SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A-1
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number O-25030
PLAY CO. TOYS & ENTERTAINMENT CORP.
(Exact name of registrant as specified in its charter)
Delaware 95-3024222
(State or Jurisdiction of Incorporation
or Organization) (I.R.S. Employer Identification No.)
550 Rancheros Drive, San Marcos, California 92069
(Address of principal executive offices)
(760) 471-4505
(Registrant's telephone number, including area code)
N/A
(Former name, former address, and former fiscal year, if changed since last
report)
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares of each of the issuer's classes of common equity
outstanding as of the latest practicable date: Common Stock, $.01 par value:
4,103,519 shares outstanding as of November 10, 1997.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
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Exhibit 10.87 - Lease Agreement for Store-Clairemont
Exhibit 10.88 - Lease Agreement for Store-Redondo Beach
Exhibit 10.89 - Lease Agreement for Store-Arizona Mills
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, this 21st day of November 1997.
PLAY CO. TOYS & ENTERTAINMENT CORP.
By: /s/ Richard L. Brady
Richard L. Brady
President and Chief Executive Officer
By: /s/ James B. Frakes
James B. Frakes
Chief Financial Officer
10.87
Lease Agreement for Store-Clairemont
<PAGE>
CLAIREMONT TOWN SQUARE
LEASE AGREEMENT
BETWEEN
OTR, AN OHIO GENERAL PARTNERSHIP, LANDLORD,
AND
TOYS INTERNATIONAL,
A CALIFORNIA CORPORATION, TENANT
doing business under the trade names of PLAY CO. TOYS or TOYS INTERNATIONAL
DATED ___________________, 1997
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TABLE OF CONTENTS
<S> <C>
1. Fundamental Lease Provisions............................................................................
2. Premises................................................................................................
3. Lease Term..............................................................................................
4. Rental..................................................................................................
5. Advertising.............................................................................................
6. Construction............................................................................................
7. Use of the Premises......................................................................................
8. Alterations..............................................................................................
9. Mechanics' Liens.........................................................................................
10. Maintenance and Repair...................................................................................
11. Common Areas.............................................................................................
12. Utilities................................................................................................
13. Estoppel Certificates....................................................................................
14. Indemnification; Waiver of Claims........................................................................
15. Insurance................................................................................................
16. Waiver of Subrogation....................................................................................
17. Holding Over.............................................................................................
18. Assignment and Sublease..................................................................................
19. Quiet Enjoyment..........................................................................................
20. Compliance with Laws and with Rules and Regulations......................................................
21. Fire and Casualty........................................................................................
22. Eminent Domain...........................................................................................
23. Default..................................................................................................
24. Waiver of Default or Remedy..............................................................................
25. Landlord's Lien..........................................................................................
26. Uniform Commercial Code..................................................................................
27. Force Majeure............................................................................................
28. Subordination of Lease...................................................................................
29. Notices and Consents.....................................................................................
30. Security Deposit.........................................................................................
31. Miscellaneous Taxes......................................................................................
32. Brokerage Commission.....................................................................................
33. Hazardous Devices and Contaminants.......................................................................
34. Exculpation..............................................................................................
35. Signs....................................................................................................
36. Locks....................................................................................................
37. Employment...............................................................................................
38. Plumbing.................................................................................................
39. Certain Rights Reserved to Landlord......................................................................
40. Guaranty.................................................................................................
41. Miscellaneous............................................................................................
42. Relationship of Parties..................................................................................
43. Gender and Number........................................................................................
44. Topic Headings...........................................................................................
45. Counterparts.............................................................................................
46. Entire Agreement.........................................................................................
47. Attorneys' Fees..........................................................................................
48. Governing Law; Invalidity of any Provisions..............................................................
</TABLE>
<PAGE>
Exhibit A - Site Plan/Floor Plan
Exhibit B - Legal Description of Property
Exhibit C - Commencement Date Agreement
Exhibit D - Tenant Improvements
Exhibit E - Tenant Estoppel Certificate
Exhibit F - Sign Criteria
Exhibit G - Guaranty of Lease
Exhibit H - Access and Rental Payment Agreement
<PAGE>
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease"), dated ______________, 199_____ ("Effective
Date"), is between OTR, an Ohio general partnership ("Landlord"), acting as the
duly authorized nominee of the BOARD OF THE STATE TEACHERS RETIREMENT SYSTEM OF
OHIO ("STRBO"), and TOYS INTERNATIONAL, a California corporation, doing business
under the trade names of PLAY CO. TOYS or TOYS INTERNATIONAL ("Tenant").
1. Fundamental Lease Provisions. This Lease contains the following
fundamental provisions. If any fundamental provision is marked "not applicable,"
it shall be deemed not applicable in the balance of the Lease.
(a) Landlord's Address:
275 E. Broad Street
Columbus, Ohio 43215
Attention: Real Estate Manager
and the address given in (b) below
(b) Address for
Payment of Rent:
Clairemont Town Square Management Office
4186 Clairemont Mesa Boulevard
San Diego, CA 92117
Attention: Operations Manager
(c) Tenant's Address: Toys International Attn: Rich Brady
550 Rancheros Drive San Marcos, CA 92069 (619) 471-4505
(d) Net Rentable Square Feet in the Premises: 10,156
(e) Unit Number of the Premises: Space #38
(f) Name and Address of the Premises.
Clairemont Town Square
4615A Clairemont Drive
San Diego, CA 92117
(g) Net Rentable Square Feet in Shopping Center: 325,459. The
parties acknowledge that (i) the preceding number is the
actual Net Rentable Square Feet in the Shopping Center on the
Effective Date, (ii) the preceding number does not include the
area designated "Space #38" on Exhibit A, of which the
Premises are a part, and (iii) the preceding number will be
revised from time to time in accordance with Paragraph 4(c) of
the Lease.
(h) Initial Term: Five (5) Lease Years.
Option Terms:
Three (3) Five (5)-Year Options per Paragraph 3(c)
(i) Base Rental:
------------
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Lease Years Annual Base Rent Monthly Base Rent
<S> <C> <C>
1 thru 3 $ 88,053.00 $7,337.75
4 thru 5 $108,365.00 $9,030.42
</TABLE>
Notwithstanding anything to the contrary contained in this
Lease, Tenant's obligation to pay Base Rental hereunder shall be abated
until November 1, 1997. It is expressly understood that Tenant shall
pay all other charges under this Lease in full from the date Tenant
opens for business through October 31, 1997, and that Tenant shall be
obligated to commence payment of Base Rental in full beginning on
November 1, 1997. If at any time during the Initial Term (as
hereinafter defined) the Lease is terminated as a result of Tenant's
default as described in Article 23 hereof, then the Base Rental due
under this Lease shall revert to the rent schedule provided herein as
though no abatement had been provided. Further, the abatement provided
herein shall not be available to any assignee or subtenant of this
Lease, and upon any such assignment or sublease, such abatement shall
become null and void except as otherwise provided in Paragraph 18(a).
(j) Percentage for Percentage Rent:
Zero (0%)
(k) Percentage Base:
Not applicable.
<PAGE>
(l) Minimum Gross Sales:
Not applicable.
(m) Tenant's Proportionate Share of Operating Expenses:
See Paragraph 4(c) hereof.
(n) Marketing Charge: An annual charge of $2,000.00, payable
in equal monthly installments provided, however, that Tenant shall have
the right to terminate its obligation to pay such charge at the end of
the first twelve months of the Lease Term. (See Paragraph 5(a) hereof).
(o) Estimated Commencement Date:
June 1, 1997.
p) Use: Tenant shall use the Premises solely for the operation
of a toy store, and for no other use or purpose without Landlord's
prior reasonable approval. Tenant shall sell a large variety of toys
and agrees that Tenant shall not use the Premises in violation of any
of the Restricted Uses (hereinafter defined). Without limiting the
foregoing preclusions, Tenant specifically agrees that Tenant shall not
sell pets or charge the public for entertainment (machines or
activities or otherwise). Tenant agrees that its sale of bicycles shall
be generally children's and family quality bicycles (and shall
therefore not include high-end bicycles). Tenant further agrees that to
the extent Tenant sells consumer electronics which are consistent with
the operation of a toy store, the display of said electronics shall not
exceed 400 square feet of the Premises. Tenant further agrees that in
the event Tenant sells computer software, prerecorded audio and/or
video records, discs, tapes and/or related devices, Tenant's Gross
Sales from such items shall be less than fifteen percent (15%) of
Tenant's total Gross Sales, and Tenant agrees that Tenant shall not
rent such items.
Landlord shall give its reasonable approval if Tenant's
proposed alternative use is (i) consistent with a "first-class
promotional retail center", and (ii) not a Restricted Use at the time
of request, and (iii) not the primary use of another tenant on the
Property at the time of request where "primary use" shall mean that
such other tenant operates fifty percent (50%) or more of its floor
area for such use, or derives fifty percent (50%) or more of its Gross
Sales from such use.
Restricted Uses are any exclusive or restricted or
objectionable uses ("Restricted Uses") Landlord has agreed to preclude
or restrict pursuant to written agreement with another tenant or owner
in the Property as of the Effective Date hereof or at any time prior to
Tenant's addition of said use or Tenant's notice to Landlord of
Tenant's proposed alternative use, and as such uses may be amended or
expanded from time to time; provided, however, that Landlord shall not
create a Restricted Use after the Effective Date that is inconsistent
with Tenant's exclusive use described hereinbelow.
Exclusive: So long as (i) Tenant's use of the Premises is for
such purpose and (ii) Tenant is at such time open and operating in the
Premises, Landlord shall not authorize the use of any space in the
Shopping Center, other than the Premises, for the operation of any
Competing Business.
The foregoing restriction shall not be construed to prohibit
any tenants existing in the Shopping Center as of the Effective Date
from handling and selling any of the items which their respective
leases permit them to sell. Landlord represents and warrants that none
of the existing tenants have use clauses which specifically authorize
the operation of a toy store although the following stores have general
use clauses not restricted by future exclusives: Burlington Coat,
McDonald's, Michael's, Pic N Save, Sav-On, T. J. Maxx, Von's and Radio
Shack.
<PAGE>
Competing business shall, for purposes hereof, mean: a toy
store such as Play Co. Toys is operating as of the Effective Date, or
such as is operated as of the Effective Date by stores like, but not
limited to Toys R Us and Kabee Toys. "Toy store" for purposes hereof
means a store selling a wide variety of toys and toy-type items but
excludes (1) any business which specializes in selected items or
categories of items sold in a toy store such as, but not limited to:
bicycle stores, game stores, hobby stores, doll stores,
records/tapes/CD stores, computer stores, electronics stores (such as
Radio Shack), or consumer electronics stores (such as Circuit City),
sports cards stores, crafts stores and teacher's supply stores; and (2)
any store which operates 1,500 square feet or less of its floor area
for the sale of toys, provided that the sale of toys shall not be the
primary business of said store.
(q) Radius Restriction:
Three (3) miles.
(r) Security Deposit: None.
Prepaid Base Rent: None.
(s) Landlord's Broker: Atwater Realty, Inc.
(t) Tenant's Broker: None.
(u) Guarantors: None.
<PAGE>
2. Premises. In consideration of the rents, terms, provisions and
covenants of this Lease, Landlord hereby leases unto Tenant, and Tenant hereby
rents and accepts from Landlord, those certain premises containing approximately
the net rentable square feet set forth in Paragraph 1(d) above, known as the
unit number set forth in Paragraph 1(e) above (the "Premises"). The Premises are
outlined on the site plan attached hereto as Exhibit A and incorporated herein
by reference. The Premises are contained in that certain shopping center (the
"Shopping Center") located on the Property (defined below), which Shopping
Center contains approximately the net rentable square feet of space set forth in
Paragraph 1(g) above, as of the Effective Date, as may change from time to time
in Landlord's discretion. The land on which the Shopping Center is situated,
together with all improvements located thereon (collectively, the "Property"),
is more particularly described on Exhibit B, attached hereto and incorporated
herein by reference. The Premises do not include the use of the roof (except for
the repair or replacement of any heating or air conditioning equipment thereon
serving the Premises pursuant to Paragraph 10(a) below) or extend beyond the
exterior faces of the walls which enclose the Premises.
3. Lease Term.
a. Initial Term. Subject to and upon the terms and conditions
set forth below, the initial term of this Lease shall be for the number of Lease
Years (as hereinafter defined) for "Initial Term" set forth in Paragraph 1(h)
above (hereinafter defined as "Initial Term"), commencing on the Commencement
Date (as hereinafter defined) and ending on last day of such number of Lease
Years.
b. Definitions. For purposes of this Lease, the following
terms shall have the following meanings:
(i) "Commencement Date" shall mean the earlier of (A)
the Estimated Commencement Date (as defined in Paragraph 1[o]) or (B)
the date that Tenant opens for business on the Premises. Promptly upon
determination of the Commencement Date, Landlord and Tenant shall
execute a memorandum, setting forth
the Commencement Date and the expiration date of this Lease,
in form and substance substantially similar to that attached hereto as
Exhibit C and incorporated by reference.
(ii) "Lease Year" shall mean each twelve (12) month
period commencing on the first day of the first February after the
Commencement Date and each anniversary thereafter during the Lease Term
(as hereinafter defined). The first Lease Year shall commence on the
Commencement Date and end on the last day of January of the first Lease
Year regardless of whether the first Lease Year is longer than twelve
(12) months.
(iii) "Lease Term" shall mean the Initial Term of this Lease and any
renewals or extensions thereof.
Notwithstanding anything to the contrary contained in this Lease, in
the event that Tenant's Gross Sales during the twenty-fifth (25th) through
thirty-sixty (36th) full months of the Lease Term do not equal or exceed One
Million Three Hundred Thousand Dollars ($1,300,000), Tenant shall have the right
to terminate this Lease by written notice to Landlord given, if at all, before
the last day of the thirty-seventh (37th) full month of the Lease Term. Such
notice shall include a statement of Tenant's Gross Sales during such 12-month
period. Any such termination shall be effective at the end of the third Lease
Year. The foregoing right to terminate shall only apply to the original Tenant,
and shall be null and void in the event of any assignment or sublease of the
Premises during the first three (3) years of the Lease Term, or in the event
Tenant does not continuously operate in the Premises as provided in Paragraph 7a
hereof.
<PAGE>
In the event Tenant delivers the termination notice described
hereinabove, Landlord shall be entitled during the period from the date of
Landlord's receipt of Tenant's termination notice until the end of the third
Lease Year to audit Tenant's Gross Sales for the period from the twenty-fifth
through thirty-sixth months of the Lease Term. Such audit shall be limited to
the determination of Tenant's "Gross Sales" as defined in this Lease and shall
be conducted during normal business hours at the Premises. If it shall be
determined as a result of such audit that Tenant's Gross Sales during the
twenty-fifth through thirty-sixth months of the Lease Term were greater than One
Million Three Hundred Thousand Dollars ($1,300,000.00), Tenant's termination
notice and Tenant's right to terminate the Lease as provided hereinabove shall
be null and void, and Tenant shall pay to Landlord all reasonable costs and
expenses which were incurred by Landlord in performing said audit.
During no less than the first three (3) Lease Years, Tenant shall keep
accurate books and records of all business conducted on the Premises and all
Gross Sales generated from the Premises, which books and records shall be
maintained in accordance with generally accepted accounting principles
consistently applied. Such books and records shall include, without limitation,
all cash register tapes and other point of sale records, sales slips, bank
deposit records and all other primary data, all federal, state and local sales
and use tax returns of Tenant, and all other books, records and materials which
would normally be examined by an independent accountant in auditing Tenant's
Gross Sales.
c. Option Term(s). Provided Tenant is not in default of the
Lease at the time of exercise, Tenant shall have three (3) successive options to
extend the Lease Term for an additional period of five (5) years each (each such
five (5)-year period being hereinafter referred to as an "Option Term") subject
to the following conditions:
(i) Tenant shall exercise such option by delivering to Landlord written
notice of its intent to exercise the option not earlier than four (4) months,
and not later than three (3) months, prior to commencement of the Option Term;
provided, however, that, notwithstanding the foregoing timeframes, Tenant's
right to exercise the option shall not lapse unless Tenant has failed to deliver
said written notice to Landlord within thirty (30) days following Tenant's
receipt of written notice from Landlord of such possible lapse.
(ii) If the option is exercised pursuant hereto, the Option Term shall
commence upon the expiration of the preceding term, whether it be the initial
term or an Option Term.
(iii) Base Rental during the entire five (5)-year period of any Option Term
shall be the Base Rental in effect as of the Commencement Date (in the case of
the first Option Term) or as of the commencement of the immediately preceding
Option Term (in the case of the second and of subsequent Option Terms), as
appropriate, increased by the percentage increase, if any, in the Price Index
(as defined hereinbelow) from the Base Price Index (which shall be the Price
Index in effect for the month in which the Commencement Date occurs in the case
of the first Option Term, or the Price Index in effect for the month in which
the commencement of the previous Option Term occurs in the case of the second
and of subsequent Option Terms, as appropriate) to the Price Index in effect at
the beginning of the month immediately preceding the commencement of the Option
Term, provided, however, that in no event shall the Base Rental be less than the
Base Rental in effect immediately prior to commencement of the Option Term or
more than a twelve and one-half percent (12.5%) increase over the Base Rental in
effect immediately prior to commencement of the Option Term. The Price Index
shall be defined as the Consumer Price Index for all Urban Consumers (CPI-U)
issued by the Bureau of Labor Statistics of the United States Department of
Labor for San Diego, California (1982-84=100). If at any time said Consumer
Price Index is no longer issued then the term "Price Index" shall mean an index
selected by Landlord that is reasonably comparable to said Consumer Price Index.
<PAGE>
(iv) In the event Tenant exercises the Option, Tenant agrees to take the
Premises in an "as is" condition with no obligation on the part of the Landlord
to undertake any work with regard to the Premises.
(v) The option granted herein shall be personal to the original Tenant, may
be exercised only by the original Tenant while it is occupying the Premises, and
may not be exercised by or assigned to any party (including, but not limited to,
any sublessee or lender) without the express written consent of Landlord except
that such option shall be available to any assignee or sublessee permitted by
Article 18 hereof, or to any assignee or sublessee specifically approved by
Landlord pursuant to the provisions of said Article.
(vi) All terms and conditions of the Lease shall remain in full force and
effect during the Option, and, except for this Paragraph 3c, or where the
context otherwise indicates, all references in the Lease to the Lease Term shall
mean the Lease Term as extended.
4. Rental.
a. Base Rental. Tenant shall pay to Landlord, as base rental
(the "Base Rental") during the Lease Term, the annual Base Rental amounts,
payable in equal monthly installments, which are set forth in Paragraph 1(i)
above; provided, however, that notwithstanding the foregoing, Tenant's
obligation to pay Base Rental during the Initial Term shall be abated from the
Commencement Date until November 1, 1997, as provided in Paragraph 1(i) hereof.
b. Percentage Rental.
(i) Tenant shall pay no Percentage Rental.
(ii) The term "Gross Sales" as used in this Lease
means the aggregate dollar amount of all business done in, on or
resulting from the Premises, including, but not limited to, the price
of all merchandise, wares and goods sold and all charges for services
performed in, upon or resulting from the Premises by Tenant or by any
licensee, concessionaire or vendor, whether such sales are evidenced by
cash, check, charge account, exchange or otherwise, regardless of
whether (A) such sales evidenced by credit or charge account are
collected, (B) such sales are for wholesale or retail, (C) such sales
are made to persons present at the Premises, or by mail or telephone
orders or by means of any mechanical or other vending device or
otherwise or (D) such merchandise or services may be delivered,
supplied or rendered from another location. No deduction or reserve
shall be allowed for uncollected or uncollectible accounts. No
franchise or capital stock tax and no income or similar tax based upon
income or profits shall be deducted from Gross Sales in any event
whatsoever. Gross Sales shall, however, exclude the following:
(A) Returns or refunds, or credits received in settlement of
claims for loss or damage to goods, wares or merchandise, provided that
such sales of goods, wares or merchandise were originally included in
Gross Sales and provided, further, that if such refunds are in the form
of credits to customers, such credits shall be included in Gross Sales
when used;
(B) All sales taxes, excise taxes, gross receipt taxes and
other similar taxes, now or hereafter imposed by any and all
governmental authorities, but only if the amount thereof is expressly
charged to the customer at the time of sale and thereafter paid by
Tenant to the taxing authority; and
<PAGE>
(C) Sales of all trade fixtures or store operating equipment
after use thereof in the conduct of Tenant's business in the Premises
and which are not part of Tenant's stock in trade.
(iii) Tenant shall deliver to Landlord within
forty-five (45) days after the end of each Lease Year, a written
statement of Gross Sales for the preceding Lease Year or portion
thereof ("Annual Statement"). Further, if, under "Use" in Paragraph
1(p) hereof, there is any limitation on the percentage of Gross Sales
which may be generated from any particular item listed in said
provision, Tenant shall, upon request of Landlord, specifically show
the percentage of Tenant's total Gross Sales which was derived from the
sale of such item(s).
(iv) [Intentionally Omitted]
(v) If Tenant shall fail to prepare and deliver,
within the time periods herein specified, any statement of Gross Sales
required hereunder, Landlord may elect to treat such failure as a
default under the terms of this Lease.
(vi) [Intentionally Omitted]
(vii) [Intentionally Omitted]
(viii) [Intentionally Omitted]
(c) Additional Rental. Portions of the Shopping Center are or
will be owned or leased by "Major Tenants" (herewith defined as any entity which
owns or leases greater than 10,000 square feet in the Shopping Center, such
definition being subject to expansion or revocation by Landlord), or "Pad
Tenants" (herewith defined as any entity which owns or leases all of a
freestanding pad). The contributions of Major Tenants and Pad Tenants towards
the Operating Expenses (as hereinafter defined), shall be credited toward
payment of the entirety of the Operating Expenses of the Property, and Tenant
shall pay to Landlord, as Additional Rental, Tenant's Proportionate Share (as
hereinafter defined) of the balance of the Operating Expenses. If this Lease
commences or terminates on a date other than January 1, the annual Operating
Expenses shall be prorated by multiplying one-twelfth (1/12) of the annual
Operating Expenses by the number of full or partial months between the
Commencement Date and December 31 of the year of commencement or between January
1 of the year of termination and the termination date, as the case may be. As
used in this Lease, "Proportionate Share" shall mean the proportion which the
number of net rentable square feet of the Premises bears to the total net
rentable square feet of the buildings in the Shopping Center which are occupied
and open for business as of the commencement of such calendar year, exclusive of
the net rentable square feet owned or leased by Major Tenants or Pad Tenants;
provided, however, that:
(W) Tenant's Proportionate Share of Operating Expenses shall not
exceed:
$2.24 per square foot for the period from the Commencement
Date through 12/31/97; $3.84 per square foot for the period
1/1/98 through 12/31/98; $1.60 per square foot for the period
1/1/99 through 5/31/99;
(X) Tenant's Proportionate Share of Operating Expenses (excluding taxes
and insurance described in clauses 4(c)(i)(A) and (B) hereof) shall not exceed
$1.62 per square foot for the period 6/1/99 through 12/31/99;
(Y) Tenant's Proportionate Share of Operating Expenses (excluding taxes
and insurance described in clauses 4(c)(i)(A) and (B) hereof) shall not exceed
$2.91 per square foot for calendar year 2000; and
<PAGE>
(Z) Tenant's Proportionate Share of Operating Expenses (excluding taxes
and insurance described in clauses 4(c)(i)(A) and (B) hereof) shall not increase
in any one calendar year by more than five percent (5%) over Tenant's
Proportionate Share of said expenses in the immediately preceding calendar year.
(i) Operating Expenses. "Operating Expenses" shall include those expenses
paid by or on behalf of Landlord in respect to the management, operation,
service and maintenance of the Property, including the Premises, in accordance
with generally accepted principles of shopping center management as applied to
the operation and maintenance of shopping centers similar to the type and nature
of the Property and in the general market area as the Property, but excluding
all expenses of other tenants of the same kind as those for which Tenant is
responsible under Paragraph 10(a). Operating Expenses shall include, but not be
limited to, (A) Real Estate Taxes (as hereinafter defined); (B) premium costs
for liability, boiler, extended coverage, casualty and other insurance covering
the Property to be maintained by Landlord and required by the terms of this
Lease; (C) electricity, gas, water and other utility charges for the Common
Areas (as hereinafter defined); (D) wages, salaries and fees of on-site
operating, auditing, accounting, maintenance and management personnel in
connection with the Property; (E) all payroll charges for such on-site
personnel, such as unemployment and social security taxes, workers'
compensation, health, accident and group insurance, and other so-called fringe
benefits; (F) rental charges for office space chargeable to the operation and
management of the Property; (G) license permits and inspection fees; (H)
supplies and materials used in the operation and management of the Property; (I)
furnishings and equipment not treated by Landlord as capital expenditures of the
Property; (J) depreciation and the cost of any labor saving devices that may,
from time to time, be placed in operation as a part of Landlord's maintenance
program; (K) personal property taxes on property used in the operation,
maintenance, service and management of the Property; (L) the cost, as reasonably
amortized by Landlord, with interest at the rate of ten percent (10%) per annum
on the unamortized amount, of any capital improvement made after completion of
initial construction of the Shopping Center which reduces Operating Expenses,
but in an amount not to exceed such reduction for the relevant year; (M)
management fees relating to the Property; (N) the cost, as reasonably amortized
by Landlord, with interest at the rate of ten percent (10%) per annum on the
unamortized amount, of any installation, renovation or improvement required by
reason of any law, ordinance or regulation, which requirement did not exist on
the date of the Lease and is generally applicable to properties similar to the
Property; and (O) all other expenses necessary for the operation and management
of the Property.
(ii) Real Estate Taxes. "Real Estate Taxes" shall
include all taxes, including state equalization factor, if any, and
assessments, special or otherwise, exclusive of penalties or discounts
levied upon or with respect to the Property, including the Premises,
imposed by any federal, state or local governmental agency, and
including any use, occupancy, excise, sales or other like taxes (other
than general income taxes on rent or other income from the Shopping
Center computed in the case of a graduated tax, as if Landlord's rent
and other income from the Shopping Center was Landlord's sole taxable
income).
<PAGE>
Real Estate Taxes also shall include the expense of
contesting the amount or validity of any such taxes, charges or
assessments, such expense to be applicable to the period of the item
contested. Real Estate Taxes shall not, however, include income,
franchise, capital stock, estate or inheritance taxes unless Landlord
reasonably determines that such taxes are in lieu of real estate taxes,
assessments, rental, occupancy and other like excise taxes. For
purposes of this Lease, Real Estate Taxes for any calendar year shall
be those taxes the last timely payment date for which occurs within
such calendar year. In case of special taxes or assessments payable in
installments, only the amount of the installment(s) the last timely
payment date for which occurs on or after the first day and on
or before the last day of such calendar year shall be included in Real
Estate Taxes for that calendar year.
Landlord shall retain the sole right to participate
in any proceedings to establish or contest the amount of Real Estate
Taxes. If a complaint against valuation, protest of tax rates or other
action increases or decreases the Real Estate Taxes for any calendar
year, resulting in an increase or decrease in rent hereunder, the Real
Estate Taxes including the expenses incurred in connection with such
contest for the affected calendar year shall be recalculated
accordingly and the resulting rent shall be paid simultaneously with or
applied as a credit against, as the case may be, the rent next becoming
due.
(iii) Payment of Proportionate Share. To provide for
current payments of Operating Expenses, Tenant shall pay Tenant's
Proportionate Share of the Operating Expenses, as estimated by Landlord
from time to time, in twelve (12) monthly installments, commencing on
the Commencement Date. Landlord and Tenant intend to estimate the
amount of Operating Expenses for a calendar year and then to reconcile
such estimated expenses in the following year based on actual Operating
Expenses for such calendar year paid by Landlord. If Tenant's
Proportionate Share of the actual Operating Expenses shall be greater
than or less than the aggregate of all installments so paid on account
to Landlord for such twelve (12) month period, then within ten (10)
days of Tenant's receipt of Landlord's statement of reconciled
Operating Expenses, Tenant shall pay to Landlord the amount of such
underpayment, or Landlord shall credit Tenant for the amount of such
overpayment against the next maturing installment(s) of rent, as the
case may be. The obligation of Tenant with respect to the payment of
Tenant's Proportionate Share of the Operating Expenses shall survive
the termination of this Lease. Any payment, refund, or credit made
pursuant to this Paragraph 4(c) shall be made without prejudice to any
right of Tenant to dispute the statement as hereinafter provided, or of
Landlord to correct any item(s) as billed pursuant to the provisions
hereof. Landlord's failure to give such statement shall not constitute
a waiver by Landlord of its right to recover rent that is due and
payable pursuant to this Paragraph 4(c).
(iv) Dispute of Operating Expenses. If Tenant
questions in writing any such notice of reconciled Operating Expenses
(or revised notice thereof), and if the question is not amicably
settled between Landlord and Tenant within thirty (30) days after said
notice of reconciled Operating Expenses (or revised adjusted) has been
given, Tenant may, within the next ninety (90) days, upon no less than
ten (10) days prior written notice to Landlord, appoint a certified
public accountant (CPA) from a nationally recognized CPA firm, or other
CPA approved by Landlord, experienced in auditing Shopping Center
records, to audit books pertaining to the Operating Expenses, provided,
however, that before conducting any audit, Tenant must pay the full
amount of Operating Expenses billed and must not be in default of any
other lease provision. Such audit shall be conducted at the management
office on the Property, shall be performed in such manner as to not
unreasonably disturb Landlord's business, and shall be during usual
business hours. Said right to audit shall be restricted to one (1) per
calendar year, shall only include Operating Expenses from the
immediately preceding calendar year, and shall be at the sole cost and
expense of Tenant (including all reasonable costs incurred by Landlord
in connection with such audit). The audit shall be conducted in
accordance with generally accepted auditing standards. Upon receipt of
the audit report, Tenant shall deliver to Landlord a copy of the report
and all accompanying data. Tenant will keep confidential all agreements
involving the rights provided in this paragraph and the results of any
audits conducted hereunder, unless otherwise specifically authorized or
requested by Landlord. In the event that Tenant, after having
reasonable opportunity to examine the Operating Expense records, shall
disagree with Landlord's determination, then Landlord and Tenant shall
attempt to adjust such disagreement,
<PAGE>
and if they are unable to agree within thirty (30) days following
Landlord's receipt of the audit, Landlord and Tenant shall each
designate an independent certified public accountant within ten (10)
days, and the two accountants shall within the next ten (10) days
appoint a third independent certified public accountant (the
"Arbiter"), whose determination shall be binding upon the parties and
the cost of such Arbiter shall be borne equally by Landlord and Tenant.
If Tenant does not, in writing, question the reconciled Operating
Expenses within thirty (30) days after such notice has been given or
audit performed, Tenant shall be deemed to have approved and accepted
such reconciled Operating Expenses.
(v) Adjustments to Operating Expenses. If a clerical
error occurs or Landlord or Landlord's accountants discover new facts,
which error or discovery causes Operating Expenses for any period to
increase or decrease, upon notice by Landlord to Tenant of the adjusted
additional Operating Expenses for such calendar year, the adjusted
additional Operating Expenses shall apply and any deficiency or
overpayment of Tenant's Proportionate Share of the Operating Expenses,
as the case may be, shall be paid by Tenant or taken as a credit by
Tenant according to the provisions set forth above. This provision
shall survive the termination of the Lease.
(d) Other Charges. All costs, expenses and other sums that
Tenant assumes or agrees to pay to Landlord pursuant to this Lease ("Other
Charges") shall be deemed rental and, in the event of nonpayment thereof,
Landlord shall have all the rights and remedies herein provided for in case of
nonpayment of Base Rental. Should any rental period commence on a day other than
the first day of a calendar month or, for any reason, end on a day other than
the last day of a calendar month, then (except as otherwise provided in
Paragraph 4(b)(i) hereof with respect to determining the Percentage Base for a
partial year), the rental for such fractional month shall be computed on a daily
basis in the event of a partial month at the beginning of the Lease Term, for
the period from the Commencement Date to the end of such calendar month or, in
the event of a partial month at the end of the Lease Term, from the first day of
such partial month until the last day of such month during which the Lease is in
effect, and at an amount equal to one three-hundred sixtieth (1/360th) of said
annual rental for each such day. If a monthly installment of rent is not
received on or before the tenth (10th) day of the month in which it is due,
other remedies for nonpayment of rent notwithstanding, such past due rent shall
bear interest at the lesser of (i) a rate of interest equal to ten percent (10%)
per annum; or (ii) the maximum rate allowed by law (the "Default Rate"), for
each day from the first day of the month through the date such monthly
installment of rent is received by Landlord, and Tenant shall pay to Landlord, a
late charge of five percent (5%) of such installment as rent for the purpose of
defraying Landlord's administrative expenses incident to the handling of such
overdue payment, provided, however, that such late charge shall not apply to the
first two occurrences in any calendar year if Tenant pays said monthly
installment within ten (10) days of receipt of Landlord's written notice that
such installment is overdue. For purposes of this Lease, "rent" shall mean Base
Rental, Additional Rental, the Marketing Charge (as hereinafter defined) and
Other Charges.
(e) Time and Place of Payment. Each monthly installment of
rent shall be due and payable in advance, on or before the first day of each and
every month during the Lease Term, without notice, demand or set-off; provided,
however, that the first month's rent shall be due and payable upon execution of
this Lease. Tenant shall pay all rent and other charges due under this Lease at
the address set forth in Paragraph 1(b) or at such other place as Landlord may
designate from time to time hereafter by written notice to Tenant.
<PAGE>
5. Advertising.
(a) Marketing Charge. Tenant agrees to pay to Landlord, as
additional rental, a marketing charge (the "Marketing Charge") at the annual
rate set forth in Paragraph 1(n) above. The Marketing Charge shall be paid in
equal monthly installments at such time and place as provided in Paragraph 4(e)
above. Notwithstanding anything in this Lease to the contrary, in the event at
any time following the first twelve months of the Lease Term Tenant is
dissatisfied for any reason with the promotions and advertising for which such
Marketing Charge is used by Landlord, Tenant shall have the right in Tenant's
sole discretion, upon delivery of written notice to Landlord, to terminate its
obligation to pay any further Marketing Charge.
(b) Increases in Marketing Charge. [Deleted.]
(c) Promotion and Advertising. Landlord shall provide, or
cause to be provided, promotions and advertising for the Shopping Center, the
type, quantity, character and duration of which shall be at the Landlord's sole
discretion and the purpose of which shall be to assist the business of the
tenants and occupants of the Shopping Center. The Marketing Charge shall be used
by Landlord for such promotions and advertising. In connection with any
promotions and advertising provided by Landlord, or caused to be provided by
Landlord, Tenant hereby grants to Landlord a license to use the Tenant's trade
name, together with a description of the nature of Tenant's business in the
Demised Premises, and Tenant shall cooperate with Landlord in the carrying out
of such promotions and advertising and shall loan, for reasonable periods of
time, merchandise of Tenant to Landlord so as to permit Landlord to effect such
promotions and advertising.
(d) Special Marketing Charge. [Deleted.]
6. Construction.
(a) Improvements to be Constructed. Except as expressly set forth in
Exhibit D, Landlord has made no promise to alter, remodel or improve the
Premises, the Shopping Center or the Property. Tenant, at its own cost and
expense, shall perform the work and make the installations in the Premises that
are described as Tenant's Work in Exhibit D attached hereto and incorporated
herein by reference, in accordance with the plans and specifications to be
approved by Landlord. Tenant's plans and specifications shall conform to the
architectural and accessibility regulations issued by the United States Attorney
General's office pursuant to Title III of the Americans with Disabilities Act of
1990 and comply with the Minimum Guidelines and Requirements for Accessible
Design issued by the Architectural and Transportation Barriers Compliance Board.
Tenant shall commence the installation of the improvements promptly upon
Tenant's receipt of the Notice of Substantial Completion (defined in Paragraph 8
of Exhibit D). Tenant's installation shall be subject to the provisions of
Exhibit D and Paragraphs 7(b)-(c) below. Subject to Paragraph 27, Tenant shall
complete the fixturization of the Premises and use its best reasonable efforts
to open for business, fully stocked and staffed on or before the redevelopment
opening date as such redevelopment opening date is designated by Landlord in a
written notice to Tenant, provided, however, that the redevelopment opening date
shall not be deemed to be earlier than the Estimated Commencement Date. Tenant
acknowledges that the financial success of the Shopping Center depends, in part,
on Tenant's opening the Premises for business contemporaneously with the
redevelopment opening date as designated by Landlord and, in any event, no later
than the Estimated Commencement Date, and that Landlord's damages arising from
Tenant's failure to do so are extremely difficult and impracticable to fix.
Therefore, should Tenant fail to open for business by August 1, 1997, and
otherwise in compliance with this Paragraph 6(a), Tenant shall pay to Landlord,
as additional rental, a sum equal to Five Hundred Dollars ($500.00) multiplied
by the number of days after said date Tenant is in breach of the foregoing
covenant to open which sum Tenant agrees is fair compensation to Landlord for
said damages, provided, however, that notwithstanding the foregoing, Tenant
shall not be required to pay said $500.00 charge before August 1, 1997, that
such date shall be subject to the provisions of Paragraph 27 hereof, and that
for purposes hereof, Paragraph 27 shall be be understood to include governmental
delay.
<PAGE>
(b) Condition of Premises. Except as otherwise agreed to in
writing, Tenant's taking possession of the Premises shall be conclusive evidence
against Tenant that the Premises were in good order and satisfactory condition
when Tenant took possession. Landlord has made no representation respecting the
condition of the Premises, the Shopping Center or the Property, except as is
expressly set forth in Exhibit D. At the termination of this Lease, by lapse of
time or otherwise, Tenant shall remove all Tenant's property, including, but not
limited to, trade fixtures, from the Premises, and shall return the Premises
broom-clean and in as good a condition as when Tenant took possession or as same
may thereafter have been put by Landlord, except for ordinary wear, loss by fire
or other casualty, and repairs that Landlord is required to make under this
Lease. If Tenant fails to remove any or all of its property upon termination of
this Lease, such property shall be deemed to be abandoned and shall become the
property of Landlord.
7. Use of the Premises.
(a) Use. Upon the commencement of the Lease Term, Tenant shall
open for business on the Premises and shall thereafter continuously, actively
and diligently operate its business on the Premises for a period of no less than
three (3) Lease Years. During all periods of Tenant's operation in the Premises,
Tenant shall operate in a high grade and reputable manner in the whole of the
Premises, maintaining in the Premises a full staff of employees and a full and
complete stock of merchandise during business hours. Notwithstanding anything to
the contrary in this Lease, provided that Tenant continues to fulfill all of its
other obligations hereunder, including without limitation, its obligation to pay
Base Rental and Additional Rental for the remainder of the Lease Term, Tenant
may, by written notice to Landlord ("Cessation Notice") elect to discontinue
operations in the Premises commencing on a date specified in such notice (the
"Cessation Date") provided, however, that the Cessation Date shall be no earlier
than the later to occur of (i) ninety (90) days after Landlord's receipt of such
notice and (ii) the last day of the third Lease Year. At any time after
Landlord's receipt of the Cessation Notice, whether or not Tenant has re-opened
for business in the Premises, Landlord may terminate this Lease by no less than
30 days' prior written notice to Tenant ("Termination Notice"); provided,
however, that the Lease shall not terminate prior to expiration of the period
specified in Tenant's Cessation Notice, and provided, further that if Tenant has
delivered said Cessation Notice, but continues to operate its business in the
Premises without interruption for at least ninety (90) days after the Cessation
Date, and Landlord shall not have delivered its Termination Notice within said
ninety (90) day period, Landlord's right to terminate the Lease in response to
the Cessation Notice shall terminate without prejudice to Landlord's right to
deliver another Termination Notice (and terminate the Lease pursuant to the
provisions hereof) if Tenant serves another Cessation Notice. Upon any such
termination, neither Tenant nor Landlord shall have any further liability to the
other hereunder, except for obligations which accrued prior to the date of such
termination.
During such periods as Tenant is operating in the Premises as
provided hereinabove, Tenant shall use the Premises for the conduct of the
business set forth in Paragraph 1(p) above and for no other purpose whatsoever.
During the first three (3) Lease Years, Tenant shall do business under either of
the trade names set forth in the first paragraph of this Lease and under no
other trade name unless specifically agreed to in writing by Landlord. Tenant
shall use and occupy the Premises so that no other occupant of any adjoining
premises will be unreasonably disturbed and shall create no nuisance in, upon or
about the Premises. Tenant will not make or permit to be made any use of the
Premises or any part thereof, and will not bring into or keep anything in the
Premises or any part thereof, that (i) violates any of the covenants,
agreements, terms, provisions and conditions of this Lease; (ii) directly or
indirectly is forbidden by public law, ordinance or regulation of any
governmental or public authority (including zoning ordinances) or by any
restrictive covenants to which the Property is subject; (iii) is dangerous to
life, limb or property; (iv) increases the risk to Landlord or any other tenant
or invalidates or increases the premium cost of any policy of insurance carried
on the Shopping Center or covering its operation; or (v) in the sole judgment of
Landlord, in any way impairs or tends to impair the character, reputation or
appearance of the Property as a first-class shopping center, or impairs or
interferes with any of the services performed by Landlord for the Property.
<PAGE>
(b) Noise; Odors. Tenant shall not use, keep or permit to be
used or kept any foul or noxious gas or substance in the Premises; permit or
suffer the Premises to be occupied or used in a manner offensive or
objectionable to Landlord or other occupants of the Shopping Center by reason of
noise, odors and/or vibrations; interfere in any way with other tenants or those
having business therein; or bring in or keep any animals or birds in the
Premises. Tenant shall not use the Premises for housing accommodations, lodging
or sleeping purposes, or do any cooking therein, or use any illumination other
than electric light.
(c) Care. Subject to the provisions of Paragraph 10(b), Tenant
shall take good care of the Premises, the fixtures and appurtenances thereto,
and all alterations, additions and improvements thereto.
(d) Minimum Operating Hours. During the first three (3) Lease
Years, Tenant will keep the Premises continuously and uninterruptedly open for
business at least from 10:00 A.M. to 6:00 P.M. Monday through Saturday (legal
holidays only excepted), and keep same, including display or show windows and
canopies thereof, fully illuminated from dusk to approximately 11:00 P.M. of
each business day, unless prevented from doing so by strikes, fire, casualty or
other causes beyond Tenant's control.
(e) Merchandise and Staff. Tenant will carry sufficient
merchandise in the Premises at all times during the first three (3) Lease Years,
and shall at all times warehouse, store and/or stock only such quantities of
goods, wares and merchandise as are reasonably required by Tenant for sale at
retail at, in, on or from the Premises. During the first three (3) Lease Years,
Tenant will fully and adequately staff the Premises with sufficient employees
for the purpose of selling its merchandise or providing its services, and at all
times during the Lease Term will use for office, clerical or other non-selling
purposes only such space in the Premises as is reasonably required for Tenant's
business therein, not including any other business of Tenant in locations other
than the Premises. Tenant will not conduct any auction, fire, bankruptcy or
going out of business sale in the Premises without Landlord's prior written
consent, or otherwise in conflict with documents recorded prior to the date
hereof. Landlord shall execute an Access and Rental Payment Agreement in the
form attached hereto as Exhibit H, and hereby consents to the sale of personal
property from the Premises as described therein.
(f) Radius Restriction. Tenant agrees that Tenant, including
any corporation (but not any shareholder, director or other individual) that is
an Affiliate (as defined in Paragraph 18(a)), shall not, within the radius set
forth in Paragraph 1(q) above of the perimeter of the Shopping Center, either
directly or indirectly, own, operate or be financially interested in, with or
without others, a business like or similar to the business permitted to be
conducted pursuant to this Lease, nor shall Tenant permit any like or similar
business within said radius to be operated under a name which shall be the same
or similar to the name under which Tenant's business in the Premises is
conducted. The provisions of this Paragraph shall survive the termination of
this Lease or the re-entry into the Premises by Landlord resulting from a breach
of this Lease by Tenant; provided, however, that the Tenant's obligations under
this Paragraph shall terminate on the later to occur of the date Tenant shall
vacate the Premises or the expiration of the Lease Term.
8. Alterations.
(a) Prohibition. Tenant shall not make any alterations,
additions or improvements (collectively, the "Alterations") in or to the
Premises, or in or to the Shopping Center without the express prior written
consent of Landlord; provided, however, Landlord's consent shall not be required
for interior nonstructural Alterations so long as Tenant notifies Landlord in
writing at least fifteen (15) days prior to commencement of said nonstructural
Alterations, and provided that Tenant shall comply with all other provisions of
this Article 8 with respect thereto. Landlord consents to Tenant's Work
described in Exhibit D. Before commencing any work in connection with the
Alterations, Tenant shall furnish to Landlord for its approval the following:
(i) detailed plans and specifications therefor, (ii) names and addresses of each
of the contractors and subcontractors, (iii) copies of all contracts,
subcontracts and necessary permits, (iv) a payment and performance bond, or
other indemnification, in form and amount satisfactory to Landlord, protecting
Landlord against any and all claims, costs, damages, liabilities and expenses
that may arise in connection with the Alterations, (v) certificates of
insurance, in form and amount satisfactory to Landlord, from all contractors and
subcontractors who will perform labor or furnish materials, insuring Landlord
against any and all liability for personal injury, including workers'
compensation claims and for property damage that may arise out of or be in any
manner connected with the Alterations. Notwithstanding the foregoing, in the
event Tenant is only making nonstructural Alterations to the interior of the
Premises, Tenant shall only be required to furnish the items described in
clauses (iii) and (v) above.
<PAGE>
(b) Indemnification. In addition to the indemnity set forth in
Paragraph 14(a) below, Tenant hereby specifically agrees to indemnify and hold
harmless Landlord from and against any and all liabilities, costs and expenses
of every kind and description, including attorneys' fees, that may arise out of
or in any manner be connected with any Alterations made by Tenant. Tenant shall
pay the cost of all such Alterations and all costs associated with decorating
the Premises that may be occasioned thereby. Upon completion of any such
Alterations, Tenant shall furnish Landlord with (i) receipted bills covering all
labor and materials used, together with copies of all mechanics' lien releases
or other releases on account of such Alterations, which are notarized,
unconditional and in recordable form, plus a copy of Tenant's recorded, valid
"Notice of Completion;" (ii) a true and correct copy of the certificate of
occupancy, if one is issued; and (iii) a certificate of Tenant's architect or
engineer stating that such Alterations were made in accordance with the plans
and specifications and in compliance with the Americans with Disabilities Act of
1990. Notice is hereby given that Landlord shall not be liable for any labor or
materials furnished or to be furnished to Tenant upon credit, and that no
mechanic's or other lien for such labor or material shall attach to or affect
the reversion or other estate or interest of Landlord in and to the Premises.
(c) Compliance and Supervision of Alterations. All Alterations
made by Tenant hereunder shall be installed in a good and workmanlike manner,
using only materials of the same or higher quality as those installed in the
Shopping Center. All Alterations shall comply with all requirements of
Landlord's insurance carriers and with all laws, rules, ordinances and
regulations of any lawful authority, including, but not limited to, the
Americans with Disabilities Act of 1990. Tenant shall permit Landlord to
supervise construction operations in connection with any such Alterations, if
Landlord requests the right to do so (but Landlord shall have no obligation to
make such requests, or having done so, to supervise construction). Landlord's
supervision of construction shall be done solely for the benefit of Landlord and
shall not alter Tenant's liability and responsibility under this Paragraph 8.
(d) Landlord's Property. All Alterations, whether temporary or
permanent, including hardware, non-trade fixtures and wall and floor coverings,
whether placed in or upon the Premises by Landlord or Tenant, shall become
Landlord's property and shall remain with the Premises at the termination of
this Lease, whether by lapse of time or otherwise, without compensation,
allowance or credit to Tenant; provided, however, notwithstanding the foregoing,
Landlord may request that any or all of said Alterations in or upon the Premises
made by Tenant be removed by Tenant at the termination of this Lease except that
Tenant shall not be required to remove structural or exterior Alterations
Landlord has approved pursuant to Paragraph 8(a) hereinabove unless Landlord
required such removal when Landlord approved said Alterations. If Landlord
requests such removal or if Tenant removes its trade fixtures, Tenant shall
remove the same prior to the end of the Lease Term and shall repair all damage
to the Premises, the Shopping Center or the Property caused by such removal.
Tenant shall not, however, be required to remove pipes and wires concealed in
floors, walls or ceilings, provided that Tenant properly cuts and caps the same,
and seals them off in a safe, lawful and workmanlike manner, in accordance with
Landlord's reasonable requirements and all applicable building codes. If Tenant
does not remove any Alterations when requested by Landlord to do so, Landlord
may remove the same and repair all damage caused thereby, and Tenant shall pay
to Landlord the cost of such removal and repair immediately upon demand therefor
by Landlord, plus fifteen percent (15%) of the cost of such removal to reimburse
Landlord for its administrative expense. Tenant's obligation to observe or
perform this covenant shall survive the expiration or termination of this Lease.
9. Mechanics' Liens.
(a) Prohibition. If, because of any act or omission of Tenant,
any mechanic's lien or other lien, charge or order for the payment of money
shall be filed against any portion of the Premises, Tenant, at its own cost and
expense, shall cause the same to be discharged of record or bonded against via
statutory procedures within sixty (60) days of the filing thereof unless Tenant
shall contest the validity of such lien by appropriate legal proceedings
diligently conducted in good faith and without expense to Landlord; and Tenant
shall indemnify and save harmless Landlord against and from all costs,
liabilities, suits, penalties, claims and demands, including attorneys' fees, on
account thereof.
<PAGE>
(b) Landlord's Right to Discharge. If Tenant shall fail to
cause such liens to be discharged of record or bonded against within the
aforesaid sixty (60) day period or shall fail to satisfy such liens within
thirty (30) days after any judgment in favor of such lien-holders from which no
further appeal might be taken, then Landlord shall have the right to cause the
same to be discharged. All amounts paid by Landlord to cause such liens to be
discharged, plus interest on such amounts at the Default Rate shall constitute
Other Charges payable by Tenant to Landlord.
10. Maintenance and Repair.
(a) Tenant's Maintenance. Tenant, at its sole cost and
expense, shall maintain, repair, and replace during the Lease Term the Premises
and every part thereof and any and all appurtenances thereto, including but not
limited to, the doors (including frames and all hardware), windows (including
plate glass and interior casements and frames) and interior walls of the
Premises; light fixtures; kitchen fixtures; private bathroom fixtures and any
other type of special equipment, together with all meters, pipes, conduits,
equipment, components, and facilities (whether or not within the Premises) that
supply the Premises exclusively with utilities (except as the appropriate
utility company has assumed these duties), specifically including the repair and
replacement of the heating, ventilation and air conditioning system but
excluding the maintenance thereof; and rugs, carpeting, wall coverings, and
drapes within the Premises, whether installed by Tenant or by Landlord on behalf
of Tenant, and whether or not such items will become Landlord's property upon
expiration or termination of this Lease. Notwithstanding the provisions hereof,
in the event that repairs required to be made by Tenant become immediately
necessary to avoid possible injury or damage to persons or property, Landlord
may, but shall not be obligated to, make repairs to such items at Tenant's
expense, which shall constitute Other Charges payable by Tenant to Landlord.
Within ten (10) days after Landlord renders a bill for the cost of said repairs,
Tenant shall reimburse Landlord.
(b) Landlord's Maintenance. Subject to Paragraph 10(a) above,
Landlord shall maintain, repair and replace the Shopping Center (including the
roof and structural members, the Common Areas (as hereinafter defined),
mechanical and electrical equipment that supply the Premises or the Common Area
on a non-exclusive basis, the exterior and architectural finish, and all items
except those excepted elsewhere in this Lease) of which the Premises are a part,
and the lawn, shrubs and other landscaping on the Property, all in good and
tenantable condition during the Lease Term; in addition, Landlord shall maintain
(but shall not be required to repair or replace) the heating, ventilating, and
air conditioning equipment. Landlord shall, in addition, supply reasonable snow
removal for the walkways and parking areas of the Property. Tenant shall notify
Landlord immediately when any repair to be made by Landlord is necessary. If any
portion of the Shopping Center or the Premises is damaged through the fault or
negligence of Tenant, its agents, employees, invitees or customers, then Tenant
shall promptly and properly repair the same at no cost to Landlord; provided,
however, that Landlord may, at its option, make such repairs and Tenant shall,
on demand, pay the cost thereof, as Other Charges. Tenant shall immediately give
Landlord written notice of any defect or need for repairs, after which notice
Landlord shall have reasonable opportunity to repair same or cure such defect.
For the purposes of making any repairs or performing any maintenance, Landlord
may temporarily block, close or change any entrances, doors, corridors,
elevators, or other facilities in the Shopping Center or in the Premises, and
may close, block or change sidewalks, driveways or parking areas of the
Property, provided, however, that during any period of time that access to the
Premises is blocked or closed,
<PAGE>
Landlord shall provide reasonable alternative access to the Premises at all
times. Landlord shall not be liable to Tenant, except as expressly provided in
this Lease, for any damage or inconvenience and Tenant shall not be entitled to
any abatement of rent by reason of any repairs, alterations or additions made by
Landlord under this Lease.
(c) Inspection. Tenant shall permit Landlord, its agents,
employees and contractors, at any time in the event of an emergency, and
otherwise at reasonable times, to take any and all measures, including
inspections, repairs, alterations, additions and improvements to the Premises or
to the Shopping Center, as may be necessary or desirable to safeguard, protect
or preserve the Premises, the Shopping Center or Landlord's interests; to
operate or improve the Shopping Center; to comply on behalf of Tenant with all
laws, orders and requirements of governmental or other authority (if Tenant
fails to do so); to examine the Premises to verify Tenant's compliance with all
of the terms, covenants, obligations and conditions of this Lease; or to
exercise any rights with respect to the Premises that Landlord may exercise in
the event of default by Tenant.
11. Common Areas.
(a) Grant. During the Lease Term, Landlord grants to Tenant,
its employees, customers and invitees, a nonexclusive license to use, in common
with all others to whom Landlord has granted or may hereafter grant a license to
use, the common areas of the Property, including but not limited to, the
sidewalks, exits, entrances, restrooms, parking areas below), driveways and
landscaped areas (collectively, the "Common Areas") subject to reasonable rules
and regulations respecting the Common Areas as Landlord may from time to time
promulgate. The Common Areas shall not be obstructed by Tenant or used for any
purpose other than for ingress to and egress from the Premises, except as
provided in 11(d) hereinbelow. The Common Areas are not for the use of the
general public and Landlord shall in all cases retain the right to control and
prevent access thereto by all persons whose presence, in the judgment of
Landlord, shall be prejudicial to the safety, character, reputation and
interests of the Shopping Center and its tenants, provided that nothing herein
contained shall be construed to prevent such access to persons with whom Tenant
normally deals in the ordinary course of Tenant's business unless such persons
are engaged in illegal activities.
(b) Employee Parking Areas. Tenant and its employees shall
park their cars only in such areas designated for that purpose by Landlord,
provided, however, that such employee parking area shall be within the southern
half of the Shopping Center unless otherwise approved in advance by Tenant.
Tenant shall furnish Landlord with automobile license numbers assigned to
Tenant's car(s) and cars used by its employees within five (5) days after taking
possession of the Premises and shall thereafter notify Landlord of any changes
in such information within five (5) days after such changes occur. If Tenant or
its employees shall fail to park their cars in such designated parking areas,
Landlord shall have the right to charge Tenant, as Other Charges under this
Lease, the sum of Ten Dollars ($10.00) per day per car parked in violation of
the provisions of this Paragraph 11. Tenant shall notify its employees in
writing of the provisions of this Paragraph 11.
(c) Right to Change Common Areas. Landlord may do and perform
such acts in and to the Common Areas as, Landlord, in its sole discretion, shall
determine to be advisable. Landlord hereby reserves the right to make
alterations, additions, deletions or changes to the Common Areas, including, but
not limited to, changes in its size and configuration.
