FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 26, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-10590
VENTURE STORES, INC.
(Exact name of registrant as specified in its charter)
Delaware 43-0914490
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2001 East Terra Lane, O'Fallon, Missouri 63366-0110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314)281-5500
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of July 26, 1997:
Common stock, $1 par value - 18,295,528
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Venture Stores, Inc.
Condensed Statement of Earnings
(Unaudited)
(thousands, except per share data)
13 WEEKS ENDED 26 WEEKS ENDED
July 26, July 27, July 26, July 27,
1997 1996 1997 1996
Net Sales $ 328,485 $ 329,423 $ 642,923 $ 680,663
Costs and expenses:
Cost of merchandise sold 278,530 246,218 520,946 506,554
Selling, general,
administrative and
other expenses 141,054 83,631 230,113 165,425
Net interest expense 9,664 6,499 17,445 12,611
Earnings (loss) before income
taxes and extraordinary item (100,763) (6,925) (125,581) (3,927)
Income tax provision (benefit) 2,230 (3,115) (7,082) (1,854)
Net earnings (loss) before
extraordinary item (102,993) (3,810) (118,499) (2,073)
Extraordinary item (net of tax) 0 0 (2,402) 0
NET EARNINGS (LOSS) $ (102,993) $ (3,810) $ (120,901) $ (2,073)
Dividends on preferred stock 625 625 1,250 1,250
NET EARNINGS (LOSS) AVAILABLE
TO COMMON SHAREHOLDERS $ (103,618) $ (4,435) $ (122,151) $ (3,323)
Earnings (loss) per common share:
Before extraordinary item $ (5.67) $ (0.24) $ (6.55) $ (0.19)
Extraordinary item
(net of tax) 0.00 0.00 (0.13) 0.00
EARNINGS (LOSS) PER
COMMON SHARE $ (5.67) $ (0.24) $ (6.68) $ (0.19)
DIVIDENDS DECLARED PER
COMMON SHARE $ - $ - $ - $ -
AVERAGE COMMON SHARES
OUTSTANDING 18,281 18,113 18,274 17,792
See accompanying Notes to Condensed Financial Statements.
Venture Stores, Inc.
Condensed Balance Sheet
(thousands)
(Unaudited) (Unaudited)
July 26, July 27, January 25,
1997 1996 1997
ASSETS
Current assets:
Cash and cash equivalents $ 16,279 $ 20,938 $ 10,178
Accounts receivable, net 13,415 13,827 14,013
Merchandise inventories 279,189 302,618 274,393
Income taxes receivable 1,113 5,583 12,187
Other current assets 6,375 12,884 7,167
Total current assets 316,371 355,850 317,938
Property and equipment, at cost 408,773 534,552 532,888
Accumulated depreciation (159,459) (161,415) (168,977)
Property and equipment, net 249,314 373,137 363,911
Deferred income taxes 8,862 - -
Other assets 11,496 7,335 5,811
TOTAL ASSETS $ 586,043 $ 736,322 $ 687,660
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
Current liabilities:
Short-term debt $ 150,232 $ 85,000 $ 105,979
Current maturities of long-
term debt 4,488 4,184 4,371
Deferred income taxes 8,862 3,571 4,962
Accounts payable 114,975 110,842 124,118
Accrued expenses 75,899 55,348 60,320
Total current liabilities 354,456 258,945 299,750
Long-term debt 148,781 181,292 179,059
Other liabilities 3,767 3,812 3,838
Deferred gain on sale/leaseback 18,351 19,788 19,070
Deferred income taxes - 32,854 4,012
Shareholders' investment 60,688 239,631 181,931
TOTAL LIABILITIES AND SHAREHOLDERS'
INVESTMENT $ 586,043 $ 736,322 $ 687,660
See accompanying Notes to Condensed Financial Statements.
Venture Stores, Inc.
Condensed Statement of Cash Flows
(Unaudited)
(dollars in thousands, except per share)
26 WEEKS ENDED
July 26, July 27,
1997 1996
OPERATING ACTIVITIES:
Net earnings (loss) $(120,901) $ (2,073)
Items not requiring the outlay of cash:
Depreciation and amortization 17,274 15,857
Deferred income tax and ITC (8,974) 16,421
Extraordinary item 3,893 0
(Gain)/loss on sale or disposal of assets 39,661 (194)
Other 481 473
Working capital and other (13,713) (44,040)
Total operating activities (54,853) (13,556)
INVESTING ACTIVITIES:
Additions of property and equipment (3,174) (5,212)
Proceeds from sale of assets 38,807 2,617
Other 47 129
Total investing activities 35,680 (2,466)
FINANCING ACTIVITIES:
Repayments of long-term debt (7,892) (1,958)
Proceeds from sale/leaseback 0 15,000
Short-term borrowings 44,253 (30,000)
Dividends (1,250) (1,250)
Debt prepayment penalty (1,688) 0
Financing costs (8,149) (2,297)
Total financing activities 25,274 (20,505)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 6,101 (36,527)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 10,178 57,465
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 16,279 $ 20,938
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid (received) during the period:
Interest $ 15,930 $ 12,841
Income taxes $ (10,634) $ (26,382)
During the first quarter of 1996, the company made a non-cash contribution
of its common stock to the Venture Profit Sharing Plan, which represented
the entire 1995 company contribution. This contribution consisted of
199,985 shares of common stock with an average market price of $4.80 per
share. During the second quarter of 1996, the company granted 704,200
shares of restricted stock with a market price of $7.75 per share on the
date of grant. $481 and $473 was charged to expense in the first 26 weeks
of 1997 and 1996, respectively, related to restricted stock.
See accompanying Notes to Condensed Financial Statements.
VENTURE STORES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. INTERIM PRESENTATION
The accompanying unaudited condensed financial statements
should be read in conjunction with the audited financial
statements for the fiscal year ended January 25, 1997, and
the accompanying notes thereto included in the company's
1996 Annual Report to Shareowners. In the opinion of
management, this information is fairly presented and all
adjustments, of a normal, recurring nature, which are
necessary for a fair statement of the results for the
interim periods have been included; however, certain items
are included in these statements based on estimates for the
entire year. The interim operating results exclude the
Christmas season and therefore may not be indicative of the
operating results that may be expected for the full fiscal
year. Certain prior year items have been reclassified to
conform to the current year presentation.
2. Net earnings (loss) per common share are computed by
dividing net earnings (loss), after deducting preferred
dividend requirements, by the weighted average number of
common shares outstanding. Common stock equivalents had no
material dilutive effect on net earnings (loss) per common
share during the periods presented.
3. In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards (SFAS)
No. 128, "Earnings per Share." This statement simplifies
the standards for computing earnings per share previously
found in Accounting Principles Board Opinion No. 15 and
establishes new standards for computing and presenting
earnings per share. The company will adopt the new Statement
when required in the fourth quarter of 1997 and does not
expect the adoption to have a material impact on the
company's earnings (loss) per share.
4. In March 1997, the company established a stock option plan
(the "1997 Stock Option Plan") that authorizes the granting
of options to purchase common stock to certain associates of
the Company. A maximum of 350,000 shares of common stock
may be issued under the 1997 Stock Option Plan. Options
granted under the plan will be granted at the market price
on the date of grant, have a maximum term of 10 years, may
be exercised only after stated intervals of time, and are
conditioned upon continued active employment with the
company, except for periods following retirement, disability
or death. The company has granted 340,000 options under
this plan in 1997.
5. On April 8, 1997, the company terminated its credit facility
with BankAmerica Business Credit and entered into an
agreement with BT Commercial Corporation for a secured
revolving credit facility (the "Revolving Credit Facility")
consisting of revolving credit loans and letters of credit
of up to $250 million in the aggregate, with a sublimit of
$125 million for letters of credit. The Revolving Credit
Facility is in effect until April 8, 2000, and is secured by
the inventory, equipment, and substantially all other assets
of the company, excluding leased or mortgaged real estate
and certain personal property under leases. The Revolving
Credit Facility requires the company to meet certain
quarterly financial covenants, including minimum net worth,
interest coverage and accounts payable to inventory ratios.
During the second quarter of 1997, the Revolving Credit
Facility was amended to increase the advance rate to 65
percent from 60 percent through December 31, 1997, and
modify, among other things, the minimum net worth as of July
26, 1997 and October 25, 1997. Under the terms of the
Revolving Credit Facility, the company is prohibited from
paying dividends on its common stock. As of July 26, 1997,
the company was in compliance with these covenants, as
amended.
Interest on borrowings under the Revolving Credit Facility
is payable based on multiple rate options. Additionally,
the company is required to pay certain unused line fees and
letter of credit fees.
In connection with the termination of its previous credit
facility, the company recorded an extraordinary pre-tax
charge of $3.9 million ($2.4 million after tax, or $0.13 per
share) in the first quarter of 1997. The charge is
primarily for the write-off of unamortized deferred
financing costs and the prepayment penalties.
6. On July 11, 1997 (the "Closing Date"), Venture Stores, Inc.
sold 20 stores to Kmart Corporation ("Kmart") for a
negotiated price of $38 million cash, before closing
adjustments. Kmart also assumed, as of the Closing Date,
certain specified liabilities of the company, including
obligations under the leases relating to 17 of the stores.
The assets purchased by Kmart include three stores that were
owned by the company and the transfer of leases for 17
stores that were held under leases. In addition, the sale
included substantially all personal property, other than
inventory, located in the stores. The stores being sold
include five in the Dallas-Ft. Worth area, ten in Houston,
two in Indianapolis, and one each in Des Moines, Iowa,
Waterloo, Iowa, and Tulsa, Oklahoma. Kmart will assume
occupancy of the stores by September 15, 1997.
In connection with the sale, the company recorded a
nonrecurring pre-tax charge of $63.9 million in the second
quarter of 1997 for costs associated with selling and
closing the stores and liquidating the inventory.
7. During the second quarter of 1997, the company recorded a
valuation allowance of $40.4 million to reduce deferred tax
assets to the amount expected to be realizable due to the
continuing net operating losses.
8. Subsequent to second quarter 1997, the company entered into
an agreement with Kimco Realty Corporation ("Kimco") for a
total value of approximately $135 million, involving the
sale of Venture real estate assets. The transaction
provided cash proceeds of approximately $75 million, before
closing adjustments, to finance the continuation of the
company's repositioning as a family value retailer. It also
includes the assumption by Kimco of approximately $60
million of existing mortgage debt on certain properties.
This transaction involved the sale of 49 Venture fee and
leasehold properties. The company simultaneously leased the
assets back under a long-term lease. The lease, pursuant to
which the company will retain possession of the properties,
is for an initial term of 25 years.
The transaction was accounted for as a financing in
accordance with SFAS No. 98, "Accounting for Leases," and
the related obligation will be included in long-term debt
and current maturities of long-term debt. The obligation
will be amortized over the lease term. Also, since this
transaction is being recorded as a financing, the related
property will remain on the company's books and will be
depreciated over the lesser of the estimated useful life or
the lease term. In addition to rents, the company is
obligated to pay real estate taxes, insurance premiums,
maintenance expenses and other costs associated with certain
of the properties.
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
Second quarter 1997 sales were $328.5 million, down 0.3% from
$329.4 million during the same period in 1996. For the 26 weeks
ended July 26, 1997, sales were $642.9 million, a decrease of
5.5% from $680.7 million in the 26 weeks ended July 27, 1996.
Total sales for the second quarter and year-to-date period were
positively impacted by an aggressive promotional strategy in June
and strong sales in July at the 20 stores that have been sold to
Kmart Corporation and are in the process of holding inventory
liquidation sales. Sales were negatively impacted by disruptions
in the flow of merchandise from certain of the company's vendors,
cooler than normal temperatures in the first quarter which
negatively affected the sales of softline and seasonal
merchandise, and competitive store openings in some of the
company's markets.
Loss per common share, before nonrecurring and extraordinary
items, for the second quarter and year-to-date periods of 1997
was $2.17 and $3.05, respectively, including a loss of $0.87 due
to unrealizable deferred tax benefits. This compares to a loss
per common share of $0.24 and $0.19 for the second quarter and
year-to-date periods of 1996, respectively. Net loss applicable
to common shareholders, before nonrecurring and extraordinary
items, was $39.7 million and $55.8 million for the second quarter
and first 26 weeks of 1997, respectively, compared to $4.4
million and $3.3 million for the comparable 1996 periods.
During the first quarter of 1997, the company recorded an
extraordinary pre-tax charge of $3.9 million ($2.4 million net of
tax) or $0.13 per share, primarily for the write-off of
unamortized deferred financing costs and prepayment penalties
related to the termination of the company's previous credit
agreement.
Second quarter of 1997 included a nonrecurring charge of $63.9
million, or $3.50 per share, for costs associated with selling
and closing the 20 stores sold to Kmart and liquidating the
inventory, including a loss of $1.34 per share of unrealizable
deferred tax benefits. Of the total nonrecurring charge, $10.1
million (including a $4.0 million nonrecurring LIFO charge) is
included in gross margin and $53.8 million is included in
selling, general, administrative and other ("SG&A") expenses.
Including the nonrecurring and extraordinary items, net loss per
common share was $5.67 and $6.68 for the second quarter and year-
to-date periods of 1997, respectively, and net loss applicable to
common shareholders was $103.6 million and $122.2 million for the
second quarter and first 26 weeks of 1997, respectively.
The first 26 weeks of 1996 included a pre-tax gain from a real
estate transaction of $2.1 million, or $0.07 per share.
The components of the net earnings (loss) as a percent of sales
were as follows:
13 Weeks Ended 26 Weeks Ended
July 26, July 27, July 26, July 27,
1997 1996 1997 1996
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of merchandise sold
(before LIFO charge) 83.4 74.9 80.3 74.4
LIFO charge (benefit) 1.4 (0.2) 0.7 0.0
Gross margin 15.2 25.3 19.0 25.6
Selling, general, admin.
and other expenses 42.9 25.4 35.8 24.3
Operating income (loss) (27.7) (0.1) (16.8) 1.3
Net interest expense 3.0 2.0 2.7 1.9
Earnings (loss) before
income taxes and
extraordinary item (30.7) (2.1) (19.5) (0.6)
Income tax provision
(benefit) 0.7 (0.9) (1.1) (0.3)
Net earnings (loss) before
extraordinary item (31.4) (1.2) (18.4) (0.3)
Extraordinary item
(net of tax) 0.0 0.0 (0.4)% 0.0
Net earnings (loss) (31.4)% (1.2)% (18.8)% (0.3)%
As previously discussed, gross margin for the second quarter and
year-to-date periods of 1997 include a non-recurring charge of
$10.1 million. Excluding the nonrecurring charge, gross margin
as a percent of sales was 18.3% and 20.5% for the second quarter
and 26 weeks of 1997, respectively, compared to 25.3% and 25.6%
for the second quarter and 26 weeks of 1996, respectively. Gross
margin as a percent of sales decreased during the second quarter
and first 26 weeks of 1997 over the same periods from the prior
year primarily due to higher promotional markdowns in the current
year and a decrease in the sales of higher margin softline items
as a percentage of total sales. This change in the sales mix
resulted principally from the disruption in the flow of
merchandise from certain of the company's vendors and cooler than
normal temperatures in the first quarter.
The second quarter of 1997 included a LIFO charge of $4.5
million, compared with a LIFO credit of $0.5 million in the
second quarter of 1996. For the first 26 weeks of 1997, the LIFO
charge was $5.0 million, compared with $0.0 million for the same
period in 1996. As previously discussed, the second quarter and
year-to-date periods of 1997 included a $4.0 million nonrecurring
LIFO charge related to the reduction in inventory as a result of
the sale of 20 stores to Kmart.
Excluding the nonrecurring charge discussed above, SG&A expenses
were $87.3 million and $176.3 million in the second quarter and
first 26 weeks of 1997, respectively, compared to $83.6 million
and $165.4 million in the second quarter and first 26 weeks of
1996, respectively. As a percent of sales, excluding the
nonrecurring charge, SG&A expenses were 26.6% and 25.4% in the
second quarter of 1997 and 1996, respectively, and 27.4% and
24.3% in the first 26 weeks of 1997 and 1996, respectively. SG&A
expenses increased in the second quarter of 1997 compared to the
second quarter of 1996 primarily due to an increase in
advertising expense. In addition to an increase in advertising
expense, SG&A expenses increased in the year-to-date period of
1997 compared with the year-to-date period of 1996 as a result of
the prior year benefitting from the reduction of certain
insurance accruals no longer required, the reduction of certain
previously provided benefit accruals, the reduction of an over-
accrual of real estate taxes, and the reduction of recorded
reserves on a closed store.
Net interest expense increased during the second quarter and
first 26 weeks of 1997 compared to the same periods in 1996 due
to the increase in short-term borrowings and a decrease in
interest income.
The income tax provision (benefit) in the second quarter and
year-to-date periods of 1997 were impacted by the establishment
of a valuation allowance of $40.4 million to reduce deferred tax
assets to the amount expected to be realizable due to the
continuing net operating losses.
FINANCIAL CONDITION
On April 8, 1997, the company terminated its credit facility with
BankAmerica Business Credit and entered into an agreement with BT
Commercial Corporation for a secured revolving credit facility
(the "Revolving Credit Facility") consisting of revolving credit
loans and letters of credit of up to $250 million in the
aggregate, with a sublimit of $125 million for letters of credit.
The Revolving Credit Facility is in effect until April 8, 2000,
and is secured by the inventory, equipment, and substantially all
other assets of the company, excluding leased or mortgaged real
estate and certain personal property under leases. The Revolving
Credit Facility requires the company to meet certain quarterly
financial covenants, including minimum net worth, interest
coverage and accounts payable to inventory ratios. During the
second quarter of 1997, the Revolving Credit Facility was amended
to increase the advance rate to 65 percent from 60 percent
through December 31, 1997, and modify, among other things, the
minimum net worth as of July 26, 1997 and October 25, 1997.
Copies of these amendments are filed as Exhibits 10.1 and 10.2
hereto. Under the terms of the Revolving Credit Facility, the
company is prohibited from paying dividends on its common stock.
As of July 26, 1997, the company was in compliance with these
covenants, as amended.
Interest on borrowings under the Revolving Credit Facility is
payable based on multiple rate options. Additionally, the
company is required to pay certain unused line fees and letter of
credit fees.
The company's debt-to-capitalization ratio (including the present
value of operating leases) was 87.6% at July 26, 1997 compared to
64.4% at the end of the second quarter of 1996 and 72.7% at year-
end 1996.
During the second quarter of 1997, the company sold 20 stores to
Kmart for a negotiated price of $38 million cash, before closing
adjustments. Kmart also assumed certain specified liabilities of
the company, including obligations under the leases relating to
17 of the stores. The assets purchased by Kmart include three
stores that were owned by the company and the transfer of leases
for 17 stores that were held under leases. In addition, the sale
included substantially all personal property, other than
inventory, located in the stores.
The decrease in long-term debt is due to the prepayment of
approximately $5.8 million of mortgage notes from the proceeds of
the sale of 20 stores to Kmart, a $22.3 million reduction in the
financing obligation from previous sale/leaseback transactions as
a result of Kmart assuming certain of these obligations, and
regularly-scheduled maturities of long-term debt and capital
leases.
Subsequent to second quarter 1997, the company entered into an
agreement with Kimco Realty Corporation ("Kimco") for a total
value of approximately $135 million, involving the sale of
Venture real estate assets. The transaction provided cash
proceeds of approximately $75 million, before closing
adjustments, to finance the continuation of the company's
repositioning as a family value retailer. It also includes the
assumption by Kimco of approximately $60 million of existing
mortgage debt on certain properties.
This transaction involved the sale of 49 Venture fee and
leasehold properties. The company simultaneously leased the
assets back under a long-term lease. The lease, pursuant to
which the company will retain possession of the properties, is
for an initial term of 25 years.
The transaction was accounted for as a financing in accordance
with SFAS No. 98, "Accounting for Leases," and the related
obligation will be included in long-term debt and current
maturities of long-term debt. The obligation will be amortized
over the lease term. Also, since this transaction is being
recorded as a financing, the related property will remain on the
company's books and will be depreciated over the lesser of the
estimated useful life or the lease term. The minimum annual rent
which the company is obligated to pay during the lease term is
approximately $21.8 million. In addition, the company is
obligated to pay real estate taxes, insurance premiums,
maintenance expenses and other costs associated with certain of
the properties.
During the second quarter of 1997, (i) Standard & Poor's lowered
the ratings of the medium term notes and 6.75% revenue bonds due
March 1, 2009 from B- to CCC and lowered the ratings of the
company's preferred stock from CCC+ to CCC-, and (ii) Moody's
Investor Services lowered the ratings of the medium term notes
from B3 to Caa2 and lowered the ratings on the company's
preferred stock from caa to to ca. Debt ratings by various
rating agencies reflect the agencies' opinions of the ability of
the issuers to repay debt obligations punctually. Lower ratings
generally result in higher future borrowing costs.
The increase in short-term debt reflects the company's greater
reliance on short-term debt to fund working capital as a result
of reduced sales and the net loss. The above mentioned
transaction with Kimco subsequent to second quarter 1997 will
reduce the amount of short-term debt outstanding.
Non-current deferred income taxes were a liability of $32.9
million at July 27, 1996 and an asset of $8.9 million at July 26,
1997. The change in non-current deferred income taxes resulted
primarily from the creation of net operating loss carryforwards
during 1996 and the first two quarters of 1997 and the conclusion
of an IRS examination that resulted in significant capital
recovery adjustments. During the second quarter of 1997, the
company recorded a valuation allowance of $40.4 million to reduce
deferred tax assets to the amount expected to be realized due to
the net operating losses. Net deferred tax assets were zero at
the end of second quarter 1997. The decrease in income taxes
receivable from year-end 1996 resulted from an IRS refund
received in the first quarter of 1997.
The increase in accrued expenses in the second quarter of 1997
over second quarter 1996 and year-end 1996 is primarily due to
$15.3 in reserves related to the 20 stores sold to Kmart.
The decrease in other current assets from the second quarter of
1996 to the second quarter of 1997 resulted primarily from a
decrease in prepaid advertising expense. The increase in other
assets is primarily due to an increase in deferred financing
costs related to the new Revolving Credit Facility, net of the
write-off of unamortized deferred financing costs related to the
previous credit agreement.
The decrease in property and equipment from year-end 1996 to
second quarter 1997 is due primarily to the write-off of the net
book value of assets sold to Kmart in the second quarter of 1997.
The capital expenditure budget totals approximately $18.0 million
for 1997 and is expected to be used primarily to remodel existing
stores and for the ordinary repair and replacement of store and
distribution center assets. The company does not anticipate
opening any new family value stores in 1997.
In the first half of 1997, the company's sales and gross margin
were significantly below plan, primarily as a result of the
disruptions in merchandise flow. In addition, although many of
the disruptions in merchandise flow have been corrected, many of
the factors which finance certain of the company's suppliers are
not providing adequate support for the sale of goods to the
company. The company believes that working capital and capital
expenditure requirements for the balance of 1997 will be funded
through a combination of cash flow from operations, borrowings
under the Revolving Credit Facility, proceeds received from the
sale of the 20 stores sold to Kmart in the second quarter, and
proceeds from the sale/leaseback of certain real estate assets
subsequent to the second quarter of 1997.
The company utilizes software and related technologies that will
be affected by the date change in the year 2000. The company is
currently assessing the impact of this issue on its operations.
Although cost estimates have yet to be completed, the company
does expect to incur costs over the next few years to address
this issue. The company expects to complete its preliminary
system study by the end of 1997.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128,
"Earnings per Share." This statement simplifies the standards
for computing earnings per share previously found in Accounting
Principles Board Opinion No. 15 and establishes new standards for
computing and presenting earnings per share. The company will
adopt the new Statement when required in the fourth quarter of
1997 and does not expect the adoption to have a material impact
on the company's earnings (loss) per share.
FORWARD LOOKING STATEMENTS
Certain matters discussed above, such as the company's
expectations with respect to the funding of future capital
expenditures and working capital requirements for the remainder
of 1997, constitute "forward looking" statements and as such are
based on assumptions and estimates. Actual results may differ
materially from those in the forward looking statements. Factors
that could cause actual results to differ materially from the
forward looking statements include, but are not limited to: (i)
economic and weather conditions in the regions in which the
company's stores are located and their effect on the buying
patterns of the company's customers, (ii) consumer spending and
debt levels, (iii) the level of support provided by the company's
numerous providers of goods and services and the institutions
which finance those providers, (iv) inventory imbalances caused
by fluctuations in consumer demand, (v)competition, including
specifically price competition, (vi) cost and availability of
capital, and (vii) the success of the company's repositioning
strategy.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The company's Annual Meeting of Shareholders was held June
20, 1997, at which the two matters described below were
submitted to a vote of shareholders.
The results of the voting were as follows:
Votes
Withheld
Votes or
For Against Abstained
I. Election of Directors:
James H. Ferstl 15,256,445 910,679 -
Kimberly A. Delsing 15,232,017 935,107 -
Ronald Allen 24,500 16,142,624 -
II. Ratification of
independent auditors 15,421,764 642,675 78,485
There were no broker non-votes on any of the matters
submitted to a vote.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2 Asset Purchase Agreement, dated July 2, 1997,
between Kmart Corporation and the company, filed
as Exhibit 2 to the company's Current Report on
Form 8-K dated July 11, 1997, is incorporated
herein by reference
10.1 First Amendment, dated June 27, 1997, to Credit
Agreement, dated as of April 8, 1997, between the
company and BT Commercial Corporation, as Agent
10.2 Second Amendment, dated July 9, 1997, to Credit
Agreement, dated as of April 8, 1997, between the
company and BT Commercial Corporation, as Agent
10.3 Contract of Sale, dated August 4, 1997, between
the company and KRCV Corp.
10.4 Unitary Net Lease, dated August 6, 1997, between
the company and KRCV Corp.
10.5 Third Amendment, dated July 11, 1997, to the
Loan Agreement dated July 3, 1990, between
the company and Principal Mutual Life
Insurance Company
10.6 Assumption of Borrower's Obligations Under
Loan Documents, Including Lender's Consent Thereto
and Amendment of Loan Agreement, dated August 6,
1997, by and among the company, KRCV Corp, and
Principal Mutual Life Insurance Company
11 Computation of Earnings per Common Share
27 Financial Data Schedule
(b) Reports on Form 8-K
(1) A report dated July 11, 1997, filed under item 2,
reporting the sale of 20 stores to Kmart Corporation
for a negotiated price of $38 million cash, before
closing adjustments and prepaid rent for the post
closing inventory liquidation period. The following
unaudited proforma condensed financial statements were
included in the report:
Pro Forma Condensed Balance Sheet as of April 26, 1997
Pro Forma Condensed Statement of Earnings:
Year Ended January 25, 1997
13 Weeks Ended April 26, 1997
(2) A report dated August 6, 1997, filed under item 5,
reporting the sale and simultaneous leaseback of 49
Venture fee and leasehold properties.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
VENTURE STORES, INC.
(Registrant)
Date: September 8, 1997 By:\s\Russell E. Solt
Russell E. Solt
Executive Vice President -
Administration and
Chief Financial Officer
Exhibit Index
Exhibit No. Description
2 Asset Purchase Agreement, dated July 2, 1997,
between Kmart Corporation and the company, filed
as Exhibit 2 to the company's Current Report on
Form 8-K dated July 11, 1997, is incorporated
herein by reference
10.1 First Amendment, dated June 27, 1997, to Credit
Agreement, dated as of April 8, 1997, between the
company and BT Commercial Corporation, as Agent
10.2 Second Amendment, dated July 9, 1997, to Credit
Agreement, dated as of April 8, 1997, between the
company and BT Commercial Corporation, as Agent
10.3 Contract of Sale, dated August 4, 1997, between
the company and KRCV Corp.
10.4 Unitary Net Lease, dated August 6, 1997, between
the company and KRCV Corp.
10.5 Third Amendment, dated July 11, 1997, to the
Loan Agreement dated July 3, 1990, between
the company and Principal Mutual Life
Insurance Company
10.6 Assumption of Borrower's Obligations Under
Loan Documents, Including Lender's Consent
Thereto and Amendment of Loan Agreement,
dated August 6, 1997, by and among the
company, KRCV Corp, and Principal Mutual Life
Insurance Company
11 Computation of Earnings per Common Share
27 Financial Data Schedule
EXHIBIT 10.1
FIRST AMENDMENT
TO
CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT ("Amendment") is
dated as of June 27, 1997, by and among VENTURE STORES, INC., a
Delaware corporation (the "Borrower"); BT COMMERCIAL CORPORATION,
a Delaware corporation (in its individual capacity, hereinafter
referred to as "BTCC"), acting in its capacity as agent (in such
capacity as agent, hereinafter referred to as the "Agent") under
the "Credit Agreement" (as hereinafter defined); and BTCC and the
other "Lenders" (as defined in the Credit Agreement) signatories
hereto. Capitalized terms used herein but not otherwise defined
herein shall have the respective meanings assigned to such terms in
the Credit Agreement, after giving effect to this Amendment.
WITNESSETH:
WHEREAS, the Borrower, the Agent and the Lenders have entered
into that certain Credit Agreement dated as of April 8, 1997 (as
amended, restated, supplemented and otherwise modified from time to
time the "Credit Agreement"), pursuant to which the Lenders have
agreed to make certain loans and other financial accommodations to
or for the account of the Borrower; and
WHEREAS, the Borrower has requested that the Agent and the
Lenders amend the Credit Agreement;
NOW, THEREFORE, in consideration of the premises set forth
above, the terms and conditions contained herein, and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the respective parties hereto hereby agree
as follows:
1. Amendment to Credit Agreement. Effective as of the date
hereof, upon satisfaction of the conditions precedent set forth in
Section 2 below, and in reliance upon the representations and
warranties of the Borrower set forth herein, in the Credit
Agreement and in each of the other Credit Documents, the Credit
Agreement is hereby amended as follows:
1.1 The proviso to the definition of the term "Advance
Rate" set forth in Section 1.1 of the Credit Agreement is hereby
deleted in its entirety and the following language is hereby
substituted therefor:
provided that, notwithstanding the foregoing, the Advance
Rate shall in any event be sixty-five percent (65%)
during the period commencing on the Closing Date through
and including December 31, 1997.
2. Conditions Precedent. This Amendment shall become
effective as of the date hereof, upon satisfaction of each of the
following conditions:
(a) receipt by the Agent of a copy of this Amendment,
executed by the Borrower and the Majority Lenders; and
(b) receipt by the Agent in immediately available funds
for the ratable benefit of the Lenders of an amount equal to
$250,000.
3. Representations, Warranties and Covenants.
3.1 The Borrower hereby represents and warrants to the
Agent and each of the Lenders that, after giving effect to this
Amendment:
(a) All representations and warranties contained in the
Credit Agreement and the other Credit Documents are true and
correct in all material respects on and as of the date of this
Amendment, in each case as if then made, other than
representations and warranties that expressly relate solely to
an earlier date (in which case such representations and
warranties remain true and accurate on and as of such earlier
date);
(b) No Default or Event of Default has occurred which
has not been waived pursuant to the terms of the Credit
Agreement;
(c) this Amendment and the Credit Agreement constitute
legal, valid and binding obligations of the Borrower and are
enforceable against the Borrower in accordance with their
respective terms; and
(d) the execution and delivery by the Borrower of this
Amendment does not require the consent or approval of any
Person, except such consents and approvals as have been
obtained.
4. Reference to and Effect on the Credit Agreement and the
Other Credit Documents.
4.1 Upon the effectiveness of this Amendment, each
reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import, and each reference in
each of the other Credit Documents to the "Credit Agreement" shall
in each case mean and be a reference to the Credit Agreement as
amended hereby.
4.2 Except as expressly set forth herein, (i) the
execution and delivery of this Amendment shall in no way affect any
of the respective rights, powers or remedies of the Agent or any of
the Lenders with respect to any Event of Default nor constitute a
waiver of any provision of the Credit Agreement or any of the other
Credit Documents and (ii) all of the respective terms and
conditions of the Credit Agreement, the other Credit Documents and
all other documents, instruments, amendments and agreements
executed and/or delivered by the Borrower pursuant thereto or in
connection therewith shall remain in full force and effect and are
hereby ratified and confirmed in all respects. The execution and
delivery of this Amendment by the Agent or any Lender shall in no
way obligate the Agent or such Lender, at any time hereafter, to
consent to any other amendment or modification of any term or
provision of the Credit Agreement or any of the other Credit
Documents, whether of a similar or different nature.
5. Governing Law. THE VALIDITY, INTERPRETATION AND
ENFORCEMENT OF THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS AND DECISIONS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
6. Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
7. Counterparts. This Amendment may be executed in any
number of counterparts and by the different parties hereto in
separate counterparts, each of which when so executed and delivered
shall be an original, but all of which shall together constitute
one and the same instrument.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their proper and
duly authorized officers as of the date first set forth above.
VENTURE STORES, INC., a
Delaware corporation
By: /s/ Robert Wildrick
Name: Robert Wildrick
Title: CEO
BT COMMERCIAL CORPORATION, in its
individual capacity as a Lender and in
its capacity as Agent
By: /s/Wayne D. Hillock
Name: Wayne D. Hillock
Title: Senior Vice President
FLEET CAPITAL CORPORATION
By: ________________________________
Name: ______________________________
Title: ______________________________
GBFC, INC.
By: ________________________________
Name: ______________________________
Title: ______________________________
LASALLE NATIONAL BANK
By: /s/ Christopher G. Clifford
Name: Christopher G. Clifford
Title: Senior Vice President
SANWA BUSINESS CREDIT CORPORATION
By: /s/ Lawrence J. Placek
Name: Lawrence J. Placek
Title: Vice President
HELLER FINANCIAL, INC.
By: /s/ Linda G. Peddle
Name: Linda G. Peddle
Title: AVP, Account Executive
FINOVA CAPITAL CORPORATION
By: /s/M. S. Milam
Name: M.S. Milam
Title: VP
FREEMONT FINANCIAL CORPORATION
By: /s/ Cheri Rittman
Name: Cheri Rittman
Title: Vice President
NATIONAL CITY COMMERCIAL FINANCE, INC.
By: /s/Christina M. Lucas
Name: Christina M. Lucas
Title: Vice President
EXHIBIT 10.2
SECOND AMENDMENT
TO
CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT ("Amendment") is
dated as of July 9, 1997, by and among VENTURE STORES, INC., a
Delaware corporation (the "Borrower"); BT COMMERCIAL CORPORATION,
a Delaware corporation (in its individual capacity, hereinafter
referred to as "BTCC"), acting in its capacity as agent (in such
capacity as agent, hereinafter referred to as the "Agent") under
the "Credit Agreement" (as hereinafter defined); and BTCC and the
other "Lenders" (as defined in the Credit Agreement) signatories
hereto. Capitalized terms used herein but not otherwise defined
herein shall have the respective meanings assigned to such terms in
the Credit Agreement, after giving effect to this Amendment.
WITNESSETH:
WHEREAS, the Borrower, the Agent and the Lenders have entered
into that certain Credit Agreement dated as of April 8, 1997, as
amended (as amended, restated, supplemented and otherwise modified
from time to time the "Credit Agreement"), pursuant to which the
Lenders have agreed to make certain loans and other financial
accommodations to or for the account of the Borrower; and
WHEREAS, the Borrower has requested that the Agent and the
Lenders amend the Credit Agreement;
NOW, THEREFORE, in consideration of the premises set forth
above, the terms and conditions contained herein, and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the respective parties hereto hereby agree
as follows:
1. Amendment to Credit Agreement. Effective as of the date
hereof, upon satisfaction of the conditions precedent set forth in
Section 2 below, and in reliance upon the representations and
warranties of the Borrower set forth herein, in the Credit
Agreement and in each of the other Credit Documents, the Credit
Agreement is hereby amended as follows:
1.1 The following definitions are hereby added to
Section 1.1 of the Credit Agreement in the appropriate alphabetical
order:
Kmart means Kmart Corporation, a Michigan corporation.
Kmart Purchase Agreement means that certain Asset
Purchase Agreement dated as of July 2, 1997, between the
Borrower and Kmart.
Kmart Sale means the sale by Borrower and the purchase by
Kmart of the Acquired Assets pursuant to the Kmart Purchase
Agreement.
1.2 Section 8.1A of the Credit Agreement is hereby
deleted in its entirety and the following language is hereby
substituted therefor:
8.1A Minimum Shareowner's Investment. The Borrower
shall maintain a shareowner's investment (exclusive of gains
or losses attributable to sales or other dispositions of fixed
assets occurring after the Closing Date and other gains or
losses attributable to the Kmart Sale) of not less than (i)
$120,900,000, as of July 26, 1997 and (ii) $108,900,000, as of
October 25, 1997.
1.3 The words "and (iv)" set forth in the fifteenth line
of Section 8.7 of the Credit Agreement are hereby deleted and the
following language is hereby substituted therefor:
(iv) the Acquired Assets (as defined the Kmart Agreement),
provided that (a) such dispositions are for fair value, and
(b) the aggregate consideration is paid in full in cash at the
time of disposition and are thereupon delivered to the Agent,
in which case such consideration will be applied to repay the
Revolving Loans; and (v)
2. Conditions Precedent. This Amendment shall become
effective as of the date hereof, upon satisfaction of all of the
following conditions:
(a) receipt by the Agent of a copy of this Amendment,
executed by the Borrower and the Majority Lenders; and
(b) receipt by the Agent in immediately available funds
for the ratable benefit of the Lenders of an amount equal to
$250,000.
3. Representations, Warranties and Covenants.
3.1 The Borrower hereby represents and warrants to the
Agent and each of the Lenders that, after giving effect to this
Amendment:
(a) All representations and warranties contained in the
Credit Agreement and the other Credit Documents are true and
correct in all material respects on and as of the date of this
Amendment, in each case as if then made, other than
representations and warranties that expressly relate solely to
an earlier date (in which case such representations and
warranties remain true and accurate on and as of such earlier
date);
(b) No Default or Event of Default has occurred which
has not been waived pursuant to the terms of the Credit
Agreement;
(c) this Amendment and the Credit Agreement constitute
legal, valid and binding obligations of the Borrower and are
enforceable against the Borrower in accordance with their
respective terms; and
(d) the execution and delivery by the Borrower of this
Amendment does not require the consent or approval of any
Person, except such consents and approvals as have been
obtained.
4. Reference to and Effect on the Credit Agreement and the
Other Credit Documents.
4.1 Upon the effectiveness of this Amendment, each
reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import, and each reference in
each of the other Credit Documents to the "Credit Agreement" shall
in each case mean and be a reference to the Credit Agreement as
amended hereby.
4.2 Except as expressly set forth herein, (i) the
execution and delivery of this Amendment shall in no way affect any
of the respective rights, powers or remedies of the Agent or any of
the Lenders with respect to any Event of Default nor constitute a
waiver of any provision of the Credit Agreement or any of the other
Credit Documents and (ii) all of the respective terms and
conditions of the Credit Agreement, the other Credit Documents and
all other documents, instruments, amendments and agreements
executed and/or delivered by the Borrower pursuant thereto or in
connection therewith shall remain in full force and effect and are
hereby ratified and confirmed in all respects. The execution and
delivery of this Amendment by the Agent or any Lender shall in no
way obligate the Agent or such Lender, at any time hereafter, to
consent to any other amendment or modification of any term or
provision of the Credit Agreement or any of the other Credit
Documents, whether of a similar or different nature.
5. Governing Law. THE VALIDITY, INTERPRETATION AND
ENFORCEMENT OF THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS AND DECISIONS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
6. Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
7. Counterparts. This Amendment may be executed in any
number of counterparts and by the different parties hereto in
separate counterparts, each of which when so executed and delivered
shall be an original, but all of which shall together constitute
one and the same instrument.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their proper and
duly authorized officers as of the date first set forth above.
VENTURE STORES, INC., a
Delaware corporation
By: /s/Russell E. Solt
Name: Russell E. Solt
Title: Executive Vice President
BT COMMERCIAL CORPORATION, in its
individual capacity as a Lender and in
its capacity as Agent
By: /s/Wayne D. Hillock
Name: Wayne D. Hillock
Title: Senior Vice President
FLEET CAPITAL CORPORATION
By: /s/Sandra J. Evans
Name: Sandra J. Evans
Title: Vice President
GBFC, INC.
By: /s/Elizabeth A. Ratto
Name: Elizabeth A. Ratto
Title: Vice President
LASALLE NATIONAL BANK
By: /s/Christopher G. Clifford
Name: Christopher G. Clifford
Title: SVP
SANWA BUSINESS CREDIT CORPORATION
By: /s/Lawrence J. Placek
Name: Lawrence J. Placek
Title: Vice President
HELLER FINANCIAL, INC.
By: /s/Linda G. Peddle
Name: Linda G. Peddle
Title: AVP, Account Executive
FINOVA CAPITAL CORPORATION
By: /s/M.S. Milam
Name: M.S. Milam
Title: VP
FREEMONT FINANCIAL CORPORATION
By: /s/Cheri Rittman
Name: Cheri Rittman
Title: Vice President
NATIONAL CITY COMMERCIAL FINANCE, INC.
By: /s/Christina M. Lucas
Name: Christina M. Lucas
Title: Vice President
EXHIBIT 10.3
CONTRACT OF SALE
THIS AGREEMENT made as of this 4th day of August, 1997 between
VENTURE STORES, INC., a Delaware corporation whose address is 2001
East Terra Lane, O'Fallon, Missouri 63366-0110 (hereinafter,
"Seller"), and KRCV CORP., a Kansas corporation whose address is
3333 New Hyde Park Road, Suite 100, P. O. Box 5020, New Hyde Park,
New York 11042-0020 (hereinafter, "Purchaser").
W I T N E S S E T H:
WHEREAS:
1. Seller represents it owns (a) fee simple title to those
certain parcels of real estate (hereinafter collectively referred
to as the "Fee Parcels" and individually as a "Fee Parcel") located
and described as set forth in Exhibit 1 (Seller's tenancy-in-common
interest in and to certain land adjoining the Downer's Grove Fee
Parcel shall also be considered a Fee Parcel); and (b) the tenant's
entire right, title and interest in and to certain leases for
locations described in Exhibit 2 (hereinafter collectively referred
to as the "Leased Parcels " and individually as a "Leased Parcel"),
on each of which (except for the photo studio in O'Fallon,
Missouri, the distribution center in Corsicana, Texas [the
"Distribution Center"], and the land in North Richland Hills,
Texas) it currently operates or formerly operated a Venture retail
store. Each of such Fee and Lease Parcels is sometimes hereinafter
individually referred to as a "Parcel"; and all of same are
hereinafter collectively referred to as the "Parcels."
2. Seller wishes to sell and Purchaser wishes to purchase
Seller's fee or leasehold interests in and to such Parcels.
3. As a condition to such purchase, Purchaser has required
that Seller grant Purchaser certain option and other rights
regarding certain other leasehold interests of Seller, including
those subject to a certain Master Lease with Metropolitan Life
Insurance Company ("MetLife "), and Seller is willing to grant such
option and other rights.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto hereby agree as follows:
1. DEFINITIONS. For this Agreement, the following expressions
shall have the meanings hereinafter set forth.
1.1 "Real Estate" means, with respect to each Parcel,
Venture's entire right, title and interest in and to the land
described on Exhibits 1 and 2 and all of the buildings, building
fixtures (including pylon structures), and other real property
improvements constructed thereon, but expressly excluding any Trade
Fixtures of Seller, as defined in the Venture Lease, other than the
Distribution Fixtures, which are included in this sale.
