United States Securities and Exchange Commission
Washington, DC 20549
FORM 10 - Q
x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended May 2, 1998
---------------
or
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission File Number 0-23874
-----------
Jos. A. Bank Clothiers, Inc.
Delaware 5611 36-3189198
-------------- ------------ ----------------
(State incorporation) (Primary Standard (I.R.S. Employer
Industrial Identification
Classification Number)
Code Number)
500 Hanover Pike, Hampstead, MD 21074-2095
- ------------------------------- ---------------
none
----------------------------------
(Former name or former address, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [x] No [ ]
Indicate the number of shares of each of the issuer's classes of common stock,
as of the latest practicable date:
Class Outstanding as of June 10, 1998
- ---------------------------- -------------------------------
Common stock. $.01 par value 6,791,152
<PAGE>
Jos. A. Bank Clothiers, Inc.
Index
Part I. Financial Information Page No.
--------------------- --------
Item 1. Financial Statements
Condensed Consolidated Statements 3
of Income - Three Months
ended May 2, 1998 and
May 3, 1997
Condensed Consolidated Balance 4
Sheets - as of May 2, 1998 and
January 31, 1998
Condensed Consolidated Statements 5
of Cash Flows -Three Months
ended May 2, 1998 and
May 3, 1997
Notes to Condensed Consolidated 6-8
Financial Statements
Item 2. Management's Discussion and Analysis 9-11
of Results of Operations and
Financial Condition
Part II. Other Information
-----------------
Item 6. Exhibits and Reports on Form 8-K 12
(a) Exhibits - Exhibit 27-Financial Data
Schedule (EDGAR filing only)
Signatures 13
- ----------
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(Unaudited)
Three Months Ended
------------------
May 2, May 3,
1998 1997
------- -------
NET SALES $43,383 $38,655
Costs and expenses:
Cost of goods sold 22,151 19,793
General and administrative 4,528 4,120
Sales and marketing 14,670 13,427
Store opening costs 240 --
------- -------
41,589 37,340
------- -------
Operating income 1,794 1,315
Interest expense, net 437 590
------- -------
Income from continuing operations
before provision for income taxes 1,357 725
Provision for income taxes 529 288
------- -------
INCOME FROM CONTINUING OPERATIONS 828 437
Loss from discontinued operations (51) (55)
------- -------
NET INCOME $ 777 $ 382
======= =======
Earnings per share:
Income from continuing operations:
Basic $0.12 $0.06
Diluted $0.12 $0.06
Discontinued operations (net of tax):
Basic $(0.01) $(0.01)
Diluted $(0.01) $(0.01)
Net income:
Basic $0.11 $0.06
Diluted $0.11 $0.06
Weighted average shares outstanding:
Basic 6,791 6,791
Diluted 6,918 6,827
See accompanying notes.
3
<PAGE>
JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) (Unaudited)
May 2, January 31,
1998 1998
-------- -----------
ASSETS
Current Assets:
Cash and cash equivalents $ 677 $ 564
Accounts receivable 3,466 2,737
Inventories:
Raw materials 7,938 6,994
Finished goods 39,016 33,120
------- -------
Total inventories 46,954 40,114
------- -------
Prepaid expenses and other current assets 4,695 4,338
Deferred income taxes 4,084 4,030
------- -------
Total current assets 59,876 51,783
------- -------
Property, plant and equipment,
at cost 47,674 46,925
Accumulated depreciation and amortization (24,917) (24,818)
------- -------
Net property, plant and equipment 22,757 22,107
------- -------
Deferred income taxes 1,207 1,680
Other assets 713 791
Net noncurrent assets of discontinued operations 750 783
------- -------
TOTAL ASSETS $85,303 $77,144
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $16,381 $13,319
Accrued expenses 10,740 9,774
Current portion of long-term debt 1,720 1,885
Net current liabilities of discontinued operations 438 663
------- -------
Total current liabilities 29,279 25,641
Long-term liabilities 18,832 15,105
------- -------
Total liabilities 48,111 40,746
------- -------
Shareholders' equity:
Common stock 70 70
Additional paid-in capital 56,353 56,336
Accumulated deficit (17,311) (18,088)
------- -------
39,112 38,318
Less treasury stock (1,920) (1,920)
------- -------
TOTAL SHAREHOLDERS' EQUITY 37,192 36,398
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $85,303 $77,144
======= =======
See accompanying notes.
4
<PAGE>
JOS. A. BANK CLOTHIERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
Three Months Ended
--------------------
May 2, May 3,
1998 1997
------- -------
Cash flows from operating activities:
Net income $ 777 $ 382
Loss from discontinued operations 51 55
------- -------
Income from continuing operations 828 437
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Decrease in deferred taxes 419 240
Depreciation and amortization 950 854
Net increase in operating working capital (4,032) (5,929)
------- -------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
OF CONTINUING OPERATIONS (1,835) (4,398)
------- -------
Cash flows from investing activities:
Additions to property, plant and equipment (1,550) (599)
------- -------
NET CASH USED IN INVESTING ACTIVITIES OF
CONTINUING OPERATIONS (1,550) (599)
------- -------
Cash flows from financing activities:
Borrowings under long-term Credit Agreement 10,625 14,573
Repayment under long-term Credit Agreement (7,090) (9,435)
Borrowings of other long-term debt 277 --
Repayment of other long-term debt (88) (98)
Other 17 --
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES
OF CONTINUING OPERATIONS 3,741 5,040
------- -------
Net cash used in discontinued operations (243) (106)
------- -------
Net increase (decrease) in cash and cash equivalents 113 (63)
Cash and cash equivalents - beginning of period 564 719
------- -------
Cash and cash equivalents - end of period $ 677 $ 656
======= =======
See accompanying notes.
5
<PAGE>
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 5/2/98
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
Jos. A. Bank Clothiers, Inc. (the Company) is a nationwide retailer of
classic men's clothing through conventional retail stores and catalog
direct marketing. The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation.
The results of operations for the interim periods shown in this report are
not necessarily indicative of results to be expected for the fiscal year.
In the opinion of management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim
periods a fair statement of such operations. These adjustments are of a
normal recurring nature.
Certain notes and other information have been condensed or omitted from
the interim financial statements presented in this Quarterly Report on Form
10-Q. Therefore, these financial statements should be read in conjunction
with the Company's January 31, 1998 Annual Report on Form 10-K.
2. SIGNIFICANT ACCOUNTING POLICIES
Inventories are stated at the lower of first-in, first-out, cost or
market. The Company capitalizes into inventories certain warehousing and
delivery costs associated with getting its manufactured and purchased
inventory to the point of sale.
Costs related to mail order catalogs and promotional materials are
included in prepaid expenses and other current assets. These costs are
amortized over the expected periods of benefit, not to exceed six months.
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 - Accounting for Income Taxes (SFAS
109). This standard requires, among other things, recognition of future tax
benefits, measured by enacted tax rates attributable to deductible temporary
differences between financial statement and income tax basis of assets and
liabilities and to tax net operating loss carryforwards, to the extent that
realization of such benefits is more likely than not.
6
<PAGE>
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 5/2/98
3. WORKING CAPITAL
The net change in operating working capital is composed of the following:
<TABLE>
<CAPTION>
Three Months Ended
-----------------------
May 2, May 3,
1998 1997
------- -------
<S><C>
Increase in accounts receivable $ (729) $ (342)
Increase in inventories (6,840) (6,929)
(Increase)decrease in prepaids and other assets (279) 424
Increase in accounts payable 3,062 2,566
Increase (decrease) in accrued expenses and other liabilities 754 1,648)
------- -------
Net increase in operating working capital $(4,032) $(5,929)
======= =======
</TABLE>
4. NEW ACCOUNTING STANDARDS
Earnings Per Share - During 1997, the Financial Accounting Standards Board
(FASB) issued Statement No. 128 (SFAS No. 128), "Earnings Per Share," which
establishes new standards for computing and presenting earnings per share.
The Company has adopted SFAS No. 128 and restated earnings per share data
presented to reflect the new standard. SFAS No. 128 requires presentation
of basic earnings per share and diluted earnings per share. The weighted
average shares used to calculate basic and diluted earnings per share in
accordance with SFAS No. 128 is as follows:
<TABLE>
<CAPTION>
Three Month Ended
-------------------
May 2, May 3,
1998 1997
----- ------
<S><C>
Weighted average shares outstanding for basic EPS 6,791 6,791
Diluted EPS:
Dilutive effect of common stock equivalents 127 36
----- -----
Weighted average shares outstanding for 6,918 6,827
diluted EPS ===== =====
</TABLE>
Weighted average shares outstanding for calculating dilutive EPS include
basic shares outstanding, plus shares issuable upon the exercise of stock
options, using the treasury stock method.
Reclassifications - Certain reclassifications have been made to the May 3,
1997 financial statements in order to conform with the May 2, 1998,
presentation.
7
<PAGE>
Jos. A. Bank Clothiers, Inc.
S.E.C. Form 10-Q, 5/2/98
5. DISCONTINUED OPERATIONS
In January 1998, the Company formalized a plan to dispose of its
manufacturing operations. Accordingly, the consolidated financial statements
have been presented to reflect the disposition of the manufacturing
operations as discontinued operations. The revenues, costs and expenses,
assets and liabilities, and cash flows of the manufacturing operations have
been excluded from the respective captions in the Consolidated Statements of
Income, Consolidated Balance Sheets and Consolidated Statements of Cash
Flows and the related footnotes included herein.
In April 1998, the Company entered into an agreement which included the
disposition of the Company's manufacturing operations. Based upon the
agreement, an estimated loss on disposal of $2.5 million was reported net of
an income tax benefit of $1.0 million for an after-tax loss of $1.5 million
during the fiscal year ended January 31, 1998.
Summarized financial information for the discontinued operations is as
follows (in thousands):
May 2, Jan 31,
1998 1998
------ ------
Loss before income taxes $ (84) $ (374)
Net loss $ (51) $ (266)
------ ------
Current assets $3,743 $3,839
Less current liabilities 4,181 4,502
------ ------
Net current assets (liabilities) $ (438) $ (663)
------ ------
Noncurrent assets $ 991 $1,028
Noncurrent liabilities 241 245
------ ------
Net noncurrent assets $ 750 $ 783
------ ------
Revenues of the manufacturing operations primarily represent
intercompany sales which have been eliminated in consolidation.
Net current and noncurrent assets/liabilities of discontinued
operations noted above includes inventories, plant and equipment,
pension termination and other transaction costs associated with the
discontinued manufacturing operations.
8
<PAGE>
Jos. A. Bank Clothiers, Inc.
S.E.C.Form 10-Q 5/2/98
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
The following discussion should be read in conjunction with the attached
condensed consolidated financial statements and notes thereto and with the
Company's audited financial statements and notes thereto for the fiscal year
ended January 31, 1998.
OVERVIEW - The Company's income from continuing operations for the quarter ended
May 2, 1998 increased to $.8 million or $.12 per share compared to $.4 million
or $.06 per share for the same period in 1997. This improvement was due
primarily to higher sales attributable to an increase in comparable store sales
and the opening of 15 new stores since May 3, 1997.
The Company continues to pursue its expansion strategy of opening new stores in
existing markets and opened seven new stores in existing markets during the
quarter. This provides the Company with greater leverage of selling, marketing
and general and administrative expenses.
The Company's availability under the Credit Agreement increased to $25.6 million
as of May 2, 1998 which was $11.8 million higher than the same time last year.
RESULTS OF OPERATIONS - The following table is derived from the Company's
condensed consolidated statements of income and sets forth, for the periods
indicated, the items included in the condensed consolidated statements of
income, expressed as a percentage of net sales.
Percentage of Net Sales
Quarter Ended
-----------------------
May 2, May 3,
1998 1997
------ ------
Net Sales......................................... 100.0% 100.0%
Cost of goods sold................................ 51.1 51.2
----- -----
Gross profit...................................... 48.9 48.8
General and administrative expenses............... 10.4 10.7
Sales and marketing expenses...................... 33.8 34.7
Store opening costs............................... .6 --
----- -----
Operating income.................................. 4.1 3.4
Interest expense, net............................. 1.0 1.5
----- -----
Income from continuing operations before income taxes 3.1 1.9
Provision for income taxes........................ 1.2 0.7
----- -----
Income from continuing operations................. 1.9 1.1
Loss from discontinued operations, net............ (0.1) (0.1)
----- -----
Net income........................................ 1.8% 1.0%
===== =====
9
<PAGE>
Jos. A. Bank Clothiers, Inc.
S.E.C.Form 10-Q 5/2/98
NET SALES - Net sales increased 12.2 percent to $43.4 million in the first
quarter of 1998 from $38.7 million in the same period last year. Comparable
store sales increased 5.0 percent in the quarter compared to a 1.5 percent
decline in the first quarter of 1997. The increase in comparable stores was
achieved despite the opening of 15 new stores in the existing markets in the
past 12 months. Sales generated by the new stores are not included in comparable
sales. Catalog sales decreased 10.2 percent in the first quarter despite an 18.0
percent decrease in catalog circulation.
COST OF GOODS SOLD - Gross profit increased $2.3 million to $21.2 million in the
first quarter of 1998 compared to $18.9 million for the same period in the prior
year. Gross profit as a percent of sales remained strong and increased .1
percent over the same period in the prior year, reflecting strong performance in
all major categories especially sportcoats and slacks.
GENERAL AND ADMINISTRATIVE EXPENSES - General and administrative expenses
decreased to 10.4 percent of sales in the first quarter of 1998 compared to 10.7
percent in the first quarter of 1997. This improvement reflects the Company's
continued effort to control overhead costs while growing the business.
SALES AND MARKETING EXPENSES - Sales and marketing expenses (which include store
and catalog payroll, marketing and occupancy expenses, among others) decreased
.9 percent of sales to 33.8 percent in the first quarter of 1998 from 34.7
percent in the same period in the prior year. This improvement is primarily the
result of achieving existing store sales increases while maintaining appropriate
staffing levels in stores, sales generated by new stores in existing markets and
a strong response to the catalog mailings.
INTEREST EXPENSE - Interest expense was $.2 million lower in the first quarter
of 1998 compared to the same period in 1997 due primarily to a $6.8 million
decrease in total debt outstanding at May 2, 1998 compared to May 3, 1997.
INCOME TAXES - At May 2, 1998, the Company had approximately $14.0 million of
tax net operating loss carryforwards (NOLs) which expire through 2010. SFAS No.
109 requires that the tax benefit of such NOLs be recorded as an asset to the
extent that management assesses the utilization of such NOLs to be "more likely
than not". Realization of the future tax benefits is dependent on the Company's
ability to generate taxable income within the carryforward period. Future levels
of operating income are dependent upon general economic conditions, including
interest rates and general levels of economic activity, competitive pressures on
sales and margins and other factors beyond the Company's control. Therefore no
assurance can be given that sufficient taxable income will be generated for full
utilization of the NOLs.
Management has determined, based on the Company's history of earnings, that
future earnings of the Company will more likely than not be sufficient to
utilize at least $10 million of NOLs prior to their expiration. Accordingly, the
Company has recorded a deferred tax asset of $4 million and a valuation
allowance of $1.4 million relating to the NOLs. Management believes that
although the prior earnings and current year operating results might justify a
higher amount, the recorded asset represents a reasonable estimate of the future
utilization of the NOLs. The Company will continue to evaluate the likelihood of
future profit and the necessity of future adjustments to the deferred tax asset
valuation allowance.
10
<PAGE>
Jos. A. Bank Clothiers, Inc.
S.E.C.Form 10-Q 5/2/98
LIQUIDITY AND CAPITAL RESOURCES - At May 2, 1998 the Company had outstanding
borrowings of $16.7 million with $25.6 million of availability under its Credit
Agreement compared to borrowings of $23.1 million and availability of $13.8
million at the same time last year. The Company's availability at May 2, 1998
increased $11.8 million compared to the same time in 1997. The increase in
availability was generated principally by cash provided by operating activities
during the preceding twelve months and a higher borrowing base created by an
additional $4.0 million term loan facility which was obtained in September,
1997.
The following table summarizes the Company's sources and uses of funds as
reflected in the condensed consolidated statements of cash flows:
Three Months Ended
-------------------
May 2, May 3,
1998 1997
------- -------
Cash provided by (used in):
Operating activities $(1,835) $(4,398)
Investing activities (1,550) (599)
Financing activities 3,741 5,040
Discontinued operations (243) (106)
------- -------
Net increase (decrease) in cash and cash equivalents $ 113 $ (63)
======= =======
Cash used by operating activities was due primarily to higher inventory levels
to support new stores, although the average inventory per store decreased. Cash
used in investing activities relates primarily to improvements to new stores.
Cash provided by financing activities represents primarily borrowings on the
revolving loan.
The Company expects to spend between $6.0 and $7.0 million on capital
expenditures in 1998, primarily to open up to 17 new stores and to relocate two
existing stores. The store expansion program is being financed through
operations and the Credit Agreement. The Company also expects to open up to 46
additional stores (including 12 relocations) beyond 1998, mostly in existing
markets. The Company believes that its existing markets can support these
additional stores which will provide leverage for its management, distribution,
advertising and sourcing infrastructure. To support this growth, the Company
expects to upgrade certain information systems and its existing distribution
center in 1998 and 1999. The Company believes that its current liquidity and its
Credit Agreement will be adequate to support its current working capital and
investment needs. Further expansion beyond 1998 may necessitate revised
financing arrangements for the Company.
The Company's plans and beliefs concerning future operations contained herein
are forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from those
forecast due to a variety of factors that can adversely affect the Company's
operating results, liquidity and financial condition such as risks associated
with economic, weather and other factors affecting consumer spending, the mix of
goods sold, pricing, availability of lease sites for new stores and other
competitive factors.
11
<PAGE>
Jos. A. Bank Clothiers, Inc.
S.E.C.Form 10-Q 5/2/98
PART 2. OTHER INFORMATION
Item 6. Exhibits
- -----------------
Exhibits
10.15 Brookhill Lease Agreement, filed herewith
10.15a First Amendment to Brookhill Lease Agreement, filed herewith
10.16 Brookhill Sublease Agreement, filed herewith
10.17 North Avenue Lease Agreement, filed herewith
27.0 Financial Date Schedule, filed herewith
12
<PAGE>
Jos. A. Bank Clothiers, Inc.
S.E.C.Form 10-Q 5/2/98
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.
Dated: June 15, 1998 Jos. A. Bank Clothiers, Inc.
(Registrant)
/s/: David E. Ullman
_________________________________________________
Executive Vice President, Chief Financial Officer
13
EXHIBIT 10.15
LANDLORD:
CONTINENTAL STEWART WAREHOUSE LIMITED
PARTNERSHIP
TENANT:
JOS. A. BANK CLOTHIERS, INC.
LEASE
Dated: May 11, 1994
Continental Stewart Warehouse
4241 Brookhill Road
Baltimore City, Maryland 21215
-1-
<PAGE>
TABLE OF CONTENTS
1. PAYMENT OF RENTAL........................................3
2. USE .....................................................3
3. UTILITIES................................................3
4. COMPLIANCE WITH LAWS.....................................3
5. ASSIGNMENT AND SUBLETTING................................4
6. LOADING CAPACITY.........................................5
7. INCREASE IN LANDLORD'S INSURANCE RATES...................5
8. INDEMNIFICATION - LIABILITY INSURANCE....................5
9. ALTERATIONS..............................................5
10. OWNERSHIP OF ALTERATIONS.................................6
11. REPAIRS AND MAINTENANCE..................................6
12. TAX/INSURANCE ESCALATION.................................7
13. DEFAULT..................................................7
14. DAMAGE OR DESTRUCTION....................................8
15. POSSESSION...............................................9
16. EXTERIOR OF PREMISES - SIGNS.............................9
17. RELOCATION...............................................9
18. FOR RENT/SALE SIGNS......................................9
19. RIGHT OF ENTRY...........................................9
20. TERMINATION OF TERM.....................................10
21. CONDEMNATION............................................10
22. SUBORDINATION...........................................10
23. ATTORNMENT..............................................10
24. PARKING AND COMMON FACILITIES...........................11
25. NOTICES.................................................12
26. NON-WAIVER..............................................12
27. SUCCESSORS AND ASSIGNS..................................12
28. SECURITY DEPOSIT........................................12
29. NOTICES TO MORTGAGEE/TENANT
FINANCIAL STATEMENT...................................13
30. ESTOPPEL CERTIFICATE....................................13
31. TENANT REPRESENTATIVE...................................13
32. NO OFFER................................................14
33. CONSTRUCTION............................................14
34. EXISTING EQUIPMENT......................................14
35. WAIVER OF JURY TRIAL AND
RIGHT TO COUNTERCLAIM.................................14
36. BROKERAGE...............................................15
37. LANDLORD'S DEFAULT......................................15
38. RENEWAL OPTION..........................................15
39. HAZARDOUS SUBSTANCES....................................15
40. MISCELLANEOUS...........................................16
41. EARLY TERMINATION RIGHT.................................17
Exhibit A - Plot Plan
Exhibit A-1 - Space Plan
Exhibit A-2 - Survey
Exhibit B - Tax Bill
Exhibit C - Assessment Notice
Exhibit D - Hart Refrigeration Letter
-2-
<PAGE>
LEASE AGREEMENT
THIS LEASE, made this day of 11th day of May, 1994, by and
between CONTINENTAL STE-WART WAREHOUSE LIMITED PARTNERSHIP, a Maryland limited
partnership, having an address at P.O. Box 10147, Baltimore, Maryland 21285,
(hereinafter called "Landlord"), and JOS. A. BANK CLOTHIERS, INC., a Delaware
corporation, having an address at 500 Hanover Pike, Hampstead, Maryland
21074-2095 (hereinafter called "Tenant")
WITNESSETH, that in consideration of the rental hereinafter
agreed upon and the performance of all the conditions and covenants hereinafter
set forth on the part of the Tenant to be performed, the Landlord does hereby
lease unto the said Tenant, and the latter does lease from the former, the
following premises (hereinafter sometimes called the "premises"):
BEING all those premises outlined in red on the Plat attached
hereto as Exhibit A, comprising 51,062 square feet, as shown
on Exhibit A-1 said premises being located within a building
known as Continental Stewart Warehouse, 4241 Brookhill Road,
Baltimore City, Maryland 21215, as shown on the survey
attached hereto as Exhibit A-2,
for the term of ten (10) years, beginning sixty (60) days after delivery of
premises to Tenant with Landlord's Work complete, and ending on the last day of
the 120th full calendar month during the term, subject to the early termination
right set forth in Section 41, at and for the annual rental of One Hundred
Fifty-three Thousand One Hundred Eighty-six Dollars ($153,186.00) per annum,
payable in advance, in equal monthly installments, as follows: Twelve Thousand
Seven Hundred Sixty-five Dollars Fifty Cents ($12,765.50) for the first thirty
(30) months of the term; at and for the annual rental of One Hundred Sixty-five
Thousand Nine Hundred Fifty-one Dollars Fifty Cents ($165,951.40) per annum,
payable in advance, in equal monthly installments, as follows: thirteen Thousand
Eight Hundred Twenty-nine Dollars Twenty-nine Cents ($13,829.29) for the thirty
first (31st) through sixtieth (60th) month of the term; at and for the annual
rental of One Hundred Seventy-eight Thousand Seven Hundred Seventeen Dollars
($178,717.00) per annum, payable in advance, in equal monthly installments, as
follows: Fourteen Thousand Eight Hundred Ninety-three Dollars Eight Cents
($14,893.08) for the sixty first (61st) through ninetieth (90th) month of the
term; at and for the annual rental of One Hundred Ninety-one Thousand Four
Hundred Eighty-two Dollars Fifty Cents ($191,482.50) per annum, payable in
advance, in equal monthly installments, as follows: Fifteen Thousand Nine
Hundred Fifty-six Dollars Eighty-seven Cents ($15,956.87) for the ninety first
(91st) month through the one hundred twentieth (120th) month. Landlord and
Tenant agree that once the commencement date is finally determined, Landlord and
Tenant will enter into a separate Lease Commencement Agreement setting forth the
commencement and expiration dates of the Lease. Payments are due on the first
day of each and every month during the term of this Lease, without setoff or
deduction except as specifically hereinafter Bet forth. In the event the term
commences on other than the first day of any calendar month, rental for such
calendar month shall be payable in an amount equal to the product of $12,765.50
multiplied by a fraction the numerator of which is the number of days within the
term during such calendar month and the denominator of which is the number of
days within such calendar month.
