EXHIBIT 10.42
NORTH CAROLINA
WAREHOUSE LEASE
MECKLENBURG COUNTY
THIS WAREHOUSE LEASE (the "Lease") is made and entered into
effective as of July 12, 1996, by and between THE SHELTON
COMPANIES, a North Carolina General Partnership, (referred to as
"LANDLORD"), and JONES APPAREL GROUP, INC., a Pennsylvania
Corporation, (referred to as "TENANT").
In consideration of the mutual and reciprocal covenants,
terms, provisions, conditions and agreements hereinafter set forth,
LANDLORD and TENANT agree as follows:
1. PREMISES. LANDLORD hereby leases to TENANT and TENANT
hereby hires from LANDLORD, on the terms and conditions hereinafter
provided, that real property outlined in bold on the plot plan
attached hereto as Exhibit "A" (the "Premises"), said real property
being more particularly described as Forsyth County, North Carolina
Tax Block 4967E, Lot 005 (the "Property"), together with the
improvements located thereon (the "Building").
2. TERM. The initial term of this Lease shall begin on
September 15, 1996, and shall end at midnight on September 14,
2001, unless terminated sooner in accordance with the provisions
hereof. As used in this Lease, the word "Term" shall mean the
initial term of this Lease as specified in this paragraph and any
extension or renewal thereof as provided under this Lease.
3. BASE RENTAL. TENANT shall pay to LANDLORD during the
Term a monthly base rental of Fifty-Six Thousand One Hundred
Fifteen Dollars & No/00 ($56,115.00), which shall be due and
payable in advance on the first day of each month during the Term.
Rental for any partial month shall be payable in advance and shall
be prorated on a daily basis.
4. TAXES. As additional rental, TENANT shall pay all ad
valorem taxes and assessments which shall be due by reason of the
Premises (Property and Building) . TENANT shall pay said ad valorem
taxes for each calendar year of the Term; however, said ad valorem
taxes shall be prorated for the first partial calendar year of the
Term and upon vacancy by TENANT at the expiration of the Term.
Said ad valorem taxes shall be due and payable by TENANT to
LANDLORD on or before December 15th of each year. TENANT shall pay
ad valorem taxes and assessments on TENANT'S personal property,
fixtures, equipment and inventory located at the Premises.
5. REPAIRS AND ALTERATIONS. With the exception of the roof,
steel structure and panels, masonry walls, and foundation, and
floor subject to the definition of floor repairs as hereinafter
defined, for which LANDLORD (except for damages caused by TENANT or
its employees, agents, or invitees, which shall be TENANT'S
responsibility) accepts responsibility, any and all improvements,
interior and exterior, including grounds, landscaping, sidewalks
and paved parking area, shall be kept in good and substantial order
and repair by TENANT at its sole cost and expense, and TENANT shall
comply with all laws, ordinances, orders and regulations of every
kind and nature. TENANT shall have the right and privilege to
make, at its own expense, reasonable alterations to the Premises
provided that no alterations or changes of a structural nature
shall be made without the prior written consent of LANDLORD, which
consent shall not be unreasonably withheld. Upon termination of
this Lease, TENANT shall remove, at its own cost and expense, all
alterations made by it and restore the Building and Premises to its
condition as of the commencement of the term of this Lease,
ordinary wear and tear excepted, unless LANDLORD shall agree in
writing to allow such alterations, or a designated portion thereof,
to remain.
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Definition of Floor Repairs: The LANDLORD represents that the
6" reinforced concrete floor is built on soil with a compaction of
3,000 lbs psf. In the event of a floor failure, the LANDLORD will
have a qualified engineer conduct tests to determine if there is a
sub-grade failure and a concrete thickness of at least 5 inches.
The floor repairs shall be the responsibility of the LANDLORD if
either of these two conditions do not exist. All other floor
damages and repairs shall be the responsibility of the TENANT.