1.2 "Overlease" means any lease between a fee owner (or
lessee or ground lessee) as landlord and Venture as tenant,
covering or with respect to any Leased Parcel. That certain lease
dated September 16, 1985 between Cook County, Illinois, as landlord
and The May Department Stores Company, Seller's predecessor in
interest, covering certain land used as common areas in conjunction
with the Elston, Illinois Fee Parcel, Venture Store #168
(hereinafter the "Elston Lease"), shall also be considered an
Overlease. All Overleases as of the date hereof are listed on
Exhibit 6.
1.3 "Venture Store" means, with respect to any Parcel,
that portion thereof currently or formerly being occupied and used
by Venture as a Venture discount department store.
1.4 "Space Lease(s)" means all tenant ground lease(s),
space lease(s), license(s), concessions or other occupancy or use
agreements where Venture is the landlord, sublandlord or licensor,
including all modifications, addenda and supplements thereto and
guarantees thereof, applicable to any part of the Real Estate.
However, "Space Leases" will not include license, concession or
other occupancy or use agreements for departments of any Venture
Stores which would not in any event be binding upon or required to
be recognized by Purchaser by reason of termination on closing of
the Venture Store or otherwise. All existing Space Leases as of
the date hereof are listed on Exhibit 3.
1.5 "Direct Assignment Space Leases" means those Space
Leases listed on Exhibit 4.
1.6 "Collateral Assignment Space Leases" means those
Space Leases listed on Exhibit 5.
1.7 "Personal Property" means, with respect to each
Parcel, the relevant working files which are in the possession of
Seller and are required for the efficient operation of the Real
Estate, including sepias, drawings, surveys, plans and
specifications; and (unless needed by Seller to operate) all
licenses, permits, certificates of occupancy (or local equivalent)
in the possession of or available to Seller.
1.8 "Property" means, with respect to each Parcel,
collectively all of Seller's rights and interest in the Real Estate
and all the other assets described in Article 2.
1.8 "Closing Date" means the date referred to in
Section 9, and on which Closing occurs. "Closing" means the event
whereby title to all of the Property is actually conveyed by Seller
to Purchaser and the Purchase Price paid by Purchaser and received
by Seller in accordance with Section 3.
1.9 "Venture Lease" means a single, unitary net lease
for all of the rentable space in the Parcels currently occupied by
Venture or under Collateral Assignment Leases, in form acceptable
to Seller and Purchaser, to be entered into at Closing between
Purchaser as Landlord and Seller as Tenant.
1.10 "Permitted Exceptions" means, with respect to each
Parcel, (i) the lien of real estate taxes not yet due and payable,
and (ii) easements and other matters of record acceptable to
Purchaser, which acceptance shall be evidenced by Purchaser's
acceptance of deeds or assignments of leases. Mortgages, judgments
and other monetary liens (except for current taxes as aforesaid,
and except for the Principal Mortgage and mortgages on interest of
Landlords under Overleases where there is non-disturbance), and
leases other than the Space Leases shall not be Permitted
Exceptions.
1.11 "Insolvent" means the inability to pay debts in the
ordinary course of business as they mature; or unreasonably small
capital for the business intended to be conducted. In addition, a
person or entity is insolvent if the sum of its debts is greater
than the sum of all of its property at a fair valuation.
1.12 "Hazardous Substances" means any hazardous or toxic
substances, materials or wastes including, but not limited to, oil
and petroleum products, asbestos, PCBs and those substances,
materials, or wastes now or hereafter listed in the United States
Department of Transportation Hazardous Materials Table at Section
49 CFR 172.101 and amendments thereto, or such substances,
materials or wastes otherwise now or hereafter regulated under any
applicable federal, state or local laws covering the environment
and/or toxic or hazardous wastes or substances.
1.13 "Met Lease" means, collectively, that certain
Master Lease between MetLife as landlord and Venture as tenant
dated May 18, 1990, as amended by Amendments dated June 15, 1990
and August 16, 1990, and that certain lease of even date therewith
covering Bedford Park..
1.14 "Met Parcels" means, collectively, all land and
improvements leased to Venture under the Met Lease, and "Met
Parcel" means, individually, any leasehold or subleasehold interest
held by Venture as tenant in and to any individual location covered
by the Met Lease. All Met Parcels are set forth in Exhibit 14.
1.15 "Distribution Fixtures" means all machinery,
equipment, vehicles, fixtures, and trade fixtures (including
without limitation any racks, conveyor systems and forklifts) used
in the operation of the Distribution Center, including without
limitation those listed in Exhibit 16.
1.16 "Principal Parcels" means, collectively, Seller's
entire right, title and interest in and to all Parcels encumbered
by the Principal Mortgage, and "Principal Parcel" means,
individually, any such Parcel.
1.17 "Principal Mortgage" means that certain loan
agreement dated July 3, 1990 by and between Principal Mutual Life
Insurance Company ("Principal") and Seller, as amended, and any
mortgage, deed of trust or other lien on any Parcel securing the
debt referred to therein.
1.18 "Purchaser Designee" means any corporation wholly-
owned by Kimco Realty Corporation.
1.19 "Option Lease Parcels" means, collectively,
Seller's entire right, title and interest in and to certain leases
for locations described in Exhibit 15; and "Option Lease Parcel",
when used individually, refers to any such Parcel.
1.20 "Corsicana Option Contract" means that certain
agreement between Seller and Raymond Hayes dated May 7, 1992
wherein Seller has been granted an option to purchase approximately
11.56 acres of land adjacent to the Distribution Center.
2. SALE AND PURCHASE. Seller agrees to sell, convey, assign
and transfer to Purchaser (or, at Purchaser's option with regard to
any Leased Parcel, to a Purchaser Designee), and Purchaser agrees
to purchase and acquire from Seller (or, with regard to any Leased
Parcel at Purchaser's option, Purchaser agrees to cause a Purchaser
Designee to purchase and acquire), subject only to the Permitted
Exceptions:
(i) With regard to all Fee Parcels, all of Seller's right,
title and interest in and to: (a) The Real Estate, (b) land lying
in the bed of any street, road or avenue, opened or proposed, if
any, in front of or adjoining the Real Estate, strips or gores
adjoining the Real Estate, if any, (c) all appurtenances and
hereditaments appertaining to the Real Estate, including without
limitation any easements, (d) all awards made or to be made to
Seller for the Parcel or any part thereof by reason of a taking by
eminent domain or in lieu thereof, except as otherwise set forth in
the Venture Lease, (e) except as otherwise set forth in the Venture
Lease, any unpaid award for damages to the Real Estate by reason of
change of grade of any street (Seller hereby agreeing to execute
and deliver to Purchaser, on the Closing Date or thereafter, all
proper instruments for collection of any such award), (f) any
Personal Property, (g) any Direct Assignment Space Leases, and (h)
with regard to the Distribution Center, all Distribution Fixtures;
(ii) With regard to all Leased Parcels, all of Seller's
right, title and interest in and to (a) the Overlease and any
appurtenances pertaining thereto, including without limitation any
easements, (b) any Personal Property, and (c) any Direct Assignment
Space Leases.
3. PURCHASE PRICE. The "Purchase Price" for all of the
Property is a sum equal to (i) SEVENTY MILLION FIVE HUNDRED
THOUSAND ($70,500,000.00) DOLLARS (the "Cash Portion of the
Purchase Price" (subject to the conditions as to payment of
portions of same hereinafter set forth in this Article 3), plus
(ii) a sum equal to the outstanding principal balance on the
Closing Date of the Principal Mortgage; which shall be and be
deemed allocated among the Parcels for all purposes (including
without limitation payment of all Transfer Taxes and amounts of
title insurance premiums) as set forth in Exhibit 7 hereto. The
Purchase Price shall be payable as follows:
(a) The sum of Fifty-Five Million Fifty-Eight Thousand Four
Hundred Fifty-Nine and 74/100 ($55,058,459.745) Dollars shall be
payable at Closing (subject to any adjustments thereto specifically
set forth in this Agreement) by wire transfer of immediately
available federal funds to Seller's account.
(b) The sum of Two Million Two Hundred Sixty-Five Thousand
($2,265,000.00) Dollars will be paid, with respect to the Roeland
Park, Kansas Lease Parcel (Venture Store #22), and the sum of Two
Hundred Thousand ($200,000.00) Dollars will be paid, with respect
to the Forest Park, Illinois Lease Parcel (Venture Store #63) and
the sum of Two Hundred Thousand ($200,000.00) Dollars will be paid,
with respect to the Niles, Illinois Lease Parcel (Venture Store
#69), if, as and when the consent of the landlord under the
respective Overlease for each such Parcel to all transactions
contemplated hereby (i.e., assignment to Purchaser Designee,
sublease to Purchaser, and lease back to Venture), in form
reasonably acceptable to Purchaser, have been obtained. Seller
agrees to use its best efforts, including without limitation
bringing lawsuits, if required, to obtain such consents. If
despite the use of such best efforts and the bringing of such
lawsuits, it is adjudicated that either (or both) such landlord
consents may be denied, and as a result thereof the relevant
Overlease is canceled due to default, then (i) the Purchase Price
shall be reduced by (and Purchaser may retain) the amount set forth
in this paragraph allocable to such Parcel, (ii) such Parcel
shall, pursuant to the terms of the Venture Lease, be dropped
therefrom, and (iii) the annual Base Rent under the Venture Lease
shall, effective upon such termination, be reduced by an amount
equal to twelve and three-quarters (12.75%) percent of the amount
of the Purchase Price so retained by Purchaser.
(c) A sum of up to an aggregate of Twelve Million Seven
Hundred Thousand Seventy-Six Five Hundred Forty and 26/100
($12,776,540.26) Dollars will be paid, with respect to the Parcels
marked with an asterisk in Exhibit 8 , if, as and when the "Title
Conditions" (as hereinafter defined) are fully met within sixty
(60) days following the Closing. Such amount is hereinafter
referred to as the "Title Condition Purchase Price Portion". The
aggregate of all sums in the "Total Allocation" column of Exhibit
8 with regard to such asterisked Parcels is herein referred to as
the "Total Amount". If, as and when the Title Conditions are met
with regard to any Parcel in Exhibit 8, the amount of the Purchase
Price set forth in the Total Allocation column of Exhibit 8
allocable to such Parcel shall be deducted from the Total Amount.
When the Total Amount is equal to the then amount of the Title
Condition Purchase Price Portion, then (and only then) the amount
of the Purchase Price allocable to that Parcel shall be deducted
from the Title Condition Purchase Price Portion (up to, but not
more than, the remaining balance thereof) and paid to Seller. The
"Title Conditions" shall mean that Commonwealth Land Title
Insurance Company (or another national title company reasonably
acceptable to Purchaser) shall have issued, at Seller's sole cost,
an ALTA Form B Fee (or Leasehold, as the case may be) policy in the
amount set forth in the Total Allocation column of Exhibit 8 for
such Parcel, with extended coverage, and any affirmative insurance
reasonably requested by Purchaser, all in form reasonably
acceptable to Purchaser, and showing that Purchaser (or a Purchaser
Designee, if applicable) has valid and marketable title to such
policy, subject to no exception for intervening liens prior to
recording the deed and no other liens or encumbrances other than
(i) the Space Leases; (ii) for the Principal Parcels, the Principal
Mortgage; (iii) for Leased Parcels, fee mortgages provided there
is non-disturbance protection running to Purchaser; (iv) current
real estate taxes not yet due and payable; (v) reciprocal easement
agreements heretofore delivered to and reviewed by Purchaser; and
(vi) utility and other easements and other matters of record (other
than liens or instruments giving any party a possessory right or an
option to purchase) which do not either restrict or impair the use
of the Parcel for retail purposes or materially impair the value
thereof. If any such title report (on which a policy will be
based) shows a lien in an ascertainable dollar amount and Seller
does not make satisfactory arrangements with the title company to
remove same, the portion of the Purchase Price allocable to such
Parcel set forth in the Total Allocation column of Exhibit 8 shall
be reduced and the Title Condition Purchase Price Portion shall be
reduced (and Purchaser shall have no further obligation to pay
same) by a sum equal to the amount of any such lien. Seller agrees
to use its best efforts, at its sole cost, including without
limitation delivery of any instruments, affidavits, indemnities,
escrows, and/or bonds as the title company may reasonably request,
to cause all Title Conditions to be met as promptly as possible.
The provisions of this Section 3(c) shall not reduce or impair
Seller's liability for any breach of representation elsewhere set
forth in this Agreement, except and to the extent of the actual
reduction in the Purchase Price pursuant to the foregoing
provisions. If despite the use of such best efforts, the Title
Conditions are not fully met with respect to any Parcel within
sixty (60) days following Closing, then (i) the Purchase Price
shall be reduced by (and Purchaser may retain) the amount set forth
in this paragraph allocable to such Parcel, (ii) such Parcel shall
be dropped from the Venture Lease, (iii) the annual Base Rent under
the Venture Lease shall, effective upon such termination, be
reduced by an amount equal to twelve and three-quarters (12.75%)
percent of the amount of the Purchase Price so retained by
Purchaser, and (iv) Purchaser shall, at Seller's sole cost
(including without limitation payment of all transfer and recording
taxes), reconvey the Parcel to Seller without any liability to
Purchaser. Notwithstanding the foregoing: (i) Purchaser shall not
have to reconvey any Parcel unless and until Purchaser has retained
from the Title Condition Purchase Price Portion a sum which, after
deducting all other sums theretofore retained by Purchaser from the
Title Condition Purchase Price Portion, would equal the full amount
of such Parcel in the "Total Allocation" Section of Exhibit 8.
(d) A sum equal to the outstanding principal balance of the
Principal Mortgage on the Closing Date shall be paid by Purchaser
accepting title to the Principal Parcels, by assuming the Principal
Mortgage.
With regard to any amount of the Purchase Price not paid at
Closing pursuant to Section 3(b) and/or Section 3(c): If, for so
long as, and to the extent any of such amounts have not been either
(x) paid to Seller, or (y) retained or applied by Purchaser with no
obligation to pay same to Seller (such amounts which have not been
paid or retained as set forth in [x] or [y] being collectively
referred to as the "Aggregate Contingent Purchase Price"), Seller
shall receive, on a monthly basis (on the first day of each month)
a credit against Base Rent under the Venture Lease in an amount
equal to an annual rate of twelve and three-quarters (12.75%)
percent interest on the amount of the Aggregate Contingent Purchase
Price for the immediately preceding month (it being understood that
any such credit shall immediately cease to accrue with regard to
any portions of the Aggregate Contingent Purchase Price paid or
retained as set forth in [x] and [y]).
4. ADJUSTMENTS AND PRORATIONS.
4.1 As hereinafter set forth, at Closing Purchaser as
Landlord and Seller as Tenant shall enter into the Venture Lease
for all Parcels pursuant to which Seller as Tenant will continue to
be responsible for all real estate taxes, utilities, Overlease rent
and all other expenses regarding each Parcel (except as expressly
otherwise set forth in the Venture Lease), and will be entitled to
continue to collect rent under the Collateral Assignment Space
Leases. In view of the foregoing, there shall be no proration at
Closing of any of said items of income or expenses if and to the
extent same would not be appropriate.
4.2 Notwithstanding the foregoing, at Closing Seller shall
pay (or Purchaser at its option may take a credit against the
Purchase Price for) the following amounts with respect to each
Parcel (or all Parcels, as the case may be):
(a) Rent under the Venture Lease for the balance of the
month of August 1997;
(b) All payments required to be made to Landlord by the
Venture Lease for periods through and including August 31, 1997;
(c) All of the following expenses paid or incurred by
Purchaser in connection with the transaction contemplated hereby
for all Parcels: any and all transfer, conveyance, deed, recording
and/or documentary stamp taxes, fees and similar costs and charges
relating to, or with respect to, the conveyance and transfer of the
Property, and the execution and/or recordation of the Venture Lease
or any sublease from a Purchaser Designee to Purchaser (hereinafter
collectively referred to as "Transfer Taxes"); all title insurance
premiums, fees and charges for owners or leasehold title policies
in the aggregate amount of the Purchase Price, in form acceptable
to Purchaser including all endorsements Purchaser deems appropriate
in its sole discretion; all survey costs for survey preparation,
update, inspection and/or recertification; all costs of Purchaser's
environmental and/or physical consultant and/or inspections, and
all costs of Purchaser's outside counsels. Notwithstanding the
foregoing, Purchaser shall pay all costs of its in-house counsel
and shall not be entitled to reimbursement for such expenses.
4.3 Further notwithstanding the foregoing, all rent and
additional rent under the Direct Assignment Space Leases shall be
pro-rated and apportioned on the Closing Date, as of 11:50 P.M. of
the day immediately preceding Closing, in accordance with the
following provisions:
(a) Purchaser shall receive a credit at Closing for
base or minimum rent and any monthly estimates for taxes, CAM,
etc., under all Direct Assignment Space Leases for the period from
the Closing Date through and including August 31, 1997. Seller may
retain all August 1997 base or minimum rent and such monthly
escalation payments under all Direct Assignment Space Leases
(collectively "August Rents") it may have heretofore collected or
may hereafter receive; and Purchaser shall promptly pay over to
Seller the entire amount of any August Rents Purchaser may
hereafter receive;
(b) Real estate tax payments (other than those included
in August Rents) under Direct Assignment Space Leases shall be
prorated on a per diem basis as and when collected. Purchaser
shall not be obligated to make any payment or give any credit to
Seller on account of or by reason of any rental or other payments
which are unpaid as of the date of Closing, but shall be required
merely to turn over Seller's share of the same within thirty (30)
days if, as and when received by Purchaser after the Closing
(subject to Section 4.4). Purchaser shall not be required to
institute any action or proceeding to collect any rent
delinquencies;
(c) Percentage rent (i.e., that portion of the rent
payable to the landlord by the tenant under a Direct Assignment
Space Lease which is a percentage of the amount of sales or of the
dollar amount of sales), if any, payable under each Direct
Assignment Space Lease shall be prorated with respect to the lease
year thereunder in which the Closing occurs on a per diem basis as
and when collected. Any percentage rent collected by Purchaser
including any percentage rent which is delinquent and pertaining to
(i) an entire lease year or accounting period of a tenant under a
Direct Assignment Space Lease which ends on a date prior to the
date of Closing, and (ii) that portion of a lease year or
accounting period of such tenant covering a period prior to the
date of Closing where such lease year or accounting period begins
prior to the date of Closing and ends thereafter shall in both
cases (subject to Section 4.4) be paid to Seller within thirty (30)
days of receipt by Purchaser. Purchaser shall not be required to
institute any action or proceeding to collect any delinquent
percentage rent;
(d) Common area maintenance expenses and charges
relating to Direct Assignment Space Leases shall be prorated.
Seller shall be responsible for all common area expenses and
charges relating to Direct Assignment Space Leases incurred prior
to Closing, and Purchaser shall be responsible for the same
subsequent to Closing (subject to the relevant provisions of the
Venture Lease). All common area expense payments made by each
tenant and such charges paid under its Direct Assignment Space
Lease for the entire lease year during which the Closing occurs,
including end-of-year adjustments, if any, shall be prorated
between Seller and Purchaser in the following manner: Prior to
Closing, Seller shall deliver to Purchaser, with regard to each
Direct Assignment Space Lease Tenant required to pay common area
charges ("CAM Charges") under its lease, a detailed computation
showing all CAM Charge expenses incurred by Seller for the period
from the beginning of each such tenant's then current billing
period for CAM Charges (e.g., calendar year, lease year, etc.)
through the Closing Date, any CAM monthly estimates or charges
theretofore collected by Seller relating to such tenant
(hereinafter referred to as the "CAM Estimates"), and a bill for
the tenant's prorata share of CAM Charges (i.e., for CAM charges
through the Closing Date net of any such CAM Estimates), together
with all invoices and other evidence documenting such CAM Charges
in detail required by such tenant's lease. Purchaser, at its
option, may either:
(i) elect to send any such bills to tenants
promptly following Closing, in which event such
tenant shall pay any amount shown due directly
to Seller, and Purchaser shall have no
responsibility to collect same; or
(ii) elect to incorporate any bills prepared by
Seller into a single post-closing (as and when
appropriate for annual reconciliation or other
billing of CAM charges for any tenant) bill for
CAM Charges to such tenant, in which event such
single bill, as and when paid, shall be
apportioned between Seller and Purchaser based
on the ratio of pre-and post-Closing CAM
expenses (taking into account any CAM Estimates
retained by Seller at Closing); or
(iii) elect, post-Closing (as and when
appropriate for annual reconciliation or other
billing of CAM Charges for any tenant) to send
two bills to such tenant (i.e., one for
pre-Closing charges as prepared by Seller and
one for post-Closing charges), with such tenant
to pay Seller directly for unpaid pre-Closing
charges, if any.
Notwithstanding Purchaser's election above set
forth, any CAM Estimates for any tenant shall be retained by Seller
up to the amount of the pre-Closing CAM Charges payable by such
tenant as evidenced by such bills and computations delivered by
Seller at Closing, and any excess shall be paid or credited to
Purchaser at Closing.
4.4 In the event that there remains any unpaid base or
minimum rent under any Direct Assignment Space Lease for a period
prior to the month of Closing, all payments of base or minimum rent
received from such tenant shall be applied to sums owed Purchaser
before any part thereof shall be treated as belonging to Seller.
In the event that there remains any unpaid tenant receivable other
than base or minimum rent (including without limitation any tax,
CAM, insurance or percentage rent payments) for any period prior to
the Closing under any such lease, all payments received from any
tenant in arrears shall be applied to any sums owed Purchaser from
such tenant (whether base or minimum rent or any other amount)
before any part thereof shall be treated as belonging to Seller.
If at the time of Closing any tenants under any Direct Assignment
Space Leases owe Seller any money, Seller shall have the right,
subsequent to the Closing, to collect such sums directly from the
tenants including bringing lawsuits against the tenants (at
Seller's sole expense) for such collection; provided, however,
Seller agrees that any such legal action or collection shall not
include any disturbance of the possession, use or occupancy of the
tenants or any right to evict the tenants, whether pursuant to the
lease provisions or otherwise, and Purchaser shall not be obligated
to join in any lawsuit or in any other way to participate or
cooperate with Seller in its collection attempts, unless required
to by law for Seller to maintain its action, and in such event,
Purchaser will (at Seller's expense) join in such a lawsuit or
action only if the same does not include or require disturbance of
the possession of any tenants, as aforesaid.
4.5 All brokerage and leasing commissions or other
compensation due or accrued prior or subsequent to the date of
Closing to any broker, agent, or other person in connection with
any Parcel for brokerage or other services rendered to Seller or
any predecessor of Seller in connection with the management and/or
leasing of the Parcel (including without limitation any that may be
due at Closing or in the future, attributable to the execution or
renewal of any Space Lease) shall be credited to Purchaser to the
extent not paid by Seller prior to Closing (it being agreed that
payment of all of the foregoing shall be the sole responsibility of
Seller).
4.6 All prepaid rentals, other prepaid payments, security
deposits, electric, gas, sewer and water deposits deposited with
Seller by tenants, (including all accrued interest on all of the
foregoing, unless Seller is entitled to retain the benefit thereof)
under any Direct Assignment Space Leases shall all belong to
Purchaser and all shall be assigned and delivered to Purchaser at
the Closing. At Purchaser's option, Purchaser may take a cash
credit in the amount of all security deposits to be delivered to
Purchaser at Closing, and Seller may retain same.
4.7 Interest on the Principal Mortgage shall be pro-rated
as of 11:59 P.M. on the day preceding Closing.
4.8 Tax escrow deposits (if any) held by Principal shall be
assigned to Purchaser at Closing. Seller shall not receive a
credit in the amount thereof against the Purchase Price, but same
shall be taken into account in computing the initial tax payments
required to be made by Venture under the Venture Lease.
4.9 If, following the Closing, a claim should be made by
any entity, party or authority that it is entitled to receive
unpaid or additional Transfer Taxes, Seller shall be responsible to
and hereby agrees to pay any such claim as and when made (including
any interest and/or penalties thereon or in connection therewith).
Seller shall have the right to contest any such claim, provided it
deposits the amount claimed in escrow with Purchaser for payment if
such contest is unsuccessful. Seller shall and hereby agrees to
defend, indemnify and hold Purchaser harmless from and against any
claim, cost, loss or liability arising from or related to
non-payment of any Transfer Taxes.
4.10 The parties recognize that there will not be time,
prior to Closing, to obtain as-built surveys on all Parcels.
Accordingly, at Closing the sum of One Hundred Seventy-Five
Thousand ($175,000.00) Dollars shall be withheld from the Purchase
Price and applied by Purchaser to pay for the cost of surveys not
obtained by Closing and to pay the cost of post-Closing title
endorsements. Should Purchaser's actual cost of same be greater
than One Hundred Seventy-Five Thousand ($175,000.00) Dollars,
Seller will reimburse Purchaser for the excess on demand. Should
Purchaser's actual costs be less, Purchaser will promptly refund
the difference to Seller.
4.11 Purchaser shall not be responsible for any
charges, salaries, vacation pay or fringe benefits of employees of
Seller prior to or following the Closing and none of the foregoing
shall be prorated.
5. TITLE AND SURVEY.
5.1 Seller shall convey to Purchaser at Closing valid and
insurable fee (or leasehold, as the case may be) title to each
Parcel, subject only to the Space Leases and the Permitted
Exceptions.
5.2 If at Closing there shall exist on any Parcel a
mortgage or other lien of a specified or readily ascertainable
dollar amount(other than the Principal Mortgage and other than
mortgages on the fee of Leased Parcels) , Seller shall be required
to remove the same by payment, by bonding, or causing the Title
Company to insure over the same or otherwise.
5.3 At Closing, as a condition to Purchaser's obligations,
Purchaser shall be able to obtain (at Seller's expense as
aforesaid) a title insurance policy from Commonwealth Land Title
Insurance Company for each Parcel, in the amount of the Purchase
Price allocated thereto, subject only to the Permitted Exceptions
and otherwise in form acceptable to Purchaser (including any
endorsement and/or affirmative insurance Purchaser deems
appropriate in its sole judgment). Seller agrees to use its
diligent good faith efforts and take all necessary actions, at its
sole cost, to obtain, following Closing, any title endorsement or
affirmative insurance which Purchaser desires but which were not
obtainable at Closing.
6. HAZARDOUS WASTES. Seller represents and warrants (and it
shall be a condition precedent to Purchaser's obligation to
purchase at Closing) that, except as otherwise disclosed in written
reports delivered to Purchaser prior to Closing by Seller or by
Purchaser's environmental consultants or in Exhibit 11 or by any
other written environmental reports actually received by Purchaser
prior to Closing, as of the date of Closing: all Real Estate of
each Parcel is in compliance with and does not violate any
provisions of the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (as the same may be amended
from time to time) and/or of any other federal, state or local
environmental or other statute relating to Hazardous Substances;
and that Seller has never used the Parcel for the dumping or
storage of any Hazardous Substances and knows of no such use by any
other party and that there does not exist on, in or under any Real
Estate any Hazardous Substances. The provisions of this Section 6
shall survive the Closing.
7. COVENANTS, REPRESENTATIONS AND WARRANTIES OF SELLER.
In order to induce Purchaser to enter into the transaction
herein set forth, Seller covenants, represents and warrants to
Purchaser the following, all of which shall be required to be true
and correct in all material respects on and as of the Closing Date
(except with respect to matters disclosed in information furnished
to Purchaser and its attorneys or disclosed on Exhibit 13 attached
hereto) as a condition precedent to Purchaser's obligations
hereunder, and all of which shall survive the Closing:
7.1 Seller (i) is a corporation, duly organized, validly
existing and in good standing under the laws of the State of
Delaware, and is duly qualified as a foreign corporation and is in
good standing in each jurisdiction where a Parcel is located; and
(ii) has the requisite corporate power and authority and the legal
right to own, pledge, mortgage and operate its properties, to sell
(or assign leasehold interest in) the Parcels, to enter into the
Venture Lease and to conduct its business as now or currently
proposed to be conducted.
7.2 The execution, delivery and performance by Seller of
each of the documents to which it is a party are within the
corporate powers of Seller, have been duly authorized by all
necessary corporate action, including the consent of shareholders
where required, and do not (A) contravene the charter or by-laws of
Seller, (B) to Seller's best knowledge, violate any law (including,
without limitation, the Securities Exchange Act of 1934) or
regulation, or any order or decree of any court or governmental
instrumentality, (C) conflict with or result in a breach of, or
constitute a default under (except to the extent waived by any
lender), any material indenture, loan agreement, mortgage or deed
of trust or any material lease, agreement or other instrument
binding on Seller or any of its properties, or (D) result in or
require the creation or imposition of any lien upon any of the
property of Seller (other than the Venture Lease). This Agreement
has been duly executed and delivered by Seller. This Agreement is
(and each of the other documents to which Seller is or will be a
party), when delivered, will be a legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with
its terms.
7.3 Seller has presented fairly its financial condition.
7.4 Seller has good and insurable fee or leasehold title to
all of the Real Estate (subject to the Permitted Exceptions), and
there are no monetary liens (including liens or retained security
interests of conditional vendors) of any nature whatsoever on any
of the Real Estate (except for the Principal Mortgage and mortgages
on the fee of Leased Parcels). Seller is not party to any
contract, agreement, lease or instrument, the performance of which,
either unconditionally or upon the happening of an event, will
result in or require the creation of a lien on any of the Real
Estate or otherwise result in a violation of this Agreement, except
as expressly permitted hereunder.
7.5 It is Seller's intent to use the proceeds of the sale
of the Properties for repayment of debt and/or general working
capital purposes; and such proceeds shall not be used in any manner
by Seller which will result in a breach or a default under any
existing agreement between Seller and any of its creditors.
7.6 There has been no material adverse change in the
business, assets, operations, prospects or conditions (financial or
otherwise) of Seller from and after the date representatives of
Seller and Purchaser first discussed the transaction herein
contemplated.
7.7 Seller is not Insolvent nor will it be rendered
Insolvent by this transaction.
7.8 Seller has filed or caused to be filed all tax returns
in which the liability for taxes is in excess of $50,000 and which
to the knowledge of Seller are required to be filed to date, and
has paid all taxes shown to be due and payable before delinquency
on said returns or on any assessments made (other than those being
contested in good faith by appropriate proceedings for which
adequate reserves have been provided on the books of Seller), and
no tax liens have been filed and, to the best knowledge of Seller,
no claims are being asserted by any taxing authority with respect
to any taxes.
7.9 Seller has been represented by counsel in connection
with the negotiation and drafting of this Agreement and all related
agreements, including the Venture Lease, and Seller has undertaken
its own independent investigation and review and, based upon such
investigation and review, and based on Seller's current financial
condition and its business plan, has determined in the exercise of
its business judgment that the transactions contemplated in this
Agreement (including without limitation the amount of the Purchase
Price and the terms of the Venture Lease) are fair and are in the
best interests of Seller and its shareholders and creditors.
7.10 Seller has not received notice from any
governmental authority, mortgagee, tenant, insurer or other party
with respect to any Parcel, (i) that either the Real Estate or the
use or operation of the improvements thereon is currently in
material violation of any zoning, environmental or other land use
regulations; (ii) that Seller is currently in material violation or
with the passage of time will be in material violation of the
requirements of any ordinance, law or regulation or order of any
government or any agency, body or subdivision thereof (including,
without limitation, the local building department) or the
requirements of any insurance carrier of Seller respecting the
Properties or Board of Fire Underwriters affecting any Parcel, or
that any investigation has been commenced, or is contemplated,
regarding any such possible violation; or (iii) asserting that
Seller is required to perform work at any Parcel and to Seller's
knowledge no such notice has been issued.
7.11 There is no pending material litigation brought
by or against Seller affecting any Property (including, without
limitation, the Real Estate, the Overleases, and the Space Leases)
or the operation of any Parcel except as set forth on Exhibit 12
(or as hereafter set forth in this paragraph). Seller has no
knowledge of any other such threatened material litigation which
affects any Property. The provisions of this paragraph shall not
apply to any litigation involving personal injury or property
damage that is fully covered by Seller's liability insurance.
Notwithstanding the foregoing, Purchaser acknowledges that Seller
has informed Purchaser of the existence of litigation involving
Venture Store #21 (in Kansas City) whereby Seller has exercised an
option to purchase certain leased land and the owner denies that
such exercise is valid (the "Kansas City Litigation"). Seller
agrees to use its best efforts, at its sole cost, to pursue the
Kansas City Litigation to a successful outcome (i.e., to a purchase
of such land). Seller shall keep Purchaser fully advised of the
progress of such litigation, including prompt delivery of all
papers. Purchaser will cooperate with Seller, if necessary, to
allow such litigation to be pursued in Purchaser's name. Seller
agrees that it will take such action in such litigation as
Purchaser may reasonably direct. Seller shall and hereby agrees to
defend, indemnify and hold Purchaser harmless from and against any
and all loss, claim, liability, expenses or damages of whatever
nature Purchaser may incur in any manner arising from or related to
the Kansas City Litigation. If Seller prevails and is adjudicated
to be allowed to purchase the land, Seller shall do so as promptly
as possible at its sole cost and expense. Seller shall
simultaneously, and without placing any further lien or encumbrance
thereon (except for the lien of the Principal Mortgage if required
thereunder), convey the land to Purchaser without cost (and Seller
shall pay any transfer taxes thereon and the cost of a title policy
in the amount of the purchase price therefor in favor of
Purchaser), and the lease originally relating to such land shall be
canceled. Seller shall not receive any rent credit against the
Venture Lease rent by reason of such transactions (provided that
Seller, from and after the aforementioned lease cancellation, shall
not longer have to pay the rent due under such land lease that it
was obligated to pay as Venture Lease tenant).
7.12 The Space Leases described in Exhibit 3 comprise
all the Space Leases presently existing for any Parcel and each is
in full force and effect; no Space Lease has been modified or
supplemented except (if at all) as set forth on Exhibit 3; Seller
has delivered to Purchaser true, correct and complete copies of
each instrument constituting any Space Lease; no rent has been paid
more than one month in advance by any tenant, and no tenant is
entitled to any current defense, credit, allowance or offset
against rental; the information set forth in Exhibit 3 is true,
correct and complete. To Seller's knowledge, there is no default
of either landlord or any material default of tenant under any of
the Space Leases, and to Seller's knowledge, no state of facts
which with notice and/or the passage of time would ripen into a
material default. There are no persons or entities (other than
Seller) entitled to possession of any Parcel other than those
listed on Exhibit 3 and licenses or concessions excepted from the
definition of Space Leases as provided in Section 1.2. No work or
installations are required of Seller under any Space Lease, and
Seller has fully completed all tenant improvements specified in any
Space Lease to be the responsibility of the landlord and has paid
all tenant construction allowances. There are no leasing
commissions due nor will any become due in connection with any
Space Lease, or the renewal thereof and no understanding or
agreement exists in regard to payment of any leasing commissions or
fees for future Space Leases. No Space Lease Tenant is entitled to
any free rent in lieu of a tenant improvement allowance or
otherwise. To Seller's knowledge, Seller has no obligations with
respect to contributing for or paying dues or charges to a
tenant's merchant's association.
7.13 To Seller's knowledge, there is no material
default by any party under any reciprocal easement agreement,
covenant or restriction, or other agreement of record affecting any
Parcel (hereinafter collectively the "Title Agreements"), and no
state of facts which with notice or the passage of time would
constitute such a material default. In amplification of the
foregoing, to Seller's knowledge, it has paid all amounts,
satisfactorily performed all work, and otherwise complied with all
provisions required to be paid, performed or complied with by the
owner (or occupant) of each and every Parcel under all Title
Agreements. Seller has delivered or caused to be delivered to
Purchaser true, correct and complete copies of each instrument
constituting any Title Agreement.
7.14 Seller will pay all general, special and
betterment assessments on any Property which are due and payable
(i.e., prior to delinquency) prior to the date of Closing.
7.15 There are not now and will not be on the date of
Closing any agreements or understandings relating to any Property
which would be binding on Purchaser, except for Title Agreements,
Overleases, and Space Leases, and no alterations, amendments or
waivers pertaining to the foregoing will be made by Seller except
with Purchaser's written approval prior to the date of Closing.
The existence of the agreements hereafter referred to in Sections
7.27, 7.29, 7.30 and the Environmental Agreement (as hereinafter
defined) shall not be deemed to violate the foregoing
representations.
7.16 The zoning classification of each Parcel is not
violated by the use(s) and/or improvements thereon on the date
hereof. To Seller's best knowledge, all permits and authorizations
necessary with respect to each Parcel for its use, operation and
occupancy are now in effect and will be in full force and effect as
of the date of Closing.
7.17 To Seller's best knowledge, no property other than
each Parcel is included in the tax assessment of each Parcel, and
there are no unpaid assessments for utility installations.
7.18 There are no on-site employees or hired persons
in connection with the management, operation or maintenance of any
Property for which Purchaser will have any responsibility.
Purchaser shall have no obligation, liability or responsibility
with respect to charges, salaries, vacation pay, fringe benefits or
like items subsequent to Closing, nor with any management or
employment agreements with respect to the Property.
7.19 Seller has no knowledge of any structural defects
in the improvements situated upon each Parcel. The heating and air
conditioning, plumbing, electrical and drainage systems at or
serving each Parcel and all facilities and equipment relating
thereto are in good condition and working order, and roofs are free
of leaks; except to the extent any such system or roof problem
would not materially impair normal store operation.
7.20 To Seller's best knowledge, there is presently
adequate parking at each Parcel to comply with the requirements of
all of the Space Leases, Title Agreements and the applicable zoning
laws (both individually and in the aggregate);
7.21 No tenant under a Space Lease, landlord under an
Overlease, party to a Title Agreement, or other person has any
option, right of first refusal or other right to purchase any
Parcel or any part thereof or interest therein, except as
specifically set forth in Title Agreements delivered to Purchaser
prior to Closing by Seller or the Title Company. No Landlord under
an Overlease has any right to cancel or terminate same or increase
the rent payable thereunder by reason of any of the transactions
set forth in this Agreement. Except for the consent of Cook
County, Illinois under the Elston Lease (which consent Seller
covenants to use its best efforts, at its sole cost, to obtain as
promptly as possible following Closing), no consent of any
Overlease landlord is required for any of the transactions set
forth in this Agreement (except for same which have already been
obtained and will be delivered to Purchaser at Closing).
7.22 Each Parcel has adequate drainage systems and
easements in place so that water freely runs off it and does not
pool or collect on any portion thereof in a manner that would
materially impair the operation of the store on the Parcel; and
such run-off does not violate the rights of any owners of adjacent
property.
7.23 To Seller's best knowledge, all construction
and/or maintenance work required by the terms of any Overlease,
Space Lease, or Title Agreement, or by any building, zoning or
other law, ordinance or regulation affecting any Property,
including without limitation any roadway and utility line
construction on the Parcel and/or adjacent property has been
completed and there are and will be no charges, liens or
assessments against any Parcel or Purchaser for any of same.
7.24 Seller knows of no pending or threatened eminent
domain proceedings against or affecting any Parcel.
7.25 The Overleases described in Exhibit 6 comprise all
the Overleases presently existing for any Parcel and each is in
full force and effect; no Overlease has been modified or
supplemented, except (if at all) as set forth on Exhibit 6; Seller
has delivered to Purchaser true, correct and complete copies of
each instrument constituting any Overlease; no rent has been paid
more than one (1) month in advance by Seller, and all rent and/or
additional rent due to date under any Overlease has been paid; the
information set forth in Exhibit 6 is true, correct and complete.
To Seller's knowledge, there is no default of either the landlord
or any material default of Seller under any of the Overleases, and
to Seller's knowledge, no state of facts exists which with notice
and/or the passage of time would ripen into a material default. No
work or installations are required of Seller except as specified
(if at all) in the Overleases, and in any case Seller has fully
completed all improvements specified in any Overlease to be the
responsibility of the tenant. There are no leasing commissions due
nor will any become due by Seller in connection with any Overlease.
To Seller's knowledge, Seller has no obligations with respect to
contributing for or paying dues or charges to a tenant's merchant's
association. Any consent required by any landlord under an
Overlease pursuant to the terms thereof to any of the contemplated
transactions in this Agreement (including without limitation
assignment of the Overlease to Purchaser or a Purchaser Designee,
sublease from a Purchaser Designee to Purchaser, and lease back to
Seller under the Venture Lease) have been obtained and delivered to
Purchaser.
7.26 Seller does not own, directly or indirectly
through any subsidiaries or joint ventures, any fee or leasehold
interests in any real property other than the Fee Parcels, the
Leased Parcels, the Met Parcels, the Option Lease Parcels, certain
Venture Stores where affiliates of Purchaser are the landlords,
leases for Venture Dollar Stores, and any other property elsewhere
specifically covered in this Agreement.
7.27 Griffith, Indiana 1979 Economic Development
Revenue Bond Financing.
7.27.1 With respect to the 1979 Economic Development
Revenue Bond Financing with the Town of Griffith, Indiana (the
"Griffith Financing"):
(a) Neither The May Department Stores Company nor
its successors and assigns is in breach of the Loan Agreement dated
as of March 1, 1979 by Town of Griffith, Indiana and The May
Department Stores Company (the "Griffith Loan Agreement" and,
together with the other documents or delivered in connection with
the Griffith Financing the "Griffith Documents").
(b) No lien on the Griffith Parcel has been
granted or arisen in connection with the Griffith Financing;
(c) The obligations of The May Department Stores
Company under the Griffith Documents are personal in nature and do
not and will not attach to or burden the Griffith Parcel. In no
event shall any actions or failures of act under the Griffith
Documents result in any lien or encumbrances on the Griffith Parcel
nor any liability against Purchaser or a Purchaser Designee; and
(d) Seller shall apply so much of the sales
proceeds it receives at Closing relating to all Parcels as is
necessary to fully pay off such obligation in accordance with
Section 5.5 of the Griffith Loan Agreement.
7.28 The Joint Improvement Agreement dated as of March
15, 1979 by Griffith Plaza Company and The May Department Stores
Company is no longer in effect; and no person or entity has any
outstanding obligations under such agreement.
7.29 Corsicana, Texas Tax Abatement Agreements.
7.29.1 As to each of the agreements dated May 4, 1992,
between Venture Stores, Inc. and each of the following (each a
"Corsicana Taxing Authority"): (a) Navarro County, (b) City of
Corsicana, (c) Corsicana Independent School District, and (d)
Navarro County Junior College District (collectively, the
"Corsicana Tax Abatement Agreements"):
Each of the Corsicana Tax Abatement Agreements (i)
is in full force and effect, and (ii) has not been
modified or terminated; and no default of Seller
exists under any of the Corsicana Tax Abatement
Agreements.
7.29.2 Seller covenants to use best efforts to obtain
the consent of each Corsicana Taxing Authority within ninety (90)
days after the closing date to the assignment by Seller to
Purchaser of the Corsicana Tax Abatement Agreements, in form
reasonably acceptable to Purchaser.
7.30 Corsicana, Texas Commitment.
7.30.1 With respect to the Commitment dated May 6,
1992 from the City of Corsicana to Seller (the "Corsicana
Commitment"), Seller represents that the commitment by the City of
Corsicana for a Five Hundred Thousand ($500,000.00) Dollar loan
referenced therein has never been utilized by Seller, and no debt
or other obligation has been incurred by Seller pursuant thereto or
in connection therewith.
7.30.2 Seller covenants to use best efforts to obtain
the consent of the City of Corsicana within ninety (90) days after
the closing date, to the assignment by Seller to Purchaser of the
Corsicana Commitment, in form reasonably acceptable by Purchaser.