(d) Food Zone. Landlord intends to provide a portion of the
Common Area for tables and chairs primarily but not exclusively for customers of
restaurant-type tenants in the Shopping Center to eat and drink food and
beverages purchased at the Shopping Center ("Food Zone"). The use of the Food
Zone may, at the election of each such restaurant-type tenant and as their sole
liability, include the consumption of alcoholic beverages, subject to the rules
and regulations imposed by governing authorities (including but not limited to
the Alcohol Beverage Control Board). As between Landlord and Tenant, Landlord
shall at all times have the right and privilege of determining the nature and
extent of the Food Zone and of any and all fixtures, property and equipment
furnished to or installed therein and making such changes, rearrangements,
additions or reductions (including elimination thereof) therein and thereto from
time to time, which, in its reasonable opinion, are deemed to be desirable and
for the best interest of a significant number of persons using the Food Zone or
the Shopping Center or which are made as a result of any federal, state or local
environmental or other law, rule, regulation, guideline, judgment or order.
Notwithstanding the foregoing, so long as alcohol is allowed to be served in the
Food Zone, the boundaries thereof shall be clearly marked, and initially the
Food Zone will be clearly marked on site in the area approximately cross-hatched
on Exhibit A hereto. Tenant acknowledges that Landlord may at any time elect to
discontinue the operation of the Food Zone and that Tenant is not entitled to an
interest in the Food Zone area.
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From time to time during the term of this Lease, Landlord shall have
the right to promulgate (or revise) reasonable rules and regulations relating to
the operation and maintenance of the Food Zone as Landlord deems appropriate and
in the best interests of Landlord and tenants of the Shopping Center. Such
reasonable rules and regulations shall be binding upon delivery to Tenant. As a
part of such rules and regulations, Landlord shall have the right to establish
hours of operations of the Food Zone.
12. Utilities.
(a) Payment. Tenant shall promptly pay for utilities rendered
or furnished to the Premises from the date Landlord delivers possession of the
Premises to Tenant and continuing throughout the term of this Lease, including
water and sewage charges (if separately metered), electricity, telephone and gas
("Utility Expenses"). Landlord shall not be liable for any permanent or
temporary interruption of utility services nor shall any of Tenant's obligations
under this Lease be affected by any such interruption of utility services.
(b) Indemnification. Tenant shall indemnify and hold Landlord
harmless from and against any and all costs, liabilities, suits, penalties,
claims and demands, including attorneys' fees, as a result of a lien being
imposed upon the Premises by virtue of Tenant's failure to pay all or any part
of Utility Expenses.
(c) Energy Curtailment. Landlord and Tenant specifically
acknowledge that energy shortages in the region in which the Property is located
may from time to time necessitate reduced or curtailed energy consumption on the
Property. Tenant shall comply with all such rules and regulations as may be
promulgated from time to time by any governmental authority with respect to
energy consumption, and during such period of time as such governmental
authority may so require, Tenant shall reduce or curtail operations in the
Premises as shall be directed by Landlord or such governmental authority.
Compliance with such rules and regulations and/or such reduction or curtailment
of operation shall not constitute a breach of Landlord's covenant of quiet
enjoyment or otherwise invalidate or affect this Lease, and Tenant shall not be
entitled to any diminution or abatement in Base Rental during the periods of
reduction or curtailment of operations.
13. Estoppel Certificates. Within twenty (20) days after written
request by Landlord, Tenant shall execute, acknowledge and deliver to Landlord
or to Landlord's mortgagee, prospective mortgagee, land lessor or prospective
purchaser of the Property or any part thereof, an estoppel certificate, in form
and substance substantially similar to that attached as Exhibit E and
incorporated herein by reference. Tenant shall make such modifications to such
estoppel certificate as may be necessary to make such certificate true and
accurate, it being intended that any such statement delivered pursuant to this
Paragraph 13 may be relied upon by any such mortgagee, prospective mortgagee,
prospective purchaser, or land lessor of the Property. If Tenant fails to
provide such estoppel certificate with twenty (20) days after Landlord's
request, Tenant shall be deemed to have approved the contents of any such
certificate submitted to Tenant by Landlord and Landlord is hereby authorized to
so certify.
14. Mutual Indemnification. Subject to Paragraph 16 hereof, Landlord
shall Indemnify Tenant from and against all claims, losses, costs, damages, and
expenses, including attorneys' fees and costs of suit ("Losses and Liabilities")
arising from injury to any person or property, or loss of life arising out of
Landlord's use, operation or maintenance of the Common Area, and Tenant shall
Indemnify Landlord from and against Losses and Liabilities arising from injury
to any person or property, or loss of life, arising out of Tenant's use,
operation or maintenance of the Premises. The parties' indemnity obligations
hereunder shall survive the expiration or earlier termination of this Lease.
<PAGE>
Indemnify means that a party (Indemnitor) shall indemnify, protect and
defend the other party (Indemnitee) from and against all Losses and Liabilities,
resulting from the death, bodily injury or personal injury of any person or
physical damage to, or (in case of a mechanic's lien) economic loss of, any
property arising out of the specified duties or conduct of the Indemnitor or its
agents and employees. An Indemnitee includes a party and its representatives. No
party shall be obligated to indemnify a proposed Indemnitee where the Losses and
Liabilities (a) are caused, in whole or in part, by the Indemnitee's act,
omission or negligence, or (b) has been released and waived in accordance with
Paragraph 16.
15. Insurance.
(a) Tenant's Insurance. Tenant, at its sole cost and expense,
shall carry from the earlier of the date Tenant enters the Premises with
Landlord's consent or the Commencement Date and continuing during the entire
Lease Term, the following types of insurance:
(i) Commercial general liability insurance on an
occurrence basis against injuries to persons occurring in, upon or
about the Premises, with minimum coverage of Two Million Dollars
($2,000,000.00) per occurrence, and One Million Dollars ($1,000,000.00)
for property damage;
(ii) Fire, extended coverage, vandalism and malicious
mischief, and sprinkler damage and all-risk insurance coverage on all
personal property, trade fixtures, floor coverings, wall coverings,
furnishings, furniture, and contents for their full insurable value on
a replacement cost basis;
(iii) Business interruption insurance, against loss
or damage resulting from the same risks as are covered by the insurance
mentioned in Paragraph (i) above in an amount equal to the aggregate of
one (1) year's requirement of (A) Base Rental, (B) the amounts payable
by Tenant for Additional Rental as provided in Paragraph 4(c), and (C)
insurance premiums necessary to comply with this Paragraph 15; and
(iv) Workers' Compensation or similar insurance, if
and to the extent required by law and in form and amounts required by law.
(b) Landlord as Additional Insured. All such insurance
required to be maintained by Tenant shall name Landlord, and at Landlord's
request, Landlord's property manager, as an additional insured and shall be
written with a company or companies reasonably satisfactory to Landlord, having
a policyholder rating of at least "A" and be assigned a financial size category
of at least "Class XIV" as rated in the 1996 edition of "Best's Key Rating
Guide" for insurance companies, and authorized to engage in the business of
insurance in the state in which the Premises are located. Tenant shall deliver
to Landlord copies of such policies and customary insurance certificates
evidencing such paid-up insurance. Such insurance shall further provide that the
same may not be canceled, terminated or modified unless the insurer gives
Landlord and Landlord's mortgagee(s) at least sixty (60) days' prior written
notice thereof.
<PAGE>
(c) Landlord's Insurance. Landlord shall maintain in force, at
all times during the Lease Term, a policy or policies of all risk insurance
covering the Shopping Center, exclusive of any items insured by Tenant, in an
amount equal to one hundred percent (100%) of its replacement cost (exclusive of
the cost of excavations, foundations and footings). Further, Landlord shall
maintain in force, at all times during the Lease Term, a commercial general
liability insurance policy or policies for liability for bodily injury to
persons and damage to property occurring in or about the Common Area. Said
insurance policy or policies shall be in an amount not less than a combined
single limit liability of Two Million Dollars ($2,000,000) per occurrence.
(d) Increase in Premiums. If insurance premiums payable by
Landlord or any other tenant are increased as a result of any breach of Tenant's
obligations under this Lease or as a result of Tenant's use and occupancy of the
Premises, Tenant shall pay to Landlord an amount equal to any increase in such
insurance premiums.
16. Waiver of Subrogation. Neither Landlord nor Tenant shall be liable
to the other for any business interruption or any loss or damage to property or
in any manner growing out of or connected with Tenant's use and occupation of
the Premises, the Shopping Center or the Property or the condition thereof, or
of the adjoining property, whether or not caused by the negligence or other
fault of Landlord or Tenant or of their respective agents, employees,
subtenants, licensees or assignees; provided, however, that this release shall
apply only to the extent that such business interruption or loss or damage is
covered by insurance, regardless of whether such insurance is payable to or
protects Landlord or Tenant or both. Nothing in this Paragraph 16 shall be
construed to impose any other or greater liability upon either Landlord or
Tenant than would have existed in the absence hereof. Because this Paragraph 16
will preclude the assignment of any claim mentioned in it by way of subrogation
(or otherwise) to an insurance company (or any other person), each party to this
Lease agrees immediately to give to each insurance company that has issued to it
policies of fire and extended coverage insurance, written notice of the terms of
the mutual waivers contained in this paragraph, and to have the insurance
policies properly endorsed, if necessary, to prevent the invalidation of the
insurance coverages because of the mutual waivers contained in this Paragraph
16.
17. Holding Over. If Tenant retains possession of the Premises or any
part thereof after the termination of this Lease, Tenant shall, from that day
forward, be a tenant from month to month and Tenant shall pay Landlord rent at
two (2) times the monthly rate in effect immediately prior to the termination of
this Lease for the time the Tenant remains in possession. No acceptance of rent
by, or other act or statement whatsoever on the part of Landlord or its agent or
employee, in the absence of a writing signed by Landlord, shall be construed as
an extension of or as a consent for further occupancy. Tenant shall indemnify
Landlord for all damages, consequential as well as direct, sustained by reason
of Tenant's retention of possession. The provisions of this Paragraph 17 do not
exclude pursuit of Landlord's right of re-entry or any other right hereunder.
18. Assignment and Sublease.
(a) Prohibition. Provided Tenant is not then in default, upon
thirty (30) days' notice to Landlord, Tenant shall have the right to assign this
Lease, or sublet all or any portion of the Premises, with Landlord's reasonable
prior written approval. Landlord shall not withhold its approval of such
transfer if (i) the transferee's proposed use of the Premises is consistent with
a "first-class promotional retail center", transferee will be operating the
proposed use in substantially all of the Premises (provided, however, that the
foregoing clause shall not imply any greater requirement to operate than is
<PAGE>
otherwise described in Paragraph 7a hereof), and the proposed use is not a
Restricted Use at the time of the proposed transfer, or an existing primary use
of another tenant on the Property (where "primary use" shall mean such other
tenant operates fifty percent (50%) or more of its floor area for such use or
derives fifty percent (50%) or more of its Gross Sales from such use), and (ii)
the proposed transferee has a reasonably acceptable net worth and business
experience respecting its proposed use of the Premises. Tenant shall not require
Landlord's approval, and shall be released from all obligations and liabilities
accruing and arising under the Lease from and after the date of an assignment of
the Lease, provided that Tenant notifies Landlord in writing as described in
Paragraph 18(b) hereof, and provided that the assignee, in addition to
satisfying the requirements of subpart (i) of this Paragraph 18(a) (A) has a net
worth equal to or greater than One Million Three Hundred Thousand Dollars
($1,300,000.00), and (B) has earned a profit during each of the past three (3)
full fiscal years in operating its retail business. If Tenant is not released
because all of the foregoing criteria are not satisfied, Tenant shall remain
fully responsible, and jointly and severally liable for the payment of the rent
and for compliance with all other obligations imposed upon Tenant under the
terms, provisions and covenants of the Lease, notwithstanding that Landlord
approves the assignment. Any single transfer of, or successive transfers
cumulating, fifty percent (50%) or more of the stock or ownership interest in
Tenant shall be an assignment of this Lease for purposes of this Paragraph 18.
Notwithstanding anything in this Lease to the contrary, none
of the following events shall be an assignment of the Lease or sublease of the
Premises ("transfer") that is subject to Landlord's approval or right to cancel
under Paragraph 18(c), and the transferee in each event shall be entitled to
exercise (subject to the terms and conditions of the Lease) all rights of the
original Tenant, including without limitation, those under Paragraphs 1(i) (rent
abatement), 3(b) (Lease termination), and 3(c) (Option Terms), provided that
Tenant shall notify Landlord as described in Paragraph 18(b) (excluding the
first sentence thereof):
(i) a transfer to an Affiliate (as hereinafter defined);
(ii) a transfer in connection with a merger or consolidation with, or sale
to, a buyer of substantially all of the assets of at least three (3) toy stores
of Tenant and its Affiliates in Southern California;
(iii) Tenant or any Affiliate becomes a public corporation pursuant to
California law and regulations of the California Commissioner of Corporations.
"Affiliate" is any individual, corporation, partnership, firm,
association or entity that, directly or indirectly, Controls, is Controlled by,
or is under common ownership or Control with, Tenant.
"Control" is the power, exercisable jointly or severally to
manage and direct any individual, corporation, partnership, firm, association or
entity through direct or indirect ownership of corporate stock, voting rights or
partnership interest.
(b) Notice/Documentation. Tenant's notice of an assignment or
sublease shall include evidence of the transferee's net worth and past business
profit (as shown in financial statements and tax returns) and copies of all
proposed agreements and documents (collectively, the "Transfer Documents")
memorializing, facilitating and/or evidencing the proposed assignment or
sublease. The Transfer Documents shall expressly provide that an assignee
assumes the Lease and agrees to be bound by all of the terms, covenants,
conditions, provisions and agreements of the Lease to the extent applicable and
a subtenant is bound by all of Tenant's duties under the Lease except payment of
rent; provided, however, that upon the occurrence of an "event of default" as
set forth in Paragraph 23 hereof, if all or any part of the Premises is then
assigned, sublet, transferred or occupied by someone other than Tenant, then, in
<PAGE>
addition to any other remedies provided in this Lease or provided by law,
Landlord, at its option, may collect directly from the assignee, subtenant,
transferee or occupant all rent becoming due to Tenant by reason of the
assignment, sublease, transfer or occupancy. Any collection directly by Landlord
from the assignee or subtenant shall not be construed to constitute a novation
of the Lease or a release of Tenant's duties under the Lease. Upon consummation
of the assignment or sublease, Tenant shall promptly deliver a copy of the
executed Transfer Documents to Landlord and Landlord shall not be required to
acknowledge a transfer (whether or not Landlord has consented thereto) prior to
receiving a copy of said executed documents. Any purported transfer,
encumbrance, pledge, mortgage, assignment or subletting not in compliance
herewith shall be void and of no force or effect.
(c) Option to Cancel. After receiving notice of Tenant's
intended assignment or sublease, Landlord shall have the right to approve or
disapprove the transfer as provided hereinabove, or to terminate this Lease on
thirty (30) days' notice to Tenant unless Tenant rescinds its prior notice of
assignment or sublease within said thirty (30) day period. If the Lease so
terminates, Tenant shall be released from all unaccrued liabilities.
(d) Excess Rent. On the effective date of transfer by
assignment of this Lease or sublease of the Premises, the Base Rental for the
portion of the Premises transferred shall be increased by one-half (1/2) of all
rent and other consideration the transferee shall pay to Tenant (as and when so
paid) pursuant to the executed Transfer Documents in excess of the total rent
otherwise payable under this Lease. In no event shall the Base Rental, after
such assignment or subletting, be less than the Base Rental payable immediately
prior to such assignment or subletting.
19. Quiet Enjoyment. If Tenant shall pay the rents and other sums due
to be paid by Tenant hereunder as and when the same become due and payable, and
if Tenant shall keep, observe and perform all of the other terms, covenants and
agreements of this Lease on Tenant's part to be kept, observed and performed,
Tenant shall, at all times during the Lease Term herein granted, peacefully and
quietly have and enjoy possession of the Premises without any encumbrance or
hindrance by, from or through Landlord, except for regulations imposed by any
governmental or quasi-governmental agency on the occupancy of Tenant or the
conduct of Tenant's business operations.
20. Compliance with Laws and with Rules and Regulations.
(a) Laws. Tenant, at its sole cost and expense, shall procure any permits
and licenses required for the transaction of Tenant's business in the Premises.
Tenant, at its sole cost and expense, shall promptly observe and comply with all
present and future laws, ordinances, requirements, orders, directives, rules and
regulations, including, but not limited to, the Americans With Disabilities Act
of 1990, of all state, federal, municipal and other agencies or bodies having
jurisdiction relating to the use, condition and occupancy of the Premises, the
Shopping Center and the Property at any time in force, applicable to the
Premises or to Tenant's use thereof (collectively, "Applicable Laws"), except
that Tenant shall not be under any obligation to comply with any Applicable Law
requiring any structural alteration of the Premises, unless such alteration is
required because of a condition that has been created by, or at the instance of,
Tenant, or is required by reason of a breach of any of Tenant's covenants and
agreements under this Lease. Landlord shall not be required to repair any injury
or damage by fire or other cause, or to make any repairs or replacements of any
panels, decoration, office fixtures, railing, ceiling, floor covering,
partitions, or any other property installed in the Premises by Tenant. Tenant
shall provide Landlord with written notice if Tenant is aware of, or has
received a communication regarding, an actual or alleged violation of Applicable
Laws. If Tenant is required to take action to effectuate compliance with
Applicable Laws, Tenant shall have thirty (30) days, or such additional time as
is necessary to cause any necessary improvements and alterations to be made so
long as Tenant diligently and continuously attempts to effectuate the same, to
comply with Applicable Laws. If Tenant fails to comply as aforesaid, Landlord
shall have the right, but not the obligation, to make such improvements and
alterations as is necessary to comply with Applicable Laws and such sums
expended by Landlord shall be immediately due and payable by Tenant as Other
Charges under this Lease.
<PAGE>
(b) Rules and Regulations. Tenant shall comply with all rules
and regulations for the Shopping Center that Landlord may from time to time
promulgate and/or modify relating to the use and operation of the Shopping
Center. Notwithstanding anything contained in this Lease, Landlord
shall not be responsible nor liable to Tenant, it agents, representatives,
employees, invitees or licensees, for the nonobservance by any other tenant of
any rules and regulations.
21. Fire and Casualty.
(a) Right to Terminate Lease. If (i) the Premises or the
Building shall be damaged to the extent of more than fifty percent (50%) of the
cost of replacement thereof during the last two years of the Lease Term, or,
(ii) the Premises or the Shopping Center shall be damaged as a result of a risk
which is not required to be covered by Landlord's insurance, then in any such
event, Landlord may terminate this Lease by notice given within ninety (90) days
after such event and upon the date specified in such notice, which shall not be
less than thirty (30) days nor more than sixty (60) days after the giving of
said notice, this Lease shall terminate, and Tenant shall vacate and surrender
the Premises to Landlord; provided, however, that if Landlord elects to
terminate the Lease as a result of damage described in clause (i) hereinabove,
and Tenant notifies Landlord in writing of its election to extend the Lease Term
according to Tenant's rights described in Paragraph 3(c) hereof within thirty
(30) days following receipt of the termination notice from Landlord, Landlord's
notice of termination shall be null and void.
(b) Obligation to Rebuild. If this Lease is not terminated
pursuant to Paragraph 21(a) above, Landlord shall proceed with due diligence to
restore, repair and replace the Premises and the Shopping Center to the same
condition as they were in as of the Commencement Date, to the extent such prior
condition can be achieved by use of available insurance proceeds. If the
casualty, repairing or rebuilding shall render the Premises untenantable, in
whole or in part, a proportionate abatement of the Base Rental shall be allowed
from the date when the damage occurred until completion of the repairs of
rebuilding or, in the event Landlord elects to terminate this Lease, until said
date of termination. Said proportionate abatement shall be computed on the basis
of the ratio which the amount of floor space rendered untenantable bears to the
total floor space of the Premises. Landlord shall be under no duty to restore
any alterations, improvements or additions made by Tenant. In all cases, due
allowance shall be given to Landlord for any reasonable delays caused by
adjustment of insurance loss, strikes, labor difficulties or any cause beyond
Landlord's control.
22. Eminent Domain.
(a) Termination of Lease. If all or substantially all of the
Premises or of the Property shall be taken for at least the unexpired portion of
the Lease Term for any public or quasi-public use under any statute or by rights
of eminent domain or by private purchase in lieu thereof, this Lease shall
terminate on the date when possession of the Premises or the Property, as the
case may be, shall be acquired by the condemning authority.
(b) Right to Terminate Lease. If less than all or
substantially all of the Premises, the leasehold estate or the Property shall be
taken and (i) the part so taken includes thirty percent (30%) or more of the
Premises, or (ii) the part so taken includes fifty percent (50%) or more of the
Shopping Center, or (iii) the part so taken consists of thirty percent (30%) or
more of the total parking area on the Property, or (iv) such part so taken
results in completely cutting off direct access from the primary thoroughfare
providing access to the Premises, then, and in any such event, within a period
of thirty (30) days after notice of such taking, either party may elect to
terminate this Lease by giving written notice to the other party, which
termination shall be effective on the date when possession of the Premises or
the Property, as the case may be, shall be acquired by the condemning authority.
<PAGE>
If Tenant does not elect to terminate the Lease following a partial
taking of the leasehold estate, Tenant shall be entitled to the entire
condemnation award related to the leasehold estate. Otherwise, if either
Landlord or Tenant elects to terminate this Lease as described in these
Paragraphs 22(a) and (b), all awards from such taking shall belong to Landlord
and Tenant hereby assigns to Landlord all its right, title and interest to any
such awards; provided, however, that Tenant reserves unto itself the right to
prosecute, in a subsequent apportionment proceeding, any claim for the
unamortized cost of Tenant's Work paid by Tenant, any injury caused to trade
fixtures and equipment or for moving expenses.
(c) Repair. If this Lease is not terminated pursuant to the
provisions of Paragraphs 22(a) or (b) above, then Tenant shall, at its own cost
and expense and with reasonable promptness, restore the remaining portion of the
Premises to the extent necessary to reconstitute the improvements thereon
lien-free and in a good and workmanlike manner as a complete architectural unit,
susceptible to the same use as that which was in effect immediately prior to
such taking; and Landlord shall make available to Tenant for such purpose such
awards as Landlord actually receives, up to, but not to exceed, Tenant's
reasonable expenses incurred in so doing. If Tenant restores the Premises or any
part thereof pursuant to this Paragraph 22, such restoration shall be governed
by, and Landlord shall have the rights set forth in Paragraph 8.
(d) Temporary Requisition. In the event of the temporary
requisition of the use or occupancy of the Premises or any part thereof, by any
governmental authority, civil or military, Tenant shall retain any award or
payment therefor, whether the same shall be paid or payable in respect of
Tenant's leasehold interest hereunder or otherwise; provided, however, that
Tenant shall continue to pay Base Rental during the period of such temporary
requisition.
(e) Notice of Taking. Landlord shall notify Tenant of any
taking of the Premises contemplated by a public authority. No taking or
temporary requisition shall constitute a breach of Landlord's covenant of quiet
enjoyment, nor shall rent abate if this Lease is not terminated.
23. Default.
(a) Events of Default. If (i) Tenant fails to pay when due any
rent, or any other sums required to be paid hereunder by Tenant, and Tenant
shall fail to cure said default within ten (10) days after receipt of written
notice thereof by Landlord; or (ii) Tenant defaults in the performance or
observance of any other agreement or condition on its part to be performed or
observed, and Tenant shall fail to cure said default within thirty (30) days
after receipt of written notice thereof by Landlord; or (iii) Tenant or
Guarantor (any of them if more than one) files a voluntary petition in
bankruptcy or is adjudicated a bankrupt or insolvent, or files any petition or
answer seeking any arrangement, composition, liquidation or dissolution under
any present or future federal, state or other statute, law or regulation
relating to bankruptcy, insolvency or other relief for debtors or seeks or
consents to or acquiesces in the appointment of any trustee, receiver or
liquidator of Tenant or of all or any substantial part of its properties, or of
the Premises, or makes any general assignment for the benefit of creditors, or
admits in writing its inability to pay its debts generally as they become due;
or (iv) a court enters an order, judgment or decree approving a petition filed
against Tenant or Guarantor (any of them if more than one) seeking any
arrangement, composition, liquidation, dissolution or similar relief under any
present or future federal, state or other statute, law or regulation relating to
bankruptcy, insolvency or other relief for debtors, and such order, judgment or
decree shall remain unvacated or unstayed for an aggregate of sixty (60) days
(whether or not consecutive); or (v) Tenant fails to operate or closes its
business upon the Premises during the first three (3) Lease Years, for reasons
other than fire or other casualty or condemnation, for a period of fifteen (15)
consecutive days; or (vi) Tenant abandons the Premises; then any of the
foregoing shall be deemed a default under this Lease.
<PAGE>
(b) Termination Remedy. If a default by Tenant occurs, then
and at any time thereafter, in addition to any other rights or remedies
available to Landlord at law or in equity, Landlord shall have the immediate
option, but not the obligation, to terminate this Lease and all rights of Tenant
hereunder without further notice or demand of any kind to Tenant or any other
person, except as required by applicable state law. In the event that Landlord
shall elect to so terminate this Lease, then Landlord, as provided in California
Civil Code Section 1951.2, may recover from Tenant:
(i) The worth at the time of award of any unpaid rent and other charges
which had been earned at the time of such termination; plus
(ii) The worth at the time of the award of the amount by which the unpaid
rent and other charges which would have been earned after termination until the
time of award exceeds the amount of such rental loss which Tenant proves could
have been reasonably avoided; plus
(iii) The worth at the time of award of the amount by which the unpaid rent
and other charges for the balance of the term of this Lease after the time of
award exceeds the amount of such rental loss which Tenant proves reasonably
could be avoided; plus
(iv) The total value at the time of the award of all of the concessions
granted to Tenant at the time of signing this Lease prorated based on the
remainder of the initial term of the Lease; plus
(v) Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom, including but not limited to any cost or expense incurred by Landlord
in (i) terminating the Lease or retaking the Premises, including reasonable
attorney fees therefor, (ii) maintaining or preserving the Premises after such
default, (iv) preparing the Premises for reletting to a new tenant, including
repairs or alterations to the Premises for such reletting, (iv) leasing
commissions and (v) any other costs necessary or appropriate to relet the
Premises; plus
(vi) At Landlord's election, such other amounts in addition to or in lieu
of the foregoing as may be permitted from time to time by applicable law.
As used in Paragraphs 23(b)(i) and (ii) above, the "worth at the time
of award" shall be computed by allowing interest at the Default Rate. As used in
Paragraph 23(b)(iii) above, the "worth at the time of award" shall be computed
by discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award plus one percentage point per annum.
All rent, other than Base Rental, including without limitation
Percentage Rental and Operating Expenses shall, for the purposes of calculating
any amount due under the provisions of (b)(3) of this Paragraph 23, be computed
on the basis of the highest annual amount of such rental paid to Landlord during
the three (3) Lease Years immediately preceding termination of the Lease except
that, if it becomes necessary to compute such rental before such a 3-year period
has occurred, then such rental shall be computed on the basis of the highest
annual or annualized amount accruing during such shorter period.
(c) Right to Continue Lease in Force. If Landlord does not
elect to terminate this Lease as provided above, Landlord may from time to time,
without terminating this Lease, enforce all of its rights and remedies under
this Lease, including the right to recover all rent as it becomes due. Tenant
acknowledges that Landlord shall have the remedy described in California Civil
Code Section 1951.4 (Landlord may continue this Lease in effect after Tenant's
breach and abandonment and recover rent as it becomes due, since Tenant
acknowledges Tenant has the right to sublease or assign subject only to
reasonable limitations as set forth in Paragraph 18 hereof.)
<PAGE>
(d) No Deemed Termination. Landlord shall not be deemed to
have terminated this Lease, Tenant's right to possession of the Premises or the
liability of Tenant to pay rent thereafter accruing or its liability for damages
under any of the provisions hereof, unless Landlord shall have notified Tenant
in writing that it has so elected to terminate this Lease.
(e) Inducement Recapture in Event of Default. Any agreement by
Landlord for (i) free or abated rent, (ii) payment of any improvement allowance,
(iii) payment of any leasing commission whether or not set forth in the Lease or
(iv) the providing to Tenant of any other bonus, inducement or consideration for
Tenant's entering into this Lease (all of which concessions are hereinafter
referred to as "Inducement Provisions(s)") shall be deemed conditioned upon
Tenant's full and faithful performance of all of the terms, covenants and
conditions of this Lease to be performed or otherwise observed by Tenant during
the Initial Term or during such subsequent Option Term for which said Inducement
Provision was granted. Upon the occurrence of any default (as defined in
Paragraph 23(a) of this Lease) of this Lease by Tenant, any such Inducement
Provisions shall automatically be deemed deleted from this Lease and of no
further force or effect, and any amount paid or concession already given to
Tenant or paid in connection with the Lease or Tenant's occupancy of the
Premises under any Inducement Provisions with respect to the portion of the
Lease Term for which the Inducement Provision was granted shall be immediately
revoked and due and payable by Tenant to Landlord as additional rent under this
Lease, in addition to any other damage or sum which Landlord may be entitled to
recover under the provisions of this Paragraph 23.
(f) Removal of Property. Upon the termination of this Lease or
of Tenant's right to possession of the Premises by lapse of time or earlier
termination as herein provided, Tenant shall remove its property from the
Premises. Any such property of Tenant not removed from the Premises by Tenant
within thirty (30) days after the end of the term or of Tenant's right to
possession of the Premises, however terminated, whichever occurs earlier, shall
be conclusively deemed to have been forever abandoned by Tenant and either may
be retained by Landlord as its property or may be disposed of in such manner as
Landlord may see fit.
(g) Landlord's Right to Pay or Perform. If Tenant at any time fails to make
any payment or perform any other act on its part to be made or performed under
this Lease, Landlord may, but shall not be obligated to, and after reasonable
notice or demand and without waiving or releasing Tenant from any obligation
under this Lease, make such payment or perform such other act to the extent
Landlord may deem desirable, and in connection therewith to pay expenses and
employ counsel. Tenant shall pay upon demand all of Landlord's costs, charges
and expenses, including the fees of counsel, agents and others retained by
Landlord, incurred in enforcing Tenant's obligations hereunder or incurred by
Landlord in any litigation, negotiations or transactions in which Tenant causes
Landlord, without Landlord's fault, to become involved or concerned, which
amount shall be deemed to be rent due and payable by Tenant, upon demand by
Landlord, and Landlord shall have the same rights and remedies for the
nonpayment thereof, as in the case of default in the payment of rent.
(h) Remedies Cumulative. All rights and remedies of Landlord herein
enumerated shall be cumulative, and none shall exclude any other right or remedy
allowed by law. In addition to the other remedies in this Lease provided,
Landlord shall be entitled to the restraint by injunction of the violation or
attempted violation of any of the covenants, agreements or conditions of this
Lease.
<PAGE>
24. Waiver of Default or Remedy. No waiver of any covenant or condition
or of the breach of any covenant or condition of this Lease shall be taken to
constitute a waiver of any subsequent breach of such covenant or condition nor
to justify or authorize the nonobservance on any other occasion of the same or
of any other covenant or condition hereof, nor shall the acceptance of rent by
Landlord at any time when Tenant is in default under any covenant or condition
hereof be construed as a waiver of such default or of Landlord's right to
terminate this Lease on account of such default, nor shall any waiver or
indulgence granted by Landlord to Tenant be taken as an estoppel against
Landlord, it being expressly understood that if at any time Tenant shall be in
default in any of its covenants or conditions hereunder an acceptance by
Landlord of rental during the continuance of such default or the failure on the
part of Landlord promptly to avail itself of such rights or remedies as Landlord
may have, shall not be construed as a waiver of such default, but Landlord may
at any time thereafter, if such default continues, terminate this Lease or
assert any other rights or remedies available to it on account of such default
in the manner hereinbefore provided.
25. Landlord's Lien. [Intentionally omitted.]
26. Uniform Commercial Code. [Intentionally omitted.]
27. Force Majeure. If Landlord or Tenant shall be delayed, hindered in
or prevented from the performance of any act required hereunder (other than the
payment of rent and other charges payable by Tenant) by reason of strikes,
lockouts, labor troubles, inability to procure materials or governmental
permits, failure of power, riots, insurrection, the act, failure to act or
default of the other party, war or any other condition beyond the reasonable
control of the party who is seeking additional time for the performance of such
act, then performance of such act shall be excused for the period of the delay
and the period for the performance of any such act shall be extended for a
reasonable period, in no event to exceed a period equivalent to the period of
such delay. No such interruption of any service to be provided by Landlord shall
ever be deemed to be an eviction, actual or constructive, or disturbance of
Tenant's use and possession of the Premises, the Shopping Center or the
Property.
<PAGE>
28. Subordination of Lease.
(a) Landlord reserves the right and privilege to subject and
subordinate this Lease to any and all mortgages, deeds of trust or land leases
now existing upon or that may be hereafter placed upon the Premises and the
Property and to all advances made or to be made thereon and all renewals,
modifications, consolidations, replacements or extensions thereof and if such
right is exercised, the lien of any such mortgages, deeds of trust or land
leases shall be superior to all rights hereby or hereunder vested in Tenant, to
the full extent of all sums secured thereby. In confirmation of such
subordination, Tenant shall, on request of Landlord or the holder of any such
mortgages, deed(s) of trust and land leases, execute and deliver to Landlord
within ten (10) days any instrument that Landlord or such holder may reasonably
request.
(b) If the interest of Landlord under this Lease shall be
transferred by reason of foreclosure, deed in lieu of foreclosure, or other
proceedings for enforcement of any first mortgage or deed of trust on the
Premises, Tenant shall be bound to the transferee (the "Purchaser") under the
terms, covenants and conditions of this Lease for the balance of the Lease Term
remaining, and any extensions or renewals, with the same force and effect as if
the Purchaser were the Landlord under this Lease, and at the option of
Purchaser, Tenant shall attorn to the Purchaser (including the mortgagee under
any such mortgage, if it be the Purchaser), as its Landlord, the attornment to
be effective and self-operative without the execution of any further instruments
upon the Purchaser succeeding to the interest of Landlord under this Lease. The
respective rights and obligations of Tenant and the Purchaser upon the
attornment, to the extent of the then remaining balance of the Lease Term, and
any extensions and renewals, shall be and are the same as those set forth in
this Lease.
Notwithstanding the foregoing provisions of this Paragraph 28,
Tenant's obligation to subordinate its rights hereunder or to attorn to any
Purchaser as provided hereinabove is expressly subject to agreement by any such
lienholder or Purchaser to recognize Tenant's Lease and, provided Tenant is not
in default of the Lease beyond any applicable cure periods, not disturb Tenant's
possession of the Premises on foreclosure.
29. Notices and Consents. All notices, demands, requests, consents and
approvals that may or are required to be given by either party to the other
shall be in writing and shall be deemed given when sent by United States
certified or registered mail, postage prepaid, or by overnight courier (a) if
for Tenant, addressed to Tenant at the Shopping Center with a copy to the
address set forth in Paragraph 1(c) above, or at such other place as Tenant may
from time to time designate by notice to Landlord, or (b) if for Landlord, to
the address set forth in Paragraph 1(a) above and to the address set forth in
Paragraph 1(b) above, or at such other place as Landlord may from time to time
designate by notice to Tenant. All consents and approvals provided for herein
must be in writing to be valid. Notice shall be deemed to have been given if
addressed and mailed as above provided on the date two (2) days after deposit in
the United States mail or one (1) day after deposit with an overnight courier.
30. Security Deposit. [Intentionally deleted.]
31. Miscellaneous Taxes. Tenant shall pay, prior to delinquency, all
taxes assessed against or levied upon its occupancy of the Premises, or upon the
fixtures, furnishings, equipment and all other personal property of Tenant
located in the Premises, if nonpayment thereof shall give rise to a lien on the
Premises, and when possible Tenant shall cause said fixtures, furnishings,
equipment and other personal property to be assessed and billed separately from
the property of Landlord. If any or all of Tenant's fixtures, furnishing,
equipment and other personal property, upon Tenant's occupancy of the Premises,
are assessed and taxed with the property of Landlord, Tenant shall pay to
Landlord its share of such taxes within ten (10) days after delivery to Tenant
by Landlord of a statement in writing setting forth the amount of such taxes
applicable to Tenant's fixtures, furnishings, equipment or personal property.
<PAGE>
32. Brokerage Commission. Except for any broker, agent or other person
identified in Paragraphs 1(s) and 1(t) above, Landlord and Tenant represent and
warrant each to the other that each has dealt with no broker, agent or other
person in connection with this transaction and that no broker, agent or other
person brought about this transaction. Landlord hereby agrees to pay to
Landlord's broker identified in Paragraph 1(s) above ("Agent") a leasing
commission as set forth in that certain Property Management Agreement between
Landlord and Agent, from which Agent shall pay "co-op" leasing commission to
Tenant's broker identified in Paragraph 1(t) above ("Co-op Broker"). Landlord
and Tenant each agree to indemnify and hold the other harmless from and against
any claims by any other broker, agent or other person (including, without
limitation, Co-op Broker) claiming a commission or other form of compensation by
virtue of having dealt with the indemnifying party with regard to this leasing
transaction. The provisions of this Paragraph 32 shall survive the termination
of this Lease.
33. Hazardous Devices and Contaminants.
(a) Prohibition. Except with the prior written consent of
Landlord, Tenant shall not install or operate any steam or internal combustion
engine, boiler, machinery, refrigerating or heating device or air-conditioning
apparatus in or about the Premises, or carry on any mechanical business therein.
Except for Contaminants (as hereinafter defined) used in the ordinary course of
business and in compliance with Requirements of Law (as hereinafter defined),
Tenant and its agents, employees, contractors and invitees shall not use, store,
release, generate or dispose of or permit to be used, stored, released,
generated or disposed of any Contaminants on or in the Premises.
(b) Indemnification by Tenant. Tenant shall indemnify and hold
harmless Landlord, its agents, servants, employees, officers and directors
forever from and against any and all liability, claims, demands and causes of
action, including, but not limited to, any and all liability, claims,
<PAGE>
demands and causes of action by any governmental authority, property owner or
any other third person and any and all expenses, including attorneys' fees
(including, but not limited to, attorneys' fees to enforce Tenant's obligation
of indemnification under this Paragraph 33(b)), relating to any environmental
liability resulting from (i) any Release (as hereinafter defined) of any
Contaminant at the Premises or emanating from the Premises to adjacent
properties or the surrounding environment during the Lease Term; (ii) during the
Lease Term, any generation, transport, storage, disposal, treatment or other
handling of any Contaminant at the Premises, including, but not limited to, any
and all off-site transport, storage, disposal, treatment or other handling of
any Contaminant generated, produced, used and/or originating in whole or in part
from the Premises; and (iii) any activities at the Premises during the Lease
Term that in any way might be alleged to fail to comply with any Requirements of
Law. The provisions of this Paragraph 33(b) shall survive the termination of
this Lease.
(c) Indemnification by Landlord. Landlord shall indemnify and
hold harmless Tenant, its agents, servants, employees, officers and directors
forever from and against any and all liability, claims, demands and causes of
action, including, but not limited to, any and all liability, claims, demands
and causes of action by any governmental authority, property owner or any other
third person and any and all expenses, including attorneys' fees (including, but
not limited to, attorneys' fees to enforce Landlord's obligation of
indemnification under this Paragraph 33(c)), relating to any environmental
liability caused solely by Landlord's actions and resulting from (i) any Release
(as hereinafter defined) of any Contaminant at the Common Area or emanating from
the Common Area to adjacent properties or the surrounding environment during the
Lease Term; (ii) during the Lease Term, any generation, transport, storage,
disposal, treatment or other handling of any Contaminant at the Common Area,
including, but not limited to, any and all off-site transport, storage,
disposal, treatment or other handling of any Contaminant generated, produced,
used and/or originating in whole or in part from the Common Area; and (iii) any
activities at the Common Area during the Lease Term that in any way might be
alleged to fail to comply with any Requirements of Law. The provisions of this
Paragraph 33(b) shall survive the termination of this Lease.
(d) Definitions.
(i) "Contaminant" shall mean any substance or waste
containing hazardous substances, pollutants, and contaminants as those
terms are defined in the federal Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq. and any
substance similarly defined or identified in any other federal,
provincial or state laws, rules or regulations governing the
manufacture, import, use, handling, storage, processing, release or
disposal of substances or wastes
deemed hazardous, toxic, dangerous or injurious to public
health or to the environment. This definition includes friable asbestos
and petroleum or petroleum-based products.
(ii) "Requirements of Law" shall mean any federal,
state or local law, rule, regulation, permit, agreement, order or other
binding determination of any governmental authority relating to the
environment, health or safety.
(iii) "Release" shall have the same meaning as in the
federal Comprehensive Environmental Response Compensation and Liability
Act, 42 U.S.C. Section 9601, et seq.
<PAGE>
34. Exculpation. This Lease is executed by certain general partners of
Landlord, not individually, but solely on behalf of, and as the authorized
nominee and agent for STRBO, and in consideration for entering into this Lease,
Tenant hereby waives any rights to bring a cause of action against the
individuals executing this Lease on behalf of Landlord (except for any cause of
action based upon lack of authority or fraud), and all persons dealing with
Landlord must look solely to STRBO's assets for the enforcement of any claim
against Landlord, and the obligations hereunder are not binding upon, nor shall
resort be had to the private property of any of, the trustees, officers,
directors, employees or agents of STRBO.
35. Signs. On or before the date that Tenant opens for business on the
Premises, Tenant, at its sole cost, shall erect an appropriate sign advertising
Tenant's business on the portion of the exterior of the Premises designated by
Landlord for the placement of Tenant's sign in conformity with Exhibit F,
attached hereto and incorporated herein by reference. The size, type, design,
wording, appearance and location of all signs shall require Landlord's written
approval prior to installation. All signs shall comply with Exhibit F, and
Tenant shall obtain all requirements of appropriate governmental authority and
all necessary permits or licenses. Tenant shall maintain all signs in good
condition and repair at all times and shall indemnify and hold Landlord harmless
from injury to person or property (including attorneys' fees and costs of suit)
arising from the erection and maintenance of said signs. Further, Tenant shall
move and reinstall Tenant's sign to a place designated by Landlord in front of
the Premises at Tenant's expense upon notice from Landlord if Landlord elects to
remodel the exterior of the building in which the Premises are located. Also, if
as a part of remodeling specifications, a new exterior tenant sign criteria is
developed by Landlord, then within 60 days after Tenant's receipt of written
notice of said new sign criteria, Tenant shall, at Tenant's expense, remove all
existing signs and replace the same with new signs in accordance with new sign
criteria. Upon vacating the Premises, Tenant shall remove all signs and repair
all damages caused by installation and removal.
36. Locks. No additional locks or similar devices shall be attached to
any door or window without Landlord's prior written consent. Except for those
keys provided by Landlord, no keys for any door shall be made. If more than two
keys for one lock are desired, Landlord will provide the same upon payment by
Tenant. All keys must be returned to Landlord at the expiration or termination
of this Lease. Tenant shall see that the doors and windows, if operable, of the
Premises are closed and securely locked before leaving the Premises.
37. Employment. If either party employs, directly or indirectly,
unionized labor whose activities illegally interfere with (a) in the case of
Tenant, the employees of Landlord or the customers of other tenants at the
Property, or (b) in the case of Landlord, the customers of Tenant, each such
employer party shall, at its sole cost, use all commercially reasonable efforts,
including commencing appropriate administrative or judicial proceedings, to
prevent such interference.
38. Plumbing. Tenant must observe strict care and caution that all
water faucets and water apparatus are shut off before Tenant or its employees
leave the Premises to prevent waste or damage. Plumbing fixtures and appliances
shall be used only for purposes for which constructed, and no sweepings,
rubbish, rags or other unsuitable material shall be thrown or placed therein.
Damage resulting to any such fixtures or appliances from misuse by Tenant shall
be paid by Tenant and Landlord shall not in any case be responsible therefor.
39. Certain Rights Reserved to Landlord. Landlord reserves the
following rights:
<PAGE>
(a) To name the Shopping Center and to change the name or street address of
the Shopping Center;
(b) On reasonable prior notice to Tenant, to exhibit the Premises to
prospective tenants during the last twelve (12) months of the Lease Term, and to
exhibit the Premises to any prospective purchaser, mortgagee, or assignee of any
mortgage on the Property and to others having a legitimate interest at any time
during the Lease Term; and
(c) To install vending machines of all kinds on the Property and to receive
all of the revenue derived therefrom; provided, however, that no vending
machines shall be installed by Landlord in the Premises.
40. Guaranty. At Landlord's election, the effectiveness of this Lease
is conditioned upon the Guarantor set forth in Paragraph 1(u) above (i)
executing the Guaranty attached to this Lease as Exhibit G and delivering it to
Landlord before or concurrently with Tenant's execution and delivery of this
Lease to Landlord, and (ii) delivering to Landlord, along with such originally
executed Guaranty, such evidence as Landlord shall require that (A) the Guaranty
has been duly authorized, executed and delivered pursuant to all necessary
corporation actions (if applicable) such as broad-form resolution, if
sufficiently current and specific, (B) the Guaranty is binding on and
enforceable against the Guarantor in accordance with its terms, and (C) the
individual(s) executing and delivering the Guaranty are empowered to do so
pursuant to all necessary corporate authorizations (if applicable) such as a
broad-form resolution and an incumbency certificate, if sufficiently current and
specific.
41. Miscellaneous.
(a) No receipt of money by Landlord from Tenant after the
termination of this Lease or after the service of any notice or after the
commencement of any suit, or after final judgment for possession of the Premises
shall reinstate, continue or extend the Lease Term or affect any such notice,
demand or suit or imply consent for any action for which Landlord's consent is
required.
(b) The term "Landlord" as used in this Lease, so far as
covenants or agreements on the part of Landlord are concerned, shall be limited
to mean and include only the owner (and/or ground lessor, as the case may be)
for the time being of the Premises. If the Premises or the underlying lease, if
any, be sold or transferred, the seller thereof shall be automatically and
entirely released of all covenants and obligations under this Lease from and
after the date of conveyance or transfer, provided the purchaser on such sale
has assumed and agreed to carry out all covenants and obligations contained in
this Lease to be performed on the part of Landlord hereunder, it being hereby
agreed that the covenants and obligations, contained in this Lease to be
performed on the part of Landlord, hereunder it being hereby agreed that the
covenants and obligations contained in this Lease shall be binding under
Landlord, its successors and assigns, only during their respective successive
period of ownership.
(c) It is understood that Landlord may occupy portions of the
Shopping Center in the conduct of Landlord's business. In such event, all
references herein to other tenants of the Shopping Center shall be deemed to
include Landlord as occupant.
(d) All of the covenants of Tenant hereunder shall be deemed
and construed to be "conditions" as well as "covenants" as though the words
specifically expressing or implying covenants and conditions were used in each
separate instance.
<PAGE>
(e) In the event of variation or discrepancy among
counterparts, Landlord's original copy of this Lease shall control.
(f) This Lease shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns,
provided that this provision shall in no manner enlarge Tenant's rights of
assignment, which right of assignment has been restricted under the foregoing
provisions of this Lease.
42. Relationship of Parties. Any intention to create a joint venture,
partnership or principal and agent relationship between the parties hereto is
hereby expressly disclaimed. This Lease shall create the relationship of
landlord and tenant between Landlord and Tenant.
43. Gender and Number. Whenever words are used herein in any gender,
they shall be construed as though they were used in the gender appropriate to
the context and the circumstances, and whenever words are used herein in the
singular or plural form, they shall be construed as though they were used in the
form appropriate to the context and the circumstances.
44. Topic Headings. Headings and captions in this Lease are inserted
for convenience and reference only and in no way define, limit or describe the
scope or intent of this Lease nor constitute any part of this Lease and are not
to be considered in the construction of this Lease.
45. Counterparts. Several copies of this Lease may be executed by all of
the parties. All executed copies constitute one and the same Lease, ------------
binding upon all parties.
46. Entire Agreement. This Lease contains the entire understanding
between the parties and supersedes any prior understanding or agreements between
them respecting the subject matter. No representations, arrangement, or
understandings except those fully expressed herein, are or shall be binding upon
the parties. No changes, alterations, modifications, additions or qualifications
to the terms of this Lease shall be made or be binding unless made in writing
and signed by each of the parties.
47. Attorneys' Fees. If either party commences litigation against the
other for the specific performance of this Lease, for damages for the breach
hereof or otherwise for enforcement of any remedy hereunder, the parties hereby
agree that the prevailing party shall be entitled to recover from the other
party such costs and reasonable attorneys' fees as may have been incurred. A
party shall be deemed "prevailing" if such party is entitled by law to recover
its costs in the action, whether or not the action proceeds to final judgment. A
party not entitled to recover its costs shall not recover attorney fees;
provided, however, where a party institutes and then dismisses an action against
a defendant party without the latter's concurrence, such defendant party shall
be the prevailing party. A final judgment shall specify the prevailing party's
right to recover its costs of the action (including attorney fees and costs)
incurred in enforcing, perfecting and executing such judgment, including all
costs incurred in connection with postjudgment motions, contempt proceedings,
garnishment, levy and debtor/third party examinations, discovery, and bankruptcy
litigation. The term "attorney fees" includes fees of outside legal counsel and
reasonable costs allocable to a party's in-house legal counsel.
48. Governing Law; Invalidity of any Provisions. This Lease shall be
subject to and governed by the laws of the state in which the Premises are
located. If any term or provision of this Lease or the application thereof to
any person or circumstance shall to any extent be invalid or unenforceable, the
other terms of this Lease, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Lease shall be valid and be enforced to the fullest extent permitted by
law.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Lease as of the day
and year first above written.
LANDLORD:
OTR, an Ohio general partnership, acting as the duly authorized nominee of the
BOARD OF THE STATE TEACHERS RETIREMENT SYSTEM OF OHIO
- --------------------------------
By:____________________, a general partner
TENANT: TOYS INTERNATIONAL, A CALIFORNIA CORPORATION
By: ________________________________
Title: ______________________________
By: ________________________________
Title: ______________________________
<PAGE>
EXHIBIT A
SITE PLAN
<PAGE>
EXHIBIT B
LEGAL DESCRIPTION OF PROPERTY
PARCEL 1
Parcels A and C of Parcel Map No. 1228, in the City of San Diego, County of San
Diego, State of California, filed in the Office of the County Recorder of San
Diego County, January 16, 1973, as File No. 73-013497 of Official Records.
PARCEL 3:
That portion of Lot 2 of NORTH CLAIREMONT PLAZA, according to Map thereof No.
3484, filed in the Office of the County Recorder of San Diego County, August 3,
1956, described as follows:
BEGINNING at the Southeasterly corner of Lot 1 of said NORTH CLAIREMONT PLAZA;
thence along the Southerly line of said Lot 2, South 89(degree) 44' 05" East 3
feet; thence North 0(degree) 15' 55" East 165 feet; thence North 89(degree) 44'
05" West 153 feet to the Westerly line of said Lot 2; thence South 0(degree) 15'
55" West 15 feet to the Northwesterly corner of said Lot 1; thence South
89(degree) 44' 05" East 150 feet to the Northeasterly corner of said Lot 1;
thence South 0(degree) 15' 55" West 150 feet to the Point of Beginning.
PARCEL 4:
Lot 2 of NORTH CLAIREMONT PLAZA, in the City of San Diego, County of San Diego,
State of California, according to Map thereof No. 3484, filed in the Office of
the County Recorder of San Diego County, August 3, 1956.
EXCEPTING that portion described as follows:
BEGINNING at the Southeasterly corner of Lot 1 of said NORTH CLAIREMONT PLAZA;
thence along the Southerly line of said Lot 2, South 89(degree) 44' 05" East 3
feet; thence North 0(degree) 15' 55" East 165 feet; thence North 89(degree) 44'
05" West 153 feet to the Westerly line of said Lot 2; thence South 0(degree) 15'
55" West 15 feet to the Northwesterly corner of said Lot 1; thence South
89(degree) 44' 05" East 150 feet to the Northeasterly corner of said Lot 1;
thence South 0(degree) 15' 55" West 150 feet to the Point of Beginning.
PARCEL 5:
That portion of Lot 3 of NORTH CLAIREMONT PLAZA, in the City of San Diego,
County of San Diego, State of California, according to Map thereof No. 3484,
filed in the Office of the County Recorder of San Diego County, described as
follows:
BEGINNING at a point in the Easterly line of said Lot 3, distant along said
Easterly line South 1(degree) 44' 47" West 371.75 feet from the Southerly
terminus of a 956 foot radius curve, concave Easterly in the Easterly line of
said Lot; thence North 89(degree) 44' 05" West 194.58 feet; thence South
0(degree) 15' 55" West 99.97 feet to the TRUE POINT OF BEGINNING; thence North
89(degree) 44' 05" West, 28.07 feet; thence South 0(degree) 15' 55" West 220
feet to a point in the South line of said Lot 3, said point being North
89(degree) 44' 05" West, 202.77 feet from the Southeast corner of said Lot 3;
thence along the South line of said Lot 3 South 89(degree) 44' 05" East 202.77
feet to said Southeast corner, being point in the arc of a 694 foot radius
curve, concave Westerly, a radial line to said point bears South 77(degree) 45'
33" East; thence along the Easterly line of said Lot, Northerly along said
curve, 127.11 feet, and tangent to said curve, North 1(degree) 44' 47" East to
the Northerly line of the Southerly 220 feet, measured at right angles of said
Lot 3; thence along said Northerly line North 89(degree) 44' 05" West to the
TRUE POINT OF BEGINNING.
<PAGE>
PARCEL 6:
NON-EXCLUSIVE EASEMENTS FOR PURPOSES DISCLOSED THEREIN OVER A PORTION OF THE
LAND SHOWN THEREIN AS MORE FULLY CONTAINED AND DESCRIBED IN THAT CERTAIN
DOCUMENT ENTITLED "OPERATION AND RECIPROCAL EASEMENT AGREEMENT" DATED JULY 7,
1972, RECORDED JANUARY 5, 1973, AS FILE NO. 73-003772 AND SUBJECT TO THE
CONDITIONS THEREIN CONTAINED IN SAID DOCUMENT.
PARCEL 7:
NON-EXCLUSIVE EASEMENTS FOR PURPOSES DISCLOSED THEREIN OVER A PORTION OF THE
LAND SHOWN THEREIN AS MORE FULLY CONTAINED AND DESCRIBED IN THAT CERTAIN
DOCUMENT ENTITLED "OPERATION AND RECIPROCAL EASEMENT AGREEMENT" DATED MARCH 27,
1972, RECORDED JANUARY 5, 1973, AS FILE NO. 73-003774 AND SUBJECT TO THE
CONDITIONS THEREIN CONTAINED IN SAID DOCUMENT.
<PAGE>
EXHIBIT C
COMMENCEMENT DATE AGREEMENT
THIS COMMENCEMENT DATE AGREEMENT ("Agreement") dated __________, 199___ is
between OTR, an Ohio general partnership, whose address is 275 East Broad
Street, Columbus, Ohio 43215, acting as the duly authorized nominee of The State
Teachers Retirement System of Ohio ("Landlord"), whose address is 275 East Broad
Street, Columbus, Ohio 43215, and TOYS INTERNATIONAL, doing business under the
trade names Play Co. Toys or Toys International ("Tenant"), whose address is 550
Rancheros Drive, San Marcos, California 92069.
W I T N E S S E T H:
A. Landlord and Tenant executed a certain Lease dated __________,
199___ (the "Lease").
B. The Lease provides that the Lease will commence on the date that
Landlord delivers possession of the Premises (as defined in the Lease) to
Tenant.
C. Landlord and Tenant now desire to set forth in writing the actual
date of delivery of the Premises and the actual commencement date of the Lease.