All rentals shall be paid to Landlord at: P.O. Box 10147, Baltimore,
Maryland 21285, or at such other place or to such appointee of the Landlord as
Landlord may from time to time designate in writing.
This Lease is made subject to the following additional terms, covenants
and conditions:
1. Payment of Rental. Tenant covenants and agrees to pay the
rental herein reserved and each installment thereof promptly when and as due,
without setoff or deduction whatsoever, except as specifically set forth herein.
2. Use. Tenant covenants and agrees to use and occupy the
premises solely for the following purpose: office use, warehousing, and cutting
facility of clothing and related materials and for no other purpose or purposes.
3. Utilities. Landlord shall install a water meter or submeter
at Landlord's expense and thereafter Tenant shall pay all water and sewer
charges for the premises based on such meter readings. Tenant will open its own
account with Baltimore Gas and Electric Company for gas and electricity upon
taking possession of the Premises. Tenant shall timely pay all costs of
electricity, gas, telephone and other utilities used or consumed on the
premises, together with all taxes, levies or other charges on such Utilities.
4. Compliance with Laws. Tenant covenants and agrees that it
will, at its own expense, observe, comply with and execute all laws, orders,
rules, requirements and regulations of all governmental agencies, and all rules,
directions, requirements and recommendations of the local board of fire
underwriters and the fire insurance rating organizations having jurisdiction
over the area in which the premises are situated, or other bodies or
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agencies now or hereafter exercising similar functions in the area in which the
premises are situated, in any way pertaining to the premises or the use and
occupancy thereof, provided, however, that Landlord shall be BO obligated with
respect to the building and those portions of the premises for which Landlord is
responsible in accordance with this Lease. If Tenant receives any violation
notices from any governmental agencies regarding the premises, it agrees to
forward a copy of such notice to Landlord for Landlord's records, together with,
if the correction of such violation is Tenant's responsibility, written
information evidencing Tenant's correction of such violation.
5. Assignment.
(a) Tenant covenants and agrees not to assign this
Lease, in whole or in part, nor sublet the premises, or any part or portion
thereof, nor grant any license or concession for all or any part thereof,
without the prior written consent of the Landlord in each instance first had and
obtained, and which consent may be withheld for any reason or no reason. If such
assignment or subletting is permitted, Tenant shall not be relieved from any
liability whatsoever under this Lease. In the event that the amount of the rent
to be paid to the Tenant by any assignee or sublessee is greater than the rent
required to be paid by the Tenant to the Landlord pursuant to this Lease, Tenant
shall pay to Landlord any such excess as is received by Tenant from such
assignee or sublessee. An assignment for the benefit of Tenant's creditors or
otherwise by operation of law shall not be effective to transfer or assign
Tenant's interest under this Lease unless Landlord shall have first consented
thereto in writing.
(b) In the event this Lease contains a renewal option
exercisable by Tenant, Landlord's consent to an assignment or sublease of the
premises or any portion thereof during the original Lease term shall be deemed
to be conditioned upon the agreement of Tenant and such assignee or sublessee
that such renewal right or option shall terminate and be of no further force or
effect unless Landlord's consent to such assignment or sublease expressly
provides otherwise.
(c) In the event Tenant desires to assign this Lease
other than to an assignee for which Landlord's consent is not required or to
sublease all or any substantial portion of the premises, Landlord shall have the
right and option to terminate this Lease, which right or option shall be
exercisable by written notice from Landlord to Tenant within thirty (30) days
from the date Tenant gives Landlord written notice of its desire to assign or
sublease.
(d) Notwithstanding anything to the contrary
contained in this Lease, Tenant shall be entitled to assign this Lease upon the
following terms and conditions:
(i) Tenant may, without obtaining
Landlord's consent:
(1) assign or otherwise transfer the
leasehold estate created by this Lease to any "affiliate, of Tenant,
which for purposes of this Lease shall be any entity under common
control with Tenant, or to the parent, or any subsidiary or successor
corporation of Tenant, provided said affiliate has a net worth of Five
Million Dollars ($5,000,000.00) or more; and
(2) merge into or consolidate with
any corporation, provided, following such merger or consolidation, the
net worth of the surviving entity shall be Five Million Dollars
($5,000,000.00) or more; and
(3) assign or otherwise transfer the
leasehold estate created by this Lease: (A) to a purchaser of all or
substantially all of the assets of Tenant, as a going business, or (B)
to the purchaser of the assets comprising a substantial number of
Tenant's locations, provided that in any such instance the acquiring
entity, immediately following such acquisition, assumes directly to
Landlord the obligations to perform and be bound by this Lease for all
payments and performances accruing from and after the date of such
acquisition and has a net worth of Five Million Dollars ($5,000,000.00)
or more.
(ii) In the event Tenant seeks to assign or transfer only the
leasehold estate created by this Lease and does not seek to assign or transfer
in conjunction therewith any of the other locations, assets or shares of Tenant,
Tenant shall, subject (ii), be entitled to effect such acquiring entity has a
net worth more and agrees in writing to be obligations of Tenant under this any
such assignment or transfer o the ensuing provisions of this paragraph an
assignment or transfer provided that the of Five Million Dollars ($5,000,000.00)
or bound by all of the covenants, duties and Lease. However, prior to the
consummation of Tenant shall notify Landlord in writing that such transaction is
being considered, which notice ("Tenant's Transfer Notice") shall set forth (1)
the trade name and legal name of proposed assignee or transferee (which trade
name and legal name shall be deemed to be expressly approved by Landlord for use
at the premises if Landlord does not cancel this Lease as hereinafter provided
in this paragraph), and (2) a description of the business conducted by the
proposed assignee or transferee (which business shall be deemed to be expressly
approved by Landlord as the use of the premises if Landlord does not cancel this
Lease as hereinafter provided in this paragraph). In addition, together with
Tenant's Transfer Notice, Tenant shall provide Landlord with an audited
financial statement of the proposed assignee or transferee. Within thirty (30)
days after the date of Tenant's Transfer Notice, Landlord shall have the right
to terminate this Lease by sending Tenant written notice of such termination
("Landlord's Transfer Termination Notice"). In the event Tenant receives
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Landlord's Transfer Termination Notice, Tenant shall, within thirty (30) days
after Tenant's receipt of Landlord's Transfer Termination Notice, notify
Landlord, in writing, of the date upon which this Lease shall terminate, which
date (A) shall thereafter be the Termination Date, and (B) shall not be more
than twelve (12) months after the date Tenant received Landlord's Transfer
Termination Notice. In the event Tenant does not receive Landlord's Transfer
Termination Notice within thirty (30) days after the date of Tenant's Transfer
Notice, Landlord shall be deemed to have approved the proposed assignment or
transfer, and Tenant may proceed to effect same.
(iii) In the event of any permitted
assignment heretofore described in this paragraph (d), Tenant shall be and
remain liable for the full performance of this Lease and for all payments and
performance falling due or accruing up to the date of any such assignment or
transfer, which liability shall survive the permitted assignment, but Tenant
shall be relieved of any responsibility with respect to any and all covenants,
duties and obligations under this Lease occurring or accruing from and after the
date of any such assignment or transfer.
(iv) No transfer or issuance of the shares
of Tenant shall be regarded as an assignment or transfer of the leasehold estate
created by this Lease to which Landlord's consent shall be required.
(v) No consent of Landlord shall be
required to any pledge or assignment of this Lease or Tenant's interest herein
in connection with the Tenant's general corporate financing or a pledge or
assignment of all or substantially all of Tenant's assets, leases or leasehold
interests.
6. Loading Capacity. Tenant covenants and agrees that it
shall not load the premises beyond its present carrying or loading capacity.
7. Increase in Landlord's Insurance Rates. Tenant will not
do, or suffer to be done, anything in or about the premises, or keep or suffer
to be kept, anything in or about the premises which will contravene or affect
any policy of insurance, now existing or which the Landlord may hereafter place
thereon, or which will prevent the Landlord from procuring such policies in
companies acceptable to Landlord at standard rates. Tenant will, at Tenant's
sole expense, take all such reasonable actions and make any reasonable
installations or alterations as may be necessary to obtain the greatest possible
reduction in the insurance rates for the premises and the building in which the
premises are located, caused solely by the occupancy of Tenant and the nature of
the business carried on by Tenant in the premises, or otherwise resulting
directly from any act of Tenant, its agents, servants, employees or customers.
Landlord represents that Tenant's uses of the premises as herein above set forth
do not contravene or affect any policy of insurance now existing or the rate
therefore.
8. Indemnification - Liability Insurance.
(a) Except as may be covered by any policy of
insurance carried or required hereunder to be carried by Landlord, Tenant shall
and does hereby indemnify and save harmless Landlord, its successors or assigns,
from all claims and demands of every kind, that may be brought against it, them
or any of them for or on account of any damage, loss or injury to persons or
property in or about the premises or the building and appurtenances in which the
premises are situated, arising from or out of Tenant's use or occupancy thereof
or occasioned wholly or in part (in which event the indemnification shall be
proportional) by any act or omission of Tenant, its agents, servants,
contractors, employees or invitees, and from any and all costs and expenses,
counsel fees, and other charges which may be imposed upon Landlord, its
successors or assigns, or which it or they may be obligated to incur in
consequence thereof.
(b) Tenant covenants and agrees that it will,
throughout the term of this Lease, carry and pay for public liability insurance
in a company reasonably satisfactory to Landlord naming Landlord as an
additional insured, with combined single limits of liability of not less than
$2,000,000 for bodily injury or death for one person and $5,000,000 for bodily
injury or death to any number of persons in any one occurrence, and $1,000,000
for property damage, and will furnish Landlord with a certificate of same
showing a ten (10) days, notice of cancellation clause. In addition, Tenant
agrees to carry casualty and property damage on its property or on any property
of Landlord which is specifically demised to Tenant pursuant to this Lease,
including water damage and sprinkler leakage legal liability, and Tenant
specifically agrees that Landlord shall have no liability to Tenant for any
property damage arising from any cause whatsoever except for any negligence of
or imputed to Landlord.
(c) Except as may be covered by any policy of
insurance carried or required hereunder to be carried by Tenant, Landlord shall
and does hereby indemnify and save harmless Tenant, its permitted successors or
assigns, from all claims and demands of every kind, that may be brought against
it, them, or any of them for or on account of any damage, loss or injury to
persons or property in or about the premises or the building and appurtenances
in which the premises are situated arising from or out of Landlord's use thereof
or occasioned wholly or in part (in which event the indemnification shall be
proportional) by any act or omission of Landlord, its agents, servants,
contractors, employees or invitees, and from any and all costs and expenses,
counsel fees, and other charges which may be imposed upon Tenant, its permitted
successors or assigns, or which it or they may be obligated to
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incur in consequence thereof.
(d) Landlord and Tenant shall each require their
respective insurers to include in all their insurance policies which could give
rise to a right of subrogation against the other, a clause or endorsement
whereby said insurers shall waive any rights of subrogation against Tenant in
the case of Landlord's insurers or against Landlord in the case of Tenant's
insurers.
9. Alterations. Tenant shall not make any structural
alterations to the premises, or any part thereof, without prior written consent
of Landlord in each instance first had and obtained. If Tenant shall desire to
make such alterations, plans for the same shall first be submitted to and
approved by Landlord, and all work and installations shall be performed by
Tenant at its own expense in accordance with approved plans. Tenant agrees that
all such work shall be done in a good and workmanlike manner, that the
structural integrity of the building shall not be impaired, and that no liens
shall attach to the premises by reason thereof. Tenant agrees to obtain, at
Tenant's expense, all permits required for such alterations. Tenant, may,
without Landlord's consent, make any and all interior, non-structural repairs,
replacements, alterations, additions, improvements or changes to the premises
which Tenant may deem necessary or appropriate. Any alterations, additions or
improvements installed or placed by or for Tenant in the premises (except for
movable furniture, other personally, tailor shop equipment, light fixtures,
trade fixtures and any other property that belongs to Tenant which may be
removed without substantial alteration or damage to the premises), regardless of
when made, may, at the termination of this Lease, at the option of the Landlord,
become the property of Landlord and remain upon the premises.
10. Ownership of Alterations. Unless Landlord shall elect that
all or part of any alteration made by Tenant to the premises (including any
alteration consented to by Landlord pursuant to Paragraph 9 hereof) shall remain
on the premises after the termination of this Lease, the premises shall be
restored to their original condition by Tenant before the expiration of this
Lease at Tenant's sole expense. Landlord and Tenant agree, however, that with
respect to the Tenant Work set forth in Section 33 of this Lease, such Tenant
Work shall be deemed as having been completed prior to the commencement date of
this Lease and therefore Tenant will not have to remove any of such improvements
upon the expiration or earlier termination of this Lease. Upon such election by
Landlord, any such alterations, improvements, betterments or mechanical
equipment, including but not limited to, heating and air conditioning systems,
shall become the property of the Landlord at the expiration or sooner of the
termination of this Lease, and all right, title and interest thereof of Tenant
shall immediately cease, unless otherwise agreed to in writing by Landlord.
Tenant shall repair promptly, at its own expense, any damage to the premises
caused by bringing into the premises any property for Tenant's use, or by the
installation or removal of such property, regardless of fault or by whom such
damage shall be caused. Tenant, upon the expiration or earlier termination of
the Term, and/or at any time during the Term, shall have the right to remove
from the premises all trade fixtures belonging to Tenant (including, but not
limited to, movable furniture, other personalty, tailor shop equipment, light
fixtures and any other property of Tenant which may be removed without
substantial alteration or damage to the premises) and all personal property of
Tenant. In the event Tenant shall effect any such removal, Tenant shall be
required to repair any damage to the premises caused by such removal.
11. Repairs and Maintenance.
(a) The premises hereby leased, are leased to Tenant
"As Is," except as specifically provided herein. Further, except as herein
expressly provided, Landlord shall be under no liability, nor have any
obligation to do any work or make any repairs in or to the premises, and any
work which may be necessary to outfit the premises for Tenant's occupancy or for
the operation of Tenant's business therein is the sole responsibility of Tenant
and shall be performed by Tenant at its own cost and expense. Tenant
acknowledges that it has fully inspected the premises prior to the execution of
this Lease, and Tenant further acknowledges that Landlord has made no warranties
or representations with respect to the condition or state of repairs of the
premises.
(b) Tenant will, during the term of this Lease, keep
the premises and appurtenances (including windows, doors, plumbing, heating and
electrical facilities and installations), in good order and repair and will make
all necessary repairs thereof at its own expense, except that Landlord will make
all necessary repairs and replacements to the exterior masonry walls, structural
components, and roof of the premises, after being notified in writing by Tenant
of the need for such repairs, and shall have a reasonable time in which to
complete such repairs, provided Landlord commences such repairs within twenty
(20) days (or within the shortest period necessary in order to prevent imminent
death, personal injury or damage, or destruction of property) of written
notification from Tenant and diligently pursues same to completion. Tenant
agrees to carry a maintenance and/or service agreement or policy on the HVAC
system in the premises; provided Tenant carries such policy and supplies
evidence to Landlord of same upon request, Landlord will warrant the repair or
replacement of any major component (e.g. heat exchangers, compressor, condenser,
motors) in the HVAC system during the first twelve (12) months of the Lease.
Tenant will, at the expiration of the term or at the sooner termination, deliver
up the premises and any equipment specifically demised to Tenant hereunder in
the same good order and condition as they were at the beginning of the tenancy,
reasonable wear and tear excepted. Tenant further agrees that it will maintain
the premises at its own expense in a clean, orderly and sanitary condition, free
of insects, rodents, vermin and other pests; and that it will not permit undue
accumulation of garbage, trash, rubbish or other refuse, but will remove the
same at its own expense and will
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keep such refuse in proper containers inside the premises until removed.
Tenant's "proportionate share" of such cost shall be the same percentage of the
total cost as the square foot area demised to Tenant bears to the total square
foot leasable area of the entire building. Tenant further agrees that it will
not install any additional electrical and/or plumbing capacity unless it has
first obtained Landlord's written consent thereto, and, if such consent is
given, Tenant will install the same at its own cost and expense, and Tenant
shall obtain, at Tenant's expense, all permits required for such installation.
The foregoing restrictions shall not apply to any distribution or redistribution
of electrical and/or plumbing capacity exclusively serving the premises by
Tenant within such premises.
(c) In the event Tenant shall not proceed promptly
and diligently to make any repairs or perform any obligation imposed upon it by
subparagraphs (a) and (b) hereof within twenty (20) days (or within the shortest
period necessary in order to prevent imminent death, personal injury or damage,
or destruction of property) of written notification from Landlord and/or
thereafter diligently pursue such repairs or perform such obligations to
completion, then and in such event, Landlord may, at its option, enter the
premises and do and perform the things specified in said notice, without
liability on the part of Landlord for any lose or damage resulting from any such
action by Landlord except in the event of negligence of or imputed to Landlord,
and Tenant agrees to pay promptly upon demand any Cost or expense incurred by
Landlord in taking such action.
12. Tax/Insurance Escalation. Notwithstanding the gross
leasable area shown on Exhibit A, Landlord represents and warrants that the
gross leasable area of the building is 160,840, per Landlord's rent roll. The
premises hereby leased comprise approximately thirty-one and seven tenths
percent (31.7%) (51,062/premises square footage divided by 160,840/gross
leasable area of the building as of the date of this Lease) of the total land
and/or buildings within which the premises are located.
(a) Tenant agrees to pay Landlord as additional rent,
thirty-one and seven tenths percent (31.7%) of any increases in real estate
taxes assessed against the land and/or buildings), in excess of the taxes for
the 1994/1995 fiscal year (July 1, 1994 - June 30, 1995), whether as a result of
an increase in the tax rate, or the levy, assessment or imposition of any tax on
real estate as such not now levied, assessed or imposed. Tenant's proportionate
share shall be paid to Landlord within thirty (30) days after being billed
therefor, not more than once per year. The foregoing shall apply to increase in
real estate taxes assessed against the land or buildings) generally, and not
resulting from improvements placed thereon by Tenant. In the event of any
increases in real estate taxes resulting from improvements, alterations or
additions made by Tenant, Tenant shall pay the entire amount of said increase,
provided, however, that increases resulting from improvements, alterations or
additions made by other tenants in the building shall be paid for by Landlord or
such other tenants prior to the calculation of Tenant's share of real estate
taxes. (Appraiser's worksheet shall be the sole determinate of how such
increases resulted.) If this Lease shall be in effect for less than a full
fiscal year, Tenant shall pay its pro rata share of taxes, based upon the number
of months that this Lease is in effect. "Taxes" as used herein shall include,
but not by way of limitation, all paving taxes, special paving taxes,
Metropolitan District Charges, and any and all other benefits or assessments
which may be levied on the premises or the land and/or buildings) in which the
same are situate, and shall also include any reasonable legal fees or costs
incurred by Landlord in contesting any such benefits or assessments, but shall
not include any income tax on the income or rent payable hereunder. Attached
hereto as Exhibits B and C, respectively, are copies of the tax bill for the
land and building for the 1993/1994 fiscal year and all current assessment
notices for the land and building, which notices contain, inter alia, the
assessment for 1994/1995 fiscal year. Landlord represents that such copies are
true, correct and complete reproductions of the originals. Any penalties or
interest for late payments of real estate taxes shall not be included in the
definition of real estate taxes and shall be the sole responsibility of
Landlord. If any real estate taxes may be paid in installments, Landlord shall
cause such real estate taxes to be paid over the longest installment period
permitted and only the installment coming due during the Term shall be included
within real estate taxes hereunder. All refunds, rebates and discounts received
by Landlord in connection with such real estate taxes shall be deducted prior to
the calculation of Tenant's proportionate share of the real estate taxes.
