U.S. 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, 1998
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 Small Business Issuer as Specified in its Charter)
<TABLE>
<CAPTION>
<S> <C>
Delaware 95-3024222
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
</TABLE>
550 Rancheros Drive, San Marcos, California 92069
(Address of Principal Executive Offices)
(760) 471-4505
(Issuer'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) 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:
4,109,198 shares outstanding as of November 12, 1998.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
PLAY CO. TOYS & ENTERTAINMENT CORP.
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION
Page Number
Item 1. FINANCIAL STATEMENTS
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Condensed balance sheets as of September 30, 1998 3
and March 31, 1998.
Condensed statements of operations and comprehensive net loss for the
three months and six months ended September 30, 1998 and 1997. 4
Condensed statements of cash flows for the six months ended September 30, 1998 and 1997.
5
Notes to condensed financial statements 6-7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
8-14
PART II. OTHER INFORMATION
15
Item 1. LEGAL PROCEEDINGS
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 15
Item 3. DEFAULTS UPON SENIOR SECURITIES 15
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 15
Item 5. OTHER INFORMATION 15
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 15
Signatures 16
</TABLE>
<PAGE>
PLAY CO. TOYS & ENTERTAINMENT CORP.
(A SUBSIDIARY OF UNITED TEXTILES & TOYS CORP.)
CONDENSED BALANCE SHEETS
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ASSETS
September 30, 1998 March 31, 1998
(unaudited) (Restated)
Current
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Cash ................................................. $ 423,634 $ 648,986
Accounts receivable .................................. 57,517 78,594
Merchandise inventories .............................. 12,185,130 7,872,804
Other current assets ................................. 934,171 433,928
----------- -----------
Total current assets 13,600,452 9,034,312
Property and Equipment, Net of accumulated
Depreciation and amortization of $3,788,081
and $3,414,235, respectively ........................ 3,558,297 2,782,386
Deposits and other assets ........................................ 2,490,037 2,323,189
----------- -----------
$19,648,786 $14,139,887
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
September 30, 1998 March 31, 1998
Current
Accounts payable .............................................. 5,649,940 3,505,230
Accrued expenses and other liabilities ........................ 197,721 726,601
Current portion of notes payable and capital leases ........... 1,340,250 350,000
----------- -----------
Total current liabilities ............................. 7,187,911 4,581,831
Borrowings under financing agreement ..................................... 8,481,996 5,445,198
Notes payable and capital leases, net of current portion ................. 157,200 1,500,000
Deferred rent liability .................................................. 119,453 110,351
Stockholders' equity:
Convertible series E preferred stock, $1 par, 10,000,000 shares
authorized: 5,858,903 and 4,200,570 shares outstanding ...... 4,748,031 3,974,376
Common stock, $.01 par value, 40,000,000 shares
authorized; 4,109,198 and 4,083,519 shares outstanding ...... 41,035 41,035
Additional paid-in-capital .................................... 14,596,252 12,927,718
Accumulated deficit ........................................... (15,683,092) (14,440,822)
----------- -----------
Total stockholders' equity . 3,702,226 2,502,507
----------- -----------
$19,648,786 $14,139,887
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements
<PAGE>
PLAY CO. TOYS & ENTERTAINMENT CORP.
(A SUBSIDIARY OF UNITED TEXTILES & TOYS CORP.)
CONDENSED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE NET LOSS
(Unaudited)
(Restated)
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<CAPTION>
Three Months Ended September 30, Six-months Ended September 30,
1998 1997 1998 1997
----
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Net sales ................................................... $ 6,098,315 $ 4,228,780 $ 12,455,710 $ 7,371,593
Cost of Sales ............................................... 3,414,054 2,384,717 7,120,385 4,358,082
Gross profit ............... 2,684,261 1,844,063 5,335,325 3,013,511
------------ ------------ ------------ ------------
Operating expenses:
Operating expenses ......................... 2,610,120 2,028,571 5,093,891 4,056,974
Depreciation and amortization .............. 193,794 139,026 382,211 278,053
------------ ------------ ------------ -----------
Total operating expenses ... 2,803,914 2,167,597 5,476,102 4,334,027
------------ ------------ ------------ -----------
Operating loss .............................................. (119,653) (323,534) (140,777) (1,321,516)
------------ ------------ ------------ -----------
Interest expense:
Interest and finance charges ...... 156,860 127,767 295,312 249,512
Amortization of debt issuance costs 27,202 89,778 54,402 179,555
------------ ------------ ------------ ------------
Total interest expense ..... 184,062 217,545 349,714 429,067
------------ ------------ ------------ ------------
Net income (loss) ........................................... $ (303,715) $ (541,079) $ (490,491) $ (1,750,583)
Other comprehensive income (loss) ........................... 0 0 0 0
------------ ------------ ------------ -----------
Comprehensive net income (loss) ............................. $ (303,715) $ (541,079) $ (490,491) $ (1,750,583)
============ ============ ============ ============
Calculation of basic and diluted income (loss) per share:
Net income (loss) ......................................... $ (303,715) $ (541,079) $ (490,491) $ (1,750,583)
Effects of non-cash dividends on convertible
preferred stock ........................................ (477,973) (1,200,000) (751.779) (1,200,000)
Net income (loss) applicable to common
shares ................................................ $ (781,688) $ (1,741,079) $ (1,242,270) $ (2,950,583)
Basic and diluted loss per common share
and share equivalents ...................... $ (0.19) $ (0.42) $ (0.30) $ (0.72)
============ ============ ============ ============
Weighted average number of common shares
and share equivalents outstanding ................. 4,103,525 4,103,519 4,103,525 4,093,683
============ ============ ============ ============
</TABLE>
See accompanying notes to condensed financial statements
<PAGE>
PLAY CO. TOYS & ENTERTAINMENT CORP.
(A SUBSIDIARY OF UNITED TEXTILES & TOYS CORP.)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
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<CAPTION>
Six-months Ended September 30,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss .................................................... $ (490,491) $(1,750,583)
Adjustments used to reconcile net loss to net
cash used for operating activities:
Depreciation and amortization ...................... 382,211 278,053
Amortization of common stock options ............... -- 107,372
Deferred rent ...................................... 9,102 8,746
Stock compensation ................................. 21,876 --
Increase (decrease) from changes in:
Accounts receivable ..................... 21,077 (338,764)
Merchandise inventories ................... (4,312,326) (1,263,705)
Other current assets ...................... (500,243) 13,418
Deposits and other assets ................. (163,756) (214,050)
Accounts payable .......................... 2,144,710 1,441,513
Accrued expenses and other liabilities .. (528,880) (262,085)
----------- -----------
Net cash used for operating activities .. (3,416,720) (1,907,085)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment ......................... (1,149,757) (366,258)
----------- -----------
Net cash used for investing activities .. (1,149,757) (366,258)
----------- -----------
ASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of preferred and common stock ........ 156,877 1,250,501
Net borrowings on line of credit ............................ 3,036,798 1,195,359
Borrowings under notes payable and capital leases, net ...... 1,147,450 (91,666)
----------- -----------
Net cash provided by financing activities 4,341,125 2,354,194
----------- -----------
Net (decrease) increase in cash ...................................... (225,352) 7,851
Cash at beginning of period .......................................... 648,986 177,722
Cash at end of period ................................................ $ 423,634 $ 185,573
</TABLE>
See accompanying notes to condensed financial statements
<PAGE>
PLAY CO. TOYS & ENTERTAINMENT CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
Note 1. General
The interim accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
for interim financial information and with the instructions to Form 10-QSB.
Accordingly, they do not include all of the information and footnotes required
by GAAP for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. For further information, management
suggests that the reader refer to the audited financial statements for the year
ended March 31, 1998 included in its Annual Report on Form 10-KSB. Operating
results for the six-month period ended September 30, 1998 are not necessarily
indicative of the results of operations that may be expected for the year ending
March 31, 1999.
Note 2. Amendment of Loan and Security Agreement
Effective September 24, 1998, the Company and FINOVA Capital Corporation
("FINOVA"), the Company's working capital lender (which is not affiliated with
the Company), amended the Company's Loan and Security Agreement to increase the
maximum level of borrowings under the Agreement from $7.6 million to $8.6
million through December 31, 1998. Beginning on January 1, 1999, the maximum
level of borrowings under the Agreement will return to the $7.6 million level.
Note 3. Leases
During the three-month period ended September 30, 1998, the Company entered
into several capital leases to help finance its new computer system and several
new stores. The leases are for an aggregate principal amount of $280,719 and
bear interest at rates varying between 10.8% and 18%.
Note 4. Secured Subordinated Promissory Note
On September 18, 1998, the Company borrowed $1,000,000 from Amir Overseas
Capital Corp. ("Amir"), a company not affiliated with the Company, under a
Secured Subordinated Promissory Note. The Note bears interest at 12% and calls
for three installment payments ending December 23, 1998.
Note 5. Subsequent Events
On November 9, 1998, the Company borrowed $250,000 from Amir under a
Promissory Note. The Note bears interest at 12% and calls for repayment on
January 29, 1999.
<PAGE>
Note 6. Restatement of Financial Statements
The Company has restated its financial statements for the year ended March
31, 1998 from those originally presented, to conform with Topic No. D-60 of the
Emerging Issues Task Force. Topic D-60 communicated the views of the staff of
the Securities and Exchange Commission that the portion of the proceeds upon
issuance of convertible preferred stock allocable to the beneficial conversion
feature should be recorded as additional paid-in capital and recognized as a
dividend over the minimum period in which the preferred shareholders can realize
the conversion.
The Company's Series E Preferred Stock ("Series E Stock"), which stock was
issued in varying amounts on various dates, includes a beneficial conversion
feature whereby each share is convertible into six shares of the Company's
Common Stock, at the option of the holder, at no additional conversion price.
The beneficial conversion feature is measured at the date of issuance of
the Company's Series E Stock as the difference between the conversion price,
which is $0, and the market value of the Common Stock into which the Series E
Stock is convertible, limited to the proceeds received from the issuance of the
Series E Stock. Based on the calculations prescribed by Topic No. D-60, all
proceeds initially received by the Company from the issuances of the Series E
Stock should initially be recorded as additional paid-in capital, as 100% of the
proceeds are allocable to the beneficial conversion feature. Over the required
holding period, a non-cash dividend is recorded reducing the retained earnings
(or increasing the accumulated deficit) and increasing the balance recorded as
Series E Stock in the balance sheet. Thus, there is no net effect on the total
shareholders' equity of the Company.
However, the Company has also restated its net loss per common share as
presented in the statement of operations for the year ended March 31, 1998, as
the dividend attributable to the beneficial conversion feature of the Series E
Stock reduces the amount of net income (or increases the amount of net loss)
applicable to the common shares.
In applying the provisions of Topic D-60, the Company has recorded
dividends of $477,973 and $1,200,000 for the three month periods ended September
30, 1998 and 1997, respectively, and $751,779 and $1,200,000 for the six month
periods ended September 30, 1998 and 1997, respectively.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Statements contained in this report which are not historical facts may be
considered forward looking information with respect to plans, projections, or
future performance of the Company as defined under the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are subject to
risks and uncertainties which could cause actual results to differ materially
from those projected.
The Company's operations are substantially controlled by United Textiles &
Toys Corp. ("UTTC"), the Company's parent, which currently owns approximately
60.1% of the issued and outstanding shares of the Company's Common Stock. UTTC
is a Delaware corporation and public company which was organized in March 1991
and commenced operations in October 1991. It formerly designed, manufactured,
and marketed a variety of lower priced women's dresses, gowns, and separates
(blouses, camisoles, jackets, skirts, and pants) for special occasions and
formal events. In April 1998, UTTC ceased all operating activities; it now
operates solely as a holding company.
For the three months ended September 30, 1998 compared to the three months ended
September 30, 1997
The Company generated net sales of $6,098,315 in the three months ended
September 30, 1998. This represented an increase of $1,869,535, or 44.2%, from
net sales of $4,228,780 in the three months ended September 30, 1997.
Approximately $780,000 of this sales growth came from a 22.5% increase in same
store sales during the three months and the remaining sales increase of
approximately $1.1 million came from sales at the Company's new stores.
The Company posted a gross profit of $2,684,261 in the three months ended
September 30, 1998; an increase of $840,198, or 45.6%, from the gross profit of
$1,844,063 in the three months ended September 30, 1997, due basically to the
increase in sales. The gross margin of 44% in the September 1998 period was
comparable to the Company's gross margin of 43.6% in the September 1997 period.
Operating expenses (excluding depreciation and amortization expenses) in
the three months ended September 30, 1998 were $2,610,120. This represented a
$581,549, or 28.7%, increase over the Company's operating expenses of $2,028,571
in the three months ended September 30, 1997. The primary reasons for the
operating expense increase were an increase in payroll and related expenses of
$253,014 and an increase in rent expense of $189,418. The payroll expense
increase was due to the addition of several middle managers and of employees at
new stores. The growth of rent expense was the result of adding additional
stores.
During the three months ended September 30, 1998, the Company recorded
non-cash depreciation and amortization expenses of $193,794, a $54,768 increase
from $139,026 in the period ended September 30, 1997. Total operating expenses
(operating expenses combined with depreciation and amortization) in the
September 1998 period were $2,803,914, a $636,317, or 29.4%, increase from total
operating expenses of $2,167,597 in the September 1997 period.
As a result of the $840,198 increase in gross profit less the $636,317
increase in total operating expenses, the Company's operating loss decreased by
$203,881 from $323,534 during the three months ended September 30, 1997 to
$119,653 during the three months ended September 30, 1998, representing a 63%
reduction in the Company's operating loss.
Interest expense totaled $184,062 for the three months ended September 30,
1998. This represented a $33,483 decrease from interest expense of $217,545 in
the three months ended September 30, 1997. The primary reason for the decreased
level of interest expense was a higher level of amortization of debt issuance
costs in the three months ended September 30, 1997 than in the September 1998
period.
<PAGE>
As a result of the above-mentioned factors, the Company recorded a net loss
of $303,715 for the three months ended September 30, 1998. This represented a
$237,364 reduction from the net loss of $541,079 recorded in the three months
ended September 30, 1997. For the three month periods ended September 30, 1998
and 1997, the net loss of $303,715 and $541,079, respectively, was increased by
non-cash dividends of $477,973 and $1,200,000, respectively, in order to
determine the net loss applicable to common shares. The non-cash dividends
represent amortization of the discount recorded upon the issuance of Series E
Stock with a beneficial conversion feature. No dividends in the form of
securities or other assets were actually paid out.
The basic and diluted net loss per common share for the September 1998
period was $0.19 compared to a basic and diluted net loss per common share in
the September 1997 period of $0.42, an improvement of $0.23 per share.
For the six months ended September 30, 1998 compared to six months ended
September 30, 1997
The Company generated net sales of $12,455,710 in the six-month period
ended September 30, 1998. This represented an increase of $5,084,117, or 69.0%,
from net sales of $7,371,593 in the six-month period ended September 30, 1997.
Approximately $2,680,000 of this sales growth came from a 42.8% increase in same
store sales during the six-month period, with the remaining increase of
approximately $2.4 million from the Company's new stores.
The Company posted a gross profit of $5,335,325 in the six-month period
ended September 30, 1998; an increase of $2,321,814, or 77.0%, from the gross
profit of $3,013,511 in the six-month period ended September 30, 1997, due to an
increase in the Company's gross margin from 40.9% for the six-months ended
September 30, 1997 to 42.8% for the same period ended September 1998. This 1.9%
gross margin improvement was largely due to the ongoing implementation of the
Company's plan to sell educational, new electronic interactive, and specialty
and collectible toys and items in high traffic malls. Prior to the fiscal year
beginning April 1, 1996, the Company sold traditional toys in stores located in
strip shopping centers. The mix of specialty and a mix of educational toys
generally produce better margins than traditional toys.
Operating expenses (excluding depreciation and amortization expenses) in
the six-month period ended September 30, 1998 were $5,093,891. This represented
a $1,036,917, or 25.6%, increase over the Company's operating expenses of
$4,056,974 in the six-month period ended September 30, 1997. The primary reasons
for the operating expense increase were an increase in payroll and related
expenses of $533,048 and an increase in rent expense of $128,141. The increased
expenses were due to the lease payments on the new stores opened and the
addition of several middle managers and of employees at the new stores.
During the six-month period ended September 30, 1998, the Company recorded
non-cash depreciation and amortization expenses of $382,211, a $104,158 increase
from $278,053 in the period ended September 30, 1997. This increase was largely
due to depreciation on the fixed assets purchased for the newly opened stores.
Total operating expenses (operating expenses combined with depreciation and
amortization) in the September 1998 period were $5,476,102, a $1,142,075, or
26.4%, increase from total operating expenses of $4,334,027 in the September
1997 period.
As a result of the $2,321,814 increase in gross profit and the $1,142,075
increase in total operating expenses, the Company's operating loss decreased by
$1,180,739 from $1,321,516 during the six-month period ended September 30, 1997
to $140,777 during the six-month period ended September 30, 1998. This
represented an 89.3% reduction in the Company's operating loss.
Interest expense totaled $349,714 for the six-month period ended September
30, 1998. This represented a $79,353, or 18.5%, decrease from the interest
expense of $429,067 in the six-month period ended September 30, 1997. The
primary reason for the decreased level of interest expense was a higher level of
amortization of debt issuance costs in the six-month period ended September 30,
1997 than in the September 1998 period.
<PAGE>
As a result of the above-mentioned factors, the Company recorded a net loss
of $490,491 for the six-month period ended September 30, 1998. This represented
a $1,260,092 reduction from the net loss of $1,750,583 recorded in the six-month
period ended September 30, 1997. For the six month periods ended September 30,
1998 and 1997, the net loss of $490,491 and $1,750,583, respectively, was
increased by non-cash dividends of $751,779 and $1,200,000, respectively, in
order to determine the net loss applicable to common shares. The non-cash
dividends represent amortization of the discount recorded upon the issuance of
Series E Stock with a beneficial conversion feature. No dividends in the form of
securities or other assets were actually paid out. The basic and diluted net
loss per common share for the September 1998 period was $0.30 compared to a
basic and diluted net loss per common share in the September 1997 period of
$0.72, an improvement of $0.42 per share.
Liquidity and Capital Resources
At September 30, 1998, the Company had a working capital position of
$6,412,541 compared to a working capital position of $4,452,481 at March 31,
1998. The primary factors in the $1,960,060 increase in working capital were a
$2,167,616 growth in the Company's net investment in inventories (increase in
inventories less increase in accounts payable) which was financed through a
$3,036,798 increase under the Company's financing agreement, a long term
liability.
The Company has generated operating losses for the past several years and
has historically financed those losses and its working capital requirements
through loans and sales of the Company's equity securities, primarily through
the sale of the Company's Series E Stock. There can be no assurance that the
Company will be able to generate sufficient revenues or have sufficient controls
over expenses and other charges to achieve profitability.
During the six-month period ended September 30, 1998, the Company used
$3,416,720 of cash in its operations compared to $1,907,085 used in operations
in the six-month period ended September 30, 1997. The Company's net loss was
approximately $490,000 and $1,750,000, respectively, in those periods. The
primary reason the cash used for operating activities was so much larger than
the net loss in the six-month period ended September 30, 1998 was net investment
(increase in inventories less increase in accounts payable) in inventories of
$2,167,616.
The Company used $1,149,757 of cash in its investing activities during the
six-month period ended September 30, 1998 compared to $366,258 in the six-month
period ended September 30, 1997. The primary investing activity was the purchase
of equipment and fixtures for new stores.
The Company generated $4,341,125 from its financing activities in the
six-month period ended September 30, 1998 compared to the generation of
$2,354,194 from financing activities in the six-month period ended September 30,
1997. The primary contributors to the Company's financing activities were
borrowings on the Company's line of credit and under notes payable. Those
proceeds were used to finance the Company's working capital requirements,
capital expenditures and operating losses during the six-month period ended
September 30, 1998.
As a result of the above factors, the Company had a net decrease in cash of
$225,352 in the six-month period ended September 30, 1998 compared to a net
increase in cash of $7,851 in the six-month period ended September 30, 1997.
During the three-month period ended September 30, 1998, the Company opened
two new stores. These stores, and all stores the Company intends to open in the
future, are considered by management to be high-end retail toy and educational,
electronic interactive stores, in presentation, which offer items comparable in
quality and choice to those offered by FAO Schwarz and Warner Brothers and
Disney Stores and which attract clientele similar to those attracted by such
stores. The first store opened in the three-month period ended September 30,
1998 is located in Primm, Nevada near Las Vegas and opened in July 1998. The
second store opened in September in Grapevine, Texas near Dallas. Both stores
are located in high traffic shopping malls. The capital investment for building
each of those stores was approximately $300,000.
<PAGE>
In early November 1998, the Company opened new stores in Thousand Oaks,
California near Los Angeles and in Auburn Hills, Michigan near Detroit. These
stores are also located in high traffic shopping malls. These two stores
represented an aggregate capital investment of approximately $613,000, net of
landlord tenant improvement ("Landlord TI") contributions.
The Company expects to open two additional stores in mid-to-late November
1998. Those stores represent the final two of the six stores the Company planned
to build during calendar year 1998. Those final two stores are located in
Orange, California near Los Angeles and in Gurnee, Illinois near Chicago. These
two stores represented an aggregate capital investment of approximately
$500,000, net of Landlord TI contributions. Upon the opening of the final two
stores in November, the Company will have 25 stores located in six states.
The Company had planned to finance the costs, now estimated to be $1.7
million, net of Landlord TI contributions, of building the new stores described
above through a combination of capital lease financing, use of the Company's
working capital, and the sale of additional equity. The Company has obtained
approximately $260,000 in lease financing on the equipment and fixtures of the
Nevada and Century City stores. The Company is also in the documentation phase
of a five-year term loan in the principal amount of approximately $500,000 with
a new lender. That term loan will be secured by the equipment and fixed assets
of the new Texas store and three existing stores.
The Company continues to seek additional lease financing based on the
equipment and fixtures of its new (or soon to be opened) stores in California
(two), Michigan, and in Illinois. There can be no assurance that the Company
will be able to obtain sufficient financing to offset the new store opening
costs that have been incurred.
On September 18, 1998, the Company borrowed $1,000,000 from Amir under a
Secured Subordinated Promissory Note. The Note bears interest at 12% and calls
for three installment payments ending December 23, 1998. On November 9, 1998,
the Company borrowed an additional $250,000 from Amir under a Promissory Note.
The Note bears interest at 12% and calls for repayment on January 29, 1998.
In September 1998, the Company and FINOVA Capital Corporation, the
Company's working capital lender, amended the Company's Loan and Security
Agreement to increase the maximum level of borrowings under the Agreement from
$7.6 million to $8.6 million through December 31, 1998. Beginning on January 1,
1999, the maximum level of borrowings under the Agreement will return to the
$7.6 million level. The Company expects to utilize this additional amount on its
credit line to partially finance either its working capital, particularly
inventory purchases, or the capital expenditures noted above.
Year 2000
Earlier in 1998 the Company developed a plan to upgrade its existing
management information system ("MIS") and computer hardware and to become year
2000 compliant. The Company has now purchased the necessary hardware and
software and is in the process of installing the software. The Company expects
to complete the MIS upgrade by late November 1998 and to finish the year 2000
compliance work in the first half of 1999.
To finance the cost of the new hardware in the computer upgrade project,
the Company entered into a lease in the amount of $82,472 bearing an interest
rate of 10.8%. The total cost of the hardware and software purchased for the
project was approximately $100,000.
Beyond the above noted internal year 2000 system issue, the Company has no
current knowledge of any outside third party year 2000 issues that would result
in a material negative impact on its operations. Management has reviewed its
material vendors' (i.e., Mattel, Inc. and Hasbro, Inc.) and financing arm's
(FINOVA) recent SEC filings vis a vis year 2000 risks and uncertainties and, on
the basis thereof, is confident that the steps the Company has taken to become
year 2000 compliant are sufficient. In continuation of this review, the Company
shall continue to monitor or otherwise obtain confirmation from the aforesaid
entities - and such other entities as management deems appropriate - as to their
respective degrees of preparedness. To date, nothing has come to the attention
of the Company that would lead it to believe that its material customers,
vendors, and/or service providers will not be year 2000 ready. Year 2000
readiness is a priority of the Company, and the Company believes that it is
taking such reasonable and prudent steps as are necessary to mitigate the risks
associated with potential year 2000 difficulties; however, the effect, if any,
of year 2000 problems on the Company's results of operations if the Company's or
its customers, vendors, or service providers are not fully compliant cannot be
estimated with any degree of certainty. Nonetheless, the most likely impact on
the Company would be a reduced level of activity in the fourth quarter of the
fiscal year ended March 31, 2000, a time at which, as a result of the
seasonality of the Company's business, its activities in sales, manufacturing,
and sourcing are at their low.
<PAGE>
Trends Affecting Liquidity, Capital Resources and Operations
As a result of its current merchandise mix which emphasizes specialty and
educational toys, the Company enjoyed significant sales and gross profits in the
six months ended September 30, 1998. This mix of specialty and educational toys
includes collectible die cast cars, specialty yo-yo's, Rokenbok and Learning
Curve toys, and Beanie Babies(R) and other plush and many educational toys.
While the Company believes these particular toys will remain popular with its
customer base for the remainder of calendar year 1998, there can be no assurance
that these particular specialty toys will continue to contribute strongly to the
Company's sales and gross profits. The history of the toy industry, however,
indicates that there is generally at least one highly popular toy every year.
The Company's current sales efforts focus primarily on a defined geographic
segment consisting of the southern California area and the southwestern and
midwestern United States. The Company's future financial performance will depend
upon (i) continued demand for high-end specialty, educational, and traditional
toys and management's ability to adapt to continuously changing consumer
preferences and the market for such items, (ii) general economic conditions
within the Company's geographic market area, as same may be expanded, (iii) the
Company's ability to choose locations for new stores, (iv) the Company's ability
to purchase products at favorable prices and on favorable terms, and (v) the
effects of increased competition.
The toy and hobby retail industry faces a number of potentially adverse
business conditions including price and gross margin pressures and market
consolidation. The Company competes with a variety of mass merchandisers,
superstores, and other toy retailers, including Toys R Us, Kay Bee Toy Stores,
Walmart and Kmart. Competitors that emphasize specialty and educational toys
include Disney Stores, Warner Bros. Stores, Learning Smith, Lake Shore, Zany
Brainy, and Noodle Kidoodle. There can be no assurance that the Company's
business strategy will enable it to compete effectively in the toy industry or
that the Company will be able to generate sufficient revenues or have sufficient
control over expenses and other charges to increase profitability.
Inflation and Seasonality
The impact of inflation on the Company's results of operations has not been
significant. The Company attempts to pass on increased costs by increasing
product prices over time.
The Company's operations are highly seasonal with approximately 30-40% of
its net sales historically falling within the Company's third quarter, which
coincides with the Christmas selling season. The Company intends to open stores
throughout the year, but generally before the Christmas selling season, which
will make the Company's third quarter sales an even greater percentage of the
total year's sales.
<PAGE>
PART II
Item 1. Legal Proceedings
In October 1997, in the Superior Court of the State of California, County
of San Bernardino, Foothill Marketplace commenced suit against the Company and
its former guarantor for breach of contract pertaining to premises leased by the
Company in Rialto, California. The lease for the premises has a term from
February 1987 through November 2003. The Company vacated the premises in August
1997. Under California State law and the provisions of the lease, plaintiff has
a duty to mitigate its damages. Plaintiff seeks damages, of a continuing nature,
for unpaid rent, proximate damages, costs, and attorneys' fees, in the
approximate amount of $300,000. This action is in the discovery phase.
No Director, Officer, or affiliate of the Company, nor any associate of
same, is a party to, or has a material interest in, any proceeding adverse to
the Company.
Item 2. Changes in Securities and Use of Proceeds: None
Item 3. Defaults Upon Senior Securities: None
Item 4. Submission of Matters to a Vote of Security Holders: None
Item 5. Other Information: None
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits, except those designated with an (*), which are
filed herewith, were previously filed with the Company's Form 10-QSB for the
quarter ended September 30, 1998:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
10.103 Promissory Note with Amir Overseas Capital Corp. (dated September 18, 1998)
10.104 Promissory Note with Amir Overseas Capital Corp. (dated November 9, 1998)
10.105* Lease Agreement for Store - Dallas (Grapevine Mills)
10.106* Lease Agreement for Store - Thousand Oaks
10.107* Lease Agreement for Store - Detroit (Great Lakes Crossing)
10.108* Lease Agreement for Store - Chicago (Gurnee Mills)
10.109* Phoenix Leasing Incorporated Loan and Security Agreement and Ancillary Documents (October 1998)
27.01* Financial Data Schedule
</TABLE>
(b) During the quarter ended September 30, 1998, no reports on Form 8-K
were filed with the Securities and Exchange Commission.
<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 31st day of March 1999.
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
Exhibit 10.105
Lease Agreement for Store - Dallas
LEASE
TOYS INTERNATIONAL,
a California corporation
-----------------------------------
Tenant
TOY CO.
------------------------------------
Trade Name
PLAY CO. TOYS AND ENTERTAINMENT CORP.,
a Delaware corporation
------------------------------------
Guarantor
Grapevine Mills
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I.........................................................................................................4
GRANT AND TERM...........................................................................................4
Section 1.1 Leased Premises....................................................................4
Section 1.2 Term...............................................................................5
Section 1.3 Opening............................................................................6
Section 1.4 Late Opening.......................................................................6
ARTICLE II........................................................................................................7
RENT AND DEPOSIT.........................................................................................7
Section 2.1. Minimum Rent......................................................................7
Section 2.2. Percentage Rent...................................................................7
Section 2.3. Payments By Tenant................................................................9
Section 2.4. Security Deposit. [Intentionally Deleted] 9
Section 2.5. Late Charge.......................................................................9
ARTICLE III......................................................................................................10
PREPARATION OF LEASED PREMISES..........................................................................10
Section 3.1. Landlord's Work..................................................................10
Section 3.2. Delivery of Possession...........................................................10
Section 3.3. Tenant's Work....................................................................11
Section 3.4. Alterations by Tenant............................................................13
Section 3.5. Removal by Tenant................................................................13
ARTICLE IV.......................................................................................................14
CONDUCT OF BUSINESS.....................................................................................14
Section 4.1. Use and Trade Name...............................................................14
Section 4.2. Operation of Business............................................................14
Section 4.3. Sign.............................................................................14
Section 4.4. Tenant's Warranties..............................................................15
Section 4.5. Storage and Office Space.........................................................15
Section 4.6. Care of Premises.................................................................15
Section 4.7. Notice by Tenant.................................................................16
Section 4.8. Radius...........................................................................16
ARTICLE V........................................................................................................16
COMMON AREA.............................................................................................16
Section 5.1. Use of Common Area...............................................................16
Section 5.2. Common Area Maintenance Expenses.................................................17
ARTICLE VI.......................................................................................................18
REPAIRS AND MAINTENANCE.................................................................................18
Section 6.1. Repairs and Maintenance by Landlord..............................................18
Section 6.2. Repairs and Maintenance by Tenant................................................18
ARTICLE VII......................................................................................................20
TAXES ...............................................................................................20
Section 7.1. Tax Liability....................................................................20
Section 7.2. Method of Payment................................................................20
ARTICLE VIII.....................................................................................................21
INSURANCE, INDEMNITY AND LIABILITY......................................................................21
Section 8.1. Landlord's Insurance Obligations.................................................21
Section 8.2. Tenant's Insurance Obligations...................................................21
SECTION 8.3. MUTUAL COVENANT..................................................................22
SECTION 8.4. COVENANT TO HOLD HARMLESS........................................................23
Section 8.5. Loss and Damage..................................................................23
ARTICLE IX.......................................................................................................24
DESTRUCTION OF LEASED PREMISES..........................................................................24
Section 9.1. Continuance of Lease.............................................................24
Section 9.2. Reconstruction...................................................................24
<PAGE>
ARTICLE X........................................................................................................25
CONDEMNATION............................................................................................25
Section 10.1. Eminent Domain..................................................................25
Section 10.2. Rent Apportionment..............................................................25
Section 10.3. Temporary Taking................................................................25
ARTICLE XI.......................................................................................................26
ASSIGNMENT, SUBLETTING AND ENCUMBERING LEASE............................................................26
Section 11.1. No Assignment, Subletting or Encumbering of Lease 26
Section 11.2. Assignment or Sublet............................................................27
Section 11.3. Transfer of Landlord's Interest.................................................28
ARTICLE XII......................................................................................................28
SUBORDINATION, ATTORNMENT, FINANCING AND ESTOPPEL CERTIFICATE 28
Section 12.1. Subordination...................................................................28
Section 12.2. Attornment......................................................................28
Section 12.3. Financing.......................................................................28
Section 12.4. Estoppel Certificate............................................................29
Section 12.5. Remedies........................................................................29
ARTICLE XIII.....................................................................................................29
ADVERTISING AND PROMOTION...............................................................................29
Section 13.1. Promotion Fund..................................................................29
Section 13.2. Promotion Fund Contribution.....................................................29
Section 13.3. Advertisements..................................................................30
Section 13.4. Network.........................................................................30
ARTICLE XIV......................................................................................................31
DEFAULT AND REMEDIES....................................................................................31
Section 14.1. Elements of Default.............................................................31
Section 14.2. Landlord's Remedies.............................................................31
Section 14.3. Bankruptcy......................................................................34
Section 14.4. Additional Remedies and Waivers.................................................34
Section 14.5. Landlord's Cure of Default......................................................34
ARTICLE XV.......................................................................................................34
RIGHT OF ACCESS.........................................................................................34
ARTICLE XVI......................................................................................................35
DELAYS ...............................................................................................35
ARTICLE XVII.....................................................................................................35
END OF TERM.............................................................................................35
Section 17.1. Return of Leased Premises.......................................................35
Section 17.2. Holding Over....................................................................35
ARTICLE XVIII....................................................................................................36
COVENANT OF QUIET ENJOYMENT.............................................................................36
ARTICLE XIX......................................................................................................36
UTILITIES...............................................................................................36
Section 19.1. Utilities.......................................................................36
Section 19.2. Electricity, Telephone and Gas..................................................36
Section 19.3. Trash and Garbage Removal.......................................................36
Section 19.4. Water and Sewer.................................................................37
Section 19.5. Grease Interceptors.............................................................37
ARTICLE XX.......................................................................................................37
MISCELLANEOUS...........................................................................................37
Section 20.1. Entire Agreement...............................................................37
Section 20.2. Notices........................................................................37
Section 20.3. Governing Law..................................................................37
Section 20.4. Successors.....................................................................38
Section 20.5. Liability of Landlord..........................................................38
Section 20.6. Brokers........................................................................38
Section 20.7. Transfer by Landlord...........................................................38
Section 20.8. No Partnership.................................................................38
SECTION 20.9. WAIVER OF COUNTERCLAIMS........................................................38
SECTION 20.10. WAIVER OF JURY TRIAL...........................................................38
Section 20.11. Severability...................................................................39
SECTION 20.12. NO WAIVER......................................................................39
Section 20.13. Consumer Price Index...........................................................39
Section 20.14. Interest.......................................................................39
Section 20.15. Excavation.....................................................................39
Section 20.16. Rules and Regulations..........................................................39
<PAGE>
Section 20.17. Financial Statements...........................................................39
Section 20.18. General Rules of Construction..................................................39
Section 20.19. Recording......................................................................40
Section 20.20. Effective Date.................................................................40
Section 20.21. Headings.......................................................................40
Section 20.22. Managing Agent.................................................................40
</TABLE>
<TABLE>
<CAPTION>
EXHIBITS: Addendum
<S> <C> <C>
Exhibit A Site Plan
Exhibit B Measurement of Leased Premises
Exhibit C Landlord's Work
Exhibit D Tenant's Work
Exhibit E Sign Criteria
Exhibit F Commencement and Expiration Date Declaration
Exhibit G Waiver of Sales Tax Confidentiality
Exhibit H Subordination, Non-Disturbance and Attornment Agreement
GUARANTY
</TABLE>
<PAGE>
A Retail Development
THIS LEASE dated as of this ____ day of ________________, 19___ (the
"Lease") by and between GRAPEVINE MILLS LIMITED PARTNERSHIP, a Delaware limited
partnership, the address of which is c/o The Mills Corporation, 1300 Wilson
Boulevard, Suite 400, Arlington, Virginia 22209 (hereinafter referred to as
"Landlord") and TOYS INTERNATIONAL, a California corporation, the address of
which is 550 Rancheros Drive, San Marcos, California 92069 (hereinafter referred
to as "Tenant").
R E C I T A L
Landlord hereby leases to Tenant and Tenant hereby hires and takes from
Landlord, the Leased Premises, for the Term commencing on the Commencement Date,
subject to the terms, covenants, conditions and provisions of this Lease.If the
Commencement Date is not the first day of a month, Minimum Rent for the month in
which the Commencement Date occurs shall be prorated to the end of the month and
paid as the second monthly installment of Minimum Rent on the first day of the
next month and, after the expiration of the number of years in the Term, the
Term shall expire on the last day of the same month in which the Commencement
Date of the Term occurred, it being the intention of the parties that the Term
expire on the last day of a month. Neither this Lease nor the obligations of
Tenant hereunder shall be affected by a postponement and Landlord shall not be
subject to any liability for failure to make possession of the Leased Premises
available on the Commencement Date. When the Commencement Date has been
determined, Landlord and Tenant shall execute, acknowledge and deliver a written
statement in recordable form specifying the Commencement and Expiration Dates of
the Term and, if there shall have been any changes in the floor area of the
Leased Premises, such statement shall reflect such change or changes. Said
statement upon execution and delivery shall be deemed to be a part of this
Lease.
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: 312, consisting of approximately 9,369 square feet of
floor area as shown on Exhibits A and B attached hereto and made a part hereof.
(2) Section 1.2: Term:
Commencement Date:
The earlier of (i) the date following the expiration of a seventy-five
(75) day fixturing period ("Fixturing Period") following the Delivery of
Possession Date (as defined in Section 3.2), or (ii) the date the Leased
Premises is open for business to the public.
Original Term: Five (5) years.
Option Period: Five (5) years, provided Tenant's Gross Sales for the
twelve (12) month period ending two hundred ten (210) days prior to the
Expiration Date exceed Two Hundred Thirty-Five and 00/100ths Dollars ($235.00)
per square foot.
(3) Section 2.1: Minimum Rent:
Original Term:
<PAGE>
From the Commencement Date and continuing through the expiration of the
Original Term, the sum of $179,135.28 annually ($19.12 psf), payable in equal
consecutive monthly installments of $14,927.94 each.
Option Period:
Beginning with the first (1st) year and continuing through the
expiration of the Option Period, the sum of $206,118.00 annually ($22.00 psf),
payable in equal consecutive monthly installments of $17,176.50 each.
(4) Section 2.2: Percentage Rent:
Percentage Factor: 5%
Sales Break Point for the Original Term:
From the Commencement Date through the expiration of the Original Term:
$3,582,705.60.
Sales Break Point for the Option Period:
Beginning with the first (1st) year and continuing through the expiration
of the Option Period: $4,122,360.00.
(5) Section 2.4: Security Deposit: N/A
(6) 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.
(7) Section 13.2: Fund Contribution: $2.00 per square foot of floor area in
the Leased Premises
Grand Opening Fee (Initial Contribution): N/A
(8) Guarantor: Play Co. Toys and Entertainment Corporation, a Delaware
corporation
Address: 550 Rancheros Drive
San Marcos, CA 92069
(9) Grand Opening Date: N/A
(10) Temporary Charges: $1.00 per square foot of floor area in the Leased
Premises
(11) Construction Chargebacks: N/A
(12) Tenant Allowance: $93,690.00
<PAGE>
ARTICLE I
GRANT AND TERM
Section 1.1 Leased Premises. (a) Landlord, in consideration of the Rent
(as defined in Section 2.3) to be paid and the covenants to be performed by
Tenant, does hereby lease and demise to Tenant, and Tenant hereby rents and
hires from Landlord for the Term herein set forth, the Leased Premises which are
described as set forth in the Data Sheet attached hereto, in the retail
development designated as Grapevine Mills or by such other name as Landlord may
from time to time hereafter designate (hereinafter "Retail Development"). The
term "State" as used herein shall mean the State or Commonwealth of Texas. For
all purposes in this Lease, a "Major Tenant" is any occupant of 20,000 square
feet or more of floor area in the Retail Development and a "Major Tenant Space"
is any space in the Retail Development containing 20,000 square feet or more. It
is agreed that, wherever the term "Shopping Center" is used herein, it shall
mean the Retail Development excluding the Major Tenant Spaces, except as
otherwise specifically stated herein. Exhibit A sets forth the general layout of
the Retail Development. Landlord does not warrant or represent that the Retail
Development or the Leased Premises will be constructed exactly as shown thereon
or that it will be completed by a specific date. 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 additional stories on any building or buildings within the Retail
Development, and to build adjoining thereto, to construct decks or elevated
parking facilities and free standing buildings within the parking lot areas of
the Retail Development, and to change the size, location, elevation and nature
of any of the stores in the Retail Development or the common areas, or any part
thereof. In the event Landlord elects to enlarge the Retail Development, or any
part thereof, any additional area may be included by Landlord in the definition
of the Retail Development for purposes of this Lease. Landlord shall also have
the general right from time to time to include within and/or to exclude from the
defined Shopping Center any existing or future areas and the floor area of the
Shopping Center shall be accordingly adjusted. The premises leased to Tenant are
herein referred to as the "Leased Premises". The approximate location of the
Leased Premises is cross-hatched on the lease plan of the Retail Development
attached hereto and made a part hereof as Exhibit A. This Lease of the Leased
Premises is subject to all applicable building restrictions, planning and zoning
ordinances, governmental rules and regulations, existing underlying leases, and
all other encumbrances, covenants, restrictions, easements and agreements
affecting the Retail Development and the terms and provisions of certain master
declaration, reciprocal easement and operating agreements now or hereafter
entered into by Landlord.
Subject to the provisions of Section 5.1, Tenant shall enjoy a
non-exclusive easement, right and privilege for Tenant and its customers,
employees and invitees and the customers, employees and invitees of any
assignee, sublessee, concessionaire or licensee of Tenant, to use the common
areas of the Shopping Center, with Landlord and the other tenants and occupants
of floor area within the Shopping Center and their respective customers,
employees and invitees. Furthermore, Landlord agrees that any additions,
alterations or modifications to the Shopping Center by Landlord shall not
adversely affect access to, or visibility of the Leased Premises and, except as
otherwise provided for herein, Tenant shall retain substantially the same
relative position with respect to Major Tenants of the Shopping Center as of the
Commencement Date.
<PAGE>
(b) After the Delivery of Possession Date (as defined in Section 3.2),
Landlord reserves the right to relocate Tenant. Landlord shall provide Tenant
with not less than thirty (30) days written notice of such relocation (the
"Relocation Period") during which Landlord shall offer to Tenant such
alternative location(s) (with approximately the same floor area) 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, Minimum Rent and Sales Break Point 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 new location 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 location to Tenant, open for
business in the new location ("Relocation Date"). In the event Landlord and
Tenant are unable to agree on an alternative location, this Lease shall
terminate at the end of the said thirty (30) day period ("Termination Date"). In
the event of such termination, Landlord shall pay to Tenant, within thirty (30)
days following the Termination Date, a sum equal to the then unamortized cost of
Tenant's leasehold improvements which have been paid for by Tenant, such
amortization to be on a straight line basis over the Original Term, provided
Tenant shall furnish to Landlord such backup information as Landlord may
reasonably require. Tenant shall deliver possession of the Leased Premises to
Landlord on or before the Termination Date and/or the Relocation Date in "as is"
condition excepting the provisions of Sections 3.5 and 17.1. Tenant shall pay
all charges which are due and owing or which shall accrue up to such Termination
Date or Relocation Date (which charges shall be paid to Landlord within thirty
(30) days of such Termination Date or Relocation Date) and Tenant shall be
released from any and all further obligations pursuant to this Lease accruing
after such Termination Date or Relocation Date with respect to the vacated
Leased Premises, except as otherwise provided in Articles V and VII; however, in
the event of relocation, Tenant shall remain liable for all obligations accruing
under this Lease after the Relocation Date.
(c) The square footage of the Leased Premises (sometimes herein
referred to as the gross leasable floor area or GLA) shall be measured as
defined in Exhibit B. The actual square footage in the Leased Premises shall be
determined by Landlord's architect. 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 from the square foot floor area originally set
forth in the Data Sheet, the Minimum Rent set forth in Section 2.1 hereof shall
be adjusted by multiplying the Minimum Rent by a fraction, the numerator of
which is the square foot floor area determined by Landlord's architect and the
denominator of which is the square foot floor area originally set forth in the
Data Sheet, and Tenant shall be obligated to pay such Minimum Rent, as adjusted,
from the Commencement Date, subject to further adjustments as provided in this
Lease. Each monthly installment provided for in Section 2.1 shall be recomputed
and shall be that dollar amount which results from dividing the adjusted Minimum
Rent by twelve (12). Any and all references in this Lease to Minimum Rent (or
the monthly installments thereof) shall be deemed to be references to the
Minimum Rent as computed by application of this Section 1.1, subject, however,
to the adjustments set forth elsewhere in this Lease. For purposes of this
Lease, in determining the gross leasable floor area or the gross leased and
occupied floor area of the Shopping Center, there shall be excluded therefrom
project areas and offices, common areas and/or areas under Landlord's control
(e.g., electrical/utility rooms, etc.). The exterior walls, roof, storefront and
the area beneath the Leased Premises are not demised hereunder, and the use
thereof, together with the right to install, maintain, use, repair and replace
pipes, ducts, conduits, wires, tunnels, sewers and structural elements leading
through the Leased Premises in locations which will not materially interfere
with Tenant's use thereof and serving other parts of the Retail Development are
hereby reserved to Landlord. Landlord reserves an easement above Tenant's
finished ceiling or light line to the roof for general access purposes and in
connection with the exercise of Landlord's other rights under this Lease.
<PAGE>
Section 1.2 Term. The Term of this Lease shall be for a period
commencing on the Commencement Date, and expiring at 11:59 p.m. local time on
the final day of the month in which the Original Term or the Option Period, if
exercised, expires or other specified date as set forth in the Data Sheet,
unless sooner terminated in accordance with the provisions hereof (the
"Expiration Date"). Unless otherwise specified in this Lease, the use of the
word "Term" shall be deemed to include both the Original Term and the Option
Period, if exercised. The term "full year" and "year" as used in this Lease
shall mean consecutive periods of twelve (12) months each following the
Commencement Date. For all purposes of this Lease, the term "Lease Year" shall
have the following meaning: the first Lease Year shall be a period beginning
with the Commencement Date and ending on the 31st day of December next following
the Commencement Date, and after the first Lease Year, the term Lease Year shall
mean a fiscal period of twelve (12) consecutive calendar months commencing on
January 1 of each calendar year, except that the last Lease Year shall terminate
on the Expiration Date or sooner termination of this Lease. Lease Years
containing 365 days or more shall be referred to as "full Lease Years." If the
Leased Premises are not delivered to Tenant on or before the expiration of
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
of this Lease, Landlord may submit to Tenant a Commencement and Expiration Date
Declaration in the form attached hereto as Exhibit F, specifying the information
called for in said form, and Tenant shall execute such Declaration within thirty
(30) days following submission for purposes of certifying such information;
provided, however, that the Declaration shall not be rendered ineffective by
Tenant's failure to execute same.
Provided Tenant is not in default hereof, Tenant shall have the option to
extend the Term hereof (the "Option") for one (1) additional period of five (5)
years (the "Option Period"). The Option shall be exercised, if at all, by
written notice to Landlord ("Notice") at least one hundred eighty (180) days
prior to the expiration of the Original Term. All terms and conditions of this
Lease shall apply during the Option Period except the Minimum Rent and Sales
Break Points shall be as scheduled in Sections 2.1 and 2.2 hereof. In the event
that Tenant does not exercise the Option by the required date, then such Option
shall become null and void and be of no further force or effect.
If Tenant's Gross Sales during the twelve (12) month period ending two
hundred ten (210) days prior to the Expiration Date do not exceed Two Hundred
Thirty-Five and 00/100ths Dollars ($235.00) per square foot of floor area in the
Leased Premises, then any Notice by Tenant of the Option shall be null and void
and Tenant's Notice shall have no force or effect. Tenant shall furnish to
Landlord, concurrently with its Notice, a statement certified by an authorized
representative or financial officer of Tenant setting forth the amount of
Tenant's Gross Sales for the said twelve (12) month period.
Notwithstanding the foregoing, in the event Tenant does not achieve
Gross Sales (as hereinafter defined) of at least Two Hundred Thirty-Five and
00/100ths Dollars ($235.00) per square foot during the third (3rd) full year of
the Term hereof, then Tenant, for a period of sixty (60) days following the end
of the third (3rd) full year, shall have the option, upon one hundred eighty
(180) days prior written notice to Landlord of terminating this Lease
("Termination Option") provided, however, that Tenant shall not be entitled to
terminate this Lease if Tenant shall have been, or is, in default of this Lease.
In the event that Tenant does not exercise its Termination Option within the
required time period, then such Termination Option shall, upon expiration of the
applicable period, become null and void and be of no further force or effect. In
the event Tenant exercises the foregoing Termination Option within the required
time period, this Lease shall terminate upon expiration of the one hundred
eighty (180) day period subject, however, to the payment by Tenant to Landlord
of all sums then due and owing or having accrued to Landlord. In the event that
Tenant exercises the Termination Option provided for herein, Tenant shall pay to
Landlord the unamortized portion of the Construction Allowance (as hereinafter
defined).
<PAGE>
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 the Tenant Handbook and to open its store for business to
the public not later than the Commencement Date.
Section 1.4 Late Opening. Except for delays, as described in Article
XVI and provided that Tenant has been given the seventy-five (75) day Fixturing
Period, 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 One Hundred and
00/100ths Dollars ($100.00) per day for the Commencement Date and each day after
the Commencement Date that Tenant shall have failed to open its store for
business. This remedy shall be in addition to any and all other remedies
provided for in this Lease in the event of such failure to open. Such additional
late opening rent shall be deemed to be in lieu of any Percentage Rent that
might have been earned during the period of Tenant's failure to open.
ARTICLE II
RENT AND DEPOSIT
Section 2.1. Minimum Rent. During the entire Term of this Lease, Tenant
shall pay annual minimum rental ("Minimum Rent") for the Leased Premises from
the Commencement Date of this Lease in the amount set forth in the Data Sheet
attached hereto, which sum shall be payable by Tenant in equal consecutive
monthly installments in the sum set forth in the Data Sheet attached hereto, on
or before the first day of each month, in advance. The Minimum Rent and each of
the monthly installments called for hereunder shall be payable to Landlord,
without demand, deduction, set-off or counter-claim. The first installment of
Minimum Rent shall be paid by Tenant within ten (10) days of Tenant's receipt of
Landlord's notice of the Delivery of Possession 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 applicable Sales Break Point set forth in the Data Sheet. In any Lease Year
where there is more than one applicable Sales Break Point, for purposes of
computing annual Percentage Rent the following calculation shall be used: each
Sales Break Point which was effective during any such Lease Year shall be
multiplied by a fraction, the numerator of which is the number of days in the
Lease Year that such Sales Break Point was effective and the denominator of
which is the actual number of days in such Lease Year (herein the "Adjusted
Break Point") and the sum of the Adjusted Break Points shall be the Sales Break
Point for such Lease Year. "Gross Sales" is defined to mean the total amount of
the actual sales price, whether for cash or otherwise, of all sales of
merchandise or services arising out of or payable on account of (and all other
receipts or amounts receivable whatsoever with respect to) all the business
conducted in, on, or from the Leased Premises by or on account of Tenant or any
sublessee, assignee or concessionaire of Tenant for cash or otherwise, including
all orders for merchandise taken from or filled at or from the Leased Premises,
including all deposits not refunded to customers. A "sale" shall be deemed to
have been consummated for purposes of this Lease, and the entire amount of the
sale price shall be included in Gross Sales, at such time as (i) the transaction
is initially reflected in the books or records of Tenant, or any sublessee,
assignee or concessionaire of Tenant, or (ii) Tenant or such other entity
receives all or any portion of the sales price, or (iii) the applicable goods or
services are delivered to the customer, whichever first occurs, irrespective of
whether payment is made in installments, the sale is for cash or credit or
<PAGE>
otherwise, or all or any portion of the sales price has actually been paid at
the time of inclusion in Gross Sales or at any other time. Tenant shall record
at the time of each sale or transaction, in the presence of the customer, all
receipts from such sale or other transaction, whether for cash, credit or
otherwise, in a cash register or cash registers having a cumulative total, which
shall be sealed in a manner approved by Landlord and which shall possess such
other features as shall be required by Landlord. There shall be no deduction
allowed for direct or indirect discounts, rebates, or other reductions on sales,
unless generally offered to the public on a uniform basis. Tenant may deduct
from Gross Sales discount sales to employees, bad debts when written off the
books of Tenant and charges paid to credit card companies provided, however,
that in the aggregate such deductions 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 exclude, however, proceeds from any sales tax,
gross receipts tax or similar tax, by whatever name called which are separately
stated and in addition to the purchase price, bona fide transfers of merchandise
from the Leased Premises to any other stores or warehouses of Tenant, refunds
given to customers for merchandise purchased at the Leased Premises and returned
or exchanged, and sales of Tenant's fixtures and equipment not in the ordinary
course of Tenant's business. The term "merchandise" as used in this Lease shall
include food and beverages if Tenant is permitted to sell such items pursuant to
Section 4.1 hereof.
(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 ten (10) 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 ten (10) days following the end of the month in which Tenant's
Gross Sales for the Lease Year to date exceed the Sales Break Point, and each
month thereafter, Tenant shall pay to Landlord Percentage Rent and shall submit
to Landlord a statement certified by Tenant setting forth the Gross Sales for
each such period. Within forty-five (45) days after the close of each Lease
Year, Tenant shall furnish to Landlord a statement certified by an authorized
representative or financial officer of Tenant setting forth the amount of Gross
Sales during such Lease Year and showing the amount of Percentage Rent required
to be paid by Tenant for such Lease Year. The full amount of the Percentage Rent
due shall be paid to Landlord no later than sixty (60) days after the end of
each Lease Year and any excess Percentage Rent paid shall be credited against
Tenant's next due Percentage Rent payment, except for the final Lease Year of
the Term for which any excess shall be refunded to Tenant. Landlord and/or
Landlord's auditor shall have the right, at any time after ten (10) business
days notice, to inspect and/or audit the records of Tenant relating to Gross
Sales. If the Gross Sales exceed those reported, Tenant shall immediately pay
any deficiency in Percentage Rent owing to Landlord. If Gross Sales vary from
those reported by three percent (3%) or more, Tenant shall pay Landlord's cost
of inspection and audit. If Gross Sales vary from those reported by (i) five
percent (5%) or more in any one (1) Lease Year, or (ii) three percent (3%) or
more for any two (2) Lease Years out of any five (5) Lease Years, then Landlord
shall have the right, at its sole option, to terminate this Lease, with Tenant
remaining liable for sums due and owing under this Lease for the balance of the
Term. Tenant agrees that in the event Tenant shall fail to timely submit a Gross
<PAGE>
Sales statement as required by this Section 2.2(b), Tenant shall pay on demand a
late fee of Fifty and 00/100ths Dollars ($50.00) per late statement, as
additional rent.
(c) In the event that Tenant shall fail to operate its business in the
Leased Premises in the manner and on each day as required pursuant to Article IV
hereof, then, for the purpose of computing the Percentage Rent for such Lease
Year affected by Tenant's failure to operate, the Sales Break Point for such
Lease Year shall be adjusted by multiplying the Sales Break Point otherwise
applicable for such Lease Year by a fraction, the numerator of which shall be
the actual number of days in such short Lease Year or the actual number of days
in such Lease Year during which Tenant was open for business and operating in
accordance with Article IV, and the denominator of which shall be "360".
In the event that the first Lease Year is less than six (6) months in
length, then the Percentage Rent covering such Lease Year shall be paid on Gross
Sales in excess of the Sales Break Point computed on a pro rated basis for the
period beginning on the Commencement Date of the Term and ending twelve (12)
calendar months thereafter.
(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 at least
fifty percent (50%) of merchandise from the Leased Premises at discount prices,
namely prices that are at least twenty percent (20%) less than the prices
charged by the 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.
Accordingly, in the event Tenant fails to sell its merchandise at discount
prices on a continuous basis, Landlord shall have the right, upon ten (10) days
written notice to Tenant, to increase the Minimum Rent set forth in the Data
Sheet and as may have been increased pursuant to other provisions of this Lease,
by Two and 00/100ths Dollars ($2.00) per square foot of the gross leasable area
of the Leased Premises. Within forty-five (45) days after the end of each Lease
Year (together with the annual Gross Sales statement) Tenant shall provide
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 cost and expense incurred for such Study.
Section 2.3. Payments By Tenant. Throughout the Term of this Lease, Tenant
shall pay to Landlord, without demands, deductions, set-offs or counterclaims,
the Rent, which is hereby defined as the sum of the Minimum Rent, Percentage
Rent and all additional rent, when and as the same shall be due and payable
hereunder. Unless otherwise stated, all sums of money or charges of any kind or
nature, in addition to Minimum Rent and Percentage Rent, payable by Tenant to
Landlord pursuant to this Lease or the Exhibits attached hereto are defined as
"additional rent" and are due thirty (30) days after the rendering of an invoice
therefor, without any deductions, set-offs or counterclaims, and failure to pay
such sums of money or charges shall carry the same consequences as Tenant's
failure to pay Rent. All payments and charges required to be made by Tenant to
Landlord hereunder shall be payable in United States funds, at the address
indicated on page 1 of this Lease, unless otherwise specified by written notice
from Landlord to Tenant. No payment by Tenant or receipt by Landlord of a lesser
amount than the correct Rent shall be deemed to be other than a payment on
account and no endorsement or statement on any check or other communication
<PAGE>
accompanying a check for payment of any amounts payable hereunder shall be
deemed an accord and satisfaction, and Landlord may accept such check in payment
without prejudice to Landlord's right to recover the balance of any sums owed by
Tenant hereunder or to pursue any other remedy available in this Lease, or under
law, against Tenant.
Section 2.4. Security Deposit. [Intentionally Deleted]
Section 2.5. Late Charge. In the event any Rent or sums required hereunder
to be paid are not received on or before the tenth (10th) calendar day after the
same are due, then, for each and every late payment, Tenant shall immediately
pay, as additional rent, a late charge equal to the greater of (a) Fifty and
00/100ths Dollars ($50.00), (b) Ten and 00/100ths Dollars ($10.00) per day for
each day after the date due that such payment has not been received by Landlord
or (c) 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 set forth in Section
2.4 hereof. The provisions herein for late charges shall not be construed to
extend the date for payment of any sums required to be paid by Tenant hereunder
or to relieve Tenant of its obligation to pay all such sums at the time or times
herein stipulated. Notwithstanding the imposition of such late charges pursuant
to this Section 2.5, Tenant shall be in default under this Lease if any or all
payments required to be made by Tenant are not made on or before the time due
and as stipulated in Article XIV, and neither the demand for, nor collection by,
Landlord of such late charges shall be construed as a cure of such default on
the part of Tenant. It is agreed that the said late charge is a fair and
reasonable charge under the circumstances and shall not be construed as interest
on a debt payment. In the event any charge imposed hereunder or under any other
section of this Lease is either stated to be or construed as interest, then no
such interest charge shall be calculated at a rate which is higher than the
maximum rate which is allowed under the usury laws of the State, which maximum
rate of interest shall be substituted for the rate in excess thereof, if any,
computed pursuant to this Lease.
ARTICLE III
PREPARATION OF LEASED PREMISES
Section 3.1. Landlord's Work.
Section 3.2. Delivery of Possession.
(a) Landlord, or Landlord's supervising architect shall give Tenant at
least ten (10) days' prior written notice of the date on which the Leased
Premises will be available for the performance of Tenant's Work, which date
shall be defined as the Delivery of Possession Date of the Leased Premises.
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 frame 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. 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) Within thirty (30) days after the execution and delivery of this
Lease by Landlord, Tenant shall furnish to Landlord for Landlord's approval, two
(2) sets of plans and specifications done in accordance with the Tenant Handbook
which shall provide for the complete remodeling of the Leased Premises (or
finishing in the event the Leased Premises have not been previously occupied),
including without limitation, utilities, interior finish, store front and
fixturing plans, together with mechanical and electrical specifications with
respect to the work to be performed and the installations to be made by Tenant
in order to fit the Leased Premises for use by Tenant in the conduct of its
business ("Tenant's Work"). Tenant agrees, at its sole cost and expense, to
<PAGE>
construct and make such improvements in the Leased Premises in accordance with
the approved plans and specifications. Tenant has inspected the Leased Premises,
is familiar with its condition and accepts same "as is" and in its present
condition and Landlord shall not be obligated to do any further construction or
to make any additional improvements in the Leased Premises, except as may
otherwise be expressly provided herein. The taking of the Leased Premises by
Tenant for the performance of Tenant's Work shall be conclusive evidence that at
such time the Leased Premises were in satisfactory condition except that this
provision shall not be deemed to release Landlord from its obligation to make
such repairs as are elsewhere set forth herein as Landlord's obligation to make.
If Landlord shall, within thirty (30) days after receipt of Tenant's plans and
specifications, notify Tenant of any objections to such plans and
specifications, Tenant shall make necessary revisions and resubmit the same
within thirty (30) days after such notice. Landlord's approval will be evidenced
by endorsement to that effect on the plans and specifications, one set to be
retained by Landlord and one set by Tenant. Tenant understands that Landlord's
approval of its plans and specifications is primarily for conceptual purposes
and such approval shall not constitute a representation or warranty of any kind
with respect thereto, including, without limitation, cost of Tenant's Work,
compliance with governmental requirements or suitability of design.
As soon as practicable after the plans and specifications are made
available to Landlord and Landlord shall have approved Tenant's plans and
specifications, Tenant shall enter the Leased Premises and shall proceed with
due diligence and dispatch to make improvements and install fixtures and other
equipment and a full stock of inventory therein, in accordance with the approved
plans and specifications and all governmental requirements. Such work and
installation shall not interfere with any work to be done by Landlord in other
portions of the Shopping Center, shall be done with labor which is not
incompatible with other labor employed at the Shopping Center without creating
any conflict or work stoppage with, under or as a result of any labor agreement
to which Landlord or its contractors may be a party, and in compliance with such
rules and regulations as Landlord may reasonably make. Landlord shall have no
responsibility or liability whatsoever for any loss of or damage to any fixtures
or other equipment or inventory installed or left in the Leased Premises, and
Tenant's entry on and occupancy of the Leased Premises shall be governed by and
subject to all the provisions, covenants and conditions of this Lease other than
those requiring payment of Rent. Tenant shall obtain and furnish to Landlord to
be delivered not later than the Commencement Date, lien waivers from all
contractors, subcontractors and materialmen, a building permit, licenses,
certificates and approvals with respect to work done and installations made by
Tenant that may be required from the governmental authorities with respect to
Tenant's Work, use and occupancy and shall open for business to the public not
later than the Commencement Date.
Provided Tenant is not in default hereof, Landlord hereby agrees to
contribute towards the cost of Tenant's Work a Construction Allowance of
Ninety-three Thousand Six Hundred Ninety and 00/100ths Dollars ($93,690.00). The
aforesaid Construction Allowance shall be paid sixty (60) days after the date
Tenant opens for business, provided Tenant shall have received the applicable
lien waivers from all contractors and subcontractors. In the event that this
Lease is terminated prior to expiration of the stated Term, Tenant shall
immediately repay to Landlord an amount equal to the then unamortized portion of
the Construction Allowance paid to Tenant, which amortization shall be on the
straight-line basis over the full stated Term, plus interest on such unamortized
portion at a rate equal to three (3) percentage points above the prime rate then
charged by a plurality of FDIC member banks headquartered in the State, which
interest shall accrue from the date of payment of the Construction Allowance to
Tenant through the date of termination of the Lease.
Notwithstanding the foregoing, Tenant shall be obligated to pay
temporary charges in the amount of One and 00/100ths Dollars ($1.00) per square
foot of floor area in the Leased Premises within thirty (30) days after receipt
of a bill from Landlord.
(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
<PAGE>
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 its expense, shall cause the lien to be
discharged or fully bonded to the satisfaction of Landlord within thirty (30)
days after notice of the filing thereof. If Tenant fails to discharge or bond
against said mechanic's, materialman's or other lien, Landlord may, in addition
to any other remedies Landlord may have, but without obligation to do so, bond
against or pay the lien without inquiring into the validity or merits of such
lien and all sums so advanced, including reasonable attorney fees incurred by
Landlord in defending against such lien, procuring the bond or in the discharge
of such lien, shall be paid by Tenant on demand as additional rent. It shall be
Tenant's continuing obligation to keep and maintain the Leased Premises and all
other parts of the Retail Development free from any and all liens arising out of
any work performed, materials furnished or obligations incurred by or for Tenant
in connection with the Leased Premises. In addition, Tenant shall replace any
bonds posted by Landlord pursuant hereto with a suitable bond of equivalent
amount within twenty (20) days after Landlord's demand therefor.
Tenant, subject to Landlord's consent not to be unreasonably withheld,
conditioned or delayed, may grant a security interest, encumber or pledge its
equipment, personal property, inventory and movable trade fixtures located on or
about the Leased Premises, with respect to financing which benefits this store
location. In no event, however, shall Tenant be permitted to mortgage,
hypothecate, encumber or pledge the leasehold interest in the Leased Premises.
(c) Upon the expiration of each five (5) year period of the Term of
this Lease, 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
covering, interior or exterior lighting, plumbing fixtures, shades, canopies or
awnings or make any changes to the storefront, mechanical, electrical or
sprinkler systems) without the prior written consent thereto by Landlord. Tenant
shall submit to Landlord plans and specifications for such work at the time
consent is sought, in accordance with the criteria and procedures as provided in
the Tenant Handbook. 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 provision of this Lease.
<PAGE>
Tenant may from time to time make non-structural alterations to the
Leased Premises without Landlord's prior written approval, the aggregate total
cost of which shall not exceed Ten Thousand and 00/100ths Dollars ($10,000.00)
in any Lease 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 non-structural alterations shall not change
the overall appearance of the Leased Premises as originally approved by
Landlord.
Section 3.5. Removal by Tenant. All repairs, alterations, decorations,
additions and improvements made by Tenant shall be deemed to be attached to the
leasehold and to have become the property of Landlord upon such attachment, and,
upon the Expiration Date or sooner termination of this Lease, Tenant shall not
remove any of such alterations, decorations, additions and improvements;
provided that trade fixtures installed by Tenant may be removed if all Rent due
herein are paid in full and Tenant is not otherwise in default hereunder;
provided further, however, that Landlord may designate by written notice to
Tenant those alterations, decorations, additions and improvements which shall be
removed by Tenant at the Expiration Date or sooner termination of this Lease and
Tenant shall, at Tenant's cost, promptly remove the same and repair any damage
to the Leased Premises caused by such removal.
ARTICLE IV
CONDUCT OF BUSINESS
Section 4.1. Use and Trade Name. Tenant shall continuously use and occupy
the Leased Premises during the Term solely for the purpose of conducting the
business specifically set forth in the Data Sheet and for no other purpose or
purposes. Throughout the Term hereof, Tenant shall (a) operate its business in
the Leased Premises under the Trade Name specifically set forth in the Data
Sheet and under no other so long as such name shall not be held to be in
violation of any applicable law, (b) not change the advertised name or character
of the business operated in the Leased Premises, (c) refer to the Shopping
Center by name in designating the location of the Leased Premises in all
newspaper and other advertising within the Shopping Center market area and in
all other references to the location of the Leased Premises, and (d) during the
period from the Delivery of Possession Date through sixty (60) days following
the Commencement Date, include in all Tenant's newspaper advertising within the
Shopping Center market area the designation that Tenant is opening for business
in the Shopping Center. If any governmental license(s) or permit(s) shall be
required for the proper and lawful conduct of Tenant's business or other
activity carried on in the Leased Premises, or if a failure to procure such a
license or permit might or would in any way, adversely affect Landlord or the
Shopping Center, then Tenant, at Tenant's expense, shall duly procure and
thereafter maintain such license(s) or permit(s) and submit the same for
inspection by Landlord. Tenant, at Tenant's expense, shall at all times, comply
with the requirements of such license(s) or permit(s). Except as provided in
Section 1.3, Tenant shall open 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.
Section 4.2. Operation of Business. Tenant shall open for business in the
Leased Premises and remain open during the entire Term and continuously operate
its business in the entire area of the Leased Premises during the entire Term.
Tenant shall conduct its business at all times in a high class and reputable
manner, maintaining at all times a full staff of employees and a complete stock
of merchandise. Tenant shall install and maintain at all times a display of
merchandise in the display windows (if any) of the Leased Premises and shall
keep the Leased Premises well lighted during all hours that the Shopping Center
is open to the public and during such other hours as may be reasonably
designated by Landlord, but in no event more than one (1) hour after the close
of business. In no event shall Tenant conduct or advertise any auction, fire
sale, going out of business sale, or bankruptcy sale in or about the Leased
Premises without Landlord's prior written consent in each instance, which
consent may be withheld by Landlord in its sole and absolute discretion. Tenant
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shall conduct its business in the Leased Premises in a lawful manner and in good
faith during all days and hours specified by Landlord from time to time. 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.
Section 4.4. Tenant's Warranties. Tenant warrants, represents, covenants
and agrees that, in the operation of its business within the Leased Premises,
Tenant shall: (a) pay before delinquency any and all taxes, assessments and
public charges levied, assessed or imposed upon Tenant's business, or upon
Tenant's fixtures, furnishings or equipment in the Leased Premises, or upon any
leasehold interest or personal property of any kind, owned by or placed in or
about the Leased Premises by Tenant or by anyone claiming by, through or under
Tenant, including, without limitation, any transfer taxes, and pay when and as
due all license fees, permit fees and charges of a similar nature required for
the conduct by Tenant or any subtenant or concessionaire of any business or
undertaking authorized hereunder to be conducted in or from the Leased Premises;
(b) observe all reasonable requirements promulgated by Landlord at any time and
from time to time relating to delivery vehicles, the delivery of merchandise,
and the storage and removal of trash and garbage; (c) not use any space outside
the Leased Premises for sale, storage or any other undertaking; (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
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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; (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.
Section 4.7. Notice by Tenant. Tenant shall give immediate notice to
Landlord in case of fire or accidents in the Leased Premises, or in the building
of which the Leased Premises are a part of, or of defects therein or in any
fixtures or equipment.
Section 4.8. Radius. Tenant acknowledges that the Retail Development draws
it customers from a large geographic area, relying in part on regional and
international tourism, and that the success of the Retail Development and income
of the Landlord therefrom are dependent upon maximum customer traffic within the
Retail Development . In addition, Tenant acknowledges that Landlord is relying
on the generation of Percentage Rent from Tenant's Gross Sales at the Leased
Premises. During the Term, in the event Tenant, or any person, firm or
corporation who or which controls or is controlled by Tenant (an "Affiliate")
shall directly or indirectly, either individually or as a partner or stockholder
or otherwise, own, operate, or 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
<PAGE>
complete Gross Sales information and reports with respect to any competing
business within the Area in accordance with the requirements of Article II of
this Lease and Tenant shall be obligated to include the applicable portion of
the Gross Sales of such competing business with the Gross Sales of the Leased
Premises and to pay Percentage Rent thereon in accordance with the terms of this
Lease. The "Area" shall be defined as the area falling within a radius of
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 within said Area on the Effective Date.
ARTICLE V
COMMON AREA
Section 5.1. Use of Common Area. Landlord agrees to cause to be operated,
managed and maintained during the Term all of the common areas of the Shopping
Center. The term "common areas", as used in this Lease, shall mean the parking
areas, pedestrian sidewalks and bridges, truckways, loading docks, delivery
areas, park areas, pedestrian malls and courts, elevators and escalators, if
any, and stairs not contained in leased areas, public restrooms and comfort
stations, if any, service areas, fire, service and exit corridors, passageways,
landscaped areas, berms and all other areas or improvements which may be
provided for the convenience and use of the occupants and tenants of the Retail
Development and their respective agents, employees, customers, invitees, and the
licensees and invitees of Landlord. The use and occupancy by Tenant of the
Leased Premises 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 LANDLORD AND DEFEND LANDLORD, 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 in such areas and to
discourage non-customer use, provided the same shall not materially adversely
affect access to or visibility of the Leased Premises. In addition, Landlord may
modify, from time to time, the traffic flow pattern and layout of parking spaces
and the entrances-exits to adjoining public streets or walkways, utilize
portions of the common areas for entertainment, displays and charitable
activities and may do such other acts in and to the common areas as in its
judgment may be desirable to improve the convenience or attraction thereof.
Landlord agrees to maintain all common areas of the Shopping Center in good
order, condition and repair and in a safe, clean, sightly and sanitary condition
in accordance with good and accepted shopping center practices. The maintenance
obligations of Landlord shall include, without limitation, the re-striping of
parking areas when required, repairing of common areas and adequate lighting of
all exterior common areas during all hours of darkness during which Tenant shall
be open for business and for one (1) hour thereafter.
Section 5.2. Common Area Maintenance Expenses. (a) Tenant agrees to pay to
Landlord each Lease Year, in the manner hereinafter provided, Tenant's
proportionate share of all costs and expenses (the "Common Area Maintenance
Expenses") of every kind and nature paid or incurred by Landlord, or for which
Landlord is obligated, during each Lease Year, for operating, equipping,
policing and protecting, heating, air conditioning, providing sanitation and
sewer and other services, lighting, insuring, repairing, replacing and
maintaining (i) the common areas, and (ii) all buildings and roofs within the
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Retail Development, and (iii) all other areas, facilities and buildings used in
connection with the maintenance and/or operation of, and whether located within
or outside of, the Retail Development, including without limitation, all roads
and driveways serving the Retail Development which are maintained or repaired by
Landlord or at Landlord's expense. The Common Area Maintenance Expenses shall
include, but are not limited to, costs and expenses of: water, gas, sewage,
electricity, refuse disposal, air conditioning, heating and other utilities
(without limitation), including all usage, service, hook-up, connection,
availability and/or standby fees or charges pertaining to same, and the utility
costs; illumination and maintenance of signs, whether located on or off the
Retail Development property; salaries of all management personnel; maintenance,
repair and replacement of directories, electronic or otherwise, cleaning,
lighting, snow removal and landscaping; security control and fire protection;
uniforms for maintenance, administrative and security personnel for the Retail
Development; management fees; maintenance for wooded areas, retention ponds,
wetlands, rivers and riverbank areas; premiums for insurance to the extent
maintained by Landlord, for liability, casualty and property damage, including,
without limitation, insurance against vandalism, plate glass breakage, fire and
extended coverage insurance and such other coverage as determined by Landlord,
and liability for defamation and claims of false arrest occurring in and about
such areas; personal property taxes; maintaining and replacing the equipment, if
any, supplying music to such areas; the reasonable depreciation of equipment
used in the operation and maintenance of such areas; total compensation and
benefits (including premiums for workers' compensation and other insurance) paid
to or on behalf of persons involved in the performance or
administration/technical support of the work specified in this Section 5.2;
repair, maintenance and cleaning of such areas; operation, repair, maintenance
and reasonable depreciation of all temporary and permanent utility systems for
the Retail Development, including, without limitation, heating, ventilating and
air conditioning systems (HVAC systems), gas system(s), plumbing system(s),
electrical equipment and irrigational pumping system(s); operation, repair,
maintenance and reasonable depreciation of emergency water and sprinkler main
system(s) and security alarm system(s); operation maintenance, repair and
replacement of mechanical equipment including any automatic door openers,
elevators, escalators, lighting fixtures (including replacement of poles, tubes
and bulbs) and all other items of equipment used in connection with such areas;
paper supplies in restrooms located in or about such areas, cleaning, lighting,
striping and landscaping, curbs, gutters, sidewalks, drainage and irrigation
ditches, conduits, pipes and canals serving the Retail Development; and there
shall also be added to the foregoing costs and expenses an amount equal to
fifteen percent (15%) of the total of all of the ongoing costs and expenses as
Landlord's administrative fee. As stated throughout this Lease, whenever Tenant
is obligated to pay its "proportionate share" of a cost, expense or Taxes (as
hereinafter defined) such share shall be based on gross leased and occupied
floor area in the Shopping Center, and Tenant's proportionate share shall be
that fraction, the numerator of which is the total square footage of floor area
in the Leased Premises, and the denominator of which is the total square footage
of gross leased and occupied floor area (including the Leased Premises) in the
Shopping Center. As used throughout this Lease, the "gross leased and occupied
floor area" in effect for the whole of any Lease Year shall be the average of
the gross leased and occupied floor area in effect on the first day of each
calendar month in such Lease Year.
Prior to the proration of such Common Area Maintenance Expenses to Tenant,
there shall be deducted from the total of such Common Area Maintenance Expenses
any amounts specifically contributed by the Major Tenants toward such Common
Area Maintenance Expenses. It is further agreed that in no event shall Tenant be
obligated for the capital costs of initially constructing the Retail Development
or the capital costs of subsequent expansion construction for the Retail
Development (i.e., adding new Major Tenants to the development or expanding the
Shopping Center or the common areas).
