, including without
limitation any Lender Party.
6. Notwithstanding anything contained herein to the contrary, or
anything to the contrary in the Lease, Lenders and any Lender Party shall not
be:
<PAGE> 90
(a) Liable for any act, omission or the breach of any warranty of
Lessor, including without limitation, any delay in opening the Project or the
Premises for occupancy and any failure to complete the construction of the
Premises or the Project or any improvements therein;
(b) Subject to any offsets, claims of defenses which Lessee might
have as Lessor;
(c) Required or obligated to credit Lessee with any rent for any
period beyond the then current rental period which Lessee might have paid
Lessor;
(d) Bound by any amendments or modifications or voluntary
termination of the Lease made without Lenders' prior written consent, other
than exercise of rights, options or elections contained in the Lease; or
(e) Bound to or liable for refund of any security deposit except to
the extent actually received by Lenders or a Lender Party.
7. Lessee shall not, without the express written consent of Lenders:
(a) Cancel, terminate or surrender the Lease, except as provided
therein or in any modification or amendment specified herein or hereafter
consented to by Lenders;
(b) After the date hereof, enter into any agreement with Lessor or
its successors or assigns, which grants any concession with respect to the
Lease or which materially compromises, discounts or otherwise reduced the rent
called for thereunder; or
(c) After the date hereof, prepay rent more than one (1) month in
advance.
8. Lessor and Lessee hereby jointly and severally agree for the benefit
and reliance of Lenders, that neither this Agreement, nor any assignment of the
Lease for collateral purposes, nor anything to the contrary in the aforesaid
Lease or in any modifications or amendment thereto shall, prior to Lenders'
acquisition of Lessor's interest in and possession of the Property (and
thereafter, only to the extent of the Property and not personally), operate to
give rise or create any responsibility or liability upon Agent or Lenders for
the control, care, management or repair of the Property by any party whatsoever
or for any dangerous or defective condition of the Property; or impose
responsibility for the carrying out by Agent or Lenders of any of the
covenants, terms and conditions of the Lease or any modification or amendment
whether or not hereafter consented to by Lenders, or for any negligence in the
management, upkeep, repair or control of said Property resulting in loss,
injury or death to any lessee, licensee, invitee, guest, employee, agent or
stranger. Notwithstanding anything to the contrary in the Lease, Lenders, their
successors and assigns (and any Lender Party, as appropriate), shall be
responsible for performance of only those covenants and obligations of the
Lease accruing after Lenders', their successors' and assigns' (or Lender
Party's, as appropriate), acquisition of Lessor's interests in and possession
of the Property; and in the event that Lenders or any Lender Party shall
acquire title to the Premises or the Property, Lenders or any Lender Party
shall have no obligation, nor incur any liability, beyond Lenders' or any Lender
Party's then equity interest, if any, in the Property or the Premises.
9. Lessee covenants and agrees to make rental payments according to the
terms of such Assignment of Leases upon written demand by Agent in the event of
any default (as described therein). Lessor consents to payments being so made.
10. Lessee agrees that this Agreement satisfies any condition or
requirement in the Lease relating to the granting of a non-disturbance
agreement.
11. Lessee agrees to execute and deliver from time to time, upon the
request of Lessor or of any holder(s) of any of the indebtedness or other
obligations secured by the Deed of Trust, a certificate regarding the status of
the Lease in the form set forth in Schedule A attached hereto and incorporated
herein by reference for all purposes.
12. THIS AGREEMENT AND ITS VALIDITY, ENFORCEMENT AND INTERPRETATION SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF NORTH CAROLINA AND APPLICABLE UNITED
STATES FEDERAL LAW.
13. If any bankruptcy proceedings shall hereafter commence with respect
to Lessor, and if the Lease is rejected by the trustee pursuant to Section 365
of the United States Bankruptcy Code, Lessee agrees with Lenders (i) not to
treat such lease as terminated or to execute a new lease with Lenders or any
Lender Party on the same terms as the Lease, and (ii) to remain in possession
of the Premises.
<PAGE> 91
14. Any notices hereunder shall be effective upon mailing by certified
mail, return receipt requested, or delivery by Federal Express addressed to the
recipient at its address set forth in the preambles hereof or as to each party,
to such other address as the party may designate by a notice given in
accordance with the requirements contained herein.
15. This Agreement contains the entire agreement between the parties
hereto. This instrument may be executed in multiple counterparts, all of which
shall be deemed originals and with the same document. Signature and
acknowledgment pages may be detached from the counterparts and attached to a
single copy of this document to physically form one document.
EXECUTED as of the date first above written.
LESSOR: CONCORD MILLS LIMITED PARTNERSHIP, a Delaware limited
partnership
By: CONCORD MILLS, L.L.C., a Delaware limited liability
company, its general partner
By: THE MILLS LIMITED PARTNERSHIP, a Delaware
limited partnership, its manager
By: THE MILLS CORPORATION, a Delaware corporation, its
general partner
By: /s/ Judith Berson
--------------------------------------------------
Judith Berson
Its: Executive Vice President
LENDER: -----------------------------, as Agent
By:
--------------------------------------------------
Authorized Signatory
LESSEE: SILICON ENTERTAINMENT, INC., A California corporation
By: /s/ Chris Morse
--------------------------------------------------
Its: Vice President
--------------------------------------------------
By: /s/ David Morse
--------------------------------------------------
Its: Chairman/CEO
--------------------------------------------------
<PAGE> 92
ACKNOWLEDGEMENT OF LANDLORD
COMMONWEALTH OF VIRGINIA )
)ss.
COUNTY OF ARLINGTON )
On this ___ day of ____________, 19__, before me personally appeared Judith
Berson, to me known to be the person who executed the foregoing Agreement of
Subordination, Non-Disturbance and Attornment and acknowledged before me that
she was duly authorized and did execute same on behalf of CONCORD MILLS LIMITED
PARTNERSHIP, a Delaware limited partnership.
___________________________________
Notary Public
My Commission expires:_____________
ACKNOWLEDGEMENT OF CORPORATE TENANT
STATE OF California )
)
)ss.
CITY/COUNTY OF Santa Clara )
)
On March 16, 1999, before me Laurie Shermer, a Notary Public in and for
said state aforesaid, personally appeared Chris Morse and David Morse, as Vice
President and Chairman and CEO of SILICON ENTERTAINMENT, INC., a California
corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which
the person(s) acted, executed the instrument.
Laurie H. Shermer
___________________________________
Notary Public, Santa Clara County,
My Commission expires: 9/19/2001
_____________
[Notarial Seal]
LAURIE H. SHERMER
Commission #1155999
Notary Public - California
Santa Clara County
My Comm. Expires Sep 19, 2001
ACKNOWLEDGEMENT OF LENDER
STATE OF ______________ )
)
CITY/COUNTY OF _______ )
On this _____ day of _____________, 19__, before me, ______, notary public,
personally appeared __________, the _________ of __________, proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity and that by his/her signature on the instrument the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
______________________________________
Notary Public
My Commission expires:________________
<PAGE> 93
EXHIBIT H-1
TENANT ESTOPPEL CERTIFICATE
TO: NationsBank, N.A., its successors and assigns or an affiliate (referred to
herein as "Lender"), for itself and as agent for itself and as agent for one or
more co-lenders:
1. The undersigned is the Lessee under that certain Lease together with all
amendments, modifications and supplements thereto (the "Lease") by and between
CONCORD MILLS LIMITED PARTNERSHIP, a Delaware limited partnership, as Lessor
and SILICON ENTERTAINMENT, INC., a California corporation, having an office at
210 Hacienda Avenue, Campbell, California 95008, as Lessee, covering those
certain premises described therein and located at Concord Mills, Concord, North
Carolina ("Premises").
2. Capitalized terms not otherwise defined herein shall have the meanings set
forth in the Lease.
3. Except for any amendments, modifications and supplements described in
Schedule A, the Lease has not been modified, changed, altered or amended in any
respect and is the only Lease or agreement between the Lessee and Lessor or its
agents affecting the Premises.
4. Lessee has made no agreements with Lessor or its agents or employees
concerning free rent, partial rent, rebate of rental payments or any other type
of rental concession except as set forth in the Lease.
5. No rent has been prepaid for more than one (1) month.
6. The Lease is in full force and effect and Lessee has no right to terminate
the Lease (other than by reason of default by Lessor). As of the date hereof,
Lessee is entitled to no credit, no free rent and no offset or deduction in
rent, except as set forth in the Lease.
7. The Lessee and Lessor are not in default under the Lease and, to the best
of Lessee's knowledge, there is no event which with notice or passage of time
would constitute a default by Lessee or Lessor under the Lease.
8. Lessor has and is under no obligation to Lessee with respect to payment of
the cost of tenant improvement work to the Premises, except as specifically set
forth in the Lease.
9. The Lease does not contain and the Lessee does not have any outstanding
options or rights of first refusal to purchase the Premises or any part thereof
or the real property of which the Premises are a part.
10. No actions, whether voluntary or otherwise, are pending against the Lessee
under the bankruptcy laws of the United States or any state thereof.
11. Any notices sent to Lender or its affiliates shall be sent certified mail,
return receipt requested and addressed to NationsBank, N.A., at its offices at
700 Louisiana, 5th Floor, Houston, Texas 77002, Attn: Real Estate Lending
Administration.
12. This certification is made knowing that Lender relies upon the truth of
this certification in making certain fundings.
Dated as of this 16 day of March, 1999.
-- -----
SILICON ENTERTAINMENT, INC., a California Corporation
By: Chris Morse
--------------------------------
Its: Vice President
By: David Morse
--------------------------------
Its: Chairman/CEO
<PAGE> 1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED ON A REQUEST FOR
CONFIDENTIAL TREATMENT.
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.17
LEASE
SILICON ENTERTAINMENT, INC., a California corporation
--------------------------
TENANT
NASCAR SILICON MOTOR SPEEDWAY and/or SILICON MOTOR SPEEDWAY
--------------------------
TRADE NAME
NONE
--------------------------
GUARANTOR
KATY MILLS
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I ............................................................... 4
GRANT AND TERM ..................................................... 4
Section 1.1 Leased Premises ................................... 4
Section 1.2 Term .............................................. 6
Section 1.3 Opening ........................................... 8
Section 1.4 Late Opening ...................................... 8
ARTICLE II .............................................................. 8
RENT AND DEPOSIT ................................................... 8
Section 2.1. Minimum Rent ..................................... 8
Section 2.2. Percentage Rent .................................. 9
Section 2.3. Payments By Tenant ............................... 12
Section 2.4. Security Deposit ................................. 12
Section 2.5. Late Charge ...................................... 12
ARTICLE III ............................................................. 13
PREPARATION OF LEASED PREMISES ..................................... 13
Section 3.1. Landlord's Work .................................. 13
Section 3.2. Delivery of Possession ........................... 13
Section 3.3. Tenant's Work .................................... 14
Section 3.4. Alterations by Tenant ............................ 15
Section 3.5. Removal by Tenant ................................ 16
ARTICLE IV .............................................................. 16
CONDUCT OF BUSINESS ................................................ 16
Section 4.1. Use and Trade Name ............................... 16
Section 4.2. Operation of Business ............................ 17
Section 4.3. Sign ............................................. 18
Section 4.4. Tenant's Warranties .............................. 19
Section 4.5. Storage and Office Space ......................... 19
Section 4.6. Care of Premises ................................. 20
Section 4.7. Notice by Tenant ................................. 20
Section 4.8. Radius ........................................... 20
ARTICLE V ............................................................... 20
COMMON AREA ........................................................ 20
Section 5.1. Use of Common Area ............................... 20
Section 5.2. Common Area Maintenance Expenses ................. 21
ARTICLE VI .............................................................. 24
REPAIRS AND MAINTENANCE ............................................ 24
Section 6.1. Repairs and Maintenance by Landlord .............. 24
Section 6.2. Repairs and Maintenance by Tenant ................ 24
ARTICLE VII ............................................................. 25
TAXES .............................................................. 25
Section 7.1. Tax Liability .................................... 25
Section 7.2. Method of Payment ................................ 26
ARTICLE VIII ............................................................ 26
INSURANCE, INDEMNITY AND LIABILITY ................................. 26
Section 8.1. Landlord's Insurance Obligations ................. 26
Section 8.2. Tenant's Insurance Obligations ................... 27
Section 8.3. Mutual Covenant .................................. 28
</TABLE>
<PAGE> 3
Section 8.4. Covenant to Hold Harmless ........................... 28
Section 8.5. Loss and Damage ..................................... 29
ARTICLE IX .................................................................. 29
DESTRUCTION OF LEASED PREMISES ......................................... 29
Section 9.1. Continuance of Lease ................................ 29
Section 9.2. Reconstruction of Lease ............................. 30
ARTICLE X ................................................................... 31
CONDEMNATION ........................................................... 31
Section 10.1. Eminent Domain ...................................... 31
Section 10.2. Rent Apportionment .................................. 31
Section 10.3. Temporary Taking .................................... 31
ARTICLE XI .................................................................. 31
ASSIGNMENT, SUBLETTING AND ENCUMBERING LEASE ........................... 31
Section 11.1. No Assignment, Subletting or Encumbering of Lease ... 31
Section 11.2. Assignment or Sublet ................................ 35
Section 11.3. Transfer of Landlord's Interest ..................... 35
ARTICLE XII ................................................................. 35
SUBORDINATION, ATTORNMENT, FINANCING AND ESTOPPEL CERTIFICATE .......... 35
Section 12.1. Subordination ....................................... 35
Section 12.2. Attornment .......................................... 36
Section 12.3. Financing ........................................... 36
Section 12.4. Estoppel Certificate ................................ 36
Section 12.5. Remedies ............................................ 36
ARTICLE XIII ................................................................ 37
ADVERTISING AND PROMOTION .............................................. 37
Section 13.1. Promotion Fund ...................................... 37
Section 13.2. Promotion Fund Contribution ......................... 37
Section 13.3. Advertisements [Intentionally Deleted] .............. 37
Section 13.4. Network ............................................. 37
ARTICLE XIV ................................................................. 38
DEFAULTS AND REMEDIES .................................................. 38
Section 14.1. Elements of Default ................................. 38
Section 14.2. Landlord's Remedies ................................. 39
Section 14.3. Bankruptcy .......................................... 41
Section 14.4. Additional Remedies and Waivers ..................... 41
Section 14.5. Landlord's Cure of Default .......................... 41
Section 14.6. Security Interest ................................... 42
ARTICLE XV .................................................................. 42
RIGHT OF ACCESS ........................................................ 42
ARTICLE XVI ................................................................. 43
DELAYS ................................................................. 43
ARTICLE XVII ................................................................ 43
END OF TERM ............................................................ 43
Section 17.1. Return of Leased Premises ........................... 43
Section 17.2. Holding Over ........................................ 43
ARTICLE XVIII ............................................................... 44
COVENANT OF QUIET ENJOYMENT ............................................ 44
ii
<PAGE> 4
ARTICLE XIX ................................................................. 44
UTILITIES .............................................................. 44
Section 19.1. Utilities .......................................... 44
Section 19.2. Electricity, Telephone and Gas ..................... 44
Section 19.3. Trash and Garbage Removal .......................... 44
Section 19.4. Water and Sewer .................................... 45
Section 19.5. Grease Interceptors ................................ 45
ARTICLE XX .................................................................. 45
MISCELLANEOUS .......................................................... 45
Section 20.1. Entire Agreement ................................... 45
Section 20.2. Notices ............................................ 45
Section 20.3. Governing Law ...................................... 45
Section 20.4. Successors ......................................... 46
Section 20.5. Liability of Landlord .............................. 46
Section 20.6. Brokers ............................................ 46
Section 20.7. Transfer by Landlord ............................... 46
Section 20.8. No Partnership ..................................... 46
Section 20.9. Waiver of Counterclaims............................. 46
Section 20.10. Waiver of Jury Trial ............................... 46
Section 20.11. Severability ....................................... 46
Section 20.12. No Waiver .......................................... 46
Section 20.13. Consumer Price Index ............................... 47
Section 20.14. Interest ........................................... 47
Section 20.15. Excavation ......................................... 47
Section 20.16. Rules and Regulations .............................. 47
Section 20.17. Financial Statements ............................... 47
Section 20.18. General Rules of Construction ...................... 47
Section 20.19. Recording .......................................... 48
Section 20.20. Effective Date ..................................... 48
Section 20.21. Headings ........................................... 48
Section 20.22. Managing Agent ..................................... 48
EXHIBITS:
Exhibit A Site Plan
Exhibit B Measurement of Leased Premises
Exhibit C Landlord's Work
Exhibit D Tenant's Work
Exhibit E Sign Criteria
Exhibit F Commencement and Expiration Date Declaration
Exhibit G Waiver of Sales Tax Confidentiality
Exhibit H Agreement of Subordination, Non-Disturbance
and Attornment
Exhibit H-1 Pre-Construction Tenant Estoppel Certificate
Exhibit I Menu
iii
<PAGE> 5
THIS LEASE dated as of this 17th day of March, 1999 (the "Lease") by and
between KATY MILLS LIMITED PARTNERSHIP, a Delaware limited partnership, the
address of which is c/o The Mills Corporation, 1300 Wilson Boulevard, Suite
400, Arlington, Virginia 22209 (hereinafter referred to as "Landlord") and
SILICON ENTERTAINMENT, INC., a California corporation, the address of which is
210 Hacienda Avenue, Campbell, California 95008 (hereinafter referred to as
"Tenant").
RECITAL
Landlord hereby leases to Tenant and Tenant hereby hires and takes from
Landlord, the Leased Premises, for the Term commencing on the Commencement Date,
subject to the terms, covenants, conditions and provisions of this Lease.
Landlord shall have the right, at any time prior to April 1, 1999, by written
notice to Tenant, to relocate the Leased Premises in either direction (from side
to side from the outside boundary of the Leased Premises) by not more than forty
(40) feet, provided that the configuration of the Leased Premises is
substantially the same in the relocated space and that the visibility of the
Leased Premises from the enclosed mall is not materially and adversely impacted
("Shift"), and upon any such Shift, the size and description of the Leased
Premises shall be appropriately modified to reflect any resulting proportional
adjustment in the Rent based upon the change in size of the Leased Premises. If
the Landlord initiates a Shift as described herein, prior to the Delivery of
Possession Date but after the receipt by Tenant of the initial Lease Outline
Drawing (as described in Exhibit D) then Landlord will pay for Tenant's actual
costs associated with the Shift, including without limitation, the costs
associated with a redesign of the Leased Premises and the Fixturing Period will
be extended one day for each day of delay created by the Shift.
If the Commencement Date is not the first day of a month, Minimum Rent for
the month in which the Commencement Date occurs shall be prorated to the end of
the month and paid as the second monthly installment of Minimum Rent on the
first day of the next month and, after the expiration of the number of years in
the Term, the Term shall expire on the last day of the same month in which the
Commencement Date of the Term occurred, it being the intention of the parties
that the Term expire on the last day of a month. When the Commencement Date has
been determined, Landlord and Tenant shall execute, acknowledge and deliver a
written statement in recordable form specifying the Commencement and Expiration
Dates of the Term and, if there shall have been any changes in the floor area
of the Leased Premises, such statement shall reflect such change or changes.
Said statement upon execution and delivery shall be deemed to be a part of this
Lease.
<PAGE> 6
DATA SHEET
The following references furnish data to be incorporated in the
specified Sections of this Lease and shall be construed to incorporate all of
the terms of the entire Section as stated in this Lease:
(1) SECTION 1.1: DESCRIPTION OF LEASED PREMISES:
Store number: R-6, consisting of approximately 6,172 square feet of
floor area with a minimum of fifty feet (50') of frontage as shown on
Exhibits A and B attached hereto and made a part hereof.
(2) SECTION 1.2: TERM:
COMMENCEMENT DATE:
The earlier of (i) the later of (A) the Grand Opening, or (B) the date
following the expiration of a one hundred twenty (120) day fixturing
period ("Fixturing Period") following the Delivery of Possession Date
(as defined in Section 3.2), or (ii) the date the Leased Premises is
open for business to the public. It is estimated that the Delivery of
Possession Date will be June 28, 1999.
ORIGINAL TERM: Five (5) years, plus that period of time necessary to
cause the Expiration Date to occur on the January 31st following the
expiration of the fifth (5th) year.
OPTION PERIOD: Five (5) years, provided Tenant's Gross Sales for the
twelve (12) month period ending two hundred ten (210) days prior to the
Expiration Date exceed [***] per square foot.
(3) SECTION 2.1: MINIMUM RENT:
Original Term:
From the Commencement Date and continuing through the expiration of the
Original Term, the sum of [***] annually ([***] psf), payable in
equal consecutive monthly installments of [***] each.
Option Period:
Beginning with the first (1st) year and continuing through the
expiration of the Option Period, the sum of [***] annually ([***]
psf), payable in equal consecutive monthly installments of [***]
each.
(4) SECTION 2.2: PERCENTAGE RENT:
Percentage Factor: [***]
Sales Break Point for the Original Term:
From the Commencement Date through the expiration of the Original Term:
[***]
Sales Break Point for the Option Period:
Beginning with the first (1st) year and continuing through the
expiration of the Option Period: [***].
(5) SECTION 2.4: SECURITY DEPOSIT: [***]
*** Confidential treatment requested.
2
<PAGE> 7
(6) SECTION 4.1: PERMITTED USE:
Tenant shall use the Leased Premises for the use set forth below and for
no other purpose:
Conducting an interactive entertainment center featuring among other
things, racing simulators and other related retail and entertainment
uses. Such uses may include but shall not be limited to the installation
and operation of simulators and the sale of auto racing, including
NASCAR Silicon Motor Speedway merchandise, NASCAR driver merchandise and
other entertainment merchandise related to NASCAR; and for the sale of
snack food items only and hot and cold non-alcoholic beverages
(selections to be based on Landlord's approval) for on-the-premises
consumption, provided said snack food and beverage service shall not be
operated or licensed by a nationally-recognized fast-food chain. See
menu referred to as Exhibit I attached hereto and made a part hereof.
Tenant shall have the right to conduct group sales events ("Events")
from the Leased Premises at which time a portion of the Leased Premises
may be closed to the general public. During Events Tenant may retain an
outside catering service (giving preference to restaurant operators
within the Retail Development) to provide food and beverage service
(including alcoholic beverage service if Tenant or the caterer obtains
all necessary permits) with food items that are not reflected on Exhibit
I.
TRADE NAME: NASCAR Silicon Motor Speedway and/or Silicon Motor Speedway
(7) SECTION 13.2: FUND CONTRIBUTION: [***] psf of floor area in the Leased
Premises
GRAND OPENING FEE (INITIAL CONTRIBUTION): [***] psf of floor area in the
Leased Premises
(8) GUARANTOR: N/A
Address:
(9) GRAND OPENING DATE: October 28, 1999
(10) TEMPORARY CHARGES: [***] psf of floor area in the Leased Premises
(11) CONSTRUCTION CHARGEBACKS: $ N/A
(12) CONSTRUCTION ALLOWANCE: [***] psf of floor area in the Leased Premises
*** Confidential treatment requested.
3
<PAGE> 8
ARTICLE I
GRANT AND TERM
SECTION 1.1 LEASED PREMISES. (a) Landlord, in consideration of the Rent
(as defined in Section 2.3) to be paid and the covenants to be performed by
Tenant, does hereby lease and demise to Tenant, and Tenant hereby rents and
hires from Landlord for the Term herein set forth, the Leased Premises which are
described as set forth in the Data Sheet attached hereto, in the retail
development designated as Katy Mills or by such other name as Landlord may from
time to time hereafter designate (hereinafter "Retail Development"). The term
"State" as used herein shall mean the State or Commonwealth of Texas. For all
purposes in this Lease, a "Major Tenant" is any occupant of 20,000 square feet
or more of floor area in the Retail Development and a "Major Tenant Space" is
any space in the Retail Development containing 20,000 square feet or more. It is
agreed that, wherever the term "Shopping Center" is used herein, it shall mean
the Retail Development excluding the Major Tenant Spaces, except as otherwise
specifically stated herein. Exhibit A sets forth the general layout of the
Retail Development. Landlord does not warrant or represent that the Retail
Development or the Leased Premises will be constructed exactly as shown thereon
or that it will be completed by a specific date, but Landlord does warrant that
the Leased Premises and the Retail Development will have the general
configuration shown on Exhibit A. Notwithstanding anything contained in this
Lease to the contrary, Landlord shall have the right, at any time and from time
to time, without notice to or consent of Tenant, and without in any manner
diminishing Tenant's obligations under this Lease, to make alterations or
additions to, and build additional stories on the building in which the Leased
Premises are located and to build adjoining the same, to construct other
buildings and improvements of any type in the Retail Development or the common
areas, or any part thereof, including the right to locate and/or erect thereon
permanent or temporary kiosks and structures, to enlarge the Retail Development,
and to make alterations therein or additions thereto (provided in no event will
any kiosk or other structure be located directly in front of the registration
desk within the Leased Premises), to build additional stories on any building or
buildings within the Retail Development, and to build adjoining thereto, to
construct decks or elevated parking facilities and free standing buildings
within the parking lot areas of the Retail Development, and to change the size,
location, elevation and nature of any of the stores in the Retail Development or
the common areas, or any part thereof. In exercising its options hereunder,
Landlord agrees to use reasonable efforts (in light of the then existing
circumstances) not to materially and unreasonably interfere with the visibility
of and access to the Leased Premises from the enclosed mall; it being understood
that any structure placed in the common areas shall not block Tenant's signage
located on the storefront signband. In the event Landlord elects to enlarge the
Retail Development, or any part thereof, any additional area may be included by
Landlord in the definition of the Retail Development for purposes of this Lease.
Landlord shall also have the general right from time to time to include within
and/or to exclude from the defined Shopping Center any existing or future areas
and the floor area of the Shopping Center shall be accordingly adjusted. The
premises leased to Tenant are herein referred to as the "Leased Premises". The
approximate location of the Leased Premises is cross-hatched on the lease plan
of the Retail Development attached hereto and made a part hereof as Exhibit A.
This Lease of the Leased Premises is subject to all applicable building
restrictions, planning and zoning ordinances, governmental rules and
regulations, existing underlying leases, and all other encumbrances, covenants,
restrictions, easements and agreements affecting the Retail Development and the
terms and provisions of certain master declaration, reciprocal easement and
operating agreements now or hereafter entered into by Landlord.
Landlord acknowledges that Tenant's customers shall be permitted to queue
in the common areas in front of the Leased Premises while waiting for access to
the Leased Premises ("Waiting Area"). The Waiting Area shall be in a location
designated by Landlord and reasonably approved by Tenant, provided said Waiting
Area permits Tenant's customers to queue in an orderly manner without
obstructing pedestrian traffic in the common areas and/or unreasonably
disturbing the operation of other tenants in the Retail Development.
In addition to the Leased Premises, Landlord shall grant Tenant a license
for a location in the common area of the Shopping Center which shall be used by
Tenant for the display of a full size stockcar, including sign tripods ("Display
Area"). The location of the Display Area shall be selected by Landlord, but such
location shall always be with in the area labeled on Exhibit A-1 as "Display
4
<PAGE> 9
Area". In no event shall Tenant be obligated to pay additional Rent for use of
the Display Area; provided, however, that any utility costs associated with the
illuminated display shall be the sole responsibility of Tenant. Tenant shall,
[***], construct the illuminated display in accordance with approved plans and
specifications, which plans and specifications shall be submitted to Landlord
for approval pursuant to the submittal requirements and process outlined in the
Tenant Handbook. During the Term, Tenant shall repair and maintain the Display
Area in accordance with Section 6.2 of this Lease. In addition, Tenant shall be
required to carry insurance for the Display Area providing for the coverage set
forth in Section 8.2(a) of this Lease. Upon the Expiration Date (hereinafter
defined) or the earlier termination of this Lease, Tenant shall be responsible
for the complete removal of the display and shall make any necessary repairs to
the Display Area in accordance with Tenant's obligations set forth in Section
17.1 of this Lease.
Subject to the provisions of Section 5.1, Tenant shall enjoy a
non-exclusive easement, right and privilege for Tenant and its customers,
employees and invitees and the customers, employees and invitees of any
assignee, sublessee, concessionaire or licensee of Tenant, to use the common
areas of the Shopping Center, with Landlord and the other tenants and occupants
of floor area within the Shopping Center and their respective customers,
employees and invitees. Furthermore, Landlord agrees that any additions,
alterations or modifications to the Shopping Center by Landlord shall not
adversely affect access to, or visibility of the Leased Premises and, except as
otherwise provided for herein, Tenant shall retain substantially the same
relative position with respect to Major Tenants of the Shopping Center as of the
Commencement Date.
(b) After the Commencement Date (as defined in Section 3.2), Landlord
reserves the right to relocate Tenant for the purpose of (i) the addition or
expansion of a Major Tenant or (ii) the redevelopment or expansion of the Retail
Development involving the addition of a minimum of 100,000 square of GLA.
Landlord shall provide Tenant with not less than sixty (60) days written notice
of such relocation (the "Relocation Period") during which Landlord shall offer
to Tenant such alternative location(s) (with approximately the same floor area,
configuration and at least fifty feet (50') of frontage) as may be available
within that area of the Retail Development labeled "Relocation Zone" on Exhibit
A-2. In the event the parties agree on a specific location, then this Lease
shall be amended by substituting the new location for the present location and
the square footage, Minimum Rent and Sales Break Point shall be proportionately
adjusted based upon the change in the size of the Leased Premises and Landlord
and Tenant shall agree upon a mutually acceptable timeframe for the completion
of work in the new premises and the relocation of the Tenant to the new
premises. Landlord shall, at Landlord's cost and expense, complete the leasehold
improvements to the new location in accordance with the working drawings
originally approved by Landlord with respect to Tenant's Work in the original
Leased Premises (including, without limitation finish work and the installation
of fixtures, simulators and other merchandise) and Tenant shall relocate to the
new location and, within sixty (60) days after the delivery of the new location
to Tenant ("Relocation Fixturing Period"), open for business in the new location
("Relocation Date"). Since Tenant will need to move its equipment, including
simulators from one space to the other, Tenant shall be permitted to close for a
period not to exceed ten (10) days for the purpose of moving the equipment and
installing it in the new leased premises ("Relocation Closure"), and during such
Relocation Closure Tenant's Rent shall abate. In the event that Tenant is not
able to operate in either the original or the relocated Leased Premises during
the Relocation Fixturing Period because of the removal and installation of the
simulators and other equipment, Rent shall abate until Tenant reopens but in no
event after the expiration of the Relocation Fixturing Period. Notwithstanding
the foregoing, Tenant may elect to have Landlord construct the relocated space
under a new prototype design, but Tenant shall bear the additional costs
required as a result of the election of the new design. Landlord recognizes that
the installation of simulators is a specialized task for which Tenant's experts
will be required and Landlord shall reimburse Tenant for the reasonable internal
costs of using Tenant's personnel for the completion of such work.
In the event Landlord offers to Tenant at least one alternative location
with approximately the same floor area, configuration and at least fifty feet
(50') of frontage and Landlord and Tenant are unable to agree on an alternative
location, then within thirty (30) days after the expiration of the sixty (60)
day period set forth above Landlord shall either (A) terminate this lease by
providing ninety (90) days prior notice, which termination shall be effective on
the later of (i) ninety (90) days after notice from Landlord of the termination
or (ii) the date that Tenant actually vacates the Leased Premises ("Termination
Date") or (B) withdraw the request for relocation. In the event
*** Confidential treatment requested.
5
<PAGE> 10
of such termination, Landlord shall pay to Tenant, within thirty (30) days
following the Termination Date, a sum equal to the then unamortized cost of
Tenant's leasehold improvements which have been paid for by Tenant,
such amortization to be on a straight line basis over the Original Term less the
value of all simulators equipment removed by Tenant for re-use plus all
reasonable costs associated with the moving and storage for up to three (3)
months of the simulators and other equipment in the Leased Premises, provided
Tenant shall furnish to Landlord such backup information as Landlord may
reasonably require. Tenant shall deliver possession of the Leased Premises to
Landlord on or before the Termination Date and/or the Relocation Date is "as
is" condition excepting the provisions of Sections 3.5 and 17.1. Tenant shall
pay all charges which are due and owing or which shall accrue up to such
Termination Date or Relocation Date (which charges shall be paid to Landlord
within thirty (30) days of such Termination Date or Relocation Date) and Tenant
shall be released from any and all further obligations pursuant to this Lease
accruing after such Termination Date or Relocation Date with respect to the
vacated Leased Premises, except as otherwise provided in Articles V and VII;
however, in the event of relocation, Tenant shall remain liable for all
obligations accruing under this Lease after the Relocation Date.
(c) The square footage of the Leased Premises (sometimes herein referred
to as the gross leasable floor area or GLA) shall be measured as defined in
Exhibit B. The actual square footage in the Leased Premises shall be determined
by Landlord's architect. If Tenant disagrees with the square footage so
determined, Tenant may advise Landlord in writing within ten (10) days that it
contests the same and retain an architect to remeasure the Leased Premises. If
Landlord's architect and Tenant's architect do not agree, then the two
architects shall retain a third architect whose decision shall be final and
binding. The agreed to square footage shall be binding upon both parties
hereto, and such determined square footage shall be used in all calculations
based on square footage throughout this Lease. If the floor area determined in
accordance with the preceding sentence varies from the square foot floor area
originally set forth in the Data Sheet, the Minimum Rent set forth in Section
2.1 hereof shall be adjusted by multiplying the Minimum Rent by a fraction, the
numerator of which is the square foot floor area determined by Landlord's
architect and the denominator of which is the square foot floor area
originally set forth in the Data Sheet, and Tenant shall be obligated to pay
such Minimum Rent, as adjusted, from the Commencement Date, subject to further
adjustments as provided in this Lease but in no event shall Tenant be obligated
to pay Minimum Rent on more than one hundred ten (110) additional square feet
of GLA. Each monthly installment provided for in Section 2.1 shall be
recomputed and shall be that dollar amount which results from dividing the
adjusted Minimum Rent by twelve (12). Any and all references in this Lease to
Minimum Rent (or the monthly installments thereof) shall be deemed to be
references to the Minimum Rent as computed by application of this Section 1.1,
subject, however, to the adjustments set forth elsewhere in this Lease. For
purposes of this Lease, in determining the gross leasable floor area or the
gross leased and occupied floor area of the Shopping Center, there shall be
excluded therefrom project areas and offices, common areas and/or areas under
Landlord's control (e.g., electrical/utility rooms, etc.). The exterior walls,
roof, storefront and the area beneath the Leased Premises are not demised
hereunder, and the use thereof, together with the right to install, maintain,
use, repair and replace pipes, ducts, conduits, wires, people counters,
tunnels, sewers and structural elements leading through the Leased Premises in
locations which will not materially interfere with Tenant's use thereof and
serving other parts of the Retail Development are hereby reserved to Landlord.
Landlord reserves an easement above Tenant's finished ceiling or light line to
the roof for general access purposes and in connection with the exercise of
Landlord's other rights under this Lease. Notwithstanding anything contained in
this Lease to the contrary, if as a result of Landlord's exercise of the
foregoing rights Tenant is prevented from operating its business within the
Leased Premises for three (3) or more consecutive days, Landlord shall after
written notice from Tenant to Landlord, abate Minimum Rent after such three (3)
days of disruption on a day-to-day basis until Tenant is able to operate its
business in the Leased Premises.
SECTION 1.2 TERM. The Term of this Lease shall be for a period commencing
on the Commencement Date, and expiring at 11:59 p.m. local time on the final
day of the month in which the Original Term or the Option Period, if exercised,
expires or other specified date as set forth in the Date Sheet unless sooner
terminated in accordance with the provisions hereof (the "Expiration Date").
Unless otherwise specified in this Lease, the use of the word "Term" shall be
deemed to include both the Original Term and the Option Period, if exercised.
The term "full year" and "year" as used in this Lease shall mean consecutive
periods of twelve (12) months each following the Commencement Date. For all
purposes of this Lease, the term "Lease Year" shall have the following
6
<PAGE> 11
meaning: the first Lease Year shall be a period beginning with the Commencement
Date and ending on the 31st day of December next following the Commencement
Date, and after the first Lease Year, the term Lease Year shall mean a fiscal
period of twelve (12) consecutive calendar months commencing on January 1 of
each calendar year, except that the last Lease Year shall terminate on the
Expiration Date or sooner termination of this Lease. Lease Years containing 365
days or more shall be referred to as "full Lease Years." If the Leased Premises
are not delivered to Tenant on or before the expiration of twelve (12) months
after the date of Landlord's execution of this Lease then either party may
cancel and terminate this Lease upon sixty (60) days prior written notice to the
other, in which event neither party shall have any further obligation or
liability to the other; provided, however, that if Landlord has commenced
construction of the Shopping Center, then Landlord shall not be permitted to
terminate in the foregoing manner. Following the Commencement Date of this
Lease, Landlord may submit to Tenant a Commencement and Expiration Date
Declaration in the form attached hereto as Exhibit F, specifying the information
called for in said form, and Tenant shall execute such Declaration within thirty
(30) days following submission for purposes of certifying such information;
provided, however, that the Declaration shall not be rendered ineffective by
Tenant's to execute same.
Provided Tenant is not default (after expiration of any cure or grace
period provided herein as of the date of exercise hereof, Tenant shall have the
option to extend the Term hereof (the "Option") for one (1) additional period of
five (5) years (the "Option Period"). The Option shall be exercised, if at all,
by written notice to Landlord ("Notice") at least one hundred eighty (180) days
prior to the expiration of the Original Term. All terms and conditions of this
Lease shall apply during the Option Period except the Minimum Rent and Sales
Break Points shall be as scheduled in Section 2.1 and 2.2 hereof. In the event
that Tenant does not exercise the Option by the required date, then such Option
shall become null and void and be of no further force or effect. In addition, if
this Lease is transferred or assigned, in whole or in part, as permitted in
Section 11.1 hereof, or if the Leased Premises or any part thereof be sublet or
occupied by any person or entity other than Tenant, then such Option shall
become null and void and be of no further force or effect, unless the Lease has
been transferred with the prior written consent of Landlord or pursuant to a
transfer of substantially all of the assets of Tenant not requiring the approval
or consent of Landlord.
If Tenant's Gross Sales during the twelve (12) month period ending two
hundred ten (210) days prior to the Expiration Date do not exceed [***] per
square foot of floor area in the Leased Premises, then any Notice by Tenant of
the Option shall be null and void and Tenant's Notice shall have no force or
effect. Tenant shall furnish to Landlord, concurrently with its Notice, a
statement certified by an authorized representative or financial officer of
Tenant setting forth the amount of Tenant's Gross Sales for the said twelve (12)
month period.
Notwithstanding the foregoing, in the event Tenant does not achieve Gross
Sales (as hereinafter defined) of at least [***] per square foot during the
third year of the Term hereof, then Landlord and Tenant, for a period of thirty
(30) days following the end of the third year, shall each have the option, upon
one hundred eighty (180) days prior written notice to the other party, of
terminating this Lease ("Termination Option") provided, however, that Tenant
shall not be entitled to terminate this Lease if Tenant is in default of this
Lease. In the event Tenant fails to submit a certified report of annual Gross
Sales within twenty (20) days after written notice of its failure to submit such
report within the time period required pursuant to Section 2.2 of this Lease,
then Landlord may use such information as Landlord shall have available to
permit Landlord to make a determination as to the amount of Gross Sales achieved
by Tenant during the period covered by Landlord's option to terminate, and such
information shall be the basis for Landlord exercising its Termination Option
and Tenant shall not be permitted to reinstate this Lease after termination for
any reason or cause whatsoever, including, but not limited to, the submittal by
Tenant of a subsequent sales report either certified or uncertified. In the
event that neither party exercises its Termination Option within the required
time period, then each such Termination Option shall, upon expiration of the
applicable period, become null and void and be of no further force or effect. In
the event either party exercises the foregoing Termination Option within the
required time period, this Lease shall terminate upon expiration of the one
hundred eighty (180) day period subject, however, to the payment by Tenant to
Landlord of all sums then due and owing or having accrued to Landlord. In the
event that Tenant exercises the Termination Option provided for herein, Tenant
shall pay to Landlord the unamortized portion of the Construction Allowance (as
hereinafter defined).
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In the event that Tenant can prove that Tenant's Gross Sales are below
[***] per square foot as the result of an act or omission on the part of
Landlord, then Landlord shall not be permitted to exercise the Termination
Option provided in the immediately preceding paragraph.
SECTION 1.3 OPENING. Subject to delays as described in Article XVI,
Tenant covenants and agrees to complete its construction within the Leased
Premises in accordance with the provisions of this Lease, to satisfy the
requirements for issuance of a certificate of acceptance pursuant to Exhibit D
attached hereto and made a part hereof, and to open its store for business to
the public not later than the Commencement Date. Notwithstanding the foregoing,
Landlord hereby notifies Tenant that the anticipated date of the grand opening
of the Shopping Center (the "Grand Opening") is the date set forth on the Data
Sheet, Tenant shall be obligated to open its store for business to the public on
or before the later of (A) the expiration of the Fixturing Period or (B) the
Grand Opening. Tenant shall not be permitted to open for business to the public
prior to the Grand Opening without the prior written consent of Landlord which
consent shall be at Landlord's sole discretion.
SECTION 1.4 LATE OPENING. In the event Tenant shall fail to open its
store for business to the public upon the Commencement Date for reasons other
than Delays, as described in Article XVI, or delays created by Landlord, then in
order to compensate Landlord for its loss, Tenant shall pay to Landlord as
additional rent (as defined in Section 2.3) over and above the Minimum Rent and
all other charges to be paid by Tenant to Landlord pursuant to this Lease, a sum
in an amount equal to [***] per day for the Commencement Date and each day after
the Commencement Date that Tenant shall have failed to open its store for
business. This remedy shall be in addition to any and all other remedies
provided for in this Lease in the event of such failure to open. Such additional
late opening rent shall be deemed to be in lieu of any Percentage Rent that
might have been earned during the period of Tenant's failure to open.
ARTICLE II
RENT AND DEPOSIT
SECTION 2.1. MINIMUM RENT. During the entire Term of this Lease, Tenant
shall pay annual minimum rental ("Minimum Rent") for the Leased Premises from
the Commencement Date of this Lease in the amount set forth in the Data Sheet
attached hereto, which sum shall be payable by Tenant in equal consecutive
monthly installments in the sum set forth in the Data Sheet attached hereto, on
or before the first day of each month, in advance. The Minimum Rent and each of
the monthly installments called for hereunder shall be payable to Landlord,
without demand, deduction, set-off or counter-claim, except as otherwise
provided herein or permitted by applicable law. The first installment of Minimum
Rent shall be paid by Tenant on or before the Commencement Date. If the
Commencement Date occurs on other than the first day of a month, the second
installment of Minimum Rent shall be prorated at a daily rate on the basis of a
thirty (30) day month.
On the Commencement Date, if either of the following conditions have not
been satisfied: (1) at least five (5) Major Tenants are open or ready to open
for business; or (2) the "Required Occupancy Level" (as hereinafter defined) has
been achieved, then Tenant's obligation for payment of Minimum Rent shall abate
and Tenant shall pay to Landlord, in lieu thereof, Interim Rent on the basis of
the lesser of (A) the [***] and (B) [***] of all of Tenant's Gross Sales (as
defined in Section 2.2 of this Lease) until both of the conditions in (1) and
(2) above have been initially satisfied; provided, however, Tenant shall not be
entitled to such abatement of Minimum Rent if Tenant fails to open its store in
the Leased Premises to the general public on or before the Commencement Date of
the Term hereof or if Tenant shall otherwise be in default of this Lease. Said
Interim Rent shall be paid to Landlord within ten (10) days following the end of
each calendar month, at which time Tenant shall also be required to submit an
unaudited statement of Tenant's Gross Sales for such calendar month and for the
Lease Year to date. All other terms and
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conditions of this Lease shall be applicable during such period. For purposes
of this paragraph, the term 'Required Occupancy Level' shall mean occupants of
at least sixty-five percent (65%) of the gross leasable floor area of the
Shopping Center are open for business, or instead, at Landlord's sole option.
'Required Occupancy Level' shall mean sixty five percent (65%) of the total
number of stores shown on the then existing lease plan for the Shopping
Center, are occupied and are not open or ready to open for business.
In addition, Landlord hereby represents and warrants to Tenant that it has
a fully executed lease for a Bass Pro facility, Jillian's and a multi-plex
theater at the Retail Development ("Key Stores"). In the event that less than
two of the Key Stores have opened for business within six (6) months of the
Commencement Date then Tenant's obligation for payment of Minimum Rent shall
abate and Tenant shall pay to Landlord, in lieu thereof, Interim Rent on the
basis of the lesser of (A) the scheduled Minimum Rent and (B) four percent (4%)
of all of Tenant's Gross Sales (as defined in Section 2.2 of this Lease) until
at least two (2) of the Key Stores are initially open for business; provided,
however, Tenant shall not be entitled to such abatement of Minimum Rent if
Tenant fails to open its store in the Leased Premises to the general public on
or before the Commencement Date or if Tenant shall otherwise be in default of
this Lease. Said Interim Rent shall be paid to Landlord within ten (10) days
following the end of each calendar month, at which time Tenant shall also be
required to submit an unaudited statement of Tenant's Gross Sales for such
calendar month and for the Lease Year to date. All other terms and conditions of
this Lease shall be applicable during such period. In the event that at least
two (2) of the Key Stores have not initially opened for business within eighteen
(18) months after the Commencement Date, then at the end of such eighteen (18)
month period, Tenant may elect to terminate this Lease by providing Landlord
within thirty (30) days of the end of such eighteen (18) month period, written
notice of its intention to so terminate the Lease ("Key Store Termination
Notice") or Tenant may elect to remain in the Lease Premises but must commence
paying the then applicable scheduled Minimum Rent as provided for in the Data
Sheet of this Lease. In the event that Tenant timely delivers the Key Store
Termination Notice, this Lease shall terminate one hundred and eighty (180) days
from the date of the Key Store Termination Notice or on such earlier date as may
be mutually agreed to between the parties and this Lease and all of the
unaccrued rights and obligations of the parties to it shall cease and terminate,
as fully and effectively as though the date agreed to were the Expiration Date.
In such event, Landlord and Tenant shall execute a Termination Agreement setting
forth the terms of such termination.
SECTION 2.2. PERCENTAGE RENT. (a) During and for each Lease Year, Tenant
shall pay annual percentage rent ("Percentage Rent") equal to the Percentage
Factor (see Data Sheet) multiplied by all "Gross Sales" resulting from business
conducted in, on or from the Leased Premises during such Lease Year in excess of
the applicable Sales Break Point set forth in the Data Sheet. In any Lease Year
where there is more than one applicable Sales Break Point, for purposes of
computing annual Percentage Rent the following calculation shall be used: each
Sales Break Point which was effective during any such Lease Year shall be
multiplied by a fraction, the numerator of which is the number of days in the
Lease Year that such Sales Break Point was effective and the denominator of
which is the actual number of days in such Lease Year (herein the "Adjusted
Break Point") and the sum of the Adjusted Break Point for such Lease Year.
"Gross Sales" is defined to mean the total amount of the actual sales price,
whether for cash or otherwise, of all sales of merchandise or services arising
out of or payable on account of (and all other receipts or amounts receivable
whatsoever with respect to) all the business conducted in, on, or from the Lease
Premises by or on account of Tenant or any sublessee, assignee or concessionaire
of Tenant for cash or otherwise, including all orders for merchandise taken from
or filled at or from the Leased Premises, including all deposits not refunded to
customers. A "sale" shall be deemed to have been consummated for purposes of
this Lease, and the entire amount of the sale price shall be included in Gross
Sales, at such time as (i) the transaction is initially reflected in the books
or records of Tenant, or any sublessee, assignee or concessionaire of Tenant, or
(ii) Tenant or such other entity receives all or any portion of the sales price,
or (iii) the applicable goods or services are delivered to the customer,
whichever first occurs. Tenant shall record at the time of each sale or
transaction, in the presence of the customer, all receipts from such sale or
other transaction, whether for cash, credit or otherwise, in a cash register or
cash registers having a cumulative total, which shall be sealed in a manner
approved by Landlord and which shall possess such other features as shall be
required by Landlord. There shall be no deduction allowed for direct
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or indirect discounts, rebates, or other reductions on sales, unless generally
offered to the public on a uniform basis. Tenant may deduct from Gross Sales
discount sales to employees, bad debts when written off the books of Tenant and
charges paid to credit card companies, as otherwise provided below. Tenant may
also exclude from Gross Sales any transfer of goods between Tenant's other
stores and returns to shippers or manufacturers. The term "Gross Sales" shall
exclude, however, proceeds from any sales tax, gross receipts tax or similar
tax, by whatever name called which are separately stated and in addition to the
purchase price, bona fide transfers of merchandise from the Leased Premises to
any other stores or warehouses of Tenant, refunds given to customers for
merchandise purchased at the Leased Premises and returned or exchanged, and
sales of Tenant's fixtures and equipment not in the ordinary course of Tenant's
business. The term "merchandise" as used in this Lease shall include food and
beverages if Tenant is permitted to sell such items pursuant to Section 4.1
hereof.
The term "Gross Sales" shall not include, however, the following: (i)
the sales price of all merchandise returned and accepted for full credit or the
amount of the cash refund or allowance made thereon; (ii) the sums and credits
received in settlement of claims for loss or damage to merchandise; (iii) the
consideration received in connection with a sale of inventory which occurs other
than in the ordinary course of Tenant's business, including, but not limited to,
a sale in bulk or to a jobber, liquidator or assignee; (iv) sales taxes,
so-called luxury taxes, excise taxes, gross receipt taxes, and other taxes now
or hereafter imposed upon the sale or value of merchandise or services, whether
added separately to the selling price of the merchandise or services and
collected from customers or included in the retail selling price; (v) receipts
from public telephones, vending machines, sales of money orders, and the
collection of public utility bills; (vi) bankcard discounts (e.g., Visa,
MasterCard, etc.), interest, carrying charges, or other finance charges in
respect of sales made on credit; (vii) sales of fixtures, trade fixtures, or
personal property that are not merchandise held for sale at retail; (viii) sales
to senior citizens at discount; (ix) revenue received from mailing, alterations,
delivery or other services performed on a non-profit basis for the benefit of
customers; (x) Tenant's accounts receivable, not to exceed [***] of Gross Sales,
which have been determined to be uncollectible for federal income tax purposes
during the applicable lease year, provided, however, that if such accounts are
actually collected in a later lease year, the amount shall be included in the
Gross Sales for such later lease year; (xi) rents, subrents or other
consideration received in connection with a permitted assignment, sublease,
license, concession or other transfer of any portion of the store (however,
Gross Sales of any such transferee shall be included) and license fees otherwise
received by Tenant in connection with a third party license agreement; (xii)
amounts received for merchandise transferred to any other place of business of
Tenant (or its subtenants, concessionaires and/or licensees) or to any business
organization affiliated with Tenant wherever located, provided such merchandise
is not used to fill a sale made in the store; (xiii) discounts given for
promotional coupons that are redeemed from time to time; (xiv) amounts received
in connection with remote site promotional activities; (xv) promotional fees
earned by Tenant with respect to goods or services offered for sale; and (xvi)
amount required to be paid by Tenant under any agreement related to Tenant's use
of the NASCAR name, not to exceed [***] of Gross Sales.
(b) Tenant shall keep at the Leased Premises or at Tenant's
executive offices within the continental United States a full and accurate set
of books and records adequately showing the amount of Gross Sales in each Lease
Year. The books and records to be kept by Tenant shall include, without
limitation, (i) cash register tapes, including tapes from temporary registers;
(ii) serially prenumbered sales slips; (iii) detailed original records of any
exclusions or deductions from Gross Sales; (iv) sales tax records; and (v) such
other records, if any, would normally be examined by an independent accountant
pursuant to accepted auditing standards in performing an audit of Tenant's
sales. Such books and records shall be kept in accordance with generally
accepted accounting principles and practices, may be saved in microfiche or an
electronic storage medium, and shall be retained by Tenant for a period of not
less than two (2) years following the end of the Lease Year to which they have
reference. When and as Landlord may reasonably require (but no more than once
per Lease Year following the first Lease Year (if the first year is a partial
Lease Year) unless required by the city, county or State), Tenant shall also
furnish to Landlord any and all statements, information, and copies of sales
reports and returns which separately show financial data for the Leased
Premises, and inventory records and other data evidencing Gross Sales. Within
twenty (20) days following the end of each calendar month of the Term
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hereof Tenant shall submit to Landlord an unaudited statement of Gross Sales for
such calendar month. Within twenty (20) days following the end of the month in
which Tenant's Gross Sales for the Lease Year to date exceed the Sales Break
Point, and each month thereafter, Tenant shall pay to Landlord Percentage Rent
and shall submit to Landlord a statement certified by Tenant setting forth the
Gross Sales for each such period. Within forty-five (45) days after the close of
each Lease Year, Tenant shall furnish to Landlord a statement certified by an
authorized representative or financial officer of Tenant setting forth amount of
Gross Sales during such Lease Year and showing the amount of Percentage Rent
required to be paid by Tenant for such Lease Year. The full amount of the
Percentage Rent due shall be paid to Landlord no later than sixty (60) days
after the end of each Lease Year and any excess Percentage Rent paid shall be
credited against Tenant's next due Rent payment, except for the final Lease Year
of the Term for which any excess shall be refunded to Tenant. Landlord and/or
Landlord's auditor shall have the right, at any time after thirty (30) business
days notice but no more than once per Lease Year after the first Lease Year (if
the first Lease Year is a partial Lease Year), to inspect and/or audit the
records of Tenant relating to Gross Sales. If the Gross Sales exceed those
reported, Tenant shall immediately pay any deficiency in Percentage Rent owing
to Landlord. If Gross Sales vary from those reported by [***] or more, Tenant
shall pay Landlord's cost of inspection and audit. If Gross Sales vary from
those reported by (i) [***] or more in any [***] Lease Year, or (ii) [***] or
more for any [***] Lease Years out of any [***] Lease Years, then Landlord shall
have the right, at its sole option, to terminate this Lease, with Tenant
remaining liable for sums due and owing under this Lease for the balance of the
Term provided, however, that Landlord shall be permitted to terminate this Lease
if Landlord can prove that such misstatement was a deliberate act. Tenant agrees
that in the event Tenant shall fail to timely submit a Gross Sales statement as
required by this Section 2.2.(b), Tenant shall pay on demand a late fee of [***]
per late statement, as additional rent.
(c) In the event that Tenant shall fail to operate its business in the
Leased Premises in the manner and on each day as required pursuant to Article IV
hereof, then, for the purpose of computing the Percentage Rent for such Lease
affected by Tenant's failure to operate, the Sales Break Point for such Lease
Year shall be adjusted by multiplying the Sales Break Point otherwise applicable
for such Lease Year by a fraction, the numerator of which shall be the actual
number of days in such short Lease Year or the actual number of days in such
Lease Year during which Tenant was open for business and operating in accordance
with Article IV, and the denominator of which shall be "360".
In the event that the first Lease Year is less than six (6) months in
length, then the Percentage Rent covering such Lease Year shall be paid on Gross
Sales in excess of the Sales Break Point computed on a pro rated basis for the
period beginning on the Commencement Date of the Term and ending on the
succeeding December 31st.
(d)
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SECTION 2.3. PAYMENTS BY TENANT. Throughout the Term of this Lease. Tenant
shall pay to Landlord without demands, deductions, set-offs or counterclaims
(except as otherwise provided for herein or permitted by applicable law), the
Rent, which is hereby defined as the sum of the Minimum Rent, Percentage Rent
and all additional rent, when and as the same shall be due and payable
hereunder. Unless otherwise stated, all sums of money or charges of any kind or
nature, in addition to Minimum Rent and Percentage Rent, payable by Tenant to
Landlord pursuant to this Lease or the Exhibits attached hereto are defined as
"additional rent" and are due thirty (30) days after the rendering of an invoice
therefor, without any deductions, set-offs or counterclaims, and failure to pay
such sums of money or charges shall carry the same consequences as Tenant's
failure to pay Rent. All payments and charges required to be made by Tenant to
Landlord hereunder shall be payable in United States funds, at the address
indicated on page 1 of this Lease, unless otherwise specified by written notice
from Landlord to Tenant. No payment by Tenant or receipt by Landlord of a lesser
amount than the correct Rent shall be deemed to be other than a payment on
account and no endorsement or statement on any check or other communication
accompanying a check for payment of any amounts payable hereunder shall be
deemed an accord and satisfaction, and Landlord may accept such check in payment
without prejudice to Landlord's right to recover the balance of any sums owed by
Tenant hereunder or to pursue any other remedy available in this Lease, or under
law, against Tenant.
SECTION 2.4. SECURITY DEPOSIT. The amount set forth in the Data Sheet as a
security deposit is payable by Tenant to Landlord upon Tenant's execution of
this Lease, which sum shall be held by Landlord as security against any default
by Tenant in the performance of the covenants, conditions and agreements of this
Lease. The security deposit may, at Landlord's option, be applied by Landlord
against any default in any of the terms, provisions or conditions of this Lease.
Landlord shall not be obligated to keep such security deposit in a separate fund
but may commingle the security deposit with its own funds. A mortgagee-in-
possession of the Leased Premises, or any interest therein, through public or
private foreclosure or the acceptance of deed in lieu thereof, shall have no
liability to Tenant for return of all or any portion of the security deposit,
unless, and then only to the extent that, such mortgagee has actually received
all or any portion of Tenant's security deposit. In the event Landlord applies
the security deposit in whole or in part against a default by Tenant, Tenant
shall, upon demand by Landlord, deposit sufficient funds to maintain the
security deposit in the initial amount. The failure of Tenant to maintain the
security deposit in the initial amount as stated shall constitute a failure to
pay Rent and shall carry with it the consequences set forth under Article XIV
hereof. Upon the expiration of the Term hereof, the security deposit, if not
applied toward the payment of Rent in arrears or toward the payment of damages
suffered by Landlord by reason of Tenant's breach of this Lease, is to be
returned to Tenant without interest, except as provided by law, but in no event
is such security deposit to be returned until Tenant has vacated the Leased
Premises, delivered possession thereof to Landlord, and fully satisfied Tenant's
obligations under this Lease. Notwithstanding the acceptance by Landlord of
Tenant's security deposit, this Lease shall not be deemed effective until the
Effective Date (as defined in Section 20.20).
SECTION 2.5. LATE CHARGE. In the event any Rent or sums required hereunder
to be paid are not received on or before the fifth (5th) calendar day after the
same are due, then, for each and every late payment, Tenant shall immediately
pay, as additional rent, a late charge equal to the greater of (a) [***], (b)
[***] per day for each day after the date due that such payment has not been
received by Landlord or (c) [***] per month of the total receivable balance of
Tenant outstanding. In the event of Tenant's failure to pay the foregoing late
charge, Landlord may deduct said charge from the Security Deposit set forth in
Section 2.4 hereof. The provisions herein for late charges 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 obligation to pay all such sums at
the time or times herein stipulated. Notwithstanding the imposition of such late
charges pursuant to this Section 2.5, Tenant shall be in default under this
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Lease if any or all payments required to be made by Tenant are not made on or
before the time due and as stipulated in Article XIV, and neither the demand
for, nor collection by, Landlord of such late charges shall be construed as a
cure of such default on the part of Tenant. It is agreed that the said late
charge is a fair and reasonable charge under the circumstances and shall not be
construed as interest on a debt payment. If the event any charge imposed
hereunder or under any other section of this Lease is either stated to be or
construed as interest, then no such interest charge shall be calculated at a
rate which is higher than the maximum rate which is allowed under the usury laws
of the State, which maximum rate of interest shall be substituted for the rate
in excess thereof, if any, computed pursuant to this Lease.
ARTICLE III
PREPARATION OF LEASED PREMISES
SECTION 3.1. LANDLORD'S WORK. Landlord shall construct the building
wherein the Leased Premises are to be located and perform the work described in
Exhibit C attached hereto and made a part hereof ("Landlord's Work") at
Landlord's cost and expense, except as otherwise provided in Exhibit C.
Landlord's work shall be completed in a good and workmanlike manner, free of
material defects and in compliance with applicable building codes, and zoning
and subdivision laws relating to general retail use. All work, in excess of the
work described in Exhibit C, done by Landlord at Tenant's written request shall
be paid for by Tenant within thirty (30) days after the presentation to Tenant
of a bill for such work. Any items of Landlord's Work which are not completed as
of delivery of possession shall be identified by Tenant on a punch list to be
submitted to Landlord within thirty (30) days after the date of possession and
Landlord shall thereafter complete the same. Any items of Landlord's Work which
are not timely identified on such a punch list shall be deemed completed, other
than latent defects as provided for in Section 6.1 hereof.
SECTION 3.2. DELIVERY OF POSSESSION (a) Landlord, or Landlord's
supervising architect, shall give Tenant at least thirty (30) days' prior
written notice of the date on which Landlord's Work will be substantially
completed in accordance with Exhibit C and the Leased Premises will be available
for the performance of Tenant's Work (as defined in Section 3.3) to the extent
that Tenant shall be able to perform its work in the Leased Premises without
substantial interference resulting from the conduct of Landlord's Work
("Delivery of Possession Date"). Tenant covenants and agrees to take physical
possession of the Leased Premises on the Delivery of Possession Date provided
that Landlord's Work is "substantially completed." The term "substantially
complete" shall mean that Landlord can give Tenant beneficial occupancy of the
Leased Premises so that Tenant can begin the performance of Tenant's Work in
safety. Landlord and Tenant acknowledge that Landlord and Tenant will be working
simultaneously to complete the Leased Premises and that Landlord will be
continuing the completion of Landlord's Work during the thirty (30) day period
after the Delivery of Possession Date. Landlord and Tenant agree to cooperate so
as to avoid interference with each other so that Landlord's Work and Tenant's
Work may be completed in a timely manner. The Delivery of Possession Date shall
be subsequently confirmed by Landlord, or Landlord's supervising architect, by
written notice to Tenant. Failure of Landlord to deliver possession of the
Leased Premises within the time and in the condition provided for in this Lease
will not give rise to any claim for damages by Tenant against Landlord or permit
Tenant to rescind or terminate this Lease except as may be provided in Section
1.2 hereof.
(b) Tenant may, provided Tenant shall not interfere with the conduct of
Landlord's Work, and subject to Landlord's reasonable rules and regulations,
enter the Leased Premises during normal working hours during the course of
Landlord's Work for the purpose of inspecting the Leased Premises and making
measurements. At such time prior to the Delivery of Possession Date that
Landlord's Work has progressed sufficiently to permit Tenant to perform its work
without interfering with Landlord's Work, Landlord may, but shall not be
required to, notify Tenant of the same, and
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Tenant may then enter the Leased Premises in order to begin to install its store
fixtures and perform such other work as may be required under the provisions of
this Lease in order to ready the store for opening. Throughout the period of
Tenant's Work, Tenant shall schedule it work so as not to interfere with any
work being performed by Landlord or by any other tenant in the Shopping Center.
SECTION 3.3. TENANT'S WORK. (a) Tenant agrees, prior to the commencement of
the Term of this Lease, [***], to diligently perform all work of whatever nature
in accordance with Tenant's obligations set forth in Exhibit D ("Tenant's Work")
and all other related work necessary to prepare for the opening to the public of
Tenant's store in the Lease Premises in accordance with the provisions of this
Lease. Tenant agrees to furnish to Landlord the Store Design Drawings and
Working Drawings and Specifications with respect to the Leased Premises prepared
in the manner and within the time period required in Exhibit D. If such Store
Design Drawings or Working Drawings and Specifications are not furnished by
Tenant to Landlord within the required time period(s) in form to permit approval
by Landlord, then the Fixturing Period (as described in the Data Sheet) shall be
reduced by [***] of delay by Tenant in submitting said Store Design Drawings or
Working Drawings and Specifications. Landlord shall respond to such Store Design
Drawings or Working Drawings and Specifications submitted by Tenant pursuant to
this Lease within [***] business days following Landlord's receipt from Tenant.
In the event of Landlord's failure to respond within such [***] business day
period or there are other delays created by Landlord, the Fixing Period as
described in the Delta Sheet shall be extended by [***] of additional delay by
Landlord.
No material deviations from the final Store Design Drawings or Working Drawings
and Specifications, once approved by Landlord, shall be permitted unless
necessary to comply with applicable governmental requirements or unless
otherwise approved by Landlord. Landlord's approval of Tenant's Store Design
Drawings and Working Drawings and Specifications shall not constitute the
assumption of such items. Tenant's Work shall include the installations of
fixtures and equipment and the stocking of the Leased Premises with suitable
merchandise. Tenant covenants that all such fixtures and equipment visible to
customers shall be new (or like-new) and otherwise reasonably acceptable to
Landlord in appearance. In addition to conforming to the requirements specified
in Exhibit D, all work performed by Tenant shall comply with such rules and
regulations as Landlord and its representatives may make, provided that such
rules and regulations are uniformly applied to all similarly situated Shopping
Center tenants under construction. Unless Landlord otherwise directs in writing,
Tenant shall not open the Leased Premises for business until all construction
has been completed pursuant to the provisions of Exhibit D. It is further
understood and agreed that: (i) Landlord shall have no responsibility or
liability whatsoever for any loss of, or damage to, any fixtures, equipment,
merchandise, or other property belonging to Tenant, installed or left in the
Leased Premises except to the extent resulting from the negligence or
intentional acts or Landlord, its agents or employees; and (ii) Tenant's entry
upon and occupancy of the Leased Premises prior to the Commencement Date shall
be governed by and subject to all the provisions, covenants and conditions of
this Lease. Tenant shall obtain at its sole cost and immediately thereafter
furnish to Landlord all certificates and approvals with respect to work done and
installations made by Tenant that may be required for the issuance of a
certificate of occupancy for the Leased Premises, so that such certificate of
occupancy shall be issued and the Leased Premises shall be ready for the opening
of Tenant's business on the Commencement Date. Upon the issuance of the
certificate of occupancy, a copy thereof shall be immediately delivered to
Landlord. Promptly upon the completion of its work, Tenant, at Tenant's cost,
shall repair, clean and restore all portions of the Shopping Center affected by
Tenant's Work to their prior condition.
To the extent approved by the proper governing authorities, Tenant shall
have the right to install atop the roof of Landlord's building in which the
Leased Premises are located one (1) antenna and/or (1) satellite dish and the
equipment necessary for Tenant's communications and data transmission network
system. The satellite dish shall not be larger than five (5) feet in diameter.
The antenna or satellite dish on such roof shall be at a location designated by
Landlord and reasonably approved by Tenant. Tenant shall submit to Landlord for
its approval plans for the installation of such antenna or satellite dish and
necessary equipment, such approval not to be unreasonably withheld, delayed, or
conditioned. Tenant shall also provide Landlord with copies of all permits
required by the proper governmental authorities regarding such installation,
which shall be obtained by Tenant at its sole cost and expense. Landlord's
contractor shall cut the roof and patch it (if necessary) at Tenant's expense,
and Tenant's contractor shall be subject to Landlord's prior
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approval, which approval shall not be unreasonably withheld, delayed, or
conditioned. Tenant shall be responsible for the cost of repairing any damage to
Landlord's building arising from such installation, except to the extent caused
by Landlord's contractors. Upon prior written notice to Landlord (except in case
of an emergency), Tenant shall have access to the antenna or satellite dish and
related equipment for the purpose of maintaining, repairing and operating the
antenna or satellite dish. Any utility costs related to the installation and
operating of the antenna or satellite dish shall be the sole responsibility of
Tenant.
Provided Tenant is not in default hereof, Landlord hereby agrees to
contribute towards the cost of Tenant's Work a Construction Allowance of [***]
per square foot of floor area in the Leased Premises. The aforesaid Construction
Allowance shall be paid as follows: fifty percent (50%) after two-thirds (2/3)
of Tenant's Work is completed; forty percent (40%) upon the opening of the
Leased Premises for business; and ten percent (10%) upon receipt of the
Certificate of Occupancy and the applicable lien waivers from all contractors
and subcontractors. In the event that this Lease is terminated prior to the
expiration of the Term hereof as a result of a default on the part of Tenant,
Tenant shall repay said Construction Allowance to Landlord in cash upon
termination; provided, however, that Tenant's liability for said Construction
Allowance shall be reduced at the rate of one-sixtieth (1/60th) at the end of
each full calendar month during the Term hereof.
(b) The interest of Landlord in the Leased Premises and the Retail
Development shall not be subject to liens for improvements made by or on behalf
of Tenant. Nothing contained in this Lease shall be construed as a consent on
the part of Landlord to subject Landlord's estate in the Leased Premises or the
Retail Development to any lien or liability under applicable law. In the event
that any mechanic's, materialman's or other lien or any notices of claim,
including without limitation, stop notices (herein "lien") is filed against the
Leased Premises or Retail Development as a result of any work, labor, services
or material performed or furnished, or alleged to have been performed or
furnished to or for Tenant (excluding work performed by or on behalf of
Landlord) or to or for anyone holding the Leased Premises through or under
Tenant, Tenant, at its expense, shall cause the lien to be discharged or fully
bonded to the satisfaction of Landlord within thirty (30) days after notice of
the filing thereof. If Tenant fails to discharge or bond against such
mechanic's, materialman's or other lien, Landlord may, in addition to any other
remedies Landlord may have, but without obligation to do so, bond against or pay
the lien without inquiring into the validity or merits of such lien and all sums
so advanced, including reasonable attorney fees incurred by Landlord in
defending against such lien, procuring the bond or in the discharge of such
lien, shall be paid by Tenant on demand as additional rent. It shall be Tenant's
continuing obligation to keep and maintain the Leased Premises and all other
parts of the Retail Development free from any and all liens arising out of any
work performed, materials furnished or obligations incurred by or for Tenant in
connection with the Leased Premises. In addition, Tenant shall replace any bonds
posted by Landlord pursuant hereto with a suitable bond of equivalent amount
within twenty (20) days after Landlord's demand therefor.
(c) During the Term of this Lease, Tenant agrees to repair, refurbish or
replace the interior portions of the Leased Premises that are visibly worn or
damaged so as to maintain the condition of the Shopping Center as a first class
super-regional discount specialty retail mall.
SECTION 3.4. ALTERATIONS BY TENANT. Tenant shall not make or cause to be
made any alterations, repairs, additions or improvements in or to the Leased
Premises (for example, but without limiting the generality of the foregoing.
Tenant shall not install or cause to be installed any
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exterior signs or interior signs visible from the exterior except as permitted
by Section 4.3 hereof, floor covering, interior or exterior lighting, plumbing
fixtures, shades, canopies or awnings or make any changes to the storefront,
mechanical, electrical or sprinkler systems) without the prior written consent
thereto by Landlord. Tenant shall submit to Landlord plans and specifications
for such work at the time consent is sought, in accordance with the criteria and
procedures as provided in Exhibit D. In the event Landlord grants such consent,
such alterations, repairs, additions or improvements shall be performed in good
and workmanlike manner and in accordance with all applicable legal and insurance
requirements and all drawings or specifications approved by Landlord, and in
accordance with the provisions of this Lease, including the provisions of
Section 3.3 governing construction of the Leased Premises. Any work performed by
Tenant shall be subject to Landlord's inspection and approval after completion
to determine whether the same complies with the requirements of this Lease.
Prior to the commencement of any such work by Tenant, Tenant shall obtain the
insurance required in Section 8.2.
Tenant may from time to time make non-structural alterations to the Leased
Premises without Landlord's prior written approval, the aggregate total of which
shall not exceed [***] in any Lease Year; provided, however, that Tenant shall
not be permitted to alter the exterior storefront sign or the exterior of the
storefront (other than for repairs) without the prior written consent of
Landlord, and provided further that any such non-structural alterations shall
not change the overall appearance of the Leased Premises as originally approved
by Landlord.
SECTION 3.5. REMOVAL BY TENANT. All repairs, alterations, decorations,
additions and improvements made by Tenant shall be deemed to be attached to the
leasehold and to have become the property of Landlord upon such attachment, and,
upon the Expiration Date or sooner termination of this Lease, Tenant shall not
remove any of such alterations, decorations, additions and improvements;
provided that trade fixtures, simulators, and other items noted as "To Be
Removed" on Tenant's Construction Documents and Specifications installed by
Tenant may be removed if all Rent due herein are paid in full and Tenant is not
otherwise in default hereunder; provided further, however, that Landlord may
designate by written notice to Tenant given at the time such improvements are
installed those alterations, decorations, additions and improvements which shall
be removed by Tenant at the Expiration Date or sooner termination of this Lease
and Tenant shall, at Tenant's cost, promptly remove the same and repair any
damage to the Leased Premises caused by such removal.
ARTICLE IV
CONDUCT OF BUSINESS
SECTION 4.1. USE AND TRADE NAME. Except as otherwise provided herein,
Tenant shall continuously use and occupy the Leased Premises during the Term
solely for the purpose of conducting the business specifically set forth in the
Data Sheet and for no other purpose or purposes. Throughout the Term hereof,
Tenant shall (a) operate its business in the Leased Premises under the Trade
Name specifically set forth in the Data Sheet and under no other so long as such
name shall not be held to be in violation of any applicable law, (b) not change
the advertised name or character of the business operated in the Leased
Premises, (c) refer to the Shopping Center by name in designating the location
of the Leased Premises in all newspaper and other advertising within the
Shopping Center market area and in all other references to the location of the
Leased Premises, and (d) during the period from the Delivery of Possession Date
through sixty (60) days following the Commencement Date, include in all Tenant's
newspaper advertising within the Shopping Center market area the designation
that Tenant is opening for business in the Shopping Center. If any governmental
license(s) or permit(s) shall be required for the proper and lawful conduct of
Tenant's business or other activity carried on in the Leased Premises, or if a
failure to procure such a license or permit might or would in any way, adversely
affect Landlord or the Shopping Center, then Tenant,
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a Tenant's expense, shall duly procure and thereafter maintain such license(s)
or permit(s) and submit the same for inspection by Landlord. Tenant, at Tenant's
expense, shall at all times, comply with the requirements of such license(s) or
permit(s). Except as provided in Section 1.3, Tenant shall open its store in the
Leased Premises for business to the public on the Commencement Date, and shall
thereafter diligently conduct is regular business operations in the Leased
Premises as required by terms of this Lease. No symbol, design, name, mark or
insignia adopted by Tenant shall be used without the prior written approval of
Tenant.
During the Term of this Lease, and provided Tenant shall not be in default
hereof, Landlord agrees that Landlord will not lease space in the Retail
Development (other than with respect to spaces leased or to be leased to Major
Tenants and presently executed non-Major Tenant leases), to any tenant whose
primary use is the entertainment use of auto-racing simulators. In addition,
with respect to any non-Major Tenant lease, Landlord shall not be permitted to
modify any such lease, either through amendment or assignment, so as to permit
the occupant of the space leased thereby to have as its primary use the
entertainment use of auto-racing simulators.
Landlord hereby represents and warrants to Tenant that Tenant's use of the
Leased Premises as contemplated in the Data Sheet does not violate any
exclusivity clause or other agreement between Landlord and any other party,
including any other Tenant of the Shopping Center, and Landlord shall indemnify,
defend, protect and hold harmless Tenant from any loss, liability, cost,
expense, judgement, action, or claim of any such party arising from the
inaccuracy of such representation and warranty.
If the trade name of all or substantially all other stores operating under
the same trade name as set forth in this Section 4.1 shall be changed, then
Tenant, with prior written notice to Landlord, may likewise change its trade
name herein set forth to such other name as adopted for all or substantially all
such other stores in first class regional malls or super-regional malls.
Notwithstanding the foregoing, in no event shall Tenant's trade name duplicate
any other trade name in the Retail Development.
SECTION 4.2. OPERATION OF BUSINESS. Tenant shall open for business in the
Leased Premises and remain open during the entire Term and continuously operate
its business in the entire area of the Lease Premises during the entire Term.
Tenant shall conduct its business at all times in a high class and reputable
manner, maintaining at all times a full staff of employees and a complete stock
of merchandise. Tenant shall install and maintain at all times a display of
merchandise in the display windows (if any) of the Leased Premises and shall
keep the Leased Premises well lighted during all hours that the Shopping Center
is open to the public and during such other hours as may be reasonably
designated by Landlord but in no event more than one (1) hour after the close of
business. In no event shall Tenant conduct or advertise any auction, fire sale,
going out of business sale, or bankruptcy sale in or about the Leased Premises
without Landlord's prior written consent in each instance, which consent may be
withheld by Landlord in its sole and absolute discretion. Tenant shall conduct
its business in the Leased Premises in a lawful manner and in good faith during
all days and hours specified by Landlord from time to time as the published
operating hours for the Shopping Center. Tenant shall not use or allow the
Leased Premises to be used for any improper, immoral or objectionable purposes,
as determined by Landlord, and Tenant shall not do any act tending to injure the
reputation of the Shopping Center as determined by Landlord. Tenant may (but
shall not be required), from time to time, upon written notice to Landlord,
remain open for business beyond the normal operating hours of the Shopping
Center on a daily basis, but such hours of operation shall not extend beyond the
time permitted by applicable law or regulations, and in no event beyond the time
that is one hour after the release of the last movie from the Theater or 1:00
a.m. whichever is later. In addition, in the event that there is an exterior
entrance serving only the Leased Premises, which provides ingress and egress to
the general public and such ingress and egress has been approved by the local
jurisdiction for non-emergency use, then Tenant shall be permitted to remain
open for business during the same days and hours that Jillian's or its
replacement is open for business. Tenant agrees to reimburse Landlord for all
reasonable costs directly relating to all additional hours of operation beyond
the normal operating hours of the Shopping Center, which costs include, without
limitation, electricity for parking lot lighting and salaries for security
personnel.
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Notwithstanding any provision hereof to the contrary, Tenant shall not be
obligated to continuously operate from the Leased Premises during periods in
which (i) Tenant is carrying on remodeling activities (but in no event for more
than thirty (30) days in any lease year and no more than twice in any five (5)
year period), (ii) Tenant is closed for the taking of inventory (but in no event
for more than two (2) days in any lease year), (iii) Tenant is unable or
reasonably unwilling to operate as a result of casualty or natural disaster,
condemnation, interruption of utilities or services, extremely inclement
weather, civil unrest, operation of the business would expose Tenant's
employees, agents or invitees to an unreasonably risk of physical injury or
property damage, or other force majeure events, (iv) Tenant's use and occupancy
of the Leased Premises is prohibited by any law, ordinance, order or other act
of any judicial governmental or quasi-governmental authority, (v) there exists a
substantial and material hardship to Tenant or its employees, provided Tenant's
failure to continuously occupy under this clause (v) for any such occurrence
shall be excused only for a period of forty-eight (48) hours, (vi) Thanksgiving
and Christmas, and (vii) during periods in which the Leased Premises are
temporarily closed in connection with group sales activities being conducted and
the Leased Premises are temporarily closed to the public (as permitted pursuant
to Section 4.1 of the Data Sheet).
Landlord hereby consents to Tenant's use of hydraulic oil in connection
with the operation of the simulators and cleaning and office products
customarily used in retail or office premises so long as such materials are
used, handled and disposed of in accordance with applicable laws. Landlord
hereby acknowledges that such materials are approved.
Landlord recognizes that Tenant's prototype incorporates an open storefront
design. Tenant shall be permitted to incorporate the open storefront element
into the design of the Leased Premises provided that Tenant, at Tenant's expense
shall construct Tenant Work in a manner that does not cause the ambient noise
level in adjacent tenant spaces and common areas to exceed 45 db(A). Similarly,
Tenant installed equipment within the Leased Premises shall be isolated in a
manner that eliminates the transfer of any and all vibrations to adjacent tenant
spaces and common areas. Landlord shall be given the opportunity to review and
approve Tenant's intended construction methods to isolate such noise and
vibrations, which will be included in Tenant's Store Design Drawings submission
(as provided for in Exhibit D). Landlord's review and approval of Tenant's Store
Design Drawings shall not relieve Tenant of its obligation to limit the ambient
noise level and eliminate the transfer of vibrations as required herein.
SECTION 4.3. SIGN. Tenant shall install and maintain one (1) sign affixed
to the front of the Leased Premises, subject to the prior written approval of
Landlord as to design and location and conforming to all applicable legal and
insurance requirements. Tenant's sign shall conform to the specifications and
requirements contained in Exhibit E attached hereto. Tenant shall keep its
approved storefront sign lighted during all hours that the Shopping Center is
open to the public and during such other hours as may be reasonably designated
by Landlord but in no event more than one (1) hour after the close of business.
Tenant shall pay for all costs in connection with such sign and shall be
responsible for the cost of proper installation and removal thereof and any
damage caused to the Leased Premises thereby. In the event Landlord deems it
necessary to remove such sign, then Landlord shall have the right to do so,
provided, however, that if the sign has received Landlord's prior written
approval and is consistent with the specifications and requirements of Exhibit
E, Landlord shall replace said sign as soon as practicable. Except as mentioned
above, Tenant shall not place or cause to be placed, erected or maintained on
any exterior door, wall or window of the Leased Premises, or the glass of any
window or door of the Leased Premises, or on any sidewalk or within any display
window space in the Leased Premises, or within five (5) feet of the front of the
storefront lease line or opening, or within any entrance to the Leased Premises,
any sign (flashing, moving, hanging, handwritten or otherwise), decal, placard,
flashing, moving or hanging lights, lettering or any other advertising matter of
any kind or description. No symbol, design, name, mark or insignia adopted by
Landlord for the Retail Development shall be used without the prior written
approval of Landlord. Any interior signs must be in good taste and prepared
professionally (not hand-lettered) so as not to detract from the appearance of
the Leased Premises or the Shopping Center. Any sign or display visible from the
exterior of the Leased Premises which does not meet the above criteria may be
removed at any time by Landlord without Landlord incurring any liability
therefor, and without such removal constituting a breach of this Lease or
entitling Tenant to claim damages on account thereof. Tenant shall be
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permitted to install a video wall within the Leased Premises (but not within
five (5) feet of the storefront leaseline), which video wall may be visible from
outside the Leased Premises.
Landlord and Tenant agree to use commercially reasonable good faith efforts
to cooperate in the development of a storefront design to permit the
incorporation of a stock car replica above the storefront so long as the
installation complies with applicable codes and is reasonably in keeping with
the design criteria for entertainment uses in the Retail Development.
SECTION 4.4. TENANT'S WARRANTIES. Tenant warrants, represents, covenants
and agrees that, in the operation of its business within the Leased Premises,
Tenant shall: (a) pay before delinquency any and all taxes, assessments and
public charges levied, assessed or imposed upon Tenant's business, or upon
Tenant's fixtures, furnishings or equipment in the Leased Premises, or upon any
leasehold interest or personal property of any kind, owned by or placed in or
about the Leased Premises by Tenant or by anyone claiming by, through or under
Tenant, including, without limitation, any transfer taxes, and pay when and as
due all license fees, permit fees and charges of a similar nature required for
the conduct by Tenant or any subtenant or concessionaire of any business or
undertaking authorized hereunder to be conducted in or from the Leased Premises;
(b) observe all reasonable requirements promulgated by Landlord at any time and
from time to time relating to delivery vehicles, the delivery of merchandise,
and the storage and removal of trash and garbage; (c) not use any space outside
the Leased Premises for sale, storage or any other undertaking except as
provided herein; (d) not use the plumbing facilities in the Leased Premises for
any purpose other than that for which they were constructed, nor dispose of any
foreign substances therein; (e) not use any advertising medium or sound devices
inside or adjacent to the Leased Premises which produce or transmit sounds which
are intended to be audible beyond the interior of the Leased Premises it being
expressly understood that Tenant shall be required to soundproof the Leased
Premises so as to minimize the impact of the noise created by the Permitted Use
on other tenants and patrons of the Retail Development; (f) not permit any odor
to emanate from the Leased Premises which is objected to by Landlord or by any
tenant or occupant of the Retail Development (and, upon written notice from
Landlord, Tenant shall immediately cease and desist from causing such odor, and
Landlord may deem the failure by Tenant to do so, a material breach of this
Lease); (g) keep the Leased Premises and any platform, loading dock or service
area used by Tenant in a neat, clean, safe and sanitary condition; (h) promptly
comply with all present and future laws, ordinances, orders, rules, regulations
and requirements of all governmental authorities having jurisdiction, and
observe and comply with all covenants and restrictions of record and all notices
from Landlord's mortgagee, affecting or applicable to the Retail Development or
affecting or applicable to the Leased Premises or to the cleanliness, safety,
occupancy and use of the same, whether or not any such law, ordinance, order,
rule, regulation, covenant, restriction, or other requirement is substantial, or
foreseen or unforeseen, or ordinary or extraordinary, or shall necessitate
structural changes or improvements (provided, however, that Tenant shall not be
required to make any structural changes or improvements required pursuant to
this Section 4.4(h) with respect to the structural portions of the Leased
Premises originally constructed by Landlord, unless such change shall be
required by virtue of Tenant's use of the Leased Premises), shall interfere with
the use or enjoyment of the Leased Premises, or shall be directed to or imposed
upon Tenant or Landlord, and Tenant shall hold Landlord harmless from any and
all cost or expense on account thereof (as used in this Lease, the term "legal
requirements" shall include the requirements set forth in this subparagraph);
(i) not use the parking areas or sidewalks, common areas or any space on or
about the Retail Development (outside the Leased Premises) for display, sale,
handbilling, advertising, solicitation, or any other similar undertaking; (j)
maintain and operate the heating, ventilating and air conditioning system and
equipment servicing the Leased Premises so as to adequately heat and cool the
same and to maintain at all times, whether or not Tenant is open for business,
temperatures in the Leased Premises which will not drain heat or ventilation or
air conditioning from the enclosed mall or other interior areas into the Leased
Premises and shall not discharge heat, ventilation or air conditioning from the
Leased Premises into the enclosed mall or other interior areas; and (k) be
authorized to do business in the State, evidence of which must be delivered to
Landlord on or before the earlier of (I) the Commencement Date or (II) the date
that Tenant opens for business in the Leased Premises.
SECTION 4.5. STORAGE AND OFFICE SPACE. Tenant shall store or stock in the
Leased Premises only such goods, wares and merchandise as Tenant intends to
offer for sale at, in, from, or upon the Leased Premises or as are required to
repair and maintain the improvements and simulators in the Leased Premises. This
shall not preclude occasional emergency transfers of merchandise to the other
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stores of Tenant, if any, not located in the Shopping Center. Tenant shall use
for office, clerical or other non-selling purposes only such space in the Leased
Premises as is from time to time reasonably required for Tenant's business
therein, and Tenant shall not perform any office or clerical function in the
Leased Premises for any store located elsewhere.
SECTION 4.6 CARE OF PREMISES. Tenant shall keep the Leased Premises
(including the exterior and interior portions of all windows, doors and all
other glass and signs) orderly, neat, safe and clean and free from rubbish or
dirt at all times and shall store all trash and garbage only in the areas
reasonably designated by Landlord for such storage and accumulation. Tenant
shall not move any safe, heavy machinery, heavy equipment, or fixtures into or
out of the Leased Premises without Landlord's prior written consent, except
that, during hours when the Shopping Center is not open to the public, Tenant
shall be permitted to move equipment associated with its Permitted Use provided
that Tenant uses its best efforts to protect the common area improvements from
damage and agrees to assume responsibility for any damage resulting from the
same. Tenant agrees that it will not place a load on any floor exceeding the
floor load per square foot which such floor was designed to carry, and will not
install, operate or maintain in the Leased Premises any heavy equipment except
in such manners as to achieve a proper distribution of weight. Landlord and
Tenant shall cooperate in their efforts to insure that the Leased Premises are
designed to accommodate the Permitted Use.
SECTION 4.7. NOTICE BY TENANT. Tenant shall give immediate notice to
Landlord in case of fire or accidents in the Leased Premises, or in the building
of which the Leased Premises are a part of, or of defects therein or in any
fixtures or equipment.
SECTION 4.8. RADIUS. Tenant acknowledges that the Retail Development draws
it customers from a large geographic area, relying in part on regional and
international tourism, and that the success of the Retail Development and income
of the Landlord therefrom are dependent upon maximum customer traffic within the
Retail Development. In addition, Tenant acknowledges that Landlord is relying on
the generation of Percentage Rent from Tenant's Gross Sales at the Leased
Premises. During the Term, in the event Tenant, or any person, firm or
corporation who or which controls or is controlled by Tenant (an "Affiliate")
shall directly or indirectly, either individually or as a partner or stockholder
or otherwise, own, operate, or obtain a controlling interest (i.e. own more than
fifty percent (50%) of the shares or interest) in any business similar to or in
competition with the business of Tenant described in Article IV ("competing
business"), which business is conducted within the Area (as said term is herein
defined), then the Gross Sales (as said term is defined in this Lease) of any
such competing business within said Area shall be included in Tenant's Gross
Sales made from the Leased Premises and the Percentage Rent hereunder shall be
computed upon the aggregate of Tenant's Gross Sales made from the Leased
Premises and made from each such competing business then conducted within said
Area. Tenant shall be obligated to provide Landlord with full and complete Gross
Sales information and reports with respect to any competing business within the
Area in accordance with the requirements of Article II of this Lease and Tenant
shall be obligated to include the applicable portion of the Gross Sales of such
competing business with the Gross Sales of the Leased Premises and to pay
Percentage Rent thereon in accordance with the terms of this Lease. The "Area"
shall be defined as the area falling within a radius of ten (10) miles measured
from the outside boundary of the Retail Development. This Section 4.8 shall not
apply to any competing business which is open and is being operated by Tenant
within said Area on the Effective Date.
ARTICLE V
COMMON AREA
SECTION 5.1. USE OF COMMON AREA. Landlord agrees to cause to be operated,
managed and maintained during the Term all of the common areas of the Shopping
Center. The term "common areas", as used in this Lease, shall mean the parking
areas, pedestrian sidewalks and bridges, truckways, loading docks, delivery
areas, park areas, pedestrian malls and courts, elevators and escalators, if
any, and stairs not contained in leased areas, public restrooms and comfort
stations, if any, service areas, fire, service and exit corridors, passageways,
landscaped areas, berms and all other areas or improvements which may be
provided for the convenience of the occupants
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and tenants of the Retail Development and their respective agents, employees,
customers, invitees, and the licensees and invitees of Landlord. The use and
occupancy by Tenant of the Leased Premises shall include the non-exclusive use,
in common with all others to whom Landlord has or may hereafter grant rights to
use the same (including, but not limited to, the owners, tenants and occupants
of the Shopping Center), of the common areas and of such other facilities as may
be designated by Landlord from time to time; subject, however, to rules and
regulations for the use thereof which will be uniformly applicable to all
Shopping Center tenants as prescribed from time to time by Landlord. In
particular, Tenant and its employees shall park their cars only in the areas
specifically designated from time to time by Landlord for that purpose. Tenant
covenants that it will enforce the parking by its employees in such designated
areas. Automobile license numbers of employees' cars shall be furnished by
Tenant to Landlord within five (5) days after Landlord's request. In the event
any vehicle is parked by an employee of Tenant in a non-employee parking area,
Landlord shall have the right to cause the vehicle to be towed to a location
designated by Landlord and Tenant shall be obligated to reimburse Landlord for
all towing charges. Landlord may at any time close temporarily any common area
to make repairs or changes, to prevent the acquisition of public rights in such
areas and to discourage non-customer use, provided the same shall not materially
adversely affect access to or visibility of the Leased Premises. In addition,
Landlord may modify, from time to time, the traffic flow pattern and layout of
parking spaces and the entrances-exits to adjoining public streets or walkways,
utilize portions of the common areas for entertainment, displays and charitable
activities and may do such other acts in and to the common areas as in its
judgment may be desirable to improve the convenience or attraction thereof.
Landlord agrees to maintain all common areas of the Shopping Center in good
order, condition and repair and in a safe, clean, sightly and sanitary condition
in accordance with good and accepted shopping center practices. The maintenance
obligations of Landlord shall include, without limitation, the re-striping of
parking areas when required, repairing of common areas and adequate lighting of
all exterior common areas during all hours of darkness during which Tenant shall
be open for business and for one (1) hour thereafter.
SECTION 5.2. COMMON AREA MAINTENANCE EXPENSES. (a) Tenant agrees to pay to
Landlord each Lease Year, in the manner hereinafter provided, Tenant's
proportionate share of all costs and expenses (the "Common Area Maintenance
Expenses") of every kind and nature paid or incurred by Landlord, or for which
Landlord is obligated, during each Lease Year, for operating, equipping,
policing and protecting, heating, air conditioning, providing sanitation and
sewer and other services, lighting, insuring, repairing, replacing and
maintaining (i) the common areas, and (ii) all buildings and roofs within the
Retail Development, and (iii) all other areas, facilities and buildings used in
connection with the maintenance and/or operation of, and whether located within
or outside of, the Retail Development, including without limitation, all roads
and driveways serving the Retail Development which are maintained or repaired by
Landlord or at Landlord's expense. The Common Area Maintenance Expenses shall
include, but are not limited to, costs and expenses of: water, gas, sewage,
electricity, refuse disposal, air conditioning, heating and other utilities
(without limitation), including all usage, service, hook-up, connection,
availability and/or standby fees or charges pertaining to same, and the utility
costs; illumination and maintenance of signs, whether located on or off the
Retail Development property; salaries of all management personnel; maintenance,
repair and replacement of directories, electronic or otherwise, cleaning,
lighting, snow removal and landscaping; security control and fire protection;
uniforms for maintenance, administrative and security personnel for the Retail
Development; management fees; maintenance for wooded areas, retention ponds,
wetlands, rivers and riverbank areas; premiums for insurance to the extent
maintained by Landlord, for liability, casualty and property damage, including,
without limitation, insurance against vandalism, plate glass breakage, fire and
extended coverage insurance and such other coverage as determined by Landlord,
and liability for defamation and claims of false arrest occurring in and about
such areas; personal property taxes; maintaining and replacing the equipment, if
any, supplying music to such areas; the reasonable depreciation of equipment
used in the operation and maintenance of such areas; total compensation and
benefits (including premiums for workers' compensation and other insurance) paid
to or on behalf of persons involved in the performance or
administration/technical support of the work specified in this Section 5.2;
repair, maintenance and cleaning of such areas; operation, repair, maintenance
and reasonable depreciation of all temporary and permanent utility systems for
the Retail Development, including, without limitation, heating,
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ventilating and air conditioning systems (HVAC systems), gas system(s), plumbing
system(s), electrical equipment and irrigational pumping system(s); operation,
repair, maintenance and reasonable depreciation of emergency water and sprinkler
main system(s) and security alarm system(s); operation maintenance, repair and
replacement of mechanical equipment including any automatic door openers,
elevators, escalators, lighting fixtures (including replacement of poles, tubes
and bulbs) and all other items of equipment used in connection with such areas;
paper supplies in restrooms located in or about such areas, cleaning, lighting,
striping and landscaping, curbs, gutters, sidewalks, drainage and irrigation
ditches, conduits, pipes and canals serving the Retail Development; and there
shall also be added to the foregoing costs and expenses an amount equal to
fifteen percent (15%) of the total of all of the ongoing costs and expenses as
Landlord's administrative fee. As stated throughout this Lease, whenever Tenant
is obligated to pay its "proportionate share" of a cost, expense or Taxes (as
hereinafter defined) such share shall be based on gross leased and occupied
floor area in the Shopping Center, and Tenant's proportionate share shall be
that fraction, the numerator of which is the total square footage of floor area
in the Leased Premises, and the denominator of which is the total square footage
of gross leased and occupied floor area (including the Leased Premises) in the
Shopping Center. As used throughout this Lease, the "gross leased and occupied
floor area" in effect for the whole of any Lease Year shall be the average of
the gross leased and occupied floor area in effect on the first day of each
calendar month in such Lease Year.
Prior to the proration of such Common Area Maintenance Expenses to Tenant,
there shall be deducted from the total of such Common Area Maintenance Expenses
any amounts specifically contributed by the Major Tenants toward such Common
Area Maintenance Expenses. It is further agreed that in no event shall Tenant be
obligated for the capital costs of initially constructing the Retail Development
or the capital costs of subsequent expansion construction for the Retail
Development (i.e., adding new Major Tenants to the development or expanding the
Shopping Center or the common areas). Notwithstanding anything contained in this
Lease to the contrary, the following shall be excluded from Common Area
Maintenance Expenses in calculating Tenant's proportionate share: (i) the
capital costs of initially constructing the Retail Development or the capital
costs of subsequent expansion construction for the Retail Development; (ii)
executive salaries (employees senior to management personnel); (iii) leasing
commissions and the expense of preparing leases; (iv) debt service and
amortization under any mortgage encumbering the Shopping Center and charges and
fees incurred by Landlord in connection with the procurement and recording of
such mortgages or rental under any ground lease or other underlying lease; (v)
the costs of Landlord's Work in connection with preparing any tenant's space
(vi) any costs for which Landlord is reimbursed by insurance proceeds or
condemnation awards; (vii) costs for which Landlord is reimbursed by individual
tenants of the Shopping Center (viii) to the extent that any employee of
Landlord performs work or services other than for the Retail Development, the
portion of his salary allocable to work not performed in connection with the
Retail Development; (ix) the costs of correcting defects in or inadequacies of
the initial design or construction of the Shopping Center, or repair and/or
replacement of any of the original materials or equipment required as a result
of such defects or inadequacies; (x) any expense resulting from the negligence
of Landlord, its agents, servants or employees, or any expense incurred as a
direct result of Landlord's failure to use reasonable efforts to minimize
expenses to the extent possible without detracting from the standards of a first
class Shopping Center; (xi) the cost of any repair to remedy damage caused by or
resulting from the negligence of any other tenant(s) in the Shopping Center,
including their agents, servants or employees; (xii) repairs or other work
occasioned by casualty or the exercise of the right of eminent domain; (xiii)
expenses incurred in build out, renovation or other improvement or decoration,
painting or redecoration of any leasable area; (xiv) costs incurred due to the
violation by Landlord or any tenant or occupant of any term or condition of any
lease or rental arrangement covering space in the Shopping Center; (xv) any
interest or penalties incurred as a result of Landlord's failure to pay any bill
as the same shall become due; (xvi) any and all costs associated with the
operation of the business of the entity which constitutes Landlord, intending by
this exclusion to distinguish the costs of operation of the common areas
(excluded items shall specifically include but shall not be limited to formation
of the entity, internal accounting and legal matters, including, but not limited
to preparation of tax returns and financial statements and gathering of data
therefor, costs of defending any lawsuits, except as the actions of Tenant may
be an issue, costs of selling, syndication, financing mortgaging or
hypothecating any of Landlord's interest in the Shopping Center, and costs of
any disputes between Landlord and its employees); (xvii) advertising and
promotional expenditures or customer services, (xviii) costs, fines, or fees
incurred by Landlord
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Shopping Center, and costs of any disputes between Landlord and its employees);
(xvii) advertising and promotional expenditures or customer services; (xviii)
costs, fines, or fees incurred by Landlord due to violations of any federal,
state or local law, statute or ordinance, or any rules, regulations, judgment or
decree of any governmental rule or authority; (xix) the cost of any work or
services performed for any facility other than the Shopping Center. Replacements
of existing improvements, facilities, and equipment (including, by way of
example, parking lot repairs, structural repairs, replacement of HVAC or
mechanical equipment) otherwise chargeable as Common Area Maintenance Expenses
having a useful life of more than one year shall be amortized over the useful
life of the replacement, and only the reasonably amortized portion thereof shall
be included in Common Area Maintenance Expenses.
Tenant's proportionate share of Common Area Maintenance Expenses from the
Commencement Date through December 31, 2000 shall not exceed [***] per square
foot of floor area in the Leased Premises per Lease Year (proportionately
reduced for a partial Lease Year). From January 1, 2001 through December 31,
2001, Tenant's proportionate share of Common Area Maintenance Expenses shall not
exceed [***] per square foot of floor area in the Leased Premises per Lease Year
(proportionately reduced for a partial Lease Year). Beginning January 1, 2002
and continuing through the expiration of the Original Term and Option Period,
if any, Tenant's proportionate share of Common Area Maintenance Expenses shall
not be increased by more than [***] per Lease Year.
It is hereby agreed that at such times as there are tenants occupying less
than eighty-five percent (85%) of the gross leasable floor area of the Shopping
Center, Tenant's proportionate share of the foregoing Common Area Maintenance
Expenses shall be computed as if the Shopping Center were eighty-five percent
(85%) leased and occupied.
(b) Tenant's proportionate share of such Common Area Maintenance Expenses
for each Lease Year shall be paid in advance, in equal monthly installments, in
the same manner and at the same time as the monthly installments of Minimum Rent
are payable hereunder without deduction, offset or diminution of any kind, based
on an amount estimated in advance from time to time by Landlord to be Tenant's
obligation under this Section 5.2. Notwithstanding the above, in the event
Landlord at any time determines that the amount of Common Area Maintenance
Expenses actually being paid or incurred by Landlord exceeds the estimate upon
which Tenant's proportionate share of Common Area Maintenance Expenses was
computed, then Tenant, following a request from Landlord, shall commence to pay
with the next monthly installment of Minimum Rent due an amount sufficient to
result in Tenant's paying its full proportionate share of Common Area
Maintenance Expenses as computed on the basis of Landlord's revised estimate of
Common Area Maintenance Expenses. Subsequent to the end of each Lease Year,
Landlord shall furnish Tenant with a statement of the actual amount of Tenant's
proportionate share of such Common Area Maintenance Expenses for such period
which statement shall be in reasonable detail, provided, however, Landlord shall
be permitted to describe areas of expenditure by category and shall not be
obligated to enumerate each specific expenditure. Upon Tenant's written request
therefore, but no more frequently than once per Lease Year, Landlord shall
provide Tenant written evidence substantiating up to three (3) particular items
included in Tenant's share of Common Area Maintenance Expenses. Landlord shall
make reasonable good faith efforts to answer or resolve Tenant's legitimate
questions about the Common Area Maintenance Expenses.
If the total amount paid by Tenant under this Section 5.2 for any Lease
Year shall be less than the actual amount due from Tenant for such Lease Year as
shown on such statement, Tenant shall pay Landlord the difference between the
amount paid by Tenant and the actual amount due, such deficiency to be paid
within thirty (30) days after the furnishing of each such statement, and if the
total amount paid by Tenant hereunder for any such Lease Year shall exceed the
actual amount due from Tenant for such Lease Year, such excess shall be credited
against the next installment due from Tenant to Landlord under this Section 5.2.
*** Confidential treatment requested.
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ARTICLE VI
REPAIRS AND MAINTENANCE
SECTION 6.1. REPAIRS AND MAINTENANCE BY LANDLORD. Landlord agrees to
keep in good order, condition and repair the roof (including keeping the roof
watertight), foundations, exterior (including exterior painting and finish),
all structural portions of the Leased Premises (and of the building in which
the Leased Premises are located) and all plumbing and utility lines not
exclusively serving the Leased Premises. Should any repairs, modifications or
alterations be required by reason of applicable law, the same shall be made by
Landlord at Landlord's cost and expense unless the need for such repairs,
modifications or alterations shall result from Tenant's failure to perform its
obligations under this Lease or from Tenant's use of the Leased Premises for
other than general merchandising purposes. In addition, for the first twelve
(12) months only following the Delivery of Possession Date, Landlord shall,
upon written notice from Tenant of the necessity therefor, correct any defects
in Landlord's Work within the Leased Premises. All costs and expenses incurred
by Landlord under this Section 6.1 shall be included in Common Area Maintenance
Expenses, other than costs and expenses for Landlord's correction of defects in
Landlord's Work or other amount that may be excluded as Common Area Maintenance
Expenses pursuant to a specific exclusion contained in Section 5.2 hereof.
SECTION 6.2. REPAIRS AND MAINTENANCE BY TENANT. (a) Except for the
repairs and maintenance that Landlord is specifically obligated to make or
perform pursuant to Section 6.1 above, throughout the entire Term of this
Lease, Tenant, at its expense, shall promptly make all repairs and replacements
and perform maintenance in and to the Leased Premises and all equipment and
fixtures therein or appurtenant thereto, that are necessary or desirable in
order to keep the Leased Premises in good order, condition and repair and in
safe, dry and tenantable condition. Without limiting the generality of the
foregoing Tenant, at its expense, shall maintain and promptly make any and all
necessary repairs to or replacement of: (i) that portion of any pipes, lines,
ducts, wires or conduits that exclusively serve the Leased Premises; (ii) the
glass windows, plate glass doors, and all fixtures or appurtenances composed of
glass that are located in or about the Leased Premises; (iii) Tenant's signs;
(iv) the floor and floor coverings, doors and door frames, windows and window
frames, walls, storefront including security gates, grilles or enclosures,
locks and closing devices, partitions and ceilings in the Leased Premises; (v)
heating, ventilating, air conditioning, electrical and plumbing system(s)
equipment and fixtures (whether contained within or outside the Leased
Premises) which are installed by Tenant or which exclusively serve the Leased
Premises; and (vi) the Leased Premises or any part of the Shopping Center when
repairs thereto are necessitated by any act or omission (negligent or
otherwise) of Tenant or any of Tenant's agents, employees or invitees, or by
the failure of Tenant to perform any of its obligations under this Lease.
Notwithstanding the foregoing, Landlord shall be responsible for repairs and
maintenance necessitated by the negligence or intentional acts of Landlord, its
agents or employees. Notwithstanding any contrary provision of this Article VI,
Tenant, at its expense, shall make any and all repairs to the Leased Premises
as may be necessitated by any break-in, forcible entry or other trespass into
or upon the Leased Premises, regardless of whether or not such entry and damage
is caused by the negligence or fault of Tenant or occurs during or after
business hours. Tenant, at its expense, shall change all air conditioning
filters at least five (5) times per year and shall have the air conditioning
system professionally inspected and generally serviced at least twice per year.
(b) Tenant shall keep and maintain the Leased Premises in a clean,
sanitary and safe condition in accordance with the laws of the State and in
accordance with all directions, rules and regulations of the health officer,
building inspector, the National Fire Protection association and any other
officials of the governmental agencies having jurisdiction, at the sole cost
and expense of Tenant, and Tenant shall comply with all requirements of laws,
ordinances, rules, regulations and orders of any lawful authority having
jurisdiction affecting the Leased Premises or Tenant's use thereof. Tenant, at
its expense, shall install and maintain fire extinguishers and other fire
protection devices as may be required by reason of the conduct of Tenant's
business, from time to time by any agency having jurisdiction or the
underwriters insuring the building in which the Leased Premises are located. If
any bureau, department or official of the Federal or State government requires
or recommends the installation of any changes, modifications or alterations in
the sprinkler system or additional sprinkler heads or other equipment
(hereinafter in this subsection (b) collectively
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"changes") by reason of Tenant's business, or the location of partitions, trade
fixtures, or other contents of the Leased Premises, or for any other reason, or
if any such changes become necessary to prevent the imposition of a penalty or
charge against the full allowance for a sprinkler system in the fire insurance
rates set by any fire insurance company, Tenant, at Tenant's expense, shall
promptly make such changes as required.
(c) Tenant agrees that Tenant's use of electrical current will at no time
exceed the capacity of the electric distribution system and that Tenant will
not make any alteration or addition to Tenant's electrical system without
Landlord's prior written consent. If Tenant installs any electrical equipment
that overloads the electrical lines in the Leased Premises or the Retail
Development, Tenant shall, at Tenant's sole cost and expense, be required to
make whatever changes to such electrical equipment and in the electric wiring
in the Leased Premises (but only after obtaining Landlord's written approval)
as may be necessary in order to remedy such overloading and be in compliance
with all insurance and legal requirements. All changes required to be made
hereby shall result in the continued conformance with the provisions of Exhibit
D and this Lease.
(d) If Tenant refuses or neglects to properly maintain the Leased
Premises, or to commence or to complete repairs promptly and adequately, or if
Landlord finds it necessary to make any repairs or replacements otherwise
required to be made by Tenant, then Landlord may, after ten (10) days prior
written notice to Tenant (except in the event of an emergency in which event no
notice shall be required) with Tenant having the opportunity to cure or to
commence to cure during such ten (10) day period (in which event Landlord shall
not take action so long as Tenant is diligently pursuing such cure to
completion), in addition to all other remedies, but without obligation to do
so, enter the Leased Premises and proceed forthwith to have such maintenance,
repairs or replacements made and Tenant shall pay to Landlord, on demand, the
cost and expenses therefor plus a charge of fifteen percent (15%) of such costs
and expenses.
ARTICLE VII
TAXES
Section 7.1 Tax Liability. Tenant agrees to pay to Landlord Tenant's
proportionate share of all taxes and assessments and service payments in lieu of
taxes of every nature and kind which may be levied or assessed by, or payable
to, any lawful authority during or with respect to each fiscal tax year falling
in whole or in part during the Term of this Lease against any or all or any
part of the land, buildings and improvements comprising the Retail Development
and any other taxes which Landlord becomes obligated to pay with respect to the
Retail Development, whether or not the same are assessed as real or personal
property or are payable in advance or in arrears (the "Taxes"). If due to a
future change in the method of taxation, any tax, excise or assessment shall be
levied or assessed against Landlord, directly or indirectly, in lieu of, in
substitution for or as a supplement to any present Taxes or future (real estate
or personal property) tax, in whole or in part, including any new tax, excise
or assessment upon rentals payable to Landlord by occupants of the Retail
Development or upon gross receipts or other income of Landlord derived by
Landlord from or upon the interest in the Retail Development of Landlord (or
any individuals or entities comprising Landlord), such tax, excise or
assessment shall constitute a tax respecting which Tenant is obligated to pay
its proportionate share to Landlord as provided herein. If any Taxes or
assessed valuation(s) are contested by Landlord, then Tenant's proportionate
share of Taxes shall also include Tenant's proportionate share of the cost and
expense of consultation services incurred in evaluating and contesting such
Taxes or assessed valuation(s).
The term "Taxes" shall also include any form of assessment, special
assessment, license fee, license tax, business license fee, business license
tax, commercial rental tax, levy, charge, tax or similar imposition, imposed by
any authority having the direct power to tax, including without limitation
any city, county, State or Federal government, or any school, agricultural,
lighting, drainage or other improvement or special assessment district or any
other agency or other public body, whether or not consented to or joined in by
Landlord and whether or not retroactive, payable by Landlord thereof as against
the land and improvements comprising, or any legal or equitable interest of the
Landlord in, the Retail Development. Notwithstanding anything to the contrary
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contained in this Section 7.1, Tenant shall not be obligated, pursuant to this
Section 7.2, to pay Landlord its proportionate share of any inheritance,
estate, succession, transfer, gift or franchise tax, levy assessment or
surcharge that may be imposed on Landlord or the individuals or entities which
constitute the partners of the partnership which is Landlord, unless the same
is imposed by way of substitution for all or any part of the "Taxes" otherwise
required to be paid in whole or in part by Tenant pursuant to this Lease; the
foregoing shall not exempt or exclude from the Taxes to be prorated among
Shopping Center tenants (including Tenant) levies, taxes, assessments or
surcharges based on the rentals or other revenues or gross income of Landlord
derived from the Shopping Center (as opposed to Landlord's net income) or other
charges payable to Landlord by Tenant or other tenants in or occupants of the
Shopping Center.
SECTION 7.2. METHOD OF PAYMENT. Tenant's proportionate share of Taxes
shall be paid, in advance, in monthly installments on or before the first day
of each calendar month, in the same manner and at the same time as the monthly
installments of Minimum Rent are payable hereunder without deduction, offset or
diminution of any kind, based on an amount estimated by Landlord. Following
receipt of all bills for Taxes attributable to any calendar or fiscal year
during the Term hereof, Landlord shall furnish Tenant with a written statement
of the actual amount of Tenant's proportionate share of Taxes for such year. If
any bill for any such Taxes is not available, Landlord will estimate the amount
of such tax. If the total amount paid by Tenant hereunder for any calendar or
fiscal year during the Term of this Lease shall be less than the actual amount
due from Tenant for such year, as shown on such statement, Tenant shall pay to
Landlord the difference between the amount paid by Tenant and the actual amount
due, such deficiency to be paid within thirty (30) days after demand therefor
by Landlord; and if the total amount paid by Tenant hereunder for any such
calendar or fiscal year shall exceed such actual amount due from Tenant for
such year, such excess shall be credited against the next installment of Taxes
due from Tenant to Landlord hereunder. For the calendar or fiscal years in
which this Lease commences and terminates, Tenant's liability for its
proportionate share of any Taxes for such years shall be subject to a pro rata
adjustment based on the number of days of said calendar or fiscal years during
which the Term of this Lease is in effect. A copy of any such bill for Taxes
shall at all times be sufficient evidence of the amount of Taxes assessed or
levied against the property to which such bill relates. Prior to or at the
commencement of the Term of this Lease and from time to time thereafter
throughout the Term hereof, Landlord shall notify Tenant in writing of
Landlord's estimate of Tenant's monthly installments due hereunder. Tenant's
obligations under this Article VII shall survive the Expiration Date or sooner
termination of this Lease.
ARTICLE VIII
INSURANCE, INDEMNITY AND LIABILITY
SECTION 8.1. LANDLORD'S INSURANCE OBLIGATIONS. Landlord agrees to obtain
and maintain during the Term hereof, to the extent the same is available, fire
and extended coverage insurance, in amounts and coverages and with such special
endorsements as Landlord shall determine from time to time, insuring the
building in which the Leased Premises are located and the improvements to the
Leased Premises provided by Tenant pursuant to this Lease (exclusive of Tenant's
merchandise, trade fixtures, furnishings, equipment, plate glass, signs and
personal property of Tenant). Landlord shall also carry rental interruption
insurance in amounts at least equal to Tenant's total rental obligation for
twelve (12) full months under this Lease including the total of the estimated
costs to Tenant of Taxes and Common Area Maintenance Expenses (including
insurance) for such twelve (12) month period. Landlord will maintain during the
Term of this Lease, commercial general liability insurance, insuring against any
and all claims for personal injury, bodily injury, death, or property damage,
accruing in, on or about the common areas and other portions of the Shopping
Center not leased to tenants, with limits of not less than [***] with respect to
bodily injury and death and [***] with respect to property damage. Further
Landlord shall maintain fire and extended coverage insurance insuring the
improvements located within the Shopping Center (except for Tenant's trade
fixtures, furnishings, operating equipment and personal property) for [***] of
the full replacement cost thereof. Tenant acknowledges that such coverage may be
provided pursuant to a blanket policy for centers managed by Managing Agent (as
defined in Section 20.22 hereof). Tenant shall reimburse Landlord for its
proportionate share of the insurance
[***] Confidential treatment requested.
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costs incurred by Landlord under this Section 8.1 as part of Tenant's Common
Area Maintenance Expenses as provided in Section 5.2 hereof.
SECTION 8.2. TENANT'S INSURANCE OBLIGATIONS. (a) Provided Tenant is the
Tenant named on the Recital Page and a wholly-owned subsidiary of the Guarantor,
if any, and Tenant's and Guarantor's, if any, combined net worths are or
Tenant's net worth is at least equal to [***], Tenant shall have the right to
self-insure for any loss or damage of the type covered by standard fire and
extended coverage insurance with respect to personal property located on or
within the Leased Premises including alterations and improvements made by Tenant
to the extent the same are not covered by Landlord's fire and extended coverage
insurance. Tenant and Guarantor shall at their sole expenses, without regard to
fault on the part of any person, make and perform any repairs or restorations
which are required as a result of a casualty which would be covered by insurance
of the type described in this Section 8.2(a). Tenant, at Tenant's sole cost and
expense, shall obtain and maintain in effect commencing with the Delivery of
Possession Date and continuing throughout the Term of this Lease, insurance
policies providing for the following coverage: (i) all risk property insurance
against fire, theft, vandalism, malicious mischief, sprinkler leakage and such
additional perils as now are or hereafter may be included in a standard extended
coverage endorsement from time to time in general use in the State, insuring
Tenant's merchandise, trade fixtures, furnishings, equipment and all items of
personal property of Tenant and of anyone claiming by, through or under Tenant
located on or in the Leased Premises, and the amount of such insurance will be
set forth in an "agreed value endorsement" to the policy of such insurance, not
less than [***] of the full replacement value thereof without deduction for
depreciation, and with a deductible amount of not more than [***], provided,
however, any and all proceeds of such insurance, so long as this Lease shall
remain in effect, shall be used only to repair or replace or pay for the items
so insured; (ii) a commercial general liability policy, including insurance
protecting against any and all claims for injury to persons or property
occurring in or about the Leased Premises and protecting against assumed or
contractual liability under this Lease with respect to the Leased Premises and
the operations of Tenant and any subtenant of Tenant in, on or about the Leased
Premises, with such policy to be in the minimum amount of [***] single limit
coverage; (iii) products liability insurance for merchandise offered for sale or
lease from the Leased Premises, including (if this Lease covers leased premises
in which food and/or beverages are sold and/or consumed) liquor liability
coverage (if applicable to Tenant's business) and coverage for liability arising
out of the consumption of food and/or alcoholic beverages on or obtained at the
Leased Premises, of not less than [***] per occurrence for personal injury and
death and property damage; (iv) workers' compensation coverage as required by
law; (v) with respect to alterations, improvements and the like required or
permitted to be made by Tenant hereunder, contingent liability and builders risk
insurance in amounts satisfactory to Landlord; and (vi) the insurance required
under Exhibit D.
(b) All insurance policies herein to be procured by Tenant shall: (i) be
issued by insurance companies reasonably satisfactory to Landlord and
authorized to do business in the State; (ii) be written as primary policy
coverage and non-contributing with respect to any coverage which Landlord may
carry and that any coverage carried by Landlord shall be excess insurance;
(iii) insure and name Landlord, Landlord's managing agent, any mortgagee of the
Shopping Center and any parties in interest designated by Landlord as
additional insured, as their respective interests may appear (except with
respect to workers' compensation insurance); and (iv) contain any express
waiver of any right of subrogation by the insurance company against Landlord,
Landlord's managing agent and their respective agents, employees and
representatives which arises or might arise by reason of any payment under such
policy or by reason of any act or omission of Landlord, its agents, employees
or representatives. Neither the issuance of any insurance policy required
hereunder, nor the minimum limits specified herein with respect to Tenant's
insurance coverage, shall be deemed to limit or restrict in any way Tenant's
liability arising under or out of this Lease. With respect to each and every
one of the insurance policies herein required to be procured by Tenant, on or
before the Commencement Date and at least thirty (30) days before any such
insurance policy shall expire, Tenant shall deliver to Landlord upon Landlord's
written request a duplicate original or certified copy of each such policy or
a certificate of the insurer, certifying that such policy has been issued,
providing the coverage required by this Section 8.2 and containing provisions
specified herein, together with evidence of payment of all applicable premiums.
Any insurance required to be carried hereunder may be carried under a blanket
policy covering the Leased Premises and other locations
*** Confidential treatment requested.
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of Tenant. Each and every insurance policy required to be carried hereunder by
or on behalf of Tenant shall provide (and any certificate evidencing the
existence of each such insurance policy shall certify) that, unless Landlord
shall first have been given thirty (30) days' prior written notice thereof, the
insurer will not cancel, materially change or fail to renew the coverage
provided by such insurance policy. The term "insurance policy" as used herein
shall be deemed to include any extensions or renewals of such insurance policy.
In the event that Tenant shall fail to promptly furnish any insurance coverage
hereunder required to be procured by Tenant, Landlord, at its sole option, shall
have the right after ten (10) days prior written notice to Tenant to obtain the
same and pay the premium therefor for a period not exceeding one (1) year in
each instance, and the premium so paid by Landlord shall be immediately due and
payable by Tenant to Landlord as additional rent.
(c) Tenant shall not do or permit to be done any act or thing upon the
Leased Premises that will invalidate or be in conflict with fire insurance
policies covering the building containing the Leased Premises or any part
thereof, including all common areas, or fixtures and property therein, or any
other insurance policies or coverage referred to above in this Article VIII; and
Tenant shall promptly comply with all rules, orders, regulations, or
requirements relating to such insurance policies, and shall not do, or permit
anything to be done, in or upon the Leased Premises, or bring or keep anything
therein, which shall increase the rate of fire insurance on the building in
which the Leased Premises are located or on any property, including all common
areas, located therein, or increase the rate or rates of any other insurance
referred to hereinabove. If any act or omission of Tenant, its agents, employees
or contractors shall result in any increase in the premium rates applicable to
any such insurance policies carried by Landlord, or other increased costs to
Landlord in connection therewith, then Tenant shall reimburse Landlord on demand
as additional rent for the amount of any such increased rates or costs. In
particular, if Tenant uses the Leased Premises for the preparation of food,
Tenant shall reimburse Landlord on demand, for any part of the premium for
insurance coverage under Section 8.1 hereof required to be paid on account of
such use of the Leased Premises.
SECTION 8.3 MUTUAL COVENANT. Notwithstanding any provision of this Lease to
be contrary, Landlord and Tenant each hereby releases the other, its officers,
directors, employees, and agents from any and all liability or responsibility
for any loss, damage or injury caused by fire or other casualty for which
insurance containing a waiver of subrogation is carried by the injured party at
the time of such loss, damage or injury regardless of the extent of any recovery
by the injured party under such insurance. Both parties agree to carry casualty
insurance containing such waiver of subrogation.
Additionally, during any time when Tenant is self-insuring its insurance
obligations hereunder, Tenant hereby releases the Landlord, its officers,
directors, employees and agents from any and all liability or responsibility for
any loss, damage or injury caused by fire or other casualty, even if such loss,
damage or casualty is caused in whole or in part by Landlord or by any party for
whom Landlord may be responsible.
SECTION 8.4. COVENANT TO HOLD HARMLESS. Except with respect to the gross
negligence or wilful misconduct of Landlord its agents or employees (unless
covered or required to be covered by Tenant's insurance), Tenant hereby
indemnifies and agrees to hold harmless Landlord, its officers, directors,
partners, employees and agents and any mortgagee or master lessor of the
Shopping Center, from and against any and all claims, actions, damages,
liabilities, costs and expenses, including attorneys' fees, that (i) arise from
or are in connection with the possession, use, occupancy, management, repair,
maintenance or control of the Leased Premises, or any portion thereof, or (ii)
arise from or are in connection with any negligent or wrongful act or omission
of Tenant or Tenant's agents, employees, contractors, licensees or invitees, or
(iii) result from any default, breach, violation or nonperformance of this
Lease or any provision hereof by Tenant, or (iv) result from injury to person
or property or loss of life sustained in the Leased Premises or outside of the
Leased Premises resulting from acts or omissions within the Leased Premises.
Tenant shall, at its own cost and expense, defend any and all actions, suits
and proceedings which may be brought against Landlord or any mortgagee or
master lessor of the Shopping Center with respect to the foregoing. Tenant
shall pay, satisfy and discharge any and all judgments, orders and decrees
which may be received against Landlord or any such mortgagee or master lessor
in connection with the foregoing. In the event landlord or any other party so
indemnified, shall, without fault, be made a party to any litigation commenced
by or against Tenant, or if Landlord or any such party shall, in its sole
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discretion, intervene in such litigation to protect its interest hereunder,
then Tenant shall protect and hold them harmless and shall pay all costs,
expenses and attorney's fees incurred or paid by such party(ies) in connection
with such litigation.
Landlord hereby indemnifies and agrees to save harmless Tenant, its
officers, directors, partners, employees and agents from and against any and
all claims, actions, damages, liabilities, costs and expenses including
attorneys' fees in connection with loss of life, personal injury and/or damage
to property arising from or out of any occurrence in the common areas of the
Shopping Center unless caused by the negligence or default of Tenant, its
agents, contractors, employees, officers, directors, partners, subtenants or
concessionaires.
SECTION 8.5. LOSS AND DAMAGE. All Tenant's property of every kind and
description which may at any time be in the Leased Premises shall be kept at
Tenant's sole risk, and Landlord shall not be liable except to the extent
resulting from the negligence or intentional acts of Landlord, its agents or
employees to Tenant, its agents, employees or customers, for any damage, loss,
compensation, accident, or claims whatsoever resulting to Tenant or its
property from the necessity of repairing any portion of the Shopping Center;
and interruption in the use of the Leased Premises; the use or operation (by
Landlord, Tenant, or any other person or persons whatsoever) of any elevators,
heating, cooling, electrical or plumbing equipment or apparatus; the
termination of this Lease by reason of the destruction of the Leased Premises;
any fire, robbery, theft, or any other casualty; any leakage in any part or
portion of the Leased Premises or the Shopping Center; any water, wind, rain or
snow that may leak into, or flow from part of the Leased Premises or the
Shopping Center, any acts or omissions of any occupant of any space adjacent
to or adjoining all or any part of the Leased Premises or any part of the
building of which the Leased Premises are a part; any explosion, casualty,
utility failure or malfunction, or falling plaster; the bursting, stoppage or
leakage of any pipes, sewer pipes, drains, conduits, appliance or plumbing
works; or any other cause whatsoever.
ARTICLE IX
DESTRUCTION OF LEASED PREMISES
SECTION 9.1. CONTINUANCE OF LEASE. In the event of any damage to the
Leased Premises by fire or other casualty, this Lease shall not be terminated
or otherwise affected; except that, (a) if more than twenty-five percent (25%)
of the square footage of the Leased Premises shall be damaged by any such fire
or other casualty during the last three (3) years of the Term of this Lease
(not including any Option Periods) or during any renewal or extension of the
Term hereof and the cost of repair or restoration exceeds One Million and
00/100ths Dollars ($1,000,000.00) as estimated by Landlord, or (b) if Landlord
is unable to rebuild any portion of the building in which the Leased Premises
are located or of the Shopping Center due to any inability (after Landlord uses
commercially reasonable efforts) to obtain any required governmental approval
in connection therewith, or (c) if more than thirty-five percent (35%) of the
floor area of the building in which the Leased Premises are located or of the
Shopping Center shall be damaged or destroyed by fire or other casualty, or (d)
if twenty-five percent (25%) or more of the building in which the Leased
Premises are located or if twenty-five percent (25%) or more of the Shopping
Center or the Leased Premises shall be damaged or destroyed at any time by the
occurrence of any risk not insured under the insurance required to be carried
under Article VIII hereof, then Landlord shall have the option to terminate
this Lease within seventy-five (75) days following the occurrence of such fire
or other casualty by giving written notice to Tenant during such period. In the
event Landlord exercises any of the foregoing options to terminate, this Lease
shall immediately terminate upon Landlord's written notice to Tenant and (i)
the entire proceeds of the insurance provided for in Section 8.1 hereof shall
be paid by the insurance company or companies directly to Landlord and shall
belong to, and be the sole property of Landlord, (ii) the portion of the
proceeds of the insurance provided for in Section 8.2 which is allocable to
equipment, fixtures and other items, which, by the terms of this Lease,
rightfully belong to Landlord upon the termination of this Lease by whatever
cause, shall be paid by the insurance company or companies directly to
Landlord, and shall belong to, and be the sole property of, Landlord, and (iii)
Landlord and Tenant shall be relieved from any and all further liability or
obligation accruing under this Lease from and after the date of such
termination.
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Further, if Landlord cancels this Lease by virtue of the fact that it is
during the last three years of the Lease term. Tenant may nullify Landlord's
cancellation within thirty (30) days after receipt thereof by giving notice to
Landlord that Tenant elects to extend the term of the Lease pursuant to any
such right contained in this Lease, in which event the parties shall proceed to
restore in accordance with Section 9.2.
SECTION 9.2. RECONSTRUCTION. If the Leased Premises are damaged by fire or
other casualty and this Lease is not terminated in accordance with Section 9.1
hereof, then all fire and extended coverage insurance proceeds from policies
carried pursuant to Section 8.1 hereof, however recovered, shall be held in
escrow and made available for payment of the cost of repairing, replacing and
rebuilding the Leased Premises. Within seventy (75) days after the casualty
Landlord shall provide Tenant with a good faith estimate of the date on which
the reconstruction of the Leased Premises will be completed. The Minimum Rent
and other charges payable by Tenant to Landlord shall be abated in proportion to
the floor area of the Leased Premises rendered untenantable, and the Sales Break
Point shall likewise be proportionately reduced. Payment of Minimum Rent and all
other charges so abated shall commence and Tenant shall be obligated to reopen
for business ninety (90) days following the date that Landlord advises Tenant
that the Leased Premises are tenantable and Landlord has substantially completed
Landlord's Reconstruction Work, unless Tenant opens at an earlier time in the
damaged area or remains open in such area following destruction or damage, in
which event there shall be no abatement or any such abatement shall terminate as
of the date of Tenant's earlier reopening. Landlord shall be obligated to
commence Landlord's Reconstruction Work and shall diligently pursue the
completion of Landlord's Reconstruction Work and shall cause the same to be
completed as soon thereafter as possible under the attendant circumstances, but
in any event all such Landlord's Reconstruction Work shall be completed and the
Leased Premises reopened for business within one hundred eighty (180) days
following such fire or casualty. After Landlord has completed Landlord's
Reconstruction Work, Tenant shall commence Tenant's Reconstruction Work, at its
expense. Tenant shall comply with all laws, ordinances and governmental rules or
regulations, and shall perform all work or cause such work to be performed with
due diligence and in a first-class manner. All permits required in connection
with said repairs, restoration and reconstruction shall be obtained by Tenant at
Tenant's sole cost and expense. Any amount expended by Tenant in excess of any
insurance proceeds received by Tenant shall be the sole obligation of Tenant.
Landlord shall reconstruct such Leased Premises in accordance with the working
drawings originally approved by Landlord or with (at Landlord's sole election)
new drawings prepared by Tenant and acceptable to Landlord and Tenant
("Landlord's Reconstruction Work"). In no event shall Landlord be required to
repair or replace Tenant's merchandise, trade fixtures, furnishings or
equipment. If Landlord repairs or rebuilds, Tenant, at Tenant's sole cost, shall
repair or replace Tenant's merchandise, trade fixtures, furnishings and
equipment in a manner and to at least a condition equal to that prior to the
damage or destruction thereof ("Tenant's Reconstruction Work"). Except as may be
specifically set forth in this Article IX, Landlord shall not be liable or
obligated to Tenant to any extent whatsoever by reason of any fire or other
casualty damage to the Leased Premises, or any damages suffered by Tenant by
reason thereof, or the deprivation of Tenant's possession of all or any part of
the Leased Premises.
In the event Landlord has not commenced restoration or rebuilding of the
Leased Premises within ninety (90) days of the date of such fire or casualty
loss, or if the Leased Premises are not restored/rebuilt to its former condition
prior to such fire or casualty loss within one hundred eighty (180) days of the
date of such fire or casualty loss, Tenant will have the right, in either case,
to terminate this Lease by providing Landlord notice of such election and Tenant
will vacate and surrender the Leased Premises pursuant to Section 17.l.
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ARTICLE X
CONDEMNATION
SECTION 10.1 EMINENT DOMAIN. If fifty percent (50%) or more of the
floor area of the of the Leased Premises shall be taken or condemned by any
governmental authority (including, for purposes of this Article X, any purchase
by such governmental authority in lieu of a taking), then either party may
elect to terminate this Lease by giving notice to the other party not more than
ninety (90) days after the date on which such title shall vest in the
authority. If the parking facilities are reduced below the minimum parking
requirements imposed by the applicable authorities, Landlord may elect to
terminate this Lease by giving Tenant notice within one hundred eighty (180)
days after such taking. In addition, if any Major Tenant shall terminate its
lease with Landlord, pursuant to a taking of its store, Landlord may terminate
this Lease by written notice to Tenant within ninety (90) days after notice to
landlord that such Major Tenant is terminating its lease. In the case of any
taking or condemnation, whether or not the Term of this Lease shall cease and
terminate, the entire award shall be the property of Landlord; provided,
however, Tenant shall be entitled to any award as may be made for trade
fixtures and other equipment (not including any Tenant's Work required or
permitted under this Lease) which under the terms of this Lease would not have
become the property of Landlord; further provided, that any such award to
Tenant shall not be in diminution of any award otherwise to be made to Landlord
in the absence of such award to Tenant.
SECTION 10.2. RENT APPORTIONMENT. In the event of any taking or
condemnation, the then current Minimum Rent, Sales Break Point and the square
foot floor area in the Leased Premises as determined pursuant to Section 1.1
shall be apportioned as of the date when possession of the Leased Premises is
required to be delivered to the condemning authority or termination of this
Lease, as the case may be, and, if the Term of this Lease shall not have ceased
and have been terminated as of said date, Tenant shall be entitled to a pro
rata reduction in the Minimum Rent payable and Sales Break Point hereunder,
or, if Tenant has prepaid Minimum Rent, Tenant shall be entitled to a pro rata
credit for the Minimum Rent paid hereunder, based on the proportion which the
floor area taken from the Leased Premises bears to the entire floor area of the
Leased Premises immediately prior to such taking.
SECTION 10.3. TEMPORARY TAKING. Notwithstanding anything to the contrary
in this Article X, the requisitioning of the Leased Premises or any part hereof
by military or other public authority for purposes arising out of a temporary
emergency or other temporary situation or circumstances shall constitute a
taking of the Leased Premises by eminent domain when the use or occupancy by
the requisitioning authority is expressly provided to continue, or shall in
fact have continued, for a period of one hundred eighty (180) days or more, and
if this Lease is not thereafter terminated under the foregoing provisions of
this Article X, then for the duration of any period of use and occupancy of the
Leased Premises by the requisitioning authority, all the terms and provisions
of this Lease and obligations of Tenant hereunder shall remain in full force
and effect, except that the Minimum Rent and Sales Break Point shall be reduced
in the same proportion that the floor area of the Leased Premises so
requisitioned bears to the total floor area of the Leased Premises, and
Landlord shall be entitled to whatever compensation may be payable from the
requisitioning authority for the use and occupation of the Leased Premises for
the period involved.
ARTICLE XI
ASSIGNMENT, SUBLETTING AND ENCUMBERING LEASE
SECTION 11.1. NO ASSIGNMENT, SUBLETTING OR ENCUMBERING OF LEASE. (a) Except
as otherwise provided in this Article XI and notwithstanding any references to
assignees, subtenants, concessionaires or other similar entities in this Lease,
Tenant shall not (i) assign or otherwise transfer, or mortgage or otherwise
encumber, this Lease, in whole or in part, or any of its rights hereunder, (ii)
sublet the Leased Premises or any part thereof, or permit the use of the
Leased Premises or any part thereof by any persons other than Tenant or its
agents. Any such attempted or purported transfer, assignment, mortgaging or
encumbering of this Lease or any of Tenant's interest
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hereunder and any attempted or purported subletting or grant of a right to use
or occupy all or a portion of the Leased Premises in violation of the foregoing
sentence, whether voluntary or involuntary or by operation of law or otherwise,
shall be null and void and shall not confer any rights upon any purported
transferee, assignee, mortgagee, or occupant, and shall, at Landlord's option,
result in a "default" under this Lease. Nothing contained elsewhere in this
Lease shall authorize Tenant to enter into any franchise, concession, license,
permit, subtenancy, departmental operation arrangements or the like, except
pursuant to the provisions of this Article XI.
Notwithstanding anything to the contrary set forth in this Article XI, the
following shall govern with respect to certain types of transfers, it being
understood that Tenant shall have the right to assign, sublease, or otherwise
transfer its rights under this Lease provided that the conditions and
requirements applicable to the particular assignment, sublease or other
transfer that are specified in subparagraphs (A), (B), (C), OR (D) below are
satisfied:
(A) INTRA-ORGANIZATIONAL TRANSFER: Tenant shall have the right, without
Landlord's consent but with prior written notice to Landlord, to assign this
Lease or sublet the Leased Premises to its parent corporation or any of its
wholly-owned subsidiaries, or any affiliate or subsidiary of Tenant's parent
corporation provided that Tenant shall at all times remain primarily obligated
for the performance of the terms, covenants and conditions of this Lease.
(B) ASSIGNMENT AS PART OF A TRANSFER OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS
OF TENANT (Same Use): Landlord's consent shall not be unreasonably withheld or
delayed to an assignment of this Lease (by merger, consolidation or otherwise)
or a sublease for all or any portion of the Leased Premises to another entity
(the "Transferee") to which Tenant shall simultaneously be transferring all or
substantially all of its stock or all or substantially all of its assets,
provided that the following criteria are met: (1) Tenant shall not at the time
of such transfer be in default under any of the terms, covenants and conditions
of this Lease beyond any applicable grace period, (2) such Transferee shall
agree in writing to perform all of the unperformed terms, covenants and
conditions of this Lease, (3) Tenant shall at all times remain primarily
obligated for the performance of the terms, covenants and conditions of this
Lease and (4) the number of stores being transferred must consist of at least
three (3) stores.
(C) ASSIGNMENT AS PART OF A TRANSFER OF LESS THAN ALL OR SUBSTANTIALLY ALL
OF TENANT'S ASSETS (Same Use): Landlord shall not unreasonably withhold its
consent to an assignment, sublease or other transfer ("Transfer") of this Lease
to an entity to whom Tenant is transferring less than substantially all of
Tenant's assets ("Transferee") provided that the following requirements and
conditions shall be satisfied prior to any such Transfer: (i) at the time of
such proposed Transfer, Tenant is not in default of any of the terms, covenants
or conditions of this Lease and shall at such time be operating the Leased
Premises pursuant to Article IV of this Lease: (ii) the proposed Transferee
shall agree in writing to assume all of the terms, covenants or conditions to be
performed by Tenant hereunder, including, but not limited to, the obligation to
continue to operate the Leased Premises in accordance with Article IV of this
Lease: (iii) effective as of the date of such Transfer, the applicable Minimum
Rent as provided for in Section 2.1 shall be increased to the sum of the
applicable Minimum Rent [***] for the time period prior to such Transfer as
required to be paid by Tenant pursuant to Section 2.2 hereof and from and after
the date of the Transfer the Sales Break Point shall be adjusted also to the
quotient of the increased Minimum Rent divided by [***]; (iv) at the time of
such Transfer, the proposed Transferee shall have a net worth equal to or
greater than [***] [in 1999 Dollars] as shown in current certified financial
statements; and (v) the proposed Transferee has proven expertise and experience
in operating and managing an entertainment use in a shopping center environment.
In addition to Landlord's right to deny Tenant's proposed Transfer on the
grounds that the items enumerated in (i) through (v) of Section 11.1(a)(C) have
not been met, within fifteen (15) days after Landlord's receipt of notice from
Tenant of its intention to complete the Transfer as provided for in this Section
11.1(a)(C). Landlord may elect by notice (hereinafter called the "Same Use
Recapture Notice") in writing to tenant to terminate this Lease and recapture
the Leased Premises, in which event this Lease shall automatically terminate on
the ninetieth (90th) day (hereinafter called the "Same Use Recapture Date")
following Tenant's receipt of the Recapture Notice with the same
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force and effect as if said Same Use Recapture Date had been designated as the
expiration date of this Lease, and Landlord and Tenant shall upon such Same Use
Recapture Date be released from any and all liabilities thereafter accruing
hereunder, provided, however that Landlord shall be obligated to repay to Tenant
the unamortized portion of the actual cost of Tenant's Work (less the Tenant
Allowance) plus the sum of [***] on or before the Same Use Recapture Date. All
Minimum Rent Percentage Rent and additional rent payable by Tenant hereunder
shall be apportioned as of the Same Use Recapture Date and Tenant shall promptly
pay to Landlord any amounts so determined to be due and owing by Tenant to
Landlord, and conversely Landlord shall promptly reimburse Tenant for any
amounts prepaid by Tenant for periods subsequent to the Same Use Recapture Date,
Notwithstanding any Same Use Recapture Notice given to Tenant by Landlord within
the aforesaid fifteen (15) day period. Tenant shall have the right within
fifteen (15) days after its receipt of the Same Use Recapture Notice to give
Landlord notice (hereinafter called the "Same Use Recision Notice") of its
recision of its intention to assign, transfer or sublease, and upon Landlord's
receipt of the Same Use Recision Notice the Same Use Recapture Notice previously
given by Landlord shall be deemed null and void; in such event, Tenant shall not
assign this Lease or sublet the Leased Premises as proposed in the notice of its
intention to assign or transfer the Lease or sublet the Leased Premises.
(D) ASSIGNMENT WITH PROPOSED CHANGE IN USE: Landlord's consent to an
assignment, transfer or sublease which results in a change in use shall not be
unreasonably withheld provided that the following criteria are met:
(i) the net worth of the assignee, transferee or sublessee shall be
equal to or greater than [***] [in 1999 Dollars] as shown in current
certified financial statements:
(ii) the proposed assignee, transferee or sublessee has proven experience
in the retail business to be conducted in the Leased Premises:
(iii) the proposed assignment, transfer or sublease applies to the entire
Leased Premises; and
(iv) the business to be conducted in the Leased Premises shall (A) not
violate an existing exclusive or restriction granted for the benefit
of another tenant in the Retail Development or (B) complement the
merchandising mix and program for the Retail Development being
promoted at the time of the proposed assignment (i, ii, iii, and iv
being collectively referred to as the "Criteria").
In the event Tenant proposes to assign its interest in this Lease or sublet
the whole of the Leased Premises pursuant to the terms of this Section
11.1(a)(D), it shall, notwithstanding Section 11.1(c) to the contrary, first
give thirty (30) days prior written notice thereof (hereinafter called the
"Assignment/Subletting Notice") to Landlord together with all other information
required pursuant to Section 11.1(c) hereof. In the event the proposed assignee
is unacceptable to Landlord, because in Landlord's reasonable belief the
Criteria have not been met. Landlord shall be permitted during the thirty (30)
day period to reject the proposed assignment and Tenant shall remain liable
under the Lease.
In addition, within thirty (30) days after Landlord's receipt of an
Assignment/Subletting Notice and such required and/or requested information from
Tenant as provided in this Section 11.1(a)(D). Landlord may elect by notice
(hereinafter called the "Recapture Notice") in writing to Tenant to terminate
this Lease and recapture the Leased Premises, in which event this Lease shall
automatically terminate on the ninetieth (90th) day (hereinafter called the
"Recapture Date") following Tenant's receipt of the Recapture Notice with the
same force and effect as if said Recapture Date had been designated as the
expiration date of this Lease, and Landlord and Tenant shall upon such Recapture
Date be released from any and all liabilities thereafter accruing hereunder,
provided, however that Tenant shall be obligated to repay to Landlord the
unamortized portion of the Tenant Allowance as provided for in Section 3.3
hereof on or before the Recapture Date. All Minimum Rent, Percentage Rent and
additional rent payable by Tenant hereunder shall be apportioned as of the
Recapture Date and Tenant shall promptly pay to Landlord any amounts so
determined to be due and owing by Tenant to Landlord, and conversely Landlord
shall promptly reimburse Tenant for any amounts prepaid by Tenant for periods
subsequent to the Recapture Date. Notwithstanding any Recapture Notice given to
Tenant by Landlord within the aforesaid thirty (30) day period. Tenant shall
have the right within fifteen (15) days after its receipt of the Recapture
Notice to give Landlord notice (hereinafter called the "Recision Notice") of its
recision of the
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Assignment/Subletting Notice and upon Landlord's receipt of the Recision
Notice the Recapture Notice previously given by Landlord shall be deemed null
and void; in such event, Tenant shall not assign this Lease or sublet the
Leased Premises as proposed in its Assignment/Subletting Notice.
(b) Except as otherwise provided herein, if Tenant is a corporation, the
sale, issuance or transfer of any capital stock of Tenant or of any corporate
entity which directly or indirectly controls Tenant (unless Tenant is a
corporation whose stock is publicly traded) which shall result in a change in
the voting control of Tenant or the corporate entity which controls Tenant
shall be deemed to be a prohibited assignment of this Lease within the meaning
of this Article XI. If tenant is a partnership or an unincorporated
association, then the sale, issuance or transfer of a majority interest
therein, or the transfer of a majority interest in or a change in the voting
control of any partnership or unincorporated association which directly or
indirectly controls Tenant, or the transfer of any portion or all of any
general partnership or managing partnership interest, shall be deemed to be a
prohibited assignment of the Lease within the meaning of this Article XI.
Except as otherwise provided herein the consent by Landlord to any assignment,
transfer, or subletting to any party shall not be constructed as a waiver or
release of Tenant under the terms of any covenant or obligation under this
Lease or as a waiver or release of the non-assignability covenants in their
future application, nor shall the collection or acceptance of Rent from any
such assignee, transferee, subtenant or occupant constitute a waiver or release
of Tenant of any covenant or obligation contained in the Lease.
(i) Notwithstanding anything herein contained to the contrary, a
sale or transfer of any voting capital stock Tenant when caused by death (e.g.,
testamentary transfer) or for estate planning purposes (e.g. inter vivos trust)
will not be deemed a prohibited assignment of this Lease.
(ii) The provisions of this Section 11.1(b) shall not be deemed to
prohibit transfer of limited partnership interests among existing limited or
general partners; however, if either general partner ceases to remain general
partner of Tenant such occurrence shall be deemed a prohibited assignment of the
Lease under the meaning of this Article XI.
(iii) In addition, Tenant may, without violating the provisions of
this Article XI, and without consent of or notice to Landlord (i) sell or offer
for sale its voting capital stock to the public in accordance with the
qualifications or registration requirements of the state where Tenant is
incorporated and the Securities Act of 1933, as amended or (ii) issue or
transfer shares of Tenant's capital stock (whether or not such insurance or
transfer results in a change in the persons comprising majority shareholders of
Tenant) as part of a so-called "private placement".
(c) Without conferring any rights upon Tenant not otherwise provided in
this Article XI, should Tenant desire to enter into an assignment, sublease or
transfer of this Lease or Tenant's rights hereunder, Tenant shall request in
writing Landlord's consent to the assignment or where consent is not required,
provide Landlord prior written notice of the same at least fifteen (15) days
before the proposed effective date of the assignment (or within such other
timeframe as may be provided for herein for a specific type of assignment),
providing the following: (i) the full particulars of the proposed assignment,
sublease or transfer of this Lease or Tenant's rights hereunder, including its
nature (i.e. whether it is an assignment, sublease or transfer) and effective
date, terms and conditions; (ii) a description of the identity, net worth and
previous business experience of the proposed transferee, including, without
limitation, copies of the proposed transferee's latest income, balance sheet and
changes in financial position statements (with accompanying notes and
disclosures of all material changes thereto) in audited form, if available, and
certified as accurate by the proposed transferee; and (iii) any further
information reasonably relevant to the proposed assignment and reasonably
available to Tenant which Landlord shall request after receipt of Tenant's
request for consent. Tenant shall, concurrently with any request for Landlord's
consent, pay to Landlord a fee of [***] for Landlord's review and processing of
such request and Landlord shall not be obligated to review such request prior to
Landlord's receipt of such fee. All requests for assignment, sublease or
transfer shall be forwarded to Landlord at the address provided above and to the
on-site mall management office. To the extent Landlord's consent is required
Landlord shall be required to respond within the prescribed period (being a
minimum of 15 days) and if Landlord's response is a denial of the proposed
transfer Landlord shall give specific reasons for the denial. If Landlord
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fails to respond within five (5) business days written notice from Tenant
(provided both to Landlord at the notice address and to the Mall Manager),
which notice must specify that Landlord has failed to respond to the initial
request and that failure to respond within five (5) days of the date of the
second notice will result in approval, then Landlord shall be deemed to have
approved the requested transfer.
(d) Except for a permitted assignment or subletting as specified in
Section 11.1(a) and (b) and without conferring any rights upon Tenant not
otherwise provided in this Article XI, in the event of an assignment or transfer
of Tenant's interest in this Lease, or sublease of all or a portion of the
Leased Premises, to a third party, any monthly rent or other payment accruing to
Tenant as the result of any such assignment, transfer, or sublease, including
any lump sum or periodic payment in any manner relating to such assignment,
transfer or sublease, which is in excess of the Rent then payable by Tenant
under this Lease less any amounts paid by Tenant in commissions, tenant
improvements, unamortized tenant improvements funded by Tenant and attorneys'
fees shall be paid [***] of such excess by Tenant to Landlord monthly as
additional rent. Landlord may require a certificate from Tenant specifying the
full amount of any such payment of whatsoever nature.
(e) Notwithstanding any assignment, subletting or transfer of this Lease
or Tenant's rights hereunder, Tenant shall remain fully liable on this Lease and
for the performance of all terms, covenants and provisions of this Lease;
provided, however, if the transferee, or assignee has a net worth equal to or in
excess of [***] [in 1999 Dollars] as shown in current certified financial
statements on the date of the transfer then Tenant shall be released from its
obligations with respect to the Lease from and after the date of the assignment
or transfer.
SECTION 11.2. ASSIGNMENT OR SUBLET. If this Lease is transferred or
assigned, in whole or in part in violation of the terms of this Lease, or if
the Leased Premises or any part thereof be sublet or occupied by any person or
entity other than Tenant in violation of the terms of this Lease, whether as a
result of any act or omission by Tenant, or operation of law, or otherwise,
then Landlord, whether before or after default by Tenant then Landlord may, in
addition to, and not in diminution of or substitution for, any other rights and
remedies under this Lease or pursuant to law to which Landlord may be entitled
as a result thereof, collect rent from the transferee, assignee, subtenant or
occupant and apply the net amount collected to the Rent herein reserved, but no
such transfer, assignment, subletting, occupancy or collection shall be deemed
a waiver of the covenants contained herein or the acceptance of the transferee,
assignee, subtenant, or occupant as Tenant, or a release of Tenant from the
further performance by Tenant of covenants on the part of Tenant set forth in
this Lease unless Tenant has been otherwise released, including without
limitation pursuant to Section 11.1(e).
SECTION 11.3. TRANSFER OF LANDLORD'S INTEREST. In the event of any
transfer of Landlord's interest in the Leased Premises, including a sale or
lease, the transferor shall be automatically relieved of any and all
obligations on the part of Landlord accruing from and after (but not before)
the date of such transfer, provided that (a) the interest of the transferor, as
Landlord, in any funds then in the hands of Landlord in which Tenant has an
interest shall be turned over, subject to such interest, to the then transferee;
and (b) notice of such sale, transfer or lease shall be delivered to Tenant as
required by law.
ARTICLE XII
SUBORDINATION, ATTORNMENT, FINANCING AND ESTOPPEL CERTIFICATE
SECTION 12.1. SUBORDINATION. Tenant agrees that this Lease shall, at the
request of Landlord, be subordinate to any mortgages or deeds of trust that are
now, or may hereafter be, placed upon the Leased Premises and to any and all
advances to be made thereunder, and to the interest thereon, and all renewals,
replacements and extensions thereof, provided that the mortgagees or
beneficiaries named in said mortgages or deeds of trust shall agree to
recognize the interest of
*** Confidential treatment requested.
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Tenant under this Lease in the event of foreclosure, if Tenant is not then in
default. Tenant also agrees that any mortgage or beneficiary may elect to have
this Lease constitute a prior lien to its mortgage or deed of trust, and in the
event of such election and upon notification by such mortgagee or beneficiary
to Tenant to that effect, this Lease shall be deemed prior in lien to such
mortgage or deed of trust, whether this Lease is dated prior to or subsequent
to the date of said mortgage or deed of trust, Tenant agrees that upon the
request of Landlord, or any mortgage or beneficiary, Tenant shall execute
whatever reasonable instruments may be required to carry out the intent of this
Section 12.1 and Section 12.2; provided that no such instrument may contain any
matters which increase any of Tenant's obligations under this Lease or decrease
any of Tenant's rights under this Lease and such instrument will grant a
covenant of non-disturbance to Tenant.
SECTION 12.2 ATTORNMENT. In the event any proceedings are brought for
the foreclosure of, or in the event of the conveyance by deed in lieu of
foreclosure of, or in the event of exercise of the power of sale under, any
mortgage and/or deed of trust made by Landlord covering the Leased Premises, or
in the event Landlords sells, conveys or otherwise transfers its interest in
the Shopping Center or any portion thereof containing the Lease Premises, this
Lease shall remain in full force and effect and Tenant hereby attorns to, and
covenants and agrees to execute an instrument in writing reasonably
satisfactory to the new owner whereby Tenant attorns to such successor in
interest and recognizes such successor as Landlord under this Lease. Payment by
or performance of this Lease by any person, firm or corporation claiming an
interest in this Lease or the Leased Premises by, through or under Tenant
without Landlord's consent in writing shall not constitute an attornment or
create any interest in this Lease or the Leased Premises.
SECTION 12.3. FINANCING. [INTENTIONALLY DELETED]
SECTION 12.4. ESTOPPEL CERTIFICATE. Tenant shall, without charge
therefor, at any time and from time to time, within thirty (30) days after
request therefor by Landlord, execute, acknowledge and deliver to Landlord a
written estoppel certificate, in reasonable form, certifying to Landlord, any
mortgage, or any purchaser of the Shopping Center or any other person designated
by Landlord, as of the date of such estoppel certificate; (i) that Tenant is in
possession of the Leased Premises and has accepted the same; (ii) 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 setting
forth such modifications); (iii) whether or not there are then existing any
set-offs or defenses against the enforcement of any right or remedy of
Landlord, or any duty or obligation of Tenant, hereunder (and, if so,
specifying the same in detail); (iv) that Rent is paid currently without any
offset or defense thereto, (v) the dates, if any, to which any Rent has been
paid in advance; (vi) whether or not there is then existing any claim of
Landlord's default under this Lease and if so, specifying the same in detail;
(vii) that Tenant has no knowledge of any event having occurred that authorized
the termination of this Lease by Tenant (or if Tenant has such knowledge,
specifying the same in detail); and (viii) any other matters relating to the
status of this Lease that Landlord or its mortgage may request be confirmed,
provided that such facts are accurate and ascertainable.
Landlord shall, within thirty (30) days after written request from Tenant,
no more often than once in any Lease Year and provided Tenant is not then in
default hereunder, deliver to Tenant or such persons as Tenant may designate, a
statement in writing certifying to the extent true that: (i) Tenant is in
possession of the Leased Premises; (ii) this Lease is in full force and effect
(as later modified, if such be the case); (iii) the Rent due hereunder is
current; and (iv) that to the best of Landlord's knowledge, information and
belief, Tenant is not in default hereunder.
SECTION 12.5 REMEDIES. Any failure by Tenant to execute any certificate,
statement or instrument in accordance with the foregoing provisions of this
Article XII or any financing statement in accordance with the provisions of
Section 14.2(a), within the time period provided or if no time period is
specified, then within thirty (30) days after written request, shall constitute
a "default" under this Lease.
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ARTICLE XIII
ADVERTISING AND PROMOTION
SECTION 13.1. PROMOTION FUND. Landlord shall establish an advertising and
promotion fund (the "Fund"). The object of the Fund shall be to advertise the
Retail Development in local metropolitan statistical area and to provide a
program of events, all of which shall, in Landlord's judgment, serve to enhance
and promote the Retail Development and its occupants. Such program of events may
include the promotion of coach traffic to the Retail Development and the
development of a mall video network within the Retail Development offering a
program of information, entertainment and advertisements. The Fund shall be
administered by Landlord and the costs and expenses of such administration shall
be charged to the Fund. Landlord shall expend all amounts paid to Fund by the
tenants in the Retail Development for the purposes herein set forth.
SECTION 13.2. PROMOTION FUND CONTRIBUTION. Tenant's annual contribution to
the Fund shall be the Fund Contribution (reduced proportionately for a partial
Lease Year) as defined in the Data Sheet. Upon the Grand Opening, Tenant shall
also pay Tenant's one-time initial contribution or Grand Opening Fee which is
defined in the Data Sheet. The Fund Contribution payable by Tenant for each
Lease Year shall be increased commencing with the second Lease Year of the Term
of this Lease, and each Lease Year thereafter, by a percentage equal to the
percentage increase from the "base period" of the Consumer Price Index ("Index")
to the "current period" of the Index of the Lease Year for which the adjustment
is being made; provided, however, if the first Lease Year is less than six (6)
months, the first adjustment to the fund Contribution shall be after the first
full Lease Year. Except as herein expressly provided, the term "base period"
shall initially refer to the Index published for the month of October
immediately preceding the Commencement Date. Following the initial increase in
the Fund Contribution hereunder, the term "base period" shall refer to the Index
published for the month of October immediately preceding the Lease Year for
which the Fund Contribution was last adjusted hereunder. The "current period" of
the Index shall refer to the Index published for the month of October
immediately preceding the Lease Year for which an adjustment is being made. In
the event the Index shall not be published for any of the above-described
months, then the Index published for the month closest, but prior, to the
described month shall be used in its place. The annual Fund Contribution shall
be payable by Tenant to Landlord, or as Landlord may direct, in twelve (12)
equal monthly installments, commencing on the Commencement Date, at the same
time and in the same manner as the monthly installments Minimum Rent are
payable.
Not withstanding the foregoing, in lieu of Tenant's payment of the Grand
Opening Fee, during the period from the Delivery of Possession Date through and
including the Grand Opening date ("Advertising Period"). Tenant shall place
advertisements (including, without limitation, billboards, signs, newspapers,
radio, television ads, and direct mail) at a cost equal to the amount of the
Grand Opening Fee that Tenant would have otherwise been obligated to pay
("Eligible Advertising") which shall specifically identify the Leased Premises,
including the name and location of the Shopping Center. At or prior to the time
the Eligible Advertising is placed, Tenant shall submit to Landlord copies of
the actual Eligible Advertising or other written third-party evidence reasonably
satisfactory to Landlord evidencing the Eligible Advertising together with all
receipts, canceled checks or other third-party evidence reasonably satisfactory
to Landlord establishing Tenant's payment for the Eligible Advertising. In the
event that the cost of the Eligible Advertising does not meet or exceed the
Grand Opening Fee by the end of the Advertising Period, Tenant shall pay the
balance to Landlord within thirty (30) days of receipt of a bill from Landlord.
SECTION 13.3. ADVERTISEMENTS [INTENTIONALLY DELETED].
SECTION 13.4. NETWORK. Landlord may cause to be developed a mall video network
within the Retail Development (the "Network"). The object of the Network shall
be to provide a program of information, entertainment and advertisements, which
shall, in Landlord's judgment, serve to enhance or promote the Retail
Development and its occupants. The Network shall have the right to sell
available time and access on the Network for advertisements or other uses. The
Network shall be under the sole and exclusive direction of Landlord and shall
be administered by Landlord. The costs and expenses paid or incurred by
Landlord for administering, operating, equipping, staffing,
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protecting, insuring, repairing, replacing and maintaining the Network shall be
charged to the Fund. Any production by Landlord of advertising messages for
Tenant and any air time on or access to the Network is subject to availability,
as determined solely by Landlord, and shall be at the then applicable rates and
fees set by Landlord. Landlord shall have the right to reject, remove or
discontinue showing any video taped advertising message of the business
conducted, or to be conducted, in the Leased Premises (herein "Tenant Video")
or advertising message on the Network the content of which is, in the opinion
of Landlord, unethical, misleading, in bad taste, or shall tend to injure the
reputation of the Retail Development or its occupants, or shall be deemed to be
detrimental to the Retail Development or is in violation of any applicable
rule, law or existing agreement with occupant(s) of the Retail Development.
Tenant acknowledges that Tenant shall be solely responsible for the content of
its Tenant Video and except with respect to the gross negligence of Landlord
and the Network, Tenant agrees to save harmless Landlord, its officers,
directors, partners, employees and agents from and against any and all claims,
actions, damages, liability, cost or expense, including attorneys' fees that
arise from or with respect to the content of such advertising message,
including without limitation any claims for infringement of the intellectual
property rights of others or actions for unfair competition. Landlord reserves
the right at any time to dissolve the Network and cease providing its
promotional services as well as Tenant Videos and in lieu thereof, to provide,
or cause to be provided, a program of advertising and promotional events which
in Landlord's sole judgment, will serve to promote the Retail Development and
its occupants.
ARTICLE XIV
DEFAULT AND REMEDIES
SECTION 14.1. ELEMENTS OF DEFAULT. If any one or more of the following
events occur, said event or events shall hereby be classified as a "default" as
that term is used throughout this Lease: (a)(i) the failure of Tenant to take
possession of the Leased Premises at the Delivery of Possession Date, or (ii)
the failure of Tenant to open its doors for business within thirty (30) days
after on the date specified in Section I.3 hereof, or (iii) if Tenant vacates
or abandons the Leased Premises and permits the same to remain unoccupied and
unattended for three (3) days after written or telephone notice, or (iv) if
Tenant fails to maintain normal inventory levels and employee staff for the
conduct of its normal business activities in the Leased Premises for three (3)
days after written or telephone notice, or (v) the failure of Tenant to operate
its business in compliance with Section 4.2 for the purposes specified in
Section 4.1 and Tenant fails to cure the same within ten (10) days after
written notice, or (vi) in the event of the sale or removal of a substantial
portion of Tenant's property located in the Leased Premises in a manner which
is outside the ordinary course of Tenant's business; (b) the failure of Tenant
to pay any Rent or other charges required to be paid by Tenant when same shall
become due and payable hereunder and such failure continues for ten (10) days
after written notice; (c) the failure of Tenant to perform or observe any term
or condition of this Lease and such failure shall continue for thirty (30) days
after written notice; provided, however, such period shall be extended for an
additional reasonable period if Tenant has diligently commenced the curing of
such default within the thirty (30) days period and is diligently pursuing the
same to completion, but in no event shall either the thirty (30) days period
or any extension thereof apply to Tenant's covenant to operate pursuant to
Article IV of this Lease, unless the same is excused pursuant to Article IX or
Article X of this Lease; (d) if Tenant shall be given three (3) notices of the
same default under subparagraphs (b) or (c) within any period of eighteen (18)
months, notwithstanding any subsequent cure of the failure to perform or
observe the terms or conditions of this Lease as identified in such notices;
(e) if any writ of execution, levy, attachment or other legal process of law
shall occur upon a substantial and material part of Tenant's assets,
merchandise, fixtures, or Tenant's estate or interest in the Leased Premises;
(f) Tenant shall be liquidated or dissolved or shall begin proceedings toward
such liquidation or dissolution, or shall in any manner permit the divestiture
of all, or any substantial part of Tenant's assets.
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SECTION 14.2. LANDLORD'S REMEDIES. In the event of any such default or
breach by Tenant, Landlord may at any time thereafter, with or without further
notice or demand and without limiting Landlord in the exercise of any right or
remedy which Landlord may have by reason of such default or breach:
(a) Perform, on behalf and at the expense of Tenant, any obligation
of Tenant under this Lease which Tenant has failed to perform and of which
Landlord shall have given at least three (3) days' notice (except in the case
of emergency, in which event no such notice shall be required), the cost of
which performance by Landlord, together with interest therein at the interest
rate (as specified in Section 20.14 hereof) from the date of such expenditure,
shall be deemed additional rent and shall be payable by Tenant to Landlord upon
demand.
(b) Without further notice, re-enter and repossess the Leased
Premises, by summary proceedings or otherwise, and remove Tenant and all other
persons and property from the Leased Premises, and store such property in a
public warehouse or elsewhere at the cost of and for the account of Tenant
without resort to legal process and without Landlord being deemed guilty of
trespass or conversion or becoming liable for any loss or damage occasioned
thereby. In connection herewith, Landlord shall have, in addition to any other
remedies, any and all self-help remedies, including but not limited to a
forcible entry into the Leased Premises or a "lock-out" accomplished by
changing the locks on the Leased Premises. No re-entry of the Leased Premises
shall be construed as an election by Landlord to accept Tenant's surrender of
the Leased Premises or to terminate this Lease unless a written notice of such
intention is given by Landlord to Tenant.
(c) Declare the entire balance of the Rent, and all other amounts to
be paid by Tenant hereunder for the remainder of the Term to be due and payable
immediately, and collect such balance in any manner not inconsistent with
applicable law. The amount of additional rent and Percentage Rent payable with
respect to each Lease Year remaining in the Term after such default (including
the Lease Year during which such default occurred) shall be conclusively
presumed to be equal to the average additional rent and Percentage Rent payable
with respect to each completed Lease Year preceding such default; provided,
however, that if such default occurs before the expiration of two (2) Lease
Years, then the amount of additional rent and Percentage Rent payable with
respect to each Lease Year remaining in the Term after such default (including
the Lease Year or partial Lease Year during which such default occurred) shall
be conclusively presumed to be equal to twelve (12) times the average monthly
additional rent and Percentage Rent payable prior to such default.
Notwithstanding anything to the contrary contained in this Lease, Landlord
hereby agrees to use reasonable efforts to mitigate damages; provided, however,
that landlord, in attempting to lease the Leased Premises shall not be obligated
to give preference to the Leased Premises over any other available space in the
Shopping Center. In consideration of the preceding sentence, Tenant hereby
acknowledges that the Leased Premises are located within a super-regional
discount specialty retail shopping center and that the quality and record of
experience of a prospective tenant and the type of prospective tenant (compared
with the then current tenant mix in the Shopping Center) are principal
considerations which Landlord shall employ in determining whether to lease the
Leased Premises.
(d) Terminate this Lease by giving written notice of such
termination to Tenant, which termination shall be effective as of the date of
such notice or any later date thereof specified by Landlord in such notice
(provided, that without limiting the generality of the foregoing provisions,
Landlord shall not be deemed to have accepted any abandonment or surrender by
Tenant of any or all of the Leased Premises or Tenant's leasehold estate under
this Lease unless Landlord has so advised Tenant expressly and in writing,
regardless of whether Landlord has re-entered or relet any or all of the Leased
Premises or exercised any or all of Landlord's other rights under this Lease or
applicable law.
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(e) In Landlord's own name or otherwise, relet any or all of the Leased
Premises with or without any additional premises, for any or all of the
remainder of the Term (or, if this Lease has then been terminated, for any or
all of the period which would, but for such termination, have constituted the
remainder of the Term) or for a period exceeding such remainder, on such terms
and subject to such conditions as are acceptable to Landlord (including, by way
of example rather than of limitation, the alteration of any or all of the
Leased Premises in any manner which, in Landlord's judgment, is necessary or
desirable in connection with such reletting, and the allowance of one or more
concessions or "free-rent" or reduced-rent periods), and collect and receive
the rents thereof. Tenant shall pay to Landlord, at the times and in the manner
specified by the provisions of this Lease (unless Landlord has elected to
accelerate Rent as provided above in subparagraph (d), in which event Tenant
shall be obligated to pay such accelerated amount as provided in such
subparagraph), (i) the installments of the Minimum Rent, additional rent and
Percentage Rent accruing during such remainder (or, if this Lease has then been
terminated, damages equalling the respective amounts of such installments
(determined as provided in subparagraph 14.2(c) which would have accrued during
such remainder, had this Lease not been terminated)), plus (ii) the cost to
Landlord of any such reletting (including, by way of example rather of
limitation, any attorneys's fees, leasing or brokerage commissions, repair or
improvement expenses and the expense of any other actions taken in connection
with such reletting) less any monies received by Landlord with respect to such
remainder from such reletting of any or all of the Leased Premises.
(f) Recover from Tenant, an amount equal to (i) all items of accrued and
unpaid Rent, including, without limitation, the then unamortized amount of the
Construction Allowance; (ii) all reasonable expenses (including, by way of
example rather than of limitation, all repossession costs, management expenses,
operating expenses, legal expenses and attorney's fees) incurred by Landlord in
curing or seeking to cure any default or in exercising or seeking to exercise
any of Landlord's rights and remedies under the provisions of this Lease or at
law or in equity on account of any default, plus (iii) interest on all such
expenses, at the rate provided in Section 20.14, all of which expenses and
interest shall be payable by Tenant immediately on demand therefor by Landlord.
(g) Without terminating this Lease, maintain Tenant's right to
possession, in which case this Lease shall continue in effect whether or not
Tenant shall have vacated the Leased Premises. In such event, Landlord shall be
entitled to enforce all of Landlord's rights and remedies under this Lease,
including the right to recover Rent as it becomes due hereunder.
(h) Any damage or loss of Rent sustained by Landlord may be recovered by
Landlord, at Landlord's option, at the time of the reletting or termination, in
a single action or in separate actions, from time to time, as said loss of Rent
or damages shall accrue, or in a single proceeding deferred by Landlord or with
jurisdiction reserved by the court, until the expiration of the Term of this
Lease (in which event Tenant hereby agrees that, at Landlord's option, the
cause of action shall not be deemed to have accrued until the date of
expiration of said Term).
(i) Nothing contained herein shall prevent the enforcement of any claim
Landlord may have against Tenant for anticipatory breach of this Lease. In the
event of any anticipatory breach by Tenant of any of the covenants or
provisions hereof or in the event of Tenant's default, Landlord shall have the
right of injunction and the right to invoke any remedy allowed at law or in
equity as if re-entry, summary proceedings and other remedies were not provided
for herein. Mention in this Lease of any particular remedy shall not preclude
Landlord from any other remedy under this Lease or, at law or in equity. Tenant
hereby expressly waives for itself and all persons claiming by or through
Tenant, any and all rights to redeem, reinstate or restore, or obtain relief
from forfeiture of this Lease granted by or under any present or future law in
the event of Tenant being evicted or dispossessed for any cause, or in the
event of Landlord obtaining possession of the Leased Premises by reason of the
violation by Tenant of any of the covenants and conditions of this Lease.
(j) In case suit shall be brought for recovery of the Leased Premises,
for the recovery of Rent or any other amount due under the provisions of this
Lease, or because of the breach of any other covenant herein contained on the
part of Tenant to be kept and performed, and a breach shall be established,
Tenant shall pay to Landlord all costs and expenses incurred therefor,
including Landlord's attorney's reasonable fees and expenses.
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(k) Nothing herein contained shall limit or prejudice Landlord's right to
prove and obtain as damages, by reason of any default by Tenant, an amount
equal to the maximum allowed by statute or rule of law in effect at the time
when, and governing the proceedings in which, such damages are to be proved. No
expiration or termination of this Lease, abandonment, re-entry by Landlord or
vacancy, shall relieve Tenant of any of its liabilities and obligations under
this Lease (whether or not any or all of the Leased Premises are relet), and
Tenant shall remain liable to Landlord for all damages resulting from any
default by Tenant, including any damage resulting from the breach by Tenant of
any of its obligations to pay Minimum Rent, Percentage Rent, additional rent
and any other sums which Tenant is obligated to pay hereunder.
(l) The rights and remedies of Landlord under this Lease shall be deemed
to be cumulative, and no one of such rights or remedies shall be exclusive at
law or in equity of the other rights and remedies of Landlord on account of a
default by Tenant, and the exercise of any one such right or remedy by Landlord
shall not impair Landlord's standing, right or power to exercise any other
right or remedy.
SECTION 14.3. BANKRUPTCY. (a) Neither Tenant's interest in this Lease, nor
any estate hereby created in Tenant nor any interest herein or therein, shall
pass to any trustee or receiver or assignee for the benefit of creditors or
otherwise by operation of law, except as may specifically be provided pursuant
to the Bankruptcy Code (11 USC Section 101 et seq.), as the same may be amended
from time to time.
(b) It is understood and agreed that this Lease is a lease of real
property in a shopping center as such lease is described in Section 365 of the
Bankruptcy Code, as the same may be amended from time to time. Upon the filing
of a petition by or against Tenant under the Bankruptcy Code, Tenant, as debtor
and as debtor-in-possession, and any trustee who may be appointed with respect
to the assets of or estate in bankruptcy of Tenant, agree to pay monthly in
advance on the first day of each month, as reasonable compensation for the use
and occupancy of the Leased Premises, an amount equal to all Minimum Rent,
additional rent and other charges otherwise due pursuant to this Lease, and to
pay Percentage Rent monthly, at the percentage factor set forth in this Lease
for the Lease Year in which such month falls, on all of the Gross Sales during
such month in excess of one-twelfth (1/12th) of the Sales Break Point for such
Lease Year, payment of all such Percentage Rent to be made by the tenth (10th)
day of the succeeding month. Included within and in addition to any other
conditions or obligations imposed upon Tenant or its successor in the event of
the assumption and/or assignment of this Lease are the following: (i) the cure
of any monetary defaults and reimbursement of pecuniary loss within not more
than thirty (30) days of assumption and/or assignment; (ii) the deposit of an
additional sum equal to not less than three (3) months' Minimum Rent and
additional rent to be held pursuant to the terms of Section 2.4 of this Lease,
which sum shall be determined by Landlord, in its sole discretion, to be a
necessary deposit to secure the future performance under this Lease by Tenant
or its assignee; (iii) the use of the Leased Premises as set forth in Section
4.1 of this Lease and the quality, quantity and/or lines of merchandise, goods
or services required to be offered for sale are unchanged; and (iv) the prior
written consent of any mortgagee to which this Lease has been assigned as
collateral security.
SECTION 14.4. ADDITIONAL REMEDIES AND WAIVERS. Notwithstanding any other
provision contained in this Lease to the contrary, all rights and remedies of
Landlord set forth herein (including but not limited to Landlord's rights
respecting lockout, re-entry, self-help, repossession, security interests and
lien rights and foreclosure) shall be in addition to (and not in substitution
of) any and all other rights and remedies now or hereafter provided by law,
including but not limited to rights and remedies provided by the statutes,
rules, regulations, laws and judicial decisions of the State, and all such
rights and remedies shall be cumulative; and none of such rights and remedies
so provided by law shall be conditioned or limited by any conditions or
limitations on the remedies granted to Landlord under the terms of this Lease,
nor upon any notice and/or passage of time that may be required hereunder in
order for an event or condition to constitute a default or an event of default
as that term is defined in this Lease.
SECTION 14.5. LANDLORD'S CURE OF DEFAULT. If Tenant shall be in default
hereunder, Landlord shall have the option, but not the obligation, upon three
(3) days written notice to Tenant (except in the event of an emergency, in which
event no notice shall be required), to cure the act or failure constituting said
default for the account of and at the expense of Tenant. Landlord's cure or
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attempt to cure any act or failure constituting the default by Tenant shall not
result in a waiver or release of Tenant. Tenant agrees to pay the costs
incurred by Landlord pursuant to this Section 14.5 plus interest, in accordance
with Section 20.14 hereof, on all sums expended by Landlord pursuant to this
Section 14.5 from the date of such expenditure plus a charge of fifteen percent
(15%) of such costs, to Landlord upon demand, as additional rent.
SECTION 14.6 SECURITY INTEREST. Tenant may grant a security interest,
encumber or pledge its equipment, personal property, inventory and moveable
trade fixtures located on or about the Leased Premises, with respect to
financing which benefits this store location and Landlord shall agree to
subordinate its lien, if any, on such equipment to such financing. In no event,
however, shall Tenant be permitted to mortgage, hypothecate, encumber or pledge
the leasehold interest in the Leased Premises.
SECTION 14.7 TENANT'S REMEDIES. In the event Landlord shall fail to
perform any obligation specified in this Lease, which default materially and
adversely affects Tenant's operations, then Tenant may, after the continuance
of any such default for thirty (30) days after written notice thereof by Tenant
to Landlord (except in the event of an emergency when only reasonable notice
shall be required to be given to Landlord under the circumstances), cure such
default all on behalf of and at the expense of Landlord and do all necessary
work and make all necessary payments in connection therewith and Landlord
shall, on demand, pay Tenant forthwith, the amount so paid by Tenant together
with interest thereon at the rate specified in Section 20.14 hereof from the
date of payment until re-payment.
ARTICLE XV
RIGHT OF ACCESS
Landlord may, at any reasonable time or times, upon prior notice to Tenant
(except in the event of an emergency, or if Tenant is in default under this
Lease, in which event no notice shall be required), before and after the
Commencement Date, enter upon the Leased Premises, any portion thereof and any
appurtenance thereto (with men and materials, if required) for the purpose of:
(a) inspecting the same; (b) making such repairs, replacements or alterations
which Landlord may be required to perform as herein provided or which it may
deem desirable for the Leased Premises; and (c) showing the Leased Premises to
prospective purchasers, lenders or lessees. Landlord hereby expressly reserves
the right, exercisable at any time and from time to time, to erect, use,
maintain and repair pipes, conduits, plumbing, vents, ducts and wires in, to,
under and through the Leased Premises as and to the extent that Landlord may
now or hereafter deem to be necessary or appropriate for the proper operation
and maintenance of the Shopping Center. Any redecorating or repair necessitated
by reason of location of same within the Leased Premises shall be the
responsibility of Landlord. Landlord agrees to hold Tenant harmless from any
damage or injury to person or property to the extent resulting from Landlord
exercising its rights under this Article XV. Notwithstanding anything contained
in this Lease to the contrary, if such work prevents Tenant from operating its
business within the Leased Premises for three (3) or more consecutive
days, Landlord shall after written notice from Tenant to Landlord, abate
Minimum Rent after such three (3) days of disruption on a day-to-day basis
until Tenant is able to operate its business in the Leased Premises.
In the exercise of its rights under this Article XV, Landlord shall used
reasonable efforts to avoid material interference with the operation of
Tenant's business within the Leased Premises. Landlord agrees that except in
the event of an emergency, and provided Tenant shall make an employee of Tenant
available to accompany Landlord following Landlord's notice to Tenant of the
necessity therefor, Landlord shall not enter the Leased Premises during the
Term of this Lease without an employee of Tenant accompanying Landlord's
representative.
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ARTICLE XVI
DELAYS
If Landlord or Tenant is delayed or prevented from performing any of their
respective obligations during the Term of this Lease because of strikes,
lockouts, labor troubles, inability to procure materials, failure of power,
governmental restrictions, a delay created by the other party, or reasons of a
like nature not the fault of the party delayed in performing such obligation
(collectively "Delays"), then the period of such delays shall be deemed added
to the time herein provided for the performance of any such obligation and the
defaulting party shall not be liable for losses or damages caused by such
delays; provided, however, that, subsequent to the Commencement Date, this
Article XVI shall not apply to the payment of any sums of money required to be
paid by Tenant hereunder or any obligation of Landlord or Tenant that can be
satisfied by the payment of money, and shall not excuse Tenant from its
obligation to continuously operate its business within the Leased Premises in
accordance with the provisions of Sections 4.1 and 4.2 hereof.
ARTICLE XVII
END OF TERM
SECTION 17.1. RETURN OF LEASED PREMISES. Upon the Expiration Date or
earlier termination of this Lease, Tenant shall quit and surrender to landlord
the Leased Premises, broom-clean, in good order and condition, ordinary wear and
tear excepted, and shall surrender to Landlord all keys to or for the Leased
Premises and inform Landlord of all combinations of locks, safes and vaults, if
any, in the Leased Premises. Subject to the provisions of Section 3.5 hereof,
Tenant, at its expense, shall promptly remove all personal property of Tenant,
and repair all damage to the Leased Premises caused by such removal. Any
personal property of Tenant not removed within ten (10) days following the
Expiration Date or earlier termination of this Lease shall be deemed to have
been abandoned by Tenant and to have become the property of Landlord, and may
be retained or disposed of by Landlord, as Landlord shall desire. Tenant's
obligation to observe or perform the covenants set forth in this Section 17.1
shall survive the Expiration Date or earlier termination of this Lease.
SECTION 17.2. HOLDING OVER. If Tenant shall hold possession of the Leased
Premises after the Expiration Date or earlier termination of this Lease at
Landlord's option (a) Tenant shall be deemed to be occupying the Leased Premises
as a tenant from month-to-month, at [***] and other charges in effect during the
last Lease year immediately preceding such holdover and other wise subject to
all of the terms and conditions of this Lease, or (b) Landlord may exercise any
other remedies it has under this Lease or at law or in equity including an
action for wrongfully holding over.
Notwithstanding the foregoing, if Tenant is negotiating in good faith with
Landlord to renew or extend the Term of this Lease for the Leased Premises (or a
relocation within the Shopping Center), then Tenant may occupy the Leased
Premises on a month-to-month tenancy at [***] of the annual Minimum Rent for the
last year of the Term of the Lease.
*** Confidential treatment requested.
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ARTICLE XVIII
COVENANT OF QUIET ENJOYMENT
Landlord covenants that if and so long as Tenant pays the Rent and all
other charges provided for herein, and performs all of its obligations provided
for herein, Tenant shall at all times during the Term hereof peaceably have,
hold and enjoy the Leased Premises, without any interruption or disturbance
from Landlord, or anyone lawfully or equitably claiming through or under
Landlord, subject to the terms hereof and any mortgage or deed of trust to
which this Lease shall be subordinate.
ARTICLE XIX
UTILITIES
SECTION 19.1. UTILITIES. Tenant agrees to connect to and use the utilities
(including electricity, water, gas, cooling and/or heating system, telephone
and any other utility) supplied to the Leased Premises in accordance with the
criteria set forth in the Exhibits attached to this Lease, Landlord's schedule
of mechanical and electrical design criteria, Landlord's rules and regulations,
and the rules and regulations of the utility companies supplying the service.
Tenant shall be solely responsible for and promptly pay all costs and charges,
including installation thereof where applicable, for all water, gas, cooling,
heat, electricity, sewer and other utilities provided or used in or at the
Leased Premises, commencing with the Delivery of Possession Date and continuing
throughout the Term of this Lease. If Landlord shall elect to supply any of the
utilities used upon or furnished to the Leased Premises, Tenant agrees to pay
as additional rent a per square foot charge based on Tenant's estimated usage,
as reflected on a monthly invoice to be provided by Landlord; provided,
however, in no event shall Tenant's total charges for utilities provided by
Landlord exceed what Tenant would be charged by the local utility company if it
were billed directly by such utility as a direct retail customer. Landlord
shall not be liable to Tenant for any loss, damage or expense which Tenant may
sustain if the utilities, or the quality or character of utilities used upon or
furnished to the Leased Premises are no longer available or suitable for
Tenant's requirements, or if the supply of any such utility ceases or is
interrupted as a result of any cause and no such change, interruption or
cessation of service shall constitute an eviction of Tenant. Any furnishing by
Landlord of light, cooling and/or heat or power shall be conditioned upon the
availability of adequate energy sources. Landlord shall have the right to
reduce heat, lighting and air conditioning within the Shopping Center,
including, without limitation, the Leased Premises and the common areas, as
required by any mandatory or voluntary fuel or energy saving allocation, or any
similar statute, regulation, order or program. Notwithstanding the foregoing,
in the event that any foregoing utility service is interrupted for three (3)
consecutive working days solely as a result of any of Landlord's or any of
Landlord's agents' wilful acts of misconduct or negligence, and Tenant is
unable to operate its business within the Leased Premises as a result thereof,
then Landlord shall, after written notice from Tenant to Landlord concerning
such interruption, abate Minimum Rent on a day-to-day basis if and until such
time as said utility services are restored.
SECTION 19.2. ELECTRICITY, TELEPHONE AND GAS. All telephone, electric and
gas (with gas being available only to food service tenants) utility required by
Tenant for the Leased Premises shall (if available) be obtained by Tenant in
accordance with Exhibit D and shall be installed by the appropriate company or
utility. All charges for such utility service (including the installation
thereof) shall be paid by Tenant directly to the company or utility providing
any such service, as and when they become due and payable.
SECTION 19.3. TRASH AND GARBAGE REMOVAL. Tenant shall be solely
responsible for trash and garbage removal from the Leased Premises including
the placing of all trash and garbage in containers provided by Landlord or
Landlord's contractor for such purpose. In the event Landlord elects to furnish
such service to the tenants in the Shopping Center, Tenant agrees to use only
the service provided by Landlord and to pay for such service (including both
the cost of leasing containers and the cost of removal) monthly, as additional
rent, in accordance with the uniform
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schedule of charges to be established by Landlord. In no event shall Tenant be
obligated to pay Landlord more for such trash and garbage removal service than
the prevailing competitive rates of reputable independent trash removal
contractors for service similar to that provided by Landlord.
SECTION 19.4. WATER AND SEWER. The cost of water and sanitary sewer for
usage in the Shopping Center shall be included in Common Area Maintenance
Expenses, except for food service tenants which may be billed directly by
Landlord or the supplier of water and sanitary service and any other tenants
which are billed directly by Landlord or such supplier. Landlord reserves the
right to install a water meter in the Leased Premises at any time or from time
to time to measure Tenant's consumption of water therein and bill Tenant
directly for the cost of such consumption. Tenant shall pay, as additional
rent, the amount of each bill within fifteen (15) days after such bill is
rendered.
SECTION 19.5. GREASE INTERCEPTORS. Landlord, in its commercially
reasonable judgment, will arrange for regular periodic service and cleaning of
all grease interceptors at Tenant's expense. Cost of service and cleaning of
grease interceptors will be allocated among grease interceptors serving food
court(s) and grease interceptors serving individual tenants in proportion to
grease trap size. Tenants served by individual grease traps will pay their pro
rata share of the cost for their grease trap. The share of grease trap service
and cleaning cost apportioned to food court grease traps will be paid by food
court tenants as part of the food court common facilities expenses.
ARTICLE XX
MISCELLANEOUS
SECTION 20.1. ENTIRE AGREEMENT. This Lease together with the Exhibits,
attached hereto and incorporated herein contains the entire agreement between
the parties hereto and there are no promises, agreements, conditions,
undertakings, or warranties, or representations, oral or written, express or
implied, between them other than as herein set forth. No change or modification
of this Lease or of any of the provisions hereof shall be valid or effective
unless the same is in writing and signed by the parties hereto. No alleged or
contended waiver of any of the provisions of this Lease shall be valid or
effective unless in writing signed by the party against whom it is sought to be
enforced.
SECTION 20.2. NOTICES. No notice or other communication given under this
Lease shall be effective unless the same is in writing and is delivered in
person or mailed by registered or certified mail, return receipt requested,
first class, postage prepaid, or delivered by Federal Express or a comparably
reliable national air courier service (i.e. one which delivers service in at
least 48 states) provided that any such courier service provides written
evidence of delivery. Any such notice or communication shall be addressed:
(a) If to Landlord, at 1300 Wilson Boulevard, Suite 400, Arlington,
Virginia 22209, Attention: General Counsel, or to such other address as
Landlord shall designate by giving notice thereof to Tenant, with a copy for
informational purposes only to the Mall Manager of the Retail Development.
(b) If to Tenant, at the address set forth for Tenant on page 1 of this
Lease or at the Leased Premises, or such other address as Tenant shall
designate by giving notice thereof to Landlord, with a courtesy copy but not
required for effective notice to: Gary Cary Ware & Friedenrich, 400 Hamilton
Avenue, Palo Alto, CA 94301; Attn: Daniel K. Seubert.
The date of service of any notice or other communication given by mail shall be
three (3) days after the date on which such notice is deposited in the U.S.
mails. The date of service of any notice given by courier service (as described
above) shall be one (1) day after deposit with such courier service.
SECTION 20.3. GOVERNING LAW. It is the intent of the parties hereto
that all questions with respect to the construction of this Lease and the
rights and the liabilities of the parties hereto shall be determined in
accordance with laws of the jurisdiction in which the Leased Premises is located
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and that all disputes arising hereunder shall be heard and decided in the local
jurisdiction where the Leased Premises is located.
SECTION 20.4. SUCCESSORS. All rights and liabilities herein given to, or
imposed upon, the respective parties hereto shall extend to and bind the
several respective heirs, executors, administrators, successors, and assigns of
the said parties; and if there shall be more than one Tenant, or more than one
person or entity acting collectively as Tenant, they shall all be bound jointly
and severally by the terms, covenants and agreements herein. Any restriction
on or requirement imposed upon Tenant hereunder shall be deemed to extend to
Tenant's Guarantor, Tenant's sublessees, Tenant's assignees and Tenant's
invitees, and it shall be Tenant's obligation to cause the foregoing persons to
comply with such restrictions or requirements. No rights, however, shall inure
to the benefit of any assignee or other transferee of Tenant, and no rights or
benefits shall be conferred upon any such assignee or transferee by reason of
this Section 20.4, unless such rights or benefits shall be expressly otherwise
set forth in this Lease.
SECTION 20.5. LIABILITY OF LANDLORD. Neither Landlord, Landlord's
beneficiaries, any persons or entities comprising Landlord, nor any successor
in interest to Landlord (or to such persons or entities) shall have any
personal liability for any failure by Landlord to perform any term, covenant or
condition of this Lease. If Landlord shall fail to perform any covenant, term
or condition of this Lease upon Landlord's part to be performed, and if as a
consequence of such default Tenant shall recover a money judgment against
Landlord, such judgment shall be satisfied only out of the proceeds of sale
received upon execution of such judgment and levied thereon against the right,
title and interest of Landlord in the Shopping Center and out of rents or other
income from such property receivable by Landlord, or out of the consideration
received by Landlord from the sale or other disposition of all or any part of
Landlord's right, title and interest in the Shopping Center, subject,
nevertheless, to the rights of Landlord's mortgagee, and neither Landlord nor
any of the co-partners comprising the partnership which is Landlord herein
shall be liable for any deficiency. The foregoing limitation of liability shall
be noted in any judgment secured against Landlord and in the judgment index.
SECTION 20.6. BROKERS. Tenant warrants and represents that there was no
broker or agent instrumental in consummating this Lease. Tenant agrees to
indemnify and hold Landlord harmless against any claims for brokerage or other
commissions arising by reason of a breach by Tenant of this representation and
warranty.
SECTION 20.7. TRANSFER BY LANDLORD. Landlord hereunder shall have the
right to freely assign this Lease without notice to or the consent of Tenant.
SECTION 20.8. NO PARTNERSHIP. Notwithstanding the fact that a portion of
the Rent reserved hereunder may be a percentage of Tenant's Gross Sales, and
notwithstanding anything else to the contrary, Landlord shall not be deemed to
be a partner of Tenant or a joint venturer with Tenant.
SECTION 20.9. WAIVER OF COUNTERCLAIMS. Tenant shall not impose any
counterclaim or counterclaims (other than compulsory counterclaims) in a
summary proceeding or other action based on termination or holdover, it being
the intent of the parties hereto that Tenant be strictly limited in such
instance to bringing a separate action in the court of appropriate
jurisdiction. The foregoing waiver is a material inducement to Landlord making,
executing and delivering this Lease and Tenant's waiver of its right to
counterclaim in any summary proceeding or other action based on termination or
holdover is done so knowingly, intelligently and voluntarily.
SECTION 20.10. WAIVER OF JURY TRIAL. [INTENTIONALLY DELETED].
SECTION 20.11. SEVERABILITY. If any provision of this Lease or the
application thereof to any person or circumstances shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each provision of
this Lease shall be valid and be enforced to the fullest extent permitted by
law.
SECTION 20.12. NO WAIVER. No failure by Landlord to insist upon the
strict performance of any term, covenant, agreement, provision, condition or
limitation of this Lease to be kept, observed
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or performed by Tenant, and no failure by Landlord to exercise any right or
remedy available upon a breach of any such term, covenant, agreement,
provision, condition or limitation of this Lease, shall constitute a waiver of
any such breach or of any such term, covenant, agreement, provision, condition
or limitation.
SECTION 20.13. CONSUMER PRICE INDEX. As used herein, "Consumer Price
Index" or "Index" shall mean the Consumer Price Index for All Urban Consumers
(1982-84-100), U.S. City Average, All Items, published by the United States
Department of Labor, Bureau of Labor Statistics (or such comparable index as
may be utilized in substitution for or as the successor to the stated Index).
If such Index is not published by the Bureau of Labor Statistics or by another
similar governmental agency at any time during the Term of this Lease, then the
most closely comparable statistics on the purchasing power of the consumer
dollar as published by a responsible financial authority and selected by
Landlord shall be utilized in lieu of such Index.
SECTION 20.14. INTEREST. Any amount due from Tenant to Landlord herein
which is not paid when due shall bear interest at a rate per annum equal to the
Federal Reserve Bank discount rate as published in [***] day of the month
preceding the date upon which the obligation is incurred (or the next business
day thereafter if the 25th is not a weekday) plus [***] unless otherwise
specifically provided herein, but the payment of such interest shall not excuse
or cure any default by Tenant under this Lease. In no event shall any interest
calculated hereunder be at a rate which is higher than the maximum rate which is
allowed under the usury laws of the State, which maximum rate of interest shall
be substituted for the rate in excess thereof, if any, computed pursuant to this
Section 20.14.
SECTION 20.15. EXCAVATION. If an excavation shall be made upon land
adjacent to the Leased Premises, or shall be authorized to be made, Tenant
shall afford to the person causing or authorized to cause such excavation,
license to enter upon the Leased Premises for the purpose of doing such work
as said person shall deem necessary to preserve the wall or the building of
which the Leased Premises form a part from injury or damage and to support the
same by proper foundation, without any claim for damages or indemnity from
Landlord, or diminution or abatement of Rent.
Notwithstanding anything contained in this Lease to the contrary, if such
excavation work prevents Tenant from operating its business within the Leased
Premises for three (3) or more consecutive days, Landlord shall after three (3)
days' written notice from Tenant to Landlord, abate Minimum Rent after such
three (3) days of disruption on a day-to-day basis until Tenant is able to
operate its business in the Leased Premises.
SECTION 20.16. RULES AND REGULATIONS. Tenant agrees to comply with and
observe all reasonable rules and regulations established by Landlord for the
Shopping Center from time to time. Tenant's failure to keep and observe such
rules and regulations shall constitute a default pursuant to the terms of this
Lease in the manner as if the same were contained herein as covenants, which
shall carry with it the same consequences under Article XIV hereof as Tenant's
failure to pay rent.
SECTION 20.17. FINANCIAL STATEMENTS. Upon Landlord's written request from
time to time, but not more than once per Lease Year, Tenant shall, within
thirty (30) days after Landlord's request therefor, furnish Landlord financial
statements outlining Tenant's then current financial condition and shall
furnish financial statements outlining the current financial condition of any
Guarantor of this Lease. Landlord shall maintain all financial information
provided in a confidential manner; provided, however, that Landlord may
disclose such financial statements to Landlord's mortgagees or prospective
mortgagees or purchasers.
SECTION 20.18. GENERAL RULES OF CONSTRUCTION. (a) This Lease may be
executed in several counterparts and the counterparts shall constitute one and
the same instrument. (b) Landlord may act under this Lease by its attorney or
agent. (c) Wherever a requirement is imposed on Tenant hereunder, Tenant shall
be required to perform such requirement at its sole cost and expense unless it
is specifically otherwise provided herein. (d)(i) Wherever appropriate herein,
the singular includes the plural and the plural includes the singular; (ii)
whenever the work "including" is used herein, it shall be deemed to mean
"including, but not limited to"; and (iii) the words "re-enter" and "re-entry"
as used herein shall not be restricted to their technical legal meaning. (e)
Anything in this Lease to the contrary notwithstanding: (i) any provision
hereof which permits or requires a party to
*** Confidential treatment requested.
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take any particular action shall be deemed to permit or require, as the case may
be, such party to cause such action to be taken; and (ii) any provision hereof
which requires any party not to take any particular action shall be deemed to
require such party to prevent such action to be taken by any person or by
operation of law. (f) Whenever costs or expenses are required to be assessed to
or paid by Tenant, such costs and expenses shall be reasonable.
SECTION 20.19. RECORDING. Neither this Lease nor any memorandum hereof may
be recorded without the express written consent of Landlord.
SECTION 20.20. EFFECTIVE DATE. For all purposes hereof, the "Effective
Date" of this Lease shall be the date upon which this Lease shall have been
executed by both parties and physically delivered by Landlord to Tenant or its
attorney. Prior to the Effective Date, neither this Lease nor anything hereunder
contained shall be legally binding on either Landlord or Tenant, and the
submission of this Lease by Landlord to Tenant prior to such Effective Date for
examination or consideration by Tenant or discussion between Landlord and Tenant
shall not constitute a reservation of or option for the Leased Premises or
create any legal obligation or liability whatsoever on Landlord.
SECTION 20.21. HEADINGS. The captions, section numbers, article numbers and
index appearing in this Lease are inserted only as a matter of convenience and
in no way define, limit, construe, or describe the scope of intent of such
sections or articles of this Lease nor in any way affect this Lease.
SECTION 20.22. MANAGING AGENT. Landlord has advised Tenant that it has
appointed MillsServices Corp., a Delaware corporation as managing agent of the
Retail Development (said managing agent and any successor or substitute managing
agent is hereinafter referred to as "Managing Agent"). Tenant shall, until
otherwise notified by Landlord, make all payments of Rent required to be made
pursuant to this Lease to the Managing Agent payable to Landlord and direct all
notices, inquiries or other communications to the Managing Agent, 1300 Wilson
Boulevard, Suite 400, Arlington, Virginia 22209.
[Signatures Appear on the Following Page]
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IN WITNESS WHEREOF, Landlord and Tenant have signed this Lease as of the
day and year first above written.
WITNESS: LANDLORD:
KATY MILLS LIMITED PARTNERSHIP, a
Delaware limited partnership
By: Katy Mills, L.L.C., a Delaware limited
liability company
Its: General Partner
By: The Mills Limited Partnership, a
Delaware limited partnership
Its: Manager
By: The Mills Corporation, a Delaware
corporation
Its: General Partner
3/17/99
By: /s/ [ILLEGIBLE] By: /s/ JUDITH BERSON
---------------------------- -------------------------------
Judith Berson
By: /s/ [ILLEGIBLE] Executive Vice President
----------------------------
WITNESS/ATTEST: TENANT:
SILICON ENTERTAINMENT, INC., a
California corporation
By: By: /s/ [ILLEGIBLE]
---------------------------- --------------------------------
By: Name: /s/ [ILLEGIBLE]
---------------------------- --------------------------------
Its: Vice President
--------------------------------
By: By: /s/ DAVID S. MORSE
---------------------------- --------------------------------
By: Name: David S. Morse
---------------------------- --------------------------------
Its: Chairman/CEO
--------------------------------
Tenant's Corporate Seal:
<PAGE> 54
ACKNOWLEDGMENT OF LANDLORD
COMMONWEALTH OF VIRGINIA )
)ss.
COUNTY OF ARLINGTON )
On this 17th day of March, 1999, before me personally appeared Judith
Berson, to me known to be the person who executed the foregoing Lease and
acknowledged before me that she was duly authorized and did execute some on
behalf of KATY MILLS LIMITED PARTNERSHIP, a Delaware limited partnership.
Karen Denton
-----------------------------------
Notary Public
My Commission expires: 10/31/02
-------------
[Notarial Seal]
ACKNOWLEDGMENT OF CORPORATE TENANT
STATE OF CALIFORNIA )
)ss.
CITY/COUNTY OF SANTA CLARA )
On March 16, 1999, before me Laurie Shermer, a Notary Public in and for
said state aforesaid, personally appeared Chris Morse and David Morse, as Vice
President and Chairman & CEO of SILICON ENTERTAINMENT, INC., a California
corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
Laurie H. Shermer
-----------------------------------
Notary Public, Santa Clara County,
My Commission expires: 9/19/2001
-------------
[Notarial Seal]
<PAGE> 55
ADDENDUM ATTACHED TO AND MADE A PART OF LEASE DATED MARCH 17, 1999, BY AND
BETWEEN KATY MILLS LIMITED PARTNERSHIP, A DELAWARE LIMITED PARTNERSHIP, AS
"LANDLORD," AND SILICON ENTERTAINMENT, INC., A CALIFORNIA CORPORATION, AS
"TENANT."
The Lease is hereby modified and supplemented as set forth herein. Any
conflict between a term, condition or provision contained in this Addendum with
any term, condition or provision contained in the printed Lease shall be
resolved in favor of this Addendum.
Add as a New Section 7.3:
"SECTION 7.3. SALES TAX REBATE. Landlord has determined that financial
assistance from the City of Katy and/or the State of Texas in the form of a
sales tax rebate will better enable Landlord to develop the Shopping Center in
a manner beneficial to both Landlord and Tenant. Therefore, in order to
provide Landlord with the sales tax information from the State of Texas
Comptroller of Public Accounts ("Comptroller") pertaining to Tenant's sales at
the Leased Premises, Tenant agrees to provide Landlord with certified copies of
all sales tax returns filed with the Comptroller for Tenant's retail operations
at the Leased Premises during the Term of this Lease. In addition thereto,
Tenant shall provide Landlord with a power of attorney letter addressed to, and
in a form satisfactory to, the Comptroller authorizing the Comptroller to
release to Landlord all sales tax information for Tenant's retail operations at
the Leased Premises during the Term of this Lease. Such letter shall be in a
form attached hereto and made a part hereof as Exhibit G, or such other or
additional forms as required from time to time by the Comptroller in order to
release such information to Landlord. Landlord agrees to maintain the
confidentiality of any proprietary information received by Landlord pursuant to
this Section 7.3."
Section 12.1: At the end of Section 12.1, insert:
"In accordance with the provision of this Section 12.1, Tenant agrees to
execute the Agreement of Subordination, Non-Disturbance and Attornment and
Pre-Construction Tenant Estoppel Certificate attached hereto as Exhibit H and
Exhibit H-1 concurrently with its execution of this Lease."
<PAGE> 56
IN WITNESS WHEREOF, Landlord and Tenant have signed and sealed this Addendum as
of the day and year first above written.
WITNESS: LANDLORD:
KATY MILLS LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Katy Mills, L.L.C., a Delaware
limited liability company
Its: General Partner
By: The Mills Limited Partnership, a
Delaware limited partnership
Its: Manager
By: The Mills Corporation, a Delaware
corporation
Its: General Partner
9/17/99
By: /s/ [ILLEGIBLE] /s/ JUDITH BERSON
------------------------- --------------------------------------
By: Judith Berson
By: /s/ [ILLEGIBLE] Its: Executive Vice President
-------------------------
WITNESS/ATTEST: TENANT:
SILICON ENTERTAINMENT, INC., a
California corporation
By: By: /s/ CHRISTOPHER O. MORSE
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By: Name: Christopher O. Morse
------------------------- --------------------------------
Its: Vice President
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By: By: /s/ DAVID S. MORSE
------------------------- ----------------------------------
By: Name: David S. Morse
------------------------- --------------------------------
Its: Chairman/CEO
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-2-
<PAGE> 57
ACKNOWLEDGEMENT OF LANDLORD
COMMONWEALTH OF VIRGINIA )
) ss.
COUNTY OF ARLINGTON )
On this 17th day of March, 1999, before me personally appeared Judith
Berson, to me known to be the person who executed the foregoing Addendum and
acknowledged before me that she was duly authorized and did execute same on
behalf of KATY MILLS LIMITED PARTNERSHIP, a Delaware limited partnership.
/s/ KAREN DENTON
---------------------------------------
Notary Public, Commonwealth of Virginia
My Commission expires: October 31, 2002
ACKNOWLEDGEMENT OF CORPORATE TENANT
STATE OF CALIFORNIA )
) ss.
CITY/COUNTY OF SANTA CLARA )
On March 16, 1999, before me Laurie Shermer, a Notary Public in and for
the state aforesaid, personally appeared Chris Morse and David Morse, as Vice
President and Chairman and CEO of SILICON ENTERTAINMENT, INC., a California
corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument, the
person, or the entity upon behalf of which the person acted, executed the
instrument.
/s/ LAURIE H. SHERMER
-----------------------------------------
Notary Public, Santa Clara County,
My Commission expires: September 19, 2001
[Notarial Seal]
LAURIE H. SHERMER
Commission #1155999
Notary Public - California
Santa Clara County
My Comm. Expires Sep 19, 2001
<PAGE> 58
EXHIBIT A
LEASED PREMISES
[DRAWING]
<PAGE> 59
EXHIBIT A-1
DISPLAY AREA
[DRAWING]
<PAGE> 60
EXHIBIT A-2
RELOCATION ZONE
[DRAWING]
<PAGE> 61
EXHIBIT B
CALCULATION OF GROSS LEASABLE AREA
[DRAWING]
<PAGE> 62
SPECIALTY TENANT LEASE EXHIBIT
EXHIBIT C
LANDLORD'S WORK -- ROUGH SHELL
Preface
Work to be performed by Landlord in constructing the Leased Premises shall be
limited to those items expressly set forth below as Landlord's Work in this
Exhibit C ("Landlord's Work") and, except as otherwise provided in Exhibit C or
Exhibit D, such work shall be performed at Landlord's sole cost and expense.
All Landlord's Work shall be performed by Landlord in a first class and
workmanlike manner using only new and first class materials in accordance with
all applicable laws, rules, regulations, codes and ordinances. All other items
of work, including the purchase and installation of all materials and equipment
necessary for Tenant's use of the Leased Premises shall be provided by Tenant
at Tenant's sole expense and shall include but shall not be limited to, those
items set forth in Exhibit D, Tenant's Work.
The building in which the Leased premises are a part shall be designed by the
architect and engineer retained by the Landlord to design and oversee
construction of the Retail Development (herein sometimes referred to as "The
Project"). Construction shall meet the requirements for a fully sprinklered
building in accordance with the fire protection and building code program of
the local jurisdictional authority as well as the Development Agreement and
Master Declaration, if applicable.
Landlord shall provide Tenant with a Tenant Handbook (Tenant Design Criteria)
hereinafter referred to as "Tenant Handbook".
Except as otherwise provided below, Landlord shall initially construct the
following:
A. BUILDING SHELL WORK WITHIN AND AROUND THE LEASED PREMISES
1. Shell. Landlord shall construct the building shell (building
structure, insulated roof and exterior walls) in which the Leased
Premises are to be located. It is expressly agreed and understood that
the Leased Premises shall constitute a portion of a covered mall
building.
2. Exterior Appurtenances. Public entrance features, canopies and
screen walls at the exterior of the building structure shall be
provided by Landlord in locations and of a design and in materials
deemed appropriate by Landlord.
3. Outside Walls. If Leased Premises abuts an exterior wall, such wall
shall be unfinished on the interior.
4. Demising Partitions. Landlord shall install metal wall studs, 16" on
center, between all leased premises. Where rated walls are required
between Leased Premises and service/exit corridors Landlord shall
install 5/8" fire code gypsum board from the floor to the roof deck on
both Landlord and Tenant sides, along demising partitions separating
Tenant from service/exit corridors.
5. Demising Strip. Where Landlord desires, a vertical demising strip may
be located at the storefront line between stores. The center line
and/or back side of said strip may or may not precisely coincide with
the lease line defining the Leased Premises.
6. Exterior Service/Exit Door. Where Leased Premises abuts an outside
wall, Landlord shall install one (1) 3'0" X 7'0" x 1-3/4" (prime
coated only on inside face) hollow
Exhibit C, Rough Shell
Page 1 5/1/98
<PAGE> 63
metal door and frame (with 1-1/2 pair butts and temporary lockset) as
required by code or Landlord's insurance carrier. The outside face of
door will be finished by Landlord to match adjacent construction and
may not be modified by Tenant. The location of such door (if any) will
be indicated on the Lease Outline Drawing. Tenant's store name and
space number will be applied adjacent to the door by Landlord per
Landlord's Architect's specifications in accordance with Exhibit D.
7. Interior Service/Exit Door. Where the Leased Premises abuts an
interior exit/service corridor, Landlord shall install one (1) 3'0" x
7'0" x 1-3/4" hollow metal door and frame (with 1-1/2 pair butts and
temporary lockset), as required by code or Landlord's insurance
carrier. The hollow metal door and frame will be finish painted on the
corridor side with a color selected by Landlord. Tenant's store name
and space number will be applied adjacent to the door by Landlord, per
Landlord's Architect's specifications in accordance with Exhibit D.
8. Floor Slab. Landlord shall furnish a 4" thick slab on-grade with
smooth trowelled concrete surface. The floor elevation may be 3/4"
below finished floor elevation in the mall areas adjacent to the
Leased Premises. The slab will be designed to support a load of not
less than 125 pounds per square foot.
9. Storefronts and Sign Bands. The configuration of the storefront lease
line, as established by Landlord, shall be the line beyond which no
element of the storefront may extend and may not necessarily follow
the line of construction. The storefront furnished by Tenant shall
include one entry complete with security closure.
The width of the security closure will be as follows:
Storefront width up to 25' - 8' wide
Storefront width up to 26' - 35' - 10' wide
Storefront width 36' and up - 12' wide
B. FINISH WORK OUTSIDE THE LEASED PREMISES
1. Exterior Areas. Landlord shall provide parking areas, access roads,
delivery areas, drainage systems, walks, ramps, lighting, landscaping
and planting, striping, signage, and other facilities and improvements
as determined by Landlord in the exterior common area.
2. Interior Areas. Landlord shall provide enclosed air conditioned and
lighted malls, courts and entry-ways, lighted delivery areas, service
and exit corridors, ramps, public restrooms, meter and valve rooms and
all other areas, facilities, and buildings used in the maintenance and
operation of The Project as determined by Landlord.
C. BUILDING UTILITY SYSTEMS SERVING THE LEASED PREMISES
1. HVAC System. Landlord will provide either 1) a central condenser water
distribution system to provide cooling water for air conditioning
unit(s) provided by Tenant in the Leased Premises in accordance with
the Tenant Handbook referenced in Exhibit D. Landlord's portion of the
condenser water system shall terminate at valved and capped outlets
within the Leased Premises as indicated on the Lease Outline Drawing
or 2) a roof-top package unit system, providing at least 35 tons of
air conditioning. In this case Landlord to install roof opening and
curb at Tenant's expense for roof-top air conditioning equipment to be
furnished and installed by Tenant in accordance with Tenant Handbook
from Landlord's HVAC inventory.
2. Electrical System. Landlord shall bring primary electrical service to
the Retail Development. An empty secondary electrical distribution
conduit only shall be extended by Landlord from the electric room to a
point within the Leased Premises
Exhibit C, Rough Shell 5/1/98
Page 2
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as indicated on the Lease Outline Drawing. Electrical service
furnished by Landlord shall consist of 277/480 volt 3 phase four wire
service 400 amp service. Tenant to complete electrical system in
accordance with Exhibit D and the Tenant Handbook.
3. Plumbing System. If required by code, Landlord shall provide 3/4"
valved and capped domestic cold water line, a 1" condensate drain
line, if applicable, and a 4" sanitary sewer line at the rear of the
Leased Premises, as indicated on the Lease Outline Drawing. Tenant
shall connect to Landlord's plumbing system and extend service within
the Leased Premises according to Tenant's approved plans and in
accordance with requirements of Exhibit D and the Tenant Handbook.
4. Sprinkler System. Landlord shall install a wet sprinkler fire
protection system in the common areas and within the Leased Premises
including, but not limited to, risers, bulk mains, cross mains, branch
lines and upturned sprinkler heads at the bar joists. Within the
Leased Premises the sprinkler system provided by Landlord shall have
one (1) head per 100 square feet. The quantity of heads provided by
Landlord will be the minimum required by code or other governing
agencies. The mains and cross mains will be designed to accept
additional heads up to a maximum coverage of one (1) head per 80
square feet of Leased Premises. Additional or relocated heads shall be
installed or relocated by Landlord's designated sprinkler contractor
as required by Tenant's layout and as described in Exhibit D and the
Tenant Handbook. Tenant shall pay Landlord for the cost thereof in
accordance with Exhibit D.
5. Telephone System. Landlord shall extend empty raceway or J hooks from
a telephone junction board to a point within or adjacent to the Leased
Premises as indicated on the Lease Outline Drawing.
6. Mechanical Smoke Venting. Landlord's building has been designed to
provide smoke venting via mechanical fans, open ceilings and no
separation above 12'-0" between Tenant premises. Any Tenant required
by Code or the authority having jurisdiction to provide separate smoke
venting, or whose tenant space design interferes with normal
functioning of Landlord's smoke venting system, must install a
complete smoke venting system to meet code in accordance with Exhibit
D and the Tenant Handbook.
D. GENERAL PROVISIONS
1. Minor changes in any plans or specifications covering Landlord's Work
which may be necessary during design and construction of The Project
or affecting the Leased Premises shall not in any way invalidate the
terms of the Lease or this Exhibit C nor shall it require the Landlord
to provide any work not described herein. Notwithstanding the
foregoing, any changes which would materially impact Tenant's Store
Design and Working Drawings must be made at least sixty (60) days
prior to the Delivery of Possession date.
2. Landlord shall have the right to specify or change the location,
either before or after construction, of all utility lines, condenser
water lines, condensate drain lines, drains, sprinkler mains and
valves, and such other facilities within the Leased Premises as are
necessary by engineering design and/or Code requirements. These items
as described above shall be located so as not to materially interfere
with Tenant's use of the Leased Premises. Landlord shall have the
right to relocate and specify the location of mechanical and other
equipment on the roof over the Leased Premises. To the extent that
such utility lines, condenser water lines, condensate drain lines,
drains, sprinkler mains and valves and other facilities within the
Leased Premises are relocated, Landlord shall be responsible for
paying for any changes in either Tenant's plans or connecting Tenant
installed improvements to such relocated facilities.
Exhibit C, Rough Shell
Page 3 5/1/98
<PAGE> 65
4. Landlord shall have the right to perform, at Tenant's expense, any of
Tenant's Work which is not being timely or properly performed by
Tenant which Landlord determines in its sole discretion be performed:
(a) immediately and/or on an emergency basis for the best interest of
The Project, (b) to the extent required for Landlord's compliance
with all applicable building codes, or (c) to the extent necessary to
obtain any Certificate of Occupancy required by the Landlord or any
other tenant in The Project. Except in the event of an emergency,
Landlord shall give Tenant forty-eight hours notice of its intention
to undertake such work and Landlord shall refrain from undertaking
such work if Tenant commences to cure during such 48-hour period.
Exhibit C, Rough Shell
Page 4 5/1/98
<PAGE> 66
SPECIALTY TENANT LEASE EXHIBIT
EXHIBIT D
TENANT'S WORK -- ROUGH SHELL
PREFACE
This Exhibit "D" is intended to describe the obligation of the Tenant in the
design and construction of the Leased Premises. Landlord's Work will be limited
to the work described in Exhibit C. Any part of Tenant's Work which is
accomplished by Landlord for Tenant pursuant to the terms of this Exhibit D
will be accomplished by Landlord at Tenant's expense. The work of Tenant
described in Exhibit D is intended to complete the Leased premises in
accordance with Tenant's drawings as approved in writing by Landlord to a
finished condition ready for the conduct of business therein. All finished
installations will be deemed incomplete until approved by Landlord. Tenant's
Work shall conform to the procedures, schedules and reimbursement requirements
set forth in Sections 2 and 3 of this Exhibit. Exhibit D shall govern over any
inconsistencies with Exhibit C.
Landlord and Tenant have a common interest in opening the Leased Premises on
the Grand Opening Date. To this end, Landlord will coordinate its work with
Tenant's work insofar as the schedule for such Grand Opening Date and prudent
construction practice allows and will assign one or more tenant coordinators to
function as liaison between tenants and Landlords. Further to this end, Tenant
and Tenant's contractors agree to abide by Landlord's Construction Rules and
Regulations which may be issued from time to time. In order to ensure that the
Tenant's store interior and signage design are orderly and aesthetically
coordinated with Landlord's building, and to ensure that Landlord's storefront
and signage requirements are understood by Tenant, its designers, engineers,
contractors, and other representatives, Landlord has drafted and Tenant shall
follow the architectural and signage criteria established in the Tenant
Handbook (Tenant Design Criteria) hereinafter referred to as "Tenant Handbook".
In order to ensure that the Tenant's HVAC, plumbing and electrical systems are
compatible and coordinated with the Landlord's building, and to ensure that the
Landlord's HVAC, plumbing and electrical requirements are understood by Tenant,
its designers, engineers, contractors, and other representatives, Landlord has
drafted and Tenant shall follow the mechanical and electrical criteria
established in the Tenant Handbook.
All Tenant construction shall be in accordance with the requirements of all
applicable codes, ordinances, rules and regulations of all authorities having
jurisdiction over the work including all requirements of the Landlord's
insurance carrier.
Construction shall conform to the requirements for a fully sprinklered building
in accordance with the fire protection and building code program of the local
jurisdictional authority as well as the Development Agreement and the Master
Declaration if applicable. Tenant shall secure all necessary permits including,
but not limited to, occupancy and health department permits from the
jurisdictional authorities in sufficient time to allow Tenant to open the
Leased Premises on the Grand Opening Date. Tenant shall furnish to Landlord
upon receipt, copies of all building permit applications, statements,
amendments and the like, and all permits, inspection reports, certificates, and
other documents as required by authorities having jurisdiction of The Project.
Tenant, at its sole cost and expense, shall perform all work other than work to
be performed by Landlord as set forth in Exhibit C, required to complete the
Lease Premises to a finished condition ready for the conduct of business
therein.
All of Tenant's work within the Leased Premises performed pursuant to this
Section 1 shall, for the purpose of this Lease to which this Exhibit is
attached, be deemed to be improvements made to the Leased Premises by Tenant at
Tenant's expense.
Exhibit D, Rough Shell
Page 1 5/1/98
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SECTION 1 - TENANT CONSTRUCTION WORK WITHIN THE PREMISES
A. GENERAL CRITERIA
The criteria and outline specifications set forth herein represent minimum
standards for the design, construction, and finish of the Leased Premises
by Tenant.
1. Jurisdictions and Codes. The Project is being developed in and under
the jurisdictions of the State, County and City in which The Project
is located. All design and construction work shall comply with all
applicable statutes, ordinances, regulations, laws and codes and the
requirements pertaining to service and utilities furnished by utility
companies, all applicable state, county, and local statutes and
ordinances, and OSHA regulations.
2. Permits and Approval. Prior to the commencement of construction, all
building and other permits shall be obtained and posted in a prominent
place within the Leased Premises. Landlord's written approval shall be
obtained by Tenant prior to the undertaking of any construction work
which deviates materially from Tenant's approved Store Working
Drawings and Specifications, or which modifies whatsoever Landlord's
building shell or utilities, or any work not explicitly shown on said
Store Working Drawings and Specifications. Landlord's approval of the
foregoing shall not constitute the assumption of any responsibility by
Landlord for the accuracy or sufficiency thereof, and Tenant shall be
solely responsible. To the extent and material changes, changes which
modify the building shell or utility or new work are required,
Landlord shall not unreasonably withhold its approval of the same.
3. Floor Loads. The slab on-grade has been designed to carry a total
load (dead and live) of 125 pounds per square foot. Any loading
imposed by any of Tenant's Work, either on a temporary or permanent
basis, shall not exceed 125 lbs./SF (""Allowable Load").
4. Standard Project Details. Standard Project Details, as issued by
Landlord's Architect from time to time and as they pertain to Tenant's
Work, shall govern with respect to Tenant's Work. Such details shall
be incorporated into the Tenant's Store Working Drawings and
Specifications for the Leased Premises.
5. Materials. Only new, first-class materials shall be used in the
construction of the Leased Premises. Used, first-class materials for
interior architectural facades and fixtures may be used provided such
materials are noted on the Tenant's plans and approved by Landlord
through field inspection.
6. Field Conditions. From time to time, the Tenant is obligated to
verify conditions pertaining to the Leased Premises prior to and after
commencement of construction of its Leased Premises. Tenant shall
coordinate its work with the work of Landlord, other tenants, and with
existing conditions above, below and adjacent to the Leased Premises.
Tenant shall make changes as required to accommodate such work or
conditions.
7. Tenant Handbook. Landlord shall provide Tenant with a Tenant Handbook
("Tenant Handbook"), and Tenant shall comply with all design criteria,
procedures for drawings, specifications, and construction, and other
rules, regulations and provisions therein. To the extent, if at all,
that the Tenant Handbook may conflict with the provisions of the
Exhibit D, the provisions of the Tenant Handbook shall govern.
Exhibit D, Rough Shell
Page 2 5/1/98
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B. ARCHITECTURAL FINISHES
1. Floors. Tenant finish floor covering materials must be selected and
adapted in thickness to correspond in elevation exactly with the level
of the finished mall floor, which may be approximately 3/4" above the
concrete floor of the Leased Premises at the Lease Line. Quality floor
materials, such as carpeting, glazed or unglazed tile, wood parquet,
or marble shall be used in the sales area of the Leased Premises. All
flooring finish materials are subject to Landlord's approval.
2. Storefront. Tenant's storefront shall be designed and constructed by
Landlord as provided in Exhibit C and as described in the Tenant
Handbook.
3. Interior Partitions. All interior partitions by Tenant within the
Leased Premises shall be metal stud construction and shall have 5/8"
gypsum board finish on all sides with taped and spackled joints. Any
combustible materials applied to partitions shall meet all flamespread
and smoke generation requirements of jurisdictional authorities and
receive a U.L. labeled fire retardant coating if required by Code.
Walls dividing the Leased Premises from service and exit corridors, or
other rated enclosures, shall receive, on Tenant's side, sufficient
layers of drywall to complete the necessary rating. Landlord shall
install service and exit corridor drywall at Tenant's expense. Any
Tenant penetrations of rated partitions shall be specifically approved
in writing by Landlord and governing authorities as a portion of the
permitting process.
4. Demising Partitions. Demising partitions are not load bearing and
Tenant may not hang fixtures from them. Should Tenant require
structure and/or backing to accommodate the loading of Tenant's wall
hung fixtures, said request shall be in writing to landlord for
approval. Additional structure and backing shall be furnished and
installed by Tenant at Tenant's Expense. Tenant shall install drywall,
taped and spackled on demising partitions between tenants. No drywall
shall be placed on demising partitions above 12'-0" without Landlord's
specific approval. Above 12'-0" the Tenant may, subject to Landlord's
prior written approval, continue with wire mesh for security purposes
if so indicated on Tenant's construction drawings. The Tenant, upon
Landlord's approval, may also install drywall to a higher level if
openings of sufficient size are provided to assure that the smoke
venting system provided by the Landlord functions as designed - see
Tenant Handbook for specific requirements.
5. Exterior Walls. Tenant shall install all finishes on the inside face
of exterior walls within Leased Premises.
6. Service and Exit Corridor Partitions. Any Tenant penetrations of
rated partitions, and relocations and/or additions to Landlord
furnished exit doors, shall be specifically approved in writing by
Landlord and governing authorities as a portion of the permitting
process. Any framing, cutting, patching of the corridor wall surfaces
including the building of vestibules to provide for the nonimpingement
of the door into the corridor traffic way, and other work related
construction shall be coordinated and consistent with Landlord's work,
including but not limited to the provision of 4'-0" high 1/4" masonite
board and metal cornerguards. Walls dividing the Leased Premises from
service and exit corridors, or other rated enclosures, shall receive,
on Tenant's side, sufficient layers of drywall to complete the
necessary rating. All materials used in corridor construction shall be
fire rated. Any Tenant penetrations of rated partitions shall be
specifically approved in writing by Landlord and governing authorities
as a portion of the permitting process.
7. Interior Service/Exit Corridor Doors. If Tenant desires additional
service access to Leased Premises other than what is provided by
Landlord in Exhibit C then Tenant
Exhibit D, Rough Shell
Page 3 5/1/98
<PAGE> 69
shall provide and install a 3'-0" X 7'-0" X 1-3/4" 18 gauge interior hollow
metal door, labeled as required, with a hollow metal 16 gauge frame, and
all hardware, in accordance with governing Codes. Any framing, cutting, and
patching of the corridor wall surfaces including the building of vestibules
to provide for the non-impingement of the door into the corridor traffic
way, and other work related thereto shall be the responsibility of the
Tenant. Hollow metal door and frame are to be finish painted on the
corridor side with a color selected by Landlord. Tenant's store name will
be applied adjacent to the door by Landlord, at Tenant's expense, per
Landlord's Architect's specifications.
8. Door Relocation. The relocation of any exterior Tenant door shall be
performed by Landlord at Tenant's sole expense and must be coordinated with
the structure of Landlord's building.
9. Door Hardware. Tenant shall furnish and install all door locks and exit
devices on all interior service doors, exterior doors, exit corridor doors,
and storefront, using hardware recommended by Landlord in the Tenant
Handbook.
10. Ceiling. Exposed and open grid systems are encouraged. All work related to
ceiling and ceiling treatments, if any, shall be the responsibility of
Tenant. All ceilings and ceiling treatments shall be of non-combustible
material approved by Landlord and shall maintain the degree of openness
required to preserve the operation of the smoke venting system and
sprinkler system in The Project as established by jurisdictional authority
and/or as described in the Tenant Handbook. Tenant's ceiling and ceiling
treatment shall be limited to a ceiling height not less than the code
required minimum nor higher than the maximum heights indicated in the
Tenant Handbook. The structure of Landlord's Building has been designed to
accept a super-imposed loading of three (3) pounds per square foot for the
installation of Tenant's suspended ceiling and equipment. Access (such as
access panels) and other openings shall be provided by Tenant where
Landlord deems necessary.
Tenants providing ceilings with less than the required degree of openness
shall provide smoke venting at Tenant's sole expense, both as required by
jurisdictional authorities and as described in the Tenant Handbook. If
Tenant's interior partitions and ceiling configuration cause the
requirement of additional sprinkler heads, such additional heads shall be
installed by Landlord's designed contractor at Tenant's expense both as
required by jurisdictional authority and Landlord's insurance carrier.
11. Interior Finishes. All finished interior surfaces must be materials
approved by Landlord for appearance. All Tenant fixtures, furniture,
carpeting (including underlayment), upholstery materials, drapery and other
furnishing must comply with flammability of materials and smoke generation
requirements for furniture and furnishings of local jurisdictional
authorities. All wood shall be fire retardant in accordance with code
requirements. All wood in contact with the floor shall be termite
retardant.
12. Finish Hardware. Commercial grade finish hardware, labeled where required,
shall be used throughout. All doors shall have at least one and one-half
(1-1/2) pair butts, wall or floor stops, kick plates, lock sets and
push-pull plates as required. All exit doors shall have hardware as
required by Code.
13. Toilet Room. Tenant shall construct restroom facilities, fixtures, toilet
partitions, and building specialty items such as toilet room mirrors,
dispensers, paper holders and amenities to fully meet the ADA Guidelines
and local codes.
Exhibit D, Rough Shell 5/1/98
Page 4
<PAGE> 70
14. Mezzanines. Mezzanines will not be permitted (other than the
approximately 10' x 4' elevated stand which is part of Tenant's
prototype store design which must be supported from the floor).
15. Layout and Painting of Exposed Mechanical and Electrical Systems. All
Tenant installed ductwork, conduits, pipes and any other mechanical or
electrical equipment exposed to public view from outside the Leased
Premises, shall be laid out and installed in a neat and orderly
configuration. Tenant shall paint the above Tenant improvements with
either a black or a mutually agreed to color and finish if Tenant's
improvements can be seen from Mainstreet (i.e. those portions of the
common area made up of the pedestrian walkways outside of the Leased
Premises) above Tenant's storefront elevation or below the top of the
storefront but visible from Mainstreet.
C. STRUCTURAL
1. Modifications. Any alterations, additions, and/or reinforcements to
the structure of Landlord's building required to accommodate Tenant's
Work, must be designed by a registered structural engineer at Tenant's
expense. Tenant shall leave the structure of Landlord's building as
strong or stronger than original design and with finishes unimpaired.
Tenant's architect shall calculate or have calculated the structural
loads caused by Tenant's improvements and submit those calculations
for written approval by Landlord and Landlord's Architect prior to
Tenant's construction.
2. Loading. All loads individually hung from the structure in excess of
100 pounds shall be specifically approved by Landlord's structural
Engineer for location and method of support. All loads less than 100
pounds that are individually hung from the structure shall be hung in
accordance with the guidelines in the Tenant Handbook.
D. HEATING, VENTILATING AND AIR CONDITIONING
1. Connection to Condenser Water System (if applicable). Not applicable.
2. HVAC System. A complete air conditioning system to suit Tenant's
requirements shall be designed, furnished, installed and maintained by
Tenant in accordance with the requirements of the Tenant Handbook.
Tenant's portion of the HVAC system shall include an air conditioning
unit(s), ducts, insulation, fire dampers, outlets, grilles and
controls to maintain temperatures per Tenant Handbook. If roof-top
units are required, Landlord shall install roof-top curb at Tenant's
expense. All Tenant ductwork shall be internally insulated and Tenant
shall make all connections to Landlord installed systems in a manner
fully satisfactory to Landlord.
3. Toilet Exhaust System. Tenant installed toilet facilities within the
Leased Premises shall include a complete toilet exhaust system
according to Code and the requirements of the Tenant Handbook.
4. Outside Air Connection. Landlord, at Tenant's expense, will provide a
roof jack for Tenant's connection to provide outside air to Tenant's
HVAC system. Tenant shall provide outside air ventilation as required
by Code and the Tenant Handbook. No openings for fans, vents, louvers,
grilles, or other devices shall be installed in any demising
partition, exterior wall, or roof without Landlord's prior written
approval. All roof and/or wall penetrations required for Tenant's
plumbing, mechanical,
Exhibit D, Rough Shell 5/1/98
Page 5
<PAGE> 71
electrical work and any other Landlord approved Tenant work shall be
made by Landlord's designated contractor at Tenant's expense.
5. Smoke Venting. If the authority having jurisdiction requires
individual smoke venting from the Leased Premises, Tenant, at Tenant's
expense, shall provide the complete required smoke system, discharging
vertically through a roof vent at sufficient velocity to carry the
discharge away from any intakes on the roof. Roof vents will be
installed by Landlord's designated contractor at Tenant's expense and
in accordance With the Tenant Handbook.
6. Refrigeration. Tenants may not connect refrigeration equipment to
Landlord's condenser water system. Landlord's condenser water system
will not operate during unoccupied hours. Refer to the Tenant Handbook
for requirements regarding Tenant's refrigeration equipment.
7. Exhaust/Negative Pressure. All exhaust and make up air systems shall
be by Tenant in accordance with Exhibit D and the Tenant Handbook. As
determined by Landlord, all tenants producing odors within their
premises shall be required to install full height partitions and
provide supplemental exhaust to the exterior of the building to keep
the premises at a negative pressure relative to Mainstreet and all
adjacent areas.
E. ELECTRICAL
1. System. Tenant shall design, furnish, install and maintain a complete
electrical distribution system, including but not limited to
conductors to electrical room connected to load side of meter socket,
transformer, distribution panels, circuits, conductors, fixtures and
devices, within the Leased Premises in accordance with the
requirements of the Tenant Handbook. No appurtenances, including but
not limited to light fixtures, antennas, signs, etc., will be affixed
to the exterior walls or roof of Landlord's Building without
Landlord's express written permission.
2. Electrical Construction.
a. Material - All electrical materials shall meet National
Electrical Code Standard, unless a better grade is required by
local Code. All materials shall be new and shall bear evidence of
approval by Underwriter's Laboratory (UL). All conductors shall
be copper. Aluminum conductors will not be allowed.
b. Lighting Fixtures - Recessed fixtures installed in furred spaces
shall be connected by means of flexible conduit and approved
fixture wire, connected to a branch circuit outlet box which is
independent of the fixture.
c. Fluorescent Fixtures - All fixtures shall be provided and
installed by Tenant with switch legs and local switches rated 20
amps at 277 volts. All fluorescent fixtures shall have internal
protection devices. Fluorescent ballasts shall be high power
factor type with individual non-resetting overload protection.
Ballast harmonics may not exceed that Total Harmonic Current
Distortion allowable by the electric utility. All lamps subject
to public view shall have warm white deluxe or better color
rendition. Cool white may be used only in storage areas not
exposed to public view.
d. Electric Meter - Where Landlord does not provide electricity from
a master meter and redistribute to Tenants, Tenant shall make
direct arrangements with the local electric utility company to
furnish and install electric meter to measure Tenant's use of
electricity.
Exhibit D, Rough Shell
Page 6 5/1/98
<PAGE> 72
e. Panel Boards - Panel boards shall be furnished and installed
by Tenant. 120/208 volt panels and 277/480 volt panels shall
both be equipped with single or multiple pole bolted thermal
magnetic breakers.
f. Short Circuit Ratings - Tenant's electrical distribution
system shall be designed to withstand and safely interrupt
an available short circuit current indicated in the Tenant
Handbook.
g. Transformer - All necessary transformers shall be furnished
and installed by Tenant. All ceiling hung transformers over
100 pounds shall be approved by Landlord's Structural
Engineer for location and method of support. All ceiling
hung transformers less than 100 pounds shall be hung in
accordance with the requirements in the Tenant Handbook.
h. Nameplates - The following equipment shall be identified
with engraved Bakelite nameplates: distribution panels,
motor starters, lighting panels and push-button stations.
F. PLUMBING
1. System. Tenant shall connect to Landlord's plumbing system as
described in Exhibit C and the Tenant Handbook. Tenant shall provide a
complete plumbing system within the Leased Premises, including but not
limited to, fixtures and toilet accessories as required by Code.
Tenant shall provide accessible clean outs in toilet areas. Plumbing
work must be installed according to all appropriate Codes and
requirements of the Tenant Handbook. Landlord's approval of Tenant's
plans is not a statement that the plans are in compliance with Code or
other local requirements. Tenant shall be required to provide vent
connections and a toilet room exhaust connection, if necessary,
through the roof as required by Code and the Tenant Handbook. All such
penetrations shall be by Landlord's designated contractor at Tenant's
sole expense.
2. Water Heaters. Electric water heaters shall be automatic and a maximum
capacity of 2 k.w. All units shall be UL approved and conform to the
requirements of the local Energy Code. Water heaters must have
temperature/pressure relief valves with discharge piping according to
Code.
3. Water Meters. All restaurants, food court tenants, salons, pet stores
and any other high volume users of water (as determined by Landlord)
shall furnish and install water meters at Tenant's expense in
accordance with the Tenant Handbook.
4. Condensate Drains. Tenant shall extend and connect condensate drain
line(s) from Tenant's air conditioning unit(s) in accordance with the
Tenant Handbook.
5. Connection. If Tenant's restroom location, on Tenant's Store Working
Drawings does not coincide with Landlord's utility location, Tenant,
at Tenant's expense, shall move utility to coincide with Tenant's
Store Working Drawings with Landlord's prior approval. All cutting and
placing of concrete is by Tenant.
G. FIRE PROTECTION SYSTEM
All revisions to the fire protection system required by Tenant's layout
shall be performed by Landlord's designated sprinkler contractor at
Tenant's sole expense. Landlord's sprinkler contractor shall design system
revisions in accordance with Tenant's Store Working Drawings. Such designs
may involve additional heads, relocated heads, heads in refrigeration
boxes, toilet rooms, kitchen exhaust ducts, and/or at Tenant's request,
heads
Exhibit D, Rough Shell 5/1/98
Page 7
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located to conform with Tenant's ceiling pattern and layout. All design and
construction shall be governed by Code and the requirements of Landlord's
insurance carrier.
Tenants are required by local code to provide fire extinguishers, at least
one to be installed within 25 feet of the Tenant's entry off Mainstreet.
H. TELEPHONE
Tenant shall arrange directly with the local Telephone Company for
telephone service. Tenant shall furnish, install and maintain telephone
wiring and equipment within the Leased Premises to suit Tenant's
requirements at Tenant's expense.
I. SIGNAGE
Guidelines. All signs shall be designed, constructed and located in
accordance with Landlord's sign Criteria, Exhibit E, the Tenant Handbook,
and as approved by Landlord.
J. FIXTURES AND FURNISHINGS
Tenant shall furnish and install in the Leased Premises all fixtures,
furnishings. equipment, shelving, trade fixtures, leasehold improvements,
interior decorations, graphics, signs, mirrors, cornices, covers and
decorative light fixtures, portable fire extinguishers as required by Code
and the Tenant Handbook, and other special effects, all as approved by
Landlord.
All Tenant improvements, other than mechanical equipment, ceilings, and
lighting fixtures, shall be floor-mounted unless written approval is
obtained from Landlord.
K. MISCELLANEOUS REQUIREMENTS
1. Tenant's Contractor. Work undertaken by Tenant at Tenant's expense (a)
shall not be awarded to Landlord's contractor without Landlord's
written consent, except that an approved list of contractors is
attached hereto as Exhibit D-1 and (b) may only be awarded to a
reputable and bondable contractor or contractors licensed to do
business in the State, County and City in which The Project is
located.
Tenant's contractor shall adhere to Landlord's policy of a drug and
alcohol free workplace.
2. Equipment Screening. Tenants requiring mechanical or electrical
equipment, antennas, and the like shall not have the same placed on
the roof or the exterior of the building without the prior express
written approval of Landlord. All such equipment, if allowed, shall be
screened from the view of the public from any point within the project
site. All screening materials, construction details, and construction
techniques shall be approved by Landlord in writing, prior to any such
work by Tenant.
3. Clean-Up. Tenant shall cause its contractors to maintain the Leased
Premises in a clean and orderly condition during construction. All
unusable shipping containers, packaging, and other debris shall be
broken down and contained within the Leased Premises until removed by
Tenant's contractor to containers provided by Landlord outside
Landlord's Building. Flammable waste must be confined to covered metal
Exhibit D, Rough Shell 5/1/98
Page 8
<PAGE> 74
containers until removed by Tenant. All usable construction material,
equipment, fixtures, merchandise, etc. must always be contained within
the Leased Premises. Malls, courts, arcades, public corridors,
service/exit corridors and the exterior of Landlord's Building shall
be kept clean at all times. If Tenant fails to clean up, Tenant hereby
authorizes Landlord to clean up for Tenant at Tenant's expense.
4. Full Payment. Tenant shall satisfy Landlord that adequate arrangements
have been made to ensure that all Tenant's contractors shall be paid
in full for work ordered by Tenant. Tenant is advised to familiarize
itself with the mechanic's lien laws in the State in which The Project
is located and shall hold the Landlord harmless for any liens filed
against the property of the Landlord for the work of the Tenant.
5. Character of Employees. Tenant will not employ any unfit person or
anyone not skilled in the work he is performing, or any workman that
is incompatible with the balance of the work force or who will cause,
or whose presence will cause, labor disputes or work stoppages. In the
event any employee(s) of Tenant or Tenant's contractor(s) causes a
labor dispute or work stoppage, Tenant expressly agrees to have such
employee(s) immediately removed from the Project upon Landlord's
request, and that Tenant's failure to do so shall constitute an event
of Default under the Tenant's Lease of which this Exhibit is a part.
SECTION 2: PROCEDURE AND SCHEDULES FOR THE COMPLETION OF TENANT'S PLANS AND
SPECIFICATIONS
Unless otherwise notified by Landlord, all prints, specifications, and other
material to be furnished by Tenant as herein required shall be sent to: Tenant
Coordinator (Address to be furnished when available).
Tenant shall engage an architect ("Tenant's Architect") registered in the State
and licensed to do business in the County and the City in which The Project is
located to prepare the Working Drawings and Specifications to be submitted for
Landlord's approval. The fees for Tenant's Architect shall be paid by the
Tenant.
A. LEASE OUTLINE DRAWINGS
Following execution of the Lease of which this Exhibit is a part, Landlord
shall furnish Tenant with two (2) prints of the Lease Outline Drawings
(LOD) giving technical and design information relative to the Leased
Premises along with other drawings that may be helpful to Tenant in the
design of its store.
B. STORE DESIGN DRAWINGS
1. Within forty-five (45) days of whichever of the following shall be the
later to occur: (a) receipt of Lease Outline Drawings from Landlord or
(b) the execution
Exhibit D, Rough Shell 5/1/98
Page 9
<PAGE> 75
of the Lease; the Tenant shall submit to Landlord one (1) set of sepia
reproducible prints and three (3) sets of blueline prints of Store
Design Drawings, showing the intended design, character, and finishes
of the Leased Premises. The Store Design Drawings shall comply with
the design criteria of The Project as described in this Exhibit D and
in the Tenant Handbook and shall set forth the requirements of Tenant
within the Leased Premises. Said Drawings shall include, but not be
limited to the following:
a. Architectural design of the space, including an elevation of
Landlord's storefront showing Tenant's signage, floor plans,
elevations, sections, and renderings indicating material and
color selections and finishes, and layout including location of
fixtures both permanent and movable. Provide the weights of all
items to be suspended above from the structure in excess of 100
pounds each.
b. Mechanical System: Basic equipment to be used and its location,
duct distribution system, diffuser locations, and any louvers or
vents to be provided for Tenant by Landlord at Tenant's expense.
Provide projected mechanical loads on forms provided by Landlord
in the Tenant Handbook.
c. Electrical System: Reflected ceiling plans indicating type of
lighting fixtures, and floor plans showing outlets and other
electrical equipment contemplated with location of panel and
switchboard. Provide projected electrical loads on forms provided
by Landlord in the Tenant Handbook.
d. Plumbing System: Floor plans showing the location, layout, and
type of fixtures to be furnished, including riser diagrams.
e. Fire Protection System: Location of any specialty heads Tenant's
architect may require.
f. Tenant shall identify in writing all intended exceptions to the
design criteria contained in the Tenant Handbook and/or this
Exhibit D.
2. After receipt of Store Design drawings, Landlord shall, within seven
(7) business days, return to Tenant One (1) set of Store Design
Drawings with modifications and/or approval. If, upon receipt of
approved Store Design Drawings bearing Landlord's comments, Tenant
wishes to take exception thereto, Tenant may do so in writing within
seven (7) days from date of receipt of said drawings, by certified or
registered mail addressed to Landlord, at the above address, and the
notice address in the Lease. Unless such action is taken, it will be
deemed that all comments made by Landlord on Store Design Drawings are
acceptable to and adopted by Tenant.
3. If Store Design Drawings are returned to Tenant with comments, but not
bearing approval of Landlord, said Store Design Drawings shall
immediately be revised by Tenant and resubmitted to Landlord for
approval within seven (7) days of their receipt by Tenant.
C. STORE WORKING DRAWINGS AND SPECIFICATIONS
1. Store Working Drawings and Specifications shall be prepared in strict
compliance with the design criteria and requirements as set forth in
this Exhibit D and the Tenant Handbook and shall adhere to the Store
Design Drawings as approved by Landlord. Store Working Drawings to
minimum scales as called for below, and Specifications shall include,
but not be limited to, the following:
Exhibit D, Rough Shell 5/1/98
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<PAGE> 76
a. Key plan showing location of the Leased Premises relative to the
entire mall.
b. Floor plan at a minimum scale of 1/4" = 1'0".
c. Overall sections at 1/4" = 1'0".
d. Reflected ceiling plan at a minimum scale of 114" = l'0".
e. Plans, elevations, and section of storefront (if to be
constructed by Tenant) at 1/2" = 1'0", with finish materials
board including manufacturers, model numbers, color numbers, and
all other identifying information. Details of storefront at
1-1/2" = 1'0".
f. Interior elevations at 1/4" = 1'0".
g. Full sections of types of partitions used at 1/2" = 1'0".
h. Details of special conditions encountered at 1-1/2" = 1'0".
i. Door schedule with jamb details at 1-1/2" = 1'0"
j. Finish and color schedules with samples.
k. Plumbing, heating, ventilating, and cooling plans, at 1/4" =
1'0".
l. Mechanical details at 1-1/2" = 1'0".
m. Electrical plans at 1/4" = 1'0"
n. Electrical details, fixture schedules, and one-line electrical
riser diagram.
o. Mechanical and electrical load tabulations on forms provided by
Landlord in the Tenant Handbook.
p. Structural load tabulations.
q. Specifications covering all of Tenant's Work, including, but not
limited to, architectural, electrical, plumbing, heating,
ventilating, and air conditioning.
r. Layout of fixture location, both permanent and movable.
s. Any and all other plans and specifications as may be required by
the local fire and building authorities or other governing
bodies.
2. All Store Working Drawings and Specifications prepared by Tenant's
Architect shall be submitted by Tenant, in the form of one (1) set of
reproducible sepia prints, specifications and three (3) sets of
blueline prints to Landlord for approval within 21 days from receipt
by Tenant of Landlord's written approval of Store Design Drawings.
3. As soon as practicable after receipt of Store Working Drawings and
Specifications, Landlord shall return to Tenant one (1) set of prints
of Store Working Drawings and Specifications with its suggested
modifications and/or approval. If. upon receipt of approved Store
Working Drawings and Specifications bearing Landlord's comments,
Tenant wishes to take exception thereto, Tenant may do so in writing,
by certified or registered mail addressed to Landlord at the above
address and at the notice address in the Lease, within seven (7) days
from the date of receipt of Store Working Drawings and Specifications.
Unless such action is taken, it will be deemed that all comments made
by Landlord on Store Working Drawings and Specifications are
acceptable to and adopted by Tenant.
4. If Store Working Drawings and Specifications are returned to Tenant
with comments, but not bearing approval of Landlord, said Store
Working Drawings and Specifications shall immediately be revised by
Tenant and resubmitted to Landlord for approval within seven (7) days
of their receipt by Tenant.
5. "For Construction" Store Working Drawings and Specifications prepared
by Tenant's Architect shall be submitted by Tenant in the form of one
(1) set of mylar reproducible prints and specifications and three (3)
sets of blueline prints. "For Construction" shall be marked clearly on
each copy in red. Such drawings and specifications shall reflect
correction of all Landlord's comments to the Store Working Drawings
and Specifications returned by Landlord.
Exhibit D, Rough Shell 5/1/98
Page 11
<PAGE> 77
6. Store Working Drawings shall be submitted to the local Authorities
having jurisdiction for building permit after such drawings have been
approved by Landlord in the submittal process as outlined above.
7. Landlord and Landlord's architect shall, from time to time, be
entitled to monitor Tenant's Work and shall have the right to require
all work which does not comply with Tenant's approved Store Working
Drawings and Specifications to be corrected within thirty (30) days of
notification to Tenant.
SECTION 3: PROCEDURE AND SCHEDULES FOR THE CONSTRUCTION OF THE LEASED PREMISES
BY TENANT
A. COMMENCEMENT OF CONSTRUCTION
Tenant shall start construction of its Leased Premises not later than ten
(10) days from either of the following dates, whichever shall be the later
to occur: (1) The date of receipt by Tenant of written notice from Landlord
that Landlord has substantially completed the work to be performed by
Landlord under Exhibit C, and payment therefore as required by Exhibit C is
due (other than such work which cannot be performed by Landlord until
Tenant makes the Leased Premises ready for the performance thereof) and
that the Leased Premises are ready for Tenant's work; or (2) the date on
which Landlord approves the Tenant's Store Working Drawings and
Specifications for the Leased Premises. Tenant shall carry such
construction to completion with all due diligence.
B. GENERAL REQUIREMENTS
1. Tenant shall submit to Landlord, via certified or registered mail, at
least five (5) days prior to the commencement of construction the
following information:
a. Copy of building and all other permits needed to perform Tenant's
Work within the Leased Premises.
b. The names and addresses of the general, mechanical, plumbing and
electrical contractors Tenant intends to engage in the
construction of the Leased Premises.
c. The actual commencement of construction date and the estimated
date of completion of construction work, fixturing work, and date
of projected opening.
d.
e. Itemized statement of estimated construction costs including
architectural, engineering, and contracting fees.
f. Evidence of insurance with a company or companies authorized to
transact business in which The Project is located as required
below.
g.
2. Tenant shall secure, pay for, maintain, and cause its contractors and
subcontractors to secure, pay for, and maintain, during the
continuance of construction and fixturing work within the Lease
Premises, all of the insurance policies required in the amounts as set
forth herein, together with such insurance as may from time to time be
required
Exhibit D, Rough Shell 5/1/98
Page 12
<PAGE> 78
by City, County, State or Federal laws, Codes, regulations or
authorities. Tenant's Work may not commence, nor may Tenant permit its
contractors and subcontractors to commence any work, until all
required insurance has been obtained and certificates of such
insurance have been delivered to Landlord. Insurance policies shall
name the Landlord and assignees, Landlord's Architect and General
Contractor for the project as additional insureds. Certificates of
insurance coverage shall provide that no change or cancellation of
such insurance coverage shall be undertaken without thirty (30) days
written notice to Landlord. Landlord shall have the right to require
Tenant, and Tenant shall have the duty, to stop work in the Leased
Premises immediately if any of the coverage required herein lapses
during the course of the work, in which event Tenant's Work may not be
resumed until the required insurance is obtained and satisfactory
evidence of same is provided to the Landlord.
a. Tenant's General Contractor's Required Minimum Coverages and
Limits of Liability.
(1) Worker's Compensation Insurance, as required by State law,
and Employees Liability Insurance with a limit of not less
than [***] (or more if required by the law of the
State) and any insurance required by any Employee Benefit
Act or similar statute applicable where the work is to be
performed as will protect the contractor and subcontractors
from any and all liability under the aforementioned act(s)
or similar statute.
(2) Comprehensive General Liability Insurance (including
Contractor's Protective Liability) in an amount not less
than [***] per occurrence whether involving personal
injury liability (or death resulting therefrom) or property
damage liability or a combination thereof (combined single
limit coverage) with a minimum aggregate limit of
[***]. Such insurance shall include explosion, collapse
and underground (X,C and U) coverage and contractual
liability coverage for personal injury, death and damage to
the property of other arising from construction at the
Leased Premises, whether performed by Tenant's contractors,
subcontractors, or subsubcontractors, or by anyone directly
or indirectly employed by any of them.
(3) Comprehensive Automotive Liability Insurance, for the
ownership, maintenance, or operation of any automotive
equipment, whether owned, leased or otherwise held,
including employer's nonownership and hired car liability
endorsements, in an amount not less than [***] per
occurrence and [***] aggregate, combined single limit
bodily injury and property damage liability.
Such insurance policies shall insure the Tenant's general
contractor and all subcontractors against any and all claims
for bodily injury, including death resulting therefrom and
damage to the property of others arising from its operations
at the Leased Premises or in connection with construction of
the Leased Premises, whether performed by the Tenant's
general contractor, subcontractors, or subsubcontractors, or
by anyone directly or indirectly employed by any of them.
b. Tenant's Insurance Requirements
(1) Tenant shall obtain Owner's Protective Liability Insurance
as will insure Tenant against any and all liability for
damage from bodily
Exhibit D, Rough Shell 5/1/98
Page 13
*** Confidential treatment requested.
<PAGE> 79
injury, including death resulting therefrom, or property
damage or a combination thereof which may arise from work in
connection with the Leased Premises, and any other liability
for damages which Tenant's general contractor and/or
subcontractors are required to insure against under any
provisions herein. Landlord and Landlord's Architect and
General Contractor shall be named as additional insureds.
