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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
( Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 26, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-22480
DM Management Company
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 04-2973769
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
25 Recreation Park Drive 02043
Hingham, MA (ZIP Code)
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (781) 740-2718
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 |_|
Shares outstanding of the Registrant's common stock (par value $0.01)
at October 29, 1998: 9,617,652
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DM MANAGEMENT COMPANY
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 26, 1998
<TABLE>
<CAPTION>
Page
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements..........................................................................3-8
Consolidated Balance Sheets at September 26, 1998, September 27, 1997 and December 27, 1997..................3
Consolidated Statements of Operations for the three months and the nine months ended
September 26, 1998 and September 27, 1997...........................................................4
Consolidated Statements of Cash Flows for the nine months ended September 26, 1998 and
September 27, 1997..................................................................................5
Notes to Consolidated Financial Statements.................................................................6-8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.....................9-13
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds...................................................................14
Item 6. Exhibits and Reports on Form 8-K............................................................................14
Signatures....................................................................................................................15
</TABLE>
2
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DM MANAGEMENT COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
September 26, September 27, December 27,
1998 1997 1997
------------- ------------- ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................................. $ 18,806 $ 582 $ 19,260
Accounts receivable, net .............................................. 3,594 1,492 373
Marketable securities, net of unrealized loss ......................... -- 3,888 3,890
Inventory ............................................................. 29,083 18,498 20,579
Prepaid catalog expenses .............................................. 6,097 5,949 6,475
Deferred income taxes ................................................. 5,295 2,748 5,295
Other current assets .................................................. 1,386 726 856
--------- --------- ---------
Total current assets ............................................. 64,261 33,883 56,728
Property and equipment, net ........................................... 40,899 7,930 14,174
Deferred income taxes ................................................. 4,479 7,026 4,479
--------- --------- ---------
Total assets ..................................................... $ 109,639 $ 48,839 $ 75,381
--------- --------- ---------
--------- --------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ...................................................... $ 13,580 $ 10,685 $ 14,116
Accrued expenses ...................................................... 7,464 3,258 4,161
Accrued customer returns .............................................. 5,211 3,752 4,779
Short-term borrowings ................................................. 20,701 -- --
Current portion of long-term debt .................................... 9,287 836 837
--------- --------- ---------
Total current liabilities ........................................ 56,243 18,531 23,893
Long-term debt, less current portion ....................................... 3,418 6,150 8,346
Commitments
Stockholders' equity:
Special preferred stock (par value $0.01) 1,000,000 shares authorized . -- -- --
Common stock (par value $0.01) 15,000,000 shares authorized,
9,599,652, 4,675,786 and 6,098,480 shares issued and outstanding as of
September 26, 1998, September 27, 1997 and December 27, 1997,
respectively ......................................................... 96 47 61
Additional paid-in capital ............................................ 59,182 40,535 58,041
Unrealized loss on marketable securities .............................. -- (107) (105)
Accumulated deficit ................................................... (9,300) (16,317) (14,855)
--------- --------- ---------
Total stockholders' equity ....................................... 49,978 24,158 43,142
--------- --------- ---------
Total liabilities and stockholders' equity ....................... $ 109,639 $ 48,839 $ 75,381
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
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DM MANAGEMENT COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- ------------------------------
September 26, September 27, September 26, September 27,
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales .......................... $ 46,580 $ 31,649 $ 150,731 $ 89,077
Costs and expenses:
Product ....................... 20,283 13,984 67,733 39,399
Operations .................... 10,349 6,335 30,177 16,548
Selling ....................... 10,076 7,459 32,801 21,595
General and administrative .... 3,623 2,720 11,375 7,454
Interest, net ................. (58) 18 (462) 86
--------- --------- --------- ---------
Income before income taxes ......... 2,307 1,133 9,107 3,995
Provision for income taxes ......... 900 442 3,552 1,558
--------- --------- --------- ---------
Net income ......................... $ 1,407 $ 691 $ 5,555 $ 2,437
--------- --------- --------- ---------
--------- --------- --------- ---------
Earnings per share:
Basic ......................... $ 0.15 $ 0.10 $ 0.59 $ 0.36
Diluted ....................... $ 0.14 $ 0.09 $ 0.53 $ 0.32
Weighted average shares outstanding:
Basic ......................... 9,559 7,001 9,437 6,863
Diluted ....................... 10,419 7,902 10,392 7,691
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
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DM MANAGEMENT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------------
September 26, September 27,
1998 1997
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income ............................................................................ $ 5,555 $ 2,437
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation .......................................................................... 2,004 1,226
Loss on sale of marketable securities ................................................. 159 --
Deferred income taxes ................................................................. -- 824
Liability for expected losses ......................................................... -- (162)
Changes in assets and liabilities:
Increase in accounts receivable, net .................................................. (3,221) (1,138)
Increase in inventory ................................................................. (8,504) (5,861)
(Increase) decrease in prepaid catalog expenses ....................................... 378 (3,235)
Increase in other current assets ...................................................... (530) (195)
Increase in accounts payable and accrued expenses ..................................... 1,968 3,923
Increase in accrued customer returns .................................................. 432 2,443
-------- --------
Net cash (used in) provided by operating activities ....................................... (1,759) 262
Cash flows from investing activities:
Additions to property and equipment ................................................... (27,930) (1,983)
Proceeds from sale of marketable securities ........................................... 3,836 --
-------- --------
Net cash used in investing activities ..................................................... (24,094) (1,983)
Cash flows from financing activities:
Borrowings under debt agreements ...................................................... 48,002 10,679
Payments of debt borrowings ........................................................... (23,779) (9,250)
Proceeds from stock transactions ...................................................... 1,176 490
------- --------
Net cash provided by financing activities ................................................. 25,399 1,919
Net increase (decrease) in cash and cash equivalents ...................................... (454) 198
Cash and cash equivalents at:
Beginning of period ................................................................... 19,260 384
-------- --------
End of period ......................................................................... $ 18,806 $ 582
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
DM MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The financial statements included herein have been prepared by DM
Management Company (the "Company"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission, and in the opinion of
management contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows for the interim periods presented. The results of
operations for such interim periods are not necessarily indicative of the
results to be expected for the full year. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted pursuant to such
rules and regulations. Accordingly, although the Company believes that the
disclosures are adequate to make the information presented not misleading, these
financial statements should be read in conjunction with the consolidated
financial statements and the notes thereto included in the Company's Annual
Report to Stockholders for the fiscal year ended December 27, 1997.
A. Debt:
The Company's credit facilities at September 26, 1998 consisted of
(i) a $1,650,000 real estate loan (the "Real Estate Loan"); (ii) a $3,600,000
term loan (the "Term Loan"); (iii) an $23,500,000 revolving line of credit
(the "Revolver"); (iv) a $17,000,000 line of credit (the "Line of Credit");
and (v) a $4,300,000 short-term note (the "Short-Term Note"). All of the
Company's credit facilities are collateralized by a security interest in
substantially all assets of the Company. These credit facilities contain
various lending conditions and covenants, including restrictions on permitted
liens and required compliance with certain financial coverage ratios. During
the quarter ended September 26, 1998, the Company's credit facilities were
amended. The amendments include releasing the lender's security interest in
certain collateral that has since been sold, increasing the amount available
under the Revolver from $8,500,000 to $23,500,000 and extending certain
maturity dates subject to the Company obtaining a satisfactory commitment
letter to provide financing for the Company's new Tilton, New Hampshire
operations and fulfillment center.
Payments on the Real Estate Loan are due monthly, based on a 15-year
amortization, with the remaining balance payable on July 30, 2002. Interest on
the Real Estate Loan is fixed at 6.81% per annum until August 31, 1999, at which
time the Company may select from several interest rate options. Payments on the
Term Loan are due quarterly through its maturity on June 1, 2002. The Term Loan
provides for several interest rate options. At September 26, 1998, the Term Loan
bore interest at 7.00% per annum. The Revolver provides for several interest
rate options. At September 26, 1998, borrowings under the Revolver bore interest
at 8.5%. $15,000,000 of the Revolver expires on December 31, 1998. The remaining
$8,500,00 of the Revolver expires on June 1, 1999. The Company is required to
pay a commitment fee of 1/8th of 1% per annum on the unused portion of the
Revolver commitment. Borrowings under the Line of Credit bear interest at LIBOR
plus 125 base points repriced monthly and are payable in full on December 31,
1998. The Company is not required to pay a commitment fee on the unused portion
of the Line of Credit commitment. There was $16,401,000 outstanding under the
Line of Credit at September 26, 1998. The Short-Term Note bears interest at
7.06% per annum and matures on December 31, 1998. The maturity dates for
$15,000,000 of the Revolver, the Line of Credit, and the Short-Term Note may be
extended to March 31, 1999 in accordance with the amendments discussed above.
A summary of the Company's outstanding long-term debt follows (in
thousands):
<TABLE>
<CAPTION>
September 26, September 27, December 27,
1998 1997 1997
------------- ------------- ------------
<S> <C> <C> <C>
Real estate loans ....................... $ 1,531 $ 1,641 $ 1,613
Term loans .............................. 2,700 3,420 7,540
Revolver borrowings ..................... 8,450 1,895 --
Capitalized lease obligations ........... 24 30 30
------- ------- -------
Total long-term debt ............... 12,705 6,986 9,183
Less current maturities ................. 9,287 836 837
------- ------- -------
Long-term debt, less current portion $ 3,418 $ 6,150 $ 8,346
------- ------- -------
------- ------- -------
</TABLE>
6
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DM MANAGEMENT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)
(unaudited)
B. Stock split:
On May 29, 1998, the Company announced a three-for-two stock split to
be effected in the form of a stock dividend payable on June 30, 1998 to
shareholders of record on June 12, 1998. All historical earnings per share
information has been restated to include the effects of the stock split. The
consolidated balance sheets as of December 27, 1997 and September 27, 1997
have not been restated to include the effects of the stock split. All common
stock amounts and activity after the date of the stock split reflect the
three-for-two stock split.
C. Earnings per share:
The Company calculates earnings per share ("EPS") in accordance with
Statement of Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings per
Share." Basic EPS excludes potentially dilutive securities and is computed by
dividing net income available to common stockholders by the weighted average
number of common shares outstanding during the period. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue
common shares were exercised or converted into common shares that then shared in
the earnings of the entity. EPS data for the period ended September 26, 1997 has
been restated to conform to the provisions of SFAS 128. A reconciliation of the
numerators and denominators of the basic and diluted EPS calculation follows (in
thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- ----------------------------
September 26, September 27, September 26, September 27,
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Numerator:
Net income ................................ $ 1,407 $ 691 $ 5,555 $ 2,437
------- ------- ------- -------
------- ------- ------- -------
Denominator (shares):
Basic weighted average shares outstanding . 9,559 7,001 9,437 6,863
Assumed exercise of stock options ......... 860 901 955 828
------- ------- ------- -------
Diluted weighted average shares outstanding 10,419 7,902 10,392 7,691
------- ------- ------- -------
------- ------- ------- -------
Earnings per share:
Basic ................................... $ 0.15 $ 0.10 $ 0.59 $ 0.36
Diluted ................................. $ 0.14 $ 0.09 $ 0.53 $ 0.32
</TABLE>
D. Commitments:
In fiscal 1997 the Company began constructing a new operations and
fulfillment center in Tilton, New Hampshire. This new facility is expected to be
fully operational by early 1999. The estimated cost of this new facility,
including land, construction and equipment, ranges from $39.0 to $41.0 million.
During the nine months ended September 26, 1998, the Company entered
into a lease agreement for a new J. Jill catalog outlet store. The original
term of the lease is five years, commencing in August 1998, with minimum
annual lease payments due under the lease of $40,000.
During September 1998 the Company entered into a lease agreement for
office space intended to house the Company's new corporate headquarters. The
original term of the lease is ten years commencing on the date following the
date on which the premises are ready for occupancy. The current estimated
completion date is in September 1999. Minimum annual lease payments due under
the lease range from $1,600,000 to $1,785,000. In October 1998 the Company
placed $1,300,000 on deposit to secure this lease.
Subsequent to September 26, 1998, the Company entered into lease
agreements for two additional J. Jill catalog outlet stores. The term of the
first lease is three years, commencing on the earlier of opening the store or
December 1999, with minimum annual lease payments due under the lease of
$74,000. The term of the second lease is five years, commencing on the
earlier of opening the store or April 1999, with minimum annual lease
payments due under the lease of $61,000.
7
<PAGE>
E. Recent accounting standards:
In June 1997 the Financial Accounting Standards Board (the "FASB")
issued Statement No. 130 ("SFAS 130"), "Reporting Comprehensive Income." The
Company has determined that the impact of this statement is immaterial to these
consolidated financial statements.
In June 1997 the FASB issued Statement No. 131, ("SFAS 131"),
"Disclosures about Segments of an Enterprise and Related Information" which
establishes new standards for the way public companies report information about
operating segments and requires companies to report selected segment information
quarterly to stockholders. This statement is effective for financial statements
for periods beginning after December 15, 1997 and requires comparative
information for earlier years to be restated. This statement need not be applied
to interim financial statements in the initial year of its application.
Management is currently evaluating the effect of this statement on its reporting
of segment information.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, which involve risks and uncertainties. For this purpose, any
statements contained herein or incorporated herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the generality of the foregoing, the words "anticipates," "plans,"
"expects" and similar expressions are intended to identify forward-looking
statements. The Company's actual results, performance or achievements may
differ significantly from the results discussed in or implied by the
forward-looking statements. Factors that might cause such a difference
include, but are not limited to the following: difficulties in managing the
transition of operations to the Company's new Tilton, New Hampshire
operations and fulfillment center; delays or problems in implementing the
Company's new order management and warehouse management systems in the new
Tilton facility; failure of the Company or its significant vendors or
suppliers to become Year 2000 compliant; the ability of the Company to
effectively liquidate its overstocked merchandise; significant changes in
customer response rates; changes in consumer spending and consumer
preferences; increasing competition in the apparel industry; success of
operating initiatives; changes in business strategy; advertising and
promotional efforts; quality of management; possible future increases in
operating costs; availability, terms and deployment of capital; brand
awareness; availability of qualified personnel; business abilities and
judgment of personnel; labor and employee benefit costs; general economic and
business conditions; change in, or the failure to comply with, government
regulations, and other factors.
Results of Operations
The following table sets forth the Company's consolidated statements of
operations expressed as a percentage of net sales and certain selected operating
data:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------------------- -----------------------------------
September 26, September 27, September 26, September 27,
Consolidated Statement of Operations: 1998 1997 1998 1997
------------------ ------------------ ------------------ ---------------
<S> <C> <C> <C> <C>
Net sales.......................................... 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Product....................................... 43.5 44.2 44.9 44.2
Operations.................................... 22.2 20.0 20.0 18.6
Selling....................................... 21.6 23.6 21.8 24.2
General and administrative.................... 7.8 8.6 7.6 8.4
Interest, net................................. (0.1) -- (0.3) 0.1
-------- ------- ------- -------
Income before income taxes......................... 5.0 3.6 6.0 4.5
Provision for income taxes......................... 2.0 1.4 2.3 1.8
-------- ------- ------- -------
Net income......................................... 3.0% 2.2% 3.7% 2.7%
-------- ------- ------- -------
-------- ------- ------- -------
Selected Operating Data (in thousands):
Catalog circulation (1) 15,100 10,900 48,500 32,300
Active customers (2) 1,203 794 1,203 794
</TABLE>
(1) In order to more closely match net sales to catalog
circulation, the Company calculates catalog circulation on a
percentage of completion basis. This calculation takes into
account the total number of catalogs mailed during all periods
and the Company's estimate of the expected sales life of each
catalog edition. As used throughout this Form 10-Q, the term
"catalog circulation" refers to circulation of the Company's
catalogs calculated in such fashion.
(2) As used throughout this Form 10-Q, the term "active customer"
means customers who have made a purchase from the Company
within the 24 months preceding the stated period end.
Comparison of the Three Months Ended September 26, 1998 with the Three Months
Ended September 27, 1997
Net Sales
During the three months ended September 26, 1998 ("third quarter
1998") net sales increased by 47.2% to $46.6 million from $31.6 million
during the three months ended September 27, 1997 ("third quarter 1997"). This
net sales growth was primarily attributable to significant sales volume
increases from the Company's J. Jill concept. During third quarter 1998 J.
Jill net sales and circulation increased by 89.1% and 74.3%, respectively, as
compared to third quarter 1997. J. Jill net sales growth was primarily
attributable to circulation growth. During third quarter 1998 net sales and
circulation for the Nicole Summers concept decreased by 17.5% and 20.0%,
respectively, as compared to third quarter 1997 as the Company focused on
improving the concept's profitability. Total Company catalog circulation
increased by 38.5% to 15.1 million during third quarter 1998 from 10.9
million during third quarter 1997. The number of active customers grew to 1.2
million at September 26, 1998 from 0.8 million at September 27, 1997, an
increase of 51.5%. Although the Company plans to continue its aggressive
customer
9
<PAGE>
acquisition strategy, it does not expect the same year over year percentage
increase in circulation that it has experienced since implementing the strategy
in third quarter 1997.
Product
Product costs consist primarily of merchandise acquisition costs (net
of term discounts and advertising allowances), including freight costs, and
provisions for markdowns. During third quarter 1998 product costs increased by
45.0% to $20.3 million from $14.0 million during third quarter 1997. As a
percentage of net sales, product costs decreased to 43.5% during third quarter
1998 from 44.2% during third quarter 1997. The decrease in product costs as a
percentage of net sales is attributable to the shift in the mix of the business
toward J. Jill, which experiences lower product costs as a percentage of net
sales than Nicole Summers due to its higher concentration of private label
merchandise. The Company does not expect product costs as a percentage of net
sales to improve significantly in the near future.
Operations
Operating expenses consist primarily of order processing costs, such
as telemarketing, customer service, fulfillment, shipping, warehousing and
credit card processing costs, and merchandising costs. During third quarter
1998 operating expenses increased by 63.4% to $10.3 million from $6.3 million
during third quarter 1997. As a percentage of net sales, operating expenses
increased to 22.2% during third quarter 1998 from 20.0% during third quarter
1997. The Company's recent growth has accelerated its need to increase its
fulfillment capacity. The Company currently fulfills orders out of its
Meredith, New Hampshire facility and two leased interim satellite facilities.
This arrangement has generated operational inefficiencies, as well as
increased costs, both of which are expected to continue through the first
year of operation in the Company's new Tilton, New Hampshire facility, which
is currently in its testing phase and is expected to be fully operational by
early 1999. Also during third quarter 1998 the Company implemented its new
order taking and order fulfillment operating systems in its current operating
facilities. The implementation process resulted in approximately six weeks of
operating inefficiencies before the Company was able to achieve previously
maintained order taking and order fulfillment performance levels. In addition
the Company's investment in the product development division of merchandising
during third quarter 1998 increased substantially as compared to third
quarter 1997. The Company currently expects the ratio of operating expenses
to net sales to improve by fiscal 2000.
Selling
Selling expenses consist primarily of the cost to produce, print and
distribute catalogs. During third quarter 1998 selling expenses increased by
35.1% to $10.1 million from $7.5 million during third quarter 1997. As a
percentage of net sales, selling expenses decreased to 21.6% during third
quarter 1998 from 23.6% during third quarter 1997. This decrease was primarily
the result of improved catalog productivity in third quarter 1998 as compared to
third quarter 1997. This improved productivity more than offset an increase in
paper costs during third quarter 1998 as compared to third quarter 1997. The
Company does not expect to maintain the catalog productivity levels achieved
during third quarter 1998.
General and Administrative
General and administrative expenses consist primarily of executive,
marketing, information systems and finance expenses. During third quarter 1998,
general and administrative expenses increased by 33.2% to $3.6 million from $2.7
million during third quarter 1997. This increase is primarily attributable to
increased salaries and performance bonuses and increased depreciation. As a
percentage of net sales, general and administrative expenses decreased to 7.8%
during third quarter 1998 from 8.6% during third quarter 1997.
Comparison of the Nine Months Ended September 26, 1998 with the Nine Months
Ended September 27, 1997
Net Sales
During the nine months ended September 26, 1998 net sales increased by
69.2% to $150.7 million from $89.1 million during the nine months ended
September 27, 1997. This net sales increase was primarily attributable to
significant sales volume increases from the Company's J. Jill concept. During
the nine months ended September 26, 1998 J. Jill net sales and circulation
increased by 150.6% and 112.8%, respectively, as compared to the nine months
ended September 27, 1997. J. Jill's net sales growth was primarily attributable
to circulation growth, an increased average order size and improved response
rates. During the nine months ended September 26, 1998 net sales and circulation
for the Nicole Summers concept decreased by 8.7% and 12.5%, respectively, as
compared to the nine months ended September 27, 1997 as the Company focused on
improving the concept's profitability. Total Company catalog circulation
increased by 50.2% to 48.5 million during the nine months ended September 26,
1998 from 32.3 million during the nine months ended September 27, 1997.
10
<PAGE>
Product
During the nine months ended September 26, 1998 product costs increased
by 71.9% to $67.7 million from $39.4 million during the nine months ended
September 27, 1997. As a percentage of net sales, product costs increased to
44.9% during the nine months ended September 26, 1998 from 44.2% during the nine
months ended September 27, 1997. During the first quarter of 1998 the Company
implemented a new strategic merchandising initiative designed to maximize the
recovery rate of "wear-now" carry-over items and minimize future potential
markdowns by offering moderately discounted Fall season merchandise in the
Company's early Spring season catalogs. This strategy, combined with increased
markdown charges associated with the Company's Nicole Summers concept during
second quarter 1998, resulted in the increase in product costs as a percentage
of net sales during the nine months ended September 26, 1998 as compared to the
nine months ended September 27, 1997. This increase in costs as a percentage of
net sales was partially offset by the shift in the mix of the business toward J.
Jill, which experiences lower product costs as a percentage of net sales than
Nicole Summers due to its higher concentration of private label merchandise.
Operations
During the nine months ended September 26, 1998 operating expenses
increased by 82.4% to $30.2 million from $16.5 million during the nine months
ended September 27, 1997. As a percentage of net sales, operating expenses
increased to 20.0% during the nine months ended September 26, 1998 from 18.6%
during the nine months ended September 27, 1997. Inefficiencies associated
with the Company's operation of multiple fulfillment centers and its recent
operating systems implementation combined with the Company's continued
investment in the product development division of merchandising, discussed
above, are primarily responsible for the increase in operating costs as a
percentage of net sales.
Selling
During the nine months ended September 26, 1998 selling expenses
increased by 51.9% to $32.8 million from $21.6 million during the nine months
ended September 27, 1997. As a percentage of net sales, selling expenses
decreased to 21.8% during the nine months ended September 26, 1998 from 24.2%
during the nine months ended September 27, 1997. This decrease was primarily the
result of improved catalog productivity, despite an increase in paper costs, in
the nine months ended September 26, 1998 as compared to the nine months ended
September 27, 1997.
General and Administrative
During the nine months ended September 26, 1998 general and
administrative expenses increased by 52.6% to $11.4 million from $7.5 million
during the nine months ended September 27, 1997. This increase is primarily
attributable to increased salaries and performance bonuses, increased outside
consulting fees and increased depreciation and insurance costs. As a percentage
of net sales, general and administrative expenses decreased to 7.6% during the
nine months ended September 26, 1998 from 8.4% during the nine months ended
September 27, 1997.
Income Taxes
The Company provides for income taxes at an effective tax rate that
includes the full federal and state statutory tax rates. The Company's effective
tax rate during the nine months ended September 26, 1998 and the nine months
ended September 27, 1997 was 39.0%.
Liquidity and Capital Resources
During the nine months ended September 26, 1998, the Company funded its
working capital needs through cash generated from operations and through use of
its credit facilities. The Company used working capital to support costs
incurred in advance of revenue generation, primarily inventory acquisition and
catalog development, production and mailing costs incurred prior to the
beginning of each selling season. The Company has two selling seasons which
correspond to the fashion seasons. The Fall season begins in July and ends in
December. The Spring season begins in January and ends in early July.
The Company's credit facilities at September 26, 1998 consisted of
(i) a $1.7 million real estate loan (the "Real Estate Loan"); (ii) a $3.6
million term loan (the "Term Loan"); (iii) an $23.5 million revolving line of
credit (the "Revolver"); (iv) a $17.0 million line of credit (the "Line of
Credit"); and (v) a $4.3 million short-term note (the "Short-Term Note"). All
of the Company's credit facilities are collateralized by a security interest
in substantially all assets of the Company. These credit facilities contain
various lending conditions and covenants, including restrictions on permitted
liens and required compliance with certain financial coverage ratios. During
the quarter ended September 26, 1998 the Company's credit facilities were
amended. The amendments include releasing the lender's security interest in
certain collateral that has since been sold, increasing the amount available
under the Revolver from $8.5 million to $23.5 million and extending certain
maturity dates subject to the Company obtaining a satisfactory commitment
letter to provide financing for the Company's new Tilton, New Hampshire
operations and fulfillment center.
Payments on the Real Estate Loan are due monthly, based on a 15-year
amortization, with the remaining balance payable on
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July 30, 2002. Interest on the Real Estate Loan is fixed at 6.81% per annum
until August 31, 1999, at which time the Company may select from several
interest rate options. Payments on the Term Loan are due quarterly through
its maturity on June 1, 2002. The Term Loan provides for several interest
rate options. At September 26, 1998, the Term Loan bore interest at 7.00% per
annum. The Revolver provides for several interest rate options. At September
26, 1998, borrowings under the Revolver bore interest at 8.5%. $15.0 million
of the Revolver expires on December 31, 1998. The remaining $8.5 million of
the Revolver expires on June 1, 1999. The Company is required to pay a
commitment fee of 1/8th of 1% per annum on the unused portion of the Revolver
commitment. Borrowings under the Line of Credit bear interest at LIBOR plus
125 basis points repriced monthly and are payable in full on December 31,
1998. The Company is not required to pay a commitment fee on the unused
portion of the Line of Credit commitment. The Short-Term Note bears interest
at 7.06% per annum and matures on December 31, 1998. The maturity dates for
$15.0 million of the Revolver, the Line of Credit, and the Short-Term Note
may be extended to March 31, 1999 in accordance with the amendments discussed
above.
Cash used in investing activities totaled $24.1 million during the nine
months ended September 26, 1998 and $2.0 million during the nine months ended
September 27, 1997. During the nine months ended September 26, 1998 investing
activities included approximately $24.4 million in costs related to the
construction of the Company's new operations and fulfillment center in Tilton,
New Hampshire.
In fiscal 1997 the Company began constructing its new operations and
fulfillment center in Tilton, New Hampshire. This new facility is in the
testing phase and is expected to be fully operational by early 1999. The
estimated cost of this new facility, including land, construction and
equipment, ranges from $39.0 million to $41.0 million, of which approximately
$30.4 million had been spent as of September 26, 1998. At September 26, 1998
approximately $20.7 million of the $30.4 million had been financed through the
use of short-term borrowings. The Company intends to finance the cost of this
new facility with a combination of the following: a mortgage from a financing
institution, a portion of the net proceeds from its second public offering, a
sale-leaseback transaction, proceeds from the Company's recent sale of
marketable securities, government sponsored financing and cash flows from
operations.
During third quarter 1998, the Company implemented its new order
management and warehouse management operating systems in its current
operating facilities. Total expenditures to be capitalized for this systems
project are estimated at approximately $2.8 million, of which approximately
$2.7 million had been spent as of September 26, 1998.
During third quarter 1998, the Company sold its marketable securities
and recognized an after tax loss of $0.1 million. The proceeds from this sale
were used to fund construction of the new operations and fulfillment center.
Inventory levels at September 26, 1998 were 57.2% higher than at
September 27, 1997, primarily due to the past and future projected growth in the
business.
During the nine months ended September 26, 1998, the Company entered
into a lease agreement for a new J. Jill catalog outlet store. The original
term of the lease is five years, commencing in August 1998, with minimum
annual lease payments due under the lease of less than $0.1 million.
During September 1998 the Company entered into a lease agreement for
office space intended to house the Company's new corporate headquarters. The
original term of the lease is ten years commencing on the date following the
date on which the premises are ready for occupancy. The current estimated
completion date is in September 1999. Minimum annual lease payments due under
the lease range from $1.6 million to $1.8 million. In October 1998 the
Company placed $1.3 million on deposit to secure this lease.
The Company expects that its cash and cash equivalents, existing
credit facilities, anticipated new credit facilities and other financing
arrangements, and cash flows from operations will be sufficient to support
the Company's capital and operating needs for the foreseeable future.
Future Considerations
On October 19, 1998 the Company launched "J. Jill Homewear," the
Company's foray into the home market, featuring an assortment of bed, bath
and accessory items. The Company does not expect this initial offering to
significantly affect its financial condition, results of operations or cash
flows during fiscal 1998. Additionally, the Company has plans to mail four
separate 48-page "J. Jill Homewear" catalogs during 1999.
Subsequent to September 26, 1998, the Company entered into lease
agreements for two additional J. Jill catalog outlet stores. The term of the
first lease is three years, commencing on the earlier of opening the store or
December 1999, with minimum annual lease payments due under the lease of
$0.1 million. The term of the second lease is five years, commencing on the
earlier of opening the store or April 1999, with minimum annual lease
payments due under the lease of $0.1 million.
Year 2000
The Year 2000 issue affects most companies that rely on computer
systems and involves the computer software and hardware changes necessary to
handle the transition from the year 1999 to the Year 2000. During 1997, the
Company formulated a plan to address the Year 2000 issue. The Company has
assessed its status regarding its Year 2000 compliance in three components:
internal information technology (IT) systems, internal non-information
technology (non-IT) systems, and external Year 2000 issues related to the
Company's vendors, suppliers and service providers ("third party providers").
As part of the Company's strategic business plan, the Company's
major internal IT and non-IT systems have been replaced or upgraded. The
Company has received assurances from the vendors of the Company's major
internal IT and non-IT systems indicating the new systems and upgrades are
designed to be Year 2000 compliant. Due to the fact that these system
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improvements were primarily motivated by the Company's growth and technology
needs, they are not considered to be costs directly attributable to the Year
2000 issue. Certain minor internal IT and non-IT systems have also been
upgraded or are planned to be upgraded by January 1999. The Company has
received assurances from the vendors of these upgrades indicating that the
upgrades are designed to be Year 2000 compliant. These upgrades are part of
the Company's continuing maintenance plans and are not considered to be costs
directly attributable to the Year 2000 issue. Beginning in the Spring of
1999, the Company plans to run tests focused on verifying the assurances
given by the vendors of its internal IT and non-IT systems. At this time
there can be no assurance that all of the Company's internal IT and non-IT
systems will be Year 2000 compliant. The total historical and estimated
future costs to address the Year 2000 issue with respect to internal IT and
non-IT systems is currently estimated to be less than $500,000.
As part of the Company's plan to address the Year 2000 issue, the
Company has begun contacting and receiving letters from its significant third
party providers either certifying that their company is currently Year 2000
compliant or indicating a date that a compliance certificate is expected. The
Company has begun to develop contingency plans to deal with possible
non-compliance by the Company's significant third party providers. These plans
include the possible replacement of the non-complying third party providers.
The current estimated impact to the Company for these replacements is
approximately $200,000. At this time there can be no assurance that all of
the Company's third party providers will be Year 2000 compliant. The Company
plans to further develop its contingency plans beginning in the first quarter
of 1999.
The estimates mentioned above may change materially in the future as
further information is obtained. Any failure of the Company or its
significant third party providers to become Year 2000 compliant could have a
material adverse effect on the Company's financial condition, results of
operations, or cash flows.
Recent Accounting Standards
In June 1997 the Financial Accounting Standards Board (the "FASB")
issued Statement No. 130 ("SFAS 130"), "Reporting Comprehensive Income". The
Company has determined that the impact of this statement is immaterial to its
consolidated financial statements.
In June 1997 the FASB issued Statement No. 131, ("SFAS 131"),
"Disclosures about Segments of an Enterprise and Related Information" which
establishes new standards for the way public companies report information about
operating segments and requires companies to report selected segment information
quarterly to stockholders. This statement is effective for financial statements
for periods beginning after December 15, 1997 and requires comparative
information for earlier years to be restated. This statement need not be applied
to interim financial statements in the initial year of its application.
Management is currently evaluating the effect of this statement on its reporting
of segment information.
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Part II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
The Company's $4.0 million of remaining proceeds from the initial
public offering of its common stock (SEC File #33-67512, effective date of
registrations statement -November 1, 1993) were used during the quarter ended
September 26, 1998. The proceeds were previously held in short term
investments. The Company sold the investments during the quarter ended
September 26, 1998 and recognized an after tax loss of $0.1 million. These
proceeds were used to fund the construction of the Company's new operations
and fulfillment center in Tilton, New Hampshire.
Item 6. Exhibits and Reports on Form 8-K
(1) Exhibits
Certificate of Incorporation and By-Laws
3.1 Restated Certificate of Incorporation of the Company (included as
Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 25, 1993, File No. 0-22480, and
incorporated herein by reference)
3.2 By-Laws of the Company, as amended (included as Exhibit 3.2 to the
Company's Current Report on Form 8-K dated January 14, 1997, File
No. 0-22480, and incorporated herein by reference)
Material Contracts
10.1 Lease Agreement dated September 18, 1998, between the Company and
National Fire Protection Association
10.2 Second Amendment to Second Amended and Restated Loan Agreement
dated September 4, 1998, between the Company and Citizens Bank of
Massachusetts
10.3 Third Amendment to Second Amended and Restated Loan Agreement
dated September 4, 1998, between the Company and Citizens Bank of
Massachusetts
10.4 First Amendment to Assignment of Certificate of Deposit dated
September 4, 1998, between the Company and Citizens Bank of
Massachusetts
10.5 Second Amendment to Bridge Mortgage dated September 4, 1998,
between the Company and Citizens Bank of Massachusetts
10.6 Third Amendment to Mortgage (Meredith) dated September 4, 1998,
between the Company and Citizens Bank of Massachusetts
10.7 Replacement New Bridge Note dated September 4, 1998, between the
Company and Citizens Bank of Massachusetts
10.8 Replacement Short Term Revolving Note dated September 4, 1998,
between the Company and Citizens Bank of Massachusetts
10.9 Second Replacement Revolving Note dated September 4, 1998, between
the Company and Citizens Bank of Massachusetts
10.10 Third Amendment to Security Agreement dated September 4, 1998,
between the Company and Citizens Bank of Massachusetts
10.11 Lease agreement dated October 5, 1998, between the Company and
Chelsea GCA Realty Partnership, L.P.
10.12 Split Dollar Agreement and Assignment of Life Insurance Policy as
Collateral dated October 1, 1998 between the Company and Gordon R.
Cooke
10.13 Lease Agreement dated October 23, 1998, between the Company and
Tanger Properties Limited Partnership
Financial Data Schedule
27.1 Financial Data Schedule
(2) Reports on Form 8-K
The Company has not filed any reports on Form 8-K during the quarter ended
September 26, 1998.
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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.
DM MANAGEMENT COMPANY
Dated: November 9, 1998 By: /s/ Olga L. Conley
-------------------
Olga L. Conley
Authorized Officer
Senior Vice President - Finance,
Chief Financial Officer and Treasurer
(Principal Financial Officer)
Dated: November 9, 1998 By: /s/ Peter J. Tulp
------------------
Peter J. Tulp
Authorized Officer
Vice President - Finance,
Corporate Controller
(Principal Accounting Officer)
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DM MANAGEMENT COMPANY
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 26, 1998
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
Certificate of Incorporation and By-Laws
3.1 Restated Certificate of Incorporation of the Company (included as
Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 25, 1993, File No. 0-22480, and
incorporated herein by reference)
3.2 By-Laws of the Company, as amended (included as Exhibit 3.2 to the
Company's Current Report on Form 8-K dated January 14, 1997, File
No. 0-22480, and incorporated herein by reference)
Material Contracts
10.1 Lease Agreement dated September 18, 1998, between the Company and
National Fire Protection Association
10.2 Second Amendment to Second Amended and Restated Loan Agreement
dated September 4, 1998, between the Company and Citizens Bank of
Massachusetts
10.3 Third Amendment to Second Amended and Restated Loan Agreement
dated September 4, 1998, between the Company and Citizens Bank of
Massachusetts
10.4 First Amendment to Assignment of Certificate of Deposit dated
September 4, 1998, between the Company and Citizens Bank of
Massachusetts
10.5 Second Amendment to Bridge Mortgage dated September 4, 1998,
between the Company and Citizens Bank of Massachusetts
10.6 Third Amendment to Mortgage (Meredith) dated September 4, 1998,
between the Company and Citizens Bank of Massachusetts
10.7 Replacement New Bridge Note dated September 4, 1998, between the
Company and Citizens Bank of Massachusetts
10.8 Replacement Short Term Revolving Note dated September 4, 1998,
between the Company and Citizens Bank of Massachusetts
10.9 Second Replacement Revolving Note dated September 4, 1998, between
the Company and Citizens Bank of Massachusetts
10.10 Third Amendment to Security Agreement dated September 4, 1998,
between the Company and Citizens Bank of Massachusetts
10.11 Lease agreement dated October 5, 1998, between the Company and
Chelsea GCA Realty Partnership, L.P.
10.12 Split Dollar Agreement and Assignment of Life Insurance Policy as
Collateral dated October 1, 1998 between the Company and Gordon R.
Cooke
10.13 Lease Agreement dated October 23, 1998, between the Company and
Tanger Properties Limited Partnership
Financial Data Schedule
27.1 Financial Data Schedule
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Exhibit 10.1
Lease Agreement
THIS INSTRUMENT IS A LEASE, dated as of September 18, 1998, in which the
Landlord and the Tenant are the parties hereinafter named, and which relates to
space in a building (the "Building") known as 4 Batterymarch Park located in
Batterymarch Park, Quincy, MA. The parties to this instrument hereby agree with
each other as follows:
ARTICLE I
BASIC LEASE PROVISIONS
1.1 INTRODUCTION
The following sets forth basic data and, where appropriate, constitutes
definitions of the terms hereinafter listed.
1.2 BASIC DATA
LANDLORD: National Fire Protection Association (NFPA)
LANDLORD'S ORIGINAL ADDRESS: One Batterymarch Park, Quincy, MA 02269
Attention: James M. Shannon
TENANT: DM Management Company, a Delaware corporation
TENANT'S ORIGINAL ADDRESS:
PRIOR TO THE COMMENCEMENT DATE: 25 Recreation Park Drive, Suite 200,
Hingham, MA 02043 Attention: Chief Executive Officer
FROM AND AFTER THE COMMENCEMENT DATE: the Premises
BUILDING: An approximately 154,000 square foot five (5) story building
to be constructed by Landlord at 4 Batterymarch Park, Quincy, MA.
BASIC RENT: Years 1 and 2 of the Term: $26.50 per square foot of the
Premises Rentable Area per annum
Years 3 and 4 of the Term: $27.50 per square foot of the
Premises Rentable Area per annum
Years 5, 6 and 7 of the Term: $28.50 per square foot of the
Premises Rentable Area per annum
<PAGE>
Years 8, 9 and 10 of the Term: $29.50 per square foot of the
Premises Rentable Area per annum
Basic Rent may be adjusted and/or abated pursuant to Sections 2.3, 3.2
and 12.1.
PREMISES RENTABLE AREA: Approximately 60,500 square feet (subject to
adjustment pursuant to Section 2.3) located on the fourth and fifth
floors of the Building as measured in accordance with the Measurement
Method.
PERMITTED USES: General office uses including the utilization of one
residential size washing machine and clothes dryer.
ESCALATION FACTOR: as computed in accordance with the Escalation Factor
Computation.
PLAN APPROVAL DATE: December 1, 1998
SCHEDULED COMPLETION DATE: September 1, 1999
INITIAL TERM: Ten (10) years commencing on the Commencement Date and
expiring at the close of the day immediately preceding the tenth (10th)
anniversary of the Commencement Date, except that if the Commencement
Date shall be other than the first day of a calendar month, the
expiration of the Initial Term shall be at the close of the day on the
last day of the calendar month in which such anniversary shall fall.
SECURITY DEPOSIT: $1,300,000, such amount to be decreased by $200,000 on
each anniversary of the Commencement Date provided that (i) no Default of
Tenant exists at that time and (ii) Tenant maintains net profits equal to
or greater than $6,500,000 for the year preceding the year in which the
reduction is sought (and provides to Landlord reasonable evidence of the
same). Notwithstanding the foregoing, at no point during the Term shall
the Security Deposit be decreased to less than $400,000.
BASE OPERATING EXPENSES: Base Operating Expenses shall be the actual
Operating Expenses for the Property for calendar year 2000 (provided
that, if during any portion of calendar year 2000, less than 95% of the
Building Rentable Area was occupied by tenants or if the Building was in
operation for only a portion of such year, actual operating expenses
incurred shall be reasonably extrapolated by Landlord to the estimated
operational expenses that would have been incurred if the Building were
in operation for the entire year and 95% occupied for such year, and such
extrapolated amount shall, for the purposes hereof, be deemed to be the
Base Operating Expenses.
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BASE TAXES: Base Taxes shall be the actual Taxes for the Property for the
period July 1, 1999 through June 30, 2000 (provided that if the
assessment for such period does not reflect the assessment for the
completed improvements, Base Taxes shall be appropriately adjusted when
the completed improvements have been fully assessed)
PUBLIC LIABILITY INSURANCE: $500,000 per occurrence (combined single
limit) for property damage, personal injury or death.
1.3 ADDITIONAL DEFINITIONS
BUILDING RENTABLE AREA: Approximately 154,000 square feet measured in
accordance with the Measurement Method.
BUSINESS DAYS: All days except Sunday, New Year's Day, Martin Luther
King Day, Washington's Birthday, Memorial Day, Independence Day, Labor
Day, Columbus Day, Veteran's Day, Thanksgiving Day, Christmas Day (and
the following day when any such day occurs on Sunday).
COMMENCEMENT DATE: As defined in Section 4.1.
DEFAULT OF TENANT: As defined in Section 13.1.
ESCALATION CHARGES: The amounts prescribed in Sections 8.1 and 9.2.
ESCALATION FACTOR COMPUTATION: Premises Rentable Area divided by 95% of
Building Rentable Area.
LANDLORD'S WORK: As defined in Section 4.2.
MEASUREMENT METHOD: "Standard Method of Floor Measurement for Office
Buildings," effective April 16, 1968, approved by the Real Estate Board
of New York, Inc. Without limitation, such computation includes common
areas of the Building notwithstanding the fact that such common areas are
not contained within the Premises.
OPERATING EXPENSES: As determined in accordance with Section 9.1.
OPERATING YEAR: As defined in Section 9.1.
PREMISES: The portion of the Building as shown on Exhibit FP annexed
hereto.
PROPERTY: The Building and the land parcels on which it is located
(including adjacent sidewalks).
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TAX YEAR: As defined in Section 8.1.
TAXES: As determined in accordance with Section 8.1.
TENANT'S DELAY: As defined in Section 4.2.
TENANT'S PLANS: As defined in Section 4.2.
TENANT'S REMOVABLE PROPERTY: As defined in Section 5.2.
TERM OF THIS LEASE: The Initial Term and any extension thereof in
accordance with the provisions hereof.
ARTICLE II
PREMISES AND APPURTENANT RIGHTS
2.1 LEASE OF PREMISES
Landlord hereby demises and leases to Tenant for the Term of this Lease
and upon the terms and conditions hereinafter set forth, and Tenant
hereby accepts from Landlord, the Premises.
2.2 APPURTENANT RIGHTS AND RESERVATIONS
a. Tenant shall have, as appurtenant to the Premises, (i) the
non-exclusive right to use, and permit its invitees to use, in
common with others, public or common lobbies, hallways,
stairways, and elevators and common walkways necessary for access
to the Building, and if the portion of the Premises on any floor
includes less than the entire floor, the common toilets,
corridors and elevator lobby of such floor; but such rights shall
always be subject to reasonable rules and regulations from time
to time established by Landlord pursuant to Section 14.7 and to
the right of Landlord to designate and change from time to time
areas and facilities so to be used and (ii) 222 parking spaces on
a non-exclusive, first-come, first-served basis, such spaces to
be available in a surface level parking lot or above-ground
structured parking facility provided, however, that Tenant shall
be entitled to use in the parking garage located under the
Building, on a designated basis, 20 parking spaces, five (5) of
which shall be located closest to the Building's elevator.
Landlord shall have no obligation, and Tenant shall have no
right, to tow or otherwise remove vehicles of third parties who
park in Tenant's designated spaces. With respect to parking
spaces, Landlord reserves the right to institute a tag or sticker
system to monitor compliance by Tenant and others of use of the
parking spaces. The Premises shall be
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designated a non-smoking area and Tenant will comply, and cause
its employees and invitees to comply, with Building regulations
regarding non-smoking areas.
b. Excepted and excluded from the Premises are the ceiling, floor
and all perimeter walls of the Premises, except the inner
surfaces thereof, but the entry doors to the Premises are a part
thereof; and Tenant agrees that Landlord shall have the right to
place in the Premises (but in such manner as to reduce to a
minimum interference with Tenant's use of the Premises) utility
lines, pipes and the like, in, over and upon the Premises,
provided that Landlord shall, if it is reasonably feasible, place
such utility lines, pipes and the like behind the walls, above
the ceilings and below the floor of the Premises. Tenant shall
install and maintain, as Landlord may require, proper access
panels in any hung ceilings or walls as may be installed by
Tenant following completion of the initial improvements to afford
access to any facilities above the ceiling or within or behind
the walls of the Premises.
2.3 ADJUSTMENT TO PREMISES RENTABLE AREA
a. Landlord shall, prior to the Commencement Date, obtain an exact
measurement of the Premises in accordance with the Measurement
Method. Such measurement shall be made by ADD, Inc. (or other
architect or engineer acceptable to Landlord) at the cost and
expense of Landlord.
b. If the Premises Rentable Area as so measured is more or less than
the Premises Rentable Area as set forth in Section 1.2:
i. Basic Rent shall, retroactively to the Commencement Date, be
recomputed by multiplying the Basic Rent set forth in
Section 1.2 by a fraction, the numerator of which shall be
premises Rentable Area as determined by such measurement and
the denominator of which shall be the Premises Rentable Area
set forth in Section 1.2: and
ii. The Escalation Factor shall be recomputed to be the
percentage determined by dividing the Premises Rentable Area
as determined by such measurement by 95% of Building
Rentable Area.
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Any payment due either party as a result of such recomputations
shall, if due from Tenant, be paid within fifteen (15) days of
such recomputation, or if due from Landlord, be credited against
the first amounts of Basic Rent due after such recomputation.
c. In the event of any adjustment pursuant to this Section, Landlord
and Tenant shall promptly execute a written statement setting
forth the recomputed Premises Rentable Area, Basic Rent and
Escalation Factor.
ARTICLE III
BASIC RENT
3.1 BASIC RENT
a. Tenant agrees to pay to Landlord, or as directed by Landlord,
commencing on the Commencement Date without offset, abatement
(except as provided in Article 12.1), deduction or demand, the
Basic Rent. Such Basic Rent shall be payable in equal monthly
installments, in advance, on the first day of each and every
calendar month during the Term of this Lease, at Landlord's
Original Address, or at such other place as Landlord shall from
time to time designate by notice. Until notice of some other
designation is given, Basic Rent and all other charges for which
provision is herein made shall be paid by remittance payable to
Landlord, at Landlord's Original Address, or at such other place
as Landlord shall from time to time designate by notice.
b. Basic Rent for any partial month shall be prorated on a daily
basis, and if the Term of this Lease commences on a day other
than the first day of a calendar month, the first payment which
Tenant shall make to Landlord shall be payable on the
Commencement Date and shall be equal to a proportionate part of
the monthly installment of Basic Rent for the partial month from
the Commencement Date to the last day of the month in which such
Commencement Date occurs plus the installment of Basic Rent for
the succeeding calendar month. In addition to any charges
pursuant to Section 14.18, Tenant shall pay a late charge equal
to 5% of the amount of any Basic Rent payment not paid within
five (5) days of the due date thereof.
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ARTICLE IV
TERM OF LEASE
4.1 COMMENCEMENT DATE
The Commencement Date shall be the later to occur of:
a. The Scheduled Completion Date; or
b. The day following the date on which the Premises are ready for
occupancy as provided in Section 4.2.
Notwithstanding the foregoing, if Tenant's personnel shall occupy all or
any part of the Premises for the conduct of its business prior to the
Commencement Date as determined pursuant to the preceding sentence, such date of
occupancy shall, for all purposes of this Lease, be the Commencement Date.
4.2 PREPARATION OF THE PREMISES
a. Tenant is currently having schematic design drawings for the
layout of the Premises ("Tenant's Initial Plans") prepared, which
Initial Plans shall be consistent with the specifications set
forth in EXHIBIT LW attached hereto and shall be submitted to
Landlord for its approval, which approval shall not be
unreasonably withheld. Any disapproval shall be accomplished by
a specific statement of reasons therefor and Tenant shall
promptly revise and resubmit such Initial Plans. Failure by
Landlord to approve or disapprove any submission of Tenant's
Initial Plans within ten (10) days after submission shall
constitute disapproval thereof. If Tenant's Initial Plans shall
not be approved within sixty (60) days of the Plan Approval Date,
Landlord shall have the option to (i) terminate this Lease by
giving notice thereof to Tenant at any time after such sixty (60)
day period and thereupon this Lease shall cease and come to an
end without further obligation or liability on the part of either
party or (ii) treat each day following such sixty (60) day period
as a Tenant's Delay in accordance with Section 4.2(e) hereof,
provided that Landlord shall retain, during the period in which
Tenant's Initial Plans have not been approved, the right to
terminate this Lease as provided in clause (i) hereof.
Upon receipt of notice of Landlord's approval of Tenant's Initial
Plans, Tenant shall have sixty (60) days within which to deliver
to Landlord for its approval, such approval not to be
unreasonably conditioned, withheld or delayed, full construction
drawings ("Tenant's Plans"), such
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Plans to be consistent with Tenant's Initial Plans. Any
disapproval shall be accomplished by a specific statement of
reasons therefor and Tenant shall promptly revise and resubmit
such Plans. Failure by Landlord to approve or disapprove any
submission of Tenant's Plans within ten (10) days after
submission shall constitute disapproval thereof. If Tenant's
Plans have not been approved by Landlord within sixty (60) days
of Landlord's receipt thereof, Landlord shall have the option to
(i) terminate this Lease by giving notice thereof to Tenant at
any time after such sixty (60) day period and thereupon this
Lease shall cease and come to an end without further obligation
or liability on the part of either party or (ii) treat each day
following such sixty (60) day period as a Tenant's Delay in
accordance with Section 4.2(e) hereof, provided that Landlord
shall retain, during the period in which Tenant's Plans have not
been approved, the right to terminate this Lease as provided in
clause (i) hereof.
b. Following approval of Tenant's Plans (and execution of a work
letter if requested by Landlord) Landlord shall exercise all
reasonable efforts to complete the work specified therein
("Landlord's Work") necessary to prepare the Premises for
Tenant's occupancy, but Tenant shall have no claim against
Landlord for failure so to complete such Work except the right to
terminate this Lease in accordance with paragraph (e) of this
Section 4.2. Landlord shall perform the base building work set
forth in EXHIBIT LW attached hereto at its sole cost and expense,
and, in addition, provide Tenant with an allowance of $20.00 per
square foot of Premises Rentable Area for the cost of Tenant's
improvements in the Premises (the "Tenant Improvements
Allowance"). To the extent that the requirements of Tenant's
Plans exceed the Tenant Improvements Allowance, Tenant shall pay
to Landlord the cost of such excess according to the following
schedule: thirty-three percent (33%) at the commencement of
Landlord's Work, thirty-three percent (33%) when Landlord's Work
is fifty percent (50%) complete and the balance (the "Final
Payment") when Landlord's Work has been completed with the
exception of "punch list" items, all as determined by Landlord's
architect. Notwithstanding the foregoing, Tenant may withhold
from the Final Payment 150% of the amount determined by
Landlord's architect as necessary to complete any "punch-list"
items (the "Retainage"). The balance of the Retainage shall be
paid to Landlord at such time as the "punch list" items have been
completed, as determined by Landlord's architect. Any increase
in the cost of Landlord's Work resulting from a change by Tenant
in any of Tenant's Plans after Landlord's original approval
thereof shall be paid to Landlord either 100% in advance or on
such other schedule as Landlord may in its discretion determine,
such determination to be made by Landlord at the
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time of its approval of such changes to Tenant's Plans. Tenant
shall, if requested by Landlord, execute a work letter confirming
such excess costs prior to the time Landlord shall be required to
commence work. Landlord shall, at its expense, procure a
certificate of occupancy or an equivalent use or occupancy permit
issued by the local building inspector in connection with its
construction obligations hereunder.
c. Landlord agrees and its agreement with its general contractor
(the "General Contractor") shall provide that all subcontracts
shall be bid to a minimum of three (3) qualified subcontractors
to be selected by the General Contractor. The General Contractor
shall make available for review by Tenant copies of all bids
received with respect to a portion of the construction of
Tenant's improvements to the Premises (the "Tenant Buildout") and
Tenant shall, within three (3) days of its receipt thereof,
notify the General Contractor if it has a preference with respect
to any such contractor, provided, however, that Tenant shall have
no right to require or prohibit the selection of any particular
subcontractor. The General Contractor shall select the
subcontractor submitting the lowest bid unless the General
Contractor, in its sole discretion, elects not to select the low
bidder because of a concern with respect to quality of work, cost
of the work or the ability of such subcontractor to timely
perform.
With respect to changes requested by Tenant after initial
approval of Tenant's Plans, the General Contractor shall solicit
at least three bids and request that each subcontractor's bid
include unit prices. Upon receipt of the bids, Tenant and its
architect shall have the option of reviewing such bids for
purposes of value engineering and suggesting changes to the
General Contractor who shall communicate such suggestions to the
subcontractors with a request that the subcontractor revise their
bids. Upon receipt of the revised bids, the General Contractor
shall select the subcontractor submitting the lowest bid unless
the General Contractor, in its sole discretion, elects not to
select the low bidder because of a concern with respect to
quality of work, cost of the work or the ability of such
subcontractor to timely perform.
Tenant's architect shall be permitted to attend regularly
scheduled job meetings during the course of construction of the
Tenant Buildout and shall be provided copies of the minutes of
all job meetings relating to the Tenant Buildout, which minutes
shall include information relating to the schedule of delivery of
the Premises.
With respect to its administration of the General Contractor's
contract for the Tenant Buildout, Landlord's architect shall keep
Tenant's
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architect reasonably informed as to the progress of the work
thereunder and shall permit Tenant's architect reasonable access
to copies of applications for payment and requests for change
orders (and any back-up documentation thereto), provided to it by
the Contractor. Approval or disapproval of applications for
payment, change orders and all other matters shall be in the
discretion of Landlord's architect (as such discretion may
otherwise be limited by the construction contract and Landlord's
agreement with its architect) provided, however, that Landlord's
architect shall take into consideration the recommendations of
Tenant's architect in connection with such approvals or
disapprovals.
d. The Premises shall be deemed ready for occupancy on the first day
as of which:
i. Landlord's Work has been completed except for items of work
(and, if applicable, adjustment of equipment and fixtures)
which can be completed after occupancy has been taken
without causing undue interference with Tenant's use of the
Premises (i.e., so-called "punch list" items), and
ii. Tenant has been given notice of the date that Landlord's
Work was or will be completed, such notice to be given by
Landlord to Tenant at least two (2) weeks' prior to the
anticipated date of completion. The Premises shall be
deemed ready for occupancy when either a temporary or
permanent certificate of occupancy or an equivalent use or
occupancy permit shall be issued by the building inspector
within the municipality where the Building is being
constructed. The determination as to whether the Premises
are ready for occupancy shall be made by ADD, Inc. (or such
other architect as may be selected by Landlord and approved
by Tenant, which approval shall not be unreasonably withheld
or delayed) and shall be conclusive and binding on Landlord
and Tenant. Landlord shall complete as soon as conditions
permit all "punch list" items and Tenant shall afford
Landlord access to the Premises for such purposes. All
telephone installation in the Premises shall be the
responsibility of the Tenant. Failure or delay of such
installation shall not delay the above completion date.
e. If the Premises shall not be ready for occupancy within one
hundred eighty (180) days following the Scheduled Completion Date
(which period shall be extended automatically for such periods of
time as Landlord is prevented from proceeding with or completing
the same for any cause beyond Landlord's reasonable control,
including failure of
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Tenant to obtain approval of Tenant's Plans by the Plan Approval
Date or to execute a work letter if requested by Landlord, and
any act or failure to act of Tenant which interferes with
Landlord's construction shall extend such Date without limiting
Landlord's other rights on account thereof), Tenant shall have
the right to terminate this Lease by giving notice to Landlord of
Tenant's desire so to do within thirty (30) days after the
expiration of such period; and, upon the giving of such notice,
this Lease shall cease and come to an end without further
liability or obligation on the part of either party unless,
within such 30-day period, Landlord substantially completes
Landlord's Work; and, subject to the following sentence, such
right of termination shall be Tenant's sole and exclusive remedy
at law or in equity for Landlord's failure so to complete such
Work within such time. If the Premises shall not be ready for
occupancy within sixty (60) days following the Scheduled
Completion Date (which period shall be extended automatically for
periods of force majeure or Tenant's Delay (as defined below),
and this Lease shall not have been terminated, Tenant shall
receive a credit against Basic Rent next due for each day in
excess of such sixty (60) day period that the Premises are not
ready for occupancy.
As used herein, the term "force majeure" shall mean a time
extension equal to the aggregate of any delays when the party
required to perform the respective obligation is prevented from
doing so, despite the exercise of reasonable diligence, and such
delay is caused by: (i) Acts of God, (ii) changes in government
regulations, (iii) casualty, (iv) strike, lockouts or other such
labor difficulties, (v) unusual weather conditions, including
earthquakes and hurricanes, and other natural disasters, (vi)
unusual scarcity of or inability to obtain supplies, parts or
employees to furnish such services, (vii) failure of power,
(viii) riots, wars, acts of public enemy or insurrections, (ix)
fires, explosions or (x) other acts reasonably beyond such
parties' control, but in no event shall the term include economic
or financing difficulties.
f. Landlord shall permit Tenant access to the Premises for the
purpose of allowing Tenant or its contractors to install fixtures
and wiring for data and telephone services when such access may
be provided without material interference with the remaining
Landlord Work provided that any such work to be performed by
Tenant or its contractor's during such period shall (i) not
interfere with the remaining Landlord Work, (ii) be coordinated
with the remaining Landlord Work in such a manner as to maintain
harmonious labor relations and not cause any work stoppage or
damage to the Premises or the Building and (iii) not interfere
with Building construction or operation. Tenant hereby
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acknowledges that Landlord will be using union labor in
connection with its Work in the Premises and the Building and
Tenant agrees not to employ or permit the use of any labor or
otherwise take any action which might result in a labor dispute
involving personnel providing services in the Building pursuant
to arrangements with Landlord.
g. If a delay shall occur in the date the Premises are ready for
occupancy pursuant to paragraph (d) as the result of any of the
following (a "Tenant's Delay"):
i. Any request by Tenant that Landlord delay in the
commencement or completion of Landlord's Work for any
reason;
ii. Any change by Tenant in any of Tenant's Plans after original
approval thereof by Landlord (including, without limitation,
a change pursuant to Section 4(c) hereof);
iii. Any other act or omission of Tenant or its officers, agents,
servants or contractors;
iv. Any reasonably necessary displacement of any of Landlord's
Work from its place in Landlord's construction schedule
resulting from any of the causes for delay referred to in
clauses i., ii., and iii. of this paragraph and the fitting
of such Work back into such schedule; or
v. Any act or omission of Tenant in violation of paragraph (e)
above;
then Tenant shall, from time to time, and within ten (10) days
after demand therefor, pay the Landlord as an additional charge
for each day of such delay equal to the amount of Basic Rent,
Escalation Charges and other charges that would have been payable
hereunder had the Commencement Date occurred prior to such delay.