<PAGE>
(b) Tenant's proportionate share of such Common Area Maintenance Expenses
for each Lease Year shall be paid in advance, in equal monthly installments, in
the same manner and at the same time as the monthly installments of Minimum Rent
are payable hereunder without deduction, offset or diminution of any kind, based
on an amount estimated in advance from time to time by Landlord to be Tenant's
obligation under this Section 5.2. Notwithstanding the above, in the event
Landlord at any time determines that the amount of Common Area Maintenance
Expenses actually being paid or incurred by Landlord exceeds the estimate upon
which Tenant's proportionate share of Common Area Maintenance Expenses was
computed, then Tenant, following a request from Landlord, shall commence to pay
with the next monthly installment of Minimum Rent due an amount sufficient to
result in Tenant's paying its full proportionate share of Common Area
Maintenance Expenses as computed on the basis of Landlord's revised estimate of
Common Area Maintenance Expenses. Subsequent to the end of each Lease Year,
Landlord shall furnish Tenant with a statement of the actual amount of Tenant's
proportionate share of such Common Area Maintenance Expenses for such period
which statement shall be in reasonable detail, provided, however, Landlord shall
be permitted to describe areas of expenditure by category and shall not be
obligated to enumerate each specific expenditure. If the total amount paid by
Tenant under this Section 5.2 for any Lease Year shall be less than the actual
amount due from Tenant for such Lease Year as shown on such statement, Tenant
shall pay Landlord the difference between the amount paid by Tenant and the
actual amount due, such deficiency to be paid within thirty (30) days after the
furnishing of each such statement, and if the total amount paid by Tenant
hereunder for any such Lease Year shall exceed the actual amount due from Tenant
for such Lease Year, such excess shall be credited against the next installment
due from Tenant to Landlord under this Section 5.2.
ARTICLE VI
REPAIRS AND MAINTENANCE
Section 6.1. Repairs and Maintenance by Landlord. Landlord agrees to keep
in good order, condition and repair the roof (including keeping the roof
watertight), foundations, exterior (including exterior painting and finish), all
structural portions of the Leased Premises (and of the 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. 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.
Section 6.2. Repairs and Maintenance by Tenant. (a) Except for the repairs
and maintenance that Landlord is specifically obligated to make or perform
pursuant to Section 6.1 above, throughout the entire Term of this Lease, Tenant,
at its expense, shall promptly make all repairs and replacements and perform
maintenance in and to the Leased Premises and all equipment and fixtures therein
or appurtenant thereto, that are necessary or desirable in order to keep the
Leased Premises in good order, condition and repair and in safe, dry and
tenantable condition. Without limiting the generality of the foregoing, Tenant,
at its expense, shall maintain and promptly make any and all necessary repairs
to or replacements of: (i) that portion of any pipes, lines, ducts, wires or
conduits (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
<PAGE>
frames, walls, storefront including security gates, grilles or enclosures, locks
and closing devices, partitions and ceilings in the Leased Premises; (v)
heating, ventilating, air conditioning, electrical and plumbing system(s)
equipment and fixtures (whether contained within or outside the Leased Premises)
which are installed by Tenant or which exclusively serve the Leased Premises;
and (vi) the Leased Premises or any part of the Shopping Center when repairs
thereto are necessitated by any act or omission (negligent or otherwise) of
Tenant or any of Tenant's agents, employees or invitees, or by the failure of
Tenant to perform any of its obligations under this Lease. Notwithstanding the
foregoing, Landlord shall be responsible for repairs and maintenance
necessitated by the negligence or intentional acts of Landlord, its agents or
employees. Notwithstanding any contrary provision of this Article VI, Tenant, at
its expense, shall make any and all repairs to the Leased Premises as may be
necessitated by any break-in, forcible entry or other trespass into or upon the
Leased Premises, regardless of whether or not such entry and damage is caused by
the negligence or fault of Tenant or occurs during or after business hours.
Tenant, at its expense, shall change all air conditioning filters at least five
(5) times per year and shall have the air conditioning system professionally
inspected and generally serviced at least twice per year.
(b) Tenant shall keep and maintain the Leased Premises in a clean, sanitary
and safe condition in accordance with the laws of the State and in accordance
with all directions, rules and regulations of the health officer, building
inspector, the National Fire Protection association and any other officials of
the governmental agencies having jurisdiction, at the sole cost and expense of
Tenant, and Tenant shall comply with all requirements of laws, ordinances,
rules, regulations and orders of any lawful authority having jurisdiction
affecting the Leased Premises or Tenant's use thereof. Tenant, at its expense,
shall install and maintain fire extinguishers and other fire protection devices
as may be required by reason of the conduct of Tenant's business, from time to
time by any agency having jurisdiction or the underwriters insuring the building
in which the Leased Premises are located. If any bureau, department or official
of the Federal or State government requires or recommends the installation of
any changes, modifications or alterations in the sprinkler system or additional
sprinkler heads or other equipment (hereinafter in this subsection (b)
collectively "changes") by reason of Tenant's business, or the location of
partitions, trade fixtures, or other contents of the Leased Premises, or for any
other reason, or if any such changes become necessary to prevent the imposition
of a penalty or charge against the full allowance for a sprinkler system in the
fire insurance rates set by any fire insurance company, Tenant, at Tenant's
expense, shall promptly make such changes as required.
(c) Tenant agrees that Tenant's use of electrical current will at no time
exceed the capacity of the electric distribution system and that Tenant will not
make any alteration or addition to Tenant's electrical system without Landlord's
prior written consent. If Tenant installs any electrical equipment that
overloads the electrical lines in the Leased Premises or the Retail Development,
Tenant shall, at Tenant's sole cost and expense, be required to make whatever
changes to such electrical equipment and in the electric wiring in the Leased
Premises (but only after obtaining Landlord's written approval) as may be
necessary in order to remedy such overloading and be in compliance with all
insurance and legal requirements. All changes required to be made hereby shall
result in the continued conformance with the provisions of the Tenant Handbook
and this Lease.
(d) If Tenant refuses or neglects to properly maintain the Leased Premises,
or to commence or to complete repairs promptly and adequately, or if Landlord
finds it necessary to make any repairs or replacements otherwise required to be
made by Tenant, then Landlord may, after 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 cost and expenses therefor plus a
charge of fifteen percent (15%) of such costs and expenses.
<PAGE>
ARTICLE VII
TAXES
Section 7.1. Tax Liability. Tenant agrees to pay to Landlord Tenant's
proportionate share of all taxes and assessments and service payments in lieu of
taxes of every nature and kind which may be levied or assessed by, or payable
to, any lawful authority during or with respect to each fiscal tax year falling
in whole or in part during the Term of this Lease against any or all or any part
of the land, buildings and improvements comprising the Retail Development and
any other taxes which Landlord becomes obligated to pay with respect to the
Retail Development, whether or not the same are assessed as real or personal
property or are payable in advance or in arrears (the "Taxes"). If due to a
future change in the method of taxation, any tax, excise or assessment shall be
levied or assessed against Landlord, directly or indirectly, in lieu of, in
substitution for or as a supplement to any present Taxes or future (real estate
or personal property) tax, in whole or in part, including any new tax, excise or
assessment upon rentals payable to Landlord by occupants of the Retail
Development or upon gross receipts or other income of Landlord derived by
Landlord from or upon the interest in the Retail Development of Landlord (or any
individuals or entities comprising Landlord), such tax, excise or assessment
shall constitute a tax respecting which Tenant is obligated to pay its
proportionate share to Landlord as provided herein. If any Taxes or assessed
valuation(s) are contested by Landlord, then Tenant's proportionate share of
Taxes shall also include Tenant's proportionate share of the cost and expense of
consultation services incurred in evaluating and contesting such Taxes or
assessed valuation(s).
The term "Taxes" shall also include any form of assessment, special
assessment, license fee, license tax, business license fee, business license
tax, commercial rental tax, levy, charge, tax or similar imposition, imposed by
any authority having the direct power to tax, including without limitation any
city, county, State or Federal government, or any school, agricultural,
lighting, drainage or other improvement or special assessment district or any
other agency or other public body, whether or not consented to or joined in by
Landlord and whether or not retroactive, payable by Landlord thereof as against
the land and improvements comprising, or any legal or equitable interest of the
Landlord in, the Retail Development.
Section 7.2. Method of Payment. Tenant's proportionate share of Taxes shall
be paid, in advance, in monthly installments on or before the first day of each
calendar month, in the same manner and at the same time as the monthly
installments of Minimum Rent are payable hereunder without deduction, offset or
diminution of any kind, based on an amount estimated by Landlord. Following
receipt of all bills for Taxes attributable to any calendar or fiscal year
during the Term hereof, Landlord shall furnish Tenant with a written statement
of the actual amount of Tenant's proportionate share of Taxes for such year. If
any bill for any such Taxes is not available, Landlord will estimate the amount
of such tax. If the total amount paid by Tenant hereunder for any calendar or
fiscal year during the Term of this Lease shall be less than the actual amount
due from Tenant for such year, as shown on such statement, Tenant shall pay to
Landlord the difference between the amount paid by Tenant and the actual amount
due, such deficiency to be paid within thirty (30) days after demand therefor by
Landlord; and if the total amount paid by Tenant hereunder for any such calendar
or fiscal year shall exceed such actual amount due from Tenant for such year,
such excess shall be credited against the next installment of Taxes due from
Tenant to Landlord hereunder. For the calendar or fiscal years in which this
Lease commences and terminates, Tenant's liability for its proportionate share
of any Taxes for such years shall be subject to a pro rata adjustment based on
the number of days of said calendar or fiscal years during which the Term of
this Lease is in effect. A copy of any such bill for Taxes shall at all times be
sufficient evidence of the amount of Taxes assessed or levied against the
property to which such bill relates. Prior to or at the commencement of the Term
of this Lease and from time to time thereafter throughout the term hereof,
Landlord shall notify Tenant in writing of Landlord's estimate of Tenant's
monthly installments due hereunder. Tenant's obligations under this Article VII
shall survive the Expiration Date or sooner termination of this Lease.
<PAGE>
ARTICLE VIII
INSURANCE, INDEMNITY AND LIABILITY
Section 8.1. Landlord's Insurance Obligations. Landlord agrees to obtain
and maintain during the Term hereof, to the extent the same is available, fire
and extended coverage insurance, in amounts and coverages and with such special
endorsements as Landlord shall determine from time to time, insuring the
building in which the Leased Premises are located and the improvements to the
Leased Premises provided by Tenant pursuant to this Lease (exclusive of Tenant's
merchandise, trade fixtures, furnishings, equipment, plate glass, signs and
personal property of Tenant). Landlord shall also carry rental interruption
insurance in amounts at least equal to Tenant's total rental obligation for
twelve (12) full months under this Lease including the total of the estimated
costs to Tenant of Taxes and Common Area Maintenance Expenses (including
insurance) for such twelve (12) month period. Tenant shall reimburse Landlord
for its proportionate share of the insurance costs incurred by Landlord under
this Section 8.1 as part of Tenant's Common Area Maintenance Expenses as
provided in Section 5.2 hereof.
Section 8.2. Tenant's Insurance Obligations. (a) Provided Tenant is the
Tenant named on the Recital Page and a wholly-owned subsidiary of the Guarantor,
if any, and Tenant's and Guarantor's, if any, combined net worths are or
Tenant's net worth is at least equal to Ten Million and 00/100ths Dollars
($10,000,000.00), Tenant shall have the right to self-insure for any loss or
damage of the type covered by standard fire and extended coverage insurance with
respect to personal property located on or within the Leased Premises including
alterations and improvements made by Tenant to the extent the same are not
covered by Landlord's fire and extended coverage insurance. Tenant and Guarantor
shall at their sole expenses, without regard to fault on the part of any person,
make and perform any repairs or restorations which are required as a result of a
casualty which would be covered by insurance of the type described in this
Section 8.2(a). Tenant, at Tenant's sole cost and expense, shall obtain and
maintain in effect commencing with the Delivery of Possession Date and
continuing throughout the Term of this Lease, insurance policies providing for
the following coverage: (i) all risk property insurance against fire, theft,
vandalism, malicious mischief, sprinkler leakage and such additional perils as
now are or hereafter may be included in a standard extended coverage endorsement
from time to time in general use in the State, insuring Tenant's merchandise,
trade fixtures, furnishings, equipment and all items of personal property of
Tenant and of anyone claiming by, through or under Tenant located on or in the
Leased Premises, and the amount of such insurance will be set forth in an
"agreed value endorsement" to the policy of such insurance, not less than 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
and 00/100ths Dollars ($50,000.00), provided, however, any and all proceeds of
such insurance, so long as this Lease shall remain in effect, shall be used only
to repair or replace or pay for the items so insured; (ii) a commercial general
liability policy, including insurance protecting against any and all claims for
injury to persons or property occurring in or about the Leased Premises and
protecting against assumed or contractual liability under this Lease with
respect to the Leased Premises and the operations of Tenant and any subtenant of
Tenant in, on or about the Leased Premises, with such policy to be in the
minimum amount of Three Million and 00/100ths 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 and 00/100ths 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 the Tenant Handbook.
<PAGE>
(b) All insurance policies herein to be procured by Tenant shall: (i)
be issued by insurance companies reasonably satisfactory to Landlord and
authorized to do business in the State; (ii) be written as primary policy
coverage and non-contributing with respect to any coverage which Landlord may
carry and that any coverage carried by Landlord shall be excess insurance; (iii)
insure and name Landlord, Landlord's managing agent, any mortgagee of the
Shopping Center and any parties in interest designated by Landlord as additional
insured, as their respective interests may appear (except with respect to
workers' compensation insurance); and (iv) contain any express waiver of any
right of subrogation by the insurance company against Landlord, Landlord's
managing agent and their respective agents, employees and representatives which
arises or might arise by reason of any payment under such policy or by reason of
any act or omission of Landlord, its agents, employees or representatives.
Neither the issuance of any insurance policy required hereunder, nor the minimum
limits specified herein with respect to Tenant's insurance coverage, shall be
deemed to limit or restrict in any way Tenant's liability arising under or out
of this Lease. With respect to each and every one of the insurance policies
herein required to be procured by Tenant, on or before the Commencement Date and
at least thirty (30) days before any such insurance policy shall expire, Tenant
shall deliver to Landlord upon Landlord's written request a duplicate original
or certified copy of each such policy or a certificate of the insurer,
certifying that such policy has been issued, providing the coverage required by
this Section 8.2 and containing provisions specified herein, together with
evidence of payment of all applicable premiums. Any insurance required to be
carried hereunder may be carried under a blanket policy covering the Leased
Premises and other locations of Tenant. Each and every insurance policy required
to be carried hereunder by or on behalf of Tenant shall provide (and any
certificate evidencing the existence of each such insurance policy shall
certify) that, unless Landlord shall first have been given thirty (30) days'
prior written notice thereof, the insurer will not cancel, materially change or
fail to renew the coverage provided by such insurance policy. The term
"insurance policy" as used herein shall be deemed to include any extensions or
renewals of such insurance policy. In the event that Tenant shall fail to
promptly furnish any insurance coverage hereunder required to be procured by
Tenant, Landlord, at its sole option, shall have the right after ten (10) days
prior written notice to Tenant to obtain the same and pay the premium therefor
for a period not exceeding one (1) year in each instance, and the premium so
paid by Landlord shall be immediately due and payable by Tenant to Landlord as
additional rent.
(c) Tenant shall not do or permit to be done any act or thing upon the
Leased Premises that will invalidate or be in conflict with fire insurance
policies covering the building containing the Leased Premises or any part
thereof, including all common areas, or fixtures and property therein, or any
other insurance policies or coverage referred to above in this Article VIII; and
Tenant shall promptly comply with all rules, orders, regulations, or
requirements relating to such insurance policies, and shall not do, or permit
anything to be done, in or upon the Leased Premises, or bring or keep anything
therein, which shall increase the rate of fire insurance on the building in
which the Leased Premises are located or on any property, including all common
areas, located therein, or increase the rate or rates of any other insurance
referred to hereinabove. If any act or omission of Tenant, its agents, employees
or contractors shall result in any increase in the premium rates applicable to
any such insurance policies carried by Landlord, or other increased costs to
Landlord in connection therewith, then Tenant shall reimburse Landlord on demand
as additional rent for the amount of any such increased rates or costs. In
particular, if Tenant uses the Leased Premises for the preparation of food,
Tenant shall reimburse Landlord on demand, for any part of the premium for
insurance coverage under Section 8.1 hereof required to be paid on account of
such use of the Leased Premises.
SECTION 8.3. MUTUAL COVENANT. NOTWITHSTANDING ANY PROVISION OF THIS LEASE
TO THE CONTRARY, LANDLORD AND TENANT EACH HEREBY RELEASES THE OTHER, ITS
OFFICERS, DIRECTORS, EMPLOYEES, AND AGENTS FROM ANY AND ALL LIABILITY OR
RESPONSIBILITY FOR ANY LOSS, DAMAGE OR INJURY CAUSED BY FIRE OR OTHER CASUALTY
FOR WHICH INSURANCE CONTAINING A WAIVER OF SUBROGATION IS CARRIED BY THE INJURED
PARTY AT THE TIME OF SUCH LOSS, DAMAGE OR INJURY REGARDLESS OF THE EXTENT OF ANY
RECOVERY BY THE INJURED PARTY UNDER SUCH INSURANCE. BOTH PARTIES AGREE TO CARRY
CASUALTY INSURANCE CONTAINING SUCH WAIVER OF SUBROGATION.
<PAGE>
ADDITIONALLY, DURING ANY TIME WHEN TENANT IS SELF-INSURING ITS INSURANCE
OBLIGATIONS HEREUNDER, TENANT HEREBY RELEASES THE LANDLORD, ITS OFFICERS,
DIRECTORS, EMPLOYEES AND AGENTS FROM ANY AND ALL LIABILITY OR RESPONSIBILITY FOR
ANY LOSS, DAMAGE OR INJURY CAUSED BY FIRE OR OTHER CASUALTY, EVEN IF SUCH LOSS,
DAMAGE OR CASUALTY IS CAUSED IN WHOLE OR IN PART BY LANDLORD OR BY ANY PARTY FOR
WHOM LANDLORD MAY BE RESPONSIBLE.
SECTION 8.4. COVENANT TO HOLD HARMLESS. EXCEPT WITH RESPECT TO THE
NEGLIGENCE OR WILLFUL MISCONDUCT OF LANDLORD, ITS AGENTS OR EMPLOYEES (UNLESS
COVERED OR REQUIRED TO BE COVERED BY TENANT'S INSURANCE), TENANT HEREBY
INDEMNIFIES AND AGREES TO HOLD HARMLESS LANDLORD, ITS OFFICERS, DIRECTORS,
PARTNERS, EMPLOYEES AND AGENTS AND ANY MORTGAGEE OR MASTER LESSOR OF THE
SHOPPING CENTER, FROM AND AGAINST ANY AND ALL CLAIMS, ACTIONS, DAMAGES,
LIABILITIES, COSTS AND EXPENSES, INCLUDING ATTORNEYS' FEES, THAT (I) ARISE FROM
OR ARE IN CONNECTION WITH THE POSSESSION, USE, OCCUPANCY, MANAGEMENT, REPAIR,
MAINTENANCE OR CONTROL OF THE LEASED PREMISES, OR ANY PORTION THEREOF, OR (II)
ARISE FROM OR ARE IN CONNECTION WITH ANY 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 MORTGAGEE OR MASTER LESSOR OF THE SHOPPING
CENTER WITH RESPECT TO THE FOREGOING. TENANT SHALL PAY, SATISFY AND DISCHARGE
ANY AND ALL JUDGMENTS, ORDERS AND DECREES WHICH MAY BE RECEIVED AGAINST LANDLORD
OR ANY SUCH MORTGAGEE OR MASTER LESSOR IN CONNECTION WITH THE FOREGOING. IN THE
EVENT LANDLORD OR ANY OTHER PARTY SO INDEMNIFIED, SHALL, WITHOUT FAULT, BE MADE
A PARTY TO ANY LITIGATION COMMENCED BY OR AGAINST TENANT, OR IF LANDLORD OR ANY
SUCH PARTY SHALL, IN ITS SOLE DISCRETION, INTERVENE IN SUCH LITIGATION TO
PROTECT ITS INTEREST HEREUNDER, THEN TENANT SHALL PROTECT AND HOLD THEM HARMLESS
AND SHALL PAY ALL COSTS, EXPENSES AND ATTORNEYS' FEES INCURRED OR PAID BY SUCH
PARTY(IES) IN CONNECTION WITH SUCH LITIGATION. 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 8.5. Loss and Damage. All Tenant's property of every kind and
description which may at any time be in the Leased Premises shall be kept at
Tenant's sole risk, and Landlord shall not be liable except to the extent
resulting from the negligence or intentional acts of Landlord, its agents or
employees to Tenant, its agents, employees or customers, for any damage, loss,
compensation, accident, or claims whatsoever resulting to Tenant or its property
from the necessity of repairing any portion of the Shopping Center; any
interruption in the use of the Leased Premises; the use or operation (by
Landlord, Tenant, or any other person or persons whatsoever) of any elevators,
heating, cooling, electrical or plumbing equipment or apparatus; the termination
of this Lease by reason of the destruction of the Leased Premises; any fire,
robbery, theft, or any other casualty; any leakage in any part or portion of the
Leased Premises or the Shopping Center; any water, wind, rain or snow that may
leak into, or flow from part of the Leased Premises or the Shopping Center; any
acts or omissions of any occupant of any space adjacent to or adjoining all or
any part of the Leased Premises or any part of the building of which the Leased
Premises are a part; any explosion, casualty, utility failure or malfunction, or
falling plaster; the bursting, stoppage or leakage of any pipes, sewer pipes,
drains, conduits, appliance or plumbing works; or any other cause whatsoever.
ARTICLE IX
DESTRUCTION OF LEASED PREMISES
Section 9.1. Continuance of Lease. In the event of any damage to the Leased
Premises by fire or other casualty, this Lease shall not be terminated or
otherwise affected; except that, (a) if more than twenty-five percent (25%) of
the square footage of the Leased Premises shall be damaged by any such fire or
other casualty during the last three (3) years of the Term of this Lease (not
including any Option Periods) or during any renewal or extension of the Term
hereof and the cost of repair or restoration exceeds Ten Thousand and 00/100ths
<PAGE>
Dollars ($10,000.00) as estimated by Landlord, or (b) if Landlord is unable to
rebuild any portion of the building in which the Leased Premises are located or
of the Shopping Center due to any inability to obtain any required governmental
approval in connection therewith, or (c) if more than thirty-five percent (35%)
of the floor area of the building in which the Leased Premises are located or of
the Shopping Center shall be damaged or destroyed by fire or other casualty, or
(d) if 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 (i) the entire proceeds of the insurance provided for in Section
8.1 hereof shall be paid by the insurance company or companies directly to
Landlord and shall belong to, and be the sole property of Landlord, (ii) the
portion of the proceeds of the insurance provided for in Section 8.2 which is
allocable to equipment, fixtures and other items, which, by the terms of this
Lease, rightfully belong to Landlord upon the termination of this Lease by
whatever cause, shall be paid by the insurance company or companies directly to
Landlord, and shall belong to, and be the sole property of, Landlord, and (iii)
Landlord and Tenant shall be relieved from any and all further liability or
obligation accruing under this Lease from and after the date of such
termination. 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 cost 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 Minimum Rent 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
Reconstruction Work, unless Tenant opens at an earlier time in the damaged area
or remains open in such area following destruction or damage, in which event
there shall be no abatement or any such abatement shall terminate as of the date
of Tenant's earlier reopening. Landlord shall be obligated to commence
Landlord's Reconstruction Work and shall diligently pursue the completion of
Landlord's Reconstruction Work and shall cause the same to be completed as soon
thereafter as possible under the attendant circumstances, but in any event all
such Landlord's Reconstruction Work shall be completed and the Leased Premises
reopened for business within one hundred eighty (180) days following such fire
or casualty. After Landlord has completed Landlord's Reconstruction Work, Tenant
shall commence such Tenant's Reconstruction Work, at its expense. Tenant shall
comply with all laws, ordinances and governmental rules or regulations, and
shall perform all work or cause such work to be performed with due diligence and
in a firs class manner. All permits required in connection with said repairs,
restoration and reconstruction shall be obtained by Tenant at Tenant's sole cost
and expense. Any amount expended by Tenant in excess of any insurance proceeds
received by Tenant shall be the sole obligation of Tenant. "Landlord's
Reconstruction Work" shall be all work required to reconstruct the Leased
Premises in accordance with the working drawings originally approved by
Landlord, or with (at Landlord's sole election) new drawings prepared by Tenant
and acceptable to Landlord and Tenant. In no event shall Landlord be required to
repair or replace Tenant's merchandise, trade fixtures, furnishings or
equipment. If Landlord repairs or rebuilds, Tenant, at Tenant's sole cost, shall
repair or replace Tenant's merchandise, trade fixtures, furnishings and
equipment in a manner and to at least a condition equal to that prior to the
damage or destruction thereof ("Tenant's Reconstruction Work"). Except as may be
<PAGE>
specifically set forth in this Article IX, Landlord shall not be liable or
obligated to Tenant to any extent whatsoever by reason of any fire or other
casualty damage to the Leased Premises, or any damages suffered by Tenant by
reason thereof, or the deprivation of Tenant's possession of all or any part of
the Leased Premises.
In the event Landlord has not commenced restoration or rebuilding of
the Leased Premises within ninety (90) days of the date of such fire or casualty
loss, or 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, 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.
Section 10.1. Eminent Domain. If fifty percent (50%) or more of the floor
area of the Leased Premises shall be taken or condemned by any governmental
authority (including, for purposes of this Article X, any purchase by such
governmental authority in lieu of a taking), then either party may elect to
terminate this Lease by giving notice to the other party not more than ninety
(90) days after the date on which such title shall vest in the authority. If the
parking facilities are reduced below the minimum parking requirements imposed by
the applicable authorities, Landlord may elect to terminate this Lease by giving
Tenant notice within one hundred eighty (180) days after such taking. In
addition, if any Major Tenant shall terminate its lease with Landlord, pursuant
to a taking of its store, Landlord may terminate this Lease by written notice to
Tenant within ninety (90) days after notice to Landlord that such Major Tenant
is terminating its lease. In the case of any taking or condemnation, whether or
not the Term of this Lease shall cease and terminate, the entire award shall be
the property of Landlord; provided, however, Tenant shall be entitled to any
award as may be made for trade fixtures and other equipment (not including any
Tenant's Work required or permitted under this Lease) which under the terms of
this Lease would not have become the property of Landlord; further provided,
that any such award to Tenant shall not be in diminution of any award otherwise
to be made to Landlord in the absence of such award to Tenant.
Section 10.2. Rent Apportionment. In the event of any taking or
condemnation, the then current Minimum Rent, Sales Break Point and the square
foot floor area in the Leased Premises as determined pursuant to Section 1.1
shall be apportioned as of the date when possession of the Leased Premises is
required to be delivered to the condemning authority or termination of this
Lease, as the case may be, and, if the Term of this Lease shall not have ceased
and have been terminated as of said date, Tenant shall be entitled to a pro rata
reduction in the Minimum Rent payable and Sales Break Point hereunder, or, if
Tenant has prepaid Minimum Rent, Tenant shall be entitled to a pro rata credit
for the Minimum Rent paid hereunder, based on the proportion which the floor
area taken from the Leased Premises bears to the entire floor area of the Leased
Premises immediately prior to such taking.
Section 10.3. Temporary Taking. Notwithstanding anything to the contrary in
this Article X, the requisitioning of the Leased Premises or any part hereof by
military or other public authority for purposes arising out of a temporary
emergency or other temporary situation or circumstances shall constitute a
taking of the Leased Premises by eminent domain when the use or occupancy by the
requisitioning authority is expressly provided to continue, or shall in fact
have continued, for a period of one hundred eighty (180) days or more, and if
this Lease is not thereafter terminated under the foregoing provisions of this
Article X, then for the duration of any period of use and occupancy of the
Leased Premises by the requisitioning authority, all the terms and provisions of
this Lease and obligations of Tenant hereunder shall remain in full force and
effect, except that the Minimum Rent and Sales Break Point shall be reduced in
the same proportion that the floor area of the Leased Premises so requisitioned
bears to the total floor area of the Leased Premises, and Landlord shall be
entitled to whatever compensation may be payable from the requisitioning
authority for the use and occupation of the Leased Premises for the period
involved.
<PAGE>
Section 11.1. No Assignment, Subletting or Encumbering of Lease. (a) Except
as otherwise provided in this Article XI and notwithstanding any references to
assignees, subtenants, concessionaires or other similar entities in this Lease,
Tenant shall not (i) assign or otherwise transfer, or mortgage or otherwise
encumber, this Lease, in whole or in part, or any of its rights hereunder, (ii)
sublet the Leased Premises or any part thereof, or permit the use of the Leased
Premises or any part thereof by any persons other than Tenant or its agents. Any
such attempted or purported transfer, assignment, mortgaging or encumbering of
this Lease or any of Tenant's interest hereunder and any attempted or purported
subletting or grant of a right to use or occupy all or a portion of the Leased
Premises in violation of the foregoing sentence, whether voluntary or
involuntary or by operation of law or otherwise, shall be null and void and
shall not confer any rights upon any purported transferee, assignee, mortgagee,
or occupant, and shall, at Landlord's option, 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 for 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: (1) Tenant shall not at the time of such transfer be in default
under any of the terms, covenants and conditions of this Lease beyond any
applicable grace period, (2) such Transferee shall agree in writing to perform
all of the unperformed terms, covenants and conditions of this Lease and (3)
Tenant shall at all times remain primarily obligated for the performance of the
terms, covenants and conditions of this Lease.
Notwithstanding anything to the contrary set forth in this Article XI and
without application of any prior provisions of this Article XI, Tenant shall
have the right, without Landlord's consent but with prior written notice to
Landlord, to assign this Lease or sublet the Leased Premises to its parent
corporation or any of its wholly-owned subsidiaries, or any affiliate or
subsidiary of Tenant's parent corporation provided that Tenant shall at all
times remain primarily obligated for the performance of the terms, covenants and
conditions of this Lease.
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 Securities Act of 1933, as amended.
(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
publicly traded which shall result in a change in the voting control of Tenant
or the corporate entity which controls Tenant shall be deemed to be a prohibited
assignment of this Lease within the meaning of this Article XI. If Tenant is a
partnership or an unincorporated association, then the sale, issuance or
transfer of a majority interest therein, or the transfer of a majority interest
in or a change in the voting control of any partnership or unincorporated
association or corporation which directly or indirectly controls Tenant, or the
transfer of any portion or all of any general partnership or managing
partnership interest, shall be deemed to be a prohibited assignment of this
Lease within the meaning of this Article XI. 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.
<PAGE>
(i) Notwithstanding anything herein contained to the contrary, a sale or
transfer of any voting capital stock of Tenant when caused by death (e.g.,
testamentary transfer) or for estate planning purposes (e.g. inter vivos trust)
will not be deemed a prohibited assignment of this Lease.
(ii) The provisions of this Section 11.1 (b) shall not be deemed to
prohibit transfer of limited partnership interests among existing limited or
general partners; however, if either general partner ceases to remain a general
partner of Tenant such occurrence shall be deemed a prohibited assignment of
this Lease under the meaning of this Article XI.
(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: (i) 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;
(ii) a description of the identity, net worth and previous business experience
of the proposed transferee, including, without limitation, copies of the
proposed transferee's latest income, balance sheet and changes in financial
position statements (with accompanying notes and disclosures of all material
changes thereto) in audited form, if available, and certified as accurate by the
proposed transferee; and (iii) any further information 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 assignment, sublease or transfer shall be forwarded to Landlord at
the address provided above and to the on-site mall management office.
(d) Except for a permitted assignment or subletting as specified in Section
11.1(a) and (b) and without conferring any rights upon Tenant not otherwise
provided in this Article XI, in the event of an assignment or transfer of
Tenant's interest in this Lease, or a sublease of all or a portion of the Leased
Premises, to a third party, any monthly rent or other payment accruing to Tenant
as the result of any such assignment, transfer, or sublease, including any lump
sum or periodic payment in any manner relating to such assignment, transfer or
sublease, which is in excess of the Rent then payable by Tenant under this Lease
shall be paid one-half (1/2) of such excess by Tenant to Landlord monthly as
additional rent. Landlord may require a certificate from Tenant specifying the
full amount of any such payment of whatsoever nature. 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.
(e) All reasonable costs and expenses, including attorney's 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 XI 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
<PAGE>
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.
Section 12.1. Subordination. Tenant agrees that this Lease shall, at the
request of Landlord, be subordinate to any mortgages or deeds of trust that are
now, or may hereafter be, placed upon the Leased Premises and to any and all
advances to be made thereunder, and to the interest thereon, and all renewals,
replacements and extensions thereof, provided that the mortgagees or
beneficiaries named in said mortgages or deeds of trust shall agree to recognize
the interests of Tenant under this Lease in the event of foreclosure, if Tenant
is not then in default. Tenant also agrees that any mortgagee or beneficiary may
elect to have this Lease constitute a prior lien to its mortgage or deed of
trust, and in the event of such election and upon notification by such mortgagee
or beneficiary to Tenant to that effect, this Lease shall be deemed prior in
lien to such mortgage or deed of trust, whether this Lease is dated prior to or
subsequent to the date of said mortgage or deed of trust. Tenant agrees that
upon the request of Landlord, or any mortgagee or beneficiary, Tenant shall
execute whatever reasonable instruments may be required to carry out the intent
of this Section 12.1 and Section 12.2.
Section 12.2. Attornment. In the event any proceedings are brought for the
foreclosure of, or in the event of the conveyance by deed in lieu of foreclosure
of, or in the event of exercise of the power of sale under, any mortgage and/or
deed of trust made by Landlord covering the Leased Premises, or in the event
Landlord sells, conveys or otherwise transfers its interest in the Shopping
Center or any portion thereof containing the Leased Premises, this Lease shall
remain in full force and effect and Tenant hereby attorns to, and covenants and
agrees to execute an instrument in writing reasonably satisfactory to the new
owner whereby Tenant attorns to such successor in interest and recognizes such
successor as Landlord under this Lease. Payment by or performance of this Lease
by any person, firm or corporation claiming an interest in this Lease or the
Leased Premises by, through or under Tenant without Landlord's consent in
writing shall not constitute an attornment or create any interest in this Lease
or the Leased Premises.
Section 12.3. Financing. In the 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 change (i) the Minimum Rent, additional rent
or Percentage Rent payable by Tenant; (ii) the permitted use; (iii) the size,
dimensions or location of the Leased Premises; (iv) the length of the Term; (v)
Landlord's construction obligations; or (vi) the conditions precedent as to
Tenant's initial opening requirements, or which would place a lien on Tenant's
assets.
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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 has
been modification, that the same is in full force and effect as modified and
setting forth such modifications); (iii) whether or not there are then existing
any set-offs or defenses against the enforcement of any right or remedy of
Landlord, or any duty or obligation of Tenant, hereunder (and, if so, specifying
the same in detail); (iv) that Rent is paid currently without any offset or
defense thereto, (v) the dates, if any, to which any Rent has been paid in
advance; (vi) whether or not there is then existing any claim of Landlord's
default under this Lease and if so, specifying the same in detail; (vii) that
Tenant has no knowledge of any event having occurred that authorized the
termination of this Lease by Tenant (or if Tenant has such knowledge, specifying
the same in detail); and (viii) any other matters relating to the status of this
Lease that Landlord or its mortgagee may request be confirmed, provided that
such facts are accurate and ascertainable.
Landlord shall, within thirty (30) days after written request from Tenant,
no more often than once in any Lease Year and provided Tenant is not then in
default hereunder, deliver to Tenant or such persons as Tenant may designate, a
statement in writing certifying to the extent true that: (i) Tenant is in
possession of the Leased Premises; (ii) this Lease is in full force and effect
(as later modified, if such be the case); (iii) the Rent due hereunder is
current; and (iv) that to the best of Landlord's knowledge, information and
belief, Tenant is not in default hereunder.
Section 12.5. Remedies. Any failure by Tenant to execute any certificate,
statement or instrument in accordance with the foregoing provisions of this
Article XII or any financing statement in accordance with the provisions of
Section 14.2(a), within the time period provided or if no time period is
specified, then within thirty (30) days after written request, shall constitute
an irrevocable power of attorney appointing and designating Landlord or its
successors or assigns as attorney-in-fact for Tenant, to execute and deliver any
such certificate, statement, instrument or financing statement.
Section 13.1. Promotion Fund. Landlord shall establish an advertising and
promotion fund (the "Fund"). The object of the Fund shall be to advertise the
Retail Development in the local metropolitan statistical area and to provide a
program of events, all of which shall, in Landlord's judgment, serve to enhance
and promote the Retail Development and its occupants. Such program of events may
include the promotion of coach traffic to the Retail Development and the
development of a mall video network within the Retail Development offering a
program of information, entertainment and advertisements. The Fund shall be
administered by Landlord and the costs and expenses of such administration shall
be charged to the Fund. Landlord shall expend all amounts paid to the Fund by
the tenants in the Retail Development for the purposes herein set forth.
Section 13.2. Promotion Fund Contribution. Tenant's annual contribution to
the Fund shall be the Fund Contribution (reduced proportionately for a partial
Lease Year) as defined in the Data Sheet. The Fund Contribution payable by
Tenant for each Lease Year shall be increased commencing with the second Lease
Year of the Term of this Lease, and each Lease Year thereafter, by a percentage
equal to the percentage increase from the "base period" of the Consumer Price
Index ("Index") to the "current period" of the Index of the Lease Year for which
the adjustment is being made; provided, however, if the first Lease Year is less
than six (6) months, the first adjustment to the Fund Contribution shall be
after the first full Lease Year. Except as herein expressly provided, the term
"base period" shall initially refer to the Index published for the month of
October immediately preceding the Commencement Date. Following the initial
increase in the Fund Contribution hereunder, the term "base period" shall refer
to the Index published for the month of October immediately preceding the Lease
Year for which the Fund Contribution was last adjusted hereunder. The "current
period" of the Index shall refer to the Index published for the month of October
immediately preceding the Lease Year for which an adjustment is being made. In
<PAGE>
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 once 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 first year of the operation of the Network and provided Tenant is not
in default of payment of its Fund Contribution, Landlord agrees to produce, or
cause to be 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 13.4. 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 format 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 operation. 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.
<PAGE>
Section 14.1. Elements of Default. If any one or more of the following
events occur, said event or events shall hereby be classified as a "default":
(a) (i) the failure of Tenant to take possession of the Leased Premises at the
Delivery of Possession Date, or (ii) the failure of Tenant to open its doors for
business on the date specified in Section 1.3 hereof, or (iii) if Tenant vacates
or abandons the Leased Premises and permits the same to remain unoccupied and
unattended, or (iv) if Tenant fails to maintain normal inventory levels and
employee staff for the conduct of its normal business activities in the Leased
Premises, or (v) the failure of Tenant to continuously operate its business in
compliance with Section 4.2 for the purposes specified in Section 4.1, or (vi)
in the event of the sale or removal of a substantial portion of Tenant's
property located in the Leased Premises in a manner which is outside the
ordinary course of Tenant's business; (b) the failure of Tenant to pay any Rent
or other charges required to be paid by Tenant when same shall become due and
payable hereunder and such failure continues for ten (10) days after written
notice; (c) the failure of Tenant to perform or observe any term or condition of
this Lease and such failure shall continue for thirty (30) days after written
notice; (d) (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) 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. In the event (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, 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" (as hereinafter defined), then Landlord may,
upon ten (10) days prior notice in writing to Tenant, declare such default to be
a default of this Lease (unless the default is cured within the ten day period
after notice) and, at Landlord's option, a default of any of the "other leases,"
as the case may be. 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) for the shopping centers commonly
referred to as Ontario Mills, Potomac Mills, Franklin Mills, Gurnee Mills,
Sawgrass Mills, City Mills, Arizona Mills, Katy Mills and Concord Mills (such
leases to be referred to as "other leases"). 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 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
<PAGE>
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 interest rate (as
specified in Section 20.14 hereof) from the date of such expenditure, shall be
deemed additional rent and shall be payable by Tenant to Landlord upon demand.
(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 and for the account of Tenant without resort to legal process and without
Landlord being deemed guilty of trespass or conversion or becoming liable for
any loss or damage occasioned thereby. In connection herewith, Landlord shall
have, in addition to any other remedies, any and all self-help remedies,
including but not limited to a forcible entry into the Leased Premises or a
"lock-out" accomplished by changing the locks on the Leased Premises.
(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 written notice of such termination to
Tenant, which termination shall be effective as of the date of such notice or
any later date therefor specified by Landlord in such notice (provided, that
without limiting the generality of the foregoing provisions, Landlord shall not
be deemed to have accepted any abandonment or surrender by Tenant of any or all
of the Leased Premises or Tenant's leasehold estate under this Lease unless
Landlord has so advised Tenant expressly and in writing, regardless of whether
Landlord has re-entered or relet any or all of the Leased Premises or exercised
any or all of Landlord's other rights under this Lease or applicable law).
(f) In Landlord's own name or otherwise, relet any or all of the Leased
Premises with or without any additional premises, for any or all of the
remainder of the Term (or, if this Lease has then been terminated, for any or
all of the period which would, but for such termination, have constituted the
remainder of the Term) or for a period exceeding such remainder, on such terms
and subject to such conditions as are acceptable to Landlord (including, by way
of example rather than of limitation, the alteration of any or all of the Leased
Premises in any manner which, in Landlord's judgment, is necessary or desirable
in connection with such reletting, and the allowance of one or more concessions
or "free-rent" or reduced-rent periods), and collect and receive the rents
thereof. Tenant shall pay to Landlord, at the times and in the manner specified
by the provisions of this Lease (unless Landlord has elected to accelerate Rent
as provided above in subparagraph(d), in which event Tenant shall be obligated
to pay such accelerated amount as provided in such subparagraph), (i) the
installments of the Minimum Rent, additional rent and Percentage Rent accruing
during such remainder (or, if this Lease has then been terminated, damages
equalling the respective amounts of such installments (determined as provided in
<PAGE>
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's
fees, leasing or brokerage commissions, repair or improvement expenses and the
expense of any other actions taken in connection with such reletting) less any
monies received by Landlord with respect to such remainder from such reletting
of any or all of the Leased Premises.
(g) Recover from Tenant, an amount equal to (i) all items of accrued and
unpaid Rent, including, without limitation, the then unamortized amount of the
Construction Allowance; (ii) all reasonable expenses (including, by way of
example rather than of limitation, all repossession costs, management expenses,
operating expenses, legal expenses and attorney's fees) incurred by Landlord in
curing or seeking to cure any default or in exercising or seeking to exercise
any of Landlord's rights and remedies under the provisions of this Lease or at
law or in equity on account of any default, plus (iii) interest on all such
expenses, at the rate provided in Section 20.14, all of which expenses and
interest shall be payable by Tenant immediately on demand therefor by Landlord.
(h) Without terminating this Lease, maintain Tenant's right to possession,
in which case this Lease shall continue in effect whether or not Tenant shall
have vacated the Leased Premises. In such event, Landlord shall be entitled to
enforce all of Landlord's rights and remedies under this Lease, including the
right to recover Rent as it becomes due hereunder.
(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 the expiration of the Term of this
Lease (in which event Tenant hereby agrees that, at Landlord's option, the cause
of action shall not be deemed to have accrued until the date of expiration of
said Term).
(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.
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(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 or assignee for the benefit of creditors or
otherwise by operation of law, except as may specifically be provided pursuant
to the Bankruptcy Code (11 USCss.101 et seq.), as the same may be amended from
time to time. -- ---
(b) It is understood and agreed that this Lease is a lease of real property
in a shopping center as such lease is described in Section 365 of the Bankruptcy
Code, as the same may be amended from time to time. Upon the filing of a
petition by or against Tenant under the Bankruptcy Code, Tenant, as debtor and
as debtor-in-possession, and any trustee who may be appointed with respect to
the assets of or estate in bankruptcy of Tenant, agree to pay monthly in advance
on the first day of each month, as reasonable compensation for the use and
occupancy of the Leased Premises, an amount equal to all Minimum Rent,
additional rent and other charges otherwise due pursuant to this Lease, and to
pay Percentage Rent monthly, at the percentage factor set forth in this Lease
for the Lease Year in which such month falls, on all of the Gross Sales during
such month in excess of one-twelfth (1/12th) of the Sales Break Point for such
Lease Year; payment of all such Percentage Rent to be made by the tenth (10th)
day of the succeeding month. Included within and in addition to any other
conditions or obligations imposed upon Tenant or its successor in the event of
the assumption and/or assignment of this Lease are the following: (i) the cure
of any monetary defaults and reimbursement of pecuniary loss within not more
than thirty (30) days of assumption and/or assignment; (ii) the deposit of an
additional sum equal to not less than three (3) months' Minimum Rent and
additional rent to be held pursuant to the terms of Section 2.4 of this Lease,
which sum shall be determined by Landlord, in its sole discretion, to be a
necessary deposit to secure the future performance under this Lease by Tenant or
its assignee; (iii) the use of the Leased Premises as set forth in Section 4.1
of this Lease and the quality, quantity and/or lines of merchandise, goods or
services required to be offered for sale are unchanged; and (iv) the prior
written consent of any mortgagee to which this Lease has been assigned as
collateral security.
Section 14.4. Additional Remedies and Waivers. The rights and remedies of
Landlord set forth herein shall be in addition to any other right and remedy now
or hereinafter provided by law, including but not limited to the statutes,
rules, regulations, laws 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 an emergency, in which
event no notice shall be required), to cure the act or failure constituting said
default for the account of and at the expense of Tenant. Landlord's cure or
attempt to cure any act or failure constituting the default by Tenant shall not
result in a waiver or release of Tenant. Tenant agrees to pay the costs incurred
by Landlord pursuant to this Section 14.5 plus interest, in accordance with
Section 20.14 hereof, on all sums expended by Landlord pursuant to this Section
14.5 from the date of such expenditure plus a charge of fifteen percent (15%) of
such costs, to Landlord upon demand, as additional rent.
<PAGE>
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 of this
Lease without an employee of Tenant accompanying Landlord's representative.
ARTICLE XVI
DELAYS
If Landlord or Tenant is delayed or prevented from performing any of their
respective obligations during the Term of this Lease because of strikes,
lockouts, labor troubles, inability to procure materials, failure of power,
governmental restrictions or delays in issuing permits (provided that the delays
do not result from Tenant's actions or failure to act) 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 XVI shall not apply to the
payment of any sums of money required to be paid by Tenant hereunder or any
obligation of Landlord or Tenant that can be satisfied by the payment of money,
and shall not excuse Tenant from its obligation to continuously operate its
business within the Leased Premises in accordance with the provisions of
Sections 4.1 and 4.2 hereof.
ARTICLE XVII
END OF TERM
Section 17.1. Return of Leased Premises. Upon the Expiration Date or
earlier termination of this Lease, Tenant shall quit and surrender to Landlord
the Leased Premises, broom-clean, in good order and condition, ordinary wear and
tear excepted, and shall surrender to Landlord all keys to or for the Leased
Premises and inform Landlord of all combinations of locks, safes and vaults, if
any, in the Leased Premises. Subject to the provisions of Section 3.5 hereof,
Tenant, at its expense, shall promptly remove all personal property of Tenant,
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 removed within ten (10)
days following the Expiration Date or earlier termination of this Lease shall be
deemed to have been abandoned by Tenant and to have become the property of
Landlord, and may be retained or disposed of by Landlord, as Landlord shall
desire. Tenant's obligation to observe or perform the covenants set forth in
this Section 17.1 shall survive the Expiration Date or earlier termination of
this Lease.
<PAGE>
Section 17.2. Holding Over. If Tenant shall hold possession of the Leased
Premises after the Expiration Date or earlier termination of this Lease at
Landlord's option (a) Tenant shall be deemed to be occupying the Leased Premises
as a tenant from month-to-month, at double the Minimum Rent and other charges in
effect during the last Lease Year immediately preceding such holdover and
otherwise subject to all of the terms and conditions of this Lease, or (b)
Landlord may exercise any other remedies it has under this Lease or at law or in
equity including an action for wrongfully holding over.
Notwithstanding the foregoing, if Tenant is negotiating in good faith with
Landlord to renew or extend the Term of this Lease for the Leased Premises (or a
relocation within the Shopping Center), then Tenant may occupy the Leased
Premises on a month-to-month tenancy at one-twelfth (1/12th) of the annual
Minimum Rent for the last year of the Term of the Lease.
ARTICLE XVIII
COVENANT OF QUIET ENJOYMENT
Landlord covenants that if and so long as Tenant pays the Rent and all
other charges provided for herein, and performs all of its obligations provided
for herein, Tenant shall at all times during the Term hereof peaceably have,
hold and enjoy the Leased Premises, without any interruption or disturbance from
Landlord, or anyone lawfully or equitably claiming through or under Landlord,
subject to the terms hereof and any mortgage or deed of trust to which this
Lease shall be subordinate.
ARTICLE XIX
UTILITIES
Section 19.1. Utilities. Tenant agrees to connect to and use the utilities
(including electricity, water, gas, cooling and/or heating system, telephone and
any other utility) supplied to the Leased Premises in accordance with the
criteria set forth in the Exhibits attached to this Lease, Landlord's schedule
of mechanical and electrical design criteria, Landlord's rules and regulations,
and the rules and regulations of the utility companies supplying the service.
Tenant shall be solely responsible for and promptly pay all costs and charges,
including installation thereof where applicable, for all water, gas, cooling,
heat, electricity, sewer and other utilities provided or used in or at the
Leased Premises, commencing with the Delivery of Possession Date and continuing
throughout the Term of this Lease. If Landlord shall elect to supply any of the
utilities used upon or furnished to the Leased Premises, Tenant agrees to pay
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,
cooling and/or heat or power shall be conditioned upon the availability of
adequate energy sources. Landlord shall have the right to reduce heat, lighting
and air conditioning within the Shopping Center, including, without limitation,
the Leased Premises and the common areas, as required by any mandatory or
voluntary fuel or energy saving allocation, or any similar statute, regulation,
order or program.
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 the Tenant Handbook 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.
<PAGE>
Section 19.3. Trash and Garbage Removal. Tenant shall be solely responsible
for trash and garbage removal from the Leased Premises including the placing of
all trash and garbage in containers provided by Landlord or Landlord's
contractor for such purpose. In the event Landlord elects to furnish such
service to the tenants in the Shopping Center, Tenant agrees to use only the
service provided by Landlord and to pay for such service (including both the
cost of leasing containers and the cost of removal) monthly, as additional rent,
in accordance with the uniform schedule of charges to be established by
Landlord. In no event shall Tenant be obligated to pay Landlord more for such
trash and garbage removal service than the prevailing competitive rates of
reputable independent trash removal contractors for service similar to that
provided by Landlord.
Section 19.4. Water and Sewer. The cost of water and sanitary sewer for
usage in the Shopping Center shall be included in Common Area Maintenance
Expenses, except for food service tenants which may be billed directly by
Landlord or by the supplier of water and sanitary service and any other tenants
which are billed directly by Landlord or such supplier. Landlord reserves the
right to install a water meter in the Leased Premises at any time or from time
to time to measure Tenant's consumption of water therein and bill Tenant
directly for the cost of such consumption. Tenant shall pay, as additional rent,
the amount of each bill within fifteen (15) days after such bill is rendered.
Section 19.5. Grease Interceptors. Landlord, in its commercially reasonable
judgment, will arrange for regular periodic service and cleaning of all grease
interceptors at Tenant's expense. Cost of service and cleaning of grease
interceptors will be allocated among grease interceptors serving food court(s)
and grease interceptors serving individual tenants in proportion to grease trap
size. Tenants served by individual grease traps will pay their pro rata share of
the cost for their grease trap. The share of grease trap service and cleaning
cost apportioned to food court grease traps will be paid by food court tenants
as part of the food court common facilities expenses.
ARTICLE XX
MISCELLANEOUS
Section 20.1. Entire Agreement. This Lease together with the Exhibits,
attached hereto and incorporated herein contains the entire agreement between
the parties hereto and there are no promises, agreements, conditions,
undertakings, or warranties, or representations, oral or written, express or
implied, between them other than as herein set forth. No change or modification
of this Lease or of any of the provisions hereof shall be valid or effective
unless the same is in writing and signed by the parties hereto. No alleged or
contended waiver of any of the provisions of this Lease shall be valid or
effective unless in writing signed by the party against whom it is sought to be
enforced.
Section 20.2. Notices. No notice or other communication given under this
Lease shall be effective unless the same is in writing and is delivered in
person or mailed by registered or certified mail, return receipt requested,
first class, postage prepaid, or delivered by Federal Express or a comparably
reliable national air courier service (i.e. one which delivers service in at
least 48 states) provided that any such courier service provides written
evidence of delivery. Any such notice or communication shall be addressed:
(a) If to Landlord, at 1300 Wilson Boulevard, Suite 400, Arlington,
Virginia 22209, Attention: General Counsel, or to such other address as Landlord
shall designate by giving notice thereof to Tenant, with a copy for
informational purposes only to the Mall Manager of the Retail Development.
<PAGE>
(b) If to Tenant, at the address set forth for Tenant on page 1 of this
Lease or at the Leased Premises, or such other address as Tenant shall designate
by giving notice thereof to Landlord.
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.
Section 20.3. Governing Law. It is the intent of the parties hereto that
all questions with respect to the construction of this Lease and the rights and
the liabilities of the parties hereto shall be determined in accordance with the
laws of the jurisdiction in which the Leased Premises is located and that all
disputes arising hereunder shall be heard and decided in the local jurisdiction
where the Leased Premises is located.
Section 20.4. Successors. All rights and liabilities herein given to, or
imposed upon, the respective parties hereto shall extend to and bind the several
respective heirs, executors, administrators, successors, and assigns of the said
parties; and if there shall be more than one Tenant, or more than one person or
entity acting collectively as Tenant, they shall all be bound jointly and
severally by the terms, covenants and agreements herein. Any restriction on or
requirement imposed upon Tenant hereunder shall be deemed to extend to Tenant's
Guarantor, Tenant's sublessees, Tenant's assignees and Tenant's invitees, and it
shall be Tenant's obligation to cause the foregoing persons to comply with such
restrictions or requirements. No rights, however, shall inure to the benefit of
any assignee or other transferee of Tenant, and no rights or benefits shall be
conferred upon any such assignee or transferee by reason of this Section 20.4,
unless such rights or benefits shall be expressly otherwise set forth in this
Lease.
Section 20.5. Liability of Landlord. Neither Landlord, Landlord's
beneficiaries, any persons or entities comprising Landlord, nor any successor in
interest to Landlord (or to such persons or entities) shall have any personal
liability for any failure by Landlord to perform any term, covenant or condition
of this Lease. If Landlord shall fail to perform any covenant, term or condition
of this Lease upon Landlord's part to be performed, and if as a consequence of
such default Tenant shall recover a money judgment against Landlord, such
judgment shall be satisfied only out of the proceeds of sale received upon
execution of such judgment and levied thereon against the right, title and
interest of Landlord in the Shopping Center and out of rents or other income
from such property receivable by Landlord, or out of the consideration received
by Landlord from the sale or other disposition of all or any part of Landlord's
right, title and interest in the Shopping Center, subject, nevertheless, to the
rights of Landlord's mortgagee, and neither Landlord nor any of the co-partners
comprising the partnership which is Landlord herein shall be liable for any
deficiency. The foregoing limitation of liability shall be noted in any judgment
secured against Landlord and in the judgment index.
Section 20.6. Brokers. Tenant warrants and represents that there was no
broker or agent instrumental in consummating this Lease. Tenant agrees to
indemnify and hold Landlord harmless against any claims for brokerage or other
commissions arising by reason of a breach by Tenant of this representation and
warranty.
Section 20.7. Transfer by Landlord. Landlord hereunder shall have the right
to freely assign this Lease without notice to or the consent of Tenant.
Section 20.8. No Partnership. Notwithstanding the fact that a portion of
the Rent reserved hereunder may be a percentage of Tenant's Gross Sales, and
notwithstanding anything else to the contrary, Landlord shall not be deemed to
be a partner of Tenant or a joint venturer with Tenant.
SECTION 20.9. WAIVER OF COUNTERCLAIMS. TENANT SHALL NOT IMPOSE ANY
COUNTERCLAIM OR COUNTERCLAIMS 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
<PAGE>
RIGHT TO COUNTERCLAIM IN ANY SUMMARY PROCEEDING OR OTHER ACTION BASED ON
TERMINATION OR HOLDOVER IS DONE SO KNOWINGLY, INTELLIGENTLY AND VOLUNTARILY.
SECTION 20.10. WAIVER OF JURY TRIAL. 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 20.11. Severability. If any provision of this Lease or the
application thereof to any person or circumstances shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each provision of
this Lease shall be valid and be enforced to the fullest extent permitted by
law.
SECTION 20.12. NO WAIVER. NO FAILURE BY LANDLORD TO INSIST UPON THE STRICT
PERFORMANCE OF ANY TERM, COVENANT, AGREEMENT, PROVISION, CONDITION OR LIMITATION
OF THIS LEASE TO BE KEPT, OBSERVED OR PERFORMED BY TENANT, AND NO FAILURE BY
LANDLORD TO EXERCISE ANY RIGHT OR REMEDY AVAILABLE UPON A BREACH OF ANY SUCH
TERM, COVENANT, AGREEMENT, PROVISION, CONDITION OR LIMITATION OF THIS LEASE,
SHALL CONSTITUTE A WAIVER OF ANY SUCH BREACH OR OF ANY SUCH TERM, COVENANT,
AGREEMENT, PROVISION, CONDITION OR LIMITATION.
Section 20.13. Consumer Price Index. As used herein, "Consumer Price Index"
or "Index" shall mean the Consumer Price Index for All Urban Consumers (1982-84
= 100), U.S. City Average, All Items, published by the United States Department
of Labor, Bureau of Labor Statistics (or such comparable index as may be
utilized in substitution for or as the successor to the stated Index). If such
Index is not published by the Bureau of Labor Statistics or by another similar
governmental agency at any time during the Term of this Lease, then the most
closely comparable statistics on the purchasing power of the consumer dollar as
published by a responsible financial authority and selected by Landlord shall be
utilized in lieu of such Index.
Section 20.14. Interest. Any amount due from Tenant to Landlord herein
which is not paid when due shall bear interest at a rate per annum equal to the
Federal Reserve Bank discount rate as published in the 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 Section 20.14.
Section 20.15. Excavation. If an excavation shall be made upon land
adjacent to the Leased Premises, or shall be authorized to be made, Tenant shall
afford to the person causing or authorized to cause such excavation, license to
enter upon the Leased Premises for the purpose of doing such work as said person
shall deem necessary to preserve the wall or the building of which the Leased
Premises form a part from injury or damage and to support the same by proper
foundation, without any claim for damages or indemnity from Landlord, or
diminution or abatement of Rent.
Section 20.16. Rules and Regulations. Tenant agrees to comply with and
observe all reasonable rules and regulations established by Landlord for the
Shopping Center from time to time. Tenant's failure to keep and observe such
rules and regulations shall constitute a default pursuant to the terms of this
Lease in the manner as if the same were contained herein as covenants, which
shall carry with it the same consequences under Article XIV hereof as Tenant's
failure to pay rent.
<PAGE>
Section 20.17. Financial Statements. Upon Landlord's written request from
time to time, but not more than once per Lease Year, Tenant shall, within 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. Landlord shall maintain all financial information provided in a
confidential manner; provided, however, that Landlord may disclose such
financial statements to Landlord's mortgagees or prospective mortgagees or
purchasers.
Section 20.18. General Rules of Construction. (a) This Lease may be
executed in several counterparts and the counterparts shall constitute one and
the same instrument. (b) Landlord may act under this Lease by its attorney or
agent. (c) Wherever a requirement is imposed on Tenant hereunder, Tenant shall
be required to perform such requirement at its sole cost and expense unless it
is specifically otherwise provided herein. (d) (i) Wherever appropriate herein,
the singular includes the plural and the plural includes the singular; (ii)
whenever the word "including" is used herein, it shall be deemed to mean
"including, but not limited to"; and (iii) the words "re-enter" and "re-entry"
as used herein shall not be restricted to their technical legal meaning. (e)
Anything in this Lease to the contrary notwithstanding: (i) any provision hereof
which permits or requires a party to take any particular action shall be deemed
to permit or require, as the case may be, such party to cause such action to be
taken; and (ii) any provision hereof which requires any party not to take any
particular action shall be deemed to require such party to prevent such action
to be taken by any person or by operation of law. (f) Whenever costs or expenses
are required to be assessed to or paid by Tenant, such costs and expenses shall
be reasonable.
Section 20.19. Recording. Neither this Lease nor any memorandum hereof may
be recorded without the express written consent of Landlord.
Section 20.20. Effective Date. For all purposes hereof, the "Effective
Date" of this Lease shall be the date upon which this Lease shall have been
executed by both parties and physically delivered by Landlord to Tenant or its
attorney. Prior to the Effective Date, neither this Lease nor anything hereunder
contained shall be legally binding on either Landlord or Tenant, and the
submission of this Lease by Landlord to Tenant prior to such Effective Date for
examination or consideration by Tenant or discussion between Landlord and Tenant
shall not constitute a reservation of or option for the Leased Premises or
create any legal obligation or liability whatsoever on Landlord.
Section 20.21. Headings. The captions, section numbers, article numbers and
index appearing in this Lease are inserted only as a matter of convenience and
in no way define, limit, construe, or describe the scope or intent of such
sections or articles of this Lease nor in any way affect this Lease.
Section 20.22. Managing Agent. Landlord has advised Tenant that it has
appointed MillsServices Corp., a Delaware corporation as managing agent of the
Retail Development (said managing agent and any successor or substitute managing
agent is hereinafter referred to as "Managing Agent"). Tenant shall, until
otherwise notified by Landlord, make all payments of Rent required to be made
pursuant to this Lease to the Managing Agent payable to Landlord and direct all
notices, inquires or other communications to the Managing Agent, 1300 Wilson
Boulevard, Suite 400, Arlington, Virginia 22209.
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have signed this Lease as of the
day and year first above written.
WITNESS:
LANDLORD:
GRAPEVINE MILLS LIMITED PARTNERSHIP, a Delaware limited partnership
By: Grapevine Mills Operating Company L.L.C.,
a Delaware limited liability company
Its: General Partner
By: The Mills Limited Partnership, a Delaware limited partnership
Its: Operating Member
By: The Mills Corporation, a Delaware corporation
Its: General Partner
By: _________________________
Judith Berson
Executive Vice President
By:____________________ TENANT:
By:____________________ TOYS INTERNATIONAL, a California corporation
By:__________________
WITNESS/ATTEST: Name:____________________
Its:____________________
By:____________________ By:__________________
By:____________________ Name:____________________
Its:____________________
Tenant's corporate seal:
By:____________________
By:____________________
<PAGE>
ACKNOWLEDGMENT OF LANDLORD
COMMONWEALTH OF VIRGINIA )
) ss.
COUNTY OF ARLINGTON )
On this ____ day of ____________________, 19____, before me personally
appeared Judith Berson, to me known to be the person who executed the foregoing
Lease and acknowledged before me that she was duly authorized and did execute
same on behalf of GRAPEVINE MILLS LIMITED PARTNERSHIP, a Delaware limited
partnership.
- -----------------------------------
Notary Public
My Commission expires:_____________
ACKNOWLEDGMENT OF CORPORATE TENANT
STATE OF )
) ss.
CITY/COUNTY OF )
On ____________________, 19____, before me _____________________, a
Notary Public in and for said state aforesaid, personally appeared
__________________________, as _____________________ and
__________________________ as _________________________of TOYS INTERNATIONAL, a
California corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which
the person(s) acted, executed the instrument.
- -----------------------------------
Notary Public, ____________ County,
My Commission expires:_____________
[Notarial Seal]
ADDENDUM ATTACHED TO AND MADE A PART OF LEASE DATED ________________,
19___, BY AND BETWEEN GRAPEVINE MILLS LIMITED PARTNERSHIP, A DELAWARE LIMITED
PARTNERSHIP, AS "LANDLORD," AND TOYS INTERNATIONAL, A CALIFORNIA CORPORATION, AS
"TENANT."
<PAGE>
The Lease is hereby modified and supplemented as set forth herein. Any
conflict between a term, condition or provision contained in this Addendum with
any term, condition or provision contained in the printed Lease shall be
resolved in favor of this Addendum.
Add as a new Section 7.3:
"Section 7.3. Sales Tax Rebate. Landlord has determined that financial
assistance from the [City of Grapevine] [State of Texas] in the form of a sales
tax rebate will better enable Landlord to develop the Shopping Center in a
manner beneficial to both Landlord and Tenant. Therefore, in order to provide
Landlord with the sales tax information from the State of Texas Comptroller of
Public Accounts ("Comptroller") pertaining to Tenant's sales at the Leased
Premises, Tenant agrees to provide Landlord with certified copies of all sales
tax returns filed with the Comptroller for Tenant's retail operations at the
Leased Premises during the Term of this Lease. In addition thereto, Tenant shall
provide Landlord with a power of attorney letter addressed to, and in a form
satisfactory to, the Comptroller authorizing the Comptroller to release to
Landlord all sales tax information for Tenant's retail operations at the Leased
Premises during the Term of this Lease. Such letter shall be in the form
attached hereto and made a part hereof as Exhibit G, or such other or additional
forms as required from time to time by the Comptroller in order to release such
information to Landlord. Landlord agrees to maintain the confidentiality of any
proprietary information received by Landlord pursuant to this Section 7.3."
Section 12.1: At the end of Section 12.1, insert:
"In accordance with the provisions of this Section 12.1, Tenant agrees to
execute the Agreement of Subordination, Non-Disturbance and Attornment attached
hereto as Exhibit H at the time this Lease is executed by Tenant."
Add as a new Section 20.23:
"Section 20.23. Lease Contingencies. This Lease is contingent and
conditioned upon (a) acquisition of the Retail Development property by the
Landlord; it being understood that as of the date of this Lease, Landlord has
only a contractual right to said property and (b) the securing by Landlord of
financing for the Retail Development on terms and conditions, and at a rate of
interest and in a loan amount, satisfactory to Landlord in its sole and absolute
discretion (both of said conditions (a) and (b) being herein collectively
referred to as the "Lease Contingencies"). In the event the foregoing Lease
Contingencies have not been satisfied on or before December 31, 1998, then
Landlord shall thereafter have the right to terminate and cancel this Lease upon
thirty (30) days prior written notice to Tenant. If the Lease Contingencies
shall be satisfied prior to the expiration of the aforesaid thirty (30) day
notice period, then the notice to terminate and cancel shall be voided and this
Lease shall remain in full force and effect. In the event of termination of this
Lease as herein provided, this Lease shall cease and come to an end, Landlord
shall reimburse Tenant for any advance Rent paid, and there shall thereupon be
no further liability or obligations upon either party under or with respect to
this Lease. Each party will, at the other's request, execute an instrument in
recordable form containing a release and surrender of all right, title and
interest in and to this Lease."
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have signed and sealed this
Addendum as of the day and year first above written.
WITNESS:
LANDLORD:
GRAPEVINE MILLS LIMITED PARTNERSHIP, a Delaware limited partnership
By: Grapevine Mills Operating Company, L.L.C.,
a Delaware limited liability company
Its: General Partner
By: The Mills Limited Partnership, a Delaware limited partnership
Its: Operating Member
By: The Mills Corporation, a Delaware corporation
Its: General Partner
- ------------------------------------
By: Judith Berson
Its: Executive Vice President
By: ____________________
TENANT:
By: ____________________
TOYS INTERNATIONAL, a California corporation
By:
Name:
WITNESS/ATTEST: Its:
By:
Name:
By: ____________________ Its:
--------------------
By: ____________________
--------------------
ACKNOWLEDGEMENT OF LANDLORD
COMMONWEALTH OF VIRGINIA )
) ss.
COUNTY OF ARLINGTON )
On this ____ day of ____________________, 19____, before me personally
appeared Judith Berson, to me known to be the person who executed the foregoing
Addendum and acknowledged before me that she was duly authorized and did execute
same on behalf of GRAPEVINE MILLS LIMITED PARTNERSHIP, a Delaware limited
partnership.
- -----------------------------------
Notary Public, Commonwealth of Virginia
My Commission expires:_____________
<PAGE>
ACKNOWLEDGEMENT OF CORPORATE TENANT
STATE OF )
) ss.
CITY/COUNTY OF )
On ______________________, 19_____, before me _______________________, a
Notary Public in and for the state aforesaid, personally appeared
_______________________, as ________________________ and
__________________________, as _____________________ of TOYS INTERNATIONAL, a
California corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity, and that by his/her signature on the instrument, the
person, or the entity upon behalf of which the person acted, executed the
instrument.
Notary Public, County,
My Commission expires:
[Notarial Seal]
<PAGE>
EXHIBIT F
COMMENCEMENT AND EXPIRATION DATE DECLARATION
LANDLORD:
TENANT:
LEASE DATE:
STORE NUMBER:
Landlord and Tenant acknowledge and agree that the Commencement Date of the
above referenced Lease is and the Expiration Date of the Lease is .
- ----------------------------------------------------
- --------------------------------------------------------
LANDLORD: TENANT:
By: By:
Its: Its:
Date: Date:
<PAGE>
EXHIBIT G
WAIVER OF SALES TAX CONFIDENTIALITY
Date: _________________
I authorize the Comptroller of Public Accounts to release sales tax
information pertaining to the taxpayer indicated below to Grapevine Mills
Limited Partnership, c/o The Mills Corporation, 1300 Wilson Boulevard, Suite
400, Arlington, Virginia 22209. I understand that this waiver applies only at
our retail store located in Grapevine Mills in Grapevine, Texas.
Please print or type the following information as shown below on your Texas
Sales and Use Tax Permit:
- ----------------------------------------------------------------------
Name of Taxpayer Listed on Texas Sales Tax Permit
- ---------------------------------------------------------------------
Name Under Which Taxpayer is Doing Business (d/b/a or Outlet Name)
- ----------------------------------------------------------------------
Taxpayer Mailing Address
- ----------------------------------------------------------------------
Physical Location of Business Permitted for Sales Tax in Grapevine, Texas
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
<S> <C>
Texas Taxpayer ID Number Tax Outlet Number
(As Shown on Texas Sales Tax Permit)
--------------------------------
Authorized Signature
--------------------------------
Print Name of Authorized Signature
--------------------------------
Position of Authorized Signature
--------------------------------
Phone Number of Authorized Signature
</TABLE>
<PAGE>
EXHIBIT H
AGREEMENT OF SUBORDINATION
NON-DISTURBANCE AND ATTORNMENT
THIS AGREEMENT is made this _____ day of _______________________________,
19____, by and among GRAPEVINE MILLS LIMITED PARTNERSHIP, a Delaware limited
partnership having an office c/o The Mills Corporation, 1300 Wilson Boulevard,
Suite 400, Arlington, VA 22209 ("Lessor"), TOYS INTERNATIONAL, a California
corporation, having an office at 550 Rancheros Drive, San Marcos, California
92069 ("Lessee"), and NATIONSBANK OF TEXAS, N.A., a national banking
association, having offices at 901 Main Street, 51st ------ ------ Floor,
Dallas, Texas 75202 ("Agent"), as agent for, and as co-lender with such other
lenders (collectively, the "Lenders") under the credit facility secured by the
hereinafter described Deed of Trust, their successors and assigns or affiliate.
- ----- -------
W I T N E S S E T H:
WHEREAS, Lenders have provided financing for GRAPEVINE MILLS shopping
center in Grapevine, Texas (the "Property");
WHEREAS, under a certain lease (the "Lease") Lessor did lease, let, and
demise a portion of the Property (such portion of the Property is hereinafter
called the "Premises") to Lessee:
WHEREAS, Lenders have or will become the owners of indebtedness secured by,
among other things, a deed of trust, granted by Lessor and Grapevine Mills
Residual Limited Partnership ("GMRLP"), to Michael Hord, trustee, for the
benefit of Agent, on behalf of the Lenders, as beneficiary (the "Deed of
Trust");
NOW, THEREFORE, in consideration of the covenants, terms, conditions and
agreements herein contained, and in consideration of other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged, the
parties hereto agree as follows:
1. The Lease and all rights and liens created thereby shall be subject and
subordinate in all respects to the Deed of Trust and the lien created thereby,
to any advancements made thereunder, and to any increases, extensions,
modifications or renewals thereof.
2. So long as Lessee is not in default under the Lease beyond any
applicable grace or cure period, Agent, on behalf of the Lenders, hereby
covenants to Lessee that in the event Lenders obtain title to the Premises,
either by foreclosure or by deed in lieu of foreclosure, and thereafter obtains
the right of possession of the Premises, that the Lease will continue in full
force and effect, and Lenders shall recognize the Lease and Lessee's rights
thereunder, subject to the provisions of this Agreement.
3. Lessee agrees that from and after the date hereof in the event of any
act or omission by Lessor under the Lease which would give Lessee the right,
either immediately or after the lapse of a period of time, to terminate the
Lease, or to claim a partial or total eviction, Lessee will not exercise any
such right (a) until it has given written notice of such act or omission to
Agent by certified mail, return receipt requested, and (b) until and unless
Lenders fail to remedy such act or omission within thirty (30) days for any act
or omission which can be cured by the payment of money, or in the case of any
other act or omission, as long as necessary to remedy such act or omission,
provided (i) Lenders cause such remedy to be commenced within thirty days, and
(ii) Lenders cause completion of such remedy to be pursued with due diligence
following such giving of notice and following the time when Lenders shall have
become entitled under the Deed of Trust to remedy the same. It is specifically
agreed that Lessee shall not, as to Lenders, be entitled to require cure of any
such default which is personal to Lessor, and therefore not susceptible of cure
<PAGE>
by Lenders, and that no such uncured default shall entitle Lessee to exercise
any rights under the Lease with respect to Lenders.
4. That in the event the interests of Lessor under the Lease shall be
transferred to Lenders or Agent or any nominee, designee, assignee of Lenders or
any purchaser at foreclosure sale (Lenders, Agent or such other party referred
to as a "Lender Party") by reason of foreclosure, deed in lieu of foreclosure,
or similar transaction, Lessee hereby covenants and agrees to make, for the
benefit and reliance of Lenders, full and complete attornment to the Lender
Party as substitute lessor upon the same terms, covenants and conditions as
provided in the Lease, except to the extent otherwise set forth herein.
5. The provisions of this Agreement are real property covenants running
with the Property, and shall be binding upon and inure to the benefit of the
respective parties hereto and their respective heirs, executors, administrators,
beneficiaries, successors and assigns, including without limitation any Lender
Party.
6. Notwithstanding anything contained herein to the contrary, or anything
to the contrary in the Lease, Lenders and any Lender Party shall not be:
(a) Liable for any act, omission or the breach of any warranty of Lessor,
including without limitation, any delay in opening the Project or the Premises
for occupancy and any failure to complete the construction of the Premises or
the Project or any improvements therein;
(b) Subject to any offsets, claims of defenses which Lessee might have as
Lessor;
(c) Required or obligated to credit Lessee with any rent for any period
beyond the then current rental period which Lessee might have paid Lessor;
(d) Bound by any amendments or modifications or voluntary termination of
the Lease made without Lenders' prior written consent, other than exercise of
rights, options or elections contained in the Lease; or
(e) Bound to or liable for refund of any security deposit except to the
extent actually received by Lenders or a Lender Party.
7. Lessee shall not, without the express written consent of Lenders:
(a) Cancel, terminate or surrender the Lease, except as provided therein or
in any modification or amendment specified herein or hereafter consented to by
Lenders;
(b) After the date hereof, enter into any agreement with Lessor or its
successors or assigns, which grants any concession with respect to the Lease or
which materially compromises, discounts or otherwise reduced the rent called for
thereunder; or
(c) After the date hereof, prepay rent more than one (1) month in advance.
8. Lessor and Lessee hereby jointly and severally agree for the benefit and
reliance of Lenders, that neither this Agreement, nor any assignment of the
Lease for collateral purposes, nor anything to the contrary in the aforesaid
Lease or in any modifications or amendment thereto shall, prior to Lenders'
acquisition of Lessor's interest in and possession of the Property (and
thereafter, only to the extent of the Property and not personally), operate to
give rise or create any responsibility or liability upon Agent or Lenders for
the control, care, management or repair of the Property by any party whatsoever
or for any dangerous or defective condition of the Property; or impose
responsibility for the carrying out by Agent or Lenders of any of the covenants,
terms and conditions of the Lease or any modification or amendment whether or
not hereafter consented to by Lenders, or for any negligence in the management,
upkeep, repair or control of said Property resulting in loss, injury or death to
any lessee, licensee, invitee, guest, employee, agent or stranger.
Notwithstanding anything to the contrary in the Lease, Lenders, their successors
and assigns (and any Lender Party, as appropriate), shall be responsible for
<PAGE>
performance of only those covenants and obligations of the Lease accruing after
Lenders', their successors' and assigns' (or Lender Party's, as appropriate),
acquisition of Lessor's interests in and possession of the Property; and in the
event that Lenders or any Lender Party shall acquire title to the Premises or
the Property, Lenders or any Lender Party shall have no obligation, nor incur
any liability, beyond Lenders' or any Lender Party's then equity interest, if
any, in the Property or the Premises.
9. Lessee covenants and agrees to make rental payments according to the
terms of such Assignment of Leases upon written demand by Agent in the event of
any default (as described therein). Lessor consents to payments being so made.
10. Lessee agrees that this Agreement satisfies any condition or
requirement in the Lease relating to the granting of a non-disturbance
agreement.
11. Lessee agrees to execute and deliver from time to time, upon the
request of Lessor or of any holder(s) of any of the indebtedness or other
obligations secured by the Deed of Trust, a certificate regarding the status of
the Lease in the form set forth in Schedule A attached hereto and incorporated
herein by reference for all purposes. ----------
12. THIS AGREEMENT AND ITS VALIDITY, ENFORCEMENT AND INTERPRETATION SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND APPLICABLE UNITED STATES
FEDERAL LAW.