NOW THEREFORE in consideration of the mutual covenants and promises
contained herein and other valuable consideration, the parties agree that the
Lease commenced on _________, 199___ and shall terminate on ___________ __,
____.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on the day and year first above written.
LANDLORD: OTR, an Ohio general partnership acting as the duly authorized
nominee of The State Teachers Retirement System of Ohio
- ---------------------------
By:___________________, a general partner
TENANT: TOYS INTERNATIONAL,
A CALIFORNIA CORPORATION
By: ________________________________
Title: ______________________________
By: ________________________________
Title: ______________________________
<PAGE>
EXHIBIT E
TENANT ESTOPPEL CERTIFICATE
RE: Premises:
Lease Dated:
Amendment(s) Dated:
Between
and (Tenant)
Square Footage Leased:
Floor(s)/Suite #(s):
The undersigned, Tenant under the above-referenced lease ("Lease"), certifies to
the following:
1. We have taken possession of and accepted the Premises described above, except
as follows:
2. The lease terms as described below are true and accurate, and the lease is in
full force and effect:
Base Rent: __________________________________________ per year
Escalations: ________________________________________
Free Rent: _________________________________________
Commencement Date: ___________________________________
Expiration Date: ______________________________________
Renewals: _________________________________________
3. No part of the Premises has been subleased or assigned except as follows:
4. The rent has been paid through:
5. The security deposit is
There are no tax or insurance escrows
6. We are not in default of our obligations under the Lease. Landlord, to
the best of our knowledge, is not in default of its obligations under
the Lease. There exists no defense or counterclaim to rent or other
sums required to be paid by us under or pursuant to the Lease.
If Tenant is a corporation, the undersigned is a duly appointed officer of the
corporation signing this certificate and is the incumbent in the office
indicated under his/her name. In any event, the undersigned individual is duly
authorized to execute this certificate.
Date:____________________, 199__ Signed:
(Signature)
(Print Name & Title)
<PAGE>
LEASE EXHIBIT F
CLAIREMONT TOWN SQUARE
TENANT SIGNAGE
for
Shop Tenants
Major/Pad Tenants
December 27, 1995
OBJECTIVE
It is the purpose of this Lease exhibit to establish the requirements for the
design and fabrication of primary signage for tenants at Clairemont Town Square.
The Tenant Sign Criteria (Attachment A), receipt of which Tenant hereby
acknowledges, provides design standards and specifications that assure
consistency throughout the Shopping Center. Details are provided in such
Attachment A which outline:
o Prohibited Signs
o General Provisions
o Design Guidelines
- Design Objective
- Acceptable Sign Treatments
- Lighting
- Colors
- Typestyles
o Construction Requirements
TERMS AND CONDITIONS FOR SIGNAGE IMPLEMENTATION
In signing the Lease for retail space at Clairemont Town Square, Tenant
acknowledges receipt of Attachment A, and agrees to the requirements contained
therein and specifically the following requirements with regard to signage:
1. Tenant shall provide a minimum of one primary identification wall sign in
accordance with the approved criteria.
2. Tenant shall be responsible for the following expenses relating to signage
for the Premises:
o design consultant's fees per Tenant Order Form attached hereto as page
F-3
o 100% of permit processing costs and application fees
o 100% of costs for sign fabrication and installation including review of
shop drawings and patterns (see Attachment A and Tenant Order Form)
o all costs relating to signage removal, including repair of any damage to
the building
Tenant shall also be responsible for maintaining the appearance and
operating condition of all signs once they are installed.
3. Tenant shall make a sign design submittal to the Landlord in accordance
with the provisions contained herein (see "Submittals and Approvals"
section).
4. The Landlord shall provide Tenant with a list of qualified sign
fabricators. Only pre-qualified sign contractors approved by the
Landlord shall be allowed to fabricate and install signs at Clairemont
Town Square.
5. Tenant agrees to abide by all provisions, guidelines, and criteria
contained within this Lease exhibit, the Tenant Sign Criteria
(Attachment A), as well as with applicable City of San Diego sign
regulations including the approved Sign Program. No banners,
<PAGE>
paper signs, flags or other such temporary signs and materials shall be
displayed without Landlord's prior written consent. Further, no signs
shall be affixed directly to the storefront glass except that Tenant
may display hours of operation provided such letters do not exceed one
inch in height.
6. Only those sign types provided for and specifically approved in writing
by the Landlord will be allowed. The Landlord may, in Landlord's sole
discretion, and at the Tenant's expense, correct, replace or remove any
sign that is installed without Landlord's written approval and/or that
is deemed not to be in conformance with the plans as submitted and with
requirements and documents referenced herein.
7. Tenant shall maintain all storefronts in like-new condition. Landlord
may, in Landlord's sole discretion and Tenant's expense, replace,
refurbish or remove any sign that has become deteriorated. Tenant
shall, upon expiration or earlier termination of the Lease and at
Tenant's own expense, remove all signs associated with the Premises and
repair building walls to their original condition; or if Tenant has not
performed such removal and/or repair after expiration or earlier
termination of the Lease, Landlord shall have the right to do so at
Tenant's expense.
SUBMITTALS AND APPROVALS
Tenant shall provide information as requested in the Tenant Order Form attached
hereto as page F-3 and return the completed form to Landlord with the designated
design fee.
Landlord's design consultant shall prepare design concepts and/or signage
treatment recommendations for Tenant's review and approval. Upon approval of
concept design, design intent drawings will be prepared suitable for use by
qualified sign fabricator.
Prior to sign fabrication, Tenant or Tenant's sign contractor shall submit for
Landlord's approval three (3) sets of complete and fully-dimensioned shop
drawings reflecting the sign design approved by Landlord. Shop drawings are to
be submitted to Landlord within twenty (20) calendar days after design intent
drawings have been approved. The shop drawings submittal shall include:
a. elevation of storefront showing design, location, size and layout of
sign, drawn to scale, indicating dimensions, attachment devices and
construction details.
b. sample board showing colors and materials including building fascia,
letter faces, returns, and other details of construction as requested
by Landlord; samples of actual paint colors and finishes.
c. section through letter and/or sign panel showing the dimensioned
projection of the face of the letter and/or sign panel and the
illumination.
d. full-size letter patterns for all graphics and full-size scale neon patterns
for all exposed or sculpted neon.
All Tenant sign submittals shall be reviewed by Landlord and/or its agent for
conformance with the provisions of the Sign Program for the center, Attachment A
and this exhibit, and the design intent drawings approved by Landlord.
<PAGE>
Within fifteen (15) business days after receipt of Tenant's shop drawings,
Landlord shall either approve the submittal contingent upon any required
modifications or disapprove Tenant's sign submittal, which approval or
disapproval shall remain the sole right and discretion of Landlord. Tenant must
continue to resubmit rejected plans until approval is obtained. A full set of
final plans must be approved and stamped by Landlord prior to permit application
or sign fabrication.
Following Landlord's approval of proposed signage, Tenant or Tenant's agent
shall submit to the City of San Diego sign plans signed by Landlord and
applications for all permits for fabrication and installation by sign
contractor. Tenant shall furnish Landlord with a copy of said permits prior to
installation of Tenant's sign(s).
Fabrication and installation of all signs shall be performed in accordance with
the standards and specifications outlined in this exhibit and in the final
approved plans and shop drawings. Landlord may, at Landlord's option, perform an
in-shop inspection and buy-off of the signage prior to installation. Any work
deemed unacceptable shall be rejected and shall be corrected or modified at
Tenant's expense as required by the Landlord or its agent.
Tenant shall install the minimum required signage within sixty (60) calendar
days after receipt of permit from the City of San Diego. If signage is not in
place by that date, Landlord may order fabrication and installation on Tenant's
behalf. Tenant shall reimburse Landlord for these costs.
SIGN CONTRACTOR RESPONSIBILITIES
Tenant's sign contractor is responsible to do the following:
o provide to Landlord, prior to commencing fabrication, an original
certificate of insurance naming the Landlord as an additional insured
for liability coverage.
o obtain approved sign permits from the City of San Diego prior to sign
fabrication and deliver copies of same to Landlord.
o prepare for approval prior to fabrication complete and
fully-dimensioned shop drawings along with items a, b, c, and d under
"Submittals and Approvals" section hereof.
MONUMENT SIGN
Tenant shall install its trade name on a Tenant Monument Sign to be located on
Clairemont Mesa Blvd. ("Monument Sign"), and Tenant's share of the sign
("Tenant's Sign") shall be one of the two top positions on both sides of such
sign in the approximate size shown on Exhibit F, page F-5 hereto. Tenant agrees
that Tenant's Sign shall be designed and installed at Tenant's expense in
accordance with the provisions of this Exhibit F and with all governmental laws,
rules and regulations, and that such sign shall be subject to Landlord's
approval.
Tenant shall, within thirty (30) days following receipt of invoice therefor, pay
its pro rata share of the cost of design and construction of the Monument Sign
which share shall be based on the square footage of Tenant's Sign divided by the
square footage of all sign panel space on the Monument Sign. Landlord shall
maintain, repair and, if necessary, replace the Monument Sign and shall maintain
and repair Tenant's Sign. Tenant shall pay its pro rata share of such
maintenance, repair and replacement based on the square footage of Tenant's Sign
divided by the square footage of all sign panels which are occupied on the sign
at the time such expenses are incurred. If Tenant's Sign must be replaced,
Tenant shall replace such sign at Tenant's expense subject to the terms of this
Exhibit F regarding the initial Tenant Sign. If for any reason, for any period
of time Tenant does not display Tenant's trade name on Tenant's Sign, Tenant
shall cover that portion of the sign with white plexiglass or such other
substance as shall be reasonably satisfactory to Landlord. If at any time for
any reason Tenant does not display its trade name on Tenant's Sign for sixty
(60) days or more, Landlord may, upon written notice to Tenant, re-lease such
sign to such party and upon such terms and conditions as Landlord shall choose
in Landlord's sole discretion.
<PAGE>
EXHIBIT D
TENANT IMPROVEMENTS
PROVISIONS RELATING TO CONSTRUCTION OF TENANT'S PREMISES
1. As soon as practicable after the final drawings and specifications have been
approved by Landlord and by all applicable governmental agencies, Landlord will,
at its own cost and expense, commence the erection of a building covering the
Premises, unless prevented or delayed by conditions over which Landlord has no
control. It is expressly understood and agreed that the building upon the
Premises may constitute a portion of a larger building. In the event that prior
to commencement of construction of the building of which the Premises are a
part, Landlord elects not to proceed with such construction, Landlord may
terminate this Lease upon notice to Tenant, and both parties shall be forthwith
released.
2. When Landlord's architect (hereinafter "Project Architect") has completed
drawings of the basic shell of the building (or if such drawings have already
been completed, then concurrently with the execution of this Lease), Landlord
shall deliver a floor plan of the Premises ("Floor Plan") to Tenant showing
thereon the columns and other structural work in the Premises. Tenant
acknowledges receipt of a copy of said Floor Plan.
3. Tenant's plans shall be prepared with full knowledge of and in compliance
with the Floor Plan, this Exhibit D and all City, County, and State ordinances,
rules and regulations relating thereto including, without limitation, the energy
conservation and handicap access requirements, if applicable, of the State in
which the Shopping Center is located. All drawings for Landlord's Work and
Tenant's Work, as described below, are to be prepared at Tenant's expense by
Tenant's architect who shall be licensed in the State in which the Shopping
Center is located. All such drawings are subject to Landlord's and Project
Architect's approval and in the event said drawings are not approved, for any
reason whatsoever, within sixty (60) days after Tenant's receipt of the Floor
Plan, this Lease shall, at the option of Landlord, be null and void and of no
further force or effect.
Tenant agrees to submit to Landlord, within twenty (20) days after
receipt of the Floor Plan, fully dimensioned and detailed 1/4" scale preliminary
drawings showing general layout of the interior space ("preliminary plans")
including without limitation stub-out locations and sizes for electrical,
plumbing, gas and telephone service, and shall outline specifications of all
materials and locations thereof for all Landlord's Work. Said plans shall also
include Tenant's sign drawings.
Within forty-five (45) days after receipt of the Floor Plan, Tenant
agrees to submit to Landlord two (2) sets of fully detailed and dimensioned
one-quarter inch (1/4") scale construction drawings in conformance with the
approved preliminary plans. These drawings shall indicate the specific
requirements of Tenant's space showing clearly, without limitation, all work
listed hereafter under "Landlord's Work."
4. Tenant shall submit to Landlord plans for all work described hereinafter as
"Tenant's Work" simultaneously with, and in accordance with the same standards
provided hereinabove for, Landlord's Work, but Tenant's plans for Tenant's Work
shall be separate from Tenant's plans for Landlord's Work. The plans for
Tenant's Work shall include the interior partitions, trade fixture plans,
lighting, electrical outlets, signs, size and locations of equipment to be
installed on the roof, if any, and all other items set forth under "Tenant's
Work", and which are not a part of Landlord's Work.
5. Tenant shall be responsible for submitting improvement plans, including but
not limited to drawings, specifications, California Title 24 calculations,
structural calculations, samples, etc., for both Landlord's Work and Tenant's
Work to the proper building authority (or health authority as applicable) to
obtain a building permit. Fees for plan checking, processing, permitting, and
any other fees relating to Landlord's Work and Tenant's Work shall be paid by
Tenant. Landlord's Work shall be constructed by Landlord's contractor in
accordance with the drawings for Landlord's Work; Tenant's Work shall be
constructed by Tenant's contractor, subject to the provisions hereinafter titled
"Tenant's Use of a Contractor Other than Landlord's Contractor." Both parties
agree to pursue the construction work of the building diligently to completion,
complying with all City, County and State ordinances, rules and regulations.
Upon completion of all Tenant's Work, Tenant shall file for record in the Office
of the County Recorder where the Shopping Center is located a Notice of
Completion, as permitted by law.
<PAGE>
6. Prior to commencement of construction, Landlord shall provide Tenant with a
written estimate of the cost of all Landlord's Work. Tenant shall have the prior
right of approval of all costs to be borne by Tenant as a part of Landlord's
Work pursuant to the provisions of this Exhibit D. If Tenant fails to deliver
written notice of disapproval to Landlord within ten (10) business days after
receipt of a notice of costs from Landlord, Tenant shall be deemed to have
approved such costs. Tenant shall pay all costs of Landlord's Work which exceed
Forty-Two Thousand Nine Hundred Dollars ($42,900.00). The total amount of such
estimated costs to be paid by Tenant shall be delivered to Landlord prior to the
date specified by Landlord for commencement of construction of Landlord's Work.
7. Any additional charges, expenses, or costs arising by reason of any
subsequent change, modification, or alteration in the approved general plans and
specifications made at the request of Tenant or approved by Tenant including
architect's fees, shall be at the sole cost and expense of Tenant, and Landlord
shall have the right to demand payment for such change, modification, or
alteration, prior to its performance of any work in the Premises. No such
changes, modifications, or alterations in the said approved plans and
specifications can be made without the written consent of Landlord. No part of
the cost of any trade fixture or personal property of Tenant shall be payable by
Landlord.
8. The parties agree to cooperate with each other and to respond with required
approvals or disapprovals with reasonable diligence in order to complete
Landlord's Work and Tenant's Work by the Commencement Date described in
Paragraph 3(b) of the Lease. Notwithstanding any provision in the Lease to the
contrary, prior to occupancy of the Premises, Tenant shall pay Base Rental at
the rate specified in Paragraph 1(i), prorated for the number of days completion
is delayed for any of the following reasons:
a. Tenant's failure to submit drawings within the time periods specified in
Paragraph 3, 4 or 5 of this Exhibit D. ---------
b. Tenant's request for changes in the plans and specifications or in the
construction of the work; and/or
c. Tenant's failure to pay any costs required of Tenant pursuant to this
Exhibit D, within the time periods specified herein.
9. Tenant may not require an exterior design, finish or construction other than
one that has been approved by Landlord; and Landlord shall be entitled to erect
and construct such exteriors in keeping with the overall plans and design of the
Project Architect. Tenant shall not be permitted to maintain or place on the
building or upon the Premises any awnings or other exterior appendage except
with written consent of Landlord.
10. Landlord will construct for Tenant an improved shell, all in conformity with
and to the extent hereinafter set forth as "Building Shell by Landlord" and
"Landlord's Work." Said work, as to the building of which the Premises is a
portion, shall be deemed substantially complete when it has been completed or
performed per the terms and conditions of the Lease and this Exhibit D, subject
only to Tenant's reasonable, good faith acceptance thereof and a "punchlist" of
minor and immaterial items which are capable of completion within thirty (30)
days thereafter. Landlord shall certify to Tenant in writing when Building Shell
by Landlord and Landlord's Work is substantially complete(such certification
shall be referred to as the "Notice of Substantial Completion"). Tenant agrees
that upon receipt of the Notice of Substantial Completion and no later than
three (3) business days following receipt of said notice, Tenant shall inspect
and accept the Premises or notify Landlord otherwise in writing. If Tenant has
not notified Landlord in writing within three (3) business days following
receipt of the Notice of Substantial Completion, Tenant shall be deemed to have
accepted the Premises in the condition which it may then be (except with respect
to the "punchlist" items) and Tenant thereafter waives any right or claim
against Landlord for any cause, directly or indirectly, arising out of the
condition of the Premises, appurtenances thereto, the improvements thereon and
the equipment thereof, and Tenant shall thereafter indemnify and hold harmless
Landlord from liability as provided in Paragraph 14 of the Lease. Landlord shall
not be liable for any latent or patent defects therein; provided, however, that
Landlord warrants the Building Shell by Landlord and Landlord's Work against
latent defects for a period of one year from completion.
<PAGE>
11. Tenant shall be responsible, at its own cost and expense, to complete the
work hereinafter set forth as the "Tenant's Work" in a good and workmanlike
condition and shall not enter into the Premises prior to receiving the Notice of
Substantial Completion from Landlord for the purpose of performing Tenant's Work
or for any other reason without Landlord's prior written consent, which may be
withheld in Landlord's sole discretion. If Landlord consents to Tenant's early
entry, Tenant shall hold Landlord harmless and shall indemnify Landlord from any
loss (including attorneys' fees) or damage to Tenant's property, fixtures,
equipment and merchandise and for injury to any persons, unless such loss or
damage is caused by the sole active negligence of Landlord.
12. During the construction of Landlord's Work, Landlord agrees at Landlord's
expense to obtain and maintain public liability and workers' compensation
insurance adequate to fully protect Tenant as well as Landlord from and against
any and all liability for death of or injury to person or damage to property
caused in or about or by reason of the construction of Landlord's Work. Tenant
agrees at Tenant's expense to obtain or maintain public liability insurance and
workers' compensation insurance as set forth in Paragraph 15(a) of the Lease
adequate to fully protect Landlord as well as Tenant from and against any and
all liability for death of or injury to person caused in or about or by reason
of the construction of Tenant's Work.
13. Where final drawings are in conflict with this Exhibit D, the provisions of
Exhibit D shall prevail.
14. Upon actual completion of the building shell of which the Premises are a
part, Landlord agrees to file for record in the Office of the County Recorder
where the Shopping Center is situated a Notice of Completion, as permitted by
law.
<PAGE>
BUILDING SHELL BY LANDLORD
The following is a description of the building shell, and limitations
of same, which will be provided by Landlord:
A. STRUCTURE
1. Frame: The building shall be of steel or wood frame,
reinforced concrete, or bearing wall construction designed in
accordance with governing building codes.
2. Exterior Walls: The exterior walls shall be of masonry or such other
material or materials as selected by the Project Architect.
3. Roof: The roof shall be builtup composition type, as selected by the
Project Architect.
4. Partitions: Partitions between areas shall be of wood frame, metal
stud, or masonry.
5. Stairways and Exits: Stairways and exits shall be in accordance with
governing building codes.
6. Door Frames: Rear exit exterior door frames will be hollow metal
construction. Interior door frames shall be wood or metal at the option of the
Landlord.
7. Doors: (a) Interior doors wood, hollow core; (b) Exterior service doors
hollow metal.
B. STORE FRONTS
1. Design and Installation: A standard store front shall be designed by
Project Architect and installed by Landlord.
2. Parapets, Etc.: Heights and locations of parapets and facings of
parapets and bulkheads shall be approved by Landlord. Landlord reserves the
right to provide a neutral strip between all stores, centered on the line
defining the Premises.
The cost of the foregoing work shall be paid by Landlord except to the
extent said work is more specifically described in Landlord's Work hereinbelow.
All costs described in Landlord's Work and which exceed $42,900.00 shall be paid
by Tenant prior to commencement of construction.
<PAGE>
DESCRIPTION OF LANDLORD'S WORK
The following is a description of the construction, and limitations of
same, which will be provided by Landlord as "Landlord's Work".
DESCRIPTION OF TENANT'S WORK
The work to be done by Landlord in satisfying its obligations to
construct Tenant's store under the Lease shall be limited to that described in
the foregoing paragraphs. All other items of work not therein provided for to be
done by Landlord shall be provided by Tenant at Tenant's expense and are herein
referred to as "Tenant's Work". Tenant's Work shall include, but not be limited
to, the purchase and/or installation and/or performance of the following:
1. Electric Fixtures and Equipment: All electrical work for the Premises
not specifically stated under Landlord's Work to be performed by Tenant.
2. Utility Meters and Connections: All utility meters, connections and
hookup fees, assessments, front footage charges and any other fees or charges
for utilities serving the Premises shall be paid by Tenant. If, in Landlord's
sole opinion, Tenant uses significantly more water or other utilities than other
tenants in the Shopping Center, Landlord may require Tenant to install a
separate meter at Tenant's expense, for such utility. For all utilities which
are master metered, Tenant shall pay its pro rata share of such costs.
3. Telephones: All wiring from the main telephone room to the Premises and
within the Premises. All conduits for Tenant's telephone system in the Premises.
Tenant shall make all arrangements for telephone service.
4. Walls: All interior partitions and curtain walls within the Premises,
except as provided by Landlord under Landlord's Work.
5. Coves and Ceilings: All special coves, ceilings, furring, etc.
6. Furniture and Fixtures: All store fixtures, cases, wood paneling,
cornices, etc.
7. Show Window Background, Floors, Etc.: All show window floors, show
window background, show window lighting fixtures, and show window doors.
8. Floor Coverings: All floor coverings and floor materials (including wall
base) other than concrete.
9. Ornamental Stairs: All ornamental or other stairs not required by
governing building codes.
10. Alarm Systems, Etc.: All alarm systems or other protective devices.
11. Plumbing: All plumbing, either roughing in fixtures, or equipment
required for Tenant's needs except as provided by Landlord under Landlord's
Work.
12. Special Ventilation: All ventilation systems, hoods, ducts, and chases,
including show window's ventilation.
13. Special Equipment: All special equipment such as conveyors, elevators,
escalators, dumb waiters, etc., including installation and connection.
14. Interior Painting and wall coverings.
15. Tenant's exterior sign. All Tenant signs shall be designed,
constructed, and located in accordance with the procedures established by the
Project Architect, and shall be subject to the approval of the Project
Architect, Landlord, and local governing agency.
16. Concrete Floors: Any special reinforcing, raised areas, or depressions.
17. Roof: All flashing, counterflashing and roof repairs and any
penetration required in connection with the installation of Tenant's equipment
shall conform to the project's roofing specifications and such work shall be
paid for by Tenant, but shall be performed by the project's original roofing
contractor.
<PAGE>
TENANT'S USE OF A CONTRACTOR
OTHER THAN LANDLORD'S CONTRACTOR
It is further understood and agreed that the items set forth below
shall be incorporated as "Special Conditions" into the contract between Tenant
and its contractor as follows (with a copy of the contract to be furnished
Landlord for Landlord's reasonable approval prior to the commencement by Tenant
of Tenant's Work):
1. Prior to start of Tenant's Work, Tenant's contractor shall provide
Landlord with a construction schedule in "bar graph" form indicating the
completing dates of all phases of Tenant's Work.
2. Tenant's contractor shall perform said work in a manner and at times
which do not impede or delay Landlord's contractor in the completion of the
Premises as provided in this Lease. Any delays in the completion of the Premises
caused by Tenant's contractor shall be at the sole cost and expense of Tenant
and shall not delay the commencement of Base Rent.
3. Tenant's contractor shall be responsible for the repair, replacement
or cleanup of any damage done by him to other contractors' work which
specifically includes accessways to the Tenant's Premises which may be currently
used by others.
4. Tenant's contractor shall accept the Premises prior to starting any
trenching operations. Any rework of subbase or compaction required after
Tenant's contractor's initial acceptance of the Premises shall be done by
Tenant's contractor, which shall include the removal from the Shopping Center of
any excess dirt or debris.
5. Tenant's contractor shall contain his storage of materials and his
operations within the Premises and such other space as he may be assigned by
Landlord's contractor. Should he be assigned space outside of the Premises, he
shall move to such other space as Landlord's contractor shall direct from time
to time to avoid interference or delays with other work.
6. All trash and surplus construction materials shall be stored within
the Premises and shall be promptly removed from the Shopping Center at the sole
cost of the Tenant's contractor. Once the Shopping Center is open and operating,
no Common Area trash containers shall be used for construction debris.
7. Tenant's contractor shall provide temporary utilities, portable
toilet facilities and potable drinking water as required for his work within the
Premises and shall pay to Landlord's contractor the cost of any temporary
utilities and facilities provided by Landlord's contractor at Tenant's
contractor's request.
8. Tenant's contractor shall notify Landlord or Landlord's project
Manager of any planned work to be done on weekends or other than normal job
hours.
9. Tenant and Tenant's contractor are responsible for compliance with
all applicable codes and regulations of duly constituted authorities having
jurisdiction insofar as the performance of the work and completed improvements
are concerned for all work performed by Tenant or Tenant's contractor and all
applicable safety regulations established by the general contractor for the
Shopping Center, and Tenant further agrees to indemnify and hold Landlord
harmless for said work as provided in Paragraph 14 of the Lease. Prior to
commencement of construction, Tenant shall submit to Landlord evidence of
insurance as required in Paragraph 15 of the Lease.
<PAGE>
10. Tenant's contractor or subcontractors shall not post signs on any
part of the Shopping Center or on the Premises.
11. Notwithstanding the provisions herein, Tenant shall be responsible
for and shall obtain and record a Notice of Completion promptly following
completion of Tenant's Work.
12. Prior to the commencement of construction, Tenant shall obtain or
cause its contractor to obtain payment and performance bonds covering the
faithful performance of the contract for the construction of Tenant's Work and
the payment of all obligations arising thereunder. Such bonds shall be for the
mutual benefit of both Landlord and Tenant and shall be issued in the names of
both Landlord and Tenant as obligees and beneficiaries. Prior to the date Tenant
commences construction of Tenant's Work, Tenant shall submit evidence
satisfactory to Landlord that such bonds have been issued. Notwithstanding the
foregoing, in the event Tenant is only making nonstructural improvements to the
interior of the Premises, Tenant shall not be required to provide the bonds
described herein.
<PAGE>
EXHIBIT G
GUARANTY OF LEASE
WHEREAS, a certain lease of even date herewith has been, or will be,
executed between OTR, an Ohio General Partnership ("Landlord") acting as the
duly authorized nominee of the Board of the State Teachers Retirement System of
Ohio ("STRBO"), and TOYS INTERNATIONAL, a California corporation ("Tenant")
doing business under the trade names Play Co. Toys or Toys International with
respect to Space No. 38, of that certain shopping center commonly known as
Clairemont Town Square located in San Diego, California:
WHEREAS, the Landlord under said Lease requires as a condition to its
execution of said Lease that the undersigned (herein referred to as "Guarantor")
guarantee the full performance of the obligations of Tenant under said Lease,
and
WHEREAS, Guarantor, is desirous that Landlord enter into said Lease with
Tenant,
NOW THEREFORE, in consideration of the execution of said Lease by
Landlord, Guarantor hereby unconditionally guarantees the complete and timely
performance of each and all of the terms, covenants and conditions of said Lease
to be kept and performed by said Tenant, including the payment of all rentals
and other charges to accrue thereunder. Guarantor further agrees as follows:
1. That this Guaranty shall continue in favor of Landlord
notwithstanding any extension, modification, or alteration of said Lease entered
into by and between the parties thereto, or their successors or assigns,
notwithstanding any assignment of said Lease, with or without the consent of
Landlord, and no extension, modification, alteration or assignment of the above
referred to Lease shall in any manner release or discharge Guarantor and it does
hereby consent thereto.
2. This Guaranty will continue unchanged by any bankruptcy,
reorganization or insolvency of Tenant or any successor or assignee thereof or
by any disaffirmance or abandonment by a trustee of Tenant;
3. Landlord may, without notice, assign this Guaranty of Lease in whole
or in part and no assignment or transfer of the Lease shall operate to
extinguish or diminish the liability of Guarantor hereunder.
4. The liability of Guarantor under this Guaranty shall be primary and,
in any right of action which shall accrue to Landlord under the Lease, Landlord
may, at its option, proceed against Guarantor without having commenced any
action or obtained any judgment against Tenant;
5. Guarantor shall pay Landlord's reasonable attorney fees and all
costs and other expenses incurred in any negotiations, action or proceeding
commenced to enforce this Guaranty; and
6. Guarantor hereby waives notice of any demand by Landlord as well as
any notice of Tenant's default in the payment of rent or any other amounts
contained or reserved in the Lease; provided, however, prior to commencing any
judicial action against Guarantor, Landlord shall give Guarantor ten (10) days'
written notice of, and opportunity to cure, Tenant's default under the Lease.
7. If Guarantor is a corporation, trust or general or limited
partnership, each individual executing this Guaranty of Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Guaranty of Lease on behalf of said entity.
The use of the singular shall include the plural. The obligation of two (2) or
more parties shall be joint and several. The terms and provisions of this
Guaranty shall be binding upon and inure to the benefit of the respective heirs,
legal representatives, successors and assigns of the parties herein named.
<PAGE>
IN WITNESS WHEREOF, Guarantor has caused this Guaranty of Lease to be
executed as of the Effective Date of the above-mentioned Lease.
GUARANTOR OF LEASE:
PLAY CO. TOYS & ENTERTAINMENT CORP.
By:
Title:
By:
Title:
Address:
Telephone:
<PAGE>
EXHIBIT H
<PAGE>
EXHIBIT A TO
ACCESS AND RENTAL PAYMENT AGREEMENT
LEGAL DESCRIPTION
Space #38 within the Shopping Center described as:
PARCEL 1
Parcels A and C of Parcel Map No. 1228, in the City of San Diego, County of San
Diego, State of California, filed in the Office of the County Recorder of San
Diego County, January 16, 1973, as File No. 73-013497 of Official Records.
PARCEL 3:
That portion of Lot 2 of NORTH CLAIREMONT PLAZA, according to Map thereof No.
3484, filed in the Office of the County Recorder of San Diego County, August 3,
1956, described as follows:
BEGINNING at the Southeasterly corner of Lot 1 of said NORTH CLAIREMONT PLAZA;
thence along the Southerly line of said Lot 2, South 89(degree) 44' 05" East 3
feet; thence North 0(degree) 15' 55" East 165 feet; thence North 89(degree) 44'
05" West 153 feet to the Westerly line of said Lot 2; thence South 0(degree) 15'
55" West 15 feet to the Northwesterly corner of said Lot 1; thence South
89(degree) 44' 05" East 150 feet to the Northeasterly corner of said Lot 1;
thence South 0(degree) 15' 55" West 150 feet to the Point of Beginning.
PARCEL 4:
Lot 2 of NORTH CLAIREMONT PLAZA, in the City of San Diego, County of San Diego,
State of California, according to Map thereof No. 3484, filed in the Office of
the County Recorder of San Diego County, August 3, 1956.
EXCEPTING that portion described as follows:
BEGINNING at the Southeasterly corner of Lot 1 of said NORTH CLAIREMONT PLAZA;
thence along the Southerly line of said Lot 2, South 89(degree) 44' 05" East 3
feet; thence North 0(degree) 15' 55" East 165 feet; thence North 89(degree) 44'
05" West 153 feet to the Westerly line of said Lot 2; thence South 0(degree) 15'
55" West 15 feet to the Northwesterly corner of said Lot 1; thence South
89(degree) 44' 05" East 150 feet to the Northeasterly corner of said Lot 1;
thence South 0(degree) 15' 55" West 150 feet to the Point of Beginning.
PARCEL 5:
That portion of Lot 3 of NORTH CLAIREMONT PLAZA, in the City of San Diego,
County of San Diego, State of California, according to Map thereof No. 3484,
filed in the Office of the County Recorder of San Diego County, described as
follows:
BEGINNING at a point in the Easterly line of said Lot 3, distant along said
Easterly line South 1(degree) 44' 47" West 371.75 feet from the Southerly
terminus of a 956 foot radius curve, concave Easterly in the Easterly line of
said Lot; thence North 89(degree) 44' 05" West 194.58 feet; thence South
0(degree) 15' 55" West 99.97 feet to the TRUE POINT OF BEGINNING; thence North
89(degree) 44' 05" West, 28.07 feet; thence South 0(degree) 15' 55" West 220
feet to a point in the South line of said Lot 3, said point being North
89(degree) 44' 05" West, 202.77 feet from the Southeast corner of said Lot 3;
thence along the South line of said Lot 3 South 89(degree) 44' 05" East 202.77
feet to said Southeast corner, being point in the arc of a 694 foot radius
curve, concave Westerly, a radial line to said point bears South 77(degree) 45'
33" East; thence along the Easterly line of said Lot, Northerly along said
curve, 127.11 feet, and tangent to said curve, North 1(degree) 44' 47" East to
the Northerly line of the Southerly 220 feet, measured at right angles of said
Lot 3; thence along said Northerly line North 89(degree) 44' 05" West to the
TRUE POINT OF BEGINNING.
H-5
Exhibit A-1
<PAGE>
EXHIBIT A TO
ACCESS AND RENTAL PAYMENT AGREEMENT
Page 2
PARCEL 6:
NON-EXCLUSIVE EASEMENTS FOR PURPOSES DISCLOSED THEREIN OVER A PORTION OF THE
LAND SHOWN THEREIN AS MORE FULLY CONTAINED AND DESCRIBED IN THAT CERTAIN
DOCUMENT ENTITLED "OPERATION AND RECIPROCAL EASEMENT AGREEMENT" DATED JULY 7,
1972, RECORDED JANUARY 5, 1973, AS FILE NO. 73-003772 AND SUBJECT TO THE
CONDITIONS THEREIN CONTAINED IN SAID DOCUMENT.
PARCEL 7:
NON-EXCLUSIVE EASEMENTS FOR PURPOSES DISCLOSED THEREIN OVER A PORTION OF THE
LAND SHOWN THEREIN AS MORE FULLY CONTAINED AND DESCRIBED IN THAT CERTAIN
DOCUMENT ENTITLED "OPERATION AND RECIPROCAL EASEMENT AGREEMENT" DATED MARCH 27,
1972, RECORDED JANUARY 5, 1973, AS FILE NO. 73-003774 AND SUBJECT TO THE
CONDITIONS THEREIN CONTAINED IN SAID DOCUMENT.
H-6
Exhibit A-2
10.88
Lease Agreement for Store-Redondo Beach
<PAGE>
L E A S E
THIS INDENTURE OF LEASE IS MADE AND ENTERED INTO as of this _____ day of
_____________________, 1997, by and between THE GALLERIA AT SOUTH BAY, a
California limited partnership, having an address for purposes hereof at 10800
Brookpark Road, Cleveland, Ohio 44130 ("LANDLORD"), and PLAY CO. TOYS AND
ENTERTAINMENT CORP., a Delaware corporation, having an address for purposes
hereof at 550 Rancheros Drive, San Marcos, California 92069 ("TENANT").
WITNESSETH:
ARTICLE I
INTRODUCTORY PROVISIONS
Section 1.0 - Basic Lease Provisions.
The following Basic Lease Provisions are an integral part of this
Lease, are referred to in other Sections hereof, including, but without
limitation, the Sections identified below and are presented in this Section for
the convenience of the parties. They are not intended to constitute an
exhaustive list of all charges which may become due and payable under this
Lease.
(a) Shopping Center: The Galleria at South Bay
(Section 1.1[a])
(b) Unit Number: 366
(Section 3.1)
(c) Approximate
Premises GLA: 3,620 square feet
(Section 3.1)
(d) Term of Lease: Ten (10) full Lease Years
(plus a partial (Section 9.1) Lease Year)
commencing on the "RCD" (as hereinafter
defined) and expiring on the "Term
Expiration Date" or "TED" (as hereinafter
defined).
(e) Rent Commencement Date ("RCD"):
(Section 10.1)
The earlier of December 1, 1997 (the "Outside Date") or the date Tenant
opens for business. The date of December 1, 1997 is predicated upon Landlord
promptly reviewing Tenant's plans and specifications. Landlord shall have a
period of eight (8) days after the day when Landlord receives any submission of
Tenant's plans and specifications within which to advise Tenant of its approval
and/or comments. Landlord's responses shall be forwarded to Tenant by overnight
carrier. In the event Landlord does not respond to any such submittal within
such eight (8) day period, then the date of December 1st shall be extended on a
day for day basis for each day from and after the ninth (9th) day after Landlord
receives the submittal of plans and specifications to and including the day when
Landlord responds to Tenant.
(f) Fixed Minimum Rent:
(Section 11.1)
(i) $23.00 per square foot of Premises GLA,
$83,260.08 per Lease Year, $6,938.34 per
month, for Lease Years 1 through 3;
(ii) $25.00 per square foot of Premises GLA,
$90,500.04 per Lease Year, $7,541.67 per
month, for Lease Years 4 through 7;
(iii) $27.00 per square foot of Premises GLA,
$97,740.00 per Lease Year, $8,145.00 per
month, for Lease Year 8 through the TED;
<PAGE>
(iv) Fixed Minimum Rent (Article III,Section 3.3)
Subject to Adjustment if Premises GLA
adjusted
X yes no
(g) Percentage Rent: (Section 11.2)
(i) 7% of Gross Revenues in excess of $1,387,666.67 ("Annual
Breakpoint")for Lease Years 1 through 3;
(ii) 7% of Gross Revenues in excess of $1,508,337.33 ("Annual Breakpoint")
for Lease Years 4 through 7;
(iii) 7% of Gross Revenues in excess of $1,629,000.00 ("Annual Breakpoint")
for Lease Year 8 through the TED.
(h) Payment of Percentage Rent:
(Section 11.3)
By the twentieth (20th) day of the month immediately following the month in
which Gross Revenue for the Lease Year exceeds the Annual Breakpoint.
(i) Sales Reports:
(Section 11.6)
Monthly on or before the twentieth (20th) day of each month of each Lease
Year. Annually on or before forty-five (45) days following the close of each
Lease Year.
(j) Special Promotion Assessment or Advertisement:
(Section 12.4)
(i) Initial Opening Ad: INTENTIONALLY OMITTED
(ii) Renovation/Expansion: INTENTIONALLY OMITTED
(k) Annual Marketing Fund Contribution:
(Section 12.5) $1.00 per square foot of Premises GLA
Increases:
(i) CPI-U: Yes, not to exceed five percent (5%) per annum.
(ii) Mall average sales threshold of $300.00 per square feet exceeded: No
(l) Annual Media Fund Charge:
(Section 12.6) INTENTIONALLY OMITTED
(m) Tenant Insurance:
(Section 17.2)
(i) Liability: $1,000,000 combined single limit per occurrence basis for
property damage and personal and bodily injury or death.
(ii) Boiler: $100,000.00, if applicable.
(iii) Liquor Liability Insurance: INTENTIONALLY OMITTED
(iv) Environmental Impairment Liability: INTENTIONALLY OMITTED
(v) All-Risk Coverage: 90% of full replacement cost
(vi) Self-Insurance yes x no
(n) CAM Costs:
(Section 12.2)
<PAGE>
Proportionate Share; payable monthly on estimated bill.
(o) Taxes:
(Section 12.3)
Proportionate Share; payable monthly on estimated bill.
(p) Food Court Charge:
(Section 12.7)
INTENTIONALLY OMITTED
(q) Utility Services and Charges:
(Section 13.1)
Payable by Tenant as billed per metered or estimated and adjusted billing.
(r) Tenant's Trade Name: TOYS INTERNATIONAL
(Section 8.1)
(s) Permitted Use:
Tenant shall use and occupy the Premises solely for the retail sale of toys
and at Tenant's option (but only to the extent incidental to the primary
operation of a toy store), better quality collectibles, hobbies, arts and
crafts, children's books, dolls, model kits, child-oriented games,
child-oriented video and audio cassettes, child-oriented compact discs,
child-oriented laser discs and other child-oriented technological innovations
thereof, child-oriented computer software, child-oriented wheel goods
(excluding, however, bicycles and tricycles), stuffed animals, other juvenile
and child-related goods (except that clothing shall be displayed in no more than
three percent (3%) of the sales area of the Premises and Tenant shall not
display or sellany shoes), and, subject to the foregoing, such other items as
are typically displayed in toy stores located within first-class regional
shopping centers.
(t) Tenant's Billing Address:
(Preamble)
(u) Tenant's Legal Notice Address:
(Section 26.1)
550 Rancheros Drive
San Marcos, California 92069
Attention: President
(v) Security Deposit: None
(Section 12.8)
(w) Guarantor: None
(x) Landlord's Contribution: $140,000.00
(Section 6.6)
(y) Annual Premises Sprinkler
Charge:
$.30 per square foot of (Section 13.5) Premises GLA.
<PAGE>
(z) Annual Central HVAC
System Equipment
Rentalization: $1.02 per square foot of Premises GLA.
(Section 13.2)
Section 1.1 - Defined Terms.
The following terms shall have the meanings ascribed to them below:
(a) "SHOPPING CENTER" shall mean those buildings, land and Common Areas
comprising the regional shopping center development known as THE GALLERIA AT
SOUTH BAY, located in the City of Redondo Beach, Los Angeles County, California,
all as shown on Exhibit "A" attached hereto and made a part hereof.
(b) "PREMISES" shall mean the specific demised store space leased to
Tenant by Landlord now existing or to be constructed in the Shopping Center. The
Premises are cross-hatched on the Leasing Plan attached hereto as Exhibit "B"
for the sole purpose of more specifically locating said area.
(c) "COMMON AREAS" shall mean the "Enclosed Mall" and its amenities,
plaza areas, surface parking areas, parking decks, structures or garages, if
any, driveways, aisles, sidewalks, loading docks, passageways, landscaping,
courts, stairs, ramps, elevators, escalators, meeting rooms, public restrooms
and other common service areas, provided for by Landlord for the common or joint
use and benefit of tenants and occupants of the Shopping Center, their
employees, agents, servants, customers and other invitees.
(d) "ENCLOSED MALL" shall mean that portion or portions of the climate
controlled enclosed mall sections of the Shopping Center which are used in
common, among other things, for pedestrian traffic and which are commonly
referred to as the "Enclosed Mall".
(e) "LEASE YEAR" as used herein shall mean each consecutive
twelve-month period beginning with the Rent Commencement Date, as herein
defined, provided it has occurred on the first day of a calendar month. In the
event that the RCD should occur on a day other than the first day of a calendar
month, a Lease Year shall be each consecutive twelve-month period commencing on
the first day of the calendar month next following the RCD. Notwithstanding the
foregoing, in the event the RCD occurs during the period from and including
December 2, 1997 through and including December 24, 1997, then the first Lease
Year shall commence on the RCD and end on November 30, 1998 and subsequent Lease
Years shall begin on December 1st.
(f) "MAJOR TENANTS" shall mean those tenants whose aggregate,
contiguous floor area exceeds 50,000 square feet and which are known as
department stores, who now or hereafter lease, own or occupy tracts or stores in
the Shopping Center, including but not limited to May Company, Nordstroms and
Mervyn's.
(g) "TENANT'S PROPORTIONATE SHARE", shall mean a fraction the numerator of
which is the "Premises GLA", as hereinafter defined, and the denominator of
which is: (i) with respect to "CAM Costs", as hereinafter defined, the total
number of square feet of actually occupied gross leasable area in the Shopping
Center ("Occupied Center GLA") (except that the Occupied Center GLA may not be
less than eighty-five percent [85%] of aggregate Shopping Center GLA) excluding
the number of square feet of floor area of the Major Tenant spaces; and (ii)
with respect to "real estate taxes", as hereinafter defined, the total number of
square feet of gross leasable area in the building(s) on the tax parcel(s) on
which the Premises is located (subject, however, to the provisions of Section
12.3[a] hereinafter set forth).
<PAGE>
ARTICLE II
EXHIBITS
Section 2.1 - Exhibits.
The following exhibits are attached hereto or otherwise incorporated
herein by reference, and made a part of this Lease:
EXHIBIT "A" - Site Plan of the Shopping Center.
EXHIBIT "B" - Leasing Plan of the Shopping Center.
EXHIBIT "SBG1.0" - Tenant Handbook containing Sign and Design Criteria, and
Work to be Performed by Landlord and Tenant.
EXHIBIT "LTW" - Landlord and Tenant Work
ARTICLE III
PREMISES
Section 3.1 - Premises.
In consideration of the payment of all rents, all other monies due
under this Lease ("Additional Charges") and the performance of the covenants as
hereinafter set forth, Landlord demises unto Tenant, and Tenant leases from
Landlord, subject to all conditions and easements of record, for the Term and
upon the terms and conditions set forth in this Lease, the Premises which is
situated in the City of Redondo Beach, County of Los Angeles and State of
California and being Unit No. 366 in the Shopping Center and being a storeroom
of irregular dimensions containing approximately 3,620 square feet of floor
space.
Section 3.2 - Gross Leasable Area of Tenant's Premises.
The Gross Leasable Area of Tenant's Premises or the "Premises GLA"
shall be computed based on the "lease lines" for the Premises, defined as
follows: The lease line for common demising walls between adjoining tenants
shall be the center line of the common demising wall. Along the storefront the
lease line shall be the designated line separating the Premises from the Common
Area, regardless of where Tenant's storefront is actually built. On non-common
demising walls such as between the Premises and service corridors, mechanical
rooms, or the building exterior, the lease line shall be the outside face of the
demising wall. Any recesses required to accommodate the door swing of the exit
door for the Premises shall be considered part of the Premises. No deductions
shall be made for existing columns or bracing within the Premises or along the
demising walls but deductions shall be made for the areas occupied by major
vertical duct shafts.
Section 3.3 - Revisions to Premises GLA.
The square footage set forth in Section 3.1 has been determined
pursuant to the provisions of Section 3.2 by reference to either "CAD" or scaled
architectural drawings of the Premises. Landlord and Tenant acknowledge that
irrespective of whether or not the Premises shall have been constructed as of
the date of this Lease, Landlord shall make final as-built field or CAD
measurements of the Premises after Tenant's leasehold improvements have been
constructed and should those measurements disclose a different square footage
than the Premises GLA set forth in Section 3.1 above ("Final Revised Premises
GLA"), then Landlord agrees to notify Tenant in writing of the Final Revised
Premises GLA. Tenant further acknowledges and agrees that such notice by
Landlord shall be deemed sufficient to amend the Premises GLA set forth in
Section 3.1, such amendment being deemed self-operative without the necessity of
further formal mutual acknowledgment or documentation between Landlord or
Tenant, but subject to Tenant's right to verify said measurements. When so
finally determined, the Final Revised Premises GLA shall be used as the
numerator in computing Tenant's Proportionate Share of Additional Charges and in
all computations of Additional Charges predicated upon the Premises GLA and all
computations of Fixed Minimum Rent if such has been determined on a square foot
(as opposed to a fixed rate) basis. If the Fixed Minimum Rent should be revised,
Landlord's revised billing to Tenant shall be deemed sufficient notice of such
rent revision and the Annual Breakpoint(s) set forth in Section 1.0(g) herein
shall be correspondingly adjusted.
<PAGE>
Section 3.4 - Landlord's Reservation.
Landlord reserves to itself the roof and exterior walls of the building
containing the Premises and all space above the ceiling within the Premises, to
accommodate the Shopping Center's structural, mechanical and electrical conduit,
piping, ducting or venting requirements. Landlord and its agents further reserve
the right on behalf of themselves or an authorized utility company to run
utility lines, pipes, conduit or ductwork when necessary or desirable through
the air space above Tenant's ceiling, columns or within walls of the Premises
and to maintain, repair, alter, replace or remove the same in non-sales area
locations which will not interfere with Tenant's use of its Premises.
ARTICLE IV
COMMON AREAS
Section 4.1 - Use.
(a) Landlord grants to Tenant and its agents, employees and customers,
a non-exclusive license, subject to the reasonable and uniform rules and
regulations promulgated by Landlord, to use the Common Areas in common with
other tenants and occupants of the Shopping Center, their agents, employees and
customers during the Term of this Lease and any renewal period thereof, subject
to the exclusive control and management thereof at all times by Landlord and
subject further to the rights of Landlord as set forth in Section 4.2 herein.
(b) Landlord reserves to itself the right to construct and lease and/or
license kiosks, carts and sales areas on any portion of the Common Areas.
(c) Tenant shall not use the Common Areas for any other purpose than
herein designated.
Section 4.2 - Management and Operation of Common Areas.
Landlord will use reasonable efforts to operate and maintain or will
cause to be operated and maintained, the Common Areas in a first-class manner
and in the best interest of the Shopping Center. Landlord will have the right
(1) to establish, modify and enforce reasonable and uniform rules and
regulations with respect to the Common Areas for the general benefit of Landlord
and all tenants of the Shopping Center; (2) to enter into, modify and terminate
easements and other agreements pertaining to the use and maintenance of the
parking areas and fees for use of such parking areas and other Common Areas; (3)
to provide for employee parking and formulate reasonable and uniform rules and
regulations for the same; (4) without abatement of rent or other charges to
close all or any portion of said parking areas or other Common Areas to such
extent as may, in the opinion of Landlord, be necessary to prevent a dedication
thereof or the accrual of any right to any person or to the public therein or
for any other reason in the best interest of Landlord and all tenants; (5)
without abatement of rent or other charges, to close temporarily reasonable
portions of the Common Areas for repairs or refurbishing; (6) to discourage
non-customer parking; (7) except as otherwise provided herein, to move, remove,
relocate and/or replace seats, trees, planters and other amenities commonly
found in first-class regional shopping centers; and (8) to do such other acts in
and to said areas and improvements as in the exercise of good business
management, and the maintenance of a first-class regional shopping center, as
Landlord, in the exercise of its reasonable business judgment, shall deem to be
advisable.
<PAGE>
ARTICLE V
CHANGES AND ADDITIONS TO THE
SHOPPING CENTER SITE PLAN AND LEASING PLAN
Section 5.1 - Site Plan and Leasing Plan.
The Site Plan and Leasing Plan attached hereto as Exhibit "A" and "B",
respectively are for the sole purpose of showing the approximate shape, design
and locations of buildings, tenant spaces and Common Areas located within the
Shopping Center.
Section 5.2 - Changes to Shopping Center Site Plan and Leasing Plan.
Landlord reserves the right at any time and from time to time (a) to
make or permit changes or revisions in the Site Plan and Leasing Plan for the
Shopping Center including additions to, subtractions from, rearrangements of,
alterations of, modifications of or supplements to the building areas, walkways,
parking areas, driveways or other Common Areas, (b) to construct other buildings
or improvements in the Shopping Center and to make alterations thereof or
additions thereto and to build additional stories on any such building or
buildings and to build adjoining same, and (c) to make or permit changes or
revisions in the Shopping Center, including additions thereto, and to convey
portions of the Shopping Center to others for the purpose of constructing
thereon other buildings or improvements, including additions thereto and
alterations thereof; provided, however, that no such changes, rearrangements or
other construction shall permanently reduce the number of parking spaces
provided by Landlord below the number of parking spaces required by law.
Notwithstanding anything to the contrary contained in this Lease, in no event
may any changes which Landlord makes to the Shopping Center, or any portion
thereof, have any material adverse effect upon access to and/or visibility of
the Premises.
ARTICLE VI
IMPROVEMENTS
Section 6.1 - Landlord's Duties.
The Premises have been previously improved by an existing tenant and
Tenant acknowledges that it is accepting the Premises in its present "as-is"
condition with no expectation that Landlord will or should perform or contribute
towards the cost of any leasehold improvements required to prepare the Premises
for Tenant's occupancy except as provided in Section 6.6. Tenant acknowledges
that it has been afforded the opportunity to inspect the Premises, including but
not limited to, gaining access to systems serving the Premises to confirm for
itself the suitability and adequacy of the Premises for Tenant's intended use.
The parties acknowledge that Tenant may have general and specific requirements
and needs relating to the operation of its business from the Premises, and
Landlord and Tenant are entering into this Lease in reliance solely upon
Tenant's expertise and ability to evaluate the suitability of the Premises and
Shopping Center for the conduct of Tenant's business. Tenant has entered into
this Lease without reliance upon any obligation of Landlord to make, and Tenant
agrees that Landlord shall not be obligated to make any disclosures concerning
the value, condition or suitability of the Premises for Tenant's intended use.
Notwithstanding anything to the contrary contained in this Section 6.1 or in
Section 6.2, before delivering possession of the Premises to Tenant, Landlord
shall perform that work which is designated as Landlord's work on Exhibit "LTW"
attached hereto and made a part hereof. Tenant shall be responsible at its sole
cost and expense to perform all work set forth on such Exhibit which is
designated as Tenant's work.
<PAGE>
Section 6.2 - Tenant's Improvements.
On or before the RCD, Tenant shall at its own expense and in accordance
with Exhibit "SBG1.0" herein:
(a) Secure all permits and licenses necessary for the construction of
any of its installations and the prosecution of its work, and Tenant shall
comply with all laws and regulations relating to the conduct of said work.
(b) Perform all leasehold improvements required to prepare the Premises
for Tenant's occupancy and the conduct of Tenant's business.
(c) Obtain on behalf of itself, or any of its contractors or
subcontractors, all insurance protection required by Landlord in Exhibit
"SBG1.0" attached hereto and made a part hereof.
(d) Install equipment and appliances used in said construction and all
trade fixtures installed shall be new or like-new and first-quality items,
except as otherwise provided herein. Tenant shall remove and replace any trade
fixtures which were not new when installed by Tenant whose "look" is
unacceptable to Landlord in the exercise of reasonable discretion.
Notwithstanding anything to the contrary contained in this Lease, but except as
specifically prohibited pursuant to the last page of Exhibit "LTW", Tenant shall
have the right without Landlord's consent to re-use any and all improvements,
fixtures and equipment existing in the Premises after demolition and turnover of
the Premises to Tenant to the extent same are working, in good repair and have
adequate capacity and life.
(e) Construct, decorate, install and remove the temporary Tenant
enclosure in order to separate the Premises from the public during Tenant's
construction.
(f) Promptly after receipt of written request from Tenant, Landlord
shall execute and deliver to Tenant or Tenant's designee an instrument pursuant
to which Landlord waives and relinquishes, in favor of any lender or lessor of
Tenant, any lien for rent and/or security interest which Landlord may have with
respect to Tenant's movable, free-standing trade fixtures, trade fixtures which
can be removed without material damage to the Premises, business machines and
business equipment, furnishings, furniture, merchandise, inventory and all other
non-attached personal property now or hereafter placed in or upon the Premises
by Tenant. Such instrument shall be in form acceptable to Landlord's counsel in
the exercise of reasonable discretion and shall provide, inter alia, that it is
null and void fifteen (15) days after Landlord gives notice to the Lender that
the Term of the Lease has expired or terminated.
(g) Notwithstanding anything to the contrary contained in this Lease or
Exhibit SBG1.0, (i) Tenant shall not be required to make any plan submissions
earlier than August 1, 1997, (ii) Tenant shall not be required to post, or to
cause its contractor to post, a payment or performance bond or other bond of any
kind, (iii) Landlord shall not have a right of approval with respect to the
identity of Tenant's
<PAGE>
contractor(s), (iv) subject to Landlord's approval rights, Landlord shall not
have the right to design Tenant's store or any portion thereof, (v) Tenant shall
not be required to pay Landlord for any item of work, installation or service,
or any other sum whatsoever, that is not specifically and expressly provided for
(including the amount thereof) in the terms and provisions of this Lease, (vi)
Tenant may use like new fixtures, (vii) the right of Landlord, Landlord's
agent(s) or a utility company to run utility lines, pipes, conduits or duct work
through the Premises is limited to any area above the ceiling and above 12' 0",
and (viii) except for permanent signs visible from the enclosed mall, Landlord
shall have no right of approval with respect to signs within the store except as
provided in Section 14.2 of this Lease.
Section 6.3 - Tenant's Trade Fixtures.
All trade fixtures, signs and apparatus (as distinguished from
leasehold improvements) owned by Tenant and installed in the Premises shall
remain the property of Tenant and shall be removable at any time, including upon
the expiration of the Term; provided that Tenant shall promptly repair any
damage to the Premises caused by the removal of said fixtures. Any of Tenant's
property not removed by Tenant may be construed by Landlord as abandoned by
Tenant or Landlord may order Tenant to remove said items or have the same
removed at Tenant's expense.