Landlord warrants and represents to Tenant that none of the expenses included
within Tenant's proportionate share of real estate taxes shall be included
within any other charge payable under this Lease. The definition of real estate
taxes shall not include any inheritance, estate, succession, transfer, gift,
franchise, corporation, income or profit tax that is or may be imposed upon
Landlord. Tenant shall have the right to audit Landlord's books and records from
time to time, but not more often than once per tax year and only if Landlord
fails to provide Tenant with a copy of the tax bill from which Landlord computed
Tenant's proportionate share as well as copies of back-up bills for any other
items properly included within the real estate taxes billed to Tenant.
(b) Tenant agrees to pay, as additional rent,
thirty-one and seven tenths percent (31.7%), of any increases in premiums for
any insurance (including but not limited to property and liability premiums)
which shall be maintained by Landlord in respect to the building over the
premiums for such insurance for the first twelve (12) month period covered by
such insurance beginning on or after the commencement date of the term.
Insurance premiums for the base year, October 1, 1993 - September 30, 1994, the
current insurance year, total $8,162.00. Landlord estimates that insurance
premiums for next year's insurance year, October 1, 1994 - September 30, 1995,
will total $9,800.00. Tenant's proportionate share shall be paid to Landlord
within thirty (30) days after being billed therefor, not more than once per
year.
13. Tenant's Default.
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(a) Tenant shall be deemed in default upon the
occurrence of any one or more of the following circumstances: (i) if Tenant
shall fail to pay any rent, fee, charge or other amount due Landlord hereunder
within ten (10) days after notice that the same has become due, all of which
shall be deemed to be "rent" pursuant to this Lease; or (ii) if Tenant shall
fail to commence performance of any non-monetary term, condition or covenant of
this Lease applicable to Tenant within twenty (20) days after written notice of
such failure from Landlord or shall fail to thereafter diligently prosecute
completion thereof; or (iii) if Tenant or an agent of Tenant shall falsify any
report required to be furnished to Landlord pursuant to the terms of this Lease;
or (iv) if Tenant is adjudicated by final non-appealable order a bankrupt or
insolvent by any court of competent jurisdiction, or if any such court enters
any order, judgment or decree finally approving any petition against Tenant
seeking reorganization, liquidation, dissolution or similar relief or if a
receiver, trustee, liquidator or conservator is appointed for all or
substantially all of Tenant's assets and such appointment is not contested
within the period allowed by applicable rule or law and thereafter diligently
defended to dismissal, or if Tenant seeks or consents to any of the relief
herein above enumerated in this subparagraph or files a voluntary petition of
bankruptcy or insolvency or makes an assignment of all or substantially all of
its assets for the benefit of creditors or admits in writing its inability to
pay its debts generally as they come due or files Articles of Dissolution, or
similar writing indicating its intention to wind up or liquidate its business,
with the appropriate authority of the place of its incorporation; or (v) if
Tenant shall suffer this Lease to be taken under any writ of execution.
(b) Landlord may exercise any right under this
Section without service of notice except as otherwise set forth herein or resort
to legal process and without being deemed guilty of trespass, or becoming liable
for any lose or damage which may be occasioned thereby. Any notice of default
shall also operate as a Notice to Quit and Tenant hereby expressly waives any
other notice required by law.
(c) Upon default by Tenant, this Lease shall, at
Landlord's option, cease and terminate. Upon default by Tenant, Landlord upon
not less than 3 days' notice may re-enter the premises, using such force as may
be necessary, and remove all persons and chattels therefrom and store such
property in a public warehouse or elsewhere at the cost of, and for the account
of, Tenant. Landlord shall not be liable (except in the event of negligence of
or imputed to Landlord) in damages or otherwise by reason of reentry or
termination of the term of this Lease nor shall such re-entry or termination
waive, bar, or in any way prejudice any other remedies available to Landlord.
Notwithstanding such termination, the liability of Tenant for any rent provided
for herein shall not be extinguished for the balance of the lease term remaining
after said termination, and Landlord shall be entitled to recover immediately as
liquidated damages an amount equal to the present value (calculated at prime) of
the monthly rent and additional rent for the balance of the lease term, times
the number of months remaining in the balance of the lease term.
(d) In the event of any default hereunder by Tenant,
Landlord may upon not less than three (3) days' notice or any time thereafter
cure such default for the account, and at the expense of, Tenant. In the case of
an emergency, Landlord need not give Tenant any notice before undertaking to
cure Tenant's default. If Landlord at any time, by reason of such default, is
compelled to pay or elects to pay any sum of money or do any act that will
require the payment of any sum of money, or is compelled to incur any expense,
the sum or sums so paid by Landlord, plus an additional fifteen percent (15%) of
such sum or sums for administrative or overhead expenses shall be deemed to be
additional rent hereunder and shall be due from Tenant to Landlord on the first
day of the month following Landlord's payment of such respective SUMB or
expenses but not less than thirty (30) days after invoice to Tenant.
(e) Tenant shall, at the expiration or termination of
this Lease, yield possession to Landlord, and, failing to do so, shall pay as
liquidated damages for each day possession is withheld an amount per day equal
to one-fifteenth (1/15th) of the monthly rent, or the highest amount permitted
by law, plus other damages caused by Tenant's failure to yield Possession. All
rights and remedies of Landlord herein enumerated shall be cumulative and none
shall exclude any other right or remedy allowed by law and said rights and
remedies may be exercised and enforced concurrently and whenever and as often as
occasion therefor arises. Notwithstanding anything in this Lease to the
contrary, Landlord hereby forever waives and relinquishes any lien (contractual,
statutory or otherwise) which Landlord may have or claim upon Tenant's chattels,
movable and non-movable fixtures, furniture, equipment, machinery, inventory and
any other property now or hereafter located at the Premises and belonging to
Tenant. In the event Landlord shall take possession of the Premises for any
reason, Landlord shall so notify Tenant and shall permit Tenant to remove such
property therefrom. The waiver of any breach of this Lease shall not constitute
a waiver of the term, covenant or condition breached or of any subsequent breach
of the same or any other term, covenant or condition of this Lease; and the
acceptance of payment or rent during the continuance of any breach of this Lease
shall not constitute a waiver of such breach. Rent including any fee, charge or
other amount due from Tenant hereunder may be recovered by Landlord from Tenant
by distress or action or by any legal process as may at the time be in operation
and force relating to proceedings between landlords and tenants.
(f) Landlord may relet the whole or any portion of
the Premises, for any period equal to or greater or less than the period which
would have constitute 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
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and purposes which Landlord may deem appropriate, and Landlord may grant
concessions of free rent. Landlord shall in no event be liable in any way
whatsoever for its failure or refusal to relet the Premises or any part thereof,
or in the event that the 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. Notwithstanding anything in this Lease to the contrary,
Landlord agrees that it is obligated to act in good faith in dealing with any
prospects proposed by Tenant.
(g) In the event Tenant fails to pay Landlord any
rent including any other charge due hereunder, also deemed to be rent, within
ten (10) days from the date on which any such payment was due, Landlord may, at
its option, charge Tenant a late charge equal to fifteen percent (15%) of the
rental payment or other such charge, which late charge shall also be collectible
as rent and shall be payable by Tenant to Landlord within ten (10) days after
written notice from Landlord to Tenant assessing the same. Landlord agrees,
however, that it shall not assess any late charge against Tenant until the
second time during the Term that Tenant fails to pay Landlord any rent due
hereunder, within ten (10) days from the date on which any such payment was due.
14. Damage or Destruction.
(a) If, during the Lease term, the premises hereby
leased are damaged by fire or other casualty, but not to the extent that Tenant
is prevented from carrying on business in the Premises, Landlord shall promptly
cause such damage to be repaired; if such damage renders any portion of the
premises untenantable, the rent reserved hereunder (except Tenant's share of any
charges for water) shall be reduced during the period of its untenantability
proportionately to the amount by which the area so rendered untenantable bears
to the entire area leased hereunder, and such reduction shall be apportioned
from the date of the casualty to the date when the leased premises are rendered
fully tenantable. Notwithstanding the foregoing, in the event such fire or other
casualty damages or destroys any of Tenant's leasehold improvements,
alterations, betterments, fixtures or equipment, including Landlord's equipment
specifically demised to Tenant hereunder, Tenant shall cause the same to be
repaired or restored at Tenant's sole cost and expense and Landlord shall have
no liability for the restoration or repair thereof.
(b) If, during the Lease term, the premises, or a
substantial portion of the building in which the premises is situated is
rendered wholly untenantable as the result of fire, the elements, unavoidable
accident or other casualty, Landlord shall have the option to terminate this
Lease, such option to be exercised by Landlord by written notice to Tenant
within thirty (30) days after the fire, accident or casualty. If, during the
Lease term, the premises are rendered wholly untenantable as the result of fire,
the elements, unavoidable accident or other casualty, Tenant shall have the
option to terminate this Lease, such option to be exercised by Tenant by written
notice to Landlord within thirty (30) days after the fire, accident or casualty.
If, during the Lease term, a substantial portion of the premises is damaged (as
hereinafter defined) as the result of fire, the elements, unavoidable accident
or other casualty, then either Landlord or Tenant shall have the option to
terminate this Lease, such option to be exercised by written notice to the other
within fifteen (15) days after the expiration of the thirty (30) day period
provided for in the sentence following. For the purpose of the immediately
preceding sentence, a substantial portion of the premises shall be deemed to
have been damaged if Landlord as a result of the extent of the fire, accident or
casualty does not restore the premises within thirty (30) days following the
fire, accident or casualty to its condition on the date Landlord delivered the
premises to Tenant after completion of Landlord's Work pursuant to Section 33(a)
of this Lease. In the event neither party elects to terminate this Lease as
aforesaid, and Landlord has restored the premises as specified herein within
thirty (30) days following the fire, accident or casualty, Tenant shall promptly
and diligently perform the balance of the work necessary to restore the premises
to its condition after the completion of Tenant's Work specified in Section
33(b) herein.
Except in the case of substantial damage, wherein Landlord is
required to complete its restoration work within thirty (30) days following the
date of the casualty, all restoration performed pursuant to this Section 14
shall be completed as promptly as reasonably possible and the rent reserved
hereunder shall abate until the earlier of thirty (30) days after the premises
are again rendered tenantable or the date Tenant recommences manufacturing
operations at the premises; and in the event this Lease is not earlier
terminated and Landlord undertakes to restore the premises and such restoration
is not completed within 180 days after the casualty, Tenant shall have the right
to terminate this Lease.
15. Possession. In case possession of the premises, in whole or
in part, cannot be given to Tenant on or before sixty (60) days prior to the
commencement date of the term of this Lease, Landlord agrees to abate the rent
and additional rent proportionately until sixty (60) days after possession is
given to Tenant, and Tenant agrees to accept such pro rata abatement as
liquidated damages for the failure to obtain possession on the commencement date
herein specified. The parties hereto covenant and agree that if the term of this
Lease commences on a date other than the date herein specified, they will, upon
the request of either of them, execute an agreement in recordable form setting
forth the new commencement and termination dates of the Lease term. Under no
circumstances shall Landlord be under any liability for failure to deliver
possession of the premises to Tenant on the date herein specified, except that
if Landlord fails to deliver to Tenant possession of the premises with
Landlord's Work as set forth in Section 33, (a), (i)-(iii), completed on or
before July 1, 1994, Tenant shall have the right to terminate this Lease.
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16. Exterior of Premises - Signs.
(a) Tenant covenants and agrees that it will not
place or permit any sign or other thing of any kind, in or about the exterior of
the premises or the building in which the premises are situate, nor paint or
make any change in, to or on the exterior of said premises to change the uniform
architecture, paint or appearance of the building, without in each such instance
obtaining the prior written consent of Landlord.
(b) Tenant further covenants and agrees not to pile
or place anything on the sidewalk, parking lot or other exterior portion of the
building, nor block the sidewalk, parking lot or other exterior portion of the
premises or building, nor do anything that directly or indirectly will interfere
with any of the rights or ingress or egress or of light from any other tenants,
nor do anything which will, in any way, change the uniform and general design of
any property of Landlord in which the premises are situate.
17. Relocation. Deleted.
18. For Rent/Sale Signs. Landlord shall have the right to
place a "For Rent" sign on any portion of the exterior of said premises for six
(6) months prior to termination of this Lease and to place a "For Sale" sign on
the exterior thereof at any time. Subject to Section 19, during such six month
period, Landlord may show the premises and all parts thereof to prospective
tenants between the hours of 9:00 a.m. and 5:00 p.m. on any day except Saturday
(unless Tenant shall otherwise then be operating the premises), Sunday or any
legal holiday on which Tenant shall not be open for business.
19. Right of Entry. Subject to the hereinafter set forth
conditions, Landlord and its agents, servants, employees, including any builder
or contractor employed by Landlord, shall have the right, license and
permission, at any and all reasonable times, to enter and inspect the premises
or any part thereof, and at the option of Landlord, to make such reasonable
repairs and/or changes in the premises to enforce and carry out any provision of
this Lease. Any non-emergency entry by Landlord, or anyone acting by, through or
under Landlord, shall be made at a time when Tenant is open and operating. No
portion of the premises is open to members of the general public and Bo neither
Landlord, nor anyone acting by, through or under Landlord, shall enter upon any
portion of the premises in a non-emergency entry unless accompanied by a
representative of Tenant. No work performed by or on behalf of Landlord in the
premises shall unreasonably interfere with the continuation of Tenant's
operations therein, and such work shall not interrupt the production schedule of
Tenant, and Landlord shall use all reasonable precautions for the protection of
Tenant's property. Landlord shall be responsible for restoring the premises
following, and for any damage caused by, any such work.
20. Termination of Term. It is agreed that the term of this
Lease shall expire and terminate at the end of the original term hereof (or at
the expiration of the last renewal term, if this Lease contains a renewal option
and the same is properly exercised), without the necessity of any notice by or
to any of the parties hereto, unless otherwise provided herein. If Tenant shall
occupy the premises after such expiration or termination, it is understood that
Tenant shall hold the premises as a tenant from month-to-month, subject to all
the other terms and conditions of this Lease.
21. Condemnation.
(a) If, during the term of this Lease, all of the
premises or such portion thereof such that the remainder is insufficient (in
Tenant's reasonable judgment) for the continuation of operations therein shall
be taken by or under power of eminent domain, this Lease shall terminate as of,
and the rent (basic and additional) shall be apportioned to and abate from and
after, the date of taking. Tenant shall have no right to participate in any
award or damages for such taking and hereby assigns all of its right, title and
interest therein to Landlord.
(b) If, during the Lease term, less than such
portion of the premises is taken by or under power of eminent domain, this Lease
shall remain in full force and effect according to its terms; and Tenant shall
not have the right to participate in any award or damages for such taking and
Tenant hereby assigns all of its right, title and interest in and to the award
to Landlord. In such event Landlord shall, at its expense, promptly make such
repairs and improvements as may be necessary to make the remainder of the
premises adequate to permit Tenant to carry on its business to substantially the
same extent and with substantially the same efficiency as before the taking;
provided that in no event shall Landlord be required to expend an amount in
excess of the award received by Landlord for such taking. If, as a result of
such taking, any part of the premises is rendered permanently unusable, the
basic annual rent reserved hereunder shall be reduced in such amount as may be
fair and reasonable, which amount shall not exceed the proportion which the area
so taken or made unusable bears to the total area which was usable by Tenant
prior to the taking. If the taking does not render any part of the premises
unusable, there shall be no abatement of rent.
(c) Nothing herein shall be deemed to prevent
Tenant from claiming and receiving from the condemning authority, if legally
payable, compensation for the taking of Tenant's own tangible property and such
amount as may be payable by statute or ordinance toward Tenant's damages for
Tenant's loss of business,
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removal and relocation expenses.
22. Subordination. Provided the holder of such mortgage or deed of
trust agrees not to disturb Tenant in its use and occupancy of the premises
hereunder, this Lease shall be subject to and subordinate at all times to the
lien of any mortgages and/or deeds of trust now or hereafter to be made
thereunder unless the mortgagee or holder of the deed of trust elects to have
Tenant's interest hereunder superior to the interest of the mortgagee or holder
of such deed of trust. This subordination provision shall be self-operative and
no further instrument of subordination shall be required. Landlord covenants and
agrees to make best efforts to obtain for and provide to Tenant from each
lender, mortgagee, trustee under a deed of trust, beneficiary under a deed of
trust, underlying landlord or other party whose title is now or might hereafter
become superior to the title of Landlord, or who may have perfected or may
perfect any title that might otherwise cause a termination of this Lease, a
written agreement, providing that Tenant's use, occupancy and possession of the
premises, and other rights, under this Lease will not be disturbed so long as
Tenant is not then deemed to be in default hereunder at the time any such
superior party (or anyone taking under such superior party) shall succeed to the
interest of Landlord hereunder.
23. Attornment.
(a) If Landlord assigns this Lease or the rents
hereunder to a creditor as security for a debt, Tenant shall, after notice of
such assignment and upon demand by Landlord or the assignee, make all sums
thereafter becoming due Landlord hereunder payable both to Landlord and such
assignee and shall mail such sums as set forth in said notice. Tenant shall
also, upon receipt of such notice, have all policies of insurance required
hereunder endorsed so as to protect the assignee's interest as it may appear and
shall deliver such policies, or certificates thereof, to assignee. Tenant shall
be entitled to rely upon any notice from any such assignee, or any individual
acting or apparently acting on behalf of such assignee, and Tenant shall not be
obligated to ascertain whether such assignee, under the circumstances then
existing, has the right to demand payment of the rent. In the event of any
conflict between the terms of this Lease and the terms of such notice, the terms
of this Lease shall control.
(b) In the event the premises are sold at any
foreclosure sale Or Bales, or by deed in lieu of foreclosure, by virtue of any
judicial proceedings or otherwise, this Lease shall continue in full force and
effect and Tenant agrees, upon request, to attorn to and acknowledge the
foreclosure purchaser or purchasers at such sale as the landlord hereunder;
provided such purchasers) agrees to assume Landlord's obligations and to
recognize Tenant's rights hereunder.
24. Parking and common Facilities.
(a) Landlord hereby further demises and leases to
Tenant the right to use the parking spaces within the parking lot adjacent to
the building (which parking spaces are outlined in red on the site plat attached
hereto) for the use solely of Tenant's employees, agents, officers and invitees
and Landlord agrees to restripe a portion of such spaces for handicapped parking
space(s), as required by law, before June 15, 1994. Section 16(b) herein to the
contrary notwithstanding, Tenant shall have the right to install, at Tenant's
sole expense, and subject to Landlord's prior approval as to size and type,
sign(s) designating the parking area or spaces reserved for Tenant's exclusive
use. Tenant agrees not to use, and not to permit its employees, agents, officers
and invitees to use, any other parking spaces except the parking spaces made
available to Tenant by Landlord and such other parking spaces on the site which
are not dedicated from time to time to the exclusive use of other tenants of the
building, and which such other parking, if any, will be in common with all other
tenants of the building. Tenant agrees that it will, at Landlord's request,
furnish Landlord with a list of license plate numbers of all automobiles
regularly used by Tenant's employees, agents, officers and invitees. Tenant
further agrees that if any automobiles of Tenant's agents, employees, officers
or invitees are found in parking areas designated for use by other tenants in
the building, Landlord shall have the right to have such improperly parked
vehicles towed away by a towing company designated by Landlord, and Tenant shall
pay Landlord, upon demand, all costs incurred by Landlord. Landlord reserves the
right to relocate (but not to an area farther from the premises than the
original spaces) any of Tenant's parking spaces by reassigning to Tenant other
parking spaces within the property shown on the site plan attached hereto for
the exclusive use of Tenant's employees, agents, officers and invitees; provided
Landlord gives Tenant written notice of such reassignment at least ten (10) days
prior to the effective date thereof. In the event Landlord gives such notice to
Tenant, Tenant shall instruct all of its employees, agents, officers and
invitees to use only the reassigned spaces and to cease use of the spaces
formerly assigned. Landlord further demises and leases to Tenant the exclusive
right to use that portion of the common area outlined in green on the location
plan attached hereto as Exhibit A. Such area shall be used by Tenant for loading
and unloading and for the permanent location of one or more trash dumpsters.