13. If any bankruptcy proceedings shall hereafter commence with respect to
Lessor, and if the Lease is rejected by the trustee pursuant to Section 365 of
the United States Bankruptcy Code, Lessee agrees with Lenders (i) not to treat
such lease as terminated or to execute a new lease with Lenders or any Lender
Party on the same terms as the Lease, and (ii) to remain in possession of the
Premises.
14. Any notices hereunder shall be effective upon mailing by certified
mail, return receipt requested, or delivery by Federal Express addressed to the
recipient at its address set forth in the preambles hereof or as to each party,
to such other address as the party may designate by a notice given in accordance
with the requirements contained herein.
15. This Agreement contains the entire agreement between the parties
hereto. This instrument may be executed in multiple counterparts, all of which
shall be deemed originals and with the same document. Signature and
acknowledgment pages may be detached from the counterparts and attached to a
single copy of this document to physically form one document.
EXECUTED as of the date first above written.
<TABLE>
<CAPTION>
<S> <C>
LESSOR: GRAPEVINE MILLS LIMITED PARTNERSHIP, a Delaware limited partnership
By: GRAPEVINE MILLS OPERATING COMPANY, L.L.C., a Delaware limited liability company
its general partner
By: THE MILLS LIMITED PARTNERSHIP, a Delaware limited partnership, its operating
member
By: THE MILLS CORPORATION, a Delaware corporation, its general partner
By:
Its:
LENDER: NATIONSBANK OF TEXAS, N.A., a national banking association, as Agent
By:
Authorized Signatory
LESSEE: TOYS INTERNATIONAL, a California corporation
By:
Its:
</TABLE>
Exhibit 10.106
Lease Agreement for Store - Thousand Oaks
SHOPPING CENTER LEASE
In consideration of the rents and covenants hereinafter set forth, Landlord
leases to Tenant, and Tenant leases from Landlord, the Premises upon the terms
and conditions of this Shopping Center Lease ("Lease") entered into and dated
June 9, 1998 ("Execution Date").
ARTICLE 1
FUNDAMENTAL LEASE PROVISIONS
ARTICLE 1 FUNDAMENTAL LEASE PROVISIONS
1.1 Landlord: THE OAKS SHOPPING CENTER, L.P., a California limited
partnership
1.2 Tenant: TOYS INTERNATIONAL, a California corporation
1.3 Tenant's Trade Name: TOYS INTERNATIONAL (Section 9.1)
1.4 Premises: That certain retail space currently identified as "Space No.
1(Sectioni2.1)e Shopping Center known as "THE OAKS," located in the City of
Thousand Oaks, County of Ventura, State of California, containing approximately
5,339 square feet of Floor Area with a frontage of approximately 49.33 feet. The
Premises are shown in that approximate location crosshatched on Exhibit A.
1.5 Lease Term: Approximately ten (10) years, two (2) months. (Section 3.1)
1.6 Target Delivery Date: August 1, 1998 (Section 2.3)
1.7 Expiration Date: December 31, 2008 (Section 3.1)
1.8 Rent Commencement Date: The earlier to occur of October 15, 1998 or
the(Sectionn4.1)first opens for business in the Premises.
1.9 Minimum Annual Rent: One Hundred Thirty-Three Thousand Four(Section
4.2)nty-Five and No/100 Dollars ($133,475.00) per annum, beginning with the Rent
Commencement Date and continuing for the first five (5) full years of the Lease
Term plus any partial calendar month at the beginning of the Lease Term; then,
One Hundred Forty-Four Thousand One Hundred Fifty-Three and No/100 Dollars
($144,153.00) per annum for the remainder of the Lease Term.
1.10 Percentage Rent: Seven percent (7%) of Gross Sales in excess of the
Break(Section 4.3)
1.11 Marketing Assessment: Sixteen Thousand Six Hundred Eighty-Five and
13(Sectionl8.2)($16,685.13) per annum.
1.12 Addresses for Notices: (Article 23)
To Landlord: THE OAKS SHOPPING CENTER, L.P.
c/o TrizecHahn Centers
4350 La Jolla Village Drive, Suite 400
San Diego, CA 92122-1233
Attn: Legal Department
and to: Landlord's manager at the Shopping Center.
To Tenant: TOYS INTERNATIONAL
550 Rancheros Drive
San Marcos, CA 92069
Attn: President
<PAGE>
1.13 Permitted Use: Primarily for the retail sale of toys and, at Tenant's
optio(Sectionn9.1)o the extent incidental to the primary operation of a toy
store), better quality collectibles, hobbies, arts and crafts, children's books,
dolls, model kits (provided that the display of such model kits shall not exceed
twenty-five percent (25%) of the retail sales Floor Area of the Premises),
child-oriented games, child-oriented video and audio cassettes, child-oriented
compact and laser discs, and other technological innovations thereof,
child-oriented computer software, sporting goods, wheel goods, stuffed animals,
other juvenile and child-related goods, and such other items as are typically
displayed in toy stores located within first-class regional shopping centers.
Tenant shall use the Premises for no other use or purpose.
1.14 Security Deposit: Thirty-Three Thousand Three Hundred Sixty-Eight and
75/1(Articler26)$33,368.75).
The provisions of this Article 1 summarize certain terms of the Lease which
are more fully described in the balance of the Lease. In the event of a conflict
between the provisions of Article 1 and the balance of the Lease, the latter
shall control. Capitalized terms used in the Lease shall have the meanings set
forth or cross-referenced in Exhibit B or otherwise defined in the body of the
Lease.
ARTICLE 2
PREMISES
2.1 Condition. Tenant accepts the Premises in its "as-is" condition and
state of repair as of the Commencement Date. Tenant, at its sole cost and
expense, shall complete any Improvements that may be required for Tenant's use
of the Premises. All such work shall be in accordance with Article 11, and
Landlord shall have no responsibility to do or pay for the same.
2.2 Title of Premises. Tenant acknowledges that Tenant's leasehold interest
in the Premises is subject to (a) covenants, conditions, restrictions,
easements, Mortgages, and other matters of record, (b) the REA, (c) the effect
of all Legal Requirements, including any local zoning laws; and (d) general and
special taxes not delinquent. Landlord warrants that none of the matters
contained in the REA and/or the Mortgage shall adversely affect the Permitted
Use.
2.3 Delay in Delivery. If Landlord cannot deliver possession of the
Premises to Tenant on the Target Delivery Date for any reason, Landlord shall
not be subject to any liability therefor. Such failure of delivery shall not
affect the validity of the Lease or the obligations of Tenant hereunder, or
extend the Expiration Date. If Landlord is unable to deliver possession of the
Premises to Tenant within ninety (90) days after the Target Delivery Date for
any reason (including without limitation Landlord's inability to terminate any
existing occupancy of the Premises) then Landlord, in its sole and absolute
discretion, shall have the option at any time thereafter, but prior to
delivering possession of the Premises, to notify Tenant of Landlord's intent to
terminate the Lease in which event the Lease shall terminate and both Landlord
and Tenant shall be released from any liability or obligation under the Lease.
Landlord shall use reasonable efforts to deliver possession of the Premises
to Tenant on or before the Target Delivery Date. If Landlord is delayed in
delivering the Premises by such date, the Rent Commencement Date shall be
delayed by the corresponding number of days after the Target Delivery Date until
possession of the Premises is delivered.
If Landlord is delayed in delivering the Premises by August 15, 1998 and
such delay results in Tenant failing to open for business in the Premises by
December 1, 1998 providing Tenant has made reasonable efforts to open by
December 1, 1998, the Minimum Annual Rental set forth in Article 1 shall be
adjusted to the lesser of (i) seven percent (7%) of Tenant's Gross Sales to be
paid monthly in arrears on or before the twentieth (20th) day of each month, or
(ii) the Minimum Annual Rental set forth in Article 1 (such adjustment shall
hereinafter be referred to as "Tenant's Adjustment Right"). Tenant's Adjustment
Right shall automatically expire April 1, 1999 at which time Tenant shall pay
the full Minimum Annual Rental set forth in Article 1.
<PAGE>
Tenant's Adjustment Right as provided for in this Section 2.3 shall be
Tenant's sole remedy at law or in equity in the event of the aforementioned
delay in delivery. It is further agreed and understood that Landlord shall not
be liable for any damages arising from any such delay. In the event the Minimum
Annual Rental is adjusted as provided for herein, Tenant shall still be required
to pay all other charges, including Percentage Rent, called for in the manner
provided for in this Lease. For the purpose of computing Percentage Rent due
during the adjustment period, it shall be deemed that all abated Minimum Annual
Rent was in fact paid to Landlord.
2.4 Relocation or Termination. If in connection with Landlord's expansion,
reduction, removal, renovation or construction of new or existing improvements
(but excluding reconfiguration required solely to accommodate other Shopping
Center tenants) Landlord reasonably determines that it is necessary that Tenant
vacate the Premises or that the Premises be altered, Landlord may require that
Tenant surrender possession of the Premises, provided Landlord, in its sole and
absolute discretion , either (a) amends this Lease to lease Tenant other
comparable premises within the Shopping Center on the same terms and conditions
as those contained in this Lease for the balance of the remaining Lease Term, or
(b) terminates this Lease and pays Tenant an amount equal to the then
unamortized net cost to Tenant of its Improvements, calculated using a
straight-line amortization schedule and an amortization period equal to the
Lease Term. The relocation of the Premises in accordance with (a) herein or the
payment of the consideration in accordance with (b) herein shall be Tenant's
sole remedy in the event Tenant is required to surrender possession of the
Premises as provided in this Section. It is expressly agreed and understood that
Landlord shall first offer to lease Tenant other comparable premises within the
Shopping Center if available, in Landlord's sole, yet reasonable discretion. The
foregoing provisions of this Section 2.4 shall be subject to the following:
(a) Comparable premises shall be deemed to mean premises which are
substantially the same in size (not less than 5,070 square feet or more than
5,600 square feet in size and having a mall frontage of 45 feet or more) and
similar in location with respect to vertical transportation within the Shopping
Center; provided, however, in no event shall Landlord be obligated to offer to
Tenant any location which Landlord is prevented from leasing to Tenant pursuant
to covenants of Landlord respecting radius, location, use, or exclusivity
contained in any other lease, financing agreement (including the Mortgage), or
other agreement affecting the Shopping Center. If more than one (1) comparable
premises is available in the Shopping Center as determined by Landlord's sole,
yet reasonable judgement, Landlord shall offer Tenant the comparable premises
that is closest to the Premises. Landlord shall pay the cost and expense of
finishing the new premises to the extent of the quality and condition of the
decor (including all Improvements but excluding Personal Property) which existed
in the Premises immediately prior to relocation;
(b) Landlord shall give Tenant at least ninety (90) days notice of
Landlord's intention to relocate the Tenant;
(c) Landlord shall not have the right to relocate the Tenant more than one
(1) time during the Lease Term and in no event shall relocation occur from
November 1st through January 31st;
(d) The physical relocation of Tenant's Personal Property from the Premises
to the new premises shall be accomplished by Landlord at Landlord's cost and
expense;
(e) Landlord shall exercise due diligence in the relocation of the Tenant
and Minimum Annual Rental and Additional Rent shall abate during any period that
the business conducted upon the Premises must be closed as a result of such
relocation, which closure shall not exceed seven (7) days;
(f) If the new premises differ in size from the Premises as it existed
before the relocation, Minimum Annual Rental shall be adjusted to a sum computed
by multiplying the Minimum Annual Rental by a fraction, the numerator of which
shall be the total number of square feet in the new premises and the denominator
of which shall be the total number of square feet in the Premises before
relocation. In addition, all Additional Rent which is calculated based on Floor
Area shall be calculated on the basis of the Floor Area of the new premises;
<PAGE>
(g) The parties shall immediately execute an amendment to this Lease
documenting the relocation of the Tenant and the reduction or increase in
Minimum Annual Rental;
(h) All incidental costs incurred by Tenant as a result of the relocation
including without limitation, costs incurred in change of address on stationery,
business cards, directories, advertising, and other such items, shall be paid by
Landlord, in a sum not to exceed Seven Hundred Fifty Dollars ($750); and
(i) If Tenant (in its sole and absolute discretion) and Landlord are unable
to agree upon comparable premises for the purposes of relocation pursuant to
this Section 2.4 within thirty (30) days of Landlord's notice to Tenant of its
intent to relocate Tenant, then this Lease shall terminate and Landlord shall
compensate Tenant for its reasonable damages. For purposes of this Section 2.4,
reasonable damages shall be defined as the unamortized net cost to Tenant of its
Improvements with a straight-line amortization period equal to the Lease Term as
of the date of termination.
2.5 Reserved Easement. Landlord shall have the right during the Lease Term
to install, relocate, maintain, and operate conduits, facilities, and structures
comprising the Air Conditioning System and permitting the conveyance of
Utilities in and through the space above the ceiling (or ceiling line if there
is no ceiling) in the Premises. If Landlord desires to relocate any such
conduits, facilities or structures, Tenant shall have the right to approve such
relocation, which approval shall not be unreasonably withheld so long as such
items remain above the ceiling or ceiling line. Landlord further reserves the
right to use up to one percent (1%) of the Floor Area of the Premises as
Landlord may designate at any time to accommodate items serving other tenants or
resulting from the remodeling or expansion of the Shopping Center, including
without limitation columns, shafts, ducts, and pipes, provided such portion is
located adjacent to a wall other than the storefront and such items are either
not visible from the Premises sales area or are reasonably concealed in a manner
which does not materially detract from the appearance of Tenant's store.
2.6 Right to Enter. Landlord and/or its authorized representatives shall
have the right to enter the Premises at all reasonable times for the purpose of
showing the Premises to prospective purchasers or lenders. Tenant additionally
shall permit Landlord, or its authorized representatives, to enter the Premises
at all times during usual business hours upon reasonable notice (except in the
case of an emergency, in which case Landlord may enter as reasonably necessary)
to inspect the Premises, to perform its duties under the Lease, and to perform
any work therein (a) that may be necessary to comply with Legal Requirements,
(b) that Landlord may deem necessary to prevent waste or deterioration of the
Premises or Shopping Center, and (c) that Landlord may deem necessary in
connection with the expansion, reduction, remodeling or renovation of any
portion of the Shopping Center. Landlord agrees that it shall use reasonable
efforts to perform any work it is required or permitted to perform under this
Section 2.6 in such manner and at such times as to not unreasonably or
materially disturb Tenant's business operations, except in the case of an
emergency. In the event work is performed by Landlord in accordance with this
Section 2.6, except to the extent such work was caused by Tenant's failure to
perform its obligations under the Lease, and said work renders the Premises
untenantable for a period of at least three (3) consecutive days, thereafter
Minimum Annual Rent and Additional Rent (except Percentage Rent) shall be abated
proportionately with the degree in which Tenant's use of the Premises is
impaired and such abatement shall continue during the period in which Tenant is
unable to operate its business in the Premises as a result of such work.
2.7 Right to Measure Floor Area of Premises. Within thirty (30) days
following delivery of possession of the Premises to Tenant, Tenant, at its sole
cost and expense, or Landlord, at its sole cost and expense, may cause the Floor
Area of the Premises to be measured by a licensed architect. In the event such
calculation reflects a deviation of more than one percent (1%) from the Floor
Area set forth in Section 1.4, and the other party approves the calculation,
this Lease shall be amended to reflect the recalculated Floor Area and to
proportionately adjust Minimum Annual Rent and the Marketing Assessment. If the
parties do not exercise their right to measure the Floor Area as provided
herein, both Landlord and Tenant hereby acknowledge and agree that each party
shall be deemed to have (i) absolutely and unconditionally waived such right,
(ii) accepted the Floor Area calculation as set forth in Section 1.4, and (iii)
unconditionally released and waived any rights the parties may have against one
another in the event the Floor Area calculation set forth in Section 1.4 is
inaccurate.
<PAGE>
ARTICLE 3
LEASE TERM
3.1 Duration. The Lease shall become fully effective and binding as of the
Effective Date. The "Lease Term" means that period commencing on the
Commencement Date and continuing through the Expiration Date, unless sooner
terminated as provided in the Lease or by law.
3.2 Surrender of the Premises. At the Expiration Date or earlier
termination of the Lease, Tenant shall remove all Personal Property from the
Premises and surrender possession of the Premises to Landlord in broom clean
condition and good state of repair, except ordinary wear and tear, damage or
destruction covered by Article 18, and any repair Landlord is obligated to
perform pursuant to the Lease.
3.3 Failure to Surrender Possession and Liquidated Damages. Landlord and
Tenant acknowledge and agree that any failure of Tenant to surrender possession
of the Premises on the Expiration Date or earlier termination of the Lease shall
result in substantial damages to Landlord, and that those damages are and will
be impossible or impracticable to measure. Accordingly, if Tenant does not
surrender possession of the Premises to Landlord as set forth herein, Tenant
shall be deemed a hold over tenant at sufferance . During the period of any such
hold over tenancy, Tenant shall pay to Landlord, as liquidated damages, for each
day that Tenant holds over in the Premises, an amount equal to two (2) times the
portion of the Minimum Annual Rent payable during the last month of the Lease
Term, plus an amount equal to the Additional Rent (including Percentage Rent)
which was payable by Tenant in the last full calendar year prior to the
Expiration Date or earlier termination of the Lease, prorated on the basis of a
365-day year; provided, however, that Tenant's obligation to pay such liquidated
damages shall not commence until the tenth (10th) day following Landlord's
notice to Tenant stating Landlord's intent to enforce the provisions of this
Section 3.3 and until the commencement of such liquidated damages, Tenant shall
pay the Minimum Annual Rent and Additional Rent as payable by Tenant in the last
full calendar year prior to the Expiration Date or earlier termination of this
Lease. No provision of the Lease shall be deemed to permit Tenant to retain
possession of the Premises after the Expiration Date or earlier termination of
the Lease without Landlord's prior written consent. Except as otherwise
specifically stated in the Lease, all of the terms and conditions of the Lease
shall remain in effect following any extension, renewal or hold over of the
original Lease Term.
ARTICLE 4
RENT
4.1 Rent Commencement Date. Tenant's obligation to pay Minimum Annual Rent
and Additional Rent shall commence upon the Rent Commencement Date.
4.2 Minimum Annual Rent. Tenant shall pay Minimum Annual Rent in twelve
(12) equal monthly installments during the Lease Term, in advance, on the first
day of each calendar month, without setoff, deduction, prior notice or demand.
In the event that at any time after the Effective Date an additional Major
Department Store containing at least sixty-five thousand (65,000) square feet of
Floor Area and having an entrance abutting the enclosed mall, other than those
shown on Exhibit A, is constructed in the Shopping Center, then as of the date
of the initial opening of such Major Department Store, the Minimum Annual Rent
as set forth in Article 1 shall be increased by ten percent (10%), provided such
increase does not occur more than once during the Lease Term.
4.3 Percentage Rent.
(a) In General. Tenant shall pay Percentage Rent for each partial or full
calendar year of the Lease Term calculated based on Gross Sales for such period.
Said payments of Percentage Rent shall commence with the calendar month in
which Tenant's Gross Sales first exceed the Breakpoint for such full or partial
calendar year. Said payments shall equal that amount which is the product of the
<PAGE>
Percentage Rent figure (specified in Article 1) multiplied by the amount of
Gross Sales in excess of the Breakpoint. Said payments shall be payable
concurrently with Tenant's submittal of the monthly statements of Gross Sales in
accordance with the provisions of Section 4.3(b). Anything to the contrary
notwithstanding, in the event Minimum Annual Rent is abated in accordance with
any provisions of the Lease, the Breakpoint shall be adjusted accordingly.
The total Percentage Rent due and payable for a calendar year shall be
computed based on Tenant's annual statement of Gross Sales for that year and if
Tenant paid an amount greater than the actual Percentage Rent payable, the
amount of such overpayment shall be credited against Tenant's next required
payment of Additional Rent or, at the end of this Lease Term, receive a refund
thereof from Landlord, provided Tenant is not otherwise in monetary default
under the terms of this Lease and no other amounts are owed to Landlord; if
Tenant paid an amount less than the required Percentage Rent, then Tenant shall
pay such difference to Landlord together with Tenant's annual statement of Gross
Sales for said calendar year.
Notwithstanding anything to the contrary contained in this Section 4.3, for
the purpose of computing Percentage Rent due for a partial calendar year
occurring at the beginning of the Lease Term, Gross Sales made during that
partial year shall be added to the Gross Sales made during the first full
calendar year after the Rent Commencement Date and said payments of Percentage
Rent shall commence with the calendar month in which Tenant's Gross Sales first
exceed the Breakpoint for this entire period
(b) Reporting of Gross Sales. Tenant agrees to furnish to Landlord a
statement of Gross Sales within twenty (20) days after the close of each
calendar month, and an annual statement, including a monthly breakdown of Gross
Sales, within forty-five (45) days after the close of each calendar year during
the Lease Term and any partial calendar year at the end of the Lease Term;
provided, however, that Tenant shall cause its store manager to orally transmit
to Landlord monthly Gross Sales within ten (10) days after the close of each
calendar month and annual Gross Sales within thirty (30) days after the close of
each calendar year. It is agreed, however, that should Tenant fail twice during
the Lease Term to submit its written report of monthly and/or annual Gross Sales
within the time periods as provided for herein, then Tenant shall, for the
remainder of the Lease Term, be required to submit its written monthly
statements of Gross Sales within ten (10) days after the close of each calendar
month and to submit its written annual statements of Gross Sales within thirty
(30) days after the close of each calendar year. Such statements shall itemize
all elements of Gross Sales and Gross Sales Adjustments, and shall be certified
as true and correct by a Responsible Officer of Tenant. The receipt by Landlord
of any statement or any payment of Percentage Rent for any period shall not bind
Landlord as to the correctness of such statement or payment. Upon request,
Tenant agrees to furnish to Landlord a copy of Tenant's state and local sales
and use tax returns, if required in the state where the Shopping Center is
located, but only to the extent such returns are limited to the business
conducted upon the Premises. Tenant shall record at the time of sale, in the
presence of the customer, all receipts from sales or other transactions using a
cash register or computer system that cumulatively numbers and records all
receipts. Tenant and its subtenants, licensees, and concessionaires, shall keep
(i) full and accurate books of account and records in accordance with generally
accepted accounting principles consistently applied, including without
limitation, a sales journal, general ledger, and all bank account statements
showing deposits of Gross Sales revenue, (ii) all cash register detail tapes
with regard to all transactions of Gross Sales, and (iii) detailed original
records of all Gross Sales Adjustments. Such books, receipts, and records shall
be kept by Tenant for a period of three (3) years after the close of each
calendar year and during such 3-year period shall be available for inspection
and audit by Landlord and its representatives at the Premises or Tenant's
principal place of business at all times during regular business hours upon no
less than twenty (20) days prior notice. It is agreed, however, that Landlord's
right to inspect or audit shall be limited to once every calendar year, provided
(i) that in the event any audit reveals an understatement of annual Gross Sales
of more than two percent (2%), said limit shall thereafter be inapplicable, and
(ii) that in the event any audit shall result in a dispute between Landlord and
Tenant, and such dispute may be resolved by another audit, Landlord shall be
entitled to a second audit. Any corrections or adjustments to Gross Sales
previously reported by Tenant which will result in a refund to Tenant must be
reported to Landlord within the three (3) year period following the end of the
calendar year in which such Gross Sales were made. If it shall be determined as
a result of an audit that there has been a deficiency in the payment of
Percentage Rent, then such deficiency shall become immediately due and payable
with interest at the Interest Rate from the date when said payment was due or if
<PAGE>
such audit determines that there has been an overpayment of Percentage Rent the
amount of such overpayment shall be credited against Tenant's next required
payments of Additional Rent. In addition, if Tenant understates annual Gross
Sales by more than three percent (3%) and if Landlord is entitled to any
additional Percentage Rent as a result, or if an audit shows that Tenant has
failed to maintain the books of account and records as required or fails to
appear for and/or cooperate with Landlord's audit representative and, as a
result, Landlord is unable to verify the accuracy of Tenant's statement, then
Tenant shall pay to Landlord all reasonable costs and expenses incurred by
Landlord in conducting such audit and collecting any underpayment. Any
information gained from such audits, statements or inspection shall be
confidential and shall not be disclosed other than to carry out the purpose
hereof; provided, however, Landlord shall be permitted to divulge the contents
of any such statements in connection with any contemplated sales, transfers,
assignments, encumbrances or financing arrangements of Landlord's interest in
the Premises or in connection with any administrative or judicial proceedings in
which Landlord is involved where Landlord may be required to divulge such
information.
(c) New Locations. If during the Lease Term, Tenant, or any director or
officer of Tenant, or any parent, subsidiary or other affiliate of Tenant,
directly or indirectly, operates or owns either (i) under Tenant's Trade Name or
otherwise any similar type of business (except for stores operated under the
trade name "Play Co." as hereinafter provided) not so operated or owned on the
date Landlord executed the Lease within a radius of ten (10) miles from the
location of the Shopping Center, or (ii) under the trade name "Play Co.", not so
operated or owned on the date Landlord executed the Lease within a radius of
three (3) miles from the location of the Shopping Center, Landlord shall, and
continuing while Tenant is operating said other business, include the Gross
Sales of such other business in the Gross Sales made from the Premises for the
purpose of computing the Percentage Rent due hereunder. Tenant will provide
Landlord with a statement of Tenant's Gross Sales, in accordance with the
provisions of Section 4.3(b) for each such business location operated by Tenant
within said radius.
(d) Mutual Right to Terminate Based on Gross Sales. Landlord or Tenant
shall have a one (1) time right to terminate this Lease by written notice to the
other party, which notice must be given, if at all, during the first ninety (90)
days following the thirty-sixth (36th) full calendar month of the Lease Term.
Such termination shall be effective on the ninetieth (90th) day after such
notice is given. This right to terminate shall be null and void in the event
Tenant's Gross Sales exceed One Million Six Hundred Two Thousand Dollars
($1,602,000) during any one of the first three (3) years (year being defined as
twelve [12] consecutive full calendar months) of the Lease Term and, further,
Tenant's right to terminate shall be null and void in the event Tenant is in
default of this Lease, beyond any applicable cure period, as of the date of the
termination notice.
4.4 Additional Rent. Tenant shall pay all Additional Rent without setoff,
deduction, prior notice or demand in the amounts and in the manner set forth in
the Lease.
Tenant's payments of Additional Rent pursuant to Articles 5, 6, and 7 shall
be payable in the following manner:
(a) Estimate. Commencing with the Rent Commencement Date and continuing
throughout the balance of the Lease Term, Tenant shall pay Landlord, on the
first day of each calendar month, those amounts Landlord estimates to be
Tenant's share of the aforementioned Additional Rent. Landlord may adjust such
monthly estimates at the end of any calendar quarter on the basis of Landlord's
experience and reasonably anticipated costs.
(b) Reconciliation. Following the end of each calendar year or property tax
installment period, as applicable, Landlord shall furnish Tenant separate
statements for the Additional Rent payable by Tenant pursuant to Articles 5, 6,
and 7. Such statements shall cover the billing period showing the total of the
applicable Additional Rent expenses, Tenant's share of such expenses for such
billing period, and the total prior amounts payable by Tenant with respect to
such period in accordance with subsection (a) of this Section. Upon written
<PAGE>
request, Landlord will provide Tenant with the method of calculation of Tenant's
share. If Tenant's share of the Additional Rent expenses exceeds the total of
Tenant's payments with respect thereto, Tenant shall pay Landlord the deficiency
within thirty (30) days after receipt of such statement. If said payments exceed
Tenant's share of the specified Additional Rent expenses, such excess shall be
offset against the payments next due Landlord for the same Additional Rent
expense with a refund of any excess remaining at the expiration or earlier
termination of the Lease Term except to the extent Tenant is in monetary default
under this Lease. If it shall be determined as a result of an audit that there
has been an overpayment in the payment of Additional Rent due to Landlord's
miscalculation of the year end reconciliation, then such overpayment shall be
credited to Tenant's next payment of Additional Rent with a refund of any excess
remaining at the expiration or earlier termination of the Lease Term except to
the extent Tenant is in monetary default under this Lease.
(c) Tenant's Right to Audit. Provided Tenant is not in default under any
provision of this Lease after notice and expiration of the applicable cure
period, if any, provided for in Article 16, within twelve (12) months after the
receipt by Tenant of the annual statement with respect to any item of Additional
Rent for a calendar year, or tax year, if applicable with respect to taxes,
Tenant may, upon no less than thirty (30) days' prior written notice to
Landlord, audit Landlord's books pertaining to such Additional Rent payable by
Tenant pursuant to Articles 5, 6, and 7 for such calendar year or tax year, as
the case may be. Tenant's audit shall be performed by a certified public
accountant who is retained strictly on a non-contingency basis. The audit shall
be conducted at the office designated by Landlord and shall be during usual
business hours. Tenant's right to audit shall be restricted to one (1) per
calendar year and shall be at the sole cost and expense of Tenant. In no event
shall Tenant's right to audit relieve Tenant of its obligation to pay all
amounts due as provided in this Lease. Tenant shall deliver a copy of the
results of such audit to Landlord within fifteen (15) days of its receipt by
Tenant. Any information gained from such audit shall be confidential and shall
not be disclosed by Tenant, its agents and/or employees except to Tenant's
attorneys, accountants, and consultants or in connection with any contemplated
assignments or in connection with any administrative or judicial proceedings in
which Tenant may be required to divulge such information.
(d) Payment Directly to Third Party. Landlord, in its sole and absolute
discretion, shall have the option to require that the Tenant pay the reasonable
costs of certain services directly to the provider of such services. In such
event, such costs shall not be payable to Landlord as provided in the applicable
provision of the Lease unless Tenant fails to pay any such amount when due. If
Tenant fails to pay any such amount when due and such failure continues for ten
(10) days after Tenant' receipt of notice thereof from Landlord, Landlord shall
have the right, but not the obligation, to pay such amount on behalf of Tenant
and Tenant shall, upon demand, pay such amount to Landlord plus Landlord's
Administrative Fee.
4.5 Proration of Rent for Partial Month. Rent payable by Tenant for any
partial calendar month at the beginning or end of the Lease Term which is
calculated on the basis of a full calendar year shall be computed on a daily
basis to reflect the actual number of days in said partial month at an amount
equal to one-three hundred sixty-fifth (1/365th) of such annual Rent for each
day of said partial month.
4.6 Landlord's Right to Offset. If any sums are payable by Landlord
pursuant to any provision of the Lease, Landlord shall have the right to first
offset from such sum any amounts that are currently payable by Tenant to
Landlord pursuant to any provision contained in the Lease.
4.7 Failure to Pay Rent When Due. If Tenant fails to pay any amount of
Minimum Annual Rent or Additional Rent within five (5) days of when due, such
unpaid amount shall bear interest at the Interest Rate from the date such sum
was due . In addition, Tenant acknowledges that the late payment by Tenant of
any installment of Minimum Annual Rent or Additional Rent within five (5) days
of when due will cause Landlord to incur certain costs and expenses not
contemplated under this Lease, the exact amount of which costs are extremely
difficult or impracticable to determine. Therefore, if any such installment is
<PAGE>
not received by Landlord from Tenant within five (5) days of when due, Tenant
shall immediately pay to Landlord a late charge of Four Hundred Dollars ($400).
Landlord and Tenant agree that such late charge represents a reasonable estimate
of such costs and expenses and is fair compensation to Landlord for its loss
caused by Tenant's late payment.
4.8 Address for Payments. Tenant shall pay all rent and other payments due
Landlord at Landlord's management office in the Shopping Center, or at such
place as Landlord may from time to time designate in writing.
ARTICLE 5 s
PREMISES TAX AND INSURANCE EXPENSES s
Tenant agrees to pay to Landlord (a) the amount of all taxes, similar
assessments, and special assessments levied for any reason on, or attributable
to, the Premises and/or the realty underlying the Premises (whether separately
or as part of a larger parcel as provided in this Article) and reasonable costs
associated with challenging such taxes and assessments and (b) the cost to
Landlord of the insurance required to be maintained by Landlord on the Premises
under Section 13.3. In no event shall Tenant be required to pay: (a) any portion
of Landlord's general income, franchise, inheritance, estate or gift taxes, or
(b) any assessment levied for the purpose of financing Landlord's cost to
develop or construct any portion of the Shopping Center.
With respect to any assessment which may be levied against or upon the
Premises and the Shopping Center, or which under the laws then in force may be
evidenced by improvement bonds or other bonds, and which may be paid in annual
installments, only the amount of such annual installment (with appropriate
proration for any partial calendar year of the Lease Term) shall be including
within the computation of Tenant's pro rata share of taxes and assessments for
any particular year.
Upon Tenant's written request therefor, Landlord will provide Tenant with
copies of applicable tax bills for the immediately preceding tax period or other
information upon which Landlord has relied for its determinations hereunder.
For the purpose of this Article, the term "larger parcel" is such portion
of the Shopping Center containing the Premises and other realty and/or
improvements for which taxes and assessments are levied, but excluding any
portion whose taxes are included in the Common Area Expenses. In the event the
Premises and the realty underlying the Premises are not separately assessed for
computation of taxes and assessments or are separately assessed and billed as
part of a larger parcel then, in either event, taxes and assessments on the
Premises and the realty underlying the Premises shall be that proportion of the
taxes and assessments on such larger parcel which the Floor Area of the Premises
bears to the Floor Area of all the areas available for exclusive use and
occupancy by tenants of such larger parcel, whether or not actually occupied and
open for business, provided that an equitable adjustment shall be made for
buildings which are partially completed on the date such taxes and assessments
are levied.
In the event the cost to Landlord of the insurance covering the Premises is
not separately charged to Landlord, Tenant's share of insurance as set forth
herein shall be the proportion of the total insurance expenses (excluding any
insurance which is included in Common Area Expenses) which the Floor Area of the
Premises bears to the Floor Area of all the areas available for exclusive use
and occupancy by tenants of the Shopping Center, whether or not actually
occupied and open for business, exclusive of Floor Area which is separately
insured.
Tenant shall pay before delinquency all taxes (including sales and use
taxes), assessments, license fees, and public charges levied, assessed or
imposed upon its business operation as well as upon its merchandise,
Improvements, and Personal Property. In the event such items of Tenant's
property are assessed with property of Landlord, Landlord shall allocate such
assessment, on the basis of assessed value or such other reasonable allocation,
between Landlord and Tenant so that Tenant shall pay only its equitable portion.
<PAGE>
ARTICLE 6
UTILITIES AND AIR CONDITIONING
6.1 Utilities. Landlord shall make the following Utilities available to the
Premises : sewage removal, delivery of water, electricity, natural gas (if
permitted by Landlord), and telephone service. Landlord shall have no obligation
whatsoever to make any other Utilities available for the benefit of Tenant.
6.2 Utilities Charge. Tenant shall pay the Utilities Charge in accordance
with Section 4.4.
6.3 Calculation of Utilities Charge. The "Utilities Charge" shall be
Tenant's payment of any and all Utilities furnished by Landlord to the Premises
or otherwise for the benefit of Tenant. Tenant shall install at its sole expense
any separate meter required by Landlord or Tenant for any Utilities. If any
Utilities are not separately metered to the Premises and are instead provided in
common with others, then Landlord shall reasonably determine Tenant's share of
the Utilities so provided (not to exceed the rates of the local utility company
if such service had been provided directly to Tenant), and such determination
shall be used in the calculation of the Utilities Charge; provided, however,
that Tenant shall be permitted to install a submeter to monitor Tenant's usage.
Tenant shall use the Utilities provided by Landlord to the Premises throughout
the Lease Term, and shall not contract separately for the same without the prior
written consent of Landlord which Landlord may grant or withhold in its sole and
absolute discretion. The Utilities Charge shall not exceed the charge the local
public utility company would have imposed had said company furnished the
Utilities directly to Tenant. If Landlord does not provide all of the Utilities,
Tenant agrees, at its own expense, to pay to the appropriate utility company the
cost of any such Utilities.
6.4 Air Conditioning. The Air Conditioning System serving the Premises is
either an individual unit serving the Premises exclusively or a centralized
system serving the Premises on a nonexclusive basis.
6.5 Air Conditioning Charge. If the Air Conditioning System exclusively
serves the Premises, Tenant shall have no separate Air Conditioning Charge, but
Tenant shall pay all costs of Utilities used to operate the Air Conditioning
System as part of the Utilities Charge. If the Air Conditioning System is a
centralized system serving the Premises on a nonexclusive basis, Tenant shall
pay the Air Conditioning Charge as provided in Section 4.4.
6.6 Calculation of Air Conditioning Charge. The "Air Conditioning Charge"
shall be Tenant's share of the total expense associated with the operation and
maintenance of the Air Conditioning System (including Amortization of Capital
Items) for any given calendar year and the Administrative Fee with respect to
all such expenses. Initially, such share shall be equal to the proportion that
Tenant's Engineered Value bears to the total of the Engineered Values of all
tenants utilizing the Air Conditioning System during each calendar month of the
calendar year and averaged for that calendar year. Within thirty (30) days after
Tenant opens the Premises for business, Tenant shall submit to Landlord a
certified air balance report stating the amount of CFM actually being used by
Tenant in the Premises. If Tenant fails to submit such certified air balance
report to Landlord within said thirty (30) day period, Landlord may obtain such
a certified air balance report at Tenant's expense, which air balance report as
completed by Landlord shall be binding and conclusive. If the Air Conditioning
System supplies chilled water or other fluid refrigerant to the Premises,
Landlord shall measure the GPM actually being used by Tenant in the Premises on
the basis of the air balance report. Either party may, at any time, install
meters to verify the amount of CFM/GPM used by Tenant. After receipt and
verification of the air balance report and/or the metered CFM or GPM readings,
Landlord shall use such actual CFM or GPM in the foregoing formula, in lieu of
Tenant's Engineered Value.
6.7 Tenant's Engineered Value. Tenant shall not at any time cause an
increase in the Engineered Value without the prior written approval of Landlord.
Upon Landlord's request, Tenant shall submit to Landlord the current
calculations requested under Exhibit F.
<PAGE>
ARTICLE 7
COMMON AREA
7.1 Tenant's License to Use. Landlord grants to Tenant and its employees,
agents, customers, and invitees a non-exclusive license to use the Common Area
during the Lease Term, subject to the rights of Landlord, the other tenants of
Landlord, the other owners of the Shopping Center and such parties' employees,
agents, customers, and invitees to use the same in common with Tenant.
7.2 Operation and Maintenance of Common Area. Landlord shall keep the
Common Area in a neat, clean, and orderly condition, and shall repair, maintain
or replace all equipment and facilities thereof as Landlord shall deem
necessary. Landlord may cause any or all of the services concerning the Common
Area to be provided by an independent contractor(s) or by an affiliate(s) of
Landlord. If Landlord does not maintain all of the Common Areas of the Shopping
Center because one or more of the Major Tenants maintains a portion thereof,
then, for so long as such condition exists, Landlord's responsibility hereunder
shall extend to only those portions of the Common Area not maintained by Major
Tenants and the Common Area expenses described in this Article shall refer only
to the portions maintained by Landlord.
7.3 Common Area Expenses.
(a) In General. "Common Area Expenses" shall mean all expenses in
connection with the use, ownership (i.e., property taxes), operation, and
maintenance of the Common Area, including without limitation, all general
maintenance and repairs deemed necessary by Landlord or as may be required by
Governmental Authority; work performed by Landlord in accordance with Section
12.2; resurfacing, restriping, and repair of all parking areas; painting;
cleaning; trash removal; snow and ice removal; sweeping and janitorial services;
seasonal decor; signs; fire protection systems; personnel to implement any of
the foregoing services including, if Landlord deems necessary, the cost of
security officers and security systems; all taxes, similar assessments, and
special assessments levied for any reason on the Common Area and the realty
underlying the Common Area and all reasonable costs associated with challenging
such taxes and assessments; all personal property taxes levied for any reason on
any personalty of the Common Area; the cost to Landlord of the insurance
covering the Shopping Center; the Amortization of Capital Items; all on-site
costs and personnel expenses of Landlord incurred in managing the Shopping
Center; and the Administrative Fee with respect to all such expenses. Common
Area Expenses shall be reduced (prior to the calculation of Tenant's share) by
the contributions required to be made by the Major Tenants thereto, and shall
not include any costs in connection with the original construction and
installation of the Common Area. There shall be no duplication to Tenant of the
costs for insurance and taxes as provided in Article 5 and this Section.
Notwithstanding anything to the contrary contained in this Lease, Tenant
shall not be required to pay its share of any costs which (i) have been
reimbursed to Landlord from insurance proceeds or warranties or eminent domain
award (and to the extent Tenant does pay for any such costs which are
subsequently reimbursed to Landlord, Tenant shall be entitled to a refund), (ii)
are incurred in connection with the expansion or renovation of the Shopping
Center except to the extent such expenses are deferred maintenance expenses or
otherwise appropriate operation and/or maintenance expenses; (iii) are
associated with the removal and/or abatement of Hazardous Materials from
portions of the Shopping Center other than the Premises; or (iv) are incurred by
Landlord pursuant to Section 8.4 of this Lease. Further, Tenant shall not be
required to pay both depreciation and the replacement cost for the same item.
In no event shall Tenant's share of expenses in any calendar year in
connection with any work associated with an Insured Casualty or an Uninsured
Casualty exceed an amount equal to fifteen percent (15%) of Tenant's total share
of Common Area Expenses for such year; provided, however, that commercially
reasonable deductibles, co-insurance, and/or self-insurance funds shall not be
subject to the foregoing limitation so long as the potential exposure to the
Landlord as a result of such deductibles, co-insurance, and/or self insurance
does not exceed an amount equal to 25% of the total replacement cost of the
Shopping Center).
<PAGE>
(b) Calculation. Tenant shall pay its share of Common Area Expenses in the
manner provided in Section 4.4. Tenant's share of Common Area Expenses shall be
calculated as follows:
(i) Tenant's share of Common Area Expenses for the previous calendar
quarter or year shall be the proportion of all such expenses, exclusive of
Interior Mall Expenses and Food Court Expenses, that the Floor Area of the
Premises bears to the total Floor Area of all premises in the Shopping Center
that are occupied and open for business as of the commencement of each calendar
quarter and averaged for that calendar year, exclusive of the Floor Area
occupied by the Major Tenants; provided, however, that during the Lease Term, in
no event will Tenant's share of such Common Area Expenses be calculated on the
basis of less than eighty percent (80%) occupancy of the Floor Area of the
Shopping Center, exclusive of the Floor Area occupied by the Major Tenants;
(ii) If the storefront of the Premises is located on the Interior Mall,
Tenant's share of Interior Mall Expenses for the previous calendar quarter or
year shall be the proportion of all Interior Mall Expenses that the Floor Area
of the Premises bears to the Floor Area of all premises having storefronts on
the Interior Mall that are occupied and open for business as of the commencement
of each calendar quarter and averaged for that calendar year, exclusive of the
Floor Area occupied by the Major Tenants; provided, however, that during the
Lease Term, in no event will Tenant's share of such Interior Mall Expenses be
calculated on the basis of less than eighty percent (80%) occupancy of the Floor
Area of premises having store fronts on the Interior Mall, exclusive of the
Floor Area occupied by the Major Tenants; and
(iii) If the Premises is located within the Food Court of the Shopping
Center and the use of the Premises involves the sale of food, Tenant's share of
Food Court Expenses for the previous calendar quarter or year shall be the
proportion of all Food Court Expenses that the Floor Area of the Premises bears
to the Floor Area of all food use tenants within the Food Court that are
occupied and open for business as of the commencement of each calendar quarter
and averaged for that calendar year.
7.4 Extended Hours Services. If Tenant desires to operate its business in
the Premises beyond the normal Shopping Center hours of operation, Tenant shall
request Landlord's permission to do so, which request shall be subject to
Landlord's approval, and thereafter shall notify Landlord of any changes in the
times or dates of the extended hours of operation. Landlord will provide those
extended hours services that it deems necessary and Tenant shall reimburse
Landlord for Tenant's equitable share of the increased costs incurred by
Landlord for such extended hours services, including without limitation
lighting, security, Utilities, and Landlord's Administrative Fee with respect to
all such expenses. Tenant shall pay such increased costs as part of Additional
Rent in accordance with Section 4.4.
7.5 Control of Common Area. Landlord shall at all times have the right to
determine the nature and extent of the Common Area, whether the same be surface,
underground or multiple-deck, and to make such changes thereto as it shall
elect, including without limitation the location and relocation of driveways,
entrances, exits, and automobile parking spaces, the direction and flow of
traffic, and the installation of prohibited areas, landscaped areas and Utility
Installations. Landlord shall at all times have the sole and exclusive control
of the Common Area, including, without limitation, the right to lease space
within the Common Area to tenants for the sale of merchandise and/or services
and the right to permit advertising displays, educational displays and
entertainment in the Common Area, including kiosks, carts, and other temporary
or permanent stands. Landlord's control and operation of the Common Area shall
at all times be subject to Landlord's obligation to comply with all Legal
Requirements. Landlord shall also have the right at any time and from time to
time to exclude and restrain any person from the use or occupancy of the Common
Area. It shall be the duty of Tenant to keep all of the Common Area free and
clear of any obstructions created or permitted by Tenant or resulting from
Tenant's operation. However, no permanent facility which materially and
<PAGE>
adversely affects the access to or visibility of the Premises shall be located
within ten feet (10') directly in front of Tenant's Premises as limited by an
imaginary ten foot (10') extension of Tenant's Interior Demising Partitions
without Tenant's prior consent.
7.6 Security Officers. Tenant acknowledges that if Landlord provides
security officers for the Common Area, Landlord does not represent, guarantee or
assume responsibility that Tenant will be secure from any Claims relating to
such security officers. Landlord shall have no obligation to hire, maintain or
provide such services, which may be withdrawn or changed at any time with or
without notice to Tenant or any other person and without liability to Landlord.
7.7 Rules and Regulations. In addition to any rules and regulations of
record governing the Shopping Center, Tenant shall abide by the rules and
regulations set forth in Exhibit D. Landlord shall have the right to establish
additional reasonable and equitable rules and regulations, and to adopt
reasonable and equitable amendments to the same from time to time for the proper
and efficient operation and/or maintenance of the Common Area or any portion
thereof, as Landlord determines in its discretion.
7.8 Validated Parking. Landlord shall have the right to adopt a
nondiscriminatory, uniform policy, charge and/or validation system for the
parking facilities in the Common Area.
ARTICLE 8
MARKETING ARTICLE
8.1 Marketing. Tenant shall, at Landlord's option, either participate in a
marketing fund ("Marketing Fund") or a merchants' association ("Merchants'
Association") which shall be organized to market the Shopping Center. Landlord
shall control and administer the Marketing Fund, if established, with advice
from an advisory group comprised of representatives of various Shopping Center
tenants. The activities of the Marketing Fund or the Merchants' Association, as
the case may be, shall be financed by an annual budget based on an appropriate
fiscal year. The annual budget shall be the sum of the following: the annual
marketing assessments of all tenants at the Shopping Center; plus the
contributions of Landlord as provided in this Article and of all Major
Department Stores pursuant to their separate agreements with Landlord.
8.2 Tenant's Marketing Assessment. Tenant shall pay the Marketing
Assessment to Landlord if Landlord has established the Marketing Fund, or as
dues to the Merchants' Association if Landlord has not established the Marketing
Fund. Tenant shall pay the Marketing Assessment in equal monthly installments,
payable in advance commencing on the Rent Commencement Date and thereafter on
the first day of each calendar month of each year. Tenant's Marketing Assessment
shall be adjusted annually in accordance with the CPI Adjustment Procedures;
provided, however, in no event shall the Marketing Assessment increase in any
year by more than five percent (5%) over the Marketing Assessment for the
previous year. The Base Month shall be the month of October immediately
preceding the Rent Commencement Date; the Month of Adjustment shall be the month
of October during each fiscal year of the Lease Term thereafter. The adjustment
shall be effective as of the first day of January following the Month of
Adjustment.
8.3 Landlord's Contribution. Landlord shall contribute on a noncumulative
basis an amount equal to twelve and one-half percent (12.5%) of the total
contributions by all tenants of the Shopping Center (including contributions, if
any, made by the Major Department Stores) to the Marketing Fund; provided,
however, in no event shall Landlord be required to contribute more than
Twenty-Five Thousand Dollars ($25,000) in any fiscal year. At Landlord's option,
Landlord may elect to contribute part or all of the marketing and graphic arts
services required by the Marketing Fund or the Merchants' Association in lieu of
making its contribution in cash. In any event, Landlord shall maintain the sole
and absolute authority to employ and discharge any member of its marketing and
graphic arts staffs providing said services.
8.4 Daily Sales. Landlord may, in its sole and absolute discretion, provide
<PAGE>
a program for the purpose of collecting daily sales information directly from
the Tenant via Tenant's designated representative at the Premises and Tenant
agrees to participate in any such program. The daily sales information would
include gross daily receipts collected at the Premises. The program shall be in
the form of automated, computerized telecommunication. The costs and expenses in
connection with the operation of the program would be paid for either by the
Landlord or by proceeds from the Marketing Fund. The information collected may
be utilized by Landlord for the purpose of evaluating and responding to market
trends and determining merchandising category rankings.
ARTICLE 9
USE
9.1 Permitted Use. Tenant shall operate the Premises only under Tenant's
Trade Name and shall only use the Premises for the Permitted Use, and for no
other use or purpose. Landlord shall not unreasonably withhold its consent to a
change in Tenant's Trade Name in connection with an approved Occupancy
Transaction.
9.2 Duties and Prohibited Conduct. Tenant shall at all times comply with
all Legal Requirements. At Tenant's sole expense, Tenant shall procure,
maintain, and make available for Landlord's inspection any governmental license
or permit required for the proper and lawful conduct of Tenant's business.
Tenant shall not use the Premises, or permit or fail to prevent the Premises to
be used, (a) for any purpose or in any manner that violates any Legal
Requirement and/or the requirements of the insurance underwriter(s) for the
Shopping Center, (b) for the sale or display of pornography, nudity, graphic
violence, drug paraphernalia, or any goods and/or services that, in the sole and
absolute discretion of Landlord, are inconsistent with the image of a community
or family-oriented shopping center, (c) as a massage parlor, adult bookstore or
second-hand store, (d) to conduct an auction, distress, fire, bankruptcy or
going-out-of business sale or similar sales, (e) to sell merchandise from
vending machines (except vending machines installed and made available solely
for use by Tenant's employees), (f) to operate any video, pinball or other
gaming machines, although Tenant shall be allowed to display and demonstrate to
customers and/or allow customers to operate items which Tenant has for sale, or
(g) to keep live animals of any kind unless otherwise permitted by this Lease.
Tenant shall not place, affix or maintain any signs, advertising placards,
names, insignia, trademarks, descriptive material or any other similar item or
items outside, on or within twenty-four inches (24") of the Lease Line, the
storefront, the glass panes and supports of the show windows, or any window,
door, roof or the exterior side of any Perimeter Demising Partition of the
Premises, except such signs as Landlord shall approve in writing in accordance
with Exhibit C. Tenant shall use the sales Floor Area within six feet (6') of
the storefront Lease Line, if at all, for the promotional display of merchandise
only; stacking or stocking merchandise within said area or in the window area is
expressly prohibited. Tenant shall not cause or permit any waste to occur in the
Premises and shall not overload the floor, or any mechanical, electrical,
plumbing or Utility systems serving the Premises. Tenant shall keep the
Premises, and every part thereof, in a clean and wholesome condition, free from
any objectionable noises, loud music, odors or nuisances. If the Permitted Use
includes the sale of and/or preparation of food, Tenant shall at all times
maintain a health department rating of "A" (or such other highest health
department or similar rating as is available).
9.3 Hazardous Materials.
(a) In General. Tenant shall not use, generate, manufacture, produce,
store, transport, treat, dispose or permit the escape or release on, under,
about or from the Premises, or any part thereof, of any Hazardous Materials. If
Tenant's Permitted Use requires the use and/or storage of any Hazardous
Materials on, under or about the Premises, Tenant shall provide written notice
to Landlord, prior to final execution of the Lease, of the identity of such
materials and Tenant's proposed plan for the use, storage, and disposal thereof;
such use, storage, and disposal shall be subject to Landlord's approval, in
Landlord's sole and absolute discretion. If Landlord approves such proposed use,
storage, and disposal of specific Hazardous Materials, Tenant may use and store
upon the Premises only such specifically approved materials and shall comply
with any conditions to such approval as Landlord may impose in its sole and
<PAGE>
absolute discretion. Landlord's permission hereunder may be withdrawn or
modified at any time in Landlord's sole and absolute discretion. Tenant shall
fully and promptly comply with all Hazardous Materials Laws at all times during
the Lease Term, and at the expiration or earlier termination of the Lease Term,
Tenant shall remove and dispose of all Hazardous Materials affecting the
Premises and the Shopping Center resulting from the use or occupancy thereof by
Tenant or its agents, employees, suppliers, contractors, subtenants, successors,
and assigns regardless of whether such removal is required by any Hazardous
Materials Law. Notwithstanding the foregoing, Landlord consents to Tenant's
above-ground use, storage, and off-site disposal of products containing small
quantities of Hazardous Materials, which products are of a type customarily used
in operations specifically mentioned as a Permitted Use, provided that Tenant
shall handle, use, store, and dispose of such Hazardous Materials in a safe and
lawful manner and shall not allow Hazardous Materials to contaminate the
Premises or the Shopping Center.
(b) Indemnity. Tenant shall indemnify, protect, defend, and hold Landlord
(and its partners, joint venturers, shareholders, affiliates, and property
managers, and their respective officers, directors, employees, and agents) and
Landlord's Mortgagee harmless from and against any and all Claims arising out
of, in connection with, or directly or indirectly arising out of the use,
generation, manufacture, production, storage, treatment, release, disposal or
transportation of Hazardous Materials by Tenant, or any successor, assignee or
sublessee of Tenant, or their respective agents, contractors, employees,
licensees, or invitees, on, under, about or from the Premises or the Shopping
Center, including, but not limited to, all foreseeable and unforeseeable costs,
expenses, and liabilities related to any testing, repair, cleanup, removal
costs, detoxification or decontamination and the preparation and implementation
of any closure, remedial action, site assessment costs or other required plans
in connection therewith deemed required, necessary or advisable by Landlord or
any Governmental Authority, and any foreseeable or unforeseeable consequential
damages. Any defense of Landlord pursuant to the foregoing indemnity shall be by
counsel reasonably acceptable to Landlord. Neither the consent by Landlord to
the use, generation, storage, release, disposal or transportation of Hazardous
Materials, nor Tenant's strict compliance with all Hazardous Materials Laws,
shall excuse Tenant from Tenant's indemnification obligations hereunder. The
foregoing indemnity shall be in addition to and not a limitation of the other
indemnification provisions of the Lease. Tenant's obligations hereunder shall
survive the termination or expiration of the Lease.
(c) Reporting. Tenant shall notify Landlord in writing, promptly after any
of the following: (i) Tenant has knowledge, or has reasonable cause to believe,
that any Hazardous Materials have been released, discharged or located on, under
or about the Premises or, to the extent caused by Tenant, the Shopping Center,
whether or not the same is in quantities that would otherwise be reportable to a
public agency, (ii) Tenant receives any warning, notice of inspection, notice of
violation or alleged violation, or Tenant receives notice or knowledge of any
proceeding, investigation, order or enforcement action, under any Hazardous
Materials Law concerning the Premises or, to the extent caused by Tenant, the
Shopping Center, or (iii) Tenant becomes aware of any Claims made or threatened
by any third party concerning the Premises or, to the extent caused by Tenant,
the Shopping Center respecting Hazardous Materials.
(d) Confirmation of Tenant's Knowledge. Upon request from Landlord or
Landlord's Mortgagee at any time, Tenant shall promptly execute all affidavits,
representations, and any other similar documents as Landlord or Landlord's
Mortgagee may request concerning Tenant's best knowledge and belief regarding
the presence or absence, or the use, generation, storage, disposal or
transportation of Hazardous Materials, under, about or from the Premises or, to
the extent caused by Tenant, the Shopping Center.
(e) Asbestos. If any asbestos containing materials exist in the Premises
that were introduced into the Premises by Tenant, its affiliates, agents,
contractors, employees, assignors, predecessors, successors or Transferees at
any time, Tenant shall remove all such asbestos containing materials prior to
(i) the expiration or earlier termination of this Lease and/or (ii) making
Improvements to the Premises and, in either event, regardless of whether such
removal is required by any Hazardous Materials Law.
<PAGE>
(f) Landlord's Right to Terminate. If the Premises or any part of the
Shopping Center becomes or is discovered to be contaminated with any Hazardous
Materials, and if any handling of any nature is undertaken in connection
therewith (either at Landlord's own initiative or pursuant to the requirements
of any Government Authority), and if Tenant is not responsible for any handling
or indemnification in connection therewith under the Lease or otherwise, then
Landlord shall have the right to terminate the Lease upon thirty (30) days'
notice to Tenant in the event the estimated cost of any such handling exceeds an
amount equal to Two Hundred Fifty Thousand Dollars ($250,000) and such cost is
not covered by insurance, provided, however, that Landlord's notice shall
include the estimated cost of such handling. Tenant shall have the option to pay
the cost of such handling in excess of $250,000 which option must be exercised,
if at all, within twenty (20) days following Tenant's receipt of Landlord's
notice by written notice to Landlord and by depositing an amount equal to the
estimated cost of such handling in excess of $250,000 in a third party escrow
account in which event Landlord's notice to terminate will be null and void
provided Tenant pays for the entire cost of such handling in excess of $250,000
in a timely and reasonable manner. In no event shall Landlord terminate the
Lease unless Landlord terminates the leases of all other tenants similarly
affected by such circumstances.
(g) Initial Inspection. Tenant may, within fifteen (15) days after Tenant
takes possession of the Premises with Landlord's consent, provided the Lease is
fully executed and Tenant has not commenced any work in the Premises, perform an
inspection of the Premises by a recognized, certified environmental consultant
for the purpose of determining whether any Hazardous Materials exist in the
Premises.
In the event such inspection determines that Hazardous Materials do exist
and further that they require specific handling in accordance with applicable
Hazardous Materials Laws and provided said Hazardous Materials are not present
by reason of Tenant's Work (as defined in Exhibit C and to the extent made or
caused to be made by Tenant or an affiliate of Tenant), then Tenant shall have
the right to, within ten (10) days of such determination, notify Landlord of the
results of the inspection, in which event Landlord, at its sole cost and
expense, shall perform the necessary reasonable steps to handle such Hazardous
Materials (hereinafter referred to as "Remedial Work"). Notwithstanding the
foregoing to the contrary, if Landlord determines that the cost of such Remedial
Work, in Landlord's reasonable opinion, is excessive, or that such Remedial Work
would unreasonably interfere with the operation of the Shopping Center or other
businesses in the Shopping Center, Landlord may terminate this Lease and all
liability hereunder shall cease.
In the event any such Remedial Work delays the commencement of Tenant's
work in the Premises, the date certain referred to in Section 1.8, in connection
with the definition of the Rent Commencement Date shall be delayed by the
corresponding number of days that it takes to complete the Remedial Work,
calculated from the date Landlord receives Tenant's notice of the results of the
inspection and continuing until the Remedial Work is completed. Tenant shall not
be entitled to any further compensation or damages from Landlord arising
directly or indirectly from the Remedial Work including but not limited to loss
of use of the whole or any part of the Premises, the building of which the
Premises are a part, Tenant's Personal Property, or any inconvenience or
annoyance reasonably occasioned by the existence of Hazardous Materials and the
subsequent Remedial Work.
In no event does Tenant's right to inspect extend beyond the fifteen (15)
day period set forth above and, in the event Tenant waives its right to
inspection of the Premises, the right to inspect shall be of no force or effect;
upon the expiration of said fifteen (15) day period or upon Tenant's waiver of
its right to inspection, the handling or removal of Hazardous Materials shall be
governed in accordance with the provisions of Article 12 of the Lease.
<PAGE>
ARTICLE 10
TENANT'S OPERATING COVENANTS
10.1 Operating Covenants. Tenant shall, continuously and uninterruptedly
from and after its initial opening for business, (a) operate and conduct within
the entire Premises the business that it is permitted to operate and conduct
under the provisions hereof, except while the Premises are untenantable by
reason of fire or other casualty, (b) maintain within the Premises an adequate
stock of merchandise together with sufficient personnel and Personal Property to
service and supply the usual and ordinary requirements of its customers, and (c)
keep the Premises in a neat, clean, and orderly condition.
10.2 Operating Days and Hours. It is in the interests of both Tenant and
Landlord to have regulated hours of business for all of the Shopping Center.
Commencing with the opening for business by Tenant in the Premises and for the
remainder of the Lease Term, Tenant shall be open for business daily and shall
continuously remain open for business with its window displays, exterior signs,
and exterior advertising displays adequately illuminated during all hours on all
days on which Landlord, in its sole and absolute discretion, determines to open
the Shopping Center for business to the public. If the Shopping Center contains
Common Area which is enclosed for the purpose of providing climatic control,
Landlord shall not be obligated to open the enclosed area so that Tenant may
conduct business except on those days and hours when (a) any one (1) of the
Major Department Stores shall be open for business, or (b) tenants in the
Shopping Center occupying at least fifty percent (50%) of the Floor Area thereof
shall have given reasonable advance notice to Landlord that they desire to be
open for business during such time.
Notwithstanding anything to the contrary contained in this Lease, in no
event shall Tenant be required to open for business on any day earlier than
10:00 a.m. or later than 10:00 p.m., or on Christmas Day or Thanksgiving Day,
unless at least fifty percent (50%) of the other Mall Tenants are open during
such period(s).
Tenant shall be permitted to be closed two (2) days per calendar year (on a
non-cumulative basis) for the purpose of taking inventory. Tenant shall provide
written notice to the Shopping Center General Manager at least ten (10) days
prior to the date of closing and shall display appropriate signage advising its
customers of such closure. In no event shall Tenant be permitted to close for
inventory during the period in any calendar year commencing November 1st and
ending December 31st.
ARTICLE 11
IMPROVEMENTS
11.1 Initial Construction of the Premises. Tenant shall submit to Landlord
plans and specifications for the construction of Tenant's storefront and store
interior in accordance with Exhibit C and the Tenant Package. Tenant shall
commence and diligently proceed with construction so as to complete the work
contemplated thereby and open for business in the Premises on or before the Rent
Commencement Date. All Personal Property must be new when installed in, or
attached to, the Premises.
Landlord agrees that Tenant may reuse the existing mechanical, electrical,
sprinkler, plumbing and alarm systems currently in the Premises, if any,
provided they are in good working order and are in compliance with Landlord's
current criteria and all laws, regulations, codes, ordinances, and other
governmental regulations relating thereto. Notwithstanding the foregoing,
Landlord makes no representations or warranties with respect to such systems and
assumes no responsibility or liability arising our of Tenant's reuse of such
systems.
11.2 Improvements. After the initial construction of the Premises by
Tenant, at Tenant's own expense and in accordance with Exhibit C, after giving
Landlord written notice of its intentions to do so, Tenant may, from time to
time, make such Improvements to the Premises as Tenant may find necessary or
convenient for its purposes so long as the value of the Premises is not thereby
materially diminished and subject to Landlord's approval as provided in this
Section. Tenant shall not make any of the following Improvements without
Landlord's prior written consent in each instance: Improvements costing more
than Ten Thousand Dollars ($10,000) in the aggregate per occurrence;
Improvements to the mechanical or electrical systems, to the exterior walls or
<PAGE>
roof of the Premises, or to any storefront or area of the Premises within three
feet (3') of the storefront; the addition of any mezzanine or Improvements that
increase the size of any existing mezzanine; and any penetration into or through
the roof, ceiling or floor of the Premises. With the exception of the plans in
connection with the Tenant's initial construction and opening of the Premises,
Tenant shall reimburse Landlord for all reasonable costs and expenses
(including, without limitation, any reasonable architect or engineer fees)
incurred by Landlord in approving or disapproving Tenant's plans for
Improvements. Tenant shall certify to Landlord Tenant's actual cost of
constructing its Improvements within thirty (30) days after completing the same.
11.3 Mechanics' Liens.
(a) General. Tenant shall pay or cause to be paid all costs of labor,
services, and materials supplied in the prosecution of any work done in the
Premises on behalf of Tenant, and Tenant shall keep the Premises free and clear
of all mechanics' liens and other liens arising out of any work done for Tenant
or persons claiming under Tenant. Tenant shall promptly notify Landlord of any
Claim or lien filed against the Premises or the commencement of any action
affecting the title thereto.
(b) Contest of Lien. If Tenant desires to contest the claim of any
mechanics' lien, Tenant shall (i) either post a release bond issued by a
responsible corporate surety as prescribed by law, or furnish Landlord with
adequate security for the amount of the claim plus estimated costs and interest,
and (ii) promptly pay or cause to be paid any and all sums awarded to the
claimant on its suit.
(c) Landlord's Right to Cure. If Tenant fails to provide security for or
satisfaction of any mechanics' lien, then Landlord, in addition to any other
rights or remedies it may have, may (but shall not be obligated to) discharge
said lien by (i) paying the claimant an amount sufficient to settle and
discharge the claim, (ii) posting a release bond, or (iii) taking such action as
Landlord shall deem appropriate, and Tenant shall pay to Landlord on demand all
costs incurred by Landlord in settling and discharging such lien (including
reasonable attorney fees and bond premiums).
(d) Notice of Non-responsibility. Landlord, or its representatives shall
have the right to go upon and inspect the Premises at all reasonable times, and
shall have the right to post and keep posted thereon during the performance by
Tenant of any work described in this Article 11 notices of non-responsibility or
such other notices that Landlord may deem to be proper for the protection of
Landlord's interest in the Premises. Tenant shall give Landlord at least ten
(10) days advance written notice of its intention to commence any work that
might result in a lien described in this Article.
11.4 Title to Improvements. All Improvements shall become the property of
Landlord upon expiration or earlier termination of the Lease. Landlord's
reversionary interest in the Improvements shall at all times be prior and
superior to any interest of any lender of Tenant, or of any other entity
claiming any purchase money lien or other interest in the Improvements.
ARTICLE 12
REPAIRS; MAINTENANCE
12.1 Tenant's Obligations. Tenant agrees at all times from and after the
Commencement Date, at its own cost and expense, to repair, maintain in good and
tenantable condition and replace, as necessary, the Premises and every part
thereof (except portions of the Premises specifically required to be maintained
by Landlord pursuant to the Lease), including without limitation all equipment
and Utility Installations exclusively serving the Premises; any Air Conditioning
System exclusively serving the Premises; exterior and interior glass; signs;
locks and closing devices, window sashes, casements and frames; doors and door
frames; floor coverings; any grease traps, grease lines, and/or piping; the
storefront; and all items of repair, maintenance, alteration, improvement or
<PAGE>
reconstruction as may be required by any Legal Requirement or the insurance
underwriter(s) for the Shopping Center. In no event shall Tenant be required to
make repairs necessitated by the negligence or willful acts of Landlord or
anyone claiming under Landlord, because of the failure of Landlord to perform or
observe any term or condition of the Lease, or because of Improvements made by
Landlord except to the extent otherwise covered by the insurance Tenant is
required to carry under the Lease. All replacements made by Tenant shall be of
like size, kind, and quality to the items replaced as they existed when
originally installed and shall be subject to Landlord's prior approval. Tenant
shall have the benefit of any warranty(ies) in connection with Landlord's Work
to the extent any such warranty covers portions of the Premises Tenant is
obligated to repair and maintain hereunder.
12.2 Landlord's Obligations. Landlord shall repair, maintain in good and
tenantable condition (and in compliance with Legal Requirements and requirements
of the insurance underwriter(s) for the Shopping Center) and replace, as
necessary, the roof, exterior walls, and structural parts of the Premises
(including the structural floor), and all Utility Installations serving the
Premises on a nonexclusive basis (except where the appropriate utility company
performs such duties) or that form a centralized Air Conditioning System serving
the Premises on a nonexclusive basis. In no event shall Landlord be required to
make repairs necessitated by the negligence or willful acts of Tenant or anyone
claiming under Tenant, because of the failure of Tenant to perform or observe
any term or condition of the Lease, or because of Improvements made by Tenant
except to the extent otherwise covered by the insurance Landlord is required to
carry under the Lease. Landlord shall be under no obligation to repair, replace
or maintain the Premises or the mechanical equipment exclusively serving the
Premises at any time, except as the Lease expressly provides. Notwithstanding
anything to the contrary contained in the Lease, Landlord shall not in any way
be liable to Tenant for failure to make repairs as herein specifically required
of it unless Tenant has previously notified Landlord of the need for such
repairs and Landlord has failed to commence and complete said repairs within a
reasonable period following receipt of Tenant's notification. As used in this
Article 12, "exterior walls" shall exclude storefronts, plate glass, window
cases or window frames, doors or door frames, security grilles or similar
enclosures. The definition of Common Area Expenses includes all work performed
by Landlord in accordance with this Section except as otherwise expressly
provided for in the Lease.
12.3 Performance of Work by Landlord. If Tenant refuses or neglects to
repair, replace, or maintain the Premises, or any part thereof, in a manner
reasonably satisfactory to Landlord, Landlord shall have the right but not the
obligation, upon giving Tenant reasonable notice of its election to do so, to
enter the Premises and make such repairs or perform such maintenance or
replacements on behalf of and for the account of Tenant. Nothing herein
contained shall imply any duty of Landlord to do any work that, under any
provision of the Lease, Tenant is required to do, nor shall Landlord's
performance of any repairs on behalf of Tenant constitute a waiver of Tenant's
default in failing to do the same. No exercise by Landlord of any rights herein
reserved shall entitle Tenant to any compensation, damages or abatement of Rent
from Landlord for any injury or inconvenience occasioned thereby. If Landlord
performs any maintenance or other obligations that Tenant is required to perform
under the terms of the Lease, Tenant shall upon demand pay to Landlord the costs
and expenses incurred by Landlord in doing the same (or shall deposit with
Landlord the anticipated amounts thereof), plus Landlord's Administrative Fee.
12.4 Service Contracts. If the Air Conditioning System exclusively serves
the Premises, Tenant shall contract with a qualified air conditioning service
company approved by Landlord for the monthly maintenance and the repair and
replacement, as necessary, of the Air Conditioning System. If the Air
Conditioning System serving the Premises is a centralized system serving the
Premises on a nonexclusive basis, Tenant shall contract with a qualified air
conditioning service company designated by Landlord (provided that the rates
charged by such service company are competitive in the trade area for
commensurate contractors) for the inspection and maintenance at least once every
calendar year and the repair and replacement, as necessary, of the distribution
portion of the Air Conditioning System serving the Premises. Tenant shall
contract with a qualified service company for the cleaning and maintenance of
<PAGE>
any grease traps and/or grease lines which are Tenant's responsibility to
maintain. Tenant shall provide Landlord with a copy of any contract required
under this Section within ten (10) days after the Commencement Date, together
with a copy of any subsequent contracts within ten (10) days after their
execution.
ARTICLE 13
INSURANCE OBLIGATIONS
13.1 Tenant's Insurance Obligations. At all times from and after the
Commencement Date, Tenant shall procure and maintain, at its sole cost and
expense, the following policies of insurance:
(a) Liability. Commercial general liability insurance with broad form
contractual liability coverage and with coverage limits of not less than Two
Million Dollars ($2,000,000) combined single limit, per occurrence, specifically
including liquor liability insurance covering consumption of alcoholic beverages
by customers of Tenant, if the sale of alcoholic beverages is permitted in the
Premises. Such policy shall insure Tenant's performance of the indemnity
provisions of this Lease, but the amount of such insurance shall not limit
Tenant's liability nor relieve Tenant of any obligation hereunder.
(b) Workers' Compensation. Workers' compensation insurance in the amount
required by the state in which the Shopping Center is located for the benefit of
Tenant's employees.
(c) Plate Glass. Insurance covering the full replacement cost of all plate
glass on the Premises; Tenant may self-insure such risk .
(d) Equipment. Boiler and machinery insurance on the Air Conditioning
System (or any part thereof) exclusively serving the Premises.
(e) Tenant's Personal Property and Improvements. Property insurance
covering any peril generally included in the classification "all risks"
(excluding earthquake and flood) in the area in which the Shopping Center is
located covering all (i) merchandise, (ii) Improvements, and (iii) Personal
Property owned or leased by Tenant (or for which Tenant is legally liable) and
located in the Shopping Center, in an amount not less than ninety percent (90%)
of their full replacement cost. Any policy proceeds shall be used for the repair
or replacement of the property damaged or destroyed, unless the Lease is
terminated under the provisions of Article 18.
13.2 Policy Requirements; Right to Adjust Requirements. All policies of
insurance provided for herein shall be issued by insurance companies that have a
general policyholder's rating of not less than "A" and a financial rating
equivalent to a policyholder's surplus of at least One Hundred Million Dollars
($100,000,000), as rated in the most current available "Best's" Insurance
Reports, and that have been admitted or qualified to do business in the state
where the Shopping Center is located by the insurance commission or other
highest board, body or official responsible for overseeing the insurance
business in such state. Tenant's general liability policy as required in Section
13.1(a) shall contain cross-liability endorsements. All policies of insurance
provided for herein (with the exception of workers' compensation insurance)
shall name Landlord, Landlord's property manager, all Mortgagees and such other
individuals or entities as Landlord may from time to time designate, as
"additional insureds." Certificates of all insurance required of Tenant
hereunder expressly providing for the waiver of subrogation as required in
Section 13.4 shall be delivered to Landlord at least ten (10) days prior to the
Commencement Date. Tenant shall provide to Landlord, at least thirty (30) days
prior to expiration, certificates of insurance to evidence any renewal or
additional insurance procured by Tenant. All certificates of insurance delivered
to Landlord shall contain an agreement by the company issuing said policy to
give Landlord twenty (20) days' advance written notice of any cancellation,
lapse, reduction or other adverse change respecting such insurance. All
commercial general liability insurance, property damage or other casualty
<PAGE>
policies shall be written as primary policies, not contributory with or
secondary to coverage that Landlord may carry.
Notwithstanding anything to the contrary contained herein, Tenant shall be
permitted to have Tenant's primary commercial general liability insurance policy
written in a lesser amount than specified in Section 13.1(a) (in no event less
than fifty percent [50%] of the required coverage) provided Tenant carries and
maintains an "excess liability" and/or "umbrella policy" to cover the balance of
the required coverage and provided that all the requirements set forth herein
are otherwise satisfied. Further, Tenant shall be permitted to have any required
insurance covered as part of a blanket policy with a so called "agreed amount
endorsement" for the business conducted upon the Premises providing the
insurance coverage required under this Lease.
13.3 Landlord's Insurance Obligation. At all times from and after the
Commencement Date, Landlord shall maintain in effect insurance providing
protection for the following liabilities and/or risks: (a) commercial general
liability insurance for bodily injury and property damage arising from
Landlord's ownership and/or operation of the Shopping Center with coverage
limits at least equal to those Tenant is required to maintain as provided
herein, and (b) any peril included in the classification All Risks in the
geographic area in which the Shopping Center is located, including earthquake
coverage, covering the Shopping Center, exclusive of any item that Tenant is
required to insure, or any item, building or improvement that another party is
required to insure (e.g., Major Department Stores), in an amount that is the
greater of eighty percent (80%) of its full replacement cost (exclusive of the
cost of excavations, foundations, and footings), or such greater amount as any
Mortgagee may require Landlord to maintain.
13.4 Mutual Waivers of Rights. Notwithstanding anything to the contrary
contained in this Lease, Landlord (for itself and its insurer), waives any
rights, including rights of subrogation, and Tenant (for itself and its
insurer), waives any rights, including rights of subrogation, each may have
against the other, and Tenant (for itself and its insurer) waives any rights,
including rights of subrogation, it may have against any of the parties to the
REA, for compensation of any loss or damage occasioned to Landlord or Tenant
arising from any risk generally covered by the All Risks insurance required to
be carried by Landlord and Tenant. The foregoing waivers shall be operative only
so long as available in the state where the Shopping Center is located. The
foregoing waivers shall be effective whether or not the parties maintain the
insurance required to be carried pursuant to the Lease.
ARTICLE 14
INDEMNITY
From and after the Commencement Date, Tenant shall indemnify, protect,
defend, and hold Landlord (and its partners, joint venturers, shareholders,
Mortgagee, affiliates, and property managers, and their respective officers,
directors, employees, and agents) harmless from and against any and all Claims
arising out of or in connection with loss of life, personal injury, property
damage or otherwise arising from (a) the use, occupation, improvement or
maintenance of the Premises or the Shopping Center or any work or activity in or
about the Premises or Shopping Center by Tenant or its assignees or subtenants
or their respective agents, employees, contractors, or licensees , (b) any
activity, condition or occurrence in or about the Premises, (c) the filing or
potential filing of any mechanic's or materialmen's lien against the Premises or
the Shopping Center in connection with any work done or caused to be done by
Tenant, (d) any breach or failure to perform any obligation imposed on Tenant
under the Lease, or (e) any act or omission of Tenant or its assignees or
subtenants or their respective agents, contractors, employees, or licensees.
Upon notice from Landlord, Tenant shall, at Tenant's sole expense and by counsel
reasonably satisfactory to Landlord, defend any action or proceeding brought
against Landlord by reason of any such Claim. If Landlord (or its partners,
joint venturers, shareholders, Mortgagee, affiliates, and property managers, or
their respective officers, directors, employees, and agents), without fault on
its part, is made a party to any litigation commenced by or against Tenant, then
Tenant shall indemnify, protect, defend, and hold each of such persons harmless
from and against any and all Claims arising out of incurred or paid by any such
<PAGE>
person in connection with such litigation. The obligations of this Article shall
survive the expiration or earlier termination of the Lease. In no event shall
Tenant's obligations pursuant to this Article 14 extend to Claims arising out of
the sole negligence or willful misconduct of Landlord, or its agents, employees
or contractors (acting on behalf of Landlord).