7.31 All conditions to the grant of any and all Texas
Capital Fund moneys awarded to Seller in connection with the
construction of the Distribution Center and infrastructure relating
thereto have been satisfied; and no obligations or debts of Seller
exist with respect to such Texas Capital Fund moneys awarded to
Seller, except for One Hundred Forty-One Thousand One Hundred
Ninety-Seven and 95/100 ($141,197.95) (the "Disallowed Amount"),
which Disallowed Amount constitutes a personal debt of Seller. In
no event can the Disallowed Amount be assessed against Purchaser or
its successors or assigns after the transactions contemplated
hereby are consummated, nor can all or any of such Disallowed
Amount result in a lien against the Distribution Center Parcel.
7.32 Without limitation or impairment of any other
representations made in this Agreement, with regard to the Tulsa,
Oklahoma Leased Parcel (Venture Store #52): (i) no percentage rent
was payable by Seller for the most recently ended percentage rent
year under such Overlease; and (ii) by reason thereof, no consent
of the landlord under the Overlease is required for any of the
transactions contemplated by this Agreement (including without
limitation assignment of Overlease to Purchaser Designee, sublease
back to Purchaser, and partial subleases back to Seller under
Venture Lease), nor does such landlord have any right to terminate
such Overlease by reason of any of such transactions.
7.33 With regard to the Corsicana Option Contact: (i)
same is in full force and effect and has not been modified or
amended, nor has the option therein been exercised; (ii) a true,
correct and complete copy of same has been delivered to Purchaser;
and (iii) there exists no default by either party thereto.
Notwithstanding anything above contained, Seller shall not
be deemed to be in breach or default of or under any representation
or warranty set forth in Sections 6, 7.4, 7.10, 7.12, 7.13, 7.14,
7.19, 7.22, 7.23, or 7.25 if and to the extent the fact, event,
circumstance or condition causing or resulting in any such breach
of representation or warranty would (i) constitute a default under
the Venture Lease, and (ii) is fully cured by Seller (as tenant
under the Venture Lease) within the applicable grace period therein
set forth.
All of the representations, warranties and covenants made
by Seller in this Agreement exclude and except those matters
referred to in Exhibit 13.
8. COVENANTS, REPRESENTATIONS AND WARRANTIES OF PURCHASER.
In order to induce Seller to enter into the transaction
herein set forth, Purchaser covenants, represents and warrants to
Seller the following, all of which shall be required to be true and
correct in all material respects on and as of the Closing Date as
a condition precedent to Seller's obligations hereunder, and all of
which shall survive the Closing:
8.1 Purchaser (i) is a corporation, duly organized, validly
existing and in good standing under the laws of the State of
Kansas, and is duly qualified as a foreign corporation in each
other jurisdiction where a Parcel is located and where the failure
to so qualify would have a material adverse effect on the financial
condition, operations, business, properties or assets of Purchaser;
(ii) has the requisite corporate power and authority and the legal
right to own and operate its properties, to buy the Parcels, to
enter into the Venture Lease and to conduct its business as now or
currently proposed to be conducted.
8.2 The execution, delivery and performance by Purchaser of
each of the documents to which it is a party are within the
corporate powers of Purchaser, have been duly authorized by all
necessary corporate action, including the consent of shareholders
where required, and do not (A) contravene the charter or by-laws of
Purchaser, (B) to Purchaser's best knowledge, violate any law
(including, without limitation, the Securities Exchange Act of
1934) or regulation, or any order or decree of any court or
governmental instrumentality, or (C) conflict with or result in a
breach of, or constitute a default under, any material agreement or
other instrument binding on Purchaser or any of its properties.
This Agreement has been duly executed and delivered by Purchaser.
This Agreement is (and each of the other documents to which
Purchaser is or will be a party), when delivered, will be a legal,
valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms.
8.3 Purchaser will not, on the Closing Date, cause any
lien to be placed on any Real Estate as collateral to finance the
acquisition of the Properties by Purchaser.
9. THE CLOSING.
9.1 The Closing of the sale and purchase of the Property
shall be held at Purchaser's offices at 3333 New Hyde Park Road,
Suite 100, New Hyde Park, New York 11042, at 9:00 A.M. on August 6,
1997.
9.2 At Closing, Purchaser shall pay the Purchase Price
adjusted in accordance with the relevant provisions of this
Agreement; and Purchaser shall execute and/or deliver corporate
resolutions and opinion of counsel. Purchaser shall also cause to
be executed (and a copy delivered to Seller) a sublease for any
Leased Parcel whose Overlease was assigned to a Purchaser Designee,
between such Purchaser Designee as landlord and Purchaser as
tenant.
9.3 At Closing, Seller shall execute and/or deliver to
Purchaser the following:
9.3.1 A special warranty deed (or the equivalent
thereof) for each Fee Parcel in proper recordable form, duly
executed and acknowledged by Seller, and conveying to Purchaser fee
simple absolute ownership of the Real Estate free and clear of all
liens, encumbrances and leases except for the Space Leases and
Permitted Exceptions.
9.3.2 An assignment of lease for each Overlease, in
recordable form, to Purchaser or at Purchaser's option to a
Purchaser Designee.
9.3.3 An assignment of lease for each Direct
Assignment Space Lease, in recordable form, to Purchaser or at
Purchaser's option to a Purchaser Designee.
9.3.4 A collateral assignment of Seller's right, title
and interest, free and clear of all liens, encumbrances and claims
(except for the Principal Mortgage) in and to all Collateral
Assignment Space Leases for each Parcel.
9.3.5 Notices to Overlease landlords, Space Tenants
and other parties to Reciprocal Easement Agreements (in each case
in compliance with any relevant requirements of any such document)
affecting any Parcel advising them of the transfer of the Parcel to
Purchaser.
9.3.6 An opinion or opinions of counsel substantially
confirming the representations in Sections 7.1 and 7.2 hereof, and
corporate resolutions of Seller authorizing the transaction
contemplated hereby.
9.3.7 All forms and returns required in connection
with payment of Transfer Taxes and/or recording the deeds.
9.3.8 The Venture Lease, in form acceptable to
Purchaser and Seller (which shall also be executed by Purchaser at
Closing). At Seller's request, Purchaser and Seller shall also
execute and deliver at Closing copies of recordable memoranda of
the Venture Lease for recordation respecting each Parcel.
9.3.9 FIRPTA affidavit in form reasonably satisfactory
to Purchaser to the effect that Seller is not a "foreign person."
9.3.10 Copies of all documents constituting Personal
Property (which copies may be delivered within 10 days following
Closing).
9.3.11 An estoppel and consent from Principal in form
reasonably satisfactory to Purchaser.
9.3.12 A consent from Bankers Trust Company in form
reasonably satisfactory to Purchaser.
9.3.13 Any consents of Overlease landlords or other
parties required for the transactions herein contemplated in form
reasonably satisfactory to Purchaser.
9.3.14 A bill of sale for the Distribution Fixtures,
and any other instruments (such as motor vehicle transfer documents
and/or release of existing UCCs) that may be necessary or
appropriate to transfer same to Purchaser.
9.3.15 Assignments of the Corsicana Tax Abatement
Agreements and Corsicana Commitment, in form acceptable to
Purchaser.
9.3.16 Assignments of the Texas Land Contract and
Maplewood Land Contract, in form acceptable to Purchaser.
9.3.17 An assignment of the Corsicana Option Contract
in form acceptable to Purchaser.
9.3.18 Seller agrees to use its best efforts to obtain
and deliver to Purchaser as promptly as possible post-Closing,
estoppels from all landlords under Overleases, tenants under Space
Leases, any other parties to REAs (to extent any of same are not
delivered at Closing), in the forms sent out to all such parties,
copies of which transmitted estoppel forms having been delivered to
Purchaser.
10. BROKERS. Purchaser and Seller each represents and warrants
that it dealt with no broker or finder in connection with this
transaction; and each agrees to defend, indemnify and hold the
other harmless from and against any and all loss, liability and
expense, including reasonable attorney's fees, the indemnified
party may incur arising by reason of the above representations
being false. The provisions of this Article 10 shall survive
Closing.
11. NOTICES. All notices, demands, requests, consents,
approvals or other communications (for the purpose of this Section
collectively called "Notices") required or permitted to be given
hereunder or which are given with respect to this Agreement shall
be valid only if in writing and sent by registered or certified
United States mail, return receipt requested, postage prepaid, or
delivered by Federal Express or UPS courier service, addressed as
follows:
To Purchaser: 3333 New Hyde Park Road
P. O. Box 5020
New Hyde Park, NY 11042-0020
Attention: Michael Flynn, President
with a copy to Bruce M. Kauderer, Esq.
at the same address.
To Seller: Venture Stores Inc.
2001 East Terra Lane
O'Fallon, MO 63366-0110
Attention: Executive Vice President -Finance
and Administration
with a copy to:
Venture Stores, Inc.
2001 East Terra Lane
O'Fallon, MO 63366-0110
Attention: Legal Department
12. ENTIRE AGREEMENT. This Agreement (including the Exhibits
attached hereto) contains the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior
or contemporaneous understandings, if any, with respect thereto.
This Agreement may not be canceled, modified, changed or
supplemented, nor may any obligation hereunder be waived, except by
written instrument signed by the party to be charged or by its
agent duly authorized in writing or except as otherwise expressly
provided herein. The parties do not intend to confer any benefit
hereunder on any person, firm or corporation other than the parties
hereto and their respective successors or assigns.
13. SURVIVAL. This Agreement, and all provisions hereof, shall
survive the Closing and continue in full force and effect
thereafter.
14. TITLES AND HEADINGS. Titles and headings of Articles and
Sections of this Agreement are for convenience of reference only
and shall not affect the construction of any provision of this
Agreement.
15. ATTACHMENTS. Each of the Exhibits and Schedules referred
to herein and attached hereto is an integral part of this Agreement
and is hereby incorporated in this Agreement by this reference.
16. FURTHER ASSURANCES. Seller and Purchaser each agree to do
such further acts and things and to execute and deliver such
additional agreements and instruments as the other may reasonably
require to consummate, evidence or confirm the sale or any other
agreement contained herein in the manner contemplated hereby.
17. MISCELLANEOUS. This Agreement shall extend to and be
binding upon the legal representatives, heirs, executors,
administrators, successors and assigns of the parties hereto. All
references to "Sections" and "Articles" shall be deemed to be
references to Sections and Articles of this Agreement unless
otherwise indicated or unless the context otherwise requires.
18. RULES OF CONSTRUCTION. The provisions of this Agreement
shall be construed, in all respects, without reference to any rule
or canon requiring or permitting the construction of provisions of
documents against the interest of the party responsible for the
drafting of the same, it being the intention and agreement of the
parties that this Agreement be conclusively deemed to be the joint
product of both parties and their counsel.
19. OPTIONS AND RIGHTS
19.1 Seller and Purchaser acknowledge that the spirit
and intent of this transaction is that Purchaser, for the Purchase
Price, would have the right to purchase all real estate assets of
Seller (or as many of same as Purchaser desired), and lease back
under the Venture Lease all space occupied by Venture and by
Collateral Assignment Leases. However, due to the abbreviated
period of time between the inception of this transaction and
Closing, Purchaser will not have adequate time to complete its due
diligence analyses/investigations, and/or to obtain the necessary
consents and documentation, regarding the Met Parcels, the Option
Lease Parcels, and the Springfield, Missouri Venture Lease Parcel
(Venture Store #3, hereinafter the "Springfield Parcel").
Accordingly, to induce Purchaser to pay the full Purchase Price at
Closing, notwithstanding that the Option Lease Parcels and Met
Leased Parcels and Springfield Parcel will not be included in this
transaction at Closing, Seller hereby irrevocably grants to
Purchaser the rights and options set forth in the following
sections of this Article 19 (it being agreed that the Purchase
Price shall be deemed to include the grant of such rights and
options without any additional consideration for same).
19.2 Met Parcels Options And Rights.
19.2.1 Seller, at Purchaser's request given at any
time within two (2) years following the Closing Date, shall cause
to be severed from the Met Lease pursuant to Section 17.01(b) of
the Met Lease up to three (3) Units, as such term is defined in the
Met Lease (the "Severed Units") and enter into New Leases (as such
term is defined in the Met Lease) with Met Life. Upon such
severance of the Severed Units, Seller shall assign the New Leases
to Purchaser or at Purchaser's option to a Purchaser Designee (and
separately assign to Purchaser or such Purchaser Designee any Space
Leases Purchaser designates as Direct Assignment Leases, whereupon
Purchaser shall sublease the Venture Store and any Collateral
Assignment Leases in such Severed Units back to Seller by causing
same to be incorporated into the Venture Lease. The rent under the
Venture Lease shall not be increased thereby, except that Seller
shall be required to pay, as additional rent, all rent and
additional rent under the New Leases as if same had been Overleases
included under the original Venture Lease at Closing (and said
annual rent may be reduced if there are Direct Assignment Leases
involved, as hereafter set forth). Seller shall pay all costs and
expenses in connection with, or contemplated by, the foregoing
severance, assignment and subleasing, including, but not limited
to, the following: all costs and expenses charged by Met Life; all
transfer, conveyance, recording and similar fees; all legal
expenses incurred in connection therewith, including, but not
limited to, the outside legal fees of Purchaser; the costs of
environmental surveys, structural reports and title insurance
relating to the Severed Units and all costs and expenses of any
kind or nature relating to such severance, New Leases, assignment
and subleasing. Seller shall cooperate at no cost to Purchaser in
connection with the transactions contemplated by this paragraph.
The Closing of any such Severed Unit shall be subject to the
provisions of Section 19.3, as if same were Option Lease Parcels
thereunder. There shall be no consideration payable to Seller by
Purchaser in connection with the transactions contemplated by this
paragraph. Purchaser shall have approval rights over the form of
any New Lease. Seller shall not amend, or permit to be amended,
the Met Lease in any manner that would increase the rent that would
otherwise be payable under the New Leases, adversely affect the
position of the tenant thereunder, or otherwise derogate, diminish
or reduce Purchaser's rights under this Section 19.2.
19.2.2 Seller hereby agrees for a period of five (5)
years following the Closing Date, to decline the exercise of any
right of first refusal, right of first offer or any other right to
purchase that Seller may have with respect to any transaction
entered into between Met Life (and/or any of its affiliates) and
Purchaser (and/or any of its affiliates). In amplification and not
in limitation of the foregoing, Seller hereby agrees to decline the
exercise of any right that Seller would otherwise have pursuant to
Article 22 of the Met Lease or otherwise to purchase any Units, the
Premises (as such term is defined in the Met Lease), or any other
interest of Met Life in the Met Lease or the Premises upon the
purchase of same by Purchaser or any of its affiliates.
19.2.3 Seller hereby agrees that Purchaser, effective
for a period of five (5) years from and after Closing, shall have
a right of first refusal with respect to any rights of first
refusal, rights of first offer or other purchase rights that Seller
may have under Article 22 or any other provision of the Met Lease.
Seller will deliver to Purchaser any notice or other correspondence
Seller may receive from MetLife promptly following receipt of same.
Accordingly, Seller will not waive any right it may have under
Article 22 or any other provision of the Met Lease. If Purchaser
elects to purchase any of the Units or other property offered to
Seller under Article 22 or any other provision of the Met Lease
(the "Offered Property"), Purchaser shall notify Seller of its
election whereupon Seller shall acquire the Offered Property and
reconvey it to Purchaser, or Seller shall cause the Offered
Property to be conveyed directly to Purchaser. All costs and
expenses of the exercise of the rights under Article 22 of the Met
Lease and the conveyance to Purchaser shall be borne by Seller. If
Purchaser causes Seller to take direct title to the Offered
Property, Purchaser shall cause adequate funds to be deposited with
Seller to accomplish same. In amplification and not in limitation
of the foregoing, Seller shall provide Purchaser with a copy of any
Offering Notice (as such term is defined in the Met Lease) within
five (5) days after receipt by Seller of such Offering Notice and
Purchaser shall control Seller's response to such Offering Notice.
Notwithstanding the foregoing, if Purchaser declines to purchase
the Offered Property, Seller shall be free to purchase same.
Further notwithstanding the foregoing, to the extent a grant of the
rights set forth in this Section 19.2 would constitute a default by
Seller under the Met Lease, they shall be and be deemed null and
void ab initio.
19.2.4 In addition to and not in limitation of the
rights set forth in Section 19.2.3, upon request(s) from Purchaser
at any time and from time to time for a period of five (5) years
from Closing, Seller shall request MetLife to make a Reconveyance
of one or more Excludable Parcels (as designated from time to time
by Purchaser) pursuant to Section 22.06 of the Met Lease. Seller
shall request that MetLife make such Reconveyance directly to
Purchaser or a Purchaser Designee. If MetLife is unwilling to so
directly convey, Seller will, simultaneously with the conveyance to
it, reconvey to Purchaser or a Purchaser Designee. All costs and
expenses of any such "Reconveyance" by MetLife and/or any
reconveyance to Purchaser, including without limitation any costs
and expenses of MetLife and/or any transfer taxes in connection
with same, shall be borne by Seller. Seller agrees to fully comply
with all provisions and conditions of, and take all actions (at its
sole cost) required by Section 22.06 and any other relevant
provision of the Met Lease necessary or appropriate to effectuate
the provisions of this Section 19.2.4.
19.2.5 In addition to and not in limitation of the
foregoing rights of Purchaser under this Section 19.2, subject to
Purchaser receiving any required consent or documentation from
MetLife, Seller hereby agrees that, for a period of two (2) years
following the Closing Date, Seller shall have the right and option,
in addition to the rights previously set forth in this Section
19.2, to acquire any or all of Seller's entire right, title and
interest in and to the Met Parcels, in the same manner, and subject
to the same terms and conditions, as if same were Option Lease
Parcels under Section 19.3, except that any such Met Parcels shall
be leased back to Venture under a separate unitary net lease on
same terms as Venture Lease (with appropriate rent adjustments).
19.3 Option Lease Parcels.
19.3.1 Seller hereby grants to Purchaser the
irrevocable right and option, exercisable on written notice to
Seller given at any time within two (2) years following the Closing
Date, to acquire Seller's entire right, title and interest in and
to any or all of the Option Lease Parcels. Such options may be
exercised at any time and from time to time within such two- (2)
year period as to any Option Lease Parcel or Parcels for which
said option has not been previously exercised.
19.3.2 Should Purchaser timely give an option exercise
notice regarding any Option Lease Parcel or Parcels, at the Closing
relating to such Option Lease Parcel(s) (which shall occur on a
date and at a place designated by Purchaser), Seller shall execute
such documents and instruments and take such other actions as
Purchaser may reasonably request, including without limitation any
documents that would have been executed at Closing had such Option
Lease Parcel(s) been acquired by Purchaser at Closing, including
without limitation collateral assignments for any Space Leases
Purchaser desires to constitute Collateral Assignment Leases, and
direct assignments of any Space Leases Purchaser desires to
constitute Direct Assignment Leases. Notwithstanding the
foregoing, if Purchaser desires to make any Space Leases Direct
Assignment Leases, the Venture Lease shall be amended to provide
Seller an annual rent credit thereunder with regard to annual net
cash flow under each such Direct Assignment Lease computed in the
manner set forth in Section 19.07 of the Venture Lease. The
Closing of such Option Lease Parcel(s) shall also be subject to all
terms and conditions (except those which, by their express context
or clear implications, are clearly irrelevant or inappropriate) of
this Agreement in the same manner as if such Option Lease Parcel(s)
had originally been acquired at Closing; including without
limitation (i) including appropriate portions of same under the
Venture Lease without any increase in rent (other than rent and
additional rent under any Overlease relating thereto); (ii)
Seller making all relevant representations and warranties set forth
in this Agreement regarding such Option Lease Parcel(s) as of the
Closing Date thereof; (iii) such apportionments as of Closing of
such Option Lease Parcel(s) as may be appropriate, consistent with
Section 4 hereof; and (iv) Seller to pay at Closing all expenses
relating to such Option Lease Parcel(s), as set forth in Section 4
hereof. Purchaser may not exercise an option on any Option Lease
Parcel if the landlord would have the right to cancel by reason
thereof, unless a waiver of such cancellation right is obtained;
and Seller, on Purchaser's request, agrees to use diligent good
faith efforts to obtain any such waiver.
19.3.3 With regard to all Option Lease Parcels, as
well as all Met Lease Parcels, following the Closing Seller shall
have the right to enter into Space Leases for portions of same as
long as same are at fair market rent, and to take such other
commercially reasonable actions as it deems necessary concerning
the ownership and operation of same.
19.4 Springfield Parcel.
19.4.1 Seller has informed Purchaser that, with regard
to the Springfield Parcel, The May Department Stores Company
("May") currently has an obligation to pay approximately Four
Hundred Forty-Eight Thousand ($448,000.00) Dollars per year of the
annual Overlease rent (the "May Obligation"). However, the May
Obligation would terminate upon a transfer of the Springfield
Parcel without May's consent. Seller agrees to use its diligent,
good faith efforts to obtain and deliver to Purchaser May's consent
that the May Obligation will continue notwithstanding a transfer to
Purchaser (or a Purchaser Designee), a possible sublease from a
Purchaser Designee to Purchaser, and a leaseback to Seller, as if
the Springfield Parcel had been included as a Leased Parcel at
Closing (the "Springfield Consent"). If and when the Springfield
Consent is obtained, the Springfield Parcel shall be considered an
Option Lease Parcel, and Purchaser shall have all of the same
rights with regard to same set forth in Section 19.3; except that
if Purchaser exercises such option within such two- (2) year
period, at the Closing thereof (i) Purchaser shall pay to Seller
the sum of Four Million ($4,000,000.00) Dollars, and (ii) the
Venture Lease shall be amended to increase the annual Base Rent
thereunder by the amount of Five Hundred Ten Thousand ($510,000.00)
Dollars.
19.5 Rockford, Illinois Parcel
19.5.1 Seller has informed Purchaser that the landlord
of the Rockford, Illinois Overlease (Venture Store #151) would have
the right to terminate such Overlease if same were originally
included in this transaction at Closing. Seller agrees to use its
diligent, good faith efforts to obtain from such landlord a waiver
of its right to terminate (notwithstanding an assignment to
Purchaser or a Purchaser Designee, a possible sublease from a
Purchaser Designee to Purchaser, and a leaseback to Seller, as if
the Rockford Parcel had originally been included in the Closing),
or alternatively, evidence (including if requested an opinion of
outside counsel) that said termination right has expired; in each
case in form satisfactory to Purchaser (furnishing such
satisfactory waiver or evidence being herein referred to as the
"Rockford Condition"). Upon meeting the Rockford Condition, the
Rockford Parcel shall be considered an Option Lease Parcel, and
Purchaser shall have all of the same rights with regard to same set
forth in Section 19.3; except that if Purchaser exercises such
option within such two- (2) year period, at the Closing thereof (i)
Purchaser shall pay to Seller the sum of Five Hundred Thousand
($500,000.00) Dollars, and (ii) the Venture Lease shall be amended
to increase the annual Base Rent thereunder by the amount of Sixty-
Three Thousand Seven Hundred Fifty ($63,750.00) Dollars.
20. TEXAS LAND CONTRACT.
20.1 Notwithstanding anything to the contrary set
forth in this Agreement, Purchaser acknowledges that Seller has
informed it that the undeveloped land owned by Seller in North
Richland Hills, Texas (the "Texas Land") is subject to an option
contract to purchase same dated July 31, 1997 between Seller as
seller and Trademark Capital Investments LLC as purchaser (the
"Texas Land Contract").
20.2 Seller represents and warrants that a true,
correct and complete copy of the Texas Land Contract has heretofore
been delivered to Purchaser; that same is in full force and effect
and has not been modified or amended nor have any material notices
or waivers been delivered thereunder; and that Seller has neither
given nor received any notice of default to or from the Purchaser
thereunder, and Seller is not aware of any fact or circumstance
which, with notice or the passage of time, might constitute a
default by either party thereto.
20.3 At Closing, the Texas Land shall be conveyed to
Purchaser (and leased back to Seller) subject to the Texas Land
Contract; and Seller shall assign to Purchaser Seller's entire
right, title and interest in and to the Texas Land Contract,
including any down-payment or deposit theretofore made by the
purchaser thereunder (and Purchaser shall receive a credit for any
option payment or down-payment previously made to Seller
thereunder).
20.4 If the closing of the Texas Land Contract should
occur, then (i) Purchaser may retain all proceeds thereof, and
(ii) from and after such Texas Land Contract closing, such land
shall ipso facto be deleted and surrendered from the Venture Lease
and Seller shall receive a credit against the annual Base Rent
under the Venture Lease in a sum equal to twelve and three-quarters
(12.75%) percent of the "Net Sales Proceeds." Net Sales Proceeds
shall mean the excess of (x) all amounts received by Purchaser
from the purchaser on account of the sale net of pro-rations,
including any down-payments and/or option payments theretofore
made; over (y) all expenses incurred by Purchaser in connection
with such transaction, including without limitation any transfer
taxes, title premiums and expenses, legal fees, and/or brokerage
commissions, and any amounts required to be paid to Banker's Trust
to release its lien.
20.5 Seller hereby agrees to and shall defend,
indemnify and hold Purchaser harmless from and against any loss,
claims, liabilities or damage Purchaser may incur in connection
with taking an assignment of the Texas Land Contract and/or
consummating the closing thereunder, including without limitation
any liability for breach of representation or indemnities or
environmental liability under the Texas Land Contract. There shall
be no Venture Lease Base Rent credit for any amount paid or due to
Purchaser under this Article 20.5.
20.6 Purchaser agrees to act in a commercially
reasonable manner as to any amendments, extensions or modifications
requested by such purchaser in order to facilitate a closing so
long as the purchase price under the Texas Land Contract is not
reduced by more than twenty (20%) percent.
21. INTENTIONALLY OMITTED.
22. POST-CLOSING INSPECTION.
Following Closing, Seller shall, upon request, give
Purchaser access to Seller's books and records with respect to the
operation of the Parcels for the calendar year in which Closing
occurs and for the previous calendar year, for purposes of
verifying collections and remittances and the preparation by
Purchaser of financial statements and reports with respect to the
Parcels. Such books and records shall be made available to
Purchaser at reasonable times and upon reasonable advance notice to
Seller, and without any expense to Seller or charge to Purchaser.
23. ENVIRONMENTAL AGREEMENT.
23.1 Reference is hereby made to the Environmental
Agreement dated May 13, 1991, by and among Seller, Pept Investment
Corporation (formerly known as Skil Corporation) ("Pept") and
Emerson Electric Co. ("Emerson"), with respect to 5033 North Elston
Avenue, Chicago, Illinois, Venture Site No. 168 (the "Elston
Parcel"), as amended by the Memorandum of Understanding by and
among Seller, Pept and Emerson (such Environmental Agreement as
amended by the Memorandum of Understanding being hereby sometimes
referred to as the "Environmental Agreement").
23.2 It is the intention of Seller and Purchaser that
all the benefits of the Environmental Agreement run in favor of
Purchaser. Accordingly, Seller shall take all action that is
necessary, at Seller's sole cost and expense, to (1) keep the
Environmental Agreement in full force and effect; (2) post all
letters of credit, bonds and other security as required by the
Environmental Agreement; (3) submit when required all financial
statements and reports and other items as required by Section 15 of
the Environmental Agreement; (4) comply with all terms and
conditions of the Environmental Agreement; (5) take such other
action as Purchaser reasonably requests in order to cause Purchaser
to receive the benefits of the Environmental Agreement or to
otherwise consummate the intent of these provisions.
23.3 Seller shall not take any action or consent or
give its approval to any matter under the Environmental Agreement
without Purchaser's prior written consent. If requested by
Purchaser, Seller shall assign the Environmental Agreement to
Purchaser. Seller shall pay all amounts, without reimbursement by
Purchaser, required under the Environmental Agreement including,
but not limited to, the amounts required to be paid pursuant to
Section 8 of the Environmental Agreement. Seller shall not hire
any consultants or engineering firms without Purchaser's prior
written consent. Seller shall be solely responsible for all
remediation required with respect to the Elston Parcel, and Seller
shall not undertake any remediation without Purchaser's prior
written consent. Seller shall provide Purchaser with copies of all
notices received by Seller in connection with the Environmental
Agreement. Seller shall cause all environmental and other
insurance to name Purchaser as an additional insured or named
insured, as the case may be. Seller shall not waive any claim
against Pept or Emerson without Purchaser's prior written consent.
Seller hereby assigns to Purchaser all rights and causes of action
that Seller may have against Emerson or Pept or any other third
party with respect to the Contamination, as such term is defined in
the Environmental Agreement.
IN WITNESS WHEREOF, Seller and Purchaser have executed this
Agreement as of the day and year first above written.
WITNESSES: SELLER:
/s/Thomas L. Story VENTURE STORES, INC.
/s/Karren M. Prasifka By:/s/ Russell Solt
Name:
Title:
WITNESS: PURCHASER:
/s/Bruce M. Kauderer KRCV CORP.
/s/Steven M. Kornblau By:/s/ Milton Cooper
Name:
Title:
The undersigned, Purchaser's parent corporation, hereby
executes this Agreement for the sole purpose of agreeing to
unconditionally guarantee the following post-Closing obligations
of Purchaser: (i) to pay all amounts to Seller if, as and when
due under Sections 3(b) and (c); and (ii) to reconvey any of the
Parcels if, as and when required pursuant to the provisions of
Section 3(c). This is a continuing guaranty of performance and
not collection.
KIMCO REALTY CORPORATION
By:/s/Milton Cooper
Name:
Title:
SCHEDULE OF EXHIBITS
Exhibit 1 Fee Parcels
Exhibit 2 Leased Parcels
Exhibit 3 Schedule of Space Leases
Exhibit 4 Schedule of Direct Assignment Space Leases
Exhibit 5 Schedule of Collateral Assignment Space Leases
Exhibit 6 Schedule of Overleases
Exhibit 7 Purchase Price Allocation
Exhibit 8 Schedule of Title Condition Amounts
Exhibit 9 Intentionally Omitted
Exhibit 10 Intentionally Omitted
Exhibit 11 Intentionally Omitted
Exhibit 12 Litigation
Exhibit 13 Seller Disclosures
Exhibit 14 Met Parcels
Exhibit 15 Option Lease Parcels
Exhibit 16 Distribution Fixtures
EXHIBIT 10.4
KRCV CORP.
and
VENTURE STORES, INC.
UNITARY NET LEASE
Dated: August 6, 1997
TABLE OF CONTENTS
Article or
Section Title Page
Definitions 2
I Condition of Demised Premises 9
II Term 12
III Basic Rent; Net Lease 13
IV Impositions 14
V Insurance 21
VI Use of Demised Premises; Use of Common Areas 29
VII Surrender and Right to Remove Trade Fixtures 31
VIII Landlord's Right to Perform Tenants Covenants 33
IX Compliance with Laws and Insurance Policies 34
X Mechanics' Liens; Other Liens; Mortgages 36
XI Repairs and Maintenance; Common Area
Maintenance and Common Area Charges 38
XII Right of Landlord to Inspect and Repair 47
XIII Indemnification by Tenant 48
XIV Light, Heat and Power, etc. 50
XV Changes, Alterations and New Construction 50
XVI Destruction and Restoration 54
XVII Quiet Enjoyment 57
XVIII Eminent Domain 57
XIX Assignments and Subleases; Leasehold
Properties; Space Leases, Outlot Lease
and Vacant Areas 61
19.03 Transferred Leases and Collateral Leases 63
19.04 Non-disturbance 64
19.06 Special provisions as to Leasehold Properties 68
19.06(3) Tenant pay Underlying Lease Rents 69
19.07 Conversion of Collateral Leases; Vacant Areas 75
XX Default and Remedies 78
XXI Arbitration and Appraisal 86
XXII Estoppel Certificates; Financial Statements 88
XXIII Invalidity of Particular Provisions 89
XXIV Notices 89
XXV Options to Extend; Extended Term Basic Rent 90
XXVI Hazardous Substance 93
XXVII Miscellaneous 99
XXVIII Subordination 101
Signatures 102
UNITARY NET LEASE
LEASE dated as of the 6th day of August, 1997 by and
between KRCV CORP., a Kansas corporation ("Landlord"), and
VENTURE STORES, INC., a Delaware corporation ("Tenant" or
sometimes "Venture").
STATEMENT OF INTENT
This Unitary Net Lease constitutes one unitary,
indivisible, non-severable lease of all the Demised Premises and
this Lease is a single lease. This Lease does not constitute
separate leases contained in one document each governed by
similar terms. The use of the expression "Unitary Lease" to
describe this lease is not merely for convenient reference. It
is the conscious choice of a substantive appellation to express
the intent of the parties in regard to an integral part of this
transaction: To accomplish the creation of an indivisible
lease. The parties agree that from an economic point of view
the portions of the Properties leased by this Lease constitute
one economic unit and that the Basic Rent and all other
provisions have been negotiated and agreed to based on a demise
of all the portions of the Properties covered by this Lease as
a single, composite, inseparable transaction. Except as
expressly provided in this Lease for specific isolated purposes
(and in such cases only to the extent expressly stated), all
provisions of this Lease, including, without limitation,
definitions, commencement and expiration dates, rental
provisions, use provisions, renewal provisions, breach, default,
enforcement and termination provisions and assignment and
subletting, shall apply equally and uniformly to all the Demised
Premises as one unit and are not severable. The economic terms
of this Lease would have been substantially different had
separate leases or a "divisible" lease been contemplated by the
parties. A default of any of the terms or conditions of this
Lease occurring with respect to any portion of the Demised
Premises situated on a particular Property shall be a default
under this Lease with respect to all the Demised Premises.
Landlord and Tenant agree that the provisions of this Lease
shall at all times be construed, interpreted and applied such
that the intention of Landlord and Tenant to create a unitary
lease shall be preserved and maintained. The parties agree that
for the purposes of any assumption, rejection or assignment of
this Unitary Lease under 11 U.S.C. Section 365 or any amendment
or successor section thereof, this is one indivisible and
non-severable lease dealing with and covering one legal and
economic unit which must be assumed, rejected or assigned as a
whole with respect to all (and only all) the Demised Premises
covered hereby.
Words and phrases and expressions which appear in this
Lease with the first letter of each word capitalized are defined
terms. Defined terms shall have the meanings as defined in this
Lease.
Definitions
For this Lease the following terms shall have the following
meanings:
1. "Affiliate" means any corporation controlling,
controlled by, or under common control with either Tenant or
Landlord (whichever of Landlord or Tenant is being referred to
in the context) within the meaning of the rules and regulations
promulgated under the Securities Act of 1933, as amended.
2. "Appurtenances" means all easements (including any
rights under applicable construction, operating and/or
reciprocal easements agreements) over adjoining real property,
rights of way, hereditaments, interests in or to adjacent
streets or alleys or other real property and all the benefits
thereunto belonging and appertaining to the Land or the
Improvements.
3. "CAM" is defined in Section 11.03.
4. "CAM Costs" are defined in Section 11.03.
5. "Common Area Charges" means the amount or share
that a party is responsible to pay for CAM Costs as determined
in Section 11.07 and Section 11.08.
6. "Common Areas" means all areas and facilities
outside of the storerooms erected or situated on the Shopping
Centers designated and improved for common use, excepting (i)
other tenants' pylon signs and sign panels, and (ii) portions of
the Shopping Centers which are used by only one Outlot Lease
occupant and its employees, agents, customers, invitees and
licensees, and (iii) loading docks; but including, without
limitation, the following areas and facilities to the extent
they exist: parking areas; access roads; entrances and
driveways; lighting facilities; grass, shrubs, trees and
landscaping; retaining walls; landscaped areas, passageways
sidewalks and curbs (including exterior sidewalks and curbs
adjacent to the buildings); culverts; retention basins and
drainage facilities; directional and shopping center pylons or
monuments; marking or striping of the parking areas and
roadways; sewer and sewage disposal systems; water supply,
electric lines, gas lines and other service and utility lines,
pipes and installations of every kind and including those, if
any, off the Shopping Centers servicing common areas and common
facilities of the Shopping Centers, including traffic control
devices within the Shopping Centers and, to the extent the owner
of the Shopping Center is responsible for such devices off-site,
the traffic control devices on adjacent roadways.
7. "Covenants" means all recorded documents and/or
instruments which run with the land, encumber the Shopping
Centers or otherwise bind Tenant.
8. "Demised Premises" means collectively those
portions of the Shopping Centers which consist of certain
buildings or portions of buildings situated within the Shopping
Centers, as shown by outline in red on Exhibit B; the buildings
outlined in red are the premises intended to be leased to Tenant
under this Lease. Exhibit B shows certain portions of the
Demised Premises shaded by slanted lines, indicating that these
portions are vacant and unoccupied at the date of this Lease.
The Trade Fixtures owned by Landlord situated in and used in
conjunction with the use, occupancy and business of warehouse
and distribution of merchandise at the Distribution Center shall
be deemed to be included within the expression "Demised
Premises".
9. "Fee Title Property" means a Property owned by
Landlord in fee title.
10. "Floor Area of the Demised Premises" means the
aggregate gross square feet of all levels inside the Venture
Building and the other buildings, if any, within the Demised
Premises, measured from the exterior surface of perimeter walls
to the exterior surface of opposite perimeter walls, except if
a building on the Demised Premises shares a common wall with a
Landlord's Building on the Shopping Center, then measured to the
center of that common wall; Floor Area of the Demised Premises
shall include, but not be limited to, the gross square feet of
all basements, balcony or mezzanine space.
11. "Floor Area of Landlord's Building" means the
aggregate gross square feet of all levels inside Landlord's
Building, measured from the exterior surface of perimeter walls
to the exterior surface of opposite perimeter walls except if
the Landlord's Building shares a common wall with a building of
the Demised Premises, then measured to the center of that common
wall; Floor Area of Landlord's Buildings shall include, but not
be limited to, the gross square feet of all basements, balcony
or mezzanine space.
12. "Improvements" means all buildings, structures
and other improvements now existing or hereafter constructed on
the Land and any restoration, addition to or replacement thereof
(and when so referred to excludes and does not mean to include
Tenant's Trade Fixtures or the Appurtenances).
13. "Land" means the land of all the Properties
unless stated otherwise; the Land is described in attached
Exhibit A (and when so referred to excludes and does not mean to
include the Improvements, Tenant's Trade Fixtures or the
Appurtenances). (See item 22 of this Section.)
14. "Landlord" means the owner or owners at the time
in question of fee title to certain portions of the Demised
Premises which Landlord owns in fee title or in other instances
means the holder of a leasehold estate, as the lessee
thereunder, as to other portions of the Demised Premises which
constitute Leasehold Properties; in the event of any conveyance
or transfer thereof by the Landlord named on the top of page 1
of this Lease, and in case of any subsequent conveyances or
transfers thereof by the then Landlord, each grantor or
transferor shall be automatically freed and relieved, from and
after the date of his or its transfer or conveyance, of all
liability as respects the performance of any covenants or
obligations on the part of Landlord contained in this Lease
thereafter to be performed, provided the grantee or transferee
assumes in writing the obligations of Landlord which will arise
under this Lease from and after the date of the transfer. Any
money in the hands of the transferring Landlord at the time of
such transfer in which moneys Tenant has an interest, such as a
security deposit or the payments for Impositions pursuant to
Section 4.07 hereof, if any, shall, if there not be a default by
Tenant existing at the time, be turned over to the grantee or
transferee, it being intended that the covenants and obligations
contained in this Lease on the part of Landlord shall, subject
as aforesaid, be binding upon Landlord and its successors and
assigns only during and in respect of their respective
successive periods of ownerships.
15. "Landlord's Buildings" means buildings and
storerooms located within buildings in the Shopping Centers
which are owned or leased by Landlord or subleased by Landlord
from an Overlandlord, not including the Demised Premises and not
including any buildings owned or leased by any Overlandlord, if
any, within a Shopping Center, which is not leased by Landlord.
16. "Landlord's Common Area Charge" is defined in
Section 11.03.
17. "Landlord's Share" means a fraction, the
numerator of which is the Floor Area of Landlord's Buildings in
a particular Shopping Center and the denominator of which is the
Floor Area of Landlord's Buildings in that Shopping Center plus
the Floor Area of the Demised Premises in that same Shopping
Center (multiplied by the amount of the item to be shared, such
as CAM Costs or Impositions).
18. "Leasehold Property" means a Property held by
Landlord as the tenant under a lease or sublease.
19. (a) "Outlot" means a parcel of land in a Shopping
Center located on or in close proximity to the abutting public
road, together with the building and other improvements, if any,
at any time erected thereon; such building being free-standing,
the Outlot parcel often having its own curb cut and direct
access to the abutting public road, but sometimes relying solely
for access on the entrances, exits and roadways within the
Shopping Center; and most often the occupant of an Outlot will
be a restaurant or fast food operation, a bank, a gasoline
station, a national or regional retail chain store, or the like.
Some Outlots, for the purpose of this definition, may, at the
date of this Lease, consist of vacant and unimproved parcels
within the Shopping Center; some of such vacant and unimproved
parcels are labelled as Outlots on Exhibit B, but Landlord may
designate other areas, in Landlord's discretion, for Landlord to
develop. An Outlot leased to a tenant is included within the
definition of Space Lease, but reference to an Outlot or Outlot
Lease in certain places in this Lease may distinguish it from
other Space Leases for certain purposes.
(b) "Outlot Lease" means a lease or sublease,
license or other occupancy agreement, with respect to an Outlot,
and is a Space Lease, but only as to an Outlot.
(c) "Overlandlord" means the owner of the fee
title or lessee from the Fee Owner or who is a lessee of a
lessee of a Leasehold Property at the time in question and who
is also the lessor under the Underlying Lease.
20. "Property" means one of the parcels of the Land
together with all the buildings and other Improvements situated
thereon at the date of this Lease or at any time in the future,
and also includes the applicable Appurtenances pertaining to
such Land. "Properties" means more than one Property; and if
where used in this Lease, no limiting reference is used with the
word "Properties", it shall be intended in that context to mean
"all the Properties". The expressions Property or Properties as
used in this Lease is intended to be synonymous with the
expressions Shopping Center or Shopping Centers.
21. "Responsible Party" means the person or entity
who is responsible pursuant to this Lease, at the time in
question, to perform or cause to be performed the CAM tasks.
22. "Shopping Center" means all those parcels of real
estate which comprise collectively the Land legally described on
attached Exhibit A, but includes all the buildings and other
Improvements, if any, and the Appurtenances situated thereon.
Except for two of the Properties described on Exhibit A, and
another Property which is at the date of this Lease vacant and
unimproved land, each Shopping Center is, at the date of this
Lease, improved as a retail shopping center and contains erected
thereon, along with a parking field and similar improvements, a
Venture Building and in many cases other buildings. One of the
Properties referred to in the preceding sentence is being used
at the date of this Lease for a distribution/warehouse located
in Corsicana, Texas (hereinafter the "Distribution Center") and
another Property just referred to is being used as a
photo/studio processing center in O'Fallon, Missouri
(hereinafter the "Photo Studio") and the vacant and unimproved
Property just referred to is located in North Richland Hills,
Texas. However, for the purpose of this Lease, those three non-
shopping center Properties are deemed included with the other
Properties within the definition "Shopping Center".