Said insurance shall be provided in minimum amounts of
$5,000,000 aggregate, combined single limit bodily injury
and property damage liability.
(2) Tenant's Work Insurance: Tenant shall insure 100% of the
value of the work in the Leased Premises as it relates to
the building within which the Leased Premises is located,
with an "all risk" perils property insurance policy or a
completed value "all risk" perils Builder's Risk policy,
naming the interest of the Landlord and the Tenant's general
contractor and all subcontractors, as their respective
interests may appear.
3. All contractors engaged by Tenant shall be licensed contractors in the
State in which The Project is located possessing good labor relations,
capable of performing quality workmanship and working in harmony with
Landlord's General Contractor and other contractors on the job. All
work shall be coordinated with the general project work.
4. Tenant's contractors and construction shall comply in all respects
with applicable federal, state and local statutes, ordinances,
regulations, laws and codes. All required building and other permits
in connection with the construction and completion of the Leased
Premises shall be obtained and paid for the Tenant.
5. Tenant shall complete all work within the Leased Premises as
expeditiously as possible, but in no event later than in time to open
for business on the Grand Opening Date. Should Tenant fail to complete
its work within this schedule, Landlord may, at Landlord's option,
install temporary storefront or barricade at the Leased Premises at
Tenant's expense. Temporary storefront and other work performed by
Landlord which was made necessary due to the Tenant's failure to
complete its work in time for the Grand Opening Date, shall be payable
to the Landlord.
6. Landlord shall have the right to perform, on behalf of and for the
account of Tenant any of Tenant's work which Landlord deems necessary
to be done on an emergency basis or which pertains to structural
components, the general utility systems for The Project, roof and
exterior wall penetrations, or the erection of temporary barricades
and temporary signs, during construction for the period following the
Opening of The Project for business. Landlord will provide such work
at Tenant's expense.
7. Tenant's Work shall be subject to the inspection and approval of
Landlord and Landlord's Architect as to compliance with Tenant's
approved plans and standards of merchantability, provided that
Landlord and Landlord's Architect shall use its commercially
reasonable efforts to insure that its work does not interfere with
Tenant's Work.
8. Tenant shall pay or reimburse Landlord for all costs incurred by
Landlord (including deposits) for all utility meters for the Leased
Premises.
9. Upon the completion of the Tenant's Work, all facilities shall be in
full use without defects.
Exhibit D, Rough Shell 5/1/98
Page 14
<PAGE> 80
10. All work performed by Tenant shall be performed so as to cause no
interference with other Tenants and the construction and operation of
The Project. Tenant will take all precautionary steps to protect its
facilities and the facilities of others affected by Tenant's Work and
properly police same. Construction equipment and materials are to be
located within the Leased Premises and truck traffic is to be routed
in and from the site, all as directed by Landlord and so as not burden
the construction and operation of The Project.
11. Upon and from the completion of Tenant's Work in the Leased Premises
and acceptance by Landlord's Architect, a minimum one-year warranty of
all work, materials, and equipment shall be provided to Landlord by
Tenant, to the extent the same are received by Tenant from its
contractors an or suppliers.
12. Landlord shall have the right to stop Tenant's Work whenever necessary
to obtain compliance with applicable building and safety codes or the
approved Store Working Drawings and Specifications.
13. Tenant and its contractors shall comply with the guidelines for Tenant
work procedures and temporary construction facilities set forth in the
Tenant Handbook, and Landlord's Construction Rules and Regulations
which may be issued from time to time.
14. Landlord shall have the right to order any Tenant or Tenant's
contractor who willfully violates any of the above requirements to
cease work, and to remove himself and his equipment and employees from
The Project.
C. TEMPORARY SERVICES AND FACILITIES DURING CONSTRUCTION
1. Utility costs or charges for any service to the Leased Premises shall
be the responsibility of Tenant from the date Tenant commences work or
is obligated to commence work, whichever is earlier.
2. If necessary, Tenant will provide temporary heat for the Leased
Premises during construction. No open burners are permitted and only
electricity may be used for temporary heat.
3. Temporary Electrical Services. If electrical service is not available
in the Leased Premises during construction, Landlord shall provide
electrical service in an area designated by the Landlord. Tenant shall
request, in writing, permission to connect temporary lines to the
power source for service to the Leased Premises. Tenant shall
reimburse Landlord for the Temporary Electric Services.
4. Temporary Trash Removal. During initial construction, fixturing and
stocking, Landlord shall provide trash removal service from the
service areas. It shall be Tenant's responsibility to break boxes down
and place trash daily in the containers provided. Trash accumulation
will not be permitted overnight in the Leased Premises, mall or
service/exit corridors. Tenant shall not allow trash to accumulate
within the Leased Premises nor shall Tenant place any trash in the
service/exit corridor or mall areas adjacent to the Leased Premises.
Tenant shall reimburse Landlord for the Temporary Trash Removal.
The period shall start with the date the Tenant starts construction in
its premises and ends with the date the Tenant opens for business.
In addition, Tenant shall pay any costs incurred by Landlord in
removing trash from areas in and around the Leased Premises.
Landlord's decision as to which Tenant is
Exhibit D, Rough Shell 5/1/98
Page 15
<PAGE> 81
responsible for trash left outside the Leased Premises will be
reasonable and equitable, and Landlord's decision will be final.
5. Plans Review/Tenant Coordination. Landlord or its architect and/or
engineer shall review Tenant's plans and specifications for compliance
with the provisions of this Exhibit D and the Tenant Handbook. In
addition, Landlord shall assign a Tenant Coordinator(s) to work with
Tenant and Tenant's Architect, Engineer and contractor for the design
and construction of the Leased Premises. Tenant shall reimburse
Landlord for such plan review and tenant coordination as part of the
Temporary Charges provided for in C.9.
6. Temporary-Storefront. If Tenant is not open for business in the Leased
Premises and Landlord's Retail Development is open, or if, in
Landlord's sole judgment, Landlord determines that a temporary
storefront is necessary so as not to disrupt the construction, opening
or operation of any portion of The Project, then Landlord shall
install, at Tenant's expense, for Tenant's use during construction a
full height temporary barricade on the storefront lease line. Tenant
shall reimburse Landlord for the temporary storefront. Upon completion
of Tenant's construction and fixturing in the Leased Premises, Tenant
shall remove, disassemble and dispose of such temporary storefront.
7. Coming Soon Sign. If during Tenant's initial construction, fixturing
and merchandise stocking, The Project is open (or shall open) for
business, Landlord will provide and install, following the earlier to
occur of (a) erection of the initial construction barricade, or (b)
completion of the storefront for the Leased Premises, a "coming soon"
sign on the front (barricade or storefront, as the case may be) of the
Leased Premises. Tenant shall reimburse Landlord for providing such
sign.
8. Suite Number and Tenant Trade Name. Landlord shall furnish and install
suite number and Tenant trade name sign adjacent to Tenant's exterior
and/or interior rear exit door(s) in accordance with Landlord's
standard. Landlord shall also install suite number on Mall storefront.
Tenant shall reimburse Landlord for this service.
9. The charges for Temporary Services and Facilities as described in this
subsection C shall be:
Landlord's Charge
[***] psf
10. The charges identified in C.9 above shall be due and payable within
thirty (30) days after billing by Landlord. Landlord may decline at
Landlord's sole judgment to proceed with work at Tenant's expense
until Landlord's receipt of payment thereof.
D. COST PLUS ADMINISTRATION FEE WORK BY LANDLORD IN PREMISES AT TENANT EXPENSE
The following work in Tenant's premises shall only be accomplished by
Landlord in Landlord's building. The Tenant shall contract with the
Landlord to furnish the following work items if required by Tenant's store
design at Landlord's actual cost plus [***] for administration, and the
cost of any such item of work shall be payable to Landlord in full within
thirty (30) days after receipt of invoice therefore.
1. Openings in rated demising partitions and exterior wall, provided such
opening/penetrations have been approved in advance by Landlord in
writing.
Exhibit D, Rough Shell 5/1/98
Page 16
*** Confidential treatment requested.
<PAGE> 82
2. Roof Openings. With Landlord's prior written permission, roof openings
for any purpose shall include supporting structures, curbs, roof
patching and flashing. Tenant shall be responsible for installation of
ducts, pipes, equipment and counter flashing. Landlord reserves the
right to refuse to permit the furnishing of any openings which exceed
the capability of the structural system or which in Landlord's opinion
would have an appearance detrimental to Landlord's Building.
3. Plumbing Service. With Landlord's written permission, additional
sanitary sewer or relocation of sanitary sewer.
4. Electric Service. With Landlord's written permission, additional
electric service or relocation of electrical service.
5. Storefront. With Landlord's prior written permission, changes to
Landlord furnished interior and exterior storefront including but not
limited to additional doors and relocation of doors.
6. Landlord's Labor (including overtime, demurrage and waiting time) and
equipment used in any work Landlord performs for Tenant.
7. Architectural and/or Engineering fees incurred Landlord as a result of
Tenant requesting any services in excess of the standard review
services described in Section
8. Building Department Expeditor Fees incurred by Landlord in expediting
Tenant Building Permit, Controlled Inspection and other requirements
for temporary and permanent Certificates of Occupancy on the building
and the Tenant Premises.
9. Building Permits, Microfilming and Documentation Fees paid by Landlord
on behalf of the Tenant in expediting the approval of Building Permits
and other approvals of Agencies having jurisdiction.
E. CERTIFICATE OF ACCEPTANCE
Upon the completion of Tenant's construction and fixturing work within its
Leased Premises Tenant shall so notify Landlord in writing. Landlord, upon
receipt of such notice from Tenant, shall issue a Certificate of Acceptance
of said premises provided, however, that the issuing of such a Certificate
shall be contingent upon all of the following:
1. The satisfactory completion by Tenant of the work to be performed by
Tenant under this Exhibit D, in accordance with good workmanship and the
approved Construction Documents and Specifications therefor and receipt of a
certificate of occupancy from the local jurisdiction.
2. Receipt by Landlord from Landlord's Architect of a premises
acceptance letter. This letter can be issued only upon Tenant's correction of
the deficiencies noted by Landlord or Landlord's Architect upon any inspection
of Leased Premises.
3. Tenant shall have furnished Landlord with waivers of liens and sworn
statements, or satisfactory substitutes for same, in such form as may be
required by Landlord, and releases of notices of commencement (if any) from all
contractors, subcontractors and other persons performing labor and/or supplying
materials in connection with such work showing that all of said persons have
been compensated in full.
4. Submission by Tenant to Landlord of a detailed breakdown of Tenant's
final and total construction costs together with receipted invoices showing
payment thereof.
Exhibit D, Rough Shell
Page 17 5/1/98
<PAGE> 83
5.
Exhibit D, Rough Shell 5/1/98
Page 18
<PAGE> 84
- --------------------------------------------------------------------------------
SPECIALTY TENANT LEASE EXHIBIT
- --------------------------------------------------------------------------------
EXHIBIT E
SIGN CRITERIA
1. Tenant is required to identify the Leased Premises by a sign on the
storefront. The general criteria for the design of Tenant signage ("sign
criteria") is set forth below. More specific sign criteria for The Project
as a whole and certain tenants in certain designated locations such as in
food courts and mall courts is set forth in the Tenant Handbook, (Tenant
Design Criteria) hereinafter referred to as "Tenant Handbook".
2. Costs incurred in design, construction and installation, as well as
maintenance shall be the responsibility of Tenant. The Tenant must obtain
permits to erect and connect the sign from local community officials before
the sign is installed.
3. It is intended that the signage be developed in an imaginative and varied
manner so as to enhance the architectural treatment of the facade in
general and be harmonious with the overall architecture and thematic
consideration of the mall in particular. Although current signage practices
of the Tenant shall be considered, they will not govern the signs to be
installed.
4. Approval of signs shall be solely the right of the Landlord, and Tenant
must submit all candidates for signage to the Landlord for approval in the
form of working drawings before manufacturing or further assembly begins.
Submission shall be to Landlord, in the form of shop drawings with all
pertinent details necessary for construction and installation included.
Submission shall be a minimum of ninety (90) days before proposed
installation date, and Tenant is expected to have sign manufactured and
ready for installation within forty-five (45) days of approval by Landlord
or Landlord's agent before installation, at project site. Landlord reserves
the right to reject signs not conforming to approved drawings regardless of
stage of completion or installation.
5. The Tenant's storefront sign shall occupy an area of the storefront facade
designated in the Tenant Handbook and/or the Lease Outline Drawing, and/or
by the Project Architect. The area shall total no more than eight (8)
square feet for up to a thirty foot (30') storefront; and twelve (12)
square feet for up to a forty foot (40') storefront; sixteen (16) square
feet for up to a fifty foot (50') storefront. The design of the storefront
is to be considered by Tenant in the development of signage. In general,
signs will be installed in the designated sign area above the entry door.
Variation of this criteria shall be subject to Landlord's prior written
approval, which shall be solely at the discretion of Landlord. No sign
shall be installed closer than three feet (3'-0") from the end of the
Tenant storefront on both sides.
6. Signage shall be limited to the name of the store. Additional elements will
be considered as long as they enlarge, expand, or otherwise clarify the
name of the store.
7. Signs which are comprised of unaltered sans serif typefaces are, in
general, unacceptable, as will be signs or type faces which are difficult
to read.
8. The use of corporate identifications or logos will be considered, but prior
use or identification with a particular sign or logo will not govern
Landlord's approval for Tenant use. Tenant agrees that Landlord's rejection
of particular logo or sign shall not constitute a violation of Lease by
Landlord. In the case of conflict between sign criteria and other
provisions of the Lease, Tenant agrees that the sign criteria and
Landlord's discretion shall prevail. Tenant shall not hold Landlord liable
for damage or injury as a result of the sign criteria or the implementation
of the sign criteria by agreement of both parties.
Exhibit E, Sign Criteria 5/1/98
Page 1
<PAGE> 85
9. A variety of fabrication materials shall be considered, however,
construction shall be guaranteed for a period of at least five (5)
years against peeling, cracking, crazing, blistering, or any other
degradation of surface or materials. Tenant shall obtain, from
manufacturer of the sign, a five (5) year warranty covering the
condition of finished surfaces, construction and operation of sign.
10. All electrical signs shall carry approval of Underwriters
Laboratories (U.L.) on all component parts and on the complete
display. Maximum brightness of lit signs shall be fifty foot (50')
Lamberts measured one foot (1') from the source of light. No
blinking, moving or flashing lights shall be allowed. Surface
lighting may be reduced in order to accentuate lit signage. There
will be no special advantage in terms of visibility of internally lit
over externally lit signs.
11. No exposed raceways, ballast boxes or electrical transformers will be
permitted except as required to be exposed by local building codes.
12. Landlord shall not be responsible for signs improperly installed or
manufactured, and those signs not meeting the code requirements
shall, at Tenant's expense, be removed and built to code
specifications before installation. Signs meeting the Landlord's sign
criteria, but not meeting local code requirements, shall be the
responsibility of Tenant and Tenant agrees not to hold Landlord
liable for costs due to conflict between these sign criteria and code,
should such conflict exist under present code or due to future
changes in code. Tenant must make required structural modifications
at Tenant's expense to Landlord's structure. Also, Landlord's
engineer to approve structural modifications.
13. Notwithstanding anything herein contained to the contrary, Tenant
shall have the right to replace any existing sign(s) of said Tenant
as long as such replacement meets the sign criteria listed within
this document, the Tenant Handbook, and is accompanied by Landlord's
prior written approval prior to installation.
14. No other signs of any type or purpose, permanent or temporary, shall
be permitted to be displayed upon the facade, windows or within the
dimension prescribed in Section 4.03 of the Lease, behind an
unobstructed window unless and until such sign has been submitted to
Landlord and has received Landlord's prior written approval. Landlord
shall be the sole judge of what constitutes an unobstructed window.
Removal of signage of any type installed without Landlord approval
shall be mandatory before said sign shall be considered by Landlord
for installation.
15. Landlord shall not be required to approve signage for any reason
other than conformance with the sign criteria in this Exhibit E and
Tenant Handbook. Scheduled opening dates and other time constraints
shall not be reason to approve signage which Landlord otherwise would
consider unsuitable for manufacture or installation. Tenant agrees not
to hold Landlord liable for any damage caused to Tenant due to
signage or lack of signage as a result of Landlord's insistence upon
conformance with the sign criteria or the Landlord's withholding of
approval of submitted signage.
16. In the event that Tenant is unable to supply satisfactory signage
design by the fixturing period of Tenant's store, Landlord shall have
the option of providing such design. In such a case, Tenant agrees to
pay prior to store opening all expenses involved in the design,
manufacture, and installation of said signage plus 15% cost of
administration, and Tenant agrees to waive rights to reject said
signage and agrees not to oppose installation of said signage.
17. Signage indicated on drawings and mechanicals submitted for reasons
other than signage evaluation (as described in this Exhibit E and the
Tenant Handbook) shall not constitute a signage submittal. No approval
of such drawings and mechanicals shall constitute approval of signage.
Exhibit E, Sign Criteria 5/1/98
Page 2
<PAGE> 86
18. Food Court Tenants shall be permitted to install one menu board within the
Leased Premises subject to Landlord's prior design review and written
approval. Refer to the Tenant Handbook for type, size and location allowed.
19. Procedure for Submittal and Approval of Sign Drawings:
a. Approval of store design drawings or working drawings and
specifications for Tenant's Leased Premises does not constitute
approval of any sign work. Approval of signs shall be solely the right
of Landlord, and Tenant must submit all candidates for signage to the
Landlord for approval in the form of sign designer's working drawings
and/or manufacturer's shop drawings before manufacturing or assembly
begins. Drawings by Tenant, its architect or anyone not qualified to
produce signage drawings are not acceptable. At the same time as
Tenant's initial submission of store working drawings and
specifications to Landlord, Tenant shall submit one (1) set of
reproducible prints and specifications and three (3) sets of blue
prints, along with samples of all material and colors for all its
proposed sign work. The drawings shall clearly show location of sign
on storefront elevation drawing, size and stroke dimensions, graphics,
color, construction, and attachment details. Full information
regarding electrical load requirements and brightness in footcandles
shall also be included. Landlord reserves the right to reject signs
not conforming to approved drawings regardless of state of completion
or installation.
b. As soon as practical after receipt of the sign drawings, Landlord
shall return to Tenant one (1) set of such sign drawings with the
suggested modifications and/or approval. If, upon receipt of approved
sign drawings bearing Landlord's comments, Tenant wishes to take
exception thereto, Tenant may do so in writing, by certified or
registered mail addressed to Landlord within seven (7) days from the
date of Tenant's receipt of such sign drawings. Unless such action is
taken, it will be deemed that all comments made by Landlord on the
sign drawings are acceptable to and approved by Tenant.
c. If sign drawings and specifications are returned to Tenant with
comments, but not bearing approval of Landlord; said drawings and
specifications shall be revised immediately by Tenant and resubmitted
to Landlord for approval within seven (7) days of their receipt by
Tenant.
Exhibit E, Sign Criteria 5/1/98
Page 3
<PAGE> 87
EXHIBIT A
(ADD LEASE INFORMATION)
<PAGE> 88
EXHIBIT F
COMMENCEMENT AND EXPIRATION DATE DECLARATION
LANDLORD:
---------------------------------------------
TENANT:
---------------------------------------------
LEASE DATE:
---------------------------------------------
STORE NUMBER:
---------------------------------------------
Landlord and Tenant acknowledge and agree that the Commencement Date of the
above referenced Lease is and the Expiration Date of the Lease is
-------- -----.
LANDLORD: TENANT:
By: By:
----------------------------- -----------------------------
Its: Its:
----------------------------- -----------------------------
Date: Date:
----------------------------- -----------------------------
<PAGE> 89
EXHIBIT G
WAIVER OF SALES TAX CONFIDENTIALITY
Date:
-------------------
I authorize the Comptroller of Public Accounts to release sales tax information
pertaining to the taxpayer indicated below to Katy Mills Limited Partnership,
c/o The Mills Corporation, 1300 Wilson Boulevard, Suite 400, Arlington, Virginia
22209. I understand that this waiver applies only at our retail store located in
Katy Mills in Katy, Texas.
Please print or type the following information as shown below on your Texas
Sales and Use Tax Permit:
- --------------------------------------------------------------------------------
Name of Taxpayer Listed on Texas Sales Tax Permit
- --------------------------------------------------------------------------------
Name Under Which Taxpayer is Doing Business (d/b/a or Outlet Name)
- --------------------------------------------------------------------------------
Taxpayer Mailing Address
- --------------------------------------------------------------------------------
Physical Location of Business Permitted for Sales Tax in Katy, Texas
- --------------------------------------------------------------------------------
Texas Taxpayer ID Number Tax Outlet Number
(As Shown on Texas Sales Tax Permit)
------------------------------------
Authorized Signature
------------------------------------
Print Name of Authorized Signature
------------------------------------
Position of Authorized Signature
------------------------------------
Phone Number of Authorized Signature
<PAGE> 90
EXHIBIT H
AGREEMENT OF SUBORDINATION.
NON-DISTURBANCE AND ATTORNMENT
THIS AGREEMENT is made this 5th day of April, 1999, by and among KATY MILLS
LIMITED PARTNERSHIP, a Delaware limited partnership having an office c/o The
Mills Corporation, 1300 Wilson Boulevard, Suite 400, Arlington, Virginia 22209
("Lessor"), SILICON ENTERTAINMENT, INC., a California corporation, having an
office at 210 Hacienda Avenue, Campbell, California 95008 ("Lessee"), and
BAYERISCHE HYPO-UND VEREINSBANK AG, acting by and through its New York branch,
having offices at 150 East 42nd Street, New York, New York 10017, its successors
and assigns or an affiliate ("Lender"), for itself and as agent for, and as
co-lender with one or more co-lenders.
W I T N E S S E T H:
WHEREAS, Lender is providing financing for the Katy Mills shopping center
in Katy, Texas as more fully described on Exhibit A attached hereto and made a
part hereof (the "Property");
WHEREAS, under a certain lease (the "Lease") Lessor did lease, let and
demise a portion of the Property (such portion of the Property is hereinafter
called the "Premises") to Lessee;
WHEREAS, Lender has or will become the owner of an indebtedness secured by,
among other things, a Deed of Trust dated as of March 31, 1999, made by Lessor,
as trustor for the benefit of Lender, as beneficiary (the "Deed of Trust"),
which Deed of Trust was recorded in the public records of the County of Ft.
Bend/Harris in the State of Texas on April 5, 1999/April 1, 1999 as Instrument
Number 1999626754/7635283, respectively, and an assignment of Lessor's interest
in the Lease for the benefit of Lender ("Assignment of Leases");
NOW, THEREFORE, in consideration of the covenants, terms, conditions and
agreements herein contained, and in consideration of other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged, the
parties hereto agree as follows:
1. The Lease and all rights and liens created thereby shall be subject and
subordinate in all respects to the Deed of Trust and the lien created
thereby, to any advancements made thereunder, and to any increases,
extensions, modifications or renewals thereof.
2. So long as Lessee is not in default under the Lease beyond any applicable
grace or cure period, Lender hereby covenants to Lessee that in the event
it obtains title to the Premises, either by foreclosure or by deed in lieu
of foreclosure, and thereafter obtains the right of possession of the
Premises, that the Lease will continue in full force and effect, and Lender
shall recognize the Lease and Lessee's rights thereunder.
3. Lessee agrees that from and after the date hereof in the event of any act
or omission by Lessor under the Lease which would give Lessee the right,
either immediately or after the lapse of a period of time, to terminate the
Lease, or to claim a partial or total eviction, Lessee will not exercise
any such right (a) until it has given written notice of such act or
omission to Lender by certified mail, return receipt requested, and (b)
until and unless Lender fails to remedy such act or omission within thirty
(30) days for any act or omission which can be cured by the payment of
money, or in the case of any other act or omission, as long as necessary to
remedy such act or omission, provided (i) Lender commences such remedy
within thirty (30) days, and (ii) Lender pursues completion of such remedy
with due diligence following such giving of notice and following the time
when Lender shall have become entitled under the Deed of Trust to remedy
the same. It is specifically agreed that Lessee shall not, as to Lender, be
entitled to require cure of any such default which is personal to Lessor,
and therefore not susceptible of cure by Lender, and that no such uncured
default shall entitle Lessee to exercise any rights under the Lease with
respect to Lender.
4. That in the event the interests of Lessor under the Lease shall be
transferred to Lender or any nominee, designee, assignee of Lender or any
purchaser at foreclosure sale (Lender or such other party referred to as a
"Lender Party") by reason of foreclosure, deed in lieu of foreclosure, or
similar transaction, Lessee hereby covenants and agrees to make, for the
benefit and reliance of Lender, full and complete attornment to the Lender
Party as substitute lessor upon the same terms, covenants and conditions as
provided in the Lease, except to the extent otherwise set forth herein.
5. The provisions of this Agreement shall be real covenants running with the
Property, and shall be binding upon and inure to the benefit of the
respective parties hereto and their respective heirs.
<PAGE> 91
executors, administrators, beneficiaries, successors and assigns, including
without limitation any Lender Party.
6. Notwithstanding anything contained herein to the contrary, or anything to
the contrary in the Lease, Lender and any Lender Party shall not be:
(a) Liable for any act of omission of Lessor, including without
limitation, any delay in opening the Project or the Premises for occupancy
and any failure to complete the construction of the Premises or the Project
or any improvements therein;
(b) Subject to any offsets, claims or defenses which Lessee might
have as to Lessor;
(c) Required or obligated to credit Lessee with any rent for any
period beyond the then current rental period which Lessee might have paid
Lessor;
(d) Bound by any amendments or modifications or voluntary termination
of the Lease made without Lender's prior written consent, other than
exercise of rights, options or elections contained in the Lease; or
(e) Bound to or liable for refund of any security deposit except to
the extent actually received by Lender or a Lender Party.
7. Lessee shall not, without the express written consent of Agent:
(a) Cancel, terminate or surrender the Lease, except as provided
therein or in any modification or amendment specified herein or hereafter
consented to by Lender;
(b) After the date hereof, enter into any agreement with Lessor or
its successors or assigns, which grants any concession with respect to the
Lease or which materially compromises, discounts or otherwise reduces the
rent called for thereunder; or
(c) After the date hereof, prepay more than one (1) month in advance.
8. Lessor and Lessee hereby jointly and severally agree for the benefit and
reliance of Lender, that neither this Agreement, nor any assignment of the
Lease for collateral purposes, nor anything to the contrary in the
aforesaid Lease or in any modifications or amendments thereto shall, prior
to Lender's acquisition of Lessor's interest in and possession of the
Property (and thereafter, only to the extent of the Property and not
personally), operate to give rise to or create any responsibility or
liability upon Lender for the control, care, management or repair of the
Property or for any waste committed on the Property by any party whatsoever
or for any dangerous or defective condition of the Property; or impose
responsibility for the carrying out by Lender of any of the covenants,
terms and conditions of the Lease or of any modification or amendment
whether or not hereafter consented to by Lender, or for any negligence in
the management, upkeep, repair or control of said Property resulting in
loss, injury or death to any lessee, licensee, invitee, guest, employee,
agent or stranger. Notwithstanding anything to the contrary in the Lease,
Lender, its successors and assigns (and any Lender Party, as appropriate),
shall be responsible for performance of only those covenants and
obligations of the Lease accruing after Lender's, its successors' and
assigns' (or Lender Party's, as appropriate), acquisition of Lessor's
interest in and possession of the Property.
9. Lessee covenants and agrees to make rental payments according to the terms
of such Assignment of Leases upon written demand by Lender in the event of
any default (as described therein). Lessor consents to payments being so
made.
10. Lessee agrees that this Agreement satisfies any condition or requirement in
the Lease relating to the granting of a non-disturbance agreement.
11. Any notices hereunder shall be effective upon mailing by certified mail,
return receipt requested, or delivery by overnight courier addressed to the
recipient at its address set forth in the preambles hereof or as to each
party, to such other address as the party may designate by a notice given
in accordance with the requirements contained herein.
12. This Agreement contains the entire agreement between the parties hereto.
This instrument may be executed in multiple counterparts, all of which
shall be deemed originals and with the same effect as if all parties hereto
had signed the same document. Signature and acknowledgement pages may be
detached from the counterparts and attached to a single copy of this
document to physically form one document.
<PAGE> 92
13. If any bankruptcy proceedings shall hereafter commence with respect to
Lessor, and if the Lease is rejected by the trustee in bankruptcy pursuant
to Section 365 of the United States Bankruptcy Code, Lessee agrees with
Lender (i) not to treat such lease as terminated or if the Lease is
terminated by the Trustee, to execute a new lease with Lender or its
designee on the same terms as the Lease, and (ii) to remain in possession
of the Premises.
14. Lessee agrees to execute and deliver from time to time, upon the request
of Lender a certificate regarding the status of the Lease in the form set
forth in Schedule A hereto and made a part hereof.
EXECUTED as of the date first above written.
LESSOR: KATY MILLS LIMITED PARTNERSHIP, a Delaware
limited partnership
By: Katy Mills, L.L.C., a Delaware limited
liability company
Its: General Partner
By: The Mills Limited Partnership, a Delaware
limited partnership
Its: Manager
By: The Mills Corporation, a Delaware
corporation
Its: General Partner
/s/ JUDITH BERSON
-------------------------------------------------
By: Judith Berson
Its: Executive Vice President
LENDER: BAYERISCHE HYPO-UND VEREINSBANK AG, for
itself and as Agent
By: /s/ NINA M. LEVINE
---------------------------------------------
Name: Nina M. Levine
--------------------------------------------
Title: Associate Director
-------------------------------------------
By: /s/ LARNEY J BISBANO
----------------------------------------------
Name: Larney J Bisbano
--------------------------------------------
Title: Director
-------------------------------------------
LESSEE: SILICON ENTERTAINMENT, INC., a California
corporation
By: /s/ CHRIS MORSE
----------------------------------------------
Name: Chris Morse
--------------------------------------------
Its: Vice President
---------------------------------------------
<PAGE> 93
ACKNOWLEDGEMENT OF LANDLORD
COMMONWEALTH OF VIRGINIA )
)ss.
COUNTY OF ARLINGTON )
On this 7th day of March ___, 1999, before me personally appeared JUDITH
BERSON, to me known to be the person who executed the foregoing Agreement of
Subordination, Non-Disturbance and Attornment and acknowledged before me that
she was duly authorized and did execute same on behalf of KATY MILLS LIMITED
PARTNERSHIP, a Delaware limited partnership.
/s/ [Signature Illegible]
-------------------------------------
Notary Public
My Commission expires: 2/illegible/02
ACKNOWLEDGEMENT OF CORPORATE TENANT
STATE OF CALIFORNIA )
)ss.
CITY/COUNTY OF SANTA CLARA )
On March 16, 1999, before me Laurie Shermer, a Notary Public in and for
said state aforesaid, personally appeared Chris Morse, as Vice President of
SILICON ENTERTAINMENT, INC., a California corporation, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
/s/ LAURIE SHERMER
--------------------------------------
Notary Public, Santa Clara County,
My Commission expires: 9/19/2001
[NOTARY SEAL} [Notarial Seal]
ACKNOWLEDGEMENT OF LENDER
STATE OF NY )
)ss.
COUNTY OF NY )
On this 5th day of April, 1999, before me, Heather Eppley, notary public,
personally appeared Nina M. Levine and Larnery J. Bisbano approved to me on the
basis of satisfactory evidence to be the persons whose names are subscribed to
the within instrument and acknowledged to me that they executed the same in
their authorized capacities and that by their signatures on the instrument the
entity upon behalf of which the persons acted, executed the instrument.
WITNESS my hand and official seal.
/s/ HEATHER EPPLEY
------------------------------------------------
Notary Public
My Commission expires:
-----------------------
[NOTARY STAMP]
<PAGE> 94
EXHIBIT H-1
PRE-CONSTRUCTION TENANT ESTOPPEL CERTIFICATE
TO: BAYERISCHE HYPO- UND VEREINSBANK AG, acting by and through its New York
branch, its successors and assigns or an affiliate (referred to herein as
"Lender"), for itself and as agent for one or more co-lenders:
1. The undersigned is the Lessee under that certain Lease together with all
amendments, modifications and supplements thereto, as more fully described
on Schedule A attached hereto, and made a part hereof (collectively, the
"Lease") by and between KATY MILLS LIMITED PARTNERSHIP, a Delaware limited
partnership, as Lessor and SILICON ENTERTAINMENT, INC., a California
corporation, as Lessee, covering those certain premises described therein
and located at Katy Mills, Katy, Texas ("Premises").
2. Capitalized terms not otherwise defined herein shall have the meanings set
forth in the Lease.
3. Except for any amendments, modifications and supplements described in
Schedule A the Lease has not been modified, changed, altered or amended in
any respect and is the only Lease or agreement between the Lessee and
Lessor or its agents affecting the Premises.
4. Except as provided in the Lease, Lessee has made no agreements with Lessor
or its agents or employees concerning free rent, partial rent, rebate of
rental payments or any other type of rental concession (except as set forth
in the Lease).
5. No rent has been prepaid for more than one (1) month.
6. The Lease is in full force and effect and Lessee has no right to terminate
the Lease (other than by reason of default by Lessor or as otherwise
provided for in the Lease). As of the date hereof, Lessee is entitled to no
credit, no free rent and no offset or deduction in rent, except as set
forth in the Lease.
7. The Lessee and, to Lessee's knowledge, Lessor are not in default under the
Lease and, to the best of Lessee's knowledge, there is no event which with
notice or passage of time would constitute a default by Lessee or Lessor
under the Lease.
8. Lessor has and is under no obligation to Lessee with respect to payment of
the cost of tenant improvement work to the Premises, except as specifically
set forth in the Lease.
9. The Lease does not contain and the Lessee does not have any outstanding
options or rights of first refusal to purchase the Premises or any part
thereof or the real property of which the Premises are a part.
10. No actions, whether voluntary of otherwise, are pending against the Lessee
under the bankruptcy laws of the United States or any state thereof.
11. Any notices sent to Lender or its affiliates shall be sent certified mail,
return receipt requested and addressed to Bayerische Hypo-und Vereinsbank
AG, at its offices at 150 East 42nd Street, New York, New York 10017.
This certification is made knowing that Lender relies upon the truth of this
certification in making certain fundings.
Dated as of this 16 day of March, 1999
SILICON ENTERTAINMENT, INC., a California corporation
By: /s/ CHRIS MORSE
------------------------------------
Its: Vice President
------------------------------------
By: /s/ BRUCE A. KENAN
------------------------------------
Its: Chairman/CEO
------------------------------------
<PAGE> 95
EXHIBIT A
(ADD LEASE INFORMATION)
<PAGE> 1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED ON A REQUEST FOR CONFIDENTIAL
TREATMENT
EXHIBIT 10.18
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
UNIVERSAL STUDIOS CITYWALK HOLLYWOOD LEASE
Between
UNIVERSAL STUDIOS CITYWALK HOLLYWOOD,
A Division of Universal Studios Inc.
as Landlord
And
Silicon Entertainment, Inc.
A California Corporation
Executed as of July 20 , 1999
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TABLE OF CONTENTS
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ARTICLE I: FUNDAMENTAL LEASE PROVISIONS
Section 1.1 Landlord
Section 1.2 Tenant
Section 1.3 Premises
Section 1.4 Lease Term
Section 1.5 Rent Commencement Date
Section 1.6 Minimum Annual Rental
Section 1.7 Percentage Rent
Section 1.8 Gross Sales Breakpoint
Section 1.9 Gross Sales Threshold
Section 1.10 Annual Advertising Amount
Section 1.11 Marketing Fund Contribution
Section 1.12 Delivery Date/Condition of Premises
Section 1.13 Permitted Use of the Premises
Section 1.14 Security Deposit
Section 1.15 Construction Allowance
Section 1.16 Tenant's Broker
Section 1.17 Addresses for Notices
Section 1.18 INTENTIONALLY DELETED
Section 1.19 Additional Documents
Exhibit A-1 Site Plan of the Project
Exhibit A-2 Parking Areas
Exhibit B-1 Floor Plan of Tenant's Premises
Exhibit B-2 Approved Exterior Facade and Exterior Signage
EXHIBIT B-3 Approved Preliminary Design Plan for Interior Layout
Exhibit C Provisions Relating to Construction of Tenant's Premises
Exhibit D Statement of Gross Sales
Exhibit E Intentionally Deleted
Exhibit F Sample Letter of Estoppel
Exhibit G Tenant's Initial Merchandise and Price List
Exhibit H Stairway Modification
ARTICLE II: PRIMARY LEASE PROVISIONS
Section 2.1 Use of the Premises
Section 2.2 Trade Name
Section 2.3 Operating Standards
Section 2.4 Sponsorships
Section 2.5 Principal's Involvement
Section 2.6 Radius Restriction
Section 2.7 Tenant's Exclusive
Section 2.8 Option to Extend
Section 2.9 Right to Relocate
Section 2.10 Deposit for Tenant's Work
Section 2.11 Intentionally Deleted
Section 2.12 Adjustment of Taxes
Section 2.13 Construction Allowance
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ARTICLE III: PREMISES
Section 3.1 Lease of Premises
Section 3.2 Definitions of "Floor Area" and "Tenant Areas"
Section 3.3 Certain Easements in Favor of Tenant
Section 3.4 Certain Easements in Favor of Landlord
ARTICLE IV: TERM
Section 4.1 Duration of Lease Term
Section 4.2 Acceptance of the Premises
Section 4.3 Delays in Completion of Landlord's Work
Section 4.4 Tenants Early Use Or Possession
Section 4.5 Tenant's Delivery of Documents
Section 4.6 Surrender of the Premises
Section 4.7 Holding Over Without Consent
Section 4.8 Landlord's Right of Termination
ARTICLE V: RENTAL
Section 5.1 Rent Commencement Date
Section 5.2 Minimum Annual Rental
Section 5.3 Percentage Rent
Section 5.4 Reporting of Gross Sales
Section 5.5 Additional Rent
Section 5.6 Late Payments
Section 5.7 No Set-Offs or Deductions
Section 5.8 Adjustment of Payments
Section 5.9 Audit Rights
ARTICLE VI: DEFINITION OF "GROSS SALES"
ARTICLE VII: UTILITIES
ARTICLE VIII: COMMON AREA AND PARKING AREAS
Section 8.1 Definition of "Common Area"
Section 8.2 Use of Common Area
Section 8.3 Control of Common Area
Section 8.4 Security
Section 8.5 Rules and Regulations
Section 8.6 Parking
Section 8.7 Parking Charges
ARTICLE IX: MARKETING AND ADVERTISING
Section 9.1 Tenant Advertising
Section 9.2 Marketing Fund
ARTICLE X: POSSESSION AND USE
Section 10.1 Permitted Uses
Section 10.2 Duties and Prohibited Conduct
Section 10.3 Deliveries/Trash Removal
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Section 10.4 Additional Costs
Section 10.5 Renovation
ARTICLE XI: TENANANT'S CONDUCT OF BUSINESS
Section 11.1 Operating Covenants
Section 11.2 Operating Days and Hours
Section 11.3 Compliance with Laws
ARTICLE XII: LIMITS ON SIGNS AND ADVERTISING
ARTICLE XIII: PERSONAL PROPERTY; IMPROVEMENTS; CERTAIN TAXES
Section 13.1 Removal and Replacement
Section 13.2 Improvements
Section 13.3 Certain Taxes
ARTICLE XIV: TENANT'S RIGHT TO MAKE IMPROVEMENTS
Section 14.1 Alterations
Section 14.2 Construction Requirements
ARTICLE XV: MECHANIC'S LIENS
ARTICLE XVI: REPAIRS AND MAINTENANCE
Section 16.1 Tenant's Obligations
Section 16.2 Landlord's Obligations
Section 16.3 Right to Enter
Section 16.4 Landlord's Liability
ARTICLE XVII: INDEMNITY; INSURANCE
Section 17.1 Indemnity by Tenant
Section 17.2 Tenant's Insurance Obligation
Section 17.2.1 General Liability
Section 17.2.2 Workers Compensation
Section 17.2.3 Plate Glass
Section 17.2.4 Equipment
Section 17.2.5 Tenant's Improvements and Personal Property
Section 17.2.6 Business Interruption
Section 17.3 Form of Policies
Section 17.4 Blanket Insurance Policies
Section 17.5 Landlord's Insurance Obligation
Section 17.6 Mutual Waivers of Rights
Section 17.7 Insurance Use Restrictions
ARTICLE XVIII: RECONSTRUCTION
Section 18.1 Insured Casualty
Section 18.1.1 Repair of Damage
Section 18.1.2 Damage Near End of Lease Term
Section 18.2 Uninsured Casualty
Section 18.3 Construction Provisions
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Section 18.4 Release of Liability
section 18.5 Major Destruction
ARTICLE XIX: OCCUPANCY TRANSACTIONS
Section 19.1 Restrictions
Section 19.2 Nullity
Section 19.3 Definitions
Section 19.3.1 "Occupancy Transaction"
Section 19.3.2 "Transferee"
Section 19.3.3 "Control"
Section 19.4 Landlord's Costs
ARTICLE XX: BANKRUPTCY; INVOLUNTARY TRANSFERS
Section 20.1 Right of Termination
Section 20.1.1 Receivership
Section 20.1.2 Attachment
Section 20.1.3 Bulk Sale
Section 20.1.4 Multiple Locations
Section 20.1.5 Guarantor
Section 20.2 Request for Information
section 20.3 Assignment by DIP or Trustee
ARTICLE XXI: SECURITY DEPOSIT
Section 21.1 Payment
Section 21.2 Application
Section 21.3 Transfer of Landlord's Interest
ARTICLE XXII: DEFAULTS BY TENANT; REMEDIES
Section 22.1 Event of Default
Section 22.1.1 Failure to Pay Rent
Section 22.1.2 Breach of Operating Covenants
Section 22.1.3 Other Curable Defaults
Section 22.2 Notices
Section 22.2.1 Failure to Pay Rent
Section 22.2.2 Breach of Operating Covenants
Section 22.2.3 Other Curable Defaults
Section 22.3 Non-Curable Defaults
Section 22.4 Landlord's Rights and Remedies
Section 22.4.1 Termination of Lease
Section 22.4.2 Reentry of the Premises
Section 22.4.3 Termination after Reentry
Section 22.4.4 Continued Enforcement of Lease
Section 22.5 Landlord's Damages
Section 22.5.1 Delinquent Rent
Section 22.5.2 Rent After Termination Until Judgment
Section 22.5.3 Rent After Judgment
Section 22.5.4 Other Compensation
Section 22.5.5 Additional or Alternative Documents
Section 22.5.6 Calculation of Damages
Section 22.6 Merchandise and Personal Property
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Section 22.7 Self-Help Cure Rights
Section 22.8 No Waiver
Section 22.9 Waiver of Notice
ARTICLE XXIII: DEFAULTS BY LANDLORD; REMEDIES
ARTICLE XXIV: EMINENT DOMAIN
ARTICLE XXV: SALE OR MORTGAGE BY LANDLORD
ARTICLE XXVI: SUBORDINATION; ATTORNMENT; ESTOPPEL
Section 26.1 Subordination
Section 26.2 Attornment
Section 26.3 Estoppel Certificate
ARTICLE XXVII: TITLE TO PREMISES
ARTICLE XXVIII: QUIET ENJOYMENT
ARTICLE XXIX: NOTICES AND CONSENTS
ARTICLE XXX: MISCELLANEOUS
Section 30.1 Lease Rate
Section 30.2 Financing Costs
Section 30.3 Waiver or Consent Limitation
Section 30.4 Force Majeure
Section 30.5 Avoidance of Labor Disputes
Section 30.6 Landlord Calculations, Determinations and Requirements
Section 30.7 Failure to Give Consent
Section 30.8 Reasonableness
Section 30.9 Relationship of the Parties
Section 30.10 Severability; Construction of Provisions
Section 30.11 Warranty of Authority
Section 30.12 Entire Agreement; Construction
Section 30.13 Time of Essence
Section 30.14 Joint and Several Liability
Section 30.15 Successors and Assigns
Section 30.16 Right to Lease
Section 30.17 Landlord's Right to Engage in Other Activities
Section 30.18 Landlord's Access
Section 30.19 Attorneys' Fees
Section 30.20 Brokers
Section 30.21 Recordation
Section 30.22 Nonbinding
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Universal Studios CityWalk Hollywood Lease
This Lease is executed as of July 20, 1999 (the "Effective Date"). In
consideration of the rents and covenants hereinafter set forth, Landlord
(identified in Section 1.1) hereby leases to Tenant (identified in Section 1.2)
and Tenant hereby leases from Landlord, the Premises upon the terms and
conditions hereinafter set forth.
CONDITION PRECEDENT:
THE VALIDITY OF THIS LEASE IS CONDITIONED ON THE APPROVAL BY THE
MUSICLAND GROUP, INC. (d/b/a SAM GOODY) ("MUSICLAND") ON OR BEFORE JULY 31, 1999
OF LANDLORD'S PRELIMINARY PLANS AND SPECIFICATIONS FOR LANDLORD'S WORK WITH
RESPECT TO THE LOCATION OF THE DEMISING WALL BETWEEN THE PREMISES AND THE SPACE
OCCUPIED BY MUSICLAND IMMEDIATELY ADJACENT TO THE PREMISES; PROVIDED, HOWEVER,
LANDLORD REPRESENTS AND WARRANTS THAT MUSICLAND WILL NOT HAVE ANY APPROVAL
RIGHTS OVER, AND THE VALIDITY OF THIS LEASE IS IN NO WAY CONDITIONED UPON
MUSICLAND'S APPROVAL OVER, TENANT OR TENANT'S DESIGN PLANS AND SPECIFICATIONS
FOR THE PREMISES, EXCEPT AS EXPRESSLY SET FORTH IN THIS PARAGRAPH. LANDLORD
SHALL DELIVER WRITTEN NOTICE TO TENANT PROMPTLY AFTER OBTAINING THE MUSICLAND
GROUP'S APPROVAL OF THE FOREGOING. LANDLORD'S FAILURE TO DELIVER TO TENANT
WRITTEN NOTICE OF MUSICLAND'S DISAPPROVAL OF THE FOREGOING ON OR BEFORE JULY 31,
1999 SHALL BE DEEMED LANDLORD'S ACKNOWLEDGEMENT AND REPRESENTATION THAT THE
AFORESAID CONDITION PRECEDENT HAS BEEN SATISFIED.
INITIAL TENANT OBLIGATIONS:
THIS PARAGRAPH SHALL SUPERSEDE ANYTHING TO THE CONTRARY CONTAINED IN
EXHIBIT C ATTACHED HERETO. TENANT HAS SUBMITTED, AND LANDLORD HAS APPROVED IN
ITS SOLE AND ABSOLUTE DISCRETION TENANT'S PRELIMINARY DESIGN PLANS FOR THE
EXTERIOR FACADE AND EXTERIOR SIGNAGE FOR THE PREMISES (WHICH DESIGNS ARE
ATTACHED HERETO AS EXHIBIT B-2), AND DOCUMENTS DETAILING TENANT'S CONCEPT. THE
FINAL DESIGN PLANS FOR THE EXTERIOR FACADE AND EXTERIOR SIGNAGE FOR THE PREMISES
SHALL BE SUBSTANTIALLY THE SAME AS EXHIBIT B-2. IF TENANT DESIRES TO MAKE ANY
CHANGES TO THE EXTERIOR FACADE AND/OR THE EXTERIOR SIGNAGE PRELIMINARY DESIGN
PLANS ATTACHED HERETO AS EXHIBIT B-2, SUCH CHANGES SHALL BE SUBMITTED TO
LANDLORD FOR APPROVAL BY LANDLORD WHICH APPROVAL SHALL BE IN LANDLORD'S
REASONABLE DISCRETION IF SUCH CHANGES ARE GENERALLY CONSISTENT WITH THE
PREVIOUSLY-APPROVED PRELIMINARY DESIGN PLANS OF TENANT, AND IN LANDLORD'S SOLE
DISCRETION IF SUCH CHANGES ARE NOT GENERALLY CONSISTENT WITH THE
PREVIOUSLY-APPROVED PRELIMINARY DESIGN PLANS OF TENANT. IN DETERMINING WHETHER
TO APPROVE TENANT'S EXTERIOR SIGNAGE, LANDLORD WILL CONSIDER WHETHER THE SAME IS
CONSISTENT WITH THE ARCHITECTURAL AND AESTHETIC STANDARDS PREVAILING WITHIN THE
PROJECT (AS DEFINED IN SECTION 1.19) AND WITH THE OVERALL CITYWALK 2000
EXPANSION PLAN AND SCHEME. TENANT ACKNOWLEDGES THAT, DUE TO THE UNIQUE
ENTERTAINMENT CHARACTER OF CITYWALK, THERE ARE SPECIFIC EXPECTATIONS IN PLACE
FOR EXTERIOR SIGNAGE. IN MAKING ANY CHANGES TO THE PREVIOUSLY-APPROVED EXTERIOR
SIGNAGE, TENANT WILL TAKE INTO ACCOUNT LANDLORD'S DESIRE THAT THE CONCEPT AND
DESIGN OF TENANT'S EXTERIOR SIGNAGE SHOULD EXHIBIT A HIGH LEVEL OF CREATIVITY
AND SHOULD BE OF SUFFICIENT SIZE WITH A "FLAIR FOR THE DRAMATIC," SUCH THAT IT
CAUSES IMMEDIATE BRAND RECOGNITION AND ENTICES PATRONS INTO TENANT'S SPACE.
FURTHERMORE, TENANT'S SIGN DESIGNER AND SIGN FABRICATOR MUST BE PRE-APPROVED BY
LANDLORD IN LANDLORD'S REASONABLE DISCRETION. TENANT HAS SUBMITTED AND LANDLORD
HAS APPROVED TENANT'S PRELIMINARY DESIGN PLANS FOR THE INTERIOR LAYOUT OF THE
PREMISES (WHICH DESIGNS ARE ATTACHED HERETO AS EXHIBIT B-3). IF TENANT DESIRES
TO MAKE ANY CHANGES TO THE INTERIOR LAYOUT PRELIMINARY DESIGN PLANS PREVIOUSLY
APPROVED BY LANDLORD, SUCH CHANGES SHALL BE SUBMITTED TO LANDLORD FOR APPROVAL
IN LANDLORD'S REASONABLE DISCRETION; PROVIDED, HOWEVER, LANDLORD SHALL HAVE
APPROVAL RIGHTS IN LANDLORD'S SOLE DISCRETION OVER SUCH
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ASPECTS OF THE INTERIOR LAYOUT OF THE PREMISES THAT AFFECT THE STRUCTURAL
INTEGRITY OF THE PREMISES AND/OR THE PROJECT. TENANT SHALL SUBMIT TENANT'S FINAL
DESIGN PLANS FOR THE EXTERIOR FACADE, EXTERIOR SIGNAGE, AND INTERIOR LAYOUT OF
THE PREMISES IN ACCORDANCE WITH SECTION III.E OF EXHIBIT C ATTACHED HERETO.
LANDLORD'S APPROVAL OF ALL DESIGN PLANS SUBMITTED TO LANDLORD BY TENANT (WHETHER
FOR THE FIRST TIME OR AS A RESULT OF ANY MODIFICATION THERETO) SHALL BE GRANTED
OR DENIED (AND IF DENIED, SUCH DENIAL SHALL BE ACCOMPANIED BY SPECIFIC, DETAILED
AND WRITTEN REASONS THEREFOR WITH ALTERNATIVE RECOMMENDATIONS BY LANDLORD)
WITHIN FIFTEEN (15) DAYS AFTER LANDLORD'S RECEIPT OF THE PLANS SUBMITTED BY
TENANT. IF LANDLORD DOES NOT NOTIFY TENANT OF ITS DENIAL OR APPROVAL OF TENANT'S
PLANS ON OR BEFORE THE EXPIRATION OF SUCH FIFTEEN (15) DAY PERIOD AND
THEREAFTER, WITHIN FIVE (5) DAYS AFTER TENANT PROVIDES WRITTEN NOTICE TO
LANDLORD THAT FAILURE OF LANDLORD TO TIMELY NOTIFY TENANT OF ITS DENIAL OR
APPROVAL SHALL BE DOOMED LANDLORD'S APPROVAL THEREOF, THEN LANDLORD'S FAILURE TO
TIMELY NOTIFY TENANT OF ITS DENIAL OR APPROVAL WITHIN SAID FIVE (5) DAY PERIOD
SHALL BE DEEMED LANDLORD'S APPROVAL THEREOF. In REVIEWING TENANT'S SIGNAGE AND
OTHER PLANS FOR THE PREMISES, LANDLORD SHALL TAKE INTO ACCOUNT AND ACKNOWLEDGE
THAT TENANT IS A PARTY TO A LICENSE AGREEMENT WITH NASCAR AND THAT TENANT'S USE
AND DISPLAY OF THE TRADE NAME AND THE LOGO AND TRADEMARKS ASSOCIATED THEREWITH
IS SUBJECT TO NASCAR'S CONSENT AS SET FORTH IN SUCH LICENSE AGREEMENT.
ARTICLE I. LEASE TERMS
The following terms, wherever initially capitalized in this Lease,
shall have the meanings set forth in this Article I:
1.1 Landlord: UNIVERSAL STUDIOS CITYWALK HOLLYWOOD, a division of Universal
Studios, Inc.
1.2 Tenant: Silicon Entertainment, Inc., a California corporation.
Tenant's Trade Name: NASCAR Silicon Motor Speedway (subject to Section
2.2).
1.3 Premises: That certain space having approximately 5,000 SQUARE FEET of
Floor Area ("Tenant's Floor Area") labeled SPACE Unit #120, as more
particularly shown in Exhibit B-1, (a portion of the first floor of the
former Sam Goody Records Space). Tenant's Floor Area shall be
re-measured in accordance with Section 3.2 below. Tenant's Floor Area
shall not include any mezzanine or catwalk floor area.
1.4 Lease Term: Five (5) years commencing on the Rent Commencement Date
("Initial Term") plus one (1) five (5) year option period ("Option
Term") on the same terms and conditions except rent related terms (the
term "Lease Term" shall be used refer to the entire term of this Lease,
including the Option Term, if Tenant's option to extend the term of
this Lease is exercised).
1.5 Rent Commencement Date: Tenant shall not be obligated to commence the
payment of any rent under this Lease until the earlier of (a) ninety
(90) days following the date that Landlord delivers the Premises to
Tenant pursuant to Section 1.12 below, or (b) the date Tenant opens
for business to the public in the Premises If the Rent Commencement
Date is other than the first day of the month, then the first day of
the calendar month immediately following the actual Rent Commencement
Date shall be used for the purposes of calculating anniversaries of the
Rent Commencement Date.
Tenant shall use commercially reasonable efforts to open for
business within 10 weeks after Landlord delivers the Premises to
Tenant; provided, however, Landlord shall not be entitled to declare
Tenant to be in default under this Lease for failure to open for
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business in the Premises until such date that is one hundred
thirty-five (135) days after the date that Landlord delivers the
Premises to Tenant as required under this Lease. Furthermore, Tenant
shall be obligated to commence the payment of rent under this Lease as
of the Rent Commencement Date whether or not Tenant has opened for
business on or before 135 days following the date that Landlord
delivers the Premises to Tenant. Notwithstanding the foregoing, each of
the aforesaid periods (i.e., the Rent Commencement Date and the date
after which Tenant shall be in default if it has not opened the
Premises for business) shall be tolled by the number of days of delay
in Tenant's opening for business resulting from events of Force Majeure
(as defined in Section 30.4 below) and/or delays caused by Landlord.
1.6 Minimum Annual Rental: [***] per year. The Minimum Annual Rental stated
in this Section is based upon an "all in" rent of [***] per square foot
of Floor Area and an initial estimated Floor Area of 5,000 square feet.
Said rental amount is based upon a starting annual rental of [***] per
square foot plus [***] per square foot for all other charges including,
without limitation, Tenant's share of Operating Costs, CAM and Taxes
(including all real property taxes assessed against the Project and the
Premises, subject to Section 2.12), marketing and advertising
contributions, and insurance costs; provided, however that the
foregoing shall exclude real and personal property taxes, if any,
levied upon Tenant's improvements (including, without limitation,
Tenant's FF&E and Tenant's contents and liability insurance, both of
which shall be paid separately by Tenant). Upon the determination of
the final Floor Area of the Premises pursuant to Section 3.2, the
amount stated in this Section shall be adjusted to equal the amount of
[***] per square foot multiplied by that final Floor Area.
On each anniversary of the Rent Commencement Date, the "all
in" Minimum Annual Rental shall be increased by the percentage increase
in the Index, as defined in Section 5.8 and as provided in Section 5.2
(such increase not to exceed 3%) over the Index for the prior year,
provided, however, that upon the commencement of the [***] anniversary
of the Rent Commencement Date, the Minimum Annual Rental (as adjusted
by the Index in prior years) shall be increased to the greater of (i)
[***] of the rent on the Rent Commencement Date, or (ii) the rent for
the prior year adjusted by the percentage increase in the Index (not to
exceed [***]).
1.7 Percentage Rental: [***] of Gross Sales in excess of the Gross Sales
Breakpoint. Percentage Rental is defined in Section 5.3.
1.8 Gross Sales Breakpoint: [***] based on [***] per square foot per year.
The amount stated in this Section is based on [***] per square foot of
Floor Area, and the initial stated Floor Area of 5,000 square feet.
Upon the determination of the final Floor Area of the Premises pursuant
to Section 3.2, the amount stated in this Section shall be adjusted to
equal the amount of [***] per square foot multiplied by that final
Floor Area.
On each anniversary of the Rent Commencement Date, the Gross
Sales Breakpoint shall be increased by the percentage increase in the
Index, as defined in Section 5.8 and as provided in Section 5.3 (such
increase not to exceed [***]) over the Index for the prior year,
provided, however, upon the commencement of the fifth anniversary of
the Rent Commencement Date the Gross Sales Breakpoint (as adjusted by
the Index in prior years) shall be increased to the greater of (i)
[***] of the Gross Sales Breakpoint on the Rent Commencement Date, or
(ii) the Gross Sales Breakpoint for the prior year adjusted by the
percentage increase in the Index (not to exceed [***]).
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1.9 Gross Sales Threshold: [***], based on [***] per square foot per year.
The amount stated in this Section is based on [***] per square foot of
Floor Area, and the initial stated Floor Area of 5,000 square feet.
Upon the determination of the final Floor Area of the Premises pursuant
to Section 3.2, the amount stated in this Section shall be adjusted to
equal the amount of [***] per square foot multiplied by that final
Floor Area.
On each anniversary of the Rent Commencement Date, the Gross
Sales Threshold shall be increased by the percentage increase in the
Index, as defined in Section 5.8 and as provided in Section 4.8 (such
increase not to exceed [***]) over the Index for the prior year;
provided, however, upon the commencement of the fifth anniversary of
the Rent Commencement Date the Gross Sales Threshold (as adjusted by
the Index in prior years) shall be increased to the greater of (i)
[***] of the Gross Sales Threshold on the Rent Commencement Date, or
(ii) the Gross Sales Threshold for the prior year adjusted by the
percentage increase in the Index (not to exceed [***]).
1.10 Annual Advertising Amount: INTENTIONALLY DELETED.
1.11 Marketing Fund Contribution: INTENTIONALLY DELETED.
1.12 Delivery Date/Condition of Premises: Subject to Section 1.5 above,
Landlord shall use commercially reasonable efforts to deliver the
Premises to Tenant on or before August 31, 1999 subject to delays
caused by events of Force Majeure. Landlord shall deliver the Premises
to Tenant after completion of Landlord's Work, as described in Exhibit
C and Tenant shall complete Tenant's Work within 90 days after the date
of delivery of the Premises to Tenant with all of Landlord's Work
completed as required hereunder. Notwithstanding anything to the
contrary contained in this Lease, (y) if Landlord has not delivered the
Premises to Tenant with all of Landlord's Work completed as required
hereunder on or before September 30, 1999 (other than directly due to
and only to the extent caused by an act or omission of Tenant), then
Tenant shall not be required to commence Tenant's Work until November
3, 1999 (provided Landlord has delivered the Premises to Tenant prior
to November 3, 1999 and provided further if Landlord delivers the
Premises to Tenant between September 22, 1999 and November 3, 1999, for
purposes of determining the Rent Commencement Date under Section 1.5
above, the delivery date shall be deemed to be the earlier of the date
Tenant commences Tenant's Work or November 3, 1999), and (z) if
Landlord has not delivered the Premises to Tenant with all of
Landlord's Work completed as required hereunder on or before September
22, 2000 (subject to Force Majeure and not due to an act or omission of
Tenant), Tenant shall have the right to terminate this Lease by written
notice to Landlord delivered on or before November 22, 2000 and
Landlord shall reimburse Tenant for all reasonable out-of-pocket
expenses not to exceed [***].
Tenant shall receive in "rough shell" condition, as more fully
described in the attached Exhibit C - Provisions Relating to
Construction of Tenant's Premises -Landlord's Work. In addition to
Exhibit C, Landlord, at its cost and expense, shall (i) deliver the
space in broom clean condition, (ii) deliver the space in compliance
with legal, code and zoning requirements exclusive of any such
requirements relating to Tenant's Work including, but not limited to,
building or occupancy permits, (iii) deliver the utility systems to the
Premises as specified in Exhibit C in good working order, (iv) deliver
the rough shell building in good condition and repair, free of any
asbestos, (v) remove the existing mezzanine, catwalks (and the
supporting structures therefor) from the Premises, and (vi) modify the
existing exit stairway as provided in the attached Exhibit H, provided
that Tenant's Construction Allowance shall be reduced by the actual
cost of the stairway
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modification in an amount not to exceed [***]. In addition to Exhibit
C and the foregoing, other specifications regarding the rough shell
condition are as follows:
- Electric Service - Landlord shall provide and install
conduit from Landlord's electrical room stubbed to
the Premises at location specified by Tenant. Service
is separately metered. Meter and hook-up is at
Tenant's expense, subject to the last sentence of
this Section 1.12. Amperage requirements in excess of
Exhibit C (per Section I.E.1) is at Tenant's expense.
- Floor structure - which can handle +l/-0.5G force at
l50 lbs./square foot.
- 17 feet 6 inches of interior height - excluding
building service lines (i.e. sprinklers, electrical
conduits, roof drains, HVAC, etc.
- No finished ceiling requirements, subject to a
minimum aesthetic standard reasonably approved by
Landlord.
- Telephone conduit stubbed to space.
- Domestic (cold) water only brought to space. Tenant
supplies water heater.
- Interior walls and curtain walls within the Premises
are per Exhibit C. Interior studs are at demising
wall locations only.
- Doors and vestibules to service corridor and service
courts. Door hardware supplied by Tenant.
- Sprinkler system per Exhibit C.
- Sanitary lines stubbed under or to rear of the
Premises.
- Smoke Evacuation System is not required.
Tenant shall be allowed to keep its front doors open during business hours.
Tenant shall have the right, at Tenant's expense, to install and maintain on the
building's roof one satellite dish for Tenant's communications and data
transmission network, subject to Landlord's reasonable approval of the size,
location, manner of installation, necessary screening, and aesthetic appearance
of the satellite dish. Tenant shall supply at Tenant's expense its own rooftop
35 ton A/C unit subject to Landlord's reasonable approval of the location,
manner of installation, necessary screening and aesthetic appearance of the A/C
unit. Notwithstanding anything to the contrary contained in this Lease and
subject to the last two sentences of the second paragraph of Section 11.3,
Landlord hereby represents and warrants to Tenant that Landlord has obtained a
conditional use permit (or its equivalent) and all other zoning and other
discretionary permits and approvals (i.e., all consents and approvals, other
than a building permit (the "Building Permit")) conditioned only upon the
submission of plans and specifications which comply with applicable building
codes and the payment of statutory building permit fees necessary to permit the
construction of the Premises and all improvements to be constructed therein or
as a part thereof by Landlord and Tenant as contemplated in this Lease
(collectively, the "Discretionary Approvals") and the use of the Premises by
Tenant as permitted under this Lease. Landlord acknowledges that it is the
intent of this Lease that Tenant shall not be obligated to pay and Landlord
shall be responsible for any mitigation, discretionary, or impact fees.
1.13 Permitted Use of the Premises: Only for the operation of an automobile
racing ride simulators, as more fully described below in Section 2.1.
1.14 Security Deposit: [***] months rent based on 5,000 square feet of Floor
Area. The amount of the Security Deposit is equal to [***] month's
installments of the Minimum Annual
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Rental as initially stated in Section 1.6. In the event Minimum Annual
Rental is adjusted upon measurement of the Premises in accordance with
Section 3.2 below, then the amount of the Security Deposit shall be
adjusted to equal two (2) month's installments of such adjusted Minimum
Annual Rental.
1.15 Construction Allowance: [***] based on [***] per square foot.
Construction Allowance to be disbursed as per Section 2.13 (subject to
Section 1.12 which provides for a reduction to the Construction
Allowance for the stairway modification not to exceed [***]. The amount
stated in this Section is based on [***] per square foot of Floor Area,
and the initial stated Floor Area of 5,000 square feet. Upon the
determination of the final Floor Area of the Premises pursuant to
Section 3.2, the amount stated in this Section shall be adjusted to
equal the amount of [***] per square foot multiplied by that final
Floor Area.
1.16 Tenant's Broker: Russell J. Friend, vice-president of Blatteis Realty
Co. Tenant agrees that it has selected, retained and hired Tenant's
Broker and that Landlord will not be responsible in any way for any
fees or commissions to Tenant's Broker associated with any services or
work which have or will be provided in connection with this Lease or
negotiation of this Lease. In addition, there is no fiduciary or other
relationship between Landlord and Tenant's Broker.
1.17 Addresses for Notices:
To Landlord: UNIVERSAL STUDIOS CITYWALK HOLLYWOOD,
a Division of Universal Studios, Inc.
100 Universal City Plaza, Bldg. SC 79;
Sixth Floor Universal City, CA 91608
Attention: Senior Vice President,
General Manager
copy to: Universal CityWalk Legal Affairs
100 Universal City Plaza, Bldg. SC 79;
Sixth Floor Universal City, CA 91608
Attention: Director,
Business & Legal Affairs
To Tenant: Silicon Entertainment
210 Hacienda Avenue
Campbell, CA 95008
Attention: President
copy to: Tenant at the address of the Premises
See Article XXIX
1.18 Intentionally Deleted.
1.19 Additional Documents: The following documents are attached hereto, and
such documents, as well as all drawings and documents prepared pursuant
thereto and all additional documents specified in Section 1.19, are
made a part of this Lease:
EXHIBIT A-1 - Site Plan of Universal CityWalk Phase II
development, a retail entertainment center being developed by
Landlord adjacent to the currently existing CityWalk Phase I
development (hereinafter Phase I & II and all future additions
to Universal CityWalk Phase I and Phase II are collectively
referred to as the "Project") and the Common Area associated
with the Project. Landlord shall have the right at any time to
expand, reduce, remove, demolish, renovate or
*** Confidential treatment requested.
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construct any existing or new improvements at the Project and/or the Common
Area.
EXHIBIT A-2 Parking Areas
EXHIBIT B-1 Floor Plan of Tenant's Premises.
EXHIBIT B-2 Approved Exterior Facade and Exterior Signage
EXHIBIT B-3 Approved Preliminary Design Plan for Interior Layout
EXHIBIT C Provisions Relating to Construction of Tenant's Premises
EXHIBIT D Statement of Gross Sales
EXHIBIT E Intentionally Deleted
EXHIBIT F Sample Letter of Estoppel
EXHIBIT G Tenant's Initial Merchandise and Price List
EXHIBIT H Stairway Modification
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ARTICLE II. PRIMARY LEASE PROVISIONS.
The provisions of this Article shall serve to modify and to amend the
hereinafter specified provisions of, and otherwise to supplement, the Lease, as
follows, and shall supersede any contrary provisions contained in the balance of
the Lease:
2.1 Use of the Premises: Tenant covenants and agrees that, except as
otherwise specifically permitted in this Lease, it shall continuously use and
occupy the Premises solely and exclusively for the purposes and uses described
in this Section 2.1 and for no other purpose whatsoever ("Permitted Use").
Notwithstanding anything to the contrary contained in this Lease, Tenant shall
not be obligated to continuously operate from the Premises during such periods
in which (i) Tenant is carrying on remodeling activities (but in no event for
more than thirty (30) days in any lease year and no more than twice in any five
(5) year period), (ii) Tenant is unable to operate as a direct result of a Force
Majeure event to the Premises or the Project or as a result of any other
condition at the Premises or the Project that would expose Tenant's employees,
agents or invitees to an unreasonably high risk of physical injury or property
damage, and/or (iii) Tenant's use and occupancy of the Premises is prohibited by
any law, ordinance, order or other act of any judicial governmental or
quasi-governmental authority.
The Premises shall be used for the installation and operation of
automobile racing car ride simulators for guests with each ride separately
priced and no general admission price to the facility (other than group sales
and leagues). Tenant shall also be permitted to use the Premises for the
incidental sale of merchandise (excluding all food and beverage unless catered
for a group sales activity) related to motor sports (including NASCAR videos,
pictures, CD-ROMs, DVD's and other media and other such audio/visual items
featuring NASCAR racing, not to exceed 2% of Tenant's total floor area,
excluding videos of actual customer races recorded from the automobile racing
car ride simulators at the Premises which shall not be subject to the 2%
limitation) and/or related to NASCAR with the logo of NASCAR or NASCAR Silicon
Motor Speedway or such Trade Name as Tenant may operate under from time-to-time
in accordance with Section 2.2 below. Tenant, its employees and agents shall
have the right to enter the Premises 24 hours a day, 7 days a week, 52 weeks per
year, at all times. Tenant shall stay open consistent with the operating hours
of the Project as per the Project Rules and Regulations (which shall be applied
in a non-discriminatory manner); provided, further, Tenant may elect to stay
open beyond these hours and can open as early as 8:00 am and close as late as
2:00 am each day of the week. Notwithstanding the foregoing, Tenant shall not be
obligated to open for business during any such hours or on any such day as less
than fifty (50%) of the other tenants of the Project are open for business.
Tenant shall be allowed to conduct group sales at which time all or a
portion of the store will be temporarily closed to the public with the group
sales activity occurring in the closed portion of the Premises. Tenant shall use
reasonable efforts to limit group sales activity such that there are no more
than two group sales events per week, the events last no longer than 3 hours per
event, and the events do not occur during peak operating hours unless approved
by Landlord in its reasonable discretion. Conditioned on Tenant obtaining at
Tenant's expense any required licenses or permits relating to the sale of
alcoholic beverages, alcoholic beverages and other food may be served during
group sales provided that the alcoholic beverages and other food are available
only to group sales patrons and not to any other patrons in the Premises and
only when the Premises is temporarily closed to the public for a group sales
event.
Any change in Tenant's Permitted Use within the Premises (i.e.,
installation and operation of automobile racing car ride simulators for guests)
shall be subject to Landlord's approval to assure that Tenant maintains (a) a
quality level consistent and compatible with the overall image of the Protect
and Universal City, and (b) a product offering not unreasonably duplicative of
that
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offered by other existing or future tenants. Subject to Tenant's permitted use
of the Premises as set forth above, Tenant shall not use or permit or suffer the
use of the Premises in any manner inconsistent with this Paragraph or not in
keeping with the character and dignity of the Project and Universal City.
Landlord hereby represents and warrants to Tenant that to the best of Landlord's
knowledge Tenant's use of the Premises as contemplated herein does not violate
any exclusivity clause or other agreement between Landlord and any other tenant
of the Project. Landlord will indemnify Tenant for any claim by another tenant
of the Project arising out of Tenant's Use as described in Section 2.1 which
violates the tenant's exclusivity clause or other agreement between that tenant
and Landlord.
Except with respect to those items of merchandise specifically
permitted as part of Tenant's Permitted Use of the Premises and/or set forth in
the attached Exhibit G ("Tenant's Initial Merchandise and Price List"),
merchandise lines offered or used by Tenant within or from the Premises shall be
subject to Landlord's prior written reasonable approval, to assure: (i) a
quality level consistent and compatible with the overall image of the Project
and future tenants of the Project and Universal Studios Hollywood, and (ii) a
product offering not unreasonably duplicative of that offered by other existing
or future tenants of the Project; provided, however, Landlord and Tenant agree
that no "NASCAR" branded merchandise consistent with the Permitted Use and/or
set forth in Exhibit G shall be determined to be duplicative of that offered by
other existing or future tenants of the Project. Without limiting the foregoing
(e.g., subject to Tenant's express right above to sell NASCAR videos, pictures,
CD-ROMs, DVD's and other media and other such audio/visual items featuring
NASCAR racing set forth above), Tenant shall not, without Landlord's prior
express written approval, sell or offer for sale any film of any nature,
disposal cameras, photographic or movie cameras, or any other related film
products. Tenant expressly acknowledges and agrees that nothing contained herein
shall permit or be deemed to permit without the express prior written approval
of Landlord, which approval may be withheld at Landlord's sole and absolute
discretion, the sale or display of any merchandise licensed by or affiliated
with any "theme parks and related facilities" as defined herein (either alone or
in conjunction with or as part of any other word or name), including without
limitation any merchandise which uses or contains any of the characters or
designs associated with any theme parks and related facilities. For the purpose
of this Lease, the term "merchandise licensed by or affiliated with any theme
parks" shall include all licensed products issued by such theme park or any of
its affiliates or parent companies. (For example, any licensed product sold by
The Wait Disney Company shall be deemed to be a product that is affiliated with
Disney World, EPCOT, and/or MGM Studios, as the case may be). Tenant expressly
acknowledges and agrees that Tenant shall have no right to sell or display any
merchandise licensed by or affiliated with "UNIVERSAL," "UNIVERSAL STUDIOS,"
"UNIVERSAL STUDIOS HOLLYWOOD," "UNIVERSAL STUDIOS CITYWALK HOLLYWOOD" or
"CITYWALK" (either alone or in conjunction with or as a part of any other word
or name), including without limitation any merchandise which uses or contains
any of the fanciful characters or designs of Universal or any of its related,
affiliated or subsidiary companies or entities without Landlord's consent which
Landlord may grant or withhold in Landlord's sole and absolute discretion.
The Permitted Use has been approved by Landlord in accordance with
certain considerations of tenant mix and product balance developed by Landlord
for the Project, taking into account the rights of other tenants within the
Project. The foregoing provisions of this Section form a material part of the
consideration for Landlord's willingness to enter into this Lease. Accordingly,
in the event Tenant or any of its agents or employees fails to comply with the
provisions of this Section 2.1, then Tenant shall, without affecting or limiting
any of the rights and remedies otherwise available to Landlord pursuant to this
Lease, indemnify and save and hold Landlord harmless from and against all
claims, costs, expenses, actions, liabilities, suits, proceedings and losses of
whatever nature including all attorney's fees, arising from such failure to
comply with the provisions of this Section. The foregoing indemnification shall
survive the
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termination of this Lease. In addition, at Landlord's option, Tenant's failure
to comply with this Section 4.1 shall constitute an Event of Default.
2.2 Trade Name: Tenant represents and warrants that as of the date
hereof, Tenant has an agreement with NASCAR that permits Tenant to use the word
NASCAR in Tenant's Trade Name until August 12, 2001. Furthermore, Tenant
covenants that on or before June 30, 1999, Tenant will enter into an extension
agreement with NASCAR extending said date until December 31, 2004. Except to the
extent in Tenant's reasonable business judgment it is cost prohibitive or to the
extent in Tenant's reasonable business judgment, the NASCAR brand no longer
brings sufficient value to the business to justify paying a license fee, Tenant
shall use commercially reasonable efforts to further extend its rights to use
the word NASCAR in its Trade Name for the remainder of the Lease Term.
Throughout the Lease Term Tenant shall operate the Premises solely under the
trade name NASCAR Silicon Motor Speedway, conditioned on Tenant executing an
extension agreement (or agreements) with NASCAR, which will grant to Tenant the
right to use the trade name NASCAR in connection with the operation of the
Premises. If Tenant extends said agreement beyond August 12, 2001, Tenant shall
continue to operate only under the Trade Name or under another trade name using
the name "NASCAR". If Tenant does not extend said agreement during any part of
the Lease Term and as a result Tenant removes the word NASCAR from its Trade
Name, Tenant shall operate the Premises under the same trade name as all or
substantially all of the other stores previously operated by Tenant under the
name "NASCAR Silicon Motor Speedway". Any change of Tenant's Trade Name is
subject to Landlord's approval, except in the case where Tenant changes the name
of substantially all of its stores, in which case, Landlord's approval shall be
limited to whether in Landlord's reasonable judgment the new Trade Name is
offensive or if it conflicts or competes with any assets or operations of the
Project, Universal Studios, Inc. or any affiliates thereof. In the event during
the Lease Term Tenant loses the right to use "NASCAR" in their trade name and
the percentage change in Tenant's Gross Sales per square foot during the
consecutive 12 month period immediately following the name change is more than
[***] less than the percentage change in the Gross Sales per square foot for the
Project for the same 12 month period, then, as of the date of the name change
(and provided there has been a decrease in Tenant's Gross Sales per square foot,
Tenant's Annual Gross Sales Breakpoint shall be reduced to a level which yields
the same Percentage Rental computed for the 12 month period prior to the name
change. If Tenant was not liable for Percentage Rental during said 12 month
period prior to the name change, then there shall be no adjustment to Tenant's
Annual Gross Sales Breakpoint. By way of example, if Tenant's Gross Sales per
square foot decreased by [***] for the 12 month period after the name change,
and the Project's Gross Sales per square foot increased by [***] for the same 12
month period, then the percentage change in Tenant's sales per square foot is
[***] less than the percentage change in the Project's Gross Sales per square
foot, which exceeds the [***] threshold for adjusting Tenant's Annual Gross
Sales Breakpoint, and the Annual Gross Sales Breakpoint would be reduced to
equate the Percentage Rental for the 12 months following the name change to the
12 months preceding the name change. Notwithstanding the foregoing, if, during
any consecutive 12 month period after the reduction of the Annual Gross Sales
Breakpoint, Tenant's Gross Sales per square foot return to a level that is equal
to or higher than the Gross Sales per square foot that Tenant realized for the
12 month period prior to Tenant's change of trade name, then the Annual Gross
Sales Breakpoint will be increased to the amount of the Annual Gross Sales
Breakpoint prior to such reduction (i.e., the amount set forth in Section 1.8
above).
2.3 Operating Standards: Tenant shall at all times act in accordance
with the highest professional standards. Without limiting the foregoing, Tenant
shall render and perform all necessary services in connection with the operation
of the Premises as a retail store of a standard at least equivalent to the
standard of quality and performance of other like establishments located in the
Project as of the time such services are rendered or performed (the "Comparison
*** Confidential treatment requested.
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Standard") and shall make necessary repairs, replace worn-out, defective or
obsolete furniture, fixtures and equipment and generally maintain the Premises
in good order and repair equivalent to the Comparison Standard. Any specific
operating standards developed jointly by Landlord's retail consultant and
Tenant, and agreed to by Tenant, shall thereafter be deemed part of this Lease.
2.4 Sponsorships: If Landlord shall from time-to-time enter into a
Project Sponsorship Agreement with a product manufacturer or distributor (the
"Sponsor") and if at such time or thereafter products of the type manufactured
or distributed by the Sponsor are used or sold within the Premises, then upon
receipt of notice from Landlord, Tenant shall enter into a contract with the
Sponsor to purchase the Sponsor's products for retail sale within the Premises
(provided that there are no conflicts with (i) any Tenant contracts or other
commitments or arrangements at the time Landlord enters into a Project
Sponsorship Agreement, or (ii) any NASCAR sponsorship or licensing agreements,
commitments or arrangements without regard to the timing of any Landlord Project
Sponsorship Agreement), provided such products are comparable (in terms of
quality, cost, taste and promotional benefits) with products that Tenant would
otherwise purchase. Currently, Landlord has Project Sponsorship Agreements with
Pepsi-Cola (until February 1, 2000, thereafter with Cola-Cola) for carbonated
soft drinks and Crystal Geyser for bottled water. The foregoing shall not apply
to any credit cards which Tenant accepts from its customers.
Furthermore, Tenant shall participate in the Project promotions and
special events, so long as such participation is at no material out-of-pocket
cost to Tenant, as reasonably requested by Landlord.
2.5 Principal's Involvement: As a material inducement to Landlord to
enter into this Lease with Tenant, Tenant agrees to have an executive from
within its corporate structure who is experienced in Tenant's business
operations personally available on a reasonable basis to oversee the concept
development, design, construction, pre-opening training, operations and
management of the business establishment to be developed on the Premises to the
degree reasonably necessary to maximize the Gross Sales and to enhance the
reputation of such business establishment. In addition, such executive shall
meet with Landlord as reasonably requested by Landlord in order to discuss the
ongoing design, construction, operation and/or management of such business
establishment.
2.6 Radius Restriction: Tenant or Tenant's affiliates shall not
directly or indirectly operate, license, own or otherwise control a business
within the "Area of Exclusivity" (as defined below), the primary use of which is
the same or substantially similar to the primary Permitted Use, including
without limitation any venue with an entertainment experience substantially
similar to the Permitted Use and/or using the name, logo, marquee, tradename,
trademark or other identifying mark/logo used by Tenant for the Premises of this
Lease, or using, in whole or in part, any other tradename for the Premises as
otherwise approved by Landlord; provided, however, notwithstanding the
foregoing, Tenant shall have the right, itself and/or through any other party,
to distribute any and all merchandise with the "Nascar" and/or "Silicon Motor
Speedway" name and/or any of Tenant's other tradenames, and/or any logo,
marquee, trademark or other identifying mark/logo related to such tradenames,
within the Area of Exclusivity.
For the purposes hereof, the "Area of Exclusivity" shall be deemed to
mean: (i) that geographic area within a radius of 10 miles from the Project and
(ii) any and all Theme Parks located within the State of California. The phrase
"Theme Parks" shall mean tourist-oriented attractions that have some combination
of permanent and temporary entertainment facilities, recreational activities and
exhibitions based on or related to an unifying theme, facilities (other than
Theme Park Exclusions, none of which shall be considered a "Theme Park" for
purposes of this Lease), contained within a closed area with a controlled
entrance and charging an admission fee, which offer rides and related
attractions (which may include multimedia or virtual reality
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presentations), provided that the entirety of such facility, excluding parking
facilities and vehicle and pedestrian ingress and egress routes, shall encompass
an area equal to or greater than twenty (20) acres, as well as any open area,
non-admission based complexes (containing a combination of retail, restaurant
and entertainment facilities) which are attached or immediately adjacent to the
Theme Parks and related facilities, and which such complexes are controlled or
owned by the Theme Parks; provided, however, a "Theme Park" shall include all
the components or elements of such facility which are advertised, promoted or
otherwise held out to the general public as comprising a single or integrated
facility, even though some of the components or elements thereof may not be
contiguous or within one general admission, show or entertainment area;
provided, further, that Landlord and Tenant acknowledge and agree that the
following are non-exclusive examples of Theme Parks intended to be generally
illustrative of the types of entities which are intended by the parties to
constitute "Theme Parks": Disneyland, Knott's Berry Farm, Knott's Camp Snoopy,
Six Flags Magic Mountain, LEGOLAND, and Sea World. "Theme Park Exclusions"
(except if attached or immediately adjacent to a Theme Park and controlled or
owned by a Theme Park) means casinos, gambling, or gaming facilities, race
tracks whether or not attached or immediately adjacent to a Theme Park (e.g.,
Riverside Raceway or California Speedway), retail or wholesale malls or shopping
centers; family entertainment centers (including miniature golf courses, often
with batting cages and car racing tracks); and public streets and areas and
other publicly owned attractions, movie theaters, movie and theater districts,
film festivals, music and sports venues, halls of fame, convention centers,
auditoriums, arenas and exhibit halls, airports and other transportation
terminals, art, historic, wax space and other museums, observatories and
planetariums, places of historical significance, zoos, wild animal parks, beach,
seaport, wharf and pier areas, vineyards, street, county and state fairs,
miniature golf courses and the Project (notwithstanding the fact that the
Project is attached to or immediately adjacent to a Theme Park).
2.7 Tenant's Exclusive: Landlord will not lease any space to any other
tenant in the Project (A) for a "Protected Use" (as defined below), or (B) whose
trade name contains the name "NASCAR" (including, for example, a "NASCAR Cafe"),
provided, however, this provision (B) shall automatically become null and void
if at any time Tenant ceases to have "NASCAR" in its Trade Name. The foregoing
sentence shall not apply to tenants in the Project with leases and amendments
thereof that were executed prior to the date of this Lease ("Existing Leases")
and which do not expressly prohibit (A) and/or (B) above. Existing Leases shall
include renewals and extensions of these leases at any time during the Lease
Term. Notwithstanding the foregoing sentence, if an Existing Lease (including
extensions or renewals thereto) is amended or modified to allow the tenant to
engage in a Protected Use or have the word NASCAR in its trade name, then
Landlord shall be in violation of this Section 2.7 if such tenant engages in a
Protected Use or changes its trade name to incorporate the word NASCAR.
2.7.1 "Protected Use" shall mean (i) the operation of automobile
driving motion-based simulator rides, excluding arcade center(s) within the
Project (which are like "GameWorks" or "Dave and Buster" type uses) which could
have similar type simulator rides or games or multi-passenger (defined as having
five or more passengers) motion-based simulator rides (such as the "Emaginator"
ride currently operating adjacent to the movie theater) and also excluding the
operation by a tenant of less than three single-passenger automobile driving
motion-based simulator rides, or (ii) the sale of "NASCAR" branded merchandise,
excluding the incidental sale of NASCAR branded merchandise. In the event Tenant
ceases to use the Premises for the sale of NASCAR branded merchandise for a
period of 45 days or more (subject to Force Majeure or remodeling by Tenant as
permitted by this Lease), then NASCAR branded merchandise shall cease to be a
Protected Use.
2.7.2 This Section 2.7 shall automatically become null and void if:
(i) there is a material monetary default under this Lease after all applicable
cure periods as set forth in Section 22.2 of this Lease have expired, or upon
termination of this Lease as a result of any Tenant
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default; or (ii) Tenant ceases to use the Premises as provided in Section 2.7.
(i) above with a minimum of ten (10) automobile driving motion-based simulator
rides for a period of 30 days or more (subject to Force Majeure or remodeling by
Tenant as permitted by this Lease).
2.8 option to Extend: Landlord hereby grants to Tenant an option to
extend the term of this Lease for the Option Term upon written notice given not
less than six (6) months and not more than twelve (12) months in advance of the
expiration of the Initial Term; provided however, that Tenant's exercise of such
option shall not be effective if (a) Tenant shall be in default beyond the
applicable cure period after notice from Landlord under any of the monetary or
other materials terms of this Lease either at the time of such exercise or at
the expiration of the then Initial Term; or (b) if Tenant has not met the Gross
Sales Threshold (as defined in Section 1.9 and adjusted per Section 5.8 each
year of the Lease Term) required for the preceding twelve (12) month period;
provided, further, Landlord may condition Tenant's extension of the Term of this
lease on Tenant's refurbishment of the Premises if such refurbishment is
reasonably necessary to maintain the Premises as a first class establishment in
accordance with Section 16.1 and Article 14. All terms and conditions applicable
to the Initial Term shall be applicable to the Option Term, including but not
limited to provisions regarding Minimum Annual Rental and Percentage Rental
annual increases; however, the provisions of Exhibit C regarding the initial
construction of the Premises shall not be applicable. In the event Tenant has
not met the Gross Sales Breakpoint (as defined in Section 1.8 and adjusted per
Section 5.3 each year of the Lease Term) required for the preceding (12) month
period, then the option to extend is personal to Tenant and may not be exercised
or be assigned, voluntarily or involuntarily, by or to any person or entity
other than Tenant.
2.9 Right to Relocate: Following expiration of the second Lease Year of
the Initial Term, Landlord shall have the right to relocate Tenant to different
space, which is equal to or better than the Premises in terms of layout, foot
traffic and visibility, in the Project at Landlord's sole cost. Subject to the
foregoing sentence, the new space will be in a location designated by Landlord
in its sole discretion and will be approximately the same size as the Premises,
Base Rent and all other square footage-based dollar obligations will be
calculated on the basis of the Floor Area of the new space (but in no event more
than the amount then being paid by Tenant for the existing space, subject to
adjustment as provided in this Lease). Otherwise, the terms and conditions of
this Lease will be fully applicable to the new space. Landlord will provide
Tenant with not less than ninety (90) days prior written notice of the
relocation. Tenant will have the right, by written notice to Landlord delivered
within twenty (20) days after Landlord's relocation notice, to terminate this
Lease provided that Tenant shall promptly vacate the Premises on the date set
forth in the relocation notice and shall pay Rent until the Premises are
vacated. If Tenant elects to terminate this Lease due to such relocation, then
this Lease shall terminate effective as of the date Landlord specified in its
notice that Tenant was to relocate to the new space and, provided Tenant vacates
the Premises as required in this Lease on or before such date, Landlord shall
pay Tenant the sum as provided in Section 4.8 below or withdraw its request to
relocate Tenant. If Landlord withdraws its request to relocate Tenant, then such
notice to relocate shall become null and void. In no event shall Landlord be
entitled to relocate Tenant before the date this is twenty-four (24) months
after the date that Tenant opens for business to the public in the Premises.
Landlord's right to relocate the Premises shall also be subject to the
following: (a) Landlord will, at Landlord's sole cost and expense (except for
the costs for Tenant's trade fixtures, personalty and inventory) fully construct
the new space and deliver the same to Tenant in the same condition as is the
Premises at the time of such relocation; provided, however, Tenant shall have
the right to request that Landlord build the new space with a design different
than that of the Premises (e.g., a new prototype for Tenant's stores) and
Landlord shall comply with Tenant's request so long as such design complies with
Landlord's design requirements; provided, further, Tenant shall reimburse
Landlord for such incremental portion of the construction and design costs of
the new space that result from Tenant's change of the design for the new space.
Subject to the foregoing sentence, Landlord's cost shall include any costs
associated with the store layout,
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preparation of architectural drawings for the new space and the cost of
leasehold improvements required to deliver the new space (exclusive Of fixtures
personalty and inventory) in a condition that is substantially identical to the
Premises at the time of such relocation (including, without limitation,
electrical capacity and distribution, telephone system installation, and
computer installation), subject only to such modifications as may be necessary
and approved by Tenant in order to accommodate the configuration of the new
space; (b) Landlord will pay all costs incurred in connection with moving Tenant
and Tenant's trade fixtures, inventory and personalty to the new space,
including any incidental costs incurred by Tenant in connection with said
relocation (such as costs for relocating computer and telecommunications systems
and equipment, new business cards, letterhead and attorney fees associated with
the documentation of the relocation) up to a maximum of [***] for such
incidental costs; (c) Tenant shall not be obligated to move until the relocation
space is fully built-out, fixturized and ready to open for business and Tenant
is not obligated to pay Rent for the period of time during which Tenant is
closed as a result of said relocation. If Landlord exercises its rights to
relocate Tenant during the Option Term and if Tenant does not accept the new
space and elects, in lieu thereof, to terminate this Lease, then, upon Tenant
promptly vacating and surrendering the Premises as required hereunder, Landlord
shall, within thirty (30) days of Tenant's surrender of the Premises, pay Tenant
the unamortized value of its leasehold improvements and fixtures, said
unamortized value to be determined on a straight-line depreciation method
allowed by the Internal Revenue Code of 1986 (as amended) assuming a useful life
equal to the remaining term of this Lease (e.g., if four years remain prior to
expiration of the Lease Term, then 4/10th of useful life shall remain
unamortized) at the time the improvement or fixture is placed in service or
installed in or upon the Premises. Tenant shall be permitted to close the
Premises during the period of time reasonably required by Tenant to relocate
from the Premises to the new space. Further, upon completion of such relocation
by Tenant and delivery of the Premises to Landlord, Tenant shall be released and
relieved of any further obligations under this Lease as pertains to the
Premises.
2.10 Deposit for Tenant's Work: In addition to the Security Deposit
specified in Section 1.14 and Article XXI, Tenant shall secure its obligations
to complete the Tenant's Work by depositing with Landlord or in an escrow
account with Bank of America NT & SA or other financial institution mutually
agreed to by Landlord and Tenant an amount equal to [***] (the "Construction
Account") prior to commencement of Tenant's Work. Tenant shall have the right
after Tenant has spent [***] on construction of Tenant's Work to draw upon the
Construction Account to pay bills and invoices for the costs of constructing
Tenant's Work based on percentage of completion of such Tenant's Work, provided
that Tenant shall provide documentation acceptable to Landlord of such costs and
shall otherwise comply with disbursement procedures prescribed by Landlord or
the depository institution. All interest on funds in the Construction Account
shall be payable to Tenant.
2.11 INTENTIONALLY DELETED.
2.12 Adjustment of Taxes: Landlord estimates its costs to be expended
for Taxes to be approximately $3.30 per square foot of Floor Area on a fully
assessed basis. Notwithstanding anything to the contrary set forth in this
Lease, if due to a change in the California tax legislation commonly known as
Proposition 13, whether by legislative or administrative action or by judicial
determination (a "Prop 13 Change"), Landlord's actual costs expended for Taxes
in any year after the year in which the Rent Commencement Date occurs (a
"Comparison Year") exceed the amount expended for Taxes for the year in which
the Rent Commencement Date occurs (the "Tax Base Year") as adjusted pursuant to
Section 5.8, Tenant shall pay its pro rata share (based on Tenant's Floor Area
as a fraction of the Floor Area of all of the premises included in the Project)
of any such excess (the "Excess Taxes") to Landlord, as additional rent, in the
manner set forth below. The foregoing adjustment shall be subject to the
following:
*** Confidential treatment requested.
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(i) Excess Taxes shall not include taxes or assessments imposed as
a result of a sale or other "change in ownership" (as defined in the California
Revenue and Taxation Code book) of the Project or the building in which the
Premises are located.
(ii) on or before May 1 of each Comparison Year after a Prop 13
Change (or as soon thereafter as is practical), Landlord shall deliver to Tenant
a statement setting forth Tenant's pro rata share of the Excess Taxes for the
preceding Comparison Year. The obligations of Tenant to make payments required
hereunder shall survive the expiration of the Lease Term. Tenant's pro rata
share of Excess Taxes in any partial Comparison Year at the end of the Lease
Term shall be appropriately prorated. Landlord's statement given pursuant to
this paragraph shall be conclusive and binding upon Tenant unless disputed by
Tenant in writing within thirty (30) days after its receipt thereof. If any such
dispute arises, Tenant shall have the right after reasonable notice and at
reasonable times to inspect Landlord's accounting records at Landlord's
accounting office and, if after such inspection Tenant still disputes the amount
of Additional Rent owed, a certification as to the proper amount shall be made
by an independent certified public accountant mutually agreeable to Landlord and
Tenant, which certification shall be final and conclusive. Tenant agrees to pay
the cost of such certification unless it is determined that Landlord's original
statement overstated Taxes by more than three percent (3%).
2.13 Construction Allowance: Landlord agrees to contribute the
Construction Allowance specified in Section 1.15. Disbursement of the
Construction Allowance shall be made in two equal payments (i.e., the
Construction Allowance is $150,000, then two payments of $75,000.00) in
accordance with the following procedure: Tenant shall submit to Landlord a
written statement (the "Payment Statement") setting forth (i) all the amounts
payable to Tenant's contractors and vendors; (ii) an architect's statement
certifying 50% or 100% completion of Tenant's Work, as applicable; (iii) a copy
of all bills and invoices pertaining to such Tenant's Work totaling a minimum of
one-half (1/2) the Construction Allowance (including "hard costs" and "soft
costs" (such "soft costs" including, for example, license and permit fees and
architect's fees, but excluding attorney's fees and internal overhead)) for the
first payment (otherwise, the first payment will be equal to such lesser amount
incurred by Tenant as shown on the bills and invoices, with the difference
between 1/2 of the Construction Allowance and the amount paid as the first
payment paid as part of the second payment) and a cumulative minimum amount of
the Construction Allowance (including "hard costs" and "soft costs" (such "soft
costs" including, for example, license and permit fees and architect's fees, but
excluding attorney's fees and internal overhead)) for the second payment
(otherwise, the second payment will be equal to such lesser amount incurred by
Tenant as shown on the bills and invoices, with the difference retained by
Landlord); (iv) unconditional lien releases and proof of payment with respect to
all bills and invoices covered by the Payment Statement; (v) a copy of the
occupancy permit for the Premises for the second disbursement of the
Construction Allowance; and (vi) a copy of Tenant's punch list which Landlord
has approved after inspection of Tenant's Work for the second disbursement of
the Construction Allowance. Landlord shall issue a check to Tenant for the first
payment and the second payment within ten (10) days after Landlord's receipt of
the Payment Statement for such payment provided that, at Landlord's option,
Landlord shall have the right to withhold fifteen percent (15%) of the
Construction Allowance out of the second payment until such time as Tenant has
completed all punch list items to Landlord's reasonable satisfaction and shall
be payable within ten (10) days after Landlord's receipt of a notice from
Tenant regarding Tenant's completion thereof. The cost of any additional work
performed by Landlord (provided Tenant has requested that Landlord perform the
additional work, or Landlord notified Tenant of a defect in Tenant's work prior
to commencing the work and Tenant has a reasonable period to cure the defect and
fails to do so in a timely manner) for the benefit of Tenant, as well as any
rental that is already due and owing under this Lease as of the date the payment
of the Construction Allowance is to be made, shall be deducted from the
Construction Allowance before said Construction Allowance is paid to Tenant.
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ARTICLE III. PREMISES
3.1 Lease of Premises: Landlord hereby leases to Tenant, and Tenant
hereby leases from Landlord, the space specified in Section 1.3, referred to
herein as the "Premises" and described in Exhibit B-1.
3.2 Definitions of "Floor Area" and "tenant areas": The term "Floor
Area," as used throughout this Lease, shall mean and include the square footage
of all interior and exterior areas (including mezzanines) of the particular area
or areas being referred to, measured (to the extent applicable) (a) with respect
to the front and rear width thereof, from the exterior face of the adjacent
exterior or corridor wall to the opposite exterior face of the adjacent exterior
or corridor wall or, if none, to the center line of those walls separating the
area being measured from other tenant areas, and (b) with respect to the depth
thereof, from the front lease line to the exterior face of the rear exterior
wall or corridor wall or, if neither, to the center of the rear demising
partition; and in no case shall there be any deduction or exclusion shall be
made for columns or other structural elements or by reason of stairs, elevators,
corridors, interior partitions or other interior construction, improvements or
equipment. The term "tenant areas" as used throughout this Lease, shall mean all
interior and exterior areas in the Project which are available for exclusive use
and occupancy by tenants of the Project. When construction is completed, the
actual size and dimensions of the Premises shall be determined by Landlord by
means of an accurate measurement of the Premise from center line to center line
of those walls separating the area being measured without any deductions or
exclusions made for columns or other structural elements; provided, however,
Tenant shall have ten (10) business days from receipt of Landlord's
determination of the size and dimensions of the Premises to itself measure the
Premises and object to Landlord's determination. If Tenant timely objects to
such determination, Landlord and Tenant shall together re-measure the Premises
and mutually agree on the correct size and dimensions of the Premises. The total
Floor Area contained in the Premises as determined above shall be memorialized
in a letter from Landlord to Tenant, and shall be deemed to be the actual Floor
Area of the Premises of this Lease, and such Floor Area as is set forth in the
letter shall thereafter be used for the purpose of calculating Minimum Annual
Rental, Gross Sales Breakpoint, Gross Sales Threshold, Tenant Allowance and any
other charges based on square footage under the Lease.
3.3 Certain Easements In Favor of Tenant: Tenant shall have
non-exclusive access easements for the benefit of itself and its employees,
patrons, invitees, customers and other appropriate persons during the Lease Term
in connection with Tenants use and occupancy of the Premises over the Common
Areas, the parking areas and various private roads and sidewalks within
Universal City as Landlord may from time-to-time designate. In addition, Tenant
shall, subject to Landlord's prior approval, have a non-exclusive right of
access to shafts, ducts and other similar facilities within the Common Area for
the purpose of provision of utilities and maintenance.
3.4 Certain Easements in Favor of Landlord: Landlord reserves to itself
the use of the exterior walls and roof and a nonexclusive easement to install,
maintain, use, repair and replace pipes, ducts, conduits, wires, conduits,
facilities and structures as may be used for ventilation and the conveyance of
Utilities in and through the Premises, including air space above ceiling height
or below the floor of the Premises for the common use and benefit of Landlord,
Tenant or other tenants; provided that any such installation, maintenance, use,
repair and replacement shall be conducted so as to avoid unreasonable
interference with Tenant's use of the Premises.
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ARTICLE IV. TERM
4.1 Duration of Lease Term: This Lease and the obligations of the
parties hereunder shall become effective as of the Effective Date. For purposes
of measuring the duration of this Lease, the Lease Term shall commence on the
"Rent Commencement Date" (as specified in Section 1.5) and shall continue for
the term specified in Section 1.4. If such Rent Commencement Date is other than
the first day of a calendar month, the first day of the calendar month
immediately following such date shall be used for purposes of calculating
anniversaries of the commencement of the Lease Term.
4.2 Acceptance of the Premises: Subject to Sections 1.5 and 1.1.2,
Landlord shall deliver, and Tenant shall accept from Landlord, possession of the
Premises on the "Delivery Date" (as specified in Section 1.12 above), and Tenant
shall commence construction of Tenant's Work as specified in Exhibit C and the
Addendum as soon as commercially reasonably possible after delivery of
possession of the Premises and diligently prosecute such construction so as to
complete and open the Premises for business. Landlord shall have the right, but
not the obligation, at Tenant's sole cost, to construct any improvements
included in Tenant's Work which Tenant shall have failed to construct as and
when required by this Lease if, ten (10) days after receiving written notice
from Landlord that Landlord intends to itself construct such improvements,
Tenant has not itself commenced construction of said improvements and/or
thereafter completed such construction within thirty (30) days.
Tenant shall be deemed to conclusively deemed to have accepted the
Premises, including Landlord's Work, in AS IS condition, except for any items
specified on a punch list delivered to Landlord within twenty (20) days after
Tenant occupies the Premises. Notwithstanding the foregoing, Tenant shall not be
deemed to have waived its right to require Landlord to correct any latent
defects as long as Tenant gives notice thereof to Landlord on the earlier of
fifteen (15) days after discovery of such defect or fifteen (15) days after
the date Tenant should have been alerted to the existence thereof had Tenant
acted reasonably.
4.3 Delays in Completion of Landlord's Work: If Landlord does not for
any reason complete Landlord's Work sufficiently to constitute substantial
completion of the Premises by the date specified in Section 1.12 above and/or
does not thereafter complete all items of Landlord's Work to enable Tenant to
open the Premises for business, Landlord shall not be subject to any liability
with respect hereto, and such delay shall not affect the validity of this Lease,
nor the obligations of Tenant hereunder, however, the Delivery Date shall be
postponed one day for each day's delay in Landlord's completing Landlord's Work,
but only to the extent that solely but for such delay, Tenant would have opened
the Premises for business by the Rent Commencement Date. If and to the extent
Landlord's failure to timely complete the various phases of Landlord's Work as
set forth in the prior sentence is due to delays by Tenant or failure by Tenant
to timely provide Landlord with plans or any other information or approvals, the
Rent Commencement Date shall not be postponed.
4.4 Tenant's Early Use Or Possession: Tenant's entry upon, or use or
possession of, the Premises for purposes other than the normal conduct of its
business activities prior to the Rent Commencement Date shall be subject to all
the terms and conditions of this Lease, other than Tenant's obligation to pay
any Rental as defined in Section V below.
4.5 Tenant's Delivery of Documents: Within thirty (30) days after the
earlier of completion of construction of Tenants Work or Tenant's opening for
business, Tenant shall deliver to Landlord the following items: (a) copies of
all mechanics' lien releases or other lien releases relating to Tenant's Work,
notarized and unconditional, in such form as Landlord shall have approved, or
evidence that same have been removed of record by bonding; (b) a copy of
Tenant's recorded valid Notice of Completion; (c) copies of all building
permits, business license and other
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certificates evidencing inspection, acceptance and/or approval of the Premises
by appropriate governmental authorities, including the underwriters approval of
Tenants electrical system; (d) a certification by Tenant's architect that the
Premises have been constructed substantially in accordance with Tenant's Plans
and in accordance with Exhibit C; (e) Tenant's certification as to the actual
cost of constructing Tenant's Work along with such documentation of such costs,
and payment thereof, as Landlord requires; (f) a complete list of the names,
addresses, telephone numbers and contract amounts for all contractors,
subcontractors, vendors and/or suppliers providing materials and/or labor for
Tenant's Work; (g) a set of "as-built" plans and specifications for Tenant's
Work in reproducible form prepared and sealed by Tenant's architect; (h) letter
of assurance from Tenant's contractor that the Premises and all equipment
installed therein can be maintained and operated as designed and installed; (i)
certified balance report that Tenant's HVAC system meets design requirements;
(j) copies of operation and maintenance manuals for all equipment installed at
the Premises; (k) emergency telephone numbers with respect to maintenance and
repair of the Premises; and (l) any other statements, certificates or agreements
reasonably requested by Landlord.
4.6 Surrender of the Premises: At the expiration of the Lease Term or
the earlier termination of this Lease, Tenant will surrender possession of the
Premises and deliver the same to Landlord. Upon surrender of the Premises,
Tenant shall deliver the Premises to Landlord in good order, condition and state
of repair, but shall not be responsible for damages resulting from ordinary wear
and tear, casualty losses which are Landlord's responsibility under Article
XVIII, or any items of repair which are Landlord's responsibility under Section
16.2. Unless waived by Landlord in writing and in response to Tenants request
for Landlord to review the space hereunder, Tenant shall accompany Landlord, or
one of Landlord's authorized representatives, on a joint inspection of the
Premises prior to such surrender.
4.7 Holding Over Without Consent: If, after the expiration or earlier
termination of the Lease Term, Tenant remains in possession of the Premises
without Landlord's express written consent, Tenant shall become a tenant at
sufferance only, subject to all of the provisions of this Lease (except as to
Lease Term), provided that the monthly installments of Minimum Annual Rental
payable by Tenant shall be increased to one hundred fifty percent (150%) of the
monthly average of the total Minimum Annual Rental and Percentage Rental which
was payable by Tenant during the Lease Term; the aforementioned new Minimum
Annual Rental payable during the aforementioned tenancy at sufferance shall be
prorated and paid in advance on a daily basis; and if and to the extent the
amount of the Percentage Rental payable with respect to the Lease Term is not
known when the tenancy at sufferance begins, the rate of Minimum Annual Rental
payable until the aforementioned amount of Percentage Rental has been determined
shall be at the daily rate specified by Landlord and when the correct figure is
determined an appropriate lump sum adjusting payment shall be made to correct
any overpayment or underpayment. Acceptance by Landlord of rental after such
expiration or earlier termination shall not result in a renewal or extension of
this Lease. The provisions of this Section are in addition to and do not affect
Landlord's right of re-entry or any rights of Landlord hereunder or as otherwise
provided by law. If Tenant fails to surrender the Premises upon the expiration
or earlier termination of this Lease, despite demand to do so by Landlord,
Tenant shall indemnify, defend and hold Landlord harmless from all loss or
liability, including any claim made by any succeeding tenant founded on or
resulting from such failure to surrender and any attorney fees and costs
associated therewith.
4.8 Landlord's Rights of Termination: If at any time following the
twenty fourth (24th) full month after the Rent Commencement Date, Tenant's Gross
Sales (as defined in Article VI) for any consecutive twelve (12) month period
(ending in or after the twenty-fifth (25th) full calendar month after the Rent
Commencement Date) do not exceed an amount equal to the Gross Sales Threshold
(specified in Section 1.9), Landlord may elect to terminate this Lease by notice
to Tenant delivered any time within one year after said consecutive twelve (12)
month period with a termination date designated at least (90) days after the
date of such notice. For the purposes of
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this Section 4.8, the definition of "Gross Sales" (as defined in Article VI
below) is modified to mean only those sales made to third parties, and not to
related or affiliated companies of Tenant. If Landlord elects to so terminate
this Lease, Landlord shall pay Tenant within fifteen (15) days after the last
to occur of the aforementioned designated termination date or the date Tenant
surrenders possession of the Premises in accordance with Section 4.6 a sum equal
to the unamortized portion of Tenant's actual cost of constructing Tenant's Work
(excluding "soft costs" and Tenant's Trade Fixtures) as certified pursuant to
Section 4.5 (after first subtracting Tenant's Construction Allowance, if any)
amortized on a straight line basis without interest over the Lease Term
(including the Option Term). Landlord shall be entitled to subtract from any
payment otherwise due and owing to Tenant under this Section all sums owed by
Tenant to Landlord. The Gross Sales Threshold shall be increased (but never
decreased) on each anniversary of the Rent Commencement Date during the Lease
Term in accordance with the procedure described in Section 5.8 (for which
purposes "Base Amount" shall mean the Gross Sales Threshold specified in Section
1.9, "Base Month" shall mean the month in which the Rent Commencement Date
occurs, and "Month of Adjustment" shall mean any month in which the Gross Sales
Threshold is to be increased pursuant to this Section).
ARTICLE V. RENTAL
5.1 Rent Commencement Date: Tenant's obligation to pay any amount of
"Minimum Annual Rental", "Percentage Rental" or "Additional Rent" (as defined in
this Article V) under this Lease shall commence on the Rent Commencement Date.
Tenant shall pay all rental and other payments to Landlord at its management
office in the Project, or at such other place as may from time-to-time be
designated by Landlord.
For the purposes of this Lease, the term "Rental" or "Rent" shall mean
and be defined as all Base Rent, Percentage Rental and Additional Rent due from
Tenant to Landlord hereunder.
5.2 Minimum Annual Rental: Tenant shall pay as rental the Minimum
Annual Rental specified and defined in Section 1.6 in advance and without notice
or invoice, on the first day of each calendar month. Minimum Annual Rental for
any fractional calendar month at the beginning or end of the Lease Term shall be
prorated on the basis of the number of days in that particular calendar month
and if the Rent Commencement Date occurs on other than the first day of a
calendar month, the prorated rent for that calendar month plus the rent for the
succeeding calendar month shall be paid in advance on the Rent Commencement
Date. On each anniversary of the Rent Commencement Date during the Lease Term,
the Minimum Annual Rental shall be increased (but never decreased) in accordance
with the procedure described in Section 5.8 (for which purposes "Base Amount"
shall mean the Minimum Annual Rental specified in Section 1.6 on the Rent
Commencement Date and the fifth anniversary of the Rent Commencement Date
depending on the period of adjustment, "Base Month" shall mean the month in
which the Rent Commencement Date and the fifth anniversary of the Rent
Commencement Date depending on the period of adjustment occurs, and "Month of
Adjustment" shall mean any month in which the Minimum Annual Rental is to be
increased pursuant to this Section).
The Minimum Annual Rental shall be deemed to include Tenant's share of
Operating Costs and Taxes. The term "Taxes" as used in this Lease is defined as
any and all real and personal property taxes, general and special assessments,
water and sewer charges, and similar impositions by any governmental authority
or agency upon the Project, the land upon which it is located, Landlord's Work,
and any improvements, fixtures, equipment or other property of Landlord located
in or used in connection with the operation or maintenance of the Project.
"Taxes" shall also include any tax on or measured by rental as well as any tax
hereafter imposed wholly or partly in lieu of any of the foregoing. "Taxes"
shall not include any net income, franchise, capital stock, estate or
inheritance taxes, or any tax hereafter imposed on the Project, on Landlord
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or on Tenant that is not imposed as of the Effective Date, or any taxes
(including sales and use taxes), assessments, license fees and public charges
levied, assessed or imposed upon it business operation at the Premises or upon
its merchandise, Improvements and Personal Property. The term "Operating Costs"
as used in this Lease is defined as the sum of the costs of all utilities,
building supplies, equipment, materials, repairs and maintenance, insurance
maintained by Landlord pursuant to Section 17.5, and cost of labor and services
of employees and independent contractors incurred by Landlord in maintaining,
repairing (or replacing in lieu thereof) and operating the Project, together
with all Common Areas and ancillary parking areas, access roads, walkways,
plazas, landscaped areas (the "Adjacent Areas") and any other property,
fixtures, equipment and improvements used in connection with the operation or
maintenance of the Project. "Operating Costs" shall also include: rental
expenses for (or a reasonable depreciation allowance on) personal property used
in the maintenance, operation or repair of the Project and/or the Adjacent
Areas; costs, expenditures or charges (whether capitalized or not) required by
any governmental or quasi-governmental authority; amortization of capital
expenses (including financing costs) made by Landlord to reduce Operating Costs;
a reasonable building management fee; and any other costs or expenses incurred
by Landlord in the performance of its obligations under this Lease and not
otherwise reimbursed by Project tenants or by insurance. Landlord reserves the
right to determine in its sole discretion what portion of Tenant's Minimum Rent
shall be allocated to cover the Operating Costs and Taxes; provided, however,
Tenant will not be obligated to pay any amount toward Operating Costs and/or
Taxes to the extent such Operating Costs and/or taxes are not included in the
Minimum Annual Rental collected from Tenant hereunder, unless expressly provided
in on Section 2.12 or Section 13.3.
5.3 Percentage Rental: In addition to the Annual Rental, Additional
Rent and other sums specified herein, Tenant shall pay percentage rent each year
commencing in the month in which the annual Gross Sales Breakpoint is exceeded
(hereinafter "Percentage Rental") calculated as a percentage of Tenant's "Gross
Sales" (as that term is defined in Article VI) made from or upon the Premises
during each calendar year or pro ration thereof. Percentage Rental shall be
calculated by (i) subtracting the "Gross Sales Breakpoint" specified in Section
1.8 from Tenant's Gross Sales, and then (ii) multiplying the resulting amount by
the percent specified in Section 1.7. Said Percentage Rental shall be computed
each calendar month and, on or before the fifteenth (15th) day after the close
of each such calendar month, Tenant shall submit to Landlord a Statement of
Gross Sales in the form set forth in Exhibit D and pay to Landlord the
"Percentage Rent Due" (if any) as computed pursuant to Exhibit D. Tenant shall
account for and pay Percentage Rental on any Gross Sales during any partial
calendar month or partial calendar year at the beginning or end of the Lease
Term in the same manner based on a pro rated Gross Sales Breakpoint calculated
on the basis of the number of days in such partial calendar month or year
divided by thirty (30) or three hundred sixty-five (365), as the case may be.
The Gross Sales Breakpoint shall be increased (but never decreased) on each
anniversary of the Rent Commencement Date during the Lease Term in accordance
with the procedure described in Section 5.8 (for which purposes "Base Amount"
shall mean the Gross Sales Threshold specified in Section 1.9 on the Rent
Commencement Date and the fifth anniversary of the Rent Commencement Date, "Base
Month" shall mean the month in which the Rent Commencement Date and the fifth
anniversary of the Rent Commencement Date occurs, and "Month of Adjustment"
shall mean any month in which the Gross Sales Breakpoint is to be increased
pursuant to this Section).
5.4 Reporting of Gross Sales: Tenant shall furnish Landlord with a
weekly report of its daily sales at the times and in the manner that Landlord
may request. If Landlord develops an automated mechanism (by computer or
otherwise) to collect such daily sales reports, Tenant shall cooperate with
Landlord's introduction of such automated mechanism and shall furnish such daily
sales reports using such automated mechanism; provided, however, that Tenant
will not be required to introduce such automated mechanism to the extent the
cost thereof would be greater than One Thousand Dollars ($1,000).
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Tenant shall furnish to Landlord a monthly Statement of Gross Sales of
Tenant within ten (10) business days after the close of each calendar month.
Each such Statement shall be in accordance with Exhibit D and shall show the
gross selling prices of all merchandise and services with all adjustments
allowed thereto pursuant to Article VI. Each such Statements shall be signed by
all individuals doing business as Tenant, by a general partner if Tenant is a
partnership, or by an authorized officer of Tenant if Tenant is a Corporation.
Each such Statement of Gross Sales shall also include a certification (in a form
approved by Landlord) by the chief financial officer of Tenant to the effect
that to such officer's knowledge such Statement is in material compliance with
the provisions of this Lease and (after the first such Statement) was prepared
in a manner consistent with all prior Statements.
Tenant shall record at the time of sale all receipts from sales or
other transactions, whether cash or credit, in a cash register or registers
(paid for and provided by Tenant) having a sealed and continuous tape which
cumulates and consecutively numbers all purchases. Tenant shall keep the
following items: (a) accurate books of account and records in accordance with
generally accepted accounting principles consistently applied, including, a
sales journal, general ledger, and all bank account statements showing deposits
of Gross Sales revenue; (b) all such cash register receipts with regard to the
Gross Sales and credits, refunds and other pertinent transactions made from or
upon the Premises (including the Gross Sales of any subtenant, licensee or
concessionaire); and (c) detailed original records of any exclusions or
deductions from Gross Sales, including vendor invoices, canceled checks, and any
other documents supporting such exclusions or deductions. Tenant shall also
follow such additional fiscal, accounting, and reporting procedures and maintain
such additional records as Landlord may from time-to-time reasonably require.
Such books, receipts and records shall be kept for a period of three (3) years
after Landlord's receipt of the Gross Sales Statement for each calendar year.
The receipt by Landlord of any statement or any payment of Percentage Rental for
any period shall not bind it as to the correctness of the statement or the
payment.
5.5 Additional Rent: In addition to Minimum Annual Rental and
Percentage Rental, Tenant shall pay all other sums of money or charges required
to be paid by Tenant under this Lease (which sums are referred to in this Lease
as "Additional Rent").
5.6 Late Payments: Any amount due from Tenant to Landlord hereunder
which is not paid within five (5) days after it is due shall be subject to a
late charge in the amount of [***] of the amount unpaid and shall in addition
bear interest at the Lease Rate, calculated from the due date until paid. The
payment of such late charge and/or interest shall, however, not excuse or cure
any default by Tenant under this Lease. The parties hereby agree that the
aforestated late charge represents a fair and reasonable estimate of the costs
Lessor will incur by reason of late payment by Tenant. Such costs include,
without limitation, processing and accounting charges and any late charges that
may be imposed on Landlord. If Tenant shall have been late in making Rental
payments three (3) times during any twelve (12) month period, Landlord shall
have the option, exercised by notice to Tenant, to require that beginning
immediately thereafter, Minimum Annual Rental shall no longer be made in monthly
installments on the first day of each calendar month, but each installment of
such Minimum Annual Rental shall be payable three (3) months in advance until
such time as Tenant has paid each installment of such Minimum Annual Rental in a
timely manner for twelve (12) consecutive months, at which time Tenant shall be
entitled to make payments of Minimum Annual Rental as regularly required under
Section 5.2 above (i.e., Tenant shall no longer be obligated to pay each
installment of Minimum Annual Rental three (3) months in advance).
5.7 No Set-Offs Or Deductions: All amounts of Minimum Annual Rental,
Percentage Rental and Additional Rent payable in a given month (also
collectively referred to in this Lease as "Rental") shall be deemed to comprise
a single rental obligation of Tenant to Landlord. Tenant
*** Confidential treatment requested.
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shall not, except as otherwise herein provided, have the right to set-off or any
right of deduction against any Rental provided for under this Lease.
5.8 Adjustment of Payments: Certain provisions of this Lease require
that adjustments be made to a sum of money or other consideration ("Base
Amount") in accordance with this Section. The measure for such percentage
increase, if any, shall be the Department of Labor, Bureau of Labor Statistics
Consumer Price Index for all Urban Consumers, Los Angeles-Anaheim-Riverside
(1982-1984 equals 100), hereinafter referred to as the "Index." The procedure
for making such adjustment shall be to increase the Base Amount by a percentage
(such increase not to exceed [***]) equal to the percentage increase, if any, in
the Index for the month which is three (3) months before the Month of Adjustment
as compared to the Index for the month which is three (3) months before the Base
Month. The terms "Month of Adjustment," "Base Month" and "Base Amount," as used
herein, are defined in the applicable sections of this Lease. Should said Bureau
discontinue the publication of the above Index, or publish the same less
frequently, or alter the same in some other manner, then Landlord shall adopt a
substitute procedure which reasonably reflects and monitors consumer prices
and/or shall substitute any official index published by the Bureau of Labor
Statistics or by such successor or similar governmental agency as may then be in
existence and shall be most nearly equivalent thereto as reasonably determined
by Landlord.
5.9 Audit Rights: Landlord shall have the right up to twice per annum
(provided, however, such limitation shall apply if Landlord finds a material
discrepancy in Tenant's books of account and records during its previous
inspection and/or audit), upon at least fifteen (15) days' reasonable advance
written notice, to inspect and audit all of the books of account and records of
Tenant (including the books of account and records of any subtenant, licensee or
concessionaire) required to be kept pursuant to Section 5.4. Tenant shall make
the books of account and records available for inspection and audit by
Landlord's representatives at the Premises or at a business office of Tenant in
Los Angeles County during regular business hours. In addition, upon request of
Landlord, Tenant shall furnish to Landlord a copy of Tenant's state and local
sales and use tax returns, and all taxing authority audit reports, delinquency
notices, and the like pertaining thereto, and, at Landlord's request, shall
obtain copies of the foregoing from the taxing authorities. Any information
gained from such statement or inspection shall be confidential and shall not be
disclosed other than to carry out the purpose hereof, provided, however,
Landlord shall be permitted to divulge the contents of any such statement in
connection with any contemplated sales, transfers, assignments, encumbrances or
financing arrangements of Landlord's interest in the Premises or in connection
with any administrative or judicial proceedings in which Landlord is involved
where Landlord may be required to divulge such information. If it shall be
determined as a result of such audit that there has been a deficiency in the
payment of Percentage Rental, then such deficiency shall become immediately due
and payable with interest at the Lease Rate from the date when said payment
should have been made. In addition, if Tenant understates Gross Sales by more
than [***], and if Landlord is entitled to any additional
Percentage Rental as a result of said understatement, or if such audit shows
that Tenant has failed to maintain the books of account and records required by
Section 5.4 so that Landlord is unable to verify the accuracy of Tenant's
statement, then Tenant shall pay to Landlord all reasonable costs and expenses
(including reasonable auditors' and attorneys' fees and costs) which may be
incurred by Landlord in conducting such audit and collecting such underpayment
if any and implement such corrective measures as may be required by Landlord to
maintain accurate books of account and records. If Tenant intentionally
understated Gross Sales, then, in addition to Landlord's aforesaid rights,
Landlord may terminate this Lease.
ARTICLE VI. DEFINITION OF "GROSS SALES"
The term "Gross Sales" of Tenant as used in this Lease is defined to be
the gross selling price of all merchandise or services sold in or from, and any
other gross receipts (including cover
*** Confidential treatment requested.
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charges and fees paid by third parties for sponsorships or celebrity appearances
or other promotional considerations) generated on or from, the Premises by
Tenant, its subtenants, licensees and concessionaires, whether for cash, credit
or barter, and whether made by store personnel or by approved vending, video,
pinball or gaming machines, which shall be adjusted only by excluding the
following:
(a) The selling price of all merchandise sold in or from the Premises
returned by customers and accepted for full credit or the amount of discounts
and allowances made thereon;
(b) Sales taxes, so-called luxury taxes, consumers' excise taxes, gross
receipts taxes, and other similar taxes now or hereafter imposed upon the sale
of merchandise or services included in Gross Sales and paid by Tenant to the
applicable governmental authorities;
(c) Sales of fixtures, equipment or property (including the racing
simulators) which are not stock in trade;
(d) Insurance proceeds, but to the extent any such proceeds are
intended to compensate for, or are measured by anticipated lost sales, such
proceeds shall be included in Gross Sales; and
(e) Sales which are "bulk transfers" of inventory, as that term is
defined in the California Commercial Code.
(f) Exchanges and transfer of goods and merchandise between, Tenant's
stores/locations made for the convenient operation of Tenants business and not
to consummate a sale made in, at, or from the Premises, and goods returned to
their sources or transferred to a warehouse owned by or affiliated with Tenant;
(g) Returns to manufacturer;
(h) Discounted or complimentary use of games or entertainment
attractions by, or discounted or complimentary merchandise given or sold to,
employees, guests or invitees of Tenant, provided that any consideration
received by Tenant in connection any discounted or complimentary transaction
shall be included in Gross Sales;
(i) Special promotional use of games or other entertainment
attractions, provided that any consideration received by Tenant in connection
with a promotion shall be included in Gross Sales;
(j) Revenue received from the sale of "debit cards," "game cards" or
"smart cards," or tokens except to the extent that such cards or token are
redeemed for use of games or other entertainment devices within the Premises;
(k) Sales of gift certificates (unless redeemed at the Premises);
(l) Sums and credits received in the settlement of claims for loss of
or damage to merchandise to the extent previously reported as Gross Sales;
(m) The price allowed on all merchandise traded in by customers for
credit to the extent the credit given is greater than the value of the
merchandise traded in (provided that such credit is not greater than the greater
of (y) the sales price originally paid for such merchandise or (z) the current
sales price for such merchandise);
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(n) Alteration workroom charges and delivery charges, if the amount of
any such charge received by Tenant is no greater than Tenant's cost of providing
the service;
(O) INTENTIONALLY DELETED.
(p) Reimbursement of the amount paid for minor service charges, such as
postage or delivery expenses;
(q) Receipts from sales of food and beverages by third-party caterers
to Tenant's employees and/or customers where such receipts are not retained by
Tenant;
(r) Fees paid by Tenant to credit card companies and/or banking
institutions (to the extent previously reported as Gross Sales) in accordance
with credit card purchase plans not to exceed five percent (5%) of the
merchandise sales price; and
(s) Tips and gratuities passed through and/or paid directly to Tenant's
employees.
All sales originating at the Premises or orders secured or received at
the Premises (whether by mail, telephone, facsimile transmission, telegraph, or
otherwise) shall be considered as made and completed therein, even though
bookkeeping, payment or collection of the account may take place elsewhere, and
even though actual filling of the sale or service order and actual delivery of
the merchandise may be made from a place other than the Premises. Each sale upon
installments or credit shall be treated as a sale for the full cash price at the
time of sale.
The term "merchandise" as used in this Lease is defined as any goods
and commodities, including foods and beverages, sold or offered for sale, unless
the context of the use of such term requires a different meaning.
ARTICLE VII. UTILITIES
Landlord will make available to Tenant, as set forth in Exhibit C,
facilities for removal of sewage and for delivery of water, electricity,
telephone services and natural gas (hereinafter collectively referred to herein
as "Utilities") to the Premises or, at Landlord's sole option, to a central
distribution point outside the Premises. Subject to Section 1.12 above, Tenant
shall, at its expense, connect to and use such Utilities throughout the Lease
Term.
Tenant shall install and maintain at its expense a separate meter for
any and all Utilities and pay to the appropriate utility company or Landlord the
cost of all such Utilities used upon the Premises. If any such charges are not
paid when due, Landlord may, but shall not be required to, pay the same, and any
amount so paid by Landlord shall immediately thereafter become due to Landlord
from Tenant as Additional Rent. In the event that Landlord elects to deliver
water or electricity to the Premises or to provide for the removal of sewage
from the Premises (the "Supplied Utilities"), Tenant shall pay, as Additional
Rent, a "Utilities Charge" to reimburse Landlord for charges related to delivery
or removal of the same. Such Utilities Charge shall be calculated on the basis
of Tenant's metered utility use and the rates charged by the local public
utility supplying such Supplied Utilities. The Utilities Charge will include
reimbursement to Landlord for direct and indirect costs of providing such
Supplied Utilities, but shall not exceed the charge of the local public utility
company had said company furnished such Supplied Utilities directly to Tenant.
Landlord shall not be liable, in damages or otherwise, for any
discontinuance, failure or interruption of service to the Premises or the Common
Areas of Utilities or of any air-conditioning
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system unless such discontinuance, failure or interruption results from
Landlord's (or its contractor's, agent's or employee's) negligence or willful
misconduct. No such discontinuance, failure or interruption shall be deemed a
constructive eviction of Tenant or entitle Tenant to terminate this Lease.
Except as provided in this paragraph below, no such discontinuance, failure or
interruption shall entitle Tenant to withhold payment of any rental due under
this Lease unless such discontinuance, failure or interruption (i) is due to
Landlord's voluntary action, negligence or willful misconduct and continues for
more than five (5) days or (ii) is not due to Landlord's voluntary action,
negligence or willful misconduct and continues for more than twenty (20) days,
but only to the extent Tenant's business interruption insurance does not pay
Tenant's rent due during such period; provided, finally, such discontinuance,
failure or interruption shall be deemed a constructive eviction of Tenant and
entitle Tenant to terminate this Lease if such discontinuance, failure or
interruption lasts for one hundred and eighty (180) days or more. In either
event, Landlord shall use reasonable efforts to restore any interrupted service.
ARTICLE VIII. COMMON AREA AND PARKING AREAS
8.1 Definition of "Common Area": The term "Common Area" refers to all
improved and unimproved areas that are now or hereafter made available for the
general use, convenience and benefit of Landlord, Tenant, other persons entitled
to occupy Floor Area in the Project and/or their customers, patrons, employees
and invitees, including floors, ceilings, roofs, skylights, windows, driveways,
open or enclosed malls, food court seating areas, service areas, loading docks,
vertical circulation facilities (other than those stairways, escalators and
elevators within tenant areas), sidewalks, curbs and landscaped areas that are
within the Project.
8.2 Use of Common Area: Subject to the provisions of this Section,
Tenant and its employees and invitees are authorized, empowered and privileged
to use the Common Area. Tenant and its employees shall have the right to use the
Common Area for access to the Premises at all times and Tenant's customers shall
have such right during all hours that Tenant is open for the conduct of
business. Notwithstanding the foregoing and subject to Section 8.3, Landlord
shall have the right to use the Common Areas for special events, during which
use Tenant shall remain open for business unless such use prohibits or
materially impairs (i.e., place or locate any physical barrier (whether
permanent or temporary; e.g., a stage, crowd-control ropes, booths, kiosks,
special event sound or lighting equipment, etc.), in such a manner as to make it
difficult and/or dangerous to gain) access to the Premises by Project patrons
(excluding event guest patronage of and use of Tenant's Premises) in which case,
Tenant shall have the right to close for business for the duration of the event.
Landlord agrees to construct, or cause to be constructed, the Common Area
generally upon the areas shown on Exhibit A and shall maintain and operate, or
cause to be maintained and operated (except as hereinafter provided with
reference to cost of maintenance) in a first-class condition and repair, said
Common Area at all times following completion thereof for the non-exclusive
benefit and use of the customers and patrons of Tenant, and of other tenants,
owners and occupants of the Project. All expenses in connection with the
original construction and installation of the Common Area shall be at the sole
cost and expense of Landlord and shall not be charged to Tenant. Landlord shall,
in a manner consistent with other facilities within Universal City, keep, or
cause to be kept, said Common Area in a neat, clean and orderly condition,
properly lighted and landscaped, and repair and maintain (or replace, if
necessary) all equipment and facilities thereof.
Subject to CityWalk Management approval and provided that there is no
interference with ingress or egress to and from other tenant spaces or with
pedestrian traffic in the common areas, Tenant's customers shall be allowed to
queue in the Common Areas for the purchasing of tickets and waiting for the use
of available simulator rides. Landlord shall have the right to approve, in
Landlord's sole discretion, Tenant's request to place an actual or model NASCAR
stockcar in the Common Areas fronting the Premises.
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8.3 Control of Common Area: Landlord shall at all times have the right
of determining the nature and extent of the Common Area and parking areas, and
of making such changes thereto from time-to-time which in its reasonable opinion
are deemed to be desirable, including the location and relocation of driveways,
entrances, exits, automobile parking spaces, the direction and flow of traffic,
designation of prohibited areas, landscaped areas, utilities and all other
facilities thereof, and the modification of the Common Area for the purpose of
expanding and/or remodeling the Project. Except as otherwise specifically
provided in this Lease, Landlord shall at all times after the Effective Date
have the sole and exclusive control of the Common Area and parking areas,
including the right to lease space within the Common Area to tenants for the
sale of merchandise and/or services and the right to permit advertising
displays, educational displays and entertainment in the Common Area. Landlord
shall also have the right at any time to exclude and restrain any person from
use thereof, excepting, however, bona fide customers, patrons and service
suppliers of Tenant and other tenants of Landlord who make use of said areas in
accordance with the rules and regulations established by Landlord from
time-to-time with respect thereto in accordance with Section 8.5. The rights of
Tenant with respect to the Common Area and parking areas shall at all times be
subject to the rights of Landlord, the other tenants of Landlord and the other
owners of the Project to use the same in common with Tenant. It shall be the
duty of Tenant to keep all of the Common Area free and clear of any obstructions
created or permitted by Tenant or resulting from Tenant's operation.
Notwithstanding the foregoing, Landlord shall not materially and adversely
impair public access (through any of Tenant's front entry doors) to the Premises
or the visibility of the Premises.
8.4 Security: Tenant acknowledges that, by providing any security
guards for the Common Area and parking areas, Landlord does not represent or
assume responsibility that Tenant will be free from any Claims (as defined in
Section 17.1) relating to such security guards, and Tenant further agree that
Section 17.1 shall relate to Claims arising out of the actions and inactions of
such security guards. Landlord shall have the right to recover from Tenant
reasonable additional security costs incurred by Landlord as a result of
Tenant's activities or a special event at the Premises reasonably necessitating
the expenditure of such additional security costs.
8.5 Rules and Regulations: Tenant acknowledges that it is aware that
Landlord and others are engaged in motion picture and television film
production, motion picture exhibition, hotel, restaurant, bar, studio tour
business and other businesses within Universal City (none of which they are
obligated to continue), and Landlord may promulgate, amend and require the
observance by Tenant and Tenant's customers, licensees, concessionaires and
employees, of reasonable rules and regulations uniformly imposed and enforced in
a non-discriminatory manner for the proper and efficient operation and/or
maintenance of the Common Area and parking areas or any portion thereof and so
as to preclude or minimize the possibility of disruption or conflict with the
other activities in Universal City. In the event of a conflict between such
rules and regulations and this Lease, the provisions of this Lease shall
prevail.
8.6 Parking: Landlord shall furnish space for parking by Tenant, its
customers and employees on a nonexclusive basis in common with customers and
employees of other Project tenants and of Landlord and its affiliated companies.
Tenant acknowledges that Landlord does not represent or guarantee that Tenant's
patrons will have immediate access to the parking at all times. The parking
areas initially designated for such use are designated on Exhibit A-2 as
"Parking Areas." Landlord may at its discretion change the configuration,
location and size of the parking areas, but except for emergency situations or
temporary interruptions, any such changes will provide parking areas
substantially equivalent to that which existed prior to such change. At all
times Landlord shall have the right, on a nondiscriminatory basis, to designate,
or change the designation of, the particular parking area to be used by any or
all Project tenants, their employees and customers and to designate discrete
areas for employee parking; provided,
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however, Tenant's employees shall be entitled to park in such designated areas
free of charge throughout the Lease Term unless all or substantially all of the
other tenants of the Project (or their employees) are required to pay for
employee parking and then Tenant (or Tenant's employees) shall pay for such
employee parking the lowest amount charged to any other Tenant of the Project.
If Tenant or its employees fail to park their cars in the designated parking
areas, Landlord may, charge Tenant an amount specified from time-to-time by
Landlord (as of execution of this Lease, such amount is Ten Dollars ($10)) per
car per day for each day or partial day that any car is parked in any area other
than those designated. All amounts due under provisions of this Section shall be
payable by Tenant within ten (10) days after demand by Landlord.
Tenant shall have the right to purchase valet parking validation stamps
at $2.00 per stamp. The stamp purchase price shall be increased (but never
decreased) on each anniversary of the Rent Commencement Date during the Lease
Term in accordance with the procedure described in Section 5.8 (for which
purposes "Base Amount" shall be $2.00, "Base Month" shall mean the month in
which the Rent Commencement Date occurs, and "Month of Adjustment" shall mean
any month in which the stamp purchase price is to be increased pursuant to this
Section). Subject to the availability of valet parking spaces in the Project,
the stamps may be used any day by Tenant's customers up until 4:00 PM and
entitle the customer to park in valet parking for two hours for $4.00. If the
customer parks in valet parking for longer than two hours, then the customer
will pay the standard valet parking rate for time parked exceeding two hours.
Landlord reserves the right to increase the rate it charges for valet parking
(including the $4.00 rate) based on demand and market conditions, provided that
any increase shall be applied in a non-discriminatory manner. Landlord and
Tenant acknowledge that the intent of this valet parking provision is to benefit
Tenant's customers who participate in racing league activity and therefore
Tenant is prohibited from advertising to the public or posting signage in or on
the Premises regarding the availability of valet parking stamps, provided,
however, Tenant may inform league patrons and Tenant's "Driver's Club" patrons
who pay an annual membership fee in exchange for special privileges of the valet
parking arrangement in brochures provided the brochures are not purposefully
sent or distributed to the public other than to the foregoing permitted
recipients. For purposes of customer satisfaction, Tenant may also offer to
validate a customer's parking to remedy a situation where a customer is
dissatisfied. Tenant shall have the right to get reimbursed by Landlord for the
full price paid by Tenant to Landlord for unused stamps which are returned to
Landlord within one year after issuance.
8.7 Parking Charges: Landlord shall have the right to charge all users
of the parking facilities made available by Landlord to Project tenants, their
customers, invitees and employees (subject to Section 8.6), and, in Landlord's
sole discretion, to establish a system for validating or waiving some or all of
said charges, provided that (i) Landlord may establish different rates based on
the type of use (e.g. restaurant, office, or retail), and (ii) Landlord shall
offer hourly, daily and monthly parking rates for employees, which rate shall
not exceed the then-prevailing rates in Universal City. If Landlord shall have
established a validation system for the Project which system shall be employed
in a non-discriminatory manner) and if a majority of Project tenants agree to
assume their allocable shares of the cost of such validation system, Tenant
shall contribute its pro rata portion based upon Tenant's Floor Area as a
fraction of the floor area of all of the premises located within the Project (or
some other equitable allocation method), of the cost of such validation system,
payable upon receipt of an invoice therefor from Landlord.
ARTICLE IX. MARKETING AND ADVERTISING
9.1 Tenant Advertising: If required by Section 1.10 above, beginning on
the Rent Commencement Date and continuing for the balance of the Lease Term,
Tenant shall expend during each full or partial calendar year the Annual
Advertising Amount set forth in Section 1.10 for the immediately preceding
calendar year, to purchase paid media or direct response
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advertising, in either print or broadcast form, to advertise Tenants business
conducted at the Premises. Such advertising shall specifically name the Project
and its location. Within sixty (60) days following the close of each calendar
year, Tenant shall furnish Landlord with such documentation as Landlord may
reasonably request evidencing Tenant's compliance with advertising requirements
set forth herein. If Tenant shall fail to advertise as provided for herein, then
Tenant shall pay Landlord upon demand, as Additional Rent, the difference
between (a) the amount actually expended by Tenant for advertising hereunder,
and (b) the amount which Tenant would have expended had Tenant complied with the
advertising requirements set forth in this Section 9.1.
9.2 Marketing Fund: If required by Section 1.11 above, Landlord shall
establish a marketing fund (the "Marketing Fund") to market, advertise and
promote the entire Project in accordance with long-range, coordinated marketing
plans including advertising through various media, a community relations
program, special events and promotions. Tenant shall make a contribution to the
Marketing Fund in the amount specified in Section 1.11. The Marketing Fund
contribution shall be increased (but never decreased), effective on the first
day of each calendar year during the Lease Term, in accordance with the
procedure described in Section 5.8 (for which purposes "Base Amount" shall mean
the amount specified in Section 1.11, "Base Month" shall mean the month in which
the Rent Commencement Date occurs, and "Month of Adjustment" shall mean any
month in which the Marketing Fund contribution is to be increased pursuant to
this Section). Such Marketing Fund contribution shall be made in advance as of
the first day of each calendar year upon receipt of landlord's invoice for same.
Landlord shall control and administer the Marketing Fund with advice from such
advisory group as a majority of the tenants at the Project shall select and
Landlord shall have the right to recoup from the Marketing Fund its costs of
administering the Marketing Fund.
ARTICLE X. POSSESSION AND USE
10.1 Permitted Uses: Tenant shall use the Premises solely for the
purpose or use specified in Section 1.13 and shall operate its business on the
Premises using only the exact trade name(s) specified above, and for no other
use whatsoever without Landlord's prior consent which may be withheld in
Landlord's sole discretion. Tenant shall procure and maintain all governmental
licenses and permits required for the proper and lawful conduct of Tenant's
business.
10.2 Duties and Prohibited Conduct: Tenant shall not use, or knowingly
permit any invitee or other person to use, the Premises for the sale or display
of, or for any activity involving, pornography, nudity, violence, drug
paraphernalia, or any goods and/or services and/or conduct which, in the sole
discretion of Landlord, are inconsistent with the image of a community- or
family-oriented establishment, or for a massage parlor, adult bookstore or
second-hand store or for the conduct of an auction, distress, fire, bankruptcy
or going-out-of-business sale. Tenant shall implement such procedures as
Landlord requires in order to effectuate the prior sentence, including retaining
qualified on-Premises security personnel and by making adjustments in the manner
Tenant conducts its business. Tenant shall not cause or permit waste to occur in
the Premises, or overload any floor, or abuse the plumbing in the Premises.
Tenant shall keep the Premises, and every part thereof, in a clean and wholesome
condition, free from any objectionable noises, music volumes, lights, odors or
nuisances, which may be detected from outside the Premises, except to the extent
the foregoing are generated from the normal operations associated with the
automobile racing car ride simulators in compliance with the Permitted Use
(including, for example, the noise made by the track announcer, but not
promotional announcements or "hawking" directed toward patrons of the Project
outside of the Premises), shall comply with all requirements of all governmental
authorities, and shall conduct its activities in a manner which is
environmentally sound. Landlord hereby consents to Tenant's use
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of hydraulic oil in connection with the operation of the automobile race car
driving simulators and cleaning and office products customarily used in retail
or office premises so long as such materials are used, handled and disposed of
in accordance with applicable laws. Unless otherwise permitted by the Lease,
Tenant shall keep no live animals of any kind in the Premises. Tenant shall not
display or sell merchandise or place carts, portable signs, devices or any other
objects, outside the defined exterior walls or roof and permanent doorways of
the Premises, nor will Tenant erect any aerial antenna or extra "dish." Tenant
shall not solicit or distribute material in any manner in any of the Common Area
of the Project. Tenant shall not sell merchandise from vending machines or allow
any coin- or token-operated vending, video, pinball or gaming machines in the
Premises (other than the automobile racing car ride simulators), except that
Tenant may install a coin operated telephone on the Premises for the use of its
employees.
10.3 Deliveries/Trash Removal: Tenant shall use its commercially
reasonable efforts to complete, or cause to be completed, all deliveries,
loading, unloading and services to the Premises prior to 10:00 a.m. of each day.
Tenant shall not cause, and shall use commercially reasonable efforts to attempt
to prevent, any delivery trucks or other vehicles serving the Premises from
parking or standing in front of, or at the rear of, the Premises from 10:00 a.m.
to 9:00 p.m. of each day. Landlord reserves the right to reasonably regulate
further the activities of Tenant in regard to deliveries and servicing of the
Premises, and Tenant agrees to abide by such further reasonable and
nondiscriminatory regulation of Landlord. Landlord will establish a system for
pick-up, disposal, cartage and recycling of refuse generated by Project tenants.
Tenant shall not burn trash or rubbish in or about the Premises and shall
deposit its trash and rubbish only in those receptacles provided by Landlord for
Tenant's use. Landlord shall cause such receptacles to be emptied and trash
removed at Tenant's expense.
10.4 Additional Costs: If Landlord shall incur additional costs as a
result of Tenants failure to observe the provisions of this Lease or its rules
and regulations, such as failure to deposit trash and rubbish in proper
receptacles or Tenant's misuse of any portion of the Project outside of the
Premises, Tenant shall pay, to Landlord, as Additional Rent, the sums required
to reimburse Landlord for such additional reasonable, out-of-pocket costs plus
Landlord's reasonable administrative fee related thereto.
10.5 Renovation: Subject to Sections 2.3 and 2.7, Tenant shall renovate
and refurbish the Premises as reasonably required from time to time by Landlord
in order to maintain the Premises in substantially the same condition as when
Tenant first opened for business (provided, however, this Section is not
intended nor shall it be construed to impose any obligation on Tenant to update
the technology relating to the automobile driving simulators or other
equipment). Such renovation or refurbishment may include new carpeting,
painting, new wall covering and/or new tenant fixtures. Any such work by Tenant
pursuant to this Section shall be commenced within three (3) months after
Tenant's receipt of notice from Landlord and shall be completed within three (3)
months after the commencement thereof.
ARTICLE XI. TENANT'S CONDUCT OF BUSINESS
11.1 Operating Covenants: Tenant covenants and agrees that it will open
for business and thereafter continuously and uninterruptedly (a) operate and
conduct within the Premises during the required operating hours the business
which it is permitted to operate and conduct under the provisions hereof, except
while the Premises are untenantable by reason of fire or other casualty, and (b)
maintain within the Premises during the entire Lease Term an adequate stock of
in-season merchandise together with sufficient personnel and Personal Property
to service and supply the usual and ordinary requirements of its customers and
to maximize Gross Sales. Tenant acknowledges that the Project is intended to
provide only the highest quality of service and merchandising for the patrons of
the Project and that Tenant will operate and conduct all
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aspects of its operations in accordance with this standard. Prior to substantial
completion of the Premises, Tenant shall provide Landlord with an initial first
year Profit and loss proforma. Tenant will not be in breach of the foregoing
sentence until ten (10) days after Landlord provides written notice to Tenant
requesting said proforma. Landlord shall include provisions substantially
similar to this Section 11.1 in the lease agreements of all other tenants of
the Project and shall enforce such provisions in a non-discriminatory manner.
As used herein, the term "merchandise" or "merchandising" shall mean
items of merchandise typically associated with the Permitted Use, including
food, beverages, themed apparel and related products and other goods and
commodities.
11.2 Operating Days and Hours: Subject to the limitations set forth in
Section 11.1 above, recognizing that it is in the interests of both Tenant and
Landlord to have regulated hours of business for all of the Project, Tenant
shall, commencing with the opening for business by Tenant in the Premises and
for the remainder of the Lease Term, be open for business continuously with its
window displays, exterior signs and exterior advertising displays adequately
illuminated during all hours on all days on which Landlord, in its sole
discretion, determines to open the Project for business to the public. In that
connection, Tenant acknowledges and agrees that Project hours may change
seasonally, and that due to regulatory requirements, hours may vary for patrons
depending on patron age. If Tenant shall open late, close early or fails to be
open at any time in violation of this Lease without the express written consent
of Landlord, which consent Landlord may grant or withhold in its sole
discretion, Landlord may assess Tenant, and Tenant shall pay the amount so
assessed as Additional Rent, at the rate of Two Hundred Dollars ($200.00) per
full or partial hour of Tenant's unauthorized closure; provided, however,
Tenant shall not be required to pay the amount assessed to Tenant if Tenant's
failure to open or to stay open resulted from a Force Majeure event. It is
agreed, however, that the foregoing provisions shall be subject to the hours of
operation prescribed by any governmental regulations or labor union contracts
which may govern the operation or business of Landlord or Tenant.
11.3 Compliance with Laws: Subject to Section 1.12, Tenant shall, at
its sole cost and expense, promptly comply with all laws, statutes, ordinances
and governmental rules, regulations or requirements (including, without
limitation, ABC liquor license and liquor conditional use, permits, mitigation
plans and best management practices from time-to-time required to be obtained or
implemented by Landlord or Tenant to satisfy legal requirements) now or
hereafter in force, and with the requirements of any board of fire underwriters
or other similar bodies now or hereafter constituted relating to or affecting
the condition, use or occupancy of the Premises, in each case excluding
structural changes not related to or affected by Tenant's improvements or acts,
which shall be Landlord's obligation. Tenant shall immediately notify Landlord
in writing, and provide Landlord copies, of any threatened or actual claim,
notice, citation, violation, warning, complaint or report that Tenant may
receive with respect to Tenant's failure to comply with Tenant's obligations
under this provision. Except for the approval by the Los Angeles County regional
planning department of a parking calculation taking into account Tenant's use,
Landlord represents and warrants that to the best of Landlord's knowledge, the
Premises are in compliance with all applicable zoning ordinances and all
mitigation plans applicable to the Premises have been satisfied. Landlord shall
obtain said approval on or before July 1, 1999.
Tenant shall disclose all ABC liquor license information to Landlord;
including but not limited to any restrictions imposed on Tenant's ABC liquor
license. In addition, Tenant understands that the Project and Universal Studios
Hollywood have extensive resources and experiences with land use issues (past,
current and future public approval projects), local agencies and a special
sensitivity to its local residential neighbors. As a result Tenant agrees to
allow Landlord to coordinate and manage all of the public approval processes
(including any public hearings) for any necessary permits including but not
limited to the liquor conditional use permit. Landlord represents and warrant
that there is nothing inherent or specific to the Project or
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Landlord or constituent owners of Landlord that will prevent Tenant from using a
catering service for the services of food and alcoholic beverages provided that
the caterer complies with all laws and regulations relating to the services of
food and alcoholic beverages.
ARTICLE XII. LIMITS ON SIGNS AND ADVERTISING
Subject to the paragraph entitled "Initial Tenant Obligations" after
the preamble of this Lease, all exterior Tenant signage and the sign designer
and fabricator shall be subject to the review and approval of Landlord, in
accordance with the procedures set forth in Exhibit C and the Tenant's Manual.
Tenant shall not place any signs, placards, names, insignia, trademarks, or
any other similar item or items outside, on or within thirty-six inches (36")
of, the front lease line, or on the store front, the glass panes and supports of
the show windows, or on any window, door, roof or perimeter wall of the
Premises, or which is otherwise visible from the Project common areas (except
for the standard design elements reflected on Tenant's plans and specifications
for the initial build out of the Premises), except such as Landlord shall
approve in its sole discretion. Notwithstanding anything to the contrary in this
Lease, Tenant shall not affix any signs to the roof of the Premises. Tenant
shall utilize no advertising medium (other than signage permitted or approved
pursuant to the preceding sentence) within the Premises or within the Common
Area which can be heard or experienced outside the Premises (excluding Tenant's
track announcer or the automobile driving simulator rides). Tenant shall not
display, paint or place any handbills or other advertising devices on any
vehicle parked in the parking area of the Project, whether belonging to Tenant
or to any other person, nor shall Tenant distribute in the Project any handbills
or other advertising devices. Other than Tenant's signage, Landlord represents
and warrants that it will not place any signage on the front building facade of
the Premises.
ARTICLE XIII. PERSONAL PROPERTY; IMPROVEMENTS; CERTAIN TAXES
13.1 Removal and Replacement: All of Tenant's trade fixtures,
furniture, furnishings, signs and other personal property not permanently
affixed to the Premises (collectively referred to herein as "Personal Property")
must be either new or antique and, in either case of a quality consistent with
the Project when installed in, or attached to, the Premises by Tenant. Subject
to the provisions of Section 13.2, any such Personal Property shall remain the
property of Tenant. Provided Tenant is not in default beyond the applicable cure
period after notice from Landlord under any of the monetary or other materials
terms of this Lease, Tenant shall have the right to remove any or all of its
Personal Property which it may have stored or installed in the Premises;
provided, however, if this Lease is still in effect, Tenant shall immediately
replace the same with similar Personal Property of comparable or better quality.
At Landlord's option, Landlord may require Tenant to remove any and all Personal
Property from the Premises upon the expiration of the Lease Term. Tenant shall,
at its expense, immediately repair any damage occasioned to the Premises by
reason of the removal of any Personal Property.
13.2 Improvements: Tenant's Alterations (as specified in Section 14.1)
and Tenant's Work (as specified in Exhibit C) are collectively referred to in
this Lease as "Improvements" and shall become the property of Landlord upon the
expiration or earlier termination of this Lease.
13.3 Certain Taxes: Tenant shall pay before delinquency all taxes
(including sales and use taxes), assessments, license fees and public charges
levied, assessed or imposed upon its business operation at the Premises as well
as upon its merchandise, Improvements and Personal Property. If any such items
of property are assessed with property of Landlord or a third party, then, and
in such event, such assessment shall be equitably divided between Tenant and
either Landlord or such third party, as the case may be.
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ARTICLE XIV. TENANT'S RIGHT TO MAKE IMPROVEMENTS
14.1 Alterations: At Tenant's own expense, after giving Landlord notice
of its intentions to do so, Tenant may, from time-to-time after completion of
all work in accordance with Exhibit C, make such permanent and nonstructural
alterations, replacements, additions, changes and/or improvements (collectively
referred to in this Lease as "Alterations") to Tenant's Work previously
completed in accordance with Exhibit C or to prior Alterations as Tenant may
find necessary or convenient for its purposes, provided that: (i) any such
Alterations which are structural or on the exterior of the Premises and/or
visible from the exterior may not be made without Landlord's prior written
consent which Landlord may withhold in its sole and absolute discretion; (ii)
the value of the Premises is not thereby diminished; and (iii) no Alterations
costing in excess of [***] for any one work of improvement, or in excess of
[***] in the aggregate for multiple works of improvement during any period of
twelve (12) consecutive months during the Lease Term, may be made without
obtaining the prior approval of Landlord, which Landlord may withhold in its
reasonable discretion. Tenant shall reimburse Landlord for all reasonable
out-of-pocket costs and expenses (including, any architect and/or engineer fees)
incurred by Landlord in approving or disapproving Tenant's plans for Alterations
up to [***].
14.2 Construction Requirements: All Alterations to be made to the
Premises which require the approval of Landlord shall be made under the
supervision of a competent architect or licensed structural engineer and in
accordance with plans and specifications prepared and constructed in conformity
with the structural, mechanical, electrical, design and quality standards,
requirements and/or criteria specified in Exhibit C. Such plans and
specifications shall be submitted to Landlord for its approval prior to
commencement of the work, in accordance with such procedures as Landlord shall
reasonably specify. Upon the expiration or earlier termination of this Lease,
such Alterations (unless they comprise Personal Property or trade fixtures)
shall not be removed by Tenant but shall become a part of the Premises unless
Landlord requires their removal, in which event Tenant shall remove such
Alterations promptly upon vacating the Premises. In performing the work of any
such Alterations, Tenant shall have the work performed in such a manner as not
to obstruct access to the premises of any other tenant in the Project.
ARTICLE XV. MECHANICS' LIENS
Except as otherwise provided in this Lease, Tenant shall pay all costs
of labor, services and materials supplied in the prosecution of any work, except
for "Landlord's Work" as specified in Exhibit C, or other work undertaken by
Landlord in discharge of its responsibilities under this Lease, done, or caused
to be done, on the Premises. Landlord and Tenant will keep the Premises free and
clear of all mechanics' liens and other such liens on account of work done by
Landlord and Tenant or persons claiming under Landlord and Tenant. [Construction
surety bond requirement waived subject to satisfactory review of Tenant's
financials] Tenant shall forthwith notify Landlord of any claim of lien filed
against the Premises of which Tenant has notice or the commencement of any
action affecting the title thereto. Landlord and its representatives shall have
the right to post and keep posted thereon notices of non-responsibility or such
other notices which Landlord may deem to be proper for the protection of
Landlord's interest in the Premises. Before the commencement of any work which
might result in any such lien, Tenant shall give to Landlord written notice of
its intention to do so, specifying the date on which such work shall commence,
in sufficient time to enable Landlord to post and record such notices in
accordance with the laws and/or statutory requirements of the State of
California.
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ARTICLE XVI. REPAIRS AND MAINTENANCE
16.1 Tenant's Obligations: From and after substantial completion of the
Premises and, except for punch list items as provided in Section 4.2, Tenant
shall at all times repair, maintain in good and tenantable condition and
replace, as necessary, the Premises and every part thereof (except that portion
of Premises to be maintained by Landlord under Section 16.2). All replacements
made by Tenant in accordance with this Section 16.1 shall be of like size, kind
and quality to the items replaced as they existed when originally installed and
shall be subject to Landlord's reasonable approval.
16.2 Landlord's Obligations: Subject to Sections 16.1 and 8.3, Landlord
shall repair, maintain in good and tenantable condition and replace, as
necessary, the roof, exterior walls and structural parts of the Premises
(including the structural floor) and all meters, pipes, conduits, equipment,
components and facilities that supply the Premises with Utilities installed by
Landlord (except as the appropriate utility company has assumed these duties);
provided however that Landlord shall not be required, and Tenant shall be
required, to make repairs necessitated by reason of the negligence or willful
misconduct of Tenant or anyone claiming under Tenant, or by reason of the
failure of Tenant to perform or observe any conditions or agreements of this
Lease, or by reason of Improvements made by Tenant or anyone claiming under
Tenant. As used in this Article XVI, "exterior walls" shall exclude storefronts,
plate glass, window cases and window frames, doors and door frames, security
grills and similar enclosures, the repair and maintenance of which are Tenant's
responsibility. Landlord shall have no obligation to repair, replace or maintain
the Premises or the mechanical equipment exclusively serving the Premises at any
time, except as this Lease expressly provides. Landlord shall perform its
obligations under this Section in a manner consistent with first-class retail
centers in Southern California. All of Landlord's costs and expenses arising out
of Landlord's complying with its obligations and exercising its rights under
this Section 16.2 shall constitute Operating Costs as defined in Section 5.2,
except that Landlord's costs and expenses of repairing and maintaining meters,
pipes, conduits, equipment and facilities that supply Tenant's Premises
exclusively shall be allocated entirely to Tenant.
16.3 Right to Enter: Tenant shall permit Landlord, or its authorized
representatives, upon reasonable notice (except in an emergency in which case no
notice shall be required), to enter the Premises at all times during usual
business hours to inspect the same, to perform its duties under Section 16.2,
and to perform any work therein that Landlord may reasonably deem necessary or
that is Landlord's obligation under this Lease. No exercise by Landlord of any
rights reserved in this Section 16.3 shall entitle Tenant to any compensation,
damages or abatement of rent from Landlord for any injury or inconvenience
occasioned thereby.
16.4 Landlord's Liability: Landlord shall be liable and assumes the
risk for any damage occasioned by reason of the construction of the Premises or
for failure to keep the Premises in repair, provided Landlord is obligated to
construct same or make such repairs under the terms hereof, and further provided
that notice of the need for repairs has been given to Landlord, a reasonable
time has elapsed and Landlord has failed to make such repairs. Landlord shall
also be liable for its negligence or willful misconduct in performing any
repairs that Landlord undertakes hereunder. Except as hereinabove set forth,
Landlord shall not be liable for any damage done or occasioned by or from the
electrical system, heating or air conditioning system, and plumbing and sewer
systems in, upon or about the Premises or the building of which the Premises are
a part, nor for damages occasioned by water, snow or ice being upon or coming
through the roof, trap door, walls, windows, doors or otherwise, nor for any
damage arising from acts of negligence of tenants or other occupants of the
building or buildings of which the Premises may be a part, or the acts of any
owners or occupants of adjoining or contiguous properties, and in any event,
Landlord shall not be liable for any damage to Tenants Improvements, Personal
Property, or merchandise resulting from fire or other insurable hazards,
regardless of the cause thereof other than as results from the gross negligence
or willful misconduct of Landlord, its employees or agents, and Tenant,
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subject to the provisions of Section 17.1, hereby releases Landlord from all
liability for such damage other than as results from the gross negligence or
willful misconduct of Landlord, its employees or agents.
ARTICLE XVII. INDEMNITY; INSURANCE
17.1 Indemnification:
17.1.1 Indemnification by Tenant: Landlord shall not be liable
for, and Tenant shall defend (unless Landlord waives its right to such defense,
and in any event with counsel satisfactory to Landlord), indemnify and protect
Landlord from, any claim, liability, fine, loss, or expense (including
reasonable actual attorneys' fees and court costs) arising directly or
indirectly from (a) any labor dispute involving Tenant or its contractors or
agents, or (b) the construction, repair, alteration, improvement, use, occupancy
or enjoyment of the Premises by Tenant, or (c) any activities in connection with
Tenant's business, including any activities relating to advertising copy
supplied by Tenant under Article IX, or (d) any loss or damage to Tenant's
property (hereinafter referred to as "Claim"); provided, however, Tenant shall
have no obligation to defend, indemnify or protect Landlord from Claims (y) made
by Tenant in accordance with Article XXIII, or (z) caused by the sole negligent
or willful acts of Landlord and/or its agents or employees. Landlord shall give
notice to Tenant as to litigation that is instituted against Landlord that may
subject Tenant to liability under this Section.
17.2 Tenant's Insurance Obligation: From and after the earlier of
commencement of Tenant's Work or Tenant's entry upon the Premises, Tenant will
carry and maintain the following types of insurance, in the amounts specified
and in the form hereinafter provided for:
17.2.1 General Liability: Commercial general liability insurance
(and/or excess umbrella liability) written on an occurrence form with a combined
single limit of not less than [***] per occurrence. Said policy must be written
on the CG0001 11/85 or 11/88 ISO occurrence form or broader, with no additional
exclusions, and must include:
1. primary, not contributing coverage
2. blanket contractual
3. broadform property damage
4. personal/advertising injury
5. products completed operations
6. liquor liability, if tenant is a restaurant
7. X, C and U, if necessary due to the nature of the work
All such bodily injury liability insurance and property damage liability
insurance shall specifically insure the performance by Tenant of that part of
the indemnity agreement contained in Section 17.1 relating to liability for
injury to or death of persons and damage to property, as well as contractual
liability.
17.2.2 Workers' Compensation: Statutory workers' compensation
including employers liability insurance with a limit of not less than [***].
Tenant shall cause its workers' compensation carrier to waive insurer's right of
subrogation with respect to Universal Studios Recreation Services, Universal
Studios, Inc., and its affiliates, and such additional individuals or entities
as Landlord shall from time-to-time designate.
17.2.3 Plate Glass: Insurance covering full replacement cost of
all plate glass on the Premises. Tenant shall have the option either to insure
commercially or to self-insure the risk.
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17.2.4 Equipment: Machinery insurance on all air-conditioning
equipment and systems exclusively serving the Premises. if said equipment and
the damage it may cause are not covered by Tenant's "All Risks" insurance (as
specified in Subsection 17.2.5 below), then the insurance specified in this
Subsection 17.2.4 shall be in an amount not less than One Hundred Thousand
Dollars ($100,000); if Tenant requires boilers or other pressure vessels to
serve the Premises, they shall also be insured for the same amount.
17.2.5 Tenant's Improvements and Personal Property: Insurance
covering Tenant's (a) merchandise; (b) "Improvements" (as defined in Section
13.2) including "Alterations" (as defined in Section 14.2); and (c) "Personal
Property" (as defined in Section 13.1) from time-to-time in, on or upon the
Premises, in an amount not less than [***] of their full replacement cost,
providing protection against any peril included within the classification "All
Risks," including coverage for sprinkler and water damage and theft. Any policy
proceeds shall be used for the repair or replacement of the property damaged or
destroyed unless this Lease shall cease and terminate under the provisions of
Article XVIII, in which event Landlord and Tenant shall share in such proceeds
as their respective interests may appear.
17.2.6 Business Interruption: Insurance covering Tenant's
anticipated continuing expenses (including Rental) and lost profits following a
casualty for a period of twelve (12) months.
Notwithstanding the foregoing, Tenant may cause any of the policies
which it maintains to carry such deductibles as are commercially reasonable.
Notwithstanding the types of insurance and dollar amounts specified above in
this Section 17.2, Landlord may by notice to Tenant given from time-to-time
require additional types and/or higher limits of insurance coverage as Landlord
may reasonably specify as being appropriate, provided, however, that Landlord
shall not so change the insurance requirements more than [***] years and
provided further that such additional types or higher limits are customary for
developments similar to the Project in the City of Los Angeles. Tenant shall be
responsible for paying any additional premiums charged by its insurer(s) for
additional insurance or waivers reasonably specified by Landlord.
17.3 Form of Policies: All policies of insurance provided for herein
shall be issued by insurance companies qualified to do business in the State of
California and with a rating of at least "A X" in Best's Key Rating Guide. All
such policies (except to the extent inconsistent with the type of policy) shall
contain cross-liability endorsements and shall name Landlord and Universal
Studios, Inc. and Universal Studios, Inc.'s affiliated companies, mortgagees or
beneficiaries and such additional individuals or entities as Landlord shall from
time-to-time reasonably designated as "Additional Insureds." Satisfactory
evidence of each insurance coverage, on the standard ACORD form or a form
acceptable to Universal Studios shall be delivered to Landlord within ten (10)
days prior to Tenant's entry onto the Premises and, thereafter, executed copies
of renewal policies or certificates thereof shall be delivered to Landlord
within thirty (30) days prior to the expiration of the term of each such policy.
When any such policy shall expire or terminate, renewal or additional policies
shall be procured and maintained by Tenant in like manner and to like extent.
All policies must contain a provision that the company writing said policy will
give to Landlord thirty (30) days' written notice in advance of any
cancellation, lapse, reduction in the amount of coverage or other adverse change
respecting such insurance. All general liability, property damage and other
casualty policies shall be written as primary policies, not contributing with or
secondary to coverage which Landlord may carry. The stipulated limits of
coverage above shall not be construed as a limitation of any potential liability
to Landlord, and failure to deliver said insurance certificate or Landlord's
failure to request delivery shall in no way be construed as a waiver of Tenant's
obligation to provide the insurance coverage specified.
17.4 Blanket Insurance Policies: Tenant's obligation to carry the
insurance provided for above may be satisfied by inclusion of the Premises
within the coverage of a so-called
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"blanket" policy or Policies of insurance carried and maintained by Tenant;
provided, however, that Landlord and Landlord's affiliated companies, mortgagees
or beneficiaries shall be named as additional insureds thereunder as their
interests may appear and that the coverage afforded Landlord will not be reduced
or diminished by reason of the use of such blanket policies of insurance, and
provided further that the requirements set forth herein are otherwise satisfied.
Tenant shall permit Landlord at all reasonable times to inspect any policies of
insurance maintained by Tenant covering risks upon the Premises or related to
Tenant's occupancy of the Premises if such policies have not been previously
delivered to Landlord.
17.5 Landlord's Insurance Obligation: At all times from and after the
Effective Date, Landlord shall maintain in effect a policy or policies of
insurance providing protection for the following liabilities and/or risks: (a)
general liability for bodily injury and property damage arising from Landlord's
ownership and/or operation of the Project with coverage limits at least equal to
those Tenant is required to maintain in accordance with Subsections 17.2.1, and
(b) all perils insurable under an All Risks policy (with, at Landlord's
election, coverage for other risks such as flood and earthquake, providing such
coverage is available at commercially reasonable cost) covering the Project,
exclusive of any item insured by Tenant pursuant to Section 17.2 and by other
Project tenants, in an amount at least equal to eighty percent (80%) of the
insured improvements' full replacement cost (exclusive of the cost of
excavations, foundation and footings). Insurance provided for in this Section
17.5 may be carried by inclusion within the coverage of any blanket policy or
policies of insurance carried and maintained by Landlord, provided that the
coverage accorded will not be reduced or diminished by reason of the use of such
blanket policies of insurance. Notwithstanding the above, Landlord may cause any
of the policies which it maintains to carry such deductibles as are commercially
reasonable. Landlord (itself or through an affiliate) may self-insure any of the
risks set forth in this Section 17.5.
17.6 Mutual Waivers of Rights: Landlord (for itself and its insurer) and
Tenant (for itself and its insurer) each hereby waive any rights, including
rights of subrogation, either may have against the other, and Tenant hereby
waives any rights it may have against other tenants of the Project (provided
such other tenants have waived such rights against Tenant and to the extent that
Tenant is insured for the loss) for compensation of any loss or damage
occasioned to Landlord or Tenant, as the case may be, with regard to their
respective property, the Premises, its contents or portions of the Project,
arising from any risk generally covered by the All Risks insurance Landlord and
Tenant shall carry and maintain under Sections 17.2 and 17.5. The foregoing
waivers shall be in operation only so long as insurance coverage recognizing
such waivers is available in the State of California and so long as no policy is
invalidated thereby. Each party may conclusively presume that the waiver by the
other party is in full force and effect unless and to the extent the other party
notifies the presuming party to the contrary. Nothing in this Section 17.6 shall
derogate from the generality of Section 17.1, which Section 17.1 shall prevail.
17.7 Insurance Use Restrictions: Tenant will not carry any goods or do
anything in or about the Premises which will in any way tend to increase the
insurance rates for any insurance maintained by Landlord above the levels
generally applicable to low-risk commercial rental space. Nothing in this
Section 17.7 shall in any way limit such Permitted Use or require Tenant to
compensate Landlord for increased insurance rates under this Section 17.7 as a
result of Tenants use of the Premises for the Permitted Use. Subject to the
foregoing sentence, Tenant shall pay to Landlord forthwith upon demand the
amount of any increase in premiums charged to Landlord for insurance carried by
Landlord pursuant to Section 17.5, which increase results from Tenants violation
of the foregoing restrictions. Tenant shall make all changes to its Premises and
install any fire extinguishing equipment and/or other safeguards that Landlord's
insurance underwriters or applicable fire, safety and building codes and
regulations may reasonably require in order to obtain and maintain favorable
premium rates and terms; Landlord shall notify Tenant prior to Tenant's
commencement of Tenant's Work of any such installations and/or other safeguards
that,
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to Landlord's best knowledge regarding safeguards that Landlord's insurance
underwriters require, Tenant will be required to perform or construct in order
to comply with this Section 17.7.
ARTICLE XVIII. RECONSTRUCTION
18.1 Insured Casualty: If the Premises are damaged by fire or other
perils covered by Landlord's insurance or self-insurance:
18.1.1 Repair of Damage: As soon as is reasonably possible, but
no later than ninety (90) days after the date of such damage, Landlord shall
commence repair, reconstruction and restoration (collectively referred to as
"Reconstruction" in this Article XVIII) of that portion of the Premises
described as Landlord's Work in Exhibit C and prosecute the same diligently to
completion, in which event this Lease shall continue in full force and effect;
or
18.1.2 Damage Near End of Lease Term: In the event of partial or
total destruction of the Premises during the last two (2) years of the Lease
Term, Landlord and Tenant shall each have the option to terminate this Lease on
notice to the other of exercise thereof within thirty (30) days after such
destruction. For purposes of this Article XVIII, "partial destruction" shall
mean destruction to an extent of more than thirty-three and one-third percent
(33-1/3%) of the full replacement cost of the Premises as of the date of
destruction.
18.2 Uninsured Casualty: If the Premises are damaged by any casualty not
required to be covered by Landlord's insurance or self-insurance or if the cost
of Reconstruction exceeds the insurance proceeds recoverable by Landlord,
Landlord shall have the election, and shall within ninety (90) days following
the date of such damage give Tenant notice of Landlord's election, either (i) to
commence Reconstruction of that portion of the Premises described as Landlord's
Work in Exhibit C and prosecute the same diligently to completion, in which
event this Lease shall continue in full force and effect, or (ii) not to perform
such Reconstruction of such portion of the Premises, in which event this Lease
shall cease and terminate not later than sixty (60) days after Landlord's notice
of its election to terminate.
18.3 Construction Provisions: In the event of any Reconstruction of the
Premises under this Article XVIII, said Reconstruction shall substantially
conform to the provisions of Exhibit C and shall cover all of the work set forth
therein under "Description of Landlord's Work" and "Description of Tenant's
Work." Landlord shall reconstruct the Premises only to the extent of the work
described as "Landlord's Work" in Exhibit C. Tenant, at it sole cost and
expense, shall reconstruct all items described as "Tenant's Work" in Exhibit C
and shall replace its merchandise and Personal Property. Tenant shall commence
such reconstruction of Tenant's Work and replacement of Tenant's merchandise and
Personal Property promptly upon delivery to it of possession of the Premises and
shall diligently prosecute the same to completion.
18.4 Release of Liability: Upon any termination of this Lease under any
of the provisions of this Article XVIII, the parties shall be released thereby
without further obligation to the other party coincident with the surrender of
possession of the Premises to Landlord, except for obligations which have
theretofore accrued and are then unpaid. In the event of termination, Landlord
and Tenant shall share in the proceeds from Tenant's insurance (including
selfinsurance and deductibles) maintained pursuant to Subsection 17.2.5 as their
respective interests may appear.
18.5 Waiver of Statutory Rights. Tenant hereby waives any statutory
rights of termination which may arise by reason of any partial or total
destruction of the Premises which Landlord is obligated to restore or may
restore under any of the provisions of this Lease.
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18.6 Major Destruction: Notwithstanding any of the foregoing provisions
of this Article XVIII, if either the Project or the Premises are damaged to an
extent of more than thirty-three and one-third percent (33-1/3%) of the full
replacement cost of the Project or the Premises (as the case may be) as of the
date of destruction, or is totally destroyed, Landlord shall have the right to
terminate this Lease by giving notice of such termination to Tenant within
ninety (90) days after such destruction.
ARTICLE XIX. OCCUPANCY TRANSACTIONS
19.1 Restrictions: Except as otherwise provided herein, Tenant shall not
enter into, or consent to, an Occupancy Transaction nor shall an Occupancy
Transaction occur, without first procuring Landlord's consent (except that in
the case of a non-consensual Occupancy Transaction, Tenant shall request
Landlord's consent as soon as possible), and any attempt to do so without such
prior written consent shall be void and at Landlord's option shall terminate
this Lease. Subject to the provisions of the next succeeding paragraph hereof,
Landlord shall not withhold its consent unreasonably but may condition such
consent upon compliance with this Article. The parties agree, however, that the
exact use, manner of operation of the Premises and conduct of business thereon
by Tenant will have an impact on the quality and reputation of the Project.
Accordingly, the parties agree that without limiting any other reasonable
criteria which Landlord may utilize, Landlord may withhold its consent, and in
so doing will not be deemed to be acting unreasonably, if Landlord in the
exercise of reasonable business judgment determines that the Transferee has
insufficient business reputation or experience in the operation of the business
being conducted by Tenant (or by Tenant's then-current Transferee, if any), or
that the financial condition of the Transferee is inadequate (notwithstanding
that Tenant may remain liable) or that it is likely that the Transferee will not
be able to generate the same level of Percentage Rental as would Tenant, or that
the transfer may lead to a breach of this Lease. In the event that Tenant
desires to gain Landlord's consent to a proposed Occupancy Transaction pursuant
to this Article 19, Tenant shall provide Landlord with written request for
consent to such Occupancy Transaction, accompanied by information reasonably
sufficient to enable Landlord to evaluate Tenant's request for consent in
accordance with the aforesaid factors. In the event that prior to the exercise
by Tenant of its Option to extend the term of this Lease, Landlord consents to
an Occupancy Transaction requested by Tenant where such consent is required
under this Article XIX, then Tenant shall be relieved of liability under this
Lease for the Option Term.
Notwithstanding the foregoing, at any time within thirty (30) days after
receiving Tenant's written notice of a proposed Occupancy Transaction, Landlord
shall have the right, in its sole discretion, to either: (i) grant or withhold
its consent in accordance with the foregoing paragraph, accompanied by specific
reason(s) for its decision in the event that Landlord denies consent; or (ii)
terminate this Lease with respect to the portion of the Premises that Tenant
proposes to assign or sublease; Landlord's right to terminate this Lease under
this section may be revoked if the Tenant rescinds the assignment request within
thirty (30) days after Landlord receiving Tenant's written notice of a proposed
assignment or sublease. In the event of any such sublease or assignment approved
by Landlord, Landlord shall receive [***] of the net sales price directly
attributable to the Lease assignment/sublease (e.g., after deduction for
Tenant's costs of sale (such as commissions, improvement costs, fees, etc.) and
after deduction of the unamortized value of Tenant's leasehold improvements and
fixtures (after deducting any Landlord Construction Allowance) installed in the
Premises by or at the direction of Tenant which are sold as part of the
assignment or sublease, said unamortized value to be determined on a
straight-line depreciation method allowed by the Internal Revenue Code of 1986
(as amended) assuming a useful life equal to the remainder of the Lease Term
(including the Option Term) at the time the improvement or fixture is placed in
service or installed in or upon the Premises). Landlord shall notify Tenant of
its consent or denial of consent to any proposed Occupancy Transaction in
accordance with the provisions of this paragraph within 10 days after receipt of
Tenant's written request and any
*** Confidential treatment requested.
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documents or information reasonably requested by Landlord and relating to such
proposed Occupancy Transaction.
19.2 Nullity: Any purported Occupancy Transaction consummated in
violation of the provisions of this Article XIX shall be null and void and of no
force or effect.
19.3 Definitions: As used in this Article, the following definitions
shall apply:
19.3.1 "Occupancy Transaction" means any (i) assignment of some
or all of Tenant's interest and rights in the Lease and/or the Premises,
including Tenant's right to use, occupy and possess the Premises, or (ii)
sublease of Tenant's right to use, occupy and possess the Premises, in whole or
in part, or (iii) granting of a concession or management arrangement pertaining
to the Premises in whole or part, or (iv) mortgage, deed of trust, pledge,
hypothecation, lien, or other security arrangement with respect to Tenants
interest in the Lease, foreclosure of which may result in an Occupancy
Transaction; provided, however, furniture, fixture and equipment financing shall
not constitute an "Occupancy Transaction", or (v) change of Control of Tenant,
or (vi) permitting the Premises or any part thereof to be occupied by anyone
other than Tenant or Tenant's employees (as such employees may change from time
to time). Notwithstanding anything to the contrary contained in this Article 19,
an "Occupancy Transaction" shall not include, and Tenant shall not be required
to obtain Landlord's consent for any of the following transactions: (a) any
assignment, sublease or other transfer of this Lease of all of the Premises to
(A) any person or entity which is a parent (owning all or substantially all of
the ownership interest of Tenant) or a wholly-owned subsidiary of Tenant, or (B)
any corporation or other entity into which or with which all or substantially
all of the assets or ownership interests of Tenant are merged or consolidated;
or (b) any assignment, sublease or other transfer of this Lease of all of the
Premises to any person or entity acquiring all or substantially all of the
assets of Tenant operating under the same trade name of Tenant as of the date of
such transfer, or (c) any sale, assignment, or other transfer of all of the
shares of stock, partnership interests, limited liability company membership
interests, or other ownership interests in Tenant resulting in a change in the
Control of Tenant; or (d) in connection with any public offering of stock in
Tenant, transfer of stock between, or among any partners, members, owners,
limited partners, or other persons or entities having an ownership interest in
Tenant. Tenant covenants that in the event of the occurrence of any of the
foregoing transactions (a) through (d) above (excluding an initial public
offering under item (d)), that, as a result thereof, there will not be a
material and adverse change in Tenant's net worth (or if there is a material and
adverse change in Tenant's net worth, Tenant will provide reasonable additional
financial security to Landlord to compensate for the material and adverse
change); and, there will not be a material change in Tenant's senior management
(or if there is a material change in Tenant's senior management, there will be
competent and experienced new senior management with regard to the Permitted
Use).
19.3.2 "Transferee" means a proposed buyer, assignee, sublessee,
mortgagee, beneficiary, pledge, concessionaire, manager or other recipient of
Tenant's interests, rights or duties in this Lease or the Premises in an
Occupancy Transaction.
19.3.3 "Control" (including the terms "controlling," "controlled
by" and "under common control with") means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a person, whether through the ownership of voting securities, by contract, or
otherwise.
19.4 Landlord's Costs: Tenant shall pay to Landlord the amount of [***]
for each Occupancy Transaction to which Landlord shall
have consented, which amount shall be deemed to reimburse Landlord for its
expenses in reviewing and approving Tenant's request for Landlord's consent, in
addition to the sales percentage price described in Section 19.1 above.
*** Confidential treatment requested.
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ARTICLE XX. BANKRUPTCY; INVOLUNTARY TRANSFERS
20.1 Right of Termination: Should any of the following events occur,
Landlord shall have the right (but not the obligation) to terminate this Lease
and any interest of Tenant herein, effective with the commencement of the event:
20.1.1 Receivership: Proceedings are instituted whereby all, or
substantially all, of Tenant's assets are placed in the hands of a receiver,
trustee or assignee for the benefit of Tenant's creditors, and not placed back
in Tenant's hands within ninety (90) days;
20.1.2 Attachment: Any creditor of Tenant institutes judicial or
administrative process to execute on, attach or otherwise seize any of Tenant's
merchandise or Personal Property, located on the Premises and Tenant fails to
discharge, set aside, exonerate by posting a bond, or otherwise obtain a release
of such property within thirty (30) days;
20.1.3 Bulk Sale: Tenant makes a bulk sale of all, or
substantially all, of Tenant's merchandise or Personal Property located on the
Premises, except in accordance with Section 13.1, or except in a permitted
Occupancy Transaction under Article XIX, and fails to replace the same with
similar items of equal or greater value and utility within ten (10) days; or
20.1.4 Intentionally Deleted.
20.2 Requests for Information: Within ten (10) days after Landlord's
request therefor, Tenant shall provide Landlord and Landlord's mortgagee or
proposed mortgagee, as Landlord shall specify, such financial, legal and
business information concerning any of the events described in Section 20.1 as
Landlord shall request.
20.3 Assignment by DIP or Trustee: Notwithstanding anything to the
contrary contained herein, if Tenant, as a debtor-in-possession (the "DIP"), or
a trustee for the estate in bankruptcy of Tenant (the "Trustee"), assumes this
Lease and proposes to assign this Lease, or sublet the Premises (or any portion
thereof), pursuant to the provisions of the Federal Bankruptcy Code, 11 U.S.C.
Sections 101 et seq. (the "Bankruptcy Code") to any person, partnership,
corporation or other entity (the "Proposed Assignee"), then such assumption of
this Lease and any such assignment or sublease shall be subject to all of the
following:
20.3.1 The DIP, or the Trustee, as the case may be, shall give
Landlord written notice at least ten (10) days prior to the date that the DIP or
the Trustee, as the case may be, shall make application to a court of competent
jurisdiction for authority and approval to enter into such assumption and
assignment or subletting, which notice shall set forth: (i) the name and address
of the Proposed Assignee; (ii) all of the terms and conditions of the Proposed
Assignee's offer; and (iii) the adequate assurances to be provided Landlord to
assure such Proposed Assignee's future performance under this Lease, including,
without limitation, the assurances referred to in Section 365(b)(3) of the
Bankruptcy Code. Landlord, upon receipt of such notice, shall have the prior
right and option, to be exercised by notice to the DIP or the Trustee, as the
case may be, given at any time prior to the effective date of such proposed
assignment or sublease, to accept an assignment or sublease of this Lease by any
other assignee or sublessee acceptable to Landlord, upon the same terms and
conditions and for the same consideration, if any, as the Proposed Assignee,
less any brokerage commissions which may be payable out of the consideration to
be paid by or for the assignment of this Lease;
20.3.2 If the rental agreed upon between the DIP or the Trustee,
as the case may be, and the Proposed Assignee under any proposed assignment or
sublease of the Premises
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(or any part thereof) is greater than the rental rate that Tenant must pay
Landlord hereunder for that portion of the premises that is subject to such
proposed assignment or sublease, or if any consideration shall be received by
the DIP or the Trustee, as the case may be, in connection with any such proposed
assignment or sublease, then all such excess rental or such consideration shall
be paid or delivered to Landlord, and shall not constitute property of the DIP,
the Trustee, or of the estate of Tenant, as the case may be, within the meaning
of the Bankruptcy Code; and
20.3.3 Any proposed assignment or sublease of this Lease by the
DIP or the Trustee, as the case may be, pursuant to provisions of the Bankruptcy
Code shall provide adequate assurance of future performance under this Lease by
the Proposed Assignee, which adequate assurance shall include, as a minimum, the
following: (i) any Proposed Assignee of the Lease shall deliver to Landlord a
security deposit in an amount equal to at least three (3) months Minimum Annual
Rental accruing under this Lease; (ii) any Proposed Assignee of the Lease shall
provide to Landlord an unaudited financial statement, certified to be accurate
by such Proposed Assignee or by an officer, director or partner thereof and
dated no later than six (6) months prior to the effective date of such proposed
assignment or sublease, which financial statement shall show the Proposed
Assignee to have a net worth equal to at least the Minimum Annual Rental that
shall accrue under this Lease for the next year of the Lease Term, (iii) any
Proposed Assignee shall pay all Rental not previously paid under this Lease
including all payments which have been suspended, mitigated, nullified or
reduced to a claim of any kind against Tenant or Tenant's property, by operation
of law or otherwise; and (iv) any Proposed Assignee shall assume Tenant's
obligation to pay Landlord's attorneys' fees pursuant to Section 30.25 hereof.
This Section 20.3 shall not apply to any assignment or sublease other
than pursuant to the provisions of the Bankruptcy Code, nor shall it in any way
limit Landlord's rights to damages or other relief in a proceeding under the
Bankruptcy Code.
ARTICLE XXI. SECURITY DEPOSIT
21.1 Payment: On or before the Effective Date, Tenant shall deposit with
Landlord the sum specified in Section 1.14 as "Security Deposit." Said deposit
shall be held by Landlord without liability for interest as security for the
faithful performance by Tenant of all of its obligations under this Lease.
21.2 Application: If any of the rental herein reserved or any other sum
payable by Tenant to Landlord shall be overdue or paid by Landlord on behalf of
Tenant, or if Tenant shall otherwise be in default beyond the applicable cure
period after notice from Landlord under any of the other monetary or other terms
of this Lease, then Landlord may, at its option and without prejudice to any
other remedy which Landlord may have on account thereof, appropriate and apply
said entire Security Deposit, or so much thereof as may be necessary, to
compensate Landlord for such rental or other sum, or out-of-pocket loss or
damage (i.e., excluding (except if pursuant to a judgment) consequential and
special damages but including, for example, reasonable attorneys' fees)
sustained by Landlord as a result thereof, and Tenant shall forthwith upon
demand restore said Security Deposit to the original sum deposited. Subject to
the foregoing sentence, said Security Deposit shall be refunded in full to
Tenant no later than thirty (30) days after Tenant has surrendered possession of
the Premises to Landlord at the expiration or earlier termination of the Lease
Term. If Landlord claims deductions against the Security Deposit, Landlord shall
return any remaining portion to Tenant within such thirty (30) day period. In
the event of bankruptcy or other debtor-creditor proceedings against Tenant, as
specified in Section 20.1, the Security Deposit shall be deemed to be applied
first to the payment of rental and other charges due Landlord for the earliest
periods prior to the filing of such proceedings.
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21.3 Transfer of Landlord's Interest: Landlord may deliver the funds
deposited hereunder by Tenant to the purchaser or assignee of Landlord's
interest in the Premises in the event that such interest is transferred and
thereupon Landlord shall be discharged from any further liability with respect
to such Security Deposit. This Section 21.3 shall also apply to any subsequent
transfers of any successor Landlord's interest in the Premises.
ARTICLE XXII. DEFAULTS BY TENANT; REMEDIES
22.1 Events of Default: The occurrence of any of the following shall
constitute a default by Tenant and a breach of this Lease:
22.1.1 Failure to Pay Rent: Failing or refusing to pay any amount
of Rental when due in accordance with the provisions of this Lease;
22.1.2 Breach of Operating Covenants: Failing or refusing to
occupy and operate the Premises in accordance with Article XI; or
22.1.3 Other Curable Defaults: Failing or refusing to perform
fully and promptly any covenant or condition of this Lease, other than those
specified in Subsections 22.1.1 and 22.1.2 above, the breach of which Tenant is
reasonably capable of curing after notice from Landlord.
22.2 Notices: When this Lease requires service of a notice, that notice
shall replace rather than supplement any equivalent or similar statutory notice,
including any notices required by California Code of Civil Procedure section
1161 or any similar or successor statute. Following the occurrence of any of the
events specified in Sections 22.1, Landlord shall give Tenant, and any
subtenant, a written notice specifying the nature of the default and the
provisions of this Lease breached and demanding that Tenant, and any subtenant,
either fully cure each such default within the time period specified in the
corresponding subsections below or quit the Premises and surrender the same to
Landlord:
22.2.1 Failure to Pay Rent: For nonpayment of any amount of
Rental, ten (10) days after receiving written notice from Landlord regarding the
same;
22.2.2 Breach of Operating Covenants: For breach of Article XI,
ten (10) days after receiving written notice from Landlord regarding the same,
except as otherwise provided in Section 22.3; and
22.2.3 Other Curable Defaults: For other curable defaults, thirty
(30) days after receiving written notice from Landlord regarding the same;
provided, however, that if such default cannot be cured within said time period,
Tenant shall be deemed to have cured such default if Tenant commences cure of
the default within said time period, and thereafter diligently and in good faith
continues with and actually completes said cure. Tenant shall promptly notify
Landlord of Tenant's commencement of such cure.
To the extent permitted by applicable State law, the time periods
provided in this Section 22.2 for cure of Tenant's defaults under this Lease or
for surrender of the Premises shall be in lieu of, and not in addition to, any
similar time periods prescribed by applicable State law as a condition precedent
to the commencement of legal action against Tenant for possession of the
Premises.
22.3 Non-Curable Defaults: With regard to any breach of this Lease
which is not capable of cure or if Tenant shall have committed three (3) or more
material curable breaches of
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Tenant's operating covenants (each for which Tenant was provided a notice to
cure pursuant to Section 22.2.2) during any twelve (12) month period after the
Effective Date, Landlord shall have the right to give Tenant and any subtenant,
a notice specifying the nature of the default and the provisions of this Lease
so breached, and Landlord shall have the right to demand in said notice that
Tenant close the Premises for business within five (5) days after Tenant
receives such notice and vacate the Premises within thirty (30) days after
tenant receives such notice.
22.4 Landlord's Rights and Remedies: Should Tenant fail to cure within
the time periods specified in Section 22.2 any default specified in Subsections
22.1.1, 22.1.2 or 22.1.3, or fail to quit the Premises in accordance with
Section 22.3, Landlord may exercise any of the following rights without further
notice or demand of any kind to Tenant or any other person, except as required
by applicable State law:
22.4.1 Termination of Lease: The right of Landlord to terminate
this Lease and Tenant's right to possession of the Premises and to reenter the
Premises, take possession thereof and remove all persons therefrom, following
which Tenant shall have no further claim thereon or hereunder; and
22.4.2 Reentry of the Premises: The right of Landlord, without
terminating this Lease and Tenant's right to possession of the Premises, to
reenter the Premises and occupy the whole or any part thereof for and on account
of Tenant and to collect any unpaid rentals and other charges which have become
payable or which may thereafter become payable; and
22.4.3 Termination after Reentry: The right of Landlord, even
though it may have reentered the Premises in accordance with Subsection 22.4.2,
to elect thereafter to terminate this Lease and Tenant's right to possession of
the Premises; and
22.4.4 Continued Enforcement of Lease: The right of Landlord to
continue to enforce all Landlord's rights and remedies under this Lease,
including the right to recover rental as it becomes due under this Lease.
Tenant further covenants that the service by Landlord of any notice
pursuant to the unlawful detainer statutes of the State of California and the
surrender of possession pursuant to such notice shall not (unless Landlord
elects to the contrary at the time of, or at any time subsequent to, the serving
of such notice and such election is evidenced by a notice to Tenant) be deemed
to be a termination of this Lease. The rights and remedies given to Landlord in
this Section 22.4 shall be additional and supplemental to all other rights or
remedies which Landlord may have under laws in force when the default occurs.
22.5 Landlord's Damages: Should Landlord terminate this Lease and
Tenant's right to possession of the Premises pursuant to the provisions of
Subsections 22.4.1 or 22.4.3 or the provisions of Section 20.1, Landlord may
recover from Tenant as damages all of the following:
22.5.1 Delinquent Rent: The worth at the time of award of any
unpaid rental that had been earned at the time of such termination;
22.5.2 Rent After Termination Until Judgment: The worth at the
time of award of the amount by which the unpaid rental that would have been
earned after termination until the time of award exceeds such rental loss Tenant
proves could have been reasonably avoided;
22.5.3 Rent After Judgment: The worth at the time of award of the
amount by which the unpaid rental for the balance of the Lease Term after the
time of award exceeds the amount of such rental loss that Tenant proves could be
reasonably avoided;
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22.5.4 Other Compensation: Any other amount necessary to
compensate Landlord for all the detriment proximately caused by Tenant's failure
to perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom, including any costs or expense
incurred by Landlord in (a) retaking possession of the Premises, including
reasonable attorney fees therefor, (b) maintaining or preserving the Premises
after such default, (c) preparing the Premises for reletting to a new tenant,
including repairs or alterations to the Premises for such reletting, (d) leasing
commissions, and (e) any other costs necessary or appropriate to relet the
Premises; and
22.5.5 Additional or Alternative Documents: At Landlord's
election, such other amounts in addition to or in lieu of the foregoing as may
be permitted from time-to-time by the laws of the State of California; and
22.5.6 Calculation of Damages: As used in Subsections 22.5.1 and
22.5.2, the "worth at the time of award" is computed by allowing [***]. As used
in Subsection 22.5.3, the "worth at the time of award" is computed by
discounting such amount at the discount rate of the [***]. All rental other than
Minimum Annual Rental shall, for the purposes of calculating any amount due
under the provisions of Subsection 22.5.3, be computed on the basis of the
average monthly amount thereof accruing during the immediately preceding sixty
(60) month period, except that, if it becomes necessary to compute such rental
before such a sixty (60) month period has occurred, then such rental shall be
computed on the basis of the average monthly amount hereof accruing during such
shorter period.
22.6 Merchandise and Personal Property: Without limitation of Landlord's
rights under Section 13.1, in the event of default by Tenant (i.e., after
notice and expiration of any applicable cure period set forth in such Article
XXII) pursuant to which Tenant either vacates the Premises or is dispossessed of
the Premises, all of Tenant's merchandise and Personal Property including the
driving simulators and Tenant's other related fixtures and equipment) shall, at
Landlord's option: (a) remain on the Premises and, Landlord, continuing during
the length of said default, shall have the right to take the exclusive
possession of same and to use the same free of rent or charge until all defaults
have been cured if and only if (i) no secured party has a lien on such
merchandise and Personal Property, and (ii) if required by NASCAR, Landlord has
a license to use the "NASCAR" name and related intellectual property pursuant to
a license agreement with NASCAR or such other licensor that has the rights to so
license such intellectual property, and (iii) such license agreement (if any)
and Landlord's use of the "NASCAR" name and related intellectual property does
not conflict with any agreement between Tenant and NASCAR or such other licensor
that has the rights to so license such intellectual property; provided, however,
if Landlord takes possession of such merchandise and/or Personal Property, any
and all revenues derived therefrom by Landlord shall be applied toward the
mitigation of Tenant's default under this Lease; (b) be removed by Landlord from
the Premises and placed in storage at a public warehouse at the expense and risk
of Tenant; or (c) be removed by Tenant upon demand by Landlord.
22.7 Self-Help Cure Rights: If Tenant is in default (after notice and
expiration of any applicable cure period) under any provisions of this Lease,
Landlord may, but shall not be obligated to, take such action as Landlord in
good faith determines to be appropriate to remedy or mitigate such default.
Tenant shall pay, as Additional Rent, all reasonable out-of-pocket costs
incurred by Landlord in following such course and in remedying or mitigating
such default. The exercise of rights by Landlord shall not constitute a waiver
of any default by Tenant or of any of Landlord's other rights or remedies.
22.8 No Waiver: The waiver by either Landlord or Tenant of any breach of
any term, covenant or condition contained in this Lease shall not be deemed to
be a waiver of such term, covenant or condition or any subsequent breach
thereof, or of any other term, covenant or
*** Confidential treatment requested.
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condition contained in this Lease. Landlord's subsequent acceptance of partial
rental or performance by Tenant shall not be deemed to be an accord and
satisfaction or a waiver of any preceding breach by Tenant of any term, covenant
or condition of this Lease or of any right of Landlord to a forfeiture of the
Lease by reason of such breach, regardless of Landlord's knowledge of such
preceding breach at the time of Landlord's acceptance.
22.9 Waiver of Notice: Notwithstanding anything to the contrary
contained in this Article XXII, Tenant waives (to the fullest extent permitted
under law) any written notice, other than such notice as this Article XXII
specifically requires or as required by law for the service of process in legal
proceedings, which any statute or law now or hereafter in force prescribes be
given Tenant.
ARTICLE XXIII. DEFAULTS BY LANDLORD; REMEDIES
If Landlord shall neglect or fail to perform or observe any of the
terms, covenants, or conditions contained in this Lease on its part to be
performed or observed within thirty (30) days after notice from Tenant of
default or, when more than thirty (30) days shall be required to cure the
default, if Landlord shall fail to commence such cure within said thirty (30)
day period or thereafter fail to proceed diligently to cure such default, then
Landlord shall be liable to Tenant for any and all damages sustained by Tenant
as a result of Landlord's breach.
ARTICLE XXIV. EMINENT DOMAIN
The word "taking" (and its variants, such as "taken") as used in this
Article shall mean any appropriation, condemnation or taking under the power of
eminent domain by any public or quasi-public authority or any other entity
having the right to exercise such power and includes a voluntary sale or
conveyance under imminent threat and in lieu of condemnation. If a taking occurs
which involves real property and/or improvements constituting the Project having
a fair market value of at least thirty-three and one-third percent (33 1/3%) of
the fair market value of the entire Project, whether or not the Premises thereof
are also taken, Landlord or Tenant shall have the right to terminate this Lease
on forty-five (45) days' written notice to the other party. If more than
twenty-five percent (25%) of the Floor Area of the Premises is taken, Tenant
shall have the right to terminate the Lease upon forty-five (45) days' written
notice to Landlord. In the event of such termination, both Landlord and Tenant
shall thereupon be released from any liability thereafter accruing hereunder. If
this Lease is not terminated following a taking, then Tenant shall continue to
occupy that portion of the Premises which shall not have been appropriated or
taken and the parties shall proceed as follows: (a) at Landlord's cost and
expense and as soon as reasonably possible, Landlord shall restore the Premises
on the land remaining to a complete unit of like quality and character as
existed prior to such appropriation or taking, and (b) the Minimum Annual Rental
shall be reduced on an equitable basis, taking into account the relative values
of the portion taken as compared to the portion remaining. Tenant hereby waives
any statutory rights of termination which may arise by reason of any partial
taking of the Premises under the power of eminent domain. If this Lease is
terminated or modified as hereinabove provided, Landlord shall be entitled to
receive the entire condemnation award for the taking of all real property
interests in the Premises. The rental and other charges for the last month of
Tenant's occupancy shall be prorated, and Landlord shall refund to Tenant any
rental or other charges paid in advance. Tenant's right to receive a
condemnation award for the taking of its merchandise, Personal Property,
goodwill, relocation expense and/or interest in other than the real property
taken shall not be affected in any manner by the provisions of this Article,
provided Tenant's award does not reduce or affect Landlord's award.
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ARTICLE XXV. SALE OR MORTGAGE BY LANDLORD
From and after a sale or other conveyance of Landlord's interest in and
to the Project, Landlord shall be released from all liability to Tenant and
Tenant's successors and assigns arising from this Lease because of any act,
occurrence or omission of Landlord occurring after such sale.
ARTICLE XXVI. SUBORDINATION/NONDISTURBANCE; ATTORNMENT; ESTOPPEL
26.1 Subordination/Nondisturbance: Within twenty (20) days after the
receipt of a request from Landlord, Tenant will subordinate its rights under
this Lease to the rights or lien or security interest of any present or future
mortgage, deed of trust on the Project (including all future advances made
thereunder subsequent to the Effective Date of this Lease), lease of the entire
Project in which Landlord is the lessee, or any reciprocal easement agreement,
as such may now or in the future burden the Premises or any building hereafter
placed upon the land of which the Premises are a part. Notwithstanding the
foregoing Tenant shall not be required to subordinate to any future lease,
security interest, mortgage, or deed of trust unless the secured party or lessor
delivers a nondisturbance agreement in a recordable, commercially reasonable
form as long as Tenant is not in default hereunder (after notice and expiration
of any cure period), and subject to the terms of this Lease.
26.2 Attornment: If landlord conveys in a sale all of its rights and
duties in and to the Lease and/or the Premises and the realty underlying the
Premises, or if an interest in Landlord or Landlord's equity of redemption or
other interest in the Lease and the Premises under a mortgage, deed of trust,
pledge or security agreement is foreclosed judicially or nonjudicially, upon the
request of Landlord's lawful successor, Tenant shall attorn to said successor,
provided said successor accepts the Premises subject to this Lease and agrees to
perform all of Landlord's obligations under the Lease.
26.3 Estoppel Certificate: At any time and from time-to-time on not more
than twenty (20) days' notice from Landlord, Tenant shall execute and deliver to
Landlord a statement (the "Estoppel Certificate"), in a form reasonably
acceptable to Landlord, ratifying this Lease and certifying as to the date that
Tenant accepted and began occupancy of the Premises, the amount of Minimum
Annual Rental then payable under this Lease and the period through which such
Rental has been paid, the expiration date of the Lease, and such other matters
as Landlord may reasonably request. Unless Tenant shall have notified Landlord
within said twenty (20) day period of any qualifications Tenant may have to the
statements in the Estoppel Certificate, anyone transacting with Landlord in a
sale or mortgage of the Premises shall have the right to rely on the accuracy of
such statements in the Estoppel Certificate or deemed made by Tenant pursuant to
this Section.
ARTICLE XXVII. TITLE TO PREMISES
Landlord represents and warrants that as of the Effective Date Landlord
shall have good and marketable title to the Premises subject to (a) covenants,
conditions, restrictions, easements and rights of record and (b) the effect of
any zoning laws of the city, county and state where the Project is located and
(c) general and special Taxes not delinquent. Landlord covenants that Tenant
will not be unreasonably interfered with as a result of any of the covenants,
conditions, restrictions, easements and rights of record, provided Tenant is in
full compliance with the provisions of this Lease.
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ARTICLE XXVIII. QUIET ENJOYMENT
Landlord agrees that Tenant, upon paying the rental and performing the
terms, covenants and conditions of this Lease, may quietly have, hold and enjoy
the Premises from and after Landlord's delivery of the Premises to Tenant in
accordance with Section 4.2, and until the end of the Lease Term, subject,
however, to the other provisions of this Lease.
ARTICLE XXIX. NOTICES AND CONSENTS
All notices, consents, approvals, requests, demands, releases, waivers,
certifications, and other communications permitted or required to be given
under, or referred to in, this Lease shall be in writing and shall be and deemed
duly served or given (i) when actually delivered, if personally delivered or
delivered by overnight or other courier or delivery service which confirms
delivery in writing, or (ii) within five (5) business days after deposit in the
U.S. Mail, if sent by certified mail, postage prepaid, return receipt requested.
Such notices shall be addressed to all persons entitled to receive notice for
such party pursuant to Section 1.17. Landlord and Tenant may, from time-to-time
by notice to the other, designate another place for receipt of future notices.
ARTICLE XXX. MISCELLANEOUS
30.1 Lease Rate: For purposes of this Lease, the term "Lease Rate" shall
be deemed to mean [***] above the annualized rate of interest publicly announced
from time-to-time by Bank of America National Trust and Savings Association in
San Francisco, California (or such other bank as Landlord may from time-to-time
specify), as its "reference rate" or its "prime rate" unless such rate exceeds
the maximum lawful rate under usury or similar laws in the State of California
in which case it shall be deemed to mean such maximum lawful rate.
30.2 Financing Costs: Whenever in this Lease provision is made for
Landlord to charge certain costs or expenses to Tenant which include financing
costs, the amount of interest to be included in that calculation shall be two
percent (2%) above the annual rate of yield available at the time of the
particular transaction on a Treasury Note or bond of the United States of
America maturing at approximately the end of the useful life or other relevant
period selected by Landlord unless such rate exceeds the maximum lawful rate
under usury or similar laws in the State of California in which case it shall be
deemed to mean such maximum lawful rate.
30.3 Waiver or Consent Limitation: No term, covenant or condition of
this Lease shall be deemed to have been waived by Landlord or Tenant unless such
waiver is in writing and signed by the party to be charged with the waiver. A
waiver of any given breach or default shall not be a waiver of any other breach
or default. Consent to or approval of any act by one party requiring the other
party's consent or approval shall not be deemed to waive or render unnecessary
such other party's consent to or approval of any subsequent similar act.
30.4 Force Majeure: The occurrence of any of the following events shall
constitute "Force Majeure" hereunder and excuse such obligations of Landlord or
Tenant as are thereby rendered impossible or reasonably impracticable for so
long as such event continues: lockouts; labor disputes; acts of God; inability
to obtain labor, materials or reasonable substitutes therefor; governmental
restrictions regulations or controls; judicial orders; enemy or hostile
governmental action; civil commotion; fire or other casualty; and other causes
beyond the reasonable control of the party obligated to perform. Notwithstanding
the foregoing, the occurrence of such events shall not excuse Tenant's
obligations to pay Minimum Annual Rental and Additional Rent (except to the
extent that the payment of Minimum Annual Rental and/or Additional Rent is
abated pursuant to
*** Confidential treatment requested.
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the terms or conditions of this Lease) or excuse such obligations as this Lease
may otherwise impose on the party to obey, remedy or avoid such event.
30.5 Avoidance of Labor Disputes: In constructing or causing its
contractor to construct, Alterations (as defined in Section 14.1) and Tenant's
Work (as defined in Exhibit C) and throughout the Lease Term, Tenant shall
conduct its activities in such a manner as to avoid any labor dispute which
causes or is likely to cause stoppage or impairment of work, deliveries or any
other services in the Project. If there shall be any such stoppage or impairment
as the result of any such labor dispute or potential labor dispute, Tenant shall
immediately undertake such action as may be necessary to eliminate such dispute
or potential dispute, including (a) removing all disputants from the job site
until such time as the labor dispute no longer exists, (b) seeking a temporary
restraining order and other injunctive relief with regard to illegal union
activities or a breach of contract between Tenant and Tenant's contractor, and
(c) filing appropriate unfair labor practice charges. Should Landlord incur or
sustain any Claims (as defined in Section 17.1) in connection with any such
labor dispute or potential labor dispute, the provisions of Section 17.1 shall
apply regardless of whether Tenant has performed its duties under this Section
30.5.
30.6 Landlord Calculations, Determinations and Requirements: Whenever
this Lease contemplates that Landlord will make particular determinations,
calculations, specifications, requirements, estimates or the like with respect
to amounts payable by Tenant, Landlord shall make such determinations, etc.,
including the amount, allocation, proration and composition of charges and
expenses, in a reasonable and equitable manner and acting in good faith.
30.7 Failure to Give Consent: If Landlord or Tenant fails to give any
consent or approval referred to in this Lease, the other party hereto shall be
entitled to specific performance in equity and shall have such other remedies as
are reserved to it under this Lease, but in no event shall Landlord or Tenant be
responsible in monetary damages for such failure to give consent or approval
unless withholding maliciously or in bad faith.
30.8 Reasonableness: Except as expressly provided in this Lease,
whenever this Lease provides that consent or approval of either party is
required, such consent or approval will not be unreasonably withheld or delayed.
The parties acknowledge that there are recent California cases interpreting
lease provisions and imposing covenants of good faith and fair dealing together
with reasonableness standards in connection with lease consents. There are
certain provisions of this Lease, however, in which either Landlord or Tenant
may withhold its consent "in its sole discretion." These specific provisions,
which may be viewed as allowing such party in such instance to deviate from a
standard of reasonableness which is imposed on Landlord and Tenant in connection
with other provisions of this Lease, have been lengthily negotiated and
bargained for and represent a material part of the consideration to be received
by each party. The parties, bearing in mind the rights, duties and obligations
of the parties to honor the implied covenants of good faith and fair dealing,
have specifically negotiated for and agreed that it is the intent of the parties
that Landlord or Tenant, where expressly provided, may exercise their respective
consent authority pursuant to a standard of sole discretion.
30.9 Relationship of the Parties: Nothing contained in this Lease shall
be deemed or construed as creating a partnership, joint venture,
principal-agent, or employer-employee relationship between Landlord and any
other person or entity (including Tenant) or as causing Landlord to be
responsible in any way for the debts or obligations of such other person or
entity.
30.10 Severability; Construction of Provisions: If any provision of this
Lease shall be determined to be void by any court of competent jurisdiction,
then such determination shall not affect any other provision of this Lease and
all such other provisions shall remain in full force and effect. It is the
intention of the parties hereto that if any provision of this Lease is capable
of two
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(2) constructions, one of which would render the Provision void and the other of
which would render the provision valid, then the provision shall have the
meaning which renders it valid.
30.11 Warranty of Authority: If either Landlord or Tenant is a
corporation, the person or persons executing this Lease on behalf of either
Landlord or Tenant hereby covenant and warrant as of the Effective Date that:
(a) such corporation is a duly constituted corporation, qualified to do business
in the State of California; (b) such corporation has paid all applicable
franchise and corporate taxes; and (c) such corporation will file or pay when
due all future forms, reports, fees and other documents necessary to comply with
applicable laws.
30.12 Entire Agreement; Construction: This Lease supersedes and cancels
any and all previous negotiations, arrangements, representations, brochures,
displays, projections, estimates, agreements and understandings, if any, made by
or between Landlord and Tenant with respect to the subject matter thereof, and
none thereof shall be used to interpret, construe, supplement or contradict this
Lease. Phrases such as "including" and "for example" shall in no circumstances
be construed as phrases of limitation but shall be treated as merely providing
examples of the more general language which more general language shall be
broadly and fairly construed.
30.13 Time of Essence: Time is of the essence in the performance of all
covenants and conditions in this Lease for which time is a factor.
30.14 Joint and Several Liability: If two (2) or more persons or
corporations execute this Lease as Landlord or Tenant, then and in such event
the words "Landlord" or "Tenant' as used in this Lease shall refer to all such
persons or corporations, and the liability of such persons or corporation for
compliance with the performance of all the terms, covenants and conditions of
this Lease shall be joint and several.
30.15 Successors and Assigns: The parties hereto agree that all the
provisions of this Lease are to be construed as covenants and agreements and,
except as otherwise specified, that said provisions shall bind and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns.
30.16 Right to Lease: The Project is being designed and will be
constructed as a dining, retail and entertainment complex. Notwithstanding the
foregoing, Landlord reserves the absolute right to effect such other tenancies
in the Project as Landlord, in the exercise of its sole business judgment, shall
determine to best promote the interest of the Project. Tenant does not rely on
the fact, nor does Landlord represent, that there shall be any specified
occupants or number of occupants of space in the Project after the Effective
Date.
30.17 Landlord's Right to Engage In Other Activities: Landlord may allow
or cause additional structures and facilities to be constructed adjacent to the
Project or in any part of Universal City, California, or elsewhere, including
motion picture theaters, hotels, motels, retail shops, office buildings,
restaurants and bars, including any business operations which might be
competitive with that of Tenant's. Tenant expressly acknowledges Landlord's
absolute right to own, operate, lease, franchise or otherwise be affiliated with
the foregoing.
30.18 Landlord's Access: Landlord and Landlord's agents shall have the
right, upon prior notice to Tenant, to enter the Premises at reasonable times
for the purpose of inspecting the same, showing the same to prospective
purchasers, lenders, or tenants provided that Landlord shall attempt to minimize
interference with Tenant's business. Landlord may at any time during the last
one hundred twenty (120) days of the Lease Term place on or about the Premises
any ordinary "For Lease" signs, all without rebate of rent or liability to
Tenant.
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30.19 Attorneys' Fees: if, at any time after the Effective Date, either
Landlord or Tenant institutes any action or proceeding against the other
relating to the provisions of this Lease, the nonprevailing party in such action
or proceeding shall reimburse the prevailing party for the reasonable expenses
of attorneys' fees and all costs and disbursements incurred therein by the
prevailing party, including any such fees, costs or disbursements incurred on
any appeal from such action or proceedings.
30.20 Brokers: Landlord and Tenant warrant that neither has had any
dealings with any realtor, broker, or agent, in connection with the negotiation
of this Lease, excepting the person or persons specified in Section 1.16 and
agrees to indemnify, defend and hold the other harmless from any cost, expense,
or liability for any compensation, commission, or charges claimed by any
realtor, broker, or agent, other than those named above, with respect to this
Lease or the negotiation of this Lease if it has had dealings or negotiations
with the broker making the claim.
30.21 Recordation: Tenant shall not record this Lease without prior
consent from Landlord.
30.22 Nonbinding: This Lease and the terms and conditions set forth
herein shall be of no force and effect, and neither party shall be bound hereby,
unless and until this Lease has been duly executed and delivered by Landlord and
Tenant.
30.23 Applicable Law/Jury Proceedings: This Lease shall be governed by
and construed in accordance with the laws of the State of California. In the
event of legal proceedings, Tenant and Landlord hereby knowingly, voluntarily
and intentionally WAIVE THE RIGHT EITHER OF THEM OR THEIR HEIRS,
REPRESENTATIVES, SUCCESSORS OR ASSIGNS MAY HAVE TO A TRIAL BY JURY WITH RESPECT
TO ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LEASE OR ANY
AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF
CONDUCT, DEALING, STATEMENTS OR ACTIONS OF EITHER PARTY. THIS PROVISION IS A
MATERIAL INDUCEMENT TO LANDLORD'S ACCEPTING THIS LEASE.
"LANDLORD" "TENANT"
UNIVERSAL STUDIOS CITYWALK SILICON ENTERTAINMENT, INC.
HOLLYWOOD
A Division of Universal Studios, Inc.
By: /s/ LARRY KURTZWEIL By: /s/ [ILLEGIBLE]
------------------------------- -------------------------------
Larry Kurtzweil
Senior Vice President Title: V.P.
Date: July 20, 1999 Date: 7/14/99
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EXHIBIT A-1
SITE PLAN OF PROPERTY
1 OF 4
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EXHIBIT A-1
SITE PLAN OF PROPERTY
2 OF 4
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EXHIBIT A-1
SITE PLAN OF PROPERTY
3 OF 4
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EXHIBIT A-1
SITE PLAN OF PROPERTY
4 OF 4
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EXHIBIT A-2
PARKING AREAS
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EXHIBIT B-1
FLOOR PLAN OF TENANT PREMISES
[GRAPHIC]
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1 SIGN Metal Face w/"Pop-through" Graphics
Projected from Scrim similar design to
our Irvine Spectrum Sign
2 SCRIM Perforated Metal w/Faux Painted Race
Track. Will provide shop dwgs. for final
Approval.
3 RACERS Authentic NASCAR Stock Cars
4 MARQUEE Checkerboard Metal Fascia w/Crossed
Flags mounted on existing ellipsoidal
Sign frame
5 LIGHTING Lit remotely from building across
the courtyard
6 TRANSOM Replace existing lightbox faces with
"NASCAR" logos
7 DOORS Clear Butt-glass Doors w/Crossed Flag
Graphic
8 THEMING (2) Free-standing lightboxes
9 VIDEO (2) 50" Projection Monitors in Custom
Cabinets Video presentations must be
related to the Permitted Use.
10 ENTRY Checkerboard tile in existing tile
locations only.
[GRAPHIC]
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[GRAPHIC]
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EXHIBIT B-3
APPROVED PRELIMINARY DESIGN PLAN FOR INTERIOR LAYOUT
[GRAPHIC]
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EXHIBIT C
PROVISIONS RELATING TO CONSTRUCTION OF TENANT'S PREMISES
1. LANDLORD'S WORK: Except as otherwise provided in this Exhibit C, Landlord, at
its own cost and expense, will construct the following, ALL of which are herein
collectively referred to as "Landlord's Work."
A. Building of Which Premises Shall Form a Part: The building of which
the Premises forms a part (herein referred to as the "Building") shall be
constructed in accordance with the following criteria:
1. Structure: The structural frame including columns, beams,
joists, and such other non-combustible materials as may be specified by
Landlord.
2. Roof: The roof will be either a metal standing seam roof with
an inverted roof membrane or a built-up roofing system, and will be insulated in
accordance with applicable governmental requirements.
3. Exterior Walls: The exterior walls will be of masonry,
pre-fabricated panels, structural metal studs, exterior gypsum sheathing with
cementitious-finished wall system or such other materials as may be specified by
Landlord and will have an R value in conformance with applicable governmental
requirements.
4. Interior Walls: The exposed interior face of exterior facing
walls will be exposed studs with exterior insulation only.
B. Common Areas as set forth in Section 8.1 of the Lease:
C. Heating, Air Conditioning and Ventilation: Equipment locations will
be identified, via the Lease Outline Drawings, on the roof and/or mechanical
wells for Tenants packaged heat pumps and, as appropriate, kitchen make-up air
and exhaust units. Chase locations will be provided for running refrigerant
pipes and controls through other tenant spaces. Locations for duct chases and/or
exterior wall louvers for fresh air, return air and toilet exhaust for Tenant
use will be identified on the Lease Outline Drawings.
D. Work Within Tenant's Premises: Landlord's Work within the Premises
shall be limited to the following:
1. Demising Walls: The demising walls which separate the Premises
from other tenant areas and Common Areas will extend from the finished floor to
the underside of the structural beam or roof deck. Gypsum board will be supplied
and installed by Tenant at Tenant's expense.
2. Floors: For ground floor restaurant Premises which are not
over structured slabs, Landlord will furnish a gravel bed at four inches (4")
below the finished floor elevation selected by Landlord; tenants of such
Premises shall not install a floor slab thicker than four inches (4") or change
the floor elevation without Landlord's approval. For all other Premises,
Landlord will provide a recessed concrete sub-slab with a brushed finish
installed at an elevation identified on the Lease outline drawings.
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3. Service doors: The service door supplied by Landlord, if any,
shall be provided at or about the location shown on the Lease Outline Drawings.
While Landlord may elect to provide hardware for the service door, it is
Tenant's responsibility to provide hardware and locking devices adequate for
Tenant's service and security requirements. Repair and replacement of the
service door are Tenant's responsibility.
4. Ceilings: The ceilings will be exposed structure with exposed
plumbing, conduit and other building services as required. Heights of exposed
elements will be noted on the Lease Outline Drawings.
E. Utility Services in the Premises:
1. Electric Service: Landlord will provide conduit from the meter
base in the Project's main electrical room to the Premises. Electric service
will be made available for the Premises at a location designated by Landlord in
the Project's main electrical room and will be 400 Amps, 277/480 volts, 3 phase,
4 wire, 60 cycle alternating current.
2. Water Service: Landlord will provide a domestic cold water
line with shutoff valve to a point in or adjacent to the Premises designated by
Landlord. Such domestic cold water line shall have either a two (2) inch
diameter if serving Premises to be used as a restaurant or a three-quarter (3/4)
inch diameter for other Premises. Approximate location will be identified on the
Lease Outline Drawings. Tenant shall install a water meter of a type and at a
location approved by Landlord.
3. Telephone Service: Landlord will arrange with the telephone
utility company to provide service at the Project's main telephone room with a
minimum two (2) inch conduit to the Premises. Approximate location will be
identified on the Lease Outline Drawings.
4. Gas service: If the Premises are to used as a restaurant,
Landlord will provide an interior three-(3) inch natural gas branch, valved and
capped at a location selected by Landlord. Approximate location will be
identified on the Lease Outline Drawings.
5. Sanitary Sewer Service: If the Premises are to used as a
restaurant, Landlord will stub two plugged four (4) inch sanitary outlets (one
for grease waste and one for regular waste) at locations selected by Landlord to
which Tenant shall connect. Otherwise, Landlord will provide a four (4) inch
sanitary line under slab in the Premises to which Tenant shall connect. Retail
Tenant Spaces will have vent line installed as indicated on the Lease Outline
Drawings.
6. Sprinkler Service: A fire protection sprinkler system
including feeds and/or cross mains and branch lines installed in a grid pattern
designed to Factory Mutual standards for unoccupied space, will be located
within the Premises at an elevation above the maximum ceiling height. The design
of the system hydraulically shall provide coverage densities established by
Factory Mutual. Their criteria for retail spaces is 0.15 density per 2,500
square feet of area and 0.10 density per 1,500 square feet for restaurant
spaces. Modifications of the system to meet Tenant's design will be provided by
Landlord at Tenant's expense or, at Landlord's option, by Tenant provided that
Tenant uses a Landlord approved licensed sprinkler contractor. Tenant's
sprinkler layout shall not exceed the base building design parameters.
F. Openings: Any structural openings or penetrations in roofs, demising
walls, exterior walls or floor slabs for any purpose will be furnished at
Landlord's option by Landlord at Tenant's expense. Landlord reserves the right
to refuse to permit the furnishing of any openings which exceed the capability
of the structural system or which, in Landlord's opinion, would have an
appearance detrimental to the Building.
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II. TENANT'S WORK: All work set forth in this Section 11 and all other work not
specifically designated as Landlord's Work by Section I which is necessary to
complete the Premises in accordance with Tenant's Plans and for the Premises to
be ready to open for business to the public shall be done by Tenant at Tenant's
expense, and is herein collectively referred to as "Tenant's Work."
A. Construction Type: All Tenant construction must be non-combustible.
All finishes shall comply with applicable governmental requirements for both
flame spread and smoke ratings. All concealed framing above ceiling or soffit
shall be made of steel studs or other fireproof materials.
B. Demising Partitions: All demising partitions between Tenant's space
and adjacent space must be fully sheathed using 5/8" Type X gypsum board, taped
and finished, from floor to structure above.
C. Mezzanines: Landlord acknowledges that Tenant will be installing a
mezzanine for its observation deck subject to Landlord's approval of Tenant's
final plans. All mezzanines, if approved, must meet local building codes, be of
fireproof construction, have complete sprinkler coverage, and be approved by
Landlord's structural engineer with respect to design and attachment to the
Building.
D. Floors: The maximum live floor load shall be one hundred (100) pounds
per square foot on the first floor. Above the first floor, the maximum live
floor load shall be eighty (80) pounds per square foot plus twenty (20) pounds
per square foot load for partitions.
1. Sales Area: The floor slab shall be covered with floor finish
materials approved by Landlord. All Tenant floor finishes must be installed to
taper or match the elevation of the projects adjacent finished walkway surfaces.
All tapers must be one quarter (1/4) inch per foot or less.
2. Stock Room, Service or Other Non-Sales Areas: The concrete
floor slab provided by Landlord must be sealed by Tenant with a sealant approved
by Landlord. If the concrete floor slab is covered, floor finish materials must
be approved by Landlord.
3. Kitchens, Bars, Food Preparation Areas: Floors shall be
thick-set quarry tile with minimum one quarter (1/4) inch to a foot slope to all
required drains. A waterproof membrane shall be installed between the setting
bed and structural slab, and shall run a minimum of six (6) inches up all walls,
curbs, and other vertical surfaces. Membrane shall be Latacrete 9235 or equal.
All floor penetrations shall be sleeved, grouted, and made waterproof in
accordance with details shown in the Lease Outline Drawings. All floor drains
and floor sinks shall have a minimum two (2) foot by two (2) foot lead flashing
in accordance with details in the Lease Outline Drawings. Floor drains shall be
required at each compartmentalized utensil sink, dishwashing machine, janitorial
sink, and ice machine.
4. Toilet Rooms: All toilet rooms must have a non-porous floor
covering with a waterproofing membrane installed under the finished flooring and
an integral six (6) inch high base sealed to the floor finish material. All
non-porous floor covering shall be of commercial grade with a non-slip surface.
Tenant shall provide a minimum of one (1) floor drain in each toilet room.
E. Painting and Decorating: Exposed walls shall have a minimum two coat
finish and all natural wood a minimum of one sealer coat. The, walls and
ceilings of the toilet rooms shall have a two-coat, semi-gloss finish.
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F. Ceilings: All ceilings must be suspended from beams and/or floor
decking. No ceiling may be suspended from roof decking. Any ceiling weighing
over five (5) pounds per square foot must attach to primary structural members.
All existing fireproofing or insulation must be protected and repaired if
damaged. All ceiling attachment methods must be approved by Landlord's
structural engineer. All ceiling tile shall meet the following specifications: a
noise reduction coefficient of .60 to .70, minimum room to room attenuation
factor of 40.0 decibels, a flame spread of 0 to 25, smoke development of 0 to 15
and full contribution of 0 to 25, tested in accordance with A.S.T.M.E. -84. If
gypsum board or plaster ceilings are used, access panels must be installed by
Tenant to allow Landlord access to all suspended Project equipment or systems
above the ceiling. Access panels must be installed flush and finished to match
adjacent surfaces. All above ceiling storage is prohibited.
G. Store Fixture Supports: All Tenant improvements, other than ceiling
and lighting fixtures, shall be floor mounted unless Landlord's approval is
obtained to support improvements otherwise.
H. Egress Door Hardware: Egress door hardware is all hardware other than
that supplied as part of Landlord's Work. Secondary locks or latches are not
allowable. Door closers are required.
I. Mechanical, Electrical and Plumbing Work by Tenant: (in order to
coordinate Tenant's Mechanical and Electrical Design, reference should be made
to Section XII of this Exhibit C.)
1. Mechanical Systems: Tenant shall design and install the air
conditioning system for the Premises including the air conditioning units, fans,
piping, duct work, any controls or circuitry, and any related elements required
for the operation of said system. Tenant shall not install the rooftop air
conditioning system and return/exhaust fans unless and until Landlord has
approved the contractor proposed to install the equipment, the method of
installation, the type of equipment and the location of equipment and routing of
ducts and pipes outside of the Premises. The air conditioning system shall be in
compliance with applicable governmental requirements, including building and
energy codes. If Tenant's business is an odor-producing operation, the air
conditioning system shall be designed and installed so as to prevent such odors
from migrating to other areas within the Project.
2. Electrical: All electrical facilities shall conform with
applicable governmental requirements. Tenant shall extend the service conduit
stub-in provided by Landlord to Tenant's main distribution service panel. Tenant
shall install feeder wires through the conduit from the switch in Landlord's
electrical room to Tenant's service panel and make all connections. Requirements
greater than that provided by Landlord shall be made, if power is available, at
Tenant's expense.
3. Plumbing: Tenant shall install drain and soil lines to the
point of entry provided by Landlord. Requirements greater than that provided by
Landlord must be shown on Tenant's working drawings and will be made at Tenant's
expense. Tenant shall install all plumbing fixtures and rough-in plumbing except
as provided above in Section 1. Any increase in the size of the water service
required by Tenant which necessitates a branch water line larger than as
specified in Section I will be furnished by Landlord at Tenants expense.
4. Sprinkler Service: Revisions to Landlord's system or
additional sprinkler heads in excess of those provided by Landlord will be
provided by Landlord at Tenant's expense. Landlord reserves the right to refuse
to permit the installation of additional heads if such additional heads exceed
the supplying capacity of Landlord's bulk mains.
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5. Costs: Tenant shall pay the costs of any meters or
pressure-reducing valves or other devices as well as any connection fees or
charges related to the provision of utility services to the Premises.
J. Appurtenances: No appurtenances (including light fixtures, antennas,
signs, etc.) will be affixed to the exterior walls of the Building without
Landlord's approval.
K. Fire Alarm System: Landlord shall provide, at Tenant's expense,
extension of Landlord's fire alarm system throughout Tenant's premises in
accordance with Tenant's approved plans, and Fire Department requirements.
L. Exiting: If Tenant is required by applicable governmental
requirements to have a second means of egress from its Premises, either to an
adjacent corridor or public area, Tenant shall provide such egress at its own
expense in a location and of a design specifically approved by Landlord.
M. Miscellaneous: Tenant shall install the following:
1. Internal communication, alarm, fire protection, or smoke
detection systems in compliance with applicable governmental requirements;
2. Storefronts, Tenant's sign(s), show window display platforms,
window backs, interior finish in show windows, store fixtures, and furnishings;
3. Double-studded walls and sound insulation of the walls,
glazing, floors and ceilings, and such other sound insulation measures as
required by Landlord in its sole and absolute discretion when, in the sole and
absolute judgment of the Landlord, Tenant's business operations create sounds or
noises which may disturb Landlord, other tenants, patrons of other tenants or
the occupant of any space in the Project; and
4. If the Premises are used as a restaurant, kitchen exhaust
fans, make-up air fans, special door opening "air curtains" fan systems and
other provisions required by applicable government requirements for restaurants.
III. TENANT'S PLANS:
A. Landlord's Design Criteria: After the execution of the Lease,
Landlord will deliver to Tenant one sepia and one print of a measured drawing of
the Premises (the "Lease Outline Drawings") and such other plans, criteria
drawings and information as Landlord deems necessary or appropriate (herein
collectively referred to as the "Landlord's Design Criteria").
B. Tenant's Preliminary Plans: Within thirty (30) days after receipt by
Tenant of Landlord's Design Criteria, Tenant shall submit for Landlord's
approval the plans and other items set forth below ("Tenant's Preliminary
Plans"), all in accordance with the criteria set forth in Landlord's Design
Criteria and with conceptual presentations, if any, made by Tenant to Landlord
prior to Lease execution. The submission must be complete in order for Landlord
to evaluate the proposal fairly and to prevent continuation of work on an
unacceptable design. Failure to provide adequate information may be cause for
return of the submission with no review. Such submittal shall include the
following:
1. Three (3) sets of prints and one (1) sepia of (a) floor plans
(at 1/4" scale) showing all partitions, doors, store fixtures, plumbing
fixtures, electrical and telephone panels and transformer, and other
construction; signage plan (at 1/4" scale) showing all signs, plus elevations
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of sign elements at a scale appropriate to understand clearly the sign design
and message; reflected ceiling plan (at 1/4" scale) showing all light fixtures,
Plus a description and fixture cut for each lighting fixture correlated with the
reflected ceiling plan; plans (at 1/2" scale) showing storefront elevations and
sections through the storefront, including signage, graphics, and decorative
fixtures; and plans and/or elevations with dimensions and preliminary details as
necessary to locate and identify any penetrations of the floor, demising walls,
and adjacent walls of the Premises and the roof structure above the Premises,
all at a scale appropriate to show clearly the intended penetrations;
2. Samples of storefront and interior materials and colors
mounted on foam core or card stock not exceeding 30" by 42", with all materials
clearly labeled and referenced on an attached room finish schedule;
3. A one point perspective color rendering of Tenant's proposed
storefront design, including signage and graphics; and
4. Three (3) copies of Tenant's estimated cooling, heating and
electrical load data, on forms provided by Landlord.
C. Landlord's Review: Landlord will review Tenant's Preliminary Plans
and, within fifteen (15) days of its receipt of such Plans, either return such
Plans to Tenant marked approved or marked to show the corrections required or
give Tenant notice of disapproval of Tenant's Preliminary Plans together with
the reasons therefor. If Landlord gives Tenant notice of disapproval, Tenant
shall have twenty (20) days from the date of such notice of disapproval to
submit revised Tenant's Preliminary Plans subject to subsequent markups and/or
disapprovals and corrections in the manner set forth above.
D. Tenant's Working Drawings: Within ninety (90) days after the date of
receipt by Tenant of the Lease Outline Drawings and Landlord's Design Criteria,
regardless of whether Tenant's Preliminary Plans have been submitted, Tenant
shall submit to Landlord six (6) sets of prints and one (1) sepia of fully
detailed and dimensioned working drawings and specifications as set forth below
("Tenant's Working Drawings"). Upon receipt of Tenant's Working Drawings
Landlord shall have the same rights of approval, markup and disapproval, and
Tenant shall have the same obligations as to resubmissions, as are set forth
with regard to Preliminary Plans. Tenant's Working Drawings shall include the
following:
1. Key plan showing location of Tenant's Premises.
2. Floor plans.
3. Interior elevations.
4. Reflected ceiling plan, including type of ceiling tile and
rating requirements as listed in UL Building Material manual.
5. Longitudinal section through the storefront.
6. Plan, elevation and section of the storefront.
7. Details of storefront.
8. Details of special conditions.
9. Door schedule with jamb, head and sill details.
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10. Finish material and color schedule.
11. Mechanical HVAC plans.
12. Plumbing plans.
13. Fire protection system modifications to Landlord's standard grid
layout.
14. Electrical power and lighting plans.
15. Electrical details, fixtures, panel schedules, and riser
diagram, including circuitry plans, panel schedules, riser
diagrams, load calculations and all other calculations and forms
required by applicable governmental requirements.
16. Mechanical details and equipment schedules.
17. Required Title 24 analysis and calculations.
18. Store fixture plan showing catalog cut sheets of all trade
fixtures and location of any heavyweight equipment such as
safes, equipment cases, refrigeration equipment, etc.
19. Fixture drawings and specifications.
20. Technical specifications.
21. Samples of finish materials.
22. Kitchen exhaust drawings.
23. Kitchen equipment plans.
24. Signage details and specifications.
25. Waterproofing details and specifications.
E. Tenant's Final Plans: After Landlord's approval of Tenant's Working
Drawings, any subsequent changes, modifications or alterations requested by
Tenant before completion of Tenant's Work shall be processed by Landlord, and
Tenant shall pay any reasonable out-of-pocket costs and expenses incurred by
Landlord in connection with said processing, including any additional fees of
Landlord's architects and engineers. Landlord shall have the right to demand
that Tenant pay such costs and expenses in advance of Landlord's processing such
a request. No such changes, modifications or alterations in Tenant's Working
Drawings shall be made without prior consent of Landlord after written request
therefor by Tenant. The total of all of Tenant's Preliminary Plans and Tenant's
Working Drawings, as approved by Landlord, are collectively referred to herein
as "Tenant's Plans."
F. Preparation of Tenant's Plans: All of Tenant's Plans shall be
prepared by architects or engineers licensed by the State of California and
employed by Tenant at its expense. If possible, such architects or engineers
shall have experience working with the building departments of the City of Los
Angeles and/or the County of Los Angeles. Tenant shall not submit plans and
specifications which have been prepared by contractors, subcontractors or
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suppliers, as such plans will not be accepted by Landlord. It is the
responsibility of Tenant's architect to verify all dimensions and field
conditions.
G. Landlord's Consents Interpreted: Any approval or consent by Landlord
of any and all of Tenant's Plans, criteria or systems shall neither constitute
an assumption of responsibility by Landlord for any aspect of such Tenant's
Plans, criteria or systems including their accuracy or efficiency nor obligate
Landlord in any manner with respect to Tenant's Work, and Tenant shall be solely
responsible for any deficiency in design or construction of all portions of
Tenant's Work for which Tenant is responsible. Landlord's approval shall not be
deemed to certify that Tenant's Plans comply with applicable governmental
requirements and shall not relieve Tenant of Tenant's responsibility to verify
all job conditions including dimensions, locations, clearances and property
lines, prior to Tenant's preparation of its plans as well as prior to starting
construction.
IV. CONSTRUCTION PROCEDURES:
A. General Regulations: All of Tenant's Work shall be done in accordance
with Tenant's Plans, all applicable governmental requirements, the regulations
of Landlord's fire underwriters and Landlord's Design Criteria. At any time and
from time-to-time during the performance of Tenant's Work, Landlord or
Landlord's contractor may enter upon the Premises and inspect the work being
performed by Tenant and take such steps as they may deem necessary or desirable
to assure the proper performance by Tenant of Tenant's Work and/or for the
protection of the Building and/or areas adjacent to the Premises. Any entry by
Landlord or Landlord's contractor shall be in a manner calculated not to
interfere unreasonably with the progress of Tenant's Work. In addition, Tenant's
Work shall be performed in a thoroughly first class and workmanlike manner,
shall incorporate only new materials, and shall be in good and usable condition
at the date of completion.
B. Building Permit: Landlord or its designated representative shall
assist Tenant in obtaining a building permit for the construction of Tenant's
Work by coordinating Tenant's submission of Tenant's Plans to the applicable
governing agencies. The fact that Landlord shall assist Tenant shall not relieve
Tenant of the responsibility for the processing of the building permit. If any
such governing agency shall reject Tenant's Plans and thereby prevent the
issuance of a building permit, Tenant shall, subject to Landlord's approval,
immediately make all necessary corrections required by said agency. Upon said
agency's approval of Tenant's plan check and permit application, Tenant or
Tenant's contractor shall obtain the building permit from said agency. Tenant
shall apply for and obtain all approvals and permits from the local health
department, as required.
C. Completion of Tenant's Work: Tenant shall complete Tenant's Work as
quickly as possible. Delays in the completion of the Premises caused by Tenant's
contractor shall not relieve Tenant of any obligation under this Lease. If the
Premises have not been constructed substantially in accordance with Tenant's
Plans in the judgment of Landlord's architect, then Tenant shall not be
permitted to open the Premises for business until the Premises do so comply, and
Tenant shall not be excused from the performance of any obligations under this
Lease.
D. Financial Requirements: Landlord may require Tenant, upon entering on
the Premises to commence Tenant's Work, to give Landlord proof satisfactory to
Landlord of Tenant's financial ability to comply with and fully pay for Tenant's
Work in a timely manner.
E. Insurance: In addition to and not in lieu of the other policies of
insurance required by the Lease, at all times during the period commencing with
the start of construction of Tenant's Work and terminating on the date of the
acceptance by Landlord of Tenant's Work as being completed in accordance with
the provisions in this Exhibit C (such period is herein referred to as
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"Tenant's Construction Period"), Tenant, at its expense, shall maintain in
effect with a responsible insurance company, a policy of Builder's "All Risk"
Insurance in the standard California form. Said insurance shall cover the full
replacement value of all work done or to be done and all fixtures and equipment
installed or to be installed at the Premises by Tenant without co-insurance and
without any deductible clauses.
F. Fees and Charges: Tenant shall obtain and pay for all necessary
permits and shall pay all plan check and other fees required by public
authorities or utility companies with respect to Tenant's Work. Unless otherwise
provided, Tenant shall pay Landlord, as Additional Rent, all fees and other
charges and/or payments for which Tenant is obligated pursuant to this Exhibit C
within thirty (30) days after demand therefor is made by Landlord.
G. Temporary Utility Service: Temporary utility services, as well as
Tenant's connection therefor during construction, including light and power,
shall be obtained by Tenant at Tenant's expense from appropriate public utility
companies or Landlord's utility service. Temporary heat, if any, is to be
provided by the temporary electrical service.
H. Cleanup: Tenant shall maintain the Premises and the adjacent Common
Areas in a clean and orderly condition during construction. Tenant shall
promptly deposit all unused construction materials, equipment, shopping
containers, packaging, debris, and waste from the building site and deposit it
in Landlord-provided receptacles. Tenant shall contain all construction
materials, equipment, fixtures, merchandise, shipping containers and debris
within the Premises. Trash storage for the Premises shall be confined to covered
metal containers. Tenant shall reimburse Landlord for the removal from the
Project by Landlord of trash and debris generated by Tenant or Tenant's
contractors and subcontractors during Tenant's Construction Period.
I. Violations: If Tenant is notified of any violations of applicable
governmental requirements, either by appropriate governmental agencies or by
Landlord, Tenant shall correct such violations as soon as reasonably possible.
Should Tenant fail to correct such violations promptly, Landlord shall have the
right to correct such violations at Landlord's actual cost plus a [***]
administrative charge.
J. Notice of Completion: Tenant shall obtain and record a Notice of
Completion promptly following completion of Tenants Work.
V. TENANT'S USE OF A CONTRACTOR:
A. Contractor Selection: Tenant may select any contractor for the
construction of Tenant's Work provided such contractor is bondable, is licensed
by and meets all insurance requirements established by appropriate governmental
agencies and is approved by Landlord, which approval shall not be unreasonably
withheld. To the end that there shall be no labor dispute which would interfere
with the construction completion or operation of the Project or any part thereof
including the Premises, Tenant shall engage the services of only such
contractors or subcontractors as will work in harmony and without causing any
labor dispute with each other and with contractors and subcontractors of working
for Landlord or others in or upon the Project or any part thereof. Tenant shall
enforce strict discipline and good order among the employees of Tenant's
contractors.
B. Plans: Tenant's contractor shall have one (1) set of Landlord and
Building Department approved Plans at the job site at all times during Tenant's
Construction Period and may not commence work until Tenant's Plans are on the
Premises.
*** Confidential treatment requested.
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C. Insurance: At all times during Tenant's Construction Period, Tenant's
contractor(s) shall maintain and pay for all premium costs for the following
insurance coverages on the forms and in the amounts not less than hereinafter
specified:
1. Statutory workers compensation including employers liability
insurance with a limit of not less than [***]. Tenant's contractor shall waive
and cause its workers compensation carrier to waive their respective rights of
subrogation against Landlord, Universal Studios, Inc. and Universal Studios,
Inc.'s affiliated companies.
2. Comprehensive or commercial general liability insurance
(and/or excess umbrella liability) written on an occurrence basis for bodily
injury and property damage with coverage limits of not less than [***] combined
single limit per occurrence in the aggregate. Said policy shall be written on
the 1985 ISO occurrence form or broader, with no additional exclusions and must
include (a) severability of interest, (b) primary, not contributing coverage,
and (c) blanket contractual. Landlord, Universal Studios, Inc., and Universal
Studios, Inc.'s affiliated companies must be indicated as additional insureds
and a waiver of subrogation must be granted.
3. Business auto liability and/or excess umbrella liability for
all owned, hired or non-owned vehicles to be driven onto Landlord's private
facilities, with a combined single limit of not less than one million dollars
($1,000,000). Landlord, Universal Studios, Inc., and Universal Studios, Inc.'s
affiliated companies must be indicated as additional insureds.
4. All risk property insurance covering all of such contractor's
property to be brought onto Landlord's private property, including a waiver of
subrogation in favor of Landlord, Universal Studios, Inc., and Universal
Studios, Inc.'s affiliated companies.
All policies of insurance provided for herein shall be issued by
insurance companies qualified to do business in the State of California and
satisfactory to Landlord. When any such policy shall expire or terminate,
renewal or additional policies shall be procured and maintained by such
contractor in like manner and to like extent. All policies must contain a
provision that the company writing said policy will give to Landlord thirty (30)
days' written notice in advance of any cancellation, lapse, reduction in the
amount of coverage or other adverse change respecting such insurance. The
stipulated limits of coverage above shall not be construed as a limitation of
any potential liability to Landlord, and failure to deliver said insurance
certificate or Landlord's failure to request delivery shall in no way be
construed as a waiver of such contractor's obligation to provide the insurance
coverage specified.
Tenant's contractor shall require all of its subcontractors to
maintain in effect Workers' Compensation Insurance as required by the laws of
the State of California and comprehensive general liability insurance with such
limits of liability and coverage endorsements that will cover the scope of their
respective work activities consistent with the reasonable and prudent practice
of similar subcontractors doing similar work in Los Angeles County.
D. Contract with Contractor: Tenant shall provide Landlord with a copy
of the contract with its contractor prior to commencement of Tenant's Work.
Tenant shall incorporate into such contract the following items as "Special
Conditions":
1. Schedule: Prior to commencement of Tenant's Work, Tenant's contractor
shall provide Landlord with a construction schedule in "bar graph" form
indicating the completion dates of all phases of Tenant's Work.
2. Interference with Others: Tenant's contractor shall diligently
perform Tenant's Work in a manner and at times which do not impede or delay
Landlord in the completion
*** Confidential treatment requested.
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of the Premises or any other portion of the Project. Tenant's contractor shall
coordinate Tenant's Work with all work being performed or to be performed by
Landlord and other occupants of the Project. Tenant's contractor and each of its
subcontractors shall comply with all procedures and regulations prescribed by
Landlord or its agents for integration of Tenant's Work with that to be
performed in connection with the construction of the Project.
3. Temporary Storage Areas: Tenant's contractor shall store all
construction materials and contain all operations within the Premises and such
other space as Landlord may specifically permit. Should Tenant be assigned space
outside of the Premises, Tenant shall move to such other space as Landlord shall
reasonably direct from time-to-time to avoid interference or other delays with
other work. All trash, construction debris and surplus construction materials
shall be promptly removed and placed in Landlord-provided receptacles. if any
such contractor and/or subcontractor shall use any space in the Project for any
or all of its aforesaid enumerated purposes or any other similar purpose without
obtaining Landlord's approval, Landlord shall have the right to terminate such
use and remove all of such contractor's or subcontractor's material, equipment
and other property from such space, without Landlord being liable to Tenant
and/or to such contractor or subcontractor, and the cost of such termination
and/or removal shall be paid by Tenant to Landlord.
4. Protection of Work: Tenant's contractor and subcontractors
shall maintain continuous protection of adjacent property and improvements
against damage by reason of the performance of Tenant's Work. Tenant's
contractor shall be responsible for the repair, replacement or clean-up of any
damage caused by Tenant's contractor to any other contractor's work in any area
of the Project.
5. Labor Disputes: Any and all work performed by Tenant's
contractor shall be performed in a manner so as to avoid any labor dispute which
results in a stoppage or impairment or work, deliveries or any other service in
the Project.
6. Penetrations of Roof, Floor and Walls: Tenant's contractor
shall not make any structural penetration or opening in any roof, floor slab,
demising wall or exterior wall of the Project. All such penetrations, at
Landlord's option, shall be done by Landlord at Tenant's expense.
7. Weekend Work: No work shall be done by Tenant's contractor on
weekends or other than normal job hours without Landlord's prior approval.
Tenant shall pay all costs associated therewith. Notwithstanding the foregoing,
Landlord hereby pre-approves weekend work provided that the work is confined to
the interior of the Premises.
8. Safety: Tenant's contractor shall comply with all applicable
governmental requirements (including OSHA) governing the performance of Tenant's
Work, including all applicable safety regulations established by Landlord and
Landlord's general contractor for the Project.
9. Signs: Tenant's contractor or subcontractors shall not post
signs on any part of the Project or the Premises.
10. Intentionally Deleted.
11. Guarantees: Each contractor and subcontractor participating
in Tenant's Work, prior to the commencement of that portion of such work for
which such contractor or subcontractor is responsible, shall guarantee or
warrant in writing, in the manner hereinafter set forth, that such portion will
be free from any defects in workmanship and materials for the period of time of
not less than one year after the Premises first opens for business to the
public. All such
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guarantees and/or warranties (collectively referred to as "guarantees") shall be
contained in the contracts and subcontracts for the performance of Tenant's
Work, shall include the obligation to repair and replace in a first-class and
workmanlike manner, and without any additional charge, all of Tenant's Work done
or furnished by the contractor or subcontractor, his employees, or agents which
shall be or become defective within such one (1) year period and shall be
written so as to insure to the benefit of Landlord and Tenant as their
respective interests may appear and so as to be directly enforceable by either
Landlord or Tenant. All such guarantees shall also include the agreement by the
contractor or subcontractor to pay for all expenses and damages incidental to
the removal, replacement or repair of any other part of Tenant's Work which may
be damaged or disturbed thereby.
VI. REMEDIES:
If Tenant fails or omits to make timely submission or resubmissions to
Landlord of Tenant's Preliminary Plans or Tenant's Working Drawings or
electrical load data or fails to or delays in submitting or supplying
information or in giving authorizations or in performing or completing Tenant's
Work or in any manner delays or interferes with the performance of Landlord's
Work, Landlord, in addition to any other right or remedy it may have under this
Lease, at law or in equity, may require Tenant to pay to Landlord, as Additional
Rent hereunder, the cost to Landlord of completing the Premises in accordance
with, the terms of this Lease over and above what would have been such cost had
there been no such failure, omission or delay.
VII. DESIGN INTENT AND DESCRIPTIVE INFORMATION:
The Project is located in Universal City, California, adjoining the
Universal Studios Tour, the Universal Amphitheater, and the Universal City
Cinemas. The Project is an expansive carfree promenade connecting all of
Universal City's attractions. Approximately 1,600 feet in length, the Project is
the length of Westwood Village, from Wilshire Boulevard to the gates of UCLA, or
Rodeo Drive in Beverly Hills. It is designed to include over 50 retail,
restaurant, and entertainment outlets carefully selected for their interest
value and quality of merchandise. Street entertainers and roaming push carts
further enhance the festive and colorful atmosphere. Additionally, there are
second and third level office spaces and some community service facilities
including the East Valley Campus classrooms for the UCLA Extension program. The
Project is serviced by more than 5,000 on-grade and structured parking spaces
with easy freeway access.
The Project is a one-of-a-kind, up-beat and active street, collecting
distinctive shops, restaurants, offices, community classrooms and entertainment
elements in an outdoor urban district. Rather than establishing finite goals or
limitations on the design of facades, graphics, or lighting, Landlord encourages
Tenant to create innovative, distinctive and original designs that reflect the
eclectic architectural characteristics of Los Angeles, and that are supportive
of the character of the Projects themed districts. The goal of Landlord's design
criteria is to provide for a variety of design, not a consistency of appearance.
The Project can be seen as three districts, each with a distinct
character, and which may be described as follows:
The WEST WALK district is similar to nearby areas known as
"Sunset Plaza" and "Larchmont Village," an intimately scaled "people street" set
against a textured backdrop of building styles indigenous to Los Angeles. It
consists primarily of retail shops and specialty food merchants at the street
level with second and third story office or retail space above. The west end of
WEST WALK fronts on the existing Tour Plaza. The east end leads to the Central
Courtyard.
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The FOUNTAIN COURT is an elegantly landscaped district fashioned as the
street arboretum that Los Angeles has never had. With filtered light, exotic
palms, densely planted wall arbors and water fountains, this garden plaza will
serve as the crossroads of the Project. It will link EAST WALK and WEST WALK and
serve as the main entrance from the nearby parking areas. On each of the two
levels around the FOUNTAIN COURT are restaurants and entertainment venues, many
of which have outdoor dining terraces.
The CINEMA PLAZA district centers around the eighteen-screen Universal
City Cinemas and the Hard Rock Cafe and will emulate the glitzy excitement and
frenetic energy of "Sunset Boulevard" and/or "Times Square". With animated
lighting systems and signage, the energy of CINEMA PLAZA is youthful and
exciting. The retail shops, theaters, and food venues are to be designed around
an entertainment theme and are encouraged to participate in the "Times Square"
atmosphere.