ARTICLE 15
OCCUPANCY TRANSACTIONS
15.1 Restrictions.
(a) No Encumbrances. Tenant shall not make, consent to, or suffer any
Encumbrance without the prior written consent of Landlord, which Landlord may
grant or withhold in its sole and absolute discretion.
(b) Other Occupancy Transactions. Tenant shall not enter into or consent to
any Occupancy Transaction other than an Encumbrance without first obtaining
Landlord's written consent, which Landlord shall not withhold unreasonably.
Landlord may withhold its consent on any reasonable ground, including without
limitation any of the following situations: (i) the Transferee's contemplated
use of the Premises following the proposed Occupancy Transaction is not
identical to the Permitted Use, (ii) in Landlord's reasonable business judgment,
the Transferee lacks sufficient business reputation or experience to operate a
business of the type and quality permitted under this Lease, (iii) the present
net worth and working capital of the Transferee are less than that of Tenant, or
Tenant and Tenant's Guarantor, as the case may be, at the Effective Date or at
the time of the request, whichever is higher, (iv) the proposed Occupancy
Transaction would breach any covenant of Landlord or Tenant respecting radius
restriction, location, use or exclusivity in any other lease, financing
agreement, or other agreement relating to the Shopping Center, or (v) the
proposed Occupancy Transaction provides for rentals thereunder based on the net
income or profits derived by the Transferee from the Premises.
15.2 Condition Precedent. Tenant shall not have the right or power to enter
into an Occupancy Transaction if Tenant shall be in default beyond any
applicable notice and cure period pursuant to Article 16 under any provision of
the Lease .
15.3 Procedures. Should Tenant desire to enter into an Occupancy
Transaction which requires Landlord's consent, Tenant shall request Landlord's
consent to such transaction in writing at least forty-five (45) days before the
effective date of any such transaction. Such request shall include the
following:
(a) A detailed description of the proposed transaction, including its
nature, effective date, the purchase price, payment terms, allocation among
leasehold interest, Personal Property, Improvements, goodwill, inventory, and
other items;
(b) Copies of any offers, agreements, subleases, assignments, letters of
commitment or intent, and other documents or correspondence pertaining to the
proposed transaction;
(c) A description of the identity, financial condition, and previous
business experience of Tenant and Transferee, including, without limitation,
copies of latest income statement, balance sheet, and statement of cash flows
(with accompanying notes and disclosures of all material changes thereto) in
audited form, if available, and certified as accurate by Tenant or Transferee
respectively, together with a statement authorizing Landlord or its designated
representative(s) to investigate Tenant's and Transferee's business experience,
credit, and financial responsibility; and
(d) A statement by Tenant and Transferee agreeing that it is their
intention to complete the transaction if Landlord consents thereto.
15.4 Response by Landlord; Documentation. Within thirty (30) days after
receipt of Tenant's request for consent and all items required under Section
15.3, Landlord shall (a) consent to the proposed Occupancy Transaction, (b)
exercise its rights under Section 15.6, or (c) refuse to consent to the
Occupancy Transaction. Any consent by Landlord to any Occupancy Transaction
<PAGE>
shall be evidenced by an instrument prepared by Landlord and executed by Tenant
and Transferee. As a condition to the completion of any assignment or transfer
of Tenant's interest in the Lease, Transferee shall agree in writing to assume
and perform all of the terms, covenants, and conditions of the Lease that are
obligations of Tenant. Tenant shall remain fully liable to perform its duties
under the Lease following the Occupancy Transaction. Tenant shall, on demand of
Landlord, reimburse Landlord for all Landlord's reasonable costs, including
attorney fees, incurred in obtaining advice and preparing documentation for each
requested Occupancy Transaction not to exceed One Thousand Dollars ($1,000.00)
per occurrence.
15.5 Consideration to Landlord. Except for those Occupancy Transactions
permitted pursuant to the provisions of Section 15.8 without Landlord's prior
consent, if Tenant enters into an Occupancy Transaction, the Minimum Annual Rent
then payable and any scheduled increases thereto shall be increased on the
effective date of such transaction to the highest of: (a) the total Minimum
Annual Rent payable by the Transferee to Tenant; (b) an amount equal to the
total of the Minimum Annual Rent plus Percentage Rent required to be paid by
Tenant pursuant to this Lease during the calendar year immediately preceding
such transaction; or (c) the Minimum Annual Rent payable in the first full year
of the Lease Term, increased in accordance with the CPI Adjustment Procedures
using the Rent Commencement Date as the Base Month and the effective date of
such transaction as the Month of Adjustment. In no event shall the Minimum
Annual Rent, as adjusted, be less than the Minimum Annual Rent in effect prior
to the effective date of the Occupancy Transaction.
15.6 Landlord's Right of First Refusal. If Tenant requests consent to an
Occupancy Transaction in accordance with this Article, Landlord shall have the
right to purchase the leasehold interest of Tenant in the Lease and the Premises
(referred to in this Section as "Tenant's interest"), to the exclusion of the
prospective Transferee, at the purchase price and terms offered by the
prospective Transferee. Such right shall be exercisable by Landlord by giving
Tenant notice of its election to purchase as provided in Section 15.4. Upon such
election, the proposed Transferee shall have no right to purchase Tenant's
interest, Landlord and Tenant shall execute an agreement setting forth the terms
and conditions of the purchase, and the proposed Occupancy Transaction shall be
deemed to have been disapproved. No failure of Landlord to elect to exercise its
rights hereunder shall be construed as consent to the proposed Occupancy
Transaction or a waiver of such rights with respect to any future proposed
Occupancy Transaction.
15.7 Nullity. Any Occupancy Transaction purportedly consummated in
violation of the provisions of this Article shall be null and void and of no
force or effect.
15.8 Permitted Occupancy Transactions. Notwithstanding anything to the
contrary contained in this Article 15, so long as the Tenant (i) is the tenant
entity named in Section 1.2 of this Lease and (ii) is not in default as provided
in Section 15.2, Tenant shall have the right, without the prior written consent
of Landlord, to enter into an Occupancy Transaction, other than an Encumbrance,
with a person or entity which: [a] is Tenant's parent organization; or [b] is a
wholly-owned subsidiary of Tenant; or [c] is a corporation of which Tenant or
Tenant's parent organization owns in excess of fifty percent (50%) of the
outstanding capital stock; or [d] as a result of a consolidation or merger with
Tenant and/or Tenant's parent corporation shall own all the capital stock of
Tenant or Tenant's parent corporation; or [e] purchases all or substantially all
of Tenant's assets provided such acquisition includes at least ten (10) stores
operating under the Trade Name (or a trade name similar to the Trade Name)
permitted under this Lease; or [f] acquires stock constituting effective control
of Tenant provided that at the time of such acquisition Tenant operates at least
ten (10) stores under the Trade Name (or a trade name similar to the Trade Name)
permitted under this Lease. Any Occupancy Transaction pursuant to [a], [b], [c],
[d], [e], or [f] above shall be subject to the following conditions: (1) Tenant
shall remain fully liable during the unexpired Lease Term; (2) any such
Occupancy Transaction shall be subject to all of the terms, covenants and
conditions of this Lease and any such Transferee shall expressly assume for the
benefit of Landlord the obligations of Tenant under this Lease by a document
prepared by Landlord; (3) the resulting entity pursuant to [d], [e], and [f]
<PAGE>
above shall have a net worth equal to or greater than Four Million Dollars
($4,000,000.00); (4) Tenant shall give Landlord notice of such Occupancy
Transaction at least twenty (20) days prior to its effective date (which notice
shall include all documentation necessary to verify the conditions contained in
this paragraph); and (5) Tenant shall reimburse Landlord for Landlord's
reasonable documentation fees incurred in conjunction with the processing and
preparation of documentation for any such Occupancy Transaction, not to exceed
One Thousand Dollars ($1,000.00) per occurrence.
ARTICLE 16
DEFAULTS BY TENANT; LANDLORD REMEDIES
16.1 Events of Default. The occurrence of any of the following shall
constitute a default by Tenant and a breach of the Lease.
(a) Failing or refusing to pay any amount of Minimum Annual Rent or
Additional Rent when due in accordance with the provisions of the Lease;
(b) Failing or refusing to occupy and operate the Premises in accordance
with Sections 10.1 and 10.2 or conducting a going-out-of-business, liquidation
or similar sale;
(c) Failing or refusing to perform fully and promptly any covenant or
condition of the Lease, other than those specified in subparagraphs (a) and (b)
above or (d) below; or
(d) Maintaining, committing, or permitting on the Premises waste or a
nuisance in any twelve (12) consecutive month period in which Tenant has
previously received one (1) or more notices of such violation; use of the
Premises for an unlawful purpose; entering into an Occupancy Transaction
contrary to the provisions of Article 15; failing to remain open for business as
required by Section 10.2, on any occasion during a given year of the Lease Term
in which Tenant has received three (3) or more notices of violations of said
Section; and in the event the Permitted Use involves the sale and/or preparation
of food, Tenant's failure to maintain a health department rating of "A" (or such
other highest health department or similar rating as is available) for the
second (2nd) time in any twelve (12) month period.
16.2 Notices. Following the occurrence of any of the defaults specified in
subparagraphs (a), (b) and (c) of Section 16.1, Landlord shall give Tenant, and
any subtenant, a written notice specifying the nature of the default and
demanding that Tenant, and any subtenant, either fully cure each such default
within the time period specified in the correspondingly lettered subparagraphs
below or quit the Premises and surrender the same to Landlord:
(a) For nonpayment of Minimum Annual Rent or Additional Rent, the first two
(2) such notices in each calendar year will be ten (10) day notices, thereafter
during such calendar year, five (5) days;
(b) For breach of Sections 10.1 or 10.2 or for conducting a
going-out-of-business, liquidation or similar sale, three (3) business ( i.e.,
Monday through Friday) days;
(c) With regard to those defaults specified in subparagraph (c) of Section
16.1, a reasonable period not to exceed thirty (30) days; provided, however,
that if such default cannot be cured within said time period, Tenant shall be
deemed to have cured such default if Tenant so notifies Landlord in writing,
commences cure of the default within said time period, thereafter diligently and
in good faith continues with said cure and actually completes said cure (and
upon request from Landlord, Tenant shall provide Landlord with written notice as
to the progress of Tenant's cure); and
(d) With regard to those defaults specified in subparagraph (d) of Section
16.1, Landlord shall give Tenant, and any subtenant, a written notice specifying
the nature of the default and the provisions of the Lease breached and Landlord
shall have the right to demand in said notice that Tenant quit the Premises
within five (5) days.
<PAGE>
To the extent permitted by applicable state law, the time periods provided
in this Section for cure of Tenant's defaults under this Lease or for surrender
of the Premises shall be in lieu of, and not in addition to, any similar time
periods prescribed by applicable state law as a condition precedent to the
commencement of legal action against Tenant for possession of the Premises;
provided, however, to the extent the foregoing is not permitted by applicable
law, any notice under this Section shall run concurrently with, and not in
addition to, any similar time periods prescribed by applicable law. Any notice
given pursuant to this Section is in lieu of any written notice required by
statute or law, including any notice required under California Code of Civil
Procedure section 1161, and Tenant waives (to the fullest extent permitted by
law) the giving of any notice other than that provided for in this Section.
16.3 Landlord's Rights and Remedies. Should Tenant fail to cure within the
time periods specified in Section 16.2 any default specified in subparagraph
(a), (b) or (c) of Section 16.1, or fail to quit the Premises in accordance with
subparagraph (d) of Section 16.2 with respect to any default specified in
subparagraph (d) of Section 16.1, Landlord may exercise any of the following
rights without further notice or demand of any kind to Tenant or any other
person, except as required by applicable state law:
(a) The right of Landlord to terminate the Lease and Tenant's right to
possession of the Premises and to reenter the Premises, take possession thereof
and remove all persons therefrom, following which Tenant shall have no further
claim thereon or hereunder;
(b) The right of Landlord, without terminating the Lease and Tenant's right
to possession of the Premises, to reenter the Premises and occupy the whole or
any part thereof for and on account of Tenant and to collect any unpaid Rent
which have become payable, or which may thereafter become payable; or
(c) The right of Landlord, even though it may have reentered the Premises,
in accordance with subparagraph (b) of this Section, to elect thereafter to
terminate the Lease and Tenant's right to possession of the Premises.
Should Landlord have reentered the Premises under the provisions of
subparagraph (b) of this Section, Landlord shall not be deemed to have
terminated the Lease or have accepted a surrender thereof by any such reentry,
unless Landlord shall have notified Tenant in writing that it has so elected to
terminate the Lease and Tenant's right to possession. Tenant further covenants
that the service by Landlord of any notice pursuant to the unlawful detainer or
eviction statutes of the state where the Shopping Center is located and the
surrender of possession pursuant to such notice shall not (unless Landlord
elects to the contrary at the time of, or at any time subsequent to, the serving
of such notice and such election is evidenced by a written notice to Tenant) be
deemed to be a termination of the Lease. In the event of any reentry or taking
possession of the Premises as aforesaid, Landlord shall have the right, but not
the obligation, to remove therefrom all or any part of the merchandise,
Improvements or Personal Property located therein and to place the same in
storage at a public warehouse at the expense and risk of Tenant. The rights and
remedies given to Landlord in this Section shall be additional and supplemental
to all other rights or remedies which Landlord may have under laws in force when
the default occurs.
Landlord agrees that in the event Tenant defaults under the Lease and
thereafter vacates the Premises, Landlord shall use its reasonable efforts to
re-lease the Premises and mitigate monetary damages arising out of Tenant's
default or breach of this Lease. Nothing herein, however, shall prohibit
Landlord from leasing any other vacant premises before leasing the Premises
hereunder, or from using its business judgment respecting the leasing of the
Premises hereunder.
16.4 Landlord's Damages. Should Landlord terminate the Lease and Tenant's
right to possession of the Premises, pursuant to the provisions of subparagraphs
(a) or (c) of Section 16.3, Landlord may recover from Tenant as damages, all of
the following:
<PAGE>
(a) The worth at the time of award of any unpaid Rent that had been earned
at the time of such termination;
(b) The worth at the time of award of the amount by which the unpaid Rent
that would have been earned after termination until the time of award exceeds
the amount of such Rent loss Tenant proves could have been reasonably avoided;
(c) The worth at the time of award of the amount by which the unpaid Rent
for the balance of the Lease Term after the time of award exceeds the amount of
such Rent loss that Tenant proves could be reasonably avoided;
(d) Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under the
Lease or which in the ordinary course of things would be likely to result
therefrom, including, without limitation, any costs or expense incurred by
Landlord in (i) retaking possession of the Premises, including reasonable
attorney fees therefor, (ii) maintaining or preserving the Premises after such
default, (iii) preparing the Premises for reletting to a new tenant, including
repairs or demolition to the Premises for such reletting, (iv) leasing
commissions, and (v) any other costs necessary or appropriate to relet the
Premises; and
(e) At Landlord's election, such other amounts in addition to or in lieu of
the foregoing as may be permitted from time to time by the laws of the state
where the Shopping Center is located.
As used in subparagraphs (a) and (b) of this Section, the "worth at the
time of award" is computed by allowing interest at the Interest Rate. As used in
subparagraph (c) of this Section, the "worth at the time of award" is computed
by discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award plus one percent (1%).
All Additional Rent shall, for the purposes of calculating any amount due
under the provisions of subparagraph (c) of this Section, be computed on the
basis of the average monthly amount thereof accruing during the immediately
preceding thirty-six (36) month period, except that, if it becomes necessary to
compute such Additional Rent before such a thirty-six (36) month period has
occurred, then such Additional Rent shall be computed on the basis of the
average monthly amount hereof accruing during such shorter period.
16.5 Personal Property. In the event of Tenant's default, continuing during
the length of said default, Landlord shall have the right to take the exclusive
possession of any of Tenant's merchandise and/or Personal Property remaining on
the Premises and to use the same free of rent or charge until all defaults have
been cured or, at its option, to require Tenant to remove same forthwith. In the
event of any reentry or taking possession of the Premises as provided in this
Article, Landlord shall have the right, but not the obligation, to remove
therefrom all or any part of the merchandise or Personal Property located
therein and to place the same in storage at a public warehouse at the expense
and risk of Tenant.
Notwithstanding anything to the contrary contained herein, upon Tenant's
written request therefor, provided such request is in connection with the
remodel, alteration or merchandising of the Premises and provided Tenant is not
in default under this Lease (beyond the applicable notice and cure period as
provided in Article 16), Landlord shall subordinate its rights, on a form
prepared by Landlord, in such Personal Property of Tenant to the rights of any
fixture or equipment seller, lender or lessor (hereinafter "Lender") of Tenant,
but only so long as Tenant is indebted to such Lender, provided such Lender
agrees to (i) allow Landlord thirty (30) days to cure Tenant's default under the
agreement between Tenant and Lender, (ii) provide Landlord with no less than
five (5) days' written notice in the event of entry for repossession and shall
have said Personal Property removed within five (5) days from the date of entry
for repossession, (iii) remove the Personal Property promptly upon notification
from Landlord in the event of default by Tenant under the Lease, (iv) be
accompanied by a representative of center management during any such entry, and
only during reasonable business hours, (v) repair all damage occasioned by any
such repossession at Lender's sole expense, (vi) defend, indemnify and hold
Landlord harmless from any claims made as a result of the removal of the
Personal Property by Lender, (vii) dispose of or sell the property at some place
other than the Shopping Center, and (viii) advise Landlord in writing within
<PAGE>
twenty (20) days after the expiration or earlier termination of the agreement
between Lender and Tenant as to said Personal Property. In no event shall
Landlord be under any obligation to assist in the repossession of such Personal
Property. Tenant further agrees to reimburse Landlord, in advance, for
Landlord's reasonable costs incurred in preparing the documentation referred to
herein (not to exceed $500 per occurrence)
16.6 Waiver of Rights of Redemption. Tenant expressly waives any and all
rights of redemption granted by or under any present or future laws if Tenant is
evicted or dispossessed for any cause, or if Landlord obtains possession of the
Premises by reason of the violation by Tenant of any of the terms, covenants,
and conditions of the Lease or otherwise.
ARTICLE 17
DEFAULTS BY LANDLORD; TENANT'S REMEDIES
17.1 Default by Landlord. If Landlord fails to perform or observe any of
the terms, covenants or conditions contained in the Lease on its part to be
performed or observed within thirty (30) days after written notice of default
from Tenant or, when more than thirty (30) days shall be required because of the
nature of the default, if Landlord shall fail to proceed diligently to cure such
default after written notice thereof from Tenant, said failure shall constitute
a default by Landlord under the Lease.
17.2 Notice to Mortgagees. If the Premises or any part thereof, or any
interest of Landlord in the Lease or the Rent due hereunder, are at any time
subject to any Mortgage and if Tenant is given notice of the name and address of
the Mortgagee, then Tenant shall give written notice of any Landlord's default
to such Mortgagee, specifying the default in reasonable detail. If Landlord
fails to cure such default within the applicable cure period, Tenant shall give
written notice of such failure to such Mortgagee affording such Mortgagee the
same opportunity to cure as provided Landlord in Section 17.1. If such Mortgagee
does perform on behalf of Landlord, such default shall be deemed cured.
17.3 Limitations on Remedies Against Landlord. In the event Tenant makes
any Claim or asserts any cause of action against Landlord as a result of
Landlord's default: (a) Tenant's sole and exclusive remedy shall be against the
current rents, issues, profits, and other income Landlord receives from its
operation of the Shopping Center, net of all current operating expenses,
liabilities, reserves, and debt service associated with said operation ("Net
Income" for purposes of this Section only), (b) no other real, personal or mixed
property of Landlord, wherever located, shall be subject to levy on any judgment
obtained against Landlord, (c) if such Net Income is insufficient to satisfy any
judgment, Tenant will not institute any further action, suit, Claim or demand,
in law or in equity, against Landlord for or on the account of such deficiency,
and (d) Landlord's default shall not constitute consent by Landlord for Tenant
to perform or observe such terms, covenants or conditions at Landlord's expense.
The limitations set forth in this Section shall be applicable to, and
enforceable by, Landlord and/or by any partner, trustee, officer, employee,
agent or property manager of Landlord.
17.4 Landlord's Exemption From Liability. Landlord shall not be liable for
injury to Tenant's business or loss of income therefrom or for damage that may
be sustained by the person, merchandise or Personal Property of Tenant, its
employees, invitees, customers, agents or contractors or any other person in or
about the Premises, caused by or resulting from fire, steam, electricity, gas,
water or rain, which may leak or flow from or into any part of the Premises, or
from the breakage, leakage, obstruction or other defects of the Utility
Installations, Air Conditioning System or other components of the Premises or
Shopping Center, or as a result of the exercise by Landlord of its rights under
the Lease, except to the extent that such damage or loss is caused by Landlord's
sole, active negligence or wilful misconduct. Landlord makes no representations
or warranties whatsoever with respect to any Air Conditioning System or Utility
Installations existing as of the date hereof or in the future except as
expressly provided in Section 2.1. Landlord shall not be liable in damages or
otherwise for any discontinuance, failure or interruption of service to the
Premises of Utilities or the Air Conditioning System and Tenant shall have no
right to terminate the Lease or withhold rent because of the same except as
otherwise expressly provided for in this Section 17.4. Landlord shall not be
<PAGE>
liable for any damages arising from any use, act or failure to act of any other
tenant or occupant, if any, of the Shopping Center.
Notwithstanding anything to the contrary contained in this Lease, if as a
result of Landlord's or Landlord's agent's negligence, any utility or Air
Conditioning System being furnished to Tenant is interrupted for more than
seventy-two (72) consecutive hours, then commencing with the first full business
day thereafter, there shall be an equitable abatement of Minimum Annual Rent and
Additional Rent (except Percentage Rent) reflecting the extent Tenant's ability
to conduct business in the Premises is impaired, continuing until such time as
the utility service to the Premises is restored. Such abatement shall not affect
any obligation of Tenant under this Lease to pay Percentage Rent.
ARTICLE 18
RECONSTRUCTION
18.1 Insured Casualty. Upon the occurrence of an Insured Casualty to the
Premises Landlord shall commence Reconstruction of Landlord's Work within ninety
(90) days after such occurrence (provided neither party has terminated as
provided in this Section) and prosecute the same diligently to completion, and
Tenant shall commence Reconstruction of Tenant's Work promptly upon completion
of Landlord's Work and shall diligently prosecute the same to completion. In the
event of a Major Destruction of the Premises as a result of an Insured Casualty
during the last two (2) years of the Lease Term, Landlord and Tenant shall each
have the option to terminate the Lease on written notice to the other of
exercise thereof within thirty (30) days after such occurrence.
18.2 Uninsured Casualty. Upon the occurrence of an Uninsured Casualty to
the Premises, Landlord shall have the election, and shall within ninety (90)
days following the date of such damage give Tenant written notice of Landlord's
election, either to commence Reconstruction of the Premises and prosecute the
same diligently to completion, in which event the Lease shall continue in full
force and effect, or not to perform such Reconstruction, in which event the
Lease shall cease and terminate not later than sixty (60) days after Landlord's
notice of its election to terminate. In the event of a Major Destruction of the
Premises as a result of an Uninsured Casualty during the last two (2) years of
the Lease Term, Tenant shall have the option to terminate this Lease on written
notice to Landlord of exercise thereof within thirty (30) days after such
occurrence.
18.3 Construction Provisions. Reconstruction shall substantially conform to
the provisions of Exhibit C and shall cover Landlord's Work and Tenant's Work.
Landlord shall reconstruct the Premises only to the extent of Landlord's Work;
Tenant, at its sole cost and expense, shall reconstruct Tenant's Work and shall
replace its merchandise, Improvements and Personal Property.
18.4 Release of Liability. In the event of termination under any of the
provisions of this Article, both Landlord and Tenant shall be released from any
liability or obligation under the Lease, except as otherwise provided for in the
Lease, arising after the date of termination. In the event of termination, all
proceeds from Tenant's insurance covering Tenant's Improvements, but excluding
proceeds for Tenant's merchandise, the unamortized net cost to Tenant of its
Improvements with a straight-line amortization schedule and an amortization
period equal to the Lease Term, and Personal Property, shall be disbursed and
paid to Landlord. In no event shall Tenant be entitled to share in Landlord's
insurance proceeds or to take any action which would result in a reduction of
Landlord's insurance proceeds.
18.5 Abatement of Rent. In the event of an Insured Casualty or an Uninsured
Casualty to the Premises, the recurrent Rent (except Percentage Rent) payable by
Tenant shall be abated proportionately with the degree to which Tenant's use of
the Premises is impaired, commencing from the date of destruction and continuing
during the period of Reconstruction or until the effective date of termination,
as the case may be. Tenant shall continue the operation of its business on the
Premises during any such period to the extent reasonably practicable from the
<PAGE>
standpoint of prudent business management, and the obligation of Tenant to pay
Percentage Rent and non-recurrent Rent shall remain in full force and effect.
Tenant shall not be entitled to any compensation or damages from Landlord for
loss of use of the whole or any part of the Premises, the Building, Tenant's
Personal Property, or any inconvenience or annoyance occasioned by such damage,
Reconstruction or replacement.
18.6 Major Destruction. Notwithstanding any of the foregoing provisions of
this Article, should there be a Major Destruction of the Shopping Center at any
time after the Effective Date, Landlord shall have the right to terminate the
Lease on written notice to Tenant within ninety (90) days after such
destruction. In no event shall Landlord terminate the Lease unless it terminates
the leases of all Shopping Center tenants similarly affected by the casualty.
18.7 Waiver of Inconsistent Statutes. Landlord and Tenant hereby waive any
statutory rights of termination which may arise by reason of any partial or
total destruction of the Premises .
ARTICLE 19
EMINENT DOMAIN
19.1 Total Taking. If the entire Premises shall be appropriated or taken
under the power of eminent domain by any public or quasi-public authority or
under threat of and in lieu of condemnation (hereinafter, "taken" or "taking"),
the Lease shall terminate as of the date of such taking, and Landlord and Tenant
shall have no further liability or obligation, except as otherwise provided for
in the Lease, arising under the Lease after such date.
19.2 Partial Taking; Right to Terminate. If more than twenty-five percent
(25%) of the Floor Area of the Premises is taken, or if by reason of any taking,
regardless of the amount so taken, the remainder of the Premises is not one
undivided space or is rendered unusable for the Permitted Use, either Landlord
or Tenant shall have the right to terminate the Lease as of the date Tenant is
required to vacate the portion of the Premises taken, upon giving notice of such
election within thirty (30) days after receipt by Tenant from Landlord of
written notice that said Premises have been or will be so taken. In addition, if
(a) such a significant portion of the Shopping Center or Common Area is taken
that, in Landlord's reasonable opinion, substantial restoration is required on
the remaining portion, or (b) Landlord exercises its right to terminate its
participation in the REA because of the taking of portions of the Shopping
Center other than the Premises, the Landlord shall have the right to terminate
the Lease upon thirty (30) days' written notice to Tenant. In the event of such
termination, both Landlord and Tenant shall be released from any liability or
obligation under the Lease, except as otherwise provided for in the Lease,
arising after the date of termination. Landlord and Tenant shall, immediately
after learning of any taking, give notice thereof to each other.
19.3 Restoration. If the Lease does not terminate pursuant to Sections 19.1
or 19.2 above, then Tenant shall continue to occupy that portion of the Premises
not taken and the parties shall proceed as follows: (a) at Landlord's cost and
expense and as soon as reasonably possible, Landlord shall restore the Premises
remaining to a complete unit of like quality and character as existed prior to
such appropriation or taking, and (b) the Minimum Annual Rent provided for in
Article 1 shall be reduced on an equitable basis, taking into account the
relative values of the portion taken as compared to the portion remaining.
Tenant waives any statutory rights of termination that may arise because of any
partial taking of the Premises.
19.4 Award. Landlord shall be entitled to the entire condemnation award for
any taking of the Premises, the Shopping Center or any part thereof. Tenant's
right to receive any amounts separately awarded to Tenant directly from the
condemning authority for the taking of its merchandise, Personal Property,
relocation expenses and/or interests in other than the real property taken
and/or the leasehold interest shall not be affected in any manner by the
provisions of this Section, provided Tenant's award does not reduce or affect
Landlord's award.
<PAGE>
ARTICLE 20
SUBORDINATION; ATTORNMENT; ESTOPPEL
20.1 Subordination to Mortgage. The Lease and all of Tenants' rights
hereunder are and shall be subject and subordinate to the first Mortgage and any
secondary Mortgage approved by the first Mortgagee. The foregoing shall be self
operative without the execution of additional documentation, however, within
twenty (20) days after the receipt of a request from Landlord or any Mortgagee,
Tenant shall confirm such subordination by executing a recordable subordination
agreement in form and content reasonably satisfactory to Landlord and Landlord's
Mortgagee. Tenant acknowledges that any Mortgagee has the right to subordinate
at any time its Mortgage to this Lease and the leasehold estate, without
Tenant's consent. Tenant shall, within twenty (20) days after written request
therefor, execute and deliver such documents as are reasonably requested by the
Mortgagee to confirm such subordination.
Notwithstanding anything to the contrary contained herein, upon request
from Tenant, Landlord shall request from any party seeking such superior
position (with the exception of the existing Mortgagee) a non-disturbance
agreement and attornment agreement to the effect that so long as Tenant pays the
rentals due under this Lease and otherwise complies with the terms hereof,
Tenant's occupancy hereunder shall not be disturbed. In no event shall Tenant's
obligation to subordinate its rights hereunder be conditioned on the receipt of
such agreement. Tenant shall be responsible for payment of any costs incurred in
connection with obtaining the documentation requested hereunder.
20.2 Subordination to REA. Subject to Section 2.2, the Lease and all of
Tenant's rights hereunder are and shall be subject and subordinate to the REA
and any amendments or modifications thereof. If the REA is not of record as of
the date hereof, then the Lease shall automatically become subordinate to the
REA upon recordation of the REA, and with twenty (20) days after the receipt of
a request from Landlord or any Mortgagee, Tenant shall confirm such
subordination by executing a recordable subordination agreement in form and
content reasonably satisfactory to Landlord.
20.3 Attornment. If Landlord sells, transfers, or conveys its interest in
the Premises or the Lease, or if the same is foreclosed judicially or
nonjudicially, or otherwise acquired, by a Mortgagee, upon the request and at
the sole and absolute election of Landlord's successor, Tenant shall attorn to
said successor, provided said successor accepts the Premises subject to the
Lease. Tenant shall, upon request of Landlord or any Mortgagee, execute an
attornment agreement confirming the same, in form and substance reasonably
acceptable to Landlord or Landlord's successor. Such agreement shall provide,
among other things, that said successor shall not be bound by (a) any prepayment
of more than one (1) month's Rent (except Security Deposit but only to the
extent received by said successor) or (b) any material amendment of the Lease
made after the later of the Execution Date, or the date that such successor's
lien or interest first arose, unless said successor shall have consented to such
amendment. This Section 20.3 shall in no way be deemed a waiver by Tenant of any
Claims for any predecessor's failure or bad faith refusal to provide any
Security Deposit to its successor or to notify its successor of any amendment
prior to the date that such successor's lien or interest first arose.
20.4 Estoppel Certificate. Within twenty (20) days after request from
Landlord, Tenant shall execute and deliver to Landlord an Estoppel Certificate
with appropriate facts concerning the status of the Lease and Tenant's occupancy
completed by Landlord, and with any exceptions thereto noted in writing by
Tenant. Tenant's failure to execute and deliver the Estoppel Certificate within
said ten-day period shall be deemed to make conclusive and binding upon Tenant
in favor of Landlord, and any potential Mortgagee or transferee the statements
contained in such Estoppel Certificate without exception.
Landlord shall upon request from Tenant (in connection with a proposed
Occupancy Transaction under Article 15), but not more than twice per any
calendar year, execute a statement certifying that (i) this Lease represents the
entire agreement between Landlord and Tenant, and is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and effect) and the
dates to which rental and other charges are paid in advance, if any, (ii)
certifying the commencement and termination dates of the Lease Term, and (iii)
acknowledging that there are not, to Landlord's knowledge, any uncured defaults
on the part of Tenant hereunder or specifying such defaults if any are claimed.
<PAGE>
ARTICLE 21
QUIET ENJOYMENT
Landlord agrees that Tenant, upon paying the rent and performing the terms,
covenants, and conditions of the Lease, may quietly have, hold, and enjoy the
Premises from and after Landlord's delivery of the Premises to Tenant and until
the end of the Lease Term, subject, however, to those matters to which the Lease
is or shall become subordinate.
ARTICLE 22
CONSENTS
Wherever in the Lease consent, approval or permission (collectively
referred to in this Article as "consent") is required, such consent shall be
given in writing and shall not be unreasonably withheld or delayed, unless
otherwise expressly provided. Landlord shall not be deemed to have withheld its
consent unreasonably where Landlord's right to give its consent is conditioned
on Landlord obtaining the consent of any other person, entity, agency or
Governmental Authority and such other person, entity, agency or Governmental
Authority does withhold its consent. If Landlord fails to give any consent that
a court later holds Landlord was required to give under the terms of the Lease,
Tenant shall be entitled solely to specific performance and such other remedies
as may be specifically reserved to Tenant under the Lease, but in no event shall
Landlord be responsible for monetary damages (including incidental and
consequential damages) for such failure to give consent unless said consent is
withheld maliciously or in bad faith. The failure by Landlord to respond to any
request for consent shall in no event be deemed either approval or refusal by
Landlord.
ARTICLE 23
NOTICES
Wherever in this Lease it shall be required or permitted that any notice,
request, report, communication or demand (collectively, "notice") be given,
served or transmitted by either party to this Lease to or on the other, such
notice shall be in writing and shall be personally delivered or forwarded by
certified mail, return receipt requested, or by nationally recognized courier
service providing written confirmation of delivery, to the addresses of the
parties specified in Section 1.12. Notice shall be deemed to have been given or
served on the delivery date indicated by the United States Postal Service or
courier service on the return receipt or on the date such delivery is refused or
marked "undeliverable," unless Landlord or Tenant, as the case may be, is served
personally, in which event the date of personal delivery shall be deemed the
effective date of notice. Either party may change its address by providing
written notice as specified herein; provided, however, that all addresses
provided must be the actual street address of a residence or business
establishment. The foregoing method of service shall be exclusive, and Landlord
and Tenant waive, to the fullest extent permitted under law, the right to any
other method of service required by any statute or law now or hereafter in
force. Whenever multiple notices are sent or multiple methods of transmitting
any notice are utilized, any time period that commences upon the giving or
deemed giving of such notice shall commence upon the earliest date such delivery
is effectuated, and such time shall not be extended by operation of law or
otherwise because of any later delivery of the same notice.
ARTICLE 24
ATTORNEY FEES
If either Landlord or Tenant institutes any action or proceeding against
the other relating to the provisions of the Lease or any default hereunder, the
nonprevailing party in such action or proceeding shall reimburse the prevailing
party for the reasonable expenses of attorney fees and all costs and
disbursements incurred therein by the prevailing party, including, without
limitation, any such fees, costs or disbursements incurred on any appeal from
such action or proceeding. The prevailing party shall recover all such fees,
<PAGE>
costs or disbursements as costs taxable by the court in the action or proceeding
itself without the necessity for a cross-action by the prevailing party. In
addition to the foregoing award of attorneys' fees, costs and disbursements to
the prevailing party, the prevailing party shall be entitled to its attorneys'
fees, costs and disbursements in any post judgment proceedings to collect or
enforce the judgment. This provision is separate and several and shall survive
the termination of the Lease.
ARTICLE 25
GENERAL PROVISIONS
25.1 Binding Effect. The parties hereto agree that all the provisions of
the Lease are to be construed as covenants and agreements and, except as
otherwise specified, that said provisions shall bind and inure to the benefit of
the parties hereto and their respective heirs, legal representatives,
successors, and assigns.
25.2 Right to Lease. Landlord shall have the absolute right to lease or
permit the use or occupancy of space in the Shopping Center as Landlord shall
determine in its sole and absolute judgment. Tenant does not rely on the fact,
nor does Landlord represent, that there shall be any specific occupants or
minimum occupancy level of space in the Shopping Center at any time (including,
without limitation, Major Tenants).
25.3 Shopping Center Configuration. Tenant acknowledges that Exhibit A is
for the purposes of convenience only and that, excluding any limitations set
forth in Section 7.5, Landlord reserves the right at any time to expand, reduce,
remove, demolish, change, renovate or construct any existing or new improvements
at the Shopping Center.
25.4 Claims by Brokers. Tenant warrants that all negotiations with respect
to the Lease (including, without limitation, preliminary consideration of the
Premises, relevant economics and final Lease provisions) were accomplished
without the aid, intervention or employment of any broker or finder, of any kind
(with the exception of BDH Associates). Tenant shall indemnify, protect, defend,
and hold Landlord (and its partners, joint venturers, affiliates, shareholders,
and property managers, and their respective officers, directors, employees, and
agents) harmless from and against any and all Claims arising out of or in
connection with any Claims made by any person claiming to be a broker or finder
representing Tenant with regard to the Lease including, without limitation,
Claims for commissions and all costs of enforcing this indemnity against Tenant.
25.5 Exhibits. All exhibits attached hereto are incorporated herein and
made a part of the Lease by reference as if fully set forth herein.
25.6 Entire Agreement; Amendments to Lease. There are no oral or written
agreements or representations between the parties hereto affecting the Lease not
contained herein. The Lease supersedes and cancels any and all previous
negotiations, arrangements, representations, brochures, displays, projections,
estimates, agreements, and understandings, if any, made by, to, or between
Landlord and Tenant and their respective agents and employees with respect to
the subject matter thereof, and none shall be used to interpret, construe,
supplement or contradict the Lease. The Lease, and all amendments thereto, shall
be considered to be the only agreement between the parties hereto and their
representatives and agents. To be effective and binding on Landlord and Tenant,
any amendment to the provisions of the Lease must be in writing and executed by
both parties in the same manner as the Lease itself. Any amendment to the Lease
shall be prepared by Landlord.
25.7 Force Majeure. The occurrence of any of the following events shall
excuse such obligations of Landlord or Tenant as are thereby rendered impossible
or reasonably impracticable for so long as such obligation remains impossible or
reasonably impracticable to perform: strikes, lockouts, labor disputes, acts of
God, inability to obtain labor, materials or reasonable substitutes therefor,
governmental restrictions, regulations or controls, judicial orders, enemy or
hostile governmental action, civil commotion, fire or other casualty, and other
causes beyond the reasonable control of the party obligated to perform.
Notwithstanding the foregoing (a) the occurrence of such events shall not excuse
<PAGE>
Tenant's obligations to pay Rent or excuse such obligations as the Lease may
otherwise impose on the party to obey, remedy or avoid such event, provided,
however, that delays in opening for business resulting from reasons set forth
herein shall abate Tenant's obligation to initially open for business and
commence payment of Rent for a period equal to the length of such delay, and
(b), should the work performed by Tenant or Tenant's contractor result in a
strike, lockout and/or labor dispute, such strike, lockout and/or labor dispute
shall not excuse Tenant's performance or obligation to pay Rent.
25.8 Venue. The laws of the state where the Shopping Center is located
shall govern the validity, performance, and enforcement of the Lease. Landlord
and Tenant consent to personal jurisdiction and venue in the state and judicial
district in which the Shopping Center is located.
25.9 Labor Disputes. Tenant shall construct, or cause Tenant's contractor
to construct, all Improvements in such a manner as to avoid any labor dispute
that causes or is likely to cause stoppage or impairment of work, deliveries or
any other services in the Shopping Center. If there shall be any such stoppage
or impairment as the result of any such labor dispute or potential labor
dispute, Tenant shall immediately undertake such action as may be necessary to
eliminate such dispute or potential dispute, including, without limitation, (a)
removing all disputants from the job site until such time as the labor dispute
no longer exists, (b) seeking a temporary restraining order and other injunctive
relief with regard to illegal union activities or a breach of contract between
Tenant and Tenant's contractor, and (c) filing appropriate unfair labor practice
charges.
25.10 Bankruptcy. Federal bankruptcy code shall govern with respect to the
Lease and in no event shall any provision of the Lease be deemed to be a waiver
by either party of its rights under such code.
25.11 No Presumption. Although the provisions of the Lease were drafted
primarily by Landlord, the parties hereto agree that such fact shall not create
any presumption, construction or implication favoring the position of either
Landlord or Tenant. The parties agree that any deletion of language from the
Lease prior to its execution by Landlord and Tenant shall not be construed to
have any particular meaning or to raise any presumption, construction or
implication, including, without limitation, any implication that the parties
intended thereby to state the opposite of the deleted language. The captions of
the Articles and Sections of the Lease are for convenience only, are not
operative parts of the Lease and do not in any way limit or amplify the terms
and provisions of the Lease.
25.12 No Waiver. The waiver by Landlord or Tenant of any breach of any
term, covenant or condition contained in the Lease shall not be deemed a waiver
of such term, covenant or condition of any subsequent breach thereof, or of any
other term, covenant or condition contained in the Lease. The consent to or
approval by Landlord or Tenant of any act by the other party requiring such
consent or approval shall not be deemed to waive or render unnecessary
Landlord's or Tenant's consent to or approval of any subsequent similar act by
the other party. Landlord's subsequent acceptance of partial Rent or performance
by Tenant shall not be deemed to be an accord and satisfaction or a waiver of
any preceding breach by Tenant of any term, covenant or condition of the Lease
or of any right of Landlord to a forfeiture of the Lease by reason of such
breach, regardless of Landlord's knowledge of such preceding breach at the time
of Landlord's acceptance. No term, covenant or condition of the Lease shall be
deemed to have been waived by Landlord or Tenant unless such waiver is in
writing and executed by such party.
25.13 Nondiscrimination. Landlord and Tenant covenant for themselves, their
heirs, executors, administrators, successors, and assigns and all persons
claiming under or through them, that there shall be no discrimination against or
segregation of any person or group of persons on account of race, color,
religion, creed, sex, marital status, sexual orientation, national origin,
ancestry, age, physical handicap or medical condition, in the leasing,
subleasing, transferring, use, occupancy, tenure or enjoyment of the Premises
herein leased, and Tenant and any person claiming under or through Tenant shall
not establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use or occupancy
of tenants, subtenants, licensees, vendees or customers in the Premises.
<PAGE>
25.14 Parties. If two (2) or more persons or corporations execute the Lease
as Tenant, the word "Tenant" as used in the Lease shall refer to all such
persons or corporations, and the liability of such persons or corporations for
compliance with and performance of all the terms, covenants, and conditions of
the Lease shall be joint and several. The masculine pronoun used herein shall
include the feminine or the neuter, as the case may be, and the use of the
singular shall include the plural.
25.15 Real Estate Investment Trust. During the Lease Term or any extension
thereof, should a real estate investment trust become Landlord hereunder, all
provisions of the Lease shall remain in full force and effect except as modified
by this Section. If Landlord in good faith determines that its status as a real
estate investment trust under the provisions of the Internal Revenue Code of
1986, as heretofore or hereafter amended, will be jeopardized because of any
provision of the Lease, Landlord may request reasonable amendments to this
Lease, and Tenant will not unreasonably withhold, delay or defer its consent
thereto, provided that such amendments do not (a) increase the monetary
obligations, decrease the rights, or materially increase any other obligations,
of Tenant pursuant to the Lease or (b) in any other manner adversely affect
Tenant's interest in the Premises.
25.16 Relationship of the Parties. Nothing contained in the Lease shall be
deemed or construed as creating a partnership, joint venture, principal-agent,
or employer-employee relationship between Landlord and any other person or
entity (including, without limitation, Tenant) or as causing Landlord to be
responsible in any way for the debts or obligations of such other person or
entity.
25.17 Sale or Mortgage by Landlord. If Landlord, at any time, sells,
conveys, transfers or otherwise divests itself or is divested of its interest
("transfer") in the Premises, other than a transfer for security purposes only,
Landlord shall be relieved of all obligations and liabilities accruing hereunder
after the effective date of said transfer, provided that any Security Deposit or
other funds of Tenant then being held by Landlord are delivered to Landlord's
successor. The obligations to be performed by Landlord hereunder shall be
binding on Landlord's successors and assigns only during their respective
periods of ownership.
25.18 Severability. If any provision of the Lease shall be determined to be
void by any court of competent jurisdiction, then such determination shall not
affect any other provision of the Lease, and all such other provisions shall
remain in full force and effect. It is the intention of the parties hereto that,
if any provision of the Lease is capable of two constructions, one of which
would render the provision void and the other of which would render the
provision valid, then the provision shall have the meaning that renders it
valid.
25.19 Time of Essence. Time is of the essence in the performance of all
covenants and conditions of the Lease.
25.20 Waiver of Trial by Jury. Landlord and Tenant hereby waive any and all
rights to a trial by jury in any action, proceeding or counterclaim (including
any claim for injury or damage and any emergency and other statutory remedy in
respect thereof) brought by either against the other on any matter arising out
of or in any way connected with the Lease, the relationship of Landlord and
Tenant, and/or Tenant's use or occupancy of the Premises.
25.21 Warranty of Authority. Tenant represents, covenants, and warrants to
Landlord as of the Effective Date that the signatories signing on behalf of
Tenant have the requisite authority to bind Tenant. Further, if the Tenant is a
corporation, Tenant represents, covenants, and warrants to Landlord that: (a) as
of the Effective Date, Tenant is a duly constituted corporation in good standing
and qualified to do business in the state where the Shopping Center is located,
(b) Tenant has paid all applicable franchise and corporate taxes, and (c) Tenant
will file when due all forms, reports, fees, and other documents necessary to
comply with applicable laws.
<PAGE>
25.22 Tenant Acknowledgment of Partner Status. Tenant hereby acknowledges
that one of the partners comprising Landlord is a unit of the California State
and Consumer Services Agency established pursuant to Title I, Division 1, Part
13 of the California Education Code, Sections 22000 et seq., as amended (the "Ed
Code"). As a result, Landlord may be prohibited from engaging in certain
transactions with a "school district or other employing agency" or a "member,
retirant, or beneficiary" (as those terms are defined in the Ed Code). In
addition, Landlord may be subject to certain restrictions and requirements under
the Internal Revenue Code, 26 U.S.C. Section 1 et seq. (the Code"). Accordingly,
Tenant represents and warrants to Landlord that : (a) Tenant is neither a school
district or other employing agency nor a member, retirant, or beneficiary; (b)
has not made any contribution or contributions to Landlord; (c) neither a school
district or other employing agency, nor a member, retirant, or beneficiary, nor
any combination thereof, is related to Tenant by any relationship described in
Section 267(b) of the Code; (d) neither Westmark Realty Advisors, its
affiliates, related entities, agents, officers, directors, or employees, nor any
Landlord's board member, employee, or internal investment contractor
(collectively, "Landlord's Affiliates") has received or will receive, directly
or indirectly, any payment, consideration, or other benefit from, nor does any
Landlord Affiliate have any agreement or arrangement with Tenant or any person
or entity affiliated with Tenant relating to, the transactions contemplated by
the Lease; and (e) except for the ownership of Tenant's publicly traded stock,
no Landlord Affiliate has any direct or indirect ownership interest in Tenant or
any person or entity affiliated with Tenant.
25.23 Tenant's Option to Lease Additional Premises. Tenant is hereby given
the option to lease additional premises currently identified as "Space No.
1-M-007" ("Additional Premises") in the Shopping Center. Such option shall be
exercised, if at all, by Tenant giving written notice ("Option Notice") to
Landlord no later than November 30, 1999 but no earlier than October 1, 1999,
however, in the event Landlord gives Tenant written notification that the
Additional Premises will be available at a date prior to October 1, 1999, Tenant
shall be required to provide Landlord with the Option Notice, if at all, within
thirty (30) days of the date Landlord's notice is given.
In the event Tenant exercises this option to lease the Additional Premises,
Landlord shall amend the Lease to lease Tenant the Additional Premises,
effective upon the date Landlord delivers possession of the Additional Premises
to Tenant, on the same terms and conditions as those contained in this Lease for
the balance of the remaining Lease Term. Effective on the earlier of the date
Tenant opens for business within the Additional Premises or the seventy-fifth
(75th) day following the date Landlord delivers possession of the Additional
Premises to Tenant, the Minimum Annual Rent and Marketing Assessment shall be
adjusted to include the Additional Premises at the same per square foot rates
Tenant is required to pay according to the terms of this Lease. Tenant shall be
required to submit to Landlord plans and specifications for the remodeling of
Tenant's storefront and store interior in accordance with Exhibit C and the
Tenant Package. Landlord shall respond to Tenant's Plans within fifteen (15)
days of the receipt of same by notifying Tenant of (a) the approval of Tenant's
Plans, or (b) the reason(s) why Tenant's Plans are not satisfactory to Landlord.
Tenant shall commence and diligently proceed with construction so as to complete
the work on or before the seventy-fifth (75th) day following the date Landlord
delivers possession of the Additional Premises to Tenant. Notwithstanding
anything contained herein, in the event Landlord's response is delayed beyond
the fifteenth (15th) day required hereinabove, Tenant's requirement to complete
the work within seventy-five (75) days following the date Landlord delivers
possession of the Additional Premises shall be delayed by the corresponding
number of days after the fifteenth (15th) day.
Tenant's option to lease Additional Premises shall be null and void in the
event any of the following occurs:
(a) Tenant is in default, beyond any applicable cure period, in its
obligations under this Lease on the date of the Option Notice, in which case
such Option Notice shall be totally ineffective;
(b) Tenant is in default, beyond any applicable cure period, in its
obligations under this Lease on the date Landlord delivers possession of the
Additional Premises to Tenant, in which case the amendment to the Lease to lease
Tenant the Additional Premises shall also be null and void; and
<PAGE>
(c) Landlord is unable to deliver the additional premises to Tenant by
October 1, 2000.
This option to lease Additional Premises shall not be effective or
available to a Transferee in the event of a permitted Occupancy Transaction
pursuant to Article 15 of this Lease, except a permitted Transferee pursuant to
Section 15.8. In addition, this option to lease the Additional Premises shall
not be operative in the event of foreclosure or the giving of a deed in lieu of
foreclosure, and will be of no force or effect to such successor in interest.
25.24 Tenant's Financial Statements. On a quarterly basis, Tenant shall
submit copies of Tenant's Form 10-QB quarterly report to Landlord, in care of
the Chief Financial Officer of TrizecHahn Centers (or any other individual
Landlord notifies Tenant of in writing at a later date), at the address
specified in Section 1.12 within sixty (60) days of filing said report with the
Securities and Exchange Commission pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934. Failing or refusing to comply with this Section
25.24 within ten (10) days of Landlord's written request, shall constitute a
default by Tenant and a breach of this Lease.
ARTICLE 26
SECURITY DEPOSIT
26.1 Payment. On or before the Effective Date, Tenant shall pay Landlord
the Security Deposit as security for the faithful performance by Tenant of all
of its obligations under this Lease. Landlord shall not be required to hold the
Security Deposit and, if Landlord does hold the Security Deposit, Landlord shall
not be liable for interest, except as required herein and shall not be required
to hold the Security Deposit in a segregated account except as may be required
by applicable law or any Mortgagee. Anything to the contrary notwithstanding
contained in Article 26, upon receipt from Tenant of the sum of Thirty-Three
Thousand Three Hundred Sixty-Eight and 75/100 Dollars ($33,368.75), Landlord
shall deposit such sum in an interest bearing account with a federally insured
bank or savings and loan association. Landlord shall hold the account as a
Security Deposit under the terms and conditions set forth in Article 26. All
interest or earnings accruing on Tenant's Security Deposit from said account
shall be paid to Tenant at the end of each year of the Lease Term, within thirty
(30) days of Tenant's written request therefor, provided Tenant is not, and has
not been, in default under the terms of the Lease during the preceding year.
26.2 Application. If any of the rentals herein reserved or any other sum
payable by Tenant to Landlord shall be overdue and unpaid or paid by Landlord on
behalf of Tenant, or if Tenant shall fail to perform any of its obligations
under the Lease, then Landlord may, at its option and without prejudice to any
other remedy which Landlord may have on account thereof, appropriate and apply
all or a portion of the Security Deposit to compensate Landlord for Minimum
Annual Rent, Additional Rent, loss or damage sustained by Landlord, and Tenant
shall forthwith restore said Security Deposit to the original sum deposited.
Should Tenant comply with all of said obligations and promptly pay all the
rentals when due and all other sums payable by Tenant to Landlord, the Security
Deposit shall be refunded in full to Tenant at the expiration or earlier
termination of the Lease Term, subject to the provisions of Section 26.3.
26.3 Return of Security Deposit. Provided Tenant (i) initially opens for
business within sixty (60) days of the time limits set forth in Section 11.1;
(ii) is not currently in default, which default remains uncured for the time
period set forth in Section 16.2, nor has been in default of any of the terms or
provisions of this Lease during the Lease Term beyond the time period to cure as
set forth in Section 16.2; (iii) is the tenant entity specified in Article 1, or
any permitted Transferee pursuant to Article 15, Section 15.8 of this Lease; and
(iv) has a net worth and working capital equal to or greater than Tenant's net
worth and working capital as of the Effective Date, then at the end of the
thirty-sixth (36th) full month of the Lease Term and upon Tenant's written
request, Landlord shall apply the Security Deposit to Tenant's Minimum Annual
Rent beginning with the Minimum Annual Rent due on the first (1st) day of the
calendar month following Landlord's receipt of Tenant's written request and
continuing each subsequent month until the entire Security Deposit has been
<PAGE>
exhausted and further provided that during the months the Security Deposit is
applied to Minimum Annual Rent, Tenant shall pay all other charges called for in
the manner provided for in this Lease. In the event Tenant is or has been in
default beyond the time period to cure as set forth in Section 16.2, does not
comply with the conditions set forth in this Lease, or if Tenant's net worth and
working capital is not equal to or greater than Tenant's net worth and working
capital as of the Effective Date, the Security Deposit shall be retained by
Landlord until the expiration or earlier termination of this Lease.
THE OAKS SHOPPING CENTER, L.P.,
a California limited partnership
By Command Properties Corporation,
a Delaware corporation,
as general partner
By: TrizecHahn Centers Management Inc.,
a California corporation,
as its attorney-in-fact
By:
Name:
Title:
By:
Name:
Title:
By: California State Teachers' Retirement System,
a retirement system organized under the
laws of the State of California,
as general partner
By: Westmark Realty Advisors,
a limited liability company
By:
Christopher W. Roscoe
National Director
By:
Name:
Title:
LANDLORD
TOYS INTERNATIONAL,
a California corporation
By:
Name:
(Type or Print Name)
Title:
By:
Name:
(Type or Print Name)
Title: TENANT
<PAGE>
EXHIBIT B
DEFINED TERMS
Unless otherwise indicated, all references to Articles and Sections shall
be deemed to refer to Articles and Sections of the Lease.
"Additional Rent" means all sums of money required to be paid by Tenant
under the Lease with the exception of Minimum Annual Rent.
"Administrative Fee" means an amount equal to fifteen percent (15%) of the
amount of expenses or other amounts with respect to which the Administrative Fee
is payable as set forth in particular Articles and Sections of the Lease.
"Air Conditioning Charge" is defined in Section 6.5.
"Air Conditioning System" means the air conditioning system serving the
Premises either exclusively or in common with other tenants of the Shopping
Center, including all pipes, ducts, machinery, fans, coolers, chillers,
condensers, and other equipment used in connection therewith.
"Amortization of Capital Items" shall mean the amortization of any capital
item costing Twenty-Five Thousand Dollars ($25,000) or more with a useful life
(as determined in accordance with generally accepted accounting principles) in
excess of five (5) years. Amortization shall be, in lieu of the full cost of
such item, over said useful life and shall include an interest factor based on
the Interest Rate.
"Breakpoint" for any specific period means the amount obtained by dividing
the Minimum Annual Rent payable during such period by the percentage set forth
in Section 1.10 for the calculation of Percentage Rent.
"CFM" means cubic feet of air per minute.
"CPI Adjustment Procedures" shall mean the method by which adjustments
shall be made to a sum of money Tenant must pay Landlord ("Base Amount") in
accordance with percentage increases, if any, in the Department of Labor, Bureau
of Labor Statistics, Consumer Price Index for All Urban Consumers, U.S. City
Average, Subgroup "All Items" (1982-84 = 100), referred to herein as the
"Index." The procedure for making such adjustments shall be to increase the Base
Amount by a percentage equal to the percentage increase, if any, in the Index
for the Month of Adjustment as compared to the Index for the Base Month. The
terms "Month of Adjustment" and "Base Month," as used herein, are defined in the
applicable Articles of the Lease. If at any time there is no Index, Landlord
shall substitute any official index published by the Bureau of Labor Statistics
or by such successor or similar governmental agency as may then be in existence
and shall be most nearly equivalent thereto.
"Change of Control" means the transfer by sale, assignment, death,
incompetency, mortgage, deed of trust, trust, operation of law, or otherwise of
any shares, voting rights or ownership interests which will result in a change
in the identity of the person or persons exercising, or who may exercise,
effective control of Tenant, unless such change results from the trading of
shares listed on a recognized public stock exchange . If Tenant is a private
corporation whose stock becomes publicly held, the transfers of such stock from
private to public ownership shall not be deemed a Change of Control.
Notwithstanding the foregoing to the contrary, any transfer of stock in Tenant's
corporation between present stockholders, to family members of present
stockholders, or for bona fide estate planning purposes shall not be deemed a
Change of Control so long as the Tenant entity does not change as a result of
such transfer.
<PAGE>
"Claims" means any claim, demand, investigation, proceeding, action, suit,
judgment, award, fine, lien, loss, damage, expense, charge or cost of any kind
or character and liability (including reasonable attorney fees and court costs).
"Commencement Date" means the earlier to occur of (i) the date Landlord
tenders possession of the Premises to Tenant or Tenant's agent or (ii) the date
Tenant or Tenant's agent occupies the Premises for any purpose.
"Common Area" means all improved and unimproved areas within the boundaries
of the Shopping Center (including additional land acquired by Landlord) which
are made available from time to time for the general use, convenience, and
benefit of Landlord, other persons entitled to occupy any portion of the
Shopping Center and/or their customers, patrons, employees, and invitees,
including, without limitation, all automobile parking areas and structures,
floors, ceilings, roofs, skylights, windows, driveways, open or enclosed malls,
food court seating areas, sidewalks, curbs, and landscaped areas, and such
public transportation facilities and landscaped areas as are contiguous with and
benefit the Shopping Center.
"Common Area Expenses" is defined in Section 7.3.
"Construction Allowance" means that amount, if any, payable by Landlord in
accordance with Exhibit C-Addendum.
"Effective Date" means the earlier of (i) the Execution Date or (ii) the
Commencement Date.
"Encumbrance" means any conditional, contingent or deferred assignment,
sublease or conveyance voluntarily made by Tenant of some or all of Tenant's
interest, rights or duties in the Lease or the Premises, including Tenant's
right to use, occupy or possess the Premises, in whole or in part, including,
without limitation, any mortgage, deed of trust, pledge, hypothecation, lien,
franchise, license, concession or other security arrangement.
"Engineered Value" means the total CFM, or the total GPM, which Tenant has
calculated under Exhibit F as necessary for supply to the Premises, or which
have been calculated as necessary for supply to other leasable premises in the
Shopping Center.
"Estoppel Certificate" means a document stipulation substantially in the
form of Exhibit E.
"Execution Date" means that date set forth in the first paragraph of the
Lease upon which the Lease is fully executed by Landlord and Tenant.
"Expiration Date" means that date set forth in Section 1.7.
"Floor Area" means the square footage of the Premises described in Article
1 (or, where applicable, of other premises located in a building or buildings of
the Shopping Center) without deduction for the width of or space occupied by air
conditioning units that exclusively serve and are located within the Premises
and/or by columns, sprinkler risers, roof drains, structural braces, expansion
joints and/or shear walls, measured from the exterior surface of building walls
(and extensions thereof, in the case of openings), from the exterior surface of
Perimeter Demising Partitions, from the center line of Interior Demising
Partitions or vertical neutral strips and from any Lease Line, all of which form
the perimeter of the Premises.
"Food Court" means that area, if any, of the Shopping Center for which
specific Common Area is designated by Landlord, in its sole and absolute
discretion, for the purpose of providing facilities to accommodate the
consumption of food and beverages by customers of food use tenants in the
Shopping Center.
"Food Court Expenses" means Common Area Expenses which are attributable
solely to the operation and use of the Food Court.
"GPM" means gallons of water or fluid per minute.
<PAGE>
"Governmental Authority" means any federal, state, county, city or local
governmental board, body or agency having jurisdiction over the Premises or the
Shopping Center or any part thereof.
"Gross Sales" means the proceeds of all sales and/or other revenue derived
or made from the Premises adjusted to exclude or deduct, as applicable, Gross
Sales Adjustments and including, without limitation, merchandise, goods and/or
services sold, leased, licensed or otherwise transferred in or from the Premises
by Tenant, its subtenants, licensees, and concessionaires, whether for cash or
on credit and whether made by store personnel or by approved vending or gaming
machines. Gross Sales shall not include any government imposed taxes upon the
sale of merchandise or services which are collected separately from the selling
price and paid directly to the taxing authority. All sales and/or revenue
originating at the Premises shall be considered Gross Sales, even though
bookkeeping and payment of the account may be transferred to another place for
collection and even though actual filling and/or delivery of the merchandise may
be made from a place other than the Premises. Each sale upon installments or
credit shall be treated as a sale for the full sale price at the time of sale.
Gift Certificates shall be included in Gross Sales upon the redemption of same
at the Premises.
"Gross Sales Adjustments" means the following items but same shall be
deducted (as opposed to excluded) from Gross Sales only to the extent previously
reported as Gross Sales: interest, service or sales carrying charges collected
separately from the selling price and paid by customers to Tenant for extension
of credit; the selling price of all merchandise returned by customers and
accepted for full credit or the amount of discounts made thereon; sums and
credits received in the settlement of Claims for loss or damage to merchandise;
the price allowed on merchandise traded in by customers for credit or the amount
of credit for discounts and allowances made in lieu of acceptance thereof;
alteration workroom charges and delivery charges at Tenant's cost and collected
separately from the selling price; receipts from vending machines installed
solely for Tenant's employees; transfers of merchandise between Tenant's stores,
and sales of fixtures, equipment or property which are not stock in trade. In
addition, the following may be included as a Gross Sales Adjustment (but shall
be deducted, as opposed to excluded, from Gross Sales only to the extent
previously reported as Gross Sales); provided that (i) through (iii) below shall
not exceed a total of two percent (2%) of Tenant's Gross Sales in any single
calendar year:
(i) Bad checks and/or debts, provided that if subsequently collected, said
checks and/or debts shall be included within Gross Sales in the calendar year in
which subsequently collected;
(ii) The discount permitted on sales to employees actually employed at the
Premises; and
(iii) Fees paid by Tenant to credit card companies and/or banking
institutions in accordance with credit card purchase plans.
"Hazardous Materials" means any chemical, compound, material, substance or
other matter that: (a) is defined as a hazardous substance, hazardous material
or waste, or toxic substance under any Hazardous Materials Law, (b) is
regulated, controlled or governed by any Hazardous Materials Law or other Legal
Requirement, (c) is petroleum or a petroleum product, or (d) is asbestos,
formaldehyde, radioactive material, drug, bacteria, virus, or other injurious or
potentially injurious material (by itself or in combination with other
materials).
"Hazardous Materials Laws" means any and all federal, state or local laws,
ordinances, rules, decrees, orders, regulations or court decisions relating to
hazardous substances, hazardous materials, hazardous waste, toxic substances,
environmental conditions on, under or about the Premises or the Shopping Center,
or soil and ground water conditions, including, but not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Resource Conservation and Recovery Act, the Hazardous Materials
Transportation Act, the California Hazardous Waste Control Act, the
<PAGE>
Carpenter-Presley-Tanner Hazardous Substances Account Act, the Porter-Cologne
Water Quality Control Act, any other Legal Requirement concerning hazardous or
toxic substances, and any amendments to the foregoing.
"Improvements" means all permanent and nonstructural fixtures,
installations, alterations, replacements, additions, changes and/or improvements
to the Premises.
"Insured Casualty" means damage or destruction the repair of which is
covered to the extent of at least fifty percent (50%) of the replacement cost
thereof (with deductibles, self-insurance and co-insurance being deemed to be
"covered") by insurance proceeds received by or made available to Landlord
pursuant to any insurance policy actually carried or required to be carried by
Landlord under the terms of the Lease.
"Interest Rate" means the lesser of (i) the maximum lawful rate permitted
by usury or similar law in the State in which the Shopping Center is located to
be charged by Landlord to Tenant, or (ii) two percent (2%) above the annualized
rate of interest publicly announced from time to time by Bank of America NT&SA
in San Francisco, California, as its "prime rate" or "reference rate," and such
interest shall be computed on the basis of monthly compounding with actual days
elapsed compared to a 360-day year.
"Interior Demising Partitions" means partitions separating the Premises
from adjacent space occupied or intended to be occupied by another tenant.
"Interior Mall" means that portion of the Common Area, if any, which is
located in the interior facing portion of the Shopping Center.
"Interior Mall Expenses" shall mean Common Area Expenses which are
attributable solely to the operation and use of the Interior Mall.
"Landlord" is defined in Article 1.
"Landlord's Work" is defined in Exhibit C. "Lease Line" means any imaginary
or defined line which separates the Premises from all areas of the Shopping
Center other than the premises of adjacent tenants and which is shown in the
Tenant Package.
"Lease Term" is defined in Section 3.1.
"Legal Requirement" means, to the extent applicable, (i) any law, statute,
ordinance, regulation, rule, requirement, order, court decision or procedural
requirement of any Governmental Authority, (ii) the rules and regulations of the
applicable governmental insurance authority or any similar body, (iii) the
requirements of the REA, and (iv) the reasonable requirements of any Mortgagee.
References herein to "law" or "lawful" include Legal Requirements or the full
and strict compliance with Legal Requirements, as applicable.
"Major Department Stores" means those certain buildings or premises (or the
occupants thereof) indicated on Exhibit A as "DEPT. STORES" (or similar
designation) and which may be subsequently added, substituted or removed at
Landlord's sole and absolute discretion without notice to Tenant or amendment to
Exhibit A.
"Major Destruction" means destruction (whether or not an Insured Casualty)
to an extent of more than one-third (33-1/3%) of the full replacement cost of
the Premises or Shopping Center, as the case may be, as of the date of
destruction, or destruction to the Shopping Center that results in the
termination of the leases of tenants therein representing more than one-third
(33-1/3%) of the Floor Area thereof, or results in the termination of the lease
and/or operation of one or more Major Department Stores.
"Major Tenants" means collectively (i) the Major Department Stores, (ii)
any premises (or the occupants thereof) at the Shopping Center used primarily
for events, meetings, and operations conducted on a nonprofit basis for the
benefit of the community, and (iii) premises (or the occupants thereof) that
contain at least twenty thousand (20,000) square feet of contiguous (i.e., not
separated by Interior Demising Partitions) Floor Area.
<PAGE>
"Mall Tenants" means those tenants occupying premises in the Shopping
Center that front onto the Interior Mall.
"Marketing Assessment" means the sum payable by Tenant as set forth in
Section 1.11 and provided for in Article 8.
"Marketing Fund" is defined in Section 8.1.
"Merchants' Association" is defined in Section 8.1.
"Minimum Annual Rent" means the rental payable by Tenant for the use and
occupancy of the Premises and is more specifically set forth in Section 1.9.
"Mortgage" means any mortgage, deed of trust, assignment, security
agreement, conditional sale contract or other encumbrance or hypothecation of
any of Landlord's interest in the real and personal property comprising the
Shopping Center (including all subsequent amendments, modifications, and
advances thereto), including an assignment or encumbrance of Landlord's interest
in the Lease and the rents and profits derived therefrom. "Mortgage" shall also
include any ground lease or similar instrument whereby Landlord holds a
leasehold interest in the Shopping Center or any part thereof. "Mortgagee" means
the holder/trustee, beneficiary or assignee of any Mortgage, or any lessor under
any ground lease or similar instrument.
"Occupancy Transaction" means any Transfer, Encumbrance, Change of Control,
or other arrangement whereby the identity of the person or persons using,
occupying or possessing the Premises changes or may change, whether such change
be of an immediate, deferred, conditional, exclusive, nonexclusive, permanent or
temporary nature.
"Percentage Rent" means the rental payable by Tenant as set forth in
Section 1.10 and pursuant to Section 4.4.
"Perimeter Demising Partitions" means partitions separating the Premises
from the Common Area.
"Permitted Use" means the permitted use of the Premises as set forth in
Section 1.13.
"Personal Property" means trade fixtures, furniture, furnishings, signs,
and other personal property not permanently affixed to the Premises.
"Premises" means the commercial space described in Section 1.4 from the top
of the floor to the underside of the structure above and exclusive of such
conduits, facilities, and structures as may be located in the Premises for the
use and benefit of Landlord and/or other tenants.
"REA" means that certain document entitled "Construction, Operation and
Reciprocal Easement Agreement" (or such other similar title) respecting the
certain rights and obligations of the owner or owners of the real property
comprising all or a portion of the Shopping Center, which has been or will be
recorded against such real property and as amended, supplemented and/or restated
from time to time.
"Reconstruction" means demolition, stabilization, repair, reconstruction,
and restoration of the Premises, Building or Shopping Center, as the case may
be, resulting from an Insured Casualty or Uninsured Casualty.
"Rent" means all amounts of Minimum Annual Rent and Additional Rent
required to be paid by Tenant under the Lease.
"Rent Commencement Date" means that date determined as set forth in Section
1.8.
<PAGE>
"Responsible Officer" of Tenant shall mean all individuals doing business
as Tenant, an individual general partner if Tenant is a partnership, a
responsible officer of Tenant if Tenant is a corporation, or a responsible
officer of any corporate general partner of Tenant if Tenant is a partnership
with one or more corporate partners.
"Security Deposit" means the amount, if any, specifically set forth in
Section 1.14.
"Shopping Center" means that commercial property named in Section 1.4 of
the Lease, as the same may from time to time be expanded, reduced, altered,
reconstructed or otherwise changed.
"Target Delivery Date" means that date set forth in Section 1.6.
"Tenant Package" means (i) the tenant design manual/package and (ii)
technical handbook setting forth specific criteria for Tenant's Work, as either
may be amended from time to time. The Tenant Package shall provide for
architectural, construction, mechanical, and Utilities standards, specifications
and criteria established by Landlord, from time to time, for the Shopping
Center, including, without limitation, standards, specifications, and criteria
for storefronts, interior improvements, and signs.
"Tenant's Work" is defined in Exhibit C and the Tenant Package.
"Tenant's Plans" means calculations, specifications, designs, and drawings
which pertain to Tenant's Work and/or other Improvements and which are described
in Exhibit C, Section I, Paragraph B.
"Trade Name" means the name set forth in Section 1.3.
"Transfer" means any voluntary, unconditional, and present (i) assignment
of some or all of Tenant's interest, rights, and duties in the Lease and the
Premises, including Tenant's right to use, occupy, and possess the Premises, or
(ii) sublease of Tenant's right to use, occupy, and possess the Premises, in
whole or in part.
"Transferee" means the proposed assignee, sublessee, mortgagee,
beneficiary, pledgee or other recipient of Tenant's interest, rights or duties
in the Lease or the Premises in an Occupancy Transaction.
"Uninsured Casualty" means damage or destruction that is not an Insured
Casualty.
"Utilities" means the services of sewage removal, delivery of water,
electricity, natural gas (if permitted by Landlord), telephone service and other
services such as satellite data transmission, cable systems, and security
systems.
"Utilities Charge" is defined in Section 6.3.
"Utility Installations" means any and all systems, machinery, facilities,
installations, supply lines, transformers, pipes, conduits, ducts, penetrations,
components, appurtenances, and equipment used in or in connection with the
Shopping Center for the generation or supply of Utilities.
<PAGE>
EXHIBIT C
PROVISIONS RELATING TO THE DESIGN AND CONSTRUCTION OF TENANT'S STORE;
DESCRIPTION OF LANDLORD'S WORK IN THE EVENT OF RECONSTRUCTION
I. General Requirements
A. Tenant Package. Tenant acknowledges receipt of the Tenant Package for
the purpose of the initial construction of the Premises.
B. Tenant's Plans.
1. Prior to Tenant preparing Tenant's Plans, Tenant's architect and
engineer(s) shall thoroughly familiarize themselves with, and verify by physical
inspection, the accuracy of the Premises, the Tenant Package, this Exhibit C,
all local building codes and all existing job conditions. Tenant's Plans and
construction shall be prepared and performed with full knowledge of and in
compliance with the Tenant Package, this Exhibit C and all Legal Requirements,
including without limitation all energy conservation, Hazardous Materials Laws,
and handicap access requirements. Tenant's Plans shall be prepared or, if
permitted by law, sealed by architect(s) and engineer(s) fully qualified and
licensed in the state in which the Shopping Center is located.
2. Within twenty (20) days after receipt of the Tenant Package, Tenant
shall submit to Landlord fully detailed and dimensioned 1/2" scale preliminary
storefront drawings. This preliminary submittal shall include the following: (a)
three (3) sets of prints and one (1) sepia that show storefront elevations,
sections through the storefront and storefront signage, (b) one (1) material
sample and color board, and (c) one (1) completely colored rendering of Tenant's
storefront design.
3. No later than June 26, 1998, Tenant agrees to submit to Landlord six (6)
sets of prints and one (1) sepia of fully detailed and dimensioned 1/4" scale
architectural and structural construction drawings, which shall include the
following: (a) plan views of the storefront, floor areas, and reflected ceiling;
elevations of the storefront and interiors, sections through the storefront and
partitions and along the longitudinal axis, door, finish, and color schedules,
and final design drawings for storefront signs in accordance with the Tenant
Package, (b) electrical drawings including circuitry plans, panel schedules,
riser diagrams, load calculations, and all calculations and forms required by
applicable Legal Requirements, and (c) mechanical drawings, including heating,
ventilating, and air conditioning design calculations, an equipment schedule and
specifications, the design for the air distribution duct work system, smoke
exhaust system, exhaust fan(s), plumbing fixtures and piping specifications, and
all calculations and completed forms required by applicable Legal Requirements.
C. Approval of Tenant's Plans.
1. Tenant's Plans, and the design and quality of all work and installations
undertaken by Tenant in the Premises, shall be subject to the approval of
Landlord and Landlord's architect and engineers. Landlord shall respond to
Tenant's Plans within fifteen (15) days of the receipt of same by notifying
Tenant of (a) the approval of Tenant's Plans, or (b) the reason(s) why Tenant's
Plans are not satisfactory to Landlord.
2. If said plans are not approved because they do not conform to the Tenant
Package, Landlord will state the reasons for nonconformance and Tenant will be
given twenty (20) days to resubmit another set of plans taking into account
Landlord's suggested changes. If these subsequent drawings are not approved,
within ninety (90) days after full execution and delivery of this Lease by both
parties, Landlord shall have no further obligation to approve said plans and
Landlord shall have the right to terminate this Lease. 3. Landlord's architect's
approval of Tenant's Plans shall not create any responsibility or liability on
the part of Landlord for their completeness, sufficiency, design or compliance
with Legal Requirements, and shall not relieve Tenant of any of Tenant's
responsibility or liability hereunder.
<PAGE>
4. Any changes to the approved Tenant's Plans requested by Tenant shall be
subject to Landlord's approval and shall be reviewed by Landlord's architect.
Tenant shall pay any additional expenses incurred in connection with such
processing, including any additional fees of Landlord's architect, which costs
shall be deposited by Tenant at the option of Landlord prior to the commencement
of such processing.
D. Requirements for Tenant's Improvements.
1. Tenant's Work and all other Improvements shall be made under the
supervision of a competent architect or licensed structural engineer and made in
accordance with the approved Tenant's Plans. At Tenant's sole cost, Landlord
shall have the right, but not the obligation, to perform any work that Tenant
shall have failed to construct in accordance the approved Tenant's Plans, after
ten (10) days' notice from Landlord. Tenant, at its sole cost and expense, shall
be responsible for obtaining all necessary permits including building and health
department permits for the performance of such work and for the payment of any
impact, capacity, usage, and/or similar fee in connection with such work. Upon
completion of such work, Tenant shall have recorded in the office of the County
Recorder where the Shopping Center is located a Notice of Completion, as
required or permitted by law, and Tenant shall deliver to Landlord, within ten
(10) days after completion of said work, a copy of the final signed-off building
inspection card, permit or report with respect thereto and the Certificate of
Occupancy. All work shall be performed and completed strictly in accordance with
all Legal Requirements in a good and workmanlike manner, and shall be diligently
prosecuted to completion. The Premises shall at all times be a complete unit,
except during the period of work, and Tenant shall perform all such work so as
not to obstruct access to the premises of any other tenant in the Shopping
Center.
2. Tenant shall not open for business in the Premises until the Premises
fully and strictly comply with the approved Tenant's Plans and all Legal
Requirements, in the reasonable judgment of Landlord or Landlord's architect.
3. During the performance of Tenant's Work, Tenant shall be responsible for
the removal from the Shopping Center on a daily basis of all trash, construction
debris and surplus construction materials.
Tenant shall, at its sole cost and expense, provide trash receptacles for
Tenant's use during Tenant's construction. Landlord shall have the right to
approve the placement location of such receptacles. In no event shall Tenant use
any trash receptacles during construction other than those that Tenant has
provided.