Tenant also shall pay to Landlord within ten (10) days of
invoice therefor, any additional costs incurred by Landlord in
completing the work to the extent that such costs are reasonably
attributable to Tenant's Delay.
h. If, as a result of Tenant's Delay(s), Landlord's Work is delayed
in the aggregate for more than ninety (90) days, Landlord may
(but shall not be required to) at any time thereafter terminate
this Lease by giving written notice of such termination to Tenant
and thereupon this Lease shall terminate without further
liability or obligation on the part of either party except that
Tenant shall pay to Landlord the cost
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theretofore incurred by Landlord in performing Landlord's Work
together with any amount required to be paid pursuant to
paragraph (g). above through the effective termination date.
4.3 CONCLUSIVENESS OF LANDLORD'S PERFORMANCE; WARRANTIES
Except to the extent to which Tenant shall have given Landlord written
notice, not later than the end of the second full calendar month next
beginning after the Commencement Date, of respects in which Landlord has
not performed Landlord's Work, Tenant shall be deemed to have
acknowledged that all Landlord's Work has been completed to Tenant's
satisfaction and that Tenant has waived any claim that Landlord has
failed to perform any of Landlord's Work. Landlord agrees to correct any
defects due to faulty workmanship or materials in Landlord's Work,
provided Tenant shall have given written notice of such defects to
Landlord prior to the first anniversary of the Commencement Date. From
and after the expiration of such twelve (12) month period, Tenant shall
be entitled to the benefit of any applicable warranties obtained by
Landlord from third parties with respect to Landlord's Work provided that
Tenant shall be solely responsible for enforcing such warranties directly
against the party providing the same.
ARTICLE V
USE OF PREMISES
5.1 PERMITTED USE
a. Tenant agrees that the Premises shall be used and occupied by
Tenant only for Permitted Uses and for no other purpose.
b. Tenant agrees to conform to the following provisions during the
Term of this Lease:
i. Tenant shall cause all freight to be delivered to or removed
from the Building and the Premises in accordance with
reasonable rules and regulations established by Landlord
therefor;
ii. Tenant will not place on the exterior of the Premises
(including both interior and exterior surfaces of windows
and doors) or on any part of the Building outside the
Premises, any sign, symbol, advertisement or the like
visible to public view outside of the Premises without the
prior consent of Landlord. Landlord will not unreasonably
withhold consent for signs or lettering on the entry doors
to the Premises provided such signs conform to building
standards adopted by Landlord and Tenant has
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submitted to Landlord a plan or sketch of the sign to be
placed on such entry doors. Landlord agrees, however, to
maintain a tenant directory in the lobby of the Building in
which will be placed Tenant's name and the location of the
Premises in the Building. In addition, if Tenant occupies
at least 50% of the Building or is the largest single tenant
in the Building after such time as so much of the Building
is initially leased to other tenants that it can be
determined that Tenant will be the largest single tenant in
the Building, Tenant, at Tenant's sole cost and expense,
shall have the non-exclusive right to maintain, subject to
Landlord's prior approval, a sign on the exterior of the
Building provided that (i) no sign shall be permitted unless
and until Tenant has submitted to Landlord a plan of the
sign to be placed on the Building, (ii) such sign shall
consist of no more than 19 letters, each letter to be no
more than three (3) feet in height, (iii) Landlord has
determined that the same is in compliance with building
standards, (iv) Landlord reasonably approves the location of
such sign on the Building, and (v) such sign complies with
all applicable laws, ordinances and codes.
iii. Tenant shall not perform any act or carry on any practice
which may injure the Premises, or any other part of the
Building, or cause any offensive odors or loud noise or
constitute a nuisance or a menace to any other tenant or
tenants or other persons in the Building;
iv. Tenant shall not operate any cooking apparatus (except for
coffee making equipment, a microwave oven, a standard size
refrigerator and a sink), or locate any vending machines, in
the Premises; and
5.2 INSTALLATIONS AND ALTERATIONS BY TENANT
a. Tenant shall make no alterations, additions or improvements
(collectively, "Improvements") in or to the Premises without
Landlord's prior written consent provided that subsequent to the
completion of the initial Landlord Work, Landlord's consent shall
not be required if such Improvements (i) are non-structural and
do not exceed in the aggregate a cost of $10,000 or (ii) are of a
decorating nature (i.e., carpeting, painting, wallpaper)
irrespective of the cost. With respect to Improvements requiring
Landlord's consent, Landlord shall not unreasonably withhold,
condition or delay its consent for non-structural Improvements to
the Premises. All Improvements shall:
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i. Be performed in a good and workmanlike manner and in
compliance with all applicable laws;
ii. Be made only by contractors or mechanics approved by
Landlord which consent shall not be unreasonably withheld,
conditioned or delayed provided that Tenant agrees not to
employ or permit the use of any labor or otherwise take any
action which might result in a labor dispute involving
personnel providing services in the Building pursuant to
arrangements made by Landlord;
iii. Be made at Tenant's sole expense and at such times and in
such manner as Landlord may from time to time designate; and
iv. Become part of the Premises and the property of Landlord.
b. All articles of personal property and all business fixtures,
machinery and equipment and furniture owned or installed by
Tenant solely at its expense in the Premises ("Tenant's Removable
Property") shall remain the Property of Tenant and shall be
removed by Tenant at any time prior to the expiration of this
Lease, provided that Tenant, at its expense, shall repair any
damage to the Premises and the Building caused by such removal.
c. Notice is hereby given that Landlord shall not be liable for any
labor or materials furnished or to be furnished to Tenant upon
credit, and that no mechanic's or other lien for any such labor
or materials shall attach to or affect the reversion or other
estate or interest of Landlord in and to the Premises. Whenever
and as often as any mechanic's lien shall have been filed against
the Property based upon any act or interest of Tenant or of
anyone claiming through Tenant, Tenant shall forthwith take such
action by bonding, deposit or payment as will remove or satisfy
the lien. Landlord shall have the option, but not the
obligation, of removing, bonding over or paying such lien if
Tenant has not done so within fifteen (15) days following
Landlord's notice to Tenant of the filing of the same, and any
amounts paid by Landlord therefor shall be paid to Landlord
within 10 business days after invoice therefor as additional rent
hereunder.
d. Tenant shall not be obligated to remove at the end of the Term of
this Lease (i) any Improvement unless Landlord specifies an
Improvement for removal at the time Landlord consents to such
Improvement or (ii) any improvements built by Landlord as part of
the initial fit-up of the Premises which would customarily be
considered standard tenant
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improvement (collectively referred to herein as "Building
Standard Office Improvements").
ARTICLE VI
ASSIGNMENT AND SUBLETTING
6.1 Prohibition
a. Tenant covenants and agrees that neither this Lease nor the term
and estate hereby granted, nor any interest herein or therein,
will be assigned, mortgaged, pledged, encumbered or otherwise
transferred and that neither the Premises nor any part thereof
will be encumbered in any manner by reason of any act or omission
on the part of Tenant, or used or occupied or permitted to be
used or occupied, by anyone other than Tenant, or for any use or
purpose other than a Permitted Use, or be sublet (which term,
without limitation, shall include granting of concessions,
licenses and the like) in whole or in part, without, in each
instance, having first received the express written consent of
Landlord which, in the case of any subletting (except to another
tenant in the Building or other buildings owned by Landlord or
its beneficiaries), will not be unreasonably withheld,
conditioned or delayed. In all other cases, Landlord's consent
may be withheld in its sole discretion. The foregoing
restrictions shall not be applicable to (i) an assignment of this
Lease or a subletting of the Premises by Tenant to an entity
controlling, controlled by or under common control with Tenant or
(ii) an assignment of this Lease to an entity that succeeds to
Tenant's interest in this Lease by reason of merger, acquisition,
consolidation or reorganization (collectively such entities are
referred to herein as, "Affiliates"), or an assignment of this
Lease to an entity acquiring all or substantially all of Tenant's
assets, provided that Tenant shall prior to the effective date of
such assignment or subletting to an entity described in the
foregoing clause (ii) provide to Landlord evidence reasonably
satisfactory to Landlord that, as of the date of such assignment
or subletting, the assignee shall have a net worth equal to or
greater than that of Tenant. It shall be a condition of the
validity of any assignment, whether with the consent of Landlord
or to an Affiliate, that the assignee agrees directly with
Landlord, by written instrument in form satisfactory to Landlord,
to be bound by all the obligations of Tenant hereunder including,
without limitation, the covenant against further assignment and
subletting. No assignment or subletting shall relieve Tenant
from its obligations hereunder and Tenant shall remain fully and
primarily liable therefor.
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b. If this Lease be assigned, or if the Premises or any part thereof
be sublet or occupied by anyone other than Tenant, Landlord may,
at any time and from time to time, collect rent and other charges
from the assignee, subtenant or occupant, and apply the net
amount collected to the rent and other charges herein reserved,
but no such assignment, subletting, occupancy or collection shall
be deemed a waiver of this covenant, or the acceptance of the
assignee, subtenant or occupant as a tenant or a release of
Tenant from the further performance by Tenant of its obligations
hereunder. The consent by Landlord to an assignment or
subletting shall in no way be construed to relieve Tenant or any
successor from obtaining the express consent in writing of
Landlord to any further assignment or subletting. No assignment
or subletting and no use of the Premises by a subsidiary
wholly-owned by Tenant or controlling corporation of Tenant shall
affect Permitted Uses.
6.2 EXCESS PAYMENTS
If:
i. The rent and other sums received by Tenant on account of a
sublease of all or any portion of the Premises exceeds the
Basic Rent and Escalation Charges allocable to the space
subject to the sublease (in the proportion of the area of
such space to the entire Premises) plus actual out-of-pocket
expenses incurred by Tenant in connection with Tenant's
subleasing of such space, including brokerage commissions to
a licensed broker and the cost of preparing such space for
occupancy by the subtenant, Tenant shall pay to Landlord, as
an additional charge, 75% of such excess, monthly as
received by Tenant; or
ii. Any payment received by Tenant on account of any assignment
of this Lease exceeds the actual out-of-pocket expenses
incurred by Tenant in connection with such assignment,
including brokerage commissions to a licensed broker and the
cost of preparing space for the assignee, Tenant shall pay
to Landlord, as an additional charge, 75% of such excess
when received by Tenant.
6.3 TERMINATION
Notwithstanding any other provision of this Article VI, if Tenant shall
intend to assign this Lease or intend (except with respect to subletting
described in the second sentence of Paragraph a. of this Section 6.1) to
enter into a sublease which, together with any other subleases then in
effect, cover more than 75%
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of Premises Rentable Area, Landlord may elect to terminate this Lease by
giving notice to Tenant of such election not later than thirty (30) days
after receiving notice of such subletting or assignment whereupon this
Lease shall terminate thirty (30) days after the giving of such notice by
Landlord with the same force and effect as if such date where the date
originally established as the expiration date hereof.
ARTICLE VII
RESPONSIBILITY FOR REPAIRS AND CONDITIONS OF PREMISES;
SERVICES TO BE FURNISHED BY LANDLORD
7.1 Landlord Repairs
a. Except as otherwise provided in this Lease, Landlord agrees to
keep in good order, condition and repair the roof, public areas
(including common areas), exterior walls, floor slabs, the
Building HVAC system (but not any special tenant HVAC system) and
structure of the Building (including plumbing, mechanical and
electrical systems), all insofar as they affect the Premises,
except that Landlord shall in no event be responsible to Tenant
for the condition of glass in and about the Premises or for the
doors leading to the Premises, or for any condition in the
Premises or the Building caused by any act or neglect of Tenant,
its invitees or contractors (in which case Tenant shall promptly
effect such repairs or, at Landlord's option, Landlord may effect
such repairs and charge the entire cost thereof to Tenant as
additional rent provided, however, that if, after Tenant pays the
cost of such repair, Landlord receives from its insurance carrier
proceeds with respect to the cost of such repairs, Landlord shall
reimburse Tenant for the cost of such repairs up to the amount
actually received by Landlord with respect to the same). Landlord
shall not be responsible to make any improvements or repairs to
the Building other than as expressly in this Section 7.1
provided, unless expressly provided otherwise in this Lease.
b. Landlord shall never be liable for any failure to make repairs
which, under the provisions of this Section 7.1 or elsewhere in
this Lease, Landlord has undertaken to make unless Tenant has
given notice to Landlord of the need to make such repairs, and
Landlord has failed to commence to make such repairs within
thirty (30) days after receipt of such notice, or fails to
proceed with reasonable diligence to complete such repairs. Upon
such failure, Tenant shall have the right, but not the
obligation, to make such repair, whereupon Landlord shall
forthwith reimburse Tenant for the reasonable costs incurred by
Tenant upon receipt of an invoice from Tenant. In no event shall
Tenant have a right of offset or abatement of Basic Rent or other
amounts due hereunder.
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7.2 TENANT'S AGREEMENT
a. Tenant will keep neat and clean and maintain in good order,
condition and repair the Premises and every part thereof,
excepting only those repairs for which Landlord is responsible
under the terms of this Lease, reasonable wear and tear of the
Premises, and damage by fire or other casualty and as a
consequence of the exercise of the power of eminent domain; and
shall surrender the Premises, at the end of the term, in such
condition. Without limitation, Tenant shall maintain and use the
Premises in accordance with all directions, rules and regulations
of the proper officers of governmental agencies having
jurisdiction, and shall, at Tenant's own expense, obtain all
permits, licenses and the like required by applicable law.
b. If repairs are required to be made by Tenant pursuant to the
terms hereof, Landlord may demand that Tenant make the same
forthwith, and if Tenant refuses or neglects to commence such
repairs and complete the same with reasonable dispatch, after
such demand, Landlord may (but shall not be required to do so)
make or cause such repairs to be made and shall not be
responsible to Tenant for any loss or damage that may accrue to
Tenant's stock or business by reason thereof. If Landlord makes
or causes such repairs to be made, Tenant agrees that Tenant
shall forthwith, on demand, pay to Landlord the cost thereof as
an additional charge hereunder.
7.3 FLOOR LOAD - HEAVY MACHINERY
a. Tenant shall not place a load upon any floor in the Premises
exceeding 100 lbs. (live load) per square foot of Premises
Rentable Area. Landlord reserves the right to prescribe the
weight and position of all business machines and mechanical
equipment, including safes, which shall be placed so as to
distribute the weight. Business machines and mechanical
equipment shall be placed and maintained by Tenant at Tenant's
expense in settings sufficient, in Landlord's judgment, to absorb
and prevent vibration, noise and annoyance. Tenant shall not
move any safe, heavy machinery, heavy equipment, freight, bulky
matter or fixtures into or out of the Building without Landlord's
prior consent, which consent may include a requirement to provide
insurance in such amounts as Landlord may deem reasonable.
b. If any such safe, machinery, equipment, freight, bulky matter or
fixtures requires special handling, Tenant agrees to employ only
persons holding a Master Rigger's License to do such work, and
that all work in
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connection therewith shall comply with applicable laws and
regulations. Any such moving shall be at the sole risk and
hazard of Tenant, and Tenant will exonerate, indemnify and save
Landlord harmless against and from any liability, loss, injury,
claim or suit resulting directly or indirectly from such moving.
7.4 BUILDING SERVICES
a. Landlord shall, on Business Days from 8:00 a.m. to 6:00 p.m.
(except on Saturdays only from 8:00 a.m. to 1:00 p.m.), furnish
heating and cooling as normal seasonal changes and the
Massachusetts State Building Code may require to provide
reasonably comfortable space temperature and ventilation for
occupants of the Premises under normal business operation at an
occupancy of not more than one person per 150 square feet of
Premises Rentable Area and an electrical load not exceeding
approximately 5.0 watts per square foot of Premises Rentable
Area. If Tenant shall require air conditioning, heating or
ventilation outside the hours and days above specified, Landlord
shall furnish such service and Tenant shall pay therefor such
charges as may from time to time be in effect. In the event
Tenant introduces into the Premises personnel or equipment which
exceeds the standards set forth above or in any other way
interferes with the Building system's ability to perform
adequately its proper functions, supplementary systems may, if
and as needed, at Landlord's option, be provided by Landlord, at
Tenant's expense. Except in the case of emergency or a scheduled
closing of the Building, Landlord shall provide to Tenant
(subject to reasonable security procedures which may be imposed
by Landlord) access to the Building, an elevator and the loading
dock twenty-four hours per day.
b. Landlord shall also provide:
i. Hot water for lavatory purposes and cold water (at
temperatures supplied by the City of Quincy) for drinking,
lavatory, and toilet purposes and hot and cold water for
Tenant's lounge and one (1) residential washing machine. If
Tenant uses water for any purpose other than as set forth in
the preceding sentence, Landlord may assess a reasonable
charge for the additional water so used, or install a water
meter and thereby measure Tenant's water consumption for all
purposes. In the latter event, Tenant shall pay the cost of
the meter and the cost of installation thereof and shall
keep such meter and installation equipment in good working
order and repair. Tenant agrees to pay for water consumed,
as shown on such meter, together with the sewer charge based
on such meter changes, as and when bills are
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rendered, and in default in making such payment Landlord may
pay such charges and collect the same from Tenant as an
additional charge hereunder. All piping and other equipment
and facilities required for use of water outside the
Building core will be installed and maintained by Landlord
at Tenant's sole cost and expense.
ii. Cleaning and janitorial services to the Premises, provided
the same are kept in order by Tenant, in accordance with the
cleaning standards set forth in Schedule CS attached hereto.
iii. Passenger elevator service from the existing passenger
elevator system in common with Landlord and other tenants of
the Building.
7.5 ELECTRICITY
a. Landlord shall supply electricity to the Premises to supply a
requirement not to exceed approximately 5.0 watts per square foot
of Premises Rentable Area for standard single-phase 120 volt
alternating current and Tenant agrees in its use of the Premises
not to exceed such requirement and that its total connected
lighting load will not exceed the maximum from time to time
permitted under applicable governmental regulations. In
addition, Landlord shall provide 220 volt service for Tenant's
refrigerator to be located in the lounge area of the Premises and
one (1) residential clothes dryer as provided in the Tenant's
Plans. Landlord shall purchase and install all lamps, tubes,
bulbs, starters and ballasts for all original fluorescent tubes
within the Premises. All other bulbs, tubes and lighting
fixtures for the Premises shall be provided and installed by
Landlord at Tenant's cost and expense. In order to assure that
the foregoing requirements are not exceeded and to avert possible
adverse affect on the Building's electric system, Tenant shall
not, without Landlord's prior consent, connect any fixtures,
appliances or equipment to the Building's electric distribution
system other than standard office equipment including, without
limitation, personal computers, printers, photocopiers and fax
machines.
b. Landlord shall install at Tenant's expense, which expense shall
be included in the allowance for construction provided by
Landlord, a separate meter which shall measure electric
consumption (including electricity consumed in connection with
the operation of the variable-air-volume (VAV) boxes used to heat
and cool the Premises) in the Premises. Tenant shall pay as
additional rent all amounts billed by the applicable utility
company when due directly to the utility company. If,
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for any reason, such utility charges are not separately metered
at any time during the Term, Tenant shall pay as additional rent
all reasonably allocated charges attributable to the furnishing
of electricity to the Premises.
c. In the computation of Operating Costs, only the cost of
electricity supplied to those portions of the Building other than those intended
to be leased to tenants for their exclusive use and occupancy, or used by the
Building for its own offices, i.e., only those areas which are so-called common
areas, shall be included.
ARTICLE VIII
REAL ESTATE TAXES
8.1 PAYMENTS ON ACCOUNT OF REAL ESTATE TAXES
a. For the purposes of this Article, the term "Tax Year" shall mean
the twelve (12) month period commencing on the July 1 immediately
preceding the Commencement Date and each twelve (12) month period
thereafter during the Term of this Lease; and the term "Taxes"
shall mean real estate taxes assessed with respect to the
Property for any Tax Year. "Taxes" shall exclude (a) federal,
state or local income, franchise or estate taxes and (b) interest
and penalties assessed by reason of Landlord's failure to pay
such real estate taxes when due (provided that Tenant makes
payment to Landlord of such real estate taxes when due, otherwise
Tenant shall be responsible for that portion of interest and
penalties attributable to its late payment). Landlord agrees
that if any special taxes or assessment shall be levied against
the Building, Landlord shall elect to pay such special tax or
assessment over the longest period of time allowed by law.
b. In the event that for any reason, Taxes shall be greater during
any Tax Year than Base Taxes, Tenant shall pay to Landlord, as an
Escalation Charge, an amount equal to:
i. The excess of Taxes over Base Taxes, multiplied by,
ii. The Escalation Factor, such amount to be apportioned for any
fraction of a Tax Year in which the Commencement Date falls
or the Term of this Lease ends.
c. Estimated payments by Tenant on account of Taxes shall be made
monthly and at the time and in the fashion herein provided for
the payment of Basic Rent. The monthly amount so to be paid to
Landlord
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shall equal to one-twelfth (1/12) of the amount required to be
paid (if any) by Tenant pursuant to Paragraph b. above for the
preceding Tax Year. Promptly after receipt by Landlord of bills
for such Taxes, Landlord shall advise Tenant of the amount
thereof and the computation of Tenant's payment on account
thereof. If estimated payments theretofore made by Tenant for
the Tax Year covered by such bills exceed the required payments
on account thereof for such Tax Year, Landlord shall credit the
amount of overpayment against subsequent obligations of Tenant on
account of real estate taxes (or refund such overpayment if the
Term of this Lease has ended and Tenant has no further obligation
to Landlord); but if the required payments on account thereof for
such Tax Year are greater than estimated payments theretofore
made on account thereof for such Tax Year, Tenant shall make
payment to Landlord within thirty (30) days after being so
advised by Landlord. Landlord shall have the same rights and
remedies for the nonpayment by Tenant of any payments due on
account of such Taxes as Landlord has hereunder for the failure
of Tenant to pay Basic Rent.
8.2 ABATEMENT
If Landlord shall receive any tax refund or reimbursement of Taxes or sum
in lieu thereof with respect to any Tax Year, then out of any balance
remaining thereof after deducting Landlord's expenses reasonably incurred
in obtaining such refund, Landlord shall pay to Tenant, provided there
does not then exist a Default of Tenant, an amount equal to such refund
or reimbursement or sum in lieu thereof (exclusive of interest)
multiplied by the Escalation Factor and adjusted for any partial year;
provided, that in no event shall Tenant be entitled to receive more than
the amount of any payments made by Tenant on account of real estate Tax
increases for such Tax Year pursuant to Paragraph b. of Section 8.1 or to
receive any payment if Taxes for any Tax Year are less than Base Taxes.
Provided that Tenant is not then in default under this Lease beyond
applicable grace and cure periods and that Tenant occupies more than 50%
of the Building Rentable Area, Tenant shall have the right, at its cost
and expense, to seek an abatement of real estate taxes provided that
Landlord has elected in writing not to do so within fifteen (15) days
after written request therefor by Tenant.
8.3 ALTERNATE TAXES
a. If some method or type of taxation shall replace the current
method of assessment of real estate taxes, or the type thereof,
the Tenant agrees that Tenant shall pay an equitable share of the
same computed in a fashion consistent with the method of
computation herein provided, to
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the end that Tenant's share thereof shall be, to the maximum
extent practicable, comparable to that which Tenant would bear
under the foregoing provisions.
b. If a tax (other than a Federal or State net income tax) is
assessed on account of the rents or other charges payable by
Tenant to Landlord under this Lease, Tenant agrees to pay the
same within ten (10) days after billing therefor, unless
applicable law prohibits the payment of such tax by Tenant.
Landlord shall have the same rights and remedies for nonpayment
by Tenant of any such amounts as Landlord has hereunder for the
failure of Tenant to pay Basic Rent.
ARTICLE IX
OPERATING EXPENSES
9.1 DEFINITIONS
For the purposes of this Article, the following terms shall have the
following respective meanings:
OPERATING YEAR: Each calendar year in which any part of the Term of this
Lease shall fall.
OPERATING EXPENSES: The aggregate costs or expenses reasonably incurred
by Landlord with respect to the operation, administration, cleaning,
repair, maintenance and management of the Property including, without
limitation, those items enumerated in Exhibit OC annexed hereto, provided
that, if during any portion of the Operating Year for which Operating
Expenses are being computed, less than 95% of the Building Rentable Area
was occupied by tenants, actual operating expenses incurred shall be
reasonably extrapolated by Landlord on an item basis to the estimated
operational expenses that would have been incurred if the Building were
95% occupied for such Operating Year, and such extrapolated amount shall,
for the purposes hereof, be deemed to be the Operating Expenses for such
Operating Year.
9.2 TENANT'S PAYMENT
a. In the event that Operating Expenses for any Operating Year shall
be greater than Base Operating Expenses, Tenant shall pay to
Landlord, as an Escalation Charge, an amount equal to:
i. The excess of the Operating Expenses for such Year over and
above Base Operating Expenses, multiplied by,
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ii. The Escalation Factor, such amount to be apportioned for any
Operating Year in which the Commencement Date falls or the
Term of this Lease ends.
b. Estimated payments by Tenant on account of Operating Expenses
shall be made monthly and at the time and in the fashion herein
provided for the payment of Basic Rent. The monthly amount so to
be paid to Landlord shall be sufficient to provide Landlord by
the end of each Operating Year a sum equal to Tenant's required
payments (if any) on account of Operating Expenses for the
preceding Operating Year. Promptly after the end of each
Operating Year, Landlord shall submit to Tenant a reasonably
detailed accounting of Operating Expenses for such Operating
Year, and Landlord shall certify the accuracy thereof. If
estimated payments theretofore made for such Operating Year by
Tenant exceed Tenant's required payment on account thereof for
such Operating Year, according to such statement, Landlord shall
credit the amount of overpayment against subsequent obligations
of Tenant with respect to Operating Expenses (or refund such
overpayment if the Term of this Lease has ended and Tenant has no
further obligation to Landlord); but, if the required payments on
account thereof for such Operating Year are greater than the
estimated payments (if any) theretofore made on account thereof
for such Operating Year, Tenant shall make payment to Landlord
within ten (10) days after being so advised by Landlord.
Landlord shall have the same rights and remedies for the
nonpayment by Tenant of any payments due on account of Operating
Expenses as Landlord has hereunder for the failure of Tenant to
pay Basic Rent.
c. Tenant shall have the right, no more often than once in an
Operating Year, exercisable within ninety (90) days following the
delivery to Tenant of the accounting referred to in Paragraph
9.2(b) and upon reasonable prior notice to Landlord, to inspect
Landlord's books and records relating to Operating Expenses and
Taxes for the Operating Year covered by such accounting. Tenant
acknowledges and agrees that only employees of Tenant, or
Tenant's certified public accountant or accounting firm (provided
that such accountant or accounting firm is then responsible for
Tenant's general corporate accounting), may conduct any such
inspection, which inspection shall occur at such place and time
(during normal business hours) as Landlord may reasonably
designate. Tenant shall pay for all reasonable expenses incurred
by Landlord in connection with, and relating directly to,
Tenant's inspection of Landlord's books and records, provided
that if such audit discloses an overpayment by Tenant of more
than five percent (5%), Landlord shall reimburse Tenant for its
reasonable third party costs
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incurred in connection with the audit. In any event, Landlord
shall reimburse Tenant the amount of any overpayment.
ARTICLE X
INDEMNITY AND PUBLIC LIABILITY INSURANCE
10.1 TENANT'S INDEMNITY
To the maximum extent this Agreement may be made effective according to
law, Tenant agrees to indemnify and save harmless Landlord from and
against all claims, actions or proceedings of whatever nature arising
from any act, omission or negligence of Tenant or Tenant's contractors,
licensees agents, servants or employees or arising from any accident,
injury or damage whatsoever caused to any person, or to the property of
any person, occurring after the date of this Lease until the end of the
Term of this Lease and thereafter, so long as Tenant is in occupancy of
any part of the Premises, in or about the Premises, or arising from any
accident, injury or damage occurring outside of the Premises but on the
Property, where such accident, damage or injury results or is claimed to
have resulted from an act or omission on the part of Tenant or Tenant's
agents or employees or independent contractors. This indemnity and hold
harmless agreement shall include indemnity against all costs, expenses
and liabilities incurred in or in connection with any such claim, action
or proceeding brought thereon, and the defense thereof.
10.2 PUBLIC LIABILITY INSURANCE
Tenant agrees to maintain in full force from the date upon which Tenant
first enters the Premises for any reason, throughout the Term of this
Lease, and thereafter so long as Tenant is in occupancy of any part of
the Premises, a policy of general liability and property damage insurance
under which Landlord (and such other persons as are in privity of estate
with Landlord as may be set out in notice from Landlord to Tenant from
time to time) and Tenant are named as insureds, and under which the
insurer agrees to indemnify and hold Landlord, and those in privity of
estate with Landlord, harmless from and against all cost, expense and/or
liability arising out of or based upon any and all claims, accidents,
injuries and damages set forth in Section 10.1. Each such policy shall
be non-cancelable and non-amendable with respect to Landlord and
Landlord's said designees without twenty (20) days prior notice to
Landlord and shall be in at least the amounts of the Public Liability
Insurance specified in Section 1.2, and a duplicate original or
certificate thereof evidencing broad form contractual liability,
independent contractor's hazard and completed operation coverage and
waiver of subrogation shall be delivered to Landlord.
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10.3 TENANT'S RISK
To the maximum extent this Agreement may be made effective according to
law, Tenant agrees to use and occupy the Premises and to use such other
portions of the Building as Tenant is herein given the right to use at
Tenant's own risk; and Landlord shall have no responsibility or liability
for any loss of or damage to Tenant's Removable Property. The provisions
of this Section shall be applicable from and after the execution of this
Lease and until the end of the Term of this Lease, and during such
further period as Tenant may use or be in occupancy of any part of the
Premises or of the Building.
10.4 INJURY CAUSED BY THIRD PARTIES
To the maximum extent this Agreement may be made effective according to
law, Tenant agrees that Landlord shall not be responsible or liable to
Tenant, or to those claiming by, through or under Tenant, for any loss or
damage that may be occasioned by or through the acts or omissions of
persons occupying adjoining premises or any part of the Premises adjacent
to or connecting with the Premises or any part of the Property or
otherwise.
10.5 LANDLORD'S INSURANCE
Landlord shall take out and maintain throughout the Term of this Lease
commercial general liability insurance for the Building and all risk fire
and casualty insurance in amounts customarily carried by landlords with
respect to similar buildings in the area with such policy limits as
Landlord may consider appropriate. Upon request by Tenant, Landlord
shall provide a certificate evidencing the foregoing insurance.
10.6 WAIVER OF SUBROGATION
Any insurance carried by either party with respect to the Property or
property therein or occurrences thereon shall include a clause or
endorsement denying to the insurer rights of subrogation against the
other party to the extent rights have been waived by the insured prior to
occurrence of injury or loss. Each party, notwithstanding any provisions
of this Lease to the contrary, hereby waives any rights of recovery
against the other for injury or loss due to hazards covered by such
insurance to the extent of the indemnification received thereunder.
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ARTICLE XI
LANDLORD'S ACCESS TO PREMISES
11.1 LANDLORD'S RIGHTS
Upon reasonable prior notice to Tenant (except in the case of emergency
where no notice shall be required and Landlord's right of access shall be
immediate) Landlord shall have the right to enter the Premises at all
reasonable hours for the purpose of inspecting or making repairs to the
same, and Landlord shall also have the right, upon reasonable prior
notice to Tenant, to make access available at all reasonable hours to
prospective or existing mortgagees, purchasers or tenants of any part of
the Property provided that prospective mortgagees and purchasers shall be
accompanied by a representative of Tenant (provided that Tenant shall
make a representative reasonably available for such purpose).
ARTICLE XII
FIRE, EMINENT DOMAIN, ETC.
12.1 ABATEMENT OF RENT
If the Premises shall be damaged by fire, casualty in the Building, Basic
Rent and Escalation Charges payable by Tenant shall abate proportionately
for the period in which, by reason of such damage, there is substantial
interference with Tenant's use of the Premises, having regard to the
extent to which Tenant may be required to discontinue Tenant's use of all
or a portion of the Premises, but such abatement or reduction shall end
if and when Landlord shall have substantially restored the Premises to
the condition in which they were prior to such damage. If the Premises
shall be affected by any exercise of the power of eminent domain, Basic
Rent and Escalation Charges payable by Tenant shall be justly and
equitably abated and reduced according to the nature and extent of the
loss of use thereof suffered by Tenant.
12.2 RIGHT OF TERMINATION
If the Premises or the Property are substantially damaged by fire or
casualty (the term "substantially damaged" meaning damage of such a
character that the same cannot, in ordinary course, reasonably be
expected to be repaired within six (6) months from the time that repair
work would commence), or, if as a result of any exercise of the right of
eminent domain more than thirty percent (30%) of the Building or the
Property is taken or a material portion of the parking is taken or there
is a material impact on access to the Property (collectively, a
"Taking"), then either party shall have the right to terminate this Lease
(even if Landlord's entire interest in the Premises may have been
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divested) by giving to the other party notice of such party's election so
to do within ninety (90) days after the occurrence of such casualty or
the effective date of such Taking, whereupon this Lease shall terminate
thirty (30) days after the date of such notice with the same force and
effect as if such date were the date originally established as the
expiration date hereof.
12.3 RESTORATION
If this Lease shall not be terminated pursuant to Section 12.2, Landlord
shall thereafter use due diligence to restore the Premises to proper
condition for Tenant's use and occupation, provided that Landlord's
obligation shall be limited to the amount of insurance proceeds available
therefor. If, for any reason (including, without limitation,
insufficiency or unavailability of insurance proceeds), such restoration
shall not be substantially completed within six (6) months from the time
that repair work would commence in the case of damage by fire or casualty
or from the effective date of the Taking, as applicable (which six (6)
month period may be extended for such periods of time as Landlord is
prevented from proceeding with or completing such restoration for reasons
of force majeure, but in no event for more than an additional three (3)
months), Tenant shall have the right to terminate this Lease by giving
notice to Landlord thereof within thirty (30) days after the expiration
of such period (as so extended). Upon the giving of such notice, this
Lease shall cease and come to an end without further liability or
obligation on the part of either party unless, within such thirty (30)
day period, Landlord substantially completes such restoration. Such
right of termination shall be Tenant's sole and exclusive remedy at law
or in equity for Landlord's failure so to complete such restoration.
12.4 AWARD
Landlord shall have and hereby reserves and excepts, and Tenant hereby
grants and assigns to Landlord, all rights to recover for damage to the
Property and the leasehold interest hereby created, and to compensation
accrued or hereafter to accrue by reason of such taking, damage or
destruction, and by way of confirming the foregoing, Tenant hereby grants
and assigns, and covenants with Landlord to grant and assign to Landlord,
all rights to such damages or compensation. Nothing contained herein
shall be construed to prevent Tenant from prosecuting in any condemnation
proceedings a claim for the value of any of Tenant's Removable Property
installed in the Premises by Tenant at Tenant's expense and for
relocation expenses, provided that such action shall not affect the
amount of compensation otherwise recoverable by Landlord from the taking
authority.
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ARTICLE XIII
DEFAULT
13.1 Tenant's Default
a. If at any time subsequent to the date of this Lease any one or
more of the following events (herein referred to as a "Default of
Tenant") shall happen:
i. Tenant shall fail to pay the Basic Rent, Escalation Charges
or other charges hereunder when due and such failure shall
continue for five (5) Business Days after notice to Tenant
from Landlord; or
ii. Tenant shall neglect or fail to perform or observe any other
covenant herein contained on Tenant's part to be performed
or observed and Tenant shall fail to remedy the same within
thirty (30) days after notice to Tenant specifying such
neglect or failure, or if such failure is of such a nature
that Tenant cannot reasonably remedy the same within such
thirty (30) day period, Tenant shall fail to commence
promptly to remedy the same and to prosecute such remedy to
completion with diligence and continuity but in no event
shall such period exceed ninety (90) days; or
iii. Tenant's leasehold interest in the Premises shall be taken
on execution or by other process of law directed against
Tenant; or
iv. Tenant shall make an assignment for the benefit of creditors
or shall file a voluntary petition in bankruptcy or shall be
adjudicated bankrupt or insolvent, or shall file any
petition or answer seeking 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 for the
relief of debtors, 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 properties,
or shall admit in writing its inability to pay its debts
generally as they become due; or
v. A petition shall be filed against Tenant in bankruptcy or
under any other law seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or
similar
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relief under any present or future Federal, State or other
statute, law or regulation and shall remain undismissed or
unstayed for an aggregate of sixty (60) days (whether or not
consecutive), or if any debtor in possession (whether or not
Tenant) trustee, receiver or liquidator of Tenant or of all
or any substantial part of its properties or of the Premises
shall be appointed without the consent or acquiescence of
Tenant and such appointment shall remain unvacated or
unstayed for an aggregate of sixty (60) days (whether or not
consecutive);
vi. Or if Tenant dissolves or is dissolved or liquidated or
adopts any plan or commences any proceeding, the result of
which is intended to include dissolution or liquidation;
vii. Then in any such case:
(1) If such Default of Tenant shall occur prior to the
Commencement Date, this Lease shall IPSO FACTO, and
without further act on the part of Landlord, terminate;
and
(2) If such Default of Tenant shall occur after the
Commencement Date, Landlord may terminate this Lease by
notice to Tenant, specifying a date not less than ten
(10) days after the giving of such notice on which this
Lease shall terminate and this Lease shall come to an
end on the date specified therein as fully and
completely as if such date were the date herein
originally fixed for the expiration of the Term of this
Lease (Tenant hereby waiving any rights of redemption
under M.G.L. c. 186, or otherwise), and Tenant will
then quit and surrender the Premises to Landlord, but
Tenant shall remain liable as hereinafter provided.
b. If this Lease shall have been terminated as provided in this
Article, or if any execution or attachment shall be issued
against Tenant or any of Tenant's property whereupon the Premises
shall be taken or occupied by someone other than Tenant, then
Landlord may, without notice, re-enter the Premises, either by
force, summary proceedings, ejectment or otherwise, and remove
and dispossess Tenant and all other persons and any and all
property from the same, as if this Lease had not been made, and
Tenant hereby waives the service of notice of intention to
re-enter or to institute legal proceedings to that end.
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c. In the event of any termination, Tenant shall pay the Basic Rent,
Escalation Charges and other sums payable hereunder up to the
time of such termination, and thereafter Tenant, until the end of
what would have been the Term of this Lease in the absence of
such termination, and whether or not the Premises shall have been
re-let, shall be liable to Landlord for, and shall pay to
Landlord, as current damages, the Basic Rent, Escalation Charges
and other sums which would be payable hereunder if such
termination had not occurred, less the net proceeds, if any, of
any re-letting of the Premises, after deducting all expenses in
connection with such re-letting, including, without limitation,
all repossession costs, brokerage commissions, legal expenses,
attorneys' fees, advertising, expenses of employees, alteration
costs and expenses of preparation for such re-letting. Tenant
shall pay such current damages to Landlord monthly on the days
which the Basic Rent would have been payable hereunder if this
Lease had not been terminated.
d. At any time after such termination, whether or not Landlord shall
have collected any such current damages, Landlord may demand, as
liquidated final damages and in lieu of all such current damages
beyond the date of such demand, and Tenant shall pay to Landlord
an amount equal to the excess, if any, of the Basic Rent,
Escalation Charges and other sums as hereinbefore provided which
would be payable hereunder from the date of such demand (assuming
that, for the purposes of this paragraph, annual payments by
Tenant on account of Taxes and Operating Expenses would be the
same as the payments required for the immediately preceding
Operating or Tax Year) for what remained, over the Term of this
Lease if the same remained in effect, over the then fair net
rental value of the Premises for the same period, such amount to
be discounted to its net present value.
Nothing contained in this Lease shall limit or prejudice the
right of Landlord to prove for and obtain in proceedings for
bankruptcy or insolvency by reason of the termination of this
Lease, an amount equal to the maximum allowed by any statute or
rule of law in effect at the time when, and governing the
proceedings in which, the damages are to be proved, whether or
not the amount be greater, equal to or less than the amount of
the loss or damages referred to above.
e. In case of any Default by Tenant, re-entry, expiration and
dispossession by summary proceedings or otherwise, Landlord may:
i. Re-let the Premises or any part or parts thereof, either in
the name of Landlord or otherwise, for a term or terms which
may at Landlord's option be equal to or less than or exceed
the period
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which would otherwise have constituted the balance of the
Term of this Lease and may grant concessions or free rent to
the extent that Landlord considers advisable and necessary
to re-let the same; and
ii. May make such reasonable alterations, repairs and
decorations in the Premises as Landlord in its sole judgment
considers advisable and necessary for the purpose of
re-letting the Premises; and the making of such alterations,
repairs and decorations shall not operate or be construed to
release Tenant from liability hereunder as aforesaid.
Landlord shall in no event be liable in any way whatsoever
for failure to re-let the Premises, or, in the event that
the Premises are re-let, for failure to collect the rent
under such re-letting. Tenant hereby expressly waives any
and all rights of redemption granted by or under any present
or future laws in the event of Tenant being evicted or
dispossessed, or in the event of Landlord obtaining
possession of the Premises, by reason of the violation by
Tenant of any of the covenants and conditions of this Lease.
f. If a Guarantor of this Lease is named in Section 1.2, the
happening of any of the events described in Paragraphs a.iv or
a.v of this Section 13.1 with respect to the Guarantor shall
constitute a Default of Tenant hereunder.
g. The specified remedies to which Landlord may resort hereunder are
not intended to be exclusive of any remedies or means of redress
to which Landlord may at any time be entitled lawfully, and
Landlord may invoke any remedy (including the remedy of specific
performance) allowed at law or in equity as if specific remedies
were not herein provided for.
h. All costs and expenses incurred by or on behalf of Landlord
(including, without limitation, attorneys' fees and expenses) in
enforcing its rights hereunder or occasioned by any Default of
Tenant shall be paid by Tenant.
13.2 LANDLORD'S DEFAULT
Landlord shall in no event be in default in the performance of any of
Landlord's obligations hereunder unless and until Landlord shall have
failed to perform such obligations within thirty (30) days, or such
additional time as is reasonably required to correct any such default,
after notice by Tenant to
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Landlord specifying wherein Landlord has failed to perform any such
obligations.
ARTICLE XIV
MISCELLANEOUS PROVISIONS AND
TENANT'S ADDITIONAL COVENANTS
14.1 EXTRA HAZARDOUS USE
Tenant covenants and agrees that Tenant will not do or permit anything to
be done in or upon the Premises, or bring in anything or keep anything
therein, which shall increase the rate of property or liability insurance
on the Premises or of the Building above the standard rate applicable to
premises occupied for Permitted Uses; and Tenant further agrees that, in
the event that Tenant shall do any of the foregoing, Tenant will promptly
pay to Landlord, on demand, any such increase resulting therefrom, which
shall be due and payable as an additional charge hereunder.
14.2 WAIVER
a. Failure on the part of Landlord or Tenant to complain of any
action or non-action on the part of the other, no matter how long
the same may continue, shall never be a waiver by Tenant or
Landlord, respectively, of any of the other's rights hereunder.
Further, no waiver at any time of any of the provisions hereof by
Landlord or Tenant shall be construed as a waiver of any of the
other provisions hereof, and a waiver at any time of any of the
provisions hereof shall not be construed as a waiver at any
subsequent time of the same provisions. The consent or approval
of Landlord or Tenant to or of any action by the other requiring
such consent or approval shall not be construed to waive or
render unnecessary Landlord's or Tenant's consent or approval to
or of any subsequent similar act by the other.
b. No payment by Tenant, or acceptance by Landlord, of a lesser
amount than shall be due from Tenant to Landlord shall be treated
otherwise than as a payment on account. The acceptance by
Landlord of a check for a lesser amount with an endorsement or
statement thereon, or upon any letter accompanying such a check,
that such lesser amount is payment in full, shall be given no
effect, and Landlord may accept such check without prejudice to
any other rights or remedies which Landlord may have against
Tenant.
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14.3 COVENANT OF QUIET ENJOYMENT
Tenant, subject to the terms and provisions of this Lease, on payment of
the Basic Rent and Escalation Charges and other charges hereunder and
observing, keeping and performing all of the other terms and provisions
of this Lease on Tenant's part to be observed, kept and performed, shall
lawfully, peaceably and quietly have, hold, occupy and enjoy the Premises
during the term hereof, without hindrance or ejection by any persons
lawfully claiming under Landlord to have title to the Premises superior
to Tenant; the foregoing covenant of quiet enjoyment is in lieu of any
other covenant, express or implied.
14.4 LANDLORD'S LIABILITY
a. No owner of the Property shall be liable under this Lease except
for breaches of Landlord's obligations occurring while owner of
the Property. The obligations of Landlord shall be binding upon
the assets of Landlord which comprise the Property but not upon
other assets of Landlord. No individual partner, trustee,
stockholder, officer, director, employee, member or beneficiary
of Landlord shall be personally liable under this Lease and
Tenant shall look solely to Landlord's interest in the Property
in pursuit of its remedies upon an event of default hereunder,
and the general assets of Landlord and of the individual
partners, trustees, stockholders, officers, employees, members or
beneficiaries of Landlord shall not be subject to levy, execution
or other enforcement procedure for the satisfaction of the
remedies of Tenant.
b. With respect to any services or utilities to be furnished by
Landlord to Tenant, Landlord shall in no event be liable for
failure to furnish the same when prevented from doing so by
strike, lockout, breakdown, accident, order or regulation of or
by any governmental authority, or failure of supply, or inability
by the exercise of reasonable diligence to obtain supplies, parts
or employees necessary to furnish such services, or because of
war or other emergency, or for any cause beyond Landlord's
reasonable control, or for cause due to any act or neglect of
Tenant or Tenant's servants, agents, employees, licensees or any
person claiming by, through or under Tenant.
c. In no event shall Landlord ever be liable to Tenant for any
indirect or consequential damages suffered by Tenant from
whatever cause.
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14.5 NOTICE TO MORTGAGEE
After receiving notice from any person, firm or other entity that it
holds a mortgage which includes the Premises as part of the mortgaged
premises, no notice from Tenant to Landlord shall be effective unless and
until a copy of the same is given to such holder (provided Tenant shall
have been furnished with the name and address of such holder), and the
curing of any of Landlord's defaults by such holder shall be treated as
performance by Landlord.
14.6 ASSIGNMENT OF RENTS AND TRANSFER OF TITLES
a. With reference to any assignment by Landlord of Landlord's
interest in this Lease, or the rents payable hereunder,
conditional in nature or otherwise, which assignment is made to
the holder of a mortgage on property which includes the Premises,
Tenant agrees that the execution thereof by Landlord, and the
acceptance thereof by the holder of such mortgage shall never be
treated as an assumption by such holder of any of the obligations
of Landlord hereunder unless such holder shall, by notice sent to
Tenant, specifically otherwise elect and that, except as
aforesaid, such holder shall be treated as having assumed
Landlord's obligations hereunder only upon foreclosure of such
holder's mortgage and the taking of possession of the Premises.
b. In no event shall the acquisition of title to the Property by a
purchaser which, simultaneously therewith, leases the entire
Property back to the seller thereof be treated as an assumption
by operation of law or otherwise, of Landlord's obligations
hereunder, but Tenant shall look solely to such seller-lessee,
and its successors from time to time in title, for performance of
Landlord's obligations hereunder. In any event, this Lease shall
be subject and subordinate to the lease between such
purchaser-lessor and seller-lessee. For all purposes, such
seller-lessee, and its successors in title, shall be the Landlord
hereunder unless and until Landlord's position shall have been
assumed by such purchaser-lessor.
c. Tenant hereby agrees that, except as provided in paragraph b. of
this Section, in the event of any transfer of title to the
Property by Landlord, Landlord shall thereafter be entirely freed
and relieved from the performance and observance of all covenants
and obligations hereunder.
d. Tenant hereby agrees not to look to the mortgagee, as mortgagee,
mortgagee in possession, or successor in title to the property,
for accountability for any security deposit required by the
Landlord
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hereunder, unless said sums have actually been received by said
mortgagee as security for the tenant's performance of this Lease.
e. Tenant shall not pay rent more than one month in advance.
14.7 RULES AND REGULATIONS
Tenant shall abide by rules and regulations set forth on Exhibit D hereto
and any other rules and regulations established by Landlord from time to
time, it being agreed that such rules and regulations will be established
and applied by Landlord in a non-discriminatory fashion, such that all
rules and regulations shall be generally applicable to other tenants, of
similar nature to the Tenant named herein, of the Building. Landlord
agrees to use reasonable efforts to insure that any such rules and
regulations are uniformly enforced, but Landlord shall not be liable to
Tenant for violation of the same by any other tenant or occupant of the
Building, or persons having business with them.
14.8 ADDITIONAL CHARGES
If Tenant shall fail to pay when due any sums under this Lease designated
as an additional charge, Landlord shall have the same rights and remedies
as Landlord has hereunder for failure to pay Basic Rent.
14.9 INVALIDITY OF PARTICULAR PROVISIONS
If any term or provision of this Lease, or the application thereof to any
person or circumstance shall, to the 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.
14.10 PROVISIONS BINDING, ETC.
Except as herein otherwise provided, the terms hereof shall be binding
upon and shall inure to the benefit of the successors and assigns,
respectively, of Landlord and Tenant and, if Tenant shall be an
individual, upon and to his heirs, executors, administrators, successors
and assigns. Each term and each provision of this Lease to be performed
by Tenant shall be construed to be both a covenant and a condition. The
reference contained to successors and assigns of Tenant is not intended
to constitute a consent to assignment by Tenant, but has reference only
to those instances in which Landlord may later
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give consent to a particular assignment as required by those provisions
of Article VI hereof.
14.11 RECORDING
Tenant agrees not to record this Lease, but each party hereto agrees, on
the request of the other, to execute a so-called Notice of Lease in form
recordable and complying with applicable law and reasonably satisfactory
to Landlord's attorneys. In no event shall such document set forth the
rent or other charges payable by Tenant under this Lease; and any such
document shall expressly state that it is executed pursuant to the
provisions contained in this Lease, and is not intended to vary the terms
and conditions of this Lease. Upon termination of this Lease, Tenant
shall execute an instrument in recordable form acknowledging the date of
termination.
14.12 NOTICES
Whenever, by the terms of this Lease, notices shall or may be given
either to Landlord or to Tenant, such notice shall be in writing and
addressed as follows:
IF INTENDED FOR LANDLORD:
Address to Landlord at Landlord's Original Address (or to such other
address or addresses as may from time to time hereafter be designated
by Landlord by like notice).
IF INTENDED FOR TENANT:
Address to Tenant at Tenant's Original Address (or to such other
address or addresses as may from time to time hereafter be designated
by Landlord by like notice).
All such notices so addressed shall be effective (i) when delivered, if
hand delivered, or (ii) one (1) day after deposit with a recognized
overnight delivery service or (iii) three (3) days after deposit with the
U.S. Postal Service if mailed by registered or certified mail, postage
prepaid, return receipt requested.
14.13 WHEN LEASE BECOMES BINDING
The submission of this document for examination and negotiation does not
constitute an offer to lease, or a reservation of, or option for, the
Premises, and this document shall become effective and binding only upon
the execution and delivery hereof by both Landlord and Tenant. All
negotiations, considerations,
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representations and understandings between Landlord and Tenant are
incorporated herein and this Lease expressly supersedes any proposals or
other written documents relating hereto. This Lease may be modified or
altered only by written agreement between Landlord and Tenant, and no act
or omission of any employee or agent of Landlord shall alter, change or
modify any of the provisions hereof.
14.14 PARAGRAPH HEADINGS
The paragraph headings throughout this instrument are for convenience and
reference only, and the words contained therein shall in no way be held
to explain, modify, amplify or aid in the interpretation, construction or
meaning of the provisions of this Lease.
14.15 RIGHTS OF MORTGAGEE
This Lease shall be subject and subordinate to any mortgage from time to
time encumbering the Property, whether executed and delivered prior to or
subsequent to the date of this Lease provided that Tenant shall have
received a commercially reasonable subordination, non-disturbance and
attornment agreement in recordable form executed by the holder of any
such mortgage. This section 14.15 shall be self-operative and no further
instrument of subordination shall be required. In confirmation of such
subordination, Tenant shall execute such instruments in confirmation of
the foregoing agreement as such holder may reasonably request. In the
event that any mortgagee or its respective successor in title shall
succeed to the interest of Landlord, then this Lease shall continue in
full force and effect and Tenant shall and does hereby agree to attorn to
such mortgagee or successor and to recognize such mortgagee or successor
as its Landlord. Landlord warrants and represents to Tenant that at the
date of execution of this Lease there is no mortgage encumbering the
Property.
14.16 STATUS REPORT
Landlord and Tenant agree from time to time, upon not less than fifteen
(15) days prior written request by the other party, to execute,
acknowledge and deliver to the requesting party a statement in writing
certifying that this Lease is unmodified and in full force and effect and
that there are no uncured defaults of Landlord or Tenant under this
Lease, and if Landlord is the requesting party, that Tenant has no
defenses, offsets or counterclaims against its obligations to pay the
Base Rent, Escalation Charges and other charges hereunder and to perform
its other covenants under this Lease and that there are no uncured
defaults of the Landlord or Tenant under this Lease (or, if there have
been any modifications that the same is in full force and effect as
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modified and stating the modifications and, if there are any defenses,
offsets, counterclaims, or defaults, setting them forth in reasonable
detail), and the dates to which the Base Rent, Escalation Charges and
other charges hereunder have been paid. Any such statement delivered
pursuant to this Section 8.8 may be relied upon by a prospective
purchaser or mortgagee of the Premises or any prospective assignee of any
mortgagee of the Premises or any prospective assignee of Tenant's
interest in the Premises, as the case may be. Failure of a party to
respond to such request within such time shall be deemed an
acknowledgment by such party that the facts recited in such request are
correct.
14.17 SECURITY DEPOSIT
If, in Section 1.2 hereof, a security deposit is specified, Tenant agrees
that the same will be paid upon execution and delivery of this Lease, and
that Landlord shall hold the same throughout the term of this Lease as
security for the performance by Tenant of all obligations on the part of
Tenant hereunder. Landlord shall have the right from time to time
without prejudice to any other remedy Landlord may have on account
thereof, to apply such deposit, or any part thereof, to Landlord's
damages arising from any default on the part of Tenant. There then
existing no Default of Tenant, Landlord shall return the deposit, or so
much thereof as shall have theretofore been applied in accordance with
the terms of this Section 14.17, to Tenant on the expiration or earlier
termination of the Term of this Lease and surrender of possession of the
Premises by Tenant to Landlord at such time. While Landlord holds such
deposit, Landlord shall invest the deposit in a mutual fund which invests
only in government securities, with interest accruing to the benefit of
Tenant. Interest shall be paid to Tenant on an annual basis. If
Landlord conveys Landlord's interest under this Lease, the deposit, or
any part thereof not previously applied, may be turned over by Landlord
to Landlord's grantee, and, if so turned over, Tenant agrees to look
solely to such grantee for proper application of the deposit in
accordance with the terms of this Section 14.17, and the return thereof
in accordance herewith. The holder of a mortgage shall not be
responsible to Tenant for the return or application of any such deposit,
whether or not it succeeds to the position of Landlord hereunder, unless
such deposit shall have been received in hand by such holder.
14.18 REMEDYING DEFAULTS; LATE PAYMENTS
If Tenant shall at any time default in the performance of any obligation
under this Lease, Landlord shall have the right, but not the obligation,
to enter upon the Premises and to perform such obligation notwithstanding
the fact that no specific provision for such substituted performance is
made in the Lease with respect to such default. In performing such
obligation, Landlord may make
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any payment of money or perform any other act. In the event of the
exercise of such right by Landlord, Tenant agrees to pay to Landlord
forthwith upon demand all such sums, together with interest thereon at a
rate equal to 3% over the prime rate in effect from time to time, as
published in the Wall Street Journal (but in no event less than 18% per
annum or more than the maximum rate allowed by law), as an additional
charge. Any payment of Basic Rent, Escalation Charges or other charges
payable hereunder not paid within five (5) days of the date when due
shall bear interest at a rate equal to 3% over the prime rate in effect
from time to time, as published in the Wall Street Journal (but in no
event less than 18% per annum or more than the maximum rate allowed by
law) from the due date thereof, as an additional charge.
14.19 HOLDING OVER
Any holding over by Tenant after the expiration of the term of this Lease
shall be treated as a daily tenancy at sufferance at a rate equal to 1
1/2 times the Basic Rent plus Escalation Charges and other charges herein
provided (prorated on a daily basis) and shall otherwise be on the terms
and conditions set forth in this Lease as far as applicable.
14.20 WAIVER OF SUBROGATION
Insofar as, and to the extent that, the following provision may be
effective without invalidating or making it impossible to secure
insurance coverage obtainable from responsible insurance companies doing
business in the locality in which the Property is located (even though
extra premium may result therefrom) Landlord and Tenant mutually agree
that, with respect to any hazard, the loss from which is covered by
insurance then being carried by them, respectively, the one carrying such
insurance and suffering such loss releases the other of and from any and
all claims with respect to such loss to the extent of the insurance
proceeds paid with respect thereto; and they further mutually agree that
their respective insurance companies shall have no right of subrogation
against the other on account thereof.
14.21 SURRENDER OF PREMISES
Upon the expiration or earlier termination of the Term of this Lease,
Tenant shall peaceably quit and surrender to Landlord the Premises in
neat and clean condition and in good order, condition and repair,
together with all alterations, additions and improvements which may have
been made or installed in, on or to the Premises prior to or during the
Term of this Lease, excepting only ordinary wear and use and damage by
fire or other casualty for which, under other provisions of this Lease,
Tenant has no responsibility of repair or restoration. Tenant shall
remove all of Tenant's Removable Property and (i) to
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the extent specified by Landlord pursuant to Paragraph 5.2, all
Improvements made by Tenant and (ii) with respect to improvements made by
Tenant not requiring Landlord's consent; and Tenant shall repair any
damages to the Premises or the Building caused by such removal.
Notwithstanding anything in this Lease to the contrary, Tenant shall have
no obligation to remove Building Standard Office Improvements from the
Premises. Any of Tenant's Removable Property which shall remain in the
Building or on the Premises after the expiration or termination of the
Term of this Lease shall be deemed conclusively to have been abandoned,
and either may be retained by Landlord as its property or may be disposed
of in such manner as Landlord may see fit, at Tenant's sole cost and
expense.
14.22 BROKERAGE
Tenant warrants and represents that Tenant has dealt with no broker
except the Conrad Group and Lynch Murphy Walsh & Partners in connection
with the consummation of this Lease and, in the event of any other
brokerage claims against Landlord predicated upon prior dealings with
Tenant, Tenant agrees to defend the same and indemnify Landlord against
any such claim.
14.23 ENVIRONMENTAL COMPLIANCE
Tenant shall not cause any hazardous or toxic wastes, hazardous or toxic
substances or hazardous or toxic materials (collectively, "Hazardous
Materials") to be used, generated, stored or disposed of on, under or
about, or transported to or from, the Premises (collectively, "Hazardous
Materials Activities") without first receiving Landlord's written
consent, which may be withheld for any reason and revoked at any time.
If Landlord consents to any such Hazardous Materials Activities, Tenant
shall conduct them in strict compliance (at Tenant's expense) with all
applicable Regulations, as hereinafter defined, and using all necessary
and appropriate precautions. Landlord shall not be liable to Tenant for
any Hazardous Materials Activities by Tenant, Tenant's employees, agents,
contractors, licensees or invitees, whether or not consented to by
Landlord. Tenant shall indemnify, defend with counsel acceptable to
Landlord and hold Landlord harmless from and against any claims, damages,
costs and liabilities, arising out of Tenant's Hazardous Materials
Activities. For purposes hereof, Hazardous Materials shall include but
not be limited to substances defined as "hazardous substances," "toxic
substances," or "hazardous wastes" in the federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended; the federal Hazardous Materials Transportation Act, as amended;
and the federal Resource Conservation and Recovery Act, as amended
("RCRA"); those substances defined as "hazardous wastes" in the
Massachusetts Hazardous Waste Facility Siting Act, as amended
(Massachusetts General Laws Chapter 21D); those
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substances defined as "hazardous materials" or "oil" in Massachusetts
General Laws Chapter 21E, as amended; and as such substances are defined
in any regulations adopted and publications promulgated pursuant to said
laws (collectively, "Regulations"). Prior to using, storing or
maintaining any Hazardous Materials on or about the Premises, Tenant
shall provide Landlord with a list of the types and quantities thereof,
and shall update such list as necessary for continued accuracy. Tenant
shall also provide Landlord with a copy of any Hazardous Materials
inventory statement required by any applicable Regulations, and any
update filed in accordance with any applicable Regulations. If Tenant's
activities violate or create a risk of violation of any Regulations,
Tenant shall cease such activities immediately upon notice from Landlord.