The design criteria for the Project's three distinctive districts should
stimulate Tenant to expand its design development beyond the concept of
traditional retail. Tenant's design should reflect the urban context of the
highly designed "LA street" theme. Tenant is encouraged to take a fresh and
innovative approach as to ways in which its Premises can be designed to fit the
Project's special atmosphere. Tenants are also encouraged to consider how
climatic conditions, pride of ownership, and the context of a city street
determine the quality, type of materials and design features of traditional
street retail shops. Tenant's overall design concept should coordinate its
storefront design, interior design and the merchandising plan. Tenant should
consider creative adaptations to its interior design and planning to create a
store for the Project that is unique and to build a total store design concept
around unique aspects of its business operation or product.
VIII. STOREFRONT CRITERIA:
A. General: The storefront design is defined as the display windows,
entrance ways, opaque panels, fascias, soffits, graphics, lighting, landscaping,
adjoining finished surfaces, and any display fixtures directly associated with
the storefront elements. Tenant is encouraged to design a highly creative and
memorable storefront and to create icon images out of its storefront design.
Each storefront design will be evaluated on an individual basis. Signage should
be considered as a key ingredient in the development of the facade. The
storefront should reinforce the idea of "streetness" as a total store design
concept and convey a memorable image of an exterior urban facade that is
supportive of the merchandising therein. The conceptual theme of each of the
districts provides an appropriate point of departure for the design of all
Tenant storefronts. Tenant is encouraged to have a large, visually open glass
storefront, utilizing the entire storefront opening provided by Landlord,
subject to Tenant's obligation to meet California Title 24 requirements and
comply with applicable governmental requirements, including energy codes, with
respect to the overall ratio of wall to glass area on Tenant's storefront.
Generic "mail" designs or standard storefront design concepts which have been
developed for typical shopping center locations are not appropriate for the
Project and use of such designs is discouraged. National and regional chain
stores with predetermined design concepts should adapt their standard design to
complement the theme of the three districts of the Project.
B. Location: Storefronts may be located at the lease line or recessed
behind the lease line or a combination of both. If Tenants storefront is set
back from the lease line, Tenant is responsible for finishing the adjoining
exposed surfaces out to the lease line. Tenant may choose to match the existing
materials and construction of adjoining surfaces or propose its own design
solution. Tenant may propose to continue the finished exterior surface and other
elements of the storefront design onto Landlord's adjoining building surfaces.
That is, the exterior finishes of the storefront design, such as decorative
tile, applied ornamentation, painted murals, lighting and signage/graphics may
bleed over onto the adjoining wall surfaces in a creative way. Construction
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of any adjoining surfaces outside of Tenant's lease space will be performed by
Landlord's contractor at Tenant's expense. Landlord will review such proposals
on an individual basis.
C. Materials: Storefronts may be constructed of any materials that will
fit the image and intent of the Project design criteria, provided that they are
fully weatherproof, new and of high quality, appropriate for exterior
applications, conform to applicable governmental requirements, and are approved
by Landlord and its architect. Materials that will not be approved by Landlord
include painted gypsum board or materials deemed by Landlord to be of low
quality, non-durable and/or difficult to maintain.
D. Awnings/Canopies: Awnings, where desired, may be of conventional
design; however, creative shapes, sizes, materials, and designs are encouraged.
If fabric awnings are used, Tenant must consider the retractability and flame
retardant specifications of applicable governmental requirements. It is highly
recommended that awnings utilize translucent fabrics and incorporate lighting
for nighttime effects. Use of canopies and projecting metal framework is
encouraged. Designs may be of various shapes, sizes and materials. No awning,
canopy or projecting metal framework may hang below eight (8) feet above the
finished floor surface.
E. Flags/Banners: Flags and banners identifying Tenant can provide a
colorful and festive supplement to the storefront design and image. Graphic
messages on flags or banners should be limited to a generic logo or symbol of
the product type of Tenant. Printed copy may be permitted on an individual
basis. Flags and banners may not hang below eight (8) above the finished floor
surface. Flag and banner material must be lightweight fabric and meet applicable
governmental requirements for flame spread and smoke generation ratings.
F. Construction: All storefront construction, including doors,
projecting elements, awnings, canopies, signs and lighting elements shall be
self-supporting and independent from Landlord's building structure whenever
possible. Any loading of Landlord's structure is subject to Landlord's approval
and shall conform to applicable governmental requirements.
G. Security Devices: All security devices must be physically integrated
into storefront construction. No free-standing pedestals containing sensor
equipment will be allowed at entrances. No overhead or horizontal rolling
security screens, inside or outside of the storefront will be permitted. Door
key devices, controls and other operating components shall be mounted flush and
integrated within the storefront design. All face plates for such components
shall be finished to blend with the background into which they are installed.
Burglar alarm tape, contact stickers, etc. are not permitted.
IX. SIGNAGE CRITERIA:
A. General: Tenant signage represents one of the most critical elements
of the Project. One horizontal and one blade sign or other graphic treatment is
required per store elevation. See Lease outline drawings for additional
criteria. All signs must be installed and operational before Tenant opens its
Premises for business. Tenant is encouraged to incorporate signage as a key
design element in the development of its store's retail image. It is strongly
recommended that Tenant employ a competent graphic designer and use exceptional
creativity in developing the signage concept for its storefront identity.
Landlord will supply upon request a list of suggested designers. Landlord has
not specified a uniform signband requirement so as to encourage creativity and
individuality in the design of the storefronts. Signage may occur anywhere
within the limits of the basic storefront and may run over onto the adjoining
Landlord wall surfaces with Landlord's approval.
B. Content: The advertising or informative content of Tenant's signs
shall be limited to letters designating Tenant's trade name set forth in this
Lease. The use of any brand name or
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brand name logo will not be allowed on the sign unless it is specifically
included in Tenant's "doing business as" (d.b.a.) designation. Crests, corporate
shields or logos may be permitted at the discretion of Landlord. Tenant's sign
shall not include specification of the merchandise offered for sale or of the
services rendered. No advertising placards, banners, pennants, signs, devices,
slogans, symbols or marks other than those specifically approved by Landlord
shall be affixed upon the glass panes or supports of the store windows, doors,
or upon the exterior of the storefront, or within three feet (3'-0") of the
lease line, except that symbols or names reflecting accepted credit cards may be
so displayed in a manner reasonably approved by Landlord. Signs may not display,
on any portion, the name, stamps or decals of the sign manufacturer or
installer. Tenant may install on its storefront, if required by the U.S. Post
Office, the numbers only for the street address in an exact location stipulated
by Landlord's architect. Size, type, color and style of numbers shall be as
stipulated by Landlord's architect.
C. Construction: All signage must be fully weatherproof and shall be
constructed of premium quality, weather resistant materials. All illuminated
signs shall be fabricated and installed in compliance with all applicable
building and electrical codes and shall bear an Underwriters Laboratory (UL)
label. No exposed raceways, crossovers or conduits will be permitted. All
cabinets, conductors, transformers or other equipment related to lighting
controls must be concealed from the public view or accessibility unless they are
an integral part of the design. All exterior Tenant signage is to be controlled
by a time clock. All permits for signs and their installation will be obtained
by Tenant with a copy sent to Landlord's Tenant Coordinator prior to
installation.
X. LIGHTING CRITERIA:
Tenant is responsible for all lighting within its Premises. Tenant's
lighting design must comply with Title 24 energy requirements. All display
windows must have adequate lighting, employing dimmable, concealed light
sources. Tenant should keep night time considerations in mind as it designs its
storefront and interiors. Tenant is encouraged to put on a "show business" hat
to convey a dramatic and exciting appearance to its Premises. Special lighting
of merchandise and attention to lighting design details are encouraged. All
fixtures within Tenants public areas shall be decorative. All fixtures shall be
new and bear the Underwriters Laboratory (UL) label. Floor-mounted fixtures are
prohibited unless specifically approved by Landlord in writing. All storefront
plans and internal reflected ceiling plane shall indicate all illuminating
devices. Specifications and catalog cut sheets shall be submitted for review and
approval by Landlord for all lighting fixtures and elements.
Emergency lighting and exit signs are required as per applicable
governmental requirements. All emergency lighting shall be self-contained. Any
battery packs for such lighting in sales areas shall be concealed.
Landlord shall provide lighting for public areas of the Project. Tenant
shall control the brightness of its lighting and avoid any direct glare from its
Premises into the Common Areas. Excessively bright or flashing lights shall only
be permitted with Landlord's approval.
All of Tenant's storefront lighting and signage within three (3) feet of
Tenant's front lease line, including Tenant's entry vestibule (if any) and
display windows, shall be separately circuited for control by Tenant's time
clock.
XI. INTERIOR CRITERIA:
A. General: Development of the interior of Tenant's space should be an
extension of Tenant's storefront image. Tenants are expected to continue the
quality and design level established in the storefronts throughout the public
areas of Tenant's Premises. All exposed
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surfaces should be of exceptional quality. Elements of particular concern are
show windows, display platforms, floors, ceilings, walls, doors, screens,
ornamental work, glass and metal work. Landlord and its architect will carefully
review all submissions to ensure Compliance with the criteria set forth in this
Section XI as well as elsewhere in this Lease and Exhibit C.
B. Flooring: Tenant shall not use vinyl composition or sheet vinyl in
the public areas of its Premises.
C. Partitions: Landlord's demising walls are not designed to accommodate
cantilevered or eccentric loads. If Tenant plans to use a demising wall for
support of any elements of equipment or fixturing, Tenant shall reinforce the
wall as needed. The design to reinforce the wall structure must be approved by
Landlord prior to work commencing. Where demising walls occur on structural
column lines, at structural braces, at structural expansion joints or at pipe
chases, projections may occur.
D. Ceilings/Acoustical Tile: Retail, restaurant and fast food/beverage
Tenants are encouraged not to use acoustical tile ceilings in areas that are
visible to the public. If acoustical tile is used, only concealed spline
ceilings will be acceptable. Acoustical tile ceilings may be used in other
areas, but two (2) foot by four (4) foot lay-in ceilings are not permissible.
The use of acoustical tile shall be limited to horizontal ceiling surfaces only.
Tenant may, at its option and upon approval of Landlord, expose the structure as
long as all visible elements receive a painted finish. All exposed elements
shall be fabricated in a neat and workman-like manner. It shall be Tenant's
responsibility to adequately seal and finish all common building elements
including utilities, ducts, conduit and shafts.
E. Structural: Overhead loading to the structure above shall not exceed
ten (10) pounds per square foot. Tenant's architect shall indicate on Tenant's
Plans the precise location, size and weight of all elements that may exceed the
per square foot weight limits and shall include references to column grid lines
and structural supporting members. Any alterations, additions or reinforcements
to Landlord's structure required to accommodate Tenant's loading of the
structure that may exceed the allowable floor loads shall be designed by
Landlord's structural engineer and performed by Landlord's contractor at
Tenant's expense.
F. Shelving: All stock shelving over eight (8) feet in height requires
structural calculations prepared by an engineer licensed in the state of
California. Shelving and its contents shall not interfere with sprinkler head
water flow.
XII. MECHANICAL, ELECTRICAL AND PLUMBING CRITERIA:
A. General Criteria:
1. All plans, specifications and calculations for Tenant's
mechanical, electrical and plumbing work shall be prepared under the supervision
of a registered professional engineer holding a valid registration in the State
of California in the applicable fields of engineering. Tenant's engineer shall
refer to the Lease Outline Drawings and this Exhibit C for requirements
governing the design and construction of Tenant's Premises.
2. The design and appearance of all light fixtures and exposed
ductwork and piping which are visible from the public areas are critical to the
overall visual effect and are subject to detailed review and approval by
Landlord. All piping and ductwork is to be installed as high as reasonably
possible. All holes through structural members must be approved by Landlord's
structural engineer prior to the start of any work.
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3. Noise and Vibration Control: All equipment installed by Tenant
shall be provided with vibration isolators, sound traps, duct lining, acoustic
housings, acoustical louvers and other noise and vibration control apparatus so
as to limit intrusion into adjacent spaces. It is the intent of Landlord and
Tenant that noise levels caused by Tenant in adjacent tenant spaces and exterior
spaces be maintained below levels which are an annoyance and disruption to
Landlord or adjacent tenants. With the above qualitative intent as the
overriding goal, the Landlord may make quantitative compliance determinations as
follows: Intrusive noise levels between Sam Goody and Tenant shall not exceed
NC-35 and between NASCAR and the space above NASCAR shall not exceed NC-25 when
measured in such adjacent tenant areas. Tenant equipment noise emitted to the
exterior shall not exceed 65 DBA in any occupied exterior space. Tenant shall
provide vibration isolation of ductwork, piping and equipment in accordance with
practices described in the latest ASHRAE Fundamentals Handbook so that the
numerical difference between flat and C-Scale measurements made in adjacent
spaces does not exceed five decibels.
4. Test for Noise and Vibration Control: At any time within the
first six months after either initial occupancy or installation of any new
equipment which produces noise and vibration, Landlord may request a test by an
acoustical consultant of its choice to verify compliance with the above minimum
acoustical requirements. If such test determines that Tenant is in compliance,
Landlord will pay the costs of the testing. If such test determines that Tenant
is not in compliance, Tenant will pay the costs of the initial testing, make
whatever changes are required to bring the installation into compliance and pay
the costs of all subsequent testing by an acoustical consultant approved by
Landlord to verify compliance.
5. Field conditions may vary from those shown on the Lease
Outline Drawings. Tenant's design team is encouraged to visit the site and
verify field conditions which may affect the design.
B. HVAC Criteria:
1. System Types: Ground Floor Tenants will use split HVAC systems
consisting of fan coil units in Tenant's Premises fed by refrigerant lines from
roof top compressor and condenser units. Make-up air and exhaust will be through
louvered openings in the Building. Second and Third Floor Tenants throughout the
Project will use rooftop packaged units ducted to each Tenant's Premises through
rated shafts.
2. Balancing: If any HVAC units, ductwork and/or diffusers or
outlets are provided by Tenant, Tenant shall engage the services of a certified
air balance contractor to adjust and completely balance Tenant's portion of the
system to the design air and condenser water quantities, and Tenant shall
provide to Landlord a copy of the certified balance report showing design and
measured quantities, static pressures, fan motor RPM, motor current and exhaust
quantities.
3. Calculations: All of Tenant's design calculations shall be in
accordance with the latest edition of the ASHRAE Fundamentals Handbook, all
applicable governmental requirements and good engineering practice. All
calculations shall be certified by a registered professional engineer and
submitted to Landlord for approval. Heat loss from the spaces shall be
calculated to maintain a minimum of 68oF DB when the temperature outdoors is
31oF DB with a 15 mph wind. Cooling load calculations shall be calculated to
maintain a maximum temperature of 76oF DB with relative humidity not exceeding
55% when the outdoor conditions do not exceed 98oF DB or 67oF (coincidental) WB
with a 7.5 mph wind. Cooling load calculations shall take into account all
interior heat producing items.
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4. Data Forms: Tenant shall complete and submit for Landlord's
approval on the forms annexed hereto the Heating and Cooling Calculation
Schedule and the HVAC Equipment Schedule. Tenant's calculations shall include
(i) block peak cooling load; (ii) block peak heating load; (iii) instantaneous
peak cooling load for each space served by a separate terminal unit; (iv)
circulated CFM required for peak cooling load; (v) instantaneous heating load
for each heated space; (vi) toilet room exhaust air calculation, including
static pressure if applicable; (vii) calculation of static pressure required
from Tenant's air-conditioning equipment; (viii) exhaust quantities and static
pressure calculations for kitchen exhaust, if applicable; and (ix) make-up
quantity and static pressure calculations for make-up air, if applicable.
5. Ventilation: Tenant's air conditioning system shall provide
outside air ventilation of a quantity equal to the greater of (i) 7.5 CFM per
person for all areas or (ii) the quantity required by applicable governmental
requirements. To help in containing food odors, ventilation air from the
restaurant dining and waiting areas shall be transferred into the kitchen so as
to constitute at least fifteen percent (15%) of the total quantity of the
make-up air for the kitchen exhaust. Outside air for ventilation shall be
available either from roof top intake or sidewall louvers, depending on the
location of Tenant's Premises. Such intakes shall be provided by Tenant with
Landlord's approval. No exhaust or vent will be located within ten (10) feet of
any supply or air intake, or such distance as may be approved by Landlord.
Tenant shall not install any mechanical equipment or any connecting duct work or
pipe chases outside of the Premises without Landlord's approval.
6. Ductwork: All ductwork shall be fabricated from galvanized
sheet steel in accordance with the best recommended practices of the American
Society of Heating, Refrigeration and Air Conditioning Engineers (ASHRAE) and in
strict compliance with all the applicable standards of the Sheet Metal and Air
Conditioning contractors National Association (SMACNA), latest editions.
Branches from the main low velocity trunk ductwork shall be furnished with
splitter dampers or similar balancing devices in general accordance with the
latest standards of the Associated Air Balance Council. Access panels are
required for these devices in ceilings. All supply and outside air ductwork
shall be insulated with one (1) inch thick glass fiber insulation with foil
vapor barrier, except those portions which are lined for acoustical purposes and
supply air ductwork within air conditioned spaces (not return air plenums).
7. Air Distribution Devices: Air distribution devices shall be
grilles or ceiling diffusers installed as required to achieve draft-free air
distribution in accordance with good engineering practice. Diffusers or grilles
shall have lockable individual manual volume control devices.
8. Fire Dampers: Tenant shall indicate the location of fire
dampers on Tenant's Plans. Tenant shall provide for ready access to reset each
fire damper. All fire dampers must carry evidence of UL approval.
9. Piping Systems: All piping systems must be compatible with the
type of materials used by Landlord. Condenser water piping shall be black steel
schedule 40, ASTM A53 with threaded ends and malleable iron threaded fittings.
Tenant may use Type L copper tubing as specified under "Plumbing Criteria" in
this Exhibit C. Dielectric couplings shall be provided between dissimilar
metals. Pipe supports and valves shall be as specified under "Plumbing Criteria"
in this Exhibit C unless noted otherwise.
10. Life Safety Interface: All spaces which require
interconnection to the base building system by the local Fire Marshall shall
have conduit and wire run, by Tenant, to Landlord's base building fire alarm
CDT, located in accordance with the Lease Outline Drawings.
C. Plumbing Criteria:
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1. Connections: Landlord shall provide sewer, vent and water
connections for the installation of Tenant equipment at the locations specified
on the Lease Outline Drawings.
2. Water Pressure: Landlord's domestic cold water system is
designed to provide the minimum pressure of 30 PSI at the ceiling. If Tenant
requires additional water pressure, Tenant shall provide a local booster pump.
3. Hot Water: If Tenant desires hot water service, Tenant shall
furnish and install its own electric water heater, fully insulated and steel
jacketed. Instantaneous recovery type water heaters are not permitted.
4. Collars: If Tenant's Premises are located on floors above
grade, Tenant shall provide flashing collars and/or flange collars on all floor
drains and pipe sleeves to restore area waterproofing.
5. Gas Piping: Gas piping shall be approved by Landlord.
6. Materials: All piping systems must be compatible with the type
of materials used by Landlord. Drainage and vent pipe and fittings for above
grade use shall be service weight, hubless cast iron with rubber sealing sleeve
and stainless steel coupling joints with stainless steel clamps and bolts as
manufactured by Tyler Pipe or equivalent. Drainage and vent pipe and fittings
for below grade use shall be service weight, bell and spigot cast iron with lead
and oakum or gasketed joints. No PVC is permitted. Water piping above grade
shall be Type L copper tubing, seamless drawn, hard temper with plain ends ASTM
B88. Fittings shall be wrought or cast copper with socket ends for lead-free
solder. Gas piping shall be black steel pipe schedule 40, ASTM A53 with threaded
ends and malleable iron threaded fittings. Piping installed in return air
plenums shall be welded joint.
7. Valves: All valves for domestic water to be 125 PSI test all
bronze wedge gate valves or line size quarter-turn installed in the proper
orientation ball valves as manufactured by either NIBCO, Crane or Wafts. Valves
for gas piping system shall be all bronze ball valves with threaded or welded
ends as manufactured by Crane or equivalent. All valves shall be accessible for
ease of operations.
8. Piping support: Pipes supported from steel structure shall be
supported from steel beams and joists with approved clamps and other structural
attachments. In areas with concrete flat slabs and concrete on metal deck
inserts, self-drilling anchors, or powder driven anchors will be allowed. No
pipe hangers will be supported from the metal roof deck. Hangers shall not
pierce piping insulation vapor barrier. Appearance and spacing of hangers
exposed to public view are important aspects of the final visual environment.
All steel hangers, rods, beam clamps, etc. exposed to public view shall be
painted to match adjacent finishes and shall be as manufactured by F & M,
Grinnell or Central Foundry. Specific details of support methods and location of
hangers must be indicated on Tenant's Plans and are subject to Landlord's
approval. All hangers must be evenly spaced and grouped as much as possible with
supports for other trades to minimize visual clutter in the upper portions of
all spaces exposed to public view. Support systems must be neat and workmanlike,
and free of extra length of support rods below the supported member. Hardware
and accessories must be selected with a smooth finished appearance for the
completed support assembly. Hangers exposed to public view shall be of the
clevis or trapeze type complete with bolts, rods and nuts. All pipe insulation
in areas exposed to public view shall be installed in the most workmanlike
manner and is subject to the approval of Landlord for appearance. Minimum hanger
rod diameter shall not be less than, and the maximum spacing of supports for
steel and copper horizontal piping shall not be greater than, the values in the
latest issue of the ASHRAE Equipment Handbook. Cast iron pipe must be supported
at least
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every five feet and at every joint and fitting. Cast iron pipe branches must
have hangers four foot on center maximum. Where required to meet minimum Spacing
of hangers, Tenant's plumbing contractor is responsible for installing
additional intermediate structural supports.
9. Escutcheons: Tenant shall provide cast brass or chrome
escutcheons with set screw, deep type, to cover sleeves or of a size to cover
fitting projections. Tenant shall provide escutcheons for all exposed piping
through walls, floors and exposed ceiling.
10. Fire protection: Landlord will provide a wet pipe fire
sprinkler system. All modifications, additions or relocations to fire protection
systems shall be performed by Landlord sprinkler contractor at Tenant's expense.
Any proposed changes to materials such as fire sprinkler heads shall be
submitted by Tenant to Landlord for approval. Sprinkler head grid provided in
Tenant spaces shall be as indicated on the Lease Outline Drawings.
11. Condensate drainage: Tenant shall dispose of all condensate
flow within Tenant's Premises. The installation of condensate drainage shall be
through an indirect connection to the sanitary sewer system in accordance with
all applicable governmental requirements.
12. Traps: If the Premises are to be used as a restaurant, Tenant
shall provide back flow prevention and grease traps for all food preparation
areas having pot sinks or any grease-producing appliances that discharge into
the waste system.
D. Electrical Design Criteria:
1. Maximum Demand: The maximum demand of Tenant's electrical
system shall not exceed fifteen (15) watts per square foot without Landlord's
approval. Any increase in service capability will be at Tenant's expense.
2. Materials: Materials, products and equipment, including all
components thereof shall be new and be identified by Underwriter's Laboratories
as suitable for the purpose, and shall meet the specifications of the National
Electrical Code ("NEC") and applicable governmental requirements. Materials,
products and equipment, including all components thereof, shall be sized in
conformity with the requirements of other recognized standards such as ASTM,
IEEE, IPCEA, NFPA and NEMA, where the requirements of such standards are more
stringent than those cited above. All conductors shall be soft-drawn annealed
copper. Minimum size shall be #12 for power wiring and #14 for control wiring.
Wire shall be 600 volt insulated, NEC type THW, or THHN/THWN. All wire shall be
run in rigid conduit or EMT. No plastic conduit is permitted.
3. Service: Electrical service provided for Tenant will be
277/480 volts, three phase, four wire, 60 cycle. Landlord will provide such
service consisting of a fusible switch or circuit breaker located in the meter
room. From the service point Landlord will provide a conduit sized to
accommodate the maximum allowable Tenant load to a point within or adjacent to
Tenant's Premises. Tenant will provide its own transformer for other voltages as
required. Transformer installations shall conform to NEC and applicable
governmental requirements with respect to location, mounting, grounding and
over-current protection. Transformers shall be drytype, and shall not be hung
from the structure without Landlord's approval. Tenant shall provide feeders,
meter socket, and a disconnect switch for its Premises and shall provide all
wiring and electrical equipment in its Premises.
4. Panelboards: Tenant's distribution and lighting panelboards
within its Premises shall be of the three phase, four wire distributed phasing
type. Tenant's circuiting shall be arranged to present, as nearly as possible,
an evenly balanced load on all phases.
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Panelboards shall be circuit breaker type. All circuit breakers shall have
interrupting capacity at least ten percent (10%) greater than the available
fault current at the breaker location. Available fault current will be stated on
Tenant's panelboard schedule.
5. Installation: All electrical work shall be installed so as to
be readily accessible for operating, servicing, maintaining and repairing. All
conduit shall be concealed where possible. Exposed conduit shall be in straight
lines parallel with, or at right angles to, column lines or beams and separated
by at least three (3) inches from water lines whenever they run alongside or
across such lines. Hangers shall be fastened to steel, concrete or masonry, but
not to piping. Hangers and support systems are an integral part of the visual
environment. All hangers and supports exposed to public view must be shown in
detail on plans submitted to Landlord for approval of appearance. All hangers
must be uniformly spaced and neatly installed with no excess material beyond
what is required for the support function. Tenant shall select accessories and
hardware with a smooth, neat finished appearance and paint all exposed conduit
hangers to match the adjacent finishes.
6. Grounding: Grounding shall consist of copper conductors in
conduit with bolted or brazed connection to cold water line for the neutral.
Grounding and bonding shall comply with NEC Article 250. All metallic raceways
shall be grounded.
7. Timers: Contractors for control of show window lighting and
signs shall be Automatic Switch Company Bulletin 920 series, electrically
operated and mechanically held, or equivalent. Time switches for control of show
window lighting and signs shall be Sangamo Electric Company Type L-12 or
equivalent.
8. Motors: Manual motor starters with overload protection may be
used for fractional horsepower motors. Single phase starters shall be Square D
or equivalent. Threephase starters shall be provided with overload relay in each
phase. Magnetic motor starters shall be used for integral horsepower motors.
Combination starters, when used, shall contain fusible switches. Reduced voltage
starters shall be used for all motors 100 HP and larger. All magnetic motor
starters shall have a control transformer, HOA switch and red pilot light.
Motors shall be designed to latest NEMA Standards. Motors rated 3/4 HP and
larger shall be 460 volt, three phase. Motors rated less than 3/4 HP shall be
115 volt, single phase.
9. Lights: Incandescent fixtures shall be as required by Tenant.
Fluorescent fixtures, where permitted, shall be either rapid start or slimline
lamps with high power factor ballast individually fused. All ballasts for four
(4) foot fluorescent lamps shall be the high efficiency type. Preheat and/or
trigger start fixtures shall be used only in special applications requiring
lamps less than four feet in length. All fixtures shall be selected so as not to
produce, in Landlord's opinion, objectionable glare. Tenants engineer should
also refer to the Lighting Criteria and Signage Criteria sections of this
Exhibit C for additional requirements regarding light fixtures and signage
lighting.
10. Water Heaters: Water heaters in Tenant's Premises that are
rated less than 5000 watts may be 120 volts single phase or 208 volts single
phase or 227 volts single phase. Those larger than 7000 watts shall be 480 volt
three phase. Instantaneous type water heaters will not be permitted.
11. NEC/Data Forms: Tenant shall perform all electrical work in
accordance with NEC and all applicable governmental requirements and in
accordance with good engineering practice. All calculations shall conform to the
appropriate articles in NEC. Calculation shall include all branch circuits and
feeder (service) tabulation. Tenant shall complete and submit for Landlord's
approval the forms annexed hereto with respect to Tenant's Service Requirements,
Tenant Electrical Data and the Panelboard Schedule. Tenant's estimated maximum
demand load
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shall be based on the summation of (i) 100% of the air conditioning and
ventilation load (the greater load of cooling or heating); plus (ii) the
percentage of the connected load for kitchen equipment, including refrigerators,
freezers. etc., in accordance with Article 220-20 of the NEC; plus (iii) 100% of
the connected load for electric water heaters; plus (iv) 100% of connected
lighting load (based on lamp wattage for incandescent lamps and watts input to
the ballast for fluorescent lamps); plus (v) 65% of the connected load of all
appliances not mentioned above; plus illuminated signs (based on the equipment
connected load set forth on the equipment nameplate); plus receptacles (based on
NEC specification).
E. KITCHEN EXHAUST SYSTEMS: (Applicable if Tenant's Premises are used
for restaurant purposes.)
1. General: Tenant shall furnish, install and maintain its own
individual kitchen exhaust and make-up air systems. Make-up air fans and
equipment and kitchen exhaust fans shall be located in equipment areas
designated by Landlord. Kitchen exhaust ducts shall discharge vertically through
the roof. Tenant-provided kitchen hoods will be designed to operate with 85%
direct connected outside air supply from their tempered make-up air system.
Tenant is responsible for providing whatever tempering is required for make-up
air. The balance of the kitchen exhaust shall be drawn from the conditioned
space, in conformance with all applicable codes. Kitchen hoods shall bear
evidence of both UL and FM approval. Kitchen hoods must incorporate a UL listed
fire damper. Make-up air and exhaust systems shall have wiring interconnected so
that one (1) switch operates both units.
2. Fire Protection: Tenant shall furnish, install and maintain in
proper working order a UL-listed fire extinguishing system to protect all
kitchen hoods above cooking areas. Fire extinguishing system must be approved by
Landlord, and meet the requirements of NFPA 96, applicable governmental
requirements, Landlord's insurance carrier and Factory Mutual data sheets 4-10
and 2-8N. Sprinkler heads will be installed by Landlord at Tenant expense in the
horizontal kitchen exhaust ductwork at the midpoint of each offset not more than
ten (10) foot on center and at the top of all vertical kitchen exhaust
ductwork. Sprinkler heads must be located on both sides of a fire damper. Tenant
shall provide a 1/2 inch pipe coupling welded into the side wall of the duct at
each sprinkler head location, as well as the access doors described below.
3. Materials: Make-up air ductwork shall be fabricated from
galvanized sheet metal in accordance with the standards of the Sheet Metal and
Air Conditioning Contractors National Association of America, latest edition.
Kitchen exhaust ductwork shall be constructed of galvanized steel of a thickness
not less than sixteen (16) gauge. Tenant shall continuously weld all
longitudinal joints and transverse joints or provide flanges with 2" x 2" x 18"
galvanized structural rolled angles with high temperature gasket and sealer.
Where applicable, ducts shall be enclosed as required by NFPA 96. Kitchen
exhaust ducts shall be fully insulated with at least 1 1/2 inch of calcium
silicate, or thermally equivalent thickness of other insulation specifically
approved for kitchen exhaust duct insulation. Ductwork for dishwater exhaust
shall be properly pitched to drain to the hood connection and constructed of
rectangular low pressure stainless steel or aluminum material of a thickness not
less than twenty (20) gauge. Ductwork joints shall be fully sealed to prevent
leaking.
4. Cleaning Systems: Cleanout doors shall be provided by Tenant
10' - 0" on centers on the side of the kitchen exhaust duct. Cleanout doors
shall be located to provide access to each sprinkler head located inside the
duct. Bottom edge of cleanout door shall be not less than two inches above the
bottom of the duct. Every run shall have at least one cleanout door. Tenant
shall provide a cleanout door and grease drain at the base of each vertical
section of kitchen exhaust duct. Cleanout door and frame shall be fabricated of
the same gage metal as the duct. Tenant shall provide 1/8 inch thick high
temperature gasket, approved for use on kitchen exhaust ducts, between frame and
duct and between door and frame. If Tenant uses
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water wash type hoods with direct connected water supply for cleaning, Tenant
shall provide a full size waste water connection running to the kitchen drainage
System.
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EXHIBIT D "STATEMENT OF GROSS SALES"
Attn: JAMES CHAU Tel# (818) 622-2924
Fax# (818) 622-0150
STATEMENT OF GROSS SALES
FOR VENUE: --------------------_
for the period ended: ----------
Month Year-to-date
----- ------------
SALES
Merchandise -------------- --------------
Services -------------- --------------
Vending -------------- --------------
Gift Certificates Sold -------------- --------------
Other (Describe) -------------- --------------
Other (describe) -------------- --------------
TOTAL SALES =================================
LESS ADJUSTMENTS
Voided Transactions -------------- --------------
Returns & Refunds -------------- --------------
Gift Certificates Redeemed -------------- --------------
Coupons -------------- --------------
Taxes included in sales above -------------- --------------
Other (Describe) -------------- --------------
Other (Describe) -------------- --------------
TOTAL ADJUSTMENTS -------------- --------------
=================================
=================================
GROSS SALES (AS DEFINED)
=================================
GROSS SALES BREAKPOINT
---------------------------------
EXCESS
=================================
PERCENTAGE RENT RATE % %
---------------------------------
TOTAL PERCENTAGE RENTAL
=================================
Less Percentage Rental Previously Paid N/A
---------------------------------
PERCENTAGE RENTAL DUE CHECK NO. DATE
-------- --------------
- --------------------------------------------------------------------------------
I certify that (i) the above amounts are true and correct, and (ii) this
statement has been prepared in accordance with the provisions of the lease and
is consistent with all prior statements.
- --------------------------------------- ---------------------------
NAME & TITLE DATE
- --------------------------------------------------------------------------------
<PAGE> 90
EXHIBIT F
TENANT'S ESTOPPEL CERTIFICATE
Date:___________, 19__
Tenant's Address: ____________________
____________________
____________________
Gentlemen:
The undersigned, as Tenant, has entered into that certain lease ("Lease"),
dated __________, 199__, with Universal Studios CityWalk Hollywood, a division
of Universal Studios, Inc., as Landlord, for the leasing of certain premises
("Premises") at Universal City commonly known as "CityWalk" the "Project").
Tenant understands that you have offered or committed to enter into a
transaction with Landlord with respect to an interest in Landlord and/or the
Lease and/or the Premises and/or the realty underlying the Premises and/or a
portion of or interest in the realty or improvements in the Project owned or
hereafter acquired by Landlord.
You have requested this Certificate from Tenant as a condition precedent
to consummation of one of the following transactions: sale, purchase, exchange,
transfer, assignment, lease, conveyance, encumbrance, pledge, mortgage or
hypothecation. Any party to any of the aforementioned transactions (a "Relying
Party") may rely upon this Certificate.
In accordance with the terms of the Lease, Tenant ratifies the Lease and
certifies that:
1. The undersigned accepted and began occupancy of the Premises described in
said Lease on ______________, 199__, and the Rent Commencement Date was
_____________, 199__;
2. The undersigned is presently open and conducting business with the public
in the Premises;
3. Minimum Annual Rental in the amount of $__________ is currently payable
under the Lease, and such Minimum Annual Rental has been paid through the
end of the current calendar month;
4. Said Lease is in full force and effect and has not been assigned,
modified, supplemented or amended in any way (except by agreement[s] dated
______________), and neither party thereto is in default thereunder;
<PAGE> 91
5. The Lease (as modified by the agreements, if any, listed in Item 4 above)
represents the entire agreement between the parties as to this leasing;
6. The Lease Term expires on ______________, 199__;
7. All conditions under the Lease to be performed by Landlord have been
satisfied, including, without limitation, all co-tenancy requirements
thereunder;
8. All required contributions by Landlord to Tenant on account of Tenant's
improvements have been received;
9. On this date there are no existing defenses, offsets, counterclaims, or
deductions against rental which the undersigned has against the
enforcement of the Lease by Landlord; and
10. No rental has been paid more than one (1) month in advance and no security
(other than a security deposit in the amount of $__________) has been
deposited with Landlord.
Statements made in this Certificate shall be deemed continually updated and
may continue to be relied upon by any Relying Party until ______________, 199__
unless and until notice to the contrary is given by Tenant and received at the
address to which rent is then being paid and also at the following address:
________________________________
________________________________
________________________________
Very truly yours,
________________________________ (Tenant)
By: _________________________
Title: _________________________
2
<PAGE> 92
EXHIBIT G
TENANTS INITIAL MERCHANDISE & PRICE LIST
1 OF 6
1999 MASTER MERCHANDISE LIST
- --------------------------------------------------------------------------------
TEES Update 05/04/99
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ITEM YOUTH RETAIL
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
BL * Full Throttle $ 20.00
Track Schedule $ 20.00 MoA/Dallas Only
Extreme Machine x $ 15.50
DE * DE Crew $ 30.00
DE Heavyweight $ 38.00
DE Racer $ 24.00
Grandstand $ 22.00
It's/Name $ 22.00
Standing $ 22.00
Hot Rod x $ 15.50
DE Jr. * Checkered/Cir $ 20.00
Coast/Coast $ 20.00
New Breed $ 20.00
New Kid x $ 15.50
DJ * DJ Heavyweight $ 38.00
Objects/Mirror $ 20.00
Sponsor $ 20.00
In Motion x $ 15.50
JG * Business/Good $ 24.00
Driving/Force $ 30.00
JG Crew $ 30.00
JG Heavyweight $ 38.00
JG Racer $ 24.00
Fighting Finish $ 18.00
No/Signs $ 22.00
Race Tech $ 18.00
Pepsi Crew $ 30.00
Pepsi Power $ 22.00
Star Wars D/F $ 22.00
Super Race $ 22.00
Superteam $ 18.00
Driving Force x $ 15.50
Generation... x $ 15.50
Star Wars D/F(y) x $ 16.50
Superteam(y) x $ 16.50
MM * Dominator $ 22.00
Race Idol $ 18.00
RW * Atti2ude $ 22.00
RW Heavyweight $ 38.00
True Blue $ 20.00
Taking/Limit x $ 15.50
</TABLE>
<PAGE> 93
EXHIBIT G
TENANTS INITIAL MERCHANDISE AND PRICE LIST
2 OF 6
- --------------------------------------------------------------------------------
TEES, cont.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ITEM YOUTH RETAIL
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
TL * Don't Mess $ 20.00
Rocket Man x $ 15.50
TS * Toughest $ 20.00
Heavy Duty $ 24.00
BL & TL Two/Texas $ 20.00
DE & Jr. Two Faces x $ 28.00
</TABLE>
- --------------------------------------------------------------------------------
HATS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ITEM YOUTH RETAIL
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
BL * BL Thrasher $ 23.00
Pit $ 22.00 MoA/Dallas Only
DE * 3 Track $ 23.00
GM/Plus $ 25.00
The Drip $ 20.00
Victory Lane $ 23.00
Wrangler $ 20.00
Be #3 x $ 16.00
DE Jr. * Flag $ 20.00
Oval $ 18.00
Busch Champ $ 23.00
DJ * FQCS/FC $ 23.00
Sponsor $ 18.00
DJ Car x $ 16.00
JG * Big Car $ 25.00
Blk. Slouch $ 23.00
Brush Stroke $ 24.00
Pepsi Racing $ 23.00
Pepsi Visor $ 23.00
Star Wars $ 24.00
Superman $ 23.00
Be #24 x $ 16.00
Star Wars(y) x $ 16.50
Superman(y) x $ 16.50
MM * MM Domestic $ 20.00
RW * Miller/Flame $ 24.00
Twist/Open $ 18.00
RW Car x $ 16.00
TL * TL Thrasher $ 23.00
TS * Sandwich $ 23.00
Up Front x $ 20.00
</TABLE>
- --------------------------------------------------------------------------------
SPECIALTY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ITEM YOUTH RETAIL
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Logo L/S Tee $ 16.50
DE * DE Crew Jkt. $155.00
</TABLE>
<PAGE> 94
EXHIBIT G
TENANTS INITIAL MERCHANDISE AND PRICE LIST
3 OF 6
<TABLE>
<S> <C> <C> <C>
DE Yth Jkt. x $ 75.00
</TABLE>
- --------------------------------------------------------------------------------
SPECIALTY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ITEM YOUTH RETAIL
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
DE Top Groove $ 38.00
DE HW Jersey
DJ * DJ Crew Jkt. $155.00
DJ DJ Top Groove $ 38.00
DJ HW Jersey
JG * JG Crew Jkt. $155.00
JG Twill $120.00
JG Yth Jkt. $ 75.00
JG Top Groove $ 38.00
JG HW Jersey
MM MM Twill $155.00
RW * RW Crew Jkt. $120.00
RW Twill Jkt. $155.00
RW Top Groove $ 38.00
RS HW Jersey
</TABLE>
- --------------------------------------------------------------------------------
SWEATS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ITEM YOUTH RETAIL
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
DE * Steel Hood
Team Color Block
DJ * Team Color Block
JG * Steel Hood
Team Color Block
MM * Team Color Block
RW Team Color Block
</TABLE>
- --------------------------------------------------------------------------------
DIE-CAST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ITEM YOUTH RETAIL
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
BL * 1:24 Interstate $ 49.95
1:64 Interstate $ 9.95
DE * Bank 25th Ann. $ 59.95
Crystal 25th Ann. $109.95
Pedal 25th Ann. $ 39.95
1:24 25th Ann. $ 59.95
1:64 25th Ann. $ 11.95
* Bank GW Plus $ 49.95
Crystal GW Plus $ 89.95
Pop Up GW Plus
1:24 GW Plus $ 49.95
1:64 GW Plus $ 9.95
* Bank Wrangler
1:24 Wrangler
1:64 Wrangler
DE Jr. * Pedal AC Delco
</TABLE>
<PAGE> 95
EXHIBIT G
TENANTS INITIAL MERCHANDISE & PRICE LIST
4 OF 6
<TABLE>
<S> <C> <C> <C>
Pop Up AC Delco $ 49.95
1:24 AC Delco $ 9.95
1:64 AC Delco $ 49.95
DE, Jr. * Bank Bud $ 89.95
Crystal Bud
Pedal Bud $ 49.95
1:24 Bud $ 9.95
1:64 Bud $ 42.95
Pump Bud
Crystal Superman(Jr.)
Pedal Superman(Jr.)
1:24 Superman(Jr.)
1:64 Superman(Jr.)
DJ * Bank QC $ 49.95
1:24 QC $ 49.95
1:64 QC $ 9.95
1:24 Winston
1:64 Winston
EI * Bank Crispy
1:24 Crispy
1:64 Crispy
JG * Crystal Baby Ruth $ 89.95
* 1:24 Carolina '91 $ 49.95
* Bank Dupont $ 49.95
Crystal Dupont $ 89.95
Pedal Dupont
Pop Up Dupont
1:24 Dupont $ 49.95
1:64 Dupont $ 9.95
Pump Dupont $ 42.95
* Bank Pepsi $ 49.95
1:24 Pepsi $ 49.95
1:64 Pepsi $ 9.95
* Bank Star Wars
Helmet Star Wars
Pedal Star Wars
Pit Wagon Star Wars
1:24 Star Wars
1:64 Star Wars
* Crystal Superman(JG)
Pedal Superman(JG)
1:24 Superman(JG) $ 79.95
1:64 Superman(JG) $ 14.95
JM * Bank Ky Derby $ 49.95
1:24 Ky Derby
1:64 Ky Derby
</TABLE>
<PAGE> 96
EXHIBIT G
TENANTS INITIAL MERCHANDISE & PRICE LIST
5 OF 6
<TABLE>
<S> <C> <C> <C>
* 1:24 Mobil 1
1:64 Mobil 1
KI * 1:24 Texaco $ 49.95
- --------------------------------------------------------------------------------
DI-CAST, cont.
- --------------------------------------------------------------------------------
ITEM YOUTH RETAIL
- --------------------------------------------------------------------------------
RW * 1:24 Texas '99 $ 62.95
1:64 Texas '99 $ 11.95
SM * 1:24 J Wayne
TL * Bank Kellogg's $ 49.95
1:24 Kellogg's $ 49.95
1:64 Kellogg's $ 9.95
TS * Bank Home Depot $ 49.95
1:24 Home Depot $ 49.95
1:64 Home Depot $ 9.95
- --------------------------------------------------------------------------------
ACCESSORIES
- --------------------------------------------------------------------------------
ITEM YOUTH RETAIL
- --------------------------------------------------------------------------------
Acrylic Std. $ 25.00
Acrylic Tilt $ 25.00
Acrylic Dbl. $ 60.00
DE * Hood $110.00
Night Light $ 15.00
Switch Plate $ 6.50
DJ * Hood $110.00
Night Light $ 15.00
Switch Plate $ 6.50
JG * Hood $110.00
Night Light $ 15.00
Switch Plate $ 6.50
RW * Hood $110.00
Night Light $ 15.00
Switch Plate $ 6.50
- --------------------------------------------------------------------------------
SOUVENIRS
- --------------------------------------------------------------------------------
ITEM YOUTH RETAIL
- --------------------------------------------------------------------------------
* 99 Track Map $ 5.95
BL * BL 1:87 Keychain $ 6.50
BL Tattoo $ 2.75
DE * DE 1:87 Keychain $ 6.50
DE Shot Glass $ 6.50
DE Tattoo $ 2.75
DJ * DJ Tattoo $ 2.75
JG * JG 1:87 Keychain $ 6.50
JG Shot Glass $ 6.75
* JG Tattoo $ 2.75
RW * RW Shot Glass $ 6.75
RW Tattoo $ 2.75
</TABLE>
<PAGE> 97
EXHIBIT G
TENANTS INITIAL MERCHANDISE & PRICE LIST
6 OF 6
<TABLE>
<S> <C> <C> <C>
TL TL 1:87 Keychain $ 6.50
BL BL Hood $ 5.50
DE DE Hood $ 5.50
DJ DJ Hood $ 5.50
JG JG Hood $ 5.50
- --------------------------------------------------------------------------------
SOUVENIRS
- --------------------------------------------------------------------------------
ITEM YOUTH RETAIL
- --------------------------------------------------------------------------------
Pepsi $ 5.50
RW RWHood $ 5.50
TL TL Hood $ 5.50
</TABLE>
<PAGE> 98
EXHIBIT H
STAIRWAY MODIFICATION
1 OF 2
[FLOOR PLAN]
SAM GOODY RENOVATION
STAIR MODIFICATION@SC79
EAST EXIT STAIR
FIRST LEVEL
6-24-99
<PAGE> 99
EXHIBIT H
STAIRWAY MODIFICATION
2 OF 2
[FLOOR PLAN]
SAM GOODY RENOVATION
STAIR MODIFICATION@SC79
EAST EXIT STAIR
UPPER PORTION OF SPACE
6-24-99
<PAGE> 1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED
ON A REQUEST FOR CONFIDENTIAL TREATMENT
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
EXHIBIT 10.19
STANDARD
SHOPPING CENTER LEASE
Name of Shopping Center: WALDEN GALLERIA
Location of Shopping Center: INTERSTATE ROUTE 90, WALDEN AVENUE
BUFFALO, NEW YORK
Landlord: PYRAMID COMPANY OF BUFFALO
Tenant: SILICON ENTERTAINMENT, INC.
d/b/a: NASCAR SILICON MOTOR SPEEDWAY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1...................................................................2
Premises..................................................................2
1.01 - Premises.........................................................2
1.02 - Shopping Center..................................................2
1.03 - Use of Premises and Trade Name...................................2
ARTICLE 2...................................................................3
Term of Lease.............................................................3
2.01 - Commencement of Term.............................................3
2.02 - Term of Lease....................................................3
2.03 - Expiration of Term...............................................3
2.04 - Surrender of Premises............................................3
ARTICLE 3...................................................................4
Rent......................................................................4
3.01 - Minimum Rent.....................................................4
3.02 - Percentage Rent..................................................4
3.03 - Gross Receipts Defined...........................................5
3.04 - Tenant's Books and Records.......................................6
3.05 - Reports by Tenant................................................6
3.06 - Non-Waiver.......................................................6
3.07 - Right to Examine and Audit Books and Records.....................6
3.08 - Delinquent Payments..............................................7
3.09 - Additional Rent..................................................7
3.10 - Definition of Lease Year and Partial Lease Year..................7
3.11 - Place for Payments...............................................7
ARTICLE 4...................................................................7
Taxes.....................................................................7
4.01 - Real Property Taxes..............................................7
4.02 - Tenant's Taxes...................................................8
ARTICLE 5...................................................................8
Construction and Financing................................................8
5.01 - Landlord's Work..................................................8
5.02 - Tenant's Work....................................................9
5.03 - Payment..........................................................9
5.04 - Financing........................................................9
ARTICLE 6..................................................................10
Conduct of Business of Tenant............................................10
6.01 - Use of Premises and Trade Name..................................10
6.02 - Tenant's Operating Covenant.....................................10
6.03 - Competition.....................................................10
6.04 - Other Business Practices........................................11
6.05 - Marketing Fund..................................................12
ARTICLE 7..................................................................12
Common Areas and Operating Costs.........................................12
7.01 - Definition......................................................12
7.02 - Development of Common Areas.....................................12
7.03 - Use of Common Areas.............................................13
7.04 - Common Area Costs...............................................13
7.05 - Adjustment to Payment...........................................13
7.06 - Payment of Extraordinary Common Area Costs......................13
ARTICLE 8..................................................................13
Energy, Utility and Sprinkler Costs......................................13
8.01 - Energy and Utility Charges......................................13
8.02 - Intentionally deleted...........................................15
8.03 - Intentionally deleted...........................................15
8.04 - Miscellaneous Utility Provisions................................15
8.05 - Periodic Adjustment.............................................15
ARTICLE 9..................................................................15
Fixtures, Alterations, Signs.............................................15
9.01 - Installation by Tenant..........................................15
9.02 - Removal and Restoration by Tenant...............................16
9.03 - Signs, Awnings and Canopies.....................................16
9.04 - Condition of the Premises.......................................16
ARTICLE 10.................................................................16
Repairs and Maintenance..................................................16
10.01 - Landlord's Obligation to Repair.................................16
10.02 - Tenant's Obligation to Repair...................................17
10.03 - Article Not Applicable to Fire or Condemnation..................17
ARTICLE 11.................................................................17
Indemnity................................................................17
11.01 - Indemnity.......................................................17
ARTICLE 12.................................................................18
Insurance................................................................18
12.01 - Liability Insurance.............................................18
12.02 - Special Causes of Loss and Difference in Conditions Insurance...18
12.03 - Insurance of Common Areas.......................................18
12.04 - Increases in Fire Insurance Premium.............................19
12.05 - Tenant to Share Insurance Costs.................................19
12.06 - Waiver of Subrogation...........................................19
12.07 - Policies........................................................19
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE 13.................................................................19
Damage by Fire, Etc......................................................19
13.01 - Restoration of Premises.........................................19
13.02 - Restoration during Last Three Years.............................20
13.03 - Tenant's Obligation Upon Restoration............................20
ARTICLE 14.................................................................20
Eminent Domain...........................................................20
14.01 - Eminent Domain..................................................20
14.02 - Landlord Entitled to Award......................................20
ARTICLE 15.................................................................20
Bankruptcy and Default Provisions........................................20
15.01 - Events of Default and Conditional Limitation....................20
15.02 - Landlord's Remedies.............................................21
ARTICLE 16.................................................................22
Mechanics' Liens.........................................................22
16.01 - Mechanics' Liens................................................22
ARTICLE 17.................................................................23
Assignments, Subleases and Other Transfers of Tenant's Interest..........23
17.01 - Limitations on Tenant's Rights..................................23
17.02 - Effect of Landlord's Consent....................................24
ARTICLE 18.................................................................25
Compliance with Government Orders........................................25
18.01 - Tenant to Comply................................................25
18.02 - Failure to Comply...............................................25
18.03 - Hazardous Material..............................................25
18.04 - Americans With Disabilities Act.................................25
ARTICLE 19.................................................................25
Subordination, Mortgagee's Rights and Assignment of Rents................25
19.01 - Subordination...................................................25
19.02 - Mortgagee's Rights..............................................26
19.03 - Assignment of Rents.............................................26
ARTICLE 20.................................................................26
Entry to Premises........................................................26
20.01 - Entry to Premises by Landlord...................................26
ARTICLE 21.................................................................27
Notices and Certificates.................................................27
21.01 - Notices.........................................................27
21.02 - Estoppel Certificate of Landlord................................27
21.03 - Estoppel Certificate of Tenant..................................27
ARTICLE 22.................................................................28
Covenant of Quiet Enjoyment..............................................28
22.01 - Covenant of Quiet Enjoyment.....................................28
ARTICLE 23.................................................................28
Miscellaneous Provisions.................................................28
23.01 - Holdover........................................................28
23.02 - Limitation on Landlord's Personal Liability.....................28
23.03 - Definition of Tenant's Allocable Share..........................28
23.04 - Force Majeure...................................................29
23.05 - Relocation of Tenant............................................29
23.06 - Changes and Additions...........................................29
23.07 - Attornment by Tenant............................................29
23.08 - Index...........................................................30
23.09 - Survival of Tenant's Obligations................................30
23.10 - Effect of Landlord's Notice to Terminate........................30
23.11 - Effect of Captions..............................................30
23.12 - Tenant Authorized to Do Business................................30
23.13 - Execution in Counterparts.......................................30
23.14 - Law Governing, Effect and Gender................................30
23.15 - Memorandum or Notice of Lease...................................30
23.16 - Complete Agreement..............................................30
23.17 - Guaranty of Lease...............................................31
23.18 - Arbitration.....................................................31
23.19 - Security Agreement..............................................31
23.20 - Invalidity of Particular Provisions.............................31
23.21 - Execution of Lease by Landlord..................................31
23.22 - Relationship of the Parties.....................................31
23.23 - Brokers.........................................................31
23.24 - Representations.................................................31
23.25 - Abatement.......................................................31
23.26 - Special Use Permit..............................................31
23.27 - Allowance or Abatement of Rent..................................32
</TABLE>
ii
<PAGE> 4
INDEX TO DEFINED TERMS
<TABLE>
<CAPTION>
DEFINED TERM SECTION
- ------------ -------
<S> <C>
Additional Rent....................................................3.09
Anchor Store......................................................23.03(c)
Common Areas.......................................................7.01
Common Area Costs..................................................7.04(b)
Energy Charges.....................................................8.01(b)
Fixed Annual Minimum Rent..........................................3.01(a)
Fixed Monthly Minimum Rent.........................................3.01(a)
Gross Receipts.....................................................3.03
Hazardous Material................................................18.03
Landlord..........................................................23.02(b)
Lease Year.........................................................3.10
Major Store.......................................................23.03(c)
Partial Lease Year.................................................3.10
Percentage Rent....................................................3.02(a)
Premises...........................................................1.01
Real Property Taxes................................................4.01
Square Feet.......................................................23.03(c)
Tenant's Allocable Share..........................................23.03
Term Commencement Date.............................................2.01
</TABLE>
iii
<PAGE> 5
SHOPPING CENTER LEASE
AGREEMENT made this 12 day of August, 1999, by and between the following
parties:
Landlord: PYRAMID COMPANY OF BUFFALO
a partnership organized and existing under the laws of the State of New York
with its mailing address for notices and a principal office at:
THE CLINTON EXCHANGE
FOUR CLINTON SQUARE
SYRACUSE, NEW YORK 13202-1078
Attention: MANAGEMENT DIVISION
hereinafter referred to as "Landlord," and
Tenant: SILICON ENTERTAINMENT, INC. d/b/a NASCAR SILICON MOTOR
SPEEDWAY
a corporation organized and existing under the laws of the State of California
with its mailing address for notices and a principal office or residence at:
210 Hacienda Avenue
- -------------------
(Street Address)
Campbell California 95008
- -----------------------------------------------------------------
(City or Town) (County) (State) (ZIP)
Attention: President
---------
hereinafter referred to as "Tenant."
Tenant's Federal Tax Identification or Social Security Number: 77-0389433.
1
<PAGE> 6
ARTICLE 1
PREMISES
1.01 - PREMISES
(a) Landlord hereby demises and leases to Tenant and Tenant hereby rents
from Landlord those certain premises ("Premises") hereinafter described and
located in Walden Galleria ("Shopping Center"), which is located in the Town of
Cheektowaga, County of Erie, and State of New York. The Premises consist of
approximately 4,124 square feet. The Premises are shown cross-hatched on the
plan attached hereto and made a part hereof as Exhibit A-1. The Premises shall
not be deemed to include either the land lying thereunder or the exterior
walls or roof of the building in which said Premises are located or any area
beyond the midpoint of any interior wall. Landlord reserves the use of said
land, walls and roof of the building, together with the right to install,
maintain, use, repair, and replace pipes, ducts, conduits, wires and structural
elements leading through the non-sales area of the Premises in locations which
will not materially interfere with Tenant's use of the Premises. Any such
installation, maintenance, use, repair or replacement, if approved by Tenant,
shall be performed by Landlord in such a manner as to avoid unreasonably
interfering with Tenant's business operations in the Premises.
(b) Within sixty (60) days after Landlord's delivery of possession to Tenant
pursuant to the terms of this Lease, Tenant may, at its sole cost and expense,
have the size of the Premises verified by an independent architect of Tenant's
choice. For purposes of this verification, the square footage of the Premises
shall be measured form the midpoints of any interior walls shared in common with
another tenant, and from the outside face of any exterior walls of the
buildings. In the event that such verification reveals a discrepancy between the
measured size of the Premises and the size of the Premises set forth in Section
1.01(a) of this Lease, and Landlord and Tenant are unable to agree upon the
square footage for purposes of this Lease, an independent architect acceptable
to Landlord and Tenant (the cost of which shall be divided equally between
Landlord and Tenant) shall measure the Premises in the manner set forth above.
In the event that Tenant's architect, Landlord or its architect, and the
independent architect are unable to agree upon the square footage of the
Premises for purposes of this Lease, the dispute shall be submitted to
arbitration pursuant to Section 23.18 hereof. In the event the square footage
of the Premises as determined in accordance with the methodology set forth in
this Section 1.01(b) varies from the square footage set forth in Section 1.01(a)
above, Landlord and Tenant agree to execute a lease modification agreement
(effective retroactive to the Term Commencement Date) adjusting the square
footage of the Premises, and appropriately adjusting the Rent, and those items
of Additional Rent to the extent that such Additional Rent was originally
calculated on a pro rata square foot basis. Any necessary payments or
reimbursements shall be paid within thirty (30) days after the full execution of
the lease modification agreement.
1.02 - SHOPPING CENTER
The Shopping Center includes: (i) the parcel(s) of land and improvements
hereinafter referred to as "Landlord's Trust" generally depicted on Exhibit A
attached hereto and made a part hereof, whether owned in fee or ground leased by
Landlord and (ii) the parcel(s) of land and improvements, if any, generally
depicted on Exhibit A as "REA Parcel" made available for use by any reciprocal
construction operating and easement agreement ("REA"). Landlord reserves the
right to add to or sever the ownership of or title to any portion of the
Shopping Center or to add to or reduce the size of any REA Parcel at any time.
Landlord represents and warrants that it has the right and authority to lease
the Premises. It is agreed that the depiction of the Shopping Center on Exhibit
A does not constitute a representation, covenant or warranty of any kind by
Landlord. Subject to Section 7.03 of this Lease, Landlord, in its sole and
absolute discretion, reserves the right to expand or remodel the Shopping Center
and to change the configuration, size and dimensions of the Shopping Center, the
number, location and dimensions of buildings, parking areas, driveways,
entrances, exits and landscaped areas, the number of floors in any of the
buildings, the dimensions, identity, and type of stores or tenancies, and, as
provided in Section 7.02, the "Common Areas" (defined in Section 7.01).
1.03 - USE OF PREMISES AND TRADE NAME
Throughout the Term, Tenant shall operate the Premises solely under the
trade name "NASCAR Silicon Motor Speedway" or "Silicon Motor Speedway" or, with
Landlord's approval, not to be unreasonably withheld, any other legally
permitted trade name ("Trade Name"); provided that if the trade name of all or
substantially all other stores operating under the trade name "NASCAR Silicon
Motor Speedway" or "Silicon Motor Speedway" are changed to another legally
permissible trade name, Tenant, upon prior written notice to Landlord, shall be
permitted to change its Trade Name to such other trade name as has been adopted
for all or substantially all such other stores. Tenant shall use the entire
Premises solely for the purpose(s) of: (a) as a primary use, conducting an
interactive entertainment center featuring among other things the installation
and operation of motion-based racing simulators and (b) ancillary thereto, other
related retail and entertainment uses; such uses may include but shall not be
limited to the sale of motor sports and auto racing merchandise, including
NASCAR Silicon Motor Speedway merchandise, NASCAR driver merchandise and other
entertainment merchandise related to NASCAR or motor sports (including, without
limitation, NASCAR videos, pictures, CD-Roms, DVDs, and other similar media or
audio/visual materials); the sale of hot and cold beverage and snack foods, and
for no other purpose whatsoever. Tenant shall use its reasonable efforts not to
place any food vending machines or other food sales area at the store front of
the Premises. Anything contained in this Lease to the contrary notwithstanding,
throughout the Term Tenant shall limit the display of merchandise and food or
beverage items to no more than forty percent (40%) of the square footage of the
Premises. Landlord hereby represents and warrants to Tenant that Tenant's use of
the Premises as contemplated in this paragraph does not violate any exclusivity
clause or other agreement between Landlord and any other party, including any
other Tenant of the Shopping Center, and Landlord shall indemnify, defend,
protect, and hold harmless Tenant from any loss, liability, cost, expense,
judgment, action or claim of any such party arising from the inaccuracy of such
representation and warranty. Anything contained in this Lease to the contrary
notwithstanding, Landlord's consent shall not be unreasonably withheld for any
change or addition to Tenant's permitted use requested in writing by Tenant.
Tenant hereby agrees that the criteria which Landlord may use in determining
whether or not to grant such consent shall include, but not be limited to, (i)
the impact such change or addition may have on the tenant mix of the Shopping
Center, (ii) whether such change or addition violates any use restriction
applicable to the Shopping Center, or (iii) the compatibility such change or
addition may have with a first-class regional shopping center.
2
<PAGE> 7
Notwithstanding anything to the contrary in this Section 1.03 of this
Lease, Tenant shall be entitled to use the Premises from time to time for
conducting the uses set forth in this Section 1.03 for the exclusive use of
groups of private parties ("Private Events"). Tenant may while such Private
Events are in progress, temporarily restrict access by the general public to
Tenant's simulator rides, provided that the Tenant shall otherwise remain open
to the general public for the sale of merchandise and the sale of simulator ride
tickets for redemption by the public after any Private Event is concluded. Gross
Receipts in connection with Private Events shall be included in Gross Receipts
for purposes of calculating Percentage Rent. In connection with Private Events,
Tenant may serve, or hire another party to serve, food and beverages (including
alcoholic beverages) for on-premises consumption only, provided that Tenant
obtains or causes to be obtained, if necessary, all governmental licenses,
approvals and permits required in connection therewith and in the case of
offering of any alcoholic beverages for consumption within the Premises, Dram
Shop or liquor liability insurance coverage. For the preparation and serving of
food and alcoholic beverages at Private Events, Tenant shall engage, and cause
third parties to use, restaurants and food establishments located within the
Shopping Center ("Center Caterer"), provided that up to ten percent (10%) of the
total number of Private Events held during a Lease Year may be catered by
non-Center Caterers and provided, further, that Tenant shall not be required to
use or cause to be used Center Caterers for Private Events within the Shopping
Center unless at the time of the related Private Event there are at least three
restaurants or other food and beverage vendors in the Shopping Center offering
catering services from the Shopping Center at prices equal to or less than the
then menu prices of such restaurant or vendor and two of three of such Center
Caterers are full service sit down restaurants and one of the three is either a
full service restaurant or a limited service restaurant, food court operator or
other food and beverage operator (such as by way of example and not limitation
Kahunaville, Ruby Tuesday, or Jack Astor's). In the event that Tenant shall be
in default of the immediately preceding sentence and a Private Event is
conducted in whole or in part by other than a Center Caterer, then, as
liquidated damages and not as a penalty, the retail value of food and beverage
provided by such third party shall be included in the amount of Gross Receipts
used to compute Percentage Rent payable under this Lease on merchandise sold
from the Premises. Any Private Events which are held at times when the
requirements set forth in the premises above concerning Center Caterers are not
met shall be excluded from the total number of Private Events held during any
Lease Year for purposes of calculating the ten percent (10%) permissible number
of Private Events catered by non-Center Caterers as described above.
ARTICLE 2
TERM OF LEASE
2.01 - COMMENCEMENT OF TERM
(a) Landlord shall deliver possession of the Premises to Tenant with all
of Landlord's work substantially complete by September 1, 1999 and the term of
this Lease shall commence, subject to Section 23.04 below and other delays
caused solely by Landlord, on the earlier of (1) December 1, 1999, or (2) the
date Tenant opens to the public for the conduct of its business in the Premises
(hereinafter called "Term Commencement Date"). In the event Landlord does not
deliver possession of the Premises to Tenant on or before March 1, 2000, then
Tenant shall have the right to terminate this Lease upon written notice to
Landlord, which notice shall be given by March 10, 2000. If Tenant does so
notify Landlord, then Landlord will reimburse Tenant for its reasonable
out-of-pocket costs actually incurred by Tenant as of the date of termination
including architectural, design and legal fees which shall not, in the
aggregate, exceed [***] and both Landlord and Tenant shall thereafter be
relieved of any further obligation and liability hereunder. If Tenant does not
so notify Landlord, then this right of termination shall be deemed waived.
(b) Tenant acknowledges the importance both to Landlord and the other
tenants of the Shopping Center of Tenant opening for business to the public on
the Term Commencement Date. In the event Tenant fails to open for business at
the Premises not later than forty-five (45) days after the Term Commencement
Date or, if the Term Commencement Date has been rescheduled by Landlord, not
later than forty-five (45) days after the rescheduled Term Commencement Date,
Tenant covenants and agrees to pay to Landlord, upon receipt of notice from
Landlord of the amount due under this Section 2.01(b), as liquidated damages
suffered by Landlord due to Tenant's failure to open, a sum (in addition to any
rent due hereunder) equal to twice the per diem Fixed Monthly Minimum Rent
(using a thirty (30) day month) provided in Section 3.01(a) for each and every
business day that Tenant has failed to open for business.
2.02 - TERM OF LEASE
Subject to Section 2.03 below, the term of this Lease shall expire on the
tenth (10th) anniversary of the Term Commencement Date, unless earlier
terminated pursuant to the provisions herein (the last day of the term, whether
due to expiration or prior termination of this Lease may be referred to herein
as the "Termination Date").
2.03 - EXPIRATION OF TERM
If the term of this Lease would expire during the period October 1 through
the last day of December, the parties agree that the term of this Lease shall
instead expire on the immediately succeeding January 31.
2.04 - SURRENDER OF PREMISES
On the Termination Date of this Lease, Tenant agrees, without necessity of
any notices from Landlord (statutory or otherwise), to surrender the Premises in
accordance with Article 9, and broom clean and in good order, repair and
condition, reasonable wear and tear and damage by fire or casualty excepted.
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ARTICLE 3
RENT
3.01 - MINIMUM RENT
(a) Except as set forth in Section 23.25 below, Tenant agrees to pay
Landlord, without diminution, deduction or set-off whatsoever and without prior
notice of demand, and as fixed annual minimum rent ("Fixed Annual Minimum
Rent"), the sums set forth in Section 3.01(a)(i) and (ii) below payable in equal
consecutive monthly installments ("Fixed Monthly Minimum Rent") each in advance
upon the first day of each calendar month during the term hereof.
(i) From the Term Commencement Date through the end of the [***] full
month of the Lease term, Fixed Annual Minimum Rent shall be [***]
per square foot of the Premises, which equals (subject to Section
1.01(b) of this Lease) [***], payable in equal monthly
installments of {***} each; and
(ii) From the first day of the [***] full month of the Lease term
through the end of the Lease term, Fixed Annual Minimum Rent
shall be [***] per square foot of the Premises, which equals
(subject to Section 1.01(b) of this Lease) [***], payable in
monthly installments of [***] each.
(b) If the term shall commence upon a day other than the first day of a
calendar month or if the term shall terminate upon a day other than the last day
of a calendar month, then Tenant shall pay, upon the Term Commencement Date, and
on the first day of the last calendar month, a pro rata portion of the Fixed
Monthly Minimum Rent for the first and last fractional calendar months of the
term.
3.02 - PERCENTAGE RATE
(a) In addition to Fixed Annual Minimum Rent, Tenant shall, in the manner,
upon the conditions and at the times hereinafter set forth, pay to Landlord
percentage rent ("Percentage Rent") equal to [***] of "Gross Receipts" (defined
in Section 3.03) in excess of the amounts set forth in Section 3.02(a)(i) and
(ii) below ("Annual Minimum Gross Receipts") per Lease Year (defined in Section
3.10). Percentage Rent shall be payable as hereinafter provided without any
diminution, deduction or set-off whatsoever, except as provided in Section
3.02(b), and without prior notice or demand;
(i) From the Term Commencement Date through the end of the [***]
month of the term of the Lease, Annual Minimum Gross Receipts
shall be [***].
(ii) From the first date of the [***] month of the term of this Lease
through the end of the term of this Lease, Annual Minimum Gross
Receipts shall be [***].
(b) Percentage Rent, if any, shall be paid by Tenant to Landlord, in
quarter-annual installments computed on all Gross Receipts during each three (3)
month period of the term hereof (i.e., periods from January 1 through March 31;
April 1 through June 30; July 1 through September 30; and October 1 through
December 31 (each a "Quarter-Annual Period" and collectively the "Quarter-Annual
Periods")) in excess of one-quarter (1/4) of Annual Minimum Gross Receipts then
in effect. Any Percentage Rent becoming due shall be payable on or before the
applicable January 15, April 15, July 15 and October 15 next following the
applicable quarter end of each Lease Year. In the event that the total of the
quarterly installments of Percentage Rent for any Lease Year does not equal the
annual Percentage Rent corrupted in accordance with the formula set forth in
Subsection 3.02(a), then, on or before January 15 following each such Lease
Year, Tenant shall pay to Landlord any deficiency, or Landlord shall refund any
overpayment to Tenant within fifteen (15) days after receipt of Tenant's Annual
Statement of Gross Receipts.
(c) Notwithstanding anything contained in this Section 3.02 to the
contrary, the Percentage Rent for any Lease Year having less than twelve (12)
full months shall be based upon the Gross Receipts for the twelve (12) month
period immediately following the Commencement Date (as to the first Lease Year)
and for the twelve (12) month period immediately preceding the expiration or
earlier termination of the Lease (as to the final Lease Year). The Percentage
Rent due for such period shall be established by multiplying the Percentage Rent
which would have been due for such twelve (12) month period had the Gross
Receipts for such period been multiplied by the applicable percentage in this
Lease, by a fraction, the numerator of which is the number of days in such
partial Lease Year and the denominator of which is 365.
(d) Provided that Tenant is not in default under this Lease beyond any
applicable cure period and has been open and continuously operating its store in
the entire Premises from the Term Commencement Date through the last day of the
fifth (5th) Lease Year of the Initial Term (except for periods Tenant is not
able to be so open and operating as a result of force majeure, casualty, eminent
domain, or remodeling (provided Tenant is not closed as a result of remodeling
for more than [***] days in the aggregate in any Lease Year)), then in the event
that Gross Receipts for the fourth (4th) and fifth (5th) Lease Year of the
Initial Term, when averaged, are less than [***]. Tenant may, at its option,
elect to terminate this Lease by giving Landlord written notice thereof, which
notice shall be given not later than thirty (30) days after the last day of the
said fifth (5th) Lease Year. Time is of the essence with respect to the giving
of such notice. If Tenant timely gives Landlord such a notice of termination of
this Lease and the conditions for such termination as provided above in this
Section 3.02(d) have been satisfied, then this Lease shall automatically
terminate without any further action or notice by either party hereto, on the
date that is thirty (30) days after the date Landlord receives such notice of
termination;
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<PAGE> 9
and from and after such date of termination. Tenant shall have no further
right, title or interest in or to the Premises. If Tenant does not notify
Landlord of its election to terminate this Lease in accordance with this
Section 3.02(d) or if the conditions for such termination as provided above in
this Section 3.02(d) have not been satisfied, then this Lease shall continue in
full force and effect in accordance with and subject to its terms, and Tenant
shall have no further right to terminate this Lease pursuant to this Section
3.02(d). If Tenant is not open and operating in the entire Premises
continuously throughout the said fifth (5th) Lease Year, as a result of force
majeure, casualty, eminent domain, remodeling or for any other reason, then for
purposes of determining whether Tenant has the right to terminate this Lease
under this Section 3.02(d), Tenant's Gross Receipts for any such period of time
shall be deemed to be the Gross Receipts for the corresponding period of time
in the first Lease Year prior to the fifth (5th) Lease Year for which Tenant was
open and operating in the entire Premises during such corresponding period of
time.
3.03 GROSS RECEIPTS DEFINED
(a) The term "Gross Receipts" as used in this Lease is defined to mean
receipts from sales of products or services by Tenant exclusively at, in, on,
or from the Premises (including any sales via personal computer, "Home
Shopping" television sales, catalog, direct mail telephone or electronic sales
at, in, on, or from the Premises) whether such sales be evidenced by check,
contract rights, credit, charge account, exchange or otherwise, and shall
include, but not be limited to, the amounts received from the sale or rental of
goods, wares and merchandise, and from fees and charges for the use by
customers of Tenant's simulators and racing entertainment center, and for
services performed on or off the Premises to the extent relating to sales made
from the Premises, together with the amount of all orders taken or received at
the Premises, whether such orders are filled from the Premises or elsewhere,
and whether such sales are made by means of merchandise or other vending
devices in the Premises. Each charge or sale upon installment or credit shall
be treated as a sale for the full price in the month during which such charge
or sale shall be made, irrespective of the time when Tenant shall receive
payment (whether full or partial) therefor.
(b) Notwithstanding anything herein to the contrary the following shall
not be included in Gross Receipts:
(1) Sales of merchandise returned and claimed to be defective or
unsatisfactory, provided such sales have been included in Gross
Receipts and deducted from Gross Receipts shall be the sales
price of merchandise returned by customers for exchange, provided
that the sales price of merchandise delivered to the customer in
exchange is included in Gross Receipts.
(2) The amount of any sales tax, so-called luxury taxes, excise
taxes, gross receipt taxes, entertainment taxes, so-called "drop
taxes" and other taxes now or hereafter imposed upon the sale or
value of merchandise or services, whether added separately to the
selling price of merchandise or services and collected from
customers or included in the retail selling price use, imposed by
any federal, state, municipal or governmental authority directly
on sales and collected from customers; provided, however, no
franchise or capital stock tax and no income or similar tax based
upon income or profits as such shall be deducted from Gross
Receipts in any event whatsoever.
(3) The sales price of merchandise returned and accepted for full
credit or the amount of the cash refund or allowance made
thereon.
(4) The sums and credits received in settlement of claims for loss or
damage to merchandise or other property located at the Premises.
(5) The consideration received in connection with a sale of inventory
which occurs other than in the ordinary course of Tenant's
business, including, but not limited to, a sale in bulk or to a
jobber, liquidator or assignee.
(6) Receipts from public telephones and vending machines used
exclusively by Tenant's employees.
(7) Bankcard discounts (e.g., Visa, MasterCard, etc.), interest,
carrying charges, or other finance charges in respect of sales
made on credit, as well as any penalty charged by Tenant for a
returned check.
(8) Sales of fixtures, trade fixtures, or personal property that are
not merchandise held for sale at retail.
(9) The amount of any discounted sales to employees of Tenant, not to
exceed [***] of Gross Receipts in any Lease Year; provided,
however, that discounted or complimentary use of Tenant's games
and entertainment attractions (including, without limitation, the
driving simulators) by Tenant's employees during such employees'
normal working hours shall not be included in Gross Receipts.
(10) The amount of any discount in sales made to senior citizens.
(11) Revenue received from mailing, alterations, delivery or other
services performed on a non-profit basis for the benefit of
customers.
(12) Tenant's accounts receivable, not to exceed [***] of Gross
Receipts in any Lease Year, which have been determined to be
uncollectible for federal income tax purposes during the
applicable Lease Year, provided however, that if such accounts
are actually collected in a later Lease Year, the amount shall be
included in Gross Receipts for such later Lease Year.
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(13) Amounts received for merchandise transferred to any other place
of business of Tenant (or its subtenants, concessionaires and/or
licenses) or to any business organization affiliated with Tenant
wherever located, provided such merchandise is not used to fill a
sale made in, at, or from the Premises.
(14) The amount of any discounts given for promotional coupons that
are redeemed from time to time.
(15) Gift certificates until such time as the certificates are
redeemed.
(16) Amounts received in connection with remote site promotional
activities.
(17) Promotional fees earned by Tenant with respect to goods or
services offered for sale.
(18) Rents, subrents or other consideration received in connection
with an assignment, sublease, license, concession or other
transfer of any portion of the store (however, Gross Receipts of
any such transferee shall be included), including license fees
otherwise payable by Tenant in connection with a third party
license agreement.
(19) To the extent they are not made at a profit to Tenant, sales
passed through to caterers or other parties providing services in
connection with private parties for Tenant's customers at the
Premises.
(c) In the event any portion of the Premises shall be operated by one or
more of Tenant's departments or divisions, or if Tenant shall, in accordance
with all of the terms, covenants, and conditions of this Lease, assign this
Lease or enter into any sublease, license, concession or other use or occupancy
agreement with respect to all or any part of the Premises, then there shall be
included in the Gross Receipts for the purpose of determining the Percentage
Rent payable under this Lease all of the Gross Receipts generated by such
departments or divisions, subtenants, assignees, licensees, concessionaires and
all such other persons, individuals and/or entities (collectively referred to as
"Affiliates") generating such Gross Receipts, it being the intention of the
parties hereto that all Gross Receipts generated at or from the Premises shall
be included in Gross Receipts for the purpose of determining Percentage Rent as
defined herein. Tenant agrees that any assignment, sublease, license or
concession, use or occupancy agreement entered into by Tenant with any
Affiliates shall contain provisions setting forth the procedure for determining,
recording and reporting Gross Receipts by Affiliates which are subject to the
review and approval of Landlord as being in conformance with this Section
3.03(c). Such provisions shall contractually obligate Affiliates to the same
procedures set forth in this Lease for determining, recording and reporting
Gross Receipts.
3.04 - TENANT'S BOOKS AND RECORDS
Tenant agrees to prepare and keep on the Premises or at its principal
office for a period of not less than three (3) years following the end of each
Lease Year, accurate books of account and records of daily Gross Receipts,
including without limitation all federal, state and local tax returns, and
copies of relevant contracts, checks, vouchers, inventory records, dated cash
register tapes, sales slips and such other documentation as would enable
Landlord to make a full and complete audit of Gross Receipts ("Books and
Records"), as more particularly set forth in Section 3.07 below. Tenant agrees
that all Gross Receipts shall be registered at the time each sale or
transaction is made in cash registers or other devices or other electronic or
technology based systems containing locked-in cumulation capacity, such systems
to be consistent with Tenant's normal business practices.
3.05 - REPORTS BY TENANT
Within twenty (20) days after the end of each Quarter-Annual Period as set
forth in Section 3.02 above, or a portion thereof, during the term of this
Lease, Tenant shall furnish to Landlord a written statement setting forth the
amount of Gross Receipts and an itemization of any deductions or exclusions
taken from Gross Receipts for such previous Quarter-Annual Period. Tenant also
agrees that it will furnish to Landlord within sixty (60) days after the end of
each Lease Year or Partial Lease Year, an annual statement, showing in all
reasonable detail the amount of Gross Receipts and an itemization of any
deductions or exclusions relating to such Lease Year or Partial Lease Year and
the amount of Percentage Rent due Landlord ("Actual percentage Rent"). Each
Quarter-Annual and Annual statement required by this Section 3.05 shall be
certified by Tenant or one of Tenant's executive officers and shall be subject
to further certification as provided in Section 3.07.
In the event Tenant fails to furnish Landlord with a Quarter-Annual or
Annual statement within the required time period and within ten (10) days after
notice from Landlord, and in the manner set forth in this Section 3.05, then
the Gross Receipts for such Quarter-Annual Period or year, as the case may be,
shall, at Landlord's option, be deemed to be equal to Tenant's highest
previously reported quarterly or annual Gross Receipts, and if such failure
continues for ten (10) days following notice from Landlord, Tenant shall pay to
Landlord, as liquidated damages, the sum of [***] per month until such statement
is received. In addition, if Tenant is delinquent in furnishing Landlord with
the annual statement of Gross Receipts and such failure continues for ten (10)
days following notice from Landlord, the immediately following audit the
Landlord conducts pursuant to Section 3.07 below shall be at Tenant's expense.
3.06 - NON-WAIVER
The acceptance by Landlord of payments of Percentage Rent and statements
of Gross Receipts shall be without prejudice to Landlord's right to examine
Tenant's Books and Records in order to verify the amounts thereof.
3.07 - RIGHT TO EXAMINE AND AUDIT BOOKS AND RECORDS
At its option, Landlord may, during regular business hours and upon ten
(10) days' prior written notice to Tenant, examine the Books and Records or
cause a complete audit to be made of the Books and Records (including
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the books and records of any subtenant, operator, concessionaire or licensee or
of any other store operated by Tenant within the five (5) mile radius as more
specifically set forth in Section 5.03 of this Lease) for the period covered by
any statement required to be furnished by Tenant as set forth above; provided,
however, any such audit or examination shall be conducted in such a manner as to
minimize any interference with Tenant's business operations. In the event such
examination discloses that Tenant has intentionally or fraudulently understated
Gross Receipts by [***] or more, Tenant agrees to pay to Landlord the reasonable
cost of such examination and audit, plus a [***] administrative fee. In the
event that such examination or audit discloses that Tenant has understated Gross
Receipts by [***] or more, then, in addition to the foregoing, at Landlord's
option, the term of this Lease shall expire ten (10) days after Tenant's receipt
of a termination notice from Landlord. Any additional Percentage Rent found to
be due and owing to Landlord as a result of any examination or audit shall
immediately be due and payable and interest shall accrue on the unpaid portion
thereof at a per annum rate ("Default Rate") equal to the lesser of (i) the
[***] or (ii) the [***].
3.08 - DELINQUENT PAYMENTS
If during the term of this Lease Tenant fails to pay the full amount of the
Fixed Monthly Minimum Rent, Percentage Rent or "Additional Rent" (defined in
Section 3.09) within five (5) days when the same was due and payable, then
interest at the Default Rate, shall accrue on the unpaid amount from and after
the date on which any such sum shall be due and payable, and such interest,
together with a Late Charge of [***] for each past due payment to cover the
extra expense involved in handling such delinquency, shall be paid to Landlord
at the time of payment of the delinquent sum. Landlord shall have the right to
apply any payments made by Tenant first to any deficiency in the payment of the
interest and administrative charges provided for hereunder. Any payment to be
made by Tenant under this Lease shall be deemed to have been paid upon the date
that it is received by Landlord. The provision for a Late Charge and Interest
herein shall not be deemed to grant Tenant any grace period or extension of time
or prevent Landlord from exercising its other rights under this Lease. Tenant
shall pay to Landlord an administrative fee of [***] for each and every check
submitted by Tenant which is dishonored. If Landlord receives from Tenant two or
more checks which have been dishonored, all checks from Tenant thereafter shall,
at Landlord's option, be either certified or cashier's checks.
3.09 - ADDITIONAL RENT
All rents, charges, costs, expenses, reimbursements, fees, interest, and
other payments to be made by Tenant to Landlord under this Lease, other than
Fixed Annual Minimum Rent and Percentage Rent, shall be deemed to be "Additional
Rent."
3.10 - DEFINITION OF LEASE YEAR AND PARTIAL LEASE YEAR
The term "Lease Year" is defined to mean a period of twelve (12)
consecutive calendar months commencing on the first day of January. Any portion
of the term which is less than a Lease Year shall be deemed a "Partial Lease
Year" and computations requiring proration shall be made on a per diem basis
using a 365 day year. In order to achieve uniformity in the operation of the
Shopping Center, Landlord reserves the right to designate and change the
beginning and ending day of the Lease Year, notice of which shall be given to
Tenant in writing; provided, however, no such change shall in any way increase
Tenant's obligations or reduce Tenant's rights hereunder.
3.11 - PLACE FOR PAYMENTS
Tenant shall deliver to Landlord all payments of Fixed Monthly Minimum
Rent, Percentage Rent and Additional Rent at the office of Landlord shown at the
beginning of the Lease or such other place as may be designated by Landlord in
writing.
Nothing contained in this Section 3.11 shall relieve Tenant of the obligation to
pay by the dates due, any and all such payments payable by Tenant under this
Lease.
ARTICLE 4
TAXES
4.01 - REAL PROPERTY TAXES
(a) Landlord will pay in the first instance all real property taxes (which
shall include property tax assessments, water and sewer rent rates and charges,
parking and environmental surcharges, and any other governmental charges,
general and special, ordinary and extraordinary) which may be levied or assessed
by any lawful authority against land or improvements located in the Shopping
Center (collectively "Real Property Taxes"). The amounts required to be paid by
Landlord or any tenant or occupant of the Shopping Center pursuant to any
Payment in Lieu of Tax Agreement entered into with a taxing authority having
jurisdiction over the Shopping Center shall be considered for the purposes of
this Lease to be included within the definition of Real Property Taxes.
(b) During the term of this Lease, Tenant shall pay to Landlord as
Additional Rent, Tenant's Allocable Share of all Real Property Taxes. Real
Property Taxes shall include a charge equal to eighteen percent (18%) of the
Real Property Taxes relating to the Common Areas. Tenant's Allocable Share shall
be computed under Section 23.03(b) as of the first day of each respective Lease
Year. If the Premises are separately assessed, then Tenant agrees to pay to
Landlord, as Additional Rent, the amount of the Real Property Taxes separately
assessed against the Premises including the land lying thereunder plus Tenant's
Allocable Share of the Real Property Taxes assessed against the Common Areas of
the Shopping Center.
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(c) Tenant agrees that following the Term Commencement Date, Tenant shall
pay to Landlord, as Additional Rent and within thirty (30) days after receipt of
a bill therefor, the amount of Tenant's Allocable Share of all Real Property
Taxes, computed as of the Term Commencement Date for the then current tax fiscal
year(s). Such amount shall be calculated on the basis of the number of days
(from the Term Commencement Date) remaining in each such current tax fiscal
year. Thereafter, Tenant shall pay to Landlord, as Additional Rent, all sums due
pursuant to Section 4.01(b) in monthly installments, in advance and without
notice, on or before the first day of each month during the term of the Lease,
in an amount estimated by Landlord, such that Landlord will have received the
full amount of Tenant's Allocable Share of Real Property Taxes in time for
payment to applicable taxing authority when due. In the event Landlord is
required to escrow Real Property Taxes, Landlord may, but shall not be obligated
to, use the amount required to be escrowed as a basis for its estimate of the
monthly installments due from Tenant hereunder. Landlord shall furnish Tenant
with a written statement of the actual amount of Tenant's Allocable Share of
Real Property Taxes based upon the tax bills or assessment bills for each tax
fiscal year. If the total amount paid by Tenant under this Section 4.01(c) for
any tax fiscal year during the term of this Lease is less than the actual amount
due from Tenant for such year as shown on such statement, Tenant shall pay to
Landlord the deficiency within thirty (30) days after demand therefor by
Landlord. If the total amount paid by Tenant hereunder for any year exceeds the
amount due from Tenant for such year, Tenant shall be entitled to offset the
excess against payments next thereafter becoming due from Tenant under this
Section 4.01(c). For the tax fiscal years in which this Lease commences and
terminates, the provisions of this paragraph shall apply and, to the extent
necessary, Tenant's liability for its Allocable Share of any Real Property Taxes
for such year shall be subject to a pro rata adjustment based on the appropriate
number of days of said tax fiscal years. A copy of a tax bill or assessment bill
submitted by Landlord to Tenant shall at all times be sufficient evidence of the
amount of Real Property Taxes to which such bill relates.
(d) Intentionally deleted.
(e) Landlord may seek a reduction in the assessed valuation (for Real
Property Tax purposes) of the Shopping Center or any portion thereof by
administrative or legal proceeding. Tenant shall pay to Landlord Tenant's
Allocable Share of Landlord's costs for said proceedings, including counsel
fees, appraisal fees and other similar expenses, within thirty (30) days after
Tenant's receipt of a statement from Landlord therefor. Tenant's Allocable Share
of such costs shall be computed under Section 23.03(b) hereof. Landlord shall
reimburse Tenant for Tenant's Allocable Share of any refund of Real Property
Taxes (after deducting any unpaid portion of Tenant's Allocable Share of
Landlord's costs for such proceedings) resulting from any proceeding for which
Tenant has paid Tenant's Allocable Share of Real Property Taxes.
(f) Should any alteration or improvement performed by or for Tenant during
the term of this Lease cause an increase in assessment, Tenant shall pay to
Landlord the full cost of all Real Property Taxes resulting from such increase
in assessment. Any amount paid separately hereunder by Tenant to Landlord shall
be in addition to any amounts paid by Tenant pursuant to Section 4.01(c).
(g) Should any governmental taxing authority acting under any present or
future law, ordinance or regulation, levy, assess or impose a tax, excise,
surcharge or assessment upon or against the rents payable by Tenant to Landlord,
or upon or against the Common Areas, whether by way of substitution for or in
addition to any existing Real Property Tax or otherwise, Tenant shall be
responsible for and shall pay Tenant's Allocable Share of such tax in the manner
provided in Section 4.01(c). Notwithstanding anything to the contrary in this
Section 4.01(g), Tenant shall not be responsible for payment of any income taxes
attributable to Landlord.
(h) Tenant's 1999 Real Property Taxes will be calculated at $7.20 per
square foot of the Premises, subject, however, to increases based upon increases
in City and School taxes assessed for the 1999-2000 tax fiscal year.
Notwithstanding anything to the contrary in this Article 4, increases in
Tenant's contributions for Real Property Taxes shall be limited to the actual
increases in Real Property Taxes as imposed by the taxing authorities. Tenant
understands that the Town and County portion of Real Property Taxes is
calculated on a tax fiscal year of January 1 through December 31, and that the
City and School portion of Real Property Taxes is calculated on a tax fiscal
year of July 1 through June 30. Figures quoted to Tenant for Real Property Taxes
include the actual 1999 Town and County Real Property Taxes and the actual
1998-1999 City and School Real Property Taxes.
4.02 - TENANT'S TAXES
Tenant shall, at all times, be responsible for and pay, before delinquency,
all municipal, county, state or federal taxes charged against Tenant's income,
sales, fixtures, furnishings, equipment, stock-in-trade or other personal
property of any kind owned, installed or used in or on the Premises, and any tax
now or hereafter charged against Tenant on any other basis.
ARTICLE 5
CONSTRUCTION AND FINANCING
5.01 - LANDLORD'S WORK
Prior to the Term Commencement Date, Landlord shall perform all items of
"Landlord's Work," if any, described in Exhibit B attached hereto and made a
part hereof. In accordance with the Outline Specifications set forth in Exhibit
D attached hereto and made a part hereof, Tenant agrees to accept the Premises
in its "as is" condition on the date possession of the Premises is made
available to Tenant without any express or implied warranty concerning the
condition of the Premises by Landlord or its agents, and agrees, at its sole
cost and expense, to complete all improvements necessary to prepare the Premises
for the conduct of Tenant's business in the Premises in accordance with the
Outline Specifications set forth in Exhibit D. Tenant represents, warrants and
covenants that it shall build out the Premises in full conformance with plans
approved by Landlord or Tenant shall be deemed in default of this Lease. In the
event of such default, Landlord shall have the right to terminate this Lease, in
addition to all other rights and remedies available to Landlord under applicable
law or under this Lease. Any non-standard item of Landlord's Work requested by
Tenant or necessitated by Tenant's location, space plans or business operation
shall be performed by Landlord [***].
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for administration. Landlord hereby warrants to Tenant that to Landlord's best
knowledge the Premises do not contain any asbestos-containing materials or
other reportable amounts of hazardous or toxic materials.
5.02 - TENANT'S WORK
(a) Prior to the Term Commencement Date, Tenant, shall [***] perform
"Tenant's Work" described in Exhibit C attached hereto and made a part hereof,
in accordance with the Outline Specifications set forth in Exhibit D. Landlord
and Tenant agree that Tenant's store front design shall be substantially similar
to Tenant's store located within the Palisades Center in the Town of Clarkstown,
County of Rockland, and State of New York. Any item of Tenant's Work which
Tenant requests Landlord to perform on the Tenant's behalf and which Landlord
agreed to undertake shall be provided to Tenant at Tenant's additional cost,
plus [***] for profit and [***] for administration. Tenant acknowledges its
ability to perform Tenant's Work, and no delay in its performance shall cause or
be deemed to cause any delay or postponement in the Term Commencement Date.
Tenant shall be responsible for obtaining, at its sole cost and expense, any
necessary permits, approvals or related consents which relate to Tenant's
particular use of the Premises or to Tenant's Work or any other work performed
by Tenant pursuant to this Lease, including any building permits required for
the construction of Tenant's Work. With respect to any permits, approvals or
related consents which relate to the Shopping Center in general and not to
Tenant's particular use of the Premises or to Tenant's Work or any other work
performed by Tenant pursuant to this lease, Landlord and not Tenant shall be
obligated therefor. Landlord knows of no such mitigation, impact, or
discretionary fees related to the development of the Shopping Center in general
which were deferred by Landlord and would result in unexpected costs to Tenant.
Notwithstanding anything to the contrary in this Section 5.02(a) or in Section
23.26 of this Lease, Landlord will obtain the special use variance required by
virtue of Tenant's designation (by either the Town of Cheektowaga or the New
York State Department of Labor) as a so-called "place of public assembly", at
Tenant's sole cost and expense. Landlord has already commenced the procedure to
obtain such special use variance and will diligently pursue its receipt. In the
event that such special use variance cannot be obtained by September 1, 1999,
then Tenant shall not be obligated to accept possession of the Premises and
there shall be a day for day postponement of the Term Commencement Date until
Landlord obtains such special use variance. If Landlord is unable to obtain such
special use variance on or before September 1, 1999 then Tenant may terminate
this Lease upon ninety (90) days notice to Landlord if Landlord is unable to
obtain the special use variance within such ninety (90) day period. On or after
September 1, 1999 Landlord may terminate this Lease on ninety (90) days notice
to Tenant if Tenant is unable to obtain such special use variance during such
ninety (90) day period. Either party, on notice to the other, agrees in good
faith to assist the other party in efforts to obtain the special use variance.
Tenant agrees that its design plans and its operations shall take into account
the potential for unreasonable vibration and noise resulting from Tenant's
equipment which may affect adjacent tenants or the Common Areas. Accordingly,
Tenant agrees that its design plans shall incorporate such reasonable steps and
procedures as known to Tenant or Tenant's contractors to eliminate or
substantially reduce any vibration or noise that may be felt or heard outside of
the Premises. These steps shall include:
i) Soundproofing of walls, floor, and ceiling construction;
ii) Isolation of equipment through use of padding, flexible mounts,
or other suitable means;
iii) Airtight sealing of all openings, cut-outs, and dissimilar
surfaces.
For purposes of operational standards, Tenant agrees to provide wall, floor and
ceiling construction such that noise emitted from the Premises will not exceed
65dbA when measured from outside the Premises.
Tenant shall submit its Design Drawings to Landlord in compliance with Exhibit
"D". Upon Landlord's approval of Tenant's Design Drawings (as Tenant may agree
to modify such plans and specifications in response to Landlord's comments
thereto in accordance with the following sentence), then Landlord will be
deemed to have approved the measures taken by Tenant to minimize vibration and,
thereafter, Tenant shall not be in default under the lease as a result of
vibration associated with the permitted use of the Premises.
In the event that Landlord and Tenant are unable to agree as to the
"reasonableness" of the steps and procedures requested by Landlord to eliminate
or substantially reduce any vibration or noise that may be felt or heard
outside of the Premises, the dispute shall be submitted to arbitration pursuant
to Section 23.18 hereof for a determination as to whether such steps are
"reasonable".
(b) Tenant agrees to obtain and maintain, or to cause Tenant's
contractors to obtain and maintain, at Tenant's or Tenant's contractor's
expense, for so long as Tenant's Work continues, public liability insurance,
builder's risk property insurance covering Tenant's Work, and Workers'
Compensation insurance protecting from and against any and all liability for
death of or injury to persons or damage to property caused in or about the
Premises, or by reason of the construction of Tenant's work. Tenant shall
furnish to Landlord certificates evidencing said coverage prior to the
commencement of Tenant's Work (see Exhibit D for further insurance
requirements).
5.03 - PAYMENT
Any payment to be made by Tenant to Landlord for items of Landlord's Work
to be completed by Landlord as provided in Section 5.01, or for any items of
Tenant's Work which Tenant requests Landlord to perform and which Landlord
agrees to undertake as provided in Section 5.02, shall be paid for by Tenant,
as Additional Rent, within ten (10) days after receipt of a bill therefor.
5.04 - FINANCING
(a) Intentionally deleted.
(b) Intentionally deleted.
(c) If Landlord can obtain approval of this Lease from a mortgagee for the
purposes of financing or refinancing only upon the basis of reasonable
modifications of terms and provisions of this Lease, then Tenant shall not
unreasonably withhold its consent thereto provided that such lease
modifications do not relate to those provisions pertaining to size or location
of the Premises, length of the term, or amount of Fixed Annual Minimum Rent,
Percentage Rent, Additional Rent, the Abatement or the Permitted Use and do not
increase Tenant's obligations or decrease Tenant's rights.
[END OF TEXT THIS PAGE]
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(d) Within fifteen (15) days of request by Landlord in connection with any
financing or sale of the Shopping Center, which request shall not be made more
than once per Lease Year, Tenant or any Guarantor shall provide to Landlord a
statement of Tenant's Gross Sales for the preceding period since the Term
Commencement Data.
ARTICLE 6
CONDUCT OF BUSINESS BY TENANT
6.01 - USE OF PREMISES AND TRADE NAME
Throughout the term, Tenant shall use the entire Premises solely for the
purpose as set forth in Section 7.03 and shall operate its store in the Premises
under the trade name set forth in Section 1.03. Tenant shall not use or permit,
or suffer the use of the Premises, or any part thereof, for any other business
or purpose or under any other trade name.
6.02 - TENANT'S OPERATING COVENANT
Subject to Section 23.04 below, Tenant shall occupy the Premises on an
after the Term Commencement Date and shall continuously operate its store in the
entire Premises during the full term of this Lease. Tenant shall operate the
Premises in a manner consistent with the majority of the other stores operated
by Tenant as of the date hereof under the same trade name and having the same or
similar use as the use as provided for in this Lease, and with due diligence and
efficiency. Tenant shall carry at all times in the Premises a stock of
merchandise of a size, character and quality as is in keeping with a first
class regional shopping center. Tenant shall use for office, storage, or other
non-selling purposes only such space as a reasonably required for the proper
operation of Tenants retail business in the Premises. Tenant shall conduct its
business in the Premises during regular published Shopping Center hours of
business (as of the date of this Lease, those hours are Monday through Saturday,
10:00 a.m. until 9:30 p.m. and Sunday 11:30 a.m. until 6:00 p.m.), which hours
are subject to change at Landlord's discretion from time to time. Tenant
acknowledges and agrees that the Shopping Center's success is dependent upon the
continued operation of Tenant's business, and that the maintenance of the
character and quality of the Shopping Center is enhanced by the continued
occupancy of the Premises and the regular conduct of Tenant's business as
required herein. In the event Tenant ceases operation prior to the termination
date set forth in Section 2.02. Landlord shall have the right to obtain a court
order for specific performance of the operating covenant as set forth in this
Section 6.02. If during any period Tenant shall fail to operate the Premises
provided herein, then after the second (2nd) such failure in any Lease Year.
Tenant shall pay as liquidated damages, as a reasonable estimate of damages
suffered by Landlord due to the loss of Percentage Rent, the damage to the
character and quality of the Shopping Center and other non-quantifiable adverse
effects caused by Tenant's failure to continually operate, a sum equal to [***]
of the Fixed Annual Minimum Rent for the portion of the term during which such
failure continues. The payment of such sums shall not relieve Tenant of any of
its obligations under this Lease. Tenant shall have the right to enter the
Premises at any time during the term of the Lease. Notwithstanding anything to
the contrary in this Section 6.02, Tenant shall be permitted to be open for
business until the later of (i) 2:00 a.m. or (ii) as late as any other tenant
located on the commons level of the Shopping Center is permitted to be open
without incurring any extra hours charge as set forth in Section 7.08 below.
Anything contained in the Lease to the contrary notwithstanding. Tenant shall
not be obligated to continuously operate from the Premise during periods which
(i) Tenant is carrying on remodeling activities, provided prior Notice of such
activities has been delivered to Landlord, (ii) Tenant is closed for the taking
of inventory (not to exceed four (4) days per Lease Year), or (iii) Tenant's use
and occupancy of the Premises is prohibited by any law, ordinance, order or
other act of any judicial, governmental or quasi-governmental authority.
Notwithstanding anything to the contrary in this Section 6.02, to the effect
that Landlord is obligated to do so according to leases between Landlord and any
theater in the Shopping Center, Landlord will illuminate and secure the Common
Areas and exterior parking areas which are immediately adjacent to the Premises
and the exterior entrance to the Shopping Center which is nearest to the
Premises. Landlord represents and warrants that it has a lease with General
Cinema Corp. of New York, Inc. which commenced on May 1, 1989 and has an initial
term of twenty-five (25) years and a full-term operating covenant. In the event
Landlord is not obligated by the terms of its lease with any theater in the
Shopping Center to illuminate and secure said Common Areas and exterior parking
areas after then-current published Shopping Center hours of business, and Tenant
requires such illumination and security, then Tenant shall be obligated to pay,
as Additional Rent and within thirty (30) days after receipt of a bill therefor,
its proportional share of the costs associated with such after-hours
illumination and security. Tenant's proportional share of such costs shall be
the product of multiplying the amount of said costs by a fraction, the numerator
of which is the number of square feet of the Premises as set forth in Section
1.01, and the denominator of which is the total number of square feet of
premises occupied by any other tenant or occupant of the Shopping Center which
is also open and operating its business in the Shopping Center during such
additional hours as Tenant requires after-hours illumination and security.
6.03 - COMPETITION
During the term of this Lease, Tenant shall not directly or indirectly,
without the prior written consent of Landlord, operate, manage, franchise,
license or have any interest in any other business located within a radius of
five (5) miles from the outside boundary of the Shopping Center, which business
is engaged in the same or substantially the same use as the use provided for in
this Lease; nor if Tenant is a corporation, shall any then current officer or
director, or any then current shareholder owning more than ten percent (10%) of
the issued and outstanding stock of Tenant, nor any entity that: (a) 50% or more
of which is owned by Tenant, or (b) owns 50% or more of Tenant, or (c) 50% or
more of which is owned by any entity that owns 50% or more of Tenant; or of any
then current officer, director or ten percent (10%) shareholder of Tenant), have
any such interest without the prior written consent of Landlord; nor, if Tenant
is a partnership, shall any then current partner or any member of the immediate
family of any then current partner have any such interest without prior written
consent of Landlord. If, during the first five years of the term, Tenant or any
such officer, director, shareholder, affiliate, partner or family member does
operate, manage, franchise, license or have any interest in any such business
without prior written consent of Landlord. Landlord shall have the right, at its
option, as its sole and exclusive remedy, to obtain a court order for specific
performance of the operating covenant as set forth in Section 6.02 of this Lease
and, as liquidated damages and not as a penalty, to require that gross receipts
(defined as in Section 3.03 of this Lease, except that where reference is
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made to the Premises, it shall in this case refer instead to the location of
such other business of Tenant or any such officer, director, shareholder,
affiliate, partner or family member as more specifically described herein)
resulting from such business shall be included in the amount of Gross Receipts
used to compute Percentage Rent hereunder. After the first five years of the
term, if Tenant or any such officer, director, shareholder, affiliate, partner
or family member does operate, manage or have any interest in any such business
without the prior written consent of Landlord, Landlord shall have the right,
at its option, in addition to all other rights and remedies to which Landlord
may avail itself pursuant to this Lease, to require, as liquidated damages and
not as a penalty, that [***] of gross receipts resulting from such business
shall be paid to Landlord. The prohibitions in this Section 6.03 shall extend to
and expire on the termination date set forth in Section 2.02 hereof
notwithstanding any earlier termination resulting from Tenant's default
hereunder.
6.04 - OTHER BUSINESS PRACTICES
(a) Tenant shall keep the Premises and all show windows and signs and any
loading area and other areas allocated for the sole use of Tenant in good, neat
and clean condition. Tenant shall keep the Premises and any service area
contiguous to or part of the Premises free of debris, rubbish, garbage, pasts,
rodents and vermin caused by Tenant, and upon two (2) days' written notice by
Landlord to Tenant of Tenant's failure to do so, Landlord may remove such
debris, snow and ice, rubbish, garbage, pests, rodents and vermin and charge
Tenant the reasonable out-of-pocket costs incurred by Landlord for such
removal, plus [***] for administration.
(b) Tenant shall keep its display windows stocked and electrically
lighted during such periods of time as may from time to time be required by
Landlord of substantially all other retail businesses in the Shopping Center.
(c) Tenant shall load and unload its merchandise, equipment and supplies
and remove its rubbish only by way of the loading area and service doors
designated by Landlord for Tenant's use; provided, however, that Landlord will
not unreasonably withhold its consent to Tenant's use of the service doors or
loading dock available for common usage by tenants in the Shopping Center and
which is closest to the Premises.
(d) Tenant shall not knowingly and willfully commit nor permit any act or
practice which may lend to injure the building occupied by Tenant, nor permit
its equipment to be a nuisance to other tenants, nor keep goods, foods,
rubbish, inventory, or merchandise on or obstruct the mall area or sidewalks or
other areas outside the Premises, nor conduct or permit any fire, bankruptcy,
auction or going-out-of-business sale, nor erect or retain any sign, light,
lettering, inscription, symbol or mark which is not approved by Landlord, not
install any antenna, fixture, or improvement outside of the Premises, nor sell
or display merchandise outside the Premises.
Notwithstanding the foregoing, Tenant shall be permitted to place
professionally generated signs, advertisement and decorations within the
Premises consistent with Tenant's other operations. Anything contained in
this Lease to the contrary notwithstanding, Tenant shall be permitted to install
a video wall or mounted video screen or panel within the Premises which may be
visible to customers from outside the Premises.
Notwithstanding anything contained in this Section 6.04 to the contrary,
subject to compliance with Legal Requirements and Landlord's prior written
reasonable approval of plans and specifications, and further provided that the
satellite dish and/or other electronic transmitter (in either case a "satellite
dish") and the screen or covering, if any, hereinafter described shall be for
the exclusive use of Tenant, shall not penetrate the roof unless otherwise
agreed in writing by Landlord, and shall not be visible from any part of the
Common Area or public roadways adjoining the Shopping Center and shall not
interfere in any material respect with access to the building roof by any
others. Tenant shall have the right to install one (1) three foot (3') or
smaller satellite dish on the building roof at the location designated by
Landlord. Tenant shall, if necessary and at its sole cost and expense, construct
a screen or other covering structure around the satellite dish to prevent
visibility from the Common Areas or public roadways adjoining the Shopping
Center. The cost of installation and maintenance of the satellite dish and
screen or other covering structure (including temporary removal thereof, if
required, in connection with any repairs or other work to the Building deemed
necessary or desirable by Landlord) shall be borne solely by Tenant. The
reasonable cost of any repairs to the roof which are necessitated by the
installation and/or repair of the satellite dish and screen or covering, if
constructed, shall be borne solely by Tenant and paid to Landlord upon demand
as Additional Rent hereunder, Upon expiration or earlier termination of this
Lease, Tenant shall, at its sole cost and expense, remove any satellite dish
and screen or covering, if constructed, and Tenant shall repair any damage to
the roof occasioned by such removal, Tenant further agrees to defend, indemnify
and hold harmless Landlord from and against all claims, losses, costs and
expenses (including without limitation reasonable attorneys' fees) suffered or
incurred by Landlord arising out of the existence of Tenant's satellite dish
and screen or covering, if constructed. In addition, Tenant's liability
insurance policies shall include special endorsements prefacing Landlord and
all other parties required to be additional insureds pursuant to Section 12.06
against any liabilities that may arise out of the existence or installation and
removal of Tenant's satellite dish and any screen or covering. In connection
with all work related to the installation, repair, maintenance and removal of
the satellite dish and screen or other covering structure. Tenant shall request
from Landlord a list of three (3) competitively priced contractors acceptable
to Landlord, which Landlord shall provide to Tenant within fifteen (15)
business say following written request. At such work shall be performed by one
of Landlord's designated contractors and shall be conducted with notice to
Landlord as provided in Section 10.02(a) of this Lease.
(e) In all of Tenant's printed material distributed primarily within
Buffalo, New York and that refers to the location of the Premises (by
newspaper, radio, television or otherwise), Tenant shall include in any
reference to Tenant's place of business the name (and where appropriate the
symbol) of the Shopping Center.
(f) Tenant agrees to store in the Premises only such merchandise as is to
be offered for sale at retail from the Premises within a reasonable time after
receipt; to store all trash and refuse in adequate containers within the
Premises and to maintain such containers in a healthy, safe, neat, odor free
and clean condition and in a location so as not to be visible to members of the
public shopping in the Shopping Center, and to attend to the daily disposal
thereof in the manner designated by Landlord; and to conform to all rules and
regulations which Landlord may make in the management and use of the Shopping
Center requiring such conformance by Tenant and Tenant's employees. If the
Premises are used for the sale of food, Tenant shall store all trash, refuse
and garbage in a garbage storeroom or compartment which Tenant shall install
and keep in good repair at its sole expense. Landlord may require that the
Premises be periodically treated against pests, rodents or vermin, and in such
event, Tenant will, at its sole cost and expense, enter into a contract with a
professional pest control service for the performance of such work, which
contract and service shall be selected by Tenant but subject to Landlord's
prior approval.
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(g) Landlord may establish a central station trash compactor and/or
recycling service (including, but not limited to, compactor and container cost,
hauling, landfill charges, taxes or any other special charges, relating to such
trash compactor and/or recycling service) or contract for the removal of trash
at the Shopping Center. If Landlord establishes a central station trash
compactor and/or recycling service, Tenant agrees to pay as Additional Rent the
sum of $125.00 per month for the cost of Tenant's share of such service. It is
agreed that this charge may be increased periodically from the date of this
Lease as Landlord's expenses increase (in which event, the cost of Tenant's
share of such service shall increase only by the percentage by which Landlord's
expenses actually increase) or as the volume of Tenant's trash increases. If at
any time Landlord elects to contract for trash removal and/or recycling, Tenant
agrees to use said contractor for its trash removal and/or recycling and pay
when due all charges at the rate established therefor from time to time.
Tenant may, however, contract with an entity other than that designated by
Landlord in the event that Landlord's designated contractor's rates are not
reasonable and competitive with alternative services available to Tenant. If
Tenant fails so to pay for trash removal and/or recycling, Landlord shall have
the same remedies (even if such payment is due to such contractor and not to
Landlord) as Landlord has for nonpayment of rent hereunder. Tenant shall comply
with all applicable Governmental Orders as defined in (Section 18.01) in
conjunction with the sorting or recycling of trash or refuse.
(h) Tenant shall comply with all further reasonable rules and regulations
for the use and occupancy of the Shopping Center as Landlord from time to time
promulgates for the best interests of the Shopping Center, provided that if
Tenant disputes the reasonableness of any further rule or regulation, Tenant
shall notify Landlord within thirty (30) days after Tenant is provided with a
copy thereof, and the dispute shall be submitted to arbitration pursuant to
Section 23.18. In the event of a conflict between the Lease and such rules or
regulations, then the terms of the Lease shall govern.
6.05 - MARKETING FUND
(a) Tenant shall make a contribution, in the manner set forth in Section
6.05, to a Marketing Fund to be administered by Landlord. The Marketing Fund
will be used for advertising, customer services, promotion, public relations,
market research and administrative expenses which, in the sole opinion of
Landlord, will sustain and improve the market penetration and promotional needs
of the Shopping Center. Landlord acknowledges and agrees that Tenant is a party
to a license agreement and that Tenant's advertising, use and display of the
Trade Name and the logo and trademarks associated therewith may be subject to
the licensor's consent as set forth in the license agreement; therefore,
Landlord agrees not to use Tenant's Trade Name in any advertising or
promotional medium without Tenant's consent; provided, however, notwithstanding
the foregoing, Landlord shall be permitted to (i) use Tenant's Trade Name in
any directory or other listing which contains the names of substantially all of
the tenants or occupants of the Shopping Center and (ii) utilize photographs,
slides, videos, or other similar images of the Shopping Center that may
include or depict the Premises or Trade Name.
(b) From and after the Term Commencement Date, Tenant shall pay to
Landlord, as an annual contribution to the Marketing Fund, the sum of [***] per
square foot of the Premises, which sum shall be paid in advance in consecutive
equal monthly installments on the first day of each month during the term. For
any Partial Lease Year during the term of this Lease, or for any partial month,
the amount of Tenant's contribution to the Marketing Fund shall be adjusted on a
pro-rata basis to reflect such Partial Lease Year or partial month.
(c) Upon the first day of January next following the date of this Lease
and upon the first day of January of each Lease Year thereafter, Tenant's
annual contribution to the Marketing Fund shall increase by [***] upon the first
day of each January thereafter during the term of this Lease.
ARTICLE 7
COMMON AREAS AND OPERATING COSTS
7.01 - DEFINITION
The term "Common Areas" shall mean the interior and exterior areas and
facilities within the Shopping Center which are: (i) not leased to a tenant, or
(ii) by nature not leasable to a tenant for the purpose of the sale of
merchandise or the rendition of services to the general public. Common Areas
shall include but shall not be limited to all parking areas and facilities,
roadways, driveways, entrances and exits, truck serviceways and tunnels,
utilities, water filtration and treatment facilities, retention ponds or basins
located within or outside the Shopping Center, retaining and exterior walls,
sidewalks, open and enclosed malls, outside courts, landscaped and planted
areas, escalators, stairways, elevators, service corridors, service areas,
loading docks, hallways, public restrooms, community rooms or areas, roofs,
equipment, signs and any special services provided by Landlord for the common
or joint use and benefit of all tenants in the Shopping Center, their
employees, customers and invitees.
7.02 - DEVELOPMENT OF COMMON AREAS
Landlord shall make available from time to time such Common Areas, which
may in part consist of areas made available by means of REA or other
agreements, for the common benefit to the tenants and occupants of the
Shopping Center as Landlord shall deem appropriate. Subject to the provisions
of any REA Agreement, Landlord shall operate, manage, equip, heat, cool,
ventilate, insure, repair and maintain such Common Areas for their intended
purposes in such a manner as Landlord shall, in its sole discretion, determine.
Landlord shall at all times have the right to determine, change or alter the
nature, extent, size or location of the Common Areas and Landlord shall not be
subject to liability therefor, nor shall Tenant be entitled to any compensation
or diminution or abatement of rent on account of any such determination or
change, nor shall any such action be deemed an actual or a constructive
eviction of Tenant.
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7.03 - USE OF COMMON AREAS
Tenant and its officers, employees, agents, customers and invitees shall
have the nonexclusive right, in common with Landlord and all others to whom
Landlord has or may hereafter grant rights, to use the Common Areas as
designated from time to time by Landlord, subject to such regulations as
Landlord may from time to time impose on a non-discriminatory basis, including
the designation of the days and hours of operation and use and designation of
specific areas in which motor vehicles owned or used by Tenant, its officers,
employees, and agents must be parked. Tenant shall, upon request, furnish to
Landlord the license numbers and descriptions of the motor vehicles operated by
Tenant and its officers, agents and employees. If Landlord designates such
parking areas, and if any motor vehicle of Tenant, or an officer, employee or
agent of Tenant is parked in any other portion of the Shopping Center, Tenant
shall pay to Landlord, upon demand, the sum of Fifty and 00/100 Dollars ($50.00)
for each such motor vehicle for each day, or part thereof, such motor vehicle is
so parked, and Tenant hereby authorizes Landlord to tow or cause any such car to
be towed to the then designated parking area, and Tenant herby agrees to
reimburse Landlord for the cost thereof upon demand. Tenant agrees to abide by
such regulations and to use its best efforts to cause the officers, employees,
agents, customers and invitees to conform thereto. Landlord may at any time (i)
close temporarily the Common Areas or any portion thereof, (ii) make repairs or
changes to prevent the acquisition of public rights therein, (iii) discourage
noncustomer parking, and (iv) do such other acts in and to the Common Areas as
in its judgment may be desirable to improve the convenience thereof. Tenant
shall not at any time interfere with the rights of Landlord and other tenants,
its and their permitted officers, employees, agents, customers, and invitees, to
use any part of the parking areas and other Common Areas. Landlord shall have
the sole and exclusive right to use the Common Areas for advertising purposes,
promotions, exhibits, shows, displays, kiosks and such other similar uses.
Notwithstanding the foregoing, Landlord shall not modify the Common Areas in any
manner that would have a material adverse effect on pedestrian and vehicular
traffic or that would materially limit the number of parking spaces reasonably
required for the business and retail activities conducted or that otherwise
would adversely affect access to the Premises or the building in which the
Premises are located. Notwithstanding the foregoing, Landlord will not
materially adversely interfere with (i) visibility of Tenant's storefront
signage from the enclosed mall immediately adjacent to the Premises, or (ii)
access to the Premises from the enclosed mall immediately adjacent to the
Premises. Notwithstanding anything to the contrary in this Section 7.03,
Landlord recognizes that Tenant's prototype incorporates an open storefront
design and Tenant shall be permitted to incorporate this element into the design
of the Premises, provided such design does not violate any applicable laws or
compromise the structural integrity of the Shopping Center. With Landlord's
approval, not to be unreasonably withheld, Tenant shall have the right to use,
at no additional cost to Tenant, a portion of the Common Area in front of the
Premises for the purpose of displaying a NASCAR racing vehicle.
7.04 - COMMON AREA COSTS
(a) Commencing on the Term Commencement Date, Tenant shall pay to
Landlord, as Additional Rent, monthly in advance on the first day of each month,
a sum equal to [***] of the Common Area Charge. The "Common Area Charge" shall
be an annual charge of [***] per square foot of the Premises for the Common Area
Costs defined in Section 7.04(b), subject to adjustment as provided in Section
7.05.
(b) "Common Area Costs" shall mean the total costs and expenses incurred
in operating, managing and maintaining the Shopping Center and the Common Areas,
including but without limitation, such maintenance, repair, replacement and
remodeling as shall be required in Landlord's sole and absolute judgment to
preserve the utility thereof in the same condition and status as existed at the
time of completion of the original construction. Common Area Costs shall also
include Tenant's share of insurance costs.
7.05 - ADJUSTMENT TO PAYMENT
Upon January 1, 2001 and upon the first day of January of each Lease Year
thereafter, the amount of Tenant's Common Area Charge then in effect shall
increase by [***]. Tenant acknowledges and agrees that Tenant shall have no
right to audit Landlord's books and records concerning Common Area Costs.
Notwithstanding anything to the contrary in this Section 7.05, the first such
increase in Common Area Charges will be prorated on a per-diem basis.
7.06 - PAYMENT OF EXTRAORDINARY COMMON AREA COSTS
If Tenant opens the Premises for business or remains open for business in
the Premises at a time when Tenant is not required under the terms of this Lease
to be open and when less than fifty percent (50%) of the total leased area of
the buildings in the Shopping Center is open for business, then for each such
day on which Tenant is open for business in the Premises, Tenant, as Additional
Rent, shall pay to Landlord, in addition to and together with Tenant's payment
of the Common Area Charge due Landlord as provided by Section 7.04, a sum equal
to [***] of the monthly amount of Tenant's Common Area Charge.
ARTICLE 8
ENERGY, UTILITY AND SPRINKLER COSTS
8.01 - ENERGY AND UTILITY CHARGES
(a) Immediately after delivery of possession of the Premises to Tenant,
Tenant shall make application to the appropriate local authority, municipality
or other governmental agency to obtain direct service for Tenant's electric,
natural gas, and other energy requirements. Tenant shall be solely responsible
for the cost of obtaining such services and the cost of providing and installing
any required motors, conduits, wiring and other facilities and equipment, all of
which shall be part of Tenant's Work. However Tenant shall not be obligated to
pay any fees to the utility company for the initial connection of energy
services to the Premises which relate to the Shopping Center in general and not
the Premises, and Landlord and not Tenant shall be obligated for any other fees
payable to the utility company which relate to the Shopping Center in general
with respect to the initial connection of energy services to the Premises. From
and after
*** Confidential treatment requested.
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the date Tenant first enters into possession of the Premises (or if the date
Tenant obtains such energy service is sooner, then from and after the date such
service begins), Tenant covenants and agrees to pay the authority, municipality
or agency the cost of all energy provided to Tenant (including but not limited
to all energy provided to the Premises, to Tenant's signs and to the HVAC units
serving the Premises) when due and payable. As of the date of this Lease,
Landlord has no knowledge that the energy provider will not provide direct
service, and Tenant acknowledges that provision of such service is within the
control of the energy provider and not Landlord.
(b) Tenant shall pay the cost of all water and sewer used in or at the
Premises. Landlord and Tenant acknowledge that water and sewer services for the
Premises are as of the date of this Lease, provided by the local municipality to
the Premises through Landlord. Accordingly, Tenant shall, at its cost and as
part of Tenant's Work, install a water meter acceptable to Landlord and the
local municipality; and Tenant shall pay Landlord for all water and sewer usage
in and at the Premises based on the usage recorded by such meter and based on
the rates charged to Landlord for water and sewer usage by the local
municipality. Such payment calculation is subject to change if, as and when the
billing methodology of said municipality for water differs from that set forth
in this paragraph. The above payment structure shall continue in effect until
such time as the Premises are directly supplied, metered and billed for water
and sewer services by the local municipality. Immediately after delivery of
possession of the Premises to Tenant, Tenant shall make application to the
appropriate local authority, municipality or other governmental agency to obtain
direct service for water and sewer services to the Premises. Tenant shall be
solely responsible for the cost of obtaining such services and the cost of
providing and installing any required meters and other facilities and equipment,
all of which shall be part of Tenant's Work. From and after the date direct
water and/or sewer service is available to the Premises, Tenant covenants and
agrees to pay the authority, municipality or agency the cost of same provided to
Tenant when due and payable.
(c) (i) If as a result of Tenant's inability to obtain direct supply
or Tenant's election not to obtain direct supply and metering for Tenant's
natural gas, electric and other energy requirements as provided in subsection
(a) hereof, and if Landlord supplies service for Tenant's electric, natural gas,
or other energy requirements, from and after the date which is the later of
either the date when Tenant firsts enters into possession of the Premises or the
date when Landlord commences supplying energy to the Premises, Tenant shall pay
to Landlord monthly in advance on the first day of each month its "Energy
Charges," as hereinafter defined.
(ii) As used in this Lease "Energy Charges" shall be the product of
multiplying the Energy Charge Calculation (herein defined) for all energy used
or consumed in the Premises including without limitation, electricity, oil and
gas times the unit prices for such energy determined in accordance with the then
current utility rate schedules applicable to Landlord, plus a charge of
twenty-five percent (25%) of such amount. Following the date that Tenant opens
for business in the Premises, Landlord shall calculate Tenant's energy
requirements on the basis of Tenant's construction plans, equipment and lighting
lists, and the as-built condition of the Premises, assuming (1) a usage of not
less than one hour before through one hour after the daily hours of operation of
the Shopping Center and (2) a loading factor based upon the total connected load
of all electrical fixtures and equipment in the Premises ("Energy Charge
Calculation"). If Tenant requires additional hours of usage of energy within the
Premises, Tenant shall make such request in writing to Landlord and Tenant's
Energy Charges shall be adjusted accordingly. Prior to the completion of such
Energy Charge Calculation and the submission to Tenant of a statement setting
forth such calculation, Tenant shall pay Energy Charges as estimated by Landlord
based upon the energy requirements of a typical store layout comparable to
Tenant's proposed use and size of the Premises. Following completion of the
Energy Charge Calculation, Tenant's energy billings and payment of Energy
Charges shall be adjusted accordingly. Any delay in Landlord furnishing such
Energy Charge Calculation to Tenant shall not in any way affect Tenant's
obligation herein.
(iii) Notwithstanding the provisions of subparagraph (c)(ii) of this
Section 8.01 relating to use of the Energy Charge Calculation to calculate
Energy Charges to the contrary, Tenant shall have the option to verify the
amount of electrical energy used or consumed within the Premises by the
installation of a checkmeter as hereinafter set forth. Such option may be
exercised by Tenant upon not less than thirty (30) days' prior written notice to
Landlord given prior to either (i) 60 days after Landlord commences supplying
energy to the Premises (provided, however, that in no event shall the checkmeter
period begin until after Tenant's Work is fully completed and operational and
Tenant is open for business to the public), or (ii) the first day of any Lease
Year during the term of this Lease. Following such notice, Tenant shall install
in the Premises, in accordance with the Outline Specifications set forth in
Exhibit D and at Tenant's sole cost and expense, a utility-quality checkmeter
for the purpose of verification of the electrical consumption within the
Premises (the "checkmeter"). The checkmeter will be monitored monthly by
Landlord and Tenant for a period of thirteen (13) consecutive full months (the
"checkmeter period") beginning on the first day of the first full month
following initial installation thereof and approval by Landlord. The first
month's reading of the checkmeter will be used solely for determining a usage
base reading over which subsequent readings will be measured. Landlord and
Tenant shall on or about the first day of each month concurrently observe and
record the checkmeter readings on forms provided by Landlord. The checkmeter
shall be reset (for demand only) in the presence of both Landlord and Tenant
representatives following the recording of monthly readings. During the
checkmeter period Tenant shall pay Energy Charges for the Premises based on the
Energy Charge Calculation.
Following completion of the checkmetering period, Landlord shall
calculate the average monthly utility usage within the Premises utilizing the
checkmeter readings taken during the checkmeter period. The average monthly
charge for consumption (KWH) shall be calculated by dividing the total KWH by
the number of days comprising the checkmeter period; the resulting quotient will
then be multiplied by 30.42. The average monthly demand charge (KW), if
applicable, shall be calculated by dividing the total KW readings by the number
of months comprising the checkmeter period. If Tenant has made the election to
utilize a checkmeter, for purposes of calculating Energy Charges for electricity
under subparagraph (b) of this Section 8.01, the product of the resulting
average monthly KWH usage readings and KW demand readings times the unit prices
for such energy determined in accordance with then current utility rate
schedules charged to Landlord shall be used in lieu of the Energy Charge
Calculation. Tenant's energy billings based on the checkmeter readings and
payment of Energy Charges retroactive to the commencement of the checkmeter
period shall be adjusted accordingly. Any delay in Landlord furnishing a
checkmeter reconciliation to Tenant shall in no way affect Tenant's obligation
herein.
The average monthly KWH usage charges and KW demand charges once
determined pursuant to the checkmeter procedure shall be the basis for
calculation of Energy Charges for the balance of the term of this Lease. The
checkmeter procedure shall be used solely to verify energy use within the
Premises in accordance with the terms of this Lease and shall not be utilized
for billing purposes. The use of the checkmeter procedure set forth in this
subparagraph (c) shall be the sole and exclusive remedy between Landlord and
Tenant to resolve any
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dispute concerning the amount of electrical usage within the Premises. The
results of the checkmetering procedures set forth herein shall be conclusive and
determinative of all disputes, claims and controversies with respect to energy
usage or demand within the Premises pursuant to this Lease. Following the
checkmeter period, Tenant shall disconnect and remove the checkmeter from the
Premises. The monitoring of energy service by means if a checkmeter shall not
take place more than once during the term of this Lease unless Tenant has varied
its equipment, service, use or load demand or has remodeled the Premises. In any
such event either Landlord or Tenant may request the other party to reinstitute
the checkmeter procedures but in no event more than once in any thirty-six (36)
month period following the completion of any checkmeter period.
(iv) At any time during the term hereof, Landlord may cease
providing energy to the Premises without thereby affecting this Lease in any
manner or otherwise incurring any liability to Tenant. In such event, Tenant
shall have no further obligation to pay to Landlord the charge for Energy
Charges as provided in this Section 8.01. Landlord will notify Tenant at least
(30) days prior to such termination in order that Tenant may make application to
the appropriate utility companies serving the Shopping Center.
In the event Tenant fails to pay energy or utility charges when the same
become due and payable, Landlord reserves the right, in addition to all other
rights and remedies to which Landlord may avail itself pursuant to this Lease,
to discontinue the furnishing of energy to the Premises. Landlord shall not be
liable for any damages resulting from or arising out of any such discontinuance,
and the same shall not constitute a termination of this Lease or an actual or
constructive eviction of Tenant.
(v) The charges defined in Section 8.01(c), if any, may be adjusted
by Landlord periodically based upon changes in the number of hours during which
the Premises remains open, connected load, recalculations, rate changes imposed
by utility companies, rate changes imposed by fuel companies (including but not
limited to fuel adjustment rates), any changes, alterations or improvements done
to the Premises, or any taxes or surcharges imposed upon energy costs or usage.
Notwithstanding anything to the contrary in this Section 8.01, in the event
Landlord's energy provider is not competitively priced, Tenant shall have the
right to secure energy service from an alternative energy provider (where
available). Tenant understands and agrees that in the event it elects to use
such alternative energy provider, it shall do so at Tenant's sole cost and
expense and such energy service must be provided to the Premises from such
alternative energy provider's facilities and shall not come through Landlord's
switchgear.
8.02 - INTENTIONALLY DELETED.
8.03 - INTENTIONALLY DELETED.
8.04 - MISCELLANEOUS UTILITY PROVISIONS.
(a) Tenant shall not install within the Premises any equipment, fixtures
or appliances which exceed the capacity of the utility facilities within or
serving the Premises. If any such equipment, fixtures or appliances installed by
Tenant requires additional utility facilities, the same shall be installed by
Tenant at Tenant's sole cost and expense.
(b) Tenant shall operate the heating, ventilating and cooling systems
serving the Premises such that the temperature in the Premises will be
substantially the same as that in the Common Areas, and Tenant shall set
Tenant's thermostat at substantially the same temperature as exists in the
Common Areas. Tenant shall operate ventilation equipment such that the relative
air pressure in the Premises will be substantially the same as or less than that
in the Common Areas.
(c) Intentionally deleted.
(d) Tenant agrees that Landlord shall not be responsible for any
interruption of business or damage to the Premises resulting from interruption
of utility service caused by any utility company or governmental regulatory
agency.
8.05 - PERIODIC ADJUSTMENT
Intentionally deleted.
ARTICLE 9
FIXTURES, ALTERATIONS, SIGNS
9.01 - INSTALLATION BY TENANT
After the completion of Tenant's Work, Tenant shall not make or cause to be
made any alterations, additions or improvements or install or cause to be
installed any trade fixtures, exterior sign, floor covering, interior or
exterior lighting, plumbing fixtures, shades or awnings, or make any changes to
its store-front or interior decor without first obtaining Landlord's written
approval and consent in each instance, which shall not be unreasonably withheld.
Notwithstanding the foregoing, Tenant shall be permitted to make interior,
non-structural alterations, changes and modifications not exceeding [***] per
Lease Year without Landlord's prior consent, provided Tenant notifies Landlord
in writing prior to the commencement of such alterations, changes, or
modifications. Tenant shall present to Landlord plans and specifications of such
work at the time approval is sought. All permitted alterations, additions or
improvements shall be done in a good and workmanlike manner in compliance with
all applicable laws and ordinances and shall not unreasonably interfere with the
conduct of Tenant's normal business. Notwithstanding anything to the contrary in
this Section 9.01, Tenant shall be permitted to close for a
*** Confidential treatment requested.
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period not to exceed five (5) days during any Lease Year, for the sole purpose
of completing such alterations, changes, or modifications. Where Landlord's
approval is required per this Section 9.01, any alteration, addition or
improvement done to the Premises by Tenant without Landlord's approval shall be
returned to its original condition within thirty (30) days after receipt of
written notice from Landlord and at Tenant's expense upon request by Landlord
at any time. All fixtures installed by Tenant shall be new or completely
reconditioned; provided, however, Tenant makes no representation or warranty
that such fixtures will be free form defects in material, workmanship, or
design; provided, further, that Tenant shall use its commercially reasonable
efforts to ensure that such fixtures are installed in the Premises in a safe
manner so as not to be hazardous to persons who may come on to the Premises.
Tenant shall (i) be responsible for all costs, including attorneys' fees, and
(ii) Tenant shall indemnify and hold harmless Landlord from all liability,
incurred by Landlord as a result of any failure in material, workmanship or
design of such fixtures.
9.02 - REMOVAL AND RESTORATION BY TENANT
All alterations, additions, improvements or installations made by Tenant,
or made by Landlord on Tenant's behalf and at Tenant's expense, shall remain the
property of Tenant for the term of the Lease. Such alterations, additions,
improvements, trade fixtures and equipment shall not be removed from the
Premises prior to the end of the term hereof without the prior consent in
writing from Landlord, except in the case of routine maintenance, refurbishment
or replacement of defective or broken items. Upon expiration of the term of the
Lease or upon Tenant's vacating the Premises upon eviction or surrender of the
Premises prior to expiration of the term, any permanent leasehold improvements
and fixtures or equipment permanently attached to the real estate shall become
the property of Landlord (unless, as a condition of its consent to install same,
Landlord shall have required the subsequent removal thereof by Tenant), if not
removed by Tenant. With respect to any improvements and fixtures which Tenant
does not remove, Tenant shall be obligated to repair any damage resulting from
such removal, and Tenant's possession of the Promises shall not be deemed
terminated until such repairs have been completed. Tenant shall surrender all
keys for the Premises to Landlord and shall inform Landlord of all combinations
on locks, safes and vaults, if any, in the Premises. Within five (5) days
following the expiration or earlier termination of this Lease, Tenant shall
remove furnishings, equipment, trade fixtures and personal property and, if
Tenant fails to so remove such property, then Landlord shall have the option of
retaining or removing such property at Tenant's expense. Tenant shall repair or
cause to be repaired any damage to the Premises caused by such removal.
9.03 - SIGNS, AWNINGS AND CANOPIES
Tenant will not place, maintain or suffer to be placed or maintained on or
in an exterior door, wall or window of the Premises any sign, awning or canopy,
decoration, lettering or advertising matter or other thing of any kind without
first obtaining Landlord's written approval, which approval shall not be
unreasonably withheld. Notwithstanding the foregoing, Landlord's consent shall
not be required for any professionally prepared signs or banners, or for the
installation of an awning or canopy at the store front of the Premises, provided
such awning or canopy complete with all applicable building codes and further
provided that such awning or canopy does not utilize any supports which cannot
be integrated into the store front of the Premises. Tenant further agrees to
maintain such sign, awning, canopy, decoration, lettering, advertising matter or
other thing as may be approved in good condition and repair at all times. In the
event that Landlord at any time during the term of this Lease elects to erect
signage within the interior of the Shopping Center which in a general fashion
depicts any so-called entertainment wing of the Shopping Center, then Tenant
may, at its option, be included in such signage at Landlord's cost and expense.
Notwithstanding anything to the contrary in this Lease and subject to
governmental and Anchor Store approval, Tenant shall be permitted to erect on
the exterior facade of the Shopping Center a fiberglass model stock car to be
used as exterior signage. Tenant shall erect, maintain, and at the expiration or
earlier termination of this Lease, remove, such exterior signage at its sole
cost and expense. Landlord reserves the right to relocate Tenant's exterior
signage to another area on the exterior facade of the Shopping Center in the
event of a change in local ordinance, rules, regulations or applicable laws, or
in the event of a demand by an Anchor Store, at Landlord's sole cost and
expense, subject to the following: (a) in the event of a change in local
ordinance, regulations, rules or applicable laws, Tenant agrees to act
reasonably with respect to relocation of Tenant's exterior signage so long as
Tenant is not treated any more adversely than similarly situated tenants of the
Shopping Center (i.e., tenants having similar signage in substantially the same
location), or (b) if required by an Anchor Store, Landlord may make immaterial
changes in the location, size, or illumination of Tenant's exterior signage so
long as Tenant is not treated any more adversely than similarly situated tenants
of the Shopping Center (i.e., tenants having similar signage in substantially
the same location).
9.04 - CONDITION OF THE PREMISES
Throughout the Term, Tenant shall maintain the Premises in a manner
consistent with a first class shopping center.
ARTICLE 10
REPAIRS AND MAINTENANCE
10.01 - LANDLORD'S OBLIGATION TO REPAIR
Landlord agrees to repair and maintain, at Landlord's sole cost and
expense, the outside walls, structure and foundation of the building containing
the Premises in good order and serviceable condition. Landlord agrees to
commence any such repair within a reasonable time (not to exceed thirty (30)
days, unless by the nature of such repair, it cannot reasonably be commenced
within said thirty (30) day period) after written notice from Tenant that the
same is necessary. There is excepted from this covenant the following, which
shall be Tenant's responsibility:
(a) Repair of damage caused by the act or omission of Tenant, its
employees, agents, and contractors;
(b) Repair of any loading areas not used in common with others; and
(c) Repairs which are the responsibility of Tenant in accordance with
Section 10.02.
[END OF TEXT THIS PAGE]
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10.02. - TENANT'S OBLIGATION TO REPAIR
(a) Tenant agrees, at its sole cost and expense, to repair and maintain
the Premises in good order and condition, including but not limited to the
non-structural portions of the Premises, including store front, loading areas,
show windows, doors, windows, plate and window glass, ceilings, floor coverings,
Tenant's HVAC systems, and the plumbing, sprinkler, electric and sewage systems,
facilities, appliances, lighting fixtures and other systems and improvements
located within the Premises. In addition, Tenant shall be responsible, at its
sole expense, for the repair and maintenance of its rooftop HVAC unit(s) (if
any) and any other equipment or improvement located outside the Premises which
is constructed or installed by Tenant or at Tenant's request and is used
exclusively by or for Tenant. Tenant shall obtain Landlord's prior consent
before making any repair or performing any maintenance which may adversely
effect any aspect of the Shopping Center's operation.
(b) During the entire term, Tenant agrees to maintain, at Tenant's sole
cost, a maintenance contract with an independent HVAC contractor approved by
Landlord covering at least the routine items of maintenance for Tenant's HVAC
systems as are recommended by the manufacturer of such systems, provided that
the cost thereof at all times shall be reasonable and competitive. Tenant
agrees to provide Landlord with a copy of such HVAC service contract within
thirty (30) days following the Term Commencement Date. Further, Tenant agrees
during the entire term of this Lease to use the sprinkler service company
designated by Landlord for any repairs or maintenance required for Tenant's
sprinkler system, provided that the cost thereof at all times shall be
reasonable and competitive.
(c) If repairs are required to be made by Tenant pursuant to the terms
of the Lease, Landlord may demand (but shall not be required to do so) that
Tenant make the same forthwith, and if Tenant refuses or neglects to commence
to such repairs and complete the same with reasonable dispatch after such
demand, and if Tenant's failure to commence such repairs continues for fifteen
(15) days after receipt of notice from Landlord, Landlord may make or cause
such repairs to be made and shall not be responsible to Tenant for any loss or
damage that may accrue to its stock or business by reason thereof. If Landlord
makes or causes such repairs to be made, Tenant agrees that it will, on demand,
pay as Additional Rent to Landlord, reasonable out-of-pocket costs incurred by
Landlord therefor, and a twelve percent (12%) administration fee, and if Tenant
defaults in such payment, Landlord shall have the remedies provided in Article
15 hereof. Likewise, if repairs are required under the terms hereof to be made
by Landlord and it fails or refuses after twenty (20) days' notice and demand
by Tenant to commence such repairs and thereafter diligently prosecute same to
completion, then Tenant shall have the right to make such required repairs.
Landlord shall reimburse Tenant for the cost of such repairs within twenty (20)
days after receipt by Landlord of evidence of payment therefor by Tenant;
additionally, Tenant shall have the right to offset such costs against the
payment of Fixed Annual Minimum Rent, Percentage Rent or Additional Rent if
Landlord shall fail to reimburse Tenant for the cost of such repairs within
thirty (30) days after receipt by Landlord of evidence of payment therefor by
Tenant.
(d) If Tenant's use of the Premises requires a grease trap, Tenant agrees
to maintain, at Tenant's sole cost, a maintenance contract with an independent
service contractor approved by Landlord to inspect, clean and repair such
grease trap at such intervals as may be required by Tenant's use but in no
event less frequently than once a month.
(e) Tenant shall not, and shall not permit any of its employees,
invitees, contractors or agents to, enter or otherwise be on the roof of the
Building without prior written notice to Landlord. Tenant shall give landlord
not less than five (5) days' prior written notice of the date any such person
will be on the roof of the Building (however, Landlord agrees to use reasonable
efforts to respond sooner if necessary - e.g., satellite dish requires
adjustment).
10.03 - ARTICLE NOT APPLICABLE TO FIRE OR CONDEMNATION
The provisions of this Article shall not apply to the repair of damage
caused by fire, casualty, which matter is covered under Article 13, nor shall
these provisions apply to a taking under the power of Eminent Domain, which
matter is covered under Article 14.
ARTICLE 11
INDEMNITY
11.01 - INDEMNITY
Tenant will indemnify and hold harmless Landlord, Landlord's managing
agent and such other persons who are in privity of estate with Landlord, or to
whom Landlord is legally responsible (collectively, "Landlord's Party"), from
and against any and all claims, actions, damages, liabilities and expenses in
connection with loss of life, personal injury, bodily injury or damage to
property arising from or out of any occurrence in, upon or at the Premises,
from or out of the occupancy or use by Tenant of the Premises or the Shopping
Center or any part thereof, or occasioned wholly or in part by any negligent
act or omission of Tenant, its agents, contractors, employees, licensees,
invitees or concessionaires; provided, however, Tenant shall not be required to
indemnify, defend, hold harmless, protect, release or otherwise exculpate
Landlord or any member of Landlord's Party from and against any claims,
actions, damages, liabilities or expenses to the extent the same results from
Landlord's or any member of Landlord's Party's or their respective agents,
employees, contractors, licensees, invitees or servants' negligence, willful
misconduct, failure to comply with applicable laws or breach of this Lease. In
case Landlord or any member of Landlord's Party shall be made a party to any
action or proceeding commenced by or against Tenant, then Tenant agrees to
protect and hold such parties harmless and to pay all costs, expenses and
reasonable attorneys' fees incurred or paid by such parties in connection with
such action or proceeding. Tenant shall pay to Landlord all costs, expenses and
reasonable attorneys' fees that may be incurred or paid by Landlord in
enforcing the terms, conditions, convenants and agreements in this Lease.
Landlord shall indemnify, hold harmless and defend Tenant, Tenant's
managing agent, if any, and such other persons who are in privity of estate with
Tenant, or to whom Tenant is legally responsible (collectively, "Tenant's
Party"), from and against any and all claims, actions, suits, cross-claims,
counterclaims, third party actions, damages, liabilities and expenses in
connection with loss of life, personal injury, bodily injury or damage to
property
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arising from or out of any occurrence in, upon or at the Shopping Center,
or occasioned wholly or in part by any negligent act or omission of Landlord,
its agents, contractors, employees, lessees, invitees or concessionaires;
provided, however, Landlord shall not be required to indemnify, defend, hold
harmless, protect, release or otherwise exculpate Tenant or any member of
Tenant's party from and against any claims, actions, damages, liabilities or
expenses to the extent the same results from Tenant's or any member of Tenant's
Party's or their respective agents, employees, contractors, licensees, invitees
or servants' negligence, willful misconduct, failure to comply with applicable
laws or breach of this Lease. In case Tenant, Tenant's managing agent or such
other persons who are in privity of estate with Tenant, or to whom Tenant is
legally responsible, shall be made a party to any action or proceeding commenced
by or against Landlord, then Landlord agrees to protect and hold such parties
harmless and to pay all costs, expenses and reasonable attorneys' fees incurred
or paid by such parties in connection with such action or proceeding. Landlord
shall pay to Tenant all costs, expenses and reasonable attorneys' fees that may
be incurred or paid by Tenant in enforcing the terms, conditions, covenants and
agreements in this Lease.
ARTICLE 12
Insurance
12.01 - LIABILITY INSURANCE
Throughout the term of this Lease, Tenant, at its sole cost and expense,
for the mutual benefit of Landlord and Tenant, shall maintain personal injury
and property damage liability insurance against claims for personal injury,
bodily injury, death or property damage occurring on, in or about the Premises,
or arising from, in or about Tenant's use of the Common Areas, or resulting from
or arising out of products sold from the Premises or Tenant's use of the Common
Areas during the term of this Lease, of not less than [***] in respect of
personal injury, bodily injury, death or property damage (combined single
limit). Such policy shall expressly contain a contractual endorsement to provide
coverage for Tenant's indemnification set forth in Section 11.01 of this Lease
and shall contain the "Per Location Aggregate" endorsement. Such policy shall be
endorsed (1) as primary and (2) to waive rights of subrogation against Landlord.
Prior to the Term Commencement Date, Tenant shall provide Landlord with a
certificate containing evidence of such coverage and of the coverage required in
Sections 12.02(c) and (d) below, and Tenant shall thereafter provide Landlord
with appropriate evidence of said coverage upon each anniversary date of the
policy. In the event that Tenant fails to provide the certificate as set forth
herein or fails to provide such evidence of such coverage at least [***] prior
to the expiration date of each expiring policy, Landlord may obtain such
insurance at Tenant's sole cost and expense and upon demand of Landlord, Tenant
shall reimburse Landlord for the cost of procuring such insurance coverage
together with [***] for administration costs.
12.02 - SPECIAL CAUSES OF LOSS AND DIFFERENCE IN CONDITIONS INSURANCE
(a) At all times during the term of this Lease, Landlord shall keep all
Permanent Improvements, as hereinafter defined, insured for the benefit of
Landlord against loss or damage by risks now or hereafter embraced by "Special
Causes of Loss" and "Difference in Conditions" coverages and against such other
risks as Landlord from time to time reasonably may designate in amounts
sufficient to prevent Landlord from becoming a coinsurer under the terms of the
applicable policies. In any event, the amount applicable to "Special Causes of
Loss" policies shall be not less than [***] of the "Then Full Replacement Cost"
(being the cost of replacing the Permanent Improvements exclusive of the costs
of excavations and footings below the lowest grade level). The Then Full
Replacement Cost shall be determined from time to time (but not more frequently
than once in any twelve (12) calendar months) by an appraiser, architect or
other person or firm as designated by Landlord.
(b) The Permanent Improvements for purposes of this Section 12.02 shall be
deemed to mean the building in which the Premises is situated, the appurtenances
thereto and the equipment and other improvements constructed by Landlord and
Tenant pursuant to Exhibits B and C. Such Permanent Improvements shall exclude,
however, Tenant's merchandise, trade fixtures, furnishings, equipment, wall
covering, carpeting, drapes, and all personal property (collectively "Tenant's
Personal Property"). Tenants shall provide Landlord with a certificate setting
forth the cost of Tenant's Work no less than [***] days prior to the Term
Commencement Date.
(c) At all times during the term of this Lease, Tenant shall keep all of
Tenant's Personal Property situated at or on the Premises, insured with "Special
Causes of Loss" and "Difference in Conditions" and "Plate Glass" coverages for
not less than the full replacement cost thereof, with the deductible on the
"Plate Glass" and "Special Causes of Loss" policies not to exceed [***] and with
a [***] deductible on the "Difference in Conditions" policy (provided, however,
by way of illustration and not limitation, it shall be deemed commercially
reasonable for the "Difference in Conditions" policy to have a deductible of
[***] of the value of the insured property or a deductible of [***].
(d) Tenant shall maintain, and shall cause all parties performing work on
or about the Premises or on behalf of the Tenant to maintain statutory Workers'
Compensation coverage according to the laws of the state in which the Shopping
Center is located and Employer's Liability coverage in limits of not less than
[***].
12.03 - INSURANCE ON COMMON AREAS
At all times during the term of this Lease, Landlord shall keep the Common
Areas insured for personal injury, bodily injury and property damage liability,
"Special Causes of Loss" and "Difference in Conditions" property coverage,
Workers' Compensation, Employer's Liability and any other casualty or risk
insurance which Landlord or Landlord's insurance carrier deems necessary or
appropriate. If and to the extent Landlord elects to self insure up to the first
[***] of any claims for personal injury or bodily injury, or under Workers'
Compensation, there shall be included within insurance costs the amount of any
personal injury, bodily injury or Workers' Compensation claim(s) or judgment(s)
paid by Landlord, limited, however, in each
*** Confidential treatment requested.
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instance to the lesser of (i) [***], or (ii) the self insured amount of such
claim or judgment.
12.04 - INCREASE IN FIRE INSURANCE PREMIUM
Tenant covenants and agrees to promptly pay to Landlord as Additional Rent,
upon demand, the amount of any increase in the rate of insurance on the Premises
or on any other part of the Shopping Center that results by reason of Tenant's
act(s) or Tenant's permitting certain activities to take place.
12.05 - TENANT TO SHARE INSURANCE COSTS
Tenant's obligation for the payment of Insurance Costs is included in
Common Area costs, as set forth in Section 7.04 of this Lease.
12.06 - WAIVER OF SUBROGATION
Each party releases and waives on behalf of itself and on behalf of the
insurers of such party's property, any and all claims and any rights of
subrogation of any such insurer against the other party, its employees and
agents for loss (other than loss or damage resulting from the willful act of
such other party, its employees and agents) sustained from any peril to
property required to be insured against herein, whether or not such insurance
is actually in force, or from any peril to property actually insured against,
though not required to be under this Lease. The policies of the respective
parties shall contain an express waiver of subrogation to this effect.
12.07 - POLICIES
All insurance provided in this Article 12 shall be effected under valid
and enforceable policies of at minimum a Best rating of A-, XII and issued by
insurers of recognized responsibility which are licensed to do business in the
state in which the Shopping Center is located. All of Tenant's policies of
insurance as required in this Article 12 shall name Landlord, Tenant,
Landlord's managing agent and any mortgagee having an interest in any or all
part of the Shopping Center the name and address of which Tenant has received
written notice, as additional insureds, as their respective interests may
appear. Tenant agrees that such policies shall also be made payable, if
required by Landlord, to a mortgagee or ground lessor, as the interest of such
mortgagee or ground lessor may appear. The loss, if any, under any policies
provided for hereunder may be adjusted with the insurance company by Landlord.
Each of Tenant's policies shall contain an agreement by the insurer that such
policy shall not be terminated, canceled or reduced in coverage without at
least thirty (30) days' prior written notice to Landlord and to any mortgagee
or ground lessor to whom a loss thereunder is payable. The minimum limits of
coverage for all of Tenant's policies of insurance required by this Article 12
shall be increased by Tenant if reasonably required by Landlord.
ARTICLE 13
DAMAGE BY FIRE, ETC.
13.01 - RESTORATION OF PREMISES
(a) The parties hereto mutually agree that if the Premises are partially
or totally destroyed or damaged by fire or otherwise, then Landlord (subject to
being able to obtain all necessary permits and approvals therefor) shall repair
and restore the Premises as soon as is reasonably practicable to substantially
the same condition in which the Premises existed before such damage; provided
that if the insurance proceeds (other than the amount of any deductible, self
insured retention or co-insurance requirement) collected or collectible and
available to Landlord to pay the cost of such repairs and restorations by
Landlord as a consequence of such destruction or damage are less than the cost
of such repairs and restoration as estimated by Landlord's architect, Landlord
shall not be obligated to commence or perform such repairs and restorations,
and this Lease upon notice by Landlord to Tenant shall at the option of
Landlord terminate unless Tenant undertakes (in form and upon terms
satisfactory to Landlord) to pay the difference between such estimated cost and
such insurance proceeds. Within forty-five (45) days following the date of
damage or destruction, Landlord shall notify Tenant of its intentions with
respect to the repairs or restoration of the Premises, and in the event
Landlord elects to repair or restore the Premises, Landlord shall diligently
pursue such repair or restoration to completion following commencement of the
repairs or restoration. If, however, the Premises are completely destroyed or
so damaged that Landlord cannot complete restoration or rebuilding in four (4)
months to substantially the same condition in which the Premises were before
such damage, then Landlord shall not be required to rebuild or restore, and
this Lease shall be terminable by either party serving written notice upon the
other. In any event, if repairs have not been commenced within sixty (60) days
after the date on which Landlord receives the insurance proceeds, or if the
repairs have been commenced within such time but Landlord is not diligently
pursuing such repairs or restoration, then this Lease may be terminated by
Tenant serving notice upon Landlord following the expiration of such sixty (60)
days by giving Landlord not less than thirty (30) days' advanced written notice
of such election. Except as otherwise provided in this Section 13.01(a),
provided Landlord is diligently pursuing such repairs or restoration, in no
event may Tenant terminate this Lease after such repairs have been commenced by
Landlord.
(b) In the event the Premises are completely or partially destroyed or so
damaged by fire or other hazard that the Premises cannot be reasonably used by
Tenant or can only be partially used by Tenant and this Lease is not terminated
as above provided, there shall be no abatement of rent for the first sixty (60)
days following the date of damage or destruction, it being understood and
agreed that the Tenant at its discretion, cost and expense shall procure
insurance necessary to protect itself against any interruption of its business
during such sixty (60) day period. In the event that Tenant is prevented from
using the Premises in excess of sixty (60) days, then Fixed Annual Minimum Rent
and Additional Rent shall be abated, and there shall be a proportionate
reduction to the Annual Minimum Gross Receipts, from and after said sixtieth
(60th) day until the date Tenant is able to reopen for business within the
Premises.
*** Confidential treatment requested.
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13.02 - RESTORATION DURING LAST THREE YEARS
Anything in Section 13.01 to the contrary notwithstanding, if, within
three (3) years prior to the expiration of the initial term or at any time
during any renewal term (if any) of this Lease the Premises shall be damaged or
destroyed by fire or otherwise and the estimated cost of restoration exceeds
Fifty Thousand and 00/100 Dollars ($50,000.00), then at the election of
Landlord or Tenant and by notice to the other, the Lease shall terminate.
13.03 - TENANT'S OBLIGATION UPON RESTORATION
In the event of damage or destruction to the Premises and unless this
Lease is terminated by Landlord or Tenant as provided in this Article 13,
Tenant shall, as soon as reasonably possible, repair, redecorate and refixture
the Premises and restock the contents thereof in a manner and to at least a
condition equal to that existing prior to its destruction or casualty, and
reopen the entire Premises for business. All proceeds of insurance carried by
Tenant on Tenant's Personal Property shall be held in trust for such purposes.
ARTICLE 14
EMINENT DOMAIN
14.01 - EMINENT DOMAIN
If the Premises, or such portion thereof as to render the balance wholly
unsuitable for the purpose of Tenant, is taken by condemnation or the right of
eminent domain, or by agreement between Landlord and those authorized to
exercise such right (collectively the "Condemnation Proceedings"), either party
upon written notice to the other shall be entitled to terminate this Lease
provided that such notice is given not later than thirty (30) days after Tenant
has been deprived possession of use by such taking. Should any part of the
Premises be so taken and should this Lease not be terminated in accordance with
the foregoing provisions, Landlord covenants and agrees promptly after such
taking to expend so much as may be necessary of the net amount which may be
awarded to and received by it in such Condemnation Proceedings in restoring the
Premises to an architectural unit as nearly like its condition prior to such
taking as shall in the reasonable judgment of Landlord be practicable, with an
appropriate abatement to be made in Fixed Annual Minimum Rent and a
corresponding reduction in Annual Minimum Gross Receipts. Should the net amount
so awarded to and received by Landlord be insufficient to cover the cost of
restoring the Premises as estimated by Landlord's architect, Landlord may at
its election, supply the amount of such insufficiency and restore the Premises,
as above provided, or terminate this Lease. Where Tenant has not already
exercised any right of termination accorded to it under this Section 14.01,
Landlord shall notify Tenant of Landlord's election within ninety (90) days
after the final determination of the amount of the award.
14.02 - LANDLORD ENTITLED TO AWARD
Out of any award for any such taking of the Premises or any part thereof,
Landlord shall be entitled to receive and retain the amounts awarded for such
Premises, except that Tenant shall be entitled to receive and retain only
amounts which may be specially awarded to it in any such condemnation
proceedings because of the taking of its trade fixtures and its leasehold
improvements which have not become a part of the realty, and such business loss
as Tenant shall specifically and separately establish, but not otherwise. It is
understood in the event of the termination of this Lease as aforesaid, Tenant
shall have no claim against the Landlord or the condemning authority for the
value of any unexpired term of its Lease and no right or claim to any part of
the award on account thereof. Tenant hereby waives each such claim or right and
assigns any such claim or right to Landlord. Anything contained in this Lease
to the contrary notwithstanding, Tenant shall have the right to bring any claim
during any Condemnation Proceedings, provided such claim does not reduce the
claim of Landlord in said Condemnation Proceedings.
ARTICLE 15
BANKRUPTCY AND DEFAULT PROVISIONS
15.01 - EVENTS OF DEFAULT AND CONDITIONAL LIMITATION
(a) If at any time prior to or during the term any one or more of the
following events occurs, each such event shall constitute an "event of default":
(i) Tenant or Tenant's Guarantor, if any, makes an assignment
for the benefit of its creditors;
(ii) The leasehold estate hereby created in Tenant is taken on
execution or by other process of law;
(iii) Any petition is filed against Tenant or Tenant's Guarantor,
if any, in any court, whether or not pursuant to any bankruptcy,
reorganization, composition extension, arrangement or insolvency proceedings,
and Tenant or Tenant's Guarantor is thereafter adjudicated bankrupt, or such
petition is approved by the Court, or the Court assumes jurisdiction of the
subject matter and such proceedings are not dismissed within ninety (90) days
after the institution of the same; or any such petition is so filed by Tenant,
or Tenant's Guarantor;
(iv) In any proceedings, a receiver or trustee is appointed for
Tenant's property or the property of Tenant's Guarantor and such receivership
or trusteeship is not vacated or set aside within ninety (90) days after the
appointment of such receiver or trustee;
(v) Tenant intentionally or fraudulently understates Gross
Receipts by five percent (5%) or more;
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(vi) There is a transfer or an attempted transfer of this Lease
or of Tenant's interest thereof in violation of the restrictions set forth in
Article 17 of this Lease;
(vii) Tenant ceases operation in or vacates or abandons the
Premises or is otherwise in breach of Sections 6.01 or 6.02 of this Lease, and
such breach is not cured within ten (10) days following written notice from
Landlord; provided, however, that if such default cannot be cured within said
time period, Tenant shall be deemed to have cured such default if Tenant
commences cure of the default within said time period, and thereafter diligently
and in good faith continues with and actually completes said cure. Tenant shall
promptly notify Landlord of Tenant's commencement of such cure;
(viii) Tenant fails to comply with any local, state or federal law,
rule or regulation governing the use, handling and disposal of Hazardous
Materials or is otherwise in violation of the obligations contained in Section
18.03 of this Lease, and Tenant fails to commence a cure of such violation
within thirty (30) days following written notice from Landlord (or such shorter
time period if required by law); provided, however, that if such default cannot
be cured within said time period. Tenant shall be deemed to have cured such
default if Tenant commences cure of the default within said time period, and
thereafter diligently and in good faith continues with and actually completes
said cure. Tenant shall promptly notify Landlord of Tenant's commencement of
such cure;
(ix) Tenant fails to comply with the obligations contained in
Section 21.03 of this Lease, and such failure continues for fifteen (15) days
following written notice from Landlord;
(x) Tenant or Tenant's Guarantor, if any, fails to pay any
installment of the Fixed Annual Minimum Rent, Percentage Rent, Additional Rent
or any portion of any such payment, when the same becomes due and payable, and
such failure continues for ten (10) days after receipt of written notice from
Landlord to Tenant;
(xi) Tenant or Tenant's Guarantor, if any, fails to pay any
installment of the Fixed Annual Minimum Rent, Percentage Rent, Additional Rent
or any portion of such payment, when same becomes due and payable, and such
failure occurs on three (3) or more occasions in any Lease Year or Partial Lease
Year;
(xii) Tenant fails to comply with the obligations contained in
Section 1.03 of this Lease, and such failure continues for ten (10) days after
receipt of written notice from Landlord to Tenant; provided, however, that if
such default cannot be cured within such time period, Tenant shall be deemed to
have cured such default if Tenant commences cure of the default within such time
period, and thereafter diligently and in good faith continues with and actually
completes said cure. Tenant shall promptly notify Landlord of Tenant's
commencement of such cure; or
(xiii) Tenant or Tenant's Guarantor, if any, fails to perform or
observe any other material requirement of this Lease (not hereinbefore
specifically referred to) on the part of Tenant to be performed or observed and
such failure continues for thirty (30) days after receipt of written notice from
Landlord to Tenant; provided, however, that if such default cannot be cured
within such time period, Tenant shall be deemed to have cured such default if
Tenant commences cure of the default within such time period, and thereafter
diligently and in good faith continues with and actually completes said cure.
Tenant or Tenant's Guarantor, if any, shall promptly notify Landlord of Tenant's
or Tenant's Guarantor's (if any) commencement of such cure.
(b) This Lease and the term are expressly subject to the conditional
limitation that upon the happening of any one or more of the aforementioned
events of default, Landlord, in addition to the other rights and remedies it
may have, shall have the right, upon notice to Tenant, to declare this Lease
terminated and the term ended, in which event all of the right, title and
interest of Tenant hereunder shall wholly cease and expire upon receipt by
Tenant of a Notice of Termination. Tenant shall then quit and surrender the
Premises to Landlord in the manner and under the conditions as provided for
under this Lease, but Tenant shall remain liable as hereinafter provided.
Notwithstanding anything to the contrary in this Section 15.01(b), the parties
hereby agree that the following events shall be deemed "material" for the
limited purposes of determining Landlord's right to terminate this Lease
according to the terms of this Section 15.01(b) following an event of default
for which notice and any applicable opportunity to cure has expired: (i)
failure to open and commence and continue operation of Tenant's business within
the entire Premises according to Section 6.02 of this Lease; (ii) failure to
make repairs to the Premises according to Section 10.02 of this Lease; (iii)
failure to comply with Tenant's indemnification obligations according to
Article 11 of this Lease; (iv) failure to comply with Tenant's insurance
obligations pursuant to Article 12 of this Lease; (v) failure to comply with
Tenant's obligations with regard to Restoration of the Premises according to
Section 13.03 of this Lease; (vi) an assignment, sublet or other transfer not
in compliance with the terms of Article 17 of this Lease; and (vii) failure to
comply with Government Orders, Insurance Matters, Hazardous Material or the
ADA, all according to the terms of Article 18 of this Lease. It is specifically
understood and agreed that this provision shall not in any way modify any
other termination right of Landlord which is otherwise specifically provided
for in this Lease.
15.02 - LANDLORD'S REMEDIES
(a) If this Lease shall be terminated as provided in Section 15.01,
Landlord or Landlord's agents or employees may immediately or at any time
thereafter re-enter the Premises and remove therefrom Tenant, its agents,
employees, licensees, and any sub-tenants and other persons, firms or
corporations, and all or any of its or their property therefrom, either by
summary dispossess proceedings or by any suitable action or proceedings at law
or in equity, without being liable to indictment or prosecution of damages
therefor, and repossess and enjoy the Premises, together with all
alterations, additions and improvements thereto. Landlord, in the event of such
re-entry and repossession, may store Tenant's Personal Property in a public
warehouse or elsewhere at the cost of and for the account of Tenant.
(b) In case of any such termination, re-entry or dispossession by summary
proceedings or otherwise, the rents and all other charges required to be paid
up to the time of such termination, re-entry or dispossession, shall be paid by
Tenant, and Tenant also shall pay to Landlord all reasonable expenses which
Landlord may then or thereafter incur for legal expenses, attorneys' fees,
brokerage commissions and all other costs paid or incurred by Landlord as the
result of such termination, re-entry or dispossession, and for restoring the
Premises to good order and condition and for altering and otherwise preparing
the same for reletting and for reletting thereof. Landlord may, at any time and
from time to time, relet the Premises, whole or in part, for any rental then
obtainable either in its own name or as agent of Tenant, for a term which, at
Landlord's option, may be for the remainder of the then current term of this
Lease or for any longer or shorter period.
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(c) If this Lease is terminated as aforesaid, Tenant nevertheless
covenants and agrees notwithstanding any entry or re-entry by Landlord whether
by summary proceedings, termination or otherwise, to pay and be liable for on
the days originally fixed herein for the payment thereof, amounts equal to the
several installments of Fixed Annual Minimum Rent. Percentage Rent and
Additional Rent reserved as they would, under the terms of this Lease, become
due if this Lease had not been terminated or if Landlord had not entered or
re-entered as aforesaid, and whether the Premises is resist or remains vacant in
whole or in part or for a period less than the remainder of the term, and for
the whole thereof. In the event the Premises be relet by Landlord, Tenant shall
be entitled to a credit (but not in excess of the Fixed Annual Minimum Rent,
Percentage Rent and Additional Rent reserved under the terms of this Lease) in
the net amount of rent received by Landlord in reletting the Premises after
deduction of the reasonable out-of-pocket expenses and costs incurred or paid as
aforesaid in reletting the Premises and in collecting the rent in connection
therewith. If Tenant fails to make such payments in accordance with the final
sentence of this subsection 15.02(c) for any two (2) consecutive months
following the termination of this Lease, Landlord shall at any time thereafter,
in lieu of collecting any monthly deficiencies, or any further monthly
deficiencies, aforesaid, at Landlord's option, be entitled to recover from
Tenant, in addition to any other relief, such a sum as at the time of such
termination represents the amount of the then [***]. Tenant shall be entitled to
a credit against the Present Value Amount for Fixed Annual Minimum Rent,
Percentage Rent and Additional Rent subsequently received by Landlord from a
replacement tenant against amounts paid by the Tenant to Landlord after
deducting the allowance paid by Landlord to Tenant and all expenses and costs
incurred or paid (including any allowances, construction costs and
administrative costs) by Landlord in reletting the Premises and in collecting
the rent in connection therewith, which right to a credit shall terminate on the
date this Lease would have expired pursuant to Section 2.02. Suit or suits for
the recovery of the deficiency or damages referred to in this Subsection
15.02(c) or for any installment or installments of Fixed Annual Minimum Rent,
Percentage Rent or Additional Rent hereunder, or for a sum equal to any such
installment or installments, may be brought by Landlord all at once or from time
to time at Landlord's election, and nothing in this Lease shall be deemed to
require Landlord to await the date whereon this Lease or the term hereof would
have naturally expired had there been no such default by Tenant or no such
termination.
(d) For the purpose of this Section 15.02, it shall be deemed that the
Percentage Rent for any period after any such default and entry by Landlord
would have been at the monthly rate thereafter equal to the average Percentage
Rent which Tenant was obligated to pay to Landlord under this Lease within the
two (2) Lease Years (or lesser number of Lease Years since the Term
Commencement Date) immediately preceding the date of such entry.
(e) Tenant hereby expressly waives, so far as permitted by law, any and
all right of redemption or re-entry or repossession under present or future laws
arising after Landlord's recovery of possession, including any amendments
hereafter, or to restore the operation of this Lease. Landlord and Tenant, so
far as permitted by law, waive and will waive trial by jury in any action,
proceeding or counterclaim brought by either of the parties hereto against the
other on any matters whatsoever arising out of or in any way connected with the
Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of the
Premises, or any claim or injury or damage. The terms "enter," "re-enter,"
"entry" or "re-entry" as used in this Lease are not restricted to their
technical legal meaning. In the event Landlord commences any proceedings for the
recovery of possession of the Premises or to recover for non-payment of Fixed
Annual Minimum Rent, Percentage Rent or Additional Rent, Tenant shall not
interpose any non-compulsory counterclaim in any such proceedings. This may not,
however, be construed as a waiver of Tenant's rights to assort such claim in any
separate action or actions initiated by Tenant.
(f) No failure by Landlord to insist upon the strict performance of any
covenant, agreement, term or condition of this Lease or to exercise any right
or remedy consequent upon a breach thereof, and no acceptance of full or partial
rent during the continuance of any such breach shall be deemed an accord and
satisfaction thus Landlord may accept any check or payment without prejudice to
Landlord's rights to recover the balance due, nor shall it constitute a waiver
of any such breech or of such covenant, agreement, term and condition, and this
Lease shall continue in full force and effect with respect to any other than
existing or subsequent breech thereof.
(g) In the event of any breech or threatened breech by Tenant of any of
the covenants, agreements, terms or conditions contained in this Lease, Landlord
shall be entitled to enjoin such breech or threatened breech and shall have the
right to invoke any right or remedy allowed at law or in equity, by statute or
otherwise.
(h) Each right and remedy of Landlord provided for in this Lease shall be
cumulative and shall be in addition to every other right or remedy provided for
in this Lease or now or hereinafter existing at law or in equity, by statute or
otherwise.
ARTICLE 16
MECHANICS' LIENS
16.01 MECHANICS' LIENS
(a) If any mechanics' liens are filed against the Premises or any portion
of the Shopping Center based upon any act of Tenant or anyone claiming through
Tenant, Tenant shall hold Landlord harmless from all damages, claims and
expenses arising therefrom, and Tenant, after notice from Landlord (or any
person in privity of estate with Landlord), shall forthwith commence such action
by bonding, deposit, payment or otherwise as will remove or satisfy such lien
within thirty (30) days. In the event Tenant does not remove or satisfy said
lien within said thirty (30) day period, Landlord shall have the right to do so
by posting a bond or undertaking, and Tenant agrees to reimburse Landlord for
all reasonable out-of-pocket expenses incurred by Landlord in connection
therewith five (5) days after receipt by Tenant of Landlord's invoice therefor.
These expenses shall include, but not be limited to, filing fees, legal fees
and bond premiums.
*** Confidential treatment requested.
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(b) Nothing in this Article 16 shall be deemed or construed as (i)
Landlord's consent to any person, firm or corporation for the performance of
any work or services or the supply of any materials to the Premises or any
improvement thereon, or (ii) giving Tenant of any other person, firm or
corporation any right to contract for or to perform or supply any work,
services or materials that would permit to give rise to a lien against the
Premises or any part thereof.
ARTICLE 17
Assignments, Subleases and Other Transfers of Tenant's Interest
17.01 - Limitations on Tenant's Rights
(a) Neither this Lease nor the interest of Tenant in this Lease shall be
sold, assigned, transferred, mortgaged, pledged, hypothecated or otherwise
disposed of, whether by operation of law or otherwise, nor shall the Premises
or any part thereof be sublet or subject to any license or concession without
the prior written consent of Landlord in each instance. The sale or transfer of
stock constituting a controlling interest in Tenant or Tenant's Guarantor shall
be considered for the purpose of this Lease to be an assignment, and likewise
shall require Landlord's prior written consent, except where Tenant or Tenant's
Guarantor is a corporation having its shares traded on the New York, American
or Over-The-Counter stock exchange or market. Tenant shall make available to
Landlord the stock record books of Tenant and Tenant's Guarantor and shall
produce the same on request of Landlord. Similarly, if Tenant is a partnership,
the interest of any partner shall not be transferred without Landlord's prior
written consent. For the purposes of this Lease, the entering into of any
management agreement or any similar agreement which transfers control of the
business operations of Tenant in the Premises shall be treated as an assignment
of this Lease and shall require Landlord's prior written consent. Any attempted
transfer, assignment, subletting, license or concession agreement, hypothecation
or other transfer herein that is prohibited without Landlord's prior written
consent shall be void and confer no rights upon any third party. Anything
contained in this Section 17.01(a) to the contrary notwithstanding, Tenant
shall have the right without Landlord's consent to assign this Lease or sublet
the Premises, subject to the terms of this Lease, in conjunction with the sale
of substantially all of the other assets and other store locations of Tenant to
Tenant's parent, Tenant's subsidiary, or a subsidiary of Tenant's parent,
provided that at least seventy-five percent (75%) of Tenant's other stores
located in the United States are simultaneously transferred to such entity.
Tenant shall remain primarily liable under this Lease following any assignment
of the Lease or subletting of the Premises. Subject to paragraph (f)
hereinbelow, Landlord shall not unreasonably withhold its consent to any
assignment or subleasing and shall respond to any request by Tenant for
permission to sublease or assign with thirty (30) days after receipt of written
request. If Landlord objects to such assignment or sublease, Landlord shall
advise Tenant of the reasons for such objections. If Landlord fails to respond
to such request within said thirty (30) days, and such failure continues for
ten (10) days following Notice from Tenant, then such failure shall be deemed
approval of such sublease or assignment.
Notwithstanding the terms of the immediately preceding grammatical
paragraph provided Tenant is not in default beyond any applicable cure period,
named Tenant may, without the consent of Landlord, assign this Lease or sublet
the entire Premises to any corporation which owns all of the issued and
outstanding common stock of named Tenant, or to a wholly owned subsidiary
corporation of named Tenant, or to any corporation resulting from the
consolidation or merger of named Tenant, in or with any other business
organization or any person, firm or corporation acquiring all of the issued and
outstanding capital stock of named Tenant, or all or substantially all of the
assets, store locations and no less than eighty percent (80%) of leases
(including this Lease) of named Tenant to the same entity; however, no such
assignment shall be deemed effective unless and until such assignee executes
and delivers to Landlord, at no cost to Landlord, a written agreement in form
and substance acceptable to Landlord whereby such assignee assumes for the
benefit of Landlord the performance and observance of all of the terms,
conditions and convenants contained in this Lease. The foregoing is subject to
Tenant providing Landlord with thirty (30) days' written notice in advance,
including statements of fact certified by an authorized officer of Tenant,
certifying the facts upon which Tenant is claiming the right to assign this
Lease pursuant to this grammatical paragraph. In addition, any private placement
or public offering of ownership interest in Tenant shall not require Landlord's
prior consent, provided that as a result of any private placement the
day-to-day management of Tenant remains unchanged.
Notwithstanding anything contained in this Section 17.01 to the contrary,
a public offering of Tenant's voting stock on a nationally recognized public
stock exchange shall not be deemed an assignment of this Lease, provided (i)
Tenant shall have given Landlord ten (10) days' prior written notice of such
intended public offering, and (ii) this Lease is not further assigned except as
provided for in this Article 17.
(b) No permitted assignment made shall be effective until there are
delivered to Landlord (i) an agreement in recordable form, executed by Tenant
and the proposed assignee, wherein such assignee assumes due performance of the
obligations of Tenant's part to be performed under this Lease to the end of the
term hereof and (ii) a written consent to such assignment by the holder of any
fee or leasehold mortgage affecting the Premises to which this Lease is then
subject and such consent shall have been obtained and delivered to Landlord if
so required by the terms of such mortgage or by a collateral document securing
the same obligations as are secured by such mortgage.
(c) Any assignment of this Lease or any sublease affecting the Premises
or any other permitted transfer hereunder shall be subject and subordinate to
the full terms and conditions of this Lease. Regardless of either the
assumption by any assignee or sublessee of due performance or the Landlord's
acceptance of rent or other charges from such assignee or sublessee, Tenant
shall not be released by any assignment or sublease but shall continue to be
fully responsible for the due performance of Tenant's obligations hereunder in
the same manner and to the same extent as if no such assignment or sublease had
been made. Notwithstanding anything to the contrary in this Section 17.01(c),
for any assignment of this Lease for which Landlord's consent is required and
such consent is granted, Tenant shall be released from any future obligations
under this Lease provided that the proposed assignee maintains a net worth of
at least [***] for the twenty-four (24) month
period immediately preceding the assignment and for the twelve (12) months
immediately following the assignment.
*** Confidential treatment requested.
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(d) In the event Tenant assigns or subleases all or any portion of the
Premises as set forth in this Article 17 and the amounts due to Tenant under
such assignment or sublease exceed the amounts reserved to be paid to Landlord
by Tenant under this Lease, then Tenant shall pay to Landlord one-half of the
amount by which such assignment or sublease rent exceeds Rent as set forth in
Section 3.01(a) above. In the event Tenant assigns or subleases only a portion
of the Premises, the assignment or sublease rent shall be calculated on a per
square foot basis and then compared to the then applicable per square foot Rent
reserved in Section 3.01(a) above to determine whether or not such assignment
or sublease rent exceeds Rent.
(e) Any transfer made in violation of the provisions of subsections (a),
(b) or (c) in this section 17.01 shall constitute an event of default under
Section 15.01 herein and give rise to Landlord's right to re-enter the Premises
in accordance with Section 15.02.
(f) Notwithstanding anything in this Section 17.01 to the contrary, if
Tenant desires to assign its interest under this Lease or to sublet all of the
Premises to a Permitted Party (as hereinafter defined), Tenant shall deliver to
Landlord written notice, requesting Landlord's consent to such transaction,
which consent request shall include (i) a fully executed letter of intent
containing the material terms of the proposed assignment or sublet transaction
(including proposed rent (including additional rent), square foot area, term
and use), (ii) current reasonable financial information with respect to the
proposed assignee or sublessee, including without limitation its most recent
financial report, (iii) a statement that the proposed assignment or sublease
relates to the entire Premises for the remaining term of this Lease, and (iv)
an express statement to the effect that the proposed assignee or sublessee is a
Permitted Party within the meaning of this paragraph and that Landlord has the
right to terminate this Lease in connection with the assignment or sublease
pursuant to this Section 17.01(f) or such assignment or sublease shall be
deemed consented to by Landlord. A notice that contains the information
described in clauses (i) through (iv) shall be deemed an offer ("Takeback
Offer") from Tenant to Landlord whereby Landlord may terminate this Lease. If
Tenant's notice does not expressly state the items described in clauses (i)
through (iv) including that the proposed assignee or sublessee is to a
Permitted Party, such notice shall constitute a request by Tenant for
Landlord's consent to sublease the Premises or assign this Lease subject to the
other terms of this Section 17.01; such notice shall not constitute a Takeback
Offer and Landlord shall not be entitled to terminate this Lease under this
Section 17.01(f). The Takeback Offer may be exercised by Landlord by written
notice ("Takeback Notice") to Tenant at any time within thirty (30) days after
such Takeback Offer has been given by Tenant to Landlord; and during such
thirty (30) day period Tenant shall not assign this Lease to such prospective
assignee or sublet the Premises to such prospective sublessee unless such
assignment is expressly conditioned upon and not effective until the expiration
of the 30-day period for Landlord to deliver the Takeback Notice. The term
"Permitted Party" shall mean a third party (i) who will operate the Premises
for a lawful bona fide retail use consistent with uses at other first-class
shopping centers or for the use permitted under Section 6.01 of this Lease, and
not in violation of any use restriction in effect for the Shopping Center of
which Tenant has been advised within twenty (20) days after Landlord's receipt
of Tenant's Takeback Offer; (ii) who has a net worth equal to or greater than
the then net worth of Tenant; and (iii) who is a national or regional chain of
retail stores, or is then operating (directly or indirectly) at least five (5)
stores in the States of New York, New Jersey, Pennsylvania, Massachusetts and
Connecticut for the same or similar use, or has at least ten (10) years of
retail operating experience. Upon such termination, all obligations of Landlord
and Tenant (other than those that expressly are stated to survive termination)
shall cease to be of further force and effect. Notwithstanding anything in this
Section 17.01 to the contrary, Tenant shall have the right, without Landlord's
consent, to secure furniture, fixture and equipment financing in the ordinary
course of business and to grant to the financing party a security interest in
the furniture, fixtures, or equipment.
If Landlord exercises its option to terminate this Lease pursuant to this
subsection in connection with an assignment or sublet of all of the Premises,
then, unless Tenant, within fifteen (15) days after receipt of the Takeback
Notice, withdraws Tenant's request for Landlord's consent to the proposed
assignment or sublet, this Lease shall end and expire on the effective date
designated by Landlord in its Takeback Notice (which date shall not be less
than sixty (60) days nor more than one hundred twenty (120) days after the date
of the Takeback Notice) as fully and completely as if such early termination
date were the original expiration date of the Term, and all Rent shall be
apportioned as of such date.
If (x) Landlord shall not elect to send a Takeback Notice within said
30-day period and (y) Tenant is not then in default under this Lease beyond any
applicable notice or cure periods, Tenant shall be entitled, without any consent
by Landlord, to assign this Lease or sublet all of the Premises on substantially
the terms for proposed rent (including additional rent), square foot area, term
and use and to the Permitted Party, described in Tenant's request for Landlord's
consent, provided that if Tenant shall then be in default under this Lease
beyond any applicable notice or cure period, then any such assignment or sublet
shall not be effective until such defaults are cured. Any assignment or sublet
to a Permitted Party shall be subject and subordinate to the terms, conditions
and covenants of this Lease (other than with respect to the use set forth in
Section 1.03), provided that if the assignee or sublessee will not operate any
racing simulator or other rides within the Premises, then notwithstanding
anything to the contrary in Section 3.02, Percentage Rent shall be an amount
equal to [***]. To the extent necessary, Tenant and Landlord shall execute and
deliver a Lease Modification Agreement or other agreement reflecting the new use
clause, if any.
17.02 - EFFECT OF LANDLORD'S CONSENT
(a) Any consent by Landlord to a sale, assignment, sublease, mortgage,
pledge, license, concession, hypothecation, or transfer of this Lease, shall
apply only to the specific transaction thereby authorized and shall not relieve
Tenant from the requirement of obtaining prior written consent of Landlord to
any further sale, assignment, sublease, mortgage, pledge, hypothecation, or
transfer of this Lease. When the consent of Landlord is required hereunder to
any proposed assignment or sublease of this Lease, or to the mortgaging,
pledging, licensing, concession or hypothecation of this Lease,
contemporaneously with the request of Tenant therefor, Tenant shall submit in
writing information reasonably sufficient to enable Landlord to make a decision
with respect thereto.
(b) With respect to any of the consents requested by Tenant, whether or
not the Landlord has consented thereto, Tenant shall pay to the Landlord the
reasonable counsel fees and disbursements and other expenses incurred by the
Landlord in connection therewith. Notwithstanding anything to the contrary in
this Section 17.02(b), in no event shall this sum exceed [***].
*** Confidential treatment requested.
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ARTICLE 18
COMPLIANCE WITH GOVERNMENT ORDERS
18.01 - TENANT TO COMPLY
Tenant, at its own expense, shall promptly execute and comply with all
statutes, ordinances, rules, orders, regulations and requirements of the
federal, state and local governments and of any and all other departments and
bureaus applicable to Tenant's particular use of the Premises or to the
business conducted by Tenant at the Premises, whether ordinary, extraordinary,
foreseen or unforeseen ("Governmental Orders"). In addition, Tenant, at its own
expense, shall comply promptly with and execute all rules, orders, regulations
and recommendations of the Board of Fire Underwriters, Rating Board and Landlord
and Tenant's insurance companies with respect to the prevention of fires and
the exposure of liability risks ("Insurance Matters"). Tenant, at its own
expense, shall furnish and maintain in good order an adequate number and type
of fire extinguishers on the Premises at all times. Notwithstanding the
foregoing, in no event shall Tenant ever be responsible for any violation of
Governmental Orders or Insurance Matters arising directly out of Landlord's
Work. Landlord hereby represents that the Premises shall comply with all
applicable Governmental Orders and insurance Matters on the date Landlord
delivers possession of the Premises to Tenant.
18.02 - FAILURE TO COMPLY
In case Tenant fails or neglects to comply with any of the Government
Orders, Insurance Matters or the ADA (as hereinafter defined) as herein required
of Tenant, then Landlord or its agent may enter the Premises and make said
repairs and comply with any and all of the Government Orders, Insurance Matters
or the ADA at the cost and expense of Tenant, and in case Tenant fails to pay
therefor upon notice within five (5) days thereafter, the said cost and
expenses, including [***] for administration costs, shall be added to the next
month's installment of Fixed Annual Minimum Rent and be due and payable as such
or Landlord may deduct the same from any balance remaining in Landlord's hands.
This provision is in addition to the right of Landlord to terminate this Lease
under Article 15 hereof by reason of default on the part of Tenant.
18.03 - HAZARDOUS MATERIAL
Tenant shall, at all times, comply with all local, state and federal laws,
rules and regulation governing the use, handling and disposal by Tenant of
Hazardous Material in the Premises and that portion of the Common Areas which
Tenant employs for the display of its model NASCAR racing vehicle, as
specifically set forth in Section 7.03 of this Lease, including, but not
limited to Section 1004 of the Federal Resource Conservation and Recovery Act
42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903) and any additions,
amendments, or modifications thereto. As used herein, the term "Hazardous
Material" shall mean any hazardous or toxic substance, material or waste which
is, or becomes, regulated by any local or state government authority in which
the Premises is located or the United States Government. Landlord and its agents
shall have the right, but not the duty, to inspect the Premises at any time to
determine whether Tenant is complying with the terms of this Section. If Tenant
is not in compliance with this Section, Landlord shall have the right to
immediately enter upon the Premises and take whatever actions as are reasonably
necessary to comply including, but not limited to, the removal from the
Premises of any Hazardous Material and the restoration of the Premises to a
clean, neat, attractive, healthy and sanitary condition. Tenant shall pay
reasonable out-of-pocket costs incurred by Landlord plus twelve percent (12%)
for administration within ten (10) days after Tenant's receipt of a bill
therefor. The covenants in this Section 18.03 shall survive the expiration or
earlier termination of this Lease. Landlord hereby consents to Tenant's use of
(i) hydraulic oil in connection with the operation of the driving simulators
and related equipment associated with Tenant's permitted use and (ii) cleaning
and office products customarily used in retail or office premises, so long as
all of such materials are used, handled, and disposed of in accordance with
applicable laws and at no cost to Landlord.
18.04 - AMERICANS WITH DISABILITIES ACT
Tenant, at its own expense, shall at all times comply with and shall cause
the Premises and that portion of the Common Areas which Tenant employs for the
display of its model NASCAR racing vehicle, as specifically set forth in
Section 7.03 of this Lease, to be in compliance with the requirements of the
Americans With Disabilities Act of 1990, and any additions, amendments or
modifications thereto and all related regulations (the "ADA"). Landlord, at
Landlord's sole cost and expense, shall be responsible for insuring that
Landlord's Work and the Common Areas are in compliance with the ADA.
ARTICLE 19
SUBORDINATION, MORTGAGEE'S RIGHTS AND ASSIGNMENT OF RENTS
19.01 - SUBORDINATION
The rights and interests of Tenant under this Lease shall be subject and
subordinate to any ground lease, mortgage or trust deed now or hereafter placed
upon any portion of the Shopping Center, and to any advances made hereunder, and
to the interest thereon, and to all renewals, modifications, consolidations,
replacements, extensions and refinancings thereof. Tenant agrees that any ground
lessor, mortgagee or trustee may elect to give the rights and interest of Tenant
under this Lease priority over the lien of its ground lease, mortgage or trust
deed. In the event of such election, the rights and interest of Tenant under
this Lease automatically shall have priority in whole or in part, over the lien
of said ground lease, mortgage or trust deed, and no additional consent or
instrument shall be necessary or required. However, Tenant agrees to execute and
deliver such instruments as may be reasonably requested by any ground lessor,
mortgages or trustee for such purposes, and in the event Tenant fails to do so
within ten (10) days after demand in writing. Tenant does hereby make,
constitute and irrevocably appoint Landlord as its attorney-in-fact (which shall
be deemed to be coupled with an interest) and in its name, place and signage so
to do in the event Landlord shall elect to refinance the Shopping Center during
the term, Tenant's subordination to such fixture
*** Confidential treatment requested.
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lender shall be expressly conditioned upon Tenant's receipt of a
non-disturbance agreement reasonably acceptable to both Tenant and such future
lender. Landlord will deliver to Tenant, on or before September 15, 1999, a
non-disturbance agreement from each existing ground lessor and lender with an
interest in the Shopping Center, and will use reasonable efforts to obtain the
non-disturbance agreement in a form reasonably acceptable to Tenant. In the
event Landlord is unable to obtain such non-disturbance agreement by
September 15, 1999, then Tenant shall not be obligated to accept possession of
the Premises and there shall be a day for day postponement of the Term
Commencement Date until Landlord obtains such non-disturbance agreement. If
Landlord is unable to obtain such non-disturbance agreement by
September 15, 1999, then Tenant may terminate this Lease upon thirty
(30) days notice to Landlord. Landlord, at anytime after the execution of this
Lease, may, in good faith, give notice to Tenant that Landlord is unable despite
its reasonable efforts to obtain the non-disturbance agreement on the form
requested by Tenant. At such time, if Tenant refuses to accept the form of
non-disturbance agreement that Landlord is able to secure from its Lender,
Landlord may terminate this Lease upon thirty (30) days notice to Tenant.
19.02 - MORTGAGEE'S RIGHTS
(a) So long as any such ground lease, trust deed or mortgage remains a
lien on any portion of the Shopping Center, Tenant agrees, simultaneously with
the giving of any notice to Landlord which is required to be given by this
Lease, to give a duplicate copy thereof to the respective ground lessor,
mortgagee or trustee, provided Landlord has given Tenant notice of the name and
address of any such ground lessor, mortgagee or trustee. Landlord agrees to
notify Tenant of any ground lessor, mortgagee or trustee to whom such notice
must be sent. Further, Tenant agrees that if Landlord defaults in its
performance of any of the covenants under this Lease and if such default
entitles Tenant to terminate this Lease, the ground lessor, mortgagee or
trustee may cure said default within thirty (30) days after any time period
required of Landlord; provided, however, that if such default cannot be cured
within such time period, Landlord shall be deemed to have cured such default if
cure of the default is commenced within such time period, and thereafter
diligently and in good faith continued with and actually completed. Landlord
shall promptly notify Tenant of its commencement of such cure, and, if
necessary, be permitted entry upon the Premises for the purpose of curing any
such default. The giving of any such notice to Landlord shall not be property
given under the terms of this Lease and shall be of no force and effect until a
duplicate copy thereof is also given to the ground lessor, mortgagee or trustee
pursuant to this Section 19.02.
(b) Tenant hereby acknowledges that so long as any ground lease, mortgage
or trust deed is a lien upon the Premises, Landlord cannot agree to reduce the
rents below that provided for in this Lease, provide for payments of rent prior
to the time herein provided for, nor terminate the Lease prior to the end of
the term, except as otherwise provided in this Lease, without first obtaining
the written consent of the ground lessor, mortgagee or trustee, and that any
such proposed modification or termination without the written consent of said
ground lessor, mortgagee or trustee shall be void as against said ground
lessor, mortgagee, or trustee.
19.03 - ASSIGNMENT OF RENTS
(a) With reference to any assignment by Landlord of Landlord's interest
in this Lease, or the rents payable hereunder, conditional in nature or
otherwise, which assignment is made to the holder of a mortgage or ground lease
on property which includes the Premises, Tenant agrees:
(i) that the execution thereof by Landlord, and the acceptance
thereof by the holder of such mortgage or the ground lessor, shall never be
treated as an assumption by such holder or ground lessor any of the obligations
of Landlord hereunder, unless such holder or ground lessor shall, by notice
sent to Tenant, specifically otherwise elect; and
(ii) that except as aforesaid, such holder or ground lessor shall be
treated as having assumed Landlord's obligations hereunder with respect only to
those obligations that arise following a foreclosure or deed in lieu thereof,
or assumption of Landlord's position by a ground lessor only upon foreclosure
of such holder's mortgage and the taking of possession of the Premises, or, in
the case of a ground lessor, the assumption of Landlord's position hereunder by
such ground lessor. Tenant agrees that with respect to those obligations of
Landlord that arise prior to a foreclosure or deed in lieu thereof, or
assumption of Landlord's position by a ground lessor, such foreclosing
mortgagee in possession or ground lessor shall have no liability, provided that
nothing contained herein shall be deemed to relieve Landlord from performance
of any obligations arising under this Lease prior to the date of such
assumption nor any such foreclosing mortgagee or ground lessor, as applicable,
from performance of non-monetary obligations of a continuing nature arising
under this Lease prior to the date of such assumption.
(b) Where a party acquires Landlord's interest in property (whether land
only, or land and buildings) which includes the Premises, and simultaneously
leases the same back, such acquisition shall not be treated as an assumption of
Landlord's position hereunder, and this Lease shall thereafter be subject and
subordinate at all times to such lease (subject to the provisions of Section
10.01 above).
ARTICLE 20
ENTRY TO PREMISES
20.01 - ENTRY TO PREMISES BY LANDLORD
Landlord shall have the right to enter the Premises at all reasonable times
acceptable to both Landlord and Tenant for the purpose of:
(i) inspecting the same,
(ii) making any repairs to the Premises and performing any work therein
that may be necessary or desirable,
(iii) exhibiting the Premises for the purpose of sale, ground lease,
mortgage or other financing,
(iv) exhibiting the Premises (within one year prior to the expiration of
the term of this Lease) to prospective tenants.
Except in the case of an emergency, Landlord shall be accompanied by a
representative of Tenant during any entity to the Premises unless Tenant waives
such requirement in writing, in advance of such entry. During any such entry,
Landlord shall not interfere with Tenant's access to the Premises.
(END OF TEXT THIS PAGE)
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(ii) making any repairs to the Premises and performing any work therein
that may be necessary or desirable,
(iii) exhibiting the Premises for the purpose of sale, ground lease,
mortgage or other financing,
(iv) exhibiting the Premises (within one year prior to the expiration of
the term of this Lease) to prospective tenants.
Except in the case of an emergency, Landlord shall be accompanied by a
representative of Tenant during any entity to the Premises unless Tenant waives
such requirement in writing, in advance of such entry. During any such entry,
Landlord shall not interfere with Tenant's access to the Premises.
(END OF TEXT THIS PAGE)
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Nothing in this Lease shall imply any duty on the part of Landlord to do
work or perform obligations which, under any of the provisions of this Lease,
Tenant may be required to perform, and the performance thereof by Landlord shall
not constitute a constructive eviction nor a waiver of Tenant's default.
ARTICLE 21
Notices and Certificates
21.01 - NOTICES
(a) Any notice, statement, certificate, request or demand required or
permitted to be given or delivered in this Lease shall be in writing, and
personally delivered, sent by reputable overnight courier, or sent by registered
or certified mail, postage prepaid, return receipt requested and addressed to
Landlord at the address shown at the beginning of this Lease, and to Tenant at
the address shown at the beginning of this Lease, or to such other addresses as
Landlord or Tenant shall designate in the manner herein provided. In the case of
any default notice sent by Landlord to Tenant, Landlord shall send a copy to:
Paul, Hastings, Janofsky & Walker, LLP, 555 South Flower Street, 23rd Floor, Los
Angeles, California 90071-2371, Attn: Rick S. Kirkbride. Landlord's managing
agent, Pyramid Management Group, Inc, is hereby authorized and designated to
give or deliver to Tenant any notice under this Lease. Any such notice,
statement, certificate, request or demand shall be deemed given, (i) when
actually delivered, if personally delivered or delivered by overnight or other
courier or delivery service which confirms delivery in writing, or (ii) within
two (2) business days after deposit in the US mail, if sent by register or
certified mail, postage pre-paid, return receipt requested, except in case of
notice of change of address or revocation or a prior notice, which shall only be
effective upon receipt.
(b) At any time or times when Tenant's interest herein is vested in more
than one person, firm or corporation, jointly, in common or in severalty, a
notice given by Landlord to any one such person, firm or corporation shall be
conclusively deemed to have been given to all such persons, firms or
corporations. Any notices by Tenant pursuant to the provisions hereof shall be
void and ineffective unless signed by all such persons, firms and corporations,
unless all such persons, firms and corporations have previously given notice to
Landlord, signed by each of them and designating and authorizing one or more of
them to give the notice referred to, and such notice shall then be unrevoked
by any notice to Landlord.
21.02 - ESTOPPEL CERTIFICATE OF LANDLORD
Within ten (10) days after request by Tenant, Landlord, from time to time
and without charge, shall deliver to Tenant or to a person, firm or corporation
specified by Tenant, a duly executed and acknowledged instrument certifying:
(i) that this Lease is unmodified and in full force and effect, or if
there has been any modification, that the same is in full force and effect as
modified, and identifying the date of any such modification; and
(ii) whether Landlord knows or does not know, as the case may be, of any
default by Tenant in the performance by Tenant of the terms, covenants and
conditions of this Lease, and specifying the nature of such defaults, if any.
Such certification shall not estop Landlord from thereafter asserting any
existing default of which Landlord did not have actual knowledge on the date of
execution thereof.
21.03 - ESTOPPEL CERTIFICATE OF TENANT
Within ten (10) days after request by Landlord or Landlord's ground lessor
or mortgagee, Tenant, from time to time and without charge, shall deliver to
Landlord or the requesting party, or to a person, firm or corporation, specified
by Landlord, a duly executed and acknowledged instrument, certifying:
(i) that this Lease is unmodified and in full force and effect or if
there has been any modification, that the same is in full force and effect as
modified, and identifying the date of any such modification;
(ii) whether Tenant knows or does not know, as the case may be, of any
default by Landlord in performance by Landlord of the terms, covenants and
conditions of this Lease, and specifying the nature of such defaults, if any;
(iii) whether or not there are any then existing permitted set-offs or
defenses by Tenant, and if so, specifying them;
(iv) the dates to which the Fixed Annual Minimum Rent, Percentage Rent,
and Additional Rent have been paid;
(v) that the operation and use of the Premises do not involve the
generation, treatment, storage, disposal or release of any Hazardous Material
or a solid waste into the environment in reportable amounts or in manners
which do not comply with all environmental laws and that the Premises is being
operated in accordance with all environmental laws, zoning ordinances and
building codes; and
(vi) such other information as Landlord or Landlord's ground lessor or
mortgagee may reasonably request.
Such certification shall not estop Tenant from thereafter asserting any
existing default of which Tenant did not have actual knowledge on the date of
execution thereof.
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ARTICLE 22
COVENANT OF QUIET ENJOYMENT
22.01 - COVENANT OF QUIET ENJOYMENT
(a) So long as no event of default is existing pursuant to Section 15.01
of this Lease, Tenant shall lawfully, peaceably and quietly have, hold and
enjoy the Premises during the term hereof on and after the Term Commencement
Date without hindrance or ejection by any persons lawfully claiming under
Landlord; but it is understood and agreed that this covenant, and any and all
other covenants of Landlord contained in this Lease shall be binding upon
Landlord and its successors only with respect to breaches occurring during its
and their respective ownership of Landlord's interest hereunder.
(b) With respect to any services to be furnished by Landlord to Tenant,
Landlord shall in no event be liable for failure to furnish the same when
prevented from doing so by strike, lockout, breakdown, accident, order or
regulation of or by any governmental authority, or failure of supply, or
inability by the exercise of reasonable diligence to obtain supplies, parts or
employees necessary to furnish such services, or because of war or other
emergency, or for any cause beyond Landlord's control.
(c) Landlord shall be in default of this Lease if Landlord fails to
perform any obligation required to be performed by Landlord under this Lease
and if such failure is not cured within thirty (30) days after receipt of
Notice from Tenant specifying the nature of such failure. In the event of any
such default by Landlord, Tenant shall have the right to exercise all rights and
remedies available at law or in equity. Landlord shall reimburse Tenant for
any reasonable expenses incurred by Tenant in curing Landlord's failures within
twenty (20) days following receipt by Landlord of paid invoices from Tenant. In
the event Landlord fails to reimburse Tenant for such amounts within thirty
(30) days following receipt by Landlord of paid invoices from Tenant, then
Tenant shall have the right to offset such amounts against the next ensuing
installments of Rent, Percentage Rent and Additional Rent coming due under this
Lease until the entire amount has been recouped by Tenant.
ARTICLE 23
MISCELLANEOUS PROVISIONS
23.01 - HOLDOVER
(a) It is expressly understood by Tenant that Tenant's right to
possession of the Premises under this Lease shall terminate at the
expiration or earlier termination of the term, and should Tenant continue
thereafter to remain in possession, Landlord, should it so elect, shall be
entitled to the benefits of all provisions of law with respect to summary
recovery of possession from a holdover tenant. Tenant shall indemnify and save
harmless Landlord from any claim, damage, expenses, cost or loss which Landlord
may incur by reason of such holding over, including without limitation, any
claim of a succeeding tenant, or any loss by Landlord with respect to a lost
opportunity to re-let the Premises.
(b) Should Tenant continue to occupy the Premises after the expiration or
earlier termination of the term with the consent of the Landlord, such tenancy
shall be from month-to-month, and such month-to-month tenancy shall be under
the same terms, covenants and conditions as set forth in this Lease, except
that Tenant shall pay Fixed Annual Minimum Rent on the basis of one and
one-half (1 1/2) times the Fixed Annual Minimum Rent for the last year of the
term.
23.02 - LIMITATION ON LANDLORD'S PERSONAL LIABILITY
(a) It is understood and agreed that Tenant shall look solely to the
estate and property of Landlord in the Shopping Center for the satisfaction of
Tenant's remedies for the collection of a judgment (or other judicial process)
requiring the payment of money by Landlord in the event of any default or
breach by Landlord with respect to any of the terms, covenants and conditions
of the Lease to be observed or performed by the Landlord, and any other
obligation of Landlord created by or under this Lease, and no other property or
assets of Landlord or of its partners, beneficiaries, co-tenants, shareholders,
members, or principals (as the case may be) shall be subject to levy, execution
or other enforcement procedures for the satisfaction of Tenant's remedies. In
no event shall Tenant name Landlord's partners, members, beneficiaries,
co-tenants, shareholders or principals to any suit or other proceeding to which
Tenant and/or Landlord are a party arising out of or relating to this Lease,
unless the naming of such partners, members, beneficiaries, co-tenants,
shareholders or principals is required in order to permit the Tenant to obtain
jurisdiction over Landlord herein.
(b) The term "Landlord," as used in Subsection 23.02(a) and throughout
this Lease, shall be limited to mean and include only the owner or owners at
the time in question of Landlord's interest in this Lease. Further, in the
event of any transfer by Landlord of Landlord's interest in this Lease,
Landlord herein named (and in case of any subsequent transfers or conveyances,
the then assignor), including each of its partners, beneficiaries, co-tenants,
shareholders, members, or principals (as the case may be), shall be
automatically freed and relieved, from and after the date of such transfer or
conveyance, of all liability for the performance of any covenants and
agreements on the part of Landlord that accrue after the date of said transfer
(but not for any obligation that accrued prior to the date of said transfer,
for which the party assigning Landlord's interest in this Lease shall remain
liable, subject to and in accordance with the terms of this Lease).
23.03 - DEFINITION OF TENANT'S ALLOCABLE SHARE
(a) Intentionally deleted.
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<PAGE> 34
(b) Tenant's Allocable Share of Real Property Taxes pursuant to Section
4.01 shall be the product of multiplying the amount of said Real Property Taxes
by a fraction, the numerator of which is the number of square feet of the
Premises as set forth in Section 1.01, and the denominator of which is the total
number of square feet of all buildings then leased in the Shopping Center on the
date as of which such computation is required to be made under the terms of this
Lease, after deducting therefrom the square footage of (i) any REA Parcel or
other parcel which is separately assessed and the Real Property Taxes of which
are paid directly to the taxing authority by the tenant or occupant thereof,
(ii) any anchor store and (iii) any theater, within the Shopping Center.
(c) Whenever used herein, the term "square feet" shall consist of the area
of floor space on all floors measured from the outside face of all exterior
walls of the buildings (or the midpoints of any interior walls) and any outdoor
sales areas which are mechanically heated or air-conditioned. It shall not
include the floor area of any roof structures used for mechanical equipment.
Whenever used in this Lease, an "anchor store" is defined to mean a premises in
the Shopping Center containing not less than fifty thousand (50,000) square
feet. In the event that, at any time the computation of Tenant's Allocable Share
under Section 23.03(b) is required to be made, less than ninety-two and one-half
percent (92.5%) of the total number of leasable square feet of all buildings in
the Shopping Center is "then leased," then the minimum denominator used in the
fraction used for determining Tenant's Allocable Share under Section 23.03(b)
shall not be less than ninety-two and one-half percent (92.5%) of the total
number of leasable square feet of all buildings then comprising the Shopping
Center (less the deductions set forth in Section 23.03(b)).
23.04 - FORCE MAJEURE
The period of time during which either party is prevented or delayed in any
performance or the making of any improvements or repairs or fulfilling any
obligation under this Lease, other than the payment of Fixed Annual Minimum
Rent, Percentage Rent and Additional Rent, due to unavoidable delays caused by
fire, catastrophe, strikes or labor trouble, civil commotion, Acts of God, the
public enemy, governmental prohibitions or regulations or inability to obtain
materials by reason thereof, or any other causes beyond such party's reasonable
control, shall be added to such party's time for performance, and such party
shall have no liability by reason of such delay, except that as a condition to
Tenant's right to avail itself of Force Majeure, Tenant must give Landlord
written notice of such claimed Force Majeure.
23.05 - RELOCATION OF TENANT
Landlord shall have the right to relocate Tenant to another space, the mall
frontage of which shall be equal to or greater than that of the Premises, and
the square footage of which shall not vary from that of the Premises by greater
than one hundred (100) square feet within the Shopping Center after the
expiration of the first thirty-six (36) months of the term of this Lease, upon
one hundred twenty (120) days Notice to Tenant, at Landlord's cost and expense,
which relocation shall in no way affect the obligation or duties of either party
hereunder. Landlord shall be obligated for all expenses associated with such
relocation, including but not limited to the construction of the new space to a
condition and level of quality of finishes at least equivalent to the condition
and level of the Premises on the date of Landlord's relocation notice and any
actual out-of-pocket costs incurred by Tenant for the printing of new stationary
and business cards, and the costs of moving Tenant's Personal Property. In the
event Tenant shall fail or refuse to accept the new location within twenty (20)
days of such Notice, Landlord at its option, may terminate this Lease upon
forty-five (45) days written Notice to Tenant, provided that if Landlord shall
fail to give the Notice of Landlord's election to terminate within forty-five
(45) days after the expiration of such twenty (20) days, then Landlord's
termination right under this Section 23.05 shall be waived and this Lease shall
remain in full force and effect through the Termination Date as defined in
Section 2.02. Tenant's written consent, which may be withheld in Tenant's sole
discretion, shall be required for any relocation which moves the Premises
outside the cross-hatched areas shown on Exhibit A-2.
23.06 - CHANGES AND ADDITIONS
Landlord hereby reserves the right at any time, and from time to time, to
make alterations or additions to, and to build additional stories on the
building in which the Premises are located and to build adjoining the same.
Landlord also reserves the right at any time, and from time to time, to
construct other buildings and improvements in Landlord's Tract, to enlarge or
otherwise modify the Shopping Center, to make alterations therein or additions
thereto, to build additional stories on any building or buildings within the
Landlord's Tract, to build adjacent thereto, to construct decks or elevated
parking facilities, to install, maintain, use, repair and replace ducts, wires,
pipes and conduits passing through or under the Premises serving other parts
(now existing or hereafter added) of Shopping Center, and to sell or lease any
part of Landlord's Tract. The purpose of the attached Site Plan is to show the
approximate location of the Premises within the Shopping Center, and Landlord
reserves the right at any time to relocate the various buildings, parking areas
and other Common Areas shown on said Site Plan; provided, however, that there
shall not be caused thereby any unreasonable obstruction of Tenant's right of
access to the Premises or any unreasonable interference with Tenant's use of the
Premises for the purpose hereinabove set forth, or the access to and visibility
of the Premises as more fully set forth in Section 7.03 of this Lease.
23.07 - ATTORNMENT BY TENANT
If at any time during the term of this Lease the Landlord hereunder shall
be the holder of a leasehold estate covering premises which include the
Premises, and if such leasehold estate shall be canceled or otherwise terminated
prior to the expiration date thereof and prior to the expiration of the term of
this Lease, or in the event of the surrender thereof whether voluntary,
involuntary or by operation of law, Tenant shall make full and complete
attornment to the lessor of such leasehold estate, provided the lessor of such
leasehold estate assumes all of Landlord's obligations under this Lease, for the
balance of the term of this Lease upon the same covenants and conditions as are
contained herein so as to establish direct privity between such lessor and
Tenant and with the same force and effect as though this Lease was made directly
from such lessor to Tenant. Tenant shall then make all rent payments thereafter
directly to such lessor. In the event any proceedings are brought for the
foreclosure of, or in the event of conveyance by deed in lieu of foreclosure of,
or in the event of the exercise of the power of sale under, any mortgage or deed
of trust made by Landlord covering the Premises, or in the event Landlord sells,
conveys or otherwise transfers its interest in the Shopping Center or any
portion thereof containing the Premises. Tenant shall
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<PAGE> 35
attorn to and hereby covenants and agrees to execute an instrument in writing
reasonably satisfactory to the new owner whereby Tenant attorns to such
successor in interest and recognizes such successor as the Landlord under this
Lease.
23.08 - INDEX
As used in this Lease, "Index" means the then higher of either of the
Revised Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W) or the Consumer Price Index for All Urban Consumers (CPI-U) of the
United States Department of Labor's Bureau of Labor Statistics in effect and
generally published at the time the computation is to be made. If the aforesaid
price indices are no longer published, then another price index, generally
recognized as authoritative, shall be substituted by Landlord. In the event the
parties are unable to so agree, the matter shall be submitted to arbitration
pursuant to Section 23.18. During any period while the determination of such a
dispute is pending, Tenant shall continue to pay the sum previously in effect;
provided, however, that the adjusted sum as finally determined shall be
retroactive from the prescribed date and any deficiency owed by Tenant shall be
paid promptly upon a final determination of the dispute.
23.09 - SURVIVAL OF TENANT'S OBLIGATIONS
Any sums due either party from the other that by the terms herein would be
payable, or are incapable of calculation, until after the expiration or earlier
termination of this Lease shall survive and remain a continuing obligation
until paid.
23.10 - EFFECT OF LANDLORD'S NOTICE TO TERMINATE
Any right on the part of Landlord to terminate this Lease shall, when
exercised, require no further act, to the end that at the expiration of the
applicable time period, if any, contained in the particular termination
provision, this Lease and the term hereunder shall end and expire as fully and
completely as if such termination date was the date herein definitely fixed for
the end and expiration of this Lease and the term hereof, and upon such date
Tenant shall quit and surrender the Premises to Landlord.
23.11 - EFFECT OF CAPTIONS
The captions, bold-faced type, underlining, notational references, or
legends in this Lease are intended only for convenient reference or
identification of the particular paragraphs. They are in no way intended to
describe, interpret, define or limit the scope, extent or interest of this
Lease, or any paragraph or provision thereof.
23.12 - TENANT AUTHORIZED TO DO BUSINESS
Tenant represents, warrants and covenants that it is upon the date of
execution, and throughout the term of this Lease it shall be authorized to do
business and in good standing in the state in which the Premises is located.
Tenant, if a partnership or corporation, agrees to furnish to Landlord, upon
request, evidence of authority for entering into this Lease.
23.13 - EXECUTION IN COUNTERPARTS
This Lease may be executed in one or more counterparts, any one of all of
which shall constitute but one agreement.
23.14 - LAW GOVERNING, EFFECT AND GENDER
This Lease, and any dispute concerning this Lease, shall be governed by
the laws of the state in which the Premises is located, and any dispute
concerning an interpretation of any portion of the Lease or the conduct of the
parties hereunder shall be brought in either Syracuse, New York, or in the
jurisdiction where the Premises is located. Tenant hereby consents to service
of process at the Premises in the event that Tenant does not maintain a separate
business office within the state where the Premises is located. This Lease
shall be binding upon and inure to the benefit of the parties hereto and their
respective legal representatives, successors and permitted assigns, except as
expressly provided otherwise. Use of the neutral gender shall be deemed to
include the masculine and feminine.
23.15 - MEMORANDUM OR NOTICE OF LEASE
Upon request by either party, Landlord and Tenant agree to execute a
Memorandum or Notice of Lease in recordable form pursuant to applicable state
law. Upon the expiration or earlier termination of this Lease, the party who
shall have recorded such Memorandum or Notice of Lease shall promptly execute
any necessary instrument and remove the Memorandum or Notice of Lease from the
public records, and upon failure to do so, the other party is hereby appointed
attorney-in-fact to execute any such instrument in the recording party's name,
place and stead.
23.16 - COMPLETE AGREEMENT
This Lease contains and embraces the entire agreement between the parties
hereto with respect to the matters contained herein, and it or any part of it
may not be changed, altered, modified, limited, terminated, or extended orally
or by any agreement between the parties unless such agreement is in writing and
signed by the parties hereto, their legal representatives, successors or
assigns. Tenant acknowledges and agrees that neither Landlord nor any
representative of Landlord nor any broker has made any representation to or
agreement with Tenant relating to the Premises, this Lease or the Shopping
Center which is not contained in the express terms of this Lease. Tenant
acknowledges and agrees that Tenant's execution and delivery of this Lease is
based upon Tenant's independent investigation and analysis of the business
potential and expenses represented by this Lease, and Tenant hereby expressly
waives any and all claims or defenses by Tenant against the enforcement of this
Lease which are based upon allegations of representations, projections,
estimates, understandings or agreements by Landlord or Landlord's
representative that are not contained in the express terms of this Lease.
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<PAGE> 36
23.17 - GUARANTY OF LEASE
Intentionally deleted.
23.18 - ARBITRATION
Any controversy or claim arising from or relative to any matter in
connection with this Lease, with reference to which this Lease shall expressly
provide that this paragraph governs, shall be settled by arbitration in the
City of Syracuse, New York, in accordance with the rules of the American
Arbitration Association or its successor organization, and judgment upon the
award rendered by the arbitrator or arbitrators may be entered in any court
having jurisdiction thereof.
23.19 - SECURITY AGREEMENT
Intentionally deleted.
23.20 - INVALIDITY OF PARTICULAR PROVISIONS
If any term or provision of this Lease or the application thereof to any
person or circumstance is, to any extent, invalid or unenforceable, the
remainder of this Lease, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be effected thereby, and each term and provision of
this Lease shall be valid and be enforced to the fullest extent permitted by
law.
23.21 - EXECUTION OF LEASE BY LANDLORD
The submission of this document for examination and negotiation does not
constitute an offer to lease, or a reservation of, or option for, the Premises,
and this document shall be effective and binding only upon the execution and
delivery hereof by both the Landlord and Tenant.
23.22 - RELATIONSHIP OF THE PARTIES
Nothing contained herein shall be deemed or construed by the parties
hereto nor by any third party as creating the relationship of principal and
agent or of partnership or of joint venture between the parties hereto, it
being understood and agreed that neither the method of computation of rent nor
any other provision herein contained, nor any acts of the parties hereto, shall
be deemed to create any relationship between the parties hereto other than
landlord and tenant.
23.23 - BROKERS
Landlord represent and warrants to Tenant that it has not employed any
realtors or brokers in connection with the negotiation of this Lease. Tenant
represents that Tenant has retained as its broker Russell J. Friend of Blatteis
Realty ("Tenant's Broker"), and Tenant specifically acknowledges and agrees
that any fee payable to Tenant's Broker is the sole and exclusive responsibility
of Tenant and Landlord shall have no liability therefor. Landlord and Tenant
shall each indemnify, defend and hold harmless the other from any cost,
expenses or claim for brokerage or other commission arising from or out of any
breach of the foregoing representation and warranty.
23.24 - REPRESENTATIONS
Landlord warrants to Tenant that the Shopping Center is in good condition
and repair, free of material defects, and that the Shopping Center has been
constructed in accordance with applicable laws and requirements.
23.25 - ABATEMENT
In the event Tenant is prevented from using the Premises or any portion
thereof, for five (5) consecutive business days or ten (10) days in any twelve
(12) month period (the "Eligibility Period") as a result of the failure of
Landlord to maintain and repair the Shopping Center and the Premises in
accordance with its obligations as set forth in this Lease, and such failure
interferes with Tenant's operations and use of the Premises, or as a result of
any failure to provide services or access to the Premises, or because of the
presence of Hazardous Materials in or on the Shopping Center or the land on
which the Shopping Center is located resulting from the acts or omissions of any
party other than Tenant which pose a health risk to occupants of the Premises,
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 a portion thereof, in the proportion
that the square footage of the portion of the Premises that Tenant is prevented
from using bears to the Tenant Area of the entire Premises. However, in the
event that Tenant is prevented from conducting its business in any portion of
the Premises under such circumstances for period of time in excess of the
Eligibility Period, and the remaining portion of the Premises is not reasonably
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
square footage of such reoccupied portion of the Premises bears to the Tenant
Area of the Premises, shall be payable by Tenant from the date such business
operations commence.
23.26 - SPECIAL USE PERMIT
Except as may be otherwise set forth in Section 5.02(a) of this Lease,
Landlord represents that as of the date hereof, no "special" use permit from
local governmental authorities is required for Tenant's operation for the
permitted use in Section 6.01 within the Premises in accordance with this
Lease. The foregoing representation shall not extend to any building or
similar permits required for Tenant's Work or a certificate of use and
occupancy for the
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Premises or licenses to conduct business and the like.
23.27 - TENANT IMPROVEMENT REBATE
Notwithstanding anything contained herein to the contrary, provided Tenant
is not in default under this Lease beyond the expiration of any applicable
notice and cure period, Tenant shall be entitled to an allowance in the amount
of [***] per square foot of the Premises ("Tenant Improvement Rebate") (e.g.,
if the Premises are 4,124 square feet in size, then Tenant shall be entitled to
a Tenant Allowance from Landlord in the amount of [***]. The Tenant Improvement
Rebate shall be paid to Tenant by Landlord in the form of an abatement (the
"Abatement") of any and all charges, fees and reimbursements that otherwise
would be due and owing from Tenant to Landlord (including, without limitation,
Fixed Monthly Minimum Rent, Percentage Rent, Common Area Charges, Insurance, and
contributions to the Marketing Fund), except Tenant shall be obligated to pay
Tenant's Allocable Share of all Real Property Taxes despite the Abatement. The
Abatement shall commence on the Term Commencement Date and shall continue until
the amount of the Abatement equals the amount of the Tenant Improvement Rebate.
If this Lease is terminated prior to the expiration of the term, Tenant shall
pay to Landlord, as Additional Rent, any amount of the Tenant Improvement Rebate
received by Tenant (whether in the form of the Abatement or otherwise) in excess
of the earned portion of the Tenant Improvement Rebate, which "earned portion"
shall be determined by dividing the Tenant Improvement Rebate by the total
number of months that would make up the term if not for the prior termination of
this Lease (e.g., 120 months if the term is not extended pursuant to Section
2.03 above) and multiplying the result by the number of months (including whole
and partial months) that occurred commencing on the Term Commencement Date and
ending on the date that this Lease was terminated. For example, if the term is
comprised of 120 months and if Tenant operated the Premises after the Term
Commencement Date for 70 whole and partial months, then Tenant shall pay to
Landlord any amount received by Tenant in excess of 7/12 (i.e., based on 70/120,
or the "earned portion") of the Tenant Improvement Rebate. Such amount shall be
deemed due as of the date the Lease is terminated and shall be payable within
five (5) days following such date. Such amount shall not be subject to credit,
offset or mitigation as otherwise provided in Section 15.02(c) of the Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Lease on the
date first above written.
PYRAMID COMPANY OF BUFFALO
By: /s/ [ILLEGIBLE]
----------------------------
Partner/Authorized Agent
SILICON ENTERTAINMENT, INC.
By: /s/ [ILLEGIBLE]
----------------------------
Title: V.P.
-------------------------
*** Confidential treatment requested.
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<PAGE> 38
(Acknowledgment of LANDLORD)
State of New York
ss:
County of Onondaga
On the 12th day of August in the year 1999, before me the undersigned, a notary
public in and for said state, personally appeared [ILLEGIBLE], personally known
to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged
to me that he executed the same in his capacity, and that by his signature on
the instrument, the individual or the person upon behalf of which the
individual acted, executed the instrument.
/s/ JENNIFER B. HUSE
--------------------
(Notary Public)
(Acknowledgement of TENANT)
JENNIFER B. HUSE
Notary Public, State of New York
No. 01HU5086563
Qualified in Onondaga County
Commission Expires October 20 1999
State of California
ss:
County of Santa Clara
On the 5th day of August in the year 1999, before me the undersigned, a notary
public in and for said state, personally appeared Chris Morse, personally known
to me or proved to me on the basis of satisfactory evidence to be the
individual(s) whose name(s) is (are) subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument, the
individual(s) or the person upon behalf of which the individual(s) acted,
executed the instrument.
/s/ LAURIE H. SHERMER
---------------------
(Notary Public)
LAURIE H. SHERMER
Commission # 1155999
Notary Public - California
Santa Clara County
My Comm. Expires Sep 19, 2001
33
<PAGE> 39
TABLE OF EXHIBITS
-----------------
<TABLE>
<S> <C>
EXHIBIT A..............................................................Site Plan
EXHIBIT A-1.............................................................Premises
EXHIBIT B.........................................Description of Landlord's Work
EXHIBIT C...........................................Description of Tenant's Work
EXHIBIT D.................................................Outline Specifications
</TABLE>
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<PAGE> 40
EXHIBIT A
[DIAGRAM]
Note: This is a schematic plan and is intended to show only the proposed layout
of the Shopping Center. All measures, dimensions and distance are not to scale.
The depiction hereon does not constitute a warranty or representation of any
kind.
<PAGE> 41
EXHIBIT A-1
[DIAGRAM]
Note: This diagram is an approximate lease plan of the Shopping Center. All
measures, dimensions, and distances are not to scale. The depiction hereon does
not constitute a warranty or representation of any kind.
<PAGE> 42
EXHIBIT A-2
[DIAGRAM]
Note: This diagram is an approximate lease plan of the Shopping Center. All
measures, dimensions, and distances are not to scale. The depiction hereon does
not constitute a warranty or representation of any kind.
<PAGE> 43
EXHIBIT A-2
Note: This diagram is an approximate lease plan of the Shopping Center. All
measures, dimensions, and distances are not to scale. The depiction hereon does
not constitute a warranty or representation of any kind.
[FLOOR PLAN]
<PAGE> 44
EXHIBIT B
LANDLORD'S WORK
The Premises have already been constructed and Tenant accepts the Premises
in its "as is" condition. All other work required to prepare the Premises for
Tenant's use and occupancy shall be performed by Tenant at its sole cost and
expense.
Notwithstanding anything to the contrary in this Lease, Landlord shall be
responsible, at its sole cost and expense, for the demolition of the interior
of the former "Pizzeria Uno" store which occupied the Premises, as well as the
removal of exterior awnings which were formerly utilized by "Pizzeria Uno".
<PAGE> 45
EXHIBIT C
TENANTS WORK
Tenant accepts the Premises in its "as is" condition on the date that
possession of the Premises is made available by Landlord, and shall, at its
sole cost and expense, and in accordance with the Outline Specifications
attached hereto and made a part hereof as Exhibit D, furnish all labor,
material, fixtures and equipment necessary to complete, in a good, substantial
and approved manner, all work required to bring the Premises to a finished
condition ready for the conduct of Tenant's business therein.
Landlord and Tenant agree that Tenant's store front design shall be
substantially similar to Tenant's store located within the Palisades Center in
the Town of Clarkstown, County of Rockland, and State of New York.
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<PAGE> 46
EXHIBIT C
WALDEN GALLERIA, BUFFALO, NEW YORK
CONDITION OF SPACE:
1. HVAC is: one (1) 12.5 Ton unit and one (1) 10 Ton unit in good working
condition.
2. Floor to deck height is 21 feet.
3. Electrical service is 277-4808 3 phase 4 watt.
4. Conduit is 5 inches.
5. Tenant's location is 200 feet form electrical room.
6. Please see attached DCP for further detail.
7. Tenant will visit site before 8/18/99 to review and tag items that exist
in restaurant condition that Tenant may revise. Landlord will not begin to
demolish prior to such visit.
8. Floor load is 100 lbs.
EXHIBIT C
Page 2
<PAGE> 47
NOTE: ALL EXISTING CONDITIONS AND DIMENSIONS TO BE FILED VERIFIED BY TENANT.
ALL UTILITY LOCATION SHOWN ARE APPROXIMATE, FIELD VERIFY EXACT
LOCATIONS.
[FLOOR PLAN]
<PAGE> 48
EXHIBIT D
OUTLINE SPECIFICATIONS
A. DESIGN AND CONSTRUCTION
Tenant will retain the services of architect(s) and engineer(s) licensed in
the sate in which the Shopping Center is located for the design of Tenant's
Work. Tenant will retain contractors for the completion of Tenant's Work.
Tenant and its contractors will at all times cooperate fully with
Landlord's employees and contractors, and with other tenants and their
contractors.
Tenant's architect and engineer will design all Tenant's Work in full
compliance with all federal, state and local codes, ordinances, rules and
zoning regulations applicable to the Shopping Center and to Tenant's
Premises. Tenant's architect and engineer will incorporate by reference or
by duplication the Tenant Design Handbook into the final contract
documents.
Landlord will complete Landlord's Work as set forth in Exhibit B of this
Lease under a blanket building permit. Tenant will complete Tenant's Work
as set forth in Exhibit C of this Lease under an individual building
permit. Tenant will be responsible for all building permit costs and/or
any other municipal permit(s) and/or fees required for Tenant's Work. All
building permit questions, as they relate to Tenant's Work (Exhibit C)
should be directed to the Landlord.
B. DIMENSION CONTROL PLAN
Landlord will furnish Tenant with two (2) prints of a Dimension Control
Plan, setting forth dimensions and design information necessary to complete
the design of Tenant's Work. The Dimension Control Plan will be made
available following the execution of this Lease.
C. TENANT'S DESIGN
All final submissions will bear the seal and signature of an architect (and
engineer if applicable) licensed to practice in the state in which the
Shopping Center is located.
Tenant's design will employ the best available technology to provide for
maximum energy conservation within the Premises. All HVAC, plumbing and
electrical work will be in compliance with ASHRAE Standard 90-80, or the
most recent edition thereof.
Within two (2) weeks from the later of (a) receipt by Tenant of a Dimension
Control Plan from Landlord, or (b) the date of execution of this Lease,
Tenant shall submit by overnight delivery service "Preliminary Design
Drawings," for Landlord's review, showing the intended design concept and
character of proposed finishes. Tenant's submission shall consist of one
(1) sepia set and one (1) blueline set of prints.
Preliminary Design Drawings will contain basic dimensions of the Premises
and shall include, but not necessarily be limited to, the following:
1. Preliminary floor plan with fixturing layout;
2. Preliminary reflected ceiling plan;
3. Storefront elevation showing intended materials and signage, complete
with sample of all finish materials;
4. Section through storefront and bulkhead; and
5. Material and color finish sample board of interior and storefront
finishes.
Landlord will return to Tenant one (1) set of prints marked with Landlord's
comments relative to Tenant's preliminary submission within fifteen
(15) days after Landlord's receipt of such submission. Tenant agrees to
incorporate Landlord's comments into Tenant's final submission.
Within thirty (30) days after the later of (a) receipt by Tenant of the
Dimension Control Plans from Landlord, or (b) the date of execution of this
Lease, Tenant will submit to Landlord two (2) sets of reproducible prints
and six (6) sets of blueline prints of Tenant's "Design Drawings" showing
final design, character, and finishes. All design shall conform to the
design criteria set forth herein. Tenant's Design Drawings shall include,
without limitation, the following for review:
1. Architectural: Floor plan, fixturing layout, room finish schedule,
door schedule, partition types, ceiling plan, interior wall and
storefront elevations describing signage elevators and shop drawings,
sections, and details as appropriate.
2. Mechanical: All equipment, locations, distributions and return
systems, diffuser locations, load calculations, controls, and details
as appropriate.
3. Electrical: Floor and ceiling plans showing type and location of power
and lighting, equipment, controls, projected loads, panel schedules,
riser diagram, and details as appropriate.
4. Plumbing: Location and type of water meter, fixtures, supply and waste
piping schematics and details as appropriate.
5. Specifications on materials and methods of construction for the above
items.
6. Signage Shop Drawings indicating finishes, type, and mounting
location. Food merchants will submit "menu board" specifications
and/or photographs.
7. Manufacturer's Cuts of fixtures and equipment with finishes.
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8. Certificate of Completion and Affidavit (Appendix 2).
9. Tenant Electrical Load Summary (Appendix 1A).
10. Tenant Design Checklist (Appendix 1).
Landlord will return to Tenant one (1) set of sepias of Tenant's Final
Design Drawings marked with review comments and required modifications. If
Tenant's Design Drawings are returned to Tenant with comments but not
bearing the approval of Landlord, Tenant's Design Drawings shall be revised
by Tenant, incorporating Landlord's comments, and resubmitted to Landlord
for review within ten (10) days of receipt.
*Plans will not be returned until Receipt of Appendices 1 and 1A.
If the final submission of Tenant's architectural drawings are stamped
"Final Approved for Construction as Noted," it is Tenant's or Tenant's
representative's responsibility to distribute copies of the final drawings,
stamped as such, to the contractors at the job site. Landlord's design
review is solely for the purpose of assisting the Tenant and coordinating
the store design of the various tenants in the Shopping Center. If in the
design review process Landlord does not denote items that are not in
compliance with the provisions of the Lease, including these Outline
Specifications, the same will not relieve Tenant, Tenant's contractor,
Tenant's architect and engineer of their obligations to construct in
compliance with these Outline Specifications, and any applicable federal,
state and local codes, ordinances, rules and regulations.
Any modifications to Tenant's Premises during the term of the Lease must
conform to all provisions of the Lease including this Exhibit or, at
Landlord's option, Landlord's then-current design criteria, including
design review and payment of the fee therefor. Tenant's contractor will
construct Tenant's space in accordance with Tenant's final drawings as
approved by Landlord and will furnish a signed Certificate of Completion as
provided below. Receipt of Appendix 2 (attached) will be required prior to
the release of Tenant's security deposit.
D. SUBMISSION OF AS-BUILT DRAWINGS AND CERTIFICATE OF COMPLETION
(Appendix 1)
As a condition of Landlord's approval for Tenant to initially open for
business in the Shopping Center, and upon completion of the Premises,
Tenant will submit to Landlord for Landlord's permanent project
construction files: (1) a set of reproducible "As-Built" drawings which
contain all of the information required in Tenant's Design Drawings,
updated to accurately reflect the as-built conditions of Tenant's HVAC,
electrical and plumbing systems; and (2) a Certificate of Completion
(Appendix 2) signed by Tenant, Tenant's architect and contractor,
certifying that the Premises have been constructed and completed in
accordance with the plans, drawings and specifications previously submitted
to and reviewed by Landlord. Tenant must also submit a completed a
Stipulation of Cost with appropriate backup documentation as a condition of
Landlord's approval. Landlord will be entitled to rely on this Certificate
as evidence of Tenant's completion of construction of the Premises pursuant
to the provisions of this Lease.
E. OUTLINE SPECIFICATIONS
The following Outline Specifications will apply to the performance of all
work carried out with regard to the Premises:
1. Floor System
a. Upper-level Floor System (if applicable)
The upper-level floor system will consist of a structural framing
system and a concrete slab. Depressions in the slab for floor
covering will not be permitted. Electrical floor boxes or
plumbing lines must be installed by core drilling through the
concrete slab to the lower-level tenant's ceiling space. All such
work will be coordinated directly with Landlord. No piping,
conduit or other related items may be placed in the concrete slab
or on the steel decking. The floor system will be designed for a
maximum allowable live load of 100 pounds per square foot.
b. Level Floor System
The lower level floor system will consist of a concrete floor
slab. All work which Tenant desires to be placed below the slab
will be installed prior to the slab construction, or Tenant may
cut and replace said slab at Tenant's expense only upon approval
from Landlord.
c. Waterproofing (if applicable)
All tenants will ensure the water tightness of their restroom
floor system. Waterproofing membranes will extend no less than 4"
vertically at all demising walls. Additionally, all food
merchants, pet stores and salons will provide a waterproof
membrane over their entire floor area with water-tight
connections at all floor penetrations.
All tenants will ensure water tightness of all floor slab
penetrations. Tenant will be responsible for any damage which
occurs as a result of, or which is caused directly or indirectly
by the failure of Tenant or its contractors to adequately
construct, install, or adequately seal all floor penetrations.
Food use tenants must install a single waterproof membrane as
specified by specific mall.
2. Walls, Partitions and Doors
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a. Demising Partitions
All demising partitions will be finished with a minimum of 5/8"
fire code gypsum wallboard (unless otherwise required by code),
from the floor to the deck, with all joints taped. Exposed walls
will be finished with three layers of spackling, sanded and left
in paint-ready condition.
1) Insulation in Demising Partitions
All demising partitions constructed by the following types
of merchants will be insulated with vapor barriers
(installed to the warm side of the wall) and sound
attenuation blanketing from the floor to the underside of
the deck.
1. Food establishments;
2. Game rooms, arcades, video, record and tape stores;
3. Pet stores;
4. Salons;
5. Any other use which produces unusual noise or odor, or
heats or cools the Premises 10 degrees (Fahrenheit) +/-
beyond the normal range within the Shopping Center or
is deemed by Landlord to potentially impact other mall
tenants adversely.
b. Exterior/Interior Partitions
All interior partitions of the Premises will be constructed of
metal studs, with gypsum wallboard or other non-combustible
finish on all sides. Any combustible materials applied to
partitions must receive a U.L. labeled fire-retardent coating, or
be placed over a non-combustible substrate material. All exterior
walls will be insulated with fiberglass insulation from the floor
to the underside of the deck. Insulation will have an integral
vapor barrier with an R value of 19 or greater if required by any
federal, state or local code, ordinance, rule or regulation. The
insulation will be covered by one (1) layer of 5/8" type "X"
gypsum wallboard from the floor to the underside of the deck.
c. Storefront Bulkhead
Tenant's storefront bulkhead, if any, will be constructed and
finished subject to Landlord's review of signage and overall
design. The mall side of Landlord's bulkhead will be finished by
Landlord. Tenant's side will be finished with a minimum of 5/8"
fire code gypsum wall board running the full height to the
structure above (1 hour rated). All materials applied on the mall
side of the storefront will be non-combustible as per code and
local building regulations.
Storefront bulkheads will have an insulation "R" value of at
least 11 (except at Walden Galleria, Independence Mall, Carousel
Center, Galleria at Crystal Run, Silver City Galleria and
Crossroads Mall, where this insulation is not required at this
time).
d. Plumbing Chases
Plumbing chases, whether in Tenant's Premises or beyond, will be
constructed with access panels in full compliance with all
applicable codes and will be insulated to prevent freezing of
water and waste piping.
e. Doors
Service doors which open into a corridor or Tenant's exterior
service areas will be framed and installed in locations approved
by Landlord. These doors must open in the direction of exit
travel, and must be recessed so as not to restrict use of any
service corridor as an emergency exit corridor. Tenant will cut
and patch the wall provided by Landlord as necessary to properly
recess the door(s). Door frames will be made of hollow metal,
14-gauge size, fully welded, with a reinforced head. Doors will
be 3'-8" by 7'-0", 15-gauge steel, reinforced, hollow metal.
Hardware will include a locking device which is always operable
from the interior, a door bumper, corner guards and a hydraulic
door closer. Service doors opening into a service corridor will
be 1-1/2 hour rated. Tenant will properly identify its Premises
with an engraved sign attached to the exterior of its service
door.
f. Exits
Fire exits will be clearly marked and maintained in accordance
with governing codes and ordinances. Tenants will not install any
hardware or other device(s) that would prohibit the use of an
emergency fire exit.
g. Finishes
Paint finishes will be minimum of two (2) even coats with no
skips, runs or sags. Before applying any wall covering(s), the
underlying surface will be prime coated.
3. Storefront
a. Scope
The total separation between the Premises and mall, herein
referred to as "Storefront" including any show windows,
platforms, glass and glazing, lobbies or entries, doors, grilles,
bracing and supports, depressions, and any walls between the
Premises and the
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mail will be furnished and installed by Tenant in accordance
with Design Drawings bearing Landlord's approval.
b. Design Review
Tenant's Storefront design will be subject to Landlord's
approval and will be in harmony with the overall quality and
character of the mall. Landlord will review each Storefront
design carefully to ensure the suitability of the design to the
merchandise sold within the store and to the store's location
within the mall. Landlord also reserves the right to modify
Tenant's design and material election for the Storefront.
c. Storefront Design Guidelines
It is the intent of these guidelines to encourage the design of
Storefronts which reinforce the concept of the mall as a
streetscape. The streetscape is comprised of tenant's
Storefronts which have varying shapes, sizes and materials and
which also vary in the degree to which they project beyond or
are recessed from the bulkhead line.
Creativity in the streetscape name and the use of new and
innovative materials is highly encouraged by Landlord: our
Design Department is available and willing to assist tenants in
creating a noteworthy and exciting design.
Landlord's review of Tenant's Design Drawings is for design
purposes only. Tenant's architect and/or engineer accepts all
responsibility for any con-compliance with federal, state or
local codes, ordinances, rules or regulations applicable to
Tenant's Premises.
d. Storefront "Pop-Out" Criteria
The following sets forth the required criteria for allowable
Storefront projections:
PLEASE NOTE: Refer to the Dimension Control Plan for the
"Condition" which pertains to the 'pop-out' criteria listed
below. Tenant may occupy an enclosed projected area beyond the
bulkhead line containing up to sixty percent (60%) of the area
bounded by the maximum Storefront projection line, the bulkhead
line, and the "no build zone" (as defined below), while
respecting other setback liners as conditions apply (see
Dimension Control Plan).
A "no build zone" of either 1'-6" or 1'-0" is required between
tenants' Storefronts. See Tenant Design Handbook for details.
Overhead projections (minimum 8'-0" A.F.F.) may be constructed
anywhere within the area bounded by the maximum Storefront
projection line, the "no build zone" and other setback lines as
conditions apply (subject to Landlord's approval) (see Dimension
Control Plan).
The Storefront will or may be built to a height no higher than
the bottom of Landlord's bulkhead and shall not project outside
the maximum Storefront projection line as shown on the Dimension
Control Plan.
At all mall Storefront feature columns, any partition of Tenant's
storefront which must attach to Landlord's feature column must be
full height glass. This glass must intersect at the center line
of the feature column and run parallel to Landlord's mall
bulkhead for a minimum of 12 inches from the face of the feature
column before changing direction.
At all Storefront(s), illuminated signs mounted to the outside
of the Storefront will not extend below 8'-0" A.F.F.
Tenant must appropriately finish the top portion of its
projected Storefront with a finish of the same quality and
material as that used on the vertical surfaces of Tenant's
projected Storefront.
Particular Storefront conditions require reference to Tenant's
Dimension Control Plan for the location(s) of any column(s) for
the purpose of respecting the 12'-8" radius setback of Tenant's
"pop-out."
In no case will there be a limit on the amount of storefront
which may be recessed behind the bulkhead line.
e. Characteristics and Materials
No artificial images such as applied roofs, dormers, thatch,
veneer brick, veneer field stone, pegboard, cork products,
carpet, painted gypsum wallboard, vinyl, plastic or metal
laminate, nor zolatone will be permitted in the construction of
Tenant's Storefront. Backpainted glass, ceramic tile (used in
any area of the mall other than in the Food Court) will be
permitted only at the sole discretion and with the consent of
Landlord. Landlord reserves the right to modify any Storefront
design and Tenant's material selection.
The use of combustible materials, fire retardant wood, permitted
only by code.
It is recommended that Tenant's Storefront design utilize full
height tempered glass from floor to bottom of bulkhead as a
basic design element.
f. Security
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Storefront security can be provided by utilizing coiling,
sliding, or folding closures of glass, painted steel, anodized
aluminum, or other material approved by Landlord. All security
closures must be fully concealed when open.
Overhead door soffits will be constructed and finished in such a
way as to conceal all internal areas of the Storefront
construction. The opening will be finished on the inside faces of
gate/door pocket 12" above the soffit line and 12" inside of the
side wall pockets.
Side wall gate/door pockets will be constructed with flush,
overlay pocket doors to conceal the door and pocket. All such
doors will have concealed hardware.
g. Construction Materials
All Storefront construction and construction materials are
subject to federal, state and local codes, ordinances, rules and
regulations applicable to the Shopping Center.
h. Safety
All Storefront design and construction shall comply with all
federal, state and local codes, ordinances, rules and regulations
applicable to the Shopping Center regarding transparent glass
doors and fixed adjacent transparent glass sidelights to avoid
injury from accidental human impact. All markings on glass
expanses will be subject to Landlord's review.
i. Tempered Glass
Any glass or mirror used in Tenant's Storefront construction in
any type of vertical planes will be minimum 3/8" tempered glass.
All overhead glass or mirror used in a horizontal or sloped
application must be heat-strengthened laminated glass installed
in accordance with governing codes.
j. Storefront Base
All Storefront construction, excluding doors, must have a tile
base. Applicable mall tile may be purchased by Tenant from
Landlord and installed by Tenant or by Landlord for Tenant if
installed prior to the opening of the Shopping Center. However,
Tenant is strongly recommended to utilize a material that
compliments the overall storefront design.
k. Maximum Projection
No element of the Storefront, except signage, will project across
Tenant's maximum Storefront projection line. No element of
Tenant's Storefront, including signage, will project across
Tenant's lease line.
l. Hinged Doors
Doors in the Storefront, if hinged, will swing toward the mall
and be locked in an open position whenever the store is occupied.
Such doors will be recessed in the Storefront so as not to swing
past Tenant's maximum Storefront projection line.
m. Non-Swing Doors
Non-swing doors such as sliding glass or folding doors or coiling
grilles are acceptable if they are locked in an open position
whenever the store is occupied.
n. Floor Track
Any floor track will be flush with the finished floor.
o. Floor Level
Tenant will adjust the level of the slab in Tenant's Premises by
flash patching or another method to ensure that the level of the
finished floor in the Premises corresponds with that of the mall.
p. Display Windows
All display windows must be adequately illuminated and vented.
Direct visual exposure of conventional incandescent lamps will
not be permitted. Fluorescent lights will not be permitted in
display window areas.
q. Structural Support
All Storefront work requiring structural support, including
sliding door tracks and housing boxes for grilles, will be
supported at the head sections by a welded structural steel
framework installed by the Tenant. Connection to Landlord's roof
structure or overhead floor structure for purposes other than
horizontal bracing will not be permitted. All overhead rolling
grille tube columns will be specified and installed by Tenant
with base plates.
r. Open Storefronts
Where Tenant's Storefront is not enclosed, Tenant's merchandise
or fixtures may not be extended farther than Tenant's maximum
Storefront projection line.
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4. Floor Covering
a. Materials
Carpeting will not be permitted within eight feet (8'0") of the
Storefront enclosure line. Areas of the store subject to high
traffic will be surfaced with ceramic, marble, or stone pavers or
prefinished durable wood flooring. Vinyl composition tile is not
allowed in Tenant's sales areas under any circumstances. All
flame spread specifications for all flooring material must be
provided prior to Tenant's construction for review by the local
building department.
b. Cutting, Patching and Core Drilling
Tenant will cut and patch for any underslab work which is
performed after Landlord's original pouring of the slab.
Excavated materials must be removed and the subgrade must be
thoroughly compacted before restoring the floor slab. Upper-level
tenants will not cut the concrete slab. Penetrations for all
mechanical, electrical, or plumbing work will be core drilled.
c. Flush with Mall
Tenant's floor finish will be flush with the mall floor finish,
and Tenant will provide necessary finish trim where Tenant's
floor finish meets the mall floor finish.
d. Mall, Tenant Floor Finish Transition
Prior to the opening of the Shopping Center, the mall floor
finish will be installed by Landlord to Tenant's lease line at
Landlord's cost. Tenant will be responsible for the cost to
extend the mall floor finish from Tenant's lease line to the
carrier line of Tenant's Storefront enclosure. At Landlord's
option, this work may be completed by Landlord; all such work
shall be done at Tenant's expense.
After the opening of the Shopping Center, the Tenant is
responsible for furnishing and installing any and all mall floor
finish necessary to the center line of Tenant's storefront
enclosure.
5. Ceilings
a. Non-Combustible System
All ceilings, related framing, blocking and accessories will be
non-combustible. No combustible materials may be used above
finished ceilings surfaces.
b. Suspension System
All ceiling suspension systems will be metal. Support for ceiling
hangers will be from the structural members. Support will not be
permitted from (but not limited to) the following: metal roof
deck, mall duct work, sprinkler pipes, or conduits.
Tenant is encouraged to include creative ceiling systems in its
sales areas. The ceiling must be suspended drywall, concealed
spinal acoustical tile, 2' x 2' acoustical T-Bar ceiling with
3/8" revealed edge, or lath and plaster construction. Acoustical
ceiling is to be of regular tile type only. Acoustical ceiling
with 2'x 4' modules (including tiles to simulate 2'x 2' look)
will NOT be permitted in sales areas.
c. Food Court
Ceilings in vent areas must be constructed with greenboard and
finished with an enamel paint or other paint which resists
moisture penetration.
d. Insulation
All upper-level ceilings for Crossgates and Poughkeepsie will
have an insulation of "R" value of at least 19. Upper-level
tenants for Walden Galleria, Carousel Center and Galleria at
Crystal Run do not need to insulate their ceilings. All ceilings
in one-level centers will have an insulation "R" value of at
least 19 and not less than a three-quarter (3/4) hour fire
rating. Ceilings in lower-level stores will have a fire rating of
not less than one (1) hour.
e. Design
Where ceilings are omitted for aesthetic or other purposes,
design will incorporate all federal, state and local codes,
ordinances, rules and regulations applicable to the Shopping
Center.
6. Sign Criteria
a. Design
Tenant's sign design will be coordinated with Tenant's Storefront
design and will not be installed until the design is approved by
Landlord. Landlord will have the right to remove or require the
removal of any signs which either do not meet the Sign Criteria
or which are
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not expressly approved by Landlord. The cost of such removal will
be at Tenant's expense.
Shop drawings of all proposed signage shall be submitted by
Tenant to Landlord for approval. The submittal shall include an
elevation of the Storefront with signage completely dimensioned
and drawn to scale. A material sample board with proposed sign
materials is also required.
Fabrication and installation of signage will comply with all
applicable local codes, ordinances, rules, regulations, and
national electrical codes applicable to the Shopping Center. All
signage materials will be U.L. rated.
All signage shall be incorporated into Tenant's design as an
integral part of the Storefront.
To add individuality, creativity and variety, Tenant is strongly
encouraged to incorporate into its design scheme the following
recommendations:
1) Signage etched in Storefront glazing or mirror;
2) Back-painted glass with signage etched & back lit;
3) Neon graphics;
4) Illuminated halo-effect letters;
5) Metal letters such as cast bronze, polished brass, polished
chrome and stainless steel; and
6) Fiber optics.
b. Store Identity
Tenant's sign will be limited to the identification of Tenant's
tradename and/or logo.
c. Characteristics
Tenant's sign and logo will comply with the following design
requirements:
1) Dimensional, individual, internally illuminated metal
letters and/or logo may not be taller than eighteen inches
(18"), unless in the opinion of Landlord, a larger size
would be preferable. Maximum allowable projection from the
Storefront will be six inches (6").
2) Dimensional metal back-lit ("halo-effect") letters or logo
with a height of six inches (6") to eighteen inches (18").
Each letter must be at least one inch (1") but no more than
five inches (5") in thickness and must be projecting from
the Tenant bulkhead surface with one inch (1") maximum
spacers.
3) Exposed neon tubes forming letters and/or logos will be
permitted at the discretion of Landlord on an individual
basis. Dimmer switches will be attached to the sign
transformers on all exposed neon tubes. No exposed neon
crossovers, raceways, ballast boxes, or transformer boxes
will be permitted.
4) Non-dimensional letters and/or logos applied or painted
directly on the inside face of the glass Storefront area
will be permitted as supplemental signs only.
5) Supergraphic or relief treatments of large amounts of
Storefront area will be permitted only at the discretion of
Landlord on an individual basis.
6) Signage will not exceed five percent (5%) of the area of
Tenant's Storefront or twelve (12) square feet (whichever is
greater).
7) Signage will not exceed two-thirds (2/3) of the width of
Tenant's demised Premises.
d. Prohibited Signs
The following types of signs or signage will be prohibited:
1) Boxed or cabinet type signs;
2) Vacuum-formed plastic luminous letters and/or logos;
3) Blade signs;
4) Paper signs of any type;
5) Artificial wood and wood grain plastic laminate;
6) Animated components, flashing lights, or noise making signs
of any type;
7) Signs utilizing plastic laminate;
8) Exposed neon; and
9) Dimensional graphic signage.
e. Illumination
All signage will be adequately illuminated by Tenant, utilizing a
method which is approved by Landlord.
f. Exterior Signage
Except for Tenant's approved mall Storefront sign, no exterior
signage by Tenant will be allowed.
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g. Menu Boards
Menu boards and price lists are subject to Landlord's review and
approval. All such signage will be compatible with the remainder
of the Premises and with the overall quality and design of the
mall, and will be of a size, color and illumination level to be
readily visible. "Photo signage" will be reviewed by Landlord. No
"supplier" signs or advertising will be permitted.
7. Furnishings and Trade Fixtures
All furnishings and trade fixtures will be new and of first quality,
including installation.
8. Heating, Ventilating and Air Conditioning
Delivery schedules required HVAC units to be ordered prior to
Landlord's receipt of specific Tenant's specific store design data.
Should Tenant require other and/or additional HVAC units due to
Tenant's design or other specific use, such information should be
immediately relayed to Landlord in writing separate from the plans
submission process (upon completion of Tenant's architect's and/or
engineer's calculations). Landlord will make arrangements for such
additional or upgraded equipment required if so desired by Tenant at
Tenant's expense. Prior to the opening of the Shopping Center, any and
all additional, upgraded or other equipment requested by Tenant is at
the control of Landlord and at Tenant's expense.