II. Description Of Tenant's Work
A. General. "Tenant's Work" shall mean the purchase and/or installation of
all of the Improvements described in this Section II and any other Improvements
or work necessary to construct and complete construction of Tenant's store. All
costs of Tenant's Work shall be paid for by the Tenant regardless of whether or
not Tenant actually performed the work.
B. Ceilings. Tenant shall install all ceilings.
C. Partitions.
1. Tenant shall install all interior partitions and curtain walls within
the Premises required by the building code and as shown in Tenant's Plans.
2. Tenant shall plaster or drywall and firetape the interior side of all
Interior Demising Partitions and Perimeter Demising Partitions over their entire
area, except for necessary openings as designated in the Tenant Package.
3. All of Tenant's partition construction work shall be completed so as to
satisfy applicable fire rating requirements.
D. Floor. Tenant shall install all floor coverings within the Premises.
<PAGE>
E. Plumbing.
1. Tenant shall install all plumbing fixtures and rough-in plumbing.
Tenant's plumbing contractor shall provide approved receptors for air
conditioning condensate drains and water heater overflow as required.
2. Grease traps will be required for all food preparation areas having pot
sinks or any grease-producing appliances that discharge into the waste system.
3. Subject to obtaining Landlord's prior written consent, which Landlord
may grant or withhold in its sole and absolute discretion, Tenant may use
natural gas on the Premises in accordance with such terms and conditions as
Landlord may specify. If Landlord grants its consent to the use of natural gas
in the Premises, Landlord shall either perform the work to bring gas service to
the Premises (in which case Tenant shall reimburse Landlord for the cost of such
work), or require Tenant to perform such work at a location designated by
Landlord.
F. Sprinklers. At Tenant's expense, Landlord's contractor (or at Landlord's
option Tenant's contractor) shall make such additions, modifications, or
relocations to the sprinkler system installed by Landlord required by the design
or construction of Tenant's Improvements or to bring the same into compliance
with the requirements of Landlord's insurance underwriters and all Legal
Requirements. The costs of any work performed by Landlord's contractor, at
Tenant's expense, shall be competitive with commensurate contractors serving the
same trade area.
G. Air Conditioning/Heating. All air conditioning and heating work required
by Tenant shall be at Tenant's sole cost and expense. All such air conditioning
and heating work shall be designed and installed by Tenant unless designed and
installed, at Landlord's option, by Landlord at Tenant's sole cost and expense.
This work shall include, without limitation, additional air conditioning, if
any, connection to supply and return lines, duct work, and any controls or
circuitry required. At Landlord's option, Tenant shall provide heating to the
Premises in accordance with the Tenant Package. Notwithstanding anything to the
contrary contained in the Lease and Exhibits, if Tenant's business produces
odor, fume and/or grease or involves food preparation, at Landlord's option,
Tenant shall, at its sole cost and expense, design and install an independent
Air Conditioning System designed to mitigate the problems caused by such
operations. The Air Conditioning System serving the Premises shall be designed
to cool air automatically. The Tenant shall maintain conditions inside the
Premises as follows: 75? Fahrenheit dry bulb and 50% relative humidity with
outside conditions of 93? Fahrenheit dry bulb and 70? Fahrenheit wet bulb.
H. Electrical. Tenant shall install all electrical and telephone work
required within the Premises, including, without limitation, the following:
1. Feeders and other work from the central distribution point, light
fixtures, transformers, electrical panels, disconnect switches, distribution
within the Premises and additional conduit(s) from the central distribution
point, as required.
2. Temporary power for Tenant's construction.
3. Tenant, at its expense, shall arrange for electrical and telephone
service and installation of an electrical meter by the local utility company in
sufficient time to establish service prior to the date Tenant initially opens
for business.
I. Performance of Work by Landlord. The reasonable cost incurred by
Landlord in performing any work or modification on behalf of Tenant or which is
required as a result of Tenant's Work and/or other Improvements, shall be paid
for by Tenant immediately upon Tenant's receipt of an invoice.
J. Miscellaneous. Tenant shall install the following:
1. Internal communication, alarm, fire protection, or smoke detection
systems, as may be required by any Governmental Authority.
2. Elevators, dumbwaiters, chutes, conveyors, duct shafts, pneumatic tubes
and their shafts, doors, and other components, including electrical hook-up and
service, if any, from the electrical panel to said equipment.
<PAGE>
3. Storefronts, Tenant's sign(s), show window display platforms, window
backs, interior finish in show windows, store fixtures, and furnishings.
4. Double-studded walls and sound insulation of the walls and ceilings, and
such other sound insulation measures as required by Landlord in its reasonable
discretion when, in the reasonable judgment of Landlord, Tenant's business
operations create sounds or noises that may disturb Landlord, other tenants,
patrons of other tenants, or the occupant of any space in the Shopping Center.
III. DESIGN CRITERIA.
A. Structural. Any alteration, additions or reinforcements to Landlord's
structure required to accommodate Tenant's Improvements shall be performed only
with Landlord's architect's and engineer's prior written approval, at Tenant's
expense. Tenant shall pay, upon receipt of invoice and without setoff or
deduction, any costs associated with the Landlord's consultants' review and
approval of Tenant's proposed alterations, additions or reinforcements to
Landlord's structure.
B. Roof.
1. There shall be no installation of radio or television antennas. Any
roof-top equipment shall be subject to the prior written approval of Landlord,
Landlord's architect and all appropriate Governmental Authorities. All roof
penetrations (which shall include, without limitation, equipment platforms,
curbs, and multiple pipe enclosures) and equipment locations required by Tenant
and approved by Landlord, Landlord's architect, and said Governmental
Authorities shall be at Tenant's expense and subject to the conditions of said
approval. At Landlord's option, all such work shall be engineered and installed
by Landlord's contractor in accordance with standard project details as provided
by Landlord's architect. Any roof screens or screening devices required by
Landlord, Landlord's architect, and/or said Governmental Authorities shall be
designed by Landlord's architect or roofing engineer and at Landlord's option
installed by Landlord's contractor at Tenant's expense. The costs of any work
performed by Landlord's contractor, at Tenant's expense, shall be competitive
with commensurate contractors serving the same trade area.
2. All flashing, counter-flashing, and roofing repairs shall conform to the
project roofing specifications. All such work shall be paid for by Tenant but
shall be performed by Landlord's roofing contractor. The costs of any work
performed by Landlord's contractor, at Tenant's expense, shall be competitive
with commensurate contractors serving the same trade area.
C. Storefronts.
1. Tenant shall strictly comply with the storefront design and construction
criteria that pertain to Tenant's Premises as set forth in the Tenant Package.
2. No storefront, part thereof, or swinging door shall project beyond the
Premises or into any Common Area, except as may be otherwise set forth in the
Tenant Package.
3. All storefront work, including sliding door tracks and housing boxes for
grilles, shall be supported at its head sections by a welded structural steel
framework that shall be securely attached, suspended and braced to the existing
building structure. Storefronts that project past the mall facia shall be
engineered and designed to be supported independently of the mall facia. Tenant
shall pay the cost incurred by Landlord in repairing any damage done to
Landlord's Work by the installation, construction, attachment or support of any
part of the storefront.
4. Other than windows, all storefront material shall be durable material
such as glazed tile, brick slate, terrazzo, stone or similar materials approved
by Landlord's architect. Plaster, drywall, and similar materials will not be
permitted.
<PAGE>
5. All storefront construction and materials shall be weatherproof (if
required in the Tenant Package) and resistant to wear, fading, discoloration,
and decay. Any and all storefront construction and materials that in the sole
but commercially reasonable judgment of Landlord are faded, discolored, worn or
in disrepair shall be immediately, at Tenant's expense, be refinished, repaired
or replaced by Tenant to Landlord's reasonable satisfaction.
D. Floors. Tenant shall install and maintain carpeting and/or other quality
flooring materials, such as glazed or unglazed pavers or wood parquet in
Tenant's public areas. Vinyl composition tile or indoor/outdoor carpeting shall
not be used in Tenant's public areas. Tenant's storefront entry area shall have
flooring material identical in quality, color and pattern to the mall flooring
material, or, at Landlord's option, such other durable materials as may be
approved by Landlord's architect.
E. Ceiling.
1. The ceiling shall be concealed spline or acoustical T-bar with 24" x 24"
tegular tile with 3/8" revealed edge or drywall or plaster construction. Other
ceiling material finishes may be used subject to written approval by Landlord's
architect. Acoustical T-bar ceiling with standard 24" x 48" modules will only be
permitted in storage and nonpublic areas.
2. Tenant shall strictly comply with specifications of the maximum ceiling
height of the Premises set forth in the Tenant Package. Higher ceilings may be
allowed upon written approval of Landlord and Landlord's architect. Any
relocation of or modification to structure, piping, conduit and/or duct work
necessitated by Tenant's installation of a ceiling in excess of the height
limitation shall be at Tenant's expense. Access panels and/or catwalks above the
ceilings required to serve Tenant's sign equipment shall be installed at
Tenant's expense.
F. Electrical. All fluorescent or incandescent lighting fixtures in
Tenant's public areas, other than decorative fixtures, shall be recessed.
Fluorescent fixtures shall have parabolic lenses or diffusers; no acrylic lenses
shall be permitted in public areas. Bare lamp fluorescent or incandescent
fixtures may be used only in concealed areas and/or stock rooms.
G. Signs. All storefront signs shall be designed strictly in accordance
with the Tenant Package. Tenant acknowledges that the sign criteria have been
established for mutual benefit of all tenants in the Shopping Center. Any
nonconforming or unapproved signs shall be removed or brought into conformance
at the expense of Tenant.
IV. Tenant's Use of a Contractor.
A. Contractor Selection. Tenant may select any contractor for the
construction of Tenant's Improvements provided such contractor is bondable and
meets all licensing and insurance requirements established by Landlord in the
Tenant Package and all Governmental Authorities. Tenant shall provide Landlord
with a copy of the contract with its contractor prior to commencement of any
Improvements. and Landlord shall have the right to disapprove such contractor or
the contract on reasonable grounds. Tenant's contractor shall do or cause to be
done all Tenant's work except where this Exhibit or this Lease provides for
Landlord's contractor to do the same.
B. Special Conditions. Tenant shall incorporate into the contract with its
contractor the following items as "Special Conditions":
1. Prior to commencement of Tenant's Improvements, Tenant's contractor
shall provide Landlord with a construction schedule indicating the completion
dates of all phases of Tenant's Improvements.
2. Tenant's contractor shall diligently perform said work in a manner and
at times that do not impede or delay Landlord in the completion of the Premises
or any other portion of the Shopping Center. Any delays in the completion of the
Premises caused by Tenant's contractor shall not relieve Tenant of any
obligation under this Lease.
<PAGE>
3. Tenant's contractor shall be responsible for the repair, replacement or
clean-up of any damage caused by Tenant's contractor to any other contractor's
work in any area of the Shopping Center.
4. Tenant's contractor shall provide written notice to Landlord or
Landlord's Shopping Center manager of any work to be done on weekends or other
than normal job hours, and Tenant agrees to pay all costs associated therewith.
5. Tenant and Tenant's contractor shall comply with all Legal Requirements
and all rules and regulations established by Landlord in the performance of
Tenant's Improvements.
6. Prior to commencement of construction, Tenant shall submit to Landlord
evidence of insurance for its contractor in accordance with the requirements set
forth in the Lease.
7. Tenant shall erect a barricade to separate the Premises from the
remainder of the Shopping Center prior to Tenant commencing construction of the
Premises. Such barricade shall be full height, constructed with studs and
drywall, sealed at the tops and sides, taped, and painted such color as Landlord
shall select.
8. Tenant's contractor or subcontractors shall not post signs on any part
of the Shopping Center or the Premises.
9. Prior to the commencement of Tenant's Improvements, Tenant shall provide
Landlord with a "labor and materials payment bond" in an amount equal to one
hundred percent (100%) of the aggregate price of all contracts for such work,
conditioned on Tenant's payment in full of all claims of mechanics' lien
claimants for such labor, services and/or materials supplied in the prosecution
of such work. Said payment bond shall name Landlord as a primary obligee, shall
be given by a sufficient surety that is reasonably satisfactory to Landlord, and
shall be in such form as Landlord shall approve in its reasonable discretion. In
addition, Tenant shall obtain, or cause its contractor to obtain, a "performance
bond" covering the faithful performance of the contract for the construction of
Tenant's Work. The performance bond shall be in an amount equal to the full
amount of the contract price, conditioned on the contractor's faithful
performance of the contract. Said performance bond shall name Landlord and
Tenant as co-obligees, shall be given by a sufficient surety that is reasonably
satisfactory to Landlord, and shall be in such form as Landlord shall approve in
its reasonable discretion.
V. Description Of Landlord's Work in the Event of Reconstruction.
A. General. "Landlord's Work" shall be limited to the performance of the
improvements described in this Section V and only to the extent such work is
required in connection with the Reconstruction of the Premises.
B. Structure. Landlord's architect shall design the building in which the
Premises are located. Said building shall be constructed and sprinklered in
accordance with the building code in effect in the jurisdiction where the
Shopping Center is located as of the time of the initial construction of the
Shopping Center. Construction of the building in which the Premises are located
shall not be less than Type V-N. Exterior walls shall be masonry, metal stud,
and plaster or such other material or materials as Landlord's architect shall
select.
C. Partitions. Landlord will provide Interior Demising Partitions and
Perimeter Demising Partitions; the demising partitions shall be of unfinished
masonry, concrete, metal or wood studs, at Landlord's option, sixteen inches
(16") on center to the underside of the structure above, or to a height as
required by Landlord. Where such partitions fall on structural column lines, at
structural braces or structural expansion joints, projections may occur. Where
desirable in Landlord's opinion, a vertical neutral strip will be located at the
storefront area between stores.
D. Floor. Concrete floor slabs within the interior of the Premises and in
any entranceways shall have a smooth finish. Such floor shall be on a single
plane without depressions or raised areas, but may, at Landlord's option, be
sloped.
<PAGE>
E. Plumbing. Water service and sewer laterals shall be brought to a point
above or directly beneath the Premises.
F. Sprinklers. An automatic sprinkler system shall be installed in
accordance with Landlord's standard grid pattern and height that shall include
one (1) sprinkler head per one hundred (100) square feet of Floor Area of the
Premises.
H. Electrical. Landlord shall provide facilities for the delivery of
277/480 volt power to premises containing 1,000 square feet of Floor Area or
more, and 120/208 volt power to premises containing less than 1,000 square feet
of Floor Area, to a central distribution point. Pursuant to Landlord's criteria,
Landlord shall provide a main electrical switch at a master metered central
distribution point and an empty conduit from the central distribution point to
the Premises for electrical and telephone lines.
I. Air Conditioning. If at the time of the casualty resulting in
Reconstruction the Premises was served by a central Air Conditioning System
serving the Premises in common with other tenants in the Shopping Center,
Landlord shall provide the Air Conditioning System (subject to Section II,
Paragraph G of this Exhibit C). The Tenant Package shall detail the type,
design, and specifications of the Air Conditioning System provided by Landlord.
J. Miscellaneous. The exterior trim and other surfaces of the mall
buildings normally requiring painting shall be painted. Sidewalks adjacent to
the Premises shall be constructed of concrete or such other suitable material as
Landlord shall select.
<PAGE>
EXHIBIT D
RULES AND REGULATIONS
Tenant will deposit its trash only in the Shopping Center trash receptacles
and shall participate in and comply with any reasonable procedures established
by Landlord or any procedures established by (or in compliance with) a
Governmental Authority for the collection, sorting, separation, and recycling of
waste products, garbage, refuse, and trash.
Tenant shall use its reasonable efforts to complete, or cause to be
completed, all deliveries, loading, unloading, and services to the Premises
prior to 10:00 a.m. of each day. Tenant shall attempt to prevent any delivery
trucks or other vehicles servicing the Premises from parking or standing in
front of, or at the rear of, the Premises from 10:00 a.m. to 9:00 p.m. of each
day.
Tenant shall not display, paint or place, or cause to be displayed, painted
or placed, any handbills, bumper stickers or other advertising devices on any
vehicle parked in the parking area of the Shopping Center, whether belonging to
Tenant, or to Tenant's agent, or to any other person, nor shall Tenant
distribute, or cause to be distributed, in the Shopping Center, any handbills or
other advertising devices.
Employees of Tenant shall not park their automobiles in those automobile
parking areas of the Common Area which Landlord may from time to time designate
for use by patrons of the Shopping Center.
Tenant and its employees shall park their cars only in those parking areas
designated by Landlord for employee parking. Tenant shall furnish Landlord with
the automobile license numbers of Tenant and Tenant's employees within fifteen
(15) days after taking possession of the Premises and shall thereafter notify
Landlord of any changes thereto within five (5) days after such change occurs.
If Tenant or its employees fail to park their cars in the designated parking
areas, Landlord may charge Tenant Ten Dollars ($10.00) per car per day for each
day or partial day that any car is parked in any area other than those
designated; provided, however, Landlord agrees to give Tenant written notice of
the first violation of this provision for each vehicle. Tenant shall have two
(2) days thereafter within which to correct the violation; if said violation is
not corrected within said two-day period, then the aforesaid fine shall be
levied and Tenant shall pay the same within ten (10) days of Landlord's request
therefor. After notice of such first violation, no prior notice of any
subsequent violation by the same vehicle shall be required.
Tenant shall not display or sell merchandise, or place carts, portable
signs, devices or any other objects in the Common Area and Tenant shall not
solicit or distribute materials in any manner in the Common Area.
Tenant shall utilize no medium which can be heard or experienced outside of
the Premises.
Tenant shall not erect an aerial or antenna on the roof or exterior walls
of the Premises.
<PAGE>
EXHIBIT E
TENANT'S ESTOPPEL CERTIFICATE
Date: , 19
Address:
To whom it may concern:
The undersigned, as Tenant, has entered into that certain Lease, dated 19 ,
with , as Landlord, for the leasing of certain Premises at the Shopping Center
commonly known as . ----------------------------- --------
- ---------------------------- --------------------------------------
Tenant understands that you have offered or committed to enter into a
transaction with Landlord with respect to an interest in Landlord and/or the
Lease and/or the Premises and/or the realty underlying the Premises and/or a
portion of or interest in the realty or improvements in the Shopping Center
owned or hereafter acquired by Landlord. You have requested this Certificate
from Tenant as a condition precedent to consummation of one of the following
transactions: sale, purchase, exchange, transfer, assignment, lease, conveyance,
encumbrance, pledge, mortgage or hypothecation.
In accordance with the terms of the Lease, Tenant ratifies the Lease and
certifies that:
(1) The undersigned has accepted the Premises and entered into occupancy
(i.e. accepted possession) of the Premises described in said Lease on , 19 ;
(2) The undersigned is presently open and conducting business with the
public in the Premises;
(3) The current Minimum Annual Rent in the annual amount of $ was payable
from , 19 ;
(4) Said Lease is in full force and effect and has not been assigned,
modified, supplemented or amended in any way (except by agreement[s] dated ),
and ,to Tenant's knowledge, neither party thereto is in default thereunder;
(5) The Lease represents the entire agreement between the parties as to the
terms, covenants and conditions respecting the leasing of the Premises;;
(6) The Lease Term expires on , 19 ;
(7) All conditions under said Lease to be performed by Landlord have been
satisfied, including, without limitation, all co-tenancy requirements thereunder
except: ;
(8) All required contributions by Landlord to Tenant on account of Tenant's
improvements have been received;
(9) On this date there are no existing defenses, offsets, counterclaims or
deductions against rental that the undersigned has against the enforcement of
said Lease by Landlord except: ;
(10) No rental has been paid more than one (1) month in advance and no
security (other than a security deposit in the amount of $ ) has been deposited
with Landlord; and
(11) The Minimum Annual Rent through , 19 , has been paid.
(12) The operation and use of the Premises does not involve the generation,
treatment, transportation, storage, disposal or release of Hazardous Material(s)
or solid waste into the environment and that the Premises are being operated in
accordance with all applicable environmental laws, zoning ordinances and
building codes.
Very truly yours,
(Tenant)
By:
Title:
<PAGE>
EXHIBIT F
MECHANICAL/ELECTRICAL SCHEDULE
<TABLE>
<CAPTION>
<S> <C>
1. Tenant Name Space No.
2. Tenant Drawing Nos. Mechanical Electrical
3. Floor Area (Sq. Ft.)
4. Electrical Load Breakdown
a. Lighting Watts
b. Sign(s) Watts
c. Appliances Watts
d. Receptacles Watts
e. Equipment Watts
f. Electric Water Heater Watts
g. Electric Heater Watts
h. Miscellaneous Watts
5. Total Connected Electrical Load Watts: Watts/Sq.Ft. of Floor
6. Tenant Calculated Design Heating Load BTUH
7. Tenant Calculated Design Cooling Load BTUH
8. Tenant Calculated Design Air Supply CFM (per Tenant plans)
9. Landlord Allotted Air Supply CFM
10. Additional Air Supply Required CFM
11. Variable Volume Air Terminal Units
a. Air CFM Max
b. Inlet/Outlet Sizes
12. Chilled Water Air Handler Units
a. Max GPM
13. Toilet Exhaust CFM
14. Special Exhaust/Make-up System(s) Data
(Use, CFM, HP, Method of Operation, Etc.)
15. Air Conditioning Unit Data (if Tenant is installing its own system.)
a. Make b. Model # c. CFM
</TABLE>
<PAGE>
EXHIBIT G
GUARANTY OF LEASE
WHEREAS, a certain Lease, more fully described below, has been or will be
executed:
<TABLE>
<CAPTION>
<S> <C> <C>
a. Name of Shopping Center: THE OAKS
b. Landlord: THE OAKS SHOPPING CENTER, L.P.,
a California limited partnership
c. Tenant: TOYS INTERNATIONAL,
a California corporation
d. Premises Address: Space No. 1-M-006
222 W. Hillcrest Drive
Thousand Oaks, CA 91360-4210
</TABLE>
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.
WHEREAS, the undersigned 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 to Tenant;
3. Landlord may, without notice, assign this Guaranty 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 the undersigned 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;
6. Guarantor hereby waives notice of any demand by Landlord as well as of
any notice of Tenant's default in the payment of rent or any other amounts
contained or reserved in the Lease;
<PAGE>
7. Guarantor hereby consents to personal jurisdiction and venue in the
state and judicial district in which the Shopping Center is located; and
8. The person or persons executing this Guaranty of Lease on behalf of
Guarantor represent, covenant, and warrant to Landlord as of the Effective Date
that the signatories signing on behalf of Guarantor have the requisite authority
to bind Guarantor. Further, if the Guarantor is a corporation, Guarantor
represents, covenants, and warrants to Landlord that: (a) as of the Effective
Date, Guarantor is a duly constituted corporation in good standing and qualified
to do business in the state where the Shopping Center is located, (b) Guarantor
has paid all applicable franchise and corporate taxes, and (c) Guarantor will
file when due all forms, reports, fees, and other documents necessary to comply
with applicable laws.
The use of the singular herein 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.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty of Lease to be
executed as of the Effective Date of the above-mentioned Lease.
PLAY CO. TOYS & ENTERTAINMENT CORP.,
a Delaware corporation
By:
Name:
(Type or Print Name)
Title:
By:
Name:
(Type or Print Name)
Title: GUARANTOR
ADDRESS: 550 Rancheros Drive
San Marcos, CA 92069
(PLEASE NOTARIZE DOCUMENT BY COMPLETING THE ATTACHED ACKNOWLEDGMENT)
ACKNOWLEDGMENT
State of )ss.
County of )
On , before me (here insert name and title of the officer), personally
appeared , personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature (Seal)
Exhibit 10.107
Lease Agreement for Store - Detroit
INDEX TO LEASE
(I)
<TABLE>
<CAPTION>
Page
ARTICLE I - GRANT AND TERM
<S> <C> <C>
Section 1.1 Leased Premises 1
Section 1.2 Term 2
Section 1.3 Opening 2
Section 1.4 Late Opening 2
ARTICLE II - RENT AND DEPOSIT
Section 2.1 Minimum Rent 3
Section 2.2 Percentage Rent 3
Section 2.3 Payments By Tenant 4
Section 2.4 Security Deposit 4
Section 2.5 Late Charge 5
ARTICLE III - PREPARATION OF LEASED PREMISES
Section 3.1 Landlord's Work 5
Section 3.2 Delivery and Possession 5
Section 3.3 Tenant's Work 5
Section 3.4 Alterations by Tenant 6
Section 3.5 Removal by Tenant 7
ARTICLE IV - CONDUCT OF BUSINESS
Section 4.1 Use and Trade Name 7
Section 4.2 Operation of Business 7
Section 4.3 Sign 7
Section 4.4 Tenant's Warranties 8
Section 4.5 Storage and Office Space 8
Section 4.6 Care of Premises 8
Section 4.7 Notice by Tenant 8
Section 4.8 Radius 8
ARTICLE V - COMMON AREA
Section 5.1 Use of Common Area 9
Section 5.2 Common Area Maintenance Expenses 9
ARTICLE VI - FEPAIRS AND MAINTENANCE
Section 6.1 Repairs and Maintenance by Landlord 10
Section 6.2 Repairs and Maintenance by Tenant 10
ARTICLE VII - TAXES
Section 7.1 Tax Liability 11
Section 7.2 Method of Payment 12
ARTICLE VIII - INSURANCE, INDEMNITY AND LIABILITY
Section 8.1 Landlord's Insurance Obligations 12
Section 8.2 Tenant's Insurance Obligations 12
Section 8.3 Mutual Covenant 13
Section 8.4 Covenant to Hold Harmless 13
Section 8.5 Loss and Damage 14
ARTICLE IX - DESTRUCTION OF LEASED PREMISES
Section 9.1 Continuance of Lease 14
Section 9.2 Reconstruction 14
ARTICLE X - CONDEMNATION
Section 10.1 Eminent Domain 15
Section 10.2 Rent Apportionment 15
Section 10.3 Temporary Taking 15
ARTICLE Xl - ASSIGNMENT, SUBLETTING AND ENCUMBERING LEASE
(ii)
<PAGE>
Section 11.1 No Assignment, Subletting or Encumbering of Lease 15
Section 11.2 Assignment or Sublet 16
Section 11.3 Transfer of Landlord's Interest 17
ARTICLE XII - SUBORDINATION, ATTORNMENT, FINANCING AND ESTOPPEL CERTIFICATE
Section 12.1 Subordination 17
Section 12.2 Attornment 17
Section 1 2.3 Financing 17
Section 12.4 Estoppel Certificate 17
Section 12.5 Remedies 18
ARTICLE XIII - ADVERTISING AND PROMOTION
Section 13.1 Promotion Fund 18
Section 13.2 Promotion Fund Contribution 18
Section 13.3 Advertisements 18
Section 13.4 Network 18
ARTICLE XIV - DEFAULT AND REMEDIES
Section 14.1 Elements of Default 19
Section 14.2 Landlord's Remedies 19
Section 14.3 Bankruptcy 21
Section 14.4 Additional Remedies and Waivers 21
Section 14.5 Landlord's Cure of Default 21
<PAGE>
ARTICLE XV - RIGHT TO ACCESS 21
ARTICLE XVI - DELAYS 22
ARTICLE XVII - END OF TERM 22
Section 17.1 Return of Leased Premises 22
Section 17.2 Holding Over 22
ARTICLE XVIII - COVENANT OF QUIET ENJOYMENT 22
ARTICLE XIX - UTILITIES 22
Section 19.1 Utilities 22
Section19.2 Electricity, Telephone and Gas 23
Section19.3 Trash and Garbage Removal 23
Section19.4 Water and Sewer 23
Section19.5 Grease Interceptors 23
ARTICLE XX - MISCELLANEOUS
Section 20.01 Entire Agreement 23
Section 20.02 Notices 23
Section 20.03 Successors 24
Section 20.04 Liability of Landlord 24
Section 20.05 Brokers 24
Section 20.06 Transfer of Landlord 24
Section 20.07 No Partnership 24
Section 20.08 Waiver of Counterclaims 24
Section 20.09 Waiver of Jury Trial 24
Section 20.10 Severability 24
Section 20.11 No Waiver 24
Section 20.12 Consumer Price Index 24
Section 20.13 Interest 24
Section 20.14 Excavation 25
Section 20.15 Rules and Regulations 25
Section 20.16 Financial Statements 25
Section 20.17 General Rules of Construction 25
Section 20.18 Recording 25
Section 20.19 Effective Date 25
Section 20.20 Headings 25
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
Exhibit Outline of Retail Development
Exhibit Outline of Leased Premises
Exhibit "A" Relocation Zone
Exhibit '1B" Calculation of Gross Leasable Area
Exhibit "C" Landlord's Work - White Box
Exhibit "C-i', Utilities
Exhibit "CC" Central Air Conditioning Supply System
Exhibit "D11 Tenant's Work - White Box
Exhibit Sign Criteria
Exhibit 1'F" Commencement Date and Expiration Date Declaration
</TABLE>
GUARANTYS
<PAGE>
THIS LEASE dated as of this day of by and between TAUBMAN AUBURN HILLS
ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership, 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,
INC., 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: M55 1 , consisting of approximately ten thousand (10,000)
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) expiration
of a sixty (60) day Fixturing Period following Possession Date (as
defined in Section 3.2), or (ii) the date the are initially open for
business to the public.
Original Term: Ten (10) years
Option Period: N/A
(3) Section 2.1: Minimum Rent:
the date of the Delivery of Leased Premises
From the Commencement Date and continuing through the third (3rd) year
of the term, the sum of One Hundred ninety-five Thousand and 00/1 O0ths
Dollars ($195,000.00) annually, payable in equal consecutive monthly
installments of Sixteen Thousand Two Hundred Fifty and 00/100ths
Dollars ($1 6,250.0O)each;
Beginning with the fourth (4th) year and continuing through the sixth
(6th) year of the term, the sum of Two Hundred Twenty Thousand and 00/1
O0ths Dollars ($220,000.00) annually, payable in equal consecutive
monthly installments of Eighteen Thousand Three Hundred thirty-three
and 33/1 O0ths Dollars ($18,333.33)each; and
Beginning with the seventh (7th) year and continuing through the
expiration of the term, the sum of Two Hundred Sixty Thousand and
00/100ths Dollars ($260,000.00) annually, payable in equal consecutive
monthly installments of twenty-one Thousand Six Hundred sixty-six and
67/lOOths Dollars ($21,666.67) each.
<PAGE>
Address:
(4) Section 2.2: Percentage Rent:
From the Commencement Date and continuing through the third (3rd) year
of the term, six percent (6%) (the "percentage factor") of Gross Sales
made during each Lease Year in excess of Three Million Four Hundred
Thousand and 00/1 00ths Dollars ($3,400,000.0O)(which sum is herein
called the "Sales Break Point");
Beginning with the fourth (4th) year and continuing through the sixth
(6th) year of the term, six percent (6%) (the "percentage factor") of
Gross Sales made during each Lease Year in excess of Three Million Six
Hundred Thousand 00/1 00ths Dollars ($3,600,00O.O0)(which sum is herein
called the "Sales Break Point").
Beginning with the seventh (7th) year and continuing through the
expiration of the term, six percent (6%) (the "percentage factor") of
Gross Sales made during each Lease Year in excess of Four Million Four
Hundred Thousand and 00/1 O0ths Dollars ($4,400,O00.00)(which sum is
herein called the "Sales Break Point").
(5) Section 2.4: Security Deposit: None
(6) Section 3.2: Tenant Inducement: One Hundred Fifty Thousand and 00/100ths
Dollars ($150,000.00)
(7) Section 4.1: Permitted Use:
Tenant shall use the Leased Premises for the use set forth below and for
no other purpose: for a Toys International store featuring educational
toys, novelty toys, computer related software, giftware, related toys,
and displayed in an area not to exceed ten percent (10%) of the selling
floor area, children's clothing.
Trade Name: Toys International
(8) Section 13.2: Fund Contribution: $1.00 per square foot of floor area in
the Leased Premises
Grand Opening Fee (Initial Contribution): $1.00 per square foot of floor
area in the Leased Premises
(9) Temporary Charges: N/A
(10) Chargebacks: N/A
(11) Guarantor:
Play Co. Toys & Entertainment Corp., a Delaware corporation
550 Rancheros Drive San Marcos, California 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 - 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 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.
After the Delivery of Possession Date, Landlord reserves the right to
relocate Tenant (ii) 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
(901 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
<PAGE>
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.
(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 hereto1 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 next
<PAGE>
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 ~ 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", 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 or
changes. Said statement upon execution and delivery shall be deemed to be part
of this Lease. SEE ATTACHED RIDER FOR INSERTS
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 (deletion) 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. SEE ATTACHED RIDER FOR INSERTS
Section 1.4 Late Opening (deletion) 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 his 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. SEE ATTACHED RIDER FOR
inserts
<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
<PAGE>
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.
(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 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.
<PAGE>
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, it
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/lOOths Dollars ($50.00) per late
statement, as additional rent.
(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 (1 St) full twelve (1 2) 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) (deleted)
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.
Section 2.4. Security Deposit. (deleted)
<PAGE>
Section 2.5. Late Charge. In the event any Rent or sums required hereunder
to be paid are not received on or before the--i-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), lb) Ten Dollars ($10.00) a day for each day such payment is late or
Ic) 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.
SEE ATTACHED RIDER FOR INSERTS
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.
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.
<PAGE>
(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. SEE ATTACHED RIDER FOR
INSERTS
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 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.
<PAGE>
(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
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
<PAGE>
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 (5) 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.
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 busines3. 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.
<PAGE>
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.
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
<PAGE>
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 o'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.
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
<PAGE>
(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 m the
outside boundary of the Retail Development. This Section 4.8 shall not apply to
any competing business which
SEE ATTACHED RIDER FOR INSERTS
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
<PAGE>
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,
<PAGE>
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.
(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. SEE
ATTACHED RIDER FOR INSERTS 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.
<PAGE>
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.
<PAGE>
(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. SEE ATTACHED RIDER
FOR INSERTS 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
<PAGE>
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. SEE ATTACHED RIDER
FOR INSERTS
Section 7.3. Sales and Rent Tax. (deleted)
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 Tenantl. 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
<PAGE>
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
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
<PAGE>
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. !n particular, if Tenant uses the Leased 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, ~ 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. SEE
ATTACHED RIDER FOR INSERTS
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
<PAGE>
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.
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
<PAGE>
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. (deleted) in accordance with the
working drawings originally approved by Landlord or with (at Landlord's sole
election) new drawings prepared by Tenant and acceptable to Landlord and tenant.
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 SEE ATTACHED RIDER FOR INSERTS
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 (1 80) 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.
<PAGE>
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 (1 80) days or 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 Xl
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 Xl. Notwithstanding the
provisions of this Article Xl 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
<PAGE>
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.
(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
(deleted)
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. SEE ATTACHED RIDER FOR INSERTS (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/lOOths 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 Xl, 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
<PAGE>
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.
(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 1 2.1 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
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
<PAGE>
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 1 2.5. 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 ac attorney-in-fact for Tenant, to execute and deliver such certificate,
statement, instrument or financing statement.
<PAGE>
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. (deleted)
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 20.1 2 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. SEE ATTACHED RIDER FOR INSERTS
Section 13.3. Advertisements.
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
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.
<PAGE>
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)
<PAGE>
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 "~ 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". SEE ATTACHED RIDER FOR INSERTS
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 by 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) (deleted)
(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, t9gether 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.
(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
<PAGE>
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.
le) 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 equaling 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 6f 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.
(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 become 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).
<PAGE>
(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.
(II 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.
(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 ~.), 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.
<PAGE>
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 even 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 20.1 3 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.
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.
<PAGE>
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.
SEE ATTACHED RIDER FOR INSERTS
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
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.
<PAGE>
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 it if 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. SEE ATTACHED RIDER FOR INSERTS
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.
<PAGE>
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 app6rtioned to food
court grease traps will be paid by food court tenants as part of the food court
common facilities expenses.
ARTICLE XX
MISCELLANEOUS
Section 20.1. Entire Agreement. This Lease together with the Exhibits,
attached hereto and incorporated herein contains the entire agreement between
the parties hereto and there are no promises, agreements, conditions,
undertakings, or warranties, or representations, oral or written, express or
implied, between them other than as herein set forth. No change or modification
of this Lease or of any of the provisions hereof shall be valid or effective
unless the same is in writing and signed by the parties hereto. No alleged or
contended waiver of any of the provisions of this Lease shall be valid or
effective unless in writing signed by the party against whom it is sought to be
enforced.
Section 20.2. Notices. No notice or other communication given under this
Lease shall be effective unless the same is in writing and is delivered in
person or mailed by registered or certified mail, return receipt requested,
first class, postage prepaid, or delivered by Federal Express or a comparably
reliable national air courier service (i.e., one which delivers service in at
least 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.
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
<PAGE>
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.
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.
<PAGE>
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.
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.
<PAGE>
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 6nly 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.
In confirmation of their agreement to enter into this Lease(including the
Data Sheet, Articles I to XX. 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 TAUBMAN AUBURN HILLS ASSOCIATES
LIMITED PARTNERSHIP, a Delaware
Partnership
TOYS INTERNATIONAL, INC.
A California corporation
ACKNOWLEDGEMENT OF LANDLORD
STATE OF
COUNTY OF
On this 25th day of June 1998, before me personally appeared Dennis Hecht
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 TAUBMAN
AUBURN HILLS ASSOCIATES.
Notary Public: Dorothy Klusek
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C-1
Exhibit "C"
Preface
Landlord's Work - White Box Work to be performed by Landlord in
constructing the Leased Premises shall be limited to those items expressly set
forth below in this Section II of this Exhibit C as "Landlord's Work". (deleted)
All other items of work, including the purchase and installation of all
materials and equipment necessary for Tenant's use of the Leased Premises, shall
be provided by Tenant at Tenant's sole expense, and shall include, but shall not
be limited to, those items set forth in Section III of this Exhibit as "Tenant's
Work". The building in which the Leased Premises are a part shall be designed by
the architect and engineer retained by the Landlord to design and oversee
construction of the Shopping Center (herein sometimes referred to as the
"Project"). Construction shall meet the requirements for a fully sprinklered
building in accordance with the fire protection and building code program of the
local jurisdictional authority as well as any development agreement and master
declaration governing the Project, if applicable. Landlord shall provide Tenant
with Tenant Handbooks (Tenant Design Criteria) hereinafter referred to as the
"Tenant Handbooks".
Except as otherwise provided below, Landlord shall initially construct the
following:
A. BUILDING SHELL WORK WITHIN AND AROUND THE LEASED PREMISES
1. Shell. Landlord shall construct the building shell (building
structure, insulated roof and exterior walls) in which the Leased
Premises are to be located. It is expressly agreed and understood
that the Leased Premises shall constitute a portion of a covered
mall building.
2. Exterior appurtenances. Public entrance features, canopies and
screen walls at the exterior of the building structure shall be
provided by Landlord in locations and of a design and in materials
deemed appropriate by Landlord.
3. Outside Walls. If the Leased Premises abut an exterior wall and
such wall is (a) masonry or pre-cast panels, then the wall shall be
unfinished on the interior or furred and finished with gypsum
board, if located in sales area; (b) metal studs, then the wall
shall be metal studs with insulation, and interior 5/8" gypsum
board taped, sanded to 1 2'O" above the concrete floor as shown on
the tenant shell drawing.
4. Demising Partitions. Landlord shall install heavy gauge metal demis
-ing studs,
16" or 24" on center, with 5/8" gypsum board on walls dividing the
Leased Premises from other premises, to a minimum of 1 2'O" above
slab and ready to paint. Such walls shall be configured in a way to
allow installation of Landlord's smoke venting system or HVAC
return air clearances, if required. Corridor walls shall, on
Tenant's side, receive drywall, rated where required, taped,
spackled and ready to paint. Sound barrier batt insulation shall be
installed in all demising partitions for tenants whose operations
include services with noise levels higher than typical, as
determined by Landlord (including, but not limited to, food service
tenants and arcades).
5. Neutral Pier. Where Landlord desires, a vertical demising strip may
be located at the storefront line between stores. The center line
and/or back side of said strip may or may not precisely coincide
with the lease line defining the Leased Premises.
6. Stockroom Walls. Landlord shall furnish and install metal studs 1
6" or 24" on center, with gypsum board on both sides to a height
aligned with the underside of adjacent steel joists or as required
to maintain HVAC return air clearances, taped, spackled and ready
to paint. Landlord shall locate the stockroom wall in the Leased
Premises so that the Leased Premises are configured approximately
85% sales area to approximately 15% stock area.
7. Exterior Service/Exit Door. Where the Leased Premises abut an
exterior wall or interior exit corridor, Landlord shall install one
(1) 3'O" X 7'O" 1-3/4" hollow metal door and frame (with 1 1/2 pair
butts and temporary lockset), if required by Code or Landlord's
insurance carrier. The outside face of door will be
<PAGE>
C-2
finished by Landlord to match adjacent construction and shall not
be modified by Tenant. The location of such door will be indicated
on the Space Layout Drawing (as defined herein). Tenant's store
name and space number will be applied adjacent to the door by
Landlord, per Landlord's architect's specifications and shall not
be modified by the Tenant.
8. Interior Service/Exit Door. Where the Leased Premises abut an
exit/service corridor, Landlord shall install one (1) 3'0" X 7'0" x
1-3/4" hollow metal door and frame (with 1 1/2 pair butts and
temporary lockset), if required by Code or Landlord's insurance
carrier. The hollow metal door and frame are to be finish painted
on the corridor side with a color selected by Landlord. Tenant's
store name and store number will be applied adjacent to the door by
Landlord, per Landlord's architect's specifications and shall not
be modified by the Tenant.
9. Floor Slab. Landlord shall furnish a 4" thick slab on-grade, with
smooth trowelled concrete surface. The floor elevation from the
storefront lease line to 4'0" within the space will be
approximately 3/4" below the finished floor elevation in the mall
areas adjacent to the Leased Premises. The floor slab shall be
designed for a maximum bearing capacity of 1 25 lbs. per square
foot.
10. Storefronts and Sign Bands. Landlord shall design and construct
Tenant's storefront and sign band. The storefront lease line, as
established by Landlord, shall be the line beyond which no element
of the storefront may extend but may not necessarily follow the
line of construction. The storefront furnished by Landlord shall
include one entry, complete with gypsum board soffit and security
closure. The width of the security closure will be as follows:
Storefront width up to 25' 8' wide
Storefront width 26'- 35' 10' wide
Storefront width 36' and up 12' wide
SEE ATTACHED RIDER FOR INSERTS
The above storefront width may vary with specific location
restrictions. Refer to Space Layout Drawing for exact opening size.
11. Ceiling Grid. Landlord shall provide a 2' X 4' T-bar open grid
defining the ceiling plane, which shall meet the requirements of
the Landlord's smoke venting system, if required. Tenant shall not
alter the degree of openness of the ceiling grid.
12. Exposed Construction. All exposed construction shall be painted
in a color approved by Landlord, including, but not limited to, all
steel construction, metal deck, ductwork, conduit, junction boxes,
etc.
B. FINISH WORK OUTSIDE THE LEASED PREMISES
1. Exterior Areas. Landlord shall provide parking areas, access roads,
delivery areas, drainage systems, walks, ramps, lighting,
landscaping and planting, striping, signage, and other facilities
and improvements, all as determined by Landlord, in the exterior
common area.
2. Interior Areas. Landlord shall provide enclosed air-conditioned and
lighted malls, courts and entry-ways, lighted delivery areas,
service and exit corridors, ramps, public restrooms, meter and
valve rooms and all other areas, facilities and buildings used in
the maintenance and operation of the Project, all as determined by
Landlord.
C. BUILDING UTILITY SYSTEMS SERVING THE LEASED PREMISES
1. Mechanical. An air conditioning system (the "HVAC System") shall be
designed and installed by Landlord in the Leased Premises in accordance with the
requirements of Jurisdictional Codes. The HVAC System may be a central variable
air volume, fixed temperature system serving multiple tenants or, as determined
by Landlord or may be individual packaged roof-top units delivering constant
volume, variable temperature air directly to the Leased Premises, at Tenant's
sole cost and expense in accordance with the schedule set forth on Exhibit CC,
attached hereto. The HVAC System shall include ducts, outlets, grilles and
controls.
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1 C-4
2. Electrical. Landlord shall install an electrical system for the Leased
Premises of the size and capacity described in the Tenant Handbooks. The
electrical system shall include 480 volt 3 phase 3 wire service, provisions for
metering, conduit, conductors, 480 volt panel, or disconnect switch, as
determined by Landlord, power transformer, 1 20/208 volt panel and distribution
wiring to Landlord supplied lights, outlets, and other accessories described
below. Landlord shall install 2' X 4' fluorescent lay-in light fixtures based on
an average of one fixture per 80 square feet of sales area and two tube strip
fluorescent lighting based on an average of one fixture per 1 50 square feet of
stock area. All fluorescent lighting shall be 3 lamp, glare-free type fixtures
recessed and shielded with 1 8 cell metal parabolic cube reflectors. Exit signs
and emergency lights shall be provided to meet Code. Landlord shall provide
duplex outlets in demising walls up to one outlet every 40 feet on center.
Landlord shall provide one 20 amp dedicated sign circuit with junction box to be
located at the front entry of the Leased Premises, and one 20 amp dedicated cash
register circuit and storefront soffit lighting wired to Tenant's electric
panel. Additional duplex outlets may be provided by Landlord, at Tenant's
expense.
3. Toilet Room. If required by Landlord or Codes, Landlord shall install
complete restroom facilities, including water, sanitary sewer, vent, plumbing
fixture, toilet exhaust and specialty items, conforming to applicable Code and
ADA requirements.
4. Sprinkler System. Landlord shall install a hydraulically calculated fire
protection sprinkler system in the Leased Premises which shall include risers,
bulk mains, cross mains, branch lines and upturned sprinkler heads at the bar
joists. The quantity of heads provided by Landlord will be no less than that
required by Code.
5. Telephone System. Landlord shall provide telephone service closets at
various locations throughout the Project. Tenant, at Tenant's sole cost and
expense, shall extend service from the service closets to the Leased Premises.
Routing of the service by Tenant shall be through Tenant's rear service
corridor, in Landlord-supplied bridle rings. If Tenant does not have an adjacent
service corridor and/or the adjacent corridor does not abut a telephone room, a
conduit shall be provided by Landlord from the Leased Premises or adjacent
corridor to a corridor adjacent to a telephone room.
6. (deleted)
D. GENERAL PROVISIONS
1. Minor changes in plans or specifications covering Landlord's Work which
may be necessary during design and construction of the Project or affecting the
Leased Premises shall not in any way invalidate the terms of the Lease or
Section II of this Exhibit C, nor shall any such change require Landlord to
provide any work not described herein.
2. Landlord shall have the right to specify or change the location, either
before or after construction, of all utility lines, ducts, drains, sprinkler
mains and valves, and such other facilities within the Leased Premises, as is
made necessary by engineering design and/or Code requirements. The items
described above shall be located so as not to materially interfere with Tenant's
use of the Leased Premises (as permitted hereunder). Landlord shall have the
right to relocate and specify the location of mechanical and other equipment on
the roof over the Leased Premises.
3. (deleted)
4. Landlord shall have the right to perform, at Tenant's expense, any of
Tenant's Work which, Landlord determines, in its sole discretion, must be
performed (a) immediately and/or on an emergency basis for the best interest of
The Project, (b) to the extent required for Landlord's compliance with Code, or,
(c) to the extent necessary to obtain any certificate of occupancy required by
the Landlord or any other tenant in the Project.
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GREAT LAKES CROSSING
EXHIBIT "C-i"
UTILITIES
(Attached to and forming a Dart of Exhibit C and Exhibit D; Section
references correspond to the Section numbers set forth in Exhibit C and/or
Exhibit D, as noted.)
EXHIBIT C, SECTION C: LANDLORD'S WORK
A. Building Utilities and Services
1. Points of connection, for Tenant's use, to the following utilities in
locations and sizes determined by Landlord.
a.Tenants designated to receive Central Air Conditioning Supply System
(areas defined on leasing plans and Exhibit "A" of this Lease).
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1. Sanitary sewer stub.
2. Plumbing vent stub.
3. Domestic cold water stub.
4. Fire protection sprinkler system main and basic sprinkler grid.
5. Air conditioning supply duct stub.
6. Main temperature control communications loop.
7. Toilet exhaust header duct stub.
8. Central electric utility company distribution centers (480/3PH, 3W, 60HZ).
9. Central telephone company distribution boards.
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b. Tenants designated to install individual heating, ventilating and air
conditioning systems (areas defined on leasing plans and Exhibit "A"
of this Lease).
1. Sanitary sewer stub.
2. Kitchen waste system sewer stub (if applicable).
3. Plumbing vent stub.
4. Domestic cold water stub.
5. Fire protection sprinkler system main and basic sprinkler grid.
6. Central gas utility company metering manifolds.
7. Central electric utility company distribution centers (480/3PH,3W,
60HZ).
8. Central telephone company distribution boards.
EXHIBIT D. SECTION II: CRITERIA - TENANT'S WORK.
The requirements, criteria, and/or outline specifications as set forth herein
represent minimum standards for the design, construction, and finish of the
mechanical and' electrical systems, whether designed and/or built by Landlord or
Tenant, unless otherwise indicated in specific Lease Agreements.
A. Mechanical
1.Plumbing:
a. Plumbing fixtures and accessories shall be of commercial quality and
shall be of a water-conserving type.
b. Water heaters shall be electric, except Food and Beverage Service
tenants where gas units may be permitted.
c. Floor drains shall be provided in toilet rooms and kitchens and /or food
service areas.
d Food and Beverage Service tenants will be required to pipe certain
fixtures into the "Kitchen Waste System" in accordance with code. Subject
tenants will be required to pay their proportionate share of all costs involved
in service, maintenance, repairs and/or replacement of the "Kitchen Waste
System."
e. Food and Beverage Service tenants shall further provide gas service and
branch line extension from the gas meter center to and within the Leased
Premises.
f. Food and Beverage Service tenants (and certain other high water volume
users) shall provide a water meter (calibrated in gallons) in an easily
accessible location (or, at Landlord's direction, Tenant will install a remote
reader device).
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2. Heating, Ventilating, and Air Conditioning:
a. Tenants designated to receive Central Air Conditioning Supply System
(areas defined on leasing plans and Exhibit "A" of this Lease).
(i) The Leased Premises are served from a centrally conditioned
air supply system installed by Landlord, which will deliver, during
regular Shopping Center business hours, filtered, cooled air at a
fixed temperature and variable volume. The system is designed to
maintain the Leased Premises at 760F. + 20F. DB and 50% RH + 5% RH,
when outdoor temperature is 900F. DB and 730F. WB, and Tenant's total
internal sensible and latent heat gain does not exceed 1 9 BTU/hour
per square foot of Leased Premises.
(ii)Landlord has provided cooling at a rate no less than 325 sq.
ft. per ton which includes ventilation and building construction
loads.
(iii)Tenant shall provide its own supplementary electrical
heating equipment, should additional heating be required for the
Leased Premises.
(iv)Landlord will furnish, for installation by Tenant within its
Leased Premises, Variable Air Volume Control Device(s), with electric
heat, electronic operator and thermostat for same (collectively, VAV
Device Sets). Tenant shall design and install the air distribution
system for its Leased Premises, using the VAV Device Set(s), in
accordance with Standard Project Details.
(v) Tenant shall provide opening(s) in the partitions defining
Tenant's Leased Premises (party walls) for the transfer of the return
air/smoke exhaust to its respective Central System Air Handling
Unit/smoke exhaust fan. Location(s) in ceiling space, details, height
and sizing of the return air/smoke exhaust opening(s) will be
determined by Landlord.
(vi)Tenant shall provide exhaust fans to satisfy exhaust
requirements for toilet rooms and for removal of heat or odors
generated within the premises. Exhaust fans shall be located within
the Leased Premises. Exhaust air discharge shall be restricted to
exhaust duct locations designated by Landlord.
(vii)Standards of design and construction shall be in accordance
with latest ASHRAE and SMACNA Guides for all ductwork.
b. Tenants designated to install individual heating, ventilating and air
conditioning systems (areas defined on leasing plans and Exhibit "A" of
this Lease:
(i) Each tenant shall provide its own individual system (i.e.,
heating, ventilation and air-conditioning equipment and controls,
ducts, insulation, water supply, venting and drainage, fresh air
supply and return, exhaust and make-up air, smoke control,
dehumidification and humidification equipment, water saving equipment
and all structural, plumbing and electrical work related thereto). All
equipment shall bear UL label.
(ii)All equipment shall be contained within Tenant's premises
except rooftop air-conditioning or condensing units, make-up air
units, and hood exhausters. Such equipment located on the roof shall
only be located in areas designated by the Landlord to specified
heights, and in accordance with Landlord's standard details for
roof-mounted equipment. All power wiring, control wiring and
refrigerant piping shall be installed in ceiling space and extended
through roof adjacent to the equipment.
(iii)Tenant's air handling units shall be floor-supported in
Tenant's space independent of Landlord's structural system (where
applicable).
(iv)All process exhausts, hood exhausts, equipment vents, and
other contaminated exhausts permitted by Landlord shall discharge
vertically to the atmosphere, and be located a minimum of 20 feet
horizontally from any fresh air intakes, properly dispersing odors or
fumes away from same.
(v) All supply and fresh-air ductwork shall be insulated. Space
between ceiling and structure shall not be used as a return air
plenum.
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(vi) All air supplied to Tenant's area by its equipment shall not
migrate to the public mall or adjacent spaces.
(vii) Standards of design and construction shall be in accordance
with latest ASHRAE and SMACNA Guides.
(viii) Tenant shall provide all process requirements, hood
exhausts, make-up air supplies, equipment vents and other contaminated
exhausts. When permitted by Landlord, they shall extend in ductwork
through the roof. Ductwork which passes through exit corridor walls
shall be completely segregated from the exit corridor, with one-hour
fire rated construction enclosures.
(ix)Tenant roof equipment shall be located in areas designated by
Landlord to specified heights and in accordance with Landlord's
standard details for equipment on the roof.
(a) Should weight or location of equipment by Tenant require
supports, screens, cat walks or roof hatch and ladder, they shall
be provided by Tenant in accordance with standard details.
Landlord shall determine when and where the above shall be
required.
(b) All above equipment shall be finish painted in
accordance with Landlord's paint schedule and specifications.
(c) Tenant's roof equipment shall be clearly identified with
Tenant's name.
(x) If a smoke control system for the Project is
required and is to be an interrelated, centrally controlled
installation, Tenant shall design and install a smoke
control system within Tenant's premises which meets all
applicable codes and is fully compatible with Landlord's
central smoke control system, as determined by Landlord.
Landlord and Tenant shall provide to each other a set of dry
contacts (normally open and normally closed) signaling
detection of fire, smoke and/or waterflow in each respective
space.
B. Electrical
1. Power available for the Leased Premises is 480 volt, 3;phase, 3-wire.
2. Installation or modification of the existing system shall conform to the
following:
a.Dry-type transformer (if required) shall be used for all 1 20/208.volt
requirements.
b.Panelboards shall be designed for 20% minimum spare ampacity (based on
connected load) and 20% spare breaker space.
c.All electrical wiring systems shall be in conduit. The' use of "BX" or
"Romex" is not permitted.
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Exhibit "CC" Central Air Conditioning SUDDIV System
Some tenants, determined by Landlord, have been designated to receive a Central
Air Conditioning Supply System delivering cooled, filtered, high velocity air to
a supply air duct stub, at fixed temperature and variable volume during regular
Shopping Center hours as determined by Landlord. The Central Air Conditioning
Supply System will be installed by Landlord on behalf of Tenant. Landlord shall
initially design and construct all heating, ventilating, and air conditioning
systems within or directly related to the Leased Premises, proceeding from the
supply air duct stub.
Operating Costs and expenses
From and after the date the space is delivered to Tenant, Tenant agrees to
pay Landlord an amount, determined by Landlord's Engineer in the manner
hereinafter provided. Said amount shall include Tenant's share of all costs and
expenses incurred by Landlord on Tenant's behalf in connection with said system,
including but not limited to the costs and charges for operation,
administration, electricity, insurance, repairs, replacement, maintenance and
property taxes.
Charges will be computed by multiplying the floor area of the Leased
Premises by the applicable amounts shown in this schedule.
Annual
Floor Area of VAC Charge Rate
Leased Premises Schedule
$2.95
2.92
2.88
2.84
2.81
2.77
2.74
2.70
2.66
2.62
2.59
2.55
2.51
2.48
2.44
2.40
2.36
2.33
2.29
2.2~
2.18
2.14
2.10
2.07
SEE ATTACHED RIDER FOR INSERTS
The annual amount, hereinafter termed "Annual Ventilating and Air Conditioning
Charge" or "Annual VAC Charge," will not include costs incurred by Tenant for
maintenance or operation of equipment installed by Tenant. The base Annual VAC
Charge is determined by a unit rate per square foot floor area of the Leased
Premises from the "Annual VAC Charge Rate Schedule," and, when established in
accordance with Landlord's requirements and approval, shall be paid by Tenant to
Landlord in accordance with the following Section 1. Section 2 provides the
basis for adjustment to the Annual VAC Charge rate, if Tenant's design load
exceeds the Landlord's base standards. Section 3 provides the basis for
adjustment to the Annual VAC Charge rate for increases to the operating
variables.
Up to 250 square feet 251 to 500 square feet 501 to 750 square feet 751 to
1,000 square feet 1,001 to 1,250 square feet 1,251 to 1,500 square feet
1,501 to 1,750 square feet
1.751to 2,000 square feet 2,001 to 2,500 square feet 2,501 to
3,000 square feet 3,001 to 3,500 square feet 3,501 to 4,000 square feet
4,001 to 4,750 square feet 4,751 to 5,500 square feet 5,501 to 6,250 square
feet 6,251 to 7,000 square feet 7,001 to 7,750 square feet 7,751 to 8,500
square feet 8,501 to 9,250 square feet 9,251 to 10,000 square feet 10,001 to
12,500 square feet 12,501 to 15,000 square feet 15,001 to 17,500 square feet
17,501 to 20,000 square feet Over 20,000 square feet
<PAGE>
a. For the purpose hereof, the term "Base Unit Rate" shall be the rate
determined from the Annual VAC Charge Rate Schedule, by using the total square
foot floor area of the premises.
b. The term "Actual Unit Rate" shall be the rate after the Base Unit Rate
has been adjusted as provided by Section 2 hereof.
c. The Actual Unit Rate is then multiplied by the total square foot floor
area of the premises. The product is the Annual VAC Charge which shall be.
divided into twelve (1 2) equal monthly installments hereinafter designated as
the Monthly VAC Charge.
2. Design Load Adjustment
a. The Base Unit Rate for VAC service has been developed in part from the
Design Criteria which also includes a maximum electrical heat producing load of
21 BTU per hour per square foot or 6 watts per square foot.
<PAGE>
The Base Unit Rate shall be increased by thereof for each watt per square
foot or maximum six (6) watts per square foot, Engineer.
ten percent (10%) or the fraction thereof in excess of the all as
determined by Landlord's
b.The Actual Unit Rate shall initially be determined by inspection of
Tenant's Store Working Drawings. Landlord shall have the right to inspect the
Leased Premises, and, in the event "As-Built" lighting and heat producing
equipment exceeds loads indicated on initial working drawings, Landlord will
adjust Actual Unit Rate on the basis of the above formula.
3. Operating expense Adjustment
a. The Base Unit Rate for VAC has been developed as follows:
i. Electrical Energy: An average unit cost of electricity per kilowatt
hour, including energy charge, demand charge, fuel adjustments and taxes, from
applicable Detroit Edison Company rates and tariffs, with base rates effective
January 22, 1 994 and surcharges effective January 1, 1 997.
ii.All Other Expenses: All costs and expenses for operation,
administration, insurance. repairs, replacement, maintenance and property taxes
accrued to said system, in effect as of January 1, 1 997.
b. The VAC Charge shall be adjusted from time to time in accordance with
the following provisions:
i. Eighty percent (80%) of the Actual Unit Rate shall be increased by a
percentage equal to the percentage increase in the previously defined average
cost of electrical power per kilowatt hour.
ii.Twenty percent (20%) of the Actual Unit Rate shall be increased during
each annual period by a percentage equal to the percentage increase from the
base period of 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.
iii. Landlord shall have the right to adjust retroactively and increase VAC
charges for preceding periods. The adjusted Actual Unit Rate shall become the
applicable rate until further adjusted by Landlord.
<PAGE>
D-1
Exhibit "D~ Preface
Tenant's Work - White Box
This Exhibit D is intended to describe the obligations of the Tenant in the
design and construction of the Leased Premises. Landlord's work will be limited
to the work described in Exhibit C. Landlord's work for Tenant in this Exhibit D
will be accomplished by Landlord at Tenant's expense. The work of Tenant
described in Exhibit D is intended to provide for the Leased Premises to be
finished in accordance with Tenant's drawings as approved in writing by Landlord
and to complete the Leased Premises to a finished condition ready for the
conduct of business therein. All finished installation will be deemed incomplete
until approved by Landlord.
Landlord and Tenant have a common interest in opening the Leased Premises on the
Grand Opening Date. To this end, Landlord will coordinate its work with Tenant's
work insofar as the schedule for such Grand Opening Date and prudent
construction practice will allow and will assign one or more tenant coordinators
to function as liaison between tenants and Landlord. Further to this end, Tenant
and Tenant's contractors agree to abide by Landlord's Construction Rules and
Regulations which may be issued from time to time. In order to insure that the
Tenant's store interior, and signage design are orderly and aesthetically
coordinated with Landlord's building, and to insure that Landlord's storefront
and signage requirements are understood by tenants, their designers, engineers,
contractors, and other representatives, Landlord has drafted and Tenant shall
follow the architectural and signage criteria established in the Tenant Handbook
(Tenant Design Criteria) hereinafter referred to as "Tenant Handbook". In order
to insure that the Tenant's HVAC, plumbing and electrical systems are compatible
and coordinated with the Landlord's building, and to insure that the Landlord's
HVAC, plumbing and electrical requirements are understood by tenants, their
designers, engineers, contractors, and other representatives, Landlord has
drafted and Tenant shall follow the mechanical and electrical criteria
established in the Tenant Handbook.
All Tenant construction shall be in accordance with the requirements of all
applicable codes, ordinances, rules and regulations of all authorities having
jurisdiction over the work including all requirements of the Landlord's
insurance carrier. Construction shall conform to the requirements for a fully
sprinklered building in accordance with the fire protection and building code
program of the local jurisdictional authority as well as the Development
Agreement and Master Declaration governing "The Project", if applicable. Tenant
shall secure all necessary permits including, but not limited to occupancy and
health department permits from the jurisdictional authorities in sufficient time
to allow Tenant to open the Leased Premises on the Grand Opening Date. Tenant
shall furnish to Landlord upon receipt, copies of all building permit
applications, statements, amendments and the like, and all permits, inspection
reports, certificates, and other documents as required by authorities having
jurisdiction over The Project.
Tenant, at its sole cost and expense shall perform all work, other than work to
be performed by Landlord as set forth in Exhibit C, required to complete the
Leased Premises to a finished condition ready for the conduct of business
therein.
Exhibit D shall govern over any inconsistencies with Exhibit C.
All of Tenant's work within the Leased Premises performed pursuant to this
Section I shall, for the purpose of this Lease to which this Exhibit is
attached, be deemed to be improvements made to the Leased Premises by Tenant at
Tenant's expense.
A. GENERAL CRITERIA
The criteria and outline specifications set forth herein represent
minimum standards for the design, construction, and finish of the Leased
Premises by Tenant.
1. Jurisdictions and Codes. The project is being developed in and
under the jurisdictions of the State, County, and the City in which
The Project is located. All design and construction work shall
comply with all applicable statutes, ordinances, regulations, laws
and codes and the requirements pertaining to service and utilities
furnished by utility companies, all applicable state, county, and
local statutes and ordinances, and OSHA regulations.
2. Permits and Approval. Prior to the commencement of construction,all
building and other permits shall be obtained and posted in a
prominent place within the
<PAGE>
D-2
Leased Premises. Landlord's written approval shall be obtained by Tenant
prior to the undertaking of any construction work which deviates from Tenant's
approved Store Working Drawings and Specifications, or which modifies whatsoever
Landlord's building shell or utilities, or any work not explicitly shown on said
Store Working Drawings and Specifications. Landlord's approval of the foregoing
shall not constitute the assumption of any responsibility by Landlord for the
accuracy or sufficiency thereof, and Tenant shall be solely responsible.
3. Floor Loads. The slab on-grade has been designed to support a
uniformly distributed superimposed load (dead plus live) of 1 25
pounds per square foot:. The allowable concentrated load which can
be placed on a contact area with a 4" radius is 2,000 pounds. Any
loading imposed by any of Tenant's work, either on a temporary or
permanent basis, shall not exceed 1 25 lbs./s.f. ("Allowable
Load").
4. Standard Project Details. Standard Project Details, as issued by
Landlord's Architect from time to time and as they pertain to
Tenant Work, shall govern with respect to Tenant's Work. Such
details shall be incorporated into the Tenant's Store Working
Drawings and specifications for the Leased Premises.
5. Materials. Only new, first-class materials shall be used in the
construction of the Leased Premises. Used, first-class materials
for interior architectural facades and fixture may be used provided
such materials are noted on the Tenant's plans and approved by
Landlord through field inspection.
6. Field Conditions. From time to time Tenant is obligated to verify
conditions pertaining to the Leased Premises prior to and after
commencement of construction of its Leased Premises. Tenant shall
coordinate its work with the work of Landlord, other tenants, and
with existing conditions above, below and adjacent to the Leased
Premises. Tenant shall make changes as required to accommodate such
work or conditions.
7. Tenant Handbook. Landlord shall provide Tenant with the Tenant
Handbook and Tenant shall comply with all design criteria
procedures for drawings, specifications, and construction, and
other rules, regulations and provisions therein. To the extent, if
at all, that the Tenant Handbook may conflict with the provisions
of this Exhibit D, the provisions of the Tenant Handbook shall
govern.
B. ARCHITECTURAL FINISHES
1. Floors. Tenant finish floor covering materials must be selected and
adapted in thickness to correspond in elevation exactly with the level of the
finished mall floor, which will be approximately 5/8" above the concrete floor
of the Leased Premises at the lease line. Quality floor materials, such as
carpeting, glazed or unglazed tile, wood parquet or marble, shall be used in the
sales area of the Leased Premises. All flooring finish materials are subject to
Landlord's approval.
2. Storefront. Tenant's storefront will be designed and constructed by
Landlord as provided in Exhibit C and as described in the Tenant Handbook.
3. Interior Partitions. All interior partitions by Tenant within Tenant
Premises shall be metal stud with gypsum board construction, and shall be
finished on all sides with taped and spackled joints. No partitions may extend
above 1 2'-0" from the concrete floor without Landlord's prior written approval.
Any combustible materials applied to partitions shall meet all flame spread and
smoke generation requirements retardant coating if required by code. Any Tenant
penetrations of rated partitions shall be specifically approved in writing by
Landlord and governing authorities as a portion of the permitting process.
Subject to Landlord's approval, Tenant may install drywall to a higher level if
openings of sufficient size are provided to assure that the smoke venting system
provided by Landlord functions as designed - see Tenant Handbook for specific
requirements. ---
4. Demising Partitions. Demising partitions are not load bearing and Tenant
may not hang fixtures from them. Should Tenant require structure and/or backing
to accommodate the loading of Tenant's wall hung fixture, said request shall be
<PAGE>
D-3
in writing to Landlord for approval. Additional structure and backing shall
be furnished and installed by Landlord at Tenant's expense.
No drywall shall be placed on demising partitions above 1 2'-0" without
Landlord's specific approval. Above 1 2'-0", Tenant may, subject to Landlord's
prior written approval, continue with wire mesh for security purposes if so
indicated on Tenant's construction drawings. Tenant may, with Landlord's
approval, also install drywall to a higher level if openings of sufficient size
are provided to assure that the smoke venting system provided by Landlord
functions as designed.
5. Service and Exit Corridor Partitions. Any Tenant penetrations of rated
partitions, and relocations and/or additions to Landlord furnished exit doors,
shall be specifically approved in writing by Landlord and governing authorities
as a portion of the permitting process. Any framing, cutting, and patching of
the corridor wall surfaces including the building of vestibules to provide for
the nonimpingement of the door into the corridor traffic way, and other work
related thereto shall be coordinated and consistent with Landlord's work,
including but not limited to the provision of 4'-0" high 1/4" masonite board and
metal corner guards.
6. Additional Interior Service/Exit Corridor Doors; If Tenant desires
additional service access to Leased Premises other than what is provided by
Landlord in Exhibit C, then Tenant shall provide and install a 3'-0" x 7'-0" x
1-3/4" 18 gauge interior hollow metal door, labeled as required, with a hollow
metal 1 6 gauge frames, and all hardware, in accordance with governing codes.
Any framing, cutting, and patching of the corridor wall surfaces including the
building of vestibules to provide for the non-impingement of the door into the
corridor traffic way, the other work related thereto shall be the responsibility
of the Tenant. Hollow metal door and frame are to be finish painted on the
corridor side with a color selected by Landlord. Tenant's store name will be
applied adjacent to the door by Landlord, at Tenant's expense, per Landlord's
Architect's specifications.
7 Door Relocation. The relocation of any exterior Tenant door shall be
performed by Landlord at Tenant's sole expense and must be coordinated with the
structure of Landlord's building.
8. Door Hardware. Tenant shall furnish and install all door locks and exit
devices on all interior service doors, exterior doors, exit corridor doors, and
storefronts that are furnished and installed by Tenant, using hardware
recommended by Landlord in the Tenant Handbook. Tenant shall be responsible to
install any special emergency detex locks or locking systems Tenant may desire
on all doors in addition to locking system provided by Landlord in Exhibit C.
9. Ceiling. Any modifications related to ceilings provided by Landlord in
Exhibit C, shall be the responsibility of Tenant. All ceilings and ceiling
treatments shall be of noncombustible material approved by Landlord and shall
maintain the degree of openness required to preserve the operation of the smoke
venting and sprinkler systems in The Project as established by the
jurisdictional authority and/or as described in the Tenant Handbook.
Tenant's ceiling shall be limited to a ceiling height not less than the
Code required minimum, nor higher than the maximum heights indicated in the
Tenant Handbook. The structure of Landlord's Building has been designed to
accept a superimposed uniform load of three (3) pounds per square foot for the
installation of Tenant's ceiling treatment, including lights. Tenant ceiling
treatment installations weighing more than three (3) pounds per square foot
shall be considered a proposed "modification", under the terms of "Section C,
Structural". All structure hung individual loads in excess of 1 00 pounds shall
be specifically approved by Landlord's Structural Engineer for location and
method of support. Access (such as access panels and other openings) shall be
provided by Tenant where Landlord deems necessary.
Tenants providing ceilings with less than the required degree of openness
shall provide smoke venting at Tenant's sole expense both as required by
jurisdictional authorities and as described in the Tenant Handbook.
<PAGE>
D-4
If Tenant's interior partitions and ceiling configuration cause the
requirement of additional sprinkler heads, such additional heads shall be
installed by Landlord's designated contractor at Tenant's expense both as
required by jurisdictional authority and Landlord's insurance carrier.
10. Interior Finishes. All finished interior surfaces must be materials
approved by Landlord for appearance. All Tenant fixtures, furniture, carpeting
(including underlayment), upholstery materials, drapery and other furnishing
must comply with the flammability of materials and smoke generation requirements
for furniture and furnishing requirements of local jurisdictional authorities.
All wood shall be fire retardant in accordance with Landlord and Code
requirements. All wood in contact with the floor shall be termite retardant.
11. Finish Hardware. If Tenant adds additional door(s) other than what is
provided in Exhibit C then commercial grade finish hardware, labeled where
required, shall be used throughout. All doors shall have wall or floor stops,
kick plates, lock sets and push-pull plates as required. All exit doors shall
have hardware as required by Code.
12. Mezzanines. Mezzanines are not permitted.
13. Layout and Painting of exposed Mechanical and Electrical Systems. All
Tenant installed duct work, conduits, pipes and any other mechanical or
electrical equipment exposed to public view from outside the Leased Premises
shall be laid out and installed in a neat and orderly configuration. Tenant
shall paint the above tenant improvements with a color and finish to match
Landlord's finish if such improvements can be seen from Mainstreet above
Tenant's storefront elevation or below the top of the storefront but visible
from Mainstreet.
C. STRUCTURAL
1. Modifications. Any alterations, additions, and/or reinforcements to
the structure of Landlord's building required to accommodate
Tenant's Work, must be designed by a registered structural engineer
at Tenant's expense. Tenant shall leave the structure of Landlord's
building as strong or stronger than original design and with
finishes unimpaired. Tenant's architect shall calculate or have
calculated the structural loads caused by Tenant's improvements and
submit those calculations for written approval by Landlord and
Landlord's Architect prior to Tenant's construction. Landlord
reserves the right to perform such work at Tenant's expense.
2. Loading. All loads individually hung from the structure in excess
of 1 00 pounds shall be specifically approved by Landlord's
structural engineer for location and method of support. All loads
less than 100 pounds that are individually hung from the structure
shall be hung in accordance with the guidelines in the Tenant
Handbook.
3. Insulation. Tenants operating food establishments, gamerooms,
arcades, video stores, record and tape stores, pet stores, salons,
and any other category of business designated by Landlord are
required to install a minimum of 2" sound attenuation batt.
D. HEATING, VENTILATING AND AIR CONDITIONING
1. Alterations. All additions and alterations, if any, to the Landlord
provided HVAC system shall be designed by Tenant's Engineer and
submitted to Landlord prior to commencement of Tenant's work and
shall be installed by Tenant at Tenant's sole expense. All HVAC
work shall comply with ASHRAE standards, Tenant Handbook, and
requirements of local codes and jurisdictional authorities.
2. Exhaust/Negative Pressure. All exhaust and make up air systems
shall be by Tenant in accordance with Exhibit D and the Tenant
Handbook. As determined by Landlord, all tenants producing odors
within their premises shall be required to provide supplemental
exhaust to the exterior of the building to keep the premises at a
negative pressure relative to Mainstreet and all adjacent areas.
3. Smoke Venting. If the authority having jurisdiction requires smoke
venting from the Leased Premises because of Tenant additions to
Landlord's work in Exhibit
<PAGE>
D-5
C, Tenant, at Tenant's expense, shall provide the complete required
smoke system. All smoke venting work shall be with Landlord
approval and in accordance with Tenant Handbook.
E. ELECTRICAL
1. Alterations. All additions and alterations, if any, to the Landlord
provided electrical system shall be designed and installed by
Tenant at Tenant's sole expense. All electrical work shall comply
with the National Electrical Code, all local codes, the local
jurisdictional authority and the requirements of the Tenant
Handbook. No appurtenances, including but not limited to light
fixtures, antennas, signs, etc., will be affixed to the exterior
walls or roof of Landlord's Building.
2.
Electrical Construction
a. Material - All electrical materials shall meet National
Electrical Code Standard, unless a better grade is required
by local Code. All materials shall be new and shall bear
evidence of approval by Underwriter's Laboratory (UL). All
conductors shall be copper. Aluminum conductors will not be
allowed.
b. Lighting Fixtures - Recessed fixtures installed in furred
spaces shall be connected by means of flexible conduit and
approved fixture wire, connected to a branch circuit outlet
box which is independent of the fixtures.
c. Fluorescent Fixtures - Additional fixtures to those provided
by Landlord in Exhibit C shall be provided and installed by
Tenant with switch legs and local switches rated 20 amps at
277 volts. All fluorescent fixtures shall have internal
protection devices. Fluorescent ballasts shall be high power
factor type with individual nonresetting overload
protection. Ballast harmonics may not exceed that Total
Harmonic Current Distortion allowable by the electric
utility. All lamps subject to public view shall have warm
white deluxe or better color rendition. Cool white may be
used only in storage areas not exposed to public view.
d. Additional exit signs, lights, and outlets shall be
furnished and installed by Tenant to meet code based on
Tenant's layout and interior partitioning.
F. PLUMBING
1. Alterations. All additions and alterations, if any, to the Landlord
provided plumbing system shall be designed by Tenant's Engineer and
submitted to Landlord prior to commencement of Tenant's Work and
installed by Tenant at Tenant's sole expense. All plumbing work
shall comply with all local codes and the Tenant Handbook.
2. Penetrations. All roof and/or wall penetrations required for
additional Tenant plumbing, mechanical or electrical work that are
above Landlord work as described in Exhibit C and any other
Landlord approved Tenant work shall be made by Landlord's
designated contractor at Tenant's expense in accordance with
Exhibit D and the Tenant Handbook.
G. FIRE PROTECTION SYSTEM
All revisions to the fire protection system required by Tenant's layout
that is above Landlord work as described in Exhibit C shall be performed by
Landlord's sprinkler contractor at Tenant's sole expense. Landlord's sprinkler
contractor shall design system revisions in accordance with Tenant's Store
Working Drawings. Such designs may involve additional heads, relocated heads,
heads in refrigeration boxes, toilet rooms, and kitchen exhaust ducts, and/or at
Tenant's request, heads located to conform with Tenant's ceiling pattern and
layout. All design and construction shall be governed by Code and the
requirements of Landlord's insurance carrier.
Tenants may be required by local code to provide fire extinguishers, at
least one of which is to be installed with in 25 feet of the Tenant's entry off
Mainstreet.
<PAGE>
D-6
Tenant shall arrange directly with the local Telephone Company for
telephone service. The local Telephone Company will bring telephone
service to a point inside the Project. Tenant shall extend service,
furnish, install and maintain telephone wiring and equipment within the
Leased Premises to suit Tenant's requirements at Tenant's expense.
I. SIGNAGE
1. Requirements. Storefront signs must be illuminated during mall hours of
operation.