Tenant shall immediately notify Landlord both by telephone and in writing
of any spill or unauthorized discharge of Hazardous Materials or of any
condition constituting an imminent hazard under any Regulations.
Landlord, Landlord's representatives and employees may enter the Premises
at any time during the Term to inspect Tenant's compliance herewith, and
may disclose any violation of any Regulations to any governmental agency
with jurisdiction. Nothing herein shall prohibit Tenant form using
minimal quantities of cleaning fluid and office supplies which may
constitute Hazardous Materials but which are customarily present in
premises devoted to office use, provided that such use is in compliance
with all applicable laws and subject to all of the other provisions of
this SECTION 14.24.
14.24 EXHIBITS
Exhibits D, CS, LW and FP attached hereto are hereby incorporated by
reference as fully as if set forth herein in full.
14.25 GOVERNING LAW
This Lease shall be governed exclusively by the provisions hereof and by
the Laws of the Commonwealth of Massachusetts, as the same may from time
to time exist.
14.26 EVIDENCE OF AUTHORITY.
If Tenant is an entity, Tenant shall, simultaneously with the delivery to
Landlord of this Lease, deliver to Landlord a Secretary's Certificate or
similar instrument evidencing that the execution of this Lease by Tenant
has been properly authorized and that the individual executing this Lease
on behalf of Tenant is authorized to do so.
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ARTICLE XV
RIGHTS OF FIRST OFFER; OPTION TO EXTEND
15.1 RIGHTS OF FIRST OFFER.
15.1.1 Landlord is in the process of marketing for lease the third floor
of the Building which is the subject of this Section 15.1.1 (the "Third Floor
Offer Space"). The provisions of this Section shall not apply to the initial
leasing of the Third Floor Offer Space after the date hereof or to any rights of
extension contained in such initial lease(s), nor shall this Section 15.1.1
apply to any other portion of the Building.
Provided that there is at least one year remaining in the Term of this
Lease and that Tenant is not in default in the performance or observance of any
of the terms and provisions of this Lease on the part of Tenant to be performed
or observed beyond applicable grace and cure periods, if Landlord intends to
market for lease all or any portion of the Third Floor Offer Space and such
space is at the time subject to Tenant's rights under this Section, then
Landlord will present a term sheet (the "Third Floor Offer") for the leasing of
such space to Tenant at fair market rent, as determined by Landlord, and on such
other terms and conditions as Landlord may determine. Except as otherwise set
forth in the Third Floor Offer, the Third Floor Offer to lease such space shall
be on the terms and conditions set forth herein.
Upon its receipt of the Third Floor Offer, Tenant shall have ten (10)
business days to accept or reject the Third Floor Offer. If Tenant accepts the
Third Floor Offer within said ten (10) business day period, Landlord and Tenant
shall execute an amendment to this Lease which incorporates the Third Floor
Offer Space on the terms set forth therein within fifteen (15) days of Tenant's
acceptance of said Third Floor Offer. In the event that Tenant does not accept
said Third Floor Offer within said ten (10) business day period or Landlord and
Tenant do not execute a lease on the terms therein set forth within said fifteen
(15) day period, then Landlord shall have the right to lease to any other party
said Third Floor Offer Space on such terms and conditions not materially more
favorable than those contained in the Third Floor Offer. As used herein,
"materially more favorable" shall include a rental rate less than ninety percent
(90%) of that contained in the Third Floor Offer.
15.1.2 Landlord is also in the process of marketing for lease the second
floor of the Building which is the subject of this Section 15.1.2 (the "Second
Floor Offer Space"). The provisions of this Section shall not apply to the
initial leasing of the Second Floor Offer Space after the date hereof or to any
rights of extension contained in such initial lease(s), nor shall this Section
15.1.2 apply to any other portion of the Building.
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Provided that Tenant has not previously rejected a Third Floor Offer from
Landlord (or, if Tenant had rejected a prior Third Floor Offer, Tenant has since
leased from Landlord space located on the third floor of the Building pursuant
to a subsequent Third Floor Offer), that there is at least one year remaining in
the Term of this Lease and that Tenant is not in default in the performance or
observance of any of the terms and provisions of this Lease on the part of
Tenant to be performed or observed beyond applicable grace and cure periods, if
Landlord intends to market for lease all or any portion of the Second Floor
Offer Space and such space is at the time subject to Tenant's rights under this
Section, then Landlord will present a term sheet (the "Second Floor Offer") for
the leasing of such space to Tenant at fair market rent, as determined by
Landlord, and on such other terms and conditions as Landlord may determine.
Except as otherwise set forth in the Second Floor Offer, the Second Floor Offer
to lease such space shall be on the terms and conditions set forth herein.
Upon its receipt of the Second Floor Offer, Tenant shall have ten (10)
business days to accept or reject the Second Floor Offer. If Tenant accepts the
Second Floor Offer within said ten (10) business day period, Landlord and Tenant
shall execute an amendment to this Lease which incorporates the Second Floor
Offer Space on the terms set forth therein within fifteen (15) days of Tenant's
acceptance of said Second Floor Offer. In the event that Tenant does not accept
said Second Floor Offer within said ten (10) business day period or Landlord and
Tenant do not execute a lease on the terms therein set forth within said fifteen
(15) day period, then Landlord shall have the right to lease to any other party
said Second Floor Offer Space on such terms and conditions not materially more
favorable than those contained in the Second Floor Offer. As used herein,
"materially more favorable" shall include a rental rate less than ninety percent
(90%) of that contained in the Second Floor Offer.
15.2 TENANT'S OPTION TO EXTEND THE TERM OF THIS LEASE.
Provided that at the time of the exercise of this option and at the
beginning of the extension period (i) Tenant is not in default under this Lease
in the performance or observance of any of the terms and provisions of this
Lease on the part of Tenant to be performed or observed beyond applicable grace
and cure periods, (ii) this Lease has otherwise not been terminated, and (iii)
this Lease has not been assigned nor is any portion of the Premises under
sublease (excluding assignments or sublets to Affiliates (as defined in Article
VI), then Tenant shall the options to extend the Term of this Lease for two (2)
periods of five (5) years each, commencing at the expiration of the Term of this
Lease (the "Extension Option"). If Tenant chooses to exercise such option(s)
Tenant shall do so by written notice to Landlord ("Tenant's Extension Notice")
given no earlier than eighteen (18) months and no later than twelve (12) months
prior to the expiration of the Term of this Lease. Failure of Tenant to
exercise such option in a timely manner shall terminate Tenant's right to lease
and occupy the Premises beyond the Term, and shall terminate all further rights
under
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the Extension Option set forth in this Section 15.2. The terms and conditions
of this Lease during any such extension shall be the same as contained in this
Lease except that Landlord shall have no obligation to make, or to provide any
allowance for, tenant improvements as may be described in this Lease, and the
Base Rent shall be adjusted to be the greater of (i) ninety five percent (95%)
of the then Fair Market Rent (defined below), or (ii) the Base Rent charged
during the year immediately preceding the extension period, and Tenant shall
have no additional options to extend the Term except as described herein.
No later than fifteen (15) days after the date Landlord receives Tenant's
Extension Notice (the "Landlord's Response Date"), Landlord shall propose a fair
market rent for the Premises (the "Landlord's Proposed Fair Market Rent") and
give written notice thereof to Tenant. "Fair Market Rent" for purposes of this
Lease shall mean the rental income that the Premises would most probably command
on the open market as indicated by current rentals being paid for comparable
space within the Boston metropolitan area (as of the time such rental will
become effective), giving due consideration to all matters as are customarily
and appropriately considered by landlords and tenants engaged in leasing similar
space in the geographic area in which the Building is located as of the time of
such determination and the terms of this Lease.
Tenant shall notify Landlord in writing within fifteen (15) days of
Landlord's notice containing Landlord's Proposed Fair Market Rent as to whether
Tenant is accepting or rejecting Landlord's Proposed Fair Market Rent ("Tenant's
Notice"). If Tenant fails to provide Tenant's Notice to Landlord within such
fifteen (15) day period, Tenant shall be deemed to have accepted Landlord's
Proposed Fair Market Rent, which shall be the Fair Market Rent for the purposes
of the first paragraph of this Section. If Tenant rejects Landlord's Proposed
Fair Market Rent (a "Tenant's Objection Notice"), Tenant shall propose a fair
market rent for the Premises in such notice (the "Tenant's Proposed Fair Market
Rent"). Landlord and Tenant shall attempt to reach agreement with respect to
the Fair Market Rent within fifteen (15) days of the date of Tenant's Objection
Notice. If Landlord and Tenant fail to agree within such fifteen (15) day
period, the Fair Market Rent shall be determined by the appraisal procedure
described below.
Unless Landlord and Tenant have agreed in writing to the Fair Market Rent
within fifteen (15) days after Tenant's objection notice, Landlord and Tenant,
within fifteen (15) days after Tenant's objection notice, shall jointly appoint
a single MAI appraiser with experience in commercial real estate including at
least ten (10) years of experience in appraising office space in the
metropolitan office rental market in which the Building is located and who is
hereinafter referred to as an "appraiser." Within five (5) days after the
appointment of such appraiser Landlord and Tenant shall each provide a written
summary of their respective determinations of the Landlord's and Tenant's
Proposed Fair Market Rent, together with any supporting
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information which it deems relevant to such determination to the appraiser
promptly upon his/her appointment. Within thirty (30) days of the appointment
of the appraiser, the appraiser shall notify both Landlord and Tenant of its
determination of the Fair Market Rent. If the appraiser's determination of the
Fair Market Rent is equal to the Landlord's or Tenant's Proposed Fair Market
Rent or within the range between the Landlord's and Tenant's Proposed Fair
Market Rent, then the appraiser's determination of the Fair Market Rent will be
the Fair Market Rent. If the appraiser's determination of the Fair Market Rent
exceeds both the Landlord's and Tenant's Proposed Fair Market Rent, then the
higher of either the Landlord's or Tenant's Proposed Fair Market Rent shall be
the Fair Market Rent. If the appraiser's determination of the Fair Market Rent
is lower than both the Landlord's and Tenant's Proposed Fair Market Rent, then
the lower of either the Landlord's or Tenant's Proposed Fair Market Rent shall
be the Fair Market Rent. If Landlord and Tenant cannot agree on the identity of
the appraiser, then either party on behalf of both may apply to the President of
the New England Chapter of the American Institute of Real Estate Appraisers (or
its successor), or on its failure or inability to appoint an appraiser within
ten (10) days of the application to that person to act, to a court of competent
jurisdiction, for the appointment of an appraiser to serve as the appraiser.
The appraiser shall within thirty (30) days of his or her appointment make his
or her determination of the Fair Market Rent. The Fair Market Rent of the
Premises, determined in accordance with the provisions of this section, shall be
binding and conclusive on Tenant and Landlord.
The cost and expense of the appraiser shall be shared equally by Tenant
and Landlord. If, for any reason, the decision of the appraiser pursuant to
this Section shall not be determined before the commencement of the extension
period, then Tenant shall pay Base Rent in monthly installments at the greater
of (i) the rate in effect immediately prior to the commencement of such
extension period or (ii) ninety five percent (95%) of the average of the
Landlord's Proposed Fair Market Rent and the Tenant's Proposed Fair Market Rent
until such decision of the appraiser shall be made, and upon the decision by the
appraiser an appropriate adjustment shall be made, retroactive to the first day
of such extension.
In no event shall the date by which Tenant must exercise the Extension
Option be extended for purposes of this Section. Time is of the essence with
respect to this Extension Option.
[Signatures on Next Page]
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IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be duly
executed, under seal, by persons hereunto duly authorized, in multiple copies,
each to be considered an original hereof, as of the date first set forth above.
LANDLORD: TENANT:
NATIONAL FIRE PROTECTION DM MANAGEMENT COMPANY
ASSOCIATION, INC.
By: /s/ James M. Shamron By: /s/ Olga P. Connelly
--------------------------- ---------------------------
Title: Sr. V.P. and General Title: CFO
Counsel
By:
---------------------------
Title:
48
<PAGE>
EXHIBIT CS
CLEANING SPECIFICATIONS
A. PREMISES
DAILY ON BUSINESS DAYS:
1. Empty and clean all waste receptacles and ash trays and remove waste
material from the Premises; wash receptacles as necessary.
2. Sweep and dust mop all uncarpeted areas using a dust-treated mop.
3. Spot vacuum all rugs and carpeted areas.
4. Hand dust and wipe clean with treated cloths all horizontal surfaces
including furniture, office equipment, window sills, door ledges,
chair rails and counter tops, within normal reach.
5. Wash clean all water fountains.
6. Upon completion of cleaning, all lights will be turned off and doors
locked, leaving the Premises in an orderly condition.
WEEKLY:
Vacuum all rugs and carpeted areas.
QUARTERLY:
Render high dusting not reached in daily cleaning to include:
1. Dusting all pictures, frames, charts, graphs and similar wall
hangings.
2. Dusting all vertical surfaces, such as walls, partitions, doors and
ducts.
3. Dusting all pipes and high moldings.
B. LAVORATORIES
DAILY ON BUSINESS DAYS:
1. Sweep and damp mop floors.
49
<PAGE>
2. Clean all mirrors, powder shelves, dispensers and receptacles, bright
work, flushmeters, pipes and toilet seat hinges.
3. Wash both sides of all toilet seats.
4. Wash all basin, bowls and urinals.
5. Dust and clean all powder room fixtures.
6. Empty and clean paper towel and sanitary disposal receptacles.
7. Remove waste paper and refuse.
8. Refill tissue holders, soap dispensers, towel dispensers, vending
sanitary dispensers; materials to be furnished by Landlord.
9. A sanitizing solution will be used in all lavatory cleaning.
MONTHLY:
1. Machine scrub lavatory floors.
2. Wash all partitions and tile walls in lavatories.
C. MAIN LOBBY, BUILDING EXTERIOR AND CORRIDORS
DAILY ON BUSINESS DAY:
1. Sweep and wash all floors.
2. Wash all rubber mats.
3. Clean elevators, wash or vacuum floors, wipe down walls and doors.
4. Spot clean any metal work inside lobby.
5. Spot clean any metal work surrounding building entrance doors.
MONTHLY:
All resilient tile floors in public areas to be treated equivalent to spray
buffing.
50
<PAGE>
QUARTERLY:
Windows washed inside and outside -- weather permitting.
D. MISCELLANEOUS SERVICES
Tenant requiring services in excess of those described above shall request
same through Landlord, at Tenant's expense.
Initialed for Identification
LANDLORD: /s/ James M. Shamron TENANT: /s/ OPC
-------------------------- ----------------------------
51
<PAGE>
EXHIBIT OC
ITEMS INCLUDED IN OPERATING EXPENSES
Without limitation, Operating Expenses shall include:
1. All expenses incurred by Landlord or Landlord's agents which shall be
directly related to employment of personnel, including amounts incurred for
wages, salaries and other compensation for services, payroll, social
security, unemployment and similar taxes, workmen's compensation insurance,
disability benefits, pensions, hospitalization, retirement plans and group
insurance, uniforms and working clothes and the cleaning thereof, and
expenses imposed on Landlord or Landlord's agents pursuant to any
collective bargaining agreement for the services of employees of Landlord
or Landlord's agents in connection with the operation, repair, maintenance,
cleaning, management and protection of the Property, and its mechanical
systems including, without limitation, day and night supervisors, property
manager, accountants, bookkeepers, janitors, carpenters, engineers,
mechanics, electricians and plumbers and personnel engaged in supervision
of any of the persons mentioned above; provided that, if any such employee
is also employed on other property of Landlord, such compensation shall be
suitably prorated among the Property and such other properties.
2. The cost of services, materials and supplies furnished to the Building or
tenants thereof or used in the operation, repair, maintenance, cleaning,
management and protection of the Property.
3. The cost of replacements for tools and other similar equipment used in the
repair, maintenance, cleaning and protection of the Property, provided
that, in the case of any such equipment used jointly on other property of
Landlord, such costs shall be suitably prorated among the Property and such
other properties and of establishment of reasonable reserves relating to
operation and maintenance of the Property.
4. Where the Property is managed by Landlord or an affiliate of Landlord, a
sum equal to the amounts customarily charged by management firms in the
Boston area for similar properties, but in no event more than four percent
(4%) of gross annual income of the Property, whether or not actually paid,
or where otherwise managed, the amounts accrued for management, together
with amounts accrued for legal and other professional fees relating to the
Property, but excluding such fees and commissions paid in connection with
services rendered for securing or renewing leases and for matters not
related to the normal administration and operation of the Building.
52
<PAGE>
5. Premiums for insurance against damage or loss to the Building from such
hazards as shall from time to time be generally required by institutional
mortgages in the Quincy area for similar properties, including, but not by
way of limitation, insurance covering loss of rent attributable to any such
hazards, and public liability insurance.
6. If, during the Term of this Lease, Landlord shall make a capital
expenditure which is not otherwise properly includable in Operating
Expenses for the Operating Year in which it was made, there shall
nevertheless be included in such Operating Expenses for the Operating Year
in which it was made and in Operating Expenses for each succeeding
Operating Year during the useful life of the capital expenditure the annual
charge-off of such capital expenditure. Annual chargeoff shall be
determined by dividing the original capital expenditure PLUS an interest
factor, reasonably determined by Landlord, as being the interest rate then
being charged for long-term mortgages by institutional lenders on like
properties within the locality in which the Building is located, by the
number of years of useful life of the capital expenditure; and the useful
life shall be determined reasonably by Landlord in accordance with
generally accepted accounting principles and practices in effect at the
time of making such expenditure.
7. Costs for electricity, water and sewer use charges, and other utilities
supplied to the Property and not paid for directly by tenants.
8. Betterment assessments (including interest charged thereon) provided the
same are apportioned equally over the longest period permitted by law.
9. Amounts paid to independent contractors for services, materials and
supplies furnished for the operation, repair, maintenance, cleaning and
protection of the Property.
Operating Expenses shall exclude the following:
(a) The cost of capital improvements, repairs or replacements to the
Building except for those that (a) reduce operating expenses of the
Building, but only to the extent of such cost saving, or (b) are
required by law; provided, however, such capital improvements, repairs
and replacements shall be amortized over a reasonable period of time
in accordance with generally accepted accounting principles;
(b) Payments for rented equipment, the cost of which equipment would
constitute a capital expenditure if the equipment were purchased,
except equipment rented for maintenance and repair of the Building
which shall be a permitted Operating Expense;
53
<PAGE>
(c) The cost of correcting defects as to which Landlord is responsible
pursuant to Section 4.3 of this Lease;
(d) Depreciation and amortization, except to the extent provided above;
(e) Interest, mortgage charges and real estate taxes;
(f) Any items to the extent such items are reimbursable to Landlord by
Tenant (other than through additional rent), by other tenants or
occupants of the Building, or by any third parties;
(g) Salaries of officers, executives and employees of Landlord not
connected with the operation of the Building, provided that if any
officer, executive or employee of Landlord or a managing agent
performs duties with respect to the Building, then a fair and
equitable portion of the wages and fringe benefits for such officer,
executive or employee as determined by Landlord shall be allocated to
the Building and included in Operating Expenses;
(h) All costs related to the preparation of any portion of the Building
for occupancy by a tenant or other occupant;
(i) Any cost incurred by the negligent acts or omissions of Landlord, its
agents and employees;
(j) Advertising and promotional expenses associated with the marketing of
vacant space in the Building;
(k) Legal fees and expenses incurred by Landlord, except to the extent
that such fees and expenses were incurred in connection with contracts
and the enforcement thereof, for services which are provided to Tenant
and available to all tenants in the Building;
(l) Costs and expenses incurred by Landlord in connection with the repair
of damage to the Building caused by fire or other casualty, insured or
required to be insured against hereunder.
(m) Insurance premiums to the extent any unusual tenant activity causes
Landlord's existing insurance premiums to increase or requires
Landlord to purchase additional insurance, but only to the extent such
additional cost can be identified by the insurer;
(n) The cost of installing any specialty service such as a cafeteria,
retail store, newsstand, concession or athletic club;
54
<PAGE>
(o) The cost of any item for which Landlord is reimbursed through
condemnation awards;
(p) Management fees in excess of the greater of (i) those reasonable and
customary for comparable properties in the geographic area in which
the Building is located or (ii) four (4) percent of gross annual
income from the Property; and
(q) Costs incurred due to violation by Landlord or any other tenant of the
Building of any lease or any laws, rules, regulations or ordinances
applicable to the Building.
Initialed for Identification
LANDLORD: /s/ James M. Shamron TENANT: /s/ OPC
--------------------------- ----------------------------
55
<PAGE>
EXHIBIT D
RULES AND REGULATIONS
The following Rules and Regulations have been formulated for the safety and well
being of all Tenants of the Building and to insure compliance with all municipal
and other requirements. Strict adherence to these Rules and Regulations is
necessary to guarantee that each and every Tenant will enjoy a safe and
undisturbed occupancy in the Building in accordance with the lease. Any
continuing violation of these Rules and Regulations by a Tenant, after notice
from the Landlord, shall be sufficient cause for termination of the lease, at
the option of the Landlord.
1. The sidewalks, entrances, loading dock, atrium, elevators, vestibules,
stairways, corridors, or other parts of the Building not occupied by any
Tenant shall not be obstructed or encumbered by any Tenant or used for any
purpose other than ingress and egress and to from the Premises. The
Landlord shall have the right to control and operate and public portions of
the Building and the facilities furnished for common use of the Tenants, in
such manner as the Landlord deems best for the benefit of the Tenants
generally.
2. No drapes, blinds, shades or screens shall be attached to or hung in, or
used in connection with, any window or door of the Premises, without the
prior written consent of the Landlord.
3. No bicycles, vehicles or animals, birds or pets of any kind shall be
brought into or kept in or about the Premises, and no cooking shall be done
or permitted by any Tenant on the Premises. No Tenant shall cause or
permit any unusual or objectionable odors to be produced upon or penetrate
from the Premises.
4. No inflammable, combustible or explosive fluid, chemical or substance shall
be kept upon the Premises.
5. No additional locks or bolts of any kind shall be places upon any of the
doors, nor shall any changes be made in existing locks or the mechanism
thereof to the doors leading to the corridors or main halls. All entrance
doors shall be kept closed during business hours except as they may be used
for ingress or egress. Each Tenant shall, upon the termination of his
tenancy, restore to the Landlord all keys either furnished to, or otherwise
procured by such Tenant and in the event of the loss of any keys so
furnished, such Tenant shall pay to the Landlord the cost thereof.
6. No furniture, equipment or other bulky matter of any description shall be
received into the Building or carried in the elevators except in the manner
and
56
<PAGE>
during the times approved by Lessor. Lessee shall obtain Lessor's
determination prior to moving said property into the Building. All moving
of furniture, equipment, and other material within the public areas shall
be under the direct control and supervision of Lessor who shall, however,
not be responsible for any damage to or charges for moving the same.
Lessor shall have the sole right to determine if Lessee's property can be
safely transported in the elevators.
7. The Landlord reserves the right to exclude from the Building at all times
any person who is not known or does not properly identify himself to the
building management or security service. Landlord may, at its option,
require all persons admitted to or leaving the Building between the hours
of 6:00 PM and 7:00 AM, Monday through Friday, and on Saturdays after 1:00
PM to register. Each Tenant shall be responsible for all persons for whom
they authorize entry into or exit out of the Building.
8. The Premises shall not, at any time, be used for lodging or sleeping or for
any immoral or illegal purposes.
9. Canvassing, soliciting and peddling in the Building is prohibited and each
Tenant shall cooperate to prevent the same.
10. Landlord does not maintain suite finishes which are non standard, such as
bathrooms, wallpaper, special lights, etc. However, should the need for
repairs of items not maintained by Landlord arise, Landlord will arrange
for the work to be done at Tenants' expense.
11. All Tenants and visitors are expected to observe all safety features and
traffic laws in the park which include:
- A speed limit of 20 m.p.h.
- All stop signs are to be obeyed
- Automobiles are not be left in the roadway at anytime
- Automobiles are not to be left in the parking lot overnight or
weekends.
- Automobiles should be parked within marked lanes. Reserved parking
and parking for the handicap signs should be respected.
12. Landlord may, upon request by any Tenant, waive the compliance by such
Tenant of any of the foregoing Rules and Regulations, provided that:
57
<PAGE>
(i) No waiver shall be effective unless signed by Landlord or
Landlord's authorized agent.
(ii) Any such waiver shall not relieve such Tenant from the obligation
to comply with such Rules or Regulations in the future unless
expressly consented to by Landlord, and;
(iii) No waiver granted to any Tenant shall relieve any other Tenant
from the obligation of complying with the foregoing Rules and
Regulations unless such other Tenant has received a similar
waiver in writing from Landlord.
Initialed for Identification
Landlord: /s/ JMS
-------------------------------
Tenant: /s/ OPC
---------------------------------
58
<PAGE>
TENANT IMPROVEMENT SPECIFICATIONS
4 BATTERYMARCH PARK
QUINCY, MA
EXHIBIT LW
The following provides a description of Tenant Improvement standards and
delineates between Base Building work by Landlord and Tenants work.
CEILINGS: Ceiling will be suspended grid type with recessed
2' x 4' (revcaledge) ARMSTRONG, OR EQUAL, "Second
Look" lay-in panels. THE FINISHED CEILING WILL BE
APPROXIMATELY 9'. THE TENANT WILL BE ALLOWED TO HAVE
EXPOSED OR GYP CEILINGS IN SOME AREAS, SUBJECT TO
FINAL REVIEW OF PLANS.
ELECTRICAL: The base building electrical system is designed in
accordance with the following anticipated loads:
- Lighting power requirements will be calculated on the
basis of 1.5 watts per SF of building area.
- Tenant convenience outlet power requirements will
be calculated on the basis of approximately 5-7
watts per square foot of total building area.
- Power requirements for HVAC and other fixed building
equipment will be determined by the actual equipment
installed.
ELECTRICAL: Distribution panels and feeders are provided for the
HVAC system, lighting and utility power. Tenant spaces
are serviced by sub-panels located in common electrical
rooms on each floor. An emergency light and exit sign
system is provided to meet code requirements for the
common areas and unfinished tenant spaces.
PAINTING: All wall surfaces shall receive two coats of latex paint
with an eggshell finish. THERE WILL BE NO
RESTRICTIONS ON INTERIOR COLORS WITHIN THE TENANT'S
SPACE. Any doors shall receive two coats of clear
polyurethane. All frames shall recieve two coats of
semi-gloss enamel to match room color.
<PAGE>
HEATING, VENTILATING
AND AIR CONDITIONING: Heating will be accomplished through the use of a
STATE OF THE ART variable air volume system. Air will
return through the ceiling. AFTERHOURS HVAC WILL BE
AVAILABLE WITH 24-HOUR NOTICE. THE COST, SUBJECT TO
THE NUMBER OF ZONES, WILL RUN APPROXIMATELY
$35.00-45.00 PER HOUR.
SUN CONTROL BLINDS: All windows will have 3" perforated vertical blinds
similar to Louver-Drape in type and color selected by
Landlord. LANDLORD, HOWEVER, IS OPEN TO DISCUSS OTHER
OPTIONS WITH TENANT.
PARTITIONS: TENANT PARTITIONS
Partitions within premises will be 2 1/2" metal studs
with one layer of 1/2" gypsum board on each side.
Partitions will extend from floor to the acoustic tile
ceiling. TENANT WILL HAVE THE RIGHT TO EXTEND CERTAIN
PARTITIONS TO THE DECK ABOVE FOR SOUNDPROOFING PURPOSES.
DEMISING PARTITIONS
Construction will be 2 1/2" metal studs with one layer
of 1/2" gypsum board on each side, and 2 1/2" sound
attenuation blanket between studs. Demising partitions
will extend from floor to the underside of structure
above, subject to requirements of the building HVAC
systems. If Tenant is part of a multi-tenanted floor
then one-half of the total quantity of the demising
walls between Tenant's space and the adjoining space(s)
will be attributed to the Tenant.
DOORS: Doors with single premises will be 3'0" x 8'0" x 1 3/4"
solid-core with plain-slice maple veneer. LANDLORD IS
OPEN TO DISCUSS AN ALTERNATIVE VENEER. Door frames
will be pressed metal. Hardware will BE SCHLAGE, OR
EQUAL, AND WILL include 1 1/2 pair of butts, one
standard duty brushed-chrome lever passage set and
one door stop.
<PAGE>
BASE BUILDING SHELL SPECIFICATIONS
4 BATTERYMARCH PARK
QUINCY, MA
EXHIBIT LW
----------
WINDOWS: Aluminum frames with thermopane, Low-E, tinted glass
is provided throughout.
ROOF: Single-ply, EPDM membrane roofing systems with 2 1/2"
insulation providing an R16 is provided. TENANT WILL
BE PERMITTED TO ROOF MOUNT SUPPLEMENTAL COOLING
UNITS, SUBJECT TO LANDLORD'S REVIEW AND CONSENT.
TENANT WILL HAVE THE RIGHT TO INSTALL AN EXTERIOR VENT
FOR THE DRYER. THE LOCATION WILL BE SUBJECT TO
LANDLORD'S REVIEW AND CONSENT. TENANT WILL ALSO
REMAIN LIABLE FOR PROBLEMS ASSOCIATED WITH THE VENT
AND FOR MAINTENANCE.
COMMON AREAS: A two-story atrium lobby which includes three
elevators, a monumental stair and bathroom cores.
Interior drywall partitions for the lobbies, bathroom
cores, electrical and mechanical rooms are
constructed using steel studs, 16" on center with
1/2" gypsum wall board to the underside of the deck.
The bathroom and utility room doors are 3'-0" x 7'-0"
solid core, maple veneer in hollow metal frames with
standard lever hardware.
Two coats of latex paint is provided on all drywall
and door frames. Doors and window sills receive stain
and/or clear sealed.
A combination of drywall soffits and suspended
ceilings is provided in the lobbies and all other
common areas. Bathrooms and 2' x 2' suspended
ceilings.
A combination of tile and carpet is provided in the
lobbies. All common hallways have carpet. Ceramic
tile is provided in the bathrooms and shower rooms on
the floors and walls.
All common areas have semi-recessed chrome sprinkler
heads located in the suspended or drywall ceilings.
<PAGE>
TENANT ENTRANCES: Entrances from lobbies into the tenant space are
3'-6" x 7'-10" solid core maple veneer with tempered
glass and 3'-6" tempered-glass sidelights.
PARTITIONS: The inside of the exterior walls are steel studs 16"
on center with bat insulation and 5/8" gypsum wall
board to 10 feet above the finished door. Hardwood
veneer window wills are provided at all windows.
FLOORING: Unfinished floors in Tenant spaces will be leveled,
IN ACCORDANCE WITH BOMA STANDARDS, to receive a new
flooring.
SPRINKLER: A sprinkler system is provided throughout the
building. Tenant spaces have the proper coverage
required by code for open, unfinished space, with
heads facing up at the underside of the exposed deck.
FIRE ALARM: An addressable fire alarm system is provided
throughout the building in conformance with all State
and municipal code requirements.
To clarify the delineation from Base Building to Tenant work, the following
criteria apply:
- All finishes in the core area are included with base
building INCLUDING BATHROOMS on ALL FLOORS (except elevator
lobbies on upper floors).
- There is no provision in base building for a common corridor
on any floor.
- Base building includes exterior window blinds (PVC Vertical)
- Base building includes painted drywall on the interior face
of the exterior wall.
- Base building sprinkler system extends to valves at each
floor on the stairwell riser. The main distribution loop is
included in Base Building.
- All distribution piping and sprinkler heads are Tenant work
(excluding heads required in the core areas).
<PAGE>
EXHIBIT C: BASE BUILDING OUTLINE SPECIFICATIONS
- Base building HVAC system includes vertical duct risers. All
HVAC work in the tenant shell pace including the main
distribution duct (medium pressure) is tenant work.
- Base building electrical system extend up to and includes
conduits and feeder to central/electrical room on each
floor, and sized to accommodate tenant electrical design load
of 5-7 watts per rentable square foot (lighting and power).
- Tenant Work Letter, which is NOT included in base building,
would normally cover the following:
- Ceiling high partitions - Interior doors
- Acoustical ceilings - Carpet
- 2 x 2 light fixtures - Single pole
switches
- Wall-mounted duplex outlets - Wall-mounted
telephone outlets
- Sprinkler heads with distribution piping: Supplemental fire
department valves if required by tenant layout.
- Medium Pressure Distribution Duct, VAV Boxes and Controls,
Secondary Duct GRD's, HVAC Diffusers and Grills with
Distributor Ductwork.
- Fire alarm stations and Exit signs required by code.
- Roof top DX units to provide additional cooling capacity in
excess of 5.5 watt/SF.
/s/ OPC
- -------------
/s/ JMS
- -------------
<PAGE>
Exhibit FP
Floor Plans
Omitted
<PAGE>
Exhibit 10.2
SECOND AMENDMENT TO SECOND AMENDED
AND RESTATED LOAN AGREEMENT
This Second Amendment to Second Amended and Restated Loan Agreement
dated as of September 4, 1998, by and between Citizens Bank of Massachusetts
(herein "BANK"), and DM Management Company, a Delaware corporation (herein
"BORROWER").
WITNESSETH:
WHEREAS, BANK and BORROWER are parties to that certain Loan
Agreement made as of June 5, 1997 by and between BANK and BORROWER, as the
same has been amended and restated in a certain Amended and Restated Loan
Agreement dated as of October 31, 1997, and in a certain Second Amended and
Restated Loan Agreement dated March 5, 1998, and as amended by a certain
First Amendment to Second Amended and Restated Loan Agreement dated as of
June 30, 1998 (as so restated and amended, the "Loan Agreement");
WHEREAS, BORROWER and the BANK wish to amend the Loan Agreement as
more particularly hereafter set forth. Capitalized terms used herein without
definition shall have the meanings ascribed to them in the Loan Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements
herein contained, the parties hereby agree that the Loan Agreement is hereby
amended as follows:
1. Section 1.01 of the Loan Agreement is hereby amended by (a)
deleting the definition of CONTROL AGREEMENT appearing under said
Section; (b) deleting the term CONTROL AGREEMENT from the definition
of FINANCING AGREEMENTS appearing under said Section; and (c) deleting
the definition of INVESTMENT PROPERTY appearing in said Section and
replacing it by inserting a new definition of INVESTMENT PROPERTY in
said Section as follows:
"INVESTMENT PROPERTY" shall mean all of BORROWER'S securities,
securities entitlements and securities accounts, and all other
INVESTMENT PROPERTY within the meaning of such term under the
UCC; exclusive of the FLEET INVESTMENT PROPERTY.
<PAGE>
2. Section 8.04 of the Loan Agreement is hereby deleted.
3. Section 9.08 of the Loan Agreement is hereby amended to delete
the phrase "and except for the FLEET INVESTMENT PROPERTY".
4. Section 10.01(d) is hereby deleted and the following inserted in
lieu thereof:
Monthly, within fifteen (l5) days of the end of each month, a
certificate signed by BORROWER'S President, Chief Financial
Officer, Vice President of Finance or Controller certifying that
the CREDIT BALANCE does not exceed the lesser of AVAILABILITY or
the REVOLVING CREDIT COMMITMENT AMOUNT.
This Amendment shall take effect as of the date first above written.
Except as hereby amended, the Loan Agreement is hereby ratified,
confirmed and republished.
BANK hereby confirms that it has released its security interest in
the FLEET INVESTMENT PROPERTY and that the Security Agreement dated June 5,
1997, as amended, and Exhibit A thereto shall be deemed to have been amended
accordingly.
IN WITNESS WHEREOF, the parties hereto have set their hands and
seals as of the date first above written.
Witness: DM MANAGEMENT COMPANY
/s/ David R. Pierson
- ------------------------------ By: /s/ Olga L. Conley
-----------------------------------
Olga L. Conley, Chief Financial Officer
CITIZENS BANK OF MASSACHUSETTS
By: /s/ Lori B. Leeth, SVP
-----------------------------------
Lori B. Leeth, Senior Vice President
<PAGE>
Exhibit 10.3
THIRD AMENDMENT TO SECOND AMENDED
AND RESTATED LOAN AGREEMENT
This Third Amendment to Second Amended and Restated Loan Agreement dated as
of September 4, 1998, by and between Citizens Bank of Massachusetts (herein
"BANK"), and DM Management Company, a Delaware corporation (herein "BORROWER").
WITNESSETH:
WHEREAS, BANK and BORROWER are parties to that certain Loan Agreement made
as of June 5, 1997 by and between BANK and BORROWER, as the same has been
amended and restated in a certain Amended and Restated Loan Agreement dated as
of October 31, 1997, and in a certain Second Amended and Restated Loan Agreement
dated March 5, 1998, and as amended by a certain First Amendment to Second
Amended and Restated Loan Agreement dated as of June 30, 1998, and Second
Amendment to Second Amended and Restated Loan Agreement dated as of September 4,
1998 (as so restated and amended, the "Loan Agreement");
WHEREAS, BORROWER and the BANK wish to amend the Loan Agreement as more
particularly hereafter set forth. Capitalized terms used herein without
definition shall have the meanings ascribed to them in the Loan Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereby agree that the Loan Agreement is hereby amended as
follows:
1. Section 1.01 of the Loan Agreement is hereby amended as follows:
(a) By deleting the definition of ADVANCE FORMULA and
substituting the following in lieu thereof:
"'ADVANCE FORMULA' shall mean the aggregate of (A) fifty
percent (50%) of the lower of (i) cost or (ii) market value of
ELIGIBLE INVENTORY, (B) One Million Dollars ($1,000,000.00), (C)
one hundred percent (100%) of the lower of (i) cost or (ii)
market value of IN TRANSIT INVENTORY to a maximum value of Two
Million Five
<PAGE>
Hundred Thousand Dollars ($2,500,000.00) at any time, (D) fifty
percent (50%) of the lower of (i) cost or (ii) market value of IN
TRANSIT INVENTORY in excess of Two Million Five Hundred Thousand
Dollars ($2,500,000.00), and (E) during the SPECIAL PERIOD,
eighty percent (80%) of the cost of new materials handling
equipment delivered to the BORROWER (and upon which the BANK
shall hold a first priority security interest hereunder) and with
respect to which BORROWER has delivered to the BANK invoices
satisfactory to the BANK showing delivery to BORROWER of such
equipment, to a maximum delivered cost of Nine Million Five
Hundred Thousand Dollars ($9,500,000.00) provided however that
upon the BORROWER entering into the CITIZENS LEASE, no further
sums shall be included in this ADVANCE FORMULA pursuant to this
Clause E.
(b) By inserting a definition of CITIZENS LEASE as follows:
"CITIZENS LEASE" shall mean a lease of materials handling
equipment by Citizens Financial Group or any of its subsidiaries,
as lessor, to BORROWER, as lessee, in an amount not to exceed
Nine Million Five Hundred Thousand Dollars ($9,500,000.00)."
(c) By deleting the definition of IN TRANSIT INVENTORY and
substituting therefor the following:
"IN TRANSIT INVENTORY" shall mean inventory (A) which is in
the possession of a third party for delivery to BORROWER, after
delivery of a LETTER OF CREDIT to the vendor thereof (B) which
consists of finished first quality goods, and (C) with respect to
which at such time as the LETTER OF CREDIT shall be presented for
payment (i) title will have passed to BORROWER, and (ii) a first
security interest will have attached pursuant to the SECURITY
AGREEMENT."
(d) By deleting the definition of REVOLVING CREDIT COMMITMENT
AMOUNT and substituting the following in lieu thereof:
"REVOLVING CREDIT COMMITMENT AMOUNT' (sometimes the
'REVOLVING COMMITMENT AMOUNT') shall mean the sum of Eight
Million Five Hundred Thousand Dollars ($8,500,000.00) except that
during the SPECIAL
- 2 -
<PAGE>
PERIOD it shall mean Twenty-Three Million Five Hundred Thousand
Dollars ($23,500,000.00) (unless BORROWER delivers written notice
to the BANK requesting a lesser amount and BANK confirms same in
writing), provided however that any such increase as aforesaid
(consisting of Fifteen Million Dollars ($15,000,000)) shall be
reduced by the amount financed under the CITIZENS LEASE."
(e) By deleting the definition of REVOLVING NOTE and
substituting the following in lieu thereof:
"REVOLVING NOTE' shall mean a promissory note in the face
amount of REVOLVING CREDIT COMMITMENT AMOUNT (or if there be more
than one REVOLVING CREDIT COMMITMENT AMOUNT during any period,
the highest such REVOLVING CREDIT COMMITMENT AMOUNT during any
such period), issued by the BORROWER to the order of the BANK and
evidencing the obligation to repay the REVOLVING LOAN, as the
same may be amended from time to time, including without
limitation, as replaced by the REPLACEMENT REVOLVING NOTE and
SECOND REPLACEMENT REVOLVING NOTE. The REVOLVING NOTE , as so
replaced, was originally in the form of Exhibit '1.01.C'".
(f) By inserting a definition of SECOND REPLACEMENT REVOLVING
NOTE as follows:
"SECOND REPLACEMENT REVOLVING NOTE' shall mean the
promissory note dated September 4, 1998 in the face amount of
Twenty-Three Million Five Hundred Thousand Dollars
($23,500,000.00) provided for under the LOAN AGREEMENT, issued by
the BORROWER to the order of the BANK in substitution and
replacement, and not in payment, of the REPLACEMENT REVOLVING
NOTE and evidencing the obligation to repay the REVOLVING LOAN."
(g) By deleting the first four lines of the definition of REAL
ESTATE MORTGAGE and substituting therefor the following:
"REAL ESTATE MORTGAGE" shall mean a mortgage of the REAL
ESTATE, as the same may hereafter be amended from time to time,
granted by the BORROWER to the BANK securing repayment of the
OBLIGATIONS
- 3 -
<PAGE>
including without limitation the REAL ESTATE NOTE, which MORTGAGE
shall include without limitation:"
(h) By inserting a definition of SPECIAL EVENT as follows:
"SPECIAL EVENT" shall mean that on or before December 31,
1998 BORROWER has not received a written commitment to provide
mortgage funding for the Tilton, New Hampshire real estate
currently owned by the BORROWER, which commitment is satisfactory
to the BANK in its sole judgment as to amount committed and the
term contracted."
(i) By inserting a definition of SPECIAL PERIOD as follows:
"SPECIAL PERIOD" shall mean the period commencing September
11, 1998 and terminating March 31, 1999 unless the SPECIAL EVENT
shall have occurred in which case the SPECIAL PERIOD shall
terminate December 31, 1998."
2. Section 2.16 is hereby deleted and the following substituted in lieu
thereof:
"2.16 The initial BORROWING shall be in the form of the
making of ADVANCE(S) pursuant to Section 2.01 in an aggregate
principal amount which, when taken together with the proceeds of
the TERM LOAN and the INTERIM LOAN will be at least equal to the
aggregate outstanding principal amount of loans under existing
agreements with Fleet Bank. Such proceeds of such initial
ADVANCE(S) and of the TERM LOAN and of the INTERIM LOAN were
applied to repay in full all such outstanding loans. The
proceeds of all subsequent ADVANCES shall be applied to the
working capital needs of the BORROWER and for the cost of certain
materials handling equipment."
3. Section 5A.05 is hereby deleted and the following substituted in lieu
thereof:
"5A.05 The term of the BRIDGE NOTE having expired and all
of the conditions of Article XV and Section 2.08 having been
satisfied and no EVENT OF DEFAULT having occurred, the BANK
agreed to extend the term for repayment of the BRIDGE LOAN until
December 31, 1998
- 4 -
<PAGE>
and to reprice the same in the manner provided. Such BRIDGE LOAN
was evidenced by the NEW BRIDGE NOTE. The BORROWER having
represented that all of the conditions of Article XV and Section
2.08 have been satisfied and remain fulfilled as of the date
hereof, and that no EVENT OF DEFAULT has occurred, provided that
no SPECIAL EVENT shall have occurred on or before December 31,
1998, the BANK agrees to further extend the term of the BRIDGE
LOAN until March 31, 1999 and to reprice the same in the manner
provided in Section 5A.08 hereof."
4. Concurrently herewith, BORROWER shall execute and deliver to the BANK
a replacement NEW BRIDGE NOTE to reflect the amended maturity date of such note.
All references in the Loan Agreement to the "NEW BRIDGE NOTE" shall hereafter be
deemed to refer to such "REPLACEMENT NEW BRIDGE NOTE" executed of even date
herewith.
5. Section 5A.08 is hereby deleted and the following substituted in lieu
thereof:
"5A.08 The BORROWER shall from March 5, 1998 until the
full balance of principal and interest on the BRIDGE LOAN shall
have been paid in full, pay interest monthly in arrears on the
daily outstanding balance of the BRIDGE LOAN from time to time
outstanding at the rate provided in Section 5A.04. for each
INTEREST PERIOD (unless otherwise provided herein), provided
however that if no SPECIAL EVENT shall have occurred on or before
December 31, 1998 then, (and only in such case), from January 1,
1999 until March 31, 1999 interest for such period shall be paid
at the SPECIAL LIBOR RATE determined with respect to an INTEREST
PERIOD of ninety (90) days."
6. Section 5B.02 is hereby deleted and the following substituted in lieu
thereof:
"5B.02 The SHORT TERM REVOLVING LOAN shall be paid in full
on the first to occur of (1) the obtaining of permanent financing
with respect to such Project or (2) March 31, 1999, provided
however that if the SPECIAL EVENT shall have occurred, such
payment date shall be December 31, 1998."
- 5 -
<PAGE>
7. Concurrently herewith, BORROWER shall execute and deliver to the BANK
a replacement SHORT TERM REVOLVING NOTE to reflect the amended maturity date(s)
of such note. All references in the Loan Agreement to "SHORT TERM REVOLVING
NOTE" shall hereafter be deemed to refer to such "REPLACEMENT SHORT TERM
REVOLVING NOTE" executed of even date herewith.
8. Section 11.01 is hereby deleted and the following substituted in lieu
thereof:
"11.01 The BORROWER will not issue evidences of
INDEBTEDNESS nor create, assume, become contingently liable for,
nor suffer to exist INDEBTEDNESS for borrowed money in addition
to indebtedness to the BANK; provided, however, that BORROWER (a)
may incur liabilities other than for money borrowed which are
incurred or arise in the ordinary course of the BORROWER'S
business, (b) may in any fiscal year of the BORROWER grant
purchase money security interests in connection with the purchase
of property with a purchase price not to exceed Two Hundred Fifty
Thousand Dollars ($250,000.00) (c) may borrow an aggregate sum up
to One Million Dollars ($1,000,000.00) from the Belknap County
Development Council of the State of New Hampshire (the "Council")
solely for the purchase of equipment to be used in the operation
of the Tilton, N.H. facility and may grant a purchase money
security interest to said Council in conection therewith, and (d)
may enter into the CITIZENS LEASE provided that the amount of
INDEBTEDNESS secured by such purchase money security interests
permitted above, shall not exceed the lesser of (i) the purchase
price therefor or (ii) the fair market value of the property
financed and such purchase money security interest shall not
relate to any other assets or property of the BORROWER except the
property thereby acquired."
9. Paragraph 11.11 of the Loan Agreement is hereby deleted in the
following inserted in lieu thereof:
"11.11 The BORROWER will not, for any four (4) consecutive
fiscal quarters, permit DEBT SERVICE COVERAGE to be less than
1.25 to 1. Such covenant shall be calculated quarterly based
upon the preceding 12 months of operations commencing with the
twelve month period ending June 30, 1997. Notwithstanding the
foregoing, the calculation for the quarters ending June 30, 1998,
September 30, 1998, December 31, 1998 and March 31,
- 6 -
<PAGE>
1999 shall be made without any reference to UNFINANCED CAPITAL
EXPENDITURES."
This Amendment shall take effect as of the date first above written.
Except as hereby amended, the Loan Agreement is hereby ratified, confirmed
and republished.
- 7 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of
the date first above written.
Witness: DM MANAGEMENT COMPANY
/s/ Richard J. Snyder
- ------------------------------ By: /s/ Olga L. Conley
----------------------------------
Olga L. Conley, Chief Financial Officer
CITIZENS BANK OF MASSACHUSETTS
By: /s/ Lori B. Leeth, SVP
----------------------------------
Lori B. Leeth, Senior Vice President
- 8 -
<PAGE>
Exhibit 10.4
FIRST AMENDMENT TO
ASSIGNMENT OF CERTIFICATE OF DEPOSIT
This First Amendment to Assignment of Certificate of Deposit dated as of
September 4, 1998 by and between Citizens Bank of Massachusetts ("Bank") and DM
Management Company ("Debtor").
W I T N E S S E T H:
WHEREAS, Bank and Debtor are parties to that certain Assignment of
Certificate of Deposit dated as of March 5, 1998 (the "Assignment"); and
WHEREAS, the parties wish to amend the Assignment as hereafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Section 1 of the Assignment is hereby amended by deleting the third
and fourth lines of said Section and substituting therefor the following:
"accommodations to the undersigned debtor (the "Debtor"), pursuant to
a certain Second Amended and Restated Loan Agreement dated March 5,
1998, as previously amended and as further amended by a certain Third
Amendment to Second Amended and Restated Loan Agreement dated
September 4, 1998, and as the same may be further amended from time to
time (collectively, the "Loan Agreement"),"
2. Exhibit A to said Assignment is hereby deleted in its entirety and is
replaced by Exhibit A hereto.
Except as amended hereby, the Assignment is hereby ratified, confirmed and
republished.
<PAGE>
EXECUTED as an instrument under seal to be construed under the laws of The
Commonwealth of Massachusetts.
DEBTOR:
WITNESS: DM MANAGEMENT COMPANY
/s/ Richard J. Snyder
- ------------------------------ By: /s/ Olga L. Conley
--------------------------
Olga L. Conley
Chief Financial Officer
BANK:
WITNESS: CITIZENS BANK OF MASSACHUSETTS
/s/ Richard J. Snyder
- ------------------------------
By: /s/ Lori B. Leeth, SVP
---------------------------
Lori B. Leeth
Senior Vice President
- 2 -
<PAGE>
EXHIBIT A
(a) the full payment of the sum of $8,500,000.00, or such lesser amount
which shall have been advanced, together with interest and other charges, all as
provided in a certain "Revolving Note" of the Debtor to the order of the Bank
dated June 5, 1997, which Note was amended and replaced by a certain Replacement
Revolving Note dated October 31, 1997 in the face amount of $8,500,000.00 which
note was amended and replaced by a certain "Second Replacement Revolving Note"
dated September 4, 1998 in the face amount of $23,500,000.00, all as provided in
a certain Loan Agreement dated June 5, 1997, as amended and restated as of the
March 5, 1998, as amended dated September 4, 1998 hereof and as the same may
hereafter be amended (collectively, the "Loan Agreement") together with all
substitutions or replacements therefor and all renewals or extensions thereof
and the full performance of all other obligations of the maker of said note as
provided therein; (b) the full payment of the sum of $1,650,000.00, as provided
in a certain "Real Estate Note" (as defined in the Loan Agreement) of the Debtor
to the order of the Bank executed and delivered by the Debtor to the Bank,
pursuant to the Loan Agreement in the face amount of $1,650,000.00, with
interest and other charges as provided therein, together with all substitutions
and replacements therefor and all renewals and extensions thereof and the full
performance of all other obligations of the maker of said note as provided
therein and a certain Second Amendment to Mortgage executed and delivered in
connection therewith as the same may be amended from time to time; (c) the full
payment of the sum of $3,600,000.00, with interest and other charges, all as
provided in a certain "Term Note" (as defined in the Loan Agreement) of the
Debtor to the order of the Bank, dated June 5, 1997, executed and delivered by
the Debtor to the Bank pursuant to the Loan Agreement, in the original face
amount of $3,600,000.00, together with all substitutions or replacements
therefor and all renewals or extensions thereof and the full performance of all
other obligations of the maker of said note as provided therein; (d) the full
payment of the sum of Four Million Three Hundred Thousand Dollars
($4,300,000.00) together with interest and other charges, all as provided in a
certain "New Bridge Note" (as defined in the Loan Agreement) of the Debtor at
the order of the Bank dated as of March 5, 1998, executed and delivered by the
Debtor to the Bank pursuant to the Loan Agreement in the original face amount of
Four Million Three Hundred Thousand Dollars ($4,300,000.00) as amended and
replaced by that certain "Replacement New Bridge Note" (as defined in the Loan
Agreement) dated September 4, 1998 together with all substitutions or
replacements therefor and all renewals and extensions thereof and the full
performance of all other obligations of the maker of said note as provided
therein; (e) the full payment of the sum of $17,000,000.00 together with all
interest and other charges all as provided in a certain "Short Term Revolving
Note" (as defined in the Loan Agreement) of the Debtor to the order of the Bank
dated March 5, 1998 pursuant to the Loan Agreement in the face amount of
- 3 -
<PAGE>
$17,000,000.00, as amended and replaced by that certain "Replacement Short Term
Revolving Note" (as defined in the Loan Agreement) dated September 4, 1998 and
all substitutions or replacements therefor and all renewals and extensions
thereof and the full performance of all other Obligations of the maker of said
Note, and in a certain "Assignment of Certificate of Deposit dated as of March
5, 1998 and executed and delivered in connection therewith, as amended dated
September 4, 1998, and as the same may hereafter be amended; (f) the full
payment and performance by the Debtor of all indebtedness, obligations and
liabilities of the Debtor to the Bank under the Loan Agreement, direct or
indirect, absolute or contingent, now existing or hereafter arising (including,
without limitation, all "Obligations", as defined in the Loan Agreement whether
or not specifically referred to herein) which Loan Agreement provides, among
other things, for the establishment of a "Revolving Loan" (as defined therein)
and for the issuance of Letter of Credit pursuant to L/C Appreciations as
defined therein, pursuant to which "Advances" (as defined therein) may be made
from time to time, and for repayment of all or a portion of the outstanding
balance of such Advances together with interest and other charges all in
accordance therewith and for the grant of "Loans" (as defined therein) as
provided therein; (g) the full payment and performance of all covenants and
agreements herein contained or referred to on the part of the Debtor to be kept
and performed (collectively hereafter referred to as "Obligations").
- 4 -
<PAGE>
Exhibit 10.5
SECOND AMENDMENT TO BRIDGE MORTGAGE
This Second Amendment to Bridge Mortgage made as of the 4th day of
September, 1998 by and between DM Management Company ("Mortgagor") and Citizens
Bank of Massachusetts ("Mortgagee").
Reference is made to a certain mortgage made the 31st day of October, 1997,
recorded with Belknap County Registry of Deeds (the "Registry") at Book 1442,
Page 273 by and between DM Management Company, a Delaware corporation with a
principal office at 25 Recreation Park Drive, Hingham, Massachusetts 02043
(herein called "Mortgagor"), and Citizens Bank of Massachusetts with a principal
place of business at 28 State Street, Boston, Massachusetts 02109 (herein called
"Mortgagee" which expression shall include its successors and assigns), as
amended by Amended Bridge Mortgage, recorded at the Registry at Book 1458, Page
1 (collectively, the "Mortgage").
For good and valuable consideration paid by each of the parties to the
other, and in further consideration of the mutual covenants and agreements
herein contained, it is agreed by and between Mortgagor and Mortgagee that the
Mortgage is hereby amended by deleting the entire paragraph following the word
"WITNESSETH" and the following is hereby inserted in lieu thereof.
WITNESSETH:
The Mortgagor hereby grants to the "Mortgagee", with mortgage covenants,
the real property described on Exhibit A (hereinafter called the "Mortgaged
Premises") to secure (a) the full payment of the sum of $8,500,000.00, or such
lesser amount which shall have been advanced, together with interest and other
charges, all as provided in a certain "Revolving Note" of the Mortgagor to the
order of the Mortgagee dated June 5, 1997, which Note was amended and replaced
by a certain Replacement Revolving Note dated October 31, 1997 in the face
amount of $8,500,000.00 which Note was amended and replaced by a certain Second
Replacement Revolving Note dated September 4, 1998 in the face amount of
$23,500,000.00, all as provided in a certain Loan Agreement dated June 5, 1997,
as amended and restated as of March 5, 1998 and as further amended and restated
dated September 4, 1998 (collectively, the "Loan Agreement") together with all
substitutions or replacements therefor and all renewals or extensions thereof
and the full performance of all other obligations of the maker of said note as
provided therein; (b) the full payment of the sum of $1,650,000.00, as provided
in a certain "Real Estate Note" (as defined in the Loan Agreement) of the
Mortgagor to the order of the Mortgagee, executed and delivered by the Mortgagor
to the Mortgagee, pursuant to the Loan Agreement in the face amount of
$1,650,000.00, with interest and other charges as provided therein, together
with all substitutions and replacements therefor and all renewals and extensions
thereof and the full performance of all other obligations of the maker of said
note as provided therein and a certain "Real Estate Mortgage" (as defined in the
Loan Agreement) executed and delivered in connection therewith as the same may
be amended from time to time; (c) the full payment of the sum of $3,600,000.00,
with interest and other charges, all as provided in a certain "Term Note" (as
defined in the Loan Agreement) of the Mortgagor to the order of the Mortgagee,
dated June 5, 1997, executed and delivered by the Mortgagor to the Mortgagee
pursuant to the Loan
<PAGE>
Agreement, in the original face amount of $3,600,000.00, together with all
substitutions or replacements therefor and all renewals or extensions thereof
and the full performance of all other obligations of the maker of said note as
provided therein; (d) the full payment of the sum of $4,300,000.00 with interest
and other charges, all as provided in a certain "New Bridge Note" (as defined in
the Loan Agreement) of the Mortgagor to the order of the Mortgagee dated as of
March 5, 1998, executed and delivered by the Mortgagor to the Mortgagee pursuant
to the Loan Agreement in the original face amount of Four Million Three Hundred
Thousand Dollars ($4,300,000.00) as amended and replaced by that certain
"Replacement New Bridge Note" (as defined in the Loan Agreement) dated September
4, 1998 together with all substitutions or replacements therefor and all
renewals and extensions thereof and the full performance of all other
obligations of the maker of said note as provided therein; (e) the full payment
of the sum of $17,000,000.00 as provided in a certain "Short Term Revolving
Note" (as defined in the Loan Agreement) of the Mortgagor at the order of the
Mortgagee dated March 5, 1998 pursuant to the Loan Agreement in the face amount
of $17,000,000.00, as amended and replaced by that certain "Replacement Short
Term Revolving Note" (as defined in the Loan Agreement) dated September 4, 1998,
with interest and other charges as provided therein, and all renewals and
extensions thereof and the full performance of all other obligations of the
maker of said note and a certain Assignment of Certificate of Deposit dated as
of March 5, 1998 executed and delivered in connection therewith, as amended
dated September 4, 1998, and as the same may hereafter be amended; (f) the full
payment and performance by the Mortgagor of all indebtedness, obligations and
liabilities of the Mortgagor to the Mortgagee under the Loan Agreement, direct
or indirect, absolute or contingent, now existing or hereafter arising
(including, without limitation, all "Obligations", as defined in the Loan
Agreement), which Loan Agreement provides, among other things, for the
establishment of a "Revolving Loan" (as defined therein) and for the issuance of
Letter of Credit pursuant to L/C Applications as defined therein, therein
pursuant to which "Advances" (as defined therein) may be made from time to time,
and for repayment of all or a portion of the outstanding balance of such
Advances together with interest and other charges all in accordance therewith
and for the grant of "Loans" (as defined therein) as provided therein; (g) the
full payment and performance of all covenants and agreements herein contained or
referred to on the part of the Mortgagor to be kept and performed (collectively
hereafter referred to as "Obligations").