Other design criteria relating to Tenant's work includes:
a. Ductwork
Ductwork will be sized, fabricated and installed in accordance
with ASHRAE 90-50 or later edition thereof and SMACNA standards.
Ductwork will be installed with fiberglass insulation and vapor
barrier. Ductwork which passes through fire rated walls will be
equipped with U.L. approved fire dampers as required by code, and
with adequate access to such dampers. All return air will be run
in insulated ducts. Any flex duct used from main trunk lines to
diffusers shall be limited to six (6) feet in length. Tenant must
provide condensate drains for all split system equipment used by
Tenant. Ductboard is NOT allowed. Ceiling plenums will not be
permitted.
b. Exhaust
Upper-level tenants will furnish and install complete exhaust
systems where required. Lower-level and upper-level tenants may
be required to connect their exhaust system to a master system
provided by Landlord. All tenants are to ensure that systems are
independent of each other for toilet rooms, equipment requiring
venting including refrigeration or hot presses, cooking, heat,
and/or other processes permitted by Landlord which produce air
contaminants. Additionally, all tenants are to ensure that the
discharge through the roof to the atmosphere properly vents odors
and/or fumes away from the building, building openings and fresh
air intakes. Tenant restroom exhaust duct systems will have a
maximum external static pressure drop of .25 w.g. All roof
penetrations must be performed by Landlord's designated
contractor at Tenant's expense. See Exhibit C, Item 14, "Roof
Work" for required special protection.
c. Outside Air
Landlord will provide a common outside air duct accessible to all
lower-level tenants and applicable upper-level tenants not having
direct roof access. All hood exhausts must be installed with
tempered make up air, including ductwork directly through the
roof. Additionally, all Food tenants' hood exhaust systems will
have a minimum of ninety-five percent (95%) of its capacity of
make up air introduced into the food preparation area directly
from the outside.
d. Supplementary Heating
Tenant will provide electric unit heaters or wall heaters where
required at exterior wall exposures to maintain minimum
comfortable winter temperature levels. Tenant's design will
provide for a constant ambient minimum temperature of 45 degrees
(Fahrenheit) above Tenant's ceiling through the use of ceiling
transfer grills, additional electric resistance units, or other
methods approved by Landlord.
e. Temporary Construction Heat
During Tenant's construction period, Tenant will provide any
necessary temporary heat required for protection and completion
of Tenant's Work.
f. Water Cooled or Heated Equipment
No water cooled or heated equipment will be permitted unless
water is recirculated and may be used only when specific
permission is granted by Landlord.
g. "As-Built" HVAC Drawings
Tenant will provide Landlord with "As-Built" drawings of Tenant's
HVAC system.
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<PAGE> 56
9. Plumbing
a. Quality
Tenant, in designing the plumbing system, will use the best and
most recent technology available for conservation of water and
energy. Fixtures will be of good standard manufacture at least
equal in quality to American Standard. Flush valves will not be
permitted. All faucets will have water saving aerators. Tenant
will supply and install or purchase from the applicable
municipality, if required, a water meter of sufficient size to
serve the Premises.
b. Hot Water Heaters
Water heaters will be automatic electric, 480 or 227 volt, 3
phase, with all necessary safety controls and drains. Water
heaters located overhead will be supported independently of
Landlord's structural framing system. Appropriate structural
detailing will be included with Tenant's submission to Landlord
for approval by Landlord and Landlord's engineer. Tenants whose
only water usage is for small toilet room(s) may utilize "instant
hot" hot water heaters or conventional heaters up to a maximum
six (6) gallon capacity.
c. Hair Interceptors
Individual hair interceptors will be installed on all sinks,
basins, and special sanitary units which may in any way receive
human or animal hair. All hair interceptors must be made
accessible and must be regularly maintained.
d. Grease Interceptors
Individual grease interceptors, adequately sized, and in
compliance with state, local and other government health
departments having jurisdiction over the Shopping Center will be
installed and maintained on all grease producing and other
kitchen equipment, and will bear the seal of the Plumbing
Drainage Institute (PDI). All grease interceptors will be the
type that will plug solid if not maintained.
e. Decor
No fountains or decorative devices will be used unless they are a
recirculating type device.
f. Sanitary Sewer Vents
Tenant will connect sanitary sewer vent pipes to Landlord's
common vent system, or vent through the roof, as applicable. Any
roof penetrations must be made by Landlord's designated roofing
contractor at Tenant's expense.
g. Trash Compactors
All tenants serving food to the public will install individual
trash compactors within the Premises to precompact all trash into
sealed, leak-proof containers.
h. "As-Built" Plumbing Drawings
Tenant will provide Landlord with "As-Built" drawings of Tenant's
entire plumbing system.
10. Electrical
a. Quality
All electrical materials will be new, and bear the U.L. label.
Selection of fixtures and lighting levels within the Premises
will be in strict accordance with the provisions outlined in the
latest editions of ASHRAE 90-80, and the I.E.S. Lighting
Handbook, and will be in conformance with the applicable energy
conservation codes.
b. Codes
All work will meet the requirements of the latest National
Electric Code, and all applicable local, state and federal codes,
applicable regulations of the local telephone and power
companies, and ASHRAE 90-80 or the latest edition thereof.
c. Certificates
Tenant will be responsible for making all necessary applications
for certificates regarding Tenant's Work. Upon completion of all
electrical work, Tenant will furnish to Landlord a copy of the
certificate of approval, issued by the local authority having
jurisdiction over such installation.
d. Voltage
All fluorescent lighting and all heating and cooling equipment
must be operated on 480 or 277 volts from Tenant's high-voltage
panel. All Tenant transformers must be supported independently of
Landlord's structure.
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<PAGE> 57
e. Night Lighting
Tenant must provide a separate night lighting circuit on a
non-controlled panel (one (1) light fixture per 2,000 square
feet), and a lock-on breaker for this circuit, or as designated
by local authorities.
f. Door Bell
Tenant will install an electrical, push-button operated door bell
immediately adjacent to Tenant's service door, mounted at 6'-9"
A.F.F. in the door jamb. Installations in exterior wall surface
will NOT be permitted.
g. Controls
HVAC and non-constant electrical loads will be monitored by
Landlord's Building Management System. Constant loads, such as
night lights, emergency lights, exit lights, exit signs, alarm
systems, employee time clocks, computer cash register systems,
electric rolling grills and refrigeration and/or life safety
equipment systems will be on non-controlled electrical panels. In
locations where lighting is not controlled by Landlord's Building
Management System, Tenant will install a seven-day time clock
system with reserve spring capacity to control all non-constant
loads.
h. Wiring
No exposed wiring of any sort (extension cords, etc.) will be
permitted subsequent to the period of Tenant's initial build-out.
i. Ceiling Lighting
In Tenant's sales areas, 2' x 4' fluorescent ceiling lighting
fixtures are prohibited. Exposed tube fluorescent lights are not
permitted. Fluorescent lighting must have parabolic reflective
lenses satisfactory to Landlord.
j. "As-Built" Electrical Drawings
Tenant will provide Landlord with "As-Built" drawings of Tenant's
electrical system.
k. Checkmeter
Upon Tenant's request, Landlord will furnish Tenant with the
specifications for a utility-quality checkmeter acceptable to
Landlord's and with Landlord's specifications for installation
thereof.
11. General Lighting
The general lighting of the mall has been designed to allow each
tenant's Storefront and sales area to be a prominent focal point. The
following required lighting criteria has been established:
a. All lighting in "pop-out" Storefronts will be incandescent.
Storefront lighting must meet all requirements as set forth by
Landlord and its consultants;
b. All accent lighting for the Storefront "pop-out" areas must meet
the criteria stated in the Tenant Design Handbook and is subject
to Landlord's review;
c. All fluorescent lighting will be low brightness type.
Acceptable lamp colors are warm white and deluxe warm white.
Acrylic lenses or non-shielded fluorescent tubes will NOT be
permitted in Tenant's sales area. All fluorescent lighting will
be 277 volt, deep cell louver, or parabolic reflective lenses;
d. Fluorescent lighting will NOT be permitted within eight (8) feet
of the Storefront closure line;
e. Installation of Tenant's lighting in mall Common Areas is NOT
permitted; and
f. Tenant will comply with all applicable energy conservation and
construction codes.
12. Fire Protection
a. Other Fire Protection
Tenant will install and maintain above the ceiling any and all
fire protection devices and equipment, smoke barriers, etc. as
required by code(s) in the jurisdiction where the Shopping Center
is located. Tenant will install and maintain automatic exhaust
hood extinguisher systems and any special equipment or retardant
required by the nature of Tenant's design or business, as
determined by Landlord or applicable codes.
b. Damage
Any damage caused by Tenant to Landlord's sprinkler system will
be repaired by Landlord at Tenant's expense.
c. Hindrance of Sprinkler System
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<PAGE> 58
Tenant's merchandising, fixturing, storage, and other practices
will not be conducted in such a manner as to hinder the
effectiveness of the sprinkler system.
d. Fire Extinguishers
Tenant will install and maintain Type ABC fire extinguishers as
approved by the local fire department and Landlord's fire and
casualty insurer.
e. Modifications
All modifications, additions, repairs or relocations to the
sprinkler system required for Tenant's use, prior to the Grand
Opening, will be performed by Landlord's sprinkler contractor,
at Tenant's expense.
f. Smoke Detections
Tenant will install smoke detectors which automatically shut
down the HVAC unit(s) if activated. Smoke detectors will be
ceiling mounted in both sales and stock/storage areas with one
(1) smoke detector for every 2,000 square feet of each area
and/or in the return or supply air duct as required by governing
authorities and/or Landlord's fire and casualty insurer.
Depending on the local code jurisdiction, the strictest of the
three above-referenced requirements will apply.
13. Sanitary
Tenant will be responsible for its own toilet requirements per all
applicable codes. Common Areas toilets will not be used in Tenant's
calculations.
a. Temporary Sanitary
Tenant will be responsible for all temporary sanitary facilities
required during the construction of Tenant's space.
14. Food Court Tenant Criteria
a. All wall surfaces visible by the public in Tenant's food
preparation areas will be faced with glazed ceramic tile. All
other wall surfaces will also be finished with FRP, marlite panel
or stainless steel.
b. Tenant will furnish and install a minimum of R-11 insulation with
a vapor barrier from the floor to the underside of the structure
above at all demising walls and in all ceiling areas. At
exterior walls, the value of insulation will be a minimum of
R-19.
c. Tenant will furnish and install ceramic or quarry life flooring
throughout Tenant's floor area.
d. Tenant will have the option of using the following countertop
finishes:
1) Plastic slab (Corian, Avonite Formica 2000X, or its
equivalent):
2) Stainless steel;
3) Wood butcher block;
4) Ceramic tile;
5) Marble, or other smooth finish stone.
e. Locations for any additional rooftop equipment required by
Tenant's design will be subject to approval by Landlord; any
such additional equipment required will be at Tenant's expense.
f. In addition to all of the other submittal requirements, Tenant
will submit with its preliminary submittal all proposed finished
for all equipment, signage, etc., which will be visible to the
public.
15. General Conditions
a. Occupancy Date
Landlord will notify Tenant of the date on which the Premises
will be available for Tenant's Work ("Occupancy Date"). Except
as otherwise set forth in the lease and to the extent legally
permissible, Tenant agrees that time is of the essence and
agrees to commence installation of Tenant's Work no later than
five (5) days following the Occupancy Date.
b. Occupancy Period
The period beginning on the Occupancy Date and terminating on
the Term Commencement Date of this Lease will be known as the
"Occupancy Period."
c. Establishment of Schedules
Tenant, its agents, contractors and employees will comply with
schedules which Landlord will establish from time to time,
governing submittables by Tenant of design information for
Landlord's approval, construction operations, occupancy by
Tenant, opening for business, and other occurrences, for the
purpose of coordinating the efforts of Tenant or Tenant's
contractors, and Landlord. All parties will cooperate with
Landlord in expediting work, and
11
<PAGE> 59
will provide work schedules, status reports, and updates upon
Landlord's request until Tenant opens for business.
d. Failure to meet Schedule
Any cost incurred by Landlord as a result of Tenant's failure to
meet the schedule requirements herein described will be Tenant's
responsibility, such costs will be payable by Tenant to Landlord
upon Landlord's demand. Any modification to Landlord's Work or
Tenant's Work necessitated by Tenant's failure to undertake or
complete Tenant's Work as required under the Lease will become
the responsibility of Tenant. Upon three (3) days written notice
thereof, Landlord may request that Tenant's general contractor
cease work, and Landlord may complete, at Tenant's expense, any
work deemed by Landlord to jeopardize Tenant's required opening
date. Upon three (3) days written notice thereof, Landlord may
remove Tenant's general contractor due to non-compliance with
rules and regulations listed below or published on site.
e. Construction Rules and Regulations of the Mall after Grand
Opening
1) Tenant will erect and maintain a temporary barrier
throughout the construction period. Said barrier is subject
to the following requirements - it shall:
a) Not extent beyond three feet (3') into the walking
corridors. At all times, a ten foot (10') minimum
clearance must be maintained in the mall Common Areas;
b) Be constructed of metal studs and 5/8" or 1/2" fire
rated gypsum wallboard;
c) Be taped and finished;
d) Be painted (paint number to be specified by Landlord)
and have a finished vinyl or rubber base;
e) Be twelve feet (12') high, sealed to contain dust, and
insulated minimize sound transmission;
f) Have a factory-made door with lockset which will be
kept closed. The door will swing into the store and be
equipped with a door closer. A working copy of the key
will be marked accordingly and left in the mall office;
g) Be maintained on a daily basis as necessary (i.e.,
paint, sheetrock, repair, etc.);
h) Any such temporary Storefront barrier may not be
dismantled until the permanent Storefront is completed;
i) Any such temporary Storefront barrier may not be
fastened to the finished floor, demise piers or any
other permanent finishes or fixtures in the mall;
j) Not contain advertising of contractors or associated
trades.
2) No jackhammering, or use of other equipment producing a high
noise or dust level during shopping hours will be permitted.
3) All construction materials will be delivered via service
entrances. For stores without service entrances, all
materials will be delivered either before or after standard
mall operating hours.
4) Doors are not to be wedged open.
5) Contractor and employee vehicles will be parked in areas as
directed by Landlord.
6) Tenant will dispose of all waste materials (except concrete,
masonry or structural steel) in dumpsters or other approved
containers provided by Tenant which are located in areas
designated by Landlord. Absolutely no waste material is to
be discarded in adjoining spaces, other vacant spaces, mall
areas or Landlord's compactor.
7) No building systems will be shut own without the express
prior permission of Landlord.
8) All work will be performed in a neat and orderly fashion.
9) Tenant will notify the mall office personnel of the
following prior to starting work:
a) The name, address and temporary residence location of
contractors working in the space; and
b) The starting date and anticipated completion date of
all work.
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<PAGE> 60
10) If Exhibit C established that Tenant accepts the Premises
"As is," then any demolition which may be required will be
performed by Tenant at Tenant's expense.
f. Compliance with Construction Rules and Regulations
As a condition of Landlord's approval of Tenant or Tenant's
contractor taking occupancy of the Premises, Tenant or Tenant's
contractor will be required to deposit with Landlord the sum of
[***] to be held by Landlord as security for the compliance by
Tenant and Tenant's contractor with the Construction Rules and
Regulations set forth herein and the other construction
requirements as set forth in Exhibits C and D. Tenant and
Tenant's contractor will reimburse Landlord for the cost of any
damage or disruption caused by the failure of Tenant or Tenant's
contractor to comply with the Construction Rules and Regulations.
Any such cost(s) will be first recovered by Landlord from the
security deposit made hereunder. Upon the recovery of cost(s),
Tenant will restore the security deposit to the original sum of
[***].
Landlord will return the security deposit or the amount remaining
thereof upon satisfaction of the following conditions: (i) the
satisfactory completion of Tenant's Work as required under the
Lease, including Landlord's punchlist; (ii) delivery of a
Certificate of Occupancy to Landlord; (iii) within sixty (60)
days following Landlord's acceptance of Tenant's properly
completed Certificate of Completion, the submission of "As-Built"
drawings as may be required hereunder; (iv) the receipt of copies
of lien releases issued to Tenant from each subcontractor and the
general contractor. Request for the return of the security
deposit must be made to Landlord in writing.
g. Compliance with Laws
Tenant and Tenant's contractor will, at its/their expense, comply
with all applicable statutes, ordinances, rules, orders, laws,
regulations, codes and recommendations of all governmental
agencies and their authorized agents which have jurisdiction over
Tenant's Work; and, with respect to the prevention of fire and
exposure to liability risks, to the Board of Fire Underwriters,
Rating Board, and Landlord and Tenant's insurance companies.
Tenant and/or Tenant's contractor will apply for, pay all fees
for, and obtain all necessary permits, licenses and certificates.
A copy of same will be delivered to Landlord and will be posted
in a prominent place within the Premises before Tenant begins
work. Tenant will furnish Landlord with a copy of a Certificate
of Occupancy prior to opening for business.
h. Non-Interference
Tenant will perform its work so as not to interfere with the
completion of Landlord's Work or the work of other tenants.
i. Quality of Materials; Warranty
All materials furnished and incorporated in Tenant's Work will be
new, unused, and of the quality and characteristics specified
herein. If the quality and characteristics of certain materials
are not specifically set forth herein, materials used will be
those customarily used in first-class work of similar nature and
character. Tenant will guarantee, and will require all parties
furnishing and incorporating materials in Tenant's Work to
guarantee said work to be fee from any and all defects in
workmanship and material for a period of five (5) years from the
date of completion thereof. Tenant will be responsible for the
costs of correction of such defects, which costs will include any
and all expenses and damages resulting from said defects.
Tenant's agreements with its contractors will contain language so
providing and further providing that all guarantees and
warranties will inure to the benefit of both Landlord and Tenant,
as their respective interests appear, and that such guarantees
and warranties can be directly enforced by either.
j. Easements
Tenant will install and maintain proper access panels as may be
required for the regular maintenance of Tenant's and Landlord's
equipment.
Where applicable, tenants will recognize the rights of Landlord
and of tenants located above or below to run pipes, ducts,
conduits, or related items servicing the mall or other areas
through Tenant's Premises. Tenant will cooperate with Landlord
and other tenants; hours and times when work will be performed
will be agreed upon by the parties involved. Any dispute arising
hereunder will be resolved by Landlord.
k. Insurance
1) Tenant will secure, pay for and maintain, or cause its
contractor(s) to secure, pay for and maintain, during
Tenant's construction and fixturing work within the
Premises, all of the insurance policies required herein in
the amounts as set forth below. Tenant will not permit its
contractor(s) to commence any work until all required
insurance has been obtained and certificates of such
insurance have been delivered to Landlord.
2) Tenant's Contractors' and Subcontractors' Required Minimum
Coverages and Limits of Liability.
[***] Confidential treatment requested.
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a) Comprehensive General Liability, including personal
injury and property damage, completed operations,
explosions, collapse, and underground operations, if
any, broad form property damage, contractor's protective
liability, in the minimum amount of [***] Combined
Single Limit.
b) Auto Liability, Bodily Injury and Property Damage
(including non-owned and hired vehicles) in the minimum
amount of [***] Combined Single Limit; and
c) Statutory Workers' Compensation, Employer's Liability
and Disability Benefits. Umbrella Coverage in the
minimum amount of [***].
Such insurance will insure the contractor and/or
subcontractor against any and all claims for personal
injury, including death resulting therefrom and damage
to the property of others caused by accident and arising
from the contractors' and/or subcontractors' operations
and whether such operations are performed by the
contractor(s), subcontractor(s), or by anyone directly
or indirectly employed by them.
3) Protective Liability Insurance
Tenant will provide Owner's Protective Liability insurance
that will insure Landlord and Tenant against any and all
liability to third parties for damages because of personal
injury liability (or death resulting therefrom) and property
damage liability of others or a combination thereof which
may arise from work in connection with the Premises, and any
other liability for damages which Tenant's contractor or
subcontractors are required to insure against under any
provisions herein. Said insurance will be provided in the
minimum amount of [***] Combined Single Limit.
4) Tenant's Builder's Risk Insurance - Completed Value
Builder's Risk Material Damage Insurance
Tenant will provide an "All Physical Loss" Builder's Risk
insurance policy on all Tenant's Work to be performed in the
Premises as it relates to the building within which the
Premises is located. The policy will include Tenant, its
contractor and subcontractors and Landlord as named
insureds, as their interests appear. The amount of insurance
to be provided will be [***] of the full replacement cost.
5) All such insurance policies required above will name
Landlord as an additional insured, except Workers'
Compensation Insurance, which will contain an endorsement
waiving all rights of subrogation against Landlord.
Certificates of Insurance will provide that no reduction in
the amounts or limits of liability or cancellation of such
insurance coverage will be undertaken without thirty (30)
days prior written notice to Landlord.
All insurance policies required above will be written by
companies authorized under the laws of the state in which
the Shopping Center is located and such policies must be
satisfactory to Landlord.
l. Indemnity
Tenant will fully protect, defend, indemnify and hold harmless
Landlord and Landlord's Managing Agent(s) and their employees,
partners, officers, directors, agents, heirs, executors,
administrators, successors, and assigns against any and all
claims, actions, damages, liabilities, costs and expenses,
including any and all attorneys' fees, arising from, because of,
or out of the performance or non-performance of Tenant's Work or
the use or occupancy of the Premises for Tenant's Work.
m. Hazardous Materials
Tenant will not install, nor cause or allow to be installed, nor
use any hazardous materials in Tenant's Work without the express
prior written consent of Landlord. Tenant will guarantee and
require all parties furnishing and incorporating materials in
Tenant's Work to guarantee that hazardous materials have not been
furnished or incorporated in Tenant's Work. Tenant will be
responsible for any and all cost(s) of correction which will
include all expenses and damages, whether direct or indirect,
resulting from the installation or use of hazardous materials.
Tenant's agreements with its contractor(s) and subcontractor(s),
if any, will contain language so providing and further,
warranting that hazardous materials were neither installed nor
used in the Premises; such warranties shall inure to the benefit
of both Landlord and Tenant, and can therefore be directly
enforced by either.
*** Confidential treatment requested.
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<PAGE> 62
APPENDIX 1A
TENANT ELECTRICAL LOAD SUMMARY
(Please complete the following form and include as part of the
Final Drawing Submittal to the Landlord.)
<TABLE>
<S> <C> <C>
Tenant: ____________________________ Space No.: ____________________________
Mall: ____________________________ GLA: ____________________________
Landlord provides as standard 10 watts per square foot. Food Court Tenants are
provided with 15 watts per square foot. The information provided below is
necessary in order to properly size the Mall's electrical distribution
capacity. Upgrades over the Landlord's supplied wattage will be billed to
the Tenant.
Winter: Summer:
1. Connected Cooling Load: Compressor(s): ________ Watts
Inside Fan: ________ Watts
Outside Fan(s): ________ Watts
Power Exhaust: ________ Watts
2. Connected Heating Load: Compressor(s): ________ Watts (Heat Pump)
Inside Fan: ________ Watts
Outside Fan(s): ________ Watts (Heat Pump)
Heat Coil(s): ________ Watts
3. Connected Constant Lighting Load:
(not to be included in occupied lighting load below) ________ Watts
4. Connected Constant Equipment Load:
(not to be included in occupied equipment load below) ________ Watts
5. Connected Occupied Lighting Load:
(not to be included in constant lighting load above) ________ Watts
6. Connected Occupied Equipment Load:
(not to be included in constant equipment load above) ________ Watts
7. Total Connected Load:
(the greater of item 1 or 2 plus items 3 through 6) ________ Watts
Completed By:
Electrical Engineer's Name:_____________________ Date:____________________
Firm Name:______________________________________
Address:________________________________________ Stamp:___________________
Phone:__________________________________________
</TABLE>
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APPENDIX 2
CERTIFICATE OF COMPLETION
AND
AFFIDAVIT OF CONTRACTOR'S COMPLIANCE WITH APPROVED PLANS
(Complete and submit to Landlord upon completion of Tenant's Work construction)
RE: Construction of STORE
-----------------------
MALL
----------------------------------------
This is to state that I have made an inspection of the site on completion, and
I hereby certify that the Premises has been completed in accordance with the
Landlord approved final plans and specifications except as noted below.
Dated: , 19 Tenant:
-------------- -- ----------------------------------
By:
---------------------------------
Title:
---------------------------------
Dated: , 19 Contractor:
-------------- -- ---------------------------------
Name:
---------------------------------
Address:
---------------------------------
Signature:
---------------------------------
Title:
---------------------------------
- ---------------------------------------------------------------------------
List all changes, if any, to previously approved plans and specifications
required during construction:
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
As-Built Drawings Enclosed (if applicable):
--------------
--------------
Certificate of Occupancy Attached (where required):
--------------
--------------
Underwriter's Certificate Attached (where required):
--------------
- -------------
2
<PAGE> 1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED
ON A REQUEST FOR CONFIDENTIAL TREATMENT
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
EXHIBIT 10.20
STANDARD
SHOPPING CENTER LEASE
Name of Shopping Center: CROSSGATES MALL
Location of Shopping Center: INTERSTATE ROUTE 87 AND ROUTE 20
TOWN OF GUILDERLAND
COUNTY OF ALBANY, NEW YORK
Landlord: PYRAMID CROSSGATES COMPANY
Tenant: SILICON ENTERTAINMENT, INC.
d/b/a: NASCAR SILICON MOTOR SPEEDWAY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1...................................................................2
Premises..................................................................2
1.01 - Premises.........................................................2
1.02 - Shopping Center..................................................2
1.03 - Use of Premises and Trade Name...................................2
ARTICLE 2...................................................................3
Term of Lease.............................................................3
2.01 - Commencement of Term.............................................3
2.02 - Term of Lease....................................................3
2.03 - Expiration of Term...............................................3
2.04 - Surrender of Premises............................................3
ARTICLE 3...................................................................4
Rent......................................................................4
3.01 - Minimum Rent.....................................................4
3.02 - Percentage Rent..................................................4
3.03 - Gross Receipts Defined...........................................5
3.04 - Tenant's Books and Records.......................................6
3.05 - Reports by Tenant................................................6
3.06 - Non-Waiver.......................................................6
3.07 - Right to Examine and Audit Books and Records.....................7
3.08 - Delinquent Payments..............................................7
3.09 - Additional Rent..................................................7
3.10 - Definition of Lease Year and Partial Lease Year..................7
3.11 - Place for Payments...............................................7
ARTICLE 4...................................................................7
Taxes.....................................................................7
4.01 - Real Property Taxes..............................................7
4.02 - Tenant's Taxes...................................................8
ARTICLE 5...................................................................8
Construction and Financing................................................8
5.01 - Landlord's Work..................................................8
5.02 - Tenant's Work....................................................9
5.03 - Payment..........................................................9
5.04 - Financing........................................................9
ARTICLE 6..................................................................10
Conduct of Business by Tenant............................................10
6.01 - Use of Premises and Trade Name..................................10
6.02 - Tenant's Operating Covenant.....................................10
6.03 - Competition.....................................................10
6.04 - Other Business Practices........................................11
6.05 - Marketing Fund..................................................12
ARTICLE 7..................................................................12
Common Areas and Operating Costs.........................................12
7.01 - Definition......................................................12
7.02 - Development of Common Areas.....................................12
7.03 - Use of Common Areas.............................................12
7.04 - Common Area Costs...............................................13
7.05 - Adjustment to Payment...........................................13
7.06 - Payment of Extraordinary Common Area Costs......................13
ARTICLE 8..................................................................13
Energy, Utility and Sprinkler Costs......................................13
8.01 - Energy and Utility Charges......................................13
8.02 - Intentionally deleted...........................................15
8.03 - Intentionally deleted...........................................15
8.04 - Miscellaneous Utility Provisions................................15
8.05 - Periodic Adjustment.............................................15
ARTICLE 9..................................................................15
Fixtures, Alterations, Signs.............................................15
9.01 - Installation by Tenant..........................................15
9.02 - Removal and Restoration by Tenant...............................16
9.03 - Signs, Awnings and Canopies.....................................16
9.04 - Condition of the Premises.......................................16
ARTICLE 10.................................................................16
Repairs and Maintenance..................................................16
10.01 - Landlord's Obligation to Repair.................................16
10.02 - Tenant's Obligation to Repair...................................17
10.03 - Article Not Applicable to Fire or Condemnation..................17
ARTICLE 11.................................................................17
Indemnity................................................................17
11.01 - Indemnity.......................................................17
ARTICLE 12.................................................................18
Insurance................................................................18
12.01 - Liability Insurance.............................................18
12.02 - Special Causes of Loss and Difference in Conditions Insurance...18
12.03 - Insurance of Common Areas.......................................18
12.04 - Increases in Fire Insurance Premium.............................18
12.05 - Tenant to Share Insurance Costs.................................19
12.06 - Waiver of Subrogation...........................................19
12.07 - Policies........................................................19
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE 13.................................................................19
Damage by Fire, Etc......................................................19
13.01 - Restoration of Premises.........................................19
13.02 - Restoration During Last Three Years.............................19
13.03 - Tenant's Obligation Upon Restoration............................20
ARTICLE 14.................................................................20
Eminent Domain...........................................................20
14.01 - Eminent Domain..................................................20
14.02 - Landlord Entitled to Award......................................20
ARTICLE 15.................................................................20
Bankruptcy and Default Provisions........................................20
15.01 - Events of Default and Conditional Limitation....................20
15.02 - Landlord's Remedies.............................................21
ARTICLE 16.................................................................22
Mechanics' Liens.........................................................22
16.01 - Mechanics' Liens................................................22
ARTICLE 17.................................................................23
Assignments, Subleases and Other Transfers of Tenant's Interest..........23
17.01 - Limitations on Tenant's Rights..................................23
17.02 - Effect of Landlord's Consent....................................24
ARTICLE 18.................................................................25
Compliance with Government Orders........................................25
18.01 - Tenant to Comply................................................25
18.02 - Failure to Comply...............................................25
18.03 - Hazardous Material..............................................25
18.04 - Americans With Disabilities Act.................................25
ARTICLE 19.................................................................25
Subordination, Mortgagee's Rights and Assignment of Rents................25
19.01 - Subordination...................................................25
19.02 - Mortgagee's Rights..............................................26
19.03 - Assignment of Rents.............................................26
ARTICLE 20.................................................................27
Entry to Premises........................................................27
20.01 - Entry to Premises by Landlord...................................27
ARTICLE 21.................................................................27
Notices and Certificates.................................................27
21.01 - Notices.........................................................27
21.02 - Estoppel Certificate of Landlord................................27
21.03 - Estoppel Certificate of Tenant..................................27
ARTICLE 22.................................................................28
Covenant of Quiet Enjoyment..............................................28
22.01 - Covenant of Quiet Enjoyment.....................................28
ARTICLE 23.................................................................28
Miscellaneous Provisions.................................................28
23.01 - Holdover........................................................28
23.02 - Limitation on Landlord's Personal Liability.....................29
23.03 - Definition of Tenant's Allocable Share..........................29
23.04 - Force Majeure...................................................29
23.05 - Relocation of Tenant............................................29
23.06 - Changes and Additions...........................................30
23.07 - Attornment by Tenant............................................30
23.08 - Index...........................................................30
23.09 - Survival of Tenant's Obligations................................30
23.10 - Effect of Landlord's Notice to Terminate........................30
23.11 - Effect of Captions..............................................30
23.12 - Tenant Authorized to Do Business................................30
23.13 - Execution in Counterparts.......................................30
23.14 - Law Governing, Effect and Gender................................31
23.15 - Memorandum or Notice of Lease...................................31
23.16 - Complete Agreement..............................................31
23.17 - Guaranty of Lease...............................................31
23.18 - Arbitration.....................................................31
23.19 - Security Agreement..............................................31
23.20 - Invalidity of Particular Provisions.............................31
23.21 - Execution of Lease by Landlord..................................31
23.22 - Relationship of the Parties.....................................31
23.23 - Brokers.........................................................31
23.24 - Representations.................................................32
23.25 - Abatement.......................................................32
23.26 - Special Use Permit..............................................32
23.27 - Allowance or Abatement of Rent..................................32
</TABLE>
ii
<PAGE> 4
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
DEFINED TERM SECTION
- ------------ -------
<S> <C>
Additional Rent....................................................3.09
Anchor Store......................................................23.03(c)
Common Areas.......................................................7.01
Common Area Costs..................................................7.04(b)
Energy Charges.....................................................8.01(b)
Fixed Annual Minimum Rent..........................................3.01(a)
Fixed Monthly Minimum Rent.........................................3.01(a)
Gross Receipts.....................................................3.03
Hazardous Material................................................18.03
Landlord..........................................................23.02(b)
Lease Year.........................................................3.10
Major Store.......................................................23.03(c)
Partial Lease Year.................................................3.10
Percentage Rent....................................................3.02(a)
Premises...........................................................1.01
Real Property Taxes................................................4.01
Square Feet.......................................................23.03(c)
Tenant's Allocable Share..........................................23.03
Term Commencement Date.............................................2.01
</TABLE>
iii
<PAGE> 5
SHOPPING CENTER LEASE
AGREEMENT made this 12 day of August, 1999, by and between the following
parties:
Landlord: PYRAMID CROSSGATES COMPANY
a partnership organized and existing under the laws of the State of New York
with its mailing address for notices and a principal office at:
THE CLINTON EXCHANGE
FOUR CLINTON SQUARE
SYRACUSE, NEW YORK 13202-1076
Attention: MANAGEMENT DIVISION
hereinafter referred to as "Landlord," and
Tenant: SILICON ENTERTAINMENT, INC. d/b/a NASCAR SILICON MOTOR SPEEDWAY
a corporation organized and existing under the laws of the State of California
with its mailing address for notices and a principal office or residence at:
210 Hacienda Avenue
- -------------------
(Street Address)
Campbell California 95008
- ---------------------------------------------------------
(City or Town) (County) (State) (ZIP)
Attention: President
----------
hereinafter referred to as "Tenant."
Tenant's Federal Tax Identification or Social Security Number: 77-0389433.
1
<PAGE> 6
ARTICLE 1
PREMISES
1.01 - PREMISES
(a) Landlord hereby demises and leases to Tenant and Tenant hereby rents
from Landlord those certain premises ("Premises") hereinafter described and
located in Crossgates Mall ("Shopping Center"), which is located in the Town of
Guilderland, County of Albany, and State of New York. The Premises consist of
approximately 4,167 square feet. The Premises are shown cross-hatched on the
plan attached hereto and made a part hereof as Exhibit A-1. the Premises shall
not be determined to include either the land lying thereunder or the exterior
walls or roof of the building in which said Premises are located or any area
beyond the midpoint of any interior wall. Landlord reserves the use of said
land, walls and roof of the building, together with the right to install,
maintain, use, repair, and replace pipes, ducts, conduits, wires and structural
elements leading through the non-sales area of the Premises in locations which
will not materially interfere with Tenant's use of the Premises. Any such
installation, maintenance, use, repair or replacement, if approved by Tenant,
shall be performed by Landlord in such manner as to avoid unreasonably
interfering with Tenant's business operations in the Premises.
(b) Within sixty (60) days after Landlord's delivery of possession to
Tenant pursuant to the terms of this Lease, Tenant may, at its sole cost and
expense, have the size of the Premises verified by an independent architect of
Tenant's choice. For purposes of this verification, the square footage of the
Premises shall be measured from the midpoints of any interior walls shared in
common with another tenant, and from the outside face of any exterior walls
of the buildings. In the event that such verification reveals a discrepancy
between the measured size of the Premises and the size of the Premises set forth
in Section 1.01(a) of this Lease, and Landlord and Tenant are unable to agree
upon the square footage for purposes of this Lease, and independent architect
acceptable to Landlord and Tenant (the cost of which shall be divided equally
between Landlord and Tenant) shall measure the Premises in the manner set forth
above. In the event that Tenant's architect, Landlord or its architect, and the
independent architect are unable to agree upon the square footage of the
Premises for purposes of this Lease, the dispute shall be submitted to
arbitration pursuant to Section 23.18 hereof. In the event that square footage
of the Premises as determined in accordance with the methodology set forth in
Section 1.01(b) varies from the square footage set forth in Section 1.01(a)
above, Landlord and Tenant agree to execute a lease modification agreement
(effective retroactive to the Term Commencement Date) adjusting the square
footage of the Premises, and appropriately adjusting the Rent, and those items
of Additional Rent to the extent that such Additional Rent was originally
calculated on a pro rata square foot basis. Any necessary payments or
reimbursements shall be paid within thirty (30) days after the full execution
of the lease modification agreement.
1.02 - SHOPPING CENTER
The Shopping Center includes: (i) the parcel(s) of land and improvements
hereinafter referred to as "Landlord's Trust" generally depicted on Exhibit A
attached hereto and made a part hereof, whether owned in fee or ground leased
by Landlord and (ii) the parcel(s) of land and improvements, if any, generally
depicted on Exhibit A as "REA Parcel" made available for use by any reciprocal
construction operating and easement agreement ("REA"). Landlord reserves the
right to add to whenever the ownership of or like to any portion of the
Shopping Center or to add to or reduce the size of any REA Parcel at any time.
Landlord represents and warrants that it has the right and authority to lease
the Premises. It is agreed that the depiction of the Shopping Center on Exhibit
A does not constitute a representation, covenant or warranty of any kind by
Landlord. Subject to Section 7.03 of this Lease, Landlord, in its sole and
absolute discretion, reserves the right to expand or remodel the Shopping
Center and to change the configuration, size and dimensions of the Shopping
Center, the number, location and dimensions of buildings, parking areas,
driveways, entrances, exits and landscaped areas, the number of floors in any
of the buildings, the dimensions, identity, and type of stores or tenancies,
and, as provided in Section 7.02, the "Common Areas" (defined in Section 7.01).
1.03 - USE OF PREMISES AND TRADE NAME
Throughout the Term, Tenant shall operate the Premises solely under the
trade name "NASCAR Silicon Motor Speedway" or "Silicon Motor Speedway" or, with
Landlord's approval, not to be unreasonably withheld, any other legally
permitted trade name ("Trade Name"): provided that it the trade name of all or
substantially all other stores operating under the trade name, "NASCAR Silicon
Motor Speedway" or "Silicon Motor Speedway" are changed to another legally
permissible trade name, Tenant, upon prior written notice to Landlord, shall be
permitted to change its Trade Name to such other trade name as has been adopted
for all or substantially all such other stores. Tenant shall use the entire
Premises solely for the purpose(s) of: (a) as a primary use, conducting an
interactive entertainment center featuring among other things the installation
and operation of motion-based racing simulators and (b) ancillary thereto,
other related retail and entertainment uses; such uses may include but shall
not be limited to the sale of motor sports and auto racing merchandise,
including NASCAR Silicon Motor Speedway merchandise, NASCAR driver merchandise
and other entertainment merchandise related to NASCAR or motor sports
(including, without limitation, NASCAR videos, pictures, CD-Roms, DVDs, and
other similar media or audio/visual materials); the sale of hot and cold
beverages and snack foods, and for no other purpose whatsoever. Tenant shall
use the reasonable effort not to place any food vending machines or other food
sales area at the store front of the Premises. Anything contained in this Lease
to the contrary notwithstanding, throughout the Term Tenant shall limit the
display of merchandise and food or beverage come to no more than forty percent
(40%) of the square footage of the Premises. Landlord hereby represents and
warrants to Tenant that Tenant's use of the Premises as contemplated in this
paragraph does not violate any exclusivity clause of other agreement between
Landlord and any other party, including any other Tenant of the Shopping
Center, and Landlord shall indemnify, defend, protect, and hold harmless Tenant
form any loss, liability, cost, expense, judgement, action or claim of any such
party arising from the inaccuracy of such representations and warranty.
Anything contained in this lease to the contrary notwithstanding, Landlord's
consent shall not be unreasonably withheld for any change or addition to
Tenant's permitted use requested in writing by Tenant. Tenant hereby agrees
that the criteria which Landlord may use in determining whether or not to grant
such consent shall include, but not be limited to, (i) the impact such change or
addition may have on the tenant mix of the Shopping Center, (ii) whether such
change or addition violates any use restriction applicable to the Shopping
Center, or (iii) the compatibility such change or addition may have with a
first-class super-regional shopping center.
2
<PAGE> 7
Notwithstanding anything to the contrary in this Section 1.03 of this
Lease, Tenant shall be entitled to use the Premises from time to time for
conducting the uses set forth in this Section 1.03 for the exclusive use of
groups of private parties ("Private Events"). Tenant may while such Private
Events are in progress, temporarily restrict access by the general public to
Tenant's simulator rides, provided that the Tenant shall otherwise remain open
to the general public for the sale of merchandise and the sale of simulator ride
tickets for redemption by the public after any Private Event is concluded. Gross
Receipts in connection with Private Events shall be included in Gross Receipts
for purposes of calculating Percentage Rent. In connection with Private Events,
Tenant may serve, or hire another party to serve, food and beverages (including
alcoholic beverages) for on-premises consumption only, provided that Tenant
obtains or causes to be obtained, if necessary, all governmental licenses,
approvals and permits required in connection therewith and in the case of
offering of any alcoholic beverages for consumption within the Premises, Dram
Shop or liquor liability insurance coverage. For the preparation and serving of
food and alcoholic beverages at Private Events, Tenant shall engage, and cause
third parties to use, restaurants and food establishments located within the
Shopping Center ("Center Caterer"), provided that up to [***] of the total
number of Private Events held during a Lease Year may be catered by non-Center
Caterers and provided, further, that Tenant shall not be required to use or
cause to be used Center Caterers for Private Events within the Shopping Center
unless at the time of the related Private Event there are at least [***]
restaurants or other food and beverage vendors in the Shopping Center offering
catering services from the Shopping Center at prices equal to or less than the
menu prices of such restaurant or vendor and [***] of [***] of such Center
Caterers are full service sit down restaurants and [***] of the [***] is either
a full service restaurant or a limited service restaurant, food court operator
or other food and beverage operator (such as by way of example and not
limitation Jonny Rockets, Pizzeria Uno, Houlihan's Ruby Tuesday, Bugaboo Creek
Steakhouse, or Sbarros). In the event that Tenant shall be in default of the
immediately preceding sentence and a Private Event is conducted in whole or in
part by other than a Center Caterer, then, as liquidated damages and not as a
penalty, the [***] shall be included in the amount of Gross Receipts used to
compute Percentage Rent payable under this Lease on merchandise sold from the
Premises. Any Private Events which are held at times when the requirements set
forth in the provisos above concerning Center Caterers are not met shall be
excluded from the total number of Private Events held during any Lease Year for
purposes of calculating the [***] permissible number of Private Events catered
by non-Center Caterers as described above.
ARTICLE 2
TERM OF LEASE
2.01 - COMMENCEMENT OF TERM
(a) Landlord shall deliver possession of the Premises to Tenant, with all
of Landlord's work, if any substantially complete, by September 1, 1999 and the
term of this Lease shall, subject to Section 23.04 below and other delays caused
solely by Landlord commence on the earlier of: (1) December 15, 1999, or (2) the
date Tenant opens to the public for the conduct of its business in the Premises
(hereinafter called "Term Commencement Date"). In the event Landlord does not
deliver possession of the Premises to Tenant on or before March 1, 2000, then
Tenant shall have the right to terminate this Lease upon written notice to
Landlord, which notice shall be given by March 15, 2000. If tenant does so
notify Landlord, then Landlord will reimburse Tenant for its reasonable
out-of-pocket costs actually incurred by Tenant as of the date of termination
including architectural, design and legal fees which shall not, in the
aggregate, exceed [***] and both Landlord and Tenant shall thereafter be relived
of any further obligation and liability hereunder. If Tenant does not so notify
Landlord, then this right of termination shall be deemed waived.
(b) Tenant acknowledges the importance both to Landlord and the other
tenants of the Shopping Center of Tenant opening for business to the public on
the Term Commencement Date. In the event Tenant fails to open for business at
the Premises not later than forty-five (45) days after the Term Commencement
Date or, if the Term Commencement Date has been rescheduled by Landlord, not
later than forty-five (45) days after the rescheduled Term Commencement Date.
Tenant covenants and agrees to pay to Landlord, upon receipt of notice from
Landlord of the amount due under this Section 2.01(b), as liquidated damages
suffered by Landlord due to Tenant's failure to open, a sum (in addition to any
rent due hereunder) equal to [***] the per diem Fixed Monthly Minimum Rent
(using a thirty (30) day month) provided in Section 3.01(a) for each and every
business day that Tenant has failed to open for business.
2.02 - TERM OF LEASE
Subject to Section 2.03 below, the term of this Lease shall expire on the
tenth (10th) anniversary of the Term Commencement Date, unless earlier
terminated pursuant to the provisions herein (the last day of the term, whether
due to expiration or prior termination of this Lease may be referred to herein
as the "Termination Date").
2.03 - EXPIRATION OF TERM
If the term of this Lease would expire during the period October 1 through
the last day of December, the parties agree that the term of this Lease shall
instead expire on the immediately succeeding January 31.
2.04 - SURRENDER OF PREMISES
On the Termination Date of this Lease, Tenant agrees, without necessity of
any notices from Landlord (statutory or otherwise), to surrender the Premises in
accordance with Article 9, and broom clean and in good order, repair and
condition, reasonable, wear and tear and damage by fire or casualty expected.
*** Confidential treatment requested.
3
<PAGE> 8
ARTICLE 3
RENT
3.01 - MINIMUM RENT
(a) Except as set forth in Section 23.25 below, Tenant agrees to pay
Landlord, without diminution, deduction or set-off whatsoever and without prior
notice or demand, and as fixed annual minimum rent ("Fixed Annual Minimum
Rent"), the sums set forth in Section 3.01(a)(i) and (ii) below payable in equal
consecutive monthly installments ("Fixed Monthly Minimum Rent") each in advance
upon the first day of each calendar month during the term hereof.
(i) From the Term Commencement Data through the end of the [***] full
month of the Lease term, Fixed Annual Minimum Rent shall be [***]
per square foot of the Premises, which equals (subject to Section
1.01(b) of this Lease) [***], payable in equal monthly
installments of [***] each; and
(ii) From the first day of the [***] full month of the Lease term
through the end of the Lease term, Fixed Annual Minimum Rent
shall be [***] per square foot of the Premises, which equals
(subject to Section 1.01(b) of this Lease) [***], payable in
monthly installments of [***] each.
(b) If the term shall commence upon a day other than the first day of a
calendar month or if the term shall terminate upon a day other than the last day
of a calendar month, then Tenant shall pay, upon the Term Commencement Date, and
on the first day of the last calendar month, a pro rata portion of the Fixed
Monthly Minimum Rent for the first and last fractional calendar months of the
term.
3.02 - PERCENTAGE RENT
(a) In addition to Fixed Annual Minimum Rent, Tenant shall, in the manner,
upon the conditions and at the times hereafter set forth, pay to Landlord
percentage rent ("Percentage Rent") equal to [***] of "Gross Receipts" (defined
in Section 3.03) in excess of the amounts set forth in Section 3.02(a)(i) and
(ii) below ("Annual Minimum Gross Receipts") per Lease Year (defined in Section
3.10). Percentage Rent shall be payable as hereinafter provided without any
diminution, deduction or set-off whatsoever, except as provided in Section
3.02(b), and without prior notice or demand:
(i) From the Term Commencement Date through the end of the [***]
month of the term of this Lease, Annual Minimum Gross Receipts
shall be [***].
(ii) From the first day of the [***] month of the term of this Lease
through the end of the term of this Lease, Annual Minimum Gross
Receipts shall be [***].
(b) Percentage Rent, if any, shall be paid by Tenant to Landlord, in
quarter-annual installments computed on all Gross Receipts during each three (3)
month period of the term hereof (i.e., periods from January 1 through March 31;
April 1 through June 30; July 1 through September 30; and October 1 through
December 31 (each a "Quarter-Annual Period" and collectively the "Quarter-Annual
Periods"), in excess of one-quarter (1/4) of Annual Minimum Gross Receipts then
in effect. Any Percentage Rent becoming due shall be payable on or before the
applicable January 15, April 15, July 15 and October 15 next following the
applicable quarter end of each Lease Year. In the event that the total of the
quarterly installments of Percentage Rent for any Lease Year does not equal the
annual Percentage Rent computed in accordance with the formula set forth in
Subsection 3.02(a), then, on or before the January 15 following each such Lease
Year, Tenant shall pay to Landlord any deficiency, or Landlord shall refund any
overpayment to Tenant within fifteen (15) days after receipt of Tenant's Annual
Statement of Gross Receipts.
(c) Notwithstanding anything contained in this Section 3.02 to the
contrary, the Percentage Rent for any Lease Year having less than twelve (12)
full months shall be based upon the Gross Receipts for the twelve (12) month
period immediately following the Commencement Date (as to the first Lease Year)
and for the twelve (12) month period immediately preceding the expiration or
earlier termination of the Lease (as to the final Lease Year). The Percentage
Rent due for such period shall be established by multiplying the Percentage Rent
which would have been due for such twelve (12) month period had the Gross
Receipts been multiplied by the applicable percentage in this Lease, by a
fraction, the numerator of which is the number of days in such partial Lease
Year and the denominator of which is 365.
(d) Provided that Tenant is not in default under this Lease beyond any
applicable cure period and has been open and continuously operating its store in
the entire Premises from the Term Commencement Date through the last day of the
fifth (5th) Lease Year of the Initial Term (except for periods Tenant is not
able to be so open and operating as a result of force majeure, casualty, eminent
domain, or remodeling (provided Tenant is not closed as a result of remodeling
for more than five (5) days in the aggregate in any Lease Year), then in the
event that Gross Receipts for the fourth (4th) and fifth (5th) Lease Year of the
Initial Term, when averaged, are less than [***], Tenant may, at its option,
elect to terminate this Lease by giving Landlord written notice thereof, which
notice shall be given not later than thirty (30) days after the last day of the
said fifth (5th) Lease Year. Time is of the essence with respect to the giving
of such notice. If Tenant timely gives Landlord such a notice of termination of
this Lease and the conditions for such termination as provided above in this
Section 3.02(d) have been satisfied, then this Lease shall automatically
terminate without any further action or notice.
*** Confidential treatment requested.
4
<PAGE> 9
by either party hereto, on the date that is thirty (30) days after the date
Landlord receives such notice of termination; and from and after such date of
termination, Tenant shall have no further right, title or interest in or to the
Premises. If Tenant does not notify Landlord of its election to terminate this
Lease in accordance with this Section 3.02(d) or if the conditions for such
termination as provided above in this Section 3.02(d) have not been satisfied,
then this Lease shall continue in full force and effect in accordance with and
subject to its terms, and Tenant shall have no further right to terminate this
Lease pursuant to this Section 3.02(d). If Tenant is not open and operating in
the entire Premises continuously throughout the said [***] Lease Year, as a
result of force majeure, casualty, eminent domain, remodeling or for any other
reason, then for purposes of determining whether Tenant has the right to
terminate this Lease under this Section 3.02(d), Tenant's Gross Receipts for any
such period of time shall be deemed to be the Gross Receipts for the
corresponding period of time in the [***] Lease Year prior to the [***] Lease
Year for which Tenant was open and operating in the entire Premises during such
corresponding period of time.
3.03 - GROSS RECEIPTS DEFINED
(a) The term "Gross Receipts" as used in this Lease is defined to mean
receipts from sales of products or services by Tenant exclusively at, in, on, or
from the Premises (including any sales made via personal computer, "Home
Shopping" television sales, catalog, direct mail telephone or electronic sales
at, in, on, or from the Premises) whether such sales be evidenced by check,
contract rights, credit, charge account, exchange or otherwise, and shall
include, but not be limited to, the amounts received from the sale of rental of
goods, wares and merchandise, and from fees and charges for the use by customers
of Tenant's simulators and racing entertainment center, and for services
performed on or off the Premises to the extent relating to sales made from the
Premises, together with the amount of all orders taken or received at the
Premises, whether such orders are filled from the Premises or elsewhere, and
whether such sales are made by means of merchandise or other vending devices in
the Premises. Each charge or sale upon installment or credit shall be treated as
a sale for the full price in the month during which such charge or sale shall be
made, irrespective of the time when Tenant shall receive payment (whether full
or partial) therefor.
(b) Notwithstanding anything herein to the contrary the following shall
not be included in Gross Receipts:
(1) Sales of merchandise returned and claimed to be defective or
unsatisfactory, provided such sales have been included in Gross
Receipts and deducted from Gross Receipts shall be the sales
price of merchandise returned by customers for exchange, provided
that the sales price of merchandise delivered to the customer in
exchange is included in Gross Receipts.
(2) The amount of any sales tax, so-called luxury taxes, excise
taxes, gross receipt taxes, entertainment taxes, so-called "drop
taxes" and other taxes now or hereafter imposed upon the sale or
value of merchandise or services, whether added separately to the
selling price of merchandise or services and collected from
customers or included in the retail selling price use, imposed by
any federal, state, municipal or governmental authority directly
on sales and collected from customers; provided, however, no
franchise or capital stock tax and no income or similar tax based
upon income or profits as such shall be deducted from Gross
Receipts in any event whatsoever.
(3) The sales price of merchandise returned and accepted for full
credit or the amount of the cash refund or allowance made
thereon.
(4) The sums and credits received in settlement of claims for loss or
damage to merchandise or other property located at the Premises.
(5) The consideration received in connection with a sale of inventory
which occurs other than in the ordinary course of Tenant's
business, including, but not limited to, a sale in bulk or to a
jobber, liquidator or assignee.
(6) Receipts from public telephones and vending machines used
exclusively by Tenant's employees.
(7) Bankcard discounts (e.g., Visa, MasterCard, etc.). Interest,
carrying charges, or other finance charges in respect of sales
made on credit, as well as any penalty charged by Tenant for a
returned check.
(8) Sales of fixtures, trade fixtures, or personal property that are
not merchandise held for sale at retail.
(9) The amount of any discounted sales to employees of Tenant, not to
exceed [***] of Gross Receipts in any Lease Year; provided,
however, that discounted or complimentary use of Tenant's games
and entertainment attractions (including, without limitation, the
driving simulators) by Tenant's employees during such employees'
normal working hours shall not be included in Gross Receipts.
(10) The Amount of any discount in sales made to senior citizens.
(11) Revenue received from mailing, alterations, delivery or other
services performed on a non-profit basis for the benefit of
customers.
(12) Tenant's accounts receivable, not to exceed [***] of Gross
Receipts in any Lease Year, which have been determined to be
uncollectible for federal income tax purposes during the
applicable Lease Year, provided however, that if such accounts
are actually collected in a later Lease Year, the amount shall be
included in Gross Receipts
*** Confidential treatment requested.
5
<PAGE> 10
for such Later Lease Year.
(13) Amounts received for merchandise transferred to any other place
of business of Tenant (or its subtenants, concessionaires and/or
licensees) or to any business organization affiliated with Tenant
wherever located, provided such merchandise is not used to fill a
sale made in, at, or from the Premises.
(14) The amount of any discounts given for promotional coupons that
are redeemed from time to time.
(15) Gift certificates until such time as the certificates are
redeemed.
(16) Amounts received in connection with remote site promotional
activities.
(17) Promotional fees earned by Tenant with respect to goods or
services offered for sale.
(18) Rents, subrents or other consideration received in connection
with an assignment, sublease, license, concession or other
transfer of any portion of the store (however, Gross Receipts of
any such transferee shall be included), including license fees
otherwise payable by Tenant in connection with a third party
license agreement.
(19) To the extent they are not made at a profit to Tenant, sales
passed through to caterers or other parties providing services in
connection with private parties for Tenant's customers at the
Premises.
(c) In the event any portion of the Premises shall be operated by one or
more of Tenant's departments or divisions, or if Tenant shall, in accordance
with all of the terms, covenants, and conditions of this Lease, assign this
Lease or enter into any sublease, license, concession or other use or occupancy
agreement with respect to all or any part of the Premises, then there shall be
included in the Gross Receipts for the purpose of determining the Percentage
Rent payable under this Lease all of the Gross Receipts generated by such
departments or divisions, subtenants, assignees, licensees, concessionaires and
all such other persons, individuals and/or entities (collectively referred to
as "Affiliates") generating such Gross Receipts, it being the intention of the
parties hereto that all Gross Receipts generated at or from the Premises shall
be included in Gross Receipts for the purpose of determining Percentage Rent as
defined herein. Tenant agrees that any assignment, sublease ,license or
concession, use of occupancy agreement entered into by Tenant with any Affiliate
shall contain provisions setting forth the procedure for determining, recording
and reporting Gross Receipts by Affiliates which are subject to the review and
approval of Landlord as being in conformance with this Section 3.03(c). Such
provisions shall contractually obligate Affiliates to the same procedures set
forth in this Lease for determining, recording and reporting Gross Receipts.
3.04 - TENANT'S BOOKS AND RECORDS
Tenant agrees to prepare and keep on the Premises or at its principal
office for a period of not less than three (3) years following the end of each
Lease Year, accurate books of account and records of daily Gross Receipts,
including without limitation all federal, state and local tax returns, and
copies of relevant contracts, checks, vouchers, inventory records, dated cash
register tapes, sales slips and such other documentation as would enable
Landlord to make a full and complete audit of Gross Receipts ("Books and
Records"), as more particularly set forth in Section 3.07 below. Tenant agrees
that all Gross Receipts shall be registered at the time each sale or
transaction is made in cash registers or other devices or other electronic or
technology based systems containing locked-in cumulation capacity, such systems
to be consistent with Tenant's normal business practices.
3.05 - REPORTS BY TENANT
Within twenty (20) days of the end of each Quarter-Annual Period as set
forth in Section 3.02 above, or a portion thereof, during the term of this
Lease, Tenant shall furnish to Landlord a written statement setting forth the
amount of Gross Receipts and an itemization of any deductions or exclusions
taken from Gross Receipts for such previous Quarter Annual Period. Tenant also
agrees that it will furnish to Landlord within sixty (60) days after the end of
each Lease Year or Partial Lease Year, an annual statement, showing in all
reasonable detail the amount of Gross Receipts and an itemization of any
deductions or exclusions relating to such Lease Year or Partial Lease Year and
the amount of Percentage Rent due Landlord ("Actual Percentage Rent"). Each
Quarter Annual and Annual statement required by this Section 3.05 shall be
certified by Tenant or one of Tenant's executive officers and shall be subject
to further certification as provided in Section 3.07.
In the event Tenant fails to furnish Landlord with a Quarter-Annual or Annual
statement within the required time period and within ten (10) days after notice
from Landlord, and in the manner set forth in this Section 3.05, then the Gross
Receipts for such Quarter-Annual Period or year, as the case may be, shall, at
Landlord's option, be deemed to be equal to Tenant's highest previously
reported quarterly or annual Gross Receipts, and if such failure continues for
ten (10) days following notice from Landlord, Tenant shall pay to Landlord, as
liquidated damages, the sum of [***] per month until such statement is received.
In addition, if Tenant is delinquent in furnishing Landlord with the annual
statement of Gross Receipts and such failure continues for ten (10) days
following notice from Landlord, the immediately following audit the Landlord
conducts pursuant to Section 3.07 below shall be at Tenant's expense.
3.06 - NON-WAIVER
The acceptance by Landlord of payments of Percentage Rent and statements of
Gross Receipts shall be without prejudice to Landlord's right to examine
Tenant's Books and Records in order to verify the amounts thereof.
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3.07 - RIGHT TO EXAMINE AND AUDIT BOOKS AND RECORDS
At its option, Landlord may, during regular business hours and upon ten
(10) days' prior written notice to Tenant, examine the Books and Records or
cause a complete audit to be made of the Books and Records (including the books
and records of any subtenant, operator, concessionaire or licensee or of any
other store operated by Tenant within the five (5) mile radius as more
specifically set forth in Section 6.03 of this Lease) for the period covered by
any statement required to be furnished by Tenant as set forth above; provided,
however, any such audit or examination shall be conducted in such a manner as to
minimize any interference with Tenant's business operations. In the event such
examination discloses that Tenant has intentionally or fraudulently understated
Gross Receipts by [***] or more; Tenant agrees to pay to Landlord the [***]
administrative fee. In the event that such examination or audit discloses that
Tenant has understated Gross Receipts by [***] or more, then, in addition to the
foregoing, at Landlord's option, the term of this Lease shall expire [***] after
Tenant's receipt of a termination notice from Landlord. Any additional
Percentage Rent found to be due and owing to Landlord as a result of any
examination or audit shall immediately be due and payable and interest shall
accrue on the unpaid portion thereof at a per annum rate ("Default Rate") equal
to the lesser of (i) [***], or (ii) [***].
3.08 - DELINQUENT PAYMENTS
If during the term of this Lease Tenant fails to pay the full amount of the
Fixed Monthly Minimum Rent, Percentage Rent or "Additional Rent" (defined in
Section 3.08) within five (5) days when the same was due and payable, then
interest at the Default Rate, shall accrue on the unpaid amount from and after
the date on which any such sum shall be due and payable, and such interest,
together with a Late Charge of [***] for each past due payment to cover the
extra expense involved in handling such delinquency, shall be paid to Landlord
at the time of payment of the delinquent sum. Landlord shall have the right to
apply any payments made by Tenant first to any deficiency in the payment of the
interest and administrative charges provided for hereunder. Any payment to be
made by Tenant under this Lease shall be deemed to have been paid upon the date
that it is received by Landlord. The provisions for a Late Charge and interest
herein shall not be deemed to grant Tenant any grace period or extension of time
or prevent Landlord from exercising its other rights under this Lease. Tenant
shall pay to Landlord an administrative fee of [***] for each and every check
submitted by Tenant which is dishonored. If Landlord receives from Tenant two or
more checks which have been dishonored, all checks from Tenant thereafter shall,
at Landlord's option, be either certified or cashier's checks.
3.09 - ADDITIONAL RENT
All rents, charges, costs, expenses, reimbursements, fees, interest, and
other payments to be made by Tenant to Landlord under this Lease, other than
Fixed Annual Minimum Rent and Percentage Rent, shall be deemed to be "Additional
Rent."
3.10 - DEFINITION OF LEASE YEAR AND PARTIAL LEASE YEAR
The term "Lease Year" is defined to mean a period of twelve (12)
consecutive calendar months commencing on the first day of January. Any portion
of the term which is less than a Lease Year shall be deemed a "Partial Lease
Year" and computations requiring proration shall be made on a per diem basis
using a 365 day year. In order to achieve uniformity in the operation of the
Shopping Center, Landlord reserves the right to designate and change the
beginning and ending day of the Lease Year, notice of which shall be given to
Tenant in writing; provided, however, no such change shall in any way increase
Tenant's obligations or reduce Tenant's rights hereunder.
3.11 - PLACE FOR PAYMENTS
Tenant shall deliver to Landlord all payments of Fixed Monthly Minimum
Rent, Percentage Rent and Additional Rent at the office of Landlord shown at the
beginning of this Lease or such other place as may be designated by Landlord in
writing.
Nothing contained in this Section 3.11 shall relieve Tenant of the obligation to
pay by the dates due, any and all such payments payable by Tenant under this
Lease.
ARTICLE 4
TAXES
4.01 - REAL PROPERTY TAXES
(a) Landlord will pay in the first instance all real property taxes (which
shall include property tax assessments, water and sewer rent rates and charges,
parking and environmental surcharges, and any other governmental charges,
general and special, ordinary and extraordinary) which may be levied or assessed
by any lawful authority against land or improvements located in the Shopping
Center (collectively "Real Property Taxes"). The amounts required to be paid by
Landlord or any tenant or occupant of the Shopping Center pursuant to any
Payment in Lieu of Tax Agreement entered into with a taxing authority having
jurisdiction over the Shopping Center shall be considered for the purposes of
this Lease to be included within the definition of Real Property Taxes.
(b) During the term of this Lease, Tenant shall pay to Landlord as
Additional Rent, Tenant's Allocable Share of all Real Property Taxes. Real
Property Taxes shall include a charge equal to eighteen percent (18%) of the
Real Property Taxes relating to the Common Areas. Tenant's Allocable Share shall
be computed under Section 23.03(b) as of the first day of each respective Lease
Year. If the Premises are separately assessed, then Tenant
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agrees to pay to Landlord, as Additional Rent, the amount of the Real Property
Taxes separately assessed against the Premises including the land lying
thereunder plus Tenant's Allocable Share of the Real Property Taxes assessed
against the Common Areas of the Shopping Center.
(c) Tenant agrees that following the Term Commencement Date, Tenant shall
pay to Landlord, as Additional Rent and within thirty (30) days after receipt
of a bill therefor, the amount of Tenant's Allocable Share of all Real Property
Texas, computed as of the Term Commencement Date for the then current tax
fiscal year(s). Such amount shall be calculated on the basis of the number of
days (from the Term Commencement Date) remaining in each such current tax
fiscal year. Thereafter, Tenant shall pay to Landlord, as Additional Rent, all
sums due pursuant to Section 4.01(b) in monthly installments, in advance and
without notice, on or before the first day of each month during the term of
this Lease, in an amount estimated by Landlord, such that Landlord will have
received the full amount of Tenant's Allocable Share of Real Property Taxes in
time for payment to applicable taxing authority when due. In the event Landlord
is required to escrow Real Property Taxes, Landlord may, but shall not be
obligated to, use the amount required to be escrowed as a basis for its
estimate of the monthly installments due from Tenant hereunder. Landlord shall
furnish Tenant with a written statement of the actual amount of Tenant's
Allocable Share of Real Property Taxes based upon the tax bills or assessment
bills for each tax fiscal year. If the total amount paid by Tenant under this
Section 4.01(c) for any tax fiscal year during the term of this Lease is less
than the actual amount due from Tenant for such year as shown on such
statement, Tenant shall pay to Landlord the deficiency within thirty (30) days
after demand therefor by Landlord. If the total amount paid by Tenant hereunder
for any year exceeds the amount due from Tenant for such year, Tenant shall be
entitled to offset the excess against payments next thereafter becoming due
from Tenant under this Section 4.01(c). For the tax fiscal years in which this
Lease commences and terminates, the provisions of this paragraph shall apply
and, to the extent necessary, Tenant's liability for its Allocable Share of any
Real Property Taxes for such year shall be subject to a pro rata adjustment
based on the appropriate number of days of said tax fiscal years. A copy of a
tax bill or assessment bill submitted by Landlord to Tenant shall at all times
be sufficient evidence of the amount of Real Property taxes to which such bill
relates.
(d) Intentionally deleted.
(e) Landlord may seek a reduction in the assessed valuation (for Real
Property Tax purposes) of the Shopping Center or any portion thereof by
administrative or legal proceeding. Tenant shall pay to Landlord Tenant's
Allocable Share of Landlord's costs for said proceedings, including counsel
fees, appraisal fees and other similar expenses, within thirty (30) days after
Tenant's receipt of a statement from Landlord therefor. Tenant's Allocable
Share of such costs shall be computed under Section 23.03(b) hereof. Landlord
shall reimburse Tenant for Tenant's Allocable Share of any refund of Real
Property Taxes (after deducting any unpaid portion of Tenant's Allocable Share
of Landlord's costs for such proceedings) resulting from any proceeding for
which Tenant has paid Tenant's Allocable Share of Real Property Taxes.
(f) Should any alteration or improvement performed by or for Tenant
during the term of this Lease cause an increase in assessment, Tenant shall pay
to Landlord the full cost of all Real Property Taxes resulting from such
increase in assessment. Any amount paid separately hereunder by Tenant to
Landlord shall be in addition to any amounts paid by Tenant pursuant to Section
4.01(b).
(g) Should any governmental taxing authority acting under any present or
future law, ordinance or regulation, levy, assess or impose a tax, excise,
surcharge or assessment upon or against the rents payable by Tenant to
Landlord, or upon or against the Common Areas, whether by way or substitution
for or in addition to any existing Real Property Tax or otherwise, Tenant shall
be responsible for and shall pay Tenant's Allocable Share of such tax in the
manner provided in Section 4.01(c). Notwithstanding anything to the contrary in
this Section 4.01(g). Tenant shall not be responsible for payment of any income
taxes attributable to Landlord.
(h) Tenant's 1999 Real Property Texas will be calculated at $10.70 per
square foot of the Premises, subject, however to increases based upon increases
in City and School taxes assessed for the 1999-2000 tax fiscal year.
Notwithstanding anything to the contrary in this Lease, increases in Tenant's
contributions for Real Property Taxes shall be limited to the actual increases
in Real Property Taxes as imposed by the taxing authorities. Tenant understands
that the Town and County portion of Real Property Taxes is calculated on a tax
fiscal year of January 1 through December 31, and that the City and School
portion of Real Property Taxes is calculated on a tax fiscal year of July 1
through June 30. Figures quoted to Tenant for Real Property Taxes include the
actual 1999 Town and County Real Property Taxes and the actual 1998-1999 City
and School Real Property Taxes.
4.02. - TENANT'S TAXES
Tenants shall, at all times, be responsible for and pay, before
delinquency, all municipal, county, state or federal taxes charged against
Tenant's income, sales, fixtures, furnishings, equipment, stock-in-trade or
other personal property of any kind owned, installed or used in or on the
Premises, and any tax now or hereafter charged against Tenant on any other
basis.
ARTICLE 5
CONSTRUCTION AND FINANCING
5.01. - LANDLORD'S WORK
Prior to the Term Commencement Date, Landlord shall perform all items of
"Landlord's Work," if any, described in Exhibit D attached hereto and made a
part hereof, in accordance with the Outline Specifications set forth in
Exhibit D attached hereto and made a part hereof. Tenant agrees to accept the
Premises in its "as is" condition on the date possession of the Premises is
made available to Tenant without any express or implied warranty concerning the
condition of the Premises by Landlord or its agents, and agrees, [***], to
complete all improvements necessary to prepare the Premises for the conduct of
Tenant's business in the Premises in accordance with the Outline Specifications
set forth in Exhibit D. Tenant represents, warrants and covenants that it shall
build out the Premises in full conformance with plans approved by Landlord or
Tenant shall be deemed in default of this Lease. In the event of such default,
Landlord shall have the right to terminate this Lease, in addition to
*** Confidential treatment requested.
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all other rights and remedies available to Landlord under applicable law or
under this Lease. Any non-standard item of Landlord's Work requested by Tenant
or necessitated by Tenant's location, space plans or business operation shall
be performed by Landlord at Tenant's additional cost, plus [***] for profit and
[***] for administration. Landlord hereby warrants to Tenant that to Landlord's
best knowledge the Premises do not contain any asbestos-containing materials or
other reportable amounts of hazardous or toxic materials.
5.02 - TENANT'S WORK
(a) Prior to the Term Commencement Date, Tenant, shall [***] perform
"Tenant's Work" described in Exhibit C attached hereto and made a part hereof,
in accordance with the Outline Specifications set forth in Exhibit D. Landlord
and Tenant agree that Tenant's store front design shall be substantially similar
to Tenant's store located within the Palisades Center in the Town of Clarkstown,
County of Rockland, and State of New York. Any item of Tenant's Work which
Tenant requests Landlord to perform on the Tenant's behalf and which Landlord
agrees to undertake shall be provided to Tenant at Tenant's additional cost,
plus [***] for profit and [***] for administration. Tenant acknowledges its
ability to perform Tenant's Work, and no delay in its performance shall cause or
be deemed to cause any delay or postponement in the Term Commencement Date.
Tenant shall be responsible for obtaining, at its sole cost and expense, any
necessary permits, approvals or related consents which relate to Tenant's
particular use of the Premises or to Tenant's Work or any other work performed
by Tenant pursuant to this Lease, including any building permits required for
the construction of Tenant's Work. With respect to any permits, approvals or
related consents which relate to the Shopping Center in general and not to
Tenant's particular use of the Premises or to Tenant's Work or any other work
performed by Tenant pursuant to this Lease, Landlord and not Tenant shall be
obligated therefor. Landlord knows of no such mitigation, impact, or
discretionary fees related to the development of the Shopping Center in general
which were deferred by Landlord and would result in unexpected costs to Tenant.
Tenant specifically understands and agrees that Tenant's Real Property Taxes
include a road bond, but that the costs associated with said road bond are
included in Tenant's Real Property Taxes as quoted and thus are not excepted as
set forth in this Section 6.02(a). Tenant agrees that its design plans and its
operations shall take into account the potential for unreasonable vibration and
noise resulting from Tenant's equipment which may affect adjacent tenants or the
Common Areas. Accordingly, Tenant agrees that its design plans shall incorporate
such reasonable steps and procedures as known to Tenant to eliminate or
substantially reduce any vibration or noise that may be felt or heard outside of
the Premises. These steps shall include:
i) Soundproofing of walls, floor, and ceiling construction;
ii) Isolation of equipment through use of padding, flexible mounts,
or other suitable means;
iii) Airtight sealing of all openings, cut-outs, and dissimilar
surfaces.
For purposes of operational standards, Tenant agrees to provide wall, floor and
ceiling construction such that noise emitted from the Premises will not exceed
65dba when measured from outside the Premises.
Tenant shall submit its Design Drawings to Landlord in compliance with Exhibit
"D". Upon Landlord's approval of Tenant's Design Drawings (as Tenant may agree
to modify such plans and specifications in response to Landlord's comments
thereto in accordance with the following sentence), then Landlord will be deemed
to have approved the measures taken by Tenant to minimize vibration and,
thereafter, Tenant shall not be in default under the Lease as a result of
vibration associated with the permitted use of the Premises.
In the event the Landlord and Tenant are unable to agree upon the steps and
procedures requested by Landlord to eliminate or substantially reduce any
vibration or noise that may be felt or heard outside of the Premises, the
dispute shall be submitted to arbitration pursuant to Section 23.18 hereof.
(b) Tenant agrees to obtain and maintain, or to cause Tenant's contractors
to obtain and maintain, at Tenant's or Tenant's contractor's expense, for so
long as Tenant's Work continues, public liability insurance, builder's risk
property insurance covering Tenant's Work, and Worker's Compensation insurance
protecting from and against any and all liability for death of or injury to
persons or damage to property caused in or about the Premises, or by reason of
the construction of Tenant's Work. Tenant shall furnish to Landlord certificates
evidencing said coverage prior to the commencement of Tenant's Work (see Exhibit
D for further insurance requirements).
5.03 - PAYMENT
Any payment to be made by Tenant to Landlord for items of Landlord's Work
to be completed by Landlord as provided in Section 5.01, or for any items of
Tenant's Work which Tenant requests Landlord to perform and which Landlord
agrees to undertake as provided in Section 5.02, shall be paid for by Tenant, as
Additional Rent, within ten (10) days after receipt of a bill therefor.
5.04 - FINANCING
(a) Intentionally deleted.
(b) Intentionally deleted.
(c) If Landlord can obtain approval of this Lease from a mortgage for the
purposes of financing or refinancing only upon the basis of reasonable
modifications of terms and provisions of this Lease, then Tenant shall not
unreasonably withhold its consent thereto provided that such lease modifications
do not relate to those provisions pertaining to size or location of the
Premises, length of the term, or amount of Fixed Annual Minimum Rent, Percentage
Rent, Additional Rent, the Abatement of the Permitted Use and do not increase
Tenant's obligations or decrease Tenant's rights.
(d) Within fifteen (15) days of request by Landlord in connection with any
financing or sale of the Shopping Center, which request shall not be made more
than once per Lease Year, Tenant or any Guarantor shall provide to Landlord a
statement of Tenant's Gross Sales for the preceding period since the Term
Commencement Date.
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ARTICLE 6
CONDUCT OF BUSINESS BY TENANT
6.01 - USE OF PREMISES AND TRADE NAME
Throughout the term, Tenant shall use the entire Premises solely for the
purpose as set forth in Section 1.03 and shall operate its store in the
Premises under the trade name set forth in Section 1.03. Tenant shall not use
or permit, or suffer the use of the Premises, or any part thereof, for any
other business or purpose or under any other trade name.
6.02 - TENANT'S OPERATING COVENANT
Subject to Section 23.04 below, Tenant shall occupy the Premises on and
after the Term Commencement Date and shall continuously operate its store in
the entire Premises during the full term of this Lease. Tenant shall operate
the Premises in a manner consistent with the majority of the other stores
operated by Tenant as of the date hereof under the same trade name and having
the same or similar use as the use as provided for in this Lease, and with due
diligence and efficiency. Tenant shall carry at all times in the Premises a
stock of merchandise of a size, character and quality as is in keeping with a
first class regional shopping center. Tenant shall use for office, storage, or
other non-selling purposes only such space as is reasonably required for the
proper operation of Tenant's retail business in the Premises. Tenant shall
conduct its business in the Premises during regular published Shopping Center
hours of business (as of the date of this Lease, those hours are Monday through
Saturday, 10:00 a.m. until 9:30 pm and Sunday 11:30 am until 6:00 pm), which
hours are subject to change at Landlord's direction from time to time. Tenant
acknowledges and agrees that the Shopping Center's success is dependent upon
the continued operation of Tenant's business, and that the maintenance of the
character and quality of the Shopping Center is enhanced by the continued
occupancy of the Premises and the regular conduct of Tenant's business as
required herein. In the event Tenant ceases operation prior to the termination
date set forth in Section 2.02, Landlord shall have the right to obtain a court
order for specific performance of the operating covenant as set forth in this
Section 6.02. If during any period Tenant shall fail to operate the Premises
provided herein, then after the second (2nd) such failure in any Lease Year,
Tenant shall pay as liquidated damages, as a reasonable estimate of damages
suffered by Landlord due to the loss of Percentage Rent, the damage to the
character and quality of the Shopping Center and other non-quantifiable adverse
effects caused by Tenant's failure to continually operate, a sum equal to 125%
of the Fixed Annual Minimum Rent for the portion of the term during which such
failure continues. The payment of such sums shall not relieve Tenant of any of
its obligations under this Lease. Tenant shall have the right to enter the
Premises at any time during the term of the Lease. Notwithstanding anything to
the contrary in this Section 6.02, Tenant shall be permitted to be open for
business until the later of (i) 2:00 a.m. or (ii) as late as any other tenant
located on the commons level of the Shopping Center is permitted to be open
without incurring any extra hours charge as set forth in Section 7.05 below.
Anything contained in this Lease to the contrary notwithstanding, Tenant shall
not be obligated to continuously operate from the Premise during periods which
(i) Tenant is carrying on remodeling activities, provided prior Notice of such
activities has been delivered to Landlord, (ii) Tenant is closed for the taking
of inventory (not to exceed four (4) days per Lease Year), or (iii) Tenant's use
and occupancy of the Premises is prohibited by any law, ordinance, order or
other act of any judicial, governmental or quasi-governmental authority.
Notwithstanding anything to the contrary in this Section 6.02, to the extent
that Landlord is obligated to do so according to leases between Landlord and
any theater in the Shopping Center, Landlord will illuminate and secure the
Common Areas and exterior parking areas which are immediately adjacent to the
Premises and the exterior entrance to the Shopping Center which is nearest to
the Premises. Landlord represents and warrants that it currently has a lease
with Hoyt's Cinemas (New York) Corporation which commenced on July 18, 1997 and
has an initial term of twenty-five (25) years and a full-term operating
covenant. In the event Landlord is not obligated by the terms of its lease
with any theater in the Shopping Center to illuminate and secure said Common
Areas and exterior parking areas after Shopping Center hours of business, and
Tenant requires such illumination and security, then Tenant shall be obligated
to pay, as Additional Rent and within thirty (30) days after receipt of a bill
therefor, its proportional share of the costs associated with such after-hours
illumination and security. Tenant's proportional share of such costs shall be
the product of multiplying the amount of said costs by a fraction, the
numerator of which is the number of square feet of the Premises as set forth in
Section 1.01, and the denominator of which is the total number of square feet
of premises occupied by any other tenant or occupant of the Shopping Center
which is also open and operating its business in the Shopping Center during
such additional hours as Tenant requires after-hours illumination and security.
6.03 - COMPETITION
During the term of this Lease, Tenant shall not directly or indirectly,
without the prior written consent of Landlord, operate, manage, franchise,
license or have any interest in any other business located within a radius of
five (5) miles from the outside boundary of the Shopping Center, which business
is engaged in the same or substantially the same use as the use provided for
in this Lease; nor, if Tenant is a corporation, shall any then current officer
or director, or any then current shareholder owning more than ten percent (10%)
of the issued and outstanding stock of Tenant, nor any entity that: (a) 50% or
more of which is owned by Tenant, or (b) owns 50% or more of Tenant, or (c) 50%
or more of which is owned by an entity that owns 50% or more of Tenant; or of
any then current officer, director or ten percent (10%) shareholder of Tenant),
have any such interest without the prior written consent of Landlord; nor, if
Tenant is a partnership, shall any then current partner or any member of the
immediate family of any then current partner have any such interest without
prior written consent of Landlord. If, during the first five years of the term,
Tenant or any such officer, director, shareholder, affiliate, partner or family
member does operate, manage, franchise, license or have any interest in any
such business without the prior written consent of Landlord, Landlord shall
have the right, at its option, as its sole and exclusive remedy, to obtain a
court order for specific performance of the operating covenant as set forth in
Section 6.02 of this Lease and, as liquidated damages and not as a penalty, to
require that gross receipts (defined as in Section 3.03 of this Lease, except
that where reference is made to the Premises, it shall in this case refer
instead to the location of such other business of Tenant or any such officer,
director, shareholder, affiliate, partner or family member as more
specifically described herein) resulting from such business shall be included
in the amount of Gross Receipts used to compute Percentage Rent hereunder.
After the first five years of the term, if Tenant or any such officer,
director, shareholder, affiliate, partner or family member does operate, manage
or have any interest in any such business without the prior written consent of
Landlord, Landlord shall have the right, at its option, in addition to all
other rights and remedies to which Landlord may avail
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itself pursuant to this Lease, is required, as liquidated damages and not as a
penalty, that [***] of gross receipts resulting from such business shall be paid
to Landlord. The prohibitions in this Section 6.03 shall extend to and expire on
the termination date set forth in Section 2.02 hereof notwithstanding any
earlier termination resulting from Tenant's default hereunder.
6.04 - OTHER BUSINESS PRACTICES
(a) Tenant shall keep the Premises and all show windows and signs and any
loading area and other areas allocated for the sole use of Tenant in good, neat
and clean condition. Tenant shall keep the Premises and any service area
contiguous to or part of the Premises free of debris, rubbish, garbage, pests,
rodents and vermin caused by Tenant, and, upon two (2) day's written notice by
Landlord to Tenant of Tenant's failure to do so. Landlord may remove such
debris, snow and ice, rubbish, garbage, pests, rodents and vermin and charge
Tenant the reasonable out-of-pocket costs incurred by Landlord for such removal,
plus [***] for administration.
(b) Tenant shall keep its display windows stocked and electrically lighted
during such periods of time as may from time to time be required by Landlord of
substantially all other retail businesses in the Shopping Center.
(c) Tenant shall load and unload its merchandise, equipment and supplies
and remove its rubbish only by way of the loading area and service doors
designated by Landlord for Tenant's use; provided, however, that Landlord will
not unreasonably withhold its consent to Tenant's use of the service doors or
loading dock invaluable for common usage by tenants in the Shopping Center and
which is closest to the Premises.
(d) Tenant shall not knowingly and willingly commit nor permit any act or
practice which may tend to injure the building occupied by Tenant, nor permit
its equipment to be a nuisance to other tenants, nor keep goods, foods, rubbish,
inventory, or merchandise on or obstruct the mall area or sidewalks or other
areas outside the Premises, nor conduct or permit any fire, bankruptcy, auction
or going-out-of-business sale, nor erect or retain any sign, light, lettering,
inscription, symbol or mark which is not approved by Landlord, nor install any
antenna, fixture, or improvement outside of the Premises, nor sell or display
merchandise outside the Premises.
Notwithstanding the foregoing, Tenant shall be permitted to place
professionally generated signs, advertisements and decorations within the
Premises consistent with Tenant's other operations. Anything contained in this
Lease to the contrary notwithstanding, Tenant shall be permitted to install a
video wall or mounted video screen or panel within the Premises which may be
visible to customers from outside the Premises.
Notwithstanding anything contained in this Section 6.04 to the contrary,
subject to compliance with Legal Requirements and Landlord's prior written
reasonable approval of plans and specifications, and further provided that the
satellite dish and/or other electronic transmitter (in either case a "satellite
dish") and the screen or covering, if any, hereinafter described shall be for
the exclusive use of Tenant, shall not penetrate the roof unless otherwise
agreed in writing by Landlord, and shall not be visible from any part of the
Common Area or public roadways adjoining the Shopping Center and shall not
interfere in any material respect with access to the Building roof by any
others, Tenant shall have the right to install one (1) three foot (3') or
smaller satellite dish on the Building roof at the location designated by
Landlord. Tenant shall, if necessary and at its sole cost and expense, construct
a screen or other covering structure around the satellite dish to prevent
visibility from the Common Areas or public roadways adjoining the Shopping
Center. The cost of installation and maintenance of the satellite dish and
screen or other covering structure (including temporary removal thereof, if
required, in connection with any repairs or other work to the Building deemed
necessary or desirable by Landlord) shall be borne solely by Tenant. The
reasonable cost of any repairs to the roof which are necessitated by the
installation and/or repair of the satellite dish and screen or covering, if
constructed, shall be borne solely by Tenant and paid Landlord upon demand as
Additional Rent hereunder. Upon expiration or earlier termination of this Lease,
Tenant shall, at its sole cost and expenses, remove any satellite dish and
screen or covering, if constructed, and Tenant shall repair any damage to the
roof occasioned by such removal. Tenant further agrees to defend, indemnity and
hold harmless Landlord from and against all claims, losses, costs and expenses
(including without limitation reasonable attorneys' fees) suffered or incurred
by Landlord arising out of the existence of Tenant's satellite dish and screen
or covering, if constructed. In addition, Tenant's liability insurance policies
shall include special endorsements protecting Landlord and all other parties
required to be additional insureds pursuant to Section 12.08 against any
liabilities that may arise out of the existence or installation and removal of
Tenant's satellite dish and any screen or covering. In connection with all work
related to the installation, repair, maintenance and removal of the satellite
dish and screen or other covering structure, Tenant shall request from Landlord
a list of three (3) competitively priced contractors acceptable to Landlord,
which Landlord shall provide to Tenant within fifteen (15) business days
following written request. All such work shall be performed by one of Landlord's
designated contractors and shall be conducted with notice to Landlord as
provided in Section 10.02(e) of this Lease.
(e) In all of Tenant's printed material distributed primarily within
Albany, New York and that refers to the location of the Premises (by newspaper,
radio, television or otherwise), Tenant shall include in any reference to
Tenant's place of business the name (and where appropriate the symbol) of the
Shopping Center.
(f) Tenant agrees to store in the Premises only such merchandise as is to
be offered for sale at retail from the Premises within a reasonable time after
receipt; to store all trash and refuse in adequate containers within the
Premises and to maintain such containers in a healthy, safe, neat, odor free and
clean condition and in a location so as not to be visible to members of the
public shopping in the Shopping Center, and to attend to the daily disposal
thereof in the manner designated by Landlord; and to conform to all rules and
regulations which Landlord may make in the management and use of the Shopping
Center requiring such conformance by Tenant and Tenant's employees. If the
Premises are used for the sale of food, Tenant shall store all trash, refuse and
garbage in a garbage storeroom or compartment which Tenant shall install and
keep in good repair at its sole expense. Landlord may require that the Premises
be periodically treated against pests, rodents or vermin, and in such event,
Tenant will, at its sole cost and expense, enter into a contract with a
professional pest control service for the performance of such work, which
contract and service shall be selected by Tenant but subject to Landlord's prior
approval.
(g) Landlord may establish a central station trash compactor and/or
recycling service (including, but not limited to, compactor and container cost,
hauling, landfill charges, taxes or any other special charges, relating to such
trash compactor and/or recycling service) or contract for the removal of trash
at the Shopping Center. If Landlord establishes a central station trash
compactor and/or recycling service, Tenant agrees to pay as Additional Rent the
sum of [***] per month for the cost of Tenant's share of such service. It is
agreed that this charge may
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be increased periodically from the date of this Lease as Landlord's expenses
increase (in which event, the cost of Tenant's share of such service shall
increase only by the percentage by which Landlord's expenses actually increase)
or as the volume of Tenant's trash increases. If at any time Landlord elects to
contract for trash removal and/or recycling, Tenant agrees to use said
contractor for its trash removal and/or recycling and pay when due all charges
at the rate established therefor from time to time. Tenant may, however,
contract with an entity other than that designated by Landlord in the event
that Landlord's designated contractor's rates are not reasonable and
competitive with alternative services available to Tenant. If Tenant fails so
to pay for trash removal and/or recycling, Landlord shall have the same
remedies (even if such payment is due to such contractor and not to Landlord)
as Landlord has for nonpayment of rent hereunder. Tenant shall comply with all
applicable Governmental Orders as defined in (Section 18.01) in conjunction
with the sorting or recycling of trash or refuse.
(n) Tenant shall comply with all further reasonable rules and regulations
for the use and occupancy of the Shopping Center as Landlord from time to time
promulgates for the best interests of the Shopping Center, provided that if
Tenant disputes the reasonableness of any further rule or regulation, Tenant
shall notify Landlord within thirty (30) days after Tenant is provided with a
copy thereof, and the dispute shall be submitted to arbitration pursuant to
Section 23.18. In the event of a conflict between the Lease and such rules or
regulations, then the terms of the lease shall govern.
6.05 - MARKETING FUND
(a) Tenant shall make a contribution, in the manner set forth in Section
8.05, to a Marketing Fund to be administered by Landlord. The Marketing Fund
will be used for advertising, customer services, promotion, public relations,
market research and administrative expenses which, in the sole opinion of
Landlord, will sustain and improve the market penetration and promotional needs
of the Shopping Center. Landlord acknowledges and agrees that Tenant is a party
to a license agreement and that Tenant's advertising, use and display of the
Trade Name and the logo and trademarks associated therewith may be subject to
the licensor's consent as set forth in the license agreement; therefore,
Landlord agrees not to use Tenant's Trade Name in any advertising or promotional
medium without Tenant's consent; provided, however, notwithstanding the
foregoing, Landlord shall be permitted to (i) use Tenant's Trade Name in any
directory or other listing which contains the names of substantially all of the
tenants or occupants of the Shopping Center and (ii) utilize photographs,
slides, videos, or other similar images of the Shopping Center that may include
or depict the Premises or Trade Name.
(b) From and after the Term Commencement Date, Tenant shall pay to
Landlord, as an annual contribution to the Marketing Fund, the sum of [***] per
square foot of the Premises, which sum shall be paid in advance in consecutive
equal monthly installments on the first day of each month during the term. For
any Partial Lease Year during the term of this Lease, or for any partial month,
the amount of Tenant's contribution to the Marketing Fund shall be adjusted on a
pro-rata basis to reflect such Partial Lease Year or partial month.
(c) Upon the first day of January next following the date of this Lease
and upon the first day of January of each Lease Year thereafter, Tenant's annual
contribution to the Marketing Fund shall increase by [***] upon the first day of
each January thereafter during the term of this Lease.
ARTICLE 7
COMMON AREAS AND OPERATING COSTS
7.01 - DEFINITION
The term "Common Areas" shall mean the interior and exterior areas and
facilities within the Shopping Center which are: (i) not leased to a tenant, or
(ii) by nature not leasable to a tenant for the purpose of the sale of
merchandise or the rendition of services to the general public. Common Areas
shall include but shall not be limited to all parking areas and facilities,
roadways, driveways, entrances and exits, truck serviceways and tunnels,
utilities, water filtration and treatment facilities, retention ponds or basins
located within or outside the Shopping Center, retaining and exterior walls,
sidewalks, open and enclosed malls, outside courts, landscaped and planted
areas, escalators, stairways, elevators, service corridors, service areas,
loading docks, hallways, public restrooms, community rooms or areas, roofs,
equipment, signs and any special services provided by Landlord for the common
or joint use and benefit of all tenants in the Shopping Center, their
employees, customers and invitees.
7.02 - DEVELOPMENT OF COMMON AREAS
Landlord may make available from time to time such Common Areas, which may
in part consist of areas made available by means of REA or other agreements, for
the common benefit to the tenants and occupants of the Shopping Center as
Landlord shall deem appropriate. Subject to the provisions of any REA Agreement,
Landlord shall operate, manage, equip, heat, cool, ventilate, insure, repair and
maintain such Common Areas for their intended purposes in such a manner as
Landlord shall, in its sole discretion, determine. Landlord shall at all times
have the right to determine, change or alter the nature, extent, size or
location of the Common Areas and Landlord shall not be subject to liability
therefor, nor shall Tenant be entitled to any compensation or diminution or
abatement of rent on account of any such determination or change, nor shall any
such action be deemed an actual or a constructive eviction of Tenant.
7.03 - USE OF COMMON AREAS
Tenant and its officers, employees, agents, customers and invitees shall
have the nonexclusive right, in common with Landlord and all others to whom
Landlord has or may hereafter grant rights, to use the Common Areas as
designated from time to time by Landlord, subject to such regulations as
Landlord may from time to time impose on a non-discriminatory basis, including
the designation of the days and hours of operation and use and designation of
specific areas in which motor vehicles owned or used by Tenant, its officers,
employees, and agents must be parked. Tenant shall, upon request, furnish to
Landlord the license numbers and descriptions of the motor vehicles operated by
Tenant and its officers, agents and employees. If Landlord designates such
parking areas, and if any
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motor vehicle of Tenant, or an officer, employee or agent of Tenant is parked in
any other portion of the Shopping Center, Tenant shall pay to Landlord, upon
demand, the sum of [***] for each such motor vehicle for each day, or part
thereof, such motor vehicle is so parked, and Tenant hereby authorizes Landlord
to tow or cause any such car to be towed to the then designated parking area,
and Tenant hereby agrees to reimburse Landlord for the cost thereof upon demand.
Tenant agrees to abide by such regulations and to use its best efforts to cause
its officers, employees, agents, customers and invitees to conform thereto.
Landlord may at any time (i) close temporarily the Common Areas or any portion
thereof, (ii) make repairs or changes to prevent the acquisition of public
rights therein, (iii) discourage noncustomer parking, and (iv) do such other
acts in and to the Common Areas as in its judgment may be desirable to improve
the convenience thereof. Tenant shall not at any time interfere with the rights
of Landlord and other tenants, its and their permitted officers, employees,
agents, customers, and invitees, to use any part of the parking areas and other
Common Areas. Landlord shall have the sole and exclusive right to use the Common
Areas for advertising purposes, promotions, exhibits, shows, displays, kiosks
and such other similar uses. Notwithstanding the foregoing, Landlord shall not
modify the Common Areas in any manner that would have a material adverse affect
on pedestrian and vehicular traffic or that would materially limit the number of
parking spaces reasonably required for the business and retail activities
conducted or that otherwise would adversely affect access to the Premises or the
building in which the Premises are located. Notwithstanding the foregoing,
Landlord will not materially adversely interfere with (i) visibility of Tenant's
storefront signage from the enclosed mall immediately adjacent to the Premises,
or (ii) access to the Premises from the enclosed mall immediately adjacent to
the Premises. Notwithstanding anything to the contrary in this Section 7.03,
Landlord recognizes that Tenant's prototype incorporates an open storefront
design and Tenant shall be permitted to incorporate this element into the design
of the Premises, provided such design does not violate any applicable laws or
compromise the structural integrity of the Shopping Center. With Landlord's
approval, not to be unreasonably withheld, Tenant shall have the right to use,
at no additional cost to Tenant, a portion of the Common Area in front of the
Premises for the purpose of displaying a NASCAR racing vehicle.
7.04 - COMMON AREA COSTS
(a) Commencing on the Term Commencement Date, Tenant shall pay to
Landlord, as Additional Rent, monthly in advance on the first day of each month,
a sum equal to one-twelfth (1/12) of the Common Area Charge. The "Common Area
Charge" shall be an annual charge of [***] per square foot of the Premises for
the Common Area Costs defined in Section 7.04(b), subject to adjustment as
provided in Section 7.05.
(b) "Common Area Costs" shall mean the total costs and expenses incurred
in operating, managing and maintaining the Shopping Center and the Common Areas,
including but without limitation, such maintenance, repair, replacement and
remodeling as shall be required in Landlord's sole and absolute judgment to
preserve the utility thereof in the same condition and status as existed at the
time of completion of the original construction. Common Area Costs shall also
include Tenant's share of insurance costs.
7.05 - ADJUSTMENT TO PAYMENT
Upon January 1, 2001 and upon the first day of January of each Lease Year
thereafter, the amount of Tenant's Common Area Charge then in effect shall
increase by [***]. Tenant acknowledges and agrees that Tenant shall have no
right to audit Landlord's books and records concerning Common Area Costs.
Notwithstanding anything to the contrary in this Section 7.05, the first such
increase in Common Areas Charges will be prorated on a per-diem basis.
7.06 - PAYMENT OF EXTRAORDINARY COMMON AREA COSTS
If Tenant opens the Premises for business or remains open for business in
the Premises at a time when Tenant is not required under the terms of this Lease
to be open and when less than fifty percent (50%) of the total leased area of
the buildings in the Shopping Center is open for business, then for each such
day on which Tenant is open for business in the Premises, Tenant, as Additional
Rent, shall pay to Landlord, in addition to and together with Tenant's payment
of the Common Area Charge due Landlord as provided by Section 7.04, a sum equal
to one thirtieth (1/30) of the monthly amount of Tenant's Common Area Charge.
ARTICLE 8
ENERGY, UTILITY AND SPRINKLER COSTS
8.01 - ENERGY AND UTILITY CHARGES
(a) Immediately after delivery of possession of the Premises to Tenant,
Tenant shall make application to the appropriate local authority, municipality
or other governmental agency to obtain direct service for Tenant's electric,
natural gas, and other energy requirements. Tenant shall be solely responsible
for the cost of obtaining such services and the cost of providing and installing
any required meters, conduits, wiring and other facilities and equipment, all of
which shall be part of Tenant's Work. However Tenant shall not be obligated to
pay any fees to the utility company for the initial connection of energy
services to the Premises which relate to the Shopping Center in general and not
to the Premises, and Landlord and not Tenant shall be obligated for any other
fees payable to the utility company which relate to the Shopping Center in
general with respect to the initial connection of energy services to the
Premises. From and after the date Tenant first enters into possession of the
Premises (or if the date Tenant obtains such energy service is sooner, then from
and after the date such service begins). Tenant covenants and agrees to pay the
authority, municipality or agency the cost of all energy provided to Tenant
(including but not limited to all energy provided to the Premises, to Tenant's
signs and to the HVAC units serving the Premises) when due and payable. As of
the date of this Lease, Landlord has no knowledge that the energy provider will
not provide direct service, and Tenant acknowledges that provision of such
services is within the control of the energy provider and not Landlord.
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(b) Tenant shall pay the cost of all water and sewer used in or at the
Premises. Landlord and Tenant acknowledge that water and sewer services for the
Premises are as of the date of this Lease, provided by the local municipality
to the Premises through Landlord. Accordingly, Tenant shall, at its cost and as
part of Tenant's Work, install a water meter acceptable to Landlord and the
local municipality; and Tenant shall pay Landlord for all water and sewer usage
in and at the Premises based on the usage recorded by such meter and based on
the rates charged to Landlord for water and sewer usage by the local
municipality. Such payment calculation is subject to change if, as and when the
billing methodology of said municipality for water differs from that set forth
in this paragraph. The above payment structure shall continue in effect until
such time as the Premises are directly supplied, metered and billed for water
and sewer services by the local municipality. Immediately after delivery of
possession of the Premises to Tenant, Tenant shall make application to the
appropriate local authority, municipality or other governmental agency to
obtain direct service for water and sewer services to the Premises. Tenant
shall be solely responsible for the cost of obtaining such services and the
cost of providing and installing any required meters and other facilities and
equipment, all of which shall be part of Tenant's Work. From and after the date
direct water and/or sewer service is available to the Premises, Tenant
covenants and agrees to pay the authority, municipality or agency the cost of
same provided to Tenant when due and payable.
(c) (i) If as a result of Tenant's inability to obtain direct supply
or Tenant's election not to obtain direct supply and metering for Tenant's
natural gas, electric and other energy requirements as provided in subsection
(a) hereof, and if Landlord supplies service for Tenant's electric, natural
gas, or other energy requirements, from and after the date Tenant first enters
into possession of the Premises, Tenant shall pay to Landlord monthly in
advance on the first day of each month its "Energy Charges," as hereinafter
defined.
(ii) As used in this Lease "Energy Charges" shall be the product of
multiplying the Energy Charge Calculation (herein defined) for all energy used
or consumed in the Premises including without limitation, electricity, oil and
gas times the unit prices for such energy determined in accordance with the
then current utility rate schedules applicable to Landlord, plus a charge of
twenty-five percent (25%) of such amount. Following the date that Tenant opens
for business in the Premises, Landlord shall calculate Tenant's energy
requirements on the basis of Tenant's construction plans, equipment and
lighting sets, and the as-built condition of the Premises, assuming (1) a usage
of not less than one hour before through one hour after the daily hours of
operation of the Shopping Center and (2) a loading factor based upon the total
connected load of all electrical fixtures and equipment in the Premises
("Energy Charge Calculation"). If Tenant requires additional hours of usage of
energy within the Premises, Tenant shall make such request in writing to
Landlord and Tenant's Energy Charges shall be adjusted accordingly. Prior to
the completion of such Energy Charge Calculation and the submission to Tenant
of a statement setting forth such calculation, Tenant shall pay Energy Charges
as estimated by Landlord based upon the energy requirements of a typical store
layout comparable to Tenant's proposed use and size of the Premises. Following
completion of the Energy Charge Calculation, Tenant's energy billings and
payment of Energy Charges shall be adjusted accordingly. Any delay in Landlord
furnishing such Energy Charge Calculation to Tenant shall not in any way affect
Tenant's obligation herein.
(iii) Notwithstanding the provisions of subparagraph (c)(ii) of this
Section 8.01 relating to use of the Energy Charge Calculation to calculate
Energy Charges to the contrary, Tenant shall have the option to verify the
amount of electrical energy used or consumed within the Premises by the
installation of a checkmeter as hereinafter set forth. Such option may be
exercised by Tenant upon not less than thirty (30) days' prior written notice
to Landlord given prior to either (i) the Term Commencement Date, or (ii) the
first day of any Lease Year during the term of this Lease. Following such
notice, Tenant shall install in the Premises, in accordance with the Outline
Specifications set forth in Exhibit D and at Tenant's sole cost and expense, a
utility-quality checkmeter for the purpose of verification of the electrical
consumption within the Premises (the "checkmeter"). The checkmeter will be
monitored monthly by Landlord and Tenant for a period of thirteen (13)
consecutive full months (the "checkmeter period") beginning on the first day of
the first full month following initial installation thereof and approval by
Landlord. The first month's reading of the checkmeter will be used solely for
determining a usage base reading over which subsequent readings will be
measured. Landlord and Tenant shall on or about the first day of each month
concurrently observe and record the checkmeter readings on forms provided by
Landlord. The checkmeter shall be reset (for demand only) in the presence of
both Landlord and Tenant representatives following the recording of monthly
readings. During the checkmeter period Tenant shall pay Energy Charges for the
Premises based on the Energy Charge Calculation.
Following completion of the checkmetering period, Landlord shall
calculate the average monthly utility usage within the Premises utilizing the
checkmeter readings taken during the checkmeter period. The average monthly
charge for consumption (KWH) shall be calculated by dividing the total KWH by
the number of days comprising the checkmeter period; the resulting quotient
will then be multiplied by 30.42. The average monthly demand charge (KW), if
applicable, shall be calculated by dividing the total KW readings by the number
of months comprising the checkmeter period. If Tenant has made the election to
utilize a checkmeter, for purposes of calculating Energy Charges for
electricity under subparagraph (b) of this Section 8.01, the product of the
resulting average monthly KWH usage readings and KW demand readings times the
unit prices for such energy determined in accordance with then current utility
rate schedules charged to Landlord shall be used in lieu of the Energy Charge
Calculation. Tenant's energy billings based on the checkmeter readings and
payment of Energy Charges retroactive to the commencement of the checkmeter
period shall be adjusted accordingly. Any delay in Landlord furnishing a
checkmeter reconciliation to Tenant shall in no way affect Tenant's obligation
herein.
The average monthly KWH usage charges and KW demand charges once
determined pursuant to the checkmeter procedure shall be the basis for
calculation of Energy Charges for the balance of the term of this Lease. The
checkmeter procedure shall be used solely to verify energy use within the
Premises in accordance with the terms of this Lease and shall not be utilized
for billing purposes. The use of the checkmeter procedure set forth in this
subparagraph (c) shall be the sole and exclusive remedy between Landlord and
Tenant to resolve any dispute concerning the amount of electrical usage within
the Premises. The results of the checkmetering procedures set forth herein shall
be conclusive and determinative of all disputes, claims and controversies with
respect to energy usage or demand within the Premises pursuant to this Lease.
Following the checkmeter period, Tenant shall disconnect and remove the
checkmeter from the Premises. The monitoring of energy service by means if a
checkmeter shall not take place more than once during the term of this Lease
unless Tenant has varied its equipment, service, use or load demand or has
remodeled the Premises. In any such event either Landlord or Tenant may request
the other party to reinstitute the checkmeter procedures but in no event more
than once in any thirty-six (36) month period following the completion of any
checkmeter period.
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(iv) At any time during the term hereof, Landlord may cease
providing energy to the Premises without thereby affecting this Lease in any
manner or otherwise incurring any liability to Tenant. In such event, Tenant
shall have no further obligation to pay to Landlord the charge for Energy
Charges as provided in this Section 8.01. Landlord will notify Tenant at least
thirty (30) days prior to such termination in order that Tenant may make
application to the appropriate utility companies serving the Shopping Center.
In the event Tenant fails to pay energy or utility charges when the same
become due and payable, Landlord reserves the right, in addition to all other
rights and remedies to which Landlord may avail itself pursuant to this Lease,
to discontinue the furnishing of energy to the Premises. Landlord shall not be
liable for any damages resulting from or arising out of any such
discontinuance, and the same shall not constitute a termination of this Lease
or an actual or constructive eviction of Tenant.
(v) the charges defined in Section 8.01(c), if any, may be
adjusted by Landlord periodically based upon changes in the number of hours
during which the Premises remains open, connected load, recalculations, rate
changes imposed by utility companies, rate changes imposed by fuel companies
(including but not limited to fuel adjustment rates), any changes, alterations
or improvements done to the Premises, or any taxes or surcharges imposed upon
energy costs or usage.
Notwithstanding anything to the contrary in this Section 8.01, in the event
Landlord's energy provider is not competitively priced, Tenant shall have the
right to secure energy service from an alternative energy provider (where
available). Tenant understands and agrees that in the event it elects to use
such alternative energy provider, it shall do so at Tenant's sole cost and
expense and such energy service must be provided to the Premises from such
alternative energy provider's facilities and shall not come through Landlord's
switchgear.
8.02 - INTENTIONALLY DELETED.
8.03 - INTENTIONALLY DELETED.
8.04 - MISCELLANEOUS UTILITY PROVISIONS
(a) Tenant shall not install within the Premises any equipment, fixtures
or appliances which exceed the capacity of the utility facilities within or
serving the Premises. If any such equipment, fixtures or appliances installed
by Tenant requires additional utility facilities, the same shall be installed
by Tenant at Tenant's sole cost and expense.
(b) Tenant shall operate the heating, ventilating and cooling systems
serving the Premises such that the temperature in the Premises will be
substantially the same as that in the Common Areas, and Tenant shall set
Tenant's thermostat at substantially the same temperature as exists in the
Common Areas. Tenant shall operate ventilation equipment such that the relative
air pressure in the Premises will be substantially the same as or less than
that in the Common Areas.
(c) Intentionally deleted.
(d) Tenant agrees that Landlord shall not be responsible for any
interruption of business or damage to the Premises resulting from interruption
of utility service caused by any utility company or governmental regulatory
agency.
8.05 - PERIODIC ADJUSTMENT
Intentionally deleted.
ARTICLE 9
FIXTURES, ALTERATIONS, SIGNS
9.01 - INSTALLATION BY TENANT
After the completion of Tenant's Work, Tenant shall not make or cause to be
made any alterations, additions or improvements or install or cause to be
installed any trade fixtures, exterior sign, floor covering, interior or
exterior lighting, plumbing fixtures, shades or awnings, or make any changes to
its store-front or interior decor without first obtaining Landlord's written
approval and consent in each instance, which shall not be unreasonably withheld.
Notwithstanding the foregoing, Tenant shall be permitted to make interior,
non-structural alterations, changes and modifications not exceeding [***] per
Lease Year without Landlord's prior consent, provided Tenant notifies Landlord
in writing prior to the commencement of such alterations, changes, or
modifications. Tenant shall present to Landlord plans and specifications of such
work at the time approval is sought. All permitted alterations, additions or
improvements shall be done in a good and workmanlike manner in compliance with
all applicable laws and ordinances and shall not unreasonably interfere with the
conduct of Tenant's normal business. Notwithstanding anything to the contrary in
this Section 9.01, Tenant shall be permitted to close for a period not to exceed
five (5) days during any Lease Year, for the sole purpose of completing such
alterations, changes, or modifications. Where Landlord's approval is required
per this Section 9.01, any alteration, addition or improvement done to the
Premises by Tenant without Landlord's approval shall be returned to its original
condition within thirty (30) days after receipt of written notice from Landlord
and at Tenant's expense upon request by Landlord at any time. All fixtures
installed by Tenant shall be new or completely reconditioned; provided, however,
Tenant makes to representation or warranty that such fixtures will be free from
defects in material, workmanship, or design; provided, further, that Tenant
shall use its commercially reasonable efforts to ensure that such fixtures are
installed in the Premises in a safe manner so as not to be hazardous to persons
who may come on to the Premises. Tenant shall (i) be responsible for all costs,
including attorneys' fees, and (ii) Tenant shall indemnify and hold harmless
*** Confidential treatment requested.
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Landlord from all liability, incurred by Landlord as a result of any failure in
material, workmanship or design of such fixtures.
9.02 - REMOVAL AND RESTORATION BY TENANT
All alterations, additions, improvements or installations made by Tenant,
or made by Landlord on Tenant's behalf and at Tenant's expense, shall remain
the property of Tenant for the term of the Lease. Such alterations, additions,
improvements, trade fixtures and equipment shall not be removed from the
Premises prior to the end of the term hereof without the prior consent in
writing from Landlord, except in the case of routine maintenance, refurbishment
or replacement of defective or broken items. Upon expiration of the term of the
Lease or upon Tenant's vacating the Premises upon eviction or surrender of the
Premises prior to expiration of the term, any permanent leasehold improvements
and fixtures or equipment permanently attached to the real estate shall become
the property of Landlord (unless, as a condition of its consent to install
same, Landlord shall have required the subsequent removal thereof by Tenant),
if not removed by Tenant. With respect to any improvements and fixtures which
Tenant does not remove, Tenant shall be obligated to repair any damage
resulting from such removal, and Tenant's possession of the Premises shall not
be deemed terminated until such repairs have been completed. Tenant shall
surrender all keys for the Premises to Landlord and shall inform Landlord of
all combinations on locks, gates and vaults, if any, in the Premises. Within
five (5) days following the expiration or earlier termination of this Lease,
Tenant shall remove furnishings, equipment, trade fixtures and personal
property and, if Tenant fails to so remove such property, then Landlord shall
have the option of retaining or removing such property at Tenant's expense.
Tenant shall repair or cause to be repaired any damage to the Premises caused
by such removal.
9.03 - SIGNS, AWNINGS AND CANOPIES
Tenant will not place, maintain or suffer to be placed or maintained on or
in an exterior door, wall or window of the Premises any sign, awning or canopy,
decoration, lettering or advertising matter or other thing of any kind without
first obtaining Landlord's written approval, which approval shall not be
unreasonably withheld. Notwithstanding the foregoing, Landlord's consent
shall not be required for any professionally prepared signs or banners, or for
the installation of an awning or canopy at the store front of the Premises,
provided such awning or canopy complies with all applicable building codes and
further provided that such awning or canopy does not utilize any supports which
cannot be integrated into the store front of the Premises. Tenant further
agrees to maintain such sign, awning, canopy, decoration, lettering,
advertising matter or other thing as may be approved in good condition and
repair at all times. In the event that Landlord at any time during the term of
this Lease elects to erect signage within the interior of the Shopping Center
which in a general fashion depicts any so-called entertainment wing of the
Shopping Center, then Tenant may, at its option, be included in such signage at
Landlord's cost and expense. Notwithstanding anything to the contrary in this
Lease, Tenant shall be permitted to erect exterior signage of approximately
fifty (50) square feet in size and as depicted on Exhibit F attached hereto and
made a part hereof, which approximately fifty (50) square feet is a part of the
approximately 5,953 square feet of external mall signage already approved by
the local municipality or other governing body, as the case may be. Tenant shall
erect, maintain, and at the expiration or earlier termination of this Lease,
remove, such exterior signage at its sole cost and expense. Landlord reserves
the right to relocate Tenant's exterior signage to another area on the exterior
facade of the Shopping Center in the event of a change in local ordinances,
rules, regulations or applicable laws, or in the event of a demand by an Anchor
Store, at Landlord's sole cost and expense, subject to the following: (a) in
the event of a change in local ordinance, regulations, rules or applicable laws,
Tenant agrees to act reasonably with respect to relocation of Tenant's exterior
signage so long as Tenant is not treated any more adversely than similarly
situated tenants of the Shopping Center (i.e., tenants having similar signage in
substantially the same location), or (b) if required by an Anchor Store,
Landlord may make immaterial changes in the location, size, or illumination of
Tenant's exterior signage so long as Tenant is not treated any more adversely
than similarly [ILLEGIBLE] tenants of the Shopping Center (i.e., tenants having
similar signage in substantially the same location).
9.04 - CONDITION OF THE PREMISES
Throughout the Term, Tenant shall maintain the Premises in a manner
consistent with a first class shopping center.
ARTICLE 10
REPAIRS AND MAINTENANCE
10.01 - LANDLORD'S OBLIGATION TO REPAIR
Landlord agrees to repair and maintain, at Landlord's sole cost and
expense, the outside walls, structure and foundation of the building containing
the Premises in good order and serviceable condition. Landlord agrees to
commence any such repair within a reasonable time (not to exceed thirty (30)
days, unless by the nature of such repair, it cannot reasonably be commenced
within said thirty (30) day period) after written notice from Tenant that the
same is necessary. There is excepted from this covenant the following, which
shall be Tenant's responsibility:
(a) Repair of damage caused by the act or omission of Tenant, its
employees, agents and contractors;
(b) Repair any loading areas not used in common with others; and
(c) Repairs which are the responsibility of Tenant in accordance with
Section 10.02.
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10.02 - TENANT'S OBLIGATION TO REPAIR
(a) Tenant agrees, at its sole cost and expense, to repair and maintain
the Premises in good order and condition, including but not limited to the
non-structural portions of the Premises, including store front, loading areas,
show windows, doors, windows, plate and window glass, ceilings, floor
coverings, Tenant's HVAC systems, and the plumbing, sprinkler, electric and
sewage systems, facilities, appliances, lighting fixtures and other systems and
improvements located within the Premises. In addition, Tenant shall be
responsible, at its sole expense, for the repair and maintenance of its
rooftop HVAC unit(s) (if any) and any other equipment or improvement located
outside the Premises which is constructed or installed by Tenant or at Tenant's
request and is used exclusively by or for Tenant. Tenant shall obtain
Landlord's prior consent before making any repair or performing any
maintenance which may adversely affect any aspect of the Shopping Center's
operation.
(b) During the entire term, Tenant agrees to maintain, at Tenant's sole
cost, a maintenance contract with an independent HVAC contractor approved by
Landlord covering at least the routine items of maintenance for Tenant's HVAC
systems as are recommended by the manufacturer of such systems, provided that
the cost thereof at all times shall be reasonable and competitive. Tenant
agrees to provide Landlord with a copy of such HVAC service contract within
thirty (30) days following the Term Commencement Date. Further, Tenant agrees
during the entire term of this Lease to use the sprinkler service company
designated by Landlord for any repairs or maintenance required for Tenant's
sprinkler system, provided that the cost thereof at all times shall be
reasonable and competitive.
(c) If repairs are required to be made by Tenant pursuant to the terms of
the Lease, Landlord may demand (but shall not be required to do so) that Tenant
make the same forthwith, and if Tenant refuses or neglects to commence to such
repairs and complete the same with reasonable dispatch after such demand, and if
Tenant's failure to commence such repairs continues for fifteen (15) days after
receipt of notice from Landlord, Landlord may make or cause such repairs to be
made and shall not be responsible to Tenant for any loss or damage that may
accrue to its stock or business by reason thereof. If Landlord makes or causes
such repairs to be made, Tenant agrees that it will, on demand, pay as
Additional Rent to Landlord, reasonable out-of-pocket costs incurred by Landlord
therefor, and a [***] administration fee, and if Tenant defaults in such
payment, Landlord shall have the remedies provided in Article 15 hereof.
Likewise, if repairs are required under the terms hereof to be made by Landlord
and it fails or refuses after twenty (20) days' notice and demand by Tenant to
commence such repairs and thereafter diligently prosecute same to completion,
then Tenant shall have the right to make such required repairs. Landlord shall
reimburse Tenant for the cost of such repairs within twenty (20) days after
receipt by Landlord of evidence of payment therefor by Tenant; additionally,
Tenant shall have the right to offset such costs against the payment of Fixed
Annual Minimum Rent, Percentage Rent or Additional Rent if Landlord shall fail
to reimburse Tenant for the cost of such repairs within thirty (30) days after
receipt by Landlord of evidence of payment therefor by Tenant.
(d) If Tenant's use of the Premises requires a grease trap, Tenant agrees
to maintain, at Tenant's sole cost, a maintenance contract with an independent
service contractor approved by Landlord to inspect, clean and repair such
grease trap at such intervals as may be required by Tenant's use but in no
event less frequently than once a month.
(e) Tenant shall not, and shall not permit any of its employees,
invitees, contractors or agents to enter or otherwise be on the roof of the
Building without prior written notice to Landlord. Tenant shall give landlord
not less than five (5) days' prior written notice of the date any such person
will be on the roof of the Building.
10.03 - ARTICLE NOT APPLICABLE TO FIRE OR CONDEMNATION
The provisions of this Article shall not apply to the repair of damage
caused by fire, casualty, which matter is covered under Article 13, nor shall
these provisions apply to a taking under the power of Eminent Domain, which
matter is covered under Article 14.
ARTICLE 11
INDEMNITY
11.01 - INDEMNITY
Tenant will indemnify and hold harmless Landlord, Landlord's managing
agent and such other persons who are in privity of estate with Landlord, or to
whom Landlord is legally responsible (collectively, "Landlord's Party"), from
and against any and all claims, actions, damages, liabilities and expenses in
connection with loss of life, personal injury, bodily injury or damage to
property arising from or out of any occurrence in, upon or at the Premises,
from or out of the occupancy or use by Tenant of the Premises or the Shopping
Center or any part thereof, or occasioned wholly or in part by any negligent
act or omission of Tenant, its agents, contractors, employees, lessees,
invitees or concessionaires; provided, however, Tenant shall not be required to
indemnify, defend, hold harmless, protect, lease or otherwise exculpate
Landlord or any member of Landlord's Party from and against any claims,
actions, damages, liabilities or expenses to the extent the same results from
Landlord's or any member of Landlord's Party's or their respective agents,
employees, contractors, licensees, invitees or servants' negligence, willful
misconduct, failure to comply with applicable laws or breach of this Lease. In
case Landlord or any member of Landlord's Party shall be made a party to any
action or proceeding commenced by or against Tenant, then Tenant agrees to
protect and hold such parties harmless and to pay all costs, expenses and
reasonable attorneys' fees incurred or paid by such parties in connection with
such action or proceeding. Tenant shall pay to Landlord all costs, expenses and
reasonable attorneys' fees that may be incurred or paid by Landlord in
enforcing the terms, conditions, covenants and agreements in this Lease.
Landlord shall indemnify, hold harmless and defend Tenant, Tenant's
managing agent, if any, and such other persons who are in privity of estate
with Tenant, or to whom Tenant is legally responsible (collectively, "Tenant's
Party"), from and against any and all claims, actions, suits, cross-claims,
counterclaims, third party actions, damages, liabilities and expenses in
connection with loss of life, personal injury, bodily injury or damage to
property arising from or out of any occurrence in, upon or at the Shopping
Center, or occasioned wholly or in part by any negligent act or omission of
Landlord, its agents, contractors, employees, lessees, invitees or
concessionaires; provided, however, Landlord shall not be required to
indemnify, defend, hold harmless, protect, release or otherwise exculpate Tenant
or any member of Tenant's Party from and against any claims, actions, damages,
liabilities or expenses to the extent the same results from Tenant's or any
member of Tenant's Party's or their respective agents, employees, contractors,
licensees, invitees or servants' negligence, willful misconduct, failure to
comply with applicable laws or breach of this Lease. In case Tenant, Tenant's
managing agent or such other persons who are in privity of estate with Tenant,
or to whom Tenant is legally responsible, shall be made a party to any action
or
*** Confidential treatment requested.
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proceeding commenced by or against Landlord, then Landlord agrees to protect
and hold such parties harmless and to pay all costs, expenses and reasonable
attorneys' fees incurred or paid by such parties in connection with such action
or proceeding. Landlord shall pay to Tenant all costs, expenses and reasonable
attorneys' fees that may be incurred or paid by Tenant in enforcing the terms,
conditions, covenants and agreements in this Lease.
ARTICLE 12
INSURANCE
12.01 - LIABILITY INSURANCE
Throughout the term of this Lease, Tenant, [***] for the mutual benefit of
Landlord and Tenant, shall maintain personal injury and property damage
liability insurance against claims for personal injury, bodily injury, death or
property damage occurring on, in or about the Premises, or arising from, in or
about Tenant's use of the Common Areas, or resulting from or arising out of
products sold from the Premises or Tenant's use of the Common Areas during the
term of this Lease, of not less than [***] in respect of personal injury, bodily
injury, death or property damage (combined single limit). Such policy shall
expressly contain a contractual endorsement to provide coverage for Tenant's
indemnification set forth in Section 11.01 of this Lease and shall contain the
"Per Location Aggregate" endorsement. Such policy shall be endorsed (1) as
primary and (2) to waive rights of subrogation against Landlord. Prior to the
Term Commencement Date, Tenant shall provide Landlord with a certificate
containing evidence of such coverage and of the coverage required in Sections
12.02(c) and (d) below, and Tenant shall thereafter provide Landlord with
appropriate evidence of said coverage upon each anniversary date of the policy.
In the event that Tenant fails to provide the certificate as set forth herein or
fails to provide such evidence of such coverage at least fifteen (15) days prior
to the expiration date of each expiring policy, Landlord may obtain such
insurance at Tenant's sole cost and expense and upon demand of Landlord, Tenant
shall reimburse Landlord for the cost of procuring such insurance coverage
together with [***] for administration costs.
12.02 - SPECIAL CAUSES OF LOSS AND DIFFERENCE IN CONDITIONS INSURANCE
(a) At all times during the term of this Lease, Landlord shall keep all
Permanent Improvements, as hereinafter defined, insured for the benefit of
Landlord against loss or damage by risks now or hereafter embraced by "Special
Causes of Loss" and "Difference in Conditions" coverages and against such other
risks as Landlord from time to time reasonably may designate in amounts
sufficient to prevent Landlord from becoming a coinsurer under the terms of the
applicable policies. In any event, the amount applicable to "Special Causes of
Loss" policies shall be not less than [***] of the "Then Full Replacement Cost"
(being the cost of replacing the Permanent improvements exclusive of the costs
of excavations and footings below the lowest grade level). The Then Full
Replacement Cost shall be determined from time to time (but not more frequently
than once in any twelve (12) calendar months) by an appraiser, architect or
other person or firm designated by Landlord.
(b) The Permanent Improvements for purposes of this Section 12.02 shall be
deemed to mean the building in which the Premises is situated, the appurtenances
thereto and the equipment and other improvements constructed by Landlord and
Tenant pursuant to Exhibits B and C. Such Permanent Improvements shall exclude,
however, Tenant's merchandise, trade fixtures, furnishings, equipment, wall
covering, carpeting, drapes, and all personal property (collectively "Tenant's
Personal Property"). Tenants shall provide Landlord with a certificate setting
forth the cost of Tenant's Work no less than fifteen (15) days prior to the Term
Commencement Date.
(c) At all times during the term of this Lease, Tenant shall keep all of
Tenant's Personal property situated at or on the Premises, insured with "Special
Causes of Loss" and "Difference in Conditions" and "Plate Glass" coverages for
not less than the full replacement cost thereof, with the deductible on the
"Plate Glass" and "Special Causes of Loss" policies not to exceed [***] and with
a commercially reasonable deductible on the "Difference in Conditions" policy
(provided, however, by way of illustration and not limitation, it shall be
deemed commercially reasonable for the "Difference in Conditions" policy to have
a deductible of [***] of the value of the insured property or a deductible of
[***].
(d) Tenant shall maintain, and shall cause all parties performing work on
or about the Premises or on behalf of Tenant to maintain, statutory Workers'
Compensation coverage according to the laws of the state in which the Shopping
Center is located and Employer's Liability coverage in limits of not less than
[***].
12.03 - INSURANCE ON COMMON AREAS
At all times during the term of this Lease, Landlord shall keep the Common
Area Insured for personal injury, bodily injury and property damage liability,
"Special Causes of Loss" and "Difference in Conditions" property coverage,
Workers' Compensation, Employer's Liability and any other casualty or risk
insurance which Landlord or Landlord's insurance carrier deems necessary or
appropriate. If and to the extent Landlord elects to self insure up to the first
[***], of any claims for personal injury or bodily injury, or under Workers'
Compensation, there shall be included within insurance costs the amount of any
personal injury, bodily injury or Workers' Compensation claim(s) or judgment(s)
paid by Landlord, limited, however, in each instance to the lesser of (i) [***],
or (ii) [***].
12.04 - INCREASE IN FIRE INSURANCE PREMIUM
Tenant covenants and agrees to promptly pay to Landlord as Additional
Rent, upon demand, the amount of any increase in the rate of insurance on the
Premises or on any other part of the Shopping Center that results by reason of
Tenant's act(s) or Tenant's permitting certain activities to take place.
*** Confidential treatment requested.
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12.05 - TENANT TO SHARE INSURANCE COSTS
Tenant's obligation for the payment of Insurance Costs is included in
Common Area costs, as set forth in Section 7.04 of this Lease.
12.06 - WAIVER OF SUBROGATION
Each party releases and waives on behalf of itself and on behalf of the
insurers of such party's property, any and all claims and any rights of
subrogation of any such insurer against the other party, its employees and
agents for loss (other than loss or damage resulting from the willful act of
such other party, its employees and agents) sustained from any peril to
property required to be insured against herein, whether or not such insurance
is actually in force, or from any peril to property actually insured against,
though not required to be under this Lease. The policies of the respective
parties shall contain an express waiver of subrogation to this effect.
12.07 - POLICIES
All insurance provided in this Article 12 shall be effected under valid
and enforceable policies of at minimum a Best rating of A-, XII and issued by
insurers of recognized responsibility which are licensed to do business in the
state in which the Shopping Center is located. All of Tenant's policies of
insurance as required in this Article 12 shall name Landlord, Tenant,
Landlord's managing agent and any mortgagee having an interest in any or all
part of the Shopping Center the name and address of which Tenant has received
written notice, as additional insureds, as their respective interests may
appear. Tenant agrees that such policies shall also be made payable, if
required by Landlord, to a mortgagee or ground lessor, as the interest of such
mortgagee or ground lessor may appear. The loss, if any, under any policies
provided for hereunder may be adjusted with the insurance company by Landlord.
Each of Tenant's policies shall contain an agreement by the insurer that such
policy shall not be terminated, canceled or reduced in coverage without at
least thirty (30) days' prior written notice to Landlord and to any mortgagee
or ground lessor to whom a loss thereunder is payable. The minimum limits of
coverage for all of Tenant's policies of Insurance required by this Article 12
shall be increased by Tenant if reasonably required by Landlord.
ARTICLE 13
DAMAGE BY FIRE, ETC.
13.01 - RESTORATION OF PREMISES
(a) The parties hereto mutually agree that if the Premises are partially
or totally destroyed or damaged by fire or otherwise, then Landlord (subject to
being able to obtain all necessary permits and approvals therefor) shall repair
and restore the Premises as soon as is reasonably practicable to substantially
the same condition in which the Premises existed before such damage; provided
that if the insurance proceeds (other than the amount of any deductible, self
insured retention of co-insurance requirement) collected or collectible and
available to Landlord to pay the cost of such repairs and restorations by
Landlord as a consequence of such destruction or damage are less than the cost
of such repairs and restoration as estimated by Landlord's architect, Landlord
shall not be obligated to commence or perform such repairs and restorations,
and this Lease upon notice by Landlord to Tenant shall at the option of
Landlord terminate unless Tenant undertakes (in form and upon terms
satisfactory to Landlord) to pay the difference between such estimated cost and
such insurance proceeds. Within forty-five (45) days following the date of
damage or destruction, Landlord shall notify Tenant of its intentions with
respect to the repairs or restoration of the Premises, and in the event
Landlord elects to repair or restore the Premises, Landlord shall diligently
pursue such repair or restoration to completion following commencement of the
repairs or restoration. If, however, the Premises are completely destroyed or
so damaged that Landlord cannot complete restoration or rebuilding in four (4)
months to substantially the same condition in which the Premises were before
such damage, then Landlord shall not be required to rebuild or restore, and
this Lease shall be terminated by either party serving written notice upon the
other. In any event, if repairs have not been commenced within sixty (60) days
after the date on which Landlord receives the insurance proceeds, or if the
repairs have been commenced within such time but Landlord is not diligently
pursuing such repairs or restoration, then this Lease may be terminated by
Tenant serving notice upon Landlord following the expiration of such sixty (60)
days by giving Landlord not less than thirty (30) days' advanced written notice
of such election. Except as otherwise provided in this Section 13.01(a),
provided Landlord is diligently pursuing such repairs or restoration, in no
event may Tenant terminate this lease after such repairs have been commenced by
Landlord.
(b) In the event the Premises are completely or partially destroyed or so
damaged by the fire or other hazard that the Premises cannot be reasonably used
by Tenant or can only be partially used by Tenant and this Lease is not
terminated as above provided, there shall be no abatement of rent for the first
sixty (60) days following the date of damage or destruction, it being understood
and agreed that the Tenant at its discretion, cost and expense shall procure
insurance necessary to protect itself against any interruption of its business
during such sixty (60) day period. In the event that Tenant is prevented from
using the Premises in excess of sixty (60) days, then Fixed Annual Minimum Rent
and Additional Rent shall be abated, and there shall be a proportionate
reduction to the Annual Minimum Gross Receipts, from and after said sixtieth
(60th) day until the date Tenant is able to reopen for business within the
Premises.
13.02 - RESTORATION DURING LAST THREE YEARS
Anything in Section 13.01 to the contrary notwithstanding, if, within
three (3) years prior to the expiration of the initial term or at any time
during any renewal term (if any) of this Lease the Premises shall be damaged or
destroyed by the fire or otherwise and the estimated cost of restoration
exceeds Fifty Thousand and 00/100 Dollars ($50,000.00), then at the election of
Landlord or Tenant and by notice to the other, the Lease shall terminate.
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13.03 - TENANT'S OBLIGATION UPON RESTORATION
In the event of damage or destruction to the Premises and unless this Lease
is terminated by Landlord or Tenant as provided in this Article 13, Tenant
shall, as soon as reasonably possible, repair, redecorate and refixture the
Premises and restock the contents thereof in a manner and to at least a
condition equal to that existing prior to its destruction or casualty, and
reopen the entire Premises for business. All proceeds of insurance carried by
Tenant on Tenant's Personal Property shall be held in trust for such purposes.
ARTICLE 14
EMINENT DOMAIN
14.01 - EMINENT DOMAIN
If the Premises, or such portion thereof as to render the balance wholly
unsuitable for the purpose of Tenant, is taken by condemnation or the right of
eminent domain, or by agreement, between Landlord and those authorized to
exercise such right (collectively the "Condemnation Proceedings"), either party
upon written notice to the other shall be entitled to terminate this Lease
provided that such notice is given not later than thirty (30) days after Tenant
has been deprived possession of use by such taking. Should any part of the
Premises be so taken and should this Lease not be terminated in accordance with
the foregoing provisions, Landlord covenants and agrees promptly after such
taking to expend so much as may be necessary of the net amount which may be
awarded to and received by it in such Condemnation Proceedings in restoring
the Premises to an architectural unit as nearly like its condition prior to
such taking as shall in the reasonable judgment of Landlord be practicable,
with an appropriate abatement to be made in Fixed Annual Minimum Rent and a
corresponding reduction in Annual Minimum Gross Receipts. Should the net amount
so awarded to and received by Landlord be insufficient to cover the cost of
restoring the Premises as estimated by Landlord's architect, Landlord may at
its election, supply the amount of such insufficiency and restore the Premises,
as above provided, or terminate this Lease. Where Tenant has not already
exercised any right of termination accorded to it under this Section 14.01,
Landlord shall notify Tenant of Landlord's election within ninety (90) days
after the final determination of the amount of the award.
14.02 - LANDLORD ENTITLED TO AWARD
Out of any award for any such taking of the Premises or any part thereof,
Landlord shall by entitled to receive and retain the amounts awarded for such
Premises, except that Tenant shall be entitled to receive and retain only
amounts which may be specially awarded to it in any such condemnation
proceedings because of the taking of its trade fixtures and its leasehold
improvements which have not become a part of the realty, and such business loss
as Tenant shall specially and separately establish, but not otherwise. It is
understood in the event of the termination of this Lease as aforesaid, Tenant
shall have no claim against the Landlord or the condemning authority for the
value of any unexpired term of its Lease and no right or claim to any part of
the award on account thereof. Tenant hereby waives each such claim or right and
assigns any such claim or right to Landlord. Anything contained in this Lease
to the contrary notwithstanding, tenant shall have the right to bring any claim
during any Condemnation Proceedings, provided such claim does not reduce the
claim of Landlord in said Condemnation Proceedings.
ARTICLE 15
BANKRUPTCY AND DEFAULT PROVISIONS
15.01 - EVENTS OF DEFAULT AND CONDITIONAL LIMITATION
(a) If at any time prior to or during the term any one or more of the
following events occurs, each such event shall constitute an "event of
default".
(i) Tenant or Tenant's Guarantor, if any, makes an assignment for
the benefit of its creditors;
(ii) The leasehold estate hereby created in Tenant is taken on
execution or by other process of law;
(iii) Any petition is filed against Tenant or Tenant's
Guarantor, if any, in any court, whether or not pursuant to any bankruptcy,
reorganization, composition extension, arrangement or insolvency proceedings,
and Tenant or Tenant's Guarantor is thereafter adjudicated bankrupt, or such
petition is approved by the Court, or the Court assumes jurisdiction of the
subject matter and such proceedings are not dismissed within ninety (90) days
after the institution of the same; or any such petition is so filed by Tenant,
or Tenant's Guarantor;
(iv) In any proceedings, a receiver or trustee is appointed for
Tenant's property or the property of Tenant's Guarantor and such receivership
or trusteeship is not vacated or set aside within ninety (90) days after the
appointment of such receiver or trustee;
(v) Tenant intentionally or fraudulently understates Gross Receipts
by [***] or more;
(vi) There is a transfer or an attempted transfer of this Lease or of
Tenant's interest thereof in violation of the restrictions set forth in Article
17 of this Lease;
(vii) Tenant ceases operation in or vacates or abandons the
Premises or is otherwise in breach of Sections 6.01 or 6.02 of this Lease, and
such breach is not cured within ten (10) days following written notice from
Landlord; provided, however, that if such default cannot be cured within said
time period. Tenant shall be deemed to have cured such default if Tenant
commences cure of the default within said time period, and thereafter
*** Confidential treatment requested.
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diligently and in good faith continues with and actually completes said cure.
Tenant shall promptly notify Landlord of Tenant's commencement of such cure:
(viii) Tenant fails to comply with any local, state or federal
law, rule or regulation governing the use, handling and disposal of Hazardous
Materials or is otherwise in violation of the obligations contained in Section
16.03 of this Lease, and Tenant fails to commence a cure of such violation
within thirty (30) days following written notice from Landlord (or such shorter
time period if required by law); provided, however, that if such default cannot
be cured within said time period, Tenant shall be deemed to have cured such
default if Tenant commences cure of the default within said time period, and
thereafter diligently and in good faith continues with and actually completes
said cure. Tenant shall promptly notify Landlord of Tenant's commencement of
such cure;
(ix) Tenant fails to comply with the obligations contained in
Section 21.03 of this Lease, and such failure continues for fifteen (15) days
following written notice from Landlord;
(x) Tenant or Tenant's Guarantor, if any, fails to pay any
installment of the Fixed Annual Minimum Rent, Percentage Rent, Additional Rent
or any portion of any such payment, when the same becomes due and payable, and
such failure continues for ten (10) days after receipt of written notice from
Landlord to Tenant;
(xi) Tenant or Tenant's Guarantor, if any, fails to pay any
installment of the Fixed Annual Minimum Rent, Percentage Rent, Additional Rent
or any portion of such payment, when same becomes due and payable, and such
failure occurs on three (3) or more occasions in any Lease Year or Partial
Lease Year;
(xii) Tenant fails to comply with the obligations contained in
Section 1.03 of this Lease, and such failure continues for ten (10) days after
receipt of written notice from Landlord to Tenant; provided, however, that if
such default cannot be cured within such time period, Tenant shall be deemed to
have cured such default if Tenant commences cure of the default within such
time period, and thereafter diligently and in good faith continues with and
actually completes said cure. Tenant shall promptly notify Landlord of Tenant's
commencement of such cure; or
(xiii) Tenant or Tenant's Guarantor, if any, fails to perform or
observe any other material requirement of this Lease (not hereinbefore
specifically referred to) on the part of Tenant to be performed or observed and
such failure continues for thirty (30) days after receipt of written notice
from Landlord to Tenant; provided, however, that if such default cannot be
cured within such time period, Tenant shall be deemed to have cured such
default if Tenant commences cure of the default within such time period, and
thereafter diligently and in good faith continues with and actually completes
said cure. Tenant or Tenant's Guarantor, if any, shall promptly notify Landlord
of Tenant's or Tenant's Guarantor's (if any) commencement of such cure.
(b) This Lease and the term are expressly subject to the conditional
limitation that upon the happening of any one or more of the aforementioned
events of default, Landlord, in addition to the other rights and remedies it
may have, shall have the right, upon notice to Tenant, to declare this Lease
terminated and the term ended. In which event all of the right, this and
interest of Tenant hereunder shall wholly cease and expire upon receipt by
Tenant of a Notice of Termination. Tenant shall then quit and surrender the
Premises to Landlord in the manner and under the conditions as provided for
under this Lease, but Tenant shall remain liable as hereinafter provided.
Notwithstanding anything to the contrary in this Section 15.01(b), the parties
hereby agree that the following events shall be deemed "material" for the
limited purposes of determining Landlord's right to terminate this Lease
according to the terms of this Section 15.01(b) following an event of default
for which notice and any applicable opportunity to cure has expired; (i)
failure to open and commence and continue operation of Tenant's business within
the entire Premises according to Section 6.02 of this Lease; (ii) failure to
make repairs to the Premises according to Section 10.02 of this Lease; (iii)
failure to comply with Tenant's indemnification obligations according to
Article 11 of this Lease; (iv) failure to comply with Tenant's insurance
obligations pursuant to Article 12 of this Lease; (v) failure to comply with
Tenant's obligations with regard to Restoration of the Premises according to
Section 13.03 of this Lease; (vi) an assignment, sublet or other transfer not
in compliance with the terms of Article 17 of this Lease; and (vii) failure to
comply with Government Orders, Insurance Matters, Hazardous Material or the
ADA, all according to the terms of Article 16 of this Lease. It is specifically
understood and agreed that this provision shall not in any way modify any other
termination right of Landlord which is otherwise specifically provided for in
this Lease.
15.02 - LANDLORD'S REMEDIES
(a) If this Lease shall be terminated as provided in Section 15.01,
Landlord or Landlord's agents or employees may immediately or at any time
thereafter re-enter the Premises and remove therefrom Tenant, its agents,
employees, licenses, and any sub-tenants and other persons, firms or
corporations, and all or any of its or their property therefrom, either by
summary dispossess proceedings or by any suitable action or proceedings at law
or in equity, without being liable to indictment or prosecution of damages
therefor, and repossess and enjoy the Premises, together with all alterations,
additions and improvements thereto. Landlord, in the event of such re-entry and
repossession, may store Tenant's Personal Property in a public warehouse or
elsewhere at the cost of and for the account of Tenant.
(b) In case of any such termination, re-entry or dispossession by summary
proceedings or otherwise, the rents and all other charges required to be paid
up to the time of such termination, re-entry or dispossession, shall be paid by
Tenant, and Tenant also shall pay to Landlord all reasonable expenses which
Landlord may then or thereafter incur for legal expenses, attorneys' fees,
brokerage commissions and all other costs paid or incurred by Landlord as the
result of such termination, re-entry or dispossession, and for restoring the
Premises to good order and condition and for altering and otherwise preparing
the same for reletting and for reletting thereof. Landlord may, at any time and
from time to time, relet the Premises, whole or in part, for any rental then
obtainable either in its own name or as agent of Tenant, for a term which, at
Landlord's option, may be for the remainder of the then current term of this
Lease or for any longer or shorter period.
(c) If this Lease is terminated as aforesaid, Tenant nevertheless
covenants and agrees notwithstanding any entry or re-entry by Landlord whether
by summary proceedings, termination or otherwise, to pay and be liable for on
the days originally fixed herein for the payment thereof, amounts equal to the
several installments of Fixed Annual Minimum Rent, Percentage Rent and
Additional Rent reserved as they would, under the terms of this Lease, become
due if this Lease had not been terminated or if Landlord had not entered or
re-entered as aforesaid, and whether the Premises is relet or remains vacant in
whole or in part or for a period less than the remainder of the term, and for
the whole thereof. In the event the Premises be relet by Landlord, Tenant shall
be entitled to a credit
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(but not in excess of the Fixed Annual Minimum Rent, Percentage Rent and
Additional Rent reserved under the terms of this Lease) in the net amount of
rent received by Landlord in reletting the Premises after deduction of the
reasonable out-of-pocket expenses and costs incurred or paid as aforesaid in
reletting the Premises and in collecting the rent in connection therewith. If
Tenant fails to make such payments in accordance with the first sentence of this
subsection 15.02(c) for any two (2) consecutive months following the termination
of this Lease, Landlord shall at any time thereafter, in lieu of collecting any
monthly deficiencies, or any further monthly deficiencies, aforesaid, at
Landlord's option, be entitled to recover from Tenant, in addition to any other
relief, such a sum as at the time of such termination represents the amount of
the [***] which would have accrued to Landlord under this Lease for the
remainder of the Lease term, as if the Lease had been fully complied with by
Tenant, less any monthly deficiencies for such period previously paid to
Landlord by Tenant. The present value ("Present Value Amount") shall be
calculated by discounting all amounts due by a discount rate equal to the great
of (i) the then current yield of U.S. Treasury debt securities with an original
term equal to the same number of calendar years then remaining in the original
Term (without regard to earlier termination) and maturity date nearest to the
original expiration date of the term (without regard to the earlier termination)
or (ii) six percent (6%). Tenant shall be entitled to a credit against the
Present Value Amount for Fixed Annual Minimum Rent, Percentage Rent and
Additional Rent subsequently received by Landlord from a replacement tenant
against amounts paid by Tenant to Landlord after deducting the allowance paid by
Landlord to Tenant and all expenses and costs incurred or paid (including any
allowances, construction costs and administrative costs) by Landlord in
reletting the Premises and in collecting the rent in connection therewith, which
right to a credit shall terminate on the date this Lease would have expired
pursuant to Section 2.02. Suit or suits for the recovery of the deficiency or
damages referred to in this Subsection 15.02(c) or for any installment or
installments of Fixed Annual Minimum Rent, Percentage Rent or Additional Rent
hereunder, or for a sum equal to any such installment or installments, may be
brought by Landlord all at once or from time to time at Landlord's election, and
nothing in this Lease shall be deemed to require Landlord to await the date
whereon this Lease or the term hereof would have naturally expired had there
been no such default by Tenant or no such termination.
(d) For the purpose of this Section 15.02, it shall be deemed that the
Percentage Rent for any period after any such default and entry by Landlord
would have been at the monthly rate thereafter equal to the average Percentage
Rent which Tenant was obligated to pay to Landlord under this Lease within the
two (2) Lease Years (or lesser number of Lease Years since the Term
Commencement Date) immediately preceding the date of such entry.
(e) Tenant hereby expressly waives, so far as permitted by law, any and
all right of redemption or re-entry or repossession under present or future laws
arising after Landlord's recovery of possession, including any amendments
hereafter, or to restore the operation of this Lease. Landlord and Tenant, so
far as permitted by law, waive and will waive trial by jury in any action,
proceeding or counterclaim brought by either of the parties hereto against the
other on any matters whatsoever arising out of or in any way connected with this
Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of the
Premises, or any claim or injury or damage. The terms "enter," "re-enter,"
"entry" or "re-entry" as used in this Lease are not restricted to their
technical legal meaning. In the event Landlord commences any proceedings for the
recovery of possession of the Premises or to recover for non-payment of Fixed
Annual Minimum Rent, Percentage Rent or Additional Rent, [***]. This may not,
however, be construed as a waiver of Tenant's rights to assert such claim in any
separate action or actions initiated by Tenant.
(f) No failure by Landlord to insist upon the strict performance of any
covenant, agreement, term or condition of this Lease or to exercise any right
or remedy consequent upon a breach thereof, and no acceptance of full or
partial rent during the continuance of any such breach shall be deemed an
accord and satisfaction thus Landlord may accept any check or payment without
prejudice to Landlord's rights to recover the balance due, nor shall it
constitute a waiver of any such breach or of such covenant, agreement, term and
condition, and this Lease shall continue in full force and effect with respect
to any other then existing or subsequent breach thereof.
(g) In the event of any breach or threatened breach by Tenant of any of
the covenants, agreements, terms or conditions contained in this Lease,
Landlord shall be entitled to enjoin such breach or threatened breach and shall
have the right to invoke any right or remedy allowed at law or in equity, by
statute or otherwise.
(h) Each right and remedy of Landlord provided for in this Lease shall be
cumulative and shall be in addition to every other right or remedy provided for
in this Lease or now or hereinafter existing at law or in equity, by statute or
otherwise.
ARTICLE 16
MECHANICS' LIENS
16.01 - MECHANICS' LIENS
(a) If any mechanics' liens are filed against the Premises or any portion
of the Shopping Center based upon any act of Tenant or anyone claiming through
Tenant, Tenant shall hold Landlord harmless from all damages, claims and
expenses arising therefrom, and Tenant, after notice from Landlord (or any
person in privity of estate with Landlord), shall forthwith commence such
action by bonding, deposit, payment or otherwise as will remove or satisfy
such lien within thirty (30) days. In the event Tenant does not remove or
satisfy said lien within said thirty (30) day period, Landlord shall have
the right to do so by posting a bond or undertaking, and Tenant agrees to
reimburse Landlord for all reasonable out-of-pocket expenses incurred by
Landlord in connection therewith five (5) days after receipt by Tenant of
Landlord's invoice therefor. These expenses shall include, but not be limited
to, filing fees, legal fees and bond premiums.
(b) Nothing in this Article 16 shall be deemed or construed as
(i) Landlord's consent to any person, firm or corporation for the performance of
any work or services or the supply of any materials to the Premises or any
improvement thereon, or (ii) giving Tenant of any other person, firm or
corporation any right to contract for or to perform or supply any work,
services or materials that would permit or give rise to a lien against the
Premises or any part thereof.
*** Confidential treatment requested.
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ARTICLE 17
ASSIGNMENTS, SUBLEASES AND OTHER TRANSFERS OF TENANT'S INTEREST
17.01 - LIMITATIONS ON TENANT'S RIGHTS
(a) Neither this Lease nor the interest of Tenant in this Lease shall be
sold, assigned, transferred, mortgaged, pledged, hypothecated or otherwise
disposed of, whether by operation of law or otherwise, nor shall the Premises or
any part thereof be sublet or subject to any license or concession without the
prior written consent of Landlord in each instance. The sale or transfer of
stock constituting a controlling interest in Tenant or Tenant's Guarantor shall
be considered for the purpose of this Lease to be an assignment, and likewise
shall require Landlord's prior written consent, except where Tenant or Tenant's
Guarantor is a corporation having its shares traded on the New York, American or
Over-The-Counter stock exchange or market. Tenant shall make available to
Landlord the stock record books of Tenant and Tenant's Guarantor and shall
produce the same on request of Landlord. Similarly, if Tenant is a partnership,
the interest of any partner shall not be transferred without Landlord's prior
written consent. For the purposes of this Lease, the entering into of any
management agreement or any similar agreement which transfers control of the
business operations of Tenant in the Premises shall be treated as an assignment
of this Lease and shall require Landlord's prior written consent. Any attempted
transfer, assignment, subletting, license or concession agreement, hypothecation
or other transfer herein that is prohibited without Landlord's prior written
consent shall be void and confer no rights upon any third party. Anything
contained in this Section 17.01(a) to the contrary notwithstanding, Tenant shall
have the right without Landlord's consent to assign this Lease or sublet the
Premises, subject to the terms of this Lease, in conjunction with the sale of
substantially all of the other assets and other store locations of Tenant to
Tenant's parent, Tenant's subsidiary, or a subsidiary of Tenant's parent,
provided that at least seventy-five percent (75%) of Tenant's other stores
located in the United States are simultaneously transferred to such entity.
Tenant shall remain primarily liable under this Lease following any assignment
of the Lease or subletting of the Premises. Subject to paragraph (f)
hereinbelow, Landlord shall not unreasonably withhold its consent to any
assignment or subleasing and shall respond to any request by Tenant for
permission to sublease or assign with thirty (30) days after receipt of written
request. If Landlord objects to such assignment or sublease, Landlord shall
advise Tenant of the reasons for such objections. If Landlord fails to respond
to such request within said thirty (30) days, and such failure continues for ten
(10) days following Notice from Tenant, then such failure shall be deemed
approval of such sublease or assignment.
Notwithstanding the terms of the immediately preceding grammatical
paragraph provided Tenant is not in default beyond any applicable cure period,
named Tenant may, without the consent of Landlord, assign this Lease or sublet
the entire Premises to any corporation which owns all of the issued and
outstanding common stock of named Tenant, or to a wholly owned subsidiary
corporation of named Tenant, or to any corporation resulting from the
consolidation or merger of named Tenant, in or with any other business
organization or any person, firm or corporation acquiring all of the issued and
outstanding capital stock of named Tenant, or all or substantially all of the
assets, no less than eighty percent (80%) of store locations and leases
(including this Lease) of named Tenant to the same entity; however, no such
assignment shall be deemed effective unless and until such assignee executes and
delivers to Landlord, at no cost to Landlord, a written agreement in form and
substance acceptable to Landlord whereby such assignee assumes for the benefit
of Landlord the performance and observance of all of the terms, conditions and
covenants contained in this Lease. The foregoing is subject to Tenant providing
Landlord with thirty (30) days' written notice in advance, including statements
of fact certified by an authorized officer of Tenant, certifying the facts upon
which Tenant is claiming the right to assign this Lease pursuant to this
grammatical paragraph. In addition, any private placement or public offering of
ownership interest in Tenant shall not require Landlord's prior consent,
provided that as a result of any private placement the day-to-day management of
Tenant remains unchanged.
Notwithstanding anything contained in this Section 17.01 to the contrary, a
public offering of Tenant's voting stock on a nationally recognized public stock
exchange shall not be deemed an assignment of this Lease, provided (i) Tenant
shall have given Landlord ten (10) days' prior written notice of such intended
public offering, and (ii) this Lease is not further assigned except as provided
for in this Article 17.
(b) No permitted assignment made shall be effective until there are
delivered to Landlord (i) an agreement, in recordable form, executed by Tenant
and the proposed assignee, wherein such assignee ensures due performance of the
obligations of Tenant's part to be performed under this Lease to the end of the
term hereof and (ii) a written consent to such assignment by the holder of any
fee or leasehold mortgage affecting the Premises to which this Lease is then
subject and such consent shall have been obtained and delivered to Landlord if
so required by the terms of such mortgage or by a collateral document securing
the same obligations as are secured by such mortgage.
(c) Any assignment of this Lease or any sublease affecting the Premises or
any other permitted transfer hereunder shall be subject and subordinate to the
full terms and conditions of this Lease. Regardless of either the assumption by
any assignee or sublessee of due performance or the Landlord's acceptance of
rent or other charges from such assignee or sublessee, Tenant shall not be
released by any assignment or sublease but shall continue to be fully
responsible for the due performance of Tenant's obligations hereunder in the
same manner and to the same extent as if no such assignment or sublease had been
made. Notwithstanding anything to the contrary in this Section 17.01(c), for any
assignment of this Lease for which Landlord's consent is required and such
consent is granted, Tenant shall be released from any future obligations under
this Lease provided that the proposed assignee maintains a net worth of at least
[***] month period immediately preceding the assignment and for the [***] months
immediately following the assignment.
(d) In the event Tenant assigns or subleases all or any portion of the
Premises as set forth in this Article 17 and the amounts due to Tenant under
such assignment or sublease exceed the amounts reserved to be paid to Landlord
by Tenant under this Lease, then Tenant shall pay to Landlord one-half of the
amount by which such assignment or sublease rent exceeds Rent as set forth in
Section 3.01(a) above. In the event Tenant assigns or subleases only a portion
of the Premises, the assignment or sublease rent shall be calculated on a per
square foot basis and then compared to the then applicable per square foot Rent
reserved in Section 3.01(a) above to determine whether or not such assignment or
sublease rent exceeds Rent.
*** Confidential treatment requested.
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(e) Any transfer made in violation of the provisions of subsections (a),
(b) or (c) in this section 17.01 shall constitute an event of default under
Section 15.01 herein and give rise to Landlord's right to re-enter the Premises
in accordance with Section 15.02.
(f) Notwithstanding anything in this Section 17.01 to the contrary, if
tenant desires to assign its interest under this Lease or to sublet all of the
Premises to a Permitted Party (as hereinafter defined), Tenant shall deliver to
Landlord written notice, requesting Landlord's consent to such transaction,
which consent request shall include (i) a fully executed letter of intent
containing the material terms of the proposed assignment or sublet transaction
(including proposed rent (including additional rent), square foot area, term
and use), (ii) current reasonable financial information with respect to the
proposed assignee or sublessee, including without limitation its most recent
financial report, (iii) a statement that the proposed assignment or sublease
relates to the entire Premises for the remaining term of this Lease, and (iv)
an express statement to the effect that the proposed assignee or sublessee is a
Permitted Party within the meaning of this paragraph and that Landlord has the
right to terminate this Lease in connection with the assignment or sublease
pursuant to this Section 17.01(f) or such assignment or sublease shall be
deemed consented to by Landlord. A notice that contains the information
described in clauses (i) through (iv) shall be deemed an offer ("Takeback
Offer") from Tenant to Landlord whereby Landlord may terminate this Lease. If
Tenant's notice does not expressly state the items described in clauses (i)
through (iv) including that the proposed assignee or sublessee is to a Permitted
Party, such notice shall constitute a request by Tenant for Landlord's consent
to sublease the Premises or assign this Lease subject to the other terms of
this Section 17.01; such notice shall not constitute a Takeback Offer and
Landlord shall not be entitled to terminate this Lease under this Section
17.01(f). The Takeback Offer may be exercised by Landlord by written notice
("Takeback Notice") to Tenant at any time within thirty (30) days after such
Takeback Offer has been given by Tenant to Landlord, and during such thirty
(30) day period Tenant shall not assign this Lease to such prospective assignee
or sublet the Premises to such prospective subleases unless such assignment is
expressly conditioned upon and not effective until the expiration of the 30-day
period for Landlord to deliver the Takeback Notice. The term "Permitted Party"
shall mean a third party (i) who will operate the Premises for a lawful bona
fide retail use consistent with uses at other first-class shopping centers or
for the use permitted under Section 6.01 of this Lease, and not in violation of
any use restriction in effect for the Shopping Center of which Tenant has been
advised within twenty (20) days after Landlord's receipt of Tenant's Takeback
Offer; (ii) who has a net worth equal to or greater than the then net worth of
Tenant; and (iii) who is a national or regional chain of retail stores, or is
then operating (directly or indirectly) at least five (5) stores in the States
of New York, New Jersey, Pennsylvania, Massachusetts and Connecticut for the
same or similar use, or has at least ten (10) years of retail operating
experience. Upon such termination, all obligations of Landlord and Tenant
(other than those that expressly are stated to survive termination) shall cease
to be of further force and effect. Notwithstanding anything in this Section
17.01 to the contrary, Tenant shall have the right, without Landlord's consent,
to secure furniture, fixture and equipment financing in the ordinary course of
business and to grant to the financing party a security interest in the
furniture, fixtures, or equipment.
If Landlord exercises its option to terminate this Lease pursuant to this
subsection in connection with an assignment or sublet of all of the Premises,
then, unless Tenant, within fifteen (15) days after receipt of the Takeback
Notice, withdraws Tenant's request for Landlord's consent to the proposed
assignment or sublet, this Lease shall end and expire on the effective date
designated by Landlord in its Takeback Notice (which date shall not be less
than sixty (60) days nor more than one hundred twenty (120) days after the date
of the Takeback Notice) as fully and completely as if such early termination
date were the original expiration date of the Term, and all Rent shall be
apportioned as of such date.
If (x) Landlord shall not elect to send a Takeback Notice within said
30-day period and (y) Tenant is not then in default under this Lease beyond any
applicable notice or cure periods, Tenant shall be entitled, without any consent
by Landlord, to assign this Lease or sublet all of the Premises on substantially
the terms for proposed rent (including additional rent), square foot area, term
and use and to the Permitted Party, described in Tenant's request for Landlord's
consent, provided that if Tenant shall then be in default under this Lease
beyond any applicable notice or cure period, then any such assignment or sublet
shall not be effective until such defaults are cured. Any assignment or sublet
to a Permitted Party shall be subject and subordinate to the terms, conditions
and covenants of this Lease (other than with respect to the use set forth in
Section 1.03), provided that if the assignee or sublessee will not operate any
racing simulator or other rides within the Premises, then notwithstanding
anything to the contrary in Section 3.02. Percentage Rent shall be an amount
equal to [***] of Gross Receipts in excess of [***]. To the extent necessary,
Tenant and Landlord shall execute and deliver a Lease Modification Agreement or
other agreement reflecting the new use clause, if any.
17.02 - EFFECT OF LANDLORD'S CONSENT
(a) Any consent by Landlord to a sale, assignment, sublease, mortgage,
pledge, license, concession, hypothecation, or transfer of this Lease, shall
apply only to the specific transaction thereby authorized and shall not relieve
Tenant from the requirement of obtaining prior written consent of Landlord to
any further sale, assignment, sublease, mortgage, pledge, hypothecation, or
transfer of this Lease. When the consent of Landlord is required hereunder to
any proposed assignment or sublease of this Lease, or to the mortgaging,
pledging, licensing, concession or hypothecation of this Lease,
contemporaneously with the request of Tenant therefor, Tenant shall submit in
writing information reasonably sufficient to enable Landlord to make a decision
with respect thereto.
(b) With respect to any of the consents requested by Tenant, whether or
not the Landlord has consented thereto, Tenant shall pay to the Landlord the
reasonable counsel fees and disbursements and other expenses incurred by the
Landlord in connection therewith. Notwithstanding anything to the contrary in
this Section 17.02(b), in no event shall this sum exceed [***].
*** Confidential treatment requested.
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ARTICLE 18
COMPLIANCE WITH GOVERNMENT ORDERS
18.01 - TENANT TO COMPLY
Tenant, at its own expense, shall promptly execute and comply with all
statutes, ordinances, rules, orders, regulations and requirements of the
federal, state and local governments and of any and all other departments and
bureaus applicable to Tenant's particular use of the Premises or to the business
conducted by Tenant at the Premises, whether ordinary, extraordinary, foreseen
or unforeseen ("Governmental Orders"). In addition, Tenant, at its own expense,
shall comply promptly with and execute all rules, orders, regulations and
recommendations of the Board of Fire Underwriters, Rating Board and Landlord and
Tenant's insurance companies with respect to the prevention of fires and the
exposure of liability risks ("Insurance Matters"). Tenant, at its own expense,
shall furnish and maintain in good order an adequate number and type of fire
extinguishers on the Premises at all times. Notwithstanding the foregoing, in no
event shall Tenant ever be responsible for any violation of Governmental Orders
or Insurance Matters arising directly out of Landlord's Work. Landlord hereby
represents that the Premises shall comply with all applicable Governmental
Orders and Insurance Matters on the date Landlord delivers possession of the
Premises to Tenants.
18.02 - FAILURE TO COMPLY
In case Tenant fails or neglects to comply with any of the Government
Orders, Insurance Matters or the ADA (as hereinafter defined) as herein
required of Tenant, then Landlord or its agent may enter the Premises and make
said repairs and comply with any and all of the Government Orders, Insurance
Matters or the ADA at the cost and expense of Tenant, and in case Tenant fails
to pay therefor upon notice within five (5) days thereafter, the said cost and
expenses, including [***] for administration costs, shall be added to the next
month's installment of Fixed Annual Minimum Rent and be due and payable as such
or Landlord may deduct the same from any balance remaining in Landlord's hands.
This provision is in addition to the right of Landlord to terminate this Lease
under Article 15 hereof by reason of default on the part of Tenant.
18.03 - HAZARDOUS MATERIAL
Tenant shall, at all times, comply with all local, state and federal laws,
rules and regulations governing the use, handling and disposal by Tenant of
Hazardous Material in the Premises and that portion of the Common Areas which
Tenant employs for the display of its model NASCAR racing vehicle, as
specifically set forth in Section 7.03 of this Lease, including, but not limited
to Section 1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq. (42 U.S.C. Section 6903) and any additions, amendments, or
modifications thereto. As used herein, the term "Hazardous Material" shall mean
any hazardous or toxic substance, material or waste which is, or becomes,
regulated by any local or state government authority in which the Premises is
located or the United States Government. Landlord and its agents shall have the
right, but not the duty, to inspect the Premises at any time to determine
whether Tenant is complying with the terms of this Section. If Tenant is not in
compliance with this Section, Landlord shall have the right to immediately enter
upon the Premises and take whatever actions as are reasonably necessary to
comply including, but not limited to, the removal from the Premises of any
Hazardous Material and the restoration of the Premises to a clean, neat,
attractive, healthy and sanitary condition. Tenant shall pay reasonable
out-of-pocket costs incurred by Landlord plus [***] for administration within
ten (10) days after Tenant's receipt of a bill therefor. The covenants in this
Section 18.03 shall survive the expiration or earlier termination of this Lease.
Landlord hereby consents to Tenant's use of (i) hydraulic oil in connection with
the operation of the driving simulators and related equipment associated with
Tenant's permitted use and (ii) cleaning and office products customarily used in
retail or office premises, so long as all of such materials are used, handled,
and disposed of in accordance with applicable laws and at no cost to Landlord.
18.04 - AMERICANS WITH DISABILITIES ACT
Tenant, at its own expense, shall at all times comply with and shall cause
the Premises and that portion of the Common Areas which Tenant employs for the
display of its model NASCAR racing vehicle, as specifically set forth in
Section 7.03 of this Lease, to be in compliance with the requirements of the
Americans With Disabilities Act of 1990, and any additions, amendments or
modifications thereto and all related regulations (the "ADA"). Landlord, at
Landlord's sole cost and expense, shall be responsible for insuring that
Landlord's Work and the Common Areas are in compliance with the ADA.
ARTICLE 19
SUBORDINATION, MORTGAGEE'S RIGHTS AND ASSIGNMENT OF RENTS
19.01 - SUBORDINATION
(a) The rights and interests of Tenant under this Lease shall be subject
and subordinate to any ground lease, mortgage or trust deed now or hereafter
placed upon any portion of the Shopping Center, and to any advances made
thereunder, and to the interest thereon, and to all renewals, modifications,
consolidations, replacements, extensions and re-financings thereof. Tenant
agrees that any ground lessor, mortgage or trustee may elect to give the rights
and interest of Tenant under this Lease priority over the lien of its ground
lease, mortgage or trust deed. In the event of such election, the rights and
interest of Tenant under this Lease automatically shall have priority in whole
or in part, over the lien of said ground lease, mortgage or trust deed, and no
additional consent or instrument shall be necessary or required. However, Tenant
agrees to execute and deliver such instruments as may be reasonably requested by
any ground lessor, mortgagee or trustee for such purposes, and in the event
Tenant fails to do so within ten (10) days after demand in writing, Tenant does
hereby make, constitute and irrevocably appoint Landlord as its attorney-in-fact
(which shall be deemed to be coupled with an interest) and in its name, place
and stead so to do. In the event Landlord shall elect to refinance the Shopping
Center during the term, Tenant's subordination in such future
*** Confidential treatment requested.
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lender shall be expressly conditioned upon Tenant's receipt of a
non-disturbance agreement reasonably acceptable to both Tenant and such future
lender. Landlord will deliver to Tenant, on or before September 15, 1999, a
non-disturbance agreement from each existing ground lessor and lender with an
interest in the Shopping Center, and will use reasonable efforts to obtain the
non-disturbance agreement in a form reasonably acceptable to Tenant. In the
event Landlord is unable to obtain such non-disturbance agreement by September
15, 1999, then Tenant shall not be obligated to accept possession of the
Date until Landlord obtains such non-disturbance agreement. If Landlord is
unable to obtain such non-disturbance agreement by September 15, 1999, then
Tenant may terminate this Lease upon thirty (30) days notice to Landlord.
Landlord, at any time after the execution of this Lease, may, in good faith,
give notice to Tenant that Landlord in unable despite its reasonable efforts to
obtain the non-disturbance agreement on the form requested by Tenant. At such
time, if Tenant refuses to accept the form of non-disturbance agreement that
Landlord is able to secure from its Lender, Landlord may terminate this Lease
upon thirty (30) days notice to Tenant.
(b) Notwithstanding anything to the contrary contained in this Section
19.01, so long as Teachers Insurance and Annuity Association of America
("TIAA") and Connecticut General Life Insurance Company ("CGLIC") have an
interest in the property, the rights of Tenant under this Lease shall be
subject and subordinate only to any first mortgage and to any subordinate
mortgage approved by TIAA and CGLIC, provided however, nothing contained in
this Section 19.01(b) shall be construed to in any way limit Landlord's
obligations under this Lease to provide Tenant with a non-disturbance agreement
pursuant to Section 19.01(a).
19.02 - Mortgagee's Rights
(a) So long as any such ground lease, trust deed or mortgage remains a
lien on any portion of the Shopping Center, Tenant agrees, simultaneously
with the giving of any notice to Landlord which is required to be given by this
Lease, to give a duplicate copy thereof to the respective ground lessor,
mortgagee or trustee, provided Landlord has given Tenant notice of the name and
address of any such ground lessor, mortgagee or trustee. Landlord agrees to
notify Tenant of any ground lessor, mortgagee or trustee to whom such notice
must be sent. Further, Tenant agrees that if Landlord defaults in its
performance of any of the covenants under this Lease and if such default
entitles Tenant to terminate this Lease, the ground lessor, mortgagee or
trustee may cure said default within thirty (30) days after any time period
required of Landlord; provided, however, that if such default cannot be cured
within such time period, Landlord shall be deemed to have cured such default if
cure of the default is commenced within such time period, and thereafter
diligently and in good faith continued with and actually completed. Landlord
shall promptly notify Tenant of its commencement of such cure, and, if
necessary, be permitted entry upon the Premises for the purpose of curing any
such default. The giving of any such notice to Landlord shall not be properly
given under the terms of this Lease and shall be of no force and effect until a
duplicate copy thereof is also given to the ground lessor, mortgagee or trustee
pursuant to this Section 19.02.
(b) Tenant hereby acknowledges that so long as any ground lease, mortgage
or trust deed is a lien upon the Premises, Landlord cannot agree to reduce the
rents below that provided for in this Lease, provide for payments of rent prior
to the time herein provided for, nor terminate this Lease prior to the end of
the term, except as otherwise provided in this Lease, without first obtaining
the written consent of the ground lessor, mortgagee or trustee, and that any
such proposed modification or termination without the written consent of said
ground lessor, mortgagee or trustee shall be void as against said ground
lessor, mortgagee, or trustee.
(c) So long as a mortgage remains a lien on any portion of the Shopping
Center neither Tenant nor any other person having an interest in the
possession, use, occupancy or utilization of the Premises shall enter into any
lease, sublease, license, concession or other agreement for use, occupancy or
utilization of space in the Premises which provides for rental or other payment
for such use, occupancy or utilization based, in whole or in part, on the net
income or profits derived from any person from the premises leased, used,
occupied or utilized (other than an amount based upon a fixed percentage
or percentages of Gross Receipts, as defined herein), and any purported lease,
sublease, license, concession or other agreement shall be absolutely void and
ineffective as a conveyance of any right or interest in the possession, use,
occupancy or utilization of any part of the Premises.
19.03 - Assignment of Rents
(a) With reference to any assignment by Landlord of Landlord's interest
in this Lease, or the rents payable hereunder, conditional in nature or
otherwise, which assignment is made to the holder of a mortgage or ground
lease on property which includes the Premises, Tenant agrees:
(i) that the execution thereof by Landlord, and the acceptance
thereof by the holder of such mortgage or the ground lessor, shall never be
treated as an assumption by such holder or ground lessor any of the obligations
of Landlord hereunder, unless such holder or ground lessor shall, by notice
sent to Tenant, specifically otherwise elect; and
(ii) that except as aforesaid, such holder or ground lessor shall be
treated as having assumed Landlord's obligations hereunder with respect only to
those obligations that arise following a foreclosure or deed in lieu thereof,
or assumption of Landlord's position by a ground lessor only upon foreclosure
of such holder's mortgage and the taking of possession of the Premises, or, in
the case of a ground lessor, the assumption of Landlord's position hereunder by
such ground lessor. Tenant agrees that with respect to those obligations of
Landlord that arise prior to a foreclosure or deed in lieu thereof, or
assumption of Landlord's position by a ground lessor, such foreclosing mortgagee
in possession or ground lessor shall have no liability, provided that nothing
contained herein shall be deemed to relieve Landlord from performance of any
obligations arising under this Lease prior to the date of such assumption nor
any such foreclosing mortgagee or ground lessor, as applicable, from
performance of non-monetary obligations of a continuing nature arising under
this Lease prior to the date of such assumption.
(b) Where a party acquires Landlord's interest in property (whether land
only, or land and buildings) which includes the Premises, and simultaneously
leases the same back, such acquisition shall not be treated as an assumption of
Landlord's position hereunder, and this Lease shall thereafter be subject and
subordinate at all times to such lease (subject to the provisions of Section
19.01 above).
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ARTICLE 20
ENTRY TO PREMISES
20.01 - ENTRY TO PREMISES BY LANDLORD
Landlord shall have the right to enter the Premises at all reasonable
times acceptable to both Landlord and Tenant for the purposes of:
(i) inspecting the same,
(ii) making any repairs to the Premises and performing any work therein
that may be necessary or desirable,
(iii) exhibiting the Premises for the purpose of sale, ground lease,
mortgage or other financing,
(iv) exhibiting the Premises (within one year prior to the expiration of
the term of this Lease) to prospective tenants.
Except in the case of an emergency, Landlord shall be accompanied by a
representative of Tenant during any entry to the Premises unless Tenant waives
such requirement in writing, in advance of such entry. During any such entry,
Landlord shall not interfere with Tenant's access to the Premises.
Nothing in this Lease shall imply any duty on the part of Landlord to do
work or perform obligations which, under any of the provisions of this Lease,
Tenant may be required to perform, and the performance thereof by Landlord
shall not constitute a constructive eviction nor a waiver of Tenant's default.
ARTICLE 21
NOTICES AND CERTIFICATES
21.01 - NOTICES
(a) Any notice, statement, certificate, request or demand required or
permitted to be given or delivered in this Lease shall be in writing, and
personally delivered, sent by reputable overnight courier, or sent by registered
or certified mail, postage prepaid, return receipt requested and addressed to
Landlord at the address shown at the beginning of this Lease, and to Tenant at
the address shown at the beginning of this Lease, or to such other addresses as
Landlord or Tenant shall designate in the manner herein provided. In the case
of any default notice sent by Landlord to Tenant, Landlord shall send a copy to:
Paul, Hastings, Janofsky & Walker, LLP, 555 South Flower Street, 23rd Floor, Los
Angeles, California 90071-2371, Attn: Rick S. Kirkbride. Landlord's managing
agent, Pyramid Management Group, Inc., is hereby authorized and designated to
give or deliver to Tenant any notice under this Lease. Any such notice,
statement, certificate, request or demand shall be deemed given, (i) when
actually delivered, if personally delivered or delivered by overnight or other
courier or delivery service which confirms delivery in writing, or (ii) within
two (2) business days after deposit in the US mail, if sent by registered or
certified mail, postage pre-paid, return receipt requested, except in case of
notice of change of address or revocation of a prior notice, which shall only be
effective upon receipt.
(b) At any time or times when Tenant's interest herein is vested in more
than one person, firm or corporation, jointly, in common or in severalty, a
notice given by Landlord to any one such person, firm or corporation shall be
conclusively deemed to have been given to all such persons, firms or
corporations. Any notices by Tenant pursuant to the provisions hereof shall be
void and ineffective unless signed by all such persons, firms and corporations,
unless all such persons, firms or corporations have previously given notice to
Landlord, signed by each of them and designating and authorizing one or more of
them to give the notice referred to, and such notice shall then be unrevoked by
any notice to Landlord.
21.02 - ESTOPPAL CERTIFICATE OF LANDLORD
Within ten (10) days after request by Tenant, Landlord, from time to time
and without charge, shall deliver to Tenant or to a person, firm or corporation
specified by Tenant, a duly executed and acknowledged instrument, certifying:
(i) that this Lease is unmodified and in full force and effect, or if
there has been any modification, that the same is in full force and effect as
modified, and identifying the data of any such modification; and
(ii) whether Landlord knows or does not know, as the case may be, of any
default by Tenant in the performance by Tenant of the terms, covenants, and
conditions of this Lease, and specifying the nature of such defaults, if any.
Such certification shall not estop Landlord from thereafter asserting any
existing default of which Landlord did not have actual knowledge on the date of
execution thereof.
21.03 - ESTOPPAL CERTIFICATE OF TRUST
Within ten (10) days after request by Landlord or Landlord's ground lessor
or mortgagee, Tenant, from time to time and without charge, shall deliver to
Landlord or the requesting party, or to a person, firm or corporation, specified
by Landlord, a duly executed and acknowledged instrument, certifying:
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(i) that this Lease is unmodified and in full force and effect, or if
there has been any modification, that the same is in full force and effect as
modified, and identifying the date of any such modification;
(ii) whether Tenant knows or does not know, as the case may be, of any
default by Landlord in the performance by Landlord of the terms, covenants and
conditions of this Lease, and specifying the nature of such defaults, if any;
(iii) whether or not there are any then existing permitted set-offs or
defenses by Tenant, and if so, specifying them;
(iv) the dates to which the Fixed Annual Minimum Rent, Percentage Rent,
and Additional rent have been paid;
(v) that the operation and use of the Premises do not involve the
generation, treatment, storage, disposal or release of any Hazardous Material
or a solid waste into the environment in reportable amounts or in manners which
do not comply with all environmental laws and that the Premises is being
operating in accordance with all environmental laws, zoning ordinances and
building codes; and
(vi) such other information as Landlord or Landlord's ground lessor or
mortgagee may reasonably request.
Such certification shall not estop Tenant from thereafter asserting any
existing default of which Tenant did not have actual knowledge on the date of
execution thereof.
ARTICLE 22
COVENANT OF QUIET ENJOYMENT
22.01 - COVENANT OF QUIET ENJOYMENT
(a) So long as no event of default is existing pursuant to Section 15.01
of this Lease, Tenant shall lawfully, peaceably and quietly have, hold and
enjoy the Premises during the term hereof on and after the Term Commencement
Date without hindrance or ejection by any persons lawfully claiming under
Landlord; but it is understood and agreed that this covenant, and any and all
other covenants of Landlord contained in this Lease shall be binding upon
Landlord and its successors only with respect to breaches occurring during its
and their respective ownership of Landlord's interest hereunder.
(b) With respect to any services to be furnished by Landlord to Tenant,
Landlord shall in no event be liable for failure to furnish the same when
prevented from doing so by strike, lockout, breakdown, accident, order or
regulation of or by any governmental authority, or failure of supply, or
inability by the exercise of reasonable diligence to obtain supplies, parts or
employees necessary to furnish such services, or because of war or other
emergency, or for any cause beyond Landlord's control.
(c) Landlord shall be in default of this Lease if Landlord fails to
perform any obligation required to be performed by Landlord under this Lease
and if such failure is not cured within thirty (30) days after receipt of
Notice from Tenant specifying the nature of such failure. In the event of any
such default by Landlord, Tenant shall have the right to exercise all rights
and remedies available at law or in equity. Landlord shall reimburse Tenant for
any reasonable expenses incurred by Tenant in curing Landlord's failures within
twenty (20) days following receipt by Landlord of paid invoices from Tenant. In
the event Landlord fails to reimburse Tenant for such amounts within thirty
(30) days following receipt by Landlord of paid invoices from Tenant, then
Tenant shall have the right to offset such amounts against the next ensuing
installments of Rent, Percentage Rent and Additional Rent coming due under this
Lease until the entire amount has been recouped by Tenant.
ARTICLE 23
MISCELLANEOUS PROVISIONS
23.01 - HOLDOVER
(a) It is expressly understood by Tenant that Tenant's right to
possession of the Premises under this Lease shall terminate at the expiration or
earlier termination of the term, and should Tenant continue thereafter, to
remain in possession, Landlord, should it so elect, shall be entitled to the
benefits of all provisions of law with respect to summary recovery of
possession from a holdover tenant. Tenant shall indemnify and save harmless
Landlord from any claim, damage, expense, cost or loss which Landlord may incur
by reason of such holding over, including without limitation, any claim of a
succeeding tenant, or any loss by Landlord with respect to a lost opportunity
to re-let the Premises.
(b) Should Tenant continue to occupy the Premises after the expiration or
earlier termination of the term with the consent of the Landlord, such tenancy
shall be from month-to-month, and such month-to-month tenancy shall be under
the same terms, covenants and conditions as set forth in this Lease, except
that Tenant shall pay Fixed Annual Minimum Rent on the basis of one and
one-half (1-1/2) times the Fixed Annual Minimum Rent for the last year of the
term.
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23.02 - LIMITATION ON LANDLORD'S PERSONAL LIABILITY
(a) It is understood and agreed that Tenant shall look solely to the
estate and property of Landlord in the Shopping Center for the satisfaction of
Tenant's remedies for the collection of a judgment (or other judicial process)
requiring the payment of money by Landlord in the event of any default or
breach by Landlord with respect to any of the terms, covenants and conditions
of the Lease to be observed or performed by the Landlord, and any other
obligation of Landlord created by or under this Lease, and no other property or
assets of Landlord or of the partners, beneficiaries, co-tenants, shareholders,
members, or principals (as the case may be) shall be subject to levy, execution
or other enforcement procedures for the satisfaction of Tenant's remedies. In
no event shall Tenant name Landlord's partners, members, beneficiaries,
co-tenants, shareholders or principals to any suit or other proceeding to which
Tenant and/or Landlord are a party arising out of or relating to this Lease,
unless the naming of such partners, members, beneficiaries, co-tenants,
shareholders or principals is required in order to permit the Tenant to obtain
jurisdiction over Landlord herein,
(b) The term "Landlord," as used in Subsection 23.02(a) and throughout
this Lease, shall be limited to mean and include only the owner or owners at
the time in question of Landlord's interest in this Lease. Further, in the
event of any transfer by Landlord of Landlord's interest in this Lease,
Landlord herein named (and in case of any subsequent transfers or conveyances,
the then assignor), including each of its partners, beneficiaries, co-tenants,
shareholders, members, or principals (as the case may be), shall be
automatically freed and relieved, from and after the date of such transfer or
conveyance, of all liability for the performance of any covenants and
agreements on the part of Landlord that accrue after the date of said transfer
(but not for any obligation that accrued prior to the date of said transfer,
for which the party assigning Landlord's interest in this Lease shall remain
liable, subject to and in accordance with the terms of this Lease).
23.03 - DEFINITION OF TENANT'S ALLOCABLE SHARE
(a) Intentionally deleted.
(b) Tenant's Allocable Share of Real Property Taxes pursuant to Section
4.01 shall be the product of multiplying the amount of said Real Property Taxes
by a fraction, the numerator of which is the number of square feet of the
Premises as set forth in Section 1.01, and the denominator of which is the
total number of square feet of all buildings then leased in the Shopping Center
on the date as of which such computation is required to be made under the terms
of this Lease, after deducting therefrom the square footage of (i) any REA
Parcel or other parcel which is separately accessed and the Real Property Taxes
of which are paid directly to the taxing authority by the tenant or occupant
thereof, (ii) any anchor store and (iii) any theater, within the Shopping
Center.
(c) Whenever used herein, the term "square feet" shall consist of the
area of floor space on all floors measured from the outside face of all
exterior walls of the buildings (or the midpoints of any interior walls) and
any outdoor sales areas which are mechanically heated or air-conditioned. It
shall not include the floor area of any roof structures used for mechanical
equipment. Whenever used in this Lease, an "anchor store" is defined to mean a
premises in the Shopping Center containing not less than fifty thousand (50,000)
square feet. In the event that at any time the computation of Tenant's
Allocable Share under Section 23.03(b) is required to be made, less than
ninety-two and one-half percent (92.5%) of the total number of leasable square
feet of all buildings in the Shopping Center is "than leased," then the minimum
denominator used in the fraction used for determining Tenant's Allocable Share
under Section 23.03(b) shall not be less than ninety-two and one-half percent
(92.5%) of the total number of leasable square feet of all buildings then
comprising the Shopping Center (less the deductions set forth in Section
23.3(b)).
23.04 - FORCE MAJEURE
The period of time during which either party is prevented or delayed in
any performance or the making of any improvements or repairs or fulfilling any
obligation under this Lease, other than the payment of Fixed Annual Minimum
Rent, Percentage Rent and Additional Rent, due to unavoidable delays caused by
fire, catastrophe, strikes or labor trouble, civil commotion, Acts of God, the
public enemy, governmental prohibitions or regulations or inability to obtain
materials by reason thereof, or any other causes beyond such party's reasonable
control, shall be added to such party's time for performance, and such party
shall have no liability by reason of such delay, except that as a condition to
Tenant's right to avail itself of Force Majeure, Tenant must give Landlord
written notice of such claimed Force Majeure.
23.05 - RELOCATION OF TENANT
Landlord shall have the right to relocate Tenant to another space, the
mall frontage of which shall be equal to or greater than that of the Premises,
and the square footage of which shall not vary from that of the Premises by
greater than one hundred (100) square feet within the Shopping Center after the
expiration of the first thirty-six (36) months of the term of this Lease, upon
one hundred twenty (120) days Notice to Tenant, at Landlord's cost and expense,
which relocation shall in no way affect the obligation or duties of either
party hereunder. Landlord shall be obligated for all expenses associated with
such relocation, including but not limited to the construction of the new space
to a condition and level of quality of finishes at least equivalent to the
condition and level of the Premises on the date of Landlord's relocation notice
and any actual out-of-pocket costs incurred by Tenant for the printing of new
stationary and business cards, and the costs of moving Tenant's Personal
Property. In the event Tenant shall fall or refuse to accept the new location
within twenty (20) days of such Notice, Landlord at its option, may terminate
this Lease upon forty-five (45) days written Notice to Tenant, provided that if
Landlord shall fail to give the Notice of Landlord's election to terminate
within forty-five (45) days after the expiration of such twenty (20) days, then
Landlord's termination right under this Section 23.05 shall be waived and this
Lease shall remain in full force and effect through the Termination Date as
defined in Section 2.02. Tenant's written consent, which may be withheld in
Tenant's sole discretion, shall be required for any relocation which moves the
Premises outside the cross-hatched area shown on Exhibit A-2.
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23.06 - CHANGES AND ADDITIONS
Landlord hereby reserves the right at any time, and from time to time, to
make alterations or additions to, and to build additional stories on the
building in which the Premises are located and to build adjoining the same.
Landlord also reserves the right at any time, and from time to time, to
construct other buildings and improvements in Landlord's Tract, to enlarge or
otherwise modify the Shopping Center, to make alterations therein or additions
thereto, to build additional stories on any building or building within the
Landlord's Tract, to build adjacent thereto, to construct decks or elevated
parking facilities, to install, maintain, use, repair and replace ducts, wires,
pipes and conduits passing through or under the Premises serving other parts
(now existing or hereafter added) of Shopping Center, and to sell or lease any
part of Landlord's Tract. The purpose of the attached Site Plan is to show the
approximate location of the Premises within the Shopping Center, and Landlord
reserves the right at any time to relocate the various buildings, parking areas
and other Common Areas shown on said Site Plan; provided, however, that there
shall not be caused thereby any unreasonable obstruction of Tenant's right of
access to the Premises or any unreasonable interference with Tenant's use of the
Premises for the purposes hereinabove set forth, or the access to and viability
of the Premises as more fully set forth in Section 7.03 of this Lease.
23.07 - ATTORNMENT BY TENANT
If any time during the term of this Lease the Landlord hereunder shall be
the holder of a leasehold estate covering purposes which include the Premises,
and if such leasehold estate shall be canceled or otherwise terminated prior to
the expiration date thereof and prior to the expiration of the term of this
Lease, or in the event of the surrender thereof whether voluntary, involuntary
or by operation of law. Tenant shall make full and complete attornment to the
lessor of such leasehold estate, provided the lessor of such leasehold estate
assumes all of Landlord's obligations under this Lease, for the balance of the
term of this Lease upon the same covenants and conditions as are contained
herein so as to establish direct privity between such lessor and Tenant and
with the same force and effect as though this Lease was made directly from such
lessor to Tenant. Tenant shall then make all rent payments thereafter directly
to such lessor. In the event any proceedings are brought for the foreclosure
of, or in the event of conveyance by deed in lieu of foreclosure of, or in the
event of the exercise of the power of sale under, any mortgage or deed of trust
made by Landlord covering the Premises, or in the event Landlord sells, conveys
or otherwise transfers its interest in the Shopping Center or any portion
thereof containing the Premises. Tenant shall attorn to and hereby covenants
and agrees to execute and instrument in writing reasonably satisfactory to the
new owner whereby Tenant attorns to such successor in interest and recognize
such successor as the Landlord under this Lease.
23.08 - INDEX
As used in this Lease, "Index" means the then higher of either of the
Revised Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W) or the Consumer Price Index for All Urban Consumers (CPI-U) of the
United States Department of Labor's Bureau of Labor Statistics in effect and
generally published at the time the computation is to be made. If the aforesaid
price indices are no longer published, then another price index, generally
recognized as authoritative, shall be substituted by Landlord. In the event the
parties are unable to so agree, the matter shall be submitted to arbitration
pursuant to Section 23.18. During any period while the determination of such a
dispute is pending, Tenant shall continue to pay the sum previously in effect;
provided, however, that the adjusted sum as finally determined shall be
retroactive from the prescribed deficiency owed by Tenant shall be paid
promptly upon a final determination of the dispute.
23.09 - SURVIVAL OF TENANT'S OBLIGATIONS
Any sums due either party from the other that by the terms herein would be
payable, or are incapable of calculation, until after the expiration or earlier
termination of this Lease shall survive and remain a continuing obligation
until paid.
23.10 - EFFECT OF LANDLORD'S NOTICE TO TERMINATE
Any right on the part of Landlord to terminate this Lease shall, when
exercised, require no further act, to the end that at the expiration of the
applicable time period, if any, contained in the particular termination
provision, this Lease and the term hereunder shall end and expire as fully and
completely as if such termination date was the date herein definitely fixed for
the end and expiration of the Lease and the term hereof, and upon such date
Tenant shall quit and surrender the Premises to Landlord.
23.11 - EFFECT OF CAPTIONS
The captions, bold-faced type, underlining, notational references, or
legends in this Lease are inserted only for convenient reference or
identification of the particular paragraphs. They are in no way intended to
describe, interpret, define or limit the scope, extent or interest of this
Lease, or any paragraph or provision thereof.
23.12 - TENANT AUTHORIZED TO DO BUSINESS
Tenant represents, warrants and covenants that it is upon the date of
execution, and throughout the term of this Lease it shall be authorized to do
business and in good standing in the state in which the Premises is located.
Tenant, if a partnership or corporation, agrees to furnish to Landlord, upon
request, evidence of authority for entering into this Lease.
23.13 - EXECUTION IN COUNTERPARTS
This Lease may be executed in one or more counterparts, any one or all of
which shall constitute but one agreement.
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23.14 - LAW GOVERNING, EFFECT AND GENDER
This Lease, and any dispute concerning this Lease, shall be governed by
the laws of the state in which the Premises is located, and any dispute
concerning an interpretation of any portion of the Lease or the conduct of the
parties hereunder shall be brought in either Syracuse, New York, or in the
jurisdiction where the Premises is located. Tenant hereby consents to service
of process at the Premises in the event that Tenant does not maintain a
separate business office within the state where the Premises is located. This
Lease shall be binding upon and inure to the benefit of the parties hereto and
their respective legal representatives, successors and permitted assigns,
except as expressly provided otherwise. Use of the natural gender shall be
deemed to include the masculine and feminine.
23.15 - MEMORANDUM OR NOTICE OF LEASE
Upon request by either party, Landlord and Tenant agree to execute a
Memorandum or Notice of Lease in recordable form pursuant to applicable state
law. Upon the expiration or earlier termination of this Lease, the party who
shall have recorded such Memorandum or Notice of Lease shall promptly execute
any necessary instrument and remove the Memorandum or Notice of Lease from the
public records, and upon failure to do so, the other party is hereby appointed
attorney-in-fact to execute any such instrument in the recording party's name,
place and stead.
23.16 - COMPLETE AGREEMENT
This Lease contains and embraces the entire agreement between the parties
hereto with respect to the matters contained herein, and it or any part of it
may not be changed, altered, modified, limited, terminated, or extended orally
or by any agreement between the parties unless such agreement is in writing and
signed by the parties hereto, their legal representatives, successors or
assigns. Tenant acknowledges and agrees that neither Landlord nor any
representative of Landlord nor any broker has made any representation to or
agreement with Tenant relating to the Premises, this Lease or the Shopping
Center which is not contained in the express terms of this Lease. Tenant
acknowledges and agrees that Tenant's execution and delivery of this Lease is
based upon Tenant's independent investigation and analysis of the business
potential and expenses represented by this Lease, and Tenant hereby expressly
waives any and all claims or defenses by Tenant against the enforcement of this
Lease which are based upon allegations of representations, projections,
estimates, understandings or agreements by Landlord or Landlord's
representative that are not contained in the express terms of this Lease.
23.17 - GUARANTY OF LEASE
Intentionally deleted.
23.18 - ARBITRATION
Any controversy or claim arising from or relative to any matter in
connection with this Lease, with reference to which this Lease shall expressly
provide that this paragraph governs, shall be settled by arbitration in the
City of Syracuse, New York, in accordance with the rules of the American
Arbitration Association or its successor organization, and judgment upon the
award rendered by the arbitrator or arbitrators may be entered in any court
having jurisdiction thereof.
23.19 - SECURITY AGREEMENT
Intentionally deleted.
23.20 - INVALIDITY OF PARTICULAR PROVISIONS
If any term or provision of this Lease or the application thereof to any
person or circumstance is, to any extent, invalid or unenforceable, the
remainder of this Lease, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Lease shall be valid and be enforced to the fullest extent permitted by
law.
23.21 - EXECUTION OF LEASE BY LANDLORD
The submission of this document for examination and negotiation does not
constitute an offer to lease, or a reservation of, or option for, the Premises,
and the document shall be effective and binding only upon the execution and
delivery hereof by both the Landlord and Tenant.
23.22 - RELATIONSHIP OF THE PARTIES
Nothing contained herein shall be deemed or construed by the parties
hereto nor by any third party as creating the relationship of principal and
agent or of partnership or of joint venture between the parties hereto, it
being understood and agreed that neither the method of computation of rent nor
any other provision herein contained, nor any acts of the parties hereto, shall
be deemed to create any relationship between the parties hereto other than
landlord and tenant.
23.23 - BROKERS
Landlord represents and warrants to Tenant that it has not employed any
realtors or brokers in connection with the negotiation of this Lease. Tenant
represents that Tenant has retained as its broker Russell J. Friend of Blatteis
Realty ("Tenant's Broker"), and Tenant specifically acknowledges and agrees
that any fee payable to Tenant's Broker is the sole and exclusive
responsibility of Tenant and Landlord shall have no liability therefor.
Landlord and Tenant shall each indemnify, defend and hold harmless the other
from any cost, expense or claim for brokerage or other commission arising from
or out of any breach of the foregoing representation and warranty.
31
<PAGE> 36
23.24 - REPRESENTATIONS
Landlord warrants to Tenant that the Shopping Center is in good condition
and repair, free of material defects, and that the Shopping Center has been
constructed in accordance with applicable laws and requirements.
23.25 - ABATEMENT
In the event Tenant is prevented from using the Premises or any portion
thereof, for five (5) consecutive business days or ten (10) days in any twelve
(12) month period (the "Eligibility Period") as a result of the failure of
Landlord to maintain and repair the Shopping Center and the Premises in
accordance with its obligations as set forth in this Lease, and such failure
interferes with Tenant's operations and use of the Premises, or as a result of
any failure to provide services or access to the Premises, or because of the
presence of Hazardous Materials in or on the Shopping Center or the land on
which the Shopping Center is located resulting from the acts or omissions of
any party other than Tenant which pose a health risk to occupants of the
Premises, 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 a portion thereof, in the
proportion that the square footage of the portion of the Premises that Tenant
is prevented from using bears to the Tenant Area of the entire Premises.
However, in the event that Tenant is prevented from conducting its business in
any portion of the Premises under such circumstances for period of time in
excess of the Eligibility Period, and the remaining portion of the Premises is
not reasonably 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 square footage of such reoccupied portion of the Premises
bears to the Tenant Area of the Premises, shall be payable by Tenant from the
date such business operations commence.
23.26 - SPECIAL USE PERMIT
Exceptions may be otherwise set forth in Section 5.02(a) of this Lease,
Landlord represents that as of the date hereof, no "special" use permit from
local governmental authorities is required for Tenant's operation for the
permitted use in Section 8.01 within the Premises in accordance with this
Lease. The foregoing representation shall not extend to any building or similar
permits required for Tenant's Work or a certificate of use and occupancy for
the Premises or licenses to conduct business and the like.
23.27 - TENANT IMPROVEMENT REBATE
Notwithstanding anything contained herein to the contrary, provided Tenant
is not in default under this Lease beyond the expiration of any applicable
notice and cure period, Tenant shall be entitled to an allowance in the amount
of [***] per square foot of the Premises ("Tenant Improvement Rebate") (e.g., if
the Premises are 4,167 square feet in size, then Tenant shall be entitled to a
Tenant Improvement Rebate from Landlord in the amount of [***]. The Tenant
Improvement Rebate shall be paid to Tenant by Landlord in the form of an
abatement (the "Abatement") of any and all charges, fees and reimbursements that
otherwise would be due and owing from Tenant to Landlord (including, without
limitation, Fixed Monthly Minimum Rent, Percentage Rent, Common Area Charges,
insurance, and contributions to the Marketing Fund), except Tenant shall be
obligated to pay Tenant's Allocable Share of all Real Property Taxes despite the
Abatement. The Abatement shall commence on the Term Commencement Date and shall
continue until the amount of the Abatement equals the amount of the Tenant
Improvement Rebate. If this Lease is terminated prior to the expiration of the
term, Tenant shall pay to Landlord, as Additional Rent, any amount of the Tenant
Improvement Rebate received by Tenant (whether in the form of the Abatement or
otherwise) in excess of the earned portion of the Tenant Improvement Rebate,
which "earned portion" shall be determined by dividing the Tenant Improvement
Rebate by the total number of months that would make up the term if not for the
prior termination of this Lease (e.g., 120 months if the term is not extended
pursuant to Section 2.03 above) and multiplying the result by the number of
months (including whole and partial months) that occurred commencing on the Term
Commencement Date and ending on the date that this Lease was terminated. For
example, if the term is comprised of 120 months and if Tenant operated the
Premises after the Term Commencement Date for 70 whole and partial months, then
Tenant shall pay to Landlord any amount received by Tenant in excess of 7/12
(i.e., based on 70/120, or the "earned portion") of the Tenant Improvement
Rebate. Such amount shall be deemed due as of the date the Lease is terminated
and shall be payable within five (5) days following such date. Such amount shall
not be subject to credit, offset or mitigation as otherwise provided in Section
15.02(c) of the Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Lease on the
date first above written.
PYRAMID CROSSGATES COMPANY
By: /s/ [ILLEGIBLE]
------------------------
Partner/Authorized Agent
SILICON ENTERTAINMENT, INC.
By: /s/ [ILLEGIBLE]
------------------------
Title: V.P.
*** Confidential treatment requested.
32
<PAGE> 37
(Acknowledgment of LANDLORD)
State of New York
ss:
County of Onondaga
On the 12th day of August in the year 1999, before me the undersigned, a notary
public in and for said state, personally appeared [ILLEGIBLE], personally known
to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged
to me that he executed the same in his capacity, and that by his signature on
the instrument, the individual or the person upon behalf of which the
individual acted, executed the instrument.
/s/ JENNIFER B. HUSE
--------------------
(Notary Public)
JENNIFER B. HUSE
Notary Public, State of New York
No. 01HU5086563
Qualified in Onondaga County
Commission Expires October 20 1999
(Acknowledgement of TENANT)
State of California
ss:
County of Santa Clara
On the 5th day of August in the year 1999, before me the undersigned, a notary
public in and for said state, personally appeared Chris Morse, personally known
to me or proved to me on the basis of satisfactory evidence to be the
individual(s) whose name(s) is (are) subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument, the
individual(s) or the person upon behalf of which the individual(s) acted,
executed the instrument.
/s/ LAURIE H. SHERMER
---------------------
(Notary Public)
LAURIE H. SHERMER
Commission # 1155999
Notary Public - California
Santa Clara County
My Comm. Expires Sep 19, 2001
33
<PAGE> 38
TABLE OF EXHIBITS
-----------------
<TABLE>
<S> <C>
EXHIBIT A..............................................................Site Plan
EXHIBIT A-1.............................................................Premises
EXHIBIT B.........................................Description of Landlord's Work
EXHIBIT C...........................................Description of Tenant's Work
EXHIBIT D.................................................Outline Specifications
EXHIBIT E..................................................Intentionally deleted
EXHIBIT F.........................................................Tenant's Signs
</TABLE>
34
<PAGE> 39
EXHIBIT A
[MAP]
Note: This is a schematic plan and is intended to show only the proposed layout
of the Shopping Center. All measures, dimensions and distances are not to
scale. The depiction hereon does not constitute a warranty or representation of
any kind.
<PAGE> 40
EXHIBIT A-1
[MAP]
Note: This diagram is an approximate lease plan of the Shopping Center. All
measures, dimensions and distances are not to scale. The depiction hereon does
not constitute a warranty or representation of any kind.
<PAGE> 41
EXHIBIT A-2
[MAP]
Note: This diagram is an approximate lease plan of the Shopping Center. All
measures, dimensions and distances are not to scale. The depiction hereon does
not constitute a warranty or representation of any kind.
<PAGE> 42
EXHIBIT B
LANDLORD'S WORK
The Premises have already been constructed and Tenants accepts the Premises
in its "as is" condition. All other work required to prepare the Premises for
Tenant's use and occupancy shall be performed by Tenant at its sole cost and
expense.
1
<PAGE> 43
EXHIBIT C
TENANT'S WORK
Tenant accepts the Premises in the "as is" condition on the date that
possession of the Premises is made available by Landlord, and shall, at its
sole cost and expense, and in accordance with the Outline Specifications
attached hereto and made a part hereof as Exhibit D, furnish all labor,
material, fixtures and equipment necessary to complete, in a good, substantial
and approved manner, all work required to bring the Premises to a finished
condition ready for the conduct of Tenant's business therein.
1
<PAGE> 44
EXHIBIT C
Crossgates Mall, Albany, New York
CONDITIONS OF SPACE:
1. HVAC is a 7.5 Ton unit, in good working condition.
2. Floor to deck height is 17 feet.
3. Existing ceiling is 12'.
4. Electrical service available is 800 amps.
5. Conduit is 2 inch.
6. Tenant's location is 40 feet from electrical room.
7. Floors are 95% wood and 5% VCT.
8. Walls are sheetrock.
9. See attached plan and DCP for further detail.
Exhibit C
Page 2
<PAGE> 45
[FLOOR PLAN]
DIMENSION CONTROL PLAN
<PAGE> 46
"EXHIBIT A"
[FLOOR PLAN]
<PAGE> 47
[FLOOR PLAN]
<PAGE> 48
EXHIBIT D
OUTLINE SPECIFICATIONS
A. DESIGN AND CONSTRUCTION
Tenant will retain the services of architect(s) and engineer(s) licensed
in the state in which the Shopping Center is located for the design of
Tenant's Work. Tenant will retain contractors for the completion of
Tenant's Work. Tenant and its contractors will at all times cooperate
fully with Landlord's employees and contractors, and with other tenants
and their contractors.
Tenant's architect and engineer will design all Tenant's Work in full
compliance with all federal, state and local codes, ordinances, rules and
zoning regulations applicable to the Shopping Center and to Tenant's
Premises. Tenant's architect and engineer will incorporate by reference or
by duplication the Tenant Design Handbook into the final contract
documents.
Landlord will complete Landlord's Work as set forth in Exhibit B of this
Lease under a blanket building permit. Tenant will complete Tenant's Work
as set forth in Exhibit C of this Lease under an individual building
permit. Tenant will be responsible for all building permit costs and/or
any other municipal permit(s) and/or fees required for Tenant's Work. All
building permit questions, as they relate to Tenant's Work (Exhibit C)
should be directed to the Landlord.
B. DIMENSION CONTROL PLAN
Landlord will furnish Tenant with two (2) prints of a Dimension Control
Plan, setting forth dimensions and design information necessary to
complete the design of Tenant's Work. The Dimension Control Plan will be
made available following the execution of this Lease.
C. TENANT'S DESIGN
All final submissions will bear the seal and signature of an architect
(and engineer if applicable) licensed to practice in the state in which
the Shopping Center is located.
Tenant's design will employ the best available technology to provide for
maximum energy conservation within the Premises. All HVAC, plumbing and
electrical work will be in compliance with ASHRAE Standard 90-80, or the
most recent edition thereof.
Within two (2) weeks from the later of (a) receipt by Tenant of a
Dimension Control Plan from Landlord, or (b) the date of execution of this
Lease, Tenant shall submit by overnight delivery service "Preliminary
Design Drawings," for Landlord's review, showing the intended design
concept and character of proposed finishes. Tenant's submission shall
consist of one (1) copy set and one (1) blueline set of prints.
Preliminary Design Drawings will contain basic dimensions of the Premises
and shall include, but not necessarily be limited to, the following:
1. Preliminary floor plan with fixturing layout;
2. Preliminary reflected ceiling plan;
3. Storefront elevation showing intended materials and signage, complete
with sample of all finish materials;
4. Section through storefront and bulkhead; and
5. Material and color finish sample board of interior and storefront
finishes;
Landlord will return to Tenant one (1) set of prints marked with
Landlord's comments relative to Tenant's preliminary submission within
fifteen (15) days after Landlord's receipt of such submission. Tenant
agrees to incorporate Landlord's comments into Tenant's final submission.
Within thirty (30) days after the issuer of (a) receipt by Tenant of the
Dimension Control Plans from Landlord, or (b) the date of execution of
this Lease, Tenant will submit to Landlord two (2) sets of reproductible
prints and six (6) sets of blueline prints of Tenant's "Design Drawings"
showing final design, character, and finishes. All design shall conform to
the design criteria set forth herein. Tenant's Design Drawings shall
include, without limitation, the following for review:
1. Architectural: Floor plan, fixturing layout, room finish schedule,
door schedule, partition types, ceiling plan, interior wall and
storefront elevations describing signage elevations and shop
drawings, sections, and details as appropriate.
2. Mechanical: All equipment, locations, distributions and return
systems, duffuser locations, load calculations, controls, and details
as appropriate.
3. Electrical: Floor and ceiling plans showing type and location of
power and lighting, equipment, controls, projected loads, panel
schedules, riser diagram, and details as appropriate.
4. Plumbing: Location and type of water meter, fixtures, supply and
waste piping schematics and details as appropriate.
5. Specifications on materials and methods of construction for the
above items.
6. Signage Shop Drawings indicating finishes, type, and mounting
location. Food merchants will submit "menu board" specifications
and/or photographs.
7. Manufacturer's Cuts of fixtures and equipment with finishes.
1
<PAGE> 49
8. Certificate of Completion and Affidavit (Appendix 2).
9. Tenant Electrical Load Summary (Appendix 1A).
10. Tenant Design Checklist (Appendix 1).
Landlord will return to Tenant one (1) set of copies of Tenant's Design
Drawings marked with reviewer comments and required modifications, if Tenant's
Design Drawings are returned to Tenant with comments but not bearing the
approval of Landlord, Tenant's Design Drawings shall be revised by Tenant,
incorporating Landlord's comments, and resubmitted to Landlord for review within
ten (10) days of receipt.
Plans will not be returned until Receipt of Appendices 1 and 1A.
If the final submission of Tenant's architectural drawings are stamped
"Final Approved for Construction as Noted," it is Tenant's or Tenant's
representative's responsibility to distribute copies of the final drawings,
stamped as such, to the contractors at the job site. Landlord's design review is
solely for the purpose of assisting the Tenant and coordinating the store
design of the various tenants in the Shopping Center. If in the design review
process Landlord does not denote items that are not in compliance with the
provisions of the Lease, including these Outline Specifications, the same will
not relieve Tenant. Tenant's contractor, Tenant's architect and engineer of
their obligations to construct in compliance with these Outline Specifications,
and any applicable federal, state and local codes, ordinances, rules and
regulations.
Any modifications to Tenant's Premises during the term of the Lease must
conform to all provisions of the Lease including this Exhibit or, at Landlord's
option, Landlord's then-current design criteria, including design review and
payment of the fee therefor. Tenant's contractor will construct Tenant's space
in accordance with Tenant's final drawings as approved by Landlord and will
furnish a signed Certificate of Completion as provided below, Receipt of
Appendix 2 (attached) will be required prior to the release of Tenant's
security deposit.
D. SUBMISSION OF AS-BUILT DRAWINGS AND CERTIFICATE OF COMPLETION
(Appendix 1)
As a condition of Landlord's approval for Tenant to initially open for
business in the Shopping Center, and upon completion of the Premises, Tenant
will submit to Landlord for Landlord's permanent project construction files: (1)
a set of reproducible "As-Built" drawings which contain all of the information
required in Tenant's Design Drawings, updated to accurately reflect the
as-built conditions of Tenant's HVAC, electrical and plumbing systems; and (2)
a Certificate of Completion (Appendix 2) signed by Tenant, Tenant's architect
and contractor, certifying that the Premises have been constructed and
completed in accordance with the plans, drawings and specifications previously
submitted to and reviewed by Landlord. Tenant must also submit a completed a
Stipulation of Cost with appropriate backup documentation as a condition of
Landlord's approval. Landlord will be entitled to rely on this Certificate as
evidence of Tenant's completion of construction of the Premises pursuant to the
provisions of this Lease.
E. OUTLINE SPECIFICATIONS
The following Outline Specifications will apply to the performance of all
work carried out with regard to the Premises:
1. Floor System
a. Upper-level Floor System (if applicable)
The upper-level floor system will consist of a structural framing
system and a concrete stab. Depressions in the slab for floor
covering will not be permitted. Electrical floor boxes or
plumbing lines must be installed by core drilling through the
concrete slab to the lower-level tenant's ceiling space. All such
work will be coordinated directly with Landlord. No piping,
conduit or other related items may be placed in the concrete slab
or on the steel decking. The floor system will be designed for a
maximum allowable live load of 100 pounds per square foot.
b. Level Floor System
The lower level floor system will consist of a concrete floor
slab. All work which Tenant desires to be placed below the slab
will be installed prior to the slab construction, or Tenant may
cut and replace said slab at Tenant's expense only upon approval
from Landlord.
c. Waterproofing (if applicable)
All tenants will ensure the water tightness of their restroom
floor system. Waterproofing membranes will extend no less than 4"
vertically at all demising walls. Additionally, all food
merchants, pet stores and salons will provide a waterproof
membrane over their entire floor area with water-tight
connections at all floor penetrations.
All tenants will ensure water tightness of all floor slab
penetrations. Tenant will be responsible for any damage which
occurs as a result of, or which is caused directly or indirectly
by the failure of Tenant or its contractors to adequately
construct, install, or adequately seal all floor penetrations.
Food use tenants must install a single waterproof membrane as
specified by specific mall.
2. Walls, Partitions and Doors
2
<PAGE> 50
a. Demising Partitions
All demising partitions will be finished with a minimum of 5/8"
fire code gypsum wallboard (unless otherwise required by code),
from the floor to the deck, with all joints taped. Exposed walls
will be finished with three layers of spackling, sanded and left
in paint-ready condition.
1) Insulation in Demising Partitions
All demising partitions constructed by the following types
of merchants will be insulated with vapor barriers
(installed to the warm side of the wall) and sound
attenuation blanketing from the floor to the underside of
the deck.
1. Food establishments;
2. Game rooms, arcades, video, record and tape stores;
3. Pet stores;
4. Salons;
5. Any other use which produces unusual noise or odor, or
heats or cools the Premises 10 degrees (Fahrenheit) +/-
beyond the normal range within the Shopping Center or is
deemed by Landlord to potentially impact other mall
tenants adversely.
b. Exterior/Interior Partitions
All interior partitions of the Premises will be constructed of
metal studs, with gypsum wallboard or other non-combustible
finish on all sides. Any combustible materials applied to
partitions must receive a U.L. labeled fire-retardant coating, or
be placed over a non-combustible substrate material. All exterior
walls will be insulated with fiberglass insulation from the floor
to the underside of the deck. Insulation will have an integral
vapor barrier with an "R" value of 19 or greater if required by
any federal, state or local code, ordinance, rule or regulation.
The insulation will be covered by one (1) layer of 5/8" type 'X'
gypsum wallboard from the floor to the underside of the deck.
c. Storefront Bulkhead
Tenant's storefront bulkhead, if any, will be constructed and
finished subject to Landlord's review of signage and overall
design. The mall side of Landlord's bulkhead will be finished by
Landlord. Tenant's side will be finished with a minimum of 5/8"
fire code gypsum wall board running the full height to the
structure above (1 hour rated). All materials applied on the mall
side of the storefront will be non-combustible as per code and
local building regulations.
Storefront bulkheads will have an insulation "R" value of at
least 11 (except at Walden Galleria, Independence Mall, Carousel
Center, Galleria at Crystal Run, Silver City Galleria and
Crossgates Mall, where the insulation is not required at this
time).
d. Plumbing Chases
Plumbing chases, whether in Tenant's Premises or beyond, will be
constructed with access panels in full compliance with all
applicable codes and will be insulated to prevent freezing of
water and waste piping.
e. Doors
Service doors which open into a corridor or Tenant's exterior
service area will be framed and installed in locations approved
by Landlord. These doors must open in the direction of exit
travel, and must be recessed so as not to restrict use of any
service corridor as an emergency exit corridor. Tenant will cut
and patch the wall provided by Landlord as necessary to properly
access the door(s). Door frames will be made of hollow metal,
14-gauge steel, fully welded, with a reinforced head. Doors will
be 3'-5" by 7'-0", 16-gauge steel, reinforced, hollow metal.
Hardware will include a locking device which is always openable
from the interior, a door bumper, corner guards and a hydraulic
door closer. Service doors opening into a service corridor will
be 1-1/2 hour rated. Tenant will properly identify the Premises
with an engraved sign attached to the exterior of its service
door.
f. Exits
Fire exits will be clearly marked and maintained in accordance
with governing codes and ordinances. Tenant will not install any
hardware or other device(s) that would prohibit the use of an
emergency fire exit.
g. Finishes
Paint finishes will be a minimum of two (2) even coats with no
skips, runs or sags. Before applying any wall covering(s), the
underlying surfaces will be prime coated.
3. Storefront
a. Scope
The total separation between the Premises and mall, herein
referred to as "Storefront," including any show windows,
platforms, glass and glazing, lobbies or entries, doors, grilles,
bracing and supports, depressions, and any walls between the
Premises and the
3
<PAGE> 51
mall will be furnished and installed by Tenant in accordance with
Design Drawings bearing Landlord's approval.
b. Design Review
Tenant's Storefront design will be subject to Landlord's approval and
will be in harmony with the overall quality and character of the mall.
Landlord will review each Storefront design carefully to ensure the
suitability of the design to the merchandise sold within the store and
to the store's location within the mall. Landlord also reserves the
right to modify Tenant's design and material election for the
Storefront.
c. Storefront Design Guidelines
It is the intent of these guidelines to encourage the design of
Storefronts which reinforce the concept of the mall as a streetscape.
The streetscape is comprised of tenants' Storefronts which have varying
shapes, sizes and materials and which also vary in the degree to which
they protect beyond or are recessed from the bulkhead line.
Creativity in the streetscape theme and the use of new and innovative
materials is highly encouraged by Landlord; our Design Department is
available and willing to assist tenants in creating a noteworthy and
exciting design.
Landlord's review of Tenant's Design Drawings is for design purposes
only. Tenants architect and/or engineer accepts all responsibility for
any non-compliance with federal, state or local codes, ordinances,
rules or regulations applicable to Tenant's Premises.
d. Storefront "Pop-Out" Criteria
The following sets forth the required criteria for allowable Storefront
projections:
PLEASE NOTE: Refer to the Dimension Control Plan for the "Condition"
which pertains to the "pop-out" criteria listed below. Tenant may
occupy an enclosed projected area beyond the bulkhead line containing
up to sixty percent (60%) of the area bounded by the maximum Storefront
protection line, the bulkhead line, and the "no build zone" (as defined
below), while respecting other setback lines as conditions apply (see
Dimension Control Plan).
A "no build zone" of either 1'.5" or 1'.0" is required between tenants'
Storefronts. See Tenant Design Handbook for details.
Overhead projections (minimum 8'.0" A.F.F.) may be constructed anywhere
within the area bounded by the maximum Storefront projection line, the
"no build zone" and other setback lines as conditions apply (subject to
Landlord's approval) (see Dimension Control Plan).
The Storefront will or may be built to a height no higher than the
bottom of Landlord's bulkhead and shall not project outside the maximum
Storefront projection line as shown on the Dimension Control Plan.
At all mall Storefront feature columns, any partition of Tenant's
storefront which must attach to Landlord's feature column must be full
height glass. This glass must interact at the center line of the
feature column and run parallel to Landlord's mall bulkhead for a
minimum of 12 inches from the face of the feature column before changing
direction.
At all Storefront(s), illuminated signs mounted to the outside of the
Storefront will not extend below 8'.0" A.F.F.
Tenant must appropriately finish the top portion of its projected
Storefront with a finish of the same quality and material as that used
on the vertical surfaces of Tenant's projected Storefront.
Particular Storefront conditions require reference to Tenant's
Dimension Control Plan for the location(s) of any column(s) for the
purpose of respecting the 12'.6" radius setback of Tenant's "pop-out".
In no case will there be a limit on the amount of storefront which may
be recessed behind the bulkhead line.
e. Characteristics and Materials
No artificial images such as applied roofs, dormers, thatch, veneer
brick, veneer field stone, pegboard, cork products, carpet, painted
gypsum wallboard, vinyl, plastic or metal laminate, nor zolatone will be
permitted in the construction of Tenant's Storefront. Backpainted glass,
ceramic tile (used in any area of the mall other than in the Food Court)
will be permitted only at the sole discretion and with the consent of
Landlord. Landlord reserves the right to modify any Storefront design
and Tenant's material selection.
"The use of combustible materials, fire retardant wood, permitted only
by code.
It is recommended that Tenant's Storefront design utilize full height
tempered glass from floor to bottom of bulkhead as a basic design
element.
f. Security
4
<PAGE> 52
Storefront security can be provided by utilizing rolling, sliding, or
folding closures of glass, painted steel, anodized aluminum, or other
materials approved by Landlord. All security closures must be fully
concealed when open.
Overhead door soffits will be constructed and finished in such a way as
to conceal all internal areas of the Storefront construction. The
opening will be finished on the inside faces of gate/door pocket 12"
above the soffit line and 12" inside of the side wall pockets.
Side wall gate/door pockets will be constructed with flush, overlay
pocket doors to conceal the door and pocket. All such doors will have
concealed hardware.
g. Construction Materials
All Storefront construction and construction materials are subject to
federal, state and local codes, ordinances, rules and regulations
applicable to the Shopping Center.
h. Safety
All Storefront design and construction shall comply with all federal,
state and local codes, ordinances, rules and regulations applicable to
the Shopping Center regarding transparent glass doors and fixed adjacent
transparent glass sidelights to avoid injury from accidental human
impact. All markings on glass expanses will be subject to Landlord's
review.
i. Tempered Glass
All glass or mirror used in Tenant's Storefront construction in any type
of vertical plane will be minimum 3/8" tempered safety glass. All
overhead glass or mirror used in a horizontal or sloped application must
be heat-strengthened laminated glass installed in accordance with
governing codes.
j. Storefront Base
All Storefront construction, excluding doors, must have a tile base.
Applicable mall tile may be purchased by Tenant from Landlord and
installed by Tenant or by Landlord for Tenant if installed prior to the
opening of the Shopping Center. However, Tenant is strongly recommended
to utilize a material that compliments the overall storefront design.
k. Maximum Projection
No element of the Storefront, except signage, will project across
Tenant's maximum Storefront projection line. No element of Tenant's
Storefront, including signage, will project across Tenant's lease line.
l. Hinged Doors
Doors in the Storefront, if hinged, will swing toward the mall and be
locked in an open position whenever the store is occupied. Such doors
will be recessed in the Storefront so as not to swing past Tenant's
maximum Storefront projection line.
m. Non-Swing Doors
Non-swing doors such as sliding glass or folding doors or rolling
grilles are acceptable if they are locked an open position whenever the
store is occupied.
n. Floor Track
Any floor track will be flush with the finished floor.
o. Floor Level
Tenant will adjust the level of the slab in Tenant's Premises by flush
patching or another method to ensure that the level of the finished
floor in the Premises corresponds with that of the mall.
p. Display Windows
All display windows must be adequately illuminated and vented. Direct
visual exposure of conventional incandescent lamps will not be
permitted. Fluorescent lights will not be permitted in display window
areas.
q. Structural Support
All Storefront work requiring structural support, including sliding door
tracts and housing boxes for grilles, will be supported at the head
sections by a welded structural steel framework installed by Tenant.
Connection to Landlord's roof structure or overhead floor structure for
purposes other than horizontal bracing will not be permitted. All
overhead rolling grille tube columns will be specified and installed by
Tenant with base plates.
r. Open Storefronts
Where Tenant's Storefront is not enclosed, Tenant's merchandise or
fixtures may not be extended farther than Tenant's maximum Storefront
projection line.
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4. Floor Covering
a. Materials
Carpeting will not be permitted within eight feet (8'0") of the
Storefront enclosure line. Areas of the store subject to high traffic
will be surfaced with ceramic, marble, or stone pavers or prefinished
durable wood flooring. Vinyl composition tile is not allowed in
Tenant's sales area under any circumstances. All flame spread
specifications for all flooring material must be provided prior to
Tenant's construction for review by the local building department.
b. Cutting, Patching and Core Drilling
Tenant will cut and patch for any underslab work which is performed
after Landlord's original pouring of the slab. Excavated material must
be removed and the subgrade must be thoroughly compacted before
restoring the floor slab. Upper-level tenants will not cut the
concrete slab. Penetrations for all mechanical, electrical, or
plumbing work will be core drilled.
c. Flush with Mall
Tenant's floor finish will be flush with the mall floor finish, and
Tenant will provide necessary finish trim where Tenant's floor finish
meets the mall floor finish.
d. Mall, Tenant floor Finish Transition
Prior to the opening of the Shopping Center, the mall floor finish
will be installed by Landlord to Tenant's lease line at Landlord's
cost. Tenant will be responsible for the cost to extend the mall floor
finish from Tenant's lease line to the center line of Tenant's
Storefront enclosure. At Landlord's option, this work may be completed
by Landlord; all such work shall be done at Tenant's expense.
After the opening of the Shopping Center, the Tenant is responsible
for furnishing and installing any and all mall floor finish necessary
to the center line of Tenant's storefront enclosure.
5. Ceilings
a. Non-Combustible System
All ceilings, related framing, blocking and accessories will be
non-combustible. No combustible materials may be used above finished
ceiling surfaces.
b. Suspension System
All ceiling suspension systems will be metal. Support for ceiling
hangers will be from the structural members. Support will not be
permitted from (but not limited to) the following: metal roof deck,
mall duct work, sprinkler pipes, or conduits.
Tenant is encouraged to include creative ceiling systems in its sales
areas. The ceiling must be suspended drywall, concealed spiral
acoustical tile, 2" x 2" accoustical T-Bar ceiling with 3/8" revealed
edge, or lath and plaster construction. Acoustical ceiling is to be of
regular tile type only. Acoustical ceiling with 2' x 4' modules
(including tiles to simulate 2' x 2' look) will NOT be permitted in
sales areas.
c. Food Court
Ceilings in wet areas must be constructed with greenboard and finished
with an enamel paint or other paint which resists moisture
penetration.
d. Insulation
All upper-level ceilings for Crossgates and Poughkeepsie will have an
insulation of "R" value of at least 19. Upper-level tenants for
Walden Galleria, Carousel Center and Galleria at Crystal Run do not
need to insulate their ceilings. All ceiling in one-level centers will
have an insulation "R" value of at least 19 and not less than a
three-quarter (3/4) hour fire rating. Ceilings in lower-level stores
will have a fire rating of not less than one (1) hour.
e. Design
Where ceilings are omitted for aesthetic or other purposes, design
will incorporate all federal, state and local codes, ordinances, rules
and regulations applicable to the Shopping Center.
6. Sign Criteria
a. Design
Tenant's sign design will be coordinated with Tenant's Storefront design and
will not be installed until the design is approved by Landlord. Landlord will
have the right to remove or require the removal of any signs which either do
not meet the Sign Criteria or which are
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not expressly approved by Landlord. The cost of such removal will
be at Tenant's expense.
Shop drawings of all proposed signage shall be submitted by
Tenant to Landlord for approval. The submittal shall include an
elevation of the Storefront with signage completely dimensioned
and drawn to scale. A material sample board with proposed sign
materials is also required.
Fabrication and installation of signage will comply with all
applicable local codes, ordinances, rules, regulations, and
national electrical codes applicable to the Shopping Center. All
signage materials will be U.L. rated.
All signage shall be incorporated into Tenant's design as an
integral part of the Storefront.
To add individuality, creativity and variety, Tenant is strongly
encouraged to incorporate into its design scheme the following
recommendations:
1) Signage etched in Storefront glazing or mirror;
2) Back-painted glass with signage etched & back lit;
3) Neon graphics;
4) Illuminated halo effect letters;
5) Metal letters such as cast bronze, polished brass, polished
chrome and stainless steel; and
6) Fiber optics.
b. Store Identity
Tenant's sign will be limited to the identification of Tenant's
tradename and/or logo.
c. Characteristics
Tenant's sign and logo will comply with the following design
requirements:
1) Dimensional, individual, internally illuminated metal
letters and/or logo may not be taller than eighteen inches
(18"), unless in the opinion of Landlord, a larger size
would be preferable. Maximum allowable projection from the
Storefront will be six inches (6").
2) Dimensional metal back-lit ("halo-effect") letters or logo
with a height of six inches (6") to eighteen inches (18").
Each letter must be at least one inch (1") but no more than
five inches (5") in thickness and must be projecting from
the Tenant bulkhead surface with one inch (1") maximum
spacers.
3) Exposed neon tubes forming letters and/or logos will be
permitted at the discretion of Landlord on an individual
basis. Dimmer switches will be attached to the sign
transformers on all exposed neon tubes. No exposed neon
crossovers, raceways, ballast boxes, or transformer boxes
will be permitted.
4) Non-dimensional letters and/or logos applied or painted
directly on the inside face of the glass Storefront area
will be permitted as supplemental signs only.
5) Supergraphic or relief treatments of large amounts of
Storefront area will be permitted only at the discretion of
Landlord on an individual basis.
6) Signage will not exceed five percent (5%) of the area of
Tenant's Storefront or twelve (12) square feet (whichever is
greater).
7) Signage will not exceed two-thirds (2/3) of the width of
Tenant's demised Premises.
d. Prohibited Signs
The following types of signs or signage will be prohibited:
1) Boxed or cabinet type signs;
2) Vacuum-formed plastic luminous letters and/or logos;
3) Blade signs;
4) Paper signs of any type;
5) Artificial wood and wood grain plastic laminate;
6) Animated components, flashing lights, or noise making signs
of any type;
7) Signs utilizing plastic laminate;
8) Exposed neon; and
9) Dimensional graphic signage.
e. Illumination
All signage will be adequately illuminated by Tenant, utilizing a
method which is approved by Landlord.
f. Exterior Signage
Except for Tenant's approved mall Storefront sign, no exterior
signage by Tenant will be allowed.
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g. Menu Boards
Menu boards and price lists are subject to Landlord's review and
approval. All such signage will be compatible with the remainder
of the Premises and with the overall quality and design of the
mall, and will be of a size, color and illumination level to be
readily visible. "Photo signage" will be reviewed by Landlord. No
"supplier" signs or advertising will be permitted.
7. Furnishings and Trade Fixtures
All furnishings and trade fixtures will be new and of first quality,
including installation.
8. Heating, Ventilating and Air Conditioning
Delivery schedules require HVAC units to be ordered prior to
Landlord's receipt of specific Tenant's specific store design data.
Should Tenant require other and/or additional HVAC units due to
Tenant's design or other specific use, such information should be
immediately relayed to Landlord in writing separate from the plans
submission process (upon completion of Tenant's architects and/or
engineer's calculations). Landlord will make arrangements for such
additional or upgraded equipment required if so desired by Tenant at
Tenant's expense. Prior to the opening of the Shopping Center, any and
all additional, upgraded or other equipment requested by Tenant is at
the control of Landlord and at Tenant's expense.
Other design criteria relating to Tenant's work includes:
a. Ductwork
Ductwork will be sized, fabricated and installed in accordance
with ASHRAE 90-80 or later edition thereof and SMACNA standards.
Ductwork will be installed with fiberglass insulation and vapor
barrier. Ductwork which passes through fire rated walls will be
equipped with U.L. approved fire dampers as required by code, and
with adequate access to such dampers. All return air will be run
in insulated ducts. Any flex duct used from main trunk lines to
diffusers shall be limited to six (6) feet in length, Tenant must
provide condensate drains for all split system equipment used by
Tenant. Ductboard is NOT allowed. Ceiling plenums will not be
permitted.
b. Exhaust
Upper-level tenants will furnish and install complete exhaust
systems where required. Lower-level and upper-level tenants may
be required to connect their exhaust system to a master system
provided by Landlord. All tenants are to ensure that systems are
independent of each other for toilet rooms, equipment requiring
venting including refrigeration or hot presses, cooking, heat
and/or other processes permitted by Landlord which produce air
contaminants. Additionally, all tenants are to ensure that the
discharge through the roof to the atmosphere properly vents odors
and/or fumes away from the building, building openings and fresh
air intakes. Tenant restroom exhaust duct systems will have a
maximum external static pressure drop of .25 w.g. All roof
penetrations must be performed by Landlords designated contractor
at Tenant's expense. See Exhibit C, Item 14, "Rock Work" for
required special protection.
c. Outside Air
Landlord will provide a common outside air duct accessible to all
lower-level tenants and applicable upper-level tenants not having
direct roof access. All hood exhausts must be installed with
tempered make up air, including ductwork directly through the
roof. Additionally, all food tenants' hood exhaust systems will
have a minimum of ninety-five percent (95%) of its capacity of
make up air introduced into the food preparation area directly
from the outside.
d. Supplementary Heating
Tenant will provide electric unit heaters or wall heaters where
required at exterior well exposures to maintain minimum
comfortable winter temperature levels. Tenant's design will
provide for a constant ambient minimum temperature of 45 degrees
(Fahrenheit) above Tenant's ceiling through the use of ceiling
transfer grills, additional electric resistance units, or other
methods approved by Landlord.
e. Temporary Construction Heat
During Tenant's construction period, Tenant will provide any
necessary temporary heat required for protection and completion
of Tenant's Work.
f. Water Cooled or Heated Equipment
No water cooled or heated equipment will be permitted unless
water is recirculated and may be used only when specific
permission is granted by Landlord.
g. "As-Built" HVAC Drawings
Tenant will provide Landlord with "As-Built" drawings of Tenant's
HVAC system.
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9. Plumbing
a. Quality
Tenant, in designing the plumbing system, will use the best and
most recent technology available for conservation of water and
energy. Fixtures will be of good standard manufacture at least
equal in quality to American Standard. Flush valves will not be
permitted. All faucets will have water saving aerators. Tenant
will supply and install or purchase from the applicable
municipality, if required, a water meter of sufficient size to
serve the Premises.
b. Hot Water Heaters
Water heaters will be automatic electric, 480 or 277 volt, 3
phase, with all necessary safety controls and drains. Water
heaters located overhead will be supported independently of
Landlord's structural framing system. Appropriate structural
detailing will be included with Tenant's submission to Landlord
for approval by Landlord and Landlord's engineer. Tenants whose
only water usage is for small toilet room(s) may utilize "instant
hot" hot water heaters or conventional heaters up to a maximum
six (6) gallon capacity.
c. Hair Interceptors
Individual hair interceptors will be installed on all sinks,
basins, and special sanitary units which may in any way receive
human or animal hair. All hair interceptors must be made
accessible and must be regularly maintained.
d. Grease Interceptors
Individual grease interceptors, adequately sized, and in
compliance with state, local and other government health
departments having jurisdiction over the Shopping Center will be
installed and maintained on all grease producing and other
kitchen equipment, and will bear the seal of the Plumbing
Drainage Institute (PDI). All grease interceptors will be the
type that will plug solid if not maintained.
e. Decor
No fountains or decorative devices will be used unless they are a
recirculating type device.
f. Sanitary Sewer Vents
Tenant will connect sanitary sewer vent pipes to Landlord's
common vent system, or vent through the roof, as applicable. Any
roof penetrations must be made by Landlord's designated roofing
contractor at Tenant's expense.
g. Trash Compactors
All tenants serving food to the public will install individual
trash compactors within the Premises to precompact all trash into
sealed, leak-proof containers.
h. "As-Built" Plumbing Drawings
Tenant will provide Landlord with "As-Built" drawings of Tenant's
entire plumbing system.
10. Electrical
a. Quality
All electrical materials will be new, and bear the U.L. label.
Selection of fixtures and lighting levels within the Premises
will be in strict accordance with the provisions outlined in the
latest editions of ASHRAE 80-80, and the I.E.S. Lighting
Handbook, and will be in conformance with the applicable energy
conservation codes.
b. Codes
All work will meet the requirements of the latest National
Electric Code, and all applicable local, state and federal codes,
applicable regulations of the local telephone and power
companies, and ASHRAE 90-80 or the latest edition thereof.
c. Certificates
Tenant will be responsible for making all necessary applications
for certificates regarding Tenant's Work. Upon completion of all
electrical work, Tenant will furnish to Landlord a copy of the
certificate of approval, issued by the local authority having
jurisdiction over such installation.
d. Voltage
All fluorescent lighting and all heating and cooling equipment
must be operated on 480 or 277 volts from Tenant's high-voltage
panel. All Tenant transformers must be supported independently of
Landlord's structure.
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e. Night Lighting
Tenant must provide a separate night lighting circuit on a
non-controlled panel (one (1) light fixture per 2,000 square
feet), and a lock-on breaker for this circuit, or as designated
by local authorities.
f. Door Bell
Tenant will install an electrical, push-button operated door bell
immediately adjacent to Tenant's service door, mounted at 6"-9"
AF, F, in the door jamb. Installations in exterior wall surfaces
will NOT be permitted.
g. Controls
HVAC and non-consistant electrical loads will be monitored by
Landlord's Building Management System. Constant loads, such as
night lights, emergency lights, exit lights, exit signs, alarm
systems, employee time clocks, computer cash register systems,
electric rolling grills and refrigeration and/or life safety
equipment systems will be on non-controlled electrical panels. In
locations where lighting is not controlled by Landlord's Building
Management System, Tenant will install a seven-day time clock
system with reserve spring capacity to control all non-constant
loads.
h. Wiring
No exposed wiring of any sort (extension cords, etc.) will be
permitted subsequent to the period of Tenant's initial build-out.
i. Ceiling Lighting
In Tenant's sales areas, 2' x 4' fluorescent ceiling lighting
fixtures are prohibited. Exposed tube fluorescent lights are not
permitted. Fluorescent lighting must have parabolic reflective
lenses satisfactory to Landlord.
j. "As-Built" Electrical Drawings
Tenant will provide Landlord with "As-Built" drawings of Tenant's
electrical system.
k. Checkmeter
Upon Tenant's request, Landlord will furnish Tenant with the
specifications for a utility-quality checkmeter acceptable to
Landlord's and with Landlord's specifications for installation
thereof.
11. General Lighting
The general lighting of the mall has been designed to allow each
tenant's Storefront and sales area to be a prominent focal point. The
following required lighting criteria has been established:
a. All lighting in 'pop-out' Storefronts will be incandescent.
Storefront lighting must meet all requirements as set forth by
Landlord and its consultants;
b. All accent lighting for the Storefront 'pop-out' areas must meet
the criteria stated in the Tenant Design Handbook and is subject
to Landlord's review;
c. All fluorescent lighting will be low brightness type. Acceptable
lamp colors are warm white and deluxe warm white. Acrylic lenses
or non-shielded fluorescent tubes will NOT be permitted in
Tenant's sales area. All fluorescent lighting will be 277 volt,
deep call louver, or parabolic reflective lenses;
d. Fluorescent lighting will NOT be permitted within eight (8) feet
of the Storefront closure line;
e. Installation of Tenant's lighting in mall Common Areas is NOT
permitted; and
f. Tenant will comply with all applicable energy conservation and
construction codes.
12. Fire Protection
a. Other Fire Protection
Tenant will install and maintain above the ceiling any and all
fire protection devices and equipment, smoke barriers, etc. as
required by code(s) in the jurisdiction where the Shopping Center
is located. Tenant will install and maintain automatic exhaust
hood extinguisher systems and any special equipment or retardant
required by the nature of Tenant's design or business, as
determined by Landlord or applicable codes.
b. Damage
Any damages caused by Tenant to Landlord's sprinkler system will
be repaired by Landlord at Tenant's expense.
c. Hindrance of Sprinkler System
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Tenant's merchandising, fixturing, storage, and other practices
will not be conducted in such a manner as to hinder the
effectiveness of the sprinkler system.
d. Fire Extinguishers
Tenant will install and maintain Type ABC fire extinguishers as
approved by the local fire department and Landlord's fire and
casualty insurer.
e. Modifications
All modifications, additions, repairs or relocations to the
sprinkler system required for Tenant's use, prior to the Grand
Opening, will be performed by Landlord's sprinkler contractor, at
Tenant's expense.
f. Smoke Detectors
Tenant will install smoke detectors which automatically shut
down the HVAC unit(s) if activated. Smoke detectors will be
ceiling mounted in both sales and stock/storage areas with
one (1) smoke detector for every 2,000 square feet of each area,
and/or in the return or supply air duct as required by governing
authorities and/or Landlord's fire and casualty Insurer.
Depending on the local code jurisdiction, the strictest of the
three above-referenced requirements will apply.
13. Sanitary
Tenant will be responsible for its own toilet requirements per all
applicable codes. Common Area Toilets will not be used in Tenant's
calculations.
a. Temporary Sanitary
Tenant will be responsible for all temporary sanitary facilities
required during the construction of Tenant's space.
14. Food Court Tenant Criteria
a. All wall surfaces visible by the public in Tenant's food
preparation areas will be faced with glazed ceramic tile. All
other wall surfaces will also be finished with FRP, marble panel
or stainless steel.
b. Tenant will furnish and install a minimum of R-11 insulation with
a vapor barrier from the floor to the underside of the structure
above at all demising walls and in all ceiling areas. At
exterior walls, the value of insulation will be a minimum of
R-19.
c. Tenant will furnish and install ceramic or quarry tile flooring
throughout Tenant's floor area.
d. Tenant will have the option of using the following countertop
finishes:
1) Plastic slab (Corian, Avonite Formica 2000X, or its
equivalent);
2) Stainless steel;
3) Wood butcher block;
4) Ceramic tile;
5) Marble, or other smooth finish stone.
e. Locations for any additional rooftop equipment required by
Tenant's design will be subject to approval by Landlord; any
such additional equipment required will be at Tenant's expense.
f. In addition to all of the other submittal requirements, Tenant
will submit with its preliminary submittal all proposed finished
for all equipment, signage, etc., which will be visible to the
public.
15. General Conditions
a. Occupancy Date
Landlord will notify Tenant of the date on which the Premises
will be available for Tenant's Work ("Occupancy Date"). Except
as otherwise set forth in the lease and to the extent legally
permissible, Tenant agrees that time is of the essence and
agrees to commence installation of Tenant's Work no later than
five (5) days following the Occupancy Date.
b. Occupancy Period
The period beginning on the Occupancy Date and terminalizing
on the Term Commencement Date of this Lease will be known as the
"Occupancy Period."
c. Establishment of Schedules
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Tenant, its agents, contractors and employees will comply with
schedules which Landlord will establish from time to time,
governing submittals by Tenant of design information for
Landlord's approval, construction operations, occupancy by
Tenant, opening for business, and other occurrences, for the
purpose of coordinating the efforts of Tenant or Tenant's
contractors, and Landlord. All parties will cooperate with
Landlord in expediting work, and will provide work schedules,
status reports, and updates upon Landlord's request until Tenant
opens for business.
d. Failure to meet Schedule
Any cost incurred by Landlord as a result of Tenant's failure to
meet the schedule requirements herein described will be Tenant's
responsibility; such costs will be payable by Tenant to Landlord
upon Landlord's demand. Any modification to Landlord's Work or
Tenant's Work necessitated by Tenant's failure to undertake or
complete Tenant's Work as required under this Lease will become
the responsibility of Tenant. Upon three (3) days written notice
thereof, Landlord may request that Tenant's general contractor
cease work, and Landlord may complete, at Tenant's expense, any
work deemed by Landlord to jeopardize Tenant's required opening
date. Upon three (3) days written notice thereof, Landlord may
remove Tenant's general contractor due to non-compliance with
rules and regulations listed below or published on site.
e. Construction Rules and Regulations of the Mall after Grand
Opening
1) Tenant will erect and maintain a temporary barrier
throughout the construction period. Said barrier is subject
to the following requirements - it shall:
a) Not extend beyond three feet (3') into the walking
corridors. At all times, a ten foot (10') minimum
clearance must be maintained in the mall Common Areas;
b) Be constructed of metal studs and 5/8" or 1/2" fire
rated gypsum wallboard;
c) Be taped and finished;
d) Be painted (paint number to be specified by Landlord)
and have a finished vinyl or rubber base;
e) Be twelve feet (12') high, sealed to contain dust, and
insulated minimize sound transmission;
f) Have a factory-made door with lockset which will be kept
closed. The door will swing into the store and be
equipped with a door closer. A working copy of the key
will be marked accordingly and left in the mall office;
g) Be maintained on a daily basis as necessary (i.e.,
paint, sheetrock, repair, etc.);
h) Any such temporary Storefront barrier may not be
dismantled until the permanent Storefront is completed;
i) Any such temporary Storefront barrier may not be
fastened to the finished floor, demise piers or any
other permanent finishes or fixtures in the mall;
j) Not contain advertising of contractors or associated
trades.
2) No jackhammering, or use of other equipment producing a high
noise or dust level during shopping hours will be permitted.
3) All construction materials will be delivered via service
entrances. For stores without service entrances, all
materials will be delivered either before or after standard
mall operating hours.
4) Doors are not to be wedged open.
5) Contractor and employee vehicles will be parked in areas as
directed by Landlord.
6) Tenant will dispose of all waste materials (except concrete,
masonry or structural steel) in dumpsters or other approved
containers provided by Tenant which are located in areas
designated by Landlord. Absolutely no waste material is to
be discarded in adjoining spaces, other vacant spaces, mall
areas or Landlord's compactor.
7) No building systems will be shut down without the express
prior permission of Landlord.
8) All work will be performed in a neat and orderly fashion.
9) Tenant will notify the mall office personnel of the
following prior to starting work:
a) The name, address and temporary residence location of
contractors working in the space; and
b) The starting date and anticipated completion date of all
work.
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10) If Exhibit C established that Tenant accepts the Premises
"As is," then any demolition which may be required will be
performed by Tenant at Tenant's expense.
f. Compliance with Construction Rules and Regulations
As a condition of Landlord's approval of Tenant or Tenant's
contractor taking occupancy of the Premises, Tenant or Tenant's
contractor will be required to deposit with Landlord the sum of
$2,000.00 to be held by Landlord as security for the compliance
by Tenant and Tenant's contractor with the Construction Rules and
Regulations set forth herein and the other construction
requirements as set forth in Exhibit C and D. Tenant and Tenant's
contractor will reimburse Landlord for the cost of any damage or
disruption caused by the failure of Tenant or Tenant's contractor
to comply with the Construction Rules and Regulations. Any such
cost(s) will be first recovered by Landlord from the security
deposit made hereunder. Upon the recovery of cost(s), Tenant will
restore the security deposit to the original sum of $2,000.00.
Landlord will return the security deposit or the amount remaining
thereof upon satisfaction of the following conditions: (i) the
satisfactory completion of Tenant's Work as required under the
Lease, including Landlord's punchlist; (ii) delivery of a
Certificate of Occupancy to Landlord; (iii) within sixty (60)
days following Landlord's acceptance of Tenant's properly
completed Certificate of Completion, the submission of
"As-Built" drawings as may be required hereunder; (iv) the
receipt of copies of lien releases issued to Tenant from each
subcontractor and the general contractor. Request for the return
of the security deposit must be made to Landlord in writing.
g. Compliance with Laws
Tenant and Tenant's contractor will, at its/their expense, comply
with all applicable statutes, ordinances, rules, orders, laws,
regulations, codes and recommendations of all governmental
agencies and their authorized agents which have jurisdiction
over Tenant's Work; and, with respect to the prevention of fire
and exposure to liability risks, to the Board of Fire
Underwriters, Rating Board, and Landlord and Tenant's insurance
companies. Tenant and/or Tenant's contractor will apply for, pay
all fees for, and obtain all necessary permits, licenses and
certificates. A copy of same will be delivered to Landlord and
will be posted in a prominent place within the Premises before
Tenant begins work. Tenant will furnish Landlord with a copy of
a Certificate of Occupancy prior to opening for business.
h. Non-interference
Tenant will perform its work so as not to interfere with the
completion of Landlord's Work or the work of other tenants.
i. Quality of Materials; Warranty
All materials furnished and incorporated in Tenant's Work will
be new, unused, and of the quality and characteristics specified
herein. If the quality and characteristics of certain materials
are not specifically set forth herein, materials used will be
those customarily used in first-class work of similar nature and
character. Tenant will guarantee, and will require all parties
furnishing and incorporating materials in Tenant's Work to
guarantee said work to be free from any and all defects in
workmanship and material for a period of five (5) years from the
date of completion thereof. Tenant will be responsible for the
costs of correction of such defects, which costs will include
any and all expenses and damages resulting from said defects.
Tenant's agreements with its contractors will contain language
so providing and further providing that all guarantees and
warranties will inure to the benefit of both Landlord and
Tenant, as their respective interests appear, and that such
guarantees and warranties can be directly enforced by either.
j. Easements
Tenant will install and maintain proper access panels as may be
required for the regular maintenance of Tenant's and Landlord's
equipment.
Where applicable, tenants will recognize the rights of Landlord
and of tenants located above or below to run pipes, ducts,
conduits, or related items servicing the mall or other areas
through Tenant's Premises. Tenant will cooperate with Landlord
and other tenants; hours and times when work will be performed
will be agreed upon by the parties involved. Any dispute arising
hereunder will be resolved by Landlord.
k. Insurance
1) Tenant will secure, pay for and maintain, or cause its
contractor(s) to secure, pay for and maintain, during
Tenant's construction and fixturing work within the Premises,
all of the insurance policies required herein in the amounts
as set forth below. Tenant will not permit its contractor(s)
to commence any work until all required insurance has been
obtained and certificates of such insurance have been
delivered to Landlord.
2) Tenant's Contractors' and Subcontractors, Required Minimum
Coverages and Limits of Liability.
13
<PAGE> 61
a) Comprehensive General Liability, including personal
injury and property damage, completed operations,
explosions, collapse, and underground operations, if
any, broad form property damage, contractor's
protective liability, in the minimum amount of
[***] Combined Single Limit;
b) Auto Liability, Bodily injury and Property Damage
(including non-owned and hired vehicles) in the minimum
amount of [***] Combined Single Limit; and
c) Statutory Workers' Compensation, Employer's Liability
and disability Benefits. Umbrella Coverage in the
minimum amount of [***].
Such insurance will insure the contractor and/or
subcontractor against any and all claims for personal
injury, including death resulting therefrom and damage
to the property of others caused by accident and arising
from the contractors' and/or subcontractors' operations
and whether such operations are performed by the
contractor(s), subcontractor(s), or by anyone directly
or indirectly employed by them.
3) Protective Liability Insurance
Tenant will provide Owner's Protective Liability Insurance
that will insure Landlord and Tenant against any and all
liability to third parties for damages because of personal
injury liability (or death resulting therefrom) and property
damage liability of others or a combination thereof which
may arise from work in connection with the Premises, and any
other liability for damages which Tenant's contractor or
subcontractors are required to insure against under any
provisions herein. Said insurance will be provided in the
minimum amount of [***] Combined Single Limit.
4) Tenant's Builder's Risk Insurance - Completed Value
Builder's Risk Material Damage Insurance
Tenant will provide an "All Physical Loss" Builder's Risk
insurance policy on all Tenant's Work to be performed in the
Premises as it relates to the building within which the
Premises is located. The policy will include Tenant, its
contractor and subcontractors and Landlord as named
insureds, as their interests appear. The amount of insurance
to be provided will be [***] of the full replacement cost.
5) All such insurances policies required above will name
Landlord as an additional insured, except Workers'
Compensation Insurance, which will contain an endorsement
waiving all rights of subrogation against Landlord.
Certificates of insurance will provide that no reduction in
the amounts or limits of Equity or cancellation of such
insurance coverage will be undertaken without thirty (30)
days prior written notice to Landlord.
All insurance policies required above will be written by
companies authorized under the laws of the state in which
the Shopping Center is located and such policies must be
satisfactory to Landlord.
l. Indemnity
Tenant will fully protect, defend, indemnity and hold harmless
Landlord and Landlord's Managing Agent(s) and their employees,
partners, officers, directors, agents, heirs, executors,
administrators, successors, and assigns against any and all
claims, actions, damages, liabilities, costs and expenses,
including any and all attorneys' fees, arising from, because of,
or out of the performance or non-performances of Tenant's Work or
the use or occupancy of the Premises for Tenant's Work.
m. Hazardous Materials
Tenant will not install, nor cause or allow to be installed, nor
use any hazardous materials in Tenant's Work without the express
prior written consent of Landlord. Tenant will guarantee and
require all parties furnishing and incorporating materials in
Tenant's Work is guarantee that hazardous materials have not been
furnished or incorporated in Tenant's Work. Tenant will be
reasonable for any and all cost(s) of correction which will
include all expenses and damages, whether director or indirect,
resulting from the installation or use of hazardous materials.
Tenant's agreements with its contractor(s) and subcontractor(s),
if any, will contain language so providing and further,
warranting that hazardous materials were neither installed nor,
used in the Premises; such warranties shall insure to the benefit
of both Landlord and Tenant, and can therefore be directly
enforced by either.
*** Confidential treatment requested.
14
<PAGE> 62
APPENDIX 1A
TENANT ELECTRICAL LOAD SUMMARY
<TABLE>
<S> <C> <C>
(Please complete the following form and include as part of the
Final Drawing Submittal to the Landlord.)
Tenant: ____________________________ Space No.: ____________________________
Mall: ____________________________ GLA: ____________________________
Landlord provides as standard 10 watts per square foot. Food Court Tenants are
provided with 15 watts per square foot. The information provided below is
necessary in order to properly size the Mall's electrical distribution
capacity. Upgrades over the Landlord's supplied wattage will be billed to the
Tenant.