6. LANDLORD'S RIGHT TO ENTER TO MAKE REPAIRS. Upon not less
than five (5) days written notice (except for emergency repairs)
LANDLORD and its agents or other representatives shall have the
right to enter into and upon the Premises and Property or any part
thereof at all reasonable hours, for the purpose of examining the
same, and in case of the neglect or default of TENANT in making
repairs or alterations to the same for which the TENANT is
responsible by the terms hereof, LANDLORD may make such after
reasonable notice to TENANT, except that no notice shall be
required in case of emergencies (defined herein as any item that
would cause additional damage to the Premises or injury to people
or property) during the Term, and all the costs and expenses
consequent thereof with interest thereon shall be repaid by TENANT
to LANDLORD.
7. NO DEDUCTIONS AGAINST RENT. It is the intention of the
parties that subject to conditions and exceptions stated in this
Lease, LANDLORD shall receive rents and additional rents and all
sum or sums which shall or may become payable hereunder by TENANT
under any contingency, free from all taxes, fees, charges,
expenses, damages and deductions of every kind or sort whatsoever,
except as otherwise specifically provided herein, and that TENANT
shall and hereby expressly agrees to pay as additional rent all
such taxes, fees, charges and expenses and such other sums which
would have been payable by LANDLORD and chargeable against the
Premises or the rental paid hereunder. TENANT, however, shall not
be under any obligation to pay any principal or interest in any
mortgage or deed of trust which may be a lien against the Property
or to pay any income or similar tax of LANDLORD.
8. UTILITIES. LANDLORD covenants and agrees that the
Premises shall be adequately serviced with electric, telephone,
water, and sewer sufficient to meet TENANT'S requirements as of the
commencement of the Term. TENANT shall pay all charges for utility
services furnished to the Premises during the Term and such utility
services shall be provided in the name of TENANT and billed
directly to TENANT by the utility company providing such services.
9. USE OF PREMISES. TENANT shall use the Premises solely as
a warehouse distribution and storage facility, and TENANT covenants
that neither the Premises nor any part thereof shall be used for
any unlawful purpose or for any purpose which shall be deemed
extra-hazardous by fire insurance companies or used or occupied in
any manner which shall result in the cancellation of any policy of
insurance on the Building or the Premises, unless TENANT shall
replace at no additional expense to LANDLORD the policies so to be
canceled by another policy in the same amount and in a company or
companies of equally good standing. TENANT shall not use the
Premises for the manufacture, storage, disposal or handling of any
hazardous substances, as the same may be defined by any statute,
rule or regulation adopted by any governmental authority having
jurisdiction over such matters, and TENANT shall indemnify and hold
harmless LANDLORD from and against any and all claims, damages and
liabilities, including remediation costs and expenses associated
therewith, incurred by LANDLORD arising from or relating to
TENANT'S violation of the terms hereof.
10. INDEMNIFICATION OF LANDLORD. TENANT shall hold LANDLORD
harmless against any and all claims, damages arising after the
commencement of the Term, or any renewal thereof and any orders,
decrees or judgements which may be entered therein, brought for
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damages or alleged damages resulting from any injury to person(s)
or property or from loss of life sustained in or about the said
Premises and the improvements thereon by any person or persons
whatsoever, except for damages which are not covered by liability
insurance policies required to be carried by TENANT hereunder and
which also result from the negligence of LANDLORD, its agents or
employees.
11. CONDEMNATION. (a) If at any time during the Term
hereof, the whole of the Premises shall be taken for any public or
quasi-public use, under any statute, or by right of eminent domain,
then, in such event, when possession of the Premises shall have
been taken thereunder by the condemning authority, the Term and all
rights of TENANT hereunder shall immediately cease and terminate,
and the rent shall be apportioned and paid to the time of such
termination.
(b) If only part of the Premises shall be so taken or
condemned, the entire award shall belong to LANDLORD without any
deduction therefrom for any estate or interest of TENANT, and
TENANT hereby assigns to LANDLORD any and all such award with any
and all rights, estate and interest of TENANT now existing or
hereafter arising in and to the same or any part thereof; provided,
however, if the part of the Premises so taken or condemned shall,
in the sole and absolute judgement of TENANT, reduce the Premises
to such extent as to prevent TENANT from continuing the substantial
operation and conduct of its business on the Premises, then TENANT
shall have the right, at its election, to cancel and terminate this
Lease. If the Lease is not so terminated, rent shall be abated in
proportion to the portion of the Premises so taken.