The Shopping Centers constitute a larger aggregate
area than the Demised Premises, because the Demised Premises
consists of certain buildings and the storeroom space in those
certain buildings situated within Shopping Centers, and the
entire Shopping Centers have not been leased under this Lease to
Tenant: in some cases (as may be seen by reviewing the drawings
which are Exhibit B attached to this Lease), Tenant leases only
the Venture Building within a Shopping Center; and in other
cases, Tenant leases the Venture Building together with portions
of other buildings and the space within the other buildings
within a Shopping Center. The Common Areas in the Shopping
Centers have not been leased to Tenant; nor Landlord's
Buildings, if any, situated thereon.
22A. "Space Leases" means the following: Prior to
the date of this Lease, Venture operated and/or leased and/or
subleased various storerooms to various occupants of buildings
within certain of the Shopping Centers pursuant to subleases.
Those leases of space in the Shopping Centers to such tenants
which exist as of the date of this Lease, or leases, subleases,
licenses or other occupancy agreements which may hereafter be
entered into at any time in the future by Landlord or Tenant in
the Shopping Centers as part of the buildings erected or to be
erected thereon, are hereinafter sometimes referred to as "Space
Leases". Space Leases refer to all storerooms so leased other
than space occupied by Venture and used as a Venture Store and
includes also, unless indicated otherwise, Outlot Leases.
23. "Tenant", unless otherwise stated in the text
where the word is used, shall include Venture Stores, Inc. and
any successor of Venture Stores, Inc. and collectively shall
include in addition any permitted assignee of the leasehold
interest of Tenant under this Lease.
24. "Tenant's Share" means a fraction, the numerator
of which is the Floor Area of the Demised Premises located in a
particular Shopping Center and the denominator of which is the
Floor Area of the Demised Premises in that Shopping Center plus
the Floor Area of the Landlord's Buildings in that same Shopping
Center (multiplied by the amount of the item to be shared, such
as CAM Costs, Impositions, etc.).
25. "Tenant's Trade Fixtures" means items and
personal property owned by Tenant or any of Tenant's subtenants
located in or used in Tenant's or subtenant's business operation
at the Properties, such as, by way of example and not in
limitation, signs (excluding pylon structures), counters, cash
registers, showcases, tables, shelves, merchandise feature
walls, restaurant and kitchen equipment and restaurant fixtures,
counters, desks, gondola units, metal floor racks, stockroom and
wrapping area shelving and fixtures, office furniture, office
machines, light fixtures and alarm systems installed by Tenant
or by the subtenant. But Tenant's Trade Fixtures shall not
include building or structural items, such as walls and
partitions, compressors, blowers, ducts, air conditioning and
heating equipment, lights or lighting fixtures, electrical and
gas equipment, wiring and conduits, plumbing fixtures and pipes,
carpeting or other floor coverings, dropped ceilings, or pylon
structures and the like. It is understood and agreed that the
Trade Fixtures located and used at the Distribution Center in
the operation of the warehouse and distribution belong to
Landlord and not to Tenant and therefore are not items or
personal property within the definition "Tenant's Trade
Fixtures".
26. "Unavoidable Delays" means delays affecting the
process of construction, repair, maintenance or installations,
relating to the Demised Premises or Restoration of the
Improvements due to strikes, acts of God, acts of the elements,
inability to obtain labor or materials, governmental
restrictions, enemy action, earthquakes, civil commotion, war,
unavoidable casualty or similar causes beyond the reasonable
control of Tenant, but Unavoidable Delays shall not apply to or
excuse or delay payment of money. Neither financial inability
of Tenant to pay Rent or money or provide insurance coverage,
nor any delay or Unavoidable Delay relating to the business
operations of Tenant shall be relevant or deemed an event to
which Unavoidable Delay is applicable, and shall not be an
unavoidable delay or an excusing cause. As to any obligation
under this Lease by Landlord to pay money, Unavoidable Delay
shall not apply to or excuse or delay such payment.
27. "Underlying Lease" means the lease which was
entered into originally between the fee owner or lessee from the
Fee Owner of a Leasehold Property, as the lessor thereunder, and
the original lessee thereunder, the lessee's interest under
which lease has been sold and assigned by Venture to Landlord or
to Landlord's Affiliate contemporaneously with the making of
this Unitary Lease to Venture. The expression Underlying Lease
includes within its meaning both a lease from a fee owner of all
or substantially all of a Shopping Center (commonly referred to
as ground lease) as well as a lease from the fee owner of only
a Venture Building or a Venture Building and other structures
and areas within a Shopping Center. That certain lease, dated
September 16, 1985, made between Cook County, Illinois, as the
landlord thereunder, and The May Department Stores Company,
Venture's predecessor in interest, covering certain land used as
Common Area in conjunction with the Fee Title Property in
Elston, Illinois, shall also be deemed an Underlying Lease.
28. "Venture Building" means the entire store
building on each Property either being used at the date of this
Lease for operation of a "Venture" department store ("Venture
Store"), or else being used in part or in whole for other
purposes or by other occupants but which when built originally
constituted a "Venture Store" before being changed. There is a
Venture Building on each Property. Use of "Venture" in the
expression "Venture Building" is intended to refer to the
building as just described, whether or not at the time in
question it still is being used as a Venture Store.
WITNESSETH :
In consideration of the mutual covenants and agreements
hereinafter set forth, Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord the Demised Premises and
together with a non-exclusive right for Tenant's benefit and the
benefit of Tenant's employees, customers, agents, licensees,
concessionees and invitees to use, with Landlord and all other
occupants of the Shopping Centers, if any, and all other
permittees of Landlord, the Common Areas and all easements,
rights and privileges and amenities otherwise appurtenant to the
Shopping Centers (see also Sections 6.02 and 11.10 hereof),
SUBJECT TO all matters of every kind and nature which now affect
the Demised Premises, including for example, without limitation
thereto: matters affecting the title to the Demised Premises,
whether or not of record; building code violations or violation
of any statute, law or ordinance; any state of facts an accurate
survey of the Demised Premises would disclose; the physical
condition; environmental conditions; existing and future zoning
laws, building codes and other laws; and the rights and
interests of persons in possession, Covenants, Existing
Mortgages, Underlying Leases and REAs.
Landlord and Tenant hereby covenant and agree as follows:
ARTICLE I
Condition of Demised Premises
Section 1.01. As a material inducement to Landlord in
consummating this transaction, including, acquiring Venture's
interest in the Properties and the making of this Lease, Tenant
hereby represents and warrants to Landlord that Tenant is fully
acquainted with the nature and condition, in all respects, of
the Demised Premises and the Properties and each portion or part
thereof, or to the extent not so actually acquainted has had
opportunity to become familiar with all such
conditions including (but not by way of limitation) the state of
the title thereto, the soil and geology thereof, the manner of
construction and the physical condition and state of repair or
lack of repair of the Land (which includes both the surface and
subsurface) and the Improvements (which includes all
improvements to the Demised Premises and the Shopping Centers of
every nature including inside the existing buildings and the
roofs and the structures thereof), and the nature and extent of
the rights of others (if any) with respect thereto, whether by
way of easement, right of way, lease, possession, lien,
encumbrance, license, reservation, condition or otherwise.
Tenant accepts the Demised Premises and the use of the Shopping
Center's Common Areas and each part and component thereof "AS
IS" and "WHERE IS" and "WITH ALL FAULTS", whether patent or
latent. Landlord in fact has not and does not make any
representations or warranties whatsoever to Tenant in this Lease
with respect to the condition of the Demised Premises or title
or any matters or things pertaining thereto, express, implied,
and Tenant hereby acknowledges that fact and waives any and all
rights and claims to the contrary. Notwithstanding such waiver,
and as the only exception, Tenant, as seller of the Properties
to Landlord, nevertheless shall be entitled to rely on all of
Landlord's representations and warranties, as purchaser, made in
the contract of sale which was executed contemporaneously
herewith to consummate this transaction. All representations,
warranties, covenants, indemnities and other post-closing
obligations of Tenant made or undertaken by Tenant to Landlord
in said contract of sale shall be, and hereby are, incorporated
by reference in this Section 1.01, and Tenant agrees that any
breach by Tenant, as the seller, of any of said representations,
warranties, covenants, indemnities or other post-closing
obligations shall automatically be deemed and shall constitute
a default by Tenant under this Lease as a breach and default of
such representations, warranties, covenants, indemnities or
other post-closing obligations made or undertaken to Landlord in
this Lease, and Landlord shall have all the rights and remedies
resulting from such default in addition to, and not in exclusion
of, all other rights or remedies available in law or in equity.
The breach of any representation, warranty, covenant, indemnity
or other post-closing obligation made or undertaken by Landlord,
as purchaser in the contract of sale, shall not in any event
permit Tenant to terminate this Lease or reduce the Basic Rent,
additional rent or other payments to be made by Tenant under
this Lease or diminish Tenant's other obligations, provided,
however, in the event of a Landlord default of the same, Tenant
shall be permitted to offset against the Basic Rent the amount
of any judgment Tenant obtains based on Landlord's default if
Landlord does not pay such judgment within ten days after the
judgment becomes final and unappealable.
Section 1.02. If the Demised Premises or portions thereof
either at the date of this Lease or, if agreed to by Tenant or
done with Tenant's written consent or done pursuant to this
Lease, in the future are the subject of (i) any Covenants,
agreements, tenancies, subtenancies, licenses, occupancies or
rights of others which apply to or relate to the use, operation,
maintenance, repair, construction or relate to any other aspect
of the Demised Premises or any portion thereof (including
without limitation the Existing Mortgages, Underlying Leases,
Collateral Leases, occupancy agreements or utility easements, or
(ii) any construction, operating and reciprocal easement
agreements or other easement agreements either declared by an
owner of adjoining property or to which Tenant is a party or
which is binding on Tenant or which is a matter of public record
affecting the Demised Premises or any part thereof, or any
similar agreements, (hereinafter referred to as "REAs"), Tenant
hereby assumes and agrees to perform and discharge, subject to
reimbursement by Landlord in certain instances pursuant to the
provisions contained in this Lease, any and all obligations with
respect to all of the same (including also for example Tenant's
status as a sublandlord under a sublease unless such sublease is
converted by Landlord from being a Collateral Lease to a
Transferred Lease) and with respect to any and all matters
affecting the Demised Premises or the title thereof, which
Landlord herein might otherwise be obligated to observe, do,
perform, or discharge by reason of the ownership of the Demised
Premises by Landlord. Notwithstanding the conveyance by Venture
of title to the Properties, in the case of REAs, Venture, or
whomever is the then Tenant under this Lease at the time in
question shall continue to be recognized as the party to the
REA. Landlord hereby reserves, shall have, and is hereby
granted by Tenant, equal rights with Tenant as such party to the
REA, and where a consent or approval is required or requested by
or related to the REA, neither Landlord nor Tenant will grant
such consent or approval without the written consent of the
other, and Landlord and Tenant each agree with each other not to
unreasonably withhold or delay such consent or approval or
condition the same on receiving money when Landlord or Tenant
requests the same, and neither Landlord nor Tenant will withhold
consent to any modification of an REA that does not adversely
impair or affect the Properties or their value or use. If the
REA and this Lease express in the respective documents different
obligations by Tenant concerning the same subject matter, the
obligations which require Tenant to do the greater amount shall
be observed by Tenant.
In any case where an Underlying Lease or other document
provides that notwithstanding Venture's transfer and sale of its
leasehold interest in a Property that if Venture leases or
subleases back the Venture Building and continues in possession,
Venture shall be continued to be the only party recognized as
the tenant, as before, then in such cases (but without intending
herein to concede or agree that this Lease or Landlord's
transaction with Venture falls within the intended category in
such Underlying Lease), Tenant agrees to follow Landlord's
directions and not act without Landlord's written consent in any
dealings with the Overlandlord or other party to the document.
ARTICLE II
Term
Section 2.01. The term of this Lease commences on August
6, 1997 and unless sooner terminated under any provision of this
Lease, shall expire on August 31, 2022 (the "Initial Term"),
subject to Tenant's rights of extension as provided in Article
XXV hereof.
Section 2.02 Except as expressly provided in Section 18.02
(Eminent Domain), Tenant has no right and will have no right
either to terminate this Lease, or to quit, abandon or surrender
the leasehold estate hereby created or all or any part of the
Demised Premises, or to be released, relieved or discharged from
the payment of Basic Rent or any obligation or liability under
this Lease for any reason, including, without limitation, if the
Demised Premises is subject to any damage to or destruction of
all or any part of the Improvements, or any interference with
the use or possession of all or any part of the Demised
Premises, or the occurrence of any act which renders the
performance by Landlord or Tenant impossible or which frustrates
the use of the Demised Premises for any purpose, or any force
majeure, or any action or threatened action of any court,
administrative agency or other governmental authority or the
expiration or termination of an Underlying Lease by effluxion or
otherwise.
ARTICLE III
Basic Rent; Other Rent; Net Lease
Section 3.01. In addition to all other payments to be made
by Tenant under this Lease, Tenant shall pay to Landlord in
lawful money of the United States commencing on the date of this
Lease and throughout the Initial Term, as net basic rent for
each year the rents set forth on the Schedule of Basic Rents
attached to this Lease and made a part of this Section 3.01 as
if fully set forth herein, payable in equal monthly installments
in advance monthly as set forth on said Schedule of (the "Basic
Rent"). In the Extended Terms, the Basic Rent shall be the
amounts provided for in Article XXV hereof. All Basic Rent
shall be paid on 25th day of each month prior to the month for
which the Basic Rent is due; prorated, however, for the partial
month of August at the beginning of the term. Rent shall be
paid at the address specified in Section 24.01, or other address
as may from time to time be designated. Unless requested
otherwise in writing by Landlord, Tenant agrees to make
payments of Basic Rent to Landlord by wire transfer of
immediately available Federal funds to Landlord's bank account
designated in writing to Tenant.
Section 3.02. It is the purpose and intent of both
Landlord and Tenant that this Lease is and shall always be an
absolutely "net" lease for Landlord and that all the Basic Rent
payable hereunder shall be net to Landlord and paid without any
abatements, deferral, reduction, set-off, counterclaim, defense
or deduction whatsoever, so that this Lease shall yield to
Landlord the Basic Rent and all additional rent free of all
costs, expenses and charges of every kind and nature relating to
the Demised Premises which may be attributed to or become due
during the term of this Lease (except as expressly provided
otherwise in this Lease as to certain taxes in Section 4.02);
all such costs, expenses and charges shall be paid by Tenant,
and Tenant agrees that Landlord shall be defended, indemnified
and saved harmless by Tenant from and against the same.
Section 3.03. Tenant will also pay, as additional rent,
all sums, Impositions (defined in Article IV), all rents and
other payments pursuant to all the Underlying Leases, all
payments pursuant to Existing Mortgages (except the principal
sum or the interest payable thereon and except to the extent a
payment is a prepayment penalty and is required by Landlord
electing to prepay the Existing Mortgage, or a payment is in the
nature of a penalty or added interest resulting from a default
by Landlord in the payment of the interest or principal or is an
increased payment made pursuant to a modification entered into
with the mortgagee without Tenant's consent which changes the
Mortgage to increase the amount of payments), and Tenant will
pay cleanup costs for remediation of any environmental condition
or other payments arising out of Article XXVI (Hazardous
Substances) hereof, and all other costs, expenses and other
payments which Tenant in any of the provisions of this Lease is
required to pay or has assumed or agreed to pay. All of such
sums, Impositions, costs, expenses and other payments, including
Basic Rent, shall be deemed to be collectively included in the
definition of "Rent" whenever that word is used in this Lease
with the initial capital letter R.
ARTICLE IV
Impositions
Section 4.01. Tenant agrees to pay, as additional rent in
addition to all other Rent, prior to delinquency and before any
fine, penalty, interest or cost may be added for the non-payment
thereof, but subject to certain reimbursement by Landlord
pursuant to Section 4.09 hereof, all taxes, assessments,
excises, levies, license and permit fees, water and sewer rents,
rates and charges, transit taxes, charges for public utilities
(whether governmental or nongovernmental), and all other
governmental charges, general and special, ordinary and
extraordinary, unforeseen as well as foreseen, of any kind and
nature whatsoever; the foregoing include (but are not limited
to) assessments for public improvements or benefits, which at
any time prior to or during the term of this Lease are laid,
assessed, levied, confirmed, imposed upon, or become due and
payable out of or in respect of, or become a lien on, (i) the
Shopping Centers or any part thereof or any personal property,
equipment or other facility located thereon or used in the
operation thereof; or (ii) rent, income or other payments
received from the Shopping Centers by Tenant or anyone claiming
by, through or under Tenant from subtenants or any other source;
or (iii) any use, occupancy or operation of the Shopping Center
or any rights, obligations, easements and franchises as may now
or hereafter be appurtenant or appertain to the Shopping Center;
or (iv) this transaction or any document to which Tenant is a
party creating or transferring an estate or interest in the
Shopping Center (provided, however, any subsequent conveyance by
Landlord of the fee title as to which a transfer tax is imposed
shall not be payable by Tenant); or (v) the Rent payable
hereunder to Landlord or as to any payments payable by Tenant to
any third party, as for example, any tax payable in any State
similar to the Florida sales tax on rents or the Michigan
business tax on gross receipts; or (vi) any tax, license fee or
levy on a tenant's occupancy or on a Tenant's leasehold
interest, such as in Iowa (all of which taxes, assessments,
water and sewer rents, rates and charges, transit taxes, charges
for public utilities, excises, levies, license fees and other
governmental charges described in the preceding portion of this
Section 4.01 are hereinafter collectively referred to as
"Impositions" or singly as an "Imposition"). Any Imposition
relating to a fiscal period of the taxing authority encompassing
a period after the end of this Lease a part of which period is
included within the term of this Lease shall be adjusted as
between Landlord and Tenant as of the expiration of the term of
this Lease by effluxion; so Landlord pays the portion of
Impositions attributable to any period subsequent to the
expiration by effluxion of the term of this Lease, and Tenant
pays the portion attributable to any period during the term of
this Lease; provided that to the extent any Impositions for the
payment of which Tenant is liable under clauses (v) hereinabove
is measured by Landlord's income, Tenant's liability therefor
shall be computed on the assumption that Landlord has no
property other than the Property subject to such Imposition.
Notwithstanding the foregoing definition, the expression
"Impositions" which Tenant shall be liable to pay under this
Lease shall not include the Impositions on any Landlord's
Building or an Outlot if it is being assessed and taxed as
separate and independent tax lot by the taxing authorities at
the date of this Lease or which is so taxed in the future
resulting from an application by Landlord for separate tax
subdivision and as separate and independent tax parcel and which
such Landlord's Building or Outlot is held by Landlord as a
Transferred Lease or is an Outlot Landlord developed from a
Vacant Area as the lessor under the Outlot Lease.
Section 4.02. Nothing herein contained shall require
Tenant to pay municipal, state or federal income taxes imposed
on Landlord in respect of Landlord's income or in respect of any
federal or state estate tax, succession tax, inheritance tax or
(other than as stated in clause (iv) in Section 4.01 above)
transfer taxes of Landlord, or corporation franchise taxes
imposed upon any corporate owner of Landlord's interest in the
Demised Premises; provided, however, that if at any time during
the term of this Lease the methods of taxation prevailing at the
commencement of the term hereof shall be altered so that in lieu
of or substitute for or a recharacterization of the whole or any
part of the taxes, assessments, levies, impositions or charges
now levied, assessed or imposed on real estate (including by
imposition of new taxes), there shall be imposed, (i) a tax,
assessment, levy, imposition or charge, wholly or partially as
a capital levy or otherwise, on the rents received from the
Demised Premises, or (ii) a tax, assessment, levy, imposition or
charge measured by or based in whole or in part upon the income
from the Demised Premises, or (iii) a license fee measured by
the rent payable under this Lease, then all such taxes,
assessments, levies, impositions or charges or the part thereof
so measured or based, shall be deemed to be included within
"Impositions", and Tenant shall pay and discharge the same as
herein provided in respect of the payment of Impositions;
provided, however, that to the extent any Impositions for the
payment of which Tenant is liable under clauses (I), (ii), or
(iii) hereinabove is measured by Landlord's income, Tenant's
liability therefor shall be computed upon the assumption that
Landlord has no properties other than the Property subject to
such Impositions.
Section 4.03. If, by law, any Imposition may at taxpayer's
option be paid in installments, then provided Tenant is not in
default, Tenant may exercise the option to pay (and which shall
include accrued interest on the unpaid balance of such
Imposition) in installments and, in such event, shall make such
payments as they become due during the term of this Lease and
prior to delinquency and before any fine, penalty, further
interest or cost may be added thereto, except that, if a default
under this Lease shall occur, Tenant shall, on demand, promptly
pay the remaining installments together with accrued interest,
if any.
Section 4.04. The certificate, advice or bill of the
non-payment of any such Imposition made or issued by the
appropriate official designated by law to make or issue the same
or to receive payment of any such Imposition shall be prima
facie evidence that such Imposition is due and unpaid at the
time of the making or issuance of such certificate, advice or
bill.
Section 4.05. As between the parties hereto, Tenant alone,
so long as Tenant is contesting the Impositions, shall have the
duty of attending to, making or filing any petition,
declaration, statement or report provided or required by law as
the basis of or in connection with the contest, determination,
equalization, reduction or payment of any Imposition which is to
be borne, paid or may become payable by Tenant, and Landlord
shall not be or become responsible therefor, nor for the
contents of any such petition, declaration, statement or report.
However, Landlord shall have the privilege, at its option in its
discretion, to voluntarily participate in or assume or share any
of such responsibilities to whatever extent Landlord desires,
all without diminishing Tenant's duty to pay the Impositions.
Section 4.06. Tenant shall have the right before any
delinquency occurs to contest or object to the amount or
validity of any Imposition by appropriate legal proceedings
diligently and in good faith, but Tenant shall pay the
Imposition timely and this right to contest shall not be deemed
or construed in any way as relieving, modifying or extending
Tenant's covenant to pay any such Imposition at the time and in
the manner stated in other Sections in this Article. Tenant
shall notify Landlord of all such contests when the protest or
proceeding is filed. Landlord shall not be required to join and
cooperate in any such proceedings unless necessary to do so in
order to prosecute such proceedings and Landlord will not be
subjected to any liability for the payment of any costs or
expenses in connection with any such proceedings brought by
Tenant. If Tenant shall not be contesting any Impositions,
nothing in this Section shall be in derogation of Landlord's
right to contest or appeal or negotiate for reduction, at
Tenant's expense, any Impositions payable in whole or in part
during the term of this Lease, by legal proceedings or in such
other manner as may be available to Landlord; provided, however,
if Landlord brings the proceeding without Tenant, Tenant shall
not be liable for expenses in an amount exceeding (i) the amount
of the refund Tenant receives, if any, or (ii) the value of the
benefits Tenant realizes from Landlord's contest, whichever of
(i) or (ii) is greater; and Landlord shall notify Tenant of such
proceedings.
Section 4.07. At the date of this Lease Tenant will pay
to Landlord initially an amount sufficient which, when added to
the monthly payments to be made subsequently by Tenant to
Landlord on an ongoing basis throughout the Lease Term, as
described hereinafter in this Section, will place in Landlord's
hands, by wire transfer of immediately available Federal funds
to Landlord's bank account designated in writing to Tenant
thirty days before the next Impositions payable by Tenant
hereunder are in the aggregate and severally payable to the tax
authorities, all the moneys sufficient to pay in full such
Impositions which will be due. After paying the initial amount
described in the immediately preceding sentence, Tenant shall
pay to Landlord, throughout the term of this Lease, as
additional rent, monthly payments, at the same time that the
monthly installments of Basic Rent are payable, amounts
estimated by Landlord to be designed to place in Landlord's
hands thirty days before the next date that the respective
Impositions payable by Tenant will be payable to the taxing
authority, in order to provide money for Landlord sufficient in
amount to pay such next occurring installments coming due of
Impositions; and in addition to those regular monthly payments,
Landlord may by notice given at any time and from time to time,
as to Impositions next becoming payable, require Tenant to pay
Landlord additional lump sum amounts if Landlord estimates that
the monthly payments, as they are on hand and will be
subsequently made, will not be sufficient to result in an amount
to meet the Impositions that are next due and payable; so that
Landlord always will have in hand the full amount of Impositions
payable by Tenant thirty days before the amount is payable to
the tax authorities. Payments so received by Landlord shall be
applied by Landlord to the payment of such Impositions (or if so
required by an Underlying Lease, will be paid to the
Overlandlord) so long as no Event of Default exists. Following
any Event of Default and so long as the Event of Default remains
uncured by Tenant, Landlord shall have the right to use the
payments or any portion thereof to cure the default regardless
whether the default relates to Impositions or other items which
gave rise to Tenant's default. Landlord shall furnish Tenant,
within fifteen business days after the date when any of the
Impositions would have become delinquent, receipts or other
proper evidence of payment of the Impositions. If the sum of
the payments by Tenant grows to contain an excess or deficiency
of money, more or less than will be sufficient or deficient to
pay the next installment, Landlord will adjust the future
regular monthly installments payments appropriately. Landlord
shall have the sole title and possession of the payments and
when the moneys are paid to Landlord it shall not be an asset of
Tenant, but until an Event of Default occurs, Landlord shall
keep the payments of Impositions in a bank selected by Landlord
in a separate bank account bearing interest at the bank's usual
rate for such accounts, separate from its business account, and
the interest thereon paid by the bank shall be added to and
deemed additional payments. Landlord shall send Tenant
appropriate information showing the interest earned. The bank
selected by Landlord shall be The Chase Manhattan Bank or a
comparable bank and Landlord shall notify Tenant as to the
identity of the bank holding the payments. No other interest
need be paid on the payments. If any surplus remains after
Landlord has paid any installment of Impositions, that surplus
shall continue to be held by Landlord to be applied as provided
in this Section. If for some reason Landlord is not collecting
the monthly payments and paying the Impositions, Tenant will pay
the Impositions which are payable by Tenant itself directly to
the taxing authorities, and in such event, Tenant agrees to
furnish Landlord within ten days after the date when any
Imposition would have become delinquent, receipts or other
proper evidence of payment of the Impositions. Landlord, in
determining the monthly estimates for the Landlord monthly
payments of Impositions to be paid to Landlord, shall take into
consideration payments made by Tenant to the holders of an
Existing Mortgage into a fund for Impositions held by the
mortgagee. Tenant's liability and obligation to pay Impositions
which are payable by Tenant shall not be released or diminished
and Landlord shall not assume the obligation to pay Impositions
by Landlord exercising Landlord's option under this Section 4.07
to collect the payments provided for in this Section, excepting
only to the extent of the amount of such payments Tenant has
placed in Landlord's hands timely; provided, however, so long as
no Event of Default exists, Landlord shall be responsible for
any interest, fines or penalties imposed by law for late payment
of Impositions (if Landlord is at fault in paying late) for any
installment thereof for which Tenant has placed sufficient funds
timely in Landlord's hands with which to pay the installment and
unless an Event of Default exists, Tenant shall have the right
of offset for any Impositions not so paid by Landlord which
threatens to result in loss of Tenant's Lease rights.
Section 4.08. In the event of a conveyance of the title
to the Demised Premises or transfer of Landlord's interest in
the Underlying Leases by Landlord as to a Leasehold Property, or
a transfer by Landlord of the title to or interest in any
individual Property of which the Demised Premises constitutes a
component, the grantee or transferee, as the case may be, shall
assume the obligations of the Landlord described in Section 4.07
with regard to the collection from Tenant of the Impositions and
the payment of Impositions.
Section 4.09. If for any reason Landlord is not
collecting the payments from Tenant as provided in Section 4.07
and Tenant is paying the Impositions directly to the taxing
authorities, Tenant shall bill Landlord for the amount of any
Impositions that are payable by Landlord to Tenant pursuant to
the provisions of this Section 4.09. Otherwise Landlord shall
pay to Tenant Landlord's Share of such Impositions within five
days after the Impositions have been paid in full by Tenant or
Landlord may credit Tenant for Landlord's share against the next
due installment of Basic Rent; provided, however, in any case
Landlord shall not be obligated to pay Tenant earlier than ten
(10) days before the Imposition is required to be paid to the
tax authority. If the Demised Premises is the only leasable
storerooms on a Shopping Center, Tenant shall pay all of the
Impositions on that Shopping Center without any reimbursement
from Landlord. As to those Shopping Centers which have
Landlord's Buildings in addition to the Demised Premises
thereon, Landlord shall pay to Tenant Landlord's Share of all of
the Impositions payable by Tenant which are attributable to
periods subsequent to the date of this Lease. Landlord shall
not be liable to pay a share of any Impositions payable for any
periods prior to the date of this Lease. Whether or not data
can be ascertained from the assessment records or by letter from
the assessor or the taxing authority as to the assessed value of
the Demised Premises apart from other buildings on such Shopping
Center and apart from the Land, Landlord shall reimburse Tenant
by paying Landlord's Share of Impositions as defined in clause
number 17 in "Definitions" and as described in this Section
4.09. It is the intent of this Lease that Tenant will pay to
Landlord all the Impositions payable to the tax authorities for
the Shopping Centers, subject to Landlord reimbursing Tenant for
Landlord's Share thereof as provided herein.
As to a Collateral Lease pertaining to an Outlot which at
the date of this Lease constitutes a subdivision for tax
purposes and is a separate and independent tax parcel and is
being billed as a separate and independent tax parcel to Tenant
or being billed to the subtenant under the Outlot Lease, Tenant
may continue that procedure and Tenant will diligently enforce
the Outlot Lease to assure faithful payment of the Impositions
by the subtenant with respect thereto. Tenant shall be and
remains primarily liable for payment of such Impositions, but in
determining Landlord's Share, if any, of the Impositions for the
Shopping Center in which that Outlot is located, the Impositions
and the square footage of the Outlot including the building
thereon will not be used to determine Landlord's Share.
Notwithstanding any dispute which may arise between
Landlord and Tenant concerning either the amount of Impositions
payable by Tenant or Landlord or Tenant's or Landlord's
obligation to pay Impositions, Tenant shall pay and continue to
pay to Landlord the Impositions as required by this Lease, but
subject later to refund, if any, to which Tenant may be
subsequently determined to be entitled pursuant to the
applicable provisions contained in this Lease.
Section 4.10. If any Property is located in Ohio,
Indiana or Illinois or any other State where Impositions are
payable in arrears, in all cases, the Impositions payable by
Tenant or by Landlord to Tenant for any year or other period
involved shall mean the amounts of those Impositions which are
payable with respect to the Shopping Center during that current
calendar year notwithstanding that the bill rendered from the
taxing authority is for the Impositions for the prior year but
payable during the then current calendar year, as is the
practice for example in Ohio or such similar States.
ARTICLE V
Insurance
Section 5.01. Tenant, at its sole cost and expense as
additional rent, but subject to certain reimbursement from
Landlord pursuant to Section 5.14 hereof and subject to Section
5.15 hereof, shall keep all the Improvements on all the
Properties insured for the mutual benefit of Landlord and Tenant
with Landlord as additional named insured (and also with both
Landlord and the Insurance Trustee hereinafter described as loss
payees for all proceeds to pay a claim over $150,000), insuring
against loss or damage by an "All-Risk" insurance policy without
any special exclusions or special conditions, including therein,
without intending to limit the nature of the risks to be insured
against by such a policy, insurance against risks of fire,
lightning, as well as other risks embraced by coverage of the
type known as the special form of extended coverage, and riot
and civil commotion, collapse, vandalism and malicious mischief,
and the other risks as from time to time covered by All-Risk
insurance policy and covering demolition and increased cost of
construction due to enforcement of then current building codes
and other laws. It is understood that if Tenant no longer is
the Responsible Party, Tenant will not be required to insure the
Improvements of the Common Areas (such as light poles,
landscaping, etc.). The insurance shall be in amounts
sufficient to prevent Landlord or Tenant from becoming a
co-insurer under the terms of the applicable policies, but in
any event in an amount not less than 100% of the then full
replacement cost of the Improvements (exclusive of the cost of
excavations, foundations, and footing below the lowest basement
floor) without deduction for physical depreciation, evidenced by
a replacement cost endorsement. Tenant will maintain such
policy with not more than an aggregate amount for all manner of
losses of $100,000 for all the buildings on the Land of each
Property as a deductible from the loss payable for any one
casualty to such buildings, which deductible amount may be
increased in any Extension Term (not during the Initial Term) to
such greater amount as Tenant deems prudent, but not more than
$200,000. Tenant shall cause the Improvements to be appraised
to determine their value for the insurance purposes hereunder at
least once every three years. The appraiser shall be selected
by Tenant subject to Landlord's approval. Tenant shall pay for
the appraisal, which may be done by appraising a representative
sample of the Improvements at fifteen Properties. Any dispute
as to the selection of the appraiser or the identity of which
shall be the representative fifteen Properties shall be
determined by arbitration pursuant to Article XXI. If Tenant's
insurance company serves as the appraisal person, Landlord
shall accept the same.
Section 5.02. Tenant, at its sole cost and expense, but
for the mutual benefit of Landlord and Tenant, with Landlord as
an additional named insured, shall maintain:
(a) Commercial general liability insurance
including contractual liability on an "occurrence basis"
for the Demised Premises and, so long as it is the
Responsible Party, the Common Areas, and every part
thereof against claims for personal injury, including
bodily injury, death or property damage occurring upon the
Demised Premises, such insurance to afford immediate
protection at the time of the inception of this Lease and
at all times during the term hereof, and to have a
combined single limit of Ten Million ($10,000,000) Dollars
or such greater limits as Landlord shall reasonably
require. Tenant may maintain such policy with not more
than $100,000 deductible for each occurrence; and
(b) Boiler and pressure vessel insurance,
including air tanks, pressure piping and major air
conditioning equipment if the Improvements contain
equipment of the nature ordinarily covered by such
insurance and for an amount not less than $5,000,000 or
such larger sum as Landlord may reasonably require, and
with not more than $10,000 deductible from the loss
payable for any casualty; and
(c) Rental value or business interruption
insurance, naming Landlord as an additional named insured
and loss payee, on an actual loss sustained basis against
loss or damage by all risks in an amount Basic Rent and
Impositions under this Lease of not less than one year's
Basic Rent plus one year's Impositions, endorsed to
provide a 360 day extended period of indemnity. The net
proceeds of any such insurance paid by the insurer to
Landlord and Tenant, when received by Landlord or Tenant,
less the cost of collecting such proceeds including
necessary attorneys' fees, to the extent available, shall
be applied to pay the Basic Rent and other Rent then due
and thereafter becoming due; and
(d) Flood insurance for any Property, equal to
the full replacement cost of the Improvements located
thereon or the maximum amount then available, if any of
the buildings on any Property is in a flood zone, so
designated and participating in the National Flood
Insurance Program.
(e) Such other insurance, and in such amounts,
as may from time to time be reasonably required by
Landlord against the same or other insurable hazards which
at the time are commonly insured against in the cases of
premises similarly situated.
Section 5.03. All insurance provided for in this Article
and in Article XV shall be effected under valid and enforceable
policies issued by insurers of recognized responsibility, the
insurance policies and the insurers to be satisfactory to
Landlord in Landlord's reasonable judgment and the holders of
Existing Mortgages and, to the extent the Underlying Lease so
requires, the Overlandlords, which insurers shall have a then
current financial ability and standing equivalent to Best's
Financial Rating and Policyholders' Rating of at least A:VII and
which are authorized to transact fire and casualty and liability
insurance in each of the States where the Demised Premises are
situated. On signing of this Lease and thereafter not less than
thirty days prior to the expiration date of each policy, the
original of each policy required to be furnished pursuant to
this Article or Article XV or a certificate of the insurer
reasonably satisfactory to Landlord shall be delivered by Tenant
to Landlord. At Landlord's request, Tenant shall deliver to
Landlord a true and complete copy of Tenant's insurance policies
required to be carried by Tenant in this Lease.
Each policy procured pursuant to Section 5.01 and
paragraphs (b), (c), (d) and (e) of Section 5.02 shall contain,
if obtainable, (i) a waiver by the insurer of the right of
subrogation against Landlord, and (ii) a statement that the
insurance shall not be invalidated if any insured waives in
writing, prior to a loss, any or all right of recovery against
any party for loss accruing to the property described in the
insurance policy.
Section 5.04. Tenant shall not take out separate insurance
concurrent in form or contributing in the event of loss with
that required in this Article or Article XV to be furnished by
Tenant unless Landlord is named as an additional named insured
therein, with loss payable as provided in Section 5.05 of this
Article. Tenant shall immediately notify Landlord of the taking
out of any such separate insurance and shall cause the original
policies in respect thereof or certificates therefor to be
delivered as required by Section 5.03 of this Article.
Section 5.05. All policies of insurance provided for in
Section 5.01 and paragraphs (b), (c), (d) and (e) of Section
5.02 shall provide for loss thereunder to be adjusted by and
payable to Tenant with respect to any particular casualty
resulting in damage or destruction not exceeding $150,000 in the
aggregate; and with respect to any particular casualty resulting
in damage or destruction exceeding $150,000 in the aggregate,
the loss to be adjusted by Landlord and Tenant and payable to be
owned by both Landlord and the Insurance Trustee; the insurance
proceeds to be disbursed by the Insurance Trustee as provided
in Sections 5.11 and 16.02 hereof. At Landlord's request, said
policies shall name Landlord's Mortgagee and the Overlandlords
as an additional insured as its interest may appear. Tenant
agrees to use the insurance proceeds as a trust money to
effectuate the repairs required by this Lease.
Section 5.06. Each such policy or certificate therefor
issued by the insurer shall contain (a) a provision that no act
or omission of Tenant which would otherwise result in forfeiture
or reduction of the insurance therein provided shall affect or
limit the obligation of the insurance company so to pay, in
accordance with Section 5.05 of this Lease, the amount of any
loss sustained and (b) an agreement by the insurer that such
policy shall not be cancelled or modified without at least 30
days' prior written notice by registered mail, return receipt
requested, to Landlord.
Section 5.07. Tenant shall likewise observe and comply
with the requirements of all policies of public liability, fire
and other policies of insurance at any time in force with
respect to the Demised Premises and Tenant shall so perform and
satisfy the requirements of the companies writing such policies
so that at all times companies of good standing satisfactory to
Landlord shall be willing to write or to continue such
insurance. Tenant shall, in the event of any violations or
attempted violations of the provisions of this Section by any
permitted subtenant, take steps, immediately upon knowledge of
such violation or attempted violation, to remedy or prevent the
same as the case may be.
If, at any time during the term of this Lease,
Landlord shall request that the amount of insurance provided by
Tenant, as required by the provisions of this Article and
paragraph (f) of Section 15.01 be increased on the ground that
such coverage is inadequate properly to protect the interest of
Landlord, or if Landlord shall require other insurance pursuant
to the provisions of paragraph (e) of Section 5.02, and Tenant
shall refuse to comply with such request, Tenant shall obtain
the insurance nevertheless and the dispute shall be submitted to
and decided by arbitration as provided in Article XXI hereof.
Landlord and Tenant shall be bound by the findings of such
arbitration proceeding except that in no event shall such
insurance be less than (and the arbitrators shall not have the
authority to decide less than) the amounts required by Landlord
pursuant to this Article or paragraph (f) of Section 15.01.
Section 5.09. Upon the expiration or earlier termination
of this Lease, unearned premiums upon any of such insurance
policies which, at Landlord's option, are transferred to and
taken over by Landlord shall be apportioned, provided that if an
Event of Default shall exist, the portion of such unearned
premiums to which Tenant would otherwise be entitled shall
belong to Landlord and shall be applied first to cure such Event
of Default.
Section 5.10. Any insurance provided for in this Article
may be effected by a policy or policies of blanket insurance and
may be continued in such form; provided, however, that the
amount of the total insurance allocation to the Demised Premises
shall be such as to furnish in protection the equivalent of
separate policies in the amounts herein required, and provided
further that in all other respects, any such policy or policies
shall comply with the other provisions of this Lease. In any
such case it shall not be necessary to deliver the original of
any such blanket policy to Landlord, but Tenant shall deliver to
Landlord a certificate issued by the insurance company of the
insurance policy and a duplicate of such policy, both of them in
form and content acceptable to Landlord.
Section 5.11. For any loss exceeding $150,000, Landlord
shall designate a bank or other financial institution or the
holder of an Existing Mortgage to receive, hold and disburse
insurance proceeds in accordance with this Lease ("Insurance
Trustee"). If, but only if, the proceeds of any insurance
policies provided for in this Article are paid to the Insurance
Trustee, the following provisions shall be applicable;
The Insurance Trustee is hereby made and constituted
a trustee to hold such proceeds and to deposit such proceeds and
to pay out such proceeds as provided in this Lease. The
Insurance Trustee shall not be obligated hereunder in any manner
except to receive and pay out any money that is received by it
as such trustee, together with such interest, if any, as is paid
by the Insurance Trustee at the time upon a like trust of like
amount. As between Landlord and Tenant, such interest on trust
funds shall be deemed to be the income of Tenant, to be held by
the Insurance Trustee subject to the terms and conditions of the
trust and this Lease. The Insurance Trustee is authorized to
retain from the trust fund the necessary expenses incidental to
the collection of any such funds, and a reasonable amount for
its services in connection with the trust.
All insurance money received by the Insurance Trustee
shall be held by the Insurance Trustee to secure the performance
by Tenant of its obligation under this Lease to repair, replace
or reconstruct any Improvements that have been damaged or
destroyed, or to pay any Rent or charges hereunder. If at any
time after the happening of any casualty it appears, in the sole
discretion of either the Insurance Trustee or Landlord, that the
insurance money and other money, if any, held in the trust will
not be sufficient to pay fully for the work of reconstruction or
repair, Tenant on demand from the Insurance Trustee or from
Landlord shall deposit such shortage or deficit with the
Insurance Trustee and any money so deposited shall be held and
used by the Insurance Trustee in the same manner and upon the
same conditions as those provided with respect to insurance
money.
As Tenant proceeds with the work of repair or
reconstruction of the Improvements, the insurance money held by
the Insurance Trustee shall be paid in accordance with Article
XVI hereof.
If any default by Tenant results in the termination of
this Lease, all insurance policies and all proceeds thereof and
all other money then in said insurance trust shall be promptly
delivered by the Insurance Trustee to Landlord as Landlord's
sole property to be applied toward curing the default. If this
Lease is terminated for any reason other than the default of
Tenant, the Insurance Trustee shall pay the proceeds and other
money in the insurance trust to Landlord as Landlord's sole
property.
Section 5.12. Tenant may not self-insure against the risks
provided for in this Article V, excepting only to the extent
expressly stated to be allowed in Section 5.01 (that is, carry
a deductible). Tenant shall be responsible for all losses and
damage by casualty so long as Tenant is responsible to carry the
insurance, including within the deductible or self-insured risk
amount. Landlord and Tenant agree that as between Tenant and
its insurance company, but not binding on Landlord, the
insurance policies to be maintained by Tenant under this Lease
may provide for greater deductibles than the deductibles
permitted by this Lease, so long as the certificates of
insurance with respect to such policies certify only the maximum
deductibles permitted by this Lease, so that Tenant's insurance
companies insure for or against all amounts in excess of the
maximum permitted under the applicable provisions of this
Article V. Tenant's failure to maintain policies of insurance
with the deductibles required by this Lease shall not constitute
an Event of Default so long as said certificates are furnished
and remain in full force and effect, without notice of
cancellation.
Section 5.13. The provisions contained in this Article V
are subject to the provisions contained in all the Existing
Mortgages and Underlying Leases relating to insurance coverage
and insurance policies and the insurance proceeds therefrom.
Tenant agrees to perform and comply with and observe faithfully
all the provisions and requirements of the Existing Mortgages
and the Underlying Leases regarding such insurance provisions.