2. Guidelines. All signs shall be designed, constructed and located in
accordance with Landlord's Sign Criteria, Exhibit E, the Tenant Handbook, and as
approved by Landlord.
3. Suite Number and Tenant Trade Name. Landlord shall furnish and install a
suite number and Tenant trade name of Landlord's design at all exterior Tenant
doors and interior service/exit corridor doors. Landlord shall also install
suite number on the Mall storefront.
J. FIXTURES AND FURNISHINGS
<PAGE>
Tenant shall furnish and install in the Leased Premises all fixtures, equipment,
shelving, trade fixtures, leasehold improvements, interior graphics, signs,
mirrors, cornices, covers and decorative light fixtures, extinguisher as
required by code, and other special effects, all as Landlord.
furnishings, decorations, portable fire approved by
All Tenant improvements, other than mechanical equipment, ceilings, and
lighting fixtures, shall be floor mounted unless written approval is obtained
from Landlord.
K. MISCELLANEOUS REQUIREMENTS
1. Tenant's C6ntractor. Work undertaken by Tenant at Tenant's expense
(a) shall not be awarded to Landlord's contractor without
Landlord's written consent; and (b) may only be awarded to a
reputable and bondable contractor or contractors licensed to do
business in the State where The Project is located. Tenant's
general contractor shall give Landlord a $2,000 security deposit
before commencement of construction. The security deposit will be
held against any damage caused by Tenant's contractor and shall be
refunded when Landlord's construction punch list is completed.
Tenant's contractor shall adhere to Landlord's policy of a drug and
alcohol free workplace.
2. Equipment Screening. Tenants requiring mechanical or electrical
equipment, antennas, and the like shall not have the same placed on
the roof or the exterior of the building without the prior express
written approval of Landlord. Said equipment must be screened from
view of the public if visible from any point within the project
site. All screening materials, construction details, and
construction techniques shall be approved by Landlord in writing
prior to any such work by Tenant.
3. Clean-UD. Tenant shall cause its contractors to maintain the Leased
Premises in a clean and orderly condition during construction. All
unusable shipping containers, packaging, and other debris shall be
broken down and contained within the Leased Premises until removed
on a daily basis by Tenant's contractor to containers provided by
Landlord outside Landlord's Building.
Flammable waste must be confined to covered metal containers until
removed by Tenant. All usable construction material, equipment,
fixtures, merchandise, etc. must always be contained within the
Leased Premises. Malls, courts, arcades, public corridors,
service/exit corridors and the exterior of Landlord's Building
shall be kept clean at all times. If Tenant fails to clean up,
Tenant hereby authorizes Landlord to clean up for Tenant at
Tenant's expense.
WB
<PAGE>
D-7
4. Full Payment. Tenant shall satisfy Landlord that adequate
arrangements have been made to insure that all Tenant's contractors
shall be paid in full for work ordered by Tenant. Tenant is advised
to familiarize itself with the local mechanics lien laws and shall
hold the Landlord harmless for any liens filed against the property
of the Landlord for the work of the Tenant.
5. Character of Employees. Tenant will not employ any unfit person or
anyone not skilled in the work he is performing, or any workman
that is incompatible with the balance of the work force or who will
cause, or whose presence will cause, labor disputes or work
stoppages. In the event any employee(s) of Tenant or Tenant's
contractor(s) causes a labor dispute or work stoppage, Tenant
expressly agrees to have such employee(s) immediately removed from
The Project upon Landlord's request, and that Tenant's failure to
do so shall constitute an Event of Default under the Tenant's Lease
of which this Exhibit is a part.
SECTION 2: PROCEDURE AND SCHEDULES FOR THE COMPLETION OF TENANTS PLANS AND
SPECIFICATIONS
Unless otherwise notified by Landlord, all prints, specifications, and
other material to be furnished by Tenant as herein required shall be sent
to: Tenant Coordinator (Address to be furnished when available). Tenant
shall engage an architect ("Tenant's Architect") registered and licensed
to do business in the State where the Project is located to prepare the
Working Drawings and Specifications to be submitted for Landlord's
approval. The fees for Tenant's Architect shall be paid by the Tenant.
On each occasion that Tenant shall fail to submit or resubmit drawings,
specifications or any amendments thereto within the time periods provided
for in this Exhibit D, and such failure continues for five (5) days
following notice from Landlord that such drawings, specifications or
amendments thereto are overdue, Tenant shall pay to Landlord a fee as
outlined below for additional coordination and other services. The
payment of this fee shall not excuse Tenant from default for failure to
submit or resubmit drawings or specifications and shall not preclude the
exercise of default or other remedies by Landlord.
<PAGE>
Floor Area of Leased Premises
1 ,500 or less sq. ft.
1,501 - 5000 sq. ft.
5,001 or more sq. ft.
A. LEASE OUTLINE DRAWINGS
Applicable Amount
$ 250.00
$ 500.00
$1,000.00
<PAGE>
Following execution of the Lease of which this Exhibit is a part,
Landlord shall furnish Tenant with two (2) prints of the Lease Outline
Drawings (LOD) and a Design Criteria Handbook giving technical and design
information relative to the Leased Premises along with other drawings
that may be helpful to Tenant in the design of its store.
B. STORE DESIGN DRAWINGS
1. Within thirty (30) days of whichever of the following shall be the
later to occur:
(a) receipt of Lease Outline Drawings from Landlord or (b) the
execution of the Lease, the Tenant shall submit to Landlord one (1)
set of reproducible sepia prints and three (3) sets of blueline
prints of Store Design Drawings, showing the intended modifications
of the Leased Premises regarding design, character, and finishes.
The Store Design Drawings shall comply with the design criteria of
the project as described in this Exhibit D and in the Tenant
Handbook and shall set forth the requirements of Tenant within the
Leased Premises. Said Drawings shall include, but not be limited to
the following:
a. Architectural design of the modified space, including an
elevation of Landlord's storefront showing Tenant's signage,
floor plans, elevations, sections and renderings indicating
material and color selections and finishes, and layout
including location of fixtures both permanent and movable.
Provide the weights of all items to be suspended above from
the structure in excess of 100 lbs. each.
wB
<PAGE>
D-8
b. Mechanical System: Any modifications to Landlord furnished
equipment and its location, duct distribution system,
diffuser locations, and any louvers or vents. Louvers or
vents to be provided for Tenant by Landlord at Tenant's
expense. Provide revised mechanical loads on forms provided
by Landlord in the Tenant Handbook.
c. Electrical System: Modifications to Landlord furnished
ceiling grid, lighting fixtures, outlets, and all other
existing electrical equipment. Provide revised electrical
loads on forms provided by Landlord in the Tenant Handbook.
d. Plumbing System: Floor plans showing the modified location,
layout, and type of fixtures being furnished, including
riser diagrams.
e. Fire Protection System: Location of any specialty heads Tenant's
architect may require.
f. Tenant shall identify in writing all intended exceptions to
the design criteria contained in the Tenant Handbook and
this Exhibit D.
2. After receipt of Store Design Drawings, Landlord shall timely
return to Tenant one (1) set of Store Design Drawings with
modifications and/or approval. If, upon receipt of approved Store
Design Drawings bearing Landlord's comments, Tenant wishes to take
exception thereto, Tenant may do so in writing within seven (7)
days from date of receipt of said drawings, by certified or
registered mail addressed to Landlord, at the above address, and
the notice address in the Lease. Unless such action is taken, it
will be deemed that all comments made by Landlord on Store Design
Drawings are acceptable to and adopted by Tenant.
3. If Store Design Drawings are returned to Tenant with comments, but
not bearing approval of Landlord, said Store Design Drawings shall
immediately be revised by Tenant and resubmitted to Landlord for
approval within seven (7) days of their receipt by Tenant.
C. STORE WORKING DRAWINGS AND SPECIFICATIONS
1. Store Working Drawings and Specifications shall be prepared in
strict compliance with the design criteria and requirements as set
forth in this Exhibit D and the Tenant Handbook and shall adhere to
the Store Design Drawings as approved by Landlord. Store Working
Drawings to minimum scales as called for below, and Specifications
shall include, but not be limited to, the following:
a. Key plan showing location of the Leased Premises relative to the entire
mall.
b. Floor plan at a minimum scale of 1/4" = 1'- 0".
c. Overall sections at 1/4" = 1 '0".
d. Reflected ceiling plan at a minimum scale of 1/4" = 1 '0".
e. Plan, elevation, and section of storefront (if to be constructed by
Tenant) at 1/4" - 1 '-0", with finish materials board including manufacturers,
model numbers, color numbers, and all other identifying information. Details of
storefront at 1-1/2" = 1 '0".
f. Interior elevations at 1/4" = 1 '0".
g. Full sections of types of partitions used at 1/2" = 1'0".
h. Details of special conditions encountered at 1-1/2" = 1'0". Door
schedule with jamb details at 1-1/2" = 1 '0".
j. Finish and color schedules with samples.
k. Plumbing, heating, ventilating, and cooling plans, at 1/4" = 1 '-0".
l. Mechanical details at 1-1/2" = 1'0".
m. Electrical plans at 1/4" = 1'0".
n. Electrical details, fixture schedules, and one line electrical riser
diagram.
0. Mechanical and electrical load tabulations on forms provided by Landlord
in the Tenant Handbook.
p. Structural load tabulations.
q. Specifications covering all of Tenant's Work, including, but not limited
to layout of fixture location, both permanent and movable.
<PAGE>
D-9
r. Any and all other plans and specifications as may be required by the
local fire and building authorities or other governing bodies.
2. All Store Working Drawings and Specifications prepared by Tenant's
Architect shall be submitted by Tenant in the form of one (1) set
of reproducible sepia prints, specifications and three (3) sets of
blueline prints to Landlord for approval within 21 days from
receipt by Tenant of Landlord's written approval of Store Design
Drawings.
3. As soon as practicable after receipt of Store Working Drawings and
Specifications, Landlord shall return to Tenant one (1) set of
prints of Store Working Drawings and Specifications bearing
Landlord's comments. If Tenant wishes to take exception thereto,
Tenant may do so in writing by certified or registered mail
addressed to Landlord at the above address and at the notice
address in the Lease, within seven (7) days from the date of
receipt of Store Working Drawings and Specifications. Unless such
action is taken, it will be deemed that all comments made by
Landlord on Store Working Drawings and Specifications are
acceptable to and adopted by Tenant.
4. If Store Working Drawings and Specifications are returned to Tenant
with comments, but not bearing approval of Landlord, said Store
Working Drawings and Specifications shall immediately be revised by
Tenant and resubmitted to Landlord for approval within seven (7)
days of their receipt by Tenant.
5. "For Construction" Store Working Drawings and Specifications
prepared by Tenant's Architect shall be submitted by Tenant in the
form of one (1) set of mylar reproducible prints and specifications
and three (3) sets of blueline prints. "For Construction" shall be
marked clearly on each copy in red. Such drawings and
specifications shall reflect correction of all Landlord's comments
to the Store Working Drawings and Specifications returned by
Landlord.
6. Store Working Drawings shall be submitted for building permit after
such drawings have been approved by Landlord in the submittal
process as outlined above.
7. Landlord and Landlord's architect shall, from time to time, be
entitled to monitor Tenant's Work and shall have the right to
require all work which does not comply with Tenant's approved Store
Working Drawings and Specifications to be corrected within thirty
(30) days of notification to Tenant.
SECTION 3: PROCEDURE AND SCHEDULES FOR THE CONSTRUCTION OF THE LEASED
PREMISES BY TENANT
A. COMMENCEMENT OF CONSTRUCTION
Tenant shall start construction of its Leased Premises not later than ten
(1 0) days from either of the following dates, whichever shall be the
later to occur: (1) The date of receipt by Tenant of written notice from
Landlord that Landlord has substantially completed the work to be
performed by Landlord under Exhibit C, and payment therefor, as required
by Exhibit C is due (other than such work which cannot be performed by
Landlord until Tenant makes the Leased Premises ready for the performance
thereof) and that the Leased Premises are ready for Tenant's work; or (2)
the date on which Landlord approves the Tenant's Store Working Drawings
and Specifications for the Leased Premises. Tenant shall carry such
construction to completion with all due diligence.
B. GENERAL REQUIREMENTS
1. Tenant shall submit to Landlord, via certified or registered mail, at
least five (5) days prior to the commencement of construction the following
information:
a. Copy of building and all other permits needed to perform
Tenant's Work within the Leased Premises.
b. The names and addresses of the general, mechanical, plumbing
and electrical contractors Tenant intends to engage in the
construction of the Leased Premises.
<PAGE>
D - 10
c. The actual commencement of construction date and the estimated date
of completion of construction work, Fixturing work, and date of
projected opening.
d. Performance and payment bonds from Tenant's general contractor and
major subcontractors, including, but not limited to the mechanical,
electrical and plumbing subcontractors, in amounts satisfactory to
the Landlord, to cover 100% of the contract amounts plus all change
orders.
e. Itemized statement of estimated construction costs including
architectural, engineering, and contracting fees.
f. Evidence of insurance with a company or companies authorized to
transact business in the State where The Project is located, as
required below.
g. Tenant's General Contractor's $2,000.00 Security Deposit.
2. Tenant shall secure, pay for, maintain, and cause its contractors and
subcontractors to secure, pay for, and maintain, during the continuance of
construction and Fixturing work within the Leased Premises, all of the insurance
policies required in the amounts as set forth herein, together with such
insurance as may from time to time be required by City, County, State or Federal
laws, Codes, regulations or authorities. Tenant's Work may not commence, nor may
Tenant permit its contractors and sub-contractors to commence any work, until
all required insurance has been obtained and certificates of such insurance have
been delivered to Landlord. Insurance policies shall name the Landlord,
Landlord's Architect and General Contractor for the project as additionally
insured. Certificates of insurance shall provide that no change or cancellation
of such insurance coverage shall be undertaken, without thirty (30) days written
notice to Landlord. Landlord shall have the right to require Tenant, and Tenant
shall have the duty, to stop work in the Leased Premises immediately if any of
the coverage required herein lapses during the course of the work, in which
event Tenant's Work may not be resumed until the required insurance is obtained
and satisfactory evidence of same is provided to the Landlord.
a. Tenant's General Contractor's Required Minimum Coverages and Limits of
Liability.
(1) Worker's Compensation Insurance, as required by State law,
and Employer's Liability Insurance with a limit of not less
than $ 1 ,000,000 (or more if required by the law 'of the
State) and any insurance required by any Employee Benefit
Act or similar statute applicable where the work is to be
performed as will protect the contractor and subcontractors
from any and all liability under the aforementioned act(s)
or similar statute.
(2) Comprehensive General Liability Insurance (including
Contractor's Protective Liability) in an amount not less
than $5,000,000 per occurrence whether involving personal
injury liability (or death resulting therefrom) or property
damage liability or a combination thereof (combined single
limit coverage) with a minimum aggregate limit of
$5,000,000. Such insurance shall include explosion, collapse
and underground (X, C and U) coverage and contractual
liability coverage for personal injury, death, and damage to
the property of others arising from construction at the
Leased Premises, whether performed by Tenant's contractors,
subcontractors, or sub-subcontractors, or by anyone directly
or indirectly employed by any of them.
(3) Comprehensive Automotive Liability insurance, for the
ownership, maintenance, or operation of any automotive
equipment, whether owned, leased, or otherwise held,
including employer's non-ownership and hired car liability
endorsements, in an amount not less than $ 5,000,OOOper
occurrence and $ 5,000,O00aggregate, combined single limit
bodily injury and property damage liability.
WR
<PAGE>
D- 11
Such insurance policies shall insure the Tenant's general contractor and
all subcontractors against any and all claims for bodily injury including death
resulting therefrom and damage to the property of others arising from its
operations at the Leased Premises or in connection with construction of the
Leased Premises, whether performed by the Tenant's general contractor,
subcontractors, or sub-subcontractors, or by anyone directly or indirectly
employed by any of them.
b. Tenant's Insurance Requirements
(1) Tenant shall obtain Owner's Protective Liability Insurance
as will insure Tenant against any and all liability for
damage from bodily injury, including death resulting
therefrom, or property damage or a combination thereof which
may arise from work in connection with the Leased Premises,
and any other liability for damages which Tenant's general
contractor and/or subcontractor are required to insure
against under any provisions herein. Landlord and Landlord's
Architect and General Contractor shall be named as
additional insureds. Said insurance shall be provided in
minimum amounts of $5,000,000 per occurrence and $5,000,000
aggregate, combined single limit bodily injury and property
damage liability.
(2) Tenant's Work Insurance: Tenant shall insure 100% of the
value of the work in the Leased Premises as it relates to
the building within which the Leased Premises are located,
with an "all risk" perils property insurance policy or a
completed value "all risk" perils Builder's Risk policy,
naming the interest of the Landlord and the Tenant's general
contractor and all subcontractors, as their respective
interests may appear, within a radius of one hundred feet
(100') of the Leased Premises.
3. All contractors engaged by Tenant shall be licensed contractors in the
State in which The Project is located possessing good labor relations, capable
of performing quality workmanship and working in harmony with Landlord's General
Contractor and other contractors on the job. All work shall be coordinated with
the general project work.
4. Tenant's contractors and construction shall comply in all respects with
applicable federal, state and local statutes, ordinances, regulations, laws and
codes. All required building and other permits in connection with the
construction and completion of the Leased Premises shall be obtained and paid
for by the Tenant.
5. Tenant shall complete all work within the Leased Premises as
expeditiously as possible, but in no event later than in time to open for
business on the Grand Opening Date. Should Tenant fail to complete its work
within this schedule, Landlord may, at Landlord's option, install temporary
storefront or barricade at the Leased Premises at Tenant's expense. Temporary
storefront and other work performed by Landlord, which was made necessary due to
the Tenant's failure to complete its work in time for the Grand Opening Date,
shall be payable to Landlord.
6. Landlord shall have the right to perform, on behalf of and for the
account of Tenant, any of Tenant's Work which Landlord deems necessary to be
done on an emergency basis or which pertains to structural components, the
general utility systems for the Project, roof and exterior wall penetrations, or
the erection of temporary barricades and temporary signs, during construction
for the period following the opening of the Project for business. Landlord will
provide such work at Tenant's expense.
7. Tenant's Work shall be subject to the inspection and approval of
Landlord and Landlord's Architect.
8. Tenant shall pay or reimburse Landlord for all costs incurred by
Landlord (including deposits) for all utility meters for the Leased Premises.
<PAGE>
D - 12
9. Upon the completion of the Tenant's Work, all facilities shall be in
full use without defects.
10. All work performed by Tenant shall be performed so as to cause no
interference with other tenants and the construction and operation of The
Project. Tenant will take all precautionary steps to protect its facilities and
the facilities of others affected by Tenant's Work and properly police same.
Construction equipment and materials are to be located within the Leased
Premises and truck traffic is to be routed in and from the site, all as directed
by Landlord and so as not to burden the construction and operation of The
Project.
11. Upon and from the completion of Tenant's Work in the Leased Premises
and acceptance by Landlord's Architect, a minimum one-year warranty on all work,
materials, and equipment shall be provided to Landlord by Tenant.
12. Landlord shall have the right to stop Tenant's Work whenever necessary
to obtain compliance with applicable building and safety codes or the approved
Store Working Drawings and Specifications.
13. Tenant and its contractors shall comply with the guidelines for Tenant
work procedures and temporary construction facilities set forth in the Tenant
Handbook, and Landlord's Construction Rules and Regulations which may be issued
from time to time.
14. Landlord shall have the right to order any Tenant or Tenant's
contractor who willfully violates any of the above requirements to cease work,
and to remove himself and his equipment and employees from The Project.
C. TEMPORARY SERVICES AND FACILITIES DURING CONSTRUCTION
1. Utility costs or charges for any service to the Leased Premises
shall be the responsibility of Tenant from the date Tenant
commences work or is obligated to commence work, whichever is
earlier.
<PAGE>
2. If necessary, construction. for temporary
Tenant will provide temporary heat for the Leased Premises during No open
burners are permitted and only electricity may be used heat.
3. temporary Electrical Services. If electrical service is not available in
the Leased Premises during construction, Landlord shall provide electrical
service in an area designated by the Landlord. Tenant shall request, in writing,
permission to connect temporary lines to the power source for service to the
Leased Premises. Tenant shall reimburse Landlord for the Temporary Electric
Services.
4. temporary Trash Removal. During initial construction, Fixturing and
stocking, Landlord shall provide trash removal service from the service areas.
It shall be Tenant's responsibility to break boxes down and place trash daily in
the containers provided. Trash accumulation will not be permitted overnight in
the Leased Premises, mall or service/exit corridors. Tenant shall not allow
trash to accumulate within the Leased Premises nor shall Tenant place any trash
in the service/exit corridor or mall areas adjacent to the Leased Premises.
Tenant shall reimburse Landlord for the Temporary Trash Removal.
The period shall start with the date Tenant starts construction in its
premises and ends with the date Tenant opens for business.
In addition, Tenant shall pay any costs incurred by Landlord in removing
trash from areas in and around the Leased Premises. Landlord's decision as to
which Tenant is responsible for trash left outside the Leased Premises will be
reasonable and equitable, and Landlord's decision will be final.
5. Plans Review/Tenant Coordination. Landlord or its architect and/or
engineer shall review Tenant's plans and specifications for compliance with the
provisions of this Exhibit D and the Tenant Handbook. In addition, Landlord
shall assign a Tenant Coordinator(s) to work with Tenant and Tenant's architect,
engineer and contractor for the design and construction of the Leased Premises.
Tenant shall reimburse Landlord for such plan review and tenant coordination.
<PAGE>
D - 13
6. temporary Storefront. If Tenant is not open for business in the Leased
Premises and Landlord's Retail Development is open, or if, in Landlord's sole
judgment, Landlord determines that a temporary storefront is necessary so as not
to disrupt the construction, opening or operation of any portion of The Project,
then Landlord shall install, at Tenant's expense, for Tenant's use during
construction a full height temporary barricade on the storefront lease line.
Tenant shall reimburse Landlord for the temporary storefront. Upon completion of
Tenant's construction and Fixturing in the Leased Premises, Tenant shall remove,
disassemble and dispose of such temporary storefront.
7. Coming Soon Sign. If during Tenant's initial construction, tenant
Fixturing and merchandise stocking, The Project is open (or shall open) for
business, Landlord will provide and install, following the earlier to occur of
(a) erection of the initial construction barricade, or (b) completion of the
storefront for the Leased Premises, a "coming soon" sign on the front (barricade
or storefront, as the case may be) of the Leased Premises. Landlord shall also
install suite number on mall storefront. Tenant shall reimburse Landlord for
providing such sign.
8. Suite Number and Tenant Trade Name. Landlord shall furnish and install
suite number and tenant trade name sign adjacent to Tenant's exterior and/or
interior rear exit door(s) as well as storefront in accordance with Landlord's
standard. Tenant shall reimburse Landlord for this service.
9. The charges for Temporary Services and Facilities as described in this
subsection C shall be:
Size of Leased Premises Landlord's Charge
10,000/sf $1.00 psf
10. The charges for all work performed or to be performed by Landlord for
or on behalf of Tenant shall be due and payable within 5 days after billing by
Landlord. Landlord may decline at Landlord's sole judgement to proceed with work
at Tenant's expense until Landlord's receipt of payment thereof.
D. COST PLUS ADMINISTRATION FEE WORK BY LANDLORD IN PREMISES AT TENANT
EXPENSE
The following work in Tenant's premises shall only be accomplished by
Landlord in Landlord's building. The Tenant shall contract with the Landlord to
furnish the following work items if required by Tenant's store design at
Landlord's actual cost plus fifteen percent (1 5%) cost of administration, and
the cost of any such item of work shall be payable to Landlord in full within
five (5) days after receipt of invoice therefore.
1. Opening in rated demising partitions and exterior walls provided such
openings/penetrations have been approved in advance by Landlord in writing.
2. Roof Openings. With Landlord's prior written permission, roof openings
for any purpose shall include supporting structures, curbs, roof patching and
flashing. Tenant shall be responsible for temporary weather protection, and
installation of ducts, pipes, equipment and counter flashing. Landlord reserves
the right to refuse to permit the furnishing of any openings which exceed the
capability of the structural system or which in Landlord's opinion would have an
appearance detrimental to Landlord's Building.
3. Plumbing Service. With Landlord's written permission, additional
sanitary sewer or relocation of sanitary sewer.
4. Electric Service. With Landlord's written permission, additional
electric service or relocation of electrical service.
5. Storefront. With Landlord's prior written permission, changes to
Landlord furnished interior and exterior storefront including but not limited to
additional doors and relocation of doors.
6. Landlord's Labor (including overtime, demurrage and waiting time) and
equipment used in any work Landlord performs for Tenant.
<PAGE>
D - 14
7. Architectural and/or Engineering Fees incurred by Landlord as a result
of Tenant requesting any services in excess of the standard review services
described in Section C.5.
8. Building Department Expeditor Fees incurred by Landlord in expediting
Tenant Building Permit, Controlled Inspection and other requirements for
temporary and permanent Certificates of Occupancy on the building and the Tenant
Premises.
9. Building Permits Microfilming and Documentation Fees paid by Landlord on
behalf of the Tenant in expediting the approval of Building Permits and other
approvals of Agencies having jurisdiction.
E. CERTIFICATE OF ACCEPTANCE
Upon the completion of Tenant's construction and Fixturing work within
its Leased Premises Tenant shall so notify Landlord in writing. Landlord,
upon receipt of such notice from Tenant, shall issue a Certificate of
Acceptance of said premises provided, however, that the issuing of such a
Certificate shall be contingent upon all of the following:
1. The satisfactory completion by Tenant of the work to be performed
by Tenant under this Exhibit D, in accordance with good workmanship
and the approved Store Working Drawings and Specifications
therefor.
2. Receipt by Landlord from Landlord's Architect of a premises
acceptance letter. This letter can be issued only upon Tenant's
correction of the deficiencies noted by Landlord or Landlord's
Architect upon any inspection of Leased Premises.
3. Tenant shall have furnished Landlord with waivers of liens and
sworn statements, or satisfactory substitutes for same, in such
form as may be required by Landlord, from all contractors,
subcontractors and other persons performing labor and/or supplying
materials in connection with such work showing that all of said
persons have been compensated in full.
4. Submission by Tenant to Landlord of a detailed breakdown of
Tenant's final and total construction costs together with receipted
invoices showing payment thereof.
5. Submission by Tenant to Landlord of the warranties for the benefit
of Landlord on the workmanship, materials, and equipment
incorporated into the Leased Premises as required in Section 3.B.1
1 of this Exhibit.
<PAGE>
E- 1
Exhibit "E"
Sign Criteria
1. Tenant is required to identify the Leased Premises by a sign on the
storefront. The general criteria for the design of Tenant' signage
("sign criteria") is set forth below. More specific sign criteria for
The Project as a whole and certain tenants in certain designated
locations such as in food courts and mall courts is set forth in the
Tenant Handbook, (Tenant Design Criteria) hereinafter referred to as
"Tenant Handbook".
2. Costs incurred in design, construction and installation, as well as
maintenance shall be the responsibility of Tenant. The Tenant must
obtain permits to erect and connect the sign from local community
officials before the sign is installed.
3. It is intended that the signage be developed in an imaginative and
varied manner so as to enhance the architectural treatment of the facade
in general and be harmonious with the overall architecture and thematic
consideration of the mall in particular. Although current signage
practices of the Tenant shall be considered, they will not govern the
signs to be installed.
4. Approval of signs shall be solely the right of the Landlord, and Tenant
must submit all candidates for signage to the Landlord for approval in
the form of working drawings before manufacturing or further assembly
begins. Submission shall be to Landlord, in the form of shop drawings
with all pertinent details necessary for construction and installation
included. Submission shall be a minimum of ninety (90) days before
proposed installation date, and tenant is expected to have sign
manufactured and ready for installation within forty-five (45) days of
approval by Landlord or Landlord's agent before installation, at project
site. Landlord reserves the right to reject signs not conforming to
approved drawings regardless of stage of completion or installation.
5. The Tenant's storefront sign shall occupy an area of the storefront
facade designated in the Tenant Handbook and/or the Lease Outline
Drawing, and/or by the Project Architect. The design 9f the storefront
is to be considered by Tenant in the development of signage. In general,
signs will be installed in the designated sign area above the entry
door. Variation of this criteria shall be subject to Landlord's prior
written approval, which shall be solely at the discretion of Landlord.
No sign shall be installed closer than three feet (3'-0") from the end
of the Tenant storefront on both sides.
6. Signage shall be limited to the name of the store. Additional elements
will be considered as long as they enlarge, expand, or otherwise clarify
the name of the store.
<PAGE>
7. Signs which are comprised of unaltered sans serif typefaces are,
unacceptable, as will be signs or type faces which are difficult to
read.
in general,
8. The use of corporate identifications or logos will be considered, but
prior use or identification with a particular sign or logo will not
govern Landlord's approval for Tenant use. Tenant agrees that Landlord's
rejection of particular logo or sign shall not constitute a violation of
Lease by Landlord. In the case of conflict between the sign criteria and
other provisions of the Lease, Tenant agrees that the sign criteria and
Landlord's discretion shall prevail. Tenant shall not hold Landlord
liable for damage or injury as a result of the sign criteria or the
implementation of the sign criteria by agreement of both parties.
9. A variety of fabrication materials shall be considered, however
construction shall be guaranteed for a period of at least five (5) years
against peeling, cracking, crazing, blistering, or any other degradation
of surface or materials. Tenant shall obtain, from manufacturer of the
sign, a five (5) year warranty covering the condition of finished
surfaces, construction and operation of sign.
10. All electrical signs shall carry approval of Underwriters Laboratories
(U.L.) on all component parts and on the complete display. Maximum
brightness of lit signs shall be fifty foot (50') Lamberts measured one
foot (1') from the source of light. No blinking, moving or flashing
lights shall be allowed. Surface lighting may be reduced in order to
accentuate lit signage. There will be no special advantage in terms of
visibility of internally lit over externally lit signs.
<PAGE>
11. No exposed raceways, ballast boxes or electrical transformers will be
permitted except as required to be exposed by local building codes.
12. Landlord shall not be responsible for signs improperly installed or
manufactured, and those signs not meeting code requirements shall, at
Tenant's expense, be removed and built to code specifications before
reinstallation. Signs meeting Landlord's sign criteria, but not meeting
local code requirements, shall be the responsibility of Tenant, and
Tenant agrees not to hold Landlord liable for costs due to conflict
between these sign criteria and code, should such conflict exist under
present code or due to future changes in code.
13. Notwithstanding anything herein contained to the contrary, Tenant
shall have the right to replace any existing sign(s) of said Tenant as
long as such replacement meets the sign criteria listed within this
document, the Tenant Handbook, and is accompanied by Landlord's prior
written approval prior to installation.
14. No other signs of any type or purpose, permanent or temporary, shall be
permitted to be displayed upon the facade, windows or within the
dimension prescribed in Section 4.3 of the Lease, behind an unobstructed
window unless and until such sign has been submitted to Landlord and has
received Landlord's prior written approval. Landlord shall be the sole
judge of what constitutes an unobstructed window. Removal of signage of
any type installed without Landlord approval shall be mandatory before
said sign shall be considered by Landlord for installation.
15. Landlord shall not be required to approve signage for any reason
other than conformance with the sign criteria in this Exhibit E and the
Tenant Handbook Scheduled opening dates and other time constraints shall
not be reason to approve signage which Landlord otherwise would consider
unsuitable for manufacture or installation. Tenant agrees not to hold
Landlord liable for any damage caused to Tenant due to signage or lack
of signage as a result of Landlord's insistence upon conformance with
the sign criteria or the Landlord's withholding of approval of submitted
signage.
16. In the event that Tenant is unable to supply satisfactory signage
design by the Fixturing period of Tenant's store, Landlord shall have
the option of providing such design. In such a case, Tenant agrees to
pay prior to store opening 'all expenses involved in the design,
manufacture, and installation of said signage plus 15% cost of
administration, and Tenant agrees to waive rights to reject said signage
and agrees not to oppose installation of said signage.
17. Signage indicated on drawings and mechanicals submitted for reasons
other than signage evaluation (as described in this Exhibit E and the
Tenant Handbook) shall not constitute a signage submittal. No approval
of such drawings and mechanicals shall constitute approval of signage.
18. Food Court Tenants shall be permitted to install one menu board within
the Leased Premises subject to Landlord's prior design review and
written approval. Refer to the Tenant Handbook for type, size and
location allowed.
19. Procedure for Submittal and Approval of Sign Drawings:
a. Approval of store design drawings or working drawings and specifications
for Tenant's Leased Premises does not constitute approval of any sign work.
Approval of signs shall be solely the right of Landlord, and Tenant must submit
all candidates for signage to the Landlord for approval in the form of sign
designer's working drawings and/or manufacturer's shop drawings before
manufacturing or assembly begins. Drawings by Tenant, its architect or anyone
not qualified to produce signage drawings are not acceptable. At the same time
as Tenant's initial submission of store working drawings and specifications to
Landlord, Tenant shall submit one (1) set of reproducible prints and
specifications and three (3) sets of blue prints, along with samples of all
material and colors, for all its proposed sign work. The drawings shall clearly
show location of sign on storefront elevation drawing, size and stroke
dimensions, graphics, color, construction, and attachment details. Full
information regarding electrical load requirements and brightness in footcandles
shall also be included. Landlord reserves the right to reject signs not
conforming to approved drawings regardless of state of completion or
installation.
<PAGE>
F-i
b. As soon as practical after receipt of the sign drawings, Landlord shall
return to Tenant one (1) set of such sign drawings with the suggested
modifications and/or approval. If, upon receipt of approved sign drawings
bearing Landlord's comments, Tenant wishes to take exception thereto, Tenant may
do so in writing, by certified or registered mail addressed to Landlord within
seven (7) days from the date of Tenant's receipt of such sign drawings. Unless
such action is taken, it will be deemed that all comments made by Landlord on
the sign drawings are acceptable to and approved by Tenant.
c. If sign drawings and specifications are returned to Tenant with
comments, but not bearing approval of Landlord; said drawings and specifications
shall be revised immediately by Tenant and resubmitted to Landlord for approval
within seven (7) days of their receipt by Tenant.
<PAGE>
Exhibit "G" COMMENCEMENT AND EXPIRATION DATE DECLARATION
LANDLORD:
TENANT:
LEASE DATE:
STORE NUMBER:
Tenant acknowledges and agrees that the Commencement Date of the above
referenced Lease is __________________________________________ and the term of
the Lease expires on
TENANT:
By:
Its:
1/2
<PAGE>
1 Toys nte,national/GfeatLakescrossingl5 15gB RIDER ATTACHED TO AND MADE A
PART OF LEASE DATED JUNE 25, 1998, ENTERED INTO BY AND BETWEEN TAUBMAN AUBURN
HILLS ASSOCIATES LIMITED PARTNERSHIP, A DELAWARE LIMITED PARTNERSHIP, AS
LANDLORD, AND TOYS INTERNATIONAL1 INC., 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 1.1(a): On page 1, line 8, in place of the deletion, insert "Great
Lakes Crossing" On page 1, line 1 0, in place of the deletion, insert "Michigan"
Section 1.2:
On page 2, line 31, in place of the deletion, insert "January"
On page 2, line 32, in place of the deletion, insert "February"
At the end of the Section, insert "In the event Tenant does not achieve Gross
Sales (as herein defined) of at least Two Hundred Fifty and 00/1 0Oths Dollars
($250.00) per square foot of floor area in the Premises, in the period between
the twenty-fifth (25th) and thirty-sixth (36th) months of the term hereof, then
Tenant shall, for a period of thirty (30) days after the close of such
thirty-sixth (36th) month, 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 period. 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 1.3: On page 2, line 59, in place of the deletion, insert "November
12, 1 998"
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"
(deleted)
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 One Hundred Fifty Thousand and O0/lOOths Dollars
($150,000.00), 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. The cost of Tenant's
leasehold improvements pursuant to Section 1.1(b) hereof shall be less the
amount of such Tenant inducement."
<PAGE>
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 subsection, 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 Ten and 00/1 O0ths Dollars ($10.00) 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 shall in no event
increase by more than five percent (5%) over such share for the previous Lease
Year."
Section 7.1: At the end of the Section, insert "Taxes shall include,
without limitation, the so-called 'Michigan Single Business Tax' of Landlord as
the same presently exists and as the same may be amended in whole or in part
from time to time."
Section 7.2: At the end of the Section, insert "Tenant's proportionate
share of the Taxes per square foot of floor area in the Leased Premises for the
first full Lease Year of the Term shall not exceed Four and 00/100ths Dollars
($4.00) per square foot. It is further understood and agreed that the Tenant's
proportionate share of Taxes per square foot during each Lease Year shall in no
event increase by more than five percent (5%) 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."
<PAGE>
Section 9.2: "Reconstruction"
On page 14, lines 49, 52,53, 54 and 55, after the word "Landlord's", insert
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 1 4, 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 1 8, line 1 5, in place of the deletion, insert
"Upon"
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)"
Section 19.1: At the end of the Section, insert "Tenant shall be solely
responsible for and shall promptly pay all charges for water, gas, heat,
electricity, sewer and any other utility used upon or furnished to the Leased
Premises. So long as Landlord shall furnish all electricity required for the
conduct of Tenant's business, Tenant agrees to purchase such electricity from
Landlord and to pay for same on the following basis: (i) Landlord, at its sole
expense, will provide and install appropriate meters at Tenant's Leased Premises
for measuring Tenant's consumption of electricity. Accuracy of meters supplied
by Landlord shall be maintained by Landlord within the limits prescribed by the
applicable public utility commission regulations. (ii) Landlord will render
monthly statements of charges to Tenant for Tenant's consumption
<PAGE>
of electricity for the previous month. Charges for electricity shall be at
the same rates, terms and conditions as rates, terms and conditions for
comparable service from the local public utility company servicing the Shopping
Center as filed from time to time with the applicable public utility commission.
Tenant agrees to pay such charges within ten (10) days of the date of such
statement. In no event shall Landlord charge Tenant rates which are higher than
the rates of such local public utility company for service comparable to that
furnished to Tenant. Landlord shall also have the right to periodically estimate
the monthly amount required to be paid by Tenant to Landlord with respect to
such service provided by Landlord and such estimated monthly amount shall be
paid by Tenant on the first day of each calendar month, in advance, at the place
and in the manner specified for payments of Minimum Rent hereunder. Landlord
shall have the right to change such estimated amount at any time and from time
to time, by notice to Tenant. If the total of the estimated monthly payments
made by Tenant for any lease year or calendar year shall be less than the actual
amount due from Tenant pursuant to the provisions of this Section, Tenant shall
pay to Landlord the difference between the amount paid by Tenant and the actual
amount due within ten (10) days after submission to Tenant of Landlord's
statement and invoice therefor; and if the total of the estimated payments made
by Tenant for any such year shall exceed the actual amount due from Tenant, the
excess amount paid shall be credited against the next payment due from Tenant to
Landlord under this Section. Landlord, at any time at its option and upon not
less than one hundred eighty (180) days' prior written notice to Tenant, may
discontinue the furnishing of electricity to the Leased Premises and in such
case, Tenant shall contract for the supply of such electricity with the public
utility company supplying electricity to the neighborhood and Landlord shall
permit its equipment, to the extent available (other than high-voltage
transformers and meters), suitable and safely capable therefor, to be used for
the purpose of supplying such electricity. Notwithstanding any other provisions
of this Lease, the value of, or (as applicable) the rate for, each utility
furnished by Landlord, which utility shall be subject to regulation by a public
agency, shall be computed for the purposes of this Lease in accordance with the
maximum rate schedules which would be applicable if Tenant were at the time a
direct customer of the applicable public utility company serving the Shopping
Center (subject to any separate rate schedules for utility services as may be
included in the exhibits to this Lease). The value of, or (as applicable) the
rate for, any nonregulated utility service provided by Landlord shall be
computed at the prevailing rates which would be paid by Tenant for direct
comparable service from contractors in the local area, except to the extent that
specific rates are otherwise set forth in this Lease. The public utility
corporation referred to in this Section 1 9.1 shall be the utility company named
in Exhibit CC attached hereto (if any), or the successor to such company or such
other company designated by Landlord."
Exhibit C: On page C-2, line 30, insert "Notwithstanding the foregoing, the
Leased Premises shall have one (1) closure of fifteen foot (1 5') width."
<PAGE>
Exhibit CC:
On page 1, line 47, in place of the deletion, insert "1.51"
On page 1, line 48, in place of the deletion, insert "1.47"
In the Presence of: TAUBMAN AUBURN HILLS ASSOCIATES
LIMITED PARTNERSHIP,
a Delaware partnership
By:
Its: Authorized Agent
LANDLORD
TENANT
TOYS INTERNATIONAL, INC.,
a California corporation
By:
Name:
Title:
<PAGE>
GUARANTY
Annexed to and forming a part of Lease dated June 25, 1998 by and between
TAUBMAN AUBURN HILLS ASSOCIATES LIMITED PARTNER~SHIP,
Landlord, and TOYS INTERNATIONAL, INC., Tenant.
The undersigned, PLAY CO. TOYS & ENTERTAINMENT CORP., a Delaware
corporation (hereinafter sometimes referred to as the "Guarantor" or
"Guarantor(s)"), whose address is 550 Rancheros Drive, San Marcos, California
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 nonperformance 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.
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.
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.
<PAGE>
E-3
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 & ENTERTAINMENT CORP., a Delaware corporation
Exhibit 10.108
Lease Agreement for Store - Chicago
LEASE
TOYS INTERNATIONAL,
a California corporation
-----------------------------------
Tenant
TOY CO.
------------------------------------
Trade Name
PLAY CO. TOYS AND ENTERTAINMENT CORPORATION,
a Delaware corporation
------------------------------------
Guarantor
GURNEE MILLS
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I.........................................................................................................4
GRANT AND TERM...........................................................................................4
Section 1.1 Leased Premises....................................................................4
Section 1.2 Term...............................................................................5
Section 1.3 Opening............................................................................6
Section 1.4 Late Opening.......................................................................7
ARTICLE II........................................................................................................7
RENT AND DEPOSIT.........................................................................................7
Section 2.1. Minimum Rent......................................................................7
Section 2.2. Percentage Rent...................................................................7
Section 2.3. Payments By Tenant................................................................9
Section 2.4. Security Deposit. [Intentionally Deleted] 10
Section 2.5. Late Charge......................................................................10
ARTICLE III......................................................................................................10
PREPARATION OF LEASED PREMISES..........................................................................10
Section 3.1. Landlord's Work..................................................................10
Section 3.2. Delivery of Possession...........................................................10
Section 3.3. Tenant's Work....................................................................11
Section 3.4. Alterations by Tenant............................................................13
Section 3.5. Removal by Tenant................................................................14
ARTICLE IV.......................................................................................................14
CONDUCT OF BUSINESS.....................................................................................14
Section 4.1. Use and Trade Name...............................................................14
Section 4.2. Operation of Business............................................................15
Section 4.3. Sign.............................................................................15
Section 4.4. Tenant's Warranties..............................................................15
Section 4.5. Storage and Office Space.........................................................16
Section 4.6. Care of Premises.................................................................16
Section 4.7. Notice by Tenant.................................................................16
Section 4.8. Radius...........................................................................16
ARTICLE V........................................................................................................17
COMMON AREA.............................................................................................17
Section 5.1. Use of Common Area...............................................................17
Section 5.2. Common Area Maintenance Expenses.................................................18
ARTICLE VI.......................................................................................................19
REPAIRS AND MAINTENANCE.................................................................................19
Section 6.1. Repairs and Maintenance by Landlord..............................................19
Section 6.2. Repairs and Maintenance by Tenant................................................19
ARTICLE VII......................................................................................................20
TAXES ...............................................................................................20
Section 7.1. Tax Liability....................................................................20
Section 7.2. Method of Payment................................................................21
ARTICLE VIII.....................................................................................................21
INSURANCE, INDEMNITY AND LIABILITY......................................................................21
Section 8.1. Landlord's Insurance Obligations.................................................21
Section 8.2. Tenant's Insurance Obligations...................................................22
Section 8.3. Mutual Covenant..................................................................23
Section 8.4. Covenant to Hold Harmless........................................................23
Section 8.5. Loss and Damage..................................................................24
<PAGE>
ARTICLE IX.......................................................................................................24
DESTRUCTION OF LEASED PREMISES..........................................................................24
Section 9.1. Continuance of Lease.............................................................24
Section 9.2. Reconstruction...................................................................25
ARTICLE X........................................................................................................26
CONDEMNATION............................................................................................26
Section 10.1. Eminent Domain..................................................................26
Section 10.2. Rent Apportionment..............................................................26
Section 10.3. Temporary Taking................................................................26
ARTICLE XI.......................................................................................................26
ASSIGNMENT, SUBLETTING AND ENCUMBERING LEASE............................................................26
Section 11.1. No Assignment, Subletting or Encumbering of Lease 26
Section 11.2. Assignment or Sublet............................................................28
Section 11.3. Transfer of Landlord's Interest.................................................28
ARTICLE XII......................................................................................................29
SUBORDINATION, ATTORNMENT, FINANCING AND ESTOPPEL CERTIFICATE 29
Section 12.1. Subordination...................................................................29
Section 12.2. Attornment......................................................................29
Section 12.3. Financing.......................................................................29
Section 12.4. Estoppel Certificate............................................................29
Section 12.5. Remedies........................................................................30
ARTICLE XIII.....................................................................................................30
ADVERTISING AND PROMOTION...............................................................................30
Section 13.1. Promotion Fund..................................................................30
Section 13.2. Promotion Fund Contribution.....................................................30
Section 13.3. Advertisements..................................................................30
Section 13.4. Network.........................................................................31
ARTICLE XIV......................................................................................................31
DEFAULT AND REMEDIES....................................................................................31
Section 14.1. Elements of Default.............................................................31
Section 14.2. Landlord's Remedies.............................................................32
Section 14.3. Bankruptcy......................................................................34
Section 14.4. Additional Remedies and Waivers.................................................35
Section 14.5. Landlord's Cure of Default......................................................35
ARTICLE XV.......................................................................................................35
RIGHT OF ACCESS.........................................................................................35
ARTICLE XVI......................................................................................................35
DELAYS ...............................................................................................35
ARTICLE XVII.....................................................................................................36
END OF TERM.............................................................................................36
Section 17.1. Return of Leased Premises.......................................................36
Section 17.2. Holding Over....................................................................36
ARTICLE XVIII....................................................................................................36
COVENANT OF QUIET ENJOYMENT.............................................................................36
ARTICLE XIX......................................................................................................36
UTILITIES...............................................................................................36
Section 19.1. Utilities.......................................................................36
Section 19.2. Electricity, Telephone and Gas..................................................37
Section 19.3. Trash and Garbage Removal.......................................................37
Section 19.4. Water and Sewer.................................................................37
Section 19.5. Grease Interceptors.............................................................37
ARTICLE XX.......................................................................................................37
MISCELLANEOUS...........................................................................................37
Section 20.1. Entire Agreement...............................................................37
Section 20.2. Notices........................................................................38
Section 20.3. Governing Law..................................................................38
Section 20.4. Successors.....................................................................38
Section 20.5. Liability of Landlord..........................................................38
Section 20.6. Brokers........................................................................39
Section 20.7. Transfer by Landlord...........................................................39
Section 20.8. No Partnership.................................................................39
Section 20.9. Waiver of Counterclaims........................................................39
<PAGE>
Section 20.10. Waiver of Jury Trial...........................................................39
Section 20.11. Severability...................................................................39
Section 20.13. Consumer Price Index...........................................................39
Section 20.14. Interest.......................................................................39
Section 20.15. Excavation.....................................................................40
Section 20.16. Rules and Regulations..........................................................40
Section 20.17. Financial Statements...........................................................40
Section 20.18. General Rules of Construction..................................................40
Section 20.19. Recording......................................................................40
Section 20.20. Effective Date.................................................................40
Section 20.21. Headings.......................................................................40
Section 20.22. Managing Agent.................................................................40
</TABLE>
EXHIBITS: Addendum
Exhibit A Site Plan
Exhibit B Measurement of Leased Premises
Exhibit C Landlord's Work
Exhibit D Tenant's Work
Exhibit E Sign Criteria
Exhibit F Commencement and Expiration Date Declaration
Exhibit G Utility Charge
GUARANTY
<PAGE>
A Retail Development
THIS LEASE dated as of this ____ day of ________________, 19___ (the
"Lease") by and between ) by and between GURNEE MILLS (MLP) LIMITED PARTNERSHIP,
an Illinois limited partnership, the address of which is c/o The Mills
Corporation, 1300 Wilson Boulevard, Suite 400, Arlington, Virginia 22209
(hereinafter referred to as "Landlord") and TOYS INTERNATIONAL, a California
corporation, the address of which is 550 Rancheros Drive, San Marcos, California
92069 (hereinafter referred to as "Tenant").
R E C I T A L
Landlord hereby leases to Tenant and Tenant hereby hires and takes from
Landlord, the Leased Premises, for the Term commencing on the Commencement Date,
subject to the terms, covenants, conditions and provisions of this Lease.. If
the Commencement Date is not the first day of a month, Minimum Rent for the
month in which the Commencement Date occurs shall be prorated to the end of the
month and paid as the second monthly installment of Minimum Rent on the first
day of the next month and, after the expiration of the number of years in the
Term, the Term shall expire on the last day of the same month in which the
Commencement Date of the Term occurred, it being the intention of the parties
that the Term expire on the last day of a month. Neither this Lease nor the
obligations of Tenant hereunder shall be affected by a postponement and Landlord
shall not be subject to any liability for failure to make possession of the
Leased Premises available on the Commencement Date. When the Commencement Date
has been determined, Landlord and Tenant shall execute, acknowledge and deliver
a written statement in recordable form specifying the Commencement and
Expiration Dates of the Term and, if there shall have been any changes in the
floor area of the Leased Premises, such statement shall reflect such change or
changes. Said statement upon execution and delivery shall be deemed to be a part
of this Lease.
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: 559, consisting of approximately 12,496 square feet of floor
area as shown on Exhibits A and B attached hereto and made a part hereof.
(2) Section 1.2: Term:
Commencement Date:
The earlier of (i) the date following the expiration of a seventy-five (75)
day fixturing period ("Fixturing Period") following the Delivery of Possession
Date (as defined in Section 3.2), or (ii) the date the Leased Premises is open
for business to the public.
Original Term: Five (5) years, plus that partial period necessary to extend
the Term to the January 31st following the expiration of five (5) full years.
Option Period: Five (5) years, provided Tenant's Gross Sales for the twelve
(12) month period ending two hundred ten (210) days prior to the Expiration Date
exceed Two Hundred Thirty-Five and 00/100ths Dollars ($235.00) per square foot.
(3) Section 2.1: Minimum Rent:
Original Term:
<PAGE>
From the Commencement Date and continuing through the second(2nd) year of
the Original Term, the sum of $168,696.00 annually ($13.50 psf), payable in
equal consecutive monthly installments of $14,058.00 each, subject to adjustment
as provided for in Section 2.1 hereof;
Beginning with the third (3rd) year and continuing through the expiration
of the Original Term, the sum of $186,690.24 annually ($14.94 psf), payable in
equal consecutive monthly installments of $15,557.52 each subject to adjustment
as provided for in Section 2.1 hereof.
Option Period:
Beginning with the first (1st) year and continuing through the second (2nd)
year of the Option Period, the sum of $211,682.24 annually ($16.94 psf), payable
in equal consecutive monthly installments of $17,640.19 each, subject to
adjustment as provided for in Section 2.1 hereof;
Beginning with the third (3rd) year and continuing through the expiration
of the Option Period, the sum of $299,904.00 annually ($24.00 psf), payable in
equal consecutive monthly installments of $24,992.00 each, subject to adjustment
as provided for in Section 2.1 hereof.
(4) Section 2.2: Percentage Rent:
Percentage Factor: 6%
Sales Break Point for the Original Term:
From the Commencement Date through the second (2nd) year of the Original
Term: $3,200,000.00, subject to adjustment as provided for below;
Beginning with the third (3rd) year and continuing through the expiration
of the Original Term: $3,500,000.00, subject to adjustment as provided for
below.
Sales Break Point for the Option Period:
Beginning with the first (1st) year and continuing through the second (2nd)
year of the Option Period: $3,800,000.00, subject to adjustment as provided for
below;
Beginning with the third (3rd) year and continuing through the expiration
of the Option Period: $4,500,000.00, subject to adjustment as provided for
below.
Notwithstanding the foregoing, in the event that the Minimum Rent is
adjusted as provided for in Section 2.1 hereof, then the Sales Break Point shall
be similarly adjusted in accordance with the following formula:
Annual Minimum Rent .06
(5) Section 2.4: Security Deposit: N/A
(6) 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. Neither
apparel nor books shall exceed fifteen percent (15%) of the sales area of the
Leased Premises.
Trade Name: Toy Co.
<PAGE>
(7) Section 13.2: Fund Contribution: $1.00 per square foot of floor area in
the Leased Premises
Grand Opening Fee (Initial Contribution): N/A
(8) Guarantor: Play Co. Toys and Entertainment Corporation, a Delaware
corporation
Address: 550 Rancheros Drive San Marcos, CA 92069
(9) Grand Opening Date: N/A
(10) Temporary Charges: $1.00 per square foot of floor area in the Leased
Premises
(11) Construction Chargebacks: N/A
(12) Tenant Allowance: $15.00 per square foot of floor area in the Leased
Premises
ARTICLE I
GRANT AND TERM
Section 1.1 Leased Premises. (a) Landlord, in consideration of the Rent (as
defined in Section 2.3) to be paid and the covenants to be performed by Tenant,
does hereby lease and demise to Tenant, and Tenant hereby rents and hires from
Landlord for the Term herein set forth, the Leased Premises which are described
as set forth in the Data Sheet attached hereto, in the retail development
designated as Gurnee Mills or by such other name as Landlord may from time to
time hereafter designate (hereinafter "Retail Development"). The term "State" as
used herein shall mean the State or Commonwealth of Illinois. For all purposes
in this Lease, a "Major Tenant" is any occupant of 20,000 square feet or more of
floor area in the Retail Development and a "Major Tenant Space" is any space in
the Retail Development containing 20,000 square feet or more. It is agreed that,
wherever the term "Shopping Center" is used herein, it shall mean the Retail
Development excluding the Major Tenant Spaces, except as otherwise specifically
stated herein. Exhibit A sets forth the general layout of the Retail
Development. Landlord does not warrant or represent that the Retail Development
or the Leased Premises will be constructed exactly as shown thereon or that it
will be completed by a specific date. 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 additional
stories on any building or buildings within the Retail Development, and to build
adjoining thereto, to construct decks or elevated parking facilities and free
standing buildings within the parking lot areas of the Retail Development, and
to change the size, location, elevation and nature of any of the stores in the
Retail Development or the common areas, or any part thereof. In the event
Landlord elects to enlarge the Retail Development, or any part thereof, any
additional area may be included by Landlord in the definition of the Retail
Development for purposes of this Lease. Landlord shall also have the general
right from time to time to include within and/or to exclude from the defined
Shopping Center any existing or future areas and the floor area of the Shopping
Center shall be accordingly adjusted. The premises leased to Tenant are herein
referred to as the "Leased Premises". The approximate location of the Leased
Premises is cross-hatched on the lease plan of the Retail Development attached
hereto and made a part hereof as Exhibit A. This Lease of the Leased Premises is
subject to all applicable building restrictions, planning and zoning ordinances,
<PAGE>
governmental rules and regulations, existing underlying leases, and all other
encumbrances, covenants, restrictions, easements and agreements affecting the
Retail Development and the terms and provisions of certain master declaration,
reciprocal easement and operating agreements now or hereafter entered into by
Landlord.
Subject to the provisions of Section 5.1, Tenant shall enjoy a
non-exclusive easement, right and privilege for Tenant and its customers,
employees and invitees and the customers, employees and invitees of any
assignee, sublessee, concessionaire or licensee of Tenant, to use the common
areas of the Shopping Center, with Landlord and the other tenants and occupants
of floor area within the Shopping Center and their respective customers,
employees and invitees. Furthermore, Landlord agrees that any additions,
alterations or modifications to the Shopping Center by Landlord shall not
adversely affect access to, or visibility of the Leased Premises and, except as
otherwise provided for herein, Tenant shall retain substantially the same
relative position with respect to Major Tenants of the Shopping Center as of the
Commencement Date.
(b) After the Delivery of Possession Date (as defined in Section 3.2),
Landlord reserves the right to relocate Tenant; Landlord shall provide Tenant
with not less than thirty (30) days written notice of such relocation (the
"Relocation Period") during which Landlord shall offer to Tenant such
alternative location(s) (with approximately the same floor area) 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, Minimum Rent and Sales Break Point 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 new location 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 location to Tenant, open for
business in the new location ("Relocation Date"). In the event Landlord and
Tenant are unable to agree on an alternative location, this Lease shall
terminate at the end of the said thirty (30) day period ("Termination Date"). In
the event of such termination, Landlord shall pay to Tenant, within thirty (30)
days following the Termination Date, a sum equal to the then unamortized cost of
Tenant's leasehold improvements which have been paid for by Tenant, such
amortization to be on a straight line basis over the Original Term, provided
Tenant shall furnish to Landlord such backup information as Landlord may
reasonably require. Tenant shall deliver possession of the Leased Premises to
Landlord on or before the Termination Date and/or the Relocation Date in "as is"
condition excepting the provisions of Sections 3.5 and 17.1. Tenant shall pay
all charges which are due and owing or which shall accrue up to such Termination
Date or Relocation Date (which charges shall be paid to Landlord within thirty
(30) days of such Termination Date or Relocation Date) and Tenant shall be
released from any and all further obligations pursuant to this Lease accruing
after such Termination Date or Relocation Date with respect to the vacated
Leased Premises, except as otherwise provided in Articles V and VII; however, in
the event of relocation, Tenant shall remain liable for all obligations accruing
under this Lease after the Relocation Date.
(c) The square footage of the Leased Premises (sometimes herein referred to
as the gross leasable floor area or GLA) shall be measured as defined in Exhibit
B. The actual square footage in the Leased Premises shall be determined by
Landlord's architect. 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 from the square foot floor area originally set forth
in the Data Sheet, the Minimum Rent set forth in Section 2.1 hereof shall be
adjusted by multiplying the Minimum Rent by a fraction, the numerator of which
is the square foot floor area determined by Landlord's architect and the
denominator of which is the square foot floor area originally set forth in the
Data Sheet, and Tenant shall be obligated to pay such Minimum Rent, as adjusted,
<PAGE>
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 in this Lease to Minimum Rent (or
the monthly installments thereof) shall be deemed to be references to the
Minimum Rent as computed by application of this Section 1.1, subject, however,
to the adjustments set forth elsewhere in this Lease. For purposes of this
Lease, in determining the gross leasable floor area or the gross leased and
occupied floor area of the Shopping Center, there shall be excluded therefrom
project areas and offices, common areas and/or areas under Landlord's control
(e.g., electrical/utility rooms, etc.). The exterior walls, roof, storefront and
the area beneath the Leased Premises are not demised hereunder, and the use
thereof, together with the right to install, maintain, use, repair and replace
pipes, ducts, conduits, wires, people counters, tunnels, sewers and structural
elements leading through the Leased Premises in locations which will not
materially interfere with Tenant's use thereof and serving other parts of the
Retail Development are hereby reserved to Landlord. Landlord reserves an
easement above Tenant's finished ceiling or light line to the roof for general
access purposes and in connection with the exercise of Landlord's other rights
under this Lease.
Section 1.2 Term. The Term of this Lease shall be for a period commencing
on the Commencement Date, and expiring at 11:59 p.m. local time on the final day
of the month in which the Original Term or the Option Period, if exercised,
expires or other specified date as set forth in the Data Sheet, unless sooner
terminated in accordance with the provisions hereof (the "Expiration Date").
Unless otherwise specified in this Lease, the use of the word "Term" shall be
deemed to include both the Original Term and the Option Period, if exercised.
The term "full year" and "year" as used in this Lease shall mean consecutive
periods of twelve (12) months each following the Commencement Date. For all
purposes of this Lease, the term "Lease Year" shall have the following meaning:
the first Lease Year shall be a period beginning with the Commencement Date and
ending on the 31st day of December next following the Commencement Date, and
after the first Lease Year, the term Lease Year shall mean a fiscal period of
twelve (12) consecutive calendar months commencing on January 1 of each calendar
year, except that the last Lease Year shall terminate on the Expiration Date or
sooner termination of this Lease. Lease Years containing 365 days or more shall
be referred to as "full Lease Years." If the Leased Premises are not delivered
to Tenant on or before the expiration of 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 of this Lease, Landlord may submit to Tenant a
Commencement and Expiration Date Declaration in the form attached hereto as
Exhibit F, specifying the information called for in said form, and Tenant shall
execute such Declaration within thirty (30) days following submission for
purposes of certifying such information; provided, however, that the Declaration
shall not be rendered ineffective by Tenant's failure to execute same.
Provided Tenant is not in default hereof, Tenant shall have the option to
extend the Term hereof (the "Option") for one (1) additional period of five (5)
years (the "Option Period"). The Option shall be exercised, if at all, by
written notice to Landlord ("Notice") at least one hundred eighty (180) days
prior to the expiration of the Original Term. All terms and conditions of this
Lease shall apply during the Option Period except the Minimum Rent and Sales
Break Points shall be as scheduled in Sections 2.1 and 2.2 hereof. In the event
that Tenant does not exercise the Option by the required date, then such Option
shall become null and void and be of no further force or effect.
If Tenant's Gross Sales during the twelve (12) month period ending two
hundred ten (210) days prior to the Expiration Date do not exceed Two Hundred
Thirty-Five and 00/100ths Dollars ($235.00) per square foot of floor area in the
Leased Premises, then any Notice by Tenant of the Option shall be null and void
and Tenant's Notice shall have no force or effect. Tenant shall furnish to
<PAGE>
Landlord, concurrently with its Notice, a statement certified by an authorized
representative or financial officer of Tenant setting forth the amount of
Tenant's Gross Sales for the said twelve (12) month period.
Notwithstanding the foregoing, in the event Tenant does not achieve Gross
Sales (as hereinafter defined) of at least Two Hundred Thirty-Five and 00/100ths
Dollars ($235.00) per square foot during the third (3rd) year of the Term
hereof, then Tenant, for a period of sixty (60) days following the end of the
third (3rd) year, shall have the option, upon one hundred eighty (180) days
prior written notice to Landlord of terminating this Lease ("Termination
Option") provided, however, that Tenant shall not be entitled to terminate this
Lease if Tenant shall have been, or is, in default of this Lease. In the event
that Tenant does not exercise its Termination Option within the required time
period, then such Termination Option shall, upon expiration of the applicable
period, become null and void and be of no further force or effect. In the event
Tenant exercises the foregoing Termination Option within the required time
period, this Lease shall terminate upon expiration of the one hundred eighty
(180) day period subject, however, to the payment by Tenant to Landlord of all
sums then due and owing or having accrued to Landlord. In the event that Tenant
exercises the Termination Option provided for herein, Tenant shall pay to
Landlord the unamortized portion of the Construction Allowance (as hereinafter
defined).
Landlord and Tenant acknowledge and agree that the Leased Premises are
presently leased to a tenant whose term has not expired. The Commencement Date
of the Term of this Lease is subject to Landlord entering into a Termination of
Lease Agreement with such tenant under which tenant in fact vacates the Leased
Premises. It is understood that the Delivery of Possession Date shall not be
earlier than the date on which the foregoing condition is met.
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 the Tenant Handbook, and to open its store for business
to the public not later than the Commencement Date.
Section 1.4 Late Opening. Except for delays, as described in Article XVI
and provided that Tenant has been given the seventy-five (75) day Fixturing
Period, 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 One Hundred and
00/100ths Dollars ($100.00) per day for the Commencement Date and each day after
the Commencement Date that Tenant shall have failed to open its store for
business. This remedy shall be in addition to any and all other remedies
provided for in this Lease in the event of such failure to open. Such additional
late opening rent shall be deemed to be in lieu of any Percentage Rent that
might have been earned during the period of Tenant's failure to open.
ARTICLE II
RENT AND DEPOSIT
Section 2.1. Minimum Rent. During the entire Term of this Lease, Tenant
shall pay annual minimum rental ("Minimum Rent") for the Leased Premises from
the Commencement Date of this Lease in the amount set forth in the Data Sheet
attached hereto, which sum shall be payable by Tenant in equal consecutive
monthly installments in the sum set forth in the Data Sheet attached hereto, on
or before the first day of each month, in advance. The Minimum Rent and each of
the monthly installments called for hereunder shall be payable to Landlord,
without demand, deduction, set-off or counter-claim. The first installment of
Minimum Rent shall be paid by Tenant within ten (10) days of Tenant's receipt of
Landlord's notice of the Delivery of Possession 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.
<PAGE>
Notwithstanding anything to the contrary contained herein, in the event K?B
Toys ceases to operate within the Shopping Center during the Original Term, and
provided Landlord does not lease Space 401 to a toy retailer other than Play Co.
Toys and Entertainment Corporation, or any Play Co. Toys and Entertainment
Corporation related entity, then Minimum Rent as shown Section 2.1 of the Data
Sheet shall be increased and Tenant shall pay Twenty and 00/100ths Dollars
($20.00) per square foot of floor area of the Leased Premises for the remainder
of the Original Term.
In the event K?B Toys ceases to operate within the Shopping Center during
the first (1st) two (2) years of the Option Period, and provided Landlord does
not lease Space 401 to a toy retailer other than Play Co. Toys and Entertainment
Corporation, or any Play Co. Toys and Entertainment Corporation related entity,
then Minimim Rent as shown Section 2.1 of the Data Sheet shall be increased and
Tenant shall pay Twenty-Two and 00/100ths Dollars ($22.00) per square foot of
floor area of the Leased Premises for such two (2) year period beginning with
the first (1st) day of the first (1st) month after K?B Toys ceases to operate.
In the event K?B Toys ceases to operate within the Shopping Center during
the last three (3) years of the Option Period, and provided Landlord does not
lease space 401 to a toy store occupying more than two thousand five hundred
(2,500) square feet, other than Play Co. Toys and Entertainment Corporation, or
any Play Co. Toys and Entertainment Corporation related entity, then Minimim
Rent as shown Section 2.1 of the Data Sheet shall be increased and Tenant shall
pay Twenty-Four and 00/100ths Dollars ($24.00) per square foot of floor area of
the Leased Premises for the remainder of the Option Period beginning with the
first (1st) day of the first (1st) month after K?B Toys ceases to operate.
Section 2.2. Percentage Rent. (a) During and for each Lease Year, Tenant
shall pay annual percentage rent ("Percentage Rent") equal to the Percentage
Factor (see Data Sheet) multiplied by all "Gross Sales" resulting from business
conducted in, on or from the Leased Premises during such Lease Year in excess of
the applicable Sales Break Point set forth in the Data Sheet. In any Lease Year
where there is more than one applicable Sales Break Point, for purposes of
computing annual Percentage Rent the following calculation shall be used: each
Sales Break Point which was effective during any such Lease Year shall be
multiplied by a fraction, the numerator of which is the number of days in the
Lease Year that such Sales Break Point was effective and the denominator of
which is the actual number of days in such Lease Year (herein the "Adjusted
Break Point") and the sum of the Adjusted Break Points shall be the Sales Break
Point for such Lease Year. "Gross Sales" is defined to mean the total amount of
the actual sales price, whether for cash or otherwise, of all sales of
merchandise or services arising out of or payable on account of (and all other
receipts or amounts receivable whatsoever with respect to) all the business
conducted in, on, or from the Leased Premises by or on account of Tenant or any
sublessee, assignee or concessionaire of Tenant for cash or otherwise, including
all orders for merchandise taken from or filled at or from the Leased Premises,
including all deposits not refunded to customers. A "sale" shall be deemed to
have been consummated for purposes of this Lease, and the entire amount of the
sale price shall be included in Gross Sales, at such time as (i) the transaction
is initially reflected in the books or records of Tenant, or any sublessee,
assignee or concessionaire of Tenant, or (ii) Tenant or such other entity
receives all or any portion of the sales price, or (iii) the applicable goods or
services are delivered to the customer, whichever first occurs, irrespective of
whether payment is made in installments, the sale is for cash or credit or
otherwise, or all or any portion of the sales price has actually been paid at
the time of inclusion in Gross Sales or at any other time. Tenant shall record
at the time of each sale or transaction, in the presence of the customer, all
receipts from such sale or other transaction, whether for cash, credit or
otherwise, in a cash register or cash registers having a cumulative total, which
shall be sealed in a manner approved by Landlord and which shall possess such
other features as shall be required by Landlord. There shall be no deduction
allowed for direct or indirect discounts, rebates, or other reductions on sales,
unless generally offered to the public on a uniform basis. Tenant may deduct
from Gross Sales discount sales to employees, bad debts when written off the
<PAGE>
books of Tenant and charges paid to credit card companies provided, however,
that in the aggregate such deductions 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 exclude, however, proceeds from any sales tax,
gross receipts tax or similar tax, by whatever name called which are separately
stated and in addition to the purchase price, bona fide transfers of merchandise
from the Leased Premises to any other stores or warehouses of Tenant, refunds
given to customers for merchandise purchased at the Leased Premises and returned
or exchanged, and sales of Tenant's fixtures and equipment not in the ordinary
course of Tenant's business. The term "merchandise" as used in this Lease shall
include food and beverages if Tenant is permitted to sell such items pursuant to
Section 4.1 hereof.
(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 ten (10) 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 ten (10) days following the end of the month in which Tenant's
Gross Sales for the Lease Year to date exceed the Sales Break Point, and each
month thereafter, Tenant shall pay to Landlord Percentage Rent and shall submit
to Landlord a statement certified by Tenant setting forth the Gross Sales for
each such period. Within forty-five (45) days after the close of each Lease
Year, Tenant shall furnish to Landlord a statement certified by an authorized
representative or financial officer of Tenant setting forth the amount of Gross
Sales during such Lease Year and showing the amount of Percentage Rent required
to be paid by Tenant for such Lease Year. The full amount of the Percentage Rent
due shall be paid to Landlord no later than sixty (60) days after the end of
each Lease Year and any excess Percentage Rent paid shall be credited against
Tenant's next due Percentage Rent payment, except for the final Lease Year of
the Term for which any excess shall be refunded to Tenant. Landlord and/or
Landlord's auditor shall have the right, at any time after ten (10) business
days notice, to inspect and/or audit the records of Tenant relating to Gross
Sales. If the Gross Sales exceed those reported, Tenant shall immediately pay
any deficiency in Percentage Rent owing to Landlord. If Gross Sales vary from
those reported by three percent (3%) or more, Tenant shall pay Landlord's cost
of inspection and audit. If Gross Sales vary from those reported by (i) five
percent (5%) or more in any one (1) Lease Year, or (ii) three percent (3%) or
more for any two (2) Lease Years out of any five (5) Lease Years, then Landlord
shall have the right, at its sole option, to terminate this Lease, with Tenant
remaining liable for sums due and owing under this Lease for the balance of the
Term. Tenant agrees that in the event Tenant shall fail to timely submit a Gross
Sales statement as required by this Section 2.2(b), Tenant shall pay on demand a
late fee of Fifty and 00/100ths Dollars ($50.00) per late statement, as
additional rent.
(c) In the event that Tenant shall fail to operate its business in the
Leased Premises in the manner and on each day as required pursuant to Article IV
hereof, then, for the purpose of computing the Percentage Rent for such Lease
Year affected by Tenant's failure to operate, the Sales Break Point for such
<PAGE>
Lease Year shall be adjusted by multiplying the Sales Break Point otherwise
applicable for such Lease Year by a fraction, the numerator of which shall be
the actual number of days in such short Lease Year or the actual number of days
in such Lease Year during which Tenant was open for business and operating in
accordance with Article IV, and the denominator of which shall be "360".
In the event that the first Lease Year is less than six (6) months in
length, then the Percentage Rent covering such Lease Year shall be paid on Gross
Sales in excess of the Sales Break Point computed on a pro rated basis for the
period beginning on the Commencement Date of the Term and ending twelve (12)
calendar months thereafter.
(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 at least
fifty percent (50%) of merchandise from the Leased Premises at discount prices,
namely prices that are at least twenty percent (20%) less than the prices
charged by the 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 (together with the
annual Gross Sales statement) Tenant shall provide 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 cost and expense
incurred for such Study.
Section 2.3. Payments By Tenant. Throughout the Term of this Lease, Tenant
shall pay to Landlord, without demands, deductions, set-offs or counterclaims,
the Rent, which is hereby defined as the sum of the Minimum Rent, Percentage
Rent and all additional rent, when and as the same shall be due and payable
hereunder. Unless otherwise stated, all sums of money or charges of any kind or
nature, in addition to Minimum Rent and Percentage Rent, payable by Tenant to
Landlord pursuant to this Lease or the Exhibits attached hereto are defined as
"additional rent" and are due thirty (30) days after the rendering of an invoice
therefor, without any deductions, set-offs or counterclaims, and failure to pay
such sums of money or charges shall carry the same consequences as Tenant's
failure to pay Rent. All payments and charges required to be made by Tenant to
Landlord hereunder shall be payable in United States funds, at the address
indicated on page 1 of this Lease, unless otherwise specified by written notice
from Landlord to Tenant. No payment by Tenant or receipt by Landlord of a lesser
amount than the correct Rent shall be deemed to be other than a payment on
account and no endorsement or statement on any check or other communication
accompanying a check for payment of any amounts payable hereunder shall be
deemed an accord and satisfaction, and Landlord may accept such check in payment
without prejudice to Landlord's right to recover the balance of any sums owed by
Tenant hereunder or to pursue any other remedy available in this Lease, or under
law, against Tenant.
Section 2.4. Security Deposit. [Intentionally Deleted]
Section 2.5. Late Charge. In the event any Rent or sums required hereunder
to be paid are not received on or before the tenth (10th) calendar day after the
same are due, then, for each and every late payment, Tenant shall immediately
<PAGE>
pay, as additional rent, a late charge equal to the greater of (a) Fifty and
00/100ths Dollars ($50.00), (b) Ten and 00/100ths Dollars ($10.00) per day for
each day after the date due that such payment has not been received by Landlord
or (c) 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 set forth in Section
2.4 hereof. The provisions herein for late charges shall not be construed to
extend the date for payment of any sums required to be paid by Tenant hereunder
or to relieve Tenant of its obligation to pay all such sums at the time or times
herein stipulated. Notwithstanding the imposition of such late charges pursuant
to this Section 2.5, Tenant shall be in default under this Lease if any or all
payments required to be made by Tenant are not made on or before the time due
and as stipulated in Article XIV, and neither the demand for, nor collection by,
Landlord of such late charges shall be construed as a cure of such default on
the part of Tenant. It is agreed that the said late charge is a fair and
reasonable charge under the circumstances and shall not be construed as interest
on a debt payment. In the event any charge imposed hereunder or under any other
section of this Lease is either stated to be or construed as interest, then no
such interest charge shall be calculated at a rate which is higher than the
maximum rate which is allowed under the usury laws of the State, which maximum
rate of interest shall be substituted for the rate in excess thereof, if any,
computed pursuant to this Lease.
ARTICLE III
PREPARATION OF LEASED PREMISES
Section 3.1. Landlord's Work. Landlord shall deliver and Tenant agrees to
accept the Leased Premises in "As Is" condition and Tenant acknowledges that the
Leased Premises are in the condition called for hereunder.
Section 3.2. Delivery of Possession. (a) Landlord, or Landlord's
supervising architect shall give Tenant at least ten (10) days' prior written
notice of the date on which the Leased Premises will be available for the
performance of Tenant's Work, which date shall be defined as the Delivery of
Possession Date of the Leased Premises. 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 frame 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. 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) Within sixty (60) days after the execution
and delivery of this Lease by Landlord, Tenant shall furnish to Landlord for
Landlord's approval, two (2) sets of plans and specifications done in accordance
with the Tenant Handbook which shall provide for the complete remodeling of the
Leased Premises (or finishing in the event the Leased Premises have not been
previously occupied), including without limitation, utilities, interior finish,
store front and fixturing plans, together with mechanical and electrical
specifications with respect to the work to be performed and the installations to
be made by Tenant in order to fit the Leased Premises for use by Tenant in the
conduct of its business ("Tenant's Work"). Tenant agrees, at its sole cost and
expense, to construct and make such improvements in the Leased Premises in
accordance with the approved plans and specifications. Tenant has inspected the
Leased Premises, is familiar with its condition and accepts same "as is" and in
its present condition and Landlord shall not be obligated to do any further
construction or to make any additional improvements in the Leased Premises,
except as may otherwise be expressly provided herein. The taking of the Leased
Premises by Tenant for the performance of Tenant's Work shall be conclusive
evidence that at such time the Leased Premises were in satisfactory condition
except that this provision shall not be deemed to release Landlord from its
obligation to make such repairs as are elsewhere set forth herein as Landlord's
<PAGE>
obligation to make. If Landlord shall, within thirty (30) days after receipt of
Tenant's plans and specifications, notify Tenant of any objections to such plans
and specifications, Tenant shall make necessary revisions and resubmit the same
within thirty (30) days after such notice. Landlord's approval will be evidenced
by endorsement to that effect on the plans and specifications, one set to be
retained by Landlord and one set by Tenant. Tenant understands that Landlord's
approval of its plans and specifications is primarily for conceptual purposes
and such approval shall not constitute a representation or warranty of any kind
with respect thereto, including, without limitation, cost of Tenant's Work,
compliance with governmental requirements or suitability of design.