Section 6.4 - Construction Lien.
Nothing contained in this Lease shall be deemed or construed in any way
as constituting the consent or request of Landlord, express or implied by
inference or otherwise, to any contractor, sub-contractor, laborer or
materialman for the specific performance of any labor or the furnishing of any
materials or equipment for any specific improvement, alteration to or repair of
the Premises or any part thereof, nor as giving Tenant any right, power or
authority to contract for or permit the rendering of any services or the
furnishing of any materials on behalf of Landlord that would give rise to the
filing of any lien against the Premises or the Shopping Center.
Section 6.5 - Union Cooperation.
Tenant shall perform or cause Tenant's contractor to perform all work
in the making and/or installation of any repairs, alterations or improvements in
a manner so as to avoid any labor dispute which causes or is likely to cause
stoppage or impairment of work or delivery services or any other services in the
Shopping Center. In the event there shall be any such stoppage or impairment as
the result of any such labor dispute or potential labor dispute, Tenant shall
immediately undertake such action as may be necessary to eliminate such dispute
or potential dispute, including, but not limited to (i) removing all disputants
from the job site until such time as the labor dispute no longer exists, (ii)
seeking an injunction in the event of a breach of contract between Tenant and
Tenant's contractor, and (iii) filing appropriate unfair labor practice charges
in the event of a union jurisdictional dispute.
Section 6.6 - Landlord's Contribution to Tenant's Work.
(a) Landlord shall pay to Tenant as its total obligation hereunder with
respect to Tenant's Work, the sum of One Hundred Forty Thousand Dollars
($140,000.00) which sum represents Landlord's contribution to Tenant's Work.
Landlord's contribution shall be due and payable to Tenant provided that the
following conditions have been met:
<PAGE>
(1) The Premises have been completed according to the plans
and specifications previously approved in writing by Landlord, and thirty (30)
days shall have elapsed from the date Tenant opens for business; and
(2) INTENTIONALLY OMITTED
(3) Tenant has furnished Landlord with unconditional lien
waivers and releases that comply with the mechanic's lien law of the State of
California, showing that all subcontractors, materialmen, laborers and design
professionals have been paid for all work, material and labor furnished for the
Premises.
(b) In the event that there are claims unpaid, work unfinished, or
liens filed for such work and labor that have not been bonded or otherwise
secured, Landlord may retain from the amount due to Tenant for said contribution
a sum sufficient to pay said claims, unfinished work or liens and all costs
resulting there from and to pay said claims or liens, if necessary. If the
amount owed to Tenant by Landlord shall not be sufficient to pay for said claims
or liens and the costs resulting therefrom, Tenant shall forthwith pay said
claims or liens or cause the same to be properly discharged as herein provided
for.
(c) Tenant shall have the right at all times and at its own expense to
contest and defend on behalf of Tenant or Landlord any action involving the
collection, validity or removal of such lien or liens, upon giving adequate
security to the Landlord for payment of said lien.
(d) Notwithstanding anything contained herein, the amount of Landlord's
Contribution shall not exceed the documented costs of Tenant's construction
work, including but not limited to design fees, permit fees, bonds, insurance
and all equipment, fixtures and improvements attached to the building.
(e) If any portion of Landlord's Contribution is not paid by Landlord
to Tenant within fifteen (15) days after Tenant gives Landlord notice that (1)
the Landlord's Contribution was not paid when due, and (2) if not paid within
fifteen (15) days it will bear interest as provided in this Section 6.6(e), then
the unpaid portion (x) shall bear interest at the rate of ten percent (10%) per
annum, not to exceed the maximum lawful rate, from the due date until paid, and
(y) may, together with such interest, be offset by Tenant against rent and other
charges owing to Landlord pursuant to this Lease.
ARTICLE VII
PLANS
Section 7.1 - Submission of Plans.
Tenant shall prepare, at its sole cost and expense, and in full
compliance with the provisions of Exhibit "SBG1.0" herein, complete plans and
specifications for all of Tenant's work, including store front design, and shall
submit such Plans and Specifications to Landlord or Landlord's designated
representative for approval prior to commencement of any work. No further
changes to said plans shall be made after such approval by Landlord without
Landlord's prior written consent.
Tenant shall be required to submit its plans and specifications to
Landlord in a timely manner in accordance with the plan submission requirements
of Exhibit "SBG1.0" so that Tenant's remodeling of its Premises shall be
completed on or before the RCD. In the event Tenant's plans are not submitted in
a timely fashion as required above, due to reasons within Tenant's or its
architect's control, Landlord shall be entitled, in addition to any other rights
it may have hereunder, to require Tenant to commence the payment of rent and
additional charges as of the RCD notwithstanding the fact that Tenant may not be
open for business on such date.
<PAGE>
ARTICLE VIII
USE
Section 8.1 - Use and Trade Name.
Tenant agrees to: (i) operate its business in the Premises under the
trade name specified in Article I, Section 1.0(r) or such other trade name
approved by Landlord, which approval shall not be unreasonably withheld, delayed
or conditioned and (ii) use the Premises solely for the permitted use specified
in Article I, Section 1.0(s) and for no other business or purpose. Tenant
further agrees not to conduct catalog sales in or from the Premises except of
merchandise which Tenant is permitted to sell "over-the-counter" consistent with
its permitted use. Tenant recognizes that the specific limited use prescribed
herein is a material consideration to Landlord in order that the Shopping Center
will maintain an appropriate tenant mix so as to produce the maximum Gross
Revenue possible for all tenants and to assure the continued operation of a
first-class regional enclosed mall shopping center. Notwithstanding the
foregoing, Tenant's specific limited use hereunder shall not be construed to
imply that Tenant has an exclusive right to conduct the use permitted by Article
I, Section 1.0(s). Landlord, in its sole discretion, may permit other tenants or
occupants of the Shopping Center to operate the same or similar use unless
expressly stated herein to the contrary. If Tenant's business in the Premises is
to be conducted pursuant to a franchise agreement, the existence and
continuation of such franchise agreement is a material consideration to Landlord
in entering into this Lease and if such franchise agreement is terminated,
Landlord shall be entitled to treat such event as an event of default and elect
any of the remedies provided in Article XXIV.
Section 8.2 - Tenant's Covenant to Operate.
Tenant agrees to complete Tenant's work and open the Premises for
business to the public adequately fixtured, stocked and staffed on the Rent
Commencement Date, and, thereafter throughout the Term of this Lease, to
continuously operate in one hundred percent (100%) of the sales space within the
Premises the business described in Article I, Section 1.0(s), Mondays through
Saturdays from 10:00 A.M. to 9:00 P.M. and on Sundays from 12:00 Noon until 6:00
P.M., or such other operating days and hours as may be reasonably determined by
Landlord for the operation of the Shopping Center. Tenant agrees it will not
open earlier or close later than such hours without Landlord's prior written
consent. Landlord's consent may be conditioned on Tenant's payment of additional
costs incurred by Landlord as a result of Tenant's extended hours of operation.
Notwithstanding anything to the contrary contained in this Lease, in no event
shall Tenant be required to be open for business in the Premises, at any time
unless at such time at least two (2) "Major Department Stores" (as hereinafter
defined) and tenants occupying at least seventy percent (70%) of the Shopping
Center GLA (excluding the GLA of the Major Department Stores) shall also be open
for business to the public. "Major Department Stores" mean those single
occupants of substantially the entirety of the buildings respectively shown on
Exhibit "B" as Nordstrom, Robinson's/May and Mervyn's. Notwithstanding anything
to the contrary contained in this Lease, Tenant may be closed up to two (2) days
in any calendar year for purposes of taking inventory and Tenant shall not be
required to be open for business on Christmas Day, Easter, Thanksgiving Day
and/or New Year's Day. In all events, even if Tenant is not required to be open,
Tenant's display windows and exterior signs shall be lighted during the days and
hours set forth in the first sentence of this Section 8.2.
Section 8.3 - Prohibitions on Use.
(a) Tenant shall not use or permit or suffer the Premises, or any part
thereof, to be used for any other business or purpose than that specifically
defined and permitted by this Article and further provided that Tenant shall not
divert any portion of the Premises GLA for any use other than the use described
in Section 1.0(s).
<PAGE>
(b) Tenant shall not permit the Premises to be used in violation of any
laws or local ordinances or any way which in the reasonable judgment of Landlord
will injure the reputation of, be a nuisance, annoyance, or do damage to the
other tenants of the Shopping Center or Landlord, including without limitation,
the sale of patently offensive material and merchandise and the use of audio
devices, flashing lights, machinery and equipment creating noise or odors, or
the committing of acts, which will disturb, impair or interfere with the use and
enjoyment by the other tenants of their respective premises within the Shopping
Center.
(c) Tenant agrees not to use or allow the Premises to be used for any
auction, fire, bankruptcy or "going out of business" sales therein unless
ordered by a court of competent jurisdiction after reasonable notice to Landlord
and an opportunity by Landlord to be heard.
Section 8.4 - Manner of Operation of Business.
(a) Tenant shall conduct the above business in a reputable manner, in
keeping with good practices as established in the trade. Tenant shall keep upon
the Premises an adequate staff of employees and an adequate stock of merchandise
during business hours throughout the Term of this Lease so as to insure a
maximum volume of business in and from its Premises consistent with sound
business practices.
(b) Subject to Article XV of this Lease, Tenant agrees to assume full
responsibility and at its own cost to keep and maintain the Premises neat,
clean, in proper repair and free from waste and offensive odors, and in an
orderly and sanitary condition, free of vermin, rodents, bugs and other pests.
(c) Tenant shall not cause or permit any Hazardous Material to be
brought upon, kept, stored, utilized, disposed of or used in or about the
Premises by Tenant, its agents, employees, contractors or invitees. This
obligation shall survive the termination or expiration of this Lease. If Tenant
breaches the obligations stated in the preceding sentence, or if the presence of
Hazardous Material on the Premises caused or permitted by Tenant results in
contamination of the Premises, or if contamination of the Premises by Hazardous
Material otherwise occurs for which Tenant is legally liable to Landlord for
damage resulting therefrom, then Tenant shall indemnify, defend and hold
Landlord harmless from any and all claims, judgments, damages, penalties, fines,
costs, liabilities or losses (including, without limitation, diminution in value
of the Premises, damages for the loss or restriction on use of rentable or
usable space or of any amenity of the Premises, damages arising from any adverse
impact on marketing of space, and sums paid in settlement of claims, attorneys'
fees, consultant fees and expert fees) which arise during or after the Term as a
result of such contamination. This indemnification of Landlord by Tenant
includes, without limitation, costs incurred in connection with any
investigation of site conditions or any clean-up, remedial, removal or
restoration work required by any federal, state or local governmental agency or
political subdivision because of Hazardous Material caused or permitted by
Tenant and present in or on the Premises. Without limiting the foregoing, if the
presence of any Hazardous Material on the Premises caused or permitted by Tenant
results in any contamination of the Premises, Tenant shall promptly take all
actions at its sole expense as are necessary to return the Premises to the
condition existing prior to the introduction of any such Hazardous Material to
the Premises; provided that Landlord's approval of such actions shall first be
obtained, which approval shall not be unreasonably withheld so long as such
actions would not potentially have any material adverse long-term or short-term
effect on the Premises.
<PAGE>
As used herein, the term "Hazardous Material" means: Any substance which is
(i) defined under any Environmental Law (defined below) as a hazardous
substance, hazardous waste, hazardous material, pollutant or contaminant, (ii) a
petroleum hydrocarbon, including crude oil or any fraction thereof, (iii)
hazardous, toxic, corrosive, flammable, explosive, infectious, radioactive,
carcinogenic or a reproductive toxicant or (iv) otherwise regulated pursuant to
any Environmental Law. The term "Environmental Law" shall mean all federal,
state and local laws, statutes, ordinances, regulations, rules, judicial and
administrative orders and decrees, permits, licenses, approvals, authorizations
and similar requirements of all federal, state and local governmental agencies
or other governmental authorities pertaining to the protection of human health
and safety or the environment now existing or later adopted during the Term.
Landlord and its agents shall have the right, but not the duty, to inspect
the Premises at any time to determine whether Tenant is complying with the terms
of this Section. If Tenant is not in compliance with this Section, Landlord
shall have the right to immediately enter upon the Premises to remedy said
noncompliance at Tenant's expense. Landlord shall use its best efforts to
minimize interference with Tenant's business, but shall not be liable for any
interference caused thereby.
ARTICLE IX
TERM
Section 9.1 - Term.
The Term of this Lease shall commence on the RCD (see Sections 1.0[e]
and 10.1[b]) and the Term, unless the Lease should be terminated earlier, shall
expire at midnight on the "Term Expiration Date" or "TED" which shall be January
31, 2008.
Section 9.2 - Commencement Date Agreement.
At any time following full execution of this Lease, Landlord and Tenant
may, upon the request of either party, execute a supplemental agreement, setting
forth the commencement and expiration dates of the Term of this Lease.
Section 9.3 - Holding Over.
If, at the expiration of the Term of this Lease, Tenant continues to
occupy the Premises with or without Landlord's consent, its tenancy shall become
month-to-month terminable by either party on thirty (30) days' written notice.
Tenant shall be subject to all the conditions of this Lease excepting the Term
thereof, and shall be further subject to any changes which Landlord has given
Tenant (including increases in Rents), in writing, during any thirty (30) day
period for the following thirty (30) day period provided Tenant shall be given
at least thirty (30) days' notice of any such changes. Notwithstanding anything
contained herein to the contrary, nothing contained in this subparagraph shall
be deemed or construed to give Tenant the right to hold over. Tenant shall not
be permitted to hold over if Landlord gives Tenant notice before the expiration
of the Term of this Lease that Tenant may not hold over.
Section 9.4 - Expiration of the Term of the Lease.
(a) This Lease shall expire at the end of the Term thereof without the
necessity of any notice from either Landlord or Tenant to terminate the same,
and subject to Section 9.3 hereof, Tenant hereby waives notice to vacate or quit
the Premises and agrees that Landlord shall be entitled to the benefit of all
provisions under this Lease respecting the summary recovery of possession of the
Premises from Tenant holding over to the same extent as if statutory notice had
been given.
<PAGE>
(b) For the period of three (3) months prior to the expiration of the
Term, upon reasonable prior notice to Tenant, Landlord shall have the right and
may show discreetly the Premises and all parts thereof to prospective tenants
during normal business hours.
(c) Tenant shall deliver and surrender to Landlord possession of the
Premises upon the expiration or earlier termination of this Lease, in good
condition and repair except ordinary wear and tear and casualty loss.
(d) Tenant shall have no right to quit the Premises, cease to operate
its business, cancel or terminate this Lease except as said right is expressly
granted to Tenant herein.
Section 9.5 - Mutual Termination Rights
Notwithstanding anything to the contrary contained in this Lease, in
the event that Tenant's Gross Revenue for the third Lease Year is less than
Three Hundred Twenty Dollars ($320.00) per square foot of Premises GLA, then
either party hereto shall have the right to terminate this Lease by notice
thereof given to the other party within sixty (60) days after the end of the
third (3rd) Lease Year. In the event that either party gives such notice, then
the Term of this Lease shall expire on the ninetieth (90th) day after the date
of the notice of termination is given. Tenant's notice of termination shall not
be effective for any purpose whatsoever unless it is accompanied by, and
Landlord actually receives a good check payable to Landlord in the amount equal
to the product obtained by multiplying Landlord's Contribution pursuant to
Section 6.6 by a fraction, the denominator of which is 120 and the numerator of
which is the number of whole months which would have been remaining in the
original Term of this Lease after the effective date of the termination. In any
event, Tenant agrees to pay Landlord the foregoing amount if this Lease is
terminated pursuant to this Section 9.5 by Tenant. In the event that at any time
or times during the third Lease Year Tenant is prevented from operating its
business at the Premises due to matters set forth in Section 27.8 of this Lease,
then for purposes of this Section 9.5 only, Tenant's Gross Revenue for such time
or times during the third Lease Year shall be deemed to be equal to Tenant's
Gross Revenue for the identical period(s) during the most recent year as to
which Tenant was not so prevented from operating its business at the Premises.
ARTICLE X
RENT COMMENCEMENT DATE
Section 10.1 - Rent Commencement Date.
(a) As used in this Lease, the term "Rent Commencement Date" or "RCD"
shall mean the earlier of the dates specified in Section 1.0(e).
(b) Should the RCD occur on a day other than the first day of a
calendar month, Tenant shall be liable for rent and/or Additional Charges due
for said previous partial month on a prorated basis based upon a thirty (30) day
month.
Section 10.2 - Failure of Delivery of Premises to Tenant.
In the event Landlord fails to deliver possession of the Premises to
Tenant on or before September 17, 1997 for any cause within Landlord's or
outside Tenant's control (except, however, Tenant's failure to comply with the
timely plan submission requirements of Section 7.1 or any other cause within the
control of Tenant or its agents, employees, architects or contractors)
including, but not limited to, the holding over of any tenant or tenants, or the
total failure to deliver the Premises, the rent and Additional Charges shall not
commence until the earlier to occur of the date Tenant opens for business or
seventy-five (75) days following the date that possession of the Premises is
available to Tenant for the commencement of its leasehold improvement work.
Tenant agrees to accept such abatement of rent as liquidated damages in full
satisfaction for the failure of Landlord to deliver possession on time or
complete failure of delivery of possession, to the exclusion of all right and
claims for damage which Tenant otherwise may have suffered as a result of
Landlord's delayed or complete failure of delivery of possession.
<PAGE>
Section 10.3 - Tenant's Failure to be Open by the Outside Date.
INTENTIONALLY OMITTED
ARTICLE XI
RENTAL
Section 11.1 - Fixed Minimum Rent.
(a) Tenant hereby covenants and agrees to pay to Landlord, without
deduction or set-off and without demand, at Galleria at South Bay, P.O. Box
72237, Cleveland, Ohio 44192-0237 or such other place as Landlord may, from time
to time, designate in writing, as Fixed Minimum Rent for the Premises, the
amount(s) set forth in Article I, Section 1.0(f), said amount(s) to be due and
payable in monthly installments, in advance, on the first day of each and every
calendar month. Tenant agrees at no time to pay the monthly Fixed Minimum Rent
more than one (1) month in advance of its due date.
(b) Notwithstanding anything in this Lease to the contrary, in the
event Tenant fails to pay any rent or additional charges within seven (7) days
following the due date of said rent or additional charges, then Tenant shall pay
a late charge of one and one-half percent (1- 1/2%) per month of the monthly
charges due from the due date of any installment of any rent or additional
charges to the date of payment of such sums.
(c) As used herein, the term "Occupancy Requirement" means a
requirement that there be a Major Tenant open for business in at least two (2)
of the three (3) buildings shown on Exhibit "B" as Mervyn's, Nordstrom and
Robinson's/May, and that there also be open for business tenants occupying at
least seventy percent (70%) of the Shopping Center GLA, exclusive of the
buildings shown on Exhibit "B" as Mervyn's, Nordstrom and Robinson's/May.
Notwithstanding anything to the contrary contained in this Lease, if at any time
during the Term, for any reason whatsoever, there shall occur a one hundred
eighty (180) day period with respect to which the Occupancy Requirement shall
not be satisfied, then from and after the end of said one hundred eighty (180)
day period, Fixed Minimum Rent shall abate by fifty percent (50%) until the date
upon which the Occupancy Requirement is again satisfied; provided, however, in
no event shall the application of this remedy result in Tenant paying more Rent
to Landlord than Tenant would have been required to pay in the absence of this
provision. In addition, but without limitation of the foregoing, if at any time
during the Term, for any reason whatsoever, there shall occur a two (2) year
period with respect to which the Occupancy Requirement shall not be satisfied,
then Tenant shall have the right to terminate this Lease effective upon sixty
(60) days' notice to Landlord which may be given at any time prior to the date
upon which the Occupancy Requirement is again satisfied.
<PAGE>
Such notice, however, shall not be effective unless Tenant contemporaneously
pays Landlord the sum Tenant is required to pay Landlord pursuant to Section 9.5
using the termination date pursuant to this Section 11.1 to make such
calculation.
Section 11.2 - Percentage Rent.
In addition to Tenant's Fixed Minimum Rent, Tenant covenants and agrees
to pay to Landlord, without deduction or set-off, during each Lease Year of the
Term hereof, as Percentage Rent in the amount(s) equal to the percentage set
forth in Article I, Section 1.0(g), of Gross Revenues during such Lease Year in,
upon and from the Premises in excess of the applicable Annual Breakpoint set
forth in Article I, Section 1.0(g). Notwithstanding anything to the contrary
contained in this Lease, Tenant shall pay to Landlord as Percentage Rent for the
partial Lease Year at the end of the Term an amount equal to (a) seven percent
(7%) of the amount by which the Gross Revenue for the last twelve (12) calendar
months of the Term exceed the Annual Breakpoint applicable during the final full
Lease Year multiplied by (b) a fraction the numerator of which is the number of
calendar days in said partial Lease Year and the denominator of which is 365.
Such Annual Breakpoints, as set forth in Article I, Section 1.0(g),
will be adjusted to correspond to Tenant's Fixed Minimum Rent, if it is revised
after final determination of the Premises GLA.
Section 11.3 - Payment.
(a) The Percentage Rent due for each Lease Year shall be payable by no
later than the twentieth (20th) day of the month immediately following the month
in which Gross Revenue for the Lease Year exceeds the Annual Breakpoint for said
Lease Year, and thereafter any Percentage Rent due shall be paid monthly on all
additional Gross Revenue made during the remainder of said Lease Year. Said
payments of Percentage Rent shall be made concurrently with the submission of
Tenant's written statement of monthly Gross Revenue to Landlord as herein
provided.
(b) Upon submission of Tenant's certified statement of Gross Revenue at
the close of each Lease Year, as provided in Section 11.6 herein, adjustments of
amounts due for Percentage Rent shall be made to the respective parties.
(c) Notwithstanding the provision for the payment of Percentage Rent,
Landlord shall not, in any event, be deemed to be a partner or associate of
Tenant in the conduct of its business. The relationship of the parties hereto
shall, at all times, be solely that of Landlord and Tenant.
Section 11.4 - Gross Revenue.
The term "Gross Revenue" wherever used herein shall be defined to mean
the total amount of all sales of merchandise and/or services and all other
receipts of all business conducted in, at, or from any part of the Premises,
whether the same be for cash, barter, credit, check, charge account, gift, and
merchandise certificates purchased, or other disposition of value regardless of
collection, in the event of sale upon credit or charge account, and whether made
by Tenant, sub-tenants, concessionaires, licensees, or assignees of Tenant. The
value of each sale shall be the actual total sales price charged the customer,
and shall be reported in full in the month that the transaction occurs
irrespective of when, or if, payment is received. Gross Revenue includes orders
or sales which originate in, at, or from the Premises, (including catalogue
sales) whether delivery or performance is made from the Premises or from another
place, and orders and sales of goods and services delivered and performed from
the Premises as a result of orders taken elsewhere; orders or sales mailed,
telephoned, or telegraphed, which are received at or filled from the Premises;
all sales and revenue accruing by means of mechanical, self-operated, or
automatic vending devices on the Premises. There shall be no deduction or
exclusion from Gross Revenue except as specifically permitted hereafter. Any
deposit not refunded shall be included in Gross Revenue.
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Section 11.5 - Exclusion from Gross Revenue.
Notwithstanding the foregoing, "Gross Revenue" shall not include or
there shall be deducted therefrom as appropriate:
(a) The amount of cash refunded, credit given, or discounts and
allowance granted or exchanges made, provided that the sale price of said items
was originally included in Gross Revenue.
(b) The amount of any sales, use or gross receipts tax, or excise tax,
imposed by any governmental authority directly on sales and collected from the
customers, provided the amount of such tax is separately recorded.
(c) The exchange of merchandise between stores of Tenant, when such
exchanges are made solely for the operation of Tenant's business and not for the
purpose of consummating a sale which has been made at, in or from the Premises.
(d) Merchandise returned for credit or sold to shippers, jobbers,
wholesalers or manufacturers.
(e) Revenue from sale of trade fixtures after use in the Premises and
sums or credits received in settlement of claims for loss or damage to
merchandise.
(f) Revenue from vending machines for Tenant's employee use only.
(g) Sales to employees at discount not to exceed two percent (2%) of
Tenant's Gross Revenue for the Lease Year in question;
(h) Bad debts and/or bad checks which are actually written off as a
bad debt for federal income tax purposes not to exceed two percent (2%) of the
Gross Revenue for the Lease Year in question;
(i) Gift certificates, or like vouchers, until such time as the same
shall have been converted into a sale by redemption or forfeited;
(j) Alteration workroom charges and delivery charges;
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(k) Receipts from so-called "layaway" sales except
as and to the extent actually received by Tenant; and
(l) Interest, service or sales carrying charges or other charges,
however denominated, paid by customers for extension of credit on sales.
Section 11.6 - Reporting.
(a) Tenant shall submit to Landlord, on or before the twentieth (20th)
day of each month of each Lease Year, commencing in the second month of the
first Lease Year, a written statement signed by Tenant showing Tenant's Gross
Revenue, as herein defined, for the preceding calendar month.
(b) On or before forty-five (45) days following the close of each Lease
Year, Tenant shall furnish to Landlord a statement certified by an officer of
Tenant of the Gross Revenue made by Tenant from the Premises during the
preceding Lease Year.
(c) For the purpose of ascertaining the amount of reportable sales and
revenue and any amounts payable as rent, Tenant agrees to record each and every
sale at the time of the transaction on either a cash register having a sealed,
continuous, cash register tape with cumulative totals, which numbers, records,
and duplicates each transaction entered into the register, (in any event such
cash register must have a non-resettable grand total) or on serially prenumbered
sales slips, or with computer equipment or other generally accepted device. In
the event Tenant chooses to record each sale by using a cash register, Tenant
agrees that the continuous, cash register tape will be sealed or locked in such
a manner that it is not accessible to the person operating the cash register. If
Tenant chooses to record each sale on individual sales slips, Tenant agrees that
said sales slips (including those canceled, voided, or not used) will be
retained in numerical sequence for the period set forth in Section 11.7 herein.
(d) If Tenant shall fail to prepare and deliver any statement of Gross
Revenue required herein, upon fifteen (15) days' notice to Tenant and Tenant's
failure to cure within said fifteen (15) day period, Landlord may elect to treat
Tenant's failure to report as a default of this Lease; or (ii) elect to make an
audit of all books and records of Tenant which in any way pertain to or show
Gross Revenues and to prepare the statement or statements which Tenant has
failed to prepare and deliver. The statement or statements so prepared shall be
conclusive on Tenant, and Tenant shall pay on demand all reasonable expenses of
such audit and of the preparation of any such statements and all sums as may be
shown by such audit to be due as Percentage Rent.
(e) All statements, reports and audit results shall be kept in
confidence by Landlord except in connection with a sale, mortgage,
administrative or judicial proceedings.
Section 11.7 - Books and Records.
(a) Tenant agrees to keep on the Premises, or at its principal offices
accurate books and records (as more specifically identified below) of all
business conducted at the Premises in accordance with generally accepted
accounting practices consistently applied, and said records shall be open and
available for examination at all reasonable times during the applicable
Retention Period to Landlord, but not more than twice per Lease Year or
Landlord's representatives, upon reasonable notice to Tenant for the purpose of
ascertaining or verifying the Gross Revenue. All records shall be retained by
Tenant for examination by Landlord for a period of at least three (3) years
following the end of the Lease Year for which said records apply (the "Retention
Period").
(b) Tenant further agrees that for the purposes hereinbefore recited,
Tenant will prepare, preserve and maintain, each Lease Year such documents,
books, accounts and records as a Certified Public Accountant would normally
required to comply with GAAP and for the preparation of a certified statement of
Gross Revenue without exceptions.
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(c) If upon inspection or examination of Tenant's available books and
records of account, Landlord determines that Tenant has failed to maintain,
preserve, or retain the above-recited documents, books, and records of account
in the manner detailed herein, Landlord will give Tenant sixty (60) days to cure
said deficiencies. Further, if Tenant is found to be deficient in maintaining
any of the above reflected documents, books or records of account, Tenant will
reimburse Landlord for reasonable expenses incurred by Landlord in determining
said deficiencies, including, but not limited to, any audit or examination fees
incurred by Landlord.
If after receiving the aforesaid notice, and upon expiration
of the sixty (60) day time period specified herein, Tenant fails to cure the
noted deficiencies, Landlord may, at his option, either grant Tenant additional
time to cure the deficiencies, hold Tenant in default of the Lease, or at
Tenant's expense, and for his benefit, retain a good and reputable independent
accounting or bookkeeping firm to prepare and maintain the above-recited
documents, books and records of accounts. If Landlord elects the latter option,
Tenant agrees and covenants that the representative or representatives of said
accounting or bookkeeping firm will have full right of entry and access to the
Premises and existing financial records, and full cooperation by Tenant, for the
purpose of establishing and maintaining the documents, records and books of
account recited hereinabove. Any expenses incurred by Landlord in furtherance of
his rights hereunder will be considered additional rent for the Premises due and
payable by Tenant with the next due installment of rent and Additional Charges.
Notwithstanding anything to the contrary contained in this Lease, upon twenty
(20) days notice to Tenant, Landlord may from time to time, but not more than
twice in any Lease Year, during the applicable Retention Period, with or without
cause, conduct an audit of Tenant's books and records relating to Gross Revenue.
The cost of such audit shall, subject to the provisions of Section 11.7(d)
below, be paid by Landlord.
(d) In the event an examination of the records of Tenant to verify said
Gross Revenue shall disclose a deficiency in excess of three percent (3%) of the
Gross Revenue reported for any Lease Year and additional Percentage Rent is due
Landlord on account of such deficiency, (1) Tenant agrees to pay to Landlord the
reasonable costs and expenses of such Audit; (2) any additional Percentage Rent
found due and owing as a result of said Audit shall be immediately paid by
Tenant to Landlord upon demand. If an examination by Landlord or its
representative discloses that Tenant has overreported Gross Revenue and that, as
a result of the overreporting Tenant has overpaid Percentage Rent, Landlord
shall give Tenant credit against the next due installments of rent and
Additional Charges due and owing by Tenant for the overpaid Percentage Rent,
with a refund at the end of the Term.
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ARTICLE XII
ADDITIONAL CHARGES
Section 12.1 - Status of Charges.
In addition to all rentals provided for by this Lease, Tenant agrees to
pay to Landlord as hereinafter provided, the Additional Charges as described in
this Article for the purposes as hereinafter set forth and such Additional
Charges shall be subject to all provisions of this Lease and of law as to
default in the payment of rent. Tenant's obligation to pay Additional Charges
shall survive the expiration or earlier termination of this Lease.
Section 12.2 - Common Area Maintenance Charges.
(a) The term "Common Area Maintenance ('CAM') Cost" means the total of
all items of cost related to maintaining, managing, operating, policing,
securing, repairing, replacing, and protecting the Common Area, including but
not limited to: all cost of maintaining and painting facilities, fixtures and
improvements, including but not limited to, parking decks or structures,
cleaning, removal of trash, dirt and debris, snow and ice removal, sweeping and
janitorial services; all such maintenance and construction work as shall be
required to preserve and maintain the utility and appearance of the Common Area;
lighting of outdoor areas, mall and service corridors; maintenance, repair and
replacement of roof/roofs, and sprinkler systems; cost of plantings, landscaping
and mall amenities, interior and exterior landscaping and supplies incidental
thereto to include all seasonal and similar decorations; Landlord's cost of all
utilities utilized in connection therewith; costs of maintenance, repair of and
Landlord's Utility Cost (excluding equipment depreciation or rentalization) of
all utilities used in connection with Landlord's HVAC system which heats,
ventilates and air conditions the Enclosed Mall; directional signs, shopping
center signs, bumpers and other markers; maintenance and repair of any security
systems, fire protection systems, lighting and utility systems, and storm
drainage systems; maintenance, repair and replacement of disposal plants, lift
stations, and retention ponds or basins; costs and expenses of payroll, payroll
taxes and employee benefits of all on-site management personnel, including
without limitation managers, security and maintenance people, secretaries and
bookkeepers; costs and expenses of operating, maintaining, repairing and
replacing machinery and equipment used in the operation and maintenance of the
Common Areas, and the personal property taxes and other charges incurred in
connection with such machinery and equipment; costs and expenses of purchasing
and maintaining in full force insurance (including, without limitation,
liability insurance for personal injury, death and property damage, rent
insurance, insurance against fire, extended coverage, theft or other casualties,
all risk, difference in conditions, sprinkler, malicious mischief, vandalism,
earthquake, flood, worker's compensation insurance covering personnel, fidelity
bonds for personnel, insurance against liability for defamation and claims of
false arrest occurring on or about the Common Areas, and plate glass insurance),
management fees; costs and expense of policing/security, including uniforms,
equipment and all supplies; cost of installation of any cost saving devices or
equipment; all costs relating to separate employee parking areas, including but
not limited to the cost of any shuttle services Landlord may provide and the
cost of transportation services, depreciation of equipment and equipment
buildings used in operating, maintaining and replacing the Common Areas and/or
rent paid for the leasing of any such equipment or buildings; cost and expense
for the rental of music program service and loudspeaker systems including
furnishing electricity; services furnished by Landlord for nonexclusive use of
all tenants on a non-profit basis including parcel pick up and delivery services
and shuttle bus service; the cost of pest extermination; and an administration
cost in an amount not more than fifteen percent (15%) of the total cost and
expense of all the foregoing. Contributions toward CAM Costs paid by Major
Tenants shall be deducted from CAM Costs before Tenant's Proportionate Share is
calculated. Notwithstanding anything to the contrary contained in this Lease,
Tenant shall have the right, at its expense and upon notice to Landlord, to
inspect and/or audit Landlord's books and records in connection with the
expenses payable by Tenant under this Lease. Any underbilling or overbilling by
Landlord which is discovered by Tenant pursuant to such inspection or audit
shall be promptly adjusted between the parties. Such inspection and/or audit
shall be accomplished in accordance with the following:
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1. Such inspection and/or audit shall take place within twenty (20)
days after Landlord's receipt of Tenant's notice requesting same at a time
mutually agreed upon by Tenant at Landlord's principal place of business;
2. No such audit and/or inspection shall take place during the period
from January 1st through April 30th;
3. Such inspection and/or audit shall be only with respect to those
items specifically requested to be inspected and/or audited by Tenant in
Tenant's notice requesting same;
4. No more than one (1) such inspection and/or audit shall take place
during any calendar year;
5. Tenant shall keep the results of all such inspections and/or audit
in the strictest confidence except as required for Tenant's business purposes,
and in no event shall such information be disclosed to any other small tenant of
the Shopping Center; and
6. No Lease Year, calendar year or fiscal year, may be audited and/or
inspected later than 730 days after the end of the applicable Lease Year,
calendar year or fiscal year, as the case may be.
(b) Tenant's Proportionate Share (as defined in Section 1.1[g]) of the
CAM Costs shall be paid by Tenant to Landlord in equal monthly installments, in
advance, on the first day of each calendar month during the Term of this Lease
in an amount equal to one twelfth (1/12th) of Tenant's Proportionate Share of
the CAM Costs as estimated by Landlord for the calendar year. The amount due for
any partial calendar year shall be prorated accordingly.
(c) Within a reasonable time after the end of Landlord's fiscal year
(January 1 - December 31) Landlord shall furnish Tenant with a written statement
in reasonable detail of the actual CAM Costs and the amount and manner of
calculation of Tenant's Proportionate Share thereof for the preceding fiscal
year. If the actual CAM Costs exceed the aggregate of Tenant's monthly payments,
Tenant shall pay to Landlord any deficiency due within thirty (30) days after
receipt of said statement by Tenant. Any surplus paid by Tenant shall be
credited against the next ensuing installment of Tenant's Proportionate Share of
the CAM Costs, unless the amount of such surplus exceeds the amount of the next
ensuing monthly installment of Tenant's estimated share of CAM Costs, in which
event Landlord shall refund such excess to Tenant within ten (10) days after
demand. Notwithstanding anything to the contrary contained in this Lease, Tenant
shall not be required to pay its share of any costs which (i) are reimbursed to
Landlord from insurance proceeds or warranties or another person or entity
responsible therefor, (ii) are typically treated as capital expenditures
pursuant to generally accepted shopping center accounting principles, except
that a single capital expenditure of Two Hundred Thousand Dollars ($200,000.00)
or less may be included in full in CAM Costs for the fiscal year incurred and
except that capital expenditures in excess of Two Hundred Thousand Dollars
($200,000.00) shall be amortized over not less than seven (7) years and only the
amortized amount each year shall be included in CAM Costs for the year in
question; (iii) relate to abatement or removal of or other action relating to
Hazardous Materials, except that simple cleanup costs of spills may be included
up to Ten Thousand Dollars ($10,000.00) per spill; (iv) relate to rentalization,
amortization or depreciation of the Central HVAC System Equipment, (v) are
incurred by Landlord pursuant to Article XXII or XXIII of this Lease, and/or
(vi) except for the general heating and air conditioning thereof, relate
specifically to a so-called "food court", or similar area, including without
limitation any seating or patio area used in connection therewith. Further,
Tenant shall not be required to pay both depreciation and replacement cost for
the same item.
Section 12.3 - Real Estate Taxes.
(a) (i) The term "real estate taxes" shall mean all taxes, in-lieu
fees, possessory interest taxes, assessments, charges, levies, fees and other
governmental charges, general and special, ordinary and extraordinary, of any
kind and nature whatsoever, including, but not limited to, assessments for
off-site public improvements for the benefit of the Shopping Center, which shall
be laid, assessed, levied, or imposed upon the Shopping Center or any part
thereof and which are payable at any time during the Term hereof, and all gross
receipts taxes, rent taxes, and occupancy taxes, and shall include any and all
costs reasonably incurred by Landlord in contesting or negotiating the taxes
with any governmental authority, excepting only franchise, estate, inheritance,
succession, capital levy, transfer, business license, net income and excess
profits taxes imposed upon Landlord.
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(ii) The Premises, its leasehold improvements and the
underlying realty will not be separately assessed for tax purposes but instead
will be assessed as part of a larger parcel or parcels of land and improvements
comprising the Shopping Center. Accordingly, Tenant agrees to pay its
Proportionate Share of said real estate taxes as set forth in Section 1.1(g). To
the extent that the Shopping Center consists of more than one tax parcel,
including but not limited to, separate tax parcels for one or more of the Major
Tenants, the following shall apply:
(x) Landlord shall have the right and option to compute Tenant's
Proportionate Share of real estate taxes based on the building area of the
particular tax parcel on which the Premises is located.
(y) In the event that a separate real estate tax bill is rendered by the
taxing authority with respect to the building, land and improvements owned or
leased by a Major Tenant, then real estate taxes shall be deemed to exclude
taxes and assessments attributable to such Major Tenant and the floor area of
such Major Tenant shall be correspondingly excluded from the denominator of the
Proportionate Share fraction.
(z) In the event that a Major Tenant's building, land and improvements are
separately assessed for real estate tax purposes but no separate tax bill is
rendered with respect to such Major Tenant or in the event that a Major Tenant's
building, land and improvements are not separately assessed for real estate tax
purposes but are included as part of other building, land and improvements in
the Shopping Center, to the extent, if any, that such Major Tenant(s)
contributes towards the real estate taxes attributable to the Shopping Center,
then real estate taxes will be reduced by the amount of such Major Tenant
contributions and the floor area of such contributing Major Tenant shall be
excluded from the denominator of the Proportionate Share fraction.
(iii) The rentals to be paid under this Lease shall be paid to
Landlord without deduction for taxes of any nature whatsoever. The amount of any
tax or excise payable by, or assessed against Tenant shall be paid by Tenant
directly to the tax collecting authority before it is due. Landlord and Tenant
recognize and acknowledge that there may be changes in the current real property
tax system and that there may be imposed new forms of taxes, assessments,
charges, levies or fees, or there may be an increase in certain existing taxes,
assessments, charges, levies or fees placed on, or levied in connection with the
ownership, leasing, occupancy or operation of the Shopping Center or the
Premises. All such new or increased taxes, assessments, charges levies or fees
which are imposed or increased as a result of or arising out of any changes in
the structure of the real property tax system or any limitations on the real
property taxes which can be assessed on real property including, but not limited
to, any and all taxes, assessments, charges, levies and fees assessed or imposed
due to the existence of this Lease (including any surcharge on the income
directly derived by Landlord therefrom) or for the purpose of funding special
assessment districts of the type funded by real property taxes, shall also be
included within the meaning of "real estate taxes". With respect to any general
or special assessment which may be levied against or upon the Premises or the
Shopping Center and which under the laws then in force may be evidenced by
improvement or other bonds, or may be paid in periodic installments, there shall
be included within the meaning of "real estate taxes" with respect to any
calendar year only the amount currently payable on such bond for such calendar
year, or the periodic installment for such calendar year.
(b) Tenant's Proportionate Share of real estate taxes shall be paid by
Tenant to Landlord in equal monthly installments on the first day of each
calendar month during the Term of this Lease, in an amount equal to one-twelfth
(1/12) of Tenant's Proportionate Share of said real estate taxes as estimated by
Landlord for the calendar year. The amount due for any partial calendar year
shall be prorated accordingly.
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(c) Within a reasonable time after the end of each tax period for which
an actual tax bill is available ("Tax Period"), Landlord shall furnish Tenant
with a copy of the actual real estate tax bills and a written statement in
reasonable detail showing the actual amount of said real estate taxes applicable
to the Shopping Center and of the manner of calculating Tenant's Proportionate
Share thereof for the appropriate Tax Period ("Actual Taxes"). If the Actual
Taxes for such Tax Period exceed the aggregate of Tenant's monthly payments with
respect thereto, Tenant shall pay to Landlord any deficiency due Landlord within
thirty (30) days after receipt of said statement by Tenant. If Tenant's
aggregate monthly payments exceed the Actual Taxes, any surplus paid by Tenant
shall be refunded or credited against the next ensuing monthly installments of
Landlord's estimate of Tenant's Proportionate Share of such real estate taxes.
The obligations of Landlord and Tenant to make the foregoing adjustments shall
survive the expiration or earlier termination of this Lease.
Section 12.4 - Initial Opening Advertisement.
(a) Initial Opening Advertisement. INTENTIONALLY OMITTED
(b) Renovation/Expansion Assessment. INTENTIONALLY OMITTED
Section 12.5 - Marketing Fund.
(a) During the Term hereof, Landlord shall maintain a Marketing Fund which
shall be used by Landlord to pay all costs and expenses associated with the
formulation and carrying out of an ongoing program for the promotion of the
Shopping Center, which program may include, without limitation, special events,
shows, displays, signs, marquees, decor, seasonal events, advertising for the
Shopping Center, promotional literature to be distributed within and outside the
Shopping Center area and other activities within the Shopping Center designed to
attract customers.
(b) In addition, Landlord may use the Marketing Fund to defray the costs of
administration of the Marketing Fund, including, without limitation, the salary
of a marketing director and related administrative personnel, rent and
insurance.
(c) Commencing on the RCD, Tenant shall make a contribution to the
Marketing Fund in the amount set forth in Article I, Section 1.0(k), hereinafter
referred to as "Tenant's Marketing Fund Contribution". Tenant's Marketing Fund
Contribution shall be paid by Tenant in equal monthly installments, in advance,
without deduction or set-off, on the first day of each calendar month. The
amount due for all partial calendar years shall be prorated accordingly.
(d) At the end of each calendar year or part thereof, Tenant's Marketing
Fund Contribution then payable shall be adjusted by a percentage equal to the
lesser of five percent (5%) or the percentage increase in the U.S. Department of
Labor Bureau of Labor Statistics, Consumers Price Index for all Urban Consumers,
Los Angeles - Anaheim - Riverside Average (1982-84=100) ("CPI-U") for the
preceding calendar year or part thereof.
If during the term of this Lease, the U.S.Department of Labor, Bureau of
Labor Statistics, ceases to publish a CPI, such other index or standard as will
most nearly accomplish the aim and purpose of said CPI and the use thereof of
the parties hereto, shall be selected by Landlord in its reasonable discretion
in determining the amount of any such adjustment.
(e) INTENTIONALLY OMITTED
Section 12.6 - Media Fund.
INTENTIONALLY OMITTED
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ARTICLE XIII
The Premises
UTILITY SERVICES
Section 13.1 - Water, Sanitary Sewer, Gas, Telephone and Electricity Service.
(a) Water and Sewer Service. Landlord shall make available electrical,
water and sewer service, and Tenant agrees to purchase the same from Landlord
and pay Landlord for such services as additional rent, on the first day of each
month in advance (and prorated for partial months) commencing on the RCD, as
herein defined. Water service shall be billed monthly based on submetered
readings, adjusted quarterly. Tenant's cost shall not exceed that which would be
charged to Tenant from time to time by the utility company which otherwise would
furnish such water and sewer services to the Premises if it provided such
services and metered the same directly to the Premises.
(b) Telephone Service. Landlord will provide and/or make available to
the Premises the facilities necessary to enable Tenant to obtain telephone
service for the Premises. Tenant shall arrange for telephone service directly
with the appropriate company supplying same to the Shopping Center at Tenant's
sole cost and expense and shall pay all charges therefor directly to the
providing company.
(c) Gas Service. To the extent such service may be necessary for the
conduct of Tenant's business in the Premises, and to the further extent that it
is feasible to run such service from the nearest available gas service point to
the Premises, Tenant shall arrange, at Tenant's sole cost and expense, but
subject to Landlord's prior approval for gas service including but not limited
to any piping from such service point and metering related thereto, directly
with the utility company supplying same to the Shopping Center and shall pay all
charges therefor directly to the providing utility.
(d) Electricity Service. Landlord shall have the option, exercisable by
Landlord in its sole discretion to arrange with the local electric utility
company to furnish and supply Tenant's "base load" (lights, appliances,
equipment plugs) electricity service requirements directly to Tenant on a
direct-metered basis; or to furnish and supply to Tenant for Tenant's use such
base load electricity service as may be reasonably necessary for the operation
of Tenant's business (hereinafter referred to as "Base Load Energy Use"). In the
event that Landlord shall elect to supply base load electricity service to the
Premises, Tenant shall pay Landlord an "Annual Energy Charge" for Tenant's base
load electrical service which shall be determined, paid and adjusted in the
following manner:
(1) Initial Determination - Tenant shall select a consultant
("Consultant") to provide Landlord with an initial load summary of Tenant's
anticipated Base Load Energy Use ("Initial Load Summary"). Consultant's Initial
Load Summary shall be based on such information which may be reasonably
necessary including without limitation: (i) the electrical systems set forth in
Tenant's final plans and specifications for its leasehold improvements as
approved by Landlord; and (ii) specifications for all electrical equipment and
appliances to be operated in the Premises. Tenant covenants and agrees that at
all times its use of electric current shall not exceed the capacity of the
feeder to the Premises and the wire installations therein. Tenant shall make no
alterations or additions to the electrical installations within the Premises
without the prior written consent of Landlord in each instance. Landlord shall
prepare an energy estimate ("Energy Estimate") of Tenant's Base Load Energy Use
based on Consultant's Initial Load Summary and Landlord's reasonable estimates
of the usage of Tenant's equipment and appliances to be operated by Tenant
during Tenant's operating hours pursuant to this Lease ("Tenant's Operating
Hours"). Landlord shall determine Tenant's "Annual Energy Charge" from its
Energy Estimate.
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(2) Billing and Payment - Tenant's Annual Energy Charge shall
be deemed and billed to Tenant as part of rent in twelve (12) equal
installments, each of which shall be due and payable in advance on or before the
first day of each month. Except in the event of interruption in service, and
except as otherwise provided in the Lease, in no event shall Tenant's obligation
to pay its Annual Energy Charge abate, nor shall Tenant have any right of
off-set or counterclaim against the payment of its Annual Energy Charge except
for those adjustments to which Tenant may be entitled as hereinafter provided.
The electric rate portion of Tenant's Annual Energy Charge shall not exceed the
"Comparable Service Rate" as hereinafter described in subsection (e).
(3) Annual and Periodic Adjustments.
(i) Annual - Not later than sixty (60) days after the end of each calendar
year, Landlord shall compute the ------ adjustments, if any, for Tenant's Base
Load Energy Use during the preceding calendar year. Such adjustments shall be
based upon factors which may have caused Tenant's Base Load Energy Use or the
costs thereof to vary from Landlord's Energy Estimate, including without
limitation: any change in rates charged by the local utility company during such
year; new taxes or any increase in existing taxes on electrical service by state
or local governments; any permitted change in the use of the Premises which
affects its Base Load Energy Use; and any adjustments required as a result of
Tenant's actual operating experience or seasonal requirements during Tenant's
Operating Hours. The amount of such adjustment shall be added to or subtracted
from, as the case may be, Tenant's next succeeding monthly payments of Tenant's
Annual Energy Charge. Landlord shall estimate Tenant's Annual Energy Charge for
each succeeding twelve (12) month period based on Tenant's Base Load Energy Use
for the prior year.
(ii) Periodic.
(x) Landlord's Energy Survey - Each party reserves the right, at any time
during the Term of this Lease, ------------------------ upon reasonable prior
notice to the other, to make an energy survey ("Energy Survey") of the Premises
during Tenant's Operating Hours to determine whether or not the installation of
electricity-consuming equipment by Tenant varies from Consultant's Initial Load
Summary and/or Tenant's approved plans and specifications. In the event of any
such variance, the Annual Energy Charge based on Landlord's Energy Estimate
shall be re-computed and adjusted retroactively to the later of (i) one (1) year
prior to the date of the Energy Survey or (ii) the date Landlord began providing
electricity to Tenant, to reflect the difference between Landlord's Energy
Estimate and its revised Energy Estimate based on the Energy Survey. Any
resulting adjustments shall be added to, or subtracted from, as the case may be,
Tenant's next succeeding monthly payment of its Annual Energy Charge.
<PAGE>
(y) Check-Metering - Either Landlord or Tenant shall have the right to
monitor Tenant's actual Base Load Energy Use by installing meters ("check
meters") which comply with the standards for such use set forth in the latest
edition of the American Standard Code for Electricity Metering, ANSI C-12. The
party desiring such monitoring shall provide written notice to the other party
prior to the installation of the check meter. The check meter shall be installed
in the meter base located within the Premises. Tenant agrees to make the check
meter accessible to Landlord during Tenant's Operating Hours for inspection and
reading. Check meter readings shall be taken over a representative period
determined by Landlord which shall not be less than thirty (30) days. If the
check meter readings disclose that Tenant's actual Base Load Energy Use differs
from Landlord's Energy Estimate or Energy Survey, then Tenant's Annual Energy
Charge for the next and subsequent monthly periods shall be adjusted to reflect
the check meter readings. In addition, Tenant's Annual Energy Charge shall be
adjusted retroactively to the later of (i) one (1) year prior to the date of
installation of the check meter, or (ii) the date Landlord began providing
electricity to Tenant, to reflect the difference between the Energy Estimate for
such period and Tenant's Base Load Energy Use as disclosed by the check meter
readings. Any adjustments shall be added to or subtracted from, as the case may
be, Tenant's next succeeding monthly payment of its Annual Energy Charge.
(e) Landlord's Utility Cost, as used herein, shall mean that in the
event that any utility service is supplied directly to Landlord by a utility
company and/or such service is redistributed or sub-metered by Landlord to
Tenant, "Landlord's Utility Cost" shall not be less than that cost actually
incurred by Landlord for the handling, distribution, redistribution and billing
of such service (including but not limited to any fuel adjustments and all taxes
applicable to Landlord's utility service nor shall the utility rate portion of
Landlord's Utility Cost be in excess of the consumer rate ("Comparable Service
Rate") chargeable by the utility company and "applicable" (as hereinafter
defined) to a shopping center commercial customer of similar size and location
as Tenant in the prevailing service area on a separately metered basis. As used
herein, however, such Comparable Service Rate would be deemed to be "applicable"
to Tenant only to the extent that Tenant qualifies for such directly metered
Comparable Service Rate "as-is" without the necessity of either Landlord or
Tenant incurring additional expense in the furnishing and/or installation of
additional facilities, wiring or equipment in order to make such Comparable
Service Rate available to Tenant.
Section 13.2 - Central and Premises Heating, Ventilating and
Air-conditioning Systems.
(a) Central HVAC and Premises HVAC System: Landlord has furnished and
installed a central heating, ventilating and air conditioning system ("Central
HVAC System") and shall operate and maintain the same during the Term of this
Lease. Tenant shall be required to furnish and install its own equipment and
facilities for heating, ventilating, and air conditioning the Premises
("Premises HVAC System") and shall operate and maintain a portion of the same
during the Term of this Lease. Such system shall belong to Landlord at the
expiration or earlier termination of this Lease. The Premises HVAC System shall
include, but is not necessarily limited to, the Variable Air Volume ("VAV") box
provided by Landlord at Tenant's expense, all ductwork, piping, thermostatic
controls and all HVAC system electric wiring within the Premises, which are to
be connected at the VAV box to Landlord's Central HVAC System.
There shall be no charge for the existing VAV box(es).
(b) Tenant agrees to operate its Premises HVAC System during Tenant's
Operating Hours and to balance the operation of its Premises HVAC System in
conjunction with the operation of the Central HVAC System servicing the
"Shopping Center GLA" as hereinafter defined.
(c) Central HVAC System Equipment Rentalization. In each Lease Year,
Tenant agrees to pay Landlord annually, as additional rental in twelve (12)
equal monthly installments, together with Fixed Minimum Rent), an amount (the
"Central HVAC System Equipment Rentalization") equal to One and 02/100 Dollars
($1.02) multiplied by the Premises GLA.
7
<PAGE>
(d) Maintenance. Landlord agrees to maintain and repair, subject to
contributions by other tenants serviced by the Central HVAC System, all other
portions of the Central HVAC System and that portion of the Premises HVAC System
including the VAV control box thermostat and the ductwork connecting the VAV
control box outward to the Central HVAC System ("Landlord's HVAC Maintenance").
Tenant shall be responsible for maintaining, at its sole expense, all portions
of the Premises HVAC System, including but not necessarily limited to, the VAV
control box and all ductwork, piping and wiring, from the VAV control box inward
throughout the interior of the Premises. Tenant agrees to pay on a monthly basis
its pro rata share of Landlord's HVAC Maintenance costs (including labor, parts,
materials and overhead but excluding Central HVAC System Equipment Rentalization
or depreciation). Tenant's pro rata share of Landlord's HVAC Maintenance costs
shall be computed by dividing said costs by the gross leasable area of the
Shopping Center ("Shopping Center GLA") and multiplying the resultant quotient
by the Premises GLA.
(e) Energy Charge. In each calendar month of each calendar year, Tenant
shall pay to Landlord, as additional rental, its proportionate share of
Landlord's Utility Cost incurred in heating, ventilating and air-conditioning
the Premises ("Tenant's HVAC Energy Charge") which shall be determined as
follows:
(i) Upon the submission by Tenant to Landlord of Tenant's
plans and specifications, Landlord's consulting engineer for ventilation and air
conditioning shall assign to Tenant a "HVAC Factor" which shall fairly represent
the relationship between (1) the mechanical capacity of the equipment and system
which is required to heat, ventilate and air condition the Premises, and (2) the
total mechanical capacity of the Central HVAC System;
(ii) In each month, Landlord's Utility Cost which is
attributable to the heating, ventilating and air conditioning of the Shopping
Center GLA shall be multiplied by a fraction, the numerator of which shall be
Tenant's HVAC Factor and the denominator of which shall be the total of all HVAC
Factors assigned to the Shopping Center GLA. The product thus obtained shall be
Tenant's HVAC Energy Charge for such month; and
(iii) Tenant's HVAC Energy Charge for each calendar month
shall be paid by Tenant in such amounts as are estimated and billed by Landlord,
each such charge being estimated and billed as of the first day of each calendar
month. Within sixty (60) days after the expiration of each calendar year,
Landlord will provide to Tenant a breakdown of how Tenant's HVAC Energy Charge
was computed based upon Landlord's Utility Cost incurred for heating,
ventilating and air conditioning the Shopping Center GLA for such calendar year.