Except as amended and restated hereby, the Mortgage is hereby ratified,
confirmed and republished.
IN WITNESS WHEREOF, Mortgagor has caused this instrument to be executed on
this 4th day of September, 1998.
Witness DM MANAGEMENT COMPANY
- ------------------------------ By: /s/ Olga L. Conley
----------------------------------
Olga L. Conley, Chief Financial Officer
- 2 -
<PAGE>
COMMONWEALTH OF MASSACHUSETTS
COUNTY OF SUFFOLK September 4, 1998
On this 4th day of September, 1998, before me, personally appeared the
undersigned officer, Olga L. Conley, known to me (or satisfactorily proven) to
be the person whose name is subscribed to the foregoing written instrument as
the Chief Financial Officer of DM Management Company in its name and on its
behalf and acknowledged that she executed the same for the purposes therein
contained.
IN WITNESS WHEREFORE I have hereunto set my hand and official seal.
/s/ Barbara Jean Apel
-----------------------------------
Notary Public
My Commission Expires: 8/12/99
-------------
- 3 -
<PAGE>
Exhibit 10.6
THIRD AMENDMENT TO MORTGAGE
(MEREDITH)
This Third Amendment to Mortgage made as of the 4th day of September, 1998
by and between DM Management Company ("Mortgagor") and Citizens Bank of
Massachusetts ("Mortgagee").
Reference is made to a certain Mortgage made as of the 30th day of July,
1997 by and between Mortgagor and Mortgagee, which Mortgage is recorded in Book
1429, Page 772 at the Belknap County, New Hampshire Registry of Deeds, as
amended by a certain First Amendment to Mortgage dated October 31, 1997,
recorded in Book 1442, Page 0267 and by a certain Second Amendment to Mortgage
dated March 5, 1998, recorded in Book 1457, Page 0998 at said Registry of Deeds
(collectively, the "Mortgage").
For good and valuable consideration paid by each of the parties to the
other, and in further consideration of the mutual covenants and agreements
herein contained, it is agreed by and between Mortgagor and Mortgagee that the
Mortgage is hereby amended by deleting the entire paragraph following the word
"WITNESSETH" and the following is hereby inserted in lieu thereof.
The Mortgagor hereby grants to Mortgagee, with mortgage covenants, the
real property described on Exhibit A (hereinafter called the "Mortgaged
Premises") to secure (a) the full payment of the sum of $8,500,000.00, or
such lesser amount which shall have been advanced, together with interest
and other charges, all as provided in a certain "Revolving Note" of the
Mortgagor to the order of the Mortgagee dated June 5, 1997, which note was
amended and replaced by a certain "Replacement Revolving Note" dated
October 31, 1997 in the face amount of $8,500,000.00, which Note was
amended and replaced by a certain "Second Replacement Revolving Note" dated
September 4, 1998 in the face amount of $23,500,000, all as provided in a
certain Loan Agreement dated June 5, 1997 as amended and restated as of
March 5, 1998 and as further amended and restated dated September 4, 1998
herewith and as the same may hereafter be amended (collectively, the "Loan
Agreement") together with all substitutions or replacements therefor and
all renewals or extensions thereof and the full performance of all other
obligations of the maker of said note as provided therein; (b) the full
payment of the sum of $1,650,000.00, as provided in a certain "Real Estate
Note" (as defined in the Loan Agreement) of the Mortgagor to the order of
the Mortgagee, dated July 30, 1997, executed and delivered by the Mortgagor
to the Mortgagee, pursuant to the Loan Agreement in the face amount of
$1,650,000.00, with interest and other charges as provided therein,
together with all substitutions and replacements therefor and all renewals
and extensions thereof and the full performance of all other obligations of
the maker of said note as provided therein and under a certain "Real Estate
Mortgage" (as defined in the Loan Agreement) executed and delivered in
connection therewith; (c) the full payment of the sum of $3,600,000.00,
with interest and other charges, all as provided in a certain "Term Note"
(as defined in the Loan Agreement) of the Mortgagor to the order of the
Mortgagee, dated June 5,
<PAGE>
1997, executed and delivered by the Mortgagor to the Mortgagee pursuant to
the Loan Agreement, in the original face amount of $3,600,000.00, together
with all substitutions or replacements therefor and all renewals or
extensions thereof and the full performance of all other obligations of the
maker of said note as provided therein; (d) the full payment of the sum of
$4,300,000.00, with interest and other charges, all as provided in a
certain "New Bridge Note" (as defined in the Loan Agreement) of the
Mortgagor to the order of the Mortgagee dated as of March 5, 1998, executed
and delivered by the Mortgagor to the Mortgagee pursuant to the Loan
Agreement, in the original face amount of $4,300,000.00, as amended and
replaced by that certain "Replacement New Bridge Note" (as defined in the
Loan Agreement) dated September 4, 1998, together with all substitutions
and replacements therefor and all renewals and extensions thereof and the
full performance of all other obligations of the maker of said note as
provided therein, and under a certain "Bridge Mortgage" (as defined in the
Loan Agreement), executed and delivered in connection therewith as the same
may be amended from time to time; (e) the full payment of the sum of
$17,000,000.00 as provided in a certain "Short Term Revolving Note" (as
defined in the Loan Agreement) of the Mortgagor to the order of the
Mortgagee dated March 5, 1998 pursuant to the Loan Agreement in the face
amount of $17,000,000.00, as amended and replaced by that certain
"Replacement Short Term Revolving Note" (as defined in the Loan Agreement)
dated September 4, 1998, together with interest and other charges as
provided therein, and all renewals and extensions thereof and the full
performance of all other obligations of the maker of said note as provided
therein and a certain Assignment of Certificate of Deposit dated as of
March 5, 1998, as amended dated September 4, 1998, executed and delivered
in connection therewith as the same may hereafter be amended; (f) the full
payment and performance by the Mortgagor of all other indebtedness,
obligations and liabilities of the Mortgagor to the Mortgagee under the
Loan Agreement, direct or indirect, absolute or contingent, now existing or
hereafter arising (including, without limitation, all "Obligations", as
defined in the Loan Agreement) which Loan Agreement provides, among other
things, for the establishment of a "Revolving Loan" (as defined therein)
and for the issuance of Letters of Credit pursuant to "L/C Applications"
(as defined therein) pursuant to which "Advances" (as defined therein) may
be made from time to time, and for repayment of all or a portion of the
outstanding balance of such Advances together with interest and other
charges, all in accordance therewith, and for the grant of "Loans" (as
defined therein) as provided therein; and (g) the full payment and
performance of all covenants and agreements herein contained or referred to
on the part of the Mortgagor to be kept and performed (collectively
hereafter referred to as "Obligations").
In all other respects, the said Mortgage (as intended herein) shall hereby
remain in full force and effect in accordance with its terms.
IN WITNESS WHEREOF, Mortgagor has caused this instrument to be executed on
this 4th day of September, 1998.
Witness DM MANAGEMENT COMPANY
/s/ Richard J. Snyder
- ------------------------------ By: /s/ Olga L. Conley
----------------------------------
Olga L. Conley, Chief Financial Officer
<PAGE>
COMMONWEALTH OF MASSACHUSETTS
COUNTY OF SUFFOLK
On this 4th day of September, 1998, before me, personally appeared the
undersigned officer, Olga L. Conley, known to me (or satisfactorily proven) to
be the person whose name is subscribed to the foregoing written instrument as
the Chief Financial Officer of DM Management Company in its name and on its
behalf and acknowledged that she executed the same for the purposes therein
contained.
IN WITNESS WHEREFORE I have hereunto set my hand and official seal.
/s/ Barbara Jean Apel
-----------------------------------
Notary Public
My Commission Expires: 8/12/99
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Exhibit 10.7
REPLACEMENT NEW BRIDGE NOTE
Boston, Massachusetts
$ 4,300,000.00 September 4, 1998
On or before March 31, 1999, the undersigned, DM Management Company, for
value received, promises to pay to the order of Citizens Bank of Massachusetts
(hereinafter called the "Bank"), at its principal office at 28 State Street,
Boston, Massachusetts 02109, or such other location that the holder may specify
Four Million Three Hundred Thousand DOLLARS ($4,300,000.00)
with interest payable as hereafter set forth. This is the "Replacement New
Bridge Note" issued pursuant to the terms of a certain Third Amendment to Second
Amended and Restated Loan Agreement dated as of the date hereof, by and between
Bank and the undersigned, as the same may further hereafter be amended or
restated (the "Loan Agreement").
Interest shall accrue at the rate provided in the Loan Agreement for the
Replacement New Bridge Loan as defined therein and shall be paid monthly, in
arrears, during the term hereof commencing one (1) month from the date hereof
and on the like day of each month thereafter except all accrued but unpaid
interest shall be due and payable at maturity.
Overdue principal and overdue interest from time to time outstanding shall
bear interest in accordance with the terms of the Loan Agreement. If payment is
not made when due hereunder then, without limitation on any other right of the
Holder, there shall be a late charge as provided in the Loan Agreement.
If an "Event of Default" (as defined in the Loan Agreement) shall occur,
the entire unpaid principal balance of this note and all accrued and unpaid
interest may become or be declared due and payable without notice or demand, in
the manner and with the effect provided in the Loan Agreement.
If a "Special Event" (as defined in the Loan Agreement) shall occur, the
entire unpaid principal balance of this note and all accrued and unpaid interest
shall be due and payable on December 31, 1998 without notice or demand.
Every maker, endorser and guarantor of this note, or the obligation
represented by this note, waives presentment, demand, notice, protest, and all
other demands or notices in connection with the delivery, acceptance,
endorsement, performance, default, or enforcement of this note, assents to any
and all extensions or postponements of the time of payment or any other
indulgence, to any substitution, exchange, or release of collateral, and/or to
the addition or release of any other party or
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person primarily or secondarily liable, and generally waives all suretyship
defenses and defenses in the nature thereof.
The undersigned will pay all reasonable out-of-pocket costs and expenses of
collection, including reasonable attorneys' fees, incurred or paid by the holder
in enforcing this note or the obligations hereby evidenced, to the extent
permitted by law.
No delay or omission of the holder in exercising any right of remedy
hereunder shall constitute a waiver of any such right or remedy.
The holder need not enter payments of principal or interest upon this note,
but may maintain a record thereof on a separate ledger maintained by the holder.
The word "holder" as used in this note shall mean the payee or indorsee of
this note who is in possession of it or the bearer if this note is at the time
payable to bearer.
This note shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts and shall take effect as an instrument under
seal.
WITNESS: DM MANAGEMENT COMPANY
/s/ Richard J. Snyder By: /s/ Olga L. Conley
- ----------------------------------- ------------------------------
Olga L. Conley
Chief Financial Officer
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<PAGE>
Exhibit 10.8
REPLACEMENT SHORT TERM REVOLVING NOTE
Boston, Massachusetts
$17,000,000.00 September 4, 1998
On or before March 31, 1999, the undersigned, DM Management Company, for
value received, promises to pay to the order of Citizens Bank of
Massachusetts (hereinafter called the "Bank"), at its principal office at 28
State Street, Boston, Massachusetts 02109, or such other location that the
holder may specify
Seventeen Million DOLLARS ($17,000,000.00) with interest payable as
hereafter set forth. This is the "Replacement Short Term Revolving Note"
issued pursuant to the terms of a certain Third Amendment to Second Amended
and Restated Loan Agreement dated as of the date hereof by and between Bank
and the undersigned, as the same may further hereafter be amended or restated
(the "Loan Agreement"), payment of which is secured by an Assignment of
Certificate of Deposit as amended by First Amendment to Assignment of
Certificate of Deposit of even date herewith and otherwise as provided in the
Loan Agreement.
Interest shall accrue at the rate provided in the Loan Agreement for the
Short Term Revolving Loan as defined therein and shall be paid monthly, in
arrears, during the term hereof commencing one (1) month from the date hereof
and on the like day of each month thereafter except all accrued but unpaid
interest shall be due and payable at maturity.
Overdue principal and overdue interest from time to time outstanding
shall bear interest in accordance with the terms of the Loan Agreement. If
payment is not made when due hereunder then, without limitation on any other
right of the Holder, there shall be a late charge as provided in the Loan
Agreement.
If an "Event of Default" (as defined in the Loan Agreement) shall occur,
the entire unpaid principal balance of this note and all accrued and unpaid
interest may become or be declared due and payable without notice or demand,
in the manner and with the effect provided in the Loan Agreement.
If a "Special Event" (as defined in the Loan Agreement) shall occur, the
entire unpaid principal balance of this note and all accrued and unpaid
interest shall be due and payable on December 31, 1998 without notice or
demand.
Every maker, endorser and guarantor of this note, or the obligation
represented by this note, waives presentment, demand, notice, protest, and
all other demands or notices in connection with the delivery, acceptance,
endorsement, performance, default, or enforcement of this note, assents to
any and all extensions or
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postponements of the time of payment or any other indulgence, to any
substitution, exchange, or release of collateral, and/or to the addition or
release of any other party or person primarily or secondarily liable, and
generally waives all suretyship defenses and defenses in the nature thereof.
The undersigned will pay all reasonable out-of-pocket costs and expenses
of collection, including reasonable attorneys' fees, incurred or paid by the
holder in enforcing this note or the obligations hereby evidenced, to the
extent permitted by law.
No delay or omission of the holder in exercising any right of remedy
hereunder shall constitute a waiver of any such right or remedy.
The holder need not enter payments of principal or interest upon this
note, but may maintain a record thereof on a separate ledger maintained by
the holder.
The word "holder" as used in this note shall mean the payee or indorsee
of this note who is in possession of it or the bearer if this note is at the
time payable to bearer.
This note shall be governed by and construed in accordance with the laws
of the Commonwealth of Massachusetts and shall take effect as an instrument
under seal.
WITNESS: DM MANAGEMENT COMPANY
By: /s/ Olga L. Conley
------------------------------
Olga L. Conley
Chief Financial Officer
<PAGE>
Exhibit 10.9
SECOND REPLACEMENT REVOLVING NOTE
Boston, Massachusetts
$23,500,000.00 September 4, 1998
ON DEMAND, the undersigned DM Management Company, for value
received, promises to pay to the order of Citizens Bank of Massachusetts
(hereinafter called the "Bank"), at its principal office at 28 State Street,
Boston, Massachusetts 02109, or such other location that the holder may
specify
Twenty-Three Million Five Hundred Thousand DOLLARS ($23,500,000.00)
or such lesser amount which shall have been advanced hereunder, with interest
thereon, as herein provided, until paid in full. This note replaces the
"Replacement Revolving Note" dated October 31, 1997 issued by the undersigned
to the order of the Bank pursuant to the terms of a certain Loan Agreement
dated June 5, 1997, by and between Bank and the undersigned, as previously
revised and amended as of the date hereof (the "Loan Agreement").
Interest shall accrue at the rates provided in the Loan Agreement
for the Revolving Loan as defined therein and shall be paid at maturity
hereof. Overdue principal and overdue interest from time to time outstanding
shall bear interest in accordance with the terms of the Loan Agreement. If
any payment is not made when due hereunder, then, without limitation on any
other right of the Holder, there shall be a late charge as provided in the
Loan Agreement.
If an "Event of Default" (as defined in the Loan Agreement) shall
occur, the entire unpaid principal balance of this note and all accrued and
unpaid interest may become or be declared due and payable without notice or
demand, in the manner and with the effect provided in the Loan Agreement.
Every maker, endorser and guarantor of this note, or the obligation
represented by this note, waives presentment, demand, notice, protest, and
all other demands or notices in connection with the delivery, acceptance,
endorsement, performance, default, or enforcement of this note, assents to
any and all extensions or postponements of the time of payment or any other
indulgence, to any substitution, exchange, or release of collateral, and/or
to the addition or release of any other party or person primarily or
secondarily liable, and generally waives all suretyship defenses and defenses
in the nature thereof.
The undersigned will pay all reasonable out-of-pocket costs and
expenses of collection, including reasonable attorneys' fees, incurred or
paid by the holder in enforcing this note or the obligations hereby
evidenced, to the extent permitted by law.
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No delay or omission of the holder in exercising any right of
remedy hereunder shall constitute a waiver of any such right or remedy.
The holder need not enter payments of principal or interest upon
this note, but may maintain a record thereof on a separate ledger maintained
by the holder.
The word "holder" as used in this note shall mean the payee or
indorsee of this note who is in possession of it or the bearer if this note
is at the time payable to bearer.
This note shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts and shall take effect as an
instrument under seal.
WITNESS: DM MANAGEMENT COMPANY
/s/ Richard J. Snyder
- ------------------------------ By: /s/ Olga L. Conley
---------------------------
Olga L. Conley
Chief Financial Officer
<PAGE>
Exhibit 10.10
THIRD AMENDMENT TO SECURITY AGREEMENT
Reference is made to a certain Security Agreement dated June 5, 1997 as
amended by (i) a certain First Amendment to Security Agreement dated October 31,
1997, and (ii) a certain Second Amendment to Security Agreement dated March 5,
1998 (collectively, the "Security Agreement") by and between DM Management
Company, a Delaware Corporation (the "Debtor") and Citizens Bank of
Massachusetts (the "Secured Party").
In consideration of Secured Party increasing (for the period specified)
from up to $8.5 million to up to $23,500,000 Secured Party's revolving credit
facility with Debtor and otherwise agreeing to further amend that certain Loan
Agreement dated June 5, 1997, as the same has been amended and restated in a
certain Amended and Restated Loan Agreement dated as of October 31, 1997, and in
a certain Second Amended and Restated Loan Agreement dated March 5, 1998 and as
amended by a certain First Amendment to Second Amended and Restated Loan
Agreement dated as of June 30, 1998 and a Second Amendment to Second Amended and
Restated Loan Agreement dated of even date herewith, and as the same may
hereafter be amended (collectively, the "Loan Agreement"), which the Secured
Party is unwilling to do unless, among other things, paragraph 1(e) of the
Security Agreement is amended, among other things, to confirm that it secures
(i) payment and performance of the Loan Agreement as amended, (ii) payment and
performance of the "Second Replacement Revolving Note" as defined in the Loan
Agreement and payment and performance of the "Replacement New Bridge Note" as
defined in the Loan Agreement, and payment and performance of the "Replacement
Short Term Revolving Note" and "First Amendment to Assignment of Certificate of
Deposit" executed by Debtor to Secured Party of even date herewith, as well as
certain other instruments amended as of this date. The Debtor and the Secured
Party hereby agree that the Security Agreement be and the same hereby is,
amended by deleting Paragraph 1 thereof and replacing it with the following:
The Debtor hereby grants to Secured Party, a security interest in all
of the Debtor's present and future right, title and interest in and to
the property described on Exhibit A (all of which is hereinafter
called the "Collateral") to secure (a) the full payment of the sum of
$8,500,000.00, or such lesser amount which shall have been advanced,
together with interest and other charges, all as provided in a certain
"Revolving Note" of the Debtor to the order of the Secured Party dated
June 5, 1997, which note was amended and replaced by a certain
"Replacement Revolving Note" dated October 31, 1997 in the face amount
of $8,500,000.00, which note was amended and replaced by a certain
"Second Replacement Revolving Note" dated September 4, 1998 in the
face amount of $23,500,000, all as provided in a certain Loan
Agreement dated June 5, 1997 as amended and restated as of March 5,
1998 and as further amended and restated dated September 4, 1998
herewith (collectively, the "Loan Agreement") together with all
substitutions or replacements therefor and all renewals or extensions
thereof and the full performance of all other obligations of the
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maker of said note as provided therein; (b) the full payment of the
sum of $1,650,000.00, as provided in a certain "Real Estate Note" (as
defined in the Loan Agreement) of the Debtor to the order of the
Secured Party dated July 30, 1997, executed and delivered by the
Debtor to the Secured Party, pursuant to the Loan Agreement in the
face amount of $1,650,000.00, with interest and other charges as
provided therein, together with all substitutions and replacements
therefor and all renewals and extensions thereof and the full
performance of all other obligations of the maker of said note as
provided therein and under a certain Real Estate Mortgage (as defined
in the Loan Agreement), as the same may be amended from time to time;
(c) the full payment of the sum of $3,600,000.00, with interest and
other charges, all as provided in a certain "Term Note" (as defined in
the Loan Agreement) of the Debtor to the order of the Secured Party
dated June 5, 1997, executed and delivered by the Debtor to the
Secured Party pursuant to the Loan Agreement, in the original face
amount of $3,600,000.00, together with all substitutions or
replacements therefor and all renewals or extensions thereof and the
full performance of all other obligations of the maker of said note as
provided therein; (d) the full payment of the sum of $4,300,000.00,
with interest and other charges, all as provided in a certain "New
Bridge Note" (as defined in the Loan Agreement), of the Debtor to the
order of the Secured Party dated as March 5, 1998, executed and
delivered by the Debtor to the Secured Party pursuant to the Loan
Agreement, in the original face amount of $4,300,000.00, as amended
and replaced by that certain "Replacement New Bridge Note" (as defined
in the Loan Agreement) dated September 4, 1998, together with all
substitutions and replacements therefor and all renewals and
extensions thereof and the full performance of all other obligations
of the maker of said note as provided therein, and under a certain
"Bridge Mortgage" (as defined in the Loan Agreement) as the same may
be amended from time to time; (e) the full payment of the sum of
$17,000,000.00 together with interest and other charges, all as
provided in a certain "Short Term Revolving Note" (as defined in the
Loan Agreement) of the Debtor to the order of the Secured Party dated
March 5, 1998 pursuant to the Loan Agreement in the face amount of
$17,000,000.00, as amended and replaced by that certain "Replacement
Short Term Revolving Note" as defined in the Loan Agreement) dated
September 4, 1998, and all renewals and extensions thereof and the
full performance of all other obligations of the maker of said note as
provided therein, and in a certain "Assignment of Certificate of
Deposit" dated as of March 5, 1998 executed and delivered in
connection therewith, as amended by First Amendment to Assignment of
Certificate of Deposit dated September 4, 1998 and as the same may
hereafter be amended; (f) the full payment and performance by the
Debtor of all other indebtedness, obligations and liabilities of the
Debtor to the Secured Party under the Loan Agreement, direct or
indirect, absolute or contingent, now existing or hereafter arising
(including, without limitation,
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all "Obligations", as defined in the Loan Agreement, whether or not
specifically referred to herein), which Loan Agreement provides, among
other things, for the establishment of a "Revolving Loan" (as defined
therein) and for the issuance of Letters of Credit pursuant to "L/C
Applications" (as defined therein) pursuant to which "Advances" (as
defined therein) may be made from time to time, and for repayment of
all or a portion of the outstanding balance of such Advances together
with interest and other charges, all in accordance therewith, and for
the grant of "Loans" (as defined therein) as provided therein; and (g)
the full payment and performance of all covenants and agreements
herein contained or referred to on the part of the Debtor to be kept
and performed (collectively hereafter referred to as "Obligations").
In all other respects, the Security Agreement shall remain in full force
and effect in accordance with its terms.
Executed as an instrument under seal as of the 4th day of September, 1998.
DM MANAGEMENT COMPANY
Witness
/s/ David R. Pierson
- ------------------------------ By: /s/ Olga L. Conley
-------------------------------
Olga L. Conley
Chief Financial Officer
Agreed: Citizens Bank of Massachusetts
By: /s/ Lori B. Leeth, SVP
------------------------------------
Lori B. Leeth, Senior Vice President
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CHELSEA GCA REALTY PARTNERSHIP, L.P.,
authorized to transact business in the
Commonwealth of Massachusetts as Chelsea GCA
Realty Partnership, Limited Partnership,
Landlord
TO
DM MANAGEMENT COMPANY,
Tenant
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LEASE
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Dated: October 5th, 1998
Premises in the Wrentham Village Premium Outlets
Town of Wrentham
County of Norfolk
Commonwealth of Massachusetts
Unit: 0575
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<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS...................................... 1
1.01 SPECIAL DEFINITIONS.............................. 1
1.02 GENERAL DEFINITIONS.............................. 3
ARTICLE II DEMISE AND CONSTRUCTION.......................... 6
2.01 DEMISE........................................... 6
2.02 CONSTRUCTION..................................... 6
2.03 ACCEPTANCE OF DEMISED PREMISES................... 7
ARTICLE III FIXED RENT, ADDITIONAL RENT AND SECURITY......... 7
3.01 PAYMENT OF FIXED RENT AND ADDITIONAL RENT........ 7
3.02 PERCENTAGE RENT.................................. 7
3.03 TAXES............................................ 9
3.04 COMMON AREA CHARGE............................... 9
3.05 ADVERTISING FEE.................................. 10
3.06 LATE CHARGES AND RETURN CHECK CHARGES............ 10
3.07 SECURITY......................................... 11
3.08 ACCORD AND SATISFACTION.......................... 11
ARTICLE IV COMMON AREAS AND PARKING......................... 12
4.01 MAINTENANCE OF AND CHANGES IN COMMON AREAS....... 12
4.02 USE OF COMMON AREAS.............................. 12
4.03 PARKING.......................................... 12
ARTICLE V UTILITIES AND SERVICES........................... 13
5.01 UTILITIES AND MECHANICAL MAINTENANCE............. 13
5.02 PAYMENT FOR UTILITIES AND SERVICES............... 13
ARTICLE VI USE AND ENJOYMENT OF DEMISED PREMISES............ 14
6.01 PERMITTED USES................................... 14
6.02 OPERATION OF BUSINESS............................ 14
6.03 SIGNS............................................ 16
6.04 COMPLIANCE WITH LAWS............................. 16
6.05 ACCESS TO PREMISES AND EXCAVATION................ 16
6.06 MECHANICS' LIENS................................. 17
6.07 RENT ABATEMENT................................... 17
ARTICLE VII ALTERATIONS, REPAIRS AND CHANGES................. 17
7.01 ALTERATIONS BY TENANT............................ 17
7.02 REPAIRS BY LANDLORD.............................. 18
7.03 REPAIRS AND MAINTENANCE BY TENANT................ 18
7.04 CHANGES BY LANDLORD.............................. 18
7.05 LANDLORD'S CONSENT............................... 19
ARTICLE VIII INSURANCE AND INDEMNITY.......................... 19
8.01 INSURANCE BY TENANT.............................. 19
8.02 INCREASE IN PREMIUMS............................. 20
8.03 INDEMNIFICATION AND RELEASE...................... 20
8.04 OPTION TO EXTEND................................. 20
ARTICLE IX SUBORDINATION AND ATTORNMENT..................... 21
9.01 SUBORDINATION TO LEASES.......................... 21
9.02 SUBORDINATION TO MORTGAGES....................... 21
9.03 ATTORNMENT....................................... 21
9.04 DELIVERY OF DOCUMENTS............................ 22
9.05 CONSENT OF LANDLORD.............................. 22
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9.06 NOTICES TO MORTGAGEES............................ 22
ARTICLE X ASSIGNMENT AND SUBLETTING........................ 22
10.01 ASSIGNMENT OR SUBLETTING......................... 22
10.02 NOTICE........................................... 23
10.03 RECAPTURE OPTION................................. 23
10.04 ASSIGNMENT/SUBLEASE AMENDMENT.................... 24
10.05 CORPORATION OR PARTNERSHIP....................... 24
10.06 MISCELLANEOUS.................................... 25
ARTICLE XI DESTRUCTION...................................... 26
11.01 TOTAL OR PARTIAL DESTRUCTION..................... 26
ARTICLE XII EMINENT DOMAIN................................... 26
12.01 TOTAL OR PARTIAL TAKING.......................... 26
ARTICLE XIII DEFAULT.......................................... 27
13.01 DEFAULTS......................................... 27
13.02 REMEDIES OF LANDLORD............................. 28
13.03 ADDITIONAL RIGHT OF LANDLORD TO CURE TENANT'S
DEFAULTS......................................... 30
13.04 BANKRUPTCY OR INSOLVENCY......................... 30
ARTICLE XIV RIGHT TO RELOCATE TENANT......................... 32
ARTICLE XV MISCELLANEOUS.................................... 32
15.01 RULES AND REGULATIONS............................ 32
15.02 HOLDOVER......................................... 32
15.03 OWNERSHIP OF IMPROVEMENTS AND PERSONAL PROPERTY.. 32
15.04 END OF TERM...................................... 32
15.05 WAIVER OF JURY TRIAL AND RIGHT TO COUNTERCLAIM... 33
15.06 NO WAIVER........................................ 33
15.07 QUIET ENJOYMENT.................................. 33
15.08 ESTOPPEL CERTIFICATES............................ 33
15.09 LANDLORD'S UNAVOIDABLE DELAYS.................... 34
15.10 FINANCIAL STATEMENTS............................. 34
15.11 NOTICES.......................................... 34
15.12 BROKERAGE........................................ 34
15.13 WAIVER OF LANDLORD'S LIABILITY................... 34
15.14 SUCCESSORS AND ASSIGNS........................... 35
15.15 LEGAL EXPENSES................................... 35
15.16 INTERPRETATION................................... 35
15.17 OPTION TO EXTEND................................. 35
15.18 CONSENTS AND APPROVALS........................... 35
15.19 RADIUS........................................... 36
15.20 COMPLETE AGREEMENT............................... 36
15.21 COUNTERPARTS..................................... 36
15.24 CO-TENANCY....................................... 36
Exhibits:
"A" - Landlord's Work Letter
"B" - Site Plan
"C" - Commencement Date Agreement
"D" - Storefront Criteria and Rules and Regulations
ii
<PAGE>
LEASE
THIS LEASE, made the 5th day of October, 1998, between CHELSEA GCA
REALTY PARTNERSHIP, L.P., a Delaware limited partnership authorized to
transact business in the Commonwealth of Massachusetts as Chelsea GCA Realty
Partnership, Limited Partnership, having an office at 103 Eisenhower Parkway,
Roseland, New Jersey 07068 (herein, except as otherwise provided, called
"Landlord"), and DM MANAGEMENT COMPANY, a corporation having an office at 25
Recreation Park Drive, Hingham, Massachusetts 02043 (herein, except as
otherwise provided, called "Tenant");
ARTICLE I
DEFINITIONS
1.01 SPECIAL DEFINITIONS. As used herein the following terms and phrases
shall have the meanings indicated:
A. ADVERTISING FEE: An amount (subject to adjustment as provided in
Section 3.05) at the initial annual rate of $3.25 multiplied by the Floor Space
of the Demised Premises (as such Floor Space may be adjusted pursuant to the
provisions of Section 2.01 hereof).
B. BASE GROSS SALES: An amount equal to the product of (a) the
Floor Space of the Demised Premises (as such Floor Space of the Demised Premises
may be adjusted pursuant to the provisions of Section 2.01 hereof) and (b)
$350.00.
C. BROKER: None.
D. COMMENCEMENT DATE: The date on which the Demised Premises has
been substantially completed in accordance with the requirements of Exhibit "A",
Landlord's Work Letter. Any entry by Tenant or Tenant's representative or agent
prior to the Commencement Date shall be subject to all the terms and conditions
of this Lease, other than with respect to the payment of Fixed Rent and those
recurring Additional Rent charges expressly identified herein as not commencing
until the Rent Commencement Date. As an accommodation only and without any
liability on the part of Landlord whatsoever, Landlord agrees to give Tenant 30
days prior notice of the anticipated Commencement Date. At Landlord's or
Tenant's request after the Rent Commencement Date shall have been determined,
Tenant and Landlord shall execute and deliver duplicate originals of an
agreement, substantially in the form of Exhibit "C" attached hereto, setting
forth the Commencement Date, the Rent Commencement Date, the date of expiration
of the Initial Term, the commencement and expiration dates of any Extended
Period and the Floor Space of the Demised Premises. Notwithstanding anything to
the contrary contained in this Lease, it is understood and agreed that in the
event that the Commencement Date shall not have occurred on or before October 1,
1999, Tenant may terminate this Lease by written notice given to Landlord at any
time thereafter; provided, however, that any such notice of termination given by
Tenant shall be deemed null and void and of no further force and effect in the
event that Landlord shall deliver such possession of the Demised Premises to
Tenant prior to any such notice of termination from Tenant.
E. COMMON AREA CHARGE: Tenant's annual proportionate share of
Common Area Costs as more particularly determined pursuant to Section 3.04
hereof.
F. DEMISED PREMISES: The area shaded with diagonal lines on the
space plan attached hereto as Exhibit "B" consisting of approximately 3,500
square
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feet of Floor Space (as may be adjusted pursuant to the provisions of Section
2.01 hereof), which Demised Premises are a part of the Shopping Center.
G. FIXED RENT: An amount at the initial annual rate of $21.00
multiplied by the Floor Space of the Demised Premises (as such Floor Space may
be adjusted pursuant to the provisions of Section 2.01 hereof).
H. GUARANTOR: None.
I. INITIAL TERM: The period of approximately three (3) years
commencing on the Commencement Date and ending at midnight of the last day of
the month in which the third anniversary date of the Rent Commencement Date
occurs.
J. MARKETING ENTRY CHARGE: A one-time charge at the rate of $2.75
multiplied by the Floor Space of the Demised Premises (as such Floor Space may
be adjusted pursuant to the provisions of Section 2.01 hereof) and due within
thirty (30) days after the giving of notice by Landlord to Tenant but in no
event earlier than ninety (90) days prior to the anticipated Commencement Date.
K. OPTION TO EXTEND: None.
L. PERCENTAGE RENT RATE: Five percent (5%).
M. PERMITTED USES: Retail sale of primarily women's apparel and
incidentals thereto, and such other items as from time to time appear in
catalogues made by or for DM Management Company. Tenant shall not sell any
items that are manufactured by or for any other tenant or occupant of the
Shopping Center. See also the provisions of Sections 6.01 and 6.02.
N. REAL ESTATE TAX CHARGE: Tenant's annual proportionate share of
Real Estate Taxes as more particularly determined pursuant to Section 3.03
hereof.
O. RENT COMMENCEMENT DATE: The earlier of (a) the date Tenant shall
open the Demised Premises to the public for business and (b) 60 days after the
Commencement Date. Notwithstanding anything to the contrary contained in this
Lease, it is understood and agreed that if as of the date upon which the Rent
Commencement Date would have been scheduled to occur in accordance with this
Section 1.01(O) of this Lease, less than fifty percent (50%) of the leasable
Floor Space of Phase III of the Shopping Center is leased and open for business,
Tenant shall nevertheless be required to open the Demised Premises to the public
for business, but Tenant may pay, in lieu of Fixed Rent, four percent (4%) of
the Gross Sales payable monthly on or before the twentieth (20th) of the
following calendar month. Upon the satisfaction of tenancy requirement set
forth above, all payments of Fixed Rent as set forth in this Lease shall
thereupon immediately commence except as hereinafter provided. Any Gross Sales
included in the payment in lieu of Fixed Rent shall also be included in the
calculation of Gross Sales. The term "leased and open" shall mean with respect
to any premises that (i) a lease or occupancy agreement has been fully executed
for such premises and (ii) such premises are then being fixtured by such Tenant
or occupant and shall be required to be open for business within thirty (30)
days after the later of (a) the substantial completion of such premises and (b)
the full execution of such lease or occupancy agreement.
P. SECURITY DEPOSIT: None.
Q. SHOPPING CENTER: That certain Shopping Center known as Wrentham
Village Premium Outlets, located in the Town of Wrentham, County of Norfolk,
Commonwealth of Massachusetts, as same may, from time to time, be
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<PAGE>
reduced or increased by the deletion or addition by Landlord of lands and/or
buildings and other improvements.
R. TENANT'S IMPROVEMENT ALLOWANCE: A maximum amount equal to the
product of (a) the Floor Space of the Demised Premises (as such Floor Space may
be adjusted pursuant to the provisions of Section 2.01 hereof) and (b) $10.00 to
be disbursed in accordance with the provisions of Section 2.02(B) hereof.
S. TENANT'S TRADE NAME: J. Jill/Nicole Summer or any other trade
name under which Tenant does business.
1.02 GENERAL DEFINITIONS: As used herein the following terms and phrases
shall have the meanings indicated:
A. ADDITIONAL RENT: All amounts payable by Tenant to Landlord under
this Lease other than Fixed Rent, or pursuant to any other agreement entered
into by or between Tenant, Landlord and/or any third party with respect to
Tenant's occupancy of the Demised Premises, including but not limited to any
agreement relating to billboards, garbage collection or signage.
B. The words CALENDAR YEAR shall mean any twelve-month period
commencing on a January 1, and the words CALENDAR QUARTER shall mean any
three-month period beginning on either a January 1, an April 1, a July 1 or an
October 1.
C. COMMON AREAS: All areas, spaces and improvements to the Shopping
Center which Landlord makes available from time to time for the common use and
benefit of the tenants and occupants of the Shopping Center, including, without
limitation, parking areas, roads, walkways, promenades, sidewalks, open and
covered courts and malls, if any, landscaped and planted areas, community rooms,
if any, Shopping Center office, if any, public rest rooms and those portions of
utility and sewer lines and systems and fire protection and sprinkler alarm
systems serving the common use and benefit of the tenants and occupants of the
Shopping Center.
D. COMMON AREA COSTS: All costs and expenses (whether or not within
the contemplation of the parties) for the maintenance, policing, securing,
repair, replacement, administration, insurance, environmental monitoring,
operation and management of the Shopping Center and any part thereof including
an overhead cost equal to fifteen percent (15%) of the total costs and expenses
so incurred but not including any Real Estate Taxes, or any other item of
Additional Rent otherwise payable by Tenant to Landlord under any other express
provision of this Lease. Notwithstanding anything to the contrary provided
herein, the following shall be excluded from Common Area Costs: (a) costs and
expenses incurred by Landlord in connection with leasing of space in the
Shopping Center; (b) costs and expenses of special services or utilities
separately chargeable to individual tenants of the Shopping Center; (c) costs
and expense incurred by Landlord in respect to service furnished to other
tenants in the Shopping Center which are not also furnished to Tenant; (d) costs
and expenses of initial construction of the Shopping Center, including, without
limitation, the cost to correct defective work; (e) fees and expenses of
attorneys, consultants and other professionals incurred by Landlord, except to
the extent such fees and expenses were incurred to benefit the Shopping Center
or in connection with services which are provided uniformly to all tenants in
the Shopping Center. With respect to the costs for alterations and additions
that are in the nature of capital improvements, any such cost which should be
capitalized in accordance with generally accepted accounting principles, such
cost for the purposes of this lease, shall be spread over such time period of
capitalization, and Common Area Charge shall include such allocable portion for
each year.
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E. EVENT OF DEFAULT: Any of the events set forth in Section 13.01
as an Event of Default.
F. FLOOR SPACE: The floor area stated in square feet bounded by the
exterior faces of the exterior walls, or the exterior or Common Areas face of
any wall between the Demised Premises and any portion of the Common Areas, or
the center line of any wall between two occupants. With respect to the Demised
Premises, Floor Space shall include, without limitation, corridors, alleys,
passageways and all other areas if the same are for the exclusive use of the
Demised Premises and shall include the aggregate floor area of all levels or
stories of the Demised Premises including any basement and mezzanine levels and
shall also include the floor area contained in any recessed entrances, but
excluding any roof except such portion thereof (other than cooling towers,
mechanical rooms and chimneys, if any) as is permanently enclosed and no
deduction or exclusion shall be made from Floor Space otherwise computed by
reason of stairs, elevators, escalators, interior partitions, columns or other
interior construction or equipment. With respect to the Shopping Center, Floor
Space shall include all (and only such) floor area of premises in the Shopping
Center demised to retail or commercial tenants or available for retail or
commercial tenancy, as subject to change from time to time, and shall not
include any kiosks, other non-permanent facilities or office facilities.
G. GROSS SALES: The dollar aggregate of: (a) the actual sales
price of all goods and merchandise sold, leased or licensed and the charges for
all services performed by Tenant or otherwise from all business conducted at or
from the Demised Premises, whether made for cash, by check, credit or otherwise,
without reserve or deduction for inability or failure to collect the same,
including, without limitation, sales and services (i) where the orders therefor
originate at or are accepted at or from the Demised Premises, whether delivery
or performance thereof is made at or from the Demised Premises or any other
place, it being understood that all sales made and orders received at or from
the Demised Premises shall be deemed to have been made and completed therein
even though the orders are fulfilled elsewhere or the payments of account are
transferred to some other office for collection, and all orders which result
from solicitation off the Demised Premises but which are conducted by personnel
operating from or reporting to or under the control or supervision of any person
at the Demised Premises shall be deemed part of Gross Sales, (ii) pursuant to
mail, telegraph, telephone or other similar orders received or billed at or from
the Demised Premises, and (iii) by means of mechanical or other vending devices;
and (b) all moneys or other things of value received by Tenant from its
operations at the Demised Premises (which are not excluded from Gross Sales by
the next succeeding sentence) including all finance charges, cost of gift or
merchandise certificates and all deposits not refunded to customers. Gross
Sales shall not include (r) delivery charges, (s) finance charges, (t)
merchandise or other items of value issued in redemption of gift certificates,
(u) sales to employees at a discount, not to exceed 5% of Gross Sales in any
calendar year, (v) any merchandise returned for credit to shippers, jobbers,
wholesalers or manufacturers, (w) any sums received in settlement of claims for
loss or damage to merchandise, (x) the exchange of merchandise between stores of
Tenant where such exchange is made solely for the convenient operation of
Tenant's business and neither for the purpose of depriving Landlord of the
benefits of a sale which would otherwise be made at or from the Demised Premises
nor for the purpose of consummating a sale which has been theretofore made at or
FROM the Demised Premises, (y) sales of fixtures which are not part of Tenant's
stock in trade and not sold in the regular course of Tenant's business, or (z)
the amount of any city, county, state or federal sales tax, luxury tax or excise
tax on sales if the tax is added to the selling price and separately stated and
actually paid to the taxing authority by Tenant; provided, however, no franchise
or capital stock tax and no income or similar tax based upon income, profits or
Gross Sales shall be deducted from Gross Sales in any event whatsoever. Cash or
credit refunds made upon transactions included within the Gross Sales, but not
exceeding the selling price of merchandise returned by the
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purchaser and accepted by Tenant, shall be deducted from the Gross Sales for the
period when such refunds are made. Each charge or sale upon installment or
credit or layaway, so called, shall be treated as a sale as each installment is
received. Each lease or rental or license of merchandise to customers shall be
treated as a sale in the month in which the lease, rental or license is made for
a price equal to the total rent or license fee payable. For purposes of this
definition the term Tenant shall include any of Tenant's subtenants,
concessionaires, and licensees. Tenant shall be permitted to install one (1)
telephone at the Demised Premises for catalogue sales. Gross Sales shall also
exclude credit card catalogue sales originating from such telephone.
H. LANDLORD: The owner for the time being, of the interest of
Landlord under this Lease as owner of the fee of the Demised Premises or as
lessee under any ground lease or underlying lease of premises including the
Demised Premises, so that in the event of any sale or transfer of the fee of the
Demised Premises (other than a sale with a leaseback to the grantor) or any
assignment of Landlord's interest under such ground lease or underlying lease,
the grantor, transferor or assignor, as the case may be, shall be and hereby is
entirely relieved and freed of all obligations of Landlord under this Lease
accruing after such sale, transfer or assignment, and the grantee, transferee or
assignee, as the case may be, shall be deemed to have assumed and agreed to
perform and observe all of the obligations of Landlord under this Lease during
the period it is the owner of the interest of Landlord under this Lease but
subject, however, to any provisions of this Lease limiting Landlord's liability.
I. The word MORTGAGE shall mean any mortgage or deed of trust, and
the word MORTGAGEE shall mean the holder of any mortgage or the beneficiary of
any deed of trust.
J. PERCENTAGE RENT: The amount for any period computed in
accordance with the provisions of Section 3.02.
K. The word PERSON shall mean a natural person, a partnership, a
corporation and any other form of business or legal association or entity.
L. PRICE INDEX: The Consumer Price Index for Urban Wage Earners and
Clerical Workers--U.S. City Average issued by the Bureau of Labor Statistics of
the United States Department of Labor or any successor index. If at any time
said Consumer Price Index is no longer published, then the term PRICE INDEX
shall mean an index selected by Landlord comparable to said Consumer Price
Index.
M. REAL ESTATE TAXES: All taxes, assessments, improvement bonds,
utility hook-up fees, license and permit fees and other governmental charges and
costs and water and sewer rents, if any, ordinary and extraordinary, general and
special, foreseen and unforeseen, levied or assessed upon or with respect to the
ownership of and/or all other taxable interests in the property in question
(land, buildings and other improvements) imposed by any taxing authority having
jurisdiction, and all reasonable costs and expenses incurred in connection with
the negotiation or contesting of Real Estate Taxes. If at any time the methods
of taxation shall be altered so that in addition to or in lieu of or as a
substitute for the whole or any part of the Real Estate Taxes now levied,
assessed or imposed there shall be levied, assessed or imposed by any government
body (a) a gross receipts or excise tax or license fee on the rents received or
(b) any other type of tax or other imposition in lieu of, or as a substitute
for, or in addition to, the whole or any portion of any Real Estate Taxes, then
the same shall be included as Real Estate Taxes. Landlord and Tenant recognize
that there may be imposed new forms of taxes, assessments, charges, levies or
fees, or there may be an increase in certain existing taxes, assessments,
charges, levies or fees placed on, or levied in connection with, the ownership,
leasing, occupancy or operation of the Shopping Center and its facilities. All
such new or increased taxes, assessments, charges, levies or fees which are
imposed or increased, including, but not limited to,
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any taxes, assessments, charges, levies and fees assessed or imposed due to the
existence of this Lease and the leases of other tenants or occupants of the
Shopping Center or for the purpose of funding services or special assessment
districts theretofore funded by real property taxes, shall also be included
within the meaning of "Real Estate Taxes" as used herein. Real Estate Taxes
shall not include any inheritance, estate, succession, transfer, gift,
franchise, corporation, net income or profit tax.
N. RENT: The Fixed Rent plus the Additional Rent.
O. REQUIREMENTS: All laws, statutes, ordinances (including, but not
limited to, building codes and zoning regulations and ordinances), orders,
rules, regulations and requirements of all federal, state, county and municipal
governments, and the appropriate agencies, officers, departments, boards and
commissions thereof, and the board of fire underwriters and/or the fire
insurance rating organization or similar organization performing the same or
similar functions, whether now or hereafter in force, applicable to the Shopping
Center or any part thereof and/or the Demised Premises or the use or manner of
use of the Shopping Center or any part thereof and/or the Demised Premises or
the sidewalks and curbs adjacent thereto.
P. TERM: The Initial Term and the Extended Period(s), if any, as to
which Tenant shall have effectively exercised its right to extend, but in any
event the Term shall end on any date when this Lease is sooner terminated.
ARTICLE II
DEMISE AND CONSTRUCTION
2.01 DEMISE. Upon and subject to the terms and conditions of this Lease,
Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord, the
Demised Premises, for the Term. Tenant acknowledges that the dimensions, shape
and location of the Demised Premises as described herein are approximate and it
is agreed and understood by Tenant that, upon the completion of the construction
of the Demised Premises, the actual number of square feet of Floor Space will be
measured by Landlord and Tenant and the number of square feet of Floor Space
previously stated in Section 1.01(F) adjusted as may be required, but in no
event shall Tenant be required to pay Rent with respect to Floor Space being
greater than 3,675 square feet. Tenant also acknowledges that Landlord reserves
the right to change the unit designation (but not the location) of the Demised
Premises. Notwithstanding the foregoing, Landlord reserves exclusively to
itself and Tenant shall have no right in and to (a) the use of the exterior
faces of all perimeter walls, (b) the use of the roof, (c) the use of the land,
improvements and space below the bottom of the lower floor slabs of the Demised
Premises and above the interior surface of the ceiling of the Demised Premises,
and (d) the use of the improvements and space above the highest ceiling of the
Demised Premises. Landlord also reserves and Tenant shall have no right in and
to the air rights above Tenant's store.
2.02 CONSTRUCTION. A. Landlord shall construct and complete the Demised
Premises to the extent required to substantially comply with the requirements of
Exhibit "A". The Demised Premises shall be delivered to the Tenant in good
order and condition as far as the aforesaid requirements require.
B. Provided Tenant shall not be in default under the terms of this
Lease beyond any applicable grace period, Tenant shall be entitled to Tenant's
Improvement Allowance toward Tenant's out-of-pocket expenditures made for
Tenant's leasehold improvements. Tenant shall submit lien waivers and proof
reasonably satisfactory to Landlord at Landlord's main office of the payment by
Tenant for such leasehold improvements up to the amount of Tenant's Improvement
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Allowance. Such proof shall be submitted no later than one hundred twenty (120)
days from the Rent Commencement Date. If any such proof shall not be timely
submitted, Tenant shall no longer be entitled to that portion of Tenant's
Improvement Allowance which was to be represented by such proof. Landlord shall
have the option either (a) to pay to Tenant the full amount of such allowance or
any part thereof on the date which is 45 days subsequent to the date by which
proof of payment by Tenant for such leasehold improvements has been submitted to
Landlord or (b) to permit Tenant to deduct the amount of any remaining allowance
not paid to Tenant by Landlord hereunder from the next installment(s) of Fixed
Rent due and owing. Notwithstanding the foregoing, if Landlord shall elect to
make any such payments, in no event shall such payment be due and payable before
the opening of the Demised Premises to the public for business. For the
purposes of this Section, Tenant's leasehold improvements shall only include
those items described in the first full sentence of Section 15.03 and shall
specifically exclude movable trade fixtures and other personal property of
Tenant.
2.03 ACCEPTANCE OF DEMISED PREMISES. Within thirty (30) days of entry by
the Tenant upon the Demised Premises, Tenant will advise Landlord of any
conditions of Landlord's Work which do not conform with Exhibit "A". Upon the
expiration of the thirty-day period herein, the Demised Premises shall be
conclusively deemed accepted by Tenant subject to the conditions in such advice.
Landlord shall have no responsibility in any respect for damages to property of
Tenant caused by water, flooding, waves or fluids of any nature or origin
whatsoever, unless caused by the act, omission or negligence of Landlord, its
agents, employees, contractors or any other party for whom Landlord is legally
responsible. If Landlord shall default in the performance or observance of any
agreement or condition on its part to be performed or observed relating to the
Demised Premises and if Landlord shall not cure such default within thirty (30)
days after notice from Tenant specifying the default (or if said default is not
capable of being cured within thirty days, and if Landlord shall not within said
period commence to cure such default and diligently endeavor to completely cure
said default), Tenant may with respect to the Demised Premises only and not with
respect to the Common Area, at any time thereafter cure such default for the
account of Landlord, and any reasonable amount paid or incurred by Tenant in so
doing shall be deemed paid or incurred for the account of Landlord, and Landlord
agrees to reimburse Tenant therefor within fifteen (15) days after demand. If
Tenant shall exercise its right to cure any such default of Landlord, such right
to cure shall be Tenant's sole remedy hereunder.
ARTICLE III
FIXED RENT, ADDITIONAL RENT AND SECURITY
3.01 PAYMENT OF FIXED RENT AND ADDITIONAL RENT. Commencing upon the Rent
Commencement Date, Tenant shall pay the Fixed Rent in equal monthly installments
in advance of the first day of each month during the Term, except that if the
Rent Commencement Date is not the first day of a month, Fixed Rent for the
period commencing on the Rent Commencement Date and ending on the last day of
the month in which the Rent Commencement Date occurs shall be apportioned on the
basis of the number of days in said month as compared to 365 days and paid on
the Rent Commencement Date. The Fixed Rent and all Additional Rent shall be
paid promptly when due, in lawful money of the United States, without notice or
demand and without deduction, abatement, counterclaim or setoff of any amount or
for any reason whatsoever, to Landlord at the address of Landlord set forth at
the head of this Lease or such other address as Landlord may designate or to
such other person as Landlord may designate.
3.02 PERCENTAGE RENT. A. Within 10 days after the end of each calendar
month, Tenant shall submit to Landlord a statement certified by Tenant (by an
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authorized officer if Tenant is a corporation or by a partner if Tenant is a
partnership) stating the Gross Sales (including an itemization of all claimed
deductions therefrom) for such month. For that calendar month in which
cumulative Gross Sales for the calendar year in question shall exceed Base Gross
Sales for such year, Tenant shall simultaneously therewith pay to Landlord, as
Percentage Rent, an amount equal to the product of (a) the Percentage Rent Rate
and (b) the difference between the cumulative Gross Sales for the calendar year
in question and the Base Gross Sales. Thereafter, Tenant shall pay
simultaneously with each monthly report to Landlord, as Percentage Rent, for the
remainder of such calendar year, an amount equal to the product of (a) the
Percentage Rent Rate and (b) the Gross Sales for each succeeding calendar month.
For any partial calendar year at the beginning or end of the Term, the Base
Gross Sales shall be pro-rated based on the actual number of days in such year.
For the purpose of this paragraph, any partial calendar year at the beginning of
the Term shall be deemed to commence on the day the Tenant first opens the
Demised Premises for business. Within sixty (60) days after the end of each
calendar year (including any partial calendar year at the beginning of the Term)
and after the end of the Term, Tenant shall submit to Landlord a statement
certified by an independent certified public accountant stating the Gross Sales
(including an itemization of all claimed deductions therefrom), for such
calendar year or partial calendar year, as the case may be. During any period
of time (computed on a daily basis) when the Demised Premises is not open for
business to the public when required under this Lease to be so open, then, for
purposes of computing the Percentage Rent hereunder, Gross Sales for the
period(s) of the immediately preceding calendar year corresponding to the
periods of closure of the Demised Premises during the then current calendar year
(or in the case of a closing during the first year of the Term, Gross Sales for
such year, or portion thereof, shall be increased proportionally to correspond
to the periods of closure of the Demised Premises) shall be added to the Gross
Sales for such current calendar year. Tenant shall require its subtenants,
concessionaires and licensees to furnish similar statements as are required
hereunder. All such statements shall be in such form and style and contain such
details and breakdown as Landlord may reasonably require. If Tenant shall fail
to prepare and deliver said statement of Gross Sales required herein, Landlord,
after thirty (30) days written notice to Tenant and the Tenant's failure to cure
within said thirty-day period, may do any and all of the following: (i) elect
to treat Tenant's failure to report as a default of this Lease, with respect to
which Tenant shall not be entitled to any further notice or opportunity to cure;
(ii) elect to make an audit of all books and records of Tenant which in any way
pertain to or show Gross Sales and to prepare the statement or statements which
Tenant has failed to prepare and deliver. The statement or statements so
prepared by Landlord shall be conclusively binding on Tenant, and Tenant shall
pay on demand all expenses of such audit and of the preparation of any such
statements and all sums as may be shown by such audit to be due as Percentage
Rent.
B. Tenant will install, and during the Term of this Lease will
maintain, a cash register or registers capable of recording continuous totals of
all receipts of sales made and services rendered in and from the Demised
Premises. For at least 36 months after the expiration of each calendar year
(including any partial calendar year at the beginning of the Term) and after the
end of the Term, Tenant shall keep and maintain (and shall cause all subtenants,
concessionaires and licensees to keep and maintain) in the Demised Premises or
the main office of Tenant full and accurate books of account and records
(including, without limitation, the records of the aforementioned cash register
or registers) from which the Gross Sales can be determined for the period in
question. Landlord shall have the right from time to time during such
thirty-six (36) month period, during Tenant's business hours and upon reasonable
prior notice to Tenant, to inspect and audit all such books and records relating
to Gross Sales, and Tenant, each subtenant, concessionaire and licensee will
produce the same on request of Landlord. If any such inspection and audit
discloses that the Gross Sales were understated, Tenant shall forthwith pay to
Landlord any additional Percentage Rent shown to be payable, and if the Gross
Sales for any
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calendar year or partial calendar year were understated by more than four (4%)
percent, Tenant shall also pay the cost of Landlord's inspection and audit.
Landlord does not, in any way or for any purpose, become a partner or joint
venturer with Tenant hereunder. The provisions of this Lease relating to
Percentage Rent are included solely for the purpose of providing a method
whereby rentals are to be measured and ascertained.
3.03 TAXES. Landlord shall estimate Tenant's annual proportionate share of
Real Estate Taxes (which estimate may be changed by Landlord, at any time and
from time to time), and Tenant shall pay to Landlord 1/12th of the amount so
estimated on the first day of each calendar month in advance. Until Landlord
shall have delivered a revised estimate to Tenant, Tenant shall continue to pay
its proportionate share of Real Estate Taxes at the same rate as Tenant was then
paying (I.E. Tenant shall continue to make the same monthly installment until a
revised estimate is delivered). After Landlord delivers a revised estimate,
Tenant shall pay to Landlord any shortfall between the estimated monthly
payments, as revised, and the actual payments made to date for the calendar year
in question. Tenant shall also pay to Landlord on demand from time to time the
amount which, together with the previously specified monthly installments, will
be sufficient to pay Tenant's proportionate share of any such Real Estate Taxes
30 days prior to the date when such Real Estate Taxes shall first become due.
If Tenant's proportionate share eventually calculated for any period is more or
less than the amount paid for such period, Tenant shall pay to Landlord the
deficiency within ten (10) days of demand, or Landlord shall credit the excess
against the next installment of Fixed Rent or Additional Rent coming due or, if
the Lease has expired, pay the excess to Tenant. If the Rent Commencement Date
hereunder is not the first day of the month, the Real Estate Tax Charge for the
period commencing on the Rent Commencement Date and ending on the last day of
the month in which the Rent Commencement Date occurs shall be apportioned on the
basis of the number of days in said month and shall be paid on the Rent
Commencement Date. Any Real Estate Taxes for a real estate fiscal tax year, a
part of which is included within the period in question for the above
computations and a part of which is not so included, shall be apportioned on the
basis of the number of days in the real estate fiscal tax year included in the
period in question for the purpose of making the above computations. In
addition, if any assessment or tax is payable in installments, the Real Estate
Taxes for any tax year shall include only such installments with respect to such
assessment of tax as are allocable to such tax year. If Landlord shall have the
right to elect the period over which such assessment or tax may be paid,
Landlord shall be deemed to have elected the longest period of time available
for the purposes of computing Tenant's liability for such assessment or tax
pursuant to Section 3.03 of this Lease. If, after Tenant shall have made a
payment of Real Estate Taxes, Landlord shall have received a refund of any
portion of the Real Estate Taxes on which such payment shall have been based,
Landlord shall pay to Tenant that proportion of the net refund, after deducting
all expense(s) (including, without limitation, interest, penalties, reasonable
attorneys' fees and appraisers' fees) incurred in obtaining such refund and not
already included in Real Estate Taxes, which the Real Estate Taxes in question
paid by Tenant bear to the entire amount of Real Estate Taxes included in the
tax bill in question and paid with respect to the Shopping Center. Tenant's
proportionate share of Real Estate Taxes shall be the Real Estate Taxes for the
period in question, multiplied by a fraction the numerator of which shall be the
Floor Space of the Demised Premises and the denominator of which shall be
ninety-eight percent (98%) of the Floor Space of that portion of the Shopping
Center which shall be included in the tax bill(s) in question. Landlord may, at
its option, elect to combine some or all of any separately assessed parcels or
any parcels not included in the tax bill in question in calculating Tenant's
proportionate share of Real Estate Taxes, in which event the denominator of such
fraction shall be ninety-eight percent (98%) of the Floor Space of such portions
of the Shopping Center included in the applicable combination of such parcels.
Tenant's obligation to make any payment due pursuant to the provisions of this
Section shall survive the expiration of the Lease.