As soon as practicable after the plans and specifications are made
available to Landlord and Landlord shall have approved Tenant's plans and
specifications, Tenant shall enter the Leased Premises and shall proceed with
due diligence and dispatch to make improvements and install fixtures and other
equipment and a full stock of inventory therein, in accordance with the approved
plans and specifications and all governmental requirements. Such work and
installation shall not interfere with any work to be done by Landlord in other
portions of the Shopping Center, shall be done with labor which is not
incompatible with other labor employed at the Shopping Center without creating
any conflict or work stoppage with, under or as a result of any labor agreement
to which Landlord or its contractors may be a party, and in compliance with such
rules and regulations as Landlord may reasonably make. Landlord shall have no
responsibility or liability whatsoever for any loss of or damage to any fixtures
or other equipment or inventory installed or left in the Leased Premises, and
Tenant's entry on and occupancy of the Leased Premises shall be governed by and
subject to all the provisions, covenants and conditions of this Lease other than
those requiring payment of Rent. Tenant shall obtain and furnish to Landlord to
be delivered not later than the Commencement Date, lien waivers from all
contractors, subcontractors and materialmen, a building permit, licenses,
certificates and approvals with respect to work done and installations made by
Tenant that may be required from the governmental authorities with respect to
Tenant's Work, use and occupancy and shall open for business to the public not
later than the Commencement Date.
Provided Tenant is not in default hereof, Landlord hereby agrees to
contribute towards the cost of Tenant's Work a Construction Allowance of Fifteen
and 00/100ths Dollars ($15.00) per square foot of floor area of the Leased
Premises. The aforesaid Construction Allowance shall be paid sixty (60) days
after the date Tenant opens for business, provided Tenant shall have received
the applicable lien waivers from all contractors and subcontractors. In the
event that this Lease is terminated prior to expiration of the stated Term,
Tenant shall immediately repay to Landlord an amount equal to the then
unamortized portion of the Construction Allowance paid to Tenant, which
amortization shall be on the straight-line basis over the full stated Term.
Notwithstanding the foregoing, Tenant shall be obligated to pay temporary
charges in the amount of One and 00/100ths Dollars ($1.00) per square foot of
floor area in the Leased Premises within thirty (30) days after receipt of a
bill from Landlord.
(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 its expense, shall cause the lien to be
discharged or fully bonded to the satisfaction of Landlord within thirty (30)
days after notice of the filing thereof. If Tenant fails to discharge or bond
against said mechanic's, materialman's or other lien, Landlord may, in addition
to any other remedies Landlord may have, but without obligation to do so, bond
<PAGE>
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.
Tenant, subject to Landlord's consent not to be unreasonably withheld,
conditioned or delayed, may grant a security interest, encumber or pledge its
equipment, personal property, inventory and movable trade fixtures located on or
about the Leased Premises, with respect to financing which benefits this store
location. In no event, however, shall Tenant be permitted to mortgage,
hypothecate, encumber or pledge the leasehold interest in 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
covering, interior or exterior lighting, plumbing fixtures, shades, canopies or
awnings or make any changes to the storefront, mechanical, electrical or
sprinkler systems) without the prior written consent thereto by Landlord. Tenant
shall submit to Landlord plans and specifications for such work at the time
consent is sought, in accordance with the criteria and procedures as provided in
the Tenant Handbook. 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 provision of this Lease.
Tenant may from time to time make non-structural alterations to the Leased
Premises without Landlord's prior written approval, the aggregate total cost of
which shall not exceed Ten Thousand and 00/100ths Dollars ($10,000.00) in any
Lease 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 non-structural alterations shall not change the
overall appearance of the Leased Premises as originally approved by Landlord.
Section 3.5. Removal by Tenant. All repairs, alterations, decorations,
additions and improvements made by Tenant shall be deemed to be attached to the
leasehold and to have become the property of Landlord upon such attachment, and,
upon the Expiration Date or sooner termination of this Lease, Tenant shall not
remove any of such alterations, decorations, additions and improvements;
provided that trade fixtures installed by Tenant may be removed if all Rent due
herein are paid in full and Tenant is not otherwise in default hereunder;
provided further, however, that Landlord may designate by written notice to
Tenant those alterations, decorations, additions and improvements which shall be
removed by Tenant at the Expiration Date or sooner termination of this Lease and
Tenant shall, at Tenant's cost, promptly remove the same and repair any damage
to the Leased Premises caused by such removal.
ARTICLE IV
<PAGE>
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 hereof, Tenant shall (a) operate its business in
the Leased Premises under the Trade Name specifically set forth in the Data
Sheet and under no other so long as such name shall not be held to be in
violation of any applicable law, (b) not change the advertised name or character
of the business operated in the Leased Premises, (c) refer to the Shopping
Center by name in designating the location of the Leased Premises in all
newspaper and other advertising within the Shopping Center market area and in
all other references to the location of the Leased Premises, and (d) during the
period from the Delivery of Possession Date through sixty (60) days following
the Commencement Date, include in all Tenant's newspaper advertising within the
Shopping Center market area the designation that Tenant is opening for business
in the Shopping Center. If any governmental license(s) or permit(s) shall be
required for the proper and lawful conduct of Tenant's business or other
activity carried on in the Leased Premises, or if a failure to procure such a
license or permit might or would in any way, adversely affect Landlord or the
Shopping Center, then Tenant, at Tenant's expense, shall duly procure and
thereafter maintain such license(s) or permit(s) and submit the same for
inspection by Landlord. Tenant, at Tenant's expense, shall at all times, comply
with the requirements of such license(s) or permit(s). Except as provided in
Section 1.3, Tenant shall open 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.
Section 4.2. Operation of Business. Tenant shall open for business in the
Leased Premises and remain open during the entire Term and continuously operate
its business in the entire area of the Leased Premises during the entire Term.
Tenant shall conduct its business at all times in a high class and reputable
manner, maintaining at all times a full staff of employees and a complete stock
of merchandise. Tenant shall install and maintain at all times a display of
merchandise in the display windows (if any) of the Leased Premises and shall
keep the Leased Premises well lighted during all hours that the Shopping Center
is open to the public and during such other hours as may be reasonably
designated by Landlord, but in no event more than one (1) hour after the close
of business. In no event shall Tenant conduct or advertise any auction, fire
sale, going out of business sale, or bankruptcy sale in or about the Leased
Premises without Landlord's prior written consent in each instance, which
consent may be withheld by Landlord in its sole and absolute discretion. Tenant
shall conduct its business in the Leased Premises in a lawful manner and in good
faith during all days and hours specified by Landlord from time to time. 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.
Notwithstanding anything to the contrary, upon expiration of the current
lease between Landlord and K?B Toys, Landlord agrees not to renew such lease
with K?B Toys in Space 401 or relocate K?B Toys to another space within the
Shopping Center. During the Term of this Lease, and provided Tenant shall not be
in default hereof, Landlord agrees that Landlord will not lease space larger
than two thousand five hundred (2,500) square feet in the Shopping Center (other
than with respect to spaces leased or to be leased to Major Tenants and
presently executed non-Major Tenant leases), to a tenant whose primary use is
the sale of toys.
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
<PAGE>
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.
Section 4.4. Tenant's Warranties. Tenant warrants, represents, covenants
and agrees that, in the operation of its business within the Leased Premises,
Tenant shall: (a) pay before delinquency any and all taxes, assessments and
public charges levied, assessed or imposed upon Tenant's business, or upon
Tenant's fixtures, furnishings or equipment in the Leased Premises, or upon any
leasehold interest or personal property of any kind, owned by or placed in or
about the Leased Premises by Tenant or by anyone claiming by, through or under
Tenant, including, without limitation, any transfer taxes, and pay when and as
due all license fees, permit fees and charges of a similar nature required for
the conduct by Tenant or any subtenant or concessionaire of any business or
undertaking authorized hereunder to be conducted in or from the Leased Premises;
(b) observe all reasonable requirements promulgated by Landlord at any time and
from time to time relating to delivery vehicles, the delivery of merchandise,
and the storage and removal of trash and garbage; (c) not use any space outside
the Leased Premises for sale, storage or any other undertaking; (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,
<PAGE>
common areas or any space on or about the Retail Development (outside the Leased
Premises) for display, sale, handbilling, advertising, solicitation, or any
other similar undertaking; (j) maintain and operate the heating, ventilating and
air conditioning system and equipment servicing the Leased Premises so as to
adequately heat and cool the same and to maintain at all times, whether or not
Tenant is open for business, temperatures in the Leased Premises which will not
drain heat or ventilation or air conditioning from the enclosed mall or other
interior areas into the Leased Premises and shall not discharge heat,
ventilation or air conditioning from the Leased Premises into the enclosed mall
or other interior areas; and (k) be authorized to do business in the State,
evidence of which must be delivered to Landlord on or before the earlier of (i)
the Commencement Date or (ii) the date that Tenant opens for business in the
Leased Premises.
Section 4.5. Storage and Office Space. Tenant shall store or stock in the
Leased Premises only such goods, wares and merchandise as Tenant intends to
offer for sale at, in, from, or upon the Leased Premises. 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.
Section 4.7. Notice by Tenant. Tenant shall give immediate notice to
Landlord in case of fire or accidents in the Leased Premises, or in the building
of which the Leased Premises are a part of, or of defects therein or in any
fixtures or equipment.
Section 4.8. Radius. Tenant acknowledges that the Retail Development draws
it customers from a large geographic area, relying in part on regional and
international tourism, and that the success of the Retail Development and income
of the Landlord therefrom are dependent upon maximum customer traffic within the
Retail Development . In addition, Tenant acknowledges that Landlord is relying
on the generation of Percentage Rent from Tenant's Gross Sales at the Leased
Premises. During the Term, in the event Tenant, or any person, firm or
corporation who or which controls or is controlled by Tenant (an "Affiliate")
shall directly or indirectly, either individually or as a partner or stockholder
or otherwise, own, operate, or 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 with the Gross Sales of the Leased
Premises and to pay Percentage Rent thereon in accordance with the terms of this
Lease. The "Area" shall be defined as the area falling within a radius of
twenty-five (25) miles for outlet stores only measured from the outside boundary
<PAGE>
of the Retail Development. This Section 4.8 shall not apply to any competing
business which is open and is being operated by Tenant within said Area on the
Effective Date.
ARTICLE V
COMMON AREA
Section 5.1. Use of Common Area. Landlord agrees to cause to be operated,
managed and maintained during the Term all of the common areas of the Shopping
Center. The term "common areas", as used in this Lease, shall mean the parking
areas, pedestrian sidewalks and bridges, truckways, loading docks, delivery
areas, park areas, pedestrian malls and courts, elevators and escalators, if
any, and stairs not contained in leased areas, public restrooms and comfort
stations, if any, service areas, fire, service and exit corridors, passageways,
landscaped areas, berms and all other areas or improvements which may be
provided for the convenience and use of the occupants and tenants of the Retail
Development and their respective agents, employees, customers, invitees, and the
licensees and invitees of Landlord. The use and occupancy by Tenant of the
Leased Premises 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 Landlord and defend Landlord, 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 in such areas and to
discourage non-customer use, provided the same shall not materially adversely
affect access to or visibility of the Leased Premises. In addition, Landlord may
modify, from time to time, the traffic flow pattern and layout of parking spaces
and the entrances-exits to adjoining public streets or walkways, utilize
portions of the common areas for entertainment, displays and charitable
activities and may do such other acts in and to the common areas as in its
judgment may be desirable to improve the convenience or attraction thereof.
Landlord agrees to maintain all common areas of the Shopping Center in good
order, condition and repair and in a safe, clean, sightly and sanitary condition
in accordance with good and accepted shopping center practices. The maintenance
obligations of Landlord shall include, without limitation, the re-striping of
parking areas when required, repairing of common areas and adequate lighting of
all exterior common areas during all hours of darkness during which Tenant shall
be open for business and for one (1) hour thereafter.
Section 5.2. Common Area Maintenance Expenses. (a) Tenant agrees to pay to
Landlord each Lease Year, in the manner hereinafter provided, Tenant's
proportionate share of all costs and expenses (the "Common Area Maintenance
Expenses") of every kind and nature paid or incurred by Landlord, or for which
Landlord is obligated, during each Lease Year, for operating, equipping,
policing and protecting, heating, air conditioning, providing sanitation and
sewer and other services, lighting, insuring, repairing, replacing and
maintaining (i) the common areas, and (ii) all buildings and roofs within the
Retail Development, and (iii) all other areas, facilities and buildings used in
connection with the maintenance and/or operation of, and whether located within
or outside of, the Retail Development, including without limitation, all roads
and driveways serving the Retail Development which are maintained or repaired by
<PAGE>
Landlord or at Landlord's expense. The Common Area Maintenance Expenses shall
include, but are not limited to, costs and expenses of: water, gas, sewage,
electricity, refuse disposal, air conditioning, heating and other utilities
(without limitation), including all usage, service, hook-up, connection,
availability and/or standby fees or charges pertaining to same, and the utility
costs; illumination and maintenance of signs, whether located on or off the
Retail Development property; salaries of all management personnel; maintenance,
repair and replacement of directories, electronic or otherwise, cleaning,
lighting, snow removal and landscaping; security control and fire protection;
uniforms for maintenance, administrative and security personnel for the Retail
Development; management fees; maintenance for wooded areas, retention ponds,
wetlands, rivers and riverbank areas; premiums for insurance to the extent
maintained by Landlord, for liability, casualty and property damage, including,
without limitation, insurance against vandalism, plate glass breakage, fire and
extended coverage insurance and such other coverage as determined by Landlord,
and liability for defamation and claims of false arrest occurring in and about
such areas; personal property taxes; maintaining and replacing the equipment, if
any, supplying music to such areas; the reasonable depreciation of equipment
used in the operation and maintenance of such areas; total compensation and
benefits (including premiums for workers' compensation and other insurance) paid
to or on behalf of persons involved in the performance or
administration/technical support of the work specified in this Section 5.2;
repair, maintenance and cleaning of such areas; operation, repair, maintenance
and reasonable depreciation of all temporary and permanent utility systems for
the Retail Development, including, without limitation, heating, ventilating and
air conditioning systems (HVAC systems), gas system(s), plumbing system(s),
electrical equipment and irrigational pumping system(s); operation, repair,
maintenance and reasonable depreciation of emergency water and sprinkler main
system(s) and security alarm system(s); operation maintenance, repair and
replacement of mechanical equipment including any automatic door openers,
elevators, escalators, lighting fixtures (including replacement of poles, tubes
and bulbs) and all other items of equipment used in connection with such areas;
paper supplies in restrooms located in or about such areas, cleaning, lighting,
striping and landscaping, curbs, gutters, sidewalks, drainage and irrigation
ditches, conduits, pipes and canals serving the Retail Development; and there
shall also be added to the foregoing costs and expenses an amount equal to
fifteen percent (15%) of the total of all of the ongoing costs and expenses as
Landlord's administrative fee. As stated throughout this Lease, whenever Tenant
is obligated to pay its "proportionate share" of a cost, expense or Taxes (as
hereinafter defined) such share shall be based on gross leased and occupied
floor area in the Shopping Center, and Tenant's proportionate share shall be
that fraction, the numerator of which is the total square footage of floor area
in the Leased Premises, and the denominator of which is the total square footage
of gross leased and occupied floor area (including the Leased Premises) in the
Shopping Center. As used throughout this Lease, the "gross leased and occupied
floor area" in effect for the whole of any Lease Year shall be the average of
the gross leased and occupied floor area in effect on the first day of each
calendar month in such Lease Year.
Prior to the proration of such Common Area Maintenance Expenses to Tenant,
there shall be deducted from the total of such Common Area Maintenance Expenses
any amounts specifically contributed by the Major Tenants toward such Common
Area Maintenance Expenses. It is further agreed that in no event shall Tenant be
obligated for the capital costs of initially constructing the Retail Development
or the capital costs of subsequent expansion construction for the Retail
Development (i.e., adding new Major Tenants to the development or expanding the
Shopping Center or the common areas).
(b) Tenant's proportionate share of such Common Area Maintenance Expenses
for each Lease Year shall be paid in advance, in equal monthly installments, in
the same manner and at the same time as the monthly installments of Minimum Rent
are payable hereunder without deduction, offset or diminution of any kind, based
on an amount estimated in advance from time to time by Landlord to be Tenant's
obligation under this Section 5.2. Notwithstanding the above, in the event
Landlord at any time determines that the amount of Common Area Maintenance
Expenses actually being paid or incurred by Landlord exceeds the estimate upon
<PAGE>
which Tenant's proportionate share of Common Area Maintenance Expenses was
computed, then Tenant, following a request from Landlord, shall commence to pay
with the next monthly installment of Minimum Rent due an amount sufficient to
result in Tenant's paying its full proportionate share of Common Area
Maintenance Expenses as computed on the basis of Landlord's revised estimate of
Common Area Maintenance Expenses. Subsequent to the end of each Lease Year,
Landlord shall furnish Tenant with a statement of the actual amount of Tenant's
proportionate share of such Common Area Maintenance Expenses for such period
which statement shall be in reasonable detail, provided, however, Landlord shall
be permitted to describe areas of expenditure by category and shall not be
obligated to enumerate each specific expenditure. If the total amount paid by
Tenant under this Section 5.2 for any Lease Year shall be less than the actual
amount due from Tenant for such Lease Year as shown on such statement, Tenant
shall pay Landlord the difference between the amount paid by Tenant and the
actual amount due, such deficiency to be paid within thirty (30) days after the
furnishing of each such statement, and if the total amount paid by Tenant
hereunder for any such Lease Year shall exceed the actual amount due from Tenant
for such Lease Year, such excess shall be credited against the next installment
due from Tenant to Landlord under this Section 5.2.
ARTICLE VI
REPAIRS AND MAINTENANCE
Section 6.1. Repairs and Maintenance by Landlord. Landlord agrees to keep
in good order, condition and repair the roof (including keeping the roof
watertight), foundations, exterior (including exterior painting and finish), all
structural portions of the Leased Premises (and of the 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. 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.
Section 6.2. Repairs and Maintenance by Tenant. (a) Except for the repairs
and maintenance that Landlord is specifically obligated to make or perform
pursuant to Section 6.1 above, throughout the entire Term of this Lease, Tenant,
at its expense, shall promptly make all repairs and replacements and perform
maintenance in and to the Leased Premises and all equipment and fixtures therein
or appurtenant thereto, that are necessary or desirable in order to keep the
Leased Premises in good order, condition and repair and in safe, dry and
tenantable condition. Without limiting the generality of the foregoing, Tenant,
at its expense, shall maintain and promptly make any and all necessary repairs
to or replacements of: (i) that portion of any pipes, lines, ducts, wires or
conduits (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
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foregoing, Landlord shall be responsible for repairs and maintenance
necessitated by the negligence or intentional acts of Landlord, its agents or
employees. Notwithstanding any contrary provision of this Article VI, Tenant, at
its expense, shall make any and all repairs to the Leased Premises as may be
necessitated by any break-in, forcible entry or other trespass into or upon the
Leased Premises, regardless of whether or not such entry and damage is caused by
the negligence or fault of Tenant or occurs during or after business hours.
Tenant, at its expense, shall change all air conditioning filters at least five
(5) times per year and shall have the air conditioning system professionally
inspected and generally serviced at least twice per year.
(b) Tenant shall keep and maintain the Leased Premises in a clean, sanitary
and safe condition in accordance with the laws of the State and in accordance
with all directions, rules and regulations of the health officer, building
inspector, the National Fire Protection association and any other officials of
the governmental agencies having jurisdiction, at the sole cost and expense of
Tenant, and Tenant shall comply with all requirements of laws, ordinances,
rules, regulations and orders of any lawful authority having jurisdiction
affecting the Leased Premises or Tenant's use thereof. Tenant, at its expense,
shall install and maintain fire extinguishers and other fire protection devices
as may be required by reason of the conduct of Tenant's business, from time to
time by any agency having jurisdiction or the underwriters insuring the building
in which the Leased Premises are located. If any bureau, department or official
of the Federal or State government requires or recommends the installation of
any changes, modifications or alterations in the sprinkler system or additional
sprinkler heads or other equipment (hereinafter in this subsection (b)
collectively "changes") by reason of Tenant's business, or the location of
partitions, trade fixtures, or other contents of the Leased Premises, or for any
other reason, or if any such changes become necessary to prevent the imposition
of a penalty or charge against the full allowance for a sprinkler system in the
fire insurance rates set by any fire insurance company, Tenant, at Tenant's
expense, shall promptly make such changes as required.
(c) Tenant agrees that Tenant's use of electrical current will at no time
exceed the capacity of the electric distribution system and that Tenant will not
make any alteration or addition to Tenant's electrical system without Landlord's
prior written consent. If Tenant installs any electrical equipment that
overloads the electrical lines in the Leased Premises or the Retail Development,
Tenant shall, at Tenant's sole cost and expense, be required to make whatever
changes to such electrical equipment and in the electric wiring in the Leased
Premises (but only after obtaining Landlord's written approval) as may be
necessary in order to remedy such overloading and be in compliance with all
insurance and legal requirements. All changes required to be made hereby shall
result in the continued conformance with the provisions of the Tenant Handbook
and this Lease.
(d) If Tenant refuses or neglects to properly maintain the Leased Premises,
or to commence or to complete repairs promptly and adequately, or if Landlord
finds it necessary to make any repairs or replacements otherwise required to be
made by Tenant, then Landlord may, after 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 cost and expenses therefor plus a
charge of fifteen percent (15%) of such costs and expenses.
ARTICLE VII
TAXES
Section 7.1. Tax Liability. Tenant agrees to pay to Landlord Tenant's
proportionate share of all taxes and assessments and service payments in lieu of
taxes of every nature and kind which may be levied or assessed by, or payable
to, any lawful authority during or with respect to each fiscal tax year falling
in whole or in part during the Term of this Lease against any or all or any part
of the land, buildings and improvements comprising the Retail Development and
any other taxes which Landlord becomes obligated to pay with respect to the
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Retail Development, whether or not the same are assessed as real or personal
property or are payable in advance or in arrears (the "Taxes"). If due to a
future change in the method of taxation, any tax, excise or assessment shall be
levied or assessed against Landlord, directly or indirectly, in lieu of, in
substitution for or as a supplement to any present Taxes or future (real estate
or personal property) tax, in whole or in part, including any new tax, excise or
assessment upon rentals payable to Landlord by occupants of the Retail
Development or upon gross receipts or other income of Landlord derived by
Landlord from or upon the interest in the Retail Development of Landlord (or any
individuals or entities comprising Landlord), such tax, excise or assessment
shall constitute a tax respecting which Tenant is obligated to pay its
proportionate share to Landlord as provided herein. If any Taxes or assessed
valuation(s) are contested by Landlord, then Tenant's proportionate share of
Taxes shall also include Tenant's proportionate share of the cost and expense of
consultation services incurred in evaluating and contesting such Taxes or
assessed valuation(s).
The term "Taxes" shall also include any form of assessment, special
assessment, license fee, license tax, business license fee, business license
tax, commercial rental tax, levy, charge, tax or similar imposition, imposed by
any authority having the direct power to tax, including without limitation any
city, county, State or Federal government, or any school, agricultural,
lighting, drainage or other improvement or special assessment district or any
other agency or other public body, whether or not consented to or joined in by
Landlord and whether or not retroactive, payable by Landlord thereof as against
the land and improvements comprising, or any legal or equitable interest of the
Landlord in, the Retail Development.
Section 7.2. Method of Payment. Tenant's proportionate share of Taxes shall
be paid, in advance, in monthly installments on or before the first day of each
calendar month, in the same manner and at the same time as the monthly
installments of Minimum Rent are payable hereunder without deduction, offset or
diminution of any kind, based on an amount estimated by Landlord. Following
receipt of all bills for Taxes attributable to any calendar or fiscal year
during the Term hereof, Landlord shall furnish Tenant with a written statement
of the actual amount of Tenant's proportionate share of Taxes for such year. If
any bill for any such Taxes is not available, Landlord will estimate the amount
of such tax. If the total amount paid by Tenant hereunder for any calendar or
fiscal year during the Term of this Lease shall be less than the actual amount
due from Tenant for such year, as shown on such statement, Tenant shall pay to
Landlord the difference between the amount paid by Tenant and the actual amount
due, such deficiency to be paid within thirty (30) days after demand therefor by
Landlord; and if the total amount paid by Tenant hereunder for any such calendar
or fiscal year shall exceed such actual amount due from Tenant for such year,
such excess shall be credited against the next installment of Taxes due from
Tenant to Landlord hereunder. For the calendar or fiscal years in which this
Lease commences and terminates, Tenant's liability for its proportionate share
of any Taxes for such years shall be subject to a pro rata adjustment based on
the number of days of said calendar or fiscal years during which the Term of
this Lease is in effect. A copy of any such bill for Taxes shall at all times be
sufficient evidence of the amount of Taxes assessed or levied against the
property to which such bill relates. Prior to or at the commencement of the Term
of this Lease and from time to time thereafter throughout the term hereof,
Landlord shall notify Tenant in writing of Landlord's estimate of Tenant's
monthly installments due hereunder. Tenant's obligations under this Article VII
shall survive the Expiration Date or sooner termination of this Lease.
ARTICLE VIII
INSURANCE, INDEMNITY AND LIABILITY
Section 8.1. Landlord's Insurance Obligations. Landlord agrees to obtain
and maintain during the Term hereof, to the extent the same is available, fire
and extended coverage insurance, in amounts and coverages and with such special
endorsements as Landlord shall determine from time to time, insuring the
building in which the Leased Premises are located and the improvements to the
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Leased Premises provided by Tenant pursuant to this Lease (exclusive of Tenant's
merchandise, trade fixtures, furnishings, equipment, plate glass, signs and
personal property of Tenant). Landlord shall also carry rental interruption
insurance in amounts at least equal to Tenant's total rental obligation for
twelve (12) full months under this Lease including the total of the estimated
costs to Tenant of Taxes and Common Area Maintenance Expenses (including
insurance) for such twelve (12) month period. Tenant shall reimburse Landlord
for its proportionate share of the insurance costs incurred by Landlord under
this Section 8.1 as part of Tenant's Common Area Maintenance Expenses as
provided in Section 5.2 hereof.
Section 8.2. Tenant's Insurance Obligations. (a) Provided Tenant is the
Tenant named on the Recital Page and a wholly-owned subsidiary of the Guarantor,
if any, and Tenant's and Guarantor's, if any, combined net worths are or
Tenant's net worth is at least equal to Ten Million and 00/100ths Dollars
($10,000,000.00), Tenant shall have the right to self-insure for any loss or
damage of the type covered by standard fire and extended coverage insurance with
respect to personal property located on or within the Leased Premises including
alterations and improvements made by Tenant to the extent the same are not
covered by Landlord's fire and extended coverage insurance. Tenant and Guarantor
shall at their sole expenses, without regard to fault on the part of any person,
make and perform any repairs or restorations which are required as a result of a
casualty which would be covered by insurance of the type described in this
Section 8.2(a). Tenant, at Tenant's sole cost and expense, shall obtain and
maintain in effect commencing with the Delivery of Possession Date and
continuing throughout the Term of this Lease, insurance policies providing for
the following coverage: (i) all risk property insurance against fire, theft,
vandalism, malicious mischief, sprinkler leakage and such additional perils as
now are or hereafter may be included in a standard extended coverage endorsement
from time to time in general use in the State, insuring Tenant's merchandise,
trade fixtures, furnishings, equipment and all items of personal property of
Tenant and of anyone claiming by, through or under Tenant located on or in the
Leased Premises, and the amount of such insurance will be set forth in an
"agreed value endorsement" to the policy of such insurance, not less than 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
and 00/100ths Dollars ($50,000.00), provided, however, any and all proceeds of
such insurance, so long as this Lease shall remain in effect, shall be used only
to repair or replace or pay for the items so insured; (ii) a commercial general
liability policy, including insurance protecting against any and all claims for
injury to persons or property occurring in or about the Leased Premises and
protecting against assumed or contractual liability under this Lease with
respect to the Leased Premises and the operations of Tenant and any subtenant of
Tenant in, on or about the Leased Premises, with such policy to be in the
minimum amount of Three Million and 00/100ths 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 and 00/100ths 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 the Tenant Handbook.
(b) All insurance policies herein to be procured by Tenant shall: (i) be
issued by insurance companies reasonably satisfactory to Landlord and authorized
to do business in the State; (ii) be written as primary policy coverage and
non-contributing with respect to any coverage which Landlord may carry and that
any coverage carried by Landlord shall be excess insurance; (iii) insure and
name Landlord, Landlord's managing agent, any mortgagee of the Shopping Center
and any parties in interest designated by Landlord as additional insured, as
their respective interests may appear (except with respect to workers'
compensation insurance); and (iv) contain any express waiver of any right of
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subrogation by the insurance company against Landlord, Landlord's managing agent
and their respective agents, employees and representatives which arises or might
arise by reason of any payment under such policy or by reason of any act or
omission of Landlord, its agents, employees or representatives. Neither the
issuance of any insurance policy required hereunder, nor the minimum limits
specified herein with respect to Tenant's insurance coverage, shall be deemed to
limit or restrict in any way Tenant's liability arising under or out of this
Lease. With respect to each and every one of the insurance policies herein
required to be procured by Tenant, on or before the Commencement Date and at
least thirty (30) days before any such insurance policy shall expire, Tenant
shall deliver to Landlord upon Landlord's written request a duplicate original
or certified copy of each such policy or a certificate of the insurer,
certifying that such policy has been issued, providing the coverage required by
this Section 8.2 and containing provisions specified herein, together with
evidence of payment of all applicable premiums. Any insurance required to be
carried hereunder may be carried under a blanket policy covering the Leased
Premises and other locations of Tenant. Each and every insurance policy required
to be carried hereunder by or on behalf of Tenant shall provide (and any
certificate evidencing the existence of each such insurance policy shall
certify) that, unless Landlord shall first have been given thirty (30) days'
prior written notice thereof, the insurer will not cancel, materially change or
fail to renew the coverage provided by such insurance policy. The term
"insurance policy" as used herein shall be deemed to include any extensions or
renewals of such insurance policy. In the event that Tenant shall fail to
promptly furnish any insurance coverage hereunder required to be procured by
Tenant, Landlord, at its sole option, shall have the right after ten (10) days
prior written notice to Tenant to obtain the same and pay the premium therefor
for a period not exceeding one (1) year in each instance, and the premium so
paid by Landlord shall be immediately due and payable by Tenant to Landlord as
additional rent.
(c) Tenant shall not do or permit to be done any act or thing upon the
Leased Premises that will invalidate or be in conflict with fire insurance
policies covering the building containing the Leased Premises or any part
thereof, including all common areas, or fixtures and property therein, or any
other insurance policies or coverage referred to above in this Article VIII; and
Tenant shall promptly comply with all rules, orders, regulations, or
requirements relating to such insurance policies, and shall not do, or permit
anything to be done, in or upon the Leased Premises, or bring or keep anything
therein, which shall increase the rate of fire insurance on the building in
which the Leased Premises are located or on any property, including all common
areas, located therein, or increase the rate or rates of any other insurance
referred to hereinabove. If any act or omission of Tenant, its agents, employees
or contractors shall result in any increase in the premium rates applicable to
any such insurance policies carried by Landlord, or other increased costs to
Landlord in connection therewith, then Tenant shall reimburse Landlord on demand
as additional rent for the amount of any such increased rates or costs. In
particular, if Tenant uses the Leased Premises for the preparation of food,
Tenant shall reimburse Landlord on demand, for any part of the premium for
insurance coverage under Section 8.1 hereof required to be paid on account of
such use of the Leased Premises.
Section 8.3. Mutual Covenant. Notwithstanding any provision of this Lease
to the contrary, Landlord and Tenant each hereby releases the other, its
officers, directors, employees, and agents from any and all liability or
responsibility for any loss, damage or injury caused by fire or other casualty
for which insurance containing a waiver of subrogation is carried by the injured
party at the time of such loss, damage or injury regardless of the extent of any
recovery by the injured party under such insurance. Both parties agree to carry
casualty insurance containing such waiver of subrogation.
Additionally, during any time when Tenant is self-insuring its insurance
obligations hereunder, Tenant hereby releases the Landlord, its officers,
directors, employees and agents from any and all liability or responsibility for
any loss, damage or injury caused by fire or other casualty, even if such loss,
damage or casualty is caused in whole or in part by Landlord or by any party for
<PAGE>
whom Landlord may be responsible.
Section 8.4. Covenant to Hold Harmless. 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),Tenant hereby
indemnifies and agrees to hold harmless Landlord, its officers, directors,
partners, employees and agents and any mortgagee or master lessor of the
Shopping Center, from and against any and all claims, actions, damages,
liabilities, costs and expenses, including attorneys' fees, that (i) arise from
or are in connection with the possession, use, occupancy, management, repair,
maintenance or control of the Leased Premises, or any portion thereof, or (ii)
arise from or are in connection with any 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 mortgagee or master lessor of the Shopping
Center with respect to the foregoing. Tenant shall pay, satisfy and discharge
any and all judgments, orders and decrees which may be received against Landlord
or any such mortgagee or master lessor in connection with the foregoing. In the
event Landlord or any other party so indemnified, shall, without fault, be made
a party to any litigation commenced by or against Tenant, or if Landlord or any
such party shall, in its sole discretion, intervene in such litigation to
protect its interest hereunder, then Tenant shall protect and hold them harmless
and shall pay all costs, expenses and attorneys' fees incurred or paid by such
party(ies) in connection with such litigation. Tenant hereby indemnifies and
agrees to hold harmless Landlord, its officers, directors, partners, employees
and agents and any mortgagee or master lessor of the Shopping Center, from and
against any and all claims, actions, damages, liabilities, costs and expenses,
including attorneys' fees, that (i) arise from or are in connection with the
possession, use, occupancy, management, repair, maintenance or control of the
Leased Premises, or any portion thereof, or (ii) arise from or are in connection
with any 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
mortgagee or master lessor of the Shopping Center with respect to the foregoing.
Tenant shall pay, satisfy and discharge any and all judgments, orders and
decrees which may be received against Landlord or any such mortgagee or master
lessor in connection with the foregoing. In the event Landlord or any other
party so indemnified, shall, without fault, be made a party to any litigation
commenced by or against Tenant, or if Landlord or any such party shall, in its
sole discretion, intervene in such litigation to protect its interest hereunder,
then Tenant shall protect and hold them harmless and shall pay all costs,
expenses and attorneys' fees incurred or paid by such party(ies) in connection
with such litigation. 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 8.5. Loss and Damage. All Tenant's property of every kind and
description which may at any time be in the Leased Premises shall be kept at
Tenant's sole risk, and Landlord shall not be liable except to the extent
resulting from the negligence or intentional acts of Landlord, its agents or
employees to Tenant, its agents, employees or customers, for any damage, loss,
compensation, accident, or claims whatsoever resulting to Tenant or its property
from the necessity of repairing any portion of the Shopping Center; any
interruption in the use of the Leased Premises; the use or operation (by
Landlord, Tenant, or any other person or persons whatsoever) of any elevators,
<PAGE>
heating, cooling, electrical or plumbing equipment or apparatus; the termination
of this Lease by reason of the destruction of the Leased Premises; any fire,
robbery, theft, or any other casualty; any leakage in any part or portion of the
Leased Premises or the Shopping Center; any water, wind, rain or snow that may
leak into, or flow from part of the Leased Premises or the Shopping Center; any
acts or omissions of any occupant of any space adjacent to or adjoining all or
any part of the Leased Premises or any part of the building of which the Leased
Premises are a part; any explosion, casualty, utility failure or malfunction, or
falling plaster; the bursting, stoppage or leakage of any pipes, sewer pipes,
drains, conduits, appliance or plumbing works; or any other cause whatsoever.
ARTICLE IX
DESTRUCTION OF LEASED PREMISES
Section 9.1. Continuance of Lease. In the event of any damage to the Leased
Premises by fire or other casualty, this Lease shall not be terminated or
otherwise affected; except that, (a) if more than twenty-five percent (25%) of
the square footage of the Leased Premises shall be damaged by any such fire or
other casualty during the last three (3) years of the Term of this Lease (not
including any Option Periods) or during any renewal or extension of the Term
hereof and the cost of repair or restoration exceeds Ten Thousand and 00/100ths
Dollars ($10,000.00) as estimated by Landlord, or (b) if Landlord is unable to
rebuild any portion of the building in which the Leased Premises are located or
of the Shopping Center due to any inability to obtain any required governmental
approval in connection therewith, or (c) if more than thirty-five percent (35%)
of the floor area of the building in which the Leased Premises are located or of
the Shopping Center shall be damaged or destroyed by fire or other casualty, or
(d) if 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 (i) the entire proceeds of the insurance provided for in Section
8.1 hereof shall be paid by the insurance company or companies directly to
Landlord and shall belong to, and be the sole property of Landlord, (ii) the
portion of the proceeds of the insurance provided for in Section 8.2 which is
allocable to equipment, fixtures and other items, which, by the terms of this
Lease, rightfully belong to Landlord upon the termination of this Lease by
whatever cause, shall be paid by the insurance company or companies directly to
Landlord, and shall belong to, and be the sole property of, Landlord, and (iii)
Landlord and Tenant shall be relieved from any and all further liability or
obligation accruing under this Lease from and after the date of such
termination. 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 cost 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 Minimum Rent 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
Reconstruction Work, unless Tenant opens at an earlier time in the damaged area
<PAGE>
or remains open in such area following destruction or damage, in which event
there shall be no abatement or any such abatement shall terminate as of the date
of Tenant's earlier reopening. Landlord shall be obligated to commence
Landlord's Reconstruction Work and shall diligently pursue the completion of
Landlord's Reconstruction Work and shall cause the same to be completed as soon
thereafter as possible under the attendant circumstances, but in any event all
such Landlord's Reconstruction Work shall be completed and the Leased Premises
reopened for business within one hundred eighty (180) days following such fire
or casualty. After Landlord has completed Landlord's Reconstruction Work, Tenant
shall commence such Tenant's Reconstruction Work, at its expense. Tenant shall
comply with all laws, ordinances and governmental rules or regulations, and
shall perform all work or cause such work to be performed with due diligence and
in a firs class manner. All permits required in connection with said repairs,
restoration and reconstruction shall be obtained by Tenant at Tenant's sole cost
and expense. Any amount expended by Tenant in excess of any insurance proceeds
received by Tenant shall be the sole obligation of Tenant."Landlord's
Reconstruction Work" shall be all work required to reconstruct the Leased
Premises in accordance with the working drawings originally approved by
Landlord, or with (at Landlord's sole election) new drawings prepared by Tenant
and acceptable to Landlord and Tenant. In no event shall Landlord be required to
repair or replace Tenant's merchandise, trade fixtures, furnishings or
equipment. If Landlord repairs or rebuilds, Tenant, at Tenant's sole cost, shall
repair or replace Tenant's merchandise, trade fixtures, furnishings and
equipment in a manner and to at least a condition equal to that prior to the
damage or destruction thereof ("Tenant's Reconstruction Work"). Except as may be
specifically set forth in this Article IX, Landlord shall not be liable or
obligated to Tenant to any extent whatsoever by reason of any fire or other
casualty damage to the Leased Premises, or any damages suffered by Tenant by
reason thereof, or the deprivation of Tenant's possession of all or any part of
the Leased Premises.
In the event Landlord has not commenced restoration or rebuilding of the
Leased Premises within ninety (90) days of the date of such fire or casualty
loss, or 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, 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.
Section 10.1. Eminent Domain. If fifty percent (50%) or more of the floor
area of the Leased Premises shall be taken or condemned by any governmental
authority (including, for purposes of this Article X, any purchase by such
governmental authority in lieu of a taking), then either party may elect to
terminate this Lease by giving notice to the other party not more than ninety
(90) days after the date on which such title shall vest in the authority. If the
parking facilities are reduced below the minimum parking requirements imposed by
the applicable authorities, Landlord may elect to terminate this Lease by giving
Tenant notice within one hundred eighty (180) days after such taking. In
addition, if any Major Tenant shall terminate its lease with Landlord, pursuant
to a taking of its store, Landlord may terminate this Lease by written notice to
Tenant within ninety (90) days after notice to Landlord that such Major Tenant
is terminating its lease. In the case of any taking or condemnation, whether or
not the Term of this Lease shall cease and terminate, the entire award shall be
the property of Landlord; provided, however, Tenant shall be entitled to any
award as may be made for trade fixtures and other equipment (not including any
Tenant's Work required or permitted under this Lease) which under the terms of
this Lease would not have become the property of Landlord; further provided,
that any such award to Tenant shall not be in diminution of any award otherwise
to be made to Landlord in the absence of such award to Tenant.
Section 10.2. Rent Apportionment. In the event of any taking or
condemnation, the then current Minimum Rent, Sales Break Point and the square
foot floor area in the Leased Premises as determined pursuant to Section 1.1
shall be apportioned as of the date when possession of the Leased Premises is
<PAGE>
required to be delivered to the condemning authority or termination of this
Lease, as the case may be, and, if the Term of this Lease shall not have ceased
and have been terminated as of said date, Tenant shall be entitled to a pro rata
reduction in the Minimum Rent payable and Sales Break Point hereunder, or, if
Tenant has prepaid Minimum Rent, Tenant shall be entitled to a pro rata credit
for the Minimum Rent paid hereunder, based on the proportion which the floor
area taken from the Leased Premises bears to the entire floor area of the Leased
Premises immediately prior to such taking.
Section 10.3. Temporary Taking. Notwithstanding anything to the contrary in
this Article X, the requisitioning of the Leased Premises or any part hereof by
military or other public authority for purposes arising out of a temporary
emergency or other temporary situation or circumstances shall constitute a
taking of the Leased Premises by eminent domain when the use or occupancy by the
requisitioning authority is expressly provided to continue, or shall in fact
have continued, for a period of one hundred eighty (180) days or more, and if
this Lease is not thereafter terminated under the foregoing provisions of this
Article X, then for the duration of any period of use and occupancy of the
Leased Premises by the requisitioning authority, all the terms and provisions of
this Lease and obligations of Tenant hereunder shall remain in full force and
effect, except that the Minimum Rent and Sales Break Point shall be reduced in
the same proportion that the floor area of the Leased Premises so requisitioned
bears to the total floor area of the Leased Premises, and Landlord shall be
entitled to whatever compensation may be payable from the requisitioning
authority for the use and occupation of the Leased Premises for the period
involved.
Section 11.1. No Assignment, Subletting or Encumbering of Lease. (a) Except
as otherwise provided in this Article XI and notwithstanding any references to
assignees, subtenants, concessionaires or other similar entities in this Lease,
Tenant shall not (i) assign or otherwise transfer, or mortgage or otherwise
encumber, this Lease, in whole or in part, or any of its rights hereunder, (ii)
sublet the Leased Premises or any part thereof, or permit the use of the Leased
Premises or any part thereof by any persons other than Tenant or its agents. Any
such attempted or purported transfer, assignment, mortgaging or encumbering of
this Lease or any of Tenant's interest hereunder and any attempted or purported
subletting or grant of a right to use or occupy all or a portion of the Leased
Premises in violation of the foregoing sentence, whether voluntary or
involuntary or by operation of law or otherwise, shall be null and void and
shall not confer any rights upon any purported transferee, assignee, mortgagee,
or occupant, and shall, at Landlord's option, 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 for 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: (1) Tenant shall not at the time of such transfer be in default
under any of the terms, covenants and conditions of this Lease beyond any
applicable grace period, (2) such Transferee shall agree in writing to perform
all of the unperformed terms, covenants and conditions of this Lease and (3)
Tenant shall at all times remain primarily obligated for the performance of the
terms, covenants and conditions of this Lease.
Notwithstanding anything to the contrary set forth in this Article XI and
without application of any prior provisions of this Article XI, Tenant shall
have the right, without Landlord's consent but with prior written notice to
Landlord, to assign this Lease or sublet the Leased Premises to its parent
corporation or any of its wholly-owned subsidiaries, or any affiliate or
subsidiary of Tenant's parent corporation provided that Tenant shall at all
<PAGE>
times remain primarily obligated for the performance of the terms, covenants and
conditions of this Lease.
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 Securities Act of 1933, as amended.
(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
publicly traded which shall result in a change in the voting control of Tenant
or the corporate entity which controls Tenant shall be deemed to be a prohibited
assignment of this Lease within the meaning of this Article XI. If Tenant is a
partnership or an unincorporated association, then the sale, issuance or
transfer of a majority interest therein, or the transfer of a majority interest
in or a change in the voting control of any partnership or unincorporated
association or corporation which directly or indirectly controls Tenant, or the
transfer of any portion or all of any general partnership or managing
partnership interest, shall be deemed to be a prohibited assignment of this
Lease within the meaning of this Article XI. The consent by Landlord to any
assignment, transfer, or subletting to any party shall not be construed as a
waiver or release of Tenant under the terms of any covenant or obligation under
this Lease or as a waiver or release of the non-assignability covenants in their
future application, nor shall the collection or acceptance of Rent from any such
assignee, transferee, subtenant or occupant constitute a waiver or release of
Tenant of any covenant or obligation contained in this Lease.
(i) Notwithstanding anything herein contained to the contrary, a sale or
transfer of any voting capital stock of Tenant when caused by death (e.g.,
testamentary transfer) or for estate planning purposes (e.g. inter vivos trust)
will not be deemed a prohibited assignment of this Lease.
(ii) The provisions of this Section 11.1 (b) shall not be deemed to
prohibit transfer of limited partnership interests among existing limited or
general partners; however, if either general partner ceases to remain a general
partner of Tenant such occurrence shall be deemed a prohibited assignment of
this Lease under the meaning of this Article XI.
(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: (i) 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;
(ii) a description of the identity, net worth and previous business experience
of the proposed transferee, including, without limitation, copies of the
proposed transferee's latest income, balance sheet and changes in financial
position statements (with accompanying notes and disclosures of all material
changes thereto) in audited form, if available, and certified as accurate by the
proposed transferee; and (iii) any further information 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 assignment, sublease or transfer shall be forwarded to Landlord at
the address provided above and to the on-site mall management office.
(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
<PAGE>
provided in this Article XI, in the event of an assignment or transfer of
Tenant's interest in this Lease, or a sublease of all or a portion of the Leased
Premises, to a third party, any monthly rent or other payment accruing to Tenant
as the result of any such assignment, transfer, or sublease, including any lump
sum or periodic payment in any manner relating to such assignment, transfer or
sublease, which is in excess of the Rent then payable by Tenant under this Lease
shall be paid one-half (1/2) of such excess by Tenant to Landlord monthly as
additional rent. Landlord may require a certificate from Tenant specifying the
full amount of any such payment of whatsoever nature. 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.
(e) All reasonable costs and expenses, including attorney's 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 XI 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.
Section 12.1. Subordination. Tenant agrees that this Lease shall, at the
request of Landlord, be subordinate to any mortgages or deeds of trust that are
now, or may hereafter be, placed upon the Leased Premises and to any and all
advances to be made thereunder, and to the interest thereon, and all renewals,
replacements and extensions thereof, provided that the mortgagees or
beneficiaries named in said mortgages or deeds of trust shall agree to recognize
the interests of Tenant under this Lease in the event of foreclosure, if Tenant
is not then in default. Tenant also agrees that any mortgagee or beneficiary may
elect to have this Lease constitute a prior lien to its mortgage or deed of
trust, and in the event of such election and upon notification by such mortgagee
or beneficiary to Tenant to that effect, this Lease shall be deemed prior in
lien to such mortgage or deed of trust, whether this Lease is dated prior to or
subsequent to the date of said mortgage or deed of trust. Tenant agrees that
upon the request of Landlord, or any mortgagee or beneficiary, Tenant shall
execute whatever reasonable instruments may be required to carry out the intent
of this Section 12.1 and Section 12.2.
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
<PAGE>
Landlord sells, conveys or otherwise transfers its interest in the Shopping
Center or any portion thereof containing the Leased Premises, this Lease shall
remain in full force and effect and Tenant hereby attorns to, and covenants and
agrees to execute an instrument in writing reasonably satisfactory to the new
owner whereby Tenant attorns to such successor in interest and recognizes such
successor as Landlord under this Lease. Payment by or performance of this Lease
by any person, firm or corporation claiming an interest in this Lease or the
Leased Premises by, through or under Tenant without Landlord's consent in
writing shall not constitute an attornment or create any interest in this Lease
or the Leased Premises.
Section 12.3. Financing. In the 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 change (i) the Minimum Rent, additional rent
or Percentage Rent payable by Tenant; (ii) the permitted use; (iii) the size,
dimensions or location of the Leased Premises; (iv) the length of the Term; (v)
Landlord's construction obligations; or (vi) the conditions precedent as to
Tenant's initial opening requirements, or which would 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 has
been modification, that the same is in full force and effect as modified and
setting forth such modifications); (iii) whether or not there are then existing
any set-offs or defenses against the enforcement of any right or remedy of
Landlord, or any duty or obligation of Tenant, hereunder (and, if so, specifying
the same in detail); (iv) that Rent is paid currently without any offset or
defense thereto, (v) the dates, if any, to which any Rent has been paid in
advance; (vi) whether or not there is then existing any claim of Landlord's
default under this Lease and if so, specifying the same in detail; (vii) that
Tenant has no knowledge of any event having occurred that authorized the
termination of this Lease by Tenant (or if Tenant has such knowledge, specifying
the same in detail); and (viii) any other matters relating to the status of this
Lease that Landlord or its mortgagee may request be confirmed, provided that
such facts are accurate and ascertainable.
Landlord shall, within thirty (30) days after written request from Tenant,
no more often than once in any Lease Year and provided Tenant is not then in
default hereunder, deliver to Tenant or such persons as Tenant may designate, a
statement in writing certifying to the extent true that: (i) Tenant is in
possession of the Leased Premises; (ii) this Lease is in full force and effect
(as later modified, if such be the case); (iii) the Rent due hereunder is
current; and (iv) that to the best of Landlord's knowledge, information and
belief, Tenant is not in default hereunder.
Section 12.5. Remedies. Any failure by Tenant to execute any certificate,
statement or instrument in accordance with the foregoing provisions of this
Article XII or any financing statement in accordance with the provisions of
Section 14.2(a), within the time period provided or if no time period is
specified, then within thirty (30) days after written request, shall constitute
an irrevocable power of attorney appointing and designating Landlord or its
successors or assigns as attorney-in-fact for Tenant, to execute and deliver any
<PAGE>
such certificate, statement, instrument or financing statement.
Section 13.1. Promotion Fund. Landlord shall establish an advertising and
promotion fund (the "Fund"). The object of the Fund shall be to advertise the
Retail Development in the local metropolitan statistical area and to provide a
program of events, all of which shall, in Landlord's judgment, serve to enhance
and promote the Retail Development and its occupants. Such program of events may
include the promotion of coach traffic to the Retail Development and the
development of a mall video network within the Retail Development offering a
program of information, entertainment and advertisements. The Fund shall be
administered by Landlord and the costs and expenses of such administration shall
be charged to the Fund. Landlord shall expend all amounts paid to the Fund by
the tenants in the Retail Development for the purposes herein set forth.
Section 13.2. Promotion Fund Contribution. Tenant's annual contribution to
the Fund shall be the Fund Contribution (reduced proportionately for a partial
Lease Year) as defined in the Data Sheet. The Fund Contribution payable by
Tenant for each Lease Year shall be increased commencing with the second Lease
Year of the Term of this Lease, and each Lease Year thereafter, by a percentage
equal to the percentage increase from the "base period" of the Consumer Price
Index ("Index") to the "current period" of the Index of the Lease Year for which
the adjustment is being made; provided, however, if the first Lease Year is less
than six (6) months, the first adjustment to the Fund Contribution shall be
after the first full Lease Year. Except as herein expressly provided, the term
"base period" shall initially refer to the Index published for the month of
October immediately preceding the Commencement Date. Following the initial
increase in the Fund Contribution hereunder, the term "base period" shall refer
to the Index published for the month of October immediately preceding the Lease
Year for which the Fund Contribution was last adjusted hereunder. The "current
period" of the Index shall refer to the Index published for the month of October
immediately preceding the Lease Year for which an adjustment is being made. In
the event the Index shall not be published for any of the above-described
months, then the Index published for the month closest, but prior, to the
described month shall be used in its place. The annual Fund Contribution shall
be payable by Tenant to Landlord, or as Landlord may direct, in twelve (12)
equal monthly installments, commencing on the Commencement Date, at the same
time and in the same manner as the monthly installments of Minimum Rent are
payable.
Section 13.3. Advertisements. Not more than once 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.
Any production by Landlord of advertising messages for Tenant and any air time
on or access to the Network is subject to availability, as determined solely by
Landlord, and shall be at the then applicable rates and fees set by Landlord.
Landlord shall have the right to reject, remove or discontinue showing any video
taped advertising message of the business conducted, or to be conducted, in the
Leased Premises (herein "Tenant Video") or advertising message on the Network
the content of which is, in the opinion of Landlord, unethical, misleading, in
bad taste, or shall tend to injure the reputation of the Retail Development or
its occupants, or shall be deemed to be detrimental to the Retail Development or
is in violation of any applicable rule, law or existing agreement with
occupant(s) of the Retail Development. Tenant acknowledges that Tenant shall be
solely responsible for the content of its Tenant Video and except with respect
to the gross negligence of Landlord and the Network, Tenant agrees to save
harmless Landlord, its officers, directors, partners, employees and agents from
and against any and all claims, actions, damages, liability, cost or expense,
including attorneys' fees that arise from or with respect to the content of such
advertising message, including without limitation any claims for infringement of
the intellectual property rights of others or actions for unfair competition.
Landlord reserves the right at any time to dissolve the Network and cease
providing its promotional services as well as Tenant Videos and in lieu thereof,
to provide, or cause to be provided, a program of advertising and promotional
events which in Landlord's sole judgment, will serve to promote the Retail
Development and its occupants.
Section 14.1. Elements of Default. If any one or more of the following
events occur, said event or events shall hereby be classified as a "default":
(a) (i) the failure of Tenant to take possession of the Leased Premises at the
Delivery of Possession Date, or (ii) the failure of Tenant to open its doors for
business on the date specified in Section 1.3 hereof, or (iii) if Tenant vacates
or abandons the Leased Premises and permits the same to remain unoccupied and
unattended, or (iv) if Tenant fails to maintain normal inventory levels and
employee staff for the conduct of its normal business activities in the Leased
Premises, or (v) the failure of Tenant to continuously operate its business in
compliance with Section 4.2 for the purposes specified in Section 4.1, or (vi)
in the event of the sale or removal of a substantial portion of Tenant's
property located in the Leased Premises in a manner which is outside the
ordinary course of Tenant's business; (b) the failure of Tenant to pay any Rent
or other charges required to be paid by Tenant when same shall become due and
payable hereunder and such failure continues for ten (10) days after written
notice; (c) the failure of Tenant to perform or observe any term or condition of
this Lease and such failure shall continue for thirty (30) days after written
notice; (d); (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) 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. In the event of (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, 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" (as hereinafter defined), then
Landlord may, upon ten (10) days prior notice in writing to Tenant, declare such
default to be a default of this Lease (unless the default is cured within the
ten day period after notice) and, at Landlord's option, a default of any of the
"other leases," as the case may be. 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) for the shopping centers commonly
referred to as Ontario Mills, Potomac Mills, Franklin Mills, Grapevine Mills,
Sawgrass Mills, City Mills, Arizona Mills, Katy Mills and Concord Mills (such
leases to be referred to as "other leases"). 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:
(b) Perform, on behalf and at the expense of Tenant, any obligation of
<PAGE>
Tenant under this Lease which Tenant has failed to perform and of which Landlord
shall have given at least three (3) days' notice (except in the case of
emergency, in which event no such notice shall be required), the cost of which
performance by Landlord, together with interest therein at the interest rate (as
specified in Section 20.14 hereof) from the date of such expenditure, shall be
deemed additional rent and shall be payable by Tenant to Landlord upon demand.
(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 and for the account of Tenant without resort to legal process and without
Landlord being deemed guilty of trespass or conversion or becoming liable for
any loss or damage occasioned thereby. In connection herewith, Landlord shall
have, in addition to any other remedies, any and all self-help remedies,
including but not limited to a forcible entry into the Leased Premises or a
"lock-out" accomplished by changing the locks on the Leased Premises.
(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 written notice of such termination to
Tenant, which termination shall be effective as of the date of such notice or
any later date therefor specified by Landlord in such notice (provided, that
without limiting the generality of the foregoing provisions, Landlord shall not
be deemed to have accepted any abandonment or surrender by Tenant of any or all
of the Leased Premises or Tenant's leasehold estate under this Lease unless
Landlord has so advised Tenant expressly and in writing, regardless of whether
Landlord has re-entered or relet any or all of the Leased Premises or exercised
any or all of Landlord's other rights under this Lease or applicable law).
(f) In Landlord's own name or otherwise, relet any or all of the Leased
Premises with or without any additional premises, for any or all of the
remainder of the Term (or, if this Lease has then been terminated, for any or
all of the period which would, but for such termination, have constituted the
remainder of the Term) or for a period exceeding such remainder, on such terms
and subject to such conditions as are acceptable to Landlord (including, by way
of example rather than of limitation, the alteration of any or all of the Leased
Premises in any manner which, in Landlord's judgment, is necessary or desirable
in connection with such reletting, and the allowance of one or more concessions
or "free-rent" or reduced-rent periods), and collect and receive the rents
thereof. Tenant shall pay to Landlord, at the times and in the manner specified
by the provisions of this Lease (unless Landlord has elected to accelerate Rent
as provided above in subparagraph(d), in which event Tenant shall be obligated
to pay such accelerated amount as provided in such subparagraph), (i) the
installments of the Minimum Rent, additional rent and Percentage Rent accruing
during such remainder (or, if this Lease has then been terminated, damages
equaling 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's
fees, leasing or brokerage commissions, repair or improvement expenses and the
expense of any other actions taken in connection with such reletting) less any
monies received by Landlord with respect to such remainder from such reletting
of any or all of the Leased Premises.
<PAGE>
(g) Recover from Tenant, an amount equal to (i) all items of accrued and
unpaid Rent, including, without limitation, the then unamortized amount of the
Construction Allowance; (ii) all reasonable expenses (including, by way of
example rather than of limitation, all repossession costs, management expenses,
operating expenses, legal expenses and attorney's fees) incurred by Landlord in
curing or seeking to cure any default or in exercising or seeking to exercise
any of Landlord's rights and remedies under the provisions of this Lease or at
law or in equity on account of any default, plus (iii) interest on all such
expenses, at the rate provided in Section 20.14, all of which expenses and
interest shall be payable by Tenant immediately on demand therefor by Landlord.
(h) Without terminating this Lease, maintain Tenant's right to possession,
in which case this Lease shall continue in effect whether or not Tenant shall
have vacated the Leased Premises. In such event, Landlord shall be entitled to
enforce all of Landlord's rights and remedies under this Lease, including the
right to recover Rent as it becomes due hereunder.
(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 the expiration of the Term of this
Lease (in which event Tenant hereby agrees that, at Landlord's option, the cause
of action shall not be deemed to have accrued until the date of expiration of
said Term).
(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.
(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
<PAGE>
or remedy.
Section 14.3. Bankruptcy. (a) Neither Tenant's interest in this Lease, nor
any estate hereby created in Tenant nor any interest herein or therein, shall
pass to any trustee or receiver or assignee for the benefit of creditors or
otherwise by operation of law, except as may specifically be provided pursuant
to the Bankruptcy Code (11 USCss.101 et seq.), as the same may be amended from
time to time.
(b) It is understood and agreed that this Lease is a lease of real property
in a shopping center as such lease is described in Section 365 of the Bankruptcy
Code, as the same may be amended from time to time. Upon the filing of a
petition by or against Tenant under the Bankruptcy Code, Tenant, as debtor and
as debtor-in-possession, and any trustee who may be appointed with respect to
the assets of or estate in bankruptcy of Tenant, agree to pay monthly in advance
on the first day of each month, as reasonable compensation for the use and
occupancy of the Leased Premises, an amount equal to all Minimum Rent,
additional rent and other charges otherwise due pursuant to this Lease, and to
pay Percentage Rent monthly, at the percentage factor set forth in this Lease
for the Lease Year in which such month falls, on all of the Gross Sales during
such month in excess of one-twelfth (1/12th) of the Sales Break Point for such
Lease Year; payment of all such Percentage Rent to be made by the tenth (10th)
day of the succeeding month. Included within and in addition to any other
conditions or obligations imposed upon Tenant or its successor in the event of
the assumption and/or assignment of this Lease are the following: (i) the cure
of any monetary defaults and reimbursement of pecuniary loss within not more
than thirty (30) days of assumption and/or assignment; (ii) the deposit of an
additional sum equal to not less than three (3) months' Minimum Rent and
additional rent to be held pursuant to the terms of Section 2.4 of this Lease,
which sum shall be determined by Landlord, in its sole discretion, to be a
necessary deposit to secure the future performance under this Lease by Tenant or
its assignee; (iii) the use of the Leased Premises as set forth in Section 4.1
of this Lease and the quality, quantity and/or lines of merchandise, goods or
services required to be offered for sale are unchanged; and (iv) the prior
written consent of any mortgagee to which this Lease has been assigned as
collateral security.
Section 14.4. Additional Remedies and Waivers. The rights and remedies of
Landlord set forth herein shall be in addition to any other right and remedy now
or hereinafter provided by law, including but not limited to the statutes,
rules, regulations, laws 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 an emergency, in which
event no notice shall be required), to cure the act or failure constituting said
default for the account of and at the expense of Tenant. Landlord's cure or
attempt to cure any act or failure constituting the default by Tenant shall not
result in a waiver or release of Tenant. Tenant agrees to pay the costs incurred
by Landlord pursuant to this Section 14.5 plus interest, in accordance with
Section 20.14 hereof, on all sums expended by Landlord pursuant to this Section
14.5 from the date of such expenditure plus a charge of fifteen percent (15%) of
such costs, to Landlord upon demand, as additional rent.
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:
<PAGE>
(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 of this
Lease without an employee of Tenant accompanying Landlord's representative.
ARTICLE XVI
DELAYS
If Landlord or Tenant is delayed or prevented from performing any of their
respective obligations during the Term of this Lease because of strikes,
lockouts, labor troubles, inability to procure materials, failure of power,
governmental restrictions or delays in issuing permits (provided that the delays
do not result from Tenant's actions or failure to act) 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 XVI shall not apply to the
payment of any sums of money required to be paid by Tenant hereunder or any
obligation of Landlord or Tenant that can be satisfied by the payment of money,
and shall not excuse Tenant from its obligation to continuously operate its
business within the Leased Premises in accordance with the provisions of
Sections 4.1 and 4.2 hereof.
ARTICLE XVII
END OF TERM
Section 17.1. Return of Leased Premises. Upon the Expiration Date or
earlier termination of this Lease, Tenant shall quit and surrender to Landlord
the Leased Premises, broom-clean, in good order and condition, ordinary wear and
tear excepted, and shall surrender to Landlord all keys to or for the Leased
Premises and inform Landlord of all combinations of locks, safes and vaults, if
any, in the Leased Premises. Subject to the provisions of Section 3.5 hereof,
Tenant, at its expense, shall promptly remove all personal property of Tenant,
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 removed within ten (10)
days following the Expiration Date or earlier termination of this Lease shall be
deemed to have been abandoned by Tenant and to have become the property of
Landlord, and may be retained or disposed of by Landlord, as Landlord shall
desire. Tenant's obligation to observe or perform the covenants set forth in
this Section 17.1 shall survive the Expiration Date or earlier termination of
this Lease.
Section 17.2. Holding Over. If Tenant shall hold possession of the Leased
Premises after the Expiration Date or earlier termination of this Lease at
Landlord's option (a) Tenant shall be deemed to be occupying the Leased Premises
<PAGE>
as a tenant from month-to-month, at double the Minimum Rent and other charges in
effect during the last Lease Year immediately preceding such holdover and
otherwise subject to all of the terms and conditions of this Lease, or (b)
Landlord may exercise any other remedies it has under this Lease or at law or in
equity including an action for wrongfully holding over.
Notwithstanding the foregoing, if Tenant is negotiating in good faith with
Landlord to renew or extend the Term of this Lease for the Leased Premises (or a
relocation within the Shopping Center), then Tenant may occupy the Leased
Premises on a month-to-month tenancy at one-twelfth (1/12th) of the annual
Minimum Rent for the last year of the Term of the Lease.
ARTICLE XVIII
COVENANT OF QUIET ENJOYMENT
Landlord covenants that if and so long as Tenant pays the Rent and all
other charges provided for herein, and performs all of its obligations provided
for herein, Tenant shall at all times during the Term hereof peaceably have,
hold and enjoy the Leased Premises, without any interruption or disturbance from
Landlord, or anyone lawfully or equitably claiming through or under Landlord,
subject to the terms hereof and any mortgage or deed of trust to which this
Lease shall be subordinate.
<PAGE>
ARTICLE XIX
UTILITIES
Section 19.1. Utilities. Tenant agrees to connect to and use the utilities
(including electricity, water, gas, cooling and/or heating system, telephone and
any other utility) supplied to the Leased Premises in accordance with the
criteria set forth in the Exhibits attached to this Lease, Landlord's schedule
of mechanical and electrical design criteria, Landlord's rules and regulations,
and the rules and regulations of the utility companies supplying the service.
Tenant shall be solely responsible for and promptly pay all costs and charges,
including installation thereof where applicable, for all water, gas, cooling,
heat, electricity, sewer and other utilities provided or used in or at the
Leased Premises, commencing with the Delivery of Possession Date and continuing
throughout the Term of this Lease. If Landlord shall elect to supply any of the
utilities used upon or furnished to the Leased Premises, Tenant agrees to pay as
additional rent per square foot charge based on Tenant's estimated usage, as
reflected on a monthly invoice to be provided by Landlord; provided, however, in
no event shall Tenant's total charges for utilities provided by Landlord exceed
what Tenant would be charged by the local utility company if it were billed
directly by such utility as a direct retail customer. Landlord shall not be
liable to Tenant for any loss, damage or expense which Tenant may sustain if the
utilities, or the quality or character of utilities used upon or furnished to
the Leased Premises are no longer available or suitable for Tenant's
requirements, or if the supply of any such utility ceases or is interrupted as a
result of any cause and no such change, interruption or cessation of service
shall constitute an eviction of Tenant. Any furnishing by Landlord of light,
cooling and/or heat or power shall be conditioned upon the availability of
adequate energy sources. Landlord shall have the right to reduce heat, lighting
and air conditioning within the Shopping Center, including, without limitation,
the Leased Premises and the common areas, as required by any mandatory or
voluntary fuel or energy saving allocation, or any similar statute, regulation,
order or program.
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 the Tenant Handbook 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
<PAGE>
providing any such service, as and when they become due and payable.
Section 19.3. Trash and Garbage Removal. Tenant shall be solely responsible
for trash and garbage removal from the Leased Premises including the placing of
all trash and garbage in containers provided by Landlord or Landlord's
contractor for such purpose. In the event Landlord elects to furnish such
service to the tenants in the Shopping Center, Tenant agrees to use only the
service provided by Landlord and to pay for such service (including both the
cost of leasing containers and the cost of removal) monthly, as additional rent,
in accordance with the uniform schedule of charges to be established by
Landlord. In no event shall Tenant be obligated to pay Landlord more for such
trash and garbage removal service than the prevailing competitive rates of
reputable independent trash removal contractors for service similar to that
provided by Landlord.
Section 19.4. Water and Sewer. The cost of water and sanitary sewer for
usage in the Shopping Center shall be included in Common Area Maintenance
Expenses, except for food service tenants which may be billed directly by
Landlord or by the supplier of water and sanitary service and any other tenants
which are billed directly by Landlord or such supplier. Landlord reserves the
right to install a water meter in the Leased Premises at any time or from time
to time to measure Tenant's consumption of water therein and bill Tenant
directly for the cost of such consumption. Tenant shall pay, as additional rent,
the amount of each bill within fifteen (15) days after such bill is rendered.
Section 19.5. Grease Interceptors. Landlord, in its commercially reasonable
judgment, will arrange for regular periodic service and cleaning of all grease
interceptors at Tenant's expense. Cost of service and cleaning of grease
interceptors will be allocated among grease interceptors serving food court(s)
and grease interceptors serving individual tenants in proportion to grease trap
size. Tenants served by individual grease traps will pay their pro rata share of
the cost for their grease trap. The share of grease trap service and cleaning
cost apportioned to food court grease traps will be paid by food court tenants
as part of the food court common facilities expenses.
ARTICLE XX
MISCELLANEOUS
Section 20.1. Entire Agreement. This Lease together with the Exhibits,
attached hereto and incorporated herein contains the entire agreement between
the parties hereto and there are no promises, agreements, conditions,
undertakings, or warranties, or representations, oral or written, express or
implied, between them other than as herein set forth. No change or modification
of this Lease or of any of the provisions hereof shall be valid or effective
unless the same is in writing and signed by the parties hereto. No alleged or
contended waiver of any of the provisions of this Lease shall be valid or
effective unless in writing signed by the party against whom it is sought to be
enforced.
Section 20.2. Notices. No notice or other communication given under this
Lease shall be effective unless the same is in writing and is delivered in
person or mailed by registered or certified mail, return receipt requested,
first class, postage prepaid, or delivered by Federal Express or a comparably
reliable national air courier service (i.e. one which delivers service in at
least 48 states) provided that any such courier service provides written
evidence of delivery. Any such notice or communication shall be addressed:
(a) If to Landlord, at 1300 Wilson Boulevard, Suite 400, Arlington,
Virginia 22209, Attention: General Counsel, or to such other address as Landlord
shall designate by giving notice thereof to Tenant, with a copy for
informational purposes only to the Mall Manager of the Retail Development.
(b) If to Tenant, at the address set forth for Tenant on page 1 of this
Lease or at the Leased Premises, or such other address as Tenant shall designate
by giving notice thereof to Landlord.
<PAGE>
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.
Section 20.3. Governing Law. It is the intent of the parties hereto that
all questions with respect to the construction of this Lease and the rights and
the liabilities of the parties hereto shall be determined in accordance with the
laws of the jurisdiction in which the Leased Premises is located and that all
disputes arising hereunder shall be heard and decided in the local jurisdiction
where the Leased Premises is located.
Section 20.4. Successors. All rights and liabilities herein given to, or
imposed upon, the respective parties hereto shall extend to and bind the several
respective heirs, executors, administrators, successors, and assigns of the said
parties; and if there shall be more than one Tenant, or more than one person or
entity acting collectively as Tenant, they shall all be bound jointly and
severally by the terms, covenants and agreements herein. Any restriction on or
requirement imposed upon Tenant hereunder shall be deemed to extend to Tenant's
Guarantor, Tenant's sublessees, Tenant's assignees and Tenant's invitees, and it
shall be Tenant's obligation to cause the foregoing persons to comply with such
restrictions or requirements. No rights, however, shall inure to the benefit of
any assignee or other transferee of Tenant, and no rights or benefits shall be
conferred upon any such assignee or transferee by reason of this Section 20.4,
unless such rights or benefits shall be expressly otherwise set forth in this
Lease.
Section 20.5. Liability of Landlord. Neither Landlord, Landlord's
beneficiaries, any persons or entities comprising Landlord, nor any successor in
interest to Landlord (or to such persons or entities) shall have any personal
liability for any failure by Landlord to perform any term, covenant or condition
of this Lease. If Landlord shall fail to perform any covenant, term or condition
of this Lease upon Landlord's part to be performed, and if as a consequence of
such default Tenant shall recover a money judgment against Landlord, such
judgment shall be satisfied only out of the proceeds of sale received upon
execution of such judgment and levied thereon against the right, title and
interest of Landlord in the Shopping Center and out of rents or other income
from such property receivable by Landlord, or out of the consideration received
by Landlord from the sale or other disposition of all or any part of Landlord's
right, title and interest in the Shopping Center, subject, nevertheless, to the
rights of Landlord's mortgagee, and neither Landlord nor any of the co-partners
comprising the partnership which is Landlord herein shall be liable for any
deficiency. The foregoing limitation of liability shall be noted in any judgment
secured against Landlord and in the judgment index.
Section 20.6. Brokers. Tenant warrants and represents that there was no
broker or agent instrumental in consummating this Lease. Tenant agrees to
indemnify and hold Landlord harmless against any claims for brokerage or other
commissions arising by reason of a breach by Tenant of this representation and
warranty.
Section 20.7. Transfer by Landlord. Landlord hereunder shall have the right
to freely assign this Lease without notice to or the consent of Tenant.
Section 20.8. No Partnership. Notwithstanding the fact that a portion of
the Rent reserved hereunder may be a percentage of Tenant's Gross Sales, and
notwithstanding anything else to the contrary, Landlord shall not be deemed to
be a partner of Tenant or a joint venturer with Tenant.
Section 20.9. Waiver of Counterclaims. Tenant shall not impose any
counterclaim or counterclaims 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
<PAGE>
right to counterclaim in any summary proceeding or other action based on
termination or holdover is done so knowingly, intelligently and voluntarily.
Section 20.10. Waiver of Jury Trial. 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 20.11. Severability. If any provision of this Lease or the
application thereof to any person or circumstances shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each provision of
this Lease shall be valid and be enforced to the fullest extent permitted by
law.
Section 20.12. No Waiver. No failure by Landlord to insist upon the strict
performance of any term, covenant, agreement, provision, condition or limitation
of this Lease to be kept, observed or performed by Tenant, and no failure by
Landlord to exercise any right or remedy available upon a breach of any such
term, covenant, agreement, provision, condition or limitation of this Lease,
shall constitute a waiver of any such breach or of any such term, covenant,
agreement, provision, condition or limitation.
Section 20.13. Consumer Price Index. As used herein, "Consumer Price Index"
or "Index" shall mean the Consumer Price Index for All Urban Consumers (1982-84
= 100), U.S. City Average, All Items, published by the United States Department
of Labor, Bureau of Labor Statistics (or such comparable index as may be
utilized in substitution for or as the successor to the stated Index). If such
Index is not published by the Bureau of Labor Statistics or by another similar
governmental agency at any time during the Term of this Lease, then the most
closely comparable statistics on the purchasing power of the consumer dollar as
published by a responsible financial authority and selected by Landlord shall be
utilized in lieu of such Index.
Section 20.14. Interest. Any amount due from Tenant to Landlord herein
which is not paid when due shall bear interest at a rate per annum equal to the
Federal Reserve Bank discount rate as published in the 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 Section 20.14.
Section 20.15. Excavation. If an excavation shall be made upon land
adjacent to the Leased Premises, or shall be authorized to be made, Tenant shall
afford to the person causing or authorized to cause such excavation, license to
enter upon the Leased Premises for the purpose of doing such work as said person
shall deem necessary to preserve the wall or the building of which the Leased
Premises form a part from injury or damage and to support the same by proper
foundation, without any claim for damages or indemnity from Landlord, or
diminution or abatement of Rent.
Section 20.16. Rules and Regulations. Tenant agrees to comply with and
observe all reasonable rules and regulations established by Landlord for the
Shopping Center from time to time. Tenant's failure to keep and observe such
rules and regulations shall constitute a default pursuant to the terms of this
Lease in the manner as if the same were contained herein as covenants, which
shall carry with it the same consequences under Article XIV hereof as Tenant's
failure to pay rent.
<PAGE>
Section 20.17. Financial Statements. Upon Landlord's written request from
time to time, but not more than once per Lease Year, Tenant shall, within 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. Landlord shall maintain all financial information provided in a
confidential manner; provided, however, that Landlord may disclose such
financial statements to Landlord's mortgagees or prospective mortgagees or
purchasers.
Section 20.18. General Rules of Construction. (a) This Lease may be
executed in several counterparts and the counterparts shall constitute one and
the same instrument. (b) Landlord may act under this Lease by its attorney or
agent. (c) Wherever a requirement is imposed on Tenant hereunder, Tenant shall
be required to perform such requirement at its sole cost and expense unless it
is specifically otherwise provided herein. (d) (i) Wherever appropriate herein,
the singular includes the plural and the plural includes the singular; (ii)
whenever the word "including" is used herein, it shall be deemed to mean
"including, but not limited to"; and (iii) the words "re-enter" and "re-entry"
as used herein shall not be restricted to their technical legal meaning. (e)
Anything in this Lease to the contrary notwithstanding: (i) any provision hereof
which permits or requires a party to take any particular action shall be deemed
to permit or require, as the case may be, such party to cause such action to be
taken; and (ii) any provision hereof which requires any party not to take any
particular action shall be deemed to require such party to prevent such action
to be taken by any person or by operation of law. (f) Whenever costs or expenses
are required to be assessed to or paid by Tenant, such costs and expenses shall
be reasonable.
Section 20.19. Recording. Neither this Lease nor any memorandum hereof may
be recorded without the express written consent of Landlord.
Section 20.20. Effective Date. For all purposes hereof, the "Effective
Date" of this Lease shall be the date upon which this Lease shall have been
executed by both parties and physically delivered by Landlord to Tenant or its
attorney. Prior to the Effective Date, neither this Lease nor anything hereunder
contained shall be legally binding on either Landlord or Tenant, and the
submission of this Lease by Landlord to Tenant prior to such Effective Date for
examination or consideration by Tenant or discussion between Landlord and Tenant
shall not constitute a reservation of or option for the Leased Premises or
create any legal obligation or liability whatsoever on Landlord.
Section 20.21. Headings. The captions, section numbers, article numbers and
index appearing in this Lease are inserted only as a matter of convenience and
in no way define, limit, construe, or describe the scope or intent of such
sections or articles of this Lease nor in any way affect this Lease.
Section 20.22. Managing Agent. Landlord has advised Tenant that it has
appointed Management Associates Limited Partnership, a Delaware limited
partnership as managing agent of the Retail Development (said managing agent and
any successor or substitute managing agent is hereinafter referred to as
"Managing Agent"). Tenant shall, until otherwise notified by Landlord, make all
payments of Rent required to be made pursuant to this Lease to the Managing
Agent payable to Landlord and direct all notices, inquires or other
communications to the Managing Agent, 1300 Wilson Boulevard, Suite 400,
Arlington, Virginia 22209.