(b) For purposes of this Lease, common areas and
facilities shall mean all areas, space, equipment and services provided by
Landlord for the common use and benefit of tenants of the building, their
employees, agents, servants, customers and other invitees; such common
facilities shall include without limitation parking areas, lighting fixtures,
access roads, retaining walls, landscaped areas, toilet facilities, common
hallways, mechanical equipment and pedestrian walkways as Landlord shall
designate. The fact that exclusive use
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of some portions of the common area has been given to a tenant does not operate
to remove such portions from the definition of "common areas and facilities.,
(c) Tenant further agrees to pay Tenant's
proportionate share (as hereinafter defined) of Landlord's costs of operating,
maintaining, and repairing the common areas and facilities, including, but not
limited to, elevators, stairwells, loading areas, parking areas, pavements and
walkways, and the cost of utilities for such common areas and facilities. Such
cost shall not include the cost of any capital improvements to the building as
determined under sound accounting principles or work which Landlord performs
specifically for or at the expense of any tenant of the building. As used
herein, Tenant's "proportionate share" shall mean the same proportion of such
costs and expenses heretofore described as the square foot area leased to Tenant
bears to the total leasable square foot area of the building or thirty-one and
seven tenths percent (31.7%). Tenant's pro rata share of common area costs shall
not in any event include: (a) any depreciation expense; (b) the cost of capital
improvements made to the building and/or the property; (c) the cost of
Landlord's federal, state or local income taxes; (d) the expense of principal
and interest payments made by Landlord pursuant to the provisions of any
mortgage or deed of trust covering any or all of the property and/or the
expenses of rental payments made by Landlord pursuant to any grant or lease
covering any or all of the property; (e) charges or fees for, or taxes on, the
furnishing of water, sewer service, gas, fuel, electricity or other utility
services to those portions of the building which are leased to tenants; (f) the
cost of providing janitorial or trash removal service to those portions of the
building which are leased to tenants; or (g) the cost of removing any Hazardous
Materials located in the building and/or the property and/or complying with all
Environmental Laws. Landlord warrants and represents that none of the expenses
included in determining Tenant's pro rata share of common area costs shall be
included in any other charge payable under this Lease. Tenant shall have the
right to audit Landlord's books and records from time to time, but not more
often than once per year, to verify the accuracy of the statements being
provided by Landlord with respect to common area costs; Tenant shall only be
permitted to audit for the prior year and if such a request is not made within
ninety (90) days after receipt of Landlord's billing, then Landlord's billing
for that year shall be deemed conclusive. Notwithstanding anything in this Lease
to the contrary, Tenant's pro rata share shall not exceed $.10 per square foot
for the first Lease year.
(d) Landlord shall notify Tenant from time to time
of the amount which Landlord reasonably estimates will be the amount payable by
Tenant in accordance with paragraph (c) above, and Tenant shall pay such amounts
to Landlord in equal monthly installments, in advance, on the first day of each
month, simultaneously with payments of the rent reserved pursuant to page 1
hereof. Within a reasonable period of time following the end of each annual
period of the term, Landlord shall submit to Tenant a statement showing the
actual amounts incurred by Landlord as set forth in paragraph (c), the amount
theretofore paid by Tenant, and the balance payable by, or overpayment owed to,
Tenant. Tenant shall pay said balance within thirty (30) days from the date of
such statement. In the event Tenant has made any overpayment, such overpayment
shall be credited by Landlord against the next installment or installments of
rent which are due and payable hereunder, or if the term of this Lease has
expired, such overpayment shall be refunded by Landlord to Tenant, without
interest, within ten (10) days after the date of such statement. Each such
statement submitted by Landlord shall be final and conclusive between the
parties hereto as to the matters therein set forth, if no objection is raised
with respect thereto within ninety (90) days after submission of each such
statement.
(e) Except as hereinafter specifically set forth,
Landlord shall at all times have the right and privilege of determining the
nature and extent to which such common facilities may be used, and of making
such changes, rearrangements, additions or reductions therein or thereto, which
in Landlord's opinion are deemed to be desirable and in the best interests of
all tenants of the building, or which are required as the result of any law or
regulation. Tenant agrees that Landlord may establish and from time to time
change, alter and enforce against Tenant such reasonable rules and regulations
as Landlord may deem necessary or advisable for the proper and efficient use,
operation and maintenance Of such common facilities. Landlord shall, at all
times, have sole and exclusive control, management and direction of such common
facilities, and may, at any time and from time to time, exclude and restrain any
person from use or occupancy thereof (for good cause, if the person to be
excluded or restrained is an employee, agent, officer, invites or contractor of
Tenant). It shall be the duty of Tenant to keep any such facilities which Tenant
is permitted to use free and clear of any obstructions created or permitted by
Tenant or resulting from Tenant's use. Tenant shall be fully liable for any
damage to any such facilities resulting from the negligence or misuse by Tenant,
its agents, employees, contractors or invitees. Except as otherwise specifically
set forth herein, Landlord may, at any time and from time to time, either
temporarily or permanently, close all or any portion of such common facilities
to make repairs or changes, and to do and perform such other acts as, in the
exercise of good business judgment, Landlord shall determine to be advisable
with a view to the improvement of the convenience and use thereof by tenants,
their employees, agents and invitees. Notwithstanding anything contained herein
to the contrary or Landlord's authority to promulgate new or modify existing
rules or regulations, (i) Tenant shall not be required to comply with any rule
or regulation which either increases Tenant's obligations or decreases Tenant's
rights hereunder; (ii) Landlord shall notify Tenant in writing of all rules and
regulations from time to time established and (iii) in the event of any conflict
between this Lease and any rule or regulation, this Lease shall control and
prevail. Notwithstanding anything to the contrary contained herein, Landlord
shall not alter the nature or utility of that portion of the common facilities
of which Tenant has been granted exclusive possession pursuant to Section 24(a);
(ii) reduce the number of, or
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relocate farther from the premises the parking spaces granted to Tenant pursuant
to Section 24(a); or (iii) alter or reduce in a manner not reasonably acceptable
to Tenant the exterior lighting of the building or parking lot.
25. Notices. Any notice required by this Lease shall be sent
by certified mail to Landlord at: 17 West Pennsylvania Avenue, Baltimore,
Maryland 21204, Attention: Lawrence Rief, with copy to Legal Department, P.O.
Box 10147, Baltimore, Maryland 21285. Any notice required by this Lease shall be
sent by certified mail to Tenant at: 500 Hanover Pike, Hampstead, Maryland
21074-2095, Attention: Mr. Timothy P. Finley with a copy to Tenant's General
Counsel at the same address (if no other address specified, such notices to
Tenant shall be addressed to the leased premises). Either party may, at any
time, or from time to time, designate in writing a substitute address for that
above set forth, and thereafter all notices to such party shall be sent by
certified mail to such substitute address.
26. Non-Waiver. It is understood and agreed that nothing
herein shall be construed to be a waiver of any of the terms, covenants or
conditions herein contained, unless the same shall be in writing, signed by the
party to be charged with such waiver and no waiver of the breach of any covenant
herein shall be construed as a waiver of such covenant or any subsequent breach
thereof. No mention in this Lease of any specific right or remedy shall preclude
Landlord or Tenant 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.
27. Successors and Assigns. Except as herein provided, this
Lease and the covenants and conditions herein contained shall inure to the
benefit of and be binding upon Tenant, its successors and assigns, and shall
inure to the benefit of Tenant and only such assignees of Tenant to whom an
assignment by Tenant has been consented to in writing by Landlord or to whom an
assignment is otherwise permitted hereunder.
In the event Landlord's interest under this Lease is
transferred or assigned and written notice thereof is given to Tenant, the
Landlord herein named (or any subsequent assignee or transferee of Landlord's
interest under this Lease who gives such notice to tenant) shall automatically
be relieved and released from and after the date of such transfer or conveyance
from all liability hereunder. Further, in the event of any sale or transfer of
the fee of any premises which includes the premises (other than a sale with the
leaseback to the grantor) or any assignment of any ground or underlying lease of
any premises which includes the premises, the grantor, transferror, or assignor,
as the case may be, shall be and hereby is entirely relieved and freed of all
obligations under this Lease from and after the date of such sale or transfer or
assignment. Further, the liability of Landlord, its successors and assigns,
under this Lease shall at all times be limited solely to Landlord's interest in
the building and property of which the premises is a part and the rents and
insurance therefrom. In the event the owner of Landlord's interest in this Lease
is at any time an individual, partnership, joint venture or unincorporated
association, Tenant agrees that such individual or members or partners of such
partnership, joint venture or unincorporated association shall not be personally
or individually liable or responsible for the performance of any of Landlord's
obligations hereunder.
28. Condition at End of Term/Security Deposit.
(a) Tenant agrees that at the expiration of this
Lease, or its earlier termination, there shall be no damage to the premises
demised hereunder, nor to Landlord's equipment as set forth in Section 34,
beyond ordinary wear and tear, and Tenant further agrees that the premises and
any equipment demised hereunder shall be left in a clean, operating condition
and in good order with all debris, rubbish and trash placed in proper
containers. Tenant shall return all keys to the premises to Landlord. Landlord
reserves the right to request that any alterations, improvements, additions made
by Tenant during the term shall be removed and the premises be restored to its
original condition. Notwithstanding anything in this Lease to the contrary,
however, Landlord agrees that with respect to the equipment set forth in Section
34, in the event Tenant replaces any such item, then Tenant shall not be
obligated to leave the replacement in place at the expiration of the term.
(b) Landlord reserves the right, pursuant to Section
29, that if the net worth of the Tenant at any time drops below Five Million
Dollars ($5,000,000.00), as evidenced by the annual audited financial statement
Tenant is required to supply to Landlord, then Landlord may demand a security
deposit from Tenant of Sixteen Thousand One Hundred Dollars ($16,100.00), which
sum represents a security deposit for the faithful performance of Tenant's
obligations under this Lease. Tenant will, upon such demand from Landlord, pay
said deposit to Landlord within ten (10) days.
Thereafter, Tenant agrees that Landlord shall
have the right, but not the obligation, to apply said security deposit or any
portion thereof to cure or remedy any default by Tenant hereunder, including
default in the payment of rent. Landlord may also, at the end of the term, apply
said deposit in accord with the Maryland Annotated Code provision relating to
security deposits. Said deposit, if not sooner applied, shall be returned to
Tenant, without interest, within thirty (30) days after vacating of the premises
by Tenant and termination of this Lease (or upon termination of the last renewal
term of this Lease if this Lease contains a renewal option and Tenant exercises
said option); provided (i) Tenant is not then in default under any of the
provisions of this Lease; (ii) there is no damage to the premises beyond
ordinary wear and tear and the premises and any equipment demised hereunder have
been left in a clean condition and in good order with all debris, rubbish and
trash placed in proper
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containers; (iii) all keys to the premises have been returned to the Landlord;
and (iv) Tenant's forwarding address has been left with Landlord.
Notwithstanding anything in this Lease to the contrary, however, Landlord
expressly reserves the right to apply all or any portion of the security deposit
against any unamortized portion of any commission paid to any real estate
brokers in conjunction with this Lease, in the event this Lease is terminated
prior to its scheduled expiration.
Tenant further agrees that Landlord shall be
entitled to commingle said security deposit with its own funds.
29. Notices to Mortgagee/Tenant Financial Statement. Tenant
agrees that a copy of any notice of default from Tenant to Landlord shall also
be sent to the holder of any mortgage or deed of trust on the premises, provided
Tenant has been given written notice of the fact that such mortgage or deed of
trust has been made; and Tenant shall allow said mortgagee or holder of the deed
of trust a reasonable time, not to exceed thirty (30) days from the receipt of
said notice, to cure, or cause to be cured, any such default. If such default
cannot reasonably be cured within the time specified herein, then such
additional time as may be necessary shall be allowed, provided the curing of
such default is commenced and diligently pursued (including, but not limited to,
commencement of foreclosure proceedings if necessary to effect such cure) in
which event this Lease shall not be terminated while such remedies are being
thus diligently pursued. Tenant (and the guarantor of this Lease, if this Lease
is guaranteed) shall at any time and from time to time (but not more than once
per year), within fifteen (15) days of written request by Landlord, deliver to
Landlord Tenant's most recently prepared annual audited financial statement.
Tenant represents to Landlord that as of the date of execution of this Lease,
Tenant has a net worth of at lease Five Million Dollars ($5,000,000.00). If at
any time Tenant's net worth drops below Five Million Dollars ($5,000,000.00) as
set forth in said annual statement, Landlord reserves the right to request the
security deposit. Landlord agrees to hold all Tenant supplied statements
strictly confidential. Such statements, and the information shown therein, may
be disclosed by Landlord to current or prospective lenders or purchasers of the
property but may not be disclosed to any other parties, including, but not
limited to, current or prospective tenants of the property. At the time of any
request hereunder by Landlord, Landlord shall inform Tenant of the identity of
any third party to which Landlord proposes to disclose Tenant's (or such
guarantor's) financial statement or the information shown therein and Tenant
shall be under no obligation to supply such statement for disclosure to any
entity in the retail clothing or clothing manufacturing business or any entity
controlling or controlled by any entity in the retail clothing or clothing
manufacturing business.
30. Estoppel Certificate. Tenant shall, at any time and from
time to time during the term of this Lease or any renewal thereof, upon request
of Landlord, execute, acknowledge, and deliver to Landlord or its designee, a
statement in writing, certifying that this Lease is unmodified and in full force
and effect if such is the fact (or if there have been any modifications thereof,
that the same is in full force as modified and stating the modifications) and
the dates to which the rents and other charges have been paid in advance, if
any. Any such statement delivered pursuant to this paragraph may be relied upon
by any prospective purchaser of the estate of Landlord or by the mortgagee or
any assignee of any mortgagee or the trustee or beneficiary of any deed of trust
constituting a lien on the premises or upon property in which the premises are
situate.
31. Tenant Representative. Name, address and telephone
number of Tenant representative to be contacted in the event of emergency: Mr.
Ed Jecelin, 305 Deep Dale Drive, Timonium, Maryland 21093.
32. No Offer. The submission of this Lease does not
constitute a binding or irrevocable option or offer by Landlord to lease the
premises to Tenant on the terms herein set forth, or on any other terms. Neither
Landlord nor Tenant shall be bound or legally obligated in any way until such
time as this Lease is fully executed by both parties hereto, and executed
counterparts thereof are delivered to each of the parties.
33. Construction.
(a) At or prior to the commencement date, Landlord
shall deliver the premises to the Tenant with the following Landlord Work
completed:
(i) Landlord will have entire premises
cleaned, including roof-joists and bathrooms, will also install a
separate meter or submeter for any utilities servicing the premises and
not separately metered as of the date hereof; will construct the new
demising wall (taped, spackled and ready for painting); will construct
(taped, spackled and ready for painting) approximately fifty-four (54)
feet of additional, interior partition wall as follows: (A) one wall
running north/south on column H, between columns 13 and 14; and (B) one
wall (with access opening as designated by Tenant) running east/west on
column 14 between columns G & H; Landlord will remove approximately
eighty-one (81) feet of existing, interior partition wall as follows:
(A) one wall running east/west on column 13, between columns G and H;
and (B) one wall running north/south on column G 1/2, between columns
13 and 15.
(ii) Landlord will paint bathrooms and
replace damaged sinks and for the
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<PAGE>
existing handicapped bathroom, will make any changes necessary in order
for such bathroom to fully comply with all ADA requirements.
(iii) Landlord will perform such repairs to
the roof of the premises as may be necessary to prevent roof leaks.
(iv) Landlord will install new exterior
lighting to enhance outside light levels, to meet Tenant's work
schedule requirements, and will complete maintenance and repair
recommendations as set forth in the Hartford Refrigeration Co., Inc.
letter, dated April 29, 1994, attached hereto as Exhibit D.
With respect to (iv), Landlord can complete said work
on or before June 15, 1994, but will be able to deliver possession of the
premises earlier to Tenant provided (i), (ii) and (iii) above have been
completed by Landlord.
All work to be done by Landlord shall be completed
in a good and workmanlike manner in compliance with all federal, state and local
laws.
(b) Within the first six (6) months of occupancy,
Tenant will do the following Tenant Work to the premises at Tenant's sole cost
and expense:
(i) Tenant will design and build a 4,000
square foot office to be serviced by a separate HVAC system,
which Tenant will install and maintain at its sole cost and
expense.
(ii) Tenant will rehab existing office area
(2,700 square feet) per Tenant's specifications.
(iii) Tenant will add additional 400 amp
electrical service and one (1) distribution panel (1,200 amp
total).
(iv) Tenant will paint the new demising
wall.
In addition, Tenant may do a complete interior
lighting retrofit (T-8 and ballast). All work to be done by Tenant
shall be completed in a good and workmanlike manner in compliance
with all federal, state and local laws. Tenant shall have the right
to use and occupy the premises and common facilities prior to the
commencement date of the term provided that neither Tenant, its
agents, employees nor contractors shall interfere with the completion
of Landlord Work.
34. Existing Equipment. Landlord hereby agrees to demise to
Tenant pursuant to this Lease the following existing equipment:
Cutting tables - approximately 1,150 linear feet; feed rail;
cutting floor lights; 25 h.p. compressor (Kaiser); 10 h.p. compressor (Joy); one
(1) air dryer, bailer, alarm system, telephone system and intercom, time clocks
and fire extinguishers, all of which equipment is currently installed in the
premises and is being demised to Tenant "as is" with no express or implied
warranties and no representation as to fitness or condition.
35. Waiver of Jury Trial and Right to Counterclaim. This
Lease shall be construed in accordance with the laws of the state of Maryland.
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 premises,
and any emergency or other statutory remedy. Tenant further agrees that it shall
not interpose any non-mandatory counterclaims) in a summary proceeding or in any
action based on holdover or non-payment of rent and/or additional charges.
36. Brokerage. The parties hereto recognize Manekin
Corporation as the broker bringing about this transaction, and Landlord shall be
responsible for such broker's commission. Tenant and Landlord each covenants and
agrees that it has had no other dealings with any broker or agent in connection
with this Lease and covenants to pay, hold harmless and indemnify the other from
and against any and all costs, expenses and liabilities for any compensation,
commissions and charges claimed by any broker or agent in respect of this Lease
or the negotiation thereof with whom Tenant or Landlord, as the case may be, is
claimed to have had dealings.
37. Landlord's Default.
(a) Landlord shall be deemed in default upon the
occurrence of any one or more of the following circumstances:
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<PAGE>
(i) If Landlord shall fail to pay any sum
due Tenant hereunder within ten (10) days after notice that the same has become
due; or
(ii) If Landlord shall fail to commence
performance of any non-monetary term, condition or covenant of this Lease
applicable to Landlord within twenty (20) days after written notice of such
failure from Tenant or shall fail to thereafter or diligently prosecute
completion thereof.
(b) Upon any Landlord default, Tenant shall have
the right to pursue any or all of the following remedies:
(i) The right to maintain any and all
actions at law or suits in equity or other proper proceedings (including the
right to injunctive relief) to enforce the curing or remedying of such default
or for damages resulting from such default; and
(ii) in the event of a final judgment in
Tenant's favor against Landlord, to collect said judgment by deducting from any
one or more succeeding payments of rent due hereunder the amount of such final
judgment, excluding any court costs, attorneys fees, or other disbursements.
38. Renewal Option. Deleted.
39. Hazardous Substances.
(a) The term "Hazardous Substances" as used in this
Lease is defined to mean any substance defined as a "hazardous substance" or
'hazardous material" under the Comprehensive Environmental Response,
Compensation and Liability Act of 1989, as amended (42 USC 9601, et seq.), or
substances declared to be hazardous or toxic under any other federal, state of
municipal law or regulation now or hereafter enacted or promulgated by any
governmental authority having jurisdiction.
(b) Landlord shall indemnify, defend and hold
harmless Tenant, its permitted successors and assigns, and their respective
officers, directors, beneficiaries, shareholders, partners, agents and employees
from all fines, suits, procedures, claims and actions of every kind and all
costs associated therewith (including attorneys' and consultants' fees) arising
out of or in any way connected with any deposit, spill, discharge or other
release of Hazardous Substances that occurs prior to the date hereof or that
occurs after the date hereof but not caused by Tenant, its agents, contractors
or employees. Landlord's obligation and liabilities under this Section shall
survive the expiration of the Lease.
(c) Tenant shall not cause or permit to occur by
its agents, contractors or employees:
(i) Any violation of any federal, state or
local law, ordinance or regulation now or hereafter enacted, related to
environmental conditions on, under or about the Premises and arising from
Tenant's use or occupancy of the Premises, including, but not limited to soil
and ground water conditions; or
(ii) The use, generation, release,
manufacture, refining, production, processing, storage or disposal of any
Hazardous Substance on, under or about the Premises or the transportation to or
from the Premises of any Hazardous Substance.
Further, it is agreed that:
(iii) Tenant shall, at Tenant's own
expense, comply with all laws regulating the use, generation, storage,
transportation or disposal of Hazardous Substances by Tenant ("Laws").
(iv) Tenant shall, at Tenant's own expense,
make all submissions to, provide all information required by, and comply with
all requirements of all governmental authorities (the "Authorities") under the
Laws in connection with the use, generation, storage, transportation or disposal
of Hazardous Substances by Tenant.
(v) Should any Authority or any third party
demand that a cleanup plan be prepared and that a clean-up be undertaken because
of any deposit, spill, discharge or other release by Tenant or its agents,
contractors, employees, of Hazardous Substances that occurs during the term of
this Lease, at or from the Premises, or which arises at any time from Tenant's
use or occupancy of the Premises, then Tenant shall, at Tenant's own expense,
prepare and submit the required plans and all related bonds and other financial
assurances; and Tenant shall carry out all such cleanup plans. Landlord shall be
so obligated with regard to any deposit, spill, discharge or other release of
Hazardous Substances in the premises occurring prior to the date hereof or
occurring after the date hereof but not caused by Tenant, its agents,
contractors or employees.
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<PAGE>
(vi) Tenant shall promptly provide all
information regarding the use, generation, storage, transportation or disposal
of Hazardous Substances by Tenant or its agents, contractors, employees that is
requested by Landlord. If Tenant fails to fulfill any duty imposed under this
section within a reasonable time, Landlord may do so; and in such case, Tenant
shall cooperate with Landlord in order to prepare all documents Landlord deems
necessary or appropriate to determine the applicability of the Laws to the
Premises and Tenant's Use thereof, and for compliance therewith, and Tenant
shall execute all documents promptly upon Landlord's request. No such action by
Landlord and no attempt made by Landlord to mitigate damages under any Law shall
constitute a waiver of any of Tenant's obligations under this Section.