12. PROPERTY INSURANCE. (a) During the Term hereof and for
the benefit of LANDLORD, the Building and all improvements and
equipment on, in or appurtenant to the Premises shall be insured
against loss or damage by fire and all standard extended coverage
for the full, fair and insurable replacement value thereof.
LANDLORD shall purchase and keep in force such insurance policy or
policies. LANDLORD retains the sole right to adjust and settle all
claims in regards to this property insurance coverage.
(b) TENANT shall bear all risk of loss or damage to its
property, equipment, and supplies located at or in the Premises and
shall be responsible to insure the same at its own cost and
expense.
13. PUBLIC LIABILITY INSURANCE. (a) During the Term hereof
TENANT shall provide and keep in force in such form as LANDLORD
shall direct, public liability insurance protecting LANDLORD
against any and all liability in the amounts of not less than
$1,000,000.00 in respect to any one accident or disaster and in the
amount of not less than $500,000.00 in respect to injuries to any
one person. LANDLORD (and its mortgagee) shall be named as an
insured in such policy or policies and TENANT shall provide
LANDLORD an original certificate of insurance confirming such
coverage. Any such policy shall require advance notice to LANDLORD
(and its mortgagee) of at least thirty (30) days prior to
cancellation.
(b) All premiums and charges for all of said insurance
policies shall be paid by TENANT as additional rent and if TENANT
shall fail to make any such payment when due or fail to provide or
keep in force any such policy that TENANT is required or has agreed
to provide, LANDLORD may make, but shall not be obligated to make,
such payment or carry such policy, and the amount paid by LANDLORD,
with interest thereon, shall be repaid to the LANDLORD by TENANT on
demand, and all such amounts so repayable together with such
interest, shall be considered as additional rent payable hereunder.
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14. REPAIR OR RECONSTRUCTION DUE TO FIRE. LANDLORD agrees
that if the Premises are damaged or destroyed by fire or the
elements at any time during the Term and if, and to the extent
that, insurance proceeds payable with respect to such damage are
paid to LANDLORD, LANDLORD will at its own expense commence to
repair or reconstruct the same within thirty (30) days and complete
same within ninety (90) days after commencement; provided, rental
shall be abated as to any part of the Premises which in the sole
and absolute judgement of TENANT, is rendered unfit for occupancy
for the period such unfitness continues. If, however, within the
last year of the original Term or any renewal term of this Lease
said damage or destruction shall be in excess of twenty-five
percent (25%) of the total replacement value of the Premises, then
at the option of LANDLORD, on not less than ninety (90) days notice
to TENANT this Lease may be terminated and the obligation of TENANT
under this Lease shall thereupon cease and terminate as of the date
of such termination. LANDLORD shall be entitled to the proceeds of
all insurance policies providing coverage with respect to the
Premises for fire or other extended coverage perils.
15. RELEASE. LANDLORD hereby releases TENANT to the extent
of LANDLORD'S insurance coverage, from any liability for loss or
damage caused by fire or any of the extended coverage casualties
included in LANDLORD'S insurance policies, even if such fire or
other casualty should be brought about by the negligence of TENANT,
its agents or employees. TENANT hereby releases LANDLORD to the
extent of TENANT'S insurance coverage, from any liability for loss
or damage caused by fire or any of the extended coverage casualties
included in TENANT's insurance policies, even if such fire or other
casualty should be brought about by the negligence of LANDLORD, its
agents or employees.
16. SURRENDER OF PREMISES. TENANT shall, on or before the
last day of the Term, peaceably and quietly leave, surrender and
yield up unto LANDLORD all and singular the improvements and
appurtenances on the Premises in good order, condition and state of
repair, reasonable wear and tear excepted, together with all
alterations, additions, improvements, and fixtures put in at the
expense of TENANT, which LANDLORD has agreed in writing to allow to
remain. The LANDLORD will make a video tape of the Premises prior
the commencement date of this Lease and this video tape shall be
used to show the condition of the Premises at the commencement of
the Lease.