Landlord covenants and agrees that the aggregate of all Tenant HVAC Energy
Charges paid or payable by all tenants occupying the Shopping Center GLA with
respect to such calendar year, as adjusted, will not exceed Landlord's Utility
Cost incurred for such heating, ventilating and air conditioning of the Shopping
Center GLA.
<PAGE>
(iv) Tenant's HVAC Energy Charge paid for such calendar year
shall be adjusted between Landlord and Tenant, the parties hereby agreeing that
Tenant shall pay Landlord or Landlord shall credit to Tenant's account (or if
such adjustment is at the end of the Term pay Tenant, as the case may be),
within thirty (30) days of such certification to Tenant, the amount necessary to
effect such adjustment. Failure of Landlord to provide the certification called
for hereunder within the time prescribed above shall not relieve Tenant of its
obligations hereunder. Notwithstanding anything to the contrary contained in
this Lease, Landlord warrants that the Central HVAC System shall comply with
Exhibit "SBG1.0".
Section 13.3 - Discontinuance of Service.
Landlord reserves the right with thirty (30) days prior written notice
to Tenant to cut off and discontinue water, electricity, air conditioning,
heating, ventilating, and any or all other service without liability to Tenant,
whenever and during any period in which bills for the same remain unpaid by
Tenant. Any such action by Landlord shall not be construed by Tenant or any
other party interpreting this Lease as an eviction or disturbance of possession
of Tenant or an election by Landlord to terminate this Lease on account of such
nonpayment. If such service is discontinued or disconnected by Landlord pursuant
to this Section, any reconnection of such service shall be at Tenant's sole cost
and expense.
Section 13.4 - Interruption of Service.
Landlord shall not be liable to Tenant in damages or otherwise if any
one or more of said utility services or obligations hereunder is interrupted or
terminated because of necessary repairs, installations, construction and
expansion, non-payment of utility charges due from Tenant, or by reason of
governmental regulation, statute, ordinance, restriction or decree, or any other
cause beyond Landlord's reasonable control. No such interruption or termination
of utility service shall relieve Tenant from any of its obligations under this
Lease. Notwithstanding anything to the contrary contained in this Lease, in the
event of any interruption in any utility service due to any cause within
Landlord's reasonable control, which interruption renders the Premises wholly or
partially untenantable for more than twenty-four (24) consecutive hours for the
reasonable operation of Tenant's business therein, all Rents shall abate during
such period of untenantability in proportion to the degree to which Tenant's use
of the Premises is so impaired.
Section 13.5 - Premises Sprinkler System.
Landlord shall provide and install or has provided and installed within
the Premises a sprinkler system ("Premises Sprinkler System") and shall operate
and maintain the same during the Term of this Lease. In each Lease Year Tenant
agrees to pay Landlord annually, as additional rental (in twelve (12) equal
monthly installments together with Fixed Minimum Rent), an amount (the "Premises
Sprinkler System Rentalization") equal to thirty cents ($.30) multiplied by
Premises GLA.
ARTICLE XIV
SIGNS
Section 14.1 - Tenant's Obligation.
Tenant shall erect only such signs as have been approved by Landlord in
accordance with Exhibit "SBG1.0" and requirements of all governmental
authorities, and said signs shall be maintained in good condition by Tenant.
Landlord's approval shall not be unreasonably withheld, delayed or conditioned.
Tenant shall obtain all permits and licenses for its sign(s). Tenant shall not
exhibit or affix any other type of sign, decal, advertisement, notice or other
writing, awning, antenna or other projection to the roof or the outside walls or
windows of the Premises or the building of which the Premises are a part,
without Landlord's approval, which shall not be unreasonably withheld, delayed
or conditioned. No movable displays or sales fixtures will be allowed in the
Design Control Area (as defined in Exhibit "SBG1.0") except behind the display
windows or store closure.
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Section 14.2 - Interior Signs and Advertising.
Tenant further agrees that no advertising material of any kind except
temporary price tags related to merchandise on display shall be placed within
eighteen inches (18") of any customer door or lease line of the Premises or on
the surface of any display window or customer door. All window display
advertising material and signs shall be in keeping in character and standards
with the improvements within the Shopping Center as reasonably determined by
Landlord and as more specifically described in Part I(B) of Exhibit "SBG1.0",
and Landlord reserves the right to require Tenant to correct any nonconformity.
Any such display and signs shall be related only to merchandising of goods from
the Premises.
ARTICLE XV
REPAIRS AND ALTERATIONS
Section 15.1 - Repairs by Landlord.
(a) Landlord shall keep the roof, structural portions, the exterior of
the Premises, parking facilities and other Common Areas, in good and tenantable
condition and repair during the Term of this Lease, subject to Section 12.2,
provided, however, except to the extent waived by Landlord pursuant to Section
17.4, if the need for such repair is attributable to or results from Tenant's or
its agent's negligent operation or acts, , then in such case Tenant does hereby
agree to and shall reimburse Landlord for all costs and expenses incurred by
Landlord in respect to such repairs.
(b) As used in this Article the expression "structural portions and
exteriors of the Premises" shall not be deemed to include store front or
store fronts, plate glass, window cases or window frames, doors or door
frames or alterations required to comply with the Americans with
Disabilities Act ("ADA"). It is expressly understood and agreed that
Landlord shall be under no obligation to make any repairs, alterations,
replacements or improvements to and upon the Premises resulting from
compliance with the ADA or the mechanical equipment exclusively serving the
Premises at any time except as in this Lease expressly provided.
(c) Landlord shall not in any way be liable to Tenant for failure to
make repairs as herein specifically required of Landlord unless Tenant has
previously notified Landlord in writing of the need for such repairs and
Landlord has failed to commence said repairs within a reasonable period of time
following receipt of Tenant's written notification, or has not diligently
pursued said repairs to completion.
Section 15.2 - Repairs by Tenant.
(a) Except where caused by the negligence of Landlord or its employees,
it shall be Tenant's sole responsibility, at its own expense, to keep and
maintain its storefront and the interior of its Premises in good condition and
repair. All repairs to the Premises or any installation, equipment or facilities
therein or thereabout, other than those repairs required to be made by Landlord
pursuant to Section 15.1, Article XXII or Article XXIII, shall be made by
Tenant. Said repairs shall include but not be limited to all necessary painting
and decorating, the maintenance, repair and replacement of the electrical,
plumbing and sewer systems, under the slab and elsewhere which exclusively serve
the Premises, store fronts, window and other glass, entrance and service doors
and window frames, and any other mechanical or operational installations,
exclusively serving the Premises. All such repairs and replacements shall be in
quality and class equal to the original work or item.
(b) Notwithstanding anything contained herein, Tenant shall, at
Tenant's sole cost, repair or replace all glass contained in the Premises,
including but not limited to, glass in doors, storefronts and windows.
9
<PAGE>
Section 15.3 - Alterations and Remodeling.
(a) Tenant, at its own expense, shall have the right during the Term of
this Lease, or any renewal thereof, to make such interior alterations, changes
and improvements to the Premises as Tenant may deem necessary for its use and
business, provided, however, that any major remodeling of the interior in excess
of Twenty Five Thousand Dollars ($25,000.00) and any exterior or structural
alterations to the building or changes in the electrical, heating, ventilating
and air conditioning systems shall not be made without Landlord's prior written
consent, which shall not be unreasonably withheld, delayed or conditioned.
Notwithstanding the foregoing, changes or alterations made by Tenant to comply
with requirements of the ADA shall not require Landlord's approval of any plans,
specifications or drawings pertaining thereto. Under no circumstances shall
Landlord be responsible to Tenant or any third party for determining whether
Tenant's alterations comply with applicable laws, including ADA Requirements,
regardless of whether Tenant must obtain Landlord's approval of the alterations
or the plans and specifications therefor as a condition to making them. All such
alterations, changes and improvements, except trade fixtures, shall become the
property of Landlord upon installation and shall remain upon and be surrendered
with the Premises upon expiration or earlier termination of this Lease.
(b) Tenant further agrees not to make any alterations, additions or
changes to its storefront or storefront sign, the exterior walls or roof of the
Premises, nor shall Tenant erect any mezzanine or increase the size of same if
one is initially constructed unless and until the prior written consent of
Landlord shall first have been obtained. In no event shall Tenant make or cause
to be made any penetration through the roof or the floor slab of the Premises
without the prior written consent of Landlord, said consent shall not be
unreasonably delayed or withheld. Tenant shall be directly responsible for any
and all damages resulting from any violation of the provisions of this Section.
Section 15.4 - Renovation.
INTENTIONALLY OMITTED.
Section 15.5 - Governmental Approvals.
In the event Tenant obtains a Certificate of Occupancy or similar
governmental approval relating to any work done on the Premises by or for
Tenant, Tenant shall promptly provide Landlord with a copy of such governmental
approval.
ARTICLE XVI
LIENS
Section 16.1 - Indemnification by Tenant.
Tenant shall allow no liens to be filed against the Premises or the
Shopping Center as a result of work performed at the request or on behalf of
Tenant. Tenant shall indemnify and save harmless Landlord against all loss,
liability, costs, attorney's fees, damages or interest charges as a result of
any mechanic's lien or any other lien caused to be filed against the Shopping
Center, the Premises or Tenant's leasehold estate herein as a result of acts or
omissions of Tenant or its agents, contractors and employees, and Tenant shall,
within thirty (30) days of the filing of any such lien and written notice given
to Tenant, remove, pay or cancel said lien or secure the payment of any such
lien or liens by bond or other security acceptable to Landlord.
Section 16.2 - Tenant's Right of Contest.
Tenant shall have the right at all times and at its own expense to
contest and defend on behalf of Tenant or Landlord any action involving the
collection, validity or removal of such Lien or liens, upon giving adequate
security to Landlord for payment of such lien.
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ARTICLE XVII
INDEMNITY AND INSURANCE
Section 17.1 - Mutual Indemnification.
(a) Tenant shall defend, indemnify and save Landlord harmless from
legal action, damages, loss, liability and any other expense (including
reasonable attorney fees) in connection with loss of life, bodily or personal
injury or property damage arising from or out of all acts, failures, omissions
or negligence of Tenant, its agents, employees or contractors which occur in the
Premises, Common Areas or other parts of the Shopping Center, unless such legal
action, damages, loss, liability or other expense (including reasonable attorney
fees) results from any sole act, omission or neglect of Landlord, its respective
agents, contractors, employees or persons claiming through it.
(b) Landlord shall defend, indemnify and save Tenant harmless from
legal action, damages, loss, liability and any other expense (including
reasonable attorney fees) in connection with loss of life, bodily or personal
injury or property damage, arising from or out of all acts, failures, omissions
or negligence of Landlord, its agents, employees or contractors which occur in
the Premises, Common Areas or other parts of the Shopping Center, unless such
legal action, damages, loss, liability or other expense (including reasonable
attorney fees) results from any sole act, omission or neglect of Tenant, its
respective agents, contractors, employees or persons claiming through it.
Section 17.2 - Tenant's Insurance.
Tenant covenants and agrees that from and after the date of delivery of
the Premises from Landlord to Tenant, and during the Term of this Lease or any
renewal thereof, Tenant will carry and maintain, at its sole cost and expense,
the following types of insurance, in the amount specified and in the form
hereinafter provided for with insurance companies authorized to do business in
the state in which the Premises is located and rated A/VII or better in the most
current edition of Best's Insurance Report:
(a) Public Liability Insurance. Tenant shall keep in full force and
effect commercial general liability insurance, which shall include broad form
property damage liability coverage, extended bodily injury coverage, advertising
injury liability coverage, contractor liability coverage and independent
contractors coverage, naming both Landlord and Tenant as insureds in an amount
not less than $1,000,000 written on a combined single limit per occurrence basis
for property damage, personal injury and bodily injury or death of one or more
persons.
(b) Boiler and Machinery Breakdown Insurance. If applicable, Tenant
shall maintain in full force and effect at all times during the Term of the
Lease a policy(s) of boiler and machinery breakdown insurance covering all of
its boilers, fired or unfired pressure vessels, heating, ventilating and
air-conditioning units or any other mechanical equipment which may malfunction
or cause damage to property or injury to persons that may be caused by or
results from any equipment existing at the commencement date of this Lease or
added to the Premises at a subsequent date, which equipment is used exclusively
by Tenant, and if said coverage is not included within the policy(s) providing
coverage for Tenant's alterations, improvements and betterments, pursuant to
Section 17.2(e), then said insurance shall be by separate policy in an amount
not less than $100,000.00.
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(c) Environmental Impairment Liability Insurance. INTENTIONALLY
OMITTED
(d) Liquor Liability Insurance. INTENTIONALLY OMITTED
(e) Personal Property, Alterations, Improvements and Betterments.
Tenant shall at all times during the Term hereof maintain in full force and
effect a policy(s) of special form insurance including coverage for sprinkler
damage, vandalism and malicious mischief, covering all of Tenant's Personal
Property, including alterations, improvements and betterments to the Premises
now existing or to be added, to the extent of ninety percent (90%) of their full
replacement costs as updated from time to time during the Term of this Lease.
The proceeds of Tenant's policy(s) to the extent of the cost of
any damage or loss to the Premises, shall be used for the repair and replacement
of the property damaged or destroyed. In the event of Tenant's failure to
commence, within thirty (30) days of availability of insurance proceeds, and to
diligently proceed to reconstruct or repair its portion of the damaged or
destroyed Premises to its former condition prior to said casualty, then Landlord
shall have the right to make all necessary repairs and if the insurance proceeds
described above are not sufficient to cover the repairs, Tenant shall be liable
for all additional costs in excess of such available insurance proceeds.
However, it is expressly understood and agreed that Landlord shall be under no
obligation to insure, reinstall, repair or replace any such alterations,
additions, improvements or betterments. This paragraph is only applicable if the
lease is not terminated pursuant to Article XXII hereof.
(f) Additional Hazards. Tenant agrees that it will not keep, use, sell or
offer for sale in or upon the Premises any article which may be prohibited by
the standard form of all risk insurance coverage. Tenant agrees to pay any
increase in premium for All Risk Coverage resulting from the keeping, use, sale
or offering for sale of such prohibited articles that may be charged during the
Term of this Lease for the amount of any insurance which may be carried by
Landlord on the Premises. Said additional premiums shall be payable by Tenant to
Landlord upon ten (10) days' written notice to Tenant.
(g) Blanket Policies. Tenant may maintain any of its required insurance
coverages under blanket, umbrella or excess liability policies of insurance
covering said Premises and any other premises of Tenant, or companies affiliated
with Tenant, provided that the coverage afforded will not be reduced or
diminished by reason of the use of such blanket, umbrella or excess liability
policy.
(h) Policy(s) and/or Certificates of Insurance. The above mentioned
policy(s) or certificate(s) of insurance are to be provided by Tenant to
Landlord prior to occupancy and at least annually thereafter or as requested by
Landlord. The coverage evidenced by the policy(s) or certificate(s) of insurance
will be with insurance company(s) reasonably acceptable to Landlord and will be
for a period of not less than one (1) year, and will provide that Landlord be
given written notice ten (10) days prior to the expiration, material alteration,
cancellation, non-renewal or replacement of the existing policy(s), with the
further understanding that should Tenant fail to furnish said notice or policies
as is provided in this Lease, and at the times herein provided, Landlord may
obtain such insurance and the premiums on such insurance shall be deemed to be
an Additional Charge to be paid by Tenant to Landlord upon demand.
(i) Notice of Loss. Tenant shall notify Landlord forthwith in the event of
any damage to persons or property occurring on the Premises from fire, any other
casualty, or serious injury.
Section 17.3 - Landlord's Insurance.
<PAGE>
Landlord covenants and agrees that from and after the date of delivery
of the Premises from Landlord to Tenant, and during the Term of this Lease or
any renewal thereof, Landlord will carry and maintain, with regard to the
Shopping Center, the following types of insurance, in the amounts specified and
in the form hereinafter provided for with insurance companies authorized to do
business in the state in which the Premises is located and rated A/VII or better
in the most current edition of Best's Insurance Report:
(a) Public Liability Insurance. Landlord shall keep and maintain in
full force and effect public liability insurance in an amount not less than
$1,000,000, adjusted annually for inflation, written on a combined single limit
per occurrence basis for property damage and personal and bodily injury or death
of one or more persons.
(b) All Risk Coverage and Rental Income Insurance. Landlord shall, at
all times, keep and maintain in full force and effect all risk policy(s) of
insurance, including coverage for sprinkler damage, vandalism and malicious
mischief, covering the roof, structural portions and perimeter walls of the
Shopping Center and equipment (excluding Tenant's fixtures, merchandise,
personal property, wall coverings, alterations, improvements, betterments and
any other item included in Tenant's insurance) in an amount not less than full
replacement cost (exclusive of the cost of excavations, foundations and
footings) updated from time to time during the Term of this Lease or the amount
of such insurance which Landlord's mortgage lender may require Landlord to
maintain, whichever is the greater.
(c) Landlord may maintain any of its required insurance under blanket
policies of insurance covering the Premises and any other premises of Landlord
or companies affiliated with Landlord, provided that the coverage afforded will
not be reduced or diminished by reason of the use of such blanket policy of
insurance.
Section 17.4 - Waiver of Right of Recovery.
Notwithstanding anything to the contrary contained elsewhere in this
Lease, neither Landlord nor Tenant shall be liable to the other party or to any
insurance company insuring the other party by way of subrogated rights or
otherwise, for any loss or damage caused by fire or any other hazard or peril
covered or insurable by fire and extended coverage or all risk insurance, or any
resulting loss of income, even though such loss or damage may have been
occasioned by the negligence of such party, its agents or employees.
Section 17.5 - Landlord Not Responsible for Acts of Others.
Unless Landlord would be responsible or liable pursuant to Section
17.1(b) and not exonerated pursuant to Section 17.4, Landlord shall not be
responsible or liable to Tenant, or those claiming by, through or under Tenant,
for any loss or damage to their person or property resulting from the acts or
omissions of persons occupying space adjoining or adjacent to the Premises or
connected to the Premises or any other part of the Shopping Center or caused by
such events as breaking or falling of electrical cables and wires, and the
breaking, bursting, stoppage or leaking of water, gas, sewer or steam pipes.
<PAGE>
ARTICLE XVIII
GENERAL RULES AND REGULATIONS
Section 18.1 - Uniformity.
Landlord reserves the right, at any time and from time to time for the
general welfare of the Shopping Center, the avoidance of nuisance and the
maintenance of a good reputation, safety, order and cleanliness in the Premises
and at the Shopping Center, to impose reasonable rules and regulations of
generally uniform application governing the conduct of tenants and the use of
the Common Areas in the Shopping Center. Upon receipt of notice thereof, Tenant
agrees to comply with such rules and regulations imposed by Landlord as if they
had existed and been attached hereto at the time of execution of this Lease.
Section 18.2 - Rubbish.
Tenant agrees to maintain the Premises, at its expense, free and clear
of all rubbish, garbage or trash in the containers permitted and/or required by
Landlord. Tenant, at its own expense, shall dispose of all said rubbish as
reasonably directed by Landlord.
Section 18.3 - Lighting.
Tenant agrees to keep the windows of the Premises properly displayed
and the Premises, signs and external lights where specifically permitted
properly illuminated during the hours as established by the Rules and
Regulations of Landlord for the Shopping Center.
Section 18.4 - Merchandise Display, Loading and Unloading.
Tenant agrees not to display merchandise outside the Premises, and to
load, unload or deliver goods and merchandise only at such times and in such
areas and through such entrances as shall be reasonably designated by Landlord.
Section 18.5 - Obstruction of Passageways.
Tenant agrees not to obstruct the passageways, driveways, approachways,
walks, roadways, exits and entries in, to, from and through the Common Areas and
all other parts of the Shopping Center used in common with other tenants.
Section 18.6 - Employee Parking.
Tenant and its employees shall park their cars only in such areas
within the Common Areas designated for the purpose by Landlord. Tenant shall
furnish Landlord with State automobile license numbers assigned to cars used by
Tenant's employees within five (5) days after taking possession of the Premises
and shall thereafter notify Landlord of any changes within five (5) days after
such changes occur. If Tenant or its employees shall fail to park their cars in
the designated parking areas, then, without limiting any other remedy which
Landlord may pursue in the event of Tenant's default, Landlord, after giving
notice to Tenant, shall have the right to charge Tenant, as an Additional
Charge, the sum of Ten Dollars ($10.00) per day per car parked in violation of
the provisions of this Section.
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ARTICLE XIX
SUBORDINATION AND ATTORNMENT BY TENANT
Section 19.1 - Subordination of Lease.
This Lease and the estate of Tenant hereunder shall be subject and
subordinate to any ground lease, deed of trust, mortgage lien or charge or any
reciprocal easement agreement or other operating agreement which now encumber or
which at any time hereafter may encumber the Premises (such ground lease, deed
of trust, mortgage lien or charge, or any reciprocal easement agreement or other
operating agreement and any replacement, renewal, modification, consolidation or
extension thereof being hereinafter referred to as an "Encumbrance"). Any
Encumbrance shall be prior and paramount to this Lease and to the right of
Tenant hereunder and all persons claiming through and under Tenant, or
otherwise, in the Premises. Tenant's acknowledgment and agreement of
subordination provided for in this Section shall be self-operative and no
further instrument of subordination shall be required. However, Tenant, on
Tenant's behalf, and on behalf of all persons claiming through and under Tenant,
covenants and agrees that, from time to time at the request of Landlord or the
holder of any Encumbrance, Tenant will execute and deliver any necessary or
proper instruments or certificates reasonably necessary to acknowledge or
confirm the priority of the Encumbrance over this Lease and the subordination of
this Lease thereto or to evidence Tenant's consent to any encumbrance.
Notwithstanding the foregoing, any holder of an Encumbrance may elect to the
extent possible that this Lease shall have priority over such Encumbrance and,
upon notification of such election by the holder of such Encumbrance, this Lease
shall be deemed to have priority over such Encumbrance, whether this Lease is
dated prior to or subsequent to the date of such Encumbrance. This Lease and
Tenant's estate hereunder shall be subordinate to an Encumbrance only if the
holder thereof does not disturb Tenant's use and occupancy of the Premises so
long as Tenant is not in default hereunder beyond the expiration of all
applicable cure periods after the giving of all required notice of default.
Section 19.2 - Attornment by Tenant.
Tenant agrees that if the holder of any Encumbrance or any person
claiming under said Encumbrance shall succeed to the interest of Landlord in
this Lease, Tenant shall recognize and attorn to said holder as Landlord under
the terms of this Lease. Tenant agrees that it will, upon the request of
Landlord, execute, acknowledge and deliver any and all instruments necessary or
desirable to give effect or notice of such attornment and failure of Tenant to
execute any such document or instrument on demand shall constitute a default by
Tenant under the terms of this Lease.
Section 19.3 - Landlord as Attorney-in-Fact for Tenant.
<PAGE>
INTENTIONALLY OMITTED
ARTICLE XX
RIGHTS OF LANDLORD
Section 20.1 - Landlord's Right to Repair.
Landlord, or its authorized agents, after reasonable prior written
notice to Tenant, may go upon and inspect the Premises or any portion of the
Shopping Center and, if necessary shall, if Tenant has failed to commence such
repairs within ten (10) days following receipt of written notice from Landlord,
make those needed repairs which are Tenant's obligation to perform and which
Tenant has failed to do. Said work performed shall be chargeable to Tenant and
shall be due and payable within ten (10) days following receipt of Landlord's
billing.
Section 20.2 - Landlord's Right to Affix Sign.
Landlord has a right to install or place upon, or affix to the roof and
exterior walls of the Premises (except the storefront) equipment, non
competitive signs, displays, antennas and any other object or structure of any
kind, provided the same shall not materially impair the structural integrity of
the building or interfere with Tenant's occupancy.
Section 20.3 - Landlord's Right to Make Payment on Behalf of Tenant.
Landlord has a right to make payments on behalf of Tenant where Tenant
defaults in its payments or obligations under the terms of this Lease. Said
payments by Landlord shall be considered as an "Additional Charge" and be
payable within ten (10) days following receipt of Landlord's billing.
Section 20.4 - Trash Compactors.
In the event Tenant requires the services of a trash compactor, it
agrees to arrange for and coordinate said services through Landlord's mall
manager. If Tenant is required to use the Shopping Center's trash compactor
service, the charge for such service shall be competitive with the prevailing
market rate for such services.
ARTICLE XXI
ASSIGNMENT AND SUBLETTING
Section 21.1 - Landlord's Consent Required.
(a) Tenant shall not mortgage, pledge, encumber, franchise, assign or
in any manner transfer this Lease, voluntarily or involuntarily, by operation of
law or otherwise, nor sublet all or any part of the Premises for the conduct of
any business by any third person or business entity, or for any purpose other
than is herein authorized without Landlord's prior written consent.
Notwithstanding anything to the contrary contained in this Lease, without
Landlord's consent and without increase in rent and/or payment to Landlord,
Tenant shall have the right to assign this Lease and/or sublet the Premises to
any person, corporation or entity which is (i) Tenant's parent corporation, (ii)
a wholly-owned subsidiary of Tenant or of Tenant's parent corporation, (iii) a
corporation or entity of which a controlling interest is owned by Tenant or the
individuals or entities which control Tenant, (iv) the surviving entity in the
event of any merger or consolidation involving Tenant; and/or (v) the buyer in
one transaction of all or substantially all of Tenant's store assets both with
respect to the Premises and with respect to all of Tenant's stores.
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(b) INTENTIONALLY OMITTED
(c) Any consent by Landlord to any assignment or subletting, or other
operation by a concessionaire, or licensee, shall not constitute a waiver of the
necessity for such consent under any subsequent assignment or subletting or
operation by a concessionaire or licensee.
(d) Reference anywhere else in this Lease to an assignee or subtenant
shall not be considered as a consent by Landlord to such assignment or
subletting nor as a waiver against the same except as specifically permitted in
this Section.
Section 21.2 - Return of Premises by Tenant.
INTENTIONALLY OMITTED
Section 21.3 - Transfer of Corporate Shares.
INTENTIONALLY OMITTED
Section 21.4 - Transfer of Other Business Interests.
If Tenant is a partnership, general or limited, or any other type of
business entity other than a corporation, and if at any time during the term
hereof, the person or persons who at the time of the execution of this Lease
owns or own the general partners' interest of a limited partnership or owns a
controlling partnership interest in a general partnership, or a majority share
of any other business entity other than a corporation, ceases to own such
interest, such cessation of ownership shall constitute an assignment of this
Lease for all purposes of this Section (except as a result of transfers by
bequests or inheritance).
Section 21.5 - Acceptance of Rent by Landlord.
If this Lease be assigned, or if the Premises, or any part thereof, be
subleased or occupied by anybody other than Tenant with or without Landlord's
consent, Landlord may collect from assignee, subtenant or occupant, any rent or
other charges payable by Tenant under this Lease and apply the amount collected
to the rent and other charges herein reserved, but such collection by Landlord
shall not be deemed a waiver of the provisions of this Lease, nor an acceptance
of this assignee, subtenant or occupant, as a Tenant of the Premises.
Section 21.6 - No Release of Tenant's Liability.
No assignment or subletting or any other transfer by Tenant, either
with or without Landlord's consent, required or otherwise, during the Term of
this Lease shall release Tenant from any liability under the terms of this Lease
nor shall Tenant be relieved of the obligation of performing any of the terms,
covenants and conditions of this Lease.
Section 21.7 - Administrative Fee.
Tenant shall pay Landlord an administrative fee of One Thousand Dollars
($1,000.00) or such lesser amount as Landlord shall reasonably determine to be
reasonably appropriate in order to compensate Landlord for the time and expense
of reviewing, processing and documenting Tenant's request that Landlord consent
to any proposed transfer. The processing fee shall be payable whether or not
Landlord approves Tenant's request and whether or not said proposed transfer
actually occurs.
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ARTICLE XXII
DAMAGE OR DESTRUCTION
Section 22.1 - Landlord's Obligation to Repair and Reconstruct.
(a) If the Premises shall be partially damaged by fire or other
casualty but are not thereby rendered untenantable in any manner, Landlord shall
cause the Premises to be repaired at Landlord's expense subject to Subsections
(c) and (d) herein and the rent shall not be abated. If by reason of such
occurrence the Premises shall be rendered untenantable only in part, Landlord
shall cause the Premises to be repaired at Landlord's expense subject to
Subsections (c) and (d) herein, and the Fixed Minimum Rent and Additional
Charges shall be abated proportionately as to the portion of the Premises
rendered untenantable until the earlier to occur of ninety (90) days after
Landlord's restoration work has been substantially completed or the date the
Premises so repaired has reopened for business.
(b) Subject to Section 22.2, if the Premises shall be rendered wholly
untenantable or inaccessible by reason of such occurrence, Landlord shall cause
the Premises to be repaired at Landlord's expense in accordance with Subsection
(c) herein (subject to reasonable delays occasioned by adjustment of losses with
insurance carriers or for any cause beyond Landlord's control), and the Fixed
Minimum Rent and Additional Charges shall be abated, until the earlier to occur
of ninety (90) days after Landlord's restoration work has been substantially
completed or the date the Premises so repaired has reopened for business.
(c) If Landlord is required or elects to repair or reconstruct the
Premises under the provisions of this Article XXII, its obligation shall be
limited to those repairs to the Premises which were Landlord's obligation to
perform pursuant to Exhibit SBG1.0. Tenant, at Tenant's expense, shall promptly
perform all repairs and restoration not required to be done by Landlord and
shall promptly refixture and reconstruct the Premises and recommence business in
all parts thereof.
(d) Tenant shall not be entitled to any compensation or damages, other
than stated herein, from Landlord for the loss of the use of the whole or any
part of the Premises or damage to Tenant's personal property or any
inconvenience or annoyance occasioned by such damage, repair, reconstruction or
restoration.
Section 22.2 - Landlord's Option to Terminate.
If (1) the Premises are (damaged as a result of any cause which is not
covered by Landlord's actual or required insurance, and Landlord terminates the
leases of all tenants within 100 feet of the Premises or (2) the Premises are
damaged or destroyed during the last two (2) years of the Term, or (3) the
Shopping Center is damaged to the extent of fifty percent (50%) or more of the
gross leasable area thereof, and Landlord terminates the leases of all tenants
within 100 feet of the Premises, then in any of such events, Landlord may elect
to terminate this Lease by giving to Tenant notice of such election within
ninety (90) days after the occurrence of such event. If such notice is given,
the rights and obligations of the parties shall cease as of the date of such
notice, and rent and Additional Charges shall be adjusted as of the date of such
termination. Notwithstanding anything to the contrary contained in this Lease,
in the event the Premises are damaged by any casualty (i) not insured under the
casualty insurance policy which Tenant is required by this Lease to carry, or
(ii) during the last two (2) years of the Term, Tenant shall have the right to
terminate this Lease by notice to Landlord given within sixty (60) days after
the occurrence of the casualty.
Section 22.3 - Demolition of Landlord's Building.
If the Shopping Center is so substantially damaged that it is
reasonably necessary, in Landlord's judgment, to demolish a portion of the said
Shopping Center, including the Premises, for the purpose of reconstruction,
Landlord may demolish the Premises, in which event Tenant's rent and Additional
Charges shall be abated until Tenant's Premises, improvements and fixtures are
restored by Landlord and Tenant. In no event, however, shall such abatement
continue for longer than seventy-five (75) days after Landlord substantially
completes its restoration work.
Landlord and Tenant hereby waive any statutory rights of termination
which may arise out of partial or total destruction of the Premises which
Landlord is obligated to restore.
ARTICLE XXIII
<PAGE>
CONDEMNATION
Section 23.1 - Effect of Taking.
(a) In the event the whole or any part of the Premises shall be taken
for public or quasi-public use or condemnation under eminent domain, this Lease
shall terminate as to the part so taken on the date possession is yielded to the
condemning authority.
(b) In the event a portion of the Premises, Shopping Center or Common
Areas is taken and such taking substantially impairs access to or the usefulness
of the Premises for the purposes hereinbefore granted to Tenant, either party
may terminate the Lease by written notice within thirty (30) days prior to the
actual physical taking.
(c) For the purposes of this Article, a voluntary sale or conveyance in
lieu of condemnation, but under threat of condemnation, shall be deemed an
appropriation or taking under the power of eminent domain.
(d) If this Lease is not terminated as above provided following any of
such actual takings, then Landlord shall, at its expense, make all necessary
repairs or alterations to the basic building and exterior work so as to
constitute the remaining Premises a complete architectural unit and a
proportionate allowance shall be made in the Fixed Rental and Additional Charges
based on the proportion of the Premises remaining as compared to the original
Premises.
Section 23.2 - Compensation and Awards.
All compensation awarded for any taking of the fee and the leasehold,
or any part thereof, shall belong to and be the property of Landlord. Tenant
hereby assigns to Landlord all right, title and interest of Tenant in and to any
award made for leasehold damages and/or diminution in the value of Tenant's
leasehold estate. Tenant shall have the right to claim such compensation as may
be separately awarded or allocated by reason of Tenant's merchandise, fixtures,
leasehold improvements and equipment. Compensation as used in this Section shall
mean any award given to Landlord for such taking in excess of, and free and
clear of, all prior claims of the holders of any mortgages or other security
interests.
Section 23.3 - Condemnation or Breach of Lease.
Any such appropriation or condemnation proceedings shall not operate as
or be deemed an eviction of Tenant or a breach of Landlord's covenant of quiet
enjoyment.
Landlord and Tenant hereby waive any statutory rights of termination
which may arise by reason of any partial taking of the Premises under the power
of eminent domain.
ARTICLE XXIV
DEFAULT
Section 24.1 - Acts of Default.
(a) In the event Tenant shall not have paid Fixed Minimum Rent,
Percentage Rent or any Additional Charge or charges, any other sums of money
required to be paid by Tenant to Landlord under this Lease, or as reimbursement
to Landlord for sums paid by Landlord on behalf of Tenant in the performance of
the covenants of this Lease within ten (10) days after receipt of written notice
of delinquency from Landlord; or
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(b) In the event Tenant shall be in default in the performance of any
other covenants, terms, conditions, provisions, rules and regulations of this
Lease excepting those items listed in the above subsection (a) and if such
default is not cured within twenty (20) days after written notice thereof given
by Landlord, or, if such default cannot be cured completely within such twenty
(20) day period, then within a reasonable time following such twenty (20) day
period, provided Tenant, within such twenty (20) day period, has promptly
commenced to proceed with diligence and in good faith to remedy such default and
complete such remedy.
Tenant acknowledges that notices required under subsections
(a) and (b) hereof, and served in accordance with Article XXVI, will be in lieu
of notices required under Section 1161 of the California Code of Civil Procedure
("CCCP") and that the service provisions of Section 1162 of the CCCP are
superseded by the notice provisions of this Lease.
(c) INTENTIONALLY OMITTED
(d) Subject to Section 365 of the Bankruptcy Reform Act of 1978 as amended,
in the event of the filing by Tenant of a petition proposing the adjudication of
Tenant or guarantor of Tenant's obligation hereunder as a bankrupt or insolvent
or the reorganization of Tenant or any such guarantor or an arrangement by
Tenant or any such guarantor with its creditors, whether pursuant to the Federal
Bankruptcy Act or any similar federal or state proceeding and such action is not
dismissed within thirty (30) days after the date of its filing.
(e) The sale of Tenant's interest in the Premises under attachment,
execution or similar legal process.
(f) The making by Tenant or any such guarantor of an assignment for the
benefit of creditors.
(g) If Tenant shall vacate the Premises or fail to continuously occupy and
conduct Tenant's business in the Premises for four (4) consecutive days.
(h) If Tenant "abandons" the Premises within the purview of Section 1951.3
of the California Civil Code ("Civil Code").
Section 24.2 - Remedies.
(a) Notwithstanding the fact that Tenant has committed an Event of
Default hereunder and has "abandoned" the Premises within the purview of Section
1951.3 of the Civil Code, this Lease shall continue in effect for so long as
Landlord has not elected to terminate Tenant's right to possession and Landlord
may enforce all of its rights and remedies under this Lease, including the right
to recover rent and Additional Charges as they become due under the Lease.
(b) Except as otherwise provided in Section 24.2(a) above, in the event
Tenant commits an Event of Default and abandons the Premises before the end of
the term or if its right to possession of the Premises is terminated by Landlord
because of an Event of Default, this Lease shall terminate. Upon such
termination, Landlord may recover from Tenant:
(1) The worth at the time of award of the unpaid rent which had been earned
at the time of termination;
(2) The worth at the time of award of the amount by which the unpaid rent
which would have been earned after termination until the time of award exceeds
the amount of such rental loss that Tenant proves could have been reasonably
avoided;
(3) The damages Landlord may recover include the worth at the time of award
of the amount by which the unpaid rent for the balance of the term after the
time of award exceeds the amount of such rental loss for the same period that
Tenant proves could be reasonably avoided;
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(4) Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom.
(c) The "worth at the time of award" of the amounts referred to in
paragraphs (1) and (2) of subsection (b) shall be computed by allowing interest
at such lawful rate as may be allowed by law. The worth at the time of award of
the amount referred to in paragraph (3) of subsection (b) shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%).
(d) Efforts by Landlord to mitigate the damages caused by Tenant's
breach of this Lease shall not constitute a waiver of Landlord's right to
recover damages under this section. Landlord agrees to use reasonable efforts to
mitigate damages, provided, however, Landlord shall not be obligated to re-lease
the Premises before it leases all other comparable space in the Shopping Center.
(e) Nothing in this Section shall affect the right of Landlord to
indemnification for liability arising prior to the termination of the Lease for
personal injuries or property damage.
Section 24.3 - Repeated Default.
(a) Notwithstanding anything to the contrary set forth in this Lease,
if Tenant shall be in default in the timely payment of any Fixed Minimum Rent,
Percentage Rent or any Additional Charges due Landlord from Tenant or the
payment of any other money due Landlord from Tenant under the terms of this
Lease, and any such default shall be repeated four (4) times in any period of
twelve (12) consecutive months, then, notwithstanding that such default may have
been cured within the period provided in this Lease, but only if Tenant was
notified of each such prior default, any further similar default within said
twelve (12) month period shall be deemed to be a Repeated Event of Default.
(b) In the event of a Repeated Event of Default, Landlord, without
giving Tenant any notice and without affording Tenant an opportunity to cure the
default may terminate this Lease forthwith without notice to Tenant.
Section 24.4 - Waiver of Rights of Redemption.
Tenant hereby expressly waives any and all rights of redemption granted
by or under any present or future laws in the event of Tenant's being evicted or
dispossessed for any cause, or in the event of Landlord's obtaining possession
of the Premises by reason of the violation, by Tenant, of any of the covenants
or conditions of this Lease, or otherwise.
ARTICLE XXV
COMPETITION
Section 25.1 - Restriction on Tenant.
Tenant agrees that for as long as this Lease shall remain in effect,
Tenant, and if Tenant is a corporation, its officers, directors, or any
affiliates, shall not directly or indirectly operate, manage, or have any
financial interest in a business (unless such business is in operation on the
date of this Lease or uses a different trade name than that used at the Premises
which does not include the word "International" or "Int.") which is similar to
or in competition with the use set forth in Section 1.0(s) ("Competing Store"),
within a radius of two (2) miles of the perimeter of the Shopping Center.
Notwithstanding anything to the contrary contained in Section 25.1, the
foregoing radius of two (2) miles, for the period from the date hereof until the
first (1st) anniversary of the date Tenant first opens the Premises for
business, shall be deemed to include the shopping center located approximately
three (3) miles from the Shopping Center which is known as Del Amo Fashion
Center. The foregoing reference to the Del Amo Fashion Center shall include all
expansions and extensions thereof including without limitation any strip centers
associated therewith.
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Section 25.2 - Imposition of Damages.
In the event that Tenant shall violate this covenant, Landlord may, at
its option, without limiting Landlord's remedies, include the gross sales of
such other Competing Store in the Gross Revenues generated from the Premises for
the purpose of computing Percentage Rent due hereunder.
Section 25.3 - Restriction on Landlord.
At the specific insistence of Tenant and as an inducement for Tenant to
enter into this Lease, Landlord agrees for the period from the date hereof until
the end of the first (1st) Lease Year, Landlord will not permit any store (other
than a store in violation hereof as of the date hereof) to open in the Shopping
Center (i) whose sales of toys is equal to or greater than thirty-five percent
(35%) of its total Gross Revenue; or (ii) which devotes thirty-five percent
(35%) or more of its sales floor area to the display of toys. In the event
Landlord violates this Section 25.3, Tenant's sole and exclusive remedy shall be
the right to pay fifty percent (50%) of its Fixed Minimum Rent for the period
from the date when such violation began until the end of the first Lease Year.
There shall be no adjustment of the applicable Annual Breakpoint.
ARTICLE XXVI
NOTICES
Section 26.1 - Notices to Tenant and Landlord.
All notices, requests, approvals and demands permitted or required to
be given under this Lease shall be in writing and deemed duly served or given if
personally delivered or sent by certified or registered U.S. Mail, postage
prepaid, and addressed as follows: (a) if to Landlord, at Hawthorne Bay, Inc.,
10800 Brookpark Road, Cleveland, Ohio 44130, Attention: General Counsel with a
copy to GE Capital Investment Advisors, One Boston Place, Suite 18180, Boston,
MA 02108, Attention: Tom Barnes; and (b) if to Tenant, at the address set forth
in Section 1.0(u) herein. Landlord and Tenant may from time to time, by notice
to the other, designate another place for receipt of future notices. If such
notice, request, approval or demand is sent by United States Mail, it shall be
deemed given and received upon receipt or attempted delivery as shown on the
return receipt or returned envelope. Rejection, refusal, failure to accept or
the inability to deliver any notice sent hereunder shall be deemed to be receipt
of the notice, demand or request sent.
Section 26.2 - Notices to Mortgagee.
Tenant shall give Landlord's first mortgagee, namely: The Sumitomo Bank
Limited, 233 South Wacker Drive, Suite 4800, Chicago, Illinois 60606-6448,
Attention: Paul Olsen, Vice President, Public Finance, notice of any default
which could give rise to Tenant's termination of the Lease or expenditure of
money on behalf of Landlord. Such mortgagee should also be given an appropriate
time to cure such default including the opportunity to obtain possession of
Landlord's interest, if necessary, to cure the default. Landlord shall notify
Tenant of any change in the mortgagee for the Shopping Center.
ARTICLE XXVII
MISCELLANEOUS
Section 27.1 - Accord and Satisfaction.
No payment by Tenant or receipt by Landlord of a lesser amount than any
payment of rent herein stipulated shall be deemed to be other than on account of
the earliest stipulated rent, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such rent or pursue any
other remedy provided for in this Lease or available at law or in equity.
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Section 27.2 - Complete Agreement.
This Lease contains the entire agreement between the parties hereto,
and no agent, representative, employee or officer of Landlord hereto has or had
authority to make or has made any statement, agreement or representation, either
oral or written, in connection herewith, modifying, adding or changing the terms
and conditions herein set forth. No present or past dealings or custom between
the parties shall be permitted to contradict or modify the terms hereof. No
modification of this Lease shall be binding unless such modification shall be in
writing and signed by the parties hereto. Unless otherwise expressly set forth
in writing herein, Tenant acknowledges that there are no agreements, promises,
representations, warranties or covenants by Landlord or its agents or employees
as to the following types of matters, including, without limitation: (i)
exclusive rights to sell goods and/or services; (ii) limitations on or
restrictions against competing businesses in the Shopping Center; (iii) the
future opening of other stores or businesses not currently in the Shopping
Center; (iv) expected per square foot or total sales from the Premises; (v) type
or quality of existing or prospective tenants located or to be located in the
Shopping Center; (vi) work to be performed by Landlord in improving Tenant's
Premises; (vi) contribution by Landlord towards Tenant's leasehold improvement
costs; (vii) that Tenant's annual Proportionate Share of CAM Costs or real
estate taxes will not exceed a certain amount per square foot of Premises GLA
during the Term hereof; or (viii) promotion and/or advertising of Tenant's
business and/or products or services.
Section 27.3 - Consents.
INTENTIONALLY OMITTED.
Section 27.4 - Compliance with Governmental Authorities.
Subject to Section 15.1, Tenant at its own expense shall comply with all
laws, rules, orders, ordinances, directions, regulations and requirements
("Requirements") of federal, state, county and municipal authorities now in
force or which hereafter may be in force, which shall impose any duty upon
Landlord or Tenant with respect to the use, occupation or alteration of the
Premises by Tenant, including but not limited to, Requirements of the ADA.
Tenant agrees to indemnify and save Landlord harmless from and against any
penalty, damage or charge imposed for any violation by Tenant, its assignees,
subtenants, licensees, agents and employees of any said Requirements. Tenant
shall have exclusive responsibility for compliance with ADA Requirements
pertaining to the interior of the Premises, including the design and
construction of the access thereto and egress therefrom. Landlord shall have
responsibility for compliance with ADA Requirements which affect the Common
Areas, subject to Tenant's obligation to pay for its share of expense of such
compliance pursuant to Section 12.2 of this Lease. Except as provided herein, or
in Section 15.1, Tenant shall comply promptly with any direction of any
governmental authority having jurisdiction which imposes any duty upon Tenant or
Landlord with respect to the Premises or with respect to the use or occupation
thereof, and Tenant agrees to furnish Landlord with a copy of any such direction
promptly after receipt of the same. In addition, Tenant shall comply with any
reasonable plan adopted by Landlord which is designed to fulfill the
requirements of any laws, including ADA Requirements.
Should compliance by Tenant with this paragraph require Landlord's
consent pursuant to Section 15.2, Tenant shall promptly seek such consent and,
following receipt of such consent, promptly comply with the provisions of such
Section and this Section.
If Tenant fails to comply as required in this Section, after notice to
Tenant, Landlord may comply or cause compliance, in which case Tenant shall
reimburse Landlord upon demand for Landlord's costs incurred in connection
therewith.
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Section 27.5 - Brokerage.
Tenant warrants that it has had no dealings with any broker or agent in
connection with the Lease, or in the event Tenant has had such dealings, Tenant
covenants and agrees to pay, hold harmless and indemnify Landlord from and
against any and all costs, expenses or liability for any compensation,
commissions and charges claimed by any such broker or agent with respect to this
Lease or negotiation hereof.
Section 27.6 - Effective Date of Lease.
Submission of this Lease by Landlord for examination or execution by
Tenant does not constitute a reservation of nor option for Lease, and this
instrument shall not become effective as a lease or otherwise until execution by
and delivery to both Landlord and Tenant. This Lease shall only become effective
and binding upon the parties in establishing the relationship of Landlord and
Tenant as of the date first written above, but not earlier than the date
Landlord executes this Lease.
Section 27.7 - Estoppel Certificates.
Tenant agrees at any time, upon not less than fifteen (15) days prior
written request by Landlord, to execute, acknowledge and deliver to Landlord a
written statement certifying that this Lease is unmodified and in full force and
effect (or, if there has been modifications, that the same is in full force as
modified and stating the modifications), the dates to which the basic rent and
other charges have been paid pursuant to this Lease and such other certification
concerning the Lease as may be reasonably required by Landlord or Landlord's
mortgagee. Tenant further agrees that said statement may be relied upon by any
prospective purchaser of the fee or mortgage or assignee or any mortgagee on the
fee of the Premises. Landlord shall furnish a similar statement from time to
time upon Tenant's request but not more than five (5) times during the Term.
Section 27.8 - Force Majeure.
Landlord and/or Tenant shall be excused for the period of delay in the
performance of any of their obligations hereunder, except their respective
obligation to pay any sums of money due under the terms of this Lease, and shall
not be considered in default, when prevented from so performing by cause or
causes beyond Landlord's or Tenant's control, including, but not limited to, all
labor disputes, civil commotion, war, fire or other casualty, governmental
regulations, statutes, ordinances, restrictions or decrees, or through acts of
God. Notwithstanding anything to the contrary contained in this Section 27.8, in
the event any work performed by Tenant or Tenant's contractors results in a
strike, lockout and/or labor dispute, such strike, lockout and/or labor dispute
shall not excuse the performance by Tenant as provided for herein.
Section 27.9 - Interpretation.
The laws of the State of California shall govern the validity,
performance and enforcement of this Lease. If any part of this Lease shall be
adjudged by any court of competent jurisdiction to be invalid, such judgment
shall not affect or impair any other provisions.
The parties hereto assert that all of the terms and covenants contained
herein were reviewed by both parties or their counsel hereto and all
negotiations, consideration, representations and understandings between the
parties are incorporated herein, and may be modified or altered only by
agreement, in writing, between the parties.
Section 27.10 - Memorandum of Lease.
This Lease shall not be recorded, but Landlord may, in its sole
discretion, elect to record a Memorandum of Lease describing the property herein
demised, giving the Term of this Lease and renewal rights, if any, and referring
to this Lease. Tenant agrees to execute at any and all times such instruments as
may be required for such recording.
20
<PAGE>
Section 27.11 - Quiet Enjoyment.
Subject to the terms and conditions of this Lease and to any
Encumbrances to which this Lease is subordinate pursuant to Section 19.1 herein,
Landlord hereby covenants and agrees that if Tenant shall perform all of the
covenants and agreements herein stipulated to be performed on Tenant's part,
Tenant shall at all times during the continuance hereof have the peaceful and
quiet enjoyment and possession of the Premises without any manner of hindrance
from Landlord or any person or persons lawfully claiming the Premises, save and
except in the event of the taking of the Premises by public or quasi-public
authority as herein before provided.
Section 27.12 - Rent Demand.
Every demand for rent due wherever and whenever made shall have the
same effect as if made at the time it falls due and at the place of payment, and
after the service of any notice or commencement of any suit, or final judgment
therein, Landlord may receive and collect any rent due, and such collection or
receipt shall not operate as a waiver of nor affect such notice, suit or
judgment.
Section 27.13 - Section Headings.
The Section Headings and Title Headings contained herein are for
convenience only and do not define, limit, construe or amplify the contents of
such Sections.
Section 27.14 - Successors and Assigns.
The conditions, covenants and agreements contained in this Lease shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and permitted assigns.
All covenants and agreements of this Lease shall run with the land.
Section 27.15 - Transfer of Landlord's Interest.
Landlord shall be liable under this Lease only while Owner of the
Premises. If Landlord should sell or otherwise transfer Landlord's interest in
the Premises, and if such purchaser or transferee assumes Landlord's
obligations, then such purchaser or transferee shall be responsible for all of
the covenants and undertakings thereafter accruing of Landlord. Tenant agrees
that Landlord shall, after such sale or transfer of Landlord's interest and
assumption, have no liability to Tenant under this Lease or any Modification or
Amendment thereof, or extensions or renewals thereof, except for such
liabilities which might have accrued prior to the date of such sale or transfer
of Landlord's interest.
Section 27.16 - Nondiscrimination.
Tenant herein covenants by and for itself, its heirs, executors,
administrators, successors and assigns and all persons claiming under or through
it, and this Lease is made and accepted upon and subject to the following
conditions: That there shall be no discrimination against or segregation of any
person or group of persons on account of race, sex, marital status, age,
handicaps, color, creed, religion, national origin or ancestry, in the leasing,
subleasing, transferring, use, occupancy, tenure or enjoyment of the premises
herein leased, nor shall Tenant itself, or any person claiming under or through
it, establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy
of tenants, lessees, sublessees, subtenants or vendees in the premises herein
leased.
Section 27.17 - Waiver.
(a) Landlord or Tenant shall have the right at all times to enforce the
covenants, conditions and legal rights or remedies of this Lease in strict
accordance with the terms thereof, notwithstanding any conduct or custom in
refraining from so doing at any time or times. No failure to insist upon the
strict performance of any term or condition of this Lease or to exercise any
right or remedy available, legal or
<PAGE>
equitable, for a breach thereof, and no acceptance of full or partial rent
during the continuance of any such breach shall constitute a waiver of any such
breach or any such term, condition or right.
(b) No term or condition of this Lease required to be performed, and no
breach thereof, shall be waived, altered or modified except by a written
instrument executed by the pertinent party or parties hereto.
(c) A waiver by Landlord in respect to any tenant of the Shopping
Center in which the Premises are located shall not constitute a waiver in favor
of any other tenant, nor shall the waiver of the breach of any condition be
claimed if pleaded to excuse a future breach of the same condition or covenant
or any other condition, covenant, provision, rule and regulation of this Lease.
Section 27.18 - Exculpation.
If Landlord shall fail to perform any covenant, term or condition of
this Lease upon Landlord's part to be performed and, as a consequence of such
default, Tenant shall recover a money judgment against Landlord, such judgment
shall be satisfied only out of the proceeds of sale received upon the execution
of such judgment and levy thereon against the right, title and interest of
Landlord in the Shopping Center and out of rents or other income from the
Shopping Center receivable by Landlord or out of the consideration received by
Landlord from the sale or other disposition of all or any part of Landlord's
right, title and interest in the Shopping Center; neither Landlord nor any of
the partners, trustees, beneficiaries, officers, directors, venturers,
shareholders or affiliated entities of Landlord shall be personally liable for
any deficiency.
Section 27.19 - Litigation.
(a) To the extent permitted by applicable law Landlord and Tenant
hereby waive all right to trial by jury in any claim, action, proceeding or
counterclaim by either Landlord or Tenant against each other on any matter
arising out of or in any way connected with this Lease, the relationship of
Landlord and Tenant or Tenant's use or occupancy of the Premises.
(b) If either party hereto be made or becomes a party to any litigation
commenced by the other party involving the enforcement of any of the rights and
remedies of such party, or arising on account of the default of the other party
in the performance of such party's obligations hereunder, then the prevailing
party in any such litigation, shall receive from the other party all costs and
reasonable attorneys' fees incurred by such party in such litigation.
(c) If either party hereto be made or becomes a party to any litigation
commenced by or against the other party involving the enforcement of: (i) any
Requirements against such other party; or (ii) any of the rights or remedies of
such party hereunder, then the prevailing party in any such litigation, or the
party becoming involved in such litigation because of a claim against such other
party, as the case may be, shall receive from the other party all costs and
reasonable attorneys' fees incurred by such party in such litigation.
(d) Any litigation commenced by either Landlord or Tenant against the
other with respect to any matter arising out of or in any way connected with
this Lease, the relationship of Landlord and Tenant or Tenant's use and
occupancy of the Premises shall be brought only in the courts of the State of
California and the parties hereby consent to the jurisdiction of those courts
over them.
IN WITNESS WHEREOF, the parties hereto have executed these presents,
the day and year first written above.
Signed in the Presence of: LANDLORD:
THE GALLERIA AT SOUTH BAY, a
California limited partnership
_____ By: Hawthorne Bay, Inc., a California corporation, General Partner
_________________________ By:___________________________
David J. LaRue, Vice President
TENANT:
PLAY CO. TOYS AND ENTERTAINMENT CORP.
________ By:______________________________
________ By:______________________________
<PAGE>
STATE OF OHIO )
) SS:
COUNTY OF CUYAHOGA)
-OPTIONAL SECTION-
On _________________________, 1997, before me, CAPACITY CLAIMED BY SIGNER
_____________________________, a Notary Public in and for
the State of Ohio, personally appeared David J. LaRue,
[X] personally known to me -OR
[ ] proved to me on the basis of satisfactory evidence to be the person
whose name is subscribed to the within instrument, and acknowledged to me that
he executed the within instrument in his authorized capacity and that, by his
signature [ ] INDIVIDUAL on the within instrument, the person or entity upon
behalf of [X] CORPORATE OFFICER which he acted executed the within instrument.
Although statute does not require the
Notary to fill in the data below, doing so
may prove invaluable to persons relying on
the document.
WITNESS my hand and official seal. Vice President
Title
- ---------------------------------
Notary Public In and For ____________________________________
Said County and State Title(s)
(Seal) [X] PARTNER(S): [X] LIMITED
================== [ ] GENERAL
=====
[ ]
ATTORNEY-IN-FACT
[ ]
TRUSTEE(S)
[ ]
GUARDIAN/CONSERVATOR
[ ]
OTHER:
-------------------------
------------------------------------
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
Hawthorne Bay, Inc., General
Partner to The Galleria at
South Bay
************************************
<PAGE>
STATE OF OHIO )
) SS:
COUNTY OF CUYAHOGA)
-OPTIONAL SECTION-
On _________________________, 1997, before me, CAPACITY CLAIMED BY SIGNER
_____________________________, a Notary Public in and for
the State of Ohio, personally appeared David J. LaRue,
[X] personally known to me -OR
[ ] proved to me on the basis of satisfactory evidence to be the person
whose name is subscribed to the within instrument, and acknowledged to me that
he executed the within instrument in his authorized capacity and that, by his
signature [ ] INDIVIDUAL on the within instrument, the person or entity upon
behalf of [X] CORPORATE OFFICER which he acted executed the within instrument.