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3.04 COMMON AREA CHARGE. A. Landlord shall estimate Tenant's annual
proportionate share of Common Area Costs (which estimate may be changed by
Landlord from time to time), and Tenant shall pay to Landlord 1/12th of the
amount so estimated on the first day of each calendar month in advance. Until
Landlord shall have delivered a revised estimate to Tenant, Tenant shall
continue to pay its proportionate share of Common Area Costs at the same rate as
Tenant was then paying (I.E. Tenant shall continue to make the same monthly
installment until a revised estimate is delivered). After Landlord delivers a
revised estimate, Tenant shall pay to Landlord any shortfall between the
estimated monthly payments, as revised, and actual payments made to date for the
calendar year in question. If the Rent Commencement Date is not the first day
of a month, the Common Area Charge for the period commencing on the Rent
Commencement Date and ending on the last day of the month in which the Rent
Commencement Date occurs shall be apportioned on the basis of the number of days
in said month and shall be paid on the Rent Commencement Date. After the end of
each calendar year and after the end of the Term, Landlord shall submit to
Tenant a statement in reasonable detail stating Tenant's proportionate share of
the Common Area Costs for such calendar year, or partial calendar year in the
event the Term shall end on a date other than a December 31st, as the case may
be, and stating the total Common Area Costs for the period in question and the
figures used for computing Tenant's proportionate share. If Tenant's
proportionate share so stated for such period is more or less than the amount
paid for such period, Tenant shall pay to Landlord the deficiency within 10 days
after submission of such statement of Tenant's proportionate share, or Landlord
shall credit the excess against the next installments of Fixed Rent and
Additional Rent coming due, or refund such excess to Tenant at the end of the
term. Tenant's obligation to make any payment due pursuant to the provision(s)
of this Section shall survive the expiration of the Lease. Tenant's
proportionate share of the Common Area Costs shall be the Common Area Costs
multiplied by a fraction the numerator of which shall be the Floor Space of the
Demised Premises and the denominator of which shall be ninety-eight percent
(98%) of the Floor Space of the Shopping Center. All items of Common Area Costs
will be stated and all computations shall be made in accordance with generally
accepted accounting principles.
B. Tenant shall also have the right, at Tenant's expense, to audit
Landlord's expenditures one time each calendar year during the Term, provided
such audit shall be conducted during reasonable hours and only after reasonable
notice to Landlord and shall be commenced within three (3) years of the
expiration of the calendar year in question. The information contained in such
audit shall be held confidential by Tenant except with respect to any litigation
between Landlord and Tenant pertaining to Common Area Costs and except as
required by law. If Tenant shall be entitled to any refund as a result of such
audit, such refund shall be forthwith paid to Tenant, and if the Common Area
Charge for any calendar year or partial calendar year was overstated by more
than 4%, Landlord shall also pay the reasonable costs of Tenant's audit.
3.05 ADVERTISING FEE. Commencing upon the Rent Commencement Date, Tenant
shall pay, as additional rent to Landlord the Advertising Fee, in equal monthly
installments in advance on the first day of each month during the Term, except
that if the Rent Commencement Date is not the first day of a month, the
Advertising Fee for the period commencing on the Rent Commencement Date and
ending on the last day of the month in which the Rent Commencement Date occurs
shall be apportioned on the basis of the number of days in said month and paid
on the Rent Commencement Date. These charges shall be increased each January
1st commencing the January 1st following the Rent Commencement Date by the
percentage increase in the Price Index during the one (1) year period from the
second preceding October 1 to the immediately preceding September 30, but in no
event shall
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such increase be less than three percent (3%) or greater than ten percent (10%)
of the charges then in effect.
3.06 LATE CHARGES AND RETURN CHECK CHARGES. Tenant acknowledges that late
payment to Landlord of any Fixed Rent or Additional Rent will cause Landlord to
incur costs not contemplated by this Lease, the exact costs being extremely
difficult to ascertain. Accordingly, if payment of any Fixed Rent or Additional
Rent shall not have been paid by the date on which such amount was due and
payable a late charge equal to the greater of (i) Fifty Dollars ($50.00) and
(ii) one and one-half percent (11/2%) per calendar month or any part thereof (or
the then maximum lawful interest rate), from the date on which such amount was
due, on the amount overdue shall, at the Landlord's option, be payable as
damages for Tenant's failure to make prompt payment. In addition to any other
penalties or remedies available to Landlord in the event of any late payment by
Tenant, if any check in payment of any Fixed Rent or Additional Rent is returned
to Landlord by Tenant's bank by reason of insufficient funds, uncollected funds
or otherwise, a return check administrative charge of Fifty Dollars ($50.00)
shall be payable to Landlord by Tenant. The late charges and return check
administrative charges for any month shall be payable the first day of the
following month, and in default of payment of any such charges, Landlord shall
have (in addition to all other remedies) the same rights as provided in this
Lease for nonpayment of Rent. Landlord and Tenant agree that the foregoing late
charges and return check administrative charges represent a reasonable estimate
of the costs which Landlord will incur by reason of late payment by Tenant and
returned checks, and are fair compensation to Landlord for its loss suffered by
such late payment or returned check. Nothing in this Section contained and no
acceptance of late charges by Landlord shall be deemed to extend or change the
time for payment of Fixed Rent or Additional Rent.
3.07 SECURITY. Tenant has deposited with Landlord the Security Deposit, or
if Tenant has not deposited same with Landlord, Tenant will do so within 10 days
after demand therefor by Landlord. The Security Deposit shall be held by
Landlord as security for the faithful performance by Tenant of all of Tenant's
obligations under this Lease. The Security Deposit shall not bear interest.
The Security Deposit shall not be mortgaged, assigned, transferred or encumbered
by Tenant without the consent of Landlord, and any such act on the part of
Tenant shall be without force and effect and shall not be binding upon Landlord.
If any Fixed Rent or Additional Rent shall be overdue and unpaid, or if Tenant
shall fail to observe or perform any of its obligations under this Lease, then
Landlord may, at its option and without prejudice to any other remedy which
Landlord may have on account thereof, appropriate and apply said entire Security
Deposit or so much thereof as may be necessary to compensate Landlord in respect
of the payment of Fixed Rent or Additional Rent or damage sustained by Landlord
due to such breach on the part of Tenant; and Tenant shall forthwith upon demand
restore said Security Deposit to the original sum deposited and failure to do so
shall be considered a default under this Lease. Should Tenant comply with all
of its obligations under this Lease and promptly pay all of the Fixed Rent and
Additional Rent, the balance of the Security Deposit shall be returned in full
to Tenant at the end of the Term after delivery of possession of the Demised
Premises to Landlord in accordance with the terms of this Lease and after the
final adjustment for Fixed Rent and Additional Rent is made. In the event of
bankruptcy or other creditor-debtor proceedings by or against Tenant, the
Security Deposit and all other securities shall be deemed to be applied first to
the payment of Fixed Rent and Additional Rent for all periods prior to the
filing of such proceedings. Landlord may deliver the Security Deposit to the
transferee of Landlord's interest in the Demised Premises in the event that such
interest is transferred, and upon notice thereof by the transferor to Tenant,
the transferor shall be discharged from any further liability with respect to
such funds, and this provision shall also apply to any subsequent transfers.
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3.08 ACCORD AND SATISFACTION. No payment by Tenant or receipt by Landlord
of any lesser amount than the amount stipulated to be paid hereunder shall be
deemed other than on account of the earliest stipulated Fixed Rent or Additional
Rent; nor shall any endorsement or statement on any check or letter be deemed an
accord and satisfaction, and Landlord may accept any check or payment without
prejudice to Landlord's right to recover the balance due or to pursue any other
remedy available to Landlord.
ARTICLE IV
COMMON AREAS AND PARKING
4.01 MAINTENANCE OF AND CHANGES IN COMMON AREAS. Subject to the provisions
of Section 7.04, Landlord will operate, manage, equip, light, repair and
maintain, or cause to be operated, managed, equipped, lighted, repaired and
maintained, the Common Areas for their intended purposes. Landlord reserves the
right, at any time and from time to time to make changes, additions, alterations
or improvements in and to such Common Areas (including, without limitation, the
right to construct, within the Common Areas, kiosks, fountains, bird cages,
aquariums, planters, pools and sculptures, and to install vending machines,
telephone booths, benches and the like), provided same shall not unreasonably
block or interfere with Tenant's and customer's means of ingress or egress to
and from the Demised Premises, or unreasonably obstruct the view of Tenant's
sign or display windows.
4.02 USE OF COMMON AREAS. Tenant and its subtenants, concessionaires and
licensees and their respective officers, employees, agents, customers and
invitees, shall have the non-exclusive right, in common with Landlord and all
others to whom Landlord has granted or may hereafter grant such rights, but
subject to the rules and regulations referred to in Section 15.01, to use the
Common Areas. Landlord reserves the right, at any time and from time to time,
to close temporarily all or any portions of the Common Areas for any of the
following purposes when in Landlord's reasonable judgment any such closing is
necessary or desirable: to make repairs or changes therein or to effect
construction, repairs or changes within the Shopping Center, to prevent the
acquisition of public rights in such areas, to discourage non-customer parking
or to protect or preserve persons or property and Landlord may do such other
acts in and to the Common Areas as in its judgment may be desirable.
Notwithstanding the foregoing, in exercising its rights under subsection 4.02,
Landlord shall not unreasonably interfere with the visibility of, or access to,
or ingress from, the Demised Premises, and shall use reasonable effort to
complete any repairs, construction or changes in a timely manner.
4.03 PARKING. Tenant and its officers, agents, and employees shall park
their vehicles only in areas from time to time designated by Landlord as the
areas for such parking. In addition, Landlord shall specifically have, without
limitation, the right to require Tenant and Tenant's agents, servants and
employees to park away from the Shopping Center, even to the extent that
Landlord may prohibit Tenant and Tenant's agents, servants and employees from
parking at the Shopping Center and accordingly, they may be required to park
upon public streets or in public parking areas at no cost to such employees, and
further provided such requirements are uniformly applied to the agents, servants
and employees of all tenants at the Shopping Center and such parking areas are
reasonably safe and reasonable access to and from the Demised Premises is
provided to Tenant and its agents, servants and employees. Tenant shall, upon
written notice from Landlord, within five (5) days, furnish Landlord, or its
authorized agent, the State automobile license tag number assigned to its
automobile or automobiles and the automobiles of all of its officers, agents and
employees employed in the Demised Premises. Landlord, after notice to Tenant
that Tenant or any of its officers, agents or employees are not parking in said
designated parking areas or off-premises, as applicable, may, at its option, in
addition to any other
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remedies it may have, tow away such vehicles at Tenant's expense, and, in
addition, after the second such notice in respect of any such violating vehicle,
Tenant shall upon demand pay to the Shopping Center as an additional fee to be
applied for advertising the sum of $50.00 for each subsequent violation, such
payment to be deemed Additional Rent. Tenant shall not at any time park or
permit the parking of any truck or any delivery vehicle in the parking area, and
the Landlord hereby reserves the exclusive right with respect to the use of the
Common Areas for advertising purposes. Tenant shall require all trucks or other
vehicles serving Tenant to use the service area designated by Landlord. Tenant
shall cause all vehicles servicing Tenant to be promptly loaded or unloaded and
removed; all such trucks owned or operated by, in behalf of, or servicing,
Tenant, shall be compelled by Tenant to comply in all respects with the rules
and regulations governing use of truck access, parking, loading and unloading
facilities, and permissible hours and places therefor, as the same may be from
time to time modified or amended by Landlord in its sole and absolute
discretion; and any breach thereof or failure to comply therewith shall be
deemed for all purposes of this Lease to be a breach of or failure to comply
with such rules and regulations by Tenant. In addition to the foregoing,
Landlord reserves the right, at any time and from time to time, to impose
parking charges.
ARTICLE V
UTILITIES AND SERVICES
5.01 UTILITIES AND MECHANICAL MAINTENANCE. Landlord shall provide the
connections specified in Exhibit "A" to enable Tenant to receive those utilities
and services specified in Exhibit "A". Tenant shall make all necessary
arrangements for all such utilities to be supplied to the Demised Premises.
During any period Landlord uses Massachusetts Electric to provide electrical
services to the Shopping Center, Tenant agrees to use Massachusetts Electric for
the providing of electric service to the Demised Premises. Landlord shall not
be liable to Tenant in damages or otherwise (including but not limited to loss
of business) for any failure of Tenant to make arrangements with the appropriate
utility companies for or to obtain any utilities or services, or for any failure
of Tenant to heat or air condition or to provide hot water for, the Demised
Premises; Tenant shall not be released or excused from the performance of any of
its obligations under this Lease for any such failure or for any interruption or
curtailment of any such utilities or services, and no such failure, interruption
or curtailment shall constitute a constructive or partial eviction. Tenant
shall not permit or suffer any utility facility to be overloaded. At all times
during the Term of this Lease, Tenant shall maintain a maintenance contract with
a qualified reputable service maintenance company reasonably designated by
Landlord, for the maintenance and repair of the heating, ventilation and
air-conditioning equipment servicing the Demised Premises which contract shall
include specific provisions for regularly scheduled periodic routine
maintenance. Tenant shall furnish Landlord with a true copy thereof.
5.02 PAYMENT FOR UTILITIES AND SERVICES. Tenant shall pay directly to the
utility companies or governmental units promptly as and when due all separately
metered or assessed charges for utilities and services used or consumed in or in
connection with the Demised Premises, including, without limitation, water,
sewer, electricity, gas, oil, heat, steam, air conditioning and heated and/or
chilled water, but not including any utilities otherwise included in Real
Estate Taxes as provided in Paragraph M of Section 1.02. If any utilities or
services are not separately metered or assessed or are only partially separately
metered or assessed and are used in common with other tenants or occupants of
the Shopping Center, other than utilities included in Real Estate Taxes as
provided in Paragraph M of Section 1.02, Tenant shall pay to Landlord on demand
Tenant's proportionate share of such charges for utilities and/or services,
which shall be such charges multiplied by a fraction the numerator of which
shall be the Floor Space of the Demised Premises and the denominator of which
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shall be the Floor Space of all tenants or occupants of the Shopping Center
using such utilities and/or services. If Landlord is permitted by law to
provide electricity to the Demised Premises by re-registering meters or
otherwise and to collect any charges for such utilities, Landlord shall have the
right to do so, in which event Tenant shall pay to Landlord upon receipt of
bills therefor charges for such utilities provided the rates for such utilities
shall not be more than the rates Tenant would be charged for such utilities if
furnished directly to Tenant by the utility companies or governmental units
which would otherwise have furnished such utilities. Landlord represents that
the utilities serving the Demised Premises will be separately metered.
ARTICLE VI
USE AND ENJOYMENT OF DEMISED PREMISES
6.01 PERMITTED USES. Tenant shall use the Demised Premises solely for the
purpose of conducting the Permitted Uses under the Tenant's Trade Name, and
Tenant shall not use or permit or suffer the use of the Demised Premises for any
other purpose whatsoever. Tenant agrees that at all times during the Term it
shall operate a true "Outlet" retail store, selling generally such brand name
merchandise at such prices as shall be typical of all other factory stores
operated under Tenant's Trade Name and Tenant shall discount one hundred percent
(100%) of its merchandise offered for sale at the Demised Premises by at least
thirty percent (30%) from the regular suggested retail price thereof (which
price shall be the original retail catalog price) and shall display two (2)
prices (the regular suggested retail price and the discounted selling price) on
each item of merchandise offered for sale.
6.02 OPERATION OF BUSINESS. Except when and to the extent that the Demised
Premises shall be untenantable by reason of damage by fire or other casualty,
Tenant shall (a) fully stock and adequately staff the Demised Premises with
trained personnel and shall continuously and uninterruptedly use, occupy,
operate and conduct Tenant's business in the entire Demised Premises, (b) except
as otherwise expressly provided herein, keep the Demised Premises open for
business during and only upon, all business hours on all business days when the
Shopping Center is open for business as determined by Landlord and as may be
changed from time to time by Landlord, (c) maintain displays of merchandise in
Tenant's display windows, if any, (d) keep Tenant's display windows illuminated
during those hours and days that the Shopping Center is open for business, (e)
use for office, clerical, storage or other non-selling purposes only such space
as is reasonably required for the proper operation of Tenant's business in the
Demised Premises, (f) use the insignia or other identifying mark or logo of the
Shopping Center designated by Landlord and the name of the Shopping Center in
Tenant's advertising of the Demised Premises, whether printed or visual, and in
Tenant's stationery and other printed material, (g) use the Tenant's Trade Name
on store signs and promotional material (and Tenant hereby grants Landlord the
right to use the Tenant's Trade Name and the brand names of Tenant in brochures,
newspapers, advertisements and other promotional material associated with the
Shopping Center), and use the name of the Shopping Center and display it
prominently in all of its advertising (provided, however that each such use of
the name of the Shopping Center shall utilize the proper name, style and/or logo
of the Shopping Center as shall be specified by Landlord), (h) apply for,
secure, maintain and comply with all licenses or permits which may be required
for the conduct of the Permitted Use and pay, if, as and when due all license
and permit fees and charges of a similar nature in connection therewith, (i)
keep the Demised Premises (including, without limitation, exterior and interior
portions of all windows, doors and all other glass) in a neat, clean and safe
condition, (j) maintain the Demised Premises and Tenant's personal property
therein as an attractive shopping area in accordance with the general character
of the Shopping Center, (k) fully cooperate with Landlord in promoting the use
of such trade names and slogans as Landlord may adopt for the Shopping Center,
(l) pay before delinquency any and all taxes, assessments and public charges,
levied,
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assessed or imposed upon Tenant's business or the rents payable by Tenant
hereunder or upon Tenant's interest in this Lease or use or occupancy of the
Demised Premises or leasehold improvements or fixtures, furnishings, equipment
or personal property in the Demised Premises, (m) handle and dispose of all
rubbish, garbage and waste from Tenant's operations in accordance with the rules
and regulations established by Landlord including, but not limited to, the use
of Landlord's approved garbage contractor and the execution of such contractor's
standard agreement, and not permit the accumulation or burning of any garbage
in, on or about any part of the Shopping Center and not permit any garbage or
rubbish to be collected or disposed of from the Demised Premises except by a
person approved in advance by Landlord, (n) take no action which would create
any work stoppage, picketing, labor disruption or dispute, or any interference
with the business of Landlord or any tenant or occupant in the Shopping Center
or with the rights and privileges of any customer or other person lawfully in or
upon the Shopping Center, nor cause any impairment or reduction of the good will
of the Shopping Center, (o) accept from customers credit cards issued by a
commercial or savings bank or savings and loan association, and (p) keep all
utilities operational at such times as shall be necessary so as to prevent
damage to the Demised Premises by the elements. Tenant shall not (i) operate
its business under this Lease so as to violate any restrictive covenant or
restrictive agreement contained in any other lease of which Tenant has
knowledge, (ii) conduct any real or fictitious "going-out-of-business", auction,
distress, fire or bankruptcy or similar sale, (iii) sell, display or distribute
any alcoholic liquors or alcoholic beverages for consumption on or off the
Demised Premises, (iv) use the Common Areas or any other premises outside of the
Demised Premises for the sale or display of any merchandise, for solicitations
or demonstrations or for any other business, occupation, undertaking or
activity, (v) use or permit or suffer the use of any portion of the Demised
Premises for improper, illegal or immoral purpose or for any activity of a type
which is not generally considered appropriate for the Shopping Center or which
will in any way conflict with any Requirement, (vi) use the plumbing facilities
for any purposes other than that for which they were constructed, or dispose of
any garbage or other foreign substance therein, whether through the utilization
of so-called disposal or similar units, or otherwise, (vii) park trucks or other
delivery vehicles so as to unreasonably interfere with the use of any driveways,
walks, roadways, highways, streets, malls, parking areas or other Common Areas,
(viii) suffer, permit or commit any waste or any nuisance or other act or thing
in the Demised Premises which may disturb any other tenant or occupant in the
Shopping Center, (ix) permit any coin or token operated vending or amusement
machine or similar device or pay telephone in the Demised Premises, (x) permit
music or any other sounds in the Demised Premises to be heard outside of the
Demised Premises, (xi) use or permit or suffer the use of any machines or
equipment in the Demised Premises which cause vibration or noise that may be
transmitted to or heard in any other building in the Shopping Center or in any
part of the Common Areas, (xii) use or permit or suffer any undesirable odor,
fumes or vapors to emanate from the Demised Premises, (xiii) carry on the
business under any name or in any manner or permit any advertising which might,
in the judgment of Landlord, reflect, or tend to reflect adversely on the
Shopping Center, or confuse or mislead or tend to confuse or mislead the public
in any apparent connection or relationship between Landlord and Tenant, (xiv)
permit window cleaning or other maintenance and janitorial services in and for
the Demised Premises to be performed except by such person as shall be approved
by Landlord and except during reasonable hours designated for such purposes by
Landlord, (xv) use any fork-lift truck, tow truck or any other machine for
handling freight in the interior delivery system, if any, except for truck
passageway portions thereof, or in the Demised Premises, unless the same is
powered by electricity, (xvi) install, operate, or maintain in the Demised
Premises any electrical equipment which will overload the electrical system
therein, or any part thereof, beyond its reasonable capacity for proper and safe
operation as determined by Landlord in light of the over-all system and
requirements therefor in the Shopping Center or which does not bear underwriter
approval, or (xvii) place a load on any floor in the Demised Premises or the
Shopping Center exceeding the floor load per square
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foot which such floor was designed to carry, or install, operate or maintain
therein any heavy item of equipment except in such manner as to achieve a proper
distribution of the weight. Tenant covenants and agrees that should Tenant fail
to comply with the provisions of Subparagraph (b) of this Section then in
addition to, but not in limitation of, any and all other remedies which may be
available to Landlord, Tenant shall pay to Landlord, upon demand, the greater of
(i) $500.00 or (ii) one and one-half (1-1/2) the PER DIEM amount of Fixed Rent
and Additional Rent (including Percentage Rent based on the monthly average over
the previous 12 months) set forth herein for every day that Tenant is closed in
violation of the provisions of such Subparagraph to compensate Landlord for the
damage to the Shopping Center caused by such closure.
6.03 SIGNS. Tenant shall fabricate and install at Tenant's expense a
suitable identification sign or signs of such size, design and character as
Landlord shall designate and/or approve. All signs shall be in accordance with
the signage policy or sign criteria established by the Landlord and shall be
installed at a place or places designated by Landlord. Tenant shall submit for
Landlord's approval one (1) shop drawing prepared by a sign company approved by
Landlord at least sixty (60) days prior to the scheduled opening of the Shopping
Center and such sign company shall fabricate and install such sign or signs.
Tenant shall maintain any such sign or signs in good order and repair. Other
than such permitted signs, Tenant shall not place or install, or permit or
suffer to be placed or installed, or maintain, any sign upon or outside of the
Demised Premises or in any part of the Shopping Center unless approved by
Landlord. Tenant shall not place, install or maintain, or permit or suffer to
be placed, installed or maintained, on the exterior of the Demised Premises, any
awning, canopy, banner, flag, pennant, aerial, antenna or the like, nor place or
maintain on the interior or exterior of the glass of the windows or the doors of
the Demised Premises any sign, nor place in the display windows, if any, any
signs other than signs of a reasonable size on the floor of the display windows
identifying items of merchandise displayed therein.
6.04 COMPLIANCE WITH LAWS. Tenant shall comply with the certificate of
occupancy relating to the Demised Premises and with the Requirements.
6.05 ACCESS TO PREMISES AND EXCAVATION. Landlord shall have the right to
enter upon and in the Demised Premises at all reasonable times to examine the
same and to make such repairs, alterations, improvements and additions in the
Demised Premises or in the buildings in the Shopping Center as Landlord may deem
necessary, and Landlord shall be allowed to take all materials into and upon the
Demised Premises that may be required therefor without the same constituting an
eviction of Tenant, in whole or in part, and the Fixed Rent and Additional Rent
shall in no way abate while such repairs, alterations, improvements or additions
are being made by reason of loss or interruption of the business of Tenant due
to the prosecution of any such work; provided, however, Landlord shall use
reasonable efforts not to unreasonably interfere with or interrupt Tenant's
business in the Demised Premises, but in no event shall Landlord be required to
incur any additional expense for work to be done during hours or days other than
regular business hours and days. Landlord shall also have the right to enter
upon the Demised Premises at reasonable times to show them to prospective
purchasers, lessees (under ground or underlying leases) and mortgagees of all or
any part of the Shopping Center. During the six months prior to the expiration
of the Term, Landlord may show the Demised Premises to prospective tenants of
the Demised Premises, and during said period Landlord may also place upon the
Demised Premises a "To Let" or "For Rent" sign, which sign shall not be removed,
obliterated or hidden by Tenant. Landlord reserves the right, at any time and
from time to time, to install, maintain, use, repair and replace pipes, duct
work, conduits, utility lines and wires through hung ceiling space, column space
and partitions in the Demised Premises and beneath the lower floor slabs of the
Demised Premises, to use all or any part of the side walls, rear walls and roof
of the Demised Premises for any purpose, to erect additional stories or other
structures over
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all or any part of the Demised Premises for others to occupy and to erect
temporary scaffolds and other aids to construction on the exterior of the
Demised Premises, provided that access to, and visibility of, the Demised
Premises shall not be denied. Nothing herein contained, however, shall be
deemed or construed to impose upon Landlord any obligation, responsibility or
liability whatsoever for the care, supervision or repair of the Demised Premises
other than as in this Lease elsewhere provided. If an excavation or other
building operation shall be made upon land or premises above, below or adjacent
to the Demised Premises, Tenant shall give to the person authorized to cause
such work to be done permission and a license to enter upon and in the Demised
Premises for the purpose of doing such work as such person deems necessary to
preserve the building of which the Demised Premises is a part from damage and to
support the same with proper foundations, without the same constituting an
eviction of Tenant, in whole or in part, and there shall be no abatement of
Fixed Rent or Additional Rent; provided, however, Landlord shall use reasonable
efforts not to unreasonably interfere with or interrupt Tenant's business in the
Demised Premises.
6.06 MECHANICS' LIENS. Nothing contained in this Lease shall be deemed,
construed or interpreted to imply any consent or agreement on the part of
Landlord to subject Landlord's interest or estate to any liability under any
mechanic's or other lien law. If any mechanic's or other lien or any notice of
intention to file a lien is filed against the Shopping Center, or any part
thereof, or the Demised Premises, or any part thereof, for any work, labor,
services or materials claimed to have been performed or furnished for or on
behalf of Tenant or anyone holding any part of the Demised Premises through or
under Tenant, Tenant shall cause the same to be canceled and discharged of
record by payment, bond or order of a court of competent jurisdiction within 20
days after notice by Landlord to Tenant. Landlord shall have the right to post
any notices of non-responsibility which may be provided for by the statutes of
the state in which the property is located which Landlord may deem necessary for
the protection of Landlord and Landlord's interest in the Demised Premises from
mechanics' liens or liens of a similar nature; and Tenant shall, before the
commencement of any work which might result in any such lien, give written
notice to Landlord of its intention to do so in sufficient time to enable the
posting of such notices.
6.07 RENT ABATEMENT. Notwithstanding anything contained in this Lease to
the contrary, if by reason of any of Landlord's work to the Common Area or the
Demised Premises or by failure of utilities due to the intentional or negligent
act of Landlord or its, agents, contractors, servants or employees, and provided
Tenant shall have given Landlord notice of such condition, Tenant closes the
Demised Premises for a period of three (3) or more consecutive days because
Tenant is not able to operate the Demised Premises, Tenant shall be entitled to
an abatement of Fixed Rent from the fourth day after closure until the earlier
of (a) such date that Tenant shall have reopened the Demised Premises for
business or (b) such date that the condition causing such closing has been
eliminated.
ARTICLE VII
ALTERATIONS, REPAIRS AND CHANGES
7.01 ALTERATIONS BY TENANT. Tenant shall not make or cause to be made any
improvements, alterations, additions, changes, replacements or installations to
the Demised Premises, or make any cuts in the walls, ceilings, roofs, or floors
thereof, or change the exterior color or architectural treatment of the Demised
Premises, without on each occasion first obtaining the consent of Landlord, and
if such consent is granted, Tenant shall carry such worker's compensation and
general liability insurance and such other insurance as Landlord may require,
naming Landlord as an additional insured. Tenant shall submit to Landlord plans
and specifications for such work at the
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time Landlord's consent is sought. Any such improvements, alterations,
additions, changes, replacements or installations will be performed in a good
and workmanlike manner in accordance with the approved plans and specifications
and in compliance with all Requirements and shall be performed and completed by
Tenant in an expeditious manner. The cost of such improvements, alterations,
additions, changes, replacements or installations shall be paid in cash or its
equivalent so that the Demised Premises shall at all times be free of liens for
work, labor, services or materials claimed to have been performed or furnished
for or on behalf of Tenant or anyone holding any part of the Demised Premises
through or under Tenant. All contractors and subcontractors performing work in
or to the Demised Premises shall be approved by Landlord prior to the
performance of any such work, which consent shall not be unreasonably withheld
or delayed. Tenant shall have the right to make nonstructural alterations or
additions costing, in the aggregate during the Term, not more than $25,000
without the consent of Landlord, provided (a) Tenant shall otherwise comply with
the requirements of Section 7.01 including, but not limited to, the carrying of
insurance as provided in said Section and the submission to Landlord of the
plans and specifications for such alterations or additions and (b) such
alterations or additions shall, when completed, be of such a character which
will not reduce the value, rentability or usefulness of the Demised Premises or
will not affect the facade, mechanical, electrical or structural components of
either the Demised Premises or the Shopping Center or which would not reduce the
Floor Space of the Demised Premises. All other proposed additions and
alterations shall be subject to the consent of the Landlord, which consent shall
not be unreasonably withheld.
7.02 REPAIRS BY LANDLORD. Landlord shall make necessary structural repairs
to the Demised Premises and the building of which it is a part (but excluding
windows and window frames, doors, plate glass, store fronts, showcases and
signs) and shall keep in good condition and repair the foundations and roof of
the Demised Premises and those portions of the utility systems serving the
Demised Premises which are for common use. Landlord shall not be required to
make any such repairs where same were caused or occasioned by any act, omission
or negligence of Tenant, any subtenant, concessionaire or licensees of Tenant,
or any of their respective officers, employees, agents, customers, invitees or
contractors. Landlord shall not be required to commence any such repair until
notice shall be received from Tenant specifying the nature of the repair. The
provisions of this Section shall not apply in the case of damage by fire or
other casualty or by eminent domain, in which event the obligations of the
parties shall be as provided in other Sections of this Lease. All costs and
expenses incurred by Landlord pursuant to the provisions of this Section shall
be deemed to constitute Common Area Costs.
7.03 REPAIRS AND MAINTENANCE BY TENANT. Except for repairs required to be
performed by Landlord under Section 7.02, Tenant shall make all repairs and
replacements to, and shall keep clean, neat, safe, sanitary, in good order,
repair and condition (including all painting and decorating necessary to
maintain at all times a clean and sightly appearance) and free of vermin, the
Demised Premises, including both inside and the outside, and any equipment,
facilities, fixtures and systems including but not limited to fire detection
and/or prevention systems therein. In making repairs, Tenant shall use
materials equal in kind and quality to the original work. Tenant shall repaint
and refurbish the Demised Premises at reasonable periodic intervals to assure
that the Demised Premises is kept in a first-class and attractive condition
through the Term. Tenant shall keep in full force and effect during the Term
hereof a maintenance contract for the HVAC system with a company reasonably
designated by Landlord, which contract shall include specific provisions for
regularly scheduled periodic routine maintenance. Tenant shall deliver to
Landlord a copy of the same and all renewals thereof. The provisions of this
Section shall not apply in the case of reasonable wear and tear or damage by
fire or other casualty or by eminent domain, in which event the obligations of
the parties shall be as provided in other Sections of this Lease. All
alterations and repairs hereunder shall be performed by contractors approved by
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Landlord and all such work shall conform to existing structures and quality at
the Shopping Center.
7.04 CHANGES BY LANDLORD. Landlord reserves the right, at any time and
from time to time, to increase, reduce or change the number, type, size,
location, elevation, nature and use of any of the Common Areas and any of the
buildings and other improvements in the Shopping Center, including, without
limitation, the right to move and/or remove same and to add additional stories
thereon, provided same shall not unreasonably block or interfere with Tenant's
means of ingress or egress to and from the Demised Premises or materially
interfere with the substantive visibility of Tenant's permitted exterior signs
or display windows. Landlord shall not change or alter the Common Areas in any
manner which would reduce the existing parking facilities of the Shopping Center
to a ratio of less than 4.0 spaces to each 1,000 square feet of Floor Space of
all leasable Floor Space in the Shopping Center.
7.05 LANDLORD'S CONSENT. In no event shall Landlord be required to consent
to any improvements, alterations, additions, changes, replacements or
installations which, when completed, will, in Landlord's judgment, be of such a
character which will reduce the value, rentability or usefulness of the Demised
Premises or which will affect the facade, mechanical, electrical or structural
components of either the Demised Premises or the Shopping Center or which would
reduce the Floor Space of the Demised Premises or which are not in accordance
with the design criteria for the Shopping Center.
ARTICLE VIII
INSURANCE AND INDEMNITY
8.01 INSURANCE BY TENANT. A. Tenant shall maintain the following
insurance: (a) commercial comprehensive general public liability insurance in
respect of the Demised Premises and the conduct or operation of business
therein, with Landlord as an additional named insured, with limits of not less
than $5,000,000 combined single limit for bodily injury or death and for
property damage, including water damage and sprinkler leakage liability, (b) a
policy of plate glass insurance covering all plate and crystal glass situated in
the Demised Premises, (c) fire and extended coverage insurance in respect of
Tenant's stock in trade, fixtures, furniture, furnishings, removable floor
coverings, equipment, signs and all other property of Tenant in the Demised
Premises to the extent of one hundred percent (100%) of the full insurable value
of the property covered and not less than the amount sufficient to avoid the
effect of the co-insurance provisions of the applicable policy or policies, and
(d) any other insurance required for compliance with any Requirements of which
Tenant has received notice. Tenant shall deliver to Landlord and any additional
insured specified by Landlord to Tenant such fully paid-for-policies or
certificates evidencing such coverage before the Commencement Date. Tenant
shall procure and pay for renewals of such insurance from time to time before
the expiration thereof, and Tenant shall deliver to Landlord and any additional
named insured such renewal policy or certificates evidencing such renewal at
least 30 days before the expiration of any existing policy. All such policies
shall be issued by companies of recognized responsibility licensed to do
business in the state in which the Demised Premises is located and having a
general policy holder's rating of not less than A, and financial ratings of not
less than Class VIII as rated in the most current "Best's" Insurance Reports,
and all such policies shall contain a provision whereby the same cannot be
canceled or modified unless Landlord and any additional insured are given at
least 30 days prior written notice by certified or registered mail of such
cancellation or modification. Notwithstanding anything to the contrary, Tenant
shall have the right to self insure as to (b) of the first sentence, provided
Tenant shall meet all applicable requirements for self-insurance in the State in
which the Shopping Center is located. All public liability policies shall
contain a provision that Landlord, will be named as
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additional insured under said policies for any loss occasioned to it by reason
of the negligence of Tenant, or its agents or employees. Each liability
insurance policy shall include a "cross liability" endorsement, providing
coverage for claims brought by another insured under such policy. All public
liability, property damage and other casualty insurance policies shall be
written as not contributing with any coverage which Landlord may carry. The
requirement of $5,000,000 combined single limit may be satisfied by utilizing
primary policies and umbrella liability policies.
B. Tenant shall require any contractor of Tenant performing work in,
on or about the Demised Premises to take out and keep in full force and effect,
at no expense to Landlord (a) commercial general public liability insurance in
respect of the Demised Premises, and the conduct of its work therein, with
Landlord as an additional insured, with limits of not less than $3,000,000
combined single limit for bodily injury or death and for property damage,
including water damage and sprinkler leakage legal liability; (b) workman's
compensation or similar insurance in form and amounts required by law; and (c)
comprehensive automobile liability insurance including owned, non-owned and
hired car coverage in an amount not less than $3,000,000 combined single limit
for bodily injury or death and for property damage.
8.02 INCREASE IN PREMIUMS. Tenant shall not do, permit or suffer to be
done any act, matter, thing or failure to act in respect of the Demised Premises
or use or occupy the Demised Premises or conduct or operate Tenant's business in
any manner objectionable to insurance companies whereby the fire insurance or
any other insurance now in force or hereafter to be placed on the Demised
Premises or the Shopping Center or any part thereof shall become void or
suspended or bring or keep anything upon the Demised Premises which shall
increase the rate of premiums of insurance on the Demised Premises or the
Shopping Center or any part thereof or on the property located therein. If by
reason of failure of Tenant to comply with the foregoing provisions of this
Section, any premiums in respect of insurance maintained by Landlord shall be
higher than those which would normally have been in effect, then Tenant shall be
liable to Landlord as hereinafter set forth. In determining whether the rate of
premiums of insurance has increased, a schedule, issued by the organization
setting the insurance rate on the Shopping Center, showing the various
components of such rate, shall be conclusive evidence of the several items and
charges which make up the fire insurance rate on the Shopping Center. In case
of a breach of this covenant, in addition to all other rights and remedies of
Landlord hereunder, Tenant shall (a) indemnify Landlord and hold Landlord
harmless from and against any loss which would have been covered by insurance
which shall have become void or suspended because of such breach by Tenant and
(b) pay to Landlord any and all increases of premiums on any insurance,
including, without limitation, rent insurance, resulting from any such breach
and the same shall be deemed to be Additional Rent. In addition to the
foregoing, Tenant will, if Landlord so requests, cease any action and/or remove
any objects or improvements which have resulted in increases in Landlord's
insurance premiums.
8.03 INDEMNIFICATION AND RELEASE. Tenant shall defend and indemnify
Landlord and shall hold Landlord harmless from and against any and all injuries,
losses, claims, actions, damages, liabilities and expenses (including attorneys'
fees and expenses) to persons or property arising from, related to or in
connection with the use or occupancy of the Demised Premises or the conduct or
operation of business therein or any construction and/or alterations performed
by Tenant therein or any default in the performance of any obligation of Tenant
under this Lease. Landlord shall not be liable or responsible for, and Tenant
hereby releases Landlord from, all liability or responsibility to Tenant or any
person claiming by, through or under Tenant, by way of subrogation or otherwise,
for any loss or damage to any property in or around the Demised Premises or to
Tenant's business irrespective of the cause of such loss or damage, and Tenant
shall require its insurer(s) to include in all of Tenant's casualty insurance
policies which could give rise to a right of subrogation against Landlord a
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clause or endorsement whereby the insurer(s) shall waive any rights of
subrogation against Landlord. If Landlord shall, without fault on its part, be
made a party to any litigation commenced by or against Tenant, Tenant shall
indemnify and hold Landlord harmless from and against all costs, expenses and
reasonable attorneys fees incurred or paid by Landlord in connection with such
litigation.
8.04 OPTION TO EXTEND. If Tenant shall exercise the right to extend the
Term of this Lease, the amount of commercial general public liability insurance
then carried by Tenant shall be increased as of the commencement of any such
Extended Period by an amount equal to the percentage increase of the Price Index
during the period from the Commencement Date to the last date of the then Term
or from the period from the first date of the Extended Period to the last day of
the then Term (in the event of more than one such option under Section 1.01(K)),
as the case may be.
ARTICLE IX
SUBORDINATION AND ATTORNMENT
9.01 SUBORDINATION TO LEASES. This Lease and Tenant's interest herein
(including, without limitation, Tenant's rights in respect of the Common Areas)
are and shall be subject and subordinate to each and every ground lease or
underlying lease now existing or hereafter made of the Shopping Center or any
part thereof of which the Demised Premises is a part and to all renewals,
modifications, replacements and extensions thereof; provided, however, that
Landlord shall use all reasonable efforts to cause the landlord under any such
ground or underlying lease to enter into an agreement with Tenant to the effect
that in the event of a termination of any such lease by reason of the default of
Landlord as the tenant thereunder, this Lease and the rights of Tenant hereunder
shall continue in full force and effect and this Lease shall not be terminated
or Tenant disturbed in its possession of the Demised Premises except in
accordance with the provisions of this Lease and Tenant shall attorn to said
landlord so long as said landlord shall agree to so recognize the rights of
Tenant as aforesaid (and Tenant agrees to cooperate with Landlord and any such
landlord in connection with the execution and deliver of any such Recognition
Agreement). This section shall be self-operative and no further instrument or
subordination shall be required. In confirmation of such subordination, Tenant
shall upon request of Landlord, within 10 days of receipt of same, execute,
acknowledge and deliver any and all documents and instruments subordinating this
Lease and Tenant's interest herein, to any ground or underlying lease.
9.02 SUBORDINATION TO MORTGAGES. This Lease and Tenant's interest herein
(including, without limitation, Tenant's rights in respect of the Common Areas)
shall be subject and subordinate to all mortgages now existing or hereafter made
covering the Shopping Center or any part thereof (which shall include leasehold
mortgages) and to all renewals, modifications, replacements, consolidations and
extensions thereof and to any and all advances made thereunder and the interest
thereon; provided, however, that Landlord shall use all reasonable efforts to
cause the holder of any such mortgage to enter into an agreement with Tenant to
the effect that in the event of foreclosure or other action taken in connection
with or under such mortgage by the holder or any assignee thereof, this Lease
and the rights of Tenant hereunder shall continue in full force and effect and
this Lease shall not be terminated or Tenant disturbed in its possession of the
Demised Premises except in accordance with the provisions of this Lease. This
section shall be self-operative and no further instrument of subordination shall
be required. In confirmation of such subordination, Tenant shall upon request
of Landlord, within 10 days of receipt of same, execute, acknowledge and deliver
any and all documents and instruments subordinating this Lease and Tenant's
interest herein to any such fee or leasehold mortgage.
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9.03 ATTORNMENT. In the event of (a) a transfer of Landlord's interest in
the Demised Premises, (b) the termination of any ground or underlying lease or
(c) the purchase of the Demised Premises or Landlord's interest therein in a
foreclosure sale or by deed in lieu of foreclosure under any mortgage or the
purchase pursuant to a power of sale contained in any mortgage, then in any of
such events Tenant shall attorn to and recognize such succeeding party as
Tenant's landlord under this Lease for the balance then remaining of the Term,
and Tenant shall promptly execute and deliver any instrument that such
succeeding party may reasonably request to evidence such attornment (provided
that such attornment shall be self-operative). Notwithstanding the
subordination set forth in Section 9.02 above, upon such attornment, this Lease
shall continue in full force and effect as a direct lease between such
succeeding party and Tenant upon all of the terms, conditions and covenants as
are set forth in this Lease except the succeeding Landlord, who shall have
succeeded by or through the rights of the holder of any mortgage, shall not be
liable for any act or omission of Landlord prior to such lease termination or
prior to such person's succession to title, nor be subject to any offset,
defense or counterclaim accruing prior to such lease termination or prior to
such person's succession to title, nor be bound by any payment of Fixed Rent or
Additional Rent prior to such lease termination or prior to such person's
succession to title for more than one month in advance or by any amendment or
modification of this Lease or any waiver, compromise, release or discharge of
any obligations of Tenant hereunder, unless such amendment, modification,
waiver, compromise, release, discharge or prepayment shall have been expressly
approved by the holder of any mortgage through or by reason of which succeeding
Landlord shall have succeeded to the rights of Landlord under this Lease.
9.04 DELIVERY OF DOCUMENTS. If Tenant fails to execute, acknowledge or
deliver any of the documents or instruments required under this Article, same
shall be deemed a material default of Tenant.
9.05 CONSENT OF LANDLORD. Notwithstanding anything to the contrary
provided in this Lease, in any instance where the consent of the holder of any
ground or underlying lease or the holder of any mortgage may be required,
Landlord shall not be required to give its consent until and unless the holder
of any ground or underlying lease and/or the holder of any mortgage has given
its consent. Nothing in this Section or elsewhere in this Lease shall be
construed to require Landlord to give its consent to any matter to which
Landlord's consent is required to be obtained.
9.06 NOTICES TO MORTGAGEES. Tenant agrees that it will give prompt notice
of Landlord's default in the performance of its obligations under this Lease to
the holder of any mortgage (which shall include leasehold mortgages) to which
this Lease is or shall be subordinate to if the default is of such nature as to
(a) give Tenant a right to cancel and terminate this Lease, or (b) reduce or
abate the Fixed Rent or Additional Rent, (c) credit or offset any amounts
against future rents payable hereunder or (d) claim a partial or total eviction
(constructive or otherwise); provided that Tenant shall not give or be obligated
to give such notice to any such party unless Landlord shall have advised Tenant
in writing of the effectiveness of this Section, the status of such party as the
holder of any such mortgage and the address to which such notices should be
sent. Any such holder shall have the right (but not the obligation) to cure the
default specified in such notice (which period shall in no event be less than
the period to which Landlord would be entitled under this Lease to effect such
remedy); and no such rights or remedies shall be exercised by Tenant until the
expiration of said period or such additional time as may be reasonably required
to cure any such default.
ARTICLE X
ASSIGNMENT AND SUBLETTING
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10.01 ASSIGNMENT OR SUBLETTING. Excepting (i) any transaction where no
consent is required under Section 10.05 hereof or (ii) any bona fide interstate
public offering of Tenant's stock made by Tenant (for any of which such
transactions Landlord's prior written consent shall not be required), Tenant
shall not, by operation of law or otherwise, assign, sell, mortgage, pledge, or
in any manner transfer this Lease or any interest therein, or sublet the Demised
Premises, or grant any concession or license or otherwise permit occupancy of
the Demised Premises by any person, without the prior written consent of
Landlord; provided, however that notwithstanding the foregoing any request by
Tenant for such consent of Landlord shall be subject to the exercise by Landlord
of the Recapture Option (as hereinafter described in Section 10.03), and if
Landlord shall not exercise such Recapture Option such consent shall be
expressly conditioned upon compliance by Tenant with all the provisions of this
Article X. Tenant shall have no right to and shall not, sublet a part of the
Demised Premises, nor permit occupancy of a part of the Demised Premises. Any
attempt by Tenant to assign or transfer this Lease or to sublet the Demised
Premises or any part or parts thereof or to grant a concession or license or
otherwise permit occupancy of all or part of the Demised Premises otherwise than
in compliance with the provisions of this Article X shall be absolutely and
unconditionally null and void and of no force and effect whatsoever.
10.02 NOTICE. If Tenant shall desire to assign, sell, mortgage, pledge or
transfer this Lease or to sublet the Demised Premises or grant any concession or
license or permit occupancy of the Demised Premises by any person (a "Proposed
Transaction"), Tenant shall submit to Landlord a written request for Landlord's
consent to such Proposed Transaction, which request shall contain or be
accompanied by the following information: (i) the name and address of the
proposed assignee, mortgagee, subtenant, licensee, concessionaire or occupant
(the "Proposed Party"); (ii) the proposed basic financial terms and conditions
of the Proposed Transaction including, without limitation, all consideration of
every nature whatsoever to be paid to Tenant (including, without limitation,
consideration for the sale or rental of Tenant's fixtures, leasehold
improvements, equipment, furniture or other personal property) in respect of
such Proposed Transaction; (iii) the nature and character of the business of the
Proposed Party and, if applicable, its proposed use of the Demised Premises; and
(iv) except with respect to the proposed mortgage of this Lease to an
institutional mortgagee, banking, financial and other credit information with
respect to the Proposed Party reasonably sufficient to enable Landlord to
determine the financial responsibility of the Proposed Party. Upon receipt of
any such written request and accompanying information from Tenant, Landlord
shall be entitled to request any additional information from Tenant in respect
of the Proposed Transaction and/or the Proposed Party as Landlord shall deem
necessary in order to permit Landlord's comprehensive assessment of same, and
Tenant shall furnish Landlord with such additional information promptly upon any
such request by Landlord.
10.03 RECAPTURE OPTION. A. Landlord shall have the following right, (the
"Recapture Option"), to be exercised by notice ("Exercise Notice") given to
Tenant within thirty (30) days after receipt of Tenant's request for consent and
all additional information requested by Landlord pursuant to Section 10.02
hereof: Landlord may require Tenant to surrender the Demised Premises to
Landlord and to accept a termination of this Lease as of a date (the
"Termination Date") to be reasonably designated by Landlord in the Exercise
Notice, which date shall not be less than thirty (30) days nor more than one
hundred twenty (120) days following the date of Landlord's Exercise Notice. If
Landlord shall elect to require Tenant to surrender the Demised Premises and
accept a termination of this Lease, then this Lease shall expire on the
Termination Date as if that date had been originally fixed as the expiration
date. Landlord shall be free to, and shall have no liability to Tenant if
Landlord shall lease the Demised Premises to Tenant's prospective assignee or
subtenant. In the event that Landlord shall exercise the Recapture Option as
herein provided, Tenant shall remit to Landlord, within fifteen (15) days after
Landlord's demand therefor, (i) a sum equal to
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three (3) months then-current Fixed Rent and Additional Rent in order to cover
Landlord's loss of rental income from the Demised Premises following the
effective Termination Date and (ii) a sum equal to the then-unamortized (with
such amortization being calculated from the Rent Commencement Date over the
Initial Term) value of the aggregate of (x) Tenant's Improvement Allowance and
(y) the incremental additional cost to Landlord of providing any improvements or
other installations made by Landlord in and upon the Demised Premises over and
above Landlord's typical "vanilla shell" initial improvements for premises in
the Shopping Center.
B. If Landlord shall not exercise the option under paragraph A above
within the time period therein provided, then Landlord shall not unreasonably
withhold consent to a proposed assignment or subletting of the entire Demised
Premises which consent or disapproval shall be given not later than thirty (30)
days following Landlord's receipt of Tenant's request for consent provided under
paragraph A above and all additional information requested by Landlord, provided
that no Event of Default has occurred and is continuing hereunder and further
provided that, at a minimum, all of the following conditions shall be fulfilled:
(a) The subletting or assignment shall be in Landlord's
reasonable judgment to a tenant whose occupancy will be in keeping with the
dignity and character of the Shopping Center and whose financial standing and
occupancy will not be more objectionable or more hazardous than that of Tenant
herein and who has sufficient prior experience in retail operations;
(b) The subletting or assignment shall be to a tenant who is a
nationally known tenant and is a manufacturer of products of at least comparable
type and quality to that of Tenant;
(c) Any subletting shall be expressly subject to all of the
obligations of Tenant under this Lease and shall specifically provide that there
shall be no further subletting of the Demised Premises or assignment or
mortgaging of the sublease except in compliance with the terms of this Lease;
(d) The proposed sublessee or assignee shall not be a tenant,
subtenant or assignee of any premises at the Shopping Center;
(e) The proposed use in connection with the assignment or
subletting is compatible in Landlord's judgment with the uses then existing at
the Shopping Center;
(f) The proposed use will not otherwise be in violation of any
exclusive then contained in any lease in existence in the Shopping Center; and
(g) The Guarantor, if any, shall affirm and ratify its guaranty
in all respects.
If this Lease is assigned or sublet, Landlord agrees that the Trade Name
shall be consistent with those used by the permitted assignee or subtenant.
10.04 ASSIGNMENT/SUBLEASE AMENDMENT. Landlord may, INTER ALIA, condition
its consent to any Proposed Transaction upon the execution of an agreement
pursuant to which Tenant and the Proposed Party agree to pay to Landlord any
amounts due and payable in respect of the making of any Proposed Transaction
wherein (i) any economic consideration in the form of money or property shall be
paid to Tenant or any Guarantor, or to any affiliate or subsidiary of Tenant or
any Guarantor, either in a lump sum, periodic payment or other form of
consideration, with such payment to Landlord to be made upon the payment thereof
to such party, and/or (ii) any Fixed Rent or Additional Rent in respect of the
Demised Premises which shall
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exceed the Fixed Rent and Additional Rent payable pursuant to this Lease; except
that Tenant shall in all cases be entitled to retain (a) such amount as may be
paid to Tenant by the Proposed Party on account of unamortized book value (as
shown on books and records maintained by Tenant in normal course of business in
accordance with generally accepted accounting principles, consistently applied)
of any leasehold improvements theretofore made by Tenant in the Demised Premises
and (b) an amount equal to costs and expenses reasonably incurred by Tenant in
connection with such assignment or sublease, including, without limitation,
brokers' commissions and legal fees.
10.05 CORPORATION OR PARTNERSHIP. If Tenant shall be a corporation or
partnership, any transfer of voting stock or partnership interest resulting in
the person(s) who, on the date of this Lease shall have owned a majority of such
corporation's shares of voting stock or the general partners' interest in such
partnership, as the case may be, ceasing to own a majority of such shares of
voting stock or general partners' interest, as the case may be (except as the
result of transfers by inheritance) shall be deemed to be an assignment of this
Lease as to which Landlord's consent shall have been required, and in any such
event Tenant shall so notify Landlord, except that this provision shall not be
applicable to any corporation all the outstanding voting stock of which is
listed on a national securities exchange (as defined in the Securities Exchange
Act of 1934, as amended). For the purposes of this Section, the term "voting
stock" shall refer to shares of stock regularly entitled to vote for the
election of directors of the corporation. Notwithstanding the foregoing, Tenant
may without Landlord's consent, assign this Lease or sublet the entire Demised
Premises to any corporation which is a subsidiary or parent of Tenant or under
common control with Tenant or to any corporation with which Tenant or its parent
may be merged or consolidated or which purchases all or substantially all of the
assets of Tenant or those of its parent, provided (i) the business, name and
operation being conducted in the Demised Premises as well as the type and
quality of merchandise in the Demised Premises shall remain unaffected and in
the case of an assignment hereunder or a sale of all or substantially all of the
assets of Tenant or those of its parent (ii) the transferee's net worth equals
or exceeds the greater of (a) Tenant's net worth as of the date hereof and (b)
Tenant's net worth on the date immediately preceding the date of the proposed
sale or transfer, and (iii) the Guarantor, if any, shall affirm and ratify its
guaranty in all respects.
10.06 MISCELLANEOUS. Notwithstanding any other provisions of this Article X
to the contrary, in connection with any Proposed Transaction, (i) Tenant shall
reimburse Landlord upon demand, for all expenses, including reasonable
attorneys' fees, incurred in connection with any such Proposed Transaction and
(ii) Tenant and any Proposed Party shall, within ten (10) days after notice from
Landlord, provide such additional information, execute and deliver to Landlord
such documents and take such further action as Landlord may reasonably require
to effect such Proposed Transaction or protect Landlord's rights in respect of
this Lease. Neither the consent of Landlord to an assignment, subletting,
mortgage, concession or license, nor the references in this Lease to assignees,
subtenants, mortgagees, concessionaires or licensees, shall in any way be
construed to relieve Tenant of the requirement of obtaining the consent of
Landlord to any further assignment or subletting or to the making of any
assignment, subletting, mortgage, concession or license for all or any part of
the Demised Premises. In the event Landlord consents to any assignment of this
Lease, the assignee shall execute and deliver to Landlord an agreement in form
and substance satisfactory to Landlord whereby the assignee shall assume all of
Tenant's obligations under this Lease. Notwithstanding any assignment or
subletting, including, without limitation, any assignment or subletting
permitted or consented to, the original Tenant named herein and any other
person(s) who at any time was or were Tenant shall remain fully liable on this
Lease, and if this Lease shall be amended, modified, extended or renewed, the
original Tenant named herein and any other person(s) who at any time was or were
Tenant shall remain fully liable on this Lease as so amended,
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modified, extended or renewed; provided, however, the original Tenant named
herein shall not be liable for any renewal or extension for which it shall not
have exercised itself or liable for any amendment or modification it has not
consented to. Any violation of any provision of this Lease by any assignee,
subtenant or other occupant shall be deemed a violation by the original Tenant
named herein, the then Tenant and any other person(s) who at any time was or
were Tenant, it being the intention and meaning that the original Tenant named
herein, the then Tenant and any other person(s) who at any time was or were
Tenant shall all be liable to Landlord for any and all acts and omissions of any
and all assignees, subtenants and other occupants of the Demised Premises. If
this Lease shall be assigned or if the Demised Premises or any part thereof
shall be sublet or occupied by any person or persons other than the original
Tenant named herein, Landlord may collect rent from any such assignee and/or any
subtenants or occupants, and apply the net amounts collected to the Fixed Rent
and Additional Rent, but no such assignment, subletting, occupancy or collection
shall be deemed a waiver of any of the provisions of this Section, or the
acceptance of the assignee, subtenant or occupant as Tenant, or a release of any
person from the further performance by such person of the obligations of Tenant
under this Lease.
ARTICLE XI
DESTRUCTION
11.01 TOTAL OR PARTIAL DESTRUCTION. Tenant shall give prompt notice to
Landlord in case of any fire or other damage to the Demised Premises. If (a)
the Demised Premises shall be damaged by fire or other occurrence to the extent
of more than 25% of the aggregate cost of replacement thereof, or (b) the
buildings in the Shopping Center shall be damaged by fire or other occurrence to
the extent of more than 25% of the aggregate cost of replacement thereof
(whether or not the Demised Premises be damaged in whole or in part), or (c) the
buildings in the Shopping Center shall be damaged by fire or other occurrence
and either the loss shall not be covered by insurance or the insurance proceeds
shall, by reasonable anticipation, be insufficient to pay for the repair or
restoration work, then in any such event Landlord may terminate the Lease by
notice given within 90 days after such event, and upon the date specified in
such notice, which shall not be less than 30 days nor more than 60 days after
the giving of said notice, this Lease shall terminate. If any damage by fire or
other casualty shall render the Demised Premises untenantable, in whole or in
part, a proportionate abatement of the Fixed Rent based upon the Floor Space
rendered untenantable shall be allowed from the date when the damage occurred
until completion of the repair or restoration work by Landlord as hereinafter
provided, or, in the event Landlord elects to terminate this Lease, until said
date of termination. If this Lease shall not be terminated after damage by fire
or other casualty, Landlord shall, promptly after receipt of the insurance
proceeds for such damage, or as soon as practicable in the event that insurance
proceeds shall not be available, proceed with the restoration of the Demised
Premises and the Shopping Center to substantially the condition in which the
same existed prior to the damage with such changes as Landlord may desire or be
required by any Requirements to make, except for tenant's stock in trade,
fixtures, furniture, furnishings, removable floor coverings, equipment, signs
and all other property, and Tenant shall promptly proceed with the restoration
or replacement of its stock in trade, fixtures, furniture, furnishings,
removable floor coverings, equipment, signs and all other property of Tenant and
decorations in and around the Demised Premises. If Landlord shall not complete
such restoration or repair of the Demised Premises within 180 days after such
damage (such date to be extended for an additional 30 days for reasons beyond
Landlord's reasonable control), Tenant shall have the right by notice to
Landlord given on or before 30 days thereafter to terminate this Lease. Such
right of termination shall be nullified if such repair or restoration shall be
completed prior to the effective date of Tenant's notice. Such right of
termination shall be Tenant's sole remedy and if not timely elected, the right
to terminate this Lease hereunder shall be deemed waived and of no further force
and
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effect. If terminated, Tenant shall remain responsible for all of its
obligations under this Lease accruing to the date of termination. Tenant hereby
waives any and all benefits or rights which Tenant might become entitled to by
reason of any statute or law that may be in effect at the time of the occurrence
of any such damage or destruction under which a lease is automatically
terminated or a tenant is given the right to terminate a lease upon such an
occurrence and Tenant agrees that the provisions of this section shall govern
and control in lieu of the provisions thereof. Notwithstanding anything else to
the contrary provided herein, Tenant shall not be required to operate the
Demised Premises in the event that fewer than 3,100 square feet of Floor Space
in the Demised Premises are tenantable.