17. DEFAULT DEFINED. Each of the following shall be deemed
a default by TENANT and a breach of this Lease: (a) failure to pay
the rental herein reserved, or any part thereof (including
additional rental), for a period of fifteen (15) days after the
date payment thereof is due; (b) failure to do, observe, keep and
perform any of the terms, covenants, conditions and provisions of
this Lease contained on the part of TENANT to be done, observed,
kept and performed, including to pay additional rent or any other
charge or expense required to be paid by TENANT hereunder, for a
period of fifteen (15) days after written notice; provided, if the
failure complained of is a failure other -than one which may be
cured by the payment of money, no default on the part of TENANT in
the performance of work required to be performed or acts to be done
or conditions to be met shall be deemed to exist if, within the
aforesaid fifteen (15) day period, steps shall have been in good
faith commenced by TENANT to rectify the same and shall be
prosecuted to completion with diligence and continuity; and (c) the
abandonment of the Premises by TENANT, the adjudication of TENANT
as bankrupt, the making by TENANT of a general assignment for the
benefit of creditors, the taking by TENANT of the benefit of any
insolvency act or law, or the appointment of a permanent receiver
or trustee in bankruptcy for TENANT'S property.
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18. LANDLORD'S REMEDIES. Should TENANT be in payment or
other material default hereunder, LANDLORD, if it shall so elect
may, upon not less than ten (10) days prior written notice (1)
terminate the Term of this Lease, or (2) re-enter the Premises with
or without process of law and expel or remove TENANT or any other
occupying the Premises, thereby terminating TENANT'S right to
possession without terminating the Term of this Lease. Upon such
termination of the Term hereof, TENANT shall promptly surrender
possession of the Premises. If LANDLORD shall elect to terminate
TENANT'S right to possession only, without terminating the Term of
this Lease, LANDLORD may (i) re-enter the Premises and remove
TENANT, without releasing TENANT from its obligations hereunder,
(ii) refurbish, redecorate, alter, repair or otherwise prepare the
Premises for lease to others, and (iii) attempt to relet the
Premises, and if the amount of rental collected by LANDLORD upon
such reletting is not sufficient to pay monthly the full amount of
the rental herein reserved (plus charges and expenses payable by
TENANT) over the remainder of the Term, together with all costs of
repossession and reletting (including leasing commissions) , TENANT
shall pay to LANDLORD the amount of each monthly deficiency upon
demand; and if the rent so collected from such reletting is more
than sufficient to pay the full amount of rent and other TENANT
obligations reserved hereunder, together with the aforementioned
costs, LANDLORD shall be entitled to the surplus.
19. SUBORDINATION. TENANT agrees that LANDLORD may, from
time to time, encumber LANDLORD'S interest in the Property with a
mortgage or deed of trust, and, in connection with the execution of
such mortgage or deed of trust, LANDLORD may, at its option, make
this Lease subordinate in lien, priority and claim to the lien or
liens or such mortgage or deed of trust. This provision is
intended to be self-operative and no further act or agreement by
TENANT shall be necessary to establish the subordination of this
Lease to any such mortgage or deed of trust; however, TENANT
covenants and agrees that TENANT will, from time to time, at the
request of LANDLORD, execute an agreement in such form as may be
required by LANDLORD or by the mortgagee under any such mortgage or
deed of trust to effect such subordination. If TENANT fails or
refuses to execute such agreement on demand, LANDLORD may, as the
attorney-in-fact and agent of TENANT, execute such agreement and in
such event, TENANT hereby confirms and ratifies any such agreement
executed by LANDLORD on behalf of TENANT. LANDLORD, however, will
arrange with the holder of any such present or future mortgage or
deed of trust for an agreement that if by foreclosure such holder,
or any successor in interest, shall become the owner of the
Property, it will not disturb the possession, use or enjoyment of
the Premises by TENANT, provided TENANT is not in payment or other
material default hereunder.