Tenant agrees to name Landlord's Mortgagees and the holders of
Existing Mortgages and the Overlandlords as loss payees and
additional insureds as their interests may appear when requested
and shall obtain an endorsement providing that the insurance
company agrees to give the mortgagees and the Overlandlords at
least 30 days advance notice of any cancellation or reduction of
coverage, the amount insured or other material change and that
the policy will not have coverage impaired due to any act or
omission of Landlord of Tenant as an insured party.
Section 5.14. Landlord shall reimburse Tenant for the
actual premiums paid by Tenant for all the insurance required to
be carried in this Article V by paying to Tenant Landlord's
Share. In determining Landlord's Share, the amount of any
premiums for insurance paid for by a Space Tenant under a
Collateral Lease who carries its own insurance and pays the
premiums to the insurance, and the square footage of the space
occupied by such subtenant shall both be excluded in determining
Landlord's Share. In case blanket insurance is carried by
Tenant, the actual premiums for the Demised Premises shall be
the premiums paid to the insurance company divided by the total
number of square feet of buildings covered by the insurance.
At any time, Landlord shall have the right instead of
Tenant to obtain and carry the insurance policies required to be
carried by Tenant under this Lease. Landlord shall give Tenant
at least 45 days prior notice of exercise of such right. If
Tenant sustains a loss of premium refund by not receiving a full
premium refund due to early cancellation of its existing
policies due to Landlord taking over the insurance obligations
and substituting the insurance coverage, Landlord shall
reimburse Tenant or credit Tenant against the installments of
Basic Rent next coming due for the difference between a pro rata
refund and the premium short-rate refund received by Tenant. If
Landlord elects to and obtains and carries the insurance as just
described, Tenant shall reimburse Landlord for the Landlord's
cost thereof on demand for Tenant's Share thereof, and in such
case where Landlord carries the insurance, if Landlord elects to
do so, Landlord may collect all proceeds from all losses and
perform all repairs and restoration pursuant to Article XIV
hereof, instead of Tenant. In determining Landlord's Share, the
amount of any premiums for insurance paid for by a Space Tenant
under a Transferred Lease who carries its own insurance and pays
the premiums to the insurance company directly and the square
footage of the space occupied by such Space Tenant shall both be
excluded in determining Tenant's Share.
Section 5.15. As to any Outlot which is at the date of
this Lease being leased to a subtenant under an Outlot Lease and
which Outlot Lease is not a Transferred Lease which Outlot Lease
permits the subtenant to obtain and provide its lessor
thereunder with insurance that differs from the requirements of
this Article V, Tenant shall not be in default so long as the
subtenant of the Outlot provides the insurance coverage called
for by the Outlot Lease and Tenant diligently enforces its
rights against the subtenant to comply with its Outlot Lease.
As to any Outlot Lease which is a
Transferred Lease or any Outlot which Landlord has developed or
caused to be developed and Landlord is the lessor under the
Outlot Lease, Tenant shall not be required to provide the
insurance under this Article V, and Landlord may or may not at
its option provide the casualty insurance, but shall provide the
commercial general liability insurance.
ARTICLE VI
Use of Demised Premises; Use of Common Areas
Section 6.01. All the provisions contained in this Article
VI shall be subject to any restrictions or limitations or
covenants contained in any Existing Mortgages, Covenants,
agreements, Underlying Leases and other leases, Space Leases and
other subleases, licenses or REAs or in any other documents of
record, or in any documents to which Tenant is a party or by
which Tenant is bound, and also shall be subject to all zoning
laws and other laws; provided, however, Tenant may, if it is
able to do so, obtain a waiver or variance of any prior
restriction or limitation imposed by any of the foregoing.
Subject to the foregoing, Tenant may continue to use the Demised
Premises for conduct of a "Venture" department store business
where Tenant is at the date hereof using a Venture Building for
such purpose; and where at the date hereof there are Existing
Leases, Tenant may continue to permit the tenants under those
Existing Leases to conduct their businesses in accordance
therewith; and if Tenant ceases operating its Venture Store or
the tenant under an Existing Lease ceases operating its
business, the Demised Premises may be used for any lawful retail
use (it being understood that retail use may include retail
sales or retail services or a combination of the two such uses
and may entail a portion of the premises to be used for storage
or stockroom for merchandise being sold at the store). In
addition, except as stated in the next following sentence,
Tenant shall have the right at any time during the term of this
Lease to close its business operations at the Demised Premises
and Tenant has no duty to Landlord to stay open for business to
the public either as a Venture Store or anything else. However,
if an Underlying Lease, a Space Lease, or REA or any Covenant,
or any other document by which Tenant is bound, obligates Tenant
to stay open, continuously operate its business or prohibits
Tenant from ceasing business operations or leaving actual
occupancy of the Demised Premises or any part thereof, Tenant
hereby agrees to faithfully comply and perform such obligations,
and this shall apply as well to any case where Tenant is not so
obligated but pursuant to such documents its ceasing operation
would cause Landlord to be subject to a purchase option by a
third party or a forfeiture of Landlord's interest to any extent
or impose any monetary obligation or damages on Landlord; or if
any Existing Lease, REA, Covenant or other document confers a
remedy on the holder thereof in the event Tenant ceases
operations in the Venture Building (such as an abatement of
rent, right to terminate, etc.), then Tenant shall fully
compensate Landlord to the extent Landlord sustains any loss or
damage resulting from Tenant's cessation of operations. Tenant
shall have the right to divide the space in each building of the
Demised Premises into different (i.e., separate) spaces provided
(1) Landlord is notified of Tenant's intention to do so and (2)
the Venture Building occupied by Venture at the date of this
Lease must always consist of at least one, undivided storeroom
in size equal to 50% or more of the gross size of the Venture
Building now existing at the date of this Lease (the "Reduced
Venture Building") which shall only be used and occupied as a
retail store. The remainder of the former Venture Building may
be converted or adapted to be used for retail, services business
(i.e., the 50% or less), warehousing or storage or offices
(hereinafter referred to as "Space Conversion"). Tenant shall
not use the Demised Premises for any other use without the prior
written consent of Landlord, which consent shall not be
unreasonably withheld or delayed. Tenant will not use or permit
to be used any part of the Demised Premises for any unlawful,
dangerous, noxious or offensive trade or business and will not
cause or allow any nuisance on the Demised Premises. Tenant
assumes the risk of any law, ordinance, rule or regulation
either now in effect or hereafter enacted or in any document as
of the date of this Lease applying to the Demised Premises which
prohibits or limits Tenant's contemplated use of the Demised
Premises. Landlord shall have no liability or responsibility in
connection therewith, and the existence of such law, ordinance,
rule or regulation or provision in any such document shall not
permit Tenant to surrender this Lease or relieve Tenant to any
extent from its obligation to pay the full Basic Rent and other
Rent payable under this Lease or from any of its other
obligations under this Lease.
Section 6.02. Landlord grants to Tenant (for the benefit
of Tenant, its employees, agents, invitees, licensees and
customers), in common with Landlord, Landlord's employees,
agents, invitees, licensees and customers, and all others
granted such rights by Landlord in Shopping Centers that include
Landlord Buildings, throughout the Lease Term the non-exclusive
right and privilege to use, for the purposes for which they are
intended, all Common Areas as they are constituted from time to
time during the Lease Term, including the parking areas and
sidewalks within the boundaries of the Shopping Centers on which
the Demised Premises are situated, and also all other common
areas neither owned or leased by Landlord nor part of the
Shopping Centers, but which Landlord now or in the future is
permitted to use, if any, adjoining the Shopping Centers by
reason of rights Landlord holds under REAs. The rights hereby
granted with regard to the Common Areas shall constitute rights
appurtenant to the Demised Premises. Tenant agrees Landlord may
change the design or layout, reduce or enlarge the size or alter
the Common Areas in exercising Landlord's right to develop
Outlots or Vacant Areas, subject to Tenant's consent which
Tenant agrees it will not unreasonably withhold or delay, and
agrees that any dispute as to its reasonableness may at
Landlord's option be determined by arbitration. (See also
Section 15.04 hereof.)
ARTICLE VII
Surrender and Right to Remove Trade Fixtures
Section 7.01. On the last day of the term or on any
earlier termination of this Lease, or upon any re-entry by
Landlord upon the Demised Premises pursuant to Article XX
hereof, or upon surrender due to termination of an Underlying
Lease, Tenant shall surrender to Landlord the Demised Premises
in good and safe order, condition and repair, reasonable wear
and tear excepted, free and clear of all occupants, liens and
encumbrances, and in compliance with the Underlying Leases to
the extent such leases apply to the premises being surrendered,
excepting matters that are of record at the date of this Lease
and any other matters which Landlord causes to be placed against
the title, or which Landlord consents to in writing to be placed
of record against the title after the date of this Lease.
Section 7.02. Any of Tenant's Trade Fixtures may be
removed provided, however, that the removal of any of Tenant's
Trade Fixtures by persons or entities having a security interest
therein and who are entitled by law to remove such Tenant's
Trade Fixtures for purposes of taking possession thereof shall
be only permitted provided Tenant first undertakes directly to
Landlord to be responsible for any damage and for restoration of
the Demised Premises resulting from exercise of its rights and
Tenant gives Landlord security or assurances satisfactory to
Landlord for such purposes. In any case Tenant shall with due
diligence, and without expense to Landlord, cause any part of
the Demised Premises damaged by any removal of Tenant's Trade
Fixtures, inventory or other personal property to be promptly
repaired and restored. It is understood that the fixtures and
equipment at the Distribution Center are not Tenant's Trade
Fixtures in this Lease, and therefore this Section 7.02 does not
grant Tenant the right to remove them; nor shall Landlord's
waiver in Section 7.04 apply to them.
Section 7.03. Any of Tenant's Trade Fixtures, inventory
or other personal property which shall remain on the Demised
Premises for thirty days after the termination of this Lease
may, at the option of Landlord, be deemed to have been abandoned
by Tenant and may, at Tenant's expense, either be retained by
Landlord as its property or be disposed of without
accountability to Tenant in such manner as Landlord may see fit.
Section 7.04. Landlord hereby waives its right, if any,
to a lien on or distraint on any Tenant's Trade Fixtures,
inventory or other personal property of Tenant to the rights of
any seller or lessor of Trade Fixtures or lender who holds a
security interest in Tenant's Trade Fixtures, inventory or other
personal property of Tenant. Landlord shall deliver to Tenant,
if requested, a written confirmation in favor of such seller,
lessor or lender provided the form of the waiver is satisfactory
to Landlord in its reasonable judgment.
Section 7.05. The provisions of this Article shall survive
the expiration or termination of this Lease.
ARTICLE VIII
Landlord's Right to Perform Tenant's Covenants
Section 8.01. In addition to any other rights and remedies
available to Landlord, and not in substitution or derogation
thereof, if Tenant any time fails to make any payment or perform
any act on its part to be made or performed within the time
permitted by this Lease, then, after the occurrence of an Event
of Default after thirty days' written notice to Tenant (or in
case of emergency which would result in imminent danger to
persons or property or other like circumstances, on such shorter
notice or without notice, as in each such case is reasonable
under the circumstances) without waiving or releasing Tenant
from any obligation and without assuming any liability to Tenant
or anyone else, Landlord may (but shall not be required to) make
such payment or perform such act on Tenant's part. Landlord may
enter the Demised Premises for such purpose and take all actions
as may be necessary or appropriate.
Section 8.02. All payments, costs and expenses incurred
by Landlord in connection with the performance of any such act,
together with interest thereon at the lower of either the rate
of 12-3/4% per annum or the maximum legal rate permitted by
applicable law, accruing from the respective dates of Landlord's
making of each such payment or incurring of each such cost or
expense) shall constitute additional rent payable by Tenant
under this Lease and shall be paid by Tenant to Landlord on
demand. As to failure to comply with the insurance provisions
in this Lease, Landlord shall not be limited, in the proof of
any damages which Landlord may claim against Tenant arising out
of or by reason of Tenant's failure to provide and keep in force
insurance required by this Lease, to the amount of the insurance
premiums not paid or incurred by Tenant and which would have
been payable upon obtaining such insurance, but Landlord shall
also be entitled to recover as damages the uninsured amount of
any loss (to the extent of any deficiency in the amount of type
of insurance coverage required by the provisions of this Lease),
and the damages, costs and expenses of suit, including
attorneys' fees, suffered or incurred by reason of damage to, or
destruction of, the Demised Premises, occurring during any
period during which Tenant shall have failed or neglected to
provide insurance as aforesaid.
ARTICLE IX
Compliance With Laws and Insurance Policies
Section 9.01. Tenant, at its sole cost and expense,
subject to Section 9.02 hereof, shall promptly comply, and cause
its tenants and subtenants to comply (provided, however, tenants
or subtenants occupying portions of the Demised Premises on
Outlots shall not be required to carry the insurance Tenant is
required to carry, but shall only be required to carry
commercially reasonable insurance), with all present and future
laws, ordinances, orders, rules, regulations and requirements of
all federal, state and municipal governments, courts,
departments, commissions, boards, and officers, and shall comply
with and observe the provisions of all of Tenant's insurance
policies and the companies issuing such policies and will
require all tenants or subtenants to so comply, and shall comply
with any national or local Board of Fire Underwriters, or any
other body exercising functions similar to those of any of the
foregoing, foreseen or unforeseen, ordinary as well as
extraordinary, including, without limitation, Environmental
Laws, the Americans with Disabilities Act (collectively referred
to as "Requirements"), which may be applicable to the Demised
Premises, or to the Common Areas so long as Tenant is the
Responsible Party or any part thereof, including the buildings,
the parking lot, sidewalks, curbs, tunnels and vaults of the
Demised Premises or to the use or manner of use of the property
of the owners, tenants or occupants thereof, whether or not such
Requirement shall necessitate structural changes or
improvements, or the removal of any encroachments or projections
on or over the streets adjacent to the Demised Premises or the
Shopping Center, or on or over other property contiguous or
adjacent to the Demised Premises or the Shopping Center,
provided, however, it is understood that if the necessity to
make a change or addition to the Demised Premises is required
solely because Tenant is conducting some kind of activity and
Tenant chooses to cease such activity, which then obviates
Tenant's need to do the change or addition, Tenant may cease the
activity and thus comply with such law.
Section 9.02. Provided no Event of Default exists, Tenant
shall have the right to contest by appropriate proceedings
diligently conducted in good faith, without cost or expense to
Landlord, the validity or application of any Requirements. If
compliance with any such Requirement may legally be delayed
pending the prosecution of any such proceeding without the
incurrence of any lien, charge or liability of any kind against
the Demised Premises or Tenant's interest therein and without
subjecting Tenant or Landlord to any liability, civil or
criminal, or jeopardizing Landlord's interest in the Demised
Premises for failure so to comply therewith, Tenant may delay
compliance therewith until the final determination of such
proceeding provided that (i) Tenant first furnishes to Landlord
security, satisfactory in from and amount to Landlord, against
such fine, lien, charge or civil liability, and (ii) Tenant
shall be solely responsible for payment of such fine, lien,
charge or civil liability and shall indemnify, defend and hold
Landlord harmless with respect thereto. Landlord shall not be
required to join in any proceedings referred to in this Section
unless the applicable law requires such proceedings be brought
in the name of Landlord, in which event Landlord shall join in
the proceedings or permit the same to be brought in its name if
Tenant shall pay all expenses in connection therewith. However,
Landlord also shall have the right to contest the validity or
application of any Requirements.
Section 9.03. Tenant, at its expense, shall promptly and
diligently comply with , observe and perform a not violate any
Underlying Leases, other leases, Space Leases and other
subleases, Covenants, agreements and other instruments, whether
or not of record, which affect at the date of this Lease or
which in the future Tenant agrees shall affect the Demised
Premises or the Shopping Centers or any part thereof or which
affect the use, operation or maintenance thereof, including,
without limitation, complying with all REAs (including making
such payments and performing such acts or refraining from such
acts as are required and which are required to be paid,
performed or omitted from doing whether by Landlord or Tenant
under the REAs), licenses, concession agreements, and all
covenants and agreements with respect to maintaining and
repairing the Demised Premises and so long as Tenant is the
Responsible Party the Common Areas and operating or maintaining
automobile parking, malls, landscaping and walkways; provided,
however, as to any Space Leases which constitute a Transferred
Lease or a Space Lease which Landlord enters into with a tenant
or subtenant after the date of this Lease, applying to space in
Landlord's Buildings or to an Outlot, Tenant shall not be
responsible to comply with the Underlying Lease or to perform
the Landlord's duties under such Space Lease.
Section 9.04. Unless Tenant is contesting the Requirements
pursuant to Section 9.02, Tenant agrees to furnish Landlord
within ten days after Landlord's written request therefor such
permits, orders, certificates or other documents as might be
reasonably requested by Landlord to evidence compliance with
Requirements applicable to the Demised Premises.
ARTICLE X
Mechanics' Liens; Other Liens; Mortgages
Section 10.01. Subject to the provisions in Section 10.04
hereof, Tenant shall not permit to remain, and shall promptly
discharge, at its cost and expense, all liens (including
perfected liens, liens which have been filed of record and any
other kind of liens caused by Tenant or Tenant's tenants or
subtenants), encumbrances and charges (other than created by
Landlord) upon the Demised Premises or any part thereof, whether
for furnishing labor, materials or services to improve the
Demised Premises at the request of Tenant or Tenant's tenants or
subtenants and including any and all such liens, encumbrances or
charges whether placed, asserted, filed or claimed, or whether
the work, labor or services were furnished, prior to the date of
this Lease or during the term of this Lease. Further, Tenant
shall not permit to remain, and shall promptly discharge, at its
cost and expense, all such liens, encumbrances and charges filed
against the Shopping Centers or any part thereof arising out of
any act or omission or request for services, labor or material
by Tenant of Tenant's subtenants or anyone claiming or acting
by, through or under Tenant. Provided no Event of Default
exists under this Lease, Tenant shall have the right to contest
the validity or amount of any lien or claimed lien so long as it
acts promptly in good faith and continues with due diligence,
but only if Tenant first gives to Landlord such security as
Landlord reasonably requires to assure payment thereof and
prevent any sale, foreclosure or forfeiture of the Demised
Premises or any portion thereof by reason of such nonpayment.
The guaranty or assurance of a title company satisfactory to
Landlord or bonding of the lien by Tenant for twice the amount
of the lien shall be satisfactory security, provided Landlord is
satisfied the assurance or bond will be sufficient to cover the
lien plus interest thereon and Landlord's legal fees. On final
determination of the claim for lien, Tenant shall immediately
pay any judgment rendered with all costs and charges and shall
have the lien released or judgment satisfied at Tenant's own
expense, and if Tenant shall fail to do so, Landlord may at its
option pay any such final judgment and clear the Demised
Premises therefrom. If Tenant shall fail to contest with due
diligence the validity or amount of any such lien or claimed
lien or remove the lien, or fail to give Landlord security as
hereinabove provided, all within thirty (30) days after notice,
Landlord may, but shall not be required to, contest the validity
or amount of any such lien or claimed lien, or settle or
compromise the same without inquiring into the validity of the
claim or the reasonableness of the amount thereof.
Section 10.02. If any lien is filed against the Demised
Premises or any action affecting the title thereto be commenced,
including all such that arise out of facts or circumstances
occurring prior to the date of this Lease or during the term of
this Lease, or any such lien is filed against the Shopping
Centers or any part thereof, Tenant shall give to Landlord
written notice thereof as soon as notice of such lien or action
comes to the knowledge of Tenant and Tenant agrees to defend and
indemnify Landlord against all damages, losses, expenses, costs
and claims arising as a result of such lien or action, unless
such lien is caused by Landlord's or Landlord's tenants' action
or activities.
Section 10.03. Tenant agrees to give prompt notice to
Landlord of the commencement of any work or alteration or
improvement on the Demised Premises to cost in excess of
$250,000 in the aggregate with regard to one project or with
regard to all projects to be commenced within one year of the
commencement of construction of all the others, and Tenant
hereby grants to Landlord the right to post notices of
non-responsibility on the Demised Premises and record verified
copies thereof in connection with all work of any kind upon the
Demised Premises.
Section 10.04. At the date of this Lease, there exist one
or more certain mortgage liens on the Demised Premises or the
Shopping Centers or portions thereof ("Existing Mortgages").
One of such mortgages is held by Principal Mutual Life Insurance
Company. Tenant hereby agrees, with the one exception stated at
the end of this sentence, to perform and observe all the
covenants and provisions contained in the Existing Mortgages or
other loan documents held by Principal Mutual Life Insurance
Company in connection with its Existing Mortgage, and, if there
are any other Existing Mortgages held by any other person or
entity in connection with that person's or entity's Existing
Mortgage, excepting the payment of the interest or principal of
said Existing Mortgages, which interest and principal Landlord
agrees to pay.
Section 10.05. Tenant shall not mortgage or otherwise
encumber either (i) its interest in this Lease, or (ii) its
interest in the Demised Premises or any portion thereof, or
(iii) its interest in any Space Lease, Outlot Lease or any other
lease or sublease of the Demised Premises.
ARTICLE XI
Repairs and Maintenance; Common Area
Maintenance and Common Area Charges
Section 11.01. Tenant agrees, without cost to Landlord,
to take good care of the entire Demised Premises, and in
addition shall take good care of the Common Areas so long as
Tenant is the Responsible Party and each and every part thereof
(whether on, below or above the surface), including, without
limitation, the Improvements (including, without limitation, the
roofs, foundations, walls, heating, ventilating and air
conditioning systems, plumbing, electric and other utility
systems, windows and doors and their frames and apparatus,
floors, storefronts, signs and landscaping thereof), the
sidewalks, curbs, roadways, parking areas and fences, and Tenant
agrees to keep all of the same in good, clean and safe order and
condition, and shall promptly, at Tenant's own cost and expense,
make all repairs, fix all potholes, resurface parking areas when
necessary, all whether interior and exterior, structural and
nonstructural, ordinary as well as extraordinary, foreseen as
well as unforeseen, in order to keep the Demised Premises and
the Common Area in good repair, good condition, safe, clean and
sanitary condition, provided, however, if under another
agreement, lease, license or an REA a third party (e.g. the fee
owner of a Leasehold Property or the owner of an adjacent
shopping center) is obligated to care for the parking areas or
the other areas, Tenant need not do so, provided Tenant
diligently and promptly and in good faith enforces the
obligation of the third party to do so and Tenant does so in
case of a default by such third party. When used in this
Article or elsewhere in this Lease, the word "repairs" shall
include replacements when needed, but Tenant may repair an item
rather than replace it if repairing it will serve to keep the
item running properly and in good order. All such repairs
(including replacements) made by Tenant shall be at least equal
in quality and class to the original work.
Section 11.02. Landlord shall not be required to furnish
any services or facilities or to make any repairs or alterations
in or to the Demised Premises or with respect to the Common
Areas so long as Tenant is the Responsible Party, or spend any
money, Tenant hereby assuming the full and sole responsibility
for the condition, operation, repair, replacement, maintenance
and management and carrying charges of the Demised Premises and
subject to being entitled to Landlord's Common Area charges, the
Common Area of the Shopping Centers. Tenant expressly waives
any right to make repairs at the expense of Landlord which might
be provided for in any law now or hereafter in effect. As to
those portions of the Demised Premises occupied by another
tenant or subtenant under an Existing Lease which is a
Collateral Lease, Tenant shall use diligent efforts promptly and
in good faith to cause such tenants or subtenants to comply with
its maintenance and repair obligations.
Section 11.03. Except where a third party, such as an
adjacent property owner pursuant to an REA performs CAM tasks,
or except if pursuant to Section 11.12 Landlord elects to
perform the CAM tasks, Tenant agrees that from and after the
date of this Lease and throughout the Lease Term, Tenant shall
be the Responsible Party and assumes responsibility for
maintenance, repair and replacement, and the payment of all
costs relating thereto of the Common Areas located on or serving
each and all of the Shopping Centers (such tasks herein referred
to collectively, the "CAM"), all in compliance with this Lease
and in accordance with customary standards for comparable
shopping centers in the area in which the Shopping Center is
located. So long as Tenant is the Responsible Party, then
Landlord, in the manner hereinafter provided, agrees to
reimburse to Tenant either by payment or by crediting Tenant
against the next due installments of Basic Rent, during the Term
of this Lease, Landlord's Share of the CAM Costs with respect to
each of the Shopping Centers ("Landlord's Common Area Charge").
The Responsible Party shall perform common area maintenance and
repairs and other duties with respect to any adjoining property
to the extent that the owner of the Shopping Center is required
to do so under any REA, and any costs incurred, to the extent
not reimbursed by other parties, shall be included in CAM Costs.
Without limiting the foregoing, the expression "CAM
Costs" shall include, but not be limited to, the total of all
costs and expenses actually incurred for, and in connection
with, the operating, repair, service, maintenance, repairs or
replacements, of lighting facilities, all portions of the Common
Areas, and allocated to the calendar year on the cash method of
accounting. Any capital expenditure which would exceed $25,000
for any one Shopping Center in any twelve month period shall be
amortized over their useful life and only such amortized portion
shall be included in CAM Costs each year regardless who is the
Responsible Party. Such CAM Costs shall include, without
limitation, the following: the amortizing amount of the capital
expenditures just referred to, charges for electricity for
lighting of the Common Areas; the cost of repairing,
maintaining, replacing and operating the Common Areas, including
electrical and storm sewer systems; the cost of commercial
general liability insurance for the Common Areas; the wages of
non-management personnel employed in cleaning sidewalks and
parking areas, removal of snow, ice and trash and similar work;
fixing of potholes, resurfacing and/or repaving the parking lot
drives and entrances and exits; repairing and/or
replacing sidewalks; cost of general supplies and materials
consumed in the maintenance and operation of the Common Areas;
the cost of maintaining and/or replacing landscaping in the
Common Areas, cutting and feeding grass and shrubs and caring
for and replacing landscaping when required with similar
landscaping; the cost of rental of machinery and equipment used
in operation and maintenance; carrying general liability and
property damage insurance with respect to elements of the Common
Areas; wages of non-management personnel employed as security
personnel and parking attendants; the cost of miscellaneous
repairs to the Common Areas and to signs; compliance with
government Requirements with respect to the Common Areas; and
payments, if any, to adjacent owners under REAs for the
privilege of using that owner's access or areas or for common
area maintenance performed by such adjacent owner. Neither
Tenant nor Landlord in performing the duties of the Responsible
Party shall be entitled to any fee or charge from the other for
its administrative, home office or overhead services or
expenses. The Responsible Party shall have the right to
contract out to independent contractors all or any aspect of the
work or services. With respect to insurance premiums to be
included in CAM Costs, if any insurance for the Common Areas is
carried by a blanket policy, the premiums to be included in CAM
Costs in which Landlord is to share shall be calculated on the
premiums actually paid for the entire blanket policy coverage
for all the properties (including those, if any, which are not
Shopping Centers) divided by the aggregate square feet of
buildings situated on all of the properties covered by the
blanket policy in order to obtain a per square feet premium
cost, which then would be applied to the number of square feet
in Landlord's Buildings to determine Landlord's Share, or in the
Demised Premises to determine Tenant's Share, as the case may
be, as to any particular Shopping Center. Notwithstanding the
above, Landlord shall have the right from time to time to elect
to have either Landlord or Tenant provide commercial general
liability insurance for the Common Areas but until further
notice, Landlord hereby directs Tenant to carry such commercial
general liability insurance for the Common Area. In the event
Landlord does not elect to have Tenant provide commercial
general liability insurance for the Common Area, Landlord shall
procure and maintain such commercial general liability insurance
for the Common Area whereupon Tenant shall share in the cost and
expense to Landlord for obtaining and carrying such insurance to
the extent of Tenant's Share. Notwithstanding any provision
contained in this Lease to the contrary, the party responsible
for carrying general liability insurance shall also carry
insurance coverage for owned, hired and non-owned automobiles.
Section 11.04. In doing any construction at a Shopping
Center, Landlord and Tenant agree that they will use their
reasonable efforts to cause such activities to be conducted in
a manner that will minimize interference with the other's
business operations and with the business operations of other
tenants.
Section 11.05. Notwithstanding anything in this Lease to
the contrary, if Landlord, in connection with the construction
of any future Landlord's Building, or Tenant, in connection with
the construction of any expansion of the Demised Premises if
permitted by Landlord, as the case may be, paves previously
unpaved areas to enlarge the parking field or undertakes other
capital improvements to the Common Areas, to the extent that
such paving or capital improvements are required solely as a
result of the construction of such future permitted Landlord's
Building, or permitted expansion of a Demised Premises, such
cost shall be borne by the constructing party, and the same
shall not be deemed a part of CAM, except when and to the extent
such improvements become part of the Common Areas, CAM shall
apply. In addition, Tenant shall not include as a CAM Cost any
expenditures for traffic control personnel or similar functions
without first obtaining Landlord's prior written consent.
Section 11.06. The Responsible Party shall have the right
to promulgate and enforce reasonable rules and regulations
governing the conduct of customers and invitees in their use of
the Common Areas in the Shopping Centers, so long as such rules
and regulations are applied and enforced uniformly and without
discrimination, and do not increase Landlord's or Tenant's
obligations or burdens or require the expenditure of any money
by Landlord or Tenant. As part of CAM, the Responsible Party
will clear the snow and ice and trash from in front of all
vacant storerooms in the Shopping Centers (even if the vacant
storerooms are in the part of the Shopping Center not within the
Demised Premises) including the sidewalks so long as such
storerooms remain vacant; but Tenant shall not be required to
clean snow, ice or trash from the sidewalks in front of
storerooms in the Shopping Centers that are leased to and
occupied by other tenants unless the Space Leases (including
Outlot Leases) require the Landlord thereunder to perform same
(in which case Tenant shall perform same unless Landlord is the
Responsible Party).
Section 11.07. It is agreed that if there are no
Landlord's Buildings in a Shopping Center, 100% of the CAM Costs
for such Shopping Center shall be borne and paid for by Tenant
without reimbursement from Landlord, and until such time as
there shall exist Landlord's Buildings in such Shopping Center,
Tenant shall bear and pay 100% of the CAM Costs for that
Shopping Center without receiving from Landlord any share or any
other reimbursement.
Section 11.08. Starting on the date of this Lease
(prorated for a partial month at the beginning, if any), and
throughout the remainder of the Lease Term, the non-Responsible
Party agrees to reimburse each month to the Responsible Party
for all the Shopping Centers its share of CAM, the amount based
on the square foot of Floor Area of the Demised Premises or
Landlord's Buildings, as the case may be, in all the Shopping
Centers; provided, however, that this clause shall not apply if
there are no Landlord's Buildings in a Shopping Center. The
non-Responsible Party shall remit to the Responsible Party this
amount which represents the non-Responsible Party's contribution
to the cost of maintenance and operation of the Common Areas on
a monthly basis as billed throughout the Lease Term and any
renewals thereof.
Within ninety (90) days after the end of each calendar
year, the Responsible Party shall furnish the non-Responsible
Party with an annual statement in reasonable detail of the
Responsible Party's actual outlays for CAM Costs during said
year, and if said statement shows that the aggregate of the
non-Responsible Party's monthly payments theretofore paid by the
non-Responsible Party during such year was less than such
Party's Share, the non-Responsible Party shall pay the balance
due to the Responsible Party (without interest) within thirty
(30) days after receipt of said statement; and if the statement
shows that said aggregate exceeds the non-Responsible Party's
Share, the Responsible Party with delivery of said statement
shall refund a payment (without interest) for the excess.
Landlord may pay Landlord's Share or credit Tenant against the
next due installments of Basic Rent. The Responsible Party
shall furnish the non-Responsible Party with copies of all
invoices, paid receipts and other backup documents, and the
non-Responsible Party shall have the right at that party's
expense to audit the Responsible Party's records regarding CAM
Costs for the Shopping Centers at reasonable times and on
reasonable advance prior notice for twelve months.
Section 11.09. Notwithstanding any provision to the
contrary, in the Shopping Centers where there are Landlord's
Buildings it is agreed that sewer, water, electric, gas or other
similar utility lines, pipes, wires, equipment, facilities,
apparatus or systems which are located outside of Landlord's
Buildings or outside of the Demised Premises and which serve
exclusively either Landlord's Buildings or the Demised Premises,
as the case may be(hereinafter referred to collectively as
"Outside Utility Apparatus") shall not be the responsibility of
the Responsible Party as part of CAM, but shall be the
responsibility of the party whose building is exclusively
served, so that Landlord or its tenants in Landlord's Buildings
(if the Outside Utility Apparatus services Landlord's Buildings
exclusively) shall be solely responsible, or Tenant (if the
Outside Utility Apparatus services the Demised Premises
exclusively) shall be solely responsible from the point where
such Outside Utility Apparatus services either the Demised
Premises exclusively or Landlord's Buildings exclusively (as the
case may be), notwithstanding that such Outside Utility
Apparatus is located in the Common Areas. CAM Costs shall not
include (i) Landlord's cost of any utility or other service, if
any, separately sold by Landlord to Tenant or other tenants,
(ii) costs incurred by Landlord or Tenant for alterations, if
any, for other tenants, (iii) depreciation of the Shopping
Center buildings or components, and (iv) debt service or
indebtedness of Landlord or Tenant. If such Outside Utility
Apparatus services the Demised Premises and Landlord's Buildings
through common lines, such Outside Utility Apparatus shall be
the responsibility of the Responsible Party as a part of CAM
Costs. Further, if any Outside Utility Apparatus is added to
the Shopping Center after the date of this Lease by either
Landlord or Tenant for the purpose of servicing either
Landlord's Buildings or any of the Demised Premises exclusively
(as the case may be), the cost of the initial construction and
installation and of the subsequent maintenance, repair and
replacement thereof shall be borne by the party (i.e. either
Landlord or Tenant) whose building is serviced exclusively. So,
for an example, if Landlord desires to rent a portion of
Landlord's Building to a laundromat tenant, and Landlord causes
a new or oversized water line to be installed in the Common
Areas to service that store exclusively (and not the Demised
Premises in any way), Landlord shall bear all the expenses, as
just mentioned (and the same shall apply to Tenant).
Conversely, as a further example, if Tenant installs a larger
electric transformer outside its Store, which except for the
fact that it services the Demised Premises exclusively would
constitute part of the Common Areas, such costs and expenses
shall be borne solely by Tenant. However, any installation or
construction of Common Area improvements which serve both the
Landlord's Buildings and the Demised Premises or which serve the
Common Areas which is necessitated by applicable laws, rules,
regulations or orders of the governmental agencies having
jurisdiction, shall be deemed to be part of CAM Costs.
Section 11.10. Landlord agrees that Tenant shall enjoy,
jointly and severally together with Landlord and others
designated by Landlord, the access, parking, easement and right
to receive services benefits that inure to the Landlord under
all REAs, concerning such access, parking, easement rights or
the right to receive services thereunder, including the right
with respect to such matters to cure defaults of either the
other party to the REA responsible for the common area
maintenance or the owner of the remainder of the shopping center
of which a Shopping Center is a part and the right to enforce
performance of its (or their) obligations thereunder; provided,
however, Landlord hereby reserves unto itself concurrently with
Tenant the rights also of enforcement of all of the REAs, and
also reserves unto itself together with Tenant all rights,
privileges and benefits that are not of an access, parking,
easement, or right to receive services nature; and further,
Tenant shall not have the right, without Landlord's prior
written consent which Landlord will not unreasonably withhold or
delay, to modify or terminate any REA or the right to exercise
any other rights thereunder; and further, Landlord shall not
have the right to modify or terminate any REA without Tenant's
prior written consent which Tenant agrees not to unreasonably
withhold or delay; provided, however, if a REA affecting a
Shopping Center and adjacent land requires that the owner of the
adjacent land make payments to the lessee or operator of the
Shopping Center for CAM Costs, then Landlord and Tenant shall
cooperate to cause such payments to be made to the Responsible
Party for that Shopping Center involved, and such Responsible
Party shall apply such payments first to pay CAM Costs for that
Shopping Center, before Landlord and Tenant calculate their
respective Landlord's Share and Tenant's Share out of the net.
Any excess of such payments by the adjacent landowner over and
above the CAM Costs for that Shopping Center for the particular
year involved shall be paid to Tenant and Landlord according to
their respective Landlord's Share and Tenant's Share for that
Shopping Center. If, with respect to a failure to maintain the
Common Areas, Tenant cures a default or enforces performance by
the other owner or other party in accordance with a REA and in
doing so spends money, or in the event that at the time in
question Tenant is performing the common area maintenance under
that REA and the adjacent owner fails to pay its share of
expenses, Landlord grants Tenant, to the extent granted under
the REA, the right to collect reimbursement of Tenant's Share
from the adjacent owner or the other party to said REA,
provided, however, no offset against Landlord under this Lease
shall be available to Tenant against Basic Rent, other Rent or
any other charges. To the extent Tenant is entitled to
reimbursement for such expenditures from the other owner or
other party under the REA, Tenant, to the extent allowed by law,
shall be subrogated to Landlord's rights (including the right,
if necessary to bring suit, to sue in Landlord's name) to
collect such amount (i.e. Tenant's Share), and in furtherance
thereof, Landlord shall deliver to Tenant, on Tenant's
reasonable request, an assignment or confirmation of rights of
collection for such amount. If any REA applicable to a Shopping
Center requires Landlord to exercise a renewal option in order
to extend the term thereof prior to the expiration of the Term
of this Lease as it applies to such Shopping Center, Landlord
shall renew that REA.
Section 11.11. In the event Tenant alone remains open on
any Shopping Center at any time for business any time after
10:00 PM on any night on any day including Sunday and legal
holidays or 11:00 PM from Thanksgiving to Christmas (hereinafter
referred to as "After Hours"), then Tenant shall bear the cost
of the entire electric bills for electricity used to light the
Common Areas on that Shopping Center which are attributable to
such After Hours. If more stores than just Tenant alone remain
open on that Shopping Center, so that another store (or stores)
remains open with Tenant for all or part of the After Hours time
that Tenant remains open, then for the time Tenant remains open
with the others, Tenant (instead of bearing the entire cost)
will bear a share of the cost of the After Hours lighting in the
same ratio that the square footage size of the building on the
Demised Premises bears to the square footage of all of the
stores on that Shopping Center that are open After Hours during
the same time with Tenant. In the event Tenant does not remain
open After Hours but other tenants on the Shopping Center remain
open After Hours, then Tenant under this Master Lease shall not
be responsible to pay any share of such After Hours lighting.
It is understood and agreed that parking lot lighting and other
Common Area lighting customarily kept lit After Hours for
security purposes or other similar purpose common to the benefit
of the Shopping Center as a whole, even when no stores are open,
shall be deemed to be part of the CAM Costs, and the foregoing
After Hours provisions with respect to the tenants' sharing
shall not relate to such lighting.
Section 11.12. Notwithstanding any provision contained
in this Lease to the contrary, Landlord shall have the right to
cause Tenant to be the Responsible Party for any or all of the
Shopping Centers. Tenant shall have the right to cancel
Tenant's designation as the Responsible Party with respect to
any or all of the Shopping Centers in which event Landlord shall
become the Responsible Party , unless Landlord chooses not to be
in which event the provisions of Section 11.13 shall apply.
Section 11.13. In the event Landlord elects to become
the Responsible Party, Landlord shall have the right to be the
Responsible Party for and or all the Shopping Centers. Landlord
may give Tenant at least 30 days advance written notice of such
election and on the effective date of Landlord's assuming the
role of Responsible Party, Landlord shall function as the
Responsible Party in the same manner as otherwise called for in
this Lease, and Tenant shall pay to Landlord Tenant's Share of
CAM Costs. Thusly, the roles of manager of the Common Areas and
passive contributor of the Common Area Charge, between Landlord
and Tenant shall be reversed with respect to the Shopping Center
as to which Landlord has so elected. Therefore, Tenant's annual
proportionate share of CAM Costs shall be Tenant's Share. In
the event Landlord thereafter shall commit a material default in
performing the CAM and fails to cure within thirty days after
receipt of written notice from Tenant, or Landlord elects not to
be the Responsible Party and does not re-designate Tenant as the
Responsible Party, then Landlord and Tenant immediately shall
mutually agree upon an outside, experienced person, firm or
corporation who will act as manager and perform such functions,
and within fifteen days after notice Landlord shall designate an
outside, experienced person, firm or corporation to act as
manager and perform such functions, subject to Tenant's
approval, which approval shall not be unreasonably withheld or
delayed. If Tenant shall not object to a manager designated by
Landlord by giving written notice to Landlord within seven days
following receipt of Landlord's notice to Tenant, it shall be
deemed that Tenant shall have approved said manager. Landlord
and Tenant each shall pay its respective Landlord's Share and
Tenant's Share of CAM Costs, but in such case there shall be
added to the CAM Costs the management fees charged by such
manager. Tenant agrees that it shall always be responsible to
fill any gap in time where there would be no Responsible Party
until a person is found to assume such role. For example, if
Landlord shall elect to dismiss Tenant as the Responsible Party,
then until an outside manager assumes such role, if Landlord has
elected not to be the Responsible Party, Tenant shall be the
Responsible Party during such gap period, and any other like
situations. In the event Tenant neglects or fails to perform
any CAM on any occasion or occasions during the Lease Term while
Tenant is the Responsible Party, Landlord may give advance
written notice thereof to Tenant, and if Tenant does not correct
the condition within the time stipulated in this Lease but in no
event in less than thirty (30) days (except in an emergency),
Landlord may itself correct the condition or cause the condition
to be corrected, using outside contractors, if appropriate, and
Tenant's Share of any costs and expenses incurred by Landlord
together with interest thereon at the annual rate of 12-3/4% or
the maximum rate permitted by applicable law, whichever is
lower, shall be paid to Landlord by Tenant within thirty days
from receipt of an invoice.
ARTICLE XII
Right of Landlord to Inspect and Repair
Section 12.01. Tenant will permit Landlord and its
authorized agents and representatives to enter the Demised
Premises at all reasonable times for the purpose of inspecting
and, upon the occurrence of an Event of Default, making any
necessary repairs and performing any other work that may be
necessary by reason of Tenant's failure to make any such repairs
or perform any such work therein or thereon or Tenant's failure
to commence the same after reasonable written notice from
Landlord. Landlord will, so long as circumstances do not
require other notice, give Tenant five days' advance written
notice of Landlord's intention and having given Tenant
opportunity for Tenant to do the repairs or the work, as
provided in Article XX. If Landlord does the repairs or work,
Landlord will use reasonable efforts to minimize interference
with Tenant's business. Nothing shall imply any duty on
Landlord's part to do any such work, and performance thereof by
Landlord shall not constitute a waiver of Tenant's default in
having failed to perform the same or an assumption of liability
or obligation with respect thereto. Landlord shall not be
liable for inconvenience, annoyance, disturbance, loss of
business or other damage of Tenant by reason of making such
repairs or the performance of any such work, or on account of
bringing materials, tools, supplies or equipment into or through
the Demised Premises during the course thereof and the
obligations of Tenant under this Lease shall not be affected
thereby. Nothing herein shall limit or change the provisions of
Article VIII hereof (Landlord's Right to Perform).
Section 12.02. Landlord shall have the right to enter the
Demised Premises at all reasonable times during usual business
hours for the purpose of exhibiting the same to prospective
purchasers, mortgagees or other persons. Landlord shall give
Tenant reasonable advance prior written notice of such
inspection, and shall not interfere with conduct of Tenant's
business or be obtrusive in its visits.