(vii) All obligations and liabilities under
this Section shall survive the expiration of this Lease.
(d) Tenant shall indemnify, defend and hold
harmless Landlord, the manager of Landlord's buildings and their respective
officers, directors, beneficiaries, shareholders, partners, agents and employees
from all fines, suits, procedures, claims and actions of every kind, and all
costs associated therewith (including attorneys' and consultants' fees) arising
out of or in any way connected with any deposit, spill, discharge or other
release of Hazardous Substances that occurs after the date hereof and is caused
by Tenant, its agents, contractors or employees. Tenant's obligations and
liabilities under this Section shall survive the expiration of the Lease.
40. Miscellaneous.
(a) Binding Effect. The terms, conditions and
agreements herein contained shall be kept and performed by the respective
parties hereto and will be binding upon them and each of their successors, heirs
and assigns.
(b) Partial Invalidity. The invalidity of any
particular clause, phrase, section of part of this Lease by order of court or
decision of any judicial authority having jurisdiction over the same shall not
be construed to void or invalidate the Lease in its entirety and the remaining
parts shall continue in full force and effect.
(c) Captions. All captions used in this Lease are
for reference purposes only. The captions do not limit and should not be used to
interpret or construe any of the provisions which follow the captions.
(d) Attorney's Fees. Deleted.
(e) Landlord shall have the right at any time to
change the name or the current address of the warehouse or both, in Landlord's
sole discretion. Landlord shall incur no liability as to Tenant as the result of
such change; furthermore, such change shall not entail a decrease in rental
value, constitute an eviction or diminution of services, or excuse Tenant from
the full performance of all its Lease obligations. Tenant agrees not to refer to
the warehouse by any name or address other than that designated by Landlord.
(f) Joint and Several Liability. If this Lease is
executed by two or more individuals, as Tenant, the liability for all
obligations on Tenant's part to be performed hereunder, specifically including
but not limited to the obligation to pay all rent and additional rent provided
for herein, shall be deemed to be joint and several.
(g) Any monies owed to Landlord by Tenant pursuant
to this Lease shall be deemed rent in the event such monies are left unpaid
beyond the time set forth hereunder.
(h) Applicable Laws. The parties agree that this
Agreement shall be construed only in accordance with the laws of the State of
Maryland.
(i) Except for Tenant's obligation to pay rent, the
time of Landlord or Tenant, as the case of may be, to perform any of its
respective obligations hereunder shall be extended if and to the extent that the
performance thereof shall be prevented due to any strike, lockouts, civil
commotions, war-like operations, invasions, rebellions, hostilities, military or
usurped power, governmental regulations or controls, acts of God, or other
causes beyond the control of the party whose performance is required. If
Landlord shall be prevented from delivery the premises to Tenant for causes
beyond the control of Landlord, then the commencement and expiration of the Term
shall be extended accordingly.
(j) This Lease and the Riders and Exhibits attached
hereto, if any, set forth all the covenants, promises, assurances, agreements,
and understandings between Landlord and Tenant concerning the
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<PAGE>
premises and supersede and revoke any previous negotiations, arrangements,
letters of intent, offers to lease, lease proposals, and information conveyed.
41. Early Termination Right. Landlord and Tenant agree that
Tenant shall have the one time only right to terminate this Lease prior to its
scheduled expiration, provided this Lease is in full force and effect, then free
of defaults by Tenant, under the following terms and conditions:
(a) Tenant shall send written notice to Landlord,
certified mail, return receipt requested, notifying Landlord of its intention to
exercise its right of early termination, which notice Must be received by
Landlord on or before February 1, 1999;
(b) Provided Tenant has vacated the premises and
left the premises and Landlord equipment (whatever has not been replaced by
Tenant in the interim) in the condition required hereunder pursuant to Section
28, at the time of the expiration of the term, this Lease shall be deemed
terminated effective July 31, 1999, and neither party shall have any further
liability to the other, except Tenant shall remain liable to Landlord for any
obligations or liabilities that have accrued up to and including July 31, 1999,
which liability shall survive the termination of this Lease.
WITNESS the hands and seals of the parties hereto the day
and year first above written.
WITNESS: LANDLORD:
CONTINENTAL STEWART WAREHOUSE
LIMITED PARTNERSHIP
By: Continental Realty Corporation, Agent
/s/ Mary P. Baxter By: /s/: John A. Luetkemeyer, Jr. (Seal)
____________________ _____________________________________
John A. Luetkemeyer, Jr., President
WITNESS: TENANT:
JOS. A. BANK CLOTHIERS, INC.
/s/: Deborah S. Timm By: /s/: Timothy F. Finley (SEAL)
____________________ _____________________________________
Timothy F. Finley, Chairman and Chief
Executive Officer
STATE OF MARYLAND, COUNTY OF BALTIMORE, to wit:
On this 11th day of May, 1994, before me, the subscriber a
Notary Public of the State of Maryland, personally appeared
JOHN A. LUETKEMEYER, JR.
President of the above named agent for Landlord, and he acknowledged the above
Lease to be the act of the said Landlord.
IN WITNESS WHEREOF, I have hereunto set my hand and Notarial Seal.
/s/: Delores F. Schafer
________________________________________
Notary Public
My Commission Expires: July 22, 1995
___________________
STATE OF MARYLAND, COUNTY OF BALTIMORE, TO WIT:
On this 10th day of May, 1994, before me, the subscriber a Notary
Public of the State of Maryland, personally appeared
TIMOTHY F. FINLEY
Chairman and Chief Executive Officer of the above named Tenant, and he
acknowledged the above Lease to be the act of the said Tenant.
IN WITNESS WHEREOF, I have hereunto set my hand and Notarial Seal.
/s/: Karen M. Mays
_________________________________________
Notary Public
My Commission Expires: 10/29/96
______________
-18-
Exhibit 10.15a
FIRST AMENDMENT TO LEASE AGREEMENT AND CONSENT
----------------------------------------------
THIS FIRST AMENDMENT TO LEASE AGREEMENT AND CONSENT (this "Amendment"),
made this 26th day of March, 1998, by and between CONTINENTAL STEWART WAREHOUSE
LIMITED PARTNERSHIP ("Landlord") and JOS. A. BANK CLOTHIERS, INC. ("Tenant"),
W I T N E S S E T H T H A T:
WHEREAS, Landlord and Tenant are the parties to that certain Lease
Agreement, dated May 11, 1994 (the "Lease"), pursuant to which Landlord leased
to Tenant 51,062 square feet of space, as shown on Exhibit A-1 to the Lease (the
"Premises"), located within a building known as Continental Stewart Warehouse,
4241 Brookhill Road, Baltimore City, Maryland 21215; and
WHEREAS, Landlord and Tenant have agreed to amend the Lease and enter into
certain other agreements as hereinafter set forth,
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Landlord and Tenant hereby amend the
Lease and agree as follows:
1. Section 41 of the Lease is hereby deleted in its entirety and the
following is hereby inserted in lieu thereof:
41. Early Termination Right. Landlord and Tenant agree that Tenant shall
have the one time only right to terminate this Lease prior to its scheduled
expiration, provided this Lease is in full force and effect, then free of
defaults by Tenant, under the following terms and conditions:
(a) Tenant shall send written notice to Landlord, certified mail,
return receipt requested, notifying Landlord of its intention to
exercise its right of early termination, which notice must be
received by Landlord on or before September 1, 1999;
(b) Provided Tenant has vacated the premises and left the premises
and Landlord equipment (whatever has not been replaced by Tenant
in the interim) in the condition required hereunder pursuant to
Section 28, at the time of the expiration of the term, this Lease
shall be deemed terminated effective February 29, 2000, and
neither party shall have any further liability to the other,
except Tenant shall remain liable to Landlord for any obligations
or liabilities that have accrued up to and including February 29,
2000, which liability shall survive the termination of this lease.
(c) In the event Tenant shall exercise its early termination right
as herein provided, notwithstanding the rental set forth in the
WITNESSETH paragraph of this Lease, the monthly installments of
rental for the period from September 1, 1999 through February 29,
2000 shall be $17,375.26, except as Landlord and Tenant may
otherwise agree.
<PAGE>
2. Notwithstanding the amendment to Section 41 of the Lease as set forth in
paragraph 1 above, in the event Tenant shall lease space in the Bed, Bath and
Beyond Shopping Center in Naples, Florida, the monthly installments of rental
for the period from September 1, 1999 through February 29, 2000 shall be
$14,893.08.
3. Nothing in paragraphs 1 or 2 above is intended to, or shall, alter the
terms and conditions of the Lease with respect to the scheduled August 1, 1999
rental increase. Rental shall be as stated in the Lease except as specifically
amended hereby.
4. Landlord hereby consents to the sublease of the Premises to SourceOne,
L.L.C.; provided, however, that in no event shall such consent affect or limit
Tenant's continued liability under the Lease.
Except as specifically amended hereby, the Lease shall remain in full force
an effect according to its terms. To the extent of any conflict between the
terms of this Amendment and the terms of the remainder of the Lease, the terms
of this Amendment shall control and prevail. Capitalized terms used but not
defined herein shall have those respective meanings attributed to them in the
Lease. This Amendment shall hereafter be deemed a part of the Lease for all
purposes.
IN WITNESS WHEREOF, this Amendment is executed as of the day and year first
above written.
WITNESS: LANDLORD:
CONTINENTAL STEWART WAREHOUSE
LIMITED PARTNERSHIP
By: Continental Realty Corporation, Agent
/s/: Mary Patricia Baxter /s/: Gene Parker
_________________________ __________________________
Name: Gene Parker
Title: Vice President
WITNESS: TENANT:
JOS. A. BANK CLOTHIERS, INC.
/s/: Charles Frazer By: /s/: Timothy F. Finley
_________________________ __________________________
Timothy F. Finley, Chairman and Chief
Executive Officer
Exhibit 10.16
SUBLEASE
THIS SUBLEASE is made as of the 17 day of April 1998, by and
between JOS. A. BANK CLOTHIERS, INC., a Delaware corporation (hereinafter
called "Sublandlord") and SOURCEONE, L.L.C., a New York limited liability
company (hereinafter called "Subtenant").
RECITALS
WHEREAS, pursuant to the Lease Agreement by and between
Continental Stewart Warehouse Limited Partnership (hereinafter called the
"Landlord") and Sublandlord dated May 11, 1994 and amended March 26, 1998,
a copy of which is attached hereto as Exhibit I (as the same may be amended
from time to time, hereinafter called the "Lease"), Sublandlord is the
tenant of certain space consisting of approximately 51,062 square feet in
the building known as Continental Stewart Warehouse located at 4241
Brookhill Road, Baltimore City, Maryland 21215 (hereinafter called the
"Building") as shown on Exhibit A attached to the Lease (hereinafter called
the "Premises"); and
WHEREAS, Subtenant desires to sublease from Sublandlord all of the
Premises in the Building (hereinafter called the "Subleased Premises"); and
WHEREAS, the parties desire to enter into this Sublease defining
their respective rights, duties, and liabilities relating to the Subleased
Premises; and
WHEREAS, the effectiveness of this Sublease and the delivery of
the Premises to Subtenant is a condition to the effectiveness of that
certain Primary Supply Agreement dated as of April 16, 1998 (the "Supply
Agreement") between Sublandlord and MS Pietrafesa, L.P. ("Pietrafesa").
NOW, THEREFORE, WITNESSETH in consideration of the mutual promises
and covenants contained herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Sublandlord
and Subtenant hereby covenant and agree as follows:
SECTION 1
DEMISE
Sublandlord, for and in consideration of the payment of the rent
and the performance of the covenants hereinafter mentioned, does hereby
demise, lease and assign unto Subtenant, the Subleased Premises, for a term
(the "Term") from April 17, 1998 (hereinafter called the "Commencement
Date") to February 29, 2000 at which time this Sublease shall terminate.
SECTION 2
RENT
The rent during the Term hereunder (hereinafter called the "Annual
Rent") shall be payable in arrears, without demand, deduction, set-off,
recoupment or counterclaim, as
<PAGE>
follows: for the period from the Commencement Date through July 31, 1999 at
the rate of $165,951.50 per year, payable in equal monthly installments of
$13,829.29 payable commencing June 1, 1998 and ending on August 1, 1999
(the period from the Commencement Date through April 30, 1998 shall be
prorated and paid together with the June 1, 1998 installment of Annual
Rent); $14,893.08 for the month of August, 1999 payable on September 1,
1999; and for the period from September 1, 1999 through February 29, 2000
at the rate of $208,503.12 per year, payable in equal monthly installments
of $17,375.26, payable on October 1, November 1, December 1, 1999 and
January 1, February 1 and March 1, 2000. Notwithstanding anything to the
contrary, contained therein, in the event Sublandlord shall lease space
from Landlord in the Bed, Bath and Beyond Shopping Center in Naples,
Florida and shall be given the benefit of the rent reduction set forth in
paragraph 2 of the March 26, 1998 amendment to the Lease, Annual Rent for
the period from September 1, 1999 through February 29, 2000 shall be
$14,893.08 per month.
SECTION 3
EXTENSION
There is no right of Sublease extension.
SECTION 4
SUBJECT TO LEASE
This Sublease is subject and subordinate to the Lease. The
Sections of the Lease listed below (except as may be inconsistent with
other provisions of this Sublease) shall be deemed a part of this Sublease,
with references in the Lease to "Landlord" deemed made to Sublandlord,
references to "Tenant" deemed made to Subtenant, and references to the
"Premises" deemed made to the Subleased Premises:
Section 2 Use
Section 3 Utilities
Section 4 Compliance with Laws
Section 5(a) Assignment
Section 6 Loading Capacity
Section 7 Increase in Landlord's Insurance Rates
Section 8 Indemnification - Liability Insurance
Section 9 Alterations
Section 10 Ownership of Alterations
Section 11 Repairs and Maintenance
Section 12 Tax/Insurance Escalation
Section 13 Tenant's Default
Section 14 Damage or Destruction
Section 15 Possession
Section 16 Exterior of Premises - Signs
Section 18 For Rent/Sale Signs
Section 19 Right of Entry
Section 20 Termination of Term
Section 21 Condemnation
<PAGE>
Section 22 Subordination
Section 23 Attornment
Section 24 Parking and Common Facilities
Section 26 Non Waiver
Section 27 Successors and Assigns
Section 28 Condition at End of Term - Security Deposit
Section 30 Estoppel Certificates
Section 32 No Offer
Section 34 Existing Equipment
Section 35 Waiver of Jury Trial and Right to Counterclaim
Section 37 Landlord's Default
Section 39 Hazardous Substances
Section 40 Miscellaneous
SECTION 5
ASSIGNMENT
Notwithstanding anything contained herein or the Lease to the
contrary, Subtenant shall have no right to assign this Sublease, in whole
or in part, nor sublet the Subleased Premises, or any part or portion
thereof, nor grant any license or concession for all or any part thereof,
without the prior written consent of the Sublandlord which may be withheld
for any reason or for no reason. Subtenant agrees to seek Sublandlord's
prior written consent for the assignment of this Sublease to an "affiliate"
of Subtenant, which consent shall not be unreasonably withheld. Subtenant
agrees that any such assignment without the prior written consent of
Sublandlord shall be null and void.
<PAGE>
SECTION 6
REPAIRS AND MAINTENANCE
Notwithstanding anything contained herein or the Lease to the
contrary, Sublandlord shall have no obligation to repair or maintain the
exterior masonry, walls, structural components, roof or other portion of
the Subleased Premises. In the event that a condition exists in the
Subleased Premises that Landlord is obligated to repair under the Lease,
Subtenant shall so advise Sublandlord, and Sublandlord, in turn, shall
promptly advise Landlord thereof. Sublandlord shall have no liability to
Subtenant for Landlord's failure to make any such repair; provided that
Sublandlord exercises its rights in good faith and in a timely manner to
procure such performance by the Landlord.
SECTION 7
DOCUMENTS
Notwithstanding anything contained herein or the Lease to the
contrary, Sublandlord shall have no obligation to provide Subtenant with
any tax bills, utility charges, insurance premium reports or any other
documents relating to the Premises or relating to Landlord's ownership or
operation of the Premises, except to the extent that Landlord or
Sublandlord seek reimbursement or direct payment by Subtenant of amounts
evidenced by such amounts.
SECTION 8
POSSESSION
Notwithstanding anything contained herein or the Lease to the
contrary, under no circumstances shall Sublandlord be under any obligation
to Subtenant for failure to deliver possession of the Subleased Premises to
Tenant on the date herein specified. Subtenant's sole remedy for
Sublandlord's failure to deliver the Subleased Premises is to terminate the
Sublease; provided, that Sublandlord acknowledges that until such failure
is remedied,(i) Subtenant shall have no obligation to make any payment to
Sublandlord hereunder and (ii) the Supply Agreement shall not be effective.
This shall not be a continuing condition and Subtenant's acceptance of the
Premises shall satisfy same. Sublandlord undertakes no obligation to
perform work to prepare the Subleased Premises for Subtenant's occupancy.
<PAGE>
SECTION 9
SUBORDINATION AND ATTORNMENT
Subtenant agrees that this Sublease shall at all times be
subordinate to the lien of any of Landlord's mortgages and/or deeds of
trust unless the mortgagee or the holder of such mortgage or deed of trust
elects to have Subtenant's interest hereunder superior to the interest of
said mortgagee or holder of such deed of trust. Subtenant further agrees to
attorn to any assignee of Landlord.
SECTION 10
OPERATING COSTS
Notwithstanding anything contained in the Lease to the
contrary, Subtenant shall pay all operating costs of any nature whatsoever
in connection with the Building or the Premises, except such any costs
arising as a result of a breach by Sublandlord of its obligations under the
Lease (to the extent that such breach is not due to a breach by Subtenant
of its payment obligations hereunder).
SECTION 11
INDEMNITIES
11.1. Compliance with Environmental Laws.
Subtenant shall comply in all respects with all "Environmental
Laws" (as hereinafter defined) now in force or which may hereafter be
enacted or promulgated applicable to the Premises and the conduct of
Subtenant's business at the Premises.
Sublandlord represents that it has complied in all respects
with all "Environmental Laws" applicable to the Premises for the period
from May 12, 1994 to the date hereof (the "Environmental Indemnification
Period").
11.2 Indemnities
Subtenant does hereby indemnify and hold Sublandlord harmless
against all Environmental Liabilities and Costs (as hereinafter defined)
to the extent that such Environmental Liabilities and Costs arise from the
operation of the Premises during the Term;
<PAGE>
Sublandlord does hereby indemnify and hold Subtenant and
its affiliates harmless against, (i) Environmental Liabilities and
Costs arising from the operation of the Premises during the Environmental
Indemnification Period, (ii) any Release that occurred during the
Environmental Indemnification Period, or (iii) any noncompliance with any
Environmental Laws during the Environmental Indemnification Period, except
that Subtenant shall be responsible to the extent any aggravation of or
contribution to any such Release is caused by Subtenant noncompliance of
any Existing Environmental Condition during the Lease Term.
Sublandlord does hereby assign to Subtenant all of its right,
title and interest to the Landlord's indemnification of Sublandlord set
forth in Section 39 of the Lease.
11.3. Definitions.
For purposes of this Section, the following definitions shall
apply:
"Environment" means navigable waters, waters of the contiguous
zone, ocean waters, natural resources, surface waters, ground water,
drinking water supply, land surface, subsurface strata, and ambient air,
both inside and outside of buildings and structures.
"Environmental Laws" means federal, state, local and
foreign laws, common law, regulations and codes, as well as orders,
decrees, judgments or injunctions issued, promulgated, approved or entered
thereunder relating to pollution, protection of the environmental or public
health and safety, including, but not limited to the Release or threatened
Release of Hazardous Substances into the Environment or otherwise relating
to the presence, manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances.
"Environmental Liabilities and Costs" means all liabilities,
losses, fines, penalties, charges, damages (including damages to persons,
property or the Environment), costs, or expenses (including legal,
engineering, and other consultant and expert witness fees and expenses)
arising under Environmental Laws, or related to Remedial Actions, or
otherwise arising out of or in respect of:
(a) the operation of the Premises or any real property,
assets, equipment or facilities related to it; or
(b) the environmental conditions on, under, above, or about
the Premises or any real property, assets, equipment or facilities
related to it; or
<PAGE>
(c) expenditures necessary to cause alter, maintain, or
restore the Premises so as to be or remain in compliance with any
and all requirements of Environmental Laws including, without
limitation, all permits, licenses or other authorization issued
under or pursuant to such Environmental Laws.
"Existing Environmental Condition" means any environmental
condition on, under, above, or about the Premises existing prior to the
Commencement Date.
"Governmental Authority" means any government or political
subdivision thereof, whether federal, state, local or foreign, or any
agency or instrumentality of any such government or political subdivision.
"Hazardous Substance" means any waste, pollutant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial
substance or waste, petroleum or petroleum-derived substance or waste, or
any constituent of any such substance or waste, including without
limitation any such substance regulated under or defined by any
Environmental Law.
"Losses" means all liabilities, losses, fines, penalties,
changes, damages, costs (including, without limitation, court costs) or
expenses (including, without limitation, reasonable attorneys fees).
"Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the Environmental or into or out of any property, including
the movement of Hazardous Substances through or in the air, soil, surface
water, ground water or property.
"Remedial Action" means all actions reasonably necessary,
whether voluntary or involuntary, to (i) clean up, remove, treat or in any
other way adjust Hazardous Substances in the Environment; (ii) prevent the
Release or further movement of Hazardous Substances so that they do not
migrate or endanger or threaten to endanger public health or welfare or the
Environment; or (iii) perform remedial studies, investigations, restoration
and post-remedial studies, investigations and monitoring at, on, under or
about the Premises.