ARTICLE XII
EMINENT DOMAIN
12.01 TOTAL OR PARTIAL TAKING. If the whole of the Demised Premises shall
be taken by any public or quasi-public authority under the power of
condemnation, eminent domain or expropriation, or in the event of conveyance of
the whole of the Demised Premises in lieu thereof, this Lease shall terminate as
of the day possession shall be taken by such authority. If 25% or less of the
Floor Space of the Demised Premises shall be so taken or conveyed, this Lease
shall terminate only in respect of the part so taken or conveyed as of the day
possession shall be taken by such authority. If more than 25% of the Floor
Space of the Demised Premises shall be so taken or conveyed, this Lease shall
terminate only in respect of the part so taken or conveyed as of the day
possession shall be taken by such authority, but either party shall have the
right to terminate this Lease upon notice given to the other party within 30
days after such taking of possession. If following such taking or conveyance in
lieu thereof, fewer than 3,100 square feet of Floor Space remain in the Demised
Premises, Tenant shall have the right to terminate this Lease upon notice to
Landlord within thirty (30) days after receipt by Tenant of notice of such
taking. If this Lease shall continue in effect as to any portion of the Demised
Premises not so taken or conveyed, the Fixed Rent and Additional Rent shall be
computed as of the date when possession shall have been taken on the basis of
the remaining Floor Space of the Demised Premises. Except as specifically
provided herein, in the event of any such taking or conveyance there shall be no
reduction in Fixed Rent or Additional Rent. If this Lease shall continue in
effect, Landlord shall, at its expense, but only to the extent of an equitable
proportion of the award or other compensation available to Landlord for the
portion of the Demised Premises taken or conveyed (excluding any award or other
compensation for land and after deducting the expense incurred in connection
with condemnation), make or cause to be made all necessary alterations so as to
constitute the remaining Demised Premises a complete architectural and
tenantable unit, except that Tenant shall make all alterations or replacements
to its stock in trade, fixtures, furniture, furnishings, removable floor
coverings, equipment, signs and all other property of Tenant and decorations in
and around the Demised Premises. In the event that the Demised Premises is not
restored to a complete architectural and tenantable unit within one hundred
eighty (180) days of such taking, regardless of whether such failure is due to
an insufficiency of the award, Tenant shall have the right to terminate this
Lease by notice to Landlord within thirty (30) days after the expiration of such
one hundred eighty day-period. If more then 20% of the Floor Space of the
Shopping Center shall be so conveyed (whether or not the Demised Premises is
conveyed in whole or in part), or if so much of the parking facilities shall be
taken or conveyed that the number of parking spaces necessary, or appropriate,
in Landlord's reasonable judgment, for the continued operation of the Shopping
Center shall not be available, then in such event Landlord may, terminate this
Lease upon notice given to Tenant within 30 days after such taking of
possession. All awards and compensation for any taking or conveyance, whether
for the whole or a part of the Shopping Center, the Demised Premises or
otherwise, shall be the property of Landlord, and Tenant hereby assigns to
Landlord all of Tenant's right, title and interest in and to any and all such
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awards and compensation, including, without limitation, any award or
compensation for the value of the unexpired portion of the Term. Tenant shall
be entitled to claim, prove and receive in the condemnation proceeding such
award or compensation as may be allowed for its trade fixtures and for loss of
business, good will, depreciation or injury to and cost of removal of stock in
trade, but only if such award or compensation shall be made by the condemning
authority in addition to, and shall not result in a reduction of, the award or
compensation made by it to Landlord.
ARTICLE XIII
DEFAULT
13.01 DEFAULTS. Each of the following shall be deemed to be an Event of
Default by Tenant and a breach by Tenant hereunder: (a) the filing by or
against the original Tenant named herein or the then named Tenant or Guarantor
in any court, pursuant to any statute either of the United States or of any
state, of a petition in bankruptcy or insolvency or a petition for
reorganization or for the appointment of a receiver or trustee of all or a
portion of the property of the original Tenant named herein or the then Tenant
or Guarantor, or the making by the original Tenant named herein or the then
Tenant or Guarantor of an assignment for the benefit of creditors, or the
petitioning for or entering into an arrangement pursuant to any statute either
of the United States or of any state by the original Tenant named herein or the
then Tenant or Guarantor, or the taking of this Lease under any writ of
execution or attachment, or the issuance of any execution or attachment against
the original Tenant named herein or the then Tenant or Guarantor or any of their
property, or the dissolution or liquidation or the commencement of any action or
proceeding for the dissolution or liquidation of the original Tenant named
herein or the Tenant or Guarantor, (b) the passing of the Lease to or the
devolution of this Lease upon any person(s) other than Tenant or a permitted
assignee, whether by operation of law or otherwise, (c) the Demised Premises
being abandoned, (d) the Demised Premises becoming vacant or deserted and
remaining so for five days after Landlord shall have given to Tenant a notice
specifying the nature of such default, (e) the default in the payment of any
Fixed Rent or Additional Rent or any part thereof when same is due, or in the
making of any other payment herein provided for, and the continuance of such
default for five days after Landlord shall have given to Tenant a notice
specifying the nature of such default, (f) the default by Tenant or any
affiliate of Tenant under any other lease with Landlord or any affiliate of
Landlord, (g) the default in the performance of any other obligation of Tenant
under this Lease, and the continuance of such default for twenty (20) days after
Landlord shall have given to Tenant a notice specifying the nature of such
default, but if said default shall be of such a nature that it cannot reasonably
be cured or remedied within said twenty-day period, same shall not be deemed an
Event of Default if Tenant shall have commenced in good faith the curing or
remedying of such default within such twenty-day period and shall thereafter
continuously and diligently proceed therewith to completion, provided, however,
that Tenant shall, in fact, cure such default within seventy-five (75) days from
the date the notice is given, or (h) if Tenant shall commit the same type of
default more than three times in any period of 12 consecutive months, then,
notwithstanding that such defaults shall have each been cured within the period
after notice as hereinbefore provided in this Section 13.01, any further similar
default shall be deemed to be deliberate and an immediate "Event of Default"
(and if any further similar default shall occur Landlord, without affording
Tenant an opportunity to cure such further default, may thereafter serve upon
Tenant a notice that this Lease will terminate on a date to be specified in such
notice, which date shall be not less than three (3) days after such notice, and
upon the date so specified this Lease shall terminate but Tenant shall remain
liable as hereinafter provided). For the purposes of this Section 13.01, the
term "affiliate" shall mean any person controlled by, controlling or under
common control with the first person.
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13.02 REMEDIES OF LANDLORD. A. Tenant shall pay to Landlord, on demand,
such reasonable expenses as Landlord may incur, including, without limitation,
court costs and attorneys' fees and disbursements, in enforcing the performance
of any obligation of Tenant under this Lease. During the continuance of any
Event of Default (whether occurring prior to the Commencement Date or during the
Term), in addition to any other rights Landlord may have at law or in equity for
Tenant's default, Landlord shall have the right, at its option, to serve upon
Tenant a notice that this Lease will terminate on a date to be specified in such
notice, which date shall not be less than three days after such notice, and upon
the date so specified this Lease shall terminate but Tenant shall remain liable
as hereinafter set forth. Nothing in this Section 13.02 shall be deemed to
require Landlord to give the notices(s) herein provided for prior to the
commencement of a summary proceeding for non-payment of Fixed Rent or Additional
Rent on account of any default in the payment thereof; it being intended that
such notice(s) are for the sole purpose of creating a conditional limitation
hereunder pursuant to which this Lease shall be terminated and Tenant shall
become a holdover tenant.
B. If this Lease shall be terminated as provided above in this
Section, or if this Lease shall be terminated by summary proceedings or
otherwise or possession of the Demised Premises is regained by Landlord, (a)
Landlord or its agents, servants or representatives may, immediately or at any
time thereafter, re- enter and resume possession of the Demised Premises and
remove all persons and property therefrom, either by summary dispossess
proceedings or by a suitable action or proceeding at law, or by force or
otherwise, without being liable for any damages therefor, and no such re-entry
shall be deemed an acceptance or surrender of this Lease, (b) Landlord may, in
its own name, but as agent for Tenant if this Lease is not terminated or in
Landlord's own behalf if this Lease is terminated relet the whole or any portion
of the Demised Premises for any period equal to or greater or less than the
period which would have constituted the balance of the Term, for any sum which
Landlord may deem reasonable, to any tenant(s) which Landlord may deem suitable
and satisfactory, and for any use and purpose which Landlord may deem
appropriate, and Landlord may grant concessions of free rent, and (c) Landlord,
at Landlord's option, may make such alterations, repairs, replacements and
decorations in and to the Demised Premises and/or the granting of such tenant
improvement allowance as Landlord in its sole judgment considers advisable or
necessary for the purpose of reletting the Demised Premises and the making of
such alterations, repairs, replacements and decorations and/or the granting of
such tenant improvement allowance shall not operate or be construed to release
Tenant from liability hereunder. Landlord shall in no event be liable in any
way whatsoever for its failure or refusal to relet the Demised Premises or any
part thereof, or in the event the Demised Premises are relet for its failure to
collect the rent under such reletting, and no such refusal or failure to relet
or failure to collect rent shall release or affect Tenant's liability for
damages or otherwise under this Lease. Landlord shall not in any event be
required to pay to Tenant any surplus of any sums received by Landlord on a
reletting of all or any part of the Demised Premises in excess of the Fixed Rent
and Additional Rent reserved in this Lease.
C. In the event of any breach by Tenant mentioned in subdivision (a)
of Section 13.01, Landlord shall immediately and IPSO FACTO, without notice or
other action by Landlord, become entitled to recover from Tenant, and Tenant
shall pay to Landlord, as liquidated damages for such breach, an amount equal to
the difference, discounted to the date of such breach at the rate of 4% PER
ANNUM, between (i) the Fixed Rent and Additional Rent plus Percentage Rent at
the rate thereof computed on the basis of the most recent actual Percentage Rent
for any calendar year during the Term for the period from the date of such
breach to the end of what would otherwise have constituted the balance of the
Term, and (ii) the then fair and reasonable rental value of the Demised Premises
for the same period. If the Demised Premises or any part thereof shall be relet
by Landlord after such a breach but before
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presentation of proof of such liquidated damages, the amount of rent reserved
upon such reletting, in the absence of evidence to the contrary, shall be deemed
to be the fair and reasonable rental value for the part of the Demised Premises
so relet during the term of such reletting. Until such time as the
above-mentioned full liquidated damages are paid to Landlord, an amount equal to
the full value of each installment of Fixed Rent and Additional Rent reserved
under this Lease shall be due and payable at the times specified in this Lease,
and if, by reason of the subsequent payment of such full liquidated damages to
Landlord, Landlord shall have received a sum in excess of all amounts to which
Landlord shall be entitled under this Section, such excess shall be refunded
upon the receipt by Landlord of such full liquidated damages. Nothing herein
contained shall limit or prejudice the right of Landlord to prove and obtain as
liquidated damages by reason of termination due to subdivision (a) of Section
13.01, an amount equal to the maximum allowed by any statute or rule of law in
effect at the time when and governing the proceeding in which such damages are
to be proved, whether or not such amount is to be greater, equal or less than
the amount of the difference referred to above.
D. In all other defaults, the full amount of each installment of
Fixed Rent and Additional Rent reserved under this Lease or the amounts due to
Landlord under the next succeeding sentence shall be due and payable at the
times specified in this Lease. If this Lease shall be terminated as provided
above in this Section, or if this Lease shall be terminated by summary
proceedings or otherwise or possession of the Demised Premises is regained by
Landlord, whether the Demised Premises shall be relet or not, Landlord shall be
entitled to recover from Tenant, and Tenant shall pay to Landlord, (x) the
amounts equal to all of the reasonable expenses incurred by Landlord in
connection with recovering possession of the Demised Premises, any reletting(s),
brokerage in connection with any reletting(s), court costs and reasonable
attorneys' fees and disbursements, and any reasonable expenses for putting and
keeping the Demised Premises in good order and for making alterations, repairs,
replacements and decorations in and to the Demised Premises and/or any amounts
granted to such new tenant for tenant improvement allowance and otherwise
preparing the same for reletting(s), which amounts shall be due and payable by
Tenant to Landlord on demand after any such expenses are incurred by Landlord,
and (y) for each month of the balance of the Term or the period which would
otherwise have constituted the balance of the Term, the amount, if any by which
(i) the sum of one monthly installment of the then current Fixed Rent which
would have been payable for the month in question had there been no default by
Tenant, plus one monthly installment of the then current Additional Rent which
would have been payable for the month in question had there been no default by
Tenant, plus 1/12th of the Percentage Rent for the most recent calendar year
during the Term exceeds (ii) the net amount, if any, of the rents collected on
account of the reletting(s) of the Demised Premises for each month of such
period, which amounts shall be due and payable by Tenant to Landlord in monthly
installments on the last day of each month, and any suit brought to collect the
amount of the deficiency for any month shall not prejudice in any way the rights
of Landlord to collect the deficiency for any subsequent month by a similar
proceeding.
E. In the event of any breach or threatened breach by Tenant of any
of the covenants or provisions of this Lease or in the case of an Event of
Default, Landlord shall have the right of injunction and the right to invoke any
remedy allowed at law or in equity; mention in this Lease of any particular
remedy shall not preclude Landlord from any other remedy at law or in equity.
Tenant hereby expressly waives any and all rights of redemption granted by or
under any present or future laws in the event of this Lease being terminated
and/or Landlord obtaining possession of the Demised Premises pursuant to the
provisions of this Article.
13.03 ADDITIONAL RIGHT OF LANDLORD TO CURE TENANT'S DEFAULTS. Landlord may,
but shall not be obligated to, cure at any time upon 10 days' notice, or without
notice in case of emergencies, any default(s) by Tenant under this Lease, and
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Tenant shall pay to Landlord on demand all costs and expenses incurred by
Landlord in curing such default(s), including, without limitation, court costs
and reasonable attorneys' fees and disbursements in connection therewith,
together with interest on the amount of costs and expenses so incurred, at the
rate PER ANNUM which is four (4%) percentage points above the prime rate of
Chase Manhattan Bank in effect on such date but in no event higher than the
maximum rate allowed by law.
13.04 BANKRUPTCY OR INSOLVENCY. A. Neither Tenant's interest in this
Lease, nor any estate hereby created in Tenant nor any interest herein or
therein, shall pass to any trustee, except as may specifically be provided
pursuant to 11 U.S.C. 101 ET SEQ. (the Bankruptcy Code"), or to any receiver or
assignee for the benefit of creditors or otherwise by operation of law except as
may specifically be provided pursuant to the Bankruptcy Code.
B. Upon the filing of a petition by or against Tenant under the
Bankruptcy Code, Tenant, as debtor and as debtor in possession, and any trustee
who may be appointed, agree as follows: (i) to perform each and every
obligation of Tenant under this Lease, including, but not limited to, the manner
of use and operation as provided in Article I and Article VI until such time as
this Lease is either rejected or assumed by order of the United States
Bankruptcy Court; (ii) to pay monthly in advance on the first day of each month,
as reasonable compensation for use and occupancy of the Demised Premises, an
amount equal to the monthly installment of Fixed Rent and Additional Rent
otherwise due pursuant to this Lease and to pay Percentage Rent monthly at the
percentage set forth in this Lease for the year in which such month falls on all
sales during such month in excess of one-twelfth (1/12th) of the Base Gross
Sales for such year, with payment of all such percentage rent to be made by the
fifteenth (15th) day of the succeeding month; (iii) to reject or assume this
Lease within sixty (60) days of the appointment of such trustee under Chapter 7
of the Bankruptcy Code or within one hundred twenty (120) days (or such shorter
term as Landlord, in its sole discretion, may deem reasonable, so long as notice
of such period is given) of the filing of a petition under any other Chapter of
the Bankruptcy Code; (iv) to give Landlord at least forty-five (45) days' prior
written notice of any proceeding related to any assumption of this Lease; (v) to
give at least thirty (30) days' prior written notice of any abandonment of the
Demised Premises, with any such abandonment to be deemed a rejection of this
Lease and an abandonment of any property not previously moved from the Demised
Premises; (vi) to do all other things of benefit to Landlord otherwise required
under the Bankruptcy Code; (vii) to be deemed to have rejected this Lease in the
event of the failure to comply with any of the above; and (viii) to have
consented to the entry of an order by an appropriate United States Bankruptcy
Court providing all of the above, waiving notice and hearing of the entry of
same.
C. No default of this Lease by Tenant, either prior to or subsequent
to the filing of such a petition, shall be deemed to have been waived unless
expressly done so in writing by Landlord. It is understood and agreed that this
is a lease of real property in a shopping center and that, therefore, Section
365(b)(3) of the Bankruptcy Code is applicable to any proposed assumption of
this Lease in a bankruptcy case. Included within and in addition to any other
conditions or obligations imposed upon Tenant or its successor in the event of
assumption and/or assignments are the following: (i) the cure of any monetary
defaults and the reimbursement of any pecuniary loss immediately upon entry of a
court order providing for assumption and/or assignment; (ii) the deposit of a
sum equal to three (3) months rent to be held by Landlord as a security deposit;
(iii) that the use of the Demised Premises remain as set forth in Article VI and
the quality, quantity and/or lines of merchandise of any goods or services
required to be offered for sale remain unchanged; (iv) that the debtor, debtor
in possession, trustee, or assignee of such entity demonstrates in writing that
it has sufficient background including, but not limited to, substantial
retailing experience in shopping centers of comparable size and financial
ability to operate a
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retail establishment of the Demised Premises in the manner contemplated in this
Lease, and meets all other reasonable criteria of Landlord as did Tenant upon
execution of this Lease; (v) that the prior written consent of any Mortgagee to
which this Lease has been assigned as collateral security; (vi) that the Demised
Premises, at all times, remains a single store and no physical changes of any
kind may be made to the Demised Premises unless in compliance with the
applicable provisions of this Lease, and (vii) that Tenant shall pay any and all
reasonable costs and expenses (including but not limited to reasonable legal
fees) incurred by Landlord in connection with any such filing of a petition by
or against Tenant under the Bankruptcy Code.
D. If this Lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code, any and all monies or other considerations
payable or otherwise delivered in connection with such assignment shall be paid
or delivered to Landlord, shall be and remain the exclusive property of Landlord
and shall not constitute property of Tenant or of the estate of Tenant within
the meaning of the Bankruptcy Code. Any and all monies or other considerations
constituting Landlord's property under the preceding sentence not paid or
delivered to Landlord upon the receipt thereof by Tenant or any Trustee shall be
held in trust for the benefit of Landlord and shall be promptly paid to Landlord
upon the entry of an appropriate order by the United States Bankruptcy Court.
ARTICLE XIV
RIGHT TO RELOCATE TENANT
14.01 Deleted.
ARTICLE XV
MISCELLANEOUS
15.01 RULES AND REGULATIONS. Tenant shall comply with and observe all
reasonable rules and regulations which Landlord shall from time to time
promulgate for the management and use of the Shopping Center which shall include
the storefront criteria for the Shopping Center, and Tenant shall use its best
efforts to cause its subtenants, concessionaires and licensees and their and
Tenant's respective officers, employees, agents, customers and invitees to
comply with and observe such rules and regulations after notice thereof shall be
given to Tenant. Landlord shall have the right from time to time to reasonably
amend or supplement any rules and regulations theretofore promulgated. Tenant's
failure to keep and observe all rules and regulations shall constitute a
material breach of the terms of this Lease in the manner as if the same were
contained herein as covenants. Annexed hereto as Exhibit "D" is a schedule of
those rules and regulations and storefront criteria which have been promulgated
by Landlord as of the date hereof. If there shall be any conflict between the
rules and regulations and the provisions of this Lease, the provisions of this
Lease shall control.
15.02 HOLDOVER. In the event Tenant remains in possession of the Demised
Premises after the expiration of the Term, Tenant shall be deemed to be
occupying the Demised Premises as a tenant from month to month at the sufferance
of Landlord subject to all of the provisions of this Lease, except that the
Fixed Rent shall be at the monthly rate equal to twice the monthly rate of Fixed
Rent in effect during the last month of the Term and Percentage Rent shall be at
the monthly rate equal to 1/12th of the greatest amount of Percentage Rent paid
or payable by Tenant for any one year prior to such period, and Tenant shall be
responsible for any and all other damages (including, without limitation,
consequential damages) which Landlord may sustain by reason of such action by
Tenant.
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15.03 OWNERSHIP OF IMPROVEMENTS AND PERSONAL PROPERTY. All installations,
alterations, additions, betterments and improvements upon the Demised Premises,
made by any party, including, without limitation, all pipes, ducts, conduits,
wiring, panelling, partitions, railings, mezzanine floors, galleries and the
like shall become the property of Landlord when installed and, except as
otherwise expressly provided in Section 15.04, shall remain upon and be
surrendered with the Demised Premises as a part thereof at the expiration or
sooner termination of the Term. Movable trade fixtures and other personal
property which Tenant installs at its own expense shall remain Tenant's property
and may be removed at any time provided Tenant promptly repairs any damage
caused by such removal and provided further that Tenant shall not then be in
default under this Lease. Any personal property of Tenant or subtenant,
concessionaire or licensee which shall remain in the Demised Premises after the
termination of this Lease and the removal of Tenant and/or such subtenant,
concessionaires or licensee from the Demised Premises, may, at the option of the
Landlord, be deemed to have been abandoned by Tenant or such subtenant,
concessionaire or licensee and either be retained by Landlord as it is property
or be disposed of, in such manner as Landlord sees fit, at Tenant's expense.
15.04 END OF TERM. At the expiration or sooner termination of the Term,
Tenant shall quit and surrender to Landlord the Demised Premises, broom clean
and in good order and condition, ordinary wear and tear and damage by fire and
any other insured casualty excepted. At such expiration or sooner termination
Tenant shall remove all property of Tenant and its signage, including but not
limited to, its storefront signage, and at the option of Landlord, shall remove
any or all alterations and other improvements made by Tenant to the Demised
Premises as designated by Landlord at the time of making such improvements and
Tenant shall repair all damage to the Demised Premises caused by such removal
and restore the Demised Premises to the condition in which they were at the
Commencement Date.
15.05 WAIVER OF JURY TRIAL AND RIGHT TO COUNTERCLAIM. Landlord and Tenant
shall and they hereby do waive trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto against the other on any
matters arising out of or in any way connected with this Lease, the relationship
of Landlord and Tenant, Tenant's use or occupancy of the Demised Premises, and
any emergency or other statutory remedy. Tenant further agrees that it shall
not interpose any counterclaim(s) in a summary proceeding or in any action based
on holdover or non-payment of Fixed Rent and/or Additional Rent.
15.06 NO WAIVER. The failure of Landlord to insist in any one or more cases
upon the strict performance or observation of any obligation of Tenant hereunder
or to exercise any right or option contained herein shall not be construed as a
waiver or relinquishment for the future of any such obligation of Tenant or any
right or option of Landlord. Landlord's receipt and acceptance of Fixed Rent
and/or Additional Rent, or Landlord's acceptance of performance of any other
obligation by Tenant, with knowledge of Tenant's breach of any provision of this
Lease, shall not be deemed a waiver of such breach. No consent, approval or
waiver, express or implied, by Landlord or Tenant to or of any breach of any
covenant, agreement or obligation, of Landlord or Tenant shall be construed as a
consent or waiver to or of any other breach of the same or any other covenant,
agreement or obligation unless in each case in writing signed by Landlord or
Tenant, whichever the case may be. Landlord's failure during the Term to
prepare and deliver to Tenant any bill, statement or notice with respect to any
item of Fixed Rent or Additional Rent or any increases thereto by operation of
any provision of this Lease, shall not in any way cause Landlord to forfeit or
surrender its right to collect any item of Fixed Rent or Additional Rent which
may become due during the Term nor shall such failure extend the date(s) on
which any such items of Fixed Rent and/or Additional Rent are due.
Notwithstanding the foregoing sentence, except as may be expressly set forth in
Sections 3.03 and 3.04 hereof, in no event shall Landlord be deemed to have any
obligation to bill any item of
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Fixed or Additional Rent or any increases thereto. IN NO EVENT SHALL LANDLORD
BE LIABLE FOR THE ACTS OF ANY TENANT OR OCCUPANT OF THE SHOPPING CENTER, EVEN IF
SUCH ACTS SHALL BE IN VIOLATION OF SUCH TENANT'S OR OCCUPANT'S LEASE OR OTHER
AGREEMENT WITH LANDLORD. IN ADDITION, IN NO EVENT SHALL LANDLORD BE LIABLE FOR
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING WITHOUT
LIMITATION TENANT'S LOST PROFITS OR GOOD WILL.
15.07 QUIET ENJOYMENT. Landlord covenants that Tenant, on paying the Fixed
Rent and Additional Rent and performing all of Tenant's obligations under this
Lease, shall peacefully and quietly have, hold and enjoy the Demised Premises,
the Common Areas and the appurtenances throughout the Term without hindrance,
ejection or molestation by any person lawfully claiming under Landlord, subject
to the terms and provisions of this Lease and to all mortgages and ground and
underlying leases of record to which this Lease may be or become subject and
subordinate.
15.08 ESTOPPEL CERTIFICATES. Landlord and Tenant shall, at any time and
from time to time, within 10 business days and following notice by the other
party, execute, acknowledge and deliver to the party which gave such notice a
statement in writing certifying (a) that this Lease is unmodified and in full
force and effect, or if there shall have been any modification(s) that the same
is in full force and effect as modified and stating the modification(s), and (b)
the date to which the Fixed Rent and Additional Rent have been paid in advance,
and (c) whether or not to the best of knowledge of the signer of such
certificate the other party is in default hereunder, and, if so, specifying each
such default, and (d) with respect to Tenant, whether Tenant has exercised any
option(s) to extend the Term of this Lease, and, if so, specifying each such
extension, and (e) certifying any other matter which shall be reasonably
requested by any lender or prospective lender of Landlord or any party acting on
behalf of Tenant. Any such statement delivered pursuant to this Section may be
relied upon by any prospective purchaser, assignee or transferee of Tenant's
interest in this Lease and of Landlord's interest in the Lease or in the
building or Shopping Center.
15.09 LANDLORD'S UNAVOIDABLE DELAYS. This Lease and the obligations of
Tenant to pay Fixed Rent and Additional Rent and perform all of the other
obligations hereunder shall in no way be affected, impaired or excused because
Landlord is unable to supply, or is delayed in supplying any service expressly
or implied to be supplied, or is unable to make or is delaying in making any
repairs, additions, alterations or decorations, or is unable to supply or is
delayed in supplying equipment or fixtures, if Landlord is prevented or delayed
from doing so by reason of any cause beyond Landlord's control, except in case
of fire or casualty damage as provided in Section 11.01, provided that Landlord
shall use reasonable efforts to resume such supply or to make such repairs,
additions or alterations.
15.10 FINANCIAL STATEMENTS. From time to time, but not more than once a
year, upon Landlord's written request, Tenant shall promptly furnish to Landlord
financial statements prepared by Tenant's independent certified public
accountant setting forth Tenant's then-current financial condition.
15.11 NOTICES. Any notice, demand, waiver, approval or consent hereunder
shall be in writing and shall be deemed duly served if mailed by registered or
certified mail in any post office station or letter box in the continental
United States, return receipt requested, or sent by reputable overnight carrier
with delivery charges prepaid and proof of delivery service to be provided,
addressed:
If to Tenant to it at the address set forth at the beginning of this Lease,
or such other address as Tenant shall have last designated by notice to
Landlord.
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If to Landlord to it at 103 Eisenhower Parkway, Roseland, New Jersey 07068;
Attention: Manager - Lease Administration and General Counsel with a copy to
Horwitz, Toback & Hyman, 500 Fifth Avenue, New York, New York 10110-0095,
Attention: Marvin J. Hyman, Esq., or such other address as Landlord shall have
last designated by notice to Tenant.
Such notice, demand, waiver, approval or consent shall be deemed served
upon receipt or refusal of delivery.
15.12 BROKERAGE. Tenant represents that it has had no dealings with any
broker or agent in connection with this Lease other than the Broker, if any, and
covenants to pay, hold harmless and indemnify Landlord from and against any and
all costs, expense or liability for any compensation and charges claimed by any
other broker or agent in respect of this Lease or the negotiation thereof with
whom Tenant is claimed to have had dealings.
15.13 WAIVER OF LANDLORD'S LIABILITY. Notwithstanding any provision to the
contrary, Tenant shall look solely to the equity of Landlord in and to the
Shopping Center or, if this Lease becomes subordinate to any ground or
underlying lease, the leasehold interest of Landlord as lessee under such ground
or underlying lease, in the event of a breach or default by Landlord pursuant to
the provisions of this Lease, and Tenant agrees that the liability of Landlord
under this Lease shall not exceed the value of such equity of Landlord in the
Shopping Center (or portion thereof) or said leasehold interest, as the case may
be. No other properties or assets of Landlord shall be subject to levy,
execution or other enforcement procedures for the satisfaction of any judgment
(or other judicial process) arising out of, or in connection with, this Lease;
and if Tenant shall acquire a lien on any such other properties or assets by
judgment or otherwise, Tenant shall promptly release such lien on such other
properties and assets by executing, acknowledging and delivering to Landlord an
instrument to that effect prepared by Landlord's attorneys.
15.14 SUCCESSORS AND ASSIGNS. The provisions of this Lease, except as
herein otherwise specifically provided, shall extend to, bind and inure to the
benefit of the parties hereto and their respective personal representatives,
heirs, successors and permitted assigns.
15.15 LEGAL EXPENSES. If it shall be necessary for either Landlord or
Tenant to employ an attorney to enforce its rights pursuant to this Lease
because of the breach or default of the other party, the prevailing party shall
be entitled to recover all of its reasonable costs, expenses and attorneys'
fees.
15.16 INTERPRETATION. Irrespective of the place of execution or
performance, this Lease shall be governed by and construed in accordance with
the laws of the state in which the property is located. If any provision of
this Lease or the application thereof to any person or circumstance shall, for
any reason and to any extent, be invalid or unenforceable, the remainder of this
Lease and the application of that provision to other persons or circumstances
shall not be affected but rather shall be enforced to the extent permitted by
law. Captions, headings, titles and the Table of Contents in this Lease are
solely for convenience of reference and shall not affect its interpretation.
This Lease shall be construed without regard to any presumption or other rule
requiring construction against the party causing this Lease to be drafted. Each
covenant, agreement, obligation or other provision of this Lease shall be deemed
and construed as a separate and independent covenant of the party bound by,
undertaking or making same, not dependent on any other provision of the Lease
unless otherwise expressly provided. All terms and words used in this Lease,
regardless of the number or gender in which they are used, shall be deemed to
include any other number and any other gender as the context may require. Upon
the request of
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Landlord, Tenant will execute and deliver to Landlord a notice of lease in
recordable form.
15.17 OPTION TO EXTEND. If Tenant shall have the right to extend the Term
of this Lease, such right shall be personal to the original Tenant named in this
Lease and shall not be exercisable by any assignee or subtenant of the original
Tenant named nor shall such right be exercisable by the original Tenant named in
this Lease if such original Tenant shall have theretofore assigned its interest
in this Lease or shall have sublet the Demised Premises. In order for such
right to be effectively exercised, such right must be exercised by notice to
Landlord no earlier than 547 days but no later than 365 days prior to the
expiration of the existing Term. Any exercise of the option under this Lease
shall be of no effect, if Tenant is in default beyond the applicable period for
curing the same at the time of such notice, or is in default at the commencement
of the Extended Period, or has been in default. Tenant agrees that it shall
waive its right to exercise such option if it shall fail for any reason
whatsoever to give such notice to Landlord by the time provided for the giving
of such notice, whether such failure is inadvertent or intentional, time being
of the essence as to the exercise of such option. Such Extended Period shall be
at the same terms and conditions, and Tenant shall pay the Fixed Rent and
Additional Rent as set forth herein, but Tenant shall have no further right to
extend the Term of this Lease (except as provided in Section 1.01(K)).
15.18 CONSENTS AND APPROVALS. Deleted.
15.19 RADIUS. Tenant covenants and agrees that neither Tenant nor any
affiliate, as such term is defined in Section 13.01 of this Lease, shall
directly or indirectly, either individually or as a partner or stockholder or
otherwise, own, operate or become financially interested in either a factory or
manufacturers outlet store or an off-price or discount retail store with a
similar or competing business within a radius of 25 air miles from the extreme
limits of the Shopping Center. Should Tenant violate this provision, then in
addition to any and all rights and remedies which Landlord may have, at law or
in equity, Landlord may require Tenant to include the gross sales from any such
factory or manufacturers outlet store or off-price or discount retail store
located within such restricted radius in the Gross Sales reportable by Tenant to
Landlord under the terms of this Lease for the purpose of computing Percentage
Rent due hereunder, and Landlord shall likewise have the right to examine the
books and records in respect of each such similar or competing business. This
Article shall not apply to any such store or stores which are open and are being
operated by Tenant within the restricted area as of the date of the execution of
this Lease.
15.20 COMPLETE AGREEMENT. There are no representations, agreements,
arrangements or understandings, oral or written, between the parties relating to
the subject matter of this Lease which are not fully expressed in this Lease.
This Lease cannot be changed or terminated orally or in any manner other than by
a written agreement executed by both parties. In making and executing this
Lease, Tenant has relied solely on such investigations, examinations and
inspections as Tenant has chosen to make or has made and Tenant acknowledges
that Landlord has afforded Tenant the opportunity for full and complete
investigations, examinations and inspections.
15.21 COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
together constitute but one Lease.
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15.24 CO-TENANCY. If, after the initial requirements of occupancy are met
under Section 1.01(O) of this Lease, less than sixty percent (60%) of the Floor
Space of the Shopping Center is then leased and open for business and such
condition shall remain for more than six (6) consecutive months, Tenant may
elect to pay monthly on or before the twentieth (20th) of the following calendar
month, in lieu of the Fixed Rent, four percent (4%) of Gross Sales until such
tenancy requirement has been satisfied provided, however, that nothing herein
shall relieve Tenant of its obligations to pay any other item of Additional
Rent, including the Percentage Rent during such period. If Tenant shall be
entitled to and does elect to pay such amounts in lieu of the Fixed Rent, the
payment of four percent (4%) of Gross Sales shall continue until such tenancy
requirement has been satisfied. For purposes of this Section, any leasable
Floor Space of any addition to the Shopping Center (to the extent built) shall
be included for determination of compliance hereunder. For the purpose of this
Section,
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(a) the leasable Floor Space of the food court and restaurants, if any, shall be
excluded from all calculations and (b) the phrase "leased and open for business"
shall have the meaning as set forth in Section 1.01(O) of this Lease.
IN WITNESS THEREOF, Landlord and Tenant have hereunto executed under seal
this Lease as of the day and year first above written.
LANDLORD:
Chelsea GCA Realty Partnership, L.P.,
a Delaware limited partnership
authorized to transact business
in the Commonwealth of Massachusetts
as Chelsea GCA Realty Partnership,
Limited Partnership
By Chelsea GCA Realty, Inc.
General Partner
ATTEST OR WITNESS:
By: /s/ Denise Elmer
------------------------------
Vice President and Secretary
By /s/ Lindsay Graham
------------------------------
- ------------------------------
(Seal)
TENANT:
DM Management Company
ATTEST OR WITNESS: By: /s/ Patricia C. Selander
-------------------------------
By Name: Patricia C. Selander
------------------------------ ------------------------------
- ------------------------------ Title: V.P., Inv. Mngt.
(Seal) ------------------------------
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Exhibit "A"
WRENTHAM VILLAGE PREMIUM OUTLETS - PHASE III
LANDLORD'S WORKLETTER
These specifications are prepared to aid Tenant in the coordination and approval
of Tenant's improvement plan. Tenant should refer to the building floor plans
and confirm all measurements and as-built conditions by visual inspection of the
premises before starting construction. In cases where these specifications are
in conflict with Landlord's completed building plans or completed buildings,
information contained in the building plans or completed buildings shall take
precedence over these requirements. All work to be done by Tenant must be
approved in writing by Landlord prior to the start of construction, and must be
coordinated so as to not interfere with Landlord's construction. Tenant's
contractor must be approved by Landlord prior to the start of construction.
The area of Tenant premises as shown on the plans have been calculated to the
exterior face of exterior walls and to the centerline of demising walls between
Tenant spaces. Tenant agrees that areas noted on the drawings are accurate. The
actual as-built area will be measured by Landlord following completion of
Landlord's work.
A. LANDLORD'S WORK
1. Shell - To include structural frame, roof, roofing and exterior
walls, no paint.
2. Storefront - Standard aluminum and glass entry with two
single-acting 3'0" entry doors complete with all standard hardware,
in accordance with Landlord's design. Any alterations and/or
deviations to the storefront must be requested in writing by Tenant
and be approved by Landlord.
3. Rear Door - When premises extend to rear wall, single hollow metal
service door of 3'0" x 7' or as required by code, shall be provided
(to include standard lock keyed to match storefront entry door).
4. Floor - Concrete slab on grade. Tenant's flooring contractor is
responsible for minor floor patching in accordance with good
installation practices. Floor covering by Tenant. Tenant contractor
is responsible for determination of compatibility of flooring
products and/or adhesive with Landlord's concrete slab.
5. Demising Partitions - Common wall of the premises.
(a) Partitions to extend from floor to roof deck.
(b) Metal studs for partitions.
(c) 5/8" gypsum board, to height that meets local code requirements,
taped and sanded, ready for Tenant's finishes.
6. Exterior Walls of Building - Wood or metal frame exterior shell wall
with interior finish consisting of 5/8" gypsum board taped and
sanded.
7. Ceiling - Standard finished 2' x 4' x 5/8" T-Bar, lay-in grid
ceiling at a height of approximately 10'-0".
8. Heating, Ventilating and Air Conditioning (HVAC) - Installation of
an HVAC system per Landlord's plan specifications of approximately
one (1) ton of heating/cooling capacity for every 350 square feet of
leased area. If Tenant's requirements are in excess of the above
(due to any factors such as additional lighting, etc. that affect
energy code compliance), Tenant shall pay for the cost of the
necessary energy code recalculations and compliance requirements and
any additional HVAC equipment and its installation. Landlord will
provide thermostat controls but installation
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Wrentham Village Premium OutletsLandlord Workletter
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shall be at the Tenant's expense and any repairs or failed
installations resulting from incomplete or inadequate relocation
shall be the tenants responsibility.
9. Electrical
(a) One distribution panel 200 AMP 3-phase, 120v/208v. Electrical
panel will be located on the rear wall of the premises. Tenant
must verify location of panel prior to design of space as
panel cannot be relocated.
(b) Flush mounted duplex convenience outlets installed within the
premises, one per each 25 lineal feet of demising wall within
the leased area, as shown on Landlord's plans. Floor outlets
are not furnished.
(c) Lay-in, three tube, 2' x 4' fluorescent light fixtures with
standard lamps distributed at approximately one fixture per
100 square feet of entire floor area, as shown on Landlord's
reflected ceiling plans.
10. Utilities
(a) Electrical - Electrical service shall be brought to Tenant
distribution panel. Electrical work to include meter socket
and main breaker at the buildings main electrical cabinet.
Tenant shall make application for electrical service in
Tenant's name prior to the start of the Tenant's work.
(b) Telephone - Telephone service will be provided to a backboard
in a common area of the building; one telephone conduit with
pullwire will be provided from the common area backboard to
the Tenant space and stubbed out to rear of premises or a
telephone distribution cable located above the ceiling in the
rear of the Tenant space. Tenant shall arrange for all wiring
from the backboard to the space and any further interior
distribution.
(c) Gas - Facilities will be provided for heating system supplied
by Landlord per Landlord's plans. Tenant is responsible for
confirming additional gas service availability with the local
utility company and for all costs of installation of any
required additional service. Tenant shall make application for
gas service in Tenant's name prior to start of Tenant's Work.
(d) Water - Piping shall be provided by Landlord for domestic cold
water service to Tenant bathroom. Any additional water or
sewerage piping or increase to service size shall be at
Tenant's expense. The Landlord may provide recycled water to
the toilet and urinals throughout the project.
11. Restroom
(a) Landlord shall provide one (1) restroom in an area designated
by the Landlord located on the rear wall of the Demised
Premises.
(b) Restroom shall be furnished with water closet, wall mounted
lavatory, electric "Insta-Hot" type water heater, mirror,
toilet paper holder, vinyl flooring, cove base, exhaust fan,
light with switch and off-white painted walls. Restroom to
comply with applicable accessibility codes.
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Wrentham Village Premium OutletsLandlord Workletter
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12. Fire Sprinkler System and/or Fire Alarm System
(a) An automatic fire sprinkler system and/or fire alarm system
will be provided to the extent required by, and in accordance
with, the requirements of any applicable building codes, local
ordinances and the underwriting authority selected by
Landlord.
(b) If any work is performed by the Tenant or at the Tenant's
request in or about the premises (i) modifies or affects the
layout of the sprinkler or fire alarm system, (ii) decreases
the protection such system affords the premises or the
building, or (iii) increases the insurance rate on the
premises or the building, Tenant shall pay for all alterations
and/or additions to the sprinkler and/or fire alarm system
required to make such system afford the premises, building,
and all other buildings in the shopping center the same fire
protection originally provided and to meet the requirements of
any applicable building codes, local ordinances and Landlord's
underwriting authority. ALL SPRINKLER AND/OR FIRE ALARM SYSTEM
ALTERATIONS AND/OR ADDITIONAL WORK MUST BE PERFORMED BY
LANDLORD'S SPRINKLER AND/OR FIRE ALARM CONTRACTOR AT TENANT'S
EXPENSE.
B. TENANT'S WORK
All other items of work shall be performed by Tenant at Tenant's expense
in accordance with Tenant's final plans and specifications, as approved by
Landlord. Tenant's Work shall include, but shall not be limited to, the
purchase, performance and installation of the following items. Tenant's
Work shall include all necessary architectural, engineering or design
related fees, code related items, permits, special assessments or taxes
relating to Tenant's Work.
1. Signs - Tenant shall have fabricated and installed at the Tenant's
expense, suitable identification sign or signs of such size, design
and character as Landlord shall designate and/or approve. All signs
shall be in accordance with the signage policy or sign criteria
established by the Landlord and shall be installed at a place or
places designated by the Landlord. Tenant shall submit for
Landlord's approval one (1) shop drawing at least 75 days prior to
the scheduled opening of the Shopping Center. PLANS WITH
SPECIFICATIONS FOR SIGNS SHALL BE SUBMITTED FOR APPROVAL BY
LANDLORD BEFORE FABRICATION.
2. Wall Sign - Tenant's wall sign shall be designed, fabricated and
installed per Landlord's sign program or sign criteria. Location of
sign shall be determined by Landlord. Location criteria shall
include proximity to Tenant's primary entrance and suitability with
architectural motif. Tenant to provide camera ready artwork to
Landlord, if requested.
3. Blade Sign - Tenant's blade sign will be designed, fabricated, and
installed by tenant at tenant's expense. Landlord is responsible for
the fabrication and installation of blade sign bracket and shall
bill cost of bracket to tenant. Location of sign shall be over or
adjacent to tenant's front entrance.
4. Interior Partitions - All interior partitions including standard
stockroom partition and exit corridor. All drop walls, curtain
walls, lowered ceilings, soffitted areas, light covers, show window
platforms, store fixtures, furnishings and accessories.
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Wrentham Village Premium OutletsLandlord Workletter
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5. Plans and Specifications - Tenant shall prepare plans and
specifications for the interior improvements to the premises showing
in detail the nature and scope of work to be done by Tenant. Tenant
shall provide two sets of As-built reproducible drawings to Landlord
upon issue of Certificate of Occupancy.
6. Permits - Tenant's Work must comply with all applicable building
codes and local ordinances for Tenant's portion of the project.
Tenant shall be responsible for securing all required permits before
commencing work. Tenant shall also be required to meet all local
energy regulations, at Tenant's expense, should improvements require
such a revision.
7. Tenant Contractor - NO WORK SHALL BE DONE ON THE PREMISES BY TENANT
UNTIL LANDLORD HAS APPROVED TENANT'S PLANS AND CONTRACTOR IN
WRITING. FURTHER, ONCE PLANS HAVE BEEN APPROVED BY LANDLORD, TWO (2)
SETS OF PLANS INCLUDING ONE SET OF REPRODUCIBLES, AS WELL AS A
"COMPUTER DISK" WHEN AVAILABLE, MUST BE SUBMITTED To LANDLORD.
Tenant's General Contractor shall work in conjunction with
Landlord's building contractor so that Tenant's contractor does not
interfere or delay the construction process of Landlord's building.
Tenant's contractor must perform the work in such a manner as not to
cause harm to Landlord's Work, delay the progress of such work or
create conflicts with labor organizations. Landlord reserves the
right to cause the removal of the Tenant's general contractor if any
such labor problems arise. Tenant's contractor must keep the area,
HVAC System and Restroom clean and free of dust and debris, with a
minimum of noise and interruption to the common areas of the
project. Tenant's contractor is responsible for keeping interior and
exterior areas clean of construction debris at all times. If the
Tenant contractor fails or refuses to keep these areas clean at all
times, Landlord reserves the right to clean these areas, Tenant will
be responsible for all costs incurred. Tenant contractor must
contract with approved vendor for all trash removal. Tenant's
contractor shall erect temporary partitions, dust barriers, etc. as
required by Landlord to minimize impact of construction activities
on the common areas of the project.
8. Temporary Utilities/Trash Removal - Prior to the commencement of
Tenant's Work, Tenant shall make application to all appropriate
utility companies and place all meters for the premises in Tenant's
name. Tenant is responsible for all utility charges for the premises
beginning with the turnover of the space from Landlord. If permanent
power is not available for any reason at Tenant turnover, it is the
responsibility of the Tenant Contractor to provide temporary
construction power. The Tenant/Tenant Contractor will be responsible
to contribute to the refuse service that will be established for the
project. A one-time charge of $.35 per square foot will cover costs
of waste removal. Tenant is responsible to deliver and place trash
in the receptacles (open top containers) which will be strategically
placed in predetermined areas by the Landlord. Tenant must use
designated areas for location of refuse containers and must keep
surrounding areas free from debris and trash or Tenant will be
subject to backcharges.
9. Special Requirements for Roof Penetrations - Any work, including
cutting, venting, or duct installations, which involves cutting
into, or penetrating in any manner, the existing roof structure
and/or roofing material MUST BE PERFORMED BY LANDLORD'S ROOFING
CONTRACTOR AT
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TENANT'S EXPENSE. Tenant shall not permit his contractor or any
subcontractor to perform such work. Tenant shall be liable for all
damage resulting from unauthorized roof penetrations and their
consequent effect on the integrity of the roof and its guarantee by
the Manufacturer or Contractor.
10. Insurance - Tenant should make early arrangements with an insurance
company to provide the coverage required within the lease. PRIOR TO
THE START OF TENANT'S WORK, LANDLORD MUST RECEIVE THE CERTIFICATE OF
INSURANCE REQUIRED UNDER THE LEASE.
11. Notice of Responsibility - Landlord shall have the right to post and
record a notice of non-responsibility for work being performed by
Tenant within the premises as permitted by law. Tenant shall give
Landlord prompt written notice of the commencement of Tenant's Work.
12. Bonds or Other Security - Landlord shall have the right to require
Tenant to furnish payment bond or other security in form
satisfactory to Landlord for the prompt and faithful payment of all
costs and expenses incurred in the performance of Tenant's Work.
13. Certificate of Occupancy - Upon completion of Tenant's Work, Tenant
shall provide Landlord with a copy of the certificate of occupancy
issued by the appropriate governmental agency for occupancy of the
premises.
<PAGE>
Exhibit "B"
Site Plan
Omitted
<PAGE>
EXHIBIT "C"
COMMENCEMENT DATE AGREEMENT
This Agreement, made as of this ____ day of _______, 199_, between
CHELSEA REALTY PARTNERSHIP, L.P. (herein called "Landlord"), and
_____________________________ (herein called "Tenant").
W I T N E S S E T H:
WHEREAS, that certain lease dated __________ ___, 199_ (herein
called the "Lease"), has commenced;
NOW, THEREFORE, Landlord and Tenant agree as follows:
1. The Commencement Date was __________ ___, 199_.
2. The Rent Commencement Date was __________ ___, 199_.
3. The term of the Lease shall expire on __________ ___, 199_,
unless Tenant shall exercise any option to extend the term of the Lease or
unless the Lease terminates earlier as provided in the Lease.
4. The Floor Space of the Demised Premises (as such term is defined
in the Lease) is _______ square feet.
5. If this Commencement Date Agreement is not executed and delivered
to Landlord within fourteen (14) days of the above date, these terms will be
accepted as part of the Lease.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed the day and year first above written.
LANDLORD:
Chelsea GCA Realty Partnership. L.P.,
By: Chelsea GCA Realty, Inc.
General Partner
ATTEST OR WITNESS:
By: By:
---------------------------- --------------------------------
TENANT:
[ ]
ATTEST OR WITNESS:
By: By:
---------------------------- --------------------------------
<PAGE>
EXHIBIT "D"
RULES AND REGULATIONS
AND STOREFRONT CRITERIA
1. Tenant shall supply replacement light bulbs, ballasts, etc., for
interior lighting of the Demised Premises.
2. Tenant shall provide and maintain adequate, functioning fire
extinguisher(s) readily available within the Demised Premises.
3. Tenant shall provide and maintain a small First Aid kit available
within the Demised Premises in the event of cuts or minor injuries.
4. Tenant shall keep the Demised Premises in a neat and clean
condition and shall maintain the Demised Premises and Tenant's personal property
therein as an attractive shopping area in accordance with the general character
of the Shopping Center. Tenant shall ensure that rugs or doormats in front of
the Demised Premises are brushed or shaken daily.
5. Tenant shall keep the windows of the Demised Premises clean
inside and outside. However, Tenant shall not permit the cleaning of any windows
or other exterior maintenance and janitorial services to be performed except by
such person(s) as shall be approved by Landlord and except during reasonable
hours designated by Landlord for such purpose.
6. Tenant shall comply with all applicable smoking regulations. No
smoking shall be allowed within the Demised Premises; customers and invitees
shall be so advised when violating this rule.
7. Tenant shall comply with all regulations concerning the disposal
of trash from the Demised Premises and shall not throw, discard or deposit any
paper, glass or extraneous matter of any kind, except in designated receptacles,
or create litter or hazards of any kind. In general, trash from daily operations
should be placed in plastic garbage bags, securely tied at the top and deposited
in the appropriate dumpster. No trash or boxes may be left in front of the
Demised Premises. All cartons must be crushed flat and tied in bundles. There
shall be no burning of trash, refuse or waste materials.
8. Tenant shall not deface, damage or demolish any part of the
Demised Premises or any sign, light standard or fixture, landscaping materials
or other improvement within the Shopping Center, or the property of any
customers, invitees or employees situated within the Shopping Center.
9. Tenant shall not use, permit or suffer the use of the Demised
Premises, or any part thereof, for any purpose other than for the retail sale of
the items identified in Tenant' Lease. Specifically, but not by way of
limitation, Tenant shall not use, permit or suffer the use of the Demised
Premises, or any part thereof, as living, sleeping or lodging quarters, or other
residential purpose, nor shall tenant store or stock in the Demised Premises any
goods, wares, merchandise or other property except such as are reasonably
required for the conduct of Tenant's business in the Demised Premises.
10. Tenant shall operate the heating, ventilating and
air-conditioning system servicing the Demised Premises in such a manner so as to
provide (i) adequate heat, ventilation and air-conditioning in and to the
Demised Premises during all business hours of the Shopping Center and (ii)
sufficient heat during all other times so as to prevent freezing of all pipes
within the Demised Premises.
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11. Tenant shall not carry on any trade or occupation, or operate
any instrument or apparatus or equipment which emits any odor or causes any
noise or sound discernible outside the Demised Premises and/or which may be
deemed offensive in nature. Tenant shall not use any televisions, flashing
lights or other devises in a manner so as to be seen outside of the Demised
Premises. Tenant shall not install or permit to be installed in, on or about the
Demised Premises any audio, video or radio transmitting equipment, diathermy
equipment, x-ray equipment or any other material or equipment which would cause
any interference with, or interruption of, electronic reception or transmission
anywhere in the Shopping Center.
12. Tenant shall not obstruct the passageways, driveways, walks,
roadways, exits and entries in, to, from and through any part of the Shopping
Center used in common with other tenants.
13. Tenant shall cause all trucks servicing it to load and unload
prior to or after the hours of the Shopping Center opening for business to the
general public.
14. Tenant shall promptly execute and deliver whatever instruments
may be required to carry out the intent of any provision of the Lease.
15. Tenant shall not use any Common Area for any purpose, other than
ingress, egress and parking, and such other common purposes as may be designated
by Landlord from time to time. Tenant, its employees and/or agents, shall not
solicit business in the parking or other Common Areas, nor shall Tenant, its
employees or its agents, distribute any handbills or other advertising matter in
or on the parking or other Common Areas, or in or on any automobiles parked
therein, except as may be expressly permitted by Landlord in each instance.
16. Tenant shall be open for business during the days and hours
established by Landlord, which days and hours may be changed from time to time
at Landlord's discretion.
17. Tenant shall not use the plumbing facilities for any purpose
other than that for which they are constructed, and no grease, paint or foreign
substance of any kind shall be disposed of therein, and the expense of any
breakage, stoppage, damage or environmental clean-up mitigation efforts (whether
on or off the Demised Premises) resulting from any breach thereof shall be borne
by Tenant.
18. Tenant shall not operate in or on the Demised Premises or in any
part of the Shopping Center any coin or token operated vending machine or
similar device for the sale of merchandise (including, without limitation, pay
lockers, pay toilets, scales, amusement devices, and machines for the sale of
beverages, foods, candy, cigarettes or other commodities).
19. Tenant shall not place or maintain any display of merchandise,
or otherwise conduct any business (including, with limitation, the storage of
any merchandise or other property of Tenant), in any areas of the Shopping
Center outside of the Demised Premises without the express permission of
Landlord.
20. Tenant shall keep its display windows and sales areas
illuminated and its signs and exterior lights lighted each and every day of the
Term during the hours designated by Landlord.
21. Tenant or its agents shall not enter upon or have access to any
roof at the Shopping Center without Landlord's express prior consent in each
instance.
22. If the Demised Premises are or become infested with vermin,
Tenant shall at Tenant's expense cause the same to be exterminated from time to
time to the satisfaction of Landlord and shall employ such exterminators and
such exterminating company or companies as shall be approved by Landlord.
2
<PAGE>
23. Tenant shall require its employees to park in any designated
"Employee Parking Area" as directed by Center Management. On written notice from
Landlord, Tenant shall provide to Landlord within five (5) days, the State
automobile license tag numbers assigned to its automobile or automobiles and the
automobiles of all of its officers, agents and employees employed in the Demised
Premises. Landlord shall be required to issue no more than one written warning
per employee violation of this provision, and may thereafter levy a fine of
$25.00 per occurrence, which shall be billed to Tenant as Additional Rent.
Landlord shall apply the proceeds of such fines as additional marketing
expenditures for the Shopping Center. After issuance of a written warning
pursuant to the forgoing provision, Landlord, at its sole discretion, shall have
the right to cause an employee's illegally parked car to be towed at the owner's
expense. Further, vehicles operated by Tenant's Employees shall be subject to
all regulations, limits, and ordinances imposed by the Shopping Center or any
governing authority.
24. In the event Landlord provides the name of a bank to provide
armored car service for cash deposits and money transfers, Tenant shall give
reasonable consideration to it use of such armored car service.
Wrentham
January 28, 1998
3
<PAGE>
[GRAPHIC OMITTED]
Storefront Criteria
Tenant Issue
1 July 1996
- ------------
CHELSEA GCA
REALTY, INC.
- ------------
<PAGE>
STOREFRONT CRITERIA
1. Display windows
A. The Tenant is responsible, at all times, for the appearance and
maintenance of the display windows of their store.
B. Displays and merchandising must be done with good taste and must be
professionally executed.
C. The Landlord reserves the right to require the Tenant to remove, repair
or restore any display that the Landlord considers to be in poor taste or
unprofessional.
D. No Tenant shall be permitted to "tint" their display windows.
1. Tenants experiencing excessive glare and/or merchandise fading
may request permission to have professionally installed transparent
UV film to block harmful rays.
2. Tenants permitted to install such film are responsible for
maintenance of the film.
3. Upon lease termination, the Tenant is also responsible for
removal of the film.
E. In certain situations, display windows may require special solutions to
optimize customer viewing. Risers and props are encouraged for use in
display windows to enhance the window appearance and presentation of the
product
F. Tenants are responsible for ensuring interior and exterior surfaces of
display windows and entrance doors are kept clean at all times.
G. The use of tape on doors, windows, or storefront frames is prohibited.
H. The display or use of multiple product boxes (such as shoe boxes) in
windows or displays is strongly discouraged and prohibited above 30" from
grade.
I. Cartons and boxes used for shipping or storage must be kept clear of
windows and doorways at all times.
J. "Blacking out" or painting of windows, including holiday themes, is
prohibited.
K. Merchandise may not be attached to entrance doors or storefront windows
at any time.
Page 1
<PAGE>
2. Display Lighting
A. The Tenant is required to provide and install appropriate lighting
fixtures to illuminate the area inside each storefront window "window
display area" to no less than 100 foot-candles measured 36" inward from
glazing and 36" above grade.
1. Either quartz or incandescent lighting is permitted. Fluorescent
lighting is prohibited for use in window display illumination.
2. Surface mounted adjustable track, or recessed lighting may be
utilized to illuminate the window display area.
3. Plans for such lighting must be included with initial Tenant
buildout plans and are subject to Landlord's approval.
4. All Tenant supplied and installed lighting fixtures must be "UL
Approved".
B. Each window display must be illuminated for day and night viewing.
C. The Tenant is responsible for maintenance, repair, and bulb replacement
for all lighting within Tenant's space.
D. The Landlord reserves the right to require the Tenant to remediate any
display lighting conditions deemed to be inadequate.
E. The Landlord reserves the right to determine the minimum hours window
display lighting shall remain illuminated after store closing.
F. If required by the Landlord, the Tenant shall be responsible for
installation and proper operation of any time-switching device needed to
ensure compliance with required lighting hours.
[GRAPHIC OMITTED]
Display Lighting
Track lighting mounted to the back face of storefront soffit gives the best
opportunity for lighting merchandice and displays.
Page 2
<PAGE>
3. Storefront Signage
All permanent Signage must be formally approved by the Landlord prior to
fabrication and installation. Any unapproved sign placed upon or outside
of Store or in any part of the Shopping Center shall be considered as a
violation of the Tenants Lease Agreement.
A. EXTERIOR STORE IDENTIFICATION SIGNAGE
The Landlord permits permanent store identification signage under
provisions contained in the Tenant Sign Criteria. This Criteria is in
compliance with local regulations and has been adopted by the local
governing authority having such jurisdiction. Please consult this Criteria
for Primary and, if applicable, Secondary Building Signage and
installation requirements.
B. TEMPORARY EXTERIOR STORE IDENTIFICATION SIGNAGE.
While the Lease requires a permanent sign to be installed, the Landlord
recognizes that permits and installation may be occasionally delayed. In
these instances, temporary banner signage may be approved, including size
and location of placement, by the Tenant Coordinator or General Manager.
1. Unless previously approved by the Tenant Coordinator, all
temporary signage requires that an application be completed and
submitted to the General Manager for review and approval.
2. Each Variance is limited to the earlier of four weeks or the date
of permanent signage installation. Upon expiration, the variance may
be extended upon Landlord receiving documentation of scheduled
installation of permanent signage.
3. The size of Temporary Signage is limited to the letter dimensions
permitted for permanent signage under the Tenant Sign Criteria.
4. Temporary signage must be installed in a manner acceptable to
Landlord. Damage to storefront/fascia caused by improper
installation of temporary signage shall be solely the responsibility
of Tenant. Repairs of such damage shall be made by Landlord at
Tenants expense.
Page 3
<PAGE>
C. ENTRY DOOR / STOREFRONT WINDOW SIGNAGE
1. For the purpose of store identification, the Tenant may propose
to the Landlord a design layout of Tenant name and/or logo in white
or black Vinyl Die-Cut Graphics for placement on the inside of entry
doors. Each door is permitted 1 SF of Vinyl Die-Cut Sign area. The
area must be centered 60" from grade.
2. For the purpose of additional store or brand/logo identification,
the Tenant may also propose to the Landlord a design layout of store
name or brand/logo in white or black vinyl die-cut graphics for
placement on the inside of every other (alternating) display
windows. The maximum permitted area on each window may not exceed 1
SF and placement must occur in the centered area measured a minimum
of 8" inward toward the window's center from the vertical edges of
the window and may nor exceed 42" above grade.
3. Permanent store or brand/logo signage as a part or window
background display is limited to 1 SF of sign area per 1 lineal foot
of store frontage.
4. Tenant supplied "Help Wanted" signs are prohibited.
5. "Help Wanted" and other standard information signs as deemed
necessary by Landlord, are provided by Landlord and shall be affixed
to the inside left edge of the window immediately adjacent
immediately to the right of entry doors and no higher than 48" above
grade. Such signage shall only be permitted to be affixed with clear
suction cups.
6. Standard information signage icons such as hours, no food, drink,
smoking, etc. shall be provided by Landlord only.