ARTICLE XIII
Indemnifications
The indemnifications that follow in
the next two Sections shall apply to the extent the indemnify
party is not covered and indemnified by insurance.
Section 13.01. Excepting if caused solely by the
negligence or willful acts of Landlord or its agents or
employees, Tenant agrees to defend, indemnify and save harmless
Landlord against and from any and all claims by or on behalf of
any person or persons, firm or firms, corporation or
corporations arising from conduct or management of or from any
work or thing whatsoever done in or about the Demised Premises
and the Common Areas so long as Tenant is the Responsible Party,
and will further indemnify and save Landlord harmless against
and from any and all claims by or on behalf of any person or
persons, firm or firms, corporation or corporations, arising
during the term of this Lease from any condition of any
building, structure or improvement on the Demised Premises or
the Common Areas so long as Tenant is the Responsible Party, or
any street, curb or sidewalk adjoining the Demised Premises or
the Common Areas so long as Tenant is the Responsible Party, or
of any passageways or spaces therein or appurtenant thereto, or
arising from any breach or default on the part of Tenant in the
performance of any covenant or agreement on the part of Tenant
to be performed pursuant to the terms of this Lease, or arising
from any act of negligence of Tenant, or any of its agents,
contractors, servants, employees, sublessees or licensees, or
arising from any accident, injury or damage whatsoever caused to
any person, firm or corporation occurring during the term of
this Lease, in, on or about the Demised Premises or occurring in
the Common Area of the Shopping Centers so long as Tenant is the
Responsible Party, and from and against all costs, reasonable
counsel fees, expenses and liabilities incurred about any such
claim or action or proceeding brought thereon; and in the event
any action or proceeding be brought against Landlord, Tenant
agrees to defend Landlord in such action or proceeding by
counsel reasonably satisfactory to Landlord.
Section 13.02. Excepting if caused solely by the
negligence or willful acts of Tenant or its agents or
employees, Landlord agrees to defend, indemnify and save
harmless Tenant against and from any and all claims by or on
behalf of any person or persons, firm or firms, corporation or
corporations arising from conduct or management of or from any
work or thing whatsoever done in or about Landlord's Buildings
and so long as Landlord is the Responsible Party, the Common
Areas, and will further indemnify and save Tenant harmless
against and from any and all claims by or on behalf of any
person or persons, firm or firms, corporation or corporations,
arising during the term of this Lease from any condition of any
building, structure or improvement on Landlord's Building or, so
long as Landlord is the Responsible Party, the Common Areas, or
any street, curb or sidewalk adjoining Landlord's Building or
the Common Areas so long as Landlord is the Responsible Party,
or of any passageways or spaces in Landlord's Building, or
arising from any breach or default on the part of Landlord in
the performance of any covenant or agreement on the part of
Landlord to be performed pursuant to the terms of this Lease, or
arising from any act of negligence of Landlord, or any of its
agents, contractors, servants, employees, sublessees or
licensees, or arising from any accident, injury or damage
whatsoever caused to any person, firm or corporation occurring
during the term of this Lease, in, on or about Landlord's
Building or occurring in the Common Area of the Shopping Centers
so long as Landlord is the Responsible Party, and from and
against all costs, reasonable counsel fees, expenses and
liabilities incurred about any such claim or action or
proceeding brought thereon; and in the event any action or
proceeding be brought against Tenant, Landlord agrees to defend
Tenant in such action or proceeding by counsel reasonably
satisfactory to Tenant.
ARTICLE XIV
Light, Heat and Power, etc.
Section 14.01. Tenant agrees to pay, or cause to be paid,
all charges which are incurred by Tenant, or which may be
incurred by any tenant or subtenant, which might be a charge or
lien against the Demised Premises or for which Landlord may be
held liable or with respect to the Common Areas so long as
Tenant is the Responsible Party, for any utility or service,
including without limitation, gas, water, electricity, light,
heat or power, telephone or other communication service
installed, used, rendered or supplied upon or in connection with
the Demised Premises, and Tenant agrees to defend, indemnify and
save Landlord harmless from and against any liability or damages
on such account. Tenant shall also procure, or cause to be
procured, without cost to Landlord, any and all necessary
permits, licenses or other authorizations required for the
lawful and proper installation and maintenance upon the Demised
Premises of wires, pipes, conduits, tubes and other equipment
and appliances for use in supplying any such service to and upon
the Demised Premises. Landlord shall not be required to furnish
any utilities or services; however, Landlord shall grant such
utility easements as may be reasonably necessary for the
operation of Tenant's business in the Demised Premises.
ARTICLE XV
Changes, Alterations and New Construction
Section 15.01. Except if expressly otherwise provided in
this Lease, Tenant shall not demolish, raze or remove any
Improvements or add any new buildings (see also Article XIX
hereof). Tenant shall have the right at any time and from time
to time during the term of this Lease to make, at its sole cost
and expense, any (structural or non-structural) changes,
additions and alterations (hereinafter collectively referred to
as a "Change" or "Changes") to the Improvements which are part
of the Demised Premises without Landlord's consent, provided
Tenant complies with each of the following, which in all cases
Tenant covenants to observe and perform:
(a) No Change shall be undertaken until Tenant
procures and has paid for all permits and authorizations
of all government or departments or subdivisions having
jurisdiction. Landlord shall join in the applications
whenever necessary, provided Landlord incurs no liability
or expense in connection therewith.
(b) Any Change which constitutes either (i) a
reduction of the square footage of a Venture Building,
(ii) an expansion of the square footage of a Venture
Building, or (iii) the razing of and new construction of
a Venture Building shall not be in any of those instances
commenced or done until Tenant shall have obtained
Landlord's written approval which approval Landlord shall
not unreasonably withhold, delay or condition on the
payment of money to Landlord. It shall not be
unreasonable for Landlord to deny consent if expansion
would prevent or hinder any future development or
construction of the Shopping Centers (including expansion
of Landlord's Building or building on an Outlot by
Landlord).
(c) Any Change shall, when completed, be of
such a character as to neither reduce the value of the
Venture Building or any other portion of the Demised
Premises below its value immediately before such Change,
nor change the configuration of any Venture Building so
that there shall not exist at least a retail store
comprising no less than 50% of the gross square feet size
of the entire Venture Building with the remainder of the
Venture Building (up to 50% of the entire Venture
Building) used for retail sales or service, office or
warehousing, nor impair the structural strength or
structural integrity thereof; and if separate stores are
created there shall be individual, separate, independent
utilities (heating, air conditioning, toilets, electric
meters, electrical and plumbing systems). Tenant is
permitted to effectuate a Space Conversion (defined in
Section 6.01) in compliance with Section 6.01 and this
Section.
(d) Any Change shall be made promptly
(Unavoidable Delays, as defined in Section 26.01,
excepted) and in a good and workmanlike manner and in
accordance with all applicable permits and authorizations
and Requirements.
(e) Tenant shall comply with the provisions of
Article X hereof, and shall satisfy Landlord that if the
Change involves in the aggregate more than $250,000 cost
that Tenant proves to Landlord it has the financial
ability to pay for it so as to avoid mechanics' liens
against the Demised Premises or any liability on
Landlord's part in the event of non-payment, which may be
by Tenant furnishing Landlord with a payment and
completion bond in advance of the work. No payment and
completion bond shall be required for any non-structural
changes incidental to installing Trade Fixtures of the
Venture Building.
(f) During the period of construction of any
Change in, to or of the Improvements, Tenant shall
maintain or cause to be maintained the following
insurance:
(1) The commercial liability and
property damage insurance provided for in Section
5.02(a) for the mutual benefit of Landlord and Tenant
as named insureds;
(2) All-risk, including fire and any
other applicable insurance provided for in Article V,
which policy by endorsement, if not then covered,
shall also insure any Change, under a broad form all
risks builders' risk completed value form or
equivalent thereof; and
(3) Workers' compensation insurance
covering all persons employed in connection with the
work, with statutory limits as then required under the
laws of the state in which the Demised Premises is
situated.
Section 15.02. Tenant shall have the right at any time and
from time to time during the Term of this Lease, provided that
no Event of Default exists, and provided Tenant complies with
all Requirements and with all Underlying Leases, Covenants,
Existing Mortgages, REAs, leases, subleases and other documents
and instruments which may be applicable thereto:
(a) to raze, demolish or remove Improvements located
on an Outlot of which Tenant is the landlord under an Existing
Lease to the occupant of the Outlot (if permitted under the
lease of such Outlot), and to make, at Tenant's expense, Changes
in and to the Improvements now or hereafter located on the
Outlot covered by the Existing Leases of which Tenant is the
landlord under a lease to the occupant of the Outlot so long as
the parking available for the Venture Building on the Property
is not reduced to below 5 spaces per 1,000 square feet of floor
area in the Venture Building. This clause (a) applies only to
Collateral Leases, and does not apply to Transferred Leases.
(b) to construct or permit to be constructed on any
Outlot parcel of which Tenant is the landlord under an Existing
Lease to the occupant of the Outlot a building at Tenant's sole
cost and expense, or at the cost and expense of the tenant of
the Outlot parcel, so long as such building is constructed in
compliance with the criteria set forth in Section 15.01(a), (d),
(e) and (f) for Changes. This clause (b) applies only to
Collateral Leases and does not apply to Transferred Leases.
Section 15.03. All changes, additions and alterations
(other than Tenant's Trade Fixtures) to the Demised Premises and
all restoration, repair and replacement of the Improvements
pursuant to any of the provisions of this Lease (including,
without limitation, Articles XV and XVI hereof) or otherwise
shall immediately become and remain the property of Landlord
without any compensation.
Section 15.04. Subject to the provisions contained in
Underling Leases, REAs, Covenants, and subject also to the
provisions of Section 6.02 hereof, Landlord shall have the
exclusive right without Tenant's consent to develop, build,
construct, expand and maintain and lease and alter or raze any
Outlot or alter, expand or raze any of Landlord's Buildings of
which Landlord is the owner or which Landlord leases and is not
leased to Tenant under this Lease at the time in question, and
Landlord shall have the exclusive right to create, develop,
construct and maintain new Outlots and buildings and
improvements thereon. (See also the last sentence in Section
6.02 hereof.) In performing any activities authorized by this
Section 15.04, Landlord shall comply with all Requirements and
shall not impair the structural integrity of the Venture
Building as a result of any construction and shall not
unreasonably interfere with Tenant's business activities at the
Shopping Center.
ARTICLE XVI
Destruction and Restoration
Section 16.01. Subject to the provisions of Section 16.04
hereof, in case of any damage to or destruction of the
Improvements which constitute the Demised Premises by fire or
any other cause, Tenant, at Tenant's sole cost and expense,
whether or not the insurance proceeds, if any, shall be
sufficient for the purpose, and irrespective of the amount of
any loss, shall restore, repair, replace, rebuild or alter the
same (collectively referred to as "Restoration") as nearly as
possible to their value, condition and character immediately
prior to such damage or destruction or with such reasonable
changes or reasonable alterations as may be desired by Tenant
for sound business reasons, but in conformity with and subject
to the conditions of Article XV. Such Restoration shall be
commenced and prosecuted with due diligence in good faith.
In case of damage to or destruction of any of the
Improvements in the Shopping Centers by fire or other cause,
Tenant shall promptly give written notice thereof to Landlord.
Section 16.02. All insurance money paid as provided in
Section 5.05 for damage or destruction, less the actual costs,
fees and expenses, if any, incurred in connection with the
adjustment of the loss, if an amount up to $150,000, shall be
paid to Tenant, and if over $150,000, shall be paid to the
Insurance Trustee, held in trust in all cases (including whether
held by Tenant or over $150,000 and held by the Insurance
Trustee), and applied to the payment of the cost of the
aforesaid Restoration, including cost of demolition and
temporary repairs and for the protection of property pending the
completion of permanent Restoration paid out from time to time
to Tenant or in accordance with its directions, as Restoration
progresses on the written approval of Landlord and the written
request of Tenant which shall be accompanied by the following:
(a) A duplicate original copy of all the
construction contracts and all supporting documents
relating to a request for money and certificate signed
by Tenant's regular Vice President, dated not more
than 30 days prior to such request, setting forth the
following:
(1) That the sum then requested either
has been paid by Tenant, or is justly due to
contractors, subcontractors, materialmen, engineers,
architects or other persons who have rendered services
or furnished materials for the Restoration therein
specified, the names and addresses of such persons, a
brief description of such services and materials, the
several amounts so paid or due to each of said persons
in respect thereof, that no part of such expenditures
has been or is being made the basis in any previous or
then-pending request for the withdrawal of insurance
money or has been made out of the proceeds of
insurance received by Tenant, and that the sum then
requested does not exceed the cost of the services and
materials described in the certificate;
(2) That, except for the amount, if
any, stated in such certificate to be due for services
or materials and except for any amount to be withheld
pursuant to a directly related construction contract,
there is no outstanding indebtedness known to Tenant,
after due inquiry, which is then due and payable for
labor, wages, materials, supplies or services in
connection with such Restoration which, if unpaid,
might become the basis of a vendor's, mechanic's,
laborer's or materialman's statutory or similar lien
upon such Restoration or upon Tenant's leasehold
interest in the Demised Premises; and
(3) That the cost, as estimated by
Tenant, of the Restoration required to be done
subsequent to the date of such certificate in order to
complete the same, does not exceed the insurance
money, plus any amount deposited by Tenant to defray
such cost and remaining in the hands of the recipient
designated in Section 5.05 hereof after payment of the
sum requested in such certificate.
(b) If requested by Landlord, evidence reasonably
satisfactory to Landlord to the effect that there has not
been filed with respect to the Demised Premises or
Tenant's leasehold interest any vendor's, mechanic's,
laborer's, materialman's or other similar lien, which has
not been discharged of record, except such as will be
discharged by payment of the amount then requested.
In the event that any such Restoration involves
expenditures in excess of $250,000, the certificate required by
paragraph (a) of this Section shall be a certificate signed by
the architect or engineer in charge of the Restoration, selected
by Tenant and reasonably satisfactory to Landlord.
If the insurance money at the time held by the recipient
designated by Section 5.05 hereof, less the actual costs, fees
and expenses, if any, incurred by Landlord in connection with
the adjustment of the loss, shall be insufficient in the
reasonable judgment of Landlord to pay the entire cost of such
restoration, Tenant shall pay the deficiency to said recipient,
prior to commencement of construction, or, if construction is
underway, prior to continuation of the construction and before
the next requisition for insurance moneys need be honored.
Upon the receipt by said recipient of satisfactory
evidence, of the character required by the foregoing provisions
of this Section 16.01, that the restoration has been fully
completed and paid for in full and that there are no liens of
the character referred to therein, and there is no Event of
Default by Tenant under this Lease, any balance of the insurance
money at the time held by said recipient shall be paid to
Tenant, and if there is then existing an Event of Default, paid
to Landlord to be applied to cure the Event of Default.
Section 16.03. No destruction of, or damage to the Demised
Premises or the Shopping Centers or any part thereof, by fire or
any other cause shall permit Tenant to surrender this Lease or
shall relieve Tenant from its obligations to pay the full Basic
Rent and other Rent or relieve Tenant from any of its other
obligations under this Lease; and to the extent not prohibited
by applicable law, Tenant waives any rights now or hereafter
conferred upon it by statute or otherwise to quit or surrender
this Lease or the Demised Premises or any suspension,
diminution, abatement or reduction of rent on account of any
such destruction or damage.
Section 16.04. With respect to buildings situated on an
Outlot, if any exist, on a Property, the restoration of such
Outlot buildings shall be performed as specified in the Outlot
Lease; provided, however, Tenant shall not be obligated to
rebuild or restore any Improvements on an Outlot which is a
Transferred Lease or if the Outlot Lease is a Collateral Lease
and does not require restoration or rebuilding, but in any case,
Landlord shall be entitled to receive all the insurance proceeds
for the full replacement cost from the insurance company for the
loss or damage of the Improvements on the Outlot if the Outlot
constituted one of Landlord's Buildings or if the Outlot Lease
was a Collateral Lease and Tenant does not restore or rebuild.
Tenant will use reasonable commercial efforts to enforce the
Outlot Leases to compel the tenant or subtenant to restore if
the Outlot Lease so provides. If restoration is not required to
be performed, or if required but Landlord waives such
requirement, Tenant, at its expense, agrees to promptly raze the
damaged building and other improvements on the Outlot and pave
it for parking, landscaping or other appropriate use, so that
the former Outlot is integrated aesthetically with the Property.
Section 16.05. In the event any of Landlord's Buildings
is damaged or destroyed by casualty, and if Landlord does not
restore the building, Landlord shall promptly clear all debris
remaining from the damage and either repair and put the
remaining building in a sightly condition or raze the building
remains and keep the area of the former building sightly at its
own expense.
ARTICLE XVII
Quiet Enjoyment
Section 17.01. Landlord agrees that, upon paying the Rent
and all other charges herein provided for and observing and
keeping all covenants, agreements and conditions of this Lease
on its part to be observed and kept, Tenant shall quietly have
and enjoy the Demised Premises during the term of this Lease
without hindrance or molestation by Landlord, subject, however,
to the provisions of this Lease and to all matters which now
affect the Demised Premises including, without limitation, the
Underlying Leases, the Existing Mortgages and all matters
affecting title to the Demised Premises, whether or not of
record, and the rights and interests of persons and tenants in
possession.
ARTICLE XVIII
Eminent Domain
Section 18.01. In the event that a Property or Properties
or any portion thereof shall be taken in condemnation
proceedings or by exercise of any right of eminent domain or by
agreement between Landlord and Tenant and those authorized to
exercise such right (hereinafter referred to as "condemnation
proceedings" or a "taking"), Landlord shall be entitled to
collect from any condemnor the entire compensation that may be
awarded in any such proceedings for the Property or Properties
so taken, including without limitation, the fee title (as to Fee
Title Properties), the Improvements, Landlord's reversion and
all leasehold interests, without deduction therefrom for any
estate hereby vested in or owned by Tenant or any estate vested
in any other tenant or subtenant, subject, however, to the
rights of Tenant as set forth in this Article. Tenant agrees to
execute any and all further documents that may be required in
order to facilitate collection by Landlord of any and all such
awards.
Section 18.02. If at any time during the term of this
Lease there shall be a total taking (as hereinafter defined) of
all of a portion of the Demised Premises situated on a
particular Shopping Center, then this Lease shall terminate and
expire only with respect to the particular portion of the
Demised Premises so taken on the date of surrender of possession
to the condemning authority of the particular portion of the
Demised Premises on that Property so taken as a result of such
total taking. In the event this Lease terminates as to a
particular portion of the Demised Premises on that Property as
the result of a total taking, Tenant shall continue to pay in
full the Rent hereunder and, shall in all other respects, keep,
observe and perform all the terms, covenants, agreements,
provisions, conditions and limitations of this Lease to be kept,
observed and performed by Tenant until the date of such
surrender. Thereafter, that particular portion of the Demised
Premises shall be deleted from this Lease and not be a part of
the Demised Premises and the annual Basic Rent shall be reduced
in an amount equal to the product obtained by multiplying the
amount of the Net Award received by Landlord by 12-3/4 percent;
but in no event, however, shall the annual Basic Rent be reduced
by an amount greater than $200,000 per year during the Initial
Term or $400,000 during an Extended Term; and this Lease shall
remain in full force and effect as to the remaining portions of
the Demised Premises. As used herein "total taking" shall mean
(a) a taking of the whole of the demised Premises on that
single, individual Property, or (b) a taking of less than the
whole of the Demised Premises on that single, individual
Property, but, the taking is of such a substantial part of that
Property which that it results in the portion of the Demised
Premises on that Property remaining after such taking (even if
Restoration were made) being economically infeasible for the use
of that particular portion of the Demised Premises on that
Property. A taking of a portion or portions of areas of a
single, individual Property being utilized for parking purposes
shall not constitute a total taking unless there is taken 20% or
more of the area of the Land area of that particular Property
which is used or useable for parking and Landlord does not
provide an adequate alternative parking area or facility for
such use (including areas to which a REA, if any, applies).
Section 18.03. In the event of a total taking affecting
one or more of the Properties as aforesaid, then and in such
event the proceeds of the entire award for such taking which are
left after paying all legal fees and other expert fees and other
expenses of collection and after the Overlandlord receives the
proceeds, if any, to which it is entitled ("Net Award") shall be
paid to Landlord as Landlord's property, and Tenant shall not be
entitled to any portion of the award for the value of Tenant's
leasehold interest in the Property taken or otherwise.
No claim or demand of any kind shall be made by Tenant
against Landlord or against an Overlandlord or the condemning
authority or any other party by reason of such termination or
taking.
Section 18.04. If at any time during the term of this
Lease there shall be a taking of only a part of a particular
Property which is not a total taking as defined in Section 18.02
hereof (which said taking is hereinafter called a "Partial
Taking"), this Lease shall not terminate as to such Demised
Premises on that Property and Tenant shall promptly, except for
Unavoidable Delays, in compliance with the provisions of Article
XVI of this Lease, repair any damage to the Demised Premises or
the Property resulting from such partial taking, and of the
Improvements so damaged so as to render the same as nearly as
possible a complete and satisfactory architectural unit of the
same type and class immediately preceding such taking, unless
Landlord elects as to Landlord's Buildings not to restore or
replace Landlord's Buildings, as stated in clause (b) of this
Section 18.04.
In the event of a Partial Taking as aforesaid, as
compensation for the respective interests of Landlord and Tenant
taken as aforesaid the Net Award, subject to the Underlying
Leases and Existing Mortgages, shall be allocated, applied and
distributed as follows and in the following order of priority:
(a) So much thereof as shall be reasonably
necessary to repair any damage to the Property, or any
part thereof, resulting from such Partial Taking, and to
demolish, alter, restore, replace or repair the portion of
the Improvements so damaged so as to render the same as
nearly as possible a complete and satisfactory
architectural unit of the same type and class immediately
preceding such Partial Taking as provided above, shall be
made available to Tenant for the purposes aforesaid
substantially in the same manner and subject to the same
conditions as those set forth in Article XVI hereof with
respect to insurance proceeds and other moneys, and
(b) Landlord shall be entitled to retain the
entire remainder of the Net Award as compensation for its
interest in the Property thus taken.
In the event the cost of said repairs, demolitions, alterations,
restoration, replacement or rebuilding of the Demised Premises
shall exceed the award, Tenant shall pay the deficiency.
Landlord shall not be obligated to restore or replace or have
Tenant restore or replace any Landlord's Buildings unless
Landlord elects to do so, but to the extent Landlord receives
and retains the Net Award Landlord shall restore or rebuild the
Common Areas remaining after the taking.
Notwithstanding the event of a Partial Taking, the Basic
Rent payable in the amounts as provided in Sections 3.01 and
25.02 shall continue and shall not be suspended, waived,
diminished or reduced or the payment thereof interrupted,
delayed or deferred, excepting that if Landlord shall actually
receive and retain as its own funds any remainder of the Net
Award pursuant to clause (a) or, remaining after Landlord spends
money to restore Landlord's Buildings, retained pursuant to
clause (b) above, the annual Basic Rent shall be reduced in an
amount equal to the product obtained by multiplying by 12-3/4
percent the amount of the Net Award actually received and
retained by Landlord, if any, after Landlord has applied and
distributed the net award for the repair of the remaining
Property in accordance with clause (a) in Section 18.04.
Section 18.05. In the event of any dispute between
Landlord and Tenant as to whether a total taking within the
meaning of this Lease shall have occurred (including an
assertion by Tenant that is has the right to terminate this
Lease as to the particular Property affected pursuant to Section
18.02, clause (b) therein), or as to the amount of the
Restoration fund, such matters shall be determined by
arbitration as provided in Article XXI of this Lease.
Section 18.06. If all or any portion of the Demised
Premises is taken by the exercise of the right of eminent domain
for governmental occupancy for a limited period for less than
the term then remaining ("Temporary Taking"), this Lease will
not terminate and Tenant will continue to perform all of
Tenant's obligations as though such taking had not occurred
(except to the extent that Tenant is prevented from doing so by
reason of such taking; provided, in no event will Tenant be
excused from the payment of Rent and all other charges required
to be paid by Tenant under this Lease). In the event of such
Temporary Taking, Tenant will be entitled to receive the entire
amount of any award made for such taking (whether paid by way of
damages, rent or otherwise) and Landlord hereby assigns such
award to Tenant, unless the period of governmental occupancy
extends beyond the end of the Lease Term, in which case the
award will be equitably apportioned between Landlord and Tenant.
To the extent possible, Tenant agrees to restore the
Improvements to the condition which existed prior to such
Temporary Taking at Tenant's expense at the termination of any
such governmental occupancy.
Section 18.07 Nothing herein contained shall prevent
Tenant from maintaining or prosecuting its own independent
action in such condemnation proceeding for a separate damage
award for the value of any Tenant's Trade Fixtures and other
removable personal property or for relocation expenses and
damages for interruption of Tenant's business; provided,
however, that no such award to Tenant shall reduce, affect or
compromise the amount of Landlord's award pursuant to Section
18.01 or 18.03, which shall have priority, and if it would
reduce Landlord's benefits and compensation for the fee title,
if any, of Landlord or the leasehold value, Tenant shall not
make such claim for those damages.
ARTICLE XIX
Assignments and Subleases; Leasehold Properties;
Space Leases, Outlot Leases and Vacant Areas
Section 19.01. All the provisions contained in this
Article XIX shall be subject to Underlying Leases, Existing
Mortgages, Covenants, restrictions or limitations or covenants
contained in any agreements, leases, subleases, licenses, REAs
or any other documents of record or in any documents to which
Tenant is a party or is bound, and shall be also subject to all
laws. Without the prior written consent of Landlord, Tenant
may, subject, however, to each and every provision of this
Lease, sublet all or any portion of the Demised Premises. In
conjunction with a permitted subletting for which Tenant has
entered into a signed sublease, Tenant may divide any Venture
Buildings into different storerooms, but Tenant shall not
subdivide any Venture Building into different stores or
storerooms to the extent and degree whereby at all times and
after all subdivisions have been done at least 50% of the gross
square feet of the original size of the Venture Building (i.e.
when the Building was first built and occupied as a "Venture"
department store) does not remain as one storeroom designed for
retail use. Tenant may in any or all of the Venture Buildings
enter into agreements for concessions and licenses relating to
uses and purposes consistent with the permitted uses applicable
to the space permitted under Article VI. Any sublease entered
into by Tenant must provide for a commercially reasonable fixed,
basic rent payable monthly; any dispute on the issue of whether
the rent is at a commercially reasonable value shall be
determined by arbitration.
Tenant may assign or transfer its entire interest in this
Lease (but not less than its entire interest) without Landlord's
consent. However, Tenant shall always remain fully and
primarily liable under this Lease notwithstanding any
assignment, and the assigned Lease shall not derogate from the
fact or operate to change the fact that every Property affected
by Tenant's assignment remains covered by this Lease, a single,
unitary Lease covering all the Properties.
No sale, assignment or transfer of this Lease by Tenant
shall be effective until there shall have been delivered to
Landlord a duplicate original of such assignment containing an
agreement, in recordable form, executed by the assignor and the
proposed assignee whereby such assignee assumes the Lease and
the assignee shall agree, expressly for the benefit of Landlord,
to keep and perform and be bound, subject to the foregoing, by
each and all of the covenants, conditions, restrictions and
provisions in this Lease contained on the part of Tenant, and
any such sale, assignment or transfer shall be subject to each
and all of such covenants, conditions, restrictions and
provisions. Any purported sublease, sale, assignment or
transfer by Tenant which is not in conformity with the terms of
this Lease shall be void and of no force or effect whatsoever.
Section 19.02. Tenant agrees that each sublease entered
into by Tenant during the Lease Term will contain a provision
whereby the subtenant, at option of Landlord, agrees to attorn
to Landlord in the event of the termination of this Lease
whether such subtenant holds a non-disturbance agreement or not.
Within thirty days after written demand, but not more often than
four times each year, Tenant will furnish to Landlord a
schedule, certified as correct by Tenant, setting forth all
leases and subleases then in effect including the names of the
tenants thereunder, a description of the sublet demised premises
and the amount of annual rent and other payments (with a copy of
the lease, if requested) payable by each tenant thereunder. It
is understood that Landlord's consent or Tenant's right to
sublet shall neither (expressly or by implication) obligate
Landlord to grant any non-disturbance rights to the subtenant,
or any other rights from Landlord to the subtenant, except as
expressly stated in this Lease, nor grant the subtenant any
right of possession, use or occupancy for a term lasting beyond
the end of the term of this Lease (whether it ends by effluxion
or early termination), except as otherwise agreed to in a
non-disturbance agreement given to such subtenant, if any, nor
grant the subtenant any rights to awards in eminent domain or
other moneys beyond the Tenant's rights relating to such awards
under this Lease, and such subleases shall be subject and
subordinate to and the subtenant bound by this Lease.
Section 19.03. (a) As to certain Existing Leases covering
portions of the Shopping Centers, which are in effect at the
date of this Lease and which have been assigned by Tenant to
Landlord by unconditional assignments of leases
contemporaneously with the making of this Lease and each such
assignment dated the same date as this Lease (herein sometimes
referred to as "Transferred Leases"), Tenant (as landlord
thereunder) has assigned its entire interest in those leases
unconditionally to Landlord. As to all the other Existing
Leases covering other portions of the Shopping Centers at the
date of this Lease (herein sometimes referred to as "Collateral
Leases"), Tenant has assigned those leases to Landlord pursuant
to collateral assignments of leases, as additional security to
Landlord for Tenant's liability under this Lease. Tenant will
assign also to Landlord, as additional security to Landlord for
Tenant's liability under this Lease, its interest as landlord
under all future subleases hereafter entered into by Tenant and
all such future subleases shall also be "Collateral Leases"
under this Lease; the assignments to be used, both the
unconditional and conditional, shall be prepared by Landlord's
attorney, subject to Tenant's reasonable approval.
(b) Intending for Landlord to retain the
security interest in the Collateral Leases described in Section
19.03(a) and without relinquishing, diminishing or impairing
such security interest in and to the Collateral Leases, Tenant
hereby assumes and agrees to perform and observe the landlord's
obligations under each and all the Collateral Leases and agrees
to defend, indemnify Landlord and hold Landlord harmless from
and against all liabilities and obligations relating to or
arising out of all of the Collateral Leases and any and all
future subleases entered into by Tenant, and Tenant shall have
all the liabilities and obligations as the landlord arising out
of said Collateral Leases and said future subleases, including,
without limitation, all brokerage commissions or fees, if any,
associated with any of said Collateral Leases or future
subleases. If an Event of Default under the Lease occurs and is
continuing, Landlord shall have the right immediately to receive
and retain the rent, issues and profits from the Collateral
Leases and shall apply same (after deducting costs of
collection) towards curing Tenant's default, but any collection
of rent shall not be deemed to be a recognition or
non-disturbance agreement in favor of the tenant or subtenant.
(c) Landlord and Tenant will, upon signing
this Lease and thereafter from time to time, cause the
appropriate UCC-1 and UCC-3 Financing Statements to be signed
and filed and re-filed to perfect the lien and maintain the
priority of the collateral assignment of the Collateral Leases.
Tenant will execute and deliver a separate instrument of
collateral assignment prepared by Landlord's lawyer, if
requested by Landlord, for each Collateral Lease as well as for
each Transferred Lease.
Section 19.04 If a proposed subtenant desires a
non-disturbance agreement from Landlord as a prerequisite to
entering into the sublease, Tenant shall notify Landlord in
writing accompanied by the proposed sublease and information
regarding the proposed subtenant, its business, operations and
financial condition, and any Changes, new structures or other
alterations or improvements as may be proposed and other
information Landlord reasonably requests. Landlord shall not be
obligated to grant a non-disturbance agreement with respect to
a sublease of all or any portion of a Venture Building or all or
any portion of the rest of any Land (other than an Outlot, which
is dealt with in Section 19.05), except if each and all the
following conditions precedent are satisfied:
(i) the proposed sublease form shall contain
commercially reasonable terms and shall provide for the
subtenant to pay a fixed, basic rent (separate from the
additional rent payments such as for common area
maintenance, taxes and insurance and the like) equivalent
to the fair rental value then prevailing in the city or
town where the Property is located, and the proposed
sublease, in addition to meeting the requirements just
mentioned, shall be a net lease and shall contain and be
on terms, provisions and conditions at least as favorable
to Landlord as contained in this Lease including, without
limitation the foregoing, and also the provisions
contained in Section 27.06; to determine what is fair
rental value, all money or other consideration, if any,
(such as a lump sum payment) to be paid by or on behalf of
the tenant in addition to fixed, basic rent (hereinafter
referred to as the "Gross Premium") shall be divided by
the number of years in the initial term of the lease
(without counting renewal options) and the resultant
number (hereinafter called the "Annual Premium") shall be
added to the annual fixed, basic rent, and it shall be an
irrebuttable presumption that the total of the fixed,
basic rent stated in the lease plus the Annual Premium is
the fair rental value, and either the lease shall be
amended to provide that the tenant shall pay the higher
annual fixed, basic rent (which includes the Annual
Premium), or Landlord shall be paid the entire Gross
Premium in which case the lease need not be amended; and
this Gross Premium formula and the presumption shall apply
to Sec. 19.05(i) as well; and
(ii) the subtenant's proposed use of the
sublet space shall be a permitted use under this Lease;
and
(iii) the proposed subtenant shall have a net
worth of at least $50,000,000; and
(iv) any proposed Change, new structure or
other change or alteration shall comply in all respects
with this Lease; and
(v) the sublease shall be absolutely "net" to the
landlord thereunder and shall provide in addition to said
fixed, basic rent that the subtenant's payments of
Impositions and insurance premiums and payments toward all
repairs and maintenance of the Property and other Rent
shall not be less than a proportionate share based on the
ratio of the subtenant's building's square footage to the
square footage of the entire buildings (including the
subtenant's building's square footage) on the property
where the subtenant's building is situated, and that no
payments or rent will be paid more than one month in
advance, and the sublease shall provide that modification
or cancellation of the sublease without Landlord's prior
written consent shall not be binding on Landlord; and
(vi) the sublease shall be expressly subject
and subordinate to this Lease and the length of the entire
term of the sublease including options will not extend
beyond August 31, 2052 and the subtenant thereunder shall
agree to be bound, as to the space demised under the
sublease, by all the provisions of this Lease (other than
the provisions of this Lease which make this Lease a
unitary Lease and other than the Rent payments provided
for in this Lease); and
(vii) the subleased premises shall be for
50,000 square feet or more and the shape thereof shall be
rectangular with same width in frontage as in rear; and
(viii) Tenant shall pay Landlord's attorneys' fees
for review of Tenant's documents, negotiations, if any, and
other services in regard to such subletting.
If both the subtenant and the sublease meet all of the
foregoing conditions, Landlord shall provide the proposed
subtenant with a subordination, non-disturbance agreement in the
form attached as Exhibit C.
If Tenant enters into a sublease, and whether or not
Landlord's consent is required with respect thereto, Tenant
shall deliver to Landlord an executed counterpart of such
sublease or any subsequent amendments or modifications thereof,
within thirty days after Tenant entered into such sublease,
amendment or modification.
Section 19.05. As to a subtenant of an Existing Lease to
whom Tenant has prior to the date of this Lease subleased an
Outlot on any Property where such Outlot is permitted under this
Lease, Landlord shall enter into a subordination,
non-disturbance agreement with such subtenant in the form of
attached Exhibit C provided all of the following listed
conditions precedent are satisfied: Landlord shall not be
obligated to grant a non-disturbance agreement with respect to
a sublease of all or any portion of an outlot, except if:
(i) the sublease form contains commercially
reasonable terms and shall provide for the subtenant to
pay a fixed, basic rent (separate from the additional rent
payments such as for common area maintenance, taxes and
insurance and the like) equivalent to the fair rental
value then prevailing in the city or town where the
Property is located (see Gross Premium formula method in
Sec. 19.04(i) hereof, which shall apply in this Section
19.05 also), and the Existing Lease, in addition to
meeting the requirements just mentioned, is a net lease
and contains terms, provisions and conditions at least as
favorable to Landlord as contained in this Lease
including, without limitation, the foregoing and also the
provisions contained in Section 27.06; and
(ii) the subtenant's proposed use of the sublet
space shall be a permitted use under this Lease; and
(iii) the subtenant has a net worth of at least
$5,000,000; and
(iv) any proposed Change, new structure or other
change or alteration shall comply in all respects with
this Lease; and
(v) the sublease shall be absolutely "net" to the
landlord thereunder and the subtenant is totally
responsible at its expense for all cleaning, repairs,
replacements and maintenance of the Outlot and the
Improvements thereon, and the subtenant is responsible to
pay all the Impositions, taxes and assessments and
insurance and other costs, fees, charges and expenses
attributable to the Outlot and the Improvements and Trade
Fixtures and the business conducted thereon, and the
subtenant agrees that no rent or other payments will be
paid to the sublandlord or anyone else for a period more
than one month in advance, and the sublease states that
modification or cancellation of the sublease without
Landlord's prior written consent shall not be binding on
Landlord; and
(vi) the sublease shall be expressly subject and
subordinate to this Lease and the length of the entire
term of the sublease including options will not extend
beyond August 31, 2052 and none of the provisions of the
subtenant's lease violates this Lease and the subtenant
thereunder shall agree to be bound, as to the area or
space demised under the sublease, by all the provisions of
this Lease (other than the provisions which make this
Lease a Unitary Lease and other than the Rent payments
provided for in this Lease); and
(vii) Tenant pays Landlord's attorneys' fees for
review of documents, negotiations, if any, and other
services in regard to such subletting or subordination,
non-disturbance agreement.
If both the subtenant and the sublease meet all of the
foregoing conditions, Landlord shall enter into, with the tenant
of the Existing Outlot Lease and Tenant herein, with a
non-disturbance agreement in the form attached as Exhibit C.
Section 19.06. The following provisions in this Section
19.06 shall apply specifically to each of those Properties which
is a Leasehold Property, and shall apply, regardless whether
after the date of this Lease the owner of the fee title of a
Leasehold Property changes, that is, regardless of the identity
of the Overlandlord. Because this Lease is a sublease as to
each of the Properties which is a Leasehold Property, these
following provisions numbers (1) through (15) inclusive shall be
applicable only to a Leasehold Property; not applying to any Fee
Title Property. The following provisions are in addition to the
other provisions of this Lease which apply to all of the
Properties, including the Leasehold Properties, and these
following provisions shall not substitute for or replace the
other provisions in this Lease, except to the extent the
following provisions conflict with the other provisions in this
Lease, in which case these following provisions shall govern as
to a Leasehold Property:
(1) No Leasehold Property shall be used or occupied,
or permitted or suffered to be used or occupied, by Landlord or
Tenant or any party claiming by or through Landlord or Tenant
for any use, purpose or activity which is not permitted by the
Underlying Lease for such Leasehold Property.
(2) Tenant, insofar as applicable to the Demised
Premises, and Landlord insofar as applicable to Landlord's
Buildings, shall at its sole expense, (i) comply with the
Underlying Leases, and with all applicable legal requirements
pursuant to the Underlying Leases, and (ii) shall comply
pursuant to the Underlying Leases with the requirements of all
policies of insurance of whatsoever nature which Landlord or
Tenant is required to maintain pursuant to the Underlying
Leases.
(3) Tenant acknowledges that this Lease, and Tenant's
and Landlord's occupancy on a Leasehold Property, are subject to
and subordinate to the Underlying Leases. Tenant agrees that
the terms, covenants, provisions and conditions of the
Underlying Leases applying to Landlord as the tenant thereunder,
to the extent said Underlying Leases apply to the Demised
Premises, shall apply directly to Tenant, and Tenant hereby does
and shall assume and perform fully all the duties, obligations,
liabilities and undertakings of Landlord as the tenant under
each and all of the Underlying Leases, including, without
limitation, as additional rent under this Lease, payment of all
the fixed, basic rents and additional rents and other payments
to be made pursuant to the Underlying Leases, whether arising
before or on or after the date of this Lease even though the
Underlying Lease may cover both Demised Premises and Landlord's
Buildings, such payments to be made to Landlord at the same time
as Basic Rent and shall be paid by Tenant in addition to the
Base Rents and shall be made by wire transfer of immediately
available Federal funds in the bank account designated by
Landlord. In the event of any inconsistency between the terms,
covenants, provisions and conditions of any such Underlying
Lease and the terms, covenants, provisions and conditions of
this Lease as applies to the Demised Premises or, so long as
Tenant is the Responsible Party, as applies to Common Areas, on
a Leasehold Property, in that the Underlying Lease imposes an
obligation or liability on the tenant thereunder (and therefore
on Tenant under this Lease by virtue of Tenant's assumption
thereof) which is stricter or broader or more onerous or not
covered by this Lease, then, even though the subject matter may
be one which is the same in both the Underlying Lease and this
Lease, the terms, covenants, provisions and conditions of the
Underlying Lease with respect to such obligation or liability
shall control and be complied with by Tenant except if expressly
stated in this Lease otherwise.
Tenant and Landlord each agrees that it will not
do, or cause or suffer to be done, any act (whether of
commission or omission) which would result in a breach of or
default under any term, covenant, provision or condition of any
Underlying Lease.
Tenant agrees to furnish reports of sales and all
other data which Tenant is obligated to furnish the Overlandlord
under the Underlying Leases.
(4) Except if specifically and expressly stated
otherwise in this Lease, Landlord shall have no responsibility
or liability to provide any services to Tenant with respect to
either the Demised Premises, or for performing any of the
duties, obligations, liabilities or undertakings of any landlord
or tenant under any Underlying Lease as it applies to the
Demised Premises or to the Shopping Center. Landlord agrees,
however, that in cases where Landlord's cooperation is necessary
to enforce rights of the tenant under any of the Underlying
Leases, Landlord will use its reasonable efforts to cause the
Overlandlords to perform their duties, obligations, liabilities
and undertakings thereunder, provided Tenant agrees to and does
bear the expense and reimburse Landlord for any and all expenses
including experts and attorneys' fees incurred by Landlord in
connection therewith. To the extent that to do so does not
prejudice or impair the rights and remedies intended to be
enjoyed by Landlord under this Lease and does not in any manner
or to any degree increase the duties, obligations, liabilities
or undertakings of Landlord and does not modify or terminate an
Underlying Lease, Landlord agrees to otherwise cooperate with
Tenant so that all of the rights and benefits of the Underlying
Leases intended to be enjoyed by the prime tenants thereunder
shall be available to Tenant, except Tenant shall not have or
enjoy any options to cancel or terminate an Underlying Lease, or
surrender the premises covered by an Underlying Lease, or to
renew or to extend an Underlying Lease, or to purchase the fee
title, or to exercise rights of first refusal, or have any
rights to encumber, assign or sublet the interest of the tenant
under the Underlying Leases, or rights to build additional
buildings. Apart from assisting Tenant, at Tenant's full cost
and expense and without expense to Landlord, there shall be no
effect on this Lease, no liability imposed on Landlord and no
adverse circumstances to Landlord for Tenant's or Landlord's
failure to obtain any non-disturbance agreement from the
Overlandlord for any reason; Landlord not covenanting or
warranting Landlord's or Tenant's ability to obtain such
agreement or that Landlord itself will become a party to such
agreement if one can be obtained.
(5) In addition to other indemnification provisions
by Tenant in this Lease, and not in limitation thereof, Tenant
hereby agrees to and shall defend, indemnify and save Landlord
(in its capacity as tenant under the Underlying Leases and
assumer of the Underlying Leases only) harmless from and against
any and all liabilities, claims, demands, actions, suits,
losses, damages, costs and expenses (including experts' and
attorney's fees), arising before or on or after the date of this
Lease, that may be based on or asserted or alleged to be based
on any breach by Tenant of any term, covenant, provision or
condition of any Underlying Lease.