<PAGE>
SECTION 12
CROSS DEFAULT
(a) Subtenant covenants and agrees that it shall constitute a
default by Subtenant hereunder if any "Pietrafesa Event of Default" (as
defined in the Supply Agreement) shall have occurred and be continuing.
(b) Sublandlord covenants and agrees that it shall constitute
a default by Sublandlord hereunder if any "Bank Event of Default" (as
defined in the Supply Agreement) shall have occurred and be continuing.
(c) Upon and during the continuation of a default described in
clause (b) above, Subtenant shall be entitled to terminate this Sublease
and all its obligations hereunder on notice to Sublandlord, which notice
and termination shall be effective as of the date sent by Subtenant (unless
provided otherwise in the relevant notice.)
SECTION 13
UTILITIES AND SERVICES
All services for and supplying of utilities to the Subleased
Premises are the obligations of the Landlord under the Lease, and the
covenants herein by Sublandlord to furnish any services for, or to supply
any utilities to, the Subleased Premises shall be subject to the condition
that Sublandlord shall not be liable for any failure of the Landlord to
furnish any services or to supply any utilities; provided the same is not
caused by the negligence or willful act of Sublandlord or its contractors
or subcontractors or its or their agents or employees nor shall any such
failure constitute an abrogation of any of the other terms or conditions of
this Sublease; provided that Sublandlord exercises its rights in good faith
and in a timely manner to procure such performance by the Landlord.
SECTION 14
DAMAGE AND DESTRUCTION
It is understood and agreed that in the event the Subleased
Premises is damaged by fire, storm, the elements, act of God, unavoidable
accident and/or the public enemy, but not to such an extent as to render
the same untenantable, then it is the obligation of the Landlord
<PAGE>
under the Lease to restore, or cause to be restored, the Subleased Premises
as speedily as possible, and there shall be no abatement of Rent. If the
Subleased Premises is injured or damaged by any of the aforesaid causes to
such an extent as to render the same wholly or partially untenantable, then
upon written notice from either party to the other this Sublease shall
thereupon become null and void, and all liability of Subtenant shall
terminate upon payment of all Rent due and payable to the date of such
happening.
If the Subleased Premises is to be repaired under this
Section, Subtenant shall, at Subtenant's sole cost and expense, be
responsible for repairing and restoring all of Subtenant's improvements and
of replacing any equipment and trade fixtures of Subtenant located in the
Subleased Premises.
SECTION 15
INDEMNIFICATION
(a) Subtenant does hereby indemnify and hold harmless
Sublandlord from and against any loss, claim, damage, or expense, including
reasonable attorney's fees which Sublandlord may suffer, incur, or expend
arising out of any failure on the part of Subtenant to perform fully its
obligations hereunder.
(b) Sublandlord does hereby indemnify and hold harmless
Subtenant and its affiliates from and against any loss, claim, damage or
expense, including reasonable attorneys' fees which Subtenant or any such
affiliate may suffer, incur or expend arising out of any failure on the
part of Sublandlord to perform fully its obligations hereunder or under the
Lease.
SECTION 16
NOTICES
In every instance in which notice is required to be given
hereunder, such notice shall be in writing and personally delivered, sent
by telecopier, or sent by certified or registered mail addressed as
follows:
If to Sublandlord: Jos. A. Bank Clothiers, Inc.
500 Hanover Pike
Hampstead, Maryland 21074
Attention: Chief Financial Officer
<PAGE>
Copy to: Newton B. Fowler III, Esquire
Venable, Baetjer and Howard, LLP
1800 Mercantile Bank & Trust Building
2 Hopkins Plaza
Baltimore, Maryland 21201
If to Subtenant: SourceOne, L.L.C.
4241 Brookhill Road
Baltimore, Maryland 21215
Attention: President
Copy to: L. Kevin Sheridan, Esquire
Roberts, Sheridan & Kotel
Tower 49
12 E. 49th Street
New York, NY 10017
All notices sent by mail shall be deemed given the second day
after the same are posted (except as provided in Section 12(c) hereof). All
notices sent by telecopier shall be deemed given the day sent, but such
notices shall be sent promptly by first class mail as well. Either party
may change the address or telecopier number to which notices to it are to
be sent by sending written notice of such new address or telecopier number
to the other party.
SECTION 17
BROKERAGE
Each party warrants to the other that it has had no dealings
with any broker or agent in connection with this Sublease and covenants to
pay, hold harmless and indemnify the other party from and against any and
all costs (including reasonable attorney's fees), expense or liability for
any compensation, commissions and charges claimed by any other broker or
other agent with respect to this Sublease or the negotiation thereof on
behalf of such party.
<PAGE>
SECTION 18
NO RECOURSE TO AFFILIATES
Sublandlord and Subtenant each agree that its obligations
hereunder are primary in nature and that neither party hereto shall have
any recourse to any officer, director, partner, member or affiliate
(including in the case of SourceOne, Pietrafesa), and that no such person
or entity shall have any liability, in respect of the payment and
performance obligations of Sublandlord and Subtenant hereunder.
SECTION 19
TABLE OF CONTENTS; CAPTIONS
The captions appearing in this Sublease are inserted only as a
matter of convenience and do not define, limit, construe, or describe scope
or intent of the Sections of this Sublease nor in any way affect this
Sublease.
IN WITNESS WHEREOF, the parties hereto have caused this
Sublease to be properly executed as of the day and year first above
written.
ATTEST/WITNESS: JOS. A. BANK CLOTHIERS, INC.
By: /s/ Timothy F. Finley
__________________________ _________________________(SEAL)
<PAGE>
SOURCEONE, L.L.C.
__________________________ By: /s/: David McDonough
__________________________(SEAL)
Name David McDonough
________________________
Title VP-Finance
__________________________
Exhibit 10.17
NET LEASE AGREEMENT
-------------------
THIS NET LEASE AGREEMENT (this "Lease") is made and entered
into as of this 17 day of April, 1998, by and between THE JOSEPH A. BANK
MFG. CO., INC., a New Jersey corporation ("Landlord"), and SOURCEONE,
L.L.C. a New York limited liability company ("Tenant").
ARTICLE 1
LEASE OF FACILITY
1.1. Lease of Facility.
-----------------
Landlord does lease to Tenant, and Tenant leases from
Landlord, all of the following (collectively the "Facility"):
(a) That certain tract or parcel of land consisting of
approximately 43,386 square feet, more or less, located in
Baltimore City, Maryland, as more particularly described in
Exhibit A (the "Land");
(b) All buildings, structures and other improvement of every
kind including, but not limited to, sidewalks, utility pipes,
conduits and lines, parking areas and roadways appurtenant to such
buildings, structures and improvements presently situated on the
Land (collectively, the "Building");
(c) All easements, rights and appurtenances relating to the
Land and the Building;
(d) All Building systems, including all components thereof,
now permanently affixed to or incorporated into the Building; and
This Lease Agreement is subject to the terms, covenants and
conditions set forth herein. Tenant covenants as a material part of the
consideration for this Lease Agreement to keep and perform each and all of
the terms, covenants and conditions by it to be kept and performed, and
this Lease Agreement is made upon the condition of such performance.
Landlord covenants as a material part of the consideration for this Lease
Agreement to keep and perform each and all of the terms and covenants by it
to be kept and performed.
1.2. Governmental Approvals.
----------------------
The Facility is leased to Tenant from Landlord in an "AS-IS"
condition with respect to compliance with applicable statutes, ordinances,
rules, regulations, zoning variances and special exceptions. Tenant hereby
undertakes, at its sole cost and expense, the responsibility to obtain all
appropriate governmental approvals, certificates, licenses and permits in
order to operate the Facility for uses described herein. In no event shall
Landlord be liable for any limitation on the use of the Facility which may
be imposed by statute, ordinance, rule, regulation, zoning variance or
special exception, economic
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<PAGE>
condition or otherwise.
1.3 Space Reserved.
--------------
Notwithstanding the terms of Section 1.1. there is
specifically and exclusively reserved to Landlord, and the Facility shall
not include, the vault and other area presently used by Landlord for
record storage (the "Storage Areas").
In addition, Tenant shall have the right at all times, in
common with others, for ingress and egress to the Storage Areas
including, but not limited to, loading and unloading facilities in the
Facility used in conjunction therewith.
1.4 Condition to Lease.
------------------
The effectiveness of this Lease and the delivery of the
Facility to Tenant is a condition to the effectiveness of that certain
Primary Supply Agreement dated as of April 16, 1997 (the "Supply
Agreement") between Landlord and M.S. Pietrafesa, L.P. ("Pietrafesa"). This
shall not be a continuing condition and Tenant's acceptance of the Facility
shall satisfy it.
ARTICLE 2
LEASE TERM
2.1. Initial Term.
------------
The initial term of this Lease Agreement (the "Initial Lease
Term") shall commence on April 17, 1998 (the "Commencement Date") and shall
terminate on February 29, 2000, or on such earlier date on which the
Initial Lease Term may expire or be terminated pursuant to this provisions
of the Lease. Tenant shall be entitled to, and its obligations hereunder
shall be conditioned on, possession of the Facility as of the Commencement
Date.
2.2. Renewal Term.
------------
The Initial Lease Term may be renewed at the option of Tenant.
If renewed, the renewal shall be for one additional twelve-month term (the
"Renewal Lease Term"; the Initial Lease Term and the Renewal Lease Term are
collectively referred to as the "Lease Term").
2.2.1 If Tenant elects to renew, it shall be a
condition to renewal that (i) Tenant not be in default under any of the
terms hereof and (ii) Tenant give Landlord at least four (4) months written
notice of its desire to renew.
2.2.2 If Tenant elects to renew all terms, this
Lease shall continue to apply except Base Rent which shall be calculated in
the manner set forth in Section 2.2.3 hereof.
-2-
<PAGE>
2.2.3 The Base Rent for the Renewal Lease Term
shall be equal to the fair rental value (the "FRV") of the Facility. For
the purposes of this Lease, the FRV shall be determined as follows:
(a) By agreement between Landlord and Tenant;
or,
(b) If Landlord and Tenant have not or are
unable to agree on the FRV within thirty (30) days after the date on which
Tenant exercises such option for the Renewal Lease Term then the FRV shall
be determined by an independent and qualified MAI appraiser with at least
ten (10) years' commercial real estate appraisal experience in the vicinity
of the Facility (a "Qualified Appraiser"). Landlord and Tenant shall agree
on the appointment of a Qualified Appraiser within seven (7) days after the
expiration of the foregoing thirty (30) day period, and each party shall
bear one-half (1/2) of the costs and expenses of the Qualified Appraiser.
If Landlord and Tenant fail or are unable to agree on the appointment of a
Qualified Appraiser within such seven (7) day period, the FRV shall be
determined by three (3) Qualified Appraisers, one selected by Landlord and
one selected by Tenant (such Qualified Appraisers to be selected within
seven (7) days after the expiration of the immediately preceding seven (7)
day period specified in this sentence), and the third Qualified Appraiser
shall be selected by the appointed Qualified Appraisers. If either Landlord
or Tenant shall fail to appoint a Qualified Appraiser, the Qualified
Appraiser appointed by the other of them shall select the second Qualified
Appraiser within seven (7) days after such failure to appoint. If the two
Qualified Appraisers so determined shall be unable to agree on the
selection of a third Qualified Appraiser within seven (7) days after the
two Qualified Appraisers are determined, then either Qualified Appraiser,
on behalf of both, may request such appointment by the American Institute
of Real Estate Appraisers (or any successor association or body of
comparable standing if such institute is not then in existence). The FRV
shall be the average of the two closest valuations of the Premises as
determined by the Qualified Appraisers. The costs, fees, and expenses of
each Qualified Appraiser appointed separately by Landlord and Tenant,
respectively, shall be borne by the party who appointed the Qualified
Appraiser. The costs, fees, and expenses of the third Qualified Appraiser
shall be shared equally between Landlord and Tenant. The FRV determined by
such Qualified Appraisers in accordance with this Section, together with
copies of their appraisal reports, shall be submitted to Landlord and
Tenant within thirty (30) days after the panel of three Qualified
Appraisers is constituted. The FRV of the Premises determined in accordance
with the provisions of this Section shall be binding and conclusive on
Landlord and Tenant.
2.3. Lease Year.
----------
As used herein during the Initial Lease Term and the Renewal
Lease Term, the term "Lease Year" means (i) with respect to the first Lease
Year, the period from the Commencement Date through February 28, 1999, (ii)
thereafter, the twelve (12) month period commencing on the day after the
last day of the preceding Lease Year and ending on the first anniversary of
the last day of the preceding Lease Year.
ARTICLE 3
RENT
3.1. Base Rent.
---------
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<PAGE>
Tenant covenants and agrees to pay to Landlord throughout the
Initial Lease Term and, if applicable, the Renewal Lease Term, base rent
(the "Base Rent"), equal to $1.00 per Lease Year.
3.1.1. Base Rental. Base Rent for the
Initial Term has been paid to Landlord, and Landlord acknowledges
receipt of the same.
3.2. Triple Net Lease.
----------------
It is the intention of Landlord and Tenant that this Lease
Agreement be a "triple net lease," with Tenant paying during the Lease Term
the Base Rent described in Section 3.1 without notice or demand and free of
any recoupment, counterclaim, offset, abatement or other deduction
whatsoever. Not in limitation of the foregoing sentence but by way of
example, Tenant shall be obligated to pay, as additional rent, any and all
costs and expenses relating to the Facility, including but not limited to
taxes (in the manner and at the times set forth in Section 4.1.2),
maintenance, repair, replacement, utilities, capital expenditures and
operational expenses, but excepting however insurance as set forth in
Article 10. This Lease shall always be construed to effectuate the
foregoing declared intent of the parties.
3.3 Late Payments.
-------------
Any installment of additional rent or any other payment
required to be made by Tenant hereunder that is due to, or paid by,
Landlord and which is not paid when due shall bear simple interest of
eighteen percent (18%) per annum (the "Default Rate") from the date each
installment shall have fallen due.
3.4. Additional Rent.
---------------
Whenever under the terms of this Lease Agreement any sum of
money is required to be paid by Tenant to Landlord in addition to the Base
Rent reserved herein, such sum shall be deemed to be additional rent,
regardless of whether designated as such, and shall be collectible as rent.
3.5. Payment of Rental.
-----------------
All additional rent shall be paid without any set off or
deduction whatsoever. Any payment by Tenant or acceptance by Landlord of
additional rent of a lesser amount than shall be due from Tenant to
Landlord shall be treated as a payment on account. The acceptance by
Landlord of a check for a lesser amount with an endorsement or statement
thereon, or upon any letter accompanying such check, that such lesser
amount is payment in full, shall be given no effect, and Landlord may
accept such check without prejudice to any other rights or remedies which
Landlord may have against Tenant.
ARTICLE 4
TAXES AND ASSESSMENTS
4.1. Taxes.
-----
-4-
<PAGE>
4.1.1. As additional rent hereunder, Tenant
hereby agrees to pay all real and personal property taxes (including,
without limitation, rental taxes, if any), assessments, impositions and
other charges of every description and character levied on or assessed
against all or any portion of the Facility, improvements located on or
affixed to the Facility, and personal property located on or affixed to the
Facility, to the extent that such taxes, assessments, impositions, and
other charges relate to the Lease Term.
4.1.2. Payment of Taxes. Taxes shall be paid by
Tenant in arrears in equal monthly installments in such amounts as are
estimated and billed for each tax year by Landlord at the commencement of
the Term and at the beginning of each successive tax year during the Lease
Term, each such installment being due on the first day of each calendar
month (commencing May 1, 1998). At any time during a tax year, Landlord may
revise its estimate of Tenant's Taxes and adjust Tenant's equal monthly
installments payable thereafter during the Tax Year to reflect such revised
estimate. Within twenty (20) days after Landlord's receipt of tax bills for
each tax year, Landlord will certify to Tenant the amount of Taxes for the
tax year in question. The failure of Landlord to provide such certification
within the time prescribed above shall not relieve Tenant of its
obligations generally or for the specific Tax Year in which any such
failure occurs unless the Landlord fails promptly thereafter to provide
such certification.
4.2. Right to Seek Reduction.
-----------------------
Tenant, at its own cost and expense, shall have the right to
seek a reduction in the assessed valuation of the Facility.
4.3. Substitute Taxes.
----------------
If at any time during the Lease Term the laws concerning the
methods of real property taxation prevailing at the Commencement Date are
changed so that a tax or excise on rent or any other such tax, however
described, is levied or assessed against Landlord as a direct substitution
in whole or in part for any real property taxes, or in addition thereto,
Tenant shall pay as additional rent before delinquency (subject to timely
invoicing to Tenant for the same) the substitute or additional tax or
excise on rents; provided, however, that Tenant shall not be required to
pay any municipal, county, state or federal income taxes of Landlord.
ARTICLE 5
ARTICLE 5 IS INTENTIONALLY OMITTED
ARTICLE 6
USE OF FACILITY/ ENVIRONMENTAL COMPLIANCE
6.1. Permitted Use.
-------------
Tenant hereby agrees to use the Facility for the operation of
a manufacturing facility for clothing and related apparel products, and for
no other use without Landlord's
-5-
<PAGE>
prior written consent, which consent will not be unreasonably withheld.
6.2. Compliance with Environmental Laws.
----------------------------------
Without limiting the provisions of Article 14 hereof, Tenant
shall comply in all respects with all "Environmental Laws" (as hereinafter
defined) now in force or which may hereafter be enacted or promulgated
applicable to the Facility and the conduct of Tenant's business at the
Facility.
Landlord represents that it has complied in all respects with
all "Environmental Laws" applicable to the Facility for the period from
August 28, 1984 to the date hereof (the "Environmental Indemnification
Period").
Further, Tenant shall bear all Environmental Liabilities and
Costs (as hereinafter defined) to the extent that such Environmental
Liabilities and Costs arise from the operation of the Facility during the
Lease Term or any condition of the Land that arises from activities by
Tenant or its agents during the Lease Term; provided, however, that Tenant
shall have no obligation, expense, cost or liability under any provision of
this Lease Agreement as a result of, and Landlord shall indemnify and hold
Tenant and its affiliates harmless against, (i) Environmental Liabilities
and Costs arising from the operation of the Facility prior to the
Commencement Date, (ii) any Release that occurred prior to the Commencement
Date, or (iii) any noncompliance with any Environmental Laws prior to the
Commencement Date, except that Tenant shall be responsible to the extent of
any aggravation of or contribution to any such Release is caused by Tenant
noncompliance of any Existing Environmental Condition during the Lease
Term.
6.3. Definitions.
-----------
For purposes of this Article, the following definitions shall
apply:
"Environment" means navigable waters, waters of the contiguous
zone, ocean waters, natural resources, surface waters, ground water,
drinking water supply, land surface, subsurface strata, and ambient air,
both inside and outside of buildings and structures.
"Environmental Laws" means federal, state, local and foreign
laws, common law, regulations and codes, as well as orders, decrees,
judgments or injunctions issued, promulgated, approved or entered
thereunder relating to pollution, protection of the environmental or public
health and safety, including, but not limited to the Release or threatened
Release of Hazardous Substances into the Environment or otherwise relating
to the presence, manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Substances.
"Environmental Liabilities and Costs" means all liabilities,
losses, fines, penalties, charges, damages (including damages to persons,
property or the Environment), costs, or expenses (including legal,
engineering, and other consultant and expert witness fees and expenses)
arising under Environmental Laws, or related to Remedial Actions, or
otherwise arising out of or in respect of:
(a) the operation of the Facility or any real property,
assets, equipment
-6-
<PAGE>
or facilities related to it; or
(b) the environmental conditions on, under, above, or
about the Facility or any real property, assets, equipment or
facilities related to it; or
(c) expenditures necessary to cause alter, maintain, or
restore the Facility so as to be or remain in compliance with any
and all requirements of Environmental Laws including, without
limitation, all permits, licenses or other authorization issued
under or pursuant to such Environmental Laws.
"Existing Environmental Condition" means any environmental
condition on, under, above, or about the Facility or any real property,
assets, equipment or facilities related to it existing prior to the
Commencement Date.
"Governmental Authority" means any government or political
subdivision thereof, whether federal, state, local or foreign, or any
agency or instrumentality of any such government or political subdivision.
"Hazardous Substance" means any waste, pollutant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial
substance or waste, petroleum or petroleum-derived substance or waste, or
any constituent of any such substance or waste, including without
limitation any such substance regulated under or defined by any
Environmental Law.
"Losses" means all liabilities, losses, fines, penalties,
changes, damages, costs (including, without limitation, court costs) or
expenses (including, without limitation, reasonable attorneys fees).
"Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the Environmental or into or out of any property, including
the movement of Hazardous Substances through or in the air, soil, surface
water, ground water or property.
"Remedial Action" means all actions reasonably necessary,
whether voluntary or involuntary, to (i) clean up, remove, treat or in any
other way adjust Hazardous Substances in the Environment; (ii) prevent the
Release or further movement of Hazardous Substances so that they do not
migrate or endanger or threaten to endanger public health or welfare or the
Environment; or (iii) perform remedial studies, investigations, restoration
and post-remedial studies, investigations and monitoring at, on, under or
about the Facility.
6.4. Environmental Compliance.
------------------------
(a) Tenant agrees that promptly after the Commencement
Date, it will, at no expense to Landlord, apply for the transfer
into Tenant's name of all permits, licenses and approvals required
under the Environmental Laws for the operation and use of the
Facility, and if any of the same are not transferable, promptly
apply for new permits, licenses and approvals to replace any that
are not transferable. Tenant will diligently pursue such
applications and use its best efforts to cause the transfers or
issuances of new licenses to be approved. Tenant represents and
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<PAGE>
warrants that it will at no expense to Landlord, maintain
compliance with the terms and conditions of all such permits and
will obtain any other such permits necessary for the operation and
use of the Facility.