20. SUBLEASE AND ASSIGNMENT RESTRICTED. Except in the normal
course of its business, TENANT shall not have the right to assign
this Lease, nor sublet the Premises, in whole or in part, without
first obtaining the written consent of LANDLORD. LANDLORD
covenants and agrees that it will not unreasonably or arbitrarily
withhold said consent. TENANT shall always remain primarily
responsible for the performance of this Lease.
21. LIMITED LIABILITY. The liability of LANDLORD hereunder
shall be limited solely to the interest of LANDLORD in the
Property; and neither LANDLORD nor any general Partner of LANDLORD
shall be personally liable with respect to any claim arising out of
or related to this Lease, and a deficit capital account of a
partner of LANDLORD shall not be deemed an asset or property of
LANDLORD.
22. NON-WAIVER PROVISION. No waiver of any condition or
covenant contained in this Lease, or of any rule or regulation
which is a part hereof, shall be implied as a result of LANDLORD'S
or TENANT'S failure to enforce such condition, covenant, rule or
regulation or failure to take advantage of any of its rights on
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account of the same; and no express waiver shall effect any
condition, covenant, rule or regulation other than the one
specified in such waiver and that one only for the time and in the
manner specifically stated. No reference in this Lease to any
specific right or remedy shall preclude LANDLORD or TENANT from
exercising any other right or having any other remedy or from
maintaining any other action to which it may otherwise be entitled
at law or in equity.
23. INTEREST AND EXPENSE OF ENFORCEMENT. After a default by
TENANT under this Lease, any amounts due or becoming due LANDLORD
shall accrue interest at the rate of ten (10%) percent per annum
until paid. TENANT agrees to pay to LANDLORD reasonable attorney's
fees if the obligations of TENANT evidenced by this Lease need to
be referred to an attorney for enforcement after a breach of this
Lease. Should LANDLORD incur any expenses in successfully
enforcing any provision of this Lease, TENANT shall pay to LANDLORD
all expenses so incurred, including reasonable attorney's fees.
24. NOTICES. Wherever in this Lease it shall be required or
permitted that notice or demand be given or served by either party
to this Lease to or on the other, such notices or demand shall be
given or served and shall not be deemed to have been duly given or
served unless in writing and forwarded by registered mail and
addressed as follows:
TO LANDLORD: THE SHELTON COMPANIES
3600 One First Union Center
301 South College Street
Charlotte, NC 28202
Attn: Ballard G. Norwood
TO TENANT: Jones Apparel Group, Inc.
250 Rittenhouse Circle
Bristol, PA 19007
Attn: Controller
Such addresses may be changed from time to time by either
party serving notices as above provided.
25. SHORT FORM. At the request of either party, the parties
hereto agree to execute a short form of Lease for purposes of
recording and of setting in writing the date of delivery and the
commencement of the Lease Term. The cost of preparing and
recording such short form of Lease shall be borne by the party
requesting the same.
26. GOVERNING LAW. This Lease shall be governed by and
construed in accordance with the laws of the State of North
Carolina. If any provision of this Lease shall be held as invalid
or unenforceable, the remainder of this Lease shall not be affected
thereby, and there shall be deemed substituted for the affected
provisions a valid and enforceable provision as similar as possible
to the affected provision. Time is of the essence under this
Lease, and all provisions herein relating thereto shall be strictly
construed. Notwithstanding any termination of this Lease, any
provisions hereof which would require observance and performance by
LANDLORD or TENANT subsequent to the termination hereof shall
continue in force and effect.
27. ENTIRE AGREEMENT. This document constitutes the entire
agreement between LANDLORD and TENANT relating to the Premises, and
may be altered or revoked only by a document in writing signed by
both parties. The terms, covenants and conditions in this Lease
shall extend to and be binding upon the heirs, representatives,
executors, administrators, successors and assigns of the respective
parties hereto; however, the foregoing shall not be construed as
granting TENANT the right to assign this Lease or sublet the
Premises, except as provided under the terms of this Lease.
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28. RULES AND REGULATIONS. Rules and regulations for use of
the Premises, Building and Property and for parking are stated in
the Declaration of The Northridge Business Park Association and,
compliance with such rules and regulations including the payment of
Common Area Expenses to the Association shall be required as a
condition of this Lease. LANDLORD shall not establish any
unreasonable rules or regulations which alter the terms and
conditions of this Lease or impose any additional costs or expenses
upon TENANT.