(6) In the event of any damage or destruction, or in
the event of any taking as a result of or in lieu of
condemnation or eminent domain of all or part of any Leasehold
Property, the terms, covenants, provisions and conditions of the
Underlying Lease for such Leasehold Property shall not be the
controlling instrument as between Landlord and Tenant, but the
provisions of this Lease relating to such event shall control
exclusively between Landlord and Tenant; that is, insofar as
Landlord or Tenant is not prevented by the terms of the
Underlying Lease or the consequences of the casualty or the
taking arising out of the provisions of the Underlying Leases or
Existing Mortgages applicable to the casualty event, and
Landlord is able to carry out the terms of this Lease in such
cases. Landlord shall not be required to assign any of
Landlord's rights as tenant under, or to pay over any amounts to
Tenant received by Landlord pursuant to, any of the Underlying
Leases by reason of any award or other payment relating to such
damage, destruction or taking.
(7) Landlord shall not modify any Underlying Lease
without Tenant's consent, which Tenant agrees not to
unreasonably deny or delay. Landlord shall not voluntarily
terminate such Underlying Lease for any reason without Tenant's
written consent. If Landlord defaults under an Underlying
Lease, then Tenant (upon reasonable advance written notice to
Landlord and Landlord's Mortgagee, unless the Underlying Lease
is in imminent danger of termination, in which case notice that
is feasible under the circumstances shall be given to Landlord
and said Mortgagee) may cure such default if after the notice
Landlord fails to take steps to effect such cure, and if Tenant
validly cures on Landlord's behalf Tenant may offset reasonable
cure expenses against the Base Rent payable to Landlord under
this Lease.
(8) Subject to clause (4) of this Section 19.06, the
performance by Overlandlord of Overlandlord's obligations in
accordance with any of the Underlying Leases, shall, for all
purposes, be accepted by Tenant, and shall be deemed to be the
performance of such obligations by Landlord under the provisions
of such Underlying Lease and also under this Lease to the extent
the obligations are the same, and in such case Tenant shall
neither look to Landlord for performance of such obligations nor
seek to hold Landlord liable for performance of such obligations
or for the manner of performance of such obligations or for any
default in performance or non-performance of such obligations;
(9) Whenever, by reason of Tenant's assumption of
all the obligations contained in an Underlying Lease as provided
in clauses (2) and (3) of this Section or otherwise, any
provision of the Underlying Lease requires the tenant thereunder
to make any payment of any money, including, without limitation,
the fixed, base rent payable thereunder, or requires such tenant
to take any action within a certain period of time (whether with
or without notice), then, notwithstanding that a provision in
this Lease calls for such payment to be made or action to be
taken at a different time, Tenant shall make such payment to
Landlord or take such action, as the case may be, within the
time specified in the Underlying Lease; and if such payment or
taking such action is required to be paid or done within a
specified time period after notice or receipt of an invoice,
then upon such notice or upon receipt of such invoice, Tenant
shall make such payment or take such action, as the case may be,
no later than ten days prior to last day of such time period
(excluding, however, installments of fixed, base rent under the
Underlying Leases which upon receiving such payments from Tenant
shall be paid by Landlord to the Overlandlord pursuant to the
Underlying Lease, Tenant being obligated to pay to Landlord in
this Lease, as additional rent, an amount which always shall
equal the fixed, base rent and other rent payments and money
payments payable under the Underlying Lease;
(10) Whenever any provision of an Underlying Lease
requires the Overlandlord to give notice or submit an invoice to
the tenant thereunder and Landlord has received such notice or
invoice but Tenant has not been given such notice or invoice by
the Overlandlord directly, then Landlord shall notify Tenant by
sending Tenant a copy of said notice or invoice. Such
notification by Landlord to Tenant of said Overlandlord's notice
or invoice shall for all purposes hereunder be deemed timely
given if sent to Tenant within five business days after receipt
by Landlord of the notice from Overlandlord;
(11) Whenever any provision of an Underlying Lease
requires the tenant under the Underlying Lease to obtain the
Overlandlord's consent for any purpose, including obtaining
consent prior to the undertaking of an act or proposed act, and
Tenant desires such consent, such provision shall for all
purposes hereunder be deemed to require the prior written
consent of both Overlandlord and Landlord; provided, however, if
Landlord is willing to consent, Landlord, at Tenant's expense,
shall cooperate to a reasonable extent with Tenant to obtain the
Overlandlord's consent provided Tenant pays all Landlord's
expenses in Landlord's extending such cooperation; and
(12) In the event Tenant contends that Overlandlord
is not observing, complying with or performing its obligations
under the Underlying Lease (thereby perhaps contending that
Landlord has similarly failed to observe, comply with or perform
its obligations under this Lease), or that the other party to an
REA is not observing, complying with or performing its
obligations under the REA, Tenant shall have the right to notify
Landlord of a default of the Overlandlord or the REA Party, as
the case maybe, which notice shall specify the nature of such
default. Landlord shall not be in default. Within five (5)
business days after its receipt of such notice, Landlord shall
give written notice to Overlandlord (in the manner required by
the Underlying Lease), which notice shall specify the nature of
such claimed default in the same manner as was specified in
Tenant's notice to Landlord. Landlord further agrees to extend
assistance to and cooperate with Tenant in order to effectuate
a cure of any alleged default, provided that all costs and
expenses in connection therewith are borne by Tenant. If Tenant
shall have given written notice to Landlord of such default by
the Overlandlord or the REA Party, as aforesaid, and if the
Underlying Lease allows withholding of such payments from the
landlord under the Underlying Lease and if Landlord consents in
writing, Tenant shall also have the right to have Landlord
withhold payments of that portion of the Base Rent payable to
the Overlandlord which is payable by Landlord at that time under
the Underlying Lease in accordance with the applicable
provision, if any, of the Underlying Lease allowing such
withholding of rent, provided, however, if Landlord then
withholds such Underlying Lease rent, Tenant agrees to defend,
indemnify and hold Landlord harmless from and against any and
all loss, cost, expense or liability as a result of the giving
of such notice of default to Overlandlord by Landlord, the
curing of such default by Tenant and the withholding of rent
under the Underlying Lease. Without limiting the generality of
the foregoing indemnity, it is expressly understood and agreed
that in the event the Underlying Lease is lawfully terminated by
Overlandlord as a result of proceedings arising out of the
operation of the provisions of this clause and the Overlandlord
claims against Landlord damages that Landlord is liable for the
loss of Overlandlord's rent, Tenant shall indemnify Landlord
from and against and shall be liable to Landlord for all the
damages that Landlord is liable for to Overlandlord.
(13) With respect to the Demised Premises,
Tenant, and with respect to the Landlord Buildings, Landlord,
shall each respectively comply with or cause the same to be in
compliance with all obligations of the tenant under the
Underlying Lease.
(14) If any provision in this Lease is the same
as a provision in the Underlying Lease, then if in legal or
arbitration proceedings between Landlord and Tenant there is an
interpretation or construction of that provision in the
Underlying Lease by a Court or by an arbitrator or arbitrators,
that will be the interpretation or construction that will apply
to that same provision in this Lease.
(15) Whenever in this Lease rights or privileges
are granted to Landlord or Tenant with respect to any matter or
thing, such rights or privileges shall be exercisable by the
Landlord insofar as the same are not inconsistent with, or in
violation of, the terms, covenants and conditions of the
Underlying Lease with respect to the same matter or thing and
the terms, rights and privileges granted to the Landlord and
Tenant herein, but where the rights and privileges granted by
the Underlying Lease to the tenant thereunder exceed the rights
and privileges granted in this Lease to Landlord or Tenant, then
Landlord or Tenant shall exercise such rights and privileges
only to the extent expressly permitted herein if the result of
exercising the greater rights or privileges in the Underlying
Lease would be detrimental to the other party hereto.
Section 19.07. At any time, and from time to time, during
the Lease Term, Landlord shall have the option to elect (i) to
acquire from Tenant an unconditional assignment of Tenant's
interest in any one or more Space Leases and Outlot Leases which
at the time are Collateral Leases (i.e. to convert them from
Collateral Leases into Transferred Leases); or (ii) to develop
then as yet unimproved Outlot areas or then vacant storerooms of
the Shopping Center (including any vacant storerooms which are
at that time part of the Demised Premises, subject to the
special provisions in the next following paragraph relating to
the case where the Vacant Storeroom was a Venture Store), to
build for Outlot Leases or Space Leases intended to be entered
into by Landlord with future occupants thereof (such unimproved
Outlot areas or being called herein "Vacant Areas" and such
vacant storerooms being called herein "Vacant Storerooms").
Landlord may exercise its option by notifying Tenant that
Landlord desires to receive such assignments or that Landlord
desires to take over and develop Vacant Areas, in each case as
designated by Landlord. Landlord will establish the date for
consummation of the transaction. Landlord's attorney shall
prepare the assignment form. Tenant will execute and deliver
the assignments to Landlord. Tenant agrees to obtain an
estoppel certificate from the tenant whose Space Lease or Outlot
Lease is to be assigned, if such be the case. The estoppel
certificate shall be addressed to and run in favor of both
Tenant and Landlord. The form shall be the form of estoppel
certificate Landlord desires or else the form the Space Lease or
Outlot Lease subtenant is obligated to deliver pursuant to its
sublease if Landlord had asked Tenant to obtain a different form
but Tenant was unable to obtain it. Tenant will use its best
efforts to obtain the estoppel certificates. When obtained,
Landlord shall receive the original estoppel certificate, and
will have opportunity to review it. If Landlord is not
satisfied with the certificate, Landlord may withdraw its
notification to receive the assignment, in which case the Space
Lease or Outlot Lease will continue to be held by Landlord as a
Collateral Lease.
In the event the Vacant Storeroom consists of a storeroom
in all or part of the Venture Building that was occupied by
Venture which became vacated because Venture ceased operating
the Venture Store as a Venture discount department store, that
space shall not be deemed to be a Vacant Storeroom (as used in
Section 19.07 above) until it has remained vacant and unused for
a retail store by Venture or by a subtenant or assignee of
Venture for a period of 360 days (the "Vacancy Period"), at
which time the space will be deemed to be a Vacant Storeroom.
Then, at any time after the Vacancy Period, Landlord shall have
the right, by giving Venture at least 45 days written notice, to
terminate this Lease as it applies to that Vacant Storeroom
solely. Landlord's notice shall specify the termination date,
which shall not be more than sixty (60) days after the date of
the termination notice, and Venture shall surrender and deliver
vacant and exclusive possession of that Vacant Storeroom to
Landlord in physical condition in accordance with the applicable
provisions of this Lease, and from and after the date of such
surrender, that Vacant Storeroom shall be deemed no longer a
part of the Demised Premises and Tenant shall have no further
obligations to pay the additional rent under this Lease as
applies to that storeroom, consisting of the payment of fixed,
basic rent or other payments to the Overlandlord (if that Vacant
Storeroom was located on a Leasehold Property), the CAM Charges,
the insurance, or the Impositions applicable to that storeroom;
nor shall the other provisions of this Lease placing obligations
on Tenant with regard to the Demised Premises be applicable with
respect to that Vacant Storeroom, except the following provision
shall survive: from and after the date that Landlord starts
receiving rent from a tenant who occupies all or any part of the
Vacant Storeroom (the "Rent Payment Date"), with whom Landlord
has entered into a lease ("Replacement Tenant"), Tenant shall be
entitled to a reduction of the Basic Rent under this Lease equal
to the annual Net Cash Flow as described in Section 19.07
hereof, with the same force and effect as if, as of the Rent
Payment Date, Tenant itself had entered into a lease with the
Replacement Tenant and on the Rent Payment Date that lease had
become a Collateral Lease and on that date Landlord had received
an assignment of that Collateral Lease, thereby converting it
into a Transferred Lease. The Rent Payment Date must commence
not later than two hundred and seventy (270) days after the
termination date set forth in the termination notice.
It is agreed that if Landlord desires to develop a Vacant
Area or Vacant Areas or add buildings in Shopping Centers or
expand existing buildings in the Shopping Centers, Landlord
shall have the exclusive right to do so. Tenant shall not have
any right to develop Vacant Areas, expand the Demised Premises
or build additional buildings. Tenant agrees to keep Landlord
informed of all areas that constitute Vacant Storerooms from
time to time, including information and data with respect to
such Vacant Storerooms, upon Landlord's request at reasonable
intervals. Further, Tenant agrees to notify Landlord in writing
prior to each time it intends to enter into a lease or other
occupancy agreement for a Vacant Storeroom.
If Landlord and Tenant consummate the assignment of a
Collateral Lease as described above in this Section 19.07, then,
from and after the date of the assignment (whereby a Collateral
Lease is converted into a Transferred Lease), insofar as
Landlord and Tenant are concerned, Tenant will no longer have
any landlord duties to the tenant under the Transferred Lease
which arise or accrue after the date of the assignment, and the
prior Collateral Lease assignment shall be terminated and the
tenant's existing premises which was covered by the Collateral
Lease shall be deleted from being a part of the Demised Premises
under this Lease and instead will become part of Landlord's
Buildings. Landlord will assume the landlord's duties under the
Transferred Lease as to duties arising or accruing after the
date of the assignment; provided, however, the foregoing shall
not be interpreted as relieving or changing Tenant's obligation
to perform its duties as the Responsible Party, as described
hereinbefore in this Lease. The date of the delivery of the
assignment of the Transferred Lease will be the effective date
of the assignment and Tenant and Landlord, as assignor and
assignee respectively, will prorate the subtenant's rents and
will prorate other items which are customarily prorated, such as
taxes, CAM, etc. With respect to the Transferred Lease,
Landlord will be responsible for all costs and expenses and
shall receive all the benefits accruing or attributable for the
period from and after the date of the assignment, and Tenant
will be responsible for all costs and expenses and shall receive
all the benefits accruing or attributable to the period before
the date of the assignment. By reason of Landlord accepting
such assignment of the Transferred Lease, the Basic Rent payable
by Tenant under this Lease will be reduced as follows: Tenant
will be entitled to a reduction in the annual Basic Rent then
payable under this Lease at the time of the assignment in an
amount equal to the annual Net Cash Flow, if any, applicable to
the Transferred Lease at the time of the assignment. Annual Net
Cash Flow applicable to the Transferred Lease is hereby defined
as an amount, computed and fixed one time as of the date of the
assignment and to be applicable in that fixed amount thereafter
without variation regardless whether the rent or other revenues
or expenses relating to the Transferred Lease premises changes
in any way. The annual Net Cash Flow reduction shall be
computed by taking (1) the amount of the annual fixed, base rent
payable under the Transferred Lease which is payable in the
calendar year in which the assignment occurs, (2) less (i.e.
deducting from the fixed, base rent aforesaid) the total of the
following amounts: (i) for a structural reserve an amount equal
to 15 cents multiplied by the square footage size of the
Transferred Lease premises, and (ii) an amount for a management
fee equal to 3% multiplied by the annual fixed, base rent
aforesaid, and (iii) an amount equal to the annual real estate
taxes and assessments, insurance premiums and costs and CAM
Costs attributable to the Transferred Lease premises to the
extent the Transferred Lease obligates the tenant thereunder to
pay less than 100% of each and all of such costs and expenses,
and (iv) an amount equal to the unamortized amount of all unpaid
broker's commissions, if any, payable under or arising out of
the assigned sublease and all unpaid allowances or contributions
(such as a construction allowance), if any, to be paid to Tenant
or the cost of all uncompleted work, if any, to be done by
Landlord pursuant to the sublease; said unamortized amount being
the amount of the unpaid brokers' commissions, unpaid
construction allowance or the cost of completing the unfinished
work (as the case may be) divided by the number of full calendar
years then remaining in the balance of the then current Lease
Term, not counting subsequent renewal or extension periods. The
resultant number shall be the Net Cash Flow reduction amount.
Tenant will deliver to Landlord any security deposit being held
under the assigned sublease, the original sublease documents,
copies of its file papers for that premises and other pertinent
documents.
As to any Vacant Area or Vacant Areas designated by
Landlord for development or leasing, no reduction of any kind at
any time in the Basic Rent or other Rent payable by Tenant under
this Lease shall occur or accrue to Tenant in such cases.
It is understood and agreed that the provisions for
reduction of the Basic Rent resulting from Landlord's acquiring
a Transferred Lease shall only apply to Collateral Leases and
which Landlord elects to convert into a Transferred Lease in the
future after the date of this Lease; and such reduction shall
not apply to Space Leases which have been or are assigned on or
prior to the date of this Lease or as of the date of this Lease,
Landlord having been assigned certain Space Leases
contemporaneously with the making of this Lease and the agreed
Basic Rent set forth on the attached Schedule of Basic Rents
having been computed and established and agreed to taking into
account these contemporaneous assignments of the Space Lease.
ARTICLE XX
Default and Remedies
Section 20.01. In case any of the following events shall
happen:
(a) Tenant shall at any time fail to pay Basic
Rent, additional rent or any other Rent or any monetary
obligation or shall fail to meet its duty as to the
delivery of any insurance policy required by this Lease,
and any such failure continues for ten days after written
notice thereof to Tenant and still continues after a
second 10-days' written notice thereof to Tenant; or
(b) Tenant shall at any time fail, whether by
action or inaction, to perform or observe or be in default
in any other of its covenants or agreements contained
herein (besides those specified in the immediately
preceding clause (a) above), and such failure shall
continue for thirty days after written notice thereof to
Tenant specifying the default; provided, however, in the
case of failure or default referred to in this clause (b)
is such that by its nature it cannot with due diligence
and in good faith be cured within the thirty days,
Tenant's period of time to cure shall be extended for such
period as shall be reasonably necessary to remedy the same
using all due diligence and good faith, and it shall be a
default if Tenant fails to proceed promptly and with all
due diligence in good faith to cure the same; or
(c) Tenant shall file a voluntary petition in
bankruptcy or shall file any petition or answer seeking or
acquiescing in any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or
similar relief for itself under any present or future
federal, state or other statute, law or regulation
relating to bankruptcy, insolvency or other relief for
debtors or Tenant is adjudicated as bankrupt or insolvent;
or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator of
Tenant or of all or any substantial part of its property,
or of any or all of the royalties, revenues, rents, issues
or profits thereof, or shall make any general assignment
for the benefit of creditors, or shall admit in writing
its inability to pay its debts generally as they become
due; or
(d) A court shall enter an order, judgment or
decree approving a petition filed by third parties against
Tenant seeking any reorganization, dissolution or similar
relief under any present or future federal, state or other
statute, law or regulation relating to bankruptcy,
insolvency or other relief for debtors, and such order,
judgment or decree shall remain unvacated and unstayed for
an aggregate of ninety days from the first date of entry
thereof; or any trustee, receiver or liquidator of Tenant
or of all or any substantial part of its property, or of
any or all of the royalties, revenues, rents, issues or
profits thereof shall be appointed without the consent or
acquiescence of Tenant and such appointment shall remain
unvacated and unstayed for an aggregate of ninety days;
then upon the occurrence of any of such events referred to
in clauses (a), (b), (c), or (d) (an "Event of Default") in
addition to any and all other rights or remedies available to
Landlord by this Lease and/or by law, Landlord shall have the
right to terminate this Lease and Tenant's possessory rights
hereunder (except for any default by Tenant which is not a
monetary default and is an act of commission or omission solely
in the performance by Tenant of Tenant's duties as the
Responsible Party; for this kind of default Landlord shall not
have a right to terminate this Lease based solely on such
default), by giving Tenant a written notice declaring the
termination and specifying the date on which the Lease will
terminate, and on the date so specified, this Lease will end as
fully and completely as if that were the date specified for the
expiration of the Lease, and Landlord shall have the right to
re-enter the Demised Premises and take possession thereof, and,
except to the extent Landlord may have agreed otherwise in
writing as to any persons, Landlord may remove all persons
therefrom, and Tenant shall have no further claim under this
Lease. All of Landlord's rights and remedies are cumulative and
non-exclusive of each other and Landlord may exercise any or all
of such rights, as well as any other rights or remedies
available, without releasing Tenant from any liability or
diminishing Tenant's liability arising out of this Lease and
notwithstanding any termination of this Lease or the exercise of
any remedies by Landlord, Tenant's liabilities shall survive and
Tenant shall remain liable for damages as hereinafter provided.
Should Landlord elect to terminate this Lease or re-enter as
herein provided, or should Landlord take possession pursuant to
legal proceedings or any notice provided for by law, Landlord
may recover from Tenant:
(i) the amount of the unpaid Rent which is due,
owing and unpaid by Tenant to Landlord at the time of
termination; and
(ii) all 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 are likely
to result therefrom, including all costs (including
reasonable attorneys' fees) of repossession, removing
persons or property from the Demised Premises, repairs,
brokerage commissions for and expenses incurred in
reletting and reasonable alterations of the Property in
connection with reletting, if any; and
(iii) 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 law.
(iv) Landlord shall always have the right to not
terminate this Lease and hold Tenant liable on the Rent
payment days for all Rent payments as they become due; and
in connection with the remedy under this clause (iv),
Landlord shall have the right to take exclusive possession
of the Demised Premises (without having terminated the
Lease) and re-renting for Tenant's account to another
tenant while holding Tenant liable nevertheless; provided,
however, at its option in its exclusive discretion,
Landlord shall have the continuing right at any time
before or after any re-letting, to terminate this Lease
for the previous default or for any subsequent default as
well.
In the alternative to damages described in clause
(iv) above in this Section 21.01, Landlord shall have the
right to recover from Tenant the worth at the time of
award of damages of the amount by which the unpaid rent
which would have come due after termination until the time
of award of damages exceeds the amount of rental loss that
Tenant proves Landlord has avoided by actually having
rented the Demised Premises to another tenant, or could
have been reasonably avoided if Landlord could have
mitigated Tenant's damages by signing a lease with another
tenant. Computations of the amounts recoverable by
Landlord in the immediately preceding sentence shall be
computed by allowing interest thereon at lower rate of
either the rate of 12-3/4% per annum or such other rate as
may be the maximum amount of interest then permitted to be
charged under the law of the state whose laws govern this
Lease as to the maximum rate of interest that may be
charged. The worth at the time of the award recoverable
by Landlord under the immediately preceding sentence above
shall be computed by discounting the amount otherwise
recoverable by Landlord at the discount rate of the
Federal Reserve Bank of New York at the time of the award
of damages.
Landlord shall be entitled to recover from Tenant all costs
of maintenance and preservation of the Demised Premises, and all
costs of re-letting and all costs, including reasonable
attorneys' and receiver's fees, incurred in connection with
re-giving possession, enforcing its remedies, entering into a
new lease or leases, suing to collect its Rent and in connection
with the appointment of and performance by a receiver to protect
the Demised Premises and Landlord's interest under this Lease.
Landlord shall use reasonable efforts, consistent with good
commercial real estate practice, to relet the Demised Premises.
Section 20.02. Nothing herein shall be deemed to affect
the right of Landlord under Article XIII of this Lease to
indemnification for liability, arising prior to the termination
of the Lease, for personal injuries or property damage. No
expiration or termination of the lease term pursuant to Section
20.01 or by operation of law, or otherwise, and no repossession
of the Demised Premises or any part thereof pursuant to Section
20.01, or otherwise, shall relieve Tenant of its liabilities and
obligations hereunder, all of which shall survive such
expiration, termination or repossession. In the event of any
termination of this Lease pursuant to Section 20.01 or any
repossession of the Demised Premises pursuant to Section 20.01,
Tenant, so far as permitted by law, waives (a) any notice of
re-entry or of the institution of legal proceedings to that end,
(b) any right of redemption, re-entry or repossession, (c) any
right to a trial by jury in any proceeding or in any matter in
any way connected with this Lease, and (d) the benefits of any
laws now or hereafter in force exempting property from liability
for rent or for debt.
Section 20.03. Except to the extent that Landlord may have
otherwise agreed in writing, no waiver by Landlord of any breach
by Tenant of any of its obligations, agreements or covenants
hereunder shall be deemed to be a waiver of any subsequent
breach of the same or any other covenant, agreement or
obligation; nor shall any forbearance by Landlord to seek a
remedy for any breach by Tenant be deemed a waiver by Landlord
of its rights or remedies with respect to such breach.
Section 20.04. No remedy herein or otherwise conferred
upon or reserved to Landlord shall be considered exclusive of
any other remedy, but the same shall be cumulative and shall be
in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute, and every
power and remedy given by this Lease to Landlord may be
exercised from time to time and as often as occasion may arise
or as may be deemed expedient.
Section 20.05. The rights herein given to receive,
collect, sue for or distrain any rent or rents, moneys or
payments, or to enforce the terms, provisions and conditions of
this Lease, or to prevent the breach or nonobservance thereof,
or the exercise of any such right or of any other right or
remedy hereunder or otherwise granted or arising, shall not in
any way affect or impair or toll the right or power of Landlord
upon the conditions and subject to the provisions in this Lease
expressed to terminate Tenant's right of possession because of
the occurrence of an Event of Default in or breach of any of the
covenants, provisions or conditions of this Lease.
Section 20.06. No receipt of money by Landlord from
Tenant, after the termination of Tenant's right of possession or
after the service of any notice or after the commencement of any
suit or after final judgment for possession of the Demised
Premises, shall renew, reinstate, continue or extend the right
of Tenant to remain in possession of the Demised Premises, or
affect any such notice, demand or suit.
Section 20.07 (a) It is expressly agreed that this Section
20.07 (arbitration procedure) shall not be available to Tenant
as to any failure by Tenant to timely furnish an insurance
policy or insurance certificate as required by this Lease or any
default under an Underlying Lease or under an Existing Mortgage
or to any failure by Tenant to pay Basic Rent or any other Rent
(including, without limitation, Impositions) or any other
payment of money which is owed by Tenant or which is due and
payable by Tenant under this Lease. If Tenant shall in good
faith dispute a notice given to Tenant by Landlord as a result
of Tenant's failure to observe, perform or satisfy any
(non-monetary, non-insurance policy/certificate, non-Underlying
Lease and non-Existing Mortgage) covenant, condition or
requirement on Tenant's part to be observed, performed or
satisfied under Articles XI (Repairs), IX (Compliance with Laws
and Insurance Policies), V (Insurance) other than the obligation
to deliver insurance policies or certificates, XV (Changes), VI
(Use) XII (Entry by Landlord), XVI (Damage or Destruction), XVII
(Condemnation), XXVI (Hazardous Substances) or XIX (Assignment
and Subletting) of this Lease, then the failure of Tenant to
perform or observe the term, covenant or condition which was the
subject matter of Landlord's notice relating to the Articles
just listed (but not any other Articles of this Lease) shall not
constitute an Event of Default by Tenant for which Landlord may
terminate this Lease if (i) Tenant shall dispute in good faith
the existence of such default and promptly (in no event later
than five business days after the giving of such notice)
notifying Landlord of such good faith dispute, the notice
expressly invoking and referring to this Section 20.07 and the
same does not create a default under an Underlying Lease or an
Existing Mortgage, or (ii) this Lease provides with respect to
any matter so in dispute that a dispute as to such matter shall
be determined by the Arbitration Proceeding, provided neither
Landlord's estate nor the Demised Premises shall be in imminent
danger of forfeiture and Landlord shall not be subject to
criminal liability, and Tenant, as provided in Section 23.03
hereof, shall, within five business days after giving Landlord
notice of its dispute, commence the Arbitration Proceeding to
determine whether a default in fact has occurred by making a
Demand for Arbitration pursuant to the "Quick Filing Directions"
(as set forth in the Commercial Arbitration Rules of the
American Arbitration Association), and Tenant shall diligently,
expeditiously and in good faith prosecute the Arbitration
Proceeding in such a manner so as to effect a final
determination, and no other Event of Default shall exist under
any Article or Section of this Lease; provided further, however,
that in the event Tenant shall dispute a default in accordance
with the provisions of this Section more than two times in any
12 calendar month period during the term of this Lease and the
decision or award in the Arbitration Proceeding in each such
case determined that Tenant was in default or if the arbitrator
appointed in accordance with the Arbitration Proceeding shall in
any decision or award determine that Tenant was acting in bad
faith, then, in such event, this Section 20.07 shall no longer
be in effect and Tenant shall have no further right under this
Section 20.07 to dispute a notice of default. When and if a
decision or award shall be made in the Arbitration Proceeding to
the effect that Tenant is in default, then, for purposes of
determining whether any applicable grace period shall have
expired, Tenant shall be deemed to have been given notice
thereof for the first time on the date of the issuance of such
decision or award. Failure by Tenant to strictly comply with
the time schedules set forth in this Section 20.07 shall cause
a waiver of Tenant's right to utilize this procedure, as time is
of the essence.
(b) The arbitration referred to in this Section 20.07
is intended to mean in each instance when Tenant avails itself
of this Section 20.07 the dispute or matter shall be determined
by arbitration under the Expedited Procedures provisions for the
Commercial Arbitration Rules of the American Arbitration
Association ("AAA") or its successor; provided, that with
respect to any such arbitration, (i) the list of arbitrators
referred to in the applicable rule of the AAA shall be returned
within five business days from the date received, (ii) the
parties shall notify the AAA by telephone, within five business
days of any objections to the arbitrator appointed and will have
no right to object of the arbitrator so appointed was on the
list submitted by the AAA and was not objected to in accordance
with the second sentence of the rule of the AAA, (iii) the
Notice of Hearing referred to in the rule of the AAA shall be
five business days in advance of the hearing, (iv) the hearing
shall be held within seven business days after the appointment
of the arbitrator and (v) the arbitrator shall have no right to
award damages. Any and all costs and expenses arising in
connection with such arbitration shall be borne by Tenant;
provided, however, in any instance when Tenant invokes this
Section 20.07, Landlord may send a notice within three days of
receipt of Tenant's notice that Landlord desires the issue to be
decided in a court of law instead of by arbitration, and in such
case Landlord (or Tenant, if it wishes) may bring an action at
law or equity and Tenant shall not be in default until the grace
period applicable to such default has expired without Tenant
having cured; the date of the final, unappealable decision of
the court being deemed the date Tenant received the default
notice for the first time.
Section 20.08. Landlord shall have the right to select
which State or States in which to bring any action at law or in
equity to enforce any provisions contained in this Article XX or
other provisions of this Lease, and Tenant hereby consents to
the jurisdiction of the proper court in any State or States
Landlord selects provided such States be either a State in which
any one of the Properties is situated or New York State.
Landlord and Tenant hereby agree that the substantive laws of
New York State shall govern and apply to all questions or issues
or disputes arising from the interpretation of this Lease or the
application of substantive laws to this Lease and this Lease
shall be interpreted under such laws of New York State. As to
cases in which Landlord starts legal action involving recovery
of possession of the Demised Premises or any part thereof, the
procedural law of the State where such lawsuit is commenced
shall govern. In case of an Event of Default, or to enforce the
provisions of this Lease or in any legal action arising out of
the provisions of this Lease, Landlord at its option may bring
one legal action in one court or may bring separate legal
actions, all at the same time or different times and in the same
state or in the different states where the Properties are
situated.
ARTICLE XXI
Arbitration and Appraisal
Section 21.01. If at any time, or from time to time during
the term hereof, any dispute shall occur between Landlord and
Tenant as to which (but only as to which) Landlord and Tenant
have specifically and expressly agreed in this Lease to the
settlement of such dispute by arbitration, such dispute shall be
settled promptly by arbitration in New York City by the American
Arbitration Association in accordance with the Commercial
Arbitration Rules then obtaining of the American Arbitration
Association and the law of the state in which the Demised
Premises is situated, and judgment upon the award rendered in
such arbitration may be entered in any court having jurisdiction
thereof; provided, however, the foregoing sentence shall not
apply to disputes covered by Section 20.07(a) and (b) hereof, as
Section 20.07 spells out its own arbitration provisions for
certain special circumstances. However, it is agreed that if
Landlord has demanded money in accordance with this Lease and
Tenant refuses to pay all or any part of the amount demanded
based on Tenant's dispute of such amount or based on Tenant's
denial of Landlord's right to payment, Tenant nevertheless shall
pay the amount that Tenant concedes is due, or if Tenant denies
the whole amount, Tenant shall pay the whole amount, pending the
decision of the arbitration, and any amount that Tenant did not
pay because it disputed Landlord's entitlement thereto shall be
resolved in the arbitration, and if Tenant is successful in the
determination in obtaining a refund, Landlord shall pay the
refund with interest thereon at the rate declared by the
arbitrators. Similarly as to any insurance policy required, if
Tenant disputes its duty, Tenant shall deliver the policy first
and arbitrate afterward. By paying or delivering the policies
(as the case may be) first, Tenant's rights of dispute shall not
be diminished.
Section 21.02. If it shall become necessary, for purposes
of Section 25.03 hereof to seek an independent determination of
the fair market rental value of the Demised Premises or any
portion thereof, or the amount of an allocable and distributable
share of a Net Award in a condemnation as specified in Section
18.03 hereof, or with respect to an insurance policy appraisal
under Section 5.01, as the case may be, either party may, by
notice to the other, appoint a disinterested person who is a
Member of the American Institute of Real Estate Appraisers (or
if such Institute is not in existence at the time in question,
a member of a similar or successor organization) (an "M.A.I.")
and whose office is located in a radius of 50 miles from the
particular Property of the Demised Premises which is the subject
of the question, as one of the appraisers. Within 20 days
thereafter the other party shall, by written notice to the party
appointing the first appraiser, appoint another disinterested
person who is an M.A.I. and whose office is located in a radius
of 100 miles from that Property and such three appraisers shall
as promptly as possible determine the value; provided, however,
that:
(a) if the second appraiser shall not have been
appointed as aforesaid, the first appraiser shall proceed
to determine such value; and
(b) if, within 20 days after the appointment of
the second appraiser, the two appraisers appointed by the
parties shall be unable to agree upon the appointment of
a third appraiser, they shall given written notice of such
failure to agree to the parties, and, if the parties fail
to agree upon the selection of such third appraiser within
10 days after the appraisers appointed by the parties gave
notice as aforesaid, then within 10 days thereafter either
of the parties upon written notice to the other party
hereto may apply for such appointment to the highest Court
of jurisdiction for the county in which that Property is
located or if none, to any other court having jurisdiction
and exercising functions similar to those now exercised by
the Court for such county.
Landlord and Tenant shall each be entitled to present evidence
and argument to the appraisers and to be represented by counsel.
The determination of the majority of the appraisers or of
the sole appraiser, as the case may be, shall be conclusive upon
the parties and judgment upon the same may be entered in any
court having jurisdiction thereof. The appraisers shall give
written notice to the parties stating their determination, and
shall furnish to each party a copy of such determination signed
by them.
The costs and expenses of such appraisal, including the
fees of the appraiser or appraisers, shall be divided equally
between Landlord and Tenant.
In the event of the failure, refusal or inability of any
appraiser to act, a new appraiser shall be appointed in his
stead, which appointment shall be made in the same manner as
hereinbefore provided for the appointment of the appraiser so
failing, refusing or unable to act.
Section 21.03. The arbitrator or arbitrators or appraiser
or appraisers may not change any of the terms of this Lease or
deprive any party to this Lease of any right or remedy expressly
or impliedly reserved in this Lease. No matter, subject or
dispute shall be submitted to arbitration or appraisal except if
it is specifically agreed to and so directed in this Lease.
ARTICLE XXII
Estoppel Certificates; Financial Statements
Section 22.01. At any time and from time to time,
Landlord, on at least twenty days' prior written request by
Tenant, and Tenant, on at least twenty days' prior written
request by Landlord, will deliver a statement in writing
certifying that this Lease is unmodified and in full force and
effect (or if there shall 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, deposits or charges have been paid and stating whether
or not, to the best knowledge of the party executing such
certificate, the party requesting such statement is in default
in the performance of any covenant, agreement or condition
contained in this Lease and, if so, specifying each such default
of which the executing party may have knowledge, and such other
information as it is reasonable for the requesting party to
request.
Section 22.02. During the term of this Lease, Tenant shall
deliver to Landlord promptly upon their becoming available,
copies of all financial statements and reports which Tenant
sends to its stockholders or files with the SEC.
ARTICLE XXIII
Invalidity of Particular Provisions
Section 23.01. 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.
ARTICLE XXIV
Notices
Section 24.01. Whenever Landlord or Tenant shall desire
to give or serve upon the other any notice, demand, request or
other communication with respect to this Lease or with respect
to the Property each such payment, notice, demand, request or
other communication in order to be legally effective shall be in
writing and shall be given or served by mailing the same to such
party or parties by registered mail or by certified mail,
postage prepaid, return receipt requested, or by overnight
independent courier service, either Federal Express or UPS,
addressed as follows:
If to Landlord:
KRCV Corp.
Suite 100, c/o Kimco
3333 New Hyde Park Road
New Hyde Park, New York 11042-0020
Attention: Mr. Milton Cooper or Mr. Michael J. Flynn
Copy to: Robert P. Schulman, Esq.;
If to Tenant:
Venture Stores, Inc.
2001 East Terra Lane
O'Fallon, Missouri 63366-0110
Attention: Vice President-Real Estate
Copy to: Legal Department;
or at such other address or addresses as Landlord or Tenant may
from time to time designate for itself by notice given in the
manner aforesaid.
Every notice, demand, request or communication hereunder
shall be deemed to have been given or served as of the day of
actual delivery as shown by the addressee's registry receipt.
ARTICLE XXV
Options to Extend; Extended Term Basic Rent
Section 25.01. Provided no Event of Default exists under
this Lease, Tenant shall have six options (each called a
"Unitary Lease Extension Option") to extend the term of this
Lease, for all (and not less than all) the Demised Premises,
beyond the Initial Term by means of six additional separate and
consecutive 5-year periods, provided that this Lease is in
effect. Such options may be exercised by Tenant one or more at
a time by giving written notice to Landlord not less than nine
months ("Option Deadline Date" or "Deadline Date") prior to the
expiration of the then current term of this Lease. Each such
extension period shall be referred to herein as an "Extended
Term". If an Underlying Lease would need to be extended by
Landlord exercising an extension option in that Underlying Lease
in order to match Tenant's exercise of extension of this Lease,
and if the Underlying Lease provided for a specified period of
advance notice to the Overlandlord which is less than eight
months from the date of Tenant's nine month notice, then Tenant
must give notice of extension in this Lease not less than 45
days before the last day which Landlord has pursuant to the
Underlying Lease to validly exercise its extension option under
the Underlying Lease, as a condition for Tenant's extension
option to be validly exercised in this Lease.
As to each Leasehold Property, Landlord, subject to the
proviso in the next sentence and subject also to the other
provisions and conditions in this Article XXV, shall exercise
Landlord's rights to the extent necessary and to the extent
available to Landlord, in order to extend the term of the
Underlying Lease applicable to that Leasehold Property until at
least the end of the Initial Term of this Lease. During the
Initial Term of this Lease, Tenant shall not be required to give
Landlord any notice that Landlord's right to extend the term of
an Underlying Lease must be exercised, provided, however,
Landlord need not exercise its extension rights if on the date
Landlord's notice of extension of the Underlying Lease is to be
given to the Overlandlord, an Event of Default on the part of
Tenant then exists under this Lease. If such an Event of
Default exists, Landlord may or may not, at Landlord's option,
exercise the extension right in question.
Tenant shall have the right to notify Landlord by sending
Landlord a written notice stating expressly that Tenant desires
Landlord not to exercise an extension option under an Underlying
Lease and that Tenant desires the Underlying Lease to expire.
The notice must be received by Landlord not less than 360 days
before the last day on which Landlord is required to exercise
its extension option under the Underlying Lease; time being of
the essence. If Landlord receives such notice, Landlord may
either intentionally fail to exercise the Underlying Lease
extension option and permit the Underlying Lease to expire, or
Landlord may exercise its extension option for Landlord's own
account. In either case, the Underlying Lease shall cease as of
the end of the then current term of said lease for the purpose
of this Lease, and the Leasehold Property to which the extension
option applied shall be deleted from being part of the Demised
Premises and Tenant shall surrender to Landlord that portion of
the Demised Premises which is located on that Leasehold
Property, but this Lease shall continue in full force and effect
as to the remaining Properties and there shall be nevertheless
no reduction or other change in the Basic Rent, additional rent
or other payments by Tenant under this Lease other than the
payments which were required to be made by Tenant to Landlord as
additional rent for the rents pursuant to that Underlying Lease.
As to any period beyond the end of the Initial Term of this
Lease, provided Tenant gives Landlord Tenant's extension notice
timely in advance as set forth in the first paragraph of this
Section 25.01, when Tenant validly exercises its right to extend
the Initial Term or any subsequent Extended Term under this
Lease, Landlord will, in turn if necessary and if options are
available to Landlord, then exercise its options to extend the
Underlying Lease for each of those Leasehold Properties in order
to correspond with Tenant's extension notice given to Landlord
to extend this Lease. It is understood that in the event that
Landlord is not required to exercise an extension right to
extend the term of an Underlying Lease, because Tenant failed to
exercise validly its option pursuant to this Article XXV,
Landlord need not, but nevertheless may, exercise any such right
for its own account; and further, Tenant agrees that Landlord
need not in any instance exercise any option available to
Landlord to extend the term of an Underlying Lease if the term
of the Underlying Lease, as to be extended by Landlord would end
more than 30 days after the end of the proposed Extended Term of
this Lease following Tenant's exercise of its options.
When Landlord sends a notice to an Overlandlord extending the
term of the Underlying Lease, Landlord will send a copy of that
notice to Tenant. Within 30 days after receipt by Landlord of
a notice from Tenant extending this Lease in accordance with and
subject to the provisions and conditions in the above first
three paragraphs of this Section 25.01, Landlord will send its
own extension notice to the Overlandlord (when extension is
necessary) extending the Underlying Lease. If Tenant does not
receive from Landlord the copy of Landlord's extension notice to
the Overlandlord by the 30th day after the date Tenant had sent
its own valid extension notice to Landlord and also has not
received a notice from Landlord disputing Landlord's duty to
exercise an option to extend the Underlying Lease, then in such
case Tenant itself may exercise the extension option under the
Underlying Lease, on Landlord's behalf and acting in place and
stead of Landlord, by notice to the Overlandlord.
In the event any Underlying Lease does not contain sufficient
extension options for Landlord (as tenant thereunder) to be able
to keep granting Tenant extensions thereof as to any Leasehold
Property to match Tenant's exercise of extension option in
accordance with this Lease, and the leasehold estate of that
Leasehold Property shall therefore expire before the then
current term of this Lease will have expired, or if the
Underlying Lease expires or terminates for any reason whatsoever
other than by reason of a default by Landlord under this Lease,
therefore, in each such case, that particular Leasehold Property
shall no longer be part of the Demised Premises under this
Lease; and without any liability on Landlord's part, this Lease
shall terminate as to said expired Leasehold Property, but this
Lease shall continue in full force and effect as to the
remaining Properties and there shall be nevertheless no
reduction or other change in the Basic Rent.
Section 25.02. Each Extended Term shall be upon the same
terms and conditions as are set forth herein for the Initial
Term, except that the Basic Rent payable for each year during
the applicable Extended Term shall be an annual amount equal to
twice the annual Basic Rent payable by Tenant in the last twelve
months of the Initial Term, that is, September 1, 2021 through
August 31, 2022, payable in equal monthly installments during
the Extended Term, so that unless the annual Basic Rent stated
on the Schedule of Basic Rents attached to this Lease and made
a part hereof changes during the Initial Term, the annual Basic
Rent payable during each year of each Extended Term commencing
September 1, 2022 will be $24,964,183.68.