(b) Tenant agrees to notify Landlord, and Landlord agrees
to notify Tenant, promptly in writing, upon the party or any of
its representatives learning of any of the following with respect
to the Facility:
(i) notice or claim to the effect that
Landlord or Tenant is or may be liable
to any person as a result of the Release
or threatened Release of any Hazardous
Substance into the Environment;
(ii) notice that Landlord or Tenant is
subject to investigation by any
Governmental Authority evaluating
whether any Remedial Action is needed to
respond to the Release or threatened
Release of any Hazardous Substance into
the Environment;
(iii) notice of a condition which might
reasonably be expected to result in a
notice of violation of any Environmental
Law; or
(iv) notice of the commencement of any
judicial or administrative proceeding
alleging a violation of any
Environmental Law.
(c) Without limiting the generality of the foregoing,
Tenant shall identify and dispose of hazardous wastes, as defined
by any Environmental Laws, generated by Tenant during the Lease
Term in the manner required by any and all applicable federal,
state and local laws, rules and regulations. Upon the expiration
or earlier termination of the Lease Agreement, Tenant shall,
unless otherwise agreed by the parties, identify and dispose of
all containers of Hazardous Substances that have been placed on
the site by the Tenant during the Lease, in accordance with all
applicable federal, state, and local laws, rules and regulations.
6.5. Waste; Nuisance.
---------------
Tenant shall not use the Facility nor permit any use of the
Facility which in any manner will cause or constitute waste, nuisance or
unreasonable annoyance to owners or occupants of adjacent or neighboring
properties. Tenant shall not do, bring, keep or permit anything in or about
the Facility that will cause a cancellation of any insurance or any
increase in the cost of insurance covering the Facility unless, in the case
of any increase in the cost, Tenant agrees to pay the increased cost.
Tenant shall, at its expense, comply with any and all requirements
pertaining to the Facility of any insurance company necessary for the
maintenance of reasonable property and public liability insurance for the
Facility. Tenant shall, at its expense, keep the Facility, including
walkways and landscaping adjacent to the Facility, clean and free from
rubbish and dirt at all times, and shall arrange for the regular pick up
and cartage of trash and garbage at Tenant's expense.
6.6. Covenant of Continuous Use.
--------------------------
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<PAGE>
Except as provided in the following paragraph, Tenant shall
(subject to any right to terminate this Lease) continuously and diligently
use the Facility for the use specified in this Lease Agreement. If the
Facility is partially destroyed or condemned and this Lease Agreement
remains in full force and effect, Tenant shall continue operation of the
Facility to the extent reasonably practical from the standpoint of good
business judgment during any period of reconstruction or restoration.
Tenant may temporarily close the Facility, for a period not to
exceed an aggregate of thirty (30) days, in order to perform repairs,
alterations, improvements or renovations which are required by this Lease
Agreement or approved by Landlord, if closing the Facility, in the Tenant's
reasonable opinion, is the most cost-effective way to accomplish such
repairs, alterations, improvements or renovations and does not violate any
applicable laws.
ARTICLE 7
IMPROVEMENTS, ALTERATIONS AND ADDITIONS
7.1. Additions.
---------
Tenant shall not make any alterations, improvements and/or
additions (collectively "Additions") to the Facility without first
obtaining the prior written consent of Landlord, which consent may not be
unreasonably withheld. When making such determination, Landlord may
consider all relevant factors, including, but not limited to, the other
provisions of this Agreement.
7.2. Removal.
-------
If approved by Landlord in accordance with Section 7.1 herein,
any and all Additions shall become a part of the Facility, and except for
personal property and trade fixtures owned by Tenant (including equipment
owned by Tenant and affixed to the Premises), shall remain on and be
surrendered with the Facility on expiration or sooner termination of this
Lease Agreement.
7.3. Mechanics' and Materialmen's Liens.
----------------------------------
Tenant shall pay all costs and expenses for any construction
done on the Facility, and shall keep the Facility free and clear of all
mechanics' or materialmen's liens resulting from construction done by or
for the Tenant or with the permission of Tenant. Any mechanic's or
materialmen's lien filed against the Facility shall be discharged by
Tenant, by bond or otherwise, within ten (10) days after Tenant's receipt
of notice of the filing thereof, at the sole cost and expense of Tenant.
Tenant shall have the right to contest the correctness or validity of any
such lien if Tenant procures and posts a lien release bond in recordable
form issued by a corporation authorized to issue surety bonds in the State
of Maryland in an amount equal to one and one-half (1-1/2) times the amount
of the claim of lien. The bond shall meet all requirements of Maryland law
and shall provide for the payment of any sum that claimant may recover on
the claim together with costs of suit if it recovers in the action.
ARTICLE 8
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MAINTENANCE AND REPAIRS
8.1. Maintenance and Repairs.
-----------------------
Tenant, at its sole cost and expense, shall maintain the
Facility in good condition and shall deliver the same and surrender the
Facility to Landlord at the expiration or earlier termination of the Lease
Term in the same condition as received at the Commencement Date less the
effects of normal wear-and-tear. In addition, on or before _________ of
each year during the Lease Term, Tenant shall, at its sole cost, cause a
boiler inspection to be performed on the boiler included in the Facility by
an inspector mutually selected by Tenant and Landlord. Tenant shall deliver
to Landlord a copy of the inspection report prepared by such inspector
promptly upon Tenant's receipt thereof. Also, Tenant shall, at its sole
cost, have the boiler properly serviced and maintained on a regular basis
in accordance with accepted standards and practices in the boiler industry,
including, without limitation, appropriate feed water testing and
conditioning.
8.2. Condition of Facility.
---------------------
Tenant accepts the Facility from the Landlord on an "As
Is/Where Is" basis and each party acknowledges that Landlord has made,
makes and shall make no representations or warranties (except under Article
(6)) with respect to the Facility, express or implied. Without limiting the
generality of the foregoing, each party acknowledges and agrees that
Landlord has made, makes and shall make (i) no representation or warranty
of tenantability or habitability with respect to the Facility, (ii) no
representation or warranty of fitness with respect to any fixtures
contained therein, and (iii) no representation or warranty with respect to
the physical condition of the Facility or the operating order or condition
of any fixtures; and Tenant agrees that, except for the express
representation and warranty set forth in Section 14.3 hereof, Tenant is not
relying upon any representations or warranties of Landlord with respect to
the tenantability, habitability, fitness, physical condition, or operating
order of the Facility or any of the fixtures contained therein.
8.3. Tenant's Responsibility.
-----------------------
Tenant agrees that during the Lease Term, it will at its own
cost and expense keep (i) the Facility and fixtures in a clean and sightly
condition consistent with the Facility's current condition less the effects
of normal wear-and-tear and in compliance with all applicable legal
requirements and (ii) all components and systems thereof (including, but
not limited to, boilers, air conditioning, heating and ventilation systems,
and all other electrical and mechanical systems), and the grounds and paved
and impervious areas surrounding the Facility, in good order and repair and
in good operating condition less the effects of normal wear-and tear.
Tenant, except as may be otherwise expressly provided in this Lease
Agreement, shall promptly, at its sole cost and expense, make all necessary
repairs, restorations, renewals and replacements to the Facility whether
interior or exterior, structural or nonstructural, ordinary or
extraordinary, foreseen or unforeseen. Such repairs, restorations, renewals
and replacements shall, to the extent practicable, be comparable in quality
to the original work or property replaced.
8.4. Landlord's Responsibility.
-------------------------
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Landlord shall have no responsibility or obligation whatsoever
to maintain, repair, replace, restore, or keep safe the Facility or
fixtures and Landlord shall not be required to make any repairs,
replacements, alterations, or renewals of any nature or description to the
Facility, whether interior or exterior, ordinary or extraordinary,
structural or nonstructural, foreseen or unforeseen, or to make any
expenditure whatsoever in connection with this Lease Agreement or to impact
or maintain the Facility in any way. Landlord and its agents shall have the
right, but not the obligation, without additional notice to Tenant and at
Tenant's expense (which expense shall constitute additional rent and shall
be payable upon written demand therefor), to enter onto and make any
repairs to the Facility that Landlord reasonably believes are necessary to
maintain the Facility if Tenant fails to make such repairs within twenty
(20) days after Landlord delivers written notice to Tenant requesting
Tenant to complete the necessary repairs. No such twenty (20) day notice
period shall be required prior to Landlord's entry and repair in the event
that the failure to immediately make such repair could cause a substantial
amount of damage to the Facility.
ARTICLE 9
UTILITIES AND SERVICES
Tenant shall, at its sole cost and expense, make all
arrangements for and pay for all charges for utilities and services
furnished to it or used by it, including, without limitation, gas,
electricity, water, sanitary sewer, telephone service, trash collection and
for all connection charges for such services. Landlord shall have no
obligation whatsoever to provide or pay for any utilities now available or
which may in the future become available at the Facility pursuant to
appropriate utilities easements, including but not limited to: gas,
electricity, water, telephone, storm and sanitary sewer, provided that
Landlord shall reasonably cooperate with Tenant (but without any
out-of-pocket expense to Landlord) in the securing thereof.
ARTICLE 10
INSURANCE
10.1. Facility. During the Lease Term, Landlord, at its
sole cost and expense, shall keep the Facility and fixtures insured against
loss or damage by, flood, fire and such other risks as are now or hereafter
are included in an extended coverage endorsement in common use for
commercial property in the geographic location of the Facility, including
vandalism and malicious mischief in an amount equal to the full replacement
value of the Facility.
10.2. Public Liability and Automobile Insurance.
-----------------------------------------
During the Lease Term, Tenant, at its sole cost and expense,
shall keep or cause to be kept in force, for the mutual benefit of Landlord
and Tenant, the following types of insurance coverage:
(a) comprehensive general bodily injury liability
insurance and property damage liability insurance, including
contractual and products and completed
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operations, with a combined single limit of liability of Ten
Million Dollars ($10,000,000.00) for personal injuries or deaths
of persons or for property damage occurring in or about the
Facility.
(b) comprehensive automobile property damage liability
insurance, providing protection of at least $10,000,000.00 per
accident.
10.3. Workers' Compensation, Unusual Hazards, and Other
Insurance.
-------------------------------------------------
During the Lease Term, Tenant, at its sole cost and expense,
shall keep in force in form and coverage reasonably satisfactory to
Landlord:
(a) Workmen's compensation (or equivalent)
insurance, including employer's liability insurance, in an amount
necessary to meet all legally required limits.
(b) Boiler and machinery insurance.
(c) If Tenant commits, permits, or causes the
conduct of any activity or the bringing or operation of any
equipment (other than the equipment currently located at the
Facility and similar equipment) on or about the Facility creating,
in Landlord's reasonable judgment, unusual hazards, Tenant shall
procure and maintain in force during such activity or operation
insurance sufficient to cover the risks represented thereby.
Landlord's demand for unusual hazard insurance hereunder shall not
constitute a waiver of any right Landlord may have to demand the
removal, cessation, or abatement of such activity or operation.
(d) Tenant may procure and maintain any insurance
not required by this Lease Agreement, but all such insurance shall
be subject to all other provisions of this Lease Agreement
pertaining to insurance and shall be for the mutual benefit of
Landlord and Tenant.
10.4. General Insurance Matters.
-------------------------
All insurance required under Sections 10.4 and 10.5 of this
Lease Agreement shall be carried only with responsible insurance companies
having a rating by A.M. Best Company of A- or better, and shall:
(a) Name Landlord as an additional insured or
additional loss payee, as applicable, and contain
cross-liability endorsements;
(b) Contain a waiver of subrogation by the
insurance company in favor of the landlord;
(c) Be primary as to Landlord and noncontributing
with any insurance that may be carried by Landlord;
(d) Not provide for a deductible of more than Ten
Thousand Dollars ($10,000.00);
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(e) Be provided by insurance companies duly
licensed in the State of Maryland and reasonably acceptable to
Landlord; and
(f) Provide that they cannot be canceled or
materially changed except after thirty (30) days' written notice
by the insurer to Landlord.
10.5. Proof of Compliance; Failure to Maintain Insurance.
--------------------------------------------------
Tenant shall deliver to Landlord, in the manner required for
notices herein, copies of policies and certificates of all insurance
policies required by this Lease Agreement, together with evidence
satisfactory to Landlord of payment required for procurement and
maintenance of the policy, within the following time limits:
(a) For insurance required at the commencement of
this Lease Agreement, upon the Commencement Date.
(b) For insurance becoming required at a later
date, at least ten (10) days before the requirement takes effect.
(c) For any renewal or replacement of a policy
already in existence, Tenant will provide evidence at least ten
(10) days before expiration or other termination of the existing
policy.
If Tenant fails or refused to procure or to maintain insurance
as required by this Lease Agreement or fails or refuses to furnish Landlord
with required proof that the insurance has been procured and is in force
and paid for, Landlord shall have the right, but not the obligation, at
Landlord's election, to procure and maintain such insurance. The premiums
paid by Landlord shall be treated as additional rent due from Tenant with
interest at the Default Rate, to be paid on the first day of the month
following the date on which the premiums were paid. Landlord shall give
Tenant prompt notice of the payment of such premiums, stating the amounts
paid and the name of the insurer or insurers, and interest at the Default
Rate shall run from the date of payment by Landlord.
ARTICLE 11
DESTRUCTION
11.1. Destruction of Facility.
-----------------------
If during the Lease Term the Facility is totally or partially
destroyed from any cause whatsoever, whether or not such cause is covered
by insurance maintained by Landlord, rendering the Facility totally or
partially inaccessible or unusable, Landlord, at its sole option, may
either (i) cancel and terminate this Lease or (ii) with due diligence and
dispatch, restore the Facility to substantially the same condition as it
was in immediately before destruction. There shall be no abatement of Base
Rent or any other payment to be made by Tenant hereunder, except that
Landlord will credit against any additional rent (i) any business
interruption insurance proceeds actually received by Landlord and (ii) any
credit actually received by Landlord for items prepaid by Tenant but which
were reduced as a result of such destruction. Upon cancellation of this
Lease by Landlord, Landlord shall be then entitled to all insurance
proceeds payable by reason of the destruction.
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ARTICLE 12
CONDEMNATION
12.1. Certain Definitions.
-------------------
The following terms shall have the following meanings: (i)
"Taking" shall mean the transfer of the use, occupancy or title of the
Facility or any portion thereof to an entity exercising the power of
eminent domain in any actual or threatened action or proceeding pursuant to
any law, general or special, and shall include such transfer made in
settlement or in lieu of any such threatened action or proceeding; (ii) the
"Date of Taking" shall mean the earlier of the date upon which the use,
occupancy or title of the Facility or any portion thereof is vested in, or
possession thereof is taken by, such entity; and (iii) "Award" shall mean
the amounts recovered as compensation or damages on account of a Taking,
including all amounts paid pursuant to any agreement with such entity which
has been made in settlement or under threat or in lieu of any such action
or proceeding, less the reasonable costs and expenses incurred in
collecting such amounts (including any such amounts held or received by or
on behalf of Landlord by the holder of any mortgage and any attorneys'
fees).
12.2. Taking.
------
If there shall occur any Taking of all or any part of the
Facility, then this Lease Agreement shall terminate effective as of the
Date of Taking provided, however, that such termination shall be without
prejudice to the rights of Landlord to recover and retain the Award in its
own name.
12.3 Claims of Landlord and Tenant.
-----------------------------
Landlord shall be entitled to receive the entire Award in any
proceeding with respect to such Taking without deduction therefrom for any
estate vested in Tenant by this Lease Agreement, and Tenant shall receive
no part of such Award, except as herein expressly provided. Tenant shall
have the right to make a separate claim with the condemning authority for
(i) any moving or relocation expenses incurred by Tenant as a result of
such condemnation; and (ii) any costs incurred and paid by Tenant in
connection with any alteration or improvement made by Tenant to the
Facility, provided, however, that such separate claim shall not reduce or
adversely affect the amount of Landlord's Award.
ARTICLE 13
DEFAULT AND REMEDIES
13.1. Default by Tenant.
-----------------
The occurrence of any one or more of the following events
shall constitute a default and breach of this Lease Agreement by Tenant:
(a) Failure by Tenant to make any payment of additional rent,
or any other payment required to be made by Tenant hereunder as and when
due.
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(b) The occurrence of a Pietrafesa Event of Default (as
defined in the Supply Agreement).
(c) Any default under Sublease of even date herewith between
Jos. A Bank Clothiers, Inc., Sublandlord and Tenant, as Subtenant.
13.2 Notices of Default to Tenant.
----------------------------
Landlord shall give Tenant written notice of default and
Tenant shall have the right to cure defaults hereunder and be relieved from
the effects thereof if, in the case of a monetary default, Tenant remedies
such default by making the required payment(s) within five (5) days after
the giving of notice by Landlord or, in the case of nonmonetary defaults,
Tenant remedies such default within thirty (30) days after the giving of
notice by Landlord; provided, however, if such nonmonetary default cannot
reasonably be cured within such thirty (30) days period, Tenant shall have
up to an additional thirty (30) days to remedy such default so long as
Tenant is diligently pursuing such remedy. No further notices shall be
required to pursue any remedy of Landlord, including the commencement of an
unlawful detainer proceeding, and to the extent the law may be construed to
require additional notices, such notices are specifically waived by Tenant.
13.3 Remedies of Landlord.
--------------------
(a) Cumulative Remedies. If, and only if, any
default by Tenant is not cured within the cure period after notice provided
in the foregoing Section 13.2, Landlord shall have the following remedies
set forth in this Section 13.3.
(b) Performance of Tenant's Obligations.
Landlord, with or without terminating this Lease Agreement, may
immediately or at any time thereafter reenter the Facility and correct or
repair any condition which shall constitute a failure on Tenant's part to
keep, observe, perform, satisfy, or abide by any term, condition, covenant,
agreement, or obligation of this Lease Agreement or of any notice given
Tenant by Landlord pursuant to the terms of this Lease Agreement, and
Tenant shall fully reimburse and compensate Landlord on demand (which sums
shall constitute additional rent).
(c) Vacation of Facility. Landlord, with or
without terminating this Lease Agreement, may immediately or at any time
thereafter demand in writing that Tenant vacate the Facility and thereupon
Tenant shall vacate the Facility and remove therefrom all property thereon
belonging to or placed on the Facility by, at the direction of, or with
consent of Tenant within thirty (30) days of receipt by Tenant of such
notice from Landlord, whereupon Landlord shall have the right to reenter
and take possession of the Facility. Any such demand, reentry and taking
possession of the Facility by Landlord shall not of itself constitute an
acceptance by Landlord of a surrender of this Lease Agreement or of the
Facility by Tenant and shall not of itself constitute a termination of this
Lease Agreement by Landlord.
(d) Reentry. Landlord, with or without
terminating this Lease Agreement, may immediately or at any time
thereafter reenter the Facility and remove therefrom Tenant and all
property belonging to or placed on the Facility by, at the direction
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of, or with consent of Tenant. Any such reentry and removal by Landlord
shall not of itself constitute an acceptance by Landlord of a surrender of
this Lease Agreement or of the Facility by Tenant and shall not of itself
constitute a termination of this Lease Agreement by Landlord.
(e) Reletting. Landlord, with or without
terminating this Lease Agreement, may immediately or at any time
thereafter relet the Facility or any part thereof for such time or times,
at such rental or rentals and upon such other terms and conditions as
Landlord may deem advisable in its sole and absolute subjective discretion,
and Landlord may make any alterations or repairs to the Facility which it
may deem necessary or proper to facilitate such reletting; and Tenant shall
pay as additional rent all costs of such reletting including but not
limited to the cost of any such alterations and repairs to the Facility,
attorneys' fees, advertising costs, and brokerage commissions; and if this
Lease Agreement shall not have been terminated, Tenant shall continue to
pay all Base Rent, and all other forms of rent and all other charges due
under this Lease Agreement up to and including the date of beginning of
payment of such rent by any subsequent tenant of part or all of the
Facility, and thereafter Tenant shall pay monthly during the remainder of
the Lease Term the difference, if any, between the rent and other charges
collected from any such subsequent tenant or tenants and the Base Rent, and
all other liabilities of Tenant hereunder arising and other charges
reserved in this Lease Agreement, but Tenant shall not be entitled to
receive any excess of any such rents collected over the rents reserved
herein.
(f) Termination. Landlord may immediately
or at any time thereafter terminate this Lease Agreement, and this
Lease Agreement shall be deemed to have been terminated upon receipt by
Tenant of written notice of such termination; upon such termination
Landlord shall recover from Tenant all damages Landlord may suffer by
reason of such termination, all arrearages in and all other forms of rent,
costs, charges, and reimbursements, the cost (including court costs and
attorneys' fees) of recovering possession of the Facility, the cost of any
alteration of or repair to the Facility which is necessary or proper to
prepare the same for re-letting. Such election shall be made by Landlord by
serving written notice upon Tenant of its choice of one of the two said
alternatives within thirty (30) days of the notice of termination.
(g) Waiver and Indemnity. If Landlord
reenters the Facility or terminates this Lease Agreement pursuant to any
of the provisions of this Lease Agreement, Tenant hereby waives all claims
for damages which may be caused by such reentry or termination by Landlord.
Tenant shall and does hereby indemnify and hold Landlord harmless from any
loss, cost (including court costs and attorneys' fees), or damage suffered
by Landlord by reason of such reentry or termination. No such reentry or
termination shall be considered or construed to be a forcible entry.