Winter: Summer:
1. Connected Cooling Load: Compressor(s): ________ Watts
Inside Fan: ________ Watts
Outside Fan(s): ________ Watts
Power Exhaust: ________ Watts
2. Connected Heating Load: Compressor(s): ________ Watts (Heat Pump)
Inside Fan: ________ Watts
Outside Fan(s): ________ Watts (Heat Pump)
Heat Coil(s): ________ Watts
3. Connected Constant Lighting Load:
(not to be included in occupied lighting load below) ________ Watts
4. Connected Constant Equipment Load:
(not to be included in occupied equipment load below) ________ Watts
5. Connected Occupied Lighting Load:
(not to be included in constant lighting load above) ________ Watts
6. Connected Occupied Equipment Load:
(not to be included in constant equipment load above) ________ Watts
7. Total Connected Load:
(the greater of item 1 or 2 plus items 3 through 6) ________ Watts
Completed By:
Electrical Engineer's Name:_____________________ Date:____________________
Firm Name:______________________________________
Address:________________________________________ Stamp:___________________
Phone:__________________________________________
</TABLE>
1
<PAGE> 63
APPENDIX 2
CERTIFICATE OF COMPLETION
AND
AFFIDAVIT OF CONTRACTOR'S COMPLIANCE WITH APPROVED PLANS
(Complete and submit to Landlord upon completion of Tenant's Work construction)
RE: Construction of STORE
-----------------------
MALL
----------------------------------------
This is to state that I have made an inspection of the site on completion, and
I hereby certify that the Premises has been completed in accordance with the
Landlord approved final plans and specifications except as noted below.
Dated: , 19 Tenant:
-------------- -- ----------------------------------
By:
----------------------------------
Title:
----------------------------------
Dated: , 19 Contractor:
-------------- -- ----------------------------------
Name:
----------------------------------
Address:
----------------------------------
Signature:
----------------------------------
Title:
----------------------------------
- ----------------------------------------------------------------------------
List all changes, if any, to previously approved plans and specifications
required during construction:
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
As-Built Drawings Enclosed (if applicable):
--------------
--------------
Certificate of Occupancy Attached (where required):
--------------
--------------
Underwriter's Certificate Attached (where required):
--------------
- -------------
2
<PAGE> 64
[VIEW OF EXTERIOR ENTRANCE]
<PAGE> 1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED
ON A REQUEST FOR CONFIDENTIAL TREATMENT
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
EXHIBIT 10.21
----
RETAIL LEASE AGREEMENT
THIS LEASE is entered into this 24 day of May, 1999, in consideration of
the covenants and undertakings of each of the parties hereto by and between
Peabody Place Centre, L.P., a Tennessee limited partnership, hereinafter
referred to as "Landlord", and Silicon Entertainment, Inc., a California
corporation, hereinafter referred to as "Tenant";
WITNESSETH:
Landlord owns, operates or controls certain real property located in the
City of Memphis County of Shelby and State of Tennessee located at Peabody
Place Centre; and
WHEREAS, Tenant desires to lease from Landlord certain premises within the
Shopping Center,
NOW, THEREFORE, Landlord and Tenant agree as follows:
PART 1
PREMISES
In consideration of the rent and other agreements contained in this Lease,
Landlord leases to Tenant and Tenant rents from Landlord the premises
(hereinafter the "Premises") described as follows:
A retail store space numbers 214, 216, and 218 containing approximately
6,000 square feet within the Peabody Place Centre (hereinafter the
"Shopping Center"), municipally described as Peabody Place
Retail/Entertainment Development, in Memphis, Tennessee.
The Premises are designated on Exhibit A hereto for the purpose of setting
forth the configuration and approximate location of the Premises within the
Shopping Center Site (the "Shopping Center Site" being defined to include all
property shown on Exhibit A hereto). The Premises shall be improved or
otherwise prepared for occupancy by Tenant in accordance with Exhibit C which
sets out any work improvements to be implemented by Landlord and the cost, if
any, to Tenant. In the absence of any specific requirements set forth on
Exhibit C, Tenant shall be deemed to have accepted the Premises "as is", except
for any items specified on a punch list delivered to Landlord within thirty
(30) days after possession of the Premises is delivered to Tenant.
Notwithstanding the foregoing, Tenant shall not be deemed to have waived its
right to require Landlord to correct any latent defects as long as Tenant gives
notice thereof to Landlord on the earlier of thirty (30) days after discovery
of the defect or thirty (30) days after the date Tenant should have been
alerted to the existence thereof had Tenant acted reasonably, provided such
notice must be provided in any event within one (1) year after delivery of
possession of the Premises, Landlord covenants and agrees to (i) deliver the
Premises in compliance with legal, code and zoning requirements exclusive of
any such requirements relating to Tenant's Work including, but not limited to,
building or occupancy permits, (ii) deliver the utility systems to the Premises
as specified in Exhibit C in good working order, and (iii) deliver the rough
shell building in good condition and repair, free of any asbestos.
Tenant shall use commercially reasonable efforts to submit plans and
specifications for Tenant's Work to Landlord for its approval, which shall not
be unreasonably withheld, on or before [***]. Landlord shall approve such plans
and specifications or provide specific objections thereto within [***] days
after their receipt. Landlord acknowledges that Tenant's prototype design plan
for its store incorporates the open storefront element into the design of the
Premises provided that Tenant constructs such portion (and all portions) of
Tenant's Work in compliance with applicable law, Exhibit C of this Lease, and
pursuant to plans and specifications approved in advance by Landlord.
*** Confidential treatment requested.
<PAGE> 2
PART 2
TERM
Subject to the terms and conditions contained herein, this Lease shall be
effective on the date of complete execution hereof by Landlord and Tenant, but
the term of this Lease and the payment of Minimum Rental and Additional Charges
(as defined in Exhibit B) shall begin on the commencement date (the
"Commencement Date") which shall be the earlier of (i) the date on which Tenant
opens for business, or (ii) one hundred twenty (120) days after Landlord tenders
delivery of the Premises to Tenant, in the event that Landlord is implementing
improvements pursuant to the provisions of exhibit C, tender of delivery shall
have occurred on the date Landlord notifies Tenant that Landlord has either (i)
substantially completed any improvements to be implemented by Landlord pursuant
to Exhibit C subject to minor punchlist terms, or (ii) determined that
Landlord's work pursuant to Exhibit C has progressed sufficiently such that
Tenant may commence and complete Tenants work while portions of Landlord's work
are still being completed. Notwithstanding anything to the contrary contained
herein, Tenant shall not be deemed to be in default hereunder for failure to
open for business on or before the Commencement Date, so long as Tenant opens
for business not later than one hundred thirty five (135) days after Landlord
delivers possession of the Premises to Tenant, subject to Force Majeure and
delays caused by Landlord. Additionally, Landlord agrees that it shall deliver
possession of the Premises to Tenant at least one hundred twenty (120) days
prior to the grand opening of the Shopping Center.
Landlord shall use its reasonable commercial efforts to deliver the
Premises with Landlord's Work substantially complete to Tenant on or before June
15, 2000 (the "Target Delivery Date"), subject to delays caused by events of
Force Majeure (as hereinafter defined), in the event that Landlord is unable to
deliver possession of the Premises with Landlord's Work substantially complete
to Tenant on or before the Target Deliver Date, Landlord shall deliver the
Premises to Tenant after substantial completion of Landlord's Work, and Tenant
shall complete Tenant's Work within one hundred twenty (120) days after the date
of delivery of the Premises subject to Force Majeure and delays caused by
Landlord and open for business in the Premises in accordance with the provisions
of the foregoing paragraph, provided, however. Tenant shall not be obligated to
pay Minimum Rental, Percentage Rental or Additional Charges until (i) March 1,
2001 (provided that Landlord delivers possession of the Premises on or before
November 1, 2000) or (ii) such later date that is one hundred twenty (120) days
after Landlord delivers possession of the Premises to Tenant with Landlord's
Work substantially complete. Landlord agrees that in the event Landlord does not
deliver possession of the Premises to Tenant on or before November 1, 2000,
within ten (10) days after Tenant's written request, Landlord shall confirm to
Tenant in writing that its leased for space in the Shopping Center with Muvico
(or a comparable tenant) and Jillian's (or a comparable tenant) are in full
force and effect. In the event that Landlord is unable to confirm that such
leases are in full affect or fails to respond to Tenant's request within ten
(10) days, Tenant shall have a right to terminate this Lease on thirty (30) days
written notice to Landlord, which notice shall be given within ten (10) days
after (i) the expiration of the aforesaid ten-day period if Landlord fails to
respond or (ii) Tenant's receipt of notice from Landlord stating that such
leases are not in full force and effect. In such event, Landlord shall reimburse
Tenant for all of its out-of-pocket expenses incurred in connection with this
lease, including, but not limited to, architectural and design fees and
attorneys fees in an amount not to exceed [***]. Notwithstanding the foregoing,
in the event that Landlord reinstates both of the respective leases or executes
leases with comparable tenant(s) during the thirty-day period, Tenant's
termination shall be rendered null and void and of no further force or effect.
Notwithstanding anything to the contrary contained in this Lease, if Landlord
has not delivered the Premises to Tenant with all of Landlord's Work
substantially completed as required hereunder on or before June 1, 2001 (subject
to Force Majeure), then Tenant may terminate this Lease by written notice to
Landlord delivered by June 15, 2001, and Landlord shall reimburse Tenant for all
of its out-of-pocket expenses incurred in connection with this Lease including,
but not limited to, architectural and design fees and attorneys fees in an
amount not to exceed [***].
Notwithstanding the foregoing, Tenant's obligation to commence payment of
Minimum Rental, Percentage Rental and Addition Charges shall be tolled by the
number of days of delay in Tenant's opening for business resulting from delays
caused by Landlord.
If the Commencement Date occurs on the first day of a month, the term
shall expire
*** Confidential treatment requested.
<PAGE> 3
without notice on the last day of the calender month ten (10) years hence, and
if the Commencement Date occurs on a day other than the first day of a month,
the term shall expire without notice on the last day of the calender month in
which the Commencement Date occurs ten (10) years hence.
Landlord and Tenant agree that, upon the demand of the other party, each
shall execute an amendment to this Lease, in recordable form, setting forth the
Commencement Date and the termination date of the Lease term. Any
access by Tenant to the Premises prior to the Commencement Date shall be upon
all of the terms, covenants and conditions of this Lease, provided, however,
Tenant shall have no obligations with respect to the payment of Minimum Rental,
Percentage Rental and Additional Charges. Tenant shall pay all utility charges
related to the Premises which accrue from and after Landlord's tender of
possession.
PART 3
OPENING COTENANCY
Notwithstanding anything contained herein to the contrary, until such time
as Muvico Theater (or a comparable tenant) is open and operating for business
and sixty percent (60%) of the other tenants of the Shopping Center are open and
operating for business (the "Initial Cotenancy"), Tenant may pay in lieu of the
Minimum Rental and Additional Charges reserved hereunder (but in no event more
than the monthly installment of Minimum Rental and Additional Charges otherwise
payable hereunder), an amount equal to [***] of Sales and Business Transacted
from the Premises, such amount to be due and payable within thirty (30) days
after the month in which such sales occurred, together with submission of
evidence of the amount of Sales and Business Transacted. Commencing on the first
day of the month following the month in which the Initial Cotenancy has been
reached, Tenant will commence payment of Minimum Rental and Additional Charges
as reserved hereunder. Notwithstanding anything to the contrary contained
herein, the Commencement Date of the Lease term shall occur on the date on which
the Initial Cotenancy is met. In the event that the Initial Cotenancy has not
been satisfied for a period equal to eight (8) months after the date on which
Tenant is obligated to open for business in the Premises, Tenant shall have a
one-time right to terminate this Lease on written notice from Tenant to Landlord
given by the date that is thirty (30) days after the date that is twelve (12)
months after the date of delivery of possession. In such event, Landlord shall
reimburse Tenant for its actual out-of-pocket costs incurred in connection with
this Lease, including but not limited to the costs of constructing leasehold
improvements, in an amount not to exceed [***], less the amount of the
Construction Allowance paid by Landlord to Tenant in accordance with the terms
of Exhibit C attached hereto and made a part hereof.
PART 4
ONGOING COTENANCY
If at any time after the date that is twelve (12) months after the
Commencement Date, (i) the multiplex movie theater facility located in the
Shopping Center (and currently leased by Muvico) closes for business (the
requirement that such theater facility be open for business referred to herein
as the "Theater Requirement") or (ii) less than sixty percent (60%) of the
total leasable floor area of the Shopping Center is occupied by tenants or
licensees and open for business (the requirement that such sixty percent (60%)
of the total leasable floor area of the Shopping center be occupied and open
for business referred to herein as the "Cotenancy Requirement"), then Tenant
shall have the right to cease operating its business in the Premises ("Go
Dark") until such time as both the Theater Requirement and the Cotenancy
Requirement are satisfied, and during such Go Dark period, Tenant shall not be
obligated to pay any Percentage Rental (i.e., Tenant will continue to pay only
the Minimum Rental along with Additional Charges as required to be paid under
the Lease). In the event that Tenant shall be entitled to Go Dark pursuant
hereto but shall elect to remain open for business in the Premises, Tenant shall
have the right to so remain open and for so long as the Theater Requirement
and/or the Cotenancy Requirement remains unsatisfied, Tenant shall be obligated
to pay the lesser of Minimum Rental and Percentage Rental (without reference to
the Percentage Rental Breakpoint) (such lesser amount referred to herein as the
"Abated Rent"), along with Additional Charges as required to be paid under this
Lease.
*** Confidential treatment requested.
<PAGE> 4
If either the Theater Requirement or the Cotenancy Requirement remains
unsatisfied for a period of nine (9) months or longer, then Tenant shall have
the right, so long as either the Theater Requirement or the Cotenancy
Requirement remains unsatisfied, to terminate this Lease and, if Tenant so
elects to terminate this Lease, Landlord shall reimburse Tenant for all
reasonable, third-party costs and expenses (but not to exceed [***], less the
amount of the Construction Allowance paid to Tenant by Landlord pursuant to the
provisions of Exhibit C attached hereto and made a part hereof) actually
incurred by Tenant in connection with the negotiation of this Lease and the
termination of this Lease, the preparation of Tenant's design plans and
specifications, and other design and construction costs, including, without
limitation, the cost of leasehold improvements in connection with the
preparation of the Premises for Tenant's business; provided, however,
notwithstanding the foregoing, with respect to the Theater Requirement, if
Landlord provides Tenant with credible and reliable evidence on or before the
expiration of the foregoing nine (9) month period that Landlord will have the
theater facility open and operating within an additional nine (9) months after
the expiration of the foregoing nine (9) month period (the "Extended Theater
Period") (i.e., evidence (including without limitation, a lease executed by a
theater tenant that commits such tenant to open by such date) that the theater
facility will be open within eighteen (18) months after the Theater Requirement
failed to be satisfied), then Tenant shall not be permitted to terminate this
Lease as a result of Landlord's failure to satisfy the Theater Requirement
unless such Theater Requirement remains unsatisfied at the expiration of the
Extended Theater Period.
PART 5
RENT
Tenant covenants and agrees that without demand, notice or set off, except
as otherwise expressly provided herein, Tenant shall pay to Landlord minimum
annual rental (hereinafter the "Minimum Rental") and percentage rental
("Percentage Rental") in the amounts as follows:
Minimum Rental in the amount of [***] per square foot or [***] per annum,
payable in equal monthly installments of [***] per month in advance on or before
the first day of each month for Years [***]. Minimum Rent in the amount of [***]
per square foot or [***] per annum, payable in equal monthly installments of
[***] per month is due in advance on or before the first day of each month for
Years [***].
Either party shall have the right to request a remeasurement of the
Premises on written notice to the other party given within thirty (30) days
after the Commencement Date and naming the architect or engineer it will have do
the remeasurement. Upon fifteen (15) days prior written notice, the other party
shall identify its architect or engineer, and the architects or engineers
identified by both parties shall jointly measure the leasable square footage
contained in the Premises. If the leasable square footage as so remeasured is
less than that set forth in Part 1 hereof, then the leasable square footage as
stated herein shall be revised and Minimum Rental shall be reduced accordingly,
by an amount not to exceed [***] of the stated square footage and the Percentage
Rental Breakpoint (as hereinafter defined) shall be proportionately adjusted. If
the leasable square footage as so remeasured is greater than that set forth in
Part 1 hereof, then the leasable square footage as stated herein shall be
revised and the Minimum Rental shall be increased accordingly, by an amount not
to exceed [***] of the stated square footage and the Percentage Rental
Breakpoint shall be proportionately adjusted. Leasable square footage shall be
measured from the exterior faces of all outside walls and from the center of all
party walls. Notwithstanding anything to the contrary contained herein, in no
event shall the leasable square footage of the Premises be less than [***] of
the square footage as stated in Part 1 hereof.
Tenant shall further pay to Landlord Percentage Rental of [***] of annual
Sales and Business Transacted (as defined in the General Lease Provisions) in
excess of [***] (the "Percentage Rental Breakpoint") per Lease Year (as herein
defined) for Years [***], and [***] of annual Sales and Business Transacted in
excess of [***] per Lease Year for Years [***].
*** Confidential treatment requested.
<PAGE> 5
All rental payments and payments of Additional Charges (as defined in
Exhibit B) hereunder shall be sent to:
Peabody Place Centre, L.P.
Attn: Accounts Receivable Department
P. O. Box 3661
Memphis, Tennessee 38173-3661
or to such other addresses as Landlord may direct from time to time.
PART 6
ADDITIONAL CHARGES
In addition to Minimum Rental and Percentage Rental, Tenant agrees,
commencing on the Commencement Date, to pay to Landlord, at the times
hereinafter set forth, without deduction, setoff or abatement, except as
otherwise expressly provided herein, the following Additional Charges, as
additional rent, the nonpayment of which shall be subject to all provisions of
this Lease and of law as to default in the payment of rent or money:
(i) Common Area Charges (See General Lease Provisions).
(ii) Real Estate Taxes and Assessments (See General Lease
Provisions).
(iii) Marketing Fund. Tenant shall pay to Landlord the sum of [***] in
advance on the first day of each and every calendar month, or
the amount voted on by a majority of the tenants in the Shopping
Center, whichever is greater, toward the expense of advertising
and for promotional activities. Landlord shall, annually, make a
contribution to the Marketing Fund in an amount equal to the
amount contributed by the tenants in the Shopping Center.
(iv) Insurance (See General Lease Provisions).
(v) First Year Promotional Assessment (INTENTIONALLY DELETED).
(vi) Food Court Furniture, Fixtures, Improvements & Equipment
Charge. (INTENTIONALLY DELETED).
PART 7
USE AND OPERATION
The premises shall be opened for business, kept open for business and used
by Tenant and any permitted assignee, sublessee or other occupant of the
Premises continuously only for the installation and operation of automobile
racing car ride simulators (including motion based simulators) for guests with
each ride separately priced and no general admission price to the facility
(other than group sales and leagues), and for the sale of merchandise related
to motor sports (including NASCAR videos, picture, CD-Roms, DVD's and other
media and other such audio/visual items featuring NASCAR and other auto racing)
and/or related to NASCAR with the logo of NASCAR or NASCAR Silicon Motor
Speedway or such other trade name as Tenant may operate under from time to time.
In no event shall the Premises be used for any of the uses set forth in
Exhibit F "Exclusive Use Restrictions" attached hereto and made a part hereof.
Tenant shall conduct its business in the Premises under the name of NASCAR
Silicon Motor Speedway which name shall not be charged without the Landlord's
prior written consent, which consent shall not be unreasonably withheld. The
Tenant shall have the right to change its trade name (i) in connection with an
assignment or subletting to a third party permitted under the Lease and (ii) in
all other cases, with Landlord's approval, not to be unreasonably withheld.
Furthermore, in the event Tenant loses its right to use the "NASCAR" name
(either because Tenant is unable to renew its license agreement with NASCAR or
because the NASCAR license agreement is terminated), then Tenant shall have the
right to operate the Premises under the same trade name as all or substantially
all of the other stores previously operated by Tenant under the trade name
*** Confidential treatment requested.
<PAGE> 6
"NASCAR Silicon Motor Speedway". Similarly, subject to Landlord's approval
which shall not be unreasonably withheld, Tenant shall also be permitted to
change its name as part of a national name change of substantially all of its
locations.
PART 8
NOTICES
All notices required or provided for under this Lease shall be given in the
manner as prescribed by the notice requirements of the General Lease Provisions,
addressed to the following addresses:
To Landlord: To Tenant:
Peabody Place Centre, L.P. Silicon Entertainment, Inc.
c/o Belz Enterprises 210 Hacienda Avenue
100 Peabody Place, Suite 1400 Campbell, CA 95008
Memphis, Tennessee 38103
ATTENTION: Ronald A. Belz
With a copy to:
Rick S. Kirkbride, Esq.
Paul, Hastings, Janofsky & Walker, LLP
555 South Flower Street
Los Angeles, CA 90071-2371
or to such other addresses as Landlord or Tenant may direct in writing from time
to time.
PART 9
REAL ESTATE AGENT
This Lease was negotiated by BELZ REALTY COMPANY, L.L.C., represented by
Stan Myers acting as agent for Landlord and Blatteis Realty Co., represented by
Russell Friend acting as agent for Tenant. BELZ REALTY COMPANY, L.L.C., agrees
to pay said agents a commission in accordance with the agreements between BELZ
REALTY COMPANY, L.L.C. and agents.
PART 10
OPTION TO RENEW
It is agreed and understood that the Tenant, if not in default beyond any
applicable cure period and this Lease has not been terminated in accordance with
the provisions of this Lease, shall have the right to extend this Agreement for
2 additional period(s) of five (5) years each at the [***]. If Tenant shall
elect to extend, Tenant shall give to Landlord not less than six (6) months'
written notice (certified mail) prior to the expiration of the original term of
this Lease Agreement. If within thirty (30) days, the Landlord and Tenant have
not agreed upon at the Fair Market Rental rate during the respective term, then
Tenant and Landlord shall each appoint a knowledgeable real estate broker or
appraiser familiar with commercial property of the type in the Memphis
metropolitan area. The two appointees shall designate a third real estate broker
or appraiser and the majority decision of the three shall be binding upon Tenant
and Landlord, but under no circumstances shall the rent during any extended term
be less than rent paid during the preceding term. The cost of arbitration shall
be borne equally by the Landlord and Tenant. Notwithstanding the foregoing, in
order to avoid any forfeiture or inadvertent lapse of any of Tenant's right to
extend the Lease term, if Tenant shall fail to give Landlord any written notice
to extend prior to that date which is six (6) months prior to the expiration of
the original term of this Lease Agreement (or the expiration of the first
extended term, as applicable) and shall not have given Landlord prior notice of
its intent not to exercise its option to extend the term of the Lease pursuant
hereto, then and as often as the same shall occur, Tenant's right to extend the
Term shall nevertheless continue until the expiration date of the original term
of this Lease Agreement (or the expiration of the first extended term as
applicable) or earlier termination of this Lease, as shall its tenancy
hereunder, under the same terms and conditions as theretofore in effect
*** Confidential treatment requested.
<PAGE> 7
and notwithstanding that the Lease term or most recent extended term shall have
expired, except that after the expiration of the term, the Lease shall become a
month-to-month tenancy until such time as the next option to extend the term is
exercised or this Lease is otherwise terminated pursuant to its terms. If Tenant
fails to give Landlord notice of its exercise of the next-succeeding option to
extend the term prior to the applicable six (6) month deadline, Landlord shall
be entitled (but not obligated) to provide Tenant with a written notice
of Landlord's election to terminate such option to extend the terms and all
subsequent options to extend the term, which notice shall be effective to
terminate this Lease upon either (i) the expiration of the term of this Lease,
or (ii) if the term has already expired, that date which is sixty (60) days
following the date of Tenant's receipt of such termination notice from Landlord,
unless Tenant, within fifteen (15) days of receipt of such termination notice,
provides Landlord with written notice of Tenant's election to exercise its next
available option to extend the terms of this Lease.
PART 11
EXCLUSIVE
Provided that Tenant is not in default hereunder beyond any applicable
notice and cure period and has not ceased operating for business in the Premises
in accordance with Part 7 hereof (subject, however, to Tenant's right to go dark
pursuant to Part 4 hereof) for a period in excess of thirty (30) days, Tenant
shall have the exclusive right to occupy and operate a business within the
Shopping Center (including, without limitation, the Common Areas of the Shopping
Centers for the installation and operation of automobile racing car ride
simulators (including motion-based simulators) and, so long as Tenant retains
the right to use the NASCAR name and uses at least 500 square feet of its sales
floor area for the sale of the merchandise hereinafter described, for the sale
of NASCAR-branded merchandise and other merchandise related to NASCAR
(including, without limitation, NASCAR videos, pictures, CD-Roms, DVD's and
other media and other such audio/visual items featuring NASCAR racing and for
the sale of NASCAR Silicon Motor Speedway-branded merchandise and Silicon Motor
Speedway-branded merchandise ("Tenant's Exclusive Use"). Notwithstanding the
foregoing, other tenants in the Shopping Center may sell NASCAR-branded
merchandise and other merchandise related to NASCAR, other than apparel, so long
as such use is incidental to such tenants primary use of their respective
premises. For purposes hereof, an "incidental" use shall mean that not more than
one hundred (100) square feet within such tenant's sales area shall be devoted
to the sale of such merchandise comprising the "incidental" use. Landlord
represents and warrants to Tenant that, except for one space tenant to be
operated as Jillian's (or successors or assigns) and one space tenant to be
operated as a movie theater under the name Muvico (or successors or assigns), no
current tenant, licensee or other occupant of (whether or not currently
operating with) the Shopping Center (or other party to which Landlord or any
predecessor entity is bound or which has rights affecting the Shopping Center)
is a party to a lease, license or other document (and Landlord is not now
negotiating any lease, license or other right to use any space within the
Shopping Center) the effect of which would violate or permit the use of any
space within the Shopping Center which, if so used, would violate Tenant's
Exclusive Use. Landlord covenants and agrees that, throughout the Term of this
Lease (as may be extended pursuant hereto), (1) Landlord shall not permit
(including, to the extant Landlord has the discretion to deny permission under
their respective leases, Jillian's and Muvico referenced above), or enter into a
lease, license or other document which permits, or approve any change of use by
any tenant, licensee or other occupant under any lease, license or other
agreement existing as of the date of this Lease or otherwise in a manner that
would permit, any other tenant, license or occupant of the Shopping Center to
use such tenant's, licensee's or occupant's premises in the Shopping Center in
any manner that would violate Tenant's Exclusive Use in whole or in part, (2)
any lease, license or other document hereafter entered into with any tenant or
occupants for space within the Shopping Center shall expressly recognize and
prohibit the tenant or occupant thereunder from violating Tenant's Exclusive
Use. Landlord acknowledges and agrees that the grant of Tenant's Exclusive Use
is a material inducement for Tenant's execution of this Lease and but for the
grant to Tenant's Exclusive Use, Tenant would not have executed this Lease.
(a) If Landlord has taken affirmative action to permit, or knowingly
permitted, the occurrence of a violation of Tenant's Exclusive Use and such
violation of Tenant's Exclusive Use is not extinguished within thirty (30) days
following Landlord's receipt of a written notice from Tenant indicating that
landlord is in breach of this part 11 ("Exclusive Use Notification"), or if
Landlord fails to comply with the requirements of (b) hereinbelow,
<PAGE> 8
then Landlord shall be in breach of this Lease and Tenant shall have the right
to terminate this Lease and pursue its rights and remedies in law and in
equity, as a result of such breach (including, without limitation, the
reimbursement by Landlord of the unauthorized costs of Tenant's improvements to
the Premises, less the amount of the Construction Allowance paid by Landlord to
Tenant pursuant to Exhibit C.
(b) If Landlord has not taken affirmative action to permit and Landlord
has not knowingly permitted, the occurrence of a violation of Tenant's Exclusive
Lien, then Landlord will provide Tenant with written certification within five
(5) days following Landlord's receipt of an Exclusive Violation Notification
from Tenant that Landlord will use all reasonable efforts to eliminate the
violation of Tenant's Exclusive Use. Thereafter, (i) so long as Landlord is
actively proceeding to eliminate the violation of Tenant's Exclusive Use by all
legal remedies available to Landlord, or (ii) if the Landlord's claim for legal
remedies is denied by the court after Landlord has exhausted all of its appeals,
Landlord will not be in breach of this Part 11; however, commencing on the fifth
(5th) day following Landlord's receipt of the Exclusive Violation Notification
and continuing until the violation of Tenant's Exclusive Use no longer exists,
Tenant shall not be obligated to pay to Landlord Minimum Rental but instead pay
to Landlord, in lieu of Minimum Rental an amount equal to [***] of the annual
Sales and Business Transacted monthly in arrears; provided, however, if Tenant's
Sales and Business Transacted during the one hundred eighty (180) day period
immediately following Landlord's receipt of an Exclusive Violation Notification
from Tenant decrease by [***] (as compared to the corresponding 180-day period
in the first preceding year that the violation of Tenant's Exclusive Use did not
occur, or if there is no such corresponding 180-day period, then the 180-day
period immediately preceding Landlord's receipt of an Exclusive Violation
Notification from Tenant) in the same category in which Tenant's Exclusive Use
is being violated (i.e., simulator rides versus merchandise), then Tenant shall
have the right, but not the obligation, for a period of forty-five (45) days
following the expiration of such 180-day period to terminate this Lease on
written notice to Landlord; in the event of such termination by Tenant pursuant
to this sentence. landlord shall reimburse Tenant for unamortized costs of its
improvements to the Premises in an amount not to exceed [***], less the amount
of the Construction Allowance paid by Landlord to Tenant pursuant to Exhibit C.
In the event Tenant fails to exercise such termination right, or Sales and
Business Transacted have not decreased as above-described, Tenant shall resume
payment of Minimum Rental and Percentage Rental as reserved hereunder on the
first day of the month following the expiration of the aforesaid forty-five (45)
day period or the expiration of the 180-day period in the event Sales and
Business Transacted had not so decreased.
PART 12
PEABODY PLACE DEVELOPMENTAL GUIDELINES
Tenant agrees to comply with all applicable federal, state and local
governmental requirements including, but not limited to, those attached hereto
in Exhibit E and agrees to furnish to Landlord, within a reasonable time after
Landlord's written request, all documentation within its reasonable control to
evidence such compliance, except for any documents or information deemed
confidential by Tenant. Notwithstanding anything to the contrary contained
herein, Landlord represents and warrants that the funds provided to fund the
Construction Allowance described in Exhibit C attached hereto and made a part
hereof shall not be funds provided by the UDAG, CDBG or MUD programs as
described in Section 5 of Exhibit E attached hereto and made a part hereof.
PART 13
TITLE TO SHOPPING CENTER
Peabody Place Centre, L.P. will be the owner of the ground leasehold
interest in the Premises and will function as the Landlord pursuant to this
Lease. The undersigned Hotel Peabody, L.P. (formerly known as Hotel Peabody,
Ltd.) joins herein as the current owner of the ground leasehold interest in the
Premises pursuant to the terms of the lease agreement dated as of December 31,
1997 by and between Memphis Center City Revenue Finance Corporation and Hotel
Peabody, L.P. recorded in the Shelby County Register's Office as Instrument HB
6476 (the "Ground Lease") and guarantees the obligations of the Landlord under
the Lease. At such time as construction commences on the Shopping Center, Hotel
Peabody, L.P. will transfer all of its right, title and interest in and to the
Shopping Center pursuant to the Ground Lease to Peabody Place Centre, L.P.
Hotel Peabody, L.P. will
*** Confidential treatment requested.
<PAGE> 9
thereupon be released from all covenants, conditions and obligations pursuant
to the Lease and any documents executed in connection therewith and Peabody
Place Centre, L.P. will assume all obligations of the Landlord hereunder,
including those which had accrued but not been satisfied prior to the time of
such transfer.
PART 14
TENANT'S TERMINATION RIGHT
Notwithstanding anything to the contrary contained herein and so long as
Tenant is not in material default hereunder beyond any applicable notice and
cure period and has not ceased operating for business within the Premises
(except pursuant to the provisions of Part 4 hereof). In the event Tenant does
not achieve Sales and Business Transacted of at least Two Hundred and Fifty and
No/100 Dollars ($250.00) per square foot contained in the Premises on average
during the fourth and fifth lease years of the term hereof calculated on an
annualized basis (e.g., if the Sales and Business Transacted for the fourth and
fifth lease years, when added together and divided by two, do not exceed
$250.00 per square foot), then Tenant, for a period of thirty (30) days
following the end of the fifth year, shall have the option, upon one hundred
eighty (180) days prior written notice to Landlord, of terminating this Lease
("Termination Option"). In the event that Tenant fails to exercise its
Termination Option within the required time period, then such Termination
Option shall, upon the expiration of the applicable period, become null and
void and be of no further force or effect. In the event Tenant exercises the
foregoing Termination Option within the required time period, this Lease shall
terminate upon expiration of the one hundred eighty-day notice period, subject,
however, to the payment by Tenant to Landlord of all sums having accrued to
Landlord. In the event that Tenant exercises the Termination Option provided
for herein, Tenant shall pay to Landlord the unamortized portion of the Tenant
Allowance actually paid to Tenant pursuant to Exhibit C and the unamortized
portion of any brokerage commissions paid by Landlord pursuant to the
provisions of Part 9 hereof.
PART 15
REASONABLE CONSENT
Landlord and Tenant hereby acknowledge and agree that, except as otherwise
expressly provided herein, in any instance provided in this Lease for Landlord
or Tenant to give its consent, such consent shall not be unreasonably withheld.
PART 16
ENTIRE AGREEMENT
This Lease includes the Lease Agreement, Exhibit A (drawing or description
of the Property showing the general location of the Premises), Exhibit B
(General Lease Provisions), Exhibit C (which delineates the construction
requirements of the parties, if any), Exhibit D (sign criteria), Exhibit E
(developmental guidelines) and Exhibit F (exclusive use restrictions). The
foregoing constitute all of the agreements and conditions made between the
parties hereto, and no representations or statements claimed to have been made
and not herein contained shall vary or modify this Lease in any way.
<PAGE> 10
IN TESTIMONY WHEREOF the above named Landlord and the above named Tenant
have executed this and three (3) other original instruments of identical year
and date, on the day and year set forth on page 1 of this Lease.
LANDLORD: Peabody Place Centre, L.P.
BY: PEABODY PLACE, INC., General Partner
By: /s/ MORRIS I. THOMAS
-----------------------------------------
Morris I. Thomas, Vice President
By: /s/ JACK A. BELZ
-----------------------------------------
Jack A. Belz, President
HOTEL PEABODY, L.P.
By: Perim Corp., General Partner
By: /s/ JIMMIE D. WILLIAMS
-----------------------------------------
Jimmie D. Williams, Senior Vice President
TENANT: Silicon Entertainment, Inc.
By: /s/ [ILLEGIBLE]
-----------------------------------------
Its: Vice President
----------------------------------------
EXHIBITS: A. Site Plan and/or Floor Plan
B. General Lease Provisions
C. Construction Exhibit (if applicable)
D. Sign Criteria
E. Developmental Guidelines
F. Exclusive Use Restrictions
Lease Agreement between Peabody Place Centre, L.P. and Silicon Entertainment,
Inc. for Peabody Place Retail/Entertainment Development at space numbers 214,
216, and 218.
<PAGE> 11
STATE OF TENNESSEE
COUNTY OF SHELBY
Before me, a Notary Public of the State and County aforesaid, personally
appeared JACK A. BELZ AND MORRIS I. THOMAS, PRESIDENT AND VICE PRESIDENT,
respectively, of PEABODY PLACE, INC., a Tennessee corporation, said corporation
is the general partner of PEABODY PLACE CENTRE, L.P., a Tennessee limited
partnership, with whom I am personally acquainted, and who, upon oath
acknowledged that they are the PRESIDENT AND VICE PRESIDENT, respectively of
PEABODY PLACE, INC., General Partner, of PEABODY PLACE CENTRE, L.P., and that
they as such PRESIDENT AND VICE PRESIDENT, respectively, executed the foregoing
instrument for the purpose therein contained by signing the name of such
partnership, as one of the general partners by themselves as PRESIDENT AND VICE
PRESIDENT, respectively of such corporation.
WITNESS my hand and Notarial seal, at office in Memphis, Tennessee, this,
the 19th day of May, 1999.
/s/ SANDRA PERRY [SEAL]
- -----------------------------
Notary Public
My Commission Expires:
-------
STATE OF CALIFORNIA
COUNTY OF SANTA CLARA
Before me, a Notary Public of the State and County aforesaid, personally
appeared Chris Morse with whom I am personally acquainted, (or proved to me on
the basis of satisfactory evidence) and who, upon oath, acknowledge himself to
be the Vice President of SILICON ENTERTAINMENT, INC., the within named
bargainor, a California corporation, and that he executed the foregoing
instrument for the purposes therein contained by signing the name of such
corporation by himself as such Vice President.
Witness my hand, at office, this 24 day of May, 1999.
/s/ LAURIE M. SHERMER
- ---------------------
Notary Public
My Commission Expires 9/19/2001 [SEAL]
STATE OF TENNESSEE
COUNTY OF SHELBY
Before me, a Notary Public of the State and County aforesaid, personally
appeared JIMMIE D. WILLIAMS, SENIOR VICE PRESIDENT of PERIM CORP, a Tennessee
corporation, said corporation is one of the general partners of HOTEL PEABODY,
L.P., a Tennessee limited partnership, with whom I am personally acquainted, and
who, upon oath acknowledged that he is the SENIOR VICE PRESIDENT of PERIM
CORP., General Partner, of HOTEL PEABODY, L.P., and that he as such SENIOR VICE
PRESIDENT, executed the foregoing instrument for the purpose therein contained
by signing the name of such partnership by such corporation, as one of the
general partners by himself as SENIOR VICE PRESIDENT of such corporation.
WITNESS my hand and Notarial seal, at office in Memphis, Tennessee, this,
the 19th day of May, 1999.
/s/ SANDRA PERRY [SEAL]
- -----------------------------
Notary Public
My Commission Expires:
-------
<PAGE> 12
TABLE OF CONTENTS
TO
EXHIBIT B TO
RETAIL LEASE AGREEMENT
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE 1 - RENT AND OTHER PAYMENT................................................. 1
Section 1 - Minimum Rental............................................. 1
Section 2 - Percentage Rental.......................................... 1
Section 3 - Additional Charges......................................... 2
(i) Common Area Maintenance Charge............................. 2
(ii) Real Estate Taxes and Assessments.......................... 2
(iii) Other Taxes................................................ 3
(iv) Marketing Fund............................................. 3
(v) Insurance.................................................. 3
(vi) Tenant's Proportionate Share............................... 3
(vii) Payment.................................................... 3
Section 4 - Security Deposit........................................... 4
ARTICLE 2 - USE AND OPERATION...................................................... 4
Section 1 - Permitted Use.............................................. 4
Section 2 - Permits.................................................... 4
Section 3 - Hours of Operation......................................... 4
Section 4 - Covenant of Continuous Operation........................... 4
Section 5 - Parking, Etc............................................... 5
Section 6 - Lawful and Moral Use....................................... 5
Section 7 - Additional Tenant Covenants................................ 5
ARTICLE 3 - COMMON AREAS MAINTENANCE............................................... 5
ARTICLE 4 - ASSIGNMENT AND SUBLETTING.............................................. 6
ARTICLE 5 - ALTERATIONS, INSTALLATIONS AND
REMOVAL OF IMPROVEMENTS BY TENANT............................... 6
ARTICLE 6 - INSURANCE AND RELATED MATTERS.......................................... 7
Section 1 - Loss or Damage to Tenant's Property........................ 7
Section 2 - Tenant's Required Insurance................................ 7
Section 3 - Landlord's Insurance....................................... 7
Section 4 - Waiver of Recovery......................................... 8
Section 5 - Hold Harmless and Indemnification.......................... 8
Section 6 - Invalidation of Insurance/Increased Premiums............... 8
ARTICLE 7 - LANDLORDS' LIEN........................................................ 8
ARTICLE 8 - MECHANICS' LIEN........................................................ 8
ARTICLE 9 - REPAIRS................................................................ 8
ARTICLE 10 - DAMAGE OR DESTRUCTION BY FIRE.......................................... 9
ARTICLE 11 - RIGHT OF ENTRY, ETC.................................................... 9
ARTICLE 12 - UTILITIES.............................................................. 9
ARTICLE 13 - DEFAULT................................................................ 10
ARTICLE 14 - INSOLVENCY OF TENANT................................................... 11
ARTICLE 15 - DELIVERY AT END OF LEASE............................................... 11
ARTICLE 16 - NO WAIVER OF BREACH, EXTENSION, PARTIAL PAYMENT,
NO ACCORD AND SATISFACTION...................................... 11
ARTICLE 17 - SUBORDINATION: ATTORNMENT: ESTOPPEL:
LANDLORDS COVENANT AS TO TITLE.................................. 12
ARTICLE 18 - GRAPHICS............................................................... 12
ARTICLE 19 - CONDEMNATION........................................................... 13
ARTICLE 20 - ENVIRONMENTAL MATTERS.................................................. 13
ARTICLE 21 - FIRE PROTECTION........................................................ 13
ARTICLE 22 - COVENANTS RUN TO HEIRS................................................. 13
ARTICLE 23 - SHORT FORM LEASE....................................................... 13
ARTICLE 24 - NOTICES................................................................ 14
ARTICLE 25 - RULES AND REGULATIONS.................................................. 14
ARTICLE 26 - REAL ESTATE AGENT...................................................... 15
ARTICLE 27 - PERSONAL LIABILITY..................................................... 15
ARTICLE 28 - NO PARTNERSHIP......................................................... 15
ARTICLE 29 - CORPORATE TENANTS...................................................... 15
ARTICLE 30 - ENTIRE AGREEMENT....................................................... 15
</TABLE>
<PAGE> 13
EXHIBIT B TO
RETAIL LEASE AGREEMENT
GENERAL LEASE PROVISIONS
ARTICLE 1
RENT AND OTHER PAYMENTS
SECTION 1. MINIMUM RENTAL
Tenant shall, without demand or notice, pay to Landlord minimum annual
rental ("Minimum Rental") in the amount as is set forth in the Lease Agreement
which amounts shall be paid in equal monthly installments (or in the manner
prescribed by Part 3 of the Lease to which this is an Exhibit without deduction,
abatement or setoff in advance on or before the first day of each month
throughout the term of this Lease. Minimum Rental for any partial calendar month
shall be prorated at a daily rate based upon the number of days in the
respective calendar year. Tenant shall not prepay any Minimum Rental more than
one (1) month in advance of its due date.
SECTION 2. PERCENTAGE RENTAL
Tenant further covenants and agrees that, commencing on the date that
Tenant's Sales and Business Transacted (as hereinafter defined) reach or exceed
the Percentage Rental breakpoint as is set forth in the Lease Agreement, then
thereafter, after the end of each month of such Lease Year (as hereinafter
defined). Tenant shall pay additional percentage rental ("Percentage Rental")
based upon the total of all Sales and Business Transacted by Tenant, its
sub-tenants and licensees, in or from the Premises during the remainder of each
such Lease Year. The dollar breakpoint above which such Percentage Rental shall
be paid as well as the percentage to be utilized in the computation of such
Percentage Rental are more particularly set forth in the Lease Agreement to
which these General Lease Provisions are attached.
Tenant shall be under no obligation to make any payments of annual
Percentage Rental in any Lease Year until such time as Tenant has achieved the
minimum amount of Sales and Business Transacted or is set forth in Part 3 of
the Lease Agreement to which this is an Exhibit (except to the extent Tenant is
not open for business a complete Lease Year, as hereinafter provided). Upon
achieving such minimum amount of Sales and Business Transacted in any Lease
Year. Tenant shall thereupon make monthly payments of annual Percentage Rental
payable on or before the fifteenth (15th) day following the close of each full
calendar month during the term, based upon the Sales and Business Transacted
for such period. Monthly payments of annual Percentage Rental shall be
calculated by multiplying the amount of Sales and Business Transacted for the
month in question by the percentage specified in Part 3 of the Lease Agreement
to which this is an Exhibit, and the first such payment shall include any
prorated Percentage Rental for the period from the date Tenant's Sales and
Business Transacted reached the Percentage Rental Breakpoint set forth in Part
3 to the first day of the next full calendar month in the term.
The term Lease Year is based herein shall mean and refer to the twelve
calendar month period commencing on the first day of the term hereof, if the
term commences on the first day of a month, or commencing on the first day of
the following month, if the term commences within a month, and successive twelve
calendar month periods thereafter. The first Lease Year shall be enlarged to
include Sales and Business Transacted for the first partial month of the term
hereof, if applicable. Sales and Business Transacted and the Percentage Rental
Breakpoint shall be proportionately reduced or enlarged based on the number of
months within a Lease year that Tenant is open and operating.
For the purposes of this Lease, "Sales and Business Transacted" shall be
defined to mean and include the aggregate dollar amount of all business done 1.
from the Premises, including all sales of merchandise, food and beverages, and
charges for all services performed in, upon or resulting from the Premises,
including, but not limited to, direct store sales, sales through newspaper, mail
order, telephone and other media of communications, whether by Tenant or
Tenant's licensees or other occupying the Premises, including all sales for
cash, check, credit, credit cards, charge accounts, exchange or otherwise,
regardless of collection. Additionally, Sales and Business Transacted shall
include all income received by Tenant attributable to display fees, slotting
allowances, promotional considerations, rebates or any other payments received
by Tenant as consideration to Tenant for its stocking, promoting, or advertising
any product. In computing the Sales and Business Transacted, there shall be
deducted from or excluded from the computation, only the following:
1(a).
On or prior to the fifteenth (15th) day of each month throughout the term,
Tenant shall furnish Landlord monthly statements of Sales and Business
Transacted during the prior month. On or before the thirtieth (30th) day after
the end of each Lease Year, Tenant shall furnish to Landlord an annual
statement of the Sales and Business Transacted during the preceding Lease Year
which shall be prepared and calculated in accordance with generally accepted
accounting principles and certified by Tenant as correct. Any Percentage Rental
not previously paid which may be due to Landlord shall be paid simultaneously
with furnishing of such annual statement. Tenant covenants that for the
purposes of ascertaining the amount of Percentage Rental due and payable,
Tenant will keep full and complete records and looks of account, showing the
daily cash receipts, the daily bank deposits, and the
1
<PAGE> 14
early Sales and Business Transacted in, from or upon the Premises. In order to
enable Landlord to verify the Percentage Rental due at hereunder, Tenant will,
upon written request, make available records and books of account at the
Premises or at an accountant's office in Memphis, Tennessee, or at Tenant's
corporate headquarters.
Tenant shall permit Landlord or its representatives, 1(b). to inspect the
records and books of account relating to Sales and Business Transacted in front
or upon the Premises, for the purpose of examination and verification of the
aforementioned "Lease Year" reports, provided such inspections shall be made
within the twenty four (24) months after delivery of the report. 1(c). In the
event that upon inspection of such records and books of account, it is
determined that the report for such year resulted in an underpayment of
Percentage Rental in excess of 1(d). anything hereinbefore contained
notwithstanding, Landlord shall have the right to inspect the records and
transfer of account for all prior Lease Years subsequent to the date of the last
inspection. Tenant shall immediately pay Landlord any amounts which may be due
for any prior year which may be shown upon or as a result of any such inspection
and Tenant also shall reimburse Landlord for the cost of all such inspections in
which an underpayment is found. 1(e). Noncompliance with the sales reporting
requirements of this Article or the nonpayment of Percentage Rental due
hereunder 1(f). shall be deemed to be a material default which shall enable
Landlord to exercise all remedies available to Landlord under this Lease, or at
law or equity, including termination of this Lease.
Upon request of Landlord, Tenant shall furnish to Landlord copies of any
sales tax returns made to any lawful taxing authority covering payment of any
sales taxes paid by Tenant in connection with Sales and Business Transacted.
In addition to the other remedies Landlord is entitled to under due
provisions of this Lease or otherwise by law, if Tenant shall fail to deliver to
Landlord any statement or report required pursuant to the provisions set out
hereinbefore in this Article 1, 1(g). Tenant, in recognition of the difficulty
or impossibility of determining Landlord's damages, shall pay Landlord, upon
demand, as liquidated damages and not as a penalty and in addition to the rent
and other charges payable under this Lease, a charge of [***] for each day
beyond the last date on which the statement or report called for hereinbefore
was due to be delivered to Landlord, which separate charge of [***] per day
shall continue to be due and payable for each day which occurs until said
statement or report is delivered to Landlord. Regardless of the foregoing,
nothing herein contained shall be deemed to limit any other remedy available to
Landlord or in any way prevent Landlord from declaring Tenant in default under
this Lease for failure to have delivered any such statement or report to
Landlord within the time limit required by the provisions of this Article 1.
SECTION 3. ADDITIONAL CHARGES
In addition to Minimum Rental and Percentage Rental, Tenant agrees that it
shall, from and after the Commencement Date, pay to Landlord, at the times
hereinafter set forth, without deduction, or abatement, the following Additional
Charges, as additional rent, the nonpayment of which shall be subject to all
provisions of this Lease and of law as to default in the payment of rent or
money:
(l) Common Area Maintenance Charge. In addition to the rentals set forth
in Part 3 of the Lease, and with the same rights and results respecting
collection, violation or default, Tenant agrees to pay to Landlord, as
additional rent, monthly in advance on the first day of each month during the
term of this Lease, commencing on the Commencement Date and continuing
throughout the term hereof, a charge (hereafter referred to as the "Common Area
Maintenance Charge") representing Tenant's Proportionate Share (as defined in
Section vi hereafter) of the Common Area Maintenance and Operation Costs.
The term "Common Area Maintenance and Operation Costs" includes the total
cost and expense incurred in operating, maintaining, equipping, policing,
inspecting, protecting and repairing the Common Areas of the Shopping Center,
including, without limitation, the cost or expenses of, or incurred in
connection with or reasonably attributable to, lighting, gardening and paving,
line painting and traffic direction; fire protection (including sprinkling and
the installation of an ADT or monitor type system); sprinkler monitoring fees;
fees for required licenses); personal property leases; surcharges levied upon or
assessed against parking spaces or areas; payments toward mass transit or car
pooling facilities or otherwise as required by federal, state or local
governmental ambient air and environmental standards; heating, ventilating and
air conditioning of the enclosed units and other enclosed portions of the Common
Areas; operating of loud speakers and other equipment supplying music in the
Common Areas; the operation and maintenance of vertical transportation equipment
and facilities; the illuminating, maintaining and operating signs advertising
the Shopping Center or the tenants therein; sanitary control, gas, water and
sewage charges; electrical charges; removal of ice, snow, trash, rubbish,
debris, garbage and other refuse; depreciation on equipment and machinery used
in such maintenance, permitted to provide and supervise such services, to clean,
to direct parking, maintain security and police the Common Areas (including
wages, unemployment, and any social security taxes, workers compensation
insurance, health benefits and other fringe benefits); such replacement of
paving, curbs, walkways, landscaping, drainage, lighting and other common
facilities as may from time to time be necessary of all the Common Areas of the
Shopping Center, expenditures required under any governmental law or regulation
that was not applicable to the Shopping Center at the time it was originally
constructed; the cost of reasonable enforcement of the Common Area Rules and
Regulations; plus the administrative costs attributable to the Common Areas for
on-site personnel and, in addition thereto, an overhead cost equal to [***] of
the total of the aforesaid costs incurred by Landlord in connection with the
operation of the Common Areas. Said Costs shall not include depreciation of the
original cost of constructing the Common Areas. Common Area Maintenance and
Operation Costs shall be reduced by the amount of any contributions thereto made
by any Anchor Tenant(s) (as hereinafter defined). 1(h).
Landlord may cause any or all of said services and/or supplies to be
provided by an independent contractor or contractors. Should Landlord acquire
or make available additional land not now a part of the Shopping Center Site
and make the same available for parking or other common area purposes, then the
Common Area Maintenance and Operation Costs shall also include all of the
aforementioned expenses incurred and/or paid by Landlord in connection with
said additional land.
(ll) REAL ESTATE TAXES AND ASSESSMENTS. Tenant shall pay to Landlord
Tenant's Proportionate Share (as hereinafter defined) of the Real Property
Taxes and Assessments (general and special, ordinary and extraordinary, foreseen
and unforeseen) levied against the land, buildings and improvements comprising
the Shopping Center or the property of which the Premises are a part or the
property included in Landlord's real property tax and assessment bills for the
Shopping Center ("Real Property Taxes and Assessments").
1(i).
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"Real Property Taxes and Assessments" shall include all 1(j)
costs and fees including consultant's fees and other similar fees
incurred by Landlord in contesting or defending taxes and assessments
or negotiating with public authorities. A copy of Landlord's tax bill
shall be conclusive evidence of the amount of Real Property Taxes and
Assessments assessed or levied.
(iii) OTHER TAXES. Should any governmental authority having
jurisdiction impose a tax and/or assessment of any kind or nature
upon, against, or with respect to the rentals or other payments
payable to Landlord or on the gross receipts of Landlord or with
respect to Landlord's ownership of the land, holdings and improvements
comprising the Shopping Center, then such shall be deemed to be a Real
Property Tax and Assessment and Tenant shall be obligated to pay said
tax. Tenant shall pay said tax directly to the taxing authority or, if
Landlord is obligated to pay taxing authority, Tenant shall pay to
Landlord Tenant's Proportionate Share thereof - 1(k).
(iv) MARKETING FUND. Tenant shall pay to Landlord the sum which
is set forth in the Lease Agreement to which this is an Exhibit as its
contribution to the Marketing Fund. Such payment shall be deemed to be
additional rental and shall be paid in advance on the first day of
each and every calendar month during the term and, at Landlord's
request, shall be paid separately from any other payments due under
this Lease. Such amount, or such greater amount voted on by a majority
of tenants in the Shopping Center, shall be paid to Landlord to be
utilized toward the expense of advertising and for promotional
activities.
Funds so paid by Tenant shall be expanded for said activities by
or under the direction of Landlord, or by such person, firm or
corporation in whom or to which Landlord may delegate such authority.
The mall manager and other mall personnel employed by Landlord may be
designated by Landlord to be the promotional director or to otherwise
perform such services. In the event any employees of the Landlord
perform promotion work, Landlord shall deduct from the Marketing Fund
the reasonable cost and expense thereof.
The amounts payable under this subparagraph shall be adjusted on
January 1 of each calender year of the term from and after January 1
of the year following the Commencement Date and annually thereafter
during the term of this lease and any extension or renewal thereof by
a percentage equal to [***]. All items (19X2-KR=100), published by the
Bureau of Labor Statistics of the United States Department of Labor
("CPI") on the date closest to the date hereinbefore designated for
such adjustment over the base CPI figure published for the month in
which the Commencement Date occurs. If, from time to time during the
term of this Lease and any extension or renewal thereof, the United
States Department of Labor, Bureau of Labor Statistics ceases to
maintain said CPI, such other index or standards as will most nearly
accomplish the aim and purpose of said CPI as reasonably determined by
Landlord shall be used in determining the amount of any such
adjustment.
In the event Landlord is required to contribute to the Marketing
Fund, such contribution may be satisfied in whole or in part by
contribution of 1(l) a Promotional Director, Promotional or
Advertising Coordinator or Shopping Center or Mall Manager.
(v) INSURANCE. Tenant shall pay to Landlord Tenant's
Proportionate Share of Landlord's annual premiums for insurance
carried by Landlord in accordance with the requirements of Article 6
of those General Lease Provisions and elsewhere herein for "all risk"
insurance coverage if carried by Landlord; commercial general
liability insurance, rent loss insurance, boiler and machinery
insurance and all other insurance and the loss deductibles maintained
by Landlord for the Shopping Center from time to time - 1(m).
(vi) TENANT'S PROPORTIONATE SHARE. "Tenant's Proportionate Share"
shall be defined as being a fraction, the numerator of which is the
number of leasable square feet in the Premises and the denominator of
which is the aggregate number of leasable square feet in the Shopping
Center, but excluding from such aggregate area the area leased by any
Anchor Tenant (but only to the extent that any such Anchor Tenant pays
less than its portion of the total costs). For purposes hereof, Anchor
Tenants shall mean and refer to tenants leasing in excess of 15,000
square feet and restaurant tenants.
(vii) PAYMENT. The foregoing amounts, unless the amount and time
for payment are fixed, may be separately invoiced by Landlord and in
such event shall be paid by Tenant within fifteen (15) days after the
date of such invoice. Said amounts may be estimated by Landlord in
which event Landlord shall notify Tenant from time to time of
Landlord's estimate. Tenant shall pay said estimate (as said estimates
may be revised) in advance on the first day of each and every calendar
month with Tenant's Minimum Rental without further notice. When
Landlord has calculated the exact amount actually payable by Tenant
for each item, Landlord shall notify Tenant. Any deficiency in payment
by Tenant for any item shall be paid by Tenant to Landlord promptly
upon receipt of the notice in respect to such item. Any overpayment by
Tenant shall be credited against the next ensuing installments of
Landlord's estimate of that item.
In the event of dispute regarding payment, the burden of proof of
payment of any monthly installments of Minimum Rental, Percentage
Rental, or Additional Charges hereunder shall be upon Tenant.
All Minimum Rental, Percentage Rental, Additional Charges and
other amounts required to be paid shall be paid to Landlord at the
notice address as is set forth in the Lease Agreement or at such other
place or places as Landlord may from time to time designate in
writing. If Tenant shall fail to pay any amounts required to be under
the terms of this Lease within seven (7) days after the same is due,
Tenant shall be obligated to pay a late payment charge equal to the
greater of [***] or [***] of any payment not paid when due to
reimburse Landlord for its additional administrative costs.
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In addition, any Minimum Rental, Percentage Rental or Additional Charges which
is not paid within seven (7) days after the same is due shall bear interest at a
rate equal to the lesser of (i) 1(n). per annum or (ii) the [***], from the
first day due until paid. Any assessments pursuant to this Section which shall
become due shall be payable, unless otherwise provided herein, with the next
installment of Minimum Rental. Any payment by Tenant or acceptance by Landlord
of a lesser amount than shall be due from Tenant to Landlord shall be treated as
a payment on account. The acceptance by Landlord of a check for a lesser amount
with an endorsement or statement thereon, or upon any letter accompanying such
check, that such lesser amount is payment in full shall be given no effect, and
Landlord may accept such check without prejudice in any other rights or remedies
which Landlord my have against Tenant.
Section 4. Security Deposit
ARTICLE 2
USE AND OPERATION
Section 1. Permitted Use
The Premises shall be opened for business, kept open for business and used
by Tenant and any assignee, sublessee or other occupant of the Premises
continuously only for the operation of a retail store engaged in the sale of
merchandise and/or performance of services more particularly described in the
Lease Agreement in which this is an Exhibit and Tenant agrees that it will not
use or permit or alter the Premises or any part thereof to be used for any
business or purpose other than that specifically defined and permitted by the
Lease Agreement of this paragraph or for the sale of merchandise or the
performance of services other than the merchandise and/or services specifically
described in the Lease Agreement. The covenant to use the Premises as set forth
above is a material inducement for Landlord to enter into this Lease and
Landlord, in Landlord's sole discretion, may withhold consent to any proposed
change of use of the Premises.
Section 2. Permits
Tenant, at Tenant's sole cost and expense, shall obtain all building, use
and occupancy permits and licenses required by applicable governmental
authorities for connection, repair or alteration of the Premises, use of the
Premises and for the conduct of Tenant's business excepting building permits
which Landlord is required to obtain in connection with improvements required
of Landlord hereunder, if any. - 1(o).
Section 3. Hours of Operation
The Premises shall be open for business to the public Monday through 1(p).
not later than 1(g). a.m. and shall remain open for the conduct of business to
the public until 2. On Sunday's the Premises shall be open minimally from 3. On
legal holidays the Premises shall be open during such hours as the Landlord
shall establish. Landlord shall designate and may amend from time to time the
closing hours of the Shopping Center. Landlord reserves the right to permit
other Tenants to observe different hours of business operations. -4.
Section 4. Covenant of Continuous Observation
Tenant agrees to keep on the Premises an adequate staff of employees and a
full and complete stock of merchandise and shall continuously operate its
business during the hours set forth above. 5. Each failure of Tenant to keep the
Premises open for business as herein required 5(a). shall be deemed a breach of
this Lease 5(b). In addition to any other rights and remedies Landlord may have
for such default, Tenant agrees to pay Landlord in addition to the Minimum
Rental and Additional Charges set forth in this Lease) for each day or partial
day that Tenant does not operate from the Premises in accordance with the
provisions of this Lease liquidated damages equal to 5(c). of the monthly
Minimum Rental payable by Tenant pursuant to this Lease, divided by thirty (30).
Further, in the event Tenant ceases operating a going business within the
Premises as required by these General Lease Provisions, in addition to the 5(d).
increase in Minimum Rental, such liquidated damages shall be increased monthly
by one twelfth (1/12) of the average annual Percentage Rental paid by Tenant
during the two (2) year period preceding such cessation of operations. Tenant
acknowledges that Landlord's actual damages would be difficult to calculate and
that the liquidated damages set forth above represent a fair and reasonable
appreciation of Landlord's actual damages. - 6.
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SECTION 5. PARKING, ETC.
7.
SECTION 6. LAWFUL AND MURAL USE
The Premises shall, during the term of this Lease be used only and
exclusively for lawful and moral purposes, and no part of the Premises or
improvements thereon shall be used in any manner whatsoever for any purposes in
violation of the ordinances and laws of any governmental authority having
jurisdiction over the Premises, and Tenant will have and hold the Landlord
harmless from any such violations.
-- 8.
Tenant, at Tenant's expense shall comply with all laws, rules, orders,
ordinances, directions, regulations and requirements of federal, state, county
and municipal authorities, now in force or which may hereafter be in force,
which shall impose any duty upon Landlord or Tenant with respect to the use,
occupation or alteration of the Premises.
SECTION 7. ADDITIONAL TENANT COVENANTS
Tenant, at Tenant's expense, shall keep the plate glass within the Premises
clean and clear of any debris and litter, keep any garbage, trash, rubbish or
refuse in all-proof containers within the interior of the Premises until
removed, have such garbage, trash, rubbish and refuse removed on a regular
basis; keep all mechanical apparatus free of vibration and noise which may be
transmitted beyond the Premises 9.; keep any vestibules or entries to the
Premises and the sidewalks, driveways, parking areas, rear service areas and
loading areas and other areas adjacent to the Premises free of all trash, refuse
or other articles; not permit any accumulations of garbage, trash, refuse, or
rubbish within or outside of the Premises; remove its shopping carts and other
personal property from the Common Areas; not cause or permit objectionable odors
to eminate from the Premises; and not distribute handbills, printed material or
advertising outside the Premises or within the Common Areas or solicit business
in the parking or other Common Areas. Further, in no event shall Tenant display
or sell merchandise outside of the Premises or in any portion of the Common
Areas other than in connection with Landlord sponsored promotional sales
affecting the overall Shopping Center, nor shall Tenant install, minimum or
permit any individual or entity to install, maintain or otherwise operate
vending machines, pay phones or any other type of personal property or equipment
within or upon the Common Areas, sidewalks or any area outside of the Premises.
- -- 10.
ARTICLE 3
COMMON AREAS MAINTENANCE
Landlord shall make available from time to time within the Shopping Center
such Common Areas as Landlord shall deem appropriate. The term "Common Areas"
shall mean all areas, improvements and equipment in the Shopping Center not
devoted to or for one occupant's exclusive use and shall include without
limitation, any and all open and enclosed pedestrian malls, courts and lanes,
customer and employee parking areas (including any back parking structures); all
lights and lighting standards, traffic and directional signs and traffic
stripping and marking, driveways, roadways and ramps, corridors, aisles and
hallways, balconies, interior and exterior stairs, retaining walls, exterior
boundary walls and fences, delivery passenger, entrances on the streets and
highways, water, sanitary sewers, storm sewers, and other utility lines,
systems, conduits and facilities to the perimeter walls of any building (even
though intended for the use of only one or a limited number of occupants), and
any of the foregoing which serve the Common Areas and facilities, planting,
landscaped areas and facilities, lighting facilities, decorative fountains,
truck serviceways, loading dock areas and facilities, sidewalks, courts, ramps,
canopies, comfort and first-aid stations, restrooms and lounges, janitorial
facilities, parcel pick-up stations, drinking fountains, transportation
equipment (including elevators, escalators and moving sidewalks), community
rooms and auditoriums, curbs and drains, the facilities apparent to each and all
of the foregoing, and other facilities and service areas for common use within
the Shopping Center, and including such improvements and facilities as may be
constructed or added to the Shopping Center, as may be expended or adjusted by
Landlord from time to time, which improvements and facilities are not devoted in
or for one occupant's exclusive use, all whether or not existing or hereafter
constructed.
Tenant and its customers shall have the right in common with others to the
nonexclusive use of the Common Areas as such are configured, maintained and
provided by Landlord from time to time.
The Shopping Center may be constructed in stages and construction of later
stages may necessitate the rearrangement and alterations of some or all of the
Common Areas.
Landlord shall operate and maintain the Common Areas at the expense of
Tenant and the occupants of the Shopping Center in a manner deemed by Landlord,
in its sole discretion as reasonable and appropriate and may close the Common
Areas or portions thereof for repairs and for other reasonable business
purposes. Landlord reserves the right in its sole discretion to modify, alter,
remove, reduce, redesign or change the size, location, elevation, nature and/or
purpose of all or any part of the Common Areas, to make installations or
construct buildings, structures, booths and/or kioshes therein, and to use the
Common Area for exhibits, sales or promotions. -- 11.
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Tenant understands and agrees that Landlord may, at any time or from time
to time during the term of this Lease, perform substantial renovation work in
and to the building or the mechanical systems serving the building (which work
may include, but need not be limited to, the repair or replacement of the
buildings exterior facade, exterior window glass, elevators, electrical systems,
air conditioning and ventilating systems, plumbing system, common hallways, or
lobby), any of which work may require access to the same from within the
Premises.
Tenant agrees that:
(a) Landlord shall have access to the Premises at all reasonable times,
upon reasonable notice, for the purpose of performing such work; and
(b) Landlord shall incur no liability to Tenant, nor shall Tenant be
entitled to any abatement of Minimum Rental or any other charges on
account of any noise, vibration, or other disturbance to Tenant's
business at the Premises (provided that Tenant is not denied access to
said Premises) which shall arise out of said access by Landlord or by
the performance by Landlord of the aforesaid renovations at the
building.
Landlord shall use reasonable efforts (which shall not include any
obligation to employ labor at overtime rates) to avoid disruption of Tenant's
business during any such entry upon the Premises by Landlord.
ARTICLE 4
ASSIGNMENT AND SUBLETTING
This Lease shall not be assigned, mortgaged, pledged, encumbered or in any
other manner transferred by Tenant, voluntarily or involuntarily, by operation
of law or otherwise nor shall the Premises of any part thereof be sublet,
licensed, granted to a concessionaire or used or occupied by anyone other
than Tenant without first obtaining the written consent of Landlord, -- 12.
12(a)
If at any time during the term of this Lease Tenant shall request
Landlord's consent to assign this Lease, or to sublet all or substantially all
of the Premises, Tenant shall include with such request the name and business
experience of the proposed transferor, assignee or sublessee, complete and
current financial statements of said transferee, assignee or sublessee, and the
??? and other terms of the proposed assignment, transfer or subletting. 12(b)
In the event that Landlord consents to said subletting or assignment, any
amounts received by or payable to Tenant (other than the reasonable value paid
to Tenant in repayment for trade fixtures and inventory and other personal
property of Tenant) above the amounts payable by Tenant to Landlord hereunder,
shall be deemed "real estate profit" and shall be paid to Landlord. -- 12(c).
If Landlord permits any such assignment, change or subletting. Tenant
agrees to pay Landlord's reasonable legal fees 12(d). in connection therewith.
If Tenant shall at any time during the term of this Lease subject all or
any part of the Premises or assign this Lease, Tenant shall nevertheless remain
fully liable under all of the terms, covenants, and conditions of this Lease. If
this Lease is assigned, or if the Premises or any part thereof are subleased or
occupied by anybody other than Tenant, Landlord may collect from the assignee,
sublessee or occupant any rent or other charges payable to Tenant under the
Lease and apply the amount collected to the rent and other charges herein
reserved, but such collection by Landlord shall not be deemed an acceptance of
the assignee, sublessee or occupant as a Tenant nor a release of Tenant from the
performance by Tenant under this Lease.
Notwithstanding Landlord's consent to any assignment, subletting,
occupation or use by another person, any subsequent assignment, subletting,
occupation or use by another person shall require Landlord's prior written
consent.
ARTICLE 5
ALTERATIONS, INSTALLATIONS AND
REMOVAL OF IMPROVEMENTS BY TENANT
Tenant shall have the right 13. during the continuance of this Lease to
make such interior alterations, changes and improvements to the Premises as may
be proper and necessary for the conduct of Tenant's business and for the full
beneficial use of the Premises, 14. provided Tenant shall (i) pay all costs and
expenses thereof, (ii) make such alterations, changes and improvements in a good
and workmanlike manner, (iii) obtain all required permits, and (iv) do all its
work in conformity with all legal requirements. Tenant shall hold Landlord
harmless from any penalty, damage or injury of whatever kind arising out of
failure of Tenant's work to so conform. 15.
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Landlord's approval of the plans, specifications and working drawings for
any of Tenant's alterations shall mandate no responsibility or liability on the
part of Landlord for their completeness, design sufficiency, or compliance with
all laws, rules and regulations of governmental authorities or agencies.
If Landlord shall send a notice to Tenant no later than thirty (30) days
after the later of (i) the expiration or earlier termination date of the term or
(ii) the date on which Tenant completely vacated the Premises. Tenant shall
remove any alterations, changes and improvements made to the Premises by Tenant
with or without the consent of Landlord which Landlord requires be removed and
shall repair and restore the Premises in its condition prior to the making of
such alterations, changes and/or improvements. Any alterations, changes, and
improvements which Landlord does not require to be removed shall remain the
property of Landlord, without compensation by Landlord to Tenant therefor.
16. All signs, furnishings, trade fixtures and other equipment installed
in the Premises by Tenant shall remain the property of Tenant and shall be
removed by Tenant upon the termination of this Lease. Tenant shall repair any
damage caused by the removal of such property and shall restore the Premises as
provided in this Lease. Notwithstanding the foregoing, all light fixtures, the
complete storefront including gates, all carpeting, linoleum or other floor
covering, nailed, cemented or otherwise adhesively attached to the Premises,
sinks and vanities and the complete electrical (including emergency generators,
if any), plumbing, air conditioning and heating systems, including ducts,
diffusers, grills, controls systems, shall be and remain in the Premises at all
times for the benefit of Landlord unless Landlord shall direct Tenant to remove
any of the foregoing within the period set forth in the preceding paragraph.
Tenant shall pay before delinquencies all taxes assessed against Tenant's
fixtures, trade fixtures, equipment and leasehold improvements placed in or
about Premises.
ARTICLE 6
INSURANCE AND RELATED MATTERS
Section 1. Loss or Damage to Tenant's Property
Tenant acknowledges that Landlord does not insure Tenant's personal
property, fixtures, improvements or equipment. Accordingly, in order to
contractually allocate risk of loss relative to all such property Tenant agrees
that it shall store its property in and shall occupy the Premises and use all
other portions of the property of which the Premises are a part, at its own
risk. 17. Landlord and Landlord's agents and employees shall not be liable for,
and Tenant waives all claims against them for, loss or damage to Tenant's
business or damage to personnel or property sustained by Tenant or any person
claiming by, through or under Tenant resulting from any accident or occurrence
in or upon the Premises of the building of which they are a part, or any part
thereof. The provisions of this section shall also apply to the period prior to
the commencement of the lease term where any permission is given by Landlord to
Tenant for Tenant to perform any of its work and install any of its fixtures or
otherwise prior to commencement of the lease term.
Section 2. Tenant's Required Insurance
Tenant shall, during the term, at its sole expense obtain and keep in
force, (i) commercial general liability insurance coverage, personal injury,
bodily injury, broad form property damage, operations hazard, owner's protective
coverage, contractual liability and products and completed operations liability
in limits not less than [***] inclusive (the aggregate limits of such insurance
to apply specifically to the Premises and not in multiple locations) with
Landlord and, if required, by Landlord mortgages of Landlord, each named as an
additional insured, as their respective interests may appear, and (ii) "All
Risk" Physical Damage insurance for Tenant's property (personal property,
fixtures and household improvements in excess of building standard) in or on the
Premises for the full insurable value thereof, including an endorsement
providing for "loss of income" coverage. Tenant shall furnish evidence
satisfactory to Landlord of the existence of and maintenance of such insurance
prior to or contemporaneous with the commencement of the term and thereafter on
the date on which such policy is required to be renewed. Tenant shall obtain a
written obligation on the part of each insurance company to notify Landlord at
least thirty (30) days prior to the cancellation of such insurance. Tenant shall
also obtain worker's compensation insurance covering all persons employed,
directly or indirectly, in connection with any finish work performed by Tenant
or any repair or alteration authorized by this Lease or consented to by
Landlord, as required by the law of the state where the Premises are located.
Landlord reserves the right to require that Tenant increase the limits if
such insurance required pursuant to the paragraphs above provided such request
is commercially reasonable in such amounts as Landlord determines prudent
within generally accepted business practices for comparable businesses. All
policies required to be maintained by Tenant pursuant to this Article shall be
issued in a form acceptable to Landlord, by insurance companies having and
maintaining at least an A-X rating in the most currently available "Best
Rating Guide", and qualified to bo business in the state in which the Premises
are located. In no event shall such policy or policies provide for a deductible
amount for any type of coverage in excess of [***].
Section 3. Landlord's Insurance
Landlord shall, during the term, obtain and keep in force commercial
general liability insurance coverage and "All Risk" Property Damage insurance
covering the building of which the Premises are a part (including exterior
walls, downspouts, gutter and roof, and (at Landlord's option) excluding all
improvements and fixtures required to be insured by the Tenant pursuant to
Article 6, Section 2 (ii), in such amounts and with such deductible amounts as
Landlord determines prudent in Landlord's sole discretion. Landlord may insure
such other risks as Landlord may from time to time determine and with any such
deductible as Landlord may from time to time determine. Landlord's insurance
cost for maintaining the insurance coverage referred to in this Article shall be
subject to reimbursement by Tenant to the extent provided elsewhere in this
Lease.
*** Confidential treatment requested.
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SECTION 4. WAIVER OF RECOVERY
Anything in this Lease to the contrary notwithstanding, Landlord and Tenant
each hereby waive any and all rights of recovery, claim, action or cause of
action, against the other, the agents, officers or employees, for any loss or
damage that may occur to the Premises, or any improvements thereto, or the
Shopping Center, or any personal property of such party therein, by reason of
fire, the elements, or any other cause which is insured against or is required
to be insured against pursuant to the terms of this Lease under the terms of
the "All Risk" Property Damage Insurance coverage referred to in subparagraphs
(1) and (3) above, regardless of cause or origin, including negligence of the
other party hereto, its agents, officers or employees. Landlord's and Tenant's
insurance policies shall each contain a waiver of alteration.
SECTION 5. HOLD HARMLESS AND INDEMNIFICATION
Irrespective of the adequacy of said insurance, Tenant shall indemnify
and save Landlord free and harmless from all liability for injury or damage to
any person(s), firm(s), corporation(s) or property occurring on or about the
Premises, or arising out of any accident or any other occurrence on the Premises
or due directly or indirectly to the use of the Premises or any part thereof by
Tenant, its agents, subtenants or employees (including all costs, expenses,
court reporter fees, expert fees and attorney fees incurred by Landlord in
defense of any such claims), -- 17(a).
SECTION 6. INVALIDATION OF INSURANCE/INCREASED PREMIUMS
Tenant shall not do anything or engage in any activity, or permit any
condition to exist on or about the Premises which will cause the cancellation of
or invalidate any insurance which Landlord may now or hereinafter have on the
Shopping Center or the Premises. Further, Tenant shall not permit any condition
or activity which may result in increased premiums payable by Landlord. -- 18.
ARTICLE 7
LANDLORDS' LIEN
ARTICLE 8
MECHANICS' LIEN
Tenant shall have no authority, express or implied, to create or place any
lien or incumbrances of any kind or nature whatsoever upon, or in any instance
to bind, the interest of Landlord in the Premises or to charge the rentals
payable hereunder for any claim in favor of any person or entity dealing with
Tenant, including those who may furnish materials or perform labor for any
construction or repairs, and each such claim shall affect and each such lien
shall attach to, if at all, only the leasehold interest granted to Tenant by
this instrument. It is understood and agreed that if Tenant shall make repairs
or improvements to the Premises, Tenant shall, in making such repairs or
improvements, act solely for its own benefit and not as an agent or Landlord,
and that Landlord's interest in the Premises, the building of which the Premises
are a part, and the Shopping Center or the overall development of which the
Premises are a part, shall not be subject to any mechanic's, furnisher's or
materialmen's liens.
Tenants covenants and agrees that it will pay or cause to be paid all sums
due and payable by it in account of any labor performed or materials furnished
in connection with any work performed on the Premises on which any lien is or
can be validly and legally asserted against its leasehold interest in the
Premises or the improvements thereon. Tenant will save and hold Landlord
harmless from any and all loss, cost or expense, including attorney's fees,
based on or arising out of asserted claims or liens against the leasehold estate
or against the rights, title and interest of Landlord in the Premises or under
the terms of this Lease. Tenant shall discharge by payment or satisfactory bond
pursuant to statutory procedures any lien arising out of work performed or
materials furnished on the Premises by, through and under Tenant within thirty
(30) days after the filing of same.
ARTICLE 9
REPAIRS
Except as otherwise provided in this Lease, within a reasonable time
after Landlord receives written notice from Tenant of the necessity thereof,
Landlord will repair the roof, structural portions and exterior of the Premises
(exclusive of doors, plate glass, mechanical systems or storefronts which shall
be maintained and repaired by Tenant), provided, however, that Tenant, not
Landlord, shall at Tenant's sole cost and expense make all repairs and
replacements necessitated by reason of (a) the neglect, fault or default of
Tenant, or Tenant's agents, employees, contractors, invitees, or customers, and
(b) the structural and exterior work done or installed by Tenant. Further, and
notwithstanding anytime in this Lease to the contrary, Tenant shall make all
repairs and replacements to the property which Landlord is required to
maintain which are required as the result of repairs, alterations, other
improvements or installations made by Tenant or any occupant of the Premises or
the agent of any of them.
All maintenance repairs and replacements to the Premises and specifically
the obligation of Landlord under this Lease shall be made by Tenant. Tenant, at
Tenant's expense, shall make all repairs and replacements to keep and maintain
the interior of the Premises in good condition and repair, including, but not
limited to, the heating, electrical, air conditioning (whether within or
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without the Premises), sprinkler and other mechanical installations serving the
Premises, the plumbing and sewer systems serving the Premises, the exterior and
interior portions of all doors including door checks and hardware, and all
windows, frames and glass and Tenant shall promptly replace all broken and
cracked glass. 19. Any replacement Tenant is required to make under this Lease
shall be of equal or better quality, type and style as the best being replaced.
Tenant shall be responsible for all painting and decorating. Tenant will
maintain and keep in good condition and repair the storefront and all
structural and exterior work done or installed by Tenant. Tenant shall not
permit any waste, damage or injury to the Premises and shall, at its sole cost
and expense, abate any nuisance upon, or emanating from, the Premises, keep the
Premises neat, clean and in an orderly and sanitary condition free of offensive
odors, vermin, rodents, bugs, insects and other pests. Tenant shall keep in full
force and effect, and provide Landlord with a copy of a maintenance contract
with a reputable heating and air conditioning contractor providing for at least
semiannual inspection and maintenance of the heating and air conditioning
systems serving the Premises. Upon request Tenant shall provide or require its
contractor to provide copies of all maintenance and service records to Landlord.
Tenant shall obtain approval from Landlord of its heating and air conditioning
contractor and, additionally, shall obtain approval of any other contractor
which may require access to the roof for the purpose of implementation of any
repairs or improvements. Tenant shall in no event perform or do any work on or
affecting the roof of the Premises without Landlord's prior written consent. And
if consented to, shall only use contractors approved by Landlord. Landlord shall
enforce any warranties in effect for the benefit of Landlord, provided, however,
that such shall not alleviate Tenant's repair responsibility hereunder.
ARTICLE 10
DAMAGE OR DESTRUCTION BY FIRE
In the event the Premises shall be damaged or destroyed either (i) by an
insured casualty within Landlord's standard all-risk insurance policies to such
extent that Landlord cannot make necessary repairs or rebuilt within 140 days
from the date 19(a). of such damage or destruction, 19(b). (ii) by any
uninsured casualty, 19(c). or (iii) or by an illegal casualty with respect to
which Landlord's mortgagee requires that the insurance proceeds be applied to
the indebtedness (19d)., then at Landlord's option, the Lease Agreement may be
terminated 20. in which event Tenant shall be allowed an abatement of Minimum
Rental and Additional Charges from the date of such damage or destruction.
20(a).
20(b). Landlord 20(c). make necessary repairs or rebuild within 10 days
from the date of such damage or destruction, subject to the provisions of any
deed of trust or mortgage encumbering the Premises and requiring the
application of insurance proceeds to the indebtedness, then this Lease
Agreement shall not terminate, the Premises shall be repaired or rebuilt by
Landlord at its own expense, the Minimum Rental and Additional Charges shall
abate proportionately until the repairs or rebuilding are completed and
possession thereof given to Tenant, and the term of this Lease Agreement shall
be extended for a period equal to such period of rent abatement but not
otherwise affected.
Should the Premises be damaged or destroyed, nor occupied by the use of
the Premises by Tenant, its agents, employees and not arising during any period
when Tenant has vacated the Premises 20(d), and Landlord 20(e)., then, in that
event, 20(f). may terminate this Lease Agreement by notice in writing 20(g).,
however, if Landlord agrees to restore or repair the Premises to tenantable
condition, then, in that event, Landlord agrees to allow Tenant a proportionate
abatement of Minimum Rental and Additional Charges in an amount which bears the
same proportion to the Minimum Rental as the number of square feet of damaged
or destroyed floor area of the Premises occurs to be total number of square
feet of floor area on the Premises, which reduction shall contain until such
renovation or repair shall be completed, (h). Tenant shall in all events
restore or repair its additions, improvements, and betterments to the Premises
and, also, any other damage or destruction the repair or restoration of which
is not provided for hereinabove. Tenant shall, in case of damage or
destruction, give notice in writing to Landlord 20(i).
Should fifty percent (50%) or more of the total floor area of the Shopping
Center at any time be damaged or destroyed by fire or any other cause, or
should Landlord's mortgages require that the insurance proceeds be applied to
the indebtedness, Landlord may elect not to rebuilt 20(j). terminate this Lease
Agreement by written notice to Tenant of Landlord's election to so terminate.
ARTICLE 11
RIGHT OF ENTRY, ETC.
Landlord reserves the right during the term of this Lease to enter the
Premises at reasonable hours to show the same to others who may be interested
in the property, and for the purposes of inspecting the Premises and to make
such repairs as Landlord may deem necessary for their protection and
preservation and may enter the Premises at any time in the event of an
emergency provided that this right shall not be construed as expanding,
Landlord's repair obligation beyond that as stated herein.
ARTICLE 12
UTILITIES
21. Tenant is to obtain and pay for all utilities, including electricity,
gas, other fuel, water, the ventilation and air conditioning system and shall
pay all garbage removal fees, water fees, sprinkler monitoring fees, and other
special fees on or for the Premises during the term of this Lease. The
ventilation and air conditioning central plant/chilled water system may be
provided by or through Landlord. In such case, Tenant shall be charged based on
the costs associated with the operation and maintenance of the ventilation and
air conditioning control plant/chilled water system including, but not limited
to, equipment, maintenance and repair, electrical consumption, water
consumption, water treatment and a replacement reserve charge plus an
administrative assessment equal to [***] of the overall charge. If there is
another meter source provided by or through Landlord, Tenant will pay Landlord
for said utility usage for additional rent (other than Minimum Rental or
Percentage Rental) and Landlord shall send
*** Confidential treatment requested.
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statements for such usage which shall include an administrative assessment equal
to ten (10) percent of the amount of utilities and shall be based upon a pro
rata square foot basis. Said amounts may be estimated by Landlord in which event
Tenant shall pay said estimate, or may be revised from time to time, in advance
on the first day of each and every month with Tenant's Minimum Rental without
further notice. Landlord will have the right in its discretion to adjust utility
costs among tenants on other than a pro rata basis based upon its determination
of tenants' image. -- 21(a).
ARTICLE 13
DEFAULT
If Tenant shall at any time be in default in the payment of rent or other
sums of money required to be paid by Tenant or in the performance of any of the
covenants, terms, conditions, provisions, rules and regulations of this Lease
and Tenant shall fail to remedy such default within five (5) days after the
giving of written notice thereof by Landlord in the event the default is as to
payment of rent or other sums of money or within ten (10) days after the giving
of written notice thereof by Landlord if the default relates to matters other
than the payment of rent and other sums of money (but Tenant shall not be deemed
to be in default if Tenant commences to remedy said defaults other than the
payment of rent and other sums of money within said ten-day period and proceeds
therewith with due diligence). Landlord, in addition to all other remedies given
to Landlord in law or in equity, may by written notice to Tenant terminate
this Lease or without terminating this Lease and without notice to enter the
Premises by summary proceedings or otherwise and in any event that disposesses
Tenant.
In the event Landlord elects to terminate the Lease, Tenant agrees,
notwithstanding such termination, that it shall be and remain liable for all
rent and other charges and sums due hereunder for the remainder of the term,
which liability shall survive the termination of this Lease, the re-entry by
Landlord and the commencement of any action to secure possession of the
Premises. Landlord shall have the right to maintain successive actions against
Tenant for recovery of all damages, including, without limitation, amounts equal
to the rents and other charges and sums payable hereunder as and when said
rents and other charges and sums are payable hereunder and Landlord shall not be
required to wait to begin such actions or legal proceedings until the date this
Lease would have expired. -22.
In the event of such re-entry, Landlord may enter as agent for Tenant or in
its own name, without being obligated to do so, and relet the whole or any
portion of said Premises (with or without any improvements made by Tenant
thereon or thereto), or the whole or any portion thereof with additional space,
for any period equal to, greater or less than the remainder of the term of this
Lease, for any sum (including any rental concessions and rent free occupancy)
which it may deem reasonable, to any Tenant which it may deem suitable and
satisfactory, and, for any use and purpose which it may deem appropriate.
Landlord's damages shall include without limitation, attorneys' fees and
collection costs incurred by reason of Tenant's default, commissions and the
cost of repair or alteration of the Premises ("Costs of Reletting") and, in the
event of any reletting, Landlord may apply the rent therefrom first to the
payment of Landlord's expenses, including Costs of Reletting, and then to the
payment of rent and all other sums due from Tenant hereunder, Tenant remaining
liable for any deficiency. In computing damages or rental due under this Lease,
the value of the Percentage Rental for any period subsequent to termination of
this Lease or Tenant's right of possession shall be included and shall be an
amount equal to the highest Percentage Rental which was payable by Tenant during
the term of this Lease.
Any obligation imposed by law upon Landlord to relet the Premises shall be
subject to the reasonable requirements of Landlord to develop in a harmonious
manner the real estate of which the Premises are a part and to establish the
tenant mix which is suitable to Landlord; and the failure of Landlord to relet,
or if relet, to collect the rent under such reletting, shall not release or
affect Tenant's liability for damages hereunder. In any event, Landlord shall
have the right to lease other vacant storerooms before leasing the Premises.
In the event of default by Tenant of any of the terms, provisions,
covenants, conditions, or rules and regulations of this Lease, Landlord shall
have the right to invoke any remedy permitted to Landlord in law or in equity.
All remedies available to Landlord in this Lease, in law or equity are declared
to be cumulative and concurrent. No termination of this Lease nor any taking or
recovering of possession of the Premises shall deprive Landlord of any of its
rights, remedies or actions against Tenant including, without limitation, the
right to receive all past due rents and damages equal to future rents and other
charges accruing under this Lease, which rights shall survive the termination of
this Lease or taking of possession of the Premises.
If this Lease be terminated for any reason whatsoever or if Landlord should
re-enter the Premises as a result of any breach of Tenant hereunder without
terminating the Lease, Tenant covenants, any other covenant herein to the
contrary notwithstanding (except where this Lease is terminated following
eminent domain proceedings) that (i) the Premises shall then be in the condition
required by all applicable provisions of this Lease; and (ii) Tenant shall
perform any covenant contained in this Lease for the construction of the
Premises or the making of any repair, improvement, alteration or betterment to
the Premises or for restoring or rebuilding any part thereof. For the breach of
either of the foregoing obligations Landlord shall be entitled to recover and
Tenant shall pay, forthwith, without notice or other action by Landlord for the
cost of performing such obligation(s).
In the event Tenant violates any of the provisions, covenants, conditions
or promises set forth in this Lease Agreement, and further in the event Landlord
determines in its exercise of its sole discretion that such default is
susceptible of a cure by Landlord, then in addition in any and all other
remedies provided for in this Lease, or at law or in equity Landlord shall have
the right (but shall not be obligated) to cure such default and implement such
corrective measures as Landlord deems reasonably necessary to correct such
default. In the event Landlord exercises the right of "self help" as set forth
in the preceding sentence, then Tenant covenants and agrees that it shall within
five (5) days after notice from Landlord pay to Landlord [***] of the cost
incurred by Landlord in connection with implementation of such corrective
measures, it being the intent to permit Landlord to recover a reasonable
administrative fee in addition to the actual cost incurred.
Further, in the event Tenant is not conducting a going business within the
Premises or vacates or abandons the Premises (the cessation of operation of a
business within the Premises for a period in excess of seven (7) days to be
conclusive evidence of Tenant's intent to abandon or vacate the Premises) then
Landlord shall have the right (but shall not be obligated) to enter the Premises
after providing notice to Tenant for the purpose of inspection and
implementation of such repairs, maintenance or other improvements to the
Premises which may be required, in Landlord's opinion, to preserve the overall
appearance of the Premises or to mitigate the adverse impact of the appearance
of the Premises upon the Shopping Center. Landlord shall additionally have the
*** Confidential treatment requested.
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right to change the exterior locks on the Premises for security purposes but
shall not be obligated to do so. In the event Landlord does change the exterior
locks, then Tenant shall, upon request, be provided with a key to the Premises.
In no event shall any of the foregoing actions by Landlord be considered an
eviction, constructive or otherwise, of Tenant, it being the intent of the
parties to permit Landlord a reasonable right of access to the Premises for the
purposes set forth herein and to minimize any adverse impact resulting from an
abandonment of the Premises or cessation of operation by Tenant. Entry by
Landlord pursuant to this paragraph shall in no event be construed, interpreted
or otherwise determined to be an eviction of Tenant or a termination of this
Lease absent notification to the contrary by Landlord.
Landlord and Tenant shall and hereby do waive trial by jury in any action,
proceeding or counterclaim brought by either of the partners hereto against the
other on any matters not relating to personal injury or property damage but
otherwise arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant. Tenant's use or occupancy of the Premises
and any emergency statutory or any other statutory remedy. In the event an
attorney is employed by either party in order to initiate litigation to secure
compliance by the other party with the provisions of this Lease, the
non-prevailing party, including filing fees and court costs.
ARTICLE 14
INSOLVENCY OF TENANT
In the event of the insolvency of Tenant, or the filing of a proceeding
by or against Tenant or any partner of Tenant or guarantor of this Lease under
the Bankruptcy Code, or in the event of a partial or general assignment for the
benefit of a creditor or creditors by Tenant, or in the event Tenant should be
successfully proceeded against in any general creditor's bill, or in the event
Tenant makes any offer in or out of court for the compromise of Tenant's debts,
or any substantial part thereof, by reduction in amount or in preference, or
security, or by postponement of payment date or dates, or in the event any
court proceedings are instituted by, for, or against Tenant in contemplation of
any such offer, Landlord in addition to any rights available to it at law or
equity shall have the right and privilege to immediately terminate this Lease.
Landlord shall have the right to immediately re-enter into possession of the
Premises for the purpose of leasing same.
If Landlord shall not be permitted to terminate this Lease as hereinabove
provided because of the provisions of Title 11 of the United States Code
relating to Bankruptcy, as amended ("Bankruptcy Code"), then Tenant as a
debtor-in-possession or any trustee for Tenant agrees promptly, within no more
than fifteen (15) days upon request by Landlord to the Bankruptcy court, to
assume or reject this Lease and Tenant on behalf of itself, and any trustee
agrees not to seek or request any extension of adjournment of any application to
assume or reject this Lease by Landlord with such Court. In such event, Tenant
or any trustee for Tenant may only assume this Lease if (A) it cures or provides
adequate assurance that the trustees will promptly cure any default hereunder.
(B) compensates or provides adequate assurance that the trustees will promptly
compensate Landlord for any actual pecuniary loss to Landlord resulting from
Tenant's defaults, and (C) provides adequate assurance of performance during the
fully stated term hereof of all of the terms, covenants, and provisions of this
Lease to be performed by Tenant. In no events after assumption of this Lease
shall any then-existing default remain uncured for a period in excess of the
earlier of ten (10) days or the time period set forth herein. Adequate assurance
of performance of this Lease, as set forth hereinabove, shall include, without
limitation, adequate assurance (1) of the source of rent reserved hereunder, (2)
that any Percentage Rental due hereunder will not decline from the levels
anticipated, and (3) the assumption of this Lease will not breach any provision
hereunder. In the event of a filing of a petition under the Bankruptcy Code,
Landlord shall have no obligation to provide Tenant with any services or
utilities as herein required, unless Tenant shall have paid and be current in
all payments of Common Area Maintenance and Operating Costs, utilities or other
charges therefor.
ARTICLE 15
DELIVERY AT END OF LEASE
23. Tenant agrees that on the last day of the term it shall without notice
or demand deliver the Premises, including all improvements and fixtures
permanently attached, and replacements thereto (except those which Tenant may be
directed to remove) to Landlord, or Landlord's agent or assignee, in good order
and condition. Tenant shall have repaired all damage to the Premises, ordinary
wear and tear excepted.
If Tenant remains in possession of the Premises after the expiration of
the tenancy created hereunder and without the execution of a new lease or other
written agreement, Tenant shall be deemed to be occupying the Premises as a
tenant from month to month and subject to all of the rents and provisions of
this Lease in effect on the day before the expiration of the tenancy, except
those relating to term and except that the Minimum Rental shall be increased to
the amount which is 24. the amount payable during the last month of the Lease
without prejudice to any claim for damages or otherwise which Landlord may have
against Tenant for failure of Tenant to vacate the Premises at expiration of
the term. For the purpose of this provision "fair rental value" shall be
defined as being the amount which Landlord is then receiving for comparable
space in the Shopping Center or comparable properties in the same city.
ARTICLE 16
NO WAIVER OF BREACH;
EXTENSION; PARTIAL PAYMENT;
NO ACCORD AND SATISFACTION
It is hereby covenanted and agreed that no waiver of a breach of any of
the covenants of this Lease shall be construed to be a waiver of any succeeding
breach of the same or any other covenants.
It is further agreed that, should Landlord, at its option, either extend
the time of payment or accept partial payment on one or more of the Minimum
Rental installments or other monetary obligations hereunder, such shall not be
construed as altering the terms of payment of any subsequent installments or
obligations.
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After the service of any notice or commencement of any suit, or final
judgement herein, Landlord may receive and collect any rent due and such
collection or receipt shall not operate as a waiver of nor affect such notice or
judgement.
No payment by Tenant or receipt by Landlord of a lessor amount shall be
other than on account of the earliest stipulated rent, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment as rent be deemed an accord and satisfaction. Landlord may accept such
check or payment without prejudice to Landlord's right to recover the balance
of such rent or pursue any other remedy provided for in this Lease or available
at law or in equity.
ARTICLE 17
SUBORDINATION: ATTORNMENT: ESTOPPEL
LANDLORD'S COVENANT AS TO TITLE
Upon payment by Tenant of the rent and other charges herein provided, and
upon the observance and performance Tenant shall peaceably and quietly hold and
enjoy the Premises for the term hereof without hindrance or interruption by
Landlord or others legally claiming title thereto by, through or under
Landlord, subject, nevertheless, to the terms and conditions of this Lease.
Tenant's leasehold estate shall always be subordinate to any mortgage loan,
deed of trust, or underlying or ground lease, including, without limitation,
any refinancing, replacement, renewal, modification, extension or consolidation
thereof which is placed upon the Premises from time to time by the Landlord.
This provision shall be self operative and no further instrument of
subordination shall be required. -25.
Any mortgage, trustee of a deed of trust or ground lessor of all or any
part of the Shopping Center may elect to have this Lease have priority over its
mortgage, deed of trust or underlying ground lease and upon any such mortgages,
trust or lessor executing unilaterally on instrument subordinating its mortgage,
deed of trust or lease to this Lease, or placing a clause of such subordination
is its mortgage, deed of trust or lease, and filing the same for record among
the public land records of the state or county in which the Shipping Center is
located, this Lease shall thereupon have priority over said mortgage, deed of
trust or lease.
Tenant agrees that it will afford to and recognize the purchaser at any
foreclosure sale or at any sale under a power of sale contained in any
mortgage or deed of trust upon the Shopping Center and the grantee of any
conveyance made in lieu of foreclosure or power of sale as Landlord under this
Lease. Tenant agrees that no mortgagee, trustee of a deed of trust or purchaser
at any foreclosure shall be reasonable for any defaults of any prior landlord,
including Landlord. Tenant agrees, further, that in the event any proceedings
are brought for the termination of any ground or underlying lease affecting the
Premises, upon such termination, if the lessor thereunder elects or is
obligated to recognize Tenant. Tenant shall afford to such lessor and recognize
such lessor as Landlord under this Lease.
Tenant covenants and agrees that within five (5) days after receipt of
notice Tenant shall execute in recordable form and deliver upon demand of
Landlord whatever instruments may be required to acknowledge and further
evidence the subordinations, agreements to afford and priorities, referred to
in this Section. Tenant shall additionally, within five (5) days after receipt
of notice, execute an "Estoppel" certificate confirming that the Lease is in
full force and effect, that there are no Landlord defaults (or delineating with
specificity the nature of such Landlord's defaults, if any), the rental and
other amounts required to be paid by Tenant, and such other information as is
reasonably requested by a prospective purchaser or mortgagee.
ARTICLE 18
GRAPHICS
Tenant acknowledges that the Premises are a part of an integrated shopping
center, and agrees that control of all signs by Landlord is essential to the
maintenance of uniformity, propriety and the esthetic values in or pertaining to
the Shopping Center. Accordingly, Tenant shall not place or suffer to be placed
on the exterior of the Premises, upon the roof, on any exterior door or wall, or
on the exterior or interior window, any sign, awning, canopy, marquee,
advertising matter decoration, lettering or other thing of that kind without the
written consent of the Landlord first had and obtained. 26 Landlord hereby
reserves the exclusive right to the use for any purpose whatsoever of all
exterior surfaces including but not limited to the roof and the exterior walls
of the Premises. In the absence of express written consent of Landlord. Tenant
shall not utilize temporary or portable signs or banners which, if installed in
the absence of such consent, may be removed by Landlord without notice, in no
event shall Landlord's approval of Tenant signage or Landlord's promulgation of
sign standards or sign criteria be construed as a confirmation or warranty that
such sign or the criteria on which the sign is based is in compliance with local
code or ordinances. Tenant shall be solely responsible for verifying such
compliance and obtaining any and all permits required from the governmental
authority having jurisdiction.
Except as otherwise herein provided, Tenant shall have the right, at its
sole cost and expense, to erect and maintain within the interior of the Premises
all signs and advertising matter customary or appropriate in the conduct of
Tenant's business provided, however, that Tenant shall upon demand of Landlord
immediately remove any sign, advertisement, decoration, lettering or notice
which Tenant has placed or permitted to be placed in, upon or about the Premises
and which Landlord reasonably deems objectionable or offensive, and if Tenant
fails or refuses so to do Landlord may remove the same at Tenant's cost and
expense and may enter the Premises for the purpose of removal of said
nonconforming signs.
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ARTICLE 19
CONDEMNATION
The parties hereby agree that should the Premises, or such portion thereof
as 28. will make the Premises unusable for the purposes herein leased, be taken
or condemned for public or quasi-public use, then this Lease shall terminate
from the date when possession of the part so taken shall be required. If the
Lease continues after a partial taking, the Minimum Rental 28(a). and Additional
Charges shall abate proportionately 28(b). All compensation awarded for such
taking of the Premises (or any part thereof), or the fee and the leasehold shall
belong to and be the property of Landlord, provided, however, that Landlord
shall not be entitled to any portion of any award made to Tenant for the value
of Tenant's trade fixtures. Tenant shall not be entitled to any damages for the
unexpired portion of the term of this Lease, or injury to its leasehold
interest. -- 28(c).
ARTICLE 20
ENVIRONMENTAL MATTERS
29. Tenant shall not cause or permit any Hazardous Substance to be used,
stored, generated, or disposed of on or in the Premises or the Shopping Center
by Tenant, Tenant's agents, employees, contractors, or invitees without first
obtaining Landlord's written consent. If Hazardous Substances are used, stored,
generated, or disposed of on or in the Premises or the Shopping Center except as
permitted above, or if the Premises or the Shopping Center become contaminated
in any manner for which Tenant is legally liable, Tenant shall indemnify and
hold harmless Landlord from any and all claims, damages, fines, judgments,
penalties, costs, liabilities, or losses (including, without limitation, a
decrease in value of the Premises or the Shopping Center, damages caused by loss
or restriction of rentable or usable space, or any damages caused by adverse
impact on marketing of the space, and any and all sums paid for settlement of
claims, attorneys' fees, consultant's fees, and expert's fees) arising during
or after the Lease term and arising as a result of that contamination by Tenant.
This indemnification includes without limitation any and all costs incurred
because of any investigation of the site or any cleanup, removal, or restoration
mandated by a federal, state or local agency or political subdivision. Without
limitation of the foregoing, if Tenant causes or permits the presence of any
Hazardous Substance on the Premises or the Shopping Center and that results in
contamination, Tenant shall promptly, at its sole expense, take any and all
necessary actions to return the Premises or the Shopping Center to the
condition existing prior to the presence of any such Hazardous Substance on the
Premises or the Shopping Center. Tenant shall first obtain Landlord's approval
for any such remedial action.
As used herein, "Hazardous Substance" means any substance that is toxic,
ignitable, reactive, or corrosive or that is regulated by any local government,
the state in which the Shopping Center is located, or the United States
Government. "Hazardous Substance" includes any and all material or substances
that are defined as "hazardous waste," "extremely hazardous waste," or a
"hazardous substance" pursuant to state, federal, or local governmental law.
"Hazardous Substance" includes, but is not restricted to asbestos,
polychlorobiphenyls ("PCBs"), and petroleum.
The provisions of this Article 20 shall survive any assignment, transfer,
amendment or termination of this Lease Agreement.
-- 30.
ARTICLE 21
FIRE PROTECTION
Tenant has examined the Premises and fire protection/sprinkler system in
the Premises, if any. Tenant acknowledges that Landlord shall have no
responsibility for implementation of any modifications whatsoever for the fire
protection/sprinkler system in the Premises which Tenant has examined and with
which Tenant is satisfied. In the event that the Fire Marshal, Building
Department or other municipal authority requires any modifications in the
existing fire protection/sprinkler system, implementation of such modifications
and all costs thereof shall be the responsibility of Tenant. Further, in the
event such modifications are requested or required as a restriction of Tenant's
use or method of storage materials within the Premises, Tenant shall either
implement the required modifications to the fire protection/sprinkler system or
ventilation and/or Tenant shall modify its method of storage or use of the
Premises so as to comply with the permitted uses under the existing fire
protection/sprinkler system or ventilation configuration.
ARTICLE 22
COVENANTS RUN TO HEIRS
It is hereby covenanted and agreed between the parties hereto that all
covenants, conditions, agreements and undertakings in this Lease contained shall
extend to and be binding on, and inure to the benefit of (except as limited by
the terms hereof), the respective heirs, administrators, executors, successors
and permitted assigns of the respective parties hereto the same as if they were
in every case named and expressed also that the terms Landlord and Tenant shall
be construed in the singular or plural number according as they respectively
represent one or more than one person.
In the event of a sale of the property in which the Premises are located,
Tenant agrees that Landlord shall thereupon be released from any obligations or
liabilities occurring under this Lease from and after the effective date of such
conveyance.
ARTICLE 23
SHORT FORM LEASE
The parties have entered into a Short Form of this Lease Agreement which
may, at Landlord's option, be recorded. In no event shall this Lease Agreement
be recorded.
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ARTICLE 24
NOTICES
All notices required or provided for under this Lease shall be given in
writing either by (i) CERTIFIED MAIL, return receipt requested; (ii) hand
delivery by a reputable courier service requiring receipt on delivery, or (iii)
delivery by a national or regional overnight courier service. All notices shall
be addressed to Landlord or Tenant at the addresses set forth in the Lease
Agreement to which this is an Exhibit, or to such other addresses as Landlord
or Tenant may direct in writing from time to time.
Notices shall be effective upon the earlier of actual receipt or forty
eight (48) hours after deposit in the U.S. Mail or permitted courier. Notices
of any default by Landlord shall be given by Tenant to any mortgagee of whom
Tenant has been notified in writing, and said mortgagee shall have the right to
cure said default.--31(a).
ARTICLE 25
RULES AND REGULATIONS
Tenant and Tenant's agents, employees, invitees and visitors shall comply
fully with all requirements of the rules and regulations of the Shopping Center
which may be made by Landlord. Such rules and regulations applicable to the
Premises and the Shopping Center may be changed, amended, or supplemented by
Landlord at any time. If said rules shall be printed on a separate schedule such
schedule shall be attached in this Lease and made a part hereof as fully and
completely as though printed herein in detail. Tenant's failure to keep and
observe said rules and regulations shall constitute a breach of the terms of
this Lease in the manner as if the same were contained herein as covenants.
Tenant agrees as follows:
(i) All garbage and refuse shall be kept in approved type containers and
shall be placed at a location adjoining the Premises or other location
designated by Landlord, for collection at regular intervals (not less than
weekly). Tenant shall pay the 32 cost of removal of garbage and refuse.--32(a).
(ii) Tenant agrees that if the Premises are used for other than
traditional retail use, or if the Fire Marshall requires, Tenant, at its cost,
shall provide the required additional automatic sprinkler heads and/or other
required modifications necessary to comply with the insurance and fire
department regulations; in all events Tenant shall provide for its usage the
necessary quantity of approved type and class fire extinguishers within the
Premises.--32(b).
(iii) No radio, television, satellite, microwave dish or tower or other
similar aerials or appurtenances (inside or outside) shall be installed without
first obtaining in each instance the Landlord's consent in writing, and if such
consent is given, no such device shall be used in a manner as to be heard or
seen outside of the Premises. Tenant shall be responsible for any damage to
Landlord's roof occasioned by such installation. Any aerial or other such device
if installed without such written consent shall be subject to removal without
notice at any time.--33.
(iv) Tenant shall keep the Premises at a temperature sufficiently high to
prevent freezing of water in pipes and/or fixtures or equipment.
(v) Tenant shall during the lease term or any extension hereof, at
Tenant's cost, be responsible for pest extermination (including, but not limited
to, rodents and insects) at such intervals as is necessary to keep the Premises
free and clear of infestation.
(vi) Tenant shall not place, suffer or permit displays, sales or storage
on the outside of the Premises or upon any of the Common Areas nor shall
Tenant install or maintain any vending machines or other property upon the
Common Areas.
(vii) Tenant agrees at all times to comply with any governmental energy
conservation regulations and at all times to maintain temperatures in the
Premises consistent with the temperature as specified and set forth in any
governmental regulation.
(viii) All loading and unloading of goods shall be done only at such
times, in the hours, and through the entrances designated for such purposes by
Landlord.
(ix) The delivery or shipping of merchandise, supplies and fixtures to
and from the Premises shall be subject to such rules and regulations as in the
judgment of Landlord are necessary for the proper operation of the Premises or
Shipping Center.
(x) No loud speakers, televisions, phonographs, radios or other devices
shall be used in a manner so as to be heard or seen outside of the Premises
without the prior written consent of Landlord.--34.
(xi) Tenant and Tenant's employees shall park their cars only in those
parking areas designated for that purpose by Landlord. Tenant shall furnish
Landlord with State automobile license numbers assigned to Tenant's car or
cars, and cars of Tenant's employees, within five (5) days after taking
possession of the Premises and shall thereafter notify Landlord of any changes
within five (5) days after such changes occur.--35. In the event that Tenant
or its employees fail to park their cars in designated parking areas as
aforesaid, then Landlord at its option shall charge Tenant Ten Dollars ($10.00)
per day per car parked in any areas other than those designated, as and for
liquidated damages.
14
<PAGE> 27
(xii) The plumbing facilities shall not be used for any other purpose
than that for which they are constructed, and no foreign substance of any kind
shall be thrown therein, and the expense of any breakage, stoppage, or damage
resulting from a violation of this provision shall be borne by Tenant who shall
or whose employees, agents or invitees shall, have caused it.
(xiii) Tenant shall not make noises, cause disturbances, or create
odors which may be offensive to other tenants of the Shopping Center or their
officers, employees, agents, servants, customers or invitees. - 36.
(xiv) Tenant shall not conduct or permit to be conducted in the
Premises any auction, fire, bankruptcy or other distress sale without the prior
written consent of Landlord.
(xv) No smoking shall be permitted in the Properties or in any other
part of the buildings in the Shopping Center.
ARTICLE 26
REAL ESTATE AGENT
Landlord and Tenant each represent and warrant to the other that no agents
were involved in the negotiation of this Lease except that it is disclosed in
the Lease Agreement to which this is an Exhibit. Each party agrees to indemnify
the other against claims for commission by individuals, entities or agents
claiming entitlement to compensation by virtue of its representation of the
indemnifying party.
ARTICLE 27
PERSONAL LIABILITY
The liability of Landlord (and any partner, stockholder or officer of
Landlord) to Tenant for any default by Landlord is limited to the interest of
Landlord in the property of which the Premises are a part and Landlord (and any
partner, stockholder or officer of Landlord) shall not be personally liable for
any deficiency nor shall Landlord (or any partner, stockholder or officer of
Landlord) ever be liable under the terms of this Lease for consequential or
special damages. This paragraph shall not be deemed to limit or deny any
remedies which Tenant may have in the event or default by Landlord hereunder
which do not involve the personal liability of Landlord.
ARTICLE 28
NO PARTNERSHIP
Nothing contained herein shall be construed to create a partnership between
Landlord and Tenant and under no circumstances shall Landlord be liable for the
debts or obligations of Tenant.
ARTICLE 29
CORPORATE TENANTS
In the event Tenant is a corporation, the persons executing this Lease on
behalf of Tenant hereby covenant and warrant that: Tenant is a duly constituted
corporation qualified to do business in the State in which the Premises is
located; all Tenant's franchise and corporate taxes have been paid in date; all
future forms, reports, fees and other documents necessary for Tenant to comply
with applicable laws will be filed by Tenant when due and such persons are duly
authorized by the board of directors of such corporation to execute and deliver
this Lease on behalf of the corporation.
ARTICLE 30
ENTIRE AGREEMENT
This Lease includes the Lease Agreement and Rider, if any, attached hereto
and forming a part hereof Exhibit A (drawing of the Shopping Center showing the
general location of the Premises), this Exhibit B (General Lease Provisions)
and Exhibit C (which delineates the construction requirements of the parties if
any). The foregoing constitute all of the agreements and conditions made
between the parties hereto, and no representations or statements claimed to
have been made and not herein contained shall vary or modify this contract in
any way.
Landlord: PEABODY PLACE CENTRE, L.P. Tenant: SILICON ENTERTAINMENT, INC.
BY: Peabody Place, Inc., General
Partner
By: /s/ MORRIS J. THOMAS By: /s/ [ILLEGIBLE]
-------------------------------- ---------------------------------
Morris J. Thomas, Vice President
By: /s/ JACK A. BELZ HOTEL PEABODY, L.P.
-------------------------------- By: Perim Corp., General Partner
Jack A. Belz, President
By: /s/ JIMMIE D. WILLIAMS
--------------------------------
Jimmie D. Williams, Senior Vice
President
15
<PAGE> 28
RIDER TO EXHIBIT D
GENERAL LEASE PROVISIONS
BETWEEN SILICON ENTERTAINMENT, INC., AS TENANT AND
PEABODY PLACE CENTRE, L.P., AS LANDLORD
1. ... "in or" ...
)(a). "(a) transfers of merchandise between stores owned by Tenant only
for the convenient operation of Tenant's business and not for the
purpose of avoiding inclusion of such transactions in Sales and
Business Transacted;
(b) returns to manufacturer;
(c) sales of fixtures, machinery, games and equipment after use in
the conduct of Tenant's business in the Premises and not in the
ordinary course of business;
(d) discounted, or complimentary use of games or entertainment
attractions by, or discounted or complimentary merchandise given
or sold to, guests or invitees of Tenant in an amount not to
exceed three percent (3%) of Sales and Business Transacted and
discounted or complimentary use of games or entertainment
attractions by or discounted or complimentary merchandise given
or sold to employees;
(e) special promotional use of games or other entertainment
attractions;
(f) revenue received from the sale of "debit cards", "game cards" or
"smart cards", or tokens except to the extent that such cards or
tokens are redeemed for use of games or other entertainment
devices within the Premises;
(g) sales of gift certificates (unless redeemed at the Premises);
(h) the selling price of all merchandise returned by customers and
accepted for full credit or the amount of discounts and
allowances made thereon;
(i) goods returned to sources or a warehouse owned by affiliated with
Tenant;
(j) sums and credits received in the settlement of claims for loss or
damage to merchandise to the extent previously reported as Sales
and Business Transacted;
(k) the price allowed on all merchandise traded in by customers for
credit to the extent the credit given is in excess of the value
of the merchandise traded in, or the amount of credit for
discounts and allowances made in lieu of acceptance thereof;
(l) alteration workroom charges and delivery charges, if the amount
of any such charge received by Tenant is not greater than
Tenant's cost of providing the services and separately stated;
(m) amount received from sales of "distressed", damaged,
unreasonable, or absolute merchandise sold in bulk to buyers
other than regular retail customers;
(n) any penalty charged by Tenant for a returned check;
(o) reimbursement of the amount paid for minor services charges, such
as postage or delivery expenses;
(p) cash refunds made to customers in the ordinary course of
business;
(q) receipts from any public telephones, stamp machines or public
toilet locks installed with Landlord's approval in areas not open
to the public;
(r) the amount of any license fee, or any city, county, state or
federal sales taxes, so-called luxury taxes, consumers' excise
taxes, gross receipts taxes, use taxes, entertainment and
so-called "drop taxes", and other similar taxes now or hereafter
imposed upon the sale of merchandise or services (including the
playing of
<PAGE> 29
games), whether collected as a part of or separately from the
selling price of merchandise or services and collected from
customers and paid to such governmental entity;
(s) sales of fixtures, equipment or property which are not Tenant's
stock in trade;
(t) fees paid by Tenant to credit card companies and/or banking
institutions (to the extent previously reported as Sales and
Business Transacted) in accordance with credit card purchases
plans not a exceed [***] of the merchandise sales price and not
to exceed a total of [***] of Tenant's Sales and Business
Transacted in any single calendar year;
(u) tips and gratuities passed through and/or paid directly to
Tenant's employees;
(v) telephone or other sales solicited or originated at the Premises
but filled from a place other than the Premises; and
(w) revenues received by third party caterers providing services at
the Premises; and
(x) revenue from vending machine sales at the Premises.
All sales that are filled at or from the Premises will be considered as
made and completed therein, even though bookkeeping and payment of the
account may be transferred to another place of collection. Each sale upon
installment or credit shall be treated as a sale for the full cash price at
the time of sale.
1(b) ..."upon ten (10) days" notice and in such a manner as to avoid
unreasonably interfering with Tenant's business in the Premises and in no
event more often than two (2) times in any five (5) year period during the
Lease term"...
1(c) "Tenant shall not be required to maintain the books and records for longer
than a twenty-four (24) month period."
1(d) ..."[***]"...
1(e) "Willful"...
1(f) "which noncompliance continues uncured for ten (10) business days after
notice thereof"
1(g) ..."and such failure continues for twenty (20) days after written
notice"...
1(h) "Notwithstanding the foregoing, none of the following shall be included in
the definition of Common Area Maintenance and Operation Costs: any ground
lease rentals; costs incurred by Landlord for the repair of damage to the
Shopping Center to the extent that Landlord is reimbursed by insurance
proceeds; costs, including permit, license and inspection costs incurred
with respect to the installation of tenant improvements made for tenants in
the Shopping Center or incurred in renovating or otherwise improving,
decorating, painting or redecorating vacant space for Tenant or other
occupants in the Shopping Center depreciation and amortization, except on
materials, tools, supplies, and vendor-type equipment purchased by Landlord
to enable Landlord to supply services Landlord might otherwise contract for
with a third party where such depreciation and amortization would otherwise
have been included in the charge or such third party's services, all as
determined in accordance with generally accepted accounting principles,
consistently applied, and when depreciation or amortization is permitted or
required, the item shall be amortized over its reasonably anticipated
useful life; leasing commissions, attorney's fees and other costs and
expenses incurred in connection with negotiations or disputes with
prospective tenants of the Shopping Center or litigation to collect rent
from tenants of the Shopping Center; costs incurred by Landlord for
alterations which are considered capital improvements and replacements
under generally accepted accounting principles, consistently applied; costs
of a capital nature, including, without limitation, capital improvements,
capital repairs, capital equipment and capital tools, all as determined in
accordance with generally accepted accounting principles, consistently
applied, except that the cost of parking lot resurfacing may be included in
Common Area Maintenance and Operation Costs so long as the cost is
amortized over the useful life of the improvement as reasonably determined
by Landlord; expenses in connection with services or other benefits which
are not offered to Tenant or for which Tenant is charged directly but which
are not provided to another tenant or occupant of the Shopping Center;
overhead and profit increments paid to
*** Confidential treatment requested.
2
<PAGE> 30
Landlord or to subsidiaries or affiliates of Landlord for services in the
Shopping Center to the extent the same exceed the overhead and profit
increments which would be paid to unaffiliated third parties on a
competitive basis of the provision of such services and any management fee
(whether paid to Landlord, its principals, any affiliate or subsidiary of
Landlord or its principals, or any other party); interest, principal,
points and fees on debt or amortization on any mortgage or any other debt
instrument encumbering the Shopping Center, any compensation paid to
clerks, attendants or other persons in commercial concessions operated by
Landlord or in the parking garage of the Shopping Center; all items and
services for which Tenant or any other persons in commercial concessions
operated by Landlord or in the parking garage of the Shopping Center; all
items and services for which Tenant or any other tenant in the Shopping
Center reimburses Landlord or which Landlord provides selectively to one or
more tenants (other than Tenant) without reimbursement, electric power
costs for which any tenant directly contracts with the local public
service company; tax penalties incurred as a result of Landlord's
negligence or inability or unwillingness to make payments when due; costs
incurred by Landlord due to the violation by Landlord or any other tenant
of the terms and conditions of any lease of space in the Shopping Center;
rentals and other related expenses incurred in leasing air conditioning
systems, elevators or other equipment ordinarily considered to be of a
capital nature, except equipment not affixed to the Shopping Center which
is used in providing janitorial or similar services; any metro rail
assessment (or equivalent); and any site characterization, investigation or
remediation costs relating to any Hazardous Substances (as hereinafter
defined).
During the first full calendar year of the Lease Term, Tenant shall pay its
actual Proportionate Share of the Common Area Maintenance Charge, estimated
at [***] per square foot per year, provided, however, in no event shall
Tenant's Common Area Maintenance Charge during the first full calendar year
of the Lease term exceed [***]. Commencing with the second calendar year
during the Lease Term, Tenant's Proportionate Share of the Common Area
Maintenance Charge (excluding the costs of waste removal, security and
utilities) shall not increase by more than [***] over the prior year's
share, calculated cumulatively.
Landlord and Tenant acknowledge and agree that during the first full
calendar year of any renewal term that may be exercised by Tenant, Tenant
shall pay its actual Proportionate Share of the Common Area Maintenance
Charge and that, thereafter, during the respective renewal term, the Common
Area Maintenance Charge (excluding the costs of waste removal, security and
utilities) shall not increase more than [***] over the amount of the Common
Area Maintenance Charge for the prior calendar year as prorated for any
partial calendar year, calculated cumulatively.
Provided that Tenant is not in default of any material covenant under this
Lease beyond the applicable cure period. Tenant shall have a right to
reasonably review supporting data for Landlord's bill for the Common Area
Maintenance and Operation Costs and all other Additional Charges. In order
to exercise its rights hereunder, Tenant shall, within twelve (12) months
after any such statement is sent, deliver a written notice to Landlord
requesting to review Landlord's records. Tenant shall pay to Landlord all
amounts shown as being due to Landlord pursuant to Landlord's bill within
thirty (30) days after receipt of such statement. The right of Tenant to
audit any such bill may be exercised not more than twice in any [***]
year period during the Lease term. Tenant acknowledges that Landlord
maintains its Common Area Maintenance and Operation Costs and other records
at its office in Memphis, Tennessee, and that any review pursuant to the
provisions hereof shall occur at such location only during the months of
May through October of any calendar year. Any review to be conducted
pursuant hereto shall be conducted at Tenant's expense by Tenant or
Tenant's certified public accountant compensated on a fixed fee basis only.
Tenant acknowledges and agrees that any records reviewed pursuant to this
paragraph constitute confidential information of Landlord and shall not be
disclosed to anyone other than the accountants performing the review and
the principals of Tenant who receive the results of the review. Any errors
disclosed by the review of records under this paragraph shall be promptly
corrected, provided however, that in the event Landlord disputes the
results of Tenant's audit, Landlord shall have the right to designate a
third party independent firm of certified public accountants compensated
on a fixed fee basis only acceptable to Tenant to undertake another review
of the records. The costs of such review shall be shared equally between
Landlord and Tenant. In the event that the results of the review (taking
into account, if applicable, the results of any additional review made by
for a preceding period. Landlord shall, as Tenant's option, reimburse the
amount of such overpayment to Tenant or credit such amount against Tenant's
subsequent obligations to pay the Common Area Maintenance and Operation
Costs or respective other Additional Charge. In the event that such
results show that Tenant has underpaid its obligations for a preceding
period, Tenant shall immediately pay the amount of underpayment to
Landlord."
*** Confidential treatment requested.
3
<PAGE> 31
1(i). "Notwithstanding anything to the contrary contained herein, during the
first full calendar year of the Lease term, Tenant's Proportionate
Share of the Real Estate Taxes and Assessments shall not exceed $0.77
per square foot per year contained in the Premises."
1(j). ..."reasonable out-of-pocket"...
1(k). "notwithstanding anything to the contrary contained herein, Tenant
shall not be responsible for any income tax assessed to Landlord."
1(l). ..."the services of"...
1(m). "notwithstanding anything to the contrary contained herein, Tenant's
Proportionate Share of insurance costs during the first full calendar
year of the Lease term shall not exceed $0.25 per square foot
contained in the Premises."
1(n). ..."[***]"...
1(o). "Landlord acknowledges that it is the intent of this Lease that Tenant
shall not be obligated to pay and Landlord shall pay any mitigation,
discretionary, impact fees or hook-up or connection fees (except that
portion of hook-up and connection fees that represents a reimbursement
to the city or county, as appropriate, for the cost of sending its
employees to connect the utilities for the Premises, which portion
will be paid by Tenant)."
1(p). ..."Saturday"...
1(q). ..."11:00"...
2. ..."10:00 p.m."...
3. ..."11:00 a.m. to 9:00 p.m."...
4. "Landlord and Tenant acknowledge and agree that the aforesaid stated
hours are minimum operating hours and that Tenant shall be permitted
to operate for hours in excess of those stated, so long as any other
tenant in the Shopping Center (including the movie theater) is open
during such hours. Tenant shall be allowed from time to time to
conduct group sales at which time all or a portion of the Premises
will be temporarily closed to the public with the group sales activity
occurring in the closed portion of the Premises. Conditioned on Tenant
obtaining at Tenant's expense any required licenses or permits
relating to the sale of alcoholic beverages, alcoholic beverages and
other food may be served during group sales activities. Tenant shall
be permitted to engage third party caterers to serve food at such
group sales activities and agrees to use commercially reasonable
efforts to use food service providers located within the Shopping
Center to the extent such food service providers are reasonably
competitive in price and the type of food served is comparable to that
ordinarily served by Tenant during its group sales activities."
5. ..."except when unable to operate as a result of Force Majeure, in
addition, Tenant shall have the right to close for business for
non-corrective remodeling for up to thirty (30) days, no more often
than once every three (3) years, for inventory up to three (3)
nonconsecutive days per year, for any reason that would expose
Tenant's employees, agent or invitees to an unreasonably high risk of
physical injury or property damage, for the purpose of complying with
applicable law, ordinance, order or other act of any judicial
governmental or quasi-governmental authority, and for extenuating
circumstances that do not constitute Force Majeure events up to one
(1) day per month. Tenant failure to open shall not constitute a
breach of the Lease without notice and in opportunity to cure."
5(a). ..."which failure shall continue for ten (10) days after written
notice thereof"...
5(b). "Subject to the provisions of Part 4 of the Lease Agreement"...
5(c). ..."[***]"...
5(d). ..."[***]"...
6. "It is agreed however, that the foregoing provisions shall be subject
to the hours of operation prescribed by any governmental regulations
or labor union contracts which may govern the operation or business of
Landlord or Tenant."
*** Confidential treatment requested.
4
<PAGE> 32
7. "Landlord has arranged to provide parking for the Shopping Center
consisting of spaces for up to 1,000 cars in the parking garage
located across Third Street and connected to the Shopping Center by
pedestrian bridge and owned by the City of Memphis. Under a parking
validation program, customers of the Shopping Center making a minimum
purchase of [***] will be permitted to park for [***] per hour for a
maximum of [***] hours. Parking validation stickers or stamps (or
another comparable validation indicator) will be available for
purchase by Tenant at its option in order that it dispense them to its
customers or will be available to customers themselves at a central
location in the Shopping Center. Landlord agrees that the parking
validation program shall be non-discriminatorily made available to all
tenants in the Shopping Center on the same terms and the same price,
except for the movie theater tenant which may have a different
agreement. In addition, Landlord will provide free employee parking
for Tenant's employees, at a surface parking lot off-site.
8. "Landlord represents and warrants that as of the date of delivery of
possession of the Premises, Landlord shall have good and marketable
title to the Premises subject to (a) covenants, conditions,
restrictions, casements, and rights of record, (b) the effect of any
zoning laws of the city, county and state where the Project is
located and (c) general and special Taxes not delinquent. Landlord
covenants that Tenant will not be unreasonably interfered with as a
result of any of the covenants, conditions, restrictions, easements
and rights or record, provided Tenant is in compliance with the
provisions of this Lease. Landlord represents and warrants that to the
best of Landlord's knowledge, the Premises are in compliance with all
applicable zoning ordinances and all mitigation plans applicable to
the Premises have been satisfied. Notwithstanding anything to the
contrary contained in this Lease, Landlord hereby represents and
warrants to Tenant that Landlord has obtained a conditional use permit
(or its equivalent) and all other zoning and other discretionary
permits and approvals (i.e., all consents and approvals, other than a
building permit ("the Building Permit"), conditioned only upon the
submission of plans and specifications which comply with applicable
building codes and the payment of statutory building permit fees
necessary to permit the construction of the Premises and all
improvements to be constructed therein or as a part thereof by
Landlord and Tenant as contemplated in this Lease (collectively the
"Discretionary Approvals") and the use of the Premises by Tenant as
permitted under this Lease."
9. ...", except to the extent the foregoing are generated from the
normal operations associated with the automobile racing car ride
simulators in compliance with the use set forth in Part 5 of the
Lease Agreement (including, for example, the noise made by the track
announcer)"...
10. "Landlord hereby consents to Tenant's use of hydraulic oil in
connection with the operation of the automobile race car driving
simulators and cleaning and office products customarily used in
retail or office premises so long as such materials are used,
handled, stored, and disposed of in accordance with applicable laws.
Tenant shall be permitted to install, maintain and operate one or
more vending machines and pay telephones within the Premises."
11. "Notwithstanding the foregoing, Landlord shall not materially impair
or allow any other party to materially impair public access to the
Premises or the visibility of the Premises and/or Tenant's signage
from the Common Areas of the Shopping Center (e.g., Landlord shall
not and Landlord shall not permit any other tenant to construct
signage that would unreasonably impair the visibility of Tenant's
signage, or place or permit the placement of any kiosk, structure or
other physical item within twenty-five feet (25') of the storefront
of the Premises). Furthermore, in the event that Landlord uses or
permits any other party to use any portion of Common Areas for a
special event, Landlord will take all necessary steps to ensure that
such use does not prohibit or materially impair access to the
Premises by patrons of the Shopping Center. Landlord agrees that
Tenant's name shall be present on the directional signage for the
Shopping Center, and further, that pending the approval of the
applicable governmental authorities, Tenant shall have signage as
reasonably approved by Landlord on the pedestrian bridge to the
Shopping Center facing Second Street. Landlord and Tenant shall work
together in good faith to devise mutually acceptable signage for the
storefront and the pedestrian bridge, which sign specifications shall
be approved pursuant to the terms of Exhibit C attached hereto and
made a part hereof.
Notwithstanding anything to the contrary contained herein, Landlord
agrees that, pursuant to plans and specifications submitted to and
approved by Landlord, Tenant shall be permitted to install a portion
of a stock car into the storefront facade, and may locate a stock car
in the Common Areas, subject to Landlord's approval as to location
and means of installation"
12. "which consent shall not be unreasonably withheld or delayed"...
*** Confidential treatment requested.
5
<PAGE> 33
12(a). "Without Landlord's consent (but with notice to Landlord), Tenant
shall have the right to assign its rights under this Lease or to
sublet all of the Premises to (a) any person or entity which is a
parent, subsidiary, general partner, limited partner, member (or
constituent owner of such general or limited partner) of Tenant or (b)
any corporation or other entity into which or with which Tenant merges
or consolidates. Additionally, without Landlord's consent (but with
notice to Landlord), Tenant shall have the right to sell, assign or
otherwise transfer all or a portion of any share of stock, partnership
interests, limited liability company membership interests, or other
ownership interests in Tenant resulting in a change in the effective
control of Tenant (i) in connection with any public offering of stock
in Tenant or (ii) by, between or among any partners, members, owners,
limited partners or other persons or entities having an ownership
interest in Tenant.
Without Landlord's consent, Tenant shall have the right to assign its
rights under this Lease or to sublet or license all or a portion of
the Premises to any person or entity acquiring at least all or
substantially all of the assets of Tenant operating under the same
trade name of Tenant as of the date of such transfer, provided that in
any such event, (i) if the transferee has a net worth equal to the
lesser of the [***] as of the execution of the Lease or [***]. Tenant
shall be relieved of all obligation or liability which arises under
the Lease after the date of such assignment, or (ii) if the transferee
does not have a net worth equal to lesser of the [***] as of the
execution of the Lease or [***], Tenant shall remain liable for all
obligation or liability which arises under the Lease after the date of
such assignment. Any assignment under this paragraph shall require
thirty (30) days prior written notice together with the following
information: (i) the name, (ii) the financial and operating experience
history, and (iii) any other information reasonably appropriate,
concerning the proposed transferee and its officers, directors, owners
and employees."
12(b). "In the event of Tenant's request for consent to assign or sublease,
Landlord shall notify Tenant in writing of its granting or, denial of
consent within fifteen (15) days of receipt of Tenant's request and
the receipt of the foregoing information accompanied by specific
reasons for its decision in the event Landlord denies consent. Failure
of Landlord to notify Tenant within such time frame shall be deemed
Landlord's approval of such request. Notwithstanding anything to the
contrary contained herein, in the event of a subletting or assignment
to which Landlord consents and the transferee has a net worth equal to
at least [***], Tenant shall be relieved of all obligation or
liability which arises under the Lease after the date of such
assignment."
12(c). "Notwithstanding anything to the contrary contained in this Lease
(including, without limitation, the immediately foregoing sentence),
in the event that any rent in excess of that owing by Tenant to
Landlord under this Lease is payable by an assignee or sublessee of
Tenant, from such excess rent, Tenant shall be entitled to recover all
costs and expenses incurred by Tenant in effecting such assignment or
sublease, including, without limitation, brokerage commissions and
fees, legal and other professional costs, tenant improvement
allowances paid by Tenant to such assignee or sublessee and other
costs of constructing or installing tenant improvements for such
assignee or sublessee as well as the unamortized costs of constructing
Tenant's leasehold improvements to the extent such costs were not paid
by Landlord."
12(d). ..."in an amount not to exceed [***]"...
13. ...", but not the obligation,"...
14. ..."and close up to thirty (30) days therefor no more often than once
every three (3) years"...
15. "After giving Landlord notice of its intention to do so, Tenant may,
from to time after completion of all work in accordance with Exhibit
C. make such permanent and nonstructural alterations, replacements,
additions, changes and/or improvements (collectively referred to in
this Lease as "Alterations"; provided, however, the term "Alterations"
shall not include strictly cosmetic changes such as changing the
carpeting or painting within the Premises) to Tenant's Work previously
completed in accordance with Exhibit C or prior Alterations as Tenant
may find necessary or convenient for its purposes, provided that: (i)
any such Alterations which are structural or on the exterior or affect
the storefront of the Premises may not be made without Landlord's
prior written consent; (ii) the value of the Premises is not thereby
diminished; and (iii) no Alterations costing in excess of [***] for
any one work of improvement, or in excess of [***] in the aggregate
for multiple works of improvement during any period of twelve (12)
consecutive months during the Lease Term, may be made without
obtaining the prior approval of Landlord, which Landlord may withhold
in its reasonable discretion."
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<PAGE> 34
16. "Notwithstanding anything to the contrary contained in this Lease"...
17. "Except for such loss or damage as results from Landlord's negligence or
intentional misconduct, or that of its employees or agents,"...
17(a). ... "except for such injury or damage as results from Landlord's
negligence or intentional misconduct, or that of its employees or agents.
Landlord shall indemnify and hold harmless Tenant from all liability for
injury or damage to any person(s) or property occurring on or about the
Common Areas of the Building, or arising out of any accident in the
Common Areas of the Building (including all costs, expenses and
reasonable attorney's fees incurred by Tenant in defense of any such
claims), unless such injury or damage results from the negligence or
intentional misconduct of Tenant, its employees, agents, subtenants or
assignees."
18. "Landlord represents and warrants that Tenant's Permitted Use as set
forth in Part 5 of the Lease will not in any way violate the terms of
this Section 6 and nothing in this Section 6 shall in any way limit such
Permitted Use or require Tenant to compensate Landlord for increased
insurance rates under this Section 6 as a result of Tenant's use of the
Premises for the Permitted Use."
19. "Notwithstanding anything to the contrary contained herein, Landlord
shall make any such repairs necessitated by the negligence or willful
misconduct of Landlord, its employees or agents."
19(a). ... "of Landlord's getting all approvals and permits"...
19(b). ... "and Landlord elects not to repair and does not repair"...
19(c). ... "the cost of which repair would exceed [***] and Landlord elects not
to repair and does not repair,"...
19(d). ... "the cost of which repair would exceed [***] and Landlord elects not
to repair and does not repair"...
20. ... "by notice to Tenant given within sixty (60) days after the
occurrence,"...
20(a). "Notwithstanding anything to the contrary contained herein, in the event
Landlord has not terminated the Lease pursuant to the foregoing
provisions, but has not completed its restoration or rebuilding of the
Premises by the date that is two hundred seventy (270) days from the date
of the occurrence, Tenant may terminate this Lease on written notice to
Landlord given by the date that is three hundred ten (310) days from the
date of the occurrence."
20(b). "If this Lease is not terminated pursuant to the provisions of the
foregoing paragraph,"...
20(c). ... "shall"...
20(d). "(subject to Tenant's right to go dark pursuant to the provisions of
Part 4 hereof)"...
20(e). ... "has not commenced within sixty (60) days after the date of the
damage or destruction to restore or repair the Premises and proceeded to
complete such repairs or restoration of the Premises within one hundred
eighty (180) days after obtaining a building permit,"...
20(f). ... "Tenant"...
20(g). ... "within sixty (60) days after failure to meet the foregoing
requirement"...
20(h). "Notwithstanding the foregoing, in the event Tenant in its reasonable
judgment determines that the Premises are not suitable for Tenant to
operate within the Premises, Minimum Rental, Percentage Rental and
Additional Charges shall be fully abated until such restoration or
repair shall be completed."
20(i). ... "as soon as reasonably possible"...
20(j). ... "and if Landlord elects not to rebuild and Landlord does not rebuild,
then Landlord may"...
21. "Subject to the provisions of Article 2, Section 2 hereof,"...
*** Confidential treatment requested.
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<PAGE> 35
21(a). "Notwithstanding anything to the contrary contained herein, Landlord
agrees that in no event shall Tenant be obligated to pay more for
utilities than it would be obligated to pay directly to the utility
company providing the service."
22. "Landlord shall use reasonable efforts to mitigate its damages and to
relet the Premises to another tenant."
23. "Subject to the provisions of Article 5 hereof," ...
24. ... "[***] of" ...
25. "Within ninety (90) days after the closing of any mortgage financing
on the Shopping Center, Landlord shall obtain from its lender and
deliver to Tenant a recordable, nondisturbance agreement in form and
substance reasonably acceptable to Tenant and have the same recorded
in the Office of the Shelby County Register. Landlord represents and
warrants that the terms of the Ground Lease state that any termination
of the Ground Lease shall be subject to the terms of any subleases
made by the lessee thereunder so long as the respective sublessee is
in compliance with its lease and attorns to the Memphis Center City
Revenue Finance Corporation, as lessor. Landlord acknowledges that
Tenant is deemed to be a sublessee under the Ground Lease."
26. "Notwithstanding the foregoing, Landlord acknowledges and agrees that
Tenant has submitted, and Landlord has approved Tenant's preliminary
design plans for the storefront and signage for the Premises (which
designs are attached hereto as Exhibit E), and documents detailing
Tenant's concept. If Tenant desires to make any changes to the
storefront and/or the exterior signage preliminary design plans
attached hereto as Exhibit E, such changes shall be submitted to
Landlord for approval by Landlord, which approval shall be in
Landlord's reasonable discretion if such changes are generally
consistent with the previously approved preliminary design plans of
Tenant, and in Landlord's sole discretion if such changes are not
generally consistent with the previously approved preliminary design
plans of Tenant."
27. "Landlord acknowledges that Tenant is a licensee under a license
agreement with NASCAR, and therefore, agrees that all use of the
NASCAR trade name (including both signage and advertising) shall
remain subject to the review and approval of the licensor to the
extent required under said license agreement."
28. ... ", in Tenant's reasonable judgment," ...
28(a). ... ", Percentage Rental" ...
28(b). ... "equitably based on the effect on Tenant's business operations"...
28(c). "Tenant shall have the right to seek a separate award for the loss of
business and damage to or loss of trade fixtures."
29. "Subject to the provisions of Article 2, Section 7 hereof," ...
30. Landlord warrants and represents that, to the best of Landlord's
knowledge, any use, storage, treatment, or transportation of Hazardous
Substances that has occurred in or on the Premises prior to the date
hereof has been in compliance with all applicable federal, state and
local laws, regulations or ordinances. Landlord additionally warrants
and represents that, to the best of Landlord's knowledge, no release,
leak, discharge, spill, disposal or emission of Hazardous Substances
has occurred in, on or under the Premises, and the Premises are free
of Hazardous Substances as of the date hereof.
Landlord agrees to indemnify and hold harmless Tenant from any and all
claims, damages, fines, judgments, penalties, costs, liabilities or
losses (including, without limitation, any and all sums paid for
settlement of claims, attorney's fees, consultant and expert fees)
arising during or after the Lease term from or in connection with the
presence or suspected presence of Hazardous Substances in or on the
Premises, unless the Hazardous Substances are present as a result of
the negligence, willful misconduct, or other acts of Tenant, Tenant's
agents, employees, contractors or invitees. Without limitation of the
foregoing, this indemnification shall include any and all costs
incurred due to any investigation of the site or any cleanup, removal
or restoration mandated by a federal, state or local agency or
political subdivision, unless the Hazardous Substances are present as
a result of the negligence, willful misconduct, or other acts of
Tenant, Tenant's agents,
8
*** Confidential treatment requested
<PAGE> 36
employees, contractors or invitees. This indemnification shall
specifically include any and all costs due to Hazardous Substances
that flow, diffuse, migrate, or percolate into, onto or under the
Premises after the Lease term commences.
31. ... "if the transferee expressly assumes all of Landlord's
liabilities and obligations under this Lease."
31(a). ... "within a period of thirty (30) days after the expiration of
Landlord's applicable notice and cure period."
32. ... "reasonable"...
32(a). ... "pursuant to a system whereby Tenant's actual use of a shared
dumpster is measured"...
32(b). "Landlord shall notify Tenant prior to Tenant's commencement of
Tenant's Work of any such installations and/or other safeguards that
(to Landlord's actual knowledge regarding applicable fire, safety and
building codes and regulations; to Landlord's best knowledge regarding
safeguards that Landlord's insurance underwriters require) Tenant will
be required to perform or construct in order to comply with this
clause (ii)."
33. "Tenant shall have the right to install and maintain on the roof of
the Shopping Center one (1) satellite dish for Tenant's
communications and data transmission network, subject to the terms
and provisions of the Satellite Dish License Agreement between
Landlord and Tenant of even date herewith."
34. "Landlord represents and warrants that Tenant's Permitted Use as set
forth in the Lease does not violate this clause (x) does not limit
Tenant's right to carry on the Permitted use in the Premises."
35. "Tenant shall not be deemed to be in default under this provision
unless Tenant fails to provide the same within five (5) business days
after receiving a written request therefor from Landlord."
36. "Landlord represents and warrants that Tenant's Permitted Use as set
forth in the Lease does not violate this clause (xiii) does not limit
Tenants right to carry on the Permitted use in the Premises."
LANDLORD: TENANT:
PEABODY PLACE CENTRE, L.P. SILICON ENTERTAINMENT, INC.
By: Peabody Place, Inc., General Partner
BY: /s/ MORRIS I. THOMAS BY: /s/ ILLEGIBLE
----------------------------------------- -----------------------
Morris I. Thomas, Vice President
BY: /s/ JACK A. BELZ
-----------------------------------------
Jack A. Belz, President
HOTEL PEABODY, L.P.
By: Perim Corp., General Partner
BY: /s/ JIMMIE D. WILLIAMS
-----------------------------------------
Jimmie D. Williams, Senior Vice President
9
<PAGE> 37
EXHIBIT "C" - WORK TO BE DONE
PEABODY PLACE CENTRE, L.P. - LANDLORD
SILICON ENTERTAINMENT, INC. - TENANT
The Tenant leases Premises in an "AS IS" condition and agrees to make all
improvements at its expense, including compliance with any ADA and handicap
requirements except that Landlord shall make those improvements as shown on the
attached Exhibit C Plans and Specifications.
The Tenant Allowance shall be disbursed in draws no more frequently than
once per month. Each draw shall be funded within [***] days after Landlord's
receipt of a draw request in an amount equal to [***] of the total draw request
which shall be submitted together with invoices for the amount actually expended
up to that point and partial lien waivers from the applicable contractors and
suppliers. The balance of the Tenant Allowance (the remaining [***] shall be
funded provided that Tenant is not in default herein beyond any applicable cure
period, within [***] days after the later of (i) Tenant opening for business in
the Premises; (ii) Tenant completing its improvements, and (iii) Tenant
providing to Landlord lien waivers from its general contractors, major
subcontractors and suppliers involved in the implementing of Tenant's leasehold
improvements. In the event the actual cost of Tenant's leasehold improvements is
less than Tenant Allowance, Landlord shall credit the difference between the
Tenant Allowance and the actual cost of the leasehold improvements, as amortized
over the full term of the Lease against the first payment of Minimum Rental due
pursuant to the terms of this Lease. In no event shall Landlord's cost exceed
$390,000.00. In the event that Landlord fails to fund the Tenant Allowance in
accordance with the aforesaid provisions and such failure continues for thirty
(30) days after written notice thereof, Tenant shall be permitted to offset such
amount against Minimum Rental and Additional Charges due hereunder; provided
that in the event Landlord in good faith disputes that the Tenant Allowance is
then due or in good faith asserts that Tenant is in default hereunder, Tenant
shall not be permitted to so offset the amount of the Tenant Allowance in
question.
LANDLORD: PEABODY PLACE CENTRE, L.P.
BY: PEABODY PLACE, INC. (General Partner)
By: /s/ MORRIS I. THOMAS
----------------------------------
Morris I. Thomas, Vice President
By: /s/ JACK A. BELZ
----------------------------------
Jack A. Belz, President
HOTEL PEABODY, L.P.
By: Perim Corp., General Partner
By: /s/ JIMMIE D. WILLIAMS
----------------------------------
Jimmie D. Williams;
Senior Vice President
TENANT: SILICON ENTERTAINMENT, INC.
By: /s/ [ILLEGIBLE]
---------------------------------
Its: Vice President
---------------------------------
*** Confidential treatment requested.
<PAGE> 38
EXHIBIT "C"
WORK TO BE DONE
PEABODY PLACE
RETAIL/ENTERTAINMENT ELEMENT
NASCAR SILICON MOTOR SPEEDWAY
LANDLORD'S WORK
A. Structure
1. Frame, etc.: The structural frame, columns, beams, floor and roof slabs
shall be constructed with incombustible framing, and the floor and roof slabs
shall be designed to carry live loads of 75 pounds per square foot. Roofs will
be insulated roof deck construction. Exterior walls above grade will be concrete
block, Precast panels, and/or suitable members, with ties for anchorage of
exterior veneers such as brick, EIFS, stone and other suitable materials. If any
load are applied to the roof or structural areas of the building which, in the
opinion of Landlord shall be considered excessive, any costs for handling these
structural changes shall be done by Tenant.
2. Space heights: The minimum clear height measured between the floor
slab and the underside of steel joints shall generally be as follows: Sales
Area 14' and Stock Areas 14'. Landlord reserves the right to install
mechanical, electrical, and plumbing systems in Tenant spaces as needed.
B. Store Fronts
The Landlord will provide a rough opening for storefront (provided by
Tenant) in accordance with the criteria and the general plan of the Shopping
Center as determined by the Landlord and prepared by the Landlord's designated
representative.
C. Demising Frames
Landlord will provide metal studs, two feet on center from finished floor
to the underside of the roof deck, or an unfinished concrete block wall, as
determined by the Landlord.
D. Interior Finish
Floor: All floors will be concrete with smooth cement finish.
E. Rear Service Doors/Hardware
The Landlord will provide a rear service door in a location acceptable to
Tenant as a means of egress in accordance with the general plan of the Shopping
Center as determined by the Landlord and prepared by the Landlord's architect
and/or if required by any building code.
F. Utilities and Plumbing
The Landlord will provide stubbed utility services essentially as outlined
below as indicated on the general plan of the Project as prepared by the
Landlord's architect and/or engineer. Refer to item G for electrical and
telephone service.
a. Domestic water line (1") will be provided above the ceiling with a
single valve for tenant connection.
b. The cost of metering of the water service if required by the Landlord
will be the responsibility of the Tenant.
c. Sanitary sewer line for main level (slab or grade) Tenants will be
provided below finish floor in a "leave out" located by the Landlord.
Sanitary sewer lines for second level Tenants will be located in the
ceiling area of the space below. Coring of the slab will be the
responsibility of the Tenant after receiving written approval from both
the Landlord and engineer regarding location of the coring. The Tenant
is also responsible for coordinating with the tenant below the coring
and correction to the sanitary sewer line.
d. Gas service (if applicable) will be separately metered. For restaurants,
an additional gas connection point will be located within the premises.
G. Electrical
The Landlord will provide the main electrical service for the Project to a
central room. An empty conduit of sufficient size shall be provided to a
designated point of entry in the Leased Premises as indicated on the general
plan of the Project prepared by the Landlord's architect. An empty 1 inch
<PAGE> 39
conduit to the Leased Premises shall be provided for telephone service. Power
and data surge protection is the responsibility of the Tenant.
H. Sprinklers (if applicable)
The Landlord will provide sprinklers on a fourteen foot by fourteen foot
grid pattern (modification by Tenant).
I. Utility Meters
Tenant is responsible for applying and paying for all utility meters.
J. Heating And Air Conditioning
The Landlord will furnish closed loop condenser water supply and return
piping maintained at a temperature between 60 degrees and 90 degrees F. These
services shall be sufficient to allow the Tenant's water source heat pump to
provide cooling at a level mutually acceptable to Landlord and Tenant not to
exceed one (1) ton for every 200 square feet of leasable area.
The Landlord will provide outside air at the rate of 0.3 CFM/FT to the
space in accordance with the 1988 International SOCA Code for retail space.
TENANT'S WORK
Landlord's Work is limited to the work herein above described and excludes work
described as Tenant's Work. All work not specifically listed above as
Landlord's Work is Tenant's Work.
Tenant's Work shall include all other necessary improvements to operate
Tenant's business at Tenant's expense. The plans and specifications and the
detail and design shall be subject to the written approval of Landlord's
architect.
A. CONSTRUCTION
1. Landlord will provide Tenant, when preliminary plans have been prepared
by Landlord's architect, with scale drawings, showing the general features
of the leased premises.
2. In developing the working drawing, Landlord reserves the right to make
such necessary reasonable changes and adjustments which are the result of
detailed technical development of the preliminary studies so long as
Landlord notifies Tenant in a reasonable manner and does not materially
alter the design of the Tenant's premises.
3. Tenant shall have the right to substitute more expensive items than
normally provided by Landlord hereunder, in which event Tenant shall
complete such items at Tenant's cost, and Landlord shall give Tenant an
allowance based upon the cost of the item Landlord would have been required
to complete. All such work performed by Tenant shall be subject to the
approval of Landlord's architect.
4. Tenant shall submit detailed plans and specifications (all in
triplicate) to Landlord for Landlord's review. Landlord may require changes
to plans and specifications prior to approving same. Tenant shall make such
changes, if any, as Landlord requires. Tenant shall not receive possession
of the leased premises nor begin construction without first receiving
Landlord's written approval of final plans and specifications.
5. Tenant shall bear the cost of all structural supports necessary for
Tenant Storefront work. Tenant shall not use building structure or demising
walls to support Tenant construction, including automatic grills without
the written approval of Landlord.
6. All Tenant construction work must be coordinated with Landlord's
Program Manager before and during construction.
<PAGE> 40
EXHIBIT E
SPECIAL CONDITIONS
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS
SECTION 1. GOVERNMENTAL COMPLIANCE. The Tenant agrees to comply with all
applicable federal, state and local governmental requirements, including, but
not limited to, those listed in these Special Conditions, and agrees to furnish
to the Landlord documentation of said compliance from time to time upon
request. The provisions of these Special Conditions are intended to be
applicable only to the extent required by federal, state or local law, and to
the extent not so required shall not be subject to enforcement.
SECTION 2. CONTRACTORS BOUND. To the extent required by law, the Tenant will
cause these Special Conditions to be inserted in all contracts and subcontracts
for construction or installation of tenant improvements for the Premises
("Tenant Build-Out"); provided that the provision regarding Sections 3 and 4
(except with regard to handicapped persons) shall not apply to contracts and
subcontracts for commercial supplies of raw materials when said contract or
subcontract is less than Ten Thousand Dollars ($10,000.00). Any failure to
insert any of these Special Conditions shall in no way modify the applicability
of the statutes or regulations described in these Special Conditions to any
contractor.
SECTION 3. PROJECT AREA EMPLOYMENT AND CONTRACTING. With respect to Tenant
Build-Out, Tenant agrees, to the greatest extent feasible, to provide
opportunities for training and employment of lower-income persons residing with
the Project Area (herein defined as the City of Memphis) and to award contracts
for work to eligible business concerns which are located in, or owned in
substantial part by persons residing in, the Project Area.
SECTION 4. NON-DISCRIMINATION IN EMPLOYMENT. During the performance of the
Tenant Build-Out, the Tenant will require its contractors to comply with the
following:
(a) The contractor will not discriminate against any employee or
applicant for employment because of race, color, religion, sex or national
origin. The contractor will take affirmative action to ensure that applicants
are employed, and that employees are treated during employment, without regard
to their race, color, religion, sex or national origin. Such action shall
include, but not be limited to, the following: employment, upgrading, demotion,
or transfer; recruitment or recruitment advertising; layoff or termination;
rates of pay or other forms of compensation; and selection for training;
including apprenticeship. The contractor will post in conspicuous places,
available to employees and applicants for employment, the attached notice
setting forth the provisions of this non-discrimination clause.
(b) The contractor will, in all solicitations or advertisements for
employees placed by or on behalf of the contractor, state that all qualified
applicants will receive consideration for employment without regard to race,
color, religion, sex or national origin.
(c) The contractor will send to each labor union or representative of
workers with which it has a collective bargaining agreement or other contract
or understanding, a notice advising the labor union or workers' representative
of the contractor's commitment under Section 202 of the Executive Order No.
11246 of September 24, 1965, and shall post copies of the notice in conspicuous
places available to employees and applicants for employment.
(d) The contractor will comply with all provisions of Executive Order No.
11246 of September 24, 1965, and the rules, regulations and relevant orders of
the Secretary of State.
(e) The contractor will furnish all information and reports required by
Executive Order No. 11246 of September 24, 1985, and by the rules, regulations
and orders of the Secretary of Labor, or pursuant thereto, and will permit
access to its books, records, and accounts by the Tenant, the City of Memphis,
U.S. Department of Housing and Urban Development (HUD), and the Secretary of
Labor for purposes of investigation to ascertain compliance with such rules,
regulations and orders.
<PAGE> 41
(f) In the event of the contractor's noncompliance with the
non-discrimination clauses of the contract or with any of such rules,
regulations, or orders, the contract may be canceled, terminated or suspended
in whole or in part, and the contractor may be declared ineligible for further
Government contracts in accordance with procedures authorized in Executive
Order No. 11246 of September 24, 1965, and such other sanctions may be imposed
and remedies invoked as provided in Executive Order 11246 of September 24,
1965, or by rule, regulation, or order of the Secretary of Labor, or as
otherwise provided by law.
(g) The contractor will include the provisions of paragraphs (a) through
(f) in every subcontract or purchase order unless exempted by rules,
regulations, or orders of the Secretary of Labor issued pursuant to Section 204
of Executive Order No. 11246 of September 24, 1965 (Section 204 of the Order),
so that such provisions will be binding upon each subcontractor or vendor. The
contractor will take such action with respect to any subcontract or purchase
order as may directed by the Secretary of Labor as a means of enforcing such
provision, including sanctions for noncompliance; provided, however, that in the
event the contractor becomes involved in, or is threatened with, litigation with
a subcontractor or vendor as a result of such direction, the contractor may
request the United States to enter into such litigation to protect the interest
of the United States.
SECTION 5. USE OF UDAG AND CDBG FUNDS. If any funds provided by the City of
Memphis to the Landlord pursuant to the Urban Development Action Grant ("UDAG")
or Community Development Block Grant ("CDBG") programs of the U.S. Department of
Housing and Urban Development ("HUD") are made available, as part of any
construction allowance or otherwise, for any of the Tenant's leasehold
improvements, such funds shall only be used for non construction items as
specifically approved by the Landlord. To assure compliance with this provision,
the Landlord shall have the right to review and approve all contracts for such
leasehold improvements prior to their execution.
SECTION 6. NON-DISCRIMINATION CONCERNING UDAG AND CDBG FUNDS. The Tenant will
comply with Section 109 of the Housing and Community Development Act of 1974,
as amended, (the "Act") to insure that no person shall on the ground of race,
color, national origin, sex, age (under the Age Discrimination Act of 1975) or
handicap (otherwise qualified handicapped persons under Section 504 of the
Rehabilitation Act of 1973) be excluded from participating in, be denied the
benefits of, or be subject to discrimination under any program or activity
funded in whole or in part with UDAG or CDBG funds.
SECTION 7. GOVERNMENT ACCESS TO RECORDS. The Landlord, the City of Memphis,
HUD, the Comptroller General of the United States, or any of their duly
authorized representatives shall have access to any books, documents, papers
and records of the Tenant and its contractors which are related directly to the
receipt or disbursement of UDAG or CDBG funds for the purpose of making audit,
examination, excerpts, and transcriptions.
SECTION 8. PROHIBITION AGAINST USING INELIGIBLE CONTRACTORS. The Tenant
agrees that no UDAG or CDBG funds shall be used directly or indirectly to
employ, award contracts to, or otherwise engage in the services of, or fund any
contractor or subcontractor during any period of debarment, suspension, or
placement in ineligibility status of such contractor or subcontractor under the
provisions of 24 CFR Part 24.
SECTION 9. AGE DISCRIMINATION REQUIREMENTS. The Tenant agrees to comply with
the Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.) which prohibits
discrimination on the basis of age and applies to participation in any program
or activity funded in whole or in part with UDAG or CDBG funds.
SECTION 10. REHABILITATION ACT REQUIREMENTS. The Tenant agrees to comply with
Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) and implementing
regulations found in 24 CFR Part 8. These regulations concern discrimination
against an otherwise qualified handicapped person who seeks to participate in
or receive benefits from an activity funded in whole or in part with UDAG or
CDBG funds.
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SECTION 11. POLLUTION PROHIBITIONS. The Tenant agrees to comply with any and
all local, state and federal statutes and regulations protecting the
environment from pollutants generated by the Tenant's activities.
SECTION 12. CONFLICT OF INTEREST. Except for approved eligible administrative
or personnel costs, no person who is an employee, agent, consultant, officer,
elected official, or appointed official of the City of Memphis or of any
designated public agencies or sub-recipients (neighborhood-based non-profit
organization, local development corporation, or Section 301(d) Small Business
Investment Company) receiving UDAG or CDBG monies, who exercises or has
exercised any functions or responsibilities with respect to the Peabody Place
project who is in a position to participate in a decision making process or
gain inside information with regard to the Peabody Place project, may obtain a
personal or financial interest or benefit from the activity, or have any
interest in any contract, subcontract or agreement with respect thereto, or the
proceeds thereunder, either for themselves or those with whom they have family
or business ties, at any time during or after such person's tenure. (However,
upon the written request of the City, HUD may grant an exception to the
conflict of interest provisions stated above on a case-by-case basis when it
determines, consistent with the requirements of 24 CFR 570.611 (48 Federal
Registor 186, pages 43571-72, 9-23-83), that such an exception would serve to
further the purposes of the Act, and the effective and efficient administration
of the City's program or project.)
SECTION 13. REPORTING REQUIREMENTS. Upon written request from the Landlord,
the Tenant shall provide the Landlord all information within its control
regarding this Lease and the performance thereof that is necessary for the
Landlord to satisfy its reporting requirements to the City of Memphis regarding
the Peabody Place project. This information shall include the total
capitalizable cost of all tenant improvements, the number of permanent
employment positions at the Premises, and the number of such positions filled
by minority persons and persons who meet the HUD definition of low and moderate
income (80% of area median income, adjusted for family size). In addition, the
Tenant understands that the Landlord has entered into an agreement with the
City of Memphis that requires the Landlord to (i) use its best efforts to
assure that at least fifty-one percent (51%) of the initial permanent
employment opportunities (computed on a full-time equivalent basis) for the
Element E portion of the Peabody Place project will be held by, or will be
available to, persons who, at the time of their employment, qualify as low or
moderate income, and (ii) development and implement procedures acceptable to
the City of Memphis whereby its tenants participate in the effort to employ low
to moderate income persons. The Tenant agrees to fully cooperate with the
Landlord, consistent with commercially reasonable business practices, in the
Landlord's efforts to achieve this employment objective.
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<PAGE> 43
EXHIBIT "F"
EXCLUSIVE USE RESTRICTIONS
1. No movie theater shall be operated in the Shopping Center except for that
operated pursuant to the Lease dated April 17, 1997 by and between Peabody
Place Centre, L.P. and Muvico Entertainment, LLC.
2. Jilliana's of Memphis, TN, Inc.
"No other leased space within the Shopping Center shall: (i) have more than
two (2) billiard tables; (ii) be a sports bar (which for purposes hereof
shall be defined as being a bar or restaurant having more than five (5)
televisions exhibiting sports events); (iii) have any bowling facilities;
or (iv) have a dance floor in excess of twenty percent (20%) of the floor
area of such space (or a maximum 5000 square foot dance floor).
Notwithstanding anything to the contrary contained herein, the foregoing
restrictions shall not apply to another tenant's space whose ordinary use
involves the presence of not more than two (2) video games."
<PAGE> 44
MEMORANDUM OF LEASE
THIS LEASE, made and entered into as of the ___ day of ____________, 1999
by and between PEABODY PLACE CENTRE, L.P., a Tennessee limited partnership,
hereinafter referred to as "Landlord", and SILICON ENTERTAINMENT, INC., a
______ corporation, hereinafter referred to as "Tenant".
WITNESSETH:
For and in consideration of One Dollar ($1.00) and other valuable
consideration paid and to be paid by the Tenant to the Landlord, the Landlord
does demise and let unto Tenant and the Tenant does lease and take from the
Landlord, upon the terms and conditions and subject to the limitations more
particularly set forth in a certain agreement between the Landlord and Tenant,
bearing even date herewith, to which Agreement reference is hereby made for all
of the terms and provisions thereof, which terms and provisions are made a part
hereof as fully and particularly as if set out verbatim herein, the premises
situated in the City of Memphis, County of Shelby, State of Tennessee,
consisting of land, together with improvements placed and/or to be placed
thereon, and more particularly described as follows:
A retail space containing approximately 6,000 square feet located within
the Peabody Place Retail Entertainment Center and further municipally
described as Memphis, Shelby County, Tennessee.
TO HAVE AND TO HOLD the above demised premises unto the Tenant for the
period of ten (10) years, commencing on the first day of _____ and ending on
the last day of the previous month ten years thereafter.
Provided that Tenant is not in default under the Lease beyond any
applicable notice and cure period and has not ceased operating for business in
the Premises in accordance with Part 7 of the Lease, subject, however, to
Tenant's right to go dark pursuant to Part 4 of the Lease, for a period in
excess of thirty (30) days. Tenant shall have the exclusive right to occupy and
operate a business within the Shopping Center (including, without limitation,
the Common Areas of the Shopping Center) for the installation and operation of
automobile racing car ride simulators (including motion-based simulators) and,
so long as Tenant retains the right to use the NASCAR name and uses at least 500
square feet of its sales floor area for the sale of the merchandise hereinafter
described, for the sale of NASCAR-branded merchandise and other merchandise
related to NASCAR (including, without limitation, NASCAR videos, pictures,
CD-Roms, DVD's and other media and other such audio/visual items featuring
NASCAR racing) and for the sale of NASCAR Silicon Motor Speedway-branded
merchandise and Silicon Motor Speedway-branded merchandise ("Tenant's Exclusive
Use"). Notwithstanding the foregoing, other tenants in the Shopping Center may
sell NASCAR-branded merchandise and other merchandise related to NASCAR, other
than apparel, so long as such use is incidental to such tenants' primary use of
their respective premises. For purposes hereof, an "incidental" use shall mean
that not more than one hundred (100) square feet within such tenant's sales area
shall be devoted to the sale of such merchandise comprising the "incidental"
use.
It is agreed and understood that if the Tenant shall make certain
improvements to the demised premises, Tenant shall, in making such
improvements, act solely for its own benefit and not as an agent of Landlord
and that Landlord's interest in the demised premises the building of which the
demised premises are a part, and the overall development of which the demised
premises are a part, shall not be subject to any mechanical, furnishers or
materialmen's liens. Landlord does not consent to any contract for labor or
materials within the context of Section 66-11-108 et seq., Tennessee Code
Annotated out of which any such liens might arise. No contract for labor or
material will be contracted for by Tenant except with the express stipulation
that any lien arising therefrom shall not attach to Landlord's fee interest,
but only is Tenant's leasehold interest in the demised premises, building, or
in the overall development of which the demised premises is a part. Tenant
shall defend and save harmless Landlord from any and all loss, cost or expense,
including attorneys' fees, based on or arising out of asserted claims or liens
against the leasehold estate or against the right, title and interest of
Landlord in the demised premises or under the terms of the Lease. Tenant shall
discharge by payment or furnish to Landlord a satisfactory bond pursuant to
statutory procedures any lien arising out of work performed or materials
furnished on the demised premises by, through or under Tenant within thirty
(30) days after the filing of same.
<PAGE> 45
IN WITNESS WHEREOF, the parties through their duly authorized officers,
have executed this instrument, this the day and year first above written.
LANDLORD: PEABODY PLACE CENTRE, L.P. TENANT: SILICON ENTERTAINMENT, INC.
BY: PEABODY PLACE, INC. (General Partner)
By: /s/ MORRIS I. THOMAS By: /s/ [ILLEGIBLE]
---------------------------------- ------------------------
Morris I. Thomas, Vice President
By: /s/ JACK A. BELZ Its: Vice President
---------------------------------- ------------------------
Jack A. Belz, President
HOTEL PEABODY, L.P.
By: Perim Corp., General Partner
By: /s/ JIMMIE D. WILLIAMS
-----------------------------------------
Jimmie D. Williams, Senior Vice President
2
<PAGE> 46
STATE OF TENNESSEE
COUNTY OF SHELBY
Before me, a Notary Public of the State and County aforesaid, personally
appeared JACK A. BELZ AND MORRIS I. THOMAS, PRESIDENT AND VICE PRESIDENT,
respectively, of PEABODY PLACE, INC., a Tennessee corporation, said corporation
is the general partner of PEABODY PLACE CENTRE, L.P., a Tennessee limited
partnership, with whom I am personally acquainted, and who, upon oath
acknowledged that they are the PRESIDENT AND VICE PRESIDENT, respectively of
PEABODY PLACE, INC., General Partner, of PEABODY PLACE CENTRE, L.P., and that
they as such PRESIDENT AND VICE PRESIDENT, respectively, executed the foregoing
instrument for the purpose therein contained by signing the name of such
partnership, as one of the general partners by themselves as PRESIDENT AND VICE
PRESIDENT, respectively of such corporation.
WITNESS my hand and Notarial seal, at office in Memphis, Tennessee, this,
the 19th day of May, 1999.
/s/ SANDRA PERRY [SEAL]
-----------------------------
Notary Public
My Commission Expires:
-------
STATE OF TENNESSEE
COUNTY OF SHELBY
Before me, a Notary Public of the State and County aforesaid, personally
appeared JIMMIE D. WILLIAMS, SENIOR VICE PRESIDENT of PERIM CORP., a Tennessee
corporation, said corporation is one of the general partners of HOTEL PEABODY
L.P., a Tennessee limited partnership, with whom I am personally acquainted, and
who, upon oath acknowledged that he is the SENIOR VICE PRESIDENT of PERIM CORP.,
General Partner, of HOTEL PEABODY, L.P., and that he as such SENIOR VICE
PRESIDENT, executed the foregoing instrument for the purpose therein contained
by signing the name of such partnership by such corporation, as one of the
general partners by himself as SENIOR VICE PRESIDENT of such corporation.
WITNESS my hand and Notarial seal, at office in Memphis, Tennessee, this,
the 19th day of May, 1999.
/s/ SANDRA PERRY [SEAL]
-----------------------------
Notary Public
My Commission Expires:
-------
STATE OF CALIFORNIA
COUNTY OF SANTA CLARA
Before me, a Notary Public of the State and County aforesaid, personally
appeared CHRIS MORSE with whom I am personally acquainted, (or proved to me on
the basis of satisfactory evidence) and who, upon oath, acknowledge himself to
be the VICE PRESIDENT of SILICON ENTERTAINMENT, INC., the within named
bargainor, a CALIFORNIA corporation, and that he executed the foregoing
instrument for the purposes therein contained by signing the name of such
corporation by himself as such VICE PRESIDENT.
Witness my hand at office, this 24 day of May, 1999.
/s/ LAURIE M. SHERMER
---------------------
Notary Public
My Commission Expires 9/19/2001 [SEAL]
---------
3
<PAGE> 47
SATELLITE/MICROWAVE EQUIPMENT LICENSE AGREEMENT
This Satellite/Microwave Equipment License Agreement ("License Agreement"
or "Agreement") is made by and between PEABODY PLACE CENTRE, L.P., as Licensor
and SILICON ENTERTAINMENT, INC., as Licensee on this ___ day of May, 1999.
Recitals:
Licensor is the Landlord and Licensee is the Tenant under a lease (the
"Lease") for premises ("Premises") located at Peabody Place Centre, Memphis,
Tennessee.
Licensee desires to establish a private satellite/microwave network for
communication among its headquarters, branch offices and store facilities,
including the Premises, and/or for private music programming within the
Premises, and Licensor is agreeable thereto as herein provided.
NOW, THEREFORE in consideration of the above and other valuable
consideration, the sufficiency which is hereby acknowledged, the parties hereto
agree as follows:
Licensor hereby grants to Licensee a license (hereinafter "License") for
the following only: to install, operate, maintain, repair, and remove
(hereinafter collectively "Licensed Work") the Equipment (as hereinafter
defined) on the terms and conditions hereinafter set forth.
1. All terms not defined herein shall have the meaning ascribed to them
in the Lease. This License shall be coterminous with the Lease.
2. Law shall mean all laws, statutes, ordinances, rules, regulations,
codes, decrees, orders and other such requirements of all federal, state,
county, municipal and local governments and governmental agencies having
jurisdiction over the Shopping Center. Insurance Requirements shall mean all
requirements of any insurance policy covering or applicable to all or any part
of the Shopping Center and all orders, regulations and other requirements of a
local or national insurance board and any state or local insurance body having
jurisdiction of all or any part of the Shopping Center.
3. Except as may be expressly provided otherwise herein, the exercise of
all rights and the fulfillment of all obligations of Licensee hereunder shall
be at Licensee's sole cost and expense.
4. Licensee shall submit to Licensor's Asset Management Department for
Licensor's prior written approval plans and specifications ("Plans and
Specifications") in scope and detail reasonably satisfactory to Licensor,
depicting all equipment (hereinafter "Equipment") including antenna, supports,
mountings, connection to building electrical and other systems, conduit, and
cables and wiring which may be installed on the exterior of the building
(hereinafter "Building") of which the Premises are a part, and the size, weight,
materials, and location of Equipment which Licensee desires to install. The
antenna and all supports, mountings and connections therefor and all
installations on the roof are hereinafter collectively referred to as the
"Antenna". The Antenna mount shall be of a non-penetrating type. The Antenna
shall not be visible from any location in the parking areas of the Shopping
Center without Landlord's prior written consent, Licensee shall obtain, upon
Licensor's request, the written opinion, a copy of which shall be delivered to
Licensor together with Licensee's plans and specifications, of a structural
engineer of Tenant's choice reasonably acceptable to Landlord certifying that no
adverse effect will result to the roof or the Building structure, from the
Equipment, the Antenna or the Licensed Work. The Equipment, the Antenna and/or
the Licensed Work shall not cause any interference in Licensor's reasonable
judgment, with the operation of the Shopping Center, or with the Building
systems. Any roof penetration shall only be done by Licensor's approved roof
contractor and shall not violate the Building roof warranty in any way.
5. The Equipment, the Antenna, the Licensed Work and any other matter
pertaining to the Equipment and/or Antenna shall comply at all times during the
term of this License with Law and Insurance Requirements. Irrespective of the
adequacy of said insurance, Licensee shall indemnify and save Licensor harmless
from all liability for injury or damage to any person(s), firm(s),
corporation(s) or properly occurring on or about the Premises or any part
thereof by Licensee, its agents, subtenants, or assignees (including all costs,
expenses, court reporter fees, expert fees, and attorney fees incurred by
Licensor in defense of any such claims), except for injury or damage resulting
from Licensor's negligence or willful misconduct or that of its employees,
agents or contractors. Licensee shall obtain at its expense and furnish to
Licensor copies of all permits and approvals required for such compliance
prior to the initial installation of the Equipment and immediately upon
obtaining any renewals thereof. Licensor assumes no responsibility for the
Equipment. Antenna and/or Licensed Work. Licensee is solely responsible for the
Licensed Work, Equipment and Antenna.
6. Approval by Licensor of Licensee's Plans and Specifications shall not
constitute a representation of or assumption of responsibility by Licensor for
compliance with Law and/or Insurance Requirements or for the accuracy or
sufficiency of such Plans and Specifications. Licensor makes no representation
that the Equipment will be able to receive or transmit communication signals
without interference or disturbances, whether or not by reason of the
installation or use similar equipment by others on the roof, and Licensee
agrees that Licensor shall not be liable therefor except for that resulting
from Licensor's willful misconduct or that of its employees or agents or
contractors. Licensee recognizes that others may have rights to use similar
equipment on the roof of the
<PAGE> 48
Building. Licensor agrees that it will use reasonable efforts to have such
others cooperate with Licensee in the event of interference or disturbance.
7. The Equipment shall be used only by Licensee for transmitting and
receiving sales, inventory and other internal operational data of Licensee, and
for music for internal sound systems. Licensee shall not use or permit the use
of the Equipment by any other party or for any other purpose.
8. Licensee will not perform in whole or in part any Licensed Work
without Licensor's prior written consent, not to be unreasonably withheld,
which consent may be given by Licensor's Mall Manager. Licensee shall, at least
ten (10) working days prior to the commencement of any Licensed Work, notify
Licensor in writing of the names and identities of the persons who are
authorized by Licensee to perform such Licensed Work. All such Licensed Work
shall be performed during Mall office hours and shall be subject to such
reasonable rules and regulations as are established by Licensor's property
management from time to time.
9. Promptly upon Licensor's request, at Licensor's discretion, Licensee
shall relocate the Equipment and/or Antenna to another location on the roof as
designated by Licensor, or, if no relocation space is available, then Licensee
shall remove the Equipment and/or Antenna. In the event Licensee fails to so
relocate or remove said Equipment and/or Antenna, Licensor may do so (but shall
not be obligated to do so) at Licensee's expense and thereupon Licensee shall
reimburse Licensor one hundred ten percent (110%) of the reasonable
out-of-pocket costs so incurred. It is expressly agreed that such removal or
relocation shall not be deemed a constructive eviction or a breach of any
covenant, express or implied, of Landlord under the Lease, or grounds for any
abatement of rent or additional rent under the Lease.
10. The Equipment and Antenna are and shall remain the property of
Licensee, and the provisions of Article 6.1, of the Lease, shall apply to the
Equipment and Antenna with the same force and effect as though fully set forth
herein with Licensor and Licensee being substituted for Landlord and Tenant.
All provisions of the Lease relating to mechanics or materialmen's liens shall
apply to this Agreement as though fully set forth herein.
11. Licensee shall be liable for any and all damages, loss, cost or
expense, resulting from the installation, maintenance and operation of the
Equipment and/or Antenna, except for damage, loss, cost or expense resulting
from Licensor's negligence or willful misconduct or that of its employees,
agents or contractors. Licensor, its employees and agents, shall not leave any
obligation with respect to the Equipment and/or Antenna, nor shall Licensor,
its employees or agents, be responsible for any damage that may be caused to
Licensee or the Equipment and/or Antenna by any third party. Licensee shall
bear the expense of repairing any damage to the roof of the building or to the
Building resulting from the Equipment, Antenna and/or the Licensed Work, except
for damage, loss, cost or expense resulting from Licensor's negligence or
willful misconduct or that of its employees, agents, or contractors.
12. Licensee shall work in good faith to take such reasonable steps as
are necessary to eliminate such interference upon notification by Licensor of
any interference, whether physical, electronic, or electromagnetic, by or
coming from the Equipment with the use of any other occupants' radio,
television, microwave, electromagnetic, or electronic transmission or receiving
equipment at the Building. If the interference has not been eliminated pursuant
to the foregoing sentence and in the event such interference cannot be
eliminated within thirty (30) days after Licensor's notification thereof to
Licensee, Licensee agrees to remove the Equipment and Antenna from the Premises
and this Licensee shall terminate without further obligation on either party
except as may be specifically enumerated herein.
13. Default. The failure of Licensee to perform or fulfill any obligation
on its part under this License shall be a default. In the event of a default by
Licensee, Licensor shall have the right, at its election, to terminate the
License upon five (5) days' written notice to Licensee. All of Licensor's
remedies hereunder shall be cumulative and shall be in addition to all rights
and remedies Licensor may have at law and in equity. Licensee shall pay
reasonable attorney's fees, court costs and filing fees incurred by Licensor in
enforcing this License.
14. Licensor shall be responsible for declarations of payment of any
applicable taxes or assessments against the Premises. Licensee shall be
responsible for the declaration and payment of any applicable taxes against
Licensee's personal property, including but not limited to any sales or use
taxes assessed against Licensee's Equipment and/or Antenna.
15. It is agreed that Licensor shall not be liable to Licensee for
damages caused by acts of God, or other acts beyond the control of Licensor
("Force Majeure"), although Licensor shall exercise due diligence to restore
services and facilities regardless of the nature of such cause. Licensee agrees
not to seek from Licensor consequential damages that may arise as a result from
the interruption to service due to such events of Force Majeure.
16. This License Agreement may not be assigned by Licensee without the
prior written consent of Licensor. In the event this License Agreement is
assigned by Licensee upon the terms and conditions set forth, Licensee shall
remain fully liable for any default occurring on the part of any assignee of
Licensee, unless Licensee is released from liability pursuant to the terms of
the Lease.
17. Any notice required or permitted hereunder shall be sent via
certified mail, return receipt requested or by a nationally recognized
overnight courier service and addressed in the following manner. Licensor or
Licensee may from time to time designate any other address for this purpose by
written notice to the other party.
-2-
<PAGE> 49
Licensor Licensee
Peabody Place Centre, L.P. Silicon Entertainment, Inc.
c/o Belz Enterprises 210 Hacienda Avenue
100 Peabody Place, Suite 1400 Campbell, CA 95008
Memphis, Tennessee 38103
ATTENTION: Ronald A. Belz
With a Copy to:
Rick S. Kirkbride, Esq.
Paul, Hostings, Janofsky & Walker, LLP
555 South Flower Street
Los Angeles, CA 90071-2371
18. Upon the termination and/or expiration of this License Agreement,
Licensee will remove all of its personal property, including without limitation
its Equipment and Antenna from the Premises and restore the Premises in its
condition as of the execution due of this License Agreement, ordinary wear and
tear excepted.
19. This Agreement may be amended only in writing signed on behalf of
both parties.
20. This Agreement constitutes the entire agreement and understanding
between the parties and no representatives, inducements, promises, agreements
or otherwise between the parties not embodied herein shall be of any force or
effect.
21. This Agreement shall be interpreted under the laws of the State of
Tennessee. Any section brought in relation to this Agreement shall be brought
in a court in Memphis, Shelby County, Tennessee and the parties agree that such
a court has personal jurisdiction over the parties and that such a court is the
proper venue for any such action.
22. Should any portion of this Agreement be deemed by a court to be
invalid, the remainder of the Agreement shall be valid and in full force and
effect.
23. This Agreement may be executed in one or more counterparts by each of
the parties hereto, each of which shall be deemed an original and all of which
together shall constitute one agreement.
24. In the event either party incurs attorneys' fees, court costs or
other reasonable expenses in order to enforce the provisions of this Agreement,
the losing party shall reimburse the prevailing party for such attorneys' fees
court costs or other reasonable expenses.
IN WITNESS WHEREOF: the parties have hereunto set their hands and seals on
the date first above written.
LICENSOR LICENSEE:
PEABODY PLACE CENTRE, L.P. SILICON ENTERTAINMENT, INC.
By: Peabody Place, Inc., General Partner
By: /s/ MORRIS I. THOMAS By: /s/ [ILLEGIBLE]
------------------------------------ ------------------------
Morris I. Thomas, Vice President
By: /s/ JACK A. BELZ
------------------------------------
Jack A. Belz, President
HOTEL PEABODY, L.P.
By: Perim Corp., General Partner
By: /s/ JIMMIE D. WILLIAMS
------------------------------------
Jimmie D. Williams, Senior Vice President
-3-
<PAGE> 1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED
ON A REQUEST FOR CONFIDENTIAL TREATMENT.
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
EXHIBIT 10.22
STANDARD
SHOPPING CENTER LEASE
NAME OF SHOPPING CENTER: CAROUSEL CENTER
LOCATION OF SHOPPING CENTER: 320 HIAWATHA BOULEVARD
SYRACUSE, NEW YORK
LANDLORD: CAROUSEL CENTER COMPANY, L.P.
TENANT: SILICON ENTERTAINMENT, INC.
D/B/A: NASCAR SILICON MOTOR SPEEDWAY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I ................................................................. 2
Premises ............................................................... 2
1.01 - Premises ................................................... 2
1.02 - Shopping Center ............................................ 2
1.03 - Use of Premises and Trade Name ............................. 2
ARTICLE 2 ......................................................... 3
Term of Lease ..................................................... 3
2.01 - Commencement of Term ....................................... 3
2.02 - Term of Lease .............................................. 3
2.03 - Expiration of Term ......................................... 3
2.04 - Surrender of Premises ...................................... 3
ARTICLE 3 ......................................................... 4
Rent .............................................................. 4
3.01 - Minimum Rent ............................................... 4
3.02 - Percentage Rent ............................................ 4
3.03 - Gross Receipts Defined ..................................... 5
3.04 - Tenant's Books and Records ................................. 6
3.05 - Reports by Tenant .......................................... 6
3.06 - Non-Waiver ................................................. 6
3.07 - Right to Examine and Audit Books and Records ............... 6
3.08 - Delinquent Payments ........................................ 7
3.09 - Additional Rent ............................................ 7
3.10 - Definition of Lease Year and Partial Lease Year ............ 7
3.11 - Place for Payments ......................................... 7
ARTICLE 4 ................................................................. 7
Taxes .................................................................. 7
4.01 - Real Property Taxes ........................................ 7
4.02 - Tenant's Taxes ............................................. 8
ARTICLE 5 ................................................................. 8
Construction and Financing ............................................. 8
5.01 - Landlord's Work ............................................ 8
5.02 - Tenant's Work .............................................. 8
5.03 - Payment .................................................... 9
5.04 - Financing .................................................. 9
ARTICLE 6 ................................................................. 9
Conduct of Business by Tenant .......................................... 9
6.01 - Use of Premises and Trade Name ............................. 9
6.02 - Tenant's Operating Covenant ................................ 9
6.03 - Competition ................................................ 10
6.04 - Other Business Practices ................................... 10
6.05 - Marketing Fund ............................................. 12
ARTICLE 7 ................................................................. 12
Common Areas and Operating Costs ....................................... 12
7.01 - Definition ................................................. 12
7.02 - Development of Common Areas ................................ 12
7.03 - Use of Common Areas ........................................ 12
7.04 - Common Area Costs .......................................... 13
7.05 - Adjustment to Payment ...................................... 13
7.06 - Payment of Extraordinary Common Area Costs ................. 13
ARTICLE 8 ................................................................. 13
Energy, Utility and Sprinkler Costs .................................... 13
8.01 - Energy and Utility Charges ................................. 13
8.02 - Intentionally deleted ...................................... 15
8.03 - Intentionally deleted ...................................... 15
8.04 - Miscellaneous Utility Provisions ........................... 15
8.05 - Periodic Adjustment ........................................ 15
ARTICLE 9 ................................................................. 15
Fixtures, Alterations, Signs ........................................... 15
9.01 - Installation By Tenant ..................................... 15
9.02 - Removal and Restoration by Tenant .......................... 15
9.03 - Signs, Awnings and Canopies ................................ 16
9.04 - Condition of the Premises .................................. 16
ARTICLE 10 ................................................................ 16
Repairs and Maintenance ................................................ 16
10.01 - Landlord's Obligation to Repair ........................... 16
10.02 - Tenant's Obligation to Repair ............................. 16
10.03 - Article Not Applicable to Fire or Condemnation ............ 17
ARTICLE 11 ................................................................ 17
Indemnity .............................................................. 17
11.01 - Indemnity ................................................. 17
ARTICLE 12 ................................................................ 17
Insurance .............................................................. 17
12.01 - Liability Insurance ....................................... 17
12.02 - Special Causes of Loss and Difference in Conditions
Insurance ................................................. 15
12.03 - Insurance on Common Areas ................................. l5
12.04 - Increase in Fire Insurance Premium ........................ 18
12.05 - Tenant to Share Insurance Costs ........................... 18
12.06 - Waiver of Subrogation ..................................... 18
12.07 - Policies .................................................. 18
ARTICLE 13 ................................................................ 19
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Damage by Fire, Etc. ................................................... 19
13.01 - Restoration of Premises ................................... 19
13.02 - Restoration During Last Three Years ....................... 19
13.03 - Tenant's Obligation Upon Restoration ...................... 19
ARTICLE 14 ................................................................ 19
Eminent Domain ......................................................... 19
14.01 - Eminent Domain ............................................ 19
14.02 - Landlord Entitled to Award ................................ 20
ARTICLE 15 ................................................................ 20
Bankruptcy and Default Provisions ...................................... 20
15.01 - Events of Default and Conditional Limitation .............. 20
15.02 - Landlord's Remedies ....................................... 21
ARTICLE 16 ................................................................ 22
Mechanics' Liens ....................................................... 22
16.01 - Mechanics' Liens .......................................... 22
ARTICLE 17 ................................................................ 22
Assignments, Subleases and Other Transfers of Tenant's Interest ........ 22
17.01 - Limitations on Tenant's Rights ............................ 22
17.02 - Effect of Landlord's Consent .............................. 24
ARTICLE 18 ................................................................ 24
Compliance with Government Orders ...................................... 24
18.01 - Tenant to Comply .......................................... 24
18.02 - Failure to Comply ......................................... 24
18.03 - Hazardous Material ........................................ 25
18.04 - Americans With Disabilities Act ........................... 25
ARTICLE 19 ................................................................ 25
Subordination, Mortgagee's Rights and Assignment of Rents .............. 25
19.01 - Subordination ............................................. 25
19.02 - Mortgagee's Rights ........................................ 25
19.03 - Assignment of Rents ....................................... 26
ARTICLE 20 ................................................................ 26
Entry to Premises ...................................................... 26
20.01 - Entry to Premises by Landlord ............................. 26
ARTICLE 21 ................................................................ 26
Notices and Certificates ............................................... 26
21.01 - Notices ................................................... 26
21.02 - Estoppel Certificate of Landlord .......................... 27
21.03 - Estoppel Certificate of Tenant ............................ 27
ARTICLE 22 ................................................................ 27
Covenant of Quiet Enjoyment ............................................ 27
22.01 - Covenant of Quiet Enjoyment ............................... 27
ARTICLE 23 ................................................................ 28
Miscellaneous Provisions ............................................... 28
23.01 - Holdover .................................................. 28
23.02 - Limitation on Landlord's Personal Liability ............... 28
23.03 - Definition of Tenant's Allocable Share .................... 28
23.04 - Force Majeure ............................................. 28
23.05 - Relocation of Tenant ...................................... 29
23.06 - Changes and Additions ..................................... 29
23.07 - Attornment by Tenant ...................................... 29
23.08 - Index ..................................................... 29
23.09 - Survival of Tenant's Obligations .......................... 29
23.10 - Effect of Landlord's Notice to Terminate .................. 29
23.11 - Effect of Captions ........................................ 30
23.12 - Tenant Authorized to Do Business .......................... 30
23.13 - Execution in Counterparts ................................. 30
23.14 - Law Governing, Effect and Gender .......................... 30
23.15 - Memorandum or Notice of Lease ............................. 30
23.16 - Complete Agreement ........................................ 30
23.17 - Guaranty of Lease ......................................... 30
23.18 - Arbitration ............................................... 30
23.19 - Security Agreement ........................................ 30
23.20 - Invalidity of Particular Provisions ....................... 30
23.21 - Execution of Lease by Landlord ............................ 31
23.22 - Relationship of the Parties ............................... 31
23.23 - Brokers ................................................... 31
23.24 - Representations ........................................... 31
23.25 - Abatement ................................................. 31
23.26 - Special Use Permit ........................................ 31
23.27 - Allowance or Abatement of Rent ............................ 31
</TABLE>
ii
<PAGE> 4
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
DEFINED TERM SECTION
<S> <C>
Additional Rent .................................................... 3.09
Anchor Store ....................................................... 23.03(c)
Common Areas ....................................................... 7.01
Common Area Costs .................................................. 7.04(b)
Energy Charges ..................................................... 8.01(b)
Fixed Annual Minimum Rent .......................................... 3.01(a)
Fixed Monthly Minimum Rent ......................................... 3.01(a)
Gross Receipts ..................................................... 3.03
Hazardous Material ................................................. 18.03
Landlord ........................................................... 23.02(b)
Lease Year ......................................................... 3.10
Major Store ........................................................ 23.03(c)
Partial Lease Year ................................................. 3.10
Percentage Rent .................................................... 3.02(a)
Premises ........................................................... 1.01
Real Property Taxes ................................................ 4.01
Square Feet ........................................................ 23.03(c)
Tenant's Allocable Share ........................................... 23.03
Term Commencement Date ............................................. 2.01
</TABLE>
iii
<PAGE> 5
SHOPPING CENTER LEASE
AGREEMENT made this 18 day of AUGUST, 1999, by and between the following
parties:
Landlord: CAROUSEL CENTER COMPANY, L.P.
a limited partnership organized and existing under the laws of the State of New
York with its mailing address for notices and a principal office at:
THE CLINTON EXCHANGE
FOUR CLINTON SQUARE
SYRACUSE, NEW YORK 13202-1078
Attention: MANAGEMENT DIVISION
hereinafter referred to as "Landlord," and
Tenant: SILICON ENTERTAINMENT, INC. d/b/a NASCAR SILICON MOTOR SPEEDWAY
a corporation organized and existing under the laws of the State of California
with its mailing address for notices and principal office or residence at:
210 Hacienda Avenue
- -------------------
(Street Address)
Campbell California 95008
- ----------------------------------------------------------
(City or Town) (County) (State) (ZIP)
Attention: President
hereinafter referred to as "Tenant."
Tenant's Federal Tax Identification or Social Security Number: 77-0389433.
1
<PAGE> 6
ARTICLE I
PREMISES
1.01 - PREMISES
(a) Landlord hereby demises and leases to Tenant and Tenant hereby rents
from Landlord those certain premises (Premises") hereinafter described and
located in Carousel Center ("Shopping Center"), which is located in the City of
Syracuse, County of Onondaga, and State of Now York. The Premises consist of
approximately 4,597 square feet. The Premises are shown cross-hatched on the
plan attached hereto and made a part hereof as Exhibit A-1. The Premises shall
not be deemed to include either the land lying thereunder or the exterior walls
or roof of the building in which said Premises are located or any area beyond
the midpoint of any interior wall. Landlord reserves the use of said land, walls
and roof of the building, together with the right to install, maintain, use,
repair and replace pipes, ducts, conduits, wires and structural elements leading
through the non-sales area of the Premises in locations which will not
materially interfere with Tenant's use of the Promises. Any such installation,
maintenance, use, repair or replacement, if approved by Tenant, shall be
performed by Landlord In such a manner as to avoid unreasonably interfering with
Tenant's business operations in the Premises.
(b) Within sixty (60) days after Landlord's delivery of possession to
Tenant pursuant to the terms of this Lease, Tenant may, at its sole cost and
expense, have the size of the Premises verified by an independent architect of
Tenant's choice. For purposes of this verification, the square footage of the
Premises shall be measured from the midpoints of any interior walls shared in
common with another tenant, and from the outside face of any exterior walls of
the buildings. In the event that such verification reveals a discrepancy between
the measured size of the Premises and the size of the Premises set forth in
Section 1.01 (a) of this Lease, and Landlord and Tenant are unable to agree upon
the square footage for purposes of this Lease, an independent architect
acceptable to Landlord and Tenant (the cost of which shall be divided equally
between Landlord and Tenant) shall measure the Premises in the manner set forth
above. In the event that Tenant's architect, Landlord or its architect, and the
independent architect are unable to agree upon the square footage of the
Premises for purposes of this Lease, the dispute shall be submitted to
arbitration pursuant to Section 23.18 hereof. In the event the square footage of
the Premises as determined in accordance with the methodology set forth in this
Section 1.01 (b) varies from the square footage set forth in Section 1.01(a)
above, Landlord and Tenant agree to execute a lease modification agreement
(effective retroactive to the Term Commencement Date) adjusting the square
footage of the Premises, and appropriately adjusting the Rent, and those items
of Additional Rent to the extent that such Additional Rent was originally
calculated on a pro rata square foot basis. Any necessary payments or
reimbursements shall be paid within thirty (30) days after the full execution of
the lease modification agreement.
1.02 - SHOPPING CENTER
The Shopping Center includes: (i) the parcel(s) of land and improvements
hereinafter referred to as "Landlord's Tract" generally depicted on Exhibit A
attached hereto and made a part hereof, whether owned in fee or ground leased by
Landlord and (ii) the parcel(s) of land and improvements, if any, generally
depicted on Exhibit A as "REA Parcel" made available for use by any reciprocal
construction operating and easement agreement ("REA"). Landlord reserves the
right to add to or sever the ownership of or title to any portion of the
Shopping Center or to add to or reduce the size of any REA Parcel at any time.
Landlord represents and warrants that it has the right and authority to lease
the Promises. It is agreed that the depiction of the Shopping Center on Exhibit
A does not constitute a representation, covenant or warranty of any kind by
Landlord. Subject to Section 7.03 of this Lease, Landlord. in its sole and
absolute discretion, reserves the right to expand or remodel the Shopping Center
and to change the configuration, size and dimensions of the Shopping Center, the
number, location and dimensions of buildings, parking areas, driveways,
entrances, exits and landscaped areas, the number of floors in any of the
buildings, the dimensions, identity, and type of stores or tenancies, and, as
provided in Section 7.02, the "Common Areas" (defined in Section 7.01).
1.03 - USE OF PREMISES AND TRADE NAME
Throughout the Term, Tenant shall operate the Premises solely under the
trade name "NASCAR Silicon Motor Speedway" or "Silicon Motor Speedway" or, with
Landlord's approval, not to be unreasonably withheld, any other legally
permitted trade name ("Trade Name"); provided that if the trade name of all or
substantially all other stores operating under the trade name "NASCAR Silicon
Motor Speedway" or "Silicon Motor Speedway" are changed to another legally
permissible trade name, Tenant, upon prior written notice to Landlord, shall be
permitted to change its Trade Name to such other trade name as has been adopted
for all or substantially all such other stores. Tenant shall use the entire
Premises solely for the purpose(s) of: (a) as a primary use, conducting an
interactive entertainment center featuring among other things the installation
and operation of motion-based racing simulators and (b) ancillary thereto, other
related retail and entertainment uses; such uses may include but shall not be
limited to the sale of motor sports and auto racing merchandise, including
NASCAR Silicon Motor Speedway merchandise, NASCAR driver merchandise and other
entertainment merchandise related to NASCAR or motor sports (including, without
limitation, NASCAR videos, pictures, CD-Roms, DVDs, and other similar media or
audio/visual materials); the sale of hot and cold beverage and snack foods, and
for no other purpose whatsoever. Tenant shall use its reasonable efforts not to
place any food vending machines or other food sales area at the store front of
the Premises. Anything contained in this Lease to the contrary notwithstanding,
throughout the Term Tenant shall limit the display of merchandise and food or
beverage items to no more than [***] of the square footage of the Premises.
Landlord hereby represents and warrants to Tenant that Tenant's use of the
Premises as contemplated in this paragraph does not violate any exclusivity
clause or other agreement between Landlord and any other party, including any
other Tenant of the Shopping Center, and Landlord shall indemnify, defend,
protect, and hold harmless Tenant from any loss, liability, cost, expense,
judgment, action or claim of any such party arising from the inaccuracy of such
representation and warranty. Anything contained in this Lease to the contrary
notwithstanding, Landlord's consent shall not be unreasonably withheld for any
change or addition to Tenant's permitted use requested in writing by Tenant.
Tenant hereby agrees that the criteria which Landlord may use in determining
whether or not to grant such consent shall include, but not be limited to, (i)
the impact such change or addition may have on the tenant mix of the Shopping
Center, (ii) whether such change or addition violates any use restriction
applicable to the Shopping Center, or (iii) the compatibility such change or
addition may have with a first-class super-regional shopping center.
*** Confidential treatment requested.
2
<PAGE> 7
Notwithstanding anything to the contrary in this Section 1.03 of this
Lease, Tenant shall be entitled to use the Premises from time to time for
conducting the uses set forth in this Section 1.03 for the exclusive use of
groups of private parties ("Private Events"). Tenant may while such Private
Events are in progress, temporarily restrict access by the general public to
Tenant's simulator rides, provided that the Tenant shall otherwise remain open
to the general public for the sale of merchandise and the sale of simulator ride
tickets for redemption by the public after any Private Event is concluded. Gross
Receipts in connection with Private Events shall be included in Gross Receipts
for purposes of calculating Percentage Rent. In connection with Private Events,
Tenant may serve, or hire another party to serve, food and beverages (including
alcoholic beverages) for on-premises consumption only, provided that Tenant
obtains or causes to be obtained, if necessary, all governmental licenses,
approvals and permits required in connection therewith and in the case of
offering of any alcoholic beverages for consumption within the Premises, Dram
Shop or liquor liability insurance coverage. For the preparation and serving of
food and alcoholic beverages at Private Events, Tenant shall engage, and cause
third parties to use, restaurants and food establishments located within the
Shopping Center ("Center Caterer"), provided that up to ten percent (10%) of the
total number of Private Events held during a Lease Year may be catered by
non-Center Caterers and provided, further, that Tenant shall not be required to
use or cause to be used Center Caterers for Private Events within the Shopping
Center unless at the time of the related Private Event there are at least three
restaurants or other food and beverage vendors in the Shopping Center offering
catering services from the Shopping Center at prices equal to or less than the
then menu prices of such restaurant or vendor and two of three of such Center
Caterers are full service sit down restaurants and one of the three is either a
full service restaurant or a limited service restaurant, food court operator or
other food and beverage operator (such as by way of example and not limitation
Johnny Rockets, Pizzeria Uno, Kahunaville. Ruby Tuesday, Mozzarella's American
Cafe or Sbarros). In the event that Tenant shall be in default of the
immediately preceding sentence and a Private Event is conducted in whole or in
part by other than a Center Caterer, then, as liquidated damages and not as a
penalty, the retail value of food and beverage provided by such third party
shall be included in the amount of Gross Receipts used to compute Percentage
Rent payable under this Lease on merchandise sold from the Premises. Any Private
Events which are held at times when the requirements set forth in the provisos
above concerning Center Caterers are not met shall be excluded from the total
number of Private Events held during any Lease Year for purposes of calculating
the ten percent (10%) permissible number of Private Events catered by non-Center
Caterers as described above.
ARTICLE 2
TERM OF LEASE
2.01 - COMMENCEMENT OF TERM
(a) Landlord shall deliver possession of the Premises to Tenant with all
of Landlord's work, if any, substantially complete by September 1, 1999 and the
term of this Lease shall commence, subject to Section 23.04 below and other
delays caused solely by Landlord, on the earlier of: (1) December 1, 1999, or
(2) the date Tenant opens to the public for the conduct of its business in the
Premises (hereinafter called "Term Commencement Date"). In the event Landlord
does not deliver possession of the Premises to Tenant on or before March 1,
2000, then Tenant shall have the right to terminate this Lease upon written
notice to Landlord, which notice shall be given by March 2000. If Tenant does so
notify Landlord, then Landlord will reimburse Tenant for its reasonable
out-of-pocket costs actually incurred by Tenant as of the date of termination
including architectural, design and legal fees which shall not, in the
aggregate, exceed [***] and both Landlord and Tenant shall thereafter be
relieved of any further obligation and liability hereunder. If Tenant does not
so notify Landlord, then this right of termination shall be deemed waived.
(b) Tenant acknowledges the importance both to Landlord and the other
tenants of the Shopping Center of Tenant opening for business to the public on
the Term Commencement Date. In the event Tenant fails to open for business at
the Premises not later than forty-five (45) days after the Term Commencement
Date or, if the Term Commencement Date has been rescheduled by Landlord, not
later than forty-five (45) days after the rescheduled Term Commencement Date,
Tenant covenants and agrees to pay to Landlord, upon receipt of notice from
Landlord of the amount due under this Section 2.01(b), as liquidated damages
suffered by Landlord due to Tenant's failure to open, a sum (in addition to any
rent due hereunder) equal to [***] the per diem Fixed Monthly Minimum Rent
(using a thirty (30) day month) provided in Section 3.01(a) for each and every
business day that Tenant has failed to open for business.
2.02 - TERM OF LEASE
Subject to Section 2.03 below, the term of this Lease shall expire on
the tenth (10th) anniversary of the Term Commencement Date, unless earlier
terminated pursuant to the provisions herein (the last day of the term, whether
due to expiration or prior termination of this Lease may be referred to herein
as the "Termination Date").
2.03 - EXPIRATION OF TERM
If the term of this Lease would expire during the period October 1
through the last day of December, the parties agree that the term of this Lease
shall instead expire on the immediately succeeding January 31.
2.04 - SURRENDER OF PREMISES
On the Termination Date of this Lease, Tenant agrees, without necessity
of any notices from Landlord (statutory or otherwise), to surrender the Premises
in accordance with Article 9, and broom clean and in good order, repair and
condition, reasonable wear and tear and damage by fire or casualty excepted.
*** Confidential treatment requested.
3
<PAGE> 8
ARTICLE 3
RENT
3.01 - MINIMUM RENT
(a) Except as set forth in Section 23.25 below, Tenant agrees to pay
Landlord, without diminution, deduction or set-off whatsoever and without prior
notice or demand, and as fixed annual minimum rent ("Fixed Annual Minimum
Rent"), the sums set forth in Section 3.01(a) (i) and (ii) below payable in
equal consecutive monthly installments ("Fixed Monthly Minimum Rent") each in
advance upon the first day of each calendar month during the term hereof.
(i) From the Term Commencement Date through the end of the
[***] full month of the Lease term, Fixed Annual Minimum
Rent shall be [***] per square foot of the Premises, which
equals (subject to Section 1.01(b) of this Lease) [***],
payable in equal monthly installments of [***] each; and
(ii) From the first day of the [***] full month of the Lease
term through the end of the Lease term, Fixed Annual Minimum
Rent shall be [***] per square foot of the Premises, which
equals (subject to Section 1.01(b) of this Lease) [***].
payable in monthly installments of [***] each.
(b) If the term shall commence upon a day other than the first day of a
calendar month or if the term shall terminate upon a day other than the last day
of a calendar month, then Tenant shall pay, upon the Term Commencement Date, and
on the first day of the last calendar month, a pro rata portion of the Fixed
Monthly Minimum Rent for the first and last fractional calendar months of the
term.
3.02 - PERCENTAGE RENT
(a) In addition to Fixed Annual Minimum Rent, Tenant shall, in the
manner, upon the conditions and at the times hereinafter set forth, pay to
Landlord percentage rent ("Percentage Rent") equal to [***] of "Gross Receipts"
(defined in Section 3.03) in excess of [***] ("Annual Minimum Gross Receipts")
per "Lease Year" (defined in Section 3.10). Percentage Rent shall be payable as
hereinafter provided without any diminution, deduction or set-off whatsoever,
except as provided in Section 3.02(b), and without prior notice or demand.
(b) Percentage Rent, if any, shall be paid by Tenant to Landlord, in
quarter-annual installments computed on all Gross Receipts during each three (3)
month period of the term hereof (i.e., periods from January 1 through March 31;
April 1 through June 30; July 1 through September 30; and October 1 through
December 31 (each a "Quarter-Annual Period" and collectively the "Quarter-Annual
Periods")) in excess of [***] of Annual Minimum Gross Receipts then in effect.
Any Percentage Rent becoming due shall be payable on or before the applicable
January 15, April 15, July 15 and October 15 next following the applicable
quarter end of each Lease Year. In the event that the total of the quarterly
installments of Percentage Rent for any Lease Year does not equal the annual
Percentage Rent computed in accordance with the formula set forth in Subsection
3.02(a), then, on or before January 15 following each such Lease Year, Tenant
shall pay to Landlord any deficiency, or Landlord shall refund any overpayment
to Tenant within fifteen (15) days after receipt of Tenant's Annual Statement of
Gross Receipts.
(c) Notwithstanding anything contained in this Section 3.02 to the
contrary, the Percentage Rent for any Lease Year having less than twelve (12)
full months shall be based upon the Gross Receipts for the twelve (12) month
period immediately following the Commencement Date (as to the first Lease Year)
and for the twelve (12) month period immediately preceding the expiration or
earlier termination of the Lease (as to the final Lease Year). The Percentage
Rent due for such period shall be established by multiplying the Percentage Rent
which would have been due for such twelve (12) month period had the Gross
Receipts for such period been multiplied by the applicable percentage in this
Lease, by a fraction, the numerator of which is the number of days in such
partial Lease Year and the denominator of which is 365.
(d) Provided that Tenant is not in default under this Lease beyond any
applicable cure period and has been open and continuously operating its store in
the entire Premises from the Term Commencement Date through the last day of the
fifth (5th) Lease Year of the Initial Term (except for periods Tenant is not
able to be so open and operating as a result of force majeure, casualty, eminent
domain, or remodeling (provided Tenant is not closed as a result of remodeling
for more than five (5) days in the aggregate in any Lease Year)), then in the
event that Gross Receipts for the fourth (4th) and fifth (5th) Lease Year of the
Initial Term, when averaged, are less than [***], Tenant may, at its option,
elect to terminate this Lease by giving Landlord written notice thereof, which
notice shall be given not later than thirty (30) days after the last day of the
said fifth (5th) Lease Year. Time is of the essence with respect to the giving
of such notice. If Tenant timely gives Landlord such a notice of termination of
this Lease and the conditions for such termination as provided above in this
Section 3.02(d) have been satisfied, then this Lease shall automatically
terminate without any further action or notice by either party hereto, on the
date that is thirty (30) days after the date Landlord receives such notice of
termination; and from and after such date of termination, Tenant shall have no
further right, title or interest in or to the Premises. If Tenant does not
notify Landlord of its election to terminate this Lease in accordance with this
Section 3.02(d) or if the conditions for such termination as provided above in
this Section 3.02(d) have not been satisfied, then this Lease shall continue in
full force and effect in accordance with and subject to its terms, and Tenant
shall have no further right to terminate this Lease pursuant to this Section
3.02(d). If Tenant is not open and operating in the entire Premises continuously
throughout the said fifth (5th) Lease Year, as a result of force majeure,
casualty, eminent domain, remodeling or for any other reason, then for purposes
of determining whether Tenant has the right to terminate this Lease under this
Section 3.02(d), Tenant's Gross Receipts for any such period of time shall be
deemed
*** Confidential treatment requested.
4
<PAGE> 9
to be the Gross Receipts for the corresponding period of time in the first (1st)
Lease Year prior to the fifth (5th) Lease Year for which Tenant was open and
operating in the entire Premises during such corresponding period of time.
3.03 - GROSS RECEIPTS DEFINED
(a) The term "Gross Receipts" as used in this Lease is defined to mean
receipts from sales of products or services by Tenant exclusively at, in, on, or
from the Premises (including any sales made via personal computer, "Home
Shopping" television sales, catalog, direct mail telephone or electronic sales
at, in, on, or from the Premises) whether such sales be evidenced by check,
contract rights, credit, charge account, exchange or otherwise, and shall
include, but not be limited to, the amounts received from the sale or rental of
goods, wares and merchandise, and from fees and charges for the use by customers
of Tenant"s simulators and racing entertainment center, and for services
performed on or off the Promises to the extent relating to sales made from the
Premises, together with the amount of all orders taken or received at the
Premises, whether such orders are filled from the Premises or elsewhere, and
whether such sales are made by means of merchandise or other vending devices in
the Premises. Each charge or sale upon installment or credit shall be treated as
a sale for the full price in the month during which such charge or sale shall be
made, irrespective of the time when Tenant shall receive payment (whether full
or partial) therefor.
(b) Notwithstanding anything herein to the contrary the following shall
not be included in Gross Receipts:
(1) Sales of merchandise returned and claimed to be
defective or unsatisfactory, provided such sales have
been included in Gross Receipts and deducted from Gross
Receipts shall be the sales price of merchandise
returned by customers for exchange, provided that the
sales price of merchandise delivered to the customer in
exchange is included in Gross Receipts.
(2) The amount of any sales tax, so-called luxury taxes,
excise taxes, gross receipt taxes, entertainment taxes,
so-called "drop taxes" and other taxes now or hereafter
imposed upon the sale or value of merchandise or
services, whether added separately to the selling price
of merchandise or services and collected from customers
or included in the retail selling price use, imposed by
any federal, state, municipal or governmental authority
directly on sales and collected from customers;
provided, however, no franchise or capital stock tax and
no income or similar tax based upon income or profits as
such shall be deducted from Gross Receipts in any event
whatsoever.
(3) The sales price of merchandise returned and accepted for
full credit or the amount of the cash refund or
allowance made thereon.
(4) The sums and credits received in settlement of claims
for loss or damage to merchandise or other property
located at the Premises.
(5) The consideration received in connection with a sale of
inventory which occurs other than in the ordinary course
of Tenant"s business, including, but not limited to, a
sale in bulk or to a jobber, liquidator or assignee.
(6) Receipts from public telephones and vending machines
used exclusively by Tenant"s employees.
(7) Bankcard discounts (e.g., Visa, MasterCard, etc.),
interest, carrying charges, or other finance charges in
respect of sales made on credit, as well as any penalty
charged by Tenant for a returned check.
(8) Sales of fixtures, trade fixtures, or personal property
that are not merchandise held for sale at retail.
(9) The amount of any discounted sales to employees of
Tenant, not to exceed [***] of Gross Receipts in any
Lease Year; provided, however, that discounted or
complimentary use of Tenant"s games and entertainment
attractions (including, without limitation, the driving
simulators) by Tenant"s employees during such employees"
normal working hours shall not be included in Gross
Receipts.
(10) The amount of any discount in sales made to senior
citizens.
(11) Revenue received from mailing, alterations, delivery or
other services performed on a non-profit basis for the
benefit of customers.
(12) Tenant's accounts receivable, not to exceed [***] of
Gross Receipts in any Lease Year, which have been
determined to be uncollectible for federal income tax
purposes during the applicable Lease Year, provided
however, that if such accounts are actually collected in
a later Lease Year, the amount shall be included in
Gross Receipts for such later Lease Year.
(13) Amounts received for merchandise transferred to any
other place of business of Tenant (or its subtenants,
concessionaires and/or licensees) or to any business
organization affiliated with Tenant wherever located,
provided such merchandise is not used to fill a sale
made in, at, or from the Premises.
(14) The amount of any discounts given for promotional
coupons that are redeemed from time
*** Confidential treatment requested.
5
<PAGE> 10
to time.
(15) Gift certificates until such time as the certificates
are redeemed.
(16) Amounts received in connection with remote site
promotional activities.
(17) Promotional fees earned by Tenant with respect to goods
or services offered for sale.
(18) Rents, subrents or other consideration received in
connection with an assignment sublease, license,
concession or other transfer of any portion of the store
(however, Gross Receipts of any such transferee shall be
included), including license fees otherwise payable by
Tenant in connection with a third party license
agreement.
(19) To the extent they are not made at a profit to Tenant
sales passed through to caterers or other parties
providing services in connection with private parties
for Tenants customers at the Premises.
(c) In the event any portion of the Promises shall be operated by one or
more of Tenant's departments or divisions, or if Tenant shall, in accordance
with all of the terms, covenants, and conditions of this Lease, assign this
Lease or enter into any sublease, license, concession or other use or occupancy
agreement with respect to all or any part of the Premises, then there shall be
included in the Gross Receipts for the purpose of determining the Percentage
Rent payable under this Lease all of the Gross Receipts generated by such
departments or divisions, subtenants, assignees, licensees, concessionaires and
all such other persons, individuals and for entities (collectively referred to
as "Affiliates") generating such Gross Receipts, it being the intention of the
parties hereto that all Gross Receipts generated at or from the Premises shall
be included in Gross Receipts for the purpose of determining Percentage Rent as
defined herein. Tenant agrees that any assignment sublease, license or
concession, use or occupancy agreement entered into by Tenant with any
Affiliates shall contain provisions setting forth the procedure for determining,
recording and reporting Gross Receipts by Affiliates which are subject to the
review and approval of Landlord as being in conformance with this Section
3.03(c). Such provisions shall contractually obligate Affiliates to the same
procedures set forth in this Lease for determining, recording and reporting
Gross Receipts.
3.04 - TENANT'S BOOKS AND RECORDS
Tenant agrees to prepare and keep on the Premises or at its principal
office for a period of not less than three (3) years following the end of each
Lease Year, accurate books of account and records of daily Gross Receipts,
including without limitation all federal, state and local tax returns, and
copies of relevant contracts, checks, vouchers, inventory records, dated cash
register tapes, sales slips and such other documentation as would enable
Landlord to make a full and complete audit of Gross Receipts ("Books and
Records"), as more particularly set forth In Section 3.07 below. Tenant agrees
that all Gross Receipts shall be registered at the time each sale or transaction
is made In cash registers or other devices or other electronic or technology
based systems containing locked-in cumulation capacity, such systems to be
consistent with Tenant's normal business practices.
3.05 - REPORTS BY TENANT
Within twenty (20) days after the end of each Quarter-Annual Period as
set forth in Section 3.02 above, or a portion thereof, during the term of this
Lease, Tenant shall furnish to Landlord a written statement setting forth the
amount of Gross Receipts and an itemization of any deductions or exclusions
taken from Gross Receipts for such previous Quarter-Annual Period. Tenant also
agrees that it will furnish to Landlord within sixty (60) days after the end of
each Lease Year or Partial Lease Year, an annual statement, showing in all
reasonable detail the amount of Gross Receipts and an itemization of any
deductions or exclusions relating to such Lease Year or Partial Lease Year and
the amount of Percentage Rent due Landlord ("Actual Percentage Rent"). Each
Quarter-Annual and Annual statement required by this Section 3.05 shall be
certified by Tenant or one of Tenant's executive officers and shall be subject
to further certification as provided in Section 3.07.
In the event Tenant fails to furnish Landlord with a Quarter-Annual or
Annual statement within the required time period and within ten (10) days after
notice from Landlord, and in the manner set forth in this Section 3.05, then the
Gross Receipts for such Quarter-Annual Period or year, as the case may be,
shall, at Landlord's option, be deemed to be equal to Tenant's highest
previously reported quarterly or annual Gross Receipts, and if such failure
continues for ten (10) days following notice from Landlord, Tenant shall pay to
Landlord, as liquidated damages. the sum of [***] per month until such statement
is received. In addition, if Tenant is delinquent in furnishing Landlord with
the annual statement of Gross Receipts and such failure continues for ten (10)
days following notice from Landlord, the immediately following audit the
Landlord conducts pursuant to Section 3.07 below shall be at Tenant's expense.
3.06 - NON-WAIVER
The acceptance by Landlord of payments of Percentage Rent and statements
of Gross Receipts shall be without prejudice to Landlord's right to examine
Tenant's Books and Records in order to verify the amounts thereof.
3.07 - RIGHT TO EXAMINE AND AUDIT BOOKS AND RECORDS
At its option, Landlord may, during regular business hours and upon ten
(10) days' prior written notice to Tenant, examine the Books and Records or
cause a complete audit to be made of the Books and Records (including the books
and records of any subtenant, operator, concessionaire or licensee or of any
other store operated by Tenant within the [***] radius as more specifically set
forth in Section 6.03 of this Lease) for the period covered by any statement
required to be furnished by Tenant as set forth above; provided, however, any
such audit or examination shall be conducted in such a manner as to minimize any
interference with Tenant's business operations. In the event such examination
discloses that Tenant has intentionally or fraudulently understated Gross
Receipts by [***] or more, Tenant agrees to pay to Landlord the reasonable cost
of such examination
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and audit, plus a [***] administrative fee. In the event that such examination
or audit discloses that Tenant has understated Gross Receipts by [***] or more,
then, in addition to the foregoing, at Landlord's option, the term of this Lease
shall expire ten (10) days after Tenant's receipt of a termination notice from
Landlord. Any additional Percentage Rent found to be due and owing to Landlord
as a result of any examination or audit shall immediately be due and payable and
interest shall accrue on the unpaid portion thereof at a per annum rate
("Default Rate") equal to the lesser of (i) the maximum interest rate permitted
by law, or (ii) the prime rate of interest from time to time charged by
Citibank, N.A. (or its successors) to its most credit worthy corporate
borrowers, plus [***].
3.08 - DELINQUENT PAYMENTS
If during the term of this Lease Tenant fails to pay the full amount of
the Fixed Monthly Minimum Rent Percentage Rent or "Additional Rent" (defined in
Section 3.09) within five (5) days when the same was due and payable, then
interest at the Default Rate. shall accrue on the unpaid amount from and after
the date on which any such sum shall be due and payable, and such Interest,
together with a Late Charge of [***] for each past due payment to cover the
extra expense involved in handling such delinquency, shall be paid to Landlord
at the time of payment of the delinquent sum. Landlord shall have the right to
apply any payments made by Tenant first to any deficiency in the payment of the
interest and administrative charges provided for hereunder. Any payment to be
made by Tenant under this Lease shall be deemed to have been paid upon the date
that it is received by Landlord. The provision for a Late Charge and interest
herein shall not be deemed to grant Tenant any grace period or extension of time
or prevent Landlord from exercising its other rights under this Lease. Tenant
shall pay to Landlord an administrative fee of [***] for each and every check
submitted by Tenant which is dishonored. If Landlord receives from Tenant two or
more checks which have been dishonored, all checks from Tenant thereafter shall,
at Landlord's option, be either certified or cashier's checks.
3.09 - ADDITIONAL RENT
All rents, charges, costs, expenses, reimbursements, fees, interest, and
other payments to be made by Tenant to Landlord under this Lease, other than
Fixed Annual Minimum Rent and Percentage Rent, shall be deemed to be "Additional
Rent."
3.10 - DEFINITION OF LEASE YEAR AND PARTIAL LEASE YEAR
The term "Lease Year" is defined to mean a period of twelve (12)
consecutive calendar months commencing on the first day of January. Any portion
of the term which is less than a Lease Year shall be deemed a "Partial Lease
Year" and computations requiring proration shall be made on a per diem basis
using a 365 day year. In order to achieve uniformity in the operation of the
Shopping Center, Landlord reserves the right to designate and change the
beginning and ending day of the Lease Year, notice of which shall be given to
Tenant in writing: provided, however, no such change shall in any way increase
Tenant's obligations or reduce Tenant's rights hereunder.
3.11 - PLACE FOR PAYMENTS
Tenant shall deliver to Landlord all payments of Fixed Monthly Minimum
Rent, Percentage Rent and Additional Rent at the office of Landlord shown at the
beginning of this Lease or such other place as may be designated by Landlord in
writing.
Nothing contained in this Section 3.11 shall relieve Tenant of the
obligation to pay by the dates due, any and all such payments payable by Tenant
under this Lease.
ARTICLE 4
TAXES
4.01 - REAL PROPERTY TAXES
(a) Landlord will pay in the first instance all real property taxes
(which shall include property tax assessments, water and sewer rent rates and
charges, parking and environmental surcharges, and any other governmental
charges, general and special, ordinary and extraordinary) which may be levied or
assessed by any lawful authority against land or improvements located in the
Shopping Center (collectively "Real Property Taxes"). The amounts required to be
paid by Landlord or any tenant or occupant of the Shopping Center pursuant to
any Payment in Lieu of Tax Agreement entered into with a taxing authority having
jurisdiction over the Shopping Center shall be considered for the purposes of
this Lease to be included within the definition of Real Property Taxes.
(b) During the term of this Lease, Tenant shall pay to Landlord as
Additional Rent, Tenant's Allocable Share of all Real Property Taxes. Real
Property Taxes shall include a charge equal to eighteen percent (18%) of the
Real Property Taxes relating to the Common Areas. Tenant's Allocable Share shall
be computed under Section 23.03(b) as of the first day of each respective Lease
Year. If the Premises are separately assessed, then Tenant agrees to pay to
Landlord, as Additional Rent, the amount of the Real Property Taxes separately
assessed against the Premises including the land lying thereunder plus Tenant's
Allocable Share of the Real Property Taxes assessed against the Common Areas of
the Shopping Center.
(c) Tenant agrees that following the Term Commencement Date, Tenant
shall pay to Landlord, as Additional Rent and within thirty (30) days after
receipt of a bill therefor, the amount of Tenant's Allocable Share of all Real
Property Taxes, computed as of the Term Commencement Date for the then current
tax fiscal year(s). Such amount shall be calculated on the basis of the number
of days (from the Term Commencement Date) remaining in each such current tax
fiscal year. Thereafter, Tenant shall pay to Landlord, as Additional Rent, all
sums due pursuant to Section 4.01(b) in monthly installments, in advance and
without notice, on or before the first day of each month during the term of this
Lease, in an amount estimated by Landlord, such that Landlord will have received
the full
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amount of Tenant's Allocable Share of Real Property Taxes in time for payment
to applicable taxing authority when due. In the event Landlord is required to
escrow Real Property Taxes, Landlord may, but shall not be obligated to, use the
amount required to be escrowed as a basis for its estimate of the monthly
installments due from Tenant hereunder. Landlord shall furnish Tenant with a
written statement of the actual amount of Tenant's Allocable Share of Real
Property Taxes based upon the tax bills or assessment bills for each tax fiscal
year. If the total amount paid by Tenant under this Section 4.01(c) for any tax
fiscal year during the term of this Lease is less than the actual amount due
from Tenant for such year as shown on such statement, Tenant shall pay to
Landlord the deficiency within thirty (30) days after demand therefor by
Landlord. If the total amount paid by Tenant hereunder for any year exceeds the
amount due from Tenant for such year, Tenant shall be entitled to offset the
excess against payments next thereafter becoming due from Tenant under this
Section 4.01(c). For the tax fiscal years in which this Lease commences and
terminates, the provisions of this paragraph shall apply and, to the extent
necessary, Tenant's liability for its Allocable Share of any Real Property Taxes
for such year shall be subject to a pro rats adjustment based on the appropriate
number of days of said tax fiscal years. A copy of a tax bill or assessment bill
submitted by Landlord to Tenant shall at all times be sufficient evidence of the
amount of Real Property Taxes to which such bill relates.
(d) Intentionally deleted.
(e) Landlord may seek a reduction in the assessed valuation (for Real
Property Tax purposes) of the Shopping Center or any portion thereof by
administrative or legal proceeding. Tenant shall pay to Landlord Tenant's
Allocable Share of Landlords costs for said proceedings, including counsel fees,
appraisal fees and other similar expenses, within thirty (30) days after
Tenant's receipt of a statement from Landlord therefor. Tenant's Allocable Share
of such costs shall be computed under Section 23.03(b) hereof. Landlord shall
reimburse Tenant for Tenant's Allocable Share of any refund of Real Property
Taxes (after deducting any unpaid portion of Tenant's Allocable Share of
Landlord's costs for such proceedings) resulting from any proceeding for which
Tenant has paid Tenant's Allocable Share of Real Property Taxes.
(f) Should any alteration or improvement performed by or for Tenant
during the term of this Lease cause an increase in assessment, Tenant shall pay
to Landlord the full cost of all Real Property Taxes resulting from such
increase in assessment. Any amount paid separately hereunder by Tenant to
Landlord shall be in addition to any amounts paid by Tenant pursuant to Section
4.01(b).
(g) Should any governmental taxing authority acting under any present or
future law, ordinance or regulation, levy, assess or impose a tax, excise,
surcharge or assessment upon or against the rents payable by Tenant to Landlord,
or upon or against the Common Areas, whether by way of substitution for or in
addition to any existing Real Property Tax or otherwise, Tenant shall be
responsible for and shall pay Tenant's Allocable Share of such tax in the manner
provided in Section 4.01(c). Notwithstanding anything to the contrary in this
Section 4.01(g), Tenant shall not be responsible for payment of any income
taxes attributable to Landlord.
(h) Tenant's 1999 Real Property taxes will be calculated at $10.84 per
square foot of the Premises, which is based upon Landlord's actual 1999 PILOT
payment. Notwithstanding anything to the contrary in this Lease: increases in
Tenant's contributions for Real Property Taxes shall be limited to the actual
increases in Real Property Taxes as imposed by the taxing authorities.
4.02 - TENANT'S TAXES
Tenant shall, at all times, be responsible for and pay, before
delinquency, all municipal, county, state or federal taxes charged against
Tenants income, sales, fixtures, furnishings, equipment, stock-in-trade or other
personal property of any kind owned, installed or used in or on the Premises,
and any tax now or hereafter charged against Tenant on any other basis.
ARTICLE 5
CONSTRUCTION AND FINANCING
5.01 - LANDLORD'S WORK
Prior to the Term Commencement Date, Landlord shall perform all items of
"Landlord's Work." if any, described in Exhibit B attached hereto and made a
part hereof, in accordance with the Outline Specifications set forth in Exhibit
D attached hereto and made a part hereof. Tenant agrees to accept the Promises
in its "as is" condition on the date possession of the Premises is made
available to Tenant without any express or implied warranty concerning the
condition of the Premises by Landlord or its agents, and agrees, at its sole
cost and expense, to complete all improvements necessary to prepare the Premises
for the conduct of Tenant's business in the Premises In accordance with the
Outline Specifications set forth in Exhibit D. Tenant represents, warrants and
covenants that it shall build out the Premises in full conformance with plans
approved by Landlord or Tenant shall be deemed In default of this Lease. In the
event of such default, Landlord shall have the right to terminate this Lease, in
addition to all other rights and remedies available to Landlord under applicable
law or under this Lease. Any non-standard item of Landlord's Work requested by
Tenant or necessitated by Tenants location, space plans or business operation
shall be performed by Landlord at Tenant's additional cost, plus [***] for
profit and [***] for administration. Landlord hereby warrants to Tenant that to
Landlord's best knowledge the Premises do not contain any asbestos-containing
materials or other reportable amounts of hazardous or toxic materials.
5.02 - TENANT'S WORK
(a) Prior to the Term Commencement Date, Tenant, shall at its sole cost
and expense perform "Tenant's Work" described in Exhibit C attached hereto and
made a part hereof, in accordance with the Outline Specifications set forth in
Exhibit D. Any item of Tenant's Work which Tenant requests Landlord to perform
on the Tenant's behalf and which Landlord agrees to undertake shall be provided
to Tenant at Tenants additional cost, plus [***] for profit and [***] for
administration. Tenant acknowledges its ability to perform Tenant's Work, and no
delay in its performance shall cause or be deemed to cause any delay or
postponement in the Term Commencement Date. Tenant shall be responsible for
obtaining, at its sole cost and expense, any necessary
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permits, approvals or related consents which relate to Tenant's particular use
of the Premises or to Tenant's Work or any other work performed by Tenant
pursuant to this Lease, including any building permits required for the
construction of Tenant's Work. With respect to any permits, approvals or related
consents which relate to the Shopping Center in general and not to Tenant's
particular use of the Premises or to Tenant's Work or any other work performed
by Tenant pursuant to this Lease, Landlord and not Tenant shall be obligated
therefor. Landlord knows of no such mitigation, impact, or discretionary fees
related to the development of the Shopping Center in general which were deferred
by Landlord and would result in unexpected costs to Tenant. Tenant agrees that
its design plans and its operations shall take into account the [***] which may
affect adjacent tenants or the Common Areas. Accordingly, Tenant agrees that its
design plans shall incorporate such reasonable steps and procedures as are known
to Tenant or Tenant's contractors to eliminate or substantially reduce any [***]
that may be felt or heard outside of the Premises. These steps shall include:
i) [***] walls, floor, and ceiling construction;
ii) [***];
iii) [***] of all openings, cut-outs, and dissimilar surfaces.
For purposes of operational standards, Tenant [***] wall, floor and ceiling
construction such that noise emitted from the Premises will not exceed 65dbA
when measured from outside the Promises.
Tenant shall submit its Design Drawings to Landlord in compliance with Exhibit
"D". Upon Landlord's approval of Tenant's Design Drawings (as Tenant may agree
to modify such plans and specifications in response to Landlord's comments
thereto in accordance with the following sentence), then Landlord will be deemed
to have approved the measures taken by Tenant to minimize vibration and,
thereafter, Tenant shall not be in default under the Lease as a result of
vibration associated with the permitted use of the Premises.
In the event that Landlord and Tenant are unable to agree as to the
"reasonableness" of the steps and procedures requested by Landlord to [***],
the dispute shall be submitted to arbitration pursuant to Section 23.18 hereof
for a determination as to whether such steps are "reasonable".
(b) Tenant agrees to obtain and maintain, or to cause Tenant's
contractors to obtain and maintain, at Tenant's or Tenant's contractor's
expense, for so long as Tenant's Work continues, public liability insurance,
builder's risk property insurance covering Tenant's Work, and Workers'
Compensation insurance protecting from and against any and all liability for
death of or injury to persons or damage to property caused in or about the
Premises, or by reason of the construction of Tenant's Work. Tenant shall
furnish to Landlord certificates evidencing said coverage prior to the
commencement of Tenant's Work (see Exhibit D for further insurance
requirements).
5.03 - PAYMENT
Any payment to be made by Tenant to Landlord for items of Landlord's
Work to be completed by Landlord as provided in Section 5.01, or for any items
of Tenant's Work which Tenant requests Landlord to perform and which Landlord
agrees to undertake as provided in Section 5.02, shall be paid for by Tenant, as
Additional Rent, within [***] days after receipt of a bill therefor.
5.04 - FINANCING
(a) Intentionally deleted.
(b) Intentionally deleted.
(c) If Landlord can obtain approval of this Lease from a mortgagee for
the purposes of financing or refinancing only upon the basis of reasonable
modifications of terms and provisions of this Lease, then Tenant shall not
unreasonably withhold its consent thereto provided that such lease modifications
do not relate to those provisions pertaining to size or location of the
Premises, length of the term, or amount of Fixed Annual Minimum Rent, Percentage
Rent, Additional Rent, the Abatement or the Permitted Use and do not increase
Tenant's obligations or decrease Tenant's rights.
(d) Within fifteen (15) days of request by Landlord in connection with
any financing or sale of the Shopping Center, which request shall not be made
more than once per Lease Year, Tenant or any Guarantor shall provide to Landlord
a statement of Tenant's Gross Sales for the preceding period since the Term
Commencement Date.
ARTICLE 6
CONDUCT OF BUSINESS BY TENANT
6.01 - USE OF PREMISES AND TRADE NAME
Throughout the term, Tenant shall use the entire Premises solely for the
purpose as set forth in Section 1.03 and shall operate its store in the Premises
under the trade name set forth in Section 1.03. Tenant shall not use or permit,
or suffer the use of the Premises, or any part thereof, for any other business
or purpose or under any other trade name.
6.02 - TENANT'S OPERATING COVENANT
Subject to Section 23.04 below, Tenant shall occupy the Premises on and
after the Term Commencement Date and shall continuously operate its store in the
entire Premises during the full term of this Lease. Tenant shall operate the
Premises in a manner consistent with the majority of the other stores operated
by Tenant as of the date
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hereof under the same trade name and having the same or similar use as the use
as provided for In this Lease, and with due diligence and efficiency. Tenant
shall carry at all times in the Premises a stock of merchandise of a size,
character and quality as is in keeping with a first class regional shopping
center. Tenant shall use for office, storage, or other non-selling purposes only
such space as is reasonably required for the proper operation of Tenant's retail
business in the Premises. Tenant shall conduct its business in the Premises
during regular published Shopping Center hours of business (as of the date of
this Lease, those hours are Monday through Saturday, 10:00 am until 9:30 pm and
Sunday 11:30 am until 6:00 pm), which hours are subject to change at Landlord's
direction from time to time. Tenant acknowledges and agrees that the Shopping
Center's success is dependent upon the continued operation of Tenant's business,
and that the maintenance of the character and quality of the Shopping Center is
enhanced by the continued occupancy of the Premises and the regular conduct of
Tenant's business as required herein. In the event Tenant ceases operation prior
to the termination date set forth in Section 2.02, Landlord shall have the right
to obtain a court order for specific performance of the operating covenant as
set forth In this Section 6.02. If during any period Tenant shall fail to
operate the Premises provided herein, then after the second (2nd) such failure
in any Lease Year, Tenant shall pay as liquidated damages, as a reasonable
estimate of damages suffered by Landlord due to the loss of Percentage Rent, the
damage to the character and quality of the Shopping Center and other
non-quantifiable adverse effects caused by Tenant's failure to continually
operate, a sum equal to [***] of the Fixed Annual Minimum Rent for the portion
of the term during which such failure continues. The payment of such sums shall
not relieve Tenant of any of its obligations under this Lease. Tenant shall have
the right to enter the Premises at any time during the term of the Lease.
Notwithstanding anything to the contrary in this Section 6.02, Tenant shall be
permitted to be open for business until the later of (i) 2:00 a.m. or (ii) as
late as any other tenant located on the commons level of the Shopping Center is
permitted to be open without incurring any extra hours charge as set forth in
Section 7.06 below. Anything contained in this Lease to the contrary
notwithstanding, Tenant shall not be obligated to continuously operate from the
Premise during periods which (i) Tenant is carrying on remodeling activities,
provided prior Notice of such activities has been delivered to Landlord, (ii)
Tenant is closed for the taking of inventory (not to exceed four (4) days per
Lease Year), or (iii) Tenant's use and occupancy of the Premises is prohibited
by any law, ordinance, order or other act of any judicial, governmental or
quasi-governmental authority. Notwithstanding anything to the contrary in this
Section 6.02, to the extent that Landlord is obligated to do so according to
leases between Landlord and any theater in the Shopping Center, Landlord will
illuminate and secure the Common Areas and exterior parking areas which are
immediately adjacent to the Premises and the exterior entrance to the Shopping
Center which is nearest to the Premises. Landlord represents and warrants that
it currently has a lease with Hoyt's Cinemas Corporation which commenced on
October 15, 1990 and has an initial term of twenty-five (25) years and a
full-term operating covenant. In the event Landlord is not obligated by the
terms of its lease with any theater in the Shopping Center to illuminate and
secure said Common Areas and exterior parking areas after then-current published
Shopping Center hours of business, and Tenant requires such illumination and
security, then Tenant shall be obligated to pay, as Additional Rent and within
thirty (30) days after receipt of a bill therefor, its proportional share of the
costs associated with such after-hours illumination and security. Tenant's
proportional share of such costs shall be the product of multiplying the amount
of said costs by a fraction, the numerator of which is the number of square feet
of the Premises as set forth in Section 1.01, and the denominator of which is
the total number of square feet of premises occupied by any other tenant or
occupant of the Shopping Center which is also open and operating its business in
the Shopping Center during such additional hours as Tenant requires after-hours
illumination and security.
6.03 - COMPETITION
During the term of this Lease, Tenant shall not directly or indirectly,
without the prior written consent of Landlord, operate, manage, franchise,
license or have any interest in any other business located within a radius of
five (5) miles from the outside boundary of the Shopping Center, which business
is engaged in the same or substantially the same use as the use provided for in
this Lease; nor, if Tenant is a corporation, shall any then current officer or
director, or any then current shareholder owning more than ten percent (IO%) of
the issued and outstanding stock of Tenant, nor any entity that: (a) 50% or more
of which is owned by Tenant, or (b) owns 50% or more of Tenant, or (c) 50% or
more of which is owned by an entity that owns 50% or more of Tenant; or of any
then current officer, director or ten percent (10%) shareholder of Tenant), have
any such interest without the prior written consent of Landlord; nor, if Tenant
is a partnership, shall any then current partner or any member of the immediate
family of any then current partner have any such interest without prior written
consent of Landlord. If, during the first five years of the term, Tenant or any
such officer, director, shareholder, affiliate, partner or family member does
operate, manage, franchise, license or have any interest in any such business
without the prior written consent of Landlord, Landlord shall have the right, at
its option, as its sole and exclusive remedy, to obtain a court order for
specific performance of the operating covenant as set forth in Section 6.02 of
this Lease and, as liquidated damages and not as a penalty, to require that
gross receipts (defined as in Section 3.03 of this Lease, except that where
reference is made to the Premises, it shall in this case refer instead to the
location of such other business of Tenant or any such officer, director,
shareholder, affiliate, partner or family member as more specifically described
herein) resulting from such business shall be included in the amount of gross
receipts used to compute Percentage Rent hereunder. After the first [***] years
of the term, if Tenant or any such officer, director, shareholder, affiliate,
partner or family member does operate, manage or have any interest in any such
business without the prior written consent of Landlord, Landlord shall have the
right, at its option, in addition to all other rights and remedies to which
Landlord may avail itself pursuant to this Lease, to require, as liquidated
damages and not as a penalty, that [***] of gross receipts resulting
from such business shall be paid to Landlord. The prohibitions in this Section
6.03 shall extend to and expire on the termination date set forth in Section
2.02 hereof notwithstanding any earlier termination resulting from Tenant's
default hereunder.
6.04 - OTHER BUSINESS PRACTICES
(a) Tenant shall keep the Premises and all show windows and signs and
any loading area and other areas allocated for the sole use of Tenant in good,
neat and clean condition. Tenant shall keep the Premises and any service area
contiguous to or part of the Premises free of debris, rubbish, garbage, posts,
rodents and vermin caused by Tenant, and, upon two (2) days' written notice by
Landlord to Tenant of Tenant's failure to do so, Landlord may remove such
debris, snow and ice, rubbish, garbage, pests, rodents and vermin and charge
Tenant the reasonable out-of-pocket costs incurred by Landlord for such removal,
plus [***] for administration.
(b) Tenant shall keep its display windows stocked and electrically
lighted during such periods of time as may from time to time be required by
Landlord of substantially all other retail businesses in the Shopping Center.
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(c) Tenant shall load and unload its merchandise, equipment and supplies
and remove its rubbish only by way of the loading area and service doors
designated by Landlord for Tenant's use; provided, however, that Landlord will
not unreasonably withhold its consent to Tenant's use of the service doors or
loading dock available for common usage by tenants in the Shopping Center and
which is closest to the Premises.
(d) Tenant shall not knowingly and willfully commit nor permit any act
or practice which may tend to injure the building occupied by Tenant, nor permit
its equipment to be a nuisance to other tenants, nor keep goods, foods, rubbish,
inventory, or merchandise on or obstruct the mall area or sidewalks or other
areas outside the Premises, nor conduct or permit any fire, bankruptcy, auction
or going-out-of-business sale, nor erect or retain any sign, light, lettering,
inscription, symbol or mark which is not approved by Landlord, nor install any
antenna, fixture, or improvement outside of the Premises, nor sell or display
merchandise outside the Promises.
Notwithstanding the foregoing, Tenant shall be permitted to place
professionally generated signs, advertisements and decorations within the
Promises consistent with Tenant's other operations. Anything contained in this
Lease to the contrary notwithstanding, Tenant shall be permitted to install a
video wall or mounted video screen or panel within the Premises which may be
visible to customers from outside the Premises.
Notwithstanding anything contained in this Section 6.04 to the contrary,
subject to compliance with Legal Requirements and Landlord's prior written
reasonable approval of plans and specifications, and further provided that the
satellite dish and/or other electronic transmitter (in either case a "satellite
dish") and the screen or covering, if any, hereinafter described shall be for
the exclusive use of Tenant, shall not penetrate the roof unless otherwise
agreed in writing by Landlord, and shall not be visible from any part of the
Common Area or public roadways adjoining the Shopping Center and shall not
interfere in any material respect with access to the Building roof by any
others, Tenant shall have the right to install one (1) three foot (3') or
smaller satellite dish on the Building roof at the location designated by
Landlord. Tenant shall, if necessary and at its sole cost and expense, construct
a screen or other covering structure around the satellite dish to prevent
visibility from the Common Areas or public roadways adjoining the Shopping
Center. The cost of installation and maintenance of the satellite dish and
screen or other covering structure (including temporary removal thereof, if
required, in connection with any repairs or other work to the Building deemed
necessary or desirable by Landlord) shall be borne solely by Tenant. The
reasonable cost of any repairs to the roof which are necessitated by the
installation and/or repair of the satellite dish and screen or covering, if
constructed, shall be borne solely by Tenant and paid to Landlord upon demand as
Additional Rent hereunder. Upon expiration or earlier termination of this Lease,
Tenant shall, at its sole cost and expense, remove any satellite dish and screen
or covering, if constructed, and Tenant shall repair any damage to the roof
occasioned by such removal. Tenant further agrees to defend, indemnify and hold
harmless Landlord from and against all claims, losses, costs and expenses
(including without limitation reasonable attorneys' fees) suffered or incurred
by Landlord arising out of the existence of Tenants satellite dish and screen or
covering, if constructed. In addition, Tenants liability endurance policies
shall include special endorsements protecting Landlord and all other parties
required to be additional insureds pursuant to Section 12.06 against any
liabilities that may arise out of the existence or installation and removal of
Tenant's satellite dish and any screen or covering. In connection with all work
related to the Installation, repair, maintenance and removal of the satellite
dish and screen or other covering structure, Tenant shall request from Landlord
a list of three (3) competitively priced contractors acceptable to Landlord,
which Landlord shall provide to Tenant within fifteen (15) business days
following written request. All such work shall be performed by one of Landlord's
designated contractors and shall be conducted with notice to Landlord as
provided in Section 10.02(e) of this Lease.
(e) In all of Tenants printed material distributed primarily within
Syracuse, New York and that refers to the location of the Premises (by
newspaper, radio, television or otherwise), Tenant shall include in any
reference to Tenant's place of business the name (and where appropriate the
symbol) of the Shopping Center.
(f) Tenant agrees to store in the Premises only such merchandise as is
to be offered for sale at retail from the Premises within a reasonable time
after receipt; to store all trash and refuse in adequate containers within the
Premises and to maintain such containers in a healthy, safe, neat, odor free and
clean condition and in a location so as not to be visible to members of the
public shopping in the Shopping Center, and to attend to the daily disposal
thereof in the manner designated by Landlord; and to conform to all rules and
regulations which Landlord may make in the management and use of the Shopping
Center requiring such conformance by Tenant and Tenants employees. If the
Premises are used for the sale of food, Tenant shall store all trash, refuse and
garbage in a garbage storeroom or compartment which Tenant shall install and
keep in good repair at its sole expense. Landlord may require that the Premises
be periodically treated against pests, rodents or vermin, and in such event,
Tenant will, at its sole cost and expense, enter into a contract with a
professional pest control service for the performance of such work, which
contract and service shall be selected by Tenant but subject to Landlord's prior
approval.
(g) Landlord may establish a central station trash compactor and/or
recycling service (including, but not limited to, compactor and container cost,
hauling, landfill charges, taxes or any other special charges relating to such
trash compactor and/or recycling service) or contract for the removal of trash
at the Shopping Center. If Landlord establishes a central station trash
compactor and/or recycling service, Tenant agrees to pay as Additional Rent the
sum of [***] per month for the cost of Tenant's share of such service. It is
agreed that this charge may be increased periodically from the date of this
Lease as Landlord's expenses increase (in which event, the cost of Tenant's
share of such service shall increase only by the percentage by which Landlord's
expenses actually increase) or as the volume of Tenant's trash increases. If at
any time Landlord elects to contract for trash removal and/or recycling, Tenant
agrees to use said contractor for its trash removal and/or recycling and pay
when due all charges at the rate established therefor from time to time. Tenant
may, however, contract with an entity other than that designated by Landlord in
the event that Landlord's designated contractors rates are not reasonable and
competitive with alternative services available to Tenant. If Tenant fails so to
pay for trash removal and/or recycling, Landlord shall have the same remedies
(even if such payment is due to such contractor and not to Landlord) as Landlord
has for nonpayment of rent hereunder. Tenant shall comply with all applicable
Governmental Orders as defined in (Section 18.01) in conjunction with the
sorting or recycling of trash or refuse.
(h) Tenant shall comply with all further reasonable rules and
regulations for the use and occupancy of the Shopping Center as Landlord from
time to time promulgates for the best interests of the Shopping Center, provided
that if Tenant disputes the reasonableness of any further rule or regulation,
Tenant shall notify Landlord within thirty (30) days after Tenant is provided
with a copy thereof, and the dispute shall be submitted to arbitration pursuant
to Section 23.18. In the event of a conflict between the Lease and such rules or
regulations, then the term of the Lease shall govern.
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6.05 - MARKETING FUND
(a) Tenant shall make a contribution, in the manner set forth in Section
6.05, to a Marketing Fund to be administered by Landlord. The Marketing Fund
will be used for advertising, customer services, promotion, public relations,
market research and administrative expenses which, in the sole opinion of
Landlord, will sustain and improve the market penetration and promotional needs
of the Shopping Center. Landlord acknowledges and agrees that Tenant is a party
to a license agreement and that Tenant's advertising, use and display of the
Trade Name and the logo and trademarks associated therewith may be subject to
the licensor's consent as set forth in the license agreement; therefore,
Landlord agrees not to use Tenant's Trade Name in any advertising or promotional
medium without Tenant's consent; provided, however, notwithstanding the
foregoing, Landlord shall be permitted to (i) use Tenants Trade Name in any
directory or other listing which contains the names of substantially all of the
tenants or occupants of the Shopping Center and (ii) utilize photographs,
slides, videos, or other similar images of the Shopping Center that may include
or depict the Premises or Trade Name.
(b) From and after the Term Commencement Date, Tenant shall pay to
Landlord, as an annual contribution to the Marketing Fund, the sum of [***] per
square foot of the Premises, which sum shall be paid in advance in consecutive
equal monthly installments on the first day of each month during the term. For
any Partial Lease Year during the term of this Lease, or for any partial month,
the amount of Tenant's contribution to the Marketing Fund shall be adjusted on a
pro-rata basis to reflect such Partial Lease Year or partial month.
(c) Upon the first day of January next following the date of this Lease
and upon the first day of January of each Lease Year thereafter, Tenant's annual
contribution to the Marketing Fund shall increase by [***] upon the first day of
each January thereafter during the term of this Lease
ARTICLE 7
COMMON AREAS AND OPERATING COSTS
7.01 - DEFINITION
The term "Common Areas" shall mean the interior and exterior areas and
facilities within the Shopping Center which are: (i) not leased to a tenant, or
(ii) by nature not leasable to a tenant for the purpose of the sale of
merchandise or the rendition of services to the general public. Common Areas
shall include but shall not be limited to all parking areas and facilities,
roadways, driveways, entrances and exits, truck serviceways and tunnels,
utilities, water filtration and treatment facilities, retention ponds or basins
located within or outside the Shopping Center, retaining and exterior walls,
sidewalks, open and enclosed mails, outside courts, landscaped and planted
areas, escalators, stairways, elevators, service corridors, service areas,
loading docks, hallways, public restrooms, community rooms or areas, roofs,
equipment, signs and any special services provided by Landlord for the common or
joint use and benefit of all tenants in the Shopping Center, their employees,
customers and invitees.
7.02 - DEVELOPMENT OF COMMON AREAS
Landlord shall make available from time to time such Common Areas, which
may in part consist of areas made available by means of REA or other agreements,
for the common benefit to the tenants and occupants of the Shopping Center as
Landlord shall deem appropriate. Subject to the provisions of any REA Agreement,
Landlord shall operate, manage, equip, heat, cool, ventilate, insure, repair and
maintain such Common Areas for their intended purposes in such a manner as
Landlord shall, in its sole discretion, determine. Landlord shall at all times
have the right to determine, change or after the nature, extent, size or
location of the Common Areas and Landlord shall not be subject to liability
therefor, nor shall Tenant be entitled to any compensation or diminution or
abatement of rent on account of any such determination or change, nor shall any
such action be deemed an actual or a constructive eviction of Tenant.
7.03 - USE OF COMMON AREAS
Tenant and its officers, employees, agents, customers and invitees shall
have the nonexclusive right, in common with Landlord and all others to whom
Landlord has or may hereafter grant rights, to use the Common Areas as
designated from time to time by Landlord, subject to such regulations as
Landlord may from time to time impose on a non-discriminatory basis, including
the designation of the days and hours of operation and use and designation of
specific areas in which motor vehicles owned or used by Tenant, its officers,
employees, and agents must be parked. Tenant shall, upon request, furnish to
Landlord the license numbers and descriptions of the motor vehicles operated by
Tenant and its officers, agents and employees. If Landlord designates such
parking areas, and if any motor vehicle of Tenant, or an officer, employee or
agent of Tenant is parked in any other portion of the Shopping Center, Tenant
shall pay to Landlord, upon demand, the sum of [***] for each such motor vehicle
for each day, or part thereof, such motor vehicle is so parked, and Tenant
hereby authorizes Landlord to tow or cause any such car to be towed to the then
designated parking area, and Tenant hereby agrees to reimburse Landlord for the
cost thereof upon demand. Tenant agrees to abide by such regulations and to use
its best efforts to cause its officers, employees, agents, customers and
invitees to conform thereto. Landlord may at any time (i) close temporarily the
Common Areas or any portion thereof, (ii) make repairs or changes to prevent the
acquisition of public rights therein, (iii) discourage noncustomer parking, and
(iv) do such other acts in and to the Common Areas as in its judgment may be
desirable to improve the convenience thereof. Tenant shall not at any time
interfere with the rights of Landlord and other tenants, its and their permitted
officers, employees, agents, customers, and invitees, to use any part of the
parking areas and other Common Areas. Landlord shall have the sole and exclusive
right to use the Common Areas for advertising purposes, promotions, exhibits,
shows, displays, kiosks and such other similar uses. Notwithstanding the
foregoing, Landlord shall not modify the Common Areas in any manner that would
have a material adverse effect on pedestrian and vehicular traffic or that would
materially limit the number of parking spaces reasonably required for the
business and retail activities conducted or that otherwise would adversely
affect access to the Premises or the building in which the Premises are located.