29. ADJACENT EXPANSION LAND. The LANDLORD will withhold the
land attached hereto as Exhibit "B" from the market for one (1)
year from the commencement of the Term. Beginning September 15,
1997 and continuing during the term of the Lease, TENANT shall have
the first right of refusal for this proposed expansion. If the
LANDLORD has reason to proceed with the expansion it will notify
TENANT of its plans in writing and TENANT shall have thirty (30)
days from date of notice to advise LANDLORD in writing if or if not
it has an interest in exercising its first right of refusal to
lease and occupy the expansion space. If TENANT does not exercise
its right of refusal, and LANDLORD proceeds with expansion which
adjoins the existing building LANDLORD will not allow a use with an
odor or chemicals that could effect TENANTS product, and TENANT may
not unreasonably withhold its approval of LANDLORD'S construction
of a building that adjoins the existing building. LANDLORD will
provide a four (4) hour fire wall between the existing building and
the expansion building. LANDLORD shall not perform any work for
the expansion which will diminish the adequacy of access to the
Lease Premises or permit any work, which will impair TENANTS use of
the Premises.
30. RENEWAL. (a) LANDLORD agrees that if TENANT shall not be
in default in performing any of its obligations under this Lease,
TENANT shall have and is hereby granted the option to extend the
Term of this Lease for three (3) separate and successive three (3)
year Terms. This option shall be automatically extended unless
TENANT notifies LANDLORD in writing no later than ninety (90) days
prior to the end of the then current term that it does not intend
to exercise it's option. If TENANT exercises an option as
hereinabove set forth, the base rent which TENANT shall pay during
the extended Term shall be determined as follows: The annual
rental for the 232,200 square foot building shall be $719,820.00
for the first renewal term, $766,260.00 for the second renewal term
and $812,700.00 for the third renewal term, each payable in equal
monthly installments.
(b) All of the terms of this Lease shall apply to an
extended Term, except that rental as provided above, and TENANT
shall have no rights to extend the Term of the Lease except as
provided in subparagraph (a) above.
31. POSSESSION. LANDLORD will take possession from its
existing tenant on August 1, 1996, at which time removal of racks
by LANDLORD will begin. It is estimated that removal of the racks
will take four (4) weeks. LANDLORD agrees to coordinate its work
with TENANT'S work, so that TENANT may have partial occupancy for
the purpose of beginning building renovations in areas of the
Premises where the existing racks have been removed.
32. CONDITION OF BUILDING AT LEASE COMMENCEMENT. Subject to
TENANT'S occupancy for rack installation and improvements, LANDLORD
will deliver the Premises in a broom-clean condition, with the
existing plumbing, electrical and HVAC systems in good working
order. TENANT may have its engineers inspect the Premises,
provided that LANDLORD shall not be obligated to make any changes
if the equipment is in good working order.
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33. LANDLORD OBLIGATIONS FOR TENANT IMPROVEMENTS. At the
time of execution of this Lease by the parties, LANDLORD will pay
to TENANT the sum of $110,000, which amount (or any part thereof)
may be used by TENANT for such renovations to the Premises as
TENANT, in its absolute discretion, shall determine to make.
TENANT shall be responsible for any such renovations, including
satisfying such requirements as may be imposed with respect thereto
by TENANT'S insurance carrier for the Premises.
IN WITNESS WHEREOF, this Lease has been duly executed by and
duly authorized representative of LANDLORD and TENANT effective the
day and year first above written.
LANDLORD
Witness: THE SHELTON COMPANIES, a North
Carolina General Partnership
/s/ Ballard Norwood BY: /s/ R. E. Shelton (SEAL)
General Partner
TENANT
JONES APPAREL GROUP, INC., a
Pennsylvania Corporation
Attest: BY: /s/ Wesley R. Card (SEAL)
(CORPORATE SEAL) Chief Financial Officer
/s/ Gary R. Klocek
Corp. Controller
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