Although statute does not require the
Notary to fill in the data below, doing so
may prove invaluable to persons relying on
the document.
WITNESS my hand and official seal. ____________________________________
Title(s)
- ---------------------------------
Notary Public In and For [ ] PARTNER(S): [ ] LIMITED
Said County and State [ ] GENERAL
(Seal) [ ] ATTORNEY-IN-FACT
============================= [ ] TRUSTEE(S)
====== [ ] GUARDIAN/CONSERVATOR
[ ] OTHER:
-------------------------
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
This instrument prepared by: PLAY CO. TOYS AND
Harvey J. Levitt, Esq. ENTERTAINMENT CORP.
10800 Brookpark Road
Cleveland, Ohio 44130 ____________________
(216) 267-1200
=============================
<PAGE>
EXHIBIT "A"
THE GALLERIA AT SOUTH BAY
Site Plan
<PAGE>
EXHIBIT "B"
THE GALLERIA AT SOUTH BAY
Leasing Plan
<PAGE>
EXHIBIT "SBG1.0"
THE GALLERIA AT SOUTH BAY
TENANT HANDBOOK
TO BE FORWARDED UNDER SEPARATE COVER.
<PAGE>
THE GALLERIA AT SOUTH BAY
Redondo Beach, California
LANDLORD
================================================================
=
THE GALLERIA AT SOUTH BAY,
a California limited partnership
TENANT
================================================================
=
PLAY CO. TOYS AND ENTERTAINMENT CORP.
d/b/a Toys International
<PAGE>
Unit No. 366
<PAGE>
GALLERIA AT SOUTH BAY
LEASE AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Section 1.1 - Defined Terms......................................................................................10
Section 2.1 - Exhibits...........................................................................................10
Section 3.1 - Premises...........................................................................................10
Section 3.2 - Gross Leasable Area of Tenant's Premises...........................................................11
Section 3.3 - Revisions to Premises GLA..........................................................................11
Section 3.4 - Landlord's Reservation.............................................................................11
Section 4.1 - Use................................................................................................11
Section 4.2 - Management and Operation of Common Areas...........................................................11
Section 5.1 - Site Plan and Leasing Plan.........................................................................12
Section 5.2 - Changes to Shopping Center Site Plan and Leasing Plan. 12
Section 6.1 - Landlord's Duties..................................................................................12
Section 6.2 - Tenant's Improvements..............................................................................12
Section 6.3 - Tenant's Trade Fixtures............................................................................13
Section 6.4 - Construction Lien..................................................................................13
Section 6.5 - Union Cooperation..................................................................................13
Section 7.1 - Submission of Plans................................................................................14
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 8.1 - Use and Trade Name.................................................................................14
Section 8.2 - Tenant's Covenant to Operate.......................................................................14
Section 8.3 - Prohibitions on Use................................................................................14
Section 8.4 - Manner of Operation of Business....................................................................14
Section 9.1 - Term...............................................................................................15
Section 9.2 - Commencement Date Agreement........................................................................15
Section 9.3 - Holding Over.......................................................................................15
Section 9.4 - Expiration of the Term of the Lease................................................................15
Section 9.5 - Mutual Termination Rights..........................................................................16
Section 10.1 - Rent Commencement Date............................................................................16
Section 10.2 - Failure of Delivery of Premises to Tenant.........................................................16
Section 10.3 - Tenant's Failure to be Open by the Outside Date...................................................16
Section 11.1 - Fixed Minimum Rent................................................................................16
Section 11.2 - Percentage Rent...................................................................................17
Section 11.3 - Payment...........................................................................................17
Section 11.4 - Gross Revenue.....................................................................................17
Section 11.5 - Exclusion from Gross Revenue......................................................................17
Section 11.6 - Reporting.........................................................................................18
Section 11.7 - Books and Records.................................................................................18
Section 12.1 - Status of Charges.................................................................................19
Section 12.2 - Common Area Maintenance Charges...................................................................19
Section 12.3 - Real Estate Taxes.................................................................................20
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 12.4 - Initial Opening Advertisement.....................................................................21
Section 12.5 - Marketing Fund....................................................................................21
Section 12.6 - Media Fund........................................................................................21
Section 13.1 - Water, Sanitary Sewer, Gas, Telephone and Electricity Service. 22
Section 13.2 - Central and Premises Heating, Ventilating and Air-conditioning Systems. 23
Section 13.3 - Discontinuance of Service.........................................................................24
Section 13.4 - Interruption of Service...........................................................................24
Section 13.5 - Premises Sprinkler System.........................................................................24
Section 14.1 - Tenant's Obligation...............................................................................24
Section 14.2 - Interior Signs and Advertising....................................................................24
Section 15.1 - Repairs by Landlord...............................................................................24
Section 15.2 - Repairs by Tenant.................................................................................25
Section 15.3 - Alterations and Remodeling........................................................................25
Section 15.4 - Renovation........................................................................................25
Section 15.5 - Governmental Approvals............................................................................25
Section 16.1 - Indemnification by Tenant.........................................................................25
Section 16.2 - Tenant's Right of Contest.........................................................................25
Section 17.1 - Mutual Indemnification............................................................................26
Section 17.2 - Tenant's Insurance................................................................................26
Section 17.3 - Landlord's Insurance..............................................................................27
Section 17.4 - Waiver of Right of Recovery.......................................................................27
Section 17.5 - Landlord Not Responsible for Acts of Others.......................................................27
Section 18.1 - Uniformity........................................................................................28
Section 18.2 - Rubbish...........................................................................................28
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 18.3 - Lighting..........................................................................................28
Section 18.4 - Merchandise Display, Loading and Unloading........................................................28
Section 18.5 - Obstruction of Passageways........................................................................28
Section 18.6 - Employee Parking..................................................................................28
Section 19.1 - Subordination of Lease............................................................................28
Section 19.2 - Attornment by Tenant..............................................................................28
Section 19.3 - Landlord as Attorney-in-Fact for Tenant...........................................................28
Section 20.1 - Landlord's Right to Repair........................................................................29
Section 20.2 - Landlord's Right to Affix Sign....................................................................29
Section 20.3 - Landlord's Right to Make Payments on Behalf of Tenant. 29
Section 20.4 - Trash Compactors..................................................................................29
Section 21.1 - Landlord's Consent Required.......................................................................29
Section 21.2 - Return of Premises by Tenant......................................................................29
Section 21.3 - Transfer of Corporate Shares......................................................................29
Section 21.4 - Transfer of Other Business Interests..............................................................29
Section 21.5 - Acceptance of Rent by Landlord....................................................................30
Section 21.6 - No Release of Tenant's Liability..................................................................31
Section 21.7 - Administrative Fee................................................................................31
Section 22.1 - Landlord's Obligation to Repair and Reconstruct...................................................31
Section 22.2 - Landlord's Option to Terminate....................................................................31
Section 22.3 - Demolition of Landlord's Building.................................................................31
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 23.1 - Effect of Taking..................................................................................31
Section 23.2 - Compensation and Awards...........................................................................32
Section 23.3 - Condemnation or Breach of Lease...................................................................32
Section 24.1 - Acts of Default...................................................................................32
Section 24.2 - Remedies..........................................................................................32
Section 24.3 - Repeated Default..................................................................................33
Section 24.4 - Waiver of Rights of Redemption....................................................................33
Section 25.1 - Restriction on Tenant.............................................................................33
Section 25.2 - Imposition of Damages.............................................................................33
Section 25.3 - Restriction on Landlord...........................................................................33
Section 26.1 - Notices to Tenant and Landlord....................................................................34
Section 26.2 - Notices to Mortgagee..............................................................................34
Section 27.1 - Accord and Satisfaction...........................................................................34
Section 27.2 - Complete Agreement................................................................................34
Section 27.3 - Consents..........................................................................................34
Section 27.4 - Compliance with Governmental Authorities..........................................................34
Section 27.5 - Brokerage.........................................................................................35
Section 27.6 - Effective Date of Lease...........................................................................35
Section 27.7 - Estoppel Certificates.............................................................................35
Section 27.8 - Force Majeure.....................................................................................36
Section 27.9 - Interpretation....................................................................................36
Section 27.10 - Memorandum of Lease..............................................................................36
Section 27.11 - Quiet Enjoyment..................................................................................36
Section 27.12 - Rent Demand......................................................................................36
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 27.13 - Section Headings.................................................................................36
Section 27.14 - Successors and Assigns...........................................................................36
Section 27.15 - Transfer of Landlord's Interest..................................................................36
Section 27.16 - Nondiscrimination................................................................................36
Section 27.17 - Waiver by Landlord...............................................................................36
Section 27.18 - Exculpation......................................................................................37
Section 27.19 - Litigation.......................................................................................37
</TABLE>
10.89
Lease Agreement for Store-Arizona Mills
<PAGE>
LEASE
TOYS INTERNATIONAL, A CALIFORNIA CORPORATION
TENANT
"TOY CO."
TRADE NAME
PLAY CO. TOYS AND ENTERTAINMENT CORPORATION, A DELAWARE CORPORATION
GUARANTOR
A R I Z O N A M I L L S
PROVISIONS ADDED TO THIS LEASE APPEAR ON THE DATA SHEET AND ON
THE ATTACHED RIDER AND, EXCEPT IN INSTANCES OF ADDITIONAL
SENTENCES OR PARAGRAPHS BEING ADDED AT THE END OF A SECTION OR
PARAGRAPH, ARE INDICATED IN THE TEXT BY AN UNDERSCORING OF THE
LINE NUMBER IN THE RIGHT-HAND MARGIN OF THE LINE BEING
CHANGED. ADDITIONAL LANGUAGE IS INSERTED EITHER IN PLACE OF
DELETED LANGUAGE OR AFTER AN UNDERSCORED WORD, EXCEPT AS
OTHERWISE NOTED ABOVE.
<PAGE>
THIS LEASE dated as of this 15th day of September, 1997 by and between
ARIZONA MILLS L.L.C., a Delaware limited liability company, the address of which
is 200 East Long Lake Road, P.O. Box 200, Bloomfield Hills, Michigan 48303-0200
(hereinafter referred to as "Landlord"), and TOYS INTERNATIONAL, a California
corporation, the address of which is 550 Rancheros Drive, San Marcos, CA 92069
(hereinafter referred to as "Tenant"). All payments, documents, notices, and any
other item to be transmitted to Landlord shall be transmitted to Landlord's
principal place of business at the address set forth in this paragraph.
DATA SHEET
The following references furnish data to be incorporated in the
specified Sections of this Lease and shall be construed to incorporate all of
the terms of the entire Section as stated in this Lease:
(1) Section 1.1: Description of Leased Premises:
Store number: 689, consisting of approximately seven thousand
one hundred three (7,103) square feet of floor as shown on
Exhibit "A".
(2) Section 1.2: Term:
Commencement Date:
The earlier of (i) the later of (a) the Grand Opening, or (b)
the date of the expiration of a thirty (30) day Fixturing
Period following the Delivery of Possession Date (as defined in
Section 3.2), or (ii) the date the Leased Premises are
initially open for business to the public.
Original Term: Five (5) years
Option Period: One (1) of five (5) years
(3) Section 2.1: Minimum Rent:
Original Term:
From the Commencement Date and continuing through the
expiration of the Original Term, the sum of One Hundred
Sixty-Three Thousand Three Hundred Sixty-Nine and 00/100ths
Dollars ($163,369.00) annually ($23.00 psf), payable in equal
consecutive monthly installments of Thirteen Thousand Six
Hundred Fourteen and 08/100ths Dollars ($13,614.08) each;
Option Period:
Beginning with the first (1st) year of the Option Period and
continuing through the expiration of the Option Period, the sum
of One Hundred Ninety-One Thousand Seven Hundred Eighty-One and
00/100ths Dollars ($191,781.00) annually ($27.00 psf), payable
in equal consecutive monthly installments of Fifteen Thousand
Nine Hundred Eighty-One and 75/100ths Dollars ($15,981.75)
each.
(4) Section 2.2: Percentage Rent:
Original Term:
From the Commencement Date and continuing through the
expiration of the Original Term, five percent (5%) (the
"Percentage Factor") of Gross Sales made during each year in
excess of Three Million Two Hundred Sixty-Seven Thousand Three
Hundred Eighty and 00/100ths Dollars ($3,267,380.00) ($460.00
psf) (the "Sales Break Point").
26
<PAGE>
Option Period:
Beginning with the first (1st) year of the Option Period and
continuing through the expiration of the Option Period, five
percent (5%) (the "Percentage Factor") of Gross Sales made
during each year in excess of Three Million Eight Hundred
Thirty-Five Thousand Six Hundred Twenty and 00/100ths Dollars
($3,835,620.00) ($540.00 psf) (the "Sales Break Point").
(5) Section 2.4: Security Deposit: None
(6) Section 3.2: Tenant Inducement: Fifty Thousand and 00/100ths
Dollars ($50,000.00)
(7) Section 4.1: Permitted Use:
Tenant shall use the Leased Premises for the use set forth
below and for no other purpose: for the sale, at discount, of
toys and toy-related merchandise. Apparel and books shall not
exceed fifteen percent (15%) of sales each.
Trade Name: Toy Co.
(8) Section 13.2: Fund Contribution: $2.00 per square foot of floor
area in the Leased Premises Grand Opening Fee (Initial Contribution): $2.00
per square foot of floor area in the Leased Premises
(9) Temporary Charges: $1.00 per square foot of floor area in the
Leased Premises
(10) Chargebacks: N/A
(11) Guarantor: Play Co. Toys and Entertainment Corporation
Address: 550 Rancheros Drive, San Marcos, CA 92069
<PAGE>
ARTICLE I
GRANT AND TERM
Section 1.1 Leased Premises. (a) Landlord, in consideration of the rent
to be paid and the covenants to be performed by Tenant, does hereby lease and
demise to Tenant, and Tenant hereby rents and hires from Landlord for the term
herein set forth, the Leased Premises which area is described as set forth in
the Data Sheet attached hereto, in the retail development designated as Arizona
Mills or by such other name as Landlord may from time to time hereafter
designate (hereinafter "Retail Development"). The term "State" as used herein
shall mean the State of Arizona. For all purposes in this Lease, a "Major
Tenant" is any occupant of more than twenty thousand (20,000) square feet of
floor area in the Retail Development. It is agreed that, wherever the term
"Shopping Center" is used herein, it shall mean the Retail Development excluding
the areas occupied by Major Tenants, except as otherwise specifically stated
herein. Exhibit "A", page 1, sets forth the general layout of the Retail
Development. Landlord does not warrant or represent that the Retail Development
or the Leased Premises will be constructed exactly as shown thereon or that it
will be completed by a specific date. Notwithstanding anything contained in this
Lease to the contrary, Landlord shall have the right, at any time and from time
to time, without notice to or consent of Tenant, and without in any manner
diminishing Tenant's obligations under this Lease, to make alterations or
additions to, and build additional stories on the building in which the Leased
Premises are located and to build adjoining the same, to construct other
buildings and improvements of any type in the Retail Development or the common
areas, or any part thereof, including the right to locate and/or erect thereon
permanent or temporary kiosks and structures, to enlarge the Retail Development,
and to make alterations therein or additions thereto, to build adjoining
thereto, to construct decks or elevated parking facilities and free standing
buildings within the parking lot areas of the Retail Development, and to change
the size, location, elevation and nature of any of the stores in the Retail
Development or the common areas, or any part thereof. In the event Landlord
elects to enlarge the Retail Development, or any part thereof, any additional
area may be included by Landlord in the definition of the Retail Development for
purposes of this Lease. Landlord shall also have the general right from time to
time to include within and/or to exclude from the defined Shopping Center any
existing or future areas and the floor area of the Shopping Center shall be
accordingly adjusted. The premises leased to Tenant are herein referred to as
the "Leased Premises". The approximate location of the Leased Premises is
cross-hatched on the lease plan of the Retail Development attachment hereto and
made a part hereof as Exhibit "A", page 2. This Lease of the Leased Premises is
subject to all applicable building restrictions, planning and zoning ordinances,
governmental rules and regulations, existing underlying leases, and all other
encumbrances, covenants, restrictions, easements and agreements affecting the
Retail Development and the terms and provisions of certain master declarations,
reciprocal easement and operating agreements now or hereafter entered into by
Landlord. Subject to the provisions of Section 5.1, Tenant shall enjoy a
non-exclusive easement, right and privilege for Tenant and its customers,
employees and invitees and the customers, employees and invitees of any
assignee, sublessee, concessionaire or licensee of Tenant, to use the common
areas of the Shopping Center, with Landlord and the other tenants and occupants
of floor area with the Shopping Center and their respective customers, employees
and invitees. Furthermore, Landlord agrees that any additions, alterations or
modifications to the Shopping Center by Landlord shall not adversely affect
access to,or visibility of the Leased Premises and, except as otherwise provided
for herein, Tenant shall retain substantially the same relative position with
respect to Major Tenants of the Shopping Center as of the Commencement Date.
27
<PAGE>
(b) Landlord shall have the right, at any time prior to the Delivery of
Possession Date (as defined herein), by written notice to Tenant, to relocate
the Leased Premises in either direction (from side to side from the outside
boundary of the Leased Premises) by not more than forty feet (40'), and, upon
any such relocation, the size and description of the Leased Premises shall be
appropriately modified to reflect any resulting proportional adjustment in the
Rent (as defined herein) based upon the change in size of the Leased Premises.
After the Delivery of Possession Date, Landlord reserves the right to relocate
Tenant (i) no more than once every five (5) year period of the term, or (ii) if
required by the construction for a Major Tenant or redevelopment of the Shopping
Center. Such change in location will be upon not less than ninety (90) days
prior written notice from Landlord to Tenant (the "Relocation Period"). During
such Relocation Period, Landlord shall offer to Tenant such alternative location
(of approximately the same floor area) which will be limited to the area
outlined and marked "Relocation Zone" on Exhibit "A", page 3, as may be
available. In the event the parties agree on a specific location, then this
Lease shall be amended by substituting the new location for the present location
and the square footage and Minimum Rent shall be proportionately adjusted based
upon the change in the size of the Leased Premises. Landlord shall, at
Landlord's cost and expense, complete the leasehold improvements to the Leased
Premises in accordance with the working drawings originally approved by Landlord
with respect to Tenant's Work in the original Leased Premises and Tenant shall
relocate to the new location and, within fifteen (15) days after delivery of the
new premises, open for business in the new premises. In the event Landlord and
Tenant are unable to agree on an alternative location, this Lease shall
terminate at the end of said 90-day period. In the event of such termination,
Landlord shall pay to Tenant within thirty (30) days following the date that
Tenant shall have vacated the Leased Premises, a sum equal to the then
unamortized costs of Tenant's leasehold improvements which have been paid for by
Tenant, such amortization to be on a straight line basis over the original
stated term of the Lease, provided Tenant shall furnish to Landlord such backup
information as Landlord may reasonably require. Tenant shall deliver possession
of the Leased Premises to Landlord on or before the termination and/or
relocation date in "as is" condition, subject to the provisions of Sections 3.5
and 17.1 hereof, and subject to all charges which are due and owing or which
shall accrue up to such date (which charges shall be paid to Landlord within
thirty (30) days of such date) and Tenant shall be released from any and all
further obligations pursuant to this Lease accruing after such date with respect
to the vacated premises; however, in the event of relocation, Tenant shall
remain liable for all obligations accruing under this Lease after the date of
such relocation.
<PAGE>
(c) The square footage of the Leased Premises (sometimes herein
referred to as the "gross leasable floor area" or "GLA") shall be measured as
defined in Exhibit "B". The actual square footage in the Leased Premises shall
be determined by Landlord's architect. The certificate of Landlord's architect
as to actual square footage shall be binding upon both parties hereto, and such
determined square footage shall be used in all calculations based on square
footage throughout this Lease. If the floor area determined in accordance with
the preceding sentence varies by more than five percent (5%) from the square
foot floor area originally set forth in the Data Sheet, the Minimum Rent set
forth in Section 2.1 hereof shall be adjusted by multiplying the Minimum Rent by
a fraction, the numerator of which is the square foot floor area determined by
Landlord's architect and the denominator of which is the square foot floor area
originally set forth in this Section 1.1, and Tenant shall be obligated to pay
such Minimum Rent, as adjusted, from the Commencement Date, subject to further
adjustments as provided in this Lease. Each monthly installment provided for in
Section 2.1 shall be recomputed and shall be that dollar amount which results
from dividing the adjusted Minimum Rent by twelve (12). Any and all references
to the Minimum Rent (or the monthly installments thereof) shall be deemed
references to the Minimum Rent as computed by application of this Section,
subject, however, to the adjustments set forth elsewhere in this Lease. For
purposes of this Lease, in determining the gross leasable floor area or the
gross leased and occupied floor area of the Shopping Center, there shall be
excluded therefrom project areas and offices, common areas and/or areas under
Landlord's control (e.g., electrical/utility room, etc.). The exterior walls,
roof, storefront and the area beneath the Leased Premises are not demised
hereunder, and the use thereof, together with the right to install, maintain,
use, repair and replace pipes, ducts, conduits, wires, tunnels, sewers and
structural elements leading through the Leased Premises in locations which will
not materially interfere with Tenant's use thereof and serving other parts of
the Retail Development, is hereby reserved to Landlord. Landlord reserves an
easement above Tenant's finished ceiling or light line to the roof for general
access purposes and in connection with the exercise of Landlord's other rights
under this Lease.
Section 1.2 Term. The term of this Lease (the "Term") shall be for a
period commencing on the Commencement Date (as defined in the Data Sheet
hereof), and expiring at 11:59 p.m. local time on the final day of the month in
which the Term expires or other specified date as set forth in the Data Sheet
(the "Expiration Date"), unless sooner terminated in accordance with the
provisions thereof and shall include any option or extended period. The term
"full year"and "year" as used in this Section shall mean consecutive periods of
twelve (12) months each following the Commencement Date. For all purposes of
this Lease, the term "Lease Year" shall have the following meaning: the first
Lease Year shall be a period beginning with the Commencement Date and ending on
the 31st of December next following the Commencement Date, and after the first
Lease Year, the term Lease Year shall mean a fiscal period of twelve (12)
consecutive calendar months commencing on January 1 of each calendar year,
except that the last Lease Year shall terminate on Expiration Date or sooner
termination of this Lease. If the Leased Premises are not delivered to Tenant on
or before the expiration of thirty-six (36) months after the date of Landlord's
execution of this Lease, then either party may cancel and terminate this Lease
upon sixty (60) days prior written notice to the other, in which event neither
party shall have any further obligation or liability to the other; provided,
however, that if Landlord has commenced construction of the Shopping Center,
then Tenant shall not be permitted to terminate in the foregoing manner.
Following the Commencement Date, Landlord may submit to Tenant a Commencement
and Expiration Date Declaration in the form attached hereto as Exhibit "F",
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specifying the information called for in said form, and Tenant shall execute
such Declaration within thirty (30) days following submission for purposes of
certifying such information; provided, however, that the Declaration shall not
be rendered ineffective by Tenant's failure to execute same. If the Commencement
Date is not the first day of a month, Minimum Rent for the month in which the
Commencement Date occurs shall be prorated to the end of the month and paid as
the second monthly installment of Minimum Rent on the first day of the next
month and, after the expiration of the number of years on the Term, the Term
shall expire on the last date of the same month in which the Commencement Date
occurred, it being the intention of the parties that the Term expire on the last
day of the month. Neither this Lease nor the obligations of Tenant hereunder
shall be affected by a postponement and Landlord shall not be subject to any
liability for failure to make possession of the Leased Premises available on the
Commencement Date. When the Commencement Date has been determined, Landlord and
Tenant shall execute, acknowledge and deliver a written statement in recordable
form specifying the Commencement Date and expiration date of the Term and, if
there shall have been any changes in the floor area of the Leased Premises, such
statement shall reflect such changes. Said statement upon execution and delivery
shall be deemed to be part of this Lease.
Section 1.3 Opening. Tenant covenants and agrees to complete its
construction within the Leased Premises in accordance with the provisions of
this Lease, to satisfy the requirements for issuance of a certificate of
acceptance pursuant to Exhibit "D", and to open its store for business to the
public not later than the Commencement Date. Notwithstanding the foregoing,
Landlord hereby notifies Tenant that the anticipated date of the grand opening
of the Shopping Center (the "Grand Opening") is November 20, 1997, and Tenant
shall be obligated to open its store for business to the public on such date or
such other date as Landlord may establish from time to time for the Grand
Opening upon written notice to Tenant.
Section 1.4 Late Opening. In the event Tenant shall fail to open its
store for business to the public upon the Commencement Date, then in order to
compensate Landlord for its loss, Tenant shall pay to Landlord as additional
rent (as defined in Section 2.3) over and above the Minimum Rent and all other
charges to be paid by Tenant to Landlord pursuant to this Lease, a sum in an
amount equal to $100 per day for the Commencement Date and each day after the
Commencement Date that Tenant shall have failed to open its store for business.
This remedy shall be in addition to any and all other remedies provided for in
the Lease in the event of such failure to open. Such additional late opening
rent shall be deemed to be in lieu of any Percentage Rent that might have been
earned during the period of Tenant's failure to open.
<PAGE>
ARTICLE II
RENT AND DEPOSIT
Section 2.1. Minimum Rent. During the entire term of this Lease, Tenant
shall pay annual minimum rental ("Minimum Rent") for the Leased Premises from
the Commencement Date in the amount set forth in the Data Sheet attached hereto,
which sum shall be payable by Tenant in equal consecutive monthly installments
in the sum set forth in the Data Sheet attached hereto, on or before the first
day of each month, in advance. The Minimum Rent and each of the monthly
installments of Rent called for hereunder shall be payable to Landlord, without
demand, deduction, set-off or counter-claim. The first installment of Minimum
Rent shall be paid concurrently with the Commencement Date. If the Commencement
Date occurs on other than the first day of a month, the second installment of
Minimum Rent shall be prorated at a daily rate on the basis of a thirty (30) day
month.
Section 2.2. Percentage Rent. (a) During and for each Lease Year,
Tenant shall pay annual percentage rent ("Percentage Rent") equal to the
Percentage Factor (see Data Sheet) multiplied by all "Gross Sales" resulting
from business conducted in, on or from the Leased Premises during such Lease
Year in excess of the amount of Gross Sales set forth in the Data Sheet (which
sum is herein called the "Sales Break Point"). For purposes of computing annual
Percentage Rent the Sales Break Point for any Lease Year shall be calculated as
follows: each Sales Break Point which was effective during any such Lease Year
shall be multiplied by a fraction, the numerator of which is the number of days
in the Lease Year that such Sales Break Point was effective and the denominator
of which is the actual number of days in such Lease Year (herein the "Adjusted
Sales Break Point") and the sum of the Adjusted Sales Break Points shall be the
Sales Break Point for such Lease Year. "Gross Sales" is defined to mean the
total amount of the actual sales price, whether for cash or otherwise, of all
sales of merchandise or services arising out of or payable on account of (and
all other receipts or amounts receivable whatsoever with respect to) all the
business conducted in, on, or from the Leased Premises by or on account of
Tenant or any sublessee, assignee or concessionaire of Tenant for cash or
otherwise, including all orders for merchandise taken from or filled at or from
the Leased Premises, including all deposits not refunded to customers. A "sale"
shall be deemed to have been consummated, for purposes of this Lease, and the
entire amount of the sale price shall be included in Gross Sales, at such time
as (i) the transaction is initially reflected in the books or records of Tenant,
or any sublessee, assignee or concessionaire of Tenant, or (ii) Tenant or such
other entity receives all or any portion of the sales price, or (iii) the
applicable goods or services are delivered to the customer, whichever first
occurs, irrespective of whether payment is made in installments, the sale is for
cash or credit or otherwise, in a cash register or cash registers having a
cumulative total, which shall be sealed in a manner approved by Landlord and
which shall possess such other features as shall be required by Landlord. There
shall be no deduction allowed for direct or indirect discounts, rebates, or
other reductions on sales, unless generally offered to the public on a uniform
basis. Tenant may exclude from Gross Sales sales to employees at a discount not
available to the general public, bad debts when written off the books of Tenant,
and credit card charges provided, however, that in the aggregate, such
exclusions do not exceed three percent (3%) of Gross Sales in any Lease Year.
Tenant may also exclude from Gross Sales any transfer of goods between Tenant's
other stores, and returns to shippers or manufacturers. The term "Gross Sales"
shall also exclude proceeds from any sales tax, gross receipts tax or similar
tax, by whatever name called which are separately stated and in addition to the
purchase price, refunds given to customers for merchandise purchased at the
Leased Premises and returned or exchanged, and sales of Tenant's fixtures and
equipment not in the ordinary course of Tenant's business. The term
"merchandise" as used in this Lease shall include food and beverages if Tenant
is permitted to sell such items pursuant to Section 4.1 hereof.
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(b) Tenant shall keep at the Leased Premises or at Tenant's executive
offices within the continental United States a full and accurate set of books
and records adequately showing the amount of Gross Sales in each Lease Year. The
books and records to be kept by Tenant shall include, without limitation, (i)
cash register tapes, including tapes from temporary registers; (ii) serially
pre-numbered sales slips; (iii) detailed original records of any exclusions or
deductions from Gross Sales; (iv) sales tax records; and (v) such other records,
if any, which would normally be examined by an independent accountant pursuant
to accepted auditing standards in performing an audit of Tenant's sales. Such
books and records shall be kept in accordance with generally accepted accounting
principles and practices and shall be retained by Tenant for a period of not
less than two (2) years following the end of the Lease Year to which they have
reference. When and as Landlord may reasonably require, Tenant shall also
furnish to Landlord any and all statements, information, and copies of sales and
income tax reports and returns which separately show financial data for the
Leased Premises, and inventory records and other data evidencing Gross Sales.
Within five (5) days following the end of each calendar month of the term hereof
Tenant shall submit to Landlord an unaudited statement of Gross Sales for such
calendar month. All Gross Sales statements to be supplied by Tenant to Landlord
shall be in such form and with such detail as Landlord shall deem necessary or
desirable. Within twenty (20) days following the end of the month in which
Tenant's Gross Sales for the Lease Year to date exceed the Sales Break Point,
and each month thereafter, Tenant shall pay to Landlord Percentage Rent and
shall submit to Landlord a statement certified by Tenant setting forth the Gross
Sales for each such period. Within forty-five (45) days after the close of each
Lease Year, Tenant shall furnish to Landlord a statement certified by an
authorized representative or financial officer of Tenant setting forth the
amount of Gross Sales during such Lease Year and showing the amount of
Percentage Rent required to be paid by Tenant for such Lease Year. The full
amount of Percentage Rent due shall be paid to Landlord no later than sixty (60)
days after the end of each Lease Year and any excess Percentage Rent paid shall
be credited against Tenant's next due Percentage Rent payment, except for the
final Lease Year of the Term, when any excess shall be refunded to Tenant.
Landlord and/or Landlord's auditor shall have the right, at anytime upon
reasonable notice and after ten (10) business days, to inspect and/or to audit
the records of Tenant relating to Gross Sales. If Gross Sales exceed those
reported, Tenant shall immediately pay any deficiency in Percentage Rent owing
to Landlord. If Gross Sales vary from those reported by three percent (3%) or
more, Tenant shall pay Landlord's cost of inspection and audit. If Gross Sales
vary from those reported by (i) five percent (5%) or more in any one (1) Lease
Year, or (ii) three percent (3%) or more for any two (2) Lease Years out of any
five (5) Lease Years, then Landlord shall have the right, at its sole option, to
terminate this Lease, with Tenant remaining liable for sums due and owing under
this Lease for the balance of the term as originally set forth in Section 1.2
hereof. Tenant agrees in the event Tenant shall fail to timely submit Gross
Sales statement as required by this Section 2.2(b), Tenant shall pay on demand a
late fee of Fifty and 00/100ths Dollars ($50.00) per late statement, as
additional rent.
<PAGE>
(c) In the event that any Lease Year during the Term is less than
exactly twelve (12) full calendar months or if Tenant shall fail to operate its
business in the Leased Premises in the manner and on each day as required
pursuant to Article IV hereof, then, for the purpose of computing the Percentage
Rent for any such short Lease Year, or such Lease Year affected by Tenant's
failure to operate, the Sales Break Point for such Lease Year shall be adjusted
by multiplying the Sales Break Point otherwise applicable for such Lease Year by
a fraction, the numerator of which shall be the actual number of days in such
short Lease Year or the actual number of days in such Lease Year during which
Tenant was open for business and operating in accordance with Article IV, and
the denominator of which shall be "360". In the event that the first Lease Year
is less than six (6) months in length, then the Percentage Rent covering such
Lease Year shall be paid on Gross Sales in excess of the Sales Break Point
computed on a prorata basis for the period beginning on the Commencement Date
and ending on the succeeding December 31. For the purpose of the aforesaid
calculation, Tenant's Gross Sales in excess of the Sales Break Point shall be
determined for the first (1st) full twelve (12) calendar months following the
Commencement Date and Percentage Rent shall be paid on such excess prorated as
to the number of days of a full calendar year which are included in the first
(1st) Lease Year.
(d) The parties hereto understand and agree that the Percentage Factor
specified in subparagraph (a) above for the purpose of computing Percentage Rent
has been determined based on Tenant's representation that it will sell
substantially all merchandise from the Leased Premises at discount prices,
namely prices that are at least thirty percent (30%) less than the prices
charged by a majority of other retailers in the metropolitan area in which the
Shopping Center is located who sell the same or substantially similar
merchandise at full retail markup. Tenant hereby acknowledges that Tenant has
represented to Landlord that it will operate its business in the Leased Premises
as one of the following: (i) a factory direct outlet; or (ii) a discounter; or
(iii) an off-price operation, selling all its merchandise at discount prices (as
herein defined), and that such representation was a material inducement for
Landlord to enter into this Lease with Tenant on the rental terms herein
contained, which rental provisions are predicated on the typically lower profit
margins of such businesses, as compared to those selling at full retail markup.
Within forty-five (45) days after the end of each Lease Year Tenant shall
provide (together with the annual Gross Sales statement) reasonable information
that Tenant has sold substantially all its merchandise at discount prices on a
continuous basis. Landlord may, at its option, at any time and from time to
time, obtain an independent study and review of the prices charged by Tenant and
the prices charged by the majority of retailers in the metropolitan area in
which the Shopping Center is located who sell the same or substantially similar
merchandise as that sold in the Leased Premises (herein "Study"). If a Study
reveals that Tenant is failing or failed to sell its merchandise at discount
prices on a continuous basis, Tenant shall pay Landlord's costs and expenses
incurred for such Study.
Section 2.3. Payments By Tenant. Throughout the Term, Tenant shall pay
to Landlord, without demand, deductions, set-offs or counterclaims, the "Rent",
which is hereby defined as the sum of the Minimum Rent, Percentage Rent and all
additional rent (as herein defined), when and as the same shall be due and
payable hereunder. Unless otherwise stated, all sums of money or charges of any
kind or nature, in addition to Minimum Rent and Percentage Rent, payable by
Tenant to Landlord pursuant to this Lease or the exhibits attached hereto are
defined as "additional rent", and are due thirty (30) days after the rendering
of an invoice therefor, without any deductions, set-offs or counterclaims, and
failure to pay such sums of money or charges shall carry the same consequences
as Tenant's failure to pay Minimum Rent or Percentage Rent. All payments and
charges required to be made by Tenant to Landlord hereunder shall be payable in
United States funds, at Landlord's principal place of business at the address
set forth on page 1 of this Lease, unless otherwise specified by written notice
from Landlord to Tenant. No payment by Tenant or receipt by Landlord of a lesser
amount than the correct rent shall be deemed to be other than a payment on
account and no endorsement or statement on any check or other communication
accompanying a check for payment of any amounts payable hereunder shall be
deemed an accord and satisfaction, and Landlord may accept such check in payment
without prejudice to Landlord's right to recover the balance of any sums owed by
Tenant hereunder or to pursue any other remedy available in this Lease, or under
law, against Tenant.
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Section 2.4. Security Deposit. The amount set forth in the Data Sheet as a
security deposit is payable by Tenant to Landlord upon Tenant's execution of
this Lease, which sum shall be held by Landlord as security against any default
by Tenant in the performance of the covenants, conditions and agreements of this
Lease. The deposit may, at Landlord's option, be applied by Landlord against any
default in any of the terms, provisions, or conditions of this Lease. Landlord
shall not be obligated to keep such security deposit in a separate fund, but may
commingle the security with its own funds. A mortgagee-in-possession of the
Leased Premises, or any interest therein, through public or private foreclosure
or the acceptance of a deed in lieu thereof, shall have no liability to Tenant
for the return of all or any portion of the deposit, unless, and then only to
the extent that, such mortgagee has acknowledged receipt of all or any portion
of Tenant's deposit. In the event Landlord applies the deposit in whole or in
part against a default by Tenant, Tenant shall, upon demand by Landlord, deposit
sufficient funds to maintain the security deposit in the initial amount. The
failure of Tenant to maintain the security deposit in the initial amount as
stated shall constitute a failure to pay Rent and shall carry with it the
consequences set forth under Article XIV hereof. Upon the expiration of the term
hereof, the security deposit, if not applied toward the payment of Rent in
arrears or toward the payment of damages suffered by Landlord by reason of
Tenant's breach of this Lease, is to be returned to Tenant, without interest,
except as provided by law, but in no event is such security deposit to be
returned until Tenant has vacated the Leased Premises, delivered possession
thereof to Landlord, and fully satisfied Tenant's obligations under this Lease.
Notwithstanding the acceptance by Landlord of Tenant's security deposit, this
Lease shall not be deemed effective until the Effective Date (as defined in
Section 20.19).
Section 2.5. Late Charge. In the event any Rent or sums required
hereunder to be paid are not received on or before the fifth (5th) calendar day
after the same are due, then, for each and every late payment, Tenant shall
immediately pay, as additional rent, a service charge equal to the greater of
(a) Fifty Dollars ($50.00), or (b) four percent (4%) per month of the total
receivable balance of Tenant outstanding. In the event of Tenant's failure to
pay the foregoing late charge, Landlord may deduct said charge from the security
deposit described in Section 2.4 hereof. The provisions herein for late payment
service charges shall not be construed to extend the date for payment of any
sums required to be paid by Tenant hereunder or to relieve Tenant of its
obligation to pay all such sums at the time or times herein stipulated.
Notwithstanding the imposition of such late charges pursuant to this Section
2.5, Tenant shall be in default under this Lease if any or all payments required
to be made by Tenant are not made on or before the time due and as stipulated in
Article XIV, and neither the demand for, nor collection by, Landlord of such
late payment service charges shall be construed as a cure of such default on the
part of Tenant. It is agreed that the said late charge is a fair and reasonable
charge under the circumstances and shall not be construed as interest on a debt
payment. In the event any charge imposed hereunder or under any other section of
this Lease is neither stated to be or construed as interest, then no such
interest charge shall be calculated at a rate which is higher than the maximum
rate which is allowed under the usury laws of the State, which maximum rate of
interest shall be substituted for the rate in excess thereof, if any, computed
pursuant to this Lease.
ARTICLE III
PREPARATION OF LEASED PREMISES
Section 3.1. Landlord's Work. Landlord shall construct the building
wherein the Leased Premises are to be located and perform the work described in
Exhibit "C" ("Landlord's Work") at Landlord's cost and expense, except as
otherwise provided in Exhibit "C". All work done by Landlord at Tenant's expense
shall be paid for within thirty (30) days after the presentation to Tenant of a
bill for such work. Acceptance of possession by Tenant shall be conclusive
evidence that Landlord's Work to the date of possession has been fully performed
in the manner required. Any items of Landlord's Work which are not completed as
of the Delivery of Possession Date (as herein defined) shall be identified by
Tenant on a punch list to be submitted to Landlord within thirty (30) days after
such delivery and Landlord shall thereafter complete the same. Any items of
Landlord's Work which are not timely identified on such a punch list shall be
deemed completed.
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Section 3.2. Delivery and Possession. (a) Landlord, or Landlord's
supervising architect, shall give Tenant at least ten (10) days' prior written
notice of the date on which Landlord's Work will be substantially completed in
accordance with Exhibit "C" to the extent that Tenant shall be able to perform
its work in the Leased Premises without substantial interference from the
conduct of Landlord's Work, and the Leased Premises will be available for the
performance of Tenant's Work. The date which is ten (10) days after Landlord
notified Tenant of delivery of possession of the Leased Premises shall be
defined as the "Delivery of Possession Date" provided, however, that in the
event the Shopping Center shall have initially opened for business prior to the
Commencement Date, then the foregoing notice requirement shall automatically be
deemed to be reduced to a five (5) day notice requirement. Tenant covenants and
agrees to take physical possession of the Leased Premises on the Delivery of
Possession Date. The Delivery of Possession Date shall be subsequently confirmed
by Landlord, or Landlord's supervising architect, by written notice to Tenant.
Failure of Landlord to deliver possession of the Leased Premises within the time
and in the condition provided for in this Lease will not give rise to any claim
for damages by Tenant against Landlord or permit Tenant to rescind or terminate
this Lease.
(b) Provided Tenant shall not interfere with the conduct of Landlord's
Work, and subject to Landlord's reasonable rules and regulations, Tenant may
enter the Leased Premises during normal working hours during the course of
Landlord's Work for the purpose of inspecting the Leased Premises and making
measurements. At such time prior to the Delivery of Possession Date that
Landlord's Work has progressed sufficiently to permit Tenant to perform its work
without interfering with Landlord's Work, Landlord may, but shall not be
required to, notify Tenant of the same, and Tenant may then enter the Leased
Premises in order to begin to install its store fixtures and perform such other
work as may be required under the provisions of this Lease, in order to ready
the store for opening. Throughout the period of Tenant's Work, Tenant shall
schedule its work so as not to interfere with any work being performed by
Landlord or by any other tenant in the Shopping Center.
Section 3.3. Tenant's Work. (a) Tenant agrees, prior to the Commencement
Date, at Tenant's sole cost and expense, to diligently perform all work of
whatever nature in accordance with Tenant's obligations set forth in Exhibit "D"
("Tenant's Work") and all other related work necessary to prepare for the
opening to the public of Tenant's store in the Leased Premises in accordance
with the provision of this Lease. Tenant agrees to furnish to Landlord the Store
Design Drawings and Working Drawings and Specifications with respect to the
Leased Premises prepared in the manner and within the time periods required in
Exhibit "D" attached hereto. If such Store Design Drawings or Working Drawings
and Specifications are not furnished by Tenant to Landlord within the required
time period(s) in form to permit approval by Landlord, then the Fixturing Period
(as described in the Data Sheet) shall be reduced by one (1) day of each day of
delay by Tenant in submitting said plans, drawings and specifications. Landlord
shall exercise reasonable efforts to respond to drawings and specifications
submitted by Tenant pursuant to this Lease within seven (7) business days
following Landlord's receipt of such drawings and specifications from Tenant. In
the event of Landlord's failure to respond within such seven (7) business day
period, the Fixturing Period as described in the Data Sheet shall be extended by
one (1) day for each day of additional delay by Landlord. No material deviations
from the final plans and specifications, once approved by Landlord, shall be
permitted unless necessary to comply with applicable governmental requirements.
Landlord's approval of Tenant's Store Design Drawings and Working Drawing and
Specifications shall not constitute the assumption of such items. Tenant's Work
shall include the installation of fixtures and equipment and the stocking of the
Leased Premises with suitable merchandise. Tenant covenants that all such
fixtures and equipment visible to customers shall be new and otherwise
acceptable to Landlord in appearance. In addition to conforming to the
requirements specified in Exhibit "D", all work performed by Tenant shall comply
with such rules and regulations as Landlord and its representatives may make,
provided that such rules and regulations are uniformly applied to all similarly
situated Shopping Center tenants under construction. Unless Landlord otherwise
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directs in writing, Tenant shall not open the Leased Premises for business until
all construction has been completed pursuant to the provisions of Exhibit "D".
It is further understood and agreed that: (i) Landlord shall have no
responsibility or liability whatsoever for any loss of, or damage to, any
fixtures, equipment, merchandise, or other property belonging to Tenant,
installed or left in the Leased Premises except to the extent resulting from the
negligence or intentional acts of Landlord, its agents or employees; and (ii)
Tenant's entry upon and occupancy of the Leased Premises prior to the
Commencement Date shall be governed by and subject to all the provisions,
covenants and conditions of this Lease. Tenant shall obtain, at its sole cost,
and immediately thereafter furnish to Landlord, all certificates and approvals
with respect to work done and installations made by Tenant that may be required
for the issuance of a certificate of occupancy of the Leased Premises, so that
such certificate of occupancy shall be issued and the Leased Premises shall be
ready for the opening of Tenant's business on the Commencement Date. Upon the
issuance of the certificate of occupancy, a copy thereof shall be immediately
delivered to Landlord. Promptly upon the completion of its work, Tenant shall
repair, clean and restore all portions of the Shopping Center affected by
Tenant's Work to their prior condition.
(b) The interest of Landlord in the Leased Premises and the Retail
Development shall not be subject to liens for improvements made by or on behalf
of Tenant. Nothing contained in this Lease shall be construed as a consent on
the part of Landlord to subject Landlord's estate in the Leased Premises or the
Retail Development to any lien or liability under applicable law. In the event
that any mechanic's, materialman's or other lien or any notices of claim,
including without limitation, stop notices (herein "lien") is filed against the
Leased Premises or Retail Development as a result of any work, labor, services
or materials performed or furnished, or alleged to have been performed or
furnished to or for Tenant or to or for anyone holding the Leased Premises
through or under Tenant, Tenant, at is expense, shall cause the lien to be
discharged or fully bonded to the satisfaction of Landlord within thirty (30)
days after notice of the filing thereof. If Tenant fails to discharge or bond
against said mechanic's, materialman's or other lien, Landlord may, in addition
to any other remedies Landlord may have, but without obligation to do so, bond
against or pay the lien without inquiring into the validity or merits of such
lien and all sums so advanced, including reasonable attorney fees incurred by
Landlord in defending against such lien, procuring the bond or in the discharge
of such lien, shall be paid by Tenant on demand as additional rent. It shall be
Tenant's continuing obligation to keep and maintain the Leased Premises and all
other parts of the Retail Development free from any and all liens arising out of
any work performed, materials furnished or obligations incurred by or for Tenant
in connection with the Leased Premises. In addition, Tenant shall replace any
bonds posted by Landlord pursuant hereto with a suitable bond of equivalent
amount within twenty (20) days after Landlord's demand therefor.
(c) Upon the expiration of each five (5) year portion of the Term,
Tenant shall, within thirty (30) days after direction from Landlord, submit
drawings and specifications showing the work to be performed by Tenant to
completely refurbish the interior portions of Leased Premises. Tenant shall not
be required, pursuant to this Section 3.3(c), to reconstruct the Leased
Premises. The work required of Tenant hereunder shall specifically include work
with respect to the following items: wall covering, floor covering, ceiling,
storefront sign, and surfaces visible to customers. Tenant will cause such work
to be performed not later than ninety (90) days following the date of Landlord's
direction in accordance with drawings and specifications approved by Landlord
specifying the refurbishing work to be done by Tenant. All such work shall be
carried out in accordance with the provisions of this Lease, including the
provisions of this Section 3.3 governing construction of the Leased Premises.
Section 3.4. Alterations by Tenant. Tenant shall not make or cause to
be made any alterations, repairs, additions or improvements in or to the Leased
Premises (for example, but without limiting the generality of the foregoing,
Tenant shall not install or cause to be installed any exterior signs or interior
signs visible from the exterior except as permitted by Section 4.3 hereof, floor
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covering, interior or exterior lighting, plumbing fixtures, shades, canopies or
awnings or make any changes to the storefront, mechanical, electrical or
sprinkler systems) without the prior written consent of Landlord. Tenant shall
submit to Landlord plans and specifications for such work at the time consent is
sought, in accordance with the criteria and procedures as provided in Exhibit
"D". In the event Landlord grants such consent, such alterations, repairs,
additions or improvements shall be performed in good and workmanlike manner and
in accordance with all applicable legal and insurance requirements and all
drawings or specifications approved by Landlord, and in accordance with the
provisions of this Lease, including the provisions of Section 3.3 governing
construction of the Leased Premises. Any work performed by Tenant shall be
subject to Landlord's inspection and approval after completion to determine
whether the same complies with the requirements of this Lease. Prior to the
commencement of any such work by Tenant, Tenant shall obtain the insurance
required in Section 8.2. Tenant agrees that Landlord shall have the right, at no
expense to Landlord, to require Tenant to furnish Landlord with payment and
performance bonds guaranteeing the completion of any repairs, alterations,
additions or improvements (structural or otherwise) required or permitted to be
performed by Tenant under any provisions of this Lease. Tenant may from time to
time make non-structural alterations to the Leased Premises, without Landlord's
prior written approval, the total cost of which shall not exceed Ten Thousand
Dollars ($10,000.00) in any year; provided, however, that Tenant shall not be
permitted to alter the sign or the storefront without the prior written consent
of Landlord, and provided further that any such nonstructural alterations shall
not change the overall appearance of the Leased Premises as originally approved
by Landlord.
Section 3.5. Removal by Tenant. All repairs, alterations, decorations,
additions and improvements made by Tenant shall be deemed to be attached to the
leasehold and to have become the property of Landlord upon such attachment, and,
upon the expiration or sooner termination of this Lease, Tenant shall not remove
any such alterations, decorations, additions and improvements; provided that
trade fixtures installed by Tenant may be removed if all Rent due herein is paid
in full and Tenant is not otherwise in default hereunder; provided further,
however, that Landlord may designate by written notice to Tenant those
alterations, decorations, additions and improvements which shall be removed by
Tenant at the expiration or termination of this Lease and Tenant shall promptly
remove the same and repair any damage to the Leased Premises caused by such
removal.
ARTICLE IV
CONDUCT OF BUSINESS
Section 4.1. Use and Trade Name. Tenant shall continuously use and
occupy the Leased Premises during the Term solely for the purpose of conducting
the business specifically set forth in the Data Sheet and for no other purpose
or purposes. Throughout the Term, Tenant shall (a) operate its business in the
Leased Premises under the trade name specifically set forth in the Data Sheet
and under no other so long as such name shall not be held to be in violation of
any applicable law, (b) not change the advertised name or character of the
business operated in the Leased Premises, (c) refer to the Shopping Center by
name in designating the location of the Leased Premises in all newspaper and
other advertising within the Shopping Center market area and in all other
references to the location of the Leased Premises, and (d) during the period
from the Delivery of Possession Date through sixty (60) days following the
Commencement Date, to include in all Tenant's newspaper advertising within the
Shopping Center market area the designation that Tenant is opening for business
in the Retail Development. If any governmental license(s) or permit(s) shall be
required for the proper and lawful conduct of Tenant's business or any other
activity carried on in the Leased Premises, or if a failure to procure such a
license or permit might, or would in any way, adversely affect Landlord or the
Shopping Center, then Tenant, at Tenant's expense, shall duly procure and
thereafter maintain such license (s) or permit(s) and submit the same for
inspection by Landlord. Tenant, at Tenant's expense, shall at all times, comply
with the requirements of such license(s) or permit(s). Except as provided in
Section 1.3, Tenant shall open its store in the Leased Premises for business to
the public on the Commencement Date, and shall thereafter diligently conduct its
regular business operations in the Leased Premises as required by the terms of
this Lease.
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Section 4.2. Operation of Business. Tenant shall open for business in
the Leased Premises and remain open during the entire Term and continuously
operate its business in the entire area of the Leased Premises during the entire
Term. Tenant shall conduct its business at all times in a high class and
reputable manner, maintaining, at all times, a full staff of employees and a
complete stock of merchandise. Tenant shall install and maintain, at all times,
a display of merchandise in the display windows (if any) of the Leased Premises
and shall keep the same well lighted during all hours that the Shopping Center
is open to the public and during such other hours as may be reasonably
designated by Landlord, but in no event more than one (1) hour after the close
of business. In no event shall Tenant conduct or advertise any auction, fire
sale, going out of business sale, or bankruptcy sale in or about the Leased
Premises without Landlord's prior written consent in each instance, which
consent may be withheld by Landlord in its sole and absolute discretion. Tenant
shall conduct its business in the Leased Premises in a lawful manner and in good
faith during all days and hours specified by Landlord. Tenant shall not use or
allow the Leased Premises to be used for any improper, immoral or objectionable
purposes, as determined by Landlord, and Tenant shall not do any act tending to
injure the reputation of the Shopping Center as determined by Landlord.
Section 4.3. Sign. Tenant shall install and maintain one (1) sign affixed
to the front of the Leased Premises, subject to the prior written approval of
Landlord as to design and location and conforming to all applicable legal and
insurance requirements. Tenant's sign shall conform to the specifications and
requirements contained in Exhibit "E" attached hereto. Tenant shall keep its
approved storefront sign lighted during all hours that the Shopping Center is
open to the public and during such other hours as may be reasonably designated
by Landlord, but in no event more than one (1) hour after the close of business.
Tenant shall pay for all costs in connection with such sign and shall be
responsible for the cost of proper installation and removal thereof and any
damage caused to the Leased Premises thereby. In the event Landlord deems it
necessary to remove such sign, then Landlord shall have the right to do so,
provided, however, that if the sign has received Landlord's prior written
approval and is consistent with the specifications and requirements of Exhibit
"E", Landlord shall replace said sign as soon as practicable. Except as
mentioned above, Tenant shall not place or cause to be placed, erected or
maintained on any exterior door, wall or window of the Leased Premises, or the
glass of any window or door of the Leased Premises, or on any sidewalk or within
any display window space in the Leased Premises, or within five (5) feet of the
front of the storefront lease line or opening, or within any entrance to the
Leased Premises, or otherwise visible from the enclosed mall, any sign
(flashing, moving, hanging, handwritten or otherwise), decal, placard, flashing,
moving or hanging lights, lettering or any other advertising matter of any kind
or description. No symbol, design, name, mark or insignia adopted by Landlord
for the Retail Development shall be used without the prior written approval of
Landlord. Any interior signs must be in good taste and prepared professionally
(not hand-lettered) so as not to detract from the appearance of the Leased
Premises or the Shopping Center. Any sign or display visible from the exterior
of the Leased Premises which does not meet the above criteria may be removed at
any time by Landlord without Landlord incurring any liability therefor, and
without such removal constituting a breach of this Lease or entitling Tenant to
claim damages on account thereof.