Notwithstanding the foregoing, Landlord will not materially adversely interfere
with (i) visibility of Tenant's storefront signage from the
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enclosed mail immediately adjacent to the Premises, or (ii) access to the
Premises from the enclosed mall immediately adjacent to the Premises.
Notwithstanding anything to the contrary in this Section 7.03, Landlord
recognizes that Tenant's prototype incorporates an open storefront design and
Tenant shall be permitted to incorporate this element into the design of the
Premises, provided such design does not violate any applicable laws or
compromise the structural integrity of the Shopping Center. With Landlord's
approval, not to be unreasonably withheld, Tenant shall have the right to use,
at no additional cost to Tenant, a portion of the Common Area in front of the
Premises for the purpose of displaying a NASCAR racing vehicle.
7.04 - COMMON AREA COSTS
(a) Commencing on the Term Commencement Date, Tenant shall pay to
Landlord, as Additional Rent, monthly in advance on the first day of each month,
a sum equal to [***] of the Common Area Charge. The "Common Area Charge" shall
be an annual charge of [***] per square foot of the Premises for the Common Area
Costs defined in Section 7.04(b), subject to adjustment as provided in Section
7.05.
(b) "Common Area Costs" shall mean the total costs and expenses incurred
in operating, managing and maintaining the Shopping Center and the Common Areas,
including but without limitation, such maintenance, repair, replacement and
remodeling as shall be required in Landlord's sole and absolute judgment to
preserve the utility thereof in the same condition and status as existed at the
time of completion of the original construction. Common Area Costs shall also
include Tenant's share of insurance costs.
7.05 - ADJUSTMENT TO PAYMENT
Upon January 1, 2001 and upon the first day of January of each Lease
Year thereafter, the amount of Tenant's Common Area Charge then in effect shall
increase by [***]. Tenant acknowledges and agrees that Tenant shall have no
right to audit Landlord's books and records concerning Common Area Costs.
Notwithstanding anything to the contrary in this Section 7.05, the first such
increase in Common Area Charges will be prorated on a per-diem basis.
7.06 - PAYMENT OF EXTRAORDINARY COMMON AREA COSTS
If Tenant opens the Premises for business or remains open for business
in the Premises at a time when Tenant is not required under the terms of this
Lease to be open and when less than fifty percent (50%) of the total leased area
of the buildings in the Shopping Center is open for business, then for each such
day on which Tenant is open for business in the Premises, Tenant, as Additional
Rent, shall pay to Landlord, in addition to and together with Tenant's payment
of the Common Area Charge due Landlord as provided by Section 7.04, a sum equal
to [***] of the monthly amount of Tenant's Common Area Charge.
ARTICLE 8
ENERGY, UTILITY AND SPRINKLER COSTS
8.01 - ENERGY AND UTILITY CHARGES
(a) Immediately after delivery of possession of the Premises to Tenant,
Tenant shall make application to the appropriate local authority, municipality
or other governmental agency to obtain direct service for Tenant's electric,
natural gas, and other energy requirements. Tenant shall be solely responsible
for the cost of obtaining such services and the cost of providing and installing
any required meters, conduits, wiring and other facilities and equipment all of
which shall be part of Tenant's Work. However Tenant shall not be obligated to
pay any fees to the utility company for the initial connection of energy
services to the Premises which relate to the Shopping Center in general and not
to the Premises, and Landlord and not Tenant shall be obligated for any other
fees payable to the utility company which relate to the Shopping Center in
general with respect to the initial connection of energy services to the
Premises. From and after the date Tenant first enters into possession of the
Premises (or if the date Tenant obtains such energy service is sooner. then from
and after the date such service begins). Tenant covenants and agrees to pay the
authority, municipality or agency the cost of all energy provided to Tenant
(including but not limited to all energy provided to the Premises, to Tenant's
signs and to the HVAC units serving the Premises) when due and payable. As of
the date of this Lease, Landlord has no knowledge that the energy provider will
not provide direct service, and Tenant acknowledges that provision of such
service is within the control of the energy provider and not Landlord.
(b) Tenant shall pay the cost of all water and sewer used in or at the
Premises. Landlord and Tenant acknowledge that water and sewer services for the
Premises are as of the date of this Lease, provided by the local municipality to
the Premises through Landlord. Accordingly, Tenant shall, at its cost and as
part of Tenant's Work, install a water meter acceptable to Landlord and the
local municipality; and Tenant shall pay Landlord for all water and sewer usage
in and at the Premises based on the usage recorded by such meter and based on
the rates charged to Landlord for water and sewer usage by the local
municipality. Such payment calculation is subject to change if, as and when the
billing methodology of said municipality for water differs from that set forth
in this paragraph. The above payment structure shall continue in effect until
such time as the Premises are directly supplied, metered and billed for water
and sewer services by the local municipality. Immediately after delivery of
possession of the Premises to Tenant, Tenant shall make application to the
appropriate local authority. municipality or other governmental agency to obtain
direct service for water and sewer services to the Premises. Tenant shall be
solely responsible for the cost of obtaining such services and the cost of
providing and installing any required meters and other facilities and equipment,
all of which shall be part of Tenant's Work. From and after the date direct
water and/or sewer service is available to the Premises, Tenant covenants and
agrees to pay the authority, municipality or agency the cost of same provided to
Tenant when due and payable.
(c) (i) If as a result of Tenant's inability to obtain direct supply or
Tenant's election not to obtain direct supply and metering for Tenant's natural
gas, electric and other energy requirements as provided in subsection
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(a) hereof, and if Landlord supplies service for Tenant's electric, natural gas,
or other energy requirements, from and after the date which is the later of
either the date when Tenant first enters into possession of the Premises or the
date when Landlord commences supplying energy to the Premises, Tenant shall pay
to Landlord monthly in advance on the first day of each month its "Energy
Charges." as hereinafter defined.
(ii) As used in this Lease "Energy Charges" shall be the product
of multiplying the Energy Charge Calculation (herein defined) for all energy
used or consumed in the Premises including without limitation, electricity, oil
and gas times the unit prices for such energy determined in accordance with the
then current utility rate schedules applicable to Landlord, plus a charge of
[***] of such amount. Following the date that Tenant opens for business in the
Premises, Landlord shall calculate Tenant's energy requirements on the basis of
Tenant's construction plans, equipment and lighting lists, and the as-built
condition of the Premises, assuming (1) a usage of not less than one hour before
through one hour after the daily hours of operation of the Shopping Center and
(2) a loading factor based upon the total connected load of all electrical
fixtures and equipment in the Premises ("Energy Charge Calculation). If Tenant
requires additional hours of usage of energy within the Premises, Tenant shall
make such request in writing to Landlord and Tenant's Energy Charges shall be
adjusted accordingly. Prior to the completion of such Energy Charge Calculation
and the submission to Tenant of a statement setting forth such calculation,
Tenant shall pay Energy Charges as estimated by Landlord based upon the energy
requirements of a typical store layout comparable to Tenant's proposed use and
size of the Premises. Following completion of the Energy Charge Calculation,
Tenant's energy billings and payment of Energy Charges shall be adjusted
accordingly. Any delay in Landlord furnishing such Energy Charge Calculation to
Tenant shall not in any way affect Tenant's obligation herein.
(iii) Notwithstanding the provisions of subparagraph (c) (ii) of
this Section 8.01 relating to use of the Energy Charge Calculation to calculate
Energy Charges to the contrary, Tenant shall have the option to verify the
amount of electrical energy used or consumed within the Premises by the
installation of a checkmeter as hereinafter set forth. Such option may be
exercised by Tenant upon not less than thirty (30) days' prior written notice to
Landlord given prior to either (i) 60 days after Landlord commences supplying
energy to the Premises (provided, however, that in no event shall the checkmeter
period begin until after Tenants Work is fully completed and operational and
Tenant is open for business to the public). or (ii) the first day of any Lease
Year during the term of this Lease. Following such notice, Tenant shall install
in the Premises. in accordance with the Outline Specifications set forth in
Exhibit D and at Tenant's sole cost and expense, a utility-quality checkmeter
for the purpose of verification of the electrical consumption within the
Premises (the "checkmeter"). The checkmeter will be monitored monthly by
Landlord and Tenant for a period of thirteen (13) consecutive full months (the
"checkmeter period") beginning on the first day of the first full month
following initial installation thereof and approval by Landlord. The first
month's reading of the checkmeter will be used solely for determining a usage
base reading over which subsequent readings will be measured. Landlord and
Tenant shall on or about the first day of each month concurrently observe and
record the checkmeter readings on forms provided by Landlord. The checkmeter
shall be reset (for demand only) in the presence of both Landlord and Tenant
representatives following the recording of monthly readings. During the
checkmeter period Tenant shall pay Energy Charges for the Premises based on the
Energy Charge Calculation.
Following completion of the checkmetering period,
Landlord shall calculate the average monthly utility usage within the Premises
utilizing the checkmeter readings taken during the checkmeter period. The
average monthly charge for consumption (KWH) shall be calculated by dividing the
total KWH by the number of days comprising the checkmeter period; the resulting
quotient will then be multiplied by 30.42. The average monthly demand charge
(KW), if applicable, shall be calculated by dividing the total KW readings by
the number of months comprising the checkmeter period. If Tenant has made the
election to utilize a checkmeter, for purposes of calculating Energy Charges for
electricity under subparagraph (b) of this Section 8.01, the product of the
resulting average monthly KWH usage readings and KW demand readings times the
unit prices for such energy determined in accordance with then current utility
rate schedules charged to Landlord shall be used in lieu of the Energy Charge
Calculation. Tenant's energy billings based on the checkmeter readings and
payment of Energy Charges retroactive to the commencement of the checkmeter
period shall be adjusted accordingly. Any delay in Landlord furnishing a
checkmeter reconciliation to Tenant shall in no way affect Tenant's obligation
herein.
The average monthly KWH usage charges and KW demand
charges once determined pursuant to the checkmeter procedure shall be the basis
for calculation of Energy Charges for the balance of the term of this Lease. The
checkmeter procedure shall be used solely to verify energy use within the
Premises in accordance with the terms of this Lease and shall not be utilized
for billing purposes. The use of the checkmeter procedure set forth in this
subparagraph (c) shall be the sole and exclusive remedy between Landlord and
Tenant to resolve any dispute concerning the amount of electrical usage within
the Premises. The results of the checkmetering procedures set forth herein shall
be conclusive and determinative of all disputes, claims and controversies with
respect to energy usage or demand within the Premises pursuant to this Lease.
Following the checkmeter period, Tenant shall disconnect and remove the
checkmeter from the Premises. The monitoring of energy service by means of a
checkmeter shall not take place more than once during the term of this Lease
unless Tenant has varied its equipment, service, use or load demand or has
remodeled the Premises. In any such event either Landlord or Tenant may request
the other party to reinstitute the checkmeter procedures but in no event more
than once in any thirty-six (36) month period following the completion of any
checkmeter period.
(iv) At any time during the term hereof, Landlord may cease
providing energy to the Premises without thereby affecting this Lease in any
manner or otherwise incurring any liability to Tenant. In such event, Tenant
shall have no further obligation to pay to Landlord the charge for Energy
Charges as provided in this Section 8.01. Landlord will notify Tenant at least
thirty (30) days prior to such termination in order that Tenant may make
application to the appropriate utility companies serving the Shopping Center. In
the event Tenant fails to pay energy or utility charges when the same become due
and payable, Landlord reserves the right, in addition to all other rights and
remedies to which Landlord may avail itself pursuant to this Lease, to
discontinue the furnishing of energy to the Premises. Landlord shall not be
liable for any damages resulting from or arising out of any such discontinuance,
and the same shall not constitute a termination of this Lease or an actual or
constructive eviction of Tenant.
(v) The charges defined in Section 8.01(c). if any, may be
adjusted by Landlord periodically based upon changes in the number of hours
during which the Premises remains open, connected load, recalculations, rate
changes imposed by utility companies, rate changes imposed by fuel companies
(including but not limited to fuel adjustment rates), any changes, alterations
or improvements done to the Premises, or any taxes or surcharges imposed upon
energy costs or usage.
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Notwithstanding anything to the contrary in this Section 8.01, in the
event Landlord's energy provider is not competitively priced, Tenant shall have
the right to secure energy service from an alternative energy provider (where
available). Tenant understands and agrees that in the event it elects to use
such alternative energy provider, it shall do so at Tenant's sole cost and
expense and such energy service must be provided to the Premises from such
alternative energy provider's facilities and shall not come through Landlord's
switchgear.
8.02 - INTENTIONALLY DELETED.
8.03 - INTENTIONALLY DELETED.
8.04 - MISCELLANEOUS UTILITY PROVISIONS
(a) Tenant shall not install within the Premises any equipment, fixtures
or appliances which exceed the capacity of the utility facilities within or
serving the Premises. If any such equipment, fixtures or appliances installed by
Tenant requires additional utility facilities, the same shall be installed by
Tenant at Tenant's sole cost and expense.
(b) Tenant shall operate the heating, ventilating and cooling systems
serving the Premises such that the temperature in the Premises will be
substantially the same as that in the Common Areas, and Tenant shall set
Tenant's thermostat at substantially the same temperature as exists in the
Common Areas. Tenant shall operate ventilation equipment such that the relative
air pressure in the Premises will be substantially the same as or less than that
in the Common Areas.
(c) Intentionally deleted.
(d) Tenant agrees that Landlord shall not be responsible for any
interruption of business or damage to the Premises resulting from interruption
of utility service caused by any utility company or governmental regulatory
agency.
8.05 - PERIODIC ADJUSTMENT
Intentionally deleted.
ARTICLE 9
FIXTURES, ALTERATIONS, SIGNS
9.01 - INSTALLATION BY TENANT
After the completion of Tenant's Work, Tenant shall not make or cause to
be made any alterations, additions or improvements or install or cause to be
installed any trade fixtures, exterior sign, floor covering, interior or
exterior lighting, plumbing fixtures, shades or awnings, or make any changes to
its store-front or interior decor without first obtaining Landlord's written
approval and consent in each instance, which shall not be unreasonably withheld.
Notwithstanding the foregoing, Tenant shall be permitted to make interior,
non-structural alterations, changes and modifications not exceeding [***] per
Lease Year without Landlord's prior consent, provided Tenant notifies Landlord
in writing prior to the commencement of such alterations, changes, or
modifications. Tenant shall present to Landlord plans and specifications of such
work at the time approval is sought. All permitted alterations, additions or
improvements shall be done in a good and workmanlike manner in compliance with
all applicable laws and ordinances and shall not unreasonably interfere with the
conduct of Tenant's normal business. Notwithstanding anything to the contrary in
this Section 9.01, Tenant shall be permitted to close for a period not to exceed
five (5) days during any Lease Year, for the sole purpose of completing such
alterations, changes, or modifications. Where Landlord's approval is required
per this Section 9.01, any alteration, addition or improvement done to the
Premises by Tenant without Landlord's approval shall be returned to its original
condition within thirty (30) days after receipt of written notice from Landlord
and at Tenant's expense upon request by Landlord at any time. All fixtures
installed by Tenant shall be new or completely reconditioned; provided, however,
Tenant makes no representation or warranty that such fixtures will be free from
defects in material, workmanship, or design; provided, further, that Tenant
shall use its commercially reasonable efforts to ensure that such fixtures are
installed in the Premises in a safe manner so as not to be hazardous to persons
who may come on to the Premises. Tenant shall (i) be responsible for all costs,
including attorneys' fees, and (ii) Tenant shall indemnify and hold harmless
Landlord from all liability, incurred by Landlord as a result of any failure in
material, workmanship or design of such fixtures.
9.02 - REMOVAL AND RESTORATION BY TENANT
All alterations, additions, improvements or installations made by
Tenant, or made by Landlord on Tenant's behalf and at Tenants expense, shall
remain the property of Tenant for the term of the Lease. Such alterations,
additions, improvements, trade fixtures and equipment shall not be removed from
the Premises prior to the end of the term hereof without the prior consent in
writing from Landlord, except in the case of routine maintenance, refurbishment
or replacement of defective or broken items. Upon expiration of the term of the
Lease or upon Tenant's vacating the Premises upon eviction or surrender of the
Premises prior to expiration of the term, any permanent leasehold improvements
and fixtures or equipment permanently attached to the real estate shall become
the property of Landlord (unless, as a condition of its consent to install same,
Landlord shall have required the subsequent removal thereof by Tenant), if not
removed by Tenant. With respect to any improvements and fixtures which Tenant
does not remove, Tenant shall be obligated to repair any damage resulting from
such removal, and
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Tenant's possession of the Premises shall not be deemed terminated until such
repairs have been completed. Tenant shall surrender all keys for the Premises to
Landlord and shall inform Landlord of all combinations on locks, safes and
vaults, if any, in the Premises. Within five (5) days following the expiration
or earlier termination of this Lease, Tenant shall remove furnishings,
equipment, trade fixtures and personal property and, if Tenant fails to so
remove such property, then Landlord shall have the option of retaining or
removing such property at Tenant's expense. Tenant shall repair or cause to be
repaired any damage to the Premises caused by such removal.
9.03 - SIGNS, AWNINGS AND CANOPIES
Tenant will not place, maintain or suffer to be placed or maintained on
or in an exterior door, wall or window of the Premises any sign, awning or
canopy, decoration. lettering or advertising matter or other thing of any kind
without first obtaining Landlord's written approval, which approval shall not be
unreasonably withheld. Notwithstanding the foregoing. Landlord's consent shall
not be required for any professionally prepared signs or banners, or for the
installation of an awning or canopy at the store front of the Premises, provided
such awning or canopy complies with all applicable building codes and further
provided that such awning or canopy does not utilize any supports which cannot
be integrated into the store front of the Premises. Tenant further agrees to
maintain such sign, awning, canopy, decoration, lettering, advertising matter or
other thing as may be approved in good condition and repair at all times. In the
event that Landlord at any time during the term of this Lease elects to erect
signage within the interior of the Shopping Center which in a general fashion
depicts any so-called entertainment wing of the Shopping Center, then Tenant
may, at its option, be included in such signage at Landlord's cost and expense.
Notwithstanding anything to the contrary in this Lease, Tenant shall be
permitted to erect interior bulkhead and directional signage as depicted on
Exhibit F attached hereto and made a part hereof.
9.04 - CONDITION OF THE PREMISES
Throughout the Term. Tenant shall maintain the Premises in a manner
consistent with a first class shopping center.
ARTICLE 10
REPAIRS AND MAINTENANCE
10.01 - LANDLORD'S OBLIGATION TO REPAIR
Landlord agrees to repair and maintain, at Landlord's sole cost and
expense, the outside walls, structure and foundation of the building containing
the Premises in good order and serviceable condition. Landlord agrees to
commence any such repair within a reasonable time (not to exceed thirty (30)
days, unless by the nature of such repair, it cannot reasonably be commenced
within said thirty (30) day period) after written notice from Tenant that the
same is necessary. There is excepted from this covenant the following, which
shall be Tenant's responsibility:
(a) Repair of damage caused by the act or omission of Tenant, its
employees, agents, and contractors;
(b) Repair of any loading areas not used in common with others; and
(c) Repairs which are the responsibility of Tenant in accordance with
Section 10.02.
10.02 - TENANT'S OBLIGATION TO REPAIR
(a) Tenant agrees, at its sole cost and expense, to repair and maintain
the Premises in good order and condition, including but not limited to the
non-structural portions of the Premises, including store front, loading areas,
show windows, doors, windows, plate and window glass, ceilings, floor coverings,
Tenant's HVAC systems, and the plumbing, sprinkler, electric and sewage systems,
facilities, appliances, lighting fixtures and other systems and improvements
located within the Premises. In addition, Tenant shall be responsible, at its
sole expense, for the repair and maintenance of its rooftop HVAC unit(s) (if
any) and any other equipment or improvement located outside the Premises which
is constructed or installed by Tenant or at Tenant's request and is used
exclusively by or for Tenant. Tenant shall obtain Landlord's prior consent
before making any repair or performing any maintenance which may adversely
affect any aspect of the Shopping Center's operation.
(b) During the entire term, Tenant agrees to maintain, at Tenant's sole
cost, a maintenance contract with an independent HVAC contractor approved by
Landlord covering at least the routine items of maintenance for Tenant's HVAC
systems as are recommended by the manufacturer of such systems, provided that
the cost thereof at all times shall be reasonable and competitive. Tenant agrees
to provide Landlord with a copy of such HVAC; service contract within thirty
(30) days following the Term Commencement Date. Further, Tenant agrees during
the entire term of this Lease to use the sprinkler service company designated by
Landlord for any repairs or maintenance required for Tenant's sprinkler system,
provided that the cost thereof at all times shall be reasonable and competitive.
(c) If repairs are required to be made by Tenant pursuant to the terms
of the Lease, Landlord may demand (but shall not be required to do so) that
Tenant make the same forthwith, and if Tenant refuses or neglects to commence to
such repairs and complete the same with reasonable dispatch after such demand,
and if Tenant's failure to commence such repairs continues for fifteen (15) days
after receipt of notice from Landlord, Landlord may make or cause such repairs
to be made and shall not be responsible to Tenant for any loss or damage that
may accrue to its stock or business by reason thereof. If Landlord makes or
causes such repairs to be made, Tenant agrees that it will, on demand, pay as
Additional Rent to Landlord, reasonable out-of-pocket costs incurred by Landlord
therefor, and a [***] administration fee, and if Tenant defaults in such
payment, Landlord shall have the remedies provided in Article 15 hereof.
Likewise, if repairs are required under the terms hereof to be made by Landlord
and it fails or refuses after twenty (20) days' notice and demand by Tenant to
commence such repairs and thereafter diligently prosecute same to completion,
then Tenant shall have the right to make such required repairs. Landlord shall
reimburse Tenant for the cost of such repairs within twenty (20) days after
receipt by Landlord of evidence of payment therefor by Tenant, additionally,
Tenant shall have the right to offset such costs
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against the payment of Fixed Annual Minimum Rent, Percentage Rent or Additional
Rent if Landlord shall fail to reimburse Tenant for the cost of such repairs
within thirty (30) days after receipt by Landlord of evidence of payment
therefor by Tenant.
(d) If Tenant's use of the Premises requires a grease trap, Tenant
agrees to maintain, at Tenant's sole cost, a maintenance contract with, an
independent service contractor approved by Landlord to inspect, clean and repair
such grease trap at such intervals as may be required by Tenant's use but in no
event less frequently than once a month.
(e) Tenant shall not, and shall not permit any of its employees,
invitees, contractors or agents to, enter or otherwise be on the roof of the
Building without prior written notice to Landlord. Tenant shall give Landlord
not less than five (5) days' prior written notice of the date any such person
will be on the roof of the Building.
10.03 - Article Not Applicable to Fire or Condemnation
The provisions of this Article shall not apply to the repair of damage
caused by fire, casualty, which matter is covered under Article 13, nor shall
these provisions apply to a taking under the power of Eminent Domain, which
matter is covered under Article 14.
ARTICLE 11
Indemnity
11.01 - Indemnity
Tenant will indemnify and hold harmless Landlord, Landlord's managing
agent and such other persons who are in privity of estate with Landlord, or to
whom Landlord is legally responsible (collectively, "Landlord's Party"), from
and against any and all claims, actions, damages, liabilities and expenses in
connection with loss of life, personal injury, bodily injury or damage to
property arising from or out of any occurrence in, upon or at the Premises, from
or out of the occupancy or use by Tenant of the Premises or the Shopping Center
or any part thereof, or occasioned wholly or in part by any negligent act or
omission of Tenant, its agents, contractors, employees, lessees, invitees or
concessionaires; provided, however, Tenant shall not be required to indemnify,
defend, hold harmless, protect, release or otherwise exculpate Landlord or any
member of Landlord's Party from and against any claims, actions, damages,
liabilities or expenses to the extent the same results from Landlord's or any
member of Landlord's Party's or their respective agents, employees, contractors,
licensees, invitees or servants' negligence, willful misconduct, failure to
comply with applicable laws or breach of this Lease. In case Landlord or any
member of Landlord's Party shall be made a party to any action or proceeding
commenced by or against Tenant, then Tenant agrees to protect and hold such
parties harmless and to pay all costs, expenses and reasonable attorneys' fees
incurred or paid by such parties in connection with such action or proceeding.
Tenant shall pay to Landlord all costs, expenses and reasonable attorneys' fees
that may be incurred or paid by Landlord in enforcing the terms, conditions,
covenants and agreements in this Lease.
Landlord shall indemnify, hold harmless and defend Tenant, Tenant's
managing agent, if any, and such other persons who are in privity of estate with
Tenant, or to whom Tenant is legally responsible (collectively, "Tenant's
Party"), from and against any and all claims, actions, suits, cross-claims,
counterclaims, third party actions, damages, liabilities and expenses in
connection with loss of life, personal injury, bodily injury or damage to
property arising from or out of any occurrence in, upon or at the Shopping
Center, or occasioned wholly or in part by any negligent act or omission of
Landlord, its agents, contractors, employees, lessees, invitees or
concessionaires; provided, however, Landlord shall not be required to indemnify,
defend, hold harmless, protect, release or otherwise exculpate Tenant or any
member of Tenant's Party from and against any claims, actions, damages,
liabilities or expenses to the extent the same results from Tenant's or any
member of Tenant's Party's or their respective agents, employees, contractors,
licensees, invitees or servants' negligence, willful misconduct, failure to
comply with applicable laws or breach of this Lease. In case Tenant, Tenant's
managing agent or such other persons who are in privity of estate with Tenant,
or to whom Tenant is legally responsible, shall be made a party to any action or
proceeding commenced by or against Landlord, then Landlord agrees to protect and
hold such parties harmless and to pay all costs, expenses and reasonable
attorneys' fees incurred or paid by such parties in connection with such action
or proceeding. Landlord shall pay to Tenant all costs, expenses and reasonable
attorneys' fees that may be incurred or paid by Tenant in enforcing the terms,
conditions, covenants and agreements in this Lease.
ARTICLE 12
Insurance
12.01 - Liability Insurance
Throughout the term of this Lease, Tenant, at its sole cost and expense,
for the mutual benefit of Landlord and Tenant, shall maintain personal injury
and property damage liability insurance against claims for personal injury,
bodily injury, death or property damage occurring on, in or about the Premises,
or arising from, in or about Tenant's use of the Common Areas, or resulting from
or arising out of products sold from the Premises or Tenant's use of the Common
Areas during the term of this Lease, of not less than [***] in respect of
personal injury, bodily injury, death or property damage (combined single
limit). Such policy shall expressly contain a contractual endorsement to provide
coverage for Tenant's indemnification set forth in Section 11.01 of this Lease
and shall contain the "Per Location Aggregate" endorsement. Such policy shall be
endorsed (1) as primary and (2) to waive rights of subrogation against Landlord.
Prior to the Term Commencement Date, Tenant shall provide Landlord with a
certificate containing evidence of such coverage and of the coverage required in
Sections 12.02(c) and (d) below, and Tenant shall thereafter provide Landlord
with appropriate evidence of said
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coverage upon each anniversary date of the policy. In the event that Tenant
fails to provide the certificate as set forth herein or falls to provide such
evidence of such coverage at least fifteen (15) days prior to the expiration
date of each expiring policy, Landlord may obtain such insurance at Tenant's
sole cost and expense and upon demand of Landlord, Tenant shall reimburse
Landlord for the cost of procuring such insurance coverage together with [***]
for administration costs.
12.02 - Special Causes of Loss and Difference In Conditions Insurance
(a) At all times during the term of this Lease, Landlord shall keep all
Permanent Improvements, as hereinafter defined, insured for the benefit of
Landlord against loss or damage by risks now or hereafter embraced by "Special
Causes of Loss" and "Difference in Conditions" coverages and against such other
risks as Landlord from time to time reasonably may designate in amounts
sufficient to prevent Landlord from becoming a coinsurer under the terms of the
applicable policies. In any event, the amount applicable to "Special Causes of
Loss" policies shall be not less than [***] of the "Then Full Replacement Cost"
(being the cost of replacing the Permanent Improvements exclusive of the costs
of excavations and footings below the lowest grade level). The Then Full
Replacement Cost shall be determined from time to time (but not more frequently
than once in any twelve (12) calendar months) by an appraiser, architect or
other person or firm designated by Landlord.
(b) The Permanent Improvements for purposes of this Section 12.02 shall
be deemed to mean the building in which the Premises is situated, the
appurtenances thereto and the equipment and other improvements constructed by
Landlord and Tenant pursuant to Exhibits B and C. Such Permanent Improvements
shall exclude, however, Tenant's merchandise, trade fixtures, furnishings,
equipment, wall covering, carpeting, drapes, and all personal property
(collectively "Tenant's Personal Property"). Tenants shall provide Landlord with
a certificate setting forth the cost of Tenant's Work no less than [***] days
prior to the Term Commencement Date.
(c) At all times during the term of this Lease, Tenant shall keep all of
Tenants Personal Property situated at or on the Premises, insured with "Special
Causes of Loss" and "Difference in Conditions" and "Plate Glass" coverages for
not less than the full replacement cost thereof, with the deductible on the
"Plate Glass" and "Special Causes of Loss" policies not to exceed [***] and with
a commercially reasonable deductible on the "Difference in Conditions" policy
(provided, however, by way of illustration and not limitation, it shall be
deemed commercially reasonable for the "Difference in Conditions" policy to have
a deductible of [***] of the value of the insured property or a deductible of
[***].
(d) Tenant shall maintain, and shall cause all parties performing work
on or about the Premises or on behalf of Tenant to maintain, statutory Workers'
Compensation coverage according to the laws of the state in which the Shopping
Center is located and Employers Liability coverage in limits of not less than
[***].
12.03 - Insurance on Common Areas
At all times during the term of this Lease, Landlord shall keep the
Common Areas insured for personal injury, bodily injury and property damage
liability. "Special Causes of Loss" and "Difference in Conditions" property
coverage, Workers' Compensation, Employers Liability and any other casualty or
risk insurance which Landlord or Landlord's insurance carrier deems necessary or
appropriate. If and to the extent Landlord elects to self insure up to the first
[***] of any claims for personal injury or bodily injury, or under Workers'
Compensation, there shall be included within insurance costs the amount of any
personal injury, bodily injury or Workers' Compensation claim(s) or judgment(s)
paid by Landlord, limited, however, in each instance to the lesser of (i) [***],
or (ii) [***].
12.04 - Increase in Fire Insurance Premium
Tenant covenants and agrees to promptly pay to Landlord as Additional
Rent, upon demand, the amount of any increase in the rate of insurance on the
Premises or on any other part of the Shopping Center that results by reason of
Tenant's act(s) or Tenants permitting certain activities to take place.
12.05 - Tenant to Share Insurance Costs
Tenant's obligation for the payment of Insurance Costs is included in
Common Area costs, as set forth in Section 7.04 of this Lease.
12.06 - Waiver of Subrogation
Each party releases and waives on behalf of itself and on behalf of the
insurers of such party's property, any and all claims and any rights of
subrogation of any such insurer against the other party, its employees and
agents for loss (other than loss or damage resulting from the willful act of
such other party, its employees and agents) sustained from any peril to property
required to be insured against herein, whether or not such insurance is actually
in force, or from any peril to property actually insured against, though not
required to be under this Lease. The policies of the respective parties shall
contain an express waiver of subrogation to this effect.
12.07 - Policies
All insurance provided in this Article 12 shall be effected under valid
and enforceable policies of at minimum a Best rating of A-, XII and issued by
insurers of recognized responsibility which are licensed to do business in the
state in which the Shopping Center is located. All of Tenant's policies of
insurance as required in this Article 12 shall name Landlord, Tenant, Landlord's
managing agent and any mortgagee having an interest in any or all part of the
Shopping Center the name and address of which Tenant has received written
notice, as additional insureds, as their respective interests may appear. Tenant
agrees that such policies shall also be made payable, if required by Landlord,
to a mortgagee or ground lessor, as the interest of such mortgagee or ground
lessor may appear. The loss, if any, under any policies provided for hereunder
may be adjusted with the insurance company by Landlord.
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Each of Tenant's policies shall contain an agreement by the insurer that such
policy shall not be terminated, canceled or reduced in coverage without at least
thirty (30) days' prior written notice to Landlord and to any mortgagee or
ground lessor to whom a loss thereunder is payable. The minimum limits of
coverage for all of Tenant's policies of insurance required by this Article 12
shall be increased by Tenant if reasonably required by Landlord.
ARTICLE 13
Damage by Fire, Etc.
13.01 - Restoration of Premises
(a) The parties hereto mutually agree that if the Premises are partially
or totally destroyed or damaged by fire or otherwise, then Landlord (subject to
being able to obtain all necessary permits and approvals therefor) shall repair
and restore the Premises as soon as is reasonably practicable to substantially
the same condition in which the Premises existed before such damage; provided
that if the insurance proceeds (other than the amount of any deductible, self
insured retention or co-insurance requirement) collected or collectible and
available to Landlord to pay the cost of such repairs and restorations by
Landlord as a consequence of such destruction or damage are less than the cost
of such repairs and restoration as estimated by Landlord's architect, Landlord
shall not be obligated to commence or perform such repairs and restorations, and
this Lease upon notice by Landlord to Tenant shall at gm option of Landlord
terminate unless Tenant undertakes (in form and upon terms satisfactory to
Landlord) to pay the difference between such estimated cost and such insurance
proceeds. Within forty-five (45) days following the date of damage or
destruction, Landlord shall notify Tenant of its Intentions with respect to the
repairs or restoration of the Premises, and in the event Landlord elects to
repair or restore the Promises, Landlord shah diligently pursue such repair or
restoration to completion following commencement of the repairs or restoration.
If, however, the Promises are completely destroyed or so damaged that Landlord
cannot complete restoration or rebuilding in four (4) months to substantially
the same condition in which the Premises were before such damage, then Landlord
shall not be required to rebuild or restore, and this Lease shall be terminable
by either party serving written notice upon the other. In any event, if repairs
have not been commenced within sixty (60) days after the date on which Landlord
receives the insurance proceeds, or if the repairs have been commenced within
such time but Landlord is not diligently pursuing such repairs or restoration,
then this Lease may be terminated by Tenant serving notice upon Landlord
following the expiration of such sixty (60) days by giving Landlord not less
than thirty (30) days' advanced written notice of such election. Except as
otherwise provided in this Section 13.01 (a), provided Landlord is diligently
pursuing such repairs or restoration, in no event may Tenant terminate this
Lease after such repairs have been commenced by Landlord.
(b) In the event the Premises are completely or partially destroyed or
so damaged by fire or other hazard that the Premises cannot be reasonably used
by Tenant or can only be partially used by Tenant and this Lease is not
terminated as above provided, there shall be no abatement of rent for the first
sixty (60) days following the date of damage or destruction, it being understood
and agreed that the Tenant at its discretion, cost and expense shall procure
insurance necessary to protect itself against any interruption of its business
during such sixty (60) day period. In the event that Tenant is prevented from
using the Premises in excess of sixty (60) days, then Fixed Annual Minimum Rent
and Additional Rent shall be abated, and there shall be a proportionate
reduction to the Annual Minimum Gross Receipts, from and after said sixtieth
(60th) day until the date Tenant is able to reopen for business within the
Premises.
13.02 - Restoration During Last Three Years
Anything in Section 13.01 to the contrary notwithstanding, if, within
three (3) years prior to the expiration of the initial term or at any time
during any renewal term (if any) of this Lease the Premises shall be damaged or
destroyed by fire or otherwise and the estimated cost of restoration exceeds
Fifty Thousand and 00/100 Dollars ($50,000.00), then at the election of Landlord
or Tenant and by notice to the other, the Lease shall terminate.
13.03 - Tenant's Obligation Upon Restoration
In the event of damage or destruction to the Premises and unless this
Lease is terminated by Landlord or Tenant as provided in this Article 13, Tenant
shall, as soon as reasonably possible, repair, redecorate and refixture the
Premises and restock the contents thereof in a manner and to at least a
condition equal to that existing prior to its destruction or casualty, and
reopen the entire Premises for business. All proceeds of insurance carried by
Tenant on Tenant's Personal Property shall be held in trust for such purposes.
ARTICLE 14
Eminent Domain
14.01 - Eminent Domain
If the Premises, or such portion thereof as to render the balance wholly
unsuitable for the purpose of Tenant, is taken by condemnation or the right of
eminent domain, or by agreement between Landlord and those authorized to
exercise such right (collectively the "Condemnation Proceedings"), either party
upon written notice to the other shall be entitled to terminate this Lease
provided that such notice is given not later than thirty (30) days after Tenant
has been deprived possession of use by such taking. Should any part of the
Premises be so taken and should this Lease not be terminated in accordance with
the foregoing provisions, Landlord covenants and agrees promptly after such
taking to expend so much as may be necessary of the net amount which may be
awarded to and received by it in such Condemnation Proceedings in restoring the
Premises to an architectural unit as nearly like its condition prior to such
taking as shall in the reasonable judgment of Landlord be practicable, with an
appropriate abatement to be made in Fixed Annual Minimum Rent and a
corresponding reduction in Annual Minimum Gross Receipts. Should the net amount
so awarded to and received by Landlord be insufficient to cover the cost of
restoring the Premises as estimated by Landlord's architect, Landlord may at its
election, supply the amount of such insufficiency and restore
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the Premises, as above provided, or terminate this Lease. Where Tenant has not
already exercised any right of termination accorded to it under this Section
14.01, Landlord shall notify Tenant of Landlord's election within ninety (90)
days after the final determination of the amount of the award.
14.02 - Landlord Entitled to Award
Out of any award for any such taking of the Premises or any part
thereof, Landlord shall be entitled to receive and retain the amounts awarded
for such Premises, except that Tenant shall be entitled to receive and retain
only amounts which may be specially awarded to it in any such condemnation
proceedings because of the taking of its trade fixtures and its leasehold
improvements which have not become a part of the realty, and such business loss
as Tenant shall specifically and separately establish, but not otherwise. It is
understood in the event of on termination of this Lease as aforesaid, Tenant
shall have no claim against the Landlord or the condemning authority for the
value of any unexpired term of its Lease and no right or claim to any part of
the award on account thereof. Tenant hereby waives each such claim or right and
assigns any such claim or right to Landlord. Anything contained in this Lease to
the contrary notwithstanding, Tenant shall have the right to bring any claim
during any Condemnation Proceedings, provided such claim does not reduce the
claim of Landlord in said Condemnation Proceedings.
ARTICLE 15
Bankruptcy and Default Provisions
15.01 - Events of Default and Conditional Limitation
(a) If at any time prior to or during the term any one or more of the
following events occurs, each such event shall constitute an "event of default":
(i) Tenant or Tenant's Guarantor, if any, makes an assignment
for the benefit of its creditors;
(ii) The leasehold estate hereby created in Tenant is taken on
execution or by other process of law;
(iii) Any petition is filed against Tenant or Tenant's
Guarantor, if any, in any court, whether or not pursuant to any bankruptcy,
reorganization, composition extension, arrangement or insolvency proceedings,
and Tenant or Tenant's Guarantor is thereafter adjudicated bankrupt, or such
petition is approved by the Court, or the Court assumes jurisdiction of the
subject matter and such proceedings are not dismissed within ninety (90) days
after the institution of the same; or any such petition is so filed by Tenant,
or Tenant's Guarantor.
(iv) In any proceedings, a receiver or trustee is appointed for
Tenants property or the property of Tenant's Guarantor and such receivership or
trusteeship is not vacated or set aside within ninety (90) days after the
appointment of such receiver or trustee;
(v) Tenant intentionally or fraudulently understates Gross
Receipts by five percent (5%) or more:
(vi) There is a transfer or an attempted transfer of this Lease
or of Tenant's interest thereof in violation of the restrictions set forth in
Article 17 of this Lease;
(vii) Tenant ceases operation in or vacates or abandons the
Premises or is otherwise in breach of Sections 6.01 or 6.02 of this Lease, and
such breach is not cured within ten (10) days following written notice from
Landlord, provided, however, that if such default cannot be cured within said
time period, Tenant shall be deemed to have cured such default if Tenant
commences cure of the default within said time period, and thereafter diligently
and in good faith continues with and actually completes said cure. Tenant shall
promptly notify Landlord of Tenant's commencement of such cure;
(viii) Tenant fails to comply with any local, state or federal
law, rule or regulation governing the use, handling and disposal of Hazardous
Materials or is otherwise in violation of the obligations contained in Section
18.03 of this Lease, and Tenant fails to commence a cure of such violation
within thirty (30) days following written notice from Landlord (or such shorter
time period if required by law); provided, however, that If such default cannot
be cured within said time period, Tenant shall be deemed to have cured such
default if Tenant commences cure of the default within said time period, and
thereafter diligently and in good faith continues with and actually completes
said cure. Tenant shall promptly notify Landlord of Tenant's commencement of
such cure;
(ix) Tenant fails to comply with the obligations contained in
Section 21.03 of this Lease, and such failure continues for fifteen (15) days
following written notice from Landlord;
(x) Tenant or Tenant's Guarantor, if any, fails to pay any
installment of the Fixed Annual Minimum Rent, Percentage Rent, Additional Rent
or any portion of any such payment, when the same becomes due and payable, and
such failure continues for ten (10) days after receipt of written notice from
Landlord to Tenant;
(xi) Tenant or Tenant's Guarantor, if any, fails to pay any
installment of the Fixed Annual Minimum Rent, Percentage Rent, Additional Rent
or any portion of such payment, when same becomes due and payable, and such
failure occurs on three (3) or more occasions in any Lease Year or Partial Lease
Year;
(xii) Tenant fails to comply with the obligations contained in
Section 1.03 of this Lease, and such failure continues for ten (10) days after
receipt of written notice from Landlord to Tenant: provided, however, that if
such default cannot be cured within such time period, Tenant shall be deemed to
have cured such default if Tenant commences cure of the default within such time
period, and thereafter diligently and in good faith continues with and actually
completes said cure. Tenant shall promptly notify Landlord of Tenant's
commencement of such cure; or
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(xiii) Tenant or Tenants Guarantor, if any, fails to perform or
observe any other material requirement of this Lease (not hereinbefore
specifically referred to) on the part of Tenant to be performed or observed and
such failure continues for thirty (30) days after receipt of written notice from
Landlord to Tenant provided, however, that if such default cannot be cured
within such time period, Tenant shall be deemed to have cured such default if
Tenant commences cure of the default within such time period, and thereafter
diligently and in good faith continues with and actually completes said cure.
Tenant or Tenant's Guarantor, if any, shall promptly notify Landlord of Tenant's
or Tenant's Guarantors (if any) commencement of such cure.
(b) This Lease and the term are expressly subject to the conditional
limitation that upon the happening of any one or more of the aforementioned
events of default, Landlord, in addition to the other rights and remedies it may
have, shall have the right, upon notice to Tenant to declare this Lease
terminated and the term ended, in which event all of the right, title and
interest of Tenant hereunder shall wholly cease and expire upon receipt by
Tenant of a Notice of Termination. Tenant shall then quit and surrender the
Premises to Landlord in the manner and under the conditions as provided for
under this Lease, but Tenant shall remain liable as hereinafter provided.
Notwithstanding anything to the contrary in this Section 15.01(b), the parties
hereby agree that the following events shall be deemed "material" for the
limited purposes of determining Landlord's right to terminate this Lease
according to the terms of this Section 15.01 (b) following an event of default
for which notice and any applicable opportunity to cure has expired: (i) failure
to open and commence and continue operation of Tenant's business within the
entire Promises according to Section 6.02 of this Lease; (ii) failure to make
repairs to the Premises according to Section 10.02 of this Lease; (iii) failure
to comply with Tenant's indemnification obligations according to Article II of
this Lease; (iv) failure to comply with Tenant's insurance obligations pursuant
to Article 12 of this Lease; (v) failure to comply with Tenant's obligations
with regard to Restoration of the Premises according to Section 13.03 of this
Lease; (VI) an assignment, sublet or other transfer not in compliance with the
terms of Article 17 of this Lease; and (vii) failure to comply with Government
Orders, Insurance Matters, Hazardous Material or the ADA, all according to the
terms of Article 18 of this Lease. It is specifically understood and agreed that
this provision shall not in any way modify any other termination right of
Landlord which is otherwise specifically provided for in this Lease.
15.02 - Landlord's Remedies
(a) If this Lease shall be terminated as provided in Section 15.01,
Landlord or Landlord's agents or employees may immediately or at any time
thereafter re-enter the Premises and remove therefrom Tenant, its agents,
employees, licensees, and any sub-tenants and other persons, firms or
corporations, and all or any of its or their property therefrom, either by
summary dispossess proceedings or by any suitable action or proceedings at law
or in equity, without being liable to indictment or prosecution of damages
therefor, and repossess and enjoy the Premises, together with all alterations,
additions and improvements thereto. Landlord, in the event of such re-entry and
repossession, may store Tenant's Personal Property in a public warehouse or
elsewhere at the cost of and for the account of Tenant.
(b) In case of any such termination, re-entry or dispossession by
summary proceedings or otherwise, the rents and all other charges required to be
paid up to the time of such termination, re-entry or dispossession, shall be
paid by Tenant, and Tenant also shall pay to Landlord all reasonable expenses
which Landlord may then or thereafter incur for legal expenses, attorneys' fees,
brokerage commissions and all other costs paid or incurred by Landlord as the
result of such termination, re-entry or dispossession, and for restoring the
Premises to good order and condition and for altering and otherwise preparing
the same for reletting and for reletting thereof. Landlord may, at any time and
from time to time, relet the Premises, whole or in part, for any rental then
obtainable either in its own name or as agent of Tenant, for a term which, at
Landlord's option, may be for the remainder of the then current term of this
Lease or for any longer or shorter period.
(c) If this Lease is terminated as aforesaid, Tenant nevertheless
covenants and agrees notwithstanding any entry or re-entry by Landlord whether
by summary proceedings, termination or otherwise, to pay and be liable for on
the days originally fixed herein for the payment thereof, amounts equal to the
several installments of Fixed Annual Minimum Rent, Percentage Rent and
Additional Rent reserved as they would, under the terms of this Lease, become
due if this Lease had not been terminated or if Landlord had not entered or
re-entered as aforesaid, and whether the Premises is relet or remains vacant in
whole or in part or for a period less than the remainder of the term, and for
the whole thereof. In the event the Premises be relet by Landlord, Tenant shall
be entitled to a credit (but not in excess of the Fixed Annual Minimum Rent,
Percentage Rent and Additional Rent reserved under the to of this Lease) in the
net amount of rent received by Landlord in reletting the Premises after
deduction of the reasonable out-of-pocket expenses and costs incurred or paid as
aforesaid in reletting the Premises and in collecting the rent in connection
therewith. If Tenant fails to make such payments in accordance with the first
sentence, of this subsection 15.02(c) for any two (2) consecutive months
following the termination of this Lease, Landlord shall at any time thereafter,
in lieu of collecting any monthly deficiencies, or any further monthly
deficiencies, aforesaid. at Landlord's option, be entitled to recover from
Tenant, in addition to any other relief, such a sum as at the time of such
termination represents the amount of the then present value of the total Fixed
Annual Minimum Rent, Percentage Rent, and Additional Rent which would have
accrued to Landlord under this Lease for the remainder of the Lease term, as if
the Lease had been fully complied with by Tenant. less any monthly deficiencies
for such period previously paid to Landlord by Tenant, The present value
("Present Value Amount") shall be calculated by discounting all amounts due by a
discount rate equal to the greater of (i) the [***] or (ii) [***]. Tenant shall
be entitled to a credit against the Present Value Amount for Fixed Annual
Minimum Rent, Percentage Rent and Additional Rent subsequently received by
Landlord from a replacement tenant against amounts paid by Tenant to Landlord
after deducting the allowance paid by Landlord to Tenant and all expenses and
costs incurred or paid (including any allowances, construction costs and
administrative costs) by Landlord in reletting the Premises and in collecting
the rent in connection therewith, which right to a credit shall terminate on the
date this Lease would have expired pursuant to Section 2.02. Suit or suits for
the recovery of the deficiency or damages referred to in this Subsection
15.02(c) or for any installment or installments of Fixed Annual Minimum Rent,
Percentage Rent or Additional Rent hereunder, or for a sum equal to any such
installment or installments, may be brought by Landlord all at once or from time
to time at Landlord's election, and nothing in this Lease shall be deemed to
require Landlord to await the date whereon this Lease or the term hereof would
have naturally expired had there been no such default by Tenant or no such
termination.
(d) For the purpose of this Section 15.02, it shall be deemed that the
Percentage Rent for any period after any such default and entry by Landlord
would have been at the monthly rate thereafter equal to the average
*** Confidential treatment requested.
21
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Percentage Rent which Tenant was obligated to pay to Landlord under this Lease
within the two (2) Lease Years (or lesser number of Lease Years since the Term
Commencement Date) immediately preceding the date of such entry.
(e) Tenant hereby expressly waives, so far as permitted by law, any and
all right of redemption or reentry or repossession under present or future laws
arising after Landlord's recovery of possession, including any amendments
hereafter, or to restore the operation of this Lease. Landlord and Tenant, so
far as permitted by law, waive and will waive trial by jury in any action,
proceeding or counterclaim brought by either of the parties hereto against the
other on any matters whatsoever arising out of or in any way connected with this
Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of the
Premises, or any claim or injury or damage. The terms 'enter,' 're-enter,'
'entry' or 're-entry' as used in this Lease are not restricted to their
technical legal meaning. In the event Landlord commences any proceedings for the
recovery of possession of the Promises or to recover for nonpayment of Fixed
Annual Minimum Rent, Percentage Rent or Additional Rent, Tenant shall not
Interpose any noncompulsory counterclaim in any such proceeding. This may not,
however, be construed as a waive of Tenant's rights to assert such claim in any
separate action or actions initiated by Tenant.
(f) No failure by Landlord to insist upon the strict performance of any
covenant, agreement, term or condition of this Lease or to exercise any right or
remedy consequent upon a breach thereof, and no acceptance of full or partial
rent during the continuance of any such breach shall be deemed an accord and
satisfaction thus Landlord may accept any check or payment without prejudice to
Landlord's rights to recover the balance due, nor shall it constitute a waiver
of any such breach or of such covenant, agreement, term and condition, and this
Lease shall continue in full force and effect with respect to any other then
existing or subsequent breach thereof.
(g) In the event of any breach or threatened breach by Tenant of any of
the covenants, agreements, terms or conditions contained in this Lease, Landlord
shall be entitled to enjoin such breach or threatened breach and shall have the
right to invoke any right or remedy allowed at law or in equity, by statute or
otherwise.
(h) Each right and remedy of Landlord provided for in this Lease shall
be cumulative and shall be in addition to every other right or remedy provided
for in this Lease or now or hereinafter existing at law or in equity, by statute
or otherwise.
ARTICLE 16
Mechanics' Liens
16.01 - Mechanics' Liens
(a) If any mechanics' liens are filed against the Premises or any
portion of the Shopping Center based upon any act of Tenant or anyone claiming
through Tenant. Tenant shall hold Landlord harmless from all damages, claims and
expenses arising therefrom, and Tenant, after notice from Landlord (or any
person in privity of estate with Landlord), shall forthwith commence such action
by bonding, deposit, payment or otherwise as will remove or satisfy such lien
within thirty (30) days. In the event Tenant does not remove or satisfy said
lien within said thirty (30) day period, Landlord shall have the right to do so
by posting a bond or undertaking, and Tenant agrees to reimburse Landlord for
all reasonable out-of-pocket expenses incurred by Landlord in connection
therewith five (5) days after receipt by Tenant of Landlord's invoice therefor.
These expenses shall include, but not be limited to, filing fees, legal fees and
bond premiums.
(b) Nothing in this Article 16 shall be deemed or construed as (i)
Landlord's consent to any person, firm or corporation for the performance of any
work or services or the supply of any materials to the Premises or any
improvement thereon, or (ii) giving Tenant of any other person, firm or
corporation any right to contract for or to perform. or supply any work,
services or materials that would permit or give rise to a lien against the
Premises or any part thereof.
ARTICLE 17
Assignments, Subleases and Other Transfers of Tenant's Interest
17.01 - Limitations on Tenant's Rights
(a) Neither this Lease nor the interest of Tenant in this Lease shall be
sold, assigned, transferred, mortgaged, pledged, hypothecated or otherwise
disposed of, whether by operation of law or otherwise, nor shall the Premises or
any part thereof be sublet or subject to any license or concession without the
prior written consent of Landlord in each instance. The sale or transfer of
stock constituting a controlling interest In Tenant or Tenant's Guarantor shall
be considered for the purpose of this Lease to be an assignment, and likewise
shall require Landlord's prior written consent, except where Tenant or Tenant's
Guarantor is a corporation having its shares traded on the New York, American or
Over-The-Counter stock exchange or market. Tenant shall make available to
Landlord the stock record books of Tenant and Tenant's Guarantor and shall
produce the same on request of Landlord. Similarly, if Tenant is a partnership,
the interest of any partner shall not be transferred without Landlords prior
written consent. For the purposes of this Lease, the entering into of any
management agreement or any similar agreement which transfers control of the
business operations of Tenant in the Premises shall be treated as an assignment
of this Lease and shall require Landlord's prior written consent. Any attempted
transfer, assignment, subletting, license or concession agreement, hypothecation
or other transfer herein that is prohibited without Landlord's prior written
consent shall be void and confer no rights upon any third party. Anything
contained in this Section 17.01(a) to the contrary notwithstanding, Tenant shall
have the right without Landlord's consent to assign this Lease or sublet the
Premises, subject to the terms of this Lease, in conjunction with the sale of
substantially all of the other assets and other store locations of Tenant to
Tenant's parent, Tenant's subsidiary, or a subsidiary of Tenant's parent,
provided that at least seventy-five percent (75%) of Tenant's other stores
located in the United States are simultaneously transferred to such entity.
Tenant shall remain primarily liable under this Lease following any assignment
of the Lease or subletting of the Premises. Subject to paragraph (f)
hereinbelow, Landlord shall not unreasonably withhold
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its consent to any assignment or subleasing and shall respond to any request by
Tenant for permission to sublease or assign with thirty (30) days after receipt
of written request. If Landlord objects to such assignment or sublease. Landlord
shall advise Tenant of the reasons for such objections. If Landlord fails to
respond to such request within said thirty (30) days, and such failure continues
for ten (10) days following Notice from Tenant, then such failure shall be
deemed approval of such sublease or assignment.
Notwithstanding the terms of the immediately preceding grammatical
paragraph provided Tenant is not in default beyond any applicable cure period,
named Tenant may, without the consent of Landlord, assign this Lease or sublet
the entire Premises to any corporation which owns all of the issued and
outstanding common stock of named Tenant or to a wholly owned subsidiary
corporation of named Tenant, or to any corporation resulting from the
consolidation or merger of named Tenant, in or with any other business
organization or any person, firm or corporation acquiring all of the issued and
outstanding capital stock of named Tenant or all or substantially all of the
assets, store locations and no less than eighty percent (80%) of leases
(including this Lease) of named Tenant to the same entity; however, no such
assignment shall be deemed effective unless and until such assignee executes and
delivers to Landlord, at no cost to Landlord, a written agreement in form and
substance acceptable to Landlord whereby such assignee assumes for the benefit
of Landlord the performance and observance of all of the terms, conditions and
covenants contained in this Lease. The foregoing is subject to Tenant providing
Landlord with thirty (30) days' written notice in advance, including statements
of fact certified by an authorized officer of Tenant, certifying the facts upon
which Tenant is claiming the right to assign this Lease pursuant to this
grammatical paragraph. In addition, any private placement or public offering of
ownership interest in Tenant shall not require Landlord's prior consent,
provided that as a result of any private placement the day-to-day management of
Tenant remains unchanged.
Notwithstanding anything contained in this Section 17.01 to the
contrary, a public offering of Tenant's voting stock on a nationally recognized
public stock exchange shall not be deemed an assignment of this Lease, provided
(i) Tenant shall have given Landlord ten (10) days' prior written notice of such
intended public offering, and (ii) this Lease is not further assigned except as
provided for in this Article 17.
(b) No permitted assignment made shall be effective until there are
delivered to Landlord (i) an agreement, in recordable form, executed by Tenant
and the proposed assignee, wherein such assignee assumes due performance of the
obligations of Tenant's part to be performed under this Lease to the end of the
term hereof and (ii) a written consent to such assignment by the holder of any
fee or leasehold mortgage affecting the Premises to which this Lease is then
subject and such consent shall have been obtained and delivered to Landlord if
so required by the terms of such mortgage or by a collateral document securing
the same obligations as are secured by such mortgage.
(c) Any assignment of this Lease or any sublease affecting the Premises
or any other permitted transfer hereunder shall be subject and subordinate to
the full terms and conditions of this Lease. Regardless of either the assumption
by any assignee or sublessee of due performance or the Landlord's acceptance of
rent or other charges from such assignee or sublessee, Tenant shall not be
released by any assignment or sublease but shall continue to be fully
responsible for the due performance of Tenant's obligations hereunder in the
same manner and to the same extent as if no such assignment or sublease had been
made. Notwithstanding anything to the contrary in this Section 17.01(c), for
any assignment of this Lease for which Landlord's consent is required and such
consent is granted, Tenant shall be released from any future obligations under
this Lease provided that the proposed assignee maintains a net worth of at least
Ten Million Dollars ($10,000.000) for the twenty-four (24) month period
immediately preceding the assignment and for the twelve (12) months immediately
following the assignment.
(d) In the event Tenant assigns or subleases all or any portion of the
Premises as set forth in this Article 17 and the amounts due to Tenant under
such assignment or sublease exceed the amounts reserved to be paid to Landlord
by Tenant under this Lease, then Tenant shall pay to Landlord one-half of the
amount by which such assignment or sublease rent exceeds Rent as set forth in
Section 3.01(a) above. In the event Tenant assigns or subleases only a portion
of the Premises, the assignment or sublease rent shall be calculated on a per
square foot basis and then compared to the then applicable per square foot Rent
reserved in Section 3.01(a) above to determine whether or not such assignment
or sublease rent exceeds Rent.
(e) Any transfer made in violation of the provisions of subsections (a),
(b) or (c) in this section 17.01 shall constitute an event of default under
Section 15.01 herein and give rise to Landlord's right to re-enter the Premises
in accordance with Section 15.02.
(f) Notwithstanding anything in this Section 17.01 to the contrary, if
Tenant desires to assign its interest under this Lease or to sublet all of the
Premises to a Permitted Party (as hereinafter defined), Tenant shall deliver to
Landlord written notice, requesting Landlord's consent to such transaction,
which consent request shall include (i) a fully executed letter of intent
containing the material terms of the proposed assignment or sublet transaction
(including proposed rent (including additional rent), square foot area, term and
use), (ii) current reasonable financial information with respect to the proposed
assignee or sublessee, including without limitation its most recent financial
report, (iii) a statement that the proposed assignment or sublease relates to
the entire Premises for the remaining term of this Lease, and (iv) an express
statement to the effect that the proposed assignee or sublessee is a Permitted
Party within the meaning of this paragraph and that Landlord has the right to
terminate this Lease in connection with the assignment or sublease pursuant to
this Section 17.01(f) or such assignment or sublease shall be deemed consented
to by Landlord. A notice that contains the information described in clauses (i)
through (iv) shall be deemed an offer ("Takeback Offer") from Tenant to Landlord
whereby Landlord may terminate this Lease. If Tenant's notice does not expressly
state the items described in clauses (i) through (iv) including that the
proposed assignee or sublessee is to a Permitted Party, such notice shall
constitute a request by Tenant for Landlord's consent to sublease the Premises
or assign this Lease subject to the other terms of this Section 17.01; such
notice shall not constitute a Takeback Offer and Landlord shall not be entitled
to terminate this Lease under this Section 17.01(f). The Takeback Offer may be
exercised by Landlord by written notice ("Takeback Notice") to Tenant at any
time within thirty (30) days after such Takeback Offer has been given by Tenant
to Landlord; and during such thirty (30) day period Tenant shall not assign this
Lease to such prospective assignee or sublet the Premises to such prospective
sublessee unless such assignment is expressly conditioned upon and not effective
until the expiration of the 30-day period for Landlord to deliver the Takeback
Notice. The term "Permitted Party" shall mean a third party (i) who will operate
the Premises for a lawful bona fide retail use consistent with uses at other
first-class shopping centers or for the use permitted under Section 6.01 of this
Lease, and not in violation of any use restriction in effect for the Shopping
Center of which Tenant has been advised within twenty (20) days after Landlord's
receipt of
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Tenant's Takeback Offer; (ii) who has a net worth equal to or greater than the
then net worth of Tenant; and (iii) who is a national or regional chain of
retail stores, or is then operating (directly or indirectly) at least five (5)
stores in the States of New York, New Jersey, Pennsylvania, Massachusetts and
Connecticut for the same or similar use, or has at least ten (10) years of
retail operating experience. Upon such termination, all obligations of Landlord
and Tenant (other than those that expressly are stated to survive termination)
shall cease to be of further force and effect. Notwithstanding anything in this
Section 17.01 to the contrary, Tenant shall have the right, without Landlord's
consent, to secure furniture, fixture and equipment financing in the ordinary
course of business and to grant to the financing party a security interest in
the furniture, fixtures, or equipment.
If Landlord exercises its option to terminate this Lease pursuant to
this subsection in connection with an assignment or sublet of all of the
Premises, then, unless Tenant, within fifteen (15) days after receipt of the
Takeback Notice, withdraws Tenant's request for Landlord's consent to the
proposed assignment or sublet, this Lease shall end and expire on the effective
date designated by Landlord in its Takeback Notice (which date shall not be less
than sixty (60) days nor more than one hundred twenty (120) days after the date
of the Takeback Notice) as fully and completely as if such early termination
date were the original expiration date of the Term, and all Rent shall be
apportioned as of such date.
If (x) Landlord shall not elect to send a Takeback Notice within said
30-day period and (y) Tenant is not then in default under this Lease beyond any
applicable notice or cure periods, Tenant shall be entitled, without any consent
by Landlord, to assign this Lease or sublet all of the Premises on substantially
the terms for proposed rent (including additional rent), square foot area, term
and use and to the Permitted Party, described in Tenant's request for Landlord's
consent, provided that if Tenant shall then be in default under this Lease
beyond any applicable notice or cure period, then any such assignment or sublet
shall not be effective until such defaults are cured. Any assignment or sublet
to a Permitted Party shall be subject and subordinate to the terms. conditions
and covenants of this Lease (other than with respect to the use set forth in
Section 1.03), provided that if the assignee or sublessee will not operate any
racing simulator or other rides within the Premises, then notwithstanding
anything to the contrary in Section 3.02, Percentage Rent shall be an amount
equal to [***] of Gross Receipts in excess of [***]. To the extent necessary,
Tenant and Landlord shall execute and deliver a Lease Modification Agreement or
other agreement reflecting the new use clause, if any.
17.02 - Effect of Landlord's Consent
(a) Any consent by Landlord to a sale, assignment, sublease, mortgage,
pledge, license, concession, hypothecation, or transfer of this Lease, shall
apply only to the specific transaction thereby authorized and shall not relieve
Tenant from the requirement of obtaining prior written consent of Landlord to
any further sale, assignment, sublease, mortgage, pledge, hypothecation, or
transfer of this Lease. When the consent of Landlord is required hereunder to
any proposed assignment or sublease of this Lease, or to the mortgaging,
pledging, licensing. concession or hypothecation of this Lease,
contemporaneously with the request of Tenant therefor, Tenant shall submit in
writing information reasonably sufficient to enable Landlord to make a decision
with respect thereto.
(b) With respect to any of the consents requested by Tenant, whether or
not the Landlord has consented thereto, Tenant shall pay to the Landlord the
reasonable counsel fees and disbursements and other expenses incurred by the
Landlord in connection therewith. Notwithstanding anything to the contrary in
this Section 17.02(b), in no event shall this sum exceed [***].
ARTICLE 18
Compliance with Government Orders
18.01 - Tenant to Comply
Tenant, at its own expense, shall promptly execute and comply with all
statutes, ordinances, rules, orders, regulations and requirements of the
federal, state and local governments and of any and all other departments and
bureaus applicable to Tenant's particular use of the Premises or to the business
conducted by Tenant at the Premises, whether ordinary, extraordinary, foreseen
or unforeseen ("Governmental Orders"). In addition, Tenant, at its own expense,
shall comply promptly with and execute all rules, orders, regulations and
recommendations of the Board of Fire Underwriters, Rating Board and Landlord and
Tenant's insurance companies with respect to the prevention of fires and the
exposure of liability risks ("Insurance Matters). Tenant, at its own expense,
shall furnish and maintain in good order an adequate number and type of fire
extinguishers on the Premises at an times. Notwithstanding the foregoing, in no
event shall Tenant ever be responsible for any violation of Governmental Orders
or Insurance Matters arising directly out of Landlord's Work. Landlord hereby
represents that the Premises shall comply with all applicable Governmental
Orders and Insurance Matters on the date Landlord delivers possession of the
Premises to Tenant.
18.02 - Failure to Comply
In case Tenant fails or neglects to comply with any of the Government
Orders. Insurance Matters or the ADA (as hereinafter defined) as herein required
of Tenant, then Landlord or its agent may enter the Premises and make said
repairs and comply with any and all of the Government Orders, Insurance Matters
or the ADA at the cost and expense of Tenant, and in case Tenant fails to pay
therefor upon notice within five (5) days thereafter, the said cost and
expenses, including twelve percent (12%) for administration costs, shall be
added to the next month's installment of Fixed Annual Minimum Rent and be due
and payable as such or Landlord may deduct the same from any balance remaining
in Landlord's hands. This provision is in addition to the right of Landlord to
terminate this Lease under Article 15 hereof by reason of default on the part of
Tenant.
18.03 - Hazardous Material
Tenant shall, at all times, comply with all local, state and federal
laws, rules and regulations governing the use, handling and disposal by Tenant
of Hazardous Material in the Premises and that portion of the Common Areas
*** Confidential treatment requested.
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which Tenant employs for the display of its model NASCAR racing vehicle, as
specifically set forth in Section 7.03 of this Lease, including, but not limited
to Section 1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq. (42 U.S.C. Section 6903) and any additions, amendments, or
modifications thereto. As used herein, the term "Hazardous Material" shall mean
any hazardous or toxic substance, material or waste which is, or becomes,
regulated by any local or state government authority in which the Promises is
located or the United States Government. Landlord and its agents shall have the
right, but not the duty, to inspect the Premises at any time to determine
whether Tenant is complying with the terms of this Section. If Tenant is not in
compliance with this Section, Landlord shall have the right to immediately enter
upon the Premises and take whatever actions as are reasonably necessary to
comply including, but not limited to, the removal from the Premises of any
Hazardous Material and the restoration of the Premises to a clean, neat,
attractive, healthy and sanitary condition. Tenant shall pay reasonable
out-of-pocket costs incurred by Landlord plus [***] for administration within
ten (10) days after Tenant's receipt of a bill therefor. The covenants in this
Section 18.03 shall survive the expiration or earlier termination of this Lease.
Landlord hereby consents to Tenant's use of (i) hydraulic oil in connection with
the operation of the driving simulators and related equipment associated with
Tenant's permitted use and (ii) cleaning and office products customarily used in
retail or office promises, so long as all of such materials are used, handled,
and disposed of in accordance with applicable laws and at no cost to Landlord.
18.04 - Americans With Disabilities Act
Tenant, at its own expense, shall at all times comply with and shall
cause the Premises and that portion of the Common Areas which Tenant employs for
the display of Its model NASCAR racing vehicle, as specifically set forth in
Section 7.03 of this Lease, to be in compliance with the requirements of the
Americans With Disabilities Act of 1990, and any additions, amendments or
modifications thereto and all related regulations (the "ADA"). Landlord, at
Landlords sole cost and expense, shall be responsible for insuring that
Landlord's Work and the Common Areas are in compliance with the ADA.
ARTICLE 19
Subordination, Mortgagee's Rights and Assignment of Rents
19.01 - Subordination
The rights and interests of Tenant under this Lease shall be subject and
subordinate to any ground lease, mortgage or trust deed now or hereafter placed
upon any portion of the Shopping Center, and to any advances made thereunder,
and to the interest thereon, and to all renewals, modifications, consolidations,
replacements, extensions and re-financings thereof. Tenant agrees that any
ground lessor, mortgagee or trustee may elect to give the rights and interest of
Tenant under this Lease priority over the lien of its ground lease, mortgage or
trust deed. In the event of such election, the rights and interest of Tenant
under this Lease automatically shall have priority in whole or in part, over the
lien of said ground lease, mortgage or trust deed, and no additional consent or
instrument shall be necessary or required. However, Tenant agrees to execute and
deliver such instruments as may be reasonably requested by any ground lessor,
mortgagee or trustee for such purposes, and in the event Tenant fails to do so
within ten (10) days after demand in writing, Tenant does hereby make,
constitute and irrevocably appoint Landlord as its attorney-in-fact (which shall
be deemed to be coupled with an interest) and in its name, place and stead so to
do. In the event Landlord shall elect to refinance the Shopping Center during
the term, Tenant's subordination to such future lender shall be expressly
conditioned upon Tenant's receipt of a non-disturbance agreement reasonably
acceptable to both Tenant and such future lender. Landlord will deliver to
Tenant, on or before September 15, 1999, a non-disturbance agreement from each
existing ground lessor and lender with an interest in the Shopping Center, and
will use reasonable efforts to obtain the non-disturbance agreement in a form
reasonably acceptable to Tenant. In the event Landlord is unable to obtain such
non-disturbance agreement by September 15, 1999, then Tenant shall not be
obligated to accept possession of the Premises and there shall be a day for day
postponement of the Term Commencement Date until Landlord obtains such
non-disturbance agreement. If Landlord is unable to obtain such non-disturbance
agreement by September 15, 1999, then Tenant may terminate this Lease upon
thirty (30) days notice to Landlord. Landlord, at any time after the execution
of this Lease, may, in good faith, give notice to Tenant that Landlord is unable
despite its reasonable efforts to obtain the non-disturbance agreement on the
form requested by Tenant. At such time, if Tenant refuses to accept the form of
non-disturbance agreement that Landlord is able to secure from its Lender,
Landlord may terminate this Lease upon thirty (30) days notice to Tenant.
19.02 - Mortgagee's Rights
(a) So long as any such ground lease, trust deed or mortgage remains a
lien on any portion of the Shopping Center, Tenant agrees, simultaneously with
the giving of any notice to Landlord which is required to be given by this
Lease, to give a duplicate copy thereof to the respective ground lessor,
mortgagee or trustee, provided Landlord has given Tenant notice of the name and
address of any such ground lessor, mortgagee or trustee. Landlord agrees to
notify Tenant of any ground lessor, mortgagee or trustee to whom such notice
must be sent. Further, Tenant agrees that if Landlord defaults in its
performance of any of the covenants under this Lease and if such default
entities Tenant to terminate this Lease, the ground lessor, mortgagee or trustee
may cure said default within thirty (30) days after any time period required of
Landlord; provided, however, that if such default cannot be cured within such
time period, Landlord shall be deemed to have cured such default if cure of the
default is commenced within such time period, and thereafter diligently and in
good faith continued with and actually completed. Landlord shall promptly notify
Tenant of its commencement of such cure, and, if necessary, be permitted entry
upon the Premises for the purpose of curing any such default. The giving of any
such notice to Landlord shall not be properly given under the terms of this
Lease and shall be of no force and effect until a duplicate copy thereof is also
given to the ground lessor, mortgagee or trustee pursuant to this Section 19.02.
*** Confidential treatment requested.
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(b) Tenant hereby acknowledges that so long as any ground lease,
mortgage or trust deed is a lien upon the Premises, Landlord cannot agree to
reduce the rents below that provided for in this Lease, provide for payments of
rent prior to the time herein provided for, nor terminate this Lease prior to
the end of the term, except as otherwise provided in this Lease, without first
obtaining the written consent of the ground lessor, mortgagee or trustee, and
that any such proposed modification or termination without the written consent
of said ground lessor, mortgagee or trustee shall be void as against said ground
lessor, mortgagee, or trustee.
19.03 - Assignment of Rents
(a) With reference to any assignment by Landlord of Landlords interest
in this Lease, or the rents payable hereunder, conditional in nature or
otherwise, which assignment is made to the holder of a mortgage or ground lease
on property which includes the Premises, Tenant agrees:
<PAGE> 31
(i) that the execution thereof by Landlord, and the acceptance
thereof by the holder of such mortgage or the ground lessor, shall never be
treated as an assumption by such holder or ground lessor any of the obligations,
of Landlord hereunder, unless such holder or ground lessor shall, by notice sent
to Tenant, specifically otherwise elect; and
(ii) that except as aforesaid, such holder or ground lessor
shall be treated as having assumed Landlord's obligations hereunder with respect
only to those obligations that arise following a foreclosure or deed in lieu
thereof, or assumption of Landlords position by a ground lessor only upon
foreclosure of such holder's mortgage and the taking of possession of the
Premises, or, in the case of a ground lessor, the assumption of Landlord's
position hereunder by such ground lessor. Tenant agrees that with respect to
those obligations of Landlord that arise prior to a foreclosure or deed in lieu
thereof, or assumption of Landlords position by a ground lessor, such
foreclosing mortgagee in possession or ground lessor shall have no liability,
provided that nothing contained herein shag be deemed to relieve Landlord from
performance of any obligations arising under this Lease prior to the date of
such assumption nor any such foreclosing mortgagee or ground lessor, as
applicable, from performance of non-monetary obligations of a continuing nature
arising under this Lease prior to the date of such assumption.
(b) Where a party acquires Landlord's interest in property (whether land
only, or land and buildings) which includes the Premises, and simultaneously
leases the same back, such acquisition shall not be treated as an assumption of
Landlord's position hereunder, and this Lease shall thereafter be subject and
subordinate at all times to such lease (subject to the provisions of Section
19.01 above).
ARTICLE 20
Entry to Premises
20.01 - Entry to Premises by Landlord
Landlord shall have the right to enter the Premises at all reasonable
times acceptable to both Landlord and Tenant for the purposes of:
(i) inspecting the same,
(ii) making any repairs to the Premises and performing any work therein
that may be necessary or desirable,
(iii) exhibiting the Premises for the purpose of sale, ground lease,
mortgage or other financing,
(iv) exhibiting the Premises (within one year prior to the expiration of
the term of this Lease) to prospective tenants.
Except in the case of an emergency, Landlord shall be accompanied by a
representative of Tenant during any entry to the Premises unless Tenant waives
such requirement in writing, in advance of such entry. During any such entry,
Landlord shall not interfere with Tenant's access to the Premises.
Nothing in this Lease shall imply any duty on the part of Landlord to do
work or perform obligations which, under any of the provisions of this Lease,
Tenant may be required to perform, and the performance thereof by Landlord shall
not constitute a constructive eviction nor a waiver of Tenant's default.
ARTICLE 21
Notices and Certificates
21.01 - Notices
(a) Any notice, statement, certificate, request or demand required or
permitted to be given or delivered in this Lease shall be in writing, and
personally delivered, sent by reputable overnight courier, or sent by registered
or certified mail, postage prepaid, return receipt requested and addressed to
Landlord at the address shown at the beginning of this Lease, and to Tenant at
the address shown at the beginning of this Lease, or to such other addresses as
Landlord or Tenant shall designate in the manner herein provided. In the case of
any default notice sent by Landlord to Tenant, Landlord shall send a copy to:
Paul, Hastings, Janofsky & Walker, LLP. 555 South Flower Street, 23rd Floor, Los
Angeles, California 90071-2371, Attn: Rick S. Kirkbride. Landlord's managing
agent, Pyramid Management Group. Inc., is hereby authorized and designated to
give or deliver to Tenant any notice under this Lease. Any such notice,
statement, certificate, request or demand shall be deemed given, (i) when
actually delivered, if personally delivered or delivered by overnight or other
courier or delivery service which confirms delivery in writing, or (ii) within
two (2) business days after deposit in the US mail, if sent by registered or
certified mail, postage pre-paid, return receipt requested, except in case of
notice of change of address or revocation of a prior notice, which shall only be
effective upon receipt.
(b) At any time or times when Tenant's interest herein is vested in more
than one person, firm or corporation, jointly, in common or in severalty, a
notice given by Landlord to any one such person, firm or corporation shall be
conclusively deemed to have been given to all such persons, firms or
corporations. Any notices by Tenant pursuant to the provisions hereof shall be
void and ineffective unless signed by all such persons, firms and corporations,
unless all such persons, firms and corporations have previously given notice to
Landlord, signed by each of them and designating and authorizing one or more of
them to give the notice referred to, and such notice shall then be unrevoked by
any notice to Landlord.
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21.02 - Estoppel Certificate of Landlord
Within ten (10) days after request by Tenant, Landlord, from time to
time and without charge, shall deliver to Tenant or to a person, firm or
corporation specified by Tenant, a duly executed and acknowledged instrument,
certifying:
(i) that this Lease is unmodified and in full force and effect, or if
there has been any modification, that the same is in full force and effect as
modified, and identifying the date of any such modification; and
(ii) whether Landlord knows or does not know, as the case may be, of any
default by Tenant in the performance by Tenant of the terms, covenants and
conditions of this Lease, and specifying the nature of such defaults, if any.
Such certification shall not estop Landlord from thereafter asserting
any existing default of which Landlord did not have actual knowledge on the date
of execution thereof.
21.03 - Estoppel Certificate of Tenant
Within ten (10) days after request by Landlord or Landlord's ground
lessor or mortgagee, Tenant, from time to time and without charge. shall deliver
to Landlord or the requesting party, or to a person, firm or corporation.
specified by Landlord, a duly executed and acknowledged instrument, certifying:
(i) that this Lease is unmodified and in full force and effect, or if
there has been any modification, that the same is in full force and effect as
modified, and identifying the date of any such modification;
(ii) whether Tenant knows or does not know, as the case may be, of any
default by Landlord in the performance by Landlord of the terms, covenants and
conditions of this Lease, and specifying the nature of such defaults, if any;
(iii) whether or not there are any then existing permitted set-offs or
defenses by Tenant, and if so, specifying them;
(iv) the dates to which the Fixed Annual Minimum Rent, Percentage Rent,
and Additional Rent have been paid;
(V) that the operation and use of the Premises do not involve the
generation, treatment, storage, disposal or release of any Hazardous Material or
a solid waste into the environment in reportable amounts or in manners which do
not comply with all environmental laws and that the Premises is being operated
in accordance with all environmental laws, zoning ordinances and building codes;
and
(vi) such other information as Landlord or Landlord's ground lessor or
mortgagee may reasonably request.
Such certification shall not estop Tenant from thereafter asserting any existing
default of which Tenant did not have actual knowledge on the date of execution
thereof.
ARTICLE 22
Covenant of Quiet Enjoyment
22.01 - Covenant of Quiet Enjoyment
(a) So long as no event of default is existing pursuant to Section 15.01
of this Lease. Tenant shall lawfully, peaceably and quietly have, hold and enjoy
the Premises during the term hereof on and after the Term Commencement Date
without hindrance or ejection by any persons lawfully claiming under Landlord;
but it is understood and agreed that this covenant, and any and all other
covenants of Landlord contained in this Lease shall be binding upon Landlord and
its successor only with respect to breaches occurring during its and their
respective ownership of Landlord's interest hereunder.
(b) With respect to any services to be furnished by Landlord to Tenant,
Landlord shall in no event be liable for failure to furnish the same when
prevented from doing so by strike, lockout, breakdown, accident, order or
regulation of or by any governmental authority, or failure of supply, or
inability by the exercise of reasonable diligence to obtain supplies, parts or
employees necessary to furnish such services, or because of war or other
emergency, or for any cause beyond Landlord's control.
(c) Landlord shall be in default of this Lease if Landlord fails to
perform any obligation required to be performed by Landlord under this Lease and
if such failure is not cured within thirty (30) days after receipt of Notice
from Tenant specifying the nature of such failure. In the event of any such
default by Landlord, Tenant shall have the right to exercise all rights and
remedies available at law or in equity. Landlord shall reimburse Tenant for any
reasonable expenses incurred by Tenant in curing Landlord's failures within
twenty (20) days following receipt by Landlord of paid invoices from Tenant. In
the event Landlord fails to reimburse Tenant for such amounts within thirty (30)
days following receipt by Landlord of paid invoices from Tenant, then Tenant
shall have the right to offset such amounts against the next ensuing
installments of Rent, Percentage Rent and Additional Rent coming due under this
Lease until the entire amount has been recouped by Tenant.
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<PAGE> 33
ARTICLE 23
Miscellaneous Provisions
23.01 - Holdover
(a) It is expressly understood by Tenant that Tenants right to
possession of the Premises under this Lease shall terminate at the expiration or
earlier termination of the term, and should Tenant continue thereafter to remain
in possession, Landlord, should it so elect, shall be entitled to the benefits
of all provisions of law with respect to summary recovery of possession from a
holdover tenant. Tenant shall Indemnify and save harmless Landlord from any
claim, damage, expense, cost or loss which Landlord may incur by reason of such
holding over. including without limitation, any claim of a succeeding tenant, or
any loss by Landlord with respect to a lost opportunity to re-let the Premises.
(b) Should Tenant continue to occupy the Premises after the expiration
or earlier termination of the term with the consent of the Landlord, such
tenancy shall be from month-to-month, and such month-to-month tenancy shall be
under the same terms. covenants and conditions as set forth in this Lease,
except that Tenant shall pay Fixed Annual Minimum Rent on the basis of [***]
times the Fixed Annual Minimum Rent for the last year of the term.
23.02 - Limitation on Landlord's Personal Liability
(a) It is understood and agreed that Tenant shall look solely to the
estate and property of Landlord in the Shopping Center for the satisfaction of
Tenant's remedies for the collection of a judgment (or other judicial process)
requiring the payment of money by Landlord in the event of any default or breach
by Landlord with respect to any of the terms, covenants and conditions of the
Lease to be observed or performed by the Landlord, and any other obligation of
Landlord created by or under this Lease, and no other property or assets of
Landlord or of its partners, beneficiaries, co-tenants, shareholders, members.
or principals (as the case may be) shall be subject to levy, execution or other
enforcement procedures for the satisfaction of Tenant's remedies. In no event
shall Tenant name Landlord's partners, members, beneficiaries, co-tenants,
shareholders or principals to any suit or other proceeding to which Tenant
and/or Landlord are a party arising out of or relating to this Lease, unless the
naming of such partners, members, beneficiaries, co-tenants, shareholders or
principals is required in order to permit the Tenant to obtain jurisdiction over
Landlord herein.
(b) The term "Landlord," as used in Subsection 23.02(a) and throughout
this Lease, shall be limited to mean and include only the owner or owners at the
time in question of Landlord's interest in this Lease. Further, in the event of
any transfer by Landlord of Landlord's interest in this Lease, Landlord herein
named (and in case of any subsequent transfers or conveyances, the then
assignor), including each of its partners, beneficiaries, co-tenants,
shareholders, members, or principals (as the case may be), shall be
automatically freed and relieved, from and after the date of such transfer or
conveyance, of all liability for the performance of any covenants and agreements
on the part of Landlord that accrue after the date of said transfer (but not for
any obligation that accrued prior to the date of said transfer, for which the
party assigning Landlord's interest in this Lease shall remain liable, subject
to and in accordance with the terms of this Lease).
23.03 - Definition of Tenant's Allocable Share
(a) Intentionally deleted.
(b) Tenant's Allocable Share of Real Property Taxes pursuant to Section
4.01 shall be the product of multiplying the amount of said Real Property Taxes
by a fraction, the numerator of which is the number of square feet of the
Premises as set forth in Section 1.01, and the denominator of which is the total
number of square feet of all buildings then leased in the Shopping Center on the
date as of which such computation is required to be made under the terms of this
Lease, after deducting therefrom the square footage of (i) any REA Parcel or
other parcel which is separately assessed and the Real Property Taxes of which
are paid directly to the taxing authority by the tenant or occupant thereof,
(ii) any anchor store and (iii) any theater, within the Shopping Center.
(c) Whenever used herein, the term "square feet" shall consist of the
area of floor space on all floors measured from the outside face of all exterior
walls of the buildings (or the midpoints of any interior walls) and any outdoor
sales areas which are mechanically heated or air-conditioned. It shall not
include the floor area of any roof structures used for mechanical equipment.
Whenever used in this Lease, an "anchor store" is defined to mean a premises in
the Shopping Center containing not less than fifty thousand (50,000) square
feet. In the event that, at any time the computation of Tenant's Allocable Share
under Section 23.03(b) is required to be made, less than [***] of the total
number of leasable square feet of all buildings in the Shopping Center is "then
leased," then the minimum denominator used in the fraction used for determining
Tenant's Allocable Share under Section 23.03(b) shall not be less than [***] of
the total number of leasable square feet of all buildings then comprising the
Shopping Center (less the deductions set forth in Section 23.03(b)).
23.04 - Force Majeure
The period of time during which either party is prevented or delayed in
any performance or the making of any improvements or repairs or fulfilling any
obligation under this Lease, other than the payment of Fixed Annual Minimum
Rent, Percentage Rent and Additional Rent, due to unavoidable delays caused by
fire, catastrophe, strikes or labor trouble, civil commotion, Acts of God, the
public enemy, governmental prohibitions or regulations or inability to obtain
materials by reason thereof, or any other causes beyond such party's reasonable
control, shall be added to such party's time for performance, and such party
shall have no liability by reason of such delay, except that as a condition to
Tenant's right to avail itself of Force Majeure, Tenant must give Landlord
written notice of such claimed Force Majeure.
*** Confidential treatment requested.
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23.05 - Relocation of Tenant
Landlord shall have the right to relocate Tenant to another space, the
mall frontage of which shall be equal to or greater than that of the Premises,
and the square footage of which shall not vary from that of the Premises by
greater than one hundred (100) square feet within the Shopping Center after the
expiration of the first thirty-six (36) months of the term of this Lease, upon
one hundred twenty (120) days Notice to Tenant, at Landlord's cost and expense,
which relocation shall in no way affect the obligation or duties of either party
hereunder. Landlord shall be obligated for all expenses associated with such
relocation, including but not limited to the construction of the now space to a
condition and level of quality of finishes at least equivalent to the condition
and level of the Premises on the date of Landlord's relocation notice and any
actual out-of-pocket costs incurred by Tenant for the printing of now stationary
and business cards, and the costs of moving Tenant's Personal Property. In the
event Tenant shall fail or refuse to accept the new location within twenty (20)
days of such Notice, Landlord at its option, may terminate this Lease upon
forty-five (45) days written Notice to Tenant, provided that if Landlord shag
fall to give the Notice of Landlord's election to terminate within forty-five
(45) days after the expiration of such twenty (20) days, then Landlord's
termination right under this Section 23.05 shall be waived and this Lease shall
remain in full force and effect through the Termination Date as defined in
Section 2.02. Tenant's written consent, which may be withheld in Tenant's sole
discretion, shall be required for any relocation which moves the Premises
outside the cross-hatched area shown on Exhibit A-2.
23.06 - Changes and Additions
Landlord hereby reserves the right at any time, and from time to time,
to make alterations or additions to, and to build additional stories on the
building in which the Premises are located and to build adjoining the same.
Landlord also reserves the right at any time, and from time to time, to
construct other buildings and improvements in Landlord's Tract, to enlarge or
otherwise modify the Shopping Center, to make alterations therein or additions
thereto, to build additional stories on any building or buildings within the
Landlords Tract to build adjacent thereto, to construct decks or elevated
parking facilities, to install, maintain, use, repair and replace ducts, wires,
pipes and conduits passing through or under the Premises serving other parts
(now existing or hereafter added) of Shopping Center, and to sell or lease any
part of Landlord's Tract. The purpose of the attached Site Plan is to show the
approximate location of the Premises within the Shopping Center, and Landlord
reserves the right at any time to relocate the various buildings, parking areas
and other Common Areas shown on said Site Plan; provided, however, that there
shall not be caused thereby any unreasonable obstruction of Tenant's right of
access to the Promises or any unreasonable interference with Tenant's use of the
Promises for the purpose hereinabove set forth, or the access to and visibility
of the Premises as more fully set forth in Section 7.03 of this Lease.
23.07 - Attornment by Tenant
If at any time during the term of this Lease the Landlord hereunder
shall be the holder of a leasehold estate covering premises which include the
Premises, and if such leasehold estate shall be canceled or otherwise terminated
prior to the expiration date thereof and prior to the expiration of the term of
this Lease, or in the event of the surrender thereof whether voluntary,
involuntary or by operation of law, Tenant shall make full and complete
attornment to the lessor of such leasehold estate, provided the lessor of such
leasehold estate assumes all of Landlord's obligations under this Lease for the
balance of the term of this Lease upon the same covenants and conditions as are
contained herein so as to establish direct privity between such lessor and
Tenant and with the same force and effect as though this Lease was made directly
from such lessor to Tenant. Tenant shall then make all rent payments thereafter
directly to such lessor. In the event any proceedings are brought for the
foreclosure of, or in the event of conveyance by deed in lieu of foreclosure of,
or in the event of the exercise of the power of sale under, any mortgage or deed
of trust made by Landlord covering the Premises, or in the event Landlord sells,
conveys or otherwise transfers its interest in the Shopping Center or any
portion thereof containing the Premises, Tenant shall attorn to and hereby
covenants and agrees to execute an instrument in writing reasonably satisfactory
to the now owner whereby Tenant attorns to such successor in interest and
recognizes such successor as the Landlord under this Lease.
23.08 - Index
As used in this Lease, "Index" means the then higher of either of the
Revised Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)
or the Consumer Price Index for All Urban Consumers (CPI-U) of the United States
Department of Labor's Bureau of Labor Statistics in effect and generally
published at the time the computation is to be made. If the aforesaid price
indices are no longer published, then another price Index, generally recognized
as authoritative, shall be substituted by Landlord. In the event the parties are
unable to so agree, the matter shall be submitted to arbitration pursuant to
Section 23.18. During any period while the determination of such a dispute is
pending, Tenant shall continue to pay the sum previously in effect, provided,
however, that the adjusted sum as finally determined shall be retroactive from
the prescribed date and any deficiency owed by Tenant shall be paid promptly
upon a final determination of the dispute.
23.09 - Survival of Tenant's Obligations
Any sums due either party from the other that by the terms herein would
be payable, or are incapable of calculation, until after the expiration or
earlier termination of this Lease shall survive and remain a continuing
obligation until paid.
23.10 - Effect of Landlord's Notice to Terminate
Any right on the part of Landlord to terminate this Lease shall, when
exercised, require no further act, to the end that at the expiration of the
applicable time period, if any, contained in the particular termination
provision, this Lease and the term hereunder shall end and expire as fully and
completely as if such termination date was the date herein definitely fixed for
the end and expiration of this Lease and the term hereof, and upon such date
Tenant shall quit and surrender the Premises to Landlord.
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23.11 - Effect of Captions
The captions, bold-faced type. underlining. notational references, or
legends in this Lease are inserted only for convenient reference or
identification of the particular paragraphs. They are in no way intended to
describe, interpret, define or limit the scope, extent or interest of this
Lease, or any paragraph or provision thereof.
23.12 - Tenant Authorized to Do Business
Tenant represents, warrants and covenants that it is upon the date of
execution, and throughout the term of this Lease it shall be authorized to do
business and in good standing in the state in which the Premises is located.
Tenant, if a partnership or corporation, agrees to furnish to Landlord, upon
request, evidence of authority for entering into this Lease.
23.13 - Execution in Counterparts
This Lease may be executed in one or more counterparts, any one or all
of which shall constitute but one agreement.
23.14 - Law Governing, Effect and Gender
This Lease, and any dispute concerning this Lease, shall be governed by
the laws of the state in which the Premises is located, and any dispute
concerning an interpretation of any portion of the Lease or the conduct of the
parties hereunder shall be brought in either Syracuse, New York, or in the
jurisdiction where the Premises is located. Tenant hereby consents to service of
process at the Premises in the event that Tenant does not maintain a separate
business office within the state where the Premises is located. This Lease shall
be binding upon and inure to the benefit of the parties hereto and their
respective legal representatives, successors and permitted assigns, except as
expressly provided otherwise. Use of the neutral gender shall be deemed to
include the masculine and feminine.
23.15 - Memorandum or Notice of Lease
Upon request by either party, Landlord and Tenant agree to execute a
Memorandum or Notice of Lease in recordable form pursuant to applicable state
law. Upon the expiration or earlier termination of this Lease, the party who
shall have recorded such Memorandum or Notice of Lease shall promptly execute
any necessary instrument and remove the Memorandum or Notice of Lease from the
public records, and upon failure to do so, the other party is hereby appointed
attorney-in-fact to execute any such instrument in the recording party's name,
place and stead.
23.16 - Complete Agreement
This Lease contains and embraces the entire agreement between the
parties hereto with respect to the matters contained herein, and it or any part
of it may not be changed, altered, modified, limited, terminated, or extended
orally or by any agreement between the parties unless such agreement is in
writing and signed by the parties hereto, their legal representatives,
successors or assigns. Tenant acknowledges and agrees that neither Landlord nor
any representative of Landlord nor any broker has made any representation to or
agreement with Tenant relating to the Premises, this Lease or the Shopping
Center which is not contained in the express terms of this Lease. Tenant
acknowledges and agrees that Tenant's execution and delivery of this Lease is
based upon Tenant's independent investigation and analysis of the business
potential and expenses represented by this Lease, and Tenant hereby expressly
waives any and all claims or defenses by Tenant against the enforcement of this
Lease which are based upon allegations of representations, projections,
estimates, understandings or agreements by Landlord or Landlord's representative
that are not contained in the express terms of this Lease.
23.17 - Guaranty of Lease
Intentionally deleted.
23.18 - Arbitration
Any controversy or claim arising from or relative to any matter in
connection with this Lease, with refers to which this Lease shall expressly
provide that this paragraph governs, shall be settled by arbitration in the City
of Syracuse, New York, in accordance with the rules of the American Arbitration
Association or its successor organization, and judgment upon the award rendered
by the arbitrator or arbitrators may be entered in any court having jurisdiction
thereof.
23.19 - Security Agreement
Intentionally deleted.
23.20 - Invalidity of Particular Provisions
If any term or provision of this Lease or the application thereof to any
person or circumstance is, to any extent, invalid or unenforceable, the
remainder of this Lease, or the application of such term or provision to persons
or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Lease shall be valid and be enforced to the fullest extent permitted by
law.
23.21 - Execution of Lease by Landlord
The submission of this document for examination and negotiation does not
constitute an offer to lease, or a reservation of, or option for the Premises,
and this document shall be effective and binding only upon the execution and
delivery hereof by both the Landlord and Tenant.
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23.22 - Relationship of the Parties
Nothing contained herein shall be deemed or construed by the parties
hereto nor by any third party as creating the relationship of principal and
agent or of partnership or of joint venture between the parties hereto it being
understood and agreed that neither the method of computation of rent nor any
other provision herein contained nor any acts of the parties hereto, shall be
deemed to create any relationship between the parties hereto other than landlord
and tenant.
23.23 - Brokers
Landlord represents and warrants to Tenant that it has not employed any
realtors or brokers in connection with the negotiation of this Lease. Tenant
represents that Tenant has retained as its broker Russell J. Friend of Blatteis
Realty ("Tenant's Broker"), and Tenant specifically acknowledges and agrees that
any fee payable to Tenants Broker is the sole and exclusive responsibility of
Tenant and Landlord shall have no liability therefor. Landlord and Tenant shall
each indemnity, defend and hold harmless the other from any cost, expense or
claim for brokerage or other commission arising from or out of any breach of the
foregoing representation and warranty.
23.24 - Representations
Landlord warrants to Tenant that the Shopping Center is in good
condition and repair, free of material defects, and that the Shopping Center has
been constructed in accordance with applicable laws and requirements.
23.25 - Abatement
In the event Tenant is prevented from using the Premises or any portion
thereof, for five (5) consecutive business days or ten (10) days in any twelve
(12) month period (the "Eligibility Period") as a result of the failure of
Landlord to maintain and repair the Shopping Center and the Premises in
accordance with its obligations as set forth in this Lease, and such failure
interferes with Tenant's operations and use of the Premises, or as a result of
any failure to provide services or access to the Premises, or because of the
presence of Hazardous Materials in or on the Shopping Center or the land on
which the Shopping Center is located resulting from the acts or omissions of any
party other than Tenant which pose a health risk to occupants of the Premises,
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 a portion thereof, in the proportion
that the square footage of the portion of the Premises that Tenant is prevented
from using bears to the Tenant Area of the entire Premises. However, in the
event that Tenant is prevented from conducting its business in any portion of
the Premises under such circumstances for period of time in excess of the
Eligibility Period, and the remaining portion of the Premises is not reasonably
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
square footage of such reoccupied portion of the Premises bears to the Tenant
Area of the Premises, shall be payable by Tenant from the date such business
operations commence.
23.26 - Special Use Permit
Except as may be otherwise set forth in Section 5.02(a) of this Lease,
Landlord represents that as of the date hereof, no "special" use permit from
local governmental authorities is required for Tenant's operation for the
permitted use in Section 6.01 within the Premises in accordance with this Lease.
The foregoing representation shall not extend to any building or similar permits
required for Tenant's Work or a certificate of use and occupancy for the
Premises or licenses to conduct business and the like.
23.27 - Tenant Improvement Rebate
Notwithstanding anything contained herein to the contrary, provided
Tenant is not in default under this Lease beyond the expiration of any
applicable notice and cure period, Tenant shall be entitled to an allowance in
the amount of [***] per square foot of the Premises ("Tenant Improvement
Rebate") (e.g., if the Premises are 4,597 square feet in size, then Tenant shall
be entitled to a Tenant Allowance from Landlord in the amount of [***]). The
Tenant Improvement Rebate shall be paid to Tenant by Landlord in the form of an
abatement (the "Abatement") of any and all charges, fees and reimbursements that
otherwise would be due and owing from Tenant to Landlord (including, without
limitation, Fixed Monthly Minimum Rent, Percentage Rent, Common Area Charges,
insurance, and contributions to the Marketing Fund), except Tenant shall be
obligated to pay Tenant's Allocable Share of all Real Property Taxes despite the
Abatement. The Abatement shall commence on the Term Commencement Date and shall
continue until the amount of the Abatement equals the amount of the Tenant
Improvement Rebate. If this Lease is terminated prior to the expiration of the
term, Tenant shall pay to Landlord, as Additional Rent, any amount of the Tenant
Improvement Rebate received by Tenant (whether in the form of the Abatement or
otherwise) in excess of the earned portion of the Tenant Improvement Rebate,
which "earned portion" shall be determined by dividing the Tenant Improvement
Rebate by the total number of months that would make up the term if not for the
prior termination of this Lease (e.g., 120 months if the term is not extended
pursuant to Section 2.03 above) and multiplying the result by the number of
months (including whole and partial months) that occurred commencing on the Term
Commencement Date and ending on the date that this Lease was terminated. For
example, if the term is comprised of 120 months and if Tenant operated the
Premises after the Term Commencement Date for 70 whole and partial months, then
Tenant shall pay to Landlord any amount received by Tenant in excess of 7/12
(i.e., based on 70/120, or the "earned portion") of the Tenant Improvement
Rebate. Such amount shall be deemed due as of the date the Lease is terminated
and shall be payable within five (5) days following such date. Such amount shall
not be subject to credit, offset or mitigation as otherwise provided in Section
15.02(c) of the Lease.
*** Confidential treatment requested.
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IN WITNESS WHEREOF, the parties hereto have executed this Lease on the date
first above written.
CAROUSEL CENTER COMPANY, L.P.
By: CAROUSEL GENERAL COMPANY, LLC
By: /s/ BRUCE A. KENAN
-----------------------------------
MEMBER/AUTHORIZED AGENT
SILICON ENTERTAINMENT, INC.
By: /s/ CHRIS MORSE
--------------------------------
Title: V.P.
--------------------------------
(Acknowledgment of LANDLORD)
State of New York
ss:
County of Onondaga
On the 18 day of August in the year 1999 before me, the undersigned, a notary
public in and for said state, personally appeared Bruce A. Kenan, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he executed the same in his capacity, and that by his signature on the
instrument, the individual or the person upon behalf of which the individual
acted, executed the instrument.
/s/ JENNIFER B. HUSE
------------------------------
(Notary Public)
(Acknowledgment of TENANT)
State of California
ss:
County of Santa Clara
On the 5th day of August in the year 1999 before me, the undersigned, a notary
public in and for said state, personally appeared Chris Morse, personally known
to me or proved to me on the basis of satisfactory evidence to be the
individual(s) whose name(s) is (are) subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument,
the individual(s) or the person upon behalf of which the individual(s) acted,
executed the instrument.
/s/ LAURIE H. SHERMER
------------------------------
(Notary Public)
SEAL LAURIE H. SHERMER
Commission #1155999
Notary Public - California
Santa Clara County
My Comm. Expires Sep 19, 2001
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TABLE OF EXHIBITS
<TABLE>
<CAPTION>
<S> <C>
Exhibit A...........................................................................................Site Plan
Exhibit A-1..........................................................................................Premises
Exhibit B......................................................................Description of Landlord's Work
Exhibit C........................................................................Description of Tenant's Work
Exhibit D..............................................................................Outline Specifications
Exhibit E...............................................................................Intentionally deleted
Exhibit F......................................................................................Tenant's Signs
</TABLE>
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EXHIBIT A
Note: This is a schematic plan and is intended to show only the proposed layout
of the Shopping Center. All measures, dimensions and distances are not to scale.
The depiction hereon does not constitute a warranty or representation of any
kind.
<PAGE> 40
EXHIBIT A-1
Note: This is a schematic plan and is intended to show only the proposed layout
of the Shopping Center. All measures, dimensions and distances are not to scale.
The depiction hereon does not constitute a warranty or representation of any
kind.
<PAGE> 41
EXHIBIT A-2
Note: This is a schematic plan and is intended to show only the proposed layout
of the Shopping Center. All measures, dimensions and distances are not to scale.
The depiction hereon does not constitute a warranty or representation of any
kind.
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Page 1
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EXHIBIT A-2
Note: This is a schematic plan and is intended to show only the proposed layout
of the Shopping Center. All measures, dimensions and distances are not to scale.
The depiction hereon does not constitute a warranty or representation of any
kind.
- -------------------------------------------------------------------------------
Page 2
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EXHIBIT B
LANDLORD'S WORK
The Premises have already been constructed and Tenant accepts the
Premises in its "as is" condition. All other work required to prepare the
Premises for Tenant's use and occupancy shall be performed by Tenant at its sole
cost and expense.
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EXHIBIT C
TENANT'S WORK
Tenant accepts the Premises in its "as is" condition on the date that
possession of the Premises is made available by Landlord, and shall, [***] , and
in accordance with the Outline Specifications attached hereto and made a part
hereof as Exhibit D, furnish all labor, material, fixtures and equipment
necessary to complete, in a good, substantial and approved manner, all work
required to bring the Premises to a finished condition ready for the conduct of
Tenant's business therein.
*** Confidential treatment requested.
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EXHIBIT C
Carousel Center, Syracuse, New York
Condition of Space:
1. HVAC unit is a 15 ton split unit in good working condition.
2. Floor to deck height is 16 feet.
3. Electrical service available is 200 amps
4. Conduit is 3 inch pvc
5. Tenant's location is 175 feet from electrical room.
6. See attached plan and DCP for further detail
Exhibit C
Page 2
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DIMENSION CONTROL PLAN
[FLOOR PLAN]
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NEW CORRIDOR & TENANT SPACE
[FLOOR PLAN]
<PAGE> 48
[FLOOR PLAN]
Exhibit C
Page 5
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EXHIBIT D
OUTLINE SPECIFICATIONS
A. DESIGN AND CONSTRUCTION
Tenant will retain the services of architect(s) and engineer(s) licensed
in the state in which the Shopping Center is located for the design of
Tenant's Work. Tenant will retain contractors for the completion of
Tenant's Work. Tenant and its contractors will at all times cooperate
fully with Landlord's employees and contractors, and with other tenants
and their contractors.
Tenant's architect and engineer will design all Tenant's Work in full
compliance with all federal, state and local codes, ordinances, rules
and zoning regulations applicable to the Shopping Center and to Tenant's
Premises. Tenant's architect and engineer will incorporate by reference
or by duplication the Tenant Design Handbook into the final contract
documents.
Landlord will complete Landlord's Work as set forth in Exhibit B of this
Lease under a blanket building permit. Tenant will complete Tenant's
Work as set forth in Exhibit C of this Lease under an individual
building permit. Tenant will be responsible for all building permit
costs and/or any other municipal permit(s) and/or fees required for
Tenant's Work. All building permit questions, as they relate to Tenant's
Work (Exhibit C) should be directed to the Landlord.
B. DIMENSION CONTROL PLAN
Landlord will furnish Tenant with two (2) prints of a Dimension Control
Plan, setting forth dimensions and design information necessary to
complete the design of Tenant's Work. The Dimension Control Plan will be
made available following the execution of this Lease.
C. TENANT'S DESIGN
All final submissions will bear the seal and signature of an architect
(and engineer if applicable) licensed to practice in the state in which
the Shopping Center is located.
Tenant's design will employ the best available technology to provide for
maximum energy conservation within the Premises. All HVAC, plumbing and
electrical work will be in compliance with ASHRAE Standard 90-80, or the
most recent edition thereof.
Within two (2) weeks from the later of (a) receipt by Tenant of a
Dimension Control Plan from Landlord, or (b) the date of execution of
this Lease, Tenant shall submit by overnight delivery service
"Preliminary Design Drawings," for Landlord's review, showing the
intended design concept and character of proposed finishes. Tenant's
submission shall consist of one (1) sepia set and one (1) blueline set
of prints.
Preliminary Design Drawings will contain basic dimensions of the
Premises and shall include, but not necessarily be limited to, the
following:
1. Preliminary floor plan with fixturing layout;
2. Preliminary reflected ceiling plan;
3. Storefront elevation showing intended materials and signage,
complete with sample of all finish materials;
4. Section through storefront and bulkhead; and
5. Material and color finish sample board of interior and
storefront finishes.
Landlord will return to Tenant one (1) set of prints marked with
Landlord's comments relative to Tenant's preliminary submission within
fifteen (15) days after Landlord's receipt of such submission. [***]
Within thirty (30) days after the later of (a) receipt by Tenant of the
Dimension Control Plans from Landlord, or (b) the date of execution of
this Lease, Tenant will submit to Landlord two (2) sets of reproducible
prints and six (6) sets of blueline prints of Tenant's "Design Drawings"
showing final design, character, and finishes. All design shall conform
to the design criteria set forth herein. Tenant's Design Drawings shall
include, without limitation, the following for review:
1. Architectural: Floor plan, fixturing layout, room finish
schedule, door schedule, partition types, ceiling plan, interior
wall and storefront elevations describing signage elevations and
shop drawings, sections, and details as appropriate.
2. Mechanical: All equipment, locations, distributions and return
systems, diffuser locations, load calculations, controls, and
details as appropriate.
3. Electrical: Floor and ceiling plans showing type and location of
power and lighting, equipment, controls, projected loads, panel
schedules, riser diagram, and details as appropriate.
4. Plumbing: Location and type of water meter, fixtures, supply and
waste piping schematics and details as appropriate.
5. Specifications on materials and methods of construction for the
above items.
6. Signage Shop Drawings indicating finishes, type, and mounting
location. Food merchants will submit "menu board" specifications
and/or photographs.
7. Manufacturer's Cuts of fixtures and equipment with finishes.
*** Confidential treatment requested.
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8. Certificate of Completion and Affidavit (Appendix 2).
9. Tenant Electrical Load Summary (Appendix 1A).
10. Tenant Design Checklist (Appendix 1).
Landlord will return to Tenant one (1) set of sepias of Tenant's Final
Design Drawings marked with review comments and required modifications.
If Tenant's Design Drawings are returned to Tenant with comments but not
bearing the approval of Landlord, Tenant's Design Drawings shall be
revised by Tenant, incorporating Landlord's comments, and resubmitted to
Landlord for review within ten (10) days of receipt.
* Plans will not be returned until Receipt of Appendices 1 and 1A.
If the final submission of Tenant's architectural drawings are stamped
"Final Approved for Construction as Noted," it is Tenant's or Tenant's
representative's responsibility to distribute copies of the final
drawings, stamped as such, to the contractors at the job site.
Landlord's design review is solely for the purpose of assisting the
Tenant and coordinating the store design of the various tenants in the
Shopping Center. If in the design review process Landlord does not
denote items that are not in compliance with the provisions of the
Lease, including these Outline Specifications, the same will not relieve
Tenant, Tenant's contractor, Tenant's architect and engineer of their
obligations to construct in compliance with these Outline
Specifications, and any applicable federal, state and local codes,
ordinances, rules and regulations.
Any modifications to Tenant's Premises during the term of the Lease must
conform to all provisions of the Lease including this Exhibit or, at
Landlord's option, Landlord's then-current design criteria, including
design review and payment of the fee therefor. Tenant's contractor will
construct Tenant's space in accordance with Tenant's final drawings as
approved by Landlord and will furnish a signed Certificate of Completion
as provided below. Receipt of Appendix 2 (attached) will be required
prior to the release of Tenant's security deposit.
D. SUBMISSION OF AS-BUILT DRAWINGS AND CERTIFICATE OF COMPLETION (Appendix
1)
As a condition of Landlord's approval for Tenant to initially open for
business in the Shopping Center, and upon completion of the Premises,
Tenant will submit to Landlord for Landlord's permanent project
construction files: (1) a set of reproducible "As-Built" drawings which
contain all of the information required in Tenant's Design Drawings,
updated to accurately reflect the as-built conditions of Tenant's HVAC,
electrical and plumbing systems; and (2) a Certificate of Completion
(Appendix 2) signed by Tenant, Tenant's architect and contractor,
certifying that the Premises have been constructed and completed in
accordance with the plans, drawings and specifications previously
submitted to and reviewed by Landlord. Tenant must also submit a
completed a Stipulation of Cost with appropriate backup documentation as
a condition of Landlord's approval. Landlord will be entitled to rely on
this Certificate as evidence of Tenant's completion of construction of
the Premises pursuant to the provisions of this Lease.
E. OUTLINE SPECIFICATIONS
The following Outline Specifications will apply to the performance of
all work carried out with regard to the Premises:
1. Floor System
a. Upper-level Floor System (if applicable)
The upper-level floor system will consist of a
structural framing system and a concrete slab.
Depressions in the slab for floor covering will not be
permitted. Electrical floor boxes or plumbing lines must
be installed by core drilling through the concrete slab
to the lower-level tenant's ceiling space. All such work
will be coordinated directly with Landlord. No piping,
conduit or other related items may be placed in the
concrete slab or on the steel decking. The floor system
will be designed for a maximum allowable live load of
100 pounds per square foot.
b. Level Floor System
The lower level floor system will consist of a concrete
floor slab. All work which Tenant desires to be placed
below the slab will be installed prior to the slab
construction, or Tenant may cut and replace said slab at
Tenant's expense only upon approval from Landlord.
c. Waterproofing (if applicable)
All tenants will ensure the water tightness of their
restroom floor system. Waterproofing membranes will
extend no less than 4" vertically at all demising walls.
Additionally, all food merchants, pet stores and salons
will provide a waterproof membrane over their entire
floor area with water-fight connections at all floor
penetrations.
All tenants will ensure water tightness of all floor
slab penetrations. Tenant will be responsible for any
damage which occurs as a result of, or which is caused
directly or indirectly by the failure of Tenant or its
contractors to adequately construct, install, or
adequately seal all floor penetrations.
Food use tenants must install a single waterproof
membrane as specified by specific mall.
2. Walls, Partitions and Doors
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a. Demising Partitions
All demising partitions will be finished with a minimum
of 5/8" fire code gypsum wallboard (unless otherwise
required by code), from the floor to the deck, with all
joints taped. Exposed walls will be finished with three
layers of spackling, sanded and left in paint-ready
condition.
1) Insulation in Demising Partitions
All demising partitions constructed by the
following types of merchants will be insulated
with vapor barriers (installed to the warm side
of the wall) and sound attenuation blanketing
from the floor to the underside of the deck.
1. Food establishments:
2. Game rooms, arcades, video, record and
tape stores;
3. Pet stores;
4. Salons;
5. Any other use which produces unusual
noise or odor, or heats or cools the
Premises 10 degrees (Fahrenheit) +/-
beyond the normal range within the
Shopping Center or is deemed by Landlord
to potentially impact other mall tenants
adversely.
b. Exterior/Interior Partitions
All interior partitions of the Premises will be
constructed of metal studs, with gypsum wallboard or
other non-combustible finish on all sides. Any
combustible materials applied to partitions must receive
a U.L. labeled fire-retardant coating, or be placed over
a non-combustible substrate material. All exterior walls
will be insulated with fiberglass insulation from the
floor to the underside of the deck. Insulation will have
an integral vapor barrier with an R" value of 19 or
greater if required by any federal, state or local code,
ordinance, rule or regulation. The insulation will be
covered by one (1) layer of 5/8" type 'X' gypsum
wallboard from the floor to the underside of the deck.
c. Storefront Bulkhead
Tenant's storefront bulkhead, if any, will be
constructed and finished subject to Landlord's review of
signage and overall design. The mall side of Landlord's
bulkhead will be finished by Landlord. Tenant's side
will be finished with a minimum of 5/8" fire code gypsum
wall board running the full height to the structure
above (1 hour rated). All materials applied on the mall
side of the storefront will be non-combustible as per
code and local building regulations.
Storefront bulkheads will have an insulation "R" value
of at least 11 (except at Walden Galleria, Independence
Mall, Carousel Center, Galleria at Crystal Run, Silver
City Galleria and Crossgates Mall, where this insulation
is not required at this time).
d. Plumbing Chases
Plumbing chases, whether in Tenant's Premises or beyond,
will be constructed with access panels in full
compliance with all applicable codes and will be
insulated to prevent freezing of water and waste piping.
e. Doors
Service doors which open into a corridor or Tenant's
exterior service area will be framed and installed in
locations approved by Landlord. These doors must open in
the direction of exit travel, and must be recessed so as
not to restrict use of any service corridor as an
emergency exit corridor. Tenant will cut and patch the
wall provided by Landlord as necessary to properly
recess the door(s). Door frames will be made of hollow
metal, 14-gauge steel, fully welded, with a reinforced
head. Doors will be 3'-8" by 7'-0". 16-gauge steel,
reinforced, hollow metal. Hardware will include a
locking device which is always operable from the
interior, a door bumper, corner guards and a hydraulic
door closer. Service doors opening into a service
corridor will be 1-1/2 hour rated. Tenant will properly
identify its Premises with an engraved sign attached to
the exterior of its service door.
f. Exits
Fire exits will be clearly marked and maintained in
accordance with governing codes and ordinances. Tenant
will not install any hardware or other device(s) that
would prohibit the use of an emergency fire exit.
g. Finishes
Paint finishes will be a minimum of two (2) even coats
with no skips, runs or sags. Before applying any wall
covering(s), the underlying surface will be prime
coated.
3. Storefront
a. Scope
The total separation between the Premises and mall,
herein referred to as "Storefront" including any show
windows, platforms, glass and glazing, lobbies or
entries, doors, grilles, bracing and supports,
depressions, and any walls between the Premises and the
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mall will be furnished and installed by Tenant in
accordance with Design Drawings bearing Landlord's
approval.
b. Design Review
Tenant's Storefront design will be subject to Landlord's
approval and will be in harmony with the overall quality
and character of the mall. Landlord will review each
Storefront design carefully to ensure the suitability of
the design to the merchandise sold within the store and
to the store's location within the mall. Landlord also
reserves the right to modify Tenant's design and
material election for the Storefront.
c. Storefront Design Guidelines
It is the intent of these guidelines to encourage the
design of Storefronts which reinforce the concept of the
mall as a streetscape. The streetscape is comprised of
tenants' Storefronts which have varying shapes, sizes
and materials and which also vary in the degree to which
they project beyond or are recessed from the bulkhead
line.
Creativity in the streetscape theme and the use of new
and innovative materials is highly encouraged by
Landlord; our Design Department is available and willing
to assist tenants in creating a noteworthy and exciting
design.
Landlord's review of Tenant's Design Drawings is for
design purposes only. Tenant's architect and/or engineer
accepts all responsibility for any non-compliance with
federal, state or local codes, ordinances, rules or
regulations applicable to Tenant's Premises.
d. Storefront 'Pop-Out' Criteria
The following sets forth the required criteria for
allowable Storefront projections:
PLEASE NOTE: Refer to the Dimension Control Plan for the
"Condition" which pertains to the 'pop-out' criteria
listed below. Tenant may occupy an enclosed projected
area beyond the bulkhead line containing up to sixty
percent (60%) of the area bounded by the maximum
Storefront projection line, the bulkhead line, and the
"no build zone" (as defined below), while respecting
other setback lines as conditions apply (see Dimension
Control Plan).
A "no build zone" of either 1'-6" or 1'-0" is required
between tenants' Storefronts. See Tenant Design Handbook
for details.
Overhead projections (minimum 8'-0" A.F.F.) may be
constructed anywhere within the area bounded by the
maximum Storefront projection line, the "no build zone"
and other setback lines as conditions apply (subject to
Landlord's approval) (see Dimension Control Plan).
The Storefront will or may be built to a height no
higher than the bottom of Landlord's bulkhead and shall
not project outside the maximum Storefront projection
line as shown on the Dimension Control Plan.
At all mall Storefront feature columns, any partition of
Tenant's storefront which must attach to Landlord's
feature column must be full height glass. This glass
must intersect at the center line of the feature column
and run parallel to Landlord's mall bulkhead for a
minimum of 12 inches from the face of the feature column
before changing direction.
At all Storefront(s), illuminated signs mounted to the
outside of the Storefront will not extend below 8'-0"
A.F.F.
Tenant must appropriately finish the top portion of its
projected Storefront with a finish of the same quality
and material as that used on the vertical surfaces of
Tenant's projected Storefront.
Particular Storefront conditions require reference to
Tenant's Dimension Control Plan for the location(s) of
any column(s) for the purpose of respecting the 12'-6"
radius setback of Tenant's "pop-out."
In no case will there be a limit on the amount of
storefront which may be recessed behind the bulkhead
line.
e. Characteristics and Materials
No artificial images such as applied roofs, dormers,
thatch, veneer brick, veneer field stone, pegboard, cork
products, carpet, painted gypsum wallboard, vinyl,
plastic or metal laminate, nor zolatone will be
permitted in the construction of Tenant's Storefront.
Backpainted glass, ceramic tile (used in any area of the
mall other than in the Food Court) will be permitted
only at the sole discretion and with the consent of
Landlord. Landlord reserves the right to modify any
Storefront design and Tenant's material selection.
* The use of combustible materials, fire retardant wood,
permitted only by code.
It is recommended that Tenant's Storefront design
utilize full height tempered glass from floor to bottom
of bulkhead as a basic design element.
f. Security
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Storefront security can be provided by utilizing
coiling, sliding, or folding closures of glass, painted
steel, anodized aluminum, or other materials approved by
Landlord. All security closures must be fully concealed
when open.
Overhead door soffits will be constructed and finished
in such a way as to conceal all internal areas of the
Storefront construction. The opening will be finished on
the inside faces of gate/door pocket 12" above the
soffit line and 12" inside of the side wall pockets.
Side wall gate/door pockets will be constructed with
flush, overlay pocket doors to conceal the door and
pocket. All such doors will have concealed hardware.
g. Construction Materials
All Storefront construction and construction materials
are subject to federal, state and local codes,
ordinances, rules and regulations applicable to the
Shopping Center.
h. Safety
All Storefront design and construction shall comply with
all federal, state and local codes, ordinances, rules
and regulations applicable to the Shopping Center
regarding transparent glass doors and fixed adjacent
transparent glass sidelights to avoid injury from
accidental human impact. All markings on glass expanses
will be subject to Landlord's review.
i. Tempered Glass
Any glass or mirror used in Tenant's Storefront
construction in any type of vertical plane will be
minimum 3/8" tempered safety glass. All overhead glass
or mirror used in a horizontal or sloped application
must be heat-strengthened laminated glass installed in
accordance with governing codes.
j. Storefront Base
All Storefront construction, excluding doors, must have
a tile base. Applicable mall tile may be purchased by
Tenant from Landlord and installed by Tenant or by
Landlord for Tenant if installed prior to the opening of
the Shopping Center. However, Tenant is strongly
recommended to utilize a material that compliments the
overall storefront design.
k. Maximum Projection
No element of the Storefront, except signage, will
project across Tenant's maximum Storefront projection
line. No element of Tenant's Storefront, including
signage, will project across Tenant's lease line.
l. Hinged Doors
Doors in the Storefront, if hinged, will swing toward
the mall and be locked in an open position whenever the
store is occupied. Such doors will be recessed in the
Storefront so as not to swing past Tenant's maximum
Storefront projection line.
m. Non-Swing Doors
Non-swing doors such as sliding glass or folding doors
or coiling grilles are acceptable if they are locked in
an open position whenever the store is occupied.
n. Floor Track
Any floor track will be flush with the finished floor.
o. Floor Level
Tenant will adjust the level of the slab in Tenant's
Premises by flash patching or another method to ensure
that the level of the finished floor in the Premises
corresponds with that of the mall.
p. Display Windows
All display windows must be adequately illuminated and
vented. Direct visual exposure of conventional
incandescent lamps will not be permitted. Fluorescent
lights will not be permitted in display window areas.
q. Structural Support
All Storefront work requiring structural support,
including sliding door tracks and housing boxes for
grilles, will be supported at the head sections by a
welded structural steel framework installed by Tenant.
Connection to Landlord's roof structure or overhead
floor structure for purposes other than horizontal
bracing will not be permitted. All overhead rolling
grille tube columns will be specified and installed by
Tenant with base plates.
r. Open Storefronts
Where Tenant's Storefront is not enclosed, Tenant's
merchandise or fixtures may not be extended farther than
Tenant's maximum Storefront projection line.
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4. Floor Covering
a. Materials
Carpeting will not be permitted within eight feet
(8'-0") of the Storefront enclosure line. Areas of the
store subject to high traffic will be surfaced with
ceramic, marble, or stone pavers or prefinished durable
wood flooring. Vinyl composition tile is not allowed in
Tenant's sales areas under any circumstances. All flame
spread specifications for all flooring material must be
provided prior to Tenant's construction for review by
the local building department.
b. Cutting, Patching and Core Drilling
Tenant will cut and patch for any underslab work which
is performed after Landlord's original pouring of the
slab. Excavated materials must be removed and the
subgrade must be thoroughly compacted before restoring
the floor slab. Upper-level tenants will not cut the
concrete slab. Penetrations for all mechanical,
electrical, or plumbing work will be core drilled.
c. Flush with Mall
Tenant's floor finish will be flush with the mall floor
finish, and Tenant will provide necessary finish trim
where Tenant's floor finish meets the mall floor finish.
d. Mall, Tenant Floor Finish Transition
Prior to the opening of the Shopping Center, the mall
floor finish will be installed by Landlord to Tenant's
lease line at Landlord's cost. Tenant will be
responsible for the cost to extend the mall floor finish
from Tenant's lease line to the center line of Tenant's
Storefront enclosure. At Landlord's option, this work
may be completed by Landlord; all such work shall be
done at Tenant's expense.
After the opening of the Shopping Center, the Tenant is
responsible for furnishing and installing any and all
mall floor finish necessary to the center line of
Tenant's storefront enclosure.
5. Ceilings
a. Non-Combustible System
All ceilings, related framing, blocking and accessories
will be non-combustible. No combustible materials may be
used above finished ceiling surfaces.
b. Suspension System
All ceiling suspension systems will be metal. Support
for ceiling hangers will be from the structural members.
Support will not be permitted from (but not limited to)
the following: metal roof deck, mall duct work,
sprinkler pipes, or conduits.
Tenant is encouraged to include creative ceiling systems
in its sales areas. The ceiling must be suspended
drywall, concealed spinal acoustical tile, 2' x 2'
acoustical T-Bar ceiling with 3/8" revealed edge, or
lath and plaster construction. Acoustical ceiling is to
be of tegular tile type only. Acoustical ceiling with
2' x 4' modules (including tiles to simulate 2' x 2'
look) will NOT be permitted in sales areas.
c. Food Court
Ceilings in wet areas must be constructed with
greenboard and finished with an enamel paint or other
paint which resists moisture penetration.
d. Insulation
All upper-level ceilings for Crossgates and Poughkeepsie
will have an insulation of "R" value of at least 19.
Upper-level tenants for Walden Galleria, Carousel Center
and Galleria at Crystal Run do not need to insulate
their ceilings. All ceilings In one-level centers will
have an insulation "R" value of at least 19 and not less
than a three-quarter (3/4) hour fire rating. Ceilings in
lower-level stores will have a fire rating of not less
than one (1) hour.
e. Design
Where ceilings are omitted for aesthetic or other
purposes, design will incorporate all federal, state and
local codes, ordinances, rules and regulations
applicable to the Shopping Center.
6. Sign Criteria
a. Design
Tenant's sign design will be coordinated with Tenant's
Storefront design and will not be installed until the
design is approved by Landlord. Landlord will have the
right to remove or require the removal of any signs
which either do not meet the Sign Criteria or which are
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not expressly approved by Landlord. The cost of such
removal will be at Tenant's expense.
Shop drawings of all proposed signage shall be submitted
by Tenant to Landlord for approval. The submittal shall
include an elevation of the Storefront with signage
completely dimensioned and drawn to scale. A material
sample board with proposed sign materials is also
required.
Fabrication and installation of signage will comply with
all applicable local codes, ordinances, rules,
regulations, and national electrical codes applicable to
the Shopping Center. All signage materials will be U.L.
rated.
All signage shall be incorporated into Tenant's design
as an integral part of the Storefront
To add individuality, creativity and variety, Tenant is
strongly encouraged to incorporate into its design
scheme the following recommendations:
1) Signage etched in Storefront glazing or mirror;
2) Back-painted glass with signage etched & back
lit;
3) Neon graphics;
4) Illuminated halo effect letters;
5) Metal letters such as cast bronze, polished
brass, polished chrome and stainless steel; and
6) Fiber optics.
b. Store Identity
Tenant's sign will be limited to the identification of
Tenant's tradename and/or logo.
c. Characteristics
Tenant's sign and logo will comply with the following
design requirements:
1) Dimensional, individual, internally illuminated
metal letters and/or logo may not be taller than
eighteen inches (18"), unless in the opinion of
Landlord, a larger size would be preferable.
Maximum allowable projection from the Storefront
will be six inches (6").
2) Dimensional metal back-lit ("halo-effect")
letters or logo with a height of six inches (6")
to eighteen inches (18"). Each letter must be at
least one inch (1") but no more than five
inches (5") in thickness and must be projecting
from the Tenant bulkhead surface with one inch
(1") maximum spacers.
3) Exposed neon tubes forming letters and/or logos
will be permitted at the discretion of Landlord
on an individual basis. Dimmer switches will be
attached to the sign transformers on all exposed
neon tubes. No exposed neon crossovers,
raceways, ballast boxes, or transformer boxes
will be permitted.
4) Non-dimensional letters and/or logos applied or
painted directly on the inside face of the glass
Storefront area will be permitted as
supplemental signs only.
5) Supergraphic or relief treatments of large
amounts of Storefront area will be permitted
only at the discretion of Landlord on an
individual basis.
6) Signage will not exceed five percent (5%) of the
area of Tenant's Storefront or twelve (12)
square feet (whichever is greater).
7) Signage will not exceed two-thirds (2/3) of the
width of Tenant's demised Premises.
d. Prohibited Signs
The following types of signs or signage will be
prohibited:
1) Boxed or cabinet type signs;
2) Vacuum-formed plastic luminous letters and/or
logos;
3) Blade signs;
4) Paper signs of any type;
5) Artificial wood and wood grain plastic laminate;
6) Animated component, flashing lights, or noise
making signs of any type;
7) Signs utilizing plastic laminate;
8) Exposed neon; and
9) Dimensional graphic signage.
e. Illumination
All signage will be adequately illuminated by Tenant,
utilizing a method which is approved by Landlord.
f. Exterior Signage
Except for Tenant's approved mall Storefront sign, no
exterior signage by Tenant will be allowed.
7
<PAGE> 56
g. Menu Boards
Menu boards and price lists are subject to Landlord's
review and approval. All such signage will be compatible
with the remainder of the Premises and with the overall
quality and design of the mall, and will be of a size.
color and illumination level to be readily visible.
"Photo signage" will be reviewed by Landlord. No
"supplier" signs or advertising will be permitted.
7. Furnishings and Trade Fixtures
All furnishings and trade fixtures will be new and of first
quality, including installation.
8. Heating, Ventilating and Air Conditioning
Delivery schedules require HVAC units to be ordered prior to
Landlord's receipt of specific Tenant's specific store design
data.
Should Tenant require other and/or additional HVAC units due to
Tenant's design or other specific use, such information should
be immediately relayed to Landlord in writing separate from the
plans submission process (upon completion of Tenant's
architect's and/or engineer's calculations). Landlord will make
arrangements for such additional or upgraded equipment required
if so desired by Tenant at Tenant's expense. Prior to the
opening of the Shopping Center, any and all additional, upgraded
or other equipment requested by Tenant is at the control of
Landlord and at Tenant's expense.
Other design criteria relating to Tenant's work includes:
a. Ductwork
Ductwork will be sized, fabricated and installed in
accordance with ASHRAE 90-80 or later edition thereof
and SMACNA standards. Ductwork will be installed with
fiberglass insulation and vapor barrier. Ductwork which
passes through fire rated wells will be equipped with
U.L. approved fire dampers as required by code, and with
adequate access to such dampers. All return air will be
run in insulated ducts. Any flex duct used from main
trunk lines to diffusers shall be limited to six (6)
feet in length. Tenant must provide condensate drains
for all split system equipment used by Tenant. Ductboard
is NOT allowed. Ceiling plenums will not be permitted.
b. Exhaust
Upper-level tenants will furnish and install complete
exhaust systems where required. Lower-level and
upper-level tenants may be required to connect their
exhaust system to a master system provided by Landlord.
All tenants are to ensure that systems are independent
of each other for toilet rooms, equipment requiring
venting including refrigeration or hot presses, cooking,
heat, and/or other processes permitted by Landlord which
produce air contaminants. Additionally, all tenants are
to ensure that the discharge through the roof to the
atmosphere properly vents odors and/or fumes away from
the building, building openings and fresh air intakes.
Tenant restroom exhaust duct systems will have a maximum
external static pressure drop of .25 w.g. All roof
penetrations must be performed by Landlord's designated
contractor at Tenant's expense. See Exhibit C, Item 14,
"Roof Work" for required special protection.
c. Outside Air
Landlord will provide a common outside air duct
accessible to all lower-level tenants and applicable
upper-level tenants not having direct roof access. All
hood exhausts must be installed with tempered make up
air, including ductwork directly through the roof.
Additionally, all Food tenants' hood exhaust systems
will have a minimum of ninety-five percent (95%) of its
capacity of make up air introduced into the food
preparation area directly from the outside.
d. Supplementary Heating
Tenant will provide electric unit heaters or wall
heaters where required at exterior wall exposures to
maintain minimum comfortable winter temperature levels.
Tenant's design will provide for a constant ambient
minimum temperature of 45 degrees (Fahrenheit) above
Tenant's ceiling through the use of ceiling transfer
grills, additional electric resistance units, or other
methods approved by Landlord.
e. Temporary Construction Heat
During Tenant's construction period, Tenant will provide
any necessary temporary heat required for protection and
completion of Tenant's Work.
f. Water Cooled or Heated Equipment
No water cooled or heated equipment will be permitted
unless water is recirculated and may be used only when
specific permission is granted by Landlord.
g. "As-Built" HVAC Drawings
Tenant will provide Landlord with "As-Built" drawings of
Tenant's HVAC system.
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<PAGE> 57
9. Plumbing
a. Quality
Tenant, in designing the plumbing system, will use the
best and most recent technology available for
conservation of water and energy. Fixtures will be of
good standard manufacture at least equal in quality to
American Standard. Flush valves will not be permitted.
All faucets will have water saving aerators. Tenant will
supply and install or purchase from the applicable
municipality, if required, a water meter of sufficient
size to serve the Premises.
b. Hot Water Heaters
Water heaters will be automatic electric, 480 or 277
volt, 3 phase, with all necessary safety controls and
drains. Water heaters located overhead will be supported
independently of Landlord's structural framing system.
Appropriate structural detailing will be included with
Tenant's submission to Landlord for approval by Landlord
and Landlord's engineer. Tenants whose only water usage
is for small toilet room(s) may utilize "instant hot"
hot water heaters or conventional heaters up to a
maximum six (6) gallon capacity.
c. Hair Interceptors
Individual hair interceptors will be installed on all
sinks, basins, and special sanitary units which may in
any way receive human or animal hair. All hair
interceptors must be made accessible and must be
regularly maintained.
d. Grease Interceptors
Individual grease interceptors, adequately sized, and in
compliance with state, local and other government health
departments having jurisdiction over the Shopping Center
will be installed and maintained on all grease producing
and other kitchen equipment, and will bear the seal of
the Plumbing Drainage Institute (PDI). All grease
interceptors will be the type that will plug solid if
not maintained.
e. Decor
No fountains or decorative devices will be used unless
they are a recirculating type device.
f. Sanitary Sewer Vents
Tenant will connect sanitary sewer vent pipes to
Landlord's common vent system, or vent through the roof,
as applicable. Any roof penetrations must be made by
Landlord's designated roofing contractor at Tenant's
expense.
g. Trash Compactors
All tenants serving food to the public will install
individual trash compactors within the Premises to
precompact all trash into sealed, leak-proof containers.
h. "As-Built" Plumbing Drawings
Tenant will provide Landlord with "As-Built" drawings of
Tenant's entire plumbing system.
10. Electrical
a. Quality
All electrical materials will be new, and bear the U.L.
label. Selection of fixtures and lighting levels within
the Premises will be in strict accordance with the
provisions outlined in the latest editions of ASHRAE
90-80, and the I.E.S. Lighting Handbook, and will be In
conformance with the applicable energy conservation
codes.
b. Codes
All work will meet the requirements of the latest
National Electric Code, and all applicable local, state
and federal codes, applicable regulations of the local
telephone and power companies, and ASHRAE 90-80 or the
latest edition thereof.
c. Certificates
Tenant will be responsible for making all necessary
applications for certificates regarding Tenant's Work.
Upon completion of all electrical work, Tenant will
furnish to Landlord a copy of the certificate of
approval, issued by the local authority having
jurisdiction over such installation.
d. Voltage
All fluorescent lighting and all heating and cooling
equipment must be operated on 480 or 277 volts from
Tenant's high-voltage panel. All Tenant transformers
must be supported independently of Landlord's structure.
9
<PAGE> 58
e. Night Lighting
Tenant must provide a separate night lighting circuit on
a non-controlled panel (one (1) light fixture per 2,000
square feet), and a lock-on breaker for this circuit, or
as designated by local authorities.
f. Door Bell
Tenant will install an electrical, push-button operated
door bell immediately adjacent to Tenant's service door,
mounted at 6'-9" A.F.F. in the door jamb. Installations
in exterior wall surfaces will NOT be permitted.
g. Controls
HVAC and non-constant electrical loads will be monitored
by Landlord's Building Management System. Constant
loads, such as night lights, emergency lights, exit
lights, exit signs, alarm systems, employee time clocks,
computer cash register systems, electric rolling grills
and refrigeration and/or life safety equipment systems
will be on non-controlled electrical panels. In
locations where lighting is not controlled by Landlord's
Building Management System, Tenant will install a
seven-day time clock system with reserve spring capacity
to control all non-constant loads.
h. Wiring
No exposed wiring of any sort (extension cords, etc.)
will be permitted subsequent to the period of Tenant's
initial build-out.
j. Ceiling Lighting
In Tenant's sales areas, 2' x 4' fluorescent ceiling
lighting fixtures are prohibited. Exposed tube
fluorescent lights are not permitted. Fluorescent
lighting must have parabolic reflective lenses
satisfactory to Landlord.
j. "As-Built" Electrical Drawings
Tenant will provide Landlord with "As-Built" drawings of
Tenant's electrical system.
k. Checkmeter
Upon Tenant's request, Landlord will furnish Tenant with
the specifications for a utility-quality checkmeter
acceptable to Landlord's and with Landlord's
specifications for installation thereof.
11. General Lighting
The general lighting of the mall has been designed to allow each
tenant's Storefront and sales area to be a prominent focal
point. The following required lighting criteria has been
established:
a. All lighting in 'pop-out' Storefronts will be
incandescent. Storefront lighting must meet all
requirements as set forth by Landlord and its
consultants;
b. All accent lighting for the Storefront 'pop-out' areas
must meet the criteria stated in the Tenant Design
Handbook and is subject to Landlord's review;
C. All fluorescent lighting will be low brightness type.
Acceptable lamp colors are warm white and deluxe warm
white. Acrylic lenses or non-shielded fluorescent tubes
will NOT be permitted in Tenant's sales area. All
fluorescent lighting will be 277 volt, deep cell louver,
or parabolic reflective lenses;
d. Fluorescent lighting will NOT be permitted within eight
(8) feet of the Storefront closure line;
e. Installation of Tenant's lighting in mall Common Areas
is NOT permitted; and
f. Tenant will comply with all applicable energy
conservation and construction codes.
12. Fire Protection
a. Other Fire Protection
Tenant will install and maintain above the ceiling any
and all fire protection devices and equipment, smoke
barriers, etc. as required by code(s) in the
jurisdiction where the Shopping Center is located.
Tenant will install and maintain automatic exhaust hood
extinguisher systems and any special equipment or
retardant required by the nature of Tenant's design or
business, as determined by Landlord or applicable codes.
b. Damage
Any damage caused by Tenant to Landlord's sprinkler
system will be repaired by Landlord at Tenant's expense.
c. Hindrance of Sprinkler System
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<PAGE> 59
Tenant's merchandising, fixturing, storage, and other
practices will not be conducted in such a manner as to
hinder the effectiveness of the sprinkler system.
d. Fire Extinguishers
Tenant will install and maintain Type ABC fire
extinguishers as approved by the local fire department
and Landlord's fire and casualty insurer.
e. Modifications
All modifications, additions, repairs or relocations to
the sprinkler system required for Tenant's use, prior to
the Grand Opening, will be performed by Landlord's
sprinkler contractor, at Tenant's expense.
i. Smoke Detectors
Tenant will install smoke detectors which automatically
shut down the HVAC unit(s) if activated. Smoke detectors
will be ceiling mounted in both sales and stock/storage
areas with one (1) smoke detector for every 2,000 square
feet of each area and/or in the return or supply air
duct as required by governing authorities and/or
Landlord's fire and casualty insurer. Depending on the
local code jurisdiction, the strictest of the three
above-referenced requirements will apply.
13. Sanitary
Tenant will be responsible for its own toilet requirements per
all applicable codes. Common Areas toilets will not be used in
Tenant's calculations.
a. Temporary Sanitary
Tenant will be responsible for all temporary sanitary
facilities required during the construction of Tenant's
space.
14. Food Court Tenant Criteria
a. All wall surfaces visible by the public in Tenant's food
preparation areas will be faced with glazed ceramic
tile. All other wall surfaces will also be finished with
FRP, marlite panel or stainless steel.
b. Tenant will furnish and install a minimum of R-11
insulation with a vapor barrier from the floor to the
underside of the structure above at all demising walls
and in all ceiling areas. At exterior walls, the value
of Insulation will be a minimum of R-19.
c. Tenant will furnish and install ceramic or quarry tile
flooring throughout Tenant's floor area.
d. Tenant will have the option of using the following
countertop finishes:
1) Plastic slab (Corian, Avonite Formica 2000X, or
its equivalent);
2) Stainless steel;
3) Wood butcher block;
4) Ceramic tile;
5) Marble, or other smooth finish stone.
e. Locations for any additional rooftop equipment required
by Tenant's design will be subject to approval by
Landlord; any such additional equipment required will be
at Tenant's expense.
f. In addition to all of the other submittal requirements,
Tenant will submit with its preliminary submittal all
proposed finished for all equipment, signage, etc.,
which will be visible to the public.
15. General Conditions
a. Occupancy Date
Landlord will notify Tenant of the date on which the
Premises will be available for Tenant's Work ("Occupancy
Date"). Except as otherwise set forth in the lease and
to the extent legally permissible, Tenant agrees that
time is of the essence and agrees to commence
installation of Tenant's Work no later than five (5)
days following the Occupancy Date.
b. Occupancy Period
The period beginning on the Occupancy Date and
terminating on the Term Commencement Date of this Lease
will be known as the "Occupancy Period."
c. Establishment of Schedules
<PAGE> 60
Tenant, its agents, contractors and employees will
comply with schedules which Landlord will establish from
time to time, governing submittals by Tenant of design
information for Landlord's approval, construction
operations, occupancy by Tenant, opening for business,
and other occurrences, for the purpose of coordinating
the efforts of Tenant or Tenant's contractors, and
Landlord. All parties will cooperate with Landlord In
expediting work, and
<PAGE> 61
will provide work schedules, status reports, and updates
upon Landlord's request until Tenant opens for business.
d. Failure to meet Schedule
Any cost incurred by Landlord as a result of Tenant's
failure to meet the schedule requirements herein
described will be Tenant's responsibility; such costs
will be payable by Tenant to Landlord upon Landlord's
demand. Any modification to Landlords Work or Tenant's
Work necessitated by Tenant's failure to undertake or
complete Tenant's Work as required under this Lease will
become the responsibility of Tenant. Upon three (3) days
written notice thereof, Landlord may request that
Tenant's general contractor cease work, and Landlord may
complete, at Tenant's expense, any work deemed by
Landlord to jeopardize Tenant's required opening date.
Upon three (3) days written notice thereof, Landlord may
remove Tenant's general contractor due to non-compliance
with rules and regulations listed below or published on
site.
e. Construction Rules and Regulations of the Mall after
Grand Opening
1) Tenant will erect and maintain a temporary
barrier throughout the construction period. Said
barrier is subject to the following requirements
- it shall:
a) Not extend beyond three feet (3') into
the walking corridors. At all times, a
ten foot (10') minimum clearance must be
maintained in the mall Common Areas;
b) Be constructed of metal studs and 5/8"
or 1/2" fire rated gypsum wallboard:
c) Be taped and finished;
d) Be painted (paint number to be specified
by Landlord) and have a finished vinyl
or rubber base;
e) Be twelve feet (12') high, sealed to
contain dust, and insulated minimize
sound transmission;
f) Have a factory-made door with lockset
which will be kept closed. The door will
swing into the store and be equipped
with a door closer. A working copy of
the key will be marked accordingly and
left in the mail office;
g) Be maintained on a daily basis as
necessary (i.e., paint, sheetrock,
repair, etc.);
h) Any such temporary Storefront barrier
may not be dismantled until the
permanent Storefront is completed;
i) Any such temporary Storefront barrier
may not be fastened to the finished
floor, demise piers or any other
permanent finishes or fixtures in the
mall;
j) Not contain advertising of contractors
or associated trades.
2) No jackhammering, or use of other equipment
producing a high noise or dust level during
shopping hours will be permitted.
3) All construction materials will be delivered via
service entrances. For stores without service
entrances, all materials will be delivered
either before or after standard mall operating
hours.
4) Doors are not to be wedged open.
5) Contractor and employee vehicles will be parked
in areas as directed by Landlord.
6) Tenant will dispose of all waste materials
(except concrete, masonry or structural steel)
in dumpsters or other approved containers
provided by Tenant which are located in areas
designated by Landlord. Absolutely no waste
material is to be discarded in adjoining spaces,
other vacant spaces, mall areas or Landlord's
compactor.
7) No building systems will be shut down without
the express prior permission of Landlord.
8) All work will be performed in a neat and orderly
fashion.
9) Tenant will notify the mall office personnel of
the following prior to starting work:
a) The name, address, and temporary
residence location of contractors
working in the space; and
b) The starting date and anticipated
completion date of all work.
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<PAGE> 62
10) If Exhibit C established that Tenant accepts the
Premises "As Is," then any demolition which may
be required will be performed by Tenant at
Tenant's expense.
f. Compliance with Construction Rules and Regulations
As a condition of Landlord's approval of Tenant or
Tenant's contractor taking occupancy of the Premises,
Tenant or Tenant's contractor will be required to
deposit with Landlord the sum of [***] to be held by
Landlord as security for the compliance by Tenant and
Tenant's contractor with the Construction Rules and
Regulations set forth herein and the other construction
requirements as set forth in Exhibits C and D. Tenant
and Tenant's contractor will reimburse Landlord for the
cost of any damage or disruption caused by the failure
of Tenant or Tenant's contractor to comply with the
Construction Rules and Regulations. Any such cost(s)
will be first recovered by Landlord from the security
deposit made hereunder. Upon the recovery of cost(s),
Tenant will restore the security deposit to the original
sum of [***].
Landlord will return the security deposit or the amount
remaining thereof upon satisfaction of the following
conditions: (i) the satisfactory completion of Tenant's
Work as required under the Lease, including Landlord's
punchlist; (ii) delivery of a Certificate of Occupancy
to Landlord; (iii) within [***] days following
Landlord's acceptance of Tenant's properly completed
Certificate of Completion, the submission of "As-Built"
drawings as may be required hereunder; (iv) the receipt
of copies of lien releases issued to Tenant from each
subcontractor and the general contractor. Request for
the return of the security deposit must be made to
Landlord in writing.
g. Compliance with Laws
Tenant and Tenant's contractor will, at its/their
expense, comply with all applicable statutes,
ordinances, rules, orders, laws, regulations, codes and
recommendations of all governmental agencies and their
authorized agents which have jurisdiction over Tenant's
Work; and, with respect to the prevention of fire and
exposure to liability risks, to the Board of Fire
Underwriters, Rating Board, and Landlord and Tenant's
insurance companies. Tenant and/or Tenant's contractor
will apply for, pay all fees for, and obtain all
necessary permits, licenses and certificates. A copy of
same will be delivered to Landlord and will be posted in
a prominent place within the Premises before Tenant
begins work. Tenant will furnish Landlord with a copy of
a Certificate of Occupancy prior to opening for
business.
h. Non-interference
Tenant will perform its work so as not to interfere with
the completion of Landlord's Work or the work of other
tenants.
i. Quality of Materials: Warranty
All materials furnished and incorporated in Tenant's
Work will be new, unused, and of the quality and
characteristics specified herein. If the quality and
characteristics of certain materials are not
specifically set forth herein, materials used will be
those customarily used in first-class work of similar
nature and character. Tenant will guarantee, and will
require all parties furnishing and incorporating
materials in Tenant's Work to guarantee said work to be
free from any and all defects in workmanship and
material for a period of five (5) years from the date of
completion thereof. Tenant will be responsible for the
costs of correction of such defects, which costs will
include any and all expenses and damages resulting from
said defects. Tenant's agreements with its contractors
will contain language so providing and further providing
that all guarantees and warranties will inure to the
benefit of both Landlord and Tenant, as their respective
interests appear, and that such guarantees and
warranties can be directly enforced by either.
j. Easements
Tenant will install and maintain proper access panels as
may be required for the regular maintenance of Tenant's
and Landlord's equipment.
Where applicable, tenants will recognize the rights of
Landlord and of tenants located above or below to run
pipes, ducts, conduits, or related items servicing the
mall or other areas through Tenant's Premises. Tenant
will cooperate with Landlord and other tenants; hours
and times when work will be performed will be agreed
upon by the parties involved. Any dispute arising
hereunder will be resolved by Landlord.
k. Insurance
1) Tenant will secure, pay for and maintain, or
cause its contractor(s) to secure, pay for and
maintain, during Tenant's construction and
fixturing work within the Premises, all of the
insurance policies required herein in the
amounts as set forth below. Tenant will not
permit its contractor(s) to commence any work
until all required insurance has been obtained
and certificates of such insurance have been
delivered to Landlord.
2) Tenant's Contractors' and Subcontractors'
Required Minimum Coverages and Limits of
Liability.
*** Confidential treatment requested.
13
<PAGE> 63
a) Comprehensive General Liability, including personal
injury and property damage, completed operations,
explosions, collapse, and underground operations, if
any, broad form property damage, contractor's protective
liability, in the minimum amount of [***] Combined
Single Limit;
b) Auto Liability, Bodily Injury and Property Damage
(including non-owned and hired vehicles) in the minimum
amount of [***] Combined Single Limit; and
c) Statutory Workers' Compensation, Employer's Liability
and Disability Benefits. Umbrella Coverage in the
minimum amount of [***].
Such insurance will insure the contractor and/or
subcontractor against any and all claims for personal
injury, including death resulting therefrom and damage
to the property of others caused by accident and arising
from the contractors' and/or subcontractors' operations
and whether such operations are performed by the
contractor(s), subcontractor(s), or by anyone directly
or indirectly employed by them.
3) Protective Liability Insurance
Tenant will provide Owner's Protective Liability Insurance that
will insure Landlord and Tenant against any and all liability to
third parties for damages because of personal injury liability
(or death resulting therefrom) and property damage liability of
others or a combination thereof which may arise from work in
connection with the Premises, and any other liability for
damages which Tenant's contractor or subcontractors are required
to insure against under any provisions herein. Said insurance
will be provided in the minimum amount of [***] Combined Single
Limit.
4) Tenant's Builder's Risk Insurance - Completed Value Builder's
Risk Material Damage Insurance
Tenant will provide an "All Physical Loss" Builder's Risk
insurance policy on all Tenant's Work to be performed in the
Premises as it relates to the building within which the Premises
is located. The policy will include Tenant, its contractor and
subcontractors and Landlord as named insureds, as their
interests appear. The amount of insurance to be provided will be
[***] of the full replacement cost.
5) All such insurance policies required above will name Landlord as
an additional insured, except Workers' Compensation Insurance,
which will contain an endorsement waiving all rights of
subrogation against Landlord.
Certificates of Insurance will provide that no reduction in the
amounts or limits of liability or cancellation of such insurance
coverage will be undertaken without thirty (30) days prior
written notice to Landlord.
All insurance policies required above will be written by
companies authorized under the laws of the state in which the
Shopping Center is located and such policies must be
satisfactory to Landlord.
l. Indemnity
Tenant will fully protect, defend, indemnify and hold harmless Landlord
and Landlord's Managing Agent(s) and their employees, partners,
officers, directors, agents, heirs, executors, administrators,
successors, and assigns against any and all claims, actions, damages,
liabilities, costs and expenses, including any and all attorneys' fees,
arising from, because of, or out of the performance or non-performance
of Tenant's Work or the use or occupancy of the Premises for Tenant's
Work.
m. Hazardous Materials
Tenant will not install, nor cause or allow to be installed, nor use any
hazardous materials in Tenant's Work without the express prior written
consent of Landlord. Tenant will guarantee and require all parties
furnishing and incorporating materials in Tenant's Work to guarantee
that hazardous materials have not been furnished or incorporated in
Tenant's Work. Tenant will be responsible for any and all cost(s) of
correction which will include all expenses and damages, whether direct
or indirect, resulting from the installation or use of hazardous
materials. Tenant's agreements with its contractor(s) and
subcontractor(s), if any, will contain language so providing and
further, warranting that hazardous materials were neither installed nor
used in the Premises; such warranties shall inure to the benefit of both
Landlord and Tenant, and can therefore be directly enforced by either.
*** Confidential treatment requested.
<PAGE> 64
APPENDIX 1A
TENANT ELECTRICAL LOAD SUMMARY
(Please complete the following form and include as part of the Final
Drawing Submittal to the Landlord.)
Tenant: ______________________________ Space No.: ____________________
Mall: ________________________________ GLA: ____________________
Landlord provides as standard 10 watts per square foot. Food Court Tenants are
provided with 15 watts per square foot. The information provided below is
necessary in order to properly size the Mall's electrical distribution
capacity. Upgrades over the Landlord's supplied wattage will be billed to the
Tenant.
Winter: Summer:
1. Connected Cooling Load: Compressor(s): ______ Watts
Inside Fan: ______ Watts
Outside Fan(s): ______ Watts
Power Exhaust: ______ Watts
2. Connected Heating Load: Compressor(s): ______ Watts (Heat Pump)
Inside Fan: ______ Watts
Outside Fan(s): ______ Watts (Heat Pump)
Heat Coil(s): ______ Watts
3. Connected Constant Lighting Load:
(not to be included in occupied lighting load below) ______ Watts
4. Connected Constant Equipment Load:
(not to be included in occupied equipment load below) ______ Watts
5. Connected Occupied Lighting Load:
(not to be included in occupied lighting load above) ______ Watts
6. Connected Occupied Equipment Load:
(not to be included in occupied equipment load above) ______ Watts
7. Total Connected Load:
(the greater of item 1 or 2 plus items 3 through 6) ______ Watts
Completed By:
Electrical Engineer's Name: ________________ Date: ________________
Firm Name: _________________________________
Address: _________________________________ Stamp: ________________
Phone: _____________________________________
1
<PAGE> 65
APPENDIX 2
CERTIFICATE OF COMPLETION
AND
AFFIDAVIT OF CONTRACTOR'S COMPLIANCE WITH APPROVED PLANS
(COMPLETE AND SUBMIT TO LANDLORD UPON COMPLETION OF TENANT'S WORK CONSTRUCTION)
RE: Construction of STORE
--------------------------------
----------------------------------------------- MALL
This is to state that I have made an inspection of the site on completion, and I
hereby certify that the Premises has been completed in accordance with the
Landlord approved final plans and specifications except as noted below.
Dated: , 19 Tenant:
------------ -- ------------------------------------------
By:
------------------------------------------
Title:
------------------------------------------
Dated: , 19 Contractor:
------------ -- --------------------------------------
Name:
--------------------------------------
Address:
--------------------------------------
Signature:
--------------------------------------
Title:
--------------------------------------
- -------------------------------------------------------------------------------
List all changes, if any, to previously approved plans and specifications
required during construction:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AS-BUILT DRAWINGS ENCLOSED (IF APPLICABLE):
----------
----------
CERTIFICATE OF OCCUPANCY ATTACHED (WHERE REQUIRED):
----------
----------
UNDERWRITER'S CERTIFICATE ATTACHED (WHERE REQUIRED):
----------
- ----------
2
<PAGE> 66
[PHOTO - UNDER CAROUSEL]
View from Main Entrance under Carousel
Carousel Center - Syracuse, New York
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[PHOTO - LOWER LEVEL COMMON AREA CAROUSEL CENTER -- SYRACUSE, NEW YORK]
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PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED
ON A REQUEST FOR CONFIDENTIAL TREATMENT
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
Exhibit 10.23
LEASE
SILICON ENTERTAINMENT, INC.,
a California corporation
-------------------------------
TENANT
NASCAR SILICON MOTOR SPEEDWAY and/or
SILICON MOTOR SPEEDWAY
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TRADE NAME
N/A
-------------------------------
GUARANTOR
OPRY MILLS
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TABLE OF CONTENTS
Page
----
ARTICLE I.............................................................. 4
GRANT AND TERM.................................................... 4
Section 1.1 Leased Premises................................. 4
Section 1.2 Term............................................ 7
Section 1.3 Opening......................................... 8
Section 1.4 Late Opening.................................... 8
ARTICLE II............................................................. 8
RENT AND DEPOSIT.................................................. 8
Section 2.1. Minimum Rent.................................... 8
Section 2.2. Percentage Rent................................. 9
Section 2.3. Payments By Tenant.............................. 12
Section 2.4. Security Deposit [Intentionally Deleted]........ 12
Section 2.5. Late Charge..................................... 12
ARTICLE III............................................................ 13
PREPARATION OF LEASED PREMISES.................................... 13
Section 3.1. Landlord's Work................................. 13
Section 3.2. Delivery of Possession.......................... 13
Section 3.3. Tenant's Work................................... 13
Section 3.4. Alterations by Tenant........................... 15
Section 3.5. Removal by Tenant............................... 16
ARTICLE IV............................................................. 16
CONDUCT OF BUSINESS............................................... 16
Section 4.1. Use and Trade Name.............................. 16
Section 4.2. Operation of Business........................... 17
Section 4.3. Sign............................................ 18
Section 4.5. Tenant's Warranties............................. 19
Section 4.5. Storage and Office Space........................ 19
Section 4.6. Care of Premises................................ 20
Section 4.7. Notice by Tenant................................ 20
Section 4.8. Radius.......................................... 20
ARTICLE V.............................................................. 20
COMMON AREA....................................................... 20
Section 5.1. Use of Common Area.............................. 20
Section 5.2. Common Area Maintenance Expenses................ 21
ARTICLE VI............................................................. 23
REPAIRS AND MAINTENANCE........................................... 23
Section 6.1. Repairs and Maintenance by Landlord............. 23
Section 6.2. Repairs and Maintenance by Tenant............... 24
ARTICLE VII............................................................ 25
TAXES............................................................. 25
Section 7.1. Tax Liability................................... 25
Section 7.2. Method of Payment............................... 26
ARTICLE VIII........................................................... 26
INSURANCE, INDEMNITY AND LIABILITY................................ 26
Section 8.1. Landlord's Insurance Obligations................ 26
Section 8.2. Tenant's Insurance Obligations.................. 27
Section 8.3. Mutual Covenant................................. 28
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Section 8.4. Covenant to Hold Harmless...........................28
Section 8.5. Loss and Damage.....................................29
ARTICLE IX...................................................................29
DESTRUCTION OF LEASED PREMISES..........................................29
Section 9.1. Continuance of Lease................................29
Section 9.2. Reconstruction......................................30
ARTICLE X....................................................................30
CONDEMNATION............................................................30
Section 10.1. Eminent Domain......................................30
Section 10.2. Rent Apportionment..................................31
Section 10.3. Temporary Taking....................................31
ARTICLE XI...................................................................31
ASSIGNMENT, SUBLETTING AND ENCUMBERING LEASE............................31
Section 11.1. No Assignment, Subletting or Encumbering of Lease...31
Section 11.2. Assignment or Sublet................................35
Section 11.3. Transfer of Landlord's Interest.....................35
ARTICLE XII..................................................................35
SUBORDINATION, ATTORNMENT, FINANCING AND ESTOPPEL CERTIFICATE...........35
Section 12.1. Subordination.......................................35
Section 12.2. Attornment..........................................36
Section 12.3. Financing...........................................36
Section 12.4. Estoppel Certificate................................36
Section 12.5. Remedies............................................37
ARTICLE XIII.................................................................37
ADVERTISING AND PROMOTION...............................................37
Section 13.1. Promotion Fund......................................37
Section 13.2. Promotion Fund Contribution.........................37
Section 13.3. Advertisements [Intentionally Deleted]..............38
Section 13.4. Network.............................................38
ARTICLE XIV..................................................................38
DEFAULT AND REMEDIES....................................................38
Section 14.1. Elements of Default.................................38
Section 14.2. Landlord's Remedies.................................39
Section 14.3. Bankruptcy..........................................41
Section 14.4. Additional Remedies and Waivers.....................42
Section 14.5. Landlord's Cure of Default..........................42
Section 14.6. Security Interest...................................42
ARTICLE XV...................................................................42
RIGHT OF ACCESS.........................................................42
ARTICLE XVI..................................................................43
DELAYS..................................................................43
ARTICLE XVII.................................................................43
END OF TERM.............................................................43
Section 17.1. Return of Leased Premises...........................43
Section 17.2. Holding Over........................................43
ARTICLE XVIII ...............................................................44
COVENANT OF QUIET ENJOYMENT.............................................44
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ARTICLE XIX ............................................... 44
UTILITIES ............................................ 44
Section 19.1 Utilities ......................... 44
Section 19.2 Electricity, Telephone and Gas .... 44
Section 19.3 Trash and Garbage Removal ......... 45
Section 19.4 Water and Sewer ................... 45
Section 19.5 Grease Interceptors ............... 45
ARTICLE XX ................................................ 45
MISCELLANEOUS ........................................ 45
Section 20.1 Entire Agreement .................. 45
Section 20.2 Notices ........................... 45
Section 20.3 Governing Law ..................... 46
Section 20.4 Successors ........................ 46
Section 20.5 Liability of Landlord ............. 46
Section 20.6 Brokers ........................... 46
Section 20.7 Transfer by Landlord .............. 46
Section 20.8 No Partnership .................... 46
Section 20.9 Waiver of Counterclaims............ 46
Section 20.10 Waiver of Jury Trial............... 47
Section 20.11 Severability ...................... 47
Section 20.12 No Waiver ......................... 47
Section 20.13 Consumer Price Index .............. 47
Section 20.14 Interest .......................... 47
Section 20.15 Excavation ........................ 47
Section 20.16 Rules and Regulations ............. 47
Section 20.17 Financial Statements .............. 48
Section 20.18 General Rules of Construction ..... 48
Section 20.19 Recording ......................... 48
Section 20.20 Effective Date .................... 48
Section 20.21 Headings .......................... 48
Section 20.22 Managing Agent .................... 48
ADDENDUM
EXHIBITS:
Exhibit A Site Plan
Exhibit B Measurement of Leased Premises
Exhibit C Landlord's Work
Exhibit D Tenant's Work
Exhibit E Sign Criteria
Exhibit F Commencement and Expiration Date Declaration
Exhibit H Agreement of Subordinate Non-Disturbance
and Attornment
Exhibit H-1 Tenant Estoppel Certificate
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THIS LEASE dated as of this 23rd day of August, 1999 (the "Lease") by and
between OPRY MILLS LIMITED PARTNERSHIP, a Delaware limited partnership, the
address of which is c/o The Mills Corporation, 1300 Wilson Boulevard, Suite 400,
Arlington, Virginia 22209 (hereinafter referred to as "Landlord") and SILICON
ENTERTAINMENT, INC., a Delaware corporation, the address of which is 210
Hacienda Avenue, Campbell, California 95008 (hereinafter referred to as
"Tenant").
RECITAL
Landlord hereby leases to Tenant and Tenant hereby hires and takes from
Landlord, the Leased Premises, for the Term commencing on the Commencement Date,
subject to the terms, covenants, conditions and provisions of this Lease.
Landlord shall have the right, at any time prior to the earlier of (i) the
Delivery of Possession Date of the Leased Premises or (ii) October 1, 1999, by
written notice to Tenant, to relocate the Leased Premises in either direction
(from side to side from the outside boundary of the Leased Premises) by not more
than forty (40) feet, provided that the configuration of the Leased Premises is
substantially the same in the relocated space, that there is not more than one
other tenant space between the shifted Leased Premises and the courtyard and
that the visibility of the Leased Premises from the enclosed mall is not
materially and adversely impacted ("Shift"), upon any such Shift, the size and
description of the Leased Premises shall be appropriately modified to reflect
any resulting proportional adjustment in the Rent based upon the change in size
of the Leased Premises. If the Landlord initiates a Shift pursuant to the
foregoing and after the receipt by Tenant of the initial Lease Outline Drawing
(as described in Exhibit D) then Landlord will pay for Tenant's actual costs
associated with the Shift, including without limitation, the costs associated
with a redesign of the Leased Premises and the Fixturing Period will be extended
one day for each day of delay created by the Shift.
If the Commencement Date is not the first day of a month, Minimum Rent for
the month in which the Commencement Date occurs shall be prorated to the end of
the month and paid as the second monthly installment of Minimum Rent on the
first day of the next month and, after the expiration of the number of years in
the Term, the Term shall expire on the last day of the same month in which the
Commencement Date of the Term occurred, it being the intention of the parties
that the Term expire on the last day of a month. When the Commencement Date has
been determined, Landlord and Tenant shall execute, acknowledge and deliver a
written statement in recordable form specifying the Commencement and Expiration
Dates of the Term and, if there shall have been any changes in the floor area of
the Leased Premises, such statement shall reflect such change or changes. Said
statement upon execution and delivery shall be deemed to be a part of this
Lease.
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DATA SHEET
The following references furnish data to be incorporated in the specified
Sections of this Lease and shall be construed to incorporate all of the terms
of the entire Section as stated in this Lease:
(1) SECTION 1.1: DESCRIPTION OF LEASED PREMISES:
Store number: 429, consisting of approximately 6,007 square feet of floor
area as shown on Exhibit A attached hereto and made a part hereof, with no
less than fifty (50') lineal feet of frontage measured from center of
demising wall to center of demising wall.
(2) SECTION 1.2: TERM:
COMMENCEMENT DATE:
The earlier of (i) the later of (a) the Grand Opening or (B) the date
following the expiration of a one hundred twenty (120) day fixturing period
("Fixturing Period") following the Delivery of Possession Date (as defined
in Section 3.2), or (ii) the date the Leased Premises is open for business
to the public. It is estimated that the Delivery of Possession Date will be
January 4, 2000.
ORIGINAL TERM: Five (5).
OPTION PERIOD: Subject to Section 1.2 of this Lease, five (5) years.
(3) SECTION 2.1: MINIMUM RENT:
Original Term:
From the Commencement Date and continuing through the expiration of the
Original Term, the sum of [***] annually ([***] psf), payable in equal
consecutive monthly installments of [***] each.
Option Period:
Beginning with the [***] year of the Option Period and continuing
through the expiration of the Option Period, the sum of [***] annually
([***] psf), payable in equal consecutive monthly installments of [***]
each.
(4) SECTION 2.2: PERCENTAGE RENT:
Percentage Factor: [***]
Sales Break Point for the Original Term:
From the Commencement Date and continuing through the expiration of the
Original Term: [***].
Sales Break Point for the Option Period:
Beginning with the [***] year of the Option Period and continuing
through the expiration of the Option Period: [***].
(5) SECTION 2.4: SECURITY DEPOSIT: N/A
(6) SECTION 4.1: PERMITTED USE:
*** Confidential treatment requested.
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Tenant shall use the Leased Premises for the use set forth below and for no
other purpose:
Conducting an interactive entertainment center featuring among other
things, racing simulators and other related retail and entertainment uses.
Such uses may include but shall not be limited to the installation and
operation of simulators and the sale of auto racing, including NASCAR
Silicon Motor Speedway merchandise, NASCAR driver merchandise and other
entertainment merchandise related to NASCAR; and for the sale of snack food
items only and hot and cold non-alcoholic beverages (selections to be based
on Landlord's reasonable approval subject to existing exclusive uses) for
on-the-premises consumption, provided said snack food and beverage service
shall not be operated or licensed by a nationally-recognized fast-food
chain. Tenant shall have the right to conduct group sales events ("Events")
from the Leased Premises at which time a portion of the Leased Premises may
be closed to the general public. During Events Tenant may retain an outside
catering service (giving preference to restaurant operators within the
Retail Development) to provide food and beverage service (including
alcoholic beverage service if Tenant or the caterer obtains all necessary
permits)
TRADE NAME: NASCAR Silicon Motor Speedway and/or Silicon Motor Speedway
(7) SECTION 13.2: FUND CONTRIBUTION: [***] psf of floor area in the Leased
Premises
GRAND OPENING FEE (INITIAL CONTRIBUTION): Subject to the terms of Section
13.2 hereof, [***] psf of floor area in the Leased Premises
(8) GUARANTOR: N/A
(9) GRAND OPENING DATE: Spring, 2000
(10) TEMPORARY CHARGES: [***] psf of floor area in the Leased Premises
(11) CONSTRUCTION CHARGEBACKS: N/A
(12) CONSTRUCTION ALLOWANCE: [***] psf of floor area in the Leased Premises
*** Confidential treatment requested.
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ARTICLE I
GRANT AND TERM
Section 1.1 Leased Premises. (a) Landlord, in consideration of the Rent
(as defined in Section 2.3) to be paid and the covenants to be performed by
Tenant, does hereby lease and demise to Tenant, and Tenant hereby rents and
hires from Landlord for the Term herein set forth, the Leased Premises which
are described as set forth in the Data Sheet attached hereto, in the retail
development designated as Opry Mills or by such other name as Landlord may from
time to time hereafter designate (hereinafter "Retail Development"). The term
"State" as used herein shall mean the State or Commonwealth of Tennessee. For
all purposes in this Lease, a "Major Tenant" is any occupant of 20,000 square
feet or more of floor area in the Retail Development and a "Major Tenant Space"
is any space in the Retail Development containing 20,000 square feet or more.
It is agreed that, wherever the term "Shopping Center" is used herein, it shall
mean the Retail Development excluding the Major Tenant Spaces, except as
otherwise specifically stated herein. Exhibit A sets forth the general layout
of the Retail Development. Landlord does not warrant or represent that the
Retail Development or the Leased Premises will be constructed exactly as shown
thereon or that it will be completed by a specific date, but Landlord does
warrant that the Leased Premises and the Retail Development will have the
general configuration shown on Exhibit A. Notwithstanding anything contained in
this Lease to the contrary, Landlord shall have the right, at any time and from
time to time, without notice to or consent of Tenant, and without in any manner
diminishing Tenant's obligations under this Lease, to make alterations or
additions to, and build additional stories on the building in which the leased
Premises are located and to build adjoining the same, to construct other
buildings and improvements of any type in the Retail Development or the common
areas, or any part thereof, including the right to locate and/or erect thereon
permanent or temporary kiosks and structures, to enlarge the Retail
Development, and to make alterations therein or additions thereto (provided in
no event will any kiosk or other structure be located directly in front of the
registration desk within the Leased Premises), to build additional stories on
any building or buildings within the Retail Development, and to build adjoining
thereto, to construct decks or elevated parking facilities and free standing
buildings within the parking lot areas of the Retail Development, and to change
the size, location, elevation and nature of any of the stores in the Retail
Development other than the Leased Premises or the common areas, or any part
thereof. Landlord agrees not to construct kiosks or other similar structures
or displays, whether temporary or permanent (hereinafter "Kiosk"), within the
mall area in front of the Leased Premises created by extending parallel lines
from each of the side demising walls of the Leased Premises, ten feet (10') out
into the common areas then connecting each line at the point of its
termination. In exercising its options hereunder, Landlord agrees to use
reasonable efforts (in light of the then existing circumstances) not to
materially and unreasonably interfere with the visibility of and access to the
Leased Premises from the enclosed mall; it being understood that any structure
placed in the common areas shall not block Tenant's signage located on the
storefront signband. In the event Landlord elects to enlarge the Retail
Development, or any part thereof, any additional area may be included by
Landlord in the definition of the Retail Development for purposes of this
Lease. Landlord shall also have the general right from time to time to include
within and/or to exclude from the defined Shopping Center any existing or
future areas and the floor area of the Shopping Center shall be accordingly
adjusted. The premises leased to Tenant are herein referred to as the "Leased
Premises". The approximate location of the Leased Premises is cross-hatched on
the lease plan of the Retail Development attached hereto and made a part hereof
as Exhibit A. This Lease of the Leased Premises is subject to all applicable
building restrictions, planning and zoning ordinances, governmental rules and
regulations, existing underlying leases, and all other encumbrances, covenants,
restrictions, easements and agreements affecting the Retail Development and the
terms and provisions of certain master declaration, reciprocal easement and
operating agreements now or hereafter entered into by Landlord.
Landlord acknowledges that Tenant's customers shall be permitted to queue
in the common areas while waiting for access to the Leased Premises ("Waiting
Area"). The Waiting Area shall be in a location designated by Landlord and
reasonably approved by Tenant, provided said Waiting Area permits Tenant's
customers to queue in an orderly manner without obstructing pedestrian traffic
in the common areas and/or unreasonably disturbing the operation of other
tenants in the Retail Development.
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In addition to the Leased Premises. Landlord shall grant Tenant a
non-revocable license during the Term for a location in the common area of the
Shopping Center which shall be used by Tenant for the display of a full size
stockcar, including sign tripods ("Display Area"). The location of the Display
Area shall be selected by Landlord, but such location shall always be within the
area labeled on Exhibit A-1 as "Display Area". In no event shall Tenant be
obligated to pay additional Rent for use of the Display Area; provided, however,
that any utility costs associated with the illuminated display shall be the sole
responsibility of Tenant. Tenant shall, at its sole cost and expense, construct
the illuminated display in accordance with approved plans and specifications,
which plans and specifications shall be submitted to Landlord for approval
pursuant to the submittal requirements and process outlined in the Tenant
Handbook. During such times as Tenant is using the Display Area for the purpose
of displaying the stock car or for any other permitted use (as so approved by
Landlord), Tenant shall repair and maintain the Display Area in accordance with
Section 6.2 of this Lease; in addition, Tenant shall be required to carry
insurance for the Display Area providing for the coverage set forth in Section
8.2(a) of this Lease during such times as Tenant is using the Display Area as
set forth herein. Upon the Expiration Date (hereinafter defined) or the earlier
termination of this Lease. Tenant shall be responsible for the complete removal
of the display and shall make any necessary repairs to the Display Area in
accordance with Tenant's obligations set forth in Section 17.1 of this Lease.
Subject to the provisions of Section 5.1, Tenant shall enjoy a
non-exclusive easement, right and privilege for Tenant and its customers,
employees and invitees and the customers, employees and invitees of any
assignee, sublessee, concessionaire or licensee of Tenant, to use the common
areas of the Shopping Center, with Landlord and the other tenants and occupants
of floor area within the Shopping Center and their respective customers,
employees and invitees. Furthermore, Landlord agrees that any additions,
alterations or modifications to the Shopping Center by Landlord shall not
adversely affect access to, or visibility of the Leased Premises and, except as
otherwise provided for herein, Tenant shall retain substantially the same
relative position with respect to Major Tenants of the Shopping Center as of the
Commencement Date.
(b) After the Commencement Date (as defined in Section 3.2), Landlord
reserves the right to relocate Tenant only for the purpose of (i) the addition
or expansion of a Major Tenant or (ii) the redevelopment or expansion of the
Retail Development involving the addition of a minimum of 100,000 square feet of
GLA. Landlord shall provide Tenant with not less than sixty (60) days written
notice of such relocation (the "Relocation Period") during which Landlord shall
offer to Tenant such alternative location(s) (with approximately the same floor
area, configuration and at least fifty feet (50') of frontage) as may be
available within that area of the Retail Development labeled "Relocation Zone"
on Exhibit A. In the event the parties agree on a specific location, then this
Lease shall be amended by substituting the new location for the present location
and the square footage, Minimum Rent and Sales Break Point shall be
proportionately adjusted based upon the change in the size of the Leased
Premises and Landlord and Tenant shall agree upon a mutually acceptable
timeframe for the completion of work in the new premises and the relocation of
the Tenant to the new premises. Landlord shall, at Landlord's cost and expense,
complete the leasehold improvements to the new location in accordance with the
working drawings originally approved by Landlord with respect to Tenant's Work
in the original Leased Premises (including, without limitation finish work and
the installation of fixtures, simulators and other merchandise) and Tenant shall
relocate to the new location and, within sixty (60) days after delivery of the
new location to Tenant ("Relocation Fixturing Period"), open for business in the
new location ("Relocation Date"). Since Tenant will need to move its equipment,
including simulators from one space to the other, Tenant shall be permitted to
close for a period not to exceed ten (10) days for the purpose of moving the
equipment and installing it in the new leased premises ("Relocation Closure"),
and during such Relocation Closure Tenant's Rent shall abate. In the event that
Tenant is not able to operate in either the original or the relocated Leased
Premises during the Relocation Fixturing Period because of the removal and
installation of the simulators and other equipment. Rent shall abate until
Tenant reopens but in no event after the expiration of the Relocation Fixturing
Period. Notwithstanding the foregoing, Tenant may elect to have Landlord
construct the relocated space under a new prototype design, but Tenant shall
bear the additional costs required as a result of the election of the new
design. Landlord recognizes that the installation of simulators is a specialized
task for which Tenant's experts will be required and Landlord shall reimburse
Tenant for the reasonable internal costs of using Tenant's personnel for the
completion of such work. If a relocation of the Leased Premises occurs Landlord
shall reimburse Tenant for Tenant's reasonable and actual out-of-pocket costs of
moving
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Tenant's equipment and inventory from the original Leased Premises to the new
location within forty-five (45) days of Landlord's receipt of a statement from
Tenant setting forth such costs together with backup information as Landlord
may reasonably require.
In the event Landlord offers to Tenant at least one alternative location
within the Relocation Zone (or elsewhere at Tenant's sole discretion) with
approximately the same floor area, configuration and at least fifty feet (50')
of frontage and Landlord and Tenant are unable to agree on an alternative
location, then within thirty (30) days after the expiration of the sixty (60)
day period set forth above, Landlord shall either (A) terminate this lease by
providing Tenant ninety (90) days prior notice, which termination shall be
effective on the later of (i) ninety (90) days after notice from Landlord of
the termination or (ii) the date that Tenant actually vacates the Leased
Premises ("Termination Date") or (B) withdraw the request for relocation. In
the event of such termination, Landlord shall pay to Tenant, within thirty
(30) days following the later of (a) the Termination Date or (b) the date that
Tenant shall have vacated the Leased Premises, a sum equal to the then
unamortized cost of Tenant's leasehold improvements which have been paid for by
Tenant, such amortization to be on a straight line basis over the Original Term
less the value of all simulators equipment removed by Tenant for re-use plus
all reasonable costs associated with the moving and storage for up to three (3)
months of the simulators and other equipment in the Leased Premises, provided
Tenant shall furnish to Landlord such backup information as Landlord may
reasonably require. Tenant shall deliver possession of the Leased Premises to
Landlord on or before the Termination Date and/or the Relocation Date in "as
is" condition subject to the provisions of Sections 3.5 and 17.1. Tenant shall
pay all amounts which are due and owing under the Lease or which shall accrue
up to such Termination Date or Relocation Date (which amounts shall be paid to
Landlord within thirty (30) days of such Termination Date or Relocation Date)
and Tenant shall be released from any and all further obligations pursuant to
this Lease accruing after such Termination Date or Relocation Date with respect
to the vacated Leased Premises, except as otherwise provided in Articles V and
VII; however, in the event of relocation, Tenant shall remain liable for all
obligations accruing under this Lease after the Relocation Date.
(c) The square footage of the Leased Premises (sometimes herein referred
to as the gross leaseable floor area or GLA) shall be measured as defined in
Exhibit B. The actual square footage in the Leased Premises shall be determined
by Landlord's architect. If Tenant disagrees with the square footage so
determined, Tenant may advise Landlord in writing within ten (10) days that it
contests the same and retain an architect to remeasure the Leased Premises. If
Landlord's architect and Tenant's architect do not agree, then the two
architects shall retain a third architect whose decision shall be final and
binding. The agreed to square footage shall be binding upon both parties
hereto, and such determined square footage shall be used in all calculations
based on square footage throughout this Lease. If the floor area determined in
accordance with the preceding sentence varies from the square foot floor area
originally set forth in the Data Sheet, the Minimum Rent set forth in Section
2.1 hereof shall be adjusted by multiplying the Minimum Rent by a fraction, the
numerator of which is the square foot floor area determined by Landlord's
architect and the denominator of which is the square foot floor area originally
set forth in the Data Sheet, and Tenant shall be obligated to pay such Minimum
Rent, as adjusted, from the Commencement Date, subject to further adjustments
as provided in this Lease but in no event shall Tenant be obligated to pay
Minimum Rent on more than [***] additional square feet of GLA. Each monthly
installment provided for in Section 2.1 shall be recomputed and shall be that
dollar amount which results from dividing the adjusted Minimum Rent by twelve
(12). Any and all references in this Lease to Minimum Rent (or the monthly
installments thereof) shall be deemed to be references to the Minimum Rent as
computed by application of this Section 1.1, subject, however, to the
adjustments set forth elsewhere in this Lease. For purposes of this Lease, in
determining the gross leaseable floor area or the gross leased and occupied
floor area of the Shopping Center, there shall be excluded therefrom project
areas and offices, common areas and/or areas under Landlord's control (e.g.,
electrical/utility rooms, etc.). The exterior walls, roof, storefront and the
area beneath the Leased Premises are not demised hereunder, and the use thereof,
together with the right to install, maintain, use, repair and replace pipes,
ducts, conduits, wires, people counters, tunnels, sewers and structural elements
leading through the Leased Premises in locations which will not materially
interfere with Tenant's use thereof and serving other parts of the Retail
Development are hereby reserved to Landlord. Landlord reserves an easement above
Tenant's finished ceiling or light line to the roof for general access purposes
and in connection with the exercise of Landlord's other rights under this Lease.
Notwithstanding anything contained in this Lease to the contrary, if as a result
of Landlord's exercise of the foregoing rights Tenant is prevented from
operating its business within the
*** Confidential treatment requested.
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Leased Premises for three (3) or more consecutive days, Landlord shall after
written notice from Tenant to Landlord, abate Minimum Rent after such three (3)
days of disruption on a day-to-day basis until Tenant is able to operate its
business in the Leased Premises.
SECTION 1.2 TERM. The Term of this Lease shall be for a period commencing
on the Commencement Date, and expiring at 11:59 p.m. local time on the final day
of the month in which the Original Term or the Option Period, if exercised,
expires or other specified date as set forth in the Data Sheet, unless sooner
terminated in accordance with the provisions hereof (the "Expiration Date").
Unless otherwise specified in this Lease, the use of the word "Term" shall be
deemed to include both the Original Term and the Option Period, if exercised.
The term "full year" and "year" as used in this Lease shall mean consecutive
periods of twelve (12) months each following the Commencement Date. For all
purposes of this Lease, the term "Lease Year" shall have the following meaning:
the first Lease Year shall be a period beginning with the Commencement Date and
ending on the 31st day of December next following the Commencement Date, and
after the first Lease Year, the term Lease Year shall mean a fiscal period of
twelve (12) consecutive calendar months commencing on January 1 of each calendar
year, except that the last Lease Year shall terminate on the Expiration Date or
sooner termination of this Lease. Lease Years containing 365 days or more shall
be referred to as "full Lease Years." If the Leased Premises are not delivered
to Tenant on or before the expiration of twelve (12) months after the date of
Landlord's execution of this Lease then Tenant may cancel and terminate this
Lease upon sixty (60) days prior written notice to the Landlord, in which event
neither party shall have any further obligation or liability to the other. In
the event the Leased Premises are not delivered resulting in Termination of this
Lease by Tenant as a result of the Landlord's failure to use Commercially
reasonable efforts to complete construction, the Landlord shall reimburse Tenant
for its actual out-of-pocket costs associated with this Lease and Leased
Premises. Following the Commencement Date of this Lease, Landlord may submit to
Tenant a Commencement and Expiration Date Declaration in the form attached
hereto as Exhibit F, specifying the information called for in said form, and
Tenant shall execute such Declaration within thirty (30) days following
submission for purposes of certifying such information; provided, however, that
the Declaration shall not be rendered ineffective by Tenant's failure to execute
same.
Provided Tenant is not in default under this Lease (after expiration of any
cure or grace period provided herein) as of the date of exercise hereof. Tenant
shall have the option to extend the Term hereof (the "Option") for one (1)
additional period of five (5) years (the "Option Period"). The Option shall be
exercised, if at all, by written notice to Landlord ("Notice") at least one
hundred eighty (180) days prior to the expiration of the Original Term. All
terms and conditions of this Lease shall apply during the Option Period except
the Minimum Rent and Sales Break Points shall be as scheduled in Sections 2.1
and 2.2 hereof. In the event that Tenant does not exercise the Option by the
required date, then such Option shall become null and void and be of no further
force or effect. If the Leased Premises or any part thereof be sublet or
occupied by any person or entity other than Tenant, then such Option shall
become null and void and be of no further force or effect, unless the Lease has
been transferred with the prior written consent of Landlord or pursuant to a
transfer not requiring the approval or consent of Landlord.
If Tenant's Gross Sales during the twelve (12) month period ending two
hundred ten (210) days prior to the Expiration Date do not exceed [***] per
square foot of floor area in the Leased Premises, then any Notice by Tenant of
the Option shall be null and void and Tenant's Notice shall have no force or
effect. Tenant shall furnish to Landlord, concurrently with its Notice, a
statement certified by an authorized representative or financial officer of
Tenant setting forth the amount of Tenant's Gross Sales for the said twelve (12)
month period.
Notwithstanding the foregoing, in the event Tenant does not achieve Gross
Sales (as hereinafter defined) of as least [***] per square foot during the
third (3rd) year of the Term hereof, then Landlord and Tenant, for a period of
thirty (30) days following the end of the third (3rd) year, shall each have the
option, upon one hundred eighty (180) days prior written notice to the other
party, of terminating this Lease ("Termination Option") provided, however, that
Tenant shall not be entitled to terminate this Lease if Tenant is in default of
this Lease beyond the expiration of any applicable grace or cure period. In the
event Tenant fails to submit a certified report of annual Gross Sales within
twenty (20) days after written notice of its failure to submit such report
within the time period required pursuant to Section 2.2 of this Lease,
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then Landlord may use such information as Landlord shall have available to
permit Landlord to make a determination as to the amount of Gross Sales
achieved by Tenant during the period covered by Landlord's option to terminate,
and such information shall be the basis for Landlord exercising its Termination
Option and Tenant shall not be permitted to reinstate this Lease after
termination for any reason or cause whatsoever, including, but not limited to,
the submittal by Tenant of a subsequent sales report either certified or
uncertified. In the event that neither party exercises its Termination Option
within the required time period, then each such Termination Option shall, upon
expiration of the applicable period, become null and void and be of no further
force or effect. In the event either party exercises the foregoing Termination
Option within the required time period, this Lease shall terminate upon
expiration of the one hundred eighty (180) day period subject, however, to the
payment by Tenant to Landlord of all sums then due and owing or having accrued
to Landlord. In the event that Tenant exercises the Termination Option provided
for herein, Tenant shall pay to Landlord the unamortized portion of the
Construction Allowance (as hereinafter defined).
In the event that Tenant can prove that Tenant's Gross Sales are below
[***] per square foot as the result of an act or omission on the part of
Landlord, then Landlord shall not be permitted to exercise the Termination
Option provided in the immediately preceding paragraph.
SECTION 1.3 OPENING. Subject to delays as described in Article XVI, Tenant
covenants and agrees to complete its construction within the Leased Premises in
accordance with the provisions of this Lease, to satisfy the requirements for
issuance of a certificate of acceptance pursuant to Exhibit D attached hereto
and made a part hereof, and to open its store for business to the public not
later than the Commencement Date. Notwithstanding the foregoing, Landlord
hereby notifies Tenant that the anticipated date of the grand opening of the
Shopping Center (the "Grand Opening") is the date set forth on the Data Sheet.
Tenant shall be obligated to open its store for business to the public on or
before the later of (a) the expiration of the Fixturing Period or (B) the Grand
Opening. Tenant shall not be permitted to open for business to the public
prior to the Grand Opening without the prior written consent of Landlord which
consent shall be at Landlord's sole discretion.
SECTION 1.4 LATE OPENING. In the event Tenant shall fail to open its store
for business to the public upon the Commencement Date for reasons other than
Delays, as described in Article XVI, or delays created by Landlord, then in
order to compensate Landlord for its loss, Tenant shall pay to Landlord as
additional rent (as defined in Section 2.3) over and above the Minimum Rent and
all other charges to be paid by Tenant to Landlord pursuant to this Lease, a sum
in an amount equal to [***] per day for the Commencement Date and each day after
the Commencement Date that Tenant shall have failed to open its store for
business. This remedy shall be in addition to any and all other remedies
provided for in this Lease in the event of such failure to open. Such additional
late opening rent shall be deemed to be in lieu of any Percentage Rent that
might have been earned during the period of Tenant's failure to open.
ARTICLE II
RENT AND DEPOSIT
SECTION 2.1. MINIMUM RENT. During the entire Term of this Lease, Tenant
shall pay annual minimum rental ("Minimum Rent") for the Leased Premises from
the Commencement Date of this Lease in the amount set forth in the Data Sheet
attached hereto, which sum shall be payable by Tenant in equal consecutive
monthly installments in the sum set forth in the Data Sheet attached hereto, on
or before the first day of each month, in advance. The Minimum Rent and each of
the monthly installments called for hereunder shall be payable to Landlord,
without demand, deduction, set-off or counter-claim, except as otherwise
provided herein or permitted by applicable law. The first installment of
Minimum Rent shall be paid by Tenant on or before the Commencement Date. If the
Commencement Date occurs on other than the first day of a month, the second
installment of Minimum Rent shall be prorated at a daily rate on the basis of a
thirty (30) day month.
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On the Commencement Date, if either of the following conditions have not
been satisfied; (1) at least five (5) Major Tenants are open or ready to open
for business; or (2) the "Required Occupancy Level" (as hereinafter defined) has
been achieved, then Tenant's obligation for payment of Minimum Rent shall abate
and Tenant shall pay to Landlord, in lieu thereof, Interim Rent on the basis of
the lesser of (A) the scheduled Minimum Rent and (B) four percent (4%) of all of
Tenant's Gross Sales (as defined in Section 2.2 of this Lease) until both of the
conditions in (1) and (2) above have been initially satisfied; provided,
however, Tenant shall not be entitled to such abatement of Minimum Rent if
Tenant fails to open its store in the Leased Premises to the general public on
or before the Commencement Date of the Term hereof or if Tenant shall otherwise
be in default of this Lease beyond the expiration of any applicable grace or
cure period. Said Interim Rent shall be paid to Landlord within ten (10) days
following the end of each calendar month, at which time Tenant shall also be
required to submit an unaudited statement of Tenant's Gross Sales for such
calendar month and for the Lease Year to date. All other terms and conditions of
this Lease shall be applicable during such period. For purposes of this
paragraph, the term "Required Occupancy Level" shall mean occupants of at least
sixty-five percent (65%) of the gross leasable floor area of the Shopping Center
are open for business, or instead, at Landlord's sole option. "Required
Occupancy Level" shall mean sixty five percent (65%) of the total number of
stores shown on the then existing lease plan for the Shopping Center, are
occupied and are open for business.
In addition, Landlord hereby represents and warrants to Tenant that it has
a fully executed lease for a Bass Pro facility, Rainforest Cafe and a multi-plex
theater at the Retail Development ("Key Stores"). In the event that a lease is
executed with Jillian's for a facility at Opry Mills, Jillian's will be added to
the list of Key Stores in place and stead of Rainforest Cafe. In the event that
less than two of the Key Stores have opened for business within six (6) months
after the Commencement Date then Tenant's obligation for payment of Minimum Rent
shall abate and Tenant shall pay to Landlord, in lieu thereof, Interim Rent on
the basis of the lesser of (A) the scheduled Minimum Rent and (B) four percent
(4%) of all of Tenant's Gross Sales (as defined in Section 2.2 of this Lease)
until at least two (2) of the Key Stores are initially open for business;
provided, however, Tenant shall not be entitled to such abatement of Minimum
Rent if Tenant shall otherwise be in default of this Lease beyond the expiration
of any applicable grace or cure period. Said Interim Rent shall be paid to
Landlord within ten (10) days following the end of each calendar month, at which
time Tenant shall also be required to submit an unaudited statement of Tenant's
Gross Sales for such calendar month and for the Lease Year to date. All other
terms and conditions of this Lease shall be applicable during such period. In
the event that at least two (2) of the Key Stores have not initially opened for
business within eighteen (18) months after the Commencement Date, then at the
end of such eighteen (18) month period, Tenant may elect to terminate this Lease
by providing Landlord within thirty (30) days of the end of such eighteen (18)
month period, written notice of its intention to so terminate the Lease ("Key
Store Termination Notice") or Tenant may elect to remain in the Leased Premises
but must commence paying the then applicable scheduled Minimum Rent as provided
for in the Data Sheet of this Lease. In the event that Tenant timely delivers
the Key Store Termination Notice, this Lease shall terminate one hundred and
eighty (180) days from the date of the Key Store Termination Notice or on such
earlier date as may be mutually agreed to between the parties and this Lease and
all of the unaccrued rights and obligations of the parties to it shall cease and
terminate, as fully and effectively as though the date agreed to were the
Expiration Date. In such event, Landlord and Tenant shall execute a Termination
Agreement setting forth the terms of such termination.
Section 2.2. Percentage Rent. (a) During and for each Lease Year, Tenant
shall pay annual percentage rent ("Percentage Rent") equal to the Percentage
Factor (see Data Sheet) multiplied by all "Gross Sales" resulting from business
conducted in, on or from the Leased Premises during such Lease Year in excess of
the applicable Sales Break Point set forth in the Data Sheet. In any Lease Year
where there is more than one applicable Sales Break Point, for purposes of
computing annual Percentage Rent the following calculation shall be used: each
Sales Break Point which was effective during any such Lease Year shall be
multiplied by a fraction, the numerator of which is the number of days in the
Lease Year that such Sales Break Point was effective and the denominator of
which is the actual number of days in such Lease Year (herein the "Adjusted
Break Point") and the sum of the Adjusted Break Points shall be the Sales Break
Point for such Lease Year. "Gross Sales" is defined to mean the total amount of
the actual sales price, whether for cash or otherwise, of all sales of
merchandise or services arising out of or payable on account of (and all other
receipts or amounts receivable whatsoever with respect to) all the business
conducted in, on, or from the Leased Premises by or on account of Tenant or any
sublessee, assignee or concessionaire of Tenant for cash or
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otherwise, including all orders for merchandise taken from or filled at or from
the Leased Premises, including all deposits not refunded to customers. A "sale"
shall be deemed to have been consummated for purposes of this Lease, and the
entire amount of the sale price shall be included in Gross Sales, at such time
as (i) the transaction is initially reflected in the books or records of Tenant,
or any sublease, assignee or concessionaire of Tenant, or (ii) Tenant or such
other entity receives all or any portion of the sales price, or (iii) the
applicable goods or services are delivered to the customer, whichever first
occurs. Tenant shall record at the time of each sale or transaction, in the
presence of the customer, all receipts from such sale or other transaction,
whether for cash, credit or otherwise, in a cash register or cash registers
having a cumulative total, which shall be sealed in a manner approved by
Landlord and which shall possess such other features as shall be required by
Landlord. There shall be no deduction allowed for direct or indirect discounts,
rebates, or other reductions on sales, unless generally offered to the public on
a uniform basis, except as otherwise provided below. Tenant may deduct from
Gross Sales discount sales to employees, bad debts written off the books of
Tenant and charges paid to credit card companies, as otherwise provided below.
Tenant may also exclude from Gross Sales any transfer of goods between Tenant's
other stores and returns to shippers or manufacturers. The term "Gross Sales"
shall exclude, however, proceeds from any sales tax, gross receipts tax or
similar tax, by whatever name called which are separately stated and in addition
to the purchase price, bona fide transfers of merchandise from the Leased
Premises to any other stores or warehouses of Tenant, refunds given to customers
for merchandise purchased at the Leased Premises and returned or exchanged,
monies received by Tenant but due and owing to the actual provider of the
service (e.g. special event catering fees), and sales of Tenant's fixtures and
equipment not in the ordinary course of Tenant's business. The term
"merchandise" as used in this Lease shall include food and beverages if Tenant
is permitted to sell such items pursuant to Section 4.1 hereof.
The term "Gross Sales" shall not include, however, the following: (i) the
sales price of all merchandise returned and accepted for full credit or the
amount of the cash refund or allowance made thereon; (ii) the sums and credits
received in settlement of claims for loss or damage to merchandise, (iii) the
consideration received in connection with a sale of inventory which occurs other
than in the ordinary course of Tenant's business, including, but not limited to,
a sale in bulk or to a jobber, liquidator or assignee; (iv) sales taxes,
so-called luxury taxes, excise taxes, gross receipt taxes, and other taxes now
or hereafter imposed upon the sale or value of merchandise or services, whether
added separately to the selling price of the merchandise or services and
collected from customers or included in the retail selling price; (v) receipts
from public telephones, vending machines, sales of money orders, and the
collection of public utility bills; (vi) bankcard discounts (e.g., Visa,
MasterCard, etc.), interest, carrying charges, or other finance charges in
respect of sales made on credit; (vii) sales of fixtures, trade fixtures, or
personal property that are not merchandise held for sale at retail; (viii) sales
to senior citizens at discount; (ix) revenue received from mailing, alterations,
delivery or other services performed on a non-profit basis for the benefit of
customers; (x) Tenant's accounts receivable, not to exceed [***] of Gross Sales,
which have been determined to be uncollectible for federal income tax purposes
during the applicable lease year, provided however, that if such accounts are
actually collected in a later lease year, the amount shall be included in the
Gross Sales for such later lease year; (xi) rents, subrents or other
consideration received in connection with a permitted assignment, sublease,
license, concession or other transfer of any portion of the store (however,
Gross Sales of any such transferee shall be included) and license fees otherwise
received by Tenant in connection with a third party license agreement; (xii)
amounts received for merchandise transferred to any other place of business of
Tenant (or its subtenants, concessionaires and/or licensees) or to any business
organization affiliated with Tenant, wherever located, provided such merchandise
is not used to fill a sale made in the store; (xiii) discounts given for
promotional coupons that are redeemed from time to time (xiv) amounts received
in connection with remote site promotional activities; (xv) promotional fees
earned by Tenant with respect to goods or services offered for sale; and (xvi)
amount required to be paid by Tenant under any agreement related to Tenant's use
of the NASCAR name, not to exceed [***] of Gross Sales.
(b) Tenant shall keep at the Leased Premises or at Tenant's executive
offices within the continental United States a full and accurate set of books
and records adequately showing the amount of Gross Sales in each Lease Year. The
books and records to be kept by Tenant shall include, without
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limitation, (i) cash register tapes, including tapes from temporary registers;
(ii) serially pre-numbered sales slips; (iii) detailed original records of any
exclusions of deductions from Gross Sales; (iv) sales tax records; and (v) such
other records, if any, which would normally be examined by an independent
accountant pursuant to accepted auditing standards in performing an audit of
Tenant's sales. Such books and records shall be kept in accordance with
generally accepted accounting principles and practices, may be saved in
microfiche or an electronic storage medium, and shall be retained by Tenant for
a period of not less than two (2) years following the end of the Lease Year to
which they have reference. When and as Landlord may reasonably require (but no
more than once per Lease Year following the first Lease Year unless required by
the city, county or State), Tenant shall also furnish to Landlord any and all
statements, information, and copies of sales tax reports and returns which
separately show financial data for the Leased Premises, and inventory records
and other data evidencing Gross Sales. Within twenty (20) days following the end
of each calendar month of the Term hereof Tenant shall submit to Landlord an
unaudited statement of Gross Sales for such calendar month. Within twenty (20)
days following the end of the month in which Tenant's Gross Sales for the Lease
Year to date exceed the Sales Break Point, and each month thereafter, Tenant
shall pay to Landlord Percentage Rent and shall submit to Landlord a statement
certified by Tenant setting forth the Gross Sales for each such period. Within
forty-five (45) days after the close of each Lease Year, Tenant shall furnish to
Landlord a statement certified by an authorized representative or financial
officer of Tenant setting forth the amount of Gross Sales during such Lease Year
and showing the amount of Percentage Rent required to be paid by Tenant for such
Lease Year. The full amount of the Percentage Rent due shall be paid to Landlord
no later than sixty (60) days after the end of each Lease Year and any excess
Percentage Rent paid shall be credited against Tenant's next due Rent payment,
except for the final Lease Year of the Term for which any excess shall be
refunded to Tenant. Landlord and/or Landlord's auditor shall have the right, at
any time after thirty (30) business days notice but no more than once per Lease
Year after the first Lease Year (if the first Lease Year is a partial Lease
Year), to inspect and/or audit the records of Tenant relating to Gross Sales. If
the Gross Sales exceed those reported, Tenant shall immediately pay any
deficiency in Percentage Rent owing to Landlord. If Gross Sales vary from those
reported by [***] of more, Tenant shall pay Landlords's cost of inspection and
audit. If Gross Sales vary from those reported by (i) [***] or more in any one
(1) Lease Year, or (ii) [***] or more for any two (2) Lease Years out of any
five (5) Lease Years, then Landlord shall have the right, at its sole option, to
terminate this Lease, with Tenant remaining liable for sums due and owing under
this Lease for the balance of the Term provided, however, that Landlord shall be
permitted to terminate this Lease only if Landlord can prove that such
misstatement was a deliberate act. Tenant agrees that in the event Tenant shall
fail to timely submit a Gross Sales statement as required by this Section
2.2(b), Tenant shall pay on demand a late fee of [***] per late statement, as
additional rent.
(c) In the event that Tenant shall fail to operate its business in the
Leased Premises in the manner and on each day as required pursuant to Section
4.2 hereof, then, for the purpose of computing the Percentage Rent for such
Lease Year affected by Tenant's failure to operate, the Sales Break Point for
such Lease Year shall be adjusted by multiplying the Sales Break Point otherwise
applicable for such Lease Year by a fraction, the numerator of which shall be
the actual number of days in such short Lease Year or the actual number of days
in such Lease Year during which Tenant was open for business and operating in
accordance with Section 4.2, and the denominator of which shall be "360".
In the event that the first Lease Year is less than twelve (12) months in
length, then the Percentage Rent covering such Lease Year shall be paid on
Gross Sales in excess of the Sales Break Point computed on a pro rated basis
for the period beginning on the Commencement Date of the Term and ending on
the succeeding December 31st.
(d)
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SECTION 2.3. PAYMENTS BY TENANT. Throughout the Term of this Lease, Tenant
shall pay to Landlord, without demands, deductions, set-offs or counterclaims
(except as otherwise provided for herein or permitted by applicable law), the
Rent, which is hereby defined as the sum of the Minimum Rent, Percentage Rent
and all additional rent, when and as the same shall be due and payable
hereunder. Unless otherwise stated, all sums of money or charges of any kind or
nature, in addition to Minimum Rent and Percentage Rent, payable by Tenant to
Landlord pursuant to this Lease or the Exhibits attached hereto are defined as
"additional rent" and are due thirty (30) days after the rendering of an invoice
therefor, without any deductions, set-offs or counterclaims (except as otherwise
provided for herein or permitted by applicable law), and failure to pay such
sums of money or charges shall carry the same consequences as Tenant's failure
to pay Rent. All payments and charges required to be made by Tenant to Landlord
hereunder shall be payable in United States funds, at the address indicated on
page 1 of this Lease, unless otherwise specified by written notice from Landlord
to Tenant. No payment by Tenant or receipt by Landlord of a lesser amount than
the correct Rent shall be deemed to be other than a payment on account and no
endorsement or statement on any check or other communication accompanying a
check for payment of any amounts payable hereunder shall be deemed an accord and
satisfaction, and Landlord may accept such check in payment without prejudice to
Landlord's right to recover the balance of any sums owed by Tenant hereunder or
to pursue any other remedy available in this Lease, or under law, against
Tenant.
SECTION 2.4. SECURITY DEPOSIT [INTENTIONALLY DELETED].
SECTION 2.5 LATE CHARGE. In the event any Rent or sums required hereunder
to be paid are not received on or before the fifth (5th) calendar day after the
same are due, then, for each and every late payment, Tenant shall immediately
pay, as additional rent, a late charge equal to the greater of (a) [***], (b)
[***] per day for each day after the date due that such payment has not been
received by Landlord or (c) [***] per month of the total receivable balance of
Tenant outstanding. In the event of Tenant's failure to pay the foregoing late
charge, Landlord may deduct said charge from the Security Deposit set forth in
Section 2.4 hereof. The provisions herein for late charges 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 obligation to pay all such sums at
the time or times herein stipulated. Notwithstanding the imposition of such late
charges pursuant to this Section 2.5, Tenant shall be in default under this
Lease if any or all payments required to be made by Tenant are not made on or
before the time due as stipulated in Article XIV, and neither the demand for,
nor collection by, Landlord of such late charges shall be construed as a cure of
such default on the part of Tenant. It is agreed that the said late charge is a
fair and reasonable charge under the circumstances and shall not be construed as
interest on a debt payment. In the event any charge imposed hereunder or under
any other section of this Lease is either stated to be or construed as interest,
then no such interest charge shall be calculated at a rate which is higher than
the maximum rate which is allowed under the usury laws of the State, which
maximum rate of interest shall be substituted for the rate in excess thereof, if
any, computed pursuant to this Lease.
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ARTICLE III
PREPARATION OF LEASED PREMISES
SECTION 3.1. LANDLORD'S WORK. Landlord shall construct the building
wherein the Leased Premises are to be located and perform the work described in
Exhibit C attached hereto and made a part hereof ("Landlord's Work") at
Landlord's cost and expense, except as otherwise provided in Exhibit C.
Landlord's work shall be completed in a good and workmanlike manner, free of
material defects and in compliance with applicable building codes, and zoning
and subdivision laws relating to general retail use. All work, in excess of the
work described in Exhibit C, done by Landlord at Tenant's written request shall
be paid for by Tenant within thirty (30) days after the presentation to Tenant
of a bill for such work. Any items of Landlord's Work which are not completed
as of delivery of possession shall be identified by Tenant on a punch list to
be submitted to Landlord within thirty (30) days after the date of possession
and Landlord shall thereafter complete the same. Any items of Landlord's Work
which are not timely identified on such a punch list shall be deemed completed,
other than latent defects as provided for in Section 6.1 hereof.
SECTION 3.2. DELIVERY OF POSSESSION. (a) Landlord, or Landlord's
supervising architect, shall give Tenant at least thirty (30) days' prior
written notice of the date on which Landlord's Work will be substantially
completed in accordance with Exhibit C and the Leased Premises will be
available for the performance of Tenant's Work (as defined in Section 3.3) to
the extent that Tenant shall be able to perform its work in the Leased Premises
without substantial interference resulting from the conduct of Landlord's Work
("Delivery of Possession Date"). Notwithstanding anything to the contrary
contained in this Lease, for purposes of calculating the Commencement Date,
the Fixturing Period shall not begin before January 1, 2000, unless otherwise
agreed to by each of Landlord and Tenant in its sole discretion. Tenant
covenants and agrees to take physical possession of the Leased Premises on the
Delivery of Possession Date provided that Landlord's Work is "substantially
complete." The term "substantially complete" shall mean that Landlord can give
Tenant beneficial occupancy of the Leased Premises so that Tenant can begin the
performance of Tenant's Work in safety. Landlord and Tenant acknowledge that
Landlord and Tenant will be working simultaneously to complete the Leased
Premises and that Landlord will be continuing the completion of Landlord's Work
during the thirty (30) day period after the Delivery of Possession Date.
Landlord and Tenant agree to cooperate so as to avoid interference with each
other so that Landlord's Work and Tenant's Work may be completed in a timely
manner. The Delivery of Possession Date shall be subsequently confirmed by
Landlord, or Landlord's supervising architect, by written notice to Tenant.
Failure of Landlord to deliver possession of the Leased Premises within the
time and in the condition provided for in this Lease will not give rise to any
claim for damages by Tenant against Landlord or permit Tenant to rescind or
terminate this Lease except as may be provided in Section 1.2 hereof or as
otherwise provided herein.
(b) Tenant may, provided Tenant shall not interfere with the conduct of
Landlord's Work, and subject to Landlord's reasonable rules and regulations,
enter the Leased Premises during normal working hours during the course of
Landlord's Work for the purpose of inspecting the Leased Premises and making
measurements. At such time prior to the Delivery of Possession Date that
Landlord's Work has progressed sufficiently to permit Tenant to perform its
work without interfering with Landlord's Work, Landlord may, but shall not be
required to, notify Tenant of the same, and Tenant may then enter the Leased
Premises in order to begin to install its store fixtures and perform such other
work as may be required under the provisions of this Lease in order to ready
the store for opening. Throughout the period of Tenant's Work, Tenant shall
schedule its work so as not to interfere with any work being performed by
Landlord or by any other tenant in the Shopping Center.
SECTION 3.3 TENANT'S WORK. (a) Tenant agrees, prior to the commencement of
the Term of this Lease, [***], to diligently perform all work of whatever nature
in
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accordance with Tenant's obligations set forth in Exhibit D ("Tenant's Work")
and all other related work necessary to prepare for the opening to the public of
Tenant's store in the Leased Premises in accordance with the provisions of this
Lease. Tenant agrees to furnish to Landlord the Store Design Drawings and
Working Drawings and Specifications with respect to the Leased Premises prepared
in the manner and within the time periods required in Exhibit D. If such Store
Design Drawings or Working Drawings and Specifications are not furnished by
Tenant to Landlord within the required time period(s) in form to permit approval
by Landlord, then the Fixturing Period (as described in the Data Sheet) shall be
reduced by one (1) day for each day of delay by Tenant in submitting said Store
Design Drawings or Working Drawings and Specifications. Landlord shall to
respond to such Store Design Drawings or Working Drawings and Specifications
submitted by Tenant pursuant to this Lease within seven (7) business days
following Landlord's receipt from Tenant. In the event of Landlord's failure to
respond within such seven (7) business day period or there are other delays
created by Landlord, the Fixturing Period as described in the Data Sheet shall
be extended by one (1) day for each day of additional delay by Landlord.
No material deviations from the final Store Design Drawings or Working Drawings
and Specifications, once approved by Landlord, shall be permitted unless
necessary to comply with applicable governmental requirements or unless
otherwise approved by Landlord. Landlord's approval of Tenant's Store Design
Drawings and Working Drawing and Specifications shall not constitute the
assumption of such items. Tenant's Work shall include the installation of
fixtures and equipment and the stocking of the Leased Premises with suitable
merchandise. Tenant covenants that all such fixtures and equipment visible to
customers shall be new (or like-new) and otherwise reasonably acceptable to
Landlord in appearance. In addition to conforming to the requirements specified
in Exhibit D, all work performed by Tenant shall comply with such rules and
regulations as Landlord and its representatives may make, provided that such
rules and regulations are uniformly applied to all similarly situated Shopping
Center tenants under construction. To the extent there is a conflict between the
terms of such rules and regulations and the terms of this Lease, this Lease
shall control. Unless Landlord otherwise directs in writing, Tenant shall not
open the Leased Premises for business until all construction has been completed
pursuant to the provisions of Exhibit D. It is further understood and agreed
that: (i) Landlord shall have no responsibility or liability whatsoever for any
loss of, or damage to, any fixtures, equipment, merchandise, or other property
belonging to Tenant, installed or left in the Leased Premises except to the
extent resulting from the negligence or intentional acts of Landlord, its agents
or employees; and (ii) Tenant's entry upon and occupancy of the Leased Premises
prior to the Commencement Date shall be governed by and subject to all the
provisions, covenants and conditions of this Lease. Tenant shall obtain at its
sole cost and immediately thereafter furnish to Landlord all certificates and
approvals with respect to work done and installations made by Tenant that may be
required for the issuance of a certificate of occupancy for the Leased Premises,
so that such certificate of occupancy shall be issued and the Leased Premises
shall be ready for the opening of Tenant's business on the Commencement Date.
Upon the issuance of the certificate of occupancy, a copy thereof shall be
immediately delivered to Landlord. Promptly upon the completion of its work,
Tenant, at Tenant's cost, shall repair, clean and restore all portions of the
Shopping Center affected by Tenant's Work to their prior condition.
To the extent approved by the proper governing authorities, Tenant shall
have the right to install atop the roof of Landlord's building in which the
Leased Premises are located one (1) antenna and/or one (1) satellite dish and
the equipment necessary for Tenant's communications and data transmission
network system. The satellite dish shall not be larger than five (5) feet in
diameter. The antenna or satellite dish on such roof shall be at a location
designated by Landlord and reasonably approved by Tenant. Tenant shall submit to
Landlord for its approval plans for the installation of such antenna or
satellite dish and necessary equipment, such approval not to be unreasonably
withheld, delayed, or conditioned. Tenant shall also provide Landlord with
copies of all permits required by the proper governmental authorities regarding
such installation, which shall be obtained by Tenant at its sole cost and
expense. Landlord's contractor shall cut the roof and patch it (if necessary) at
Tenant's expense, and Tenant's contractor shall be subject to Landlord's prior
approval, which approval shall not be unreasonably withheld, delayed, or
conditioned. Tenant shall be responsible for the cost of repairing any damage to
Landlord's building arising from such installation, except to the extent caused
by Landlord's contractors. Upon prior written notice to Landlord (except in case
of an emergency), Tenant shall have access to the antenna or satellite dish and
related equipment for the purpose of maintaining, repairing, replacing and
operating the antenna or satellite
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dish. Any utility costs related to the installation and operating of the
antenna or satellite dish shall be the sole responsibility of Tenant.
Provided Tenant is not in default of this Lease beyond the expiration of
any applicable grace or cure period. Landlord hereby agrees to contribute
towards the cost of Tenant's Work a Construction Allowance of [***] per square
foot of floor area in the Leased Premises. The aforesaid Construction Allowance
shall be paid as follows: [***] after [***] of Tenant's Work is completed; [***]
upon [***]; and [***] upon [***]. In the event that this Lease is terminated
prior to the expiration of the Term hereof as a result of a default on the part
of Tenant, Tenant shall repay said Construction Allowance to Landlord in cash
upon termination; provided, however, that Tenant's liability for said
Construction Allowance shall be reduced at the rate of [***] at the end of each
full calendar month during the Term hereof. If Landlord fails to pay Tenant all
or any portion of the Construction Allowance after thirty (30) days notice that
the same is past due, then, in addition to Tenant's other rights and remedies
hereunder, Tenant may withhold payment of Minimum Rent until Tenant has recouped
such amount in full together with interest thereon at the interest rate set
forth in Section 20.14 hereof.
(b) The interest of Landlord in the Leased Premises and the Retail
Development shall not be subject to liens for improvements made by or on behalf
of Tenant. Nothing contained in this Lease shall be construed as a consent on
the part of Landlord to subject Landlord's estate in the Leased Premises or the
Retail Development to any lien or liability under applicable law. In the event
that any mechanic's, materialman's or other lien or any notices of claim,
including without limitation, stop notices (herein "lien") is filed against the
Leased Premises or Retail Development as a result of any work, labor, services
or materials performed or furnished,or alleged to have been performed or
furnished to or for Tenant (excluding work performed by or on behalf of
Landlord) or to or for anyone holding the Leased Premises through or under
Tenant. Tenant, at its expense, shall cause the lien to be discharged or fully
bonded to the satisfaction of Landlord within thirty (30) days after notice of
the filing thereof. If Tenant fails to discharge or bond against said
mechanic's, materialman's or other lien, Landlord may, in addition to any other
remedies Landlord may have, but without obligation to do so, bond against or
pay the lien without inquiring into the validity or merits of such lien and all
sums so advanced, including reasonable attorney fees incurred by Landlord in
defending against such lien, procuring the bond or in the discharge of such
lien, shall be paid by Tenant on demand as additional rent. It shall be
Tenant's continuing obligation to keep and maintain the Leased Premises and all
other parts of the Retail Development free from any and all liens arising out
of any work performed, materials furnished or obligations incurred by or for
Tenant in connection with the Leased Premises. In addition, Tenant shall
replace any bonds posted by Landlord pursuant hereto with a suitable bond of
equivalent amount within twenty (20) days after Landlord's demand therefor.
(c) During the Term of this Lease, Tenant agrees to repair, refurbish or
replace the interior portions of the Leased Premises that are visibly worn or
damaged so as to maintain the condition of the Shopping Center as a first class
super-regional discount specialty retail mall.
SECTION 3.4. ALTERATIONS BY TENANT. Tenant shall not make or cause to be
made any alterations, repairs, additions or improvements in or to the Leased
Premises (for example, but without limiting the generality of the foregoing,
Tenant shall not install or cause to be installed any exterior signs or
interior signs visible from the exterior except as permitted by Section 4.3
hereof, floor covering, interior or exterior lighting, plumbing fixtures,
shades, canopies or awnings or make any changes to the storefront, mechanical,
electrical or sprinkler systems) without the prior written
*** Confidential treatment requested.
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consent thereto by Landlord. Tenant shall submit to Landlord plans and
specifications for such work at the time consent is sought, in accordance with
the criteria and procedures as provided in Exhibit D. In the event Landlord
grants such consent, such alterations, repairs, additions or improvements shall
be performed in good and workmanlike manner and in accordance with all
applicable legal and insurance requirements and all drawings or specifications
approved by Landlord, and in accordance with the provisions of this Lease,
including the provisions of Section 3.3 governing construction of the Leased
Premises. Any work performed by Tenant shall be subject to Landlord's
inspection and approval after completion to determine whether the same complies
with the requirements of this Lease. Prior to the commencement of any such work
by Tenant, Tenant shall obtain the insurance required in Section 8.2.
Tenant may from time to time make non-structural alterations to the Leased
Premises without Landlord's prior written approval, the aggregate total cost of
which shall not exceed [***] in any Lease Year; provided, however, that Tenant
shall not be permitted to alter the exterior storefront sign or the exterior of
the storefront (other than for repairs) without the prior written consent of
Landlord, and provided further that any such non-structural alterations shall
not change the overall appearance of the Leased Premises as originally approved
by Landlord.
SECTION 3.5. REMOVAL BY TENANT. All repairs, alterations, decorations,
additions and improvements made by Tenant shall be deemed to be attached to the
leasehold and to have become the property of Landlord upon such attachment,
and, upon the Expiration Date or sooner termination of this Lease, Tenant shall
not remove any of such alterations, decorations, additions and improvements;
provided that trade fixtures, simulators and other items noted as "To Be
Removed" on Tenant's Construction Documents and Specifications installed by
Tenant may be removed if all Rent due herein is paid in full and Tenant is not
otherwise in default hereunder; provided further, however, that Landlord may
designate by written notice to Tenant given at the time such improvements are
installed those alterations, decorations, additions and improvements which
shall be removed by Tenant at the Expiration Date or sooner termination of this
Lease and Tenant shall, at Tenant's cost, promptly remove the same and repair
any damage to the Leased Premises caused by such removal.
ARTICLE IV
CONDUCT OF BUSINESS
SECTION 4.1. USE AND TRADE NAME. Except as otherwise provided herein,
Tenant shall continuously use and occupy the Leased Premises during the Term
solely for the purpose of conducting the business specifically set forth in the
Data Sheet and for no other purpose or purposes. Throughout the Term hereof,
Tenant shall (a) operate its business in the Leased Premises under the Trade
Name specifically set forth in the Data Sheet and under no other so long as
such name shall not be held to be in violation of any applicable law, (b) not
change the advertised name or character of the business operated in the Leased
Premises, (c) refer to the Shopping Center by name in designating the location
of the Leased Premises in all newspaper and other advertising within the
Shopping Center market area and in all other references to the location of the
Leased Premises, and (d) during the period from the Delivery of Possession Date
through sixty (60) days following the Commencement Date, include in all
Tenant's newspaper advertising within the Shopping Center market area the
designation that Tenant is opening for business in the Shopping Center. If any
governmental license(s) or permit(s) shall be required for the proper and
lawful conduct of Tenant's business or other activity carried on in the Leased
Premises, or if a failure to procure such a license or permit might or would in
any way, adversely affect Landlord or the Shopping Center, then Tenant, at
Tenant's expense, shall duly procure and thereafter maintain such license(s) or
permit(s) and submit the same for inspection by Landlord. Tenant, at Tenant's
expense, shall at all times, comply with the requirements of such license(s) or
permit(s). Except as provided in Section 1.3, Tenant shall open
*** Confidential treatment requested.
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its store in the Leased Premises for business to the public on the Commencement
Date, and shall thereafter diligently conduct its regular business operations in
the Leased Premises as required by the terms of this Lease. No symbol, design,
name, mark or insignia adopted by Tenant shall be used without the prior written
approval of Tenant.
During the Term of this Lease, and provided Tenant shall not be in default
hereof beyond the expiration of any applicable grace or cure period, Landlord
agrees that Landlord will not lease space in the Retail Development (other than
with respect to spaces leased or to be leased to Major Tenants and presently
executed non-Major Tenant leases), to any tenant whose primary use is the
entertainment use of auto-racing simulators. In addition, with respect to any
non-Major Tenant lease. Landlord shall not be permitted to modify any such
lease, either through amendment or assignment, so as to permit the occupant of
the space leased thereby to have as its primary use the entertainment use of
auto-racing simulators.
Landlord hereby represents and warrants to Tenant that Tenant's use of the
Leased Premises as contemplated in the Data Sheet does not violate any
exclusivity clause or other agreement between Landlord and any other party,
including any other tenant of the Shopping Center, and Landlord shall indemnify,
defend, protect and hold harmless Tenant from any loss, liability, cost,
expense, judgement, action, or claim of any such party arising from the
inaccuracy of such representation and warranty.
If the trade name of all or substantially all other stores operating under
the same Trade Name as set forth in this Section 4.1 shall be changed, then
Tenant, with prior written notice to Landlord, may likewise change its Trade
Name herein set forth to such other name as adopted for all or substantially
all such other stores in first class regional malls or super-regional malls.
Notwithstanding the foregoing, in no event shall Tenant's Trade Name duplicate
any other trade name in the Retail Development.
SECTION 4.2. OPERATION OF BUSINESS. Tenant shall open for business in the
Leased Premises and remain open during the entire Term and continuously operate
its business in the entire area of the Leased Premises during the entire Term.
Tenant shall conduct its business at all times in a high class and reputable
manner, maintaining at all times a full staff of employees and a complete stock
of merchandise. Tenant shall install and maintain at all times a display of
merchandise in the display windows (if any) of the Leased Premises and shall
keep the Leased Premises well lighted during all hours that the Shopping Center
is open to the public and during such other hours as may be reasonably
designated by Landlord but in no event more than one (1) hour after the close of
business. In no event shall Tenant conduct or advertise any auction, fire sale,
going out of business sale, or bankruptcy sale in or about the Leased Premises
without Landlord's prior written consent in each instance, which consent may be
withheld by Landlord in its sole and absolute discretion. Tenant shall conduct
its business in the Leased Premises in a lawful manner and in good faith during
all days and hours specified by Landlord from time to time as the published
operating hours for the Shopping Center, Tenant shall not use or allow the
Leased Premises to be used for any improper, immoral or objectionable purposes,
as determined by Landlord, and Tenant shall not do any act tending to injure the
reputation of the Shopping Center as determined by Landlord. Tenant may (but
shall not be required), from time to time, upon written notice to Landlord,
remain open for business beyond the normal operating hours of the Shopping
Center on a daily basis, but such hours of operation shall not extend beyond the
time permitted by applicable law or regulations, and in no event beyond the time
that is one hour after the release of the last movie from the Theater or 1:00
a.m. whichever is later. In addition, in the event that there is an exterior
entrance serving only the Leased Premises, which provides ingress and egress to
the general public and such ingress and egress has been approved by the local
jurisdiction for non-emergency use, then Tenant shall be permitted to remain
open after the Theater is open for business. Tenant agrees to reimburse Landlord
for its pro-rata share of all reasonable costs directly relating to all
additional hours of operation beyond the normal operating hours of the Theater,
which costs include, without limitation, electricity for parking lot lighting
and salaries for security personnel.
Notwithstanding any provision hereof to the contrary, Tenant shall not be
obligated to continuously operate from the Leased Premises during periods in
which (i) Tenant is carrying on remodeling activities (but in no event for more
than thirty (30) days in any lease year and no more than twice in any five (5)
year period), (ii) Tenant is closed for the taking of inventory (but in no event
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for more than two (2) days in any lease year), (iii) Tenant is unable or
reasonably unwilling to operate as a result of casualty or natural disaster,
condemnation, interruption of utilities or services, extremely inclement
weather, civil unrest, operation of the business would expose Tenant's
employees, agents or invitees to an unreasonably risk of physical injury or
property damage, or other force majeure events, (iv) Tenant's use and occupancy
of the Leased Premises is prohibited by any law, ordinance, order or other act
of any judicial governmental or quasi-governmental authority, (v) there exists
a substantial and material hardship to Tenant or its employees, provided
Tenant's failure to continuously occupy under this clause (v) for any such
occurrence shall be excused only for a period of forty-eight (48) hours, (vi)
Thanksgiving and Christmas, and (vii) during periods in which the Leased
Premises are temporarily closed in connection with group sales activities
being conducted and the Leased Premises are temporarily closed to the public
(as permitted pursuant to Section 4.1 of the Data Sheet).
Landlord hereby consents to Tenant's use of hydraulic oil in connection with
the operation of the simulators and cleaning and office products customarily
used in retail or office premises so long as such materials are used, handled
and disposed of in accordance with applicable laws, Landlord hereby
acknowledges that such materials are approved.
Landlord recognizes that Tenant's prototype incorporates an open storefront
design. Tenant shall be permitted to incorporate the open storefront element
into the design of the Leased Premises provided that Tenant, at Tenant's
expense shall construct Tenant Work in a manner that does not cause the ambient
noise level in adjacent tenant spaces and common areas to exceed 65 db(A).
Similarly, Tenant installed equipment within the Leased Premises shall be
isolated in a manner that eliminates the transfer of any and all vibrations to
adjacent tenant spaces and common areas. Landlord shall be given the
opportunity to review and approve Tenant's intended construction methods to
isolate such noise and vibrations, which will be included in Tenant's Store
Design Drawings submission (as provided for in Exhibit D). Landlord's review
and approval of Tenant's Store Design Drawings shall not relieve Tenant of its
obligation to limit the ambient noise level and eliminate the transfer of
vibrations as required herein.
Section 4.3. Sign. Tenant shall install and maintain one (1) sign affixed to
the front of the Leased Premises, subject to the prior written approval of
Landlord as to design and location and conforming to all applicable legal and
insurance requirements. Tenant's sign shall conform to the specifications and
requirements contained in Exhibit E attached hereto. Tenant shall keep its
approved storefront sign lighted during all hours that the Shopping Center is
open to the public and during such other hours as may be reasonably designated
by Landlord but in no event more than one (1) hour after the close of business.
Tenant shall pay for all costs in connection with such sign and shall be
responsible for the cost of proper installation and removal thereof and any
damage caused to the Leased Premises thereby. In the event Landlord deems it
necessary to remove such sign, then Landlord shall have the right to do so,
provided, however, that if the sign has received Landlord's prior written
approval and is consistent with the specifications and requirements of Exhibit
E, Landlord shall replace said sign as soon as practicable. Except as mentioned
above, Tenant shall not place or cause to be placed, erected or maintained on
any exterior door, wall or window of the Leased Premises, or the glass of any
window or door of the Leased Premises, or on any sidewalk or within any display
window space in the Leased Premises, or within five (5) feet of the front of
the storefront lease line or opening, or within any entrance to the Leased
Premises, any sign (flashing, moving, hanging, handwritten or otherwise),
decal, placard, flashing, moving or hanging lights, lettering or any other
advertising matter of any kind or description. No symbol, design, name, mark or
insignia adopted by Landlord for the Retail Development shall be used without
the prior written approval of Landlord. Any interior signs must be in good
taste and prepared professionally (not hand-lettered) so as not to detract from
the appearance of the Leased Premises or the Shopping Center. Any sign or
display visible from the exterior of the Leased Premises which does not meet
the above criteria may be removed at any time by Landlord without Landlord
incurring any liability therefor, and without such removal constituting a
breach of this Lease or entitling Tenant to claim damages on account thereof.
Tenant shall be permitted to install a video wall within the Leased Premises
(but not within five (5) feet of the storefront leaseline), which video wall
may be visible from outside the Leased Premises.
Landlord and Tenant agree to use commercially reasonable good faith efforts to
cooperate in the development of a storefront design to permit the incorporation
of a stock car replica above the
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storefront so long as the installation complies with applicable codes and is
reasonably in keeping with the design criteria for entertainment uses in the
Retail Development.
SECTION 4.4. TENANT'S WARRANTIES. Tenant warrants, represents, covenants
and agrees that, in the operation of its business within the Leased Premises,
Tenant shall: (a) pay before delinquency any and all taxes, assessments and
public charges levied, assessed or imposed upon Tenant's business, or upon
Tenant's fixtures, furnishings or equipment in the Leased Premises, or upon any
leasehold interest or personal property of any kind, owned by or placed in or
about the Leased Premises by Tenant or by anyone claiming by, through or under
Tenant, including, without limitation, any transfer taxes, and pay when and as
due all license fees, permit fees and charges of a similar nature required for
the conduct by Tenant or any subtenant or concessionaire of any business or
undertaking authorized hereunder to be conducted in or from the Leased
Premises; (b) observe all reasonable requirements promulgated by Landlord at any
time and from time to time relating to delivery vehicles, the delivery of
merchandise, and the storage and removal of trash and garbage; (c) not use any
space outside the Leased Premises for sale, storage or any other undertaking
except as provided herein; (d) not use the plumbing facilities in the Leased
Premises for any purpose other than that for which they were constructed, nor
dispose of any foreign substances therein; (e) except as set forth in Section
4.2., not use any advertising medium or sound devices inside or adjacent to the
Leased Premises which produce or transmit sounds which are intended to be
audible beyond the interior of the Leased Premises it being expressly
understood that Tenant shall be required to soundproof the Leased Premises so
as to minimize the impact of the noise created by the Permitted Use on other
tenants and patrons of the Retail Development; (f) not permit any odor to
emanate from the Leased Premises which is objected to by Landlord or by any
tenant or occupant of the Retail Development (and, upon written notice from
Landlord, Tenant shall immediately cease and desist from causing such odor, and
Landlord may deem the failure by Tenant to do so, a material breach of this
Lease); (g) keep the Leased Premises and any platform, loading dock or service
area used by Tenant in a neat, clean, safe and sanitary condition; (h) promptly
comply with all present and future laws, ordinances, orders, rules, regulations
and requirements of all governmental authorities having jurisdiction, and
observe and comply with all covenants and restrictions of record and all
reasonable notices from Landlord's mortgagee, affecting or applicable to the
Retail Development or affecting or applicable to the Leased Premises or the
cleanliness, safety, occupancy and use of the same, provided such notices from
Landlord's mortgagee do not increase Tenant's obligations or decrease Tenant's
rights under the Lease, whether or not any such law, ordinance, order, rule,
regulation, covenant, restriction, or other requirement is substantial, or
foreseen or unforeseen, or ordinary or extraordinary, or shall necessitate
structural changes or improvements (provided, however, that Tenant shall not
be required to make any structural changes or improvements required pursuant to
this Section 4.4(h) with respect to the structural portions of the Leased
Premises originally constructed by Landlord, unless such change shall be
required by virtue of Tenant's use of the Leased Premises), shall interfere
with the use or enjoyment of the Leased Premises, or shall be directed to or
imposed upon Tenant or Landlord, and Tenant shall hold Landlord harmless from
any and all cost or expense on account thereof (as used in this Lease, the term
"legal requirements" shall include the requirements set forth in this
subparagraph); (i) not use the parking areas or sidewalks, common areas or any
space on or about the Retail Development (outside the Leased Premises) for
display, sale, handbilling, advertising, solicitation, or any other similar
undertaking; (j) maintain and operate the heating, ventilating and air
conditioning system and equipment servicing the Leased Premises so as to
adequately heat and cool the same and to maintain at all times, whether or not
Tenant is open for business, temperatures in the Leased Premises which will not
drain heat or ventilation or air conditioning from the enclosed mall or other
interior areas into the Leased Premises and shall not discharge heat,
ventilation or air conditioning from the Leased Premises into the enclosed mall
or other interior areas; and (k) be authorized to do business in the State,
evidence of which must be delivered to Landlord on or before the earlier of (I)
the Commencement Date or (II) the date that Tenant opens for business in the
Leased Premises.
SECTION 4.5 STORAGE AND OFFICE SPACE. Tenant shall store or stock in the
Leased Premises only such goods, wares and merchandise as Tenant intends to
offer for sale at, in, from, or upon the Leased Premises or as are required to
repair and maintain the improvements and simulators in the Leased Premises.
This shall not preclude occasional emergency transfers of merchandise to the
other stores of Tenant, if any, not located in the Shopping Center. Tenant
shall use for office, clerical or other non-selling purposes only such space in
the Leased Premises as is from time to time reasonably
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required for Tenant's business therein, and Tenant shall not perform any office
or clerical function in the Leased Premises for any store located elsewhere.
SECTION 4.6. CARE OF PREMISES. Tenant shall keep the Leased Premises
(including the exterior and interior portions of all windows, doors and all
other glass and signs) orderly, neat, safe and clean and free from rubbish or
dirt at all times and shall store all trash and garbage only in the areas
reasonably designated by Landlord for such storage and accumulation. Tenant
shall not move any safe, heavy machinery, heavy equipment, or fixtures into or
out of the Leased Premises without Landlord's prior written consent, except
that, during hours when the Shopping Center is not open to the public. Tenant
shall be permitted to move equipment associated with its Permitted Use provided
that Tenant uses its best efforts to protect the common area improvements from
damage and agrees to assume responsibility for any damage resulting from the
same. Tenant agrees that it will not place a load on any floor exceeding the
floor load per square foot which such floor was designed to carry, and will not
install, operate or maintain in the Leased Premises any heavy equipment except
in such manner as to achieve a proper distribution of weight. Landlord and
Tenant shall cooperate in their efforts to insure that the Leased Premises are
designed to accommodate the Permitted Use.
SECTION 4.7. NOTICE BY TENANT. Tenant shall give immediate notice to
Landlord in case of fire or accidents in the Leased Premises, or in the
building of which the Leased Premises are a part of, or of defects therein or
in any fixtures or equipment.
SECTION 4.8. RADIUS. Tenant acknowledges that the Retail Development draws
it customers from a large geographic area, relying in part on regional and
international tourism, and that the success of the Retail Development and
income of the Landlord therefrom are dependent upon maximum customer traffic
within the Retail Development. In addition, Tenant acknowledges that Landlord
is relying on the generation of Percentage Rent from Tenant's Gross Sales at
the Leased Premises. During the Term, in the event Tenant, or any person, firm
or corporation who or which controls or is controlled by Tenant (an
"Affiliate") shall directly or indirectly, either individually or as a partner
or stockholder or otherwise, own, operate, or obtain a controlling interest
(i.e. own more than fifty percent (50%) of the shares or interest) in any
business which is the same as or substantially similar to and in competition
with the business of Tenant described in Article IV ("competing business"),
which business is conducted within the Area (as said term is herein defined),
then the Gross Sales (as said term is defined in this Lease) of any such
competing business within said Area shall be included in Tenant's Gross Sales
made from the Leased Premises and the Percentage Rent hereunder shall be
computed upon the aggregate of Tenant's Gross Sales made from the Leased
Premises and made from each such competing business then conducted within said
Area. Tenant shall be obligated to provide Landlord with full and complete
Gross Sales information and reports with respect to any competing business
within the Area in accordance with the requirements of Article II of this Lease
and Tenant shall be obligated to include the applicable portion of the Gross
Sales of such competing business with the Gross Sales of the Leased Premises
and to pay Percentage Rent thereon in accordance with the terms of this Lease.
The "Area" shall be defined as the area falling within a radius of ten (10)
miles measured from the outside boundary of the Retail Development. This
Section 4.8 shall not apply to any competing business which is open and is
being operated by Tenant within said Area on the Effective Date.
ARTICLE V
COMMON AREA
SECTION 5.1. USE OF COMMON AREA. Landlord agrees to cause to be operated,
managed and maintained during the Term all of the common areas of the Shopping
Center. The term "common areas", as used in this Lease, shall mean the parking
areas, pedestrian sidewalks and bridges, truckways, loading docks, delivery
areas, park areas, pedestrian malls and courts, elevators and escalators, if
any, and stairs not contained in leased areas, public restrooms and comfort
stations, if any, service areas, fire, service and exit corridors, passageways,
landscaped areas, berms and all other areas or improvements which may be
provided for the convenience and use of the occupants and tenants of the Retail
Development and their respective agents, employees, customers, invitees, and
the licensees and invitees of Landlord. The use and occupancy by Tenant of the
Leased Premises
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shall include the non-exclusive use, in common with all others to whom Landlord
has or may hereafter grant rights to use the same (including, but not limited
to, the owners, tenants and occupants of the Shopping Center), of the common
areas and of such other facilities as may be designated by Landlord from time
to time; subject, however, to rules and regulations for the use thereof which
will be uniformly applicable to all Shopping Center tenants as prescribed from
time to time by Landlord; provided, however, to the extent there is a conflict
between such rules and regulations and the terms of this Lease, the terms of
the Lease shall control. In particular, Tenant and its employees shall park
their cars only in the areas specifically designated from time to time by
Landlord for that purpose. Tenant covenants that it will enforce the parking by
its employees in such designated areas. Automobile license numbers of
employees' cars shall be furnished by Tenant to Landlord within five (5) days
after Landlord's request. In the event any vehicle is parked by an employee of
Tenant in a non-employee parking area, Landlord shall have the right to cause
the vehicle to be towed to a location designated by Landlord and Tenant shall
be obligated to reimburse Landlord for all towing charges. Landlord may at any
time close temporarily any common area to make repairs or changes, to prevent
the acquisition of public rights in such areas and to discourage non-customer
use, provided the same shall not materially adversely affect access to or
visibility of the Leased Premises. In addition, Landlord may modify, from time
to time, the traffic flow pattern and layout of parking spaces and the
entrances-exits to adjoining public streets or walkways, utilize portions of
the common areas for entertainment, displays and charitable activities and may
do such other acts in and to the common areas as in its judgment may be
desirable to improve the convenience or attraction thereof.
Landlord agrees to maintain all common areas of the Shopping Center in
good order, condition and repair and in a safe, clean, sightly and sanitary
condition in accordance with good and accepted shopping center practices. The
maintenance obligations of Landlord shall include, without limitation, the
re-striping of parking areas when required, repairing of common areas and
adequate lighting of all exterior common areas during all hours of darkness
during which Tenant shall be open for business and for one (1) hour thereafter:
SECTION 5.2. COMMON AREA MAINTENANCE EXPENSES. (a) Tenant agrees to pay
to Landlord each Lease Year, in the manner hereinafter provided, Tenant's
proportionate share of all costs and expenses (the "Common Area Maintenance
Expenses") of every kind and nature paid or incurred by Landlord, or for which
Landlord is obligated, during each Lease Year, for operating, equipping,
policing and protecting, heating, air conditioning, providing sanitation and
sewer and other services, lighting, insuring, repairing, replacing and
maintaining (i) the common areas, and (ii) all buildings and roofs within the
Retail Development, and (iii) all other areas, facilities and buildings used in
connection with the maintenance and/or operation of, and whether located within
or outside of, the Retail Development, including without limitation, all roads
and driveways serving the Retail Development which are maintained or repaired
by Landlord or at Landlord's expense. The Common Area Maintenance Expenses
shall include, but are not limited to, costs and expenses of: water, gas,
sewage, electricity, refuse disposal, air conditioning, heating and other
utilities (without limitation), including all usage, service, hook-up,
connection, availability and/or standby fees or charges pertaining to same, and
the utility costs; illumination and maintenance of signs, whether located on or
off the Retail Development property; salaries of all management personnel;
maintenance, repair and replacement of directories, electronic or otherwise,
cleaning, lighting, snow removal and landscaping; security control and fire
protection; uniforms for maintenance, administrative and security personnel for
the Retail Development; management fees; maintenance for wooded areas,
retention ponds, wetlands, rivers and riverbank areas; premiums for insurance
to the extent maintained by Landlord, for liability, casualty and property
damage, including, without limitation, insurance against vandalism, plate
glass breakage, fire and extended coverage insurance and such other coverage as
determined by Landlord, and liability for defamation and claims of false arrest
occurring in and about such areas; personal property taxes; maintaining and
replacing the equipment, if any, supplying music to such areas; the reasonable
depreciation of equipment used in the operation and maintenance of such areas;
total compensation and benefits (including premiums for workers' compensation
and other insurance) paid to or on behalf of persons involved in the
performance or administration/technical support of the work specified in this
Section 5.2; repair, maintenance and cleaning of such areas; operation, repair,
maintenance and reasonable depreciation of all temporary and permanent utility
systems for the Retail Development, including, without limitation, heating,
ventilating and air conditioning systems (HVAC systems), gas system(s),
plumbing system(s),
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electrical equipment and irrigational pumping system(s); operation, repair,
maintenance and reasonable depreciation of emergency water and sprinkler main
system(s) and security alarm system(s); operation maintenance, repair and
replacement of mechanical equipment including any automatic door openers,
elevators, escalators, lighting fixtures (including replacement of poles, tubes
and bulbs) and all other items of equipment used in connection with such areas;
paper supplies in restrooms located in or about such areas, cleaning, lighting,
striping and landscaping, curbs, gutters, sidewalks, drainage and irrigation
ditches, conduits, pipes and canals serving the Retail Development; and there
shall also be added to the foregoing costs and expenses an amount equal to
[***] of the total of all of the ongoing costs and expenses as Landlord's
administrative fee. As stated throughout this Lease, whenever Tenant is
obligated to pay its "proportionate share" of a cost, expense or Taxes (as
hereinafter defined) such share shall be based on gross leased and occupied
floor area in the Shopping Center, and Tenant's proportionate share shall be
that fraction, the numerator of which is the total square footage of floor area
in the Leased Premises, and the denominator of which is the total square footage
of gross leased and occupied floor area (including the Leased Premises) in the
Shopping Center. As used throughout this Lease, the "gross leased and occupied
floor area" in effect for the whole of any Lease Year shall be the average of
the gross leased and occupied floor area in effect on the first day of each
calendar month in such Lease Year.
Prior to the proration of such Common Area Maintenance Expenses to Tenant,
there shall be deducted from the total of such Common Area Maintenance Expenses
any amounts specifically contributed by the Major Tenants toward such Common
Area Maintenance Expenses. It is further agreed that in no event shall Tenant be
obligated for the capital costs of initially constructing the Retail Development
or the capital costs of subsequent expansion construction for the Retail
Development (i.e., adding new Major Tenants to the development or expanding the
Shopping Center or the common areas). Notwithstanding anything contained in this
Lease to the contrary, the following shall be excluded from Common Area
Maintenance Expenses in calculating Tenant's proportionate share; (i) the
capital costs of initially constructing the Retail Development or the capital
costs of subsequent expansion construction for the Retail Development; (ii)
executive salaries (employees senior to management personnel); (iii) leasing
commissions and the expense of preparing leases; (iv) debt service and
amortization under any mortgage encumbering the Shopping Center and charges and
fees incurred by Landlord in connection with the procurement and recording of
such mortgages or rental under any ground lease or other underlying lease; (v)
the costs of Landlord's Work in connection with preparing any tenant's space
(vi) any costs for which Landlord is reimbursed by insurance proceeds or
condemnation awards; (vii) costs for which Landlord is reimbursed by individual
tenants of the Shopping Center (viii) to the extent that any employee of
Landlord performs work or services other than for the Retail Development, the
portion of his salary allocable to work not performed in connection with the
Retail Development; (ix) the costs of correcting defects in or inadequacies of
the initial design or construction of the Shopping Center, or repair and/or
replacement of any of the original materials or equipment required as a result
of such defects or inadequacies; (x) any expense resulting from the negligence
of Landlord, its agents, servants or employees, or any expense incurred as a
direct result of Landlord's failure to use reasonable efforts to minimize
expenses to the extent possible without detracting from the standards of a first
class Shopping Center; (xi) the cost of any repair to remedy damage caused by or
resulting from the negligence of any other tenant(s) in the Shopping Center,
including their agents, servants or employees; (xii) repairs or other work
occasioned by casualty or the exercise of the right of eminent domain; (xiii)
expenses incurred in build out, renovation or other improvement or decoration,
painting or redecoration of any leasable area; (xiv) costs incurred due to the
violation by Landlord or any tenant or occupant of any term or condition of any
lease or rental arrangement covering space in the Shopping Center; (xv) any
interest or penalties incurred as a result of Landlord's failure to pay any bill
as the same shall become due; (xvi) any and all costs associated with the
operation of the business of the entity which constitutes Landlord, intending by
this exclusion to distinguish the costs of operation of the common areas
(excluded items shall specifically include but shall not be limited to formation
of the entity, internal accounting and legal matters, including, but not limited
to preparation of tax returns and financial statements and gathering of data
therefor, costs of defending any lawsuits, except as the actions of Tenant may
be an issue, costs of selling, syndication, financing mortgaging or
hypothecating any of Landlord's interest in the Shopping Center, and costs of
any disputes between Landlord and its employees); (xvii) advertising and
promotional expenditures or customer services, (xviii) costs, fines, or fees
incurred by Landlord due to violations of any federal, state or local law,
statute or ordinance, or any rules, regulations, judgment or decree of any
governmental rule or authority; (xix) the cost of any work or services performed
for any facility other than the Shopping Center. Replacements of
*** Confidential treatment requested.
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existing improvements, facilities, and equipment (including, by way of example,
parking lot repairs, structural repairs, replacement of HVAC or mechanical
equipment) otherwise chargeable as Common Area Maintenance Expenses having a
useful life of more than one year shall be amortized over the useful life of
the replacement, and only the reasonably amortized portion thereof shall be
included in Common Area Maintenance Expenses.
Tenant's proportionate share of Common Area Maintenance Expenses from the
Commencement Date through December 31, 2000 shall not exceed [***] per square
foot of floor area in the Leased Premises per Lease Year (proportionately
reduced for a partial Lease Year). From [***] through [***], Tenant's
proportionate share of Common Area Maintenance Expenses shall not exceed [***]
per square foot of floor area in the Leased Premises per Lease Year
(proportionately reduced for a partial Lease Year). Beginning [***] and
continuing through the expiration of the Original Term and Option Period, if
any, Tenant's proportionate share of Common Area Maintenance Expenses shall not
be increased by more than [***] per Lease Year over the prior Lease Year's
charge.
It is hereby agreed that at such times as there are tenants occupying less
than eighty-five percent (85%) of the gross leaseable floor area of the
Shopping Center, Tenant's proportionate share of the foregoing Common Area
Maintenance Expenses shall be computed as if the Shopping Center were
eighty-five percent (85%) leased and occupied.
(b) Tenant's proportionate share of such Common Area Maintenance Expenses
for each Lease Year shall be paid in advance, in equal monthly installments, in
the same manner and at the same time as the monthly installments of Minimum
Rent are payable hereunder without deduction, offset or diminution of any kind,
based on an amount estimated in advance from time to time by Landlord to be
Tenant's obligation under this Section 5.2. Notwithstanding the above, in the
event Landlord at any time determines that the amount of Common Area
Maintenance Expenses actually being paid or incurred by Landlord exceeds the
estimate upon which Tenant's proportionate share of Common Area Maintenance
Expenses was computed, then Tenant, following a request from Landlord, shall
commence to pay with the next monthly installment of Minimum Rent due an amount
sufficient to result in Tenant's paying its full proportionate share of Common
Area Maintenance Expenses as computed on the basis of Landlord's revised
estimate of Common Area Maintenance Expenses. Subsequent to the end of each
Lease Year, Landlord shall furnish Tenant with a statement of the actual amount
of Tenant's proportionate share of such Common Area Maintenance Expenses for
such period which statement shall be in reasonable detail, provided, however,
Landlord shall be permitted to describe areas of expenditure by category and
shall not be obligated to enumerate each specific expenditure. Upon Tenant's
written request therefore, but no more frequently than once per Lease Year,
Landlord shall provide Tenant written evidence substantiating up to three (3)
particular items included in Tenant's share of Common Area Maintenance
Expenses. Landlord shall make reasonable food faith efforts to answer or
resolve Tenant's legitimate questions about the Common Area Maintenance
Expenses.
If the total amount paid by Tenant under this Section 5.2 for any Lease
Year shall be less than the actual amount due from Tenant for such Lease Year as
shown on such statement, Tenant shall pay Landlord the difference between the
amount paid by Tenant and the actual amount due, such deficiency to be paid
within thirty (30) days after the furnishing of each such statement, and if the
total amount paid by Tenant hereunder for any such Lease Year shall exceed the
actual amount due from Tenant for such Lease Year, such excess shall be credited
against the next installment due from Tenant to Landlord under this Section 5.2.
ARTICLE VI
REPAIRS AND MAINTENANCE
SECTION 6.1. REPAIRS AND MAINTENANCE BY LANDLORD. Landlord agrees to keep
in good order, condition and repair the roof (including keeping the roof
watertight), foundations, exterior (including exterior painting and finish),
all structural portions of the Leased Premises (and of the
*** Confidential treatment requested.
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building in which the Leased Premises are located) and all plumbing and utility
lines not exclusively serving the Leased Premises. Should any repairs,
modifications or alterations be required by reason of applicable law, the same
shall be made by Landlord at Landlord's cost and expense unless the need for
such repairs, modifications or alterations shall result from Tenant's failure to
perform its obligations under this Lease or from Tenant's use of the Leased
Premises for other than general merchandising purposes. In addition, for the
first twelve (12) months only following the Delivery of Possession Date,
Landlord shall, upon written notice from Tenant of the necessity therefor,
correct any defects in Landlord's Work within the Leased Premises. All costs and
expenses incurred by Landlord under this Section 6.1 shall be included in Common
Area Maintenance Expenses, other than costs and expenses for Landlord's
correction of defects in Landlord's Work or other amount that may be excluded as
Common Area Maintenance Expenses pursuant to a specific exclusion contained in
Section 5.2 hereof.