13.4 Non-Waiver; Forbearance.
-----------------------
Landlord's pursuit of any one or more of its stated remedies
shall not preclude pursuit of any other remedy or remedies provided for in
this Lease Agreement or any other remedy or remedies provided for or
allowed by law or in equity, separately or concurrently, or in any
combination. Pursuit of any one or more of the remedies provided in this
Lease Agreement shall not constitute an election of remedies excluding the
election of another remedy or other remedies, or a forfeiture or waiver of
any damages or other sums accruing to Landlord by reason of Tenant's
default. Landlord's forbearance in
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pursuing or exercising one or more of its remedies shall not be deemed or
construed to constitute a waiver of any future default or remedy. No waiver
by Landlord of any right or remedy on one occasion shall be construed as a
waiver of that right or remedy on any subsequent occasion or as a waiver of
any right or remedy then or thereafter existing. No failure of Landlord to
pursue or exercise any of its powers rights or remedies or to insist upon
compliance by Tenant with any agreement, term, covenant, condition,
requirement, provision or restriction of this Lease Agreement, and no
custom or practice at variance with the terms of this Lease Agreement,
shall constitute a waiver by Landlord of the right to demand compliance
with the terms and conditions of this Lease Agreement.
13.5 Default by Landlord.
-------------------
(a) Landlord covenants and agrees that it
shall constitute a default by Landlord hereunder if any "Bank Event of
Default" (as defined in the Supply Agreement) shall have occurred and be
continuing.
(b) Upon and during the continuation of a
default described in clause (a) above, Tenant shall be entitled to
terminate this Lease and all its obligations hereunder on notice to
Landlord, which notice and termination shall be effective as of the date
sent by Tenant (unless provided otherwise in the relevant notice.)
ARTICLE 14
COMPLIANCE WITH LAW
14.1. Tenant's Compliance with Laws.
-----------------------------
Tenant, at its expense, shall comply with all applicable laws,
rules, orders, ordinances, conditional use permits, zoning variances,
regulations and other requirements, present or future, including all
Environmental Laws defined in Section 6.3 herein (collectively, "Legal
Requirements"), affecting the Facility that are promulgated by any
governmental authority or agency having jurisdiction, including, without
limitation, all Legal Requirements affecting the design, construction, use,
condition, occupancy, and/or operation of the Facility, or relating to the
performance by Tenant of any duties or obligations to be performed by it
hereunder; provided, however, that Tenant shall have no obligation,
expense, cost or liability under any provision of this Lease Agreement as a
result of (i) Environmental Liabilities and Costs arising from the
operation of the Facility prior to the Commencement Date, (ii) any Release
that occurred prior to the Commencement Date, or (iii) any noncompliance
with any Environmental Laws prior to the Commencement Date, except that
Tenant shall be responsible for any aggravation of or contribution to any
such Release, noncompliance or any Existing Environmental Condition during
the Lease Term.
14.2. Contest of Legal Requirements.
-----------------------------
Tenant, at its expense and by appropriate proceedings
diligently prosecuted, may contest the validity or applicability of any
Legal Requirement, and may postpone its compliance therewith until such
contest shall be decided, provided such postponement does not subject the
Landlord or the Facility to penalty or material loss, damage or reduction
in value.
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ARTICLE 15
ASSIGNMENT AND SUBLETTING
15.1. Prohibition Against Lease Agreement Transfers.
---------------------------------------------
Tenant may not sell, assign, encumber or otherwise transfer
this lease Agreement, or any portion of Tenant's interest in this Lease
Agreement, or sublease or grant any license or concession for all or any
part of the Facility, or allow any other person or entity to occupy all or
any part of the Facility, whether voluntarily or involuntarily (hereinafter
collectively referred to as "Transfer") without Landlord's prior written
consent, which consent may be granted or withheld in the sole and absolute
subjective discretion of Landlord. Any Transfer shall be subject to and
governed by the terms of this Lease Agreement, and Tenant shall thereafter
remain primarily liable for the full performance of all terms and
conditions of this Lease Agreement, including the payment of all additional
rent and all other forms of rent and other payments required hereunder. Any
Transfer without Landlord's prior consent shall be voidable at the Option
of Landlord and shall be a material breach of this Lease Agreement. The
approval of one Transfer shall not be deemed approval of or consent to any
subsequent Transfer. As a condition to Landlord's consent to any Transfer,
Landlord may require a fee to reimburse Landlord for reasonable attorneys'
fees and costs incurred in reviewing the proposed Transfer, and that the
transferee assume Tenant's obligations hereunder in writing in a form
approved by Landlord. Such fee shall constitute additional rent hereunder.
Notwithstanding the foregoing, Landlord will not unreasonably
withhold its consent to a subletting of a portion of the Facility provided
that:
(a) the space to be sublet shall be subject to Landlord
approval as being unneeded space for the purpose set forth in the Supply
Agreement.
(b) the subletting shall in no way affect the Reserved Space
provided in Section 1.3.
(c) all proceeds of any nature whatsoever to the extent
exceeding applicable Base Rent and additional rent from said subletting
shall be promptly paid to Landlord.
15.2. Transfer of Limited Liability Company Member
Interests.
--------------------------------------------
If at any time after execution of this Lease, any part or all
of the member interests of Tenant shall be transferred by sale, assignment,
bequest, inheritance, operation of law, or other disposition (including
such a transfer to or by a receiver or trustee in Federal or state
bankruptcy, insolvency, or other proceedings) so as to result in a change
in the present control of the limited liability company by the person or
persons now owning a majority of such interests (or any affiliate of such
persons), Tenant shall give Landlord notice of such event within five (5)
days from the date of such transfer. In such event and regardless of
whether Tenant has given such notice, Landlord may elect to terminate this
Lease at any time thereafter by giving Tenant notice of such election, in
which event this Lease and the rights and obligations of the parties
hereunder shall cease as of a date set
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forth in such notice which date shall not be less than ten (10) days after
the date of such notice. In the event of any such termination, all
additional rent due Landlord resulting from Tenant's failure to perform any
of its obligations hereunder) shall be adjusted as of the date of such
termination.
15.3. Landlord's Right to Assign Agreement and Mortgage the
Facility.
-----------------------------------------------------
Landlord shall have the right to assign its rights and
obligations under this Lease Agreement and, in such event, Landlord shall
provide written notice thereof to Tenant. Landlord shall also have the
right to mortgage or otherwise encumber the Facility at any time during the
Lease Term and Landlord shall provide Tenant written notice thereof.
ARTICLE 16
ENTRY BY LANDLORD DURING THE LEASE TERM
Landlord and its authorized representatives shall have the
right to enter the Facility either (i) at all times for purposes of
entering the Reserved Space as set forth in Section 1.3 or (ii) on prior
notice during normal business hours, for any reason or purpose in
accordance with the Primary Supply Agreement. Landlord may post "for sale,"
"for rent" or "for lease" signs during the last six (6) months of the Lease
Term, or at any time after Tenant has failed to cure a default under the
terms of this Lease Agreement within the cure period, if any, specified in
Section 13.2 hereof and, in addition show the Facility to prospective
brokers, agents, buyers, tenants, lenders or persons interested in the
Facility at any time during the last six (6) months of the Lease Term, or
at any time after Tenant has failed to cure a default under the terms of
this Lease Agreement within the cure period specified in Section 13.2
hereof. Tenant shall not be entitled to an abatement or reduction in Base
Rent, or any other form of rent if Landlord exercises any rights reserved
in this Article. Nothing in this Article shall be construed to require
Landlord to make any repairs to the Facility whatsoever, it being
acknowledged by the parties that such responsibility is the sole
responsibility of Tenant hereunder.
ARTICLE 17
SUBORDINATION AND ATTORNMENT
17.1. Subordination
-------------
Tenant shall from time to time, upon request from Landlord,
execute and deliver all documents that may be required by a lender to
effectuate a subordination of this Lease Agreement to any encumbrance
recorded before or after the date of this Lease Agreement which constitutes
a lien against the Facility.
17.2. Attornment
----------
It is acknowledged and agreed that Landlord has the right to
transfer Landlord's interest in the Facility, in whole or in part, to
encumber Landlord's fee title, and to assign any or all rent due hereunder.
Tenant shall attorn to any purchaser at any foreclosure sale, or to any
grantee or transferee designated in any deed given in lieu of foreclosure,
and any grantee in an outright sale or exchange of the Facility or any part
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thereof from Landlord. In the event of such attornment, this Lease
Agreement shall remain in full force and effect so long as Tenant is not in
default hereunder.
17.3 In the event that Tenant loses possession of the Facility
as a result of foreclosure of a mortgage encumbering the Facility, this
shall constitute a "Bank Event of Default" under the Supply Agreement.
17.4. Further Documents.
-----------------
Tenant hereby agrees to execute any documents reasonably
required by a lender or grantee from Landlord hereunder to accomplish the
purposes of this Article. If Tenant fails to execute such documents within
ten (l0) days of a request therefor, Tenant hereby grants to Landlord a
power of attorney, coupled with an interest, to execute and deliver such
documents on behalf of Tenant; provided, however, Landlord shall not be
authorized to so execute such documents in the event that during such
ten-day period Tenant reasonably objects on the basis that such documents
are unreasonable in light of the purposes of this Article.
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ARTICLE 18
NOTICES
-------
Any notice, demand or request, consent, approval or other
communication that either Landlord or Tenant desires or is required to give
hereunder shall be in writing and shall be deemed to have been duly given
and received if delivered by hand or mailed by registered or certified mail
(return receipt requested), postage prepaid, or if given by facsimile or
telecopy (followed by a mailed copy), transmitted to the parties at the
following addresses:
If to Landlord: The Joseph A. Bank Mfg. Co., Inc.
500 Hanover Road
Hampstead, Maryland 21074
Attn: Chief Financial Officer
Copy to: Newton B. Fowler III, Esquire
Venable, Baetjer and Howard, LLP
1800 Mercantile Bank & Trust Building
2 Hopkins Plaza
Baltimore, Maryland 21201
If to Tenant: SourceOne, LLC
4241 Brookhill Road
Baltimore, MD 21215
Attention: President
Copy to: L. Kevin Sheridan, Esquire
Roberts, Sheridan & Kotel
Towers 49
12 E. 49th Street
New York, NY 10017
or at such other address as may be substituted by notice given as herein
provided. Every notice, demand, request, consent, approval or other
communication hereunder shall be deemed to have been duly given on the date
on which personally delivered, with receipt acknowledged, on the date of
telecopier transmission, on the date of delivery by overnight courier or
three (3) business days after the same shall have been deposited with the
United States mail. For purposes of this Section, a "business day" means
any day other than Saturday, Sunday or other day on which the commercial
banks of the State of Maryland are authorized to close.
ARTICLE 19
REPRESENTATIONS AND COVENANTS OF THE PARTIES
--------------------------------------------
19.1. Landlord's Representations and Covenants.
----------------------------------------
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Landlord hereby makes the following representations:
(a) Landlord is a corporation, organized,
validly existing and in good standing under the laws of the State of
New Jersey and is authorized to transact business as a foreign corporation
under the laws of the State of Maryland.
(b) Landlord is the record owner of the
Facility, and has the corporate power and authority to execute and deliver
this Lease Agreement and the other agreements to be delivered pursuant
thereto (collectively, the "Transaction Documents") and to perform its
obligations hereunder and thereunder.
(c) The execution and delivery by Landlord of
the Transaction Documents and the performance of its obligations
thereunder have been duly authorized by all action (corporate or otherwise)
that is necessary to authorize Landlord to enter into the Transaction
Documents or to perform its obligations thereunder. Each of the Transaction
Documents is the legal, valid and binding obligation of Landlord,
enforceable against Landlord in accordance with its terms.
(d) None of the Transaction Documents
conflicts with, violates or will cause a default under any existing
agreements to which Landlord is a party and all consents and approvals
necessary for Landlord to enter into each of the Transaction Documents have
been obtained.
19.2. Representations and Covenants of Tenant.
---------------------------------------
Tenant hereby makes the following representations:
(a) Tenant is a limited liability Company
organized, validly existing and in good standing under the laws of the
State of New York and is authorized to transact business as a foreign
limited liability Company under the laws of the State of Maryland.
(b) Tenant has the limited liability company
power and authority to execute and deliver each of the Transaction
Documents and to perform its obligations thereunder.
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(c) The execution and delivery by Tenant of the
Transaction Documents and the performance of its obligations thereunder
have been duly authorized by all action that is necessary to authorize
Tenant to enter into the Transaction Documents or to perform its
obligations thereunder. Each of the Transaction Documents is the legal,
valid and binding obligation of Tenant, enforceable against Tenant in
accordance with its terms.
(d) None of the Transaction Documents conflicts
with, violates or will cause a default under any existing agreements to
which Tenant is a party, and all consents and approvals necessary for
Tenant to enter into each of the Transaction Documents have been obtained.
ARTICLE 20
SUCCESSORS
Subject to the provisions of this Lease Agreement regarding
Transfers, each and all of the covenants and conditions of this Lease
Agreement shall be binding upon and shall inure to the benefit of the
heirs, successors, executors, administrators, assigns and personal
representatives of the respective parties.
ARTICLE 21
EXPIRATION, TERMINATION AND HOLDER OVER
21.1. Surrender of the Facility.
-------------------------
At the expiration or earlier termination of the Lease Term,
Tenant shall surrender to Landlord the possession of the Facility,
Fixtures, improvements, alterations and/or additions to or of the Facility
(excepting only movable fixtures and trade fixtures, including all
manufacturing equipment installed by Tenant), which shall, upon the
expiration or earlier termination of the Lease Term, become a part of the
Facility and the property of the Landlord, subject to Landlord's right to
require removal in accordance with Section 7.2 hereof. Tenant shall leave
the surrendered Facility and any other property in good and broom-clean
condition and, except as provided to the contrary in provisions of this
Lease Agreement on maintenance and repair, in the same condition as
delivered to Tenant or as improved during the Lease Term, normal wear and
tear excepted. All property that Tenant is not required to surrender but
that Tenant does not remove from the Facility on or before the date of
termination of this Lease Agreement shall, at Landlord's election,
automatically become Landlord's property at termination without the
necessity of any further act by Landlord or Tenant.
21.2. Holding Over.
------------
If Tenant fails to surrender the Facility at the expiration or
sooner termination of this Lease Agreement, Tenant shall defend and
indemnify Landlord from all liability and expense including, without
limitation, attorneys' fees resulting from Tenant's failure to surrender.
This Lease Agreement shall terminate without further notice at the
expiration of the Lease Term. Any holding over by Tenant after expiration
with the consent of Landlord shall not constitute a renewal or extension or
give Tenant any right in or to the Facility, but will be deemed to be a
tenancy on a month-to-month basis, subject to the
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covenants and conditions of this Lease Agreement, including without
limitation, the obligation to pay the rent reserved to Landlord, except
that Base Rent shall be increased to an amount equal to two (2) times the
then current Base Rent.
ARTICLE 22
NO RECOURSE TO AFFILIATES
Landlord and Tenant each agree that its obligations hereunder
are primary in nature and that neither party hereto shall have any recourse
to any officer, director, partners, member or affiliate (including in the
case of SourceOne, Pietrafesa), and that no such person or entity shall
have any liability, in respect of the payment and performance obligations
of Landlord and Tenant hereunder.
ARTICLE 23
MISCELLANEOUS PROVISIONS
23.1. Counterparts.
------------
This Lease Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which shall
constitute one and the same instrument.
23.2. Time of the Essence.
-------------------
In the performance of all of the covenants and conditions of
this Lease Agreement, time shall be of the essence.
23.3. Brokers.
-------
Tenant and Landlord each warrants that it has had no dealings
with any real estate broker or agent in connection with the negotiation of
this Lease Agreement and it knows of no real estate commissions and/or fee
in connection with the making and entering into of this Lease Agreement.
Further, the parties each hereby indemnify and hold harmless the other
party from the payment of any such claims for commissions or fees arising
from the indemnifying party's contacts with a claiming broker or agent.
23.4. Estoppel Certificates.
---------------------
Tenant shall, at any time and from time to time upon not less
than ten (10) business days' prior written notice from Landlord, execute a
statement in writing which shall set forth the following: (a) an
unequivocal certification that this Lease Agreement is unmodified and in
full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease Agreement, as so modified, is
in full force and effect), and the amount of and date to which the rental
or other charges have been paid in advance, if any; and (b) an
acknowledgment that there are not any defenses, offsets or to Tenant's
knowledge and belief, outstanding uncured defaults on the part of Landlord
hereunder or specifying such defenses, offsets or defaults if any. Failure
to deliver the
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certificate within ten (l0) business days shall be conclusive upon Tenant
for the benefit of Landlord and third parties relying on the certificate
that this Lease Agreement is in full force and effect, has not been
modified, and there is no default on the part of Landlord, except as may be
represented by Landlord. Tenant hereby agrees that any statement delivered
pursuant to this paragraph may be relied upon by the person to whom it is
addressed at Landlord's request. Landlord agrees to deliver to Tenant upon
request, a statement similar to the foregoing, except with the parties
reversed, upon the same terms and conditions as required of Tenant herein.
23.5. Applicable Law.
--------------
This Lease Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland (without regard to its
conflicts of law doctrines).
23.6. Prior Agreements and Modifications.
----------------------------------
No provision of this Lease Agreement may be amended or added
to except by a subsequent contract in writing signed by the parties hereto
or their respective successors in interest. Further, the Transaction
Documents take the place of all other oral and written agreements between
Landlord and Tenant made prior to the date hereof and contain the entire
agreement of Landlord and Tenant.
23.7. Captions and Headings.
---------------------
The captions and headings used throughout this Lease Agreement
have been provided for the convenience of the parties and for reference
only. Such are not to be deemed a part of this Lease Agreement nor to be
considered in the construction or interpretation of any part hereof.
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23.8. Provisions are Covenants and Conditions.
---------------------------------------
All provisions, whether covenants or conditions on the part of
Tenant, shall be deemed as both covenants and conditions hereunder.
23.9. Severability.
------------
The unenforceability, invalidity or illegality of any
provision of this Lease Agreement shall not render any other provision
unenforceable, invalid or illegal.
23.10. Exhibits and Schedules Incorporated.
-----------------------------------
All Exhibits to which reference is made are deemed
incorporated in this Lease Agreement.
23.11. Relationship of Parties.
-----------------------
The relationship between the parties shall at all times be
deemed to be that of Landlord and Tenant. The parties do not intend, nor
shall this Lease Agreement be deemed to create, a partnership or joint
venture.
23.12. Modifications.
-------------
The parties agree to modify this Lease Agreement in order to
accommodate any reasonable requirements of Landlord's lenders so long as
such modifications do not affect the rent or other financial
responsibilities of the parties, do not alter significantly the
non-financial responsibilities of the parties, or otherwise have a material
and adverse economic effect on the parties hereunder.
23.13. Covenant of Quiet Enjoyment.
---------------------------
So long as Tenant is not in default hereunder, and subject to
all of the other provisions of this Lease Agreement, Tenant shall be
entitled to quiet enjoyment of the Facility during the Lease Term without
molestation or hindrance by Landlord or any party claiming by, through, or
under Landlord.
23.14. Recordation. A short form of this Lease, in the form
prescribed by statute, suitable for recordation, shall be executed by the
parties hereto upon the request of either Landlord or Tenant. Recordation
shall not be required. If either party desires to record the short form
lease, all costs of recordation shall be at the expense of that party.
23.15. Landlord Exculpation. The term "Landlord" as used in
this Lease, shall be limited to mean and include only the then lawful owner
(at the time in question) of the Facility; in the event of any transfer or
transfers of said estate, the Landlord, herein named (and in case of any
subsequent transfers or conveyances, the then grantor) shall be
automatically freed and relieved, from and after the date of such transfer
and conveyance, of all liability with respect to the performance of any
covenants and agreements on the part of Landlord contained in this Lease
thereafter to be performed. It is understood and agreed that if any
Landlord or grantor shall have committed default prior to such transfer,
the Landlord or grantor committing such default shall not be exempt from
such liability
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attaching thereto; it being intended that the covenants and agreements
contained in this Lease on the part of the Landlord to be performed,
subject to that which is hereafter set forth, be binding on Landlord and
its successors and assigns, only during and in respect to their successive
periods of ownership.
Tenant agrees that the Facility is within the exclusive
control of Tenant.
23.16. No Option. The submission of this Lease for examination
does not constitute a reservation of or option for the leased premises and
this Lease become effective as a Lease only upon execution and delivery
thereof by Landlord and Tenant.
IN WITNESS WHEREOF, the parties hereto have executed this
Lease Agreement as of the date first written above with the intention of
creating a document under seal.
LANDLORD:
Witness: THE JOSEPH A. BANK MFG. CO., INC.
By: /s/ Timothy F. Finley (SEAL)
________________________ _______________________
Name: Timothy F. Finley
____________________
Title: CEO
____________________
[CORPORATE SEAL)
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TENANT:
SOURCEONE, L.L.C.
By: /s/ David McDonough (SEAL)
________________________ _______________________
Name: David McDonough
____________________
Title: VP-Finance Member
____________________
By: (SEAL)
________________________ _______________________
Name:
____________________
Title: Member
____________________
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<PAGE>
EXHIBITS AND SCHEDULES
----------------------
EXHIBIT A - Land
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-END> MAY-02-1998
<CASH> 677
<SECURITIES> 0
<RECEIVABLES> 3,466
<ALLOWANCES> 0
<INVENTORY> 46,954
<CURRENT-ASSETS> 59,876
<PP&E> 47,674
<DEPRECIATION> 24,917
<TOTAL-ASSETS> 85,303
<CURRENT-LIABILITIES> 29,279
<BONDS> 0
0
0
<COMMON> 70
<OTHER-SE> 37,122
<TOTAL-LIABILITY-AND-EQUITY> 85,303
<SALES> 43,383
<TOTAL-REVENUES> 43,383
<CGS> 22,151
<TOTAL-COSTS> 19,438
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 437
<INCOME-PRETAX> 1,357
<INCOME-TAX> 529
<INCOME-CONTINUING> 828
<DISCONTINUED> (51)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 777
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