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Section 4.4. Tenant's Warranties. Tenant warrants, represents,
covenants and agrees that, in the operation of its business within the Leased
Premises, Tenant shall: (a) pay before delinquency any and all taxes,
assessments and public charges levied, assessed or imposed upon Tenant's
business, or upon Tenant's fixtures, furnishings or equipment in the Leased
Premises, or upon any leasehold interest or personal property of any kind, owned
by or placed in or about the Leased Premises by Tenant or by anyone claiming by,
through or under Tenant, including, without limitation, any transfer taxes, and
pay when and as due all license fees, permit fees and charges of a similar
nature on the conduct by Tenant or by anyone claiming by, through or under
Tenant, including without limitation, any transfer taxes, and pay when and as
due all license fees, permit fees and charges of a similar nature of the conduct
by Tenant or any subtenant or concessionaire of any business or undertaking
authorized hereunder to be conducted in or from the Leased Premises; (b) observe
all reasonable requirements promulgated by Landlord at any time and from time to
time relating to delivery vehicles, the delivery of merchandise, and the storage
and removal of trash and garbage; (c) not use any space outside the Leased
Premises for sale, storage or any other undertaking; (d) not use the plumbing
facilities in the Leased Premises for any purpose other than that for which they
were constructed, nor dispose of any foreign substances therein; (e) not use any
advertising medium or sound devices inside or adjacent to the Leased Premises
which produce or transmit sounds which are audible beyond the interior of the
Leased Premises; (f) not permit any odor to emanate from the Leased Premises
which is objected to by Landlord or by any tenant or occupant of the Retail
Development (and, upon written notice from Landlord, Tenant shall immediately
cease and desist from causing such odor, and Landlord may deem the failure by
Tenant to do so, a material breach of this lease); (g) keep the Leased Premises
and any platform, loading dock or service area used by Tenant in a neat, clean,
safe and sanitary condition; (h) promptly comply with all present and future
laws, ordinances, orders, rules, regulations and requirements of all
governmental authorities having jurisdiction, and observe and comply with all
covenants and restrictions of record and all notices from Landlord's mortgagee,
affecting or applicable to the Retail Development or affecting or applicable to
the Leased Premises or the cleanliness, safety, occupancy and use of the same,
whether or not any such law, ordinance, order, rule, regulation, covenant,
restriction, or other requirement is substantial, or foreseen or unforeseen, or
ordinary or extraordinary, or shall necessitate structural changes or
improvements, shall interfere with the use or enjoyment of the Leased Premises,
or shall be directed to or imposed upon Tenant or Landlord, and Tenant shall
hold Landlord harmless from any and all cost or expense on account thereof (as
used in this Lease, the term "legal requirements" shall include the requirements
set forth in this subparagraph); (i) not use the parking areas or sidewalks,
common areas or any space on or about the Retail Development (outside the Leased
Premises) for display, sale, handbilling, advertising, solicitation, or any
other similar undertaking; and (j) maintain and operate the heating, ventilating
and air conditioning system and equipment servicing the Leased Premises so as to
adequately heat and cool the same and to maintain at all times, whether or not
Tenant is open for business, temperatures in the Leased Premises which will not
drain heat or ventilation or air conditioning from the enclosed mall or other
interior areas into the Leased Premises and shall not discharge heat,
ventilation or air conditioning from the Leased Premises into the enclosed mall
or other interior areas; and (k) be authorized to do business in the State.
Section 4.5. Storage and Office Space. Tenant shall store or stock in
the Leased Premises only such goods, wares and merchandise as Tenant intends to
offer for sale at, in, from, or upon the Leased Premises. This shall not
preclude occasional emergency transfers of merchandise to the other stores of
Tenant, if any, not located in the Shopping Center. Tenant shall use for office,
clerical or other non-selling purposes only such space in the Leased Premises as
is from time to time reasonably required for Tenant's business therein, and
Tenant shall not perform any office or clerical function in the Leased Premises
for any store located elsewhere.
Section 4.6. Care of Premises. Tenant shall keep the Leased Premises
(including the exterior and interior portions of all windows, doors and all
other glass and signs) orderly, neat, safe and clean and free from rubbish or
dirt at all times and shall store all trash and garbage only in the areas
reasonably designated by Landlord for such storage and accumulation. Tenant
shall not move any safe, heavy machinery, heavy equipment, or fixtures into or
out of the Leased Premises without Landlord's prior written consent. Tenant
agrees that it will not place a load on any floor exceeding the floor load per
square foot which such floor was designed to carry, and will not install,
operate or maintain in the Leased Premises any heavy equipment except in such
manner as to achieve a proper distribution of weight.
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Section 4.7. Notice by Tenant. Tenant shall give immediate notice to
Landlord in case of fire or accidents in the Leased Premises, or in the building
of which the Leased Premises are part, or of defects therein or in any fixtures
or equipment.
Section 4.8. Radius. During the term of this Lease, in the event Tenant, or
any person, firm or corporation who or which controls or is controlled by Tenant
(an "Affiliate") shall directly or indirectly, either individually or as a
partner or stockholder or otherwise, own, operate, or become financially
interested in any business similar to or in competition with the business of
Tenant described in Article IV ("competing business"), which business is
conducted within the Area (as said term is herein defined), then the Gross Sales
(as said term is defined in this Lease) of any such competing business within
said Area shall be included in Tenant's Gross Sales made from the Leased
Premises and the Percentage Rent hereunder shall be computed upon the aggregate
of Tenant's Gross Sales made from the Leased Premises and made from each such
competing business then conducted within said Area. Tenant shall be obligated to
provide Landlord with full and complete Gross Sales information and reports with
respect to any competing business within the Area in accordance with the
requirements of Article II of this Lease and Tenant shall be obligated to
include the applicable portion of the Gross Sales of such competing business in
with the Gross Sales of the Leased Premises and to pay Percentage Rent thereon
in accordance with the terms of this Lease. The "Area" shall be defined as the
area falling within the radius of twenty-five (25) miles measured from the
outside boundary of the Retail Development. This Section 4.8 shall not apply to
any competing business which is open and is being operated by Tenant or an
Affiliate within said Area on the Effective Date (as said term is defined in
Section 20.19).
ARTICLE V
COMMON AREA
Section 5.1. Use of Common Area. Landlord agrees to cause to be operated,
managed and maintained during the term of this Lease all of the common areas of
the Shopping Center. The term "common areas", as used in this Lease, shall mean
the parking areas, pedestrian sidewalks and bridges, truckways, loading docks,
delivery areas, park areas, pedestrian malls and courts, elevators and
escalators, if any, and stairs not contained in leased areas, public restrooms
and comfort stations, if any, service areas, fire, service and exit corridors,
passageways, landscaped areas, berms and all other areas or improvements which
may be provided for the convenience and use of the occupants and tenants of the
Retail Development and their respective agents, employees, customers, invitees,
and the licensees and invitees of Landlord. The use and occupancy by Tenant of
the Leased Premises shall include the non-exclusive use, in common with all
others to whom Landlord has or may hereafter grant rights to use the same
(including, but not limited to, the owners, tenants and occupants of the
Shopping Center), of the common areas and of such other facilities as may be
designated by Landlord from time to time; subject, however, to rules and
regulations for the use thereof which will be uniformly applicable to all
Shopping Center tenants, as prescribed from time to time by Landlord. In
particular, Tenant and its employees shall park their cars only in the areas
specifically designated from time to time by Landlord for that purpose. Tenant
covenants that it will enforce the parking by its employees in such designated
areas. Automobile license numbers of employees' cars shall be furnished by
Tenant to Landlord within five (5) days after Landlord's request. In the event
any vehicle is parked by an employee of Tenant in a non-employee parking area,
Landlord shall have the right to cause the vehicle to be towed to a location
designated by Landlord and Tenant shall be obligated to reimburse Landlord for
all towing charges. Tenant further agrees to hold harmless and defend Landlord
and its agents and employees against any and all claims of the employee and/or
owner of the vehicle towed. Landlord may, at any time, close temporarily any
common area to make repairs or changes, to prevent the acquisition of public
rights to such areas and to discourage non-customer use, provided the same shall
not materially adversely affect access to or visibility of the Leased Premises.
In addition, Landlord may modify, from time to time, the traffic flow pattern
and layout of parking spaces and the entrances-exits to adjoining public streets
or walkways, utilize portions of the common areas for entertainment, displays
and charitable activities and do such other acts in and to the common areas as,
in its judgment, may be desirable to improve the convenience or attraction
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thereof. Landlord agrees to maintain all common areas of the Shopping Center in
good order, condition and repair and in a safe, clean, sightly and sanitary
condition, in accordance with good and accepted shopping center practices. The
maintenance obligations of Landlord shall include, without limitation, the
re-striping of parking areas, when required, repairing of common areas and
adequate lighting of all exterior common areas during all hours of darkness
during which Tenant shall be open for business and for one (1) hour thereafter.
Section 5.2. Common Area Maintenance Expenses. (a) Tenant agrees to pay to
Landlord each Lease Year, in the manner hereinafter provided, Tenant's
proportionate share of all costs and expenses (the "Common Area Maintenance
Expenses") of every kind and nature paid or incurred by Landlord, or for which
Landlord is obligated, during each Lease Year, for operating, equipping,
policing and protecting, heating, air conditioning, providing sanitation and
sewer and other services, lighting, insuring, repairing, replacing and
maintaining (i) the common areas, and (ii) all buildings and roofs within the
Retail Development, and (iii) all other areas, facilities and buildings used in
connection with the maintenance and/or operation of, and whether located within
or outside of, the Retail Development, including without limitation, all roads
and driveways serving the Retail Development which are maintained or repaired by
Landlord or at Landlord's expense. The Common Area Maintenance Expenses shall
include, but are not limited to, costs and expenses of: water, gas, sewage,
electricity, refuse disposal, air conditioning, heating and other utilities
(without limitation), including all usage, service, hook-up, connection
availability and/or standby fees or charges pertaining to same, and the utility
costs; illumination and maintenance of signs, whether located on or off the
Retail Development property; salaries of all management personnel; maintenance,
repair and replacement of directories, electronic or otherwise, cleaning,
lighting, snow removal and landscaping; security control and fire protection;
uniforms for maintenance, administrative and security personnel for the Retail
Development; management fees; maintenance for wooded areas, retention ponds,
wetlands, rivers and riverbank areas; premiums for insurance to the extent
maintained by Landlord, for liability, casualty and property damage, including,
without limitation, insurance against vandalism, plate glass breakage, fire and
extended coverage insurance and such other coverage as determined by Landlord,
and liability for defamation and claims of false arrest occurring in and about
such areas; personal property taxes; maintaining and replacing the equipment, if
any; supplying music to such areas; the reasonable depreciation of equipment
used in the operation and maintenance of such areas; total compensation and
benefits (including premiums for workers' compensation and other insurance) paid
to or on behalf of persons involved in the performance or administration of the
work specified in this Section 5.2; repair, maintenance and cleaning of such
areas; costs and expenses for water and sewage usage in the Shopping Center;
operation, repair, maintenance and reasonable depreciation of all temporary and
permanent utility systems for the Retail Development, including, without
limitation, heating, ventilating and air conditioning systems (HVAC systems),
gas system(s), plumbing system(s); electrical equipment and irrigational pumping
system(s); operation, repair, maintenance and reasonable depreciation of
emergency water and sprinkler main system(s) and security alarm system(s);
operation, maintenance, repair and replacement of mechanical equipment including
any automatic door openers, elevators, escalators, lighting fixtures (including
replacement of poles, tubes and bulbs) and all other items of equipment used in
connection with such areas; paper supplies in restrooms located in or about such
areas; cleaning, lighting, striping and landscaping, curbs, gutters, sidewalks,
drainage and irrigation ditches, conduits, pipes and canals serving the Retail
Development; and there shall also be added to the foregoing costs and expenses
an amount equal to fifteen percent (15%) of the total of all of the ongoing
costs and expenses as Landlord's administrative fee. As stated throughout this
Lease, whenever Tenant is obligated to pay its "proportionate share", such share
shall be based on gross leased and occupied floor area in the Shopping Center,
and Tenant's proportionate share shall be that fraction, the numerator of which
is the total square footage of floor area in the Leased Premises, and the
denominator of which is the total square footage of gross leased and occupied
floor area (including the Leased Premises) in the Shopping Center. As used
throughout this Lease, the "gross leased and occupied floor area" in effect for
the whole of any Lease Year shall be the average of the gross leased and
occupied floor area in effect on the first day of each calendar month in such
Lease Year.
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(1) Prior to the proration of such Common Area Maintenance
Expenses to Tenant, there shall be deducted from the total of such Common Area
Maintenance Expenses any amount specifically contributed by the Major Tenants
toward such Common Area Maintenance Expenses. It is further agreed that in no
event shall Tenant be obligated for the capital costs of initially constructing
the Retail Development or the capital costs of subsequent expansion construction
for the Retail Development (i.e., adding new Major Tenants to the Retail
Development or expanding the Shopping Center or the common areas).
(2) Not more often than once during each Lease Year, Landlord
agrees to provide, upon thirty (30) days prior written notice, but in no event
earlier than ninety (90) days following the expiration of any Lease Year, a
statement of Common Area Maintenance Expenses, in reasonable detail. Landlord
shall be permitted to describe areas of expenditure by category and shall not be
obligated to enumerate each specific expenditure.
(b) Tenant's proportionate share of such Common Area Maintenance
Expenses for each Lease Year shall be paid in advance, in equal monthly
installments, in the same manner and at the same time as the monthly
installments of Minimum Rent are payable hereunder, without deduction or
diminution of any kind, based on an amount estimated in advance, from time to
time, by Landlord to be Tenant's obligation under this Section 5.2.
Notwithstanding the above, in the event Landlord, at any time, determines that
the amount of Common Area Maintenance Expenses actually being paid or incurred
by Landlord exceeds the estimate upon which Tenant's proportionate share of
Common Area Maintenance Expenses was computed, then Tenant, following a request
from Landlord, shall commence to pay with the next monthly installment of
Minimum Rent due in an amount sufficient to result in Tenant's paying its full
proportionate share of Common Area Maintenance Expenses as computed on the basis
of Landlord's revised estimate of Common Area Maintenance Expenses. Subsequent
to the end of each Lease Year, Landlord shall furnish Tenant with a statement of
the actual amount of Tenant's proportionate share of such Common Area
Maintenance Expenses for such period. If the total amount paid by Tenant under
this Section 5.2 for any Lease Year shall be less than the actual amount due
from Tenant for such Lease Year as shown on such statement, Tenant shall pay
Landlord the difference between the amount paid by Tenant and the actual amount
due, such deficiency to be paid within thirty (30) days after the furnishing of
each such statement, and if the total amount paid by Tenant hereunder for any
such Lease Year shall exceed the actual amount due from Tenant for such Lease
Year, such excess shall be credited against the next installment due from Tenant
to Landlord under this Section 5.2.
ARTICLE VI
REPAIRS AND MAINTENANCE
Section 6.1. Repairs and Maintenance by Landlord. Landlord agrees to
keep in good order, condition and repair the roof (including keeping the roof
watertight), foundation, exterior (including exterior painting and finish), all
structural portions of the Leased Premises (and of the building in which the
Leased Premises are located) and all plumbing and utility lines not exclusively
serving and not located within the Leased Premises. Should any repairs,
modifications or alterations be required by reason of applicable law, the same
shall be made by Landlord, at Landlord's cost and expense, unless the need for
such repairs, modifications or alterations shall result from Tenant's failure to
perform its obligations under this Lease or from Tenant's use of the Leased
Premises for other than general merchandising purposes. Landlord further agrees
to keep in a safe, secure condition all buildings in the Shopping Center. In
addition, for the first twelve (12) months only following the Delivery of
Possession Date, Landlord shall, upon written notice from Tenant of the
necessity therefor, correct any defects in Landlord's Work within the Leased
Premises. All costs and expenses incurred by Landlord under this Section 6.1
shall be included in Common Area Maintenance Expenses, other than costs and
expenses for Landlord's correction of defects in Landlord's Work.
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Section 6.2. Repairs and Maintenance by Tenant. (a) Except for the repairs
and maintenance that Landlord is specifically obligated to make or perform
pursuant to Section 6.1 above, throughout the entire Term, Tenant, at its
expense, shall promptly make all repairs and replacements and perform
maintenance in and to the Leased Premises and all equipment and fixtures therein
or appurtenant thereto, that are necessary or desirable in order to keep the
Leased Premises in good order, condition and repair and in a safe, dry and
tenantable condition. Without limiting the generality of the foregoing, Tenant,
at its expense, shall maintain and promptly make any and all necessary repairs
to or replacements of: (i) that portion of any pipes, lines, ducts, wires or
conduits (whether contained within or outside the Leased Premises) which are
installed by Tenant or that exclusively serve the Leased Premises; (ii) the
glass windows, plate glass doors, and all fixtures or appurtenances composed of
glass that are located in or about the Leased Premises; (iii) Tenant's signs;
(iv) the floors and floor coverings, doors and door frames, windows and window
frames, walls, storefront, including security gates, grilles or enclosures,
locks and closing devices, partitions and ceilings in the Leased Premises; (v)
heating, ventilating, air conditioning, electrical and plumbing system(s)
equipment and fixtures (whether contained within or outside the Leased Premises)
which are installed by Tenant or which exclusively serve the Leased Premises;
and (vi) the Leased Premises or any part of the Shopping Center when repairs
thereto are necessitated by any act or omission (negligent or otherwise) of
Tenant or any of Tenant's agents, employees or invitees, or by the failure of
Tenant to perform any of its obligations under this Lease. Notwithstanding the
foregoing, Landlord shall be responsible for repairs and maintenance
necessitated by the negligence or intentional acts of Landlord, its agents or
employees. Notwithstanding any contrary provision of this Article VI, Tenant, at
its expense, shall make any and all repairs to the Leased Premises as may be
necessitated by any break-in, forcible entry or other trespass into or upon the
Leased Premises, regardless of whether or not such entry and damage is caused by
the negligence or fault of Tenant or occurs during or after business hours.
Tenant, at its expense, shall change all air conditioning filters at least five
(5) times per year and shall have the air conditioning system professionally
inspected and generally serviced at least twice per year.
(b) Tenant shall keep and maintain the Leased Premises in a clean,
sanitary and safe condition in accordance with the laws of the State and in
accordance with all directions, rules and regulations of the health officer,
building inspector, the National Fire Protection association and any other
officials of the governmental agencies having jurisdiction, at the sole cost and
expense of Tenant, and Tenant shall comply with all requirements of law,
ordinance, rules, regulations and orders of any lawful authority having
jurisdiction affecting said Leased Premises, or Tenant's use thereof. Tenant, at
its expense, shall install and maintain fire extinguishers and other fire
protection devices as may be required by reason of the conduct of Tenant's
business, from time to time by any agency having jurisdiction or the
underwriters insuring the building in which the Leased Premises are located. If
any bureau, department or official of the Federal or State government requires
or recommends the installation of any changes, modifications or alterations in
the sprinkler system or additional sprinkler heads or other equipment
(hereinafter collectively "changes") by reason of Tenant's business, or the
location of partitions, trade fixtures, or other contents of the Leased
Premises, or for any other reason, or if any such changes become necessary to
prevent the imposition of a penalty or charge against the full allowance for a
sprinkler system in the fire insurance rates set by any fire insurance company,
Tenant, at Tenant's expense, shall promptly make such changes as required.
(c) Tenant agrees that Tenant's use of electrical current will at no
time exceed the capacity of the electric distribution system and that Tenant
will not make any alteration or addition to Tenant's electrical system without
Landlord's prior written consent. If Tenant installs any electrical equipment
that overloads the electrical lines in the Leased Premises or the Retail
Development, Tenant shall, at Tenant's sole cost and expense, be required to
make whatever changes to such electrical equipment and in electric wiring in the
Leased Premises (but only after obtaining Landlord's written approval) as may be
necessary in order to remedy such overloading and in compliance with all
insurance and legal requirements. All changes required to be made hereby shall
result in the continued conformance with the provisions of Exhibit "D" and this
Lease.
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(d) If Tenant refuses or neglects to properly maintain the Leased
Premises, or to commence or to complete repairs promptly and adequately, or if
Landlord finds it necessary to make any repairs or replacements otherwise
required to be made by Tenant, then Landlord may, after notice to Tenant, in
addition to all other remedies, but without obligation to do so, enter the
Leased Premises and proceed forthwith to have such maintenance, repairs or
replacements made and Tenant shall pay to Landlord, on demand, the costs and
expenses therefor plus a charge of fifteen percent (15%) of such costs and
expenses.
ARTICLE VII
TAXES
Section 7.1. Tax Liability. Tenant agrees to pay to Landlord Tenant's
proportionate share of all taxes and assessments and service payments in lieu of
taxes of every nature and kind which may be levied or assessed by, or payable
to, any lawful authority during or with respect to each fiscal tax year falling
in whole or in part during the Term against all or any part of the land,
buildings and improvements comprising the Retail Development and any other taxes
which Landlord becomes obligated to pay with respect to the Retail Development,
whether or not the same are assessed against real or personal property or are
payable in advance or in arrears (the "Taxes"). If, due to a future change in
the method of taxation, any tax, excise or assessment shall be levied or
assessed against Landlord, directly or indirectly, in lieu of, in substitution
for or as a supplement to any present Taxes or future (real estate or personal
property) tax, in whole or in part, such tax, excise or assessment shall
constitute a Tax, respecting which Tenant is obligated to pay its proportionate
share to Landlord as provided herein. If any Taxes or assessed valuation(s) are
contested by Landlord, then Tenant's proportionate share of Taxes shall also
include Tenant's proportionate share of the cost and expense of consultation
services incurred in evaluating and contesting such Taxes or assessed
valuation(s). The term "Taxes" shall also include any form of assessment,
special assessment, license fee, license tax, business license fee, business
license tax, commercial rental tax, levy, charge, tax or similar imposition,
imposed by any authority having the direct power to tax, including without
limitation, any city, county, state or Federal government, or any school,
agricultural, lighting, drainage or other improvement or special assessment
district or any other agency or other public body, whether or not consented to
or joined in by Landlord and whether or not retroactive, payable by Landlord
thereof as against the land and improvements comprising, or any legal or
equitable interest of Landlord in, the Retail Development.
Section 7.2. Method of Payment. Tenant's proportionate share of Taxes
shall be paid, in advance, in monthly installments on or before the first day of
each calendar month, in an amount estimated by Landlord. Following receipt of
all bills for Taxes attributable to any calendar or fiscal year during the term
hereof, Landlord shall furnish Tenant with a written statement of the actual
amount of Tenant's proportionate share of Taxes for such year. If any bill for
any such Taxes is not available, Landlord will estimate the amount of such Tax.
If the total amount paid by Tenant hereunder for any calendar or fiscal year
during the Term shall be less than the actual amount due from Tenant for such
year, as shown on such statement, Tenant shall pay to Landlord the difference
between the amount paid by Tenant and the actual amount due, such deficiency to
be paid within thirty (30) days after demand therefor by Landlord; and if the
total amount paid by Tenant hereunder for any such calendar or fiscal year shall
exceed such actual amount due from Tenant for such year, such excess shall be
credited against the next installment of Taxes due from Tenant to Landlord
hereunder. For the calendar or fiscal years in which this Lease commences and
terminates, Tenant's liability for its proportionate share of any Taxes for such
years shall be subject to a pro rata adjustment based on the number of days of
said calendar or fiscal years during which the Term is in effect. A copy of any
such bill for Taxes shall at times be sufficient evidence of the amount of Taxes
assessed or levied against the property to which such bill relates. Prior to or
at the Commencement Date and from time to time hereafter throughout the Term,
Landlord shall notify Tenant in writing of Landlord's estimate of Tenant's
monthly installments due hereunder. Tenant's obligations under this Article VII
shall survive the expiration or sooner termination of this Lease.
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Section 7.3. Sales and Rent Tax. Tenant, and not Landlord, shall pay,
when due and payable, any state, county or city sales tax, transaction privilege
tax, and any other sales, excise, use, rental or occupancy tax now or hereafter
levied or assessed upon or payable by virtue of the Minimum Rent, the Rent, or
any item of additional rent reserved hereunder or any other payment made or
other consideration given by Tenant under this Lease and classified as rental by
taxing authority. Should the appropriate taxing authority require that any such
tax be collected by Landlord for or on behalf of such taxing authority, or
should such tax be imposed on Landlord, then such tax shall be paid by Tenant to
Landlord, monthly, as additional rent, together with the payment of Minimum Rent
or, at the option of Landlord, in accordance with the terms of any notice from
Landlord to Tenant to such effect.
ARTICLE VIII
INSURANCE, INDEMNITY AND LIABILITY
Section 8.1. Landlord's Insurance Obligations. Landlord agrees to
obtain and maintain during the Term, to the extent the same is available, fire
and extended coverage insurance, in amounts and coverages and with such special
endorsements as Landlord shall determine from time to time, insuring the
building in which the Leased Premises are located, and the improvements to the
Leased Premises provided by Tenant pursuant to this Lease (exclusive of Tenant's
merchandise, trade fixtures, furnishings, equipment, plate glass, signs and
personal property of Tenant). Landlord shall also carry rental interruption
insurance in amounts at least equal to Tenant's total rental obligation for at
least twelve (12) full months under this Lease including the total of the
estimated costs to Tenant of Taxes and Common Area Maintenance Expenses
(including insurance) for such period. Tenant shall reimburse Landlord for its
proportionate share of the insurance costs incurred by Landlord under this
Section 8.1 as part of Tenant's Common Area Maintenance Expenses described in
Section 5.2 hereof.
Section 8.2. Tenant's Insurance Obligations. (a) Provided Tenant is the
Tenant named on the Cover Page hereof and a wholly-owned subsidiary of the
Guarantor and Tenant's and Guarantor's net worth are at least equal to Ten
Million Dollars ($10,000,000.00) combined, Tenant shall have the right to
self-insure for any loss or damage of the type covered by standard fire and
extended coverage insurance with respect to personal property located on or
within the Leased Premises including alterations and improvements made by Tenant
to the extent the same are not covered by Landlord's fire and extended coverage
insurance. Tenant and Guarantor shall, at their sole expenses, without regard to
fault on the part of any person, make and perform any repairs or restorations
which are required as a result of a casualty which would be covered by insurance
of the type described in this Section 8.2(a). Tenant, at Tenant's sole cost and
expense, shall obtain and maintain in effect commencing with the Delivery of
Possession Date and continuing throughout the Term, insurance policies providing
for the following coverage: (i) all risk property insurance against fire, theft,
vandalism, malicious mischief, sprinkler leakage and such additional perils as
now are or hereafter may be included in a standard extended coverage endorsement
from time to time in general use in the State, insuring Tenant's merchandise,
trade fixtures, furnishings, equipment and all items of personal property of
Tenant and of anyone claiming by, through or under Tenant located on or in the
Leased Premises, and the amount of such insurance will be set forth in an
"agreed value endorsement" to the policy of such insurance, not less than one
hundred percent (100%) of the full replacement value thereof without deduction
for depreciation, and with a deductible amount of not more than Fifty Thousand
Dollars ($50,000.00). Any and all proceeds of such insurance, so long as the
Lease shall remain in effect, shall be used only to repair or replace or pay for
the items so insured; (ii) a commercial general liability policy, including
insurance naming Landlord and any mortgagee of the Shopping Center as additional
insured, protecting against any and all claims for injury to persons or property
occurring in or about the Leased Premises and protecting against assumed or
contractual liability under this Lease with respect to the Leased Premises and
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the operations of Tenant and any subtenant of Tenant in, on or about the Leased
Premises, with such policy to be in the minimum amount of Three Million Dollars
($3,000,000) single limit coverage; (iii) products liability insurance for
merchandise offered for sale or lease from the Leased Premises, including (if
this Lease covers leased premises in which food and/or beverages are sold and/or
consumed) liquor liability coverage (if applicable to Tenant's business) and
coverage for liability arising out of the consumption of food and/or alcoholic
beverages on or obtained at the Leased Premises, of not less than Two Million
Dollars ($2,000,000) per occurrence for personal injury and death and property
damage; (iv) workers' compensation coverage as required by law; (v) with respect
to alterations, improvements and the like required or permitted to be made by
Tenant hereunder, contingent liability and builders risk insurance in amounts
satisfactory to Landlord; and (vi) the insurance required under Exhibit "D".
(b) All insurance policies herein to be procured by Tenant shall: (i)
be issued by insurance companies reasonably satisfactory to Landlord and
authorized to do business in the State; (ii) be written as primary policy
coverage and non-contributing with respect any coverage which Landlord may carry
with any coverage carried by Landlord being excess insurance; (iii) insure and
name each of Landlord, any mortgagee of the Shopping Center or the Retail
Development and any parties in interest designated by Landlord as additional
insured, as their respective interests may appear (except with respect to
workers' compensation insurance); and (iv) shall contain an express waiver of
any right of subrogation by the insurance company against Landlord, and its
agents, employees and representatives which arises or might arise by reason of
any payment under such policy or by reason of any payment under such policy or
by reason of any act or omission of Landlord, its agents, employees or
representatives. Neither the issuance of any insurance policy required
hereunder, nor the minimum limits specified herein with respect to Tenant's
insurance coverage, shall be deemed to limit or restrict in any way Tenant's
liability arising under or out of this Lease. With respect to each and every one
of the insurance policies herein required to be procured by Tenant, on or before
the Commencement Date and before any such insurance policy shall expire, Tenant
shall deliver to Landlord, upon Landlord's written request, a duplicate original
or certified copy of each such policy or a certificate of the insurer,
certifying that such policy has been issued, providing the coverage required by
this Section and containing provisions specified herein, together with evidence
of payment of all applicable premiums. Any insurance required to be carried
hereunder may be carried under a blanket policy covering the Leased Premises and
other locations of Tenant. Each and every insurance policy required to be
carried hereunder by or on behalf of Tenant shall provide (and any certificate
evidencing the existence of each such insurance policy shall certify) that,
unless Landlord shall first have been given thirty (30) days' prior written
notice thereof, the insurer will not cancel, materially change or fail to renew
the coverage provided by such insurance policy. The term "insurance policy" as
used herein shall be deemed to include any extensions or renewals of such
insurance policy. In the event that Tenant shall fail to promptly furnish any
insurance coverage hereunder required to be procured by Tenant, Landlord, at its
sole option, shall have the right after ten (10) days prior written notice to
Tenant to obtain the same and pay the premium therefor for a period not
exceeding one (1) year in each instance, and the premium so paid by Landlord
shall be immediately due and payable by Tenant to Landlord as additional rent.
(c) Tenant shall not do or permit to be done any act or thing upon the
Leased Premises that will invalidate or be in conflict with fire insurance
policies covering the building containing the Leased Premises or any part
thereof, including all common areas, or fixtures and property therein, or any
other insurance policies or coverage referred to above in this Article VIII and
Tenant shall promptly comply with all rules, orders, regulations, and
requirements relating to such insurance policies, and shall not do, or permit
anything to be done, in or upon the Leased Premises, or bring or keep anything
therein, which shall increase the rate of fire insurance on the building in
which the Leased Premises are located or on any property, including all common
areas, located therein, or increase the rate or rates of any other insurance
referred to hereinabove. If any act or omission of Tenant, its agents, employees
or contractors shall result in any increase in the premium rates applicable to
any such insurance policies carried by Landlord, or other increased costs to
Landlord in connection therewith, then Tenant shall reimburse Landlord on demand
as additional rent for the amount of any increased rates or costs. In
particular, if Tenant uses the Leased
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Premises for preparation of food, Tenant shall reimburse Landlord, on demand,
for any part of the premium for insurance coverage under Section 8.1 hereof
required to be paid on account of such use of the Leased Premises.
Section 8.3. Mutual Covenant. Notwithstanding any provision of this
Lease to the contrary, each of Landlord and Tenant hereby releases the other,
its officers, directors, employees, and agents from any and all liability or
responsibility for any loss, damage or injury caused by fire or other casualty
for which insurance containing a waiver of subrogation is carried by the injured
party at the time of such loss, damage or injury regardless of the extent of any
recovery by the injured party under such insurance. Both parties agree to carry
casualty insurance containing such waiver of subrogation. Additionally, at any
time Tenant self-insures its insurance obligations hereunder, Tenant hereby
releases the Landlord, its officers, directors, employees and agents from any
and all liability or responsibility for any loss, damage or injury caused by
fire or other casualty, even if such loss, damage or casualty is caused in whole
or in part by Landlord or by any party for whom Landlord may be responsible.
Section 8.4. Covenant to Hold Harmless. Tenant hereby indemnifies and
agrees to hold harmless Landlord, its officers, directors, partners, employees,
and agents, and any mortgagee or master lessor of the Shopping Center and/or the
Retail Development (herein, collectively, "Landlord's Indemnitees"), from and
against any and all claims, actions, damages, liability, cost and expense,
including attorneys' fees, that (i) arise from or are in connection with the
possession, use, occupancy, management, repair, maintenance or control of the
Leased Premises, or any portion thereof, or (ii) arise from or are in connection
with any act or omission of Tenant or Tenant's agents, employees, contractors,
licensees or invitees, or (iii) result from any default, breach, violation or
nonperformance of this Lease or any provision hereof by Tenant, or (iv) result
from injury to person or property or loss of life sustained in or about the
Leased Premises. Tenant shall, at its own cost and expense, defend any and all
actions, suits and proceedings which may be brought against Landlord or any of
Landlord's Indemnitees with respect to the foregoing. Tenant shall pay, satisfy
and discharge any and all judgments, orders and decrees which may be received
against Landlord or any of Landlord's Indemnitees in connection with the
foregoing. In the event Landlord or any of Landlord's Indemnitees, shall,
without fault, be made a party to any litigation commenced by or against Tenant,
or if Landlord or any such party shall, in its sole discretion, intervene in
such litigation to protect its interest hereunder, then Tenant shall protect and
hold them harmless and shall pay all costs, expenses and attorneys' fees
incurred or paid by such party(ies) in connection with such litigation.
Section 8.5. Loss and Damage. All Tenant's property of every kind and
description which may at any time be in the Leased Premises shall be kept at
Tenant's sole risk, and Landlord shall not be liable to Tenant, its agents,
employees or customers, except to the extent resulting from the negligence or
intentional acts of Landlord, its agents or employees for any damage, loss,
compensation, accident, or claims whatsoever resulting to Tenant or its property
from the necessity of repairing any portion of the Shopping Center; any
interruption in the use of the Leased Premises; the use or operation (by
Landlord, Tenant, or any other person or persons whatsoever) of any elevators,
heating, cooling, electrical or plumbing equipment or apparatus; the termination
of this Lease by reason of the destruction of the Leased Premises; any fire,
robbery, theft, or any other casualty; any leakage in any part or portion of the
Leased Premises or the Shopping Center; any water, wind, rain or snow that may
leak into, or flow from part of the Leased Premises or the Shopping Center; any
acts or omissions of any occupant of any space adjacent to or adjoining all or
any part of the Leased Premises or any part of the building of which the Leased
Premises are a part; any explosion, casualty, utility failure or malfunction, or
falling plaster; the bursting, stoppage or leakage or any pipes, sewer pipes,
drains, conduits, appliance or plumbing works; or any other cause whatsoever.
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ARTICLE IX
DESTRUCTION OF LEASED PREMISES
Section 9.1. Continuance of Lease. In the event of any damage to the Leased
Premises by fire or other casualty, this Lease shall not be terminated or
otherwise affected; except that, if more than twenty-five percent (25%) of the
square footage of the Leased Premises shall be damaged by any such fire or other
casualty during the last three (3) years of the term of this Lease (not
including any option or renewal periods) or during any renewal or extension of
the term hereof and the cost of repair or restoration exceeds Ten Thousand
Dollars ($10,000.00) as estimated by Landlord, or if Landlord is unable to
rebuild any portion of the building in which the Leased Premises are located or
of the Shopping Center due to any inability to obtain any required governmental
approval in connection therewith, or if more than thirty-five percent (35%) of
the floor area of the building in which the Leased Premises are located or of
the Shopping Center shall be damaged or destroyed by fire or other casualty, or
if all or any part of the building in which the Leased Premises are located or
if the Shopping Center or the Leased Premises shall be damaged or destroyed at
any time by the occurrence of any risk not insured under the insurance required
to be carried under Article VIII hereof, then Landlord shall have the option to
terminate this Lease within ninety (90) days following the occurrence of such
fire or other casualty by giving written notice to Tenant during such period. In
the event Landlord exercises any of the foregoing options to terminate, this
Lease shall immediately terminate upon Landlord's written notice to Tenant and
(a) the entire proceeds of the insurance provided for in Section 8.1 hereof
shall be paid by the insurance company or companies directly to Landlord and
shall belong to, and be the sole property of Landlord, (b) the portion of the
proceeds of the insurance provided for in Section 8.2 which is allocable to
equipment, fixtures and other items, which, by the terms of the Lease,
rightfully belongs to Landlord upon the termination of the Lease by whatever
cause, shall be paid by the insurance company or companies directly to Landlord,
and shall belong to, and be the sole property of Landlord, and (c) Landlord and
Tenant shall be relieved from any and all further liability or obligation
occurring under this Lease from and after the date of such termination. Tenant
hereby waives any and all rights which it may have to terminate this Lease by
reason of damage to the Leased Premises by fire or other casualty pursuant to
any presently existing or hereafter enacted statute or pursuant to any other
law.
Section 9.2. Reconstruction. If the Leased Premises are damaged by fire
or other casualty and this Lease is not terminated in accordance with Section
9.1 hereof, then all fire and extended coverage insurance proceeds from policies
carried pursuant to Section 8.1 hereof, however recovered, shall be held in
escrow and made available for payment of the costs of repairing, replacing and
rebuilding the Leased Premises, the damage to the Leased Premises shall be
promptly repaired, and the Minimum Rent and other charges payable by Tenant to
Landlord shall be abated in proportion to the floor area of the Leased Premises
rendered untenantable, and the Sales Break Point shall likewise be
proportionately reduced. Payment of full rental and all other charges so abated
shall commence and Tenant shall be obligated to reopen for business sixty (60)
days following the date that Landlord advises Tenant that the Leased Premises
are tenantable and Landlord has substantially completed Landlord's Work, unless
Tenant opens at an earlier time in the damaged area or remains open in such area
following destruction or damage, in which event there shall be no abatement or
any such abatement shall terminate as of the date of Tenant's earlier reopening.
Landlord shall be obligated to commence Landlord's Work and shall diligently
pursue the completion of Landlord's Work and shall cause the same to be
completed as soon thereafter as possible under the attendant circumstances, but
in any event all such Landlord's Work shall be completed and the Leased Premises
reopened for business within one hundred eighty (180) days following such fire
or casualty. After Landlord has completed Landlord's Work, Tenant shall commence
such Tenant's Work, at Tenant's expense. Tenant shall comply with all laws,
ordinances and governmental rules or regulations, and shall perform all work or
cause such work to be performed with due diligence and in a first-class manner.
All permits required in connection with said repairs, restoration and
reconstruction shall be obtained by Tenant, at Tenant's sole cost and expense.
Any amount expended by Tenant in excess of any insurance proceeds received by
Tenant shall be the sole obligation of Tenant. The party required hereunder to
repair the damage to the Leased Premises shall reconstruct such Leased Premises
in accordance with the working drawings originally approved by Landlord or with
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(at Landlord's sole election) new drawings prepared by Tenant and acceptable to
Landlord and Tenant. In no event shall Landlord be required to repair or replace
Tenant's merchandise, trade fixtures, furnishings or equipment. If Landlord
repairs or rebuilds, Tenant, at Tenant's sole cost, shall repair or replace
Tenant's merchandise, trade fixtures, furnishings and equipment in a manner and
to at least a condition equal to that existing prior to the damage or
destruction thereof. Except as may be specifically set forth in this Article IX,
Landlord shall not be liable or obligated to Tenant to any extent whatsoever by
reason of any fire or other casualty damage to the Leased Premises, or any
damages suffered by Tenant by reason thereof, or the deprivation of Tenant's
possession of all or any part of the Leased Premises. In the event Landlord has
not commenced restoration or rebuilding the Leased Premises within ninety (90)
days of the date of such fire or casualty loss, or has not diligently proceeded
to complete such restoration or rebuilding so that the Leased Premises are
restored/rebuilt to its former condition prior to such fire or casualty loss
within one hundred eighty (180) days of the date of such fire or casualty loss,
then Tenant will have the right, in either case, to terminate this Lease by
providing Landlord notice of such election and Tenant will vacate and surrender
the Leased Premises pursuant to Section 17.1 hereof.
ARTICLE X
CONDEMNATION
Section 10.1. Eminent Domain. If fifty percent (50%) or more of the
floor area of the Leased Premises shall be taken or condemned by any
governmental authority (including, for purposes of this Article, any purchase by
such governmental authority in lieu of a taking), then either party may elect to
terminate this Lease by giving notice to the other party not more than ninety
(90) days after the date on which such title shall vest in the authority. If the
parking facilities are reduced below the minimum parking requirements imposed by
the applicable authorities, Landlord may elect to terminate this Lease by giving
Tenant notice within one hundred eighty (180) days after such taking. In
addition, if any Major Tenant shall terminate its lease with Landlord, pursuant
to a taking of its store, Landlord may terminate this Lease by written notice to
Tenant within ninety (90) days after notice to Landlord that such Major Tenant
is terminating its lease. In the case of any taking or condemnation, whether or
not the Term shall cease and terminate, the entire award shall be the property
of Landlord; provided, however, Tenant shall be entitled to any award as may be
made for trade fixtures and other equipment (not including any Tenant's Work
required or permitted under this Lease) which under the terms of this Lease
would not have become the property of Landlord; further provided, that any such
award to Tenant shall not be in diminution of any award otherwise to be made to
Landlord in the absence of such award to Tenant.
Section 10.2. Rent Apportionment. In the event of any taking or
condemnation, the then current Minimum Rent, Sales Break Point and the square
foot floor area in the Leased Premises as determined pursuant to Section 1.1
shall be apportioned as of the date when possession of the Leased Premises is
required to be delivered to the condemning authority or termination of this
Lease, as the case may be, and, if the Term shall not have ceased and been
terminated as of said date, Tenant shall be entitled to a pro rata reduction in
the Minimum Rent payable and Sales Break Point hereunder, or if Tenant has
prepaid Minimum Rent, Tenant shall be entitled to a pro rata credit for the
Minimum Rent paid hereunder, based on the proportion which the floor area taken
from the Leased Premises bears to the entire floor area of the Leased Premises
immediately prior to such taking.
Section 10.3. Temporary Taking. Notwithstanding anything to the
contrary in this Article X, requisitioning of the Leased Premises or any part
thereof by military or other public authority for purposes arising out of a
temporary emergency or other temporary situation or circumstances shall
constitute a taking of the Leased Premises by eminent domain when the use or
occupancy by the requisitioning authority is expressly provided to continue, or
shall in fact have continued, for a period of one hundred eighty (180) days or
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more. If the Lease is not thereafter terminated under the foregoing provisions
of this Article X, then for the duration of any period of use and occupancy of
the Leased Premises by the requisitioning authority, all the terms and
provisions of this Lease and obligations of Tenant hereunder shall remain in
full force and effect, except that the Minimum Rent and Sales Break Point shall
be reduced in the same proportion that the floor area of the Leased Premises so
requisitioned bears to the total floor area of the Leased Premises, and Landlord
shall be entitled to whatever compensation may be payable from the
requisitioning authority for the use and occupation of the Leased Premises for
the period involved.
ARTICLE XI
ASSIGNMENT, SUBLETTING AND ENCUMBERING LEASE
Section 11.1. No Assignment, Subletting or Encumbering of Lease. (a)
Notwithstanding any references to assignees, subtenants, concessionaires or
other similar entities in this Lease, Tenant shall not (i) assign or otherwise
transfer, or mortgage or otherwise encumber, this Lease, in whole or in part, or
any of its rights hereunder, or (ii) sublet the Leased Premises or any part
thereof, or permit the use of the Leased Premises or any part thereof by any
persons other than Tenant or its agents. Any such attempted or purported
transfer, assignment, mortgaging or encumbering of this Lease or any of Tenant's
interest hereunder and any attempted or purported subletting or grant of a right
to use or occupy all or a portion of the Leased Premises in violation of the
foregoing sentence, whether voluntary or involuntary or by operation of law or
otherwise, shall be null and void and shall not confer any rights upon any
purported transferee, assignee, mortgagee, or occupant, and shall, at Landlord's
option, terminate this Lease without relieving Tenant of any of its obligations
hereunder for the balance of the stated term. Nothing contained elsewhere in
this Lease shall authorize Tenant to enter into any franchise, concession,
license, permit, subtenancy, departmental operation arrangements or the like,
except pursuant to the provisions of this Article XI. Notwithstanding the
provisions of this Article XI to the contrary, Landlord's consent shall not be
unreasonably withheld or delayed to an assignment of this Lease or a sublease of
all or any portion of the Leased Premises (by merger, consolidation or
otherwise) to another entity (the "Transferee") to which Tenant shall
simultaneously be transferring all or substantially all of its stock or all or
substantially all of its assets, provided that: (i) the number of stores being
transferred must consist of at least three (3) stores, (ii) Tenant shall not at
the time of such transfer be in default under any of the terms, covenants and
conditions of this Lease beyond any applicable grace period, (iii) such
Transferee shall agree in writing to perform all of the unperformed terms,
covenants and conditions of this Lease, and (iv) Tenant shall at all times
remain primarily obligated for the performance of the terms, covenants and
conditions of this Lease. Tenant shall also have the right, without Landlord's
consent, to assign this Lease or sublet the Leased Premises to its parent
corporation or any of its wholly-owned subsidiaries, or any affiliate or
subsidiary of Tenant's parent corporation. In addition, Tenant may, without
violating the provisions of this Article XI, sell or offer for sale its voting
stock to the public in accordance with the qualifications or registration
requirements of the state where Tenant is incorporated and the Security Act of
1933, as amended.
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(b) If Tenant is a corporation, the sale, issuance or transfer of any
voting capital stock of Tenant or of any corporate entity which directly or
indirectly controls Tenant (unless Tenant is a corporation whose stock is traded
on the New York Stock Exchange or the American Stock Exchange) which shall
result in a change in the voting control of Tenant or the corporate entity which
controls Tenant shall be deemed to be a prohibited assignment of this Lease
within the meaning of this Article XI. If Tenant is a partnership or
unincorporated association, then the sale, issuance or transfer of a majority
interest therein, or the transfer of a majority interest in or a change in the
voting control of any partnership or unincorporated association or corporation
which directly or indirectly controls Tenant, or the transfer of any portion or
all of any general partnership or managing partnership interest, shall be deemed
to be a prohibited assignment of this Lease within the meaning of this Article
XI. The consent by Landlord to any assignment, transfer, or subletting to any
party shall not be construed as a waiver or release of Tenant under the terms of
any covenant or obligation under this Lease or as a waiver or release of the
non-assignability covenants in their future application, nor shall the
collection or acceptance of rent from any such assignee, transferee, subtenant
or occupant constitute a waiver or release of Tenant of any covenant or
obligation contained in this Lease.
(1) Notwithstanding anything herein contained to the contrary,
a sale or transfer of any voting capital stock of Tenant when caused by death
(e.g. testamentary transfer) or for estate planning purposes (e.g. inter vivos
trust) will not be deemed a prohibited assignment of the Lease.
(2) The provisions of this Section 11.1(b) shall not be deemed
to prohibit the transfer of limited partnership interests among existing limited
or general partners; however, if either general partner ceases to remain a
general partner of Tenant, such occurrence shall be deemed a prohibited
assignment of this Lease under the meaning of Article XI.
(c) Without conferring any rights upon Tenant not otherwise provided in
this Article XI, should Tenant desire to enter into an assignment, sublease or
transfer of this Lease or Tenant's rights hereunder, Tenant shall request in
writing Landlord's consent to the assignment at least thirty (30) days before
the proposed effective date of the assignment, providing the following: (1) the
full particulars of the proposed assignment, sublease or transfer of this Lease
or Tenant's rights hereunder, including its nature, effective date, terms and
conditions, and copies of any offers, draft agreements, subleases, letters of
commitment or intent and other documents pertaining to the proposed assignment;
(2) a description of the identity, net worth and previous business experience of
the proposed transferee, including, without limitation, copies of the proposed
transferee's latest income, balance sheet and changes in financial position
statements (with accompanying notes and disclosures of all material changes
thereto) in audited form, if available, and certified as accurate by the
proposed transferee; and (3) any further information relevant to the proposed
assignment which Landlord shall request after receipt of Tenant's request for
consent. Tenant shall, concurrently with any request for Landlord's consent, pay
to Landlord a fee in the sum of One Thousand and 00/100ths Dollars ($1,000.00)
for Landlord's review and processing of such request and Landlord shall not be
obligated to review such request prior to Landlord's receipt of such fee. All
requests for consent to assignment, sublease or transfer shall be forwarded to
Landlord at the address provided above and to the on-site mall management
office, if applicable.
(d) Except for a permitted assignment or subletting as specified in
Section 11.1(a) and (b), and without conferring any rights upon Tenant not
otherwise provided in this Article XI, in the event of an assignment or transfer
of Tenant's interest in this Lease, or a sublease of all or a portion of the
Leased Premises, to a third party, any monthly rent or other payment accruing to
Tenant as a result of any such assignment, transfer, or sublease, including any
lump sum or periodic payment in any manner relating to such assignment, transfer
or sublease, which is in excess of the rent then payable by Tenant under the
Lease shall be paid one-half of such excess by Tenant to Landlord monthly as
additional rent. Landlord may require a certificate from Tenant specifying the
full amount of any such payment of whatsoever nature. Notwithstanding any
assignment, subletting or transfer of this Lease or Tenant's rights hereunder,
Tenant shall remain fully liable on this Lease and for the performance of all
terms, covenants and provisions of this Lease.
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(e) All reasonable costs and expenses, including attorneys' fees (which
shall include the cost of any time expended by Landlord's attorneys, including
in-house counsel) incurred by Landlord in connection with any proposed or
purported assignment, transfer or sublease shall be borne by Tenant and shall be
payable to Landlord as additional rent. It is understood and agreed that the
restrictions set forth in this Article are of primary importance in enabling
Landlord to control the mix of tenants in the Shopping Center.
Section 11.2. Assignment or Sublet. If this Lease is transferred or
assigned, in whole or in part, as aforesaid, or if the Leased Premises or any
part thereof be sublet or occupied by any person or entity other than Tenant,
whether as a result of any act or omission by Tenant, or operation of law, or
otherwise, then Landlord, whether before or after default by Tenant, may, in
addition to, and not in diminution of or substitution for, any other rights and
remedies under this Lease or pursuant to law to which Landlord may be entitled
as a result thereof, collect rent from the transferee, assignee, subtenant or
occupant and apply the net amount collected to the Rent herein reserved, but no
such transfer, assignment, subletting, occupancy or collection shall be deemed a
waiver of the covenants contained herein or the acceptance of the transferee,
assignee, subtenant, or occupant as Tenant, or a release of Tenant from the
further performance by Tenant of covenants on the part of Tenant set forth in
this Lease.
Section 11.3. Transfer of Landlord's Interest. In the event of any
transfer of Landlord's interest in the Leased Premises, including a sale or
lease, the transferor shall be automatically relieved of any and all obligations
on the part of Landlord accruing from and after the date of such transfer,
provided that (a) the interest of the transferor, as Landlord, in any funds then
in the hands of Landlord in which Tenant has an interest shall be turned over,
subject to such interest, to the then transferee; and (b) notice of such sale,
transfer or lease shall be delivered to Tenant as required by law.
ARTICLE XII
SUBORDINATION, ATTORNMENT, FINANCING AND ESTOPPEL CERTIFICATE
Section 12.1. Subordination. Tenant agrees that this Lease shall, at
the request of Landlord, be subordinate to any mortgages or deeds of trust that
are now, or may hereafter be, placed upon the Leased Premises and to any and all
advances to be made thereunder, and to the interest thereon, and all renewals,
replacements and extensions thereof, provided that the mortgagees or
beneficiaries named in said mortgages or trust deeds shall agree to recognize
the interest of Tenant under this Lease in the event of foreclosure, if Tenant
is not then in default. Tenant also agrees that any mortgagee or beneficiary may
elect to have this Lease constitute a prior lien to its mortgage or deed of
trust, and in the event of such election and upon notification by such mortgagee
or beneficiary to Tenant to that effect, this Lease shall be deemed prior in
lien to its mortgage or deed of trust, whether this Lease is dated prior or
subsequent to the date of said mortgage or deed of trust. Tenant agrees that,
upon the request of Landlord, or any mortgagee or beneficiary, Tenant shall
execute whatever reasonable instruments may be required to carry out the intent
of this Section 12.1 and Section 12.2.
Section 12.2. Attornment. In the event any proceedings are brought for
the foreclosure of, or in the event of the conveyance by deed in lieu of
foreclosure of, or in the event of exercise of the power of sale under, any
mortgage and/or deed of trust made by Landlord covering the Leased Premises, or
in the event Landlord sells, conveys or otherwise transfers its interest in the
Shopping Center or any portion thereof containing the Leased Premises, Tenant
hereby attorns to, and covenants and agrees to execute and deliver an instrument
or instruments in writing whereby Tenant attorns to such successor-in-interest
and recognizes such successor as Landlord under this Lease. In such case, the
successor to Landlord's interest under such mortgage or deed of trust shall not
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be bound by any prepayment on the part of Tenant of any rent for more than one
month in advance (except prepayments in the nature of a security deposit), so
that rent shall be payable under this Lease in accordance with its terms, from
the date of the foreclosure of such mortgage or deed of trust, as if such
prepayment had not been made. Such successor to Landlord's interest under such
mortgage or deed of trust shall not be bound by any amendment or modification of
this Lease unless, prior to the foreclosure of such mortgage or deed of trust,
such successor to Landlord's interest shall have first consented in writing to
any such amendment or modification. Payment by or performance of this Lease by
any person, firm or corporation claiming an interest in this Lease or the Leased
Premises by, through or under Tenant without Landlord's consent in writing shall
not constitute an attornment or create any interest in this Lease or the Leased
Premises.
Section 12.3. Financing. In any event any construction lender, land
lessor, or the permanent lender for the Shopping Center requires, as a condition
to financing, modifications to this Lease, then, provided such modifications do
not materially alter the approved working plans and do not increase the Rent to
be paid hereunder, Landlord shall submit to Tenant a written amendment with such
required modifications and, if Tenant fails to execute and return the same
within thirty (30) days after the amendment has been submitted, Landlord shall
be entitled to its remedies as specified in Section 12.5. Nothing herein shall
require Tenant to execute an amendment or amendments to accomplish changes which
would (i) change the Minimum Rent, additional rent or Percentage Rent payable by
Tenant; (ii) change the Permitted Use; (iii) change the size, dimensions or
location of the Leased Premises; (iv) change the length of the Term; (v) change
Landlord's construction obligations; (vi) change the conditions precedent as to
Tenant's initial opening requirements, or (vii) place a lien on Tenant's assets.
Section 12.4. Estoppel Certificate. Tenant shall, without charge therefor,
at any time and from time to time, within thirty (30) days after request
therefor by Landlord, execute, acknowledge and deliver to Landlord a written
estoppel certificate, in reasonable form, certifying to Landlord, any mortgagee,
or any purchaser of the Shopping Center or any other person designated by
Landlord, as of the date of such estoppel certificate: (i) that Tenant is in
possession of the Leased Premises and has unconditionally accepted the same;
(ii) that this Lease is unmodified and in full force and effect (or if there
have been modifications, that the same is in full force and effect as modified
and setting forth such modifications); (iii) whether or not there are then
existing any set-offs or defenses against the enforcement of any right or remedy
of Landlord, or any duty or obligation of Tenant, hereunder (and, if so,
specifying the same in detail); (iv) that rent is paid currently without any
offset or defense thereto, (v) the dates, if any, to which any rent has been
paid in advance; (vi) whether or not there is then existing any claim of
Landlord's default under this Lease and if so, specifying the same in detail;
and (vii) that Tenant has no knowledge of any event having occurred that
authorized the termination of this Lease by Tenant or if Tenant has such
knowledge, specifying the same in detail); and (viii) any other matters relating
to the status of this Lease that Landlord or its mortgagee may request to be
confirmed, provided that such facts are accurate and ascertainable. Landlord
shall, within thirty (30) days after written request from Tenant, no more often
than once in any year, and provided Tenant is not then in default hereunder,
deliver to Tenant, or such persons as Tenant may designate, a statement in
writing certifying to the extent true that: (i) Tenant is in possession of the
Leased Premises; (ii) this Lease is in full force and effect (as later modified,
if such be the case); (iii) the rentals due hereunder are current; and (iv)
that, to the best of Landlord's knowledge, information and belief, Tenant is not
in default hereunder.
Section 12.5. Remedies. Any failure by Tenant to execute any
certificate, statement or instrument in accordance with the foregoing provisions
of this Article or any financing statement in accordance with the provisions of
Section 14.2(a), within the time period provided or if no time period is
specified, then within thirty (30) days after written request, shall constitute
an irrevocable power of attorney appointing and designating Landlord or its
successors or assigns as attorney-in-fact for Tenant, to execute and deliver
such certificate, statement, instrument or financing statement.
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ARTICLE XIII
ADVERTISING AND PROMOTION
Section 13.1. Promotion Fund. Landlord shall establish an advertising
and promotion fund (the "Fund"). The object of the Fund shall be to advertise
the Retail Development and to provide a program of events, all of which shall,
in Landlord's judgment, serve to enhance and promote the Retail Development and
its occupants. Such program of events may include the promotion of coach traffic
to the Retail Development and the development of a mall video network within the
Retail Development offering a program of information, entertainment and
advertisements. The Fund shall be administered by Landlord and the costs and
expenses of such administration shall be charged to the Fund. Landlord shall
expend all amounts paid to the Fund by the tenants in the Retail Development for
the purposes herein set forth.