SECTION 6.2. REPAIRS AND MAINTENANCE BY TENANT. (a) Except for the repairs
and maintenance that Landlord is specifically obligated to make or perform
pursuant to Section 6.1 above, throughout the entire Term of this Lease, Tenant,
at its expense, shall promptly make all repairs and replacements and perform
maintenance in and to the Leased Premises and all equipment and fixtures therein
or appurtenant thereto, that are necessary or desirable in order to keep the
Leased Premises in good order, condition and repair and in safe, dry and
tenantable condition. Without limiting the generality of the foregoing, Tenant,
at its expense, shall maintain and promptly make any and all necessary repairs
to or replacements of: (i) that portion of any pipes, lines, ducts, wires or
conduits that exclusively serve the Leased Premises; (ii) the glass windows,
plate glass doors, and all fixtures or appurtenances composed of glass that are
located in or about the Leased Premises; (iii) Tenant's signs; (iv) the floors
and floor coverings, doors and door frames, windows and window frames, walls,
storefront including security gates, grilles or enclosures, locks and closing
devices, partitions and ceilings in the Leased Premises; (v) heating,
ventilating, air conditioning, electrical and plumbing system(s) equipment and
fixtures (whether contained within or outside the Leased Premises) which are
installed by Tenant or which exclusively serve the Leased Premises; and (vi) the
Leased Premises or any part of the Shopping Center when repairs thereto are
necessitated by any act or omission (negligent or otherwise) of Tenant or any of
Tenant's agents, employees or invitees, or by the failure of Tenant to perform
any of its obligations under this Lease. Notwithstanding the foregoing, Landlord
shall be responsible for repairs and maintenance necessitated by the negligence
or intentional acts of Landlord, its agents or employees. Notwithstanding any
contrary provision of this Article VI, Tenant, at its expense, shall make any
and all repairs to the Leased Premises as may be necessitated by any break-in,
forcible entry or other trespass into or upon the Leased Premises, regardless of
whether or not such entry and damage is caused by the negligence or fault of
Tenant or occurs during or after business hours. Tenant, at its expense, shall
change all air conditioning filters at least five (5) times per year and shall
have the air conditioning system professionally inspected and generally serviced
at least twice per year.
(b) Tenant shall keep and maintain the Leased Premises in a clean, sanitary
and safe condition in accordance with the laws of the State and in accordance
with all directions, rules and regulations of the health officer, building
inspector, the National Fire Protection association and any other officials of
the governmental agencies having jurisdiction, at the sole cost and expense of
Tenant, and Tenant shall comply with all requirements of laws, ordinances,
rules, regulations and orders of any lawful authority having jurisdiction
affecting the Leased Premises or Tenant's use thereof. Tenant, at its expense,
shall install and maintain fire extinguishers and other fire protection devices
as may be required by reason of the conduct of Tenant's business, from time to
time by any agency having jurisdiction or the underwriters insuring the building
in which the Leased Premises are located. If any bureau, department or official
of the Federal or State government requires or recommends the installation of
any changes, modifications or alterations in the sprinkler system or additional
sprinkler heads or other equipment (hereinafter in this subsection (b)
collectively "changes") by reason of Tenant's business, or the location of
partitions, trade fixtures, or other contents of the Leased Premises, or for any
other reason, or if any such changes become necessary to prevent the imposition
of a penalty or charge against the full allowance for a sprinkler system in the
fire insurance rates set by any fire insurance company. Tenant, at Tenant's
expense, shall promptly make such changes as required.
(c) Provided that Landlord completes Landlord's Work as described in
Exhibit C. Tenant agrees that Tenant's use of electrical current will at no time
exceed the capacity of the electric
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distribution system and that Tenant will not make any alteration or addition to
Tenant's electrical system without Landlord's prior written consent. If Tenant
installs any electrical equipment that overloads the electrical lines in the
Leased Premises or the Retail Development, Tenant shall, at Tenant's sole cost
and expense, be required to make whatever changes to such electrical equipment
and in the electric wiring in the Leased Premises (but only after obtaining
Landlord's written approval) as may be necessary in order to remedy such
overloading and be in compliance with all insurance and legal requirements. All
changes required to be made hereby shall result in the continued conformance
with the provisions of Exhibit D and this Lease.
(d) If Tenant refuses or neglects to properly maintain the Leased
Premises, or to commence or to complete repairs promptly and adequately, or if
Landlord finds it necessary to make any repairs or replacements otherwise
required to be made by Tenant, then Landlord may, after ten (10) days prior
written notice to Tenant (except in the event of an emergency in which event no
notice shall be required) with Tenant having the opportunity to cure or to
commence to cure during such ten (10) day period (in which event Landlord
shall not take action so long as Tenant is diligently pursuing such cure to
completion), in addition to all other remedies, but without obligation to do so,
enter the Leased Premises and proceed forthwith to have such maintenance,
repairs or replacements made and Tenant shall pay to Landlord, on demand, the
reasonable, out-of-pocket costs and expenses therefor plus a charge of fifteen
percent (15%) of such costs and expenses.
ARTICLE VII
TAXES
SECTION 7.1. TAX LIABILITY. Tenant agrees to pay to Landlord Tenant's
proportionate share of all taxes and assessments and service payments in lieu
of taxes of every nature and kind which may be levied or assessed by, or
payable to, any lawful authority during or with respect to each fiscal tax year
falling in whole or in part during the Term of this Lease against all or any
part of the land, buildings and improvements comprising the Retail Development
and any other taxes which Landlord becomes obligated to pay with respect to the
Retail Development, whether or not the same are assessed as real or personal
property or are payable in advance or in arrears (the "Taxes"). If due to a
future change in the method of taxation, any tax, excise or assessment shall
be levied or assessed against Landlord, directly or indirectly, in lieu of, in
substitution for or as a supplement to any present Taxes or future (real estate
or personal property) tax, in whole or in part, including any new tax, excise
or assessment upon rentals payable to Landlord by occupants of the Retail
Development or upon gross receipts or other income of Landlord derived by
Landlord from or upon the interest in the Retail Development of Landlord (or
any individuals or entities comprising Landlord), such tax, excise or
assessment shall constitute a tax respecting which Tenant is obligated to pay
its proportionate share to Landlord as provided herein. If any Taxes or
assessed valuation(s) are contested by Landlord, then Tenant's proportionate
share of Taxes shall also include Tenant's proportionate share of the cost and
expense of consultation services incurred in evaluating and contesting such
Taxes or assessed valuation(s).
The term "Taxes" shall also include any form of assessment, special
assessment, license fee, license tax, business license fee, business license
tax, commercial rental tax, levy, charge, tax or similar imposition, imposed by
any authority having the direct power to tax, including without limitation any
city, county, State or Federal government, or any school, agricultural,
lighting, drainage or other improvement or special assessment district or any
other agency or other public body, whether or not consented to or joined in by
Landlord and whether or not retroactive, payable by Landlord thereof as against
the land and improvements comprising, or any legal or equitable interest of the
Landlord in, the Retail Development. Notwithstanding anything to the contrary
contained in this Section 7.1, Tenant shall not be obligated, pursuant to this
Section 7.2, to pay Landlord its proportionate share of any inheritance,
estate, succession, transfer, gift or franchise tax, levy assessment or
surcharge that may be imposed on Landlord or the individuals or entities which
constitute the partners of the partnership which is Landlord, unless the same
is imposed by way of substitution for all or any part of the "Taxes" otherwise
required to be paid in whole or in part by Tenant pursuant to this Lease; the
foregoing shall not exempt or exclude from the Taxes to be
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prorated among Shopping Center tenants (including Tenant) levies, taxes,
assessments or surcharges based on the rentals or other revenues or gross
income of Landlord derived from the Shopping Center (as opposed to Landlord's
net income) or other charges payable to Landlord by Tenant or other tenants in
or occupants of the Shopping Center.
It is hereby agreed that at such times as there are tenants occupying
less than eighty percent (80%) of the gross leasable floor area of the Shopping
Center, Tenant's proportionate share of the foregoing Taxes shall be computed
as if the Shopping Center were eighty percent (80%) leased and occupied.
SECTION 7.2. METHOD OF PAYMENT. Tenant's proportionate share of Taxes
shall be paid, in advance, in monthly installments on or before the first day
of each calendar month, in the same manner and at the same time as the monthly
installments of Minimum Rent are payable hereunder without deduction, offset or
diminution of any kind, based on an amount estimated by Landlord. Following
receipt of all bills for Taxes attributable to any calendar or fiscal year
during the Term hereof, Landlord shall furnish Tenant with a written statement
of the actual amount of Tenant's proportionate share of Taxes for such year. If
any bill for any such Taxes is not available, Landlord will estimate the amount
of such tax. If the total amount paid by Tenant hereunder for any calendar or
fiscal year during the Term of this Lease shall be less than the actual amount
due from Tenant for such year, as shown on such statement, Tenant shall pay to
Landlord the difference between the amount paid by Tenant and the actual amount
due, such deficiency to be paid within thirty (30) days after demand therefor
by Landlord; and if the total amount paid by Tenant hereunder for any such
calendar or fiscal year shall exceed such actual amount due from Tenant for
such year, such excess shall be credited against the next installment of Taxes
due from Tenant to Landlord hereunder. For the calendar or fiscal years in
which this Lease commences and terminates, Tenant's liability for its
proportionate share of any Taxes for such years shall be subject to a pro rata
adjustment based on the number of days of said calendar or fiscal years during
which the Term of this Lease is in effect. A copy of any such bill for Taxes
shall at all times be sufficient evidence of the amount of Taxes assessed or
levied against the property to which such bill relates. Prior to or at the
commencement of the Term of this Lease and from time to time thereafter
throughout the Term hereof, Landlord shall notify Tenant in writing of
Landlord's estimate of Tenant's monthly installments due hereunder. Tenant's
obligations under this Article VII shall survive the Expiration Date or sooner
termination of this Lease.
ARTICLE VIII
INSURANCE, INDEMNITY AND LIABILITY
SECTION 8.1. LANDLORD'S INSURANCE OBLIGATIONS. Landlord agrees to obtain
and maintain during the Term hereof, to the extent the same is available, fire
and extended coverage insurance, in amounts and coverages and with such special
endorsements as Landlord shall determine from time to time, insuring the
building in which the Leased Premises are located and the improvements to the
Leased Premises provided by Tenant pursuant to this Lease (exclusive of
Tenant's merchandise, trade fixtures, furnishings, equipment, plate glass, signs
and personal property of Tenant). Landlord shall also carry rental interruption
insurance in amounts at least equal to Tenant's total rental obligation for
twelve (12) full months under this Lease including the total of the estimated
costs to Tenant of Taxes and Common Area Maintenance Expenses (including
insurance) for such twelve (12) month period. Landlord will maintain during the
Term of this Lease, commercial general liability insurance, insuring against
any and all claims for personal injury, bodily injury, death, or property
damage, accruing in, on or about the common areas and other portions of the
Shopping Center not leased to tenants, with limits of not less than $[***]
with respect to bodily injury and death and $[***] with respect to property
damage. Further Landlord shall maintain fire and extended coverage insurance
insuring the improvements located within the Shopping Center (except for
Tenant's trade fixtures, furnishings, operating equipment and personal property)
for [***] of the full replacement cost thereof. Tenant acknowledges that such
coverage may be provided pursuant to a blanket policy for centers managed by
Managing Agent (as defined in Section 20.22 hereof). Tenant shall reimburse
Landlord for its proportionate share of the insurance costs incurred by Landlord
under this Section 8.1 as part of Tenant's Common Area Maintenance Expenses as
provided in Section 5.2 hereof.
*** Confidential treatment requested.
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SECTION 8.2. TENANT'S INSURANCE OBLIGATIONS. (a) Provided Tenant is the
Tenant named on the Page 1 and a wholly-owned subsidiary of the Guarantor, if
any, and Tenant's and Guarantor's, if any, combined net worths are or Tenant's
net worth is at least equal to [***], Tenant shall have the right to self-insure
for any loss or damage of the type covered by standard fire and extended
coverage insurance with respect to personal property located on or within the
Leased Premises including alterations and improvements made by Tenant to the
extent the same are not covered by Landlord's fire and extended coverage
insurance. Tenant and Guarantor shall at their sole expenses, without regard to
fault on the part of any person, make and perform any repairs or restorations
which are required as a result of a casualty which would be covered by insurance
of the type described in this Section 8.2(a). Tenant, at Tenant's sole cost and
expense, shall obtain and maintain in effect commencing with the Delivery of
Possession Date and continuing throughout the Term of this Lease, insurance
policies providing for the following coverage: (i) all risk property insurance
against fire, theft, vandalism, malicious mischief, sprinkler leakage and such
additional perils as now are or hereafter may be included in a standard extended
coverage endorsement from time to time in general use in the State, insuring
Tenant's merchandise, trade fixtures, furnishings, equipment and all items of
personal property of Tenant and of anyone claiming by, through or under Tenant
located on or in the Leased Premises, and the amount of such insurance will be
set forth in an "agreed value endorsement" to the policy of such insurance, not
less than [***] of the full replacement value thereof without deduction for
depreciation, and with a deductible amount of not more than [***], provided,
however, any and all proceeds of such insurance, so long as this Lease shall
remain in effect, shall be used only to repair or replace or pay for the items
so insured; (ii) a commercial general liability policy, including insurance
protecting against any and all claims for injury to persons or property
occurring in or about the Leased Premises and protecting against assumed or
contractual liability under this Lease with respect to the Leased Premises and
the operations of Tenant and any subtenant of Tenant in, on or about the Leased
Premises, with such policy to be in the minimum amount of [***] single limit
coverage; (iii) products liability insurance for merchandise offered for sale or
lease from the Leased Premises, including (if this Lease covers leased premises
in which food and/or beverages are sold and/or consumed) liquor liability
coverage (if applicable to Tenant's business) and coverage for liability arising
out of the consumption of food and/or alcoholic beverages on or obtained at the
Leased Premises, of not less than [***] per occurrence for personal injury and
death and property damage; (iv) workers' compensation coverage as required by
law; (v) with respect to alterations, improvements and the like required or
permitted to be made by Tenant hereunder, contingent liability and builders risk
insurance in amounts satisfactory to Landlord; and (vi) the insurance required
under Exhibit D.
(b) All insurance policies herein to be procured by Tenant shall: (i) be
issued by insurance companies reasonably satisfactory to Landlord and
authorized to do business in the State; (ii) be written as primary policy
coverage and non-contributing with respect to any coverage which Landlord may
carry and that any coverage carried by Landlord shall be excess insurance;
(iii) insure and name Landlord, Landlord's managing agent, any mortgagee of the
Shopping Center and any parties in interest designated by Landlord as
additional insured, as their respective interests may appear (except with
respect to workers' compensation insurance); and (iv) contain any express waiver
of any right of subrogation by the insurance company against Landlord,
Landlord's managing agent and their respective agents, employees and
representatives which arises or might arise by reason of any payment under such
policy or by reason of any act or omission of Landlord, its agents, employees
or representatives. Neither the issuance of any insurance policy required
hereunder, nor the minimum limits specified herein with respect to Tenant's
insurance coverage, shall be deemed to limit or restrict in any way Tenant's
liability arising under or out of this Lease. With respect to each and every
one of the insurance policies herein required to be procured by Tenant, on or
before the Commencement Date and at least thirty (30) days before any such
insurance policy shall expire, Tenant shall deliver to Landlord upon Landlord's
written request a duplicate original or certified copy of each such policy or a
certificate of the insurer, certifying that such policy has been issued,
providing the coverage required by this Section 8.2 and containing provisions
specified herein, together with evidence of payment of all applicable
premiums. Any insurance required to be carried hereunder may be carried under a
blanket policy covering the Leased Premises and other locations of Tenant. Each
and every insurance policy required to be carried hereunder by or on behalf of
Tenant shall provide (and any certificate evidencing the existence of each such
insurance policy shall certify) that, unless Landlord shall first have been
given thirty (30) days' prior written notice thereof, the insurer will not
cancel,
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materially change or fail to renew the coverage provided by such insurance
policy. The term "insurance policy" as used herein shall be deemed to include
any extensions or renewals of such insurance policy. In the event that Tenant
shall fail to promptly furnish any insurance coverage hereunder required to be
procured by Tenant, Landlord, at its sole option, shall have the right after ten
(10) days prior written notice to Tenant to obtain the same and pay the premium
therefor for a period not exceeding one (1) year in each instance, and the
premium so paid by Landlord shall be immediately due and payable by Tenant to
Landlord as additional rent.
(c) Tenant shall not do or permit to be done any act or thing upon the
Leased Premises that will invalidate or be in conflict with fire insurance
policies covering the building containing the Leased Premises or any part
thereof, including all common areas, or fixtures and property therein, or any
other insurance policies or coverage referred to above in this Article VIII; and
Tenant shall promptly comply with all rules, orders, regulations, or
requirements relating to such insurance policies, and shall not do, or permit
anything to be done, in or upon the Leased Premises, or bring or keep anything
therein, which shall increase the rate of fire insurance on the building in
which the Leased Premises are located or on any property, including all common
areas, located therein, or increase the rate or rates of any other insurance
referred to hereinabove. If any act or omission of Tenant, its agents, employees
or contractors shall result in any increase in the premium rates applicable to
any such insurance policies carried by Landlord, or other increased costs to
Landlord in connection therewith, then Tenant shall reimburse Landlord on demand
as additional rent for the amount of any such increased rates or costs. In
particular, if Tenant uses the Leased Premises for the preparation of food,
Tenant shall reimburse Landlord on demand, for any part of the premium for
insurance coverage under Section 8.1 hereof required to be paid on account of
such use of the Leased Premises.
Section 8.3. Mutual Covenant. Notwithstanding any provision of this Lease
to the contrary, Landlord and Tenant each hereby releases the other, its
officers, directors, employees, and agents from any and all liability or
responsibility for any loss, damage or injury caused by fire or other casualty
for which insurance containing a waiver of subrogation is carried by the injured
party at the time of such loss, damage or injury regardless of the extent of any
recovery by the injured party under such insurance. Both parties agree to carry
casualty insurance containing such waiver of subrogation.
Additionally, during any time when Tenant is self-insuring its insurance
obligations hereunder, Tenant hereby releases the Landlord, its officers,
directors, employees and agents from any and all liability or responsibility for
any loss, damage or injury caused by fire or other casualty, even if such loss,
damage or casualty is caused in whole or in part by Landlord or by any party for
whom Landlord may be responsible.
Section 8.4. Covenant to Hold Harmless. Except with respect to the gross
negligence or wilful misconduct of Landlord, its agents or employees (unless
covered or required to be covered by Tenant's insurance). Tenant hereby
indemnifies and agrees to hold harmless Landlord, its officers, directors,
partners, employees and agents and any mortgagee or master lessor of the
Shopping Center, from and against any and all claims, actions, damages,
liabilities, costs and expenses, including attorneys' fees, that (i) arise from
or are in connection with the possession, use, occupancy, management, repair,
maintenance or control of the Leased Premises, or any portion thereof, or (ii)
arise from or are in connection with any negligent or wrongful act or omission
of Tenant or Tenant's agents, employees, contractors, licensees or invitees, or
(iii) result from any default, breach, violation or nonperformance of this Lease
or any provision hereof by Tenant, or (iv) result from injury to person or
property or loss of life sustained in the Leased Premises or outside of the
Leased Premises resulting from acts or omissions within the Leased Premises.
Tenant shall, at its own cost and expense, defend any and all actions, suits and
proceedings which may be brought against Landlord or any mortgagee or master
lessor of the Shopping Center with respect to the foregoing. Tenant shall pay,
satisfy and discharge any and all judgments, orders and decrees which may be
received against Landlord or any such mortgagee or master lessor in connection
with the foregoing. In the event Landlord or any other party so indemnified,
shall, without fault, be made a party to any litigation commenced by or against
Tenant, or if Landlord or any such party shall, in its sole discretion,
intervene in such litigation to protect its interest hereunder, then Tenant
shall protect and hold them harmless and shall pay all costs, expenses and
attorneys' fees incurred or paid by such party(ies) in connection with such
litigation.
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Landlord hereby indemnifies and agrees to save harmless Tenant, its
officers, directors, partners, employees and agents from and against any and
all claims, actions, damages, liabilities, costs and expenses including
attorneys' fees, in connection with loss of life, personal injury and/or damage
to property arising from or out of any occurrence in the common areas of the
Shopping Center unless caused by the negligence or default of Tenant, its
agents, contractors, employees, officers, directors, partners, subtenants or
concessionaires.
SECTION 8.5. LOSS AND DAMAGE. All Tenant's property of every kind and
description which may at any time be in the Leased Premises shall be kept at
Tenant's sole risk, and Landlord shall not be liable except to the extent
resulting from the negligence or intentional acts of Landlord, its agents or
employees to Tenant, its agents, employees or customers, for any damage, loss,
compensation, accident, or claims whatsoever resulting to Tenant or its
property from the necessity of repairing any portion of the Shopping Center;
any interruption in the use of the Leased Premises; the use or operation (by
Landlord, Tenant, or any other person or persons whatsoever) of any elevators,
heating, cooling, electrical or plumbing equipment or apparatus; the
termination of this Lease by reason of the destruction of the Leased Premises;
any fire, robbery, theft, or any other casualty; any leakage in any part or
portion of the Leased Premises or the Shopping Center; any water, wind, rain or
snow that may leak into, or flow from part of the Leased Premises or the
Shopping Center; any acts or omissions of any occupant of any space adjacent to
or adjoining all or any part of the Leased Premises or any part of the building
of which the Leased Premises are a part; any explosion, casualty, utility
failure or malfunction, or falling plaster; the bursting, stoppage or leakage
of any pipes, sewer pipes, drains, conduits, appliance or plumbing works; or
any other cause whatsoever.
ARTICLE IX
DESTRUCTION OF LEASED PREMISES
SECTION 9.1. CONTINUANCE OF LEASE. In the event of any damage to the
Leased Premises by fire or other casualty, this Lease shall not be terminated
or otherwise affected; except that, (a) if more than twenty-five percent (25%)
of the square footage of the Leased Premises shall be damaged by any such fire
or other casualty during the last three (3) years of the Term of this Lease
(not including any Option Periods) or during any renewal or extension of the
Term hereof and the cost of repair or restoration exceeds One Million and
00/100ths Dollars ($1,000,000.00) as estimated by Landlord, or (b) if Landlord
is unable to rebuild any portion of the building in which the Leased Premises
are located or of the Shopping Center due to any inability (after Landlord uses
commercially reasonable efforts) to obtain any required governmental approval
in connection therewith, or (c) if more than thirty-five percent (35%) of the
floor area of the building in which the Leased Premises are located or of the
Shopping Center shall be damaged or destroyed by fire or other casualty, or (d)
if twenty-five percent (25%) or more of the building in which the Leased
Premises are located or if twenty-five percent (25%) or more of the Shopping
Center or the Leased Premises shall be damaged or destroyed at any time by the
occurrence of any risk not insured under the insurance required to be carried
under Article VIII hereof, then Landlord shall have the option to terminate
this Lease within seventy-five (75) days following the occurrence of such fire
or other casualty by giving written notice to Tenant during such period,
provided Landlord elects to terminate the leases of all or substantially all
other Shopping Center tenants which are similarly affected by the casualty and
are located in the same section of the mall as the Leased Premises. In the
event Landlord exercises any of the foregoing options to terminate, this Lease
shall immediately terminate upon Landlord's written notice to Tenant and (i)
the entire proceeds of the insurance provided for in Section 8.1 hereof shall
be paid by the insurance company or companies directly to Landlord and shall
belong to, and be the sole property of Landlord, (ii) the portion of the
proceeds of the insurance provided for in Section 8.2 which is allocable to
equipment, fixtures and other items, which, by the terms of this Lease,
rightfully belong to Landlord upon the termination of this Lease by whatever
cause, shall be paid by the insurance company or companies directly to
Landlord, and shall belong to, and be the sole property of, Landlord, and (iii)
Landlord and Tenant shall be relieved from any and all further liability or
obligation accruing under this Lease from and after the date of such
termination.
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Further, if Landlord cancels this Lease by virtue of the fact that it is
during the last three years of the Lease term, Tenant may nullify Landlord's
cancellation within thirty (30) days after receipt thereof by giving notice to
Landlord that Tenant elects to extend the term of the Lease pursuant to any such
right contained in this Lease, in which event the parties shall proceed to
restore in accordance with Section 9.2.
SECTION 9.2. RECONSTRUCTION. If the Leased Premises are damaged by fire or
other casualty and this Lease is not terminated in accordance with Section 9.1
hereof, then all fire and extended coverage insurance proceeds from policies
carried pursuant to Section 8.1 hereof, however recovered, shall be held in
escrow and made available for payment of the cost of repairing, replacing and
rebuilding the Leased Premises. Within seventy (75) days after the casualty
Landlord shall provide Tenant with a good faith estimate of the date on which
the reconstruction of the Leased Premises will be completed. The Minimum Rent
and other charges payable by Tenant to Landlord shall be abated in proportion to
the floor area of the Leased Premises rendered untenantable, and the Sales Break
Point shall likewise be proportionately reduced. Payment of Minimum Rent and all
other charges so abated shall commence and Tenant shall be obligated to reopen
for business ninety (90) days following the date that Landlord advises Tenant
that the Leased Premises are tenantable and Landlord has substantially completed
Landlord's Reconstruction Work, unless Tenant opens at an earlier time in the
damaged area or remains open in such area following destruction or damage, in
which event there shall be no abatement or any such abatement shall terminate as
of the date of Tenant's earlier reopening. Landlord shall be obligated to
commence Landlord's Reconstruction Work and shall diligently pursue the
completion of Landlord's Reconstruction Work and shall cause the same to be
completed as soon thereafter as possible under the attendant circumstances, but
in any event all such Landlord's Reconstruction Work shall be completed and the
Leased Premises reopened for business within one hundred eighty (180) days
following such fire or casualty. After Landlord has completed Landlord's
Reconstruction Work, Tenant shall commence Tenant's Reconstruction Work, at its
expense. Tenant shall comply with all laws, ordinances and governmental rules or
regulations, and shall perform all work or cause such work to be performed with
due diligence and in a first-class manner. All permits required in connection
with said repairs, restoration and reconstruction shall be obtained by Tenant at
Tenant's sole cost and expense. Any amount expended by Tenant in excess of any
insurance proceeds received by Tenant shall be the sole obligation of Tenant.
Landlord shall reconstruct such Leased Premises in accordance with the working
drawings originally approved by Landlord or with (at Landlord's sole election)
new drawings prepared by Tenant and acceptable to Landlord and Tenant
("Landlord's Reconstruction Work"). In no event shall Landlord be required to
repair or replace Tenant's merchandise, trade fixtures, furnishings or
equipment. If Landlord repairs or rebuilds, Tenant, at Tenant's sole cost, shall
repair or replace Tenant's merchandise, trade fixtures, furnishings and
equipment in a manner and to at least a condition equal to that prior to the
damage or destruction thereof ("Tenant's Reconstruction Work"). Except as may be
specifically set forth in this Article IX, Landlord shall not be liable or
obligated to Tenant to any extent whatsoever by reason of any fire or other
casualty damage to the Leased Premises, or any damages suffered by Tenant by
reason thereof, or the deprivation of Tenant's possession of all or any part of
the Leased Premises.
In the event Landlord has not commenced restoration or rebuilding of the
Leased Premises within ninety (90) days of the date of such fire or casualty
loss, or if the Leased Premises are not restored/rebuilt to its former condition
prior to such fire or casualty loss within one hundred eighty (180) days of the
date of such fire or casualty loss, Tenant will have the right, in either case,
to terminate this Lease by providing Landlord notice of such election and Tenant
will vacate and surrender the Leased Premises pursuant to Section 17.1.
ARTICLE X
CONDEMNATION
SECTION 10.1. EMINENT DOMAIN. If fifty percent (50%) or more of the floor
area of the Leased Premises shall be taken or condemned by any governmental
authority (including, for purposes of this
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Article X, any purchase by such governmental authority in lieu of a taking),
then either party may elect to terminate this Lease by giving notice to the
other party not more than ninety (90) days after the date on which such title
shall vest in the authority. If the parking facilities are reduced below the
minimum parking requirements imposed by the applicable authorities, Landlord may
elect to terminate this Lease by giving Tenant notice within one hundred eighty
(180) days after such taking. In addition, if two or more Major Tenants in the
northern half of the Retail Development (which begins at the southern lease
line of Space D shall terminate their leases with Landlord, pursuant to a
taking of its store and Landlord cannot replace such Major Tenants because of
the taking, Landlord may terminate this Lease by written notice to Tenant
within ninety (90) days after Landlord receives notice from such Major Tenants
that they are terminating their leases. In the case of any taking or
condemnation, whether or not the Term of this Lease shall cease and terminate,
the entire award shall be the property of Landlord; provided, however, Tenant
shall be entitled to any award as may be made for trade fixtures and other
equipment (not including any Tenant's Work required or permitted under this
Lease) which under the terms of this Lease would not have become the property
of Landlord; further provided, that any such award to Tenant shall not be in
diminution of any award otherwise to be made to Landlord in the absence of such
award to Tenant.
SECTION 10.2. RENT APPORTIONMENT. In the event of any taking or
condemnation, the then current Minimum Rent, Sales Break Point and the square
foot floor area in the Leased Premises as determined pursuant to Section 1.1
shall be apportioned as of the date when possession of the Leased Premises is
required to be delivered to the condemning authority or termination of this
Lease, as the case may be, and, if the Term of this Lease shall not have ceased
and have been terminated as of said date, Tenant shall be entitled to a pro
rata reduction in the Minimum Rent payable and Sales Break Point hereunder, or,
if Tenant has prepaid Minimum Rent, Tenant shall be entitled to a pro rata
credit for the Minimum Rent paid hereunder, based on the proportion which the
floor area taken from the Leased Premises bears to the entire floor area of the
Leased Premises immediately prior to such taking.
SECTION 10.3. TEMPORARY TAKING. Notwithstanding anything to the contrary
in this Article X, the requisitioning of the Leased Premises or any part hereof
by military or other public authority for purposes arising out of a temporary
emergency or other temporary situation or circumstances shall constitute a
taking of the Leased Premises by eminent domain when the use or occupancy by
the requisitioning authority is expressly provided to continue, or shall in
fact have continued, for a period of one hundred eighty (180) days or more, and
if this Lease is not thereafter terminated under the foregoing provisions of
this Article X, then for the duration of any period of use and occupancy of the
Leased Premises by the requisitioning authority, all the terms and provisions
of this Lease and obligations of Tenant hereunder shall remain in full force
and effect, except that the Minimum Rent and Sales Break Point shall be reduced
in the same proportion that the floor area of the Leased Premises so
requisitioned bears to the total floor area of the Leased Premises, and
Landlord shall be entitled to whatever compensation may be payable from the
requisitioning authority for the use and occupation of the Leased Premises for
the period involved.
ARTICLE XI
ASSIGNMENT, SUBLETTING AND ENCUMBERING LEASE
SECTION 11.1. NO ASSIGNMENT, SUBLETTING OR ENCUMBERING OF LEASE. (a) Except
as otherwise provided in this Article XI and notwithstanding any references to
assignees, subtenants, concessionaires or other similar entities in this Lease,
Tenant shall not (i) assign or otherwise transfer, or mortgage or otherwise
encumber, this Lease, in whole or in part, or any of its rights hereunder, (ii)
sublet the Leased Premises or any part thereof, or permit the use of the Leased
Premises or any part thereof by any persons other than Tenant or its agents.
Any such attempted or purported transfer, assignment, mortgaging or encumbering
of this Lease or any of Tenant's interest hereunder and any attempted or
purported subletting or grant of a right to use or occupy all or a portion of
the Leased Premises in violation of the foregoing sentence, whether voluntary
or involuntary or by operation of law or otherwise, shall be null and void and
shall not confer any rights upon any purported transferee, assignee, mortgagee,
or occupant, and shall, at Landlord's option, result in a "default" under this
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Lease. Nothing contained elsewhere in this Lease shall authorize Tenant to enter
into any franchise, concession, license, permit, subtenancy, departmental
operation arrangements or the like, except pursuant to the provisions of this
Article XI.
Notwithstanding anything to the contrary set forth in this Article XI, the
following shall govern with respect to certain types of transfers, it being
understood that Tenant shall have the right to assign, sublease or otherwise
transfer its rights under this Lease provided that the conditions and
requirements applicable to the particular assignment, sublease or other transfer
that are specified in subparagraphs (A), (B), (C), OR (D) below are satisfied:
(A) INTRA-ORGANIZATIONAL TRANSFER: Tenant shall have the right, without
Landlord's consent but with prior written notice to Landlord, to assign this
Lease or sublet the Leased Premises to its parent corporation or any of its
wholly-owned subsidiaries, or any affiliate or subsidiary of Tenant's parent
corporation provided that Tenant shall at all times remain primarily obligated
for the performance of the terms, covenants and conditions of this Lease.
(B) ASSIGNMENT AS PART OF A TRANSFER OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS
OF TENANT (Same Use): Subject to Section 11.1(a)(A) above, Landlord's consent
shall not be unreasonably withheld or delayed to an assignment of this Lease (by
merger, consolidation or otherwise) or a sublease for all or any portion of the
Leased Premises to another entity (the "Transferee") to which Tenant shall
simultaneously be transferring all or substantially all of its stock or all or
substantially all of its assets, provided that the following criteria are met:
(1) Tenant shall not at the time of such transfer be in default under any of the
terms, covenants and conditions of this Lease beyond any applicable grace
period, (2) such Transferee shall agree in writing to perform all of the
unperformed terms, covenants and conditions of this Lease, (3) Tenant shall at
all times remain primarily obligated for the performance of the terms, covenants
and conditions of this Lease and (4) the number of stores being transferred must
consist of at least three (3) stores.
(C) ASSIGNMENT AS PART OF A TRANSFER OF LESS THAN ALL OR SUBSTANTIALLY ALL OF
TENANT'S ASSETS (Same Use): Landlord shall not unreasonably withhold it consent
to an assignment, sublease or other transfer ("Transfer") of this Lease to an
entity to whom Tenant is transferring less than substantially all of Tenant's
assets ("Transferee") provided that the following requirements and conditions
shall be satisfied prior to any such Transfer: (i) at the time of such proposed
Transfer, Tenant is not in default of any of the terms, covenants or conditions
of this Lease beyond any applicable grace or cure period and shall at such time
be operating the Leased Premises pursuant to Article IV of this Lease; (ii) the
proposed Transferee shall agree in writing to assume all of the terms, covenants
and conditions to be performed by Tenant hereunder, including, but not limited
to, the obligation to continue to operate the Leased Premises in accordance with
Article IV of this Lease; (iii) effective as of the date of such Transfer, the
applicable Minimum Rent as provided for in Section 2.1 shall be increased to the
sum of the applicable [***] for the time period prior to such Transfer as
required to be paid by Tenant pursuant to Section 2.2 hereof and from and after
the date of the Transfer the Sales Break Point shall be adjusted also to the
quotient of the increased Minimum Rent divided by [***]; (iv) at the time of
such Transfer, the proposed Transferee shall have a net worth equal to or
greater than [***] [in 1999 Dollars] as shown in current certified financial
statements; and (v) the proposed Transferee has proven expertise and experience
in operating and managing an entertainment use in a shopping center environment.
If the Transfer described in this Section 11.1(a)(C) involves less than
four (4) of Tenant's stores, then, in addition to Landlord's right to deny
Tenant's proposed Transfer on the grounds that the items enumerated in (i)
through (v) of Section 11.1(a)(C) have not been met, Landlord may elect to
terminate this Lease and recapture the Leased Premises by written notice
delivered to Tenant within fifteen (15) days after Landlord's receipt of notice
from Tenant of its intention to complete the Transfer as provided for in this
Section 11.1(a)(C) (hereinafter called the "Same Use Recapture Notice"), in
which event this Lease shall automatically terminate on the ninetieth (90th) day
(hereinafter called the "Same Use Recapture Date") following Tenant's receipt of
the Recapture Notice with the same force and effect as if said Same Use
Recapture Date had been designated as the expiration date of this Lease, and
Landlord and Tenant shall upon such Same Use Recapture Date be
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released from any and all liabilities thereafter accruing hereunder, provided,
however that Landlord shall be obligated to repay to Tenant the unamortized
portion of the actual cost of Tenant's Work (less the Tenant Allowance) plus the
sum of [***] on or before the Same Use Recapture Date. All Minimum Rent,
Percentage Rent and additional rent payable by Tenant hereunder shall be
apportioned as of the Same Use Recapture Date and Tenant shall promptly pay to
Landlord any amounts so determined to be due and owing by Tenant to Landlord,
and conversely Landlord shall promptly reimburse Tenant for any amounts prepaid
by Tenant for periods subsequent to the Same Use Recapture Date. Notwithstanding
any Same Use Recapture Notice given to Tenant by Landlord within the aforesaid
fifteen (15) day period, Tenant shall have the right within fifteen (15) days
after its receipt of the Same Use Recapture Notice to give Landlord notice
(hereinafter called the "Same Use Recision Notice") of its recision of its
intention to assign, transfer or sublease, and upon Landlord's receipt of the
Same Use Recision Notice the Same Use Recapture Notice previously given by
Landlord shall be deemed null and void; in such event, Tenant shall not assign
this Lease or sublet the Leased Premises as proposed in the notice of its
intention to assign or transfer the Lease or sublet the Leased Premises.
(D) ASSIGNMENT WITH PROPOSED CHANGE IN USE: Landlord's consent to an
assignment, transfer or sublease which results in a change in use shall not be
unreasonably withheld provided that the following criteria are met:
(i) the net worth of the assignee, transferee or sublessee shall be equal
to or greater than [***] [in 1999 Dollars] as shown in current certified
financial statements;
(ii) the proposed assignee, transferee or sublessee has proven experience
in the retail business to be conducted in the Leased Premises;
(iii) the proposed assignment, transfer or sublease applies to the entire
Leased Premises; and
(iv) the business to be conducted in the Leased Premises shall (A) not
violate an existing exclusive or restriction granted for the benefit of
another tenant in the Retail Development or (B) complement the
merchandising mix and program for the Retail Development being promoted at
the time of the proposed assignment (i, ii, iii and iv being collectively
referred to as the "Criteria").
In the event Tenant proposes to assign its interest in this Lease or
sublet the whole of the Leased Premises pursuant to the terms of this Section
11.1(a)(D), it shall, notwithstanding Section 11.1(c) to the contrary, first
give thirty (30) days prior written notice thereof (hereinafter called the
"Assignment/Subletting Notice") to Landlord together with all other information
required pursuant to Section 11.1(c) hereof. In the event the proposed assignee
is unacceptable to Landlord, because in Landlord's reasonable belief the
Criteria have not been met, Landlord shall be permitted during the thirty (30)
day period to reject the proposed assignment and Tenant shall remain as the
tenant in possession of the Leased Premises under the Lease.
In addition, within thirty (30) days after Landlord's receipt of an
Assignment/Subletting Notice and such required and/or requested information
from Tenant as provided in this Section 11.1(a)(D), Landlord may elect by
notice (hereinafter called the "Recapture Notice") in writing to Tenant to
terminate this Lease and recapture the Leased Premises, in which event this
Lease shall automatically terminate on the ninetieth (90th) day (hereinafter
called the "Recapture Date") following Tenant's receipt of the Recapture Notice
with the same force and effect as if said Recapture Date had been designated as
the expiration date of this Lease, and Landlord and Tenant shall upon such
Recapture Date be released from any and all liabilities thereafter accruing
hereunder, provided, however that Tenant shall be obligated to repay to
Landlord the unamortized portion of the Tenant Allowance as provided for in
Section 3.3 hereof on or before the Recapture Date. All Minimum Rent,
Percentage Rent and additional rent payable by Tenant hereunder shall be
apportioned as of the Recapture Date and Tenant shall promptly pay to Landlord
any amounts so determined to be due and owing by Tenant to Landlord, and
conversely Landlord shall promptly reimburse Tenant for any amounts prepaid by
Tenant for periods subsequent to the Recapture Date. Notwithstanding any
Recapture Notice given to Tenant by Landlord within the aforesaid thirty (30)
day period, Tenant shall have the right within fifteen (15) days after its
receipt of the Recapture Notice to give Landlord notice (hereinafter called the
"Recision Notice") of its recision of the Assignment/Subletting Notice, and
upon Landlord's receipt of the Recision Notice the Recapture Notice previously
given by Landlord shall be deemed
*** Confidential treatment requested.
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null and void; in such event, Tenant shall not assign this Lease or sublet the
Leased Premises as proposed in its Assignment/Subletting Notice.
(b) Except as otherwise provided herein, if Tenant is a corporation, the
sale, issuance or transfer of any voting capital stock of Tenant or of any
corporate entity which directly or indirectly controls Tenant (unless Tenant is
a corporation whose stock is publicly traded) which shall result in a change in
the voting control of Tenant or the corporation entity which controls Tenant
shall be deemed to be a prohibited assignment of this Lease within the meaning
of this Article XI. If Tenant is a partnership or an unincorporated
association, then the sale, issuance or transfer of a majority interest
therein, or the transfer of a majority interest in or a change in the voting
control of any partnership or unincorporated association or corporation which
directly or indirectly controls Tenant, or the transfer of any portion or all
of any general partnership or managing partnership interest, shall be deemed to
be a prohibited assignment of this Lease within the meaning of this Article XI.
Except as otherwise provided herein, the consent by Landlord to any assignment,
transfer, or subletting to any party shall not be construed as a waiver or
release of Tenant under the terms of any covenant or obligation under this
Lease or as a waiver or release of the non-assignability covenants in their
future application, nor shall the collection or acceptance of Rent from any
such assignee, transferee, subtenant or occupant constitute a waiver or release
of Tenant of any covenant or obligation contained in this Lease.
(i) Notwithstanding anything herein contained to the contrary, a sale
or transfer of any voting capital stock of Tenant when caused by death (e.g.,
testamentary transfer) or for estate planning purposes (e.g. inter vivos trust)
will not be deemed a prohibited assignment of this Lease.
(ii) The provisions of this Section 11.1(b) shall not be deemed to
prohibit transfer of limited partnership interests among existing limited or
general partners; however, if either general partner ceases to remain a general
partner of Tenant such occurrence shall be deemed a prohibited assignment of
this Lease under the meaning of this Article XI.
(iii) In addition, Tenant may, without violating the provisions of
this Article XI, and without consent of or notice to Landlord (i) sell or offer
for sale its capital stock to the public in accordance with the qualifications
or registration requirements of the state where Tenant is incorporated and the
Securities Act of 1933, as amended or (ii) issue or transfer shares of Tenant's
capital stock (whether or not such issuance or transfer results in a change in
the persons comprising majority shareholders of Tenant) as part of a so-called
"private placement".
(c) Without conferring any rights upon Tenant not otherwise provided in
this Article XI, should Tenant desire to enter into an assignment, sublease
or transfer of this Lease or Tenant's rights hereunder, Tenant shall
request in writing Landlord's consent to the assignment or, where consent
is not required, provide Landlord prior written notice of the same at least
fifteen (15) days before the proposed effective date of the assignment (or
within such other timeframe as may be provided for herein for a specific
type of assignment), providing the following: (i) the full particulars of
the proposed assignment, sublease or transfer of this Lease or Tenant's
rights hereunder, including its nature (i.e. whether it is an assignment,
sublease or transfer) and effective date, terms and conditions; (ii) a
description of the identity, net worth and previous business experience of
the proposed transferee, including, without limitation, copies of the
proposed transferee's latest income, balance sheet and changes in financial
position statements (with accompanying notes and disclosures of all
material changes thereto) in audited form, if available, and certified as
accurate by the proposed transferee; and (iii) any further information
reasonably relevant to the proposed assignment and reasonably available to
Tenant which Landlord shall request after receipt of Tenant's request for
consent. Tenant shall, concurrently with any request for Landlord's
consent, pay to Landlord a fee in the sum of [***] for Landlord's review
and processing of such request and Landlord shall not be obligated to
review such request prior to Landlord's receipt of such fee. All requests
for assignment, sublease or transfer shall be forwarded to Landlord at the
address provided above and to the on-site mall management office. To the
extent Landlord's consent is required, Landlord shall be required to
respond within the prescribed period (being a minimum of 15 days) and if
Landlord's response is a denial of the proposed transfer, Landlord shall
give specific reasons for the denial. If Landlord fails to respond within
five (5) business days written notice from Tenant (provided both to
Landlord at the
*** Confidential treatment requested.
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notice address and to the Mall Manager), which notice must specify that Landlord
has failed to respond to the initial request and that failure to respond within
five (5) days of the date on the second notice will result in approval, then
Landlord shall be deemed to have approved the requested transfer.
(d) Except for a permitted assignment or subletting as specified in Section
11.1(a) and (b) and without conferring any rights upon Tenant not otherwise
provided in this Article XI, in the event of an assignment or transfer of
Tenant's interest in this Lease, or a sublease of all or a portion of the Leased
Premises, to a third party, any monthly rent or other payment accruing to Tenant
as the result of any such assignment, transfer, or sublease, including any lump
sum or periodic payment in any manner relating to such assignment, transfer or
sublease, which is in excess of the Rent then payable by Tenant under this Lease
less any amounts paid by Tenant in commissions, tenant improvements, unamortized
tenant improvements funded by Tenant, and attorneys' fees shall be paid
one-half(1/2) of such excess by Tenant to Landlord monthly as additional rent.
Landlord may require a certificate from Tenant specifying the full amount of any
such payment of whatsoever nature.
(e) Notwithstanding any assignment, subletting or transfer of this Lease or
Tenant's rights hereunder, Tenant shall remain fully liable on this Lease and
for the performance of all terms, covenants and provisions of this Lease;
provided, however, if the transferee, or assignee has a net worth equal to or in
excess of [***] [in 1999 Dollars] as shown in current certified financial
statements on the date of the transfer then Tenant shall be released from its
obligations with respect to the Lease from and after the date of the assignment
or transfer.
SECTION 11.2. ASSIGNMENT OR SUBLET. If this Lease is transferred or
assigned, in whole or in part in violation of the terms of this Lease, or if the
Leased Premises or any part thereof be sublet or occupied by any person or
entity other than Tenant in violation of the terms of this Lease, whether as a
result of any act or omission by Tenant, or operation of law, or otherwise, then
Landlord, whether before or after default by Tenant, may, in addition to, and
not in diminution of or substitution for, any other rights and remedies under
this Lease or pursuant to law to which Landlord may be entitled as a result
thereof, collect rent from the transferee, assignee, subtenant or occupant and
apply the net amount collected to the Rent herein reserved, but no such
transfer, assignment, subletting, occupancy or collection shall be deemed a
waiver of the covenants contained herein or the acceptance of the transferee,
assignee, subtenant, or occupant as Tenant, or a release of Tenant from the
further performance by Tenant of covenants on the part of Tenant set forth in
this Lease unless Tenant has been otherwise released, including without
limitation pursuant to Section 11.1(e).
SECTION 11.3. TRANSFER OF LANDLORD'S INTEREST. In the event of any
transfer of Landlord's interest in the Leased Premises, including a sale or
lease, the transferor shall be automatically relieved of any and all obligations
on the part of Landlord accruing from and after (but not before) the date of
such transfer, provided that (a) the interest of the transferor, as Landlord, in
any funds then in the hands of Landlord in which Tenant has an interest shall be
turned over, subject to such interest, to the then transferee; and (b) notice of
such sale, transfer or lease shall be delivered to Tenant as required by law.
ARTICLE XII
SUBORDINATION, ATTORNMENT, FINANCING AND ESTOPPEL CERTIFICATE
SECTION 12.1. SUBORDINATION. Tenant agrees that this Lease shall, at the
request of Landlord, be subordinate to any mortgages or deeds of trust that may
hereafter be, placed upon the Leased Premises and to any and all advances to be
made thereunder, and to the interest thereon, and all renewals, replacements and
extensions thereof, provided, as an express condition to such subordination,
that the mortgagees or beneficiaries named in said mortgages or deeds of trust
shall
[***] Confidential treatment requested.
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agree to substantially concurrently with such subordination execute a
non-disturbance agreement whereby such mortgagee or beneficiary agrees to
recognize the interests of Tenant under this Lease in the event of foreclosure,
if Tenant is not then in material default of this Lease beyond the applicable
cure period, which non-disturbance agreement shall be evidenced by a document on
such mortgagee's or beneficiary's standard form (which must be commercially
reasonable, it being understood that the form attached hereto as Exhibit H is
acceptable to Landlord and Tenant) and may (at the cost of the party recording
the same) be recorded among the land records of the jurisdiction in which the
Retail Development lies. Landlord hereby represents to Tenant that as of the
date hereof, there are no underlying mortgages, deeds of trust, ground leases or
other liens on or affecting the Leased Premises or the Shopping Center except
for the Ground Lease referenced in Section 20.24 of the Addendum hereto ("Ground
Lease") and Landlord further represents that Tenant is not currently subordinate
to any mortgage, deed of trust or other lien or ground lease (except the Ground
Lease). Tenant also agrees that any mortgagee or beneficiary may elect to have
this Lease constitute a prior lien to its mortgage or deed of trust, and in the
event of such election and upon notification by such mortgagee or beneficiary to
Tenant to that effect, this Lease shall be deemed prior in lien to such mortgage
or deed of trust, whether this Lease is dated prior to or subsequent to the date
of said mortgage or deed of trust. Tenant agrees that upon the request of
Landlord, or any mortgagee or beneficiary, Tenant shall execute whatever
reasonable instruments may be required to carry out the intent of this Section
12.1 and Section 12.2; provided that no such instrument may contain any matters
which increase any of Tenant's obligations under this Lease or decrease any of
Tenant's rights under this Lease and such instrument will grant a covenant of
non-disturbance to Tenant.
SECTION 12.2. ATTORNMENT. In the event any proceedings are brought for the
foreclosure of, or in the event of the conveyance by deed in lieu of foreclosure
of, or in the event of exercise of the power of sale under, any mortgage and/or
deed of trust made by Landlord covering the Leased Premises, or in the event
Landlord sells, conveys or otherwise transfers its interest in the Shopping
Center or any portion thereof containing the Leased Premises, this Lease shall
remain in full force and effect and Tenant hereby attorns to, and covenants and
agrees to execute an instrument in writing reasonably satisfactory to the new
owner whereby Tenant attorns to such successor in interest and recognizes such
successor as Landlord under this Lease; provided, however, that Tenant's
attornment shall (except with respect to a mortgagee of the Shopping Center
succeeding to Landlord's interest as a result of foreclosure or an agreement in
lieu of foreclosure, or a workout arrangement) be subject to the successor
assuming, in writing, all of the terms, covenants and conditions of this Lease
arising after the date of transfer to such successor. Payment by or performance
of this Lease by any person, firm or corporation claiming an interest in this
Lease or the Leased Premises by, through or under Tenant without Landlord's
consent in writing shall not constitute an attornment or create any interest in
this Lease or the Leased Premises.
SECTION 12.3. FINANCING. [INTENTIONALLY DELETED]
SECTION 12.4. ESTOPPEL CERTIFICATE. Tenant shall, without charge therefor,
at any time and from time to time, within thirty (30) days after request
therefor by Landlord, execute, acknowledge and deliver to Landlord a written
estoppel certificate, in reasonable form, certifying to Landlord, any mortgagee,
or any purchaser of the Shopping Center or any other person designated by
Landlord, as of the date of such estoppel certificate; (i) that Tenant is in
possession of the Leased Premises and has accepted the same; (ii) 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 setting
forth such modifications); (iii) whether or not there are then existing any
set-offs or defenses against the enforcement of any right or remedy of Landlord,
or any duty or obligation of Tenant, hereunder (and, if so, specifying the same
in detail); (iv) that Rent is paid currently without any offset or defense
thereto, (v) the dates, if any, to which any Rent has been paid in advance; (vi)
whether or not there is then existing any claim of Landlord's default under this
Lease and if so, specifying the same in detail; (vii) that Tenant has no
knowledge of any event having occurred that authorized the termination of this
Lease by Tenant (or if Tenant has such knowledge, specifying the same in
detail); and (viii) any other matters relating to the status of this Lease that
Landlord or its mortgagee may request be confirmed, provided that such facts are
accurate and ascertainable.
Landlord shall, within thirty (30) days after written request from Tenant,
no more often than once in any Lease Year and provided Tenant is not then in
default hereunder beyond any applicable cure period, deliver to Tenant or such
persons as Tenant may designate, a statement in writing
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certifying to the extent true that: (i) Tenant is in possession of the Leased
Premises; (ii) this Lease is in full force and effect (as later modified, if
such be the case); (iii) the Rent due hereunder is current; and (iv) that to the
best of Landlord's knowledge, information and belief, Tenant is not in default
hereunder.
SECTION 12.5. REMEDIES. Any failure by Tenant to execute any certificate,
statement or instrument in accordance with the foregoing provisions of this
Article XII or any financing statement in accordance with the provisions of
Section 14.2(a), within the time period provided or if no time period is
specified, then within thirty (30) days after written request, shall constitute
a "default" under this Lease.
ARTICLE XIII
ADVERTISING AND PROMOTION
SECTION 13.1. PROMOTION FUND. Landlord shall establish an advertising and
promotion fund (the "Fund"). The object of the Fund shall be to advertise the
Retail Development in the local metropolitan statistical area and to provide a
program of events, all of which shall, in Landlord's judgment, serve to enhance
and promote the Retail Development and its occupants. Such program of events may
include the promotion of coach traffic to the Retail Development and the
development of a mall video network within the Retail Development offering a
program of information, entertainment and advertisements. The Fund shall be
administered by Landlord and the costs and expenses of such administration shall
be charged to the Fund. Landlord shall expend all amounts paid to the Fund by
the tenants in the Retail Development for the purposes herein set forth.
SECTION 13.2. PROMOTION FUND CONTRIBUTION. Tenant's annual contribution to
the Fund shall be the Fund Contribution (reduced proportionately for a partial
Lease Year) as defined in the Data Sheet. Upon the Grand Opening, Tenant shall
also pay Tenant's one-time initial contribution or Grand Opening Fee which is
defined in the Data Sheet. The Fund Contribution payable by Tenant for each
Lease Year shall be increased commencing with the second Lease Year of the term
of this Lease, and each Lease Year thereafter, by a percentage equal to the
percentage increase from the "base period" of the Consumer Price Index ("Index")
to the "current period" of the Index of the Lease Year for which the adjustment
is being made, provided, however, in no event shall such increase exceed [***]
per Lease Year; provided, however, if the first Lease Year is less than six (6)
months, the first adjustment to the Fund Contribution shall be after the first
full Lease Year. Except as herein expressly provided, the term "base period"
shall initially refer to the Index published for the month of October
immediately preceding the Commencement Date. Following the initial increase in
the Fund Contribution hereunder, the term "base period" shall refer to the Index
published for the month of October immediately preceding the Lease Year for
which the Fund Contribution was last adjusted hereunder. The "current period" of
the Index shall refer to the Index published for the month of October
immediately preceding the Lease Year for which an adjustment is being made. In
the event the Index shall not be published for any of the above-described
months, then the Index published for the month closest, but prior, to the
described month shall be used in its place. The annual Fund Contribution shall
be payable by Tenant to Landlord, or as Landlord may direct, in twelve (12)
equal monthly installments, commencing on the Commencement Date, at the same
time and in the same manner as the monthly installments of Minimum Rent are
payable.
Notwithstanding the foregoing, in lieu of Tenant's payment of the Grand
Opening Fee, during the period from the Delivery of Possession Date through and
including the Grand Opening date ("Advertising Period"), Tenant shall place
advertisements (including, without limitation, billboards; signs; newspapers,
radio, television ads; and direct mail) at a cost equal to the amount of the
Grand Opening Fee that Tenant would have otherwise been obligated to pay
("Eligible Advertising") which shall specifically identify the Leased Premises,
including the name and location of the Shopping Center. At or prior to the time
the Eligible Advertising is placed, Tenant shall submit to Landlord copies of
the actual Eligible Advertising or other written third-party evidence reasonably
satisfactory
*** Confidential treatment requested.
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to Landlord evidencing the Eligible Advertising, together with all receipts,
canceled checks or other third-party evidence reasonably satisfactory to
Landlord establishing Tenant's payment for the Eligible Advertising. In the
event that the cost of the Eligible Advertising does not meet or exceed the
Grand Opening Fee by the end of the Advertising Period, Tenant shall pay the
balance to Landlord within thirty (30) days of receipt of a bill from Landlord.
SECTION 13.3. ADVERTISEMENTS [INTENTIONALLY DELETED].
SECTION 13.4. NETWORK. Landlord may cause to be developed a mall video
network within the Retail Development (the "Network"). The object of the
Network shall be to provide a program of information, entertainment and
advertisements, which shall, in Landlord's judgment, serve to enhance or
promote the Retail Development and its occupants. The Network shall have the
right to sell available time and access on the Network for advertisements or
other uses. The Network shall be under the sole and exclusive direction of
Landlord and shall be administered by Landlord. The costs and expenses paid or
incurred by Landlord for administering, operating, equipping, staffing,
protecting, insuring, repairing, replacing and maintaining the Network shall be
charged to the Fund. Any production by Landlord of advertising messages for
Tenant and any air time on or access to the Network is subject to availability,
as determined solely by Landlord, and shall be at the then applicable rates and
fees set by Landlord. Landlord shall have the right to reject, remove or
discontinue showing any video taped advertising message of the business
conducted, or to be conducted, in the Leased Premises (herein "Tenant Video")
or advertising message on the Network the content of which is, in the opinion
of Landlord, unethical, misleading, in bad taste, or shall tend to injure the
reputation of the Retail Development or its occupants, or shall be deemed to be
detrimental to the Retail Development or is in violation of any applicable
rule, law or existing agreement with occupant(s) of the Retail Development.
Tenant acknowledges that Tenant shall be solely responsible for the content of
its Tenant Video and except with respect to the gross negligence of Landlord
and the Network, Tenant agrees to save harmless Landlord, its officers,
directors, partners, employees and agents from and against any and all claims,
actions, damages, liability, cost or expense, including attorneys' fees that
arise from or with respect to the content of such advertising message,
including without limitation any claims for infringement of the intellectual
property rights of others or actions for unfair competition. Landlord reserves
the right at any time to dissolve the Network and cease providing its
promotional services as well as Tenant Videos and in lieu thereof, to provide,
or cause to be provided, a program of advertising and promotional events which
in Landlord's sole judgment, will serve to promote the Retail Development and
its occupants.
ARTICLE XIV
DEFAULT AND REMEDIES
SECTION 14.1. ELEMENTS OF DEFAULT. If any one or more of the following
events occur, said event or events shall hereby be classified as a "default" as
that term is used throughout this Lease: (a)(i) the failure of Tenant to take
possession of the Leased Premises within thirty (30) days after the Delivery of
Possession Date, or (ii) the failure of Tenant to open its doors for business
within thirty (30) days after the date specified in Section 1.3 hereof, or
(iii) if Tenant vacates or abandons the Leased Premises and permits the same to
remain unoccupied and unattended for three (3) days after written or telephone
notice, or (iv) if Tenant fails to maintain normal inventory levels and
employee staff for the conduct of its normal business activities in the Leased
Premises for three (3) days after written or telephone notice, or (v) the
failure of Tenant to operate its business in compliance with Section 4.2 for the
purposes specified in Section 4.1 and Tenant fails to cure the same within ten
(10) days after written notice, or (vi) in the event of the sale or removal of
a substantial portion of Tenant's property located in the Leased Premises in a
manner which is outside the ordinary course of Tenant's business; (b) the
failure of Tenant to pay any Rent or other charges required to be paid by
Tenant when same shall become due and payable hereunder and such failure
continues for ten (10) days after written notice; (c) the failure of Tenant to
perform or observe any term or condition of this Lease and such failure shall
continue for thirty (30) days after written notice; provided, however, such
period shall be extended for an additional reasonable period if Tenant has
diligently commenced the curing of such default within the thirty (30) days
period and is diligently pursuing the same to completion, but in no event shall
either the thirty (30) days period or any extension thereof apply to Tenant's
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covenant to operate pursuant to Article IV of this Lease, unless the same is
excused pursuant to Article IX or Article X of this Lease; (d) if Tenant shall
be given three (3) notices of the same default under subparagraphs (b) or (c)
within any period of eighteen (18) months, notwithstanding any subsequent cure
of the failure to perform or observe the terms or conditions of this Lease as
identified in such notices; (e) if any writ of execution, levy, attachment or
other legal process of law shall occur upon a substantial and material part of
Tenant's assets, merchandise, fixtures, or Tenant's estate or interest in the
Leased Premises; (f) Tenant shall be liquidated or dissolved or shall begin
proceedings toward such liquidation or dissolution, or shall in any manner
permit the divestiture of all, or any substantial part of Tenant's assets.
SECTION 14.2. LANDLORD'S REMEDIES. In the event of any such default or
breach by Tenant, Landlord may at any time thereafter, with or without further
notice or demand and without limiting Landlord in the exercise of any right or
remedy which Landlord may have by reason of such default or breach;
(a) Perform, on behalf and at the expense of Tenant, any obligation of
Tenant under this Lease which Tenant has failed to perform and of which Landlord
shall have given at least three (3) days' notice (except in the case of
emergency, in which event no such notice shall be required), the cost of which
performance by Landlord, together with interest therein at the interest rate (as
specified in Section 20.14 hereof) from the date of such expenditure, shall be
deemed additional rent and shall be payable by Tenant to Landlord upon demand.
(b) Without further notice, re-enter and repossess the Leased Premises, by
summary proceedings or otherwise, and remove Tenant and all other persons and
property from the Leased Premises, and store such property in a public warehouse
or elsewhere at the cost of and for the account of Tenant without resort to
legal process and without Landlord being deemed guilty of trespass or conversion
or becoming liable for any loss or damage occasioned thereby. In connection
herewith, Landlord shall have, in addition to any other remedies, any and all
self-help remedies, including but not limited to a forcible entry into the
Leased Premises or a "lock-out" accomplished by changing the locks on the Leased
Premises. No re-entry of the Leased Premises shall be construed as an election
by Landlord to accept Tenant's surrender of the Leased Premises or to terminate
this Lease unless a written notice of such intention is given by Landlord to
Tenant. In the event that Landlord exercises any of the remedies provided for
herein which allow it to gain access to the Leased Premises Landlord shall be
prohibited from using or permitting the use of Tenant's equipment for operating
within the Leased Premises.
(c) Declare the entire balance of the Rent, and all other amounts to be
paid by Tenant hereunder for the remainder of the Term to be due and payable
immediately, and collect such balance in any manner not inconsistent with
applicable law. The amount of additional rent and Percentage Rent payable with
respect to each Lease Year remaining in the Term after such default (including
the Lease Year during which such default occurred) shall be conclusively
presumed to be equal to the average additional rent and Percentage Rent payable
with respect to each completed Lease Year preceding such default; provided,
however, that if such default occurs before the expiration of two (2) Lease
Years, then the amount of additional rent and Percentage Rent payable with
respect to each Lease Year remaining in the Term after such default (including
the Lease Year or partial Lease Year during which such default occurred) shall
be conclusively presumed to be equal to twelve (12) times the average monthly
additional rent and Percentage Rent payable prior to such default.
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Notwithstanding anything to the contrary contained in this Lease, Landlord
herby agrees to use reasonable efforts to mitigate damages; provided, however,
that Landlord, in attempting to lease the Leased Premises shall not be obligated
to give preference to the Leased Premises over any other available space in the
Shopping Center. In consideration of the preceding sentence, Tenant hereby
acknowledges that the Leased Premises are located within a super-regional
discount specialty retail shopping center and that the quality and record of
experience of a prospective tenant and the type of prospective tenant (compared
with the then current tenant mix in the Shopping Center) are principal
considerations which Landlord shall employ in determining whether to lease the
Leased Premises.
(d) Terminate this Lease by giving written notice of such termination to
Tenant, which termination shall be effective as of the date of such notice or
any later date therefor specified by Landlord in such notice (provided, that
without limiting the generality of the foregoing provisions, Landlord shall not
be deemed to have accepted any abandonment or surrender by Tenant of any or all
of the Leased Premises or Tenant's leasehold estate under this Lease unless
Landlord has so advised Tenant expressly and in writing, regardless of whether
Landlord has re-entered or relet any or all of the Leased Premises or exercised
any or all of Landlord's other rights under this Lease or applicable law).
(e) In Landlord's own name or otherwise, relet any or all of the Leased
Premises with or without any additional premises, for any or all of the
remainder of the Term (or, if this Lease has then been terminated, for any or
all of the period which would, but for such termination, have constituted the
remainder of the Term) or for a period exceeding such remainder, on such terms
and subject to such conditions as are acceptable to Landlord (including, by way
of example rather than of limitation, the alteration of any or all of the Leased
Premises in any manner which, in Landlord's judgment, is necessary or desirable
in connection with such reletting, and the allowance of one or more concessions
or "free-rent" or reduced-rent periods), and collect and receive the rents
thereof. Tenant shall pay to Landlord, at the times and in the manner specified
by the provisions of this Lease (unless Landlord has elected to accelerate Rent
as provided above in subparagraph(d), in which event Tenant shall be obligated
to pay such accelerated amount as provided in such subparagraph), (i) the
installments of the Minimum Rent, additional rent and Percentage Rent accruing
during such remainder (or, if this Lease has then been terminated, damages
equalling the respective amounts of such installments (determined as provided in
subparagraph 14.2(c) which would have accrued during such remainder, had this
Lease not been terminated)), plus (ii) the cost to Landlord of any such
reletting (including, by way of example rather of limitation, any attorney's
fees, leasing or brokerage commissions, repair or improvement expenses and the
expense of any other actions taken in connection with such reletting) less any
monies received by Landlord with respect to such remainder from such reletting
of any or all of the Leased Premises.
(f) Recover from Tenant, an amount equal to (i) all items of accrued and
unpaid Rent, including, without limitation, the then unamortized amount of the
Construction Allowance; (ii) all reasonable expenses (including, by way of
example rather than of limitation, all repossession costs, management expenses,
operating expenses, legal expenses and attorney's fees) incurred by Landlord in
curing or seeking to cure any default or in exercising or seeking to exercise
any of Landlord's rights and remedies under the provisions of this Lease or at
law or in equity on account of any default, plus (iii) interest on all such
expenses, at the rate provided in Section 20.14, all of which expenses and
interest shall be payable by Tenant immediately on demand therefor by Landlord.
(g) Without terminating this Lease, maintain Tenant's right to possession,
in which case this Lease shall continue in effect whether or not Tenant shall
have vacated the Leased Premises. In such event, Landlord shall be entitled to
enforce all of Landlord's rights and remedies under this Lease, including the
right to recover Rent as it becomes due hereunder.
(h) Any damage or loss of Rent sustained by Landlord may be recovered by
Landlord, at Landlord's option, at the time of the reletting or termination, in
a single action or in separate actions, from time to time, as said loss of Rent
or damages shall accrue, or in a single proceeding deferred by Landlord or with
jurisdiction reserved by the court, until the expiration of the Term of this
Lease (in which event Tenant hereby agrees that, at Landlord's option, the cause
of action shall not be deemed to have accrued until the date of expiration of
said Term).
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(i) Nothing contained herein shall prevent the enforcement of any
claim Landlord may have against Tenant for anticipatory breach of this Lease.
In the event of any anticipatory breach by Tenant of any of the covenants or
provisions hereof or in the event of Tenant's default, Landlord shall have the
right of injunction and the right to invoke any remedy allowed at law or in
equity as if re-entry, summary proceedings and other remedies were not provided
for herein. Mention in this Lease of any particular remedy shall not preclude
Landlord from any other remedy under this Lease or, at law or in equity. Tenant
hereby expressly waives for itself and all persons claiming by or through
Tenant, any and all rights to redeem, reinstate or restore, or obtain relief
from forfeiture of this Lease granted by or under any present or future law in
the event of Tenant being evicted or dispossessed for any cause, or in the
event of Landlord obtaining possession of the Leased Premises by reason of the
violation by Tenant of any of the covenants and conditions of this Lease.
(j) In case suit shall be brought for recovery of the Leased
Premises, for the recovery of Rent or any other amount due under the provisions
of this Lease, or because of the breach of any other covenant herein contained
on the part of Tenant to be kept and performed, and a breach shall be
established, Tenant shall pay to Landlord all costs and expenses incurred
therefor, including Landlord's attorney's reasonable fees and expenses.
(k) Nothing herein contained shall limit or prejudice Landlord's
right to prove and obtain as damages, by reason of any default by Tenant, an
amount equal to the maximum allowed by statue or rule of law in effect at the
time when, and governing the proceedings in which, such damages are to be
proved. No expiration or termination of this Lease, abandonment, re-entry by
Landlord or vacancy, shall relieve Tenant of any of its liabilities and
obligations under this Lease (whether or not any or all of the Leased Premises
are relet), and Tenant shall remain liable to Landlord for all damages
resulting from any default by Tenant, including any damage resulting from the
breach by Tenant of any of its obligations to pay Minimum Rent, Percentage
Rent, additional rent and any other sums which Tenant is obligated to pay
hereunder.
(l) The rights and remedies of Landlord under this Lease shall be
deemed to be cumulative, and no one of such rights or remedies shall be
exclusive at law or in equity of the other rights and remedies of Landlord on
account of a default by Tenant, and the exercise of any one such right or
remedy by Landlord shall not impair Landlord's standing, right or power to
exercise any other right or remedy.
SECTION 14.3. BANKRUPTCY. (a) Neither Tenant's interest in this Lease,
nor any estate hereby created in Tenant nor any interest herein or therein,
shall pass to any trustee or receiver or assignee for the benefit of creditors
or otherwise by operation of law, except as may specifically be provided
pursuant to the Bankruptcy Code (11 USC Section 101 et seq.), as the same may
be amended from time to time.
(b) It is understood and agreed that this Lease is a lease of real
property in a shopping center as such lease is described in Section 365 of the
Bankruptcy Code, as the same may be amended from time to time. Upon the filing
of a petition by or against Tenant under the Bankruptcy Code, Tenant, as debtor
and as debtor-in-possession, and any trustee who may be appointed with respect
to the assets of or estate in bankruptcy of Tenant, agree to pay monthly in
advance on the first day of each month, as reasonable compensation for the use
and occupancy of the Leased Premises, an amount equal to all Minimum Rent,
additional rent and other charges otherwise due pursuant to this Lease, and to
pay Percentage Rent monthly, at the percentage factor set forth in this Lease
for the Lease Year in which such month falls, on all of the Gross Sales during
such month in excess of [***] of the Sales Break Point for such Lease Year;
payment of all such Percentage Rent to be made by the [***] day of the
succeeding month. Included within and in addition to any other conditions or
obligations imposed upon Tenant or its successor in the event of the assumption
and/or assignment of this Lease are the following: (i) the cure of any monetary
defaults and reimbursement of pecuniary loss within not more than thirty (30)
days of assumption and/or assignment; (ii) the deposit of an additional sum
equal to not less than three (3) months' Minimum Rent and additional rent to be
held pursuant to the terms of Section 2.4 of this Lease, which sum shall be
determined by Landlord, in its sole discretion, to be a necessary deposit to
secure the future performance under this Lease by Tenant or its assignee; (iii)
the use of the Leased Premises as set forth in Section 4.1 of this Lease and the
quality, quantity and/or lines of merchandise, goods or services required to be
offered for sale are
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unchanged; and (iv) the prior written consent of any mortgagee to which this
Lease has been assigned as collateral security.
SECTION 14.4. ADDITIONAL REMEDIES AND WAIVERS. Notwithstanding any other
provision contained in this Lease to the contrary, all rights and remedies of
Landlord set forth herein (including but not limited to Landlord's rights
respecting lockout, re-entry, self-help, repossession, security interests and
lien rights and foreclosure) shall be in addition to (and not in substitution
of) any and all other rights and remedies now or hereafter provided by law,
including but not limited to rights and remedies provided by the statutes,
rules, regulations, laws and judicial decisions of the State, and all such
rights and remedies shall be cumulative; and none of such rights and remedies so
provided by law shall be conditioned or limited by any conditions or limitations
on the remedies granted to Landlord under the terms of this Lease, nor upon any
notice and/or passage of time that may be required hereunder in order for an
event or condition to constitute a default or an event of default as that term
is defined in this Lease.
SECTION 14.5. LANDLORD'S CURE OF DEFAULT. If Tenant shall be in default
hereunder, Landlord shall have the option, but not the obligation, upon three
(3) days written notice to Tenant (except in the event of an emergency, in which
event no notice shall be required), to cure the act or failure constituting said
default for the account of and at the expense of Tenant. Landlord's cure or
attempt to cure any act or failure constituting the default by Tenant shall not
result in a waiver or release of Tenant. Tenant agrees to pay the costs incurred
by Landlord pursuant to this Section 14.5 plus interest, in accordance with
Section 20.14 hereof, on all sums expended by Landlord pursuant to this Section
14.5 from the date of such expenditure plus a charge of [***] of such costs, to
Landlord upon demand, as additional rent.
SECTION 14.6. SECURITY INTEREST. Notwithstanding anything to the contrary
contained in this Lease, Tenant may grant a security interest, encumber or
pledge its equipment, personal property, inventory and moveable trade fixtures
located on or about the Leased Premises, with respect to financing which
benefits this store location and Landlord shall agree to subordinate its lien,
if any, on such equipment to such financing. In no event, however, shall Tenant
be permitted to mortgage, hypothecate, encumber or pledge the leasehold interest
in the Leased Premises.
SECTION 14.7 TENANT'S REMEDIES. In the event Landlord shall fail to
perform any obligation specified in this Lease, which default materially and
adversely affects Tenant's operations, then Tenant may, after the continuance of
any such default for thirty (30) days after written notice thereof by Tenant to
Landlord (except in the event of an emergency when only reasonable notice shall
be required to be given to Landlord under the circumstances), cure such default
all on behalf of and at the expense of Landlord and do all necessary work and
make all necessary payments in connection therewith and Landlord shall, on
demand, pay Tenant forthwith, the amount so paid by Tenant together with
interest thereon at the rate specified in Section 20.14 hereof from the date of
payment until re-payment.
ARTICLE XV
RIGHT OF ACCESS
Landlord may, at any reasonable time or times, upon three (3) days' prior
written notice to Tenant (except in the event of an emergency, or if Tenant is
in default under this Lease beyond the expiration of any applicable cure period,
in which event no notice shall be required), before and after the Commencement
Date, enter upon the Leased Premises, any portion thereof and any appurtenance
thereto (with men and materials, if required) for the purpose of: (a) inspecting
the same; (b) making such repairs, replacements or alterations which Landlord
may be required to perform as herein provided or which it may deem desirable for
the Leased Premises; and (c) showing the Leased Premises to prospective
purchasers, lenders or lessees. Landlord hereby expressly reserves the right,
exercisable at any time and from time to time, to erect, use, maintain and
repair pipes, conduits, plumbing, vents, ducts and wires in, to, under and
through the Leased Premises as and to the extent that Landlord may now or
hereafter deem to be necessary or appropriate for the proper operation and
maintenance of the Shopping Center. Any redecorating or repair necessitated by
reason of location
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of same within the Leased Premises shall be the responsibility of Landlord.
Landlord agrees to hold Tenant harmless from any damage or injury to person or
property to the extent resulting from Landlord exercising its rights under this
Article XV. Notwithstanding anything contained in this Lease to the contrary, if
such work prevents Tenant from operating its business within the Leased Premises
for three (3) or more consecutive days, Landlord shall after written notice from
Tenant to Landlord, abate Minimum Rent after such three (3) days of disruption
on a day-to-day basis until Tenant is able to operate its business in the Leased
Premises.
In the exercise of its rights under this Article XV, Landlord shall use
reasonable efforts to avoid material interference with the operation of Tenant's
business within the Leased Premises, including, without limitation, performing
repairs during hours in which Tenant is not open for business or, if the same is
not reasonably possible, during Tenant's "off-peak" hours. Landlord agrees that
except in the event of an emergency, and provided Tenant shall make an employee
of Tenant available to accompany Landlord following Landlord's notice to Tenant
of the necessity therefor, Landlord shall not enter the Leased Premises during
the Term of this Lease without an employee of Tenant accompanying Landlord's
representative.
ARTICLE XVI
DELAYS
If Landlord or Tenant is delayed or prevented from performing any of their
respective obligations during the Term of this Lease because of strikes,
lockouts, labor troubles, inability to procure materials, failure of power,
governmental restrictions, a delay created by the other party, or reasons of a
like nature not the fault of the party delayed in performing such obligation
(collectively "Delays"), then the period of such delays shall be deemed added to
the time herein provided for the performance of any such obligation and the
defaulting party shall not be liable for losses or damages caused by such
delays; provided, however, that, subsequent to the Commencement Date, this
Article XVI shall not apply to the payment of any sums of money required to be
paid by Tenant hereunder or any obligation of Landlord or Tenant that can be
satisfied by the payment of money, and shall not excuse Tenant from its
obligation to continuously operate its business within the Leased Premises in
accordance with the provisions of Sections 4.1 and 4.2 hereof.
ARTICLE XVII
END OF TERM
SECTION 17.1. RETURN OF LEASED PREMISES. Upon the Expiration Date or
earlier termination of this Lease, Tenant shall quit and surrender to Landlord
the Leased Premises, broom-clean, in good order and condition, ordinary wear and
tear excepted, and shall surrender to Landlord all keys to or for the Leased
Premises and inform Landlord of all combinations of locks, safes and vaults, if
any, in the Leased Premises. Subject to the provisions of Section 3.5 hereof,
Tenant, at its expense, shall promptly remove all personal property of Tenant,
and repair all damage to the Leased Premises caused by such removal. Any
personal property of Tenant not removed within ten (10) days following the
Expiration Date or earlier termination of this Lease shall be deemed to have
been abandoned by Tenant and to have become the property of Landlord, and may be
retained or disposed of by Landlord, as Landlord shall desire. Tenant's
obligation to observe or perform the covenants set forth in this Section 17.1
shall survive the Expiration Date or earlier termination of this Lease.
SECTION 17.2. HOLDING OVER. If Tenant shall hold possession of the Leased
Premises after the Expiration Date or earlier termination of this Lease at
Landlord's option (a) Tenant shall be deemed to be occupying the Leased Premises
as a tenant from month-to-month, at one and one-half times the Minimum Rent and
other charges in effect during the last Lease Year immediately preceding such
holdover and otherwise subject to all of the terms and conditions of this Lease,
or (b)
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Landlord may exercise any other remedies it has under this Lease or at law or in
equity including an action for wrongfully holding over.
Notwithstanding the foregoing, if Tenant is negotiating in good faith with
Landlord to renew or extend the Term of this Lease for the Leased Premises (or a
relocation within the Shopping Center), then Tenant may occupy the Leased
Premises on a month-to-month tenancy at one-twelfth (1/12) of the annual Minimum
Rent for the last year of the Term of the Lease.
ARTICLE XVIII
COVENANT OF QUIET ENJOYMENT
Landlord covenants that if and so long as Tenant pays the Rent and all
other charges provided for herein, and performs all of its obligations provided
for herein, Tenant shall at all times during the Term hereof peaceably have,
hold and enjoy the Leased Premises and a license to use the Display Area as
permitted under this Lease, without any interruption or disturbance from
Landlord, or anyone lawfully or equitably claiming through or under Landlord,
subject to the terms hereof and any mortgage or deed of trust to which this
Lease shall be subordinate.
ARTICLE XIX
UTILITIES
SECTION 19.1. UTILITIES. Tenant agrees to connect to and use the utilities
(including electricity, water, gas, cooling and/or heating system, telephone and
any other utility) supplied to the Leased Premises in accordance with the
criteria set forth in the Exhibits attached to this Lease, Landlord's schedule
of mechanical and electrical design criteria, Landlord's rules and regulations,
and the rules and regulations of the utility companies supplying the service.
Tenant shall be solely responsible for and promptly pay all costs and charges,
including installation thereof where applicable, for all water, gas, cooling,
heat, electricity, sewer and other utilities provided or used in or at the
Leased Premises, commencing with the Delivery of Possession Date and continuing
throughout the Term of this Lease. Landlord, either directly or through an agent
or designee, may elect to supply any of the utilities used upon or furnished to
the Leased Premises. If Landlord, either directly or through its designee, shall
elect to supply any of the utilities used upon or furnished to the Leased
Premises, Tenant agrees to pay as additional rent a per square foot charge based
on Tenant's estimated usage, as reflected on a monthly invoice to be provided by
Landlord or its designee; provided, however, in no event shall Tenant's total
charges for utilities provided by Landlord exceed what Tenant would be charged
by the local utility company if it were billed directly by such utility as a
direct retail customer. Landlord and its designee shall not be liable to Tenant
for any loss, damage or expense which Tenant may sustain if the utilities, or
the quality or character of utilities used upon or furnished to the Leased
Premises are no longer available or suitable for Tenant's requirements, or if
the supply of any such utility ceases or is interrupted as a result of any cause
(except as otherwise provided for herein) and no such change, interruption or
cessation of service shall constitute an eviction of Tenant. Any furnishing by
Landlord or its designee of light, cooling and/or heat or power shall be
conditioned upon the availability of adequate energy sources. Landlord or its
designee shall have the right to reduce heat, lighting and air conditioning
within the Shopping Center, including, without limitation, the Leased Premises
and the common areas, as required by any mandatory or voluntary fuel or energy
saving allocation, or any similar statute, regulation, order or program.
Notwithstanding the foregoing, in the event that any foregoing utility service
is interrupted for three (3) consecutive working days solely as a result of any
of Landlord's or any of Landlord's agents' wilful acts of misconduct or
negligence, and Tenant is unable to operate its business within the Leased
Premises as a result thereof, then Landlord shall, after written notice from
Tenant to Landlord concerning such interruption, abate Minimum Rent on a
day-to-day basis if and until such time as said utility services are restored.
SECTION 19.2. ELECTRICITY, TELEPHONE AND GAS. All telephone, electric and
gas (with gas being available only to food service tenants) utility required by
Tenant for the Leased Premises shall
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(if available) be obtained by Tenant in accordance with Exhibit D and shall be
installed by the appropriate company or utility. All charges for such utility
service (including the installation thereof) shall be paid by Tenant directly to
the company or utility providing any such service, as and when they become due
and payable.
SECTION 19.3. TRASH AND GARBAGE REMOVAL. Tenant shall be solely responsible
for trash and garbage removal from the Leased Premises including the placing of
all trash and garbage in containers provided by Landlord or Landlord's
contractor for such purpose. In the event Landlord, either directly or through
an agent or designee, elects to furnish such service to the tenants in the
Shopping Center, Tenant agrees to use only the service provided by Landlord or
its designee and to pay for such service (including both the cost of leasing
containers and the cost of removal) monthly, as additional rent, in accordance
with the uniform schedule of charges to be established by Landlord. In no event
shall Tenant be obligated to pay Landlord or its designee more for such trash
and garbage removal service than the prevailing competitive rates of reputable
independent trash removal contractors for service similar to that provided by
Landlord.
SECTION 19.4. WATER AND SEWER. The cost of water and sanitary sewer for
usage in the Shopping Center shall be included in Common Area Maintenance
Expenses, except for food service tenants which may be billed directly by
Landlord or by the supplier of water and sanitary service and any other tenants
which are billed directly by Landlord or such supplier. Landlord reserves the
right to install a water meter in the Leased Premises at any time or from time
to time to measure Tenant's consumption of water therein and bill Tenant
directly for the cost of such consumption. Tenant shall pay, as additional rent,
the amount of each bill within fifteen (15) days after such bill is rendered.
SECTION 19.5 GREASE INTERCEPTORS. Landlord, in its commercially reasonable
judgment, will arrange for regular periodic service and cleaning of all grease
interceptors at Tenant's expense. Cost of service and cleaning of grease
interceptors will be allocated among grease interceptors serving food court(s)
and grease interceptors serving individual tenants in proportion to grease trap
size. Tenants served by individual grease traps will pay their pro rata share of
the cost for their grease trap. The share of grease trap service and cleaning
cost apportioned to food court grease traps will be paid by food court tenants
as part of the food court common facilities expenses.
ARTICLE XX
MISCELLANEOUS
SECTION 20.1. ENTIRE AGREEMENT. This Lease together with the Addendum and
the Exhibits, attached hereto and incorporated herein contains the entire
agreement between the parties hereto and there are no promises, agreements,
conditions, undertakings, or warranties, or representations, oral or written,
express or implied, between them other than as herein set forth. No change or
modification of this Lease or of any of the provisions hereof shall be valid or
effective unless the same is in writing and signed by the parties hereto. No
alleged or contended waiver of any of the provisions of this Lease shall be
valid or effective unless in writing signed by the party against whom it is
sought to be enforced.
SECTION 20.2. NOTICES. No notice or other communication given under this
Lease shall be effective unless the same is in writing and is delivered in
person or mailed by registered or certified mail, return receipt requested,
first class, postage prepaid, or delivered by Federal Express or a comparably
reliable national air courier service (i.e. one which delivers service in at
least 48 states) provided that any such courier service provides written
evidence of delivery. Any such notice or communication shall be addressed:
(a) If to Landlord, at 1300 Wilson Boulevard, Suite 400, Arlington,
Virginia 22209, Attention: General Counsel, or to such other address as Landlord
shall designate by giving notice thereof to Tenant, with a copy for
informational purposes only to the Mall Manager of the Retail Development.
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(b) If to Tenant, at the address set forth for Tenant on page 1 of this
Lease or at the Leased Premises, or such other address as Tenant shall
designate by giving notice thereof to Landlord, with a courtesy copy but not
required for effective notice to: Paul, Hastings, Janofsky & Walker LLP, 555
South Flower Street, 23rd Floor, Los Angeles, California 90071, Attn: Rick S.
Kirkbride, Esquire.
The date of service of any notice or other communication given by mail shall be
three (3) days after the date on which such notice is deposited in the U.S.
mails. The date of service of any notice given by courier service (as described
above) shall be one (1) day after deposit with such courier service.
SECTION 20.3. GOVERNING LAW. It is the intent of the parties hereto that
all questions with respect to the construction of this Lease and the rights and
the liabilities of the parties hereto shall be determined in accordance with
the laws of the jurisdiction in which the Leased Premises is located and that
all disputes arising hereunder shall be heard and decided in the local
jurisdiction where the Leased Premises is located.
SECTION 20.4. SUCCESSORS. All rights and liabilities herein given to, or
imposed upon, the respective parties hereto shall extend to and bind the
several respective heirs, executors, administrators, successors, and assigns of
the said parties; and if there shall be more than one Tenant, or more than one
person or entity acting collectively as Tenant, they shall all be bound jointly
and severally by the terms, covenants and agreements herein. Any restriction on
or requirement imposed upon Tenant hereunder shall be deemed to extend to
Tenant's Guarantor, Tenant's sublessees, Tenant's assignees and Tenant's
invitees, and it shall be Tenant's obligation to cause the foregoing persons to
comply with such restrictions or requirements. No rights, however, shall inure
to the benefit of any assignee or other transferee of Tenant, and no rights or
benefits shall be conferred upon any such assignee or transferee by reason of
this Section 20.4, unless such rights or benefits shall be expressly otherwise
set forth in this Lease.
SECTION 20.5. LIABILITY OF LANDLORD. Neither Landlord, Landlord's
beneficiaries, any persons or entities comprising Landlord, nor any successor
in interest to Landlord (or to such persons or entities) shall have any
personal liability for any failure by Landlord to perform any term, covenant or
condition of this Lease. If Landlord shall fail to perform any covenant, term
or condition of this Lease upon Landlord's part to be performed, and if as a
consequence of such default Tenant shall recover a money judgment against
Landlord, such judgment shall be satisfied only out of the proceeds of sale
received upon execution of such judgment and levied thereon against the right,
title and interest of Landlord in the Shopping Center and out of rents or other
income from such property receivable by Landlord, or out of the consideration
received by Landlord from the sale or other disposition of all or any part of
Landlord's right, title and interest in the Shopping Center, subject,
nevertheless, to the rights of Landlord's mortgagee, and neither Landlord nor
any of the co-partners comprising the partnership which is Landlord herein
shall be liable for any deficiency. The foregoing limitation of liability shall
be noted in any judgment secured against Landlord and in the judgment index.
SECTION 20.6. BROKERS. Tenant warrants and represents that there was no
broker or agent other than Blatteis Realty Company, instrumental in
consummating this Lease. Tenant agrees to indemnify and hold Landlord harmless
against any claims for brokerage or other commissions arising by reason of a
breach by Tenant of this representation and warranty. Landlord warrants and
represents that there was no broker or agent, acting on its behalf,
instrumental in consummating this Lease. Landlord agrees to indemnify and hold
Tenant harmless against any claims for brokerage or other commissions arising
by reason of a breach by Landlord of this representation and warranty.
SECTION 20.7. TRANSFER BY LANDLORD. Landlord hereunder shall have the
right to freely assign this Lease without notice to or the consent of Tenant.
SECTION 20.8. NO PARTNERSHIP. Notwithstanding the fact that a portion of
the Rent reserved hereunder may be a percentage of Tenant's Gross Sales, and
notwithstanding anything else to the contrary, Landlord shall not be deemed to
be a partner of Tenant or a joint venturer with Tenant.
SECTION 20.9. WAIVER OF COUNTERCLAIMS. Tenant shall not impose any
counterclaim or counterclaims (other than compulsory counterclaims) in a
summary proceeding or other action based
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on termination or holdover, it being the intent of the parties hereto that
Tenant be strictly limited in such instance to bringing a separate action in the
court of appropriate jurisdiction. The foregoing waiver is a material inducement
to Landlord making, executing and delivering this Lease and Tenant's waiver of
its right to counterclaim in any summary proceeding or other action based on
termination or holdover is done so knowingly, intelligently and voluntarily.
SECTION 20.10. WAIVER OF JURY TRIAL. [INTENTIONALLY DELETED].
SECTION 20.11. SEVERABILITY. If any provision of this Lease or the
application thereof to any person or circumstances shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each provision of
this Lease shall be valid and be enforced to the fullest extent permitted by
law.
SECTION 20.12. NO WAIVER. No failure by Landlord to insist upon the strict
performance of any term, covenant, agreement, provision, condition or limitation
of this Lease to be kept, observed or performed by Tenant, and no failure by
Landlord to exercise any right or remedy available upon a breach of any such
term, covenant, agreement, provision, condition or limitation of this Lease,
shall constitute a waiver of any such breach or of any such term, covenant,
agreement, provision, condition or limitation.
SECTION 20.13. CONSUMER PRICE INDEX. As used herein, "Consumer Price Index"
or "Index" shall mean the Consumer Price Index for All Urban Consumers (1982-84
= 100), U.S. City Average, All Items, published by the United States Department
of Labor, Bureau of Labor Statistics (or such comparable index as may be
utilized in substitution for or as the successor to the stated Index). If such
Index is not published by the Bureau of Labor Statistics or by another similar
governmental agency at any time during the Term of this Lease, then the most
closely comparable statistics on the purchasing power of the consumer dollar as
published by a responsible financial authority and selected by Landlord shall be
utilized in lieu of such Index.
SECTION 20.14. INTEREST. Any amount due from Tenant to Landlord herein
which is not paid when due shall bear interest at a rate per annum equal to the
Federal Reserve Bank discount rate as published in the [***] day of the month
preceding the date upon which the obligation is incurred (or the next business
day thereafter if the [***] is not a weekday) plus [***] unless otherwise
specifically provided herein, but the payment of such interest shall not excuse
or cure any default by Tenant under this Lease. In no event shall any interest
calculated hereunder be at a rate which is higher than the maximum rate which is
allowed under the usury laws of the State, which maximum rate of interest shall
be substituted for the rate in excess thereof, if any, computed pursuant to this
Section 20.14.
SECTION 20.15. EXCAVATION. If an excavation shall be made upon land
adjacent to the Leased Premises, or shall be authorized to be made, Tenant shall
afford to the person causing or authorized to cause such excavation, license to
enter upon the Leased Premises for the purpose of doing such work as said person
shall deem necessary to preserve the wall or the building of which the Leased
Premises form a part from injury or damage and to support the same by proper
foundation, without any claim for damages or indemnity from Landlord, or
diminution or abatement of Rent.
Notwithstanding anything contained in this Lease to the contrary, if such
excavation work prevents Tenant from operating its business within the Leased
Premises for three (3) or more consecutive days, Landlord shall after three (3)
days' written notice from Tenant to Landlord, abate Minimum Rent after such
three (3) days of disruption on a day-to-day basis until Tenant is able to
operate its business in the Leased Premises.
SECTION 20.16. RULES AND REGULATIONS. Tenant agrees to comply with and
observe all reasonable rules and regulations established by Landlord for the
Shopping Center from time to time. Tenant's failure to keep and observe such
rules and regulations shall constitute a default pursuant to the terms of this
Lease in the manner as if the same were contained herein as covenants, which
shall carry with it the same consequences under Article XIV hereof as Tenant's
failure to pay rent.
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SECTION 20.17. FINANCIAL STATEMENTS. Upon Landlord's written request from
time to time, but not more than once per Lease Year, Tenant shall, within thirty
(30) days after Landlord's request therefor, furnish Landlord financial
statements outlining Tenant's then current financial condition and shall furnish
financial statements outlining the current financial condition of any Guarantor
of this Lease. Landlord shall maintain all financial information provided in a
confidential manner; provided, however, that Landlord may disclose such
financial statements to Landlord's mortgagees or prospective mortgagees or
purchasers.
SECTION 20.18. GENERAL RULES OF CONSTRUCTION. (a) This Lease may be
executed in several counterparts and the counterparts shall constitute one and
the same instrument. (b) Landlord may act under this Lease by its attorney or
agent. (c) Wherever a requirement is imposed on Tenant hereunder, Tenant shall
be required to perform such requirement at its sole cost and expense unless it
is specifically otherwise provided herein. (d)(i) Wherever appropriate herein,
the singular includes the plural and the plural includes the singular; (ii)
whenever the word "including" is used herein, it shall be deemed to mean
"including, but not limited to"; and (iii) the words "re-enter" and "re-entry"
as used herein shall not be restricted to their technical legal meaning. (e)
Anything in this Lease to the contrary notwithstanding: (i) any provision hereof
which permits or requires a party to take any particular action shall be deemed
to permit or require, as the case may be, such party to cause such action to be
taken; and (ii) any provision hereof which requires any party not to take any
particular action shall be deemed to require such party to prevent such action
to be taken by any person or by operation of law.
SECTION 20.19. RECORDING. Neither this Lease nor any memorandum hereof may
be recorded without the express written consent of Landlord.
SECTION 20.20. EFFECTIVE DATE. For all purposes hereof, the "Effective
Date" of this Lease shall be the date upon which this Lease shall have been
executed by both parties and physically delivered by Landlord to Tenant or its
attorney. Prior to the Effective Date, neither this Lease nor anything hereunder
contained shall be legally binding on either Landlord or Tenant, and the
submission of this Lease by Landlord to Tenant prior to such Effective Date for
examination or consideration by Tenant or discussion between Landlord and Tenant
shall not constitute a reservation of or option for the Leased Premises or
create any legal obligation or liability whatsoever on Landlord.
SECTION 20.21. HEADINGS. The captions, section numbers, article numbers and
index appearing in this Lease are inserted only as a matter of convenience and
in no way define, limit, construe, or describe the scope of intent of such
sections or articles of this Lease nor in any way affect this Lease.
SECTION 20.22. MANAGING AGENT. Landlord has advised Tenant that it has
appointed MillsServices Corp., a Delaware corporation as managing agent of the
Retail Development (said managing agent and any successor or substitute managing
agent is hereinafter referred to as "Managing Agent"). Tenant shall, until
otherwise notified by Landlord, make all payments of Rent required to be made
pursuant to this Lease to the Managing Agent payable to Landlord and direct all
notices, inquires or other communications to the Managing Agent, 1300 Wilson
Boulevard, Suite 400, Arlington, Virginia 22209.
[signatures appear on next page]
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IN WITNESS WHEREOF, Landlord and Tenant have signed this Lease as of the day
and year first above written.
WITNESS: LANDLORD:
OPRY MILLS LIMITED PARTNERSHIP, a
Delaware limited partnership
By: Opry Mills, L.L.C., a Delaware
limited liability company
Its: General Partner
By: The Mills Limited Partnership, a
Delaware limited partnership
Its: Manager
By: The Mills Corporation, a Delaware
corporation
Its: General Partner
By: /s/ [ILLEGIBLE] 8/23/99 By: /s/ Judith Berson
--------------------------------- ---------------------------------
By: /s/ [ILLEGIBLE] Judith Berson
--------------------------------- Executive Vice President
WITNESS/ATTEST: TENANT:
SILICON ENTERTAINMENT, a California
corporation
By: By: /s/ Christopher U. Morse
--------------------------------- ---------------------------------
By: Name: Christopher U. Morse
--------------------------------- ---------------------------------
Its: V.P.
By: By: /s/ David S. Morse
--------------------------------- ---------------------------------
By: Name: David S. Morse
--------------------------------- ---------------------------------
Its: CEO
Tenant's Corporate Seal:
49
<PAGE> 54
ACKNOWLEDGMENT OF LANDLORD
COMMONWEALTH OF VIRGINIA )
) ss.
COUNTY OF ARLINGTON )
On this 23rd day of August, 1999, before me personally appeared Judith
Berson, to me known to be the person who executed the foregoing Lease and
acknowledged before me that she was duly authorized and did execute same on
behalf of OPRY MILLS LIMITED PARTNERSHIP, a Delaware limited partnership.
ELAINE SHIRVY CHIN /s/ Elaine Shirvy Chin
Notary Public, Commonwealth of Virginia -------------------------------
Arlington County Notary Public
My Commission Expires My Commission Expires
November 30, 2003 November 30, 2003
[Notarial Seal]
ACKNOWLEDGMENT OF CORPORATE TENANT
STATE OF CALIFORNIA )
) ss.
CITY/COUNTY OF SANTA CLARA )
On June 30, 1999, before me Laurie H. Shermer a Notary Public in and for
said state aforesaid, personally appeared Chris Morse, as V. President and David
Morse, as CEO of SILICON ENTERTAINMENT, INC., a California corporation,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
/s/ Laurie H. Shermer
------------------------------------
Notary Public, Santa Clara County,
My Commission expires: 9/19/2001
[Notarial Seal]
LAURIE H. SHERMER
Commission #1155999
Notary Public - California
Santa Clara County
My Comm. Expires Sep 19, 2001
<PAGE> 55
ADDENDUM, ATTACHED TO AND MADE A PART OF LEASE DATED AUGUST 23, 1999, BY AND
BETWEEN OPRY MILLS LIMITED PARTNERSHIP, A DELAWARE LIMITED PARTNERSHIP, AS
"LANDLORD," AND SILICON ENTERTAINMENT, INC., A CALIFORNIA CORPORATION, AS
"TENANT."
- -----------------------------------------------------------------------------
The Lease is hereby modified and supplemented as set forth herein. Any
conflict between a term, condition or provision contained in this Addendum with
any term, condition or provision contained in the printed Lease shall be
resolved in favor of this Addendum.
Add as a new Section 20.23:
"SECTION 20.23. LEASE CONTINGENCIES. This Lease is contingent and conditioned
upon the securing by Landlord of financing for the Retail Development on terms
and conditions, and at a rate of interest and in a loan amount, satisfactory to
Landlord in its sole and absolute discretion (said condition being referred to
as the "Lease Contingency"). In the event the foregoing Lease Contingency has
not been satisfied on or before October 31, 1999, then Landlord shall thereafter
have the right to terminate and cancel this Lease upon thirty (30) days prior
written notice to Tenant. If the Lease Contingency shall be satisfied prior to
the expiration of the aforesaid thirty (30) day notice period, then the notice
to terminate and cancel shall be voided and this Lease shall remain in full
force and effect. In the event of termination of this Lease as herein provided,
this Lease shall cease and come to an end, Landlord shall reimburse Tenant for
any advance Rent paid and Landlord shall be obligated to pay Tenant its actual
and reasonable costs associated with the Leased Premises, including legal fees
associated with lease negotiations and design and construction costs incurred
prior to the date of notice from Landlord of its intention to terminate this
Lease, and there shall thereupon be no further liability or obligations upon
either party under or with respect to this Lease. Each party will, at the
other's request, execute an instrument in recordable form containing a release
and surrender of all right, title and interest in and to this Lease."
Add as a new Section 20.24:
"SECTION 20.24. GROUND LEASE. Notwithstanding anything else contained in this
Lease, Tenant acknowledges that Landlord's interest in the land upon which the
Shopping Center is to be or has been constructed will be that of a ground
lessee under a ground lease to be entered into between Landlord and the
owner(s) of such land (the "Ground Lease"). Tenant agrees that (i) this Lease
is and shall be subordinate to the Ground Lease, as the same may from time to
time be modified, extended, restated or replaced, (ii) upon any termination of
the Ground Lease, Tenant shall attorn to the ground lessor and recognize said
ground lessor as its lessor under this Lease, and (iii) said ground lessor
shall be named as an additional insured under Tenant's liability insurance
described in Section 8.2 above (provided Tenant has been furnished with the
name of such ground lessor). Landlord represents and warrants that the Ground
Lease will contain (and any restatement or replacement thereof will contain)
provisions pursuant to which the ground lessor irrevocably agrees to recognize
this Lease and Tenant's interest hereunder in the event of any termination of
the Ground Lease (unless such termination is caused by a casualty or
condemnation that also results in a termination of this Lease), so long as
Tenant is not then in default under this Lease beyond any applicable cure
period; provided that, upon such recognition, the ground lessor shall not (i)
have any obligation to Tenant with respect to any portion of the term of this
Lease extending beyond the scheduled expiration date of the Ground Lease (which
shall be no earlier than October 31, 2048); (ii) be liable for the acts or
defaults of any prior landlord (including Landlord); (iii) have any liability
to complete any initial construction of the Leased Premises or to fund any
allowance granted by any prior landlord (including Landlord) with respect
thereto; (iv) be bound by any payments of rent made by Tenant more than thirty
(30) days in advance; or (v) be liable for the return of any security deposit
not actually received by the ground lessor. None of the foregoing shall be
deemed to release the existing Landlord from any liability accruing prior to
the date hereof, nor shall this provision be deemed to extend the existing
Landlord's liability. Landlord shall obtain from the Ground Lessor a
non-disturbance agreement on a commercially reasonable and recordable form in
favor of Tenant on or before the date that is thirty (30) days after the
Effective Date."
<PAGE> 56
IN WITNESS WHEREOF, Landlord and Tenant have signed and sealed this Addendum as
of the day and year first above written.
WITNESS: LANDLORD:
OPRY MILLS LIMITED PARTNERSHIP, a
Delaware limited partnership
By: Opry Mills, L.L.C., a Delaware
limited liability company
Its: General Partner
By: The Mills Limited Partnership, a
Delaware limited partnership
Its: Manager
By: The Mills Corporation, a Delaware
corporation
Its: General Partner
8/23/99
By: /s/ [ILLEGIBLE] /s/ Judith Berson
--------------------------------- ---------------------------------
By: /s/ [ILLEGIBLE] By: Judith Berson
--------------------------------- Its: Executive Vice President
WITNESS/ATTEST: TENANT:
SILICON ENTERTAINMENT, INC., a
California corporation
By: By: /s/ Christopher U. Morse
--------------------------------- ---------------------------------
By: Name: Christopher U. Morse
--------------------------------- ---------------------------------
Its: V.P.
---------------------------------
By: By: /s/ David S. Morse
--------------------------------- ---------------------------------
By: Name: David S. Morse
--------------------------------- ---------------------------------
Its: CEO
<PAGE> 57
ACKNOWLEDGMENT OF LANDLORD
COMMONWEALTH OF VIRGINIA )
) ss.
COUNTY OF ARLINGTON )
On this 23rd day of August, 1999, before me personally appeared Judith
Berson, to me known to be the person who executed the foregoing Addendum and
acknowledged before me that she was duly authorized and did execute same on
behalf of OPRY MILLS LIMITED PARTNERSHIP, A Delaware limited partnership.
ELAINE SHIRVY CHIN /s/ Elaine Shirvy Chin
Notary Public, Commonwealth of Virginia -------------------------------
Arlington County Notary Public, Commonwealth of
My Commission Expires Virginia
November 30, 2003 My Commission expires:
November 30, 2003
ACKNOWLEDGEMENT OF CORPORATE TENANT
STATE OF CALIFORNIA )
) ss.
CITY/COUNTY OF SANTA CLARA )
On June 30, 1999, before me Laurie H. Shermer a Notary Public in and for
the state aforesaid, personally appeared Chris Morse, as Vice President and
David Morse, as C.E.O. of SILICON ENTERTAINMENT, INC., a California corporation,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument, the person, or the entity upon
behalf of which the person acted, executed the instrument.
/s/ Laurie H. Shermer
------------------------------------
Notary Public, Santa Clara County,
My Commission expires: 9/19/2001
[Notarial Seal]
LAURIE H. SHERMER
Commission #1155999
Notary Public - California
Santa Clara County
My Comm. Expires Sep 19, 2001
<PAGE> 58
[RELOCATION ZONE MAP]
RELOCATION ZONE
Project: Opry Mills
Exhibit: A
Reference: Opry Mills Lease Plan LP15 dated 5/19/99.
Prepared By: Craig Bennett Assoc./Architects, PC
Tenant: SILICON ENTERTAINMENT, INC., a California corporation
Date: June 9, 1999
TRADE NAME: NASCAR SILICON MOTOR SPEEDWAY
and\or SILICON MOTOR SPEEDWAY
STORE: #429 6,007 SF
File: [ILLEGIBLE]
<PAGE> 59
[DISPLAY AREA MAP]
DISPLAY AREA
Project: Opry Mills
Exhibit: A-1
Reference: Opry Mills Lease Plan LP15 dated 5/19/99.
Prepared By: Craig Bennett Assoc./Architects, PC
Tenant: SILICON ENTERTAINMENT, INC., a California corporation
Date: June 9, 1999
TRADE NAME: NASCAR SILICON MOTOR SPEEDWAY
and/or NASCAR MOTOR SPEEDWAY
STORE: #429 6,007 SF
File: [ILLEGIBLE]
<PAGE> 60
[DIAGRAM OF LEASABLE AREA]
CALCULATION OF GROSS LEASABLE AREA
EXHIBIT B
8/23/94
<PAGE> 61
SPECIALTY TENANT LEASE EXHIBIT
EXHIBIT C
LANDLORD'S WORK -- ROUGH SHELL
Preface
Work to be performed by Landlord in constructing the Leased Premises shall be
limited to those items expressly set forth below as Landlord's Work in this
Exhibit C ("Landlord's Work") and, except as otherwise provided in Exhibit C or
Exhibit D, such work shall be performed at Landlord's sole cost and expense.
All Landlord's Work shall be performed by Landlord in a first class and
workmanlike manner using only new and first class materials in accordance with
all applicable laws, rules, regulations, codes and ordinances. All other items
of work, including the purchase and installation of all materials and equipment
necessary for Tenant's use of the Leased Premises shall be provided by Tenant
at Tenant's sole expense and shall include but shall not be limited to, those
items set forth in Exhibit D, Tenant's Work.
The building in which the Leased Premises are a part shall be designed by the
architect and engineer retained by the Landlord to design and oversee
construction of the Retail Development (herein sometimes referred to as "The
Project"). Construction shall meet the requirements for a fully sprinklered
building in accordance with the fire protection and building code program of
the local jurisdictional authority as well as the Development Agreement and
Master Declaration, if applicable.
Landlord shall provide Tenant with a Tenant with a Tenant Handbook (Tenant
Design Criteria) hereinafter referred to as "Tenant Handbook".
Except as otherwise provided below, Landlord shall initially construct the
following:
A. BUILDING SHELL WORK WITHIN AND AROUND THE LEASED PREMISES
1. Shell. Landlord shall construct the building shell (building structure,
insulated roof and exterior walls) in which the Leased Premises are to be
located. It is expressly agreed and understood that the Leased Premises shall
constitute a portion of a covered mall building.
2. Exterior Appurtenances. Public entrance features, canopies and screen
walls at the exterior of the building structure shall be provided by Landlord
in locations and of a design and in materials deemed appropriate by Landlord.
3. Outside Walls. If Lease Premises abuts an exterior wall, such wall
shall be unfinished on the interior.
4. Demising Partitions. Landlord shall install metal wall studs, 16" on
center, between all leased premises. Where rated walls are required between
Leased Premises and service/exit corridors Landlord shall install 5/8" fire
code gypsum board to the roof deck on both Landlord and Tenant sides, along
demising partitions separating Tenant from service/exit corridors.
5. Demising Strip. Where Landlord desires, a vertical demising strip may
be located at the storefront line between stores. The center line and/or back
side of said strip may or may not precisely coincide with the lease line
defining the Leased Premises.
6. Exterior Service/Exit Door. Where Leased Premises abuts an outside
wall, Landlord shall install one (1) 3'0 X 7'0" x 1-3/4" (prime coated only on
inside face) hollow
Exhibit C, Rough Shell 5/1/98
Page 1
<PAGE> 62
metal door and frame (with 1-1/2 pair butts and temporary lockset) as
required by code or Landlord's insurance carrier. The outside face of door
will be finished by Landlord to match adjacent construction and may not be
modified by Tenant. The location of such door (if any) will be indicated
on the Lease Outline Drawing. Tenant's store name and space number will
be applied adjacent to the door by Landlord per Landlord's Architect's
specifications in accordance with Exhibit D.
7. Interior Service/Exit Door. Where the Leased Premises abuts an interior
exit/service corridor, Landlord shall install one (1) 3'0" x 7'0" x 1-3/4"
hollow metal door and frame (with 1-1/2 pair butts and temporary lockset),
as required by code or Landlord's insurance carrier. The hollow metal door
and frame will be finish painted on the corridor side with a color
selected by Landlord. Tenant's store name and space number will be applied
adjacent to the door by Landlord, per Landlord's Architect's
specifications in accordance with Exhibit D.
8. Floor Slab. Landlord shall furnish a 4" thick slab on-grade with smooth
trowelled concrete surface. The floor elevation may be 3/4" below finished
floor elevation in the mall areas adjacent to the Leased Premises. The
slab will be designed to support a load of not less than 125 pounds per
square foot.
9. Storefronts and Sign Bands. The configuration of the storefront lease
line, as established by Landlord, shall be the line beyond which no
element of the storefront may extend and may not necessarily follow the
line of construction. The storefront furnished by Tenant shall include one
entry complete with security closure.
The width of the security closure will be as follows:
Storefront width up to 25' - 8' wide
Storefront width up to 26' - 35' - 10' wide
Storefront width 36' and up -12' wide
B. FINISH WORK OUTSIDE THE LEASED PREMISES
1. Exterior Areas. Landlord shall provide parking areas, access roads,
delivery areas, drainage systems, walks, ramps, lighting, landscaping and
planting, striping, signage, and other facilities and improvements as
determined by Landlord in the exterior common area.
2. Interior Areas. Landlord shall provide enclosed air conditioned and
lighted malls, courts and entry-ways, lighted delivery areas, service and
exit corridors, ramps, public restrooms, meter and valve rooms and all
other areas, facilities, and buildings used in the maintenance and
operation of The Project as determined by Landlord.
C. BUILDING UTILITY SYSTEMS SERVING THE LEASED PREMISES
1. HVAC System. Landlord will provide either 1) a central condenser water
distribution system to provide cooling water for air conditioning unit(s)
provided by Tenant in the Leased Premises in accordance with the Tenant
Handbook referenced in Exhibit D. Landlord's portion of the condenser
water system shall terminate at valved and capped outlets within the
Leased Premises as indicated on the Lease Outline Drawing or 2) a roof-top
package unit system, providing at least 35 tons of air conditioning. In
this case Landlord to install roof opening and curb at Tenant's expense
for roof-top air conditioning equipment to be furnished and installed by
Tenant in accordance with Tenant Handbook from Landlord's HVAC inventory.
2. Electrical System. Landlord shall bring primary electrical service to the
Retail Development. An empty secondary electrical distribution conduit
only shall be extended by Landlord from the electric room to a point
within the Leased Premises
Exhibit C, Rough Shell 5/1/98
Page 2
<PAGE> 63
as indicated on the Lease Outline Drawing. Electrical service
furnished by Landlord shall consist of 277/480 volt 3 phase four wire
service 400 amp service. Tenant to complete electrical system in
accordance with Exhibit D and the Tenant Handbook.
3. Plumbing System. If required by code, Landlord shall provide 3/4"
valved and capped domestic cold water line, a 1" condensate drain
line, if applicable, and a 4" sanitary sewer line at the rear of the
Leased Premises, as indicated on the Lease Outline Drawing. Tenant
shall connect to Landlord's plumbing system and extend service within
the Leased Premises according to Tenant's approved plans and in
accordance with requirements of Exhibit D and the Tenant Handbook.
4. Sprinkler System. Landlord shall install a wet sprinkler fire
protection system in the common areas and within the Leased Premises
including, but not limited to, risers, bulk mains, cross mains, branch
lines and upturned sprinkler heads at the bar joists. Within the
Leased Premises the sprinkler system provided by Landlord shall have
one (1) head per 100 square feet. The quantity of heads provided by
Landlord will be the minimum required by code or other governing
agencies. The mains and cross mains will be designed to accept
additional heads up to a maximum coverage of one (1) head per 80
square feet of Leased Premises. Additional or relocated heads shall be
installed or relocated by Landlord's designated sprinkler contractor
as required by Tenant's layout and as described in Exhibit D and the
Tenant Handbook. Tenant shall pay Landlord for the cost thereof in
accordance with Exhibit D.
5. Telephone System. Landlord shall at Tenant's expense arrange for
telephone intrabuilding cable to be brought to a point within or
adjacent to the Leased Premises as indicated on the Lease Outline
Drawing.
6. Mechanical Smoke Venting. Landlord's building has been designed to
provide smoke venting via mechanical fans, open ceilings and no
separation above 12'-0" between Tenant premises. Any Tenant required
by Code or the authority having jurisdiction to provide separate
smoke venting, or whose tenant space design interferes with normal
functioning of Landlord's smoke venting system, must install a
complete smoke venting system to meet code in accordance with Exhibit
D and the Tenant Handbook.
D. GENERAL PROVISIONS
1. Minor changes in any plans or specifications covering Landlord's Work
which may be necessary during design and construction of The Project
or affecting the Leased Premises shall not in any way invalidate the
terms of the Lease or this Exhibit C nor shall it require the Landlord
to provide any work not described herein. Notwithstanding the
foregoing, any changes which would materially impact Tenant's Store
Design and Working Drawings must be made at least sixty (60) days
prior to the Delivery of Possession date.
2. Landlord shall have the right to specify or change the location,
either before or after construction, of all utility lines, condenser
water lines, condensate drain lines, drains, sprinkler mains and
valves, and such other facilities within the Leased Premises as are
necessary by engineering design and/or Code requirements. These items
as described above shall be located so as not to materially interfere
with Tenant's use of the Leased Premises. Landlord shall have the
right to relocate and specify the location of mechanical and other
equipment on the roof over the Leased Premises. To the extent that
such utility lines, condenser water lines, condensate drain lines,
drains, sprinkler mains and valves and other facilities within the
Leased Premises are relocated, Landlord shall be responsible for
paying for any changes in either Tenant's plans or connecting Tenant
installed improvements to such relocated facilities.
Exhibit C, Rough Shell 5/1/98
Page 3
<PAGE> 64
3.
4. Landlord shall have the right to perform, at Tenant's expense, any of
Tenant's work which Landlord determines in its sole discretion be
performed: (a) immediately and/or on an emergency basis for the best
interest of The Project, (b) to the extent required for Landlord's
compliance with all applicable building codes, or, (c) to the extent
necessary to obtain any Certificate of Occupancy required by the
Landlord or any other tenant in The Project. Except in the event of an
emergency, Landlord shall give Tenant forty-eight (48) hours notice of
its intention to undertake such work and Landlord shall refrain from
undertaking such work if Tenant commences to cure during such
forty-eight (48) hour period.
Exhibit C, Rough Shell 5/1/98
Page 4
<PAGE> 65
SPECIALTY TENANT LEASE EXHIBIT
EXHIBIT D
TENANT'S WORK -- ROUGH SHELL
PREFACE
This Exhibit "D" is intended to describe the obligation of the Tenant in the
design and construction of the Leased Premises. Landlord's Work will be limited
to the work described in Exhibit C. Any part of Tenant's Work which is
accomplished by Landlord for Tenant pursuant to the terms of this Exhibit D will
be accomplished by Landlord at Tenant's expense. The work of Tenant described in
Exhibit D is intended to complete the Leased Premises in accordance with
Tenant's drawings as approved in writing by Landlord to a finished condition
ready for the conduct of business therein. All finished installations will be
deemed incomplete until approved by Landlord. Tenant's Work shall conform to the
procedures, schedules and reimbursement requirements set forth in Sections 2
and 3 of this Exhibit. Exhibit D shall govern over any inconsistencies with
Exhibit C.
Landlord and Tenant have a common interest in opening the Leased Premises on the
Grand Opening Date. To this end, Landlord will coordinate its work with
Tenant's work insofar as the schedule for such Grand Opening Date and prudent
construction practice allows and will assign one or more tenant coordinators to
function as liaison between tenants and Landlord. Further to this end, Tenant
and Tenant's contractors agree to abide by Landlord's Construction Rules and
Regulations which may be issued from time to time. In order to ensure that the
Tenant's store interior and signage design are orderly and aesthetically
coordinated with Landlord's building, and to ensure that Landlord's storefront
and signage requirements are understood by Tenant, its designers, engineers,
contractors, and other representatives, Landlord has drafted and Tenant shall
follow the architectural and signage criteria established in the Tenant Handbook
(Tenant Design Criteria) hereinafter referred to as "Tenant Handbook". In order
to ensure that the Tenant's HVAC, plumbing and electrical systems are compatible
and coordinated with the Landlord's building, and to ensure that the Landlord's
HVAC, plumbing and electrical requirements are understood by Tenant, its
designers, engineers, contractors, and other representatives, Landlord has
drafted and Tenant shall follow the mechanical and electrical criteria
established in the Tenant Handbook.
All Tenant construction shall be in accordance with the requirements of all
applicable codes, ordinances, rules and regulations of all authorities having
jurisdiction over the work including all requirements of the Landlord's
insurance carrier.
Construction shall conform to the requirements for a fully sprinklered building
in accordance with the fire protection and building code program of the local
jurisdictional authority as well as the Development Agreement and the Master
Declaration if applicable. Tenant shall secure all necessary permits including,
but not limited to, occupancy and health department permits from the
jurisdictional authorities in sufficient time to allow Tenant to open the Leased
Premises on the Grand Opening Date. Tenant shall furnish to Landlord upon
receipt, copies of all building permit applications, statements, amendments and
the like, and all permits, inspection reports, certificates, and other documents
as required by authorities having jurisdiction of The Project.
Tenant, at its sole cost and expense, shall perform all work other than work to
be performed by Landlord as set forth in Exhibit C, required to complete the
Leased Premises to a finished condition ready for the conduct of business
therein.
All of Tenant's work within the Leased Premises performed pursuant to this
Section 1 shall, for the purpose of this Lease to which this Exhibit is
attached, be deemed to be improvements made to the Leased Premises by Tenant at
Tenant's expense.
Exhibit D, Rough Shell 5/1/98
Page 1
<PAGE> 66
SECTION 1-TENANT CONSTRUCTION WORK WITHIN THE PREMISES
A. GENERAL CRITERIA
The criteria and outline specifications set forth herein represent minimum
standards for the design, construction, and finish of the Leased Premises by
Tenant.
1. JURISDICTIONS AND CODES. The Project is being developed in and under the
jurisdictions of the State, County and City in which The Project is
located. All design and construction work shall comply with all
applicable statutes, ordinances, regulations, laws and codes and the
requirements pertaining to service and utilities furnished by utility
companies, all applicable state, county, and local statutes and
ordinances, and OSHA regulations.
2. PERMITS AND APPROVAL. Prior to the commencement of construction, all
building and other permits shall be obtained and posted in a prominent
place within the Leased Premises. Landlord's written approval shall be
obtained by Tenant prior to the undertaking of any construction work
which deviates materially from Tenant's approved Store Working Drawings
and Specifications, or which modifies whatsoever Landlord's building
shell or utilities, or any work not explicitly shown on said Store
Working Drawings and Specifications. Landlord's approval of the
foregoing shall not constitute the assumption of any responsibility by
Landlord for the accuracy or sufficiency thereof, and Tenant shall be
solely responsible. To the extent and material changes, changes which
modify the building shell or utility or new work are required, Landlord
shall not unreasonably withhold its approval of the same.
3. FLOOR LOADS. The slab on-grade has been designed to carry a total load
(dead and live) of 125 pounds per square foot. Any loading imposed by
any of Tenant's Work, either on a temporary or permanent basis, shall
not exceed 125 lbs./SF ("Allowable Load").
4. STANDARD PROJECT DETAILS. Standard Project Details, as issued by
Landlord's Architect from time and time and as they pertain to Tenant's
Work, shall govern with respect to Tenant's Work. Such details shall be
incorporated into the Tenant's Store Working Drawings and Specifications
for the Leased Premises.
5. MATERIALS. Only new, first-class materials shall be used in the
construction of the Leased Premises. Used, first-class materials for
interior architectural facades and fixtures may be used provided such
materials are noted on the Tenant's plans and approved by Landlord
through field inspection.
6. FIELD CONDITIONS. From time to time, the Tenant is obligated to verify
conditions pertaining to the Leased Premises prior to and after
commencement of construction of its Leased Premises. Tenant shall
coordinate its work with the work of Landlord, other tenants, and with
existing conditions above, below and adjacent to the Leased Premises.
Tenant shall make changes as required to accommodate such work or
conditions.
7. TENANT HANDBOOK. Landlord shall provide Tenant with a Tenant Handbook
("Tenant Handbook"), and Tenant shall comply with all design criteria,
procedures for drawings, specifications, and construction, and other
rules, regulations and provisions therein. To the extent, if at all,
that the Tenant Handbook may conflict with the provisions of the Exhibit
D, the provisions of the Tenant Handbook shall govern.
Exhibit D, Rough Shell 5/1/98
Page 2
<PAGE> 67
B. ARCHITECTURAL FINISHES
1. FLOORS. Tenant finish floor covering materials must be selected and
adapted in thickness to correspond in elevation exactly with the level of the
finished mall floor, which may be approximately 3/4" above the concrete floor of
the Leased Premises at the Lease Line. Quality floor materials, such as
carpeting, glazed or unglazed tile, wood parquet, or marble shall be used in the
sales area of the Leased Premises. All flooring finish materials are subject to
Landlord's approval.
2. STOREFRONT. Tenant's storefront shall be designed and constructed by
Landlord as provided in Exhibit C and as described in the Tenant Handbook.
3. INTERIOR PARTITIONS. All interior partitions by Tenant within the
Leased Premises shall be metal stud construction and shall have 5/8" gypsum
board finish on all sides with taped and spackled joints. Any combustible
materials applied to partitions shall meet all flamespread and smoke generation
requirements of jurisdictional authorities and receive a U.L. labeled fire
retardant coating if required by Code. Walls dividing the Leased Premises from
service and exit corridors, or other rated enclosures, shall receive, on
Tenant's side, sufficient layers of drywall to complete the necessary rating.
Landlord shall install service and exit corridor drywall at Tenant's expense.
Any Tenant penetrations of rated partitions shall be specifically approved in
writing by Landlord and governing authorities as a portion of the permitting
process.
4. DEMISING PARTITIONS. Demising partitions are not load bearing and
Tenant may not hang fixtures from them. Should Tenant require structure and/or
backing to accommodate the loading of Tenant's wall hung fixtures, said request
shall be in writing to Landlord for approval. Additional structure and backing
shall be furnished and installed by Tenant at Tenant's expense. Tenant shall
install drywall, taped and spackled on demising partitions between tenants. No
drywall shall be placed on demising partitions above 12'-0" without Landlord's
specific approval. Above 12'-0" the Tenant may, subject to Landlord's prior
written approval, continue with wire mesh for security purposes if so indicated
on Tenant's construction drawings. The Tenant, upon Landlord's approval, may
also install drywall to a higher level if openings of sufficient size are
provided to assure that the smoke venting system provided by the Landlord
functions as designed -- see Tenant Handbook for specific requirements.
5. EXTERIOR WALLS. Tenant shall install all finishes on the inside
face of exterior walls within Leased Premises.
6. SERVICE AND EXIT CORRIDOR PARTITIONS. Any Tenant penetrations of rated
partitions, and relocations and/or additions to Landlord furnished exit doors,
shall be specifically approved in writing by Landlord and governing authorities
as a portion of the permitting process. Any framing, cutting, patching of the
corridor wall surfaces including the building of vestibules to provide for the
nonimpingement of the door into the corridor traffic way, and other work related
construction shall be coordinated and consistent with Landlord's work, including
but not limited to the provision of 4'-0" high 1/4" masonite board and metal
cornerguards. Walls dividing the Leased Premises from service and exit
corridors, or other related enclosures, shall receive, on Tenant's side,
sufficient layers of drywall to complete the necessary rating. All materials
used in corridor construction shall be fire rated. Any Tenant penetrations of
rated partitions shall be specifically approved in writing by Landlord and
governing authorities as a portion of the permitting process.
7. INTERIOR SERVICE/EXIT CORRIDOR DOORS. If Tenant desires additional
service access to Leased Premises other than what is provided by Landlord in
Exhibit C then Tenant
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shall provide and install a 3'-0" X 7'-0" X 1-3/4" 18 gauge interior hollow
metal door, labeled as required, with a hollow metal 16 gauge frame, and
all hardware, in accordance with governing Codes. Any framing, cutting, and
patching of the corridor wall surfaces including the building of vestibules
to provide for the non-impingement of the door into the corridor traffic
way, and other work related thereto shall be the responsibility of the
Tenant. Hollow metal door and frame are to be finished painted on the
corridor side with a color selected by Landlord. Tenant's store name will
be applied adjacent to the door by Landlord, at Tenant's expense, per
Landlord's Architect's specifications.
8. Door Relocation. The relocation of any exterior Tenant door shall be
performed by Landlord at Tenant's sole expense and must be coordinated with
the structure of Landlord's building.
9. Door Hardware. Tenant shall furnish and install all door locks and exit
devices on all interior service doors, exterior doors, exit corridor doors,
and storefront, using hardware recommended by Landlord in the Tenant
Handbook.
10. Ceiling. Exposed and open grid systems are encouraged. All work related to
ceiling and ceiling treatments, if any, shall be the responsibility of
Tenant. All ceilings and ceiling treatments shall be of non-combustible
material approved by Landlord and shall maintain the degree of openness
required to preserve the operation of the smoke venting system and
sprinkler system in The Project as established by jurisdictional authority
and/or as described in the Tenant Handbook. Tenant's ceiling and ceiling
treatment shall be limited to a ceiling height not less than the code
required minimum nor higher than the maximum heights indicated in the
Tenant Handbook. The structure of Landlord's Building has been designed to
accept a super-imposed loading of three (3) pounds per square foot for the
installation of Tenant's suspended ceiling and equipment. Access (such as
access panels) and other openings shall be provided by Tenant where
Landlord deems necessary.
Tenants providing ceilings with less than the required degree of openness
shall provide smoke venting at Tenant's sole expense, both as required by
jurisdictional authorities and as described in the Tenant Handbook. If
Tenant's interior partitions and ceiling configuration cause the
requirement of additional sprinkler heads, such additional heads shall be
installed by Landlord's designated contractor at Tenant's expense both as
required by jurisdictional authority and Landlord's insurance carrier.
11. Interior Finishes. All finished interior surfaces must be materials
approved by Landlord for appearance. All Tenant fixtures, furniture,
carpeting (including underlayment), upholstery materials, drapery and other
furnishing must comply with flammability of materials and smoke generation
requirements for furniture and furnishings of local jurisdictional
authorities. All wood shall be fire retardant in accordance with code
requirements. All wood in contact with the floor shall be termite
retardant.
12. Finish Hardware. Commercial grade finish hardware, labeled where required,
shall be used throughout. All doors shall have at least one and one-half
(1-1/2) pair butts, wall or floor stops, kick plates, lock sets and
push-pull plates as required. All exit doors shall have hardware as
required by Code.
13. Toilet Room. Tenant shall construct restroom facilities, fixtures, toilet
partitions, and building specialty items such as toilet room mirrors,
dispensers, paper holders and amenities to fully meet the ADA Guidelines
and local codes.
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14. Mezzanines. Mezzanines will not be permitted (other than the
approximately 10' x 4' elevated stand which is part of Tenant's
prototype store design which must be supported from the floor).
15. Layout and Painting of Exposed Mechanical and Electrical Systems. All
Tenant installed ductwork, conduits, pipes and any other mechanical or
electrical equipment exposed to public view from outside the Leased
Premises, shall be laid out and installed in a neat and orderly
configuration. Tenant shall paint the above Tenant improvements with
either a black or a mutually agreed to color and finish if Tenant's
improvements can be seen from Mainstreet (i.e. those portions of the
common area made up of the pedestrian walkways outside of the Leased
Premises) above Tenant's storefront elevation or below the top of the
storefront but visible from Mainstreet.
C. STRUCTURAL
1. Modifications. Any alterations, additions, and/or reinforcements to
the structure of Landlord's building required to accommodate Tenant's
Work, must be designed by a registered structural engineer at Tenant's
expense. Tenant shall leave the structure of Landlord's building as
strong or stronger than original design and with finishes unimpaired.
Tenant's architect shall calculate or have calculated the structural
loads caused by Tenant's improvements and submit those calculations
for written approval by Landlord and Landlord's Architect prior to
Tenant's construction.
2. Loading. All loads individually hung from the structure in excess of
100 pounds shall be specifically approved by Landlord's structural
Engineer for location and method of support. All loads less than 100
pounds that are individually hung from the structure shall be hung in
accordance with the guidelines in the Tenant Handbook.
D. HEATING, VENTILATING AND AIR CONDITIONING
1. Connection to Condenser Water System (if applicable). Not applicable.
2. HVAC System. A complete air conditioning system to suit Tenant's
requirements shall be designed, furnished, installed and maintained by
Tenant in accordance with the requirements of the Tenant Handbook.
Tenant's portion of the HVAC system shall include an air conditioning
unit(s), ducts, insulation, fire dampers, outlets, grilles and
controls to maintain temperatures per Tenant Handbook. If roof-top
units are required, Landlord shall install roof-top curb at Tenant's
expense. All Tenant ductwork shall be internally insulated and Tenant
shall make all connections to Landlord installed systems in a manner
fully satisfactory to Landlord.
3. Toilet Exhaust System. Tenant installed toilet facilities within the
Leased Premises shall include a complete toilet exhaust system
according to Code and the requirements of the Tenant Handbook.
4. Outside Air Connection. Landlord, at Tenant's expense, will provide a
roofjack for Tenant's connection to provide outside air to Tenant's
HVAC system. Tenant shall provide outside air ventilation as required
by Code and the Tenant Handbook. No openings for fans, vents, louvers,
grilles, or other devices shall be installed in any demising
partition, exterior wall, or roof without Landlord's prior written
approval. All roof and/or wall penetrations required for Tenant's
plumbing, mechanical,
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electrical work and any other Landlord approved Tenant work shall be
made by Landlord's designated contractor at Tenant's expense.
5. Smoke Venting. If the authority having jurisdiction requires
individual smoke venting from the Leased Premises, Tenant, at Tenant's
expense, shall provide the complete required smoke system, discharging
vertically through a roof vent at sufficient velocity to carry the
discharge away from any intakes on the roof. Roof vents will be
installed by Landlord's designated contractor at Tenant's expense and
in accordance With the Tenant Handbook.
6. Refrigeration. Tenants may not connect refrigeration equipment to
Landlord's condenser water system. Landlord's condenser water system
will not operate during unoccupied hours. Refer to the Tenant Handbook
for requirements regarding Tenant's refrigeration equipment.
7. Exhaust/Negative Pressure. All exhaust and make up air systems shall
be by Tenant in accordance with Exhibit D and the Tenant Handbook. As
determined by Landlord, all tenants producing odors within their
premises shall be required to install full height partitions and
provide supplemental exhaust to the exterior of the building to keep
the premises at a negative pressure relative to Mainstreet and all
adjacent areas.
E. ELECTRICAL
1. System. Tenant shall design, furnish, install and maintain a complete
electrical distribution system, including but not limited to
conductors to electrical room connected to load side of meter socket,
transformer, distribution panels, circuits, conductors, fixtures and
devices, within the Leased Premises in accordance with the
requirements of the Tenant Handbook. No appurtenances, including but
not limited to light fixtures, antennas, signs, etc., will be affixed
to the exterior walls or roof of Landlord's Building without
Landlord's express written permission.
2. Electrical Construction.
a. Material - All electrical materials shall meet National Electrical
Code Standard, unless a better grade is required by local Code. All
materials shall be new and shall bear evidence of approval by
Underwriter's Laboratory (UL). All conductors shall be copper.
Aluminum conductors will not be allowed.
b. Lighting Fixtures - Recessed fixtures installed in furred spaces shall
be connected by means of flexible conduit and approved fixture wire,
connected to a branch circuit outlet box which is independent of the
fixture.
c. Fluorescent Fixtures - All fixtures shall be provided and installed by
Tenant with switch legs and local switches rated 20 amps at 277 volts.
All fluorescent fixtures shall have internal protection devices.
Fluorescent ballasts shall be high power factor type with individual
non-resetting overload protection. Ballast harmonics may not exceed
that Total Harmonic Current Distortion allowable by the electric
utility. All lamps subject to public view shall have warm white deluxe
or better color rendition. Cool white may be used only in storage
areas not exposed to public view.
d. Electric Meter - Where Landlord does not provide electricity from a
master meter and redistribute to Tenants, Tenant shall make direct
arrangements with the local electric utility company to furnish and
install electric meter to measure Tenant's use of electricity.
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e. Panel Boards -- Panel boards shall be furnished and installed by
Tenant, 120/208 volt panels and 277/480 volt panels shall both be
equipped with single or multiple pole bolted thermal magnetic
breakers.
f. Short Circuit Ratings -- Tenant's electrical distribution system
shall be designed to withstand and safely interrupt an available
short circuit current indicated in the Tenant Handbook.
g. Transformer -- All necessary transformers shall be furnished and
installed by Tenant. All ceiling hung transformers over 100
pounds shall be approved by Landlord's Structural Engineer for
location and method of support. All ceiling hung transformers
less than 10 pounds shall be hung in accordance with the
requirements in the Tenant Handbook.
h. Nameplates -- The following equipment shall be identified with
engraved Bakelite nameplates; distribution panels, motor
starters, lighting panels and push-button stations.
F. PLUMBING
1. System. Tenant shall connect to Landlord's plumbing system as
described in Exhibit C and the Tenant Handbook. Tenant shall provide a
complete plumbing system within the Leased Premises, including but not
limited to, fixtures and toilet accessories as required by Code.
Tenant shall provide accessible clean outs in toilet areas. Plumbing
work must be installed according to all appropriate Codes and
requirements of the Tenant Handbook. Landlord's approval of Tenant's
plans is not a statement that the plans are in compliance with Code or
other local requirements. Tenant shall be required to provide vent
connections and a toilet room exhaust connection, if necessary,
through the roof as required by Code and the Tenant Handbook. All such
penetrations shall be by Landlord's designated contractor at Tenant's
sole expense.
2. Water Heaters. Electric water heaters shall be automatic and a maximum
capacity of 2 k.w. All units shall be UL approved and conform to the
requirements of the local Energy Code. Water heaters must have
temperature/pressure relief valves with discharge piping according to
Code.
3. Water Meters. All restaurants, food court tenants, salons, pet stores
and any other high volume users of water (as determined by Landlord)
shall furnish and install water meters at Tenant's expense in
accordance with the Tenant Handbook.
4. Condensate Drains. Tenant shall extend and connect condensate drain
line(s) from Tenant's air conditioning unit(s) in accordance with the
Tenant Handbook.
5. Connection. If Tenant's restroom location, on Tenant's Store Working
Drawings does not coincide with Landlord's utility location, Tenant,
at Tenant's expense, shall move utility to coincide with Tenant's
Store Working Drawings with Landlord's prior approval. All cutting and
placing of concrete is by Tenant.
G. FIRE PROTECTION SYSTEM
All revisions to the fire protection system required by Tenant's layout
shall be performed by Landlord's designated sprinkler contractor at
Tenant's sole expense. Landlord's sprinkler contractor shall design system
revisions in accordance with Tenant's Store Working Drawings. Such designs
may involve additional heads, relocated heads, heads in refrigeration
boxes, toilet rooms, kitchen exhaust ducts, and/or at Tenant's request,
heads
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located to conform with Tenant's ceiling pattern and layout. All design and
construction shall be governed by Code and the requirements of Landlord's
insurance carrier.
Tenants are required by local code to provide fire extinguishers, at least
one to be installed within 25 feet of the Tenant's entry off Mainstreet.
H. TELEPHONE
Tenant shall arrange directly with the local Telephone Company for
telephone service. Tenant shall furnish, install and maintain telephone
wiring and equipment within the Leased Premises to suit Tenant's
requirements at Tenant's expense.
I. SIGNAGE
Guidelines. All signs shall be designed, constructed and located in
accordance with Landlord's sign Criteria, Exhibit E, the Tenant Handbook,
and as approved by Landlord.
J. FIXTURES AND FURNISHINGS
Tenant shall furnish and install in the Leased Premises all fixtures,
furnishings, equipment, shelving, trade fixtures, leasehold improvements,
interior decorations, graphics, signs, mirrors, cornices, covers and
decorative light fixtures, portable fire extinguishers as required by Code
and the Tenant Handbook, and other special effects, all as approved by
Landlord.
All Tenant improvements, other than mechanical equipment, ceilings, and
lighting fixtures, shall be floor-mounted unless written approval is
obtained from Landlord.
K. MISCELLANEOUS REQUIREMENTS
1. Tenant's Contractor. Work undertaken by Tenant at Tenant's expense (a)
shall not be awarded to Landlord's contractor without Landlord's
written consent, except that an approved list of contractors is
attached hereto as Exhibit D-1 and (b) may only be awarded to a
reputable and bondable contractor or contractors licensed to do
business in the State, County and City in which The Project is
located.
Tenant's contractor shall adhere to Landlord's policy of a drug and
alcohol free workplace.
2. Equipment Screening. Tenants requiring mechanical or electrical
equipment, antennas, and the like shall not have the same placed on
the roof or the exterior of the building without the prior written
approval of Landlord. All such equipment, if allowed, shall be
screened from the view of the public from any point within the project
site. All screening materials, construction details, and construction
techniques shall be approved by Landlord in writing, prior to any such
work by Tenant.
3. Clean-Up. Tenant shall cause its contractors to maintain the Leased
Premises in a clean and orderly condition during construction. All
unusable shipping containers, packaging, and other debris shall be
broken down and contained within the Leased Premises until removed by
Tenant's contractor to containers provided by Landlord outside
Landlord's Building. Flammable waste must be confined to covered metal
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containers until removed by Tenant. All usable construction material,
equipment, fixtures, merchandise, etc. must always be contained within the
Leased Premises, Malls, courts, arcades, public corridors, service/exit
corridors and the exterior of Landlord's Building shall be kept clean at
all times. If Tenant fails to clean up, Tenant hereby authorizes Landlord
to clean up for Tenant at Tenant's expense.
4. Full Payment. Tenant shall satisfy Landlord that adequate arrangements have
been made to ensure that all Tenant's contractors shall be paid in full for
work ordered by Tenant. Tenant is advised to familiarize itself with the
mechanic's lien laws in the State in which The Project is located and shall
hold the Landlord harmless for any liens filed against the property of the
Landlord for the work of the Tenant.
5. Character of Employees. Tenant will not employ any unfit person or anyone
not skilled in the work he is performing, or any workman that is
incompatible with the balance of the work force or who will cause, or whose
presence will cause, labor disputes or work stoppages. In the event any
employee(s) of Tenant or Tenant's contractor(s) causes a labor dispute or
work stoppage, Tenant expressly agrees to have such employee(s)
immediately removed from the Project upon Landlord's request, and that
Tenant's failure to do so shall constitute an event of Default under the
Tenant's Lease of which this Exhibit is a part.
SECTION 2: PROCEDURE AND SCHEDULES FOR THE COMPLETION OF TENANT'S PLANS AND
SPECIFICATIONS
Unless otherwise notified by Landlord, all prints, specifications, and other
material to be furnished by Tenant as herein required shall be sent to: Tenant
Coordinator (Address to be furnished when available).
Tenant shall engage an architect ("Tenant's Architect") registered in the State
and licensed to do business in the County and the City in which The Project is
located to prepare the Working Drawings and Specifications to be submitted for
Landlord's approval. The fees for Tenant's Architect shall be paid by the
Tenant.
A. LEASE OUTLINE DRAWINGS
Following execution of the Lease of which this Exhibit is a part, Landlord
shall furnish Tenant with two (2) prints of the Lease Outline Drawings
(LOD) giving technical and design information relative to the Leased
Premises along with other drawings that may be helpful to Tenant in the
design of its store.
B. STORE DESIGN DRAWINGS
1. Within forty-five (45) days of whichever of the following shall be the
later to occur: (a) receipt of Lease Outline Drawings from Landlord or
(b) the execution
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of the Lease; the Tenant shall submit to Landlord one (1) set of sepia
reproducible prints and three (3) sets of blueline prints of Store
Design Drawings, showing the intended design, character, and finishes
of the Leased Premises. The Store Design Drawings shall comply with
the design criteria of The Project as described in this Exhibit D and
in the Tenant Handbook and shall set forth the requirements of Tenant
within the Leased Premises. Said Drawings shall include, but not be
limited to the following:
a. Architectural design of the space, including an elevation of
Landlord's storefront showing Tenant's signage, floor plans,
elevations, sections, and renderings indicating material and
color selections and finishes, and layout including location of
fixtures both permanent and movable. Provide the weights of all
items to be suspended above from the structure in excess of 100
pounds each.
b. Mechanical System: Basic equipment to be used and its location,
duct distribution system, diffuser locations, and any louvers or
vents to be provided for Tenant by Landlord at Tenant's expense.
Provide projected mechanical loads on forms provided by Landlord
in the Tenant Handbook.
c. Electrical System: Reflected ceiling plans indicating type
of lighting fixtures, and floor plans showing outlets and other
electrical equipment contemplated with location of panel and
switchboard. Provide projected electrical loads on forms provided
by Landlord in the Tenant Handbook.
d. Plumbing System: Floor plans showing the location, layout, and
type of fixtures to be furnished, including riser diagrams.
e. Fire Protection System: Location of any specialty heads Tenant's
architect may require.
f. Tenant shall identify in writing all intended exceptions to the
design criteria contained in the Tenant Handbook and/or this
Exhibit D.
2. After receipt of Store Design drawings, Landlord shall, within seven
(7) business days, return to Tenant One (1) set of Store Design
Drawings with modifications and/or approval. If, upon receipt of
approved Store Design Drawings bearing Landlord's comments, Tenant
wishes to take exception thereto, Tenant may do so in writing within
seven (7) days from date of receipt of said drawings, by certified or
registered mail addressed to Landlord, at the above address, and the
notice address in the Lease. Unless such action is taken, it will be
deemed that all comments made by Landlord on Store Design Drawings are
acceptable to and adopted by Tenant.
3. If Store Design Drawings are returned to Tenant with comments, but not
bearing approval of Landlord, said Store Design Drawings shall
immediately be revised by Tenant and resubmitted to Landlord for
approval within seven (7) days of their receipt by Tenant.
C. STORE WORKING DRAWINGS AND SPECIFICATIONS
1. Store Working Drawings and Specifications shall be prepared in strict
compliance with the design criteria and requirements as set forth in
this Exhibit D and the Tenant Handbook and shall adhere to the Store
Design Drawings as approved by Landlord. Store Working Drawings to
minimum scales as called for below, and Specifications shall include,
but not be limited to, the following:
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a. Key plan showing location of the Leased Premises relative to
the entire mall.
b. Floor plan at a minimum scale of 1/4"=1'0".
c. Overall sections at 1/4"=1'0".
d. Reflected ceiling plan at a minimum scale of 1/4"=1'0".
e. Plans, elevations, and section of storefront (if to be construed by
Tenant) at 1/2"=1'0", with finish materials board including
manufacturers, model numbers, color numbers, and all other identifying
information. Details of storefront at 1-1/2"=1'0".
f. Interior elevations at 1/4"=1'0".
g. Full sections of types of partitions used at 1/2"=1'0".
h. Details of special conditions encountered at 1-1/2"=1'0".
i. Door schedule with jamb details at 1-1/2"=1'0".
j. Finish and color schedules with samples.
k. Plumbing, heating, ventilating, and cooling plans, at 1/4"=1'0".
l. Mechanical details at 1-1/2"=1'0".
m. Electrical plans at 1/4"=1'0".
n. Electrical details, fixture schedules, and one-line electrical riser
diagram.
o. Mechanical and electrical load tabulations on forms provided by
Landlord in the Tenant Handbook.
p. Structural load tabulations.
q. Specifications covering all of Tenant's Work, including, but not
limited to, architectural, electrical, plumbing, heating, ventilating,
and air conditioning.
r. Layout of fixture location, both permanent and movable.
s. Any and all other plans and specifications as may be required by the
local fire and building authorities and other governing bodies.
2. All Store Working Drawings and Specifications prepared by Tenant's
Architect shall be submitted by Tenant, in the form of one (1) set of
reproducible sepia prints, specifications and three (3) sets of blueline
prints to Landlord for approval within 21 days from receipt by Tenant of
Landlord's written approval of Store Design Drawings.
3. As soon as practicable after receipt of Store Working Drawings and
Specifications, Landlord shall return to Tenant one (1) set of prints of
Store Working Drawings and Specifications with its suggested modifications
and/or approval. If, upon receipt of approved Store Working Drawings and
Specifications bearing Landlord's comments, Tenant wishes to take exception
thereto, Tenant may do so in writing, by certified or registered mail
addressed to Landlord at the above address and at the notice address in the
Lease, within seven (7) days from the date of receipt of Store Working
Drawings and Specifications. Unless such action is taken, it will be deemed
that all comments made by Landlord on Store Working Drawings and
Specifications are acceptable to and adopted by Tenant.
4. If Store Working Drawings and Specifications are returned to Tenant with
comments, but not bearing approval of Landlord, said Store Working Drawings
and Specifications shall immediately be revised by Tenant and resubmitted
to Landlord for approval within seven (7) days of their receipt by Tenant.
5. "For Construction" Store Working Drawings and Specifications prepared by
Tenant's Architect shall be submitted by Tenant in the form of one (1) set
of mylar reproducible prints and specifications and three (3) sets of
blueline prints. "For Construction" shall be marked clearly on each copy in
red. Such drawings and specifications shall reflect correction of all
Landlord's comments to the Store Working Drawings and specifications
returned by Landlord.
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6. Store Working Drawings shall be submitted to the local Authorities
having jurisdiction for building permit after such drawings have been
approved by Landlord in the submittal process as outlined above.
7. Landlord and Landlord's architect shall, from time to time, be
entitled to monitor Tenant's Work and shall have the right to require
all work which does not comply with Tenant's approved Store Working
Drawings and Specifications to be corrected within thirty (30) days of
notification to Tenant.
SECTION 3: PROCEDURE AND SCHEDULES FOR THE CONSTRUCTION OF THE LEASED PREMISES
BY TENANT
A. COMMENCEMENT OF CONSTRUCTION
Tenant shall start construction of its Leased Premises not later than ten
(10) days from either of the following dates, whichever shall be the later
to occur: (1) The date of receipt by Tenant of written notice from Landlord
that Landlord has substantially completed the work to be performed by
Landlord under Exhibit C, and payment therefore as required by Exhibit C is
due (other than such work which cannot be performed by Landlord until
Tenant makes the Leased Premises ready for the performance thereof) and
that the Leased Premises are ready for Tenant's work; or (2) the date on
which Landlord approves the Tenant's Store Working Drawings and
Specifications for the Leased Premises. Tenant shall carry such
construction to completion with all due diligence.
B. GENERAL REQUIREMENTS
1. Tenant shall submit to Landlord, via certified or registered mail, at
least five (5) days prior to the commencement of construction the
following information:
(a) Copy of building and all other permits needed to perform Tenant's
Work within the Leased Premises.
(b) The names and addresses of the general, mechanical, plumbing and
electrical contractors Tenant intends to engage in the
construction of the Leased Premises.
(c) The actual commencement of construction date and the estimated
date of completion of construction work, fixturing work, and date
of projected opening.
(d) Itemized statement of estimated construction costs including
architectural, engineering, and contracting fees.
(e) Evidence of insurance with a company or companies authorized to
transact business in which The Project is located as required
below.
2. Tenant shall secure, pay for, maintain, and cause its contractors and
subcontractors to secure, pay for, and maintain, during the
continuance of construction and fixturing work within the Lease
Premises, all of the insurance policies required in the amounts as set
forth herein, together with such insurance as may from time to time be
required
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by City, County, State or Federal laws, Codes, regulations or authorities.
Tenant's Work may not commence, nor may Tenant permit its contractors and
subcontractors to commence any work, until all required insurance has been
obtained and certificates of such insurance have been delivered to Landlord.
Insurance policies shall name the Landlord and assignees, Landlord's Architect
and General Contractor for the project as additional insureds. Certificates of
insurance coverage shall provide that no change or cancellation of such
insurance coverage shall be undertaken without thirty (30) days written notice
to Landlord. Landlord shall have the right to require Tenant, and Tenant shall
have the duty, to stop work in the Leased Premises immediately if any of the
coverage required herein lapses during the course of the work, in which event
Tenant's Work may not be resumed until the required insurance is obtained and
satisfactory evidence of same is provided to the Landlord.
a. Tenant's General Contractor's Required Minimum Coverages and Limits of
Liability.
(1) Worker's Compensation Insurance, as required by State law, and
Employers's Liability Insurance with a limit of not less than [***]
(or more if required by the law of the State) and any insurance
required by any Employee Benefit Act or similar statute applicable
where the work is to be performed as will protect the contractor and
subcontractors from any and all liability under the aforementioned
act(s) or similar statute.
(2) Comprehensive General Liability Insurance (including Contractor's
Protective Liability) in an amount not less than [***] per occurrence
whether involving personal injury liability (or death resulting
therefrom) or property damage liability or a combination thereof
(combined single limit coverage) with a minimum aggregate limit of
[***]. Such insurance shall include explosion, collapse and
underground (X, C and U) coverage and contractual liability coverage
for personal injury, death and damage to the property of other arising
from construction at the Leased Premises, whether performed by
Tenant's contractors, subcontractors, or sub-subcontractors, or by
anyone directly or indirectly employed by any of them.
(3) Comprehensive Automotive Liability Insurance, for the ownership,
maintenance, or operation of any automotive equipment, whether owned,
leased or otherwise held, including employer's non-ownership and hired
car liability endorsements, in an amount not less than [***] per
occurrence and [***] aggregate, combined single limit bodily injury
and property damage liability.
Such insurance policies shall insure the Tenant's general contractor
and all subcontractors against any and all claims for bodily injury,
including death resulting therefrom and damage to the property of
others arising from its operations at the Leased Premises or in
connection with construction of the Leased Premises, whether performed
by the Tenant's general contractor, subcontractors, or sub-
subcontractors, or by anyone directly or indirectly employed by any of
them.
b. Tenant's Insurance Requirements
(1) Tenant shall obtain Owner's Protective Liability Insurance as will
insure Tenant against any and all liability for damage from bodily
Exhibit D, Rough Shell 5/1/98
Page 13
*** Confidential Treatment Requested
<PAGE> 78
injury, including death resulting therefrom, or property
damage or a combination thereof which may arise from work
in connection with the Leased Premises, and any other
liability for damages which Tenant's general contractor
and/or subcontractors are required to insure against under
any provisions herein. Landlord and Landlord's Architect
and General Contractor shall be named as additional
insureds. Said insurance shall be provided in minimum
amounts of [***] aggregate, combined single limit bodily
injury and property damage liability.
(2) Tenant's Work Insurance: Tenant shall insure [***] of
the value of the work in the Leased Premises as it relates
to the building within which the Leased Premises is
located, with an "all risk" perils property insurance
policy or a completed value "all risk" perils Builder's
Risk policy, naming the interest of the Landlord and the
Tenant's general contractor and all subcontractors, as
their respective interests may appear.
3. All contractors engaged by Tenant shall be licensed contractors
in the State in which The Project is located possessing good
labor relations, capable of performing quality workmanship and
working in harmony with Landlord's General Contractor and other
contractors on the job. All work shall be coordinated with the
general project work.
4. Tenant's contractors and construction shall comply in all
respects with applicable federal, state and local statutes,
ordinances, regulations, laws and codes. All required building
and other permits in connection with the construction and
completion of the Leased Premises shall be obtained and paid for
the Tenant.
5. Tenant shall complete all work within the Leased Premises as
expeditiously as possible, but in no event later than in time to
open for business on the Grand Opening Date. Should Tenant fail
to complete its work within this schedule, Landlord may, at
Landlord's option, install temporary storefront or barricade at
the Leased Premises at Tenant's expense. Temporary storefront
and other work performed by Landlord which was made necessary
due to the Tenant's failure to complete its work in time for the
Grand Opening Date, shall be payable to the Landlord.
6. Landlord shall have the right to perform, on behalf of and for
the account of Tenant any of Tenant's work which Landlord deems
necessary to be done on an emergency basis or which pertains to
structural components, the general utility systems for The
Project, roof and exterior wall penetrations, or the erection of
temporary barricades and temporary signs, during construction
for the period following the Opening of The Project for
business. Landlord will provide such work at Tenant's expense.
7. Tenant's Work shall be subject to the inspection and approval of
Landlord and Landlord's Architect as to compliance with Tenant's
approved plans and standards of merchantability, provided that
Landlord and Landlord's Architect shall use its commercially
reasonable efforts to insure that its work does not interfere
with Tenant's Work.
8. Tenant shall pay or reimburse Landlord for all costs incurred by
Landlord (including deposits) for all utility meters for the
Leased Premises.
9. Upon the completion of the Tenant's Work, all facilities shall
be in full use without defects.
Exhibit D, Rough Shell 5/1/98
Page 14
*** Confidential Treatment Requested
<PAGE> 79
10. All work performed by Tenant shall be performed so as to cause no
interference with other Tenants and the construction and operation of
The Project. Tenant will take all precautionary steps to protect its
facilities and the facilities of others affected by Tenant's Work and
properly police same. Construction equipment and materials are to be
located within the Leased Premises and truck traffic is to be routed
in and from the site, all as directed by Landlord and so as not burden
the construction and operation of The Project.
11. Upon and from the completion of Tenant's Work in the Leased Premises
and acceptance by Landlord's Architect, a minimum one-year warranty of
all work, materials, and equipment shall be provided to Landlord by
Tenant, to the extent the same are received by Tenant from its
contractors and/or suppliers.
12. Landlord shall have the right to stop Tenant's Work whenever necessary
to obtain compliance with applicable building and safety codes or the
approved Store Working Drawings and Specifications.
13. Tenant and its contractors shall comply with the guidelines for Tenant
work procedures and temporary construction facilities set forth in the
Tenant Handbook, and Landlord's Construction Rules and Regulations
which may be issued from time to time.
14. Landlord shall have the right to order any Tenant or Tenant's
contractor who willfully violates any of the above requirements to
cease work, and to remove himself and his equipment and employees from
The Project.
C. TEMPORARY SERVICES AND FACILITIES DURING CONSTRUCTION
1. Utility costs or charges for any service to the Leased Premises shall
be the responsibility of Tenant from the date Tenant commences work or
is obligated to commence work, whichever is earlier.
2. If necessary, Tenant will provide temporary heat for the Leased
Premises during construction. No open burners are permitted and only
electricity must be used for temporary heat.
3. Temporary Electrical Services. If electrical service is not available
in the Leased Premises during construction, Landlord shall provide
electrical service in an area designated by the Landlord. Tenant shall
request, in writing, permission to connect temporary lines to the
power source for service to the Leased Premises. Tenant shall
reimburse Landlord for the Temporary Electric Service's.
4. Temporary Trash Removal. During initial construction, fixturing and
stocking, Landlord shall provide trash removal service from the
service areas. It shall be Tenant's responsibility to break boxes down
and place trash daily in the containers provided. Trash accumulation
will not be permitted overnight in the Leased Premises, mall or
service/exit corridors. Tenant shall not allow trash to accumulate
within the Leased Premises nor shall Tenant place any trash in the
service/exit corridor or mall areas adjacent to the Leased Premises.
Tenant shall reimburse Landlord for the Temporary Trash Removal.
The period shall start with the date the Tenant starts construction in
its premises and ends with the date the Tenant opens for business.
In addition, Tenant shall pay any costs incurred by Landlord in
removing trash from areas in and around the Leased Premises.
Landlord's decision as to which Tenant is
Exhibit D, Rough Shell 5/1/98
Page 15
<PAGE> 80
responsible for trash left outside the Leased Premises will be
reasonable and equitable, and Landlord's decision will be final.
5. PLANS REVIEW/TENANT COORDINATION. Landlord or its architect and/or
engineer shall review Tenant's plans and specifications for compliance
with the provisions of this Exhibit D and the Tenant Handbook. In
addition, Landlord shall assign a Tenant Coordinator(s) to work with
Tenant and Tenant's Architect, Engineer and contractor for the design
and construction of the Leased Premises. Tenant shall reimburse
Landlord for such plan review and tenant coordination as part of the
Temporary Charges provided for in C.9.
6. TEMPORARY STOREFRONT. If Tenant is not open for business in the Leased
Premises and Landlord's Retail Development is open, or if, in
Landlord's sole judgment, Landlord determines that a temporary
storefront is necessary so as not to disrupt the construction, opening
or operation of any portion of The Project, then Landlord shall
install, at Tenant's expense, for Tenant's use during construction a
full height temporary barricade on the storefront lease line. Tenant
shall reimburse Landlord for the temporary storefront. Upon completion
of Tenant's construction and fixturing in the Leased Premises, Tenant
shall remove, disassemble and dispose of such temporary storefront.
7. COMING SOON SIGN. If during Tenant's initial construction, fixturing
and merchandise stocking, The Project is open (or shall open) for
business, Landlord will provide and install, following the earlier to
occur of (a) erection of the initial construction barricade, or (b)
completion of the storefront for the Leased Premises, a "coming soon"
sign on the front (barricade or storefront, as the case may be) of the
Leased Premises. Tenant shall reimburse Landlord for providing such
sign.
8. SUITE NUMBER AND TENANT-TRADE NAME. Landlord shall furnish and install
suite number and Tenant trade name sign adjacent to Tenant's exterior
and/or interior rear exit door(s) in accordance with Landlord's
standard. Landlord shall also install suite number on Mall storefront.
Tenant shall reimburse Landlord for this service.
9. The Charges for Temporary Services and Facilities as described in this
subsection C shall be:
Landlord's Charge
[***] psf
10. The charges identified in C.9 above shall be due and payable within
thirty (30) days after billing by Landlord. Landlord may decline at
Landlord's sole judgement to proceed with work at Tenant's expense
until Landlord's receipt of payment thereof.
D. COST PLUS ADMINISTRATION FEE WORK BY LANDLORD IN PREMISES AT TENANT EXPENSE
The following work in Tenant's premises shall only be accomplished by
Landlord in Landlord's building. The Tenant shall contract with the
Landlord to furnish the following work items if required by Tenant's store
design at Landlord's actual costs plus ten percent [***] for
administration, and the cost of any such item of work shall be payable to
Landlord in full within [***] days after receipt of invoice therefore.
1. Openings in rated demising partitions and exterior wall, provided such
opening/penetrations have been approved in advance by Landlord in
writing.
Exhibit D, Rough Shell 5/1/98
Page 16
*** Confidential Treatment Requested
<PAGE> 81
2. Roof Openings. With Landlord's prior written permission, roof openings
for any purpose shall include supporting structures, curbs, roof
patching and flashing. Tenant shall be responsible for installation of
ducts, pipes, equipment and counter flashing. Landlord reserves the
right to refuse to permit the furnishing of any openings which exceed
the capability of the structural system or which in Landlord's opinion
would have an appearance detrimental to Landlord's Building.
3. Plumbing Service. With Landlord's written permission, additional
sanitary sewer or relocation of sanitary sewer.
4. Electric Service. With Landlord's written permission, additional
electric service or relocation of electrical service.
5. Storefront. With Landlord's prior written permission, changes to
Landlord furnished interior and exterior storefront including but not
limited to additional doors and relocation of doors.
6. Landlord's Labor (including overtime, demurrage and waiting time) and
equipment used in any work Landlord performs for Tenant.
7. Architectural and/or Engineering fees incurred Landlord as a result of
Tenant requesting any services in excess of the standard review
services described in Section
8. Building Department Expeditor Fees incurred by landlord in expediting
Tenant Building Permit, Controlled Inspection and other requirements
for temporary and permanent Certificates of Occupancy on the building
and the Tenant Premises.
9. Building Permits, Microfilming and Documentation Fees paid by Landlord
on behalf of the Tenant in expediting the approval of Building Permits
and other approvals of Agencies having jurisdiction.
E. CERTIFICATE OF ACCEPTANCE
Upon the completion of Tenant's construction and fixturing work within its
Leased Premises Tenant shall so notify Landlord in writing. Landlord, upon
receipt of such notice from Tenant, shall issue a Certificate of Acceptance
of said premises provided, however, that the issuing of such a Certificate
shall be contingent upon all of the following:
1. The satisfactory completion by Tenant of the work to be performed by
Tenant under this Exhibit D, in accordance with good workmanship and the
approved Construction Documents and Specifications therefor and receipt of a
certificate of occupancy from the local jurisdiction.
2. Receipt by Landlord from Landlord's Architect of a premises
acceptance letter. This letter can be issued only upon Tenant's correction of
the deficiencies noted by Landlord or Landlord's Architect upon any inspection
of Leased Premises.
3. Tenant shall have furnished Landlord with waivers of liens and sworn
statements, or satisfactory substitutes for same, in such form as may be
required by Landlord, and releases of notices of commencement (if any) from all
contractors, subcontractors and other person performing labor and/or supplying
materials in connection with such work showing that all of said persons have
been compensated in full.
4. Submission by Tenant to Landlord of a detailed breakdown of Tenant's
final and total construction costs together with receipted invoices showing
payment thereof.
Exhibit D, Rough Shell 5/1/98
Page 17
<PAGE> 82
5.
Exhibit D, Rough Shell 5/1/98
Page 18
<PAGE> 83
SPECIALTY TENANT LEASE EXHIBIT
EXHIBIT E
SIGN CRITERIA
1. Tenant is required to identify the Leased Premises by a sign on the
storefront. The general criteria for the design of Tenant's signage ("sign
criteria") is set forth below. More specific sign criteria for The Project
as a whole and certain tenants in certain designated locations such as in
food courts and mall courts is set forth in the Tenant Handbook, (Tenant
Design Criteria) hereinafter referred to as "Tenant Handbook".
2. Costs incurred in design, construction and installation, as well as
maintenance shall be the responsibility of Tenant. The Tenant must obtain
permits to erect and connect the sign from local community officials
before the sign is installed.
3. It is intended that the signage be developed in an imaginative and varied
manner so as to enhance the architectural treatment of the facade in
general and be harmonious with the overall architecture and thematic
consideration of the mall in particular. Although current signage
practices of the Tenant shall be considered, they will not govern the
signs to be installed.
4. Approval of signs shall be solely the right of the Landlord, and Tenant
must submit all candidates for signage to the Landlord for approval in the
form of working drawings before manufacturing or further assembly begins.
Submission shall be to Landlord, in the form of shop drawings with all
pertinent details necessary for construction and installation included.
Submission shall be a minimum of ninety (90) days before proposed
installation date, and Tenant is expected to have sign manufactured and
ready for installation within forty-five (45) days of approval by Landlord
or Landlord's agent before installation, at project site. Landlord
reserves the right to reject signs not conforming to approved drawings
regardless of stage of completion or installation.
5. The Tenant's storefront sign shall occupy an area of the storefront facade
designated in the Tenant Handbook and/or the Lease Outline Drawing, and/or
by the Project Architect. The area shall total no more than eight (8)
square feet for up to a thirty foot (30') storefront; and twelve (12)
square feet for up to a forty foot (40') storefront; sixteen (16) square
feet for up to a fifty foot (50') storefront. The design of the storefront
is to be considered by Tenant in the development of signage. In general,
signs will be installed in the designated sign area above the entry door.
Variation of this criteria shall be subject to Landlord's prior written
approval, which shall be solely at the discretion of Landlord. No sign
shall be installed closer than three feet (3'-0") from the end of the
Tenant storefront on both sides.
6. Signage shall be limited to the name of the store. Additional elements will
be considered as long as they enlarge, expand, or otherwise clarify the
name of the store.
7. Signs which are comprised of unaltered sans serif typefaces are, in
general, unacceptable, as will be signs or type faces which are difficult
to read.
8. The use of corporate identifications or logos will be considered, but prior
use or identification with a particular sign or logo will not govern
Landlord's approval for Tenant use. Tenant agrees that Landlord's rejection
of particular logo or sign shall not constitute a violation of Lease by
Landlord. In the case of conflict between the sign criteria and other
provisions of the Lease, Tenant agrees that the sign criteria and
Landlord's discretion shall prevail. Tenant shall not hold Landlord liable
for damage or injury as a result of the sign criteria or the implementation
of the sign criteria by agreement of both parties.
Exhibit E, Sign Criteria 5/1/98
Page 1
<PAGE> 84
9. A variety of fabrication materials shall be considered, however
construction shall be guaranteed for a period of at least five (5) years
against peeling, cracking, crazing, blistering, or any other degradation of
surface or materials. Tenant shall obtain, from manufacturer of the sign, a
five (5) year warranty covering the condition of finished surfaces,
construction and operation of sign.
10. All electrical signs shall carry approval of Underwriters Laboratories
(U.L.) on all component parts and on the complete display. Maximum
brightness of lit signs shall be fifty foot (50') Lamberts measured one
foot (1') from the source of light. No blinking, moving or flashing lights
shall be allowed. Surface lighting may be reduced in order to accentuate
lit signage. There will be no special advantage in terms of visibility of
internally lit over externally lit signs.
11. No exposed raceways, ballast boxes or electrical transformers will be
permitted except as required to be exposed by local building codes.
12. Landlord shall not be responsible for signs improperly installed or
manufactured, and those signs not meeting code requirements shall, at
Tenant's expense, be removed and built to code specifications before
reinstallation. Signs meeting Landlord's sign criteria, but not meeting
local code requirements, shall be the responsibility of Tenant, and Tenant
agrees not to hold Landlord liable for costs due to conflict between these
sign criteria and code, should such conflict exist under present code or
due to future changes in code. Tenant must make required structural
modifications at Tenant's expense to Landlord's structure. Also, Landlord's
engineer to approve structural modifications.
13. Notwithstanding anything herein contained to the contrary, Tenant shall
have the right to replace any existing sign(s) of said Tenant as long as
such replacement meets the sign criteria listed within this document, the
Tenant Handbook, and is accompanied by Landlord's prior written approval
prior to installation.
14. No other signs of any type or purpose, permanent or temporary, shall be
permitted to be displayed upon the facade, windows or within the dimension
prescribed in Section 4.03 of the Lease, behind an unobstructed window
unless and until such sign has been submitted to Landlord and has received
Landlord's prior written approval. Landlord shall be the sole judge of what
constitutes an unobstructed window. Removal of signage of any type
installed without Landlord approval shall be mandatory before said sign
shall be considered by Landlord for installation.
15. Landlord shall not be required to approve signage for any reason other than
conformance with the sign criteria in this Exhibit E and the Tenant
Handbook. Scheduled opening dates and other time constraints shall not be
reason to approve signage which Landlord otherwise would consider
unsuitable for manufacture or installation. Tenant agrees not to hold
Landlord liable for any damage caused to Tenant due to signage or lack of
signage as a result of Landlord's insistence upon conformance with the sign
criteria or the Landlord's withholding of approval of submitted signage.
16. In the event that Tenant is unable to supply satisfactory signage design by
the fixturing period of Tenant's store, Landlord shall have the option of
providing such design. In such a case, Tenant agrees to pay prior to store
opening all expenses involved in the design, manufacture, and installation
of said signage plus [***] cost of administration, and Tenant agrees to
waive rights to reject said signage and agrees not to oppose installation
of said signage.
17. Signage indicated on drawings and mechanicals submitted for reasons other
than signage evaluation (as described in this Exhibit E and the Tenant
Handbook) shall not constitute a signage submittal. No approval of such
drawings and mechanicals shall constitute approval of signage.
Exhibit E, Sign Criteria 5/1/98
Page 2
*** Confidential Treatment Requested
<PAGE> 85
18. Food Court Tenants shall be permitted to install one menu board within the
Leased Premises subject to Landlord's prior design review and written
approval. Refer to the Tenant Handbook for type, size and location allowed.
19. Procedure for Submittal and Approval of Sign Drawings:
a. Approval of store design drawings or working drawings and
specifications for Tenant's Leased Premises does not constitute
approval of any sign work. Approval of signs shall be solely the right
of Landlord, and Tenant must submit all candidates for signage to the
Landlord for approval in the form of sign designer's working drawings
and/or manufacturer's shop drawings before manufacturing or assembly
begins. Drawings by Tenant, is architect or anyone not qualified to
produce signage drawings are not acceptable. At the same time as
Tenant's initial submission of store working drawings and
specifications to Landlord, Tenant shall submit one (1) set of
reproducible prints and specifications and three (3) sets of
blueprints, along with samples of all material and colors, for all its
proposed sign work. The drawings shall clearly show location of sign
on storefront elevation drawing, size and stroke dimensions, graphics,
color, construction, and attachment details. Full information
regarding electrical load requirements and brightness in footcandles
shall also be included. Landlord reserves the right to reject signs
not conforming to approved drawings regardless of state of completion
or installation.
b. As soon as practical after receipt of the sign drawings, Landlord
shall return to Tenant one (1) set of such sign drawings with the
suggested modifications and/or approval. If, upon receipt of approved
sign drawings bearing Landlord's comments, Tenant wishes to take
exception thereto, Tenant may do so in writing, by certified or
registered mail addressed to Landlord within seven (7) days from the
date of Tenant's receipt of such sign drawings. Unless such action is
taken, it will be deemed that all comments made by Landlord on the
sign drawings are acceptable to and approved by Tenant.
c. If sign drawings and specifications are returned to Tenant with
comments, but not bearing approval of Landlord; said drawings and
specifications shall be revised immediately by Tenant and resubmitted
to Landlord for approval within seven (7) days of their receipt by
Tenant.
Exhibit E, Sign Criteria 5/1/98
Page 3
<PAGE> 86
EXHIBIT F
COMMENCEMENT AND EXPIRATION DATE DECLARATION
LANDLORD:
___________________________________________________________________
TENANT:
___________________________________________________________________
LEASE DATE:
_________________________________________________________________
STORE NUMBER:
_______________________________________________________________
Landlord and Tenant acknowledge and agree that the Commencement Date of
the above referenced Lease is ________________________ and the Expiration Date
of the Lease is _________________________________.
<TABLE>
<CAPTION>
LANDLORD: TENANT:
<S> <C>
By: ___________________________ By: ___________________________
Its: __________________________ Its: __________________________
Date: _________________________ Date: _________________________
</TABLE>
<PAGE> 87
EXHIBIT H
AGREEMENT OF SUBORDINATION
NON-DISTURBANCE AND ATTORNMENT
THIS AGREEMENT is made this ________ day of ___________, 199_, by and among OPRY
MILLS LIMITED PARTNERSHIP, a Delaware limited partnership having an office c/o
The Mills Corporation, 1300 Wilson Boulevard, Suite 400, Arlington, VA 22209
("Lessor"), SILICON ENTERTAINMENT, INC., a California corporation, having an
office at 210 Hacienda Avenue, Campbell, California 95008 ("Lessee") and
______________ having offices at _________________ ("Agent"), as agent for, and
as co-lender with such other lenders (collectively, the "Lenders") under the
credit facility secured by the hereinafter described Deed of Trust, their
successors and assigns or affiliate.
WITNESSETH:
WHEREAS, Lenders have provided financing for OPRY MILLS shopping center in
Nashville, Tennessee (the "Property");
WHEREAS, under a certain lease (the "Lease") Lessor did lease, let, and
demise a portion of the Property (such portion of the Property is hereinafter
called the "Premises") to Lessee:
WHEREAS, Lenders have or will become the owners of indebtedness secured by,
among other things, a deed of trust, granted by Lessor to _______, trustee, for
the benefit of Agent, on behalf of the Lenders, as beneficiary (the "Deed of
Trust");
NOW, THEREFORE, in consideration of the covenants, terms, conditions and
agreements herein contained, and in consideration of other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged, the
parties hereto agree as follows:
1. The Lease and all rights and liens created thereby shall be subject and
subordinate in all respects to the Deed of Trust and the lien created thereby,
to any advancements made thereunder, and to any increases, extensions,
modifications or renewals thereof.
2. So long as Lessee is not in material default under the Lease beyond any
applicable grace or cure period, Agent, on behalf of the Lenders, hereby
covenants to Lessee that in the event Lenders obtain title to the Premises,
either by foreclosure or by deed in lieu of foreclosure, and thereafter obtains
the right of possession of the Premises, that the Lease will continue in full
force and effect, and Lenders shall recognize the Lease and Lessee's rights
thereunder, subject to the provisions of this Agreement.
3. Lessee agrees that from and after the date hereof in the event of any
act or omission by Lessor under the Lease which would give Lessee the right,
either immediately or after the lapse of a period of time, to terminate the
Lease, or to claim a partial or total eviction, Lessee will not exercise any
such right (a) until it has given written notice of such act or omission to
Agent by certified mail, return receipt requested, and (b) until and unless
Lenders fail to remedy such act or omission within thirty (30) days for any act
or omission which can be cured by the payment of money, or in the case of any
other act or omission, as long as necessary to remedy such act or omission,
provided (i) Lenders cause such remedy to be commenced within thirty days, and
(ii) Lenders cause completion of such remedy to be pursued with due diligence
following such giving of notice and following the time when Lenders shall have
become entitled under the Deed of Trust to remedy the same. It is specifically
agreed that Lessee shall not, as to Lenders, be entitled to require cure of any
such default which is personal to Lessor, and therefore not susceptible of cure
by Lenders, and that no such uncured default shall entitle Lessee to exercise
any rights under the Lease with respect to Lenders.
4. That in the event the interests of Lessor under the Lease shall be
transferred to Lenders or Agent or any nominee, designee, assignee of Lenders or
any purchaser at foreclosure sale (Lenders, Agent or such other party referred
to as a "Lender Party") by reason of foreclosure, deed in lieu of foreclosure,
or similar transaction, Lessee hereby covenants and agrees to make, for the
benefit and reliance of Lenders, full and complete attornment to the Lender
Party as substitute lessor upon the same terms, covenants and conditions as
provided in the Lease, except to the extent otherwise set forth herein.
5. The provisions of this Agreement are real property covenants running
with the Property, and shall be binding upon and inure to the benefit of the
respective parties hereto and their respective heirs, executors, administrators,
beneficiaries, successors and assigns, including without limitation any Lender
Party.
<PAGE> 88
6. Notwithstanding anything contained herein to the contrary, or anything
to the contrary in the Lease, Lenders and any Lender Party shall not be:
(a) Liable for any act, omission or the breach of any warranty of
Lessor, including without limitation, any delay in opening the Project or
the Premises for occupancy and any failure to complete the construction of
the Premises or the Project or any improvements therein;
(b) Subject to any offsets, claims of defenses which Lessee might have
as Lessor except for Tenant's offset and deduction rights as provided in
Section 3.3 of the Lease;
(c) Required or obligated to credit Lessee with any rent for any
period beyond the then current rental period which Lessee might have paid
Lessor;
(d) Bound by any amendments or modifications or voluntary termination
of the Lease made without Lender's prior written consent, other than
exercise of rights, options or elections contained in the Lease; or
(e) Bound to be liable for refund of any security deposit except to
the extent actually received by Lenders or a Lender Party.
7. Lessee shall not, without the express written consent of Lenders:
(a) Cancel, terminate or surrender the Lease, except as provided
therein or in any modification or amendment specified herein or hereafter
consented to by Lenders;
(b) After the date hereof, enter into any agreement with Lessor or its
successors or assigns, which grants any concession with respect to the
Lease or which materially compromises, discounts or otherwise reduced the
rent called for thereunder; or
(c) After the date hereof, prepay rent more than one (1) month in
advance.
8. Lessor and Lessee hereby jointly and severally agree for the benefit
and reliance of Lenders, that neither this Agreement, nor any assignment of
the Lease for collateral purposes, nor anything to the contrary in the
aforesaid Lease or in any modifications or amendment thereto shall, prior to
Lenders' acquisition of Lessor's interest in and possession of the Property
(and thereafter, only to the extent of the Property and not personally),
operate to give rise or create any responsibility or liability upon Agent or
Lenders for the control, care, management or repair of the Property by any
party whatsoever or for any dangerous or defective condition of the Property;
or impose responsibility for the carrying out by Agent or Lenders of any of the
covenants, terms and conditions of the Lease or any modification or amendment
whether or not hereafter consented to by Lenders, or for any negligence in the
management, upkeep, repair or control of said Property resulting in loss,
injury or death to any lessee, licensee, invitee, guest, employee, agent or
stranger. Notwithstanding anything to the contrary in the Lease, Lenders, their
successors and assigns (and any Lender Party, as appropriate), shall be
responsible for performance of only those covenants and obligations of the
Lease accruing after the Lenders', their successors' and assigns' (or Lender
Party's, as appropriate), acquisition of Lessor's interests in and possession of
the Property; and in the event that Lenders or any Lender Party shall acquire
title to the Premises or the Property, Lenders or any Lender Party shall have
no obligation, nor incur any liability, beyond Lenders' or any Lender Party's
then equity interest, if any, in the Property or the Premises.
9. Lessee covenants and agrees to make rental payments according to the
terms of such Assignment of Leases upon written demand by Agent in the event of
any default (as described therein). Lessor consents to payments being so made.
10. Lessee agrees that this Agreement satisfies any condition or
requirement in the Lease relating to the granting of a non-disturbance
agreement.
11. Lessee agrees to execute and deliver from time to time, upon the
request of Lessor or of any holder(s) of any of the indebtedness or other
obligations secured by the Deed of Trust, a certificate regarding the status of
the Lease in the form set forth in Schedule A attached hereto and incorporated
herein by reference for all purposes.
12. THIS AGREEMENT AND ITS VALIDITY, ENFORCEMENT AND INTERPRETATION SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF TENNESSEE AND APPLICABLE UNITED STATES
FEDERAL LAW.
<PAGE> 89
13. If any bankruptcy proceedings shall hereafter commence with respect to
Lessor, and if the Lease is rejected by the trustee pursuant to Section 365 of
the United States Bankruptcy Code, Lessee agrees with Lenders (i) not to treat
such lease as terminated or to execute a new lease with Lenders or any Lender
Party on the same terms as the Lease, and (ii) to remain in possession of the
Premises.
14. Any notices hereunder shall be effective upon mailing by certified
mail, return receipt requested, or delivery by Federal Express addressed to the
recipient at its address set forth in the preambles hereof or as to each party,
to such other address as the party may designate by a notice given in accordance
with the requirements contained herein.
15. This Agreement contains the entire agreement between the parties
hereto. This instrument may be executed in multiple counterparts, all of which
shall be deemed originals and with the same document. Signature and
acknowledgment pages may be detached from the counterparts and attached to a
single copy of this document to physically form one document.
EXECUTED as of the date first above written.
LESSOR: OPRY MILLS LIMITED PARTNERSHIP, a Delaware limited
partnership
By: OPRY MILLS, L.L.C., a Delaware limited liability
company, its general partner
By: THE MILLS LIMITED PARTNERSHIP, a Delaware limited
partnership, its manager
By: THE MILLS CORPORATION, a Delaware corporation, its
general partner
By: __________________________________________________
Judith Berson
Its: Executive Vice President
LENDER: ________________________________, as Agent
By: __________________________________________________
Authorized Signatory
LESSEE: SILICON ENTERTAINMENT, INC., a California corporation
By: __________________________________________________
Its: __________________________________________________
<PAGE> 90
ACKNOWLEDGMENT OF LANDLORD
COMMONWEALTH OF VIRGINIA )
) ss.
COUNTY OF ARLINGTON )
On this ____ day of ______, 19__, before me personally appeared JUDITH
BERSON, to me known to be the person who executed the foregoing Agreement of
Subordination, Non-Disturbance and Attornment and acknowledged before me that
she was duly authorized and did execute same on behalf of OPRY MILLS LIMITED
PARTNERSHIP, a Delaware limited partnership.
_______________________________
Notary Public
My Commission expires: ________
ACKNOWLEDGMENT OF CORPORATE TENANT
STATE OF ___________________ )
) ss.
CITY/COUNTY OF _____________ )
On ________________, 19__, before me ________________, a Notary Public in
and for said state aforesaid, personally appeared ________________, as
________________ and ________________, as ________________ of SILICON
ENTERTAINMENT, INC., a California corporation, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
_______________________________
Notary Public, county,
My Commission expires: ________
[Notarial Seal]
ACKNOWLEDGMENT OF LENDER
STATE OF ___________________ )
) ss.
CITY/COUNTY OF _____________ )
On this __ day of _______________, 19__, before me ________________, notary
public, personally appeared ________________, the ________________ of
________________, proved to me on the basis of satisfactory evidence to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he/she executed the same in his/her authorized capacity and that by his/her
signature on the instrument the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal
_________________________________
Notary Public
My Commission expires: _________
<PAGE> 91
EXHIBIT H-1
TENANT ESTOPPEL CERTIFICATE
TO: _________________, its successors and assigns or an affiliate (referred to
herein as "LENDER"), for itself and as agent for one or more co-lenders:
1. The undersigned is the Lessee under that certain Lease together with all
amendments, modifications and supplements thereto (the "Lease") by and
between OPRY MILLS LIMITED PARTNERSHIP, a Delaware limited partnership, as
Lessor and SILICON ENTERTAINMENT, INC., a California corporation, having an
office at 210 Hacienda Avenue, Campbell, California 95008, as Lessee,
covering those certain premises described therein and located at Opry
Mills, Nashville, Tennessee ("Premises").
2. Capitalized terms not otherwise defined herein shall have the meanings set
forth in the Lease.
3. Except for any amendments, modifications and supplements described in
Schedule A, the Lease has not been modified, changed, altered or amended in
any respect and is the only Lease or agreement between the Lessee and
Lessor or its agents affecting the Premises.
4. Lessee has made no agreements with Lessor or its agents or employees
concerning free rent, partial rent, rebate of rental payments or any other
type of rental concession except as set forth in the Lease.
5. No rent has been prepaid for more than one (1) month.
6. The Lease is in full force and effect and Lessee has no right to terminate
the Lease (other than by reason of default by Lessor). As of the date
hereof, Lessee is entitled to no credit, no free rent and no offset or
deduction in rent, except as set forth in the Lease.
7. The Lessee and Lessor are not in default under the Lease and, to the best
of Lessee's knowledge, there is no event which with notice or passage of
time would constitute a default by Lessee or Lessor under the Lease.
8. Lessor has and is under no obligation to Lessee with respect to payment of
the cost of tenant improvement work to the Premises, except as specifically
set forth in the Lease.
9. The Lease does not contain and the Lessee does not have any outstanding
options or rights of first refusal to purchase the Premises or any part
thereof or the real property of which the Premises are a part.
10. No actions, whether voluntary or otherwise, are pending against the Lessee
under the bankruptcy laws of the United States or any state thereof.
11. Any notices sent to Lender or its affiliates shall be sent certified mail,
return receipt requested and addressed to ____________, at its offices at
______________________________.
12. This certification is made knowing that Lender relies upon the truth of
this certification in making certain fundings.
Dated as of this ______ day of ____________________, 199_.
SILICON ENTERTAINMENT, INC., a California corporation
By: _________________________________________________
Its: ________________________________________________
<PAGE> 1
Exhibit 10.24
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED ON A
REQUEST FOR CONFIDENTIAL TREATMENT
AGREEMENT OF LEASE
BETWEEN
MALL OF GEORGIA, L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY
AND
SILICON ENTERTAINMENT, INC.
D/B/A "NASCAR SILICON MOTOR SPEEDWAY" OR "SILICON MOTOR SPEEDWAY"
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE 1 Definitions....................................................................................... 1-1
ARTICLE 2 Construction ..................................................................................... 2-1
Section 2.1 Tenant's Work...................................................................... 2-1
Section 2.2 Performance of Tenant's Work....................................................... 2-1
Section 2.3 Remedies for Tenant's Failure or Delay to Submit Plans
or Perform Work............................................................... 2-2
Section 2.4 Ownership of Improvements.......................................................... 2-2
Section 2.5 Failure to Open or to do Business.................................................. 2-2
Section 2.6 Remodeling of Premises............................................................. 2-2
ARTICLE 3 Rent ............................................................................................. 3-1
Section 3.1 Payment............................................................................ 3-1
Section 3.2 Fixed Rent......................................................................... 3-1
Section 3.3 Percentage Rent.................................................................... 3-1
Section 3.4 Tax Rent........................................................................... 3-3
Section 3.5 Common Area Rent................................................................... 3-5
Section 3.6 Additional Rent.................................................................... 3-8
Section 3.7 Rent for a Partial Month........................................................... 3-8
Section 3.8 Late Charges and Interest.......................................................... 3-8
Section 3.9 Taxes.............................................................................. 3-8
ARTICLE 4 Common Areas ..................................................................................... 4-1
Section 4.1 Common Areas....................................................................... 4-1
ARTICLE 5 Landlord's Additional Covenants................................................................... 5-1
Section 5.1 Repairs by Landlord................................................................ 5-1
Section 5.2 Quiet Enjoyment.................................................................... 5-1
ARTICLE 6 Tenant's Additional Covenants..................................................................... 6-1
Section 6.1 Affirmative Covenants.............................................................. 6-1
Section 6.2 Negative Covenants................................................................. 6-8
ARTICLE 7 Destruction: Condemnation........................................................................ 7-1
Section 7.1 Fire or Other Casualty............................................................. 7-1
Section 7.2 Eminent Domain..................................................................... 7-2
ARTICLE 8 Defaults and Remedies............................................................................. 8-1
Section 8.1 Bankruptcy, Insolvency............................................................. 8-1
Section 8.2 Default............................................................................ 8-1
Section 8.3 Remedies of Landlord............................................................... 8-2
Section 8.4 Waiver of Trial by Jury: Tenant Not to Counter-Claim............................... 8-3
Section 8.5 Holdover by Tenant................................................................. 8-3
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Section 8.6 Landlord's Right to Cure Defaults.................................................. 8-4
Section 8.7 Effect of Waivers of Default....................................................... 8-4
Section 8.8 Security Deposit................................................................... 8-4
ARTICLE 9 Additional Provisions............................................................................. 9-1
Section 9.1 Notices from One Party to the Other................................................ 9-1
Section 9.2 Brokerage.......................................................................... 9-1
Section 9.3 Estoppel Certificates.............................................................. 9-1
Section 9.4 Applicable Law and Construction.................................................... 9-1
Section 9.5 Relationship of the Parties........................................................ 9-1
Section 9.6 Limitations on Liability........................................................... 9-2
Section 9.7 Landlord's Entry Rights............................................................ 9-2
Section 9.8 Subordination...................................................................... 9-3
Section 9.9 Construction on Adjacent Premises or Buildings..................................... 9-4
Section 9.10 Mall Expansion..................................................................... 9-4
Section 9.11 Short Form Lease................................................................... 9-6
Section 9.12 Binding Effect of Lease............................................................ 9-6
Section 9.13 Effect of Unavoidable Delays....................................................... 9-7
Section 9.14 No Oral Changes.................................................................... 9-7
Section 9.15 Executed Counterparts of Lease..................................................... 9-7
Section 9.16 Landlord's Liability............................................................... 9-7
</TABLE>
ii
<PAGE> 4
AGREEMENT OF LEASE made as of Sept. 23rd, 1999 between MALL OF GEORGIA,
L.L.C., a Delaware limited liability company, having its principal place of
business at 115 West Washington, Indianapolis, Indiana 46204 (the Landlord) and
SILICON ENTERTAINMENT, INC., d/b/a "NASCAR Silicon Motor Speedway" or "Silicon
Motor Speedway", a California corporation, having its principal place of
business at 210 Hacienda Avenue, Campbell, California 95008, (the Tenant).
RECITAL
Landlord hereby leases to Tenant and Tenant hereby hires and takes from
Landlord, the Premises, for the Term, commencing on the Commencement Date,
subject to the terms, covenants, conditions and provisions of this Lease. If the
Commencement Date is not the first (1st) day of a month, Rent for the month in
which the Commencement Date occurs shall be prorated to the end of the month,
the first (1st) full monthly installment of Rent shall be due on the first (1st)
day of the next month and after the expiration of the number of years in the
Term, the Term shall expire on the last day of the same month in which the
Commencement Date of the Term occurred, it being the intention of the parties
that the Term expire on the last day of a month. If there shall be any change in
the Floor Space of the Premises, Landlord and Tenant shall execute and deliver a
written statement reflecting such change or changes, in no event, however, shall
the Size of the Premises or the amount of Lease line frontage on the enclosed
mall be materially reduced without consent of Tenant. Said statement upon
execution and delivery shall be deemed to be a part of this Lease.
<PAGE> 5
ARTICLE 1
DEFINITIONS
Whenever used in this Lease, the following terms shall have the meanings
indicated below.
<TABLE>
<S> <C>
Premises Store No. 2068, Second Level, as shown on Exhibit
B.
Term Ten (10) Years
Commencement Date The earlier of (i) the date Tenant opens for
business at the Premises, and (ii) the later of (a)
the Grand Opening of the Shopping Center, or (b)
the expiration of Tenant's Work Period.
Size of Premises 5,895 square feet
Fixed Rent [***] per year for each of the first (1st) through
[***] years, and
[***] per year for each of the [***] through [***]
years.
Environmental Charge The initial amount of [***] per year, subject to
adjustment as provided in Exhibit C.
Percentage Rent Rate [***] Percent
Promotion Fund Charge [***] per year initially or such other greater
amount as shall be determined pursuant to Section
6.1 L.
Security Deposit None
Tenant's Work Period The period of [***] days after the date possession
of the Premises is made available to Tenant in the
condition required hereby.
Tenant's Trade Name "NASCAR Silicon Motor Speedway" or "Silicon Motor
Speedway"
Guarantor None
Broker Russell Friend
Blatteis Realty Company
233 South Beverly Drive
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Beverly Hills, CA 90212
Construction Barrier Fee Tenant shall only be required to erect a
construction barrier in the event Tenant is not
open for the Grand Opening. In the event that a
construction barrier is required, Tenant shall be
permitted to construct its own barrier, at its
sole cost and expense and such barrier must
conform to the requirements of the Shopping Center
Criteria and all Governmental Authorities.
Construction Deposit None
Plan Review Fees None
Number of Department Stores Four (4)
Percentage of Advertising None
Required
Permitted Use Tenant shall use the Premises for the use set
forth below and for no other purpose: The premises
shall be occupied and used by Tenant for the
purpose of conducting therein the business of an
auto racing entertainment center and other related
retail uses. The entertainment facility may
include a combination of driving simulators, but
shall not include coin operated machines as
typically found in conventional video arcade game
room type operations. Incidental thereto, Tenant
shall be permitted to use the Premises for the
display and retail sale of auto racing and other
auto racing themed or related entertainment
merchandise. Tenant shall be permitted to sell
some concessions from the Premises as mutually
agreed to from time to time by Landlord and
Tenant. Tenant shall not use or permit or suffer
to use of the Premises for any other business or
purpose. Tenant shall have the right, in an area
not to exceed [***] percent of the Floor Space of
the Premises to sell snack food items including,
but not limited to popcorn and hot and cold
non-alcoholic beverages. Landlord hereby
represents and warrants to Tenant that Tenant's
use of the Premises as contemplated in this
paragraph does not violate any exclusivity clause
or other agreement between Landlord and any other
party, including any other tenant of the Shopping
Center and Landlord shall indemnify, defend,
protect and hold harmless Tenant from any loss,
liability, cost,
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expense, judgment, action or claim of any such
party arising from the inaccuracy of such
representation and warranty. Tenant shall have the
right to temporarily prohibit or restrict access to
the Premises by members of the public from time to
time for conducting group sales or promotional
activities. In connection with such group sales
activities, Tenant may contract with private
caterers to provide food and beverage service
(including alcoholic beverage service) for the
group sales customers. Provided they are not within
[***] feet of the lease line, Tenant shall have the
right to install up to [***] soft drink vending
machines at the Premises.
Additional Rent The Percentage Rent, Storage Rent, if any, Common
Area Rent, Tax Rent and Taxes, Environmental
Charge, Promotion Fund Charge and all other
amounts, except Fixed Rent, payable by Tenant
under this Lease.
Affiliate Any Person which controls or is controlled by the
Person in question or is controlled by the same
Persons which shall then control the Person in
question and any Person which is a member with the
Person in question in a relationship of joint
venture, partnership or other form of business
association; the term "control" means, with
respect to a corporation, the ownership of stock
possessing, or the right to exercise, at least
fifty (50%) percent of the total combined voting
power of all classes of the controlled
corporation, issued, outstanding and entitled to
vote for the election of directors, whether such
ownership be direct ownership or indirect
ownership through another Person.
Common Areas As defined in Section 4.1.
Common Area Operating Costs As defined in Subsections 3.5 A (2) and 3.5 B (2).
Common Area Rent As defined in Subsections 3.5 A (1) and 3.5 B (1).
Department Store A retail store occupying not less than an
aggregate of 50,000 square feet of Floor Space on
one or more levels, for the sale in combination or
solely, of a variety of goods and services such as
wearing apparel, accessories, general merchandise,
home furnishings, fittings, appliances,
housewares, furniture, floor coverings and the
like. Except for the purposes described in
Section 3.2 and Subsection 6.1B, the term
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"Department Store" shall be deemed to include any
movie theatre complex or non-retail operation
occupying the third (3rd) level of the Enclosed
Shopping Center and any other building, improvement
or structure, not devoted primarily to retail use,
such as an office building or hotel/motel, unless
same is deemed by Landlord not to be part of the
Shopping Center.
Enclosed Shopping Center That portion of the Shopping Center containing an
enclosed mall and stores which front on said
enclosed mall, as shown in orange on Exhibit A
hereto.
Floor Space The space available for occupancy by each tenant
within the exterior faces of the walls between the
tenant's premises and any Common Area or, if the
tenant's premises are enclosed by one or more
walls abutting leaseable space, the space within
such exterior faces and the center of such walls;
if the tenant's premises are not surrounded by
walls, then the space within and up to the lease
line of the premises shall be included in the
computation. For the purposes of the definition,
store fronts shall not be deemed to be walls. No
deduction or exclusion shall be made from Floor
Space otherwise computed by reason of stairs,
elevators, escalators, interior partitions or
other interior construction or equipment.
Governmental Authority The United States, the state, county, city, town,
village and any water, sewer or school or other
district covering the area in which the Shopping
Center is located, and any political subdivision
thereof or any local public or quasi-public
authority, agency, department, commission, board,
bureau or instrumentality of any of them
including, with respect to matters pertaining to
insurance, boards of fire underwriters, rating
bureaus and the like, to the extent they have
power to impose conditions on the issuance of
policies or the coverage thereof.
Governmental Requirement Any law, ordinance, code, order, rule or regulation
of any Governmental Authority.
Gross Leaseable Area The aggregate of all Floor Space in the Shopping
Center excluding Storage Space, if any, and
excluding for the purposes of the computation of
Tax Rent pursuant to Section 3.4., Floor Space
which is part of either a parcel or improvement
which is separately assessed for the purpose of
assessment of Taxes, to the extent the Taxes
thereon are paid by the tenant or occupant thereof.
</TABLE>
1-4
<PAGE> 9
<TABLE>
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Gross Sales As defined in Subsection 3.3B.
Landlord The party named as Landlord herein until a sale,
transfer or lease, and thereafter the Person or
Persons, collectively, who shall, for the time
being, be liable for the obligations of Landlord
under the provisions of Subsection 9.16A of this
Lease.
Lease Year For the purposes of Percentage Rent only, the
period of twelve (12) consecutive months from
January 1 to December 31 of each year during the
Term. If the date Tenant opens for business or
the expiration of the Term does not coincide with
the beginning or end of a Lease Year, the periods
preceding or following the commencement or end of
each full Lease Year, as the case may be, shall be
deemed independent, partial Lease Years.
Necessary Approvals Any permit, license, certificate or approval or
other evidence of compliance with any Governmental
Requirement necessary to the lawful occupancy of
the Premises for the Permitted Use and the
issuance of the insurance required to be carried
by Tenant.
Percentage Rent As defined in Subsections 3.3A and 3.3B.
Person A natural person, firm, partnership, association,
business trust or corporation, as the case may be.
Rent The Fixed Rent and the Additional Rent.
Retail Restriction Limit As defined in Subsection 6.2A.
Shopping Center Mall of Georgia at Mill Creek, as outlined in
green on Exhibit A hereto, located in Gwinnett
County, Georgia, plus (i) any other parcels of
land at any time designated by Landlord to be
added thereto (but only so long as any such
designation remains unrevoked) which are used for
Shopping Center or related purposes, including,
but not limited to, recharge or catch basins,
drainage and detention ponds, sumps, access and
circulatory roadways to and from public streets,
parking, the furnishing to the Shopping Center of
any utility, amenity or other service, shuttle
transit to and from the Shopping Center,
recreation areas for customers of the Shopping
Center, or for any other improvement appropriate
or related to the operation or functioning of the
Shopping Center; together with (ii) all
</TABLE>
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<PAGE> 10
<TABLE>
<S> <C>
present and future buildings on and improvements
to any such parcels.
Specialty Store A retail store occupying not less than an aggregate
of 25,000 square feet of Floor Space on one or more
levels.
Storage Space Space not contained within any tenant's premises
which is used solely for the storage of merchandise
and other items.
Tax Rent and Taxes As defined in Section 3.4.
Tenant's Work As set forth in Sections 2.1 and 2.2.
Village Area That portion of the Shopping Center containing
stores which do not front on the enclosed mall, as
shown in yellow on Exhibit A hereto.
Exhibit A Shopping Center.
Exhibit B Premises.
Exhibit C Utilities.
Exhibit D (optional) Food Court Area.
</TABLE>
1-6
<PAGE> 11
ARTICLE 2
CONSTRUCTION
Section 2.1. Tenant's Work. Not later than the twentieth (20th) day after
the execution and delivery of this Lease by Landlord, Tenant shall furnish to
Landlord for Landlord's approval, in accordance with the Shopping Center
Information Manual and Design Criteria, plans and specifications which shall
provide for the complete remodeling (or finishing in the event the Premises have
not been previously occupied) of the Premises. Within [***] days following the
Commencement Date, Tenant shall pay to Landlord, a Plan Review Fee calculated in
accordance with the fee schedule set forth in Article 1. Tenant agrees, at its
sole cost and expense, to construct and make such improvements in the Premises
in accordance with the approved plans and specifications. Tenant has inspected
the Premises, is familiar with their condition and accepts same "as is" and in
their present condition and Landlord shall not be obligated to do any further
construction or to make any additional improvements in the Premises, except as
may otherwise be expressly provided herein. Tenant understands that Landlord's
approval of its plans and specifications is primarily for conceptual purposes
and such approval shall not constitute a representation or warranty of any kind
with respect thereto, including, without limitation, the cost of Tenant's Work,
compliance with Governmental Requirements or suitability of design. Tenant
acknowledges receipt of the Shopping Center Tenant Information Manual and Design
Criteria, the provisions of which are incorporated herein by reference.
Section 2.2 Performance of Tenant's Work. As soon as practicable after
Landlord shall have approved Tenant's plans and specifications and possession of
the Premises shall be made available to Tenant and Tenant shall have obtained
all Necessary Approvals with respect to commencement of Tenant's Work, Tenant
shall enter the Premises and shall proceed with due diligence and dispatch to
make improvements and install fixtures and other equipment and a full stock of
inventory therein, in accordance with the approved plans and specifications and
all Governmental Requirements. Such work and installation shall not interfere
with any work to be done by Landlord in other portions of the Shopping Center,
shall be done with labor which is not incompatible with other labor employed at
the Shopping Center without creating any conflict or work stoppage with, under
or as a result of any labor agreement to which Landlord or its contractors may
be a party, and in compliance with such rules and regulations as Landlord may
reasonably make. Except for Landlord's negligence and willful acts (subject,
however, to the waiver of subrogation elsewhere set forth in this Lease),
Landlord shall have no responsibility or liability whatsoever for any loss of or
damage to any fixtures or other equipment or inventory installed or left in the
Premises, and Tenant's entry on and occupancy of the Premises shall be governed
by and subject to all the provisions, covenants and conditions of this Lease
other than those requiring payment of Rent. Prior to commencing any construction
work in the Premises, Tenant shall (i) obtain a building permit and furnish a
copy of same to Landlord and (ii) deposit with Landlord (or cause its general
contractor to deposit) the Construction Deposit set forth in Article 1, said
deposit (less any amount retained by Landlord as reimbursement for sums expended
in performing Tenant's construction obligations) shall be returned upon
completion of
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Tenant's Work including punchlist items and clean-up. Tenant shall also obtain
and furnish to Landlord, to be delivered not later than the end of Tenant's Work
Period, lien waivers from all contractors, subcontractors and materialmen, and
all licenses, certificates and approvals with respect to work done and
installations made by Tenant that may be required from the Governmental
Authorities with respect to Tenant's Work, use and occupancy. During Tenant's
Work Period and throughout the Term of this Lease, Tenant shall not do or suffer
anything to be done whereby the Premises or the Shopping Center may be
encumbered by a mechanic's lien, and Tenant shall, whenever any mechanic's lien
is filed against the Premises or the Shopping Center purporting to be for labor,
materials or services furnished or to be furnished to Tenant, discharge or
remove the same of record within thirty (30) days after the date of filing.
Notice is hereby given that Landlord shall not be liable for any labor,
materials or services furnished or to be furnished to Tenant. Tenant shall
complete Tenant's Work and open for business to the public not later than the
expiration of Tenant's Work Period. Landlord and Tenant agree that the timely
performance of Tenant's obligations under this Article 2 is a material
inducement to the execution and delivery of this Lease by Landlord.
Section 2.3. Remedies for Tenant's Failure or Delay to Submit Plans or
Perform Work. If Tenant fails or omits to make timely submission to Landlord of
any plans or specifications or delays in performing or completing Tenant's Work,
such failure or delay shall constitute a default hereunder and shall be governed
by Article 8 hereof.
Section 2.4. Ownership of Improvements. All installations, alterations,
additions or improvements upon the Premises, made by either party, including all
heating, ventilating and air conditioning equipment, electrical and plumbing
equipment and fixtures, carpeting or other floor covering and wall coverings,
pipes, ducts, conduits, wiring, paneling, partitions, railings, mezzanine
floors, galleries and the like, shall, unless Landlord otherwise elects by
giving Tenant notice not less than thirty (30) days prior to the expiration or
other termination of this Lease, become the property of Landlord and shall
remain upon and be surrendered with the Premises as a part thereof at the
expiration or sooner termination of the Term. None of the foregoing shall be
deemed to include Tenant's trade fixtures, furniture and other personal
property. Tenant shall not be required to remove at the end of the Term any
installations made with Landlord's consent unless Landlord shall so specify at
the time its consent is given.
Section 2.5 Failure to Open or to do Business. The parties covenant and
agree that because of the difficulty or impossibility of determining Landlord's
damages, should Tenant (i) subject to Unavoidable Delays, fail to open for
business within the number of days allowed for Tenant's Work Period, or (ii) at
any time during the Term, vacate, abandon or desert the Premises, or (iii)
subject to Unavoidable Delays, at any time during the Term, cease operating its
business therein, then, in any such event if Landlord does not terminate this
Lease, Tenant shall pay to Landlord, in addition to Fixed and Additional Rent,
[***] the Premises and Tenant's business therein are not continuously and
uninterruptedly operated by Tenant.
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Section 2.6. Remodeling of Premises. Between the [***] and [***] months of
the Term, Tenant shall furnish to Landlord for Landlord's approval, plans and
specifications which shall provide for the remodeling of the Premises in order
to [***]. Within [***] days following receipt of Landlord's approval of said
plans and specifications, Tenant shall commence remodeling the Premises in
accordance with the approved plans and specifications and shall complete such
remodel within [***] days thereafter. In no event shall Tenant, in connection
with its remodeling of the Premises, close for business at the Premises for more
than [***] days, in the aggregate, and in no event shall Tenant be entitled to
receive an abatement of or credit against the Rent due hereunder as a result of
any such closure.
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ARTICLE 3
RENT
Section 3.1. Payment. Tenant covenants and agrees, at all times during the
Term, to perform promptly all of the obligations of Tenant set forth in this
Lease and to pay when due all Rent, charges, costs and other sums (all of which
shall be deemed to be Additional Rent) which by the terms of this Lease are to
be paid by Tenant. All Rent shall be paid in lawful money of the United States
which shall be legal tender for payment of all debts and dues, public and
private, at the time of payment, at the address of Landlord set forth in this
Lease or at such other place as Landlord in writing may designate, without
(except as may be otherwise herein expressly provided) any set-off or deduction
whatsoever and without any prior demand or notice therefor.
Section 3.2. Fixed Rent. Tenant shall pay the annual Fixed Rent in equal
monthly installments in advance on the first (1st) day of each calendar month
included in the Term. If the Shopping Center shall, at any time during the Term
of this Lease, contain in excess of the number of Department Stores set forth in
Article 1, the Fixed Rent herein provided for shall automatically be increased
by [***] percent upon the date each additional Department Store is opened for
business.
Section 3.3. Percentage Rent.
A. Tenant shall also pay, as "Percentage Rent" for each Lease Year
included in the Term, payable as hereinafter provided, the amount, if any, by
which Tenant's Gross Sales transacted during such Lease Year, [***], shall
exceed the [***] payable for the same period; provided, however, that there
shall be excluded from such computation any [***].
B. The term "Gross Sales" as used herein is defined to mean the total
amount in dollars of the actual prices charged, whether for cash or on credit or
trade-in or partly for cash, credit or trade-in, for all sales or leases of
merchandise, food, beverages and services (including finance or service charges
thereon), redeemed gift or merchandise certificates, irrespective of where sold,
and all other receipts of business conducted at, in, on, about or from the
Premises, including, but not limited to, all mail or telephone orders received
or filled at, in, on, about or from the Premises, and including all deposits not
refunded, all orders taken at, in, on, about or from the Premises, whether or
not said orders are filled elsewhere, total receipts of sales through any
vending machine or other coin or token operated device, other than not more than
[***] vending machines used exclusively by Tenant's employees, and total sales
by any sublessee, concessionaire or licensee or any other occupant otherwise at,
in, on, about or from the Premises, and sales and receipts occurring or arising
as a result of solicitation off the Premises conducted by personnel operating
from, or reporting to, or under the supervision of any employee of Tenant
located at the Premises. Provided that Tenant keeps proper evidence thereof,
Gross Sales shall not, however, include (i) any sums collected and paid out for
any retail sales tax or retail excise
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tax imposed by any Governmental Authority and paid directly by Tenant to that
Governmental Authority and separately stated, (ii) any exchange of goods or
merchandise between the stores or warehouses of Tenant where such exchange of
goods or merchandise is made solely for the convenient operation of the business
of Tenant and not for the purpose of consummating a sale which had theretofore
been made at, in, on, about or from the Premises, nor for the purpose of
depriving Landlord of the benefits of a sale which otherwise would be made at,
in, on, about or from the Premises, (iii) the amount of returns to shippers or
manufacturers, (iv) the amount of any cash or credit refund, limited to the
sales prices, made upon any sale where the merchandise sold, or some part
thereof, is thereafter returned by the purchaser and accepted by Tenant, (v)
sales of fixtures (after use thereof) which are not a part of Tenant's
stock-in-trade, (vi) the amount of any discount on sales to employees of the
Premises, (vii) to the extent that the amount thereof was previously included in
Gross Sales, bad debts, not exceeding [***] percent of Gross Sales per Lease
Year, (viii) to the extent such charges do not materially exceed Tenant's costs,
separately stated charges for alterations, repairs, giftwrapping and delivery
services rendered to Tenant's customers, and (ix) sales of gift certificates.
Each layaway sale shall be treated as a sale (to the extent of the amount
received) when Tenant shall receive any payment from its customer. Each sale
upon installment or credit shall be treated as a sale for the full amount when
Tenant shall receive any payment from its customer, and subject to the
limitation set forth above, no deduction shall be allowed for uncollectible
credit accounts. Each lease of merchandise shall be treated as a sale in the
month in which made for a price equal to the total rent payable during the term
of the lease. Notwithstanding anything contained in this Subsection with respect
to inclusion in Gross Sales of all receipts of sales made through any vending
machine or other coin or token operated device, the operation of any such device
shall be subject to the prior written consent of Landlord, as provided in
Subsection 6.2E hereof.
C. Tenant shall utilize, and cause to be utilized, cash registers equipped
with sealed continuous totals or such other devices for recording sales as
Landlord shall reasonably approve to record all sales, and Tenant shall keep at
its principal office in the continental United States for at least [***] months
after expiration of each Lease Year full, true and accurate books of account and
records conforming to generally accepted accounting principles showing all of
the Gross Sales transacted at, in, on, about or from the Premises for such Lease
Year, including all sales or similar tax reports and returns, dated cash
register tapes, sales checks, sales books, bank deposit records, computer tapes,
disc, chips, print-outs or other storage media and any other records normally
maintained by Tenant and other supporting data. Landlord shall have the right,
from time to time, to inspect Tenant's recordkeeping system and, in connection
therewith, to make test audits of Gross Sales. Within [***] days after the end
of each calendar month, or portion thereof, Tenant shall furnish to Landlord a
statement signed and verified by Tenant (or by an authorized officer if Tenant
be a corporation) of the Gross Sales transacted during such month or portion
thereof; and within [***] days after the end of each Lease Year and within [***]
days after the end of the Term, Tenant shall furnish to Landlord a statement,
hereinafter called the annual statement, certified to Landlord by an executive
officer of Tenant, of Gross Sales transacted during the preceding Lease Year
included in the Term. The certification by said officer shall expressly state
that the Gross Sales shown on said statement conform with and are
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computed in compliance with the definition thereof contained in Subsection 3.3B
hereof. In the event Gross Sales for each of [***] Lease Years are misstated by
more than [***] percent, thereafter the annual statement of Gross Sales must be
certified by an independent certified public accountant. Landlord shall have the
right, from time to time, by its accountants or representatives, to audit
Tenant's Gross Sales and, in connection with such audits, to examine all of
Tenant's records (including sales or similar tax returns, an actual inventory of
Tenant's stock-in-trade and all supporting data and any other records from which
Gross Sales may be tested or determined) of Gross Sales disclosed in any
statement given to Landlord by Tenant and Tenant shall make all such records
readily available at Tenant's main office, for such examination. If any such
audit discloses that the Gross Sales transacted by Tenant exceed those reported,
Tenant shall forthwith pay to Landlord such additional Percentage Rent as may be
so shown to be payable and, if the actual Gross Sales exceed the Gross Sales
reported by Tenant by more than [***] percent, or if Tenant's records or systems
do not comply with the requirements of this Subsection, Tenant shall also then
pay the reasonable cost of such audit and examination, including travel, food
and lodging and related expenses of Landlord's auditors. In the event Tenant has
understated Gross Sales by [***] percent or more, Landlord may, in addition to
any other remedies, terminate this Lease but Tenant shall remain liable
hereunder as set forth in Article 8; provided, however, that Landlord shall not
exercise its right to terminate this Lease if Tenant shall demonstrate to
Landlord's reasonable satisfaction that such understatement was made
inadvertently. Any information obtained by Landlord pursuant to the provisions
of this Subsection shall be treated as confidential, except in any litigation or
arbitration proceedings between the parties and, except further, that Landlord
may disclose such information to prospective buyers, to prospective or existing
lenders, in any registration statement filed with the Securities and Exchange
Commission or other similar body or in compliance with subpoenas and judicial
orders. In no event shall this Subsection be deemed to limit Landlord's rights
of pre-trial discovery and disclosure in any action or proceeding.
D. If Tenant fails to submit a monthly statement of Gross Sales within
[***] days following Landlord's request therefor, then until such statement is
received by Landlord, Gross Sales for such month shall be deemed equal to
Tenant's highest previously reported monthly Gross Sales (or, if Tenant has
never previously reported, to the Gross Sales reasonably estimated by Landlord),
and if such failure shall occur [***] in any Lease Year, Landlord may, at
Tenant's expense, conduct an audit of Tenant's Gross Sales as set forth in
Subsection 3.3C above.
E. Percentage Rent shall be payable by Tenant not later than the [***] day
of each calendar month for and in respect to the preceding calendar month. Such
payment shall be a sum equal to the amount by which Tenant's Gross Sales for the
then current Lease Year, through the last day of the preceding month, multiplied
by the Percentage Rent Rate, shall exceed the Fixed Rent payable for said
period, less payments previously made with respect to such Lease Year. Upon
receipt by Landlord of the certified annual statement of Gross Sales to be
furnished as hereinabove provided, there shall be an adjustment between Landlord
and Tenant with payment to or credit by Landlord, as the case may be, to the end
that Landlord shall receive the entire amount of Percentage Rent payable under
this Lease for the preceding Lease Year and no more.
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Section 3.4. Tax Rent.
A. Tenant shall pay to Landlord, as Additional Rent, Tax Rent in an amount
equal to the product obtained by multiplying Taxes by a fraction, the numerator
of which shall be the Floor Space of the Premises excluding Storage Space, if
any, and the denominator of which shall be the portion of the aggregate leased
and occupied Floor Space in the Shopping Center which is included in the
assessment which constitutes the basis for the Taxes, but excluding Storage
Space, if any, buildings or areas occupied by Department Stores and Specialty
Stores, stores not fronting on the enclosed mall, and temporary kiosks;
provided, however, that Tenant's Tax Rent for any year shall not exceed the
amount which would otherwise be payable by Tenant hereunder if the denominator
of said fraction were [***] percent of the Gross Leaseable Area of that portion
of the Shopping Center included in the assessment, exclusive of Department
Stores, Specialty Stores, stores not fronting on the enclosed mall, and
temporary kiosks. Tax Rent shall be payable at least [***] days prior to the due
date of any Taxes or installment thereof; however, Landlord may, if it so
elects, collect Tax Rent from Tenant on a monthly basis, in which event Tenant
shall pay, with each monthly installment of Fixed Rent, one-twelfth (1/12) of
the annual amount estimated by Landlord to be due hereunder. In the event Taxes
for the then current tax year are not known, monthly installments shall be based
on the preceding tax year with immediate adjustment as soon as current taxes
become known. If at the time any Taxes or installments are required to be paid,
the amount of Tenant's previously made monthly payments is insufficient to pay
Tenant's share, Tenant shall pay such deficiency within [***] days after demand
therefor. In the event of any excess, it shall be credited and applied to future
Tax Rent payments, except that any excess in the last year of the Term shall be
refunded at the end of the Term.
B. Should the taxing authority include in Taxes as a separately stated
item the value of any improvements made by or for the benefit of Tenant, or
include machinery, equipment, fixtures, inventory or other personal property or
assets used by Tenant in the Premises, then Tenant shall pay the entire tax
attributable to such items.
C. Nothing herein contained shall be construed to include as a tax which
shall be the basis of Tax Rent, any inheritance, estate, succession, transfer,
gift, franchise, corporation, income or profit tax or capital levy that is or
may be imposed upon Landlord, provided, however, that if, at any time during the
Term, the method of taxation prevailing at the Commencement Date of this Lease
shall be altered so that in lieu of or as a substitute for the whole or any part
of the taxes now levied, assessed or imposed on real estate as such, there shall
be levied, assessed or imposed (i) a tax on the rents received from real estate,
or (ii) a tax or license fee imposed on Landlord which is otherwise measured by
or based, in whole or in part, upon the Shopping Center or any portion thereof,
then the same shall be included in the computation of Tax Rent hereunder,
computed as if the amount of such tax or fee so payable were that due if the
Shopping Center were the only property of Landlord subject thereto.
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D. For the purpose of this Section 3.4, the term "Taxes" shall include all
real estate taxes, assessments, license fees or charges, excise on rent, water
and sewer rents, any sums including interest or any payments in lieu or in
substitution thereof on any bonds or debt (except industrial revenue bonds or
similar indebtedness incurred for construction of non-public facilities)
incurred by any Governmental Authority and payable by Landlord in connection
with the Shopping Center and other governmental impositions, payments and
charges of every kind and nature whatsoever, extraordinary as well as ordinary,
foreseeable and unforeseeable, and each and every installment thereof which
shall or may during the Term of this Lease be levied, assessed, imposed, become
due and payable, or liens upon or arising in connection with the use, occupancy
or possession of or grow due or payable out of, or for, the Shopping Center, or
any part thereof or any land, building or other improvements therein, including
any and all fees or expenses incurred in connection with the institution,
prosecution, conduct and maintenance of any negotiations, settlements, actions
or proceedings with respect to the amount of any Taxes, less the contributions
or payments, if any, paid to Landlord with respect to Taxes by Department
Stores, Specialty Stores, stores not fronting on the enclosed mall, and
temporary kiosks, such deduction to be credited to the year in which actually
received. Taxes shall not include any of the foregoing relating to any parcel or
improvement included in the Shopping Center which, except for insignificant
portions thereof, comprises a separate tax lot or is separately assessed or
valued for the purpose of real estate taxes to the extent the taxes thereon are
paid by a single tenant or occupant thereof, and further excluding any charge
such as a water meter charge, sewer rent, if any, based thereon, which is
measured by the consumption by the actual user of the item or service for which
the charge is made. Whether or not Landlord shall take the benefit of the
provisions of any statute or ordinance permitting an assessment for public
betterment or improvements to be paid over a period of time, Landlord shall,
nevertheless, be deemed to have taken such benefit so that the term Taxes shall
include only the current annual installment of any such assessment and the
interest on unpaid installments. A tax bill or copy thereof submitted by
Landlord to Tenant shall be conclusive evidence of the amount of taxes or
installments thereof.
E. In the event Landlord shall obtain a tax refund as a result of tax
reduction proceedings or other proceedings of similar nature, then Tenant shall,
provided Tenant is not then in default beyond any opportunity to cure elsewhere
set forth in this Lease, and after the final conclusion of all appeals or other
remedies, be entitled to its pro rata share of the net refund obtained based
upon Tax Rent paid by Tenant which is the subject of the refund. As used herein,
the term "net refund" means the refund plus interest, if any, thereon, less
appraisal, engineering, expert testimony, attorneys', printing and filing fees
and all other costs and expenses of the proceeding, to the extent such fees,
costs and expenses have not been previously included in Taxes under Subsection
3.4D, and less an administrative fee to Landlord in the amount of not more than
[***] percent of the original refund. Tenant shall not have the right to
institute or participate in any such proceedings, it being understood that the
commencement, maintenance, settlement or conduct thereof shall be in the sole
discretion of Landlord.
Section 3.5. Common Area Rent.
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A. (1) Tenant shall pay to Landlord as Additional Rent, an amount equal to
the product obtained by multiplying Interior Common Area Operating Costs for
each fiscal year adopted by Landlord by a fraction, the numerator of which shall
be the Floor Space of the Premises excluding Storage Space, if any, and the
denominator of which shall be the aggregate of all leased and occupied Floor
Space in the Enclosed Shopping Center, excluding the Floor Space of Storage
Space, if any, and any buildings or areas occupied by Department Stores,
Specialty Stores, stores not fronting on the enclosed mall, and temporary
kiosks; provided, however, that the denominator of said fraction shall never be
less than [***] percent of the Gross Leaseable Area of the Enclosed Shopping
Center, exclusive of Department Stores, Specialty Stores, stores not fronting on
the enclosed mall, and temporary kiosks. Tenant shall pay, with each monthly
installment of Fixed Rent, one-twelfth (1/12) of the annual amount estimated by
Landlord to be due hereunder, subject to adjustment.
(2) As used in this Lease, the term Interior Common Area Operating
Costs shall mean all costs and expenses incurred by Landlord in maintaining,
managing, operating, repairing, replacing and protecting the Common Areas of the
Enclosed Shopping Center, all in a manner consistent with the highest shopping
center standards, including the cost of all work necessary to preserve and
maintain the value, utility and appearance of said Common Areas. Interior Common
Area Operating Costs shall specifically include, without limitation, all costs
and expenses incurred in connection with the following: lighting, heating,
ventilating, and air conditioning the Common Areas of the Enclosed Shopping
Center; painting and decorating non-leaseable areas; gardening, including
planting and replacing flowers and plants; compliance with environmental, health
and safety regulations and standards promulgated by applicable Governmental
Authorities; sanitary control, including extermination; removal of rubbish,
garbage and other refuse; contracted security personnel, security systems and
all other security measures; acquisition (including rental fees), maintenance,
repair and replacement of fixtures, machinery, equipment, and supplies used in
the operation and maintenance of the Common Areas of the Enclosed Shopping
Center, and all personal property taxes and/or fees payable with respect to such
items; maintenance, repair and replacement of Enclosed Shopping Center signs,
ceilings, elevators, escalators and utility systems; maintenance, repair and
replacement of all roofs over non-leaseable areas in the Enclosed Shopping
Center; acquisition, maintenance, repair and replacement of cost saving devices
commonly used in properties comparable to the Shopping Center; music program
services and loud speaker systems; cleaning of non-leaseable areas; maintenance,
repair and replacement of decorations in non-leasable areas; water for interior
fountains and restrooms; acquisition, maintenance, repair and replacement of
seasonal decorations; resolution of disputes or litigation with persons
attempting to use the Common Areas of the Enclosed Shopping Center for
commercial purposes; professional and technical fees and all other disbursements
incurred in connection with the performance of any of the foregoing; other
similar direct costs of the type incurred in the operation of comparable
properties; and [***] percent of all of the foregoing costs to cover Landlord's
administrative and overhead expenses. From the aggregate of the aforementioned
costs and expenses, there shall be deducted the payments, if any, made with
respect to Interior Common Area Costs by Department Stores, Specialty Stores,
stores not fronting on the enclosed mall, and temporary kiosks, such deduction
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to be credited to the year for which such payments are applicable irrespective
of the fiscal year in which such payments are actually received.
B. (1) Tenant shall pay to Landlord as Additional Rent, an amount equal to
the product obtained by multiplying Exterior Common Area Operating Costs for
each fiscal year adopted by Landlord by a fraction, the numerator of which shall
be the Floor Space of the Premises excluding Storage Space, if any, and the
denominator of which shall be the aggregate of all leased and occupied Floor
Space in the Shopping Center, excluding Storage Space, if any, any buildings or
areas occupied by Department Stores and Specialty Stores, stores not fronting on
the enclosed mall, and temporary kiosks; provided, however, that Tenant's share
of Exterior Common Area Operating Costs for any fiscal year shall not exceed the
amount which would otherwise be payable by Tenant hereunder if the denominator
of said fraction were [***] percent of the Gross Leaseable Area of the Shopping
Center, exclusive of Department Stores and Specialty Stores, stores not fronting
on the enclosed mall, and temporary kiosks. Tenant shall pay, with each monthly
installment of Fixed Rent, one-twelfth (1/12) of the annual amount estimated by
Landlord to be due hereunder, subject to adjustment.
(2) As used in this Lease, the term Exterior Common Area Operating
Costs shall mean all costs and expenses incurred by Landlord in maintaining,
managing, operating, repairing, replacing and protecting the Exterior Common
Areas of the Shopping Center, excluding the Common Areas of the Village Area,
all in a manner consistent with the highest shopping center standards, including
the cost of all work necessary to preserve and maintain the value, utility and
appearance of the Exterior Common Areas. Exterior Common Area Operating Costs
shall specifically include, without limitation, all costs and expenses incurred
in connection with the following: lighting the Exterior Common Areas; providing
snow and ice removal; maintenance, repair and replacement of all parking lot
surfaces, including striping, repaving and sealcoating; gardening and
landscaping, including planting and replacing flowers, shrubbery and trees;
policing and regulating vehicle and pedestrian traffic, including the cost of
any contracted security personnel; providing off-site employee parking
facilities, including transportation to and from such facilities; maintenance,
repair and replacement of sewer and storm drainage systems, waste disposal
facilities, lift stations, retention ponds or basins and sump facilities;
removal of rubbish and other refuse from the Exterior Common Areas; acquisition
(including rental fees), maintenance, repair and replacement of machinery,
equipment, vehicles and supplies used in the operation and maintenance of the
exterior Common Areas, and all personal property taxes and/or fees payable with
respect to such items; maintenance, repair and replacement of exterior Shopping
Center signs, curbs and walkways; painting and decorating exterior structures
and improvements; water for exterior fountains, if any; salaries and other costs
(including training costs, employee benefits and workers' compensation
insurance) of Shopping Center personnel, such as security and maintenance staff,
the regional property manager (a reasonable allocation), the Shopping Center
manager, assistant manager, property accountant, secretaries and office staff;
resolution of disputes or litigation with Persons attempting to use the Exterior
Common Areas for non-commercial purposes; professional and technical fees and
all other disbursements incurred in connection with the performance of any of
the foregoing; the cost of acquiring,
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maintaining and administering such "all risk" insurance (including rental
income, flood and earthquake), boiler and machinery insurance, comprehensive
general and umbrella liability insurance and such other insurance for the
Shopping Center as Landlord may, from time to time, deem necessary, or in lieu
thereof or in combination therewith, the costs attributable to that portion of
the coverage which Landlord shall elect to self-insure, including the cost of
administering Landlord's self-insurance program; dues and assessments allocable
to the Shopping Center pursuant to the Declaration of Covenants, Conditions and
Restrictions for the Mill Creek development, including any property owners
association; other similar direct costs of the type incurred in the operation of
the exterior areas of comparable properties; and [***] percent of all of the
foregoing costs to cover Landlord's administrative and overhead expenses. Costs
and expenses incurred by Landlord solely in connection with or for the benefit
of the Common Areas of the Village Area of the Shopping Center, shall not be
included as Exterior Common Area Operating Costs. From the aggregate of the
aforementioned costs and expenses, there shall be deducted the payments, if any,
made with respect to Exterior Operating Costs by Department Stores, Specialty
Stores, stores not fronting on the enclosed mall and temporary kiosks, such
deduction to be credited to the year for which such payments are applicable
irrespective of the fiscal year in which such payments are actually received.
C. With respect to costs which Landlord may elect to depreciate (or
amortize) in lieu of including such costs in Common Area Operating Costs for a
single fiscal year, only that portion of the depreciation (or amortization)
allocable to the year for which Common Area Operating Costs are being determined
shall be included in then current Common Area Operating Costs, it being
understood, however, that interest (at a rate equal to the prime rate being
charged from time to time by Citibank, N.A. during the year for which Common
Area Operating Costs are being determined) on the then undepreciated (or
unamortized) portion of such costs shall be included in Common Area Costs. In no
event shall Common Area Operating Costs include the costs and expenses incurred
by Landlord in constructing new buildings in the Shopping Center or expanding or
improving leasable area or the costs and expenses incurred by Landlord for
repairs and replacements with respect to which Landlord receives insurance
proceeds or condemnation awards.
D. After the end of each fiscal year adopted by Landlord, Landlord shall
furnish to Tenant a statement showing in reasonable detail the information
relevant or necessary to the calculation and determination of Landlord's actual
Interior and Exterior Common Area Operating Costs, as hereinabove defined, for
the fiscal year in question. If the monthly charges paid by Tenant during such
fiscal year, as hereinabove provided, shall be less than (i) Landlord's actual
Interior Common Area Operating Costs for such fiscal year, as shown by such
statement, multiplied by the fraction referred to in Subsection 3.5A, plus (ii)
Landlord's actual Exterior Common Area Operating Costs for such fiscal year, as
shown by such statement, multiplied by the fraction referred to in Subsection
3.5B, Tenant shall pay to Landlord the excess within [***] days after service of
such statement. If, however, the said monthly charges shall exceed Landlord's
actual costs multiplied by said fractions, Landlord shall, with the submission
of said statement, credit or refund to Tenant the excess.
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Section 3.6. Additional Rent. Unless another time shall be herein
expressly provided, Additional Rent shall be due and payable within [***] days
following demand or together with the next-succeeding installment of Fixed Rent,
whichever shall first occur, and Landlord shall have the same remedies for
failure to pay the Additional Rent as for a non-payment of Fixed Rent. Tenant's
failure to object to any final statement, invoice or billing rendered by
Landlord within a period of [***] days after receipt thereof shall constitute
Tenant's acquiescence with respect thereto and shall render such statement,
invoice or billing an account stated between Landlord and Tenant.
Section 3.7. Rent for a Partial Month. For any portion of a calendar month
included at the beginning or end of the Term, Tenant shall pay one-thirtieth
(1/30) of each monthly installment of Rent for each day of such portion, payable
in advance at the beginning of such portion, except that Percentage Rent for
such portion shall be computed and paid as provided in Section 3.3 hereof.
Section 3.8. Late Charges and Interest. Tenant shall pay, as Additional
Rent, a service charge in the amount of [***] for bookkeeping and administrative
expenses, if any Rent due hereunder is not received within [***] days following
its due date. In addition, as of the [***] day following service of notice by
Landlord that a payment of Rent is overdue, interest shall accrue on the overdue
amount, retroactive to the original due date, at the lesser of the highest rate
permitted to be paid by Tenant in the state in which the Shopping Center is
located or an annual rate of [***] percent more than the prime interest rate of
Citibank N.A., located in New York, New York.
Section 3.9. Taxes. Tenant shall pay, as Additional Rent, for any
documentary stamps or other transfer fees or any other sales or use taxes or
other taxes, impositions or levies of or required by any Governmental Authority,
including interest or penalties thereon, arising out of or by reason of this
Lease or the amount of Rent payable hereunder.
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ARTICLE 4
COMMON AREAS
Section 4.1. Common Areas. Landlord hereby grants to Tenant a
non-exclusive license to use (i) the parking areas provided by Landlord in the
Shopping Center for the accommodation and parking of vehicles of Tenant and its
officers, agents and employees and customers while such customers are shopping
in the Premises or in any other portion of the Shopping Center, (ii) the public
conveniences of the Shopping Center, including any connecting passageways and
lobbies used in conjunction with hotels and/or office buildings, and (iii) all
other areas in the Shopping Center, including the enclosed mall, to be used in
common by tenants of the Shopping Center, such parking areas, public
conveniences and other common areas being hereafter collectively referred to as
"Common Areas". Notwithstanding any of the provisions herein contained, Landlord
retains and reserves the non-exclusive right to the use of the Common Areas.
A. Exhibit A sets forth the general layout of the Shopping Center, but
shall not be deemed to be a warranty, representation or agreement on the part of
Landlord that the Shopping Center will be or will continue to be exactly as
indicated on said diagram, and Landlord reserves the right to (i) increase,
eliminate, reduce or change the number, type, size, location, elevation, nature
and use of any of the Common Areas or the buildings comprising the Shopping
Center, (ii) make changes, additions, subtractions, alterations or improvements
in or to such Common Areas, including, but not limited to, the construction of
decked or subsurface parking, (iii) withdraw portions of the Shopping Center
from Common Area or add Common Area to the Shopping Center, including
non-contiguous parcels for parking and other related Shopping Center purposes
and (iv) construct buildings, additional Department Stores, kiosks and other
improvements in the Common Areas. Tenant shall have no rights with respect to
the land or improvements below floor slab level or above the interior surface of
the ceiling of the Premises or air rights above the Premises.
B. Landlord shall not, pursuant to Subsection 4.1A, create any permanent,
substantial, adverse interference with access to or visibility of the Premises
from the covered mall upon which the front of the Premises abuts. However, this
provision shall not preclude Landlord from installing carts or erecting kiosks
or similar improvements anywhere in the covered mall, so long as any kiosks or
similar improvements which are located in front of the Premises are
approximately centered in the mall. Tenant's sole remedy in the event of
Landlord's failure to comply with this Subsection 4.1B shall be to terminate
this Lease. In the event Tenant, as the result of Landlord's failure to so
comply, shall exercise its right to terminate this Lease, Landlord shall pay,
within [***] days following the date Tenant vacates and surrenders the Premises,
the then unamortized cost of the permanent leasehold improvements (excluding,
inter alia, trade fixtures and equipment, furnishings, decorations, inventory
and other items of personal property) initially made by Tenant pursuant to
Article 2 of this Lease, assuming a useful life equal to the length of the
original Term of this Lease and amortization on a straight line
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basis. Tenant shall, not later than [***] days following the Commencement Date,
deliver an affidavit of an officer of Tenant and a certificate of Tenant's
architect accompanied by such bills, contracts, receipts, invoices, cancelled
checks and the like as Landlord may reasonably require, specifying the cost of
the Tenant's leasehold improvements, which amount shall, unless disputed by
Landlord, thereupon be the basis for the amount to be paid by Landlord pursuant
to this Subsection. Failure to timely deliver such affidavit, certificate and
supporting data shall constitute a waiver of Tenant's right to such payment.
C. Tenant, its officers, agents and employees shall park their vehicles
only in areas from time to time designated by Landlord as the area for such
parking, provided that such areas shall be located in or not more than [***]
mile from the perimeter boundary of the Shopping Center. Tenant shall, within
[***] days following written notice from Landlord, furnish Landlord, or its
authorized agent, the state automobile license numbers assigned to its
automobiles and the automobiles of all its employees employed in the Premises.
Tenant shall not at any time park any trucks or any delivery vehicles in the
parking area. Landlord shall have the right, after service of [***] or more
notices to Tenant regarding improper parking, to levy an assessment payable by
Tenant in a sum not to exceed [***] per day for each and every car belonging to
Tenant, its agents, servants, contractors, licensees or employees which shall
thereafter park in an area other than that designated by Landlord as a parking
area for such vehicles. Such assessment shall be payable by Tenant on the next
due date for Fixed Rent and shall be considered Additional Rent.
D. Common Areas shall be subject to such reasonable rules and regulations,
including the right to impose parking charges or fees and to allocate parking
areas on a uniform or non-discriminatory basis and to prohibit the use of the
Shopping Center by such Persons as Landlord determines, as the same may be
amended or modified, as Landlord may, from time to time, adopt as provided in
this Lease.
E. Landlord reserves the right to close, if necessary, all or any portion
of the Common Areas for the minimum length of time as may, in the reasonable
opinion of Landlord's counsel, be legally sufficient to prevent a dedication
thereof or the accrual of the right of the public therein, to close temporarily,
if necessary, all or any part of the parking areas to discourage non-customer
parking and to do and perform such other acts in and to the Common Areas as in
the use of good business judgment of Landlord will improve the use thereof.
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ARTICLE 5
LANDLORD'S ADDITIONAL COVENANTS
Section 5.1. Repairs by Landlord. Landlord shall keep the exterior walls,
foundations, downspouts, gutters and roofs of the buildings, and the plumbing,
electrical and other utility system serving but which are located outside of the
Premises, in good order, condition and repair and shall make necessary
structural repairs to the exterior walls of the buildings (excluding, however,
repairs to windows, doors, saddles, plate glass, store fronts and air
conditioning and heating installations and wiring, pipes and other utility
installations located outside of the Premises which are used exclusively by
Tenant), the dividing walls between the Premises and space occupied or to be
occupied by others and the load-bearing walls and load-bearing columns, if any,
within the Premises, provided that Landlord shall not be obligated hereby to do
any work required to be done because of any damage caused by any act, omission
or negligence of Tenant and its invitees, licensees, their respective officers,
agents and employees or their customers. Except where Landlord has actual notice
of the necessity for such repair, Landlord shall not be required to commence any
such repair until after notice from Tenant that the same is necessary, which
notice, except in case of any emergency, shall be in writing and shall allow
Landlord [***] days in which to commence such repair. The fact that the costs
incurred by Landlord in connection with any of the foregoing are includable in
Common Area Operating Costs pursuant to Subsections 3.5A and 3.5B shall not
affect Landlord's performance obligations under this Section 5.1. When necessary
by reason of accident or other cause occurring in the Premises, or elsewhere in
the Shopping Center, or in order to make any repairs or alterations or
improvements in or relating to the Premises or to other portions of the Shopping
Center, Landlord reserves the right to interrupt the supply to the Premises of
steam, condenser water or cooled air for air conditioning, electricity, water
and gas and also to suspend the operation of the heating and air conditioning
system, if any, until said repairs, alterations or improvements shall have been
completed. If, as a result of Landlord's performance of its obligations or
exercise of its rights under this Section 5.1, there is created a substantial
and material interference with Tenant's ability to conduct its business in the
Premises and Tenant therefor closes for more than [***] consecutive business
days, Tenant shall be entitled to an abatement of Fixed Rent for each day after
the [***] business day during which the condition continues. Other than the
aforesaid, there shall be no abatement of Rent because of any such interruption
or suspension; however, Landlord shall pursue such work with reasonable
continuity, diligence and dispatch and in such a manner as (consistent with good
practice) to cause a minimum of interference with Tenant's use of the Premises.
Section 5.2 Quiet Enjoyment. Landlord covenants that Tenant, on paying the
Rent and performing Tenant's obligations in this Lease, shall peacefully and
quietly have, hold and enjoy the Premises and the appurtenances throughout the
Term without hindrance, ejection or molestation by any Person lawfully claiming
under Landlord subject to the other terms and provisions of this Lease and to
any agreements to which this Lease may be or become subject and subordinate.
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ARTICLE 6
TENANT'S ADDITIONAL COVENANTS
Section 6.1. Affirmative Covenants. Tenant covenants, at its expense, at
all times during the Term:
A. To use the Premises only for the Permitted Use: to operate its business
in the Premises under Tenant's Trade Name (or such other trade name as is
adopted by a majority of stores operating under the Trade Name); and to conduct
its business at all times in a dignified manner and in conformity with the
highest standards of practice obtaining among superior type stores, shops or
concerns dealing in the same or similar merchandise and in such manner as to
produce the maximum volume of Gross Sales and to help establish and maintain a
high reputation for the Shopping Center.
B. To continuously and uninterruptedly use, occupy and operate for retail
sales purposes, all of the Premises other than such minor portions thereof as
are reasonably required for storage and office purposes; to use such storage and
office space only in connection with the business conducted by Tenant in the
Premises; to furnish and install all trade fixtures and permitted signs; to
carry a complete stock of seasonal merchandise; to maintain an adequate number
of trained personnel for efficient service to customers; to open for business
and remain open during the entire Term from at least 10:00 A.M. to 9:30 P.M.
Mondays through Saturdays and 12:30 P.M. to 6:00 P.M. on Sundays, and to light
its display windows and signs during those hours and on those days when the
covered mall is kept illuminated by Landlord (but Tenant shall not be obligated
to keep the same illuminated beyond 11:00 P.M. on any day). Tenant shall, if not
in conflict with any Governmental Requirements, and providing that (i) at least
one Department Store is open on such days or for such hours and (ii) Landlord
shall agree to cause the Shopping Center to remain open for such days or for
such hours, also open for business on such days or for such additional hours.
C. To store in the Premises only such merchandise as is to be offered for
sale at retail within a reasonable time after receipt; to store all trash and
refuse in appropriate containers within the Premises so as not to be visible to
the shopping public and to attend to the daily disposal thereof in the manner
approved by Landlord; to keep all drains inside the Premises open; and to
receive, deliver, load and unload goods, merchandise, supplies, fixtures,
equipment, furniture and rubbish through proper service doors and at times
established by Landlord, provided, however, that if Landlord shall furnish or
designate trash removal service, Tenant shall accept and use such service and
pay Landlord or the Person designated by Landlord, monthly for such service at a
rate which shall be no greater than the prevailing competitive rate for
equivalent service in the locale. If Landlord shall implement a refuse recycling
program for the Shopping Center, Tenant shall participate in such a program and
shall comply with all rules and regulations promulgated by Landlord in
connection therewith, including, but not limited to, the sorting of refuse by
type for deposit in designated containers.
D. Except for repairs hereunder to be made by Landlord, to take good care
of the Premises and the fixtures and appurtenances therein and make all other
necessary repairs and replacements thereto, of every kind whatsoever (including,
without limitation, repairs and
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replacements to windows, doors, saddles, plate glass, store fronts, air
conditioning and heating installations and plumbing inside the Premises or
located outside but exclusively serving the Premises and any exterior
installation peculiar to the conduct of Tenant's business such as, but not
limited to, signs, displays or exterior devices of any nature) which repairs and
replacements shall be in quality and class at least equal to the original work.
If Tenant fails to make any such repairs or replacements, Landlord may after
reasonable notice (other than in the case of an emergency) to Tenant make same
for the account of Tenant, at Tenant's expense, which amount shall be considered
Additional Rent and shall be due and payable by Tenant when billed by Landlord.
Tenant shall not be required to make structural repairs unless the necessity
therefor arises by reason of Tenant's Work, installations or alterations made by
Tenant, the manner of Tenant's use or occupancy or any other cause created by
Tenant.
E. To make all repairs, alterations, additions or replacements to the
Premises, including appurtenances, equipment, facilities and fixtures therein,
arising out of the manner of Tenant's use or occupancy of the Premises or
necessary to satisfy any Governmental Requirement; to keep the Premises equipped
with all safety appliances so required because of such use or occupancy; and
otherwise to comply with the orders and regulations of any Governmental
Authority. Tenant shall not be required to make structural alterations unless
the necessity therefor arises by reason of Tenant's Work, installations or
alterations made by Tenant, the manner of Tenant's use or occupancy or any other
cause created by Tenant.
F. To pay promptly when due the entire cost of any work to the Premises,
including equipment, facilities and fixtures therein, so that the Premises and
all of Tenant's fixtures and equipment shall, at all times, be free of
encumbrances or liens, including liens for labor and materials; to procure all
Necessary Approvals before undertaking such work; to permit Landlord to post and
keep posted on the Premises, sufficient, conspicuous notices stating that any
improvements are not being made at Landlord's instance; to do all such work in a
good and workmanlike manner acceptable to Landlord, employing materials of good
quality; to perform such work in such a manner as to insure proper maintenance
of good and harmonious labor relationships; to comply with any Governmental
Requirement relating thereto. Tenant understands that as part of the rules and
regulations promulgated by Landlord in connection with Tenant's Work, Landlord
requires a construction barrier which fulfills Landlord's construction criteria
to be erected around the mall exposure of the Premises. In the event that such a
barrier is already in place at the time Tenant takes possession of the Premises
to prosecute Tenant's Work, Tenant shall pay to Landlord, as consideration for
Landlord having provided the barrier and thereby having relieved Tenant of
responsibility for erecting same, an amount equal to the product of the [***].
Said amount shall be payable to Landlord not later than [***] days following the
date on which Tenant commences Tenant's Work and shall constitute Additional
Rent under the Lease. Tenant shall within [***] days after completion of any
work performed by Tenant, file for record in the appropriate public records, a
"notice of completion."
G. To defend and save Landlord and Landlord's Managing Agent harmless and
indemnified from all injury, loss, claims or damage (including reasonable
attorneys' fees and
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disbursements incurred by Landlord or its Managing Agent in conducting an
investigation and preparing for and conducting a defense) to any Person
(including Tenant's employees) or property, arising from, related to, or in any
way connected with the use or occupancy of the Premises or the conduct or
operation of Tenant's business, unless such injury, loss, claim or damage be
attributable to the negligence or willful acts of Landlord or its Managing
Agent, or its servants or employees.
H. To maintain with responsible companies approved by Landlord (said
approval not to be unreasonably withheld), (i) commercial general liability
insurance (or comparable coverage, including products liability and blanket
contractual liability insurance) against all claims, demands or actions for
personal injury, bodily injury or property damage arising from, related to, or
in any way connected with Tenant's Work, Tenant's occupation of the Premises, or
the conduct and operation of Tenant's business, or caused by actions or
omissions to act, where there is a duty to act, of Tenant, its agents, servants
and contractors, to the limits of not less than [***] per claim and in the
aggregate, which limits may be provided by any combination of primary and
umbrella or excess insurance, and which insurance shall be on an occurrence
basis and shall be endorsed to name Landlord, its agents and employees as
additional insureds; (ii) "All-Risk" property insurance, including such flood
and earthquake coverage as Landlord may, from time to time, require covering
[***] of Tenant's real and personal property values, such as fixtures and
equipment, stock-in-trade, furniture, furnishings, finishes, improvements and
betterments installed or made by or on behalf of Tenant in, on or about the
Premises, to [***] of their replacement cost without deduction for depreciation,
as well as loss of business income (so-called business interruption) coverage,
to include the Fixed Rent and Additional Rent payable under this Lease; (iii) if
there is air conditioning or refrigeration equipment valued in excess of [***],
boiler and machinery coverage at replacement cost, or if there is a boiler or
pressure vessel or other similar equipment in the Premises, boiler and machinery
coverage in the minimum amount of [***]; and (iv) workers' compensation,
disability and such other similar insurance covering all persons employed by
Tenant in connection with Tenant's Work and the operation of Tenant's business
and with respect to whom death or bodily injury claims could be asserted against
Tenant, Landlord or the Shopping Center. All of said insurance shall be in form
and with deductibles reasonably satisfactory to Landlord and shall provide that
it shall not be subject to cancellation, termination or change except after at
least [***] days' prior written notice to Landlord. In the case of boiler and
machinery insurance, the policy or policies shall cover Landlord or any designee
of Landlord as a loss payee and shall provide that losses sustained by Landlord
shall be adjusted by and payable to Landlord. Certificates of insurance
evidencing the coverage required pursuant to this Subsection H, together with
certificates evidencing coverage on the part of Tenant's contractors, shall be
deposited with Landlord not less than [***] days prior to the day Tenant begins
Tenant's Work and upon renewals of said policies not less than [***] days prior
to the expiration of the term of such coverage. All such policies shall be
delivered with satisfactory evidence of the payment of the premium therefor.
Landlord and Tenant mutually agree that with respect to any loss which is
covered by "All-Risk" property insurance then being carried by them
respectively, or required to be carried, the party carrying or required to carry
such insurance and suffering said loss, releases the other of and from any and
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all claims with respect to such loss, including amounts within the deductibles,
and they further mutually agree that their respective insurance companies shall
have no right of subrogation against the other on account thereof.
I. In the event of any action or proceeding arising out of or pursuant to
this Lease, the successful party shall be entitled to recover its reasonable
attorneys' fees and all other costs and expenses incurred in connection with the
action or proceeding.
J. Within [***] days following receipt of actual notice thereof, to cause
to be discharged of record by bonding, payment or otherwise, any mechanic's or
similar lien, judgment, encumbrance, security interest, chattel mortgage or
notice thereof at any time filed in any public office against the Shopping
Center or the Premises (including any fixtures or equipment located therein) or
the owner of any interest therein for any work, labor, services, materials,
fixtures, equipment or property claimed to have been performed at or furnished
to the Shopping Center or Premises for or on behalf of Tenant or any agent or
contractor of Tenant, or anyone holding the Premises through or under Tenant.
Nothing contained in this Lease shall be construed as a consent on the part of
Landlord to subject Landlord's estate in the Premises to any lien or liability
under applicable law.
K. Upon the expiration or other termination of the Term to quit and
surrender the Premises to Landlord, broom clean, in good order and condition,
ordinary wear and tear and casualty damages excepted, and to remove all property
of Tenant and each alteration addition and improvement made by Tenant as to
which Landlord shall have made the election provided for in Section 2.4 hereof,
to repair all damage to the Premises caused by such removal and restore the
Premises to the condition in which they were prior to the installation of the
articles so removed. Any property not so removed and as to which Landlord shall
not have made said election, shall be deemed to have been abandoned by Tenant
and may be retained or disposed of by Landlord, as Landlord shall desire.
However, Tenant shall be responsible for the cost of removal and disposal. If
the last day of the Term falls on a day the Shopping Center is closed, the Term
shall expire on the business day immediately preceding and Tenant's obligation
to observe or perform this covenant shall survive the expiration or termination
of the Term. Immediately upon the failure of Tenant to perform any covenant of
this Subsection K, Landlord may, without notice, do so, and shall be entitled to
receive from Tenant the then cost of performance of such covenant, such damages
to be paid in addition to and separate and independently from damages accruing
by reason of breach of any other covenant of this Lease.
L. (1) Tenant shall pay to Landlord for deposit by Landlord in a promotion
fund (the "Promotion Fund"), an amount (the "Promotion Fund Charge") equal to
the sum set forth in Article 1, subject to adjustment as hereinafter provided.
On the January 1 next following the [***] anniversary of the Commencement Date
of this Lease, the amount set forth in Article 1 shall be increased by [***]
percent, and on each January 1 thereafter, the Promotion Fund Charge payable for
the immediately preceding year shall be increased by [***] percent. The annual
charge payable by Tenant under this paragraph shall be paid in equal monthly
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installments on the [***] day of each calendar month in advance and shall be
prorated for any partial calendar month. The Promotion Fund shall be used by
Landlord, at such times and in such manner as shall be determined by Landlord,
to pay all costs and expenses (including the costs of administration) associated
with the formulation and carrying out of an ongoing program for the promotion of
the Shopping Center, which program may include, without limitation, special
events, shows, displays, institutional advertising for the Shopping Center,
promotional literature to be distributed within the general trade area of the
Shopping Center, and other activities designed to attract customers to the
Shopping Center.
(2) At any time, Landlord may elect to cause a Merchants'
Association (an "Association") to be organized, the object of which shall be the
general furtherance of the business interests of tenants in the Shopping Center
by sales promotion and Shopping Centerwide advertising. Upon the organization
of an Association, Tenant shall become (and remain) a member thereof, and the
amount which would have otherwise been payable by Tenant to the Promotion Fund
pursuant to the provisions of paragraph (1) above shall be discontinued and a
sum equal to such amount (subject to adjustment as herein set forth or such
greater adjustment as may be assessed from time to time by the Association)
shall be paid by Tenant to the Association as dues. The rules and regulations
and by-laws of the Association shall be consistent with the obligations of
Tenant set forth in this Subsection L, but shall in all other respects be in the
form designated by Landlord; it being agreed, however, that nothing therein set
forth shall be in conflict with the provisions of this Lease. Landlord, having
once exercised its option as set forth in this Subsection, may at any time elect
to discontinue operation of the Association, in which case the provisions of
paragraph (1) applicable to the Promotion Fund Charge shall again become
operative.