7. Other than as provided in Items 3-C-1, 2, 5, and 6, no signage of
any type is permitted to be placed in or affixed to storefront
windows or doors.
8. Credit card or check acceptance signs or logos placed on
storefront display windows or doors are prohibited.
9. Alarm company stickers shall be limited to one per entry door and
be located only at the extreme lower right corner of the glass area
on the door.
[GRAPHIC OMITTED]
Entry door signage
[GRAPHIC OMITTED]
Window signage
Page 4
<PAGE>
10. Handicap access stickers are permitted and shall be placed
according to A.D.A. or local jurisdiction under the supervision and
approval of the Landlord.
11. The Landlord reserves the right to require a Tenant, at its
expense, to remove any storefront signage it considers to be
non-complying or unprofessional.
12. No security alarm boxes shall be installed on or above
storefronts. All alarm boxes are to be placed on the rear facade of
the building only.
D. TEMPORARY PROMOTIONAL SIGNAGE
1. All temporary signage requires that an application be completed
and submitted to the General Manager for review and approval of
Promotional Sign Variance.
2. Each Variance shall be limited to two weeks, and upon expiration
may be renewed once with proof of supporting advertising (4 weeks
maximum).
3. The total area of Promotional Signage is limited to 1 SF per
lineal foot of storefrontage.
4. All temporary promotional signage must be professionally
produced. Handmade or personal computer graphics signs are
prohibited.
5. Promotional Signs affixed in any manner to storefront windows or
entry doors are prohibited. Such signs intended to be visible
through storefront windows may be temporarily suspended with
aircraft cable or monofilament no closer than 12" from the inside of
the window.
6. Individual Sign Panels must be spaced a minimum of 6' from one
another.
7. Fabric or lightweight posters must be weighted. Curled sign
materials are not permitted.
8. All interior banners shall be considered "Temporary Promotional
Signage" and as such, be subject to all rules governing same. The
area of interior banners may not exceed 1 SF per lineal foot of
storefront. In no case may an interior banner be hung closer to the
storefront than half the distance from the furthest back wall of the
store.
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
Promotional Signage
Temporary Signs suspended from ceiling
Page 5
<PAGE>
and may not be suspended with the lower edge less than 8 feet above
the floor.
9. Exterior banners for promotional purposes are prohibited.
l0. "A-frame", poster holder, or other types of free-standing signs
may not be placed outside of the Lease Line at any time. The Lease
Line is defined as the boundary between storefront glazing and
entrance doors, and common area.
11. No merchandise shall be placed outside of Lease Line (see No.
10).
4. Submittals & Approvals
A. All Tenant signage is subject to the Landlord's approval at its sole
discretion. The Landlord's approval shall be based upon the following
Criteria:
1. The design, fabrication and method of installation of all signs
shall conform to the Tenant Sign Criteria and this Storefront
Criteria.
2. The proposed sign shall conform with the design standards of the
center and shall be in harmony with adjacent signage.
B. The Tenant shall conform to the Tenant Sign Criteria regarding
procedures and submissions requirements necessary to secure the Landlord's
approval.
C. The Landlord reserves the right to revise the Tenant Sign Criteria and
Storefront Criteria from time to time. These Criteria may also be revised
at any time, if so required, by any governmental agency having appropriate
jurisdiction.
D. In the event the Tenant changes permanent signage at any time during
the term of their lease, the Tenant must then comply with all subsequent
modifications, revisions or changes which may have been made to the Tenant
Sign Criteria or Storefront Criteria for the center after the execution of
the Lease Agreement.
E. All signs shall be reviewed for conformance with these Criteria and
overall design quality. Approval or disapproval of sign submittals based
on aesthetics of design shall remain the sole right of the Landlord.
Page 6
<PAGE>
5. Prohibited Signs, Displays, and Acts.
A. SIGNS CONSTITUTING A TRAFFIC HAZARD
Signs which simulate or imitate in size, color, lettering or design, any
traffic sign or signal, or which makes use of the words "STOP", "LOOK",
"DANGER", or any other words, phrases, symbols or characters in such a
manner to interfere with, mislead or confuse traffic are prohibited.
B. IMMORAL OR UNLAWFUL SIGNAGE
Signs referencing anything of any obscene, indecent, or immoral nature or
unlawful activity are prohibited.
C. SIGNS ON DOORS. WINDOW OR FIRE ESCAPE PATHS
Placement of signs in the walkway area in front of stores is not
permitted. No signs shall be installed, relocated or maintained so as to
prevent free ingress to or egress from any door.
D. ANIMATED, AUDIBLE, OR MOVING SIGNS
Signs consisting of, or giving the effect of moving, swinging, rotating,
flashing, blinking, scintillating, fluctuating or having animated light or
sound are prohibited.
E. CREDIT CARD OR CHECK ACCEPTANCE SIGNS OR LOGOS
Placement of vendor provided adhesive signs on entry doors or storefront
glass is prohibited.
F. UNPROFESSIONAL SIGNS
Hand lettered or personal computer printed signs are prohibited in public
view. Absolutely no signs are permitted to be taped to the storefront or
any other surface in public view.
G. NEON OR INTERNALLY ILLUMINATED SIGNS
Unless specifically approved by the Landlord, neon or internally
illuminated signage is prohibited inside stores.
H. OFF-PREMISES SIGNS
Any sign installed for the purpose of advertising a project, event, person
or subject occurring not on center property is prohibited unless
specifically authorized by the Landlord.
I. VEHICLE SIGNS
Signs on or affixed to trucks, automobiles, trailers or other vehicles
which advertise, identify or provide direction to a use or activity not
related to its lawful making of deliveries of merchandise or service, are
prohibited.
Page 7
<PAGE>
J. INVENTORY LIQUIDATION SIGNS
"Going Out of Business", "Bankruptcy Sale", "Closing This Store", "Lost
Our Lease", etc. signs are strictly prohibited.
K. LIGHT BULB STRINGS
Displays, other than temporary, decorative holiday lighting during the
months of November and December, which consist of unshielded light bulbs
or light bulb strings are prohibited unless otherwise specifically
approved.
L. FLYERS
Distribution of flyers, for any purpose, outside of Tenant's leased
premises, unless specifically authorized by the Landlord is prohibited.
Page 8
<PAGE>
Exhibit 10.12
SPLIT DOLLAR AGREEMENT
NEW YORK LIFE INSURANCE
POLICY NO. 46 184 235
AGREEMENT made as of this 22nd day of December, 1997, by and between Gordon
R. Cooke of New York, New York (the "Employee"), and DM Management Company, a
Delaware corporation (the "Employer").
WHEREAS, the Employee wishes to establish a life insurance program for the
benefit and protection of his family under Policy No. 46 184 235 (the "Policy")
issued by New York Life Insurance Company, of New York, New York (the
"Insurer"); and
WHEREAS, the Employer wishes to help the Employee provide such insurance
for the benefit and protection of his family by the payment of a portion of the
premiums due on the Policy in accordance with Article 2 hereof; and
WHEREAS, the Employee will be the sole owner of the Policy, and will assign
the Policy to the Employer for the purpose of providing security for the
repayment of the amounts which the Employer will contribute toward payment of
the premium due or to become due on the Policy pursuant to an agreement of even
date to be executed by the parties hereto (the "Collateral Assignment"); and
WHEREAS, it is the desire of the parties to define the extent of the
Employer's interest in the cash surrender value and death proceeds of the
Policy;
NOW THEREFORE, in consideration of the mutual promises contained herein, it
is agreed between the parties hereto as follows:
ARTICLE 1: Ownership of Policy
The Policy is the exclusive property of the Employee, who may exercise
all rights of ownership with respect to his interest therein, subject to the
security interest of the Employer as expressed in this Agreement and the
Collateral Assignment and to any death benefit which may become due to the
Employer.
ARTICLE 2: Payment of Premiums
A. For the first seven (7) years the Policy is in force, or until this
Agreement is earlier terminated as provided in Article 8, the Employer shall be
responsible for the payment of (i) the scheduled premium less the premium
payable by the Employee as described in Article 2, Section B,
<PAGE>
or (ii) such lesser amount as the Insurer advises is consistent with the
insurance features of the Policy. In addition, after the expiration of said
seven-year period and while this Agreement is still in effect, the Employer may
make such additional payments as the Insurer advises is consistent with
maintaining the intended value of the Policy but only if such greater amount or
additional payments are approved by the Compensation Committee of the Employer's
Board of Directors.
B. Whenever the Employer makes a premium payment, the Employee shall be
responsible for the payment of a portion of said premium which is equal to the
value of the reportable economic benefit of the life insurance protection
afforded the Employee, the so-called P.S. 58 rate of a one-year term policy of
insurance on the Employee's life.
C. Provided that the Employer has received from the Employee the Employee's
portion of the premium due, the Employer shall, before the end of any grace
period provided in the Policy for each premium payment, remit the annual
premiums as stated in the Policy until this Agreement is terminated as provided
in Article 8. If requested, the Employer shall give proof to the Employee of the
timely payment of each premium.
ARTICLE 3: Collateral Assignment
To secure the repayment to the Trust of an amount equal to the aggregate
amount of its premium payments under the Policy to the extent provided in
Article 6, the Employee has contemporaneously with the execution of this
Agreement assigned the Policy to the Employer as collateral, by means of the
form of Collateral Assignment attached to this Agreement as Schedule 1. The
Collateral Assignment shall not be altered, terminated or amended by Employee
without the express written consent of the Employer. The parties agree to take
all action necessary to cause such assignment to conform to the provisions of
this Agreement.
ARTICLE 4: Rights in Policy
A. The Employer shall have no right to borrow against the Policy.
B. The Employer shall have the right to allocate the aggregate account
value to particular investment vehicles.
C. The Employee shall have the right to exchange the Policy for such other
policies and/or insurers that he deems appropriate based upon the investment
performance or financial condition of the Insurer, subject to the approval of
the Employer, which approval shall not unreasonably be denied. Action by the
Employee or the Employer to change the Policy and/or insurer pursuant to this
paragraph shall not otherwise alter the rights and responsibilities of the
Employer and the Employee as set forth in this Agreement.
D. The Employer shall have no responsibility for a shortfall in the
projected total return on the paid-in premiums available to provide the death
benefit.
2
<PAGE>
E. The Employer shall not take any action that might endanger the interest
of the Employee in the Policy. The Employee shall not take any action that might
endanger the interest of the Employer in the Policy.
ARTICLE 5: Employee's Rights in Policy
The Employee retains all other rights in the Policy not specifically
assigned to the Employer including, but not limited to, the following rights:
A. The right to surrender the Policy as set forth in Paragraph D of the
Collateral Assignment.
B. The right to change the beneficiary of the Policy, to the extent of his
interest.
C. The right to select optional methods of settlement with regard to the
death benefit provided in PART TWO of Article 7.
D. All other rights contained in the Policy, to the extent the exercise of
such rights does not adversely affect the Employer's interest in the Policy.
ARTICLE 6: Payment of Cash Surrender Value
A. Except as set forth in this Article 6, Section B, in the event this
Agreement is terminated pursuant to Article 8, the Employer shall have the
unqualified right to receive from the Insurer a sum which is equal to the lesser
of (a) the then cash surrender value as defined in the Policy or (b) the
aggregate unreimbursed amount of premium payments with respect to the Policy for
which the Employer was responsible pursuant to Article 2, Section A (the
"Premium Reimbursement"). This amount shall be established in a written
statement to the Insurer by the Employer, and the Insurer shall have the right,
without liability to the Employee or his beneficiary or beneficiaries of the
Policy, to rely exclusively upon such statement. The Employer shall, upon
receiving such sum, release the Collateral Assignment of the Policy.
B. In the event that this Agreement is terminated pursuant to Section B of
Article 8 after the occurrence of a "Terminating Event" (as defined in Section C
of this Article 6), the Employer shall not be entitled to receive the Premium
Reimbursement pursuant to Section A of Article 6.
C. For purposes of this Article 6, a "Terminating Event" shall mean any of
the following if it occurs within two years of a "Change in Control" (as defined
in Section E of this Article 6):
(i) termination by the Employer of the Employee's employment with the
Employer for any reason other than (a) the Employee's death or disability, or
(b) for "Cause" (as such term is defined in Section D of this Article 6), or
3
<PAGE>
(ii) Employee's resignation as an employee of the Employer, other
than for reasons of disability, following a significant reduction in the nature
or scope of the Employee's duties, responsibilities, authority and powers from
the duties, responsibilities, authority and powers exercised by the Employee
immediately prior to the Change in Control or a reduction in the Employee's
annual base salary as in effect on the date of the Change in Control, except for
across-the-board salary reductions similarly affecting all management personnel
of the Employer (or the surviving entity, in the case of a merger or acquisition
in which the Employer is not the surviving entity).
D. For purposes of Section C of this Article 6, "Cause" shall mean:
(i) deliberate dishonesty with respect to the Employer or any
subsidiary or affiliate thereof;
(ii) conviction of a crime involving moral turpitude; or
(iii) gross and willful failure to perform a substantial portion of
the Employee's duties and responsibilities as an officer of the Employer, which
failure continues for more than thirty days after written notice given to the
Employee pursuant to a two-thirds vote of all of the members of the Board of
Directors of the Employer then in office, such vote to set forth in reasonable
detail the nature of such failure.
E. For the purposes of this Article 6, "Change in Control" shall mean the
occurrence of any one or more of the following events:
(i) if there is a merger or consolidation of the Employer with any
other entity and the voting securities of the Employer outstanding immediately
prior to such merger or consolidation do not continue to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the combined voting power of
the voting securities of the Employer or such surviving entity immediately after
such merger or consolidation, or
(ii) when any person or entity or group of persons or entities either
related or acting in concert becomes the "beneficial owner" (as defined in Rule
13d-3 under the Securities Exchange At of 1934, as amended) of securities of the
Employer representing more than fifty percent (50%) of the total number of votes
that may be cast for the election of directors of the Employer (any such person
or entity or group of persons or entities being referred to, collectively in the
case of any such group, as an "Acquiring Person"), or
4
<PAGE>
(iii) if the Employer sells all or substantially all of its assets to
another entity, other than in a transaction in which the voting securities of
the Employer outstanding immediately prior to such transaction continue to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than fifty percent (50%) of the
combined voting power of the voting securities of the Employer or such surviving
entity immediately after such transaction, or
(iv) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who are Continuing
Directors (as hereinafter defined) cease for any reason to constitute at least a
majority of the Board of Directors of the Employer. For this purpose, a
"Continuing Director" shall mean (a) an individual who was a director of the
Employer at the beginning of such period or (b) any new director (other than a
director designated by an Acquiring Person) whose election by the Board or
nomination for election by the Board, a committee thereof or the Employer's
stockholders was approved by a vote of a majority of the directors then still in
office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved; or
(v) one or more Acquiring Persons has succeeded, as the result of or
in response to actual or threatened election contests, whether by settlement or
otherwise, in having elected to the Board of Directors of the Employer, whether
at one time or on a cumulative basis, a sufficient number of its nominees to
constitute (a) more than thirty percent (30%) of the members of the Employer's
Board of Directors, rounded down to the nearest whole number, if the number of
directors on the Employer's Board is eight or less, or (b) more than forty
percent (40%) of the members of the Employer's Board, rounded down to the
nearest whole number, if the number of directors on the Employer's Board is nine
or more.
ARTICLE 7: Payment of Death Benefit
In the event of the death of the Employee while the Policy and this
Agreement are in force, the proceeds of the Policy shall be divided into two
parts and paid as follows:
PART ONE: To the Employer, a sum equal to the aggregate unreimbursed
amount of premium payments for which the Employer was responsible
pursuant to Section A of Article 2, unless Section B of Article 6
applies.
PART TWO: To the designated beneficiaries of the Employee, the
remaining proceeds of the Policy.
5
<PAGE>
ARTICLE 8: Termination of Agreement
This Agreement shall terminate:
A. Upon surrender of the Policy by the Employee, except when the Policy is
surrendered and a new policy is issued pursuant to an exchange under Article 4,
Section C.
B. Upon the termination of the employment of the Employee for any reason
other than retirement at or after attaining the age of 65.
C. On the death of the Employee.
ARTICLE 9: Exchange of Policy
In the event the Employer is required to exchange the Policy under Article
4, Section C, the Employee shall execute any forms necessary or appropriate to
effect such exchange including, without limitation, the surrender of the Policy,
the transfer of proceeds to the new insurer and the execution of a new Split
Dollar Agreement and Collateral Assignment. Such exchange shall qualify under
Section 1035 of the Internal Revenue Code or successor provisions of similar
import.
ARTICLE 10: Obligations of Insurer
Any payments made or action taken by the Insurer in accordance with the
provisions of the Policy and the Collateral Assignment shall fully discharge it
from all claims, suits, and demands of all persons whatsoever.
ARTICLE 11: Miscellaneous
A. This Agreement shall be binding upon the parties hereto, their heirs,
legal representative, successors and assigns.
B. This Agreement and the Collateral Assignment embody all agreements
between or among the parties with respect to the Policy, and no change,
alteration, or modification may be made except in writing signed by all parties
hereto.
C. This Agreement shall be governed by, and construed in accordance with
the provisions of, the laws of the Commonwealth of Massachusetts without regard
to its principles of conflicts of laws.
D. Any dispute, controversy or claim with respect to any party's
performance under this Agreement shall be settled by arbitration in accordance
with the laws of The Commonwealth of
6
<PAGE>
Massachusetts by a single arbitrator who shall be selected by the American
Arbitration Association in Boston, Massachusetts. Such arbitration shall be
conducted in the City of Boston in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. Punitive damages shall not
awarded. Judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof.
IN WITNESS WHEREOF, the parties hereto have set their hand and seals
effective as of the day and year first above written.
/s/ Gordon R. Cooke
---------------------------------------
Gordon R. Cooke, Employee
Date: October 1, 1998
DM MANAGEMENT COMPANY, Employer
By /s/ Olga L. Conley
------------------------------------
Its Chief Financial Officer
------------------------------------
Date: October 1, 1998
----------
7
<PAGE>
Schedule 1 to Split Dollar Agreement
ASSIGNMENT OF LIFE INSURANCE POLICY AS COLLATERAL
A. FOR VALUE RECEIVED, the undersigned Gordon R. Cooke (hereinafter the
"Owner") hereby assigns, transfers and sets over to DM Management Company, a
Delaware corporation, its successors and assigns (hereinafter the "Assignee"),
the following specific rights (and only those specific rights) in and to policy
number 46 184 235, issued by New York Life Insurance Company (hereinafter the
"Insurer") and any supplementary contract or contracts issued in connection
therewith (said policy and any such contracts hereinafter the "Policy"),
insuring the life of the Owner, subject to all terms and conditions of the
Policy and to all superior liens, if any, which the Insurer may have against the
Policy. The Owner, by this Assignment, and the Assignee, by acceptance of the
Assignment of the Policy to it hereunder, agree to the terms and conditions
contained in the Policy.
B. This Assignment is made, and the Policy is to be held as collateral
security for, all rights of and obligations owed to the Assignee, now existing
or hereafter arising under and pursuant to a certain Split Dollar Agreement, by
and between the Owner and the Assignee of even date herewith pertaining to the
Policy (hereinafter the "Agreement"). The Owner reserves all rights and powers
in and to the Policy, except those specific, limited rights in the Policy
granted to the Assignee hereby, as security for all rights of and obligations
owed to the Assignee under the Agreement.
C. It is expressly agreed that the Assignee's interest in the Policy under
and by virtue of this Assignment shall be limited to the following specific
rights, and no others: (1) in the case of the death of the Owner, the right to
be paid the amounts due it under PART ONE of Article 7 of the Agreement by
recovering said amounts directly from the Insurer out of the net death proceeds
of the Policy; (2) in the event that Agreement is terminated pursuant to Article
8, Sections A or B, the right to be paid the amount due it, if any, under
Article 6 of the Agreement. Neither party shall have the right to borrow against
the Policy, except that the Owner may borrow against the Policy after attaining
the age of 65, so long as such borrowing shall not include funds from the
Assignee's interest in the Policy.
D. Notwithstanding this Assignment, the Owner shall specifically retain all
incidents of ownership in and to the Policy, including, but not limited, to: (1)
in accordance with the terms of the Agreement, the right to cancel or surrender
the Policy and to receive, subject to Paragraph C. 2. hereof, the surrender
value thereof at any time provided by the terms of the Policy and at such other
times as the Insurer may allow; (2) the right to designate and change the Policy
beneficiary, with respect to the amount to be paid pursuant to PART TWO of
Article 7 of the Agreement; (3) the right to elect any optional methods of
settlement with regard to the death benefit under PART TWO of Article 7; (4) the
right to borrow against the Policy after the Owner
1
<PAGE>
attains age 65; and (5) all other rights contained in the Policy to the extent
the exercise of such rights does not adversely affect the interest of the
Assignee; provided, however, that all of the foregoing rights retained by the
Owner in the Policy shall be subject to the terms and conditions of the
Agreement.
E. The Assignee agrees with the Owner as follows: (1) any funds received by
Assignee from the Insurer which are attributable to the portion of the death
benefit allocated to PART TWO of Article 7 of the Agreement shall be paid by the
Assignee to the beneficiaries designated by the Owner; and (2) if the Policy is
in the possession of the Assignee, the Assignee will, upon the Owner's request,
forward the Policy to the Insurer, without unreasonable delay, for endorsement
of any designation or change of beneficiary, any election of optional mode of
settlement, or the exercise of any other right reserved by the Owner hereunder.
F. Notwithstanding anything in this Assignment to the contrary, the Insurer
shall be under no obligation to monitor the obligation of the Assignee hereunder
to pay to the designated beneficiaries of the Owner any amounts received from
the Insurer under PART TWO of Article 7 of the Agreement after payment of PART
ONE to the Assignee under the Agreement; and the Insurer shall have no
obligation or liability to any person or entity if the Assignee fails to pay
such amounts as required hereunder.
G. The Insurer is hereby authorized to recognize, and is protected in
recognizing, the Assignee's claims to amounts due it hereunder without
investigating the validity of its claim thereto, the reason for any action taken
by the Assignee, the validity or accuracy of the amount of any of the
liabilities of the Owner to the Assignee under the Agreement, the existence of
any default therein, the giving of any notice required therein, or the
application to be made by the Assignee of any amounts to be paid to the
Assignee. A receipt executed solely by the Assignee for any amounts received by
it from the Insurer shall be a full discharge and release of the Insurer from
the obligations released thereby.
H. In furtherance hereof, the Owner appoints the Assignee his
attorney-in-fact for the following purposes:
1. to receive the portion of the death benefit payable to the Assignee
upon the death of the Owner under PART ONE of Article 7 of the
Agreement; and
2. to receive, upon termination of the Agreement pursuant to Article 8,
Sections A or B thereof, the amount, if any, designated in Article 6,
Sections A or B of the Agreement, as the case may be.
This appointment is coupled with an interest in the Assignee and shall be
irrevocable so long as the Agreement remains in force.
2
<PAGE>
I. The Insurer shall not comply with a request made by the Owner for
cancellation or surrender of the Policy without the consent of the Assignee.
Upon receipt of an assented-to request for cancellation or surrender, the
Insurer shall terminate the Policy and this Assignment shall be of no further
force or effect; provided, however, that the Insurer shall set aside and deduct
from any amounts to be paid to the Owner under the terms of the Policy in
consequence of its cancellation or surrender, the amount due to the Assignee
under the provisions of Article 6 of the Agreement, which amount shall be paid
to the Assignee by the Insurer.
J. In the event of any conflict between the provisions of this Assignment
and the provisions of the Agreement with respect to the Policy or the Assignee's
rights therein, the provisions of the Agreement shall prevail.
K. The Owner declares that no proceedings in bankruptcy are pending against
the Owner and that the Owner's property is not subject to any assignment for the
benefit of creditors of the Owner.
Signed and sealed as of the 22nd day of December, 1997.
/s/ Gordon R. Cooke
----------------------------
Gordon R. Cooke, Owner
Date: October 1, 1998
---------
Accepted and Agreed:
DM Management Company
By: /s/ Olga L. Conley
--------------------------
Its: Chief Financial Officer
-------------------------
Date: October 1, 1998
---------
ACKNOWLEDGEMENT OF SIGNATURE OF OWNER
COMMONWEALTH OF MASSACHUSETTS )
COUNTY OF ) ss:
On the 1st day of October, 1998, before me personally came Gordon R.
Cooke, to me known to be the individual described in and who executed the
assignment above and acknowledged to me that he executed the same.
/s/ Patricia L. Eppich
-------------------------------------
Notary Public
My commission expires: April 1, 2005
--------------
3
<PAGE>
ACKNOWLEDGEMENT OF SIGNATURE OF ASSIGNEE
COMMONWEALTH OF MASSACHUSETTS )
COUNTY OF Plymouth ) ss:
On the 1st day of October, 1998, before me personally came
Gordon R. Cooke, who being by me duly sworn, did depose and say that he is the
President and C.E.O. of DM Management Company, the corporation described in and
which executed the acceptance and agreement of assignment above; and that he
signed his name thereto by the authority granted to his office.
/s/ Patricia L. Eppich
--------------------------------------
Notary Public
My commission expires: April 1, 2005
-------------
4
<PAGE>
LEASE AGREEMENT BETWEEN
TANGER PROPERTIES LIMITED PARTNERSHIP
AND
DM MANAGEMENT COMPANY
FOR THE
TANGER FACTORY OUTLET CENTER
IN
LANCASTER, PENNSYLVANIA
<PAGE>
<TABLE>
<CAPTION>
Section Page #
<S> <C> <C>
1. Premises.................................................................................................1
2. Term and Option to Renew.................................................................................2
3. Rent.....................................................................................................4
(a) Fixed Rent......................................................................................4
(b) Percentage Rent.................................................................................4
(i) Percentage Rent Payment....................................................................5
(ii) Books of Accounts.........................................................................6
(iii) Gross Sales..............................................................................6
(c) Payments Between Commencement Date and First Lease Year. .......................................7
(d) Taxes; Insurance; Repairs and Common Area Maintenance; Promotion Fund..........................7
4. Construction of Premises................................................................................11
(a) Construction...................................................................................11
(b) Completion Date................................................................................11
(c) Ready for Occupancy............................................................................12
5. Installations by Tenant.................................................................................13
6. Use of Parking Areas and Walkways.......................................................................13
(a) Common Areas...................................................................................13
(b) Changes by Landlord............................................................................14
(c) Right to Close Common Areas....................................................................14
7. Use and Care of Premises by Tenant......................................................................15
(a) Tenant's Use of Premises.......................................................................15
(b) Nature of Use..................................................................................15
(c) Reputation of the Site.........................................................................15
(d) Extra Hazardous Activity.......................................................................16
(e) Painting and Decorating........................................................................16
(f) Snow and Ice...................................................................................16
(g) Rubbish and Trash..............................................................................16
(h) Indemnification by Tenant......................................................................17
(i) Signs..........................................................................................17
(j) Waste..........................................................................................17
8. Operation of Business...................................................................................17
(a) Open for Business..............................................................................17
<PAGE>
(b) Business Hours.................................................................................18
(c) Landlord Approval of Advertising...............................................................18
(d) Use of Space...................................................................................18
(e) Character of Operations........................................................................19
(f) General Covenants of Tenant....................................................................19
(g) Insurance......................................................................................20
(h) Payment of Personal Property Taxes.............................................................21
9. Utilities...............................................................................................21
(a) Installation...................................................................................21
(b) Gas, Electricity, Water and Sewer, Lights, Heat, Power and Telephone Charges...................21
(c) Advances by Landlord...........................................................................21
10. Alterations or Improvements by Tenant...................................................................21
11. Removal of Improvements.................................................................................22
12. Access to Premises......................................................................................23
13. Repairs by Landlord.....................................................................................23
14. Reservation of Landlord.................................................................................24
15. Liability...............................................................................................24
16. Repairs by Tenant / HVAC Contract.......................................................................25
(a) Repairs by Tenant..............................................................................25
(b) HVAC Contract..................................................................................25
17. (a) Default by Tenant...................................................................................26
18. Rent Demand.............................................................................................29
19. Notices / Time..........................................................................................29
(a) Notices........................................................................................29
(b) Time...........................................................................................30
20. Damage and Destruction..................................................................................30
21. Mortgage Subordination..................................................................................30
22. Eminent Domain..........................................................................................31
<PAGE>
23. Assignment and Subletting...............................................................................33
24. Accord and Satisfaction.................................................................................34
25. Estoppel Certificates...................................................................................34
26. Waiver..................................................................................................35
27. Quiet Enjoyment.........................................................................................35
28. Interpretation..........................................................................................36
29. No Partnership..........................................................................................36
30. Exceptions to Demise....................................................................................36
31. Paragraph Headings......................................................................................36
32. Lease Inures to Benefit of Assignees....................................................................36
33. Entire Agreement / Severability.........................................................................36
(a) Entire Agreement...............................................................................36
(b) Severability...................................................................................37
34. Surrender and Holding Over..............................................................................37
35. Liability of Landlord...................................................................................37
36. Waiver of Subrogation...................................................................................38
37. Retail Restriction Limit................................................................................38
38. Financial Statements....................................................................................39
</TABLE>
<PAGE>
STATE OF PENNSYLVANIA LEASE AGREEMENT
COUNTY OF LANCASTER LANCASTER, PENNSYLVANIA
THIS LEASE is entered into as of October 23rd, 1998 by and between
TANGER PROPERTIES LIMITED PARTNERSHIP, a North Carolina limited partnership,
having an office or located at P. O. Box 29168, Greensboro, North Carolina 27429
(hereinafter referred to as "Landlord") and DM MANAGEMENT COMPANY, a Delaware
corporation, having an office at 25 Recreation Park Drive, Hingham,
Massachusetts, 02043 (hereinafter referred to as "Tenant") doing business as J.
Jill.
IN CONSIDERATION of Ten Dollars ($10.00) and other good and valuable
consideration and the mutual covenants contained herein and intending to be
legally bound hereby, Landlord and Tenant hereby agree with each other as
follows:
1. Premises. Landlord leases to Tenant and Tenant leases from Landlord
upon and subject to the terms and conditions and provisions hereof approximately
2,780 square feet of floor area (hereinafter sometimes referred to as the
"Premises"). The building is shown on the Site Plan attached hereto as EXHIBIT
"A" and made a part hereof. The Premises shall be designated as Phase I, Unit
No. 609 on EXHIBIT "A".
At any time within thirty (30) days after the Premises are ready for
occupancy (as hereinafter defined), Tenant shall have the right to cause the
Premises to be measured by an architect who shall certify to Landlord and to
Tenant the number of square feet in the Premises. Such certification shall be
deemed final unless disputed in good faith by Landlord and a certification to
the contrary is made by Landlord's architect. In the event of such dispute,
Landlord's architect and Tenant's architect shall mutually agree upon a third
architect (whose cost will be shared equally by Landlord and Tenant) who shall
measure the Premises, whose determination shall be final. If Tenant does not
notify Landlord in writing of a discrepancy in the square footage of the
Premises on or before the Commencement Date, then the Premises shall be
conclusively deemed to be 2,780 square feet.
If the measurement of the Premises discloses that the actual square
foot area differs by more than one percent (1%) from that
1
<PAGE>
stated in the Lease, the rentals and other charges due and payable under this
Lease shall be proportionately adjusted. If the actual square foot area is
between 2,752 square feet and 2,808 square feet, then the area shall be deemed
to be 2,780 square feet.
The Premises are located on property in Lancaster, Pennsylvania, said
property being more fully described on EXHIBIT "B" attached hereto and made a
part hereof (the "Site"). It is understood and agreed that all other parcels
shown on the Site Plan are shown for the sole purpose of locating and
designating such parcels for the purposes of Section 6 hereof.
2. Term and Option to Renew.
(a) The term of this Lease shall be five (5) years beginning upon (i)
the date sixty (60) days after the date specified in a written notice from
Landlord to Tenant on which the Premises are or shall be "ready for occupancy"
as such term is defined in Section 4(c) hereof or (ii) the date on which Tenant
shall open the Premises for business to the public, whichever of said dates
shall first occur, such date being hereinafter referred to as the "Commencement
Date". Unless terminated by Landlord as hereinafter provided, the term of this
Lease shall end on the last day of the fifth consecutive full lease year
thereafter, as said term "lease year" is defined in Section 2(b) hereof;
provided however, that if the Landlord has not given the notice that the
Premises are ready for occupancy as provided above on or before the date which
is one year after the date this Lease is fully executed by both parties, then
upon written notice of termination by either party delivered prior to such
notice of ready for occupancy, this Lease shall become null and void and both
parties hereto shall be relieved of all obligations hereunder.
Landlord's and Tenant's obligations under this Lease are conditioned
upon the current tenant, Welcome Home, vacating the Premises and delivering over
legal possession of the Premises to Landlord. Landlord agrees to use reasonable
efforts to see that such vacation of the Premises and delivery of the Premises
to Landlord is accomplished.
Notwithstanding any other provisions of this Lease, if at least
sixty-five percent (65%) of the leasable floor space of the
2
<PAGE>
Shopping Center of which the Premises is a part is not leased and/or open for
business to the public for one hundred twenty (120) consecutive days
("Non-Operating Co-Tenancy") and Tenant notifies Landlord in writing of the
Non-Operating Co-Tenancy ("Non-Operating Co-Tenancy Notice"), then Tenant may
pay four percent (4%) of Gross Sales in lieu of Fixed Rent beginning with the
date of delivery of the Non-Operating Co-Tenancy Notice to Landlord and
continuing until such time as the Non-Operating Co-Tenancy no longer exists, at
which time Tenant shall pay Fixed Rent as set forth in Item 3(a) or 2(d) hereof.
For purposes of this paragraph, the following shall be deemed open for business
to the public at all times: (a) the Premises; (b) space under assignment or
sublease, space which is controlled by a referee or trustee in bankruptcy or
which is otherwise out of Landlord's control; and (c) space which constitutes
new construction/expansion of the Shopping Center for a period of eighteen (18)
months after substantial completion of such construction/expansion.
(b) The term "lease year" as used herein shall mean a period of twelve
(12) consecutive full calendar months during the initial term or the Extended
Term of this Lease. The first lease year shall begin on the Commencement Date if
said Commencement Date shall occur on the first day of a calendar month; if not,
then the first lease year shall begin upon the first day of the calendar month
next following such Commencement Date. Each succeeding lease year shall commence
upon the anniversary date of the first day of the first lease year.
(c) At the time that the Commencement Date of the term of this Lease is
established the parties will promptly execute a Memorandum of Lease prepared by
Landlord stipulating the actual commencement and expiration dates of the term of
this Lease as provided herein, referring to this Lease, and describing the
property herein leased but containing no other terms or provisions hereof.
(d) Tenant shall have one (1) option to extend this Lease, such option
for five (5) years (such additional period being herein referred to as the
"Extended Term"). Such option period shall be exercised by Tenant giving written
notice to that effect to Landlord at least six (6) months prior to the
expiration of the then pending term. Time is of the essence with respect to the
exercise of the option to extend. Upon the giving of such notice this Lease
shall be extended for an Extended Term without the
3
<PAGE>
execution of any further instrument and such exercise of option to extend shall
be irrevocable. Such Extended Term shall be upon the same terms, covenants and
conditions as shall be in effect immediately prior to such extension except that
the Fixed Rent (as hereinafter defined) for each lease year of the Extended Term
shall be as follows:
<TABLE>
<CAPTION>
Lease Year Annual Fixed Rent Monthly Installment
---------- ----------------- -------------------
<S> <C> <C> <C>
6 - 10 $69,500.00 $5,791.66
</TABLE>
and the applicable Breakpoint used to determine Percentage Rent (as hereinafter
defined) for each lease year of the Extended Term shall be as follows:
<TABLE>
<CAPTION>
Lease Year Applicable Breakpoint
---------- ---------------------
<S> <C> <C>
6 - 10 $973,000.00
</TABLE>
Tenant's right to exercise its option granted in this subparagraph is
conditioned on (i) Tenant not being in default beyond any applicable grace
period in performance of any of its obligations under this Lease at the time of
the exercise of such option; (ii) during the twelve (12) calendar months
immediately preceding the month in which the option is exercised, Tenant shall
have achieved gross sales of $250.00 per square foot of Premises; (iii) Tenant
not assigning this Lease except in connection with a merger, consolidation or
sale of all or substantially all of Tenant's assets, or to an affiliate of
Tenant, or if such assignment or sublease has been approved by Landlord or
occurs or subletting the Premises, or any part thereof; provided, however, in
the event Tenant has exercised its option to extend the term of this Lease and
prior to the beginning of the Extended Term Tenant then assigns this Lease or
sublets the Premises or any part thereof, Landlord may, at its option deem such
exercise of option to be null and void and of no force or effect; and (iv)
Tenant not being a named Debtor in a bankruptcy action; provided, however, in
the event Tenant has exercised its option to extend the term of this Lease and
prior to the beginning of the Extended Term Tenant becomes a named Debtor in a
bankruptcy action, Landlord may, at its option deem such exercise of option to
be null and void and of no force or effect.
3. Rent.
4
<PAGE>
(a) Fixed Rent. Tenant hereby covenants and agrees to pay to Landlord,
at its office or such other place as Landlord may from time to time designate,
as minimum guaranteed fixed rent, hereinafter called "Fixed Rent", for the
Premises during each year of the continuance of this Lease, paid in equal
monthly installments, the following:
<TABLE>
<CAPTION>
Lease Year Annual Fixed Rent Monthly Installment
---------- ----------------- -------------------
<S> <C> <C> <C>
1 - 5 $61,160.00 $5,096.66
</TABLE>
Each monthly installment shall be paid in advance, on the first day of
each and every calendar month during said term.
Each rental payment payable hereunder by Tenant to Landlord shall bear
interest at the rate of twelve percent (12%) per annum from the date same shall
become payable under the terms of this Lease until the same shall be paid.
(b) Percentage Rent. In addition to the minimum guaranteed Fixed Rent
hereinabove agreed to be paid by Tenant, Tenant shall and will pay to Landlord
at the time and in the manner herein specified, as additional rental an amount
equal to four percent (4%) of the amount of Tenant's gross sales in excess of
the applicable Breakpoint made in, upon or from the Premises during each lease
year of the term hereof ("Percentage Rent"). The applicable Breakpoint for each
lease year of the initial term shall be as follows:
<TABLE>
<CAPTION>
Lease Year Applicable Breakpoint
---------- ---------------------
<S> <C> <C>
1 - 5 $903,500.00
(inclusive)
</TABLE>
(i) Percentage Rent Payment. The Percentage Rent shall be paid
as follows: Within fifteen (15) days after the end of each calendar
month of the term hereof, commencing with the 15th day of the second
month of the first lease year, Tenant shall furnish to Landlord a
statement, certified by Tenant to be correct, showing the total gross
sales made in, upon, or from the Premises during the preceding calendar
month together with a statement of the total local sales tax payment
for such month (identifying any over payment of sales tax and refunds
actually made to Tenant during such month), and beginning with the
statement for the calendar month in which Tenant's Gross Sales exceed
the applicable Breakpoint Tenant shall accompany
5
<PAGE>
each such statement with a payment to Landlord equal to four percent
(4%) of the total gross sales in excess of the applicable Breakpoint
less the amount of the Percentage Rent previously paid for such lease
year.
Within sixty (60) days after the end of each lease year of the
term hereof, Tenant shall furnish to Landlord a statement in writing,
certified by a Chief Financial Officer, showing the total gross sales
by months made in, upon, or from the Premises during the preceding
lease year, at which time an adjustment shall be made between Landlord
and Tenant to the end that the total percentage rent paid for each such
lease year shall be a sum equal to four percent (4%) of the total gross
sales in excess of the applicable breakpoint for that lease year so
that the percentage rent, although payable monthly after the applicable
Breakpoint is reached shall be computed and adjusted on an annual
basis.
Each rental payment payable hereunder by Tenant to Landlord
shall bear interest at the rate of twelve percent (12%) per annum from
the date same shall become payable under the terms of this Lease until
the same shall be paid.
(ii) Books of Accounts. Tenant agrees to keep on the Premises
or at its principal office accurate books and records of the sales made
on the Premises, which books and records shall be kept in accordance
with accepted accounting practice, and shall be open at all reasonable
times during business hours and upon reasonable notice to Landlord or
its representative for the purpose of examining the same to determine
the accuracy of the statements of the gross sales submitted by Tenant
as aforesaid. The books and records of account shall also include all
federal, state and local tax returns of Tenant relating to Tenant's
sales. In the event an examination of the records of Tenant shall
disclose that gross sales as reported in the aforesaid statements were
less, by three percent (3%) or more, than the gross sales actually made
by Tenant during any lease year, Tenant agrees to pay to Landlord the
reasonable cost of any such audit. Any additional Percentage Rent found
due and owing as a result of any audit shall immediately become due and
payable. Landlord shall have the right to inspect the records of Tenant
in
6
<PAGE>
connection with sales made by Tenant from other stores operated by it,
but only in the event such examination becomes necessary to ascertain
the gross sales made by Tenant from the Premises.
(iii) Gross Sales. The term "gross sales" as used in this
Lease shall be deemed to mean the aggregate gross amount of all sales
of merchandise made and all charges for services performed by Tenant or
any persons, firms or corporations on its behalf, or any tenants or
concessionaires of Tenant, from, in or upon the Premises, including
orders taken upon the Premises for delivery from sources other than the
Premises, and whether wholesale or retail, and whether cash or credit,
less refunds for merchandise returned for which cash has been refunded
or credit given. Gross sales shall also include the value of any
consideration other than money, as well as money, received by Tenant or
by subtenants, concessionaires or other persons firms or corporations
under subleases or arrangements of any nature for the right to occupy
or to transact business upon the Premises. The amount of any sales and
excise taxes whatsoever, and however imposed, computed or paid for
sales from, in, or upon the Premises, shall, to the extent included in
sales, be deducted when determining gross sales.
Gross Sales shall not include the following: (a) the amount of
cash refunds made to Tenant's customers for the return of merchandise
purchased at the Premises; (b) sum or credits received in settlement of
claims for loss or damage to merchandise; (c) the exchange of
merchandise between the stores of Tenant and its affiliates and
licensees where such exchange is made solely for the convenient
operation of Tenant's business and not for the purpose of depriving
Landlord of the benefit of a sale which would otherwise be made at, in,
from or upon the Premises; (d) the amount of merchandise returned by
Tenant to shippers or manufacturers; (e) the sale of fixtures,
machinery or equipment which are not Tenant's stock in trade; (f)
interest, service or sales carrying charges paid by customers to Tenant
for the extension of credit on sales; (g) delivery charges, provided
same are separately stated and no profit is made thereon; (h) gift
certificates until such time as the same shall be converted into a sale
by redemption or deemed abandoned; (i) catalog
7
<PAGE>
orders accepted in the Premises so long as same are accepted via a
separate mail order catalog sales desk and/or direct telephone and
processed directly by Tenant's mail order catalog processing center,
provided such sales do not exceed one-half of one percent (1/2%) of
Tenant's Gross Sales; (j) the amount of sales to Tenant's employees
employed at the Premises, provided such amount does not exceed one
percent (1%) of Tenant's Gross Sales.
(c) Payments Between Commencement Date and First Lease Year. If the
Commencement Date of this Lease precedes the commencement of the first lease
year as provided in Section 2(b) hereof, then Tenant shall pay to Landlord Fixed
Rent on a pro rata basis for any period of time between said Commencement Date
and the date upon which the first lease year begins and any gross sales, as
defined herein, made during such fractional month period shall be added to gross
sales for the first calendar month for the purpose of determining Percentage
Rent under Section 3(b) hereof.
(d) Taxes; Insurance; Repairs and Common Area Maintenance;
Promotion Fund.
(i) In addition to the minimum guaranteed annual Fixed Rent
and the Percentage Rent to be paid by Tenant, Tenant shall pay to the
Landlord as Additional Rent an amount equal to a fraction of the "Real
Estate Taxes", the "Repairs and Common Area Maintenance", and the
"Landlord Insurance". Such fraction shall have as its numerator the
floor area of the Premises and shall have as its denominator the
leasable floor area of the buildings on the Site (calculated exclusive
of anchor tenants occupying 20,000 square feet or greater, but not to
exceed 2 anchor tenants) at the time such taxes, maintenance costs or
insurance shall become due and payable. Landlord shall bill Tenant
monthly for such Additional Rent, and Tenant agrees to pay such bill
rendered by Landlord within fifteen (15) days after receipt thereof by
Landlord.
Landlord shall be entitled to estimate all amounts of
Additional Rent payable during each calendar year and to obtain payment
in advance on account thereof from Tenant on a monthly basis from and
after the Commencement Date. Within ninety (90) days after the end of
each calendar year Landlord
8
<PAGE>
shall furnish Tenant with a statement (the "Additional Rent Adjustment
Statement") of the actual costs of Real Estate Taxes, Repairs and
Common Area Maintenance and Landlord Insurance for the preceding
calendar year for which estimated monthly payments were billed, such
statement showing in reasonable detail information relevant to the
calculation of Tenant's share payable under this Lease. If the actual
cost of Additional Rent is greater than Tenant's estimated payments on
account Tenant shall pay any deficiency with Tenant's next due payment
of Additional Rent, or if no payments are next due, Tenant shall make
such payment to Landlord within fifteen (15) days of receipt of the
Additional Rent Adjustment Statement. If the actual cost of Additional
Rent is less than Tenant's estimated payments on account Landlord
shall credit any excess payments to Tenant's next due payment to
Landlord or if no payments are next due, Landlord shall refund such
excess payment to Tenant within fifteen (15) days. Any annual
statement furnished by Landlord pertaining to Additional Rent which is
not disputed by Tenant in writing within one (1) year after such
statement is delivered to Tenant shall be deemed accepted by Tenant.
In the event of a dispute, Tenant shall have the right to
inspect and audit such books and records of Landlord pertaining to
Repairs and Common Area Maintenance, Promotion Costs, Landlord
Insurance, and Real Estate Taxes for the preceding one (1) calendar
years upon at least thirty (30) days prior written notice to Landlord,
but no more frequently than once per lease year and in no event during
the months of December and January. Tenant acknowledges that such
examination of Landlord's relevant records may reveal confidential or
proprietary information. Tenant agrees to protect and maintain the
security and confidentiality of such information and agrees that such
information shall not be disclosed to any third party and shall be used
only for the purposes of establishing charges for Repairs and Common
Area Maintenance, Promotion Costs, Landlord Insurance, and Real Estate
Taxes payable by Tenant under this Lease (such agreement herein
referred to as "Tenant's Confidentiality Agreement"). Provided however,
any such inspection and audit of Landlord's records must be conducted
by (i) employees of Tenant having a minimum of five (5) years of
commercial
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auditing experience with documentation of such experience to be
provided to Landlord at least thirty (30) days prior to any such
inspection and audit; or (ii) Tenant's accountant who is regularly
responsible for books and records of Tenant and its affiliates. In no
event shall the person(s) conducting the audit be compensated on a
contingency basis. In the event an examination of the records of
Landlord shall disclose that the amounts charged to Tenant were more,
by four percent (4%) or more, than the charges actually incurred by
Landlord during any lease year, Landlord agrees to reimburse Tenant
the reasonable cost of any such audit.
Each rental payment payable hereunder by Tenant to Landlord
shall bear interest at the rate of twelve percent (12%) per annum from
the date same shall become payable under the terms of this Lease until
the same shall be paid.
(ii) For the purpose of this Section 3(d) "floor area" shall
be deemed to mean the actual number of square feet of floor space
within the exterior walls of all floors, without deduction or exclusion
for any space occupied by or used by columns, stairs or other interior
construction or equipment.
(iii) For purposes of this Section 3(d) "Real Estate Taxes"
shall mean the levy assessment or imposition of any tax on or for the
use of the Site and all improvements of a real property nature located
thereon; "Repairs and Common Area Maintenance" shall mean the charges,
costs and expenses which are incurred by the Landlord under Section 13;
"Landlord Insurance" shall mean the insurance carried by Landlord
pursuant to Section 20 and Sub-Section 8(g) of this Agreement.
Tenant shall be responsible only for its proportionate share
of such Real Estate Taxes which would come due during the term of this
Lease calculated as if such assessment had been paid over the longest
period of time permitted by the applicable governmental entity.
(iv) Grand Opening. INTENTIONALLY DELETED.
(v) Landlord will establish a Promotion and Advertising
Service for the Shopping Center. Amounts contributed to the Promotion
and Advertising Service will be expended for Promotions Costs.
"Promotion Costs" shall mean all amounts paid or incurred by Landlord
for advertising and any other
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marketing, promotional and/or public relations activities, excluding
grand opening costs, engaged in by, or on behalf of Landlord for the
benefit of the tenants of the shopping center located on the Site.
Tenant agrees to pay Landlord the following: during the first calendar
year (i.e. the calendar year in which the Commencement Date occurs)
the sum of $2.25 per square foot of Premises (pro rated in the event
such year is less than twelve (12) calendar months); beginning with
the first January first thereafter and continuing through each
calendar year thereafter the sum of $2.25 per square foot of Premises
increased as set forth below; provided, however, in no event shall
such increase be greater than ten percent (10%) per square foot of
Premises per annum.
The Promotion and Advertising Service charge will be increased
effective January 1 of each calendar year in proportion to the change
in the Consumer Price Index U.S. average for All Urban Consumers
("CPI"), all items: 1982-1984 = 100, published by the Bureau of Labor
Statistics of the United States Department of Labor. The "Current Index
Figure" shall be the CPI for the immediately preceding October; the
"Basic Index Figure" shall be the corresponding CPI for the penultimate
October. (i.e. the increase shall be calculated using the CPI for the
immediately preceding October as the Current Index Figure and using the
CPI for the October two years preceding such January for the Basic
Index Figure).
The Current Index Figure shall be divided by the Basic Index
Figure. From the quotient thereof, there shall be subtracted the
integer 1, and any resulting positive number shall be deemed to be the
percent of increase in the cost of living ("Percent of Increase").
The increase for each calendar year during the lease term
shall be an amount equal to the Percent of Increase as calculated above
multiplied by the Promotion and Advertising Service charge for the
immediately preceding calendar year.
The annual charge for Promotion and Advertising Service as so
determined (the charge for the immediately preceding calendar year plus
any "increases" calculated as set forth
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above) shall be due and payable in equal monthly installments in
advance on the first day of each calendar month throughout the term of
this Lease. By way of illustration if the Promotion and Advertising
Service charge for the first calendar year is $2.25 per square foot
and the applicable Percent of Increase is 2%, then the Promotion and
Advertising Service charge for the second calendar year would be $2.30
per square foot ($2.25 x 2% + $2.25 = $2.30); if the applicable
Percent of Increase for calculating the Promotion and Advertising
Service charge for the third calendar year is 1.5%, then the Promotion
and Advertising Service charge for the third calendar year is $2.33
per square foot ($2.30 x 1.5% + $2.30 = $2.33).
In the event that the determination of any increase cannot be
made by the first day of January of each calendar year because of the
unavailability of the Current Index Figure, such determination shall be
made as soon thereafter as possible. Until such determination can be
made, the parties agree that Tenant shall pay as Promotion and
Advertising Service charge the Promotion and Advertising Service charge
for the immediately preceding calendar year increased by five percent
(5%) ("Adjusted Charge"); once the Percent of Increase has been
calculated Tenant shall immediately pay to Landlord for each month that
the Percent of Increase could not be determined the difference between
the Adjusted Charge actually paid to Landlord and the Promotion and
Advertising Service charge as increased by the CPI. In the event the
Adjusted Charge exceeds the Promotion and Advertising Service charge as
increased by the CPI the excess paid by Tenant shall be applied to
future payments of Promotion and Advertising Service charges as such
charges become due.
If publication of the Consumer Price Index shall be
discontinued, the parties hereto shall thereafter accept comparable
statistics on the cost of living as shall be computed and published by
an agency of the United States or by a responsible financial periodical
or recognized authority then to be selected by the parties hereto. In
the event the CPI should some time in the future be retroactively
adjusted, such adjustment shall not be considered.
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4. Construction of Premises.
(a) Construction. Landlord has constructed the building in which the
Premises are located as a one story building. Landlord agrees to prepare the
interior of the Premises for occupancy by Tenant in accordance with EXHIBIT "C"
attached hereto and made a part hereof. If the Tenant desires additional
installations that vary from or are in excess of those indicated on EXHIBIT "C",
Tenant will pay for those items and their installation upon terms agreed upon by
Landlord and Tenant.
(b) Completion Date. Landlord agrees that the Premises shall be
substantially completed on, or prior to, the later of the two following dates,
that is (i) January 1, 1999 or (ii) the expiration of such period after such
date specified in clause (i) as shall equal the aggregate period or periods of
delay (hereinafter referred to as "unavoidable delays"), if any, in construction
of the Premises in consequence of any acts of God, strikes, labor disputes,
inability to obtain material or labor on reasonable terms, governmental laws,
regulations or restrictions, acts of a public enemy, or any cause whatever
beyond the control of Landlord (but in no event prior to January 1, 1999). In
the event that Landlord has reasonable knowledge or belief that the Premises
will not be substantially completed on or before the date specified in clause
(i) above, then Landlord shall give Tenant at least thirty (30) days written
notice of the revised date prior to which the Premises will be substantially
completed, subject to such unavoidable delays. Under no circumstances shall
Landlord be liable to Tenant in damages for any delay in commencing or
completing the Premises or for a total failure to complete same.
If Tenant is to provide Landlord with Tenant's drawings and/or plans
and specifications or any other information pertaining to the interior
design/layout/etc. of the Premises (the "Tenant Plans") in order for Landlord to
perform any work with respect to the Premises ("Work") and Tenant does not
deliver the Tenant Plans to Landlord within ten (10) days of request by
Landlord, then Landlord shall have the right, and is hereby expressly directed
and authorized by Tenant, to proceed with such Work in a manner which Landlord
considers to be commercially reasonable.
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Further, Tenant agrees that it shall provide to Landlord Tenant's
drawings and/or plans and specifications and other information pertaining to the
interior designs/layout/etc. of the Premises for work to be performed by Tenant
in the Premises("Tenant's Work")for review and approval by Landlord and obtain
Landlord's approval to such Tenant's Work, which approval shall not be
unreasonably withheld or delayed, prior to commencing Tenant's Work in the
Premises.
Landlord agrees to use reasonable efforts to deliver possession of the
Premises on or before February 15, 1999.
(c) Ready for Occupancy. The Premises shall be deemed to be "ready for
occupancy" and substantially complete under the terms of this Lease upon
delivery of the Premises to Tenant. The opening by Tenant of the Premises for
business shall be deemed conclusive that the Premises, driveways, parking areas,
and sidewalks were substantially completed and in good order and condition at
the commencement of the lease term, and that Tenant accepted delivery of the
Premises as substantially completed. If Tenant has taken possession of the
Premises as substantially completed, Landlord agrees that it will diligently
carry forward the construction of the Premises to final completion.
5. Installations by Tenant. Landlord may, prior to notifying Tenant
that the Premises are ready for occupancy as provided in Section 2(a) hereof,
make the Premises available to Tenant for the installation of its store
equipment, fixtures and merchandise at Tenant's sole risk, so long as such
installation does not interfere with the Landlord's work on the interior of the
Premises, but the Commencement Date shall nevertheless be determined as provided
in Section 2 hereof. Tenant shall observe and perform all of its obligations
under this Lease (except its obligations to pay Fixed Rent, Percentage Rent, or
Additional Rent) from the date that the Premises are so made available to Tenant
for its work and installations until the Commencement Date, as defined in
Section 2 hereof, in the same manner as though the lease began when the Premises
were so made available to Tenant. All work performed by Tenant in the Premises
shall be in accordance with applicable laws and building codes; shall be
performed in a good and workmanlike manner; and shall be performed by a
contractor acceptable to Landlord.
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6. Use of Parking Areas and Walkways.
(a) Common Areas. Landlord covenants and agrees that during the term of
this Lease, and subject to the provisions hereinafter set forth in Sections
6(b), 6(c), 7(g), 8(e) and 8(f) hereof, Tenant and its officers, employees,
agents, customers, business visitors, business guests, licensees and invitees
shall be entitled to the non-exclusive use of the parking areas, driveways and
walkways within the Site (hereinafter referred to as "Common Areas"), but such
use shall be in common with Landlord and all others to whom Landlord has or may
hereafter grant similar nonexclusive rights to use the same, including, but not
limited to, the owners and tenants of the Site and any lands added thereto, and
the officers, employees, agents, customers, business visitors, business guests,
licensees and invitees of such owners and tenants, their successors and assigns;
provided, however, that such use by Tenant shall be subject to such rules and
regulations consistently applied as Landlord may from time to time adopt
governing the same; and provided, further, that Landlord shall at all times have
full control, management and direction of said Common Areas, and that Landlord
shall have the right at any time to change the layout thereof, including the
right to reasonably add to or subtract from their shape and size, as well as to
alter their location.
(b) Changes by Landlord. It is understood that EXHIBIT "A" indicates,
in general, the proposed plan for development of the Site of which the Premises
are a part; that Landlord, in building and operating the improvements on the
Site, may (in addition to any specific rights to amend the same elsewhere
reserved in this Lease) make such other reasonable departures from said plan as
Landlord, in its sole discretion, may from time to time find proper. Landlord
may, in its discretion, change the location of other tenants and the nature of
any occupancy of any store unit at any time, except only as otherwise provided
in this Lease. Tenant understands and agrees that Landlord may from time to time
make, anywhere within the Site, alterations or additions to the building on the
Site or any lands added thereto, construct additional buildings or improvements
and make alterations thereto. It is further understood and agreed that EXHIBIT
"A" indicates only a proposed plan of development for the Site. There is no
obligation upon Landlord to complete the improvements shown on EXHIBIT "A" other
than the improvements necessary to Tenant's use of the
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Premises. In exercising its rights under this subparagraph Landlord shall not
materially adversely interfere with the direct/immediate visibility of, ingress
to or egress from Tenant's Premises.
(c) Right to Close Common Areas. Landlord shall have the right to close
any or all portions of the Common Areas to such extent as may, in the opinion of
Landlord's counsel, be legally sufficient to prevent a dedication thereof or the
accrual of any rights to any person or to the public therein and to close
temporarily, if necessary, any part of the Common Areas in order to discourage
non-customer parking. All space, areas, and facilities within the Site are to be
used and occupied under a license, and if the amount of such space, areas and
facilities are diminished, this Lease shall remain in full force and effect and
Landlord shall not be subject to any liability nor will Tenant be entitled to
any compensation or diminution of rent, nor shall diminution of such space,
areas and facilities be deemed constructive or actual eviction. If, as a result
of Landlord exercising Landlord's rights under this subparagraph, if Tenant
cannot conduct its business in the Premises for a period in excess of three (3)
consecutive business days, then a proportionate abatement of the Fixed Rent,
Additional Rent and an adjustment of the applicable Breakpoint used for
calculating Percentage Rent shall be allowed for such reasonable period during
which Tenant cannot conduct its business in the Premises.
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7. Use and Care of Premises by Tenant.
(a) Tenant's Use of Premises. Tenant shall use the Premises only for
the retail sale of women's clothing and accessories, and home furnishings and
accessories. Tenant shall sell merchandise from the Premises at discount prices,
namely prices that are at least thirty percent (30%) less than the prices
charged by the majority of the other retailers in the metropolitan area in which
the Site is located that sell the same or substantially the same merchandise at
full retail mark-up. Tenant shall operate its business in the Premises as a
factory direct outlet selling its merchandise at discount prices. Tenant agrees
that it will not use, or permit or suffer the use of, the Premises, or any part
thereof, for any other business or purpose. Tenant shall, on the Commencement
Date, open, operate and advertise the Premises under a name of which "J. Jill"
is the primary component. Products manufactured by or bearing the label of any
other tenant in the shopping center located on the Site of which the Premises is
a part shall not be sold in, from or upon the Premises.
Notwithstanding any other provision of this Lease, in the event Tenant
changes the name of all of its other manufacturer outlet stores, then Tenant may
change the name under which it does business in the Premises to be consistent
with all of its other manufacturer outlet stores.