Section 25.03. Any exercise of any option to extend, and
the Extended Term which would be created by such exercise, shall
cease to be of any force or effect if, prior to the date upon
which such Extended Term would otherwise commence, the term of
this Lease shall have been terminated as provided in Article XX
(Default).
ARTICLE XXVI
Hazardous Substances
Section 26.01. Tenant agrees that all operations or
activities on or use or occupancy of the Demised Premises or use
of the Shopping Center and all portions thereof by Tenant in
this Lease, and all of Tenant's tenants, subtenants or occupants
shall comply with all Environmental Laws, as such term is
hereinafter defined.
Section 26.02. Tenant agrees to not permit to be present
on the Demised Premises, or contained in any transformers or
other equipment, or in the Common Areas so long as Tenant is the
Responsible Party, any PCBs or any asbestos (including any
structures, fixtures, equipment or other objects or materials
containing asbestos); provided, however, Tenant shall be
permitted to use and maintain (but not replace unless any
replacements are free of PCBs and asbestos) those transformers
and other equipment containing PCBs and permitted to use and
maintain the portions of any structures or materials containing
asbestos located at the Demised Premises on the date of this
Lease, so long as removal is not required by Environmental Laws.
("PCB" shall include all substances includible under the
definition of PCB in 40 CFR Section 761.3.)
Section 26.03. In the event any investigation or
monitoring of site conditions or any clean-up, containment,
restoration, removal or other remedial work is required under
any Environmental Laws or other laws or in order to comply with
the terms of this Lease, including, but not limited to, the
provisions of Section 26.06(collectively, the "Remedial Work"),
Tenant shall perform such Remedial Work (such performance being
herein sometimes referred to as "Remediation" and the act of
remediation being sometimes referred to herein as "Remediate")
in compliance with such Environmental Laws or other laws and
otherwise in compliance with this Lease. Remedial Work shall be
performed by contractors who have all necessary licenses and
expertise, selected by Tenant and approved in advance in writing
by Landlord (not to be unreasonably withheld) who shall perform
the Remedial Work under supervision of an environmental
consulting engineer selected by Tenant and approved in advance
in writing by Landlord (not to be unreasonably withheld), all
performed at Tenant's expense. In the event Tenant shall fail
to timely commence or fail to diligently prosecute to completion
such Remedial Work, Landlord may, but shall not be required to,
cause such Remedial Work to be performed, and all reasonable
costs and expenses thereof incurred in connection therewith
shall be payable on demand by Tenant.
Section 26.04 (a) All Remedial Work shall be satisfactory
to Landlord, in Landlord's reasonable judgment. Landlord shall
have the right at any time and from time to time to cause its
own contractor and consulting engineer ("Landlord's Consultant")
to conduct an environmental inspection in order to confirm
Tenant's compliance with this Article and to determine whether
or not any Hazardous Substances are present in quantities
sufficient to require further Remedial Work (each, an
"Inspection").
(b) The determination as to whether Remedial Work has
been completed in accordance with this Lease and in compliance
with all Environmental Laws and other applicable laws, shall be
evidenced by a certificate of compliance issued by Landlord's
Consultant (the "Certificate of Compliance").
(c) Landlord shall use reasonable efforts to cause any
Inspection to be conducted in a manner which minimizes
interference with the business of Tenant or any tenant or
subtenant. Nothing contained in this Section 26.04 shall be
deemed or construed to amend, modify or replace any other
obligation of Tenant set forth in this Article.
Section 26.05 The obligations of Tenant as set forth in
Article XXVI, shall survive the expiration or sooner termination
of this Lease. This Article XXVI shall be fully operative and
Tenant's obligations shall not be diminished by the fact that
Landlord may have knowledge at any time, whether before or after
the date of this Lease, of any Release, or that Landlord caused
Phase I or Phase II investigations to be done.
Section 26.06 (a) Notwithstanding any provision contained
in this Lease to the contrary, the provisions of this Section
26.06 shall govern and supersede any conflicting provisions
contained in this Lease.
(b) Tenant acknowledges that there have been Releases of
Hazardous Substances in the Demised Premises and/or the Shopping
Centers in which the Demised Premises are located (such existing
Releases, including, but not limited to, the Releases described
or referenced in the Existing Reports, as such term is
hereinafter defined, and all subsequent Releases relating to
such existing Releases being herein sometimes referred to as the
"Existing Contamination").
(c) Tenant agrees that Tenant shall be solely
responsible, at Tenant's sole cost and expense, for the Existing
Contamination, the Remediation of the Existing Contamination,
all liabilities and claims of third parties (including, but not
limited to, tenants at the Shopping Centers) relating to the
Existing Contamination and all Costs relating thereto.
(d) Without limiting the generality of the foregoing,
Tenant shall (i) pay all Costs relating to, or arising from or
in connection with, the Existing Contamination disclosed or
referenced in the Existing Reports (as such term is hereinafter
defined) and (ii) pay all Costs to Remediate the Existing
Contamination that is disclosed or referenced in the Existing
Reports which are required to be remediated by Environmental
Laws.
(e) Tenant agrees to indemnify, defend (by attorney
reasonably satisfactory to Landlord) and hold Landlord, and
Landlord's directors, officers, shareholders, employees and
agents, harmless from and against all claims (including without
limitation third party claims for personal injury or damage to
property), actions, administrative proceedings, judgments,
damages including punitive damages), penalties, fines, costs,
liabilities (including without limitation sums paid in
settlement of claims), expenses, losses (including without
limitation reasonable attorneys' and experts' fees and
disbursements and fees and expenses incurred in enforcing this
Lease or collecting any sums due hereunder), and all other costs
and expenses of any kind or nature (collectively, the " Costs")
that arise directly or indirectly from or in connection with (i)
the Existing Contamination (whether or not caused by Tenant and
whether or not located within the Demised Premises) and/or (ii)
the Release of any Hazardous Substance at, on, about, under,
over or within the Demised Premises, or any portion thereof or
any portion of the Shopping Center which was used by Tenant or
by Tenant's subtenants prior to or during the Term of this
Lease, and in particular (without limiting the generality of the
foregoing) any so-called TBA space which is or in the past was,
before the date of this Lease or at any time, so occupied by
Tenant or its subtenants even though such TBA space may be space
that Landlord takes over by a Transferred Lease and is not part
of Tenant's Demised Premises except, in the case of clause (ii)
only, to the extent (but only to the extent) such claims result
solely from Landlord's active negligence or willful misconduct
or solely from the acts of Landlord's tenants who occupy
Landlord's Buildings and the claim first arises after the date
of this Lease and after the space became part of Landlord's
Buildings in the Demised Premises and/or the Shopping Center.
Tenant shall pay Landlord on demand the total of all such Costs
suffered or incurred by Landlord. Without limiting the
generality of the foregoing, the indemnification provided by
this Section shall specifically cover Costs incurred in
connection with any investigation or monitoring of site
conditions, any clean-up, containment, remedial, removal or
restoration work (including capital expenditures and operating
and maintenance costs) required or performed by the Government
because of any Release and/or Existing Contamination, as well as
claims of third parties for loss or damage due to such Existing
Contamination and/or any Release. In the event a claim, action
or proceeding is brought against Landlord for which Tenant shall
have an indemnification obligation under this Section (an "
Indemnified Matter"), Landlord shall give Tenant notice thereof.
Tenant shall have the right to engage independent counsel
reasonably acceptable to Landlord to defend Landlord against any
claims, actions, suits or proceedings (an " Action"), the costs
and expenses thereof shall be paid by Tenant. Nothing contained
in this Section shall restrict Landlord's right thereafter to
retain, at Landlord's expense (so long as attorney selected by
Tenant and approved by Landlord is continuing Landlord's
defense), separate legal counsel during the pendency of any
Action. On receipt of written notice of a claim relating to an
Indemnified Matter, Landlord shall give Tenant prompt written
notice; provided, however, the failure to give such notice shall
not relieve Tenant of any liability hereunder. Landlord and
Tenant shall diligently keep each other fully informed, and each
shall fully cooperate with the other and its attorneys at all
stages of any Action.
Section 26.07 Definitions:
(a) "Environmental Laws": Any applicable statute,
regulation, rule, ordinance, code, license or order of any
Governmental Authority (defined below) and all applicable
judicial and administrative and regulatory decrees, judgments
and orders, relating tot he protection of public health, public
safety or the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA"), 42 U.S.C. Sections 9601 et seq., as amended by
the Superfund Amendments and Reauthorization Act of 1986; the
Resource conservation and Recovery Act, 42 U.S.C. Sections 6901
et seq.; the Clean Air Act; the Federal Water Pollution Control
Act, 42 U.S.C. Sections 1251 et seq.; the National Environmental
Policy Act, 42 U.S.C. Sections 4321 et seq.; the Refuse Act, 33
U.S.C. Sections 401 et seq.; the Federal Insecticide, Fungicide
and Rodentcide Act, 7 U.S.C. Sections 136 et seq.; the Emergency
Planning and Community Right to Know Act, 42 U.S.C. Sections
11001 et seq.; the Occupational Safety and Health Act of 1970;
the Hazardous Materials Transportation Act, as amended by the
Hazardous Materials Transportation Authorization Act of 1994, 49
U.S.C. Sections 5101 et seq.; the Toxic Substances Control Act,
15 U.S.C. Sections 2601 et seq.; the Oil Pollution Act of 1990,
33 U.S.C. Sections 2701 et seq.; as each of these may be amended
from time to time; and any state or local analogues to any of
these statutes.
(b) "Existing Reports": The environmental reports
delivered by Tenant to Landlord or its agents and disclosed or
referenced in the environmental reports dated August 6, 1997
prepared by GAI Consultants, Inc., 1400 Airport North Office
Park, Suite A, Fort Wayne, Indiana.
(c) "Governmental Authority": Any municipal, county,
state and federal and foreign governments, agencies,
departments, authorities, both public and quasi-public, courts,
boards, bureaus, commissions and officers of any of the
foregoing.
(d) "Hazardous Substance": Any material, substance,
compound, solid, liquid or gas, or any radiation, emission or
release of energy in any form, whether naturally occurring, man-
made or the product of any process (1) which is or may under
certain conditions be toxic, harmful, hazardous or acutely
hazardous to public health, public safety or the environment,
(2) which is or may be defined or regulated as a "hazardous
waste," "hazardous substance," "toxic substance," pollutant or
contaminant under any Environmental Law, (3) the use, handling,
management, release, treatment, storage, transportation or
disposal of which is or may be regulated under any Environmental
Law, of (4) the removal, remediation or abatement of which is
required under any Environmental Law. Hazardous Substances
include but are not limited to asbestos, polychlorinated
biphenyls, mercury, lead, petroleum and petroleum products and
derivatives, urea formaldehyde foam insulation and radon and
other radioactive materials.
(e) "Release": Any condition, situation, circumstance
or event, relating to or arising from the release (or threatened
release) of a Hazardous Substance to the environment, or from
the presence of a Hazardous Substance at or about the Premises,
which could serve as the basis for or element of any claim or
liability under any law or regulation or under any common law or
equitable theory of recovery, including, without limitation, the
presence of underground storage tanks.
(f) "Costs": "Costs" shall also include any and all
damage, loss (including any diminution in the value of the
Demised Premises and/or the Shopping Center), liability and
expense (including, without limitation, fees incurred for the
services of attorneys, consultants, engineers, contractors,
experts, laboratories, accountants and nay other service
providers) arising from or in connection with any Environmental
Law, including, without limitation, the following:
(1) any and all response costs, clean-up costs, repair
costs, costs of demolition and costs of rebuilding,
and all other costs incurred in connection with the
investigation, clean-up, remediation or monitoring of
any Release, or violation of any Environmental Law,
including, without limitation, the preparation of any
work plans, remedial investigations, feasibility
studies or reports, or the performance of any clean-
up, remediation, removal, abatement, containment,
closure, restoration or monitoring work required by
any Governmental Authority (defined below), or
reasonably necessary to make full economic use of the
Demised Premises and/or the Shopping Center or to
protect human health or the environment, or otherwise
expended);
(2) any and all claims, costs and expenses of
investigation and defense of any claims, costs of
satisfying a judgment on any claims, and costs
incurred settling any claims (whether or not any such
claim is ultimately upheld);
(3) any and all personal injuries or injuries to the
environment, property or natural resources occurring
upon or off the Demised Premises and/or the Shopping
Center;
(4) any and all judgments, damages (including
consequential and punitive damages) lost income,
foregone profits, expenses (including litigation
expenses) attorneys' fees, disbursements, expert
witness expenses, consultant fees, losses, penalties,
fines, liabilities (including strict liability and
liability to any person to indemnify such person for
costs expended in connection with any Environmental
Condition or violation of Environmental Laws),
encumbrances, and liens; and
(5) any and all costs incurred in complying with any
directives of any Governmental Authority that are in
whole or in part incurred, sustained, filed, borne or
brought at any time in connection with the existence
of (i) any Environmental Condition or (ii) any
violation or alleged violation of Environmental Laws
by any tenant or Tenant.
ARTICLE XXVII
Miscellaneous
Section 27.01. All Rent and all other sums which may from
time to time become due and payable by Tenant to Landlord under
any of the provisions of this Lease shall, unless a different
rate of interest is specifically stated as to such obligation
elsewhere in this Lease, bear interest accruing from and after
the due date thereof at the rate of 12-3/4% per annum or at the
highest legal rate permitted under applicable law, whichever is
the lower rate.
Section 27.02. In all cases, the language in all parts of
this Lease shall be construed according to its fair meaning to
carry out the parties' intent and not interpreted strictly for
or against either Landlord or Tenant.
Section 27.03. Subject to the provisions hereof, this
Lease shall be binding upon and shall inure to the benefit of
the parties hereto and their respective legal representatives,
successors and assigns, and wherever a reference in this Lease
is made to either of the parties hereto such reference shall be
deemed to include also, wherever applicable and unless the
intent be expressed otherwise, a reference to the legal
representatives, successors and assigns of such party, as if in
every case so expressed.
Section 27.04. This Lease shall not be recorded in the
public records. A Short Form of Lease (Memorandum of Lease)
referring to this Lease shall be executed by Landlord and Tenant
and may be recorded by Tenant at its expense or if Landlord
wishes to record it, Landlord may do so at its own expense in
the office of the County Recorder of the county in which the
Demised Premises are located. The Short From Lease shall
contain all appropriate language permitted by local state law to
exculpate Landlord and the Property from persons furnishing
labor, materials or services to the Property filing mechanics'
liens and to insulate against such lien rights.
Section 27.05. This instrument may be executed in two or
more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same
instrument.
Section 27.06 Notwithstanding anything contained in this
Lease, Tenant and its successors and assigns agree that it shall
look solely to the estate and property of Landlord in the Land
and Improvements for the collection of any claims, judgments (or
other judicial process) or liabilities requiring the payment of
money by Landlord or its successors or grantees in the event of
any default or breach by Landlord or with respect to or arising
out of this Lease or any of the terms, covenants and conditions
of this Lease to be observed or performed by the Landlord, and
no other assets of Landlord or Landlord's successors or
Landlord's parent corporation or affiliates shall be subject to
levy, execution or other procedures for the satisfaction of
Tenant's remedies, provided, however, if Tenant obtains a
judgment for money against Landlord which is final and
unappealable and Landlord fails to pay the judgment, Tenant
shall have the right to set off the amount of the judgment
against the Basic Rent payable by Tenant hereunder.
Section 27.07 Landlord and Tenant each represent and
warrant to the other that they did not deal with any broker,
finder or any other person entitled to any fee, compensation,
commission or other remuneration or reimbursements for expenses
in bringing out, introducing or causing this Lease, the
sale/leaseback transaction or any other aspect hereof to be
done.
Section 27.08. In any instance where the Demised Premises
shares a party wall with an adjacent store in Landlord's
Building, both Landlord and Tenant shall share equally in the
repair and replacement of such party wall should the same be
damaged by any casualty, each, however, having the obligation to
keep and repair in good order its own side of such party wall.
ARTICLE XXVIII
Subordination
Section 28.01 Landlord may, at its sole option at any time
or times on or after the date of this Lease, mortgage or grant
a deed of trust (a holder thereof being called "Mortgagee") with
respect to its fee interest or its leasehold interest in the
Demised Premises or the Shopping Center or any part thereof, in
amounts and on terms as Landlord, in Landlord's sole discretion,
determines; provided, however, that in no event shall this Lease
be subject and subordinate at any time to the lien, operation or
effect of any mortgage, deed of trust or any other similar
encumbrance created originally by Landlord, and any
modification, extension and renewal thereof, which may hereafter
be executed by Landlord affecting the Demised Premises or any
part thereof unless Tenant has consented or agreed to the
placing of such mortgage, pledge, encumbrance or deed of trust,
modification or renewal, except that if the proposed Mortgagee
is an institutional lender (i.e. a bank, insurance company,
corporate pension fund or the like), Tenant agrees to
subordinate its interest in this Lease so long as the Mortgagee
agrees to enter into a subordination, attornment and non-
disturbance agreement with Tenant in the customary form of such
instrument used by such institutional lender and otherwise
acceptable to Tenant in its reasonable judgment. Any such
proposed Mortgagee shall agree to enter into a subordination,
non-disturbance agreement with Tenant's subtenants who have
received or who are in the future entitled to receive a
subordination, non-disturbance agreement from Landlord pursuant
to Article XIX hereof, which shall be in form and substance
substantially similar to the subordination, non-disturbance
agreement (see Exhibit C) delivered by Landlord previously to
those subtenants, if any, who qualify under Article XIX of this
Lease as being entitled to receive the same from Landlord.
IN WITNESS WHEREOF, Landlord and Tenant have executed this
Lease as of the date first set forth on page 1.
WITNESSES: LANDLORD:
For Landlord: KRCV CORP.
/s/Linda Protitch By: /s/Michael J. Flynn
Michael J. Flynn
President
/s/Georgia Misoulis By: /s/ Robert P. Schulman
Robert P. Schulman
Secretary
WITNESSES: TENANT:
For Tenant: VENTURE STORES, INC.
/s/James Adkins By:/s/Russell E. Solt
James Adkins Russell E. Solt
Executive Vice President,
Administration & Chief
Financial Officer
/s/Donald Kennedy By:/s/Karren Prasifka
Donald Kennedy Asst.Secretary
EXHIBIT 10.5
THIRD AMENDMENT TO LOAN AGREEMENT
THIS THIRD AMENDMENT TO LOAN AGREEMENT ("Amendment"), is
entered into as of July 11, 1997, by and between Venture Stores,
Inc., a Delaware corporation ("Borrower") and Principal Mutual
Life Insurance Company, an Iowa corporation ("Lender")
Recitals.
A. Borrower and Lender are parties to a certain Loan
Agreement dated July 3, 1990, as amended by letter agreement
dated April 17, 1995 and by that certain Second Amendment to the
Loan Agreement dated October 28, 1995 (as amended, the "Loan
Agreement");
B. In connection with the sale of a certain item of
collateral consisting of one of the Venture Sites (as defined in
the Loan Agreement; capitalized terms used herein shall have the
same meanings ascribed to such terms in the Loan Agreement),
Borrower has requested the right to prepay a portion of the
indebtedness described in the Loan Agreement, which prepayment is
not permitted by the Loan Agreement, and Lender has agreed to
accept such prepayment on the terms and conditions provided below
and to amend the Loan Agreement to permit such prepayment.
NOW THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the parties agree to amend
and supplement the Loan Agreement in the following manner:
1. In connection with the sale by Borrower of the real
property known as the "Cypress Station Store" located in Harris
County, Texas and described specifically on Exhibit A hereto
(collectively the "Cypress Station Site"), Borrower has requested
the right to prepay a portion of the indebtedness (the "Secured
Indebtedness") secured by, among other security: (a) that certain
Deed of Trust, Security Agreement and Assignment of Rents dated
November 20, 1995, from Borrower to Ronald B. Franklin, as
Trustee for Lender, as recorded as Document No. ###-##-####,
Clerk's File No. R681160 of the records of the Harris County,
Texas Recorder of Deeds (the "Cypress Station Deed of Trust");
(b) that certain Assignment of Leases and Rents dated November
20, 1995 from Borrower to Lender, recorded as Document No. 506-
23-0843, Clerk's File No. R681161 (the "Cypress Station
Assignment of Rents"); and (c) those two certain Uniform
Commercial Code-1 Financing Statements recorded respectively in
the Harris County, Texas real property records and in the Office
of the Texas Secretary of State as Document No. ###-##-####,
Clerk's File No. R681162 of the Harris County, Texas Recorder of
Deeds and Document No. 225783 of the Texas Secretary of State
Uniform Commercial Code records, respectively (collectively the
"Cypress Station UCC Financing Statements") (the Cypress Station
Deed of Trust, Cypress Station Assignment of Leases and Rents and
the Cypress Station UCC Financing Statements are hereinafter
collectively called the "Cypress Station Security Documents").
2. Borrower has requested the right to make such
prepayment of principal of the Secured Indebtedness in the amount
of $5,754,279.00 (the "Principal Prepayment"), plus interest
accrued thereon from July 1, 1997 through the date hereof in the
amounts set forth in paragraph 4 below (the "Accrued Interest
Prepayment"), plus an additional payment (hereinafter the
"Cypress Station Make Whole Premium") in the amount of
$593,000.00. (The Principal Prepayment, Accrued Interest
Prepayment and Cypress Station Make Whole Premium are hereinafter
collectively called the "Prepayment").
3. Lender agrees to accept the Prepayment, and to release
and discharge the Cypress Station Security Documents.
4. Borrower and Lender hereby allocate the Principal
Prepayment and Accrued Interest to July 11, 1997 among Note A,
Note B and Note C as follows:
Principal Accrued Interest
Note A -- $4,586,028.01 $13,141.50
Note B -- 849,331.58 2,799.50
Note C -- 318,919.41 903.10
Total $5,754,279.00 $16,844.10
5. Nothing in this Third Amendment is intended to or shall
be deemed to constitute a waiver by Lender of any of its rights
under the Loan Agreement, Loan Documents or any other security
instruments or documents executed or delivered in connection
therewith.
6. Except as expressly provided herein, the Loan
Agreement, Loan Documents and any other security instruments or
documents executed or delivered in connection therewith shall
remain in full force and effect and, specifically, nothing in
this Amendment is intended to or shall be deemed to provide any
right of prepayment of the Notes except as expressly provided in
Paragraph 3.7 of the Loan Agreement.
7. This Amendment may be executed in counterparts and by
telefax, each of which shall be considered as authentic
originals.
8. Borrower agrees to pay Lender's attorneys fees and
disbursements incurred in connection with this Amendment in the
amount of no greater than $2,500.00.
IN WITNESS WHEREOF, Borrower and Lender have executed this
Amendment as of the date first above written.
BORROWER:
VENTURE STORES, INC.
By:/s/Russell Solt
Name: Russell Solt
ATTEST: Title:Eecutive Vice President-
Finance & Administration
/s/ Karren M. Prasifka
Name Karren M. Prasifka
Title Assistant Secretary
LENDER:
PRINCIPAL MUTUAL LIFE
INSURANCE COMPANY
By:/s/ John Cleavenger
Name: John Cleavenger
Title:
By:/s/Clarence R. Bell
Name: Clarence R. Bell
Title: Counsel
EXHIBIT 10.6
ASSUMPTION OF BORROWER'S
OBLIGATIONS UNDER LOAN DOCUMENTS,
INCLUDING LENDER'S CONSENT THERETO AND
AMENDMENT OF LOAN AGREEMENT
THIS ASSUMPTION OF BORROWER'S OBLIGATIONS UNDER LOAN
DOCUMENTS, INCLUDING LENDER'S CONSENT THERETO AND AMENDMENT OF
LOAN AGREEMENT (this "Agreement), is entered into as of the 6th
day of August, 1997, by and among: (i) KRCV Corp., a Kansas
corporation ("KRCV"); (ii) Venture Stores, Inc., a Delaware
corporation ("Venture"); and (iii) Principal Mutual Life
Insurance Company, an Iowa corporation ("Lender").
WITNESSETH
A. Venture and Lender are parties to a certain Loan
Agreement dated July 3, 1990, as amended by: (i) that certain
Letter Agreement dated April 17, 1995; (ii) that certain Second
Amendment to the Loan Agreement dated October 28, 1995: and (iii)
that certain Third Amendment to the Loan Agreement dated July 11,
1997 (as so amended, the "Loan Agreement");
B. Capitalized terms used herein shall have the same
meaning ascribed to them as in the Loan Agreement, unless
otherwise expressly provided;
C. Venture and KRCV propose to enter into and consummate
an agreement whereby Venture sells to KRCV certain shopping
center properties, including all of the real and personal
property (the "Security Property") which secures Venture's
obligations to Lender under the Loan, and leases back such
properties, including the Security Property to Venture, pursuant
to that certain Unitary Lease of even date herewith, between
KRCV, as Lessor and Venture, as Lessee (the "Unitary Lease");
D. Such proposed sale and lease back would, if undertaken
without Lender's consent, constitute a default of Venture's
obligations under the Loan Agreement and the Loan Documents (as
defined in Section 1.1 of the Loan Agreement) including the
Mortgages, Deeds of Trust, Assignments of Leases and other
security instruments encumbering the Security Property,
including, without limitation, the instruments listed on Schedule
A attached hereto (collectively hereinafter the "Security
Documents");
E. Lender has agreed to consent to such sale and
leaseback, subject to the terms and conditions provided below;
F. KRCV desires and intends to assume the obligations of
Venture under the Loan Documents, including without limitation,
the payment obligations of Venture under: (i) that certain First
Amended and Restated Secured Promissory Note A, dated July 3,
1990 in the original principal amount of $55,000,000.00; (ii)
that certain First Amended and Restated Secured Promissory Note
B, dated July 3, 1990, in the original principal amount of
$10,000,000.00; (iii) that certain First Amended and Restated
Secured Promissory Note C, dated July 3, 1990, in the original
principal amount of $10,000,000.00 (collectively the "Notes"),
and Venture intends and desires to remain liable as Borrower
under the Loan Documents;
G. Lender has required, and KRCV and Venture have agreed
to deliver a guaranty of their obligations under the Loan
Documents in the form of a certain Continuing Unlimited Guaranty
Agreement of even date herewith executed by Kimco Realty
Corporation, a Maryland corporation in favor of Lender (the
"Kimco Guaranty"); and
H. The parties desire to amend certain provisions of the
Loan Agreement in connection with the foregoing recitals.
NOW, THEREFORE, in consideration of the foregoing and the
payment by Venture to Lender of the sum of Two Hundred Ninety-Six
Thousand One Hundred Seventy-Five Dollars and Ninety-Six Cents
($296,175.96), the receipt of which is hereby acknowledged by
Lender, the parties agree as follows:
1. Assumption of Borrower's Obligations. KRCV hereby
assumes all of Venture's obligations under the Loan Documents,
including, without limitation, the payment of all principal,
interest and the Make Whole Premium under the Notes, in
accordance with the terms thereof, and agrees to be bound by each
of the terms thereof.
2. Lender's Consent; No Release of Venture or Lender's
Liens; Confirmation of Assignment of KRCV's Rights Under the
Unitary Lease.
(a) Lender consents to the transfer of even date herewith
of all of Venture's right, title and interest in the Security
Property to KRCV, subject, however, to the security interest of
Lender in the Security Property. Lender further consents to the
foregoing assumption of Venture's obligations and waives the
default under the Loan Documents that would, absent Lender's
consent arise out of such transfer and assumption; provided,
however, that nothing herein is intended to or shall be construed
to affect or impair the first lien priority of the Security
Documents. Such consent shall not be deemed to be a waiver of
Lender's requirements for consents for any future transfer and is
not intended to and shall not be deemed to be a release of
Venture from its obligations under the Loan Documents. Venture
expressly agrees that it remains jointly and severally liable
with KRCV under the Loan Documents, that the Loan Documents are
in full force and effect and that there is no default by Lender
thereunder. Except as expressly permitted by the Loan Documents,
the Loan Documents shall not be amended by Lender and Venture
without the written consent of KRCV.
(b) KRCV acknowledges that the Unitary Lease is a lease
subject to Lender's existing Assignments of Leases as listed on
Schedule A hereto and hereby ratifies, affirms and restates the
assignment to Lender, to secure KRCV's obligations under the Loan
Documents, of all of its right, title and interest as lessor
under the Unitary Lease as a lease subject to such Assignments.
3. Payment to Lender. Simultaneously with the execution
of this Agreement, Venture has paid to Lender by wire transfer
the sum of Two Hundred Ninety-Six Thousand One Hundred Seventy-
Five Dollars and Ninety-Six Cents ($296,175.96), plus all fees
and expenses incurred by Lender in connection herewith,
including, without limitation, its attorneys' fees and expenses.
4. Amendment of Loan Agreement. Lender, KRCV and Venture
amend the Loan Agreement as follows:
(a) Section 8.9 of the Loan Agreement is deleted.
(b) Notwithstanding anything in this Agreement to the
contrary, Lender and KRCV agree that Article VI of the Loan
Agreement shall apply only to Venture and not to KRCV and KRCV
shall not be bound by the covenants of Venture provided in such
Article.
(c) Any default under, or the invalidity or termination of
the Kimco Guaranty shall constitute a Default under the Loan
Documents.
(d) Section 8.8 of the Loan Agreement is amended to delete
the word "5,000" throughout such Section and replace it with the
term "10,000".
5. Notices; Defaults. All notices to KRCV hereunder shall
be provided in accordance with Section 14.9 of the Loan Agreement
to the following address:
KRCV Corp.
c/o KRCV Realty Corporation
3333 New Hyde Park Road
New Hyde Park, New York 11042
Telefax No.: 516-869-7201
Attention: Bruce M. Kauderer
Vice President--Legal
Contemporaneously with any notice from Lender to Venture, Lender
shall provide notice to KRCV of all claims of default under the
Loan Documents, and KRCV shall have the right to cure all such
defaults within the cure periods, if any provided in the Loan
Documents. Notwithstanding anything in this Agreement to the
contrary, in the event of any Default under the Loan Documents
which arises solely and exclusively out of the financial
condition of Venture, Lender shall forbear from exercising its
remedies under the Loan Documents arising out of such Default,
provided there is no other Default by either KRCV or Venture
under the Loan Documents, provided further, however, that the
foregoing shall not prohibit Lender from pursuing its rights in
any Bankruptcy Proceeding or Reorganization Proceeding (as
defined in paragraph 8(f) below).
6. Lender's Certification. Lender hereby certifies to
KRCV as follows:
(a) The Loan is in good standing, there are no outstanding
Defaults by the Borrower under the Loan Documents and Lender
expressly waives any prior Defaults to the date hereof.
(b) The outstanding balances under the Notes are as
follows:
Note A: $47,251,995.22
Note B: $ 8,752,300.73
Note C: $ 3,230,895.95
(c) Payments scheduled under the Notes through August 1,
1997 have been made;
(d) The current interest rates under the Notes are as
follows:
Note A: 10.316%
Note B: 11.866%
Note C: 10.194%
(e) Interest accrues under the Notes in the following per
diem amounts:
Note A: $13,540.32
Note B: $ 2,884.86
Note C: $ 914.88
(f) The maturity dates under the Notes are as follows:
Note A: July 1, 2000
Note B: July 1, 2000
Note C: July 1, 2000
(g) The current monthly debt service payments under the
Notes are as follows:
Note A: $495,556.26
Note B: $101,830.96
Note C: $ 89,194.10
(h) The balloon payments at maturity under the Notes are as
follows:
Note A: $44,117,056.91
Note B: $ 8,218,608.79
Note C: $ 815,562.03
(i) Under each of the Notes, monthly interest payments are
made in arrears, on the first day of each month; and
(j) There are no current escrow funds held by Lender in
connection with the Loan Documents.
7. Lender's Representation and Warranty. Lender hereby
represents and warrants to KRCV that Lender has received the Pre-
payment (as defined in the Loan Agreement), pertaining to Note C,
and that Section 12.1(1) of the Loan Agreement is therefore of no
further force and effect.
8. Subordination of Unitary Lease to the Security
Documents.
(a) The Unitary Lease is hereby expressly acknowledged to
be subordinate to the interests of Lender under the Security
Documents and shall remain subordinate, at the option of Lender.
Lender may, at any time, upon written notice to KRCV and Venture,
at its sole option, waive such subordination and elect to
subordinate its interests to the interest of KRCV under the
Unitary Lease. The subordination of the Unitary Lease to the
interests of Lender under the Security Documents shall be fully
effective irrespective of any lack of validity or enforceability
of any of the Loan Documents.
(b) Notwithstanding Lender's consent to the subordinated
Unitary Lease, in the event of any conflict between the
provisions of the Unitary Lease applicable to the Security
Property and the Security Documents, the Unitary Lease shall be
deemed modified to the extent necessary to prevent such conflict
and in all events the terms of the Security Documents shall
control.
(c) In the event that the Unitary Lease is construed by a
court to constitute a security instrument and the applicable
documents conveying the premises thereunder to KRCV from Venture
are held to constitute mortgages, deeds of trust or other
security instruments, as the case may be, such interests shall
remain subordinate to the interests of Lender under the Security
Documents.
(d) KRCV shall provide written notice to Lender of any
default by Venture under the Unitary Lease to the extent that
such default affects the Security Property.
(e) KRCV shall not consent to any assignment by Venture of
its rights or delegation of its obligations under the Unitary
Lease without the prior express written consent of Lender.
(f) (1) In any case commenced by or against Venture under
Chapter 11 of the United States Bankruptcy Code or any similar
federal or state statute (a "Reorganization Proceeding"), Lender
shall have the exclusive right to exercise any voting rights in
respect of the Loan Documents, and KRCV shall have the exclusive
right to exercise any voting rights in respect of the Unitary
Lease, except that, without the consent of Lender, KRCV shall not
have the right to vote to accept any plan of reorganization
unless the Lender gives KRCV permission to do so, or Lender votes
to accept such plan.
(2) In any bankruptcy, reorganization, readjustment of
debt or any dissolution, receivership, liquidation or insolvency
proceedings with respect to Venture (a "Bankruptcy Proceeding"),
KRCV shall file a proof of claim in respect of KRCV's claims
against the Venture and shall send to Lender a copy of such proof
of claim, together with evidence of its filing with the
appropriate court or other authority. If KRCV should fail to
file such proof of claim by the tenth (10th) business day before
the last day for filing of proofs of claim, or if Lender
reasonably believes that the proof of claim so filed is less than
the proper amount thereof, then Lender may file such proof of
claim, or corrected proof of claim, on behalf of KRCV. If
objection is made to the allowance of any claim of KRCV, Lender
shall have the right to intervene and fully participate in such
proceedings, and if such rights are denied and KRCV fails to
defend such claim, then Lender may defend such claim in the name
of KRCV. Lender is hereby appointed the attorney-in-fact of KRCV
for the purpose of taking any of the actions specified in this
Section (f). The foregoing power of attorney is coupled with an
interest and cannot be revoked.
(3) In any Bankruptcy Proceeding, KRCV shall not
contest or dispute any claim made by Lender in respect of the
Loan Documents, otherwise contest the indebtedness evidenced by
the Loan Documents or oppose or object to any position taken by
Lender concerning the Security Property.
(4) In any Bankruptcy Proceedings, the person or
person authorized to pay any claim in respect of the Unitary
Lease in respect of the Security Property shall pay the amount
payable thereon to Lender to be applied under the Loan Documents,
and to the full extent necessary for that purpose, KRCV hereby
assigns to Lender all of KRCV's rights to any such payments or
distributions to which KRCV would otherwise be entitled.
9. Borrower's Representations, Warranties and Covenant as
to Title and Unitary Lease. KRCV and Venture jointly represent
and warrant to Lender that the Security Property shall not have
been encumbered by any mortgages, liens, deeds of trust, security
interests or other encumbrances or claims securing any
indebtedness of any kind as a result of the sale to KRCV of the
Security Property and that the interests of Lender in the
Security Property are the sole mortgages, liens, deeds of trust,
security interests or other encumbrances or claims encumbering
the Security Property. Specifically and not by way of limitation
of the foregoing, KRCV and Venture jointly represent and warrant
to Lender that other than the interests of Lender therein, there
are no mortgages, liens, deeds of trust, security interests or
other encumbrances or claims of any kind encumbering the Unitary
Lease. KRCV and Venture jointly covenant that except with
respect to the interests of Lender therein, and except to the
extent expressly permitted pursuant to paragraph 10 below, they
shall not grant or create any mortgages, liens, deeds of trust,
security interests or other encumbrances or claims of any kind
with respect to the Unitary Lease or the Security Property,
except as expressly permitted by the Loan Documents.
10. Subordination of Assignment of Third-Party Leases.
(a) Lender consents to the collateral assignment by Venture
to KRCV, to secure Venture's obligations to KRCV under the
Unitary Lease, of Venture's license interest, if any, as lessor
or sublessor under certain third-party leases between Venture and
other tenants pertaining to retail sites operated by Venture to
the extent listed on Schedule B hereto; provided, however that
KRCV's rights under any such assignment shall at all times remain
subordinate to the assignments by Venture to Lender of its rights
under such third-party leases pursuant to the Security Documents.
(b) Lender consents to the direct assignment by Venture to
KRCV of certain third-party leases between Venture and other
tenants pertaining to retail sites operated by Venture to the
extent listed on Schedule C hereto; provided, however that KRCV's
rights under any such assignment shall at all times remain
subject to the assignments by Venture to Lender of its rights
under such third-party leases pursuant to the Security Documents.
11. Amendment of Unitary Lease. KRCV and Venture may not
amend the Unitary Lease at any time in the event such amendment
would in any way affect or relate to the Security Property or the
interests of Lender under the Loan Documents. KRCV and Venture
covenant to provide to Lender thirty days advance written notice
of any proposed amendment to the Unitary Lease.
12. Counterparts. This Agreement may be executed in
multiple counterparts and by telefax, each of which shall be
deemed an original, but all which together shall constitute one
and the same instrument.
13. No Implied Modification. Except as expressly provided
hereunder, the Loan Documents shall remain in full force and
effect as written.
14. Governing Law. This Agreement shall be governed by the
Laws of the State of Illinois.
15. Authority of KRCV. KRCV represents and warrants to
Lender that: (i) it is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Kansas; (ii) it has full power and authority to conduct its
business as presently conducted and to own the property
encumbered by the Security Documents; (iii) it has full power and
authority to enter into this Agreement and to perform all of its
duties and obligations hereunder; and (iv) the execution and
performance of this Agreement have been duly authorized by all
necessary corporate action.
16. Recordable Memoranda. Upon request of Lender,
Venture and KRCV shall execute memoranda recordable in the
counties and states in which the various parcels of the Security
Property are located, evidencing this Agreement and such
provisions hereof as Lender shall deem appropriate.
IN WITNESS WHEREOF, the parties have signed this Agreement
as of the date first above written.
KRCV CORP.
By: /s/Milton Cooper
Name: Milton Cooper
Title: Chairman
VENTURE STORES, INC.
By: /s/Russell Solt
Name: Russell Solt
Title: EVP - Finance & Admin.
LENDER:
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY
By: /s/John D. Cleavenger
Name: John D. Cleavenger
Title:
and
By: /s/Clarence R. Bell
Name: Clarence R. Bell
Title: Counsel
Venture Stores, Inc.
Computation of Earnings Per Share
(thousands, except per share data) EXHIBIT 11
13 WEEKS ENDED 26 WEEKS ENDED
July 26, July 27, July 26, July 27,
1997 1996 1997 1996
Net earnings (loss) before
extraordinary item $(102,993) $ (3,810) $(118,499) $ (2,073)
Extraordinary item
(net of tax) - - (2,402) -
Net earnings (loss) $(102,993) $ (3,810) $(120,901) $ (2,073)
Less Preferred dividend (625) (625) (1,250) (1,250)
Net earnings (loss) avail.
to common shareholders $(103,618) $ (4,435) $(122,151) $ (3,323)
Average outstanding shares 18,281 18,113 18,274 17,792
Earnings (loss) per common
share:
Before extraordinary item $ (5.67) $ (0.24) $ (6.55) $ (0.19)
Extraordinary item
(net of tax) - - (0.13) -
Earnings (loss) per
common share $ (5.67) $ (0.24) $ (6.68) $ (0.19)
PRIMARY:
Net earnings (loss) before
extraordinary item $(102,993) $ (3,810) $(118,499) $ (2,073)
Extraordinary item
(net of tax) - - (2,402) -
Net earnings (loss) $(102,993) $ (3,810) $(120,901) $ (2,073)
Less Preferred dividend (625) (625) (1,250) (1,250)
Net earnings (loss) avail.
to common shareholders $(103,618) $ (4,435) $(122,151) $ (3,323)
Average outstanding shares 18,281 18,113 18,274 17,792
Net effect of dilutive
stock options - based on
the treasury method - 70 - 64
Average shares for primary
earnings per share 18,281 18,183 18,274 17,856
Primary earnings (loss) per
common share:
Before extraordinary item $ (5.67) $ (0.24) $ (6.55) $ (0.19)
Extraordinary item
(net of tax) - - (0.13) -
Earnings (loss) per
common share $ (5.67) $ (0.24) $ (6.68) $ (0.19)
FULLY DILUTED:
Net earnings (loss) before
extraordinary item $(102,993) $ (3,810) $(118,499) $ (2,073)
Extraordinary item
(net of tax) - - $ (2,402) $ -
Net earnings (loss) $(102,993) $ (3,810) $(120,901) $ (2,073)
Less Preferred dividend (625) (625) (1,250) (1,250)
Net earnings (loss) avail.
to common shareholders $(103,618) $ (4,435) $(122,151) $ (3,323)
Average outstanding shares 18,281 18,113 18,274 17,792
Net effect of dilutive
stock options - based on
the treasury method - 70 - 64
Average shares for
fully diluted
earnings per share 18,281 18,183 18,274 17,856
Fully diluted earnings
(loss) per common share:
Before extraordinary item $ (5.67) $ (0.24) $ (6.55) $ (0.19)
Extraordinary item
(net of tax) - - (0.13) -
Earnings (loss) per
common share $ (5.67) $ (0.24) $ (6.68) $ (0.19)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Balance Sheet as of July 26, 1997 and the Condensed Statement of
Earnings for the 26 weeks ended Juy 26, 1997 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000864968
<NAME> VENTURE STORES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> JUL-26-1997
<CASH> 16,279
<SECURITIES> 0
<RECEIVABLES> 13,415
<ALLOWANCES> 0
<INVENTORY> 279,189
<CURRENT-ASSETS> 316,371
<PP&E> 408,773
<DEPRECIATION> 159,459
<TOTAL-ASSETS> 586,043
<CURRENT-LIABILITIES> 354,456
<BONDS> 148,781
0
77
<COMMON> 18,296
<OTHER-SE> 42,315
<TOTAL-LIABILITY-AND-EQUITY> 586,043
<SALES> 642,923
<TOTAL-REVENUES> 642,923
<CGS> 520,946
<TOTAL-COSTS> 230,113
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,445
<INCOME-PRETAX> (125,581)
<INCOME-TAX> (7,082)
<INCOME-CONTINUING> (118,499)
<DISCONTINUED> 0
<EXTRAORDINARY> (2,402)
<CHANGES> 0
<NET-INCOME> (120,901)
<EPS-PRIMARY> (6.68)
<EPS-DILUTED> (6.68)
</TABLE>