(3) The failure of any other tenant or occupant of the Shopping
Center to contribute to the Promotion Fund or become a member of the Association
shall in no way release Tenant from its obligations to do so.
(4) If the Shopping Center shall be expanded by adding a Department
Store and/or [***] percent or more to the Gross Leaseable Area of the Shopping
Center (an "Expansion"), Tenant shall pay to Landlord's Promotion Fund a
one-time charge for each such Expansion. Such Expansion charge shall be an
amount equal to the annual Promotion Fund Charge payable by Tenant for the Lease
Year immediately preceding the year in which work on the Expansion commences and
shall be payable upon [***] days' prior written notice from Landlord given at
any time subsequent to the commencement of construction. A like amount shall
also be payable by Tenant to the Promotion Fund in the event that the Shopping
Center shall be substantially renovated. For purposes of this subparagraph, the
term "substantial renovation" or any variation thereof shall be deemed to mean a
redecoration of the covered mall portion of the Common Areas of the Shopping
Center to the extent of at least [***] percent thereof, including new flooring
and the painting and/or recovering of the walls. The amount payable to the
Promotion Fund in connection with a substantial renovation of the Shopping
Center shall be due upon [***] days' prior written notice from Landlord to
Tenant, but in no
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event prior to commencement of the renovation. In the event of a contemporaneous
Expansion and renovation of the Shopping Center, Tenant shall be assessed only
the one-time Expansion charge.
M. Tenant shall furnish to Landlord an annual statement at the end of each
Lease Year showing the amounts spent by Tenant on white space advertising or
other advertising media. Each such annual statement shall be made a part of the
annual report required to be furnished by Tenant under Section 3.3. If Tenant's
annual statement shows that Tenant has expended for such advertising, during the
preceding Lease Year, less than the Percentage of Advertising Required, Tenant
shall, within [***] days after the required delivery date of its annual
statement, pay to the Promotion Fund (or substitute Association) the difference
between the amount actually expended for such advertising and the Percentage of
Advertising Required. The Promotion Fund Charge (or dues or other payments made
by Tenant to the substitute Association) shall not be deemed an amount expended
for advertising within the meaning of this Subsection M. All expenditures made
by Tenant for advertising in connection with Tenant's other stores, if any,
within the trade area of the Shopping Center, may be included by Tenant to
comply with this Subsection provided such advertising in all instances includes
the Premises and is distributed to the geographical trade area in which the
Shopping Center is located.
N. To refer to the Shopping Center by its name above stated in designating
the location of the Premises in all newspaper or other advertising in the
general trade area in which the Shopping Center is located. With respect to any
advertisement in which the location of another similar business activity
conducted by Tenant in the trade area shall be mentioned, Tenant shall also
mention or cause to be mentioned the Trade Name and location of the business
conducted at the Premises.
O. (1) To the extent that Tenant currently has or in the future shall
establish an online site (including but not limited to a World Wide Web site or
a section of a proprietary online service) (each a "Site"; collectively,
"Sites"), Tenant shall:
(a) In promoting its business via such Site, feature Tenant's
store at the Shopping Center with substantially the same prominence as that of
any other comparable store of Tenant.
(b) To the extent that Tenant shall provide such a link in
connection with any other comparable store, provide a link off an appropriate
page of Tenant's Site to the Mall Site (as hereinafter defined), if Tenant has a
Digital Storefront (as hereinafter defined) for such Mall Site. The placement of
the link shall be subject to Tenant's reasonable technical and design
requirements.
(c) Offer Landlord the opportunity to include content from
Tenant's Site on one or more of Landlord's Sites, on terms to be mutually agreed
upon.
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(d) Subject to Section 3.3, to the extent Tenant shall make
any sales of goods or services via Tenant's Site and such goods or services are
shipped from or delivered to the customer from the Premises, the amount of the
actual prices charged, excluding shipping and handling charges, shall be
included in Gross Sales and shall be subject to all audit rights otherwise
granted to Landlord under Section 3.3.
(2) To the extent that Landlord has established or shall establish
a Site for the Shopping Center (the "Mall Site"), Tenant shall cooperate with
Landlord to establish a "store" for Tenant in such Mall Site, on terms to be
mutually agreed upon, in accordance with Landlord's then current format and
features. The "store" shall be known as a "Digital Storefront".
(a) In connection with the Digital Storefront and the Mall Site,
Tenant shall permit Landlord to use Tenant's Trade Name and any graphics
approved by Tenant for use in the Shopping Center directory. If so requested by
Landlord, Tenant shall also keep Landlord apprised of all sales events and
special promotions taking place in the Premises and shall permit Landlord to
publicize same via the Digital Storefront and the Mall Site.
(b) Subject to Section 3.3, Tenant hereby agrees that, to the
extent that Tenant shall make any sales of goods or services via the Digital
Storefront or the Mall Site, the amount of the actual prices charged, excluding
shipping and handling charges, shall be included in Gross Sales and shall be
subject to all audit rights otherwise granted to Landlord under Section 3.3.
(3) Notwithstanding anything to the contrary contained in this
Subsection 6.10, Tenant shall not be required to:
(a) include any information regarding the Premises, the Shopping
Center, the Digital Storefront, and/or the Mall Site in Tenant's Site unless
Tenant displays at least one other of Tenant's comparable store locations or
other specific shopping centers; or
(b) include sales of goods or services in Gross Sales which are
made via an online service unless such sales are paid for at the Premises or
delivered to the purchaser from the Premises or traceable solely to either the
Mall Site or the Digital Storefront; or
P. To obtain all Necessary Approvals.
Q. To provide in accordance with Landlord's sign criteria, a suitable
identification sign or signs, bearing Tenant's Trade Name, of such size, design
and character as Landlord shall approve and install said sign or signs at a
place or places designated by Landlord. Tenant shall maintain any such signs or
other installations in good condition and repair.
R. To conform to all reasonable rules and regulations which Landlord may
make for management and use of the Shopping Center, requiring such conformance
by Tenant and Tenant's employees. Such rules and regulations shall be uniform
and shall not discriminate against Tenant.
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S. To deliver to Landlord, within [***] days after a request for same, all
or any of the following items, in such form and containing such evidence of
authenticity and regularity as Landlord may reasonably require.
(1) Balance sheet, annual report and related financial statements
of Tenant, Guarantor, if any, Tenant's parent and all subsidiaries of Tenant for
the previous annual period, same to have been prepared in accordance with
generally accepted accounting principles.
(2) A list of all Affiliates, officers, directors and stockholders
of Tenant, including name, title, number and type of shares owned.
(3) If Tenant or any Person from whom information as aforesaid is
required to be submitted is a corporation whose shares are traded on the "over
the counter", American or New York Stock Exchanges then the provisions of
paragraphs (1) and (2) above may be satisfied by submission of Tenant's most
recent annual report and form 10K together with all other current filings with
the Securities Exchange Commission or otherwise made pursuant to Federal
securities laws.
(4) Certificates executed by the appropriate chief financial
officers (or executives) of any entity from whom information is required
pursuant to this Subsection to the effect that there has been no material
adverse change in its financial status since the date of the most recent
information provided to Landlord.
(5) A list of all stores operated by any of the Persons from whom
information is required as aforesaid (including shareholders of such Persons) or
their licensees, franchisees, concessionaires or the like within a radius of
five (5) miles of the Shopping Center.
Tenant represents that Tenant has the right, power and authority to
execute and deliver this Lease, that such execution, delivery and performance of
Tenant's obligations shall not cause, create or constitute a default or breach
of or under any agreement to which Tenant is a party or by which it is bound.
Tenant further represents that the information concerning its financial status,
stockholders, parent, subsidiaries and Affiliates, if any, prior to the
execution and delivery of this Lease is unchanged, true and correct, accurately
represents the financial status of the Person for whom submitted and that there
has been no material or adverse change in the financial status of Tenant or said
Persons.
Section 6.2.Negative Covenants. Tenant covenants at all times during the
Term and such further time as Tenant occupies the Premises or any part thereof:
A. Except for existing stores, Tenant shall not, nor shall any officer,
director, shareholder, Affiliate, franchisee or licensee or the like of Tenant,
directly or indirectly operate, manage or have any interest in any other store
or facility for the sale at retail of merchandise or services similar to that
which is permitted under "Permitted Use", within ten (10) miles of the Shopping
Center (the Retail Restriction Limit). For purposes of this Subsection A, the
Retail
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Restriction Limit shall be measured along a straight line, the beginning of
which is the point on the outer perimeter of the Shopping Center which is
closest to such other store and the end of which is a point on the main entry
doors of such other store. Without limiting Landlord's remedies in the event
Tenant should violate this covenant, Landlord may include the Gross Sales of
such other store in the Gross Sales transacted in the Premises, for the purpose
of computing Percentage Rent due hereunder. In the event Landlord so elects, all
of the provisions of Section 3.3 hereof shall be applicable to all records
pertaining to such other store.
B. Unless specifically set forth in the Permitted Use, not to sell,
display or distribute (i) any alcoholic liquors or beverages for consumption on
or off the Premises or (ii) any pornographic or obscene or sexually erotic
goods, wares, printed material or services or (iii) any drugs or other
substances whose use or sale is prohibited or controlled by Governmental
Authority, including any merchandise which, although not per se violative of
Governmental Requirements, is designed or may reasonably be inferred to have
been designed for use in connection with such prohibited or controlled items.
C. Not to injure, overload, deface or otherwise harm the Premises or any
part thereof or any equipment or installation therein; nor commit any nuisance;
nor permit the emission of any objectionable noise or odor; nor, unless
specifically permitted by the Permitted Use, bum anything within the Shopping
Center; nor permit the collection of trash or refuse contrary to rules and
regulations established by Landlord or by any Person not approved or designated
by Landlord; nor install or cause to be installed any automatic garbage disposal
equipment; nor conduct business at, in, on, about or from all or any part of the
Premises on any days or hours that Landlord does not open the Shopping Center
for business to the public; nor make any use of the Premises or of any part
thereof or equipment therein which is improper, offensive or contrary to any
Governmental Requirement or to the rules and regulations of Landlord as such may
be promulgated from time to time; nor use any advertising medium that may
constitute a nuisance, such as loudspeakers, sound amplifiers or phonographs in
a manner to be heard outside the Premises; nor conduct any auction, fire, "going
out of business" or bankruptcy sales except under conditions approved by
Landlord in writing; nor use or occupy the Premises, or suffer or permit them to
be used or occupied in whole or in part, as a surplus store, salvage or "odd
lot" store, or for any similar business or activity; nor do any act tending to
injure the reputation of the Shopping Center; nor sell or display merchandise
on, or otherwise obstruct, the Common Areas or anywhere else in the Shopping
Center or distribute handbills or other advertising matter in the Shopping
Center outside of the confines of the Premises; nor carry on or permit any
business conduct or practice which, in Landlord's judgment, may harm the
business reputation of Landlord or reflect unfavorably on the Shopping Center,
Landlord or other tenants or which might confuse or mislead the public. Tenant
shall, upon notice from Landlord, immediately discontinue any violation of the
foregoing provisions.
D. Except for those which are interior, non-structural and do not affect
the heating, ventilation, air conditioning, mechanical or utility systems of the
Premises or Shopping Center and the aggregate cost of which does not exceed
[***], not to make any repairs, installations,
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alterations or additions or improvements or work to the Premises without, on
each occasion, obtaining the prior written consent of Landlord, which consent
shall not be unreasonably withheld (it being understood that Landlord's
withholding of consent shall not be deemed unreasonable where Tenant is unable
to demonstrate, to Landlord's reasonable satisfaction, the ability to pay for
the proposed work); nor attach interior signs, placards or other advertising
media or other objects to the windows, doors, valances or ceiling or locate the
same either outside of or within the Premises in such manner as to obstruct the
view of Tenant's store from the mall area or from the outside other than
insubstantially. If Landlord's consent is required, Tenant shall not commence
any work as aforesaid until Tenant shall have filed with Landlord plans and
specifications for such work and Landlord shall have approved same, said
approval not to be unreasonably withheld. Tenant shall perform such work in
accordance with such approved plans and specifications using labor not
incompatible with other labor at the Shopping Center and such as will not create
any labor disputes or work stoppages. Any work performed by Tenant shall at all
times be subject to Landlord's inspection and approval after completion to
determine whether same complies with the requirements of the applicable
provisions of this Lease. Tenant shall, preceding and during the course of any
alteration, addition, enlargement, improvement or construction, post or permit
Landlord to post and keep posted in conspicuous places on the Premises, and in
addition, serve all Persons who are expected to perform work or supply
materials, such notices as are now or hereafter permitted or required to be
posted to protect Landlord from having its interest in the Premises made subject
to a mechanics' or materialmen's lien arising from such alteration, enlargement,
improvement or construction. Prior to commencing construction, Tenant shall give
Landlord a list of names and addresses for all such Persons.
E. Except those for the sole use of Tenant's employees, not to operate any
coin or token operated vending machine or similar device for the sale of any
goods, wares, merchandise, food, beverage or services, including, but not
limited to, pay telephones, pay lockers, pay toilets, scales, amusement devices
and machines for the sale of beverages, foods, candy, cigarettes or toilet
commodities, without the prior written consent of Landlord.
F. Unless Tenant shall first have received Landlord's written consent with
respect thereto, not to assign, sell, mortgage, hypothecate, encumber, pledge,
or in any manner transfer this Lease or any interest therein, or sublet the
Premises or any part or parts thereof, or grant any concession or license or
otherwise permit occupancy of all or any part thereof by anyone with, through or
under it; nor shall Tenant grant or create any security interest or mortgage,
hypothecate, encumber or pledge any equipment, or improvements located in or
about the Premises. A transfer of any of Tenant's or Guarantor's stock or a
transfer or change of "control" (as such term is defined under the heading
"Affiliate" in Article 1 of this Lease) of Tenant or Guarantor, if Tenant or
Guarantor is a corporation or a change in the composition of Persons owning any
interest in any non-corporate Tenant shall be deemed an assignment for the
purpose of this Subsection F. In the event of the occurrence of any of the
foregoing events without Landlord's prior consent, this Lease shall, at
Landlord's option, be deemed to have been cancelled, terminated and expired as
of the date of the occurrence of said event. Neither the consent by Landlord to
any of the foregoing, nor any references in this Lease to concessionaires or
licensees shall be construed to relieve Tenant from obtaining the express
consent of Landlord to any further act which is prohibited herein, nor shall the
collection of Rent by Landlord from any assignee, subtenant or other occupant,
after default by Tenant, be deemed a waiver of this
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covenant or the acceptance of the assignee, subtenant or occupant as Tenant or a
release of Tenant from the further performance by Tenant of the covenants in
this Lease on Tenant's part to be performed.
(1) The provisions of this Subsection 6.2F shall not be deemed to
prohibit (i) transfers of stock among existing stockholders or among spouses,
children or grandchildren of existing stockholders or inter vivos or
testamentary transfers to trusts established for the benefit of such persons,
(ii) a public offering of the stock of Tenant or Guarantor or (iii) the transfer
of outstanding voting stock registered under applicable securities laws of
Tenant or Guarantor which are traded on a recognized national securities
exchange. For the purposes of the preceding clause (iii), the term "voting
stock" shall mean shares of stock regularly entitled to vote for the election of
all directors of the corporation.
(2) Landlord shall not unreasonably withhold its consent to an
assignment of this Lease or sublease of the entire Premises to a parent,
Affiliate or wholly-owned subsidiary of Tenant or to any entity with which or
into which Tenant may consolidate or merge and who shall assume for Landlord's
benefit the performance of all of the terms, conditions and covenants of this
Lease; provided, however, that the merged or consolidated entity shall have a
net worth at least equal to the net worth of Tenant at the time of such
consolidation or merger or at the time of the Commencement Date of this Lease,
whichever shall be greater, and further provided that the assignee or sublessee
shall use the Premises under the Trade Name and only for the Permitted Use.
(3) Except for the transactions described in paragraphs (1) and (2)
of this Subsection, Tenant may not assign or sublet the Premises until Tenant
completes Tenant's Work and opens for business. When Tenant requests Landlord's
consent to a transaction other than the types of transactions described in
paragraphs (1) and (2) of this Subsection, such requests shall include the name
of the proposed transferee of stock, assignee or subtenant and its officers,
directors and stockholders and such information as to the financial
responsibility, business and reputation of the proposed assignee, transferee of
stock or subtenant and its officers, directors and stockholders as Landlord may
reasonably require. Upon the receipt of such request and information from
Tenant, Landlord shall have the right, to be exercised in writing within thirty
(30) days after such receipt, to cancel and terminate this Lease, as of the date
set forth in Landlord's notice of exercise of such option, which effective date
of termination in Landlord's said notice shall not be less than sixty (60) nor
more than one hundred twenty (120) days following the service of such notice.
Tenant shall have the right to negate Landlord's cancellation by withdrawing its
request within ten (10) days after service of Landlord's notice, whereupon, this
Lease and the occupancy hereunder shall continue unchanged and in full force and
effect.
(a) In the event Landlord shall exercise such cancellation right,
Tenant shall surrender possession of the Premises on the date set forth in
Landlord's notice and in accordance with the provisions of this Lease relating
to surrender of the Premises at the
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expiration of the Term. In no event shall the Premises be subdivided or
partially sublet nor any request made for permission to do so.
(b) In the event Landlord shall not exercise its right to cancel
this Lease as provided above, then Landlord's consent to such request shall not
be unreasonably withheld in accordance with subparagraph (c) of this paragraph
(3), provided such consent to sublease or assignment is effected by a legal
document in form and substance satisfactory to Landlord. In no event shall any
assignment or subletting to which Landlord may have consented release or relieve
Tenant from its obligations fully to perform all of the terms, covenants and
conditions of the Lease on its part to be performed. Any assignee or subtenant
shall be bound by, subject to and deemed to have assumed performance of all of
the terms, conditions and covenants of this Lease, including, but not limited
to, the Permitted Use set forth in Article 1 and the Retail Restriction Limit
and any and all defaults shall be cured prior to the assignment or subletting.
(c) In determining reasonableness, Landlord may take into
consideration all relevant factors surrounding the proposed sublease and
assignment, including, without limitation, the following:
(i) The business reputation of the proposed assignee or
subtenant and its officers, directors and stockholders;
(ii) The nature of the business of the proposed assignee or
subtenant in relation to the tenant mix or balance of the Shopping Center;
(iii) The source of the Rent due under this Lease, the
financial condition and operating performance of the proposed assignee or
subtenant and its guarantors, if any;
(iv) Restrictions, if any, contained in lease or other
agreements affecting the Shopping Center;
(v) The extent to which the proposed assignee or subtenant and
Tenant provide Landlord with assurance of future performance hereunder,
including, without limitation, the payment of Percentage Rent; and
(vi) The number of other stores operated by the proposed
assignee or subtenant in the vicinity in which the Shopping Center is located.
(4) This paragraph (4) shall not apply to any transactions described
in paragraphs (1) and (2) above but shall apply to all other transactions. In
the event Tenant shall assign its interest in this Lease or sublet the Premises,
then the Fixed Rent specified in Article 1 shall [***], effective as of the date
of such assignment or subletting, [***], required to be paid by Tenant pursuant
to this Lease for the Lease Year immediately preceding such assignment or
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subletting. In no event shall the Fixed Rent, after such assignment or
subletting, be [***]. In addition to the foregoing, Tenant agrees that in the
event of an assignment or subletting, Tenant shall pay to Landlord any and all
consideration, money or thing of value received by Tenant or payable to Tenant
in connection with the transaction, except Tenant shall not be required to pay
to Landlord consideration received in connection with the sale of Tenant's trade
fixtures, equipment, inventory or leasehold improvements.
(5) Except for transactions of the types described in paragraphs (1)
and (2), in the event of any assignment or subletting, Landlord shall have the
right to require that there be deposited with and held by Landlord, in addition
to any other security then held by Landlord, an amount equal to [***] months'
rent ensuing.
(6) Use of the terms "assignment" or "subletting" shall be deemed to
include stock or share transfers as to corporations, and transfers of ownership
interests in the case of non-corporate entities.
(7) Tenant shall pay to Landlord the sum of [***] for the processing
of any assignment, sublease or other transaction covered or affected by this
Subsection 6.2F. Tenant shall pay to Landlord the sum of [***] for the
processing of all other transactions initiated by Tenant which are covered or
affected by the other provisions of this Lease.
G. Not to permit commercial or piped in music to be played other than in
the Premises or in a manner which can be heard outside the Premises or, except
for work performed by its own employees during reasonable hours designated by
Landlord, not to permit rubbish or garbage removal, window cleaning, janitorial
or maintenance services in or about the Premises, except in each such case, by a
Person, if any, designated by Landlord. Landlord agrees that the prices to be
charged by the Person, if any, so designated to supply or perform any or all of
the services referred to in this Subsection G shall be competitive. Landlord
reserves the right to provide rubbish and garbage removal service, and if
Landlord provides such service, Tenant shall pay for the cost thereof in such
amount and at such intervals as Landlord may fairly and reasonably determine,
said payments to constitute Additional Rent hereunder.
H. Not to place or install or suffer to be placed or installed or maintain
any graphics or sign in, upon or outside the Premises or in the Shopping Center
unless it complies with Landlord's sign criteria and is approved by Landlord
pursuant to Subsection Q of Section 6.1, nor any awning, canopy, banner, flag,
pennant, aerial, antenna or the like in or on the Premises. Tenant shall not
place in the windows or at or near the entrance to the Premises any sign,
graphics, decoration, lettering, advertising matter, shade or blind or other
thing of any kind, other than neatly lettered signs of reasonable size placed on
the floor thereof identifying articles offered for sale and the prices thereof,
without first obtaining Landlord's written approval and consent in each
instance, which consent shall not be unreasonably withheld. Tenant further
agrees that Landlord shall have the right to disapprove and require the removal
of any sign, graphics, lettering, lights, advertising or other forms of
inscription located in the front [***] feet
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of the Premises. Any signs, lights, lettering or other forms of inscription
displayed without prior written approval of Landlord may be removed forthwith by
Landlord. The cost of such removal shall be paid by Tenant and Tenant shall
thereafter restore the Premises and the building to the condition existing
immediately prior to the installation of the removed signs, lettering or
inscription.
I. Not to place a load upon any floor of the Premises which exceeds the
floor load per square foot area which such floor was designated to carry. If
Tenant shall desire a floor load in excess of that for which the floor or any
portion of the Premises is designed, upon submission to Landlord of plans
showing the location of and the desired floor live load for the area in
question, Landlord may, at its option, strengthen and reinforce the same, at
Tenant's sole expense, so as to carry the live load desired. Business machines
and mechanical equipment used by Tenant which cause vibration or noise that may
be transmitted to the building or to any occupiable space to such a degree as to
be reasonably objectionable to Landlord or to any tenants in the building shall
be placed and maintained by Tenant at its expense, in settings of cork, rubber
or spring-type vibration eliminators sufficient to eliminate such vibration or
noise.
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ARTICLE 7
DESTRUCTION: CONDEMNATION
Section 7.1. Fire or Other Casualty.
A. Tenant shall give prompt notice to Landlord in case of fire or other
damage to the Premises.
B. If (i) the Enclosed Shopping Center (whether or not the Premises were
damaged) shall be damaged to the extent of more than twenty-five (25%) percent
of the cost of replacement thereof, or (ii) the proceeds of Landlord's insurance
recovered or recoverable as a result of the damage described in subsection (i)
preceding shall be substantially insufficient to pay fully for the cost of
replacement of the damaged portion of the Enclosed Shopping Center, or (iii) the
Premises or the Enclosed Shopping Center shall be damaged as a result of a risk
which is not covered by Landlord's insurance or generally commercially available
"All-Risk" property insurance, Landlord may terminate this Lease by notice given
within ninety (90) days after such event and upon the date specified in such
notice, which shall be not less than thirty (30) nor more than sixty (60) days
after the giving of said notice, this Lease shall terminate. If the Premises
shall be damaged in whole or in part during the last two (2) years of the Term,
then either Landlord or Tenant may terminate this Lease by notice given to the
other within ninety (90) days after the occurrence of such damage, and upon the
date specified in such notice, which shall not be less than thirty (30) nor more
than sixty (60) days after the giving of said notice, this Lease shall
terminate. If the casualty, or Landlord's repair and restoration work shall
render the Premises untenantable, in whole or in part, then, a proportionate
credit against Rent (except Percentage Rent, Tax Rent and that portion of Common
Area Rent attributable to the cost of insurance) shall be allowed from the date
when the damage occurred until the earlier of (i) the day after Landlord has
substantially completed the work required to repair and restore the Premises, as
set forth in Subsection C of this Section, or (ii) the date Tenant shall have
opened for business, or (iii) the date of termination by Landlord, in the event
Landlord elects to terminate this Lease. Said proportion shall be computed on
the basis of the ratio which the amount of Floor Space rendered untenantable
bears to the total Floor Space. If there is a credit against Fixed Rent, in
computing the "break even" for Percentage Rent purposes, the amount of Fixed
Rent less such credit shall be applied, or if the "break even" is expressed
herein as a fixed dollar amount, such amount shall be ratably reduced.
C. If this Lease shall not be terminated as provided in Subsection B
hereof, Landlord shall, at its expense, repair or restore the Premises with
reasonable diligence and dispatch, to the condition obtaining immediately prior
to the casualty except that Landlord shall not be required to repair or restore
any of Tenant's leasehold improvements or betterments, furniture, furnishings,
finishes, decorations or any other installations made by Tenant. Upon the
completion by Landlord of repair or restoration, Tenant shall prepare the
Premises for occupancy by Tenant in the manner obtaining immediately prior to
the damage or destruction in accordance with plans and specifications approved
by Landlord. All work of restoration or repair by Tenant shall be subject to the
provisions of Article 2.
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D. The provisions of this Section 7.1 shall supersede and are in lieu of
the provisions of any present or future statute or law to the contrary of the
state in which the Shopping Center is located.
E. The "cost of replacement", as such term is used in Subsection B hereof,
shall be determined by the company or companies insuring Landlord against the
casualty in question, or if there shall be no insurance, then, by an independent
engineer selected and paid for by Landlord.
Section 7.2. Eminent Domain.
A. If twenty-five (25%) percent or more of the Floor Space of the Premises
shall be taken or condemned by any competent authority for any public or
quasi-public use or purpose, either party may elect, by giving notice to the
other not more than sixty (60) days after the date on which title shall vest in
such authority, to terminate this Lease, and, in either such event, the Term of
this Lease shall cease and terminate as of the said date of title vesting. In
case of any taking or condemnation, whether or not the Term of this Lease shall
cease and terminate, the entire award shall be the property of Landlord and
Tenant hereby assigns to Landlord all its right, title and interest in and to
any such award. Tenant shall, however, be entitled to claim, prove and receive
in the condemnation proceeding such awards as may be allowed for loss of lease,
moving expense, fixtures and other equipment installed by it but only if such
awards shall be made by the condemnation court in addition to the award made by
it for the land and the building or part thereof so taken.
B. The current Rent (except Percentage Rent) in the case of any taking or
condemnation, shall be apportioned as of the date of vesting of title and, if
the Term of the Lease shall not have ceased and have been terminated as of said
date, Tenant shall be entitled to a pro rata reduction in the Rent (except
Percentage Rent) payable hereunder based on the proportion which the Floor Space
of the space taken bears to the entire Floor Space of the Premises immediately
prior to such taking.
C. If more than fifty (50%) percent of the Floor Space of the Enclosed
Shopping Center, or if more than twenty-five (25%) percent of the total Floor
Space in the Shopping Center shall be so taken or conveyed, or if so much of the
parking facilities shall be so taken or conveyed that a reasonable number of
parking spaces necessary, in Landlord's judgment, for the continued operation of
the Shopping Center shall not be available for use by patrons of the Shopping
Center, then, in any such event, Landlord may, by notice in writing to Tenant
delivered on or before the day of surrendering possession to the Governmental
Authority, terminate this Lease, and Rent shall be paid or refunded as of the
date of termination.
D. If this Lease is not terminated pursuant to the provisions of this
Section 7.2, Landlord shall, at its expense, but only to the extent of an
equitable proportion of the net award or other compensation (after deducting
legal and all other fees in connection with obtaining said award) for the
portion taken or conveyed, of the building of which the Premises are a part
(excluding award for land) make such repairs or alterations as are in Landlord's
reasonable judgment necessary to constitute the building a complete
architectural and tenantable unit.
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ARTICLE 8
DEFAULTS AND REMEDIES
Section 8.1. Bankruptcy, Insolvency.
A. If (i) Tenant or Guarantor shall become insolvent or make an assignment
for the benefit of creditors; or (ii) if there shall be filed against or by
Tenant or Guarantor in any court, pursuant to any statute either of the United
States or of any state, a petition in bankruptcy or insolvency or for
arrangement or reorganization or for the appointment of a receiver or trustee of
all or portion of Tenant's or Guarantor's property and it is not discharged
within thirty (30) days after filing; or (iii) in the case of a filing under
Title 11 of the United States Code (the Federal Bankruptcy Act), if this Lease
is not assumed within sixty (60) days after filing; then upon the occurrence of
any of such foregoing events, this Lease shall, automatically and as a matter of
law, be deemed to have been cancelled, terminated, expired and rejected in which
event neither Tenant nor any Person claiming through or under Tenant by virtue
of any statute or of an order of any court shall be entitled to acquire or
remain in possession of the Premises, and Landlord shall have no further
liability hereunder and Tenant or any such Person, if in possession, shall
forthwith quit and surrender the Premises. If this Lease shall be so cancelled
or terminated, Landlord, in addition to the other rights and remedies of
Landlord by virtue of any other provision herein or elsewhere in this Lease
contained or by virtue of any statute or rule of law, may retain and apply to
damages incurred by Landlord, any Rent, Security Deposit or monies received by
Landlord from Tenant or on behalf of Tenant.
B. In the event of the termination or rejection of this Lease pursuant to
Subsection A hereof, Landlord shall be entitled to recover from Tenant an amount
equal to the maximum allowed by any statute, law or rule of law in effect at the
time when, and governing the proceeding in which, such damages are to be proved.
If this Lease shall have been terminated pursuant to Section 8.2 or otherwise,
prior to the occurrence of any of the events described in Subsection 8.1A above,
then Landlord's rights under this Lease shall not be affected or prejudiced by
this Section 8.1.
Section 8.2. Default.
A. If Tenant defaults in fulfilling any of the covenants or provisions of
this Lease, including, without limiting the generality of the foregoing, the
covenants for the payment of Rent when due or any part thereof or for the making
of any other payment herein provided or for the performance of any other
covenant on Tenant's part to be performed hereunder, and such default shall
continue for [***] days in the case of a default in the payment of Rent or other
monies, after service by Landlord of written notice upon Tenant specifying the
nature of said default, or, [***] days as to any other default except that if a
non-monetary default or omission shall be of such a nature that the same cannot
be reasonably cured or remedied within said [***], if Tenant shall not in good
faith have commenced the curing or remedying of such default within such
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day period, and shall not thereafter diligently proceed therewith to completion,
or if any levy, execution or attachment shall be issued against Tenant or any of
Tenant's property at the Premises, or if the Premises become abandoned, vacant
or deserted, or if Tenant shall default with respect to any other lease between
Landlord (or any Affiliate of Landlord) and Tenant (or any Affiliate of Tenant),
Landlord may serve upon Tenant a written notice that this Lease and the Term
will terminate on a date to be specified therein, which shall be not less than
five (5) days after the giving of such notice, and upon the date so specified,
this Lease and the Term shall terminate and come to an end as fully and
completely as if such date were the date herein definitely fixed for the end and
expiration of this Lease and the Term, and Tenant shall then quit and surrender
the Premises to Landlord, but Tenant shall remain liable as hereinafter set
forth; provided, however, that if Tenant shall default (i) in the timely payment
of any item of Rent or the timely reporting of Gross Sales as required by
Section 3.3 hereof and any such default shall continue or be repeated for [***]
consecutive months or for a total of [***] months in any period of [***] months
or (ii) in performance of any other particular convenant of this Lease more than
[***] times in any period of [***] months, then, notwithstanding that such
defaults shall have each been cured within the period after notice as above
provided, any further similar default shall be deemed to be deliberate and
Landlord thereafter may serve the said written five (5) days' notice of
termination without affording to Tenant an opportunity to cure such further
default.
B. If this Lease shall have been terminated pursuant to Section 8.1 or
8.2, or if Tenant has defaulted (beyond any opportunity to cure hereinabove set
forth) in the payment of Rent or in observing any other term, condition or
covenant, then, in any of such events, Landlord may institute summary
proceedings, re-enter the Premises, dispossess Tenant and the legal
representative of Tenant or other occupants of the Premises, and remove their
effects and hold the Premises as if this Lease had not been made.
Section 8.3. Remedies of Landlord.
A. In case of any such default, re-entry, expiration and/or dispossess by
summary proceedings or otherwise, (i) the Rent shall become due thereupon and be
paid up to the time of such re-entry, dispossess and/or expiration; (ii)
Landlord may relet the Premises or any part or parts thereof, either in the name
of Landlord or otherwise, for a term which may at Landlord's option be less than
or exceed the period which would otherwise have constituted the balance of the
Term, and may grant commercially reasonable concessions including free rent; and
(iii) Tenant or the legal representative of Tenant shall also pay Landlord, for
the failure of Tenant to observe and perform Tenant's covenants herein
contained, the maximum amount of damages recoverable or at Landlord's option,
for each month of the period which would otherwise have constituted the balance
of the Term, any deficiency between (x) the sum of (a) [***], (b) [***], (c)
[***] that would have been payable for the year in question but for such
re-entry or termination, (d) the current [***] and (e) [***] under this Lease,
and (y) the net amount, if any, of the [***]. [***]. In computing damages there
shall be included such commercially reasonable expenses as Landlord may incur in
connection with reletting, such as court costs, attorneys' fees and
disbursements, brokerage fees, other costs and expenses incurred by Landlord
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and for putting and keeping the Premises in good order or for preparing the same
for reletting as hereinafter provided. Any such damages shall, at Landlord's
option, be paid in monthly installments by Tenant on the rent day specified in
this Lease and any suit brought to collect the amount of the deficiency for any
month shall not prejudice in any way the rights of Landlord to collect the
deficiency for any subsequent month by a similar proceeding or, at Landlord's
option, in advance, discounted to the then present value. Landlord, at
Landlord's option, may make such alterations, repairs, replacements and/or
decorations in the Premises as Landlord in Landlord's reasonable judgment
considers advisable and necessary for the purpose of reletting the Premises; and
the making of such alterations and/or decorations shall not operate or be
construed to release Tenant from liability hereunder as aforesaid. Provided that
Landlord makes the same effort to relet the Premises as other space in the
Enclosed Shopping Center, Landlord shall in no event be liable in any way
whatsoever for failure to relet the Premises, or in the event that the Premises
are relet, for failure to collect the rent under such reletting. Landlord shall
not, in reletting the Premises, be required to prefer the letting of the
Premises over any other space in the Enclosed Shopping Center. Landlord shall
have in addition to any statutory or other liens or rights, if any, and not in
lieu thereof, a lien on all fixtures, equipment and leasehold improvements
located at the Premises.
B. In the event of a breach or threatened breach by Tenant of any of the
covenants or provisions hereof, Landlord shall have the right of injunction and
the right to invoke any remedy allowed at law or in equity as if re-entry,
summary proceedings and other remedies were not herein provided for. Mention in
this Lease of any particular remedy shall not preclude Landlord from any other
remedy.
Section 8.4. Waiver of Trial by Jury: Tenant Not to Counter-Claim. It is
mutually agreed by and between Landlord and Tenant that the respective parties
hereto shall and they hereby do waive, to the extent permitted by the State in
which the Shopping Center is located, trial by jury in any action, proceeding or
counter-claim or other claim brought by either of the parties hereto against the
other on any matters not relating to negligently caused personal injury or
property damage, but otherwise arising out of or in any way connected with this
Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of the
Premises, and any emergency statutory or any other statutory remedy. Tenant
further agrees that unless the failure to do so would constitute a waiver of its
right to institute a separate action or proceeding against Landlord, it shall
not interpose any counter-claim or cross-claim in a summary dispossess
proceeding, unlawful detainer proceeding or in any action or proceeding based on
non-payment of Rent or any other payment required of Tenant hereunder, however,
Tenant shall not be precluded from disputing the amounts due Landlord.
Section 8.5 Holdover by Tenant. In the event Tenant remains in possession
of the Premises after the expiration of the Term created hereunder, and without
the express written consent of Landlord or the execution and delivery of a new
lease, Tenant, at the option of Landlord, shall be deemed to be occupying the
Premises as a tenant from month-to-month, terminable at will on thirty (30)
days' notice (notwithstanding any contrary provision
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of applicable law) by either party, at a monthly rental equal to the sum of (i)
[***] the monthly installment of Fixed Rent payable during the last month of the
Term, (ii) one-twelfth (1/12) of the average annual Percentage Rent payable
hereunder based upon the last [***] Lease Years, (iii) the current monthly Tax
Rent payable for the last year of the Term, (iv) the monthly Common Area Rent,
(v) the monthly Environmental Charge and (vi) one-twelfth (1/12) of any other
Additional Rent or other charges payable, subject to all the other conditions,
provisions and obligations of this Lease insofar as the same are applicable to a
month-to-month tenancy. Tenant shall not interpose any counter-claim or
cross-claim in a summary dispossess proceeding, unlawful detainer proceeding or
other action or proceeding based on holdover, however, Tenant shall be permitted
to assert appropriate defense to Landlord's claim.
Section 8.6. Landlord's Right to Cure Defaults. Landlord may cure, after
notice served pursuant to this Article and failure of Tenant to do so, any
default by Tenant under this Lease; and whenever Landlord so elects, all costs
and expenses incurred by Landlord in curing a default, including, without
limitation, reasonable attorneys' fees, together with interest on the amount of
costs and expenses so incurred at the rate provided in Section 3.8 hereof, shall
be paid by Tenant to Landlord on demand, and shall be recoverable as Additional
Rent.
Section 8.7. Effect of Waivers of Default. No consent or waiver, expressed
or implied, by Landlord to or of any breach of any covenant, condition or duty
of Tenant shall be construed as a consent or waiver to or of any other breach of
the same or any other covenant, condition or duty of Tenant, unless in writing
signed by Landlord.
Section 8.8 Security Deposit. Tenant has agreed to deposit with Landlord
the Security Deposit as security for the punctual performance by Tenant of each
and every obligation of it under this Lease. In the event of any default by
Tenant, Landlord may apply or retain all or any part of the Security Deposit to
cure the default or to reimburse Landlord for any sum which Landlord may spend
by reason of the default. In the case of every such application or retention,
Tenant shall, on demand, pay to Landlord the sum so applied or retained which
shall be added to the Security Deposit so that the same shall be restored to its
original amount. If at the end of the Term, Tenant shall not be in default under
this Lease and shall have delivered to Landlord evidence of final utility
service readings and payment thereof, the Security Deposit or any balance
thereof, shall be returned to Tenant within [***] days. If Landlord shall sell
the Shopping Center, or shall lease the Shopping Center, in either case subject
to this Lease, or shall otherwise assign or dispose of this Lease, Landlord may
assign and turn over the Security Deposit or any balance thereof to Landlord's
grantee, lessee or assignee, and Tenant hereby releases and relieves Landlord
from any and all liability for the return of said deposit and shall look solely
to said grantee, lessee or assignee; it being expressly agreed that this
provision shall apply to each and every sale, conveyance or lease of the
Shopping Center or assignment or disposition of this Lease. Landlord shall not
be required to place the Security Deposit in an interest-bearing account and
said fund shall be returned to Tenant without interest.
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ARTICLE 9
ADDITIONAL PROVISIONS
Section 9.1. Notices from One Party to the Other. Any notice or demand
from Landlord to Tenant or from Tenant to Landlord shall be in writing and shall
be deemed duly served if mailed by registered or certified mail, return receipt
requested, addressed, if to Tenant, at the address of Tenant set forth herein,
or to such other address as Tenant shall have last designated by notice in
writing to Landlord, and if to Landlord, at the address of Landlord set forth
herein or such other address as Landlord shall have designated by notice in
writing to Tenant. Notice shall be deemed served when mailed.
Section 9.2. Brokerage. Tenant warrants that it has had no dealings with
any broker or agent in connection with this Lease other than the Broker, if any,
named elsewhere in this Lease and covenants to pay, hold harmless and indemnify
Landlord from and against any and all costs, expense or liability for any
compensation, commissions and charges claimed by the Broker or by any other
broker or agent with respect to this Lease or the negotiation thereof with whom
Tenant had dealings.
Section 9.3. Estoppel Certificates. Each of the parties agrees that it
will, at any time and from time to time, within twenty (20) business days
following written notice by the other party herein specifying that it is given
pursuant to this Section, execute, acknowledge and deliver to the party who gave
such notice a statement in writing certifying that this Lease is unmodified and
in full force and effect (or if there have been modifications, that the same is
in full force and effect as modified and stating the modifications), and the
dates to which the Rent and any other payments due hereunder from Tenant have
been paid in advance, if any, and stating whether or not to the best knowledge
of the signer of such certificate the other party is in default in performance
of any covenant, agreement or condition contained in this Lease, and if so,
specifying each such default of which the signer may have knowledge.
Section 9.4 Applicable Law and Construction. The laws of the state in
which the Shopping Center is located shall govern the validity, performance and
enforcement of this Lease. The invalidity or unenforceability of any provision
of this Lease shall not affect or impair any other provision. All negotiations,
considerations, representations and understandings between the parties are
incorporated in this Lease. Landlord or Landlord's agents have made no
representations or promises with respect to the Shopping Center or the Premises,
except as herein expressly set forth. Tenant further understands that this Lease
and every other lease agreement with every other tenant or occupant of the
Shopping Center is negotiated on its own merits and Landlord does not make any
representation as to the similarity of the terms of this Lease with any other
such lease or agreement. The headings of the several articles and sections
contained herein are for convenience only and do not define, limit or construe
the contents of such articles or sections, it being understood that the
so-called "Recital" constitutes part of the agreement between Landlord and
Tenant. Whenever herein the singular number is used, the same shall include the
plural, and the neuter gender shall include the masculine and feminine genders.
Section 9.5. Relationship of the Parties. Nothing contained herein shall
be deemed or construed by the parties hereto, or any third party, as creating
the relationship of principal and
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agent or partnership or joint venture between the parties hereto, it being
understood and agreed that neither the method of computation of Rent nor any
other provision contained herein, nor any acts of the parties hereto, shall be
deemed to create any relationship between the parties hereto other than the
relationship of landlord and tenant.
Section 9.6. Limitations on Liability. Landlord and Landlord's agents and
employees shall not be liable for, and Tenant waives all claims for, loss or
damage to Tenant's business or damage to any Person or property sustained by
Tenant resulting from any accident or occurrence (unless, subject, however, to
the waiver of subrogation provision hereof, caused by or resulting from the
negligence or willful acts of Landlord) in or upon the Premises or any other
part of the Shopping Center, including, but not limited to, claims for damage
resulting from: (i) any equipment or appurtenances becoming out of repair; (ii)
injury done or occasioned by wind; (iii) any defect in or failure of plumbing,
heating or air conditioning equipment, electric wiring or installation thereof,
gas, water and steam pipes, stairs, porches, railings or walks; (iv) broken
glass; (v) the backing up of any sewer pipe or downspout; (vi) the bursting,
leaking or running of any tank, tub, washstand, water closet, waste pipe, drain
or any other pipe or tank in, upon or about the building or the Premises; (vii)
the escape of steam or hot water; (viii) water, snow, or ice being upon or
coming through the roof, skylight, trapdoor, stairs, doorways, show windows,
walks or any other place upon or near the building or the Premises or otherwise;
(ix) the falling of any fixture, plaster, tile or stucco; and (x) any act,
omission or negligence of other tenants, licensees or of any other Persons or
occupants of the Shopping Center.
Section 9.7 Landlord's Entry Rights. Landlord or Landlord's agents shall
have the right to enter upon the Premises at all reasonable times to examine
same and to make such repairs, alterations, improvements or additions to the
Premises or to the building as may be necessary, and Landlord shall be allowed
to take all materials into and upon the Premises that may be required therefor
without the same constituting an eviction of Tenant, in whole or in part, and
the Rent shall in nowise abate while such repairs, alterations, improvements or
additions are being made by reason of loss or interruption of the business of
Tenant because of the prosecution of any such work. However, if as the result of
the exercise by Landlord of its rights under this Section 9.7, there is created
a substantial and material interference with Tenant's ability to conduct
business in the Premises, and Tenant therefore closes for more than [***]
consecutive business days, Tenant shall be entitled to an abatement of Fixed
Rent for each day after the [***] business day during which the condition
continues. Except in emergencies such entry shall be during business hours and
on reasonable oral notice to the Person then in charge of the Premises for
Tenant. Landlord shall use all reasonable efforts not to unreasonably interfere
with or interrupt the conduct and operation of Tenant's business but in no event
shall Landlord be required to incur any additional expenses for work to be done
during hours or days other than regular business hours or days. Landlord or
Landlord's agents shall also have the right to enter upon the Premises after
notice as set forth above, at reasonable times to show them to prospective
lessees or purchasers of the Shopping Center. During the [***] days prior to the
expiration of the Term, Landlord may show the Premises to prospective tenants.
If, [***] the end of the Term, Tenant shall have removed all or substantially
all of Tenant's property
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therefrom, Landlord may [***] enter, renovate and redecorate the Premises
without elimination or abatement of Rent or the payment of other compensation to
Tenant and such action shall have no effect upon this lease.
Section 9.8. Subordination.
A. This Lease is and all of Tenant's rights hereunder are subject and
subordinate to (i) any ground or underlying (including operation) leases that
now exist or may hereafter be placed on the Shopping Center or any part thereof,
and (ii) any mortgages or deeds of trust or deeds to secure debt that now exist
or may hereafter be placed upon the Shopping Center or the interest under any
ground or underlying leases and to any and all advances made thereunder and the
interest thereon and to all renewals, replacements, amendments, modifications,
consolidations and extensions of any of the foregoing. Tenant covenants and
agrees that if any mortgagee of Landlord's interest in any underlying lease or
any fee mortgagee succeeds to Landlord's interest under this Lease by
foreclosure or otherwise, Tenant will, if requested, attorn to such mortgagee
and will recognize such mortgagee as Tenant's landlord under this Lease. At the
option of the landlord or any successor landlord thereunder, Tenant agrees that
neither the cancellation nor termination of any ground or underlying lease to
which this Lease is now or may hereafter become subject or subordinate, nor any
foreclosure of a mortgage either affecting the fee title of the Premises or the
ground or underlying lease, nor the institution of any suit, action, summary or
other proceeding by the landlord or any successor landlord thereof, or any
foreclosure proceeding brought by the holders of any such mortgage to recover
possession of the leased property, shall by operation of law or otherwise result
in the cancellation or termination of this Lease or the obligations of Tenant
hereunder, and Tenant covenants and agrees to attorn to the landlord or to any
successor to Landlord's interest in the Premises. Tenant shall execute and
deliver in recordable form, whatever instruments maybe required to acknowledge
or further effectuate the provisions of this Subsection, and in the event Tenant
fails to do so within [***] days after demand in writing, such failure shall be
deemed a material default hereunder. Any mortgagee or trustee under any such
mortgage or deed of trust or deed to secure debt, or the lessor under any such
ground or underlying lease may elect that this Lease shall have priority over
its mortgage, deed of trust, deed to secure debt, or lease and upon notification
of such election by such mortgagee, trustee or lessor to Tenant, this Lease
shall be deemed to have priority over said mortgage, deed of trust, deed to
secure debt, or ground or underlying lease whether this Lease is dated prior to
or subsequent to the date of said mortgage, deed of trust, deed to secure debt,
or lease. If the holder of any mortgage, deed of trust, deed to secure debt, or
security agreement shall forward to Tenant written notice of the existence of
such lien or lease, then Tenant shall, so long as such lien or lease continues,
give to such lienholder or lessor the same notice and opportunity to correct any
default as is required to be given to Landlord under this Lease but such notice
of default may be given to Landlord and such lienholder or lessor concurrently.
B. If so requested by Tenant, Landlord shall use reasonable efforts to
obtain non-disturbance and attornment agreements from any ground or underlying
lessors or present or
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future mortgagees of Landlord's interest in the Premises, which efforts shall
consist only of Landlord's making a written request for such agreements on
behalf of Tenant. Tenant shall cooperate in all respects with Landlord's
efforts, shall provide any information reasonably required by such mortgagees or
lessors and shall pay such fees or expenses as may be requested by such parties
in connection with such agreements. Landlord shall not be required to institute
any legal action or proceeding in order to obtain said agreements. The foregoing
shall not be deemed a condition to the effectiveness or continuing effectiveness
of this Lease.
Section 9.9 Construction on Adjacent Premises or Buildings. If any
construction, excavation or other building operation shall be about to be made
or shall be made on any premises adjoining or above or below the Premises or on
any other portion of the Enclosed Shopping Center, Tenant shall permit Landlord,
or the adjoining owner, and their respective agents, employees, licensees and
contractors, to enter the Premises and to strengthen, add to or shore the
foundations, walls, columns or supporting members thereof, and to erect
scaffolding and/or protective barricades around and about the Premises (but not
so as to preclude entry thereto) and to do any act or thing necessary for the
safety or preservation of the Premises. Except as may be expressly set forth to
the contrary in this Section 9.9, Tenant's obligations under this Lease shall
not be affected by any of the foregoing or any such construction or excavation
work, shoring-up, scaffolding or barricading. Landlord shall not be liable in
any such case for any inconvenience, disturbance, loss of business or any other
annoyance arising from any such construction, excavation, shoring-up,
scaffolding or barricades, but Landlord shall use its best efforts so that such
work will cause as little inconvenience, annoyance and disturbance to Tenant as
possible, consistent with accepted construction practice in the vicinity, and so
that such work shall be expeditiously completed. It is understood by Tenant that
shopping centers are at times expanded or reconfigured by the addition of new or
reconfigured buildings, improvements or structures (including multilevel, decked
or subsurface parking structures) and if the foregoing occurs, Landlord shall
have the right of access to enter upon the Premises to perform construction work
and shall use its reasonable efforts to complete all construction in the
Premises as promptly as possible (considering the nature and extent of the
construction and subject to prudent construction practices). Landlord shall have
the right to require Tenant to temporarily curtail its business or to
temporarily close the Premises if necessary in connection with the construction
work. Accordingly, (i) if Landlord requires Tenant to temporarily suspend
business or to temporarily close the Premises because of any such changes or
(ii) if Tenant's use and occupancy of the Premises or Tenant's access to the
covered mall in front of the Premises is materially, adversely interfered with
and Tenant temporarily closes for business, Tenant shall receive an abatement of
Rent (except Percentage Rent) on a per diem basis for the number of days for
which Tenant is required to close. Notwithstanding the foregoing, [***] because
of the proposed expansion, [***] said expansion.
Section 9.10 Mall Expansion.
A. In the event Landlord shall add additional buildings to the Enclosed
Shopping Center or otherwise expand or reconfigure the Enclosed Shopping Center,
Landlord shall have
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the right to relocate Tenant's operation to other premises (the "New Premises")
in another part of the Enclosed Shopping Center in accordance with the following
provisions: The New Premises shall be substantially the same in size and
configuration as the Premises described in this Lease and, to the extent
reasonably possible, shall be located in an area having, in Landlord's
reasonable judgment, comparable pedestrian traffic. If the New Premises have
been previously occupied, Landlord shall deliver the New Premises to Tenant in
"as is" condition. If the New Premises consist of newly created leasable area,
Landlord shall deliver the New Premises to Tenant in a "shell" condition (i.e.,
Landlord shall provide a concrete slab, demising studs, an empty electrical
conduit to the New Premises, sprinkler, water and sewer service to the New
Premises, and a common exhaust vent). Landlord shall give Tenant at least two
hundred seventy (270) days' notice of Landlord's intention to relocate Tenant's
operation to the New Premises. To the extent determined by Landlord to be
practicable, Tenant's Work in the New Premises shall be prosecuted while Tenant
is open for business in the Premises herein demised and the physical move shall
take place during non-business hours, if reasonably possible, or during such
other period as shall be mutually agreed upon by Landlord and Tenant. Rent
(except Percentage Rent) and all other charges shall abate for any period during
which Tenant's operation shall be closed to the public as a result of the
relocation and there shall be excluded from the computation set forth in Section
3.3A of this Lease the amount of Fixed Rent which would otherwise be payable for
such period. Landlord shall not have the right to relocate Tenant's operation
more than once during the Term. If the New Premises are smaller or larger than
the Premises described in this Lease, Fixed Rent for the balance of the original
Term of this Lease shall be adjusted to a sum computed by multiplying the Fixed
Rent specified in Article 1, by a fraction, the numerator of which shall be the
total number of square feet of Floor Space in the New Premises and the
denominator of which shall be the total number of square feet of Floor Space in
the Premises described in this Lease. All other charges based upon Floor Space
shall likewise be adjusted proportionately. In addition, the original Term
hereof shall be extended for such period of time (the "Extension Period") as
shall be necessary to permit Tenant to occupy the New Premises for the same
number of days and months as constituted the original Term hereunder [e.g., if
Tenant's original Term was seven (7) years and Tenant opens for business in the
New Premises on the fifteenth day of the fifty second (52nd) month, the
Extension Period will be fifty one (51) months and fifteen (15) days]. During
the Extension Period, Fixed Rent shall be payable at such rates as constitute
the then fair market rental ("FMR"), as determined in accordance with paragraph
(D) hereof, and all Additional Rent, including the Promotion Fund Charge, shall
be at the rates and payable on the terms then in effect for new retail leases at
the Enclosed Shopping Center.
B. In the event the New Premises described in Landlord's relocation notice
are unacceptable to Tenant, Tenant shall have the right, as its sole and only
remedy, exercisable by written notice to Landlord given within [***] days
following receipt of Landlord's relocation notice, to terminate this Lease, such
termination to be effective as of the proposed relocation date set forth in
Landlord's notice. Failure by Tenant to timely exercise such right shall be
deemed a waiver with respect thereto and confirmation that the New Premises are
acceptable to Tenant. Such termination shall be Tenant's sole and only remedy in
the event of Tenant's refusal to accept relocation to the New Premises, it being
understood that should Tenant refuse for any
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reason to relocate, but fail to terminate this Lease in accordance with the
foregoing, this Lease shall nevertheless expire on the date set forth in
Landlord's relocation notice.
C. If Tenant shall accept the New Premises, Landlord shall pay, within
ninety (90) days following the date Tenant opens for business in the New
Premises, the then unamortized cost of the permanent leasehold improvements
(excluding, inter alia trade fixtures and equipment, furnishings, decorations,
inventory and other items of personal property) initially made by Tenant in the
original Premises pursuant to Article 2 of this Lease, assuming a useful life
equal to the length of the original Term of this Lease and amortization on a
straight line basis. Tenant shall, not later than, ninety (90) days following
the Commencement Date, deliver an affidavit of an officer of Tenant and a
certificate of Tenant's architect accompanied by such bills, contracts,
receipts, invoices, cancelled checks and the like as Landlord may reasonably
require, specifying the cost of Tenant's leasehold improvements, which amount
shall, unless disputed by Landlord, thereupon be the basis for the amount to be
paid by Landlord pursuant to this provision.
D. FMR during the Extension Period, if any, shall be determined as
follows:
(1) Within sixty (60) days following the date of Landlord's
relocation notice to Tenant, Landlord shall deliver to Tenant a written proposal
setting forth Landlord's determination of FMR (on a per square foot basis) for
the New Premises during the Extension Period.
(2) Within thirty (30) days thereafter, Tenant shall deliver to
Landlord (a) written acceptance of Landlord's proposed FMR or (b) a
counterproposal setting forth Tenant's determination of such annual FMR. Failure
by Tenant to respond to Landlord's proposal within the aforesaid 30-day period
shall be deemed confirmation that Landlord's determination of FMR is acceptable
to Tenant.
(3) If Tenant shall deliver a counterproposal as aforesaid, then for
the ensuing 30-day period, Landlord and Tenant shall conduct good faith
negotiations in an effort to agree upon FMR.
(4) If Landlord and Tenant are unable to reach agreement within said
30-day period, then, within ten (10) days thereafter, each shall appoint an
independent real estate appraiser who is then, and has been for a minimum of ten
(10) years, a member of the American Institute of Real Estate Appraisers. If
Tenant shall fail to make timely appointment of an appraiser, then Landlord's
appraiser shall make the determination of FMR, and such determination shall be
binding upon both parties.
(5) The appraisers shall, within sixty (60) days following their
appointment, render their joint determination of FMR for the New Premises for
each year of the Extension Period, and such determination shall be binding and
conclusive upon Landlord and Tenant. Should the appraisers be unable to reach
agreement as to FMR within said sixty (60)-day period, then
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together they shall designate a third appraiser, who shall select either the FMR
proposed by Landlord's appraiser or the FMR proposed by Tenant's appraiser as
the Fixed Rent (per square foot) to be paid by Tenant for the New Premises
during the Extension Period, and such determination by the third appraiser shall
be binding and conclusive on both Landlord and Tenant. The cost of the appraisal
shall be shared equally by Landlord and Tenant.
Section 9.11 Short Form Lease. Tenant agrees not to record this Lease.
Either party shall, at the request of the other, execute, acknowledge and
deliver, at any time after the date of this Lease, a memorandum or notice of
lease prepared by the requesting party, but the provisions of this Lease shall
control the rights and obligations of the parties.
Section 9.12 Binding Effect of Lease. The covenants, agreements and
obligations herein contained, except as herein otherwise specifically provided,
shall extend to, bind and inure to the benefit of the parties hereto and their
respective personal representatives, heirs, successors and permitted assigns. In
particular the provisions of Subsection F of Section 6.2 shall bind the
executors, administrators or other personal representatives of Tenant, if an
individual, or its successors, if Tenant is a corporation or partnership. Each
covenant, agreement, obligation or other provisions herein contained shall be
deemed and construed as a separate and independent covenant of the party bound
by, undertaking or making the same, not dependent on any other provision of this
Lease unless otherwise expressly provided.
Section 9.13 Effect of Unavoidable Delays. The provisions of this Section
shall be applicable if there shall occur, during the Term, or prior to the
commencement thereof, any (i) strike(s), lockout(s) or labor dispute(s); (ii)
inability to obtain labor or materials, or reasonable substitutes therefor; or
(iii) acts of God, governmental restrictions, regulations or controls, enemy or
hostile governmental action, civil commotion, fire or other casualty, or other
conditions similar or dissimilar to those enumerated in this item (iii) beyond
the reasonable control of the party obligated to perform. If Landlord or Tenant
shall, as the result of any of the above-described events, fail punctually to
perform any obligation on its part to be performed under this Lease, then such
failure shall be excused and not be a breach of this Lease by the party in
question, but only to the extent occasioned by such event. If any right or
option of either party to take any action under or with respect to this Lease is
conditioned upon the same being exercised within any prescribed period of time
and such named date, then such prescribed period of time and such named date
shall be deemed to be extended or delayed, as the case may be, for a period
equal to the period of the delay occasioned by any above-described event.
Notwithstanding anything herein contained, the provisions of this Section shall
not be applicable to or in determining the date of commencement of or the
continuance of Tenant's obligation to pay Rent or its obligations to pay any
other sums, moneys, costs, charges or expenses required to be paid by Tenant
hereunder.
Section 9.14 No Oral Changes. Neither this Lease nor any provision hereof
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.
Section 9.15 Executed Counterparts of Lease. This Lease may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original; and all such counterparts shall together constitute
but one and the same Lease.
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Section 9.16 Landlord's Liability.
A. In the event of sale or transfer of all or any portion of the Shopping
Center or any undivided interest therein, or in the event of the making of a
lease of all or substantially all of the Shopping Center, or in the event of a
sale or transfer of the leasehold estate under any such lease, the grantor,
transferor or lessor, as the case may be, shall thereafter be entirely relieved
of all terms, covenants and obligations thereafter to be performed by Landlord
under this Lease to the extent of the interest or portion so sold, transferred
or leased, provided that (i) any amount then due and payable to Tenant or for
which Landlord or the then grantor, transferor or lessor would otherwise then be
liable to pay to Tenant (it being understood that the owner of an undivided
interest in the fee or any such lease shall be liable only for his or its
proportionate share of such amount) shall be paid to Tenant; (ii) the interest
of the grantor, transferor or lessor, as Landlord, in any funds then in the
hands of Landlord or the then grantor, transferor or lessor in which Tenant has
an interest, shall be turned over, subject to such interest, to the then
grantee, transferee or lessee; (iii) notice of such sale, transfer or lease
shall be delivered to Tenant and (iv) the grantee, transferee or lessee shall
assume in writing all of Landlord's obligations under this Lease accruing from
the date of the transaction.
B. Tenant agrees that it shall look solely to the estate and property of
Landlord in the land and buildings comprising the Shopping Center and the income
therefrom (subject to prior rights of the holder of any mortgage or deed of
trust on any part of the Shopping Center) for the collection of any judgment (or
other judicial process) requiring the payment of money by Landlord in the event
of any default or breach by Landlord with respect to any of the terms, covenants
and conditions of this Lease to be observed or performed by Landlord; and no
other assets of Landlord, its members or shareholders shall be subject to levy,
execution or other procedures for the satisfaction of Tenant's remedies.
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IN WITNESS WHEREOF, Landlord and Tenant have hereunto executed this Lease
as of the day and year first above written.
(TENANT) SILICON ENTERTAINMENT, INC.
By: /s/ Chris Morse
-----------------------------------
(LANDLORD) MALL OF GEORGIA, LLC, a Delaware
limited liability company
ATTEST: By: CPI-GEORGIA CORPORATION,
a Delaware corporation, Managing Member
By: /s/ David Simon
- ------------------------------------ -----------------------------------
Secretary
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(TENANT, if a Corporation)
STATE OF CALIFORNIA )
) ss.:
COUNTY OF SANTA CLARA )
On this 2nd day of September, 1999, before me personally came Chris Morse,
to me known, who being by me duly sworn, did depose and say that s(he) resides
at 210 Hacienda Avenue, Campbell, CA 95008, that (s)he is the Vice President of
Silicon Entertainment, the corporation described herein and which executed the
foregoing instrument; and that (s)he signed his name thereto by authority of the
Board of Directors of the said corporation.
/s/ Laurie Shermer
-------------------------------
Notary Public
<PAGE> 56
RIDERS TO LEASE AGREEMENT dated September 23rd, 1999 between MALL OF GEORGIA,
L.L.C., a Delaware limited liability company, as Landlord, and SILICON
ENTERTAINMENT, INC., d/b/a "NASCAR Silicon Motor Speedway" or "Silicon Motor
Speedway", as Tenant, for Store No. 2068 at Mall of Georgia, Gwinnett County,
Georgia.
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IN THE EVENT OF ANY INCONSISTENCIES BETWEEN THESE RIDERS AND THE PRINTED
FORM OF THIS LEASE, THE RIDERS SHALL BE DEEMED TO CONTROL.
RIDER #1 - Construction of Shopping Center
Landlord has commenced construction of the Shopping Center of which the
Premises will be a part. Tenant will occupy Store No. 2068, consisting of
approximately 5,895 square feet. Tenant's Premises in the Enclosed Shopping
Center is shown on Exhibit B for illustrative purposes and Landlord reserves the
right to increase, eliminate, reduce or change the number, type, size, location,
elevation, nature and use of any part of the Enclosed Shopping Center and make
changes, additions, subtractions, alterations or improvements in or to the
Enclosed Shopping Center.
RIDER #2 - amending Article 1 - Size of Premises
Landlord and Tenant acknowledge that the Fixed Rent set forth on page 1-1
has been calculated assuming that the Premises shall consist of 5,895 square
feet of Floor Space. As soon as practicable after Tenant's Work is completed,
Landlord shall cause the Premises to be measured and the Floor Space of the
Premises to be determined in accordance with the definition thereof set forth in
Article 1. In the event the Floor Space of the Premises varies from 5,895 square
feet, the Fixed Rent shall be adjusted on the basis of [***] per square foot for
each of the first (1st) through [***] years of the Term and $30.00 per square
foot for each of the [***] through [***] years of the Term. The Promotion Fund
Charge and Environmental Charge set forth on page 1-1 shall also be adjusted to
reflect such variance. In no event, as a result of remeasurement shall the Size
of the Premises be deemed to vary by more than [***] square feet. Landlord and
Tenant shall execute, acknowledge and deliver a supplemental agreement
specifying the adjusted annual Fixed Rent, Promotion Fund Charge and
Environmental Charge. The form of the Supplemental Agreement is annexed hereto
as Exhibit F.
RIDER #3 - Landlord's Work
Landlord has performed the work (Landlord's Work) described in Exhibit E
annexed hereto and made a part hereof. The cost of those items of Landlord's
Work which are to be performed at Tenant's expense are designated on page 5 of
Exhibit E. In no event shall the aggregate costs to Tenant of items A, B, C, D,
E, G, H and I exceed [***] percent of the cost listed on Exhibit E. Such costs
shall be deemed Additional Rent under the Lease, shall be billed
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to Tenant upon commencement of Tenant's Work, and shall be due and payable
within [***] days thereafter.
After delivering possession of the Premises to Tenant, Landlord shall not
then alter the size and/or shape of the Premises without Tenant's consent, which
consent may be withheld in Tenant's sole discretion.
RIDER #4 - Disputes
In the event of any dispute between Landlord and Tenant concerning the
date of substantial completion of Landlord's Work or the Size of Premises or any
part thereof, or whether or not access to the Premises is available as
contemplated in these riders, such dispute shall be determined by an architect
selected by Landlord's and Tenant's architect, whose decision shall be binding
on the parties and whose fees for such determination shall be borne equally by
the parties. Until such determination shall have been made, Tenant shall pay all
Rent as, when and in the amounts billed by Landlord, subject to reimbursement,
if any, as indicated by decision of the architect.
RIDER #5 - Grand Opening Contribution
On the first day of the month next following the month in which the
Commencement Date occurs, Tenant shall pay to Landlord, as a contribution toward
the promotion of the Grand Opening of the Enclosed Shopping Center (the "Grand
Opening Contribution") the sum of [***] per square foot]. In addition, Tenant
shall reasonably cooperate with Landlord in all Grand Opening activities at no
additional cost to Tenant.
RIDER #6 - amending Article 1 - Tenant's Trade Name
Tenant may change its Trade Name to any other name then being used by
substantially all of Tenant's chain of stores currently doing business as
"Nascar Silicon Motor Speedway" or "Silicon Motor Speedway"; provided, however,
said name does not conflict with a name then being used by another tenant in the
Shopping Center.
RIDER #7 - amending Article 1 - Construction Barrier Fee
Tenant shall install a construction barrier at the Premises and decorate
such barrier with a NASCAR motif display announcing Tenant's scheduled opening.
RIDER #8 - Tenant's Work and amending Section 2.1
Tenant shall commence Tenant's Work when possession of the Premises is
made available to Tenant. Landlord's Work is substantially complete in the
Premises, and possession of the Premises shall be deemed to have been delivered
to Tenant on the later of (i) the date of the Lease and (ii) the date that
Tenant has received its conditional use permit (if necessary) and
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all other approvals required for Tenant to commence Tenant's Work in the
Premises. In the event Tenant, despite its good faith efforts to do so, Tenant
is unable to secure all Necessary Approvals required for Tenant to conduct its
business at the Premises for the Permitted Use within nine (9) months after the
date of the Lease, Tenant shall have the right to terminate this Lease.
Landlord's Work is substantially completed in accordance with Landlord's plans
and specifications on Exhibit E and access to the Premises through the Common
Area is available and the Premises are in a condition to accept the installation
of Tenant's Work, as reasonably determined by Landlord's architect,
notwithstanding that other stores in the Enclosed Shopping Center may not be
ready for occupancy by other tenants. Tenant's Work Period shall be as provided
in Article 1 of this Lease. Tenant's Work shall be performed in accordance with
the terms of the Tenant Design Criteria Manual to be furnished to Tenant by
Landlord.
RIDER #9 - Temporary Utility Charges during Tenant's Work Period
Throughout Tenant's Work Period, Tenant shall pay, promptly upon receipt
of bills therefor, for all utilities used at the Premises and for refuse
removal, in the amounts referenced in Exhibit E.
RIDER #10 - Coordination of Work
The timing and progress of Tenant's Work and the work of other tenants,
Landlord's Work, and work in the Interior Common Area shall be coordinated with
Landlord or its designee. In the event of any dispute with respect to
deliveries, parking, storage of equipment or materials or vehicles, traffic
flow, or any other matter or thing relating to Landlord's Work, Tenant's Work or
the work of other tenants, such dispute shall be determined by Landlord or
Landlord's designee, in their sole discretion. Tenant and its agents or
contractors, when requested, shall attend at the Shopping Center, during
business hours, all construction meetings convened by Landlord or its
representative, and they shall comply with all reasonable and nondiscriminatory
rules and regulations adopted from time to time by Landlord or its designee.
Neither Tenant nor its agents shall park or store any vehicles, equipment,
materials or supplies other than within Tenant's Premises, without the specific
written consent of Landlord.
RIDER #11 - amending Article 1 - Term
In the event Tenant's Gross Sales shall be less than [***] in the [***]
full (twelve (12) month) Lease Year, Tenant may terminate this Lease by written
notice served not later than thirty (30) days after delivery to Landlord of
Tenant's annual statement of Gross Sales for the [***] full Lease Year. Tenant's
termination notice shall specify a date for the termination of this Lease which
shall be not less than ninety (90) days nor more than one hundred eighty (180)
days from the date thereof. Tenant's right to terminate as aforesaid and the
effectiveness of Tenant's notice is conditioned upon (i) payment by Tenant to
Landlord of an amount equal to the unamortized portion of Landlord's
Contribution assuming a useful life equal to the original Term and
unamortization on
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a straight-line basis, and (ii) payment by Tenant to Landlord of all Rent and
other charges due to the date of termination.
RIDER #12 - amending Article 1 - Storage Space
Page 1-5, line 2, delete "soley" and substitute "solely".
RIDER #13 - amending Article 1 - Permitted Use
(A) Provided the same have been approved by Landlord on Tenant's Plans,
Tenant shall be allowed to place a full size race car within the Premises in the
area immediately fronting on Tenant's entrance to the Premises. Landlord
acknowledges that the race car may be fitted with operating lights, including
flashing lights, a "fogging" device to simulate exhaust emissions and race car
sound effects. However, Tenant's operation of such race car shall remain subject
to the terms and conditions of the Lease (including, but not limited to Section
6.2 thereof) and shall not cause an adverse effect on the Shopping Center
activities conducted in or from the Common Areas or interfere with any other
tenant's quiet enjoyment of its premises.
(B) Tenant shall be allowed to employ a "greeter" at the Premises who
would greet Tenant's customers in the Common Area immediately adjacent to the
Premises.
(C) Landlord hereby consents to tenant's use of hydraulic oil in
connection with the operation of the stimulators and cleaning and office
products customarily used in retail or office premises so long as such materials
are used, handled, stored and disposed of in accordance with applicable laws.
RIDER #14 - amending Article 1 -Necessary Approvals
Necessary Approvals shall not include those approvals Landlord is required
to secure under this Lease.
RIDER #15 - amending Section 2.1
(A) Landlord shall approve or reject to Tenant's plans and specifications
within twenty (20) days of submission by Tenant. If Landlord rejects Tenant's
plans, Landlord shall provide a detailed explanation why the plans were so
rejected. If Landlord responds to Tenant's plans and specifications later than
[***] days after any submission by Tenant, the Tenant's Work Period shall be
extended on a day for day basis.
(B) Landlord agrees that it shall contribute the sum of [***] per square
foot of Floor Space at the Premises (Landlord's Contribution) towards the cost
of Tenant's Work on the terms set forth below:
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(1) Landlord shall not be required to make Landlord's Contribution
unless this Lease is in full force and effect and Tenant is not in default
beyond any applicable cure period hereunder and the leasehold improvements
(excluding fixtures, furnishings and equipment) at the Premises are free of all
liens.
(2) Landlord's Contribution shall be used only for alterations,
improvements, fixtures and equipment which become part of or attached or affixed
to the realty, including heating, ventilating and air conditioning systems,
walls, floors and ceiling, but excluding trade fixtures, furniture and
furnishing or other personal property.
(3) Landlord's Contribution shall be made in installments as
follows:
[***] upon completion of [***] of Tenant's Work;
[***] upon completion of [***] of Tenant's Work.
The final installment shall be paid upon the last to occur of (i) the
opening for business by Tenant in the Premises and (ii) the completion of
Tenant's Work as certified pursuant to Section (4)(b) below.
(4) Prior to and as a condition precedent to Landlord's obligation
to pay any installment, Tenant shall deliver to Landlord's Managing Agent at the
Shopping Center:
(a) an affidavit of the principal officer of Tenant to the effect
that all leasehold improvements (excluding fixtures, furnishings and equipment)
at the Premises are free and clear of all mechanics liens, encumbrances and
charges;
(b) an affidavit sworn to by Tenant's general contractor to the
effect that it has been paid all sums due to it through the date of the
affidavit or the requisition date, and all subcontractors, materialmen and
suppliers and all costs of labor, including payroll taxes and charges, have been
paid through the date of the affidavit or the requisition date; said affidavit
to contain the names of all subcontractors, materialmen and suppliers, specific
amounts, if any, due to each and to be accompanied by copies of all
requisitions;
(c) conditional lien waivers with respect to work performed and
materials supplied to the date of each respective lien waiver or the requisition
date, executed by Tenant's general contractor and all subcontractors,
materialmen and suppliers supplying in excess of [***] worth of labor and/or
materials;
(d) an affidavit from the architect having supervision over
Tenant's Work to the effect that Tenant's Work has been completed to the extent
necessary to qualify for an advance and in accordance with the plans and
specifications approved by Landlord, to such architects actual knowledge, and in
compliance with all Governmental Requirements.
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(5) Prior to and as a condition precedent to Landlord's obligation
to pay the final installment, Tenant shall also deliver to Landlord's Managing
Agent at the Shopping Center:
(a) a current search of the public records issued by a title
insurance or title abstract company reasonably satisfactory to Landlord showing
that the Premises, including all installations therein (excluding fixtures,
furnishings, and equipment), are free and clear of all mechanics liens, charges,
and encumbrances and that there are no judgments, levies, attachments, liens or
tax liens issued, pending or in effect with respect to Tenant;
(b) an affidavit sworn to by such subcontractors and suppliers
supplying in excess of [***] worth of labor and/or materials to the effect that
they have been paid all sums due them.
(c) a conditional certificate of occupancy and fire underwriters
certificate for the Premises and such other approvals of Tenant's Work which may
be necessary for the conduct of Tenant's business or as may be required by any
Governmental Authority (subject to any and all approvals to be secured by
Landlord under this Lease).
(6) Tenant shall not mortgage, pledge, assign or hypothecate
Tenant's right to receive Landlord's Contribution.
(C) Tenant's acceptance of the Premises is subject to and excluding latent
defects and items of repair which are Landlord's responsibility as elsewhere set
forth in this Lease.
(D) In the event a multiple-user antenna and/or satellite system is
installed or caused to be installed in the Shopping Center by Landlord, Tenant
shall be permitted to utilize said system pursuant to separate agreement with
Landlord and/or the vendor of such system and subject to all provisions
regarding the use of such system as contained in such separate agreement, which
shall be mutually agreed upon by Tenant and Landlord and/or the vendor of such
system. In the event Tenant and Landlord and/or such vendor are unable to
mutually agree on terms of a satellite agreement, or such system is not made
available for Tenant's use, Tenant shall be permitted to install a satellite
dish (hereinafter "Dish") at the Center, subject to the following terms,
conditions and limitations:
(a) Tenant shall provide [***] days prior written notice of its
intent to install the Dish, and shall provide plans and specifications for the
location and installation of the Dish for Landlord's review and approval
concurrently with such notice. Such plans shall be in accordance with Landlord's
current design criteria and must conform to the reasonable requirements of
Landlord's roofing consultant, in part, in order to protect Landlord's roof
warranties;
(b) The location of the Dish shall be on the roof of the Shopping
Center or such other location as Landlord, in its sole and absolute discretion,
shall approve;
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provided that such location provides for the clear transmission of signals from
the Dish, and in no event shall such installation affect the structural
integrity of the roof or any other area where the Dish has been installed;
(c) The installation and maintenance of the Dish, including any
necessary structural support to the roof and/or screening shall be at Tenant's
sole cost and expense;
(d) The Dish shall be installed within the existing wall screen,
if any; however, Landlord may require Tenant to further screen or otherwise
shield the Dish from view by providing fencing, screening materials or
landscaping satisfactory to Landlord;
(e) Tenant shall procure and maintain any approval(s) and/or
permits required by any governmental authority having jurisdiction thereof and
shall deliver evidence of same to Landlord prior to commencing installation. In
the event the use or installation of the Dish is in violation of applicable law
or any agreement of Landlord or the Shopping Center regarding the Shopping
Center, Tenant shall not be permitted to use, install or maintain the Dish and
shall be required to remove the Dish from the Shopping Center;
(f) Tenant's installation or operation of the Dish shall in no
way interfere with the operation of any other transmission or receiving device
at the Center;
(g) Tenant shall give Landlord two (2) days prior notice of the
necessity to access the Dish for service, except in the case of an emergency, or
such shorter period of time as Landlord may allow;
(h) The Dish and related equipment shall remain the property of
Tenant. Tenant shall remove the Dish at the expiration or earlier termination of
the Lease Term and repair any damage occurring as a result thereof, at Tenant's
sole cost and expense; and
(i) Only one Dish will be permitted at the Center for the joint
use of Tenant and Tenant's affiliates. Further, Tenant shall not re-sell
satellite dish services to any other tenant or occupant in the Shopping Center
(E) Tenant shall submit its Design Drawings to Landlord in compliance with
the Design Criteria. In the event that Landlord approves Tenant's Design
Drawings (as Tenant may agree to modify such plans and specifications in
response to Landlord's comments thereto in accordance with the following
sentence), then Landlord will be deemed to have approved the measures taken by
Tenant to minimize noise and vibration and, thereafter, Tenant shall not be in
default under the Lease as a result of noise or vibration associated with the
permitted use of the Premises. In the event that Landlord does not approve
Tenant's Design Drawings (for reasons relating to the measures taken therein to
minimize noise and vibration) within the timeframe required for Landlord's
disapproval in accordance with the Design Criteria, and notwithstanding anything
to the contrary contained in the Design Criteria, Landlord shall deliver written
notice to Tenant thereof (such notice a "Design Drawing Rejection Notice") and
specific reasons therefor
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with reasonable alternative recommendations with respect thereto. Tenant shall,
for a period of fifteen (15) business days after Tenant's receipt of the Design
Drawing Rejection Notice, have the right to either (i) agree to incorporate
Landlord's recommendations or otherwise address the reasons for Landlord's
rejection (as set forth in the Design Drawing Rejection Notice) in a manner
mutually agreeable to Tenant and Landlord or (ii) terminate the Lease and
neither party shall incur any liability as a result of such termination;
provided, however, if Landlord's recommendations are commercially reasonable and
if the cost that would be incurred by Tenant therefor is equal to [***] or less,
then Tenant shall incorporate Landlord's recommendations into its design and
proceed with construction; provided, further, upon Tenant's incorporation of
Landlord's recommendations into its design, Landlord shall be deemed to have
approved the measures taken by Tenant to minimize noise and vibration. Landlord
shall have the right to nullify Tenant's right to terminate, as provided above,
if, within the aforementioned fifteen (15) day notice period, Landlord notifies
Tenant, in writing, that Landlord shall increase Landlord's Contribution by the
amount by which the cost to implement Landlord's recommendations exceeds [***].
Notwithstanding the foregoing, if unreasonable noise or vibration occurs (i.e.,
so as to materially adversely affect the Shopping Center or the business of
adjacent tenants) after the Premises are open for business, then Tenant will
agree to take such steps as are reasonably necessary to reduce such noise or
vibration, as applicable, the cost of which would be split evenly by Landlord
and Tenant; provided however, if Tenant's expenditure of Tenant's portion of
such costs would, in Tenant's good faith discretion, (1) materially reduce
Tenant's expected returns from the operation of the Premises, or (2) affect the
performance of one or more of its equipment so as to materially and adversely
affect the sensory experience created thereby (e.g., reducing the vertical
movement or the volume of the racing simulators), or (3) otherwise make Tenant's
operation of its business in the Premises infeasible, then Tenant shall, for a
period of thirty (30) days after receiving Landlord's request to make such
expenditures, have the right to elect not to make such expenditures as are
requested by Landlord and instead terminate this Lease, and neither party shall
incur any liability as a result of such termination.
RIDER #16 - amending Section 2.2
(A) Page 2-1, line 21, after "specifications" insert "which shall take
place as set forth in Section 2.1".
(B) Page 2-1, line 27, prior to "interfere" insert "unreasonably".
(C) Page 2-1, line 31, after "make" insert "and notify Tenant in writing".
(D) Page 2-2, line 3, prior to "the end" insert "[***] days following".
(E) Page 2-2, line I 1, after "discharge" insert ", bond".
(F) Page 2-2, line 12, delete "[***]" and substitute "[***]".
(G) Page 2-2, line 14, after "shall" insert "use best efforts to".
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RIDER #17 - amending Section 2.4
Page 2-2, lines 29-30, delete "not less than ... this Lease" and
substitute "at the time Tenant first requests consent thereto".
RIDER #18 - amending Section 2.5
Page 2-2, line 39, after "within" insert "[***] days after".
RIDER #19 - amending Section 2.5 and 6.1 B
Tenant shall not be obligated to continuously operate from the Premises
(i) for a period of up to [***] days and after notice to Landlord while Tenant
is carrying on remodeling activities, (ii) for up to [***] days per year for the
taking of inventory, (iii) while Tenant is unable or reasonably unwilling to
operate as a result of casualty or natural disaster, condemnation, interruption
of utilities or services, extremely inclement weather, civil unrest, operation
of the business would expose Tenants' employees, agents or invitees to an
unreasonable risk of physical injury or property damage, or other force majeure
events, (iv) while Tenant's use and occupancy of the Premises is prohibited by
any law, ordinance, order or other act of any judicial, governmental or
quasi-governmental authority.
RIDER #20 - amending Section 2.6
Provided Tenant maintains the Premises in a state consistent with the
standards required by the Lease and in accordance with Tenant's remodel and
maintenance practices for its chain of stores, the provisions of Section 2.6
shall be deemed waived.
RIDER #21 - amending Section 3.2
So long as the Tenant operating in the Premises is the Tenant named herein
or any assignee of Silicon Entertainment, Inc. pursuant to Section 6.2(F)(2),
the second sentence of Section 3.2 shall be deemed deleted. In addition, the
foregoing Fixed Rent increase shall only apply to Department Stores which open
after the effective date of any such assignment.
RIDER #22 - amending Section 3.3B
The following shall not be included in (or may be deducted from) Gross
Sales:
(A) Receipts from bulk sales to jobbers and the like made for the purpose
of clearing stock of old and/or obsolete merchandise;
(B) Receipts from the bulk sale of the entire stock of merchandise in the
Premises, or a substantial portion thereof, to a successor to the business of
Tenant;
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(C) Fees charged by credit card companies for the transactions originating
in, or from the Premises not to exceed [***] percent of Gross Sales per Lease
Year;
(D) Sale of fixtures, trade fixtures or personal property after use in the
Premises;
(E) Free use of games and discounted sales to Tenant's employees not to
exceed [***] percent of Gross Sales per Lease Year;
(F) Revenue received from mailing, delivery or other service performed on
a non-profit basis for the benefit of Tenant's customers;
(G) Rents, subrents, or other consideration received in connection with an
assignment, sublease, license, concession (however, Gross Sales, if any, for
such transferee shall be included) including license fees otherwise payable by
Tenant in connection with a third party license agreement;
(H) Amounts required to be paid by Tenant under any agreement related to
Tenant's use of the NASCAR name, not to exceed [***] percent of Gross Sales per
Lease Year; and
(1) Discounts given for promotional coupons that are redeemed from time to
time not to exceed [***] percent per Gross Sales per Lease Year.
RIDER #23 - amending Section 3.3C
(A) Page 3-2, line 39, after "to time" insert "but no more than twice per
calendar year".
(B) Page 3-2, line 41, delete "[***]" and substitute "[***]".
(C) Page 3-3, line 1, delete "[***]" and substitute "[***]" in both
instances.
(D) Page 3-3, lines 8 and 18, delete "[***]" and substitute "[***]".
(E) Page 3-3, line 10, after "to time" insert "but no more frequently than
twice per calendar year".
(F) Page 3-3, line 22, delete "[***]" and substitute "[***]".
(G) Page 3-3, line 22, after "more" insert "and such understatement
results in underpayment of Percentage Rent".
(H) Page 3-3, line 23, delete "but Tenant shall remain liable hereunder"
and substitute "and Landlord shall have the remedies".
RIDER #24 - amending Section 3.3D
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(A) Page 3-3, line 35, delete "[***]" and substitute "[***]".
(B) Page 3-3, line 36, delete "Landlord's request therefor" and substitute
"the end of the calendar month".
RIDER #25 - amending Section 3.3E
Page 3-4, line 1, delete "[***]" and substitute "[***]".
RIDER #26 - amending Section 3.4
(A) Page 3-4, line 22, delete "[***]" and substitute "[***]".
(B) Page 3-4, line 26, after "elects" insert "upon written notice to
Tenant,".
(C) Page 3-5, line 42, prior to "tax" insert "rebate, abatements of taxes
or".
RIDER #27 - amending Section 3.4
(A) With respect to any special assessments made by governmental
authorities for street improvement, traffic mitigation or similar physical
improvements, Landlord may, at its option, pay any such special assessments in
one lump sum when due or, if permitted by law, Landlord may elect to pay such
special assessments in installments. In the event Landlord shall pay any special
assessment in full when due, Tenant shall nevertheless reimburse Landlord for
its share thereof based upon the installment payments including principal and
interest which Landlord would have been obligated to pay had Landlord elected to
pay the special installment in the maximum number of installments permitted.
Tenant's installment payments for such special assessment shall be due and
payable on the same dates that they would have been payable to the taxing
authority had Landlord elected to pay the special assessment in installments.
(B) Tenant shall be required to pay only Tenant's proportionate share of
such assessments to the extent Tenant's proportionate and amortized share
thereof corresponds to the Lease Term.
RIDER #28 - amending Section 3.4C
Page 3-4, line 43, prior to "gift" insert "change in ownership".
RIDER #29 - amending Section 3.5
(A) Page 3-6, line 23, delete "[***]" and substitute "[***]".
(B) Page 3-7, line 29, delete "[***]" and substitute "[***]".
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(C) In no event shall Common Area Operating Costs for the first twelve
(12) months of the Term exceed [***] per square foot of Floor Space at the
Premises.
(D) Commencing the second full year of the Term, the annual increases for
Common Area Operating Costs shall not exceed [***] percent.
(E) With respect to items costing more than [***], Landlord shall not
include such costs in Common Area Operating Costs for the year in which they are
incurred, but in lieu thereof shall depreciate (or amortize) such items over a
period of not less than [***] nor more than [***] years, as reasonably
determined by Landlord in accordance with generally accepted accounting
principles for the shopping center industry, consistently applied. In such
cases, only that portion of the depreciation (or amortization) allocable to the
year for which Common Area Operating Costs are being determined and interest on
the undepreciated (or unamortized) portion shall be included in then current
costs.
(F) Tenant shall not be responsible for payment of any of the following as
a Common Area Operating Costs, whether or not otherwise included in the
definition of "Common Area Operating Costs":
(i) Interest, loan fees, ground lease rental, and other
carrying costs related to any mortgage or indebtedness secured by the Shopping
Center;
(ii) Premiums or deductibles to the extent any other tenant in
the Shopping Center causes Landlord's insurance premiums relating to the
Premises to increase or obligates Landlord to purchase additional insurance, or
any damage resulting from the negligent or willful acts or omissions or breach
of any other tenant of the Shopping Center;
(iii) New buildings constructed on or within the Shopping
Center;
(iv) Expenses that under generally accepted accounting
principles are treated as capital expenditures to the extent they improve the
Common Areas to beyond their original condition or utility (other than those
capital expenditures reasonably required for maintenance, repair and replacement
of exiting capital items which costs Landlord shall amortize over a period of
years as reasonably determined by Landlord and which amortized amount may be
included in Common Area Operating Costs;
(v) Leasing fees, commissions or other brokerage commissions
of any kind, or advertising or promotional expenditures (including costs
incurred in leasing to or procuring new tenants with allowances, concessions, or
inducements provided by Landlord, such as the cost of leasehold improvements),
attorney's fee, or other comparable expenses incurred in connection with
attracting any prospective tenant to the Shopping Center or with respect to
disputes or litigation with such tenants;
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(vi) Costs incurred due to a violation by Landlord or any
tenant (other than Tenant) of the Shopping Center of the terms of this Lease or
any other lease or condition, covenant or restriction affecting the Shopping
Center, or any laws, rules, regulations or ordinances applicable to the Shopping
Center;
(vii) Costs of repairs, replacements or other work occasioned
by fire, windstorm, earthquake, or other casualty, or the exercise by
governmental authorities of the right of eminent domain;
(viii) Costs and expenses reimbursed by Tenant or any other
third party; except for reimbursements of Common Area Operating Costs;
(ix) The cost of repair necessitated by the negligence,
willful misconduct or breach of any written agreement by Landlord or Landlord's
agents or any other tenant of the Shopping Center;
(x) Cost of repairs, replacements, alterations or improvements
necessary to make the Shopping Center comply with applicable past, present of
future laws, except to the extent compliance with such laws is required as the
result of Tenant's particular use of the Premises or alterations or additions
made or requested to be made by Tenant;
(xi) The cost incurred in performing work or furnishing
services for individual tenants in the Shopping Center to the extent such work
or services are in excess of the work and services required to be provided to
Tenant under the Lease, and costs incurred for the benefit of particular tenants
and not generally beneficial to the tenants of the Shopping Center;
(xii) Expenses for repair or replacement paid by proceeds of
insurance, condemnation awards, warranties or guarantees, or reimbursed by
tenants of the Shopping Center;
(xiii) Costs of salaries, wages and other employment benefits,
except to the extent such costs are fairly allocable to the Shopping Center and
not to other shopping centers or projects;
(xiv) Amounts that are payable or reimbursable by Landlord to
Tenant with respect to Landlord's Contribution provided by Landlord to Tenant in
connection with Tenant's construction of leasehold improvements at the Premises;
and
(xv) Duplication of charges under the Lease.
RIDER #30 - amending Section 3.5 D
Tenant may audit Landlord's Common Area Operating Costs for such year in
order to verify the accuracy thereof, provided that: (a) Tenant specifically
designates the year Tenant
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intends to audit, which shall be a year during the Lease Term that is also
within [***] years of the date of the audit; (b) such audit is conducted only
during regular business hours at the office where Landlord maintains expense
records of Landlord's Common Area Operating Costs; (c) Tenant gives Landlord
[***] days prior written notice of Tenant's request to audit and Tenant shall
deliver to Landlord a copy of the results of such audit within [***] days of its
receipt by Tenant; (d) such audit must be conducted by Tenant's employees or an
independent nationally recognized accounting firm that is not being compensated
on a contingency fee basis; (e) no audit shall be conducted if Tenant has
previously conducted an audit for the same time period; (f) such audit shall be
at Tenant's sole cost and expense; and (g) any financial or other information
provided by Landlord or obtained by Tenant as a result of such audit shall only
be pursuant to duly executed confidentiality agreements between Landlord, Tenant
and Tenant's agents and employees to whom disclosure is made. Tenant
acknowledges that the Landlord considers its financial and other operating
information to be confidential and will not disclose such information to any
third party without Landlord's prior written consent except to prospective
buyers or lenders, Tenant's accountants and attorneys, or in the case of
compliance with a subpoena or other legal process provided Tenant gives Landlord
at least ten (10) days prior written notice of Tenant's receipt of such subpoena
or legal process and Tenant's intent to disclose pursuant thereto. If the audit
discloses that Tenant has underpaid, Tenant shall promptly reimburse Landlord of
any amount owed. If the audit accurately discloses that Tenant has overpaid,
Landlord shall promptly refund such excess.
RIDER #31 - amending Section 3.6
(A) Page 3-9, line 22, prior to "demand" insert "written".
(B) Page 3-9, line 27, after "thereto" insert "excluding manifest error,
which Tenant shall have the continuing right to have corrected".
RIDER #32 - amending Section 3.8
(A) Page 3-9, line 38, delete "its due date" and substitute "written
notice of such failure".
(B) Page 3-9, line 42, delete "[***]" and substitute "[***]".
RIDER #33 - amending Section 4.1B
(A) Page 4-1, line 27, after "create" insert "material, adverse
interference with the access to and/or visibility of the Premises or Tenant's
business operation on the Premises, or create".
(B) Page 4-1, line 28, prior to "access" insert "pedestrian".
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(C) Page 4- 1, line 32, after "mall" insert "and not immediately fronting
the lease line of the Premises".
(D) Landlord agrees that except for existing kiosks or replacements
thereof, Landlord shall not install or operate or permit any other person to
install or operate any kiosks or carts closer than [***] feet parallel to the
front of Tenant's mall entrance.
(E) Landlord shall (i) provide clear access to Tenant's storefront from
the Common Area, and (ii) use reasonable efforts to restrict the theatre queue
such that it will not materially and adversely impair access to and visibility
of the Premises from the Common Area.
(F) Landlord shall maintain such parking as shall be required to be
maintained pursuant to its agreements with the Department Stores, as the same
may from time to time be modified or amended; it being understood that Tenant
shall, without the necessity of any further consents, be bound by such changes
in parking requirements as shall be consented or agreed to by the Department
Stores or their successors. Tenant's sole and only remedy in the event of a
breach of this covenant will be to cancel and terminate this Lease.
RIDER #34 - amending Section 4.1C
In no event shall the employees of the Premises be required to pay for
parking at the Shopping Center while they are working.
RIDER #35 - amending Section 5.1
(A) Page 5-1, line 2, after "roofs" insert "(including membrane)".
(B) Page 5-1, line 25, after "completed" insert "following notice to
Tenant (except in cases of emergency)".
(C) Page 5-1, line 25, after "performance of" insert ", or failure to
perform,".
(D) Page 5-1, line 27, after "Premises" insert "as reasonably determined
by Tenant".
(E) Landlord shall perform all repairs to the heating, ventilation and air
conditioning equipment and systems (including ducts) in the Shopping Center,
except those that exclusively serve any tenant's premises.
(F) Landlord shall, at Landlord's sole cost and expense, repair any damage
or defect in the Premises of the Shopping Center caused by the acts or omissions
of Landlord and its agents and contractors.
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RIDER #36 - amending Section 6.1A
Page 6-1, line 9, after "manner" insert "using Tenant's commercially
reasonable efforts".
RIDER #37 - amending Section 6.1B
(A) Page 6-1, line 12, delete "To" and substitute "Except as otherwise
provided, to".
(B) Tenant shall have the right to remain open until 1:00 AM or later if
at least one (1) other Tenant is open; provided that entry and exit by customers
after the mall is closed is through the food court entrance which shall remain
open while Tenant is open for business, and Tenant pays for any additional
security staff or devices reasonably required by mall management as a result of
Tenant's remaining open later than standard mall hours. In the event other
tenants are open after mall hours and the additional security for Tenant's late
hours is shared by Tenant and such other tenants, the cost of such additional
security shall be evenly divided among such tenants during the additional hours
Tenant and such other tenant(s) are simultaneously open. Tenant shall not be
responsible to pay any additional costs so long as Tenant is not open for
operation after the theatre closes.
(C) In no event shall Tenant be required to open prior to 10:00 AM on any
day.
(D) The parties agree that until such time as Nordstrom opens for business
at the Shopping Center, Tenant shall pay, as Opening Rent, on a monthly basis,
in lieu of Fixed Rent and Percentage Rent only, [***] percent of Gross Sales
made at the Premises, to be paid in accordance with the provisions of Article 3
relating to payment of Percentage Rent. In addition, Tenant shall be obligated
to pay all Additional Rent and charges due under the Lease. At such time as
Nordstrom opens for business at the Shopping Center, the current Fixed Rent and
Percentage Rent, set forth in Article 1 of the Lease shall be reinstated and
paid in accordance with Article 3 of this Lease. Notwithstanding the foregoing,
Gross Sales transacted at the Premises during the period which Tenant is paying
Opening Rent shall not be included in the calculation at Percentage Rent for the
applicable Lease Year.
RIDER #38 - amending Section 6.1D
Tenant shall not be required to maintain plumbing, electrical or other
systems that are not located within the Premises or that otherwise do not
exclusively serve the Premises, and Tenant shall have no obligation to maintain,
repair or replace exterior or structural parts of the Premises, or plumbing,
HVAC, elevators, or electrical or mechanical systems (except those exclusively
serving the Premises).
RIDER #39 - amending Section 6.1E
(A) Page 6-2, lines 18-19, delete "the manner of".
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(B) Page 6-2, line 19, after "Tenant's" insert "particular".
(C) Page 6-2, line 19, delete "or occupancy".
(D) Page 6-2, line 20, after "Requirement" insert "to the extent triggered
by Tenant's particular use of the Premises".
(E) Page 6-2, line 24, prior to "use" insert "particular".
RIDER #40 - amending Section 6.1F
(A) Page 6-2, line 26, after "Premises" insert "performed by or on behalf
of Tenant and not by Landlord".
(B) Page 6-2, line 32, prior to "acceptable" insert "reasonably".
RIDER #41 - amending Section 6.1G
(A) Page 6-3, line 5, delete "Managing Agent" and substitute "managing
agent, if any,".
(B) Landlord hereby agrees to defend and save Tenant harmless and
indemnified from all injuries, losses, claims and damages (including reasonable
attorneys' fees and disbursements) to any Person or property, arising from,
related to, or in any way connected with Landlord's use or occupancy of the
Common Areas, unless such injury, loss, claim or damage be attributable to the
negligence of Tenant or its agents, servants or employees.
RIDER #42 - amending Section 6.1H
Page 6-3, line 20, delete "[***]" and substitute [***]".
RIDER #43 - deleting Section 6.1I
Section 6.1I is hereby deemed deleted in its entirety.
RIDER #44 - amending Section 6.1J
Page 6-4, line 15, delete "[***]" and substitute "[***]".
RIDER #45 - amending Section 6.1L
(A) Page 6-5, line 4, delete "[***] percent" and substitute "the lesser of
(i) [***] percent and (ii) by the [***]. For purposes of this Rider, the
"Consumer Price Index" shall mean the Consumer Price Index for U.S. City Average
for All Items For All Urban Consumers, 1982-
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84 equals 100 (CPI-U), as published by the United States Department of Labor (or
if not published, the most clearly comparable index)."
(B) Page 6-5, line 6, delete "[***] percent" and substitute "in the manner
set forth above".
RIDER #46 - deleting Section 6.1L(4)
Section 6.1L(4) is hereby deemed deleted in its entirety.
RIDER-#47 - deleting Section 6.1M
Section 6.1M is hereby deemed deleted in its entirety.
RIDER-#48 - deleting Section 6.1O
Section 6.1O is hereby deemed deleted in its entirety.
RIDER #49 - deleting Section 6.1P
Page 6-7, line 43, after "Approvals" insert "(except those that Landlord's
required to obtain)".
RIDER #50 - amending Section 6.1R
Page 6-8, line 6, delete "To" and insert "Following receipt by Tenant of
written notice, to".
RIDER #51 - amending Section 6.1S
(A) Page 6-8, line 11, delete "To" and substitute "Subject to Section 9.18
below,".
(B) Page 6-8, line 11, delete "[***]" and substitute "[***]".
(C) Page 6-8, line 11, after "same" insert "not more than [***] times
during the Term".
(D) Subparagraph (4) is hereby deemed deleted in its entirety.
(E) Page 6-8, line 36, delete "[***]" and substitute "[***]".
RIDER #52 - amending Section 6.2A
(A) Page 6-8, line 7, prior to "officer" insert "then-current".
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(B) Page 6-8, line 10, delete "ten (10)" and substitute "eight (8)".
(C) The Retail Restriction Limit shall not apply to any existing or future
stores of Tenant, or any Affiliate of Tenant, operating under a different trade
name and having a different merchandise mix.
(D) The Retail Restriction Limit shall not apply to Tenant's remote site
promotional activities.
RIDER #53 - amending Section 6.2B
Page 6-9, line 22, prior to "beverages" insert "alcoholic".
RIDER #54 - amending Section 6.2C
Landlord acknowledges that race car simulator noise and track announcer
heard outside the Premises shall not be deemed objectionable.
RIDER #55 - amending Section 6.2D
Page 6-10, line 12, delete "[***]" and substitute "[***]".
RIDER #56 - amending Section 6.2E
Page 6-10, line 38, after "employees" insert "and except for those allowed
by the Permitted Use".
RIDER #57 - amending Section 6.2F
(A) Notwithstanding anything in Section 6.2F to the contrary, provided
such does not involve a change of control, any issuance or transfers of private
stock that are exempt under Securities and Exchange Commission regulations.
(B) Nothing contained in this Lease shall be deemed to prohibit Tenant
from encumbering its trade fixtures and the equipment with security agreements,
but no security interest shall be permitted as to any alterations, installations
or improvements which by the terms of this Lease become part of the Premises.
(C) Tenant shall have the right to issue or transfer Tenant's Stock
without Landlord's Consent.
(D) In the event of assignment or other transfer by Tenant of its interest
in this Lease (whether by merger, consolidation, agency, franchise, or
otherwise) and the assignee or transferee (i) has a net worth equal to or
greater than the net worth of Tenant on the Commencement Date of this Lease or
at the time of such assignment (whichever is greater) and
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(ii) assumes all obligations imposed by this Lease, then as of the effective
date of the assignment, Tenant, Tenant shall be released from all obligations
imposed by this Lease. The form and substance of legal documents shall be
reasonably satisfactory to Landlord.
RIDER #58 - amending Section 6.2F(2)
Section 6.2F(2) is hereby deleted and the following is substituted in lieu
thereof:
"After completion of Tenant's Work and the opening of the Premises for
business, Tenant, without Landlord's consent, may assign this Lease or sublease
the entire Premises to a parent, Affiliate or wholly owned subsidiary of Tenant
(or the Guarantor, if any) or to any entity with which or into which Tenant (or
the Guarantor, if any) may consolidate or merge or to whom all of the assets and
business of the chain of Tenant is sold as a going concern, and who shall assume
for Landlord's benefit the performance of all of the terms, conditions and
covenants of this Lease; provided, however, that the merged or consolidated
entity or transferee of assets shall have a net worth at least equal to the net
worth of Tenant at the time of such consolidation, merger or transfer or at the
time of the Commencement Date of this Lease, whichever shall be greater; and
further provided that the assignee or sublessee shall use the Premises under the
Trade Name and only for the purpose stated in the "Permitted Use" clause."
RIDER #59 - amending Section 6.2F(3)
(A) Page 6-11, line 44, delete "and stockholders".
(B) Page 6-11, line 49 through line 1 on page 6-12, delete
"responsibility" and substitute "status".
(C) Page 6-12, line 9, delete "ten (10)" and substitute "thirty (30)".
(D) Page 6-12, line 19, after "withheld" insert "or delayed".
(E) In the event Landlord exercises its right to terminate this Lease
pursuant to Section 6.2 F (3), Landlord shall pay to Tenant the unamortized
value, less the amount of Landlord's Contribution, and any liens or
encumbrances, of Tenant's leasehold improvements (excluding removable personal
property and fixtures). Tenant shall, not later than ninety (90) days following
its opening for business in the Premises, deliver an affidavit of an officer of
Tenant and a certificate of Tenant's architect, accompanied by bills, receipts,
invoices, canceled checks and the like, specifying the cost of Tenant's Work
which shall thereupon be the basis for the amount to be paid by Landlord
pursuant to this provision. Failure to timely deliver such affidavit and
certificate shall constitute a waiver of Tenant's right to such payment. As of
the termination date, Tenant shall have no further liability for items arising
or accruing after such date.
(F) Page 6-12, lines 34-35, delete "and its officers, directors and
stockholders".
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(G) Page 6-12, line 37, after "nature" insert ", if different from
Tenant's business at the Premises,".
(H) Subparagraph 6.2F(3)(c)(v) is hereby deemed deleted.
RIDER #60 - amending Section 6.2F(4)
(A) Page 6-13, line 19, after "transaction" insert "less out-of-pocket
leasing commissions, tenant improvement costs, advertising costs and other
related expenses paid to third parties".
(B) If an assignment or sublease occurs in connection with the sale of
Tenant's business and a portion of the sales price is allocated to the goodwill
of the business, the payment of said excess rent or other consideration to
Landlord as Additional Rent hereunder shall exclude the valuation of goodwill.
(C) Page 6-13, line 13, after "Percentage Rent" insert "as averaged for
the prior [***] Lease Years".
RIDER #61 - amending Section 6.2F(5)
Page 6-13, line 25, delete "[***]" and substitute "[***]".
RIDER #62 - amending Section 6.2F(7)
(A) Page 6-13, line 32, delete "[***]" and substitute "[***]".
(B) Page 6-13, line 34, delete "[***]" and substitute "[***]".
RIDER #63 - amending Section 6.2G
(A) Page 6-13, line 37, delete "Not" and substitute "Except as otherwise
provided herein, not".
(B) Page 6-13, line 43, after "competitive" insert "with fair market value
prevailing".
(C) Page 6-14, line 3, after "determine" insert "not to exceed prevailing
fair market rates".
RIDER #64 - amending Section 6.2H
Tenant shall be permitted to use professionally prepared signs consistent
with signs displayed in Tenant's other locations operating under the Trade Name.
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RIDER #65 - amending Section 6.2I
Page 6-14, lines 23-27, delete "If Tenant ... load desired."
RIDER #66 - amending Section 7.1B
If the Premises are damaged and the reasonably estimated time to repair
the damage will exceed [***] days, then Tenant shall have the right to terminate
this Lease by delivering written notice to Landlord within thirty (30) days
after the estimated time for rebuilding is determined.
RIDER #67 - amending Section 8.1
(A) Page 8-1, line 3, delete "become insolvent or".
(B) Page 8-1, line 6, delete "or insolvency".
RIDER #68 - amending Section 8.2
(A) Page 8-1, lines 38 and 40, delete "[***]" and substitute "[***]".
(B) Page 8-2, line 1, delete "[***]" and substitute "[***]".
(C) Page 8-2, line 3, after "Premises" insert "for a period in excess of
[***] days".
(D) Page 8-2, lines 4-6, delete "or if Tenant ... of Tenant)".
(E) Page 8-2, line 17, delete "[***]" and substitute "[***]".
RIDER #69 - amending Section 8.3
(A) Page 8-2, line 33, delete "dispossess" and substitute "dispossession".
(B) Landlord shall use reasonable efforts to relet the Premises, it being
understood that such efforts shall consist of the same efforts as Landlord makes
with respect to other vacant space in the Shopping Center and that Landlord
shall not be required to prefer the reletting of the Premises over any other
vacant or empty space in the Shopping Center or to accept a tenant for any use
or purpose other than a use or purpose acceptable to Landlord.
(C) Page 8-3, line 11, delete "[***]" and substitute "[***] percent of".
(D) The last sentence of this Section 8.3A is hereby deemed deleted.
(E) Anything in Section 8.3 A to the contrary notwithstanding, it is
agreed that where reference is made in said Section to sums becoming due and
payable to Landlord for Fixed Rent and Additional Rent for the entire unexpired
balance of the Term, or anything therein referring to
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payment of Fixed Rent and Additional Rent by Tenant to Landlord in a lump sum
shall mean that such payments will be made monthly, with no acceleration, over
the balance of the Term or, alternatively, that Landlord shall have the right to
sue at the end of the Term for amounts accruing to Landlord to the date thereof.
RIDER #70 - deleting Section 8.8
Section 8.8 is hereby deemed deleted in its entirety.
RIDER #71 - amending Section 9.1
(A) Page 9-1, line 7, delete "mailed" and substitute "received or
refused".
(B) Landlord agrees to use reasonable efforts to give copies of default
notices to Tenant's attorneys; however, the failure to give such a notice shall
not affect the validity of any notice otherwise properly given. Tenant's
attorneys are:
PAUL, HASTINGS, JANOFSKY & WALKER LLP
555 SOUTH FLOWER STREET
23RD FLOOR
LOS ANGELES, CALIFORNIA 90071-2371
ATTENTION: RICK S. KIRKBRIDE, ESQ.
RIDER #72 - amending Section 9.7
(A) Page 9-3, line 5, delete "[***]" and substitute "[***]".
(B) Page 9-3, line 30, after "time" insert "upon reasonable notice to
Tenant".
RIDER #73 - amending Section 9.8A
Page 9-3, line 34, prior to "instruments" insert "reasonable".
RIDER #74 - amending Section 9.8B
(A) Page 9-4, line 8, delete "If so requested by Tenant,".
(B) Page 9-3, line 20, after the word "foregoing" add the following:
"(any one or more of the foregoing individually or collectively called an
"Encumbrance") provided however that with respect to Encumbrances recorded after
the date hereof, this Lease shall not be subordinate to such Encumbrance unless
and until Landlord obtains, at Tenant's cost and expense, from the holder of the
Encumbrance placed against the Premises, a non-disturbance agreement in
recordable form which is reasonably acceptable to Tenant and provides that in
the
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event of any foreclosure, sale under a power of sale, ground or master lease
termination or transfer in lieu of any of the foregoing or the exercise of any
other remedy pursuant to any such Encumbrance (a) Tenant's use, possession and
enjoyment of the Premises shall not be disturbed and this Lease shall continue
in full force and effect so long as Tenant is not in default hereunder beyond
any applicable cure period, and (b) this Lease shall automatically become a
direct lease between any successor to Landlord's interest, as Landlord, and
Tenant as if such successor were the Landlord originally named hereunder."
(B) Page 9-3, line 23, delete ", if requested,".
(C) Page 9-3, lines 24-25, delete "At the option ... thereunder,".
(D) Page 9-3, line 37, after the word "hereunder" add the following:
"Notwithstanding the foregoing, Tenant's obligation to execute the documents as
provided in this Subsection shall be subject to the express limitation that (i)
such documents shall be strictly limited to the matters which are subject of
this Subsection, and (ii) no such document may materially increase any of
Tenant's obligations hereunder or materially decrease any of Tenant's rights
under this Lease."
RIDER #75 - deleting Section 9.10
Section 9.10 is hereby deleted in its entirety.
RIDER #76 - amending Section 9.16B
Page 9-9, line 4, after "Center)" insert "and proceeds thereof".
RIDER #77 - deleting Section 9.16C
Section 9.16C is hereby deemed deleted in its entirety.
RIDER #78 - deleting Section 9.17
Section 9.17 is hereby deemed deleted in its entirety.
RIDER #79 - adding Section 9.18 - Confidentiality
In handling any confidential information Landlord shall exercise the same
degree of care that it exercises with respect to its own proprietary information
of the same types to maintain the confidentiality of any non-public information
thereby received or received pursuant to this Lease, except that disclosure of
such information may be made (i) to the subsidiaries or affiliates of Landlord
in connection with their present or prospective business relations with
Landlord, (ii) to prospective transferees or purchasers of any interest in the
Lease, provided that they have entered into a comparable confidentiality
agreement in favor of Tenant and have delivered a copy to Tenant (iii) as
required by law, regulations, rule or order, subpoena, judicial order or similar
order, (iv) as may be required in connection with the examination, audit or
similar investigation of Landlord and (v) as Landlord may deem appropriate in
connection with the exercise of any remedies hereunder. Confidential information
hereunder shall not include information that either (a) as in the public domain,
or becomes part of the public domain, after
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disclosure to Landlord through no fault of Landlord; or (b) is disclosed to
Landlord by a third party, provided Landlord does not have knowledge that such
third party is prohibited from disclosing such information.
RIDER #80 - Special Stipulations
(A) Landlord's Covenants, Representations and Warranties.
Landlord represents and warrants to Tenant, and covenants and agrees with
Tenant, the following:
(i) Landlord is a Delaware limited partnership, duly organized under
the laws of Delaware, validly existing and in good standing under the laws of
Georgia;
(ii) Landlord has good and marketable fee simple title in and to a
portion of the Center and a leasehold interest in a portion of the Center;
(iii) Landlord, and the undersigned signatories executing this Lease
on behalf of Landlord, are duly authorized and empowered to enter into this
Lease with Tenant; and
(iv) There are no restrictive covenants, zoning or other ordinances
or any Laws prohibiting any of the permitted uses of the Premises set forth in
this Lease by Tenant.
(B) (i) Unless and until Tenant vacates the Premises in violation of
this Lease, or Tenant no longer occupies the Premises for the Permitted Use,
then Landlord will not lease space within the Shopping Center to (a) any tenant
whose permitted use allows the operation of motion-based automobile driving
simulators, or any tenant whose trade name contains the word "NASCAR"
(hereinafter referred to as "Competing Business"). If (x) Landlord violates or
suffers the violation of this paragraph, and (y) Tenant's Gross Sales for any
[***] month period during the first [***] years such violation exists are at
least [***] percent less than Tenant's Gross Sales for the prior [***] month
period, then effective retroactive to the day such Competing Business opens for
business, Tenant shall pay the lesser of (i) [***] and (ii) [***] percent of its
[***], for so long as such Competing Business remains open in the Shopping
Center. If a Competing Business is open for a period in excess of [***]
consecutive months, Tenant shall have the right to terminate this Lease upon
thirty (30) days' written notice to Landlord. Notwithstanding the foregoing, the
restriction hereinabove set forth in this paragraph shall be inapplicable to the
following: any tenant or occupant open for business in the Shopping Center on
the date of this Lease who by the terms of its Lease or operating agreement is
not prohibited or restricted from operating a Competing Business from its
premises; provided, however, to the extent the lease under which any of the
foregoing tenants or occupants is not prohibited or restricted from operating a
Competing Business would nevertheless require such tenant or occupant to obtain
Landlord's consent for (or otherwise permit Landlord the opportunity to object
to) a change in use, an assignment or sublet or other change in the manner that
such tenant or occupant (or its successor assign) does business that would
result in such tenant or occupant
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engaging in such Competing Business, Landlord agrees that it shall not grant
such consent to (or object to, as appropriate) such change in use or assignment
or sublet or other change (i.e., Landlord shall take such affirmative action
that is favorable to Tenant under the circumstances); Game Works; any tenant
occupying an outlot parcel in the Center, and any Department Store or Specialty
Store in the Shopping Center. Additionally, Jillian's may have up to [***]
motion based automobile driving simulators without being considered a Competing
Business. Notwithstanding anything in this Lease to the contrary, Gross Sales
transacted during the period which Tenant is paying Alternative Rent shall not
be included in the calculation of Percentage Rent for the applicable Lease Year.
(ii) In the event Tenant shall exercise its right to terminate this
Lease, as provided above, Landlord shall pay, within [***] days following the
date Tenant vacates and surrenders the Premises herein demised, the then
unamortized cost of the permanent leasehold improvements (excluding, inter alia,
trade fixtures and equipment, furnishings, decorations, inventory and other
items of personal property) initially made by Tenant pursuant to Article 2 of
this Lease, less the amount of Landlord's contribution, assuming a useful life
equal to the length of the original Term of this Lease and amortization on a
straight line basis.
(C) In the event of any action or proceeding arising out of or pursuant to
this Lease, the successful party shall be entitled to recover its reasonable
attorney's fees and all other costs and expenses incurred in connection with the
action or proceeding.
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MALL OF GEORGIA
EXHIBIT "A"
GRAPHIC
<PAGE> 83
EXHIBIT B
GRAPHIC
<PAGE> 84
EXHIBIT C
Utilities
1. The initial Environmental Charge shall be as follows:
The initial amount of [***] per year, of which [***] per year is for the
Electric Component [***] per year is for the Non-Electric Portion of the Chilled
Air Component, [***] is for the Electric Portion of the Chilled Air Component,
[***] per year is for the Facilities Fee, and [***] per year is for sanitary
sewer and domestic water, all subject to adjustment as provided herein.
2. Utilities. As of the Commencement Date, all mains, conduits and other
facilities necessary for supplying electric energy, domestic water, chilled air
and sanitary sewer facilities to the Premises will have been installed by
Landlord. Tenant shall pay to Landlord for the furnishing of such services,
computed in the manner hereinafter provided, the Environmental Charge. The
Environmental Charge shall be paid in equal monthly installments in advance,
simultaneously with the payment of Fixed Rent. Tenant shall be solely
responsible and shall pay separately for all charges for telephone and for any
other utilities used or consumed in the Premises, except those utilities
furnished by Landlord, the charge for which is included in the Environmental
Charge.
3. Electric Energy and Water. Landlord will (subject to Paragraph 12 of this
Exhibit) furnish electric energy for Tenant's lighting and power needs in the
Premises and domestic water and sanitary sewer services, subject to the
restrictions and limitations on Tenant set forth in this Lease. Tenant shall
accept and use the electric energy and domestic water and sanitary sewer
facilities furnished by Landlord to the Premises. Tenant, at its own expense,
shall furnish and maintain all electric, lighting and power apparatus and
plumbing apparatus needed in the Premises. Except as otherwise provided in
paragraph 9 of this Exhibit C, Tenant shall not be charged for domestic water
and sanitary sewer facilities by way of measuring the use or consumption thereof
in the Premises on any meter or other mechanical device based upon amount of
use, the cost of furnishing domestic water and sanitary facilities being covered
by Tenant's payment as set forth in paragraph 1 above.
4. Facilities Fee. Tenant shall pay to Landlord a Facilities Fee in the amount
set forth in Paragraph 1 of this Exhibit C. The Facilities Fee represents an
amount agreed upon by Landlord and Tenant as an appropriate sum for the use by
Tenant of the utility systems provided by Landlord in the Shopping Center.
5. Chilled Air. Landlord will (subject to paragraph 12 hereof) furnish chilled
air to the Premises, subject to the restrictions and limitations on Tenant set
forth in this Exhibit C. Tenant shall accept and use such chilled air to air
condition and heat the Premises. Tenant, at its own expense, shall furnish a
thermostat and mixing (VAV) box to be specified by Landlord to heat the chilled
air provided by Landlord and shall provide the distribution system for
chilled/heated air within the Premises. In the event Tenant's approved plans set
forth a cooling requirement (as
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reasonably determined by Landlord, in its sole discretion) which would exceed
1.15 CFM per square foot of Floor Space in the Premises, the initial Electric
Portion of the Chilled Air Component set forth above shall be adjusted upward by
Landlord, in its reasonable determination, to reflect such increased
requirement. The expenses of furnishing chilled air to the Premises shall be
paid by Tenant to Landlord as part of Tenant's payment of the Environmental
Charge and shall be subject to increase as provided for in Paragraph 8.
6. Practices and Rules. The following practices and rules shall apply in
connection with Landlord's obligation to furnish electric energy, chilled air,
and domestic water and in connection with Tenant's use thereof:
A. The Chilled Air Component is predicated upon normal consumption and use
of chilled air by Tenant in air conditioning and heating the Premises during the
hours specified in Section 6.1 of the Lease.
B. Electric energy, chilled air and domestic water shall be made available
to Tenant by Landlord on the days when the Shopping Center is open during the
hours when the Premises are required to be open as specified in Section 6.1 of
the Lease.
C. Tenant shall not materially increase its cooling load beyond that
installed in the Premises at the Commencement Date of the Lease or as shown on
the plans and specifications thereof approved by Landlord.
D. Tenant shall not use chilled air for any purpose other than for air
conditioning and heating in the Premises, and Tenant shall not use electric
energy for any purpose other than for lighting and power demands set forth in
Tenant's plans approved by Landlord.
E. Landlord shall have the right to inspect the Premises in order to test
Tenant's use of chilled air and domestic water and in order to install and
operate suitable devices for the purposes of determining Tenant's demands for
temperatures. The time and frequency of such inspections shall be at Landlord's
sole option, but said test shall be conducted in a manner so as to minimize
interference with or disturbance of Tenant's operations at the Premises. In the
event that inspection indicates that Tenant's chilled air usage deviates from or
materially exceeds the conditions herein set forth, Landlord shall have the
right (in addition to any other rights) to require Tenant to pay the cost of
such excess usage and the costs of said inspection and to require Tenant to
provide, at Tenant's expense, all remedial action or equipment required to
conform Tenant's installations and operations to the conditions set forth in
this Exhibit C. Any such charges payable by Tenant shall be deemed Additional
Rent and shall be payable to Landlord within [***] days after demand.
7. Electric Component. The Environmental Charge as set forth in Paragraph 1 of
this Exhibit includes and sets forth Landlord's initial estimate of the Electric
Component thereof, which estimate shall be subject to adjustment as set forth
below.
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A. Simultaneously with the submission of Tenant's plans and specifications
for Tenant's Work at the Premises, Tenant shall submit to Landlord detailed
electrical plans and specifications, including, without limitation, a list of
all electrical fixtures, equipment and furnishings, the names, model numbers,
electrical ratings and maximum inrush current of each electric consuming item to
be located at the Premises. Provided that Tenant's electrical plans and
specifications do not indicate that Tenant will consume substantially more
electric energy than Landlord's estimated tenant average, the Electric Component
of the Environmental Charge will be billed at the rate of [***] per square foot
of Floor Space per annum from the Commencement Date through the December 31 next
following the Commencement Date. Commencing on the January 1 next following the
Commencement Date, the Electric Component will be adjusted and billed as set
forth in paragraph B below.
B. As part of Tenant's Work, Tenant shall purchase and install an electric
check meter, as set forth in the Shopping Center Tenant Information Manual and
Design Criteria. Such check meter shall measure both the kilowatts used in the
Premises and the kilowatt hours used in the Premises, both of which measurements
shall be used in computing electric service consumption and the annual Electric
Component of Tenant's Environmental Charge (Electric power consumed by Tenant's
heating system is included in the Electric Component). Promptly following the
end of each calendar month throughout the Term, Landlord shall cause all
electric check meters serving the Premises to be read. Promptly following the
end of the calendar year in which the Commencement Date occurs, Landlord shall
cause the actual Electric Component payable by Tenant from the Commencement Date
to the following December 31 to be calculated. If the aggregate amount billed to
Tenant as the Electric Component for said period shall be less than Tenant's
actual Electric Component, Tenant shall pay the differential to Landlord within
[***] days after receipt of Landlord's invoice therefor. If the aggregate amount
billed to Tenant as the Electric Component for said period shall be more than
Tenant's actual Electric Component, Landlord shall credit such amount to future
Environmental Charge payments. In each successive calendar year thereafter, the
monthly Electric Component billed to Tenant shall be one-twelfth (1/12) of the
prior year's actual (annualized) Electric Component, and promptly following the
end of each such year, Landlord shall cause the actual annual Electric Component
payable by Tenant to be calculated. If Tenant's actual Electric Component shall
be more than the aggregate of Tenant's monthly payments for the subject year,
Tenant shall pay the differential to Landlord as aforesaid. So long as Landlord
provides electricity to the Premises on a submetered basis, Tenant shall
purchase electricity from Landlord or Landlord's designated agent at the same
rates Tenant would be required to pay if Tenant were to purchase electric energy
directly from the utility company furnishing electric energy to the Shopping
Center, it being understood that the term "rate" shall include all fees,
adjustments, tariffs and surcharges that Tenant would be required to pay to said
utility company. Where more than one such check meter measures the service to
Tenant, the service rendered through each submeter may be computed and billed
separately in accordance with the above. In the event that such bills are not
paid within [***] days after the same are rendered, Landlord may, in addition to
any other remedy available to Landlord, without further notice, discontinue the
service of electric current to the Premises without releasing Tenant from any
liability under the Lease and without
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Landlord or Landlord's agent incurring any liability for any damage or loss
sustained by Tenant by such discontinuance of services.
C. If there are imposed any taxes or if there is an increase in the amount
of present taxes upon the sale or furnishing of electric energy to the Shopping
Center or to the Premises, then the Electric Component (and the Electric Portion
of the Chilled Air Component) shall be increased in the same proportion as the
increase or assessment to Landlord. Such taxes shall be paid by Tenant to
Landlord in the same manner as if such taxes were to be paid directly by Tenant.
As used in this Article, the term "taxes" shall mean any and all taxes, ordinary
or extraordinary, foreseen or unforeseen, levied, imposed or assessed in
connection with the furnishing of electric energy to the Premises or to the
Shopping Center.
D. Tenant shall not make any material alteration or addition to the
electric system of the Premises without the prior written approval of Landlord,
which approval shall not be unreasonably withheld.
8. Chilled Air. The Environmental Charge as set forth in Paragraph 1 includes a
component for the furnishing by Landlord to the Premises of chilled air for use
by Tenant for air conditioning and heating purposes (the Chilled Air Component
of the Environmental Charge). The Chilled Air Component is composed of a sum
applicable to the purchase by Landlord of electric energy for the production of
chilled air (the Electric Portion) and all other charges related to the
production of chilled air (the Non-Electric Portion). The Electric Portion shall
be increased for the same causes and in the same manner as the Electric
Component of the Environmental Charge is increased as set forth in Paragraph 7.
The Non-Electric Portion shall be increased as provided in Paragraph 17 hereof.
9. Water and Sewer.
A. The Environmental Charge as set forth in Paragraph 1 included a
component for the furnishing by Landlord to the Premises of domestic water and
the right to use the sanitary sewer system of the Shopping Center (the Water and
Sewer Component). If the rate charged by the public utility, Governmental
Authority or other entity supplying water to the Shopping Center shall be
increased, then the Water and Sewer Component shall be increased in the same
proportion as the increase to Landlord. It is understood that as used in this
paragraph, the term "rate" shall include any surcharges which Landlord is
required to pay in connection with obtaining domestic water and/or sanitary
sewer services for the Shopping Center.
B. If Landlord shall so request, Tenant shall install a water meter to
measure the amount of water consumed at the Premises. Landlord shall read the
meter on a regular basis, and Tenant shall pay to Landlord, in lieu of the
amount set forth in paragraph 1 hereof the amount, based on consumption, which
Tenant would otherwise pay to the utility company providing water to the
Shopping Center.
10. Disputes. Any dispute between Landlord and Tenant arising out of or relating
to the amount of increase of the Environmental Charge which Tenant is required
to pay pursuant to this Exhibit C shall be determined promptly by a reputable
independent electrical engineer to be
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selected by Landlord and paid by Tenant. The determination of said engineer
shall be binding and conclusive on Landlord and Tenant.
11. Effective Dates. All increases of the Environmental Charge as a result of
any of the events described in this Exhibit shall be effective as of the date
the event occurs which constitutes the basis for such increase and the
provisions of this Exhibit shall be cumulative and each of said paragraphs shall
operate independently of each other, so that each or all events, if they occur,
shall be a separate, cumulative basis for any increase of the Environmental
Charge. Landlord reserves the right to bill any increase pursuant to this
Exhibit at such times as Landlord shall in its sole discretion determine and the
failure to bill any increase pursuant to this Exhibit on the date the event
which constitutes the basis for the increase occurs shall not be deemed a waiver
of Landlord's right to so bill at a subsequent time, effective, in any event, as
of the date the event which constitutes the basis for the increase occurs. Each
time an increase in the Environmental Charge occurs pursuant to this Exhibit,
Landlord shall notify Tenant of the amount of such increase and the new dollar
amount. However, said increase shall be effective from the date the increase
became operative. Any decrease in consumption by reason of removal of electric
consuming equipment from the Premises shall, provided the equipment is removed,
be measured from the date written notice of removal is served upon Landlord.
12. Discontinuance of Utilities. Landlord hereby reserves the right to
discontinue furnishing electric energy, chilled air or domestic water to Tenant
in the Premises at any time upon not less than [***] days' written notice to
Tenant. If Landlord exercises such right of termination, the Lease shall
continue in full force and effect and shall be unaffected thereby, except that
from and after the effective date of such termination, Landlord shall not be
obliged to furnish the discontinued utility to Tenant and the Environmental
Charge payable under the Lease shall be reduced by the amount of the
discontinued component included therein at the time of discontinuance. If
Landlord so discontinues furnishing electric energy or water to Tenant, Tenant
shall arrange to obtain same directly from the utility company furnishing the
same to the Shopping Center. Electric energy may be furnished to Tenant by means
of the then existing building system feeders, risers and wiring to the extent
that the same are available, suitable and safe for such purposes. All meters and
additional panel boards, feeders, risers, wiring and other conductors and
equipment which may be required to obtain electric energy directly from such
utility company shall be installed and maintained by Tenant at its expense.
13. Reduction in Power Factor. If Tenant's use of electricity causes reduction
in the "power factor" of its electric service below ninety (90%) percent
lagging, Tenant will, at Tenant's expense, make the necessary corrections
through the proper approved uses of capacitors or other approved devices.
14. Furnishing of Utilities. Any utility which Landlord is required or elects to
provide or causes to be provided to the Premises may be furnished by an agent
employed or by an independent contractor engaged by Landlord, and Tenant shall
accept the same therefrom to the exclusion of all other suppliers. Landlord
shall not be liable to any extent to Tenant in damages
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or otherwise if any one or more of said utilities is interrupted, impaired or
terminated because of failures, repairs, installations or improvements, nor
shall any such interruption, impairment or termination in any way release Tenant
from the performance of any of its obligations under the Lease.
15. Rates if Central Utility Plant is Declared to be a Public Utility. If
Landlord's operation of the central utility plant furnishing any utility to the
Premises and the other premises served thereby shall be determined to be a
public utility service, and rates therefor should be fixed or approved by the
public authority having jurisdiction, then such rates for such service shall
supersede the provisions of this Exhibit with respect to the determination of
the rates to be paid by Tenant for such services, and Tenant shall pay therefor
at such rates.
16. Sales and Use Tax. Tenant shall pay all sales, use and other taxes imposed
by any Governmental Authority upon the manufacture, sale, use, transmission,
distribution or other process necessary or incidental to the furnishing of
electric energy and chilled air, and domestic water to the Premises. If Landlord
has paid said taxes, Tenant shall reimburse Landlord for the full amount thereof
on demand.
17. Increases of Certain Charges. The Non-Electric Portion of the Chilled Air
Component of the Environmental Charge shall be adjusted on the January 1 next
following the first anniversary of the Commencement Date and on each January 1
thereafter, as provided in the next following sentences. The term "Consumer
Price Index" means the Consumer Price Index for U.S. City Average for All Items
For All Urban Consumers, 1982-84 equals 100 (CPI-U), as published by the Bureau
of Labor Statistics of the United States Department of Labor or if not published
then the index of prices most closely comparable. The term "Base Number" means
the Consumer Price Index number applicable to the January 1 next following the
Commencement Date. The term "Current Number applicable to a calendar year" means
the latest Consumer Price Index number published for the month of January (or if
no Consumer Price Index is published for January then for the next succeeding
month) of each, respective calendar year occurring subsequent to the first
anniversary of the Commencement Date. If the latest Current Number applicable to
a calendar year exceeds the Base Number, then the new amount of the Non-Electric
Portion effective January 1 of each calendar year shall be obtained by
multiplying the original amount thereof at the time of execution and delivery of
the Lease by a fraction, the numerator of which is the Current Number applicable
to any calendar year and the denominator of which is the Base Number; provided,
however, that in no event shall the Environmental Charge ever be less than the
amount specified in Article 1 of the Lease.
18. Obligations Prior to Commencement Date. Tenant shall pay Environmental
Charges for temporary water, chilled air and electricity from the date upon
which the Premises are made available to Tenant for Tenant's Work until the
Commencement Date, such payment to be at the amounts and rates set forth in
Paragraph 1.
19. Communication Services. Landlord may install in the Premises and the
Shopping Center such communications lines and systems as Landlord shall elect
and, in connection therewith, Landlord may provide communication services (other
than voice-grade telephone service) for Tenant's use in the Premises. To the
extent that Tenant requires the type of communication services made available by
Landlord, Tenant shall use the services offered by Landlord to the
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exclusion of any other provider. Tenant shall pay Landlord, as an additional
component of the Environmental Charge, for the furnishing of such services, in
an amount not to exceed what Tenant would pay were Tenant to obtain such
services from another provider in the locale in which the Shopping Center is
located.
20. All capitalized terms used herein unless otherwise defined shall have the
same meaning as in the Lease.
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Exhibit D
Intentionally Deleted
<PAGE> 92
EXHIBIT E
LANDLORD'S WORK
I. Landlord's Work at Tenant's Premises:
Landlord shall perform the following work in or at the Premises
("Landlord's Work"). The respective costs of those items of Landlord's
Work which are to be reimbursed by Tenant are delineated in the rate
schedule which constitutes Part II of this Exhibit E. Said costs shall
be deemed Additional Rent under the Lease, shall be billed to Tenant
upon completion of Landlord's Work, and shall be due and payable within
thirty (30) days thereafter.
ITEMS
A. Electrical Service An empty conduit sized to service capacity for
a 277/480 V, 3 phase, 4 wire, 60 cycle AC
service capacity sized to accommodate a
maximum load of 20 watts per square foot of
Floor Space in the Premises shall be provided
from the Landlord's electrical room to a point
within the Premises. The location of such
conduit shall be indicated on the Lease
Outline Drawing. Landlord shall provide a
service connection point in the electrical
room.
B. Telephone Room An 1" empty conduit shall be provided for
Tenants not adjacent to a service corridor. A
6" wide cable tray will be provided in the
service corridor and the cable tray will
terminate in the Landlord's telephone room.
C. Sewer Service One (1) 4 inch sanitary sewer connection shall
be installed at one point below the Premises.
The approximate location of such connection
shall be indicated on the Lease Outline
Drawing.
D. Sanitary Vent Furnish and install one (1) 2" common sanitary
vent connection at one point within the
Premises. Approximate location and size will be
indicated on the Lease Outline Drawing.
E. Water Service A 3/4 inch domestic cold water service with
ball valve shall be brought to one point
within the Premises. The approximate location
of such service shall be indicated on the
Lease Outline Drawing.
F. Sprinklers A sprinkler system flange connection shall be
installed within the Premises for extension by
Tenant, in accordance with all applicable
codes, references design standards and IRI.
All branch sprinkler piping within the
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Premises shall be at Tenant's expense.
G. Toilet Exhaust A gravity toilet exhaust duct
main shall be provided to each Premise.
Approximate location of duct main will be
indicated on Lease Outline Drawing.
H. Floor Floor Slab. Furnish and install a concrete
floor slab designed to support a maximum live
load of 75 pounds per square foot and a
partition load of 20 pounds per square foot.
Smooth troweled finish, no depression,
recesses or cutting of slab will be permitted
without the prior written approval of Landlord.
I. Walls Demising Studs. Furnish and install 6 inch
demising metal studs from floor to the
underside of the roof deck and/or structural
members.
J. Roof Roof Penetration. All roof penetrations and
flashing will be a Tenant expense and
performed solely by Landlord's contractor.
Landlord reserves the right to disallow any
installation which may exceed the structural
capabilities of the roof system or if, in
Landlord's opinion, the appearance of such
equipment will be detrimental to the
appearance of the building.
K. Tenant Plan Review Landlord will review Tenant's plans to
ascertain that the Tenant and his Architect
are in compliance with the Tenant and
Information Design Manuals and have designed
improvements that uniquely identify the retail
store and are a credit to the Tenant and the
Mall.
L. Construction Deposit Deposit required before Tenant construction can
commence to ensure the successful completion of
build-out including punch list items,
construction clean-up, and administration
close-out.
M. Intentionally Omitted
N. Trash Removal During construction, fixturing and
merchandising of the Premises, Landlord will
remove Tenant's trash and debris from the
building site (not Tenant's Premises) at a
cost based upon size of the Premises. Tenant
shall deliver trash and debris to designated
locations and deposit same in receptacles
provided. If Tenant does not maintain the
Premises in a clean and orderly condition or
properly dispose of its trash and debris in
the designated locations, Landlord may perform
such work and charge Tenant Landlord's actual
cost plus fifteen (15%) percent thereof
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for administration.
O. Temporary Electric Landlord shall provide limited temporary
During Construction Service electric service for Tenant's
contractors. This is the only temporary
electric service available to such contractors.
Tenant shall have five (5) days from beginning
work to connect to permanent power.
P. Temporary Storefront Landlord will furnish and install a painted
Closure gypsum board and metal stud wall enclosure at
those tenant storefronts' for those tenant
spaces' that are not under construction or open
at mall grand opening which tenant's contractor
can move and use for future construction
barricade.
II. Landlord's Work - Reimbursed by Tenant
<TABLE>
<S> <C> <C>
A. Electrical Conduit Empty - 2".................. $ 1,100.00 EA
B. Telephone Hook/Conduit......................... $ 100.00 EA
C. Sanitary Sewer................................. $ 500.00 EA
D. Sanitary Vent.................................. $ 600.00 EA
E. Water.......................................... $ 500.00 EA
F. Sprinkler Shut-Down Fee........................ $ 200.00 EA
G. Toilet Exhaust................................. $ 600.00 EA
H. Floor
1. Pavers (material only)
Floor.................................... $ 15.00/SF
Base..................................... $ 15.00/LF
2. Carpet (material only)................... $ 6.50/SF
3. Concrete Slab............................ $ 2.50/SF
I. Walls
1. Demising Studs (one-half wall) (No
Drywall)
6' metal stud, 16" O.C................... $ 12.00/LF
J. Roof Cuts/Penetrations/Flashing................ $ Actual Cost
plus 15% Admin
K. Tenant Plan Reviews
1. Initial Review........................... $
</TABLE>
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<TABLE>
<S> <C> <C>
2. Additional Review........................ $
L. Construction Deposit (Required from Contractor) $
M. Intentionally Omitted
N. Trash Removal
1. Up to 1,000 SF........................... $ 500.00 EA
2. 1,001 SF to 3,000 SF..................... $ 1,200.00 EA
3. 3,001 SF or more......................... $ 1,700.00 EA
O. Temporary Electric............................. $ 0.38/SF/MTH
P. Temporary Storefront Closure................... $ 40.00/LF
</TABLE>
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EXHIBIT F
MODIFICATION OF LEASE
LANDLORD NAME AND ADDRESS: MALL OF GEORGIA, L.L.C.,
a Delaware limited liability company
115 West Washington Street
Indianapolis, Indiana 46204
TENANT NAME AND ADDRESS:
DATE OF LEASE:
PREMISES: Store No.
SHOPPING CENTER: Mall of Georgia
Gwinnett County, Georgia
DATE OF AGREEMENT:
R E C I T A L
Landlord and Tenant have agreed to amend the Lease in accordance with the
terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
it is hereby agreed as follows:
1. The Commencement Date of the Lease shall be _________________ and the
Expiration Date of the Term shall be _________________.
2. Landlord and Tenant have agreed that the Size of the Premises is
_____________ square feet.
3. The adjusted Fixed Rent shall be as follows:
$_______ per year from ______________ through ______________;
$_______ per year from ______________ through ______________; and
$_______ per year from ______________ through ______________.
4. The adjusted Promotion Fund Charge shall be $_____________ per year
initially or such other greater amount as shall be determined pursuant to
Section 6.1 L.
5. The adjusted Grand Opening Contribution is $_______________________.
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6. All additional Rent charges calculated based on the Size of the
Premises shall be adjusted according to the adjusted size of the Premises as of
the Commencement Date.
7. After execution and delivery of this Modification of Lease, Landlord
shall bill Tenant for any monies owed retroactive to the Commencement Date of
the Lease. Tenant shall pay such amount within ten (10) days after demand.
8. Except as provided herein all of the terms, conditions and covenants of
the lease shall remain the same and in full force and effect.
9. Any capitalized terms used herein shall have the meaning ascribed to it
in the Lease.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Agreement as of
the day and year first above written.
Tenant:
By:
---------------------------------
Title:
Landlord:
MALL OF GEORGIA, L.L.C., a Delaware
limited liability Company
By: CPI-Georgia Corporation, a
Delaware corporation, Managing Member
By:
---------------------------------
David Simon, Chief Executive
Officer
F-2
<PAGE> 1
EXHIBIT 10.30
SILICON ENTERTAINMENT, INC.
SECURED SUBORDINATED CONVERTIBLE NOTE
PURCHASE AGREEMENT
JUNE 30, 1999
<PAGE> 2
SILICON ENTERTAINMENT, INC.
SECURED SUBORDINATED CONVERTIBLE NOTE AND WARRANT
PURCHASE AGREEMENT
This Secured Subordinated Convertible Note Purchase Agreement (the
"Agreement") is made as of the 30th day of June 1999 by and between Silicon
Entertainment, Inc., a California corporation (the "Company"), and each of the
investors listed on Exhibit A attached to this Agreement (each a "Purchaser" and
together the "Purchasers").
RECITALS
The Company desires to issue and sell and the Purchasers desire to
purchase secured subordinated convertible promissory notes in substantially the
form attached to this Agreement as Exhibit B (the "Notes") which shall be
convertible on the terms stated therein into equity securities of the Company as
specified in the Notes. The Notes and the equity securities issuable upon
conversion or exercise thereof (and the securities issuable upon conversion of
such equity securities) are collectively referred to herein as the "Securities."
AGREEMENT
In consideration of the mutual promises contained herein and other good
and valuable consideration, receipt of which is hereby acknowledged, the parties
to this Agreement agree as follows:
1. PURCHASE AND SALE OF NOTES AND WARRANTS.
(a) SALE AND ISSUANCE OF NOTES. Subject to the terms and conditions
of this Agreement, each Purchaser agrees to purchase at the Closing and the
Company agrees to sell and issue to each Purchaser a Note in the principal
amount specified with respect to such Purchaser on Exhibit A to this Agreement.
The Company's agreements with each of the Purchasers are separate agreements,
and the sales of the Notes to each of the Purchasers are separate sales and
issuances; provided that any amendments of this Agreement must be in accordance
with Section 9(g).
(b) CLOSINGS. The first closing (the "Closing") of the sale and
purchase of the Notes, Warrants and Call Options under this Agreement shall take
place at the offices of Gray Cary Ware & Freidenrich, LLP, 400 Hamilton Avenue,
Palo Alto, California at 10:00 a.m. on June 30, 1999, or at such other time,
date and place as are mutually agreeable to the Company and the Purchasers,
provided that the aggregate purchase price for the Notes at the time of the
Initial Closing shall be not less than $5,000,000. Subsequent closings (each a
"Subsequent Closing") of the sale and purchase of Securities under this
Agreement shall take place at the offices of Gray Cary Ware & Freidenrich, LLP,
no later than December 31, 1999. In no event shall the aggregate purchase price
for the Notes at the time of the Initial Closing or any Subsequent Closing
exceed $10,000,000. The Initial Closing and the Subsequent Closings, if any,
shall hereinafter be referred to individually as a "Closing" and collectively as
the "Closings" and the date of any Closing shall hereinafter be referred to as a
"Closing Date." At each Closing
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other than the Initial Closing, Exhibit A shall be amended to include additional
Purchasers and such new Purchasers shall become parties to this Agreement. The
date of the Closing shall hereinafter be referred to as a "Closing Date."
(c) DELIVERY. At the Closing, the Company will deliver to each
Purchaser the Note to be purchased by such Purchaser against receipt by Company
of the purchase price set forth opposite the Purchasers name on the Schedule of
Purchasers.
2. SUBORDINATION. The indebtedness evidenced by the Notes shall be
expressly subordinated, to the extent and in the manner set forth in the Notes,
in right of payment to the prior payment in full of all of the Company's Senior
Indebtedness (as defined in the Note), and each Purchaser hereby agrees to enter
into such agreements and take such additional action as may be necessary to
perfect such subordination.
3. SECURITY INTEREST. The indebtedness represented by the Notes shall be
secured by all of the assets of the Company in accordance with the provisions of
a security agreement among the Company and the Purchasers in the form attached
to this Agreement as Exhibit C (the "Security Agreement").
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each Purchaser that except as set forth in the
Schedule of Exceptions attached hereto as Exhibit D:
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California and has all requisite corporate power and authority
to carry on its business as now conducted and as proposed to be conducted.
(b) AUTHORIZATION. All corporate action on the part of the Company,
its officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement and the authorization, sale, issuance
and delivery of the Notes and the Warrants, the shares of the Company's capital
stock issuable on conversion or exercise thereof, and the performance of all
obligations of the Company hereunder and thereunder has been taken or will be
taken prior to the Closing. The Agreement, the Notes, and the Warrants
(collectively, the "Transaction Documents") when executed and delivered by the
Company, shall constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and other laws of general application affecting enforcement of
creditors' rights generally, as limited by laws relating to the availability of
specific performance, injunctive relief, or other equitable remedies.
(c) CAPITALIZATION. The authorized capital of the Company consists,
or will consist, immediately prior to the Closing, of:
(i) 20,000,000 shares of Preferred Stock, of which (A) 3,266,667
shares have been designated Series A Preferred Stock, 3,266,667 of which are
issued and outstanding immediately prior to the Closing, (B) 6,222,531 shares
have been designated Series B Preferred Stock, 5,528,776 of which are issued and
outstanding immediately prior to the
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Closing and (C) 8,500,000 shares have been designated Series C Preferred Stock,
6,974,414 of which are issued and outstanding immediately prior to the Closing.
All of the outstanding shares of Preferred Stock have been duly authorized,
fully paid and are nonassessable.
(ii) 40,000,000 shares of Common Stock, 4,309,752 shares of
which are issued and outstanding immediately prior to the Closing. All of the
outstanding shares of Common Stock have been duly authorized, fully paid and are
nonassessable and issued in compliance with all applicable federal and state
securities laws. The Company has reserved shares of Common Stock for issuance
upon conversion of the Preferred Stock.
(iii) The Company has reserved 4,360,000 shares of Common Stock
for issuance to officers, directors, employees and consultants of the Company
pursuant to its Stock Option and Stock Bonus Plans, duly adopted by the Board of
Directors and approved by the Company's shareholders (collectively, the "Stock
Plans"). Of such reserved shares of Common Stock, as of June 1, 1999, options to
purchase 3,837,299 shares have been granted and are currently outstanding, and
522,701 shares of Common Stock remain available for issuance to officers,
directors, employees and consultants pursuant to the Stock Plan.
(iv) Except for outstanding options issued pursuant to the Stock
Plans and warrants to purchase 631,834 shares of Common Stock and warrants to
purchase 53,334 shares of Series B Preferred Stock and 717,644 shares of Series
C Preferred Stock, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal or similar rights)
or agreements, orally or in writing, for the purchase or acquisition from the
Company of any shares of its capital stock.
(d) REPORTS OF THE COMPANY; NO MATERIAL ADVERSE CHANGES. The Company
has furnished Purchasers with copies of its April 30, 1999 financial statements
(collectively, the "Financial Statements"). Said Financial Statements, as of
their respective dates, were accurate and complete in all material respects and
did not omit any material information required to be set forth therein. Since
April 30, 1998 there has not been any change in the assets, liabilities,
financial condition or operating results of the Company from that reflected in
the Financial Statements, except changes in the ordinary course of business that
have not been, in the aggregate, materially adverse.
(e) INTELLECTUAL PROPERTY RIGHTS.
(i) To the best of its knowledge, the Company has sufficient
title and ownership of all patents, trademarks, service marks, trade names,
copyrights, trade secrets, information, proprietary rights, and processes
(collectively, "Intellectual Property") necessary for its business as now
conducted and as proposed to be conducted to the Company's knowledge, without
any conflict with or infringement of the rights of others;
(ii) Except for agreements with its own employees or
consultants, there are not outstanding options, licenses, or agreements of any
kind relating to the matters listed in subsection (i) above or that grant rights
to any other person to manufacture, license, produce, assemble, market or sell
the Company's products, nor is the Company bound by or a party to any options,
licenses, or agreements of any kind with respect to the Intellectual Property
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of any other person or entity, other than licenses or agreements relating to the
Company's use of certain trademarks of Nascar, and various drivers, race tracks
and teams.
(iii) The Company has not received any communications alleging
that the Company or its employees has violated or infringed or, by conducting
its business as proposed, would violate or infringe any of the Intellectual
Property of any other person or entity; and
(iv) The Company is not aware that any of its employees is
obligated under any contract (including licenses, covenants, or commitments of
any nature) or other agreement, or subject to any judgment, decree, or order of
any court or administrative agency, that would interfere with the use of such
employee's best efforts to promote the interests of the Company with respect to
the Intellectual Property of the Company or otherwise or that would conflict
with the Company's business as proposed to be conducted.
(f) SECURITY INTERESTS. The grant of security interests in the
Security Agreement, when effective by execution of such Security Agreement (and
the filings required under the Uniform Commercial Code of the State of
California and U.S. Patent and Trademark Office, when completed), creates a
valid, binding, and effective security interest in the Collateral (as defined in
Section 1 of the Security Agreement), free from any other liens and
encumbrances.
(g) COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS. The Company is not
in violation or default in any material respect of any provision of its
certificate of incorporation or bylaws or in any material respect of any
provision of any material mortgage, indenture, agreement, instrument, or
contract to which it is a party or by which it is bound, or of any federal or
state judgment, order, writ, decree, or any federal or state statute, rule,
regulation or restriction applicable to the Company. The execution, delivery,
and performance by the Company of the Transaction Documents, and the
consummation of the transactions contemplated hereby and thereby, will not
result in any such violation or be in material conflict with or constitute, with
or without the passage of time or giving of notice, either a material default
under any such provision or an event that results in the creation of any
material lien, charge or encumbrance upon any assets of the Company or the
suspension, revocation, impairment, forfeiture or nonrenewal of any material
permit, license, authorization, or approval applicable to the Company, its
business or operations, or any of its assets or properties.
(h) LITIGATION. There is no action, suit, proceeding, or
investigation pending or, to the best knowledge of the Company, threatened
against the Company that questions the validity of the Transaction Documents, or
the right of the Company to enter into such agreements, or to consummate the
transactions contemplated hereby or thereby, or that might result, either
individually or in the aggregate, in any material adverse change in the assets,
business properties, prospects or financial condition of the Company.
(i) TAXES. The Company has no material liability for any federal,
state or local taxes, except for taxes which have accrued and are not yet
payable or are being contested by the Company in good faith. The Company has
paid all payroll taxes required to be paid by it.
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(j) OFFERING. Assuming the accuracy of the representations and
warranties of each Purchaser contained in Section 6 hereof, the offer, issue,
and sale of the Securities is and will be exempt from the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended (the
"1933 Act"), and has been registered or qualified (or are exempt from
registration and qualification) under the registration, permit, or qualification
requirements of all applicable state securities laws.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby represents and warrants to the Company that:
(a) PURCHASE ENTIRELY FOR OWN ACCOUNT. The Securities to be acquired
by the Purchaser will be acquired for investment for the Purchaser's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and the Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing the same. The
Purchaser has not been formed for the specific purpose of acquiring any of the
Securities.
(b) DISCLOSURE OF INFORMATION. The Purchaser is aware of the
Company's business affairs and financial condition and has acquired sufficient
information about the Company to reach an informed and knowledgeable decision to
acquire the securities.
(c) RESTRICTED SECURITIES. The Purchaser understands that the
Securities have not been, and will not be, registered under the Securities Act,
by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Purchaser's representations as
expressed herein. The Purchaser understands that the Securities are "restricted
securities" under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Purchaser must hold the Securities indefinitely
unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and
qualification requirements is available. The Purchaser acknowledges that the
Company has no obligation to register or qualify the Securities for resale. The
Purchaser further acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period
for the Securities, and on requirements relating to the Company which are
outside of the Purchaser's control, and which the Company is under no obligation
and may not be able to satisfy.
(d) NO PUBLIC MARKET. The Purchaser understands that no public
market now exists for any of the securities issued by the Company, that the
Company has made no assurances that a public market will ever exist for the
Securities.
(e) LEGENDS. The Purchaser understands that the Securities, and any
securities issued in respect thereof or exchange therefor, may bear one or all
of the following legends:
(i) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE
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BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933."
(ii) Any legend required by the Blue Sky laws of any state to
the extent such laws are applicable to the shares represented by the certificate
so legended.
(f) ACCREDITED INVESTOR. The Purchaser is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the Act.
(g) FOREIGN INVESTORS. If a Purchaser is not a United States person
(as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as
amended), such Purchaser hereby represents that it has satisfied itself as to
the full observance of the laws of its jurisdiction in connection with any
invitation to subscribe for the Securities or any use of this Agreement,
including (i) the legal requirements within its jurisdiction for the purchase of
the Securities, (ii) any foreign exchange restrictions applicable to such
purchase, (iii) any governmental or other consents that may need to be obtained
and (iv) the income tax and other tax consequences, if any, that may be relevant
to the purchase, holding, redemption, sale or transfer of the Securities. Such
Purchaser's subscription and payment for, and his or her continued beneficial
ownership of the Securities, will not violate any applicable securities or other
laws of Purchaser's jurisdiction.
6. CONDITIONS OF THE PURCHASERS' OBLIGATIONS AT CLOSING. The obligations
of each Purchaser to the Company under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 5 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of the Closing.
(b) QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be obtained and effective as of
the Closing.
(c) CONSENTS AND WAIVERS. The Company shall have obtained any and
all consents (including all governmental or regulatory consents, approvals or
authorizations required in connection with the valid execution and delivery of
this Agreement, the Security Agreement and the Amendment to the Rights
Agreement), permits and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement, the Security Agreement and the
Amendment to the Rights Agreement.
(d) LEGAL INVESTMENT. At the time of the Closing, the purchase of
the Notes and Warrants by the Purchasers hereunder shall be legally permitted by
all laws and regulations to which the Purchasers and the Company are subject.
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(e) AMENDMENT TO RIGHTS AGREEMENT. The Company, each Purchaser and
the other parties listed as signatories thereto shall have executed and
delivered Amendment No. 1 to that certain Third Amended and Restated Rights
Agreement dated December 31, 1998 in the form attached hereto as Exhibit E.
(f) SECURITY AGREEMENT. The Company and the Purchasers shall have
executed the Security Agreement.
7. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations
of the Company to each Purchaser under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each Purchaser contained in Section 6 shall be true on and as of
the Closing with the same effect as though such representations and warranties
had been made on and as of the Closing.
(b) QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be obtained and effective as of
the Closing.
8. COVENANTS OF THE COMPANY.
(a) NO OTHER INDEBTEDNESS. The Company shall not incur any
indebtedness for money borrowed (other than equipment lease financing
transaction) to the extent that the Company's aggregate payment obligations
thereunder would exceed Ten Million Dollars ($10,000,000) without the Majority
Purchasers' prior written consent, which shall not be unreasonably withheld.
(b) NO DIVIDENDS. No payment or declaration of a cash dividend,
shall be made on the Common Stock of the Company while any Obligation under the
Note is outstanding.
(c) FINANCIAL STATEMENTS. No later than 30 days following the end of
each quarter, the Company shall deliver to the Purchasers its balance sheet as
at the end of such period and its income statement for such period and for that
portion of the Company's financial reporting year ending with such period. In
addition, no later than 90 days following the end of each financial reporting
year, the Company shall deliver to the Purchasers its audited balance sheet,
income statement, and statement of cash flows for such year.
(d) STAY, EXTENSION AND USURY LAWS. The Company convenants (to the
extent that it may lawfully do so) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, how or at any time hereafter
in force, that might affect the covenants or the performance of its obligations
under this Agreement and the Notes; and the Company (to the extent it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power
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granted to the holders of Notes pursuant to this Agreement, but will suffer and
permit the execution of every such power as though no such law has been enacted.
(e) LIMITATION ON TRANSACTIONS WITH AFFILIATES. Neither the Company
nor any of its subsidiaries shall enter into any transaction or series of
transactions to sell, lease, transfer, exchange or otherwise dispose of any of
its properties or assets to or to purchase any property or assets from, or for
the direct or indirect benefit of, an affiliate of the Company or of any
subsidiary of the Company, make any investment in or enter into any contract,
agreement, understanding, loan, advance or guarantee with, or for the direct or
indirect benefit of, an affiliate of the Company or of any subsidiary of the
Company (each, including any series of transactions with one or more affiliates,
an "Affiliate Transaction"), unless the Board of Directors of the Company or the
relevant subsidiary determines, as evidenced by a Board resolution, that the
terms of such Affiliate Transaction are fair and reasonable to the Company and
no less favorable to the Company or the relevant subsidiary than those that
could have been obtained at that time in a comparable arms-length transaction by
the Company or such subsidiary with an unrelated Person.
(f) MAINTENANCE OF PROPERTIES. The Company will cause all properties
used or useful in the conduct of its business or the business of any subsidiary
of the Company to be maintained and kept in good condition, repair and working
order, subject to normal wear and tear, and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this section (f) shall prevent the Company from
discontinuing the operation or maintenance of any such properties if such
discontinuance is, as determined by the Company in good faith, desirable in the
conduct of its business or the business of any subsidiary and not
disadvantageous in any material respect to the holders of the Notes.
(g) COMPLIANCE WITH LAWS. The Company shall comply, and shall cause
each of its subsidiaries to comply, with all applicable statutes, rules,
regulations, orders and restrictions of the United States of America, all states
and municipalities thereof, and of any governmental department, commission,
board, regulatory authority, bureau, agency and instrumentality of the
foregoing, in respect of the conduct of their respective businesses and the
ownership of their respective properties, except such as are being contested in
good faith and by appropriate proceedings and except for such noncompliance as
well not in the aggregate have a Material Adverse Effect.
(h) EUROPEAN OPERATIONS. Company covenants that it will use best
efforts to form in either 2001 or 2002 a new corporation to be called Silicon
Entertainment-Europe, Inc. ("Affiliated European Entity") which will be granted
the right by the Company to operate NASCAR Silicon Motor Speedway or related
version based on Formula One or GT racing in Europe in return for a royalty
payment of 6.5% of net revenues to the Company. The Affiliated European Entity
will be owned sixty percent (60%) by the Company and forty percent (40%) by the
holders of the Notes. Any development required is intended to be performed by
the Company and paid by the Affiliated European Entity. The financing of the
Affiliated European Entity shall be determined later. If by July 1, 2002 the
Affiliated European Entity has not been
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formed, the holders of the Notes may require the Company to repurchase rights to
operate in Europe for the cash payment of $600,000.
(i) TERMINATION. This Section 9 (except subsection (h)) shall
terminate as to each Purchaser at such time as no Obligation under such
Purchasers Note is outstanding.
9. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
(b) GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
(c) COUNTERPARTS. Note Purchase Agreement and all documents attached
to the Note Purchase Agreement (including Note, warrants, Security Agreement and
Amendment No. 1 to Amended and Restated Investors Rights Agreement. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original and all of which together shall constitute one instrument.
(d) TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(e) NOTICES. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the U.S. mail as certified or
registered mail with postage prepaid, if such notice is addressed to the party
to be notified at such party's address or facsimile number as set forth below or
as subsequently modified by written notice.
(f) AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived only with the written consent of the Company and the holders
of at least a majority in interest of the Notes. Any amendment or waiver
effected in accordance with this Section 10(f) shall be binding upon all the
Purchasers and all transferees of the Securities, each future holder of all such
Securities, and the Company.
(g) SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith, in order to maintain the economic position enjoyed
by each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
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excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
(h) ENTIRE AGREEMENT. This Agreement, and the documents referred to
herein constitute the entire agreement between the parties hereto pertaining to
the subject matter hereof, and any and all other written or oral agreements
existing between the parties hereto are expressly canceled.
(i) EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges that
it is not relying upon any person, firm or corporation, other than the Company
and its officers and directors, in making its investment or decision to invest
in the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable for any action heretofore or hereafter taken or
omitted to be taken by any of them in connection with the Securities.
(j) CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES WHICH ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
[Signature Pages Follow]
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The parties have executed this Secured Subordinated Convertible Note and
Warrant Purchase Agreement as of the date first written above.
COMPANY:
SILICON ENTERTAINMENT, INC.
By: /s/
------------------------------------------
Name:
Title:
Address:
PURCHASERS:
/s/
---------------------------------------------
(Purchaser)
By:________________________________________
Name:______________________________________
(print)
Title:_____________________________________
SIGNATURE PAGE TO SECURED SUBORDINATED CONVERTIBLE NOTE
AND WARRANT PURCHASE AGREEMENT
<PAGE> 13
EXHIBIT A
SCHEDULE OF PURCHASERS
<TABLE>
<CAPTION>
ORIGINAL PRINCIPAL AMOUNT
NAME/ADDRESS OF PURCHASER OF NOTE TOTAL PURCHASE PRICE
- ------------------------- ------------------------- --------------------
<S> <C> <C>
Galladio Holding B.V. $2,260,000 $2,000,000
Attn: Mr. Nicolaas Monteban
Wagenaarweg 7
2597 LL The Hague
The Netherlands
Wagenaarkwartier's - Gravenhage 2,260,000 2,000,000
B.V.
Attn: Mr. Nicolaas Monteban
Wagenaarweg 7
2597 LL The Hague
The Netherlands
Van der Lee Partnership 1,130,000 1,000,000
Mr. Nicolaas Monteban
Wagenaarweg 7
2597 LL The Hague
The Netherlands
TOTAL: $5,650,000 $5,000,000
</TABLE>
<PAGE> 14
EXHIBIT B
FORM OF SECURED SUBORDINATED
CONVERTIBLE PROMISSORY NOTE
<PAGE> 15
EXHIBIT C
FORM OF SECURITY AGREEMENT
<PAGE> 16
THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON ITS CONVERSION HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
AND IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES AND OTHER JURISDICTIONS.
SILICON ENTERTAINMENT, INC.
8.5% CONVERTIBLE NOTE DUE 2002
No. R- $000,000
SILICON ENTERTAINMENT, INC., a corporation duly organized and existing
under the laws of California (the "Company") for value received, hereby promises
to pay to ____________ or registered assigns, the principal sum of ____________
on June 30, 2002 and to pay interest thereon, from June 30, 2000, or from the
most recent interest payment date to which interest has been paid or duly
provided for, semi-annually on June 30 and December 30 in each year, commencing
December 30, 2000, at the rate of 8.5 % per annum, until the principal hereof is
due. The interest so payable, and punctually paid or duly provided for, on any
interest payment date will be paid to the person in whose name this Security (or
one or more predecessor Securities) is registered at the close of business on
the regular record date for such interest, which shall be the June 30 or
December 30 (whether or not a business day), as the case may be, next preceding
such interest payment date. Payment of the principal of this Security shall be
made upon the surrender of this Security to the Company, at its office at 210
Hacienda Avenue, Campbell, CA 95008, or such other office within the United
States as shall be notified by the Company to the holder hereof) (the
"Designated Office"), in such coin or currency of the United States of America
as at the time of payment shall be legal tender for the payment of public and
private debts. Payment of interest on this Security shall be made by wire
transfer to a U.S. dollar account maintained by the payee with a bank in the
United States of America, provided that if the holder shall not have furnished
wire instructions in writing to the Company no later than the record date
relating to an interest payment date, such payment may be made by U.S. dollar
check mailed to the address of the Person entitled thereto as such address shall
appear in the Company security register. Each of the Company and the holder of
this Security hereby acknowledges and agrees that the principal amount of this
Security shall equal one hundred thirteen percent (113%) of the total purchase
price paid by such holder to the Company, and that such additional amount shall
represent, and shall be expensed by the Company as, the first full year of
interest payable on this Security.
1. Conversion.
(a) Optional Conversion. The holder of this Security is entitled at
any time on or after June 30, 1999 and before the close of business on June 30,
2002 (or in case the holder hereof has exercised his right to require the
Company to repurchase this Security or a portion hereof, then in respect of this
Security or such portion hereof, as the case may be, until and including, but
(unless the Company defaults in making the payment due upon repurchase) not
<PAGE> 17
after, the close of business on the Repurchase Date) to convert this Security
into fully paid and nonassessable shares (calculated as to each conversion to
the nearest share) of Common Stock of the Company at the rate of one (1) share
of Common Stock for each $7.50 of principal amount of Security (or at the
current adjusted rate if an adjustment has been made as provided below) (the
"Conversion Ratio"); provided, however that should this Security be converted by
the holder at any time prior to June 30, 2000, the principal amount of this
Security shall be reduced by an amount equal to the product of (i) the number of
full months elapsed from June 30, 1999 through the date of conversion of this
Security divided by twelve (12); (ii) thirteen percent (13%); and (iii) the
total purchase price of this Security as set forth on Exhibit A attached hereto.
(b) Automatic Conversion. This Security shall automatically be
converted into fully paid and nonassessable shares (calculated as to each
conversion to the nearest share) of Common Stock of the Company at the rate of
one (1) share of Common Stock for each $7.50 of principal amount of Security (or
at the Conversion Rate if an adjustment has been made as provided below) one (1)
business day after the earlier to occur of (i) the closing of the sale of Common
Stock of the Company in an underwritten public offering registered under the
Securities Act of 1933, as amended (the "IPO"), at a public offering price of
greater than $7.50 per share (as adjusted for any combinations, stock splits,
stock dividend, recapitalizations and the like) or (ii) following the IPO, such
time that the average closing price of the Company's Common Stock exceeds $10.00
per share for any continuous (4) week period; provided, however that should this
Security be converted by the holder at any time prior to June 30, 2000, the
principal amount of this Security shall be reduced by an amount equal to the
product of (i) the number of full months elapsed from June 30, 1999 through the
date of conversion of this Security divided by twelve (12); (ii) thirteen
percent (13%); and (iii) the total purchase price of this Security as set forth
on Exhibit A attached hereto.
(c) Procedure for Conversion. The holder of this Security may
exercise the conversion rights as to such Security, or any portion thereof, by
surrender of this Security, duly endorsed or assigned to the Company or in blank
to the Company at the Designated Office, accompanied by written notice to the
Company that the holder hereof elects to convert this Security (or if less than
the entire principal amount hereof is to be converted, specifying the portion
hereof to be converted). Conversion shall be deemed to have been effected on the
date when such delivery is made, or the conditions for automatic conversion set
forth in Section 1(b) above have been satisfied. Upon surrender of this Security
for conversion, the holder will be entitled to receive the interest accruing on
the principal amount of this Security then being converted from the interest
payment date next preceding the date of such conversion to such date of
conversion. No payment or adjustment is to be made on conversion for dividends
on the Common Stock issued on conversion hereof. No fractions of shares or scrip
representing fractions of shares will be issued on conversion, but instead of
any fractional interest, the Company shall pay a cash adjustment, computed on
the basis of the Closing Price of the Common Stock on the date of conversion,
or, at its option, the Company shall round up to the next higher whole share.
(d) The Conversion Ratio shall be subject to adjustments from time
to time as follows:
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<PAGE> 18
(1) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company payable in shares of
Common Stock, the Conversion Ratio in effect at the opening of business on the
day following the Determination Date for such dividend or other distribution
shall be increased by dividing such Conversion Ratio by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on such Determination Date and the denominator shall be the sum of
such number of shares and the total number of shares constituting such dividend
or other distribution, such increase to become effective immediately after the
opening of business on the day following such Determination Date. For the
purposes of this paragraph (1), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company but
shall include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock. The Company will not pay any dividend or
make any distribution on shares of Common Stock held in the treasury of the
Company.
(2) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion Ratio
in effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the Conversion Ratio in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately reduced, such increase or
reduction, as the case may be, to become effective immediately after the opening
of business on the day following the day upon which such subdivision or
combination becomes effective.
(e) Whenever the Conversion Ratio is adjusted as provided in Section
1(d), the Company shall compute the adjusted Conversion Ratio in accordance with
Section 1(d) and shall prepare a certificate signed by the chief financial
officer of the Company setting forth the adjusted Conversion Ratio and showing
in reasonable detail the facts upon which such adjustment is based, and shall
promptly deliver such certificate to the holder of this Security.
(f) In case:
(1) the Company shall declare a dividend or other distribution
on its Common Stock payable (i) otherwise than exclusively in cash or (ii)
exclusively in cash in an amount that would require any adjustment pursuant to
Section 1(d); or
(2) the Company shall authorize the granting to the holders of
its Common Stock of rights, options or warrants to subscribe for or purchase any
shares of capital stock of any class or of any other rights; or
(3) of any reclassification of the Common Stock of the Company,
or of any consolidation, merger or share exchange to which the Company is a
party and for which approval of any shareholders of the Company is required, or
of the conveyance, sale, transfer or lease of all or substantially all of the
assets of the Company; or
(4) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
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<PAGE> 19
(5) the Company or any Subsidiary shall commence a tender offer
for all or a portion of the Company's outstanding shares of Common Stock (or
shall amend any such tender offer);
then the Company shall cause to be delivered to the holder of this Security, at
least 20 days (or 10 days in any case specified in clause (1) or (2) above)
prior to the applicable record, expiration or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, rights, options or warrants, or, if
a record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, rights, options or
warrants are to be determined, (y) the date on which the right to make tenders
under such tender offer expires or (z) the date on which such reclassification,
consolidation, merger, conveyance, transfer, sale, lease, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, sale, lease, dissolution, liquidation or winding up. Neither the
failure to give such notice nor any defect therein shall affect the legality or
validity of the proceedings described in clauses (1) through (5) of this Section
1(f).
(g) The Company shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of the Security, the full number of shares
of Common Stock then issuable upon the conversion of this Security.
(h) Except as provided in the next sentence, the Company will pay
any and all taxes and duties that may be payable in respect of the issue or
delivery of shares of Common Stock on conversion of the Security. The Company
shall not, however, be required to pay any tax or duty which may be payable in
respect of any transfer involved in the issue and delivery of shares of Common
Stock in a name other than that of the holder of this Security, and no such
issue or delivery shall be made unless and until the person requesting such
issue has paid to the Company the amount of any such tax or duty, or has
established to the satisfaction of the Company that such tax or duty has been
paid.
(i) The Company agrees that all shares of Common Stock which may be
delivered upon conversion of the Security, upon such delivery, will have been
duly authorized and validly issued and will be fully paid and nonassessable (and
shall be issued out of the Company's authorized but unissued Common Stock) and,
except as provided in Section 1(h), the Company will pay all taxes, liens and
charges with respect to the issue thereof.
(j) In case of any consolidation of the Company with any other
person, any merger of the Company into another person or of another person into
the Company (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Company) or any conveyance, sale, transfer or lease of all or substantially
all of the properties and assets of the Company, the person formed by such
consolidation or resulting from such merger or which acquires such properties
and assets, as the case may be, shall execute and deliver to the holder of this
Security a supplemental agreement providing that such holder have the right
thereafter, during the period this Security shall be
4
<PAGE> 20
convertible as specified in Sections 1(a) and 1(b), to convert this Security
only into the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, conveyance, sale, transfer or lease (including
any Common Stock retainable) by a holder of the number of shares of Common Stock
of the Company into which this Security might have been converted immediately
prior to such consolidation, merger, conveyance, sale, transfer or lease,
assuming such holder of Common Stock of the Company (i) is not a person with
which the Company consolidated, into which the Company merged or which merged
into the Company or to which such conveyance, sale, transfer or lease was made,
as the case may be (a "Constituent Person"), or an Affiliate of a Constituent
Person and (ii) failed to exercise his rights of election, if any, as to the
kind or amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer or lease (provided that if the
kind or amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer, or lease is not the same for
each share of Common Stock of the Company held immediately prior to such
consolidation, merger, conveyance, sale, transfer or lease by others than a
Constituent Person or an Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("Non-electing Share"), then for the
purpose of this Section 1(j) the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance, sale, transfer
or lease by the holders of each Non-electing Share shall be deemed to be the
kind and amount so receivable per share by a plurality of the Non-electing
Shares). Such supplemental agreement shall provide for adjustments which, for
events subsequent to the effective date of such supplemental agreement, shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 1. The above provisions of this Section 1(j) shall similarly apply
to successive consolidations, mergers, conveyances, sales, transfers or leases.
In this paragraph, "securities of the kind receivable" upon such consolidation,
merger, conveyance, transfer, sale or lease by a holder of Common Stock means
securities that, among other things, are registered and transferable under the
Securities Act, and listed and approved for quotation in all securities markets,
in each case to the same extent as such securities so receivable by a holder of
Common Stock.
(k) The Company (i) will effect all registrations with, and obtain
all approvals by, all governmental authorities that may be necessary under any
United States Federal or state law (including the Securities Act of 1933, the
Securities Exchange Act of 1934 and state securities and Blue Sky laws) for the
shares of Common Stock issuable upon conversion of this Security to be lawfully
issued and delivered as provided herein, and thereafter publicly traded (if
permissible under such Securities Act) and qualified or listed as contemplated
by clause (ii) (it being understood that the Company shall not be required to
register the Common Stock issuable on conversion hereof under the Securities
Act, except pursuant to the Rights Agreement between the Company and the initial
holder of this Security); and (ii) will list the shares of Common Stock required
to be issued and delivered upon conversion of Securities, prior to such issuance
or delivery, on each national securities exchange on which outstanding Common
Stock is listed or quoted at the time of such delivery, or if the Common Stock
is not then listed on any securities exchange, to qualify the Common Stock for
quotation on the Nasdaq National Market or such other inter-dealer quotation
system, if any, on which the Common Stock is then quoted.
2. Repurchase upon Change in Control.
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<PAGE> 21
(a) In the event that a Change in Control (as hereinafter defined)
shall occur, then the holder of this Security shall have the right, at such
holder's option, to require the Company to repurchase, and upon the exercise of
such right the Company shall repurchase, this Security, or any portion of the
principal amount hereof that is equal to $1,000 or any integral multiple
thereof, on the date (the "Repurchase Date") that is 30 days after the date on
which the Company gives notice thereof to the holder of this Security, at a
purchase price equal to 101% of the principal amount of this Security to be
repurchased, plus interest accrued to the Repurchase Date (the "Repurchase
Price"); provided, however, that installments of interest on this Security whose
stated maturity is on or prior to the Repurchase Date shall be payable to the
holder of this Security, or one or more predecessor Securities, registered as
such on the relevant Record Date according to their terms. The Company agrees to
give the holder of this Security notice of any Change in Control, by facsimile
transmission confirmed in writing by overnight courier service, promptly and in
any event within two days of the occurrence thereof.
(b) To exercise a repurchase right, the holder shall deliver to the
Company on or before the 5th day prior to the Repurchase Date, together with
this Security, written notice of the holder's exercise of such right, which
notice shall set forth the name of the holder, the principal amount of this
Security to be repurchased (and, if this Security is to be repurchased in part,
the portion of the principal amount thereof to be repurchased and the name of
the person in which the portion thereof to remain outstanding after such
repurchase is to be registered) and a statement that an election to exercise the
repurchase right is being made thereby. Such written notice shall be
irrevocable, except that the right of the holder to convert this Security (or
the portion hereof with respect to which the repurchase right is being
exercised) shall continue until the close of business on the Repurchase Date.
(c) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall pay or cause to be paid to the holder
the Repurchase Price in cash, together with accrued and unpaid interest to the
Repurchase Date; provided, however, that installments of interest that mature on
or prior to the Repurchase Date shall be payable in cash, to the holders of this
Security, or one or more predecessor Securities, registered as such at the close
of business on the relevant regular record date.
(d) If this Security (or portion thereof) is surrendered for
repurchase and is not so paid on the Repurchase Date, the principal amount of
this Security (or such portion hereof, as the case may be) shall, until paid,
bear interest to the extent permitted by applicable law from the Repurchase Date
at the rate per annum borne by this Security, and shall remain convertible into
Common Stock until the principal of this Security (or portion thereof, as the
case may be) shall have been paid or duly provided for.
(e) If this Security is to be repurchased only in part, it shall be
surrendered to the Company at the Designated Office (with, if the Company so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company duly executed by, the holder hereof or his attorney
duly authorized in writing), and the Company shall execute and make available
for delivery to the holder without service charge, a new Security or Securities,
containing identical terms and conditions, each in an authorized denomination in
aggregate principal amount equal to and in exchange for the unrepurchased
portion of the principal of the Security so surrendered.
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<PAGE> 22
(f) For purposes of this Section 2
(1) the term "beneficial owner" shall be determined in
accordance with Rule 13d-3 promulgated by the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934; and
(2) a "Change in Control" shall be deemed to have occurred at
the time, after the original issuance of this Security, of:
(i) the acquisition by any person of beneficial ownership,
directly or indirectly, through a purchase, merger or other acquisition
transaction or series of transactions, of shares of capital stock of the Company
entitling such person to exercise 50% or more of the total voting power of all
shares of capital stock of the Company entitled to vote generally in the
elections of directors (any shares of voting stock of which such person is the
beneficial owner that are not then outstanding being deemed outstanding for
purposes of calculating such percentage) other than any such acquisition by the
Company or any employee benefit plan of the Company; or
(ii) any consolidation or merger of the Company with or
into, any other person, any merger of another person with or into the Company,
or any conveyance, transfer, sale, lease or other disposition of all or
substantially all of the assets of the Company to another person (other than (a)
any such transaction (x) which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock and
(y) pursuant to which holders of Common Stock immediately prior to such
transaction have the entitlement to exercise, directly or indirectly, 50% or
more of the total voting power of all shares of capital stock entitled to vote
generally in the election of directors of the continuing or surviving person
immediately after such transaction and (b) any merger which is effected solely
to change the jurisdiction of incorporation of the Company and results in a
reclassification, conversion or exchange of outstanding shares of Common Stock
into solely shares of common stock).
3. Events of Default. (a) "Event of Default", wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or Harder of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon this Security
when it becomes due and payable, and continuance of such default for a period of
15 days; or
(2) default by the Company in the performance of its obligations
in respect of any conversion of this Security (or any portion hereof) in
accordance with Section 1; or
(3) failure by the Company to give any notice of a Change of
Control required to be delivered in accordance with Section 2(a); or
7
<PAGE> 23
(4) default in the performance, or breach, of any material
covenant or warranty of the Company herein (other than a covenant or warranty a
default in the performance or breach of which is specifically dealt with
elsewhere in this Section 3(a)) and continuance of such default or breach for a
period of 15 days after there has been given, by registered or certified mail,
to the Company by the holders of at least 25 % of the outstanding principal
amount of this Security a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(5) a default under any bond, debenture, note or other evidence
of indebtedness for money borrowed by the Company, or under any agreement,
mortgage, indenture or instrument under-which there may be issued or by which
there may be secured or evidenced any indebtedness for money borrowed by the
Company, with a principal amount then outstanding in excess of $1,000,000,
whether such indebtedness now exists or shall hereafter be created, which
default shall constitute a failure to pay the principal of such indebtedness (in
whole or in any part greater than $1,000,000) when due and payable or shall have
resulted in such indebtedness (in whole or in any part greater than $1,000,000)
becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable, without such indebtedness having been
discharged, or such acceleration having been rescinded or annulled, within a
period of 15 days after there shall have been given, by registered or certified
mail, to the Company by the holders of at least 25 % of the outstanding
principal amount of this Security a written notice specifying such default and
requiring the Company to cause such indebtedness to be discharged or cause such
acceleration to be rescinded or annulled and stating that such notice is a
"Notice of Default" hereunder; or
(6) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or
(7) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or similar relief under any applicable
Federal or State law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or of
any substantial part of its property, or the making by it of an assignment for
the benefit of creditors,
8
<PAGE> 24
or the admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company in furtherance
of any such action.
(b) If an Event of Default (other than an Event of Default specified
in Section 3(a)(6) or 3(a)(7)) occurs and is continuing, then in every such case
the holder of this Security may declare the principal hereof to be due and
payable immediately, by a notice in writing to the Company, and upon any such
declaration such principal and all accrued interest thereon shall become
immediately due and payable. If an Event of Default specified in Section 3(a)(6)
or 3(a)(7) occurs and is continuing, the principal of, and accrued interest on,
this Security shall ipso facto become immediately due and payable without any
declaration or other act of the holders.
4. Subordination. The indebtedness evidenced by this Note is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full of all the Company's Senior
Indebtedness, as hereinafter defined.
(a) Senior Indebtedness. As used in this Note, the term "Senior
Indebtedness" shall mean the principal of and unpaid accrued interest on (i) up
to $2,000,000 of indebtedness of the Company or with respect to which the
Company is a guarantor to any bank or other financial institution whose
principal business is lending funds on a secured basis, (ii) any indebtedness of
the Company with respect to equipment financing transactions which indebtedness
shall not exceed the sum of $1.25 million times the number of stores in
operation by the Company and (iii) any such indebtedness or any debentures,
notes or other evidence of indebtedness issued solely in exchange for such
Senior Indebtedness, or any indebtedness arising solely from the satisfaction of
such Senior Indebtedness by a guarantor.
(b) Default on Senior Indebtedness. If there should occur any
receivership, insolvency, assignment for the benefit of creditors, bankruptcy,
reorganization or arrangements with creditors (whether or not pursuant to
bankruptcy or other insolvency laws), sale of all or substantially all of the
assets, dissolution, liquidation or any other marshaling of the assets and
liabilities of the Company, or if this Note shall be declared due and payable
upon the occurrence of an event of default with respect to any Senior
Indebtedness, then (i) no amount shall be paid by the Company in respect of the
principal of or interest on this Note at the time outstanding, unless and until
the principal of and interest on the Senior Indebtedness then outstanding shall
be paid in full, and (ii) no claim or proof of claim shall be filed with the
Company by or on behalf of the Holder of this Note that shall assert any right
to receive any payments in respect of the principal of and interest on this
Note, except subject to the payment in full of the principal of and interest on
all of the Senior Indebtedness then outstanding. If there occurs an event of
default that has been declared in writing with respect to any Senior
Indebtedness, or in the instrument under which any Senior Indebtedness is
outstanding, permitting the holder of such Senior Indebtedness to accelerate the
maturity thereof, then, unless and until such event of default shall have been
cured or waived or shall have ceased to exist, or all Senior Indebtedness shall
have been paid in full, no payment shall be made in respect of the principal of
or interest on this Note, unless within 90 days after the happening of such
event of default, the maturity of such Senior Indebtedness shall not have been
accelerated.
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<PAGE> 25
(c) Effect of Subordination. Subject to the rights, if any, of the
holders of Senior Indebtedness under this Section 4 to receive cash, securities
or other properties otherwise payable or deliverable to the Holder of this Note,
nothing contained in this Section 4 shall impair, as between the Company and the
Holder, the obligation of the Company, subject to the terms and conditions
hereof, to pay to the Holder the principal hereof and interest hereon as and
when the same become due and payable, or shall prevent the Holder of this Note,
upon default hereunder, from exercising all rights, powers and remedies
otherwise provided herein or by applicable law.
(d) Subrogation. Subject to the payment in full of all Senior
Indebtedness and until this Note shall be paid in full, the Holder shall be
subrogated to the rights of the holders of Senior Indebtedness (to the extent of
payments or distributions previously made to such holders of Senior Indebtedness
pursuant to the provisions of Section 4 above) to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness. No
such payments or distributions applicable to the Senior Indebtedness shall, as
between the Company and its creditors, other than the holders of Senior
Indebtedness and the Holder, be deemed to be a payment by the Company to or on
account of this Note; and for the purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness to which the Holder would be
entitled except for the provisions of this Section 4 shall, as between the
Company and its creditors, other than the holders of Senior Indebtedness and the
Holder, be deemed to be a payment by the Company to or on account of the Senior
Indebtedness.
(e) Undertaking. By its acceptance of this Note, the Holder agrees
to execute and deliver such documents as may be reasonably requested from time
to time by the Company or the lender of any Senior Indebtedness in order to
implement the foregoing provisions of this Section 4.
5. Prepayment. This Note may be prepaid in while or in part at any time
by the Company without the prior written consent of Holder. Any such prepayment
will be applied first to the payment of expenses due under this Note, second to
interest accrued on this Note and third, if the amount of prepayment exceeds the
amount of all such expenses and accrued interest, to the payment of principal of
this Note.
6. Other.
(a) No provision of this Security shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of and interest on this Security at the times, places and rate, and in
the coin or currency, herein prescribed or to convert this Security as herein
provided.
(b) The Company will give prompt written notice to the holder of
Security of any change in the location of the Designated Office.
(c) The transfer of this Security is registrable on the Security
Register of the Company Upon surrender of this Security for registration of
transfer at the Designated Office, duly endorsed by, Or accompanied by a written
instrument of transfer in form satisfactory to the Company duly executed by, the
holder hereof or his attorney duly authorized in writing, and
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<PAGE> 26
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees. Such Securities are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. No service
charge shall be made for any such registration of transfer, but the Company may
require payment of a sum sufficient to recover any tax or other governmental
charge payable in connection therewith. Prior to due presentation of this
Security for registration of transfer, the Company and any agent of the Company
may treat the person in whose name this Security is registered as the owner
thereof for all purposes, whether or not this Security be overdue, and neither
the Company nor any such agent shall be affected by notice to the contrary.
(d) This Security shall be governed by and construed in accordance
with the laws of the State of California, United States of America.
[Signatures to Follow]
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<PAGE> 27
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed under its corporate seal.
Dated: June 30, 1999.
SILICON ENTERTAINMENT, INC.
By: ___________________________________
Printed Name: _________________________
Title: ________________________________
Attest:
By: __________________________________
Printed Name: ________________________
Title: ________________________________
12
<PAGE> 28
EXHIBIT A
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
NAME/ADDRESS OF PURCHASER ORIGINAL PRINCIPAL AMOUNT TOTAL PURCHASE PRICE
OF NOTE
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
- -------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 29
SECURITY AGREEMENT
This Security Agreement (the "Agreement") is made as of May __, 1999 by
and between Silicon Entertainment, Inc., a California corporation (the "Debtor")
in favor of each of the parties listed on Exhibit A hereto (each a "Secured
Party" and collectively the "Secured Parties").
RECITALS
The Debtor and the Secured Parties are parties to a Secured Subordinated
Convertible Note Purchase Agreement of even date with this Agreement (the
"Purchase Agreement") pursuant to which the Secured Parties shall purchase Notes
(as defined in the Purchase Agreement) from the Debtor. The parties intend that
the Debtor's obligations to repay the Notes be secured by all of the assets of
the Debtor, subject to the rights of Senior Indebtedness (as defined below in
the Note).
AGREEMENT
In consideration of the purchase of the Notes by the Secured Parties and
for other good and valuable consideration, the Debtor hereby agrees with the
Secured Parties as follows:
1. GRANT OF SECURITY INTEREST. To secure the Debtor's full and timely
performance of all of the Debtor's obligations and liabilities to the Secured
Parties pursuant to the Notes (including, without limitation, Debtor's
obligation to timely pay the principal amount of, and interest on, the Notes)
(the "Obligations"), the Debtor hereby grants to the Secured Parties a
continuing security interest (the "Security Interest") in and to all of the
property described on Exhibit B to this Agreement (the "Collateral").
2. AGREEMENT AMONG THE SECURED PARTIES.
(a) PAYMENT PRO RATA. Payment to the Secured Parties under the Notes
shall be made in proportion to the principal and accrued interest then
outstanding on any such date of payment to each, until such obligations are paid
or retired in full.
(b) SHARING OF PAYMENTS. If any Secured Party shall at any time
receive any payment of principal, interest or other charge arising under a Note,
or upon any other obligation of Debtor or any sums by virtue of counterclaim,
offset, or other lien that may be exercised, or from any security, other than
payments made on the same date to all Secured Parties, such Secured Party shall
share such payment or payments ratably with the other Secured Parties as to
maintain as near as possible the unpaid balance of the loans pro rata according
to the Secured Parties' aggregate proportionate interests.
(c) SHARING OF COLLATERAL. For purposes of this Agreement, "Event of
Default" means Debtor's failure to pay or discharge the Obligations in full in
accordance with the terms of the Notes. Upon the occurrence of any Event of
Default, and if the Secured Parties proceed to any exercise rights with respect
to the Collateral, the Secured Parties shall share the Collateral and the
proceeds of such Collateral ratably, without priority of one over the other.
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<PAGE> 30
(d) APPOINTMENT OF AGENT. The Secured Parties agree that Secured
Parties holding a majority in interest of the principal amount of Notes
outstanding may act together as the agent of all Secured Parties to execute and
deliver in their names such instruments, documents, statements and amendments
thereto as may be necessary or appropriate to perfect or continue the perfection
of the security interest granted in this Agreement.
(e) ENFORCEMENT. Enforcement of the Secured Parties' rights
hereunder shall be taken by Secured Parties holding a majority in interest of
the principal amount of Notes outstanding acting together as the agent for all
of the Secured Parties. The action of such percentage taken in accordance with
the preceding sentence, shall in each case bind all the Secured Parties. Each of
the Secured Parties agrees that any Secured Parties acting under Sections 2(d)
and 2(e) shall not be liable for any acts taken in good faith in enforcing the
rights of the Secured Parties hereunder.
3. PERFORMANCE BY SECURED PARTIES OF DEBTOR'S OBLIGATIONS. If the Debtor
fails to perform or comply with any of its agreements or covenants contained in
this Agreement and the Secured Parties perform or comply, or otherwise cause
performance or compliance, with such agreement or covenant in accordance with
the terms of this Agreement, then the reasonable expenses of the Secured Parties
incurred in connection with such performance or compliance shall be payable by
the Debtor to the Secured Parties on demand and shall constitute Obligations
secured by this Agreement.
4. REMEDIES. If an Event of Default has occurred and is continuing, the
Secured Parties may exercise, in addition to all other rights and remedies
granted to them in this Agreement and in any other instrument or agreement
relating to the Obligations, all rights and remedies of a secured party under
the California Uniform Commercial Code, as amended from time to time (the
"Code"). Without limiting the foregoing, the Secured Parties, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law) to or upon the Debtor or any other
person (all of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances collect, receive, appropriate and realize
upon any or all of the Collateral, and/or may sell, lease, assign, give option
or options to purchase, or otherwise dispose of and deliver any or all of the
Collateral (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of a
Secured Party or elsewhere upon such terms and conditions as the Secured Parties
may deem advisable, for cash or on credit or for future delivery without
assumption of any credit risk. The Secured Parties shall have the right upon any
such public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase all or any part of the Collateral so sold,
free of any right or equity of redemption in the Debtor, which right or equity
is hereby waived or released. The Secured Parties shall apply the net proceeds
of any such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable expenses incurred therein or connection with the
care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Secured Parties under this Agreement (including,
without limitation, reasonable attorneys' fees and expenses) to the payment in
whole or in part of the Obligations, in such order as the Secured Parties may
elect, and only after such application and after the payment by the Secured
Parties of any other amount required by any provision of law, need the Secured
Parties account for the surplus, if any, to the Debtor. To the extent permitted
by applicable law, the
2
<PAGE> 31
Debtor waives all claims, damages and demands it may acquire against the Secured
Parties arising out of the exercise by the Secured Parties of any of their
rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least five (5) days before such sale or other disposition.
The Debtor shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are insufficient to pay the Obligations and
the fees and disbursements of any attorneys employed by the Secured Parties to
collect such deficiency.
5. LIMITATION ON DUTIES REGARDING PRESERVATION OF COLLATERAL. The sole
duty of a Secured Party with respect to the custody, safekeeping and
preservation of the Collateral, under Section 9207 of the Code or otherwise,
shall be to deal with it in the same manner as such Secured Party deals with
similar property for its own account. Neither the Secured Parties nor any of
their directors, officers, employees or agents shall be liable for failure to
demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Debtor or otherwise.
6. POWERS COUPLED WITH AN INTEREST. All authorizations and agencies
contained in this Agreement with respect to the Collateral are irrevocable and
powers coupled with an interest.
7. NO WAIVER; CUMULATIVE REMEDIES. The Secured Parties shall not by any
act (except by a written instrument pursuant to Section 10(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any default under the Notes or in any breach
of any of the terms and conditions of this Agreement. No failure to exercise,
nor any delay in exercising, on the part of the Secured Parties, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Secured Parties of any right or remedy under this
Agreement on any one occasion shall not be construed as a bar to any right or
remedy which the Secured Parties would otherwise have on any subsequent
occasion. The rights and remedies provided in this Agreement are cumulative, may
be exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.
8. MISCELLANEOUS.
(a) AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended with the written consent of the Debtor and of Secured Parties holding a
majority in interest of the principal amount of Notes outstanding.
Notwithstanding the foregoing or any other provision of this Agreement, no
amendment or waiver that adversely affects a Secured Party in a manner different
from all of the Secured Parties may be effected without the written consent of
such Secured Party. Any amendment or waiver effected in accordance with this
Section 10(a) shall be binding upon the parties and their respective successors
and assigns.
(b) TRANSFER; SUCCESSORS AND ASSIGNS. The terms and conditions of
this Agreement shall be binding upon the Debtor and its successors and assigns
and inure to the benefit of the each Secured Party and its successors and
assigns. Nothing in this Agreement,
3
<PAGE> 32
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
(c) GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
(d) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(e) TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(f) NOTICES. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the U.S. mail as certified or
registered mail with postage prepaid, if such notice is addressed to the party
to be notified at such party's address or facsimile number as set forth below or
on Exhibit A hereto, or as subsequently modified by written notice.
(g) SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith in order to maintain the economic position enjoyed
by each party as close as possible to that under the provision rendered
unenforceable. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
(h) ENTIRE AGREEMENT. This Agreement, and the documents referred to
herein constitute the entire agreement between the parties hereto pertaining to
the subject matter hereof, and any and all other written or oral agreements
existing between the parties hereto concerning such subject matter are expressly
canceled.
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<PAGE> 33
The Debtor and Secured Parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
DEBTOR:
SILICON ENTERTAINMENT, INC.
By: _____________________________________
Name: ___________________________________
Title: __________________________________
Address: ________________________________
Facsimile Number: _______________________
SECURED PARTIES:
_________________________________________
By:______________________________________
Name: ___________________________________
Title: __________________________________
SIGNATURE PAGE TO SECURITY AGREEMENT
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<PAGE> 34
EXHIBIT A
NAME/ADDRESS AND FACSIMILE ORIGINAL PRINCIPAL
NUMBER OF PURCHASER AMOUNT OF NOTE
<PAGE> 35
EXHIBIT B
The Collateral shall consist of all right, title and interest of Debtor
in and to the following:
(a) All goods and equipment now owned or hereafter acquired, including
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
(b) All inventory, now owned or hereafter acquired, including without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Debtor's custody or possession or in transit
and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above, and Debtor's
books relating to any of the foregoing;
(c) All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
(d) All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Debtor
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Debtor, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Debtor and Debtor's books relating
to any of the foregoing;
(e) All documents, cash, deposit accounts, securities, letters of
credit, certificates of deposit, instruments and chattel paper now owned or
hereafter acquired and Debtor's books relating to the foregoing;
(f) All copyrights, copyright applications, copyright registrations and
like protections in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; all trade secret
rights, including all rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; all mask work or similar rights available for the
protection of semiconductor devices, now owned or hereafter acquired; all claims
for damages by way of any past, present and future infringement of any of the
foregoing; and
(g) Any and all claims, rights and interests in any of the above and all
substitutions for, additions and accessions to and proceeds thereof.
<PAGE> 1
EXHIBIT 10.31
SILICON ENTERTAINMENT, INC.
SUBORDINATED CONVERTIBLE NOTE AND WARRANT
PURCHASE AGREEMENT
SEPTEMBER 9, 1999
<PAGE> 2
SILICON ENTERTAINMENT, INC.
SUBORDINATED CONVERTIBLE NOTE AND WARRANT
PURCHASE AGREEMENT
This Subordinated Convertible Note Purchase Agreement (the "Agreement")
is made as of the 9th day of September 1999 by and between Silicon
Entertainment, Inc., a California corporation (the "Company"), and each of the
investors listed on Exhibit A attached to this Agreement (each a "Purchaser" and
together the "Purchasers").
RECITALS
The Company desires to issue and sell and the Purchasers desire to
purchase subordinated convertible promissory notes in substantially the form
attached to this Agreement as Exhibit B (the "Notes") and warrants in
substantially the form attached to this Agreement as Exhibit C (the
"Warrants")which shall be convertible on the terms stated therein into equity
securities of the Company as specified in the Notes and Warrants. The Notes and
Warrants and the equity securities issuable upon conversion or exercise thereof
(and the securities issuable upon conversion of such equity securities) are
collectively referred to herein as the "Securities."
AGREEMENT
In consideration of the mutual promises contained herein and other good
and valuable consideration, receipt of which is hereby acknowledged, the parties
to this Agreement agree as follows:
1. PURCHASE AND SALE OF NOTES AND WARRANTS.
(a) SALE AND ISSUANCE OF NOTES. Subject to the terms and
conditions of this Agreement, each Purchaser agrees to purchase at the Closing
and the Company agrees to sell and issue to each Purchaser a Note in the
principal amount specified with respect to such Purchaser on Exhibit A to this
Agreement. The Company shall pay to each Purchaser a placement fee of one
percent (1%) of the principal amount of such Purchaser's Note (the "Placement
Fee"), which Placement Fee shall be deducted from the proceeds paid to the
Company at the Closing. The Company's agreements with each of the Purchasers are
separate agreements, and the sales of the Notes to each of the Purchasers are
separate sales and issuances; provided that any amendments of this Agreement
must be in accordance with Section 8(f).
(b) SALE AND ISSUANCE OF WARRANTS. Subject to the terms and
conditions of this Agreement, for every One Million Dollars ($1,000,000) of
principal paid by a Purchaser to the Company pursuant to the Note held by such
Purchaser, Company agrees to issue to such Purchaser a warrant to purchase
25,000 shares of the Company's Common Stock at a price of $5.40 per share.
(c) CLOSINGS. The first closing (the "Closing") of the sale and
purchase of the Notes, Warrants and Call Options under this Agreement shall take
place at the offices of the Company on September 9, 1999, or at such other time,
date and place as are mutually agreeable
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<PAGE> 3
to the Company and the Purchasers, provided that the aggregate purchase price
for the Notes at the time of the Initial Closing shall be not less than
$5,000,000. Subsequent closings (each a "Subsequent Closing") of the sale and
purchase of Securities under this Agreement shall take place at the offices of
Gray Cary Ware & Freidenrich, LLP, no later than December 31, 1999. In no event
shall the aggregate purchase price for the Notes at the time of the Initial
Closing or any Subsequent Closing exceed $10,000,000. The Initial Closing and
the Subsequent Closings, if any, shall hereinafter be referred to individually
as a "Closing" and collectively as the "Closings" and the date of any Closing
shall hereinafter be referred to as a "Closing Date." At each Closing other than
the Initial Closing, Exhibit A shall be amended to include additional Purchasers
and such new Purchasers shall become parties to this Agreement. The date of the
Closing shall hereinafter be referred to as a "Closing Date."
(d) DELIVERY. At the Closing, the Company will deliver to each
Purchaser the Note to be purchased by such Purchaser against receipt by Company
of the purchase price set forth opposite the Purchasers name on the Schedule of
Purchasers.
2. SUBORDINATION. The indebtedness evidenced by the Notes shall be
expressly subordinated, to the extent and in the manner set forth in the Notes,
in right of payment to the prior payment in full of all of the Company's Senior
Indebtedness (as defined in the Note), and each Purchaser hereby agrees to enter
into such agreements and take such additional action as may be necessary to
perfect such subordination.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each Purchaser that except as set forth in the
Schedule of Exceptions attached hereto as Exhibit D:
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of California and has all requisite corporate power and
authority to carry on its business as now conducted and as proposed to be
conducted.
(b) AUTHORIZATION. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement and the authorization,
sale, issuance and delivery of the Notes and the Warrants, the shares of the
Company's capital stock issuable on conversion or exercise thereof, and the
performance of all obligations of the Company hereunder and thereunder has been
taken or will be taken prior to the Closing. The Agreement, the Notes, and the
Warrants (collectively, the "Transaction Documents") when executed and delivered
by the Company, shall constitute valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their terms except
as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and other laws of general application affecting
enforcement of creditors' rights generally, as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies.
(c) CAPITALIZATION. The authorized capital of the Company as of
August 1, 1999, consists of:
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<PAGE> 4
(i) 20,000,000 shares of Preferred Stock, of which (A)
3,266,667 shares have been designated Series A Preferred Stock, 3,266,667 of
which are issued and outstanding immediately prior to the Closing, (B) 6,222,531
shares have been designated Series B Preferred Stock, 5,538,052 of which are
issued and outstanding immediately prior to the Closing and (C) 8,500,000 shares
have been designated Series C Preferred Stock, 6,970,892 of which are issued and
outstanding immediately prior to the Closing. All of the outstanding shares of
Preferred Stock have been duly authorized, fully paid and are nonassessable.
(ii) 40,000,000 shares of Common Stock, 5,631,111 shares
of which are issued and outstanding immediately prior to the Closing. All of the
outstanding shares of Common Stock have been duly authorized, fully paid and are
nonassessable and issued in compliance with all applicable federal and state
securities laws. The Company has reserved shares of Common Stock for issuance
upon conversion of the Preferred Stock.
(iii) The Company has reserved 6,100,000 shares of
Common Stock for issuance to officers, directors, employees and consultants of
the Company pursuant to its Stock Option and Stock Bonus Plans, duly adopted by
the Board of Directors and approved by the Company's shareholders (collectively,
the "Stock Plans"). Of such reserved shares of Common Stock, as of August 1,
1999, options to purchase 2,211,195 shares have been granted and are currently
outstanding.
(iv) Except for outstanding options issued pursuant to
the Stock Plans and warrants to purchase 756,034 shares of Common Stock and
warrants to purchase 128,001 shares of Series B Preferred Stock and 743,281
shares of Series C Preferred Stock, there are no outstanding options, warrants,
rights (including conversion or preemptive rights and rights of first refusal or
similar rights) or agreements, orally or in writing, for the purchase or
acquisition from the Company of any shares of its capital stock.
(d) INTELLECTUAL PROPERTY RIGHTS.
(i) To the best of its knowledge, the Company has
sufficient title and ownership of all patents, trademarks, service marks, trade
names, copyrights, trade secrets, information, proprietary rights, and processes
(collectively, "Intellectual Property") necessary for its business as now
conducted and as proposed to be conducted to the Company's knowledge, without
any conflict with or infringement of the rights of others;
(ii) Except for agreements with its own employees or
consultants, there are not outstanding options, licenses, or agreements of any
kind relating to the matters listed in subsection (i) above or that grant rights
to any other person to manufacture, license, produce, assemble, market or sell
the Company's products, nor is the Company bound by or a party to any options,
licenses, or agreements of any kind with respect to the Intellectual Property of
any other person or entity, other than licenses or agreements relating to the
Company's use of certain trademarks of Nascar, and various drivers, race tracks
and teams.
(iii) The Company has not received any communications
alleging that the Company or its employees has violated or infringed or, by
conducting its business as
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<PAGE> 5
proposed, would violate or infringe any of the Intellectual Property of any
other person or entity; and
(iv) The Company is not aware that any of its employees
is obligated under any contract (including licenses, covenants, or commitments
of any nature) or other agreement, or subject to any judgment, decree, or order
of any court or administrative agency, that would interfere with the use of such
employee's best efforts to promote the interests of the Company with respect to
the Intellectual Property of the Company or otherwise or that would conflict
with the Company's business as proposed to be conducted.
(e) COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS. The Company is
not in violation or default in any material respect of any provision of its
certificate of incorporation or bylaws or in any material respect of any
provision of any material mortgage, indenture, agreement, instrument, or
contract to which it is a party or by which it is bound, or of any federal or
state judgment, order, writ, decree, or any federal or state statute, rule,
regulation or restriction applicable to the Company. The execution, delivery,
and performance by the Company of the Transaction Documents, and the
consummation of the transactions contemplated hereby and thereby, will not
result in any such violation or be in material conflict with or constitute, with
or without the passage of time or giving of notice, either a material default
under any such provision or an event that results in the creation of any
material lien, charge or encumbrance upon any assets of the Company or the
suspension, revocation, impairment, forfeiture or nonrenewal of any material
permit, license, authorization, or approval applicable to the Company, its
business or operations, or any of its assets or properties.
(f) LITIGATION. There is no action, suit, proceeding, or
investigation pending or, to the best knowledge of the Company, threatened
against the Company that questions the validity of the Transaction Documents, or
the right of the Company to enter into such agreements, or to consummate the
transactions contemplated hereby or thereby, or that might result, either
individually or in the aggregate, in any material adverse change in the assets,
business properties, prospects or financial condition of the Company.
(g) TAXES. The Company has no material liability for any
federal, state or local taxes, except for taxes which have accrued and are not
yet payable or are being contested by the Company in good faith. The Company has
paid all payroll taxes required to be paid by it.
(h) OFFERING. Assuming the accuracy of the representations and
warranties of each Purchaser contained in Section 6 hereof, the offer, issue,
and sale of the Securities is and will be exempt from the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended (the
"1933 Act"), and has been registered or qualified (or are exempt from
registration and qualification) under the registration, permit, or qualification
requirements of all applicable state securities laws.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby represents and warrants to the Company that:
(a) PURCHASE ENTIRELY FOR OWN ACCOUNT. The Securities to be
acquired by the Purchaser will be acquired for investment for the Purchaser's
own account, not as a nominee
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<PAGE> 6
or agent, and not with a view to the resale or distribution of any part thereof,
and the Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the same. The Purchaser has not been
formed for the specific purpose of acquiring any of the Securities.
(b) DISCLOSURE OF INFORMATION. The Purchaser is aware of the
Company's business affairs and financial condition and has acquired sufficient
information about the Company to reach an informed and knowledgeable decision to
acquire the securities.
(c) RESTRICTED SECURITIES. The Purchaser understands that the
Securities have not been, and will not be, registered under the Securities Act,
by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Purchaser's representations as
expressed herein. The Purchaser understands that the Securities are "restricted
securities" under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Purchaser must hold the Securities indefinitely
unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and
qualification requirements is available. The Purchaser acknowledges that the
Company has no obligation to register or qualify the Securities for resale. The
Purchaser further acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period
for the Securities, and on requirements relating to the Company which are
outside of the Purchaser's control, and which the Company is under no obligation
and may not be able to satisfy.
(d) NO PUBLIC MARKET. The Purchaser understands that no public
market now exists for any of the securities issued by the Company, that the
Company has made no assurances that a public market will ever exist for the
Securities.
(e) LEGENDS. The Purchaser understands that the Securities, and
any securities issued in respect thereof or exchange therefor, may bear one or
all of the following legends:
(i) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933."
(ii) Any legend required by the Blue Sky laws of any
state to the extent such laws are applicable to the shares represented by the
certificate so legended.
(f) ACCREDITED INVESTOR.The Purchaser is an accredited investor
as defined in Rule 501(a) of Regulation D promulgated under the Act.
5
<PAGE> 7
(g) FOREIGN INVESTORS. If a Purchaser is not a United States
person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986,
as amended), such Purchaser hereby represents that it has satisfied itself as to
the full observance of the laws of its jurisdiction in connection with any
invitation to subscribe for the Securities or any use of this Agreement,
including (i) the legal requirements within its jurisdiction for the purchase of
the Securities, (ii) any foreign exchange restrictions applicable to such
purchase, (iii) any governmental or other consents that may need to be obtained
and (iv) the income tax and other tax consequences, if any, that may be relevant
to the purchase, holding, redemption, sale or transfer of the Securities. Such
Purchaser's subscription and payment for, and his or her continued beneficial
ownership of the Securities, will not violate any applicable securities or other
laws of Purchaser's jurisdiction.
5. CONDITIONS OF THE PURCHASERS' OBLIGATIONS AT CLOSING. The obligations
of each Purchaser to the Company under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 5 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of the Closing.
(b) QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be obtained and effective as of
the Closing.
(c) CONSENTS AND WAIVERS. The Company shall have obtained any
and all consents (including all governmental or regulatory consents, approvals
or authorizations required in connection with the valid execution and delivery
of this Agreement, the Security Agreement and the Amendment to the Rights
Agreement), permits and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement. the Security Agreement and the
Amendment to the Rights Agreement.
(d) LEGAL INVESTMENT. At the time of the Closing, the purchase
of the Notes and Warrants by the Purchasers hereunder shall be legally permitted
by all laws and regulations to which the Purchasers and the Company are subject.
6. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations
of the Company to each Purchaser under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each Purchaser contained in Section 6 shall be true on and as of
the Closing with the same effect as though such representations and warranties
had been made on and as of the Closing.
(b) QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be obtained and effective as of
the Closing.
6
<PAGE> 8
7. COVENANTS OF THE COMPANY.
(a) NO OTHER INDEBTEDNESS. The Company shall not incur any
indebtedness for money borrowed (other than equipment lease financing
transaction) to the extent that the Company's aggregate payment obligations
thereunder would exceed Ten Million Dollars ($10,000,000) without the Majority
Purchasers' prior written consent, which shall not be unreasonably withheld.
(b) NO DIVIDENDS. No payment or declaration of a cash dividend,
shall be made on the Common Stock of the Company while any Obligation under the
Note is outstanding.
(c) FINANCIAL STATEMENTS. No later than 30 days following the
end of each quarter, the Company shall deliver to the Purchasers its balance
sheet as at the end of such period and its income statement for such period and
for that portion of the Company's financial reporting year ending with such
period. In addition, no later than 90 days following the end of each financial
reporting year, the Company shall deliver to the Purchasers its audited balance
sheet, income statement, and statement of cash flows for such year.
(d) STAY, EXTENSION AND USURY LAWS. The Company convenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, how or at any time hereafter
in force, that might affect the covenants or the performance of its obligations
under this Agreement and the Notes; and the Company (to the extent it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power granted to the holders of Notes pursuant to
this Agreement, but will suffer and permit the execution of every such power as
though no such law has been enacted.
(e) LIMITATION ON TRANSACTIONS WITH AFFILIATES. Neither the
Company nor any of its subsidiaries shall enter into any transaction or series
of transactions to sell, lease, transfer, exchange or otherwise dispose of any
of its properties or assets to or to purchase any property or assets from, or
for the direct or indirect benefit of, an affiliate of the Company or of any
subsidiary of the Company, make any investment in or enter into any contract,
agreement, understanding, loan, advance or guarantee with, or for the direct or
indirect benefit of, an affiliate of the Company or of any subsidiary of the
Company (each, including any series of transactions with one or more affiliates,
an "Affiliate Transaction"), unless the Board of Directors of the Company or the
relevant subsidiary determines, as evidenced by a Board resolution, that the
terms of such Affiliate Transaction are fair and reasonable to the Company and
no less favorable to the Company or the relevant subsidiary than those that
could have been obtained at that time in a comparable arms-length transaction by
the Company or such subsidiary with an unrelated Person.
(f) MAINTENANCE OF PROPERTIES. The Company will cause all
properties used or useful in the conduct of its business or the business of any
subsidiary of the Company to be maintained and kept in good condition, repair
and working order, subject to normal wear and tear, and supplied with all
necessary equipment and will cause to be made all necessary repairs,
7
<PAGE> 9
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this section (f) shall prevent the Company
from discontinuing the operation or maintenance of any such properties if such
discontinuance is, as determined by the Company in good faith, desirable in the
conduct of its business or the business of any subsidiary and not
disadvantageous in any material respect to the holders of the Notes.
(g) COMPLIANCE WITH LAWS. The Company shall comply, and shall
cause each of its subsidiaries to comply, with all applicable statutes, rules,
regulations, orders and restrictions of the United States of America, all states
and municipalities thereof, and of any governmental department, commission,
board, regulatory authority, bureau, agency and instrumentality of the
foregoing, in respect of the conduct of their respective businesses and the
ownership of their respective properties, except such as are being contested in
good faith and by appropriate proceedings and except for such noncompliance as
well not in the aggregate have a Material Adverse Effect.
(h) TERMINATION. This Section 7 shall terminate as to each
Purchaser at such time as no Obligation under such Purchaser's Note is
outstanding.
8. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
(b) GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
8
<PAGE> 10
(c) COUNTERPARTS. Note Purchase Agreement and all documents
attached to the Note Purchase Agreement (including Note and Warrants) may be
executed in two or more counterparts, each of which shall be deemed an original
and all of which together shall constitute one instrument.
(d) TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(e) NOTICES. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the U.S. mail as certified or
registered mail with postage prepaid, if such notice is addressed to the party
to be notified at such party's address or facsimile number as set forth below or
as subsequently modified by written notice.
(f) AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived only with the written consent of the Company and the holders
of at least a majority in interest of the Notes. Any amendment or waiver
effected in accordance with this Section 8(f) shall be binding upon all the
Purchasers and all transferees of the Securities, each future holder of all such
Securities, and the Company.
(g) SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith, in order to maintain the economic
position enjoyed by each party as close as possible to that under the provision
rendered unenforceable. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of the Agreement shall be enforceable in accordance with its terms.
(h) ENTIRE AGREEMENT. This Agreement, and the documents referred
to herein constitute the entire agreement between the parties hereto pertaining
to the subject matter hereof, and any and all other written or oral agreements
existing between the parties hereto are expressly canceled.
(i) EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges
that it is not relying upon any person, firm or corporation, other than the
Company and its officers and directors, in making its investment or decision to
invest in the Company. Each Purchaser agrees that no Purchaser nor the
respective controlling persons, officers, directors, partners, agents, or
employees of any Purchaser shall be liable for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with the
Securities.
(j) CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES WHICH
ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF
9
<PAGE> 11
THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE
SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR
25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS
AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED UNLESS
THE SALE IS SO EXEMPT.
[Signature Pages Follow]
10
<PAGE> 12
The parties have executed this Subordinated Convertible Note and Warrant
Purchase Agreement as of the date first written above.
COMPANY:
SILICON ENTERTAINMENT, INC.
By: /s/
--------------------------------
Name:
Title:
Address:
PURCHASERS:
/s/
-----------------------------------
(Purchaser)
By:
--------------------------------
Name:
------------------------------
(print)
Title:
-----------------------------
SIGNATURE PAGE TO SUBORDINATED CONVERTIBLE NOTE
AND WARRANT PURCHASE AGREEMENT
<PAGE> 13
EXHIBIT A
SCHEDULE OF PURCHASERS
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT NET PROCEEDS TO COMPANY
NAME OF PURCHASER OF NOTE AFTER 1% PLACEMENT FEE
----------------- ---------------- -----------------------
<S> <C> <C>
Galladio Holding B.V. $2,000,000 $1,980,000
Van der Lee Partnership $500,000 $495,000
Mr. E.M.H. van der Lee C.S. $500,000 $495,000
Mr. E.W. van der Lee $1,000,000 $990,000
Manschot Opportunity Fund $1,500,000 $1,485,000
---------- ----------
TOTAL: $5,500,000 $5,445,000
</TABLE>
<PAGE> 14
EXHIBIT B
FORM OF SUBORDINATED
CONVERTIBLE PROMISSORY NOTE
<PAGE> 15
EXHIBIT C
FORM OF WARRANT
<PAGE> 16
THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON ITS CONVERSION HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
AND IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES AND OTHER JURISDICTIONS.
SILICON ENTERTAINMENT, INC.
12% CONVERTIBLE NOTE DUE 2001
No. N- $0,000,0000
SILICON ENTERTAINMENT, INC., a corporation duly organized and existing
under the laws of California (the "Company") for value received, hereby promises
to pay to ___________, or registered assigns, the principal sum of _________
Dollars ($_______) on March 9, 2001, and to pay interest thereon from September
9, 1999 at the rate of 12% per annum, due and payable on March 9, 2001. If the
principal and interest due on this Security are not repaid on or by March 9,
2001, the interest rate shall increase to 18% per annum. Payment of the
principal and interest of this Security shall be made upon the surrender of this
Security to the Company, at its office at 210 Hacienda Avenue, Campbell, CA
95008, or such other office within the United States as shall be notified by the
Company to the holder hereof) (the "Designated Office"), in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts.
The Company shall pay to holder a placement fee of one percent (1%) of
the principal amount of this Security, or _____ Dollars ($_______) (the
"Placement Fee"). Such Placement Fee shall be deducted from the proceeds to the
Company from the issuance and sale of this Security on September 9, 1999.
1. Conversion.
(a) Optional Conversion. Notwithstanding Section 5 of this
Security, the holder of this Security is entitled at any time on or after
September 9, 1999 and before the close of business on March 9, 2001 (or in case
the holder hereof has exercised his right to require the Company to repurchase
this Security or a portion hereof, then in respect of this Security or such
portion hereof, as the case may be, until and including, but (unless the Company
defaults in making the payment due upon repurchase) not after, the close of
business on the Repurchase Date) to convert this Security into fully paid and
nonassessable shares (calculated as to each conversion to the nearest share) of
Common Stock of the Company at the rate of one (1) share of Common Stock for
each $5.00 of principal amount of Security (or at the current adjusted rate if
an adjustment has been made as provided below) (the "Conversion Ratio").
(b) Procedure for Conversion. The holder of this Security may
exercise the conversion rights as to such Security, or any portion thereof, by
surrender of this Security, duly endorsed or assigned to the Company or in blank
to the Company at the Designated Office,
<PAGE> 17
accompanied by written notice to the Company that the holder hereof elects to
convert this Security (or if less than the entire principal amount hereof is to
be converted, specifying the portion hereof to be converted). Conversion shall
be deemed to have been effected on the date when such delivery is made. Upon
surrender of this Security for conversion, the holder will be entitled to
receive the interest accruing on the principal amount of this Security then
being converted from the interest payment date next preceding the date of such
conversion to such date of conversion. No payment or adjustment is to be made on
conversion for dividends on the Common Stock issued on conversion hereof. No
fractions of shares or scrip representing fractions of shares will be issued on
conversion, but instead of any fractional interest, the Company shall pay a cash
adjustment, computed on the basis of the Closing Price of the Common Stock on
the date of conversion, or, at its option, the Company shall round up to the
next higher whole share.
(c) The Conversion Ratio shall be subject to adjustments from
time to time as follows:
(1) In case the Company shall pay or make a dividend or
other distribution on any class of capital stock of the Company payable in
shares of Common Stock, the Conversion Ratio in effect at the opening of
business on the day following the Determination Date for such dividend or other
distribution shall be increased by dividing such Conversion Ratio by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
at the close of business on such Determination Date and the denominator shall be
the sum of such number of shares and the total number of shares constituting
such dividend or other distribution, such increase to become effective
immediately after the opening of business on the day following such
Determination Date. For the purposes of this paragraph (1), the number of shares
of Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The Company
will not pay any dividend or make any distribution on shares of Common Stock
held in the treasury of the Company.
(2) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion Ratio
in effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the Conversion Ratio in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately reduced, such increase or
reduction, as the case may be, to become effective immediately after the opening
of business on the day following the day upon which such subdivision or
combination becomes effective.
(d) Whenever the Conversion Ratio is adjusted as provided in
Section 1(c), the Company shall compute the adjusted Conversion Ratio in
accordance with Section 1(c) and shall prepare a certificate signed by the chief
financial officer of the Company setting forth the adjusted Conversion Ratio and
showing in reasonable detail the facts upon which such adjustment is based, and
shall promptly deliver such certificate to the holder of this Security.
(e) In case:
2
<PAGE> 18
(1) the Company shall declare a dividend or other
distribution on its Common Stock payable (i) otherwise than exclusively in cash
or (ii) exclusively in cash in an amount that would require any adjustment
pursuant to Section 1(c); or
(2) the Company shall authorize the granting to the
holders of its Common Stock of rights, options or warrants to subscribe for or
purchase any shares of capital stock of any class or of any other rights; or
(3) of any reclassification of the Common Stock of the
Company, or of any consolidation, merger or share exchange to which the Company
is a party and for which approval of any shareholders of the Company is
required, or of the conveyance, sale, transfer or lease of all or substantially
all of the assets of the Company; or
(4) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(5) the Company or any Subsidiary shall commence a
tender offer for all or a portion of the Company's outstanding shares of Common
Stock (or shall amend any such tender offer);
then the Company shall cause to be delivered to the holder of this Security, at
least 20 days (or 10 days in any case specified in clause (1) or (2) above)
prior to the applicable record, expiration or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, rights, options or warrants, or, if
a record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, rights, options or
warrants are to be determined, (y) the date on which the right to make tenders
under such tender offer expires or (z) the date on which such reclassification,
consolidation, merger, conveyance, transfer, sale, lease, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, sale, lease, dissolution, liquidation or winding up. Neither the
failure to give such notice nor any defect therein shall affect the legality or
validity of the proceedings described in clauses (1) through (5) of this Section
1(e).
(f) The Company shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued Common Stock,
for the purpose of effecting the conversion of the Security, the full number of
shares of Common Stock then issuable upon the conversion of this Security.
(g) Except as provided in the next sentence, the Company will
pay any and all taxes and duties that may be payable in respect of the issue or
delivery of shares of Common Stock on conversion of the Security. The Company
shall not, however, be required to pay any tax or duty which may be payable in
respect of any transfer involved in the issue and delivery of shares of Common
Stock in a name other than that of the holder of this Security, and no such
issue or delivery shall be made unless and until the person requesting such
issue has paid to the
3
<PAGE> 19
Company the amount of any such tax or duty, or has established to the
satisfaction of the Company that such tax or duty has been paid.
(h) The Company agrees that all shares of Common Stock which may
be delivered upon conversion of the Security, upon such delivery, will have been
duly authorized and validly issued and will be fully paid and nonassessable (and
shall be issued out of the Company's authorized but unissued Common Stock) and,
except as provided in Section 1(g), the Company will pay all taxes, liens and
charges with respect to the issue thereof.
(i) In case of any consolidation of the Company with any other
person, any merger of the Company into another person or of another person into
the Company (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Company) or any conveyance, sale, transfer or lease of all or substantially
all of the properties and assets of the Company, the person formed by such
consolidation or resulting from such merger or which acquires such properties
and assets, as the case may be, shall execute and deliver to the holder of this
Security a supplemental agreement providing that such holder have the right
thereafter, during the period this Security shall be convertible as specified in
Section 1(a) to convert this Security only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance, sale, transfer or lease (including any Common Stock retainable) by a
holder of the number of shares of Common Stock of the Company into which this
Security might have been converted immediately prior to such consolidation,
merger, conveyance, sale, transfer or lease, assuming such holder of Common
Stock of the Company (i) is not a person with which the Company consolidated,
into which the Company merged or which merged into the Company or to which such
conveyance, sale, transfer or lease was made, as the case may be (a "Constituent
Person"), or an Affiliate of a Constituent Person and (ii) failed to exercise
his rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance, sale,
transfer or lease (provided that if the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance, sale,
transfer, or lease is not the same for each share of Common Stock of the Company
held immediately prior to such consolidation, merger, conveyance, sale, transfer
or lease by others than a Constituent Person or an Affiliate thereof and in
respect of which such rights of election shall not have been exercised
("Non-electing Share"), then for the purpose of this Section 1(i) the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer or lease by the holders of
each Non-electing Share shall be deemed to be the kind and amount so receivable
per share by a plurality of the Non-electing Shares). Such supplemental
agreement shall provide for adjustments which, for events subsequent to the
effective date of such supplemental agreement, shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 1. The above
provisions of this Section 1(i) shall similarly apply to successive
consolidations, mergers, conveyances, sales, transfers or leases. In this
paragraph, "securities of the kind receivable" upon such consolidation, merger,
conveyance, transfer, sale or lease by a holder of Common Stock means securities
that, among other things, are registered and transferable under the Securities
Act, and listed and approved for quotation in all securities markets, in each
case to the same extent as such securities so receivable by a holder of Common
Stock.
2. Repurchase upon Change in Control.
4
<PAGE> 20
(a) In the event that a Change in Control (as hereinafter
defined) shall occur, then the holder of this Security shall have the right, at
such holder's option, to require the Company to repurchase, and upon the
exercise of such right the Company shall repurchase, this Security, or any
portion of the principal amount hereof that is equal to $1,000 or any integral
multiple thereof, on the date (the "Repurchase Date") that is 30 days after the
date on which the Company gives notice thereof to the holder of this Security,
at a purchase price equal to 101% of the principal amount of this Security to be
repurchased, plus interest accrued to the Repurchase Date (the "Repurchase
Price"); provided, however, that installments of interest on this Security whose
stated maturity is on or prior to the Repurchase Date shall be payable to the
holder of this Security, or one or more predecessor Securities, registered as
such on the relevant Record Date according to their terms. The Company agrees to
give the holder of this Security notice of any Change in Control, by facsimile
transmission confirmed in writing by overnight courier service, promptly and in
any event within two days of the occurrence thereof.
(b) To exercise a repurchase right, the holder shall deliver to
the Company on or before the 5th day prior to the Repurchase Date, together with
this Security, written notice of the holder's exercise of such right, which
notice shall set forth the name of the holder, the principal amount of this
Security to be repurchased (and, if this Security is to be repurchased in part,
the portion of the principal amount thereof to be repurchased and the name of
the person in which the portion thereof to remain outstanding after such
repurchase is to be registered) and a statement that an election to exercise the
repurchase right is being made thereby. Such written notice shall be
irrevocable, except that the right of the holder to convert this Security (or
the portion hereof with respect to which the repurchase right is being
exercised) shall continue until the close of business on the Repurchase Date.
(c) In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall pay or cause to be paid to
the holder the Repurchase Price in cash, together with accrued and unpaid
interest to the Repurchase Date; provided, however, that installments of
interest that mature on or prior to the Repurchase Date shall be payable in
cash, to the holders of this Security, or one or more predecessor Securities,
registered as such at the close of business on the relevant regular record date.
(d) If this Security (or portion thereof) is surrendered for
repurchase and is not so paid on the Repurchase Date, the principal amount of
this Security (or such portion hereof, as the case may be) shall, until paid,
bear interest to the extent permitted by applicable law from the Repurchase Date
at the rate per annum borne by this Security, and shall remain convertible into
Common Stock until the principal of this Security (or portion thereof, as the
case may be) shall have been paid or duly provided for.
(e) If this Security is to be repurchased only in part, it shall
be surrendered to the Company at the Designated Office (with, if the Company so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company duly executed by, the holder hereof or his attorney
duly authorized in writing), and the Company shall execute and make available
for delivery to the holder without service charge, a new Security or Securities,
containing identical terms and conditions, each in an authorized denomination in
aggregate principal amount equal to and in exchange for the unrepurchased
portion of the principal of the Security so surrendered.
5
<PAGE> 21
(f) For purposes of this Section 2
(1) the term "beneficial owner" shall be determined in
accordance with Rule 13d-3 promulgated by the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934; and
(2) a "Change in Control" shall be deemed to have
occurred at the time, after the original issuance of this Security, of:
(i) the acquisition by any person of beneficial
ownership, directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions, of shares of capital stock of
the Company entitling such person to exercise 50% or more of the total voting
power of all shares of capital stock of the Company entitled to vote generally
in the elections of directors (any shares of voting stock of which such person
is the beneficial owner that are not then outstanding being deemed outstanding
for purposes of calculating such percentage) other than any such acquisition by
the Company or any employee benefit plan of the Company; or
(ii) any consolidation or merger of the Company
with or into, any other person, any merger of another person with or into the
Company, or any conveyance, transfer, sale, lease or other disposition of all or
substantially all of the assets of the Company to another person (other than (a)
any such transaction (x) which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock and
(y) pursuant to which holders of Common Stock immediately prior to such
transaction have the entitlement to exercise, directly or indirectly, 50% or
more of the total voting power of all shares of capital stock entitled to vote
generally in the election of directors of the continuing or surviving person
immediately after such transaction and (b) any merger which is effected solely
to change the jurisdiction of incorporation of the Company and results in a
reclassification, conversion or exchange of outstanding shares of Common Stock
into solely shares of common stock).
3. Events of Default. (a) "Event of Default", wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or Harder of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon this
Security when it becomes due and payable, and continuance of such default for a
period of 30 days; or
(2) default by the Company in the performance of its
obligations in respect of any conversion of this Security (or any portion
hereof) in accordance with Section 1; or
(3) failure by the Company to give any notice of a
Change of Control required to be delivered in accordance with Section 2(a); or
6
<PAGE> 22
(4) default in the performance, or breach, of any
material covenant or warranty of the Company herein (other than a covenant or
warranty a default in the performance or breach of which is specifically dealt
with elsewhere in this Section 3(a)) and continuance of such default or breach
for a period of 30 days after there has been given, by registered or certified
mail, to the Company by the holders of at least 25 % of the outstanding
principal amount of this Security a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(5) a default under any bond, debenture, note or other
evidence of indebtedness for money borrowed by the Company, or under any
agreement, mortgage, indenture or instrument under-which there may be issued or
by which there may be secured or evidenced any indebtedness for money borrowed
by the Company, with a principal amount then outstanding in excess of
$1,000,000, whether such indebtedness now exists or shall hereafter be created,
which default shall constitute a failure to pay the principal of such
indebtedness (in whole or in any part greater than $1,000,000) when due and
payable or shall have resulted in such indebtedness (in whole or in any part
greater than $1,000,000) becoming or being declared due and payable prior to the
date on which it would otherwise have become due and payable, without such
indebtedness having been discharged, or such acceleration having been rescinded
or annulled, within a period of 30 days after there shall have been given, by
registered or certified mail, to the Company by the holders of at least 25 % of
the outstanding principal amount of this Security a written notice specifying
such default and requiring the Company to cause such indebtedness to be
discharged or cause such acceleration to be rescinded or annulled and stating
that such notice is a "Notice of Default" hereunder; or
(6) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or (B) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or State law, or appointing
a custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or
(7) the commencement by the Company of a voluntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or similar relief under any applicable
Federal or State law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or of
any substantial part of its property, or the making by it of an assignment for
the benefit of creditors,
7
<PAGE> 23
or the admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company in furtherance
of any such action.
(b) If an Event of Default (other than an Event of Default
specified in Section 3(a)(6) or 3(a)(7)) occurs and is continuing, then in every
such case the holder of this Security may declare the principal hereof to be due
and payable immediately, by a notice in writing to the Company, and upon any
such declaration such principal and all accrued interest thereon shall become
immediately due and payable. If an Event of Default specified in Section 3(a)(6)
or 3(a)(7) occurs and is continuing, the principal of, and accrued interest on,
this Security shall ipso facto become immediately due and payable without any
declaration or other act of the holders.
4. Subordination. The indebtedness evidenced by this Note is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full of all the Company's Senior
Indebtedness, as hereinafter defined.
(a) Senior Indebtedness. As used in this Note, the term "Senior
Indebtedness" shall mean the principal of and unpaid accrued interest on (i) up
to $2,000,000 of indebtedness of the Company or with respect to which the
Company is a guarantor to any bank or other financial institution whose
principal business is lending funds on a secured basis, (ii) any indebtedness of
the Company with respect to equipment financing transactions which indebtedness
shall not exceed the sum of $1.25 million times the number of stores in
operation by the Company and (iii) any such indebtedness or any debentures,
notes or other evidence of indebtedness issued solely in exchange for such
Senior Indebtedness, or any indebtedness arising solely from the satisfaction of
such Senior Indebtedness by a guarantor.
(b) Default on Senior Indebtedness. If there should occur any
receivership, insolvency, assignment for the benefit of creditors, bankruptcy,
reorganization or arrangements with creditors (whether or not pursuant to
bankruptcy or other insolvency laws), sale of all or substantially all of the
assets, dissolution, liquidation or any other marshaling of the assets and
liabilities of the Company, or if this Note shall be declared due and payable
upon the occurrence of an event of default with respect to any Senior
Indebtedness, then (i) no amount shall be paid by the Company in respect of the
principal of or interest on this Note at the time outstanding, unless and until
the principal of and interest on the Senior Indebtedness then outstanding shall
be paid in full, and (ii) no claim or proof of claim shall be filed with the
Company by or on behalf of the Holder of this Note that shall assert any right
to receive any payments in respect of the principal of and interest on this
Note, except subject to the payment in full of the principal of and interest on
all of the Senior Indebtedness then outstanding. If there occurs an event of
default that has been declared in writing with respect to any Senior
Indebtedness, or in the instrument under which any Senior Indebtedness is
outstanding, permitting the holder of such Senior Indebtedness to accelerate the
maturity thereof, then, unless and until such event of default shall have been
cured or waived or shall have ceased to exist, or all Senior Indebtedness shall
have been paid in full, no payment shall be made in respect of the principal of
or interest on this Note, unless within 90 days after the happening of such
event of default, the maturity of such Senior Indebtedness shall not have been
accelerated.
8
<PAGE> 24
(c) Effect of Subordination. Subject to the rights, if any, of
the holders of Senior Indebtedness under this Section 4 to receive cash,
securities or other properties otherwise payable or deliverable to the Holder of
this Note, nothing contained in this Section 4 shall impair, as between the
Company and the Holder, the obligation of the Company, subject to the terms and
conditions hereof, to pay to the Holder the principal hereof and interest hereon
as and when the same become due and payable, or shall prevent the Holder of this
Note, upon default hereunder, from exercising all rights, powers and remedies
otherwise provided herein or by applicable law.
(d) Subrogation. Subject to the payment in full of all Senior
Indebtedness and until this Note shall be paid in full, the Holder shall be
subrogated to the rights of the holders of Senior Indebtedness (to the extent of
payments or distributions previously made to such holders of Senior Indebtedness
pursuant to the provisions of Section 4 above) to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness. No
such payments or distributions applicable to the Senior Indebtedness shall, as
between the Company and its creditors, other than the holders of Senior
Indebtedness and the Holder, be deemed to be a payment by the Company to or on
account of this Note; and for the purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness to which the Holder would be
entitled except for the provisions of this Section 4 shall, as between the
Company and its creditors, other than the holders of Senior Indebtedness and the
Holder, be deemed to be a payment by the Company to or on account of the Senior
Indebtedness.
(e) Undertaking. By its acceptance of this Note, the Holder
agrees to execute and deliver such documents as may be reasonably requested from
time to time by the Company or the lender of any Senior Indebtedness in order to
implement the foregoing provisions of this Section 4.
5. Prepayment. This Note may be prepaid in whole or in part at any time
beginning ninety (90) days after September 9, 1999 by the Company without the
prior written consent of Holder. Any such prepayment will be applied first to
the payment of expenses due under this Note, second to interest accrued on this
Note and third, if the amount of prepayment exceeds the amount of all such
expenses and accrued interest, to the payment of principal of this Note.
6. Other.
(a) No provision of this Security shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of and interest on this Security at the times, places and rate, and in
the coin or currency, herein prescribed or to convert this Security as herein
provided.
(b) The Company will give prompt written notice to the holder of
Security of any change in the location of the Designated Office.
(c) The transfer of this Security is registrable on the Security
Register of the Company Upon surrender of this Security for registration of
transfer at the Designated Office, duly endorsed by, Or accompanied by a written
instrument of transfer in form satisfactory to the Company duly executed by, the
holder hereof or his attorney duly authorized in writing, and
9
<PAGE> 25
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees. Such Securities are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. No service
charge shall be made for any such registration of transfer, but the Company may
require payment of a sum sufficient to recover any tax or other governmental
charge payable in connection therewith. Prior to due presentation of this
Security for registration of transfer, the Company and any agent of the Company
may treat the person in whose name this Security is registered as the owner
thereof for all purposes, whether or not this Security be overdue, and neither
the Company nor any such agent shall be affected by notice to the contrary.
(d) This Security shall be governed by and construed in
accordance with the laws of the State of California, United States of America.
[Signatures to Follow]
10
<PAGE> 26
IN WITNESS WHEREOF, the Company has caused this Security to be duly executed
under its corporate seal.
Dated: September 9, 1999. SILICON ENTERTAINMENT, INC.
By:
--------------------------------
Printed Name:
----------------------
Title:
-----------------------------
Attest:
By:
--------------------------------
Printed Name:
----------------------
Title:
-----------------------------
11
<PAGE> 27
EXHIBIT A
<TABLE>
<CAPTION>
NET PROCEEDS TO COMPANY AFTER
NAME OF PURCHASER PRINCIPAL AMOUNT OF NOTE 1% PLACEMENT FEE
----------------- ------------------------ -----------------------------
<S> <C> <C>
</TABLE>
12
<PAGE> 28
THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED
UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH
SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF SUCH SECURITIES
REASONABLY SATISFACTORY TO THE COMPANY STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT.
No. 1999-
WARRANT TO PURCHASE COMMON STOCK
OF
SILICON ENTERTAINMENT, INC.
(void after September 9, 2004)
1. Number of Shares Subject to Warrant. FOR VALUE RECEIVED, subject to
the terms and conditions herein set forth, Holder (as defined below) is entitled
to purchase from Silicon Entertainment, Inc., a California Corporation (the
"Company"), at any time before 5:00 p.m. California time on September 9, 2004
("Termination Date"), at a price per share equal to the Warrant Price (as
defined below), the Warrant Stock (as defined below) upon exercise of this
Warrant pursuant to Section 6 hereof.
2. Definitions. As used in this Warrant, the following terms shall have
the definitions ascribed to them below:
(a) "Holder" shall mean _____________ or its assigns.
(b) "Securities" shall mean ________ shares of Common Stock.
(c) "Warrant Price" shall be $5.40 per share.
(d) "Warrant Stock" shall mean the Securities purchasable upon
exercise of this Warrant or issuable upon conversion of this Warrant.
3. Fractional Shares. No fractional shares shall be issuable upon
exercise or conversion of the Warrant and the number of shares to be issued
shall be rounded down to the nearest whole share. If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying the Holder an amount computed
by multiplying the fractional interest by the fair market value of a full share.
4. No Shareholder Rights. This Warrant, by itself, as distinguished from
any shares purchased hereunder, shall not entitle its Holder to any of the
rights of a shareholder of the Company.
1
<PAGE> 29
5. Reservation of Stock. The Company will reserve from its authorized
and unissued Common Stock a sufficient number of shares to provide for the
issuance of Warrant Stock upon the exercise conversion of this Warrant. Issuance
of this Warrant shall constitute full authority to the Company's officers who
are charged with the duty of executing stock certificates to execute and issue
the necessary certificates for shares of Warrant Stock issuable upon the
exercise or conversion of this Warrant.
6. Exercise of Warrant. This Warrant may be exercised in whole or part
by the Holder, at any time after the date hereof prior to the termination of
this Warrant, by the surrender of this Warrant, together with the Notice of
Exercise and Investment Representation Statement in the forms attached hereto as
Attachments 1 and 2, respectively, duly completed and executed at the principal
office of the Company, specifying the portion of the Warrant to be exercised and
accompanied by payment in full of the Warrant Price in cash or by check with
respect to the shares of Warrant Stock being purchased. This Warrant shall be
deemed to have been exercised immediately prior to the close of business on the
date of its surrender for exercise as provided above, and the person entitled to
receive the shares of Warrant Stock issuable upon such exercise shall be treated
for all purposes as Holder of such shares of record as of the close of business
on such date. As promptly as practicable after such date, the Company shall
issue and deliver to the person or persons entitled to receive the same a
certificate or certificates for the number of full shares of Warrant Stock
issuable upon such exercise. If the Warrant shall be exercised for less than the
total number of shares of Warrant Stock then issuable upon exercise, promptly
after surrender of the Warrant upon such exercise, the Company will execute and
deliver a new Warrant, dated the date hereof, evidencing the right of the Holder
to the balance of the Warrant Stock purchasable hereunder upon the same terms
and conditions set forth herein.
7. Conversion. In lieu of exercising this Warrant or any portion hereof,
the Holder hereof shall have the right to convert this Warrant or any portion
hereof into Warrant Stock by executing and delivering to the Company at its
principal office the written Notice of Conversion and Investment Representation
Statement in the forms attached hereto as Attachments 2 and 3, specifying the
portion of the Warrant to be converted, and accompanied by this Warrant. The
number of shares of Warrant Stock to be issued to Holder upon such conversion
shall be computed using the following formula:
X = (P)(Y)(A-B)/A
where X = the number of shares of Securities to be issued to the
Holder for the portion of the Warrant being converted.
P = the portion of the Warrant being converted expressed
as a decimal fraction.
Y = the total number of shares of Securities issuable
upon exercise of the Warrant in full.
A = the fair market value of one share of Warrant Stock
which shall mean (i) the fair market value of the
Company's stock issuable
2
<PAGE> 30
upon conversion of such share as of the last business
day immediately prior to the date the notice of
conversion is received by the Company, as determined
in good faith by the Company's Board of Directors, or
(ii) if this Warrant is being converted in conjunction
with a public offering of stock the price to the
public per share pursuant to the offering.
B = the Warrant Price on the date of conversion.
Any portion of this Warrant that is converted shall be immediately canceled.
This Warrant or any portion hereof shall be deemed to have been converted
immediately prior to the close of business on the date of its surrender for
conversion as provided above, and the person entitled to receive the shares of
Warrant Stock issuable upon such conversion shall be treated for all purposes as
Holder of such shares of record as of the close of business on such date. As
promptly as practicable after such date, the Company shall issue and deliver to
the person or persons entitled to receive the same a certificate or certificates
for the number of full shares of Warrant Stock issuable upon such conversion. If
the Warrant shall be converted for less than the total number of shares of
Warrant Stock then issuable upon conversion, promptly after surrender of the
Warrant upon such conversion, the Company will execute and deliver a new
Warrant, dated the date hereof, evidencing the right of the Holder to the
balance of the Warrant Stock purchasable hereunder upon the same terms and
conditions set forth herein.
8. Adjustment of Exercise Price and Number of Shares. The number of
shares issuable upon exercise of this Warrant (or any shares of stock or other
securities or property at the time receivable or issuable upon exercise of this
Warrant) and the Warrant Price therefor are subject to adjustment upon the
occurrence of the following events:
(a) Adjustment for Stock Splits, Stock Dividends,
Recapitalizations, etc. The Warrant Price and the number of shares issuable upon
exercise of this Warrant shall each be proportionally adjusted to reflect any
stock dividend, stock split, reverse stock split, combination of shares,
reclassification, recapitalization or other similar event altering the number of
outstanding shares of the Company's capital stock.
(b) Adjustment for Other Dividends and Distributions. In case
the Company shall make or issue, or shall fix a record date for the
determination of eligible holders entitled to receive, a dividend or other
distribution with respect to the shares payable in securities of the Company
then, and in each such case, the Holder, on exercise of this Warrant at any time
after the consummation, effective date or record date of such event, shall
receive, in addition to the Warrant Stock (or such other stock or securities)
issuable on such exercise prior to such date, the securities of the Company to
which such Holder would have been entitled upon such date if such Holder had
exercised this Warrant immediately prior thereto (all subject to further
adjustment as provided in this Warrant).
9. Adjustment for Capital Reorganization, Consolidation, Merger. If any
capital reorganization of the capital stock of the Company, or any consolidation
or merger of the Company with or into another corporation, or the sale of all or
substantially all of the Company's
3
<PAGE> 31
assets to another corporation shall be effected in such a way that holders of
the Company's capital stock will be entitled to receive stock, securities or
assets with respect to or in exchange for the Company's capital stock, and in
each such case the Holder, upon the exercise of this Warrant, at any time after
the consummation of such capital reorganization, consolidation, merger, or sale,
shall be entitled to receive, in lieu of the stock or other securities and
property receivable upon the exercise of this Warrant prior to such
consummation, the stock or other securities or property to which such Holder
would have been entitled upon such consummation if such Holder had exercised
this Warrant immediately prior to the consummation of such capital
reorganization, consolidation, merger, or sale, all subject to further
adjustment as provided in this Section 9; and in each such case, the terms of
this Warrant shall be applicable to the shares of stock or other securities or
property receivable upon the exercise of this Warrant after such consummation.
10. Transfer of Warrant. This Warrant may be transferred or assigned by
the Holder hereof in whole or in part, provided that (i) the transferor
provides, at the Company's request, an opinion of counsel satisfactory to the
Company that such transfer does not require registration under the Act and the
securities law applicable with respect to any other applicable jurisdiction, and
(ii) the Company, in its sole discretion, consents to such assignment or
transfer.
11. Termination. This Warrant shall terminate at 5:00 p.m. California
time on the Termination Date.
12. Miscellaneous. This Warrant shall be governed by the laws of the
State of California, as such laws are applied to contracts to be entered into
and performed entirely in California by California residents. The headings in
this Warrant are for purposes of convenience and reference only, and shall not
be deemed to constitute a part hereof. Neither this Warrant nor any term hereof
may be changed or waived orally, but only by an instrument in writing signed by
the Company and the Holder of this Warrant. All notices and other communications
from the Company to the Holder of this Warrant shall be delivered personally or
mailed by first class mail, postage prepaid, to the address furnished to the
Company in writing by the last Holder of this Warrant who shall have furnished
an address to the Company in writing, and if mailed shall be deemed given three
days after deposit in the United States mail.
SILICON ENTERTAINMENT, INC.
-----------------------------------
David S. Morse, President
4
<PAGE> 32
Attachment 1
NOTICE OF EXERCISE
TO: SILICON ENTERTAINMENT, INC.
1. The undersigned hereby elects to purchase ____________ shares of the
Warrant Stock of Silicon Entertainment, Inc. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price in full,
together with all applicable transfer taxes, if any.
2. Please issue a certificate or certificates representing said shares
of Warrant Stock in the name of the undersigned or in such other name as is
specified below:
-----------------------------------------
(Name)
-----------------------------------------
(Address)
- ----------------------------------- -----------------------------------
(Date) (Name of Warrant Holder)
By:
--------------------------------
Title:
-----------------------------
A-1-1
<PAGE> 33
Attachment 2
INVESTMENT REPRESENTATION STATEMENT
Shares of the Securities
(as defined in the attached Warrant) of
SILICON ENTERTAINMENT, INC.
In connection with the purchase of the above-listed securities, the
undersigned hereby represents to Silicon Entertainment, Inc. (the "Company") as
follows:
(a) The securities to be received upon the exercise of the Warrant (the
"Securities") will be acquired for investment for its own account, not as a
nominee or agent, and not with a view to the sale or distribution of any part
thereof, and the undersigned has no present intention of selling, granting
participation in or otherwise distributing the same, but subject, nevertheless,
to any requirement of law that the disposition of its property shall at all
times be within its control. By executing this Statement, the undersigned
further represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer, or grant participation to such
person or to any third person, with respect to any Securities issuable upon
exercise of the Warrant.
(b) The undersigned understands that the Securities issuable upon
exercise of the Warrant at the time of issuance may not be registered under the
Securities Act of 1933, as amended (the "Act"), and applicable state securities
laws, on the ground that the issuance of such securities is exempt pursuant to
Section 4 (2) of the Act and state law exemptions relating to offers and sales
not by means of a public offering, and that the Company's reliance on such
exemptions is predicated on the undersigned's representations set forth herein.
(c) The undersigned agrees that in no event will it make a disposition
of any Securities acquired upon the exercise of the Warrant unless and until (i)
it shall have notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances surrounding the
proposed disposition, and (ii) it shall have furnished the Company with an
opinion of counsel satisfactory to the Company and Company's counsel to the
effect that (A) appropriate action necessary for compliance with the Act and any
applicable state securities laws has been taken or an exemption from the
registration requirements of the Act and such laws is available, and (B) the
proposed transfer will not violate any of said laws.
(d) The undersigned acknowledges that an investment in the Company is
highly speculative and represents that it is able to fend for itself in the
transactions contemplated by this Statement, has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investments, and has the ability to bear the economic risks
(including the risk of a total loss) of its investment. The undersigned
represents that it has had the opportunity to ask questions of the Company
concerning the Company's business and assets and to obtain any additional
information which it considered necessary to verify the accuracy of or to
amplify the Company's disclosures, and has had all questions which have been
asked by it satisfactorily answered by the Company.
A-2-1
<PAGE> 34
(e) The undersigned acknowledges that the Securities issuable upon
exercise of the Warrant must be held indefinitely unless subsequently registered
under the Act or an exemption from such registration is available. The
undersigned is aware of the provisions of Rule 144 promulgated under the Act
which permit limited resale of shares purchased in a private placement subject
to the satisfaction of certain conditions, including, among other things, the
existence of a public market for the shares, the availability of certain current
public information about the Company, the resale occurring not less than one
year after a party has purchased and paid for the security to be sold, the sale
being through a "broker's transaction" or in transactions directly with a
"market makers" (as provided by Rule 144(f)) and the number of shares being sold
during any three-month period not exceeding specified limitations.
Dated:
-----------------------------
-----------------------------------
(Typed or Printed Name)
By:
--------------------------------
(Signature)
-----------------------------------
(Title)
A-2-2
<PAGE> 35
Attachment 3
NOTICE OF CONVERSION
TO: SILICON ENTERTAINMENT, INC.
1. The undersigned hereby elects to acquire ___________ shares of the
Securities of Silicon Entertainment, Inc. pursuant to the terms of the attached
Warrant, by conversion of _____ percent (___%) of the Warrant.
2. Please issue a certificate or certificates representing said shares
of Securities in the name of the undersigned or in such other name as is
specified below:
-----------------------------------------
(Name)
-----------------------------------------
(Address)
- ----------------------------------- -----------------------------------
(Date) (Name of Warrant Holder)
By:
--------------------------------
Title:
-----------------------------
A-3-1
<PAGE> 1
EXHIBIT 23.1
CONSENT OF PRICEWATERHOUSECOOPERS LLP
INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-1 of
our report dated June 7, 1999, except for Note 11, which is as of September 9,
1999 relating to the financial statements of Silicon Entertainment, Inc., which
appear in such Registration Statement. We also consent to the references to us
under the headings "Experts" and "Selected Financial Data" in such Registration
Statement.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
San Jose, California
November 4, 1999