Section 13.2. Promotion Fund Contribution. Tenant's annual contribution
to the Fund shall be the Fund Contribution (reduced proportionately for a
partial Lease Year) as defined on the Data Sheet. Within ten (10) days before
the Grand Opening, Tenant shall also pay Tenant's one-time initial contribution
or Grand Opening Fee which is equal to the annual Fund Contribution. The Fund
Contribution payable by Tenant for each Lease Year shall be increased commencing
with the second Lease Year of the Term, and each Lease Year thereafter, by a
percentage equal to the percentage increase from the "base period" of the
Consumer Price Index (as defined in Section 20.12 hereof) to the "current
period" of the Index of the Lease Year for which the adjustment is being made.
Except as herein expressly provided, the term "base period" shall initially
refer to the Index published for the month of October immediately preceding the
Lease Year for which the Fund Contribution was last adjusted hereunder. The
"current period" of the Index shall refer to the Index published for the month
of October immediately preceding the Lease Year for which an adjustment is being
made. In the event the Index shall not be published for any of the
above-described months, then the Index published for the month closest, but
prior, to the described month shall be used in its place. The annual Fund
Contribution shall be payable by Tenant to Landlord, or as Landlord may direct,
in twelve (12) equal monthly installments, commencing on the Commencement Date,
at the same time and in the same manner as the monthly installments of Minimum
Rent are payable.
Section 13.3. Advertisements. Not more than four (4) times each Lease
Year, Landlord may require Tenant, at Tenant's cost, to either (i) place a
one-quarter (1/4) page tabloid advertisement, or (ii) contribute funds to cover
the cost and expense of an advertisement prepared by Landlord in an advertising
mailer, newspaper insert or other media ad coordinated by Landlord. In the event
that Tenant fails to submit its proposed advertisement within thirty (30) days
after Landlord's request, then Landlord shall have the right to include Tenant
in the advertising promotion and to charge Tenant for the advertisement. Such
charge shall be payable by Tenant within ten (10) days after written notice by
Landlord.
Section 13.4. Network. Landlord may cause to be developed a mall video
network within the Retail Development (the "Network"). The object of the Network
shall be to provide a program of information, entertainment and advertisements,
which shall, in Landlord's judgment, serve to enhance or promote the Retail
Development and its occupants. The Network shall have the right to sell
available time and access on the Network for advertisements or other uses. The
Network shall be under the sole and exclusive direction of Landlord and shall be
administered by Landlord. The costs and expenses paid or incurred by Landlord
for administering, operating, equipping, staffing, protecting, insuring,
repairing, replacing and maintaining the Network shall be charged to the Fund.
During the initial year of the Term and provided Tenant is not in default of
payment of its Fund contribution, Landlord agrees to produce, or cause to be
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produced a video taped advertising message of the business conducted, or to
be conducted, in the Leased Premises (herein "Tenant Video") in accordance with
the terms of this Section. The Tenant Video shall (i) identify Tenant's type of
business in the Leased Premises, Tenant's trade name and the address/location of
the Leased Premises within the Retail Development; (ii) be approximately fifteen
(15) seconds in duration; (iii) be produced on one occasion only following the
initial opening of the Leased Premises for business; (iv) be produced in the
Leased Premises, Landlord's studio or both; (v) utilize one from a select group
of advertising message formats as mutually selected by Landlord and Tenant; and
(vi) not contain any lewd, obscene or offensive content or material. The Tenant
Video will be shown on the Network a reasonable number of times, not to exceed
one hundred (100), during a two (2) week period in the first year of the Term.
Landlord shall use reasonable efforts to air Tenant Videos at varying times and
days during such two (2) week period. Any further production by Landlord of
advertising messages for Tenant and any further air time on or access to the
Network is subject to availability, as determined solely by Landlord, and shall
be at the then applicable rates and fees set by Landlord. Landlord shall have
the right to reject, remove or discontinue showing any Tenant Video or
advertising message on the Network the content of which is, in the opinion of
Landlord, unethical, misleading, in bad taste, or shall tend to injure the
reputation of the Retail Development or its occupants, or shall be deemed to be
detrimental to the Retail Development, or is in violation of any applicable
rule, law or existing agreement with occupant(s) of the Retail Development.
Tenant acknowledges that Tenant shall be solely responsible for the content of
its Tenant Video and, except with respect to the gross negligence of Landlord
and the Network, Tenant agrees to save harmless Landlord, its officers,
directors, partners, employees and agents from and against any and all claims,
actions, damages, liability, cost or expense, including attorneys' fees that
arise from or with respect to the content of such advertising message, including
without limitation any claims for infringement of the intellectual property
rights of others or actions for unfair competition. Landlord reserves the right
at any time to dissolve the Network and cease providing its promotional services
as well as Tenant Videos and in lieu thereof, to provide, or cause to be
provided, a program of advertising and promotional events which, in Landlord's
sole judgment, will serve to promote the Retail Development and its occupants.
ARTICLE XIV
DEFAULT AND REMEDIES
Section 14.1. Elements of Default. If any one of more of the following
events occur, said events shall hereby be classified as a "default": (a) (i) the
failure of Tenant to take possession of the Leased Premises at the Delivery of
Possession Date, (ii) the failure of Tenant to open its doors for business on
the date specified in Section 1.2 hereof, (iii) if Tenant vacates or abandons
the Leased Premises and permits the same to remain unoccupied and unattended,
(iv) if Tenant fails to maintain normal inventory levels and employee staff for
the conduct of its normal business activities in the Leased Premises, (v) if
Tenant fails to continuously operate its business in compliance with Section 4.2
hereof, (vi) if Tenant fails to operate for the purposes specified in Section
4.1 hereof, (vii) in the event of the sale or removal of a substantial portion
of Tenant's property located in the Leased Premises in a manner which is outside
the ordinary course of Tenant's business; (b) the failure of Tenant to pay any
Rent or other charges required to be paid by Tenant when same shall become due
and payable hereunder and such failure continues for ten (10) days after written
notice; (c) the failure of Tenant to perform or observe any term or condition of
this Lease (including the obligation specified in Section 14.3) and such failure
shall continue for thirty (30) days after written notice; (d) if Tenant shall be
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given three (3) notices of default under subparagraphs (b) or (c) within any
period of eighteen (18) months, notwithstanding any subsequent cure of the
failure to perform or observe the terms or conditions of the Lease as identified
in such notices; (e) if any writ of execution, levy, attachment or other legal
process of law shall occur upon Tenant's assets, merchandise, fixtures, or
Tenant's estate or interest in the Leased Premises; (f) if Tenant shall be
liquidated or dissolved or shall begin proceedings toward such liquidation or
dissolution, or shall in any manner permit the divestiture of all, or any
substantial part of Tenant's assets; (g) Landlord and Tenant acknowledge that
Tenant or the parent, subsidiary or affiliate of Tenant (by virtue of common
ownership or control, direct or indirect) has presently, or may in the future,
enter into lease agreements with Landlord (or with any person or entity which is
affiliated with Landlord, or which directly or indirectly controls or is
controlled by, or is under common control with Landlord, or which is managed by
the managing agent utilized by Landlord for the Shopping Center) (such leases to
be referred to as "other leases"), and, in the event of default which shall not
be remedied within the applicable grace period, if any, by Tenant under this
Lease or by the tenant in any of the "other leases", then Landlord may, upon
notice in writing to Tenant, declare such default to be a default of this Lease
and, at Landlord's option, a default of any of the "other leases", as the case
may be. Nothing contained herein shall be deemed a limitation of the rights of
Landlord as set forth in this Lease or any of the "other leases".
Section 14.2. Landlord's Remedies. In the event of any such default or
breach by Tenant, Landlord may, at any time thereafter, with or without further
notice or demand and without limiting Landlord in the exercise of any right or
remedy which Landlord may have by reason of such default or breach:
(a) Sell at public or private sale all or any part of the goods,
chattels, fixtures and other personal property belonging to Tenant which are or
may be put into the Leased Premises during the Term, whether exempt or not from
sale under execution or attachment (it being agreed that said property shall be
at all times bound with a lien in favor of Landlord and shall be chargeable for
all Rent and for the fulfillment of the other covenants and agreements herein
contained) and apply the proceeds of such a sale, first, to the payment of all
costs and expenses of conducting the sale or caring for or storing said
property; second, toward the payment of any indebtedness, including (without
limitation) indebtedness for Rent which may be or may become due from Tenant to
Landlord; and third, to pay to Tenant, on demand in writing, any surplus
remaining after all indebtedness of Tenant to Landlord has been fully paid. In
addition to any statutory lien for Rent held by Landlord, Landlord shall have,
and Tenant hereby grants to Landlord, a continuing security interest for all
Rent and other sums of money becoming due hereunder from Tenant, upon all of the
property now or hereafter owned by Tenant and now or hereafter located on the
Leased Premises. In connection herewith, Landlord shall have, in addition to any
other remedies, any and all of the remedies afforded to secured parties under
the provisions of the Uniform Commercial Code, as codified in the State
(including, by way of example, rather than of limitation), the right to sell
such property at public or private sale upon ten (10) days' notice to Tenant
without resort to judicial process. Tenant shall, on its receipt of a written
request therefor from Landlord, execute such financing statements and other
instruments as are necessary or desirable, in Landlord's judgment, to perfect
such security interest.
(b) Perform, on behalf and at the expense of Tenant, any obligation of
Tenant under this Lease which Tenant has failed to perform and of which Landlord
shall have given at least three (3) days' notice (except in the case of
emergency, in which event no such notice shall be required), the cost of which
performance by Landlord, together with interest therein at the Default Interest
Rate from the date of such expenditure, shall be deemed additional rent and
shall be payable by Tenant to Landlord upon demand.
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(c) Re-enter and repossess the Leased Premises, by summary proceedings
or otherwise, and remove Tenant and all other persons and property from the
Leased Premises, and store such property in a public warehouse or elsewhere at
the cost of for the account of Tenant without resort to legal process and
without Landlord being deemed guilty of trespass or conversion or becoming
liable for any loss or damage occasioned thereby. In connection herewith,
Landlord shall have, in addition to any other remedies, any and all self-help
remedies, including, but not limited to, a forcible entry into the Leased
Premises or a "lock-out" accomplished by changing the locks on the Leased
Premises.
(d) Declare the entire balance of the Rent, and all other amounts to be
paid by Tenant hereunder for the remainder of the Term to be due and payable
immediately, and collect such balance in any manner not inconsistent with
applicable law. The amount of additional rent and Percentage Rent payable with
respect to each Lease Year remaining in the Term after such default (including
the Lease Year during which such default occurred) shall be conclusively
presumed to be equal to the average additional rent and Percentage Rent payable
with respect to each completed Lease Year preceding such default; provided,
however, that if such default occurs before the expiration of two (2) Lease
Years, then the amount of additional rent and Percentage Rent payable with
respect to each Lease Year remaining in the Term after such default (including
the Lease Year or partial Lease Year during which such default occurred) shall
be conclusively presumed to be equal to twelve (12) times the average monthly
additional rent and Percentage Rent payable prior to such default.
(e) Terminate this Lease by giving notice of such termination to
Tenant, which termination shall be effective as of the date of such notice or
any later date thereof specified by Landlord in such notice (provided, that,
without limiting the generality of the foregoing provisions, Landlord shall not
be deemed to have accepted any abandonment or surrender by Tenant of any or all
of the Leased Premises or Tenant's leasehold estate under this Lease unless
Landlord has so advised Tenant expressly and in writing, regardless of whether
Landlord has re-entered or relet any or all of the Leased Premises or exercised
any or all of Landlord's other rights under this Lease or applicable law).
(f) In Landlord's own name, or otherwise, relet any and all of the Leased
Premises with or without any additional premises, for any or all of the
remainder of the Term (or, if this Lease has then been terminated, for any or
all of the period which would, but for such termination, have constituted the
remainder of the Term) or for a period exceeding such remainder, on such terms
and subject to such conditions as are acceptable to Landlord (including, by way
of example rather than of limitation, the alteration of any or all of the Leased
Premises in any manner which, in Landlord's judgment, is necessary or desirable
in connection with such reletting, and the allowance of one or more concessions
or "free-rent" or reduced-rent periods), and collect and receive the rents
thereof. Tenant shall pay to Landlord, at the times and in the manner specified
by the provision of this Lease (unless Landlord has elected to accelerate Rent
as provided above in subparagraph (d), in which event Tenant shall be obligated
to pay such accelerated amount as provided in such subparagraph), (i) the
installments of the Minimum Rent, additional rent and Percentage Rent accruing
during such remainder of the Term (or, if this Lease has then been terminated,
damages equalling the respective amounts of such installments (determined as
provided in subparagraph 14.2(d) which would have accrued during such remainder,
had this Lease not been terminated), plus (ii) the cost to Landlord of any such
reletting (including, by way of example rather of limitation, any attorneys'
fees, leasing or brokerage commissions, repair or improvement expenses and the
expense of any other actions taken in connection with such reletting) less any
monies received by Landlord with respect to such remainder from such reletting
of any and all of the Leased Premises.
(g) Recover from Tenant, an amount equal to (i) all items of accrued
and unpaid Rent, (ii) all reasonable expenses (including, by way of example
rather than of limitation, all repossession costs, management expenses,
operating expenses, legal expenses and attorneys' fees) incurred by Landlord in
curing or seeking to cure any default or in exercising or seeking to exercise
any of Lessor's rights any remedies under the provisions of this Lease or at law
or in equity on account of any default, plus (iii) interest on all such
expenses, at the rate provided in Section 20.13, all of which expenses and
interest shall be payable by Tenant immediately on demand therefor by Landlord.
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(h) Without terminating this Lease, maintain Tenant's rights to
possession, in which case this Lease shall continue to be in effect whether or
not Tenant shall have vacated the Leased Premises. In such event, Landlord shall
be entitled to enforce all of Landlord's rights and remedies under this Lease,
including the right to recover Rent as it becomes due hereunder.
(i) Any damage or loss of Rent sustained by Landlord may be recovered
by Landlord, at Landlord's option, at the time of the reletting or termination,
in a single action or in separate actions, from time to time, as said loss of
Rent or damages shall accrue, or in a single proceeding deferred by Landlord or
with jurisdiction reserved by the court, until expiration of the Term of this
Lease (in which event Tenant hereby agrees that, at Landlord's option, the cause
of action shall not be deemed to have accrued until the date of expiration of
said Term).
(j) Nothing contained herein shall prevent the enforcement of any claim
Landlord may have against Tenant for anticipatory breach of this Lease. In the
event of any anticipatory breach by Tenant of any of the covenants or provisions
hereof or in the event of Tenant's default, Landlord shall have the right of
injunction and the right to invoke any remedy allowed at law or in equity as if
re-entry, summary proceedings and other remedies were not provided for herein.
Mention in this Lease of any particular remedy shall not preclude Landlord from
any other remedy under this Lease or, at law or in equity. Tenant hereby
expressly waives for itself and all persons claiming by or through Tenant, any
and all rights to redeem, reinstate or restore, or obtain relief from forfeiture
of this Lease granted by or under any present or future law in the event of
Tenant being evicted or dispossessed for any cause, or in the event of Landlord
obtaining possession of the Leased Premises by reason of the violation by Tenant
of any of the covenants and conditions of this Lease.
(k) In case suit shall be brought for recovery of the Leased Premises,
for the recovery of Rent or any other amount due under the provisions of this
Lease, or because of the breach of any other covenant herein contained on the
part of Tenant to be kept and performed, and a breach shall be established,
Tenant shall pay to Landlord all costs and expenses incurred therefor, including
Landlord's attorney's reasonable fees and expenses.
(l) Nothing herein contained shall limit or prejudice Landlord's right
to prove and obtain as damages, by reason of any default by Tenant, an amount
equal to the maximum allowed by statute or rule of law in effect at the time
when, and governing the proceedings in which, such damages are to be proved. No
expiration or termination of this Lease, abandonment, re-entry by Landlord or
vacancy, shall relieve Tenant of any of its liabilities and obligations under
this Lease (whether or not any or all of the Leased Premises are relet), and
Tenant shall remain liable to Landlord for all damages resulting from any
default by Tenant, including any damage resulting from the breach by Tenant of
any of its obligations to pay Minimum Rent, Percentage Rent, additional rent and
any other sums which Tenant is obligated to pay hereunder.
<PAGE>
(m) The rights and remedies of Landlord under this Lease shall be
deemed to be cumulative, and no one of such rights or remedies shall be
exclusive at law or in equity of the other rights and remedies of Landlord on
account of a default by Tenant, and the exercise of any one such right or remedy
by Landlord shall not impair Landlord's standing, right or power to exercise any
other right or remedy.
Section 14.3. Bankruptcy. (a) Neither Tenant's interest in this Lease,
nor any estate hereby created in Tenant nor any interest herein or therein,
shall pass to any trustee or receiver of assignee for the benefit of creditors
or otherwise by operation of law, except as may specifically be provided
pursuant to the Bankruptcy Code (11 USC ss. 101 et seq.), as the same may be
amended from time to time.
(b) Rights and Obligations Under Bankruptcy Code. (1) It is understood
and agreed that this Lease is a lease of real property in a Shopping Center as
such lease is described in Section 365 of the Bankruptcy Code, as the same may
be amended from time to time. (2) Upon the filing of a petition by or against
Tenant under the Bankruptcy Code, Tenant, as debtor and as debtor-in-possession,
and any trustee who may be appointed with respect to the assets of or estate in
bankruptcy of Tenant, agree to pay monthly in advance on the first day of each
month, as reasonable compensation for the use and occupancy of the Leased
Premises, an amount equal to all Minimum Rent, additional rent and other charges
otherwise due pursuant to this Lease, and to pay Percentage Rent monthly, at the
Percentage Factor set forth in this Lease for the Lease Year in which such month
falls, on all of the Gross Sales during such month in excess of one-twelfth
(1/12th) of the Sales Break Point for such Lease Year; payment of all such
Percentage Rent to be made by the tenth (10th) day of the succeeding month. (3)
Included within and in addition to any other conditions or obligations imposed
upon Tenant or its successor in the event of the assumption and/or assignment of
this Lease are the following: (i) the cure of any monetary defaults and
reimbursement of pecuniary loss within not more than thirty (30) days of
assumption and/or assignment; (ii) the deposit of an additional sum equal to not
less than three (3) months' Minimum Rent and additional rent to be held pursuant
to the terms of Section 2.4 of this lease, which sum shall be determined by
Landlord, in its sole discretion, to be a necessary deposit to secure the future
performance under the Lease of Tenant or its assignee; (iii) the use of the
Leased Premises as set forth in Section 4.1 of this Lease and the quality,
quantity and/or lines of merchandise, goods or services required to be offered
for sale are unchanged; and (iv) the prior written consent of any mortgagee to
which this Lease has been assigned as collateral security.
Section 14.4. Additional Remedies and Waivers. The rights and remedies
of Landlord set forth herein shall be in addition to any other right and remedy
now or hereafter provided by law, including but not limited to the statutes,
rules, regulations and judicial decisions of the State, and all such rights and
remedies shall be cumulative. No action or inaction by Landlord shall constitute
a waiver of a default or termination and no waiver of default or termination
shall be effective unless it is in writing, signed by Landlord.
Section 14.5. Landlord's Cure of Default. If Tenant shall be in default
hereunder, Landlord shall have the option, but not the obligation, upon three
(3) days written notice to Tenant (except in the event of any emergency, in
which event no notice shall be required), to cure the act or failure
constituting said default for the account of and at the expense of Tenant.
Landlord's cure or attempt to cure any act or failure constituting the default
by Tenant shall not result in a waiver or release of Tenant. Tenant agrees to
pay Landlord interest, in accordance with Section 20.13 hereof, on all sums
expended by Landlord pursuant to this Section 14.5 from the date of such
expenditure, and Tenant agrees to pay the costs incurred by Landlord pursuant to
this Section 14.5, plus a charge of fifteen percent (15%) of such costs, to
Landlord upon demand, as additional rent.
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ARTICLE XV
RIGHT OF ACCESS
Landlord may, at any reasonable time or times, upon prior notice to Tenant
(except in the event of an emergency, or if Tenant is in default under this
Lease, in which event no notice shall be required), before and after the
Commencement Date, enter upon the Leased Premises, any portion thereof and any
appurtenance thereto (with men and materials, if required) for the purpose of:
(a) inspecting the same; (b) making such repairs, replacements or alterations
which Landlord may be required to perform as herein provided or which it may
deem desirable for the Leased Premises; and (c) showing the Leased Premises to
prospective purchasers, lenders or lessees. Landlord hereby expressly reserves
the right, exercisable at any time and from time to time, to erect, use,
maintain and repair pipes, conduits, plumbing, vents, ducts and wires in, to,
under and through the Leased Premises as and to the extent that Landlord may now
or hereafter deem to be necessary or appropriate for the proper operation and
maintenance of the Shopping Center. Any redecorating or repair necessitated by
reason of location of same within the Leased Premises shall be the
responsibility of Landlord. Landlord agrees to hold Tenant harmless from any
damage or injury to person or property to the extent resulting from Landlord
exercising its rights under this Article XV. In the exercise of its rights under
this Article XV, Landlord shall use reasonable efforts to avoid material
interference with the operation of Tenant's business within the Leased Premises.
Landlord agrees that, except in the event of an emergency, and provided Tenant
shall make an employee of Tenant available to accompany Landlord following
Landlord's notice to Tenant of the necessity therefor, Landlord shall not enter
the Leased Premises during the Term without an employee of Tenant accompanying
Landlord's representative.
ARTICLE XVI
DELAYS
If Landlord or Tenant is delayed or prevented from performing any of
their respective obligations during the term of this Lease because of strikes,
lockouts, labor troubles, inability to procure materials, failure of power,
governmental restrictions or reasons of a like nature not the fault of the party
delayed in performing such obligation, then the period of such delays shall be
deemed added to the time herein provided for the performance of any such
obligation and the defaulting party shall not be liable for losses or damages
caused by such delays; provided, however, that, subsequent to the Commencement
Date, this Article shall not apply to the payment of any sums of money required
to be paid by Tenant hereunder or any obligation of Landlord or Tenant that can
be satisfied by the payment of money, and shall not excuse Tenant from its
obligation to continuously operate its business within the Leased Premises in
accordance with the provisions of Section 4.1 and 4.2 hereof.
ARTICLE XVII
END OF TERM
Section 17.1. Return of Leased Premises. Upon the expiration or sooner
termination of the term of this Lease, Tenant shall quit and surrender to
Landlord the Leased Premises, broom-clean, in good order and condition, ordinary
wear and tear excepted, and shall surrender to Landlord all keys to or for the
Leased Premises and inform Landlord of all combinations of locks, safes and
vaults, if any, in the Leased Premises. Subject to the provisions of Section 3.5
hereof, Tenant, at its expense, shall promptly remove all personal property of
Tenant, repair all damage to the Leased Premises caused by such removal and
restore the Leased Premises to the condition which existed prior to the
installation of the property so removed. Any personal property of Tenant not
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removed within ten (10) days following the expiration or earlier termination of
the Lease shall be deemed to have been abandoned by Tenant and to have become
the property of Landlord, and may be retained or disposed of by Landlord, as
Landlord shall desire. Tenant's obligation to observe or perform the covenants
set forth in this Section shall survive the expiration or termination of this
Lease.
Section 17.2. Holding Over. If Tenant shall hold possession of the
Leased Premises after the expiration or termination of this Lease, at Landlord's
option (a) Tenant shall be deemed to be occupying the Leased Premises as a
tenant from month-to-month, at one hundred fifty percent (150%) of the Minimum
Rent and other charges in effect during the last Lease Year immediately
preceding such holdover and otherwise subject to all of the terms and conditions
of this Lease, or (b) Landlord may exercise any other remedies it has under this
Lease or at law or in equity including an action for wrongfully holding over.
Notwithstanding the foregoing, if Tenant is negotiating in good faith with
Landlord to renew or extend the Term for the Leased Premises (or a relocation
within the Shopping Center), then Tenant may occupy the Leased Premises on a
month-to-month tenancy at 1/12th of the annual Minimum Rent for the last year of
the Term.
ARTICLE XVIII
COVENANT OF QUIET ENJOYMENT
Landlord covenants that if, and so long as, Tenant pays the Rent and
all other charges provided for herein, and performs all of its obligations
provided for herein, Tenant shall, at all times during the Term peaceably have,
hold and enjoy the Leased Premises, without any interruption or disturbance from
Landlord, or anyone lawfully or equitably claiming through or under Landlord,
subject to the terms hereof and any mortgage or deed of trust to which this
Lease shall be subordinate.
ARTICLE XIX
UTILITIES
Section 19.1. Utilities. Tenant agrees to connect to and use the utilities
(including electricity, water, gas, heat, condenser water, telephone and any
other utility) supplied to the Leased Premises in accordance with the criteria
set forth in the Exhibits attached to this Lease, Landlord's schedule of
mechanical and electrical design criteria, Landlord's rules and regulations, and
the rules and regulations of the utility companies supplying the service. Tenant
shall be solely responsible for and promptly pay all costs and charges,
including installation thereof where applicable, for all water, gas, heat,
electricity, sewer and other utilities provided or used in or at the Leased
Premises, commencing with the Delivery of Possession Date and continuing
throughout the Term. If Landlord shall elect to supply any of the utilities used
upon or furnished to the Leased Premises, Tenant agrees to pay Tenant's share of
Landlord's hard and soft costs associated with the installation, operation,
maintenance and repair of such utility systems, based on Tenant's estimated
usage and its pro rata share of such hard and soft costs as reflected on a
monthly invoice to be provided by Landlord; provided, however, in no event shall
Tenant's total charges for utilities provided by Landlord exceed what Tenant
would be charged by the local utility company if it were billed directly by such
utility as a direct retail customer. Landlord shall not be liable to Tenant for
any loss, damage or expense which Tenant may sustain if the utilities, or the
quality or character of utilities used upon or furnished to the Leased Premises
are no longer available or suitable for Tenant's requirements, or if the supply
of any such utility ceases or is interrupted as a result of any cause and no
such change, interruption or cessation of service shall constitute an eviction
of Tenant. Any furnishing by Landlord of light, condenser water, heat, air
conditioning or power shall be conditioned upon the availability of adequate
energy sources. Landlord shall have the right to reduce heat, condenser water,
lighting and air conditioning within the Shopping Center, including, without
limitation, the Leased Premises and the common areas, as required by any
mandatory or voluntary fuel or energy saving allocation, or any similar statute,
regulation, order or program.
<PAGE>
Section 19.2. Electricity, Telephone and Gas. All telephone, electric
and gas (with gas being available only to food service tenants) utility required
by Tenant for the Leased Premises shall (if available) be obtained by Tenant in
accordance with Exhibit "D" and shall be installed by the appropriate company or
utility. All charges for such utility service (including the installation
thereof) shall be paid by Tenant directly to the company or utility providing
any such service, as and when they become due and payable.
Section 19.3. Trash and Garbage Removal. Tenant shall be solely
responsible for trash and garbage removal from the Leased Premises including the
placing of all trash and garbage in containers provided by Landlord for such
purpose. In the event Landlord elects to furnish such service to the tenants in
the Shopping Center, Tenant agrees to use only the service provided by Landlord
and to pay for such service (including both the cost of leasing containers and
the cost of removal) monthly, as additional rent, in accordance with the uniform
schedule of charges to be established by Landlord. In no event shall Tenant be
obligated to pay Landlord more for such trash and garbage removal service than
the prevailing competitive rates of reputable independent trash removal
contractors for service similar to that provided by Landlord.
Section 19.4. Water and Sewer. The cost of water and sanitary sewer for
usage in the Shopping Center shall be included in Common Area Maintenance
Expenses, except for food service tenants which shall be billed directly by
Landlord or by the supplier of water and sanitary service and any other tenants
which are billed directly by Landlord or such supplier. Landlord reserves the
right to install a water meter in the Leased Premises at any time or from time
to time to measure Tenant's consumption of water therein and bill Tenant
directly for the cost of such consumption. Tenant shall pay, as additional rent,
the amount of each bill within fifteen (15) days after such bill is rendered.
Section 19.5. Grease Interceptors. Landlord will arrange for regular
periodic service and cleaning of all grease interceptors at Tenant's expense.
Cost of service and cleaning of grease interceptors will be allocated among
grease interceptors serving food court(s) and grease interceptors serving
individual tenants in proportion to grease trap size. Tenants served by
individual grease traps will pay the pro rata share of the cost for their grease
trap. The share of grease trap service and cleaning cost apportioned to food
court grease traps will be paid by food court tenants as part of the food court
common facilities expenses.
ARTICLE XX
MISCELLANEOUS
Section 20.1. Entire Agreement. This Lease together with the Exhibits,
attached hereto and incorporated herein contains the entire agreement between
the parties hereto and there are no promises, agreements, conditions,
undertakings, or warranties, or representations, oral or written, express or
implied, between them other than as herein set forth. No change or modification
of this Lease or of any of the provisions hereof shall be valid or effective
unless the same is in writing and signed by the parties hereto. No alleged or
contended waiver of any of the provisions of this Lease shall be valid or
effective unless in writing signed by the party against whom it is sought to be
enforced.
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Section 20.2. Notices. No notice or other communication given under
this Lease shall be effective unless the same is in writing and is delivered in
person or mailed by registered or certified mail, return receipt requested,
first class, postage prepaid, or delivered by Federal Express or a comparably
reliable national air courier service (i.e., one which delivers service in at
least forty-eight (48) states) provided that any such courier service provides
written evidence of delivery. Any such notice or communication shall be
addressed:
(a) If to Landlord, 200 East Long Lake Road, P.O. Box 200, Bloomfield
Hills, Michigan 48303-0200 or to such other address as Landlord shall designate
by giving notice thereof to Tenant;
(b) If to Tenant, at the address set forth for Tenant on the Data Sheet
of this Lease, or such other address as Tenant shall designate by giving notice
thereof to Landlord.
The date of service of any notice or other communication given by mail shall be
the date on which such notice is deposited in the U.S. mails. The date of
service of any notice given by courier service (as described above) shall be one
(1) day after deposit with such courier service.
<PAGE>
Section 20.3. Successors. All rights and liability herein given to, or
imposed upon, the respective parties hereto shall extend to and bind the several
respective heirs, executors, administrators, successors, and assigns of the said
parties; and if there shall be more than one Tenant, or more than one person or
entity acting collectively as Tenant, they shall all be bound jointly and
severally by the terms, covenants and agreements herein. Any restriction on or
requirement imposed upon Tenant hereunder shall be deemed to extend to Tenant's
Guarantor, Tenant's sublessees, Tenant's assignees and Tenant's invitees, and it
shall be Tenant's obligation to cause the foregoing persons to comply with such
restrictions or requirements. No rights, however, shall inure to the benefit of
any assignee or other transferee of Tenant, and no rights or benefits shall be
conferred upon any such assignee or transferee by reason of this Section 20.3,
unless such rights or benefits shall be expressly otherwise set forth in this
Lease.
Section 20.4. Liability of Landlord. Neither Landlord, Landlord's
beneficiaries, any persons or entities comprising Landlord, or any successor in
interest to Landlord (or to such persons or entities) shall have any personal
liability for any failure by Landlord to perform any term, covenant or condition
of this Lease. If Landlord shall fail to perform any covenant, term or condition
of this Lease upon Landlord's part to be performed, and if as a consequence of
such default Tenant shall recover a money judgment against Landlord, such
judgment shall be satisfied only out of the proceeds of sale received upon
execution of such judgment and levied thereon against the right, title and
interest of Landlord in the Shopping Center and out of rents or other income
from such property receivable by Landlord, or out of the consideration received
by Landlord from the sale or other disposition of all or any part of Landlord's
right, title and interest in the Shopping Center, subject, nevertheless, to the
rights of Landlord's mortgagee, and neither Landlord nor any of the parties or
entities comprising Landlord herein shall be liable for any deficiency. The
foregoing limitation of liability shall be noted in any judgment secured against
Landlord and in the judgment index.
Section 20.5. Brokers. Tenant warrants and represents that there was no
broker or agent instrumental in consummating this Lease. Tenant agrees to
indemnify and hold Landlord harmless against any claims for brokerage or other
commissions arising by reason of a breach by Tenant of this representation and
warranty.
Section 20.6. Transfer by Landlord. Landlord hereunder shall have the
right to freely assign this Lease without notice to or consent of Tenant.
Section 20.7. No Partnership. Notwithstanding the fact that a portion
of the rent reserved hereunder may be a percentage of Tenant's Gross Sales, and
notwithstanding anything else to the contrary, Landlord shall not be deemed to
be partner of Tenant or a joint venturer with Tenant.
Section 20.8. Waiver of Counterclaims. Tenant shall not impose any
counterclaim or counterclaims in a summary proceeding or other action based on
termination or holdover, it being the intent of the parties hereto that Tenant
be strictly limited in such instance to bringing a separate action in the court
of appropriate jurisdiction. The foregoing waiver is a material inducement to
Landlord making, executing and delivering this Lease and Tenant's waiver of its
right to counterclaim in any summary proceeding or other action based on
termination or holdover is done so knowingly, intelligently and voluntarily.
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Section 20.9. Waiver of Jury Trial. Landlord and Tenant hereby waive
trial by jury in any action, proceeding or counterclaim brought by either of the
parties hereto against the other on, or in respect of, any matter whatsoever
arising out of or in any way connected with this Lease, the relationship of
Landlord and Tenant hereunder, Tenant's use or occupancy of the Leased Premises
and/or any claim of injury or damage.
Section 20.10. Severability. If any provision of this Lease or the
application thereof to any person or circumstances shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each provision of
this Lease shall be valid and be enforced to the fullest extent permitted by
law.
Section 20.11. No Waiver. No failure by Landlord to insist upon the
strict performance of any term, covenant, agreement, provision, condition or
limitation of this Lease to be kept, observed or performed by Tenant, and no
failure by Landlord to exercise any right or remedy available upon a breach of
any such term, covenant, agreement, provision, condition or limitation of this
Lease shall constitute a waiver of any such breach or of any such term,
covenant, agreement, provision, condition or limitation.
Section 20.12. Consumer Price Index. As used herein, "Consumer Price
Index" or "Index" shall mean the Consumer Price Index for All Urban Consumers
(1982-84 = 100), U.S. City Average, All Items, published by the United States
Department of Labor, Bureau of Labor Statistics (or such comparable index as may
be utilized in substitution for or as the successor to the stated Index). If
such Index is not published by the Bureau of Labor Statistics or by another
similar governmental agency at any time during the Term, then the most closely
comparable statistics on the purchasing power of the consumer dollar as
published by a responsible financial authority and selected by Landlord shall be
utilized in lieu of such Index.
Section 20.13. Interest. Any amount due from Tenant to Landlord herein
which is not paid when due shall bear interest at a rate per annum equal to the
Federal Reserve Bank discount rate as published in the Wall Street Journal on
the 25th day of the month preceding the date upon which the obligation is
incurred (or the next business day thereafter if the 25th is not a weekday) plus
five percent (5%) unless otherwise specifically provided herein, but the payment
of such interest shall not excuse or cure any default by Tenant under this
Lease. In no event shall any interest calculated hereunder be at a rate which is
higher than the maximum rate which is allowed under the usury laws of the State,
which maximum rate of interest shall be substituted for the rate in excess
thereof, if any, computed pursuant to this provision.
Section 20.14. Excavation. If an excavation shall be made upon land
adjacent to the Leased Premises, or shall be authorized to be made, Tenant shall
afford to the person causing or authorized to cause such excavation, license to
enter upon the Leased Premises for the purpose of doing such work as said person
shall deem necessary to preserve the wall or the building of which the Leased
Premises form a part from injury or damage and to support the same by proper
foundation, without any claim for damages or indemnity from Landlord, or
diminution or abatement of rent.
Section 20.15. Rules and Regulations. Tenant agrees to comply with and
observe all reasonable rules and regulations established by Landlord for the
Shopping Center from time to time. Tenant's failure to keep and observe such
rules and regulations shall constitute a default pursuant to the terms of this
Lease in the manner as if the same were contained herein as covenants, which
shall carry with it the same consequences under Article XIV hereof as Tenant's
failure to pay rent.
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Section 20.16. Financial Statements. Upon Landlord's written request
from time to time, Tenant shall, within ten (10) days after Landlord's request
therefor, furnish Landlord financial statements outlining Tenant's then current
financial condition and shall furnish financial statements outlining the current
financial condition of any Guarantor of this Lease. The provisions of this
Section 20.16 shall apply to financial statements of Tenant and/or Guarantor.
Landlord may request financial statement(s) not more than once per Lease Year
and shall use reasonable efforts to maintain all financial information provided
in a confidential manner; provided, however, that Landlord may disclose such
financial statements to Landlord's mortgagees or prospective mortgagees or
purchasers.
Section 20.17. General Rules of Construction. (a) This Lease may be
executed in several counterparts and the counterparts shall constitute one and
the same instrument. (b) Landlord may act under this Lease by its attorney or
agent. (c) Wherever a requirement is imposed on Tenant hereunder, Tenant shall
be required to perform such requirement at is sole cost and expense unless it is
specifically otherwise provided herein. (d)(i) Wherever appropriate herein, the
singular includes the plural and the plural includes the singular; (ii) whenever
the word "including" is used herein, it shall be deemed to mean "including, but
not limited to"; (iii) the words "re-enter" and "re-entry" as used herein shall
not be restricted to their technical legal meaning. (e) Anything in this Lease
to the contrary notwithstanding: (i) any provision hereof which permits or
requires a party to take any particular action shall be deemed to permit or
require, as the case may be, such party to cause such action to be taken; and
(ii) any provision hereof which requires any party not to take any particular
action shall be deemed to require such party to prevent such action to be taken
by any person or by operation of law.
Section 20.18. Recording. Neither this Lease nor any memorandum hereof
may be recorded without the express written consent of Landlord.
Section 20.19. Effective Date. For all purposes hereof, the "Effective
Date" of this Lease shall be the date upon which this Lease shall have been
executed by both parties and physically delivered by Landlord to Tenant or its
attorney. Prior to the Effective Date, neither this Lease nor anything hereunder
contained shall be legally binding on either Landlord or Tenant, and the
submission of this Lease by Landlord to Tenant prior to such Effective Date for
examination or consideration by Tenant or discussion between Landlord and Tenant
shall not constitute a reservation of or option for the Leased Premises or
create any legal obligation or liability whatsoever on Landlord.
Section 20.20. Headings. The captions, section numbers, article numbers
and index appearing in this Lease are inserted only as a matter of convenience
and in no way define, limit, construe, or describe the scope of intent of such
sections or articles of this Lease nor in any way affect this Lease.
<PAGE>
In confirmation of their agreement to enter into this Lease (including
the Data Sheet, Articles I through XXXIV, Addendum (if any), all exhibits and
the Rider (if any) attached hereto, and intending to be bound hereby, Landlord
and Tenant have caused this Lease to be signed as of the day and year first
above written.
In the Presence of:
ARIZONA MILLS L.L.C.,
a Delaware limited liability company
By:
- -------------------------------------------------------
The Mills corporation,
a Delaware corporation
By:
Name: Judith Berson
Its: Executive Vice President
LANDLORD
TOYS INTERNATIONAL,
a California corporation
By:
- -------------------------------------------------------
Name:
- -----------------------------------------
Richard Brady
Title: President
TENANT
Tenant's Federal Tax Identification Number:
- -----------
- -----------------------------------------------
Tenant's corporate seal:
- ----------------------------------
<PAGE>
ACKNOWLEDGMENT OF LANDLORD
STATE OF _____________ )
) ss.
COUNTY OF ___________ )
On this day of , 19 , before me personally appeared ------------
- ---------------------------------- ----- to me known to be the person who
executed the foregoing Lease and acknowledged before me that he was duly
authorized and did execute same on behalf of
____________________________________________.
Notary Public, ___________ County, ___________
My Commission expires:
, 19
ACKNOWLEDGMENT OF CORPORATE TENANT
STATE OF )
) ss.
COUNTY OF )
On this day of , 19 , before me personally appeared ----------
- ------------------------------------ ----- and , to me personally known, who,
being by me duly sworn, did each for himself say that he is, respectively, the
and of , the corporation named in and which executed the within instrument, and
that the seal affixed to said instrument is the corporate seal of said
corporation, and that said instrument was signed and sealed in behalf of said
corporation by authority of its board of directors; and said and acknowledged
before me said instrument to be the free act and deed of said corporation.
Notary Public,County,
My Commission expires:
<PAGE>
RIDER ATTACHED TO AND MADE A PART OF LEASE DATED __________________,
19____, ENTERED INTO BY AND BETWEEN ARIZONA MILLS L.L.C., A DELAWARE LIMITED
LIABILITY COMPANY, AS LANDLORD, AND TOYS INTERNATIONAL, A CALIFORNIA
CORPORATION, AS TENANT.
This Lease is hereby modified and supplemented as set forth herein. Any
conflict between a term, condition or provision contained in this Rider with any
term, condition or provision contained in the printed Lease Agreement shall be
resolved in favor of this Rider.
Section 1.2: At the end of the Section, insert "Provided Tenant is not in
default hereof, Tenant shall have the option to extend the Term for one (1)
additional consecutive period of five (5) Lease Years. Such option shall be
exercised, if at all, by written notice to Landlord at least one hundred eighty
(180) days prior to the expiration of the original term hereof. All terms and
conditions contained in this Lease shall apply during such option period, except
the annual Minimum Rent and Percentage Rent shall be as provided in Section 2
hereof. In the event Tenant does not exercise the foregoing option to renew this
Lease within the required time period, then such option shall, upon expiration
of the applicable period, become null and void and be of no further force or
effect.
If Tenant's Gross Sales during the twelve (12) month period ending
approximately one (1) year prior to the expiration of the original term hereof
do not equal or exceed Two Hundred Eighty-Five and 00/100ths Dollars ($285.00)
per square foot of floor area in the Premises, then, at Landlord's sole
election, any notice of exercise by Tenant of its option to extend the term
hereof may, at Landlord's election and upon notice from Landlord to Tenant, be
deemed to be null and void and of no force or effect. Tenant shall furnish to
Landlord, concurrently with its notice of exercise of the option, a statement
certified by the chief financial officer of Tenant setting forth the amount of
Tenant's Gross Sales for the aforesaid twelve (12) month period.
In the event Tenant does not achieve Gross Sales (as herein defined) of
at least Two Hundred Eighty-Five and 00/100ths Dollars ($285.00) per square foot
during the third (3rd) full Lease Year of the Term hereof, then Tenant shall,
for a period of thirty (30) days after the close of such third (3rd) full Lease
Year, have the option, upon ninety (90) days prior written notice to Landlord,
of terminating this Lease; provided, however, that Tenant shall not be entitled
to terminate this Lease if Tenant shall have been, or is, in default of this
Lease. Any such notice to terminate shall be accompanied by a certified
statement of Tenant's actual Gross Sales for such third (3rd) full Lease Year.
From and after the effective date of Tenant's notice to terminate, this Lease
shall be of no further force or effect, subject, however, to the payment by
Tenant to Landlord of all sums then due and owing or having accrued to Landlord.
In the event that Tenant fails to exercise its option to terminate this Lease
within the required time period, then such option shall, upon expiration of the
applicable period, become null and void and be of no further force or effect.
Tenant shall only be permitted to exercise its option to terminate this Lease
for failure to achieve certain Gross Sales during a particular time period if
Tenant shall have operated its business in accordance with the requirements of
Section 4.2 on each day during the entire time period in question. At Landlord's
sole option, the above stated Gross Sales figure shall be reduced by 1/360th for
each day during the above stated time period that Tenant shall not have operated
its business in the leased premises."
Section 1.4: On page 2, line 63, in place of the deletion, insert "Except for
delays as described in Article XVI and provided that Tenant has been given the
thirty (30) day Fixturing Period, in"
56
<PAGE>
Section 2.2(d): On page 4, line 25, in place of the first deletion, insert
"at least fifty percent (50%)" --------------
On page 4, line 25, in place of the second deletion, insert "twenty percent
(20%)"
Section 2.5: On page 5, line 6, in place of the deletion, insert "tenth
(10th)" -----------
Section 3.2: At the end of the Section, insert "Provided that Tenant shall not
be in default under this Lease, then, Landlord shall pay to Tenant, as a Tenant
inducement, the sum of Fifty Thousand and 00/100ths Dollars ($50,000.00), within
sixty (60) days following the Commencement Date of this Lease and Tenant's
opening for business. In the event that this Lease is terminated prior to
expiration of the stated lease term, Tenant shall immediately repay to Landlord
an amount equal to the then unamortized portion of the Tenant inducement paid to
Tenant, which amortization shall be on the straight-line basis over the full
stated lease term, plus interest on such unamortized portion at a rate equal to
three (3) percentage points above the prime rate then charged by a plurality of
FDIC member banks headquartered in the State,
<PAGE>
which interest shall accrue from the date of payment of the Tenant inducement to
Tenant through the date of termination of the Lease. The cost of Tenant's
leasehold improvements pursuant to Section 1.1(b) hereof shall be less the
amount of such Tenant inducement."
Section 4.8: On page 8, line 70, after the word "miles", insert ", with
reference to outlet stores only,"
Section 5.2(b): At the end of the Section, insert "Tenant's proportionate share
of Common Area Maintenance Expenses per square foot of floor area in the Leased
Premises for the first full Lease Year of the Term shall not exceed Eight and
95/100ths Dollars ($8.95) per square foot. It is further understood and agreed
that the Tenant's proportionate share of Common Area Maintenance Expenses per
square foot during each Lease Year during the original term beginning with the
third (3rd) full Lease Year shall in no event increase by more than seven
percent (7%) over such share for the previous Lease Year."
Section 8.4: On page 13, line 52, after the word "Harmless.", insert "Except
with respect to the negligence or willful misconduct of Landlord, its agents or
employees (unless covered or required to be covered by Tenant's insurance),"
At the end of the Section, insert "Landlord hereby indemnifies and
agrees to save harmless Tenant, its officers, directors, partners, employees and
agents from and against any and all claims, actions, damages, liabilities, costs
and expenses, including attorneys' fees, in connection with loss of life,
personal injury and/or damage to property arising from or out of any occurrence
in the common areas of the Shopping Center unless caused by the negligence or
willful misconduct of Tenant, its agents, contractors, employees, officers,
directors, partners, subtenants or concessionaires."
Section 9.2: On page 14, lines 49, 52,53, 54 and 55, after the word
"Landlord's", insert "Reconstruction"
On page 14, line 55, after the word "Tenant's", insert "Reconstruction"
On page 14, line 61, in place of the first deletion, insert ""Landlord's
Reconstruction Work" shall be all work required to"
On page 14, line 61, in place of the second deletion, insert "the"
On page 14, line 62, after the word "Landlord", insert "pursuant to Exhibit
C and Exhibit D,"
On page 14, line 66, after the word "thereof.", delete the period and
insert "("Tenant's Reconstruction Work")"
Section 11.1(b): On page 16, line 6, after the word "is", insert "publicly"
Section 13.2: On page 18, line 16, in place of the deletion, insert "Upon"
On page 18, line 17, in place of the deletion, insert "Fourteen Thousand
Two Hundred Six and 00/100ths Dollars ($14,206.00)"
Section 14.1: On page 19, line 27, in place of the deletion, insert "(i) a
default which results in a total monetary outstanding balance on excess of
$20,000.00 or (ii) a default pursuant to Section 14.1 (a) (iii) of this Lease,"
On page 19, line 29, after the word "upon", insert "ten (10) days prior"
On page 19, line 30, after the word "Lease", insert "(unless the default is
cured within the ten [10] day period after notice)"
Article XVI: On page 22, line 7, after the word "restrictions", insert "or
delays in issuing permits (provided that the delays do not result from Tenant's
actions or failure to act)"
<PAGE>
Exhibit C: On page C-2, line 27, insert "Notwithstanding the foregoing, the
Leased Premises shall have one (1) closure of fifteen foot (15') width."
Exhibit E: On page E-1, line 23, in place of the deletion, insert "thirty
(30)"
In the Presence of: ARIZONA MILLS L.L.C.,
a Delaware limited liability company
By: The Mills Limited Partnership,
a Delaware limited partnership
By: The Mills Corporation,
a Delaware corporation
By:
Name: Judith Berson
Its:Executive Vice President
LANDLORD
TOYS INTERNATIONAL,
a California corporation
By:
Name: Richard Brady
Title:
TENANT
<PAGE>
GUARANTY
Annexed to and forming a part of Lease dated , by and between ARIZONA MILLS,
L.L.C., Landlord, and TOYS INTERNATIONAL, Tenant.
The undersigned, PLAY CO. TOYS AND ENTERTAINMENT CORPORATION, a
Delaware corporation (hereinafter sometimes referred to as the "Guarantor" or
"Guarantor(s)"), whose address is 550 Rancheros Drive, San Marcos, CA 92069, in
consideration of the leasing of the Leased Premises described in the annexed
Lease ("Lease") to the above named Tenant ("Tenant"), does hereby covenant and
agree as follows:
A. The undersigned does hereby absolutely, unconditionally and irrevocably
guarantee the full, faithful and timely payment and performance by Tenant of all
of the payments, covenants and other obligations of Tenant under or pursuant to
the Lease. If Tenant shall default at any time in the payment of any rent or any
other sums, costs or charges whatsoever, or in the performance of any of the
other covenants and obligations of Tenant, under or pursuant to the Lease, then
the undersigned, at its expense, shall on demand of said Landlord ("Landlord")
fully and promptly, and well and truly, pay all rent, sums, costs and charges to
be paid by Tenant, and perform all the other covenants and obligations to be
performed by Tenant, under or pursuant to the Lease, and in addition shall on
Landlord's demand pay to Landlord any and all sums due to Landlord, including
(without limitation) all interest on past due obligations of Tenant, costs
advanced by Landlord, and damages and all expenses (including attorneys' fees
and litigation costs), that may arise in consequence of Tenant's default. The
undersigned hereby waives all requirements of notice of the acceptance of this
Guaranty and all requirements of notice of breach or non-performance by Tenant.
B. The obligations of the undersigned hereunder are independent of, and may
exceed, the obligations of Tenant. A separate action or actions may, at
Landlord's option, be brought and prosecuted against the undersigned, whether or
not any action is first or subsequently brought against Tenant, or whether or
not Tenant is joined in any such action, and the undersigned may be joined in
any action or proceeding commenced by Landlord against Tenant arising out of, in
connection with or based upon the Lease. The undersigned waives any right to
require Landlord to proceed against Tenant or pursue any other remedy in
Landlord's power whatsoever, any right to complain of delay in the enforcement
of Landlord's rights under the Lease, and any demand by Landlord and/or prior
action by Landlord of any nature whatsoever against Tenant, or otherwise.
Notwithstanding anything herein to the contrary, Landlord shall not commence
judicial action against the undersigned without first giving the undersigned ten
(10) days written notice and opportunity to perform this Guaranty.
C. This Guaranty shall remain and continue in full force and effect and
shall not be discharged in whole or in part notwithstanding (whether prior or
subsequent to the execution hereof) any alteration, renewal, extension,
modification, amendment or assignment of, or subletting, concession,
franchising, licensing or permitting under, the Lease. Without limiting the
foregoing, this Guaranty shall be applicable to any obligations of Tenant
arising in connection with a termination of the Lease, whether voluntary or
otherwise. The undersigned hereby waives notices of any of the foregoing, and
agrees that the liability of the undersigned hereunder shall be based upon the
obligations of Tenant set forth in the Lease as the same may be altered,
renewed, extended, modified, amended or assigned. For the purpose of this
Guaranty and the obligations and liabilities of the undersigned hereunder,
"Tenant" shall be deemed to include any and all concessionaires, licensees,
franchisees, department operators, assignees, subtenants, permittees or others
directly or indirectly operating or conducting a business in or from the Leased
Premises, as fully as if any of the same were the named Tenant under the Lease.
D. The undersigned's obligations hereunder shall remain fully binding
although Landlord may have waived one or more defaults by Tenant, extended the
time of performance by Tenant, released, returned or misapplied other collateral
at any time given as security for Tenant's obligations (including other
guaranties) and/or released Tenant from the performance of its obligations under
the Lease or terminated the Lease.
<PAGE>
E. This Guaranty shall remain in full force and effect notwithstanding the
institution by or against Tenant, of bankruptcy, reorganization, readjustment,
receivership or insolvency proceedings of any nature, or the disaffirmance of
the Lease in any such proceedings or otherwise.
F. If this Guaranty is signed by more than one party, or if more than one
Guaranty shall be given as security for the performance of Tenant's obligations
under the Lease, then the obligations of such parties and any other guarantors
shall be joint and several, and the release of one of such guarantors shall not
release any other of such guarantors.
G. This Guaranty shall be applicable to and binding upon the heirs,
executors, administrators, representatives, successors and assigns of Landlord,
Tenant and the undersigned. Landlord may, without notice, assign this Guaranty
in whole or in part.
H. In the event that Landlord should institute any suit against the
undersigned for violation of or to enforce any of the covenants or conditions of
this Guaranty or to enforce any right of Landlord hereunder, or should the
undersigned institute any suit against Landlord arising out of or in connection
with this Guaranty, or should either party institute a suit against the other
for a declaration of rights hereunder, or should either party intervene in any
suit in which the other is a party to enforce or protect the intervening party's
interest or rights hereunder, Landlord shall receive from the undersigned all
costs and expenses paid or incurred by Landlord in connection therewith,
including, without limitation, the fees of its attorney(s), to be determined by
the court and taxed as a part of the costs therein.
I. The undersigned hereby waives trial by jury in any action, proceeding or
counterclaim brought by any person or entity with respect to any matter
whatsoever arising out of or in any way connected with: this Guaranty; the
Lease; any liability or obligation of Tenant in any manner related to the Leased
Premises; any claim of injury or damage in any way related to the Lease or the
Leased Premises; any act or omission of Tenant, its agents, employees,
contractors, suppliers, servants, customers or licensees; or any aspect of the
use or occupancy of, or the conduct of business in, on or from the Leased
Premises. The undersigned shall not impose any counterclaim or counterclaims or
claims for set-off, recoupment or deduction of rent in any action brought by
Landlord against the undersigned under this Guaranty. The undersigned shall not
be entitled to make, and hereby waives, any and all defenses against any claim
asserted by Landlord or in any suit or action instituted by Landlord to enforce
this Guaranty or the Lease. In addition, the undersigned hereby waives, both
with respect to the Lease and with respect to this Guaranty, any and all rights
which are waived by Tenant under the Lease, in the same manner as if all such
waivers were fully restated herein. The liability of the undersigned under this
Guaranty is primary and unconditional.
J. The undersigned shall not be subrogated, and hereby waives any and all
rights of subrogation (if any), to any of the rights of Landlord under the Lease
or otherwise, or to or in the Leased Premises thereunder, which may arise by
reason of any of the provisions of this Guaranty or by reason of the performance
by the undersigned of any of its obligations hereunder. The undersigned shall
look solely to Tenant for any recoupment of any payments made or costs or
expenses incurred by the undersigned pursuant to this Guaranty.
K. Any default or failure by the undersigned to perform any of its
obligations under this Guaranty shall be deemed to be an immediate default by
Tenant under the Lease.
L. The execution of this Guaranty prior to execution of the Lease shall not
invalidate this Guaranty or lessen the obligations of Guarantor(s) hereunder.
IN WITNESS WHEREOF, the undersigned has executed this Guaranty this day of
, 19 .
WITNESSES:
PLAY CO. TOYS AND ENTERTAINMENT
CORPORATION, a Delaware corporation
<PAGE>
CORPORATE ACKNOWLEDGMENT
STATE OF )
) ss.
COUNTY OF )
On this day of , 19 , before me personally appeared and , to me personally
known, who, being by me duly sworn, did each for himself say that they are
respectively the and of Play Co. Toys and Entertainment Corporation, the
corporation named in and which executed the within instrument, and that the seal
affixed to said instrument is the corporate seal of said corporation, and that
said instrument was signed and sealed on behalf of said corporation by authority
of its board of directors; and said and acknowledged before me said instrument
to be the free act and deed of said corporation.
Notary Public, County,
My commission expires:
<PAGE>