<PAGE>
WITNESS WHEREOF, Landlord and Tenant have signed this Lease as of the day
and year first above written.
<TABLE>
<CAPTION>
<S> <C>
WITNESS: LANDLORD:
GURNEE MILLS (MLP) LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Gurnee Mills II L.L.C., a Delaware limited liability company
Its: General Partner
By: The Mills Limited Partnership, a Delaware limited partnership
Its: Manager
By: The Mills Corporation, a Delaware corporation
Its: General Partner
By: _________________________
Judith Berson
Executive Vice President
By: ____________________
TENANT:
By: ____________________
TOYS INTERNATIONAL, a California corporation
By: __________________
WITNESS/ATTEST:
Name:____________________
Its: ____________________
By: ____________________
By: __________________
By: ____________________
Name:____________________
Its: ____________________
By: ____________________ Tenant's Corporate Seal:
By: ____________________
</TABLE>
<PAGE>
ACKNOWLEDGEMENT OF LANDLORD
COMMONWEALTH OF VIRGINIA )
) ss.
COUNTY OF ARLINGTON )
On this ____ day of ____________________, 19____, before me personally
appeared Judith Berson, to me known to be the person who executed the foregoing
Lease and acknowledged before me that she was duly authorized and did execute
same on behalf of GURNEE MILLS (MLP) LIMITED PARTNERSHIP, an Illinois limited
partnership.
- -----------------------------------
Notary Public
My Commission expires:_____________
[Notarial Seal]
ACKNOWLEDGEMENT OF CORPORATE TENANT
STATE OF )
) ss.
CITY/COUNTY OF )
On ____________________, 19____, before me _____________________, a Notary
Public in and for said state aforesaid, personally appeared ___________________,
as _______________________ and ___________________________ as
_________________________of TOYS INTERNATIONAL, a California corporation,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
- -----------------------------------
Notary Public, ____________ County,
My Commission expires:_____________
[Notarial Seal]
<PAGE>
ADDENDUM ATTACHED TO AND MADE A PART OF LEASE DATED ___________, 19__, BY
AND BETWEEN GURNEE MILLS (MLP) LIMITED PARTNERSHIP, AN ILLINOIS LIMITED
PARTNERSHIP, AS "LANDLORD," AND TOYS INTERNATIONAL, A CALIFORNIA CORPORATION, AS
"TENANT."
The Lease is hereby modified and supplemented as set forth herein. Any
conflict between a term, condition or provision contained in this Addendum with
any term, condition or provision contained in the printed Lease shall be
resolved in favor of this Addendum.
Add as a new Section 19.1(b):
"Section 19.1(b): Utility Charge. Tenant shall pay to Landlord, as
additional rent, at the times and in the manner herein set forth, a charge for
Landlord's provision of chilled water through Landlord's chilled water supply
system to the Leased Premises (such charge being herein referred to as the
"Utility Charge"). Tenant's Utility Charge shall be calculated by Landlord in
accordance with the provisions of Exhibit G which is attached hereto and made a
part hereof. Tenant's Utility Charge shall be due and payable to Landlord in the
same manner and at the same time as the monthly installments of Minimum Rent are
payable under the Lease without deduction, offset or diminution of any kind.
Landlord shall notify Tenant of the amount of Tenant's Utility Charge from time
to time, but no more often than monthly. Tenant hereby acknowledges and agrees
that Landlord shall have the right, at its option, at any time, to arrange for
any utility company to assume responsibility for providing utilities which
Landlord had previously been providing. Upon the assumption by the utility
company of the obligation to provide such utility services to Tenant, Landlord
shall be released from any and all obligations with respect thereto, and shall
not be liable to Tenant for any costs, fees or charges that may be assessed
against Tenant by the utility company assuming responsibility for the provision
of such utility service."
[signature block on following page]
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have signed and sealed this
Addendum as of the day and year first above written.
<TABLE>
<CAPTION>
<S> <C>
WITNESS: LANDLORD:
GURNEE MILLS (MLP) LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Gurnee Mills II L.L.C., a Delaware limited liability company
Its: General Partner
By: The Mills Limited Partnership, a Delaware limited partnership
Its: Manager
By: The Mills Corporation, a Delaware corporation
Its: General Partner
By: _________________________
Judith Berson
Executive Vice President
TENANT:
By: ____________________ TOYS INTERNATIONAL, a California corporation
By: ____________________ By: __________________
Name:____________________
WITNESS/ATTEST: Its: ____________________
By: __________________
By: ____________________ Name:____________________
Its: ____________________
By: ____________________
By: ____________________
By: ____________________
</TABLE>
<PAGE>
ACKNOWLEDGEMENT OF LANDLORD
COMMONWEALTH OF VIRGINIA )
) ss.
COUNTY OF ARLINGTON )
On this ____ day of ____________________, 19____, before me personally
appeared Judith Berson, to me known to be the person who executed the foregoing
Addendum and acknowledged before me that she was duly authorized and did execute
same on behalf of GURNEE MILLS (MLP) LIMITED PARTNERSHIP, an Illinois limited
partnership.
- -----------------------------------
Notary Public, Commonwealth of Virginia
My Commission expires:_____________
ACKNOWLEDGEMENT OF CORPORATE TENANT
STATE OF )
) ss.
CITY/COUNTY OF )
On ____________________, 19____, before me _____________________, a Notary
Public in and for said state aforesaid, personally appeared
____________________________, as _______________________ and
___________________________ as _______________________of TOYS INTERNATIONAL, a
California corporation, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which
the person(s) acted, executed the instrument.
- -----------------------------------
Notary Public, ____________ County,
My Commission expires:_____________
[Notarial Seal]
<PAGE>
EXHIBIT F
COMMENCEMENT AND EXPIRATION DATE DECLARATION
LANDLORD:
TENANT:
LEASE DATE:
STORE NUMBER:
Landlord and Tenant acknowledge and agree that the Commencement Date of the
above referenced Lease is and the Expiration Date of the Lease is .
LANDLORD: TENANT:
By: By:
Its: Its:
Date: Date:
<PAGE>
GUARANTY
ANNEXED TO AND FORMING A PART OF LEASE DATED ______________, 19___ BY AND
BETWEEN GURNEE MILLS (MLP) LIMITED PARTNERSHIP, AN ILLINOIS LIMITED PARTNERSHIP,
AS LANDLORD AND TOYS INTERNATIONAL, A CALIFORNIA CORPORATION, AS TENANT.
The undersigned, PLAY CO. TOYS AND ENTERTAINMENT CORPORATION, a Delaware
corporation having an address at 550 Rancheros Drive, San Marcos, California
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 guarantee the full, faithful and timely
payment and performance by Tenant of all 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 the Landlord fully and promptly, and will 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, cost advanced by Landlord, and damages and all expenses
(including attorneys' fees and litigation cost), that may arise in consequence
of Tenant's default. The undersigned hereby waives all requirements of notice of
the acceptance of the Guaranty and all requirements of notice of breach of
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.
C. The Guaranty shall remain and continue in full force and effect and
shall not discharge 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. The undersigned hereby
waives notices of any of the foregoing, and agrees that the liability of the
undersigned here under 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 the 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 the security for Tenant's obligations (including other
guaranties) and/or released Tenant from the performance of its obligations under
the Lease.
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.
<PAGE>
F. If this Guaranty is signed by more than one party, their obligations
shall be joint and several, and the release of one of such guarantors shall not
release any other of such guarantors.
G. The Guaranty shall be applicable to and binding upon the heirs,
executors, administrators, representatives, successors and assigns of Landlord,
Tenant and the Guarantor(s). Landlord may, without notice, assign this Guaranty
in whole or in part.
H. In the event that Landlord should institute any suit against the
Guarantor(s) 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 its interest or rights
hereunder, the prevailing party in any such suit shall be entitled to the fees
of its attorney(s) in the reasonable amount thereof, to be determined by the
court and taxed as a part of the cost therein.
I. The execution of this Guaranty after 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___.
<TABLE>
<CAPTION>
<S> <C>
WITNESS/ATTEST: GUARANTOR:
PLAY CO. TOYS AND ENTERTAINMENT
CORPORATION, a Delaware corporation
By:
Its:_____________________________
</TABLE>
<PAGE>
ACKNOWLEDGMENT OF CORPORATE TENANT
STATE OF ___________________ )
)ss.
COUNTY OF __________________)
On this ______ day of ________________, 19___, before me personally
appeared _____________________________, to me personally known, who, being by me
duly sworn, did for himself/herself say that he/she is the
_________________________ of PLAY CO. TOYS AND ENTERTAINMENT CORPORATION, a
Delaware corporation, the corporation named in and which executed the within
instrument, and that the seal affixed to said instrument is the corporate seal
of said corporation, and that said instrument was signed and sealed in behalf of
said corporation by authority of its board of directors and acknowledged before
me said instrument to be the free act and deed of said corporation.
- -----------------------------------
Notary Public My Commission expires:_____________
Exhibit 10.109
Phoenix Leasing Incorporated Agreement
SENIOR LOAN AND SECURITY AGREEMENT NO. 4003
THIS SENIOR LOAN AND SECURITY AGREEMENT NO. 4003 (this "Security
Agreement") is dated as of October 19, 1998 between PLAY CO. TOYS &
ENTERTAINMENT CORP. DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO., a
Delaware corporation ("Borrower") and PHOENIX LEASING INCORPORATED, a California
corporation ("Lender").
RECITALS
A. Borrower desires to borrow from Lender in one or more borrowings an
amount not to exceed $500,000 in the aggregate, and Lender desires to loan,
subject to the terms and conditions herein set forth, such amount to Borrower
(each, a "Loan" and collectively, the "Loans"). Such borrowings shall be
evidenced by one or more Senior Secured Promissory Notes (each, a "Note" and
collectively, the "Notes"), in the form attached hereto.
B. As security for Borrower's obligations to Lender under this Security
Agreement, the Notes and any other agreement between Borrower and Lender,
Borrower will grant to Lender hereunder a first priority security interest in
certain of its equipment, machinery, fixtures, other items and intangibles,
whether now owned by Borrower or hereafter acquired, and all substitutions and
replacements of and additions, improvements, accessions and accumulations to
said equipment, machinery and fixtures and other items, together with all rents,
issues, income, profits and proceeds therefrom (collectively, the "Collateral")
which is described on the Note attached hereto or any subsequently-executed Note
entered into by Lender and Borrower and which incorporates this Security
Agreement by reference.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
SECTION 1. TERM OF AGREEMENT. The term of this Security Agreement begins on
the date set forth above and shall continue thereafter and be in effect so long
as and at any time any Note entered into pursuant to this Security Agreement is
in effect. The Term and monthly payment amount payable with respect to each item
of Collateral shall be as set forth in and as stated in the respective Note(s).
The terms of each Note hereto are subject to all conditions and provisions of
this Security Agreement as it may at any time be amended. Each Note shall
constitute a separate and independent Loan and contractual obligation of
Borrower and shall incorporate the terms and conditions of this Security
Agreement and any additional provisions contained in such Note. In the event of
a conflict between the terms and conditions of this Security Agreement and any
provisions of such Note, the provisions of such Note shall prevail with respect
to such Note only.
SECTION 2. NON-CANCELABLE LOAN. This Security Agreement and each Note
cannot be canceled or terminated except as expressly provided herein. Borrower
agrees that its obligations to pay all monthly payment amounts and other sums
payable hereunder (and under any Note) and the rights of Lender and any assignee
in and to such monthly payment amounts and other sums, are absolute and
unconditional and are not subject to any abatement, reduction, setoff, defense,
counterclaim or recoupment due or alleged to be due to, or by reason of, any
past, present or future claims which Borrower may have against Lender, any
assignee, the manufacturer or seller of the Collateral, or against any person
for any reason whatsoever.
SECTION 3. LENDER COMMITMENT. (a) General Terms. Subject to the terms and
conditions of this Security Agreement and so long as no Event of Default or
event which with the giving of notice or passage of time, or both, could become
an Event of Default has occurred, Lender hereby agrees to make one or more
senior secured Loans to Borrower, subject to the following conditions: (i) each
Loan shall be evidenced by a Note; (ii) the total principal amount of the Loans
shall not exceed $500,000 in the aggregate (the "Commitment"); (iii) at the time
<PAGE>
of each Loan, no Event of Default or event which with the giving of notice or
passage of time, or both, could become an Event of Default shall have occurred
and be continuing, as reasonably determined by Lender, and certified by
Borrower; (iv) Lender shall not be obligated to make any Loan after November 23,
1998 and satisfied the conditions specified in the Commitment Letter; (v) for
each Loan, Borrower shall present to Lender a list of proposed Collateral for
approval by Lender in its sole discretion; (vi) for each Loan, Borrower shall
have provided Lender with each of the closing documents described in the
Commitment Letter between Lender and Borrower (the "Commitment Letter" ) and in
Exhibit A hereto (which documents shall be in form and substance reasonably
acceptable to Lender)and satisfied the conditions specified in the Commitment
Letter; (vii) Borrower is performing according to its business plan referred to
as "Play Co. Toys International Projected 1999 Revised 10/12/97" (the "Business
Plan"), as may be amended from time to time in form and substance acceptable to
Lender; (viii) there shall be no material adverse change in Borrower's
condition, financial or otherwise, that would materially impair the ability of
Borrower to meet its payment and other obligations under this Loan (a "Material
Adverse Effect") as reasonably determined by Lender, and Borrower so certifies,
from (yy) the date of the most recent financial statements delivered by Borrower
to Lender to (zz) the date of the proposed Loan; (ix) Borrower shall use the
proceeds of all Loans hereunder to purchase or reimburse the purchase of
Collateral; (x) at the time of each Loan, Borrower has reimbursed Lender for all
UCC filing and search costs, inspection and labeling costs, and appraisal fees,
if any; (xi) all Collateral has been marked and labeled by Lender or Lender's
agent; and (xii) Lender has received in form and substance acceptable to Lender:
(a) Borrower's interim financial statements signed by a financial officer of
Borrower, (b) prior to each funding, evidence satisfactory to Lender of
Borrower's $500,000 cash position and/or bank line availability; (c)
Subordination or Intercreditor Agreement from Finova Capital and (d) immediately
upon availability, complete copies of the Borrower's audit reports for its most
recent fiscal year, which shall include at least Borrower's balance sheet as of
the close of such year, and Borrower's statement of income and retained earnings
and of changes in financial position for such year, prepared on a consolidated
basis and certified by independent public accountants. Such certificate shall
not be qualified or limited because of restricted or limited examination by such
accountant of any material portion of the company's records. Such reports shall
be prepared in accordance with generally accepted accounting principles and
practices consistently applied. In the event of conflict between the terms and
conditions of the Security Agreement and the Commitment Letter, the terms and
conditions of this Security Agreement shall govern.
(b) The Notes. Each Loan shall be evidenced by a Note which may not be
prepaid in whole or in part. Each Note shall bear interest and be payable at the
times and in the manner provided therein. Following payment of the Indebtedness
related to each Note, Lender shall promptly return such Note, marked "canceled,"
to Borrower.
SECTION 4. SECURITY INTERESTS. (a) Borrower hereby grants to Lender a first
security interest in all Collateral; (b) This Security Agreement secures (i) the
payment of the principal of and interest on the Notes and all other sums due
thereunder and under this Security Agreement (the "Indebtedness") and (ii) the
performance by Borrower of all of its other covenants now or hereafter existing
under the Notes, this Security Agreement and any other obligation owed by
Borrower to Lender (the "Obligations").
SECTION 5. BORROWER'S REPRESENTATIONS AND WARRANTIES. Borrower represents
and warrants that (a) it is in good standing under the laws of the state of its
formation, duly qualified to do business and will remain duly qualified during
the term of each Loan in each state where necessary to carry on its present
business and operations, including the jurisdiction(s) where the Collateral will
be located as specified on each Exhibit A to each Note, except where failure to
be so qualified would not have a Material Adverse Effect; (b) it has full
authority to execute and deliver this Security Agreement and the Notes and
perform the terms hereof and thereof, and this Security Agreement and the Notes
have been duly authorized, executed and delivered and constitute valid and
binding obligations of Borrower enforceable in accordance with their terms; (c)
<PAGE>
the execution and delivery of this Security Agreement and the Notes will not
contravene any law, regulation or judgment affecting Borrower or result in any
breach of any material agreement or other instrument binding on Borrower; (d) no
consent of Borrower's shareholders or holder of any indebtedness, or filing
with, or approval of, any governmental agency or commission, which has not
already been obtained or performed, as appropriate, is a condition to the
performance of the terms of this Security Agreement or the Notes; (e) there is
no action or proceeding pending or threatened against Borrower before any court
or administrative agency which might have a Material Adverse Effect on the
business, financial condition or operations of Borrower; (f) at the time any
Loan is made hereunder, Borrower owns and will keep all of the Collateral free
and clear of all liens, claims and encumbrances, and, except for this Security
Agreement, there is no deed of trust, mortgage, security agreement or other
third party interest against any of the Collateral; (g) at the time any Loan is
made hereunder, Borrower has good and marketable title to the Collateral; (h) at
the time any Loan is made hereunder, all Collateral has been received, installed
and is ready for use and is satisfactory in all respects for the purposes of
this Security Agreement; (i) the Collateral is, and will remain at all times
under applicable law, removable personal property, which is free and clear of
any lien or encumbrance except in favor of Lender, notwithstanding the manner in
which the Collateral may be attached to any real property; (j) all credit and
financial information submitted to Lender herewith or at any other time is and
will at the time given be true and correct in all material respects; and (k) the
security interest granted to Lender hereunder is a first priority security
interest, and (l) on or before January 1, 2000, Borrower's computer system shall
be Year 2000 performance compliant and will thus be able to accurately process
date data from, into and between the twentieth and twenty-first centuries
including leap year calculations.
SECTION 6. METHOD AND PLACE OF PAYMENT. Borrower shall pay to Lender, at
such address as Lender specifies in writing, all amounts payable to it under
this Security Agreement and the Notes.
SECTION 7. LOCATION; INSPECTION; LABELS. All of the Collateral shall be
located at the address (the "Collateral Location") shown on Exhibit A to each
Note and shall not be moved without Lender's prior written consent which
location shall in all events be within the United States. All of the records
regarding the Collateral shall be located at 550 Rancheros Drive, San Marcos, CA
92069, or such other location of which Borrower has given notice to Lender in
accordance with this Security Agreement. Lender shall have the right to inspect
Collateral, including records relating thereto, and Borrower's books and records
at any time (upon reasonable notification) during regular business hours, such
books and records to be maintained in accordance with generally accepted
accounting principles. Borrower shall be responsible for all labor, material and
freight charges incurred in connection with any removal or relocation of
Collateral which is requested by Borrower and consented to by Lender, as well as
for any charges due to the installation or moving of the Collateral. Payments
under the Notes and under this Security Agreement shall continue during any
period in which the Collateral is in transit during a relocation. During
Borrower's regular business hours and upon at least two days' notice to
Borrower, Lender or its agent shall mark and label Collateral, which labels (to
be provided by Lender) shall state that such Collateral is subject to a security
interest of Lender, and Borrower shall keep such labels on the Collateral as so
labeled.
SECTION 8. COLLATERAL MAINTENANCE. (a) General. Borrower will reasonably
permit Lender to inspect each item of Collateral and its maintenance records
during Borrower's regular business hours. Borrower will at its sole expense
comply with all applicable laws, rules, regulations, requirements and orders
with respect to the use, maintenance, repair, condition, storage and operation
of each item of Collateral. Any addition or improvement that is so required or
cannot be so removed will immediately become Collateral of Lender. (b) Service
and Repair. With respect to computer equipment, other than personal computers,
Borrower has entered into, and will maintain in effect, vendor's standard
maintenance contract or another contract satisfactory to Lender for a period
equal to the term of each Loan and extensions thereto which provides for the
<PAGE>
maintenance of the Collateral in good condition and working order and repairs
and replacement of parts thereof, all in accordance with the terms of such
maintenance contract. Borrower shall have that Collateral certified for the
vendor's standard maintenance agreement before Lender acquires any interest in
the Collateral as provided in this Security Agreement. With respect to any other
Collateral, Borrower will at its sole expense maintain and service and repair
any damage to each item of Collateral in a manner consistent with prudent
industry practice and Borrower's own practice so that such item of Collateral is
at all times (i) in the same condition as when delivered to Borrower, except for
ordinary wear and tear, and (ii) in good operating order for the function
intended by its manufacturer's warranties and recommendations.
SECTION 9. LOSS OR DAMAGE. Borrower assumes the entire risk of loss to the
Collateral through use, operation or otherwise. Borrower hereby indemnifies and
holds harmless Lender from and against all claims, loss of Loan payments, costs,
damages, and expenses relating to or resulting from any loss, damage or
destruction of the Collateral, any such occurrence being hereinafter called a
"Casualty Occurrence." No later than the first payment date following such
Casualty Occurrence, or, if there is no such payment date, no later than thirty
(30) days after such Casualty Occurrence, Borrower shall, at its election,
either: (a) repair the Collateral returning it to good operating condition, or
(b) replace the Collateral with Collateral acceptable to Lender in its
reasonable discretion, in good condition and repair taking all steps required by
Lender to perfect Lender's first priority security interest therein, which
replacement Collateral shall be subject to the terms of this Security Agreement,
or (c) on the first day payment is due on any Note following the Casualty
Occurrence, or if there is no such payment date, thirty (30) days after such
Casualty Occurrence, pay to Lender an amount equal to the Balance Due (as
defined below) for each lost or damaged item of Collateral. The Balance Due for
each such item is the sum of: (i) all amounts for each item which may be then
due or accrued to the payment date, plus (ii) as of such payment date, an amount
equal to the product of the fraction specified below times the sum of all
remaining payments under the respective Note, including the amount of any
mandatory or optional payment required or permitted to be paid by Borrower to
Lender at the maturity of the Note. The numerator of the fraction shall be the
collateral value (as set forth on the applicable Note) of the item and the
denominator shall be the aggregate collateral value of all items under the Note.
Upon the making of such payments, Lender shall release such item of Collateral
from its lien hereunder.
SECTION 10. INSURANCE. Borrower at its expense shall keep the Collateral
insured against all risks of physical loss for at least the replacement value of
the Collateral (including, in the case of Collateral which is vehicles,
comprehensive and collision coverage) and in no event for less than the amount
payable following a Casualty Occurrence (as provided in Section 9). Such
insurance shall provide for a loss payable endorsement to Lender and/or any
assignee of Lender. Borrower shall maintain commercial general liability
insurance, including products liability and completed operations coverage, with
respect to loss or damage for personal injury, death or property damage in an
amount not less than $2,000,000 in the aggregate, (and in the case of Collateral
which is vehicles, in an amount not less than $1,000,000 covering bodily injury
and property damage in a combined single limit) naming Lender and/or Lender's
assignee as additional insured. Such insurance shall contain insurer's agreement
to give thirty (30) days' advance written notice to Lender before cancellation
or material change of any policy of insurance. Borrower will provide Lender and
any assignee of Lender with a certificate of insurance from the insurer
evidencing Lender's or such assignee's interest in the policy of insurance. Such
insurance shall cover any Casualty Occurrence to any unit of Collateral.
Notwithstanding anything in Section 9 or this Section 10 to the contrary, this
Security Agreement and Borrower's obligations hereunder shall remain in full
force and effect with respect to any unit of Collateral which is not subject to
a Casualty Occurrence. If Borrower fails to provide or maintain insurance as
required herein, Lender shall have the right, but shall not be obligated, to
obtain such insurance. In that event, Borrower shall pay to Lender the cost
thereof.
<PAGE>
SECTION 11. MISCELLANEOUS AFFIRMATIVE COVENANTS. So long as any portion of
the Indebtedness is unpaid and as long as any of the Obligations are outstanding
Borrower will: (a) duly pay all governmental taxes and assessments at the time
they become due and payable; provided, however, Borrower may contest the same in
good faith so long as no payment default by Borrower has occurred and is
continuing; (b) comply with all applicable material governmental laws, rules and
regulations relating to its business and the Collateral where a failure to
comply would have a Material Adverse Effect; (c) take no action to adversely
affect Lender's security interest in the Collateral as a first and prior
perfected security interest; (d) furnish Lender with its annual audited
financial statements within ninety (90) days following the end of Borrower's
fiscal year, unaudited quarterly financial statements within forty-five (45)
days after the end of each fiscal quarter, and within thirty (30) days of the
end of each month a financial statement for that month prepared by Borrower, and
including an income statement and balance sheet, all of which shall be certified
by an officer of Borrower as true and correct and shall be prepared in
accordance with generally accepted accounting principles consistently applied,
and such other information as Lender may reasonably request; and (e) promptly
(but in no event more than five (5) days after the occurrence of such event)
notify Lender of any change in Borrower's condition during the commitment period
which constitutes a Material Adverse Effect, and of the occurrence of any Event
of Default.
SECTION 12. INDEMNITIES. Borrower will protect, indemnify and save harmless
Lender and any assignees from and against all liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses (including reasonable
attorneys' fees and expenses), imposed upon or incurred by or asserted against
Lender or any assignee of Lender by Borrower or any third party by reason of the
occurrence or existence (or alleged occurrence or existence) of any act or event
relating to or caused by any portion of the Collateral, or its purchase,
acceptance, possession, use, maintenance or transportation, including without
limitation, consequential or special damages of any kind, any failure on the
part of Borrower to perform or comply with any of the terms of this Security
Agreement or any Note, claims for latent or other defects, claims for patent,
trademark or copyright infringement and claims for personal injury, death or
property damage, including those based on Lender's negligence or strict
liability in tort and excluding only those based on Lender's gross negligence or
willful misconduct. In the event that any action, suit or proceeding is brought
against Lender by reason of any such occurrence, Borrower, upon Lender's
request, will, at Borrower's expense, resist and defend such action, suit or
proceeding or cause the same to be resisted and defended by counsel designated
and approved by Lender. Borrower's obligations under this Section 12 shall
survive the payment in full of all the Indebtedness and the performance of all
Obligations with respect to acts or events occurring or alleged to have occurred
prior to the payment in full of all the Indebtedness and the performance of all
Obligations.
SECTION 13. TAXES. Borrower agrees to reimburse Lender (or pay directly if
instructed by Lender) and any assignee of Lender for, and to indemnify and hold
Lender and any assignee harmless from, all fees (including, but not limited to,
license, documentation, recording and registration fees), and all sales, use,
gross receipts, personal property, occupational, value added or other taxes,
levies, imposts, duties, assessments, charges, or withholdings of any nature
whatsoever, together with any penalties, fines, additions to tax, or interest
thereon (the foregoing collectively "Impositions"), except same as may be
attributable to Lender's income, arising at any time prior to or during the term
of any Notes or of this Security Agreement, or upon termination or early
termination of this Security Agreement and levied or imposed upon Lender
directly or otherwise by any Federal, state or local government in the United
States or by any foreign country or foreign or international taxing authority
upon or with respect to (a) the Collateral, (b) the exportation, importation,
registration, purchase, ownership, delivery, leasing, financing, possession,
use, operation, storage, maintenance, repair, return, sale, transfer of title,
or other disposition thereof, (c) the rentals, receipts, or earnings arising
from the Collateral, or any disposition of the rights to such rentals, receipts,
or earnings, (d) any payment pursuant to this Security Agreement or the Notes,
<PAGE>
or (e) this Security Agreement, the Notes or any transaction or any part hereof
or thereof.
SECTION 14. RELEASE OF LIENS. Upon payment of all of the Indebtedness and
performance of all of the Obligations, Lender shall execute UCC termination
statements and such other documents as Borrower shall reasonably request to
evidence the release of Lender's lien relating to the Collateral.
SECTION 15. ASSIGNMENT. WITHOUT LENDER'S PRIOR WRITTEN CONSENT WHICH
CONSENT WILL NOT BE UNREASONABLY WITHHELD OR DELAYED, BORROWER SHALL NOT (a)
ASSIGN, TRANSFER, PLEDGE, HYPOTHECATE OR OTHERWISE DISPOSE OF THIS SECURITY
AGREEMENT, ANY NOTE, ANY COLLATERAL, OR ANY INTEREST THEREIN, (b) LEASE OR LEND
COLLATERAL OR PERMIT IT TO BE USED BY ANYONE OTHER THAN BORROWER OR BORROWER'S
EMPLOYEES, CONTRACTORS AND AGENTS OR (c) MERGE INTO, CONSOLIDATE WITH OR CONVEY
OR TRANSFER ITS PROPERTIES SUBSTANTIALLY AS AN ENTIRETY TO ANY OTHER PERSON OR
ENTITY EXCEPT TO A SUCCESSOR IN INTEREST TO ALL OR SUBSTANTIALLY ALL OF THE
BUSINESS OF BORROWER; PROVIDED, HOWEVER, THAT, THE FINANCIAL CONDITION OF SUCH
SUCCESSOR IS GREATER THAN OR EQUAL TO BORROWER AS DETERMINED IN GOOD FAITH BY
LENDER AND THE SUCCESSOR'S BUSINESS AND ITS MAJOR INVESTORS ARE REASONABLY
ACCEPTABLE TO LENDER. LENDER MAY ASSIGN ANY OF THE NOTES, THIS SECURITY
AGREEMENT OR ITS SECURITY INTEREST IN ANY OR ALL COLLATERAL, OR ANY OR ALL OF
THE ABOVE, IN WHOLE OR IN PART TO ONE OR MORE ASSIGNEES OR SECURED PARTIES
WITHOUT NOTICE TO BORROWER. If Borrower is given notice of such assignment it
agrees to acknowledge receipt thereof in writing and Borrower shall execute such
additional documentation as Lender's assignee and/or secured party shall
reasonably require at Lender's expense. Each such assignee and/or secured party
shall have all of the rights, but (except as provided in this Section 15) none
of the obligations, of Lender under this Security Agreement, unless such
assignee or secured party expressly agrees to assume such obligations in
writing. Borrower shall not assert against any assignee and/or secured party any
defense, counterclaim or offset that Borrower may have against Lender.
Notwithstanding any such assignment, and providing no Event of Default has
occurred and is continuing, Lender, or its assignees, secured parties, or their
agents or assigns, shall not interfere with Borrower's right to quietly enjoy
use of Collateral subject to the terms and conditions of this Security
Agreement. Subject to the foregoing, the Notes and this Security Agreement shall
inure to the benefit of, and are binding upon, the successors and assignees of
the parties hereto. Borrower acknowledges that any such assignment by Lender
will not change Borrower's duties or obligations under this Security Agreement
and the Notes or increase any burden or risk on Borrower.
SECTION 16. DEFAULT. (a) Events of Default. Any of the following events or
conditions shall constitute an "Event of Default" hereunder: (i) Borrower's
failure to pay any monies due to Lender hereunder or under any Note beyond the
tenth (10th) day after the same is due; (ii) Borrower's failure to comply with
its obligations under Section 10 or Section 15; (iii) any representation or
warranty of Borrower made in this Security Agreement or the Notes or in any
other agreement, statement or certificate furnished to Lender in connection with
this Security Agreement or the Notes shall prove to have been incorrect in any
material respect when made or given; (iv) Borrower's failure to comply with or
perform any material term, covenant or condition of this Security Agreement or
any Note or under any other agreement between Borrower and Lender or under any
lease or mortgage of real property covering the location of the Collateral if
such failure to comply or perform is not cured by Borrower within thirty (30)
days after Borrower knows of the noncompliance or nonperformance or notice from
Lender or such longer period that Borrower is diligently attempting to effect
such cure; (v) seizure of any of the Collateral under legal process; (vi) the
filing by or against Borrower or any guarantor under any guaranty executed in
connection with this Security Agreement ("Guarantor") of a petition for
reorganization or liquidation under the Bankruptcy Code or any amendment thereto
or under any other insolvency law providing for the relief of debtors; (vii) the
voluntary or involuntary making of an assignment of a substantial portion of its
assets by Borrower or by any Guarantor for the benefit of its creditors, the
appointment of a receiver or trustee for Borrower or any Guarantor or for any of
Borrower's or Guarantor's assets, the institution by or against Borrower or any
Guarantor of any formal or informal proceeding for dissolution, liquidation,
<PAGE>
settlement of claims against or winding up of the affairs of Borrower or any
Guarantor provided that in the case of all such involuntary proceedings, same
are not dismissed within sixty (60) days after commencement; (viii) the making
by Borrower or by any Guarantor of a transfer of all or a material portion of
Borrower's or Guarantor's assets or inventory not in the ordinary course of
business; or (ix) any default or breach by any Guarantor of any of the terms of
its guaranty to Lender in connection with this Security Agreement.
(b) Remedies. If any Event of Default has occurred, Lender may in its sole
discretion exercise one or more of the following remedies with respect to any or
all of the Collateral: (i) declare due any or all of the aggregate sum of all
remaining payments under the Notes, including the amount of any mandatory or
optional payment required or permitted to be paid by Borrower to Lender at the
maturity of the Notes ("Remaining Payments"); (ii) proceed by appropriate court
action or actions either at law or in equity to enforce Borrower's performance
of the applicable covenants of the Notes and this Security Agreement or to
recover all damages and expenses incurred by Lender by reason of an Event of
Default; (iii) except as provided by law, without court order or prior demand,
enter upon the premises where the Collateral is located and take immediate
possession of and remove it without liability of Lender to Borrower or any other
person or entity; (iv) terminate this Security Agreement and sell the Collateral
at public or private sale, or otherwise dispose of, hold, use or lease any or
all of the Collateral in a commercially reasonable manner; or (v) exercise any
other right or remedy available to it under applicable law. If Lender has
declared due any or all of the Remaining Payments, Borrower will pay immediately
to Lender, without duplication, (A) the Remaining Payments, (B) all amounts
which may be then due or accrued, and (C) all other amounts due under this
Security Agreement and under the Notes (Lender's Return, as referred to below,
means the amounts described in clauses (A), (B) and (C) above). The net proceeds
of any sale or lease of such Collateral will be credited against Lender's
Return. The net proceeds of a sale of the Collateral pursuant to this Section
16(b) is defined as the sales price of the Collateral less selling expenses,
including, without limitation, costs of remarketing the Collateral and all
refurbishing costs and commissions paid with respect to such remarketing. The
net proceeds of a lease of the Collateral pursuant to this Section 16(b) is
defined as the amount equal to the monthly payments due under such lease
(discounted at 6% per annum compounded monthly on the basis of a 360 day year
(the "Discount Rate") plus the residual value of the Collateral at the end of
the basic term of such lease, as reasonably determined by Lender, and discounted
at the Discount Rate.
Borrower agrees to pay all reasonable out-of-pocket costs of Lender
incurred in enforcement of this Security Agreement, the Notes or any instrument
or agreement required under this Security Agreement, including, but not limited
<PAGE>
to reasonable attorneys' fees and litigation expenses and fees of collection
agencies ("Remedy Expenses"). At Lender's request, Borrower shall assemble the
Collateral and make it available to Lender at such time and location as Lender
may reasonably designate. Borrower waives any right it may have to redeem the
Collateral.
Declaration that any or all amounts under this Security Agreement and/or
the Notes are immediately due and payable and Lender's taking possession of any
or all Equipment shall not terminate this Security Agreement or any of the Notes
unless Lender so notifies Borrower in writing. None of the above remedies is
intended to be exclusive but each is cumulative and may be enforced separately
or concurrently.
In addition to the foregoing remedies, if an Event of Default hereunder
shall have occurred and be continuing, Lender shall have the right to cause its
representative or representatives to attend any meeting of Borrower's Board of
Directors or any committee thereof. In such case, Borrower shall provide Lender
with the same notice of any such Board or committee meeting that is given to the
members of Borrower's Board or committee thereof.
(c) Application of Proceeds. The proceeds of any sale of all or any part of
the Collateral and the proceeds of any remedy afforded to Lender by this
Security Agreement shall be paid to and applied as follows:
First, to the payment of reasonable costs and expenses of suit or
foreclosure, if any, and of the sale, if any, including, without limitation,
refurbishing costs, costs of remarketing and commissions related to remarketing,
all Remedy Expenses, all expenses, liabilities and advances incurred or made
pursuant to this Security Agreement or any Note by Lender in connection with
foreclosure, suit, sale or enforcement of this Security Agreement or the Notes,
and taxes, assessments or liens superior to Lender's security interest granted
by this Security Agreement;
Second, to the payment of all other amounts not described in item Third
below due under this Security Agreement and all Notes;
Third, to pay Lender an amount equal to Lender's Return, to the extent not
previously paid by Borrower; and
Fourth, to the payment of any surplus to Borrower or to whomever may lawfully be
entitled to receive it.
(d) Effect of Delay; Waiver; Foreclosure on Collateral. No delay or
omission of Lender, in exercising any right or power arising from any Event of
Default shall prevent Lender from exercising that right or power if the Event of
Default continues. No waiver of an Event of Default, whether full or partial, by
Lender or such holder shall be taken to extend to any subsequent Event of
Default, or to impair the rights of Lender in respect of any damages suffered as
a result of the Event of Default. The giving, taking or enforcement of any other
or additional security, collateral or guaranty for the payment or discharge of
the Indebtedness and performance of the Obligations shall in no way operate to
prejudice, waive or affect the security interest created by this Security
Agreement or any rights, powers or remedies exercised hereunder or thereunder.
Lender shall not be required first to foreclose on the Collateral prior to
bringing an action against Borrower for sums owed to Lender under this Security
Agreement or under any Note.
SECTION 17. LATE PAYMENTS. Borrower shall pay Lender a late charge of 10%
of any payment owed Lender by Borrower which is not paid when due (taking into
account applicable grace periods), for every month such payment is not paid when
due, but in no event an amount greater than the highest rate permitted by
applicable law. If such amounts have not been received by Lender at Lender's
place of business or by Lender's designated agent by the date such amounts are
due under this Security Agreement or the Notes, Lender shall bill Borrower for
such charges. Borrower acknowledges that invoices for amounts due hereunder or
under the Notes are sent by Lender for Borrower's convenience only. Borrower's
<PAGE>
non-receipt of an invoice will not relieve Borrower of its obligation to make
payments hereunder or under the Notes.
SECTION 18. PAYMENTS BY LENDER. If Borrower shall fail to make any payment
or perform any act required hereunder (including, but not limited to,
maintenance of any insurance required by Section 10), then Lender may, but shall
not be required to, after such notice to Borrower as is reasonable under the
circumstances, make such payment or perform such act with the same effect as if
made or performed by Borrower. Borrower will upon demand reimburse Lender for
all sums paid and all reasonable costs and expenses incurred in connection with
the performance of any such act.
SECTION 19. FINANCING STATEMENTS. Borrower hereby appoints Lender (and each
of Lender's officers, employees or agents designated by Lender) with full power
of substitution by Lender, as Borrower's attorney, with power to execute and
deliver on Borrower's behalf, financing statements and other documents necessary
to perfect and/or give notice of Lender's security interest in any of the
Collateral. Notwithstanding the above, Borrower will, upon Lender's request,
execute all financing statements pursuant to the Uniform Commercial Code and all
such other documents reasonably requested by Lender to perfect Lender's security
interests hereunder. Borrower authorizes Lender to file financing statements
signed only by Lender (where such authorization is permitted by law) at all
places where Lender deems necessary.
SECTION 20. NATURE OF TRANSACTION. Lender makes no representation
whatsoever, express or implied, concerning the legal character of the
transaction evidenced hereby, for tax or any other purpose.
SECTION 21. SUSPENSION OF LENDER'S OBLIGATIONS. The obligations of Lender
hereunder will be suspended to the extent that Lender is hindered or prevented
from complying therewith because of labor disturbances, including but not
limited to strikes and lockouts, acts of God, fires, floods, storms, accidents,
industrial unrest, acts of war, insurrection, riot or civil disorder, any order,
decree, law or governmental regulations or interference, failure of the
manufacturer to deliver any item of Collateral or any cause whatsoever not
within the sole and exclusive control of Lender.
SECTION 22. LENDER'S EXPENSE. Borrower shall pay Lender all reasonable
costs and expenses including reasonable attorney's fees and the fees of
collection agencies, incurred by Lender (a) in enforcing any of the terms,
conditions or provisions hereof and related to the exercise of its remedies, and
(b) in connection with any bankruptcy or post-judgment proceeding, whether or
not suit is filed and, in each and every action, suit or proceeding, including
any and all appeals and petitions therefrom.
SECTION 23. ALTERATIONS; ATTACHMENTS. No alterations or attachments shall
be made to the Collateral without Lender's prior written consent, which shall
not be given for changes that will affect the reliability and utility of the
Collateral or which cannot be removed without damage to the Collateral, or which
in any way affect the value of the Collateral for purposes of resale or lease.
All attachments and improvements to the Collateral shall be deemed to be
"Collateral" for purposes of the Security Agreement, and a first priority
security interest therein shall immediately vest in Lender.
SECTION 24. CHATTEL PAPER. (a) One executed copy of the Security Agreement
will be marked "Original" and all other counterparts will be duplicates. To the
extent, if any, that this Security Agreement constitutes chattel paper (as such
term is defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction) no security interest in the Security Agreement may be created in
any documents other than the "Original." (b) There shall be only one original of
each Note and it shall be marked "Original," and all other counterparts will be
duplicates. To the extent, if any, that any Notes to this Security Agreement
constitutes chattel paper (or as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction) no security interest in any
Note(s) may be created in any documents other than the "Original."
<PAGE>
SECTION 25. COMMITMENT FEE. Borrower has paid to Lender a commitment fee
("Fee") of $2,500. The Fee shall be applied by Lender first to reimburse Lender
for all out-of-pocket UCC and other search costs, inspections and labeling costs
and appraisal fees, if any, incurred by Lender, and then proportionally to the
first monthly payment for each Note hereunder in the proportion that the
Collateral value for such Note bears to Lender's entire commitment. However, the
portion of the Fee which is not applied to such monthly payments shall be
non-refundable except if Lender defaults in its obligation to fund Loans
pursuant to Section 3.
SECTION 26. NOTICES. All notices hereunder shall be in writing, by
registered mail, or reliable messenger or delivery service (including overnight
service) and shall be directed, as the case may be, to Lender at 2401 Kerner
Boulevard, San Rafael, California 94901, Attention: Asset Management and to
Borrower at 550 Rancheros Drive, San Marcos, CA 92069, Attention: Jim Frakes.
SECTION 27. MISCELLANEOUS. (a) Borrower shall provide Lender with such
corporate resolutions, financial statements and other documents as Lender shall
reasonably request from time to time. (b) Borrower represents that the
Collateral hereunder is used solely for business purposes. (c) Time is of the
essence with respect to this Security Agreement. (d) Borrower acknowledges that
Borrower has read this Security Agreement and the Notes, understands them and
agrees to be bound by their terms and further agrees that this Security
Agreement and the Notes constitute the entire agreement between Lender and
Borrower with respect to the subject matter hereof and supersede all previous
agreements, promises, or representations. (e) This Security Agreement and the
Notes may not be changed, altered or modified except by an instrument signed by
an officer or authorized representative of Lender and Borrower. (f) Any failure
of Lender to require strict performance by Borrower or any waiver by Lender of
any provision herein or in a Note shall not be construed as a consent or waiver
of any other breach of the same or any other provision. (g) If any provision of
this Security Agreement or any Note is held invalid, such invalidity shall not
affect any other provisions hereof or thereof. (h) The obligations of Borrower
to pay the Indebtedness and perform the Obligations shall survive the expiration
or earlier termination of this Security Agreement and each Note until all
Obligations of Borrower to Lender have been met and all liabilities of Borrower
to Lender and any assignee have been paid in full. (i) Borrower will notify
Lender at least 30 days before changing its name, principal place of business or
chief executive office. (j) Borrower will, at its expense, promptly execute and
deliver to Lender such documents and assurances (including financing statements)
and take such further action as Lender may reasonably request in order to carry
out the intent of this Security Agreement and Lender's rights and remedies.
SECTION 28. JURISDICTION AND WAIVER OF JURY TRIAL. This Security Agreement
and each Note shall be deemed to have been made under and shall be governed by
the laws of the State of California in all respects, including matters of
construction, validity and performance. At Lender's sole discretion, option and
election, jurisdiction and venue for any legal action between the parties
arising out of or relating to this Security Agreement or any Note shall be in
the Superior Court of Marin County, California, or, in cases where federal
diversity jurisdiction is available, in the United States District Court for the
Northern District of California located in San Francisco, California. BORROWER,
TO THE EXTENT IT MAY LAWFULLY DO SO, HEREBY WAIVES ITS RIGHT TO TRIAL BY JURY IN
ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS SECURITY AGREEMENT, ANY NOTE, ANY
SECURITY DOCUMENTS, OR ANY OTHER AGREEMENTS EXECUTED IN CONNECTION HEREWITH.
IN WITNESS WHEREOF, Borrower and Lender have caused this Security Agreement
to be executed as of the date and year first above written.
PHOENIX LEASING INCORPORATED PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL
AND TOY CO.
By: __ By:
Name: Name (Print):
Title:__ Title:
HEADQUARTERS LOCATION:
550 Rancheros Drive
San Marcos, CA 92069
County of San Diego
<PAGE>
EXHIBIT A TO
SENIOR LOAN AND SECURITY AGREEMENT NO. 4003
DATED OCTOBER 19, 1998
CLOSING MEMORANDUM
1* Duly executed Senior Loan and Security Agreement.
2. Duly executed Senior Security Promissory Note with Exhibit A Collateral
description attached.
3. Insurance certificates reflecting coverage required under Section 10 of
the Senior Loan and Security Agreement.
4.* Resolutions of Borrower's board of directors.
5. UCC-1 Financing Statements with respect to the Collateral.
6. UCC search (Lender will obtain).
7. Certificate of Chief Financial Officer stating that (i) there are no
liens, charges, security interests or other encumbrances that may affect
Lender's right, title and interest in the Collateral and there are no UCC-1
financing statements filed or in the process of being filed against any of the
Collateral, (ii) Borrower is performing according to Borrower's business plan,
(iii) no change which is a Material Adverse Effect has occurred in the financial
condition of Borrower, (iv) no default has occurred, and (v) the representations
and warranties in Section 5 of the Senior Loan and Security Agreement are true
and correct as if made on the date of the Loan.
8.* Certificate from the Secretary of State of Borrower's state of
incorporation, and from the state in which Borrower's chief executive office is
located, if different, stating the Borrower is in good standing or is authorized
to transact business, as the case may be, dated not more than thirty days prior
to the first Loan (Lender will obtain).
9.* Borrower's Business Plan.
10. Borrower's most recent financial statements.
11. List of proposed Collateral.
12. Purchase documentation verifying Borrower's ownership of equipment.
13. See Section 3 of the Senior Loan and Security Agreement for additional
conditions to closing. 14. Subordination/Intercreditor Agreement from Finova and
other entities.
* First Loan only.
** Required if any Equipment is a fixture, i.e., attached to real property,
or located in certain states.
<PAGE>
NOTE NO. 01
TO SENIOR LOAN AND SECURITY AGREEMENT NO. 4003
DATED AS OF OCTOBER 19, 1998
BETWEEN PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO.
AS BORROWER AND
PHOENIX LEASING INCORPORATED AS LENDER
SENIOR SECURED PROMISSORY NOTE
$232,098.21 _________________, 199___
FOR VALUE RECEIVED, the undersigned, PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO., a Delaware corporation
("Borrower"), hereby promises to pay to the order of PHOENIX LEASING
INCORPORATED, or its assigns (the "Lender") the principal sum of Two Hundred
Thirty-two Thousand Ninety-eight and 21/100 Dollars ($232,098.21), together with
interest thereon until the principal is fully repaid. Principal and interest
shall be payable in consecutive monthly installments, each of which shall be
equal to the percentage specified below of the principal sum and in the amounts
each month specified below.
Month Payment Amount Percentage
1-60 $5,312.73 2.289%
The first payment shall be due on the first day of the month immediately
following the date of this Note (unless the date of this Note is the first day
of the month in which case such payment is due on that day), and each succeeding
payment shall be made on the first day of each succeeding month. An interim
payment will be due on the same date as the first payment for the period from
the date Lender funds the principal amount of this Note until the first day of
the following month and shall be equal to 1/30 of the monthly loan payment
multiplied by the number of days, if any, between (and including) the funding
date and the first day of the following month.
This Note may not be prepaid in whole or in part.
Borrower shall pay Lender a late charge of 10% of any payment owed Lender
by Borrower which is not paid when due (taking into account applicable grace
periods), for every month such payment is not paid when due, but in no event an
amount greater than the highest rate permitted by applicable law.
Payments of principal and interest hereunder shall be made in lawful money
of the United States of America at the offices of Lender at 2401 Kerner
Boulevard, San Rafael, California 94901, or such other place as the Lender shall
designate to the Borrower in writing.
This Note is secured by a Senior Loan and Security Agreement, dated as of
October 19, 1998 between Borrower and Lender (the "Security Agreement") and is
entitled to the benefits of the Security Agreement which contains, among other
things, provisions for (i) events of default and the Lender's rights and
remedies following an event of default (which include, but are not limited to,
acceleration of this Note), (ii) Collateral which secures the repayment of this
Note and is more particularly described on Exhibit A, and (iii) other rights and
remedies of Lender.
This Note may be declared due prior to its expressed maturity date only in
the events, on the terms and in the manner provided in the Security Agreement.
This Note shall be deemed to have been made under and shall be governed by
the laws of the State of California in all respects, including matters of
construction, validity and performance. At Lender's sole discretion, option and
election, jurisdiction and venue for any legal action between the parties
arising out of or relating to this Note shall be in the Superior Court of Marin
<PAGE>
County, California, or, in cases where federal diversity jurisdiction is
available, in the United States District Court for the Northern District of
California located in San Francisco, California.
The Borrower hereby expressly waives presentment for payment, demand for
payment, notice of dishonor, protest, notice of protest, notice of nonpayment,
and all lack of diligence or delays in collection or enforcement of this Note.
BORROWER:
PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL
AND TOY CO.
By:
Name (Print):
Title:
<PAGE>
EXHIBIT A to
SENIOR SECURED PROMISSORY NOTE NO. 01
(Insert Exhibit A here)
<PAGE>
OFFICER'S CERTIFICATE
The undersigned, ____________________, hereby certifies that:
(i) I am the __________________ of PLAY CO. TOYS & ENTERTAINMENT CORP. DBA
PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO., a Delaware corporation (the
"Borrower");
(ii) as such officer, I am familiar with the terms and conditions of that
certain Senior Loan and Security Agreement (the "Security Agreement") dated as
of October 19, 1998 between Borrower and PHOENIX LEASING INCORPORATED
("Lender");
(iii) the equipment, machinery, furniture, fixtures and other items on the
attached list are free and clear of any and all liens, charges, security
interests or other encumbrances that may affect Lender's right, title or
interest in and to the equipment and other items, and no UCC-1 financing
statements or other grants of security interests have been or are in the process
of being filed against any of such equipment or other items;
(iv) Borrower is performing according to Borrower's business plan described
in Section 3 of the Security Agreement, a true copy of which business plan has
been delivered to Lender;
(v) there has been no material adverse change in the financial condition of
Borrower from the date of its most recent financial statements, true copies of
which have been delivered to Lender;
(vi) as of the date hereof, no Event of Default (as defined in the Security
Agreement) or event which with the giving of notice or passage of time, or both,
could become an Event of Default has occurred and is continuing; and
(vii) the representations and warranties in Section 5 of the Security
Agreement are true and correct as if made on the date of the Loan.
IN WITNESS WHEREOF, I hereby execute this certificate on this ______ day of
_______________, 19__.
-----------------------------------
<PAGE>
NOTE NO. 02
TO SENIOR LOAN AND SECURITY AGREEMENT NO. 4003
DATED AS OF OCTOBER 19, 1998
BETWEEN PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO.
AS BORROWER AND
PHOENIX LEASING INCORPORATED AS LENDER
SENIOR SECURED PROMISSORY NOTE
$188,048.92 _________________, 199___
FOR VALUE RECEIVED, the undersigned, PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO., a Delaware corporation
("Borrower"), hereby promises to pay to the order of PHOENIX LEASING
INCORPORATED, or its assigns (the "Lender") the principal sum of One Hundred
Eighty-eight Thousand Forty-eight and 92/100 Dollars ($188,048.92), together
with interest thereon until the principal is fully repaid. Principal and
interest shall be payable in consecutive monthly installments, each of which
shall be equal to the percentage specified below of the principal sum and in the
amounts each month specified below.
Month Payment Amount Percentage
1-60 $4,304.44 2.289%
The first payment shall be due on the first day of the month immediately
following the date of this Note (unless the date of this Note is the first day
of the month in which case such payment is due on that day), and each succeeding
payment shall be made on the first day of each succeeding month. An interim
payment will be due on the same date as the first payment for the period from
the date Lender funds the principal amount of this Note until the first day of
the following month and shall be equal to 1/30 of the monthly loan payment
multiplied by the number of days, if any, between (and including) the funding
date and the first day of the following month.
This Note may not be prepaid in whole or in part.
Borrower shall pay Lender a late charge of 10% of any payment owed Lender
by Borrower which is not paid when due (taking into account applicable grace
periods), for every month such payment is not paid when due, but in no event an
amount greater than the highest rate permitted by applicable law.
Payments of principal and interest hereunder shall be made in lawful money
of the United States of America at the offices of Lender at 2401 Kerner
Boulevard, San Rafael, California 94901, or such other place as the Lender shall
designate to the Borrower in writing.
This Note is secured by a Senior Loan and Security Agreement, dated as of
October 19, 1998 between Borrower and Lender (the "Security Agreement") and is
entitled to the benefits of the Security Agreement which contains, among other
things, provisions for (i) events of default and the Lender's rights and
remedies following an event of default (which include, but are not limited to,
acceleration of this Note), (ii) Collateral which secures the repayment of this
Note and is more particularly described on Exhibit A, and (iii) other rights and
remedies of Lender.
This Note may be declared due prior to its expressed maturity date only in
the events, on the terms and in the manner provided in the Security Agreement.
This Note shall be deemed to have been made under and shall be governed by
the laws of the State of California in all respects, including matters of
construction, validity and performance. At Lender's sole discretion, option and
election, jurisdiction and venue for any legal action between the parties
arising out of or relating to this Note shall be in the Superior Court of Marin
<PAGE>
County, California, or, in cases where federal diversity jurisdiction is
available, in the United States District Court for the Northern District of
California located in San Francisco, California.
The Borrower hereby expressly waives presentment for payment, demand for
payment, notice of dishonor, protest, notice of protest, notice of nonpayment,
and all lack of diligence or delays in collection or enforcement of this Note.
BORROWER:
PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL
AND TOY CO.
By:
Name (Print):
Title:
EXHIBIT A to
SENIOR SECURED PROMISSORY NOTE NO. 02
(Insert Exhibit A here)
<PAGE>
OFFICER'S CERTIFICATE
The undersigned, ____________________, hereby certifies that:
(i) I am the __________________ of PLAY CO. TOYS & ENTERTAINMENT CORP. DBA
PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO., a Delaware corporation (the
"Borrower");
(ii) as such officer, I am familiar with the terms and conditions of that
certain Senior Loan and Security Agreement (the "Security Agreement") dated as
of October 19, 1998 between Borrower and PHOENIX LEASING INCORPORATED
("Lender");
(iii) the equipment, machinery, furniture, fixtures and other items on the
attached list are free and clear of any and all liens, charges, security
interests or other encumbrances that may affect Lender's right, title or
interest in and to the equipment and other items, and no UCC-1 financing
statements or other grants of security interests have been or are in the process
of being filed against any of such equipment or other items;
(iv) Borrower is performing according to Borrower's business plan described
in Section 3 of the Security Agreement, a true copy of which business plan has
been delivered to Lender;
(v) there has been no material adverse change in the financial condition of
Borrower from the date of its most recent financial statements, true copies of
which have been delivered to Lender;
(vi) as of the date hereof, no Event of Default (as defined in the Security
Agreement) or event which with the giving of notice or passage of time, or both,
could become an Event of Default has occurred and is continuing; and
(vii) the representations and warranties in Section 5 of the Security
Agreement are true and correct as if made on the date of the Loan.
IN WITNESS WHEREOF, I hereby execute this certificate on this ______ day of
_______________, 19__.
-----------------------------------
<PAGE>
NOTE NO. 03
TO SENIOR LOAN AND SECURITY AGREEMENT NO. 4003
DATED AS OF OCTOBER 19, 1998
BETWEEN PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO.
AS BORROWER AND
PHOENIX LEASING INCORPORATED AS LENDER
SENIOR SECURED PROMISSORY NOTE
$71,322.25 _________________, 199___
FOR VALUE RECEIVED, the undersigned, PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO., a Delaware corporation
("Borrower"), hereby promises to pay to the order of PHOENIX LEASING
INCORPORATED, or its assigns (the "Lender") the principal sum of Seventy-One
Thousand Three Hundred Twenty-Two and 25/100 Dollars ($71,322.25), together with
interest thereon until the principal is fully repaid. Principal and interest
shall be payable in consecutive monthly installments, each of which shall be
equal to the percentage specified below of the principal sum and in the amounts
each month specified below.
Month Payment Amount Percentage
1-60 $1,632.57 2.289%
The first payment shall be due on the first day of the month immediately
following the date of this Note (unless the date of this Note is the first day
of the month in which case such payment is due on that day), and each succeeding
payment shall be made on the first day of each succeeding month. An interim
payment will be due on the same date as the first payment for the period from
the date Lender funds the principal amount of this Note until the first day of
the following month and shall be equal to 1/30 of the monthly loan payment
multiplied by the number of days, if any, between (and including) the funding
date and the first day of the following month.
This Note may not be prepaid in whole or in part.
Borrower shall pay Lender a late charge of 10% of any payment owed Lender
by Borrower which is not paid when due (taking into account applicable grace
periods), for every month such payment is not paid when due, but in no event an
amount greater than the highest rate permitted by applicable law.
Payments of principal and interest hereunder shall be made in lawful money
of the United States of America at the offices of Lender at 2401 Kerner
Boulevard, San Rafael, California 94901, or such other place as the Lender shall
designate to the Borrower in writing.
This Note is secured by a Senior Loan and Security Agreement, dated as of
October 19, 1998 between Borrower and Lender (the "Security Agreement") and is
entitled to the benefits of the Security Agreement which contains, among other
<PAGE>
things, provisions for (i) events of default and the Lender's rights and
remedies following an event of default (which include, but are not limited to,
acceleration of this Note), (ii) Collateral which secures the repayment of this
Note and is more particularly described on Exhibit A, and (iii) other rights and
remedies of Lender.
This Note may be declared due prior to its expressed maturity date only in
the events, on the terms and in the manner provided in the Security Agreement.
This Note shall be deemed to have been made under and shall be governed by
the laws of the State of California in all respects, including matters of
construction, validity and performance. At Lender's sole discretion, option and
election, jurisdiction and venue for any legal action between the parties
arising out of or relating to this Note shall be in the Superior Court of Marin
County, California, or, in cases where federal diversity jurisdiction is
available, in the United States District Court for the Northern District of
California located in San Francisco, California.
The Borrower hereby expressly waives presentment for payment, demand for
payment, notice of dishonor, protest, notice of protest, notice of nonpayment,
and all lack of diligence or delays in collection or enforcement of this Note.
BORROWER:
PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL
AND TOY CO.
By:
Name (Print):
Title:
EXHIBIT A to
SENIOR SECURED PROMISSORY NOTE NO. 03
(Insert Exhibit A here)
<PAGE>
OFFICER'S CERTIFICATE
The undersigned, ____________________, hereby certifies that:
(i) I am the __________________ of PLAY CO. TOYS & ENTERTAINMENT CORP. DBA
PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO., a Delaware corporation (the
"Borrower");
(ii) as such officer, I am familiar with the terms and conditions of that
certain Senior Loan and Security Agreement (the "Security Agreement") dated as
of October 19, 1998 between Borrower and PHOENIX LEASING INCORPORATED
("Lender");
(iii) the equipment, machinery, furniture, fixtures and other items on the
attached list are free and clear of any and all liens, charges, security
interests or other encumbrances that may affect Lender's right, title or
interest in and to the equipment and other items, and no UCC-1 financing
statements or other grants of security interests have been or are in the process
of being filed against any of such equipment or other items;
(iv) Borrower is performing according to Borrower's business plan described
in Section 3 of the Security Agreement, a true copy of which business plan has
been delivered to Lender;
(v) there has been no material adverse change in the financial condition of
Borrower from the date of its most recent financial statements, true copies of
which have been delivered to Lender;
(vi) as of the date hereof, no Event of Default (as defined in the Security
Agreement) or event which with the giving of notice or passage of time, or both,
could become an Event of Default has occurred and is continuing; and
(vii) the representations and warranties in Section 5 of the Security
Agreement are true and correct as if made on the date of the Loan.
IN WITNESS WHEREOF, I hereby execute this certificate on this ______ day of
_______________, 19__.
-----------------------------------
<PAGE>
CORPORATE RESOLUTION TO BORROW
RESOLVED: That this corporation, PLAY CO. TOYS & ENTERTAINMENT CORP. DBA
PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO., borrow funds from PHOENIX LEASING
INCORPORATED, a California corporation, ("Lender") and grant as collateral for
such borrowings such items of personal property and fixtures, and upon such
terms and conditions, as the officer or officers hereinafter authorized, in
their discretion, may deem necessary or advisable; provided, however, that the
aggregate principal amount of borrowings hereunder shall not exceed the sum of
$500,000.
RESOLVED FURTHER: That:
(Print or type name) (Title of Corporate Officer) (specimen signature) or
(Print or type name) (Title of Corporate Officer) (specimen signature)
of this corporation (this officer or officers authorized to act pursuant
hereto being hereinafter designated as "authorized officers"), are individually
authorized, directed and empowered, in the name of this corporation, to execute
and deliver to Lender, and Lender is requested to accept, any notes, security
agreements, and other documents or agreements that may be required by Lender in
connection with such borrowings.
RESOLVED FURTHER: That the authorized officers are individually authorized,
directed and empowered, in the name of this corporation, to do or cause to be
done all such further acts and things as they shall deem necessary, advisable,
convenient, or proper in connection with the execution and delivery of any such
notes, security agreements, and other documents or agreements and in connection
with or incidental to the carrying of the same into effect, including without
limitation, the execution, acknowledgment, and delivery of all instruments and
documents which may reasonably be required by Lender under or in connection with
any such borrowing.
RESOLVED FURTHER: That Lender is authorized to act upon these resolutions
until written notice of their revocation is delivered to Lender, and that the
authority hereby granted shall apply with equal force and effect to the
successors in office of the officers herein named.
I, _______________________, Secretary of PLAY CO. TOYS & ENTERTAINMENT
CORP. DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO., a corporation
incorporated under the laws of the State of Delaware, do hereby certify that the
foregoing is a full, true and correct copy of resolutions of the Board of
Directors of the said corporation, duly and regularly passed or adopted by the
Board of Directors of said corporation as required by law and by the by-laws of
the said corporation on the _______ day of __________________________, 19__.
I further certify that said resolutions are still in full force and effect
and have not been amended or revoked and that the specimen signatures appearing
above are the signatures of the officers authorized to sign for this corporation
by virtue of the said resolutions.
IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary, and affixed
the corporate seal of the said corporation, this _______ day of
__________________, 19__.
AFFIX CORPORATE
SEAL HERE SECRETARY OF PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL
AND TOY CO.
[PERSON WHO SIGNS HERE MUST BE DIFFERENT FROM PERSON(S) WHO SIGNED ABOVE.]
<PAGE>
INSTRUCTIONS FOR COMPLETING
REAL PROPERTY WAIVER DOCUMENTS
To: PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO.
Borrower
If you lease the real property on which your business is located, the
attached Waiver must be signed by your landlord. Your landlord should mark the
(_____ Landlord/Real Property Lessor) block in the last paragraph of the Waiver.
If you lease the real property on which your business is located but your
landlord is, in turn, leasing the real property from another party, then two
Waivers must be signed. A Waiver must be signed by your landlord who should mark
the (_____ Sublandlord/Real Property Sublessor) block in the last paragraph of
the Waiver, and a Waiver must also be signed by the other party from whom your
landlord is leasing the real property. That party should mark the (_____
Landlord/Real Property Lessor) block in the last paragraph of the Waiver.
If you own the real property on which your business is located and there is
a mortgage, the attached Waiver must be signed by your mortgage holder. Your
mortgage holder should mark the (_____ Mortgagee) block in the last paragraph of
the Waiver. If a Deed of Trust rather than a mortgage is involved, the (_____
Beneficiary (Deed of Trust)) block in the last paragraph of the Waiver should be
marked by the holder of the Deed of Trust.
If you own the real property on which your business is located and it is
free and clear of mortgages, the attached Waiver must be signed by you. You
should mark the (_____ Owner) block in the last paragraph of the Waiver.
THE SIGNATURE(S) OF ALL APPROPRIATE SIGNERS MUST BE NOTARIZED.
A LEGAL DESCRIPTION OF THE REAL PROPERTY MUST BE ATTACHED.
<PAGE>
REAL PROPERTY WAIVER
To: PHOENIX LEASING INCORPORATED
2401 Kerner Boulevard
San Rafael, CA 94901
Attention: Asset Management
Re: PLAY CO. TOYS & ENTERTAINMENT CORP.
DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND TOY CO.
Borrower
As holder ("Holder") of an interest in the real property ("Real Property")
described below, I (we) (1) acknowledge and consent to your agreement to finance
and install on the Real Property the equipment (the "Equipment") financed
pursuant to Senior Loan and Security Agreement dated as of October 19, 1998, and
Senior Secured Promissory Note(s) thereto between you and Borrower, (2) disclaim
any ownership or other interest in subject Equipment and other Equipment that
may be added from time to time, and (3) recognize your right to enter, and will
permit you to enter upon the Real Property, but only for the purposes of
inspecting or removing the Equipment.
This Real Property Waiver shall be binding upon the heirs, successors and
assigns of Holder.
I (we), as Holder, am (are) the (Please Check Appropriate Line Below):
___Beneficiary (Deed of Trust) ___Mortgagee ___Landlord/Real Property Lessor
___Sublandlord/Real Property Sublessor ___Owner with respect to the Real
Property.
Signed,
- --------------------------------------
Full Legal Name of Holder
- -------------------------- --------------------------
Signature Title Date
Real Property located at: One Mills Circle #302
Ontario, CA 01764
<PAGE>
(For use when agreement is executed in California)
ACKNOWLEDGMENT OF A NOTARY PUBLIC:
ALL-PURPOSE CERTIFICATE
(For use when agreement is executed in California)
State of California
County of ______________________
On _____________________ before me _______________________________,
personally appeared ________________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature__________________________ (Seal)
ACKNOWLEDGMENT OF A NOTARY PUBLIC:
REGISTERED LIMITED LIABILITY PARTNERSHIP ACKNOWLEDGMENT
(For use when agreement is executed in California)
STATE OF )
) ss:
COUNTY OF )
On this _____ day of ________________, 19__, before me, a Notary Public in
and for said County, personally appeared ____________________, personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person
who executed the within instrument on behalf of said registered limited
liability partnership and acknowledged to me that he (or she) executed the same
in his/her authorized capacity as the free act and deed of said registered
limited liability partnership for the purposes therein stated.
- --------------------------------
My commission expires: NOTARY PUBLIC
[Notary Seal]
<PAGE>
(For use when agreement is executed in States other than California)
ACKNOWLEDGMENT OF A NOTARY PUBLIC:
INDIVIDUAL ACKNOWLEDGMENT
STATE OF )
) ss:
COUNTY OF )
On this ______ day of ____________________, 199___, before me, a Notary
Public in and for said County, personally appeared
______________________________, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged that he/she executed the
same.
Notary Public in and for the
State of
County of
(SEAL) My commission expires
ACKNOWLEDGMENT OF A NOTARY PUBLIC:
PARTNERSHIP ACKNOWLEDGMENT
STATE OF )
) ss:
COUNTY OF )
On this _____ day of ________________, 19__, before me, a Notary Public in
and for said County, personally appeared ____________________, personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person
who executed the within instrument on behalf of said partnership and
acknowledged to me that he (or she) executed the same in his/her authorized
capacity as the free act and deed of said partnership for the purposes therein
stated.
My commission expires: NOTARY PUBLIC
[Notary Seal]
<PAGE>
(For use when agreement is executed in States other than California)
ACKNOWLEDGMENT OF A NOTARY PUBLIC:
LIMITED LIABILITY COMPANY ACKNOWLEDGMENT
STATE OF )
) ss:
COUNTY OF )
On this _____ day of ________________, 19__, before me, a Notary Public in
and for said County, personally appeared ____________________, personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person
who executed the within instrument on behalf of said limited liability company
and acknowledged to me that he (or she) executed the same in his/her authorized
capacity as the free act and deed of said limited liability company for the
purposes therein stated.
My commission expires: NOTARY PUBLIC
[Notary Seal]
ACKNOWLEDGMENT OF A NOTARY PUBLIC:
CORPORATE ACKNOWLEDGMENT
STATE OF )
) ss:
COUNTY OF )
On this _____ day of _____________, 19__, before me, a Notary Public in and
for said County, personally appeared ______________ personally known to me (or
proved to me on the basis of satisfactory evidence) to be the
___________________ of the corporation that executed the within instrument, and
acknowledged to me that he/she executed the within instrument on behalf of said
corporation and that the within instrument was signed on behalf of said
corporation by authority of its board of directors, and that the within named
officer of said corporation executed the same as the free act and deed of said
corporation for the purposes therein stated.
My commission expires: NOTARY PUBLIC
[Notary Seal]
<PAGE>
(For use when agreement is executed in States other than California)
ACKNOWLEDGMENT OF A NOTARY PUBLIC:
TRUST ACKNOWLEDGMENT
STATE OF )
) ss:
COUNTY OF )
On this _____ day of ________________, 19__, before me, a Notary Public in
and for said County, personally appeared
_______________________________________________________, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the Trustee of
_______________________________________________________________________________
(Name of Trust)
who executed the within instrument in his/her authorized capacity on behalf of
said Trust and acknowledged to me that he (or she) executed the same as the free
act and deed of said Trust for the purposes therein stated.
My commission expires: NOTARY PUBLIC
[Notary Seal]
ACKNOWLEDGMENT OF A NOTARY PUBLIC:
FOREIGN LIMITED LIABILITY PARTNERSHIP ACKNOWLEDGMENT
STATE OF )
) ss:
COUNTY OF )
On this _____ day of ________________, 19__, before me, a Notary Public in
and for said County, personally appeared ____________________, personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person
who executed the within instrument on behalf of said foreign limited liability
partnership and acknowledged to me that he (or she) executed the same in his/her
authorized capacity as the free act and deed of said partnership for the
purposes therein stated.
My commission expires: NOTARY PUBLIC
[Notary Seal]
<PAGE>
CONTINUING GUARANTY
THIS CONTINUING GUARANTY AGREEMENT ("Guaranty") is executed by UNITED
TEXTILES & TOYS CORP, a ____________________ corporation ("Guarantor"), in favor
of PHOENIX LEASING INCORPORATED, a California corporation ("Lender") at the
request of PLAY CO. TOYS & ENTERTAINMENT CORP. DBA PLAY CO. TOYS, TOYS
INTERNATIONAL AND TOY CO. ("Borrower").
WHEREAS, Lender will make loans to Borrower secured by certain property
which may be personal property, real property or other items pursuant to a
Senior Loan and Security Agreement No. 4003 dated as of October 19, 1998
("Security Agreement") which term "Security Agreement" in this Guaranty includes
any and all promissory notes and other agreements now or hereafter executed by
Borrower in connection with the Security Agreement between Lender and Borrower.
WHEREAS, Guarantor acknowledges that Lender would not enter into the
Security Agreement or make any loans to Borrower pursuant thereto, unless
Guarantor enters into and delivers this Guaranty.
WHEREAS, it is of a business benefit to Guarantor that Lender make the
loans under the Security Agreement to Borrower.
NOW, THEREFORE, to induce Lender to enter into the Security Agreement with
Borrower, and in consideration of the benefits accruing from the Security
Agreement to Guarantor by virtue of its business relationship with Borrower and
for other good and valuable consideration, receipt of which is hereby
acknowledged, Guarantor agrees, subject to the Terms and Conditions of
Continuing Guaranty attached hereto and made a part hereof, (i) to guaranty the
full satisfaction and payment of Borrower's Obligations (as defined in such
Terms and Conditions) to Lender and (ii) to be liable for, and legally bound by,
all other terms, conditions, covenants and obligations set forth in such Terms
and Conditions.
IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty on
the date set forth below, and by such signature acknowledges and agrees that
Guarantor has read and is in agreement with the attached Terms and Conditions of
Continuing Guaranty.
DATED: _______________________
[GUARANTOR'S SIGNATURE ON THIS DOCUMENT MUST BE NOTARIZED]
UNITED TEXTILES & TOYS CORP. ("Guarantor")
By:
Name (Print):
Title:
Address:
Telephone Number:
Federal Tax I.D. Number:
<PAGE>
CORPORATE ACKNOWLEDGMENT
STATE OF )
) ss:
COUNTY OF )
On this ________ day of ______________________, 199___, before me, a Notary
Public in and for said County, personally appeared
____________________________________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the ______________ of the corporation
that executed the within instrument, and acknowledged to me that he/she executed
the within instrument on behalf of said corporation and that the within
instrument was signed on behalf of said corporation by authority of its board of
directors, and that the within named officer of said corporation executed the
same as the free act and deed of said corporation for the purposes therein
stated.
My commission expires: NOTARY PUBLIC
[Notary Seal]
<PAGE>
Insert here the pre-printed, duplexed copy of
TERMS AND CONDITIONS OF CONTINUING GUARANTY - LOAN
(This version is for both the FrLn and AsLn Continuing Guaranty - Short
Form)
<PAGE>
CORPORATE RESOLUTION AUTHORIZING EXECUTION OF GUARANTY
WHEREAS, PHOENIX LEASING INCORPORATED ("Lender"), is willing to enter into
a senior loan and security agreement or senior loan and security agreements with
PLAY CO. TOYS & ENTERTAINMENT CORP. DBA PLAY CO. TOYS, TOYS INTERNATIONAL AND
TOY CO. ("Borrower") if the obligations of Borrower arising thereunder are
guaranteed by this corporation; and
WHEREAS, it is of a business benefit to this corporation that such
agreement or agreements be entered into by Lender and Borrower;
NOW, THEREFORE, BE IT RESOLVED that this corporation guarantee the
obligations of Borrower to Lender under the terms and conditions of any loan or
other senior loan and security agreement or senior loan and security agreements
entered into between Lender and Borrower prior to actual receipt by Lender of
written notice of revocation of this resolution as to future agreements.
BE IT FURTHER RESOLVED that:
<TABLE>
<CAPTION>
<S> <C> <C>
- -------------------------- -------------------------- ------------------------
(Print or type name) (Title of Corporate Officer) (specimen signature)
or
- -------------------------- -------------------------- ------------------------
(Print or type name) (Title of Corporate Officer) (specimen signature)
</TABLE>
of this corporation are hereby individually authorized and directed on
behalf of this corporation to execute a guaranty in such form as may be agreed
upon by any of said officers and Lender, and the signatures of either of said
officers to the guaranty shall evidence their agreement.
RESOLVED FURTHER that Lender is authorized to act upon these Resolutions
until written notice of their revocation is delivered to Lender and that the
authority hereby granted shall apply with equal force and effect to the
successors in office of the officers herein named.
I, ________________, Secretary of UNITED TEXTILES & TOYS CORP., a
corporation incorporated under the laws of the State of Delaware, do hereby
certify that the foregoing is a full, true and correct copy of resolutions of
the Board of Directors of said corporation, duly and regularly passed or adopted
by the Board of Directors of said corporation as required by law and by the
by-laws of said corporation, on the ___ day of ________________, 19__.
I further certify that said resolutions are still in full force and effect
and have not been amended or revoked and that the specimen signatures appearing
above are the signatures of the officers authorized to sign for this corporation
by virtue of said resolutions.
IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary, and
affixed the corporate seal of said corporation, this ___ day of ______________,
19__.
AFFIX CORPORATE
SEAL HERE SECRETARY OF UNITED TEXTILES & TOYS CORP.
[PERSON WHO SIGNS HERE MUST BE DIFFERENT FROM PERSON(S) WHO SIGNED ABOVE.]
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27
FINANCIAL DATA SCHEDULE
This schedule contains summary financial information extracted from Balance
Sheet, Statement of Operations, Statement of Cash Flows and Notes thereto
incorporated in Part 1, Item 1, of this Form 10-QSB/A-1 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> mar-31-1999
<PERIOD-END> sep-30-1998
<CASH> 423,634
<SECURITIES> 0
<RECEIVABLES> 57,517
<ALLOWANCES> 0
<INVENTORY> 12,185,130
<CURRENT-ASSETS> 13,600,452
<PP&E> 7,346,378
<DEPRECIATION> 3,788,081
<TOTAL-ASSETS> 19,648,524
<CURRENT-LIABILITIES> 7,187,911
<BONDS> 0
0
4,748,031
<COMMON> 0
<OTHER-SE> (1,045,805)
<TOTAL-LIABILITY-AND-EQUITY> 19,648,524
<SALES> 12,455,710
<TOTAL-REVENUES> 12,455,710
<CGS> 7,120,385
<TOTAL-COSTS> 7,120,385
<OTHER-EXPENSES> 5,476,102
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 349,714
<INCOME-PRETAX> (490,491)
<INCOME-TAX> 0
<INCOME-CONTINUING> (490,491)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (490,491)
<EPS-PRIMARY> (.19)
<EPS-DILUTED> (.19)
</TABLE>