(b) Nature of Use. Tenant shall use and occupy the Premises in a
careful, safe and proper manner and shall keep the Premises in a clean and safe
condition in accordance with applicable laws, regulations and ordinances and the
lawful directions of proper public officers and shall not do, or fail to do,
anything within the Premises to increase the obligations or liabilities of the
Landlord under any applicable laws, regulations and ordinances. Tenant shall use
and maintain the Premises consistent with present reasonable standards of good
shopping center operations, and Tenant shall not permit solicitations,
demonstrations, itinerant vending or any other activities inconsistent with such
standards.
(c) Reputation of the Site. Tenant shall not use, or allow the Premises
to be used, for any purpose other than as specified herein and shall not use nor
permit the Premises to be used for any unlawful, disreputable or immoral purpose
or in any way that will
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injure the reputation of the building in which the Premises are situated, nor
permit the Premises to be occupied in whole or in part by any other person
except as otherwise provided herein.
(d) Extra Hazardous Activity. Tenant agrees that it will not do or
suffer to be done, or keep or suffer to be kept, anything in, upon or about the
Premises which will contravene Landlord's policies insuring against loss or
damage by fire or other hazards, or which will prevent Landlord from procuring
such policies in companies acceptable to Landlord; and if anything done, omitted
to be done or suffered to be done by Tenant, or kept, or suffered by Tenant to
be kept, in, upon or about the Premises shall cause the rate of fire or other
insurance on the Premises or other property of Landlord to be increased beyond
the rate from time to time applicable to the Premises for use for the purposes
permitted under this Lease or to such other property for the use or uses made
thereof, Tenant will pay the amount of such increase promptly upon Landlord's
demand.
(e) Painting and Decorating. Tenant will not paint or decorate any part
of the exterior of the Premises, or change the architectural treatment thereof,
without first obtaining Landlord's written approval of such painting or
decoration; and Tenant will remove promptly upon order of Landlord any paint or
any such decoration which has been so applied or installed without Landlord's
prior written approval, or take such action with reference thereto as Landlord
may direct.
(f) Snow and Ice. Landlord shall remove snow and ice from areas
contiguous to the Premises and from the roof of the Premises and shall maintain
the same unobstructed. In accordance with Sub-Section 3(d) and as Additional
Rent, Tenant shall reimburse Landlord for a proportionate share of all charges,
costs and expenses incurred by Landlord under this Sub-Section 7(f).
(g) Rubbish and Trash. Tenant shall not permit the accumulation of
rubbish, trash, garbage and other refuse (collectively "Refuse") in and around
the Premises, will remove same at Tenant's expense, and will keep such Refuse in
proper containers on the interior of the Premises until removal by Tenant to the
collection area designated by Landlord. In the event Tenant fails to remove any
accumulation of Refuse within three (3) days after notice by
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Landlord to remove the same, Landlord shall have the right to remove the same in
which event the cost thereof shall be paid by Tenant as additional rent for the
following month except that Landlord shall at no time be obligated to remove the
same but may cancel this Lease if continual violations occur. In the event the
City of Lancaster, Pennsylvania, or other governmental authority or service
provider levies a service fee or other charge for the collection and removal of
Tenant's refuse, Tenant shall pay promptly when due said fee or charge for such
service.
Landlord at its sole option and upon notice to Tenant may provide the
service to remove Refuse from the collection area and in accordance with
sub-section 3(d) hereof and as Additional Rent Tenant shall reimburse Landlord
for a proportionate share of all charges, costs and expenses incurred by
Landlord under this sub-section 7(g). Provided, however, Tenant shall pay to
Landlord the cost of removal of any of Tenant's excessive Refuse or Refuse which
requires special handling out of the ordinary course of waste disposal.
(h) Indemnification by Tenant. Tenant will indemnify Landlord and hold
Landlord harmless against all claims, demands, and judgments for loss, damage,
or injury to property or person, resulting or occurring by reason of the use and
occupancy of the Premises by Tenant. Landlord may recover any and all costs and
expenses incurred by Landlord, including, without limitation, court costs and
reasonable attorneys' fees, in enforcing any of its rights or remedies under
this Lease.
(i) Signs. Tenant will place, erect and maintain at its sole expense an
internally illuminated sign on the exterior surface of the Premises in a place
and of a style and size that conforms with any applicable governmental ordinance
and is approved in advance by the Landlord. On and after the Commencement Date,
the sign shall include "J. Jill" as a primary component. The sign shall be
located on the exterior of the Premises in a place approved in advance by
Landlord. The sign shall be of a size and a style including color approved in
advance by Landlord. The sign shall be similar and equivalent in quality to
signs which have been manufactured by Victory Sign Industries, P.O.Box 1047,
Ringgold, Georgia 30736 (Telephone 706-375-6612). Tenant shall maintain any sign
permitted hereunder in a good state of repair and shall save the Landlord
harmless from any loss, cost or damage as a result of the maintenance of or
existence of the same, and shall repair any damage which may have been caused by
the maintenance of same. Landlord may place and erect an under-soffit sign of a
size and a
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style similar and equivalent in quality to under-soffit signs presently being
used in Landlord's shopping centers. The cost expended by Landlord for such
signs shall be additional rent and shall be due and payable with the next
installment of rent thereafter due under this Lease.
(j) Waste. During the term of this Lease, or any renewal or extension
thereof, Tenant shall permit no waste, damage or injury to the Premises and
Tenant shall initiate and carry out a program of regular maintenance and repair
of the Premises so as to impede, to the extent possible, deterioration by
ordinary wear and tear.
8. Operation of Business.
(a) Open for Business. Tenant agrees to occupy the Premises and open
its store for business fully fixtured, stocked and staffed upon the Commencement
Date of the term of this Lease, and thereafter to continuously conduct in one
hundred percent (100%) of the space within the Premises the business permitted
under Section 7 hereof on all business days, except only as otherwise provided
in Sections 8(b) and 8(d) hereof; this covenant by Tenant is a material
consideration to Landlord hereunder in order that Tenant might produce the
maximum gross sales possible from the Premises during the lease term.
(b) Business Hours. Tenant will keep its store in the Premises open for
business with the public in accordance with the following minimum schedule:
Required Store Hours
10:00 A.M. through 9:00 P.M.
Monday through Saturday
1:00 P.M. through 6:00 P.M. Sunday
The hours set forth in the foregoing schedule may be reduced, or changed under
either of the following circumstances:
(a) If the required store hours violate any
applicable statute or ordinance prohibiting
the conduct of retail business during such
times then the hours shall be reduced to
conform to such statute or ordinance; or
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(b) Upon consent of the Landlord.
Except as it may be necessary that the Premises be closed on account of the
order of any duly constituted authority, or for the purpose of making repairs or
improvements, or during the period of strikes, lockouts, emergencies or other
causes beyond Tenant's control, Tenant shall maintain the Required Store Hours.
(c) Landlord Approval of Advertising. Tenant will not place or suffer
to be placed, or maintain on the interior surface of any display windows or
doors of the Premises any sign or advertising matter or other thing of any kind
without first obtaining Landlord's written approval thereof. Tenant will not
place anything or allow anything to be placed near the glass of any door,
partition, wall or window which may be unsightly from outside the Premises.
(d) Use of Space. Tenant agrees to carry sufficient merchandise in the
Premises at all times, but to warehouse, store and/or stock only such quantities
of goods, wares and merchandise as are reasonably required by Tenant for sale at
retail at, in, on or from the Premises. Tenant agrees to fully and adequately
staff the Premises with sufficient employees for the purpose of selling said
merchandise and to use for office, clerical or other non-selling purposes only
such space in the Premises as is reasonably required for Tenant's business
therein, not including any other business of Tenant in locations other than the
Premises.
(e) Character of Operations. Tenant will not conduct any auction, fire,
bankruptcy or closeout sales, provided, however, that this provision shall not
preclude the conduct of periodic seasonal promotional or clearance sales. Tenant
will not utilize any unethical method of business operation. Tenant will not use
or permit the use of any apparatus for sound reproduction or transmission of any
musical instrument in such manner that the sounds so reproduced transmitted or
procured shall be unreasonably audible beyond the interior of the Premises; will
not cause or permit objectionable odors to emanate or be unreasonably dispelled
from the Premises; and will use its best efforts to prevent the parking or
standing, outside of the Premises, of trucks, trailers,
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or other vehicles or equipment except when actually engaged in loading or
unloading.
Tenant will immediately notify Landlord of the occurrence, or threat,
of any picketing, hand billing, protest, boycott of any kind whatsoever with
respect to the Premises and Tenant will cooperate with Landlord as may be
necessary to prevent, stop or avoid any picketing, hand billing, protest,
boycott within the Premises or in the common areas of the shopping center.
Tenant will immediately notify Landlord of any complaint, charge, petition or
claim filed against Tenant with any federal, state or local court or
governmental authority which under reasonable commercial standards creates any
adverse effect on Landlord's operations.
(f) General Covenants of Tenant. Tenant will keep the inside and
outside of all glass in the doors and windows of the Premises clean and free of
blinds, shades, awnings, draperies or other forms of inside or outside window
and door coverings except to the extent, if any, that the character, shape,
color, material and make thereof is approved by Landlord; will not place or
maintain any merchandise or other thing of any kind in the entry of the Premises
or on the sidewalks adjacent thereto or elsewhere on the exterior of the
Premises, except such signs as are permitted under Section 7(i) hereof; will
maintain the Premises at its own expense in a clean, orderly and sanitary
condition and free of insects, rodents, vermin, and other pests; will, at
Tenant's sole cost and expense, comply with all laws and ordinances and all
valid rules, regulations and requirements of the government of all county,
municipal, state, federal and other governmental authorities, now in force or
which may hereafter be in force, pertaining to the Premises except that Tenant
shall not be required to make any changes to building, systems or structural
changes in connection therewith; and will comply with all recommendations of any
public or private agency having authority over insurance rates with respect to
the use or occupancy of the Premises by Tenant; will not park, and will require
its employees to refrain from parking, any vehicle on Landlord's land except in
such places as may be designated from time to time by Landlord for the use of
Tenant and its employees; and will conduct business in the Premises in all
respects in a dignified manner and in accordance with high standards of store
operation.
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Notwithstanding anything contained in this Lease to the contrary, there
shall be no obligation on the part of Tenant to comply with any of the laws,
directions, rules or regulations which may require structural alterations,
changes, repairs or additions to the Premises or the Common Areas, which
required structural alterations, changes, repairs or additions to the Premises
or the Common Areas are the obligation of Landlord unless made necessary by the
willful negligence or default of Tenant, in which event, Tenant shall comply at
its sole cost and expense.
(g) Insurance. Tenant agrees to carry at its own expense continuously
throughout the term of this Lease comprehensive public liability insurance
covering the Premises and Tenant's use thereof, in companies and in a form
satisfactory to Landlord, with minimums of $1,000,000.00 on account of bodily
injuries to or death of one person and $5,000,000.00 on account of bodily
injuries to or death of more than one person as a result of any one accident or
disaster, and with $100,000.00 coverage for property damage in an accident, and
to deposit said policy or policies (or certificates thereof) with Landlord prior
to the date of any use or occupancy of the Premises by Tenant; said policies
shall name the Landlord as an additional insured and shall protect Tenant and
Landlord, as their interests may appear. Should Tenant fail to carry such public
liability insurance, Landlord may at its option (but shall not be required so to
do) cause public liability insurance as aforesaid to be issued, and in such
event Tenant agrees to pay the premium for such insurance promptly upon
Landlord's demand. Such liability insurance policy or policies shall bear
endorsements to the effect that the insurer agrees to notify Landlord not less
than ten (10) days in advance of modification or cancellation thereof.
Landlord agrees to carry throughout the term of this Lease public
liability insurance with respect to the common areas on the Site with a minimum
combined coverage for bodily injury and property damage of $5,000,000.00. In
accordance with Sub-Section 3(d) and as Additional Rent, Tenant shall reimburse
Landlord for a proportionate share of the costs of such insurance.
(h) Payment of Personal Property Taxes. Tenant further covenants and
agrees to pay promptly when due all taxes assessed against Tenant's fixtures,
furnishings, equipment and stock in trade placed in or on the Premises during
the term of this Lease.
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9. Utilities.
(a) Installation. Landlord shall provide, or cause to be provided, as
part of the original installations in the Premises, the necessary mains,
conduits and facilities in order that all utility services initially required in
connection with installations to be provided by Landlord, as specified in
EXHIBIT "C" may be furnished to the Premises. Tenant shall provide or cause to
be provided all other mains, conduits and facilities necessary to provide
utility services to the Premises.
(b) Gas, Electricity, Water and Sewer, Lights, Heat, Power and
Telephone Charges. The Tenant shall pay all charges for gas, electricity, water
and sewer, light, heat, power and telephone or other communication service used,
rendered or supplied upon or in connection with the leased property and shall
indemnify the Landlord against any liability or damages on such account.
(c) Advances by Landlord. Any amounts paid by Landlord for Tenant's
account as herein provided and any amounts paid by Landlord to keep the Premises
in a clean, safe and healthy condition, as herein specified, or to make up any
default on Tenant's part, or to fulfill Tenant's covenants herein written, are
hereby agreed and declared to be so much additional rent and shall be due and
payable with the next installment of rent thereafter due under this Lease.
10. Alterations or Improvements by Tenant. (a) Tenant shall have the
right during the continuance of this Lease to make such alterations or
improvements in the Premises, excepting structural alterations or improvements,
as may be proper and necessary for the conduct of its business and for the full
beneficial use of the Premises permitted herein, provided Tenant shall pay all
costs, expenses and charges thereof, shall make such alterations and
improvements in accordance with applicable laws and building codes; in a good
and workmanlike manner; and performed by a contractor acceptable to Landlord,
and Tenant shall fully and completely indemnify Landlord against any mechanic's
lien or other liens or claims in connection with the making of such alterations
and improvements. Tenant shall not make, nor permit to be made, any alterations,
additions or improvements of a structural nature to
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the interior, exterior or store front of the Premises, or to the plumbing,
heating or air conditioning systems. Tenant shall promptly repair any damages to
the Premises, or to the building of which the Premises are a part, caused by any
alterations, additions or improvements of the Premises by Tenant.
(b) With respect to work performed at the Premises and/or Tenant's
obligation under this Lease including its rights under Section 5 hereof and
Section 10(a) hereof , all contractors engaged by Tenant shall be bondable,
licensed contractors, possessing good labor relations, capable of performing
quality workmanship and working in harmony with Landlord's general contractor
and other contractors on the job. All work performed by Tenant during the term
of the Lease shall be performed so as to cause a minimum of interference with
other tenants and the operation for the project.
11. Removal of Improvements. Except as otherwise hereinafter provided,
all alterations, improvements, furnishings and other equipment installed in the
Premises by Tenant and paid for by it shall remain the property of Tenant and
may be removed by Tenant upon the termination of this Lease, provided (a) that
any of such items as are affixed to the Premises and require severance may be
removed only if Tenant shall repair any damage caused by such removal and (b)
that Tenant shall have fully performed all of the covenants and agreements to be
performed by it under the provisions of this Lease. If the Tenant fails to
remove such items from the Premises prior to the date of termination of this
Lease, all such alterations, decorations, additions and improvements shall
become the property of the Landlord unless Landlord elects to require their
removal in which case Tenant shall promptly remove same and restore the Premises
to its prior condition. Notwithstanding anything to the contrary provided
herein, in no event shall Landlord require Tenant to remove alterations and
improvements made to the Premises by Tenant prior to the Commencement Date which
are customary in connection with the fixturing of space for the uses permitted
hereunder.
Notwithstanding the above, within the Sign Removal Period (hereinafter
defined), Tenant shall remove the signage permitted by Section 7(i) hereof, and
shall repair any damage caused by such removal. Such removal and repair shall be
by a Landlord approved certified Exterior Insulated Finishing System (EIFS)
contractor and
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such contractor shall restore the fascia to substantially the condition at the
time of commencement of this Lease, and such activity shall be at the sole cost
and expense of the Tenant. In the event Tenant fails to remove such signage by
the end of the Sign Removal Period, Landlord may immediately remove the signage
and dispose of it at Landlord's sole discretion, and repair any damage caused by
such removal and the cost of removal and repair plus a 15% service fee shall be
charged to Tenant who shall make payment to Landlord within ten (10) days of
demand. The Sign Removal Period shall be the 24 hour period commencing with the
hour the Premises is permanently closed for business to the public.
12. Access to Premises. Landlord may have free access to the Premises
at all reasonable times for the purpose of examining the same or making any
alterations or repairs to the Premises that Landlord may deem necessary for its
safety or preservation, and also during the last three (3) months of the term of
this Lease for the purpose of exhibiting the Premises and putting up the usual
notice "to Rent", which notice shall not be removed, obliterated or hidden by
Tenant; provided, however, that any such action by Landlord shall cause as
little inconvenience as reasonably practicable. Such action shall not be deemed
an eviction or disturbance of Tenant nor shall Tenant be allowed any abatement
of rent, or damages for any injury or inconvenience occasioned thereby.
13. Repairs by Landlord.
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(a) Landlord shall provide for the care, maintenance and repair of the
Common Areas on the Site including but not limited to repairing, replacing and
restriping paved parking areas when needed, keeping Common Areas reasonably
clear of litter and snow, maintaining any plantings and landscaped areas and
keeping Common Areas reasonably lighted at times when substantially all of the
stores on the Site are open for business. Repairs and Common Area Maintenance
shall further include expenses actually incurred by Landlord which, in
Landlord's judgment, are necessary, appropriate and/or beneficial generally to
the operation of the shopping center located on the Site, of which the Premises
are a part, including but not limited to the cost of maintaining a business
office and the cost of security, traffic control, maintenance and supervision
personnel, the cost of maintaining and replacing the septic system used in the
operation of the shopping center located on the Site, the cost of providing rest
room facilities for customers of the complex, and the cost of making provisions
for buses and their drivers bringing shoppers to the complex. In addition to
such expenses set forth in this Section 13 an administrative cost equal to
fifteen percent (15%) of all such expenses shall be included as part of Repairs
and Common Area Maintenance.
Repairs and Common Area Maintenances shall not include the following:
(a) brokerage, leasing commissions or fees, advertising or promotional expenses,
legal fees and any other expenses incurred in connection with the leasing of
space in the Shopping Center; (b) the cost of installations, alterations,
changes or repairs of such nature which is required to be capitalized under
generally accepted accounting principles except for the portion calculated based
on a straight line basis over the actual economic life of such installation,
alteration, change or repair; (c) the cost of correcting latent defects in the
initial construction of the shopping center.
(b) Landlord shall keep and maintain the foundation, roof and
structural portions of the walls, floors and the building systems, of the
building in which the Premises are located in good condition and repair, and
such activity shall be included in Common Area Maintenance and reimbursed by
Tenant in accordance with subsection (a) of this Section 13.
In accordance with Sub-Section 3(d) and as Additional Rent, Tenant
shall reimburse Landlord for a proportionate share of all charges, costs and
expenses incurred by Landlord under this Section 13. The provisions of this
Section shall not apply in the case of damage or destruction by fire or other
casualty or by Eminent
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Domain, in which events the obligations of Landlord shall be controlled by
either Section 20 or Section 22 hereof.
14. Reservation of Landlord. Landlord reserves the right to place,
maintain, repair and replace such utility lines, pipes, tunneling, and the like,
in, under, over and upon the Premises as may be reasonably necessary or
advisable for the servicing of the Premises or of other portions of the Site of
which the Premises are a part. Landlord reserves the right of use of the roof
and exterior walls of the Premises and of the building or buildings of which the
Premises are a part.
Landlord shall use reasonable efforts to place such utility lines,
pipes, etc. above the ceiling or below the floor of the Premises and such
installation shall not unreasonably adversely interfere with the aesthetic
appearance of the Premises.
15. Liability. Landlord shall not be liable for any damage done or
occasioned by or from the electrical system, the heating or air conditioning
system, the plumbing and sewer systems in, upon or about the Premises or the
building of which the Premises are a part, nor for damages occasioned by water,
snow or ice being upon or coming through the roof, trapdoor, walls, windows,
doors or otherwise, nor for any damage arising from acts of negligence of
co-tenants or other occupants of the building or buildings of which the Premises
may be a part, or the acts of any owners or occupants of adjoining or contiguous
property; and furthermore, Landlord shall not be liable for any damage
occasioned by reason of the construction of the Premises or for failure to keep
the Premises in repair, unless Landlord is obligated to make such repairs under
the terms hereof, and unless notice of the need for repairs has been given
Landlord, a reasonable time has elapsed and Landlord has failed to make such
repairs. In any events, Landlord shall not be liable for any damage to Tenant's
leasehold improvements, fixtures, or merchandise resulting from fire or other
insurable hazards, regardless of the cause thereof, and Tenant hereby releases
Landlord from all liability for such damage.
16. Repairs by Tenant / HVAC Contract.
(a) Repairs by Tenant. Tenant shall keep and maintain the Premises and
any fixtures, facilities or equipment contained therein, in good condition and
repair, including, but not limited to, the heating, air conditioning,
electrical, plumbing and sewer systems, the exterior doors and window frames and
shall make any replacements thereof and of all broken and cracked glass as may
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become necessary during the term of this Lease or any renewal or extension
thereof, excepting, however, such repairs and replacements as are the obligation
of Landlord under Section 13 hereof, and excepting any repairs made necessary by
reason of damage due to fire or other casualty covered by standard fire and
extended coverage insurance or by taking by eminent domain. If Tenant refuses or
neglects to commence or complete repairs promptly and adequately, Landlord may,
but shall not be required to do so, make or complete said repairs and Tenant
shall pay the cost thereof to Landlord upon demand.
(b) HVAC Contract. During the term of this Lease, Tenant agrees to
employ, pursuant to written contract running to the benefit of the Landlord, a
contractor acceptable to Landlord to perform Tenant's obligations for the
regular factory recommended maintenance and service of the heating, cooling and
ventilating units serving the Premises. Prior to the Commencement Date, Tenant
shall deliver a fully executed copy of the contract to the Landlord. Such
maintenance program shall include all regular factory recommended maintenance
and service and at least semiannual inspections, filter replacements, and
cleaning of said units and systems, together with such adjustments and servicing
as each inspection discloses to be required or reasonably recommended and, in
addition, all repairs, testing and servicing as shall be necessary or reasonably
required by Landlord or Landlord's insurance underwriter.
17. (a) Default by Tenant. This Lease is made upon the condition that
the Tenant shall punctually and faithfully perform all of the covenants and
agreements by it to be performed as herein set forth, and if any of the
following events of default shall occur, to-wit: (a) any installment of Fixed
Rent, Percentage Rent, Additional Rent or any other sums required to be paid by
the Tenant hereunder, or any part thereof, shall at any time be in arrears and
unpaid for five (5) business days after written demand therefor, or (b) Tenant
fails to strictly comply with the provisions of Item 8(a), 8(b), 8(d), 8(e) or
8(f) hereof and such failure continues after five (5) business days written
notice thereof and/or such failure, whether or not previously timely cured,
re-occurs more than three (3) times within any lease year; or (c) at the
election of Landlord there be a default by Tenant beyond any applicable cure
period under any other lease between Landlord and Tenant or an affiliate,
subsidiary, parent or other related entity of Tenant; or (d) there be any
default on the part of the Tenant in the observance or performance of any of the
other covenants, agreements, or conditions of this Lease on the part of the
Tenant
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to be kept and performed, and said default shall continue for a period of
fifteen (15) days after written notice thereof from Landlord to Tenant (unless
such default cannot reasonably be cured within fifteen (15) days and Tenant
shall have commenced to cure said default within said fifteen (15) days and
continues diligently to pursue the curing of the same), or (e) the Tenant shall
file a petition in bankruptcy or be adjudicated a bankrupt, or file any petition
or answer seeking 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, or make an assignment
for the benefit of creditors, or (f) any trustee, receiver or liquidator of
Tenant or of all or any substantial part of its properties or of the Premises
shall be appointed in any action, suit or proceeding by or against Tenant and
such proceeding or action shall not have been dismissed within thirty (30) days
after such appointment, or (g) the leasehold estate hereby created shall be
taken on execution or by other process of law, or (h) Tenant shall vacate or
abandon the Premises, then and in any of said cases, the Landlord at its option
may terminate this Lease and re-enter upon the Premises and take possession
thereof with full right to sue for and collect all sums or amounts with respect
to which Tenant may then be in default and accrued up to the time of such entry,
including damages to the Landlord by reason of any breach or default on the part
of the Tenant, or the Landlord may, if he elects so to do, bring suit for
collection of such rents and damages without entering into possession of the
Premises or avoiding this Lease.
In addition to, but not in limitation of, any of the remedies set forth
in this Lease or given to the Landlord by law or in equity, the Landlord shall
also have the right and option, in the event of any default by the Tenant under
this Lease and the continuance of such default after the period of notice above
provided, to retake possession of the Premises from the Tenant by summary
proceedings or otherwise, and it is agreed that the commencement and prosecution
of any action by the Landlord in forcible entry and detainer, ejectment or
otherwise, or any execution of any judgment or decree obtained in any action to
recover possession of the Premises, shall not be construed as an election to
terminate this Lease unless the Landlord expressly exercises its option
hereinbefore provided to declare the term hereof ended, whether or not such
entry or re-entry be had or taken under summary proceedings or otherwise, and
shall not be deemed to have absolved or discharged the Tenant from any of its
obligations and liabilities for the remainder of the term of this Lease, and
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the Tenant shall, notwithstanding such entry or re-entry, continue to be liable
for the payment of the rents and the performance of the other covenants and
conditions hereof and shall pay to the Landlord all monthly deficits after any
such re- entry in monthly installments as the amounts of such deficits from time
to time are ascertained and, if in the event of any such ouster, the Landlord
rents or leases the Premises to some other person, firm or corporation (whether
for a term greater, less than or equal to the unexpired portion of the term
created hereunder) for an aggregate rent during the portion of such new lease
co-extensive with the term created hereunder which is less than the rent and
other charges which the Tenant would pay hereunder for such period, Landlord may
immediately upon the making of such new lease or the creation of such new
tenancy sue for and recover the difference between the aggregate rental provided
for in said new lease for the portion of the term co- extensive with the term
created hereunder and the rent which Tenant would pay hereunder for such period,
together with any expense to which the Landlord may be put for brokerage
commission, placing the Premises in tenantable condition or otherwise. In
determining the rent payable by Tenant hereunder a sum equal to the average
amount of annual Percentage Rent (if any) paid by Tenant to the Landlord
pursuant to the provisions of Section 3(b) hereof for the period since the
Commencement Date of this Lease which preceded any such default, prorated, shall
be added to the Fixed Rent as provided in Section 3(a) hereof. If such new lease
or tenancy is made for a shorter term than the balance of the term of this
Lease, any such action brought by the Landlord to collect the deficit for that
period shall not bar the Landlord from thereafter suing for any loss accruing
during the balance of the unexpired term of this Lease. If Tenant at any time
shall fail to pay any taxes, assessments, or liens, to make any payment or
perform any act required by this Lease to be made or performed by it, Landlord,
without waiving or releasing Tenant from any obligation or default under this
Lease, may (but shall be under no obligation to) at any time thereafter make
such payment or perform such act for the account and at the expense of Tenant.
All sums so paid by Landlord and all costs and expenses so incurred, together
with interest thereon at the rate of twelve percent (12%) per annum from the
date of payment or incurring thereof, shall constitute additional rent payable
by Tenant under this Lease and shall be paid by Tenant to Landlord on demand.
All rights and remedies of Landlord herein enumerated shall be cumulative, and
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none shall exclude any other remedies allowed at law or in equity.
Further, in addition to, but not in limitation of any of the remedies otherwise
available to Landlord, in the event (a) Tenant should fail to take possession of
the Premises within ten (10) days of the date possession is tendered by Landlord
to Tenant (such failure herein referred to as the "Failure to Take Possession")
or (b) Tenant should fail to perform its buildout work, fully fixture, stock and
staff the Premises and open the Premises for business to the public on or before
thirty (30) days after the Commencement Date (such failure herein referred to as
the "Failure to Operate"), or (c) Tenant should fail to deliver any required
Security Deposit within the time specified in the Lease or, if such Security
Deposit is made by check and such check is not honored by the bank on which the
check is drawn for any reason (such failure herein referred to
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as the "Failure to Deposit"),or (d) Tenant should fail to comply with the
provisions of Section 10(b) (such failure referred to as "Contractor Failure")
then Landlord shall have the right at its option to treat such Failure to Take
Possession, Failure to Operate, Failure to Deposit and/or Contractor Failure as
a default within the meaning of this Lease the remedy for which default is that
at the option of Landlord the Lease may be forfeited by Tenant and thereby
become null and void, which option shall be exercised by Landlord in writing to
Tenant, and upon delivery of such notice of exercise of option this Lease shall
be forfeited and this Lease shall be void ab initio, and possession of Premises
shall be in Landlord and not in Tenant and Tenant shall immediately vacate the
Premises and upon failure to so vacate may be ousted by Landlord.
18. Rent Demand. Every demand for rent due wherever and whenever made
shall have the same effect as if made at the time it falls due and at the place
of payment, and after the services of any notice or commencement of any suit, or
final judgment therein, Landlord may receive and collect any rent due, and such
collection or receipt shall not operate as a waiver of nor affect such notice,
suit or judgment.
19. Notices / Time.
(a) Notices. Any notice or consent required to be given by or on behalf
of either party to the other shall be in writing and shall be given by mailing
such notice or consent by registered or certified mail, return receipt
requested, addressed to Landlord at the address hereinabove specified, or by
Federal Express or comparable overnight air courier service - Next Day - Morning
Delivery addressed to Landlord at 1400 West Northwood Street, Greensboro, North
Carolina 27408 (Telephone: 336-274-1666), and to the Tenant at the address
hereinabove specified and to the Premises, or such other address as either party
may from time to time designate as its notice address by notifying the other
party thereof. Notice so sent shall be deemed given (a) when personally
delivered, or (b) on the first business day following deposit with Federal
Express or a comparable overnight air courier service providing written evidence
of next day delivery, such notice or consent not to be included with any other
items being transmitted to Landlord, Tenant, or any other party, or (c) five (5)
business days following deposit in the United States mail, if notice is sent
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by registered or certified mail, with return receipt requested, first class
postage prepaid.
(b) Time. Time is of the essence in performance of all obligations and
exercise of all rights under this Lease.
20. Damage and Destruction. In the event the Premises are damaged by
fire, explosion or other casualty or occurrence to an extent which is less than
twenty-five percent (25%) of the cost of replacement of the Premises, the damage
shall promptly be repaired by Landlord, at Landlord's expense, provided that
Landlord shall not be obligated to expend for such repairs an amount in excess
of the insurance proceeds recovered or recoverable as a result of such damage
and that in no event shall Landlord be required to repair or replace Tenant's
stock in trade, fixtures, furniture, furnishings, or floor coverings and
equipment. In the event of such damage and (a) Landlord is not required to
repair as hereinabove provided, or (b) the Premises are damaged by fire,
explosion or any other casualty or occurrence to the extent of twenty-five
percent (25%) or more of the cost of replacement of the Premises, or (c) the
building of which the Premises are a part is damaged to the extent of fifty
percent (50%) or more of the cost of replacement, Landlord may elect either to
repair or rebuild the Premises, or the building of which the Premises are a
part, as the case may be, or to terminate this Lease upon giving notice of such
election in writing to Tenant within ninety (90) days after the happening of the
event causing the damage. If the casualty, repairing, or rebuilding shall render
the Premises untenantable, in whole or in part, a proportionate abatement of the
Fixed Rent shall be allowed from the date when the damage occurred until the
date Landlord completes the repairs or rebuilding, said proportion to be
computed on the basis of the relation which the gross square foot floor area of
the space rendered untenantable bears to the gross square foot area of the
Premises. If Landlord is required or elects to repair the Premises as herein
provided, Tenant shall repair or replace its stock in trade, fixtures,
furniture, furnishings, floor coverings and equipment.
Landlord shall procure and maintain "all risks" property insurance on
all buildings and improvements now or hereafter erected on the Site. Such
insurance shall be for the full replacement cost of such improvements. In
accordance with sub-
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Section 3(d) and as Additional Rent, Tenant shall reimburse Landlord for a
proportionate share of the costs of such insurance.
21. Mortgage Subordination. Upon written request or notice by Landlord,
concurred in by any mortgagee or trustee of the Site or by any person, firm or
corporation intending to become such a mortgagee or trustee, Tenant agrees to
subordinate its rights under this Lease to the lien or liens of any mortgages or
deeds of trust that may hereafter be placed upon the Site and the Premises and
to any and all advances to be made thereunder, and to the interest thereon, and
all renewals, replacements and extensions thereof, provided the mortgagee or
trustee named in said mortgages or deeds of trust shall agree to recognize the
lease of Tenant in the event of foreclosure if Tenant is not in default beyond
any applicable grace period. Tenant also agrees that any mortgagee or trustee
may elect to have this Lease a prior lien to its mortgage or deed of trust, and
in the event of such election and upon notification by such mortgagee or trustee
to Tenant to that effect, this Lease shall be deemed prior in lien to the said
mortgage or deed of trust, whether this Lease is dated prior to or subsequent to
the date of said mortgage or trust deed. Tenant agrees that, upon the requests
of Landlord, any mortgagee, or any trustee named in such mortgages or trust
deeds, it shall execute and deliver whatever instruments may be required for
such purposes and to carry out the intent of this Section, and in the event
Tenant fails so to do within ten (10) business days after demand in writing,
Tenant does hereby make, constitute and irrevocably appoint Landlord as its
attorney in fact and in its name, place and stead so to do.
This Lease and all of the rights of Tenant hereunder are and shall be
subject and subordinate to the lien of any mortgage or deed of trust
("Mortgage") now existing, or which hereinafter may be placed, on the Premises
or the Site, or any part thereof, and to any and all renewals, modifications,
consolidations, replacements, extensions, or substitutions of any such Mortgage;
provided, nevertheless, each Mortgage shall contain provisions to the effect
that so long as Tenant is not in default under this Lease, no foreclosure of
lien of any such Mortgage shall impair Tenant's right to quiet possession of the
Premises pursuant to the provisions of this Lease. Such subordination shall be
automatic, without the execution of any further subordination agreement by
Tenant.
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With respect to any lien or liens of any mortgages or deeds of trust
placed upon the Site and the Premises as of the date of this Lease, Landlord
shall request such mortgagee or trustee to enter into a non-disturbance
agreement with Tenant provided Tenant agrees to attorn to the interests of the
mortgagee in the event of a foreclosure.
22. Eminent Domain. In the event the Premises or any part thereof shall
be taken or condemned either permanently or temporarily for any public or quasi
public use or purpose by any competent authority in appropriation proceedings or
by any right of eminent domain, the entire compensation award therefor,
including, but not limited to, all damages as compensation for diminution in
value of the leasehold, reversion, and fee, shall belong to the Landlord without
any deduction therefrom or any present or future estate of Tenant, and Tenant
hereby assigns to Landlord all its right, title and interest to any such award.
Although all damages in the event of any condemnation are to belong to the
Landlord, whether such damages are awarded as compensation for diminution in
value of the leasehold, reversion or to the fee of the Premises, Tenant shall
have the right to claim and recover from the condemning authority, but not from
Landlord, such compensation as may be separately awarded or recoverable by
Tenant in Tenant's own right on account of any and all damage to Tenant's
business by reason of the condemnation and for or on account of any cost or loss
to which Tenant might be put in removing Tenant's merchandise, furniture,
fixtures, leasehold improvements and equipment.
If the whole of the Premises shall be taken by any public authority
under the power of eminent domain, this Lease shall terminate as of the day
possession shall be taken by such public authority, and Tenant shall pay rent up
to that date with an appropriate refund by Landlord of such rent as shall have
been paid in advance for a period subsequent to the date of the taking. If less
than twenty-five percent (25%) of the floor space of the Premises shall be so
taken, this Lease shall terminate only with respect to the parts so taken as of
the day possession shall be taken by such public authority, and Tenant shall pay
rent up to that day with an appropriate refund by Landlord of such rent as may
have been paid in advance for a period subsequent to the date of the taking and,
thereafter, the Fixed Rent shall be equitably
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adjusted, and Landlord shall at its expense make all necessary repairs or
alterations to the basic building and exterior and interior work so as to
restore the Premises to its condition prior to such taking. If more than
twenty-five percent (25%) of the floor space of the Premises shall be so taken,
then this Lease shall terminate with respect to the part so taken from the day
possession shall be taken by such public authority, and Tenant shall pay rent up
to that day with an appropriate refund by Landlord of such rent as may have been
paid in advance for a period subsequent to the date of the taking, and either
party shall have the right to terminate this Lease upon notice in writing within
thirty (30) days after such taking of possession; in the event that Tenant
remains in possession, and if Landlord does not so terminate, all of the terms
herein provided shall continue in effect except that the rent shall be equitably
abated, and Landlord shall make all necessary repairs or alterations to the
basic building and exterior and interior work so as to restore the Premises to
its condition prior to such taking. If more than fifty percent (50%) of the
floor space of the building in which the Premises are located shall be taken
under the power of eminent domain, Landlord may, by notice in writing to Tenant
delivered on or before the day of surrendering possession to the public
authority, terminate this Lease, and rent shall be paid or refunded as of the
date of termination.
Notwithstanding the above, if so much of the Premises is permanently
taken and Landlord within ninety (90) days of the taking does not commence to
restore the Premises to an architectural unit suitable for the conduct of
Tenant's business, or if the Premises includes less than 2,500 square feet of
floor area, then a proportionate abatement of the Fixed Rent shall be allowed
from the date of such taking until the date Landlord completes the repairs or
rebuilding, said proportionate share to be computed on the basis of the relation
which the gross square foot floor area of the space rendered taken bears to the
gross square foot area of the Premises.
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23. Assignment and Subletting.
(a) Tenant shall not sublet said Premises or any part thereof nor
assign this Lease, without in each case the prior written consent of Landlord,
which shall not be unreasonably withheld or delayed. Any transfer of this Lease
from Tenant by merger, consolidation, liquidation or otherwise by operation of
law shall constitute an assignment for the purpose of this Lease and shall
require the written consent of Landlord. Provided, however, the use occupancy,
assignment or subletting of the Premises to any company, corporation, firm or
entity which is affiliated or related to, or a parent or a subsidiary of Tenant
or into which Tenant may be merged or consolidated or to which substantially all
of Tenant's assets may be transferred (hereinafter referred to as an "Affiliated
Entity") shall not be deemed an assignment or subletting requiring the prior
written consent of Landlord provided that such Affiliated Entity has a net worth
equal to or greater than that of Tenant if such Affiliated Entity is other than
a parent or subsidiary of Tenant resulting from a corporate restructure and
evidence of such is provided Landlord ten (10) days prior to such assignment or
subletting, and provided further that the nature of the operations remain as set
forth in Paragraph 7(a) hereof, and provided further that such Affiliated Entity
has national recognition and name awareness within the industry as a retailer of
comparable or better caliber than Tenant selling products at an outlet price
structure. Any transfer, sale or other disposition of the controlling stock of
the Tenant and/or of substantially all of the assets of Tenant shall be deemed
an assignment of this Lease requiring the Landlord's written consent; provided,
however, that if the stock of such corporation is regularly traded on any
recognized securities market, the transfer of stock will not be prohibited
hereby. Tenant shall not permit any business to be operated in or from the
Premises by any concessionaire or licensee without the prior written consent of
Landlord. Any consent by Landlord to any assignment or subletting, or to the
operation by a concessionaire or licensee, shall not constitute a waiver of the
necessity for such consent to any subsequent assignment or subletting, or
operation by a concessionaire or licensee. In the event that Tenant shall at any
time, during the term of this Lease, sublet all or any part of said Premises or
assign this Lease, either with the consent of Landlord as hereinbefore provided
or without the consent of Landlord, then, and in such event, it is hereby
mutually agreed that Tenant shall nevertheless remain fully liable under all of
the terms, covenants and conditions of this Lease. If this Lease be assigned, or
if the Premises or any part thereof be subleased or occupied by anybody other
than Tenant, Landlord may collect from the assignee, subtenant or occupant any
rent or other charges payable by Tenant under this Lease, and apply the amount
collected to the rent and other charges herein reserved, but such collection by
Landlord shall not be deemed an acceptance of the assignee, subtenant or
occupant as a tenant nor a release of Tenant from the performance by Tenant
under this Lease. Tenant shall not advertise the Lease for assignment nor shall
Tenant advertise the Premises or any part
38
<PAGE>
thereof for sublease in any trade magazine, newspaper, or in any other printed
publication or in any audio, video, or magnetic medium.
(b) If Landlord should sell or otherwise transfer its interest in the
Premises upon an undertaking by the purchaser or transferee to be responsible
for all of the covenants and undertakings of Landlord, Tenant agrees that
Landlord shall thereafter have no liability to Tenant under this Lease or any
modification or amendments thereof, or extensions or renewals thereof, except
for such liabilities which might have accrued prior to the date of such sale or
transfer of Landlord's interest.
24. Accord and Satisfaction. No payment by Tenant or receipt by
Landlord of a lesser amount than the rental herein stipulated shall be deemed to
be other than on account of the earliest stipulated rent, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment as rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such rent or pursue any other remedy provided for in this Lease or
available at law or in equity.
25. Estoppel Certificates. At any time and from time to time, Tenant
agrees, upon request in writing from Landlord, to promptly without delay
execute, acknowledge and deliver to Landlord a statement in writing certifying
that this Lease is unmodified and in full force and effect (or if there have
been modifications, that the same is in full force and effect as modified and
stating the modifications) and the dates to which the Fixed Rent, Percentage
Rent, Additional Rent, and other charges hereunder have been paid. In addition,
Tenant agrees to furnish Landlord, upon request and after Tenant has opened its
doors for business in the Premises, a letter addressed to Landlord's mortgagee
or financial institution, giving the following information or any part thereof
requested by Landlord: (i) that the Premises have been completed on or before
the date of such letter and that all conditions precedent to the lease taking
effect have been carried out; (ii) that Tenant has accepted possession, that the
lease term has commenced, that Tenant is occupying the Premises and that Tenant
knows of no default under the lease by the Landlord; (iii) the actual
commencement date of the lease and the expiration date of the lease; and (iv)
that the
39
<PAGE>
Tenant's store is open for business. In the event the Tenant fails to provide
such letter as above-described within ten (10) business days after Landlord's
written request therefor, Tenant does hereby make, constitute and irrevocably
appoint Landlord as its attorney-in-fact and in its name, place and stead so to
do. At any time and from time to time, Landlord agrees, upon ten (10) days
request in writing from Tenant, to execute, acknowledge and deliver to Tenant a
statement in writing certifying that this Lease is unmodified and in full force
and effect (or if there has been modification, that the same is in full force
and effect as modified and stating the modifications) and the dates to which the
Fixed Rent, Percentage Rent, Additional Rent and other charges hereunder have
been paid, and stating whether Tenant is in default hereunder, and if so the
nature of such defaults.
26. Waiver. No waiver of any condition or legal right or remedy shall
be implied by the failure of Landlord to declare a forfeiture, or for any other
reason, and no waiver of any condition or covenant shall be valid unless it be
in writing signed by Landlord. No waiver by Landlord in respect to one tenant of
the building in which the Premises are located shall constitute a waiver in
favor of any other tenant, nor shall the waiver of a breach of any condition be
claimed or pleaded to excuse a future breach of the same condition or covenant.
The mention in this Lease of any specific right or remedy shall not preclude
Landlord from exercising any other right or from having any other remedy or from
maintaining any action to which it may be otherwise entitled either at law or in
equity; and for the purpose of any suit by Landlord brought or based on this
Lease, this Lease shall be construed to be a divisible contract, to the end that
successive actions may be maintained as successive periodic sums shall mature
under this Lease and it is further agreed that failure to include in any suit or
action any sum or sums then matured shall not be a bar to the maintenance of any
suit or action for the recovering of said sum or sums so omitted.
27. Quiet Enjoyment. Landlord hereby covenants and agrees that if
Tenant shall perform all the covenants and agreements herein stipulated to be
performed on Tenant's part, Tenant shall at all times during the continuance
hereof have the peaceable and quiet enjoyment and possession of the Premises
without any manner
40
<PAGE>
of hindrance from Landlord or any person or persons lawfully claiming the
Premises.
28. Interpretation. Wherever either the word "Landlord" or "Tenant" is
used in this Lease, it shall be considered as meaning "Landlords" or "Tenants",
respectively, wherever the context permits or requires, and when the singular
and/or neuter pronouns are used herein, the same shall be construed as including
all persons and corporations designated respectively as Landlord or Tenant in
the heading of this instrument wherever the context requires.
29. No Partnership. Landlord does not, in any way or for any purpose,
become a partner of Tenant in the conduct of its business, or otherwise, or
joint venturer or a member of a joint enterprise with Tenant.
30. Exceptions to Demise. Notwithstanding anything to the contrary
herein contained, this Lease is subject to utility easements, both recorded and
unrecorded.
31. Paragraph Headings. The paragraph headings are inserted only as a
matter of convenience and for reference and in no way define, limit or describe
the scope or intent of this Lease nor in any way affect this Lease.
32. Lease Inures to Benefit of Assignees. This Lease and all the
covenants, provisions and conditions herein contained shall inure to the benefit
of and be binding upon the heirs, personal representatives, successors and
assigns, respectively, of the parties hereto, provided, however, that no
assignment by, from, through or under Tenant in violation of the provisions
hereof shall vest in the assigns any right, title or interest whatever.
33. Entire Agreement / Severability.
(a) Entire Agreement. This Lease and the exhibits attached hereto, and
any Rider attached hereto and forming a part hereof, set forth all the
covenants, promises, agreements, conditions and understandings between Landlord
and Tenant concerning the Premises and there are no covenants, promises,
agreements, conditions or understandings, either oral or written, between them
other than are herein set forth. This Lease shall not be orally amended,
modified
41
<PAGE>
or terminated, nor shall any obligation hereunder be waived orally. No
subsequent alteration, amendment, change or addition to this Lease shall be
binding upon Landlord or Tenant unless and until reduced to writing and signed
by them and by any lender to Landlord if such consent is required as a condition
of financing to Landlord. Tenant agrees that Landlord and its agents have made
no representations or promises with respect to the Premises or the building or
property of which the same are a part except as herein expressly set forth.
(b) Severability. If any provisions of this Lease, or the application
thereof to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such provision
or provisions to persons or circumstances other than those as to whom or which
it is held invalid or unenforceable, shall not be affected thereby and every
provision of this lease shall be valid and enforceable to the fullest extent
permitted by law.
34. Surrender and Holding Over. Tenant shall deliver up and surrender
to Landlord possession of the Premises upon the expiration of the Lease, or its
termination in any way, in as good condition and repair as the same shall be on
the date on which the Premises are delivered to Tenant by Landlord (damage by
fire and other casualty, taking by eminent domain and ordinary wear and decay
only excepted), and shall deliver the keys at the office of Landlord or
Landlord's agent. As provided in Section 11 of this Lease Tenant shall remove
all signage and shall repair any damage caused by the removal of such signage.
Should Tenant or any party claiming under Tenant remain in possession of the
Premises, or any part thereof, after any termination of this Lease, no tenancy
or interest in the Premises shall result therefrom but such holding over shall
be an unlawful detainer and all such parties shall be subject to immediate
eviction and removal, and Tenant shall upon demand pay to Landlord, as
liquidated damages, a sum equal to Additional Rent plus double the Fixed Rent as
specified herein for any period during which Tenant shall hold the Premises
after the stipulated term of this Lease may have terminated.
35. Liability of Landlord. If Landlord shall fail to perform any
covenant, term or condition of this Lease upon Landlord's part to be performed
and, as a consequence of such default, Tenant shall
42
<PAGE>
recover a money judgment against Landlord, such judgment shall be satisfied only
out of the proceeds of sale received upon execution of such judgment and levy
thereon against the right, title and interest of Landlord in the Site and out of
rents or other income from such property receivable by Landlord or out of the
consideration received by Landlord from the sale or other disposition of all or
any part of Landlord's right, title and interest in the Site, and neither the
Landlord nor any partner or employee of the partnership designated herein as
Landlord shall be liable for any deficiency.
This Agreement and all documents, agreements, understandings and
arrangements relating to this transaction have been negotiated, executed and
delivered on behalf of Tanger Properties Limited Partnership by its Authorized
Agent or by Tanger Factory Outlet Centers, Inc., its sole general partner or
officers thereof in their representative capacity and not individually, and bind
only Tanger Properties Limited Partnership and no employee, agent, officer,
partner or shareholder of Tanger Properties Limited Partnership or Tanger
Factory Outlet Centers, Inc. shall be bound or held to any personal liability in
connection with the obligations of Tanger Properties Limited Partnership
thereunder, and any person or entity dealing with Tanger Properties Limited
Partnership in connection therewith shall look solely to Tanger Properties
Limited Partnership for the payment of any claim or for the performance of any
obligation thereunder. The foregoing shall also apply to any future documents,
agreements, understandings, and arrangements which may relate to this
transaction.
36. Waiver of Subrogation. Landlord and Tenant hereby release the other
from any and all liability or responsibility to the other or anyone claiming
through or under them by way of subrogation or otherwise for any loss or damage
to property caused by fire or any of the extended coverage or supplementary
contract casualties, even if such fire or other casualty shall have been caused
by the fault or negligence of the other party, or any one for whom such party
may be responsible, provided, however, that this release shall be applicable and
in force and effect only with respect to loss or damage occurring during such
time as the releasor's policies shall contain a clause or endorsement to the
effect that any such release shall not adversely affect or impair
43
<PAGE>
said policies or prejudice the right of the releasor to recover thereunder.
Each party shall request its insurance carriers to include a waiver of
subrogation clause in all insurance policies which relate to the Leased Premises
or use of the Leased Premises so long as such clause is obtainable without extra
cost, or, if extra cost shall be charged therefor, so long as the other party
pays such entire cost. If extra cost shall be charged therefor, each party shall
advise the other thereof and of the amount of the extra cost, and the other
party, at its election, may pay the same, but shall not be obligated to do so.
37. Retail Restriction Limit. Except for the store currently leased in
Redding, Pennsylvania during the term of this Lease (including any extension or
renewal thereof) and for a period of one year thereafter, Tenant shall not
directly or indirectly own, operate or be financially interested in, either by
itself or with others within a radius of fifty (50) miles of the perimeter of
the shopping center located on the Site, of which the Premises are a part, a
business like or similar to the business permitted to be conducted in the
Premises. This provision shall apply to any principal or partner of Tenant, if
Tenant is a partnership or joint venture, and to any officer, director or
shareholder owning more than ten percent (10%) of the capital stock of Tenant,
if Tenant be a corporation other than a corporation whose shares are regularly
traded on a nationally recognized exchange including but not limited to NASDQ.
Landlord, for breach of this covenant and in addition to any other remedy
otherwise available, may require that all sales from any such competing business
be included within the gross sales as defined in Section 3(b)(iii) hereof as
though such sales had actually been made from the Premises.
38. Financial Statements. At the request of Landlord, Tenant shall, not
later than ninety (90) days following the close of each fiscal year of Tenant
during the term of this Lease, furnish to Landlord a balance sheet of Tenant as
of the end of such fiscal year and a statement of income and expense for the
fiscal year then ended together with an opinion of an independent certified
public accountant of recognized standing to the effect that said financial
statements have been prepared in conformity with generally accepted accounting
principles consistently applied and fairly present the
44
<PAGE>
financial condition and results of operations of Tenant as of and for the period
covered.
IN TESTIMONY WHEREOF, the Landlord and Tenant have caused this Lease to
be signed in triplicate as of the day and year first above written.
LANDLORD: TANGER PROPERTIES LIMITED PARTNERSHIP, a
North Carolina limited partnership
By: Tanger Factory Outlet Centers, Inc.,
its sole general partner
(Corporate
Seal)
BY: /s/ Rochelle G. Simpson
------------------------------------
Rochelle G. Simpson
Senior Vice President-Administration
ATTEST:
/s/ Virginia R. Summerell
- -------------------------
Virginia R. Summerell
Assistant Secretary
TENANT: DM MANAGEMENT COMPANY
(Corporate
Seal)
BY: /s/ Patricia C. Selander
------------------------
President/Vice President
ATTEST:
/s/ Olga L. Conley
- -----------------------------
Secretary/Assistant Secretary
LANDLORD
NOTARY PROVISION
45
<PAGE>
STATE OF North Carolina
--------------
COUNTY OF
--------------
I, Betty E. Massey, a Notary Public for the above State and County do
hereby certify that Virginia R. Summerell personally appeared before me this day
and acknowledged that she is Assistant Secretary of TANGER FACTORY OUTLET
CENTERS, INC., a Corporation, which is the General Partner of Tanger Properties
Limited Partnership, a North Carolina Limited Partnership and that by authority
duly given and as the act of the corporation the foregoing Lease Agreement was
signed in its name by its Senior Vice President of Administration, sealed with
its corporate seal and attested by herself as its Assistant Secretary.
Witness my hand and notarial seal this the 29 day of October, 1998.
/s/ Betty E. Massey
-------------------
Notary Public
My commission expires:
6/14/99
- ----------------------
(Notary
Seal)
46
<PAGE>
TENANT
NOTARY PROVISION
STATE OF Massachusetts
COUNTY OF Norfolk
I, Nancy B. Marse, a Notary Public for the above State and County, do
hereby certify that Olga L. Conley
---------------------------------------
(NAME OF SECRETARY/ASSISTANT SECRETARY)
personally appeared before me this day and acknowledged that he/she is
Secretary/Assistant Secretary of DM MANAGEMENT COMPANY, a Corporation and that
by authority duly given and as the act of the corporation the foregoing Lease
Agreement was signed in its name by its President/Vice President, sealed with
its corporate seal and attested by himself/herself as its Secretary/Assistant
Secretary.
Witness my hand and notarial seal this the 23rd day of October, 1998.
/s/ Nancy B. Marse
------------------
Notary Public
My commission expires:
7/2/04
- ---------------------
(Notary
Seal)
47
<PAGE>
Exhibit "A"
Drawing of Site
Omitted
<PAGE>
EXHIBIT "B"
LEGAL DESCRIPTION
ALL THAT CERTAIN lot or tract or land SITUATE on the South Side of U.S. Route
30, the Lincoln Highway East, Legislative Route 215, east of Millstream Road,
T-539, in East Lampeter Township, Lancaster County, Pennsylvania, as shown on a
Plan prepared by Huth Engineers Inc., dated September 4, 1987, Drawing No.
LA-1565-8, said tract being more fully bounded and described as follows:
BEGINNING at an iron pin on the Southern right of way line of the Lincoln
Highway East, 50 feet wide, said pin being a corner of land of Hugh D. Summers;
thence along land of Hugh D. Summers the following two courses and distances:
(1) South 22 degrees 44 minutes 20 seconds West, a distance of 250.00 feet to an
iron pin; (2) South 66 degrees 15 minutes 40 seconds East, a distance of 400.04
feet to a concrete monument, a corner of land of the Host of America, Inc.;
thence along the same the following fourteen (14) courses and distances: (1)
South 13 degrees 03 minutes 55 seconds East, a distance of 346.81 feet to a
concrete monument; (2) South 13 degrees 59 minutes 45 seconds East, a distance
of 99.94 feet to an iron pin; (3) South 76 degrees 05 minutes 40 seconds West, a
distance of 10.87 feet to an iron pin; (4) South 10 degrees 16 minutes 15
seconds East, a distance of 107.52 feet to an iron pin; (5) South 04 degrees 44
minutes 30 seconds East, a distance of 100.62 feet to an iron pin; (6) South 05
degrees 39 minutes 15 seconds West, a distance of 101.83 feet to an iron pin;
(7) South 14 degrees 21 minutes 10 seconds West, a distance of 101.52 feet to an
iron pin; (8) South 21 degrees 36 minutes 15 seconds West, a distance of 101.97
feet to an iron pin; (9) South 33 degrees 21 minutes 05 seconds West, a distance
of 100.24 feet to an iron pin; (10) South 39 degrees 01 minutes 50 seconds West,
a distance of 97.75 feet to an iron pin; (11) South 48 degrees 20 minutes 30
seconds West, a distance of 97.33 feet to an iron pin; (12) South 56 degrees 00
minutes 30 seconds West, a distance of 97.29 feet to an iron pin; (13) South 64
degrees 11 minutes 00 seconds West, a distance of 100.98 feet to an iron pin;
(14) South 76 degrees 16 minutes 20 seconds West, a distance of 185.07 feet to
an iron pin, a corner of land of Benuel H. and Sylvia K. King; thence along the
same North 14 degrees 53 minutes 35 seconds West, a distance of 522.06 feet to
an iron pin; thence in and along the centerline of Millstream Road, the
following two (2) courses and distances: (1) North 14 degrees O7 minutes 35
seconds West, a distance of 894.80 feet to a point; (2) North 14 degrees 06
minutes 50 seconds West, a distance of 390.37 feet to a point; thence crossing
Millstream Road North 75 degrees 46 minutes 50 seconds East, a distance of 15.89
feet to an iron pin on the eastern right of way line of Millstream Road, 33 feet
wide, said iron pin also being a corner of land of Audrey Brodsky; thence along
the same North 40 degrees 38 minutes 20 seconds East, a distance of 224.86 feet
to an iron pin on the southern right of way line of the Lincoln Highway East;
thence along the same the two following (2) courses and distances; (1) in a line
curving to the left in a southeasterly direction having a radius of 2,653.36
feet an arc distance of 150.65 feet, the chord of said arc being South 64
degrees 30 minutes 05 seconds East, a distance of 150.63 feet to a point; and
(2) South 66 degrees 15 minutes 40 seconds East, a distance of 413.17 feet to an
iron pin, the place of beginning.
or so much of the site as may be used by Landlord for the Shopping Center.
<PAGE>
TANGER PROPERTIES LIMITED PARTNERSHIP
LANCASTER, PENNSYLVANIA
EXHIBIT "C"
Page 1 of 1
DM MANAGEMENT COMPANY
TERMS AND SPECIFICATIONS:
<TABLE>
<CAPTION>
<S> <C>
FLOORS: AS IS.
WALLS: AS IS.
DOORS: AS IS.
CEILING: AS IS.
PLUMBING: AS IS.
HVAC: AS IS.
FIRE
PROTECTION
SYSTEM: AS IS.
ELECTRICAL: AS IS.
PHONE: AS IS.
SIGNAGE: AS IS.
All exterior signs must conform to the
Landlord's sign criteria and be approved by
Landlord before installation.
UTILITIES: AS IS.
</TABLE>
50
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED BALANCE SHEET AT SEPTEMBER 26, 1998 AND FROM THE
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS AND THE NINE MONTHS
ENDED SEPTEMBER 26, 1998 CONTAINED IN THE COMPANY'S QUARTERLY REPORT ON FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000910721
<NAME> DM MANAGEMENT COMPANY
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-26-1998 DEC-26-1998
<PERIOD-START> JUN-28-1998 DEC-28-1997
<PERIOD-END> SEP-26-1998 SEP-26-1998
<CASH> 18,806 18,806
<SECURITIES> 0 0
<RECEIVABLES> 3,594 3,594
<ALLOWANCES> 0 0
<INVENTORY> 29,083 29,083
<CURRENT-ASSETS> 64,261 64,261
<PP&E> 40,899 40,899
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 109,639 109,639
<CURRENT-LIABILITIES> 56,243 56,243
<BONDS> 0 0
0 0
0 0
<COMMON> 96 96
<OTHER-SE> 49,882 49,882
<TOTAL-LIABILITY-AND-EQUITY> 109,639 109,639
<SALES> 46,580 150,731
<TOTAL-REVENUES> 46,580 150,731
<CGS> 20,283 67,733
<TOTAL-COSTS> 30,632 97,910
<OTHER-EXPENSES> 13,699 44,176
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (58) (462)
<INCOME-PRETAX> 2,307 9,107
<INCOME-TAX> 900 3,552
<INCOME-CONTINUING> 1,407 5,555
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,407 5,555
<EPS-PRIMARY> 0.15 0.59
<EPS-DILUTED> 0.14 0.53
</TABLE>
